TIDMNET
RNS Number : 1058Q
Netcall PLC
24 February 2021
24 February 2021
NETCALL PLC
("Netcall", the "Company", or the "Group")
Interim results for the six months ended 31 December 2020
Continued sales momentum and positive outlook
Netcall plc (AIM: NET), the leading provider of intelligent
automation and customer engagement software, today announces its
unaudited interim results for the six months ended 31 December
2020.
Financial highlights
-- Revenue up 9% to GBP13.4m (H1-FY20: GBP12.3m)
-- Cloud services annual contract value(1) ('ACV') at 31
December 2020 up 25% to GBP8.4m (H1-FY20: GBP6.7m)
-- Total ACV at 31 December 2020 up 7% to GBP17.7m (H1-FY20: GBP16.6m)
-- Adjusted EBITDA(2) up 39% to GBP2.95m (H1-FY20: GBP2.12m)
-- Profit before tax increased to GBP0.96m (H1-FY20: GBP0.14m)
-- Adjusted basic earnings per share up 88% to 0.90p (H1-FY20: 0.48p)
-- Cash generated from operations up 52% to GBP2.39m (H1-FY20: GBP1.57m)
-- Group cash at 31 December 2020 was GBP12.9m more than offsetting borrowings of GBP6.8m
Operational highlights
-- Continued strong trading
-- Significant cloud services growth from both Intelligent
Automation and Customer Engagement offerings with an increasing
number of customers using both solutions
-- Strong revenue growth achieved in key market segments of
financial services, healthcare and government, contributing to more
than 85% of total revenues
-- Annual revenue run-rate from Intelligent Automation now
exceeds GBP10m, representing more than 40% of Group revenue and
generating a positive contribution
-- Recurring revenue from cloud and support contracts is 65% of revenue (H1-FY20: 64%)
-- Released several new enhancements to the Liberty platform,
including the addition of a Robotic Process Automation (RPA)
solution
Outlook
-- Strong current trading and healthy sales pipeline
-- Whilst mindful of the ongoing impact of the pandemic, the
Board now believes that adjusted EBITDA for the full year will be
ahead of its previous expectations
Henrik Bang, Chief Executive, said:
"Netcall enjoyed a strong first half year performance delivering
solid revenue and profit growth despite the ongoing impact of
Covid-19 and traded comfortably in line with management
expectations. We continued to experience robust demand from our
main market segments of financial services, healthcare and
government driven by cloud subscription contracts for both
Intelligent Automation and Customer Engagement solutions.
"As we continue to strengthen our product portfolio, such as the
recent addition of Robotic Process Automation, we see an increasing
number of customers combining the use of both our Intelligent
Automation and Customer Engagement solutions, which supports our
growth aspirations.
" Whilst the Board are mindful of the ongoing impact of the
pandemic, the combination of strong current trading, improved
forward revenue visibility and a healthy sales pipeline, means the
Board now believes that adjusted EBITDA for the full year will be
ahead of its previous expectations .
The acceleration of organisations' digital transformation
initiatives represents a significant and rapidly growing market
opportunity for Netcall. Therefore, l ooking further ahead, the
Board remains confident that the strength of the Group's product
offering, combined with its solid balance sheet and high levels of
recurring revenue, position Netcall well for continued success.
"
(1) ACV, as at a given date, is the total of the value of each
cloud and support contract divided by the total number of years of
the contract.
(2) Profit before interest, tax, depreciation and amortisation
adjusted to exclude the effects of acquisition, impairment,
contingent consideration, share-based payments and non-recurring
transaction costs.
Enquiries:
Netcall plc Tel. +44 (0) 330
333 6100
Henrik Bang, CEO
Michael Jackson, Chairman
James Ormondroyd, Group Finance Director
Canaccord Genuity Limited (Nominated Adviser Tel. +44 (0) 20
and Broker) 7523 8000
Simon Bridges/ Andrew Potts
Alma PR Tel. +44 (0) 20
3405 0205
Caroline Forde / Helena Bogle / Robyn Fisher
About Netcall:
Netcall's Liberty software platform with Intelligent Automation
and Customer Engagement solutions helps organisations transform
their businesses faster and more efficiently, empowering them to
create a leaner, more customer-centric organisation.
Netcall's customers span enterprise, healthcare and government
sectors. These include two-thirds of the NHS Acute Health Trusts
and leading corporates including Legal and General, Lloyds Banking
Group, ITV and Nationwide Building Society.
For further information, please go to www.netcall.com.
This announcement contains inside information for the purposes
of article 7 of the Market Abuse Regulation (EU) 596/2014 as
amended by regulation 11 of the Market Abuse (Amendment) (EU Exit)
Regulations 2019/310. With the publication of this announcement,
this information is now considered to be in the public domain.
Overview
Netcall delivered a strong trading performance in the first six
months of the financial year with a solid increase in revenue of 9%
year over year to GBP13.4m (H1-FY20: GBP12.3m) and a 39% increase
in adjusted EBITDA to GBP2.9m (H1-FY20: GBP2.1m).
This was primarily driven by 28% growth in cloud revenues
underpinned by a 25% increase in cloud ACV to GBP8.4m (H1-FY20:
GBP6.7m) from both Intelligent Automation and Customer Engagement
solutions.
