Investor Presentation Tim Sykes, CEO Designate April 2016 - - PowerPoint PPT Presentation

investor presentation
SMART_READER_LITE
LIVE PREVIEW

Investor Presentation Tim Sykes, CEO Designate April 2016 - - PowerPoint PPT Presentation

Investor Presentation Tim Sykes, CEO Designate April 2016 Disclaimer These presentation slides and the accompanying verbal presentation (the Presentation Materials) do not constitute or form part of any invitation, offer for sale or


slide-1
SLIDE 1

Investor Presentation

Tim Sykes, CEO Designate April 2016

slide-2
SLIDE 2

Disclaimer

These presentation slides and the accompanying verbal presentation (the “Presentation Materials”) do not constitute or form part of any invitation, offer for sale or subscription or any solicitation for any offer to buy or subscribe for any securities in the PROACTIS Holdings PLC (the "Company") (“Company Securities”) nor shall they or any part of them form the basis of or be relied upon in connection with, or act as any inducement to enter into, any contract or commitment with respect to Company Securities. These Presentation Materials do not constitute a recommendation regarding any decision to sell or purchase Company Securities. These Presentation Materials are for information purposes only and must not be used or relied upon for the purpose of making any investment decision or engaging in any investment activity. Whilst the information contained herein has been prepared in good faith, neither the Company, its subsidiaries (together with the Company, the “Group”) nor any of the Group’s directors, officers, employees, agents or advisers makes any representation or warranty in respect of the accuracy or completeness of the contents of the Presentation Materials or otherwise in relation to the Group or its businesses, and responsibility and liability therefor (whether direct or indirect, express or implied, contractual, tortious, statutory or otherwise) is expressly disclaimed, provided that nothing herein is intended to limit the liability of any such person for
  • fraud. No duty of care or advisory obligation is owed by any member of the Group or any of its directors, officers, employees, agents or advisers to any recipient of the Presentation Materials. No reliance may be placed for any purpose whatsoever on the information contained in
these Presentation Materials or the completeness or accuracy of such information. In particular, no representation or warranty, express or implied, is made as to the fairness, accuracy or completeness of the information or opinions contained herein, which have not been independently verified and may be in draft form. The figures and projections included in these Presentation Materials are based on internal assumptions made by the directors and employees of the Company and have not been reviewed or verified as to their accuracy by any third
  • party. The information contained in these Presentation Materials are provided as at the date of this presentation and is subject to updating, completion, revision, verification and further amendment without notice. However, the Company does not undertake or agree to any obligation
to provide the recipient with access to any additional information or to update these Presentation Materials or to correct any inaccuracies in, or omissions from these Presentation Materials which may become apparent. The content of these Presentation Materials has not been approved by an authorised person within the meaning of the Financial Services and Markets Act 2000 (“FSMA”). Reliance on the Presentation Materials for the purpose of engaging in any investment activity may expose an individual to a significant risk of losing all of the property or other assets invested. Any person who is in any doubt about the subject matter to which this presentation relates should consult a person duly authorised for the purposes of FSMA who specialises in the acquisition of shares and other securities. These Presentation Materials do not constitute an offer of transferable securities to the public for the purposes of section 85 FSMA. These Presentation Materials are exempt from the general restriction set out in section 21 FSMA on the communication of financial promotions on the grounds that they are directed only at: (i) persons whose ordinary activities involve them in acquiring, holding, managing and disposing of investments (as principal or agent) for the purposes of their business and who have professional experience in matters relating to investments
  • r otherwise are “investment professionals” for the purposes of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”); (ii) are persons who fall within Article 49(2)(a) to (d) of the Order; or (iii) otherwise fall within an applicable
