Final Results
October 10 2006 - 3:01AM
UK Regulatory
RNS Number:2040K
PROACTIS Holdings PLC
10 October 2006
For immediate release 10 October 2006
PROACTIS Holdings PLC
("PROACTIS", the "Group" or the "Company")
Preliminary Results for the 12 months to 31 July 2006
PROACTIS Holdings PLC, the specialist Spend Control software provider, is today
issuing its preliminary results for the 12 month period to 31 July 2006, its
maiden results following the successful admission of its shares to AIM on 1 June
2006.
Highlights:
*Successful flotation on AIM in June 2006, via a placing, raising #3.3m
net
*Turnover increased by 56.3% to #2.9m (2005: #1.9m)
*Operating profit (before exceptional items) increased eightfold to
#479,000 (2005: #52,000)
*Substantial improvement in margins, reflecting better sales mix and
leverage of cost base
*Earnings per share (before exceptional items) of 2.5p (2005: 0.8p)
*Net cash at 31 July 2006 of #3.8m (2005: #0.2m)
*Continued strong growth in customer base across all target markets
Commenting on the Group's preliminary results, Alan Aubrey, Chairman said:
"The preliminary results we report today show that we have delivered growth
across all our markets - commercial, public sector and not for profit. We have
also made inroads into extending our geographic reach by signing up new
accredited channel partners in both mainland Europe and the US. Our customer
base continues to grow and our core product is used by more than 80
organisations."
Rod Jones, Chief Executive Officer of PROACTIS, said:
"I am delighted to report record results for the Group. These reflect both the
strength of our products and the capability of our team and our accredited
channel partners to sell, implement and maintain those products for our
customers. I am confident that we can continue to deliver significant growth and
shareholder value in the future."
- ends -
Enquiries:
PROACTIS 01904 481 999
Rod Jones, Chief Executive Officer
Weber Shandwick Square Mile 0207 067 0700
Nick Oborne / John Moriarty / James White
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' software is already used by more than
80 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.
Chairman's Statement
Listing on AIM
I am delighted to report our maiden results following the Company's successful
Admission and Placing on the AIM market of the London Stock Exchange plc on 1
June 2006. These results cover the twelve month period from 1 August 2005 to 31
July 2006.
In our Admission document we set out our key reasons for the Placing. These
were:
- Developing the accredited channel partner route to market;
- Increasing the direct sales force;
- Implementing a marketing and public relations programme; and
- Pursuing an acquisition strategy
Since Admission I am pleased to report that we have made good progress against
all of these objectives and the Chief Executive Officer's Report explains this
progress.
Annual results
The year to 31 July 2006 saw PROACTIS deliver its strongest performance to date,
with record revenues of #2.9 million (2005 : #1.9 million) and record operating
profit (before the costs of the Placing) of #0.5 million (2005 : #0.1 million).
The operating loss after the costs of the placing was #0.1m (2005: profit
#0.1m). Cash performance has also been good. The placing of 30% of the enlarged
share capital raised #3.3 million net of expenses and at 31 July 2006 the Group
had cash of #3.8 million. Having repaid debt of #0.2 million since the Placing,
the Group is now debt free.
This growth has been achieved through both direct sales and our accredited
channel partners, and across all our markets; commercial, public sector and not
for profit. We have also made inroads into extending our geographic reach,
signing up new accredited channel partners in both mainland Europe and the US.
Our customer base continues to grow with our core product being used by more
than 80 organisations. In addition, we have also sold our new applications into
some of our existing customers. Early performance and feedback on the new
applications are very encouraging.
The Board and Corporate Governance
Three new Directors have joined the Board during the Placing process; Berenice
Smith as Senior Independent Non-Executive Director, Sean McDonough as
Professional Services Director and Tim Sykes as Chief Financial Officer. I
welcome all three to the Board and look forward to working with them over the
years ahead.
Employees and accredited channel partners
I would like to thank all management and staff at PROACTIS for their dedication
and commitment without which, of course, the progress would not have been
possible. I would also like to thank our accredited channel partners who
continue to contribute to our success.
Outlook
PROACTIS has made excellent progress in the year just ended. I look forward with
confidence to further good growth over the next twelve months and to delivering
value to our shareholders.
A Aubrey
Chairman
9 October 2006
Chief Executive Officer's Report
Business overview
I am pleased to report that the Group has achieved a record performance with
revenues of #2.9 million for the year (2005: #1.9 million) - a 56% increase -
delivering an operating profit (before exceptional costs related entirely to our
Admission to AIM and the Placing) of #0.5 million (2005: #0.1 million) - a more
than eightfold increase. The operating loss after the costs of the placing was
#0.1m (2005: profit #0.1m).
