Annual Report and Accounts
2021
Parity Group plc
Company number: 3539413
1
Table of Contents
Parity Group plc
Company Information .................................................................................................................................3
Chairman’s Statement ................................................................................................................................4
Operational and Financial Review ..............................................................................................................6
Principal Risks and Uncertainties ............................................................................................................. 12
Section 172 of the Companies Act (2007) ............................................................................................... 15
Corporate Governance Report ................................................................................................................. 16
The Board ................................................................................................................................................. 22
Corporate Social Responsibility Report ................................................................................................... 24
Remuneration Committee Report ........................................................................................................... 26
Audit Committee Report .......................................................................................................................... 32
Directors’ Report ...................................................................................................................................... 35
Statement of Directors’ Responsibilities ................................................................................................. 38
Independent Auditor’s Report ................................................................................................................. 40
Accounts ................................................................................................................................................... 51
Notes to the Financial Statements ........................................................................................................... 58
2
Corporate Information
Advisors
Parity Group plc
Registered office
82 St John Street
London EC1M 4JN
Tel: 020 8171 1729
Registered in England & Wales
No. 3539413
Auditor
Grant Thornton UK LLP
30 Finsbury Square
London EC2A 1AG
Bankers
RBS Group
9th Floor
280 Bishopsgate
London EC2M 4RB
Leumi ABL Ltd
Pacific House
Brighton BN1 3TE
Nominated advisor & broker
Allenby Capital Ltd
5th Floor
5 St Helen’s Place
London
EC3A 6AB
Registrars
Equiniti Limited
Aspect House
Spencer Road, Lancing
West Sussex BN99 6DA
Tel: 037 1384 2382
3
Parity Group plc
Chairman’s Statement
Parity is a people business. At its core, the Company has a strong heritage and brand, recognised for its
strengths in engaging and placing talented professionals to carry out important work in both the public and
commercial sectors.
Over the last few years, the business had lost sight of these strengths as it pursued a strategy in a different
direction. Unfortunately, this did not deliver the performance expected.
A change in key management in June 2021 led to a review of opportunities for the business. The decision was
made to refocus on Parity’s core competence in recruitment solutions, where its brand and reputation is strong
and where market activity provides a wealth of opportunities for value and growth.
As a result, 2021 became a year of two halves, the first continuing the pursuit of a strategy that failed to ignite,
the second reclaiming the original purpose of the Parity business, that of being a trusted and successful
provider of recruitment solutions.
As a supplier of critical and in demand IT and data skills we have continued to meet the needs of existing clients
during the year and have had notable successes in the second half of 2021, growing 3 of our largest accounts,
one of which has more than doubled in size over the last 18-months. We are suppliers on the UK’s key public
sector frameworks for IT and Data resources and see an opportunity in 2022 to grow this further.
High employee turnover over the previous three years and the impact of working remotely from home during
the pandemic has meant that a key focus for us during the second half of 2021 has been rebuilding employee
morale and motivation.
We have made rapid progress creating a new culture within the business that will enable us to foster growth
and development. We have established an academy structure around our core recruitment team to develop
our own talent and this is already adding value with a second cohort joining the academy in January 2022. As
a business we seek to offer opportunities for all and are proud of our diverse and inclusive workforce. Whilst
we strive for more, we are proud of the fact that we have a gender balanced workforce.
Parity is now smaller than it has been historically, however changes in back-office processes and systems
alongside the re-building of a capable and scalable recruitment solutions team places us in a strong position
to benefit from the continuing demand for digital transformation. As businesses adapt to new ways of doing
business post Covid, we are supplying our clients with the talented and experienced people that make this
change possible.
Over the last three years the Group has actively transformed itself into a highly flexible business, its cloud
infrastructure and digital backbone combined with a hybrid working environment enable the business to adapt
and scale to meet future opportunities and challenges. Alongside this, we have put in place a new three-year
asset based lending facility in 2021 with Leumi ABL that will provide support and flexibility as we grow the
business.
People, remain critical to the success of most if not all, commercial and public service activities. As technology
advances, talent is relied on to define and architect solutions, integrate and implement components, manage
change and continuously develop advances that deliver improvements to the way things work.
This all takes place in a market where the best talent is demanding more flexibility whilst the ecosystem
demands greater productivity. Demand for talent to support this ever-changing environment continues
unabated. It is into this environment Parity has strong foundations to acquire and provide solutions that
deliver value.
As we chart our path forwards, we are excited by the opportunity.
4
We end as we start, our business is all about people and the changes over the last six to nine months have only
been made possible by our talented and committed teams in Edinburgh and London. On behalf of my
colleagues, I wish to thank the whole team at Parity for their work so far, we have more to do, however the
base from which we move forward is now solid.
Parity Group plc
Mark Braund
Executive Chairman
27 April 2022
5
Parity Group plc
Operational and Financial Review
Overview
• During 2021 the business continued to develop key relationships with growth in 3 of top 5 client accounts.
• The refocus of investment to support the development and growth of the core recruitment business has
been delivered in 2021 without increasing costs.
• As a result the Group recorded a modest Adjusted EBITDA profit of £0.1m for 2021 (2020: £1.1m).
• The Group maintains its strong cash collection with a DSO of 17 days (2020: 14 days) and no bad debts.
• During 2021 the Group replaced its previous asset based lending facility (ABL) with a new 3 year debt
facility provided by Leumi ABL, increasing funding flexibility across both billed and unbilled assets.
• As a consequence of the changes to the business in 2021 the Group made increased use of its ABL facility
and at 31 December 2021 the net debt was £1.2m (2020: net cash of £0.2m).
• The defined benefit pension scheme surplus has increased significantly during 2021 to £1.9m.
Performance highlights for 2021
Revenue (£ million)
Net Fee Income (£ million)
EBITDA (£ million) 3
Operating (loss)/profit (£
million)
(Loss)/profit before tax (£
million)
2021
Adjusted
1
47.0
4.1
0.1
Reported
47.0
4.1
(0.4)
2020
Adjusted
1
57.8
5.6
1.1
Reported
57.8
5.6
0.7
Variance 2
-19%
-27%
-89%
(0.3)
(0.8)
0.5
0.0
-157%
(0.6)
(1.1)
0.1
(0.3)
-552%
Basic earnings per share (pence)
Net (debt)/cash (£million) 4
(0.08)
(1.2)
(0.62)
(1.2)
(0.02)
0.2
(0.46)
0.2
Notes
1 - Excludes from the Income Statement the impact of non-underlying items of £0.5m in 2021 (2020: £0.4m)
2 - Variance compares 2021 adjusted against 2020 adjusted to provide a consistent view of performance
3 - EBITDA is calculated as Operating profit excluding Amortisation and Depreciation and share based payments
4 - Net cash represents cash and cash equivalents less loans and borrowings and excluding leases
The financial performance in 2021 reflects the challenging year for the Group.
Whilst our strong position in the public sector helped cushion the impact of Covid in 2020, the return of the
market and contractor mobility/churn in particular, exposed the lack of depth in the recruitment team and the
business was unable to take advantage of the increasingly buoyant recruitment market during 2021. This has
had a significant impact upon performance in 2021.
To address this, investment in H2 2021 was redirected to rebuilding the recruitment capability. A reallocation
of resource from non-core activities to support client facing recruitment along with a streamlining of the
extended management team meant that this was achieved without an increase in operating costs (non-
underlying costs excluded). This close management of costs within the Group has enabled the Group to deliver
a modest Adjusted EBITDA for 2021 despite the fall in Net Fee Income.
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Parity Group plc
Revenue
Year on year revenue has declined by 19% to £47m, driven by a fall in contract recruitment revenue that makes
up 97% of total revenue.
The impact of an under resourced recruitment team and lack of additional capacity to pursue new business
has been a year on year fall in the number of contractors by 20%. This decline in contractor numbers has in
part been offset by an increase in average billing rates by 8% during the year, reaching £504/day in December
2021.
This increase is attributable to two factors:
• Over the last 2 years the business has been increasingly focusing its contract recruitment on higher
value IT resources.
• The increased enforcement of IR35 legislation and potential for large penalties has prompted many
organisations to take a conservative approach to IR35 assessments. The impact of this is an increase
in roles deemed to be inside IR35. To attract candidates, clients are in most cases having to increase
rates to offset the increased tax burden a contractor faces if inside IR35.
Non recruitment revenues totalled £1.3m in 2021 (2020: £1.6m).
Net Fee Income
Total Net Fee Income was £4.1m in 2021, a fall of £1.5m (27%) over 2020. Of this £0.3m is attributable non-
recruitment Net Fee Income and the remaining £1.2m is a direct consequence of the lower Contract
Recruitment Net Fee income, of £3.4m (2020: £4.6m).
Lower contractor numbers in 2021 account for £1.1m of the drop in Contract Recruitment Net Fee Income. In
parallel with the reduction in contractors the underlying % margin has fallen from 8.2% to 7.4% resulting in a
£0.4m reduction in Net Fee Income. This margin dilution reflects the impact of the under resourced
recruitment team who were successfully able to support and grow large key accounts but unable to manage
and pursue smaller higher margin accounts. These two adverse variances are partially tempered by the
increase in billing rate during the year which has flowed through to Net Fee income, adding £0.3m.
With the new recruitment team in place, there is now resourcing to cover all accounts and with a renewed
focus on engaging with contractors there will be a push to win back higher margin business in 2022.
7
Parity Group plc
Segmental performance
As noted previously, the key driver of the lower revenue and net fee income has been a fall in contractor
numbers. This has had an impact on both public and private sector income streams with a lack of capacity in
the recruitment team during the first three quarters of the year limiting the ability to manage beyond key
accounts.
In the public sector specifically, this has resulted in a decline in net fee income by 27%, driven by the loss of
contractors in the first three quarters. The slight drop in % margin reflects the loss of some smaller, higher
margin accounts.
Private sector has maintained revenue in line with the prior year at £14.5m as a result of strong growth in a
key account during the year that has offset lower contractor numbers elsewhere and the impact of the failure
to establish a sustainable and scalable consultancy division.
Net fee income for private sector has dropped by £0.5m with growth from the key account adding £0.2m to
net fee income but insufficient to offset a fall of £0.4m due to lower contractor numbers in smaller accounts
where margins are higher. Additionally, the failure to generate new consulting opportunities was responsible
for a further £0.2m of the drop in Net fee income.
The fall in net fee income as a % of revenue between 2020 and 2021 reflects a change in revenue mix, with a
fall in high % margin consulting income being replaced by lower margin contract recruitment.
Selling and Administration Costs
2021 was a year of two halves for expenditure, H1 2021 began with the business making further investments
in management and new business capability to support the continual development of non-recruitment
activities. Following the change in management in June 2021 investment shifted towards recruitment,
rebuilding the capacity in the team during H2 2022 to take advantage of future opportunities in the market.
Resources engaged in non-core activities were reduced during H2 2021 and the management team
streamlined to facilitate the investment in additional recruitment resources. This created £1.1m (Annualised)
of capacity to re-invest in recruitment and new business resources.
8
Parity Group plc
In addition to hiring experienced recruitment professionals, investment has also been made into long term
development of employees with the creation of an academy structure focused on developing talent in house.
The first cohort through the academy are already thriving and second intake started in January 2022, this
structure will support the Group’s organic growth and profitability in future years.
Operating costs before non-underlying items
GBP million
Selling & Administration expenses
Share-based payment charges
Depreciation & amortisation
Total
H1
H2
(2.1)
(1.9)
0.0
0.1
(0.2)
(0.3)
(2.3)
(2.1)
FY21
(4.0)
0.1
(0.5)
(4.4)
H2 vs
H1
-9.1%
n/a
14.6%
-9.5%
Selling and Administration costs for H2 2021 were 9% lower than H1 2021, this variance is primarily the result
of the switch from non-core activities into core recruitment and gives the Group scope to invest further in
2022. Against prior year, Selling and Administration costs are 10% lower.
Depreciation and amortisation
In accordance with IFRS 16, the 2021 results are presented with lease assets and liabilities recognised in the
Group’s Statement of Financial Position, where the Group is the lessee.
Non-underlying items
The Board measures the performance of the Group after excluding costs (and income) that would not be
incurred during the normal operation of the business and classify these exceptional costs under the category
of non-underlying items. With the change in management in June 2021 and subsequent refocus around the
recruitment business the non-underlying costs incurred in 2021 total £0.6m (2020: £0.4m) and relate almost
entirely to the costs of departing employees. A detailed analysis of the non-underlying items is provided in
note 5 on page 68.
Taxation
The tax income on profit before tax was £0.47m (2020: charge of £0.15m), mainly representing a deferred tax
adjustment in respect of recognition of tax losses that were not recognised previously. The Group did not
provide for corporation tax payable in 2021 due to the utilisation of Group relief and the availability of carried
forward deductible timing differences and tax losses.
Earnings per share and dividend
The basic loss per share from continuing operations was 0.62 pence (2020: loss of 0.46 pence per share). The
Group’s results for both 2021 and 2020 were impacted by restructuring costs.
The Board does not propose a dividend for 2021 (2020: nil).
Statement of financial position
Trade and other receivables
The Group continues to maintain its strong performance on trade debtors, keeping a close relationship with
clients to ensure both prompt payment and quick resolution of any issues, this approach has both maintained
low debtor days and also ensured that the business has no bad debt. Group debtor days (calculated on billings
on a countback basis) at the end of the year were 17 days (2020: 14 days).
Overall trade and other receivables decreased during the year to £4.8m (2020: £6.1m), the main driver being
the reduction in contractor numbers.
9
Trade and other payables
Trade and other payables decreased during the year by £1.3m to £3.6m (2020: £4.9m). Of this, key variances
were £0.6m decrease attributable to the reduction in contractor numbers and a further £0.3m to the payment
of VAT deferred in 2020 under the Covid-19 VAT deferral scheme.
Parity Group plc
At the year end, creditor days were 23 days (2020: 23 days).
Loans and borrowings
Loans and borrowings represent the Group’s debt under its asset-based lending (“ABL”) facility. This is a
working capital facility and linked to the same cycle as trade receivables. In April 2021 the Group switched its
ABL facility from PNC to Leumi ABL. As a result of this switch the amount that can be borrowed against billed
and unbilled receivables increased and borrowing costs reduced because the Group will only pay fees on
amounts it borrows (under the previous PNC facility the Group were charged a 1% fee for any unutilised
facility). The facility in place with Leumi ABL is for a minimum of 3 years giving the Group the support it needs
to optimise its working capital requirements.
In 2021 the average borrowings were £2.5m (2020: £1.6m) and the Group only borrowed more than £3 million
for 79 days during the year (2020: 29 days).
Cash flow and net debt
Net cash outflow in the year (excluding IFRS16 adj) was £1.4m. Of this, £0.2m related to ongoing operating
activities and a further £0.4m the impact of the non-underlying costs. In addition, the Group incurred £0.1m
of capital expenditure for the development of a data warehouse to provide business intelligence to the Group.
The balance of the cash outflow is made up of primarily of pension costs of £0.3m (included within the FY21
finance costs of £0.4m) and the repayment of £0.3m of VAT deferred under the government Covid scheme.
10
Defined benefit pension surplus
Solid investment management of the Defined Benefit pension scheme assets has further increased the surplus
from £0.2m at the beginning of the year to £1.9m at the end of 2021. Whilst financial markets are currently
volatile based on world events and there is always potential for surplus position to change, the strength of the
scheme’s assets, is now sufficient for the Group and Trustees to target, over the medium term, a buyout of the
scheme.
Parity Group plc
During 2021 the Group paid £0.3m contributions to the scheme.
Mike Johns
Chief Financial Officer
27 April 2022
11
Principal Risks and Uncertainties
The Board maintains a close watch on issues that affect our business, markets and the wider economy. Whilst
the markets that we operate in can be cyclical in their nature, we take necessary action to mitigate the risk
and potential impact profile. We have provided a listing of the principal risks and uncertainties below:
Parity Group plc
Status
Reduced
Status
No
change
Status
Reduced
Impact of Covid-19 and macro-economic uncertainty
Risk
Mitigation
Whilst the primary risk of the Covid
pandemic is generally agreed to have
passed, there is a residual effect as Covid
continues to result in a higher than
normal number of lost working days due
to sickness. The lost working days, if
continued for a prolonged period, could
result in a material loss of revenue.
The Board recognise that the risk to the
Group from Covid has been mitigated to
date by a client base weighted towards
the public sector (with government
expenditure having been more resilient
as it supports key public services) and
core revenue being generated by a highly
skilled contractor base. These contractors
are able to carry out their work remotely
from a client and therefore it is expected
that with the reducing seriousness of
Covid infections any future lost working
days will be limited as contractors can
continue to work even if isolating at
home.
Strategy fails to deliver anticipated growth
Risk
Mitigation
The Group’s anticipated growth may not
be achievable if the Group is unable to
implement its strategy effectively.
Legislation – e.g. IR35
Risk
The planned extension of IR35 off-payroll
worker regulations to the private sector
in the UK, which was delayed to April
2021, has caused limited short-term
disruption as both clients and contractors
adapted. The Group has seen a small
impact upon revenue in 2021 as some
contractors sought other, better paid
roles outside of IR35.
The Board seeks to mitigate this through
a robust assessment of its opportunities,
the feedback from its clients and
potential clients, clear priorities and focus
on delivering key objectives and
incentivising its team to deliver against
those objectives.
Mitigation
Parity’s mix of contractors is weighted
towards the public sector, where the IR35
reforms were introduced in 2017,
meaning that our exposure to the risk is
limited. We have retained good
knowledge from our experience of the
2017 implementation to the public
sector, with the associated internal
processes now business as usual. We
have worked closely with our private
sector clients to ensure a smooth
transition.
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Parity Group plc
With IR35 now an ongoing consideration
for both public and private sector
contracting there is expected to be no
further impact.
Status
No
change
Status
No
change
Status
Reduced
Loss of key client accounts
Risk
Mitigation
A portion of the Group’s revenues are
dependent on the award of framework
agreements as an approved supplier. It is
possible that the Group will lose this
status.
We seek to mitigate this through closely
monitoring our service level agreements
and ensuring the quality of our delivery.
The Group also has a deliberate focus on
winning new client framework
agreements to continue to diversify its
revenue streams.
Financial
Risk
Mitigation
The Group maintains credit facilities that
enable it to borrow against assets on the
balance sheet to meet short term
working capital requirements. Poor cash
and liquidity management may result in
strain on the Group’s credit facilities
and/or operational cash flow issues.
The Group actively monitors its liquidity
position to ensure it has sufficient
available funds and working capital in
order to operate and meet its planned
commitments and has a credit risk policy
that requires appropriate status checks
and or references as necessary.
Technology
Risk
As an IT services provider the Group
relies on its IT, telecommunications, and
infrastructure systems to perform and
manage the services we provide to
clients. The failure or obsolescence of any
of these systems could hinder the
operation of end-to-end business
processes.
Mitigation
The Group has moved its core IT telecoms
systems into the Cloud, and these are
managed remotely and are backed up
automatically thus providing the Group
with a high level of reliance. Having made
these changes during 2020 and managed
the new services for more than 12
months there is evidence that there is
greater resilience and therefore lower
risk of failure. ISO 27001 and Cyber
Essentials certifications are held ensuring
that the business maintain high levels of
data security.
13
Parity Group plc
Data
Risk
The Group routinely collects and uses
personal data. Following the introduction
of the General Data Protection Regulation
(‘GDPR’) there is a risk of non-compliance
with the legislation and therefore risk of
litigation and the incurrence of fines.
Status
No
change
Mitigation
The Group has implemented significant
changes to its data collection and
processing controls. The data privacy
landscape is monitored, and ISO 27001
and Cyber Essentials certifications are
held ensuring that the business maintain
high levels of data security.
14
Parity Group plc
Section 172 of the Companies Act 2006 requires the Directors to act in a way that they consider, in good
faith, would be most likely to promote the success of the Group for the benefit of its members as a whole,
and in doing so have regard (amongst other matters) to:
a) the likely consequences of any decision in the long term;
b) the interests of the company’s employees;
c) the need to foster the company’s business relationships with suppliers, customers and others;
d) the impact of the company’s operations on the community and the environment;
e) the desirability of the company maintaining a reputation for high standards of business conduct; and
f) the need to act fairly as between members of the company.
New Directors receive a comprehensive, formal and tailored induction to the Group’s operations including
corporate governance, the legislative framework and visits to Group premises. They can access professional
advice on their duties from the Company Secretary or, if they deem necessary, from an independent advisor.
The Board confirms that, during the year, it has had regard to the matters set out above. Further details as to
how the Directors have fulfilled their duties with references to relevant areas within this annual report, are set
out below.
Risk management
The Board recognises the importance of identification, evaluation and management of the Group’s risks.
Details of the principal risks and uncertainties of the Group are set out on pages 12 to 14. The Group’s
statement on going concern and future prospects is included in the Directors’ Report on page 35 and
Chairman’s Statement on page 4.
Employees
The Board is committed to the Group being a responsible employer and strives to create a working
environment where employees are engaged, informed and involved. The Group’s employment policies and
related information is set out in the Corporate Social Responsibility Report on page 24.
Community and the environment
The Board recognises its responsibility to achieve good environmental practice and make a positive
contribution to the community. The Group’s practices and policies in this regard are set out in the Corporate
Social Responsibility Report on page 24.
