TIDMPHD
RNS Number : 3227D
PROACTIS Holdings PLC
26 April 2017
Date: 26 April 2017
On behalf PROACTIS Holdings PLC ('PROACTIS',
of: the 'Company' or the 'Group')
Embargoed 0700hrs
until:
PROACTIS Holdings PLC
Interim results for the six months ended 31 January 2017
PROACTIS Holdings PLC, a global Spend Control and eProcurement
solution provider, today announces its interim results for the six
month period ended 31 January 2017.
Trading performance
-- Deal activity buoyant: 27 new name deals (31 January 2016:
23)
-- Favourable revenue shift toward multi-year SaaS deals: 22 new
names (31 January 2016: 14)
-- Increased volumes from existing customers: 59 deals in the
period (31 January 2016: 45)
-- Early adopter programme for Supplier Commerce has progressed
well during the period and overall supplier opportunity
extended
Financial performance
-- Reported revenue increased 35.6% to GBP11.8m (31 January
2016: GBP8.7m)
-- Underlying revenue growth (excluding the benefit of
acquisitions) was 13.4% (31 January 2016: 3.6%)
-- Adjusted EBITDA(1) increased 25% to GBP3.0m (31 January 2016:
GBP2.4m)
-- Strong balance sheet with net debt at GBP2.7m (31 July 2016:
GBP0.5m)
Revenue visibility
-- Order book(2) was GBP27.1m (31 July 2016: GBP26.1m)
-- Annualised(3) contracted revenue increased to GBP22.9m (31
July 2016: GBP17.6m)
M&A
-- Acquired Millstream Associates Limited ("Millstream") for
GBP15.5m, a provider of tender information services to suppliers
and a provider of eProcurement systems to buyers
-- Post-acquisition performance of Millstream is in line with
management's expectations with revenues for the ten week post
acquisition period of GBP1.05m and EBITDA of GBP0.42m
1 - Adjusted EBITDA is stated before non-recurring
administrative expenses, amortisation of customer related
intangible assets and share based payment charges
2 - Order Book is the Group's current contracted revenue that is
required to be recognised in future accounting periods
3 - Annualised contracted revenue is the Group's estimate of the
annualised value of revenue of customers currently contracted with
the Group
Tim Sykes, Chief Executive Officer Designate, commented:
"The Group has once again illustrated its ability to drive
growth, both organically and by acquisition. The core business has
delivered significant growth and this has been bolstered by the
contributions from recent acquisitions, which are performing in
line with expectations.
"We have continued to execute on our M&A strategy in the
period with the acquisition of Millstream, a business that
complements the four acquisitions made since 2014. We are committed
to further M&A activity and have established a robust platform
for further acquisitions.
"Alongside the significant levels of new names signed during the
period, the Group's customer retention and increased deal flow from
existing customers demonstrates the strength of the Group's
proposition and ability to successfully address the growing Spend
and Procurement marketplace.
"We look forward to the coming period and are confident in our
ability to drive further growth and continue to deliver against our
ambitious strategy."
For further information, please contact:
PROACTIS Holdings PLC
Rod Jones, Chief Executive Via Redleaf Communications
Officer
Tim Sykes, Chief Executive
Officer Designate
Redleaf Communications
Rebecca Sanders-Hewett 0207 382 4730
Susie Hudson proactis@redleafpr.com
Sam Modlin
finnCap Ltd
Stuart Andrews - Corporate
Finance
Carl Holmes
Emily Watts
Stephen Norcross - Corporate
Broking 0207 220 0500
The information communicated in this announcement contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) No. 596/2014.
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 800 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.
CHAIRMAN'S AND CHIEF EXECUTIVE OFFICER'S REPORT
I am delighted to report that the Group has maintained its
momentum and delivered further substantial progress in line with
its ambitious plans.
Strategy
The Board continues to execute on its well established growth
strategy, leveraged from a solid commercial, operational and
financial platform.
