TIDMPHD
RNS Number : 9868W
PROACTIS Holdings PLC
07 August 2018
Date: 7 August 2018
On behalf of: PROACTIS Holdings PLC
Embargoed until: 0700hrs
PROACTIS Holdings PLC
Trading Update and
Acquisition of Esize Holdings BV
PROACTIS Holdings PLC ("PROACTIS", the "Group" or the
"Company"), the global spend management and B2B eCommerce solution
provider reports a preliminary update on trading for the financial
year ended 31 July 2018 and announces that it has entered into an
agreement to acquire the entire issued share capital of Esize
Holdings BV ("Esize"), a Netherlands based procurement software
business for buy side organisations for a maximum consideration of
up to EUR15.2 million (the "Acquisition").
Trading Update
PROACTIS' expects to report revenue(1) of approximately GBP52
million and Adjusted EBITDA(1) of approximately GBP17 million for
the year ended 31 July 2018. Further, deal intake was strong with
64 new names with a total initial contract value of GBP8.7m (2017:
54; GBP4.1m) and 119 (2017: 110) upsell deals.
Net debt(2) as at 31 July 2018 is expected to be approximately
GBP30 million.
The Company is in the process of closing out its year-end and
expects to provide a more detailed trading update on 22 August
2018.
(1) Revenue and Adjusted EBITDA are both unaudited and Adjusted
EBITDA is stated before the Company's assessment of non-recurring
administrative expenses, amortisation of customer related
intangible assets and share based payment charges.
(2) Net debt is unaudited and is calculated excluding the $5
million 2.0 per cent. convertible unsecured loan notes due 2022 and
convertible at GBP1.65 per share. These loan notes were issued as
part consideration in connection with the acquisition of Perfect
Commerce, LLC on 4 August 2017
Acquisition of Esize
Esize is a recognised territory leader in the Netherlands for
its cloud-based spend management solutions. Its solutions cover the
full procurement cycle for indirect spend and provide PROACTIS with
additional capabilities in the travel and expense management and
contract labour markets. These are two markets which are adjacent
to, and of an equivalent size to, PROACTIS' core indirect product
procurement proposition. The Board believes that they will become
increasingly important to mid-market buyside customers going
forward. It has approximately 60 customers across the private and
public sectors and approximately 50 employees.
Esize has a SaaS based business model, which is consistent with
PROACTIS', and which delivers high levels of contracted annual
recurring revenue with high retention rates. Esize's recent growth
rates have been above 10% per annum and it has historically
delivered comparable profitability margins to PROACTIS.
The acquisition will also benefit PROACTIS by creating a scaled
operation in The Netherlands, where it will consolidate its
existing operations. It will also allow PROACTIS to access growth
opportunities through the cross-selling of complementary
capabilities to both customer bases.
The Board expects this Acquisition to be immediately earnings
enhancing.
For the year ended to 31 December 2017, Esize reported revenue
of EUR5.1 million (c.19% YOY growth), EUR1.7 million of EBITDA
(c.14% YOY growth) and a profit before tax of EUR0.6 million (c.48%
YOY growth).
Terms of the Acquisition
The maximum consideration payable for the Acquisition (subject
to minor working capital adjustments) is EUR15.2 million. This
comprises an initial consideration of EUR14.2 million (the "Initial
Consideration") and a deferred contingent consideration of between
EUR0.5 million and EUR1.0 million based on achieving certain
revenue targets for the year ending 31 July 2019 (the "Deferred
Consideration").
The Initial Consideration will be satisfied by:
(i) EUR9.6 million in cash, to be satisfied from the Group's
existing cash resources and a draw down from the Group's extended
GBP35 million (previously GBP30 million) revolving credit bank
facility;
(ii) 1,292,491 ordinary shares of 10 pence each in the Company
(the "Ordinary Shares") (being EUR2.4 million at an issue price of
GBP1.65 pence per Ordinary Share, which is equivalent to EUR1.6
million at the closing mid-market share price on 6 August 2018);
and
(iii) EUR3.0 million by way of a convertible loan note (see
below).
