Proactis Holdings Plc (LON:PHD) Chief Financial Officer Tim Sykes caught up with DirectorsTalk for an exclusive interview to discuss their latest trading statement, the performance of Millstream, the supplier commerce initiative and summarises Proactis’ delivery within the short period against the longer-term story
Q1: Proactis Holdings appears to be doing well with 36% year-on-year revenue growth, what are the key drivers of that growth?
A1: We’re delighted with the progress that we’ve made this 6 months. So, there are three key drivers to the growth we’ve been able to demonstrate, first one is our organic growth from our core businesses and the second one is the contribution from our acquisitions. So, it’s absolutely key to remember that our underpinning foundation is strong organic business so it’s really important to see that growth coming through in the figures at 13.4% but we’re a twin-storied company so the contribution from our acquisitions is also very important and really encouraging. Millstream, which was acquired during November 2016, and also Due North, which was acquired during February 2016, both represent new revenues to us for this period and both were contributing well and in line with our expectations.
Q2: You refer to the performance of Millstream specifically, it’s your fifth acquisition in 4 years, could you elaborate a little bit further?
A2: The financial performance of Millstream is really critical to our plans and we paid £15.5 million for that in November last year. So, we were hoping, when we bought it, for just short of £5 million per annum in revenue and just short of £2 million per annum on EBITDA so it’s great to see that coming through post-acquisition and we’ve tried to show to investors and the investment community how that business is going in the early days under our stewardship. So, we took a decision to integrate minimally in the early phase of our ownership to give it the opportunity to bed in properly with minimal disruption and we’ll move further forward with fuller integration in the coming months so really pleased with the early stage progress that it’s made inside of our group.
Q3: Now, an element of the upside to the Proactis story is the supplier commerce initiative, can you give us an update on the progress there?
A3: Of course, so this is a really exciting upside to our story, on the base plan of our organic growth in our businesses and our M&A story and it’s really important to understand that we’re bringing a new product, or a new concept, to market here and this takes time so, it’s frustratingly time-consuming but we believe that we’re truly be very valuable in the future. So, we established a small group of early adopters for the concept, made about a year or so ago now, and envisaged the period from about 6 months of about a year, we said that estimated between 3 months and 12 months, to transition to develop the concept into a product which we could then take more widely into our customer base. So, we’re in that transition period now and we’re gathering really important data and information about buyer behaviour and about supplier reaction to what we’re trying to achieves so that we can be prepared for that wider roll out down the line. In addition to the acquisition of Millstream, and their business model, the supplier commerce opportunities have widened considerably and we’re looking at ways we can deploy the technology within our own operations as well as into our customers.
Q4: More generally then, can you summarise Proactis Holdings’ delivery within the short period against the longer-term story?
A4: Yes, it’s important to understand where we are in our 6 months versus our longer-term plan. We have a well-established strategy to deliver growth to three core areas so organic, new names in our core businesses and then upselling and cross-selling into the customer base is our foundation. Earnings enhancing M&A activity, so things like Due North in February ’16 and then Millstream in November ’16, adding to the three acquisitions from before and then number three, as just described, supply and commerce. That strategy has been set now for over 4 years and is still really an absolutely valid so we’re simply executing to that strategy in this 6-month time and continue to do that over the course of the next 6 months and into the future years.
