RNS Number:8763D
PROACTIS Holdings PLC
01 June 2006
Embargoed until 08.01 on 1 June 2006
Not for release, distribution or publication in whole or part in or into the
United States, Australia, Canada, Japan or South Africa
PROACTIS Holdings PLC
("PROACTIS" or the "Company")
FIRST DAY OF DEALINGS AND ADMISSION TO TRADING ON AIM
PROACTIS, the specialist Spend Control software provider, announces that
admission to trading on AIM will become effective, and dealings in the Ordinary
shares of the Company will start, at 8.00am today, 1st June 2006, under the
ticker symbol 'PHD'.
Highlights
* The placing price is 43p per Placing Share (the "Placing Price")
* At the Placing Price Proactis will, on the commencement of dealings on
AIM, have a market capitalisation of approximately #13m
* The amount of new money raised for the Company will be approximately #4
million, gross
* PROACTIS creates, sells and maintains specialist software which enables
organisations to streamline, control and monitor all internal and external
expenditure, other than payroll. This helps organizations to automate many
procedures, to ensure the use of preferred suppliers, to monitor spend
against budget and to reduce maverick spending
* PROACTIS' software is already used in over 70 organisations in the UK
from the commercial, public and not-for-profit sectors. These include HMV,
Wickes, Virgin Holidays, The Law Society, Scottish Borders Council, English
Sports Council, NSPCC, Amnesty International and National Trust Scotland
* For the year to 31 July 2005 PROACTIS more than doubled revenues to #1.9
million. For the first 8 months of the current year, to 31 March 2006, Proactis
achieved turnover of #1.8 million.
For the year to 31 July 2005 PROACTIS achieved a pre-tax profit of #43,000
(2004: loss of #200,000). For the first 8 months of the current year, to 31
March 2006, PROACTIS achieved a pre-tax profit of #252,000
* Teather and Greenwood is Nominated Advisor and Broker to PROACTIS
Rod Jones, Chief Executive, commented:
"PROACTIS is a profitable, cash generative business. The listing will enable us
to speed up our growth through the development of our sales force and channels
to market. We look forward to taking advantage of the very exciting
opportunities available to us in the commercial, public and not-for-profit
sectors.
"PROACTIS has received a strong reception from investors and we are delighted to
be listing on AIM."
-ends -
Enquiries:
PROACTIS 01904 481 999
Alan Aubery, Non-Executive Chairman
Rod Jones, Chief Executive
Teather & Greenwood Limited 0207 426 9000
Robert Naylor
Harry Nicholas
Weber Shandwick Square Mile 0207 067 0700
Nick Oborne
John Moriarty
Notes to Editors
Introduction
PROACTIS creates, sells and maintains specialist software under the brand
PROACTIS P2P, which enables organisations to streamline, control and monitor all
internal and external expenditure, other than payroll. PROACTIS P2P is already
used in over 70 organisations in the UK from the commercial, public and
not-for-profit sectors.
PROACTIS is a profitable, high growth business operating from York. It is a
sales led organisation with a marketing strategy involving a mix of selling
direct and selling through a number of Accredited Channel Partners. PROACTIS
develops all of its own software with its own in-house team of developers.
Product
PROACTIS P2P can be deployed across an entire organisation, giving all users a
means of ordering goods or services online from an approved catalogue and at the
same time directing them toward preferred suppliers. PROACTIS P2P has the
following key benefits:
* Internal cost reduction; PROACTIS P2P automates many key administrative
processes thereby reducing cost within the finance and procurement
departments of organisations deploying it.
* Low integration costs, maintenance costs and inexpensive upgrades;
PROACTIS P2P is a 'zerofootprint''application. This means it is installed on
central servers and users access it through Microsoft Internet Explorer. It
is not installed on the desktop so maintaining and upgrading are inexpensive
and simple to achieve.
* Preferred suppliers and best value; PROACTIS P2P allows user
organisations to enforce internal procedures and supports best practice by
leading users to preferred suppliers therefore promoting best value
suppliers.
* Visibility of incurred and committed cost against budget; the PROACTIS
P2P suite of software enables an organisation to have a real time visibility
of its spend against budget by combining a detailed analysis of its
committed future spend along with a detailed analysis of incurred spend.
Visibility of committed cost pipeline is an important element of business
for all organisations, when seeking to adhere to budgets.
* Enforcing internal control: PROACTIS P2P supports commitment accounting
regardless of the existing financial systems in place, by providing budget
checking before the order is placed, not after the goods have been received.
This reduces the risk of maverick spend. Although the internet has created
an opportunity for organisations to simplify and improve their procurement
process, it has also substantially increased the risk of maverick spending
in organisations. PROACTIS P2P assists organisations to address the risk of
maverick spend.
