27 Mar 2013 07:00
Date: | 27 March 2013 |
On behalf of: | PROACTIS Holdings PLC ('PROACTIS', the 'Company' or the 'Group') |
Embargoed until: | 0700hrs |
PROACTIS Holdings PLC
Interim results for the six months ended 31 January 2013
PROACTIS Holdings PLC, a global Spend Control and eProcurement solution provider, today issues its interim results for the six month period ended 31 January 2013.
Highlights
w Reported revenue increased by 7% to £3.9m (31 January 2012: £3.7m)
w Total contracted, deferred multi-year revenue increased to £5.9m (31 July 2012: £5.7m)
w Underlying operating profit £143,000 (31 January 2012: £196,000)
w Strong balance sheet with cash balances of £2.0m (31 January 2012: £2.3m)
w Total Initial Contract Value signed on new deals was £1.5m (31 January 2012: £1.8m) with £0.8m recognised in the period (31 January 2012: £0.5m)
w Annualised contracted revenue maintained at £5.1m (31 July 2012: £5.1m)
w Deal activity is buoyant with 15 new name deals (31 January 2012: 15) and continued strong customer loyalty with 29 upgrades in the period (31 January 2012: 34)
w Uptake of multi-year, transactional priced Cloud/SaaS solutions is in line with expectations - six new customers (31 January 2012: five)
w Greater visibility of forward revenue and a more predictable cash flow profile
Post period highlight
w Entry into the Indian Market through new Joint Venture
Rod Jones, Chief Executive Officer, commented:
"I am pleased with the progress of the Group as it continues to grow revenue and to generate profit. The Group's revenue growth has been generated from its fixed income long term Cloud/SaaS contracts signed in prior years and, in line with the Group's stated strategy, it has continued to build a greater level of visibility over its future revenue. This is a particularly important performance indicator and the mix of Cloud/SaaS based deals to perpetual licence deals remains extremely significant to short term profitability for the foreseeable future.
"I am excited about the progress of the Group's operation in India, albeit at this early stage. The proposition of providing procurement services using the Group's software as a platform is significant, and the signing of an early pilot client that was delivered by our Joint Venture partners through their network is very encouraging. I look forward to reporting on the development of this business.
"New deal closure remains challenging, as ever, but sales and marketing activity is high and the Group has good visibility of new deal opportunities, through both its direct and its indirect channels, and a solid forward order book for its consultancy services."
For further information, please contact:
PROACTIS Holdings PLC | |
Rod Jones, Chief Executive Officer Tim Sykes, Chief Financial Officer
| Via Redleaf Polhill
|
Redleaf Polhill | |
Rebecca Sanders-Hewett /Jenny Bahr | 0207 382 4730 proactis@redleafpr.com
|
finnCap Limited Charlotte Stranner | 0207 220 0500
|
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 250 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.
CHAIRMAN'S AND CHIEF EXECUTIVE OFFICER'S REPORT
The Group reports its interim results for the six month period to 31 January 2013.
Results
Reported revenue has increased 7% to £3.9m (2012: £3.7m) and the Group remains profitable with positive operating cash flows supporting the continued investment in our product and the initial investment in our Indian Joint Venture where we are deploying our software as a platform for outsourced procurement services, as well as providing a yield for our shareholders with a £237,000 dividend paid during the period.
The highlights of the trading period were as follows:
- 15 new name deals (2012: 15) of which 9 were perpetual licence based (2012: 10);
- 29 upgrade deals (2012: 34) of which 26 were perpetual licence based (2012: 32); and
- a continued natural cumulative increase in recurring subscription, support and hosting revenues largely from new deals signed in prior periods.
