TIDMNET
RNS Number : 6987P
Netcall PLC
11 October 2023
11 October 2023
NETCALL PLC
("Netcall", the "Company" or the "Group")
Final Results for the Year Ended 30 June 2023
Accelerating organic growth and higher profitability
Netcall plc (AIM: NET), a leading provider of intelligent
automation and customer engagement software, today announces its
audited results for the year ended 30 June 2023.
Financial highlights
FY23 FY22
-------------------------------- --------- --------- -----
Total Revenue GBP36.0m GBP30.5m +18%
Cloud services revenue GBP16.6m GBP10.7m +55%
-------------------------------- --------- --------- -----
Total annual contract value(1)
("ACV") GBP27.9m GBP24.2m +15%
Cloud services ACV GBP18.1m GBP15.0m +21%
-------------------------------- --------- --------- -----
Adjusted EBITDA(2) GBP8.0m GBP6.4m +25%
Profit before tax GBP4.0m GBP2.3m +74%
Adjusted basic earnings per
share 3.33p 2.15p +55%
-------------------------------- --------- --------- -----
Group cash at period end GBP24.8m GBP17.6m +41%
Net funds at period end GBP24.3m GBP13.4m +81%
-------------------------------- --------- --------- -----
Final ordinary dividend per
share 0.83p 0.54p +54%
-------------------------------- --------- --------- -----
Operational highlights
-- Continued good demand for Liberty solutions, with strong contribution
from new customer acquisition
-- Total revenue increased by 18% driven by Cloud services which
accounted for more than 80% of new product bookings
-- Intelligent Automation solutions now accounts for more than
half of Group revenue increasing by 34% to GBP18.5m (FY22:
GBP13.8m)
-- Customer Engagement customers that have purchased Intelligent
Automation solutions increased by 6 percentage points to 21%
-- Cloud net retention rate (3) of 113% (FY22: 152%) or 122%
(FY22: 117%) excluding the effect of the significant contract
win announced in June 2022 and renewed in July 2023
-- Current Remaining Performance Obligations, being contracted
revenue expected to be recognised within FY24, increased by
18% to GBP31.4m (FY23: GBP26.5m)
-- Contract with S&P 500 firm using Liberty platform in more
than 60 countries replaced with new five-year contract valued
in total at $20m, representing a $6m uplift to the remaining
contract value
-- Positive sales momentum continued to date in FY24
-- With more than a third of Customer Engagement solutions now
deployed as a cloud service and the pipeline increasing, the
Board has decided to invest further in the Group's development
and technology teams to capitalise on growing demand and support
future growth
Henrik Bang, Chief Executive, said:
"Netcall had a strong year of trading, delivering double digit
organic revenue and profit growth which was fueled by a strong
demand for our cloud services as we transition to a predominately
cloud-based business.
"We have continued to see strong demand for our offering as
customers increasingly prioritise automation and improvements to
customer experience, which, in addition to solid cross and
up-sales, also resulted in an increased number of new customer
wins.
"Based on the increased wins and growing pipeline in Customer
Engagement cloud sales with more than a third of such solutions now
deployed in the cloud, the Board has decided to increase
investments into this offering to meet anticipated future demand,
gain operational efficiencies and deliver an improved
proposition.
"Sales momentum has remained strong into the start of the new
financial year and our significant order book alongside our
increasing recurring revenues and strong pipeline of new business
opportunities, gives the Board confidence in the Group's continued
success."
(1) ACV, as of 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 (save that the contract renewal announced on 20 July
2023 is included in FY23 ACV at the new annual amount of $4m).
(2) Profit before interest, tax, depreciation and amortisation
adjusted to exclude the effects of share-based payments,
acquisition, impairment, profit or loss on disposals, contingent
consideration and non-recurring transaction costs.
(3) Cloud net retention rate is calculated by starting with the
Cloud ACV from all customers twelve months prior to the period end
and comparing it to the Cloud ACV from the same customers at the
current period end. The current period ACV includes any cross- or
up-sales and is net of contraction or churn over the trailing
twelve months but excludes ACV from new customers in the current
period. The Cloud net retention rate is the total current period
ACV divided by the total prior period ACV.
(4) Based on Scope 1 emissions (direct emissions from owned or
controlled sources) and Scope 2 emissions (indirect emissions from
the generation of purchased electricity, steam, heating and cooling
consumed by the Company) following the UK Government GHG Conversion
Factors for Company Reporting.
For further enquiries, please contact:
Netcall plc Tel. +44 (0) 330
333 6100
Henrik Bang, CEO
Michael Jackson, Chairman
James Ormondroyd, Group Finance Director
Canaccord Genuity Limited (Nominated Tel. +44 (0) 20
Adviser and Broker) 7523 8000
Simon Bridges / Andrew Potts
Singers Capital Markets (Joint Broker) Tel. +44 (0) 20
Harry Gooden / Asha Chotai 7496 3000
Alma PR Tel. +44 (0) 20
3405 0205
Caroline Forde / Hilary Buchanan / Matthew
Young
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 leaner, more customer-centric organisations.