These results reflect the combination of the relative strength of our products
against our competitors and the capability of our team to sell, implement and
maintain those products for our customers. We also recognise the valuable input
of our accredited channel partners to this performance.
With the successful Admission to AIM during the year and the progress that has
been made in all areas throughout the business, this truly has been a year of
transformation for PROACTIS.
Strategy
The Placing raised #3.3 million net of expenses and has allowed the Company to
execute its strategy from a position of financial strength. Key achievements
during the year ended 31 July 2006 and in the period since include:
Developing the accredited channel partner route to market - we have increased
our accredited channel partners by 5, including 3 new international accredited
channel partners in the US, Russia and the Commonwealth of Independent States
countries and the Benelux respectively.
Increasing the direct sales force - we have increased the number of our direct
sales team to 5 (2005: 2) including one specifically designated for channel
development in the EMEA markets.
Implementing a marketing and public relations programme - we have a detailed
schedule of events over the coming year to raise the profile of the PROACTIS
brand including eWorld Purchasing & Supply, GOVNET EXPO and t-Gov Procurement.
Pursuing an acquisition strategy - since the Admission to AIM we have drawn up a
list of potential acquisition targets. An ideal acquisition profile is a
competitor which has a complementary product and a customer base that offers
good opportunity for conversion to PROACTIS.
Markets
We are fortunate to operate in three major sectors; the Public sector, Not for
Profit and Charities and the Commercial Services sector. Each of these sectors,
whilst having specific challenges, have a truly global nature and offer
significant opportunities for our go-to-market strategy, namely a mixture of
direct and indirect selling in the UK and indirect selling for the rest of the
world.
Public sector - As the UK's eGovernment programme moves forward, local
authorities are under pressure to improve efficiency by embracing new
technologies. eProcurement is recognised as one of the key pillars of a
successful eGovernment strategy, seen by most as an effective way to reduce
purchase costs, drive new efficiencies and promote collaboration across local
government.
PROACTIS has a vision for implementing eProcurement that addresses everyday
issues and offers real value across and beyond the local government
organisation. Our significant client base in this sector attests to our prowess
and leaves us well placed to take advantage of the buoyant conditions. At 9
October 2006, we had 24 (1 August 2005: 17) customer organisations using
PROACTIS in the Public sector.
Not for Profit and Charities sector - Organisations face multiple pressures as
they seek to maximise donations, whilst delivering against obligations made to
beneficiaries, donors and employees and demonstrating efficient use of funds and
grants.
PROACTIS has become a cornerstone for Not for Profit organisations and Charities
as they move into a new era, offering them eProcurement and Spend Control,
whilst promoting corporate governance with efficient and effective reporting to
all stakeholders. At 9 October 2006, we had 18 (1 August 2005: 14) customer
organisations using PROACTIS in the Not for Profit and Charities sector.
Commercial Services sector - Our offering is applicable to virtually all
commercial enterprises and we are particularly strong in the financial and
professional services sectors.
Spend control has become a recognised term for good procurement practice.
Increasingly the control of spend on overheads has become a boardroom issue as
the old fashioned buying office has evolved into the strategic procurement
department. The realisation that spend control can markedly improve
profitability and streamline many outdated processes has led many management
teams to embark on this as a competitive strategy.
PROACTIS has completed over 110 projects in the spend control and eProcurement
space and our reputation for high quality permeates through our complete
offering: from software, through implementation and into support during live
operation. At 9 October 2006, we had 38 (1 August 2005: 27) customer
organisations using PROACTIS in the Commercial Services sector.
Routes to market
The basis for our approach is very simple: every organisation in the world
should be able to buy and use our products. This means that our products support
local languages, currencies and companies where appropriate. We deliver our
products through a mixture of direct and indirect selling organisations, with
the indirect being dominant outside the UK. Our Accreditation and Certification
classes have been designed specifically to provide the necessary in-built
quality that has become our hallmark over the last four years.
Our unique method of working has meant that our accredited channel partners work
hand-in-hand with our direct sales team to maximise value to our customers
whilst removing channel conflict.
Products and product development
Our core product is our "purchase to pay" spend control system which is used by
more than 90 organisations and has many modules within it to provide a tailored
solution to suit any customer's requirements or budget. During the year, we have
sold elements of our new applications a hosted, Sourcing, Supplier Relationship
Management and eCommerce into 5 customer organisations. During the year to 31
July 2006, we have spent approximately 10% of our revenue on improving and
developing our products (2005: 16%) and we will continue to invest at similar
levels to maintain and improve our competitive advantage.
