REG - Netcall PLC - Final Results
09/10/2024 07:00
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RNS Number : 4346H Netcall PLC 09 October 2024
9 October 2024
NETCALL PLC
("Netcall", the "Company" or the "Group")
Final Results for the Year Ended 30 June 2024
Strong performance driven by cloud demand and enhanced product proposition
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 2024.
Financial highlights
FY24 FY23
Total Revenue £39.1m £36.0m +9%
Cloud services revenue £19.8m £16.6m +19%
Total annual contract value((1)) ("ACV") £32.2m £27.9m +15%
Cloud services ACV £22.3m £18.1m +23%
Adjusted EBITDA((2)) £8.4m £8.0m +5%
Profit before tax £6.3m £4.0m +58%
Adjusted basic earnings per share 3.57p 3.33p +7%
Group cash at period end £34.0m £24.8m +37%
Net funds at period end £33.5m £24.3m +37%
Final ordinary dividend per share 0.89p 0.83p +7%
Operational highlights
· Demand for Liberty cloud solutions continued to drive growth, with cloud
services revenue growing 19% to £19.8m and accounting for 90% of new bookings
· Increasing cloud subscriptions is resulting in a higher proportion of
recurring revenues, now at 76% (FY23: 72%), contributing to strong cash
generation
· Robust demand from new customers together with continued growth from the
existing base, reflected in cloud net retention rate of 117% (FY23: 113%)
· Continued investment in business operations and product offering to support a
growing pipeline, including integration and embedding of Generative AI
capabilities
· Significant uptake of Liberty cloud contact centre and the launch of Liberty
Converse CX contributed to a 51% growth in cloud contact centre revenues.
· Successful integration of Skore into the Liberty platform which has now been
launched to the existing Netcall customer base, with initial cross-sales
achieved and providing an expanded total addressable market.
· Post-period end acquisitions of Govtech and Parble, both of which are expected
to be immediately earnings enhancing with substantial potential for
cross-selling
· Positive sales momentum continuing into the start of the new financial year
which, together with the contracted revenue expected to be recognised in FY25,
provides good revenue visibility.
· Appointed an additional Independent Non-Executive Director post-period end,
James Platt, who will join the Board on 24 October 2024.
James Ormondroyd, Chief Executive, said:
"This year has been another period of strong performance for Netcall. Our
cloud services continue to receive growing demand from new and existing
customers, driving increased revenue visibility and strong cash flow.
"We have made significant advancements to the product offering, including the
launch of our new cloud contact centre solution, Liberty Converse CX, which
has generated substantial interest as customers migrate to cloud environments
to leverage advanced technologies, as well as the ongoing integration of GenAI
capabilities across our broader Liberty platform. We are also pleased with the
progress in our acquisition strategy, with the recent acquisitions of Skore,
Govtech and Parble enhancing our market position and opening up new
opportunities.
"Positive sales momentum has continued into the new financial year. Our robust
pipeline and product roadmap, together with a growing base of recurring
revenue and a healthy cash position, leaves us well-positioned to capitalise
on the market opportunities ahead."
((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.
For further enquiries, please contact:
Netcall plc Tel. +44 (0) 330 333 6100
James Ormondroyd, CEO
Richard Hughes, CFO
Henrik Bang, Non-Executive Chair
Canaccord Genuity Limited (Nominated Adviser and Broker) Tel. +44 (0) 20 7523 8000
Simon Bridges / Andrew Potts
Singer Capital Markets (Joint Broker) Tel. +44 (0) 20 7496 3000
Charles Leigh-Pemberton / Asha Chotai
Alma Strategic Communications Tel. +44 (0) 20 3405 0205
Caroline Forde / Hilary Buchanan / Emma Thompson
About Netcall
Netcall's Liberty software platform with Intelligent Automation and Customer
Engagement solutions helps organisations digitally transform their businesses
faster and more efficiently, empowering them to create a leaner, more
customer-centric organisation.
Netcall's customers span enterprise, healthcare and government sectors. These
include two-thirds of the NHS Acute Health Trusts and leading corporates
including Legal and General, Lloyds Banking Group, Aon and Santander.
For further information, please go to www.netcall.com (http://www.netcall.com)
.
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 has delivered another year of robust performance, with strong sales
momentum and cash generation ahead of expectations. Revenue grew by 9% to
£39.1m (FY23: £36.0m), and adjusted EBITDA increased by 5% to £8.4m (FY23:
£8.0m).
Netcall's cloud offerings continue to drive growth, reflecting the Group's
ongoing transition to a digital cloud business. Cloud service revenues rose by
19% to £19.8m (FY23: £16.6m), with cloud subscriptions comprising 90% of new
bookings. The Group benefits from favourable long term macro trends for cloud
computing, automation and customer experience, which underpin the growing
demand for subscription-based solutions.
