TIDMPHD
RNS Number : 9860W
PROACTIS Holdings PLC
29 April 2021
PROACTIS Holdings PLC
Interim results for the six months ended 31 January 2021
PROACTIS Holdings PLC, the business spend management solution
provider, today announces its unaudited interim results for the
six-month period ended 31 January 2021.
Key highlights:
-- Performance in line with Board expectations for the period
-- Total Contract Value ("TCV"), excluding renewals, signed was
GBP6.7m (H1 FY2020: GBP7.5m; H2 FY2020: GBP7.1m) delivered against
backdrop of challenging COVID-19 headwinds
-- Consistent new business deal activity: 29 new name deals (H1 FY2020: 29; H2 FY2020: 32)
-- Robust upsell activity: 66 deals with existing customers in
the period (H1 FY2020: 70; H2 FY2020: 57)
-- Annualised recurring revenue(1) ("ARR"), excluding heightened
risk accounts ("HRAs"), increased marginally to GBP40.1m (31 July
2020: GBP39.8m)
-- ARR including HRAs was GBP40.8m (31 July 2020: GBP41.2m)
-- Reported revenue was GBP23.8m (H1 FY2020: GBP24.5m; H2
FY2020: GBP25.1m) due to lower revenues in the Group's volume
related businesses and the effect of net churn in prior periods
-- Adjusted EBITDA(2) increased to GBP6.2m (H1 FY2020: GBP5.6m;
H2 FY2020: GBP6.2m), an increase of over 10%
-- Churn of GBP1.5m (H1 FY2020: GBP2.1m; H2 FY2020: GBP2.3m)
stable and in line with expectations
-- Net bank debt(3) increased to GBP39.7m (31 July 2020:
GBP37.1m) due to lower volume related revenue leading to lower cash
levels in the Group's BPO business in the US, along with specific
actions underway in order to right-size operating expenditure for
the future.
-- First instance of the buyer-funded model for bePayd sold in France
-- Net cash flow from operating activities was GBP1.8m (H1
FY2020: GBP5.1m; H2 FY2020: GBP2.9m)
-- Appointment of Nick Brown as Senior Independent Non-Executive Director
Post period end highlights:
-- First US deal signed on the Group's mid-market platform
meaning that the single platform solution has now been sold under
the revised go to market strategy in all targeted territories
-- First instance of the Proactis-funded model for bePayd has been sold in the UK
1 - Annualised Recurring Revenue is the Group's estimate of the
annualised value of revenue of customers currently contracted with
the Group
2 - Adjusted EBITDA is stated before non-core net expenditure,
amortisation of intangible assets and share based payment charges;
and Adjusted EPS is stated after the equivalent post tax effects of
Adjusted EBITDA
3 - Excludes right of use assets recognised under IFRS 16 Leases
and unsecured convertible loan notes of GBP6.0m maturing during
July 2022, August 2023 and November 2024. IFRS 16 Leases was
adopted from 1 August 2019
Tim Sykes, Chief Executive Officer, commented:
"It is encouraging to see the progression of the Group over
recent periods. Churn has stabilised and is demonstrably back to
normal. Furthermore, excluding the impact of HRAs (which is now
only small at GBP0.7m) and, despite the impact of COVID-19 on new
business intake, we are continuing to grow the business again .
We are now executing our commercial business processes well in
each of France, Germany and North America and new business momentum
is accelerating for those teams. As this continues to progress, the
Group's forward momentum will start to reflect market rates of
growth.
I am delighted that we have also sold our bePayd solution into
two early adopters, one under the buyer-funded model and one under
the Proactis-funded model. We look forward to working with our
customers to deliver a great service to their suppliers and the
necessary returns to our customers and Proactis.
We have also made good progress in addressing some of the
inefficiencies in our operating expenditure and this has improved
our margins.
We look forward to the continued execution of our growth
strategy and exploring ways to create shareholder value whilst
working toward our ambition of building a leading international
business spend management company."
For further information, please contact:
Proactis Holdings PLC 01937 545070 x1115
Tim Sykes, Chief Executive Officer investorcontact@Proactis.com
Richard Hughes, Chief Financial Officer
finnCap Ltd
Carl Holmes, Emily Watts - Corporate Finance
Andrew Burdis, Richard Chambers - ECM 0207 220 0500
Alma PR
Hilary Buchanan, Sam Modlin, David Ison 020 3405 0205
Proactis@almapr.co.uk
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the company's obligations under Article 17 of MAR
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.
CHAIRMAN'S AND CHIEF EXECUTIVE OFFICER'S REPORT
Strategic overview
The Group's long-term strategy is to build an international
business focused on delivering best value to its customers through
the digital transformation of their procurement systems and
processes with the application of the Group's software technology
and provision of its expert services. The Group's strategy can be
illustrated as follows:
-- Maximise customer and technology opportunity to existing customers
-- Accelerate new business spend management momentum
-- Roll out bePayd, the Group's accelerated payment product
-- Drive adoption of existing supplier paid products
-- Extend supplier paid product portfolio
This strategy is designed to deliver a strong financial
proposition of profitable, cash generative organic growth with a
high level of visibility illustrated by its ARR across both buyer
and supplier paid products.
