TIDMPHD
RNS Number : 2896B
PROACTIS Holdings PLC
03 March 2014
Date: 03 March 2014
On behalf of: PROACTIS Holdings PLC ('PROACTIS', the 'Company'
or the 'Group')
Embargoed until: 0700hrs
PROACTIS Holdings PLC
Interim results for the six months ended 31 January 2014
PROACTIS Holdings PLC, a global Spend Control and eProcurement
solution provider, today issues its interim results for the six
month period ended 31 January 2014.
Financial highlights
w Reported revenue increased by 3% to GBP4.03 m (31 January
2013: GBP3.92m)
w Adjusted operating profit increased by 217% to GBP454,000 (31
January 2013: GBP143,000)
w Reported operating profit increased to GBP316,000 (31 January
2013: GBP3,000)
w Strong balance sheet with cash balances of GBP2.4m (31 July
2013: GBP2.3m)
Revenue visibility
w Total contracted, deferred multi-year revenue increased by 15%
to GBP7.1m (31 July 2013: GBP6.2m)
w Annualised contracted revenue increased by 6% to GBP5.7m (31
July 2013: GBP5.4m)
Operational highlights
w Total Initial Contract Value signed on new deals was GBP1.6m
(31 January 2013: GBP1.5m) with GBP0.7m recognised in the period
(31 January 2013: GBP0.8m)
w Deal activity is buoyant with 15 new name deals (31 January
2013: 15) and continued strong customer loyalty with 39 upgrades in
the period (31 January 2013: 29)
w Multi-year, transactional priced Cloud/SaaS solutions is in
line with expectations - 8 new customers (31 January 2013: 6)
w 100% SaaS renewals in the period
w Indian joint venture signs two new deals with Mittal
network
Post period highlights
w Acquisition of EGS Group Limited completed on 7 February
2014
w EGS has signed 3 new name deals since the acquisition
w Synergies of GBP0.3m per annum realised in line with
integration plan with more identified
w Conditional Loan Note Facility of up to GBP5m signed
Rod Jones, Chief Executive Officer, commented:
"It has been a transformational period for the Group, and I am
pleased to report a strong set of results with very encouraging
levels of profit. The Group's forward order book has reached record
levels at GBP7.1m and, with a solid increase in reported revenue
for the period, this firmly endorses our strategy of moving to a
mixed SaaS and perpetual licence model and provides a platform on
which to drive further growth.
"Our core UK business is growing well. New deal volumes are
positive and sales and marketing activity is high. Complementing
that growth, overseas, the Group's Indian operation has made
further progress; two new deals were signed with Mittal network
companies in the period, with more in the pipeline.
"We are pleased to confirm the Group's commitment to M&A as
a core element of its growth strategy following the acquisition of
EGS, which will impact our numbers positively in the coming months.
The Group has a number of attractive opportunities available to it
and will look to exploit these over the year ahead.
"I am confident that the Group is now at an inflection point and
the opportunities for growth are substantial. Further M&A
opportunities are being reviewed and I am confident that the Group
will continue its organic growth and impressive win rate, and that
this, combined with an excellent product and strong pipeline, will
continue to drive value for stakeholders."
For further information, please contact:
PROACTIS Holdings PLC
Rod Jones, Chief Executive Officer Via Redleaf Polhill
Tim Sykes, Chief Financial Officer
Redleaf Polhill
Rebecca Sanders-Hewett/Jenny Bahr 0207 382 4730
proactis@redleafpr.com
finnCap Limited
Stuart Andrews
Charlotte Stranner 0207 220 0500
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 over 400 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.
CLOUD COMPUTING is defined as location-independent computing,
whereby shared servers provide resources, software, and data to
computers and other devices on demand, as with the electricity
grid.
CHAIRMAN'S AND CHIEF EXECUTIVE OFFICER'S REPORT
Performance overview
I am delighted to report record revenues for the half year of
GBP4.0m (31 January 2013: GBP3.9m) and strong order book growth to
GBP7.1m (31 July 2013: GBP6.2m).