These trends are reflected in Cloud ACV, which increased by 23% to £22.3m
(FY23: £18.1m), contributing to total ACV growth of 15% to £32.2m (FY23:
£27.9m). The Group experienced robust demand from new customers, along with
continued cross and up-selling, resulting in a Cloud net retention rate of
117% (FY23: 113%). Over a quarter of Customer Engagement customers now
integrate both Customer Engagement and Intelligent Automation solutions,
highlighting the substantial opportunity for further cross-selling as
customers embed additional capabilities.
Significant advancements have been made to the Liberty platform, integrating
AI capabilities across the product portfolio and extending its cloud
offerings. The launch of Liberty Converse CX in April, combining AI and
intelligent automation to enhance Netcall's Customer Engagement proposition
with a cloud-native contact centre solution, has been met with high levels of
interest, contributing to the 51% growth in Cloud contact centre subscription
revenue to £5.50m (FY23: 22% to £3.65m). This in part reflects the trend of
on-premise contact centre customers migrating to Netcall's cloud environment
in order to leverage greater flexibility and lower operating costs but also
the enhanced proposition. The Group's cloud investment programme in
operations, development, IT, and services has continued as planned to
capitalise on this growing market opportunity.
The Group's market proposition was further strengthened by the integration of
the recently acquired Skore Labs Limited ("Skore"), now rebranded as Liberty
Spark, enhancing Netcall's position as a one-stop-shop digital transformation
toolkit provider. Post-period end, the Group acquired Govtech Holdings Limited
("Govtech"), a digital process automation company, expanding Netcall's Liberty
product portfolio into new business functions; and Smart & Easy NV
(trading as "Parble"), a provider of intelligent document processing software
which enhances Netcall's Liberty portfolio with a complementary solution. The
total initial consideration paid net of cash acquired was £12.0m which was
funded out of existing cash reserves. Both acquisitions are expected to be
immediately earnings enhancing with respect to adjusted earnings per share,
and provide substantial cross-selling potential and an expanded customer base
within core Group sectors of Local Government and financial services.
The momentum in cloud services and the increasing proportion of recurring
cloud subscription revenues have led to excellent cash flow generation. This
has significantly improved the year-end cash position to £34.0m (30 June
2023: £24.8m), providing the Group flexibility to continue driving both
organic and inorganic growth.
Current Trading and Outlook
Positive sales momentum has continued into the new financial year, driven by
continued demand for our cloud solutions. The Group's enhanced product
offerings, following recent investments, are creating additional growth
opportunities with both new and existing customers. This, along with £35.1m
of contracted revenue expected to be recognised in FY25, which includes the
impact of post year end acquisitions, provides good revenue visibility. The
Group is well positioned for growth and enhanced profitability as it continues
its transition to a subscription business model.
The pipeline of opportunities is robust, supported by a strong product
roadmap. The Board continues to invest in innovation and product development
in cloud services, as well as ongoing customer-led enhancements to strengthen
Netcall's proposition and scale the business. Supported by favourable market
trends driving the adoption of cloud and AI technologies, together with the
Group's strong balance sheet and cash generation, ensures that the Board
remains confident in the Group's continued success.
Business Review
Netcall helps customers implement digital strategies, transforming them into
more intelligent, efficient, and customer-centric organisations. The Group's
software solutions accelerate the achievement of businesses' digitalisation
objectives through an intuitive platform that enables rapid process automation
and enhanced customer engagement. This results in better outcomes for
service-users, such as reduced waiting times for NHS patients, quicker
delivery of council services for citizens, improved banking experiences for
customers, and increased staff retention and satisfaction for employers.
Business process automation and digitalisation are strategic priorities for
organisations, given the significant scope for operational improvement
available. In response to rising costs and evolving consumer expectations,
organisations are increasingly adopting solutions such as low-code
development, task-centric automation, and AI, alongside cloud-based
omni-channel engagement to leverage these technologies as an integrated
toolkit for more effective automation programmes.
Netcall's Liberty platform powers this transformation, offering AI-driven
tools to create business applications that automate processes and streamline
workflows. It integrates Intelligent Automation and Customer Engagement on a
single, easy-to-use platform, providing competitive differentiation with
industry-specific implementations. The modular nature of the Liberty platform
aligns with a common market preference for prebuilt, industry-specific
automations which can be adopted as a starting point and subsequently scaled
quickly through its integration with other automation solutions.
