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Proactis Holdings PLC

PROACTIS Holdings - Interim Results

RNS Number : 9860W
PROACTIS Holdings PLC
29 April 2021
 

 

PROACTIS Holdings PLC

Interim results for the six months ended 31 January 2021

PROACTIS Holdings PLC, the business spend management solution provider, today announces its unaudited interim results for the six-month period ended 31 January 2021.

 

Key highlights:

·      Performance in line with Board expectations for the period

·      Total Contract Value ("TCV"), excluding renewals, signed was £6.7m (H1 FY2020: £7.5m; H2 FY2020: £7.1m) delivered against backdrop of challenging COVID-19 headwinds

·      Consistent new business deal activity: 29 new name deals (H1 FY2020: 29; H2 FY2020: 32)

·      Robust upsell activity: 66 deals with existing customers in the period (H1 FY2020: 70; H2 FY2020: 57)

·      Annualised recurring revenue1 ("ARR"), excluding heightened risk accounts ("HRAs"), increased marginally to £40.1m (31 July 2020: £39.8m)

·      ARR including HRAs was £40.8m (31 July 2020: £41.2m)

·      Reported revenue was £23.8m (H1 FY2020: £24.5m; H2 FY2020: £25.1m) due to lower revenues in the Group's volume related businesses and the effect of net churn in prior periods

·      Adjusted EBITDA2 increased to £6.2m (H1 FY2020: £5.6m; H2 FY2020: £6.2m), an increase of over 10%

·      Churn of £1.5m (H1 FY2020: £2.1m; H2 FY2020: £2.3m) stable and in line with expectations

·      Net bank debt3 increased to £39.7m (31 July 2020: £37.1m) due to lower volume related revenue leading to lower cash levels in the Group's BPO business in the US, along with specific actions underway in order to right-size operating expenditure for the future.

·      First instance of the buyer-funded model for bePayd sold in France

·      Net cash flow from operating activities was £1.8m (H1 FY2020: £5.1m; H2 FY2020: £2.9m)

·      Appointment of Nick Brown as Senior Independent Non-Executive Director

 

Post period end highlights:

·      First US deal signed on the Group's mid-market platform meaning that the single platform solution has now been sold under the revised go to market strategy in all targeted territories

·      First instance of the Proactis-funded model for bePayd has been sold in the UK

 

1 - Annualised Recurring Revenue is the Group's estimate of the annualised value of revenue of customers currently contracted with the Group

2 - Adjusted EBITDA is stated before non-core net expenditure, amortisation of intangible assets and share based payment charges; and Adjusted EPS is stated after the equivalent post tax effects of Adjusted EBITDA

3 - Excludes right of use assets recognised under IFRS 16 Leases and unsecured convertible loan notes of £6.0m maturing during July 2022, August 2023 and November 2024.  IFRS 16 Leases was adopted from 1 August 2019

 

Tim Sykes, Chief Executive Officer, commented:

 

"It is encouraging to see the progression of the Group over recent periods.  Churn has stabilised and is demonstrably back to normal. Furthermore, excluding the impact of HRAs (which is now only small at £0.7m) and, despite the impact of COVID-19 on new business intake, we are continuing to grow the business again.

We are now executing our commercial business processes well in each of France, Germany and North America and new business momentum is accelerating for those teams.  As this continues to progress, the Group's forward momentum will start to reflect market rates of growth.

I am delighted that we have also sold our bePayd solution into two early adopters, one under the buyer-funded model and one under the Proactis-funded model.  We look forward to working with our customers to deliver a great service to their suppliers and the necessary returns to our customers and Proactis.

We have also made good progress in addressing some of the inefficiencies in our operating expenditure and this has improved our margins.

We look forward to the continued execution of our growth strategy and exploring ways to create shareholder value whilst working toward our ambition of building a leading international business spend management company."

 

 

For further information, please contact:

Proactis Holdings PLC

01937 545070 x1115

Tim Sykes, Chief Executive Officer

Richard Hughes, Chief Financial Officer

 

investorcontact@Proactis.com

finnCap Ltd

Carl Holmes, Emily Watts - Corporate Finance

Andrew Burdis, Richard Chambers - ECM

 

 

0207 220 0500

 

Alma PR

 

Hilary Buchanan, Sam Modlin, David Ison

 

020 3405 0205

Proactis@almapr.co.uk

 

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with the company's obligations under Article 17 of MAR

 

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 1,100 buying organisations around the world from the commercial, public and not-for-profit sectors.

 

CHAIRMAN'S AND CHIEF EXECUTIVE OFFICER'S REPORT

Strategic overview

The Group's long-term strategy is to build an international business focused on delivering best value to its customers through the digital transformation of their procurement systems and processes with the application of the Group's software technology and provision of its expert services.  The Group's strategy can be illustrated as follows:

·      Maximise customer and technology opportunity to existing customers

·      Accelerate new business spend management momentum

·      Roll out bePayd, the Group's accelerated payment product

·      Drive adoption of existing supplier paid products

·      Extend supplier paid product portfolio

 

This strategy is designed to deliver a strong financial proposition of profitable, cash generative organic growth with a high level of visibility illustrated by its ARR across both buyer and supplier paid products.

