There’s no doubt that Philip Swinstead and Paul Davies, the ‘encore’ top team at ITSA (IT staff agency)-cum-project house-cum aspiring technology incubator (!), Parity, have done a grand job at hacking out cost. Half-time net losses reduced substantially, from £2.6m to £0.4m, but this was on the back of a 22% yoy decline in headline revenues to £40.8m. However, H1 2011 revenues were 1% higher than H2 2010, so hopefully this is a sign that the rot has stopped.
As ever, it was Parity’s core Resources (ITSA) business that generated the meagre operating profit, with 'adjusted' margins creeping up 10bps yoy to 2.6% on a 22% revenue decline to £34.7m. If you ignore all the ‘nasties’, Parity’s ‘refreshed’ Solutions division (£6.3m revs) went back to black, but only just, at £54k.
But I still worry about the strategy of diversifying into services weird and wonderful (see Is Parity’s business of three halves two too many?). I can now (sort of) get my head around Parity’s ‘Talent Management’ activities, which seem to target graduate placement. Parity knows recruitment and if they can carve out a profitable niche here (note “if”), then all well and good. But the plan to create a ‘Technology Laboratory’ for emerging technologies is just so out of left field as to be in the next paddock. Also, on the basis that if you don't succeed the first, second, third, etc time, then try, try, again, Swinstead and Davies want to resurrect a consultancy capability. Why?
Well, the answer to these questions and more will be undoubtedly be revealed to me in what I assume will be a highly ‘therapeutic’ lunch I am to have with Philip Swinstead in due course. I just hope that it won’t upset my digestion.