RNS Number:5597G
PROACTIS Holdings PLC
30 October 2007
For immediate release 30 October 2007
PROACTIS Holdings PLC
Preliminary Results for the year to 31 July 2007
PROACTIS Holdings PLC ("PROACTIS", the "Group" or the "Company"), the specialist
Spend Control software provider, announces its preliminary results for the year
to 31 July 2007.
Highlights:
* Revenue growth of 84% to #5.3m (2006: #2.9m)
* Profit before tax increased to #1.1m (2006: loss #0.1m)
* Earnings per share increased to 3.5p (2006: loss per share of 0.5p)
* 48 new client wins in the year (including Virgin Active, The Tote and
United Nations) and 30 paid upgrade deals from existing clients
* Five new Accredited Channel Partners, growing our portfolio to 23 (2006:
18)
* Successful acquisition of a commercial sector competitor, Requisoft, now
fully integrated with #0.3m of annualised overhead savings made
* Successful acquisition of Alito, enhancing the Group's strong position in
the UK public sector
* Successful launch into North America; partner agreements signed and first
revenues received (clients including Department of Treasury for
Pennsylvania and City of Trenton)
* Sponsored development Partnership agreement with Microsoft, supporting
entry into US market
Rod Jones, CEO commented:
"This year, the first full year since our flotation in June 2006, saw excellent
progress for PROACTIS on all fronts. We have achieved another year of record
financial performance, made two strategically important acquisitions in the UK
and have extended our global reach, particularly in the US, where we have allied
ourselves closely to Microsoft. I am confident in our current position and
ability to grow substantially for the foreseeable future."
- ends -
Enquiries:
PROACTIS 019 3754 5070
Rod Jones, Chief Executive Officer
Tim Sykes, Chief Financial Officer
Weber Shandwick Financial 020 7067 0700
Nick Oborne / John Moriarty / James White
Landsbanki Securities (UK) Limited 020 7426 9000
Gareth Price / Simon Brown
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 over 150
organisations in the UK from the commercial, public and not-for-profit sectors.
PROACTIS is a profitable, high growth business 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
Business overview
We are pleased to report that the Group has achieved excellent growth with
revenues of #5.3m for the year (2006: #2.9m) - an 84% increase - delivering a
profit before taxation of #1.1m (2006: loss #0.1m after #0.6m of AIM
flotation-related costs) - a 118% increase.
These results reflect a tremendous effort in our first full year since admission
to AIM with strong organic growth from our core business and excellent
contributions from our two acquisitions, Requisoft and Alito. Our existing
Accredited Channel Partners continue to perform very well and, with several new
partners bringing in deals during the second half of the year, we remain
optimistic about our prospects looking forward.
Strategy
Our strategy and focus to grow the business remain unchanged and we continue to
execute the plans we set out at the time of our flotation. Key achievements in
the year ended 31 July 2007 and in the period since include:
- Increasing our customer base. We achieved some 48 new deals in the
year, with additional revenue coming from a further 30 upgrade sales
to existing clients.
- Developing the Accredited Channel Partner route to market. We have
increased our Accredited Channel Partners by five including two major
new partners in the UK and another in the USA. We have also cemented a
tight relationship with Microsoft and have jointly developed an
enhanced solution for delivery initially into the US Public sector.
This should open up the substantial Microsoft Channel and assist in
the signing of new partners in the region.
- Investing in the direct sales force. The size of the organic team
remains similar to last year (five), but by virtue of our acquisitions
of both Requisoft and Alito, we have added to and become more
effective in our chosen markets with dedicated resources selling
direct to the UK Commercial and UK Public sectors.
- Acquisition strategy. We have made two acquisitions in the year;
Requisoft, a competitor in the UK commercial market and Alito, a
supplier of Sourcing solutions to the UK Public sector. Both
acquisitions have delivered new wins and positive contributions from
the date of acquisition. Requisoft is now fully integrated into the
core business and Alito will follow.
- US expansion. We have commenced our entry into the high opportunity US
market which could be a large component of our longer term growth
objectives. Initially, we have recruited a small, highly focussed
team that has already been successful in taking its first revenues. We
are partnering tightly with Microsoft and are encouraged by its
sponsored development of our software.
- Improved public relations. We have applied ourselves diligently to
this exercise and now feature regularly in national computer press,
web site blogs, specialist magazines and analyst briefings. This
results in far more in-bound activity and makes our partner
recruitment and selling process much easier.
