7 Apr 2009 07:00
7 April 2009
PROACTIS Holdings PLC
Interim results for the six months ended 31 January 2009
PROACTIS Holdings PLC ("PROACTIS" or the "Company"), the software company that helps businesses cut indirect costs and manage expenditure, today announces its interim results for the six month period to 31 January 2009. The Interim Results are available on the Company's website www.proactis.com.
KEY POINTS
Operating profit showed strong improvement to £362,000 (2008: loss £438,000)
Revenues increased by 6.7% year on year to £3.2m (2008: £3.0m)
Good organic growth in contract wins - 19 new deals
Strong customer loyalty with 24 upgrade deals from existing customers
Sales to the commercial markets via our accredited channel partner network remain buoyant
Visible consultancy and recurring support revenues have increased to £2.1m (2008: £1.9m)
Direct and in-direct revenues in-line with plan
Expenses reduced by 24% year on year to £1.9m (2008: £2.5m)
The market opportunity remains very attractive for our traditional products and our newer products are building in momentum
Overseas territories are producing good results with revenues at approximately 22% of total
Rod Jones, Chief Executive Officer, commented:
"Our progress has been excellent in all aspects of our business, our restructuring programme has worked and our profitability has returned to an acceptable level; this is a highly credible result when considering the general economic environment and uncertainties at this time.
We remain watchful of any sign of a softening in our markets and will react accordingly to it but with good visibility on our consultancy and support revenues and a market that should be open to our proposition for new business, we have every reason to be positive about the near term opportunity."
Enquiries:
| PROACTIS Holdings PLC | Tel: 01937 545 070 |
| Rod Jones, Chief Executive Officer | |
| Weber Shandwick Financial | Tel: 020 7067 0700 |
| Nick Oborne/John Moriarty | |
| Daniel Stewart & Company plc | Tel: 020 7776 6550 |
| Lindsay Mair/Charlotte Stranner |
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 300 organisations around the world 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
We report our interim results for the six month period to 31 January 2009.
The period has been one of continued good progress across the business. Our indirect approach to commercial markets has proven successful, and our geographic coverage has now extended to Africa and Asia Pacific regions where we have partnerships, revenues, and business plans in place. Our consultancy and recurring support revenues have grown again and our visibility of forward revenues for consultancy is stronger than ever. We have enjoyed a solid six months in the Public Sector and have some good prospects for the second half.
Our cost restructuring has worked well and we have a sound business model for controlled growth.
Despite the turmoil and uncertainty in global markets we have demonstrated solid progress and the core elements of our strategy remain. These are:
Revenue growth
Our Accredited channel partnerships have enabled us to move further into the global commercial marketplace. We now have some 28 partners and clients in most parts of the world, giving us access to many more opportunities and opening up global deals based from the UK and Europe. Over 22% of new business has come from non UK deals.
The UK public sector has generally been approached through our direct sales force, but we also now have a partnership with Unit 4 Agresso NV (Unit 4 Agresso as listed on Euronext Amsterdam). Agresso is a leading Financial Management software author and a leading supplier to the Public Sector. Agresso will be selling our solution in conjunction with their own. We will continue our direct sales effort in this sector of the market.
Low cost model
Our Commercial, Off the Shelf ("COTS") software model is well proven, minimising engineering, QA, support and implementation costs and allowing us to educate our Accredited Channel Partners in order to make them self-sufficient, whilst ensuring that our clients use up to date software releases and get value from their maintenance fees.
Headcount and overhead base are reduced and in line with revenues.
Financial overview
Revenues increased to £3.2m from £3.0m for the same period last year.
The profit before tax was £377,000 (2008: loss £417,000).
Revenues have grown by 6.7% with solid performances from both direct and indirect licences, consultancy and recurring maintenance revenues. Our direct revenues into the public sector have improved and our pipeline looks healthy. Gross margin is ahead of last year at 72% (2008: 69%) and our overhead base has improved, reducing to £1.9m (2008 £2.5m).
Cash at bank is £1.6m gross (2008: £1.1m) and our term loan has reduced to £0.3m (2008: £0.5m).
Outlook
Our progress has been excellent in all aspects of the business, our restructuring programme has worked and our profitability has returned to an acceptable level; this is a highly credible result when considering the general economic environment and uncertainties at this time.
The turnaround in performance against the corresponding period last year has been driven by a re-focusing of our sales and marketing effort. We have concentrated our effort on driving sales of mid-market purchase-to-pay projects through an increasing network of dedicated resellers. In addition we have developed collaborative relationships with a number of third party influencers and specialist consulting firms to deliver larger, more complex, multi-national or broad-scope eProcurement projects in the public sector. This strategy has led to increased revenues and efficiencies in our sales and marketing costs.
We remain watchful of any sign of a softening in our markets and will react accordingly to it but with good visibility on our consultancy and support revenues and a market that should be open to our proposition for new business, we have every reason to be positive about the near term opportunity.