 

The Group aims to drive organic growth into its business spend management solutions by retaining existing and winning new customers through continually improving its best in class procurement solutions with high service levels and excellent user support as well as a focused approach to the up-selling of the Group's extensive range of solutions, creating even broader and deeper customer relationships. 

 

In addition, the Group has a substantial opportunity to provide complementary products which leverage the business spend management solutions with transactional services, tender services and the Group's accelerated payment facility, bePayd.

 

Strategic performance

Progress against the Group's strategy continues to be encouraging. Despite the ongoing COVID-19 global pandemic ("COVID-19") related headwinds, the Group's performance was in line with Board expectations for the period demonstrating the resilience of the Group's business model.

 

TCV of new business signed was healthy at £6.7m (H1 FY20: £7.5m). The Board believes that the Group has now met every milestone needed to in order to validate its mid-market business spend management strategy. The challenge for the Group is now to accelerate the rate of new business in each of the territories that it operates in.

 

During the period the Group also announced its first bePayd contract under the buyer-funded model with Experbuy in France. Subsequent to the end of the period, the Group also announced its first Proactis-funded contract, with Denbighshire County Council. The Board believes that the Group can now push forward with confidence to pursue the market opportunity in this area.

 

The Group's reported revenues decreased to £23.8m (H1 FY20: £24.5m). This reduction in revenue is primarily due to:

·      net customer losses in prior financial years, which, as a consequence of the Group's SaaS based subscription model, flows through to the current year income statement; and

·      the impact from COVID-19 on the Group's implementation services revenues and volume-based subscription contracts, which the Board expects to normalise following the end of the pandemic.

 

Group adjusted EBITDA of £6.2m is £0.6m (or 10.7%) higher than the comparative period (H1 FY20: £5.6m). The result was achieved, despite lower revenue levels, through a heightened focus on cost control along with a reduced level of travel and deferred investment in marketing and sales capacity until the economic environment makes that investment worthwhile.

 

The Board considers this financial performance to be in line with expectations and positions the Group well to continue to capitalise on the opportunities available to it.

 

Solutions and markets

Buyer solutions

The Group provides business spend management solutions which enable customers to reduce the cost of goods or services purchased through enhanced sourcing activities, and access efficiency gains through the automation of manual processes using technology. Customers also benefit from an enhanced level of corporate governance and compliance through work-flows designed into the solutions.

 

Buyer revenues for the period were £19.3m (H1 FY2020: £20.4m). The decrease is analysed further below and is a direct consequence of high levels of customer churn in the previous financial years flowing into the current year by virtue of the SaaS business model the Group operates.

 

 

 

 

Supplier solutions

The Group provides access to technology that enables suppliers to transact digitally with their customers.  This technology is often referred to as networking technology, allowing multiple documents in any format to be passed between suppliers and their customers and encouraging greater collaboration between suppliers and their customers through the provision of other trading information. In addition, the Group uses its technology to deliver tailored new business opportunities to suppliers through its search and selection of a vast number of new business opportunities and tenders from a number of international sources.

 

Revenues for the period were £4.5m (H1 FY2020: £4.1m) which was in line with the Board's expectations.

 

Financial solutions

The Group brought its new early settlement solution, bePayd, to market in early 2020 just before COVID-19 impacted the global economy.

 

The solution allows suppliers to accelerate the payment of a customer approved invoice in return for a small discount and is primarily aimed at the long tail of small suppliers in the supply chain, a population that is underserved.  The solution is market leading in its simplicity, speed and convenience without any detriment to security or risk. The solution is entirely flexible down to single invoice level with extremely low values because of the end to end automation of the process. Funding of the early settlement can be provided by either the customer or Proactis (through a dedicated facility with HSBC) or a blended model.

 

The solution has been adopted by Experbuy, a new customer to the Group based in France, under the buyer-funded model and by Denbighshire County Council, an existing customer of the Group, under the Proactis-funded model.  The knowledge from the implementation and roll out programmes for these two customers will be invaluable as the Group now seeks to optimise supplier take-up of the solution and grow pipeline further.

 

Performance overview

The Board monitors the Group's performance through a combination of several key performance indicators as follows:

 

6 months ended

31 January 2021

6 months ended

31 January 2020

Year ended

31 July 2020

Reported revenue

£23.8m

£24.5m

£49.6m

Reported revenue growth

(2.9%)

(11.6%)

(8%)

Adjusted revenue (see additional information)

£23.7m

£24.5m

£49.2m

CAGR 3-year revenue growth*

(3.5%)

28%

25%

TCV of new name deals

£3.6m

£5.4m

£9.0m

Number of new name deals

29

29

61

TCV of upsell deals

£3.1m

£2.1m

£5.6m

Number of upsell deals

66

70

127

Total deal value signed

£6.7m

£7.5m

£14.6m

* Includes impact of acquisitions

 

The Board considers that TCV, customer retention and ARR as the key indicators that shape the direction of and momentum within the Group. These indicators are included in all information packs distributed to and discussed by senior and executive level teams, and at Board level.

