REG - Netcall PLC - Half-year Report
05/03/2025 07:00
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RNS Number : 3551Z Netcall PLC 05 March 2025
5 March 2025
NETCALL PLC
("Netcall", the "Company", or the "Group")
Interim results for the six months ended 31 December 2024
Strong Cloud momentum and enlarged opportunity through innovation and
complementary M&A
Netcall plc (AIM: NET), the leading provider of intelligent automation and
customer engagement software, today announces its unaudited interim results
for the six months ended 31 December 2024.
Financial highlights
H1 FY25 H1 FY24
Revenue £23.0m £18.9m +22%
Cloud services revenue £13.4m £9.28m +44%
Total annual contract value((1)) (ACV) £39.4m £30.1m +31%
Cloud services ACV £29.9m £20.3m +47%
Adjusted EBITDA((2)) £5.70m £4.83m +18%
Profit before tax £3.69m £3.87m -5%
Adjusted basic earnings per share 2.22p 2.08p +7%
Group cash at period end £22.0m £28.6m
Net funds at period end £20.9m £28.1m
Operational highlights
· Accelerated growth as a result of strong double-digit organic growth and
revenue contribution from complementary acquisitions
· Cloud solutions continue to drive growth, with Cloud ACV up 47% (organic
growth of 20%), representing 76% of total ACV
· Increasing cloud subscriptions are resulting in a higher proportion of
recurring revenues, now at 79% (H1 FY24: 75%) of total revenue
· Robust demand from new customers, along with continued cross and up-sales,
resulting in a Cloud net retention rate((3)) of 115% (H1 FY24: 111%)
· Following the successful acquisitions of Govtech and Parble, enhanced new
customer and cross-sell opportunities continue to arise, with the first sales
of Parble's Intelligent Document Processing solution into the existing
customer base and the Liberty platform to a Govtech customer secured in the
period
· Continued investment in the Group's cloud offering, including embedding
generative AI capabilities, resulting in expanded opportunities and
underpinned by increasing profitability and strong balance sheet
· Significant uptake of Liberty cloud contact centre, Converse CX, addressing
growing interest in automation and AI, with two thirds of Converse CX
customers also opting for AI products
· Growing base of predictable, recurring revenue, with Group Remaining
Performance Obligations ("RPO"), representing the total of future contracted
revenue not yet recognised increasing 23% to £71.1m (H1 FY24: £58.0m)
· Positive sales momentum into H2, with the Board confident in delivering on its
expectations and completing another successful year
James Ormondroyd, Chief Executive, said:
"We are delighted to report another strong trading period, marked by
double-digit organic growth and increased profitability. The expansion of our
Liberty platform continues to drive success, and we are particularly pleased
with the results of our cloud investment programme, which has seen 41% growth
in cloud contact centre subscription revenues and the addition of further
generative AI features across the platform. The integration of our recent
acquisitions, Govtech and Parble, is progressing well, enhancing our
capabilities and creating cross-sale opportunities.
"Positive trading momentum has continued into the second half and we continue
to benefit from strong market tailwinds. The rapid acceleration of cloud and
AI adoption remains a long-term driver of sustainable growth for our business.
Our focus on organic growth initiatives and commitment to product innovation
positions us well to capitalise on this expanding market opportunity. This is
underpinned by a growing base of recurring revenue, with over £71m in
contracted revenue yet to be recognised.
"With a solid financial position, increasing recurring revenues, and a strong
pipeline, the Board remains confident in Netcall's continued success."
((1)) ACV, as at a given date, is the total of the value of each cloud and
support contract divided by the total number of years of the contract (save
that the contract renewal announced on 20 July 2023 was included in FY23 ACV
at the annual amount of $4m), plus the annualised value of recurring IDP
revenue.
((2)) Profit before interest, tax, depreciation and amortisation adjusted to
exclude the effects of share-based payments, impairment, profit or loss on
disposals, and acquisition, 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 upsells and is net of contraction or churn
over the trailing twelve months but excludes ACV from new customers and
acquisitions in the current period. The Cloud net retention rate is the total
current period ACV divided by the total prior period ACV.
