Final Results


 

TIDMNET 
 
RNS Number : 3115T 
Netcall PLC 
27 September 2010 
 

27 September 2010 
                                  NETCALL PLC 
 
          Unaudited preliminary results for the year ended 30 June 2010 
 
Netcall plc ("Netcall", "the Company", or "the Group"), a leading provider of 
customer engagement software, today announces its unaudited preliminary results 
for the year ended 30 June 2010. 
 
Financial Highlights 
·      Revenue increased by 5% to GBP4.13m (2009: GBP3.93m) 
·      Revenues of a recurring nature increased by 10% to GBP3.42m (2009: 
GBP3.10m) 
·      Gross profit margin increased 1% to 91% 
·      Gross profit from revenues of a recurring nature exceeded operating costs 
·      Adjusted operating profit(1) increased by 23% to GBP1.02m (2009: 
GBP0.83m) 
·      Adjusted operating profit margin increased by 4% to 25% 
·      Earnings per share 0.04p (2009:1.18p) after one off impact of acquisition 
costs of GBP0.92m 
·      Debt-free balance sheet with net cash funds of GBP2.45m at 30 June 2010. 
Post-acquisition of Telephonetics, the Group had net cash funds of GBP4m 
 
Acquisitions 
·      Q-Max Systems Limited ("Q-Max") acquisition has now been successfully 
integrated 
·      Placing of GBP4.25m (before expenses) at 19 pence per share post year end 
·      Acquisition of Telephonetics Limited ("Telephonetics") completed post 
year end and integration commenced which is expected to deliver significant 
synergies 
·      Broader product portfolio with improved offerings and delivery 
capabilities to customers 
·      Increased installed base to more than 600 customers enhancing cross 
selling opportunities and security of recurring revenues 
 
Henrik Bang, CEO of Netcall, commented, 
"This has been a transformational year for Netcall with the acquisitions of 
Q-Max and Telephonetics, the latter successfully completed following our 
financial year end, supporting our growth strategy and providing a significantly 
larger customer base and broader product portfolio. The Company will continue to 
pursue carefully selected acquisitions that enhance long term shareholder value. 
 
"Netcall's start to the current financial year has been promising, with the 
first months of this period showing early sales and healthy profit levels. 
Whilst market conditions remain uncertain, the Board's outlook remains 
confident." 
 
For further enquiries, please contact: 
 
+------------------------------------------------+-----------------+ 
| Netcall plc                                    |    Tel. +44 (0) | 
|                                                |     1480 495300 | 
+------------------------------------------------+-----------------+ 
| Henrik Bang, CEO                               |                 | 
| Michael Jackson, Chairman                      |                 | 
| James Ormondroyd, Group Finance Director       |                 | 
+------------------------------------------------+-----------------+ 
|                                                |                 | 
+------------------------------------------------+-----------------+ 
| Evolution Securities Limited                   | Tel. +44 (0) 20 | 
| (nominated adviser and broker)                 |       7071 4300 | 
+------------------------------------------------+-----------------+ 
| Barry Saint / Esther Lee - Corporate Finance   |                 | 
+------------------------------------------------+-----------------+ 
| Tim Redfern - Corporate Broking                |                 | 
+------------------------------------------------+-----------------+ 
|                                                |                 | 
+------------------------------------------------+-----------------+ 
| Threadneedle Communications                    | Tel. +44 (0) 20 | 
|                                                |       7653 9850 | 
+------------------------------------------------+-----------------+ 
| Tom Moriarty / Caroline Evans-Jones / Hilary   |                 | 
| Millar                                         |                 | 
+------------------------------------------------+-----------------+ 
 
(1) before share-based charges, amortisation of acquired intangible assets and 
acquisition costs. 
 
About Netcall 
 
Netcall is a UK company quoted on the AIM market of the London Stock Exchange. 
Netcall's software product suite provides compelling solutions for end-to-end 
customer engagement, incorporating call handling, callback, smart automation, 
workforce management and data unification. Our target markets comprise 
organisations of all sizes, including many blue-chip companies with global 
contact centre operations. The Netcall software platform helps organisations 
meet the growing demands of their customers and prospects whilst improving 
internal efficiencies, thereby increasing profitability and customer 
satisfaction. 
 
Netcall's customer base contains over 600 organisations in both the private and 
public sectors. These include 80% of the major UK multiplex cinemas, over 60% of 
the NHS Acute Health Trusts, major telecoms operators such as BT and Cable & 
Wireless and leading organisations including First Direct, McAfee, Interflora, 
Lloyds TSB, Oracle, Orange, Prudential, RBS and Standard Life. 
 
