Partway Group plc
("Partway" or the "Group")
Final results for the year ended 31 December 2023
10 June 2024
Partway announces its full year results for the year ended 31 December 2023.
A copy of its audited financial statements and annual report for the year ended 31 December 2023 ("Annual Report") will shortly be available for download on the Company's website, www.partway.net.
Key extracts from the Annual Report are set out below.
Contacts | |
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Partway Group plc | |
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Mark Braund, Executive Chairman | m.braund@partway.net |
Mike Johns, Chief Financial Officer | m.johns@partway.net |
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Allenby Capital Limited (Nominated Adviser and Broker) | Tel: +44 (0) 20 3328 5656 |
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David Hart / Dan Dearden-Williams (Corporate Finance) | |
Tony Quirke (Sales and Corporate Broking) | |
Chairman's statement
For more than a decade, Partway Group plc, formerly known as Parity Group plc (the "Company" or the "Group") has, under several different management teams, attempted without success to diversify away from its core competency in IT contract recruitment.
In the three years leading up to my appointment as Chair, in April 2021, the core recruitment division had been starved of investment in order to fund a failed attempt to build a new consulting capability.
During the second half of 2021, we restructured the business, shutting down the consulting division to refocus on IT recruitment, a business that was generating greater than 95% of the revenue at the time. After years of underinvestment, and the loss of key personnel, we successfully rebuilt the core recruitment business into a position of strength in the public sector market, re-establishing Parity's heritage as a well-recognised recruitment brand, and did so against a backdrop of tough economic conditions.
Despite a much slimmer management structure and materially lower overheads, the costs associated with maintaining an AIM listing along with the continuing obligation to fund a legacy defined benefit pension scheme, did not leave capacity to fund further investment.
With significant challenges to source new investment for growth, continuing economic uncertainty, and no expectation of a short-term return to a growth in the recruitment market, we took the decision in November 2023 that the best opportunity to deliver value for all our stakeholders, (shareholders, employees, customers and suppliers) was to find a new home for the recruitment business, giving it the opportunity to flourish within a larger group. This was completed on 8 December 2023, realising £1.6m of cash after costs of the disposal, and the settlement reached with the trustees of the pension scheme that removed future obligations to fund the defined benefit pension scheme.
As outlined in the circular to shareholders dated 21 November 2023, the sale of the trading activities of the Company reclassified the Company as a cash shell under rule 15 of the AIM Rules for Companies (AIM Rule 15). The Board's strategy has been to use the proceeds from the sale to secure a new trading activity via a reverse takeover (RTO), and if this was not possible to return funds back to shareholders, many of whom are long term holders.
In parallel with our proactive search for RTO targets, we have since 8 December 2023, decoupled the operational and IT resources from the recruitment business and been unwinding 40 + years of corporate activity to facilitate a clean cash shell.
Over the last six months, we have actively explored more than a dozen RTO opportunities, considering the following key factors:
· suitability and readiness for a public listing;
· growth potential and outlook for future cash generation;
· likely resulting liquidity in the Company's shares following acquisition(s);
· short, medium and longer-term exit strategies for Shareholders;
· possible synergies with knowledge and contacts of the Directors; and
· ease with which capital can be raised to meet the working capital requirements both initially and in the future.
To date we have not sourced a suitable target that has:
· the opportunity to generate future value for Shareholders;
· could be delivered within the timeframes set out in AIM Rule 15 before the Company would be delisted; and
· would justify incurring the significant costs to undertake an RTO.
The Board has considered the merits of continuing to pursue the RTO strategy based on conversations with prospective RTO candidates, and has concluded that the likelihood of successfully securing an RTO on or before 9 December 2024 (being the first business day following the anniversary of the sale of the recruitment business and the deadline for completing an RTO before the Company's shares are cancelled from trading in accordance with Rule 41 of the AIM Rules for Companies) is low and, as such, is not in the best interests of shareholders given the ongoing costs that would be incurred.
