Netcall Regulatory News (NET)

20 Sep 2005 07:02

Netcall PLC20 September 2005 20 SEPTEMBER 2005 NETCALL PLC ("Netcall" or "the company") Preliminary Results for Year Ended 30 June 2005 Netcall sells telephony solutions, including its innovative flagship productQueueBuster TM, which enable call centres to manage call queuing, reduce costsand enhance customer service. HIGHLIGHTS Financial •Sales up 17% to £2.8 million (2004: £2.4 million) •Gross profit margin increases to 83% (2004: 80%) •Profit on ordinary activities before tax of £0.16 million (2004: loss of £0.83 million), representing the first full year of profit in the company's history •Cash position of £1.4 million (2004: £1.3 million) Operational •Hosted Services achieving strong growth •Implementation of QueueBuster Product at one of the world's leading banks •Continued tight control of operating costs Ron Elder, Chairman of Netcall, commented: "We are very pleased with our strategy of offering customers the opportunity totake the hosted service version of QueueBuster. It has produced excellentresults and is providing an increasing base of highly stable and visiblerevenue. Our objective is to continue to grow this base whilst offeringflexible packages which meet the needs of our customers and prospects." ENQUIRIES Netcall plc (www.netcall.com) Tel. +44(0)1480 495300Ron Elder, ChairmanHenrik Bang, Chief Executive ICIS Tel. +44 (0)20 7651 8688Archie BerensCaroline Evans-Jones Chairman's Statement Following the launch of the hosted service version of QueueBuster last year, wehave successfully built up the proportion of service based revenues. Bycontinuing to grow revenue and maintaining a prudent stance on costs, Netcall isreporting full year profits for the first time in its history. Results Turnover for the year was £2.8 million, 17% ahead of last year (2004: £2.4million). Margins improved slightly and as a result, gross profits were £2.4million, compared to last year's figure of £1.9 million. A reduction inadministrative expenses meant that the company was able to report a small profitbefore taxation, of £0.16 million, compared to a loss before tax in the previousyear of £0.83 million. Earnings per share were 0.2p, compared to a loss pershare of 1.3p in 2004. Increasing annuity revenues from maintenance contracts and growing revenues fromhosted services ensured a continuing healthy cash flow into the new financialyear. At 30 June 2005, the cash position was £1.4 million, slightly ahead of theprevious year. At the year end, Netcall had contracted future revenues of £1.19 million (2004:£1.65 million) that will contribute to its income over the next three years.Additionally the business now has a higher level of regular monthly income beinggenerated from users of the hosted services. Business Focus We continue to deliver on the plan to make the company's solutions available toa broader customer base through the introduction of service offerings. Thisstrategy will also reduce the unpredictability of Netcall's revenue streamscaused by a relatively small number of customers making decisions on high-valueproduct purchases. We have found that no matter how great the positive impactQueueBuster technology can be shown to have on a customer's business, thetimings associated with the customer's decision making processes make our ownbudgeting very difficult. This has proven to be the case on a number of occasions, and was most notablerecently when we won a contract to install QueueBuster at one of the world'slargest banks. Although clearly an important and potentially valuable piece ofbusiness for Netcall, the timetable was under the control of the customer, andoutside our influence. Our roll-out expectations for the period to 30 June 2005were not met, and the delayed revenues are now expected to occur in the currentfinancial year. Thus we continue to focus on building up the stream of regular, visible andlower-risk revenues by increasing our efforts on marketing the service solutionssuch as QueueBuster Service and Netcall800. Outlook We believe our knowledge of telephony and the sophisticated technology we havedeveloped gives us a unique insight into the requirements of organisations withregard to call handling and customer contact management. It is becomingincreasingly clear to us that these organisations consider customerdissatisfaction to be a huge threat to their business and our technology is avital tool in combating that threat. Those organisations that have had the vision to recognise this by signing up forour service have been delighted with the results. Our objective now is tocapture a greater share than that which we currently occupy, by offering moreflexible ways to sell the product to more organisations, and by providing acomplementary package of services that will be even more attractive to ourcurrent and potential customers. We are making good progress in formulatingthese plans and we are therefore confident of further success. Ron Elder, Chairmanron.elder@netcall.com20 September 2005 Chief Executive's Review At the beginning of the financial year, the main objective was for Netcall toexecute its new strategic directions