Annual Report and Accounts 2019 Brilliant People Bolder Decisions Transforming the relationship business and government have with data. Parity annual report and accounts 2019 Introduction 03 Introduction About Parity Making data driven decisions, it suggests options transformation a reality that were previously unimagined. Our strategic goal Our financial goal From helping chefs to plan Our business is based on a school menus to police forces Data doesn’t To equip our clients with the data skills and To grow net profitability with a more robust simple truth; without the right combat terrorism proactively, it is only justify advice necessary to make bold, commercial margin mix. people doing the right things transforming our world. the promise of data and the decisions, decisions. transformations it can enable, Positive change will depend on remains a dream. seeing data not as a technical it suggests problem of networks and By collaboratively building a reservoirs but as a human options community of data experts we process. It will ultimately be will make better, faster and that were our curiosity and integrity Our Purpose Our Mission Our Vision surer decisions possible in our that delivers not only the right previously We are the trusted partner of We provide expertise that To build the world’s most businesses, governments and commercial outcomes but also unimagined. data driven transformation. delivers positive growth for dynamic community of data lives. impacts society positively. clients through realising the true experts, enabling our clients to value of their data. realise their vision. Our mission is to release the We are partnering with potential in data to help our organisations to provide the clients grow. We provide a skills and knowhow to turn challenger spirit and expertise information into an effective and that enables organisations to positive driver for change. We make insight available to people are collaboratively building the at every level – so they can make most dynamic community of data Our values better decisions. experts, enabling our clients to realise that vision. We’re collaborative We have integrity We’re focused on commercial Data doesn’t only justify We believe in partnership - internally Building communities demands honesty outcomes and externally. By building trust and and fulfilling on your promise. Human Data exists to provide value, we don’t a community of experts we make integrity is the bedrock of what all else is problem solve in a vacuum, but with a transformation possible because built on and, like data integrity, creates commercial outlook that helps us be change isn’t easy and needs strong, solutions our clients can rely on. trusted partners to our clients as they positive relationships. realise the opportunities of data driven We bring a challenger spirit transformation. We’re curious Bringing down the walls, silos and Over 45 years of trusted relationships with our clients. A thirst for discovering what is possible outdated anachronisms of data drives us. Data is changing the world, complexity is how we challenge the Parity helps organisations find the right people, skills and data to support and will answer many of humanity’s problems in front of us, bringing new confident data-led business decisions. challenges, great and small. Curiosity solutions, new thinking and new teams inspires us to seek out new answers by to realise our client’s vision and realise We advise on data and we provide access to skills either as a managed service, asking the right questions. the true value of their data. through resourcing in the contract or permanent market, or as part of a learning and development programme. Our work comes from a mix of long-term contracts with public and private sector organisations as well as expanded projects with existing clients as a result of strong relationships and a track record of high client satisfaction. Contents Introduction ....................................02 Section two About Parity....................................03 Governance Corporate Governance Report ....................26 The Board .....................................32 Section one Corporate Social Responsibility Report .............34 Strategic report Remuneration Committee Report ..................39 Chairman’s Report ..............................06 Audit Committee Report .........................46 Chief Executive’s Statement ......................08 Directors’ Report ...............................48 Our Timeline . 12 Statement of Directors’ Responsibilities .............52 Section one Case Studies ..................................14 Independent Auditor’s Report .....................54 A New Operating Model ..........................16 Strategic report Operational and Finanicial Review .................18 Section three Accounts, notes and other information Accounts ......................................62 Notes to the Financial Statements ..................70 Corporate Information ..........................102 Advisors .....................................102 6 Strategic report Parity annual report and accounts 2019 Parity annual report and accounts 2019 Strategic report 7 Chairman’s report 2019 – Transformation on track Parity underwent very of data in data centre storage is business, and we have changed the Financing and dividend already achieved in 2019 and further significant change during 2019. five times higher than it was five way we incentivise people to align organisational design and process At the beginning of the year years ago and that rate of growth is management and shareholder’s In May we renewed our banking mapping work instigated before we appointed our new chief forecast to continue. For businesses, interests, moving to a profit based arrangements with PNC for a further the pandemic will deliver additional executive Matthew Bayfield and that makes decision making more incentive plan. two years at more competitive rates, savings in 2020. the Board asked him to address complex and the analysis of data resulting in a £10m facility at 2.00% The Board wishes to record its In direct response to the pandemic, the structural changes that more difficult, and to make matters above base. The exceptional cash thanks to all of the staff who have management have agreed a were impacting our markets and more challenging, data analytic performance at the end of 2019 left contributed to the transformation 20% reduction in salaries with all undermining our ability to earn skills are scarce and data gurus at a us with £0.9m of net cash at the year of our business, much hard work Directors and staff for the three returns for shareholders from premium. end. An improved cash position has gone into ensuring we remain months starting 1 April 2020. the recruitment market. The loss will give us further flexibility when That is Parity’s opportunity, our focused on delivering for existing Management are conducting a of a large framework contract in reviewing our facility, which has a strategy is to help our clients realise clients and identifying potential new daily review of Covid-19 impacts Scotland at the beginning of the minimum period to May 2021. The the true value of their data. We can clients. We are fortunate to have an with clients and contractors to year and the end of a significant Board is not proposing a dividend do that in different ways; we can help enthusiastic and talented team. assess supply and demand in as consultancy contract were both at this time but will keep this policy them find data expertise because close to real time as possible. This further catalysts for change, they under review. we have access to a community of review process is designed to give gave us an urgency in our pursuit Results experts, we can teach our clients’ the advanced warning required of a new business model that will Current trading and outlook people to become data experts and Revenue across the Group was to be able to manage impacts on deliver for all our stakeholders. we can take on our clients’ data 6.6% lower at £80.4 million, largely The significant disruption to the the business and to help clients fill I am pleased to be able to report services as a consultancy project, as a result of lower recruitment world economy brought on by the potential gaps in their workforces. The Board that we have made great progress in and of course we can offer them revenues as our large contract with Covid-19 virus will impact almost Parity remains well capitalised, with implementing our new strategy and any combination of all three of those the Scottish Government, which was every single company. At this point wishes to net cash at 31 December 2019, the transformation of our business is services. not renewed in early 2019, began to it is difficult to predict its impact on and a £10m existing credit facility very much on track. Whilst revenues, wind down. The Group continues Parity. The significant costs that record its providing a comfortable level of EBITDA and adjusted profit before to be cash generative and helped have come out of the business in Board and people headroom through asset-based thanks to tax are all lower than in the previous by a reduction in working capital the last twelve months will help us to lending. The government’s VAT year this is in line with the Board’s Matthew Bayfield joined the board we generated £3.4m in cash from ride out the storm. deferral measures will provide an all of the staff expectations. We have moved to as Chief Executive in February 2019 operations taking us to a net cash Parity’s business is heavily weighted additional useful help to cash flow in a new business model, taken a and had an immediate impact on the positive position of £0.9m at the towards the public sector, which the current year. The Board remains who have significant level of cost out of the business. He and Roger Antony, our year end. Adjusted profit before accounted for approximately 70% confident that Parity has sufficient business and invested in new talent. CFO, have been responsible for the tax of £115k was in line with our of revenues in 2019.