Proactis sees profit growth in ‘transformational’ year

The Wetherby-based group said it has seen encouraging levels of profit and its core UK business is growing well.

It said that its Indian operation has made further progress and two new deals were signed with Mittal network companies, with more in the pipeline.

The group reported a three per cent increase in revenues to £4m in the six months to January 31 while pre-tax profits rose from £16,000 to £321,000.

Last month Proactis bought EGS Group for £2.9m in a deal that created one of the largest independent eProcurement solution providers to the UK public sector.

Proactis said EGS’s integration into the group is progressing well and it is confident of further integration benefits over the coming months.

Since the acquisition, EGS has signed three new deals.

Proactis said that synergies of £300,000 a year were realised, in line with the firm’s integration plan, and more synergies have been identified.

Chief executive Rod Jones said: “It has been a transformational period for the group and I am pleased to report a strong set of results with very encouraging levels of profit.

“The group’s forward order book has reached record levels at £7.1m and, with a solid increase in reported revenue for the period, this firmly endorses our strategy.

“Our core UK business is growing well.

“New deal volumes are positive and sales and marketing activity is high.

“We are pleased to confirm the group’s commitment to mergers and acquisitions as a core element of our growth strategy following the acquisition of EGS, which will impact our numbers positively in the coming months. The group has a number of attractive opportunities available to it and will look to exploit these over the year ahead.”

Analyst Andrew Darley at FinnCap said: “The management has stated a clear aspiration for accelerating growth organically or through acquisitions.

“In order to display surety of funding to undertake acquisitions, the group has executed a loan note instrument from Henderson Alternative Investment Advisor Ltd. We look forward to further positive newsflow. We reiterate our target price of 70p.”

The group’s decision to offer both subscription and perpetual licences to customers, where previously it had offered only perpetual licences, appears to be paying off.

Proactis said the strategy is part of the group’s plan to increase the lifetime value of a customer relationship and to increase visibility of future revenue.

Subscription deals have made up a large proportion of new business across all channels during the period.

The firm said it is very encouraging that all the subscription deals have been renewed at or above pre-existing contract values, although relatively few of those early subscription deals have reached their renewal date so far.