TIDMNET
RNS Number : 8502B
Netcall PLC
13 October 2020
13 October 2020
NETCALL PLC
("Netcall", the "Company", or the "Group")
Final Results for the Year Ended 30 June 2020
Double digit revenue growth
Netcall plc (AIM: NET), a leading provider of L ow-code,
customer engagement and contact center software, today announces
its audited results for the year ended 30 June 2020.
Financial Highlights
-- Revenue up 10% to GBP25.1m (FY19: GBP22.9m)
-- Total annual contract value(1) ('ACV') at 30 June 2020 up 7%
year over year to GBP16.8m (30 June 2019: GBP15.7m)
-- Cloud services ACV at 30 June 2020 up 25% year over year to GBP7.5m (30 June 2019: GBP6.0m)
-- Adjusted EBITDA(2) on an IFRS 16 basis up 29% to GBP4.41m
(FY19: GBP3.41m on an IAS 17 basis). Adjusted EBITDA on an IAS17
basis increased by 21% to GBP4.12m
-- Profit before tax of GBP0.50m (FY19: GBP0.75m)
-- Cash generated from operations of GBP9.39m (FY19: GBP6.84m)
including GBP2.21m of deferred VAT payments
-- Group cash at 30 June 2020 was GBP12.7m (FY19: GBP7.77m) more
than offsetting borrowings of GBP6.75m (FY19: GBP6.63m)
-- Final ordinary dividend of 0.25p proposed, an increase of 25% (FY19: 0.20p)
Operational Highlights
-- Solid trading in the financial year including strong demand
in the final quarter despite COVID-19
-- Continued high growth for cloud and Low-code solutions
-- Organisation remained intact during the pandemic without
requirement for furloughing, redundancies or pay-cuts
-- Launched several releases to the Liberty platform including
solutions catering for COVID-19 requirements
-- Several large customer implementations went live during the year
Henrik Bang, CEO of Netcall , commented:"Netcall performed
excellently in the year, delivering double-digit revenue and cloud
ACV growth. We experienced solid demand in our largest market
segments of healthcare, government and financial services, where
our cloud and Low-code business continued to grow
significantly.
"Following the outbreak of COVID-19, customer demand continued
to be strong and the organisation remained firmly intact without
furloughing, pay-cuts or redundancies. Throughout the challenging
period, the Netcall team has shown tremendous flexibility,
creativity and resilience, providing support to our customers,
especially those within the NHS, and I would like to thank
everybody for their contribution.
"The new financial year has begun well, with the Group trading
strongly and ahead of last year in the first three months.
Notwithstanding the positive start to the year and the Group's
significant recurring revenues, the Board is mindful of the current
economic uncertainty and the impact it may have on customers, which
we continue to monitor closely. The acceleration of organisations'
digital transformation initiatives represents a significant
long-term opportunity for Netcall and provides the Board with
confidence in the future prospects of the Group."
(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.
(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.
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 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 plc
Netcall's Liberty software platform with Low-code, customer
engagement and contact centre 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, ITV and Nationwide Building Society.
Prior to publication the information communicated in this
announcement was deemed by the Company to constitute inside
information as stipulated under the Market Abuse Regulations (EU)
No 596/2014 ('MAR') With the publication of this announcement, this
information is now considered to be in the public domain.
Introduction
Netcall delivered an excellent trading performance in the year,
achieving double digit revenue and adjusted EBITDA growth, whilst
reacting to the disruption caused by the global pandemic. Our team
adapted fantastically to the changes and showed tremendous
flexibility, resilience and creativity, quickly delivering
innovative solutions to support our customers as they responded to
the lockdown measures introduced.
Digital transformation is rapidly advancing across our customer
base and key market segments. Solutions enabled by our Liberty
platform touch many aspects of our daily lives, whether it be
enabling house-buyers to apply for mortgages, to make insurance
claims, providing businesses with easy means to apply for COVID-19
business support or enabling hospitals to safely manage socially
distanced outpatient appointments. Our COVID-19 related apps and
solutions which with traditional software development might
previously have taken months, if not years, to be launched, were
live within weeks, helping our customers to support their patients,
customers and citizens. This demonstrates the power of our Liberty
platform and the ability of our team to combine technology
capabilities and business knowledge to create solutions which
enable organisations to implement more lean and automated
operations, delivering better experiences for their customers and
employees.
As a result of solid demand throughout the financial year, cloud
ACV grew by 25% to GBP7.5m (FY19: GBP6.0m) contributing to a 7%
growth in total ACV to GBP16.8m. The growth in ACV came through new
customer wins and cross-sales of our expanded product suite,
combined with high customer retention and renewal rates. Low-code
and cloud bookings continued to drive sales, while we also saw
positive trading performance from product sales.