 

New business performance analysis

The Group's TCV for new deals and upsell / cross sell deals can be analysed by market segment as follows:

 

6 months ended

31 January 2021

TCV of new name deals

Number of new name deals

TCV of upsell deals

Number of upsell deals

Total TCV

Total

number of deals

Business Spend Management

 

 

 

 

 

 

United Kingdom

£2.1m

17

£1.1m

48

£3.2m

65

France

£0.2m

1

£0.2m

3

£0.4m

4

Germany

£0.1m

1

-

-

£0.1m

1

United States

£0.1m

1

£1.6m

3

£1.7m

4

Netherlands

£1.1m

6

£0.2m

12

£1.3m

18

Supplier

 

 

 

 

 

 

Transactions

-

-

-

-

-

-

Tenders Direct

-

3

-

-

-

3

Total

£3.6m

29

£3.1m

66

£6.7m

95

* The Tenders Direct business shows net wins

 

 

6 months ended

31 January 2020

TCV of new name deals

Number of new name deals

TCV of upsell deals

Number of upsell deals

Total TCV

Total

number of deals

Business Spend Management

 

 

 

 

 

 

United Kingdom

£0.7m

16

£1.4m

49

£2.1m

65

France

£0.8m

2

£0.1m

3

£0.9m

5

Germany

£0.3m

1

-

-

£0.3m

1

United States

£1.7m

5

£0.5m

3

£2.2m

8

Netherlands

£1.9m

5

£0.1m

15

£2.0m

20

Supplier

 

 

 

 

 

 

Transactions

-

-

-

-

-

-

Tenders Direct

-

-

-

-

-

-

Total

£5.4m

29

£2.1m

70

£7.5m

99

* The Tenders Direct business shows net wins

 

 

Year ended

31 July 2020

TCV of new name deals

Number of new name deals

TCV of upsell deals

Number of upsell deals

Total TCV

Total

number of deals

Business Spend Management

 

 

 

 

 

 

United Kingdom

£3.0m

31

£3.6m

86

£6.6m

117

France

£0.8m

2

£0.8m

17

£1.6m

19

Germany

£0.3m

1

-

-

£0.3m

1

United States

£1.8m

6

£1.0m

6

£2.8m

12

Netherlands

£3.0m

11

£0.2m

18

£3.2m

29

Supplier

 

 

 

 

 

 

Transactions

-

-

-

-

-

-

Tenders Direct

£0.1m

10*

-

-

£0.1m

10

Total

£9.0m

61

£5.6m

127

£14.6m

188

* The Tenders Direct business shows net wins

 

During the previous year the way information was internally reported changed to reflect a clearer presentation of how the Group is operated between Business Spend Management (buyer led) customers and supplier led customers. Comparative information has been re-presented to align to the updated analysis.

 

During the period, new name deal wins were lower than the comparative period of H1 FY2020 due to the impact on pipeline conversion that COVID-19 has had. The Board is pleased by the higher level of upsell and cross sell deal during the period, which were concentrated in the UK and US business spend management territories.

 

Customer Churn

As reported previously, the Group experienced heavy customer churn over the 2018 and 2019 financial years in specific customers with non-authored product deployment and, as at 31 July 2019, the Group defined these as Heightened Risk Accounts ("HRA").

 

The detail below shows the progression that the Group has made during the period against those HRAs.

 

£'m

ARR

HRA value at the start of the period

1.4

Customer churn in the period

(0.3)

Contracts converted to multi-year deals upon renewal

(0.4)

HRA value at the end of the period

0.7

 

Of the remaining HRAs, £0.5m came up for renewal in the period and renewed on deals of 1 year or less. Only £0.2m is due for renewal in the second half of the financial year.

 

The level of retention and conversion into multi-year deals in these accounts continues to be above the Board's expectations and demonstrates the Group's renewed ability to offer alternative solutions to existing customers.

 

Total churn in the period including HRAs was £1.5m (H1 FY2020: £2.1m; H2 FY2020: £2.3m) which the Board considers to be normal levels.

 

ARR

ARR is a key performance indicator giving the Board visibility of the Group's annualised run rate of contracted subscription, managed service, support and hosting revenues. It provides the Group's stakeholders with real indicators of:

·      The amount of revenue from new business required to be won in order to hit expectations in future periods;

·      The level of debt that the business can conservatively support and hence assist in the overall return to investors; and

·      The overall strength of the Group.

 

During the period COVID-19 has impacted the Group in various ways, including delays in new business, deferral of project implementation service revenues through project deferrals and reduction in volume-based contracts.

 

The following table analyses the Group's ARR into three categories:

·      Non-volume based ARR

·      Volume based ARR

·      HRAs

 

£'m

31 July

2020

Growth /

(Decline)

31 January

2021

Non-volume-based contracts

28.3

1.1%

28.6

Volume based contracts

11.5

-%

11.5

Underlying ARR

39.8

0.8%

40.1

HRA contracts

1.4

(50.0%)

0.7

Total

41.2

(1.0%)

40.8

 

The Board is encouraged by the underlying performance of the Group's non-volume-based business with a 1.1% increase in non-volume related ARR from the previous reporting period and expects to grow this number substantially over the coming months and years.

 

Volume based contract ARR stabilised at the lower level seen at the end of July 2020, albeit on a slightly different mix of the products bases involved, as COVID-19 continued to impact this area of the business. The Board expects an increase in volume related ARR once businesses return to a level of normalised trading.