Netcall's customers span enterprise, healthcare and government
sectors. These include two-thirds of the NHS Acute Health Trusts
and leading corporates such as Legal and General, Lloyds Banking
Group, Santander and Aon.
Prior to publication the information communicated in this
announcement was deemed by the Company to constitute inside
information for the purposes of article 7 of the Market Abuse
Regulations (EU) No 596/2014 as amended by regulation 11 of the
Market Abuse (Amendment) (EU Exit) Regulations No 2019/310 ('MAR').
With the publication of this announcement, this information is now
considered to be in the public domain.
Overview
The Group delivered another year of growth, with solid sales
momentum and strong cash generation. Revenue grew 18% to GBP36.0m
(FY22: GBP30.5m) and adjusted EBITDA increased 25% to GBP8.0m
(FY22: GBP6.4m).
As Netcall continues its transition to a predominantly
cloud-based business with 72% (FY22: 65%) of its revenue coming
from recurring revenue contracts, we achieved good progress against
each of our four core strategic pillars. New customer acquisition
progressed particularly well during the year, contributing to
overall growth. We have also continued to work closely with
existing customers resulting in a strong cross and up-sales
performance, reflected in the Cloud net retention rate of 113% or
122% excluding the effect of the significant contract win announced
in June 2022 and renewed in July 2023. Netcall's partner base
continued to expand throughout FY23 with bookings increasing by
approximately a quarter. These results were underpinned by
continuous product releases, including enhancements to Liberty AI,
which was originally released in April 2022.
The main growth driver in the period continued to be our cloud
offerings where revenues increased by 55% to GBP16.6m, as secular
trends including the move to cloud computing, increased use of
automation and intensified focus on improving customer experience
continue to benefit the Group. Revenues from Intelligent Automation
solutions increased by 34% to GBP18.5m (FY22: GBP13.8m), now
representing over half of total revenues for the year. This has
materially contributed to Cloud revenues, which have grown 30% CAGR
over the last 5 years.
The momentum towards cloud services also meant that other
revenue streams declined by 1% to GBP19.4m (FY22: GBP19.7m), with
lower professional services as enterprise accounts increasingly use
accredited IT service providers for application development and
support together with fewer call-back and SMS transactions in the
year.
The ongoing sales momentum is also reflected in Cloud annual
contract value ('ACV') which increased 21% to GBP18.1m (FY22:
GBP15.0m), contributing to Total ACV growth of 15% to GBP27.9m
(FY22: GBP24.2m). Underlying cloud ACV, excluding the significant
contract announced in June 2022 and renewed in July 2023, increased
33% and underlying Total ACV grew 20%.
As announced at the end of the year, the Group's landmark $19m
three-year cloud subscription contract with a S&P 500 financial
services firm was renegotiated at the end of the period, after the
customer instigated an internal review of its vendor landscape. As
a result, we have now agreed a replacement five-year contract
valued at $20m in total (the "Contract Renewal") representing a $6m
uplift to the remaining contract value, with an expected revenue
contribution of $4m per annum over the extended term.
The Group's changing business model to cloud and recurring
revenue streams has translated into excellent cash flow and a
significant increase in net funds which at year end was GBP24.3m
(30 June 2022: GBP13.4m).
Current Trading and Outlook
Sales momentum has remained strong into the start of the new
financial year with cloud solutions performing particularly well
which, together with visibility of GBP31.4m of contracted revenue
expected to be recognised in FY24, provides good forward momentum
and revenue visibility.
In addition, the Company has a strong sales pipeline with the
majority of opportunities being for cloud solutions combined with
an ongoing new product pipeline which we expect will provide new
sales opportunities.
Based on the increased wins in Customer Engagement cloud sales,
with more than a third of such solutions now deployed in the cloud,
and a growing pipeline the Board has decided to increase
investments into this offering to meet anticipated future demand,
gain operational efficiencies and deliver an improved proposition.
The Group will make a step change investment of approximately
GBP1.0m pa in its development and technology teams, mainly
occurring in FY25. In addition, cloud computing expenses within
cost of sales will be approximately GBP0.5m higher, also largely
expected in FY25 and which in future periods will be volume
dependent. The underlying operating margin is expected to remain
robust and over time benefit from the increased investment in cloud
solutions.
The Group's strong balance sheet and cash generation supports
continued investment in our growth strategies which are underpinned
by supportive macro-trends for both cloud computing, automation and
customer experience. Therefore, the Board remains confident in the
Group's future success.
Business Review
Netcall unifies Intelligent Automation and Customer Engagement
software, providing organisations with an easy-to-use platform that
enables rapid process automation and improved customer engagement.
From councils interacting with citizens, NHS trusts helping
patients, or financial services firms servicing customers, there is
increasing pressure on organisations to improve operations to
deliver successful outcomes for stakeholders. This is achieved
through the Liberty platform which enables organisations to improve
operational efficiencies as well as customer and employee
experiences.