The Group aims to drive organic growth into its business spend
management solutions by retaining existing and winning new
customers through continually improving its best in class
procurement solutions with high service levels and excellent user
support as well as a focused approach to the up-selling of the
Group's extensive range of solutions, creating even broader and
deeper customer relationships.
In addition, the Group has a substantial opportunity to provide
complementary products which leverage the business spend management
solutions with transactional services, tender services and the
Group's accelerated payment facility, bePayd.
Strategic performance
Progress against the Group's strategy continues to be
encouraging. Despite the ongoing COVID-19 global pandemic
("COVID-19") related headwinds, the Group's performance was in line
with Board expectations for the period demonstrating the resilience
of the Group's business model.
TCV of new business signed was healthy at GBP6.7m (H1 FY20:
GBP7.5m). The Board believes that the Group has now met every
milestone needed to in order to validate its mid-market business
spend management strategy. The challenge for the Group is now to
accelerate the rate of new business in each of the territories that
it operates in.
During the period the Group also announced its first bePayd
contract under the buyer-funded model with Experbuy in France.
Subsequent to the end of the period, the Group also announced its
first Proactis-funded contract, with Denbighshire County Council.
The Board believes that the Group can now push forward with
confidence to pursue the market opportunity in this area.
The Group's reported revenues decreased to GBP23.8m (H1 FY20:
GBP24.5m). This reduction in revenue is primarily due to:
-- net customer losses in prior financial years, which, as a
consequence of the Group's SaaS based subscription model, flows
through to the current year income statement; and
-- the impact from COVID-19 on the Group's implementation
services revenues and volume-based subscription contracts, which
the Board expects to normalise following the end of the
pandemic.
Group adjusted EBITDA of GBP6.2m is GBP0.6m (or 10.7%) higher
than the comparative period (H1 FY20: GBP5.6m). The result was
achieved, despite lower revenue levels, through a heightened focus
on cost control along with a reduced level of travel and deferred
investment in marketing and sales capacity until the economic
environment makes that investment worthwhile.
The Board considers this financial performance to be in line
with expectations and positions the Group well to continue to
capitalise on the opportunities available to it.
Solutions and markets
Buyer solutions
The Group provides business spend management solutions which
enable customers to reduce the cost of goods or services purchased
through enhanced sourcing activities, and access efficiency gains
through the automation of manual processes using technology.
Customers also benefit from an enhanced level of corporate
governance and compliance through work-flows designed into the
solutions.
Buyer revenues for the period were GBP19.3m (H1 FY2020:
GBP20.4m). The decrease is analysed further below and is a direct
consequence of high levels of customer churn in the previous
financial years flowing into the current year by virtue of the SaaS
business model the Group operates.
Supplier solutions
The Group provides access to technology that enables suppliers
to transact digitally with their customers. This technology is
often referred to as networking technology, allowing multiple
documents in any format to be passed between suppliers and their
customers and encouraging greater collaboration between suppliers
and their customers through the provision of other trading
information. In addition, the Group uses its technology to deliver
tailored new business opportunities to suppliers through its search
and selection of a vast number of new business opportunities and
tenders from a number of international sources.
Revenues for the period were GBP4.5m (H1 FY2020: GBP4.1m) which
was in line with the Board's expectations.
Financial solutions
The Group brought its new early settlement solution, bePayd, to
market in early 2020 just before COVID-19 impacted the global
economy.
The solution allows suppliers to accelerate the payment of a
customer approved invoice in return for a small discount and is
primarily aimed at the long tail of small suppliers in the supply
chain, a population that is underserved. The solution is market
leading in its simplicity, speed and convenience without any
detriment to security or risk. The solution is entirely flexible
down to single invoice level with extremely low values because of
the end to end automation of the process. Funding of the early
settlement can be provided by either the customer or Proactis
(through a dedicated facility with HSBC) or a blended model.
The solution has been adopted by Experbuy, a new customer to the
Group based in France, under the buyer-funded model and by
Denbighshire County Council, an existing customer of the Group,
under the Proactis-funded model. The knowledge from the
implementation and roll out programmes for these two customers will
be invaluable as the Group now seeks to optimise supplier take-up
of the solution and grow pipeline further.
Performance overview
The Board monitors the Group's performance through a combination
of several key performance indicators as follows:
6 months ended 6 months ended Year ended
31 January 31 January 31 July 2020
2021 2020
----------------------------- -------------- -------------- -------------
Reported revenue GBP23.8m GBP24.5m GBP49.6m
Reported revenue growth (2.9%) (11.6%) (8%)
Adjusted revenue (see GBP23.7m GBP24.5m GBP49.2m
additional information)
CAGR 3-year revenue growth* (3.5%) 28% 25%
TCV of new name deals GBP3.6m GBP5.4m GBP9.0m
Number of new name deals 29 29 61
TCV of upsell deals GBP3.1m GBP2.1m GBP5.6m
Number of upsell deals 66 70 127
Total deal value signed GBP6.7m GBP7.5m GBP14.6m
----------------------------- -------------- -------------- -------------
* Includes impact of acquisitions
The Board considers that TCV, customer retention and ARR as the
key indicators that shape the direction of and momentum within the
Group. These indicators are included in all information packs
distributed to and discussed by senior and executive level teams,
and at Board level.