(.)
( )
Enquiries:
Netcall plc Tel. +44 (0) 330 333 6100
James Ormondroyd, CEO
Henrik Bang, Non-Executive Chair
Richard Hughes, CFO
Canaccord Genuity Limited (Nominated Adviser and Joint Broker) Tel. +44 (0) 20 7523 8000
Simon Bridges / Harry Gooden / 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.
Overview
The Group has delivered a strong first half performance, achieving
double-digit organic growth and increased profitability, in line with
management expectations. Group revenue rose by 22% to £23.0m (H1 FY24:
£18.9m), driven by 12% organic growth and revenue contribution from
complementary acquisitions. Adjusted EBITDA increased by 18% to £5.7m (H1
FY24: £4.8m).
The primary growth driver remains the Group's expanding suite of Liberty Cloud
solutions, which accounted for 94% of new bookings. This includes a
significant uptake of the Group's cloud contact centre, Converse CX,
reflecting ongoing demand from new customers as well as upsells from
on-premise contact centre customers migrating to cloud environments in order
to leverage automation and AI. This is evidenced with two thirds of Converse
CX customers also opting for AI products. This demand contributed to organic
Cloud ACV growth of 20%, and with the benefit of Govtech and Parble
acquisitions, it grew 47% to £29.9m, now accounting for 76% of total ACV.
This represents a near 4x growth in cloud subscriptions over the past four
years, resulting in a higher proportion of predictable, recurring revenues,
now at 79% of total ACV (H1 FY24: 75%).
Demand across target markets was healthy. In addition to new customer wins,
the Group continued to benefit from high Cloud net retention of 115% (H1 FY24:
111%) as customers expanded their usage of the Liberty platform, demonstrating
the stickiness of the Group's customer base. This is underpinned by the
Group's near-complete Cloud investment programme, the success of which can be
seen in the 41% growth in cloud contact centre subscription revenue in the
period, and a robust product roadmap which is expected to deliver regular
solution upgrades and enhancements, including embedding further generative AI
features across the Liberty platform and new upgrades to its industry-specific
'Hub' solutions.
The integration of Govtech (acquired in August) and Parble (acquired in
September) is progressing well, bringing new capabilities and customers to the
Liberty platform. The Group has delivered its first cross-sales from these
acquisitions, including the initial sales of Parble's Intelligent Document
Processing ('IDP') solution into the existing Netcall clients and the first
cross-sale of the Netcall Liberty platform into the Govtech customer base. The
pipeline of opportunities across both new and existing customers continues to
build.
The Group's Board was strengthened with the appointment of James Platt as a
Non-Executive Director in October, with the Group benefitting from James'
extensive experience in delivering digital transformation programmes, both
from a customer and provider perspective.
Net cash at 31 December 2024 was £22.0m (30 June 2024: £34.0m) after
acquisition-related payments of £12.1m (net of cash acquired and debt
assumed). This continues to provide the Group flexibility to drive both
organic and inorganic growth.
Current Trading and Outlook
Positive trading momentum has continued into the second half, with Cloud
uptake driving both new customer acquisition and expansion/upsell
opportunities with existing clients. The acquisitions of Parble and Govtech
have also opened up new business opportunities for cross-selling and upselling
in a broader customer base, which, moving into H2, is starting to generate
tangible results.
Netcall continues to benefit from strong market tailwinds, as the rapid
acceleration of cloud and AI adoption in the Group's end markets remains a
long-term driver of sustainable growth. With a focus on organic growth
initiatives and a commitment to product innovation, coupled with the Board's
ongoing evaluation of complementary acquisition opportunities, Netcall is well
positioned to capitalise on this expanding market opportunity. This is
underpinned by a growing base of predictable, recurring revenue, with the
contracted base of revenue yet to be recognised now standing at over £71m.
The combination of a solid financial position, an increasing base of recurring
revenues, and a strong pipeline provides the Board with confidence in the
Group's continued success.
