Proactis Holdings (PHD) Reported Dismal Interim Results

  • May 01, 2019 BST
  • Team Kalkine
Proactis Holdings (PHD) Reported Dismal Interim Results

Proactis Holdings PLC (PHD) recently announced its interim results for the six months ended 31 January 2019 and said it had hired a new chief financial officer amid an interim period which has seen its profit all but wiped out. Richard Hughes has been appointed as the Chief Financial Officer, effective from 20 May 2019. He will replace Tim Sykes, who was promoted to the role of Chief Executive Role in January 2019. The series of acquisitions the company had undertaken in recent time helped it to report an increase in revenue, but it posted a steep fall in profits for the period. As the group took on debt to finance the deals, finance costs increased significantly.

Proactis is a Wetherby, United Kingdom-based Spend management and B2B eCommerce solutions provider, which engages in the development and sale of business software, installation and related services in the United Kingdom and internationally. The company appointed Richard Hughes as the new Chief Financial Officer; he has significant experience in, accounting, reporting, compliance and financial control. Before joining the company, he was the Finance Director, International of ARRIS International plc, and had held senior positions at PwC for seven years.

Benefitting from the contribution of acquisitions, the company reported revenues increased to £27.7 million from £26.4 million, indicating an increase of 5 per cent over the last. However, excluding the effect of acquisitions, reported revenue declined to £24.9 million from £26.4 million reported in the first half of 2018. Adjusted EBITDA declined slightly to £8.0 million from £8.40 million reported last year. In the six months to January 31, the company's profit before tax dropped to £0.30 mn as compared to £2.45 million for the corresponding period a year back, while net profit declined to £45,000 from a profit of £2.56 million in 1H 2018.  Adjusted EPS also fell to 3.5p as compared to 5.4p in the corresponding period last year.

Net cash generated from operating activities stood at £4.4 million. Net bank debt rose to £39.3 million and increased from £29.8m at the end of 31 July 2018. The increase in debt was fuelled by the cash element of the acquisition of Esize. The management acknowledged that the group had experienced a higher level of customer churn than had been expected. The order book, which indicates the longer-term visibility of income, remained flat at £44.6 million. Though operational cost savings have mitigated the loss of profitability to some extent, this has adversely impacted Annual Recurring Revenue over that period.

The company undertook a review of the US, French and German business units and plans, which include transitioning the go to market strategy, were established accordingly. The company also announced that dividends had been suspended for the foreseeable future and it will make adjustments to operating and investment expenses. The company expects to report better cash flow and profitability in the next financial year.

Share Price Commentary

 Daily Chart as at May-01-19, before the market closed (Source: Thomson Reuters) 

On 1st May 2019, at the time of writing (before the market close, GMT 9:40 am), PHD shares were trading at GBX 29.65, down by 1.82 per cent against its previous day closing price. Stock's 52 weeks High and Low is GBX 145.00/GBX 28.10. Total outstanding market capitalisation was £28.55 million with a dividend yield of 4.97 per cent.

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