Liberty's comprehensive digital transformation toolkit includes Liberty
Create, empowering both professional and citizen developers to build
enterprise-level applications using low-code software, and Liberty Converse
CX, offering seamless customer engagement through an omni-channel contact
centre solution, among other portfolio solutions. Embedded within the platform
is Liberty AI, providing tools like Large Language Models (LLMs) for
Generative AI, Natural Language Processing, and Machine Learning prediction
models ensuring consistent performance, control of costs, management of AI
risks, and helping customers meet their compliance requirements.
Strategy
Netcall pursues its market opportunities through a consistent and proven
growth strategy, anchored on four strategic pillars: new customer acquisition,
expansion within the existing customer base, ongoing product innovation, and
partner network expansion.
The Group serves customers across a range of size and sectors, with a primary
focus on the financial services, healthcare, and public sector industries,
which collectively contributed to 90% of total Group revenues. These core
sectors are characterised by their complexity, large customer and employee
bases, and high levels of regulation, and where Netcall has established a
strong presence through extensive referenceability and packaged
industry-tailored solutions, known as 'Hubs'.
Following initial engagement, the Liberty platform's flexibility and seamless
integration with cloud services enable customers to increase their platform
usage, supporting their expansion objectives. This adaptability ensures that
Netcall's solutions remain relevant and valuable in a rapidly evolving
technology landscape.
Netcall consistently achieves high levels of customer satisfaction and
employee engagement, laying a solid foundation for sustained future growth.
This commitment to excellence not only strengthens customer loyalty but also
enhances the Group's competitive edge in the market.
Customer base expansion
Throughout the year, the Group experienced robust demand from new customers,
driven by its Cloud services and Hub solutions. Expanding the customer base
remains a key priority, as acquiring new customers enables future
cross-selling, increases wallet share, and strengthens loyalty, driving
sustainable long-term growth.
The Group's efforts in the public sector have yielded significant results. It
secured a major new £2m contract with a local council for a period of five
years, reflecting good demand from local councils and housing associations.
Additionally, the acquisition of Govtech has expanded the Group's capabilities
in digital process automation for the local council sector, increasing
Netcall's market share from 26% to 34% of UK councils.
In the healthcare sector, the Group's solutions are in high demand, leading to
several new customer wins. An example is Mersey and West Lancashire Teaching
Hospitals NHS Trust which has chosen Patient Hub, Waiting List Validation and
integrated cloud contact centre solutions to streamline their patient
experience, improve efficiencies, and enhance overall care. The Group's
presence across other NHS trusts continues to generate significant impact,
such as the digital transformation of Hampshire Hospitals NHS Foundation
Trust, which resulted in a 79% patient uptake of Patient Hub following its
deployment. These successes underscore the value and effectiveness of the
Group's healthcare solutions.
The Group continued to build momentum in the transport sector. In April,
Netcall renewed a £7.6m five-year contract renewal with a leading
transportation company for Liberty cloud services, representing a £0.4m
annual uplift from the original contract. Additionally, the Group partnered
with Transport for London to deploy a product acceptance solution for managing
certification of equipment and vehicles used on the underground network.
Land and expand
The Group's land-and-expand strategy remains a pivotal element of its growth
framework, with cross-selling and upselling driving substantial value
creation. Customers are increasingly deploying upgrades and new solutions,
capitalising on the modular architecture and enhanced functionality of the
platform. This approach has resulted in the high cloud net retention rate of
117% (FY23: 113%).
An example is a recent sale to West Brom Homes, which resulted from the
Group's initial engagement with West Brom Building Society in June 2023. By
using Liberty Create, West Brom successfully digitised its new account
application process, achieving a 30% reduction in processing time. This
achievement led for further collaboration with West Brom Homes.
The adoption of Intelligent Automation solutions among Customer Engagement
clients has continued to increase to 26% (FY23: 21%). Clients using both
solutions provide a threefold increase in average contract value compared to
those using standalone Customer Engagement solutions.
The Group has also seen a significant number of on-premise contact centre
customers migrating to the cloud to leverage greater flexibility and lower
operating costs, resulting in an approximate 50% increase in annual contract
values. This migration has significantly contributed to the strong growth in
Customer Engagement revenue, which rose 9% this year, driven by a 51% growth
in cloud contact centre subscription revenue.
Netcall's Community remains a valuable resource, fostering connections among
the customer base through a forum for knowledge sharing, training, and
pre-built accelerators and modules to enrich their interaction with the
Liberty platform solutions. Over the past year, Community membership has grown
by 60% now reaching 8,000 members. Additionally, the Academy has expanded to
include approximately 200 courses, providing users with a wide selection of
educational resources.
Growing the partner channel
Netcall's partner network continues to build, with bookings through partners
contributing to 20% of total bookings. The network has expanded with the
addition of 9 new partners, bringing the total to approximately 50. This
expansion opens up opportunities in existing markets and new sectors and
geographies.
