Partway Share Discussion Threads

[tomboyb] 12/12/2023 15:47

Got my numbers wrong on this -

Cash is around 2p per share so could be some upside here -

[chrisdgb] 12/12/2023 15:41

Could be an interesting punt at these levels......

[diku] 23/11/2023 22:58

Being part of a larger group??? i have already mentioned this on one of the PTY threads previously some time ago...the BOD just woke up...buying shares here last few years was like supporting BOD lifestyle...to keep going...





"The Board feels that the Group's core business is sound and Parity's position in the public sector is attractive but that it is subscale and would benefit from being a part of a larger group."

[hedgehog 100] 22/11/2023 18:38

"The Board feels that the Group's core business is sound and Parity's position in the public sector is attractive but that it is subscale and would benefit from being a part of a larger group."
"For the year ended 31 December 2022, Parity Professionals Limited contributed GBP378,000 of profit before taxation to the Group's consolidated set of accounts."


So a business that delivered £378K. of pre-tax profit in 2022, on revenue of £40.6M., in depressed markets, is being sold to a major PTY shareholder for an enterprise value of just c. £3M.

The PTY share price fall today to just 1.2p shows what the market thinks of this.

I was expecting an EV value of at least double that.

When markets recover, this sale value should look like an absolute steal.

Let's see if what looks like a very low-priced sale attracts a rival bidder.

[stuart14] 22/11/2023 10:18

Seems so. Name change to PartWay, as in "You were our Recruitment Partner, but it is now time to Partway". Who came up with that!!!

[its the oxman] 22/11/2023 10:03

Is the end near

[stuart14] 22/11/2023 09:23

Wow. A Recruitment Great from yester-year gone for a firesale.

[hedgehog 100] 21/11/2023 18:27

Note that the RTO route may have attractions to the IPO route that may give it additional 'value' to a company wishing to float:-

• A requirement to give away less equity than in an IPO.

• Potentially more speed and certainty - an aborted IPO due to market conditions could be very expensive, and time is money.

• The 'shellmeisters' may also have attractive business acumen, contacts, and 'clout', that may be attractive to the floating company.


Remember that if the company floating is valued at hundreds of millions, then a shell value of a few £millions may be just 1% of the expanded equity, which is comparatively insignificant.

There have been some shell-RTO deals signed relatively recently where the shell has been valued at multiple times its cash balance, and multiple times the value of its original market cap. at the time it came to the market.


The shell company ASHI floated at 3p per share on 6th. June this year, market cap. £1.841M., compared to net cash of £717K., including its net IPO proceeds.

It then suspended (at 2.75p) for a DOUBLE RTO, valued at over £175M. including ASHI's shell value, two and a half months later:-

17/08/2023 08:10 UK Regulatory (RNS & others) Ashington Innovation PLC Heads of Terms Signed LSE:ASHI Ashington Innovation Plc
"Heads of Terms Signed
Proposed Reverse Takeover of Cell Therapy Limited
Suspension of Listing
Conditional Acquisition of Cell Therapy Limited
Ashington Innovation (LSE:ASHI), the Special Purpose Acquisition Company (SPAC) established to acquire businesses primarily in the technology sector, is pleased to announce that the Company has entered into a non-binding term sheet (the "Term Sheet") with Cell Therapy Limited ("Cell Therapy") pursuant to which Ashington Innovation will acquire 100% of the total issued equity for GBP135 million in an all share transaction (the "Transaction"). Cell Therapy is a clinical stage biotechnology firm with a portfolio of patented cellular medicines with a lead program that successfully completed an early-stage human clinical trial in heart failure. ... "


24/08/2023 07:00 UK Regulatory (RNS & others) Ashington Innovation PLC Heads of Terms Signed for the Acquisition of Calon LSE:ASHI Ashington Innovation Plc
"Heads of Terms Signed for the Acquisition of Calon Cardio-Technology Limited, subject to the Completion of the Reverse Takeover of Cell Therapy Limited
Ashington Innovation plc (LSE: ASHI; FSE: 6FW), a special purpose acquisition company, is pleased to announce it has entered into a non-binding heads of terms agreement with Calon Cardio-Technology Limited ("Calon"), to acquire 100% of the outstanding shares in Calon in an all-share transaction. The acquisition is subject to the completion of the proposed reverse takeover of Cell Therapy Limited ("CTL") ...
Following recent discussions, on 23 August 2023 Ashington entered a non-binding heads of terms agreement with Calon for the acquisition of 100% of the issued share capital of Calon for a purchase price of GBP39 million, to be satisfied by the allotment and issue of new ordinary shares in Ashington Innovation PLC to the shareholders of Calon. ..."