Business conduct and relationships
The Board recognises the importance of a strong corporate culture that considers the best interests of its
employees, business partners and shareholders. The Board recognises its responsibilities to other external
stakeholders including its clients, contractors and suppliers. Its strong relationships with its clients are critical
to driving growth. The Group’s purpose, mission, vision and values are set out on page 25 and its ethics policies
are set out in the Corporate Social Responsibility Report on page 24.
Shareholders
The Board is committed to openly engaging with our shareholders and recognises the importance of continuing
communications. It is important that shareholders understand the Group’s strategy and objectives so we
endeavour to explain these clearly and any issues or questions raised are properly considered. The Group’s
engagement with shareholders is set out in the Corporate Governance Report on page 16.
15
Corporate Governance Report
Introduction
Parity Group plc
The Company applies the 2018 QCA Corporate Governance Code (the Code) and this Corporate Governance
Report for the year ended 31 December 2021 is based upon the Code. The principal means of communicating
our application of the Code are this Annual Report and our website (www.parity.net).
Chairman’s statement
On behalf of the board, I acknowledge that we are responsible for corporate governance. I am specifically
responsible for the leadership of the Board, ensuring its effectiveness on all aspects of its role, including
good governance in dealing with all of our stakeholders. This includes ensuring that Board meetings are
held in an open manner, that the Directors receive accurate, timely and clear information and allowing
sufficient time for agenda items to be discussed. I am also responsible for effective communications with
shareholders and relaying any shareholder concerns to the Directors.
The Board remains committed to maintaining and evolving high standards of corporate governance
throughout the organisation. In the remainder of this report, I set out how the Group applies the ten key
principles of the Code which fall under three broad categories.
Deliver growth
Establish a strategy and business model which promote long term shareholder value for shareholders
The Group’s strategy is to drive growth and profitability through the development of the Group’s core
competencies in recruitment. With the recruitment market continuing to evolve there is opportunity to
leverage Parity’s brand, reputation and expertise to not only deliver traditional recruitment solutions but
also to innovate and deliver value added solutions that solve challenges for its clients in sourcing and
retaining critical talent.
Challenges faced by the Group in executing its strategy include repositioning the business service offerings,
market competition and macro-economic factors. The principal risks and uncertainties faced by the Group
and potential mitigation can be found on pages 12 to 14.
Seek to understand and meet shareholder needs and expectations
The Board seeks to understand the needs of its shareholders through regular engagement with its major
shareholders. At the same time the Board recognises the need to balance the interests of significant and
minority shareholders.
The Group engages with major shareholders through presentations and meetings after the announcement
of the Group’s full year results and interim results. All shareholders are given the opportunity to
communicate directly with the Board at the Annual General Meeting. From time to time the Executive
Directors attend investor events which provides an opportunity to speak to both existing and prospective
retail shareholders. The Senior Independent Director acts as an additional contact point for shareholders
if they have reason for concerns, when contact with the normal channels has failed to resolve their
concerns.
The Group maintains an investor website which holds all relevant shareholder information.
16
Wider stakeholder and social responsibilities
Parity Group plc
As a professional services business, Parity’s strength derives from the commitment, capability and cultural
diversity of its employees. The Group encourages the participation of all employees in the operation and
development of the business by offering access to senior management, including executive directors, and
adopting a policy of regular communications through business updates, all staff events, and the intranet.
The Group also recognises its responsibilities to other external stakeholders including its clients,
contractors, suppliers, the trustees of the defined benefit pension plan and its asset-based lender.
It is Group policy to be a good corporate citizen wherever it operates. Encouragement and support are
provided to employees who undertake charity or volunteer work.
The Group’s Social, Environmental and Ethical policies can be found in the Corporate Social Responsibility
Report on page 24.
Embed effective risk management
The Board is ultimately responsible for the Group’s system of internal control and for reviewing its
effectiveness and is assisted in this respect by the Audit Committee. The Group maintains an internal risk
register which is updated and reviewed periodically by the Audit Committee.
The Group does not consider it necessary to have a separate internal audit function due to the Group’s
size and its centralised administrative function but keeps this need under review. The Company receives
regular feedback from its external auditors on the effectiveness of its internal controls and aims to
implement any improvements identified.
The principal risks faced by the Group are presented on pages 12 to 14. The Board is not aware of any
significant failings or weaknesses in the system of internal control.
Maintain a dynamic management framework
Maintain a well-functioning, balanced board
At the date of this report, the Board comprises myself as Executive Chairman, David Firth and Gerard
Brandon, both Non-Executive Directors, and Mike Johns, Chief Financial Officer. The table on page 29 sets
out the dates of tenure of the current Directors on the Board.
The Board has a balance of Executive and Non-Executive Directors such that no individual or small group of
individuals can dominate the Board’s decision making. The Board has a range of backgrounds and skills. The
Board considers all Non-Executive Directors to be independent, with only one (David Firth) having a length
of service of greater than five years. The Non-Executive Directors ensure that independent judgement is
brought to Board discussions and decisions. The Board considers that there are no relationships or
circumstances which are likely to affect the independent judgement of the Non-Executive Directors.
In June 2021 I moved from my role as Non-Executive Chairman into a part-time Executive Chairman role
following the departure of the previous Chief Executive Officer. In my capacity as Executive Chairman I am
responsible, in addition to board related matters, for overseeing the management of the day to day business
of the Group. Supporting me in this are Mike Johns, Chief Financial Officer and Isobel Brown, Director,
Recruitment Business. Together the 3 of us form the executive management team responsible for the key
decision making within the Group.
17
The Board has meetings scheduled regularly throughout the year to review and approve the Group’s
strategy and to monitor progress against set objectives. Additional meetings are also held as business
dictates. The Board has a formal schedule of matters reserved for its specific approval which includes a
review of Group strategic, operational and financial matters such as proposed acquisitions and
divestments. All members of the Board are supplied in advance of meetings with the agenda and
supporting papers covering the matters which are to be considered.
Parity Group plc
Whilst there is a clear division of responsibilities, the Non-Executive Directors remain in regular contact
with the Executive Directors outside of board meetings. For example, I have catch up calls with the Non-
Executive Directors in between board meetings and David Firth, as Chairman of the Audit Committee is in
periodic contact with the CFO on financial matters. The Non-Executive Directors are also available to
support on material matters as and when that support is required.
As Executive Chairman, I am responsible for the leadership of the Board, ensuring its effectiveness on all
aspects of its role. This includes ensuring that Board meetings are held in an open manner, that the Directors
receive accurate, timely and clear information and allowing sufficient time for agenda items to be discussed.
I am also responsible for effective communications with shareholders and relaying any shareholder concerns
to the Directors. During the period under review I met with the Non-Executive Directors without the other
Executive Director being present.
Directors appointed since the last annual General Meeting, and those retiring by rotation will submit
themselves for election or re-election at the next Annual General Meeting, as set out in the Directors’ Report
on page 35 and in the separate Notice of Annual General Meeting sent to all shareholders. I confirm that the
performance of each Director continues to be effective and the individuals continue to demonstrate
commitment to their role.
New Directors receive a comprehensive, formal and tailored induction to the Group’s operations including
corporate governance, the legislative framework and visits to Group premises.
A table showing the number of meetings of the Board and its Committees held during the year, and
attendance at those meetings by each Board member, is set out below.
During the year, 9 scheduled Board meetings were convened, along with 3 ad hoc Board meetings to deal
with various matters. Details of attendance at Board meetings is summarised below. Committee attendance
is shown for Committee members only.
Number held
Number attended
John Conoley2
David Firth
Gerard Brandon
Matthew Bayfield3
Mike Johns
Mark Braund4
1
2
3
4
Excludes ad hoc meetings
Resigned on 21/04/2021
Resigned on 09/06/2021
Appointed on 21/04/2021
Board1
9
Audit
2
Nomination
0
Remuneration
2
2/2
2/2
1/1
4/4
9/9
8/9
4/4
9/9
5/5
1/1
2/2
1/1
18
All Directors who were members of the Board at the time attended the Group’s Annual General Meeting on
10 June 2021 apart from Gerard Brandon.
Parity Group plc
The Board maintains close dialogue by email, telephone and conference calls between scheduled meetings.
The Board has a formal schedule of matters reserved for its specific approval which includes a review of Group
strategic, operational and financial matters such as proposed acquisitions and divestments. It approves the
annual accounts and interim report, the annual budget, significant transactions, major capital expenditure and
reviews the effectiveness of the system of internal control and the risks faced by the Group. It covers all
controls, including financial, operational, compliance and risk management.
The Board delegates specific responsibilities to three Committees: the Audit Committee, the Remuneration
Committee and the Nomination Committee. The Audit, Remuneration and Nomination Committees of the
Board each have formal written terms of reference. These terms of reference are available on the Group’s
website (www.parity.net).
The Audit Committee comprises David Firth as Non-Executive Director and Mark Braund as Executive Chairman
and is chaired by David Firth. The Audit Committee has met twice in 2021. Details of the responsibilities of the
Audit Committee are set out in the Audit Committee Report on pages 32 to 34. Where necessary, specialist
external consultants are used to assist the Committee.
The Remuneration Committee comprises both Non-Executive Directors and the Executive Chairman and is
chaired by David Firth. Details of the responsibilities of the Remuneration Committee are set out in the
Remuneration Report on pages 26 to 31. Where necessary, specialist external consultants are used to assist
the Committee.
The Nomination Committee comprises both Non-Executive Directors and the Executive Chairman. It is chaired
by Mark Braund. It is responsible for proposing candidates for appointment to the Board, having due regard
to the balance and structure of the Board, as well as succession planning. The Committee did not meet in 2021.
The typical process for new Board appointments includes an initial search, preliminary interviews and
discussions. Following this process, recommendations are then made by the Committee to the Board on
merit against objective criteria. Where necessary, external recruitment consultants are used to assist the
process.
Ensure the board has the necessary up-to-date experience, skills and capabilities
Directors who have been appointed to the Board have been chosen because of the skills and experience
they offer. The Directors’ biographies, which are set out on pages 22 and 23, illustrate the range of business
backgrounds, skills, independence and experience contributed by each Board member. The Board are
aware of the importance of attaining greater diversity amongst its members.
Each member of the Board takes responsibility for maintaining their skill sets, which includes roles and
experience with other boards and organisations. The Group pays subscriptions to various professional
organisations, for example the QCA, which provide the Directors with access to regular market and
regulatory updates. Some of the Directors have individual membership of professional organisations that
require their members to evidence continual professional development on an annual basis. All Directors
have the opportunity to undertake relevant training and attend relevant seminars and forums.
Where the Board considers specialist advice is required to address matters reserved for the Board, it will
seek to engage competent external advisors.
David Firth acted as the Senior Independent Director during 2021. He was an additional contact point for
shareholders if they had reason for concern, when contact through the normal channels of the Executive
Directors and Chairman had failed to resolve their concerns, or where such contact was inappropriate.
19
All Directors have access to the advice and services of the Company Secretary, who is responsible for
ensuring that Board procedures, applicable rules and regulations are observed. There is an agreed
procedure for Directors to obtain independent professional advice, if necessary, at the Company’s
expense.
Parity Group plc
Evaluating board performance and development
The Board undertakes regular evaluations of its own performance and that of its Committees and
individual Directors.
Promoting ethical values and behaviours
The Group is committed to maintaining the highest standards of ethics, professionalism and business
conduct as well as ensuring that we act in accordance with the law at all times. Further details are set out
under the “Ethics” section of the Corporate Social Responsibility Report on page 25.
A critical aspect of the Group’s strategy is to be perceived as a trusted partner of its clients. In order to
achieve this objective, a culture of teamwork, openness, integrity and professionalism forms a key element
of our company principles and values which sets out the standards of behaviour we expect from all our
employees. The Company’s values are set out on page 25. The Board supports and promotes the principles
of equal opportunities in employment and promotes a culture where every employee is treated fairly. The
Board and management conduct themselves ethically at all times and promote a culture in line with the
standards set out in the Company’s intranet.
Maintain governance structures and processes that are fit for purpose
The Audit, Remuneration and Nomination Committees of the Board each have formal written terms of
reference. These terms of reference are available in the Corporate Governance section of the Group’s
website (www.parity.net).
All Directors have access to the advice and services of the Company Secretary, who is responsible for
ensuring that Board procedures, applicable rules and regulations are observed. There is an agreed
procedure for Directors to obtain independent professional advice, if necessary, at the Group’s expense.
New Directors receive a comprehensive, formal and tailored induction to the Group’s operations including
corporate governance, the legislative framework.
Authority is delegated to senior operational management through Group authorisation limits on a
structured basis, ensuring that proper management oversight exists at the appropriate level. The executive
management team comprises the Executive Chairman, the Chief Financial Officer, and Isobel Brown, the
Director, Recruitment Business. The executive management team meet regularly and can be attended by
other senior management as appropriate. Any key issues from these meeting are reported to the main
Board.
Build trust
Communicate how the company is governed and performing, maintaining a dialogue with shareholders
and other relevant stakeholders
The Board attaches great importance to providing shareholders with clear and transparent information on
the Group's activities, strategy and financial position. Details of all shareholder communications are
provided on the Group's website (www.parity.net).
20
The Company engages where possible in regular dialogue with its major shareholders through
presentations and meetings after the announcement of the Group’s full year and interim results. Private
and institutional shareholders are given an opportunity to communicate directly with the Board at the
Annual General Meeting. Shareholders’ queries received via the Company Secretary’s email address at
cosec@parity.net or by telephone to the Group’s head office are responded to in person by the Company
Secretary or by another appropriate employee.
Parity Group plc
All members of the Board usually attend the Annual General Meeting. The chairmen of the Audit,
Remuneration and Nomination Committees will normally be available to answer shareholders’ questions
at that meeting. Notice of the Meeting is posted to shareholders with the report and accounts no fewer
than 21 clear days prior to the date of the Annual General Meeting. The information sent to shareholders
includes a summary of the business to be covered at the Annual General Meeting, where a separate
resolution is proposed for each substantive matter. The Group’s annual report and accounts, interim
report and other stock exchange announcements are published on the Group’s website at www.parity.net.
The Annual Report is designed to present a fair, balanced and understandable view of the Group’s activities
and prospects. The Operational and Financial Review provides an assessment of the Group’s affairs and
position. The Annual Report is sent to all shareholders on the shareholder register. The Group’s Annual
and Interim Reports and Notices of the Annual General Meeting for the past 5 years are available on the
Group’s website.
The Group details how it is governed and performing both in this Annual Report and Financial Statements
and on its website.
The reports to the shareholders of the Audit and Remuneration Committee can be found on pages 32 and
26 respectively.
Mark Braund
Executive Chairman
27 April 2022
21
Parity Group plc
The Board
Mark Braund (60)
Executive Chairman
Appointment Date:
April 2021
David Firth (61)
Non-Executive Director
Gerard Brandon (60)
Non-Executive Director
Appointment Date:
September 2016
Appointment Date:
May 2020
Experience:
Previously Chief Executive of
RedstoneConnect plc (now
known as Smartspace Software
plc), Chief Executive of
InterQuest Group plc. Current
Chairman of REACT Group plc
Committees:
Chairman of the Nominations
Committee and member of the
Remuneration, and Audit
Committees.
External Appointments:
Chairman of REACT Group plc.
Chairman of Livingstone Group
Skills brought to the board:
Significant experience across a
number of business sectors,
both in the UK and overseas
including recruitment & HR
services, outsourcing, managed
services and digital software &
technology.
Experience:
Previously Finance Director of
Penna Consulting for 16 years
and Group Finance Director of
Parity for 4 years
Committees:
Chairman of the Remuneration,
and Audit Committees and
member of the Nominations
Committee.
External Appointments:
Non-Executive Chairman at
Best of the Best plc and Non-
Executive Director at Celadon
Pharmaceuticals plc and i-nexus
Global plc.
Skills brought to the board:
A wealth of experience in the
people management and
consultancy markets. Has held
senior finance positions in
public companies across a
number of sectors
Experience:
Founder and CEO of Alltracel
Pharmaceuticals plc. Previously
appointed as a Managing
Partner for Farmabrand Private
Equity and an Executive
Consultant to Eplixo Limited. A
Fellow of the Ryan Academy of
Entrepreneurs in Dublin.
Committees:
Member of the Nominations
and Remuneration Committees
External Appointments:
CEO of Deepverge plc and
Cellulac plc and Non-Executive
Chairman of Microsaic Systems
plc
Skills brought to the board:
A wealth of knowledge and
expertise in leading AIM listed
companies, both in senior
executive and non-executive
roles.
Number of Board meetings
attended in 2021:
5/5
Number of Board meetings
attended in 2021:
9/9
Number of Board meetings
attended in 2021:
8/9
Sector experience:
Recruitment & HR services
sector and relevant technology
sectors.
Sector experience:
People management,
consultancy, finance,
recruitment, IT services, motor
retailing and advertising
Sector experience:
Technology, health,
pharmaceutical, services and
utilities
22
Parity Group plc
Mike Johns (51)
Chief Financial Officer
Appointment Date:
June 2020
Experience:
Previous work in the technology
and data sectors across both
financial and operational roles
including CFO of SmartStream
Technologies, CFO of Iris
Financial Solutions, CEO of TIS
Software and most recently
CFO/COO at Oxford based 3D
technology business Fuel3D
Skills brought to the board:
More than 20 years of board
level experience, including of
corporate transactions having
completed a buy out, two trade
sales, multiple fundraises and
acquisitions. Experience in
delivering growth and
transformation strategies
Number of Board meetings
attended in 2021:
9/9
Sector experience:
Fintech, biotech, enterprise
software, IT services, data and
mobile commerce
23
Parity Group plc
Corporate Social Responsibility Report
Employment policies
As a professional services business, Parity’s strength derives from the commitment, capability and cultural
diversity of its employees. The Group aims to adopt a policy of diversity at all levels including selection, role
assignment, teamwork and individual career development.
The Group encourages the participation of all employees in the operation and development of the business
by offering open access to senior management, including the Executive Directors, and adopting a policy of
regular communications through road shows and the intranet.
The Group incentivises employees through share-based incentives and the payment of bonuses and
commissions linked to performance objectives. Where appropriate these objectives are linked to
profitability. The Group is looking to implement an improved talent development programme in 2022.
Health & Safety
The health and safety of Parity’s employees is paramount. Group policy is to provide and maintain safe and
healthy working conditions, equipment and systems of work for all employees and to provide such
information, training and supervision as is needed for this purpose.
Appropriate written health and safety information outlining the Group’s policy in each area is issued to all
new employees. This includes:
• First aid — There is in place a person qualified in first aid. First aid boxes are readily accessible and
records kept of all accidents and injuries.
• Fire safety — There is in place an evacuation marshal who will liaise with building management or local
emergency authorities, as appropriate. Evacuation assembly points are agreed for every location and
full evacuations are carried out when circumstances permit. Fire alarms are tested regularly.
• Employees’ physical health — Any employee who believes he/she is suffering from an illness or
condition related to their working environment is encouraged to report this to his/her manager for
investigation.
• Employees’ mental health – the Company has put in place additional measures to support employees
with mental health issues, including external training for a selected member of staff to act as a mental
health first aider.
Much of 2021 was impacted by the Covid-19 pandemic. The Company followed all government guidelines in
respect of working from home and operated strict Covid-secure policies during the times offices were able
to be occupied safely. All employees were supported with equipment to work effectively from home.
Annual Health and Safety audits are carried out to ensure high standards are maintained.
As part of its benefits package Parity offers a number of benefits to support the health and well-being of its
staff, as well as an Employee Assistance helpline.
Social responsibilities
It is Group policy to be a good corporate citizen wherever it operates. As part of the Group’s social
responsibility, employees are encouraged to support national charities and also become involved in their
local communities and fundraising events.
The Group encourages employees who undertake volunteer work and firmly believes that the experience
gained contributes to the individual’s personal development. Where possible, the Group provides flexibility
with working hours to accommodate such commitments outside of work.
24
Parity Group plc
Environmental policy
While the Group’s operations by their very nature have minimal environmental impact, the Group recognises
its responsibilities to protect and sustain the environment and its resources. The Group’s policy is to meet or
exceed the statutory requirements in this area and it has adopted a code of good environmental practice,
particularly in its main areas of environmental impact, namely energy efficiency, use and recycling of
resources and transport.
Transport
Public transport is used whenever possible. Interest-free season ticket loans are made to staff as part of the
benefits package. Collaborative working technologies (including Microsoft Teams) are used to communicate
with clients, candidates and internally between offices, reducing the need for business travel and increasing
efficiency. All employees are supported to work from home as has been needed during the Covid-19
pandemic.
Energy
Only energy-efficient computers and devices are acquired and they are turned off at the end of each day. As
a normal part of its operations the Group seeks to occupy offices which have efficient building management
systems and, ideally, low energy lighting.
Whenever economically justifiable, the paper and other consumables used are made from environmentally-
friendly or recycled material or from renewable resources.
Recycling
Appropriate containers are provided at all offices and recyclable waste collected is sent to recycling plants.
The facilities used by the Group, such as toner cartridges, are recycled where possible by its office provider.
When replaced, computers and peripherals are offered to employees at market value, local schools or
charities, or sent to recycling plants.
Paper usage
The Group constantly strives to implement paper-saving practices to reduce wastage. Examples include
scanned records, electronic timesheets, e-invoicing, e-payslips and electronic expense claims. As a result of
the Covid-19 pandemic where all employees worked from home, the use of paper has reduced significantly
with most business now being conducted digitally, including the negotiation and signing of contracts which
makes use of digital signatures, reducing the need for paper copies to be printed and signed.