The Group is seeing a growing pipeline of opportunities across its network,
which includes large global advisory firms, technology specialists and
communication service providers. Netcall has now forged partnerships with
three global IT and business consulting service providers, including CGI,
which has launched its Energy Commission Suite built on Liberty Create,
securing three customers to date.
The introduction of Liberty Converse CX, has unlocked new potential within the
partner network. Its channel-friendly capabilities have enhanced the appeal of
the offering, garnering positive endorsements from existing partners. Several
partners have commenced their accreditation, with a number selecting Liberty
Converse CX as their preferred contact centre solution.
To support growth, Netcall is developing new tools to help partners upskill
more quickly, especially for large, complex projects. A new portal will be
launched to enable partners to be more self-sufficient and expedite market
entry, ensuring efficient and effective market delivery of Netcall's products.
Innovation and product enhancement
Netcall continues to keep up the pace of innovation and product development,
providing customers with new features to enhance their systems and expand
capabilities, creating value for the customer and new opportunities for the
business.
Liberty Converse CX has the potential to be transformative across Netcall's
customer base and partner network. With 64% of UK contact centres reporting
rising chat volumes and 60% experiencing increased call volumes, many contact
centre infrastructures are not designed to meet these advances((1)), driving
the migration of contact centres to the cloud. Capturing this trend, Liberty
Converse CX uses a blend of AI and intelligent automation to bring efficiency
gains and enhance customer experiences, with a cloud-native contact centre
solution, enhancing Netcall's offering in a rapidly growing segment of the
market.
Delivering new Generative AI capabilities into the Liberty platform has been a
key focus for Netcall. Liberty AI is embedded with Liberty Converse CX to
provide a range of Generative AI natural language capabilities for customer
engagement including the easy development and deployment of powerful and
informative chatbots and virtual assistants, along with sentiment analysis,
conversation summarisation, translation, text enhancement including rewriting
in a given tone, correcting grammar and punctuation mistakes, and expanding
text. Liberty AI capabilities are also used in custom Liberty Create and
Liberty RPA applications and workflows, enabling customers to innovate with AI
and safely implement it in their operations.
The introduction of Skore's process discovery and mapping solution, now
branded as Liberty Spark, has generated immediate positive interest from
Netcall's customer base. The product development roadmap includes introducing
industry-specific process templates and leveraging Liberty AI to enhance
process mapping and automation, making them more efficient and intelligent.
Netcall's Hubs, including Citizen Hub, Tenant Hub, and Patient Hub, provide
comprehensive low-code case management, workflow, and process automation
solutions for councils, housing providers, and healthcare institutions. New
upgrade applications launched in the second half of the year, such as
Diagnostic Booking for automated scan appointment scheduling and Rent-IQ for
proactive rent arrears management, are now deployed with customers and
generating additional incremental revenue and expanded pipeline
opportunities.
((1))
https://www.netcall.com/news/redefining-customer-engagement-with-liberty-converse-cx/
(https://www.netcall.com/news/redefining-customer-engagement-with-liberty-converse-cx/)
ESG initiatives
Environmental commitment and progress
Netcall is committed to achieving carbon neutrality by the end of 2026. Since
establishing a baseline in 2020, the Group has successfully reduced Scope 1
and Scope 2 emissions by 48%, equating to a decrease of 32.3 tCO2e (66.6
tCO2e). The Intensity Ratio of tonnes of CO2e per £ million of revenue has
improved by 8% in the period to 0.88 (FY23: 0.96)
Aligned with the Group's carbon reduction strategy and transition plan to Net
Zero, validated as science-based by the SBTi, Netcall continues to invest in
woodland creation and uses its Environmental Management System ("EMS") built
on the Liberty platform. The EMS app manages key actions and improvements for
environmental performance and is available to Netcall customers through the
Netcall AppShare® to support their sustainability objectives.
Digital Transformation supporting customers' carbon reduction
Netcall's digital transformation initiatives empower customers to reduce
carbon emissions by harnessing advanced technologies such as artificial
intelligence and RPA. These solutions drive operational efficiency and
minimise resource usage by digitising systems and promoting electronic
communications, thereby reducing the need for printed and mailed materials.
For instance, Leeds Teaching Hospital realised savings of over £2 million
through the reduced paper use and postage, facilitated by Patient Hub.