[hedgehog 100] 21/11/2023 17:52

The positive aspects are that this business sale removes the perceived risk of PTY going bust, and creates a very attractive cash shell: with a low market cap., good cash balance, and capable directors ... and at an ideal time.

Poor stock market conditions tend to make it harder to IPO, increasing the attractions of the RTO (reverse takeover) route, and increasing the bargaining power of listed shells.

And meanwhile, the valuations of RTO targets for shells tend to be depressed.

So in summary, listed shells are in effect becoming more valuable: more capable of cutting a cracking RTO deal on great terms - i.e. a better shell valuation and lower target valuation, and great quality targets.

Moreover, listed shells are a great place to 'park funds' at the moment.

Many investors may wish to reduce their exposure to shares in companies with trading businesses, but holding cash for months doesn't give any real direct upside - certainly in the short term.

A PTY shell though will have both cash underpinning, and great potential upside - it could easily double or more from this level on a good deal.

And you don't have to worry about funds being tied up here for a while if you won't be using them anyway.

[hedgehog 100] 21/11/2023 17:11

I was certainly hoping for a lot more (not that the share price was really factoring in anything more), and the buyer looks to be getting the business very much on the cheap.

But unless this deal quickly flushes out a fairly definite bid at a significantly higher price, this deal will very likely go through.

But a rival bidder would have to move quickly, as this deal looks to be being rushed through:-

"The proposed Disposal is subject to shareholder approval at General Meeting of the Company to be held on 7 December 2023 at 1:00 p.m."


Presumably this is a situation that only requires 14 days' notice:-

"If the directors of a listed public company call a general meeting, they should give at least 21 days’ notice except in certain situations."

[hedgehog 100] 21/11/2023 16:22

21/11/2023 14:43 UK Regulatory (RNS & others) Parity Group PLC Proposed disposal of PPL and notice of GM LSE:PTY Parity Group Plc

"Proposed disposal of Parity Professionals Limited and notice of GM

Parity Group plc (AIM: PTY), the data and technology-focussed recruitment and professional services company, announces the proposed disposal of 100% of Parity Professionals Limited ("PPL"), the Company's primary operating subsidiary, to Network Ventures Limited (the "Purchaser") for cash consideration of up to GBP3 million (the "Disposal").

Overview of the Disposal:

-- Under the terms of the SPA, on completion of the Disposal:
- 100% of the issued share capital of PPL will be acquired by the Purchaser;
- cash consideration of GBP2 million will be payable immediately; and
- a further GBP1 million will be retained by the Purchaser for adjustments based primarily on the working capital position of PPL at completion.

-- The Disposal constitutes a fundamental change of business of the Company under Rule 15 of the AIM Rules and accordingly requires shareholder approval. If approved, the Company would become an AIM Rule 15 Cash Shell on completion.

-- On completion, the proceeds of the Disposal will be utilised to remove the pension liability from the Company's balance sheet and in seeking to identify and execute a potential acquisition.

-- It is also the intention of the Directors to change the name of the Company to Partway Group plc following shareholder approval and the relevant paperwork being filed with Companies House.

Further information regarding the proposed Disposal can be found below and in a Circular which will shortly be posted to shareholders and made available on the Company's website at www.parity.net (the "Circular").

The proposed Disposal is subject to shareholder approval at General Meeting of the Company to be held on 7 December 2023 at 1:00 p.m. Notice of the General Meeting and further information regarding voting and attendance is provided within the Circular.

Unless otherwise defined, terms used in this announcement have the defined meaning given to them in the appendix at the end of this announcement. ...

The Board feels that the Group's core business is sound and Parity's position in the public sector is attractive but that it is subscale and would benefit from being a part of a larger group. The Board has exhausted a number of initiatives to source additional funding to invest in further growth, none of which it believed were in the best interests of shareholders.