 

ARR movement can be analysed further as follows:

 

£'m

31 July

2020

Growth /

(Decline)

31 January

2021

Business Spend Management (excluding HRAs)

 

 

United Kingdom

13.9

4.3%

14.5

France

4.6

(4.3%)

4.4

Germany

0.6

100%

1.2

United States

7.6

(9.2%)

6.9

Netherlands

5.2

3.8%

5.4

 

31.9

1.6%

32.4

Supplier

 

 

 

Tenders Direct

3.7

-%

3.7

Global Transactions

4.2

(4.8%)

4.0

 

7.9

(2.5%)

7.7

Underlying ARR

39.8

0.8%

40.1

HRAs

1.4

(50.0%)

0.7

Total

41.2

(1.0%)

40.8

 

ARR as at 31 January 2021 is in line with the Board's expectations.

 

Core business spend management ARR increased 1.6% to £32.4m at the period end with encouraging performances by the UK, NL and German territories. The US territory continued to suffer net churn in the period due to volume related contract reductions impacted by COVID-19 predominantly.

 

Tenders Direct ARR remained stable during the period as improved new deal and higher retention rates delivered encouraging indicators for the future.

 

 

 

Revenue performance analysis

Reported revenue in the period is shown below split by Business Spend Management ("Buyer") and Supplier businesses.

 

Revenue reductions in all areas other than the Netherlands business was driven by churn in the previous financial years as a consequence of the Group's SaaS based subscription model, along with COVID-19 impacts in volume related parts of the Group.

 

The Group's reported revenues by market segment were:

 

6 months ended

31 January 2021

£m

6 months ended

31 January 2020

£m

Year ended

31 July 2020

£m

Business Spend Management revenue

 

 

 

United Kingdom

8.1

8.2

17.1

France

2.9

2.7

5.8

Germany

1.0

1.0 

1.9

United States

3.8

5.4

10.1

Netherlands

3.5

3.1

6.2

Supplier revenue

 

 

 

Tenders Direct

2.4

1.9

4.1

Global Transactions

2.1

2.2

4.4

 

23.8

24.5

49.6

 

Staff costs and other operating expenses

The aggregate of staff costs and other operating expenses (excluding depreciation of property, plant and equipment and amortisation of intangibles assets increased to £17.2m (H1 FY2020: £16.8m). 

 

This part of the Group's costs has included significant items of income or expenditure associated primarily with areas that are not associated with the Groups on-going, underlying activities (together, "non-core net expenditure"). 

 

The impact of this non-core net expenditure on the aggregate of staff costs and other operating expenses is as follows:

 

 

6 months ended 31 January 2021

6 months ended 31 January 2020

Year ended
31 July 2020

 

£m

£m

Aggregate of staff costs and other operating expenses (reported)

17.2

16.8

35.5

Non-core net expenditure

(2.1)

(0.7)

(2.8)

Aggregate of staff costs and other operating expenses (excluding non-core net expenditure)


15.1


16.1


32.7

 

Non-core net expenditure can be analysed as follows:

 

 

6 months ended 31 January 2021

6 months ended 31 January 2020

Year ended
31 July 2020

 

£m

£m

Loss arising from asset held for sale

0.2

-

0.4

Costs of restructuring Group operations - staff

1.4

0.4

0.9

Costs of restructuring Group operations - other

0.1

0.2

0.1

Legal and professional fees

0.2

0.2

0.7

Foreign exchange impacts

0.2

(0.1)

0.7

 

2.1

0.7

2.8

 

 

 

 

 

Reported profit and Group Adjusted profit performance

The Board considers that each of the two periods ended 31 January 2021 and 31 January 2020 have been significantly impacted by non-core net expenditure incurred primarily as part the Group's restructuring activities. 

 

A summary of the various profit measures is set out below.

 

 

6 months ended
31 January 2021

6 months ended
31 January 2020

    Year ended
    31 July 2020

 

 

Reported

1Adjusted

Reported

1Adjusted

Reported

1Adjusted

Revenue

£23.8m

£23.7m £23.7m

£24.5m

N/a

£49.6m

£49.2m

Earnings before interest,
tax, depreciation and
amortisation ('EBITDA')1



£4.2m



£6.2m



£4.9m



£5.6m



£9.0m



£11.8m

Operating (loss) / profit

(£2.1m)

£1.5m

(£1.4m)

£1.7m

(£18.4m)

£4.0m

(Loss) / profit / before tax

(£2.8m)

£0.8m

(£2.2m)

£0.9m

(£19.3m)

£2.6m

Diluted earnings per share (note 2)

(2.7p)

0.9p

(1.9p)

1.1p

(19.9p)

2.9p

                 

Note 1: See Additional Information - Reconciliation of alternative performance measures

 

Cash flow

An analysis of the Group Adjusted Free Cash Flow is as follows:

 

 

 

6 months ended
31 January 2021

6 months ended 31 January 2020

Year ended
31 July 2020

 

 

£m

£m

£m

Net cash flow from operating activities

1.8

5.1

8.0

 

Non-core net expenditure incurred in prior period but paid in current period


0.1


0.3


0.3

 

Non-core net expenditure charged and paid within the same period


1.6


0.7


1.6

Adjusted Net cash flow from operating activities

3.5

6.1

9.9

 

Purchase of plant and equipment

(0.1)

(0.3)

(0.5)

 

Development expenditure capitalised

(4.2)

(3.9)

(8.5)

Adjusted Group Net Free Cash Flow

(0.8)

1.9

0.9

 

The Group had net bank debt of £39.7m as at 31 January 2021 (31 July 2020: £37.1m). The increase of £2.6m relates to lower cash levels in the Group's outsourced sourcing business resulting from lower trading volumes impacted by COVID-19, as previously reported, and cash outflow arising from upfront costs of the restructuring of its management team and operating cost base

 

The net bank debt figure excludes convertible loan notes of approximately £6.0m that mature from July 2022 onwards.