The Group's markets are demanding choice between the perpetual licence based model and the Cloud/SaaS based model and as such, the Group has won substantial deals of both model types in the period. The mix of deal type between the direct and indirect route to market has been more pronounced than usual in this period, with the Group's business partners selling mainly perpetual licence based deals whilst the Cloud/SaaS based model has been sold mainly by the Group's own direct sales force. This has reduced margins for this reporting period but is not a longer term concern. With six further Cloud/SaaS deals signed during the period, principally through the Group's own direct sales team, this will have the effect of increasing forward visibility of revenues and margin, a key strategic objective of the Group.
Distribution strategy
The Group is continuing to evolve its distribution strategy and has identified that there are certain markets where the Cloud/SaaS model has the potential to evolve further. With this in mind, since the period end, the Group has entered into a Joint Venture to access the Indian market, providing outsourced procurement services to clients using the Group's software as a platform for delivery. The investment to date is approximately £0.1m with a short-term commitment of a further £0.2m depending on future milestones being met. The opportunity is significant and there has been early stage traction with a pilot contract already signed.
Patterns in the deal flow of the Group's distribution channels for its core software business shift naturally, both geographically and in types of partner and their business propositions, and the Group continues to manage this:
UK and Europe - The Group's UK based software resellers have performed well in the continuing challenging market conditions and the Group's perpetual licence software sales have shifted toward more indirect business, reversing the trend of recent periods. Mainland Europe remains predominantly a reseller market.
US -The Group's US unit has been successful in monetising its existing relationships better with significant reorders for consultancy services, providing good visibility and high levels of forward contracted income. It signed one new name deal in the period, however, the pipeline is taking longer to realise than is usual due to team changes in the unit.
APAC - The Group's APAC unit is now well established but has not converted pipeline during the period. Eclipse, its non-exclusive reseller business partner, has now started to invest more substantially in the product and the APAC unit, which works side-by-side with Eclipse as a facilitation unit, has good opportunity within its pipeline to be successful in the current period.
Product strategy
The Group's aim of being a leading "best in class" spend control and eProcurement organisation has been further enhanced by the addition of new Cloud/SaaS pricing and licensing options in recent periods. Software solutions are available to customers according to any reasonable variable; user based, functionality or module based; geography based; currency based; transaction based; and business model based.
The Group's cumulative investment in its products has given it a real competitive advantage and, having deployed the products in all manner of variable contexts, they are fully referenceable and validated.
The Group's most recent theme of investment is in the mobile application of its technology, providing users with the facility to access the software remotely from mobile devices for point solutions such as authorisations. This is an area in which the Group sees a significant growth opportunity and is considering the best way to monetise its development.
Financial overview
Revenues increased by 7% to £3.9m (2012: £3.7m). The Group has seen broadly consistent levels of deal volumes with 15 new deals in the period (2012: 15) and 29 upgrade deals in the period (2012: 34). The uptake of the new Cloud/SaaS based solution continues and contribution of fixed term contracted income continues to increase. This more than offset the Group's implementation services business which contributed approximately £0.2m less than the comparative period.
One of the beneficial consequences of the transition toward a more Cloud/SaaS based revenue model and the long term non-cancellable support contracts for perpetual licence deals is the increased level of contracted revenue to be recognised in future periods. This gives the Group greater visibility of forward revenue and a more predictable cash flow profile. Of the £1.5m (2012: £1.8m) of total value contracted during the period, £0.7m (2012: £1.3m) is deferred to subsequent financial periods and the total value of contracted forward revenue has increased to £5.9m (31 July 2012: £5.7m). Annualised contracted revenue remained flat at £5.1m (31 July 2012: £5.1m).
In the period, the mix of revenue from new and upgrade deals shifted, as it has in other reporting periods historically, toward lower margin indirect perpetual licence deals from the Group's reseller partners. This, along with the inflationary based employment cost increases and the expensing of a significant part of the investment in the Indian Joint Venture, has meant that the increase in reported revenue has not flowed through to an improved level of profitability in this period. The mix of revenue from new and upgrade deals will not necessarily continue and much of the investment in the Indian Joint Venture is one-time and will not continue going forward. The Group delivered a broadly flat underlying earnings figure, before share based payment charges and amortisation of customer related intangible assets, of £143,000 (2012: £196,000).