exemption within the Order (all such persons together being referred to as “Relevant Persons”). Persons of any other description, including those that do not have professional experience in matters relating to investment, should not rely or act upon the Presentation Materials. Any investment, investment activity or controlled activity to which the Presentation Materials may ultimately relate is available only to Relevant Persons and will be engaged in only with such Relevant Persons. These Presentation Materials do not constitute an offer of securities for sale in the United States, Canada, Australia, Japan or the Republic of South Africa or in any other country outside the United Kingdom where such distribution may lead to a breach of any legal or regulatory requirement, nor must they be distributed to persons with addresses in the United States, Canada, Australia, Japan or the Republic of South Africa, or to any national or resident of the United States, Canada, Australia, Japan or the Republic of South Africa, or to any corporation, partnership, or other entity created or authorised under the laws thereof. Any such distribution could result in a violation of American, Canadian, Australian, Japanese or South African law. It is the responsibility of each recipient outside the United Kingdom to ensure compliance with the laws of and regulations of any relevant jurisdiction. These Presentation Materials are not for publication, release or distribution in, and may not be taken or transmitted into, the United States, Canada, Australia, Japan or the Republic of South Africa and may not be copied, forwarded, distributed or transmitted in or into the United States, Canada, Australia, Japan or the Republic of South Africa or any other jurisdiction where to do so would be unlawful. These Presentation Materials may not be provided to any person in Canada or to any person who may be subject to Canadian securities laws. The Company Securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "Securities Act"), or the securities laws of any state or other jurisdiction of the United States and may not be offered and sold in the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. There will be no public offering of Company Securities in the United States. The Presentation Materials includes statements that are, or may be deemed to be, forward-looking statements. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will", or "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include matters that are not historical facts and include statements regarding the Company's intentions, beliefs or current expectations concerning, among other things, the anticipated future performance of the Company. Any such forward-looking statements in the Presentation Materials reflect the Company’s current expectations and projections about future events but, by their nature, forward-looking statements involve a number of risks, uncertainties and assumptions that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements. These risks, uncertainties and assumptions could adversely affect the outcome and financial effects of the plans and events described herein. Save as required by law or regulation or the rules of any securities exchange, the Company undertakes no obligation to release the results of any revisions to any forward-looking statements in this Presentation that may
  • ccur due to any change in its expectations or to reflect events or circumstances after the date of the Presentation Materials. In particular, no representation or warranty is given by the Company or Brandon Hill as to the achievement of, and no reliance should be placed on, any
projections, targets, estimates or forecasts and nothing in the Presentation Materials is or should be relied on as a promise or representation as to any future event. The Presentation Materials are confidential and being supplied to you solely for your own information and may not be reproduced, further distributed, or the contents otherwise divulged, directly or indirectly, to any other person or published, in whole or in part, for any purpose whatsoever. finnCap Ltd (“finnCap”) is authorised and regulated in the United Kingdom by the Financial Conduct Authority, are advising the Company and no one else in relation to the Company and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients. Any other person should seek their own independent legal, investment and tax advice as they see fit. Apart from the responsibilities and liabilities, if any, which may be imposed on finnCap by FSMA or the regulatory regime established thereunder, finnCap accept no responsibility whatsoever for the contents of the Presentation Materials, including their accuracy or completeness or for any other statement made or purported to be made by them, or on their or the Company’s behalf, in connection with the Company or the proposed
  • transaction. finnCap accordingly disclaim all and any liability whether arising in tort, contract or otherwise (save as referred to above) which they might otherwise have in respect of these Slides or the accompanying verbal presentation.
These Presentation Materials may contain inside information and accordingly you will not be able to deal in any securities of the Company before the information is made public in accordance with the insider dealing provisions of Part V of the Criminal Justice Act 1993. In addition, the Presentation Materials may constitute inside information for the purposes of article 7 of MAR and therefore you must not (i) engage or attempt to engage in (a) market manipulation or (b) insider dealing; (ii) recommend that another person engages in insider dealing or induce another person to engage in insider dealing; or (iii) unlawfully disclose inside information (as such terms are defined in MAR). No individual within the Company (or within its associates) or finnCap is by virtue of these Presentation Materials recommending, inducing or encouraging you to deal in the Company's securities. WARNING: You are advised to exercise caution in relation to these Presentation Materials. If you are in any doubt about any of the contents of these Presentation Materials, you should obtain independent professional advice.

