RNS Number:0415X
Vocalis Group PLC
11 June 2002
VOCALIS GROUP PLC
Preliminary Results for the Year ended 31 March 2002
Vocalis Group plc, a leading provider of voice driven
business solutions to the call centre industry, announces
results for the year ended 31 March 2002.
HIGHLIGHTS
* The year was one of significant progress for the Group:
- Major changes were made to Vocalis' strategy to
establish a sound commercial base on which to develop a
successful business
- Vocalis was transformed from a pure technology company
developing its own proprietary software to a market driven
business solutions provider
- Significant operational and personnel changes were
introduced to underpin the commercial strategy.
* The Group is enjoying the first commercial successes of
these moves. New contracts to the value of £2 million were
won in the final quarter from Powergen, Chelsea Building
Society and Abbey National. Revenues from these contracts
will be recognised in the year ending 31 March 2003.
* The monthly overhead cost base was significantly
reduced during the year from £700,000 to £400,000.
* The Group's cash position remains strong following the
Placing in December 2001 to raise £4.1 million (net). Cash
balances at the year end were £4.0 million.
* The Group returned a loss for the year of £3.8 million
(2001: loss of £7.1 million). Turnover from continuing
activities was £1.74 million (2001: £1.98 million).
Paul Wright, Chief Executive, commented:
"A strong business need for voice driven solutions in the
Call Centre market has been identified by independent market
research and confirmed by many leading organisations in the
financial services, utility and other sectors who operate
large call centres. Following the changes made last year,
Vocalis is well positioned to provide valuable, cost
effective solutions which can bring real benefit to
organisations in this substantial market whilst delivering
value to shareholders."
"Vocalis is one of the UK's leading providers of voice
driven solutions and we enter the current year as a strong
organisation pursuing a clear and focused strategy. Early
progress suggests the changes we have introduced will lead
to success and we look forward with increasing confidence."
Enquiries:
Vocalis Group plc today: 020 7950 2800
Paul Wright, Chief Executive thereafter: 01223 846177
Weber Shandwick Square Mile 020 7950 2800
Nick Oborne or Stephanie Smart
VOCALIS GROUP PLC
Preliminary Results for the Year Ended 31 March 2002
CHAIRMAN'S STATEMENT
The year to 31 March 2002 has been one of significant
progress for Vocalis providing the Group with a secure base
from which to enter the new financial year.
The Group started the year possessing a strong technology
but without the commercial focus needed to translate its
technological expertise into sales and sustainable
profitability. During the year we introduced a focused
strategy aimed at meeting the specific requirements of our
marketplace and the demands of our customers. We made
significant operational and personnel changes. I am pleased
to report that we are already enjoying the first commercial
successes as a result of these major changes.
Results
Against a background of continued harsh trading conditions,
and reflecting a period during which we introduced but did
not realize the full benefit of key operational changes,
turnover was lower at £1.7m, against £2.7m last year. On 19
March 2002 we announced several major contract wins, the
revenue for which will be recognised in the new financial
year. In response to the realignment of our cost base, the
loss for the year was reduced to £3.8m (2001: £7.1m, after a
£1.4m charge for closure of the managed service business).
Placing
In December 2001 we issued just under 93 million new shares,
raising £4.1m (net) for the Company. As set out in the
circular to shareholders, the Placing provided the working
capital to allow the implementation of our revised strategy
and introduced a number of significant institutional
shareholders to the Group. In welcoming them I would also
like to take this opportunity to thank all our shareholders
for their support during the recent difficulties and to
confirm our total commitment to seeking to deliver increases
in shareholder value for them.
People
Following the resignation of Charles Halle in July 2001,
Paul Wright assumed the role of Chief Operating Officer. On
1 January 2002 Paul was appointed Chief Executive, a
reflection of his success in progressing the development and
implementation of our revised strategy.
In March we further strengthened the team through the
appointment of Richard Watrasiewicz as Operations Director.
Richard joined from TCA Consulting Ltd (part of the Terence
Chapman Group plc) where he was a director of the Retail
Financial Services practice.