In the current economic environment which has increased the need
for cost efficiencies, business automation remains a key strategic
priority for organisations, creating a significant opportunity for
improvements. In the face of rising costs, skill shortages and
evolving consumer expectations, organisations are turning to
solutions such as Low-code development, Robotic Process Automation
(RPA), AI and machine learning, as well as omni-channel engagement
as an interconnected toolkit for implementing automation programmes
more effectively.
Addressing these challenges sits at the core of Netcall's
Liberty platform which provide a 'one-stop-shop' Digital
Transformation suite. The integration of Intelligent Automation and
Customer Engagement technologies on one easy to use platform with
the inclusion of industry specific implementations are key
differentiating factors that have contributed to increased demand
during the period.
The Liberty platform's main product categories are:
Intelligent Automation
-- Liberty Create : Enables both professional and non-professional
developers to create enterprise grade applications that
drive automated workflows and business processes using
Low-code software. Liberty Create uses an intuitive drag-and-drop
environment for faster development and combines easy
integration to other parts of the Liberty platform, as
well as third party solutions such as SAP and Salesforce.
-- Liberty RPA : AI-powered robotic process automation
frees up people from mundane and repetitive tasks, enabling
them to be more productive. RPA speeds up processing
times, reduces errors and improves overall efficiency.
-- Liberty AI : Offers richer insights to data, predicts
outcomes and improves business decision making. Through
machine learning Liberty AI scales, delivers and enhances
customer experiences across the entire enterprise.
Customer Engagement
-- Liberty Converse : Seamless customer engagement using
our complete omni-channel contact centre solution including
conversational messaging, chatbots and AI-powered virtual
agents. Converse blends practical AI and automation with
agent-assisted technology to boost operational and agent
productivity, reduce costs and improve customer experience.
Strategy
Netcall helps customers turn their digital strategies into
successful journeys and build smarter, leaner and more
customer-centric organisations making them more effective,
competitive and sustainable.
Our main market verticals are financial services, healthcare,
and public sector industries, which in the period accounted for 89%
of total Group revenues, with the Liberty platform also being
implemented in other sectors like utilities and transportation. The
Group's target customers are typically operating complex businesses
with large numbers of customers, employees and stakeholders, and in
many cases are subject to a high level of regulation.
The flexibility of the platform and its cloud deployment enables
customers to rapidly scale the platform usage to support their
expansion plans across the world.
Netcall pursues its market opportunity through execution of its
growth strategy centred on four strategic pillars: new customer
acquisition, growth within the existing base, ongoing product
innovation and partner network expansion.
Customer base expansion
Despite the challenging economic environment, contribution from
new customer acquisition increased significantly during the year.
Cloud solutions continues to be the primary driver of new business
opportunities, accounting for the majority of the new customer wins
in the period. Demand for the Group's sector-tailored solutions,
particularly CitizenHub for local councils, proved in demand,
demonstrating the strong referenceability the Group's has
established in this sector.
Land and expand
The opportunity available for the Group within its extensive
customer base remains significant and cross/upselling products has
been a major contributor to growth during the year, as customers
increasingly deploy upgrades and new Netcall solutions. The number
of Customer Engagement customers who have also purchased
Intelligent Automation solutions increased in the year to 21% from
15% in FY22.
Netcall's Community continues to be a valuable resource
connecting our customer base by providing a forum for knowledge
sharing, training, and providing pre-built accelerators and modules
to enrich customers' interaction with the Liberty platform
solutions. This community continues to grow, and currently consists
of more than 4,500 members including developers and administrators.
As part of the Community, Netcall launched its Academy, which
offers more than 150 eLearning courses on a range of Netcall
solutions and in its initial phase has seen more than 2,000
delegates enrolling to available courses.
Growing the partner channel
Netcall's growing partner network includes large global advisory
firms as well as specialised technology experts, offering
opportunities in existing markets while also expanding the Group's
reach into adjacent sectors and geographies. Throughout the period,
the partner network has shown steady growth, with order bookings
increasing by approximately a quarter, and it remains a priority to
further increase the contribution from our expanding partner
network.
Innovation and product enhancement
Innovation and platform expansion continually provide customers
with new capabilities and features to enhance the value of the
platform, generating new opportunities for the business. During the
year this included a wide range of new features including Microsoft
Teams integration which allows organisations to embed video calling
within their applications and AI Optical Character Recognition
processing of documents enabling the delivery of intelligent
document management capabilities together with enhancements to
Liberty AI offering customers new capabilities and pre-trained AI
models.
Netcall was an early adopter of AI/ML type technologies such as
speech recognition, OCR and computer vision which are used by many
customers today. In April 2022, Netcall enhanced its AI footprint
by launching Liberty AI, building Artificial Intelligence
capabilities into the Liberty platform allowing customers to use
custom or pre-trained private AI models in their apps or
interactions. Today a growing number of sales engagements are
exploring the use of Liberty AI capabilities.
Recent studies(1) , show generative AI can unlock significant
benefits within both the software development delivery cycle, and
customer and agent experience within Intelligent Automation and
Customer Engagement solutions. Netcall believes that in order to
most effectively capitalise on AI, it needs to be fully integrated
into a platform that offers a wide range of capabilities, as well
as the tools to deploy and govern them securely, to all teams in
the enterprise, not just specialist data scientists.