2

slide-3
SLIDE 3

Company Overview

  • Global Spend Control & eProcurement solution

provider

  • Technology-led tools & services for procurement &

financial professionals

  • Solutions that deliver bottom-line value
  • Monetary savings
  • Improved operations & efficiencies
  • Governance & risk mitigation
  • 800 customers
  • 2m+ users
  • 90+ countries
  • 1m+ supplier relationships

1

slide-4
SLIDE 4

Spend Control & eProcurement Market

Management predict market growth at 10%+ per annum

Networks: Spend analysis: Purchase to pay: Source to contract:

Proactis offers an end-to-end solution with multiple competitive entry points

2

slide-5
SLIDE 5

Annual benchmark targets:

  • 60 new names
  • 100 inside sales deals
  • 10 supplier commerce deals
  • 90% retention
  • 25% total revenue growth
  • 10% organic revenue growth

Competitive Advantage

Enable full spend control Drive broad adoption Seamless integration Provide actionable insights Support global business Built-in controls

3

slide-6
SLIDE 6

Strategic Progress

5 year total revenue CAGR c.25% 3 year total revenue CAGR c.35% 3 year organic revenue CAGR c.10%

4

slide-7
SLIDE 7

Track record

Scale +£50m revenue Growth 35%+ overall 10%+ organic Visibility +80% Profitability +25% EBITDA margin FINANCIAL METRICS

  • Growth strategy unlocked November 2013
  • Organic growth business as a foundation
  • Five earnings enhancing acquisitions since 2014
  • Track record of small scale market consolidation
  • Supplier commerce opportunity building
  • Shifting toward “scale”
  • Delivering shareholder value

Page 5

Debt (est.)

£25m secured £35m unsecured

Dividend 1-2% yield

NEW CUSTOMERS MAXIMISE PENETRATION ACQUISITIONS SUPPLIER COMMERCE

slide-8
SLIDE 8

FY2017 Interim performance

slide-9
SLIDE 9

Key messages

Strong organic growth:

  • 13.4% underlying revenue growth; 25% underlying EBITDA growth

Further accretive M&A:

  • Millstream Associates Limited: £5.0m revenue; £2.0m EBITDA; £15.5m price

Clear strategy for high growth opportunities:

  • Supplier commerce project moving forward; Supplier Directory accelerated

6

slide-10
SLIDE 10

Reporting Period Highlights

  • Deal activity buoyant: 27 new name deals (31

January 2016: 23)

  • Favourable revenue shift toward multi-year

SaaS deals: 22 new names (31 January 2016: 14)

  • Increased deal volumes from existing

customers: 59 deals in the period (31 January 2016: 45)

  • Early adopter programme progressing well:

for Supplier Commerce and Accelerated Payment

  • Facility. Accelerated launch of Supplier Directory

anticipated

COMMERCIAL PROGRESS

  • Reported revenue: increased 35.6% to £11.8m

(31 January 2016: £8.7m)

  • Underlying revenue growth: 13.4% (31 January

2016: 3.6%)

  • Revenue visibility: Order book2 was £27.1m (31

July 2016: £26.1m); Annualised3 contracted revenue increased to £22.9m (31 July 2016: £17.6m)

  • Adjusted EBITDA1 increased 25% to £3.0m (31

January 2016: £2.4m)

  • Strong balance sheet with net debt at £2.7m (31

July 2016: £0.5m)

REPORTED RESULTS

1 – Adjusted EBITDA is stated before non-recurring administrative expenses, amortisation of customer related intangible assets and share based payment charges

STRATEGIC PROGRESS

M&A

  • Acquired Millstream Associates Limited, a

provider of tender information services to suppliers and a provider of eProcurement systems to buyers

  • Funded with £12.5m placing; well supported and
  • ver-subscribed at a premium
  • Post-acquisition performance of Millstream is in

line with expectations: £1.05m revenue; £0.42m EBITDA in 10 weeks

  • More activity in the pipeline

2 – Order Book is the Group’s current contracted revenue that is required to be recognised in future accounting periods 3 – Annualised contracted revenue is the Group’s estimate of the annualised value of revenue of customers currently contracted with the Group