Prospects
With the continued strengthening of the products and the team, I am confident
that we can continue to deliver significant growth and shareholder value this
year and in the future.
Rod Jones
Chief Executive Officer
9 October 2006
Chief Financial Officer's Report
Results for the year
Revenues increased by 56.3% to #2.9m from #1.9m and operating profit (before
exceptional items related to the Admission to AIM and the Placing) increased to
#0.5m from #0.1m.
The quality of these earnings is strong in terms of sustainability and cash to
revenue match. At 31 July 2006, we had net cash received in advance of revenues
to be taken during the following financial year of #0.6m (2005: #0.4m),
principally being advance maintenance contract payments. Further, our recurring
maintenance revenue stream increased to #0.7m (2005: #0.4m) which covered
approximately 58.8% of our administrative cost base (2005: 43.8%).
Operating margins before exceptional items increased to 16.5% from 2.8% due to a
mix shift of revenues toward higher margin sales through our direct route to
market and better leverage of the cost base. Revenue per head increased to
approximately #145,000 (2005: #116,000).
Our continuing investment in research and development of our product increased
to #371,000 (2005: #298,000).
The operating loss after the costs of the placing was #0.1m (2005: profit
#0.1m).
Taxation
There was no tax charge during the year because trading losses from prior
periods have been utilised. There are approximately #2.0m of trading losses
still available for further utilisation as and when profit is earned.
Earnings
Earnings per share before exceptional items increased to 2.5p (2005: 0.8p).
Basic (and diluted) earnings per share were negative 0.5p (2005: positive 0.8p).
Impact of the Placing and Admission to AIM and exceptional items
The placing of approximately 9.3m shares at 43p per share raised #4.0m. After
#0.7m of associated costs, the net cash inflow was #3.3m. At 31 July 2006, #0.4m
was still outstanding and this has now been settled. #0.3m of the fees has been
written off against the share premium account and #0.4m has been charged within
exceptional items.
Cash flow
The Group has reported an operating cash outflow of #0.2m (2005: inflow #0.3m).
This cash outflow arises from a combination of exceptional items and short term
timing differences in relation to revenues in the latter part of the year being
settled in the early part of the new year. I am pleased to inform you that this
short term effect has already reversed at the date of this report.
Treasury
The Group continues to manage the cash position in a manner designed to maximise
interest income, while at the same time minimising any risk to these funds.
Surplus cash funds are deposited with commercial banks that meet credit criteria
approved by the Board, for periods between one and six months. At 31 July 2006,
the Group had #3.6m on short term deposits (2005: #0.3m).
The Group repaid the Small Firms Loan Guarantee loan of #0.2m following the
Placing.
Merger accounting
The Group has applied merger accounting rules as required by FRS6 'Mergers and
Acquisitions'. This has created a merger reserve of #0.6m at 31 July 2006 which
reflects the deficit of the nominal value of the share capital issued against
the share capital and reserves (excluding the profit and loss account) of the
acquired subsidiary at time of the share exchange. As required by FRS6, the
Group has then presented comparatives as if the Group had always been in
existence.
International Financial Reporting Standards ("IFRS") conversion
PROACTIS must prepare its financial statements under IFRS for the year ending 31
July 2008. A project, with the objective of ensuring compliance with
International Accounting Standards (as adopted by the EU), is underway.
Tim Sykes
Chief Financial Officer
9 October 2006
Consolidated Profit and Loss Account for the year ended 31 July 2006
2006 2005
#000 #000
Turnover 2,905 1,859
Cost of sales (1,261) (938)
-------------- --------------
Gross profit 1,644 921
Administrative costs (1,747) (869)
-------------- --------------
_______________________________________________________________________________
Operating profit before exceptional items 479 52
Exceptional items (582) -
_______________________________________________________________________________
-------------- --------------
Operating (loss) / profit (103) 52
Interest receivable 29 6
Interest payable (9) (15)
-------------- --------------
(Loss) / profit on ordinary activities
before taxation (83) 43
Taxation - 10
-------------- --------------
(Loss) / profit on ordinary activities after
taxation (83) 53
-------------- --------------
Earnings per ordinary share :
- Basic and diluted (0.5)p 0.8p
-------------- --------------
- Basic excluding exceptional items 2.5p 0.8p
-------------- --------------
There is no material difference between the profit / (loss) on ordinary
activities before taxation and the profit / (loss) for the financial years
stated above, and their historical cost equivalents.
All of the above activities are continuing.
There were no recognised gains or losses other than the loss for the financial
year.