Business Review
Netcall helps customers transform into more intelligent, efficient, and
customer-centric organisations. The Group's software solutions accelerate the
achievement of businesses' digitalisation objectives through its intuitive
Liberty 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.
Netcall's Liberty platform fuses Intelligent Automation and Customer
Engagement software in a one-stop-shop digital transformation toolkit, with
industry-specific packages that provide competitive differentiation. Netcall's
Liberty platform offers solutions such as low-code development, task-centric
automation, and AI, alongside cloud-based omni-channel engagement. 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. The Group's product offering is underpinned by excellent
customer service, with 98% of customers stating that they would recommend
Netcall.
Complementary M&A in the period has further enhanced the Group's value
proposition. The acquisition of Govtech in August brought new digital process
automation capabilities for the local government sector. This service
complements Liberty's existing automation capabilities, such as AI-enhanced
citizen experience technology, chatbots, robotic process automation, and rapid
application development. The acquisition of Parble in September added IDP
software to the Liberty offering, extending the Group's reach across a wider
spectrum of business process automation workflows, from data capture to
customer engagement. Both acquisitions have provided increased competitive
differentiation and substantial two-way cross-selling opportunities across the
Group's enlarged customer base.
The demand for AI, automation and customer experience continues to grow,
presenting a significant market opportunity. The rapid availability of
automation technologies is prompting enterprise application leaders to search
for a platform that can cater to the end-to-end needs of a wide range of
automation use cases(1). The Liberty platform answers to this need, with the
expanding range of solutions available on the platform supporting more aspects
of customers' digitalisation and automation ambitions and providing a
favourable backdrop for continued growth.
Strategy
Netcall's growth strategy is built on four key pillars: acquiring new
customers, expanding within its existing client base, continuously innovating
products (both organically and inorganically), and growing its partner
network.
The Group serves a diverse customer base across various industries, focusing
primarily on financial services, healthcare and the public sector. These
sectors account for around 90% of total revenue. Netcall has earned a strong
reputation with businesses known for their complexity, large customer and
employee bases and stringent regulatory requirements by offering
industry-specific, packaged solutions, known as 'Hubs,' and through a wealth
of customer references. 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.
Once engaged, customers benefit from the Liberty platform's flexibility and
seamless integration with cloud services, allowing them to scale their usage
as their needs evolve, supporting their expansion objectives. This
adaptability ensures that Netcall's solutions remain relevant and valuable in
an ever-changing technological environment.
Netcall consistently delivers high levels of customer satisfaction and
employee engagement, achieving top quartile employee engagement scores,
providing a strong foundation for sustained future growth. This dedication to
quality not only reinforces customer loyalty but also enhances the Group's
competitive position in the market.
Customer base expansion
New customer acquisition remained robust in H1, driven by demand for workflow
management solutions and digital tools to streamline processes. New customer
momentum was accelerated through acquisitions in the period which brought new,
complementary customers to the Group. This expansion is broadening Netcall's
reach across its target sectors and laying the ground for long-term, valuable
relationships, supported by consistently high net retention rates.
The Group continued to add new customers across the private sector, including
a three-year contract worth £1.8m with a global law firm to support the
development of a Third Party Administrator (TPA) claims management solution
and service centre. The contract incorporates multiple elements of the Liberty
platform and newly acquired solutions, including Converse CX, Create, AI, IDP
and Spark.
In healthcare, Netcall's Liberty platform is used by over two-thirds of NHS
Trusts, providing healthcare specific digital tools that leverage AI and
modern contact centre technologies to support increased operational efficiency
and more effective patient communication. The Group's strong referenceability
and established product offering are well positioned to meet the ambitions of
healthcare operators. Netcall's competitive positioning is underpinned by
Converse CX and Patient Relationship Management (PRM) solutions, designed to
reduce waiting times and ensure timely delivery of care. This has led to a
series of contract wins within the NHS, including:
· A partnership with an Integrated Care Board for Netcall's Diagnostic
Booking application, which automates and streamlines the booking process for
diagnostic services, allowing healthcare staff to focus on more complex
patient queries and those who require telephony-based assistance.
