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Parity plunges as it issues profit warning amid large contract delay

The group said that despite progress in revenues, adjusted pre-tax profits would be around breakeven for the second half of the year
Profit decline
Parity also said it had begun a review of project profitability and staff utilisation

Shares in recruitment and tech consultancy Parity Group PLC (LON:PTY) plunged in late-afternoon trading Friday as it issued a profit warning for the full year after a delay in the extension of a large contract continued into the second half.

The group added that even if the contract was eventually approved, its scope would be “reduced” and despite progress in revenues, adjusted pre-tax profits would be around breakeven for the second half of the year.

READ: Parity shares gain as it expects double-digit growth in first-half profits

Considering the pressures on the business, the firm said it had initiated several actions including a review of project profitability and staff utilisation with cost reductions which would benefit 2019 as well as a restructuring of its Parity Consultancy Services (PCS) division to focus on “new Data consultancy opportunities”.

Parity also said it was re-prioritising its pipeline and relationship management process to “ensure appropriate engagement” on fewer but more likely and more profitable projects.

As a result of the initiatives, the company expected to incur around £300,000-£400,000 of non-recurring costs in restructuring the PCS division.

Shares were down 29.4% at 6.9p.

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