Ethics
Parity Group is committed to maintaining the highest standards of ethics, professionalism and business
conduct as well as ensuring that we act in accordance with the law at all times. The Group supports and
promotes the principles of equal opportunities in employment and promotes a culture where every
employee is treated fairly. A culture of teamwork, openness, integrity and professionalism forms a key
element of our company principles and values which sets out the standards of behaviour we expect from all
our employees.
Company Values
Parity underwent a consultation with all staff in 2021 to redefine its core values. The new values, published
and rolled out across the Group on 01/12/2021 are:
We do the right thing
1.
We make decisions based on what is best for our customers, candidates and employees even if that means
foregoing profit in the short term. We get excited by the opportunity to help others and believe our reward
comes from adding value to the lives and businesses of those we engage with.
We treat people as they want to be treated
2.
We understand everyone is different and we are proud to celebrate that difference and seek to understand
those that we work with in all capacities from colleagues to clients alike.
25
Parity Group plc
We believe that everyone has a voice
3.
We recognise the value that everyone brings to Parity and those we serve. We listen then listen more. We
encourage everyone to promote new ideas, provide feedback and discuss what they believe is important.
We create exceptional outcomes
4.
We work hard to be the best at what we do with our aim being to deliver exceptional outcomes for those we
engage with.
We believe in being rewarded for the value we create
5.
We recognise our role to bring value to all our stakeholders, whether providing valuable services to our
contractors, candidates and customers, a great place to work for our colleagues or, delivering sound financial
returns for our shareholders.
Anti-Bribery Act
Parity’s Anti-Bribery and Corruption policy is written to follow the UK regulatory requirements in relation to
the Anti-Bribery Act. The policy has Executive Director ownership and is available on the Group’s intranet.
Client and supplier arrangements are regularly reviewed and employees are signposted to the Group policy at
induction.
During 2021 no instances of bribery or corruption were reported or identified.
Modern Slavery Policy
Parity Group has a zero-tolerance approach to modern slavery and is committed to acting ethically and with
integrity in all its business dealings and relationships, and to implement and enforce effective systems and
controls to ensure modern slavery is not taking place anywhere in its own business, or its supply chain. The
following actions were taken in recent years:
• Supply Chain Review – we continue to take positive steps to improve supply chain transparency.
Following the review of our policy and supply chain, we continue to believe that we operate a supply
chain with a very low inherent risk of slave and human trafficking potential. Our supply chain is mainly
made up of UK based suppliers of professional services, computer software and equipment, office
supplies and our contractor and associate workers. Nevertheless, this assessment is kept under
continual review and due diligence is conducted with any new suppliers.
• Staff Signposting – Employees are signposted to the Modern Slavery Act 2015 and our Modern Slavery
Policy at induction.
During 2021 no instances of modern slavery were reported or identified.
Remuneration Committee Report
Remuneration Committee
The Remuneration Committee comprises David Firth as Chairman, Gerard Brandon and Mark Braund. At the
invitation of the Committee, other Directors may attend meetings, however individual Directors are excluded
from discussions about their personal remuneration.
The committee is responsible for reviewing the Group’s remuneration policy, the emoluments of the
Executive Directors and other senior management and the Group’s pension arrangements, and for making
recommendations thereon to the Board. The committee also makes recommendations to the Board in
respect of awards of options under the Group’s share option schemes. It also reviews the terms of service
contracts with senior employees and Executive Directors and any compensation arrangements resulting from
the termination by the Company of such contracts.
26
Parity Group plc
The committee has access to external advisors to assist it with ensuring that salary and benefits packages are
competitive and appropriate. In addition, committee members keep themselves fully informed of all relevant
developments and best practice by reference to the QCA’s Remuneration Committee guide. Advice on share
options is provided by BPE Solicitors LLP, who also provide other legal services to the Group.
The Board determines the remuneration of all Non-Executive Directors within the limits set out in the
Company’s Articles of Association. Non-Executive Directors are not involved in any decisions about their own
remuneration. Details of Directors’ remuneration for the year ended 31 December 2021 are set out in the
table on page 30.
Meetings
There were two meetings held during the year. Attendance at the meetings can be found in the table on
page 18.
Remuneration policy
Parity aims to recruit, motivate and retain high calibre executives capable of achieving the objectives of the
Group and to encourage and reward performance in a manner which enhances shareholder value.
Accordingly, the Group operates a remuneration policy which ensures that there is a clear link to business
strategy and a close alignment with shareholder interests and current best practice and aims to ensure that
senior executives are rewarded fairly for their respective individual contributions to the Group’s
performance.
The key elements of the remuneration package of senior executives, including Executive Directors, in the
Group in 2021 were basic annual salary and benefits in kind, long term incentives including share options,
and pension arrangements.
Salaries and benefits are reviewed annually. In order to assess the competitiveness of the pay and benefits
packages offered by the Group, comparisons are made to those offered by similar companies. These are
chosen with regard to the size of the company (turnover, profits and employee numbers), the diversity and
complexity of their businesses, the geographical spread of their businesses, and their growth, expansion and
change profile.
Performance bonus
There were no performance bonus payments paid in 2021.
Share option schemes
During 2021 the Group operated the following types of share option scheme: the Company Share Option
Plans, and the EMI Share Option Plan
Share Option Plans
The Group operates an HMRC Approved Share Option Plan, an EMI Share Option Plan, and an Unapproved
Share Option Plan for options awarded to UK employees in excess of the HMRC limit of £30,000. Share
options are granted to Executive Directors and other senior employees over a period of time and according
to performance.
The rules of the Share Option Plans allow for annual grants to be awarded equivalent to a value of up to one
times salary or up to two times salary in exceptional circumstances. A limit of 15% of the issued share capital
of the Company in a ten-year period, on a rolling basis, is applicable to the headroom available to award
options over the life of the Schemes. The EMI Share Option Plan was established in September 2019 and
Rules of the other Plans were renewed in September 2019. Rules of all Plans expire in September 2029.
Share options granted are exercisable in normal circumstances between three and ten years after the date
of grant. The options are typically divided into 3 tranches per grant, with the exercise of each tranche of
options conditional upon the share price outperforming a target price.
27
Parity Group plc
The exercise of share options is satisfied through shares issued by the Company. In the event that an
employee resigns, the options that they hold will lapse. Options are granted at nil cost. The option exercise
price is set at the closing mid-market share price on date of grant without any discount.
Share options awarded to the Executive Directors are disclosed in the table under the section Directors’
Remuneration on page 30. All of the options awarded to the Executive Directors and senior management
have vested or lapsed, with the exception of the following grants:
On 24 November 2020, 2,000,000 share options were awarded to Mike Johns, Chief Financial Officer. The
exercise price of the options is 7.75 pence and the share options granted have been divided into thirds with
each third being subject to the following performance condition:
i)
To exercise the first third (1/3 in total) of the share options awarded, the share price must be greater
than or equal to 12.00 pence for 5 consecutive days.
ii) To exercise the second third (2/3 in total) of the share options awarded the share price must be greater
than or equal to 15.00 pence for 5 consecutive days.
iii) To exercise the final third (100% in total) of the share options awarded the share price must be greater
than or equal to 18.00 pence for 5 consecutive days.
Further share options over 2,000,000 Ordinary Shares were awarded to Mike Johns, Chief Financial Officer,
on 23 June 2021 on the recommendation of the Company’s Remuneration Committee and represent
approximately 1.9% of the Company’s issued share capital.
The Share Options have an exercise price, calculated in accordance with the rules of the Parity Group 2019
EMI Options Plan and 2019 Unapproved Company Share Option Plan, of 10.25 pence per Ordinary Share,
being the closing mid-market price per Ordinary Share on 22 June 2021. The Share Options will vest after
three years and are subject to the following performance conditions:
• One quarter of the total grant of Share Options will be exercisable if the price per Ordinary Share
achieves or exceeds each of 15.0 pence, 20.0 pence, 25.0 pence and 30.0 pence, in each case for a
period of at least 30 consecutive calendar days at any time during the vesting period.
Share Options were awarded to Isobel Brown, Director, Recruitment Business and a person discharging
managerial responsibility options over 500,000 ordinary shares of 2 pence each. The Options were granted
on 01 October 2021 and represent approximately 0.49% of the Company's issued share capital. The purpose
of the Options is to retain, reward and incentivise Isobel Brown as a key employee of the Company, on the
recommendation of the Company's Remuneration Committee. The Options each have an exercise price,
calculated in accordance with the rules of the Parity Group 2019 EMI Options Plan, of 6.25 pence per Option,
being the closing mid-market price per Ordinary Share on 30 September 2021 and will vest after three years.
The Options are subject to the following performance conditions:
• One quarter of the total grant of Share Options will be exercisable if the price per Ordinary Share
achieves or exceeds each of 15.0 pence, 20.0 pence, 25.0 pence and 30.0 pence, in each case for a
period of at least 30 consecutive calendar days at any time during the vesting period.
All of the share options awarded vest in 3 years from the grant date, and lapse in 10 years from the grant
date if not exercised.
Share Warrants
Share Warrants were awarded to Mark Braund, Executive Chairman over 3,500,000 ordinary shares of 2
pence each. The Warrants were granted on 01 October 2021 and represent approximately 3.4% of the
Company's issued share capital. The Warrants have been awarded on the recommendation of the Company's
Remuneration Committee to reward and incentivise Mark Braund in his capacity as Executive Chairman over
the medium term and to retain him as a key director as the Company grows its core recruitment services to
28
create long term value for shareholders. The Warrants have an exercise price of 6.25 pence per Warrant,
being the closing mid-market price per Ordinary Share on 30 September 2021 and are exercisable for five
years from the date of grant. The Warrants are also subject to performance conditions:
• One quarter of the total grant of Warrants will be exercisable if the mid-market price per Ordinary
Share equals or exceeds each of 15.0 pence, 20.0 pence, 25.0 pence and 30.0 pence, in each case,
for a period of at least 30 consecutive calendar days at any time during the exercise period.
Parity Group plc
Share price
The Parity Group plc mid-market share price on 31 December 2021 was 6.75 pence. During the period 1
January 2021 to 31 December 2021 shares traded at market prices between 6.25 pence and 13.5 pence.
Directors’ pension information
Executive Directors are entitled to a contributory company pension contribution.
Non-Executive Directors’ remuneration
The Board determines the remuneration of the Non-Executive Directors with the benefit of independent
advice when required. The fees are set at a level which will attract individuals with the necessary experience
and ability to make a significant contribution to the Group and are benchmarked against those fees paid by
other UK listed companies.
The Non-Executive Directors do not receive bonuses or pension contributions and are not eligible for grants
under any of the Group’s share incentive schemes. They are entitled to be reimbursed for reasonable
expenses incurred by them in carrying out their duties as Directors of the Company.
Service contracts and letters of appointment
The Group’s policy is that no Director has a service contract with a notice period of greater than one year or
has provision for pre-determined compensation on termination which exceeds one year’s salary, bonus and
benefits in kind. Non-Executive Directors have letters of appointment which set out the terms of their
appointments. All Board appointments are subject to the Company’s articles of association.
Contractual arrangements for current Directors are summarised below:
Director
Contract date
Notice period
David Firth1
Gerard Brandon1
Mike Johns
Mark Braund
31 May 2016
1 May 2020
8 June 2020
9 June 2021
n/a
3 months
6 months
6 months
Contractual termination
payment
n/a
n/a
6 months rolling
6 months rolling
1. Unless otherwise specified, the appointment of Non-Executive Directors is terminable at the will of the parties
Other Non-Executive posts
Subject to the approval of the Board, the Executive Directors may hold external Non-Executive
appointments. The Group believes that such appointments provide a valuable opportunity in terms of
personal and professional development. Fees derived from such appointments may be retained by the
Executive Director concerned.
29
Directors’ remuneration
The remuneration of the Directors who served during the year is set out below:
Parity Group plc
Bonus
2021
£’000
Benefits
2021
£’000
Compensation
for loss of
office
2021
£’000
Total
emoluments
2021
£’000
Company
pension
contributions6
2021
£’000
Share-based
payments
2021
£’000
-
-
-
-
-
-
-
5
12
1
-
-
-
18
228
-
-
15
-
-
243
345
185
79
33
45
35
722
5
9
4
-
-
-
18
(90)
22
5
-
-
-
(63)
Bonus
2020
£’000
Benefits
2020
£’000
Compensation
for loss of
office
2020
£’000
Total
emoluments
2020
£’000
Company
pension
Contributions6
2020
£’000
Share-based
payments
2020
£’000
11
-
-
-
-
-
11
12
7
10
-
-
-
29
-
-
87
-
-
-
87
237
105
199
57
43
23
664
11
3
3
-
-
-
17
55
1
23
-
-
-
79
Salary/
fees
2021
£’000
112
173
78
18
45
35
461
Salary/
fees
2020
£’000
214
98
102
57
43
23
537
Executive Directors
Matthew Bayfield2
Mike Johns
Mark Braund3
Non-Executive Directors
John Conoley1
David Firth
Gerard Brandon
Total emoluments
Executive Directors
Matthew Bayfield
Mike Johns4
Roger Antony5
Non-Executive Directors
John Conoley
David Firth
Gerard Brandon6
Total emoluments
Notes
1. Resigned on 21/04/2021
2. Resigned on 09/06/2021
3. Appointed as Non-executive Chairman on 21/04/21 and into the role of Executive Chairman on 09/06/2021
4. Appointed on 08/06/2020
5. Resigned on 30/06/2020
6. Appointed on 01/05/2020
30
Executive Directors’ share options
As at
1 January
2021
Lapsed/
surrendered
in the
year
Exercised
in the
year
Awarded
in the
year
As at 31
December
2021
Exercise
period
Exercise
price
per share
Parity Group plc
Matthew Bayfield
Executive share option plan
2018
2019
2020
Subtotal
Mike Johns
Executive share option plan
2020
2021
Sub-total
Total
500,000
3,000,000
4,000,000
7,500,000
(500,000)
(3,000,000)
(4,000,000)
(7,500,000)
2,000,000
-
2,000,000
9,500,000
-
-
-
(7,500,000)
-
-
-
-
-
-
-
-
Executive Directors’ share warrants
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,000,000
2,000,000
2,000,000
2,000,000
2,000,000
4,000,000
4,000,000
2023-2030
2024-2031
£0.0775
£0.1025
As at
1 January
2021
Lapsed/
surrendere
d
in the
year
Exercised
in the
year
Awarded
in the
year
As at 31
December
2021
Exercise
period
Exercise
price
per share
-
-
-
-
-
-
3,500,000
3,500,000
3,500,000
3,500,000
2022-2027
£0.0625
Mark Braund1
2021
Total
Notes
1. Mark Braund was appointed as a Board Director on 21 April 2021
Directors’ interests in shares
The beneficial interests of the Directors who were serving at 31 December 2021 and their families in the
ordinary share capital of the Company are shown below:
David Firth
Gerard Brandon 1
Mike Johns
Mark Braund
Notes
Shareholding at
31 December
2020
200,000
-
-
-
% issued share
capital
0.19
-
-
-
Shareholding at
31 December
2021
200,000
571,613
-
134,660
% issued share
capital
0.19
0.55
-
0.13
1. 451,613 ordinary shares were issued to Gerard Brandon during the year to satisfy the Director’s Fee in respect of the initial
period of 12 months from the date of his appointment on 1 May 2020.
For and on behalf of the Board
David Firth
Chairman of The Remuneration Committee
31
Parity Group plc
27 April 2022
Audit Committee Report
Audit Committee
The Audit Committee is a sub-committee of the Board, and comprises David Firth as Chairman, and Mark
Braund. David Firth is a Non-Executive Director and is considered to be independent by the Board. Mark
Braund is Executive Chairman. Their biographies can be found on page 22.
The Audit Committee met twice in 2021. Audit Committee meetings are attended by the external auditors
and the Executive Directors, at the invitation of the Committee. The external auditors meet separately with
the Audit Committee on request, without the presence of the Executive Directors, to ensure open
communication.
The Audit Committee reviews and, as appropriate, actively engages in the processes for financial reporting,
internal control, risk assessment, audit, compliance assurance and considers the independence of the
Group’s external auditor as well as the effectiveness of the Group’s system of accounting, its internal
financial controls, external audit process and risk management. The Audit Committee’s principal terms of
reference include:
the oversight responsibilities described in the foregoing paragraph;
reviewing compliance with laws, regulations and the Group’s code of conduct and policies;
•
•
• monitoring the integrity of the Group’s financial statements and announcements relating to the Group’s
financial performance and reviewing significant financial reporting judgements, changes in accounting
policies and practices, significant adjustments resulting from the audit and the application of the going
concern assumption;
reviewing the findings of the external audit with the external auditor;
•
• making recommendations to the Board, for it to put to the shareholders for their approval, regarding
the appointment, re-appointment and removal of the external auditor and approving the remuneration
and terms of engagement of the external auditor;
• monitoring and reviewing the external auditor’s independence and the effectiveness of the audit
process;
• developing and implementing policy on the engagement of the external auditors to supply non-audit
•
•
services;
reviewing the risk management framework and risk assessments;
reviewing the Group’s arrangements for its employees to raise concerns, in confidence, about possible
wrongdoing in financial reporting or other matters; and
• reviewing and monitoring the adequacy and effectiveness of the Company’s internal financial controls,
internal control, and risk management systems.
Meetings
There were two meetings held during the year. Attendance at the meetings can be found in the table on
page 18.
Matters considered
During the year, the Committee:
•
reviewed the annual and interim report and financial statements of the Group, and the clarity of
disclosures made;
reviewed the significant judgements and estimates within the financial statements;
•
• oversaw the relationship with the external auditor, including a review of the external auditor’s findings
during the audit in relation to the year ended 31 December 2020;
reviewed the Board’s compliance with Section 172 of the Companies Act.
•
32
Parity Group plc
External Auditor
The audit in relation to the year ended 31 December 2020 was Grant Thornton’s fourth audit of the Company
since appointment in 2018. The Audit Committee took feedback with regard to the conduct of the audit from
both Grant Thornton and the Chief Financial Officer. Neither party reported any performance or cooperation
issues.
Internal audit
The Group does not consider it necessary to have a separate internal audit function due to the Group’s size
and its centralised administrative function but keeps this need under review. The Company receives regular
feedback from its external auditors on the effectiveness of its internal controls and aims to implement any
improvements identified.
Significant issues relating to the Financial Statements
The Audit Committee reviewed the following issues in relation to the financial statements for the year under
review:
Judgements and estimates
The Committee reviewed the executive management’s assessments and noted that:
• a clear distinction had been made between judgements and estimates;
•
•
the only significant areas of judgement were revenue recognition and deferred tax asset recognition;
there were no other judgements made that had a significant effect on amounts recognised in the
accounts; and
• estimates were limited to those assumptions that carried a significant risk of a material adjustment to
the carrying values of asset and liabilities within the next financial year.
Valuation of goodwill
The Committee reviewed the executive management’s support of the carrying value of Goodwill in the Group’s
two cash generating units (CGUs). The Committee noted that:
•
•
•
the discount rates applied were commensurate with rates used within the Group’s peer group;
cash flow projections were based upon prudent growth projections; and
the sensitivity analysis demonstrated that both CGUs had sufficient headroom to absorb the possible
impact of key sensitivities.
Retirement benefit asset
The Committee reviewed the assumptions made in relation to the accounting for the Group’s defined benefit
pension scheme and were satisfied that these were in line with recognised market practice.
Going concern
The Committee reviewed a paper prepared by executive management in support of the going concern
statement. The paper included sensitivity analysis comprising different downside scenarios of the Group’s
financial projections. It was noted that the projections and scenarios for the period to 31 December 2023
demonstrated sufficient facility headroom.
Deferred taxation
The Committee reviewed a paper prepared by the Finance team and noted that:
•
the assumptions used around recoverability of the assets were the same assumptions used for the
valuation of goodwill; and
33
• brought forward tax losses in the Consultancy legal entity were unrecognised, consistent with the prior
year, which was considered appropriate in view of current trading in the division.
Parity Group plc
David Firth
Chairman of The Audit Committee
27 April 2022
34
Parity Group plc
Directors’ Report
The Directors present their report and the audited accounts for the year ended 31 December 2021.
Principal activities
The Group delivers a range of recruitment solutions to clients across the public and private sectors.
Recruitment services include predominately interim recruitment to a diverse range of clients delivered to
central and local government within the public sector and the private sector.
Review of business and future developments
A review of the business and its outlook, including commentary on the key performance indicators of
revenue, net fee income, adjusted EBITDA, operating profit, debtor days and net cash, and the principal risks
and uncertainties facing the Group is included in the Chairman’s Report, and the Operating and Finance
Review on pages 6 to 11. The Group’s social, environmental and ethical policies are set out on pages 24 to
25. A statement on the application of the going concern principle is set out below. Details of financial
instruments are set out in note 20 to the financial statements. Each of the above is incorporated in this report
by reference.
Group results
The Group loss before tax for the year was £1.1m (2020: £0.33m). After a tax income of £0.47m (2020: charge
of £0.15m), the retained loss of £0.64m (2020: £0.47m) has been transferred from reserves. The results for
the year are set out in the consolidated income statement on page 51.
Dividends
The Directors do not recommend a final dividend (2020: nil pence per ordinary share). The total dividends
for the year were nil pence per ordinary share (2020: nil pence per ordinary share).
