TIDMPHD
RNS Number : 9133I
PROACTIS Holdings PLC
31 March 2015
Date: 31 March 2015
On behalf of: PROACTIS Holdings PLC ('PROACTIS', the 'Company'
or the 'Group')
Embargoed until: 0700hrs
PROACTIS Holdings PLC
Interim results for the six months ended 31 January 2015
PROACTIS Holdings PLC, a global Spend Control and eProcurement
solution provider, today issues its interim results for the six
month period ended 31 January 2015.
Financial highlights
w Reported revenue increased by 110% to GBP8.4m (31 January
2014: GBP4.0m)
w Adjusted EBITDA increased by 155% to GBP2.3m (31 January 2014:
GBP0.9m)
w Reported adjusted(1) operating profit increased by 207% to
GBP1.4m (31 January 2014: GBP0.5m)
w Strong balance sheet with gross cash balances of GBP3.1m (31
July 2014: GBP3.1m)
Revenue visibility
w Total contracted, deferred multi-year revenue increased by 30%
to GBP15.5m (31 July 2014: GBP11.9m)
w Annualised contracted revenue increased by 5% to GBP13.8m (31
July 2014: GBP13.1m)
Operational highlights
w Total Initial Contract Value signed on new deals was GBP2.6m
(31 January 2014: GBP1.6m) with GBP0.5m recognised in the period
(31 January 2014: GBP0.7m)
w Deal activity is buoyant with 20 new name deals (31 January
2014: 15) and continued strong customer loyalty with 43 upgrades in
the period (31 January 2014: 39)
w Multi-year, transactional priced Cloud/SaaS solutions is in
line with expectations - 11 new customers (31 January 2014: 8)
w 39 from 43 SaaS renewals in the period
w Commercial partnership with Fifth Third Bank extended
Post period highlights
w Collaboration agreement for the development of an Accelerated
Payment Facility signed with Inspired Capital plc
w "Activate" technology platform completed
1 - Adjusted operating profit is stated before non-recurring
administrative expenses, amortisation of customer related
intangible assets and share based payment charges
Rod Jones, Chief Executive Officer, commented:
"I am pleased to report another set of results showing
significant increases in revenues, profit and forward order book.
The Group's core business is performing well and experiencing
strong growth rates as it benefits from the subscription business
model.
"Supplementing this, the Group's three acquisitions are
bolstering growth. Trading is in line with expectations with
performance levels in those businesses being maintained through the
integration process. M&A activity remains a core element of the
Group's growth strategy and there are a number of potentially
attractive opportunities in the pipeline.
"The Group's programme to access the supplier monetisation
opportunity, Activate, is progressing well. The technology
development is complete and the Group is now building the
commercial plan to take the opportunity to market. In addition, the
Group intends to enhance the supplier benefits package further with
the offer of an Accelerated Payment Facility for suppliers'
qualifying invoices and, to that end, I am delighted that the Group
has partnered with Inspired Capital plc in the development of this
offer.
"Activate is a potentially transformational initiative and,
along with further M&A activity and with a continued impressive
win rate in the Group's core businesses, I am confident that the
Group is poised for a sustained period of substantial growth.
"Finally, Tim Sykes has informed the Board of his intention to
step down as Chief Financial Officer of the Group once a suitable
replacement is found. I would like to thank Tim for his work with
the Group in achieving the success it has had since its IPO in June
2006. I wish him well in his future career."
For further information, please contact:
PROACTIS Holdings PLC
Rod Jones, Chief Executive Officer Via Redleaf Polhill
Tim Sykes, Chief Financial Officer
Redleaf Polhill
Rebecca Sanders-Hewett/Jenny Bahr 0207 382 4730
proactis@redleafpr.com
finnCap Limited
Stuart Andrews
Charlotte Stranner 0207 220 0500
Notes to editors:
PROACTIS creates, sells and maintains specialist software which
enables organisations to streamline, control and monitor all
internal and external expenditure, other than payroll. PROACTIS is
already used in approximately 500 organisations around the world
from the commercial, public and not-for-profit sectors. It is the
largest independent eProcurement solution provider to the UK Public
Sector.