As a Group, Netcall is cognisant of the developments of AI and
the increased demand for adoption into a range of business systems.
As part of its AI strategy, Netcall's roadmap will enable customers
to:
-- Deploy further Private AI models tailored to customer
needs, built on their data, giving reliable and accurate
results for bespoke use-cases.
-- Connect to Public AI models, incorporating intelligence
within workflows while retaining control over the data
the organisation is willing to share.
-- And, embed Generative AI within the platform to enable
features such as natural language authoring, code generation
and communication sentiment and summarisation, to further
increase the value customers can derive from Liberty.
During the year, Netcall increased its investments in AI and is
planning to continue these investments as the market develops.
(1) McKinsey: July 2023, "The economic potential of generative
AI"
Cloud first investments
Cloud contact centre market growth rates are forecast to
accelerate(1) as decision makers implement solutions to modernise
their customer service operations, including supporting a broader
mix of communications channels, conversational AI and virtual
assistant capabilities.
A third of Netcall's Customer Engagement solutions are now
deployed in the cloud and the related Cloud Services ACV grew by
37% year over year. This momentum has continued into the beginning
of the FY24, supported by a growing Customer Engagement solution
pipeline.
Therefore, the Board has decided to increase investments into
this cloud service offering to meet this growing market
opportunity, gain operational efficiencies and deliver an improved
proposition by consolidating all cloud computing activities on a
single public cloud platform. The Group will make a step change
investment of approximately GBP1.0m pa in its development and
technology teams, mainly occurring in FY25. In addition, cloud
computing expenses within cost of sales will be approximately
GBP0.5m higher, also largely expected in FY25 and which in future
periods will be volume dependent. The underlying operating margin
is expected to remain robust and over time benefit from the
increased investment in cloud solutions.
(1) Gartner:
https://www.gartner.com/en/newsroom/press-releases/2023-07-31-gartner-says-conversational-ai-capabilities-will-help-drive-worldwide-contact-center-market-to-16-percent-growth-in-2023
ESG initiatives
The Group remains focused on managing its impact on the
environment. During the period, Netcall has continued to progress
against its ambition to be carbon neutral by the end of 2026.
Netcall has measured and is voluntarily reporting its total Scope 1
and Scope 2 emissions which have reduced by 48% to 32.2 tCO2e
compared to the 2020 Baseline of 66.6 tCO2e. The Group has started
to measure and analyse Scope 3 emissions, which cover indirect
emissions that occur in a company's value chain and for the first
time, Netcall is reporting on a subset of Scope 3 emissions;
business travel. Emissions for business travel and accommodation
were 78.5 tCO2e with employee commuting responsible for 12.0
tCO2e.
Moreover, to track progress on its carbon reduction strategy,
Netcall has populated and utilised the Environmental Management
System (EMS) built on the Liberty Create Low-code Application
Platform. The implementation of the EMS supports management of key
actions and improvements for environmental performance. The EMS app
is also available to Netcall customers through the AppShare to
support Netcall's customers' own objectives.
The Group is also pleased to report that is has seen a 9%
improvement in energy intensity ratio to 0.96 tCO2e per GBP1m
revenue.
In addition, the Board recognises that Netcall's solutions have
a wider reach and impact on our customers and communities. More
than 1 million patients have logged into our NHS applications,
whilst our technology supports 1 in 4 UK councils, and 2 in 5 UK
police forces. Netcall's solutions are designed to enable
organisations to become more efficient and effective in delivering
better services and thereby also enabling them to operate more
sustainably.
Internally, the Group continues to evolve its employee value
proposition. Our employee engagement score puts us in the top
quartile of more than a 1000 UK and Global Technology businesses
surveyed on Culture Amp, an employee satisfaction-focused platform
made up of 21 million answered questions.
Financial Review
A key financial metric monitored by the Board is the growth in
the ACV base year-on-year. 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 21% higher at GBP18.1m (FY22: GBP15.0m). The growth
in Cloud ACV contributed to a 15% growth in total ACV to GBP27.9m
(FY22: GBP24.2m). The underlying Cloud and Total ACV growth
excluding the effect of the significant contract announced 20 July
2023 was 33% and 20% respectively.
The table below sets out ACV at the three financial year
ends:
GBP'm ACV FY23 FY22 FY21
--------------------------- ----- ----- -----
Cloud services 18.1 15.0 9.4
Product support contracts 9.8 9.2 9.1
Total ACV 27.9 24.2 18.5
=========================== ===== ===== =====
Group revenue for the year grew by 18% to GBP36.0m (FY22:
GBP30.5m). The year-on-year increase was primarily driven by growth
in both Intelligent Automation solutions by 34% to GBP18.5m (FY22:
GBP13.8m), and Customer Engagement solutions by 6% to GBP17.0m
(FY22: GBP16.0m) of which the Customer Engagement Cloud services
revenue stream grew by 20% to GBP3.6m (FY22: GBP3.0m).
