Proactis shares slide as it ends formal sale process

Spend management provider Proactis Holdings announced the conclusion of its formal sale process on Wednesday, which was first announced on 29 July.

The AIM-traded firm said the process was started to enable the board, in an orderly fashion, to explore a number of approaches and expressions of interest which it considered had the potential to provide benefit to the group's stakeholders.

A comprehensive process was run to assess the credibility of interested parties, it explained, and their ability to deliver an offer or strategic outcome that could be recommended to shareholders.

That had not led to any firm proposals being received, and it was unlikely that prolonging the process would deliver a proposal that the board would be willing to recommend to shareholders, it said on Wednesday.

“The board is mindful of the potential commercial and management distraction that a protracted formal sale process could present to the group, and also of its encouraging prospects (as illustrated by the group's 44% increase in total contract value of new business sold during the six month period ended 31 January as described within the trading update dated 20 February,” the board said.

“This rate of new business has continued during February, and the group has now signed approximately £9.4m of total contract value, cumulatively, during the seven months ended 29 February.”

As a comparative, Proactis signed £11.3m for the whole financial year ended 31 July.

The board said it was confident that the right business strategy was in place, and some of the benefits of that were said to be becoming evident.

Additionally, the board would continue to focus on cost control, and to review non-core aspects of the business with a view to reducing net debt further.

The board said it considered that superior shareholder value would be achieved by focussing the group's efforts on delivery of that strategy, rather than by engaging in the formal sale process at the current time.

“For this reason, the board has concluded the formal sale process, and the company is no longer in an ‘offer period’ as defined by the code.”

The board said it recognised that the decision would not have achieved the desired outcome for some shareholders, adding that it was committed to working with those shareholders to facilitate their objectives, where possible.

Alongside that, the board had committed to make certain changes to its corporate governance infrastructure, including to transition to a position within 12 months where, in accordance with the UK Governance Code, at least half of the board, excluding the chair, are independent non-executive directors.

It said it would also amend the company's articles of association at the next general meeting to require annual re-election for every director, and would review the group's reporting key performance indicators in order to provide greater transparency and granularity as the group returned to growth.

“We believe we have come to the right conclusion for our shareholders as a whole, considering the clear progress that has been made in the business and the opportunities that we have ahead of us,” said chief executive officer Tim Sykes.

“The business strategy that we have established is being implemented and is delivering encouraging early indicators. As communicated within our recent trading update, we have delivered a significant improvement in new business and dramatically improved retention rates and we expect a return to revenue growth in the second half of this financial year.

“Our progress in the short-term has been encouraging and we are confident that the long-term prospects are significant.”

At 1343 GMT, shares in Proactis Holdings were down 29.79% at 33p.