PROACTIS is head quartered in Wetherby, West Yorkshire. It
develops its own software using an in-house team of developers and
sells through both direct and indirect channels via a number of
Accredited Channel Partners.
PROACTIS floated on the AIM market of the London Stock Exchange
in June 2006.
CLOUD COMPUTING is defined as location-independent computing,
whereby shared servers provide resources, software, and data to
computers and other devices on demand, as with the electricity
grid.
CHAIRMAN'S AND CHIEF EXECUTIVE OFFICER'S REPORT
Performance overview
I am delighted to again report record results for the Group. The
core business is growing strongly and the Group's recent
acquisitions are all contributing at expected levels. The reported
revenues for the half year were GBP8.4m (31 January 2014: GBP4.0m)
and there was a strong order book of GBP15.5m at 31 January 2015
(31 July 2014: GBP11.9m) to take into future periods.
The Group has made three acquisitions during the previous twelve
months and these acquisitions have all contributed to the Group's
results for the whole of the period. Like for like revenues,
excluding the effect of the three acquisitions, increased by 18% to
GBP4.7m (31 January 2014: GBP4.0m) and the like for like order book
increased to GBP8.1m (31 July 2014: GBP7.1m).
The Group secured 20 new deals in the period of which 11 (31
January 2014: 8) were subscription or managed service deals and 9
were perpetual deals. Total Initial Contract Value sold was GBP2.6m
(31 January 2014: GBP1.6m) of which GBP0.5m (31 January 2014:
GBP0.7m) was recognised during the period.
In addition, the Group sold 43 upgrade deals (31 January 2014:
39) to existing clients.
Whilst the volume and value of new business are good indicators
of market traction and performance, the renewal of subscription
deals sold in prior years is of critical importance to the Group's
strategy. It is very encouraging that the vast majority of
customers continue to renew.
During 2010, the Group took the decision to offer both
subscription and perpetual licences to customers, where previously
the Group had offered only perpetual licences. This strategy is
part of the Group's plan to increase the lifetime value of a
customer relationship and to increase visibility of future revenue.
Subscription (or managed service, which have similar
characteristics) deals have been a large proportion of the new
business across all channels to market during the period.
These subscription or managed service deals reduce reported
revenue growth in the period that the deal is signed but increase
reported revenue growth in future periods. The mix shift toward
subscription deals was prevalent in the comparative period and,
consequently, the Group's like for like revenue growth was
significant, from 3% during the comparative period to 15% during
this current period.
The Group's contracted order book of revenue has again grown
substantially during the period and was GBP15.5m at 31 January
2015. On 1 August 2014, the Group completed its third acquisition,
Intelligent Capture Limited, with which it acquired an order book
of GBP1.0m. Accordingly, the like for like growth in order book is
20% against an opening position of GBP12.9m at 31 July 2014
(including the GBP1.0m order book acquired with Intelligent Capture
Limited).
The Group's rate of profitability has increased significantly
with a reported EBITDA (before share based payment charges and
non-recurring administrative expenses) of GBP2.3m (31 January 2014:
GBP0.9m). The statutory operating profit was GBP0.9m (31 January
2014: GBP0.3m).
The Group remains in a strong financial position with gross cash
balances of GBP3.1m. Net cash was GBP0.8m.
Developments in line with growth strategy
Accessing the supplier opportunity ("Activate")
The Group has, to date, monetised its technology through
contracting with organisations of significant scale ("Buyers") for
the delivery of its software solutions and complementary service
offerings. This core business model remains compelling with healthy
growth prospects and the Group has a significant competitive
advantage in this offering.
Whilst executing this growth strategy, the Group has also been
developing its technology to address a key industry issue; the lack
of take-up of electronic trading between buyers and suppliers,
despite the obvious benefits in cost and efficiency. The Group has
developed a technology platform that requires suppliers to trade
electronically, enables suppliers to maintain their own records and
provides open and transparent information on the status of their
invoices as they flow through the Buyer's purchase invoice process
toward payment. The Group intends that suppliers will pay for these
benefits by means of a small annual administrative charge, rather
than tariff based or linked to volume throughput. The Group
estimates that its 500 clients are presently trading with
approximately 1-2 million suppliers so the opportunity is
significant.
