21 June 2024

Partway Group plc

("Partway Group" or the "Company")

Proposed cancellation, members' voluntary liquidation and notice of GM

Partway Group plc (AIM: PTY) announces that further to its announcement of 10 June 2024, the Board has formally resolved to place the Company into a members' voluntary liquidation ("MVL") and a circular setting out the details of the proposed MVL and cancellation of admission to trading on AIM of the Company's ordinary shares (the "Proposals") will be posted to shareholders shortly and made available on the Company's website at www.partway.net. Further information regarding the Proposals can be found below and in the circular.

The Proposals are subject to shareholder approval at a General Meeting of the Company to be held on 8 July 2024 at 10:00 a.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.

EXPECTED TIMETABLE OF PRINCIPAL EVENTS

1      The actual time and date on which the Register is closed and the Record Date is set for participation in the MVL will ultimately be determined by the Liquidator and is therefore subject to change.

2      The actual date on which any distribution will be complete will ultimately be determined by the Liquidator and is therefore subject to change.

The following is an extract from the circular that will be posted to shareholders shortly, a full version of which is available on the Company's website at www.partway.net.

Introduction

Following the Company's disposal of its main operating business, Parity Professionals Limited  which was announced on 7 December 2023, the Company was reclassified as a Rule 15 cash shell under the AIM Rules. As a result, it was required to complete a transaction that would constitute a reverse takeover under Rule 14 of the AIM Rules for Companies before 7 June 2024 to avoid the suspension of the trading in the Company's ordinary shares. As announced on 10 June 2024, with this deadline having passed, and the trading in the Company's ordinary shares suspended, the Board has now resolved to:

(i)      cancel the admission of the Ordinary Shares to trading on AIM; and

(ii)     place the Company into a members' voluntary liquidation.

The Resolutions to approve the Proposals are to be proposed at the General Meeting, which has been convened for 10.00 a.m. on 8 July 2024 at the offices of Allenby Capital, 5 St. Helen's Place, London, EC3A 6AB.

Background to and reasons for the Proposals

For more than a decade, Partway Group plc, formerly known as Parity Group plc, has, under several different management teams, attempted without success to diversify away from its core competency in IT contract recruitment.

In the three years prior to 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, the business was restructured, 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, the core recruitment business was returned to a position of strength in the public sector market, re-establishing Parity's heritage as a well-recognised recruitment brand, and delivered 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, the Directors took the decision in November 2023 that the best opportunity to deliver value for all 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.

Over the last six months, the Directors have assessed a number of potential acquisition opportunities that would have constituted a Reverse Takeover ("RTO"). The criteria the Directors have used in assessing these acquisition opportunities have included:

•       the opportunity to generate future value for the Company's shareholders;

•       the likelihood of delivering a RTO within the timeframes set out in Rule 15 and Rule 41 of the AIM Rules for Companies before the Company would be delisted, being 9 December 2024; and

•       the significant potential costs and risks associated with undertaking an RTO.

The Directors have also been very conscious of the ongoing use of the Company's existing cash resources associated with its continued listing whilst the search for a suitable Reverse Takeover candidate progressed.

The Board is no longer in discussions with any potential RTO candidate.  Against this backdrop, the Board has considered the merits of continuing to pursue the completion of a Reverse Takeover and has concluded that the risks associated with such a transaction being achieved 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) are high.

The Board believes it is not in the best interests of the Company's shareholders to continue to pursue this strategy and has therefore resolved to place the Company into a Members Voluntary Liquidation, subject to the Resolutions at the General Meeting being passed, appointing the Liquidator to place the Company into a solvent members' voluntary liquidation pursuant to the UK Companies Act 2006, enabling surplus funds, after paying creditors, to be distributed to shareholders.

Principal effects of the Cancellation

Prior to the Company being dissolved pursuant to the MVL, the principal effects of the Cancellation will be that:

•       Shareholders will no longer be afforded the protections given by the AIM Rules, such as the requirement to be notified of certain events and the requirement that the Company seek shareholder approval for certain corporate actions where applicable, including substantial transactions, financing transactions, reverse takeovers and fundamental changes in the Company's business, related party transactions and certain acquisitions and disposals;

•       the levels of transparency and corporate governance applicable to the Company will not be as high as for a company whose shares are admitted to trading on AIM;

•       following approval of the MVL by Shareholders at the General Meeting, Shareholders will not be able to transfer Ordinary Shares without the prior consent of the Liquidator. In addition, there will be no formal market mechanism enabling Shareholders to trade in Ordinary Shares;

•       as a result of the MVL being approved by Shareholders at the General Meeting and in the absence of a formal market in, and quotation of, the Ordinary Shares, it may be more difficult for Shareholders to determine the value of their shareholding in the Company at any given time;

•       the regulatory and financial reporting regime applicable to companies whose shares are admitted to trading on AIM will no longer apply;

•       the Company will cease to have a nominated adviser and broker;

•       whilst the Company's CREST facility will remain in place following the Cancellation becoming effective, the Company's CREST facility may be cancelled in future and the Ordinary Shares will cease to be transferable through CREST if the CREST facility is cancelled.

•       the Cancellation may have taxation consequences for Shareholders. Shareholders who are in any doubt about their tax position should consult their own professional independent tax adviser.