Markets
We are confident that our chosen markets remain open to us and that we can
achieve the desired penetration in each. Each of these sectors, whilst having
specific challenges, are global in their nature and we are finding many
opportunities for our direct and indirect channels.
Public sector
The UK's e-Government programme continues to provide impetus, with local
authorities under pressure to improve efficiency by embracing new technologies.
Our Sourcing, Supplier Relationship and e-Procurement solutions are now
recognised by many as being the "best-in-class" offering for this sector. The
addition of Alito, with its public sector focus, has given us a competitive
advantage and allows us to deliver a true end-to-end solution.
PROACTIS has now captured some 75 UK Public sector accounts (2006: 24) and our
Accredited Channel Partners in the US have added several others, including the
Department of Treasury for Pennsylvania and the City of Trenton. UK government
pressure is expected to intensify the need for our product type and this
provides us with a great opportunity for future growth in this 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 many Not-for-Profit (NfP) and Charity
organisations as they move into a new era offering e-Procurement and Spend
Control whilst promoting corporate governance and transparency of information to
all stakeholders. PROACTIS has 28 (2006: 18) customer organisations in the NfP
and Charities sector.
Commercial Services sector
Our offering is particularly strong in the financial and professional services
sector, offering many advantages over the traditional solutions and providing
flexibility when clients are looking to replace financial management solutions.
Our clients have recognised that cost savings made on goods and services drop
straight to the bottom line, making the decision to buy PROACTIS Spend Control
one of the most compelling available to management today. Increasingly the
control of spend on overhead is seen as the "quick win" producing an ROI in
months rather than years, and can be the catalyst for process changes that
provide the platform for a long term competitive strategy. PROACTIS has 65
(2006: 38) customer organisations using PROACTIS in the Commercial sector.
PROACTIS has now completed over 200 projects in the spend control and
e-Procurement arena and our reputation for supplying high quality systems is
being widely recognised by end user organisations and consultancies alike.
Routes to market
The basis for our approach is very simple: every organisation in the world
should be able to buy and use our software. This means that we must support
local languages (we have seven language options available), currencies,
companies and customers where appropriate. We deliver our software through a
mixture of direct and indirect selling organisations, with the indirect being
dominant outside the UK. Our Accreditation and Certification classes have been
built specifically to provide the necessary in-built quality that has become our
hallmark over the last five years.
Our unique method of working has meant that our accredited resellers work
hand-in-hand with our direct sales organisation to maximise value to our clients
whilst removing channel conflict.
Products and product development
Our core product is PROACTIS P2P (our "purchase to pay" spend control system)
which is established in more than 120 customer organisations. It has many
modules within it to provide a tailored solution to suit any customer's
requirements or budget. We are now converting the Requisoft clients to PROACTIS
P2P and have been actively promoting our PROACTIS Plaza solutions to existing
and new clients alike. The Alito hosted solution is still being marketed to the
Public sector; over time its unique IPR will be moved to the PROACTIS Plaza
environment making the whole product suite more easily deployable. During the
year to 31 July 2007, we have maintained our level of investment in product
development at 12% of revenues (on an expensed as incurred basis) (2006: 12%)
and we will continue to invest at similar levels to maintain and further our
competitive advantage.
Employees
We thank all management and staff of the Group for their dedication and
commitment without which, of course, the progress would not have been possible.
Prospects
PROACTIS has delivered significant shareholder value over the last year. With
the continued strengthening of the products and our team, we are confident that
we will continue to deliver significant growth and shareholder value in the
future.
Alan Aubrey Rod Jones
Chairman Chief Executive Officer
30 October 2007
Chief Financial Officer's Report
Results for the year and key performance indicators
Revenues increased by 84% to #5.3m from #2.9m and profit before taxation
increased to #1.1m from a loss of #0.1m last time (after charging #0.6m of
expenses relating to the admission to AIM and the Placing).
The quality of these earnings remains strong. At 31 July 2007, net cash received
in advance of revenues was #1.3m (2006: #0.6m), principally being advanced
maintenance contract payments. Further, our high retention maintenance revenue
stream increased to #1.5m (2006: #0.7m) which covered 53% of our administrative
overhead base (2006: 40%).
The cost of the continuing internal software development programme increased to
#0.6m (2006: #0.4m).