New business performance analysis
The Group's TCV for new deals and upsell / cross sell deals can
be analysed by market segment as follows:
Number
6 months ended TCV of of new TCV of Number Total
31 January 2021 new name name upsell of upsell Total number
deals deals deals deals TCV of deals
--------------------------- ----------- -------- -------- ----------- ------- ---------
Business Spend Management
United Kingdom GBP2.1m 17 GBP1.1m 48 GBP3.2m 65
France GBP0.2m 1 GBP0.2m 3 GBP0.4m 4
Germany GBP0.1m 1 - - GBP0.1m 1
United States GBP0.1m 1 GBP1.6m 3 GBP1.7m 4
Netherlands GBP1.1m 6 GBP0.2m 12 GBP1.3m 18
Supplier
Transactions - - - - - -
Tenders Direct - 3 - - - 3
Total GBP3.6m 29 GBP3.1m 66 GBP6.7m 95
----------- -------- ------- ---------
* The Tenders Direct business shows net wins
Number
6 months ended TCV of of new TCV of Number Total
31 January 2020 new name name upsell of upsell Total number
deals deals deals deals TCV of deals
--------------------------- ----------- -------- -------- ----------- ------- ---------
Business Spend Management
United Kingdom GBP0.7m 16 GBP1.4m 49 GBP2.1m 65
France GBP0.8m 2 GBP0.1m 3 GBP0.9m 5
Germany GBP0.3m 1 - - GBP0.3m 1
United States GBP1.7m 5 GBP0.5m 3 GBP2.2m 8
Netherlands GBP1.9m 5 GBP0.1m 15 GBP2.0m 20
Supplier
Transactions - - - - - -
Tenders Direct - - - - - -
Total GBP5.4m 29 GBP2.1m 70 GBP7.5m 99
----------- -------- ------- ---------
* The Tenders Direct business shows net wins
Number
Year ended TCV of of new TCV of Number Total
31 July 2020 new name name upsell of upsell Total number
deals deals deals deals TCV of deals
--------------------------- ----------- -------- -------- ----------- -------- ---------
Business Spend Management
United Kingdom GBP3.0m 31 GBP3.6m 86 GBP6.6m 117
France GBP0.8m 2 GBP0.8m 17 GBP1.6m 19
Germany GBP0.3m 1 - - GBP0.3m 1
United States GBP1.8m 6 GBP1.0m 6 GBP2.8m 12
Netherlands GBP3.0m 11 GBP0.2m 18 GBP3.2m 29
Supplier
Transactions - - - - - -
Tenders Direct GBP0.1m 10* - - GBP0.1m 10
Total GBP9.0m 61 GBP5.6m 127 GBP14.6m 188
----------- -------- -------- ---------
* The Tenders Direct business shows net wins
During the previous year the way information was internally
reported changed to reflect a clearer presentation of how the Group
is operated between Business Spend Management (buyer led) customers
and supplier led customers. Comparative information has been
re-presented to align to the updated analysis.
During the period, new name deal wins were lower than the
comparative period of H1 FY2020 due to the impact on pipeline
conversion that COVID-19 has had. The Board is pleased by the
higher level of upsell and cross sell deal during the period, which
were concentrated in the UK and US business spend management
territories.
Customer Churn
As reported previously, the Group experienced heavy customer
churn over the 2018 and 2019 financial years in specific customers
with non-authored product deployment and, as at 31 July 2019, the
Group defined these as Heightened Risk Accounts ("HRA").
The detail below shows the progression that the Group has made
during the period against those HRAs.
GBP'm ARR
-------------------------------------- ------
HRA value at the start of the period 1.4
Customer churn in the period (0.3)
Contracts converted to multi-year
deals upon renewal (0.4)
HRA value at the end of the period 0.7
-------------------------------------- ------
Of the remaining HRAs, GBP0.5m came up for renewal in the period
and renewed on deals of 1 year or less. Only GBP0.2m is due for
renewal in the second half of the financial year.
The level of retention and conversion into multi-year deals in
these accounts continues to be above the Board's expectations and
demonstrates the Group's renewed ability to offer alternative
solutions to existing customers.
Total churn in the period including HRAs was GBP1. 5m (H1
FY2020: GBP2.1m; H2 FY2020: GBP2.3m) which the Board considers to
be normal levels.
ARR
ARR is a key performance indicator giving the Board visibility
of the Group's annualised run rate of contracted subscription,
managed service, support and hosting revenues. It provides the
Group's stakeholders with real indicators of:
-- The amount of revenue from new business required to be won in
order to hit expectations in future periods;
-- The level of debt that the business can conservatively
support and hence assist in the overall return to investors;
and
-- The overall strength of the Group.
During the period COVID-19 has impacted the Group in various
ways, including delays in new business, deferral of project
implementation service revenues through project deferrals and
reduction in volume-based contracts.
