TIDMPHD
RNS Number : 5297D
PROACTIS Holdings PLC
20 February 2020
20 February 2020
Proactis Holdings PLC
Trading and FSP Updates & Notice of Results
Proactis Holdings PLC ("Proactis", the "Group" or the
"Company"), the global spend management solution provider, today
provides an update on trading ("Trading Update") for the six-month
period ended 31 January 2020 as well as an update on the Formal
Sales Process ("FSP").
Trading Update
The Group's announcement on 29 April 2019 outlined a revised
strategy that included improving the rates of winning new customers
and the retention of existing customers. Since then, the Group has
restructured its operations and the Board is encouraged to be able
to report that the Group has delivered well against this strategy
during the six-month period to 31 January 2020.
Total contract value signed with new and existing customers was
GBP7.5m for the six-month period ended 31 January 2020, a 44%
increase against the six-month period ended 31 July 2019 of
GBP5.2m. This rate of new business performance is expected to
continue during February and the Group is well positioned to take
this performance further in the mid-term. As a comparative, the
total contract value sold for the year ended 31 July 2019 was
GBP11.3m (31 July 2018: GBP12.3m). Revenues from this new business
will largely be recognised in future periods because of the Group's
SaaS-based business model.
The Group has achieved organic growth in annualised recurring
revenues ("ARR") in its core business of 3.6% for the half year
with ARR progressing to GBP40.7m at 31 January 2020 (31 July 2019:
GBP39.3m). Including the impact of the heightened risk accounts (as
described in the Group's Final Results on 29 October 2019 ("2019
Final Results")), ARR at 31 January 2020 was GBP43.4m (31 July
2019: GBP44.3m).
In respect of the retention of existing customers, churn
(expressed in terms ARR lost through either loss or downgrade of
contracts with existing customers) was GBP0.8m in the Group's core
business (and GBP2.0m including the impact of heightened risk
accounts) for the six-month period ended 31 January 2020 which is a
significant improvement against the six-month period ended 31 July
2019 of GBP4.1m.
Further, the total ARR associated with the heightened risk
accounts was GBP5.0m and, of that, GBP3.4m came up for renewal
during the six-month period ended 31 January 2020. The Board is
pleased to be able to report that only GBP1.2m of the GBP3.4m ARR
was actually lost and the GBP2.2m retained is well ahead of the
Board's expectations.
The Board expects the Group to report revenues of approximately
GBP24.5m for the six-month period ended 31 January 2020 (six-month
period ended 31 July 2019: GBP26.4m). This reduction in reported
revenue is principally a reflection of the significant net loss of
ARR during the two prior financial years ended 31 July 2019 and 31
July 2018.
The Board has elected at this stage not to quantify expectations
of EBITDA as it would incur a disproportionate regulatory burden as
a result of the FSP but will do so at the time of its interim
results.
The Group has invested in new leadership, sales, marketing and
account management teams required to deliver our new go-to-market
strategy designed to boost new business and customer retention for
the longer-term. This investment is beginning to deliver value and
the new business success in the first half adds to the Group's
recurring revenue base and will be recognised in future
periods.
The Group has managed its net debt position down to GBP35.6m (31
July 2019: GBP36.5m) and it remains fully serviced and within its
covenants.
Outlook
Following the significant improvement in new business
performance and retention of existing customers, the Board expects
that the Group will return to revenue growth for the second half of
the financial year resulting in a likely full year outturn of
approximately GBP50.5m for the year ending 31 July 2020 (as
compared to the Board's expectations prior to the announcement of
the FSP of GBP53.5m) with a consequential impact on the Board's
expectations of adj. EBITDA for the year. The Board then
anticipates the rate of revenue growth to accelerate into next
financial year and future periods.
BePayd
bePayd is the Group's supplier paid financial solution,
providing accelerated payments to suppliers against invoices
approved by buyers. The Group continues to make substantial
progress on this exciting opportunity with the completion of the
product to market readiness during the period and, during February
2020, the deployment of the product across the Group's own supplier
base. The Group has a substantial pipeline of opportunities for the
early adopter programme and looks forward to being able to update
the market on material commercial progress in the near future.
FSP update
The Board continues to work to advance certain approaches
received since the FSP was announced on 29 July 2019. The Board
reports that further inbound interest continues to be received from
credible parties but, being conscious of the protracted FSP, the
Board is mindful to only engage with those able to advance rapidly.
Management team presentations and additional information has been
provided to selected interested parties. A key element of interest
for all potential buyers is a view of current trading which this
Trading Update provides. The Board considers, therefore, that it
will be in a position to move forward promptly following this
update, but it reiterates that there can be no certainty that any
offer will be forthcoming or the terms of any such offer.
Notice of Results
The Group currently intends to release its interim results for
the six-month period ending 31 January 2020 on 29 April 2020, but
this date is subject to change in light of any requirements arising
from the FSP described above.
Tim Sykes, CEO, commented:
"I am delighted with the record level of new business that the
Group has achieved and the pipeline that we have built over recent
months as we execute our new strategy for growth. Our commercial
teams are beginning to access our market opportunity and we are
confident that we will continue to demonstrate significant progress
against 2019's performance and, in due course, accelerate this
further.
"Our customer retention rates have improved significantly which
is partly due to our increased level of engagement with our
customers where we are offering product strategies designed to
maintain and, potentially, provide even more value. This, along
with our new business performance, has enabled us to deliver
substantial net organic growth in ARR in our core business and that
represents a return to the core values of Proactis.
"After significant progress during the period, we remain excited
about the prospects for our bePayd product and we are confident and
determined that we will make material commercial progress with this
product during this year.
"Our revenue performance in the period is largely a function of
the lower new business and much lower retention performance in
previous periods which we have now reversed. I am also encouraged
that we were able to reduce net debt and we remain highly focussed
on and in control of this key aspect of our strategy.
"We are confident that the revenue performance has now bottomed
out and we have much to be optimistic about as we re-emerge to
growth in our core offer after a very difficult period in the
Group's history."
For further information, please contact:
Proactis Holdings PLC 01937 545070 x1115
Tim Sykes, Chief Executive Officer investorcontact@Proactis.com
finnCap Ltd
Stuart Andrews/Carl Holmes/Matthew Radley
- Corporate Finance
Andrew Burdis/Richard Chambers - ECM 0207 220 0500
Alma PR
Rebecca Sanders-Hewett/Hilary Buchanan/Sam 020 3405 0205
Modlin Proactis@almapr.co.uk
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 1,100
buying organisations around the world from the commercial, public
and not-for-profit sectors.
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
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of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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