 

Summary and Outlook

The Group continues to progress its go to market strategy and has now met all of its primary strategic milestones being: to address churn and return it to normal levels; to have sold its mid-market focussed single platform business spend management solution in all of its territories; and, to have early adopters for bePayd in both the buyer-funded and Proactis-funded models. 

 

The Group must now demonstrate that it can access the market opportunity open to it and shift gear on the rate of new business intake by converting the pipeline it has been building over recent periods.  COVID-19 has been impacting this rate of progression, but the Board is confident that this will be demonstrable in the short-term. The Board looks forward to continuing to execute on our strategy to realise our ambition, whilst also exploring opportunities to accelerate this, address the capital structure and create shareholder value.

 

Accordingly, the Board considers that the commercial indicators for accelerated progression are evident and looks forward to returning the Group to substantial growth.

 

 

 

 

 

Alan Aubrey                                                                          Tim Sykes

Chairman                                                                              Chief Executive Officer

29 April 2021

 

 

Consolidated income statement

for the six months ended 31 January 2021

 

Unaudited

Unaudited

Audited

 

6 months to

31 January 2021

6 months to

31 January 2020

Year ended 31 July 2020

 

£000

£000

£000

 

 

 

 

Revenue

23,800

24,468

49,571

 

 

 

 

Cost of sales

(2,569)

(2,845)

(5,339)

Staff costs

(11,957)

(11,504)

(24,118)

Other operating expenses

(5,216)

(5,342)

(11,361)

Depreciation of property, plant and equipment

(833)

(813)

(1,642)

Amortisation of intangible assets

(5,556)

(5,347)

(10,664)

Impairment of goodwill and intangible assets

-

-

(14,813)

 

-------------

-------------

-------------

Operating loss

(2,331)

(1,383)

(18,366)

Finance income

1

-

-

Finance expenses

(695)

(795)

(974)

 

-------------

-------------

-------------

Loss before taxation

(3,025)

(2,178)

(19,340)

Income tax credit/(charge)

229

331

(20)

 

-------------

-------------

-------------

Loss for the period/year

(2,796)

(1,847)

(19,360)

 

-------------

-------------

-------------

Loss attributable to:

 

 

 

Owners of the Company

(2,612)

(1,832)

(19,017)

Non-controlling interest

(184)

(15)

(343)

 

-------------

-------------

-------------

 

(2,796)

(1,847)

(19,360)

 

-------------

-------------

-------------

Earnings per ordinary share (Note 2)

 

 

 

-  Basic

(2.7)p

(1.9)p

(19.9)p

 

-------------

-------------

-------------

-  Diluted

(2.7)p

(1.9)p

(19.9)p

 

-------------

-------------

-------------

 

 

 

Consolidated statement of other comprehensive income

for the six months ended 31 January 2021

 

Unaudited

Unaudited

Audited

 

6 months to

31 January 2021

6 months to

31 January 2020

Year ended 31 July 2020

 

£000

£000

£000

 

 

 

 

Loss for the period/year

(2,796)

(1,847)

(19,360)

 

 

 

 

Other comprehensive income

 

 

 

Items that are or may be reclassified to profit or loss

 

 

 

Foreign operations - foreign currency translation differences

 

163

 

(46)

 

332

 

-------------

-------------

-------------

Other comprehensive gain/(loss), net of tax

163

(46)

332

 

-------------

-------------

-------------

Total comprehensive loss

(2,633)

(1,893)

(19,028)

 

-------------

-------------

-------------

Attributable to:

 

 

 

Equity holders of the parent

(2,527)

(1,770)

(18,896)

Non-controlling interest

(106)

(123)

(132)

 

-------------

-------------

-------------

 

(2,633)

(1,893)

(19,028)

 

-------------

-------------

-------------

 

 

 

Condensed consolidated statement of changes in equity

As at 31 January 2021

 

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

 

Share

capital

Share premium

Merger
reserve

Capital
reserve

Foreign exchange reserve

Equity reserve

Retained earnings


Total

Non-controlling interest


Total equity

 

£000

£000

£000

£000

£000

£000

£000

£000

£000

£000

 

 

 

 

 

 

 

 

 

 

 

At 1 August 2019

9,522

83,513

556

449

(1,386)

89

(23,839)

68,904

1,600

70,504

Result for the period

-

-

-

-

-

-

(1,832)

(1,832)

(15)

(1,847)

Other comprehensive income

-

-

-

-

62

-

-

62

(108)

(46)

Total comprehensive income for the period

-

-

-

-

62

-

(1,832)

(1,770)

(123)

(1,893)

Shares issued during the period

31

146

-

-

-

-

-

177

-

177

Issue of convertible notes

-

-

-

-

-

13

-

13

-

13

Share based payment charges

-

-

-

-

-

-

124

124

-

124

 

-------------

-------------

-------------

-------------

-------------

-------------

-------------

-------------

-------------

-------------

At 31 January 2020

9,553

83,659

556

449

(1,324)

102

(25,547)