For the year ended 31 December 2022, Parity Professionals Limited contributed GBP378,000 of profit before taxation to the Group's consolidated set of accounts.

3. Transaction details

The Disposal will take place in the form of the sale by Parity Holdings Limited, the Company's subsidiary, to the Purchaser of the entire issued share capital of Parity Professionals Limited for a cash consideration of up to GBP3 million. Of this consideration, GBP2 million is payable at Completion and the balance of GBP1 million will be retained by the Purchaser to set off against the expected negative working capital position of PPL as at Completion and other minor adjustments. That working capital position will be determined from a set of completion accounts that will be agreed following Completion. To the extent that PPL's negative working capital position at Completion is less than GBP1 million, the difference will be paid by the Purchaser to PHL and to the extent that PPL's negative working capital position at Completion is greater than GBP1 million, the difference will be paid by PHL to the Purchaser.

Some basic warranties of a type normally given as regards PHL's title to the share capital of PPL and its ability to enter into the Disposal have been given by PHL. Under the terms of the SPA PHL and the Company have also entered into certain restrictive covenants and given various undertakings in respect of PPL and its business after Completion.

Subject to the passing of the Resolutions, Completion is expected to occur shortly after the General Meeting has been held.

4. Details of the Pension Scheme

The 'Parity Group 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.

As detailed in the Company's final results for the year ended 31 December 2022, the Group made payments of GBP300k to the Pension Scheme in that financial year. It was also noted that the Directors were exploring a buy out of the Pension Scheme. The Board has now reached an agreement with the Pension Scheme trustees to settle the Group's obligation to make future contributions to the Pension Scheme for a fee of GBP589k.

Part of the cash consideration from the Disposal will be used to pay the settlement fee and therefore settlement of the Pension Scheme is conditional upon the Disposal being approved by shareholders at the general meeting, failing which settlement of the Pension Scheme will not occur. The Company has also agreed with the trustees to pay GBP50k towards the costs of the trustee's advisors associated with the transaction.

The settlement of the Pension Scheme will remove from the Company a liability which would be likely to limit the future strategic options available to it, further details of which are set out below.

5. Strategy for the Company following the Disposal

The Company's proposed strategy, following completion of the Disposal, will be to acquire one or more companies and/or projects which are either cash flow generative or show significant potential for growth and a profitable exit.

Leveraging their knowledge and contacts, the Directors will seek to identify suitable investment and/or acquisition opportunities. At this stage, the Directors would not seek to exclude any particular sector or jurisdiction.

In selecting suitable investment and/or acquisition opportunities, the Directors will consider various factors relevant to an opportunity, including the:

-- ease with which capital can be raised to meet the working capital requirements both initially and in the future;
-- 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
-- suitability for a public listing, either on AIM or another recognised market in the UK.

6. Use of proceeds

The Initial Consideration will be used to pay the settlement fee and agreed costs to the Pension Scheme totalling GBP639k, cover the costs associated with the Disposal, expected to total approximately GBP240k, and to provide the Company with working capital whilst it progresses with its strategy.

... 9. Related party transaction

The Purchaser is a wholly owned subsidiary of Pertemps Network Group Limited, a company in which Timothy Watts has a direct and indirect interest of 33.1%. Mr. Timothy Watts is a 22.8% shareholder in Parity and is therefore deemed a related party pursuant to the AIM Rules. As a result, the Disposal constitutes a related party transaction for the purposes of AIM Rule 13.

During the last 12-18 months the Directors have evaluated a number of potential opportunities to create long-term value in the business, including the acquisition and/or merger of other businesses in order to create a business of greater scale and value for shareholders.

During this period, the Directors have had exposure to the value ascribed to Parity's business by other interested parties, for example, the vendors of potential acquisitions considering Parity's equity as part of a structured deal, and the appetite amongst Shareholders to support a fundraise.

The Directors have also had three separate approaches to acquire the Company's recruitment business assets from medium to large independent businesses with verified access to funding.

Whilst comparing the potential relative values from these activities with the offer made by the Purchaser, the offer from Network Ventures represents the best available proposition for shareholders amongst those evaluated by the Directors.

