Netcall Regulatory News (NET)

19 Sep 2006 07:01

Netcall PLC19 September 2006 19 September 2006 NETCALL PLC ("Netcall" or "the Company") Preliminary Results for Year Ended 30 June 2006 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 Highlights • Turnover up 11% to £3.13million (2005: £2.82 million) • Hosted services growth of 102% to £1.33 million (2005: £0.66 million) • Gross margin increases to 86% (2005: 83%) • Operating profits before exceptional items increases 180% to £0.42 million (2005: £0.15 million) • Profit before tax margin at 12.5% (2005: 5.6%) Operational Highlights • Revenue from distribution channels achieving strong growth • 5 consecutive 6 month periods of hosted services revenue growth • Broadening of customer base • Strengthened management team Ron Elder, Chairman of Netcall, commented: "Today's results are evidence of Netcall's achievements over the last year,which has seen the Company enhancing its presence within the market leading toincreased interest in the Company's solutions. I am also pleased to report thatthe change in strategy is continuing to prove a success with continued growth inhosted services revenue and margins. Following on from this I look forward toanother successful year." ENQUIRIES Netcall plc (www.netcall.com) Tel. +44(0)1480 495300Ron Elder, ChairmanHenrik Bang, Chief Executive ICIS Tel. +44 (0)20 7651 8688Tom MoriartyLaura Cocker Chairman's Statement I am pleased to report that this has been another successful year for Netcall.The Company's trading performance has continued to improve. Turnover for theyear was £3.13 million, an increase of 11.1% from last year (2005: £2.82million). Most significantly, profit before tax rose by 148% to £391,900 (2005:£158,100). We have strengthened the executive team with key appointments in theleadership roles of the Sales and Marketing, Finance and Operations areas. As wecontinue to increase our presence within the market we have now built a solidplatform for future growth. It is particularly encouraging to see a growingmarket interest in the company's innovative telephony solutions, primarilyQueueBuster. Hosted services revenues generated £1.33 million, an increase of 104% from 2005(2005: £0.65 million). This is again encouraging and is an indication of thesuccess of our strategy of focusing on providing a hosted service alternative toour customer premises solution, and we see customers increasingly turning tothis solution. Not only has hosted services made a significant contribution to revenues thisyear but it has also improved our gross margin. In conjunction with revenuegrowth gross profits have increased to £2.68 million from £2.35 million, anincrease of 14.1%. At 30 June 2006, the Company's cash position increased by 31% to £1.82 million,(2005: £1.39 million). During the year, we also set out to expand our distribution channels allowingmore reach into an ever expanding market. We have experienced significantsuccess in this area and have already seen new orders from these partners. Following on from this year's positive results and achievements we look forwardto another successful year where we can build upon our accomplishments further.I would like to take this opportunity to thank the Netcall team for theircontinued commitment as well as expressing my gratitude to our various partnerswho have continued to support our solutions. Ron Elder, Chairman19 September 2006 Chief Executive's Review During the year, Netcall has continued to make significant progress. Thebusiness has achieved substantial growth in its profitability resulting from keystrategies focused on hosted services growth and growing revenues from ourexpanding distribution channels. Netcall further broadened its customer base, mainly due to increased marketacceptance of our flagship product QueueBuster which now saves millions ofcallers from more than 150 years of telephone queuing every year. Financial Results Netcall continued to improve its financial performance with profits growing by148% to £0.39 million (FY 2005: £0.16 million) corresponding to a profit marginof 12.5% (FY 2005: 5.6%). This result has been achieved through a combination ofrevenue growth and margin improvement while keeping a tight grip on expenses. Revenues increased by 11.1% to £3.13 million (FY 2005: £2.82 million). Hostedservices, which now have generated growth for 5 consecutive 6 month periods,delivered a 102% increase in revenues to £1.33 million, and as a result theCompany achieved significant growth in its recurring and annuity revenues.Revenue from channels grew by 82% reaching £1.15 million (FY 2005: £0.63million). The change in revenue mix resulted in a gross margin increase by 3 percentagepoints to 86% and an increase in gross profit of 14.1% to £2.68 million (FY2005: £2.35 million). During the year expenses increased by 3.0% to £2.28 million (FY 2005: £2.21million). This increase was mainly due to investments in sales and