Minesh Patel, Technical Director, left the Group at the end
of the year to pursue other opportunities. Minesh was a
founder member of Vocalis and we thank him for his
contribution during his many years with the Group.
Roy Cotterill, who intended to retire from the Group in July
2001, extended his term as non-executive director at the
Board's request. He will now be standing down at the Annual
General Meeting. His vast commercial experience has proved
to be invaluable to the Group in the last nine years both as
Chairman and as a non executive director. We thank him for
his support and wish him well for the future.
On behalf of the Board I should like to thank all of our
staff for their continued commitment during a year of
tremendous change and for the way in which they have
embraced the commercial focus following our September 2001
relaunch.
We now have in place a strong management team with
appropriate experience and skills, to take the Group forward
into our target markets.
Prospects
Vocalis is one of the UK's leading providers of voice driven
solutions and we enter the current year as a strong
organisation pursuing a clear and focused strategy. Early
progress suggests the changes we have introduced will lead
to success and we look forward with increasing confidence.
OPERATIONAL AND FINANCIAL REVIEW
The financial year to 31 March 2002 saw Vocalis undertake
fundamental change in order to establish a sound, commercial
base on which to develop a successful UK and European
business and from which to deliver value to shareholders and
customers in our target markets.
Strategy
During the period we focused our business, to address the
needs of UK corporations in their interaction with customers
by telephone, transforming Vocalis from a pure technology
company developing its own proprietary software, to a market
driven business solutions provider.
Vocalis is now a product and solutions led company focused
on Call Centre markets, with initial targets within the
Financial Services, Utilities and Telecom sectors. These
are large markets where call centre operations are central
to customer interaction and where Vocalis can offer
solutions providing both financial and other tangible
benefits.
SpeechWareTM, the Vocalis speech recognition engine, is the
core technology used in our solutions which adopt a best of
breed approach to related technologies and use industry
standard components. As part of this standardisation we
joined the VoiceXML Forum last year, the industry body
responsible for promoting the understanding and use of the
Voice Extensible Markup Language (VoiceXML) standard.
Our repositioned business was successfully launched at the
London Stock Exchange Conference Centre on 20 September.
There we were joined by S2 Systems, a leading provider of
back-end transaction software for the financial services
market and by Eircom, a leading provider of directory
enquiries in Ireland and a Vocalis call centre customer.
Vocalis solutions
Vocalis solutions are based on standard modules that have
been developed to address the needs of call centres. Working
with our customers, Vocalis creates tailored dialogues to
integrate these modules together, thereby creating an
individual solution, based on standard Vocalis and third
party products.
Our approach offers significant benefits to Vocalis
customers. The use of standard products reduces customer
risk and implementation leadtimes, providing cost effective,
high quality, flexible solutions. It also reduces
development time and costs which, together with our inherent
and unrivalled expertise in the use of the English language,
gives us a clear competitive advantage in our target
markets.
The market
Our strategy recognises that after a decade of explosive
growth, the Call Centre market, of which the UK is the
largest in Europe, faces a number of critical issues.
Call Centres are becoming increasingly popular but with
annual staff turnover rates approaching thirty per cent and
an almost insatiable need for more people, the costs
associated with hiring, training and retaining employees are
significant. Customer expectations continue to increase and,
as a result, dependence on call centers and their role as
the primary customer interface is fundamental to many
business sectors, most notably in Financial Services and
Utilities.
Our own and independent research has confirmed that voice
remains the most intuitive and simple way for people to
interact with businesses and other organisations, not least
because people speak five times faster than they can type
and ten times faster than they can write. We believe that
the adoption of a voice driven solution will not only
address many of the problems currently being experienced by
Call Centres but can deliver competitive advantage for our
customers.
Our voice driven solutions automate many basic customer
identification and verification tasks currently performed by
call center operators. They provide a flexible alternative
to the increasingly unpopular "touch-tone" solution utilised
in many call centres, shortening the operators time per call
and increasing the number of calls that can be handled by
each operator. Vocalis solutions are sold on a return on
investment criteria to our customers, addressing business
issues to improve efficiency within these organisations.
