29 Sep 2010 07:00
PROACTIS Holdings PLC
Preliminary Results for the year to 31 July 2010
PROACTIS Holdings PLC ("PROACTIS", the "Group" or the "Company"), the specialist Spend Control software provider, announces its preliminary results for the year to 31 July 2010.
Highlights:
Ø Revenue growth of 5.4% to £7.4m (2009: £7.0m) and there is a healthy pipeline of opportunities
Ø 38 new client wins in the year (2009: 44) and 85 upgrade deals from existing clients (2009: 52)
Ø Recurring support revenues increased to £3.7m (2009: £3.1m)
Ø Underlying operating profit growth of 18.3% to £1.3m (2009: £1.1m)
Ø Reported operating profit growth of 15.6% to £1.1m (2009: £0.9m)
Ø Cash generated before repayments of bank debt and dividends improved to £1.4m (2009: £1.2m)
Ø Cash at 31 July of £3.5m (2009: £2.4m), the Group is debt free
Ø Earnings per share was 3.0p (2009: 3.2p)
Ø Proposed dividend increased by 10% to 1.1p (2009: 1.0p) per share
Rod Jones, CEO commented:
"PROACTIS performed well from many perspectives: achieving solid revenue growth of 5.4% with underlying profitability of £1.3m (an increase of 18.3% against 2009). Our balance sheet is strong, with excellent cash conversion again and our product remains highly competitive. Our pipeline has grown significantly this year and is currently very strong. We believe that this platform positions PROACTIS very well for the forthcoming year and that we will see continued growth in our business."
The Company's Preliminary Results are available on its website www.proactis.com
- ends -
Enquiries:
PROACTIS 019 3754 5070
Rod Jones, Chief Executive Officer
Tim Sykes, Chief Financial Officer
Weber Shandwick Financial 020 7067 0700
Nick Oborne / John Moriarty
Daniel Stewart & Company plc 020 7776 6550
Paul Shackleton / Emma Earl
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 over 300 organisations in the UK from the commercial, public and not-for-profit sectors.
Chairman's and Chief Executive Officer's Report
Business overview
We are pleased to report that the Group has achieved record revenues of £7.4m for the year, up 5.4% against £7.0m for 2009 and delivered an operating profit before non-recurring administrative expenses, customer related intangible amortisation and share based payment charges of £1.3m (2009: £1.1m). Our cautious approach to expenditure means that the Group is in a very strong position going forward. The statutory operating profit was £1.1m (2009: £0.9m).
These results reflect a tremendous effort, particularly when considered within the general economic environment, uncertain political climate and other factors that have adversely affected commercial and public sector markets. Our solutions continue to be rated very highly and are fully deployable in several different modes, including "Cloud" computing.
Strategy
Our strategy and focus remain broadly the same, although we have added different methods of engagement with new prospects and increased our services offerings to include client Spend Analysis and Supplier Engagement. Both of these initiatives provide clear return on investment evidence to clients and prospects alike before they buy our software thereby also positioning PROACTIS as a spend control consultancy.
Key achievements during this financial year include:
Increasing our customer base - we achieved some 38 new deals in the year; with additional revenue coming from a further 85 upgrades for existing clients.
Accredited Channel Partner re-invigoration - our streamlined reseller channel which accounted for some 58% of licence revenues, performed exceptionally in all geographies and worked harmoniously with our direct channel to achieve good results for our clients.
Software Products - the latest versions of software have been very well received and our solutions can now be deployed as "Cloud Computing" or any derivation of Cloud. We have signed-up our first three clients on multi-year agreements with hosting and have a pipeline that is building on a month by month basis. The traditional business of "behind the firewall" remains very strong and our Portal software is providing good solid success in its first full year of trading, contributing around 22% of the Company's licence revenue from both commercial and public sector clients.
Markets
All of our chosen markets have held up during the period, with pipeline opportunities regularly coming through the various markets and geographies that we operate in.
Public sector - was responsible for 25% of our new licence revenue. We added 8 new name accounts in this sector, including a new collaborative portal for 7 regional councils, and this takes our client base to some 113 accounts in total (2009: 105).
Not for Profit and Charities sector- was responsible for 17% of new licence revenues. We added 6 new name accounts in this sector taking the total to 49 (2009: 43).
Commercial Services sector- was our largest sector, generating some 58% of new licence revenue and adding 24 new clients to our list taking the total to 133 (2009: 109).
Client Base - our clients have been very active during the period. 85 clients purchased additional software or extra users in the period, demonstrating in the most positive of fashions that the software is providing real benefits.