7

slide-11
SLIDE 11

Growth strategy

slide-12
SLIDE 12

Growth Strategy

1. NEW CUSTOMERS 2. MAXIMISE PENETRATION 3. SUPPLIER COMMERCE 4. ACQUISITIONS

Maintaining momentum in the Group’s core business

Benchmarks (forward):

  • 60 new name deals
  • 100 inside deals
  • 90% retention

Actual performance:

  • 27 new name deals (31 January 2016: 23)
  • 59 inside deals (31 January 2016: 45)
  • 88%1 retention (FY16: 91%)

Note 1: Recovered to 91% at 31 March YTD

8

slide-13
SLIDE 13

Growth Strategy

1. NEW CUSTOMERS 2. MAXIMISE PENETRATION 3. SUPPLIER COMMERCE 4. ACQUISITIONS

Cross-sell extended offer into enlarged customer base

Actual performance:

  • 59 inside sales deals for H1

New Solutions:

  • Spend analysis

Benchmarks (forward):

  • 100 inside sales deals per annum

Cross-sell acquired solutions:

  • AP automation
  • Managed reverse auctions
  • Marketplace
  • Sourcing only

9

slide-14
SLIDE 14

Growth Strategy

1. NEW CUSTOMERS 2. MAXIMISE PENETRATION 3. SUPPLIER COMMERCE 4. ACQUISITIONS

Extending product reach into Supplier population

3-5yr objective:

  • 50-100 buyers on programme 250,000-

500,000 suppliers

  • £10-20bn pa spend through network
  • £50-100m revenue opportunity

Buyers:

  • Enabling eProcurement for ALL suppliers
  • 800 customers
  • £100bn+ pa spend under management

Suppliers:

  • Enabling eProcurement and commerce
  • 1m+ suppliers

10

slide-15
SLIDE 15

Growth Strategy

Supplier Commerce

Supplier Subscriptions:

  • Buyer initiated
  • Fixed de minimis fee of £50 pa

Accelerated Payment Facility:

  • Supplier demand driven
  • Spot finance opportunity
  • Non-contracted
  • Same day cash
  • HSBC backed facility
  • Buyer participation

Average Buyer:

  • Current account value - £30,000 pa software/services
  • 5,000 suppliers – c.£250,000 pa subscription opportunity
  • £200m spend pa – c.*£750,000 pa APF opportunity
  • Transforming £30,000 pa revenue to c.£1m pa revenue

* Assuming a 4% discount for a 30 day acceleration on 10% take-up

11

slide-16
SLIDE 16

Growth Strategy

Supplier Commerce

Market feedback

  • Unlocking the eProcurement problem
  • Supply chain stability
  • New revenue line
  • Strong interest in facility provision from financial partners

Risks & challenges

  • New customer group
  • Subscription fees (even at £50)
  • Buyer capability
  • Cultural & behavioural change
  • Organisational priorities
  • Timing uncertainty

It is taking time to realise … but FY2017 is key

12

slide-17
SLIDE 17

Growth Strategy

1. NEW CUSTOMERS 2. MAXIMISE PENETRATION 3. SUPPLIER COMMERCE 4. ACQUISITIONS

Strong M&A track record

Highly active space:

  • Fragmented market
  • 5 earnings enhancing acquisitions

between 2014 and 2016

  • Busy on short and long term pipeline

Target profile:

  • Technology backed procurement
  • UK, US & NW Europe centric
  • Cultural fit
  • Add to scale & growth opportunity
  • Visible revenue
  • Operational synergies

13

slide-18
SLIDE 18

M&A track record

  • Competitor vendor in UK public sector
  • Price £2.9m gross; £2.2m net
  • Run rate revenue £2.4m
  • EBIT £0.3m (at acquisition)
  • c.70 new customers
  • Managed auction service provider in US
  • Price $3.9m gross; $2.9m net
  • Run rate revenue $5.0m
  • EBIT $0.6m (at acquisition)
  • c.25 new customers
  • Document capture vendor in UK
  • Price £1.6m gross; £1.4m net
  • Run rate revenue £1.6m
  • EBIT £0.3m (at acquisition)
  • c.40 new customers
  • Sourcing vendor in UK public sector
  • Price £4.5m gross and net
  • Run rate revenue £1.8m
  • EBIT £0.1m (at acquisition)
  • c.330+ new customers