The Board has therefore consulted with specialist advisors on the most appropriate way to return funds to Shareholders and will in due course set out in a circular to Shareholders its plan to cancel the admission of the Company's Ordinary Shares to trading on AIM and place the Company in a solvent members' voluntary liquidation (the "Liquidation") pursuant to the UK Companies Act 2006, enabling surplus funds, after paying creditors to be distributed.
As a result, we expect that this to be our final annual report on the Company. We have included for your review our statutory accounts which, as a result of the proposed solvent members voluntary liquidation, have been prepared on a basis other than going concern. We thank you for your support.
Consolidated Income Statement for the year ended 31 December 2023
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Notes | 2023 Continuing activities £'000 | 2022 Continuing activities £'000 | |
Revenue | 3 | - | - | |
Contractor costs | | - | - | |
Net Fee Income | | - | - | |
Other operating income | 4 | 111 | 950 | |
Operating costs | 5 | (2,785) | (2,810) | |
Operating (loss)/profit |
| (2,674) | (1,860) | |
Analysed as: | |
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Operating loss before non-underlying items | | (685) | (858) | |
Non-underlying costs | 6 | (2,100) | (1,952) | |
Non underlying income | 4 | 111 | 950 | |
Operating loss | | (2,674) | (1,860) | |
Finance costs | 10 | (249) | (302) | |
(Loss)/profit before tax | | (2,923) | (2,162) | |
Analysed as: | |
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Adjusted loss before tax1 | | (934) | (1,160) | |
Non-underlying costs | 6 | (2,100) | (1,952) | |
Non underlying income | 4,6 | 111 | 950 | |
Loss before tax | | (2,923) | (2,162) | |
Tax (charge)/ credit | 12 | (236) | (301) | |
Loss for the year | | (3,159) | (2,463) | |
Loss on disposal of trading activities | 7 | (262) | - | |
Profit for the year from discontinued operations | 8 | 198 | 748 | |
Loss for the year attributable to owners of the parent | | (3,223) | (1,715) | |
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Loss per share - Continuing activities | |
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Basic | 13 | (3.07p) | (2.39p) | |
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Loss per share - Continuing and discontinued activities Basic
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| (3.13p) |
(1.66p)
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1 Adjusted profit/(loss) before tax is a non-IFRS alternative performance measure, defined as profit/(loss) before tax and non-underlying items.
Statements of Changes in Equity for the year ended 31 December 2023
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Consolidated | Share capital £'000 |
Share premium reserve £'000 |
Share- based payment reserve £'000 | Capital redemption reserve £'000 | Other reserves £'000 | Retained earnings £'000 | Total £'000 |
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At 1 January 2022 | 2,062 | 33,270 | 31 | 14,319 | 34,560 | (77,215) | 7,027 |
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Share options and warrants - charge | - | - | 50 | - | - | - | 50 |
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Transactions with owners | - | - | 50 | - | - | - | 50 |
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Loss for the year | - | - | - | - | - | (1,715) | (1,715) |
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Remeasurement of defined benefit pension scheme | - | - | - | - | - | (841) | (841) |
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Deferred taxation on remeasurement of defined pension scheme | - | - | - | - | - | 290 | 290 |
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At 31 December 2022 | 2,062 | 33,270 | 81 | 14,319 | 34,560 | (79,481) | 4,811 |
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Share options and warrants - charge | - | - | 45 | - | - | - | 45 |
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Share options - lapsed | - | - | (28) | - | - | 28 | - |
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Transactions with owners | - | - | 17 | - | - | 28 | 45 |
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Loss for the year | - | - | - | - | - | (3,223) | (3,223) |
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Remeasurement of defined benefit pension scheme | - | - | - | - | - | 13 | 13 |
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Deferred taxation on remeasurement of defined pension scheme | - | - | - | - | - | (5) | (5) |
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At 31 December 2023 | 2,062 | 33,270 | 98 | 14,319 | 34,560 | (82,668) | 1,641 |
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Statements of Financial Position as at 31 December 2023
Company number 3539413 | | Consolidated | ||
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Notes | 2023
| 2022
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Assets Non-current assets |
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Goodwill | 14 | - | 2,642 |
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Other intangible assets | 15 | - | 188 |
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Property, plant and equipment | 16 | - | 10 |