As a result, revenues increased by 10% to GBP25.1m which lifted
the Group's adjusted EBITDA by 29% to GBP4.41m. Low-code
subscription revenue grew 29% contributing to an overall growth in
Low-code revenue of 17% to GBP8.99m (FY19: GBP7.66m), now
representing 36% of Group revenues (FY19: 33%).
The business model is underpinned by our highly profitable and
cash generative contact centre and communication revenue streams,
which grew 9% in the year. The profits and cash generated from this
business sector provide the means to invest in our Low-code and
cloud operations, as we continue to capitalise on the rapidly
expanding digital automation market opportunity.
Cash collection was particularly strong, resulting in cash
generated from operations of GBP9.39m and Group cash at 30 June
2020 of GBP12.7m, (FY19: GBP7.77m) of which GBP2.21m was deferred
VAT payments, resulting in a normalised cash position of GBP10.5m
which exceeds borrowings of GBP6.75m (FY19: GBP6.63m).
Response to COVID-19
During February and March 2020, we tested our contingency plans
to ensure the organisation was ready when we started working from
home in March. The team adapted quickly to the changes which
resulted in minimal disruption to the business, with no negative
impact on productivity or ability to support and market to
customers.
Due to the pandemic's impact on some of our customers, we
adjusted our roadmap priorities to focus on the rapid development
of new applications to support them, harnessing the tremendous
speed and power of our Low-code platform. This included areas such
as enabling home working for customers' employees, assisting
hospitals in managing changes to outpatient processes and COVID-19
responses, as well as supporting councils in providing enhanced
citizen and local business support. Today, we have multiple new
solutions available, including in our AppShare, and more are in
development.
These activities helped underpin continued good demand from our
customers in the final quarter with the healthcare sector in
particular performing strongly, where we had an increased uptake of
Liberty Converse and Connect, both on premise and for the first
time in the cloud, as well as our Low-code platform Liberty Create,
through our Patient Hub. The strong performance in healthcare,
public sector and financial services offset limited delays and
cancellations in some smaller segments of our customer base, such
as travel and transportation, where customers faced unprecedented
challenges and we worked with them to help them though the initial
stage of the crisis. This caused our exit ACV figure to be dampened
slightly, but had minimal impact on reported revenue.
As a result of the overall good 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, have been implemented and the
Company retained its strong focus on operational efficiency.
Moving forward, the changes in society brought about by the
pandemic, including the workplace, will continue to accelerate
organisations' digital transformation initiatives, as they look for
ways to better serve their customers, employees and citizens. These
changes support long-term significant growth drivers for
Netcall.
Current trading and outlook
The new financial year has begun well, with the Group trading
strongly and ahead of the last fiscal period in the first three
months. Notwithstanding the strong start to the current year and
significant recurring revenues, the Board is mindful of the current
economic disruptions and the impact it may have on customers, which
we continue to monitor closely. The acceleration of organisations'
digital transformation initiatives presents a significant long-term
opportunity for Netcall and provides the Board with confidence in
the future prospects of the Group.
Business Review
Netcall helps organisations transform their customer engagement
activities and enables digital transformation faster and more
efficiently, empowering them to improve customer experiences and
operational efficiencies. We achieve this by delivering a
market-leading software platform, Liberty, that addresses
best-in-class customer experience and digital process
automation.
The Liberty platform is today used by more than 600
organisations, across all sectors including financial services,
local government and healthcare, making life easier for the people
they serve.
The platform includes three core solutions; Liberty Create - a
cloud based Low-code platform for digital process automation,
Liberty Connect - a cloud based conversational messaging and
chatbot platform and Liberty Converse - a complete omnichannel
contact centre platform.
In harmony, these solutions empower business users and IT
developers, at a wide-range of organisations including the likes of
Hampshire Trust Bank and Dreams, to collaboratively deliver
solutions that support leaner and more customer-centric
organisations .
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 to the Group's focused organic strategies, the Board
continues to look for selective acquisitions with complementary
proprietary software and/or additional customers in our target
markets.
Expansion of our customer base
We primarily target organisations with large numbers of
customers and/ or employees and, in many cases, are subject to a
high level of regulation. This mainly includes the financial
services, healthcare and government sectors where we currently have
a significant market presence, and which generated 84% of Group
revenues in 2020. This has provided the Group with resilience
during the COVID-19 pandemic, with limited exposure to those
sectors more impacted by the lockdown.
Our marketing activities include the recent release of
'LaunchPads', which are groups of applications targeted for
particular industry verticals, such as the water industry, which
provide prospective customers with an easy entry point to Liberty
Create.
New customer implementations include:
-- A FTSE-100 financial services company used Liberty to
streamline a number of complex insurance claims processes and
manage the high volume of claims, as well as improving
communication with customers while their claim was being processed.
Through Liberty Create the financial services company has now
automated processes and customer communications for various
insurance products, replacing a legacy implementation.