The initial steps were taken several years ago with a shift from
a perpetual software license only model to a blended model also
offering multi-year subscription based software as service ("SaaS")
licenses. This shift was designed to meet the commercial need at
the time, whilst also providing investors with a business capable
of delivering:
- High revenue growth rates;
- Security through absolute scale and high levels of recurring
and contracted income;
- Profitability; and
- Yield through a dividend policy.
The Group's growth strategy is as follows:
- Delivery of new names through best in class procurement
solutions;
- Retention and a broadening of relationships with existing
customers through high levels of support and service offerings and
an energetic approach to the upselling and cross selling of the
Group's widening range of solutions;
- Undertake targeted M&A based activity with a focus on
complementary customer bases, solutions and technology, allied with
similar business model characteristics to the Group's own; and
- Access a vast new opportunity through the provision of
benefits and value added services to a new customer grouping, our
customers' supplier networks.
Performance overview
The core business continues to grow strongly with the Group's
acquisitions performing in line with expected levels.
Revenue increased 36.3% to GBP11.8m (31 January 2016: GBP8.7m),
benefitting from the contribution of two acquisitions, neither of
which businesses contributed to the comparative period revenues.
The underlying business (excluding the benefit of acquisitions)
performed strongly with 13.4% revenue growth (2016: 3.6%).
The Group secured 27 new names (31 January 2016: 23) in the
period of which 22 (31 January 2016: 14) were multi-year
subscription or managed service deals and 5 (31 January 2016: 9)
were perpetual licence deals.
Following a strategic decision to increase focus on the
commercial opportunity in the Group's existing customer base
alongside its efforts to win new names, the Group's performance was
strong with 59 deals (31 January 2016: 45).
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 majority of customers
continue to renew. Annualised contracted revenue increased to
GBP22.9m (31 July 2016: GBP17.6m).
The Group's rate of profitability was maintained, despite
significant investment in account management and in the Supplier
Commerce opportunities, with a reported EBITDA (before share based
payment charges and non-recurring administrative expenses) of
GBP3.0m (31 January 2016: GBP2.4m). The statutory operating profit
remained flat at GBP1.0m (31 January 2016: GBP1.0m).
The Group remains in a strong financial position with gross cash
balances of GBP4.9m (31 July 2016: GBP4.6m). Net debt was GBP2.7m
(31 July 2016: GBP0.5m).
M&A activity
On 16 November 2016, the Group acquired Millstream, a provider
of tender information services to suppliers and a provider of
eProcurement systems to buyers. The acquisition broadens both the
product offering and the customer base on the buy side of the
procurement process whilst also bringing scale of operation to the
strategically important supply side of the procurement process.
Millstream is a clear complementary fit to the Group and provides
potential upside with cross-selling opportunities into both the
PROACTIS and Millstream customer bases.
The gross cash consideration payable at completion was GBP15.5m
on a cash free/debt free and normalised working capital basis,
which the Group funded through a placing of 9,259,260 new ordinary
shares at a placing price of 135 pence raising GBP12.5m (the
"Placing") and through bank debt drawn against its new facility of
GBP15.2m provided by HSBC Bank plc. It was particularly encouraging
that the Placing was oversubscribed and well supported by both
existing and new shareholders.
The acquisition of Millstream complements the four acquisitions
made since 2014; EGS Group Limited, Intesource Inc, Intelligent
Capture Limited and Due North Limited. These businesses are
performing as expected without adverse disruption to business
performance in the immediate post acquisition period. The Group is
now focused on multiple commercial synergies and the convergence of
products and technologies.
The Group remains committed to further M&A activity and has
established a robust platform for further acquisitions.