The Directors have also considered the speed, certainty and relative cost-efficiency with which this deal can be executed compared to the alternative of initiating a full sale process.

Recognising the risk and the near-term funding requirements of the business, the Directors believe this deal represents the best available value for Shareholders.

The Directors consider, having consulted with the Company's Nominated Adviser, that the terms of the Disposal are fair and reasonable insofar as the Shareholders are concerned. ..."

[tomboyb] 21/11/2023 14:50

Overview of the Disposal:

-- Under the terms of the SPA, on completion of the Disposal:
- 100% of the issued share capital of PPL will be acquired by the Purchaser;
- cash consideration of GBP2 million will be payable immediately;

So £2mill for company and £1mill retained buy purcahser -

Of the £2mill:

Use Of Proceeds
The Initial Consideration will be used to pay the settlement fee and agreed costs to the Pension Scheme totalling £639k, cover the costs associated with the Disposal, expected to total approximately £240k, and to provide the Company with working capital whilst it progresses with its strategy.

They will be left with just over £1mill cash shell -

[hedgehog 100] 16/11/2023 12:14

Chris - the plan may well be to submit to a takeover ... but such negotiations would clearly be very market sensitive, and you would expect confidentiality until any takeover announcement.

Note that there has been yet another 'sweet' takeover today at a huge premium:-


LSE % Gainers Top Lists
EPIC Name %
HOTC Hotel Chocolat +162%

16/11/2023 07:00 UK Regulatory (RNS & others) Hotel Chocolat Group PLC Recommended cash acquisition LSE:HOTC Hotel Chocolat Group Plc

" ... The Cash Offer values the entire issued and to be issued share capital of Hotel Chocolat at approximately GBP534 million on a fully diluted basis.
-- The Cash Offer represents a premium of approximately:
-- 169.8 per cent. to Hotel Chocolat's share price of 139 pence at the close of business on 15 November 2023, being the last Business Day prior to the date of this announcement. ..."




Hotel Chocolat Group (HOTC):-

[chrisdgb] 15/11/2023 14:55

Need a plan.........

[hedgehog 100] 31/10/2023 15:29

And another likely takeover at a huge premium RNSed today:-

LSE % Gainers Top Lists
EPIC Name %
SPE Sopheon +87%

31/10/2023 14:10 Alliance News Alliance NewsSopheon shares surge as receives Wellspring takeover interest LSE:SPE Sopheon Plc

31/10/2023 13:00 UK Regulatory (RNS & others) Sopheon PLC Statement re Possible Offer LSE:SPE Sopheon Plc

STATEMENT REGARDING POSSIBLE CASH OFFER

for

SOPHEON PLC

("Sopheon", the "Company" or the "Group")

By

IOPS BUYER INC.

(a wholly-owned subsidiary of Wellspring Worldwide Inc.)

The boards of Sopheon, the InnovationOps software company, and IOps Buyer Inc. ("Bidco"), a wholly-owned subsidiary of Wellspring Worldwide Inc. ("Wellspring", and together with its affiliates, the "Wellspring Group"), are pleased to announce that they have reached agreement in principle on the key terms of a possible cash offer for the entire issued and to be issued share capital of the Company ("Possible Offer") at a price of GBP10.00 per Sopheon share.

Wellspring is backed and controlled by Resurgens Technology Partners ("Resurgens"), a technology-focused private equity firm headquartered in Atlanta, Georgia, USA. Founded in 2003 as a spin-off from Carnegie Mellon University, Wellspring is a leading provider of software solutions and data systems for managing technology transfer, intellectual property ("IP") and innovation activities, primarily for the academic, government and corporate markets. Wellspring is headquartered in Chicago with additional offices in London and Tokyo, and works with more than 500 organisations worldwide.

Discussions relating to the Possible Offer are well advanced and Bidco has notified Sopheon that due diligence has been completed to Bidco's satisfaction. The board of Sopheon (the "Sopheon Board") has confirmed to Bidco that it intends to unanimously recommend the Possible Offer to Sopheon's shareholders, should a firm offer be made on these terms.