-- A global broadcaster has adopted Liberty to automate and
streamline advert bookings across multiple products improving
efficiency, management and reporting. The Liberty platform has
replaced a legacy solution involving significant manual
intervention.
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 in three areas:
-- Low-code solutions, which represent the largest opportunity
as our existing customers digitise and modernise their operations
enabling them to further leverage their existing Liberty estate.
The ACV of a Low-code cross-sales is a significant uplift on the
average customer spend which emphasises the potential value of
Low-code sales into the existing customer base;
-- evolution of transitioning our premise-based customers to
cloud solutions. This opportunity is in its infancy where we see
growing number of customers transitioning their Liberty estate to a
cloud model; and
-- on-going upgrades and addition of modules to the Liberty
platform as customers expand the use of the platform and we release
new features and modules.
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 well over
100, several of which have been designed and uploaded by our
customers and partners. From launch in September 2019, there are
today more than 300 different organisations participating in the
community with developers and business users benefiting from the
apps, best practice sharing and previews of new functionality among
other things.
This includes the module Citizen Hub, for local authorities,
which is a suite of pre-built business processes and citizen
portals that can be downloaded for Liberty Create and integrated
with our customer engagement solutions. We have a number of live
customers for Citizen Hub and an extensive roadmap of additional
applications to be added.
For example, Croydon Council used Liberty Create to build and
launch a business rates claim solution in just nine days following
the outbreak of COVID-19. The solution included a business register
which allowed applicants to follow their claim progress right the
way through, enabling the office team to check and process the
grants that the business owners desperately needed.
Continued innovation and enhancement of our platform
We continue to invest in the technical enhancement of our
Liberty platform and innovations over the financial year
included:
-- The incorporation of Google Cloud's Artificial Intelligence
services within our Low-code, Liberty Create solution, enabling the
quick creation of intelligent enterprise applications. We also
completed the development of our Low-code Monitor Studio which
enables an organisation to automate the entirety of the software
development lifecycle within the Liberty Create platform; deploying
apps through the Controller; developing using Build/Code Studios;
testing using test Studio and now monitoring using Monitor Studio;
all on a single platform through a unified interface.
-- Within our Contact Centre, Liberty Converse solution, the
development of integrated workforce management which allows
managers to plan shifts and monitor adherence in real-time,
ensuring that Contact Centres are staffed correctly in order to
meet customer demand. An integrated softphone for agents that
allows calls to be handled directly within the app, means there is
no need for separate handsets. Furthermore, we added the ability to
queue back-office tasks (such as order processing, expenses, and HR
activities) into appropriately skilled agents and thereby
automatically distributing all kinds of work while providing
visibility of workload and employee performance. This insight can
help improve throughput, achieve SLAs and deliver an enhanced
customer experience.
-- Within our conversational messaging and bot platform, Liberty
Connect, the launch of Web Messaging introduced a new
communications channel, enabling consumers to engage in both
inbound and proactive outbound messaging on customer websites. This
is complemented by a natural language enabled bot designer for
creating tailored conversation flows and intelligent FAQ answers
that work seamlessly across web, social, and SMS channels.
Moreover, customers can further increase their self-service and
automation capabilities by integrating their back-end systems into
their bots with the introduction of Connect's app developer
framework.
COVID-19 related innovation
A number of innovations on our road-map have been fast-tracked
as a result of the COVID-19 pandemic. The increased adoption of
Microsoft Teams within our core customer base drove the development
of an integration being made available for both Liberty Create and
Liberty Converse. Native video was also added to Liberty Create to
support virtual appointments within apps built on the Low-code
platform. Patient Hub, our digital appointment management service
built using Liberty Create, can now deliver COVID-19 results to
patients, ask patients to confirm they do not have symptoms before
attending appointments, and help hospitals manage patients waiting
outside rather than in a waiting room using our 'I've Arrived'
app.
Internally, we have also used our Liberty platform to drive
digital transformation. This includes our new Liberty Create based
CRM system, "Hive", our new support portal, "Nest", and our new
help portal, "Docs", on our Liberty Create platform, just like our
"Community" app is managed and driven by Liberty Create. In
addition, we are using the latest version of our Liberty Converse,
deployed in the Amazon cloud, AWS, to support customer
enquiries.
Growing our 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.
The year saw the launch of a new Managed Service Partner
programme, building on the initial success of our partner programme
last year. We now offer various packages, each including a mix of
sales enablement, marketing support and technical training. The
first partners have now signed up to the programme and initial
customer wins have been secured. We will continue to grow this part
of the business in the year ahead.
New partners include:
-- CGI Group, among the largest independent IT and business
consulting services firms' in the world, with approximately 77,500
consultants and professionals across the globe. CGI Group has
developed its own solutions based on Liberty Create.
-- Gobeyond, a leading provider of consulting, training,
innovative technology and next generation managed services through
whom we won an initial contract supplying Liberty Create to a
financial services customer.