Providing positive social value and community impact
Netcall's operations provide social value through the extensive reach and
impact the business has on its customers and communities. Over 2 million
patients have accessed Netcall's NHS applications, and the Group's technology
supports 1 in 3 UK councils, and 2 in 5 UK police forces. The Group's Social
Value Policy highlights the importance of social value and ensures better
community service, guided by value-based operating principles and regular
reviews. This approach aligns with various UK social value legislation,
helping customers maximise social, economic, and environmental benefits. For
instance, St Helens Borough Council, has significantly benefited from
Netcall's RPA, which has eased the Children's Social Care workload and ensured
records are updated in near real-time, enabling better decisions on a child's
well-being and safeguarding.
Internal commitment to values
Internally, the Group follows the same value proposition. It has introduced a
Management Development Programme involving 15 managers, and employee
engagement remains high with positive feedback. The Group's employee
engagement score ranks in the top quartile of over 1000 UK and global
technology businesses surveyed on Culture Amp, an employee satisfaction
platform made up of 13 million responses. This focus on management development
and employee engagement underscores Netcall's dedication to fostering a
positive and productive workplace culture.
Financial Review
Year-on-year growth in the ACV is a key financial metric monitored by the
Board. This reflects the annual value of new business won, together with
upsell and cross-sell into the Group's existing customer base, 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
23% higher at £22.3m (FY23: £18.1m). Cloud ACV growth, driven by the Group's
successful land-and-expand strategy,
contributed to a 15% year-on-year increase in total ACV to £32.2m (FY23:
£27.9m).
The table below sets out ACV at the end of the last three financial years:
£'m ACV FY24 FY23 FY22
Cloud services 22.3 18.1 15.0
Product support contracts 9.9 9.8 9.2
Total ACV 32.2 27.9 24.2
Group revenue for the year increased by 9% to £39.1m (FY23: £36.0m). This
growth was primarily driven by a 9% rise in both Intelligent Automation
solutions, reaching £20.1m (FY23: £18.5m), and Customer Engagement
solutions, which rose to £18.5m (FY23: £17.0m). Notably, the Customer
Engagement Cloud services revenue stream saw a significant increase of 51% to
£5.50m (FY23: £3.65m).
The table below sets out revenue by component for the last three financial
year ends:
£'m Revenue FY24 FY23 FY22
Cloud services 19.8 16.6 10.7
Product support contracts 9.9 9.4 9.0
Total Cloud services & Product support contracts 29.7 26.0 19.7
Communication services 2.5 2.6 3.0
Product 1.8 2.2 2.2
Professional services 5.1 5.2 5.5
Total Revenue 39.1 36.0 30.5
Driven by the year-on-year growth in ACV, Cloud services revenue (subscription
and usage fees of our cloud-based offerings) was 19% higher at £19.8m (FY23:
£16.6m) and product support contract revenue grew by 5% to £9.9m (FY23:
£9.4m). This increased recurring revenues from Cloud service and Product
support contracts to 76% of total revenue (FY23: 72%).
Communication services revenues was £2.46m (FY23: £2.58m), reflecting a
decrease in call-back volumes, partially offset by an increase in
automation-driven messaging transactions.
Product revenue for software license sales with supporting hardware, reduced
as expected to £1.83m (FY23: £2.24m), as more customers opted for cloud
solutions over on-premises ones. As previously communicated, we anticipate
this trend to continue in the future.
Professional services revenue was £5.07m (FY23: £5.21m). This revenue stream
varies depending on the ratio of direct and indirect sales, and whether the
customer demand is for full application development or support for their own
development teams. Additionally, our partners have the option to provide
professional services to customers, whether they sell our products directly or
indirectly.
Group Remaining Performance Obligations ("RPO"), representing the total future
contracted revenue with customers that has not yet been recognised, including
deferred income, increased by 17% to £63.8m at year-end (FY23: £54.5m). This
highlights the substantial revenue available to the Group for recognition in
future periods. Including the impact of post year end acquisitions, current
RPO, which is revenue due to be recognised within the next 12 months,
increased by 12% to £35.1m (FY23: £31.4m). RPO arising from post period end
acquisitions was £5.1m of which £3.1m was current.
The Group's adjusted EBITDA was 5% higher year-on-year to £8.44m (FY23:
£8.00m), maintaining a margin of 22% of revenue (FY23: 22%). The consistent
margin reflects a higher contribution from Cloud services in the sales mix,
offset by the Group's investment programme in its cloud Customer Engagement
offering.
The higher adjusted EBITDA led to a 43% increase in operating profits to
£5.43m (FY23: £3.81m), due to lower share-based payment charges of £0.54m
(FY23: £1.64m).
Profit before tax was 58% higher at £6.33m (FY23: £4.00m). This growth
includes the benefit of £0.94m of interest income on the Group's cash
holdings, which was £0.60m higher than the previous year (FY23: £0.34m).