Customers
PROACTIS P2P is already used in over 70 organisations in the UK. The Directors
categorise customers into three sectors being; commercial, public and
not-for-profit. Examples of customers in each sector include:
* Commercial: HMV, Wickes, Hoyer, Virgin Holidays, National Car Rental,
Teletext, KBC Financial Products, Mercer HR and Waste Recycling Group.
* Public: The Law Society, Scottish Borders Council, Cumbria County
Council, Caerphilly (Caerffili) County Council, The University of
Birmingham, Greater Manchester Public Transport Executive and English Sports
Council.
* Not-for-profit: NSPCC, Refugee Council, Amnesty International, National
Trust Scotland, Disability Rights Commission and Peabody Trust.
Technology
The Group is a Microsoft Gold Partner and has developed PROACTIS P2P as a
Microsoft application. For end users this means a stable application that is
rapidly deployable and complementary to most existing back-office systems such
as financial management, payroll, HR and document management systems. For
Accredited Channel Partners, this means a product with a secure future, that is
easy to integrate and has industry standard features and functions that are
endorsed by Microsoft. PROACTIS P2P can be implemented on a standalone basis
within an organisation or integrated into back-office financial or ERP systems.
Business revenue model
The Group's business model can be analysed into three phases; licence delivery,
implementation services and maintenance.
* Licence delivery: Licence codes and copy software are delivered to the
user on receipt of an order.
* Implementation services: Professional services are deployed during the
implementation process. Service revenues are initially targeted by the Group
to be 50 per cent. of new licence revenues. However, the Directors believe
there is an opportunity to significantly increase the level of service
revenues.
* Maintenance: Customers pay for maintenance through annual contracts paid
for in advance.
Route to market
PROACTIS employs two principal routes to market: Direct selling and Accredited
Channel Partners.
* Direct selling: Currently, direct selling is predominant in the Group's
sales to the UK public sector and PROACTIS recognises that the customers in
this sector prefer to deal with the author of the software rather than
Accredited Channel Partners. The size of the Group's current direct sales
force is small but the Directors believe expansion of this direct sales
force will increase the number of customers both within and outside the UK
public sector.
* Accredited Channel Partners: The Group has 11 Accredited Channel
Partners and is seeking to appoint additional Accredited Channel Partners in
the short to medium term.
Market overview
The Directors believe the Group's market can be broken down into the following
three sectors:
* Commercial: In this sector the Group principally targets medium to large
corporates who would have an overall revenue of circa #20 million for a
medium corporate and circa #1 billion for a large corporate. The Directors
estimate there are approximately 10,000 organisations in the commercial
sector in the UK which are potential customers for PROACTIS P2P. The
Directors will target the commercial sector primarily through existing and
new Accredited Channel Partners.
* Public: The Directors believe that the public sector opportunity is
driven by legislative guidelines for the adoption of new working practices
such as those set out in the EU Procurement Directive and the e-Government
Directive. There are some 1,200 publicly funded organisations including
Local Authorities, NHS trusts, Higher Education Colleges, Universities,
Government Offices and Police Authorities. There is a need to control
significant spend budgets in these organisations.
The public sector spends over #100 billion each year on procuring goods and
services. The government have set out efficiency targets for the public sector
which are aimed at achieving significant savings. One of the areas where cost
savings are being sought is in the procurement of goods and services. The
Directors believe PROACTIS P2P is well placed to benefit from this drive to
improve and control the procurement process in the public sector. The Directors
will target the public sector primarily through the direct sales force.
* Not-for-profit: There are over 100 not-for-profit organisations in the
UK of a size which the Directors believe could be potential users of
PROACTIS P2P. A number of these organisations are also required to follow
similar guidelines to those for the public sector, namely the EU Procurement
Directive and the e-Government Directive and many of the remainder may, as a
matter of good practice, follow such guidelines. The Directors will target
the not-for-profit sector primarily through existing and new Accredited
Channel Partners.
Strategy
The Directors have developed a core strategy which is focused on the following
key elements:
* The Group capitalising on its early stage penetration into the UK public
sector: The Directors believe that, under current UK government legislative
guidelines for the public sector and as a result of the 2004 report by Sir
Peter Gershon entitled ''Releasing resources to the front line - an
independent review of public sector efficiency'', which sets out target
based cost savings, the Group is ideally placed to take advantage of its
early stage penetration into this sector. Expansion of the direct sales
force should facilitate further penetration of the public sector market.
* Targeting mid-sized corporates for growth in customer base: The
Directors believe that there is significant opportunity for PROACTIS to
increase its presence in the mid-size corporate market with PROACTIS P2P.