Financial Review
The Group's revenue comprises the following components:
-- Cloud services: revenue subscription and usage fees for cloud-based offerings.
-- Product support contracts: provision of software updates,
system monitoring and technical support services for our
products.
-- Communications services: fees for telephony and messaging services.
-- Product revenues: software license sales with supporting hardware.
-- Professional services: consultancy, implementation and training services.
The Group continues its transition to a digital cloud business,
having reached an inflection point last year, with new Cloud
services bookings continuing to exceed new Product and Product
support contract sales.
Group revenue increased 10% to GBP25.1m (FY19: GBP22.9m) of
which Low-code solutions now represent GBP8.99m (FY19: GBP7.66m) of
Group revenues, increasing 17% in the year.
As a result of the change in sales mix towards recurring revenue
models, total ACV at 30 June 2020 increased by 7% year over year to
GBP16.8m, with Cloud services ACV up 25% year over year to GBP5.4m.
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. The table below sets out ACV at the end of the last three
financial years:
GBP'm ACV FY20 FY19 FY18
------------------ ----- ----- -----
Low-code 5.4 4.5 3.3
Liberty cloud 2.1 1.5 1.5
------------------ ----- ----- -----
Total cloud 7.5 6.0 4.8
Support contract 9.3 9.7 9.4
Total 16.8 15.7 14.2
================== ===== ===== =====
The table below sets out revenue by component for the last three
financial years:
GBP'm Revenue FY20 FY19 FY18
-------------------------------------------------- ----- ----- -----
Cloud services 6.6 5.7 4.3
Product support contracts 9.6 9.3 8.9
-------------------------------------------------- ----- ----- -----
Total Cloud services & Product support contracts 16.1 15.0 13.2
Communication services 1.9 1.8 2.3
Product 3.1 2.3 3.1
Professional services 4.0 3.8 3.3
Total 25.1 22.9 21.9
================================================== ===== ===== =====
Revenue from Cloud services increased by 14% to GBP6.55m (FY19:
GBP5.74m) reflecting the higher year over year Cloud service ACV.
The comparative period figure included a one-off termination fee of
GBP0.5m which excluding this gives an underlying growth rate of
25%.
Product support contract revenue increased by 3% to GBP9.56m
(FY19: GBP9.26m) as a result of the contribution of new product
sales and price rises.
Cloud service and product support contract revenues, which are
recurring in nature, total GBP16.1m (FY19: GBP15.0m) are 64% of
overall revenues (FY19: 66%).
Communication services revenue increased by 7% to GBP1.93m
(FY19: GBP1.81m) due to higher application driven messaging volumes
and call-back usage.
Product revenue increased by 34% to GBP3.07m (FY19: GBP2.29m)
due to higher sales to NHS and Public Sector organisations.
Professional services revenue increased 5% to GBP4.01m (FY19:
GBP3.81m) due to demand for implementation services for Cloud
service and Product solutions. The overall demand for our
professional services is dependent on:
-- the mix of direct and indirect sales of our solutions, in the
latter case our 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 was 88% (FY19: 90%) mainly due to an
increase in outsourced and insourced consultants from partners to
supplement our in-house teams in delivering professional
services.
Administrative expenses, before depreciation, amortisation,
impairment, share-based payments and acquisition related items
increased to GBP17.8m (FY19: GBP17.1m) reflecting an underlying
increase of 5%, a result of the previously announced investment
programme into our business, offset by a reduction of GBP0.30m in
operating lease payments following the Group's adoption of IFRS 16
'Leases' (see note 8 for further information).
Consequently, Group adjusted EBITDA on an IFRS 16 basis
increased by 29% to GBP4.41m (FY19: GBP3.41m), a margin of 18% of
revenue (FY19: 15%). Adjusted EBITDA on an IAS17 basis increased by
21% to GBP4.12m (see note 8 for further information).
Profit before tax was GBP0.50m (FY19: GBP0.75m) after accounting
for acquisition related items and interest on borrowings taken out
to fund the acquisition of MatsSoft in August 2017 and higher
depreciation and amortisation of capitalised development.
The Group tax charge of GBP0.01m (FY19: GBP0.14m) represents an
effective rate of tax of 1% (FY19: 10%) on adjusted profit before
tax. The underlying effective rate of tax is lower than the
headline rate of corporation tax principally due to deductions for
R&D expenditure.
Basic earnings per share was 0.34 pence (FY19: 0.43 pence) and
increased by 27% to 1.01 pence on an adjusted basis (FY19: 0.80
pence). Diluted earnings per share was 0.33 pence (FY19: 0.41
pence) and increased 28% to 0.97 pence on an adjusted basis (FY19:
0.76 pence).