Netcall also experienced double-digit revenue growth in each of
its key market segments (financial services, healthcare and
government), which contributed more than 85% of total revenues. As
expected, revenue contribution from other sectors declined ,
primarily as a result of lower revenues from markets highly
affected by the impact of Covid-19.
A growing number of customers are choosing to use both our
Intelligent Automation and Customer Engagement offerings, combining
them into more powerful and integrated solutions. Today more than
20% of Group ACV of GBP17.7m is from customers who have purchased
both solutions, which gives a significant opportunity to grow
within the existing customer base.
Subscription revenues from both Intelligent Automation and
Customer Engagement grew at double-digit rates and cloud services
is now approaching the same level as maintenance revenues and is
expected to become the largest revenue stream in the coming months.
The Board considers this a significant milestone , demonstrating
the impact of the Group's cloud strategy .
Intelligent Automation has reached a revenue run rate exceeding
GBP10m annually, another key milestone, having more than doubled in
three years. At this run rate the Board considers that revenues
from Intelligent Automation solutions now make an overall positive
contribution.
During the period, Netcall successfully completed the
acquisition of RPA provider, Oakwood Technologies BV trading as
"Automagica", and its solution is an important addition to
Netcall's automation capabilities. The open source model offered by
Automagica has been discontinued, and the RPA solution has been
integrated onto the Liberty platform, strengthening Netcall's
product offering and ability to help organisations with their
growing digital transformation requirements.
Covid-19
The Board is especially grateful to the Netcall team who have
continued to respond positively to the uncertainty caused by the
pandemic, showing tremendous flexibility, resilience and creativity
during this challenging period.
Given the changing nature of work, and with the entire team
still working from home, Netcall took the decision to permanently
close two offices, whilst retaining two offices and moving the
Group's registered office to Bedford.
As a result of the solid trading performance, the Group has not
been required to introduce pay-cuts, furlough staff or make
redundancies, although increased cash management measures,
including the deferral of VAT in March and June 2020, have been
implemented and the Company retained its strong focus on
operational efficiency.
Current Trading and Outlook
The Group traded comfortably in line with the Board's
expectations for the first half of the year. Trading to date in the
second half of the year has continued at the same revenue growth
rate as the first half. In addition, forward revenue visibility
continues to improve, and we have entered the second half of the
year with a healthy sales pipeline.
Whilst the Board are mindful of the ongoing impact of Covid-19,
the combination of strong current trading, improved forward revenue
visibility and a healthy sales pipeline, means the Board now
believes that adjusted EBITDA for the full year will be ahead of
its previous expectations.
The acceleration of organisations' digital transformation
initiatives represents a significant and rapidly growing market
opportunity for Netcall. Therefore, looking further ahead, the
Board remains confident that the strength of the Group's product
offering, combined with its solid balance sheet and high levels of
recurring revenue, position Netcall well for continued success.
Business Review
Technology advancements have fundamentally changed how people
interact with organisations, and these organisations must adapt and
re-invent the ways they operate in order to remain competitive and
meet requirements from customers and other stake-holders.
Correspondingly the same businesses can substantially improve
competitiveness and operational efficiencies by adopting new
technologies in areas such as automation and communication.
Therefore, organisations are increasingly adopting 'digital
first' strategies and are looking to automate operations and
interactions with customers, suppliers, employees and other
stakeholders wherever possible. As a result, business processes,
workflows and communications are being integrated, automated and
standardised to improve efficiency, quality and auditability. This
is happening daily across all industries.
Where interactions may be complex or sensitive and personal
interactions are required, call centres take over. These call
centres are increasingly dealing with more complex interactions and
are therefore being staffed by higher skilled and paid
professionals. In these environments, the use of automation, such
as automated workflows and RPA, is also rapidly expanding to
improve speed, quality and efficiency.
As a result, automation and communication technologies are
increasingly used together to improve business operations, and
Netcall's Liberty platform addresses these challenges with a
comprehensive and easy-to-use digital transformation toolkit
including four main solution areas:
Intelligent Automation:
-- Liberty Create: A low-code software solution which enables
the creation of apps that drive workflows and business processes
with integration to our communication services as well as back-end
systems.
-- Liberty RPA: An AI-powered robotic process automation
solution, acquired through Automagica, which frees-up people from
mundane and cumbersome tasks, enabling them to be more
productive.
Customer engagement:
-- Liberty Converse: A complete omnichannel contact centre
solution for customer engagement which also includes solutions such
as automated speech bots, workforce and quality management,
switchboard and auto attendant.
-- Liberty Connect: A cloud messaging and bot platform enabling
customers to extend their reach using digital channels like web
chat, Facebook Messenger and Twitter as well as benefit from bots
and automation.
Strategy
Netcall primarily targets organisations with large numbers of
customers and/ or employees and, in many cases, are subject to a
high level of regulation, including the financial services,
healthcare and government sectors, which generated more than 85% of
Group revenue in the six months to 31 December 2020.
Netcall's focus is in assisting organisations implement digital
first solutions using the Group's automation and communications
offerings which empower them to create leaner and more
customer-centric businesses.