The Group secured 15 new deals in the period (31 January 2013:
15) of which 8 (31 January 2013: 6) were subscription deals and 7
(31 January 2013: 9) were perpetual deals.
During 2010, the Group took the decision to offer both
subscription and perpetual licences to customers, where previously
the Group had offered only perpetual licences. This strategy is
part of the Group's plan to increase the lifetime value of a
customer relationship and to increase visibility of future revenue.
Subscription deals have been a large proportion of new business
across all channels to market during the period.
This mix shift toward subscription deals means revenue is
recognised in future periods rather than the period in which the
deal is signed, and has the impact of reducing headline revenue
growth in the current period, but increasing forward visibility of
revenues through order book growth. Accordingly, the Group's
headline revenue growth was 3% but the Group's contracted order
book of revenue has again grown substantially during the period and
was GBP7.1m at 31 January 2014, up 15% against GBP6.2m at 31 July
2013.
Total Initial Contract Value sold was GBP1.6m (31 January 2013:
GBP1.5m) of which GBP0.7m (31 January 2013: GBP0.8m) was recognised
during the period. In addition, the Group sold 39 upgrade deals (31
January 2013: 29) to existing clients.
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, whilst relatively few of
those early subscription deals have reached their renewal date so
far, all have renewed at or above pre-existing contract values.
The existing customer base continues to offer the Group
significant opportunity. Support revenue continues to grow and
represented 49% (31 January 2013: 49%) of total revenue for the
period. In addition, clients continue to buy additional software
and extra users and are capitalising on their existing
investment.
The Group also continues to invest in both its product and in
its selling territories. The cash spend during the period on
product development was GBP0.5m (31 January 2013: GBP0.5m). The
Group made some commercial progress in both the US and Indian
territories whilst Asia Pacific improved profitability despite
reduced volumes of new deals.
The Group's financial progress is illustrated by the increase in
operating profit (before amortisation of customer related
intangible assets and share based payment charges) to GBP0.5m (31
January 2013: GBP0.1m). The statutory operating profit was GBP0.3m
(31 January 2013: GBPNil). The Group made substantial cost
reductions during the second half of the preceding year that have
taken effect during this financial year.
I am pleased to report that PROACTIS remains in a strong
financial position with cash balances of GBP2.4m after payment of a
GBP0.3m dividend.
Growth strategy
Blended perpetual and subscription licence models
The Group is now more than three years into its program of
introducing the blended model of perpetual and subscription
licences to the marketplace. It has delivered on its Cloud
technology platform, and the offering continues to be taken up
well. The Group's global business partners are now starting to
achieve stronger sales traction of the subscription licence model,
which is ideally suited to the Source-to-Contract elements of the
Group's software suite.
Software as a platform for BPO managed services
The application of the Group's software as a platform, on which
BPO based business partners can provide managed services is gaining
momentum. The Group's joint venture with the Mittal family network
in India, Proactis Total Procure, is now largely self-sufficient
and has secured two new name deals in the period.
Geographic expansion
Asia Pacific has rationalised its cost base and is now more
profitable on a lower cost base. The US and Asia Pacific teams have
contributed to new deal count.
M&A activity
On 10 February 2014, the Group announced the completion of the
acquisition of EGS Group Limited. This confirmed PROACTIS as the
leading supplier of procurement solutions to the UK Public sector
with the acquisition of more than 70 new clients. The combination
offers substantial synergistic benefits that are already being
realised with GBP0.3m of annualised overhead removed from the
combined businesses to date. The Group is now in an excellent
position to provide a platform for further complementary bolt-ons,
and is committed to M&A growth.
Product
The Group's position as a leading "best in class" spend control
and eProcurement organisation has been further enhanced by the
addition of major new modules with many new features. The Group's
continued investment offers a truly "end-to-end" suite of software,
which places the Group in a very strong competitive position, which
should be capitalised on over the next 2-3 years.