Routes to market
We continue to deliver our products through a mixture of direct and indirect selling organisations. We have worked hard to promote a tighter working relationship and to provide a greater focus and are seeing the evidence from improved results. We send our thanks to all our partners in the indirect channel and are looking forward to even more success in 2011.
Products and product development
We are in the best position possible. Our product suite is complete and very highly rated. It is deployable in the most appropriate way for our client's circumstances, and has testimonials from many clients as to its suitability. We will continue to invest at the same levels, approximately 10% of our revenue, on further improving and developing our products (2009: 10%), to ensure that we maintain our competitive advantage.
Prospects
PROACTIS performed well from many perspectives: achieving solid revenue growth of 5.4% with underlying profitability of £1.3m (an increase of 18.3% against 2009). Our balance sheet is strong, with excellent cash conversion again and our product remains highly competitive. Our pipeline has grown significantly this year and is currently very strong. We believe that this platform positions PROACTIS very well for the forthcoming year and that we will see continued growth in our business.
Alan Aubrey Rod Jones
Chairman Chief Executive Officer
28 September 2010
Chief Financial Officer's Report
Results for the year and key performance indicators
Revenues increased by 5.4% to £7.4m from £7.0m and gross profit delivered increased to £5.2m from £5.0m. Gross margin dipped slightly at 70.5% from 71.3% as our revenue mix shifted back toward the indirect channel licence revenues.
Operating profit increased by 15.6% to £1,076,000 against £931,000 in the prior year with underlying operating profit increasing by 18.3% to £1,293,000 against £1,093,000 last time.
The Group has continued to invest in product and the cash cost of internal software development was £0.9m (2009: £0.6m) of which £0.6m was capitalised (2009: £0.4m). The income statement includes a total charge for software development of £0.6m (2009: £0.5m).
Taxation
The Group has utilised substantially all of its losses and, accordingly, has recognised a current tax charge for the year of £200,000 and expects to pay tax at the full rate going forward. There was a small net tax credit of £36,000 recognised in the income statement relating principally to the change in rate of deferred taxation provisions.
Earnings per share
Basic earnings per share fell to 3.0p (2009: 3.2p) with the impact of taxation following the utilisation of losses referred to above more than offsetting the increased profitability.
Dividend
The Directors are keen to ensure that shareholders benefit from the trading performance of the group through a dividend policy. Subject to approval at the Annual General Meeting of Shareholders to be held on 20 December 2010, a final dividend of 1.1p per Ordinary share is proposed and will be paid on or before 28 January 2011 to shareholders on the register at 7 January 2011. The payment of future dividends is subject to availability of distributable reserves whilst maintaining an appropriate level of dividend cover and having regard to the need to retain sufficient funds to finance the development of the Group's activities.
Cash flow
The Group has reported a net cash inflow from operating activities of £2.1m (2009: £1.6m) which is ahead of the reported operating profit of the Group of £1.0m (2009: £0.9m) following an excellent performance in working capital management throughout the year. The Group increased net cash by £1.1m to £3.5m (2009: £2.4m).
Treasury
The Group continues to manage the cash position in a manner designed to maximise interest income, while at the same time minimising any risk to these funds. Surplus cash funds are deposited with commercial banks that meet credit criteria approved by the Board, for periods between one and six months.
Key risks
Although the directors seek to minimise the impact of risk factors, the Group is subject to a number of risks which are as follows:
- Loss of key personnel: Loss of key management could have adverse consequences for the Group. While the Group has entered into service agreements with each of its executive directors, the retention of their services or those of other key personnel cannot be guaranteed.
- Ability to sign up Accredited Channel Partners: The Group is reliant in part on generating its revenues through agreements with Accredited Channel Partners. While the Group currently has agreements with a number of Accredited Channel Partners, there is no guarantee that further agreements will be reached with appropriate Accredited Channel Partners nor that the existing agreements will be renewed. This could have an adverse impact on the Group's business.
- Government policy: The Group's strategy is dependent in part on generating revenue from public sector bodies. Any change in the Government's policy of encouraging public sector bodies to develop their e-procurement strategies, including making funds available for such a strategy, could have an adverse impact on the Group's ability to deliver its business strategy.
- Competition: Competitors may be able to develop products and services that are more attractive to customers than the Group's products and services. In order to be successful in the future, the Group will need to continue to finance research and development activities and continue to respond promptly and effectively to the challenges of technological change in the software industry and competitors' innovations. An inability to devote sufficient resources to research and development activities in order to achieve this may lead to a material adverse effect on the Group's business.
