Good growth, positive development in result and strong cash flow
Kista, 21 October 2020
It is very positive that the healthy development we saw during the second quarter has continued in the third quarter. We see a growth of 17 percent compared to the same quarter last year, of which 7 percent organically. The growth is mainly driven by one larger deal in Business Unit UK, and by good growth in Nordics and East. Our revenues in the quarter amounted to SEK 821 (701) million. The gross margin in the quarter decreased slightly, mainly due to a lower margin in some of the system deals, but also as a result of Peopleware having a lower gross margin than Proact’s average. The combination of high sales and reduced sales and administration costs led to a significant improvement in profitability compared with the previous year. The adjusted EBITA of SEK 54,1 (36,9) million is the highest result we have reported in a third quarter. The cost reductions are a result of the cost program we implemented earlier this year, in combination with significantly reduced travel and other sales expenses as a consequence of the pandemic.
We work actively with acquisitions to accelerate our growth strategy. Therefore I’m very happy that we, after the close of the quarter, closed another acquisition, this time in the UK. Cetus Solutions Ltd complements and strengthens our offering in cloud and workplace services, which we now can offer our expanded common customer base. We see that the combination of Proact UK and Cetus leads to a stronger presence in the UK with good possibilities to grow faster than market in the future. I look forward to a successful collaboration with Cetus and would like to warmly welcome their employees to Proact.
We continue living in a world characterized by covid-19, where sales to certain customer segments has declined significantly. Other customer segments show good growth, and the need for our solutions increases when distance working and demand for digital solutions increase. A good example of how our offering and specialist competence within data and information handling is appreciated in the market, is the recently announced deal with NHS Blood and Transplant (NHSBT) in the UK. NHSBT administers the blood and organ donor services in the UK, and Proact delivers a cloud-based solution for their business-critical IT infrastructure, which will enable increased flexibility and scalability.
The services business grows faster than the systems business in the quarter, in line with our strategy to increase the proportion of recurring revenues. We do see a clear impact from covid-19 for new sales of cloud services, which is lower than in the same quarter last year. In an uncertain world, where the possibility for physical meetings is limited, customers are more hesitant to enter multiyear contracts, especially with new suppliers. We continue to actively develop our offering and strengthen our customer relations during the pandemic, this will give us possibilities to new deals and long term growth.
As a result of the positive development in recent quarters and thanks to the company’s stable financial position, the Board recommends, as previously communicated, that Proact pay a dividend of SEK 2.50 per share. The shareholders will decide on the dividend at an Extraordinary General Meeting on 5 November.
In conclusion, this quarter can be summarized as very successful. To some extent this is due to specific circumstances, including very low travel and sales costs due to the pandemic. In the short term, uncertainties about the development of the pandemic remains, but we remain convinced that we can achieve our long term goals.