The Group's organic growth strategy for this large and growing
market focuses on four core pillars:
-- expansion of our customer base;
-- growth through a land and expand model;
-- continued innovation and enhancement of our platform; and
-- growing our partner base.
In addition, the Board continues to look for selective
acquisitions with complementary proprietary software and/or
additional customers in its target markets.
Expansion of customer base
Netcall continued to win new customers in the period across
multiple sectors. During the period the Company executed a series
of targeted marketing initiatives such as 'LaunchPads', which are
'starter-packs' that include industry specific solutions for
various sectors.
Recent customer successes include:
-- A leading UK provider of home warranty and insurance who used
the Low-code platform to develop a mobile app in order to improve
the efficiency of site visits and enable virtual inspections.
-- We continued to win new customers via our Citizen Hub and
Patient Hub offerings, which use both our Low-code and customer
engagement solutions. In total more than 30 customers have
purchased these cloud-based solutions. Specifically, for the
housing sector, a number of customers purchased a version of
Citizen Hub adapted to their requirements.
-- A global media company purchased our Low-code platform to
develop a series of internal applications to improve business
operations including a solution for advertising management.
Growth through land and expand
Many of our customers initially purchase an entry level solution
with the objective of rolling out further applications over time
and deploying the systems more widely to support their future
customer engagement and digital transformation initiatives. This
combined with continuous enhancements to our product portfolio and
tighter integration between the various solutions, provides
substantial cross and up-sale opportunities. We are increasingly
engaging with potential new customers who are seeking solutions
using our combined Intelligent Automation and Customer Engagement
offering.
Examples of new solutions purchased by existing customers
include:
-- An existing public sector customer using our Low-code
platform decided to expand the usage of the Liberty platform by
adopting our Customer Engagement solutions, as well as expanding
the use of the Low-code platform by implementing Citizen Hub.
-- A number of public sector customers already using our
Customer Engagement solutions broadened their usage of the Liberty
platform by purchasing our Low-code platform and Citizen Hub.
-- A global insurance company expanded their licensed users
during the period as they continue to roll-out their Low-code
solution.
To stimulate cross-sales and fast-track implementations we are
also providing several pre-built accelerators and modules via our
AppShare which supplement the existing Liberty applications. The
number of accelerators and modules have now increased to over 200,
several of which have been designed and uploaded by our customers
and partners.
Continued innovation
Netcall's investment in innovation and platform expansion
continues to help differentiate its offering, and further present
the Group as an innovative provider of Customer Engagement and
Intelligent Automation solutions providing a compelling one-stop
shop to our customer base.
During the period we acquired Automagica, the RPA provider,
which , broadened our Intelligent Automation offering and expanded
our market opportunity. Since the acquisition, the RPA solution has
been integrated into the Liberty platform, with the first version
of Liberty RPA released in early February 2021. The new release
helps organisations to increase automation by exposing
AI-functionality, including natural language processing, and
computer vision for handwriting recognition capabilities.
Additionally, the new version includes a new Liberty RPA Studio, an
easy drag-and-drop environment, for both business users and
development professionals, used to create RPA flows.
The Liberty platform was also upgraded with new and enhanced
Mobile App capabilities and a new Monitoring Studio with dashboards
for general performance monitoring.
As part of our Quality Management module, we also released new
integrated functions for customer surveys and reporting as well as
skills coverage analysis tools used to manage shifts and rotas to
ensure the right level of resources are available to meet
performance targets.
Growing partner base
Partners are an important additional route to market, providing
the scope to access new markets and scale our business opportunity
faster. The aim is to grow revenue via partners significantly by
assisting them in creating new offerings and revenue streams from
their customers. We are building an eco-system of partners with
industry knowledge and delivery and support capabilities, focusing
on large organisations with global footprints.
During the period, we expanded the partner team in response to
the positive results delivered by the Managed Service Partner
programme. Various packages are offered, each including a mix of
sales enablement, marketing support and technical training. During
the period, order inflow via various partners more than doubled and
now accounts for 25% of the total sales mix.
Wins via partners in the period included:
-- Customer Engagement solutions to two large UK-based financial service organisations.
-- A cloud contact centre solution to a central government organisation.
-- Expansion of the Low-code solution to a customer within the insurance sector.
Financial Review
A key financial metric monitored by the Board is the growth in
the ACV base year-on-year (ACV, as at a given date, is the total of
the value of each cloud and product support contract divided by the
total number of years of the contract). This reflects the annual
value of new business won, together with upsell into the Group's
existing customer base as it delivers against its land and expand
strategy, less any customer contraction or cancellation. It is an
important metric for the Group, as it is a leading indicator of
future revenue.
The Group continues its transition to a digital cloud business
with Cloud ACV 25% higher at GBP8.4m (H1-FY20: GBP6.7m) with growth
in both Customer Engagement and Intelligent Automation solutions of
approximately 50% and 20% respectively compared to H1-FY20. The
growth in Cloud ACV contributed to a 7% growth in total ACV to
GBP17.7m (H1-FY20: GBP16.6m).
The table below sets out ACV for the last three interim
periods:
GBP'm ACV H1-FY21 H1-FY20 H1-FY19
--------------------------- -------- -------- --------
Cloud services 8.4 6.7 5.5
Product support contracts 9.3 9.9 9.6
Total 17.7 16.6 15.1
=========================== ======== ======== ========
Product support contract ACV includes GBP0.7m (H1-FY20: GBP1.1m)
of maintenance contracts for other solutions which declined in the
second half of the last financial year, primarily as a result of
customers affected by the impact of Covid-19 and products at
end-of-life.
