Investor’s criticism sets the scene for showdown at Proactis AGM

In a stockmarket announcement, ISIS Equity Partners raised concerns over the company’s share price – which had fallen to 25.75p on Thursday afternoon from 43p when it listed on the Alternative Investment Market in 2006.

ISIS called for the board of Proactis to “clearly articulate to all shareholders its strategy for creating shareholder value”, and said it should consider a sale.

“(Isis) request(s) that the company formally appoint corporate finance advisers to conduct a strategic review to assess whether shareholders would see better value through a sale or merger of the business than through remaining as an independent public company.”

Private Equity investor Isis, which owns 26.3 per cent of Proactis’s shares, also called for directors to seek re-election annually, “in line with current best practice”.

The company, which designs and licenses software for businesses and organisations to cut the cost of procurement, is holding its AGM at its Wetherby headquarters.

Its next-biggest shareholder, non-executive director Rodney Potts, is a former chief executive of accounting software group Coda, and has 24 per cent.

Proactis chief executive Rod Jones declined to comment.

Mr Jones, finance director Tim Sykes and chief operating officer Sean McDonough are all up for re-election at the AGM. Earlier this month the company said chief technical officer Kevin Chidlow was quitting after 15 years.

The company’s results for the year to the end of July showed revenues growing 20 per cent to £7.5m. This led to a return to the black with a £100,000 operating profit, up from a loss of £600,000 last year.

Over the year, the group signed 28 new deals worth £3.5m, compared with 30 new deals worth £2.6m last year as the group signed up more higher margin customers.

Proactis is now offering a cloud-based subscription business model to complement its traditional perpetual licence business model.

Cloud computing provides companies with secure software and remote data management, emails and storage so they don’t have to deal with lots of different contracts.

Proactis said 10 of the 28 new deals agreed in the last year were cloud-based subscriptions.

The company was founded in 1996 and floated on AIM in 2006 with a market value of about £13m.

ISIS has stakes in firms including Crew Clothing and has £1.1bn under management.