Parity, the (now) AIM-listed IT recruitment firm-cum-digital media agency aspirant, continues to pursue its digital dream (see Parity 'places' digital media cards on the table), to which end returning chairman, Philip Swinstead, has now assumed executive responsibilities. Paul Davies remains CEO.
Parity is being reconstructed as a ‘game of two halves’ – Parity Professionals (recruitment) and Parity Digital (not really doing what it says on the tin) – each with its own COO and (eventually) its own operating infrastructure. In fact, both Parity Professionals and Parity Digital are themselves games of two halves.
Swinstead will now be ‘hands on’ at Parity Digital, which comprises a traditional systems business and the acquired digital media agency, Inition (see Parity buys into its digital dream). Parity Digital reported a half-time segment contribution of £964k (H1 2012: £531k) on revenues of £4.4m (+20%) in the 6 months to 30th June. However, the so-called exceptional costs associated with the ‘strategising’ and the acquisition rather suggest that only the traditional systems business is actually profitable. Indeed, Swinstead signalled a slow start to Inition’s business this year, though activity has since increased.
Revenues at Parity Professionals grew by 7% to £42.1m, but contribution fell by 13% to £2.0m, knocking 110bps off operating margins – now 4.8%. Again it’s difficult to see under the covers so it’s unclear how much of the profit is coming from Parity’s traditional IT recruitment operations rather than its new-ish ‘Talent Management’ activities. Net net, Parity Group’s post-tax losses doubled to £651k, on revenues 8% higher at £46.5m.
I get what the top team are trying to do. I just don’t think it will work as there are so many others out there chasing the same digital dream with arguably better credentials.