marketingactivities. Operating profits before exceptional items increased by 180% to £0.42 millionfrom £0.15 million. Exceptional items incurred in the year related to aprovision required under UITF 17 (employee share schemes) and reorganisationcosts. These were substantially offset by increased interest earnings generatedfrom the strong cash position of the company. As a result of the Company's trading performance, the cash position improved by31% to £1.82 million (FY2005: £1.39 million). Review of Operation Netcall's flagship product, QueueBuster, enables customers in a call centrequeue to choose the option of receiving a return call without losing their placein the queue. QueueBuster continues to give excellent performance, as reportedby our customers, confirming that the product delivers high customer and agentsatisfaction with substantial productivity improvements. Throughout the year there has been an increase in the number of new customers,including several blue chip companies, who benefited from using our products,either having purchased directly from Netcall or via distribution partners. Weentered into the Government sector with new customers including London Boroughsof Waltham Forest and Lewisham and also secured numerous other corporatecustomers including Aviva, Alliance & Leicester, ATEC, Cheshire Building SocietyCoventry Building Society, Invesco Perpetual and Nildram. In addition severalcustomers increased their commitments with Netcall and our products includingBT, More Th>n and npower. In conjunction with the increase in customer base, the average revenue percustomer using our hosted services offering also increased. As the hostedservice business model is maturing, we have in this financial year seen apreference to deploy this solution compared to the QueueBuster product modelwhere Netcall's technology is installed on the customer's premises. Theflexibility of the hosted model in terms of usage, scalability and ease ofimplementation means that many customers prefer this model and are prepared topay a premium over the QueueBuster product model. In line with our strategy thehosted services model provides a stable recurring and higher revenue streamcompared to that of the QueueBuster product model which is a larger up frontrevenue component but a lower total value. The focus on expanding our market reach via channel partners resulted in newdistribution agreements being signed including an agreement with Cable &Wireless. This has already lead to the securing of new customers. During theyear the growth in revenues from distribution channels was especially strong forthe hosted service business. As part of the ongoing transformation of Netcall, the management team has beenstrengthened. In addition the company undertook a market repositioninginitiative increasing our product offerings and positioning Netcall to supportour key strategies. Strategy Netcall's ambition is to continue to increase the market acceptance of itsproducts, primarily QueueBuster, and to utilise our distribution partnerships insupporting this. By continuing to execute our key strategies we believe that thecompany will further improve its financial performance and its long term healthresulting in increased shareholder value. Current Trading The Directors believe that the outlook for the company is positive and that thenew financial year has started satisfactorily. The hosted service business hasto date continued to show significant year on year growth. Henrik Bang, Chief Executive 19 September 2006 NETCALL PLC Consolidated Profit and Loss AccountYear ended 30 June 2006 Notes 2006 2005 £'000 £'000 Turnover 1 3,134.5 2,822.1 Cost of sales (449.9) (469.1) -------- ---------Gross profit 2,684.6 2,353.0 -------- ---------Administration expensesExceptional items 2 (78.7) (21.2)Other (2,279.2) (2,211.8) -------- --------- (2,357.9) (2,233.0) -------- --------- Other operating income 11.0 7.9 -------- ---------Operating profit 337.7 127.9---------------------------------------------- ------ -------- --------- before exceptional items 416.4 149.1 exceptional items (78.7) (21.2)--------------------------------------------- ------ -------- --------- Interest receivable 63.6 44.6Interest payable and similar charges (9.4) (14.4) -------- ---------Profit on ordinary activities before taxation 391.9 158.1 Tax on profit on ordinary activities - - -------- ---------Profit for the financial year 391.9 158.1 -------- --------- Earnings per ordinary share Basic 3 0.6p 0.2p Diluted 3 0.6p 0.2p All activities derive from continuing operations. Consolidated Statement of Total Recognised Gains and LossesYear ended 30 June 2006 2006 2005 £'000 £'000 Profit for the financial year 391.9 158.1Currency translation differences on foreign currency netinvestments 0.1 (0.3) -------- ----------Total recognised gains and losses for the year 392.0 157.8 ======== ========== Reconciliation of Movements in Consolidated Shareholders' FundsYear