Group revenue for the period grew by 9% to GBP13.4m (H1-FY20:
GBP12.3m). The year-on-year increase was primarily driven by growth
in both Intelligent Automation solutions by 17% to GBP5.4m
(H1-FY20: GBP4.6m), and Customer Engagement solutions by 9% to
GBP7.6m (H1-FY20: GBP7.0m).
The table below sets out revenue by component for the last three
interim periods:
GBP'm Revenue H1-FY21 H1-FY20 H1-FY19
-------------------------------------------------- -------- -------- --------
Cloud services 4.1 3.2 3.0
Product support contracts 4.6 4.7 4.6
-------------------------------------------------- -------- -------- --------
Total Cloud services & Product support contracts 8.7 7.9 7.6
Communication services 1.6 1.1 0.9
Product 1.0 1.2 1.0
Professional services 2.1 2.1 1.8
Total Revenue 13.4 12.3 11.4
-------------------------------------------------- -------- -------- --------
Revenue from Cloud services (subscription and usage fees of our
cloud-based offerings) increased by 29% to GBP4.08m (H1-FY20:
GBP3.16m) reflecting the higher year over year Cloud ACV.
Product support contract revenue decreased by 4% to GBP4.55m
(H1-FY20: GBP4.72m) as expected, with lower product and support
contract ACV at the start of the new financial year of GBP9.3m,
compared with the start of the prior financial year (GBP9.7m).
Recurring revenue from Cloud service and Product support
contracts totalled 65% of revenue (H1-FY20: 64%).
Communication services revenue (fees for telephony and messaging
services) increased by 43% to GBP1.59m (H1-FY20: GBP1.11m) due to
higher revenues for call-back and messaging services.
Product revenue (software license sales with supporting
hardware) decreased by 13% to GBP1.03m (H1-FY20: GBP1.19m). As
previously communicated, this revenue stream continues to change
within periods subject to customers preferences for buying
on-premise or cloud contracts. The trend is, as expected,
accelerating toward cloud contracts. The Group recorded more than
70 product cross- and up-sales in the period.
Professional services revenue increased by 1% to GBP2.10m
(H1-FY20: GBP2.08m). The overall demand for our professional
services is dependent on: the mix of direct and indirect sales of
our solutions, in the latter case the Group's partners provide the
related services directly for the end customer; and whether a
customer requires the support of a full application development
service or support to enable their own development teams.
Gross profit margin improved by 1% to 89% (H1-FY20: 88%) mainly
due to higher margin Cloud services forming a greater proportion of
overall revenue, and higher margin media channels driving revenues
within Communication services.
Administrative expenses, before depreciation, amortisation,
share-based payments and acquisition related items, increased by 3%
to GBP8.89m (H1-FY20: GBP8.61m) due to higher staff-related
expenditure partially offset by changed working practises resulting
in lower travel and expense spending.
Consequently, the Group's adjusted EBITDA increased by 39% to
GBP2.95m (H1-FY20: GBP2.12m), a margin of 22% of revenue (H1-FY20:
17%).
The higher adjusted EBITDA led to increased profit before tax of
GBP0.96m (H1-FY20: GBP0.14m) with charges for interest on
borrowings, share-based payments, depreciation and amortisation
charges being broadly level period over period.
The Group recorded a tax credit of GBP0.35m (H1-FY20: charge
GBP0.10m) benefiting from tax relief available from the exercise of
share options during the period and additional deductions for
R&D expenditure.
Basic earnings per share was 0.91 pence (H1-FY20: 0.03 pence)
and increased by 88% to 0.90 pence on an adjusted basis (H1-FY20:
0.48 pence). Diluted earnings per share was 0.87 pence (H1-FY20:
0.02 pence) and increased by 89% to 0.87 pence on an adjusted basis
(H1-FY20: 0.46 pence).
Cash generated from operations increased by 52% to GBP2.39m
(H1-FY20: GBP1.57m) a conversion of 81% (H1-FY20 74%) of adjusted
EBITDA. Cash conversion is typically weighted to the second half of
the financial year due to the timing of Cloud service and Support
contract annual billings.
Spending on research and development, including capitalised
software development, increased in line with revenues to GBP1.85m
(H1-FY20: GBP1.67m) of which capitalised software expenditure was
GBP0.80m (H1-FY20: GBP0.74m).
Total capital expenditure was GBP0.82m (H1-FY20: GBP0.81m); the
balance after capitalised development, being GBP0.02m (H1-FY19:
GBP0.07m) relating to IT assets.
The Company acquired 100% of the issued share capital of
Automagica in October 2020 for an initial cash consideration of
EUR1.20 million (of which EUR0.12m is deferred for a year) and a
potential further payment of EUR0.9 million in cash and up to
EUR0.9 million in Netcall shares. The potential further payments
are dependent on achieving specified performance targets during the
two-year period from completion of the acquisition. In the period
the Company paid GBP0.98m in relation to the acquisition. See note
7 for further information.