Tim Sykes
Chief Financial Officer
28 September 2010
Consolidated Income Statement for the year ended 31 July 2010
|
|
| 2010 | 2009 |
|
| Notes | £000 | £000 |
| Revenue |
| 7,382 | 7,001 |
|
|
|
|
|
| Cost of sales |
| (2,177) | (2,006) |
|
|
| ------------- | ------------- |
| Gross profit |
| 5,205 | 4,995 |
|
|
|
|
|
| Administrative costs |
| (4,129) | (4,064) |
|
|
| ------------- | ------------- |
| Operating profit before non-recurring administrative expenses, amortisation of customer related intangible assets and share based payment charges |
| 1,293 | 1,093 |
| Non-recurring administrative expenses | 3 | (69) | - |
| Amortisation of customer related intangible assets |
| (120) | (120) |
| Share based payment charges |
| (28) | (42) |
|
|
| ------------- | ------------- |
| Operating profit |
| 1,076 | 931 |
|
|
|
|
|
| Finance income |
| 8 | 33 |
| Finance expenses |
| (3) | (14) |
|
|
| ------------- | ------------- |
| Profit before taxation |
| 1,081 | 950 |
|
|
|
|
|
| Taxation |
| (164) | 46 |
|
|
| ------------- | ------------- |
| Profit for the year |
| 917 | 996 |
|
|
| ------------- | ------------- |
|
|
|
|
|
| Earnings per ordinary share : |
|
|
|
| - Basic | 4 | 3.0p | 3.2p |
|
|
| ------------- | ------------- |
| - Diluted | 4 | 2.9p | 3.2p |
|
|
| ------------- | ------------ |
Consolidated Statement of Changes in Equity for the year ended 31 July 2010
|
| Share capital | Share premium | Merger reserve | Capital reserve | Foreign exchange reserve | Retained earnings |
|
| £000 | £000 | £000 | £000 | £000 | £000 |
|
|
|
|
|
|
|
|
| At 1 August 2008 | 3,077 | 3,051 | 556 | 449 | - | (1,706) |
| Shares issued pursuant to exercising of options under employee share option schemes | 5 | - | - | - | - | (2) |
| Arising during the period | - | - | - | - | (28) | - |
| Result for the period | - | - | - | - | - | 996 |
| Share based payment charges | - | - | - | - | - | 42 |
|
| ------------- | ------------- | ------------- | ------------- | ------------- | ------------- |
| At 31 July 2009 | 3,082 | 3,051 | 556 | 449 | (28) | (670) |
| Dividend payment | - | - | - | - | - | (311) |
| Shares issued pursuant to exercising of options under employee share option schemes | 25 | - | - | - | - | (19) |
| Buy back of own shares | - | - | - | - | - | (25) |
| Arising during the period | - | - | - | - | 38 | - |
| Result for the period | - | - | - | - | - | 917 |
| Share based payment charges | - | - | - | - | - | 28 |
|
| ------------- | ------------- | ------------- | ------------- | ------------- | ------------- |
| At 31 July 2010 | 3,107 | 3,051 | 556 | 449 | 10 | (80) |
|
| ------------- | ------------- | ------------- | ------------- | ------------- | ------------- |
Consolidated Balance Sheet as at 31 July 2010
|
|
| 2010 | 2009 |
|
|
| £000 | £000 |
| Non-current assets |
|
|
|
| Property, plant & equipment |
| 107 | 108 |
| Intangible assets |
| 6,466 | 6,338 |
|
|
| ------------- | ------------- |
|
|
| 6,573 | 6,446 |
|
|
| ------------- | ------------- |
| Current assets |
|
|
|
| Trade and other receivables |
| 1,271 | 1,506 |
| Cash and cash equivalents |
| 3,477 | 2,626 |
|
|
| ------------- | ------------- |
|
|
| 4,748 | 4,132 |
|
|
| ------------- | ------------- |
| Total assets |
| 11,321 | 10,578 |
|
|
| ------------- | ------------- |
| Current liabilities |
|
|
|
| Bank loans and borrowings |
| - | 167 |
| Trade and other payables |
| 724 | 938 |
| Deferred income |
| 2,003 | 1,611 |
| Income taxes |
| 216 | 18 |
|
|
| ------------- | ------------- |
|
|
| 2,943 | 2,734 |
|
|
| ------------- | ------------- |
| Non-current liabilities |
|
|
|
| Bank loans and borrowings |
| - | 83 |
| Deferred tax liabilities |
| 1,285 | 1,321 |
|
|
| ------------- | ------------- |
|
|
| 1,285 | 1,404 |
|
|
| ------------- | ------------- |
| Total liabilities |
| 4,228 | 4,138 |
|
|
| ------------- | ------------- |
| Net assets |
| 7,093 | 6,440 |
|
|
| ------------- | ------------- |
| Equity attributable to equity holders of the Company |
|
|
|
| Called up share capital |
| 3,107 | 3,082 |
| Share premium account |
| 3,051 | 3,051 |
| Merger reserve |
| 556 | 556 |
| Capital reserve |
| 449 | 449 |
| Foreign exchange reserve |
| 10 | (28) |
| Retained deficit |
| (80) | (670) |