Pension
The Group operates a defined contribution pension scheme. There is also a defined benefit scheme which is
closed both to new members and to future service accrual. Details of the defined benefit pension scheme
are given in note 22.
Purchase of own shares
At the end of the year, the Company had authority, under the shareholders’ resolution of 11 June 2021, to
purchase in the market 10,262,402 of the Company’s ordinary shares at prices ranging between two pence
and an amount equal to 105% of the average of the middle market prices quoted in the five business days
immediately preceding the day of purchase. No purchases were made during the year. The Directors intend
to seek renewal of this authority at the forthcoming Annual General Meeting.
Board of Directors
Biographical information on each of the Directors as at 27 April 2022 is set out on pages 22 and 23, together
with details of membership of the Board committees.
The Company’s Articles of Association require that at least one Director will retire from office by rotation and
seek reappointment at the next AGM.
Directors’ interests
The Directors’ beneficial interests in the ordinary share capital of the Company are set out within the
remuneration report from page 26.
35
Principal shareholders
As at 26 April 2022 (being the latest practical date prior to the signing of the Directors’ Report) the Company
had received notification of the following substantial interests representing over 3% of the issued share
capital:
Parity Group plc
IS Partners Investment Solutions
Timothy Watts
David Courtley
Barclays Smart Investor
John Cawthorne
Interactive Investor
Dominion Holdings
Hargreaves Lansdown
Jarvis Investment Management
Redmayne Bentley
Number of
Ordinary 2p shares
23,712,851
21,749,500
6,519,786
5,791,795
5,186,087
4,802,905
4,664,900
4,098,848
4,051,715
3,382,666
Percentage
Held
23.01%
21.1%
6.33%
5.62%
5.03%
4.66%
4.53%
3.97%
3.93%
3.28%
Capital structure
The Company has one class of share in issue, ordinary shares of 2p. The shares are listed on the London Stock
Exchange (Alternative Investment Market) and shareholders are entitled to vote at Company meetings, to
receive dividends and to the return of their capital in the event of liquidation.
The Directors are not aware of any restrictions on transfers of shares in the Company or on voting rights or
of any agreements between holders of the Company’s shares which may result in such restrictions.
Going concern
The financial statements have been prepared on a going concern basis. The Directors have reviewed the
Group’s cash flow forecasts for the period to 31 December 2023, taking account of reasonably possible changes
in trading performance, including potential downsides from increased volatility in the market and slower
delivery of new business initiatives. Downside sensitivities have included reduced levels of new business and
in these scenarios, the Directors do not anticipate issues with the Group’s financing requirements. The Group
also modelled available headroom under the new facility and consider that the new facility comfortably meets
the Group’s financing requirements.
The Company is not party to any significant agreements that take effect, alter or terminate upon a change
of control of the Company following a takeover bid, except for the finance facility agreement with Leumi
ABL. There are no agreements between the Company and its Directors or employees providing for
compensation for loss of office or employment that occurs because of a takeover bid.
Payments to suppliers
The Group seeks to abide by the payment terms agreed with suppliers when it is satisfied that the supplier
has provided the goods or services in accordance with the agreed terms and conditions. In the United
Kingdom and Ireland, the Group agrees payment terms with its suppliers when it enters into binding
purchase contracts.
Corporate social responsibility
The Group recognises its corporate social responsibilities and reports on these in a separate statement of
social, environmental and ethical policies on pages 24 to 25. This statement covers the Group’s Employment
Policies, Environmental Policy and Health and Safety Policy.
36
Directors’ and officers’ liability insurance and indemnity
The Company has purchased insurance to cover its Directors and officers against their costs in defending
themselves in any legal proceedings taken against them in that capacity and in respect of damages
resulting from the unsuccessful defence of any proceedings.
Parity Group plc
Political donations
There were no political donations made by the Group during the year (2020: none).
Corporate Governance
The Corporate Governance Report on pages 16 to 21 forms part of the Directors’ Report.
Auditor
Pursuant to section 489 of the Companies Act 2006, resolutions will be proposed at the 2022 Annual General
Meeting to reappoint Grant Thornton UK LLP as auditor to the Company and to authorise the Directors to
determine their remuneration.
Annual General Meeting
The resolutions to be proposed at the Annual General Meeting, together with the explanatory notes, will
appear in the Notice of the Annual General Meeting which will be circulated with the annual report when
sent to all shareholders.
By order of the Board
Mike Johns
Director
27 April 2022
37
Parity Group plc
Statement of Directors’ Responsibilities
Statement of Directors’ responsibilities in respect of the Annual Report and the Financial Statements
The Directors are responsible for preparing the Annual Report and the Group and parent Company financial
statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Group and parent Company financial statements for each
financial year. Under that law the Directors have prepared the Group and parent Company financial statements
in accordance with UK-adopted International Financial Reporting Standards and applicable law.
Under company law, the Directors must not approve the financial statements unless they are satisfied that
they give a true and fair view of the state of affairs of the Group and parent Company and of their profit or loss
for that period. In preparing each of the Group and parent Company financial statements, the Directors are
required to:
•
select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable, relevant and reliable;
•
•
•
state whether applicable UK-adopted international accounting standards have been followed for the
Group and parent Company financial statements;
assess the Group and parent Company’s ability to continue as a going concern, disclosing, as applicable,
matters related to going concern; and
use the going concern basis of accounting unless they either intend to liquidate the Group or the parent
Company or to cease operations, or have no realistic alternative but to do so.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the parent Company’s transactions and disclose with reasonable accuracy at any time the financial position of
the parent Company and enable them to ensure that its financial statements comply with the Companies Act
2006. They are responsible for such internal control as they determine is necessary to enable the preparation
of financial statements that are free from material misstatement, whether due to fraud or error, and have
general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group
and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report and a
Directors’ Report that complies with that law and those regulations.
Website publication
The Directors are responsible for ensuring the annual report and the financial statements are made available
on the Parity Group website. Financial statements are published on the Company’s website in accordance with
AIM company requirements governing the preparation and dissemination of financial statements. The
maintenance and integrity of the Company's website is the responsibility of the Directors. The Directors'
responsibility also extends to the ongoing integrity of the financial statements contained therein.
Internal control
The Board is ultimately responsible for the Group’s system of internal control and for reviewing its
effectiveness and is assisted in this respect by the Audit Committee. Such a system is designed to manage
rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable and
not absolute assurance against material misstatement or loss. The Group’s system of internal control, which
materially complies with the Financial Reporting Council’s Risk Management, Internal Control and Related
Financial and Business Reporting September 2014 guidance has been in place throughout the year and up to
the date of this report. The Directors confirm that they have reviewed the effectiveness of the Group’s system
38
of internal controls during the year.
Parity Group plc
The Group did not consider it necessary to have a separate internal audit function but will continue to keep
the need under review.
Risk management
The Group is exposed through its operations to the following financial risks:
•
Interest rate risk;
• Foreign currency risk;
•
Liquidity risk; and
• Credit risk.
The policies for managing these risks are set by the Board following recommendations from the Chief Finance
Officer. Certain risks are managed centrally, while others are managed locally following guidelines
communicated from the centre. The policies for each of the above risks, and the nature and extent of those
risks, are described in detail in note 20 to the financial statements. Other risks and uncertainties are
discussed on pages 12 to 14.
Each of the persons who is a Director as at the date of approval of this annual report confirms that:
•
so far as the Director is aware, there is no relevant audit information of which the Company’s auditors are
unaware; and
the Director has taken all the steps that he ought to have taken as a Director in order to make himself
aware of any relevant audit information and to establish that the Company’s auditors are aware of that
information.
•
This confirmation is given and should be interpreted in accordance with the provisions of s418 of the
Companies Act 2006.
Mark Braund
Executive Chairman
27 April 2022
39
Independent auditor’s report to the members of Parity Group plc
Opinion
Our opinion on the financial statements is unmodified
We have audited the financial statements of Parity Group plc (the ‘parent company’) and its
subsidiaries (the ‘Group’) for the year ended 31 December 2021, which comprise the Consolidated
Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated
Statement of Changes in Equity, the Company Statement of Changes in Equity, the Consolidated
and Company Statements of Financial Position, the Consolidated and Company Statements of Cash
Flows and notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and
UK-adopted international accounting standards and, as regards the parent company financial
statements, as applied in accordance with the provisions of the Companies Act 2006.
In our opinion:
•
•
•
•
the financial statements give a true and fair view of the state of the group’s and of the parent
company’s affairs as at 31 December 2021 and of the group’s loss for the year then ended;
the group financial statements have been properly prepared in accordance with UK-adopted
international accounting standards;
the parent company financial statements have been properly prepared in accordance with UK-
adopted international accounting standards and as applied in accordance with the provisions of
the Companies Act 2006; and
the financial statements have been prepared in accordance with the requirements of the
Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the ‘Auditor’s
responsibilities for the audit of the financial statements’ section of our report. We are independent of the
group and the parent company in accordance with the ethical requirements that are relevant to our
audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed
entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Conclusions relating to going concern
We are responsible for concluding on the appropriateness of the directors’ use of the going concern
basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the group’s and the parent company’s
ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our report to the related disclosures in the financial statements or, if such
disclosures are inadequate, to modify the auditor’s opinion. Our conclusions are based on the audit
evidence obtained up to the date of our report. However, future events or conditions may cause the
group or the parent company to cease to continue as a going concern.
A description of our evaluation of management’s assessment of the ability to continue to adopt the
going concern basis of accounting, and the key observations arising with respect to that evaluation is
included in the key audit matters section of our report.
Based on the work we have performed, we have not identified any material uncertainties relating to
events or conditions that, individually or collectively, may cast significant doubt on the group’s and the
parent company’s ability to continue as a going concern for a period of at least twelve months from
when the financial statements are authorised for issue.
In auditing the financial statements, we have concluded that the directors’ use of the going concern
basis of accounting in the preparation of the financial statements is appropriate.
40
Parity Group plc
The responsibilities of the directors with respect to going concern are described in the ‘Responsibilities
of directors for the financial statements’ section of this report.
Our approach to the audit
Overview of our audit approach
Overall materiality:
Group: £238,000, which represents 0.5% of the group’s
expected revenue at the planning stage of the audit.
Parent company: £178,500, which represents 2% of the parent
company’s net assets, capped at 75% of Group materiality.
Group key audit matters were identified as:
• Going concern (same as previous year);
Materiality
Key audit
matters
• Revenue recognition (same as previous year); and
Scoping
• Accrued income (same as previous year).
Our auditor’s report for the year ended 31 December 2020
included no key audit matters that have not been reported as
key audit matters in our current year’s report.
No key audit matters were identified for the parent company.
Our full-scope audit work performed on the financial information
of components covered 100% of the revenue generated by the
Group for the year, 100% of the Group’s total assets at the year-
end and 100% of the loss before tax of the Group for the year.
Key audit matters
Key audit matters are those matters that, in our
professional judgement, were of most significance in
our audit of the financial statements of the current
period and include the most significant assessed
risks of material misstatement (whether or not due to
fraud) that we identified. These matters included
those that had the greatest effect on: the overall audit
strategy; the allocation of resources in the audit; and
directing the efforts of the engagement team. These
matters were addressed in the context of our audit of
the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a
separate opinion on these matters.
Description
Audit
response
KAM
Disclosures Our results
41
Parity Group plc
In the graph below, we have presented the key audit matters, significant risks and other risks relevant to
the audit.
Hig
Potential
financial
statement
impact
Low
Low
Revenue recognition –
occurrence and accuracy
Accrued income – existence
and valuation & allocation
Accounting system transaction
allocations in a combined ledger
Prior year adjustment –
accuracy and completeness
Non underlying
items – accuracy
and presentation
Going concern
Management override or controls
Investments, intercompany debtors, and
deferred tax asset - valuation
Goodwill - valuation
Defined pension benefit scheme –
existence, accuracy and valuation
Related party transactions
Cost accruals - accuracy
Extent of management judgement
Hig
Key audit matter
Significant risk
Other risk
42
Key Audit Matter – Group
How our scope addressed the matter – Group
Parity Group plc
Going concern
We identified going concern as one of the
most significant assessed risks of
material misstatement due to error.
Going concern risk was determined to be
a significant risk as the group was loss
making in the year and the group remains
reliant on a committed 36 month working
capital facility which mandates that the
group meets certain financial covenants
throughout and at predetermined
reporting dates within the going concern
assessment period.
Relevant disclosures in the Annual
Report and Accounts 2021
• Financial statements: Note 1,
Accounting policies; and
• Audit committee report: Significant
issues relating to the Financial
Statements
In responding to the key audit matter, we performed the
following audit procedures:
• We considered the inherent risks associated with
the Group’s and the parent company’s business
model including effects arising from macro-
economic uncertainties, Covid-19 and the strategic
repositioning of the business to concentrate on
recruitment solutions;
• Obtained management’s base case profit and loss,
balances sheet and cash flow forecasts covering
the period from 31 December 2021 to 31 December
2023;
• Assessed how these profit and loss, balance sheet
and cash flow forecasts were compiled and
assessed their appropriateness by understanding
and corroborating underlying assumptions,
challenging those assumptions and applying
sensitivities where relevant;
• Assessed the accuracy of management’s past
forecasting by comparing management’s forecasts
for 2021 to the actual results for 2021 albeit 2021
results were impacted by the strategic repositioning
of the business, Covid-19 and the cost restructuring
exercise. We also compared current year to date
actual and forecast data to 31 March 2022 and
considered the impact on the base case cash flow
forecast;
• Obtained management’s worst-case scenario
prepared to assess the ongoing impact of Covid-19
on the business. We considered whether the
assumptions were consistent with our
understanding of the business derived from other
detailed audit work undertaken;
• Assessed the impact of the mitigating actions
available to management in respect of the ability to
restrict cash impact, including the level of available
facilities; and
• Assessed the adequacy of related disclosures
within the report and accounts 2021.
Our results
We have nothing to report in addition to that stated in the
‘Conclusions relating to going concern’ section of our
report.
43
Key Audit Matter – Group
How our scope addressed the matter – Group
Revenue recognition – occurrence and
accuracy
In responding to the key audit matter, we performed the
following audit procedures:
Parity Group plc
• Assessed whether the accounting policies adopted
by the directors are in accordance with the
requirements of IFRS 15, and whether management
accounted for revenue in accordance with the
accounting policies;
• Used audit data analytics techniques to identify
journal entries and other transactions where
revenue and receivables transactions had a
financial impact on unexpected balances or classes
of transactions. For the unusual accounts
combinations, we performed further investigation
which included consolidating our understanding
with management and obtaining support evidence;
and
•
This testing was supported by the testing of
operating effectiveness of bank reconciliation
controls, and a substantive test of detail on a
sample of revenue transactions by agreeing a
sample of sales invoices to timesheets, remittance,
and bank receipts, or alternative evidence where
appropriate.
Our results
Our audit work did not identify any material adjustments
in relation to the occurrence and / or accuracy of
unusual recruitment services revenue journals.
We identified revenue recognition as one
of the most significant assessed risks of
material misstatement due to fraud.
Under ISA (UK) 240 ‘The Auditor’s
Responsibilities Relating to Fraud in an
Audit of Financial Statements’, there is a
presumed risk that there are risks of fraud
in revenue recognition. The revenue
recognised by the Group is one of the
key factors that impacts EBITDA and is a
key performance indicator for the Group.
Revenue is recognised in accordance
with the Group's accounting policy and
International Financial Reporting
Standard (IFRS) 15 “Revenue from
Contracts with Customers”.
The Group has two separate revenue
streams relating to its public and private
sector clients:
•
Provision of recruitment services;
and
Provision of consultancy services.
•
The majority of revenues across the
Group are considered non-complex.
Notable journals outside of the normal
business process relating to the provision
of recruitment services which is the
significant segment of the business in
relation to revenue therefore pose a risk
of fraud due to their unusual nature and in
terms of the consultancy business this
has been pinpointed to the unbilled
revenue (see Accrued income key audit
matter below).
Relevant disclosures in the Annual
Report and Accounts 2021
•
•
Financial statements: Note 1,
Accounting policies
Financial statements: Note 3,
Revenue
• Audit committee report: Significant
issues relating to the Financial
Statements
44
Key Audit Matter – Group
How our scope addressed the matter – Group
Accrued income – existence and
valuation
In responding to the key audit matter, we performed the
following audit procedures:
Parity Group plc
We identified accrued income on both the
provision of recruitment and consultancy
services as one of the most significant
assessed risks of material misstatement
due to error.
Accrued income primarily arises where
temporary workers have provided their
services, but approved timesheets are
outstanding.
As such, the amount incurred, and
margin earned thereon has yet to be
invoiced onto the client. In making an
accrual for time worked by contractors at
the year-end date, management make an
estimate of the time worked based on
knowledge of the contracts in place, the
number of working days outstanding and
experience adjustments from prior
periods. This estimation uncertainty has
resulted in the audit team identifying
accrued income as a significant risk.
Relevant disclosures in the Annual
Report and Accounts 2021
• Financial statements: Note 1,
Accounting policies
• Note 16 Trade and other receivables
• Assessed whether the accounting policies adopted
by the directors are in accordance with the
requirements of IFRS 15, and whether management
accounted for revenue in accordance with the
accounting policies;
• Obtained management’s reconciliation of accrued
income to the trial balance at year-end;
•
Tested a sample of accrued income at year-end to
underlying documentation, including where relevant
subsequent invoice and receipt; and
• Challenged management’s assumptions
underpinning the recognition of accrued income.
Our results
Management concluded that amendments were
required to their accrued income and accrued cost
balances having considered our audit findings.
Our application of materiality
We apply the concept of materiality both in planning and performing the audit, and in evaluating the
effect of identified misstatements on the audit and of uncorrected misstatements, if any, on the financial
statements and in forming the opinion in the auditor’s report.
Materiality was determined as follows:
Materiality measure
Group
Parent company
Materiality for
financial statements
as a whole
We define materiality as the magnitude of misstatement in the financial
statements that, individually or in the aggregate, could reasonably be
expected to influence the economic decisions of the users of these financial
statements. We use materiality in determining the nature, timing, and extent
of our audit work.
Materiality threshold
£238,000, which is 0.5% of expected
revenue at the planning stage of our
audit.
£178,500, which is 2% of parent’s
net assets, capped at 75% of Group
materiality, being its component
materiality.
Significant
judgements made by
auditor in determining
materiality
In determining materiality, we made
the following significant judgements:
In determining materiality, we made
the following significant judgements:
• Revenue is considered to be the
most appropriate benchmark for
the Group because there is
considerable volatility in loss
before tax.
• Revenue is also a key
performance indicator for the
Group.
45
• Net assets are considered to be
the most appropriate
benchmark for the parent
company as the parent
company's purpose is that of
holding investments in the
Group’s subsidiary companies.
Materiality measure
Group
Parent company
Parity Group plc
Materiality for the current year is
lower than the level that we
determined for the year ended 31
December 2020 to reflect the
decrease in the Group’s revenue for
the year.
The parent company does not
undertake any trading activities.
• We have capped materiality at
75% of Group materiality.
Materiality for the current year is
lower than the level that we
determined for the year ended 31
December 2020 to reflect capping at
75% of the Group’s revenue for the
year, which was lower, despite the
parent company’s net assets being
higher at the year-end.
Performance
materiality used to
drive the extent of
our testing
We set performance materiality at an amount less than materiality for the
financial statements as a whole to reduce to an appropriately low level the
probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality for the financial statements as a whole.
Performance
materiality threshold
£178,500, which is 75% of financial
statement materiality.
£134,000, which is 75% of financial
statement materiality.
Significant
judgements made by
auditor in determining
performance
materiality
In determining performance
materiality, we made the following
significant judgements:
In determining performance
materiality, we made the following
significant judgements:
• Our risk assessment – based on
• Our risk assessment – based on
the results of our risk
assessment procedures,
including the consideration of
the control environment;
the results of our risk
assessment procedures,
including the consideration of
the control environment;
• Our experience with auditing the
financial statements of the
Group in previous years –
based on the number of
identified misstatements in the
prior year audit and
management's attitude to
correcting misstatements
identified; and
• Our experience with auditing the
financial statements of the
parent company in previous
years – based on the number of
identified misstatements in the
prior year audit and
management's attitude to
correcting misstatements
identified.
•
The number of components
within the Group and the extent
of audit procedures planned
and performed at these
components.
Specific materiality
We determine specific materiality for one or more particular classes of
transactions, account balances or disclosures for which misstatements of
lesser amounts than materiality for the financial statements as a whole could
reasonably be expected to influence the economic decisions of users taken
on the basis of the financial statements.
Specific materiality
We determined a lower level of
specific materiality for the following
areas:
We determined a lower level of
specific materiality for the following
areas:
• Related party transactions; and
• Related party transactions; and
• Directors’ remuneration and
transactions with directors.
• Directors’ remuneration and
transactions with directors.
46
Materiality measure
Group
Parent company
Parity Group plc
Communication of
misstatements to the
audit committee
Threshold for
communication
We determine a threshold for reporting unadjusted differences to the audit
committee.
£11,900 and misstatements below
that threshold that, in our view,
warrant reporting on qualitative
grounds.
£9,900 and misstatements below
that threshold that, in our view,
warrant reporting on qualitative
grounds.
The graph below illustrates how performance materiality interacts with our overall materiality and the
tolerance for potential uncorrected misstatements.