To support the acquisition of MatsSoft Limited in 2017, the
Company issued a Loan Note totalling GBP7m. Loan Note interest
payments in the period totalled GBP0.42m (H1-FY20: GBP0.30m). The
Loan Note is unsecured and is repayable in six instalments from 30
September 2022 to 31 March 2025. See note 6 for further
information.
As a result of these factors, net funds were GBP5.15m at 31
December 2020 (30 June 2020: GBP4.82m). The Group deferred GBP2.21m
of VAT payments during March and June 2020 due to Covid-19, which
is repayable from March 2021, resulting in a normalised gross cash
position of GBP10.7m (30 June 2020: GBP10.5m).
Unaudited consolidated income statement for the six months to 31
December 2020
Unaudited Unaudited Audited
Six months to Six months to 12 months to
GBP'000 31 December 2020 31 December 2019 30 June 2020
------------------------------------------------------- ------------------ ------------------ --------------
Revenue 13,351 12,267 25,114
Cost of sales (1,472) (1,510) (2,930)
-------------------------------------------------------- ------------------ ------------------ --------------
Gross profit 11,879 10,757 22,184
Administrative expenses (10,434) (10,218) (20,926)
Other losses - net (98) (35) (24)
-------------------------------------------------------- ------------------ ------------------ --------------
Adjusted EBITDA 2,949 2,115 4,413
Depreciation (305) (332) (657)
Net loss on disposal of property, plant and equipment (52) (1) -
Amortisation of acquired intangible assets (227) (248) (483)
Amortisation of other intangible assets (655) (633) (1,344)
Change in fair value of contingent consideration - (37) (37)
Post-completion services (59) (33) (33)
Share-based payments (304) (327) (625)
Operating profit 1,347 504 1,234
Finance income 1 23 38
Finance costs (385) (391) (775)
-------------------------------------------------------- ------------------ ------------------ --------------
Finance costs - net (384) (368) (737)
-------------------------------------------------------- ------------------ ------------------ --------------
Profit before tax 963 136 497
Tax credit/ (charge) 350 (99) (10)
-------------------------------------------------------- ------------------ ------------------ --------------
Profit for the period 1,313 37 487
======================================================== ================== ================== ==============
Earnings per share - pence
Basic 0.91 0.03 0.34
Diluted 0.87 0.02 0.33
======================================================== ================== ================== ==============
All activities of the Group in the current and prior periods are
classed as continuing. All of the profit for the period is
attributable to the shareholders of Netcall plc.
Unaudited statement of comprehensive income for the six months
to 31 December 2020
Unaudited Unaudited Audited
Six months to Six months to 12 months to
GBP'000 31 December 2020 31 December 2019 30 June 2020
Profit for the period 1,313 37 487
Other comprehensive income
Items that may be reclassified to profit or loss
Exchange differences arising on translation of foreign
operations 34 11 (14)
Items that will not be reclassified to profit or loss
Changes in the fair value of equity investments at
fair value through other comprehensive
income - - -
----------------------------------------------------------- ------------------ ------------------ --------------
Total other comprehensive income for the year 34 11 (14)
------------------------------------------------------------ ------------------ ------------------ --------------
Total comprehensive income for the period 1,347 48 473
============================================================ ================== ================== ==============
All of the comprehensive income for the period is attributable
to the shareholders of Netcall plc.
Unaudited consolidated balance sheet at 31 December 2020
Unaudited Unaudited Audited
GBP'000 31 December 2020 31 December 2019 30 June 2020
----------------------------------------------------------- ------------------ ------------------ --------------
Assets
Non-current assets
Property, plant and equipment 739 1,071 960
Right-of-use assets 797 690 970
Intangible assets 30,208 29,054 29,078
Deferred tax asset 833 421 482
Financial assets at fair value through other comprehensive
income 72 72 72
Total non-current assets 32,649 31,308 31,562
------------------------------------------------------------ ------------------ ------------------ --------------
Current assets
Inventories 119 63 139
Other current assets 1,287 1,232 1,392
Contract assets 944 1,232 585
Trade receivables 3,159 3,311 3,957
Other financial assets at amortised cost 15 145 4
Cash and cash equivalents 12,903 6,502 12,710
------------------------------------------------------------ ------------------ ------------------ --------------
Total current assets 18,427 12,485 18,787
------------------------------------------------------------ ------------------ ------------------ --------------
Total assets 51,076 43,793 50,349
------------------------------------------------------------ ------------------ ------------------ --------------
Liabilities
Non-current liabilities
Contract liabilities 42 171 104
Borrowings 6,802 6,689 6,745
Lease liabilities 759 635 902
Deferred tax liabilities 814 869 842
Total non-current liabilities 8,417 8,364 8,593
------------------------------------------------------------ ------------------ ------------------ --------------
Current liabilities
Trade and other payables 7,553 3,527 6,907
Dividend payable 369 287 -
Contract liabilities 10,268 9,316 11,724
Current tax liabilities 2 - -
Lease liabilities 194 198 248
Total current liabilities 18,386 13,328 18,879
------------------------------------------------------------ ------------------ ------------------ --------------
Total liabilities 26,803 21,692 27,472
------------------------------------------------------------ ------------------ ------------------ --------------
Net assets 24,273 22,101 22,877
============================================================ ================== ================== ==============
Equity attributable to the owners of the parent
Share capital 7,483 7,275 7,312
Share premium 3,015 3,015 3,015
Other equity 4,900 4,900 4,900
Other reserves 3,381 3,900 3,996
Retained earnings 5,494 3,011 3,654
------------------------------------------------------------ ------------------ ------------------ --------------
Total equity 24,273 22,101 22,877
============================================================ ================== ================== ==============
Unaudited consolidated statement of changes in equity at 31
December 2020
Share Share Other Other Retained Total