67,448

1,477

68,925

Result for the period

-

-

-

-

-

-

(17,185)

(17,185)

(328)

(17,513)

Other comprehensive income

-

-

-

-

59

-

-

59

319

378

Total comprehensive income for the period

-

-

-

-

59

-

(17,185)

(17,126)

(9)

(17,135)

Share premium reduction

-

(83,659)

-

-

-

-

83,659

-

-

-

Release of equity component of

convertible notes

-

-

-

-

-

(102)

-

(102)

-

(102)

Share based payment charges

-

-

-

-

-

-

123

123

-

123

 

-------------

-------------

-------------

-------------

-------------

-------------

-------------

-------------

-------------

-------------

At 1 August 2020

9,553

-

556

449

(1,265)

-

41,050

50,343

1,468

51,811

Result for the period

-

-

-

-

-

-

(2,612)

(2,612)

(184)

(2,796)

Other comprehensive income

-

-

-

-

85

-

-

85

78

163

Total comprehensive income for the period

-

-

-

-

85

-

(2,612)

(2,527)

(106)

(2,633)

Share based payment charges

-

-

-

-

-

-

45

45

-

45

 

-------------

-------------

-------------

-------------

-------------

-------------

-------------

-------------

-------------

-------------

At 31 January 2021

9,553

-

556

449

(1,180)

-

38,483

47,861

1,362

49,223

 

-------------

-------------

-------------

-------------

-------------

-------------

-------------

-------------

-------------

-------------

 

Consolidated balance sheet

as at 31 January 2021

 

Unaudited

Unaudited

Audited

 

As at 31
January 2021

As at 31
January 2020

As at 31
July 2020

 

£000

£000

£000

Non-current assets

 

 

 

Property, plant & equipment

4,749

5,801

5,439

Intangible assets (Note 3)

117,138

133,987

118,754

Deferred tax asset

734

748

746

 

-------------

-------------

-------------

 

122,621

140,536

124,939

 

 -------------

 -------------

-------------

Current assets

 

 

 

Trade and other receivables

12,539

26,929

13,239

Cash and cash equivalents

2,793

7,548

4,424

 

-------------

-------------

-------------

 

15,332

34,477

17,663

Assets held for sale (Note 4)

15,889

-

10,273

 

-------------

-------------

-------------

Total assets

153,842

175,013

152,875

 

 -------------

 -------------

-------------

Current liabilities

 

 

 

Trade and other payables

8,595

25,450

9,136

Lease liabilities

1,043

982

1,008

Contract liabilities

17,772

16,897

18,242

Income taxes

-

278

90

Loans and borrowings (Note 6)

2,849

3,192

1,356

 

-------------

-------------

-------------

 

30,259

46,799

29,832

 

 -------------

 -------------

-------------

Liabilities directly associated with the assets held for sale (Note 4)

16,206

-

10,429

 

-------------

-------------

-------------

 

46,465

46,799

40,261

 

 -------------

 -------------

-------------

Non-current liabilities

 

 

 

Contract liabilities

147

190

184

Deferred tax liabilities

8,276

8,435

8,810

Loans and borrowings (Note 6)

46,418

46,492

48,153

Lease liabilities

2,735

3,483

3,164

Provisions

578

689

492

 

-------------

-------------

-------------

 

58,154

59,289

60,803

 

-------------

-------------

-------------

Total liabilities

104,619

106,088

101,064

 

-------------

-------------

-------------

Net assets

49,223

68,925

51,811

 

 -------------

 -------------

-------------

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

Called up share capital

9,553

9,553

9,553

Share premium account

-

83,659

-

Equity reserve

-

102

-

Merger reserve

556

556

556

Capital reserve

449

449

449

Foreign exchange reserve

(1,180)

(1,324)

(1,265)

Retained earnings

38,483

(25,547)

41,050

 

-------------

-------------

-------------

Equity attributable to equity holders of the parent

47,861

67,448

50,343

Non-controlling interest

1,362

1,477

1,468

 

-------------

-------------

-------------

Total equity

49,223

68,925

51,811

 

-------------

-------------

-------------

 

 

 

 

Consolidated statement of cash flows

for the six months ended 31 January 2021

 

Unaudited

Unaudited

Audited

 

6 months to

31 January 2021

6 months to

31 January 2020

Year ended

31 July
 2020

 

£000

£000

£000

 

 

 

 

Operating activities

 

 

 

Loss for the period

(2,796)

(1,847)

(19,360)

Amortisation of intangible assets

5,556

5,347

10,664

Impairment of goodwill and intangible assets

-

-

14,813

Depreciation

833

813

1,642

Net finance expense

694

795

974

Income tax (credit)/charge

(229)

(331)

20

Share based payment charges

45

124

247

 

-------------

-------------

-------------

Operating cash flow before changes in working capital

4,103

4,901

9,000

Movement in trade and other receivables

(5,859)

(4,141)

396

Movement in trade and other payables and deferred income

4,740

4,732

44

 

-------------

-------------

-------------

Operating cash flow from operations

2,984

5,492

9,440

Interest paid

(663)

(652)

(1,409)

Income tax (paid)/received

(512)

237

(77)

 

-------------

-------------

-------------

Net cash flow from operating activities

1,809

5,077

7,954

 

-------------

-------------

-------------

Investing activities

 

 

 

Purchase of plant and equipment

(62)