The announcement of a firm intention to make an offer pursuant to Rule 2.7 of the Code is subject to the receipt of a regulatory clearance by the Wellspring Group, for which a relevant application has been submitted and which is expected to be received in or before mid-December 2023, as well as customary clerical finalisation of documentation. These pre-conditions can be waived at Bidco's discretion.

For the avoidance of doubt, this Announcement does not amount to a firm intention to make an offer for Sopheon under Rule 2.7 of the Code and, accordingly, there can be no certainty that a firm offer will be forthcoming.

Highlights

-- The Possible Offer at GBP10.00 per Sopheon share values the entire issued and to be issued share capital of Sopheon at approximately GBP114.9 million.

-- This represents a premium of approximately:

-- 104 per cent. to the Closing Price of 490 pence per Sopheon share on 30 October 2023 (being the last business day prior to the date of this Announcement);

-- 80 per cent. to the Volume Weighted Average Price of 555 pence per Sopheon share during the three month period ended 30 October 2023 (being the last business day prior to the date of this Announcement); and

-- 72 per cent. to the Volume Weighted Average Price of 581 pence per Sopheon share during the six month period ended 30 October 2023 (being the last business day prior to the date of this Announcement). ..."



Sopheon (SPE):-

[hedgehog 100] 27/10/2023 12:07

LSE % Gainers Top Lists
EPIC Name %
FA. Fireangel Safety... +210%

27/10/2023 07:00 UK Regulatory (RNS & others) FireAngel Safety Technology Group Rule 2.7 Announcement LSE:FA. Fireangel Safety Technology Group Plc

"RECOMMED CASH OFFER

FOR

FIREANGEL SAFETY TECHNOLOGY GROUP PLC

BY

INTELLIGENT SAFETY ELECTRONICS PTE. LTD

Summary

The Boards of Intelligent Safety Electronics Pte. Ltd ("ISE") and FireAngel Safety Technology Group plc ("FireAngel") are pleased to announce that they have reached agreement on the terms and conditions of a recommended cash offer to acquire the issued and to be issued share capital of FireAngel not already owned or controlled by ISE (the "Offer"). ISE is a company incorporated in Singapore and wholly-owned by Siterwell Electronics Co., Ltd ("Siterwell"), a leading manufacturer of intelligent security protection for life and property which utilises an advanced smart security ecosystem technology. ISE currently holds approximately 17.46 per cent. of the issued ordinary shares of FireAngel Safety Technology Group plc.

Under the terms of the Offer, the shareholders of FireAngel ("FireAngel Shareholders") will be entitled to receive:

7.40 pence per share in cash for each FireAngel Share

-- The Offer of 7.40 pence per share in cash for each FireAngel Share (the "Offer Price") values the total issued and to be issued share capital of FireAngel at approximately GBP27.68 million.

-- The Offer Price represents a premium of:

o approximately 252.38 per cent. to the Closing Price of 2.10 pence per FireAngel Share on 26 October 2023 (being the last Business Day prior to the date of this announcement (the "Announcement"));

o 46.53 per cent. to the price per FireAngel Share of 5.05 pence, being the price at which FireAngel undertook its GBP6.1 million (before expenses) equity fundraising in June 2023; and

o 198.20 per cent. to the volume-weighted average price per FireAngel Share of 2.48 pence for the last three months to 26 October 2023 (being the last Business Day prior to the date of this Announcement). ..."





So another takeover, at a huge premium, for a company whose share price has fallen massively this year on trading headwinds.

Earlier this week, SCS announced a takeover of itself at a 66% premium:-

24/10/2023 07:05 UK Regulatory (RNS & others) Poltronesofa S.p.A. Recommended Cash Offer LSE:SCS Scs Group Plc



PTY could be next.

Last December, PTY sold just its name for nearly a million pounds.

If the name alone was worth that much, then how much are PTY ten's of millions of revenue etc. worth?


Fireangel Safety Technology Group (FA.):-

[hedgehog 100] 30/9/2023 12:22

Arthur,

I think that to a degree, you're splitting hairs about terminology.
Technically, you could argue that many IT consultancies are also partly recruiters, in that they're providing tech staff to provide services for the clients.