The table below sets out revenue by component for the last three
financial year ends:
GBP'm Revenue FY23 FY22 FY21
-------------------------------------------------- ----- ----- -----
Cloud services 16.6 10.7 8.3
Product support contracts 9.4 9.0 9.0
-------------------------------------------------- ----- ----- -----
Total Cloud services & Product support contracts 26.0 19.7 17.3
Communication services 2.6 3.0 2.9
Product 2.2 2.2 2.7
Professional services 5.2 5.5 4.3
Total Revenue 36.0 30.5 27.2
-------------------------------------------------- ----- ----- -----
Reflecting the year-over-year growth in ACV, Cloud services
revenue (subscription and usage fees of our cloud-based offerings)
was 55% higher at GBP16.6m (FY22: GBP10.7m) and product support
contract revenue grew by 5% to GBP9.40m (FY22: GBP8.97m). This
increased recurring revenues from Cloud service and Product support
contracts to 72% of total revenue (FY22: 65%).
Communication services revenue were GBP2.56m (FY22: GBP3.00m)
due to fewer call-back and messaging transactions in the financial
services segment.
Product revenue (software license sales with supporting
hardware) was maintained at GBP2.24m (FY22: GBP2.24m) due to
continuing customer demand for on-premise license expansions or
upgrades. 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.
Professional services revenue was GBP5.21m (FY22: GBP5.51m) as a
number of enterprise accounts, signed up in previous years, onboard
global IT service providers to support further application
development and support. 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.
Group Remaining Performance Obligations ("RPO"), being the total
of future contracted revenue with customers that have not yet been
recognised, inclusive of deferred income, at year end was GBP54.5m
(FY22: GBP54.4m) demonstrating the material amount of revenue
available to the Group to be recognised in future periods. Within
this, current RPO, being revenue due to be recognised within the
next 12 months, increased by 18% to GBP31.4m (FY22: GBP26.5m).
The Group's adjusted EBITDA was 25% higher at GBP8.00m (FY22:
GBP6.41m), at a margin of 22% of revenue (FY22: 21%). The improved
margin reflecting the higher contribution from Cloud services in
the sales mix partially offset by continued investment in headcount
and pay growth.
The higher adjusted EBITDA led to a 19% increase in operating
profits to GBP3.81m (FY22: GBP3.19m) with the final Oakwood
Technologies BV contingent consideration expense of GBP0.37m (FY22:
GBP0.06m) and higher share-based payment charges of GBP1.64m (FY22:
GBP0.96m).
To support the acquisition of MatsSoft Limited in 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 was
unsecured, had an annual interest rate of 8.5% payable quarterly in
arrears and was repayable in six instalments from 30 September 2022
to 31 March 2025. The Company made an initial repayment of GBP3.5m
in November 2021, a scheduled repayment of GBP0.6m in September
2022 and in October 2022 redeemed the final GBP2.9m of the Loan
Notes. Accordingly, total finance costs reduced to GBP0.14m
(H1-FY22: GBP0.66m). In September 2022, the options were exercised
and the Company received GBP2.8m in proceeds and issued 4.8m new
ordinary shares of 5p each. with the amount in excess of nominal
value, GBP2.56m, credited to the share premium account.
As a result, profit before tax was 73% higher at GBP4.00m (FY22:
GBP2.31m).
The Group recorded a tax credit of GBP0.21m (FY22: credit of
GBP0.09m) benefiting from tax relief available from the exercise of
share options during the period.
Basic earnings per share was 2.69 pence (FY22: 1.61 pence) and
increased by 55% to 3.33 pence on an adjusted basis (FY22: 2.15
pence). Diluted earnings per share was 2.52 pence (FY22: 1.52
pence) and increased by 53% to 3.12 pence on an adjusted basis
(FY22: 2.04 pence).
Cash generated from operations increased by 12% to GBP11.2m
(FY22: GBP9.99m). The Group deferred GBP2.21m of VAT payments
during March and June 2020 due to Covid-19, which was repayable in
monthly instalments from March 2021 to January 2022. Adjusting for
the effect of VAT deferral and consideration paid to the vendors of
Oakwood Technologies BV (acquired in October 2020) accounted for as
post completion services, cash generated from operations increased
to GBP11.6m (FY22: GBP11.5m) a conversion of 145% (FY22: 179%) of
adjusted EBITDA.
Spending on research and development, including capitalised
software development, was 22% higher at GBP4.98m (FY22: GBP4.07m)
of which capitalised software expenditure was GBP2.27m (FY22:
GBP1.61m).
Total capital expenditure was GBP2.74m (FY22: GBP1.94m); the
balance after capitalised development, being GBP0.48m (FY22:
GBP0.33m) relating to IT equipment and software.
As a result of these factors, net funds were GBP 24.4 m at 30
June 2023 (30 June 2022: GBP13.4m).
Dividend
In line with the Company's dividend policy to pay-out 25% of
adjusted earnings per share, the Board is proposing a final
dividend for this financial year of 0.83p (FY22: 0.54p). If
approved, the final dividend will be paid on 9 February 2024 to
shareholders on the register at the close of business on 29
December 2023.