Cash generated from operations increased by 37% to GBP9.39m
(FY19: GBP6.84m), a conversion of 213% (FY19: 202%) of adjusted
EBITDA. The normalised cash conversion rate was 163% when adjusted
for GBP2.21m of VAT payments that were deferred due to COVID-19
until March 2021. In addition, the comparative including GBP0.30m
of rental payments under IAS 17 Leases which are now accounted as
lease liabilities under IFRS 16 Leases (see note 8).
Spending on research and development, including capitalised
software development, was GBP3.59m (FY19: GBP3.21m) of which
capitalised software expenditure was GBP1.71m (FY19: GBP1.53m).
Total capital expenditure was GBP1.86m (FY19: GBP2.96m); the
balance after capitalised development, being GBP0.16m (FY19:
GBP1.43m) was significantly lower as the comparative period
included new office fit-out.
The Company acquired MatsSoft Limited in August 2017. The
purchase agreement provided for potential further cash and shares
to be paid dependent on achieving specified performance targets
over various periods from completion of the acquisition. In October
2019, the fair value of the remaining contingent consideration was
re-estimated at GBP1.76m resulting in GBP0.04m being debited to the
income statement as a change in estimate of fair value. During the
period the Company paid GBP1.76m comprising GBP1.68m in cash and
GBP0.08m in shares under this arrangement, bringing the total
consideration paid to GBP15.6m. No further payments are expected
under this agreement.
To support the acquisition, the Company issued a GBP7m Loan
Note. Interest payments under the Loan Note in the period totalled
GBP0.48m (FY19: GBP0.59m). The Loan Note is unsecured and is
repayable in six instalments from 30 September 2022 to 31 March
2025. See note 7 for further information.
The Group applied IFRS 16 Leases for the first time, whereby it
recognised lease liabilities in relation to leases which had
previously been classified as 'operating leases' under the
principles of IAS 17 'Leases'. IFRS 16 was adopted using the
modified retrospective approach and lease liabilities of GBP0.90m
and a right-of-use asset GBP0.82m were recognised on 1 July 2019.
See note 8 for further information.
As a result of these factors, net funds were GBP4.82m at 30 June
2020 (30 June 2019: GBP1.14m). See note 7 for further
information.
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 0.25p (FY19: 0.20p). If
approved, the final dividend will be paid on 9 February 2021 to
shareholders on the register at the close of business on 29
December 2020.
Audited consolidated income statement for the year ended 30 June
2020
2020 2019
GBP'000 GBP'000
-------------------------------------------------- --------- ---------
Revenue 25,114 22,903
Cost of sales (2,930) (2,329)
Gross profit 22,184 20,574
Administrative expenses (20,926) (19,058)
Other losses - net (24) (11)
--------------------------------------------------- --------- ---------
Adjusted EBITDA 4,413 3,411
Depreciation (657) (310)
Net loss on disposal of property, plant
and equipment - (2)
Amortisation of acquired intangible
assets (483) (512)
Amortisation of other intangible assets (1,344) (1,120)
Change in fair value of contingent consideration
(see note 4) (37) 865
Post-completion services (see note 4) (33) (244)
Share-based payments (625) (583)
--------------------------------------------------- --------- ---------
Operating profit 1,234 1,505
Finance income 38 41
Finance costs (775) (794)
--------------------------------------------------- --------- ---------
Finance costs - net (737) (753)
Profit before tax 497 752
Tax charge (10) (142)
--------------------------------------------------- --------- ---------
Profit for the year 487 610
=================================================== ========= =========
Earnings per share - pence
Basic 0.34 0.43
Diluted 0.33 0.41
=================================================== ========= =========
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 2020
2020 2019
GBP'000 GBP'000
------------------------------------------------- -------- --------
Profit for the year 487 610
Other comprehensive income
Items that may be reclassified to profit
or loss
Exchange differences arising on translation
of foreign operations (14) (17)
Total other comprehensive income for the
year (14) (17)
-------------------------------------------------- -------- --------
Total comprehensive income for the year 473 593
================================================== ======== ========
All of the comprehensive income for the year is attributable to
the shareholders of Netcall plc.