(299)

(530)

Development expenditure capitalised

(4,241)

(3,900)

(8,525)

 

-------------

-------------

-------------

Net cash used in investing activities

(4,303)

(4,199)

(9,055)

 

-------------

-------------

-------------

Financing activities

 

 

 

Receipts from loans and borrowings

512

830

1,586

Repayment of borrowings

(572)

(1,500)

(2,557)

Payment of lease liabilities

(554)

(558)

(976)

 

-------------

-------------

-------------

Net cash flow used in financing activities

(614)

(1,228)

(1,947)

 

-------------

-------------

-------------

Effects of currency translation on cash and cash equivalents

411

166

859

Net decrease in cash and cash equivalents

(3,108)

(350)

(3,048)

Cash and cash equivalents at the beginning of the period

5,543

7,732

7,732

 

-------------

-------------

-------------

Cash and cash equivalents at the end of the period

2,846

7,548

5,543

 

-------------

-------------

-------------

 

 

 

 

Cash and cash equivalents at end of year - from continuing operations

2,793

7,548

4,424

Cash and cash equivalents at end of year - assets held for sale

53

-

1,119

 

 

 

 

 

 

 

Unaudited notes

 

1.     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 28 April 2021.

 

The interim financial information for the six months ended 31 January 2021, including comparative financial information, have been prepared in accordance with international accounting standards ("IFRS") in conformity with the requirements of the Companies Act 2006 insofar as these apply to interim financial statements.

 

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 2020.

 

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 2020 Annual Report

The financial figures for the year ended 31 July 2020, 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 2020 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.

 

 

 

 

2.     Basic and diluted earnings per ordinary share

 

 

Unaudited

Unaudited

Audited

 

6 months to

31 January 2021

6 months to

31 January 2020

Year ended

31 July
 2020

 

£000

£000

£000

 

 

 

 

Loss for the period attributable to owners of the Company (£000)

(2,612)

(1,832)

(19,017)

Post tax effect of non-core net expenditure (£000)

1,519

559

2,007

Post tax effect of customer related intangible assets (£000)

1,343

1,727

3,571

Post tax effect of impairment of goodwill (£000)

-

-

14,813

Post tax effect of share-based payment charges (£000)

45

124

247

Post tax effect of convertible loan note interest (£000)

106

55

116

Post tax effect of fair value and foreign currency on convertible loan note

(174)

-

(591)

Non-recurring tax factors (£000)

639

437

1,650

 

-------------

-------------

-------------

Adjusted post tax earnings (£000)

866

1,070

2,796

 

-------------

-------------

-------------

Weighted average number of shares (number '000)

95,533

95,439

95,485

Dilutive effect of share options (number '000)

374

1,105

565

 

-------------

-------------

-------------

Fully diluted number of shares in issue (number '000)

95,907

96,544

96,050

 

-------------

-------------

-------------

Basic loss per ordinary share (pence)

(2.7)

(1.9)

(19.9)

Adjusted earnings per ordinary share (pence)

0.9

1.1

2.9

Diluted loss per ordinary share (pence)

(2.7)

(1.9)

(19.9)

Adjusted diluted earnings per ordinary share (pence)

0.9

1.1

2.9

 

-------------

-------------

-------------

 

 

 

 

 

 

 

3.     Intangible assets

 

Unaudited

Unaudited

Unaudited

Unaudited

Unaudited

 



Goodwill

Customer related intangibles


Development costs


Software for own use



Total

 

£000

£000

£000

£000

£000

Cost

 

 

 

 

 

At 31 July 2020

115,758

42,356

40,064

3,780

201,958

Internally developed

-

-

4,241

-

4,241

Foreign exchange differences

-

-

(971)

(17)

(988)

 

-------------

-------------

-------------

-------------

-------------

At 31 January 2021

115,758

42,356

43,334

3,763

205,211

 

-------------

-------------

-------------

-------------

-------------

Amortisation and impairment

 

 

 

 

 

At 31 July 2020

41,812

13,613

24,426

3,353

83,204

Amortisation for the period

-

1,740

3,656

160

5,556

Foreign exchange differences

-

-

(672)

(15)

(687)

 

-------------

-------------

-------------

-------------

-------------

At 31 January 2021

41,812

15,353

27,410

3,498

87,924

 

-------------

-------------

-------------

-------------

-------------

Carrying amounts

 

 

 

 

 

At 31 July 2020

73,946

28,743

15,638

427

118,754

 

-------------

-------------

-------------

-------------

-------------

At 31 January 2021

73,946

27,003

15,924

265

117,138

 

-------------

-------------

-------------

-------------

-------------

 

 

 

4.     Disposal Group classified as held for sale

 

At 31 January 2021, the Group was actively progressing the sale of a non-core element of the Group's Business Spend Management business.

 

The major classes of assets and liabilities, stated at book value, of the disposal group classified as held for sale at 31 January

2021 are as follows:

 

 

31 January 2021

31 July
 2020

 

£000

£000

 

 

 

Trade and other receivables

15,836

9,154

Cash and cash equivalents

53

1,119

 

-------------

-------------

Total assets classified as held for sale

15,889

10,273

 

-------------

-------------

 

 

 

Trade and other payables

16,206

10,429

 

-------------

-------------

Total liabilities classified as held for sale

16,206

10,429

 

-------------

-------------

 

Revenue relating to this element of the Group's Business Spend Management business was £137,000 (FY 2020: £416,000) in the period ended 31 January 2021. Revenue for the Group for the period was £23,800,000 (FY 2020: £49,571,000). Adjusted revenue of £23,663,000 (FY 2020: £49,155,000) refers to the revenue excluding the £137,000 (FY 2020: £416,000) attributable to this element of the business.