Customers
The final quarter of the year saw early signs of the success
of our new strategy, with the award of a number of new
contracts.
We are providing Chelsea Building Society with the solution
for a voice driven telephone banking system for money
transfers, balance enquiries and recent transaction
reporting.
Powergen is to introduce over the next year a complete voice
driven solution with applications such as meter reading,
direct debit changes and balance enquiries. Vocalis is
providing both the solution and consultancy.
Abbey National, an existing Vocalis client, is continuing
with its telephone banking system and during the final
quarter of the year signed an order for ongoing maintenance
and support. The telephone banking solution now handles over
1.5 million calls every month.
In addition, delivery of contracts through Ericsson,
including those to Eircom,a providers of directory enquiries
in Ireland, Telenor Mobile, one of Norway's
telecommunications suppliers and Stet Hellas a mobile
telecoms operator in Greece were completed during the year.
Feedback from our customers is positive and our order
pipeline is encouraging.
Employees
In order to underpin our commercial strategy the Company has
changed the balance of its staff. Consultancy and Customer
Service operations have been set up to deliver and support
solutions to our customers. We have invested in staff with
experience in our target sectors and realigned our technical
expertise to the extent that over fifty per cent of our
staff have regular interaction with customers and prospects,
a level that will continue to grow in the new financial
year.
Financial review
In implementing our strategy based on the call centre market
and standardisation we focused on reducing our cost base,
enhancing value for shareholders without limiting our
ability to take advantage of opportunities offered by our
market place. Monthly overheads have been lowered from a
high of £700,000 per month in March 2001 to a level of
£400,000.
As we moved from the in-house development of a range of
proprietary technology to focus on our core SpeechWareTM
technology in conjunction with third party products, we
reduced expenditure on research and development. As part of
this change we have ceased the development of proprietary
software for applications where appropriate industry
standard products already exist. Research and development
expenditure fell from £2.7m for the year to 31 March 2001 to
£1.3m for the year just ended. Vocalis continues to have
extensive intellectual property rights and maintains a
strong research and development capability, which is focused
on the future commercial needs of the market place.
The successful fund raising in December 2001 provided the
Group with a strong financial base. Of the £4.1m raised,
£4.0m remained on the Balance Sheet at the year end.
At 31 March 2002, the Group has, subject to agreement by the
Inland Revenue, tax losses of £16m available for offset
against future taxable profits in the United Kingdom.
Shareholders' return
The loss per share for the financial year under review,
which was also the diluted loss per share was 5.4p compared
to a loss per share, basic and diluted of 15.8p last year.
The directors do not propose the payment of a dividend.
Prospects
A strong business need for voice driven solutions in the
Call Centre market has been identified by independent market
research and confirmed by many leading organisations in the
financial services, utility and other sectors who use large
call centres. Following the changes made last year, Vocalis
is well positioned to provide valuable, cost effective
solutions which can bring real benefit to organisations in
this substantial market whilst delivering value to
shareholders.