Audited consolidated balance sheet at 30 June 2020
2020 2019
GBP'000 GBP'000
------------------------------------------- --- -------- --------
Assets
Non-current assets
Property, plant and equipment 960 1,210
Right-of-use assets 970 -
Intangible assets 29,078 29,188
Deferred tax asset 482 501
Financial assets at fair value through
other comprehensive income 72 72
Total non-current assets 31,562 30,971
------------------------------------------- --- -------- --------
Current assets
Inventories 139 165
Other current assets 1,392 1,314
Contract assets 585 1,178
Trade receivables 3,957 3,864
Other financial assets at amortised cost 4 100
Cash and cash equivalents 12,710 7,769
------------------------------------------- --- -------- --------
Total current assets 18,787 14,390
------------------------------------------- --- -------- --------
Total assets 50,349 45,361
------------------------------------------- --- -------- --------
Liabilities
Non-current liabilities
Contract liabilities 104 207
Borrowings 6,745 6,632
Lease liabilities 902 -
Deferred tax liabilities 842 851
Provisions - 77
------------------------------------------- --- -------- --------
Total non-current liabilities 8,593 7,767
------------------------------------------- --- -------- --------
Current liabilities
Trade and other payables 6,907 5,265
Contract liabilities 11,724 10,395
Lease liabilities 248 -
Total current liabilities 18,879 15,660
------------------------------------------------ -------- --------
Total liabilities 27,472 23,427
------------------------------------------------ -------- --------
Net assets 22,877 21,934
=========================================== === ======== ========
Equity attributable to owners of Netcall
plc
Share capital 7,312 7,259
Share premium 3,015 3,015
Other equity 4,900 4,832
Other reserves 3,996 4,440
Retained earnings 3,654 2,388
------------------------------------------- --- -------- --------
Total equity 22,877 21,934
=========================================== === ======== ========
Audited consolidated statement of cash flows for the year ended
30 June 2020
2020 2019
GBP'000 GBP'000
----------------------------------------------- -------- --------
Cash flows from operating activities
Profit before income tax 497 752
Adjustments for:
Depreciation and amortisation 2,484 1,942
Loss on disposal of property, plant
and equipment - 2
Share-based payments 625 583
Net finance costs 737 753
Other non-cash expenses 1 -
Changes in operating assets and liabilities,
net of effects from purchasing of subsidiary
undertaking:
Decrease in inventories 26 51
(Increase)/ decrease in trade receivables (92) 2,216
Decrease in contract assets 589 252
Decrease in other financial assets at
amortised cost 100 24
Increase in other current assets (107) (257)
Increase/ (decrease) in trade and other
payables 3,334 (242)
Increase in contract liabilities 1,223 862
Decrease in provisions (29) (95)
------------------------------------------------ -------- --------
Cash flows from operations 9,388 6,843
------------------------------------------------ -------- --------
Interest received 38 41
Interest paid (6) (4)
Net cash inflow from operating activities 9,420 6,880
------------------------------------------------ -------- --------
Cash flows from investing activities
Payment for acquisition of subsidiary,
net of cash acquired (1,679) (591)
Payment for property, plant and equipment (146) (1,078)
Payment of software development costs (1,708) (1,532)
Payment for other intangible assets (9) (350)
Proceeds from sale of property, plant
and equipment - 1
Net cash outflow from investing activities (3,542) (3,550)
------------------------------------------------ -------- --------
Cash flows from financing activities
Proceeds from issues of ordinary shares 39 16
Interest paid on Loan Notes (478) (590)
Principle element of lease payments (199) -
Dividends paid to Company's shareholders (287) (758)
------------------------------------------------ -------- --------
Net cash outflow from financing activities (925) (1,332)
------------------------------------------------ -------- --------
Net increase in cash and cash equivalents 4,953 1,998
Cash and cash equivalents at beginning
of the financial year 7,769 5,779
Effects of exchange rate on cash and
cash equivalents (12) (8)
================================================ ======== ========
Cash and cash equivalents at end of
financial year 12,710 7,769
================================================ ======== ========
Audited consolidated statement of changes in equity at 30 June
2020
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 2018 7,242 3,015 4,832 3,917 2,482 21,488
-------------------------------- --------- --------- -------- ---------- ---------- --------
Proceeds from share issue 16 - - - - 16
Increase in equity reserve
in relation to options
issued - - - 633 - 633
Tax debit relating to
share options - - - (38) - (38)
Reclassification following
exercise or lapse of options 1 - - (55) 54 -
Dividends paid - - - - (758) (758)
-------------------------------- --------- --------- -------- ---------- ---------- --------
Transactions with owners 17 - - 540 (704) (147)
-------------------------------- --------- --------- -------- ---------- ---------- --------
Profit for the year - - - - 610 610
Other comprehensive income
for the year - - - (17) - (17)
-------------------------------- --------- --------- -------- ---------- ---------- --------
Profit and total comprehensive
income for the year - - - (17) 610 593
-------------------------------- --------- --------- -------- ---------- ---------- --------
Balance at
30 June 2019 as original
presented 7,259 3,015 4,832 4,440 2,388 21,934
-------------------------------- --------- --------- -------- ---------- ---------- --------
Change in accounting policy
(note 8) - - - - 14 14
Restated balance at
30 June 2019 7,259 3,015 4,832 4,440 2,402 21,948
Issue of ordinary shares
as consideration for an
acquisition in a business
combination 14 - 68 - - 82
Proceeds from share issue 39 - - - - 39
Increase in equity reserve
in relation to options
issued - - - 622 - 622
Reclassification following
exercise or lapse of options - - - (1,052) 1,052 -
Dividends paid - - - - (287) (287)
-------------------------------- --------- --------- -------- ---------- ---------- --------
Transactions with owners 53 - 68 (430) 765 456
-------------------------------- --------- --------- -------- ---------- ---------- --------
Profit for the year - - - - 487 487
Other comprehensive income
for the year - - - (14) - (14)
-------------------------------- --------- --------- -------- ---------- ---------- --------
Profit and total comprehensive
income for the year - - - (14) 487 473
-------------------------------- --------- --------- -------- ---------- ---------- --------
Balance at
30 June 2020 7,312 3,015 4,900 3,996 3,654 22,877
-------------------------------- --------- --------- -------- ---------- ---------- --------
Notes to the financial information for the year ended 30 June
2020
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 1st Floor,
Building 2, Peoplebuilding Estate, Maylands Avenue, Hemel
Hempstead, Hertfordshire, HP2 4NW 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 preliminary results
has been prepared in accordance with International Financial
Reporting Standards ('IFRSs') as adopted by the European Union. 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 2020 as updated for new standards and
interpretations effective from 1 July 2019. The Group has adopted
IFRS 16 'Leases' from 1 July 2019, replacing IAS 17 'Leases', see
note 8 for details. No other significant changes to accounting
policies are expected for the year ending 30 June 2020.
