Half Yearly Report

22 March 2012

PROACTIS Holdings PLC

Interim results for the six months ended 31 January 2012

PROACTIS Holdings PLC ("PROACTIS" or the "Group") the specialist Spend Control software provider, is today issuing its interim results for the six month period to 31 January 2012.

KEY POINTS

w Reported revenue increased by 22% to £3.7m (31 January 2011: £3.0m)

w Reported operating profit increased to a profit of £124,000 (31 January 2011: loss £208,000)

w Cash generative and strong balance sheet with cash balances of £2.3m (31 July 2011: £2.1m)

w Total Initial Contract Value signed on new deals was £1.8m (31 January 2011: £1.5m) with only £0.5m recognised in the period (31 January 2011: £0.4m)

w Annualised contracted revenue increased to £4.3m (31 July 2011: £4.0m)

w Total contracted, deferred multi-year revenue increased to £4.7m (31 July 2011: £3.8m)

w Deal activity is buoyant with 15 new name deals (31 January 2011: 13) and continued strong customer loyalty with 34 upgrades in the period (31 January 2011: 38)

w Uptake of multi-year, transactional priced Cloud/SaaS solutions is in line with expectations - 5 new customers including Cancer Research UK and Kingfisher (31 January 2011: 5)

Rod Jones, Chief Executive Officer, commented:

"I am pleased with the progress of the Group as it has returned to profitable cash generation. The Group has reported substantial revenue growth coming from a greater proportion of perpetual licence deals in the current period, a significant proportion of deferred revenue from contract wins from prior periods and a return to a normalised level of performance from the implementation services business. Further, the Group has continued to build a greater level of visibility over its future revenue with five new multi-year Cloud/SaaS deals signed along with long term support contracts being signed on some of the ten new perpetual licence deals. The mix of Cloud/SaaS based deals to perpetual licence deals remains extremely important to short term profitability for the foreseeable future.

Although new deal closure remains challenging, with elongated sale processes and aggressive negotiations evident in most cases, sales and marketing activity is high and the Group has good visibility of new deal opportunities and a solid forward order book for its implementation services."

Enquiries:

Notes to editors:

PROACTIS creates, sells and maintains specialist software which enables organisations to streamline, control and monitor all internal and external expenditure, other than payroll. PROACTIS is already used in over 250 organisations around the world from the commercial, public and not-for-profit sectors.

PROACTIS is head quartered in Wetherby, West Yorkshire. It develops its own software using an in-house team of developers and sells through both direct and indirect channels via a number of Accredited Channel Partners.

PROACTIS floated on the AIM market of the London Stock Exchange in June 2006.

CLOUD COMPUTING is defined as location-independent computing, whereby shared servers provide resources, software, and data to computers and other devices on demand, as with the electricity grid.

CHAIRMAN'S AND CHIEF EXECUTIVE OFFICER'S REPORT

The Group reports its interim results for the six month period to 31 January 2012.

Results

Reported revenue has increased 22% to £3.7m (2011: £3.0m) and the Group has returned to profitability and positive cash flows, even after taking account of the £173,000 dividend paid during the period. This progress has been achieved through three contributory factors:

- 15 new name deals (2011: 13) of which 10 were perpetual licence based (2011: 8);

- an improvement in like for like levels of implementation services revenues as deal flow normalised; and

- a natural cumulative increase in recurring subscription, support and hosting revenues largely from new deals signed in prior periods.

It is becoming evident that the Group's markets are demanding choice between the perpetual licence model and the Cloud/SaaS model. The Group has won substantial deals of both types in the period and, where the deal is a perpetual licence model, the Group has been successful in increasing the level of customer commitment with long term support contracts. With five further Cloud/SaaS deals signed during the period, this has substantially increased forward visibility of revenues.

The Directors have reported previously that the transition toward a business model that blends the perpetual licence and the Clous/SaaS models would adversely affect short term financial results. This was exacerbated during the year ended 31 July 2011 by a lower level of new deals than would ordinarily be expected to be signed, primarily due to a tightening of the market generally. The Directors recognise that, whilst the results for the six month period to 31 January 2012 are a demonstrable step forward, the Group still faces significant challenges to its target of returning to profit parity alongside the target of greater security of revenue.

Distribution strategy

The Group continues to experience a shift of emphasis in its distribution channels, both geographically and in types of partner and their business propositions.

UK and Europe - The Group's UK based software resellers are finding the market increasingly challenging and the Group is experiencing a shift toward more direct business and is necessarily supplementing its traditional reseller channels with alternatives. Mainland Europe remains predominantly a reseller market.

US - The Group experienced an acceptable level of performance from the Group's own sales effort during the period but continues to work on increasing its market presence which is currently low. The referenceable customers that the Group now has will allow the Group to focus its efforts on partner recruitment and maximise penetration of chosen market sectors such as Legal and Financial Services by offering its value-added software to supplement customers' existing solutions.

APAC - The Group's APAC unit is now established and on plan. It has selected a non-exclusive reseller business partner, Eclipse - a very well regarded software reseller in that region with a substantial Sun and E5 financial systems customer base. The APAC unit works side-by-side with Eclipse as a facilitation unit and has already secured its first contract with Australian Customs & Border Protection Service.

The Group has also made substantial progress on a global basis, having signed TATA Consultancy Services ("TCS") as a business partner. TCS will embed the Group's solutions as part of its own service offering to existing and new clients across the world. TCS is the first business partner of this type for the Group and similar opportunities will be actively sought.