Overall materiality – Group
Overall materiality – Parent company
Revenue
£47.2m
FSM,
£238,000
0.5%
PM
£178,500
75%
TFPUM
£59,500
25%
Net Assets
£8.6m
FSM,
£179,000
2%
PM
£134,000
75%
TFPUM
£44,800
25%
FSM: Financial statements materiality, PM: Performance materiality, TFPUM: Tolerance for potential uncorrected
misstatements
An overview of the scope of our audit
We performed a risk-based audit that requires an understanding of the group’s and the parent
company’s business and in particular matters related to:
Understanding the group, its components, and their environments, including group-wide controls
•
•
obtained an understanding of the group and its environment, including group-wide controls, and
assessed the risks of material misstatement at the group level; and
obtained an understanding on the effectiveness of the group organisational structure on the scope
of the audit, especially around the centralised group financial reporting system.
Identifying significant components
• we evaluated the identified components to assess their significance based on revenue and
determined the planned audit response based on a measure of materiality
Type of work to be performed on financial information of parent and other components
•
the parent company and other significant components have been scoped at full scope which
covers all areas of focus, including addressing each KAM
Performance of our audit
•
•
all audit work was carried out by the Group engagement team using a hybrid of on-site, office and
home working; and
full-scope audit was performed and covered 100% of total revenue, 100% of assets and 100% loss
before tax.
47
Communications with component auditors
•
all components were audited by the Group team therefore no communications with other auditors.
Parity Group plc
Changes in approach from previous period
•
no changes have been made in our approach from the previous period.
Audit approach
No. of
components
% coverage
net assets
% coverage
revenue
Full-scope audit
3
100%
100%
%
coverage
LBT
100%
Other information
The directors are responsible for the other information. The other information comprises the information
included in the annual report and accounts, other than the financial statements and our auditor’s report
thereon. Our opinion on the financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion
thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the financial
statements, or our knowledge obtained in the audit or otherwise appears to be materially misstated. If
we identify such material inconsistencies or apparent material misstatements, we are required to
determine whether there is a material misstatement in the financial statements or a material
misstatement of the other information. If, based on the work we have performed, we conclude that there
is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Our opinions on other matters prescribed by the Companies Act 2006 are unmodified
In our opinion, based on the work undertaken in the course of the audit:
•
•
the information given in the strategic report and the directors’ report for the financial year for
which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable
legal requirements.
Matters on which we are required to report under the Companies Act 2006
In the light of the knowledge and understanding of the group and the parent company and its
environment obtained in the course of the audit, we have not identified material misstatements in the
strategic report or the directors’ report.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters in relation to which the Companies Act
2006 requires us to report to you if, in our opinion:
•
•
•
adequate accounting records have not been kept by the parent company, or returns adequate for
our audit have not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and
returns; or
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
48
Parity Group plc
Responsibilities of directors for the financial statements
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and for
such internal control as the directors determine is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s and the
parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to
going concern and using the going concern basis of accounting unless the directors either intend to
liquidate the group or the parent company or to cease operations, or have no realistic alternative but to
do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an
audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms
part of our auditor’s report.
Explanation as to what extent the audit was considered capable of detecting irregularities,
including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in respect
of irregularities, including fraud. Owing to the inherent limitations of an audit, there is an unavoidable
risk that material misstatements in the financial statements may not be detected, even though the audit
is properly planned and performed in accordance with ISAs (UK).
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed
below:
• We obtained an understanding of how the Group and the parent company are complying with the
legal and regulatory frameworks by making enquiries of management. We corroborated our
enquiries through our review of board minutes and discussions with the Audit Committee;
• We obtained an understanding of the legal and regulatory frameworks that are applicable to the
Group and the parent company and determined that the most significant in the context of the
Group are those related to the financial reporting framework, being UK-adopted international
accounting, the Companies Act 2006 and the QCA Corporate Governance Code;
• We assessed the susceptibility of the Group's and the parent company’s financial statements to
material misstatement, including how fraud might occur, by evaluating management's incentives
and opportunities for manipulation of the financial statements. This included the evaluation of the
risk of management override of controls. We determined that the principal risks were in relation to:
o
journal entries that increased revenues; and
o potential management bias in determining accounting estimates, especially in relation to
accrued income.
Our audit procedures included:
o
o
o
o
obtaining an understanding of the design and implementation of controls that management has
in place to prevent and detect fraud;
journal entry testing, with a focus on material manual journals, including those with unusual
account combinations and those posted directly to the consolidation that increased revenue;
challenging assumptions and judgements made by management in its significant accounting
estimates; and
testing the completeness of the Group's related party transactions.
49
Parity Group plc
•
•
In addition, we completed audit procedures to conclude on the compliance of disclosures in the
report and accounts with the applicable financial reporting framework requirements;
These audit procedures were designed to provide reasonable assurance that the financial
statements were free from fraud or error. The risk of not detecting a material misstatement due to
fraud is higher than the risk of not detecting one resulting from error and detecting irregularities that
result from fraud is inherently more difficult than detecting those that result from error, as fraud may
involve collusion, deliberate concealment, forgery or intentional misrepresentations. Also, the
further removed non-compliance with laws and regulations is from events and transactions
reflected in the financial statements, the less likely we would become aware of it;
•
The engagement partner assessed whether the Group engagement team collectively had the
appropriate competence and capabilities to identify and recognise non-compliance with laws and
regulations through assessment of the team’s:
o
o
understanding of, and practical experience with audit engagements of a similar nature and
complexity through appropriate training and participation; and
knowledge of the industry in which the client operates.
Use of our report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part
16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the
company’s members those matters we are required to state to them in an auditor’s report and for no
other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the company and the company’s members as a body, for our audit work, for this
report, or for the opinions we have formed.
Marc Summers, BSc (Hons), FCA
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
LONDON
27 April 2022
50
ACCOUNTS, NOTES AND OTHER INFORMATION
Consolidated Income Statement for the year ended 31 December 2021
Revenue
Contractor costs
Net Fee Income
Operating costs before non-underlying items
Operating (loss)/profit before non-underlying items
Non-underlying items
Operating (loss)/profit
Finance costs
Loss before tax
Analysed as:
Adjusted (loss)/profit before tax1
Non-underlying items
Tax credit/ (charge)
Loss for the year attributable to owners of the parent
Loss per share
Basic
Diluted
All activities comprise continuing operations.
Notes
3
4
5
7
5
9
2021
£’000
46,962
(42,882)
4,080
(4,349)
(269)
(553)
(822)
(281)
(1,103)
(550)
(553)
467
(636)
2020
£’000
57,827
(52,266)
5,561
(5,091)
470
(447)
23
(348)
(325)
122
(447)
(145)
(470)
10
10
(0.62p)
(0.62p)
(0.46p)
(0.46p)
1 Adjusted (loss)/profit before tax is a non-IFRS alternative performance measure, defined as (loss)/profit before tax and
non-underlying items.
The notes on pages 58 to 87 form part of the financial statements.
51
Consolidated Statement of Comprehensive Income for the year ended 31 December 2021
Loss for the year
Other comprehensive income
Items that will never be reclassified to profit or loss
Remeasurement of defined benefit pension scheme
Deferred taxation on remeasurement of defined pension scheme
Other comprehensive income for the year after tax
Total comprehensive income for the year attributable to owners of the
parent
The notes on pages 58 to 87 form part of the financial statements.
Notes
22
15
Parity Group plc
2021
£’000
(636)
2020
£’000
(470)
1,620
(567)
1,053
417
1,041
(198)
843
373
52
Statements of Changes in Equity for the year ended 31 December 2021
Parity Group plc
Consolidated
At 1 January 2020 (reported)
Effect of correction of material
misstatement (Note 28)
At 1 January 2020 (restated)
Share options – value of employee
services
Transactions with owners
Loss for the year
Remeasurement of defined benefit
pension scheme
Deferred taxation on remeasurement
of defined pension scheme taken
directly to equity
At 31 December 2020 (reported)
Effect of correction of material
misstatement
At 31 December 2020 (restated)
Shares issues in the period
Share options – value of employee
services
Transactions with owners
Loss for the year
Remeasurement of defined benefit
pension scheme
Deferred taxation on remeasurement
of defined pension scheme taken
directly to equity
At 31 December 2021
Total
£’000
6,423
(247)
6,176
90
90
(470)
(198)
6,886
(247)
6,639
35
(64)
(29)
(636)
Share
capital
£’000
2,053
Share
premium
reserve
£’000
33,244
Capital
redemption
reserve
£’000
14,319
Other
reserves
£’000
34,560
Retained
earnings
£’000
(77,753)
-
2,053
-
33,244
-
14,319
-
34,560
(247)
(78,000)
-
-
-
-
-
2,053
-
2,053
9
-
9
-
-
-
-
-
-
-
33,244
-
33,244
26
-
26
-
-
-
-
-
-
-
-
-
-
90
90
(470)
1,041
1,041
-
14,319
-
34,560
(198)
(77,290)
-
14,319
-
-
34,560
-
(247)
(77,537)
-
-
-
-
-
-
-
-
-
(64)
(64)
(636)
1,620
1,620
-
2,062
-
33,270
-
14,319
-
34,560
(567)
(77,184)
(567)
7,027
53
Parity Group plc
Share
capital
£’000
2,053
-
-
-
2,053
9
-
9
-
2,062
Share
premium
reserve
£’000
33,244
Capital
redemption
reserve
£’000
14,319
Other
reserves
£’000
13,129
Retained
earnings
£’000
(51,912)
-
-
-
33,244
26
-
26
-
33,270
-
-
-
14,319
-
-
-
-
14,319
-
-
-
13,129
-
-
-
-
13,129
71
71
(2,909)
(54,750)
-
(39)
(39)
700
(54,089)
Total
£’000
10,833
71
71
(2,909)
7,995
35
(39)
(4)
700
8,691
Company
At 1 January 2020
Share options – value of
employee services
Transactions with owners
(Loss) for the year
At 31 December 2020
Shares issues in the period
Share options – value of
employee services
Transactions with owners
Profit for the year
At 31 December 2021
The notes on pages 58 to 87 form part of the financial statements.
54
Statements of Financial Position as at 31 December 2021
Company number 3539413
Assets
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Right-of-use assets
Trade and other receivables
Deferred tax assets
Retirement benefit asset
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Current liabilities
Loans and borrowings
Lease liabilities
Trade and other payables
Provisions
Total current liabilities
Non-current liabilities
Lease liabilities
Provisions
Retirement benefit liability
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Called up share capital
Share premium reserve
Capital redemption reserve
Other reserves
Retained earnings
Total shareholders’ equity
Notes
11
12
13
14
16
15
22
16
17
14
18
19
14
19
22
23
21
21
21
21
Parity Group plc
Consolidated
31 December
2020
as restated
£’000
1 January 2020
as restated
£’000
2021
£’000
4,594
84
15
149
29
528
1,939
7,338
4,768
1,121
5,889
13,227
(2,279)
(242)
(3,608)
-
(6,129)
(29)
(42)
-
(71)
(6,200)
7,027
4,594
6
23
247
87
627
208
5,792
6,062
3,172
9,234
15,026
(2,941)
(321)
(4,857)
(139)
(8,258)
(87)
(42)
-
(129)
(8,387)
6,639
2,062
33,270
14,319
34,560
(77,184)
7,027
2,053
33,244
14,319
34,560
(77,537)
6,639
4,594
32
43
395
-
970
-
6,034
6,739
4,116
10,855
16,889
(2,719)
(325)
(6,259)
(324)
(9,627)
(173)
(21)
(892)
(1,086)
(10,713)
6,176
2,053
33,244
14,319
34,560
(78,000)
6,176
In accordance with Section 408 of the Companies Act 2006, the Company has not presented its own income statement or
statement of comprehensive income. The profit for the year dealt with in the accounts of the Company was £700,000
(2020: loss of £2,909,000).
The notes on pages 58 to 87 form part of the financial statements.
Approved by the Directors and authorised for issue on 27 April 2022.
Mark Braund
Executive Chairman
Michael Johns
Chief Financial Officer
55
Statements of Financial Position as at 31 December 2021
Parity Group plc
Company number 3539413
Assets
Non-current assets
Trade and other receivables
Investments in subsidiaries
Total non-current assets
Current assets
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Liabilities
Current liabilities
Trade and other payables
Provisions
Total current liabilities
Non-current liabilities
Trade and other payables
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Called up share capital
Share premium reserve
Capital redemption reserve
Other reserves
Retained earnings
Total shareholders’ equity
Company
2021
Notes
£’000
16
27
16
18
19
18
23
21
21
21
21
94,850
20,527
115,377
-
405
405
115,782
(16,048)
-
(16,048)
(91,043)
(91,043)
(107,091)
8,691
2,062
33,270
14,319
13,129
(54,089)
8,691
2020
£’000
134,662
20,527
155,189
925
301
1,226
156,415
(13,944)
-
(13,944)
(134,476)
(134,476)
(148,420)
7,995
2,053
33,244
14,319
13,129
(54,750)
7,995
In accordance with Section 408 of the Companies Act 2006, the Company has not presented its own income statement or
statement of comprehensive income. The profit for the year dealt with in the accounts of the Company was £700,000
(2020: loss of £2,909,000).
The notes on pages 58 to 87 form part of the financial statements.
Approved by the Directors and authorised for issue on 27 April 2022.
Mark Braund
Executive Chairman
Michael Johns
Chief Financial Officer
56
Statements of Cash Flows for the year ended 31 December 2021
Parity Group plc
Consolidated
Company
Notes
2021
£’000
2020
£’000
2021
£’000
2020
£’000
(636)
(470)
700
(2,909)
7
8
9
12
21
13
14
14
14
16
18
19
22
13
12
17
14
7
281
(64)
(467)
3
35
12
414
31
-
(391)
1,352
(1,249)
(139)
(322)
(749)
(4)
(81)
(85)
(662)
(490)
-
(65)
(1,217)
(2,051)
3,172
1,121
348
90
145
26
-
20
540
-
(21)
678
764
(1,402)
(165)
(325)
(450)
-
-
-
222
(649)
-
(67)
(494)
(944)
4,116
3,172
(1,732)
(39)
(24)
-
35
-
-
-
-
(1,060)
-
82
-
-
(978)
-
-
-
-
-
1,147
(65)
1,082
104
301
405
1,902
71
(130)
-
-
-
-
-
-
(1,066)
1
20
-
-
(1,045)
-
-
-
-
-
1,296
(67)
1,229
184
117
301
Operating activities
(Loss)/profit for the year
Adjustments for:
Net finance expense
Share-based payment expense
Income tax (credit)/ charge
Amortisation of intangible assets
Shares issued in lieu of Directors fees
Depreciation of property, plant and equipment
Depreciation and impairment of right-of-use assets
Loss on write down of lease assets
Lease liability credit
Working capital movements
Decrease in trade and other receivables
(Decrease)/increase in trade and other payables
(Decrease)/increase in provisions
Payments to retirement benefit plan
Net cash flows (used in)/from operating activities
Investing activities
Purchase of property, plant and equipment
Development of intangible assets
Net cash flows used in investing activities
Financing activities
(Repayment)/drawdown of finance facility
Principal repayment of lease liabilities
Net movements on intercompany funding
Interest paid
Net cash flows (used in)/from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
The notes on pages 58 to 87 form part of the financial statements.
57
Notes to the Financial Statements for the year ended 31 December 2021
Parity Group plc
1
Accounting policies
Basis of preparation
Parity Group plc (the “Company”) is a company incorporated and domiciled in the UK.
Both the parent company financial statements and the Group financial statements have been prepared and approved by
the Directors in accordance with company law and UK adopted international accounting standards. On publishing the
parent company financial statements here together with the Group financial statements, the Company is taking
advantage of the exemption in Section 408 of the Companies Act 2006 not to present its individual income statement and
related notes that form a part of these approved financial statements. Financial Information is presented in £’000.
The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies
have been consistently applied to all the years presented unless otherwise stated.
The Group’s business activities, together with the factors likely to affect its future development, performance and position
are set out in the Directors’ Report (Review of business and future developments). The financial position of the Group,
its cash flows, liquidity position and borrowing facilities are described in the Operational and Financial Review on pages 6
to 11 and in note 20 to the financial statements. Note 20 also includes the Group’s objectives for managing capital.
As outlined in note 20, the Group meets its day to day working capital requirements through an asset-based finance
facility. The facility contains certain financial covenants which have been met throughout the period. During the period
the PNC facility was replaced in April 2021 with a new asset based lending facility provided by Leumi ABL. This new facility
runs for 3 years and provides up to £9m of borrowing.
The financial statements have been prepared on a going concern basis. The Directors have reviewed the Group’s cash
flow forecasts for the period to 31 December 2023, taking account of reasonably possible changes in trading performance.
Discussion of this risk is included within Principal Risks and Uncertainties on pages 12 to 14. Downside sensitivities have
included reduced levels of new business in these scenarios, the Directors do not anticipate issues with the Group’s
financing requirements.
Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at 31
December 2021. Subsidiaries are entities controlled by the Group. Control exists when the Group has:
•
•
•
existing rights that give it the ability to direct the relevant activities that significantly affect the subsidiary's
returns; and
exposure, or rights, to variable returns from its involvement with the subsidiary; and
the ability to use its power over the subsidiary to affect the amount of the Group's returns.
The acquisition date is the date on which control is transferred to the acquirer. The financial statements of subsidiaries
are included in the consolidated financial statements from the date that control commences until the date that control
ceases.
The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using
consistent accounting policies. All intra-group balances, transactions, unrealised gains and losses resulting from intra-
group transactions and dividends are eliminated in full.
In accordance with Section 408 of the Companies Act 2006, the Company has not presented its own income statement or
statement of comprehensive income. The profit for the year dealt with in the accounts of the Company was £700,000
(2020: loss of £2,909,000).
58
Business combinations
Parity Group plc
The acquisition of subsidiaries is accounted for using the purchase method. The related costs of acquisition other than
those associated with the issue of debt or equity securities, are recognised in the profit and loss as incurred. The
acquiree’s identifiable assets and liabilities and contingent liabilities that meet the conditions for recognition under
IFRS 3 ‘Business Combinations’ are recognised at their fair value at the acquisition date.
Accounting policies: new standards, amendments and interpretations effective and adopted by the Group
There are no other standards, amendments or interpretations effective this year which have a significant impact on these
financial statements.
Accounting policies: new standards, amendments and interpretations that are not yet effective and have not been
adopted early by the Group
At the date of authorisation of these financial statements, several new, but not yet effective, standards, amendments
to existing standards and interpretations have been published. None of these have been adopted early by the Group.
New standards, amendments and interpretations not adopted in the current year have not been disclosed as they are
not expected to have a material impact on the Group.
Measurement convention
The financial statements are prepared on the historical cost basis. Non-current assets are stated at the lower of
previous carrying amount and fair value less costs to sell.
Alternative performance measure
In the reporting of its financial performance, the Group uses certain measures that are not defined under IFRS, the
Generally Accepted Accounting Principles (“GAAP”) under which the Group reports. The Directors believe that these
non-GAAP measures assists with the understanding of the performance of the business. These non-GAAP measures
are not a substitute, or superior to, any IFRS measures of performance but they have been included as the Directors
consider them to be an important means of comparing performance year-on-year and they include key measures used
within the business for assessing performance.
Non-underlying items
The presentation of the alternative performance measure of adjusted profit before tax excludes non-underlying items.
The Directors consider that an underlying profit measure better illustrates the underlying performance of the Group
and allows a more meaningful comparison of performance across periods. Items are classified as non-underlying by
nature of their magnitude, incidence or unpredictable nature and their separate identification results in a calculation
of an underlying profit measure that is consistent with that reviewed by the Board in their monitoring of the
performance of the Group. Events which may give rise to the classification of items as non-underlying include gains or
losses on the disposal of a business, restructuring of a business, transaction costs, litigation and similar settlements,
asset impairments and onerous contracts.
Adjusted EBITDA
Operating profit before non-underlying items and before the deduction of depreciation, amortisation changes and
shared based payments. This is considered a useful measure, commonly accepted and widely used when evaluation
business performance and used by the Directors to evaluate performance of the Group and its subsidiaries.
Adjusted EBITDA
(£ 000's)
Operating (loss)/ profit
Add back:
Adjustment for amortisation & depreciation
Adjustment for share based payment charge/(income)
EBITDA
Non underlying costs
Adjusted EBITDA
2021
(822)
460
(64)
(426)
553
127
2020
23
586
90
699
447
1,146
59
Parity Group plc
Net debt
Net debt is the amount of bank debt less available cash balances and is regarded as a useful measure of the level of
external debt utilised by the Group to fund its operations. Net debt is also presented on a pre-IFRS 16 basis which
excludes lease liabilities.
Revenue recognition
The Group generates revenue principally through the provision of recruitment and consultancy services.
Identifying the contract with the customer;
Identifying the performance obligations;
To determine whether to recognise revenue, the Group follows a five-step process:
1.
2.
3. Determining the transaction price;
4. Allocating the transaction price to the performance obligations; and
5. Recognising revenue when and as performance obligations are satisfied.
Revenue is recognised either at a point in time or over time, when the group satisfies performance obligations by
transferring promised services to its customers. Revenue is measured at the transaction price, being the amount of
consideration expected to be entitled in exchange for services to a customer, net of refund liabilities and value added
tax.
Revenue for the provision of recruitment services
The performance obligation is the provision of temporary or permanent workers to customers. For temporary workers,
the performance obligations are satisfied over time as the customer receives the benefit of the temporary worker, in
line with time worked by the temporary worker at pre-determined rates. For permanent workers, the performance
obligation is measured at a point in time, which is at the point that the permanent worker commences employment,
as before this time the Group does not create or enhance an asset for the customer and there is no enforceable right
to payment until then. Refund liabilities related to permanent workers are calculated based on a probabilistic estimate
using historic refund levels.