The Group's financial position is sound with £2.0m cash on the balance sheet. Net operating cash inflow in the period since 31 July 2012 was £0.2m before a dividend payment of £0.2m and continued capital investment in the Group's products and solutions of £0.5m. Working capital remains tightly managed and receivables collection is strong with debtor days at 47 (2012: 45).
Outlook
The Group continues to deliver a strong performance in new name deals and this has been supported by the performance of its business partners during the period.
Revenues have increased again and this has been substantially delivered through the Group's strategic shift toward the Cloud/SaaS business model which commenced three years ago. Strategically, the Group remains focused on building the recurring and contracted revenue of the business, and it has continued to make good progress on this during the period. There were six new multi-year contracted Cloud/SaaS deals; these solutions and long term support contracts both provide much greater levels of visibility over future revenue and profits and the level of contracted multi-year income increased to £5.9m at 31 January 2013.
The Joint Venture in India extends the Group's value proposition by providing outsourced procurement services to clients using the Group's software as a platform and the signing of an early pilot client is very encouraging. Our Joint Venture partners have proved extremely valuable, at this early stage, in providing access to their networks.
The second half has started well. With a strong pipeline of opportunities for the remaining part of the financial year and beyond we look forward to further enhancing delivery against our strategy and continuing to drive growth.
Alan Aubrey Rod Jones
Chairman Chief Executive Officer
27 March 2013
Condensed consolidated income statement
for the six months ended 31 January 2013
Unaudited | Unaudited | Audited | ||
6 months to 31 Jan 2013 | 6 months to 31 Jan 2012 | Year ended 31 July 2012 | ||
£000 | £000 | £000 | ||
Revenue | ||||
Continuing | 3,920 | 3,662 | 7,513 | |
Cost of sales | (1,224) | (1,067) | (2,366) | |
------------- | ------------- | ------------- | ||
Gross profit | 2,696 | 2,595 | 5,147 | |
Administrative costs | (2,693) | (2,471) | (5,072) | |
------------- | ------------- | ------------- | ||
Operating profit before non-recurring items, amortisation of customer related intangibles and share based payment charges | 143 | 196 | 264 | |
Amortisation of customer related intangibles | (130) | (60) | (159) | |
Share based payment charges | (10) | (12) | (30) | |
------------- | ------------- | ------------- | ||
Operating profit/(loss) | 3 | 124 | 75 | |
Finance income | 14 | 8 | 20 | |
Finance expenses | (1) | - | (1) | |
------------- | ------------- | ------------- | ||
Profit /(loss) before taxation | 16 | 132 | 94 | |
Taxation | 25 | 80 | 60 | |
------------- | ------------- | ------------- | ||
Profit/(loss) for the period | 41 | 212 | 154 | |
------------- | ------------- | ------------- | ||
Earnings/(loss) per ordinary share : | ||||
- Basic | 0.1p | 0.7p | 0.5p | |
------------- | ------------- | ------------- | ||
- Diluted | 0.1p | 0.7p | 0.5p | |
------------- | ------------- | ------------- |
The profit for the period is wholly attributable to equity holders of the parent Company.