The Group recorded a tax charge of £0.48m (FY23: credit of £0.21m),
benefiting from tax relief available from the exercise of share options during
the period.
Basic earnings per share was 3.61 pence (FY23: 2.69 pence) and increased by 7%
to 3.57 pence on an adjusted basis (FY23: 3.33 pence). Diluted earnings per
share was 3.46 pence (FY23: 2.52 pence) and increased by 10% to 3.42 pence on
an adjusted basis (FY23: 3.12 pence).
Cash generated from operations increased by 23% to £13.8m (FY23: £11.2m) a
conversion of 164% (FY23: 140%) of adjusted EBITDA.
Spending on research and development, including capitalised software
development, was 14% higher at £5.66m (FY23: £4.98m) of which capitalised
software expenditure was £2.32m (FY23: £2.27m).
Total capital expenditure was £2.57m (FY23: £2.74m); the balance after
capitalised development, being £0.25m (FY23: £0.48m) relating to IT
equipment and software.
On 22 January 2024, the Company acquired Skore for a total consideration of up
to £6.225m (see note 8 for further information). During the reporting period,
Skore generated £0.24m in revenue and achieved a break-even point in profit
before tax. The consideration paid in the period amounted to £1.63m in cash,
with an additional £0.2m accrued as post-completion services under IFRS 3, as
the former owners of Skore continued to work in the business following its
acquisition.
Group cash at the year-end was 37% higher year-on-year at £34.0m (30 June
2023: £24.8m). Net funds, stated after lease liabilities and borrowings, were
£33.5m at 30 June 2024 (30 June 2023: £24.3m).
Post-period end, the Group acquired Govtech and Parble for a total
consideration of up to £11.5m and €9.8m, respectively (see note 8 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
0.89p (FY23: 0.83p). If approved, the final dividend will be paid on 7
February 2025 to shareholders on the register at the close of business on 27
December 2024.
Audited consolidated income statement for the year ended 30 June 2024
2024 2023
£'000 £'000
Revenue 39,057 36,040
Cost of sales (5,612) (5,768)
Gross profit 33,445 30,272
Administrative expenses (28,050) (26,522)
Other gains/(losses) - net 31 62
Adjusted EBITDA 8,440 8,003
Depreciation (398) (377)
Amortisation of acquired intangible assets (581) (522)
Amortisation of other intangible assets (1,228) (1,287)
Post-completion services (see note 4) (156) (365)
Share-based payments (651) (1,640)
Operating profit 5,426 3,812
Finance income 943 344
Finance costs (40) (155)
Finance income - net 903 189
Profit before tax 6,329 4,001
Tax (charge)/ credit (475) 205
Profit for the year 5,854 4,206
Earnings per share - pence
Basic 3.61 2.69
Diluted 3.56 2.52
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 2024
2024 2023
£'000 £'000
Profit for the year 5,854 4,206
Other comprehensive income
Items that may be reclassified to profit or loss
Exchange differences arising on translation of foreign operations (5) 8
Total other comprehensive income for the year (5) 8
Total comprehensive income for the year 5,849 4,214
All of the comprehensive income for the year is attributable to the
shareholders of Netcall plc.
Audited consolidated balance sheet at 30 June 2024
2024 2023
£'000 £'000
Assets
Non-current assets
Property, plant and equipment 685 699
Right-of-use assets 357 298
Intangible assets 33,596 30,453
Deferred tax assets 876 1,767
Financial assets at fair value through other comprehensive income 72 72
Total non-current assets 35,586 33,289
Current assets
Inventories 36 31
Other current assets 2,313 2,333
Contract assets 207 599
Trade receivables 4,752 4,468
Other financial assets at amortised cost 139 57
Cash and cash equivalents 34,008 24,753
Total current assets 41,455 32,241
Total assets 77,041 65,530
Liabilities
Non-current liabilities
Contract liabilities 806 787
Borrowings 9 -
Lease liabilities 358 292
Deferred tax liabilities 1,407 1,151
Total non-current liabilities 2,580 2,230
Current liabilities
Trade and other payables 7,841 7,232
Contract liabilities 26,009 20,578
Borrowings 10 -
Lease liabilities 104 113
Total current liabilities 33,964 27,923
Total liabilities 36,544 30,153
Net assets 40,497 35,377
Equity attributable to owners of Netcall plc
Share capital 8,339 8,108
Share premium 5,574 5,574
Other equity 4,900 4,900
Other reserves 403 3,056
Retained earnings 21,281 13,739
Total equity 40,497 35,377
Audited consolidated statement of cash flows for the year ended 30 June 2024
2024 2023
£'000 £'000
Cash flows from operating activities
Profit before income tax 6,329 4,001
Adjustments for:
Depreciation and amortisation 2,207 2,186
Share-based payments 651 1,640
Finance income - net (903) (189)
Other non-cash expenses - 6
Changes in operating assets and liabilities, net of effects from purchasing of
subsidiary undertaking:
(Increase)/ decrease in inventories (5) 7
Increase in trade receivables (249) (765)
Decrease in contract assets 393 281
Increase in other financial assets at amortised cost (77) (49)
Decrease in other current assets 29 416
Increase/ (decrease) in trade and other payables 182 (1,148)
Increase in contract liabilities 5,249 4,835
Cash flows from operations 13,806 11,221
Analysed as:
Cash flows from operations before post completion service consideration 13,806 11,597
Payment of post completion service consideration - (376)
Interest received 943 344
Interest paid (10) (8)
Income taxes paid (11) -
Net cash inflow from operating activities 14,728 11,557
Cash flows from investing activities