The following table analyses the Group's ARR into three
categories:
-- Non-volume based ARR
-- Volume based ARR
-- HRAs
31 July Growth / 31 January
GBP'm 2020 (Decline) 2021
---------------------------- -------- ----------- -----------
Non-volume-based contracts 28.3 1.1% 28.6
Volume based contracts 11.5 -% 11.5
---------------------------- -------- ----------- -----------
Underlying ARR 39.8 0.8% 40.1
HRA contracts 1.4 (50.0%) 0.7
Total 41.2 (1.0%) 40.8
---------------------------- -------- ----------- -----------
The Board is encouraged by the underlying performance of the
Group's non-volume-based business with a 1.1% increase in
non-volume related ARR from the previous reporting period and
expects to grow this number substantially over the coming months
and years.
Volume based contract ARR stabilised at the lower level seen at
the end of July 2020, albeit on a slightly different mix of the
products bases involved, as COVID-19 continued to impact this area
of the business. The Board expects an increase in volume related
ARR once businesses return to a level of normalised trading.
ARR movement can be analysed further as follows:
31 July Growth / 31 January
GBP'm 2020 (Decline) 2021
---------------------------- ---------- ----------- -----------
Business Spend Management (excluding
HRAs)
United Kingdom 13.9 4.3% 14.5
France 4.6 (4.3%) 4.4
Germany 0.6 100% 1.2
United States 7.6 (9.2%) 6.9
Netherlands 5.2 3.8% 5.4
---------------------------- ---------- ----------- -----------
31.9 1.6% 32.4
---------------------------- ---------- ----------- -----------
Supplier
---------------------------- ---------- ----------- -----------
Tenders Direct 3.7 -% 3.7
Global Transactions 4.2 (4.8%) 4.0
7.9 (2.5%) 7.7
---------------------------- ---------- ----------- -----------
Underlying ARR 39.8 0.8% 40.1
---------------------------- ---------- ----------- -----------
HRAs 1.4 (50.0%) 0.7
---------------------------- ---------- ----------- -----------
Total 41.2 (1.0%) 40.8
---------------------------- ---------- ----------- -----------
ARR as at 31 January 2021 is in line with the Board's
expectations.
Core business spend management ARR increased 1.6% to GBP32.4m at
the period end with encouraging performances by the UK, NL and
German territories. The US territory continued to suffer net churn
in the period due to volume related contract reductions impacted by
COVID-19 predominantly.
Tenders Direct ARR remained stable during the period as improved
new deal and higher retention rates delivered encouraging
indicators for the future.
Revenue performance analysis
Reported revenue in the period is shown below split by Business
Spend Management ("Buyer") and Supplier businesses.
Revenue reductions in all areas other than the Netherlands
business was driven by churn in the previous financial years as a
consequence of the Group's SaaS based subscription model, along
with COVID-19 impacts in volume related parts of the Group.
The Group's reported revenues by market segment were:
6 months ended 6 months ended Year ended
31 January 31 January 31 July 2020
2021 2020 GBPm
GBPm GBPm
--------------------------- -------------- -------------- --------------
Business Spend Management
revenue
United Kingdom 8.1 8.2 17.1
France 2.9 2.7 5.8
Germany 1.0 1.0 1.9
United States 3.8 5.4 10.1
Netherlands 3.5 3.1 6.2
Supplier revenue
Tenders Direct 2.4 1.9 4.1
Global Transactions 2.1 2.2 4.4
23.8 24.5 49.6
--------------------------- -------------- -------------- --------------
Staff costs and other operating expenses
The aggregate of staff costs and other operating expenses
(excluding depreciation of property, plant and
equipment and amortisation of intangibles assets increased to GBP17.2m (H1 FY2020: GBP16.8m).
This part of the Group's costs has included significant items of
income or expenditure associated primarily with areas that are not
associated with the Groups on-going, underlying activities
(together, "non-core net expenditure").
The impact of this non-core net expenditure on the aggregate of
staff costs and other operating expenses is as follows:
6 months 6 months Year ended
ended 31 ended 31 31 July
January 2021 January 2020 2020
GBPm GBPm GBPm
-------------------------------------- -------------- ------------- -----------
Aggregate of staff costs and
other operating expenses (reported) 17.2 16.8 35.5
Non-core net expenditure (2.1) (0.7) (2.8)
--------------------------------------
Aggregate of staff costs and
other operating expenses (excluding
non-core net expenditure) 15.1 16.1 32.7
-------------------------------------- -------------- ------------- -----------
Non-core net expenditure can be analysed as follows:
6 months 6 months ended Year ended
ended 31 31 January 31 July
January 2021 2020 2020
GBPm GBPm GBPm
------------------------------ -------------- -------------- -----------
Loss arising from asset held
for sale 0.2 - 0.4
Costs of restructuring Group
operations - staff 1.4 0.4 0.9
Costs of restructuring Group
operations - other 0.1 0.2 0.1
Legal and professional fees 0.2 0.2 0.7
Foreign exchange impacts 0.2 (0.1) 0.7
2.1 0.7 2.8
------------------------------ -------------- -------------- -----------
Reported profit and Group Adjusted profit performance
The Board considers that each of the two periods ended 31
January 2021 and 31 January 2020 have been significantly impacted
by non-core net expenditure incurred primarily as part the Group's
restructuring activities.
A summary of the various profit measures is set out below.