Supplier Commerce opportunity
The Group has a strategic objective, with the support of its
customers, to access, provide benefits and deliver value added
services to a new customer grouping, the suppliers of its 800
customers. The Group has identified additional scope for these
value added services during the period and the Group has progressed
its strategy with three themes:
- The acquisition of Millstream (described above) is already
delivering supplier side revenues and the complementary nature of
Millstream's Tenders Direct product provides an excellent
cross-sell opportunity to be realised in the coming years;
- The Group is rolling out its offer for suppliers to its US
managed service business customers. The annual subscription
business model should contribute to revenues during this financial
year; and
- The Group is working alongside three customers in an early
adopter programme to deliver increased levels of electronic
trading, which is generally still poorly adopted in the economic
environment, and create efficiencies within the transaction
process. These efficiencies will be realised by suppliers through a
greater level of convenience and automation in the trading
relationship with their customers, significantly reducing costs
whilst also creating new commercial opportunities. These benefits
and efficiencies will be charged through an annual, non-tariff
based, de minimis subscription. In addition, the Group intends to
offer an accelerated payment service to suppliers to facilitate
growth or working capital benefits in return for a small discount.
The early adopter programme, is progressing well and is providing
informative data together with commercial and operational know-how
that will be invaluable as the concept evolves to product and the
early adopter customers become referenceable.
The Directors estimate that these opportunities could increase
the revenue per customer significantly from level which is
currently being achieved. The Group has more than 800 customers
with an estimated spend of more than GBP100bn with over 1m
suppliers.
Financial overview
Reported revenues increased to GBP11.8m (31 January 2016:
GBP8.7m). The Group's headline revenue growth was 36.3%,
benefitting from the contribution of both Due North Limited
(acquired 2 February 2016) and Millstream Associates Limited
(acquired 16 November 2016). Neither of these businesses
contributed to the comparative period revenues.
Underlying revenue growth (excluding the benefit of
acquisitions) was substantial at 13.4% (31 January 2016: 3.6%) as
the Group benefited from revenues from the exceptionally strong
level of business signed during the year ended 31 July 2016.
The Group has signed 27 new deals (31 January 2016: 23) of which
22 were subscription based (31 January 2016: 14). Total Initial
Contract Value sold was GBP1.8m (31 January 2016: GBP3.7m).
Further, the Group made 59 upsell deals (31 January 2016: 45) in
the period.
This revenue shift toward multi-year SaaS subscription and
managed service deals has the impact of deferring revenue to be
recognised in future periods rather than in the period in which the
deal is signed. The revenue from those deals signed in prior
periods has been recognised in this period which has the impact of
consuming order book. Despite that, the order book has still grown,
principally as a result of the acquisition of Millstream, to
GBP27.1m at 31 January 2017 (31 July 2016: GBP26.1m). This order
book will be recognised in future periods of up to five years.
Annualised contracted revenue increased to GBP22.9m (31 July
2016: GBP17.6m).
In the period, the mix of revenue from new and upsell deals
shifted toward higher margin direct deals. With a significant
investment to support the development of the Group's Supplier
commerce and Accelerated Payment Facility opportunities and cross
selling capability, overhead increased by an equivalent amount. The
Group maintained strong levels of profitability with an increased
adjusted EBITDA of GBP3.0m (31 January 2016: GBP2.4m), adjusted
operating profit of GBP1.9m (31 January 2016: GBP1.4m) and
statutory operating profit of GBP1.0m (31 January 2016:
GBP1.0m).
Net operating cash inflow in the period since 31 July 2016 was
GBP1.9m before a cash outflow from investing activities (excluding
the acquisition of Millstream) of GBP1.1m and a dividend payment of
GBP0.6m. The total net new funding raised to support the Millstream
acquisition was GBP15.7m and the net cash outflow from the
acquisition was GBP14.7m,
The Group's financial position is strong with net debt of only
GBP2.7m (31 July 2016: GBP0.5m).
Summary and Outlook
The rate of organic growth is strong and is the foundation of
the Group's robust performance in the period. High levels of deal
activity and a favourable new name shift toward multi-year SaaS
deals illustrates the Group's ability to drive further organic
growth. Underpinning this, high levels of customer retention and
increased deal activity within the existing customer base both
demonstrate the strength of the Group's proposition to its
customers.
The M&A activity in this and the prior period has further
bolstered the Group's growth. The acquisition of Millstream
Associates Limited in the period broadens both the product offering
and the customer base on the buy side of the procurement process
whilst also bringing scale of operation on the strategically
important supply side of the procurement process. Millstream is a
clear complementary fit to the Group and provides some potential
upside with cross-selling opportunities into both the PROACTIS and
Millstream customer bases.
