24th Apr 2018 14:57
LONDON (Alliance News) - Shares in Proactis Holdings PLC plummeted Tuesday as the company reported higher than expected customer losses and despite an increased profit for the six months to end of January.
Shares in the business management software company were trading 41% lower at 112.00 pence in afternoon trade.
The company made a pretax profit of GBP2.5 million for the first half, up from GBP878,000 in the same period last year. Reported revenue rose to GBP26.4 million from GBP11.8 million.
First half earnings before income, taxes, depreciation and amortisation increased more than two-fold to GBP8.4 million from GBP3.0 the year before.
Proactis' order book increased by almost GBP20 million in the period to GBP47.8 million from GBP28.0 million at the end of July 2017.
The rise in order book stemmed from its acquisition of Perfect Commerce LLC for GBP94.3 million in August 2017. Perfect's performance has been "in line with management's expectations" since its acquisition. Perfect contributed GBP13.4 million in revenue and about GBP3.7 million of adjusted Ebitda in the period.
Proactis said that it has had "a higher loss rate" of customers "toward the end of the period than it has historically experienced which will have an impact during the second half" - which might explain the large drop in share price.
Chief Executive Hamp Wall said: "The board has dramatically enhanced the scale and financial performance of Proactis as well as its medium-term growth opportunity through its successful and focussed M&A strategy. Further, the group has performed extremely well with a strong momentum in new names signed during the period delivering substantially improved initial contract value. Up-selling and cross-selling activity with existing customers has also been positive. However, this performance is not fully reflected by reported revenue which has been slower to build principally due to a strengthening Sterling which is reducing the impact of the group's performance in the United States and in Europe and, latterly, a loss of a number of customers which the board does not expect to continue.
"Following the acquisition of Perfect during August 2017, the group commenced its restructuring plan. The new leadership team is formed and the group has been successful in realising an estimated GBP4.2 million of annualised cost savings to date. The board is confident that it will meet its target of GBP5.0 million by end of this financial year.
"The group has been introduced to a high level of good quality M&A opportunities and the board is keen to move forward with this element of the group's strategy when it is prudent to do so."
"The group has made substantial progress during the period. The board is cautious about the immediate outlook for the financial performance of the group due to the factors described above but is confident about the longer-term growth prospects for value creation. I look forward to the coming period and am confident in our ability to drive further growth and continue to deliver against our ambitious strategy."
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