Short of actually calling prior management complete and utter rubbish, Parity ‘encore’ top team, Philip Swinstead and Paul Davies, yet again laid bare all the sins of the past and listed all the painful remedies. There was nothing they could do to completely staunch the bleeding before year-end so, as presaged (see Parity buckles down for difficult H2), Parity ended the year (to 31st Dec.) nursing operating, pre-tax and net losses on revenues 22% lower (£93m).
And, also as previously announced, the business of two halves has become a business of three. Swinstead and Davies have dissected the already sub-scale (£15m, down 20%) Solutions business into a (hopefully) less risky project services business (Parity Systems), and a new ‘talent management’ division. I still haven’t quite got my ahead around the latter, but it seems to have more to do with recruitment (Parity’s real knitting and the only part of the business actually making money) than projects, but there you go.
And this, for me, is still the nub of the matter. I truly struggle to see how Parity’s projects business can ever achieve scale and sufficient profitability, despite having broken even in Q4. I would think if management can knock it into some sort of consistently profitable shape they should be able to job it out to a more suitable home, and it is possibly with this thought in mind that the market had been marking up Parity’s stock over the past few months. However, today’s news has so far inspired a 10% share price hit, down to 22.5p, nonetheless still over double the price in early December but a third down on its February 34p peak.