Proactive Investors - Run By Investors For Investors

Parity shares under the cosh after losing staffing contract with Scottish government

Parity expects the loss of the contract to drag full-year revenue 10% below market forecasts
The announcement follows a profit warning in November

Parity Group PLC (LON:PTY) shares plunged after the recruitment and tech consultancy said the Scottish government has decided against renewing a staff placement contract.

The company will continue to generate revenue from the existing staff placements it has made under the contract for the next two financial years but will not make any new placements.

READ: Parity plunges as it issues profit warning amid large contract delay

Parity said while the contract has been “significant” in revenue terms, it has provided “relatively low” margins.

The revenues lost from the loss of the contract will be offset by costs savings from no longer carrying out the work under the agreement with the government.

For this reason, it does not expect a “material impact” on profits.

Parity continues to expect to meet market forecasts for profit in the current financial year.

However, the firm expects revenue will be 10% lower than analysts’ estimates.

“In the longer term the end of this contract will improve the group's net margin performance albeit from a lower level of revenue, consistent with the longer term direction of travel for Parity,” it said.

Matthew Bayfield, who was appointed chief executive in January, will announce his new strategy for the business at the full-year results on April 16.

Parity issued a profit warning in November after a delay in the extension of a large contract continued into the second half.

View full PTY profile View Profile

Parity Timeline

Related Articles

scientist in laboratory
March 07 2019
In a January update, Instem said trading had been in-line with expectations, helped by a 500% rise in orders for its SEND platform
StatPro Revolution
On 20 May the company secured a three-year contract extension for its Revolution platform from a top 20 fund administrator carrying a price tag of at least £2.44mln
April 15 2019
Corero Network Security PLC specialises in cyber-security software

© Proactive Investors 2019

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use