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 2020 or 2019.
Statutory accounts for the years ended 30 June 2020 and 30 June
2019 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 2019 have been
filed with the Registrar of Companies. The statutory accounts for
the year ended 30 June 2020 will be delivered to the Registrar in
due course. Copies of the Annual Report 2020 will be posted to
shareholders on or about 17 November 2020. Further copies of this
announcement can be downloaded from the website www.netcall.com
.
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, share-based
payments, non-recurring transaction costs, which is set out on the
consolidated income statement.
4. Material profit or loss items
The Group identified a number of items which are material due to
the significance of their nature and/or their amount. These are
listed separately here to provide a better understanding of the
financial performance of the Group.
2020 2019
GBP'000 GBP'000
----------------------------------------------------- -------- --------
Change in fair value of contingent consideration(1) (37) 865
Post completion services expense(2) (33) (244)
(80) 621
----------------------------------------------------- -------- --------
(1) The purchase agreement of MatsSoft Ltd provided for
potential further cash and shares to be paid dependent on achieving
specified performance targets over various periods from completion
of the acquisition. In October 2019, the fair value of the
remaining contingent consideration was re-estimated at GBP1.76m
resulting in GBP0.04m being debited to the income statement as a
change in estimate of fair value. During the period the Company
paid GBP1.76m comprising GBP1.68m in cash and GBP0.08m in shares
under this arrangement, bringing the total consideration paid to
GBP15.6m. No further payments are expected under this
agreement.
(2) A number of former owners of MatsSoft Ltd 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.
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
2020 2019
---------------------------------------------------- -------- --------
Net earnings attributable to ordinary shareholders
(GBP'000) 487 610
Weighted average number of ordinary shares
in issue (thousands) 143,588 143,038
---------------------------------------------------- -------- --------
Basic earnings per share (pence) 0.34 0.43
---------------------------------------------------- -------- --------
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
2020 2019
----------------------------------------------- -------- --------
Weighted average number of ordinary shares
in issue (thousands) 143,588 143,038
Adjustments for share options 5,839 6,085
Weighted average number of potential ordinary
shares in issue (thousands) 149,427 149,123
----------------------------------------------- -------- --------
Diluted earnings per share (pence) 0.33 0.41
----------------------------------------------- -------- --------
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 2020 30 June 2019
--------------------------------------------------------------- ------------- -------------
Profit used for calculation of basic and diluted EPS 487 610
Change in fair value of contingent consideration (see note 4) 37 (865)
Share-based payments 625 583
Post completion services (see note 4) 33 244
Amortisation of acquired intangible assets 483 512
Unwinding of discount - contingent consideration & borrowings 123 181
Tax effect of adjustments (332) (125)
Profit used for calculation of adjusted basic and diluted EPS 1,456 1,140
--------------------------------------------------------------- ------------- -------------
30 June 30 June
2020 2019
--------------------------------------------- -------- --------
Adjusted basic earnings per share (pence) 1.01 0.80
Adjusted diluted earnings per share (pence) 0.97 0.76
--------------------------------------------- -------- --------
6. Dividends
Statement of changes June 2020 balance
Cash flow statement in equity sheet
Year to June 2020 Paid Pence per share (GBP'000) (GBP'000) (GBP'000)
---------------------- -------- ---------------- -------------------- --------------------- ---------------------
Final ordinary
dividend for the
year to June 2019 5/2/20 0.20p 287 287 -
---------------------- -------- ---------------- -------------------- --------------------- ---------------------
287 287 -
------------------------------- ---------------- -------------------- --------------------- ---------------------
Statement of changes June 2019 balance
Cash flow statement in equity sheet
Year to June 2019 Paid Pence per share (GBP'000) (GBP'000) (GBP'000)
---------------------- -------- ---------------- -------------------- --------------------- ---------------------
Final ordinary
dividend for the
year to June 2018 6/2/19 0.53p 758 758 -
758 758 -
------------------------------- ---------------- -------------------- --------------------- ---------------------
It is proposed that this year's final ordinary dividend of 0.25
pence per share will be paid to shareholders on 9 February 2021.
