RNS Number:2661Q
Netcall PLC
29 September 2003
NETCALL PLC
Preliminary results for the year ended 30 June 2003
FLAGSHIP PRODUCT REALISING PROFITABLE GROWTH
Netcall develops and supplies call centre software and systems, including the
market leading queue management product, QueueBusterTM.
* Threefold increase in Sales to #2.39 million (2002: #0.81 million)
* Threefold increase in Gross Profit to #1.88 million (2002: #0.63
million)
* 19% reduction in operating expenses
* Loss on ordinary activities before tax reduced to #0.33 million (2002:
loss #2.40 million)
* Pre-tax profit on ordinary activities of #0.16 million achieved in the
second half of the year
* #1.5 million BT contract signed to supply QueueBuster in May 2003
* Embarking on an international expansion strategy
* Signed first Asian distribution agreement with Digiberry, a Japanese
technology distribution company, via JV Netcall Asia Pacific
Ron Elder, Netcall Chairman, commented:
"These are encouraging results as we begin to see real returns from our market
leading product, QueueBuster. It provides clear advantages for our customers in
terms of improving their customer satisfaction and reducing their operating
costs.
"We are confident of delivering positive results from our investment programme
early in 2004 as we exploit the opportunities within QueueBuster's core customer
base, widen our international distribution and develop prospects in the small
call centre sector."
29 September 2003
Enquiries:
Netcall plc (www.netcall.com) Tel: 020 7457 2020 (today)
Ron Elder, Chairman 01480 495 300 (thereafter)
David Rothchild, Chief Operating Officer
College Hill Tel: 020 7457 2020
Adrian Duffield /Corinna Dorward
Chairman's Statement
Results
Sales and gross profits increased threefold, driven by our principal call centre
technology product, QueueBuster. QueueBuster cuts queues by enabling callers to
request a call back. Combined with a 19% reduction in operating expenses,
losses before taxation were substantially reduced to #0.33 million. (2002: loss
#2.40 million).
More significantly the Group became profitable in the second half of the year
with sales of #1.56 million delivering pre-tax profit of #0.16 million. Loss per
ordinary share for the year has been reduced to 0.6p (2002: loss 6.35p).
In August 2002 the company raised #0.97 million net of costs by means of a
placing. Currently the company has a cash balance in excess of #0.5 million.
Typical QueueBuster contracts are signed for a three-year period. At the
year-end Netcall had contracted future revenues and deferred income of #1.1
million of which #0.42 million will be executed in the current financial year.
Operations
The company has been able to build on the successes of the first half of the
year, and QueueBuster has continued to justify our confidence in its
international potential.
The highlight of the year was the #1.5 million contract in May 2003 to supply BT
with QueueBuster for three years, including an initial substantial payment.
Since the trial and selling process is typically of a long duration, the
endorsement of major corporations of the calibre of BT has been an important
step forward. Larger corporations with multi-site call centre operations are
attractive since they are more likely to place repeat orders. Clients who have
bought the product during the year include The Cooperative Bank, Linklaters,
Royal and Sun Alliance, Vertex Data Sciences, United Utilities as well as BT.
So far all of Netcall's customers with multi-site operations have ordered more
than one system. QueueBuster's strengths were further verified by repeat orders
during the year from BT, The Cooperative Bank and Vertex.
We have continued with our international growth strategy. Our joint venture with
Committed Capital, in the Asia Pacific region has signed Digiberry as a Japanese
distributor and a trial system has been operational in Japan for over eight
weeks. We expect to be installing a similar system in Australia shortly. We
also now have our first trial system in the USA.
Strategy and Prospects
We aim to capitalise on our leading market position and over the past three
months have further strengthened the team.
During the last quarter, the management has focussed on developing a strategy
aimed at creating a smoother revenue stream for the company. Since the selling
process for the QueueBuster product is lengthy, owing to a substantial initial
capital outlay requirement, Netcall has adopted a broader marketing approach
using international partnerships and distribution agreements. Discussions with
a number of parties with distribution capability have been encouraging, both in
the UK and internationally.
We also plan to exploit the leading position of QueueBuster by providing a
managed service variation for smaller call centres with less than 100 seats.
The new application reduces customer's initial capital investment and will
provide Netcall with an additional revenue stream.
The current financial year has started well. We have already completed two
successful trials in Ireland and the UK; the latter has resulted in an order
from Legal and General Insurance. We have an order for our first Spanish trial
in October and a pilot system is installed in Japan through our joint venture
with Committed Capital. Our high conversion rate from trials to sales allows us
to be confident of sales volumes but long decision cycles continue to make
actual contract timings difficult to forecast.