GBP'000 capital premium equity reserves earnings equity
-------------------------------- --------- --------- -------- ---------- ---------- --------
Balance at 30 June 2019 7,259 3,015 4,832 4,440 2,402 21,948
Issue of ordinary shares
as consideration for
acquisition in a business
combination 14 - 68 - - 82
Proceeds from share issue 2 - - - - 2
Increase in equity reserve
in relation to options
issued - - - 307 - 307
Reclassification following
exercise or lapse of
share options - - - (859) 859 -
Tax credit relating to
share options - - - 1 - 1
Dividends declared - - - - (287) (287)
-------------------------------- --------- --------- -------- ---------- ---------- --------
Transactions with owners 16 - 68 (551) 572 105
-------------------------------- --------- --------- -------- ---------- ---------- --------
Profit for the period - - - - 37 37
Other comprehensive income
for the period - - - 11 - 11
-------------------------------- --------- --------- -------- ---------- ---------- --------
Profit and total comprehensive
income for the period - - - 11 37 48
-------------------------------- --------- --------- -------- ---------- ---------- --------
Balance at 31 December
2019 7,275 3,015 4,900 3,900 3,011 22,101
-------------------------------- --------- --------- -------- ---------- ---------- --------
Proceeds from share issue 37 - - - - 37
Increase in equity reserve
in relation to options
issued - - - 315 - 315
Reclassification following
exercise or lapse of
share options - - - (193) 193 -
Tax debit relating to
share options - - - (1) - (1)
Transactions with owners 37 - - 121 193 351
-------------------------------- --------- --------- -------- ---------- ---------- --------
Profit for the period - - - - 450 450
Other comprehensive income
for the period - - - (25) - (25)
-------------------------------- --------- --------- -------- ---------- ---------- --------
Profit and total comprehensive
income for the period - - - (25) 450 425
-------------------------------- --------- --------- -------- ---------- ---------- --------
Balance at 30 June 2020 7,312 3,015 4,900 3,996 3,654 22,877
-------------------------------- --------- --------- -------- ---------- ---------- --------
Proceeds from share issue 171 - - - - 171
Increase in equity reserve
in relation to options
issued - - - 218 - 218
Reclassification following
exercise or lapse of
share options - - - (896) 896 -
Tax credit relating to
share options - - - 29 - 29
Dividends declared - - - - (369) (369)
-------------------------------- --------- --------- -------- ---------- ---------- --------
Transactions with owners 171 - - (649) 527 49
-------------------------------- --------- --------- -------- ---------- ---------- --------
Profit for the period - - - - 1,313 1,313
Other comprehensive income
for the period - - - 34 - 34
-------------------------------- --------- --------- -------- ---------- ---------- --------
Profit and total comprehensive
income for the period - - - 34 1,313 1,347
-------------------------------- --------- --------- -------- ---------- ---------- --------
Balance at 31 December
2020 7,483 3,015 4,900 3,381 5,494 24,273
-------------------------------- --------- --------- -------- ---------- ---------- --------
Unaudited consolidated cash flow statement for the six months to
31 December 2020
Unaudited Unaudited Audited
Six months to Six months to 12 months to
GBP'000 31 December 2020 31 December 2019 30 June 2020
-------------------------------------------------------------- ------------------ ------------------ --------------
Cash flows from operating activities
Profit before income tax 963 137 497
Adjustments for:
Depreciation and amortisation 1,187 1,213 2,484
Loss on disposal of property, plant and equipment 52 1 -
Share-based payments 304 327 625
Net finance costs 384 368 737
Other non-cash expenses 11 - 1
Changes in operating assets and liabilities, net of effects
from acquisition of subsidiaries:
Decrease in inventories 20 102 26
Decrease/ (increase) in trade receivables 818 550 (92)
(Increase)/ decrease in contract assets (362) (81) 589
(Increase)/ decrease in other financial assets at amortised
cost (10) (16) 100
Decrease/ (increase) in other current assets 97 59 (107)
Increase/ (decrease) in trade and other payables 472 (20) 3,334
(Decrease)/ increase in contract liabilities (1,548) (1,066) 1,223
Increase/ (decrease) in provisions - - (29)
Cash generated from operations 2,388 1,574 9,388
Interest received 2 23 38
Interest paid (3) (2) (6)
Net cash inflow from operating activities 2,387 1,595 9,420
-------------------------------------------------------------- ------------------ ------------------ --------------
Cash flows from investing activities
Payment for acquisition of subsidiary, net of cash acquired (984) (1,679) (1,679)
Payment for property, plant and equipment (15) (64) (146)
Payment of software development costs (802) (737) (1,708)
Payment for other intangible assets (7) (9) (9)
Proceeds from sale of property, plant and equipment 1 - -
Net cash outflow from investing activities (1,807) (2,489) (3,542)
-------------------------------------------------------------- ------------------ ------------------ --------------
Cash flows from financing activities
Proceeds from issue of ordinary shares 170 3 39
Interest paid on Loan Notes (420) (298) (478)
Principal element of lease payments (172) (86) (199)
Dividends paid to Company's shareholders - - (287)
-------------------------------------------------------------- ------------------ ------------------ --------------
Net cash outflow from financing activities (422) (381) (925)
-------------------------------------------------------------- ------------------ ------------------ --------------
Net increase/ (decrease) in cash and cash equivalents 158 (1,275) 4,953
Cash and cash equivalents at beginning of period 12,710 7,769 7,769
Effects of exchange rate changes on cash and cash equivalents 35 8 (12)
-------------------------------------------------------------- ------------------ ------------------ --------------
Cash and cash equivalents at end of period 12,903 6,502 12,710
============================================================== ================== ================== ==============
Notes to the financial information for the six months ended 31
December 2020
1. General information
Netcall plc (AIM: "NET", "Netcall", "Group" or the "Company") is
a leading provider of Low-code and customer engagement software. It
is a public limited company which is quoted on AIM (a market of the
London Stock Exchange). The Company's registered address is Suite
203, Bedford Heights, Brickhill Drive
Bedford, UK MK41 7PH and the Company's registered number is
01812912.