Product strategy

The Group's aim of being a leading "best in class" spend control and eProcurement organisation has been further enhanced by the addition of new Cloud/SaaS pricing and licensing options. Software solutions are available to customers according to any reasonable variable; user based, functionality or module based; geography based; currency based; transaction based; and business model based.

The Group's cumulative investment in its products has given it a real competitive advantage and, having deployed the products in all manner of variable contexts, they are fully referenceable and validated.

Financial overview

Revenues increased by 22% to £3.7m (2011: £3.0m) due to the reasons set out above. The Group has seen broadly consistent levels of deal volumes with 15 new deals in the period (2011: 13) and consistent levels of upgrades with 34 deals in the period (2011: 38). The uptake of the new Cloud/SaaS based solution continues and this has been balanced by an increased proportion of perpetual licence deals, where the Group has been successful in increasing customer commitment to long term non-cancellable support contracts. The Group's implementation services business has benefitted substantially from a full order book of work brought forward from the prior financial period.

One of the beneficial consequences of the transition toward a more Cloud/SaaS based revenue model and the long term support contracts for perpetual licence deals is the increased level of contracted revenue that must be recognised in future periods. This gives the Group greater visibility of forward revenue and a more predictable cash flow profile. Of the £1.8m (2011: £1.5m) of total value contracted during the period, £1.3m (2011: £1.1m) is deferred to subsequent financial periods and the total value of contracted forward revenue has increased to £4.7m (31 July 2011: £3.8m). Further, total annualised contracted revenue increased to £4.3m (31 July 2011: £4.0m).

The increase in reported revenue has flowed through to an improved level of profitability in the period and the Group has reported an operating profit of £124,000 (2011: loss £208,000). Group overheads are in line with plan.

The Group's financial position is good with £2.3m cash on the balance sheet. Net cash inflow in the period since 31 July 2011 was £0.8m before a dividend payment of £0.2m and continued capital investment in the Group's products and solutions of £0.4m. Working capital remains tightly managed and receivables collection is very strong with debtor days at 45 (2011: 39).

Outlook

The Group has benefited during this reporting period from an increased deal flow, a shift in mix toward perpetual licence deals, a buoyant order book for its implementation services brought forward and a natural increase in recurring subscription, support and hosting revenues largely from deals signed in prior periods. Accordingly, reported revenue has increased substantially and the Group has returned to profitability and cash generation.

Strategically, the Group remains focussed on building the recurring and contracted revenue of the business and it has continued to make good progress on this during the period. There were five new multi-year contracted Cloud/SaaS deals and ten perpetual licence deals where the Group has seen some success in negotiating long term support contracts. Cloud/SaaS solutions and long term support contracts both provide much greater levels of visibility over future revenue and profits.

The second half has started well with a strong pipeline of opportunities and a strong implementation services order book.

Alan Aubrey Rod Jones

Chairman Chief Executive Officer

22 March 2012

Condensed consolidated income statement

for the six months ended 31 January 2012

The profit for the period is wholly attributable to equity holders of the parent Company.

All results arise from continuing operations.

Condensed consolidated statement of comprehensive income

for the six months ended 31 January 2012

Condensed consolidated statement of changes in equity

as at 31 January 2012

Condensed consolidated balance sheet

as at 31 January 2012

Total equity is wholly attributable to equity holders of the parent Company.

Condensed consolidated cash flow statement

for the six months ended 31 January 2011

Unaudited notes

Basis of preparation and accounting policies

PROACTIS Holdings PLC is a company incorporated in England and Wales under the Companies Act 2006.

The condensed financial statements are unaudited and were approved by the Board of Directors on 21 March 2012.

The interim financial information for the six months ended 31 January 2012, including comparative financial information, has been prepared on the basis of the accounting policies set out in the last annual report and accounts, with the exception of the amendment to IAS 1 (Presentation of Financial Statements) referred to below, and in accordance with International Financial Reporting Standards ("IFRS"), including IAS 34 (Interim Financial Reporting), as issued by the International Accounting Standards Board and adopted by the European Union.

The preparation of the interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expense. Actual results may subsequently differ from those estimates.

In preparing the interim financial statements, the significant judgements made by management in applying the Group's accounting policies and key sources of estimation uncertainty were the same, in all material respects, as those applied to the consolidated financial statements for the year ended 31 July 2011.

There is a choice between presenting comprehensive income in one statement or in two statements comprising an income statement and a separate statement of comprehensive income. The Group has elected to present comprehensive income in two statements.

Going concern assumption

The Group manages its cash requirements through a combination of operating cash flows and long term borrowings.

The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within the level of its current lending facilities.

Consequently, after making enquires, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis of accounting in preparing the interim financial statements.

Information extracted from 2011 Annual Report

The financial figures for the year ended 31 July 2011, as set out in this report, do not constitute statutory accounts but are derived from the statutory accounts for that financial year.

The statutory accounts for the year ended 31 July 2011 were prepared under IFRS and have been delivered to the Registrar of Companies. The auditors reported on those accounts. Their report was unqualified, did not draw attention to any matters by way of emphasis and did not include a statement under Section 498(2) or 498(3) of the Companies Act 2006.

The Board confirms that to the best of its knowledge:

w The condensed set of financial statements has been prepared in accordance with IAS34 'Interim Financial Reporting' as adopted by

the EU;

w The interim management report includes a fair review of the information required by :

- DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the year; and

- DTR4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.

By Order of the Board

Rod Jones Tim Sykes

Chief Executive Officer Chief Financial Officer

22 March 2012