Acquisitions
Requisoft and Alito contributed #1.6m to group revenues since their respective
acquisition dates and both were profitable, delivering #0.2m to operating
profit. We have removed #0.3m of annualised overheads in Requisoft since
acquisition and we expect to make more savings as the client base migrates from
old Requisoft code base to PROACTIS' own code base. This means that there is
approximately #0.1m of non-recurring overhead within our reported result.
The cumulative cash outflow for these acquisitions is #2.5m.
The final consideration payment for the acquisition of Requisoft of #0.3m is due
in cash in November 2007 and is provided for within this result. The final
consideration payment for the acquisition of Alito is due in May 2008. It is
variable, dependent on future performance, but is capped at #1.75m part cash,
part shares. #1.25m is provided for within this result.
US investment
The cumulative net investment in the strategically important US market amounts
to approximately #0.2m, all of which has been expensed as incurred. Early
indications are good with first revenues already taken.
Taxation
There was a small charge to taxation during the year. We have utilised trading
losses from prior periods within the group but post-acquisition profits within
the acquired businesses cannot be offset. There remains approximately #1.1m of
trading losses still available for further utilisation as and when profit is
earned.
Earnings per share
Basic earnings per share increased to 3.5p (2006: loss per share 0.5p).
Dividend
The payment of dividends will be subject to availability of distributable
reserves whilst maintaining an appropriate level of dividend cover and having
regard to the need to retain sufficient funds to finance the development of the
Group's activities. In the short term it is the Directors' intention to
re-invest funds into the Company rather than fund the payment of dividends.
Accordingly, the Directors do not recommend the payment of a dividend.
Cash flow
The Group has reported a net cash inflow from operating activities of #0.7m
(2006: #Nil) which is in line with the reported operating profit of the group
before non recurring items and share-based payment charges of #0.7m (2006:
#0.5m).
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 2007,
the Group had #0.8m on short term deposits (2006: #3.6m).
IFRS and new accounting issues
The Group has adopted the principles of accounting under IFRS earlier than it is
required. The principle areas that are affected are as follows:
- Internal development: Under IAS38 'Intangible Assets' the Group is
required to capitalise internally generated intangible development
costs. The Group has capitalised only #0.3m of these costs
cumulatively within the balance sheet and a net #0.1m during the year
ended 31 July 2007;
- Acquisitions: Under IFRS3 'Business Combinations' the Group is
required to capitalise the separate intangible assets of the acquired
businesses along with any associated goodwill and to review this
annually for impairment. The Group has capitalised #4.8m of
intangible customer related assets, representing the value of customer
relationships acquired as part of the Requisoft and Alito
acquisitions, and #1.2m of goodwill, principally relating to Alito.
The Group has recognised an associated deferred tax liability of
#1.4m. The customer related assets will be reviewed annually for
impairment; and,
- Share based payment: Under IFRS2 'Share based payment' the Group is
required to recognise the cost of its share option schemes for
employees. The Group has adopted the Black-Scholes model to quantify
this charge and it has resulted in a charge of #86,000 for the year
ended 31 July 2007 (2006: #44,000).
Tim Sykes
Chief Financial Officer
30 October 2007
Consolidated Income Statement for the year ended 31 July 2007
2007 2006
Notes #000 #000
Revenue
- acquisitions 1,563 -
- continuing 3,777 2,905
------------- ------------
Total revenue 5,340 2,905
Cost of sales (1,620) (1,261)
------------- ------------
Gross profit 3,720 1,644
Administrative costs (2,762) (1,748)
------------- ------------
--------------------------------------------------------------------------------
Operating profit before non recurring items
and share-based payment charges 744 522
Non-recurring administrative income /
(expenses) 300 (582)
Share-based payment charges (86) (44)
------------- ------------
--------------------------------------------------------------------------------
Operating profit
- acquisitions 210 -
- continuing 748 (104)
------------- ------------
Total operating profit / (loss) 958 (104)
Finance income 130 29
Finance expenses - (9)
------------- ------------
Profit / (loss) before taxation 1,088 (84)
Taxation (29) -
------------- ------------
Profit / (loss) for the year 1,059 (84)
------------- ------------
Earnings / (loss) per ordinary share :
- Basic 3 3.5p (0.5p)
------------- ------------
- Diluted 3 3.4p (0.5p)
------------- ------------
Consolidated Balance Sheet as at 31 July 2007
2007 2006
Notes #000 #000
Non-current assets
Property, plant & equipment 140 18