* Entry into new geographic markets: The Directors believe that the multi
site, multi currency and multi language capability of PROACTIS P2P combined
with its low cost and low risk Accredited Channel Partner route to market,
leaves the Group well placed to access new geographic markets.
* Market consolidation: The Directors believe that the Group is well
placed to take advantage of the significant opportunity for consolidation in
the software sector to complement the Group's activities.
Summary financial information
The following financial information has been extracted from the Accountants'
Report on PROACTIS Group Limited for the three years ended 31 July 2005 and for
the 8 months ended 31 March 2006 in Part IV of this document and should be read
in conjunction with the full text of this document. Investors should not rely
solely on the summarised information.
8 months
Year ended Year ended Year ended ended
31 July 31 July 31 July 31 March
2003 2004 2005 2006
# # # #
__________________________________________________________________
Turnover 1,188,003 907,786 1,858,537 1,787,944
EBITDA 88,355 (122,748) 62,032 258,113
EBIT 97,505 (139,510) 51,597 250,961
PBT (19,249) (200,511) 42,794 252,544
Since 31 March 2006 the Group has continued to trade in line with Directors'
expectations.
Directors and employees
The Board consists of eight Directors for whom brief biographies are set out
below.
Alan Aubrey (aged 45), Non-Executive Chairman
Mr Aubrey is the Chief Executive Officer of IP Group plc, an AIM listed company
that specialises in commercialising intellectual property originating from
research intensive institutions. He is also a non executive director of Syntopix
Group plc, an AIM listed company that develops new therapeutics for dermatology
markets. Mr Aubrey is a fellow of the Institute of Chartered Accountants of
England and Wales.
Rod Jones (aged 54), Chief Executive Officer
Appointed Chief Executive in 2002, Mr Jones has held senior management roles in
a number of global technology companies. These include; European Vice President
at Cincom Systems Inc., International Director of Western Data Systems Inc. and
President of NASDAQ listed Ross Systems Inc.
Terry Wilcox (aged 51), Commercial Director
Appointed Commercial Director in 2003, Mr Wilcox's previous roles include; Sales
and Marketing Director of CODA Group plc, Vice President of Kana Inc. and Chief
Executive of Silknet Europe Limited.
Tim Sykes (aged 36), Chief Financial Officer
Mr Sykes is a qualified Chartered Accountant and a director of Penta Financial
Direction Limited, his own business advisory practice which specialises in
providing accounting services to small businesses. Prior to establishing Penta
Financial Direction Limited, Mr Sykes was Commercial Director at Mountain
Warehouse Limited and prior to that he was an associate director within KPMG's
transaction services group. Mr Sykes was appointed as a Director in 2006.
Kevin Chidlow (aged 43), Chief Technical Officer
Mr Chidlow is the principal architect of the PROACTIS P2P product set and is the
head of product strategy and development. Prior to joining PROACTIS in 1997, he
worked as an implementation and software development manager with international
software developer IBS and as a Local Government systems accountant. Mr Chidlow
is a member of the Chartered Institute of Public Finance and Accountancy (IPFA)
and he was appointed as a Director of PG in 2001.
Sean McDonough (aged 45), Director of Professional Services
Mr McDonough joined the Group as Director of Professional Services in 2005 from
Azolve Limited. He was previously Director of Professional Services for the CODA
Group plc, Silknet Europe Limited and Kana Inc. and he was appointed as a
Director in 2006.
Rodney Potts (aged 61), Non-Executive Director
Mr Potts was appointed a Director of PG in 1997. Mr Potts was one of the
founders and former Chief Executive of CODA Group plc, the global provider of
accounting systems. He is a director of a number of technology ventures.
Berenice Smith (aged 43), Non-Executive Director
Ms Smith has been Finance and Commercial Director of the University of Leeds
since 1996. Prior to this, Ms Smith's other roles included senior finance
positions for; Dixons Stores Group plc., Gillette Inc. and Wickes plc. Ms Smith
is a member of the Chartered Institute of Management Accountants. Ms Smith was
appointed as a Director in 2006.
Reasons for the Placing and Admission
The Company intends to raise approximately #3.3 million net of expenses pursuant
to the Placing. The net proceeds of the Placing will be used by the Company to:
* further develop the Accredited Channel Partners route to market to sell
the Group's products to a wider market;
* increase the direct sales force with the intention of widening the
Group's presence as a preferred supplier in the public sector in the UK;
* raise the profile of the Group by implementing a marketing and public
relations program;
* pursue appropriate acquisition opportunities; and
* strengthen the balance sheet to increase the credibility of the Group
when negotiating with larger organisations.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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