Payment for acquisition of subsidiary, net of cash acquired (1,633) -
Payment for property, plant and equipment (252) (458)
Payment of software development costs (2,322) (2,267)
Payment for other intangible assets - (19)
Net cash outflow from investing activities (4,207) (2,744)
Cash flows from financing activities
Proceeds from issues of ordinary shares 231 3,079
Interest paid on Loan Notes - (204)
Repayment of borrowings (4) (3,500)
Lease payments (152) (214)
Dividends paid to Company's shareholders (1,338) (839)
Net cash outflow from financing activities (1,263) (1,678)
Net increase in cash and cash equivalents 9,258 7,135
Cash and cash equivalents at beginning of the financial year 24,753 17,605
Effects of exchange rate on cash and cash equivalents (3) 13
Cash and cash equivalents at end of financial year 34,008 24,753
Audited consolidated statement of changes in equity for the year ended 30 June
2024
Share capital Share premium Other equity Other reserves Retained earnings Total
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 July 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 - - - 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
Proceeds from share issue 231 - - - - 231
Increase in equity reserve in relation to options issued - - - 740 - 740
Tax charge relating to share options - - - (362) - (362)
Reclassification following exercise or lapse of options - - - (3,026) 3,026 -
Dividends paid - - - - (1,338) (1,338)
Transactions with owners 231 - - (2,468) 1,688 (729)
Profit for the year - - - - 5,854 5,854
Other comprehensive income - - - (5) - (5)
Total comprehensive income for the year - - - (5) 5,854 5,849
Balance at 30 June 2024 8,339 5,574 4,900 403 21,281 40,497
Notes to the financial information for the year ended 30 June 2024
1. General information
Netcall plc (AIM: "NET", "Netcall", or the "Company"), is a leading provider
of intelligent automation and customer engagement software. It is a public
limited 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 2024.
The consolidated financial information is presented in sterling (£), 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 2024 or 2023. Statutory accounts for the
years ended 30 June 2024 and 30 June 2023 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 2023 have been filed with the
Registrar of Companies. The statutory accounts for the year ended 30 June 2024
will be delivered to the Registrar in due course. Copies of the Annual Report
2024 will be posted to shareholders on or about 15 November 2024. Further
copies of this announcement can be downloaded from the website www.netcall.com
(http://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.
2024 2023
£'000 £'000
Post completion services expense((1)) (156) (365)
(156) (365)
((1)) The former owners of Skore Labs Limited acquired in January 2024
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. In the prior
year, 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 £0.38m was made during the financial year
ended 30 June 2023.
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 2024 30 June 2023
Net earnings attributable to ordinary shareholders (£'000) 5,854 4,206
Weighted average number of ordinary shares in issue (thousands) 162,293 156,352
Basic earnings per share (pence) 3.61 2.69
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 2024 30 June 2023
Weighted average number of ordinary shares in issue (thousands) 162,293 156,352
Adjustments for share options (thousands) 7,021 10,630
Weighted average number of potential ordinary shares in issue (thousands) 169,314 166,982
Diluted earnings per share (pence) 3.46 2.52
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:
£'000 30 June 2024 30 June 2023
Profit used for calculation of basic and diluted EPS 5,854 4,206
Share-based payments 651 1,640
Post-completion services (see note 4) 156 365
Amortisation of acquired intangible assets 581 522
Unwinding of discount - contingent consideration & borrowings 10 29
Tax effect of adjustments (1,457) (1,548)
Profit used for calculation of adjusted basic and diluted EPS 5,795 5,214
30 June 2024 30 June 2023
Adjusted basic earnings per share (pence) 3.57 3.33
Adjusted diluted earnings per share (pence) 3.42 3.12
6. Dividends
Year to June 2024 Paid Pence per share Cash flow statement Statement of changes in equity June 2024 balance sheet
(£'000) (£'000) (£'000)
Final ordinary dividend for the year to June 2023 9/2/24 0.83p 1,338 1,338 -
1,338 1,338 -
Year to June 2023 Paid Pence per share Cash flow statement Statement of changes in equity June 2023 balance sheet
(£'000) (£'000) (£'000)
Final ordinary dividend for the year to June 2022 31/1/23 0.54p 839 839 -
839 839 -
It is proposed that this year's final ordinary dividend of 0.89p pence per
share will be paid to shareholders on 7 February 2025. Netcall plc shares will
trade ex-dividend from 24 December 2024 and the record date will be 27
December 2024. The estimated amount payable is £1.47m. 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
£'000 30 June 2024 30 June 2023
Cash and cash equivalents 34,008 24,753
Borrowings - fixed interest (19) -
Lease liabilities (462) (405)
Net funds 33,527 24,348
8. Business combinations
Acquisition of Skore Labs Limited
On 22 January 2024, the Company acquired 100% of the issued share capital of
Skore Labs Limited ('Skore'), a provider of a cloud-based software solution
for business process discovery, mapping, analysis and management.