6 months ended 6 months ended Year ended
31 January 31 January 2020 31 July 2020
2021
Reported (1) Adjusted Reported (1) Adjusted Reported (1) Adjusted
-------------------- --------------- ------------- --------- ------------ ----------------- -------------
Revenue GBP23.8m GBP23.7m GBP24.5m N/a GBP49.6m GBP49.2m
(GBP23.7m)
Earnings before
interest,
tax, depreciation GBP4.2m GBP6.2m GBP4.9m GBP5.6m GBP9.0m GBP11.8m
and
amortisation
('EBITDA')(1)
Operating (loss) (GBP2.1m) GBP1.5m (GBP1.4m) GBP1.7m (GBP18.4m) GBP4.0m
/ profit
(Loss) / profit (GBP2.8m) GBP0.8m (GBP2.2m) GBP0.9m (GBP19.3m) GBP2.6m
/ before tax
Diluted earnings
per share (note
2) (2.7p) 0.9p (1.9p) 1.1p (19.9p) 2.9p
-------------------- --------------- ------------- --------- ------------ ----------------- -------------
Note 1: See Additional Information - Reconciliation of
alternative performance measures
Cash flow
An analysis of the Group Adjusted Free Cash Flow is as
follows:
6 months ended 6 months Year ended
31 January ended 31 31 July
2021 January 2020 2020
GBPm GBPm GBPm
------------------------------------- --------------- ------------- -----------
Net cash flow from operating
activities 1.8 5.1 8.0
Non-core net expenditure
incurred in prior period
but paid in current period 0.1 0.3 0.3
Non-core net expenditure
charged and paid within the
same period 1.6 0.7 1.6
------------------------------------- --------------- ------------- -----------
Adjusted Net cash flow from
operating activities 3.5 6.1 9.9
Purchase of plant and equipment (0.1) (0.3) (0.5)
Development expenditure capitalised (4.2) (3.9) (8.5)
------------------------------------- --------------- ------------- -----------
Adjusted Group Net Free Cash
Flow (0.8) 1.9 0.9
-------------------------------------- --------------- ------------- -----------
The Group had net bank debt of GBP39.7m as at 31 January 2021
(31 July 2020: GBP37.1m). The increase of GBP2.6m relates to lower
cash levels in the Group's outsourced sourcing business resulting
from lower trading volumes impacted by COVID-19, as previously
reported, and cash outflow arising from upfront costs of the
restructuring of its management team and operating cost base
The net bank debt figure excludes convertible loan notes of
approximately GBP6.0m that mature from July 2022 onwards.
Summary and Outlook
The Group continues to progress its go to market strategy and
has now met all of its primary strategic milestones being: to
address churn and return it to normal levels; to have sold its
mid-market focussed single platform business spend management
solution in all of its territories; and, to have early adopters for
bePayd in both the buyer-funded and Proactis-funded models.
The Group must now demonstrate that it can access the market
opportunity open to it and shift gear on the rate of new business
intake by converting the pipeline it has been building over recent
periods. COVID-19 has been impacting this rate of progression, but
the Board is confident that this will be demonstrable in the
short-term. The Board looks forward to continuing to execute on our
strategy to realise our ambition, whilst also exploring
opportunities to accelerate this, address the capital structure and
create shareholder value.
Accordingly, the Board considers that the commercial indicators
for accelerated progression are evident and looks forward to
returning the Group to substantial growth.
Alan Aubrey Tim Sykes
Chairman Chief Executive Officer
29 April 2021
Consolidated income statement
for the six months ended 31 January 2021
Unaudited Unaudited Audited
6 months 6 months Year ended
to to 31 July 2020
31 January 31 January
2021 2020
GBP000 GBP000 GBP000
Revenue 23,800 24,468 49,571
Cost of sales (2,569) (2,845) (5,339)
Staff costs (11,957) (11,504) (24,118)
Other operating expenses (5,216) (5,342) (11,361)
Depreciation of property, plant
and equipment (833) (813) (1,642)
Amortisation of intangible
assets (5,556) (5,347) (10,664)
Impairment of goodwill and
intangible assets - - (14,813)
------------- ------------- -------------
Operating loss (2,331) (1,383) (18,366)
Finance income 1 - -
Finance expenses (695) (795) (974)
------------- ------------- -------------
Loss before taxation (3,025) (2,178) (19,340)
Income tax credit/(charge) 229 331 (20)
------------- ------------- -------------
Loss for the period/year (2,796) (1,847) (19,360)
------------- ------------- -------------
Loss attributable to:
Owners of the Company (2,612) (1,832) (19,017)
Non-controlling interest (184) (15) (343)
------------- ------------- -------------
(2,796) (1,847) (19,360)
------------- ------------- -------------
Earnings per ordinary share
(Note 2)
- Basic (2.7)p (1.9)p (19.9)p
------------- ------------- -------------
- Diluted (2.7)p (1.9)p (19.9)p
------------- ------------- -------------
Consolidated statement of other comprehensive income
for the six months ended 31 January 2021
Unaudited Unaudited Audited
6 months 6 months Year ended
to to 31 July 2020
31 January 31 January
2021 2020
GBP000 GBP000 GBP000
Loss for the period/year (2,796) (1,847) (19,360)
Other comprehensive income
Items that are or may be reclassified
to profit or loss
Foreign operations - foreign