The Group's M&A pipeline remains strong as it seeks further
acquisition opportunities.
The commitments from customers to the early adopter programme
for the Group's Supplier commerce technology opens up a very
exciting new opportunity that could deliver growth rates that are
substantially beyond the capability of its core business. The Group
is working hard to realise this opportunity as it moves the
solution from concept to product.
The Group has a clear and ambitious strategy in place, enabling
it to exploit the growing Spend and Procurement marketplace. There
is a significant opportunity both for the Group's core business and
also its strategic initiatives.
Alan Aubrey Tim Sykes
Chairman Chief Executive Officer Designate
26 April 2017
Condensed consolidated income statement
for the six months ended 31 January 2017
Unaudited Unaudited Audited
6 months 6 months Year ended
to to 31 July
31 January 31 January 2016
2017 2016
GBP000 GBP000 GBP000
Revenue 11,795 8,655 19,374
Cost of sales (1,759) (1,531) (3,401)
Staff costs (5,406) (3,973) (8,877)
Other operating expenses (2,247) (850) (2,495)
Depreciation of property,
plant and equipment (128) (105) (224)
Amortisation of intangible
assets (1,301) (1,222) (2,495)
------------- ------------- -------------
------------------------------------ -------------- -------------- --------------
Operating profit before
non-recurring items, amortisation
of customer related intangibles
and share based payment
charges 1,926 1,435 3,227
Non-recurring administrative
expenses (589) (158) (579)
Amortisation of customer
related intangibles (321) (292) (648)
Share based payment charges (62) (11) (118)
------------- ------------- -------------
Operating profit 954 974 1,882
Finance income 1 4 6
Finance expenses (77) (28) (87)
------------- ------------- -------------
Profit before taxation 878 950 1,801
Income tax credit 203 30 684
------------- ------------- -------------
Profit 1,081 980 2,485
------------- ------------- -------------
Other comprehensive income
Items that will never be
reclassified to profit
or loss
Share base payment charges 62 11 118
Items that are or may be
reclassified to profit
or loss
Foreign operations - foreign
currency translation differences 168 (444) (792)
------------- ------------- -------------
Other comprehensive income,
net of tax 230 (433) (674)
------------- ------------- -------------
Total comprehensive income 1,311 547 1,811
------------- ------------- -------------
Earnings per ordinary share
:
- Basic 2.5p 2.5p 6.3p
------------- ------------- -------------
- Diluted 2.4p 2.3p 5.9p
------------- ------------- -------------
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 2017
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
2015 3,941 5,840 556 449 (281) 967
Shares issued
during the
period 23 58 - - - -
Arising during - - - - (444) -
the period
Result for
the period - - - - - 880
Dividend - - - - - (476)
Share based
payment charges - - - - - 11
------------- ------------- ------------- ------------- ------------- -------------
At 31 January
2016 3,964 5,898 556 449 (725) 1,382
Shares issued
during the
period 19 64 - - - -
Arising during - - - - (348) -
the period
Result for
the period - - - - - 1,606
Share based
payment charges - - - - - 107
------------- ------------- ------------- ------------- ------------- -------------
At 1 August
2016 3,983 5,962 556 449 (1,073) 3,095
Shares issued
during the
period 1,034 11,604 - - - (3)
Arising during - - - - 168 -
the period
Result for
the period - - - - - 1,081
Dividend - - - - - (638)
Share based
payment charges - - - - - 62
------------- ------------- ------------- ------------- ------------- -------------
At 31 January
2017 5,017 17,566 556 449 (905) 3,597
------------- ------------- ------------- ------------- ------------- -------------
Condensed consolidated balance sheet
as at 31 January 2017
Unaudited Unaudited Audited
As at 31 As at 31 As at 31
January January July 2016
2016 2016
GBP000 GBP000 GBP000
Non-current assets
Property, plant
& equipment 371 353 391
Intangible assets 38,136 16,465 21,613
Deferred tax asset 440 170 500
------------- ------------- -------------
38,947 16,988 22,504