In addition, through the Group's recent collaboration agreement
with Inspired Capital plc, the Group is looking to provide further
benefit to suppliers by way of offering a facility for accelerated
payment of suppliers' qualifying invoices. The Group estimates that
its 500 clients are presently transacting GBP60-80 billion of trade
per year with those suppliers through the Group's technology
platform.
M&A activity
The Group has made three acquisitions within the previous twelve
month period; EGS Group Limited, Intesource Inc and Intelligent
Capture Limited. Each of these businesses is performing as expected
and each is fuelling the Group's overall growth rates. The specific
integration plans are well established and largely delivered. The
Group remains committed to further M&A activity is in an
excellent position to provide a platform for further complementary
bolt-on acquisitions.
Blended perpetual and subscription licence models
The Group now has a mature blended business model, offering
perpetual and subscription licences to the marketplace. It has
delivered on its Cloud technology platform and the take up of this
is strong. The Group's global business partners are now achieving
good sales traction with the subscription licence model, which is
ideally suited to the Source-to-Contract elements of the Group's
software suite.
Software as a platform for BPO managed services
The Group's own BPO offering of reverse e-auctions, acquired
with Intesource Inc during June 2014 is performing well but the
application of the Group's software as a platform, on which BPO
based business partners can provide managed services, is being
taken up more slowly than the opportunity offers. The Group's joint
venture with the Mittal family network in India, Proactis Total
Procure, has not performed as expected and the Group is in the
process of restructuring this arrangement toward a more typical
value added reseller partner in that territory.
Product
The Group's position as a leading "best in class" spend control
and eProcurement organisation has been further enhanced by the
addition of major new modules with many new features. The Group's
continued investment has resulted in a truly "end-to-end" suite of
software, placing the Group in a very strong competitive position
which should be capitalised on over the next 2-3 years.
Services
During the period, the Group has successfully trialled several
new managed service based offerings to complement its software,
including supplier engagement and on-boarding, help-desk for
supplier registration process, managed auctions and electronic
invoicing. Many clients have a skills or resource shortage and the
Group's procurement domain expertise provides them with an added
value solution. These managed service offerings remain at an early
stage of commercial realisation but offer a significant opportunity
for growth and this is being pursued aggressively within the
business.
Financial overview
Revenues increased by 110% to GBP8.4m (31 January 2014:
GBP4.0m). This growth has been supplemented by the three
acquisitions completed during the previous twelve month period. The
impact of the acquisitions can be demonstrated as follows:
6 months ended
31 January 2015 31 January 2014 Growth
GBPm GBPm %
--------------------- ---------------- ---------------- -------
Core business 4.7 4.0 18%
Acquired businesses 3.7 - -
--------------------- ---------------- ---------------- -------
8.4 4.0 110%
--------------------- ---------------- ---------------- -------
The Group has signed 20 new deals (31 January 2014: 15) and 43
upgrade deals (31 January 2014: 39) in the period. Of the 20 new
deals, 11 were subscription based (31 January 2014: 8). Again, this
includes new deals signed by the three acquired businesses and, on
a like for like basis, the Group secured 13 (31 January 2014: 15)
new deals, of which 7 were subscription deals.
This mix shift toward subscription revenues in the comparative
period means that reported revenue growth slowed in that period (to
3%) but increased in the current period (to 18%).
A beneficial consequence of the transition toward a more
subscription based revenue model and the long term non-cancellable
support contracts for perpetual licence deals is the increased
level of contracted revenue to be recognised in future periods.
This gives the Group greater visibility of forward revenue and a
more predictable cash flow profile. Of the GBP2.6m (31 January
2014: GBP1.6m) of total value contracted with new customers during
the period, GBP2.1m (31 January 2014: GBP0.9m) has been deferred to
future financial periods and the total value of contracted forward
revenue has increased to GBP15.5m (31 July 2014: GBP12.9m,
including GBP1.0m acquired with Intelligent Capture Limited during
the current period). Annualised contracted revenue increased to
GBP13.8m (31 July 2014: GBP13.1m).
