Netcall Regulatory News (NET)

26 Sep 2007 07:02

Netcall PLC26 September 2007 26th September 2007 NETCALL PLC ("Netcall" or "the Company") Preliminary Results for Year Ended 30th June 2007 Netcall plc (AIM:NET), a leading provider of callback, auto-messaging andcontact solutions, today announces its financial results for the year ended 30thJune 2007. Financial Highlights • Turnover up 31% to £4.11 million (2006: £3.13 million) • Hosted services growth of 51% to £2.0 million (2006: £1.33 million) • Operating profits before FRS 20 charges increases 121% to £0.81 million (2006: £0.37 million) • Operating margin before FRS 20 charges of 20% (2006: 12%) • Profit before tax increased by 115% to £0.77 million Operational Highlights • New customers include Fortis Insurance, Birmingham City Council and McAfee • Growing footprint within existing customer base including Lloyds TSB, Oracle and nPower • Revenues from distribution channels grow by 65% accounting for 45% of total revenues (2006: 37%) • QueueBuster saved millions of callers from more than 400 years of telephone queuing Ron Elder, Chairman of Netcall, commented: "Today's results reflect a growingdemand in the market for Netcall's products and solutions. When combined withthe effective working relationship we have established with our distributionpartnerships, this allows Netcall to deliver recurring revenues and significantincreases in profitability." For further enquiries, please contact: Netcall plc Tel. +44 (0) 1480 495300Ron Elder, Chairman / Henrik Bang, CEO Evolution Securities Tel. +44 (0) 20 7071 4300Simon Leathers / Tim Redfern ICIS Limited Tel. +44 (0)20 7651 8688Tom Moriarty / Caroline Evans-Jones CHAIRMAN'S STATEMENT Results I am very pleased to report that the financial results for the year ended 30thJune 2007 were ahead of expectations and continue to confirm the acceptance bythe market of Netcall's technology and equally the strategy pursued since 2004which is delivering profit, cash and consistent growth. The figures reported today show a 51% increase in service revenues and a 17%increase in product revenues resulting in total revenue for the year of £4.11million, a 31% growth on the year to 30th June 2006. Gross margins were slightlyahead at 87% (2006 : 86%); with operating profits before FRS 20 charges of £0.81million (2006 : £0.37 million) the business achieved an operating margin of 20%. Business focus As detailed in the Chief Executive's review we continue to successfully pursueour strategy of increasing our market presence, principally through our flagshipproduct QueueBuster, both as a hosted service provider and as a seller oflicenced software. We have increased our channel partners during the year andwill continue to deepen our relationship with them as we identify newopportunities to extend the use of our products. Since my last report the Company has undertaken a capital restructuring whichallows us to better utilise our distributable reserves and cash not required forplanned business growth for the benefit of shareholders. This could take theform of a limited share buyback program, recently authorised by shareholders, orby way of a dividend. Following the announcement of these results the Board willdetermine the appropriate action. During the year Brian Gowers resigned his directorship to pursue other interestsand the Board would like to thank him for his contribution over his many yearsof service. We continue to strengthen the management team at Netcall and advance thecapabilities of the entire company for the benefit of our existing andprospective customers. This year's performance is a testament to the executionof a clear strategy under the leadership of our Chief Executive Henrik Bang andI would like to thank him and the entire staff for their dedication and supportin delivering these results. Ron Elder, Chairman26th September 2007 CHIEF EXECUTIVE'S REVIEW Netcall continued to make significant progress during the year. The Companyaccelerated its turnover growth and achieved another year with a significantincrease in profitability. The main areas of the business improved withcontinued emphasis on hosted services growth and increasing revenues fromdistribution channels. The overall long term health of the Company continues to strengthen withimproving profits which generate a growing cash position. This has been drivenby the ongoing growth in both hosted services and revenues from distributionchannels, underwritten by a significant increase in the Company's recurringrevenue streams. Netcall has continued to broaden its customer base and expand its footprintwithin existing customers, mainly due to increased market demand for itsflagship product QueueBuster. Financial results Operating profits before FRS 20 charges increased by 121% to £0.81 million(2006: £0.37 million) corresponding to a profit margin of 20% (2006: 12%). Thisresult was achieved by a combination of revenue growth and improving marginsthrough the close monitoring and control of costs. Turnover increased by 31% to £4.11 million (2006: £3.13 million) with growth inboth product and services revenues. Hosted services reported its seventhconsecutive six month period of growth and reached £2.00 million (2006: £1.33million), contributing 49% (2006: 42%) towards total revenues. Product salesincreased to £2.11 million (2006: £1.81 million), and both revenue streamscontributed to a significant increase in the Company's recurring revenue. The majority of Netcall's cost increases were directly linked to the improvementin revenues and profits, with only a low percentage uplift in