On acquisition of a business, IFRS 3 'Business Combinations' requires the
Group to assess the fair value of the consideration transferred and the fair
value of the assets acquired.
The fair value of the consideration transferred is:
£000
Initial cash consideration 1,800
Deferred cash consideration 193
Contingent cash consideration 124
Contingent share consideration 154
2,271
The consideration for the transaction comprised:
· cash consideration of £1.8m paid on completion;
· deferred cash consideration of £0.2m (undiscounted) payable in
January 2025; and
· contingent consideration of up to £2.0m payable in cash and up
to £2.0m in Netcall shares dependent on the achievement of specified
performance targets within the three-year period following the completion of
the acquisition. As the arrangement requires on-going provision of services to
the Group by a number of the previous shareholders of Skore then: the cash
components will be recognised in the income statement as services are
rendered, in line with the requirements of IAS 19 'Employee benefits'; and the
share components will be recognised in the income statement based on the
volume of shares that are ultimately expected to vest, in line with the
requirements of IFRS 2 'Share based payments'.
The assets and liabilities recognised as a result of the acquisition are as
follows:
£000
Intangible assets - proprietary software 1,120
Intangible assets - customer relationships 170
Property, plant and equipment 2
Other current assets 15
Trade receivables 35
Cash and cash equivalents 167
Trade and other payables (32)
Contract liabilities (200)
Borrowings - current liabilities (10)
Borrowings - non-current liabilities (13)
Deferred tax liabilities (323)
Net identifiable assets acquired 931
Goodwill 1,340
Net assets acquired 2,271
The goodwill recognised is attributable to the future economic benefits
expected to be obtained from the integration of the process mapping solution
into the Liberty product and to the workforce.
Subsequent to the date of acquisition, Skore generated £0.24m of revenue and
a £2,000 loss during the reporting period, which is included within the
Consolidated income statement. If the acquisition had occurred at the
beginning of the reporting period, Skore would have generated £0.54m of
revenue and a £0.03m profit.
The cash outflow as a result of the transaction is as follows:
£000
Initial cash consideration 1,800
Less: cash acquired (167)
Net cash outflow from investing activities 1,633
Acquisition of Govtech Holdings Limited
On 6 August 2024, after the year-end, the Company acquired 100% of the issued
share capital of Govtech Holdings Limited ('Govtech'), a provider of digital
process automation solutions.
The consideration for the transaction comprised:
· cash consideration of £9.15m paid on completion. Cash acquired
on completion was £1.5m;
· deferred cash consideration of £0.45m (undiscounted) payable in
August 2025; and
· contingent consideration of up to £2.4m in cash and £1.0m in
Netcall shares, payable upon achievement of specific performance targets
within the two-year period following the completion date.
Acquisition of Smart & Easy NV
On 13 September 2024, after the year-end, the Company acquired 100% of the
issued share capital of Smart & Easy NV (trading as 'Parble'), a provider
of digital process automation solutions.
The consideration for the transaction comprised:
· cash consideration of €4.1m paid on completion. Additionally, €1.1 million
in net debt was assumed and repaid at completion;
· deferred cash consideration of €0.6m (undiscounted) payable in September
2025; and
· contingent consideration of up to €2.0m in cash and €2.0m in Netcall
shares, payable upon achievement of specific performance targets within the
three-year period following the completion date.
Due to the limited period of time between the acquisition dates of Govtech and
Parble and the signing date of the financial statements, the assessment of the
fair value of the consideration transferred and the internal assessment of the
book value of net assets acquired on both post-period end acquisitions was
incomplete.
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