2. Basis of preparation
The Group interim results consolidate those of the Company and
its subsidiaries (together referred to as the 'Group'). The
principal trading subsidiaries of Netcall are Netcall Technology
Limited and Netcall Systems Limited.
These condensed half year financial statements for the half year
ended 31 December 2020 have been prepared in accordance with the
AIM Rules for Companies, comply with IAS 34 Interim Financial
Reporting as adopted by the European Union and should be read in
conjunction with the annual financial statements for the year ended
30 June 2020, which have been prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by
the European Union.
This results announcement is unaudited and does not constitute
statutory accounts of the Group within the meaning of sections
434(3) and 435(3) of the Companies Act 2006 (the 'Act'). The
balance sheet at 30 June 2020 has been derived from the full Group
accounts published in the Annual Report and Accounts 2020, which
has been delivered to the Registrar of Companies and on which the
report of the independent auditors was unqualified and did not
contain a statement under either section 498(2) or section 498(3)
of the Act.
The results have been prepared in accordance with the accounting
policies set out in the Group's 30 June 2020 statutory
accounts.
The results for the six months ended 31 December 2020 were
approved by the Board on 23 February 2021. A copy of these interim
results will be available on the Company's web site www.netcall
.com from 23 February 2021.
The principal risks and uncertainties faced by the Group have
not changed from those set out on page 11 of the annual report for
the year ended 30 June 2020.
3. Segmental analysis
The Board considers that there is one operating business segment
being the design, development, sale and support of software
products and services, which is consistent with the information
reviewed by the Board when making strategic decisions. Resources
are reviewed on the basis of the whole of the business
performance.
The key segmental measure is adjusted EBITDA which is profit
before interest, tax, depreciation, amortisation, acquisition and
reorganisation expenses and share-based payments, a reconciliation
of which is set out on the consolidated income statement.
4. Earnings per share
The basic earnings per share is calculated by dividing the net
profit attributable to equity holders of the Company by the
weighted average number of ordinary shares in issue during the year
excluding those held in treasury:
Six months to Six months to 12 months to
31 December 2020 31 December 2019 30 June 2020
-------------------------------------------------------------- ------------------ ------------------ --------------
Net earnings attributable to ordinary shareholders (GBP'000s) 1,313 37 487
Weighted average number of ordinary shares in issue (000s) 145,043 143,455 143,588
Basic earnings per share (pence) 0.91 0.03 0.34
============================================================== ================== ================== ==============
The diluted earnings per share has been calculated by dividing
the net profit attributable to ordinary shareholders by the
weighted average number of shares in issue during the period,
adjusted for potentially dilutive shares that are not
anti-dilutive.