------------- ------------- -------------
Current assets
Trade and other
receivables 5,193 3,575 4,182
Cash and cash equivalents 4,920 4,573 3,595
------------- ------------- -------------
10,113 8,148 7,777
------------- ------------- -------------
Total assets 49,060 25,136 30,281
------------- ------------- -------------
Current liabilities
Trade and other
payables 2,582 1,844 2,769
Deferred income 9,644 7,031 7,929
Income taxes 515 295 270
Borrowings 4,809 650 1,393
------------- ------------- -------------
17,550 9,820 12,361
------------- ------------- -------------
Non-current liabilities
Deferred income 684 581 473
Deferred tax liabilities 1,746 2,273 1,819
Borrowings 2,800 938 2,656
------------- ------------- -------------
5,230 3,792 4,948
------------- ------------- -------------
Total liabilities 22,780 13,612 17,309
------------- ------------- -------------
Net assets 26,280 11,524 12,972
------------- ------------- -------------
Equity attributable
to equity holders
of the Company
Called up share
capital 5,017 3,964 3,983
Share premium account 17,566 5,898 5,962
Merger reserve 556 556 556
Capital reserve 449 449 449
Foreign exchange
reserve (905) (725) (1,073)
Retained earnings 3,597 1,382 3,095
------------- ------------- -------------
Total equity 26,280 11,524 12,972
------------- ------------- -------------
Total equity is wholly attributable to equity holders of the
parent Company.
Condensed consolidated cash flow statement
for the six months ended 31 January 2017
Unaudited Unaudited Audited
6 months 6 months Year ended
to to 31 July
31 January 31 January 2016
2017 2016
GBP000 GBP000 GBP000
Operating activities
Profit for the period 1,081 880 2,485
Amortisation of intangible
assets 1,301 1,222 2,495
Depreciation 128 105 224
Net finance expense 76 32 81
Income tax credit (203) (31) (684)
Share based payment charges 62 11 118
------------- ------------- -------------
Operating cash flow before
changes in working capital 2,445 2,219 4,719
Movement in trade and other
receivables 645 (211) (530)
Movement in trade and other
payables and deferred income (1,066) 1,023 1,229
------------- ------------- -------------
Operating cash flow from
operations 2,024 3,031 5,418
Finance income 1 4 6
Finance expense (77) (36) (87)
Income tax (paid)/received - - (145)
------------- ------------- -------------
Net cash flow from operating
activities 1,948 2,999 5,192
------------- ------------- -------------
Investing activities
Purchase of plant and equipment (53) (88) (169)
Purchase of intangible assets - - (304)
Payments to acquire subsidiary
undertakings (14,680) - (4,370)
Development expenditure capitalised (1,034) (1,076) (2,075)
------------- ------------- -------------
Net cash flow from investing
activities (15,767) (1,164) (6,918)
------------- ------------- -------------
Financing activities
Proceeds from issue of new
shares 12,187 81 164
Receipts from bank borrowings 4,235 - 3,000
Repayment of bank borrowings (700) (325) (864)
Finance lease payments - (1) -
Dividend payment (638) (476) (475)
------------- ------------- -------------
Net cash flow from financing
activities 15,084 (721) 1,825
------------- ------------- -------------
Effects of currency translation
on cash and cash equivalents 60 35 72
Net increase/(decrease) in
cash and cash equivalents 1,265 1,149 99
Cash and cash equivalents
at the beginning of the period 3,595 3,424 3,424
------------- ------------- -------------
Cash and cash equivalents
at the end of the period 4,920 4,573 3,595
------------- ------------- -------------
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 25 April 2017.
The interim financial information for the six months ended 31
January 2017, 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 2016.
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 2016 Annual Report
The financial figures for the year ended 31 July 2016, 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 2016 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 Executive Officer Designate
26 April 2017
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR OKPDNABKDNQB
(END) Dow Jones Newswires
April 26, 2017 02:00 ET (06:00 GMT)
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