All results arise from continuing operations. |
Condensed consolidated statement of changes in equity
as at 31 January 2013
Unaudited | Unaudited | Unaudited | Unaudited | Unaudited | Unaudited | |
Share capital | Share premium | Mergerreserve | Capitalreserve | Foreign exchange reserve | Retained earnings | |
£000 | £000 | £000 | £000 | £000 | £000 | |
At 1 August 2011 | 3,148 | 3,051 | 556 | 449 | 31 | (1,003) |
Dividend | - | - | - | - | - | (173) |
Result for the period | - | - | - | - | - | 212 |
Share based payment charges | - | - | - | - | - | 12 |
------------- | ------------- | ------------- | ------------- | ------------- | ------------- | |
At 31 January 2012 | 3,148 | 3,051 | 556 | 449 | 31 | (952) |
Arising during the period | - | - | - | - | (26) | - |
Result for the period | - | - | - | - | - | (58) |
Share based payment charges | - | - | - | - | - | 18 |
------------- | ------------- | ------------- | ------------- | ------------- | ------------- | |
At 1 August 2012 | 3,148 | 3,051 | 556 | 449 | 5 | (992) |
Shares issued during the period | 10 | 9 | - | - | - | - |
Result for the period | - | - | - | - | - | 41 |
Dividend | - | - | - | - | - | (237) |
Share based payment charges | - | - | - | - | - | 10 |
------------- | ------------- | ------------- | ------------- | ------------- | ------------- | |
At 31 January 2013 | 3,158 | 3,060 | 556 | 449 | 5 | (1,178) |
------------- | ------------- | ------------- | ------------- | ------------- | ------------- |
Condensed consolidated balance sheet
as at 31 January 2013
Unaudited | Unaudited | Audited | ||
As at 31 Jan 2013 | As at 31 Jan 2012 | As at 31 July 2012 | ||
£000 | £000 | £000 | ||
Non-current assets | ||||
Property, plant & equipment | 82 | 96 | 88 | |
Intangible assets | 6,637 | 6,616 | 6,566 | |
------------- | ------------- | ------------- | ||
6,719 | 6,712 | 6,654 | ||
------------- | ------------- | ------------- | ||
Current assets | ||||
Trade and other receivables | 1,371 | 1,447 | 1,183 | |
Cash and cash equivalents | 1,989 | 2,310 | 2,668 | |
------------- | ------------- | ------------- | ||
3,360 | 3,757 | 3,851 | ||
------------- | ------------- | ------------- | ||
Total assets | 10,079 | 10,469 | 10,505 | |
------------- | ------------- | ------------- | ||
Current liabilities | ||||
Trade and other payables | 455 | 757 | 744 | |
Deferred income | 2,236 | 2,150 | 2,181 | |
Income taxes | 121 | - | 121 | |
------------- | ------------- | ------------- | ||
2,812 | 2,907 | 3,046 | ||
------------- | ------------- | ------------- | ||
Non-current liabilities | ||||
Finance leases | - | 12 | - | |
Deferred tax liabilities | 1,217 | 1,267 | 1,242 | |
------------- | ------------- | ------------- | ||
1,217 | 1,279 | 1,242 | ||
------------- | ------------- | ------------- | ||
Total liabilities | 4,029 | 4,186 | 4,288 | |
------------- | ------------- | ------------- | ||
Net assets | 6,050 | 6,283 | 6,217 | |
------------- | ------------- | ------------- | ||
Equity attributable to equity holders of the Company | ||||
Called up share capital | 3,158 | 3,148 | 3,148 | |
Share premium account | 3,060 | 3,051 | 3,051 | |
Merger reserve | 556 | 556 | 556 | |
Capital reserve | 449 | 449 | 449 | |
Foreign exchange reserve | 5 | 31 | 5 | |
Retained earnings | (1,178) | (952) | (992) | |
------------- | ------------- | ------------- | ||
Total equity | 6,050 | 6,283 | 6,217 | |
------------- | ------------- | ------------- |
Total equity is wholly attributable to equity holders of the parent Company.
