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Proactis Holdings PLC

Trading Update & Notice of Results

Proactis Holdings PLC, the business spend management solution provider, provides an update on trading for the financial year ended 31 July 2019.

Trading Update

The Group's performance was at the Board's expected levels following the completion of the operational review announced earlier in the year, and it is now focused on delivering the strategy set out at that time. Significant progress has been made and the delivery of the associated benefits are on target. The Board will provide further detail of this progress as part of its final results.

The Board announces that it expects to report an increase in revenue1 to £54.1m (2018: £52.2m) with Adjusted EBITDA1 at £15.0m (2018: £17.3m). Net bank debt2 as at 31 July 2019 has reduced following the generation of £5.1m of adjusted net free cash flow in the second half of the year and is expected to be £36.5m (31 January 2019: £39.3m) and remains fully serviced and within covenants. Adjusted net free cash flow is stated after adding back a net £1.9m of non-recurring cash flows, which relate principally to the non-core costs of restructuring the Group's corporate structure, closure of certain offices and the associated employment costs.

Deal intake for the year was solid and the Group secured a total contract value ("TCV") of £11.3m (2018: £12.1m) from 60 new names (2018: 64) and 127 upsell deals (2018: 120). The Board expects to see an increase in both the number of new name and upsell deals, along with the associated TCV, as benefits of moving toward a consistent go to market strategy for the Group's US, French and German teams are realised.

Following the acquisition of Esize Holdings BV ("Esize") on 6 August 2018, the Board is pleased that the post-acquisition contribution of Esize is in line with expectations with revenue1 of £5.3m and Adjusted EBITDA1 of £1.9m. This level of performance is sufficient to crystallise the full payment of Deferred Consideration as described within the announcement on 7 August 2018 and that is fully provided for within the Group's balance sheet.

Accelerated Payment Facility ("APF")

The Board was delighted to secure a specific committed facility provided by HSBC UK of £20m during the period to support the delivery of the Group's APF. The APF will enable the Group to fund early payments against approved invoices for suppliers. The Board currently anticipates that the product will be deployed in a live environment with the Group's own suppliers during October 2019 before being offered to a number of early adopters.

Formal Sales Process Update ("FSP")

The Board has received a number of expressions of interest following the Company's announcement of the FSP on 29 July 2019 and intends to update shareholders following a careful review of these. As previously expressed, at this early stage, the Board 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 Final Results for the financial year ending 31 July 2019 on 31 October 2019, but this date is subject to change in light of any requirements arising from the FSP described above.

Recognition by Gartner

The Group has again been identified by Gartner Inc. in its Magic Quadrant as one of the top 13 global software vendors for Procure-to-Pay suites, supporting the Group's mission to provide best-in-class spend management solutions. The key criteria for evaluating this recognition include: completeness of vision: market understanding, marketing and sales strategy, product strategy, business model, vertical/industry strategy, innovation and geographic strategy; and ability to execute: product/service capabilities, overall viability, sales execution/pricing, and market responsiveness/track record, marketing execution, operations and customer experience.

Tim Sykes, CEO commented:

"We are encouraged by the Group's performance and especially the level of cash generation in the second half of the year. This has reduced net debt substantially and we expect this level of cash flow performance to continue as the Group delivers on the benefits identified during the operational review.

"We have also made significant changes to our management team and processes - the combination of this, along with our current financial performance, offers a stable platform on which the Group can build in order to exploit the considerable opportunities open to it.

"With these opportunities fully determined following our operational review, our teams are deploying their go-to-market and product plans to deliver them on a sustainable and long-term basis. We are excited about the opportunity to replicate our strong performance in the UK and the Netherlands across all of the Group's territories.

"It is extremely pleasing to be able to provide such a positive update on the progress of our APF which is now close to market.

"We approach 2020 with confidence and energy and I am confident that we will be able to demonstrate substantial progress in our business."

1 Revenue and Adjusted EBITDA are unaudited and Adjusted EBITDA is stated before the Company's assessment of non-recurring administrative expenses, amortization of intangible assets and share based payments.

2 Net bank debt is unaudited and is calculated excluding the $3.75 million convertible unsecured loan notes due 2022 and convertible at £1.65 per share arising from the Perfect Commerce acquisition and issued on 4 August 2017, and the €3 million convertible unsecured loan notes due 2023 and convertible at £1.75 per share arising from the esize acquisition and issued on 8 August 2018.

This announcement contains inside information for the purposes of article 7 of Regulation 596/2014

Financial expectations noted above are unaudited and are subject to the completion of year-end financial close and audit processes.

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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 1,000 buying organisations around the world from the commercial, public and not-for-profit sectors.

Proactis has been quoted on the AIM market of the London Stock Exchange since June 2006.