currency translation differences 163 (46) 332
------------- ------------- -------------
Other comprehensive gain/(loss),
net of tax 163 (46) 332
------------- ------------- -------------
Total comprehensive loss (2,633) (1,893) (19,028)
------------- ------------- -------------
Attributable to:
Equity holders of the parent (2,527) (1,770) (18,896)
Non-controlling interest (106) (123) (132)
------------- ------------- -------------
(2,633) (1,893) (19,028)
------------- ------------- -------------
Condensed consolidated statement of changes in equity
As at 31 January 2021
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited
Share Share premium Merger Capital Foreign Equity Retained Non-controlling
capital reserve reserve exchange reserve earnings Total interest Total
reserve equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
At 1 August
2019 9,522 83,513 556 449 (1,386) 89 (23,839) 68,904 1,600 70,504
Result for the
period - - - - - - (1,832) (1,832) (15) (1,847)
Other
comprehensive
income - - - - 62 - - 62 (108) (46)
Total
comprehensive
income
for the
period - - - - 62 - (1,832) (1,770) (123) (1,893)
Shares issued
during the
period 31 146 - - - - - 177 - 177
Issue of
convertible
notes - - - - - 13 - 13 - 13
Share based
payment
charges - - - - - - 124 124 - 124
------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
At 31 January
2020 9,553 83,659 556 449 (1,324) 102 (25,547) 67,448 1,477 68,925
Result for the
period - - - - - - (17,185) (17,185) (328) (17,513)
Other
comprehensive
income - - - - 59 - - 59 319 378
Total
comprehensive
income
for the
period - - - - 59 - (17,185) (17,126) (9) (17,135)
Share premium
reduction - (83,659) - - - - 83,659 - - -
Release of
equity
component
of
convertible
notes - - - - - (102) - (102) - (102)
Share based
payment
charges - - - - - - 123 123 - 123
------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
At 1 August
2020 9,553 - 556 449 (1,265) - 41,050 50,343 1,468 51,811
Result for the
period - - - - - - (2,612) (2,612) (184) (2,796)
Other
comprehensive
income - - - - 85 - - 85 78 163
Total
comprehensive
income
for the
period - - - - 85 - (2,612) (2,527) (106) (2,633)
Share based
payment
charges - - - - - - 45 45 - 45
------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
At 31 January
2021 9,553 - 556 449 (1,180) - 38,483 47,861 1,362 49,223
------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- ------------- -------------
Consolidated balance sheet
as at 31 January 2021
Unaudited Unaudited Audited
As at 31 As at 31 As at 31
January January July 2020
2021 2020
GBP000 GBP000 GBP000
Non-current assets
Property, plant & equipment 4,749 5,801 5,439
Intangible assets (Note 3) 117,138 133,987 118,754
Deferred tax asset 734 748 746
------------- ------------- -------------
122,621 140,536 124,939
------------- ------------- -------------
Current assets
Trade and other receivables 12,539 26,929 13,239
Cash and cash equivalents 2,793 7,548 4,424
------------- ------------- -------------
15,332 34,477 17,663
Assets held for sale (Note 4) 15,889 - 10,273
------------- ------------- -------------
Total assets 153,842 175,013 152,875
------------- ------------- -------------
Current liabilities
Trade and other payables 8,595 25,450 9,136
Lease liabilities 1,043 982 1,008
Contract liabilities 17,772 16,897 18,242
Income taxes - 278 90
Loans and borrowings (Note 6) 2,849 3,192 1,356
------------- ------------- -------------
30,259 46,799 29,832
------------- ------------- -------------
Liabilities directly associated
with the assets held for sale
(Note 4) 16,206 - 10,429
------------- ------------- -------------
46,465 46,799 40,261
------------- ------------- -------------
Non-current liabilities
Contract liabilities 147 190 184
Deferred tax liabilities 8,276 8,435 8,810
Loans and borrowings (Note 6) 46,418 46,492 48,153
Lease liabilities 2,735 3,483 3,164
Provisions 578 689 492
------------- ------------- -------------
58,154 59,289 60,803
------------- ------------- -------------
Total liabilities 104,619 106,088 101,064
------------- ------------- -------------
Net assets 49,223 68,925 51,811
------------- ------------- -------------
Equity
Called up share capital 9,553 9,553 9,553
Share premium account - 83,659 -
Equity reserve - 102 -
Merger reserve 556 556 556
Capital reserve 449 449 449
Foreign exchange reserve (1,180) (1,324) (1,265)
Retained earnings 38,483 (25,547) 41,050
------------- ------------- -------------
Equity attributable to equity
holders of the parent 47,861 67,448 50,343
Non-controlling interest 1,362 1,477 1,468
------------- ------------- -------------
Total equity 49,223 68,925 51,811
------------- ------------- -------------
Consolidated statement of cash flows
for the six months ended 31 January 2021
Unaudited Unaudited Audited
6 months 6 months Year ended
to to 31 July
31 January 31 January 2020
2021 2020
GBP000 GBP000 GBP000
Operating activities
Loss for the period (2,796) (1,847) (19,360)
Amortisation of intangible assets 5,556 5,347 10,664
Impairment of goodwill and intangible
assets - - 14,813
Depreciation 833 813 1,642
Net finance expense 694 795 974
Income tax (credit)/charge (229) (331) 20
Share based payment charges 45 124 247