The Group presents revenues gross of the costs of the temporary workers where it acts as principal under IFRS 15 and
net of the costs of temporary workers where it acts as agent. The Group acts as principal in the large majority of its
contracts, where it has the primary responsibility for fulfilling the promise to supply a worker to a customer and has
control over that supply. The Group acts as agent where it does not have such control.
Revenue for the provision of consultancy services
Performance obligations on consultancy services contracts are satisfied over time if the service creates an asset that
the customer controls and the Group has an enforceable right to payment. Revenue is measured using an input
measure, such as days worked as a proportion of total days to be worked, towards the satisfaction of an obligation.
In obtaining some contracts, the Group may incur a number of incremental costs, such as commissions paid to sales
staff. As the amortisation period of these costs, if capitalised, would be less than one year, the Group makes use of the
practical expedient in IFRS 15 and expenses them as incurred.
Financing income and expenses
Financing expenses comprise interest payable and finance leases recognised in profit or loss using the effective
interest method, unwinding of the discount on the retirement benefit scheme liabilities, and net foreign exchange
losses that are recognised in the income statement (see Foreign currencies accounting policy). Financing income
comprises the expected return on the retirement benefit scheme assets, interest receivable on funds invested,
dividend income, and net foreign exchange gains.
Interest income and interest payable is recognised in profit or loss as it accrues, using the effective interest method.
Dividend income is recognised in the income statement on the date the entity’s right to receive payments is
established. Foreign currency gains and losses are reported on a net basis.
60
Parity Group plc
Dividends
Final dividends proposed by the Board of Directors and unpaid at the balance sheet date are not recognised in the
financial statements until they have been approved by the shareholders at the Annual General Meeting. Interim
dividends, which do not require shareholder approval, are recognised when paid.
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the income
statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised
in equity or in other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates
enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of
previous years.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes. The following temporary differences
are not provided for: the initial recognition of goodwill; the initial recognition of assets or liabilities that affect
neither accounting nor taxable profit other than in a business combination, and differences relating to
investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The
amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying
amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset for deductible temporary differences is not recognised unless it is probable that there will
be taxable profits in the foreseeable future against which the deferred tax asset can be utilised. A deferred tax
asset for unused tax losses carried forward is recognised on the same basis as for deductible temporary
differences. However, the existence of the unused tax losses is strong evidence that future taxable profit may
not be available. Therefore, when an entity has a history of recent losses, the entity recognises a deferred tax
asset arising from unused tax losses only to the extent that there is convincing evidence that sufficient taxable
profit will be available against which the unused tax losses can be utilised.
Foreign currencies
Company
Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets
and liabilities denominated in foreign currencies are retranslated at the rate of exchange ruling at the balance
sheet date. All differences are taken to the income statement.
Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are
translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities
denominated in foreign currencies that are stated at fair value are retranslated to the functional currency at
foreign exchange rates ruling at the dates the fair value was determined.
Group
On consolidation, the results of overseas operations are translated into sterling at rates approximating to those
ruling when the transactions took place. All assets and liabilities of overseas operations are translated at the rate
ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate
and the results of overseas operations at actual rate are recognised in other comprehensive income. On disposal
of a foreign operation, the cumulative exchange differences recognised in other comprehensive income relating
to that operation up to the date of disposal are transferred to the consolidated income statement as part of the
profit or loss on disposal.
Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief
Operating Decision Maker. The Chief Operating Decision Maker is the Group Board.
61
Parity Group plc
Intangible assets
Goodwill
Goodwill represents the excess of the cost of acquisition of a business combination over the Group’s share of the
fair value of identifiable net assets of the business acquired.
After initial recognition, goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to
cash-generating units and is not amortised but is tested annually for impairment. In respect of equity accounted
investees, the carrying amount of goodwill is included in the carrying amount of the investment in the investee.
Gains and losses on disposal of a business include the carrying amount of goodwill relating to the business sold in
determining the gain or loss on disposal, except for goodwill arising on business combinations on or before 31
December 1997 which has been deducted from shareholders’ equity and remains indefinitely in shareholders’
equity.
Software
The carrying amount of software is its cost less any accumulated amortisation and provision for impairment. Software
is amortised on a straight-line basis over its expected useful economic life of three to seven years.
Property, plant and equipment
Property, plant and equipment are stated at cost, net of depreciation and provision for impairment.
Depreciation is provided on all property, plant and equipment at rates calculated to write off the cost less estimated
residual value of each asset on a straight-line basis over its expected useful economic life, as follows:
Leasehold improvements
Office equipment
The lesser of the asset life and the remaining length of the lease
Between 3 and 5 years
The carrying value of property, plant and equipment is reviewed for impairment if events or changes in
circumstances indicate the carrying value may not be recoverable.
Impairment of non-financial assets (excluding deferred tax assets)
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount,
the latter being the higher of the fair value less costs to sell associated with the cash generating unit (CGU) and its value
in use. Value in use calculations are performed using cash flow projections for the CGU to which the goodwill relates,
discounted at a pre-tax rate which reflects the asset specific risks and the time value of money.
Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first
to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the carrying amounts of the
other assets in the unit (group of units) on a pro rata basis.
Goodwill is tested for impairment at each reporting date. The carrying value of other intangible assets and property,
plant and equipment is reviewed for impairment if events or changes in circumstances indicate the carrying value may
not be recoverable.
For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest
group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of
other assets or groups of assets, being the cash generating unit. The goodwill acquired in a business combination, for
the purpose of impairment testing, is allocated to CGUs. Subject to an operating segment ceiling test, for the purposes
of goodwill impairment testing, CGUs to which goodwill has been allocated are aggregated so that the level at which
impairment is tested reflects the lowest level at which goodwill is monitored for internal reporting purposes. Goodwill
acquired in a business combination is allocated to groups of CGUs that are expected to benefit from the synergies of
the combination.
62
Parity Group plc
An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in
prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An
impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An
impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount
that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
Cash and cash equivalents
Cash and short-term deposits in the consolidated balance sheet compromise cash at bank and in hand and short-term
deposits with the original maturity of three months or less. For the purpose of the consolidated cash flow statement,
cash and cash equivalents consist of cash and short-term deposits as defined above. Amounts drawn down from the
asset-based lending facility with Leumi are shown within loans and borrowings on the consolidated balance sheet.
Financial instruments
Financial assets and liabilities are recognised when the Group becomes a party to the contractual provisions of the
financial instrument. Financial assets are derecognised when the contractual rights to the cash flows expire or when
substantially all the risks and rewards are transferred. A financial liability is derecognised when it is extinguished,
discharged, cancelled or expires.
Except for trade receivables that do not contain a significant financing component and are measured at the transaction
price in accordance with IFRS 15, all financial assets are initially measured at fair value adjusted for transaction costs.
Financial assets, other than those designated and effective as hedging instruments, are classified as either amortised
cost, fair value through profit or loss (FVTPL) or fair value through other comprehensive income (FVOCI). In the periods
presented, the Group has no financial assets categorised as FVTPL or FVOCI.
The Group’s financial assets include cash and cash equivalents and trade and other receivables. After initial recognition,
these are measured at amortised cost using the effective interest method. All income and expenses relating to financial
assets that are recognised in profit or loss are presented within finance costs, except for impairment of trade
receivables which is presented within operating expenses. Unless otherwise indicated, the carrying amounts of the
Group’s financial assets are a reasonable approximation of their fair values.
Impairment provisions are recognised using the expected credit loss model. Measurement of expected credit losses is
determined by a probability-weighted estimate of credit losses over the expected life of the financial instrument. The
Group makes use of a simplified approach for trade and other receivables and contract assets and records impairment
as a lifetime expected credit loss, being the expected shortfalls in contractual cash flows, considering the potential for
default. The Group uses its historical experience, external indicators and forward-looking information to calculate the
expected credit losses.
Cash and cash equivalents in the statement of financial position comprise cash at bank and in hand, short term deposits
and other short term liquid investments. In the statement of cash flows, cash and cash equivalents comprise cash and
cash equivalents, net of bank overdrafts.
The Group’s financial liabilities include bank borrowings, finance leases and trade and other payables. Financial
liabilities are initially measured at fair value and subsequently measured at amortised cost using the effective interest
method. All interest related charges that are reported in profit and loss are presented within net finance expenses. In
the periods presented, the Group has no financial liabilities categorised as FVTPL. Unless otherwise indicated, the
carrying amounts of the Group’s financial liabilities are a reasonable approximation of their fair values.
Amounts recoverable on contracts and accrued income
Amounts recoverable on contracts which are expected to benefit performance and be recoverable over the life of the
contracts are recognised in the statement of financial position within trade and other receivables and charged to the
income statement over the life of the contract so as to match costs with revenues.
Amounts recoverable on contracts are stated at the net sales value of work done less amounts received as progress
payments on account. Where progress payments exceed the sales value of work done, they are included in payables
as payments in advance.
63
Parity Group plc
Accrued income primarily arises where temporary workers have provided their services but approved timesheets are
outstanding. As such, the amount incurred and margin earned thereon has yet to be invoiced onto the client. In making
an accrual for time worked by contractors at the balance sheet date, management make an estimate of the time worked
based on knowledge of the contracts in place, the number of working days outstanding and experience adjustments
from prior periods.
Leased assets
At the commencement of a lease, the Group recognises a right-of-use asset and a lease liability. The right-of-use asset
is measured at cost, comprising the initial measurement of the lease liability, any initial direct costs incurred, an
estimate of any restoration costs and any lease payments made in advance of the lease commencement date, net of
any incentives received. The lease liability is measured at the present value of the minimum lease payments discounted
using the rate implicit in the lease, or if that cannot be determined, which is generally the case for the leases in the
Group, the Group’s incremental borrowing rate is used. Lease payments to be made under lease extensions are
included when the option to extend is reasonably certain to be taken up. Subsequent to initial measurement, the
liability will be reduced for payments made and increased for interest. It is remeasured to reflect any reassessment or
modification.
Expected lives of right-of-use assets are determined by reference to the lease term and depreciated over the lease
term on a straight-line basis.
Provisions
A provision is recognised when the Group has a present legal or constructive obligation as a result of a past event, that
can be reliably measured and it is probable that an outflow of economic benefits will be required to settle the
obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects risks
specific to the liability.
From time to time the Group faces the potential of legal action in respect of employment or other contracts. In such
situations, where it is probable that a payment will be required to settle the action, provision is made for the Group’s
best estimate of the outcome.
Where leasehold properties are surplus to requirements, provisions are made for the best estimates of the unavoidable
net future costs.
Provisions for dilapidation charges that will crystallise at the end of the period of occupancy are provided for in full on
non-serviced properties.
Pensions
The Group operates a small number of retirement benefit schemes. With the exception of the ‘Parity Retirement
Benefit Plan’, all of the schemes are defined contribution plans and the assets are held in separate, independently
administered funds. The Group’s contributions to defined contribution plans are charged to the income statement in
the period to which the services are rendered by the employees, and the Group has no further obligation to pay further
amounts.
The ‘Parity Retirement Benefit Plan’ is a defined benefit pension fund with assets held separately from the Group. This
fund has been closed to new members since 1995 and with effect from 1 January 2005 was also closed to future service
accrual.
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Group’s net
obligation in respect of defined benefit pension plans is calculated by estimating the amount of future benefit that
employees have earned in return for their service in the current and prior periods; that benefit is discounted to
determine its present value, and the fair value of any plan assets at bid price, and any unrecognised past service costs
are deducted. The liability discount rate is the yield at the balance sheet date on AA credit rated bonds denominated
in the currency of, and having maturity dates approximating to, the terms of the Group’s obligations. The calculation
is performed by a qualified actuary using the projected unit credit method. When the calculation results in a benefit to
the Group, the recognised asset is limited to the present value of benefits available in the form of any future refunds
64
Parity Group plc
from the plan, reductions in future contributions to the plan or on settlement of the plan and takes into account the
adverse effect of any minimum funding requirements.
Share capital
Financial instruments issued by the Group are treated as equity only to the extent that they meet the following two
conditions:
(a) they include no contractual obligations upon the company (or Group as the case may be) to deliver cash or other
financial assets or to exchange financial assets or financial liabilities with another party under conditions that are
potentially unfavourable to the company (or Group); and
(b) where the instrument will or may be settled in the company’s own equity instruments, it is either a non-derivative
that includes no obligation to deliver a variable number of the company’s own equity instruments or is a derivative that
will be settled by the company’s exchanging a fixed amount of cash or other financial assets for a fixed number of its
own equity instruments.
To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the
instrument so classified takes the legal form of the company’s own shares, the amounts presented in these financial
statements for called up share capital and share premium account exclude amounts in relation to those shares.
For the purposes of the disclosures given in note 20, the Group considers its capital to comprise its cash and cash
equivalents, its asset-based bank borrowings, and its equity attributable to equity holders, comprising issued capital,
reserves and retained earnings, as disclosed in the statement of changes in equity.
Financial guarantee contracts
Where Group companies enter into financial guarantee contracts and guarantee the indebtedness of other companies
within the Group, the company considers these to be insurance arrangements and accounts for them as such. In this
respect, the company does not recognise liabilities under the contracts until it becomes probable that any Group
company will be required to make a payment under the guarantee.
Share-based payment transactions
Share-based payment arrangements in which the Group and Company receives goods or services as consideration
for its own equity instruments are accounted for as equity-settled share-based payment transactions, regardless of
how the equity instruments are obtained by the Group and Company.
The grant date fair value of share-based payment awards granted to employees is recognised as an employee
expense, with a corresponding increase in equity, over the period that the employees become unconditionally
entitled to the awards. The fair value of the options granted is measured using an option valuation model, taking
into account the terms and conditions upon which the options were granted. The amount recognised as an expense
is adjusted to reflect the actual number of awards for which the related service and non-market vesting conditions
are expected to be met, such that the amount ultimately recognised as an expense is based on the number of
awards that do meet the related service and non-market performance conditions at the vesting date. For share-
based payment awards with non-vesting conditions, the grant date fair value of the share-based payment is
measured to reflect such conditions and there is no true-up for differences between expected and actual outcomes.
Where the terms and conditions of options are modified before they vest, the increase in the fair value of the
options, measured immediately before and after the modification, is also charged to the income statement over
the remaining vesting period.
Significant management judgements in applying accounting policies and estimation uncertainty
When preparing the financial statements, management make a number of judgements, estimates and assumptions
about the recognition and measurement of assets, liabilities, income and expenses. The following are the judgements
made by management in applying the accounting policies of the Group and the estimates that have the most
significant effect on the financial statements.
Significant management judgements
Recognition of deferred tax asset
A deferred tax asset has been recognised for unused tax losses carried forward within Parity Consultancy Services
Limited as management believes that given the significant increase in the Retirement benefit asset during the period
there is sufficient certainty that a proportion of the tax losses carried forward would be utilised to offset any charge
65
Parity Group plc
arising from the realisation of the surplus on the Retirement benefit asset. Accordingly management have decided to
include within the financial statements a deferred tax asset in Parity Consultancy Services Limited equal to the tax
charge calculated on the Retirement benefit asset during the year of £1.9m.
Revenue recognition
The main area of judgement in revenue recognition relates to the determination of whether the Group acts as principal
or agent in its contractual arrangements for the provision of temporary workers to customers. The factors considered
by management to result in recognition of revenue as principal include that the Group:
•
has a direct relationship with the worker and is responsible for paying the worker;
•
has the primary responsibility for organising the service engagements and fulfilling the promise to supply a worker
to a customer; and
the Group has control over the supply of the worker.
•
Estimation uncertainty
Retirement benefit liability
The costs, assets and liabilities of the defined benefit scheme operated by the Group are determined using methods
relying on actuarial estimates and assumptions. Details of the key assumptions and sensitivities on those assumptions
are set out in note 22. The Group takes advice from independent actuaries relating to the appropriateness of the
assumptions. Changes in the assumptions used may have a material effect on the income statement and the statement
of financial position within the next year.
Investments in subsidiaries
The Company reviews its investment in subsidiaries to test for impairment. The recoverable amounts are determined
using discounted future cash flows of the relevant subsidiaries. In performing these tests, assumptions are made in
respect of future growth rates and the discount rate to be applied to the future cash flows, as set out in note 27.
Changes in the assumptions used may have a material effect on the income statement and statement of financial
position within the next year.
2 Segmental information
Factors that management used to identify the Group’s reporting segments
In accordance with IFRS 8 ‘Operating Segments’ the Group’s management structure, and the reporting of financial
information to the Chief Operating Decision Maker (the Group Board), have been used as the basis to define reporting
segments.
Description of the types of services from which each reportable segment derives its revenues
During the period the Group derived revenue from two operating segments relating to customer sectors, being the
public sector and private sector. The reporting of financial information presented to the Chief operating Decision maker,
being the Group board of directors, is consistent with these reporting segments. These reporting segments are
supported by a combined back office and therefore there is no allocation of overheads between sectors.
The accounting policies of the operating segments are the same as those described in the summary of significant
accounting policies.
Revenue
Contractor costs
Net fee income
Revenue
Contractor costs
Net fee income
Public sector
2021
£’000
32,544
(29,691)
2,853
Private sector
2021
£’000
14,418
(13,191)
1,227
Public sector
2020
£’000
43,283
(39,405)
3,878
Private sector
2020
£’000
14,544
(12,861)
1,683
Total
2021
£’000
46,962
(42,882)
4,080
Total
2020
£’000
57,827
(52,266)
5,561
66
Parity Group plc
All segment assets and liabilities are based in the UK.
3 Revenue
All of the Group’s revenue derives from contracts with customers. Trade receivables, amounts recoverable on contracts
and accrued income as presented in note 16 arise from contracts with customers. Changes to the Group’s contract assets
are attributable solely to the satisfaction of performance obligations.
The Group’s revenue disaggregated by pattern of revenue recognition is as follows:
Services transferred over time
Services transferred at a point in time
Revenue
The Group’s revenue disaggregated by primary geographical market is as follows:
United Kingdom
European Union
Other
Revenue
2021
£’000
46,934
28
46,962
2020
£’000
57,790
37
57,827
2021
£’000
43,967
2,994
1
46,962
2020
£’000
55,235
2,577
15
57,827
The largest single customer in the public sector contributed 26% or £8.2m to public sector revenue (2020: 25% or £11.0m).
The largest single customer in the private sector contributed 79% or £11.7m to private sector revenue (2020: 46% or
£6.7m).
4
Operating expenses
Employee benefit costs
- wages and salaries
- social security costs
- other pension costs
Depreciation, amortisation and impairment
Amortisation of intangible assets - software
Depreciation of leased property, plant and equipment
Depreciation of owned property, plant and equipment
Depreciation of right-of-use assets
Impairment of right-of-use assets
All other operating expenses
Occupancy costs
IT costs
Net exchange (gain)/loss
Equity settled share-based payment charge
Other operating costs
Total operating expenses
67
Consolidated
2021
£’000
2,818
316
86
3,220
3
-
12
414
31
460
43
236
15
(64)
992
1,222
4,902
2020
£’000
2,975
342
102
3,419
26
-
20
540
-
586
44
464
(2)
90
937
1,533
5,538
Disclosures relating to the remuneration of Directors are set out from page 26.
During the year the Group obtained the following services from the Group’s auditors:
Parity Group plc
Consolidated
Fees payable to the auditor of the Group’s annual financial statements
Fees payable to the Group’s auditor for other services
The audit of the Company’s subsidiaries pursuant to legislation
Total
Tax compliance
Other services
Total fees
All other services have been performed in the UK.
5 Non-underlying items
Restructuring
-
-
- Other costs
Costs related to employees
Costs related to premises
Grant Thornton UK LLP
2020
£’000
15
-
58
73
2021
£’000
15
-
67
82
17
-
105
2021
£’000
502
31
20
553
16
16
89
2020
£’000
370
(11)
88
447
Items are classified as non-underlying by nature of their magnitude, incidence or unpredictable nature and their separate
identification results in a calculation of an underlying profit measure that is consistent with that reviewed by the Board
in their monitoring of the performance of the Group.
Non-underlying items during 2021 include costs related to changes in senior management of the Group, including
employee termination payments.
6 Average staff numbers
The average number of staff employed by the Group during the year was as follows:
Group
The total above includes 4 (2020: 5) employees of the Company.
At 31 December 2021, the Group had 35 employees (2020: 41).
7 Finance costs
Interest expense on financial liabilities
Interest expense on lease liabilities
Interest income on lease assets
Net finance costs in respect of post-retirement benefits
68
2021
Number
38
2020
Number
44
2021
£’000
65
8
(3)
211
281
2020
£’000
67
19
(4)
266
348
Parity Group plc
The interest expense on financial liabilities represents interest paid on the Group’s asset-based financing facilities. A 1%
increase in the base rate would have increased annual borrowing costs by approximately £25,000 (2020: £17,000).
8 Share-based payments
The Group operates several share-based reward schemes for employees:
• HMRC approved schemes for Executive Directors and senior staff;
•
•
an unapproved scheme for Executive Directors and senior staff; and
a Save As You Earn Scheme for all employees.
Under the approved and unapproved schemes, options vest if the share price averages a target price for 5 consecutive
days over a three-year period from the date of grant. Options lapse if the individual leaves the Group, except under certain
circumstances such as leaving by reason of redundancy, when the options lapse 12 months after the leaving date.
