RNS Number:1630F
Vocalis Group PLC
13 June 2001
13 June 2001
VOCALIS GROUP PLC
Preliminary Results for the Year ended 31 March 2001
Vocalis Group plc, the speech technology company, announces
results for the year ended 31 March 2001.
HIGHLIGHTS
* Revenues for the year were #2.7m
* Focus on provision of core technology, SpeechWare; and speech
solutions based upon it
* New products launched and new customers won during the year
* The Group had cash balances of #3.5m at the year end
Charles Halle, Chief Executive commented:
"These results reflect the challenges faced by Vocalis in
all its markets. The slowdown in general economic
conditions, together with specific difficulties being
experienced in the Telecommunications, Media and Technology
(TMT) sector, have created a harsh environment for
companies offering new technology. As we described in the
trading updates given during the year, in this environment
the overall growth of the speech recognition industry was
slower than expected and the market demand for our products
was lower.
"That said, Vocalis operates in a nascent market that
presents enormous opportunities. Underlying our strategy is
the firm belief that voice is, and will increasingly be,
the most natural way to interact with many internet and
telephone-based services and that the global market for
speech recognition will grow. Our revised corporate
structure, new focus and control of costs will allow us to
maximise the opportunities in today's market and in the
future."
Enquiries:
Vocalis Group plc today: 020 7601 1000
Charles Halle, Chief Executive thereafter: 01223 846177
Square Mile BSMG Worldwide 020 7601 1000
Nick Oborne or Stephanie Smart info@sq-mile.com
13 June 2001
VOCALIS GROUP PLC
Preliminary Results for the Year ended 31 March 2001
Review of Operations
THE MARKET
The results for the year ending March 2001 reflect the
challenges faced by Vocalis in all its markets. The
slowdown in general economic conditions, together with
specific difficulties being experienced in the
Telecommunications, Media and Technology (TMT) sector, have
created a harsh environment for companies offering new
technology. In this environment, the overall growth of the
speech recognition industry was slower than expected and
the market demand for our products was lower. This change
in the dynamics of the market, which has been described in
the trading updates given during the year, has affected a
small number of high value contracts which remain an area
of focus for our sales team.
Our share price has suffered from the general volatility of
TMT sector valuations, and whilst this is beyond our
control on a day-to-day basis, we recognise that our
ability to confirm adherence to our corporate targets is
fundamental to renewing confidence in the Company's market
valuation.
Following the recent downturn in the Internet Services
market, particularly in the "business to consumer" segment,
we took the decision in March 2001 not to pursue the
further development of the managed services business. This
has resulted in a substantial reduction in operating costs.
SpeechMail and SpeecHTML are still being developed and will
continue to be offered to customers as a speech system.
RESULTS FOR THE PERIOD
Our results show turnover of #2.7m for this year compared
to #2.7m last year and a loss after tax and interest and
before cost of closure of managed service businesses of
#5.7m, compared with a loss of #4.5m after tax and interest
last year. As at 31 March 2001, the Group had cash balances
of #3.5m compared to #4.8m last year.
In September 2000, the Group raised #5.1m (#5.0m net of
expenses) through the issue of 2,198,700 ordinary shares by
way of a section 95 placing of shares to existing and new
institutional investors. This issue was made under the
authority granted by Shareholders under Section 80
Companies Act 1985 at the Annual General Meeting on 19 July
2000.
Operating expenditure increased from #6.6m to #7.6m
reflecting the opening of the US office, the increased
number of staff for the managed services operation, and
continued investment in systems and infrastructure.
Operating expenditure of the managed service businesses
which was discontinued in March 2001 represented #2.2m of
the Group's overheads. Included within the Group operating
expenditure, research and development increased to #2.7m
during the year under review, compared with #2.2m in the
financial year 2000. This increase reflected continuing
development of the core SpeechWare technology, together
with the costs of increasing the functionality and
performance of the SpeechMail and SpeecHTML products.
On 28 March 2001 the Group announced that it would not
pursue the further development of its managed service
businesses The Talking Network (TTN). However, Vocalis
continues to offer SpeechMail and SpeecHTML as applications
to be incorporated into the Group's range of Speech
Recognition Systems for sale to corporate customers.
Following this decision, 16 staff from the Group's
Cambridge and Houston offices were made redundant. The
annual Group cost base, and associated cash burn was
reduced by #2.1m as a result of this decision.
Closure costs for TTN of #1.4m were charged, as an
exceptional item, to the Consolidated Profit and Loss
Account. This charge includes accruals for future
liabilities under supply contracts entered into for the
managed service business.