ended 30 June 2006 2006 2005 £'000 £'000 Profit for the financial year 391.9 158.1Currency translation differences on foreign currency netinvestments 0.1 (0.3)New shares issued 16.8 14.6UITF 17 adjustment re employee share schemes 29.9 - -------- ---------- 438.7 172.4Opening shareholders' funds 1,359.2 1,186.8 -------- ----------Closing shareholders' funds 1,797.9 1,359.2 ======== ========== NETCALL PLC Consolidated Balance SheetAt 30 June 2006 2006 2005 £'000 £'000Fixed assetsTangible assets 154.3 172.3Investments - - --------- --------- 154.3 172.3 --------- --------- Current assetsStocks 62.2 19.5Debtors within one year 1,052.5 1,079.3Cash at bank and in hand 1,819.5 1,393.4 --------- --------- 2,934.2 2,492.2 --------- --------- Creditors: amounts falling due within one year (1,233.1) (1,217.8) --------- ---------Net current assets 1,701.1 1,274.4 --------- --------- Total assets less current liabilities 1,855.4 1,446.7 Creditors: amounts falling due aftermore than one year (57.5) (87.5) --------- --------- 1,797.9 1,359.2 --------- --------- Capital and reservesCalled up share capital 3,297.1 3,285.5Share premium account 15,125.3 15,120.0Special and capital reserves 245.1 245.1Employee share schemes reserve 29.9 -Profit and loss account (16,899.5) (17,291.4) --------- ---------Equity shareholders' funds 1,797.9 1,359.2 --------- --------- Consolidated Cash Flow StatementYear ended 30 June 2006 2006 2005 £'000 £'000 £'000 £'000 Net cash inflow from operating activities 468.7 208.0 Returns on investments and servicing offinanceBank interest received 63.6 44.6Interest on bank loans and overdrafts (9.4) (13.7)Other interest - (0.7) -------- ------- Net cash inflow from returns oninvestments and servicing of finance 54.2 30.2 Capital expenditure and financial investmentPayments to acquire tangible fixed assets (83.6) (86.3) -------- ------- Net cash outflow from capital expenditureand financial investment (83.6) (86.3) -------- -------- Net cash inflow before financing 439.3 151.9 FinancingRepayment of bank loan (30.0) (30.0)Issue of new shares 16.8 14.6 -------- ------- Net cash outflow from financing (13.2) (15.4) -------- --------Increase in cash 426.1 136.5 ======== ======== Notes to the Accounts 1. Analysis of turnover 2006 2005 £'000 £'000Analysis of turnover by class of business Product 1,807.7 2,172.0Services 1,326.8 650.1 -------- --------- 3,134.5 2,822.1 -------- --------- Geographical analysis of turnover by destination: 2006 2005 £'000 £'000 United Kingdom 2,961.5 2,412.5Rest of Europe 142.5 316.5North America 23.3 55.2Rest of World 7.2 37.9 -------- --------- 3,134.5 2,822.1 -------- --------- 2. Exceptional items 2006 2005 £'000 £'000 Reorganisation costs 48.8 21.2UITF 17 Employee share scheme charges 29.9 - -------- --------- 78.7 21.2 -------- --------- 3. Earnings per ordinary share Earnings per share has been calculated in accordance with Financial Reporting Standard 22 (FRS 22). The calculation of earnings per share is based on the profit attributable to equity shareholders of £391,900 (2005 - £158,100) and 65,813,224 (2005 - 65,592,187) shares being the weighted average of the number of shares in issue during that period. The diluted earnings per share is based on a weighted average of 66,426,369 shares after allowing for the exercise of share options. For 2005, the diluted profit per share, as presented, equals the basic profit per share as FRS 22 requires presentation of diluted EPS when a company could be called upon to issue shares that would decrease net profit or increase net loss per share. 4. The Directors do not recommend payment of a dividend. 5. The financial information set out in the announcement does not constitute the company's statutory accounts for the years ended 30 June 2006 or 2005. The financial information for the year ended 30 June 2005 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was unqualified and did not contain a statement under s237(2) or (3) Companies Act 1985. The statutory accounts for the year ended 30 June 2006 will be delivered to the Registrar of Companies after the company's Annual General Meeting. The auditors have reported on those financial statements; their report was unqualified and did not contain a statement under S237(2) or (3) of the Companies Act 1985. The financial information is prepared on the basis of accounting policies as stated in the previous year. The company has adopted in the year FRS 21 - events after the balance sheet date - and the presentation requirements of FRS 25 - Financial instruments: disclosure and presentation -; no restatement of the comparatives was necessary. 6. Copies of the full statutory accounts will be despatched to shareholders in due course. Further copies will be available from the Registered Office of the company at 10 Harding Way, St Ives, Cambs PE27 3WR. This information is provided by RNS The company news service from the London Stock Exchange