Subject to, and prior to the conclusion of the winding-up of, the Company's affairs pursuant to the MVL, the Company will remain incorporated and registered in England and Wales under the Companies Act 1948 to 1976, notwithstanding the Cancellation becoming effective. Shareholders should also note that the Takeover Code will continue to apply to the Company during the period following the Cancellation and prior to the Company being dissolved in connection with the MVL. The Company will also continue to be bound by the Articles following the Cancellation becoming effective.

The above considerations are not exhaustive, and Shareholders should seek their own independent advice when assessing the likely impact of the Cancellation on them.

Process for Cancellation

Under the AIM Rules, it is a requirement that the Cancellation must be approved by not less than 75 per cent. of votes cast by Shareholders at a general meeting. Accordingly, the Notice of General Meeting set out at the end of this document contains a special resolution to approve the Cancellation.

Furthermore, Rule 41 of the AIM Rules requires any AIM company that wishes the London Stock Exchange to cancel the admission of its shares to trading on AIM to inform the London Stock Exchange of its preferred cancellation date at least 20 Business Days prior to such date and to notify shareholders. In accordance with AIM Rule 41, the Company (through its nominated adviser, Allenby Capital Limited) has notified the London Stock Exchange of its intention, subject to the passing of the special resolution numbered 1 in the notice of General Meeting set out at the end of this document to approve the Cancellation at the General Meeting, to cancel admission of the Ordinary Shares to trading on AIM. It is expected that the Liquidator will be appointed immediately following the conclusion of the General Meeting and the Cancellation will become effective at 7.00 a.m. on 9 July 2024, being the Business Day following the General Meeting. If the Cancellation becomes effective, the Company will no longer be required to comply with the AIM Rules and Allenby Capital Limited will cease to be the Company's nominated adviser and broker.

Members' Voluntary Liquidation

The Proposals involve the Company being placed into a members' voluntary liquidation. If the MVL and the appointment of the Liquidator are approved by Shareholders at the General Meeting, the Company will be wound-up in accordance with the Insolvency Act. Following their appointment, the Liquidator will assess the Company's financial position and, when they are in a position to do so, it is expected that they will make the distribution detailed in this circular.

Shareholders should note that the Company is solvent and the MVL is not an insolvent liquidation.

Since the Company's cash balances represent the Company's sole material asset and the liabilities of the Company are expected to be less than the cash balance, the Directors anticipate that the Liquidator will undertake a distribution of surplus funds in a proportion which is as close as practicable to such Shareholders' pro rata interests in the capital of the Company at the Record Date. The MVL will allow the orderly winding-up of its affairs, and upon the conclusion of the MVL, the Company will be dissolved. Upon the appointment of the Liquidator, which, subject to Shareholders' approval being obtained at the General Meeting, will take effect immediately following the passing of the resolutions approving such appointment at the General Meeting, all powers of the Board will cease and the Liquidator will deal with the affairs of the Company until it is dissolved.

The Board estimates that the costs and expenses of the Proposals will amount to approximately £200,000, which includes the fees of the Liquidator of £18,000 and estimated costs for concluding the wind up of the group of companies for which the Company is the ultimate parent company. A summary of the estimated costs is provided within Appendix A. The Liquidator will retain the Liquidation Fund to pay the Company's known and contingent liabilities and costs of liquidation not already paid at the point of the commencement of the MVL including the contractual obligations of the directors' contracts (circa £393,000) and an amount for unknown contingencies.

It is currently expected, based upon the estimated costs, that a distribution of 0.68 pence for every 1 Ordinary Share held by Shareholders on the Record Date is expected to be made, subject to a minimum total distribution of £20 per Shareholder. As a result, Shareholders holding less than 2,923 Ordinary Shares in the Company will not be eligible to receive a distribution due to the associated cost. Shareholders who hold their Ordinary Shares in CREST will receive any distributions through

the CREST system. Other Shareholders will be sent a cheque. Cheques in respect of the final

distribution to Shareholders will be sent once the liquidation is completed.

The distribution to Shareholders is expected to be made in two payments:

·      an interim distribution to Shareholders on the Record Date is proposed to be made in September 2024, the value of the distribution will be confirmed by the Liquidator prior to the distribution being made; and

·      a final distribution to Shareholders on the Record Date is anticipated to be made in April 2025.

The final distribution will not be made until the Liquidator has completed their statutory duty to adjudicate and pay creditors' claims and is satisfied that all tax returns due to HMRC have been dealt with and all amounts owing have been paid.  Each distribution will be rounded down to the nearest value in pence.

The precise timing of the final distribution is uncertain (although it is expected to be at least nine months from the commencement of the MVL before a final distribution can take place due to the requirement to wind up the other subsidiaries within the group including three non-trading overseas entitles).

The Liquidator will subsequently prepare a final account which will be sent to Shareholders giving eight weeks' notice of the date upon which the Liquidator intends to deliver the final account to the Registrar of Companies. The Company will be dissolved on the expiry of three months following the filing of the final account with the Registrar of Companies.

DEFINITIONS

The following definitions apply throughout this document and in the Form of Proxy, unless the context requires otherwise:

Term                                                  Definition