In the period, the mix of revenue from new and upgrade deals
shifted toward higher margin direct deals, partly through the
effect of the acquired businesses that do not utilise business
partners as a distribution channel. This, combined with continued
strong cost control, has resulted in a significant improvement in
profitability with an increased adjusted EBITDA of GBP2.3m (31
January 2014: GBP0.9m), adjusted operating profit of GBP1.4m (31
January 2014: GBP0.5m) and statutory operating profit of GBP0.9m
(31 January 2014: GBP0.3m).
The Group's financial position is strong with GBP3.1m cash on
the balance sheet.
Net operating cash inflow in the period since 31 July 2014 was
GBP1.6m before a cash outflow from investing activities of GBP2.1m
and a dividend payment of GBP0.4m. Additional funding was raised
through net new borrowings of GBP0.7m and from the issue of new
equity of GBP0.1m.
The Group's acquisition of Intelligent Capture created a new
funding requirement of approximately GBP1.3m which was satisfied by
a new debt facility of GBP1.0m and an issue of new equity to the
vendor of GBP0.3m.
The Group's gross debt was GBP2.2m as at 31 January 2015. The
Group's existing term loan of GBP1.5m was increased by GBP1.0m to
support the acquisition of Intelligent Capture Limited as described
above and the Group has repaid GBP0.3m during the period.
Board changes
Tim Sykes has informed the Board of his intention to step down
as Chief Financial Officer of the Group. The Board will commence
the process of identifying a suitable replacement and Tim has
agreed to remain with the Group until that recruitment is made and
to assist through a satisfactory handover period.
The Board would like to thank Tim for his contribution to the
Group's success. Tim has been with the Group since its IPO in June
2006 and has been fundamentally involved with the Group's
substantial progress since then.
Outlook
PROACTIS is realising the benefits of its organic and M&A
based growth strategy reporting record revenues of GBP8.4m in total
which includes GBP4.7m in its core business, representing like for
like growth of 18% with increased profitability. The Group has
successfully integrated its acquisitions without disruption to
financial performance and has transitioned to a blended perpetual
and subscription licence model offering, which it has achieved
without requiring any external funding. Visibility of forward
revenue has also increased and the Group has grown its order book
to GBP15.5m.
After the period end, the Group announced a collaboration
agreement with Inspired Capital plc to develop an Accelerated
Payment Facility for suppliers trading through the Group's global
network which is on schedule for a release during 2015. Commercial
success will depend on the Group's ability to transition its
customers to the Activate programme and the Group looks forward to
reporting further progress on this over the coming months.
The Board is confident that the Group has further strengthened
its position to continue to exploit the growing Spend and
Procurement marketplace and the evolving strategic growth
opportunities.
Alan Aubrey Rod Jones
Chairman Chief Executive Officer
31 March 2015
Condensed consolidated income statement
for the six months ended 31 January 2015
Unaudited Unaudited Audited
6 months 6 months Year ended
to to 31 July
31 January 31 January 2014
2015 2014
GBP000 GBP000 GBP000
Revenue
Continuing 8,371 4,025 10,150
Cost of sales (1,762) (1,234) (2,675)
------------- ------------- -------------
Gross profit 6,609 2,791 7,475
Administrative costs (5,676) (2,475) (7,315)
------------- ------------- -------------
--------------------------------------- -------------- -------------- --------------
Operating profit before non-recurring
items, amortisation of customer
related intangibles and share
based payment charges 1,393 454 1,122
Non-recurring administrative
expenses (118) - (532)
Amortisation of customer related
intangibles (281) (130) (352)
Share based payment charges (61) (8) (78)
------------- ------------- -------------
Operating profit 933 316 160
Finance income 6 6 12
Finance expenses (41) (1) (26)
------------- ------------- -------------
Profit before taxation 898 321 146
Taxation 194 (43) 176
------------- ------------- -------------
Profit for the period 1,092 278 322
------------- ------------- -------------
Earnings per ordinary share
:
- Basic 2.8p 0.9p 1.0p
------------- ------------- -------------
- Adjusted 3.7p 0.9p 2.7p
------------- ------------- -------------
- Diluted 2.7p 0.8p 0.9p
------------- ------------- -------------
The profit for the period is wholly attributable to equity
holders of the parent Company.