The Board is confident of delivering positive results from our investment
programme early in 2004.
Review of Operations
Significant progress has been achieved during the year and it is clear that our
QueueBuster product delivers exceptional value to our customers. Not only does
it result in significant increases in customer satisfaction levels but our
customers also benefit from reduced operating expenses. The concept of allowing
callers caught in a queue to arrange a call-back is now better understood but
typically users are still surprised when their call comes back in less time than
they had expected. The product is gathering credibility in our target markets
and our prospect pipeline grows monthly.
In a market that has been resistant to both increased capital investment and new
technology, we've achieved ambitious sales and gross margin goals. QueueBuster
systems have been implemented rapidly and benefit from universal switch
compatibility.
We have also focussed on tight resource management and we are particularly
pleased to have reduced operating costs, whilst maintaining sales momentum.
Development and infrastructure
The technical team has concentrated on developing new features for QueueBuster
to enable customers to understand, manage and control queues to greater effect.
During the year the product was successfully integrated with an internal network
for the first time at BT which demonstrates the flexibility and compatibility of
QueueBuster in all switch environments.
Since the year-end we have bolstered all operational divisions of the company in
preparation for increased demand via distribution channels both in the UK and
internationally. This will enable us to expand rapidly and extend our market
breadth as many of the distribution partners will have expertise in market
segments as yet untapped by the company directly.
The technical and operations teams have continued to support our service-based
infrastructure that will be used to deliver our QueueBuster Service offering to
a wider prospect base. A significant amount of development work has followed
initial beta trials of this QueueBuster variant and we have received very
positive feedback from trial users. The stability and scalability of our service
infrastructure has continued to be very satisfactory giving us confidence in our
ability to roll out this and future service-based programmes efficiently.
Sales and Marketing
Installing QueueBuster represents a capital investment usually requiring a
lengthy trial and sales process of between six to nine months. To ensure
adequate returns Netcall has targeted larger corporations operating multi-site
call centres, with the capacity to place repeat orders.
This has been a very successful strategy as, over the year, we maintained our
record with 100% of QueueBuster trials converting to orders. Additionally, all
multi-site call centre customers have installed at least two systems and we are
confident of further repeat orders. We are particularly pleased that the
original pilot systems installed for BT resulted in the placing of the #1.5
million order for multiple systems in May.
We have concentrated on companies in the financial, telecommunications and
utilities markets and have devoted considerable energy to understanding the
product benefits delivered as well as managing the product in-situ. As a result
we now have a powerful reference base and replicable sales model, which will
enhance our development into new markets.
We have an ambitious programme for our QueueBuster Service variant, which
provides a hosted queue management solution, requiring minimal customer capital
investment. We plan to sell QueueBuster capabilities to call centres with less
than 100 seats, an opportunity that we believe is about twice the size of the
product market we have been addressing to date. Initial sales will be made via
our direct sales force but we anticipate a swift move to distribution and
consequential rapid expansion. We are expecting this business to have radically
shorter sales cycles and a growing recurring revenue stream.
NETCALL PLC
Consolidated Profit and Loss Account
Years ended 30 June
Notes 2003 2002
As restated
Note 4
# #
Turnover 1 2,387,203 807,564
Cost of sales (505,843) (181,331)
Gross profit 1,881,360 626,233
Administration expenses (including exceptional (2,225,310) (2,745,779)
reorganisation costs of #120,633 (2002- #nil))
Operating loss (343,950) (2,119,546)
Interest receivable 14,807 74,183
Amounts written off investments - (350,000)
Interest payable and similar charges (2,634) (531)
Loss on ordinary activities before taxation (331,777) (2,395,894)
Tax on loss on ordinary activities 2 - 92,110
Loss for the financial year (331,777) (2,303,784)
Loss per ordinary share 3 (0.6p) (6.35p)
Diluted loss per ordinary share 3 (0.6p) (6.35p)
All activities derive from continuing operations.
