Cash collections were exceptionally strong during December 2019. As a result, the Group now expects to show a net positive cash position at the year end. At the 31 December 2018 the Group had a net debt position of £1.1m.”
Trading in 2020 and outlook
With COVID-19 becoming a global pandemic in March 2020, the Board has been closely monitoring the outlook for the Company. Significant uncertainties as to the severity and length of the pandemic make it impossible, at this time, to accurately forecast trading in the current financial year. However the Company has undertaken measures to protect itself from a potential downturn in revenues which, combined with significant cost savings already achieved in 2019 of a gross annualised £3.3m, will help shield the business from a downturn. Since the year end we have instigated further organisational design and process mapping work that will deliver additional savings in 2020.
In addition, and in direct response to the COVID-19 pandemic:
- Management have agreed an across the board 20% reduction in salaries with all Directors and staff for the three months starting 1 April 2020.
- We are conducting a daily review of COVID-19 impacts with clients and contractors to assess supply and demand in as close to real time as possible. This review process is designed to give us the advanced warning required to be able to manage impacts on our business and to help clients fill potential gaps in their workforces.
Parity’s business is heavily weighted towards the public sector, which accounted for approximately 70% of revenues in 2019. We are already seeing signs that Government expenditure will be more resilient as much of it is aligned to the provision of key public services. However due to the ongoing uncertainty caused by COVID-19, Parity expects there will be an impact on revenues for the current year, the exact extent of this impact remains impossible to quantify at this stage.
Parity remains well capitalised, with net cash at 31 December 2019, and a £10m existing credit facility providing a comfortable level of headroom through asset based lending. The government’s VAT deferral measures will provide an additional useful help to cash flow in the current year. The Board remains confident that Parity has sufficient access to cash to enable it to trade its way through this period of global uncertainty.
The Board will continue to closely monitor all expenditure over the near term, to ensure the Company effectively manages its cost base and cash reserves in line with a quickly evolving situation.
Certain information contained in this announcement would have constituted inside information (as defined by Article 7 of Regulation (EU) No 596/2014) (“MAR”) prior to its release as part of this announcement and is disclosed in accordance with the Company’s obligations under Article 17 of MAR.