Netcall plc shares will trade ex-dividend from 24 December 2020 and
the record date will be 29 December 2020. The estimated amount
payable is GBP0.36m. 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 2020 2019
------------------------------------------- -------- --------
Cash and cash equivalents 12,710 7,769
Borrowings - fixed interest and repayable
after one year (1) (6,745) (6,632)
Lease liabilities (1,150) -
------------------------------------------- -------- --------
Net funds 4,815 1,137
------------------------------------------- -------- --------
(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.
8. IFRS 16 'Leases'
The Group has adopted IFRS 16 'Lease's retrospectively from 1
July 2019, but has not restated comparatives for the 30 June 2019
reporting period, as permitted under the specific transition
provisions in the standard. The reclassifications and the
adjustments arising from the new leasing rules are therefore not
recognised in the opening balance sheet on 1 July 2019.
On adoption of IFRS 16, the Group recognised lease liabilities
in relation to leases which had previously been classified as
'operating leases' under the principles of IAS 17 Leases. These
liabilities were measured at the present value of the remaining
lease payments, discounted using an incremental borrowing rate as
of 1 July 2019. The weighted average incremental borrowing rate
applied to the lease liabilities on 1 July 2019 was 3.25%.
In applying IFRS 16 for the first time, the Group has used the
following practical expedients permitted by the standard:
-- applying a single discount rate to a portfolio of leases with
reasonably similar characteristics;
-- relying on previous assessments on whether leases are onerous
as an alternative to performing an impairment review - there were
no onerous contracts as at 1 July 2019;
-- excluding initial direct costs for the measurement of the
right-of-use asset at the date of initial application; and,
-- using hindsight in determining the lease where the contract
contains options to extend or terminate the lease.
The Group has also elected not to reassess whether a contract
is, or contains a lease at the date of initial application.
Instead, for contracts entered into before the transition date the
group relied on its assessment made applying IAS 17 and
Interpretation 4 Determining whether an Arrangement contains a
Lease.
Measurement of lease liabilities
GBP'000
------------------------------------------------------------------- -----
Operating lease commitments at 30 June 2019 770
Add property lease dilapidations 227
Discounted using the incremental cost of borrowing at 1 July 2019 (93)
Lease liability recognised at 1 July 2019 904
------------------------------------------------------------------- -----
Of which are:
Current lease liabilities 179
Non-current lease liabilities 725
------------------------------------------------------------------- -----
904
------------------------------------------------------------------- -----
Measurement of right-of-use assets
The associated right-of-use assets were measured at the amount
equal to the lease liability, adjusted by the amount of any prepaid
or accrued lease payments relating to that lease recognised in the
balance sheet as at 30 June 2019.
Adjustments recognised in the balance sheet on 1 July 2019
The change in accounting policy affected the following items in
the balance sheet on 1 July 2019.
GBP'000
------------------------------------------- ------
Right-of-use assets 819
Prepayments (15)
Accruals 37
Lease liabilities (904)
Provisions - property lease dilapidations 77
Net impact on retained earnings 14
------------------------------------------- ------
Impact of change on income statement
In order to show the impact of IFRS 16 and to facilitate a
comparison of results with the prior year, a reconciliation is
presented below for the year ended 30 June 2020 as reported on an
IFRS 16 basis with the former IAS17 basis.
30 June 2020
GBP'000 (IFRS 16 basis) IFRS 16 impact 30 June 2020 (IAS 17 basis)
-------------------------------------------------- ------------------ --------------- ----------------------------
Adjusted EBITDA 4,413 (297)(1) 4,116
Depreciation (657) 261(2) (396)
Amortisation of acquired intangible assets (483) - (483)
Amortisation of other intangible assets (1,344) - (1,344)
Change in fair value of contingent consideration (37) - (37)
Post-completion services (33) - (33)
Share-based payments (625) - (625)
Finance costs - net (737) 32(3) (705)
Profit before tax 497 (4) 493
================================================== ================== =============== ============================
(1) reduced lease rental charge on IFRS 16 basis
(2) additional depreciation on right-of-use asset recognised
under IFRS 16
(3) additional interest cost on leases recognised under IFRS
16
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END
FR FLFEDITLFLII
(END) Dow Jones Newswires
October 13, 2020 02:00 ET (06:00 GMT)
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