In May 2021 the Save As You Earn Scheme was closed for all new participants and current participants were granted six
months to either purchase shares at the exercise price of 10 pence per share or to withdraw their funds from the scheme.
As at the end of 2021 all funds were withdrawn and the Save As You Earn Scheme was closed.
All employee options have a maximum term of ten years from the date of grant. The total share-based remuneration
recognised in the income statement was a gain of £64,000 (2020: loss of £90,000). Share-based remuneration relating to
key management personnel is disclosed in note 25.
Outstanding at beginning of the year
Granted during the year
Exercised during the year
Lapsed during the year
Outstanding at the end of the year
2021
Weighted
average exercise
price (p)
9
7
-
(9)
7
2020
Weighted
average exercise
price (p)
11
9
-
(11)
9
2021
Number
11,919,040
6,000,000
-
(9,909,040)
8,010,000
2020
Number
11,157,040
6,000,000
-
(5,238,000)
11,919,040
The exercise price of options outstanding at the end of the year and their weighted average contractual life fell within
the following ranges:
2021
Weighted
average
contractual life
(years)
9
-
1
2021
Exercise price (p)
7-11
11-17
17-28
2020
Weighted
average
contractual life
(years)
9
7
2
2020
Exercise price
(p)
7-11
11-17
17-28
2021
Number
8,000,000
-
10,000
8,010,000
2020
Number
10,379,040
1,500,000
40,000
11,919,040
Of the total number of options outstanding at the end of the year 10,000 (2020: 840,000) had vested and were exercisable
at the end of the year. The weighted average exercise price of those options was 26 pence (2020: 9 pence).
No options were exercised during the year (2020: none).
2,500,000 options were granted during the year (2020: 6,000,000) at a weighted average fair value of 1 pence (2020: 2
pence). In addition, 3,500,000 share warrants were granted during the year (2020: nil) at a weighted average fair value of
1 pence (2020: nil).
69
Parity Group plc
The following information is relevant in determining the fair value of options granted during the year under equity–settled
share-based remuneration schemes operated by the Group. There are no cash-settled schemes.
Option valuation model
Weighted average share price at grant date (p)
Weighted average exercise price (p)
Weighted average contractual life (years)
Weighted average expected life (years)
Expected volatility
Weighted average risk-free rate
Expected dividend growth rate
2021
Stochastic
7
7
10
5
47.7-48.0%
0.61%
0%
2020
Stochastic
7
8
10
5
47.6-48.0%
0.09%
0%
The volatility assumption is calculated as the historic volatility of the share price over a 5 year period prior to grant date.
Share options issued to defined benefit pension scheme
In December 2010 the Group issued 1,000,000 share options in Parity Group plc to the pension scheme at an exercise
price of 9 pence per share. These options may be exercised at the discretion of the Trustees; they vested on grant and
have no expiry date. Any gain on exercise is to be used to reduce the scheme deficit. These options were valued using the
stochastic method. The share price on the grant date was 15.75 pence. Whilst the options do not have an expiry date,
for valuation purposes it is assumed that the expected life of the options is 8 years. The expected volatility is 64.2% and
the average risk-free rate assumed was 3.4%.
9
Taxation
Current tax
Current tax on profit for the year
Total current tax expense
Deferred tax
Accelerated capital allowances
Recognition of deferred tax asset on past trading losses
Origination and reversal of other temporary differences
Adjustments in respect of prior periods
Change in corporation tax rate
Total deferred tax charge
Tax charge
2021
£’000
2020
£’000
-
-
(2)
(678)
98
115
-
(467)
(467)
-
-
(4)
-
2
230
(83)
145
145
The adjustment in respect of prior periods of £115,000 (2020: £230,000) largely relates to decisions to claim or disclaim
capital allowances.
There is no current tax payable by the Group for 2021 (2020: £nil).
The Group’s profits for this accounting period are subject to tax at a rate of 19% (2020: 19%).
The reasons for the difference between the actual tax credit for the year and the standard rate of corporation tax in the
UK applied to profit for the year are as follows:
Loss before tax
Expected tax credit based on the standard rate of UK
corporation tax of 19% (2020: 19%)
Expenses not allowable for tax purposes
Adjustments in respect of prior periods
70
2021
£’000
(1,103)
(210)
-
115
2020
£’000
(325)
(62)
(2)
230
Tax losses not recognised
Tax losses recognised
Change in corporation tax rate
Other
Tax charge
Tax on each component of other comprehensive income is as follows:
Parity Group plc
85
253
-
(678)
(83)
33
(23)
20
145
(467)
Before
tax
£’000
1,620
2021
Tax
£’000
(567)
After
tax
£’000
1,053
Before
tax
£’000
1,041
2020
Tax
£’000
(198)
After
tax
£’000
843
Remeasurement of defined benefit pension scheme
10
Earnings per ordinary share
Basic earnings per share is calculated by dividing the basic earnings for the year by the weighted average number of fully
paid ordinary shares in issue during the year.
Diluted earnings per share is calculated on the same basis as the basic earnings per share with a further adjustment to
the weighted average number of fully paid ordinary shares to reflect the effect of all dilutive potential ordinary shares.
Weighted
average
number of
shares
2021
‘000
102,854
-
102,854
Loss
2021
£’000
(636)
-
(636)
Loss
per share
2021
Pence
(0.62)
-
(0.62)
Weighted
average
number of
shares
2020
‘000
102,624
-
102,624
Loss
2020
£’000
(470)
-
(470)
Loss
per share
2020
Pence
(0.46)
-
(0.46)
Basic
Effect of dilutive options
Diluted
As at 31 December 2021 the number of ordinary shares in issue was 103,075,633 (2020: 102,624,020). There were
8,010,000 options that had a potential dilutive effect in 2021 (2020: Nil).
11
Goodwill
The carrying amount of goodwill is allocated to the Group’s two separate continuing cash generating units (CGUs), being
Parity Professionals Limited and Parity Consultancy Services Limited.
Carrying amounts are as follows:
Carrying value
Balance at 1 January 2020 and 31 December 2020
Balance at 1 January 2021 and 31 December 2021
Parity Professionals
Limited
£’000
Parity
Consultancy
Services Limited
£’000
2,642
2,642
1,952
1,952
Total
£’000
4,594
4,594
Goodwill was tested for impairment in accordance with IAS 36 at the year end and no impairment charge was recognised.
Impairment calculations include the effect of changes following the application of IFRS 16.
The recoverable amounts of the CGUs are based on value in use calculations using the pre-tax cash flows based on
forecasts approved by management for 2022. Years from 2023 to 2027 are based on the forecast for 2022 projected
71
Parity Group plc
forward at expected growth rates, with no growth assumed beyond these years. This approach is considered prudent
based on current expectations of the 2022 long-term growth rate.
Major assumptions are as follows:
2021
Discount rate
Forecast revenue growth
Operating margin 2022
Operating margin 2023 onward
2020
Discount rate
Forecast revenue growth
Operating margin 2021
Operating margin 2022 onward
Parity Professionals
Limited
%
Parity Consultancy
Services Limited
%
11.5
5.0-11.5
3.3
4.8-5.8
11.3
12.2-13.3
3.0
3.7-3.8
11.5
11.3-14.9
14.0
14.7-15.3
11.3
10.0-15.9
4.0
4.1-12.1
Discount rates are based on the Group’s weighted average cost of capital.
Forecast revenue growth rates are based on past experience and future expectations of economic conditions. Growth for
the CGUs is assumed to be higher than the long-term growth rate for the UK economy due to the following factors:
•
•
There is focused investment in growing new clients and service lines, including areas that are seeing significant
growth post the Covid-19 pandemic;
The business recruited additional heads to focus on key areas of new business within recruitment including value
added services and permanent recruitment; and
• Market indicators and recent engagements with clients support the increased demand for high skilled IT and
data professionals and help underwrite the growth forecasts.
A 10% change in any of the underlying assumptions used in the discounted cash flow forecasts would not lead to the
carrying value of goodwill being materially in excess of their recoverable amounts.
12
Other intangible assets
Consolidated
Cost
At 1 January
Additions
Disposals
At 31 December
Accumulated amortisation
At 1 January
Charge for the year
Disposals
At 31 December
Net book value
Software
2021
£’000
2020
£’000
Intellectual property
2020
£’000
2021
£’000
Total
2021
£’000
2020
£’000
408
-
-
408
402
3
-
405
3
408
-
-
408
376
26
-
402
6
-
81
-
81
-
-
-
-
81
-
-
-
-
-
-
-
-
-
408
81
-
489
402
3
-
405
84
408
-
-
408
376
26
-
402
6
In 2021 the Group invested in the development of a data warehouse to support the ongoing business operations. The
additions to Intellectual Property represent the costs associated with building the data warehouse and creating the data
asset within the data warehouse.
72
The Company does not hold any intangible assets.
Parity Group plc
As at 31 December 2021, neither the Group nor the Company had any capital commitments contracted for but not
provided for the purchase of intangible assets (2020: £nil).
13
Property, plant and equipment
Consolidated
Cost
At 1 January
Additions
Disposals
At 31 December
Accumulated depreciation
At 1 January
Charge for the year
Disposals
At 31 December
Net book value
Leasehold
improvements
2021
£’000
2020
£’000
Office equipment
Total
2021
£’000
2020
£’000
2021
£’000
2020
£’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
204
4
-
208
181
12
-
193
15
204
-
-
204
161
20
-
181
23
204
4
-
208
181
12
-
193
15
204
-
-
204
161
20
-
181
23
The Company does not hold any property, plant and equipment.
As at 31 December 2021, neither the Group nor the Company had any capital commitments contracted for but not
provided for the purchase of property, plant and equipment (2020: £nil).
14
Leases
The Group holds leases for its main office premises. Each lease is reflected on the balance sheet as a right-of-use asset
and a lease liability unless exempt. The statement of financial position includes the following amounts in relation to leases
where the Group is a lessee:
Right-of-use assets
Buildings
IT equipment
Lease liabilities
Current
Non-current
2021
£’000
2020
£’000
149
-
149
242
29
271
247
-
247
321
87
408
Additions to right-of-use assets during the year were £345,000 (2020: £562,000). The total cash outflow for lease liabilities
during the year was £490,000 (2020: £649,000).
Amounts recognised in profit or loss in respect of the above leases are as follows:
Depreciation charge on right-of-use assets
-
-
Impairment charge on right-of-use-assets
Buildings
IT equipment
73
2021
£’000
414
-
2020
£’000
537
3
Buildings
-
Total depreciation and impairment charge on right-of-use assets
Rent concession
Interest expense included in finance costs
Future minimum lease payments at 31 December 2021 were as follows:
Less than one year
Between one and two years
Between two and three years
Parity Group plc
31
445
-
8
-
540
(21)
19
Minimum
payments
2021
£'000
246
29
-
275
Interest
2021
£'000
(3)
-
-
(3)
Present
value
2021
£'000
243
29
-
272
At 31 December 2021, the Group was committed to £nil (2020: £nil) of future lease payments in respect of leases not yet
commenced.
All leases held during 2021 were accounted for under IFRS 16.
15
Deferred taxation
At 1 January
Recognised in other comprehensive income
Remeasurement of defined benefit pension scheme
Recognised in the income statement
Adjustments in relation to prior periods
Recognition of deferred tax asset for prior trading losses
Change in corporation tax rate
Capital allowances in excess of depreciation
Other short-term timing differences
At 31 December
The deferred asset of £528,000 (2020: £627,000) comprises:
Depreciation in excess of capital allowances
Other short-term timing differences
Retirement benefit (asset)/liability
Consolidated
2021
£’000
627
2020
£’000
970
(567)
(198)
(115)
678
-
2
(97)
528
Consolidated
2021
£’000
520
8
-
528
(230)
-
83
4
(2)
627
2020
£’000
632
34
(39)
627
A deferred tax asset for unused tax losses carried forward is normally recognised on the same basis as for deductible
temporary differences. However, the existence of the unused tax losses is itself strong evidence that future taxable profit
may not be available. Therefore, when an entity has a history of recent losses, the entity recognises a deferred tax asset
arising from unused tax losses only to the extent that there is convincing evidence that sufficient taxable profit will be
available against which the unused tax losses can be utilised. At the balance sheet date, the Directors considered
recognising a deferred tax asset for previously unrecognised unused tax losses carried forward by Parity Consultancy
Services Limited. The review concluded that as Parity Consultancy Services Limited has a deferred tax liability of £678,000
(2020: £39,000) related to its defined benefit pension plan, a deferred tax asset for previously unrecognised unused tax
losses of £678,000 would be recognised to offset the liability.
74
Parity Group plc
The Directors believe that the deferred tax asset recognised is recoverable based on the future earning potential of the
Group and the individual subsidiaries. The forecasts for Parity Professionals Limited comfortably support the unwinding
of the deferred tax asset held by this company of £256,000 (2020: £335,000). Parity Consultancy Services Limited currently
has a deferred tax asset of £272,000 (2020: £292,000) which can be offset against the deferred tax liability to be unwound
on the same defined benefit scheme .
The Group has unrecognised carried forward tax losses of £32,679,000 (2020: £29,392,000). The Group has unrecognised
capital losses carried forward of £282,441,000 (2020: £282,441,000). These losses may be carried forward indefinitely.
The Company has unrecognised carried forward tax losses of £26,522,000 (2020: £23,511,000). The Company has
unrecognised capital losses carried forward of £281,875,000 (2020: £281,875,000). These losses may be carried forward
indefinitely.
16
Trade and other receivables
Amounts falling due within one year:
Trade receivables
Accrued income
Amounts owed by subsidiary undertakings
Other receivables
Prepayments
Amounts falling due after one year:
Amounts owed by subsidiary undertakings
Other receivables
Total
Consolidated
Company
2021
£’000
2,116
2,435
-
75
142
4,768
-
29
29
4,797
2020
£’000
2,197
3,591
-
110
164
6,062
-
87
87
6,149
2021
£’000
2020
£’000
-
-
-
-
-
-
-
-
925
-
-
925
94,850
-
94,850
94,850
134,662
-
134,662
135,587
The fair values of trade and other receivables are not considered to differ from the values set out above.
£2,116,000 (2020: £2,197,000) of the Group’s trade receivables and £2,435,000 (2020: £3,591,000) of the total of the
Group’s accrued income and amounts recoverable on contracts, are pledged as collateral for the asset-based
borrowings. These borrowings fluctuate daily and at 31 December 2021 totalled £2,279,000 (2020: £2,941,000).
The movement in accrued revenue on contracts during the period is shown below:
At 1 January
Billed and cash received during the year
Amounts accrued at year end
At 31 December
Contract Assets
2021
£’000
3,591
(3,591)
2,435
2,435
2020
£’000
3,882
(3,882)
3,591
3,591
The Group records impairment losses on its trade receivables separately from gross receivables. Factors considered in
making provisions for receivables include the ability of the customer to settle the debt, the age of the debt and any
other circumstance particular to the transaction that may impact recoverability.
The balance of impaired losses for the Group at 31 December 2021 was £nil (2020: £9,000). All debts at 31 December
2021 are considered to be recoverable.
The Company holds interest-bearing loan agreements with some of its subsidiary undertakings. Interest on all loans is
charged at 2.0% above the prevailing Bank of England base rate. The Company’s receivables due from subsidiary
undertakings were reviewed for impairment at the balance sheet date based on the performance of 2021 and on
75
Parity Group plc
subsequent years’ forecast projections. A discounted future cash flow method was employed for the review. As a result
of this review, no provision was deemed necessary. The assessment was performed on a value in use basis using a discount
rate of 9.3% (2020: 11.3%) and the other parameters used in the goodwill impairment review, as outlined in note 11.
As at 31 December 2021 trade receivables of £523,000 (2020: £374,000) were past due but not impaired. These relate
to customers where there is no evidence of unwillingness or of an inability to settle the debt. The ageing of Group trade
receivables is as follows:
Not past due
31-60 days and past due
61-90 days
>90 days
Total
2021
Impaired
£’000
-
-
-
-
-
Gross
£’000
1,593
310
131
82
2,116
Total
£’000
1,593
310
131
82
2,116
2020
Impaired
£’000
-
-
-
(9)
(9)
Gross
£’000
1,823
323
36
24
2,206
Total
£’000
1,823
323
36
15
2,197
The Company had no provisions for trade receivables, as it has no trade receivables. Other receivables in the Group and
the Company were not past due and not impaired.
17
Loans & borrowings
Current
Bank and other borrowings due within one year or on demand:
Asset-based financing facility
Changes in liabilities from financing activities
Balance at 1 January 2021
Repayment of borrowings
Balance at 31 December 2021
Further details of the Group’s banking facilities are given in note 20.
18
Trade and other payables
Consolidated
2021
2020
restated
£’000
27
3,168
-
912
750
4,857
-
4,857
Amounts falling due within one year:
Payments in advance
Trade payables
Amounts due to subsidiary undertakings
Other tax and social security payables
Other payables and accruals
Amounts falling due after one year:
Amounts due to subsidiary undertakings
Total
£’000
11
2,494
-
367
736
3,608
-
3,608
76
Consolidated
2021
£’000
2020
£’000
2,279
2,941
Loans and borrowings
£000
2,941
(662)
2,279
Company
2021
£’000
-
-
15,786
77
185
16,048
2020
restated
£’000
-
-
13,764
63
117
13,944
91,043
107,091
134,476
148,420
Parity Group plc
The fair value of trade and other payables has not been separately disclosed as, due to their short duration, the
Directors consider the carrying amounts recognised in the statement of financial position to be a reasonable
approximation of their fair value.
19
Provisions
Consolidated
At 1 January 2021
Used in year
Reversed in year
Created in year
At 31 December 2021
Due within one year
Due after one year
Total
Leasehold
dilapidations
£’000
42
-
-
-
42
Restructuring
£’000
139
(45)
(94)
-
-
-
42
42
-
-
-
Total
£’000
181
(45)
(94)
-
42
-
42
42
The Company had no provisions at 31 December 2021 (2020: £nil).
Leasehold dilapidations
Leasehold dilapidations relate to the estimated cost of returning leasehold properties to their original state at the end
of the lease in accordance with the lease terms. Dilapidation charges that will crystallise at the end of the period of
occupancy are provided for in full on all properties. Based on current lease expiry dates it is estimated these provisions
will be settled over a period of one to three years. The main uncertainty relates to the estimation of the costs that will
be incurred at the end of the lease.
20
Financial instruments – risk management
The Group is exposed to risks that arise from its use of financial instruments. This note describes the Group’s objectives,
policies and processes for managing those risks and the methods used to measure them. Further quantitative
information in respect of these risks is presented throughout these financial statements.
There have been no substantive changes in the Group’s exposure to financial instrument risks and the methods used to
measure them from previous periods unless otherwise stated in this note.
Principal financial instruments
The principal financial instruments used by the Group, from which financial instrument risk arises, are trade receivables,
cash and cash equivalents, trade and other payables and bank borrowings.
A summary by category of the financial instruments held by the Group is provided below:
Consolidated
As 31 December 2021
Financial assets
Non-current trade and other receivables
Cash and cash equivalents
Trade and other short-term receivables
Financial liabilities
Asset-based financing facility
Lease liabilities
Trade and other short-term payables
77
Amortised
cost
£’000
29
1,121
4,626
5,776
2,279
272
3,597
6,148
Total
£’000
29
1,121
4,626
5,776
2,279
272
3,597
6,148
Parity Group plc
As 31 December 2020 (Restated)
Financial assets
Non-current trade and other receivables
Cash and cash equivalents
Trade and other short-term receivables
Financial liabilities
Asset-based financing facility
Lease liabilities
Trade and other short-term payables
87
3,172
5,898
9,157
2,941
408
4,830
8,179
A summary by category of the financial instruments held by the Company is provided below:
Company
As 31 December 2021
Financial assets
Non-current trade and other receivables
Cash and cash equivalents
Trade and other short-term receivables
Financial liabilities
Non-current trade and other payables
Trade and other short-term payables
As 31 December 2020
Financial assets
Non-current trade and other receivables
Cash and cash equivalents
Trade and other short-term receivables
Financial liabilities
Non-current trade and other payables
Trade and other short-term payables
Amortised
cost
£’000
94,850
405
-
95,255
91,043
16,048
107,091
134,662
301
925
135,888
134,476
13,944
148,420
87
3,172
5,898
9,157
2,941
408
4,830
8,179
Total
£’000
94,850
405
-
95,255
91,043
16,048
107,091
134,662
301
925
135,888
134,476
13,944
148,420
Non-current amounts due to subsidiary undertakings have no specific repayment terms but are subject to notice periods
of at least one year.
Fair values of financial instruments
The fair values of all of the Group’s and the Company’s financial instruments are the same as their carrying values.
General objectives, policies and processes – risk management
The Group is exposed through its operations to the following financial instrument risks: credit risk; liquidity risk; interest
rate risk; and foreign currency risk.
The policy for managing these risks is set by the Board following recommendations from the Chief Financial Officer.
Certain risks are managed centrally, while others are managed locally following guidelines communicated from the centre.
The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the
Group’s competitiveness and flexibility. The policy for each of the above risks is described in more detail below.
78
Parity Group plc
Credit risk
Credit risk arises from the Group’s trade and other receivables. It is the risk that the counterparty fails to discharge
their obligation in respect of the instrument.