WORKING CAPITAL
Trade debtors at the year end decreased to #600,000 (2000:
#1.4m) as credit control processes were strengthened. At 31
March 2001, 50% of trade debtors were represented by March
invoices (2000: 84%). Trade creditors were also reduced and
at 31 March 2001 represented 37 days (2000: 64 days). Cash
and short term deposits at the year end amounted to #3.5m
which were held in short term sterling deposits of under
one month maturity. As a result of trading performance
there was a net cash outflow from operating activities of
#3.4m during the year compared to an outflow of #5.1m in
financial year 2000.
SHAREHOLDERS' RETURN
The loss per share for the financial year under review,
which was also the diluted loss per share was 15.8p
compared to a loss per share basic and diluted of 10.6p
last year. The Directors do not propose a dividend. The
loss per share before charging the cost of closure of the
managed service businesses was 12.6p.
PRODUCTS AND SERVICES
Our core technology, SpeechWare, is established in the
market place as a speech recognition solution that combines
proven accuracy with the benefits of natural interaction.
During the year we launched SpeechWare VRooM, our branded
hardware speech recogniser, to meet anticipated market
demand for large-scale speech recognition systems. Our
latest developments include two versions of SpeechWare
VRooM that provide solutions less than one-tenth the
physical size of equivalent systems, making them more cost
effective to run and easier to maintain.
To expand the market for our technology, we have integrated
SpeechWare to a number of next-generation telephony
interface cards and to Dialogic's CT Media 2.0, a software
tool for developing standards-based telecommunications
solutions. This allows third party developers to
incorporate SpeechWare's sophisticated speech recognition
into their own products quickly and easily.
The Intelligent Query engine (IQe) forms the basis of a
number of Call Centre applications and is designed to
increase productivity and reduce running costs. The first
of these applications, Postcoder, was launched in September
2000, since when we have formed partnerships with a number
of leading address management solution vendors, including
QAS, Hopewiser and AFD.
A speaker verification research project, run in conjunction
with Nationwide, was successfully completed during the
year. We are currently developing a commercial product
based on the results of this and other research projects.
PEOPLE
Michael Williams, Business Development Director, left the
Company on 12 April 2001 to pursue other opportunities, and
two long serving non-executive Directors, Roy Cotterill and
Robert Hook, will retire from the Board at the AGM in July
2001. Roy Cotterill was Chairman of Vocalis from June 1994
until December 2000. We take this opportunity to thank them
all for their major contributions to the Company.
On 27 March 2001 we announced three new appointments.
Stephen Lawrenson and Colin Garrett were appointed as non-
executive Directors. We welcome them to the Board and look
forward to their contributions to the development of the
Company. Ian Cockerill, who has many years of sales
experience at a senior level within the IT industry, was
appointed Sales Director of Vocalis Limited.
We also thank all our staff for their continued dedication,
professionalism and hard work in this challenging
environment.
THE CORPORATE FOCUS
Our strategy will be to focus on the provision of our core
technology, SpeechWare, and of speech solutions based upon
it. Accordingly, we will continue to target specific
markets, such as Call Centres, and to develop market-led
solutions tailored to their specific requirements. We will
present speech recognition as the key component of a
complete business solution, highlighting the benefits that
differentiate our solutions from those of our competitors.
Recent successes have included upgrades to existing Vocalis
systems by Abbey National and Telenor Mobil, Norway's
mobile communications network provider. We have also
recently secured an order from Eircom, a leading Irish
telephone network operator, which falls into the current
financial year, ending 31 March 2002.
We will continue to concentrate our efforts on generating
demand both directly, and indirectly through OEM and
channel partner relationships.
PROSPECTS
Speech recognition is an area of enormous commercial
potential. It is also an emerging market in which the
issues of customer awareness, general market penetration
and customer adoption remain significant. Underlying our
strategy is the firm belief that voice is, and will
increasingly be, the most natural way to interact with many
internet and telephone-based services and that the global
market for speech recognition will grow. Our revised
corporate structure, new focus and control of costs will
allow us to maximise the opportunities in today's market
and in the future.