Intangible assets 6,273 212
------------- ------------
6,413 230
------------- ------------
Current assets
Trade and other receivables 2,500 1,105
Cash and cash equivalents 1,267 3,764
------------- ------------
3,767 4,869
------------- ------------
Total assets 10,180 5,099
------------- ------------
Current liabilities
Trade and other payables 2,464 838
Deferred income 1,260 399
------------- ------------
3,724 1,237
------------- ------------
Non-current liabilities
Deferred taxation 1,447 -
------------- ------------
1,447 -
------------- ------------
Total liabilities 5,171 1,237
------------- ------------
Net assets 5,009 3,862
------------- ------------
Equity attributable to equity holders of the
Company
Called up share capital 3,018 3,012
Share premium account 2,735 2,735
Merger reserve 556 556
Retained earnings (1,300) (2,441)
------------- ------------
Total equity 4 5,009 3,862
------------- ------------
Consolidated Cash Flow Statement for the year ended 31 July 2007
2007 2006
#000 #000
Operating activities
Profit for the period 1,059 (84)
Amortisation of intangible assets 212 169
Depreciation 25 11
Net finance income (130) (20)
Income tax credit 29 -
------------- ------------
Operating cash inflow before changes in
working capital 1,195 76
Movement in trade and other receivables (994) (738)
Movement in trade and other payables 237 628
Share based payment charges 86 44
------------- ------------
Operating cash inflow from operations 524 10
Net interest received 130 11
Income tax received 6 10
------------- ------------
Net cash flow from operating activities 660 31
------------- ------------
Investing activities
Purchase of plant and equipment (103) (11)
Development expenditure capitalised (273) (212)
Acquisition of subsidiaries (2,508) -
------------- ------------
Net cash flow from investing activities (2,884) (223)
------------- ------------
Financing activities
Net (outflow) / inflow from the Placing (275) 3,665
Proceeds from issue of shares 2 97
Repayment of bank borrowing - (171)
------------- ------------
Net cash flow from financing activities (273) 3,591
------------- ------------
Net increase in cash and cash equivalents (2,497) 3,399
Cash and cash equivalents at the beginning of
the year 3,764 365
------------- ------------
Cash and cash equivalents at the end of the
year 1,267 3,764
------------- ------------
Notes
1. The financial information set out herein does not constitute the
Group's statutory accounts for the year ended 31 July 2007 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 year ended 31 July 2006 has
been derived from the audited statutory accounts for the year ended on
that date, as restated for the first time adoption of International
Financial Reporting Standards ("IFRS") as referred to below, upon which
an unqualified audit opinion was expressed and which did not contain a
statement under section 237 (2) or (3) of the Companies Act 1985. The
audited financial statements will be available by contacting the
Company Secretary at the Company's Registered Office.
2. Basis of preparation
The financial information has been prepared and approved by the
directors in accordance with IFRS as adopted by the European Union. The
first time adoption of IFRS has impacted on the year's results. The
principal changes relate to:
- Acquisition of subsidiaries (treatment of goodwill and intangible
assets);
- Share-based payments; and
- Treatment of software development in accordance with IAS38 where
certain strict criteria are met.
The net impact of the restatement of last year's figures was to
increase the loss for the year from a loss of #83,000 to a loss of
#84,000. Net assets increased from #3,650,000 to #3,862,000.
The rules for first time adoption of IFRS are set out in IFRS1 'First
time adoption of international financial reporting standards'. In
accordance with IFRS1, the Company has determined its IFRS accounting
policies and has applied these retrospectively to determine its opening
balance sheet under IFRS.
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 as follows. The number of shares in issue during the
prior year was 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 that year.
2007 2006
Earnings (#000) 1,059 (84)
------------- -------------
Weighted average number of shares (number '000) 30,134 16,265
------------- -------------
Basic earnings / (loss) per ordinary share (pence) 3.5p (0.5p)
Diluted earnings / (loss) per ordinary share
(pence) 3.4p (0.5p)
------------- -------------
4. Reconciliation of movement in shareholders' funds
2007 2006
#000 #000
Profit / (loss) attributable to ordinary shareholders 1,059 (84)
Other recognised gains :
- Arising on share for share exchange - 129
- Arising on the placing - 3,665
- Shares issued under employee share option scheme 2 97
- Share option charge 86 44
------------- -------------
Addition to shareholders' funds 1,147 3,851
Opening shareholders' funds 3,862 11
------------- -------------
Closing shareholders' funds 5,009 3,862
------------- -------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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