Proactis Holdings PLC (LON:PHD), the global spend management solution provider, has today provided an update on trading for the six-month period ended 31 January 2021.
Trading Update
The Group’s progression over the period has been strategically significant with encouraging commercial traction and growing pipelines in each of its operations in France, Germany and the US under the new go-to-market strategy. In addition, the Group signed its first bePayd contracts under both the buyer-funded and the Proactis-funded models.
The Board believes that delivering these milestones validates the Group’s strategy and provides confidence of sustainable momentum and progression in the second half of the year and beyond.
New business deal intake for the period was strong with total contract value of £6.7m delivered, despite the persistence of previously announced COVID-19 related headwinds (H1 2020: £7.5m; H2 2020: £7.1m). The Board expects to progress TCV in the second half of the year as the Group accelerates pipeline conversion in the US, France and Germany and as COVID-19 deferred contracts from the first half come through.
Customer churn for the six-month period of £1.5m (31 January 2020: £2.1m) was in line with the Board’s expectations and included £0.3m from Heightened Risk Accounts (“HRAs”) as defined in previous announcements. Accordingly, the Board expects to be able to report further modest progression in the Group’s underlying ARR, building on that reported for the year ended 31 July 2020.
The Board expects to report revenues for the six-month period of £23.7m (H1 2020: £24.5m) and Adjusted EBITDA* of £6.2m (H1 2020: £5.6m), against a comparative period unaffected by COVID-19. Operating margins have improved following the restructuring of the Group’s management team and operating cost base.
Net bank debt as at 31 January 2021 was £39.7m (31 July 2020: £37.1m). The position has been impacted by lower cash levels in the Group’s outsourced sourcing business resulting from lower trading volumes impacted by COVID-19 as previously reported, and cash flow from upfront costs of the restructuring of its management team and operating cost base.
Outlook
The Group expects to be able to report performance in line with Board’s expectations for the period. Whilst the Board is conscious of the ongoing impact that COVID-19 is having across the business, its confidence in the Group’s prospects for the mid-term has been strengthened further through the strategic milestones that have been achieved during the period. The Board looks forward to continued progression.
Notice of Results
The Group currently intends to release its interim results for the six-month period ending 31 January 2021 on 29 April 2021.
Tim Sykes, Proactis Holdings CEO, commented:
“I am encouraged by the progress the Group has made during the period as our strategy becomes embedded within our teams across the Group. We have met every milestone that we needed to in order to validate our strategy for mid-market business spend management solutions and for bePayd and we can now push forward with confidence to pursue the market opportunity we have.”
* 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.
Financial expectations noted above are unaudited.
The company went on to announce that it has signed a contract with Denbighshire County Council (“DCC”) to provide its early payment service, bePayd, into DCC’s supply chain.
bePayd will enable DCC’s suppliers to receive an automated notification of approved invoices with the option of accelerating payment before the pre-agreed contractual terms. Proactis will fund the accelerated payment in exchange for a small discount paid by the supplier.
It is anticipated that bePayd will be offered, within the first year, to approximately 3,000 suppliers that generate over 50,000 invoices per annum with a spend value exceeding £100m.
Councillor Julian Thompson-Hill, Denbighshire County Council’s Lead Member for Finance, Performance and Strategic Assets, commented:
“The Council recognises the importance of its valuable supply chain, especially in these difficult times. Proactis has recognised the needs of our suppliers and we are keen to be able to offer bePayd to them.”
Tim Sykes, Chief Executive Officer, commented:
“DCC is a long-standing and valued customer of Proactis and we are delighted that it has agreed to offer bePayd to its suppliers. bePayd is a natural extension to the portfolio of Proactis’ existing solutions adopted by DCC and we expect that it can drive liquidity into the supply chain. We will now work closely with DCC to design and implement bePayd’s roll-out and look forward to updating the market in line with progress.”