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Right-of-use assets | 17 | - | 174 |
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Trade and other receivables | 19 | - | - |
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Deferred tax assets | 18 | - | 521 |
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Retirement benefit asset | 25 | - | 1,269 |
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Total non-current assets |
| - | 4,804 |
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Current assets |
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Trade and other receivables | 19 | 426 | 5,909 |
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Cash and cash equivalents | | 1,495 | 2,053 |
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Total current assets |
| 1,921 | 7,962 |
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Total assets | | 1,921 | 12,766 |
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Liabilities Current liabilities |
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Loans and borrowings | 20 | - | (4,356) |
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Lease liabilities | 17 | - | (203) |
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Trade and other payables | 21 | (280) | (3,340) |
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Total current liabilities | | (280) | (7,899) |
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Non-current liabilities |
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Lease liabilities | 17 | - | (14) |
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Provisions | 22 | - | (42) |
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Total non-current liabilities | | - | (56) |
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Total liabilities |
| (280) | (7,955) |
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Net assets |
| 1,641 | 4,811 |
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Shareholders' equity |
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Called up share capital | 26 | 2,062 | 2,062 |
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Share premium reserve | 24 | 33,270 | 33,270 |
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Share based payment reserve | 11 | 98 | 81 |
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Capital redemption reserve | 24 | 14,319 | 14,319 |
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Other reserves | 24 | 34,560 | 34,560 |
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Retained earnings | 24 | (82,668) | (79,481) |
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Total shareholders' equity |
| 1,641 | 4,811 |
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Statements of Cash Flows for the year ended 31 December 2023
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Consolidated | |
| Notes | 2023 | 2022 |
Cash flows from/ (used in) operating activities (Loss)/profit for the year | |
(3,223) |
(1,715) |
Adjustments for: | |
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Net finance expense/(income) | 10 | 282 | 310 |
Share-based payment expense/(credit) | 11 | 45 | 50 |
Income tax charge/ (credit) | 12 | 235 | 376 |
Amortisation of intangible assets | 15 | 59 | 3 |
Depreciation of property, plant and equipment | 16 | 4 | 10 |
Depreciation and impairment of right-of-use assets | 17 | 149 | 346 |
Write down of pension asset | 25 | 2,100 | - |
Loss on disposal of subsidiary | 7 | 262 | - |
Provision for impairment of investment in subsidiaries | 20 | - | - |
Impairment of goodwill | 14 | - | 1,952 |
| | (87) | 1,332 |
Working capital movements | |
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(Increase)/decrease in trade and other receivables | 19 | 1,837 | (1,112) |
(Decrease)/increase in trade and other payables | 21 | (1,100) | (343) |
(Decrease) in provisions | 22 | (42) | - |
Payments to retirement benefit plan | 25 | (928) | (331) |
Net cash flows used in operating activities | | (320) | (454) |
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Investing activities | |
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Purchase of property, plant and equipment | 16 | - | (5) |
Development of intangible assets | 15 | - | (109) |
Net proceeds from disposal | 7 | 1,792 | - |
Cash disposed of | | (127) | - |
Net cash flows used in investing activities | | 1,665 | (114) |
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Financing activities | |
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Drawdown/(repayment) of finance facility | 20 | (1,542) | 2,077 |
Principal repayment of lease liabilities | 17 | (191) | (433) |
Movements on intercompany funding | | - | - |
Interest paid | 10 | (170) | (144) |
Net cash flows from/ (used in) financing activities | | (1,903) | 1,500 |
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Net increase/(decrease) in cash and cash equivalents | | (558) | 932 |
Cash and cash equivalents at the beginning of the year | | 2,053 | 1,121 |
Cash and cash equivalents at the end of the year | | 1,495 | 2,053 |
All references to Notes in the financial statements above refer to the Annual Report which will be available to download from www.partway.net
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