Six months to Six months to 12 months to
31 December 2020 31 December 2019 30 June 2020
-------------------------------------------------------------- ------------------ ------------------ --------------
Weighted average number of ordinary shares in issue (000s) 145,043 143,455 143,588
Adjustments for share options (000s) 5,753 5,666 5,839
Weighted average number of potential ordinary shares in issue
(000s) 150,796 149,121 149,427
-------------------------------------------------------------- ------------------ ------------------ --------------
Diluted earnings per share (pence) 0.87 0.02 0.33
============================================================== ================== ================== ==============
Adjusted basic and diluted earnings per share have been
calculated to exclude the effect of acquisition, contingent
consideration and reorganisation costs, share-based payment
charges, amortisation of acquired intangible assets and utilisation
of historic tax losses. The Board believes this gives a better view
of ongoing maintainable earnings. The table below sets out a
reconciliation of the earnings used for the calculation of earnings
per share to that used in the calculation of adjusted earnings per
share:
Six months to Six months to 12 months to
GBP'000s 31 December 2020 31 December 2019 30 June 2020
-------------------------------------------------------------- ------------------ ------------------ --------------
Profit used for calculation of basic and diluted EPS 1,313 37 487
Amortisation of acquired intangible assets 227 248 483
Change in fair value of contingent consideration - 37 37
Post-completion services 59 33 33
Share-based payments 304 327 625
Unwinding of discount - contingent consideration & borrowings 59 67 123
Tax adjustment (656) (58) (332)
Profit used for calculation of adjusted basic and diluted EPS 1,306 691 1,456
============================================================== ================== ================== ==============
Six months to Six months to 12 months to
Pence 31 December 2020 31 December 2019 30 June 2020
------------------------------------- ------------------ ------------------ --------------
Adjusted basic earnings per share 0.90 0.48 1.01
Adjusted diluted earnings per share 0.87 0.46 0.97
===================================== ================== ================== ==============
5. Dividends
Dividends paid or declared during the period were as
follows:
Statement of changes December 2020
Six months to Cash flow statement in equity balance sheet
December 2020 Paid Pence per share (GBP'000) (GBP'000) (GBP'000)
---------------------- -------- ---------------- -------------------- --------------------- ---------------------
Final ordinary
dividend for year to
June 2020(1) 9/2/21 0.25p - 369 369
---------------------- -------- ---------------- -------------------- --------------------- ---------------------
- 369 369
------------------------------- ---------------- -------------------- --------------------- ---------------------
Statement of changes December 2019
Six months to Cash flow statement in equity balance sheet
December 2019 Paid Pence per share (GBP'000) (GBP'000) (GBP'000)
---------------------- -------- ---------------- -------------------- --------------------- ---------------------
Final ordinary
dividend for year to
June 2019 5/2/20 0.20p - 287 287
---------------------- -------- ---------------- -------------------- --------------------- ---------------------
- 287 287
------------------------------- ---------------- -------------------- --------------------- ---------------------
(1) The final ordinary dividend for the year ended 30 June 2020
was approved at the Annual General Meeting held on 17 December
2020.
6. Net funds/ (debt) reconciliation
GBP'000 31 December 2020 31 December 2019 30 June 2020
------------------------------------------ ----------------- ----------------- -------------
Cash and cash equivalents 12,903 6,502 12,710
Borrowings - repayable after one year(1) (6,802) (6,689) (6,745)
Lease liabilities (953) (833) (1,150)
Net funds/ (debt) 5,148 (1,020) 4,815
========================================== ================= ================= =============
(1) To support the acquisition of MatsSoft Limited in August
2017, the Company issued a GBP7m Loan Note with options over 4.8m
new ordinary shares of 5p each priced at 58p. The Loan Note is
unsecured, has an annual interest rate of 8.5% payable quarterly in
arrears and is repayable in six instalments from 30 September 2022
to 31 March 2025. The Loan Note was initially allocated a fair
value of GBP6.42m and the share option a fair value of GBP0.58m.
The discount on the carrying value of the Loan Note is being
amortised via the profit and loss account over the expected option
life of five years.
7. Acquisition of Oakwood Technologies BV
On 12 October 2020 the Company acquired 100% of the issued share
capital of Oakwood Technologies BV (trading as 'Automagica'), an AI
powered Robotic Process Automation software provider.
The Company assessed that substantially all of the fair value of
gross assets acquired was concentrated in Automagica's software. It
therefore elected to account for the transaction as an acquisition
of assets under the amendments to IFRS 3 'Business Combinations'
issued by IASB in October 2018. As such the consideration together
with the direct acquisition-related expenses (less any tangible or
financial assets assumed) has been attributed to the acquired
software.
The fair value of consideration was GBP1.20m comprising:
GBP'000
-------------------------------------- --------
Cash consideration - initial payment 987
Deferred cash consideration 99
Acquisition-related expenses 111
1,197
====================================== ========
The consideration for the transaction comprised:
-- cash consideration of EUR1.08m paid on completion in October 2020;
-- deferred cash consideration of an undiscounted amount of
EUR0.12m payable in October 2021; and
-- contingent consideration of up to EUR0.90m in cash and up to
EUR0.90m in Netcall shares payable dependent on specified
performance targets during the 2-year period from completion of the
acquisition. As the contingent payments are reliant on the on-going
provision of services to the business by the previous shareholders
then: the cash amounts earned will be expensed in the income
statement as rendered; and, the share element will be charged to
the income statement based on the fair value of shares that are
ultimately expected to vest, in line with the requirements of IFRS
2 'Share-based payments'.
The total contingent consideration expensed as post-completion
services in the period was GBP59,000.
The assets and liabilities recognised as a result of the
acquisition are as follows:
GBP'000
----------------------------------------- --------
Intangible assets: proprietary software 1,203
Property, plant & equipment 2
Contract assets -
Trade receivables 24
Other current assets 1
Cash & cash equivalents 13
Trade & other payables (10)
Contract liabilities (32)
Current tax liabilities (2)
Net assets acquired 1,197
=========================================== ========
The cash outflow as a result of the acquisition is as
follows:
GBP'000
------------------------------------------ --------
Cash consideration - initial payment 987
Less: cash acquired (13)
Acquisition-related expenses 10
Net cash out flow - investing activities 984
============================================ ========
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END
IR ZZGZZRFRGMZM
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