As Chris has suggested, PTY looks a good fit for MTEC:-

"Legacy technology is one of the biggest threats to the public sector. Whether you’ve started your transformation journey, or aren’t sure where to begin, ..."
"Made Tech provides Digital, Data and Technology services to the UK public sector"


"For over 45 years we have been connecting our clients with the best data, technology and transformation talent. We place over 1,200 skilled professionals each year as well as provide fully-formed teams to deliver projects and managed services."


And high margins are actually bad for a recovery play, because it equates to less gearing to recovery. Potential acquirers will know that.


And if the company was going insolvent, then they wouldn't be preparing the accounts on a going concern basis:-

"The Directors are actively discussing a number of funding options and based on progress to date, believe that the Group will be able to secure sufficient funds to continue to meet its headroom covenant over the next twelve months.
Whilst acknowledging that there is material uncertainty regarding the Group's funding position, the Directors remain confident of securing the additional funds required and consider it appropriate to prepare the unaudited interim financial information on a going concern basis."



A weaker financial position also increases the likelihood of a takeover.

Look at some strong similarities between PTY and ECSC, in ECSC's last results before its takeover compared to PTY's new interims: an 8% interim ECSC decline in revenues, compared to 10% for PTY, and an interim ECSC pre-tax loss of £784K., compared to £649K. for PTY:-

27/09/2022 07:10 UK Regulatory (RNS & others) ECSC Group PLC Interim Results LSE:ECSC Ecsc Group Plc
"... Total revenue in the period ended 30 June 2022 was GBP2.77m, down 8% on the comparable prior period (revenue in the six months ended 30 June 2021 was GBP3.01m).
... Loss before Taxation (784) ..."

[diku] 29/9/2023 18:55

Probably management buyout...shareholders high and dry?...aren't tech companies supposed to be making profit...

[arthur_lame_stocks] 29/9/2023 17:54

I don't know where you get this idea that it is a high margin business, gross margins at the half way stage were around 7.5%. That's shockingly low for any business.

And incidentally they describe their core business as recruitment.

Finally, they're on the verge of insolvency.

[hedgehog 100] 29/9/2023 16:43

Arthur,

PTY isn't "just a recruiter": it's more of a hybrid recruitment-consultancy company, as it also provides fully-formed teams to deliver projects and managed services:-

"For over 45 years we have been connecting our clients with the best data, technology and transformation talent. We place over 1,200 skilled professionals each year as well as provide fully-formed teams to deliver projects and managed services."


That gives it the opportunity to win bigger contracts, at higher margins, such as this contract win from the Scottish Government:-

01/02/2021 07:00 UK Regulatory (RNS & others) Parity Group PLC Contract win LSE:PTY Parity Group Plc
" ... Under this new contract Parity, which brings 45 years of data and technology experience and skills, will provide a managed service supplying Digital Technology skills for the R100 programme's Project Management Office and Deployment Management function to ensure quick and efficient build-out of the superfast broadband infrastructure.
The award represents a total opportunity of up to GBP5.0m over the next three to six years for Parity strengthening the Group's order book and providing further visibility to underpin its current expectations for Group performance over the period. ..."


I'm not aware of another listed company of this nature, so it seems to me to have quite a rarity and scarcity value.


PTY has clearly generally been a bad investment for shareholders, but its share price has had its moments: e.g. quintupling between late 1998 to early 2000, during the tech stock boom then.


And the numbers aren't that bad for the tech sector: H1 revenue of £17.634M., and a pre-tax loss of £649K.


Compare that to AGL for example (your "favourite growth share" as at 19.12.22, at multiples of its current s.p.):
the figure are more like the other way round: H1 revenue of £1.2M, and a pre-tax loss of £10.612M.

And AGL has a market cap. of about £40M, compared to PTY's of below £3M. at 2.75p.

[hedgehog 100] 29/9/2023 15:01

29/09/2023 07:00 UK Regulatory (RNS & others) Parity Group PLC Interim Results LSE:PTY Parity Group Plc

"INTERIM RESULTS FOR THE SIX MONTHS TO 30 JUNE 2023

29 September 2023

Parity Group plc ("Parity" or the "Group"), the data and technology focused professional services business, announces its half year results for the six months ended 30 June 2023 ("H1 2023").