and to prove the strategy's durability byreaching profitability. I am therefore pleased to report strong growth in ournew key revenue streams and profitability for the first time in the company'shistory. The overall long term health of the company has improved substantially asNetcall has made significant progress in its market reach and has enhanced thediversity of the revenue streams, including an increase in recurring revenues. Financial Results Netcall is reporting a full year profit for the first time in its history. Thishas been achieved by a combination of revenue growth, margin increases and areduced cost base, resulting in an improvement of profit before tax ofapproximately £1 million compared to the previous year. Year on year turnover growth was 17%. Behind this is a significant change inrevenue composition including a substantial increase in recurring servicerevenues as well as revenue growth from new customers buying QueueBusterproduct. Product revenue growth has been adversely impacted by a decline in new productsales made to a single QueueBuster product customer. New sales to this customerhave naturally declined as penetration of this customer has increased. Totalrevenue excluding new sales to this customer increased by more than 60% year onyear and has been generated from a much broader customer base. Margins have continued to improve as a result of the changing revenue profile. Cost control has remained tight and consequently administration expenses havedeclined by 20% compared to last year. Review of Operations QueueBuster, Netcall's flagship product, gives customers caught in a call centrequeue the option of receiving a return call without losing their place in thequeue. Our customers continue to report excellent performance from QueueBusterin both sales and customer support environments, confirming that the productdelivers substantial productivity improvements as well as high customer andagent satisfaction. There is also a growing interest in other Netcall products, most notablyNetCall800 which is Netcall's internet call-back solution supporting anincreased number of customers internet based business transactions. The hosted services business is continuing to show solid growth. This supportsour belief that smaller customers as well as large corporations are attracted tothe 'on-demand' business model where customers pay fees according to theirusage. Netcall has over the course of the year signed contracts with customersfrom a broad range of sectors including Financial Services, Telecommunications,Travel & Leisure and Government. Whilst Netcall is increasingly moving towards the hosted services model, therehas also been an increase in revenues from new QueueBuster product customers.During the year Netcall signed a significant three year Global FrameworkAgreement with an international bank to provide its QueueBuster technology tosupport that company's telephony operations. The strategy to increase revenues via channels is yielding tangible benefits forboth hosted services and product sales. As an example, through our distributionagreement with BT Global Services we have seen QueueBuster being adopted byPrudential. Both the results and the feedback from Prudential have been verypositive. In the financial year 24% of revenues came from distribution channels. Current Trading Since the year end, trading has continued to be satisfactory. Our monthlyrun-rate of recurring revenues is continuing to rise in line with the increasingadoption of the hosted service and we have also received customer commitment fornew QueueBuster Product systems. Strategy Our overall strategy is to increase both the diversity and the quality of ourrevenue streams. We believe we have made significant progress in executing thisstrategy and will continue our current efforts in growing the platform ofrecurring revenues as well as building distribution channels. In addition we see an opportunity to bundle together packages of other relatedtelephony services to increase sales to existing customers and to attract newprospects. We intend also in the coming year to build our internal capabilities to supportthe key strategic directions which will make the basis for continued growth.This will be done alongside continued tight control of the company's cost base. Netcall's suite of products continues to have considerable potential. With acontinued strong focus on the execution and development of our market model andproduct proposition, we are confident about the future. Henrik Bang, Chief Executivehenrik.bang@netcall.com20 September 2005 NETCALL PLC Consolidated Profit and Loss AccountYear ended 30 June 2005 Notes 2005 2004 £Turnover 1 2,822,086 2,414,211 Cost of sales (469,073) (471,378) -------- ---------Gross profit 2,353,013 1,942,833 Administration expenses (2,233,033) (2,786,225)Other operating income 7,942 - -------- ---------Operating profit (loss) 127,922 (843,392) Interest receivable 44,582 18,853Interest payable and similar charges (14,445) (3,392) -------- ---------Profit (loss) on ordinary activities beforetaxation 158,059 (827,931) Tax on profit (loss) on ordinary activities - 32,224 -------- ---------Profit (loss) for the financial year 158,059 (795,707) -------- --------- Earnings (loss) per ordinary share Basic 2 0.2p (1.3p) Diluted 2 0.2p (1.3p) All activities derive from continuing operations. NETCALL PLC Consolidated Statement of Total Recognised Gains and LossesYear ended 30 June 2005 2005 2004 £ £ Profit (loss) for the financial year 158,059 (795,707)Currency translation differences on foreign currency net investments (253) (3,776) -------- ---------- Total recognised gains and losses for the year 157,806 (799,483) ======== ========== NETCALL PLC Consolidated Balance SheetAt 30 June 2005 2005 2004 £ £Fixed assetsTangible assets 172,346 153,268Investments - - --------- --------- 172,346 153,268 --------- --------- Current assetsStocks 19,468 130,359Debtors within one year 1,079,348 1,033,535Cash at bank and in hand 1,393,385 1,256,872 --------- --------- 2,492,201 2,420,766 --------- --------- Creditors: amounts falling due (1,217,884) (1,269,798)within one year --------- --------- Net current assets 1,274,317 1,150,968 --------- --------- Total assets less current liabilities 1,446,663 1,304,236 Creditors: amounts falling due after (87,500) (117,500)more than one year --------- --------- 1,359,163 1,186,736 --------- --------- Capital and reservesCalled up share capital 3,285,547 3,275,464Share premium account 15,120,021 15,115,483Special and capital reserves 245,055 245,055Profit and loss account (17,291,460) (17,449,266) --------- ---------Equity shareholders' funds 1,359,163 1,186,736 --------- --------- NETCALL PLC Consolidated Cash Flow StatementYear ended 30 June 2005 2005 2004 £ £ £ £ Net cash inflow (outflow) fromoperating activities 208,094 (221,838) Returns on investments and servicingof financeInterest element of finance lease - (15)rental paymentsBank interest received 44,582 18,853Interest on bank loans and (13,712) (589)overdraftsOther interest (733) (2,788) -------- ------- Net cash inflow from returns oninvestments and 30,137 15,461servicing of finance Capital expenditure and financialinvestmentPayments to acquire tangible fixed (86,339) (58,686)assetsReceipts from sales of tangible - 620fixed assets -------- ------- Net cash (outflow) from capitalexpenditure and (86,339) (58,066)financial investment -------- -------- Net cash inflow (outflow) before financing 151,892 (264,443) FinancingBank loan taken out - 150,000Repayment of bank loan (30,000) (2,500)Capital element of finance lease - (485)rental paymentsIssue of new shares 14,621 1,295,990Share issuance costs - (200,000) -------- --------- Net cash (outflow) inflow from (15,379) 1,243,005financing -------- ---------- Increase in cash 136,513 978,562 ======== ========== NETCALL PLC Notes to the Accounts 1. Analysis of turnover 2005 2004 Analysis of turnover by class of business £ £ Product 2,171,976 2,086,300Service 650,110 327,911 -------- --------- 2,822,086 2,414,211 -------- --------- Geographical analysis of turnover by destination: 2005 2004 £ £United Kingdom 2,412,518 2,135,605Rest of Europe 316,436 187,511North America 55,227 88,870Rest of World 37,905 2,225 -------- --------- 2,822,086 2,414,211 -------- --------- 2. Earnings (loss) per ordinary share Earnings (loss) per share has been calculated in accordance with FinancialReporting Standard 14 (FRS 14). The calculation of earnings per share is basedon the profit attributable to equity shareholders of £158,059 (2004 - loss of£795,707) and 65,592,187 (2004 - 60,005,122) shares being the weighted averageof the number of shares in issue during that period. The diluted earnings per share is based on a weighted average of 65,777,775shares after allowing for the exercise of share options. For 2004, the dilutedloss per share, as presented, equals the basic loss per share as FRS 14 requirespresentation of diluted EPS when a company could be called upon to issue sharesthat would decrease net profit or increase net loss per share. 3. The Directors do not recommend payment of a dividend. 4. The financial information set out in the announcement does not constitutethe company's statutory accounts for the years ended 30 June 2005 or 2004. Thefinancial information for the year ended 30 June 2004 is derived from thestatutory accounts for that year which have been delivered to the Registrar ofCompanies. The auditors reported on those accounts; their report wasunqualified and did not contain a statement under s237(2) or (3) Companies Act1985. The statutory accounts for the year ended 30 June 2005 will be deliveredto the Registrar of Companies after the company's Annual General Meeting. Theauditors have reported on those financial statements; their report wasunqualified and did not contain a statement under S237(2) or (3) of theCompanies Act 1985. The financial information is prepared on the basis of accounting policies asstated in the previous year. 5. Copies of the full statutory accounts will be despatched to shareholders indue course. Further copies will be available from the Registered Office of thecompany at 10 Harding Way, St Ives, Cambs PE27 3WR. This information is provided by RNS The company news service from the London Stock Exchange