------------- ------------- -------------
Operating cash flow before changes
in working capital 4,103 4,901 9,000
Movement in trade and other receivables (5,859) (4,141) 396
Movement in trade and other payables
and deferred income 4,740 4,732 44
------------- ------------- -------------
Operating cash flow from operations 2,984 5,492 9,440
Interest paid (663) (652) (1,409)
Income tax (paid)/received (512) 237 (77)
------------- ------------- -------------
Net cash flow from operating activities 1,809 5,077 7,954
------------- ------------- -------------
Investing activities
Purchase of plant and equipment (62) (299) (530)
Development expenditure capitalised (4,241) (3,900) (8,525)
------------- ------------- -------------
Net cash used in investing activities (4,303) (4,199) (9,055)
------------- ------------- -------------
Financing activities
Receipts from loans and borrowings 512 830 1,586
Repayment of borrowings (572) (1,500) (2,557)
Payment of lease liabilities (554) (558) (976)
------------- ------------- -------------
Net cash flow used in financing activities (614) (1,228) (1,947)
------------- ------------- -------------
Effects of currency translation on
cash and cash equivalents 411 166 859
Net decrease in cash and cash equivalents (3,108) (350) (3,048)
Cash and cash equivalents at the beginning
of the period 5,543 7,732 7,732
------------- ------------- -------------
Cash and cash equivalents at the end
of the period 2,846 7,548 5,543
------------- ------------- -------------
Cash and cash equivalents at end of
year - from continuing operations 2,793 7,548 4,424
Cash and cash equivalents at end of
year - assets held for sale 53 - 1,119
Unaudited notes
1. 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 April 2021.
The interim financial information for the six months ended 31
January 2021, including comparative financial information, have
been prepared in accordance with international accounting standards
("IFRS") in conformity with the requirements of the Companies Act
2006 insofar as these apply to interim financial statements.
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 2020.
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 2020 Annual Report
The financial figures for the year ended 31 July 2020, 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 2020 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.
2. Basic and diluted earnings per ordinary share
Unaudited Unaudited Audited
6 months 6 months Year ended
to to 31 July
31 January 31 January 2020
2021 2020
GBP000 GBP000 GBP000
Loss for the period attributable to
owners of the Company (GBP000) (2,612) (1,832) (19,017)
Post tax effect of non-core net expenditure
(GBP000) 1,519 559 2,007
Post tax effect of customer related
intangible assets (GBP000) 1,343 1,727 3,571
Post tax effect of impairment of goodwill
(GBP000) - - 14,813
Post tax effect of share-based payment
charges (GBP000) 45 124 247
Post tax effect of convertible loan
note interest (GBP000) 106 55 116
Post tax effect of fair value and
foreign currency on convertible loan
note (174) - (591)
Non-recurring tax factors (GBP000) 639 437 1,650
------------- ------------- -------------
Adjusted post tax earnings (GBP000) 866 1,070 2,796
------------- ------------- -------------
Weighted average number of shares
(number '000) 95,533 95,439 95,485
Dilutive effect of share options (number
'000) 374 1,105 565
------------- ------------- -------------
Fully diluted number of shares in
issue (number '000) 95,907 96,544 96,050
------------- ------------- -------------
Basic loss per ordinary share (pence) (2.7) (1.9) (19.9)
Adjusted earnings per ordinary share
(pence) 0.9 1.1 2.9
Diluted loss per ordinary share (pence) (2.7) (1.9) (19.9)
Adjusted diluted earnings per ordinary
share (pence) 0.9 1.1 2.9
------------- ------------- -------------
3. Intangible assets
Unaudited Unaudited Unaudited Unaudited Unaudited
Customer
related Development Software
Goodwill intangibles costs for own Total
use
GBP000 GBP000 GBP000 GBP000 GBP000
Cost
At 31 July 2020 115,758 42,356 40,064 3,780 201,958
Internally developed - - 4,241 - 4,241
Foreign exchange
differences - - (971) (17) (988)
------------- ------------- ------------- ------------- -------------
At 31 January 2021 115,758 42,356 43,334 3,763 205,211
------------- ------------- ------------- ------------- -------------
Amortisation and
impairment
At 31 July 2020 41,812 13,613 24,426 3,353 83,204
Amortisation for
the period - 1,740 3,656 160 5,556
Foreign exchange
differences - - (672) (15) (687)
------------- ------------- ------------- ------------- -------------
At 31 January 2021 41,812 15,353 27,410 3,498 87,924
------------- ------------- ------------- ------------- -------------
Carrying amounts
At 31 July 2020 73,946 28,743 15,638 427 118,754
------------- ------------- ------------- ------------- -------------
At 31 January 2021 73,946 27,003 15,924 265 117,138
------------- ------------- ------------- ------------- -------------
4. Disposal Group classified as held for sale
At 31 January 2021, the Group was actively progressing the sale
of a non-core element of the Group's Business Spend Management
business.