its fixed costbase. The leveraging of its overheads, coupled with improved organisationalcapabilities resulted in a substantially increased operating margin. Operating cash flow was strong with a net inflow of £0.63 million (after earlyrepayment of the balance of outstanding debt); the Company's net funds increasedto £2.36 million as at 30th June 2007 (2006: £1.73 million), the majority ofwhich is held on short term treasury deposits. During the early part of the newfinancial year, the majority of trade debtors have been collected resulting in afurther increase in the cash position. The balance sheet shows an increase in net assets to £2.68 million (2006: £1.80million), reflecting Netcall's profitability. The changed composition of thecapital and reserves has arisen through the implementation of a capitalreduction scheme Review of Operations QueueBuster, Netcall's flagship product, gives customers waiting in call centrequeues the option of receiving a return call when a call centre agent isavailable without losing their place in the queue. Our customers continue toreport excellent performance from QueueBuster in both sales and customer supportenvironments, confirming that the product delivers substantial productivityimprovements as well as significantly improved customer and agent satisfaction.During the year QueueBuster saved millions of callers from more than 400 yearsof telephone queuing. Expanded QueueBuster customer baseThe Company acquired several new customers including Fortis Insurance,Birmingham City Council, McAfee, Anglian Water and STA Travel. Netcall alsoexpanded its footprint within the existing customer base including Lloyds TSB,Prudential, nPower and Oracle. Channel partnershipsNetcall continued to focus on expanding its market reach via distributionpartners which grew revenues by 65% and accounted for 46% of turnover (2006:37%). Netcall's key distribution partners include Affiniti, BT and Cable &Wireless Europe, Asia and US, with whom the Company in August this yearannounced a new partnership agreement which sees the integration of aQueueBuster hosted services platform into their existing infrastructure. Accounting Standards In this financial year the Company adopted FRS 20 which deals with share basedpayments. The fair value of share options is spread over the period from thedate of grant until the date it is anticipated the options will becomeexercisable. The prior year comparative figures have been restated in accordancewith the new standard. The Group's assets and cash flow statement wereunaffected. For the year ending 30th June 2008 Netcall will adopt International FinancialReporting Standards (IFRS) in accordance with the AIM Rules. Strategy Netcall's ambition is to continue to increase the market acceptance of itsproducts and to work with distribution partners to achieve this. The Companywill continue its focus on business models which generate a high element ofrecurring revenue improving future visibility. By working closer with partners while also strengthening the Company'sorganisational capabilities, the aim is to improve and extend Netcall's abilityto execute.With continued focus on executing Netcall's key strategies the Board isconfident that Netcall will continue to improve its financial performanceresulting in increased shareholder value. Current Trading Netcall have had a good start to the year and the directors believe that theoutlook for the year is very positive. I would like to take this opportunity to thank the staff and our partners fortheir continued support and contribution. CONSOLIDATED PROFIT AND LOSS ACCOUNTYear ended 30th June 2007 Note 2007 2006 £'000 (restated - note 6) £'000 Turnover 2 4,112.3 3,134.5 Cost of sales (535.2) (449.9) Gross profit 3,577.1 2,684.6 Administrative expenses before share basedcharges (2,765.4) (2,317.0)Share based charges (131.4) (65.5) Administrative expenses (2,896.8) (2,382.5) Operating profit before share based charges 811.7 367.6Share based charges (131.4) (65.5) Operating profit 680.3 302.1 Interest receivable 92.0 63.6Interest payable and similar charges (5.3) (9.4) Profit on ordinary activities before taxation 767.0 356.3Tax on profit on ordinary activities - - Profit for the financial year 767.0 356.3 Earnings per shareBasic 3 1.16p 0.54p Diluted 3 1.12p 0.54p All activities derive from continuing operations. CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESYear ended 30th June 2007 2007 2006 £'000 (restated - note 6) £'000 Profit for the financial year 767.0 356.3Currency translation differences on foreigncurrency net investments - 0.1 Total recognised gains and losses for the year 767.0 356.4Prior year adjustment (94.0) - Total recognised gains and losses since lastannual report 673.0 356.4 In the year ended 30th June 2007 the Company was obliged to make a prior yearadjustment (as explained in note 1) amounting to £94,000 against the reservesfor the year ended 30th June 2006 as a consequence of a change in accountingpolicy on the implementation of FRS 20 'Share based payments'. RECONCILIATION OF MOVEMENTS IN CONSOLIDATED SHAREHOLDERS' FUNDSYear ended 30th June 2007 2007 2006 £'000 (restated - note 6) £'000 Profit for the financial year 767.0 356.3Currency translation differences on foreigncurrency net investments - 0.1New shares issued net of issue costs (18.4) 16.8FRS 20 share based charges 131.4 65.5 Net addition to shareholders' funds 880.0 438.7Opening shareholders' funds 1,797.9 1,359.2 Closing shareholders' funds 2,677.9 1,797.9 CONSOLIDATED BALANCE SHEETAs at 30th June 2007 2007 2006 £'000 (restated - note 