Group and Company Balance Sheets as at 31 July 2006
Group Company
2006 2005 2006
#000 #000 #000
Fixed assets
Tangible assets 18 18 -
Investments - - 2,046
Current assets
Debtors 1,105 368 909
Cash at bank and in hand 3,764 365 3,519
------------- ------------- -------------
4,869 733 4,428
Creditors - amounts
falling due within one year (1,237) (762) (535)
------------- ------------- -------------
Net current assets /
(liabilities) 3,632 (29) 3,893
------------- ------------- -------------
Total assets less
current liabilities 3,650 (11) 5,939
Creditors - amounts
falling due after more
than one year - (146) -
------------- ------------- -------------
Net assets /
(liabilities) 3,650 (157) 5,939
------------- ------------- -------------
Capital and reserves
Called up share capital 3,012 639 3,012
Share premium account 2,735 - 2,735
Merger reserve 556 1,746 -
Profit and loss account (2,653) (2,542) 192
------------- ------------- -------------
Shareholders' funds /
(deficit) 3,650 (157) 5,939
------------- ------------- -------------
Consolidated Cash Flow Statement for the year ended 31 July 2006
2006 2005
#000 #000 #000 #000
Net cash (outflow) /
inflow from operating
activities (202) 295
Returns on investments and
servicing of finance
Interest received 20 6
Interest paid (9) (15)
----------- -----------
Net cash inflow
/ (outflow) from
returns on investment
and servicing of finance 11 (9)
Taxation 10 7
Capital expenditure and
financial investment
Purchase of tangible
fixed assets (11) (8)
Management of liquid
resources
Cash used to increase
short term deposits (3,265) (215)
----------- -----------
Cash flow before
use of financing (3,457) 70
Financing
Proceeds from
the placing 4,000 -
Costs of the Placing (335) -
Shares issued
from employee
share option schemes 97 -
Loans repaid (171) (25)
----------- -----------
Net cash inflow
/ (outflow) from
financing 3,591 (25)
----------- -----------
Increase in cash 134 45
----------- -----------
Reconciliation of net cash flow to movement in net funds
2006 2005
#000 #000
Increase in cash 134 45
Loans repaid 171 25
Management of
liquid resources 3,265 215
----------- -----------
Increase in net
funds from cash
flows and
movement in net
cash in the year 3,570 285
Net cash /
(debt) at 1 August 194 (91)
----------- -----------
Net cash at 31 July 3,764 194
----------- -----------
Notes
1. The financial information set out herein does not constitute the
Group's statutory accounts for the years ended 31 July 2006 or 31 July
2005 but is derived from those financial statements. The statutory
accounts will be finalised on the basis of the financial information
presented by the directors in this preliminary announcement and will be
delivered to the registrar of companies following the Annual General
Meeting. The comparative information in respect of the period ended 31
July 2005 has been derived from the statutory accounts of PROACTIS
Group Limited for the period ended on that date, and upon which an
unqualified audit opinion was expressed, and did not contain a
statement under section 237(2) or (3) of the Companies Act 1985. Copies
of the Company's financial statements will be sent to shareholders in
due course and copies will be made available at the Company's
registered office: Holtby Manor, Stamford Bridge Road, York, YO19 5LL.
2. Exceptional items represent the professional and other fees related to
the Admission to AIM and the Placing.
3. Basic and diluted loss per ordinary share
The calculation of earnings per ordinary share is based on the profit
or loss for the period and the weighted average number of equity voting
shares in issue. The number of shares in issue has been restated to
reflect the merger accounting of PROACTIS Group Limited. Therefore the
number of shares in the comparative period is the aggregate of the
weighted average number of shares of the combined entities, adjusted to
equivalent PROACTIS Holdings PLC shares and for shares issued during
the year.
2006 2005
Earnings (#000) (83) 53
Exceptional items (#000) 582 -
Taxation on exceptional items (#000) (95) -
------------- -------------
Earnings before exceptional items (#000) 404 53
------------- -------------
Weighted average number of shares (number '000) 16,265 6,389
------------- -------------
Basic and diluted (loss) / earnings per
ordinary share (pence) (0.5p) 0.8p
------------- -------------
Earnings before exceptional items per ordinary
share (pence) 2.5p 0.8p
------------- -------------
4. Net cash (outflow) / inflow from operating activities
2006 2005
#000 #000
Group :
Operating (loss) / profit (103) 52
Depreciation of tangible fixed assets 11 10
(Increase) / decrease in debtors (738) 57
Increase / (decrease) in creditors 628 176
------------- -------------
Net cash (outflow) / inflow (202) 295
------------- -------------
#535,000 of the increase in creditors relates to the professional fees and other
charges related to the Admission to AIM and the Placing.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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