Audited consolidated income statement for the year ended 30 June
2023
2023 2022
GBP'000 GBP'000
----------------------------------------- --------- ---------
Revenue 36,040 30,458
Cost of sales (5,768) (5,021)
Gross profit 30,272 25,437
Administrative expenses (26,522) (22,363)
Other gains/(losses) - net 62 113
------------------------------------------ --------- ---------
Adjusted EBITDA 8,003 6,405
Depreciation (377) (437)
Amortisation of acquired intangible
assets (522) (522)
Amortisation of other intangible assets (1,287) (1,239)
Post-completion services (see note 4) (365) (56)
Share-based payments (1,640) (964)
------------------------------------------ --------- ---------
Operating profit 3,812 3,187
Finance income 344 6
Finance costs (155) (881)
------------------------------------------ --------- ---------
Finance costs - net 189 (875)
Profit before tax 4,001 2,312
Tax credit 205 88
------------------------------------------ --------- ---------
Profit for the year 4,206 2,400
========================================== ========= =========
Earnings per share - pence
Basic 2.69 1.61
Diluted 2.52 1.52
========================================== ========= =========
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.
Audited consolidated statement of comprehensive income for the
year ended 30 June 2023
2023 2022
GBP'000 GBP'000
------------------------------------------------- -------- --------
Profit for the year 4,206 2,400
Other comprehensive income
Items that may be reclassified to profit
or loss
Exchange differences arising on translation
of foreign operations 8 (14)
Total other comprehensive income for
the year 8 (14)
-------------------------------------------------- -------- --------
Total comprehensive income for the year 4,214 2,386
================================================== ======== ========
All of the comprehensive income for the year is attributable to
the shareholders of Netcall plc.
Audited consolidated balance sheet at 30 June 2023
2023 2022
GBP'000 GBP'000
--------------------------------------------- ------ --------- ---------
Assets
Non-current assets
Property, plant and equipment 699 477
Right-of-use assets 298 539
Intangible assets 30,453 29,976
Deferred tax assets 1,767 906
Financial assets at fair value through
other comprehensive income 72 72
Total non-current assets 33,289 31,970
--------------------------------------------- ------ --------- ---------
Current assets
Inventories 31 37
Other current assets 2,333 2,767
Contract assets 599 888
Trade receivables 4,468 3,704
Other financial assets at amortised cost 57 8
Cash and cash equivalents 24,753 17,605
--------------------------------------------- ------ --------- ---------
Total current assets 32,241 25,009
--------------------------------------------- ------ --------- ---------
Total assets 65,530 56,979
--------------------------------------------- ------ --------- ---------
Liabilities
Non-current liabilities
Contract liabilities 787 525
Borrowings - 2,304
Lease liabilities 292 521
Deferred tax liabilities 1,151 899
Total non-current liabilities 2,230 4,249
--------------------------------------------- ------ --------- ---------
Current liabilities
Trade and other payables 7,232 7,963
Contract liabilities 20,578 16,005
Borrowings - 1,167
Lease liabilities 113 177
Total current liabilities 27,923 25,312
----------------------------------------------------- --------- ---------
Total liabilities 30,153 29,561
----------------------------------------------------- --------- ---------
Net assets 35,377 27,418
============================================= ====== ========= =========
Equity attributable to owners of Netcall
plc
Share capital 8,108 7,587
Share premium 5,574 3,015
Other equity 4,900 4,900
Other reserves 3,056 4,462
Retained earnings 13,739 7,454
--------------------------------------------- ------ --------- ---------
Total equity 35,377 27,418
============================================= ====== ========= =========
Audited consolidated statement of cash flows for the year ended
30 June 2023
2023 2022
GBP'000 GBP'000
----------------------------------------------- -------- --------
Cash flows from operating activities
Profit before income tax 4,001 2,312
Adjustments for:
Depreciation and amortisation 2,186 2,198
Share-based payments 1,640 964
Finance costs - net (189) 875
Other non-cash expenses 6 -
Changes in operating assets and liabilities,
net of effects from purchasing of subsidiary
undertaking:
Decrease in inventories 7 47
Increase in trade receivables (765) (1,064)
Decrease in contract assets 281 32
(Increase)/ decrease in other financial
assets at amortised cost (49) 3
Decrease/ (increase) in other current
assets 416 (1,237)
(Decrease)/ increase in trade and other
payables (1,148) 1,040
Increase in contract liabilities 4,835 4,817
Cash flows from operations 11,221 9,987
------------------------------------------------ -------- --------
Analysed as:
Cash flows from operations before VAT
deferral scheme and payment of post
completion service consideration 11,597 11,500
Net effect of VAT deferral scheme - (1,407)
Payment of post completion service
consideration (376) (106)
------------------------------------------------ -------- --------
Interest received 344 6
Interest paid (8) (7)
Income taxes paid - (1)
Net cash inflow from operating activities 11,557 9,985
------------------------------------------------ -------- --------
Cash flows from investing activities
Payment for property, plant and equipment (458) (134)
Payment of software development costs (2,267) (1,610)
Payment for proprietary software - (136)
Payment for other intangible assets (19) (57)
Net cash outflow from investing activities (2,744) (1,937)
------------------------------------------------ -------- --------
Cash flows from financing activities