Condensed consolidated cash flow statement
for the six months ended 31 January 2013
Unaudited | Unaudited | Audited | |
6 months to 31 Jan 2013 | 6 months to 31 Jan 2012 | Year ended 31 July 2012 | |
£000 | £000 | £000 | |
Operating activities | |||
Profit for the period | 41 | 212 | 154 |
Amortisation of intangible assets | 466 | 409 | 858 |
Depreciation | 22 | 32 | 65 |
Net finance income | (13) | (8) | (19) |
Income tax charge credit | (25) | (80) | (60) |
Share based payment charges | 10 | 12 | 30 |
------------- | ------------- | ------------- | |
Operating cash flow before changes in working capital | 501 | 577 | 1,028 |
Movement in trade and other receivables | (182) | (69) | 194 |
Movement in trade and other payables | (172) | 189 | 221 |
------------- | ------------- | ------------- | |
Operating cash flow from operations | 147 | 697 | 1,443 |
Interest received | 7 | 8 | 13 |
Income tax received/(paid) | - | 64 | 144 |
------------- | ------------- | ------------- | |
Net cash flow from operating activities | 154 | 769 | 1,600 |
------------- | ------------- | ------------- | |
Investing activities | |||
Purchase of plant and equipment | (16) | (21) | (46) |
Development expenditure capitalised | (537) | (350) | (751) |
Payments to acquire assets and liabilities | (59) | (50) | (100) |
------------- | ------------- | ------------- | |
Net cash flow from investing activities | (612) | (421) | (897) |
------------- | ------------- | ------------- | |
Financing activities | |||
Capital elements of finance lease payments | (3) | (3) | - |
Proceeds from issue of new shares | 19 | - | - |
Dividend payment | (237) | (173) | (173) |
------------- | ------------- | ------------- | |
Net cash flow from financing activities | (221) | (176) | (173) |
------------- | ------------- | ------------- | |
Net (decrease)/increase in cash and cash equivalents | (679) | 172 | 530 |
Cash and cash equivalents at the beginning of the period | 2,668 | 2,138 | 2,138 |
------------- | ------------- | ------------- | |
Cash and cash equivalents at the end of the period | 1,989 | 2,310 | 2,668 |
------------- | ------------- | ------------- |
Unaudited notes
Basis of preparation and accounting policies
PROACTIS Holdings PLC is a company incorporated in England and Wales under the Companies Act 2006.
The condensed financial statements are unaudited and were approved by the Board of Directors on 26 March 2013.
The interim financial information for the six months ended 31 January 2013, including comparative financial information, has been prepared on the basis of the accounting policies set out in the last annual report and accounts, with the exception of the amendment to IAS 1 (Presentation of Financial Statements) referred to below, and in accordance with International Financial Reporting Standards ("IFRS"), including IAS 34 (Interim Financial Reporting), as issued by the International Accounting Standards Board and adopted by the European Union.
The preparation of the interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expense. Actual results may subsequently differ from those estimates.
In preparing the interim financial statements, the significant judgements made by management in applying the Group's accounting policies and key sources of estimation uncertainty were the same, in all material respects, as those applied to the consolidated financial statements for the year ended 31 July 2012.
There is a choice between presenting comprehensive income in one statement or in two statements comprising an income statement and a separate statement of comprehensive income. The Group has elected to present comprehensive income in two statements.
Going concern assumption
The Group manages its cash requirements through a combination of operating cash flows and long term borrowings.
The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within the level of its current lending facilities.
Consequently, after making enquires, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis of accounting in preparing the interim financial statements.
Information extracted from 2012 Annual Report
The financial figures for the year ended 31 July 2012, as set out in this report, do not constitute statutory accounts but are derived from the statutory accounts for that financial year.
The statutory accounts for the year ended 31 July 2012 were prepared under IFRS and have been delivered to the Registrar of Companies. The auditors reported on those accounts. Their report was unqualified, did not draw attention to any matters by way of emphasis and did not include a statement under Section 498(2) or 498(3) of the Companies Act 2006.
The Board confirms that to the best of its knowledge:
w The condensed set of financial statements has been prepared in accordance with IAS34 'Interim Financial Reporting' as adopted by the EU;
w 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.
By Order of the Board
Rod Jones Tim Sykes
Chief Executive Officer Chief Financial Officer
27 March 2013