Alan Aubrey Rod Jones
Chairman Chief Executive Officer
7 April 2008
Consolidated income statement
for the six months ended 31 January 2009
| Unaudited | Unaudited | Audited | ||
| 6 months to 31 Jan 2009 | 6 months to 31 Jan 2008 | Year ended 31 July 2008 | ||
| £000 | £000 | £000 | ||
| Revenue | ||||
| Continuing | 3,150 | 2,975 | 6,553 | |
| Cost of sales | (881) | (910) | (2,079) | |
| ------------- | ------------- | ------------- | ||
| Gross profit | 2,269 | 2,065 | 4,474 | |
| Administrative costs | (1,907) | (2,503) | (5,030) | |
| ------------- | ------------- | ------------- | ||
| Operating profit / (loss) before non recurring items and share based payment charges | 371 | (216) | 841 | |
| Non-recurring administrative costs | - | - | (928) | |
| One-time recurring administrative costs | - | (200) | (447) | |
| Share based payment charges | (9) | (22) | (22) | |
| ------------- | ------------- | ------------- | ||
| Operating profit / (loss) | 362 | (438) | (556) | |
| Finance income | 27 | 23 | 47 | |
| Finance expenses | (12) | (2) | (19) | |
| ------------- | ------------- | ------------- | ||
| Profit / (loss) before taxation | 377 | (417) | (528) | |
| Taxation | 30 | - | 100 | |
| ------------- | ------------- | ------------- | ||
| Profit / (loss) for the period | 407 | (417) | (428) | |
| ------------- | ------------- | ------------- | ||
| Earnings per ordinary share : | ||||
| - Basic | 1.3p | (1.3p) | (1.4p) | |
| ------------- | ------------- | ------------- | ||
| - Diluted | 1.2p | (1.3p) | (1.4p) | |
| ------------- | ------------- | ------------- |
Consolidated statement of changes in equity
as at 31 January 2009
| Unaudited | Unaudited | Unaudited | Unaudited | Unaudited | Unaudited | |
| Share capital | Share premium | Merger reserve | Capital reserve | Foreign exchange reserve | Retained earnings | |
| £000 | £000 | £000 | £000 | £000 | £000 | |
| At 1 August 2007 | 3,018 | 2,735 | 556 | - | - | (1,300) |
| Shares issued as deferred consideration for acquisition | 59 | 316 | - | - | - | - |
| Result for the period | - | - | - | - | - | (417) |
| Share based payment charges | - | - | - | - | - | 22 |
| ------------- | ------------- | ------------- | ------------- | ------------- | ------------- | |
| At 31 January 2008 | 3,077 | 3,051 | 556 | - | - | (1,695) |
| Result for the period | - | - | - | - | - | (11) |
| Share options issued as consideration for business combinations | - | - | - | 449 | - | - |
| ------------- | ------------- | ------------- | ------------- | ------------- | ------------- | |
| At 1 August 2008 | 3,077 | 3,051 | 556 | 449 | - | (1,706) |
| Result for the period | - | - | - | - | - | 407 |
| Arising on translation of US assets | - | - | - | - | (16) | - |
| Issue of shares | 5 | - | - | - | - | (3) |
| Share based payment charges | - | - | - | - | - | 9 |
| ------------- | ------------- | ------------- | ------------- | ------------- | ------------- | |
| At 31 January 2009 | 3,082 | 3,051 | 556 | 449 | (16) | (1,293) |
| ------------- | ------------- | ------------- | ------------- | ------------- | ------------- |
Consolidated balance sheet
as at 31 January 2009
| Unaudited | Unaudited | Audited | ||
| As at 31 Jan 2009 | As at 31 Jan 2008 | As at 31 July 2008 | ||
| £000 | £000 | £000 | ||
| Non-current assets | ||||
| Property, plant & equipment | 119 | 153 | 133 | |
| Intangible assets | 6,360 | 6,364 | 6,377 | |
| ------------- | ------------- | ------------- | ||
| 6,479 | 6,517 | 6,510 | ||
| ------------- | ------------- | ------------- | ||
| Current assets | ||||
| Trade and other receivables | 1,664 | 2,019 | 1,866 | |
| Cash and cash equivalents | 1,612 | 1,081 | 1,587 | |
| ------------- | ------------- | ------------- | ||
| 3,276 | 3,100 | 3,453 | ||
| ------------- | ------------- | ------------- | ||
| Total assets | 9,755 | 9,617 | 9,963 | |
| ------------- | ------------- | ------------- | ||
| Current liabilities | ||||
| Bank loans | (167) | (167) | (167) | |
| Trade and other payables | (554) | (1,450) | (1,225) | |
| Deferred income | (1,701) | (1,176) | (1,478) | |
| Corporation tax liabilities | - | (55) | (60) | |
| ------------- | ------------- | ------------- | ||
| (2,422) | (2,848) | (2,930) | ||
| ------------- | ------------- | ------------- | ||
| Non-current liabilities | ||||
| Bank loans | (166) | (333) | (251) | |
| Deferred tax liabilities | (1,338) | (1,447) | (1,355) | |
| ------------- | ------------- | ------------- | ||
| (1,504) | (1,780) | (1,606) | ||