Headlines

-- In spite of challenging market conditions, revenue for the first half of 2023 was just 10% lower than the second half of 2022.

-- Close to break even on an Adjusted EBITDA basis for H1 2023.

-- Net debt significantly reduced.

Mark Braund, Executive Chairman of Parity Group plc, said:

"The team has completed the task of rebuilding the core recruitment business after years of underinvestment, to position Parity as a recruiter of strength in the UK's public sector, at a time when there are increasing headwinds affecting the broader recruitment market.

Whilst our business in the public sector has been resilient, we too have been affected by these headwinds in areas where we sought to grow such as the UK's commercial private sector.

The changes made to the business have enabled Parity to act quickly, tuning itself far more rapidly than before to operate at a fit-for-purpose scale and cost base.

As we reflect on Parity's position in the market, we continually review the Company's businesses to determine the best medium and long-term direction for Parity for the benefit of its shareholders." ...

Overview

After years of underinvestment and neglect, the team has completed the task of rebuilding the core recruitment business to position Parity as a recruiter of strength in the UK's public sector.

In the year prior we had removed the substantial overhead associated with the previous management team's failure to build a profitable consulting business and reinvested a small portion into re-establishing Parity's heritage as a well-recognised recruitment brand.

In line with many others within the recruitment sector, Parity has seen market conditions become more challenging with economic uncertainty resulting in clients and new business opportunities deferring hiring decisions. As a result, first half revenues were 10% lower than that achieved in the second half of 2022.

During H1 2023, Parity successfully won a place on the coveted public sector RM6277 framework, which has an estimated spend of circa GBP2bn over the next four years, though it is not possible at this stage to quantify what level of revenue might accrue to Parity. This framework, which went live on 25 July 2023, represents a significant opportunity for Parity to expand further into the public sector at a time when there are increasing headwinds affecting the broader recruitment market.

In spite of the lower H1 performance, the business has improved its working capital management and reduced net debt to GBP0.7m as at the 30 June 2023 (compared with GBP2.3m net debt as at 31 December 2022).

With market conditions not expected to improve in the near term and a key commercial client in the private sector signaling a shift towards a more global supply chain, Parity is prioritising resources to exploit its strengths and opportunity within the public sector, and in particular the new RM6277 framework. As a consequence, the new business initiatives targeting the private sector, which included permanent recruitment services, were scaled back, with a resultant reduction in headcount.

Historically, Parity's core business, servicing contract recruitment within the public sector, has been one of the most resilient areas when recruitment markets turn down. The Company sees this as a core strength of the business and will be looking at how the Company can leverage this.

As we consider the scale of the business, its strength and value in public sector, we continually review the Company's businesses to determine the best medium and long-term direction for Parity for the benefit of its shareholders. ..."




The phrase "As we reflect on Parity's position in the market" has an almost philosophical ring to it: perhaps indicating an air of resignation to PTY's days as an independent company being numbered.

PTY's H1 revenue of £17.634M., and an operating loss of just $446K., despite the current temporary market challenges, will likely be very attractive to a range of potential acquirers.

PTY's depressed share price means that an acquirer can pay a large premium to enable a takeover, but still get excellent value for money.

And PTY's need to raise funds means that its directors may feel obligated to accept an offer.


The situation here is similar to that of ESCS in Q1, which was taken over at a huge premium:-

31/03/2023 11:55 UK Regulatory (RNS & others) Daisy Corporate Services Trading Ld Recommended Cash Acquisition LSE:ECSC Ecsc Group Plc
" ... The Cash Consideration represents a premium of approximately:
o 170.1 per cent. to the closing price of 20.0 pence per ECSC Share on the Last Practicable Date;
o 138.0 per cent. to the volume weighted average price per ECSC Share for the three month period ended on the Last Practicable Date; and
o 46.0 per cent. to the volume weighted average price per ECSC Share for the twelve month period ended on the Last Practicable Date. ...
Background to, and reasons for, the recommendation
... In addition, whilst the outlook for ECSC's strategy is favourable, it will require scale to take full advantage of the opportunities available, and to fulfil its full potential. ECSC may also need to access additional growth capital to strengthen its balance sheet. ..."