Consolidated Statement of Total Recognised Gains and Losses
Years ended 30 June
2002
2003 As restated
# #
Loss for the financial year (331,777) (2,303,784)
Currency translation differences on foreign currency net
investments 9 17,097
Total recognised gains and losses for the year (331,768) (2,286,687)
Prior year adjustment (refer to note 4) (53,667)
Total gains and losses recognised since last annual report and
financial statements (385,435)
NETCALL PLC
Consolidated Balance Sheet
At 30 June 2003 2002
As restated
Note 4
# #
Fixed assets
Intangible assets - 19,315
Tangible assets 186,395 193,742
Investments - -
186,395 213,057
Current assets
Stocks 58,924 50,500
Debtors within one year 1,386,872 335,492
Cash at bank and in hand 278,310 149,514
1,724,106 535,506
Creditors: amounts falling due (1,020,272) (489,937)
within one year
Net current assets 703,834 45,569
Total assets less current liabilities 890,229 258,626
Creditors: amounts falling due after - (393)
more than one year
890,229 258,233
Capital and reserves
Called up share capital 2,836,513 1,814,513
Share premium account 14,458,444 14,516,680
Special and capital reserves 245,055 245,055
Profit and loss account (16,649,783) (16,318,015)
Equity shareholders' funds 890,229 258,233
NETCALL PLC
Consolidated Cash Flow Statement
Years ended 30 June
2003 2002
# # # #
Net cash outflow from operating activities (739,077) (1,804,224)
Returns on investments and servicing of
Finance
Interest element of finance lease rental payments (286) (415)
Interest received 14,807 74,183
Bank interest paid (100) (116)
Other interest (2,248) -
Net cash inflow from returns on investments and servicing
of finance 12,173 73,652
Taxation repaid - 88,981
Capital expenditure and financial
Investment
Payments to acquire intangible fixed assets - (7,822)
Payments to acquire tangible fixed assets (72,319) (25,924)
Receipts from sales of tangible fixed assets - 787
Net cash outflow from capital expenditure and financial
investment (72,319) (32,959)
Net cash outflow before use of liquid resources and
financing (799,223) (1,674,550)
Management of liquid resources
Decrease in short-term bank bonds 15,000 1,250,000
Financing
Capital element of finance lease rental payments (1,714) (1,585)
Issue of new shares 1,022,000 -
Expenses of issue of ordinary share capital (58,236) (1,700)
Net cash inflow (outflow) from financing 962,050 (3,285)
Increase (decrease) in cash 177,827 (427,835)
NETCALL PLC
Notes to the Accounts
1. Analysis of turnover
2003 2002
As restated
Note 4
Analysis of turnover by class of business # #
QueueBuster sales 1,859,566 313,334
QueueBuster support and maintenance 202,894 65,648
Telephony services 322,998 427,018
Commission and sundry income 1,745 1,564
2,387,203 807,564
All of the turnover arose from activities carried out in the United Kingdom.
Geographical analysis of turnover by destination:
2003 2002
As restated
Note 4
# #
United Kingdom 2,370,288 754,447
North America 7,540 36,290
Rest of Europe 6,520 13,959
Rest of World 2,855 2,868
2,387,203 807,564
2. Tax on loss on ordinary activities
The Corporation Tax receivable in 2002 arose from the availability of a tax credit of Netcall
Telecom Limited's expenditure on research and development activities.
3. Loss per ordinary share
The calculation of loss per ordinary share for the current year is based on the loss for the year
of #331,777 (2002 - #2,303,784 as restated) and the weighted average number of ordinary shares of
0.5p each of 54,490,267 (2002 - 36,290,267). FRS 14 requires that potential ordinary shares
should strictly be treated as dilutive when they increase net loss per share. Since the group has
reported losses, its basic and diluted loss per share are therefore equal.
4. Prior year adjustment
During the year the group changed its accounting policy for maintenance and support income for the
first year of a supply agreement. Previously this income had been recognised in full upon
installation of the system. The current policy is to spread the first year support and
maintenance revenue over the year rather than in full upon installation. As a consequence of the
company changing its accounting policy in this regard, a prior year adjustment has resulted and
the prior year results restated accordingly.
The effect of the prior year adjustment is as follows:
2002
Turnover #
Turnover as previously stated 861,231
Effect of prior year adjustment (53,667)
Turnover as restated 807,564
Increase in loss for financial year (53,667)
Accruals and deferred income
Accruals and deferred income as previously stated 148,667
Effect of prior year adjustment 53,667
Accruals and deferred income as restated 202,334
Decrease in net assets (53,667)
5. The Directors do not recommend payment of a dividend.
6. The financial information set out in the announcement does not constitute the company's
statutory accounts for the years ended 30 June 2003 or 2002. The financial information for the
year ended 30 June 2002 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 2003 will be finalised on the basis of the financial
information presented by the directors in this preliminary announcement and will be delivered to
the Registrar of Companies following the company's Annual General Meeting.
The financial information is prepared on the basis of accounting policies as stated in the
previous year except as detailed in note 4.
7. 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
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