Services
During the period, the Group has successfully trialled several
new managed service based offerings to complement its software,
including supplier engagement and on-boarding, help-desk for
supplier registration process, managed auctions and electronic
invoicing. Many clients have a skills or resource shortage and the
Group's procurement domain expertise provides them with an added
value solution. These managed service offerings remain at an early
stage of commercial realisation but offer a significant opportunity
for growth and this is being pursued aggressively within the
business.
Markets
The Group continues to offer true multi-company, multi-currency
and multi-language functionality. This remains an essential
differentiator as the Group continues to win new business across
more sectors worldwide.
The Group competes on various levels; local vendors, ERP vendors
and international procurement vendors and this mix creates a highly
competitive market. The Group's "end-to-end" message and tight
integration techniques mitigate this and position PROACTIS as a
cost effective solution against both big ticket, consultancy led
ERP and international procurement vendors' solutions and potential
multi-Vendor software led solutions.
Routes to market and market outlook
The Group's traditional reseller business partners continued to
make a significant contribution during the period, and adoption of
the subscription licence model remains encouraging. This will
extend the partners reach into the Group's Source-to-Contract
product suite, and offers incremental opportunities within their
existing and new accounts.
Financial overview
Revenues increased by 3% to GBP4.0m (31 January 2013: GBP3.9m).
The Group has seen broadly consistent levels of deal volumes with
15 new deals in the period (31 January 2013: 15) and 39 upgrade
deals in the period (31 January 2013: 29). Of the 15 new deals, 8
were subscription based (31 January 2013: 6). This mix shift toward
subscription revenues in the period means that reported revenue
growth in the period slowed (to 3%) but order book, largely driven
by revenue on subscription deals being recognised in future
periods, grew substantially by 15% to GBP7.1m (31 July 2013:
GBP6.2m).
A beneficial consequence of the transition toward a more
subscription based revenue model and the long term non-cancellable
support contracts for perpetual licence deals is the increased
level of contracted revenue to be recognised in future periods.
This gives the Group greater visibility of forward revenue and a
more predictable cash flow profile. Of the GBP1.6m (31 January
2013: GBP1.5m) of total value contracted during the period, GBP0.9m
(31 January 2013: GBP0.7m) has been deferred to future financial
periods and the total value of contracted forward revenue has
increased to GBP7.1m (31 July 2013: GBP6.2m). Annualised contracted
revenue increased to GBP5.7m (31 July 2013: GBP5.4m).
In the period, the mix of revenue from new and upgrade deals
shifted marginally toward higher margin direct deals. This, along
with a reduced cost base, has resulted in a significant improvement
in profitability with an adjusted operating profit of GBP454,000
(31 January 2013: GBP143,000).
The Group's financial position is strong with GBP2.4m cash on
the balance sheet. Net operating cash inflow in the period since 31
July 2013 was GBP0.8m before a dividend payment of GBP0.3m and
continued capital investment in the Group's products and solutions
of GBP0.5m.
Loan Note Facility
The Group has executed a loan note instrument and entered into a
subscription agreement with Henderson Alternative Investment
Advisor Limited ("Henderson"), as discretionary investment manager
of The Alphagen Volantis Catalyst Fund Limited ("the Fund") whereby
Henderson has conditionally agreed, subject to the conditions set
out below, to subscribe for up to GBP5,000,000 fixed rate unsecured
loan notes of the Group (the "Loan Notes") (the "Facility"). The
Facility will give the Group surety of funding, allowing the Board
to pursue acquisition targets.
At any time up to and including 31 July 2014, provided that the
Group has first used reasonable endeavours to raise a sum equal to
the amount of funds required (or such portion thereof) to fund a
particular acquisition and/or to provide working capital in support
or furtherance of a particular aspect of the Group's acquisition
strategy, the Fund shall, at the request of the Group and subject
to certain conditions precedent, subscribe for the Loan Notes in
full or in part. The conditions precedent include the satisfaction
of the Fund, acting reasonably, as to the due diligence conducted
on the acquisition and the working capital requirements of the
Group going forward. The Loan Notes shall carry interest at a rate
of 6 per cent. per annum. Unless previously redeemed, the Loan
Notes shall be repaid at par on the third anniversary of their date
of issue, together with accrued interest. Under the terms of the
Facility, a commitment fee of GBP250,000 is payable to Henderson,
of which GBP125,000 is paid upon completion of the Subscription
Agreement, and the remaining GBP125,000 to be paid by 31 March 2014
(the "Commitment Fee").
