PHD.L Regulatory News (PHD)

PROACTIS Holdings PLC

Acquisition of Intelligent Capture Limited

PROACTIS Holdings PLC, the specialist Spend Control software provider, is pleased to announce that it has acquired the entire issued share capital of Intelligent Capture Limited ("IC"), one of the UK's leading providers of document scanning and optical character recognition services, to support the launch of PROACTIS' new offering, 'Activate' ("the Acquisition").

Acquisition Highlights

§ Brings business critical commercial, operational and technical expertise to support the roll-out of the Group's new milestone offering, Activate

§ Over 40 new customers to the Group with significant scope for cross-selling opportunities

§ Clients follow a subscription based business model with high retention rates

§ Annual recurring revenue to be acquired as part of the Acquisition is anticipated to be in excess of £1.25 million and total revenues of approximately £1.5 million

The consideration for the Acquisition is £1.55 million, payable in cash and shares. The net cash consideration is approximately £1.40 million as IC has approximately £0.15 million of cash at completion.

For the year ended 31 March 2014, the unaudited accounts of IC showed turnover of £1.41 million on which it made an operating profit of £0.21 million. Net assets at that date were £0.3 million.

Activate

Activate is the Group's new offering to its customer and vendor network and marks a significant milestone in the Group's strategy for growth.

The objective of the offering is to create a Global Trading Network between PROACTIS' customer base and their vendors. The Global Trading Network will encourage electronic trading, which is currently poorly adopted, creating efficiencies within the buy/sell transaction process. These efficiencies will be realised by significantly reduced costs for the Group's customers and also for their vendors, whilst also creating new commercial opportunities for both.

Activate increases transparency within the payment cycle for vendors by clearly showing where its purchase invoice is in the invoice processing cycle. Consequently, this creates an opportunity for vendor financing and PROACTIS is currently exploring financing options to accompany the Activate offering in order to capitalise on this opportunity. PROACTIS estimates that its customer base is spending approximately £60-80 billion per annum with their vendors.

IC's technology and expertise in the delivery of 'bureau type' invoice scanning and translation services will be instrumental in shaping the technological solution as well as the commercial and operational roll-out of Activate.

Information on Intelligent Capture Limited

IC is one of the UK's leading providers of document scanning and optical character recognition services, and is currently a business partner of PROACTIS. IC has more than 40 clients and generates over £1.25 million of profitable, annual recurring annual income. The blue chip customer base includes BT, Screwfix, BDO and Henderson.

Customers of both PROACTIS and IC can look forward to the delivery of broadened services and solutions to support their operations and enhance purchasing efficiency. In addition, IC's customers will now have access to truly "end-to-end" procurement solutions from the enlarged PROACTIS Group.

Further information on the Acquisition

The cash element of the consideration will be £1.25 million, payable at completion, and PROACTIS will also issue to the vendor of IC ("the Seller") 511,334 new ordinary shares of 10p each in the capital of the Company ("Ordinary Shares") to the value of £0.3 million. These Ordinary shares will be subject to lock-in conditions over a period of one year from completion. Furthermore, should the Company or finnCap Limited introduce a buyer within that lock-in period for all or some of those Ordinary Shares, at a price of 75p or more per share, the Seller will be obliged to sell those Ordinary Shares.

The Group will support the Acquisition with additional bank debt which will be provided by HSBC Bank plc by way of a Term Loan of £1.0 million repayable over four years at an interest rate of 2.65% per annum over LIBOR.

Application has been made for the 511,334 new Ordinary Shares to be admitted to trading on AIM ("Admission") and dealings are expected to commence at 8.00 a.m. on 7August 2014. The new Ordinary Shares will rank pari passu with the Company's existing Ordinary Shares.

The total number of Ordinary Shares in issue following Admission will be 38,765,993. There are 63,777 Ordinary Shares held in Treasury. Accordingly, the figure of 38,702,216 may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in the Company under the FCA's Disclosure and Transparency Rules.

Rod Jones, CEO commented:

"IC is a crucial strategic acquisition for PROACTIS, accelerating and de-risking the execution of Activate. We have developed Activate through listening to the needs of our customers - there will be obvious cost benefits to them and these benefits will be replicated for their vendors. In addition, IC consolidates the Group's existing excellent customer base and has encouraging levels of recurring revenue and profitability.

"We have worked successfully with IC for some time, partnering in several key accounts. Its expertise in this area is exceptional and we look forward to working with the team to drive PROACTIS' strategy forward, and to deliver returns for shareholders."

Enquiries:

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 used in approximately 500 organisations around the world from the commercial, public and not-for-profit sectors.

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.