The Deferred Consideration will be satisfied by way of a
convertible loan note of between EUR0.5 million and EUR1.0 million
which is convertible on or after 1 November 2019. The amount of
Deferred Consideration payable will be calculated on a sliding
scale based on Esize achieving revenues between EUR5.5 million and
EUR6.0 million for the year ending 31 July 2019.
All consideration payable in Ordinary Shares will be issued
under the Company's existing authorities and will be subject to a
one-year lock in agreement and a further one year orderly market
agreement, from the date of admission of the Ordinary Shares.
The number of Ordinary Shares to be issued in respect of the
Initial Consideration and the Deferred Consideration is calculated
by dividing the appropriate consideration values by reference
to:
(i) In respect of the Initial Consideration, 1.1254 EUR/GBP and
then by dividing by the negotiated issue price of GBP1.65 per
Ordinary Share; and
(ii) In respect of the Deferred Consideration, 1.1254 EUR/GBP
and then by dividing by the negotiated conversion price of GBP1.75
per Ordinary Share.
Issue of Equity and Total Voting Rights
Pursuant to the Initial Consideration, application has been made
for the 1,292,491 new Ordinary Shares to be admitted to trading on
AIM ("Admission") and dealings are expected to commence on 13
August 2018. The new Ordinary Shares will rank pari passu with the
Company's existing Ordinary Shares.
The total number of Ordinary Shares in issue following Admission
will be 94,528,614. Accordingly, the figure of 94,528,614 may be
used by shareholders as the denominator for the calculations by
which they will determine if they are required to notify their
interest in, or a change to their interest in the Company under the
FCA's Disclosure Guidance and Transparency Rules.
Hamp Wall, CEO of PROACTIS commented:
"I am encouraged by the expected out turn for the year,
particularly with regard to underlying growth driven by the rate
and value of new deal intake and upselling activity which are key
indicators of the relevance of our solutions and our ability to
sell. I am optimistic that this will continue for the foreseeable
future and that we are confident of returning to normalised levels
of growth and churn into FY2019.
"Acquisitions are a key part of our Group's growth strategy and
Esize perfectly satisfies our acquisition criteria. We are excited
by this growing, profitable and cash generative business that
brings with it a scaled operation in a key new North West European
geography, a SaaS/cloud-based business model delivering security
over forward revenues and an additive technology stack.
"In addition, Esize has a strong management team which we look
forward to welcoming into the Group. As well as the immediate
benefits, we believe there will be significant cross sell
opportunities across both customer bases on the buy side as well
as, in the longer term, the extension into the supply side
networking opportunity."
Tim Schaefers, CEO of Esize commented:
"By combining our efforts, we will be in an even better position
to serve our customers, which increasingly demand global support.
The combination will give Esize the opportunity to add new products
and services to our existing portfolio. This will give our
customers even more options which may drive further growth. As the
board and shareholders, we therefore see that as a win-win
situation."
This announcement contains inside information for the purposes
of article 7 of Regulation 596/2014
For further information, please contact:
PROACTIS Holdings PLC
Hamp Wall, Chief Executive Officer Via Redleaf Communications
Tim Sykes, Chief Financial Officer
Redleaf Communications
Elisabeth Cowell
Bob Huxford
Fiona Norman 020 3757 6880
finnCap Limited
Corporate Finance
Stuart Andrews
Carl Holmes
Emily Watts 0207 220 0500
Notes to Editors:
PROACTIS creates, sells and maintains software and services
which enable organisations to streamline, control and monitor all
indirect expenditure. Its solutions are used in approximately 1,000
buying organisations around the world from the commercial, public
and not-for-profit sectors.
PROACTIS is head quartered in London and floated on the AIM
market of the London Stock Exchange in June 2006.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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