31st Oct 2019 12:55
(Alliance News) - Proactis Holdings PLC on Thursday said it suffered a swing to loss in its most recent financial year, weighed down by an impairment in the US over "performance issues" there.
The procurement solutions firm posted a GBP25.8 million pretax loss in its financial year ended July 31, swinging from a GBP3.7 million profit the year before.
The central cause of this was a GBP27.0 million impairment of goodwill and intangible assets.
"Goodwill impairment testing resulted in the need to impair goodwill in the US cash generating unit by the amount of GBP27.0 million due to the performance issues experienced in that territory. The United Kingdom, Netherlands and Rest of Mainland Europe CGUs showed headroom in these calculations. This follows the already announced challenges faced in the US and outlined in the interim results earlier this year," Proactis said.
In its interim report, Proactis noted lost tenders in its US business and made changes to the unit's leadership.
Revenue increased by 3.6% to GBP54.1 million from GBP52.2 million. This followed a February warning that the firm was no longer expecting significant growth in the second half of the year.
At present, Practis is undertaking a formal sales process and has received expressions or interest, some of which have resulted in advanced discussions, which the company said included "provision of certain detailed financial information with regard to the business in a dataroom". This process continues.
Chief Executive Tim Sykes said: "The results for the period are in line with the board's expectations. Following the completion of the operational review announced in April 2019, the management team has been working incredibly hard to assess and rectify the issues identified and that have impacted overall group performance over the last two financial years. This has included managing leadership change throughout the regions affected as well as through the business as we build teams that are capable of executing the group's new go to market strategy.
"The board is confident that this capability is now in place and the whole team can execute efficiently to deliver a substantial and high growth company. We are seeing relevant progress already with pipeline starting to build and an encouraging level of order intake in the new financial year."
Sykes added: "The group has been profitable and cash generative in the period under review, and the long-term prospects are exciting. With a strong ARR giving high levels of visibility, and a proven, highly relevant end-to-end offering, we begin the new financial year in line with management's expectations and with optimism for the group's potential."
Proactis shares were down 11% on Thursday in London at 52.26 pence.
By Anna Farley; [email protected]
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