Proactis (PHD) has seen better days. Shares in the spend-control software group plummeted more than 40 per cent on the news that the strengthening pound and unexpected customer losses meant revenue was “slower to build” in the six months to January 2018. Worse, such losses will also affect the second half.
The first issue stemmed from the acquisition of Perfect Commerce last August for up to $132m (£95m), which tripled Proactis’s market cap and expanded its global reach. The downside being that Perfect earned most of its £13.4m revenues and £3.7m adjusted cash profits in dollars and euros. Sterling’s appreciation over the period meant that Perfect’s reported sales declined beyond management’s expectations. Meanwhile, four major customers waved goodbye; these included BP (BP.) and Royal Dutch Shell (RDSB), which unexpectedly ended their agreements.
Still, there was positive news that the market reaction failed to reflect. Proactis’s order book – contracted revenue to be realised in future periods – reached £47.8m, up from £28m. Thirty-five new deals were signed, against 27 year on year, five of which came from Perfect. Net annualised cost synergies from Perfect continue to improve, standing at £4.2m now against £3.2m at the period-end.
Broker FinnCap forecasts adjusted pre-tax profits of £11.7m and EPS of 10.2p for FY2018, up from £5.1m and 8.6p in 2017.
| PROACTIS (PHD) | ||||
| ORD PRICE: | 112p | MARKET VALUE: | £104m | |
| TOUCH: | 110-113p | 12-MONTH HIGH: | 211p | LOW: 112p |
| DIVIDEND YIELD: | 1.3% | PE RATIO: | na | |
| NET ASSET VALUE: | 99p* | NET DEBT: | 32% | |
| Half-year to 31 Jan | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 11.8 | 0.9 | 2.5 | nil |
| 2018 | 26.4 | 2.5 | 2.6 | nil |
| % change | +123 | +179 | +4 | nil |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £151m, or 163p a share | ||||