6) £'000Fixed assetsTangible assets 158.5 154.3Investments - - 158.5 154.3 Current assetsStocks 38.1 62.2Debtors 1,622.8 1,052.5Cash at bank and in hand 2,360.5 1,819.5 4,021.4 2,934.2 Creditors: amounts falling due within one year (1,502.0) (1,233.1) Net current assets 2,519.4 1,701.1 Total assets less current liabilities 2,677.9 1,855.4 Creditors: amounts falling due after more thanone year - (57.5) Net assets 2,677.9 1,797.9 Capital and ReservesCalled up share capital 3,302.5 3,297.1Share premium account 2.4 15,125.2Special and capital reserves - 245.1Employee share schemes reserve 290.9 159.5Profit and loss account (917.9) (17,029.0) Shareholders' funds 2,677.9 1,797.9 CONSOLIDATED CASH FLOW STATEMENTYear ended 30th June 2007 2007 2006 £'000 £'000 Net cash inflow from operating activities 642.3 468.7 Returns on investments and servicing of finance 86.7 54.2 Capital expenditure and financial investment (82.1) (83.6) Net cash inflow before management of liquid resources andfinancing 646.9 439.3 Management of liquid resources (2,000.0) - Financing (105.9) (13.2) (Decrease) increase in cash (1,459.0) 426.1 Reconciliation of net cash flow to movement in net fundsYear ended 30th June 2007 2007 2006 £'000 £'000 (Decrease) increase in cash in the year (1,459.0) 426.1Decrease in bank loans 87.5 30.0Increase in short term treasury deposits held at bank 2,000.0 - Movement in net funds in the year 628.5 456.1 Net funds at 1st July 2006 1,732.0 1,275.9 Net funds at 30th June 2007 2,360.5 1,732.0 NOTES TO THE FINANCIAL STATEMENTS 1. Accounting policies The financial statements are prepared in accordance with applicable UnitedKingdom accounting standards. The particular accounting policies adopted aredescribed below. The Company has adopted in the year FRS 20 - Share basedpayment - restatement of the comparatives was required. Share-based compensationThe Company issues share options to certain employees. The fair value of suchoptions granted is calculated using the Black-Scholes option pricing model. Theexpense is spread over the period from the date of grant to the date the optionsvest and are exercisable, based on the best estimate of the number of sharesthat will eventually vest. The prior year comparative figures have been restated- see note 6. The effect of FRS20 was to increase administrative expenses forthe year ended 30th June 2006 by £35,600. The group net assets and the cash flowwere unaffected. Additionally, the group is obliged to make a prior yearadjustment totalling £94,000 as a result of this. 2. Analysis of turnover 2007 2006 £'000 £'000Class of businessProducts 2,107.3 1,807.7Services 2,005.0 1,326.8 4,112.3 3,134.5 Geographical analysis by destinationUnited Kingdom 3,751.9 2,961.5Rest of Europe 161.2 142.5North America 21.2 23.3Rest of the World 178.0 7.2 4,112.3 3,134.5 3. Earnings per shareEarnings per share has been calculated in accordance with Financial ReportingStandard 22 (FRS 22). The calculation of earnings per share is based on theprofit attributable to equity shareholders of £767,000 (2006 (restated - note 6)- £356,300) and 66,014,672 (2006 - 65,813,224) shares being the weighted averageof the number of shares in issue during that period.The diluted earnings per share take into account the potentially dilutive effectof share options, this is based on a diluted weighted average of 68,500,526(2006 - 66,166,558) shares. 4. The Directors do not currently recommend paying a dividend. 5. The financial information set out in the announcement does notconstitute the Company's statutory accounts for the years ended 30th June 2007or 2006. The financial information for the year ended 30th June 2006 is derivedfrom the statutory accounts for that year which have been delivered to theRegistrar of Companies. The auditors reported on those accounts; their reportwas unqualified and did not contain a statement under s237(2) or (3) CompaniesAct 1985. The statutory accounts for the year ended 30 June 2007 will bedelivered to the Registrar of Companies after the Company's Annual GeneralMeeting on 15 November. The auditors have reported on those financialstatements; their report was unqualified and did not contain a statement underS237(2) or (3) of the Companies Act 1985. Copies of the full statutory accounts will be despatched to shareholders in duecourse. Further copies will be available from the Registered Office of theCompany at 10 Harding Way, St Ives, Cambs PE27 3WR. 6. Restatement of comparatives Profit and loss account Share based Total charges administrative expenses £'000 £'000Administrative expenses As previously reportedat 30th June 2006 29.9 2,346.9Additional charge arising from adoption of FRS 20 35.6 35.6 At 30th June 2006restated 65.5 2,382.5 Profit and earnings per share Operating Profit for Earnings per profit financial share £'000 year pence £'000As previouslyreported at 30thJune 2006 337.7 391.9 0.59Additional charge arisifrom adoption of FRS 20 (35.6) (35.6) (0.05) At 30th June2006 restated 302.1 356.3 0.54 Shareholders' funds Employee share Profit and loss schemes reserve account £'000 £'000 As previouslyreported at 30thJune 2006 29.9 (16,899.4)Additional charge arisingfrom adoption of FRS 20 35.6 (35.6)Prior year adjustmentarising fromadoption of FRS 20 94.0 (94.0) At 30th June2006 restated 159.5 (17,029.0) The restatement has no net impact on net assets or shareholders' funds. Therestatement establishes a new employee share scheme reserve with a correspondingreduction in the profit and loss account reserve. This information is provided by RNS The company news service from the London Stock Exchange