Related Party Transaction
Henderson Alternative Investment Advisor Limited is a wholly
owned subsidiary of Henderson Global Investors. The Alphagen
Volantis Catalyst Fund Limited, managed by Henderson Alternative
Investment Advisor Limitedis a substantial shareholder in the
Company, holding approximately 27% of its voting rights. As such
Henderson is a 'related party' of the Company under the AIM Rules
for Companies. The entering into of the Facility and the associated
payment of the Commitment Fee constitutes a related party
transaction pursuant to AIM Rule 13. The directors, having
consulted with the Company's nominated adviser, finnCap Limited,
consider that the terms of the Facility are fair and reasonable
insofar as the Company's shareholders are concerned.
Prospects
PROACTIS has reported record revenues in its core business for
the period. The Group continues to successfully transition to its
blended perpetual and subscription licence model offering, which it
has achieved without requiring any external funding, and is now
reaching good rates of profitability. During the period, the Group
has grown its order book by 15% to GBP7.1m from GBP6.2m at 31 July
2013 and continued to make commercial progress in all of its
geographies.
After the period end, the Group announced the completion of the
acquisition of EGS Group Limited, which confirmed the Group's
commitment to selective M&A as a core element of its growth
strategy. This acquisition confirmed PROACTIS as the biggest
supplier of Procurement solutions to the UK Public Sector. The pace
and ease of the integration process and the substantial level of
operational savings available to the combined businesses is
encouraging with GBP0.3m of annualised overhead savings already
realised.
The Board is confident that the Group has strengthened its
position to continue to exploit the growing Spend and Procurement
marketplace and the evolving strategic growth opportunities.
Alan Aubrey Rod Jones
Chairman Chief Executive Officer
3 March 2014
Condensed consolidated income statement
for the six months ended 31 January 2014
Unaudited Unaudited Audited
6 months 6 months Year ended
to to 31 July
31 January 31 January 2013
2014 2013
GBP000 GBP000 GBP000
Revenue
Continuing 4,025 3,920 8,042
Cost of sales (1,234) (1,224) (2,440)
------------- ------------- -------------
Gross profit 2,791 2,696 5,602
Administrative costs (2,475) (2,693) (5,321)
------------- ------------- -------------
--------------------------------------- -------------- -------------- --------------
Operating profit before non-recurring
items, amortisation of customer
related intangibles and share
based payment charges 454 143 573
Amortisation of customer related
intangibles (130) (130) (260)
Share based payment charges (8) (10) (32)
------------- ------------- -------------
Operating profit 316 3 281
Finance income 6 14 24
Finance expenses (1) (1) (1)
------------- ------------- -------------
Profit before taxation 321 16 304
Taxation (43) 25 45
------------- ------------- -------------
Profit for the period 278 41 349
------------- ------------- -------------
Earnings per ordinary share
:
- Basic 0.9p 0.1p 1.1p
------------- ------------- -------------
- Diluted 0.8p 0.1p 1.1p
------------- ------------- -------------
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 2014
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 2012 3,148 3,051 556 449 5 (992)
Shares issued
during the period 10 9 - - - -
Result for the
period - - - - - 41
Dividend - - - - - (237)
Share based payment
charges - - - - - 10
------------- ------------- ------------- ------------- ------------- -------------
At 31 January
2013 3,158 3,060 556 449 5 (1,178)
Arising during - - - - (6) -
the period
Result for the
period - - - - - 308
Share based payment
charges - - - - - 22
------------- ------------- ------------- ------------- ------------- -------------
At 1 August 2013 3,158 3,060 556 449 (1) (848)
Shares issued
during the period 24 13 - - - (2)
Result for the
period - - - - - 278
Dividend - - - - - (318)
Share based payment
charges - - - - - 8
------------- ------------- ------------- ------------- ------------- -------------
At 31 January