EGS Intesource Intelligent Capture Due North

14

slide-19
SLIDE 19

Millstream Associates

Millstream provides eProcurement solutions to:

  • Over 4,000 customers for its Tenders Direct product
  • Over 50 public sector customers and more than 500

contributors for its bespoke portals and myTenders products

  • £15.5m on a cash free/debt free and normalised

working capital basis funded by a £12.5m Placing and bank debt drawn against new facility of £15.2m provided by HSBC Bank plc

Background Transaction

  • Track record of revenue growth with strong profit and

cash generation

  • Reported revenues of £4.9m (YE 30 June 2016)
  • Adjusted EBITDA (unaudited) of £2.0m (YE 30 June 2016)

Financials

  • In line with PROACTIS' growth and acquisition strategy
  • Broadens the PROACTIS product offering and further

expands its customer base providing cross-sell

  • pportunities
  • Bringing scale of operation on the strategically important

supply side of the procurement process

Rationale

15

Post-acquisition performance in line with expectations: Revenues for the ten weeks post-acquisition of £1.05m, EBITDA of £0.42m

slide-20
SLIDE 20

Summary & outlook

slide-21
SLIDE 21

Summary and Outlook

Strong performance in the period

  • Continued strong organic growth with new deals and further upsell activity
  • Complementary acquisition, performing in line with expectations
  • Early adopter programmes for Supplier Commerce progressing in line with expectations
  • Accelerated launch of Supplier Directory

Established market leading solutions addressing high growth markets

  • Continued organic growth with opportunity to cross sell “M&A acquired” solutions
  • M&A pipeline remains strong with a robust platform to execute from
  • Further progress with Supplier Commerce

The Group has a clear and ambitious strategy in place, enabling it to exploit the growing Spend and Procurement marketplace

16

slide-22
SLIDE 22

Appendices

slide-23
SLIDE 23

North America Clients (examples)

17

slide-24
SLIDE 24

UK / EMEA Clients (examples)

18

slide-25
SLIDE 25

Solution Overview

SUPPLIER NETWORK SUPPLIER INTERACTION SUPPLIER COMMERCE SOURCE-TO-CONTRACT PURCHASE-TO-PAY SPEND VISIBILITY & ANALYSIS SYSTEMS INTEGRATION EXPERT SERVICES

Supplier Management Sourcing Content Management Purchasing Payables Contract Management Transition Services Advisory Services Managed Services

19

slide-26
SLIDE 26

Solution Overview

SUPPLIER NETWORK SOURCE-TO-CONTRACT PURCHASE-TO-PAY

Supplier Management Sourcing Contract Management Content Management Purchasing Payables

Supplier Directory Qualification On-Boarding Engagement Performance Reviews Event Manager RFx Design Public Notices Response Evaluations Auctions Quick Quotes

SPEND VISIBILITY & ANALYSIS

Contract Repository Event Monitoring Performance Analysis Spend Visibility Catalogue Maintenance Supplier Publishing Punch-Out Marketplace Pricelist Approval Multi-Source Search Authorisation Rules & Workflow Requisitions & Orders Planned Purchasing Receipting Expenses Stores Scan & Data Capture Electronic Invoicing Matching Engine Exception Handling Authorisation Rules & Workflow PCard Reconciliation Accelerated Payment Facility

20

slide-27
SLIDE 27

Solution Overview

SUPPLIER NETWORK SUPPLIER INTERACTION SUPPLIER COMMERCE SPEND VISIBILITY & ANALYSIS

Communication & Collaboration Ordering Invoices Supply Chain Finance

Join Network Self-Service Profile Management View Opportunities Self-Service Catalogue Management Contract Visibility Account Enquiry View & Acknowledge Orders Punch-Out Invoicing Receipt & Status Supplier Self-Billing Purchase Order Flip Accelerated Payments 21