Enquiries:
Vocalis Group plc today: 020 7601 1000
Charles Halle, Chief Executive thereafter: 01223 846177
Square Mile BSMG Worldwide 020 7601 1000
Nick Oborne or Stephanie Smart info@sq-mile.com
VOCALIS GROUP PLC
Consolidated Profit and Loss Account
for the year ended 31 March 2001
Discontinued Continuing
operations operations Total Total
2001 2001 2001 2000
#'000 #'000 #'000 #'000
------------------------------------------------------------------------------
Turnover 719 1,982 2,701 2,694
Cost of sales (280) (745) (1,025) (913)
------------------------------------------------------------------------------
Gross profit 439 1,237 1,676 1,781
Other operating expenses (net) (2,215) (5,389) (7,604) (6,632)
------------------------------------------------------------------------------
Operating loss (1,776) (4,152) (5,928) (4,851)
----------------------
Cost of closure of managed service
businesses (1,446) - (1,446) -
------------------------------------------------------------------------------
Loss on ordinary activities before
interest and finance charges (7,374) (4,851)
Bank interest receivable 250 377
Interest payable (20) (33)
------------------------------------------------------------------------------
Loss on ordinary activities before
taxation (7,144) (4,507)
Taxation - 40
------------------------------------------------------------------------------
Loss on ordinary activities after
taxation being retained loss for
the year (7,144) (4,467)
------------------------------------------------------------------------------
Loss per share, basic and diluted - pence (15.82) (10.57)
------------------------------------------------------------------------------
Loss per share, basic and diluted -
pence, excluding cost of closure of
managed service businesses (12.62) (10.57)
Consolidated Statement of Total Recognised Gains and Losses
for the year ended 31 March 2001
2001 2000
#'000 #'000
------------------------------------------------------------------------------
Loss for the year (7,144) (4,467)
Loss on foreign currency translation (109) (7)
------------------------------------------------------------------------------
Total recognised losses for the year (7,253) (4,474)
------------------------------------------------------------------------------
VOCALIS GROUP PLC
Balance Sheet
As at 31 March 2001
Group Group
2001 2000
#'000 #'000
Fixed assets
Intangible assets 21 76
Tangible assets 975 2,051
Investments 200 -
------------------------------------------------------------------------------
1,196 2,127
------------------------------------------------------------------------------
Current assets
Stocks 694 803
Debtors 1,121 1,688
Cash at bank and in hand 3,474 4,778
------------------------------------------------------------------------------
5,289 7,269
------------------------------------------------------------------------------
Creditors: amounts falling due within one year (1,766) (2,351)
------------------------------------------------------------------------------
Net current assets 3,523 4,918
------------------------------------------------------------------------------
Total assets less current liabilities 4,719 7,045
Creditors: amounts falling due after more
than one year (41) (111)
------------------------------------------------------------------------------
Net assets 4,678 6,934
------------------------------------------------------------------------------
Capital and reserves
Called-up share capital 2,316 2,199
Share premium account 17,332 12,452
Other reserves 1,070 1,070
Profit and loss account (16,040) (8,787)
------------------------------------------------------------------------------
Shareholders' funds - equity interests 4,678 6,934
------------------------------------------------------------------------------
VOCALIS GROUP PLC
Consolidated Cash Flow Statement
for the year ended 31 March 2001
2001 2000
#'000 #'000
------------------------------------------------------------------------------
Net cash outflow from operating activities (3,417) (5,067)
Returns on investments and servicing of
finance
- interest received 250 377
- interest paid (21) (33)
------------------------------------------------------------------------------
Net cash inflow from returns on 229 344
investments and servicing of finance
Capital expenditure and financial investment
- purchase of tangible fixed assets (305) (1,857)
- purchase of trade investment (200) -
- purchase of intangible fixed assets - (34)
------------------------------------------------------------------------------
Net cash outflow from capital
expenditure and financial investment (505) (1,891)
Cash outflow before management of liquid
resources and financing (3,693) (6,614)
------------------------------------------------------------------------------
Management of liquid resources
- increase in short term deposits (1,250) (2,400)
Financing
Issue of ordinary shares 4,997 8,788
Repayment of secured loan (5) (5)
Capital element of finance lease repayments (103) (95)
------------------------------------------------------------------------------
Net cash inflow from financing 4,889 8,688
------------------------------------------------------------------------------
(Decrease) in cash in the year (54) (326)
NOTES:
1.The financial information set out above does not constitute
the Company's statutory financial statements for the year ended 31
March 2001 within the meaning of section 240 of the Companies Act
1985 but is derived from those financial statements. The statutory
financial statements for the Company for the year ended 31 March
2001 will be delivered to the Registrar of Companies after the
Annual General Meeting. The auditors have reported on those
financial statements and their report was unqualified.
2.Loss per ordinary share is calculated with reference to the
loss attributable to ordinary shareholders of #7,144,000 (2000:
loss #4,467,000) and the weighted average number of ordinary shares
in issue during the year of 45,153,500 (2000: 42,241,314).
3.Copies of the 2001 Report and Accounts will be sent to
shareholders in due course. Further copies will be available from
the Company's offices at Chaston House, Mill Court, Great Shelford,
Cambridge CB2 5LD.
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