Proceeds from issues of ordinary shares 3,079 53
Interest paid on Loan Notes (204) (759)
Repayment of borrowings (3,500) (3,500)
Lease payments (214) (169)
Dividends paid to Company's shareholders (839) (554)
------------------------------------------------ -------- --------
Net cash outflow from financing activities (1,678) (4,929)
------------------------------------------------ -------- --------
Net increase in cash and cash equivalents 7,135 3,119
Cash and cash equivalents at beginning
of the financial year 17,605 14,520
Effects of exchange rate on cash and
cash equivalents 13 (34)
================================================ ======== ========
Cash and cash equivalents at end of
financial year 24,753 17,605
================================================ ======== ========
Audited consolidated statement of changes in equity at 30 June
2023
Share Share Other Other Retained
capital premium equity reserves earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- --------- --------- -------- ---------- ---------- --------
Balance at 30 June 2021 7,534 3,015 4,900 3,840 5,317 24,606
------------------------------- --------- --------- -------- ---------- ---------- --------
Proceeds from share issue 53 - - - (1) 52
Increase in equity reserve
in relation to options
issued - - - 775 - 775
Tax credit relating to
share options - - - 153 - 153
Reclassification following
exercise or lapse of options - - - (292) 292 -
Dividends paid - - - - (554) (554)
------------------------------- --------- --------- -------- ---------- ---------- --------
Transactions with owners 53 - - 636 (263) 320
------------------------------- --------- --------- -------- ---------- ---------- --------
Profit for the year - - - - 2,400 2,400
Other comprehensive income
for the year - - - (14) - (14)
------------------------------- --------- --------- -------- ---------- ---------- --------
Total comprehensive income
for the year - - - (14) 2,400 2,386
------------------------------- --------- --------- -------- ---------- ---------- --------
Balance at 30 June 2022 7,587 3,015 4,900 4,462 7,454 27,418
------------------------------- --------- --------- -------- ---------- ---------- --------
Proceeds from share issue 521 2,559 - - - 3,080
Increase in equity reserve
in relation to options
issued - - - 1,099 - 1,099
Tax credit relating to
share options - - - 405 - 405
Reclassification following
exercise or lapse of options - - - (2,918) 2,918 -
Dividends paid - - - - (839) (839)
------------------------------- --------- --------- -------- ---------- ---------- --------
Transactions with owners 521 2,559 - (1,414) 2,079 3,745
------------------------------- --------- --------- -------- ---------- ---------- --------
Profit for the year - - - - 4,206 4,206
Other comprehensive income
for the year - - - 8 - 8
------------------------------- --------- --------- -------- ---------- ---------- --------
Total comprehensive income
for the year - - - 8 4,206 4,214
------------------------------- --------- --------- -------- ---------- ---------- --------
Balance at 30 June 2023 8,108 5,574 4,900 3,056 13,739 35,377
------------------------------- --------- --------- -------- ---------- ---------- --------
Notes to the financial information for the year ended 30 June
2023
1. General information
Netcall plc (AIM: "NET", "Netcall", or the "Company"), is a
leading provider of customer engagement software, is a limited
liability company and 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 financial statements consolidate those of the Company
and its subsidiaries (together referred to as the 'Group').
The financial information set out in these final results has
been prepared in accordance with UK-adopted International
Accounting Standards in conformity with the requirements of the
Companies Act 2006. The accounting policies adopted in this results
announcement have been consistently applied to all the years
presented and are consistent with the policies used in the
preparation of the statutory accounts for the period ended 30 June
2023.
The consolidated financial information is presented in sterling
(GBP), which is the Company's functional and the Group's
presentation currency.
The financial information set out in these results does not
constitute the Company's statutory accounts for 2023 or 2022.
Statutory accounts for the years ended 30 June 2023 and 30 June
2022 have been reported on by the Independent Auditors; their
report was (i) unqualified; (ii) did not draw attention to any
matters by way of emphasis; and (iii) did not contain a statement
under 498(2) or 498(3) of the Companies Act 2006.
Statutory accounts for the year ended 30 June 2022 have been
filed with the Registrar of Companies. The statutory accounts for
the year ended 30 June 2023 will be delivered to the Registrar in
due course. Copies of the Annual Report 2023 will be posted to
shareholders on or about 19 November 2023. Further copies of this
announcement can be downloaded from the website www.netcall.com
.
As a result of the level of cash generated from operating
activities the Group has maintained a healthy liquidity position as
shown on the consolidated balance sheet. The Board has carried out
a going concern review and concluded that the Group has adequate
cash to continue in operational existence for the foreseeable
future. To support this the Directors have prepared cash flow
forecasts for a period in excess of 12 months from the date of
approving the financial statements. When preparing the cash flow
forecasts the Directors have reviewed a number of scenarios,
including the severe yet plausible downside scenario, with respect
to levels of new business and client retention. In all scenarios
the Directors were able to conclude that the Group has adequate
cash to continue in operational existence for the foreseeable
future.