The Group is mainly exposed to credit risk from credit sales. It is Group policy to assess the credit risk of new customers
before entering contracts. Such credit ratings are then factored into the credit assessment process to determine the
appropriate credit limit for each customer. The Group does not collect collateral to mitigate credit risk.
The Group operates primarily in the UK with 94% of generated revenues from the UK (2020: 96%). Approximately 69%
(2020: 75%) of the Group’s turnover is derived from the public sector. The largest customer balance represents 27%
(2020: 20%) of the trade receivables balance.
Quantitative disclosures of the credit risk exposure in relation to financial assets are set out below. Further disclosures
regarding trade and other receivables, which are neither past due nor impaired, are provided in note 16.
2020
2021
Carrying
value
£’000
1,121
4,655
5,776
Maximum
exposure
£’000
1,121
4,655
5,776
Carrying
value
£’000
Maximum
exposure
£’000
3,172
5,985
9,157
3,172
5,985
9,157
Financial assets
Cash and cash equivalents
Trade and other receivables
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of
changes in interest rates.
It is Group policy that all external Group borrowings are drawn down on the asset-based financing facilities arranged
with our bankers which bear a floating rate of interest based on the Leumi base rate. Borrowings against the asset-
based financing facilities are typically drawn or repaid on a daily basis in order to minimise borrowings and interest
costs and transaction charges. Although the Board accepts that this policy neither protects the Group entirely from the
risk of paying rates in excess of current market rates, nor eliminates the cash flow risk associated with interest
payments, it considers that it achieves an appropriate balance of these risks.
Throughout 2021 the Group’s variable rate borrowings were denominated in Sterling and Euro. Interest costs on
borrowings from the asset-based financing facility with PNC (January – May) and Leumi ABL (May – December) was
charged at 2.00% above base rate for all of 2021 (2020: 2.00%). The Leumi facility has a 3 year term of commitment,
although amounts are repayable upon demand under certain circumstances such as default. If interest rates on
borrowings had been 1% higher/lower throughout the year with all other variables held constant, the loss after tax for
the year would have been approximately £25,000 higher/lower (2020: £17,000) and net assets £25,000 lower/higher
(2020: £17,000). The Directors consider a 1% change in base rates is the maximum likely change over the next year,
being the period to the next point at which these disclosures are expected to be made.
The Company holds interest-bearing loan agreements with some of its subsidiary undertakings. Interest on all loans is
charged at 2.0% above the prevailing Bank of England base rate, except for one loan with Parity International B.V.
which is charged at 2.0% above the prevailing European Central Bank base rate. As at 31 December 2021, the loan
balance due by the Company to Parity International BV, translated into Sterling, was £28,066,000 (2020: £29,469,000).
Foreign exchange risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because
of changes in foreign exchange rates.
The Group no longer has any active overseas operations but does retain certain overseas subsidiaries that are not
trading. The Group’s net assets arising from overseas operations are exposed to currency risk resulting in gains or losses
on retranslation into sterling. The asset exposure is mainly in respect of intercompany balances.
79
Parity Group plc
The Group does not hedge its net investment in overseas operations as it does not consider that the potential financial
impact of such hedging techniques warrants the reduction in volatility in consolidated net assets.
The business has limited transactions in foreign currency. The hedging of individual contracts is considered on a case
by case basis. Owing to the small value and volume of such contracts no hedging transactions were entered in 2021 or
2020.
During 2014, the underlying denomination of a large intercompany balance between the Company and one of the
Group’s inactive overseas subsidiaries was revised, whereby the denomination of the loan was revised from Sterling to
Euros and thus subject to exchange rate fluctuations in the books of the Company. In 2021 the Company recorded a
translation gain of £1,965,000 (2020: loss of £1,681,000). As at 31 December 2021, the loan balance due by the
Company, translated into Sterling, was £28,066,000 (2020: £29,469,000).
The currency profile of the Group’s net financial assets was as follows:
Net foreign currency financial assets
Sterling
Euro
US Dollar
Total net exposure
Functional currency of individual entity
Euro
Total
Sterling
2021
£’000
-
(27,279)
4
(27,275)
2020
£’000
-
(29,021)
4
(29,017)
2021
£’000
(2,462)
-
-
(2,462)
2020
£’000
(2,411)
-
-
(2,411)
2021
£’000
(2,462)
(27,279)
4
(29,737)
2020
£’000
(2,411)
(29,021)
4
(31,428)
The currency profile of the Company’s net financial assets was as follows:
Net foreign currency financial assets
Euro
US Dollar
Total net exposure
Sterling
2021
£’000
(27,680)
4
(27,676)
2020
£’000
(29,292)
4
(29,288)
Sensitivity analysis – Group and Company
If the exchange rate between Sterling and the Euro had been 10% higher/lower at the balance sheet date, with all other
variables held constant, the effect on equity for the year would have been approximately £2,728,000 higher/lower (2020:
£2,902,000). A 10% fluctuation in any other currency exchange rate would not have a significant impact on profit and loss,
nor equity.
Liquidity risk
Liquidity risk arises from the Group’s management of working capital and the finance charges on its borrowings under its
asset-based financing arrangements. It is the risk that the Group will encounter difficulty in meeting its financial
obligations as they fall due.
The liquidity of each Group entity is managed centrally, with daily transfers to operating entities to maintain a pre-
determined cash balance. Normal supplier terms range from 2 weeks to 30 days. The level of the Group facility is
approved periodically by the Board and negotiated with the Group’s current bankers. At the reporting date, cash flow
projections were considered by the Board and the Group is forecast to have sufficient funds and available funding
facilities to meet its obligations as they fall due.
The following table sets out the contractual maturities (representing undiscounted contractual cash flows) of financial
liabilities:
80
Consolidated
At 31 December 2021
Trade and other payables
Lease liabilities
Borrowings
Total
At 31 December 2020 (Restated)
Trade and other payables
Lease liabilities
Borrowings
Total
Company
At 31 December 2021
Trade and other payables
Total
At 31 December 2020
Trade and other payables
Total
Up to
1 month
£’000
3,597
243
2,279
6,119
Up to
1 month
£’000
4,830
321
2,941
8,092
Between 1
month and
1 year
£’000
-
29
-
29
Between 1
month and
1 year
£’000
-
57
-
57
Up to
1 month
£’000
16,048
16,048
Up to
1 month
£’000
13,944
13,944
Between 1
month and
1 year
£’000
-
-
Between 1
month and
1 year
£’000
-
-
Parity Group plc
Over
1 year
£’000
-
-
-
-
Over
1 year
£’000
-
30
-
30
Over
1 year
£’000
91,043
91,043
Over
1 year
£’000
134,476
134,476
Total
£’000
3,597
272
2,279
6,148
Total
£’000
4,830
408
2,941
8,179
Total
£’000
107,091
107,091
Total
£’000
148,420
148,420
More detail on trade and other payables is given in note 18.
Capital disclosures
The capital structure of the Group consists of cash and cash equivalents, equity attributable to equity holders, and asset-
based financing. There is no other long-term external debt, except for lease liabilities which are explained more fully in
note 14.
During 2021 The Group uses two asset-based financing facilities. The first facility was with PNC Business Credit, a member
of The PNC Financial Services Group, Inc. and this agreement ran from January until May. In May a new asset-based
finance facility was agreed with LEUMI UK which is still being utilised. Both facilities enable the Group to borrow against
both trade debt and accrued income and the current Leumi facility provides for borrowing of up to £9.0m depending on
the availability of appropriate assets as security.
The Group’s and Company’s objectives when maintaining capital are:
•
to safeguard the entity's ability to continue as a going concern, so that it can continue to provide returns for
shareholders and benefits for other stakeholders; and
to provide an adequate return to shareholders by pricing products and services commensurately with the level of
risk.
•
81
The Group’s net debt position is as follows:
Consolidated
Cash and cash equivalents
Asset-based borrowings
Net cash before lease liabilities
Lease liabilities
Net (debt)/cash
Parity Group plc
2021
£’000
1,121
(2,279)
(1,158)
(272)
(1,430)
2020
£’000
3,172
(2,941)
231
(408)
(177)
The Board regularly reviews the adequacy of resources available and considers the options available to increase them.
The asset-based borrowing facility contains certain externally imposed financial covenants which have been met
throughout the period.
The Company does not currently have distributable reserves available for dividend payments. A capital reconstruction
will be necessary to create reserves available for distribution. The Board will keep possible capital reconstruction options
under review.
21
Reserves
The Board is not proposing a dividend for the year (2020: nil pence per share).
The following describes the nature and purpose of each reserve within shareholders' equity:
Share capital
Share capital consists of ordinary share capital and previously consisted of deferred share capital.
Ordinary share capital
Share capital is the amount subscribed for ordinary shares at nominal value. During 2021, 451,613 ordinary shares were
issued. No share options were exercised during the year (2020: none).
Share premium reserve
Share premium is the amount subscribed for share capital in excess of nominal value. During 2021 451,613 ordinary shares
were issued at a premium of 5.75p per share (2020: none).
Capital redemption reserve
A capital redemption reserve of £14,319,000 was created during 2017 when the Directors resolved to cancel the deferred
shares of Parity Group plc.
Other reserves
Other reserves of the Group relate principally to a reserve created following a change of the Group’s ultimate parent and
a corresponding Scheme of Arrangement in July 1999, and a reserve created following the reorganisation of the Group’s
capital structure in 2002 that resulted in the Company increasing its investment in subsidiary undertakings.
Retained earnings
Retained earnings represent the cumulative net gains and losses recognised in the income statement.
22
Pension commitments
The Group operates a small number of pension schemes. With the exception of the Parity Group Retirement Benefits
Plan, all of the schemes are defined contribution plans and the assets are held in separately administered funds.
Contributions to defined contribution schemes from during the year were £86,000 (2020: £102,000).
Defined benefit plan
In March 1995, the Group established the Parity Retirement Benefits Plan, renamed as the Parity Group Retirement
Benefits Plan (“the Plan”), following a Scheme of Arrangement in 1999, in order to facilitate the continuance of pension
entitlements for staff transferring from other schemes following acquisitions in 1994. The Plan is governed by the Trustees
of the plan and is administered by Cartwright Group Limited in accordance with the Trust Deed and Rules, solely for the
82
Parity Group plc
benefit of its members and other beneficiaries. The Trustees comprise an independent Chairman, one member
representative and one employer representative. It is a funded defined benefit scheme and has been closed to new
members since 1995. With effect from 1 January 2005 this scheme was also closed to future service accrual and future
contributions paid into money purchase arrangements.
The weighted average liability duration is approximately 13 years (2020: 14 years) and can be attributed to the scheme
members as follows:
Pensioner members
Deferred members
Total
Number of
members
61
6
67
Weighted
average liability
duration (years)
13
18
13
There were no retirements during the year (2020: one). There was a reduction by 2 total members during the year (2020:
no change).
The Plan is funded by the Group based on the triennial actuarial valuation of the scheme’s technical provisions. The
actuarial valuation is subject to more prudent assumptions than the accounting valuation under IAS 19. The triennial
actuarial valuation due at April 2018 was finalised during 2019 and resulted in an increase in monthly contributions from
£17,260 per month to £24,300 per month. Funding requirements are formally set out in the Statement of Funding
Principles, Schedule of Contributions and Recovery Plan agreed between the Trustees and the Group.
The valuation for IAS 19 has been provided by Cartwright Group Limited, a company that specialises in providing actuarial
services, as at 31 December 2021.
Principal actuarial assumptions
Rate of increase of pensions in payment
Discount rate
Retail price inflation
Consumer price inflation
2021
3.8-4.0%
1.9%
3.6%
2.6%
2020
3.6-3.9%
1.3%
3.2%
2.2%
In accordance with the revised IAS 19, the assumption for future investment returns is the same discount rate of 2.0%
(2020: 2.0%) used in calculating the pension liabilities.
The underlying mortality assumption used is in accordance with the standard table known as S1PA_H, S1PA or S1PA_L
mortality, dependent on the size of each member’s pension, using the CMI_2020 projection based on year of birth with
a long-term rate of improvement of 1.25% p.a. (2020: CMI_2019 and 1.25% p.a.). This results in the following life
expectancies:
• Male aged 65 at 31 December 2021 has a life expectancy of 86 years (2020: 86 years)
•
Female aged 65 at 31 December 2021 has a life expectancy of 89 years (2020: 89 years)
Guaranteed Minimum Payment (“GMP”) equalisation
During 2018 the High Court of Justice in England made judgement in a case relating to GMP equalisation. The court held
that pensions earned between 1990 and 1997 must be equalised between men and women for the effect of GMPs. Most
sections of the Group’s scheme were unaffected since they were opted in to the Second State Pension, with just one
section opted out. The actuary estimates that the impact to the scheme will be to increase liabilities by between £10,000
and £30,000. Accordingly, an adjustment is recorded in these accounts to increase the scheme deficit by £20,000 (2020:
£20,000), first recognised as a past service cost recognised in the income statement for the year ended 31 December
2018.
83
Reconciliation to consolidated statement of financial position
Parity Group plc
Fair value of plan assets
Present value of funded obligations
At the end of the year
Reconciliation of plan assets
At the beginning of the year
Expected return
Contribution by Group
Benefits paid
Expenses met by scheme
Actuarial (loss)/ gain
Plan assets at the end of the year
2021
£’000
24,478
(22,539)
1,939
2021
£’000
25,143
320
322
(964)
(213)
(130)
24,478
2020
£’000
25,143
(24,935)
208
2020
£’000
22,670
442
325
(990)
(247)
2,943
25,143
Contributions to the scheme included £nil of additional payments (2020: £nil). The actuarial loss on plan assets relates to
the fall in value of the scheme’s investments reflecting uncertainty in global equity markets experienced in 2021.
Composition of plan assets
Diversified growth funds – Quoted
Liability driven investment funds – Quoted
Options in Parity Group plc
Cash
Total plan assets
Reconciliation of plan liabilities
At the beginning of the year
Interest cost
Benefits paid
Actuarial (gain)/loss
Plan liabilities at the end of the year
Amounts recognised in the consolidated income statement
Included in finance costs
Expected return on plan assets, net of expenses
Unwinding of discount on plan liabilities (interest cost)
Net finance costs in respect of post-retirement benefits
Amounts recognised in the consolidated statement of comprehensive income
Actuarial (loss)/gain on plan assets
Actuarial gain/(loss) on plan liabilities
Remeasurement of defined benefit pension scheme
84
2021
£’000
24,308
-
96
74
24,478
2021
£’000
24,935
318
(964)
(1,750)
22,539
2021
£’000
107
(318)
(211)
2021
£’000
(130)
1,750
1,620
2020
£’000
20,139
4,827
96
81
25,143
2020
£’000
23,562
461
(990)
1,902
24,935
2020
£’000
195
(461)
(266)
2020
£’000
2,943
(1,902)
1,041
Parity Group plc
The asset recognised under this scheme is not limited under IFRIC 14 as the Group has an unconditional right to realise
the economic benefit of these assets during the life of the plan or when the plan is settled.
Defined benefit obligation trends
Plan assets
Plan liabilities
Surplus/(deficit)
Experience adjustments on assets
Experience adjustments on liabilities
Sensitivity analysis
Effect of change in assumptions
No change
0.25% rise in discount rate
0.25% fall in discount rate
0.25% rise in inflation
0.25% fall in inflation
23
Share capital
Authorised share capital
Authorised at 1 January and 31 December
Issued share capital
Issued and fully paid at 1 January
Shares issued during the year
Issued and fully paid at 31 December
24
Contingencies
2021
£’000
24,478
(22,539)
1,939
(130)
(0.5%)
1,750
7.2%
2020
£’000
25,143
(24,935)
208
2,943
13.3%
(1,902)
(8.3%)
2019
£’000
22,670
(23,562)
(892)
2,761
13.9%
(1,830)
(8.4%)
2018
£’000
20,099
(22,041)
(1,942)
(1,586)
(7.3%)
581
2.6%
2017
£’000
21,880
(22,939)
(1,059)
609
2.9%
(191)
(0.8%)
Liabilities
£’000
22,539
21,805
23,273
22,639
22,439
Assets
£’000
24,478
24,478
24,478
24,478
24,478
Surplus/(deficit)
£’000
1,863
2,597
1,129
1,763
1,963
Increase/
(decrease) in
surplus
£’000
-
734
(734)
(100)
100
Ordinary shares 2p each
2021
£’000
8,181
2021
Number
409,044,603
Ordinary shares 2p each
2021
£’000
2,053
9
2,062
2021
Number
102,624,020
451,613
103,075,633
In the normal course of business, the Group is exposed to the risk of claims in respect of contracts where the customer
or supplier is dissatisfied with the performance, pricing and/or completion of the contracted service or product. Such
claims are normally resolved by a combination of negotiation, further work by Parity or the supplier, and/or monetary
settlement without formal legal process being necessary. Occasionally, such claims progress into legal action. At the
present time, Group management believes the resolution of any known claims or legal proceedings will not have a
material further impact on the financial position of the Group.
85
25
Key management remuneration
Parity Group plc
Key management comprises the Group’s Board of Directors, along with Group’s executive committee of senior
management. The total remuneration received by key management for 2021 was £1,118,000 (2020: £1,209,000).
Remuneration comprises emoluments received, pension contributions, share-based payment charges and compensation
for loss of office. Remuneration of the Board of Directors, including that of the highest paid Director Matthew Bayfield, is
disclosed in detail within the remuneration report on page 30.
Short-term employee benefits
Post-employment benefits
Compensation for loss of office
Share-based payments (note 8)
26
Related party transactions
2021
£’000
843
32
308
(65)
1,118
2020
£’000
955
29
145
80
1,209
Consolidated
During the year the Group engaged the marketing services of CRM Squad. The Executive Chairman Mark Braund is an
owner and Director of CRM Squad. The total value of services received from CRM squad in 2021 is £12,180. (2020: none).
Company
Details of the Company’s holdings in Group undertakings are given in note 27. The Company entered into transactions
with Group undertakings as shown in the table below:
Operating
expenses
2021
£’000
Finance
income
2021
£’000
Finance
expense
2021
£’000
Operating
expenses
2020
£’000
Finance
income
2020
£’000
Finance
expense
2020
£’000
(208)
-
(1,350)
(327)
-
(1,348)
-
1,181
-
-
1,195
-
Expenses incurred from Group
subsidiaries
Income generated from Group
subsidiaries
The Company had the following amounts payable to and recoverable from Group undertakings:
Amounts owed by subsidiary undertakings (note 16):
Falling due within one year
Falling due after one year
Amounts due to subsidiary undertakings (note 18):
Falling due within one year
Falling due after one year
2021
£’000
-
94,850
2020
£’000
925
134,662
(15,786)
(91,043)
(13,764)
(134,476)
86
27
Subsidiaries
Parity Group plc
The principal subsidiaries of Parity Group plc, which have been included in these consolidated financial statements, are
Parity Professionals Limited and Parity Consultancy Services Limited. Parity Professionals Limited and Parity Consultancy
Services Limited are wholly owned by Parity Holdings Limited and incorporated in the United Kingdom. Parity Holdings
Limited is a direct subsidiary of Parity Group plc and is incorporated in the United Kingdom.
Parity Professionals Limited is a specialist IT and data recruitment services company. Parity Consultancy Services Limited
provides IT and data services including consultancy and value added recruitment services.
During 2021, management continued to simplify the group structure. All UK dormant companies have been wound up
and will be struck off in due time.
The Company’s investment in continuing subsidiaries was reviewed for impairment at the balance sheet date based on
the performance of 2021 and on subsequent years’ forecast projections. A discounted future cash flow method was
employed for the review. As a result of this review, no provision was deemed necessary, leaving a carrying value of
£20,527,000 (2020: £20,527,000). The assessment was performed on a value in use basis using discount rates of 11.5%
(2020: 11.3%) and the other parameters used in the goodwill impairment review, as outlined in note 11.
The remaining Group subsidiaries are listed below. These are either discontinued or dormant, are wholly owned by the
Group ultimate parent Parity Group plc.
Parity Eurosoft Limited
Parity International BV (registered at Keizersgracht 62-64, 1015 CS Amsterdam, Netherlands)
Parity Limited
Parity Resources Limited
Parity Solutions (Dublin 1999) Limited (registered at 13-18 City Quay, Dublin 2 D02 ED70, Ireland)
Parity Solutions (Ireland) Limited (registered at Northern Ireland Science Park, Queens Road, Belfast BT3 9DT)
Personnel Solutions Inc. (registered at 39 Broadway, New York, NY10006, USA)
Teltech International Corp. (registered at 39 Broadway, New York, NY10006, USA)
28
Prior period adjustment
During the year, the Group discovered that contractor expenses has been erroneously understated in 2017 and 2018 by
a cumulative amount of £247,000. As a consequence, operating costs for the Group were understated in those years
and closing accruals have been understated since 2017. The understatement represents a prior period error under IAS 8
and is accounted for by correcting retrospectively in these financial statements. As the error occurred before the
earliest period presented in these financial statements, the Group has restated the opening balances of assets, liabilities
and equity for the earliest period presented. The adjustment was posted to contractor accruals within current liabilities
on the statement of financial position.
Reconciliation of changes is Equity
Equity as previously reported
Adjustment to prior year
Restatement of contractor expense accruals
Equity as adjusted
Analysis of the effect upon equity
Retained earnings
87
1 January
2019
£’000
(77,612)
(247)
(77,859)
1 January 2020
£’000
(77,753)
(247)
(78,000)
(247)
(247)
Perivan 263437