All results arise from continuing
operations.
Condensed consolidated statement of changes in equity
as at 31 January 2015
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
Foreign
Share Share Merger Capital exchange Retained
capital premium reserve reserve reserve earnings
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 August 2013 3,158 3,060 556 449 (1) (848)
Shares issued
during the period 24 13 - - - -
Result for the
period - - - - - 276
Dividend - - - - - (318)
Share based payment
charges - - - - - 8
------------- ------------- ------------- ------------- ------------- -------------
At 31 January
2014 3,182 3,073 556 449 (1) (882)
Shares issued
during the period 643 2,404 - - - -
Arising during - - - - (22) -
the period
Result for the
period - - - - - 46
Share based payment
charges - - - - - 70
------------- ------------- ------------- ------------- ------------- -------------
At 1 August 2014 3,825 5,477 556 449 (23) (766)
Shares issued
during the period 77 300 - - - (1)
Arising during - - - - (278) -
the period
Result for the
period - - - - - 1,092
Dividend - - - - - (428)
Share based payment
charges - - - - - 61
------------- ------------- ------------- ------------- ------------- -------------
At 31 January
2015 3,902 5,777 556 449 (301) (42)
------------- ------------- ------------- ------------- ------------- -------------
Condensed consolidated balance sheet
as at 31 January 2015
Unaudited Unaudited Audited
As at 31 As at 31 As at 31
January January 2014 July 2014
2015
GBP000 GBP000 GBP000
Non-current assets
Property, plant & equipment 286 66 168
Intangible assets 16,562 6,868 15,365
Deferred tax asset 160 - 143
------------- ------------- -------------
17,008 6,934 15,676
------------- ------------- -------------
Current assets
Trade and other receivables 2,839 1,404 2,169
Cash and cash equivalents 3,082 2,351 3,124
------------- ------------- -------------
5,921 3,755 5,293
------------- ------------- -------------
Total assets 22,929 10,689 20,969
------------- ------------- -------------
Current liabilities
Trade and other payables 1,090 727 1,769
Deferred income 6,151 2,309 4,726
Income taxes 51 158 31
Borrowings 650 - 400
------------- ------------- -------------
7,942 3,194 6,926
------------- ------------- -------------
Non-current liabilities
Deferred income 450 - 728
Deferred tax liabilities 2,608 1,118 2,697
Borrowings 1,588 - 1,100
------------- ------------- -------------
4,646 1,118 4,525
------------- ------------- -------------
Total liabilities 12,588 4,312 11,451
------------- ------------- -------------
Net assets 10,341 6,377 9,518
------------- ------------- -------------
Equity attributable to
equity holders of the
Company
Called up share capital 3,902 3,182 3,825
Share premium account 5,777 3,073 5,477
Merger reserve 556 556 556
Capital reserve 449 449 449
Foreign exchange reserve (301) (1) (23)
Retained earnings (42) (882) (766)
------------- ------------- -------------
Total equity 10,341 6,377 9,518
------------- ------------- -------------
Total equity is wholly attributable to equity holders of the
parent Company.