|
|
| ------------- | ------------- |
| Total equity |
| 7,093 | 6,440 |
|
|
| ------------- | --- --------- |
Consolidated Cash Flow Statement for the year ended 31 July 2010
|
|
| 2010 | 2009 |
|
|
| £000 | £000 |
| Operating activities |
|
|
|
| Profit for the year |
| 917 | 996 |
| Amortisation of intangible assets |
| 518 | 449 |
| Depreciation |
| 54 | 60 |
| Net finance income |
| (5) | (19) |
| Income tax expense / (credit) |
| 164 | (46) |
| Share based payment charges |
| 28 | 42 |
|
|
| ------------- | ------------- |
| Operating cash flow before changes in working capital |
| 1,676 | 1,482 |
| Movement in trade and other receivables |
| 235 | 320 |
| Movement in trade and other payables |
| 216 | (184) |
|
|
| ------------- | ------------- |
| Cash flow from operations |
| 2,127 | 1,618 |
| Finance income |
| 8 | 33 |
| Finance expense |
| (3) | (14) |
| Income tax (paid) / received |
| (2) | 12 |
|
|
| ------------- | ------------- |
| Net cash flow from operating activities |
| 2,130 | 1,649 |
|
|
| ------------- | ------------- |
| Investing activities |
|
|
|
| Purchase of plant and equipment |
| (53) | (35) |
| Development expenditure capitalised |
| (646) | (410) |
|
|
| ------------- | ------------- |
| Net cash flow from investing activities |
| (699) | (445) |
|
|
| ------------- | ------------- |
| Financing activities |
|
|
|
| Payment of dividend |
| (311) | - |
| Proceeds from issue of shares |
| 6 | 3 |
| Purchase of own shares |
| (25) | - |
| Repayment of bank borrowing |
| (250) | (168) |
|
|
| ------------- | ------------- |
| Net cash flow from financing activities |
| (580) | (165) |
|
|
| ------------- | ------------- |
| Net increase in cash and cash equivalents |
| 851 | 1,039 |
| Cash and cash equivalents at the beginning of the year |
| 2,626 | 1,587 |
|
|
| ------------- | ------------- |
| Cash and cash equivalents at the end of the year |
| 3,477 | 2,626 |
|
|
| ------------- | ------------- |
Notes
1. These preliminary results have been prepared on the basis of the accounting policies which are to be set out in PROACTIS Holdings PLC's annual report and financial statements for the year ended 31 July 2010.
The consolidated financial statements of the Group for the year ended 31 July 2010 be prepared in accordance with International Financial Reporting Standards ("IFRSs") as adopted for use in the EU ("adopted IFRSs") and applicable law.
The financial information set out above does not constitute the company's statutory financial statements for the years ended 31 July 2010 or 2009 but is derived from those financial statements. Statutory financial statements for 2009 have been delivered to the Registrar of Companies and distributed to shareholders, and those for 2010 will be respectively delivered and distributed on or before 29 November 2010. The auditors have reported on those financial statements and their reports were:
(i) unqualified;
(ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report; and
(iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006 in respect of the financial statements for 2009 or 2010.
2. Basis of preparation
The Group financial statements have been prepared and approved by the directors in accordance with adopted IFRSs.
The preparation of financial statements in conformity with IFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.
3. Non-recurring administrative expenses
|
| 2010 | 2009 |
|
| £000 | £000 |
| Non-recurring administrative expenses from Board restructure | 69 | - |
|
| ------------- | ------------- |
Non-recurring administrative expenses relate principally to termination costs.
4. Basic and diluted loss per ordinary share
The calculation of earnings per ordinary share is based on the profit or loss for the period and the weighted average number of equity voting shares in issue as follows.
|
| 2010 | 2009 |
|
|
|
|
| Earnings (£000) | 917 | 996 |
|
| ------------- | ------------- |
| Weighted average number of shares (number '000) | 31,014 | 30,718 |
| Fully diluted number of shares (number '000) | 32,013 | 31,382 |
|
| ------------- | ------------- |
| Basic earnings per ordinary share (pence) | 3.0p | 3.2p |
| Diluted earnings per ordinary share (pence) | 2.9p | 3.2p |
|
| ------------- | ------------- |