 

There was no gain or loss recognised on the recognition of the disposal group as held for sale in either the current or comparative period.

 

 

5.     Alternative performance measure - Adjusted EBITDA (unaudited)

 

Management has presented the performance measure adjusted EBITDA because it monitors this performance measure at a consolidated level, and it believes that this measure is relevant to an understanding of the Group's financial performance.

 

Adjusted EBITDA is calculated by adjusting profit before taxation to exclude the impact of net finance costs, depreciation, amortisation, share based payment charges and non-core net expenditure.  The non-core net expenditure includes significant items of income or expenditure that are not associated with the Groups on-going, underlying activities (together, "non-core-net expenditure").

 

Adjusted EBITDA is not a defined performance measure in IFRS. The Group's definition of adjusted EBITDA may not be comparable with similarly titled performance measures and disclosures by other entities.

 

 

 

6 months to

31 January 2021

6 months to

31 January 2020

Year ended

31 July
 2020

 

£000

£000

£000

 

 

 

 

Loss before taxation

(3,025)

(2,178)

(19,340)

Adjustments for:

 

 

 

Net finance costs

694

795

974

Depreciation

833

813

1,642

Amortisation

5,556

5,347

10,664

Share based payment charges

45

124

247

Impairment of goodwill and intangible assets

-

-

14,813

Non-core net expenditure:

 

 

 

§  Costs of restructuring the Group's operations - staff

1,361

456

901

§  Costs of restructuring the Group's operations - other

95

190

142

§  Expenses of acquisition related activities

-

81

-

§  Legal and professional fees

247

83

698

§  Non-core foreign exchange impacts

199

(122)

698

§  Net loss related to assets held for sale

176

-

405

 

-------------

-------------

-------------

Adjusted EBITDA

6,181

5,589

11,844

 

-------------

-------------

-------------

R&D capitalised

(4,241)

(3,900)

(8,525)

 

-------------

-------------

-------------

Adjusted cash EBITDA

1,940

1,689

3,319

 

-------------

-------------

-------------

 

 

 

Management has presented the performance measure adjusted EPS (note 2) because it believes that this measure is relevant to an understanding of the Group's financial performance. Adjusted EPS is calculated by adjusting the loss for the period to exclude the post-tax impact of goodwill impairment, customer related intangible amortisation, share based payment charges, interest and foreign currency impacts on convertible loan notes, non-core net expenditure and non-recurring tax factors.

 

Adjusted EPS is not a defined performance measure in IFRS. The Group's definition of adjusted EPS may not be comparable with similarly titled performance measures and disclosures by other entities.

 

 

6.     Net debt

 

 

Unaudited

31 January 2021

Unaudited

31 January 2020

Audited

31 July
 2020

 

£000

£000

£000

Non-current

 

 

 

 

 

 

 

Secured bank loans

40,146

40,005

41,744

US Government loan

322

-

336

Convertible notes

5,950

6,487

6,073

Lease liabilities

2,735

3,483

3,164

 

-------------

-------------

-------------

Total non-current

49,153

49,975

51,317

 

-------------

-------------

-------------

Current

 

 

 

Secured bank loans

2,447

3,192

936

US Government loan

402

-

420

Lease liabilities

1,043

982

1,008

 

-------------

-------------

-------------

Total current

3,892

4,174

2,364

 

-------------

-------------

-------------

 

 

 

 

Total borrowings

53,045

54,149

53,681

 

 

 

 

Less:

 

 

 

Cash and cash equivalents

(2,846)

(7,548)

(5,543)

 

-------------

-------------

-------------

Net debt

50,199

46,601

48,138

 

-------------

-------------

-------------

 

 

 

 

Bank net debt

39,747

35,649

37,137

 

-------------

-------------

-------------

 

 

 

 

Additional information

 

 

Reconciliation of alternative performance measures:

 

 

 

 

Reported EBITDA

Adjusted EBITDA

Adjusted operating profit

Adjusted profit before tax

Adjusted profit after tax

 

£000

£000

£000

£000

£000

 

 

 

 

 

 

Loss after tax

(2,796)

(2,796)

(2,796)

(2,796)

(2,796)

Add back:

 

 

 

 

 

Tax credit

(229)

(229)

(229)

(229)

(229)

Interest charge

694

694

694

-

-

Share based payment charges

45

45

45

45

45

Depreciation

833

833

-

-

-

Amortisation

5,556

5,556

-

-

-

Non-core net expenditure (note 5)

-

2,078

2,078

2,078

2,078

Non-recurring interest and foreign currency impacts on convertible loan notes

-

-

-

(43)

(43)

Amortisation charged on customer related intangible assets

-

-

1,740

1,740

1,740

Non-recurring tax factors

-

-

-

-

639

 

 

 

 

 

 

 

-------------

-------------

-------------

-------------

-------------

Total

4,103

6,181

1,532

795

1,434

 

-------------

-------------

-------------

-------------

-------------

 

 

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