3. Segmental analysis
Management consider 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, which is set out
on the consolidated income statement.
4. Material profit or loss items
The Group identified the following item in the prior year which
was material due to the significance of its nature and/or its
amount. It is listed separately here to provide a better
understanding of the financial performance of the Group in this and
the prior year.
2023 2022
GBP'000 GBP'000
------------------------------------- -------- --------
Post completion services expense(1) (365) (56)
(365) (56)
------------------------------------- -------- --------
(1) The former owners of Oakwood Technologies BV acquired in
October 2020 continued to work in the business following its
acquisition and in accordance with IFRS 3 a proportion of the
contingent consideration arrangement is treated as remuneration and
expensed in the income statement. The final payment under this
arrangement of GBP0.38m was made during the year.
5. 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.
30 June 30 June
2023 2022
---------------------------------------------------- -------- --------
Net earnings attributable to ordinary shareholders
(GBP'000) 4,206 2,400
Weighted average number of ordinary shares
in issue (thousands) 156,352 149,462
---------------------------------------------------- -------- --------
Basic earnings per share (pence) 2.69 1.61
---------------------------------------------------- -------- --------
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 year,
adjusted for potentially dilutive shares that are not
anti-dilutive.
30 June 30 June
2023 2022
----------------------------------------------- -------- --------
Weighted average number of ordinary shares
in issue (thousands) 156,352 149,462
Adjustments for share options (thousands) 10,630 8,150
Weighted average number of potential ordinary
shares in issue (thousands) 166,982 157,612
----------------------------------------------- -------- --------
Diluted earnings per share (pence) 2.52 1.52
----------------------------------------------- -------- --------
Adjusted 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 with a normalised rate of tax. The Board
believes this gives a better view of on-going 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:
GBP'000 30 June 2023 30 June 2022
--------------------------------------------------------------- ------------- -------------
Profit used for calculation of basic and diluted EPS 4,206 2,400
--------------------------------------------------------------- ------------- -------------
Share-based payments 1,640 964
Post-completion services (see note 4) 365 56
Amortisation of acquired intangible assets 522 522
Unwinding of discount - contingent consideration & borrowings 29 116
Tax effect of adjustments (1,548) (842)
Profit used for calculation of adjusted basic and diluted EPS 5,214 3,216
--------------------------------------------------------------- ------------- -------------
30 June 30 June
2023 2022
--------------------------------------------- -------- --------
Adjusted basic earnings per share (pence) 3.33 2.15
Adjusted diluted earnings per share (pence) 3.12 2.04
--------------------------------------------- -------- --------
6. Dividends
Statement of changes June 2022 balance
Cash flow statement in equity sheet
Year to June 2023 Paid Pence per share (GBP'000) (GBP'000) (GBP'000)
--------------------- --------- ---------------- -------------------- --------------------- ---------------------
Final ordinary
dividend for the
year to June 2022 31/1/23 0.54p 839 839 -
--------------------- --------- ---------------- -------------------- --------------------- ---------------------
839 839 -
------------------------------- ---------------- -------------------- --------------------- ---------------------
Statement of changes June 2022 balance
Cash flow statement in equity sheet
Year to June 2022 Paid Pence per share (GBP'000) (GBP'000) (GBP'000)
--------------------- --------- ---------------- -------------------- --------------------- ---------------------
Final ordinary
dividend for the
year to June 2021 8/2/22 0.37p 554 554 -
554 554 -
------------------------------- ---------------- -------------------- --------------------- ---------------------
It is proposed that this year's final ordinary dividend of 0.83p
pence per share will be paid to shareholders on 9 February 2024.
Netcall plc shares will trade ex-dividend from 28 December 2023 and
the record date will be 29 December 2023. The estimated amount
payable is GBP1.33m. The proposed final dividend is subject to
approval by shareholders at the Annual General Meeting and has not
been included as a liability in these financial statements.
7. Net funds reconciliation
30 June 30 June
GBP'000 2023 2022
------------------------------------------- -------- --------
Cash and cash equivalents 24,753 17,605
Borrowings - fixed interest and repayable
within one year (1) - (1,167)
Borrowings - fixed interest and repayable
after one year (1) - (2,304)
Lease liabilities (405) (698)
------------------------------------------- -------- --------
Net funds 24,348 13,436
------------------------------------------- -------- --------
(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 was
unsecured, had an annual interest rate of 8.5% payable quarterly in
arrears and was 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 was amortised
via the profit and loss account over the expected option life of
five years. The Company made an initial repayment of GBP3.5m in
November 2021, a scheduled repayment of GBP0.6m in September 2022
and in October 2022 redeemed the final GBP2.9m of the Loan Notes.
In September 2022, options were exercised and the Company received
GBP2.8m in proceeds and issued 4.8m new ordinary shares of 5p
each.
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END
FR BIBDGUGBDGXG
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October 11, 2023 02:00 ET (06:00 GMT)
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