The major classes of assets and liabilities, stated at book
value, of the disposal group classified as held for sale at 31
January
2021 are as follows:
31 January 31 July
2021 2020
GBP000 GBP000
Trade and other receivables 15,836 9,154
Cash and cash equivalents 53 1,119
------------- -------------
Total assets classified as held for
sale 15,889 10,273
------------- -------------
Trade and other payables 16,206 10,429
------------- -------------
Total liabilities classified as held
for sale 16,206 10,429
------------- -------------
Revenue relating to this element of the Group's Business Spend
Management business was GBP137,000 (FY 2020: GBP416,000) in the
period ended 31 January 2021. Revenue for the Group for the period
was GBP23,800,000 (FY 2020: GBP49,571,000). Adjusted revenue of
GBP23,663,000 (FY 2020: GBP49,155,000) refers to the revenue
excluding the GBP137,000 (FY 2020: GBP416,000) attributable to this
element of the business.
There was no gain or loss recognised on the recognition of the
disposal group as held for sale in either the current or
comparative period.
5. Alternative performance measure - Adjusted EBITDA (unaudited)
Management has presented the performance measure adjusted EBITDA
because it monitors this performance measure at a consolidated
level, and it believes that this measure is relevant to an
understanding of the Group's financial performance.
Adjusted EBITDA is calculated by adjusting profit before
taxation to exclude the impact of net finance costs, depreciation,
amortisation, share based payment charges and non-core net
expenditure. The non-core net expenditure includes significant
items of income or expenditure that are not associated with the
Groups on-going, underlying activities (together, "non-core-net
expenditure").
Adjusted EBITDA is not a defined performance measure in IFRS.
The Group's definition of adjusted EBITDA may not be comparable
with similarly titled performance measures and disclosures by other
entities.
6 months 6 months Year ended
to to 31 July
31 January 31 January 2020
2021 2020
GBP000 GBP000 GBP000
Loss before taxation (3,025) (2,178) (19,340)
Adjustments for:
Net finance costs 694 795 974
Depreciation 833 813 1,642
Amortisation 5,556 5,347 10,664
Share based payment charges 45 124 247
Impairment of goodwill and intangible
assets - - 14,813
Non-core net expenditure:
* Costs of restructuring the Group's operations - staff 1,361 456 901
* Costs of restructuring the Group's operations - other 95 190 142
- 81 -
* Expenses of acquisition related activities
* Legal and professional fees 247 83 698
* Non-core foreign exchange impacts 199 (122) 698
* Net loss related to assets held for sale 176 - 405
------------- ------------- -------------
Adjusted EBITDA 6,181 5,589 11,844
------------- ------------- -------------
R&D capitalised (4,241) (3,900) (8,525)
------------- ------------- -------------
Adjusted cash EBITDA 1,940 1,689 3,319
------------- ------------- -------------
Management has presented the performance measure adjusted EPS
(note 2) because it believes that this measure is relevant to an
understanding of the Group's financial performance. Adjusted EPS is
calculated by adjusting the loss for the period to exclude the
post-tax impact of goodwill impairment, customer related intangible
amortisation, share based payment charges, interest and foreign
currency impacts on convertible loan notes, non-core net
expenditure and non-recurring tax factors.
Adjusted EPS is not a defined performance measure in IFRS. The
Group's definition of adjusted EPS may not be comparable with
similarly titled performance measures and disclosures by other
entities.
6. Net debt
Unaudited Unaudited Audited
31 January 31 January 31 July
2021 2020 2020
GBP000 GBP000 GBP000
Non-current
Secured bank loans 40,146 40,005 41,744
US Government loan 322 - 336
Convertible notes 5,950 6,487 6,073
Lease liabilities 2,735 3,483 3,164
------------- ------------- -------------
Total non-current 49,153 49,975 51,317
------------- ------------- -------------
Current
Secured bank loans 2,447 3,192 936
US Government loan 402 - 420
Lease liabilities 1,043 982 1,008
------------- ------------- -------------
Total current 3,892 4,174 2,364
------------- ------------- -------------
Total borrowings 53,045 54,149 53,681
Less:
Cash and cash equivalents (2,846) (7,548) (5,543)
------------- ------------- -------------
Net debt 50,199 46,601 48,138
------------- ------------- -------------
Bank net debt 39,747 35,649 37,137
------------- ------------- -------------
Additional information
Reconciliation of alternative performance measures:
Reported EBITDA Adjusted Adjusted Adjusted Adjusted
EBITDA operating profit profit
profit before after
tax tax
GBP000 GBP000 GBP000 GBP000 GBP000
Loss after tax (2,796) (2,796) (2,796) (2,796) (2,796)
Add back:
Tax credit (229) (229) (229) (229) (229)
Interest charge 694 694 694 - -
Share based payment
charges 45 45 45 45 45
Depreciation 833 833 - - -
Amortisation 5,556 5,556 - - -
Non-core net expenditure
(note 5) - 2,078 2,078 2,078 2,078
Non-recurring interest
and foreign currency
impacts on convertible
loan notes - - - (43) (43)
Amortisation charged
on customer related
intangible assets - - 1,740 1,740 1,740
Non-recurring tax
factors - - - - 639
------------- ------------- ------------- ------------- -------------
Total 4,103 6,181 1,532 795 1,434
------------- ------------- ------------- ------------- -------------
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END
IR DKFBDCBKDNQB
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