Last checked at 27 Apr 2009 07:00
27 April 2009
Eckoh plc
("Eckoh" or "the Group")
Trading Update and Contract Wins
Eckoh, the UK's largest provider of hosted speech recognition services, provides the following trading statement for the full year ended 31 March 2009 ahead of its full year results announcement in June 2009.
Trading for the full year ended 31 March 2009 and outlook for 2009/10
The Group is pleased to report that the good operational progress stated in the interim results of 10th November 2008 continued into the second half of the year. For the full year 2008/9, the adjusted* loss suffered in 2007/8 of £1.6m has been converted into an adjusted* profit that will be in line with market expectations. This strong improvement in performance is primarily as a result of growth within the Speech Solutions division, an improvement in margins and a reduction of around 25% in administrative expenses following the reorganisation programme instigated at the beginning of 2008. Exceptional costs of around £1m will be reported which largely relate to the settlement of a legal issue with Channel 4, but cash balances in the Group remain in excess of £5m.
With the restructuring programme complete and the overheads reduced to service the ongoing business effectively, the Group entered 2009/10 with a clear focus on scaling the Speech Solutions division and generating further profit growth. The Group approaches the new financial year without debt, a healthy cash balance and a trade that is generating cash in an economic climate that is actually conducive to attracting new customers.
Growth drivers for the business in 2009/10
The difficult economic climate has generated increased interest in Eckoh's solutions as large organisations look to improve efficiency and reduce costs. The Group provides services predominantly over the telephone, but also through the mobile and web channels, for organisations that are looking to automate high volume but repetitive customer service activities that traditionally call centres will have managed. By using Eckoh's products and services for these activities, organisations can reduce the waiting time required to speak to an agent, extend the hours of availability to the consumer and manage unpredictable or seasonal peaks of demand at a fraction of the cost of a live agent. The fact that these "on-demand" services improve the customer experience and simultaneously help reduce agent churn by removing the repetitive activity, all without the need for capital expenditure, has proven very attractive to large companies and this interest has increased further recently.
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The revenues and gross margins for the Speech division, expected to be reported at around 10% higher than in the equivalent period last year, are anticipated to grow at a faster rate in 2009/10 as a consequence of the economic conditions and contracts already secured. The financial benefit of these significant new contracts won in 2008/9, such as the Ministry of Justice and a global financial services company, will only be seen in the coming financial year as they achieve full run rate.
In addition, to capitalise on the increased number of opportunities, Eckoh has expanded its sales team and reviewed its approach to marketing activities. As a consequence the Group is confident that it will meet its growth expectations and consolidate its market leading position.
New contract wins
In addition to revenue streams generated from contracts signed in 2008/9, revenues in 2009/10 we will also see the impact of new contracts signed in the new year.
We are pleased to announce a three year contract with Capita Group Plc ("Capita") and Intelecom UK to provide an automated speech service for recording the hours and expenses of up to 35,000 temporary Census staff. In 2011 the Office for National Statistics ("ONS") will conduct a National Census of Population and Housing in England and Wales. The ONS has selected Capita to recruit and train all the temporary ONS workers who will work as field staff for the 2011 census and to administer their pay.
We can also announce two contract renewals in the utility sector. Northern Ireland Electricity has renewed their contract for a further two years and Three Valleys Water have renewed for a three year term. In the case of Three Valleys Water they have extended the scope of the contract beyond the existing bill payment solution to include the identification and verification of customers and providing account balances. It is also significant that as part of the renewal process both companies have begun to use Eckoh for complementary web based services as well as for telephony, which is an increasing trend within the business.
Nik Philpot, Chief Executive Officer of Eckoh said: "We are delighted to update the market with the positive progress of Eckoh. We have moved into profitable trading and the year has been a successful one for both winning significant new contracts and the retention of existing customers. The success of the restructuring programme and the formation of a streamlined and operationally efficient company mean the Group is well positioned to execute on its strategy and deliver shareholder value. Continued investment in our technology, the consolidation of strategic partnerships and the opportunities arising as a result of the economic climate and changing trends in customer service, mean that the Company can significantly increase profitability over the medium term."
* before tax, excluding intangible asset amortization and exceptional items
Enquiries
Eckoh plc
Nik Philpot, Chief Executive Officer
Adam Moloney, Group Finance Director
Jim Hennigan, Executive Director
www.eckoh.com Tel: 01442 458 300
Corfin Communications
Harry Chathli / Alexis Gore / Victoria Ward Tel: 020 7977 0020
Seymour Pierce
Jonathan Wright Tel: 020 7107 8000