Proactis sees a mixed performance

Proactis creates, sells and maintains specialist softwareProactis creates, sells and maintains specialist software
Proactis creates, sells and maintains specialist software
Software firm Proactis has reported a mixed performance in its first half with its UK operations and new Dutch business Esize performing well whilst its US, French and German businesses failed to meet expectations.

The Wetherby-based firm, whose customers include Grant Thornton, Marshalls, Air France, Chelsea FC and Savills, said its US business unit lost tenders and the French and German business units were hit by deferred decisions.

The group said it is taking corrective action to address the problems.

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Proactis’ chief executive Tim Sykes said: “The steps to address these issues are underway with some leadership team changes and organisational restructuring already having been delivered.”

In the six months to January 31, the group’s total contract value was £6.1m, up from £5.6m, and the group signed 34 deals with new customers.

It reported strong upselling activity with existing customers, signing 54 deals over the six month period.

Revenue rose 5 per cent to £27.7m, mainly due to the benefit of acquisitions.

Adjusted earnings fell from £8.4m to £8m.

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In August, Proactis completed its acquisition of Esize, a complementary provider of spend management solutions to buyers based in the Netherlands. Proactis said Esize has performed well since the acquisition.

“Esize has settled in well,” said Mr Sykes.

“We’ve already consolidated its existing operations and the group is seeing the benefits of a scaled operation in the Netherlands.

“Esize has a SaaS-based business model that is consistent with the group’s and which delivers high levels of contracted annual recurring revenue with high retention rates.”

Analyst Andrew Darley at FinnCap said: “A review of operations since February has given a clearer picture, leading to revised but broadly unchanged 2019 revenue and EBITDA expectations.

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“Following the departure of former CEO Hamp Wall in January and awareness of weak trading, the board has identified changes to enable replication of successful operations (in the UK and the Netherlands) across weaker territories (in the US, France and Germany). As the fifth-largest procurement solutions business globally, Proactis remains undervalued due to a series of challenges which have the opportunity to be corrected with significant valuation benefit – and if not, then private equity or trade buyers will be interested.”

He trimmed his 12-month target share price to 100p.

Mr Sykes said: “This set of results is the culmination of a number of the previously reported issues facing the US, French and German parts of the group. However, much work has been undertaken and we are pleased to share the outcome of our review of operations with shareholders today.

“We have a proven proposition to address a large and growing market, and we are confident that this will drive growth going forward after a period of stabilisation.”

Proactis has said the complexities of leaving the EU could hand the firm more work as customers attempt to make their businesses Brexit compliant.

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The firm is keen to help customers prepare themselves for Britain’s departure so they can trade successfully after Brexit.

“Our business could certainly help customers in a post Brexit world, but Brexit has not impacted business noticeably to date,” said Mr Sykes.