LONDON (Alliance News) - Proactis Holdings PLC Monday said its pretax profit multiplied in the half-year ended January 31, 2013, as revenue was boosted by new customer deals and administrative costs declined.
Proactis posted a pretax profit of GBP321,000, up from GBP16,000 in the previous year, benefiting from a rise in revenue to GBP4.02 million from GBP3.92 million in the previous year and lower administrative costs.
Proactis signed 15 new deals during the period, flat on the previous year, and 39 upgrade deals, up from 29 upgrade deals in the previous year.
Proactis said that revenue from the new and upgrade deals shifted towards higher margin direct deals, and this alongside a reduced cost base had led to the improvement in profitability.
The business software company previously offered only perpetual deals to customers, but in 2010 decided to offer both subscription and perpetual licenses. Proactis said this meant that revenue from deals is recognised in future periods, not the current period, and forward visibility is increased.
Proactis also confirmed its commitment to mergers and acquisitions as part of its growth strategy, following its acquisition of EGS Group Ltd in February. The company is reviewing other merger and acquisition opportunities, it said.
"We are a very broad range offer in the procurement space," Chief Financial Officer Timothy Sykes explained to Alliance News. "We'd look to in fill with companies that are doing a little bit or all of what we're doing, or doing something in an area we are very light in our offer."
"Another parameter is growth and profitability," Sykes said. "It's unlikely to be looking at a technology development with a lot of development spend to come, more likely a a profitable growing business in its own right, whether that be a product business or any other type of business."
"We were very encouraged by how the market reacted to the EGS acquisition," Sykes said.
Sykes and Chief Executive Rod Jones indicated that another potential acquisition opportunity would be a company that offers services; as it is currently trialling service offerings to compliment its software.
"Clearly there are a lot of businesses out there, possibly even acquisition targets, that that only do services and not software," Jones said.
"There's a lot of services we've never offered. If you look at the market in general there's a dearth of qualified staff that are able to actually understand how to put in a procurement solution and the key elements to making that solution efficient," Jones said.
The service offerings are at an early stage, and Sykes said that they're hoped to both produce incremental revenue and bolster existing contracts. "It bolsters the contract as you have more touching points with the client across their organisation, you become more relied upon," Sykes said.
"We've got a number of them working now, everyone goes through a learning curve, we're productising them while we're in this early stage, we expect to learn a lot, productise it and then roll it out to our product base as and when we want to," Sykes said.
Shares in Proactis were trading up 9.6% at 60.00 pence Monday afternoon.
By Hana Stewart-Smith; hanassmith@alliancenews.com; @HanaSSAllNews
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