Chairman's and Chief Executive's Statement 
 
This has been a transformational year for Netcall, incorporating key 
acquisitions supporting our growth strategy. Since this time last year we have 
increased our market presence, significantly grown our customer base to over 600 
customers and substantially increased the Group's revenues of a recurring nature 
which the Board believes provides a solid foundation for delivering long term 
shareholder value. 
 
The Group continues to enjoy a strong financial position underpinned by a 
business with high revenue visibility which will continue to support our growth 
strategy. 
 
Acquisitions 
 
Within a 12 month period Netcall undertook two acquisitions: 
 
Q-Max 
In October 2009, Netcall acquired Q-Max, a leading UK-based provider of 
workforce management software to contact centres. As well as adding more than 
100 new customers to Netcall's existing customer base, this has also opened up a 
new market for the Company. Q-Max's integration was completed to plan and the 
business has performed well during the year, in line with management's 
expectations. 
 
Telephonetics 
On 2 June 2010, the Company announced the recommended proposed acquisition of 
Telephonetics, a UK-based provider of speech automation and data integration 
solutions, along with a placing of new Netcall shares at 19p per share to raise 
GBP4.25m before expenses. The acquisition was made by way of a scheme of 
arrangement and constituted a reverse takeover pursuant to the AIM Rules. It was 
successfully completed on 30 July 2010, after Netcall's financial year end. 
Integration work has begun and is proceeding according to plan, with a number of 
cost saving and synergistic opportunities having been identified. These 
opportunities include cross-selling to the significantly increased customer base 
and reseller channels. The removal of duplicate head office costs will also 
benefit the Group through cost synergies and efficiency gains. 
 
Telephonetics last published set of audited accounts were for the year to 30 
November 2009, in those accounts it reported revenue of GBP10.5 million and 
profit before tax of GBP0.4 million. 
 
Financials 
 
Group revenue for the 2010 financial year was GBP4.13m, representing an increase 
of 5% over the prior financial year (2009: GBP3.93m). This improved performance 
included the first time contribution from newly acquired Q-Max of GBP1.19m which 
compensated for a reduction in QueueBuster revenues. 
 
Revenue of a recurring nature, from our hosted platforms and maintenance and 
support agreements, continues to provide good visibility of future earnings and 
increased 10% to GBP3.42m (2009: GBP3.10m) which represents 83% (2009: 78%) of 
Group revenues. 
 
Gross profit margin increased by 1% to 91% (2009: 90%) including the effect from 
Q-Max. 
 
The integration of Q-Max into the Group increased the percentage of direct sales 
as a proportion of Group revenues to 58% (2009: 53%). 
 
Costs were monitored closely during the year with operating costs increasing 
marginally by 2%, including the effect from Q-Max, to GBP2.75m (2009: GBP2.69m), 
before share-based payments, acquisition costs and amortisation of acquired 
intangible assets.  At this level gross profit achieved from revenues of a 
recurring nature continue to exceed operating costs and provide the Group with a 
sound financial platform. 
 
As a result, the Group recorded a 23% increase in adjusted operating profits to 
GBP1.02m (2009: GBP0.83m), a profit margin of 25% (2009: 21%). 
 
This adjusted operating profit taking into account (i) share-based payment 
charges of GBP0.2m, (ii)  amortisation charges on acquired intangible assets 
relating to Q-Max of GBP0.15m; (iii) acquisition costs in respect of Q-Max and 
Telephonetics of GBP0.92m; and (iii) lower interest income of GBP0.13m on a 
lower cash balance following the part-cash acquisition of Q-Max, resulted in a 
loss before tax of GBP0.23m (2009: profit of GBP0.75m). 
 
The Group continues to benefit from the utilisation of tax losses brought 
forward and therefore has no income tax expense. In light of trading in the 
period, the Board considers that a higher proportion of losses are likely to be 
utilised in the future and therefore a deferred tax credit of GBP0.26m has been 
recorded in the income statement. 
 
Net cash generated from operating activities was GBP0.37m (2009: GBP1.58m) which 
was lower than last year due to cost of acquisition and timing differences. This 
combined with GBP2.00m of cash paid to acquire Q-Max resulted in a cash outflow 
for the year of GBP1.71m (2009: inflow of GBP1.25m). 
 
The Group has a debt-free balance sheet and net cash funds of GBP2.45m at 30 
June 2010. This position was strengthened further post-year end following a
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