| ------------- | ------------- | ------------- | ||
| Total liabilities | (3,926) | (4,628) | (4,536) | |
| ------------- | ------------- | ------------- | ||
| Net assets | 5,829 | 4,989 | 5,427 | |
| ------------- | ------------- | ------------- | ||
| Equity attributable to equity holders of the Company | ||||
| Called up share capital | 3,082 | 3,077 | 3,077 | |
| Share premium account | 3,051 | 3,051 | 3,051 | |
| Merger reserve | 556 | 556 | 556 | |
| Capital reserve | 449 | - | 449 | |
| Foreign exchange reserve | (16) | - | - | |
| Retained earnings | (1,293) | (1,695) | (1,706) | |
| ------------- | ------------- | ------------- | ||
| Total equity | 5,829 | 4,989 | 5,427 | |
| ------------- | ------------- | ------------- |
Consolidated cash flow statement
for the six months ended 31 January 2009
| Unaudited | Unaudited | Audited | ||
| 6 months to 31 Jan 2009 | 6 months to 31 Jan 2008 | Year ended 31 July 2008 | ||
| £000 | £000 | £000 | ||
| Operating activities | ||||
| Profit / (loss) for the period | 407 | (417) | (428) | |
| Amortisation of intangible assets | 225 | 65 | 257 | |
| Depreciation | 31 | 41 | 60 | |
| Net finance income | (15) | (21) | (28) | |
| Income tax credit | (30) | - | (100) | |
| Share based payment charges | 9 | 22 | 22 | |
| ------------- | ------------- | ------------- | ||
| Operating cash flow before changes in working capital | 627 | (310) | (217) | |
| Movement in trade and other receivables | 202 | 88 | 674 | |
| Movement in trade and other payables | (468) | (224) | 346 | |
| ------------- | ------------- | ------------- | ||
| Operating cash flow from operations | 361 | (446) | 803 | |
| Interest received | 27 | 23 | 47 | |
| Interest paid | (12) | (2) | (18) | |
| Income tax paid | (46) | (62) | (90) | |
| ------------- | ------------- | ------------- | ||
| Net cash flow from operating activities | 330 | (487) | 742 | |
| ------------- | ------------- | ------------- | ||
| Investing activities | ||||
| Purchase of plant and equipment | (17) | (44) | (53) | |
| Development expenditure capitalised | (207) | (155) | (446) | |
| Acquisition of subsidiaries | - | - | (341) | |
| ------------- | ------------- | ------------- | ||
| Net cash flow from investing activities | (224) | (199) | (840) | |
| ------------- | ------------- | ------------- | ||
| Financing activities | ||||
| Proceeds from issue of new shares | 2 | - | - | |
| Proceeds from new bank borrowing | - | 500 | 500 | |
| Repayment of bank borrowing | (83) | - | (82) | |
| ------------- | ------------- | ------------- | ||
| Net cash flow from financing activities | (81) | 500 | 418 | |
| ------------- | ------------- | ------------- | ||
| Net decrease in cash and cash equivalents | 25 | (186) | 320 | |
| Cash and cash equivalents at the beginning of the period | 1,587 | 1,267 | 1,267 | |
| ------------- | ------------- | ------------- | ||
| Cash and cash equivalents at the end of the period | 1,612 | 1,081 | 1,587 | |
| ------------- | ------------- | ------------- |
Notes to the half yearly financial information
Basis of preparation
This consolidated half-yearly financial information for the half year ended 31 January 2009 has been prepared in accordance with IAS 34, 'Interim financial reporting' as adopted by the European Union. The half-yearly consolidated financial report should be read in conjunction with the annual financial statements for the year ended 31 July 2008, which have been prepared in accordance with IFRS as adopted by the European Union.
The financial information contained in the interim report does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. Statutory accounts for the year ended 31 July 2008 have been filed with the Registrar of Companies. The auditors' report on those accounts was unqualified and did not contain a statement made under Section 237(2) or Section 237(3) of the Companies Act 1985.
There were no recognised gains or losses in the six month period ended 31 January 2009 other than the profit for the period and therefore no statement of recognised income and expenses is presented.
The Board confirms that to the best of its knowledge :
The condensed set of financial statements has been prepared in accordance with IAS34 'Interim Financial Reporting' as adopted by the EU;
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.
The interim report was approved by the Board of Directors on 7 April 2009.
Accounting policies
The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 July 2008, as described in those annual financial statements.