Condensed consolidated cash flow statement
for the six months ended 31 January 2015
Unaudited Unaudited Audited
6 months 6 months Year ended
to to 31 July
31 January 31 January 2014
2015 2014
GBP000 GBP000 GBP000
Operating activities
Profit for the period 1,092 278 322
Amortisation of intangible assets 1,115 456 1,219
Depreciation 75 18 53
Net finance expense/(income) 35 (5) 14
Income tax charge/(credit) (194) 43 (176)
Share based payment charges 61 8 78
------------- ------------- -------------
Operating cash flow before changes
in working capital 2,184 798 1,510
Movement in trade and other receivables (250) (33) 257
Movement in trade and other payables
and deferred income (376) 69 (128)
------------- ------------- -------------
Operating cash flow from operations 1,558 834 1,639
Finance income 6 10 12
Finance expense (41) - (26)
Income tax received 92 - 61
------------- ------------- -------------
Net cash flow from operating activities 1,615 844 1,686
------------- ------------- -------------
Investing activities
Purchase of plant and equipment (70) (14) (57)
Payments to acquire subsidiary undertakings (1,101) - (3,909)
Development expenditure capitalised (956) (534) (1,200)
------------- ------------- -------------
Net cash flow from investing activities (2,127) (548) (5,166)
------------- ------------- -------------
Financing activities
Proceeds from issue of new shares 77 35 3,084
Receipts from borrowings 1,000 - 1,500
Repayment of borrowings (262) - -
Dividend payment (428) (318) (318)
------------- ------------- -------------
Net cash flow from financing activities 387 (283) 4,266
------------- ------------- -------------
Net increase/(decrease) in cash and
cash equivalents (125) 13 786
Cash and cash equivalents at the beginning
of the period 3,124 2,338 2,338
Effects of currency translation on 83 - -
cash and cash equivalents
------------- ------------- -------------
Cash and cash equivalents at the end
of the period 3,082 2,351 3,124
------------- ------------- -------------
Unaudited notes
Basis of preparation and accounting policies
PROACTIS Holdings PLC is a company incorporated in England and
Wales under the Companies Act 2006.
The condensed financial statements are unaudited and were
approved by the Board of Directors on 30 March 2015.
The interim financial information for the six months ended 31
January 2015, including comparative financial information, has been
prepared on the basis of the accounting policies set out in the
last annual report and accounts, with the exception of the
amendment to IAS 1 (Presentation of Financial Statements) referred
to below, and in accordance with International Financial Reporting
Standards ("IFRS"), including IAS 34 (Interim Financial Reporting),
as issued by the International Accounting Standards Board and
adopted by the European Union.
The preparation of the interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets, liabilities, income and expense. Actual results
may subsequently differ from those estimates.
In preparing the interim financial statements, the significant
judgements made by management in applying the Group's accounting
policies and key sources of estimation uncertainty were the same,
in all material respects, as those applied to the consolidated
financial statements for the year ended 31 July 2014.
There is a choice between presenting comprehensive income in one
statement or in two statements comprising an income statement and a
separate statement of comprehensive income. The Group has elected
to present comprehensive income in two statements.
Going concern assumption
The Group manages its cash requirements through a combination of
operating cash flows and long term borrowings.
The Group's forecasts and projections, taking account of
reasonably possible changes in trading performance, show that the
Group should be able to operate within the level of its current
lending facilities.
Consequently, after making enquires, the Directors have a
reasonable expectation that the Group has adequate resources to
continue in operational existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis of
accounting in preparing the interim financial statements.
Information extracted from 2014 Annual Report
The financial figures for the year ended 31 July 2014, as set
out in this report, do not constitute statutory accounts but are
derived from the statutory accounts for that financial year.
The statutory accounts for the year ended 31 July 2014 were
prepared under IFRS and have been delivered to the Registrar of
Companies. The auditors reported on those accounts. Their report
was unqualified, did not draw attention to any matters by way of
emphasis and did not include a statement under Section 498(2) or
498(3) of the Companies Act 2006.
The Board confirms that to the best of its knowledge:
w The condensed set of financial statements has been prepared in
accordance with IAS34 'Interim Financial Reporting' as adopted by
the EU;
w The interim management report includes a fair review of the
information required by :
- DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first
six months of the financial year and their impact on the condensed
set of financial statements, and a description of the principal
risks and uncertainties for the remaining six months of the year;
and
- DTR4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and any changes in the related party transactions
described in the last annual report that could do so.
By Order of the Board
Rod Jones Tim Sykes
Chief Executive Officer Chief Financial Officer
31 March 2015
This information is provided by RNS
The company news service from the London Stock Exchange
END
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