Enquiries:
Vocalis Group plc today: 020 7950 2800
Paul Wright, Chief Executive thereafter: 01223 846177
Weber Shandwick Square Mile 020 7950 2800
Nick Oborne or Stephanie Smart
VOCALIS GROUP PLC
Consolidated Profit and Loss Account
for the year ended 31 March 2002
2002 2001
Notes £000 £000
------------------------------------------------------------------------------
Turnover
Continuing 1,735 1,982
Discontinued - 719
------------------------------------------------------------------------------
1,735 2,701
Cost of sales (754) (1,025)
------------------------------------------------------------------------------
Gross profit 981 1,676
Other operating expenses (net) (5,055) (7,604)
------------------------------------------------------------------------------
Operating loss
Continuing (4,074) (4,152)
Discontinued - (1,776)
------------------------------------------------------------------------------
(4,074) (5,928)
Cost of closure of managed service businesses (195) (1,446)
------------------------------------------------------------------------------
Loss on ordinary activities before interest
and finance charges (4,269) (7,374)
Bank interest receivable 96 250
Interest payable (12) (20)
------------------------------------------------------------------------------
Loss on ordinary activities before taxation (4,185) (7,144)
Taxation 388 -
------------------------------------------------------------------------------
Loss for the year (3,797) (7,144)
------------------------------------------------------------------------------
Loss per share, basic and diluted - pence 2 (5.41) (15.82)
------------------------------------------------------------------------------
Consolidated Statement of Total Recognised Gains and Losses
for the year ended 31 March 2002
2002 2001
£000 £000
------------------------------------------------------------------------------
Loss for the year (3,797) (7,144)
Loss on foreign currency translation - (109)
------------------------------------------------------------------------------
Total recognised losses for the year (3,797) (7,253)
------------------------------------------------------------------------------
VOCALIS GROUP PLC
Balance Sheet
as at 31 March 2002
Group Group
2002 2001
£000 £000
------------------------------------------------------------------------------
Fixed assets
Intangible assets 8 21
Tangible assets 740 975
Investments - 200
------------------------------------------------------------------------------
748 1,196
------------------------------------------------------------------------------
Current assets
Stocks 535 694
Debtors 471 1,121
Cash at bank 4,012 3,474
------------------------------------------------------------------------------
5,018 5,289
Creditors: amounts falling due within one year (965) (1,766)
------------------------------------------------------------------------------
Net current assets 4,053 3,523
------------------------------------------------------------------------------
Total assets less current liabilities 4,801 4,719
Creditors: amounts falling due after more than one year (38) (41)
------------------------------------------------------------------------------
Net assets 4,763 4,678
------------------------------------------------------------------------------
Capital and reserves
Called-up share capital 6,948 2,316
Share premium account 16,789 17,332
Other reserves 1,070 1,070
Profit and loss account (20,044) (16,040)
------------------------------------------------------------------------------
Shareholders' funds - equity interests 4,763 4,678
------------------------------------------------------------------------------
VOCALIS GROUP PLC
Consolidated Cash Flow Statement
for the year ended 31 March 2002
2002 2001
£000 £000
------------------------------------------------------------------------------
Net cash outflow from operating activities (3,862) (5,917)
Returns on investments and servicing of finance
- interest received 96 250
- interest paid - finance leases (6) (10)
- other loans (6) (11)
------------------------------------------------------------------------------
Net cash inflow from returns on investments
and servicing of finance 84 229
Capital expenditure and financial investment
- purchase of tangible fixed assets (95) (305)
- purchase of trade investment - (200)
- taxation 388 -
------------------------------------------------------------------------------
Net cash inflow (outflow )from capital expenditure
and financial investment 293 (505)
Cash outflow before management of liquid
resources and financing (3,485) (6,193)
------------------------------------------------------------------------------
Management of liquid resources
- (increase)/decrease in short term deposit (700) 1,250
Financing
Proceeds from issue of Ordinary Shares 4,631 5,090
Costs of issue of Ordinary Shares (542) (93)
Repayment of secured loan (3) (5)
Capital element of finance lease repayments (63) (103)
------------------------------------------------------------------------------
Net cash inflow from financing 4,023 4,889
------------------------------------------------------------------------------
Decrease in cash in the year (162) (54)
------------------------------------------------------------------------------
NOTES:
1. The financial information set out above does not
constitute the Company's statutory financial statements for
the year ended 31 March 2002 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 2002 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 share
The calculations of loss per share are based on the following
losses and numbers of shares.
2002 2001
£000 £000
------------------------------------------------------------------------------
Loss for the financial year (3,797) (7,144)
------------------------------------------------------------------------------
Weighted average number of shares used to calculate basic and diluted loss
per share.
2002 2001
Number of Number of
shares shares
------------------------------------------------------------------------------
70,175,139 45,153,500
------------------------------------------------------------------------------
3. Copies of the 2002 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.
This information is provided by RNS
The company news service from the London Stock Exchange
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