2014 3,182 3,073 556 449 (1) (882)
------------- ------------- ------------- ------------- ------------- -------------
Condensed consolidated balance sheet
as at 31 January 2014
Unaudited Unaudited Audited
As at 31 As at 31 As at 31
January January 2013 July 2013
2014
GBP000 GBP000 GBP000
Non-current assets
Property, plant & equipment 66 82 70
Intangible assets 6,868 6,637 6,791
------------- ------------- -------------
6,934 6,719 6,861
------------- ------------- -------------
Current assets
Trade and other receivables 1,404 1,371 1,376
Cash and cash equivalents 2,351 1,989 2,338
------------- ------------- -------------
3,755 3,360 3,714
------------- ------------- -------------
Total assets 10,689 10,079 10,575
------------- ------------- -------------
Current liabilities
Trade and other payables 727 455 704
Deferred income 2,309 2,236 2,265
Income taxes 158 121 117
------------- ------------- -------------
3,194 2,812 3,086
------------- ------------- -------------
Non-current liabilities
Deferred tax liabilities 1,118 1,217 1,115
------------- ------------- -------------
1,118 1,217 1,115
------------- ------------- -------------
Total liabilities 4,312 4,029 4,201
------------- ------------- -------------
Net assets 6,377 6,050 6,374
------------- ------------- -------------
Equity attributable to
equity holders of the
Company
Called up share capital 3,182 3,158 3,158
Share premium account 3,073 3,060 3,060
Merger reserve 556 556 556
Capital reserve 449 449 449
Foreign exchange reserve (1) 5 (1)
Retained earnings (882) (1,178) (848)
------------- ------------- -------------
Total equity 6,377 6,050 6,374
------------- ------------- -------------
Total equity is wholly attributable to equity holders of the
parent Company.
Condensed consolidated cash flow statement
for the six months ended 31 January 2014
Unaudited Unaudited Audited
6 months 6 months Year ended
to to 31 July
31 January 31 January 2013
2014 2013
GBP000 GBP000 GBP000
Operating activities
Profit for the period 278 41 349
Amortisation of intangible assets 456 466 891
Depreciation 18 22 40
Net finance income (5) (13) (23)
Income tax charge/(credit) 43 (25) (45)
Share based payment charges 8 10 32
------------- ------------- -------------
Operating cash flow before changes
in working capital 798 501 1,244
Movement in trade and other receivables (33) (182) (198)
Movement in trade and other payables 72 (172) 100
------------- ------------- -------------
Operating cash flow from operations 837 147 1,146
Interest received 10 7 29
Income tax paid - - (85)
------------- ------------- -------------
Net cash flow from operating activities 847 154 1,090
------------- ------------- -------------
Investing activities
Purchase of plant and equipment (14) (16) (22)
Development expenditure capitalised (534) (537) (1,025)
Payments to acquire intangible assets - (59) (150)
------------- ------------- -------------
Net cash flow from investing activities (548) (612) (1,197)
------------- ------------- -------------
Financing activities
Capital elements of finance lease
payments (3) (3) (5)
Proceeds from issue of new shares 35 19 19
Dividend payment (318) (237) (237)
------------- ------------- -------------
Net cash flow from financing activities (286) (221) (223)
------------- ------------- -------------
Net increase/(decrease) in cash and
cash equivalents 13 (679) (330)
Cash and cash equivalents at the beginning
of the period 2,338 2,668 2,668
------------- ------------- -------------
Cash and cash equivalents at the end
of the period 2,351 1,989 2,338
------------- ------------- -------------
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 28 February 2014.
The interim financial information for the six months ended 31
January 2014, 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 2013.
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 2013 Annual Report
The financial figures for the year ended 31 July 2013, 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 2013 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 Financial Officer
3 March 2014
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR QKFDKDBKBNBB
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