· Imperial College Healthcare NHS Trust has adopted Netcall's
Outpatient PRM solution to transform its Patient Service Centre operations
following the Trust's upgrade to Netcall's next-generation cloud-based
platform, Converse CX. Built on the Liberty for Health platform, Outpatient
PRM is a turnkey solution that is highly valuable for both immediate and
long-term automation and workflow management improvements.
In the public sector, the Group's market position was further strengthened
through the acquisition of Govtech, increasing the Group's customer base from
26% to 34% of UK councils. This strong presence positions Netcall well to
respond to the recently proposed UK local government reorganisation plans. The
creation of single unitary authorities presents an opportunity for increased
uptake of the solution portfolio from existing council clients, helping to
manage reorganisational complexities and drive efficiencies in larger
councils. An example of this is Cumberland Council, a newly merged authority
following local government restructuring which was faced with the challenge of
integrating various legacy systems and technologies. By leveraging the
digitisation power of the Liberty platform, including Liberty Create,
Cumberland Council was able to streamline and unify functions, and launch over
100 digital service applications to improve efficiency and enhance cost
savings.
Land and expand
The Group's land-and-expand strategy continues to generate substantial value
as customers increasingly deploy upgrades and new Netcall solutions. The
effectiveness of this strategy is evident in the consistently high cloud net
retention rate of 115% (H1 FY24: 111%) and supported by high levels of
customer satisfaction.
The proportion of Customer Engagement customers who have also purchased
Intelligent Automation solutions continues to rise, reaching 29% (H1 FY24:
23%) (excluding Govtech and Parble customers). Clients using both solutions
deliver a threefold increase in average contract value compared to those using
standalone Customer Engagement solutions.
In addition, the trend of on-premise contact centre customers migrating to the
cloud in order to leverage greater flexibility and lower operating costs
continues to grow, resulting in an approximately 50% uplift in annual contract
values. This migration is reflected in the strong growth in Customer
Engagement revenue, up 10% in the period, driven in part by a 41% increase in
cloud contact centre revenue.
Recent examples include a new five-year £1.9m contract with Doncaster
Council, initially an on-premise contact centre customer, that purchased
Citizen Hub and upgraded to Converse CX in order to improve citizen services
and streamline processes. Additionally, a large, UK transport service provider
selected Converse CX to replace incumbent providers across its recently
integrated subsidiary operations to improve customer experiences and
operational efficiency.
Following the successful acquisitions of Govtech and Parble, enhanced new
customer and cross-sell opportunities continue to arise. This has led to the
first sales of Parble's IDP solution into the existing customer base this
period. Netcall also achieved its first cross-sale of the Liberty platform to
a Govtech customer, with other cross-sell and upsell opportunities in the
pipeline.
Growing the partner channel
Netcall has an established partner network that is increasingly expanding to
include large global advisory firms, technology specialists and communication
service providers. The Group has established 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. These successes have led to an expansion of the relationship to CGI's
Global Healthcare practice, which is now generating opportunities across
multiple geographies.
Expanding this partner channel is a priority for Netcall, as it enables the
Group to leverage its IP and access new markets and opportunities in the UK
and internationally. During the period, sales via indirect channels accounted
for 20% of order bookings (H1 FY24: 20%), and 10 new partners signed up in the
period, bringing the total number of signed partners to over 50.
Recent wins through the Partner channel include a UK high street retailer and
a small but growing international momentum, including the Group's first
international Citizen Hub win with a local council in New Zealand, providing a
foothold to unlock further potential clients in the region.
Liberty Converse CX continues to open up new potential opportunities within
the partner network. Its channel-friendly capabilities and cloud commercial
model have enhanced the appeal of the offering, providing an attractive
solution for partners to build and launch new product offerings to the market
in order to create competitive differentiation and add new recurring revenue
streams. We have already seen positive endorsements from existing partners and
several partners have concluded their accreditation. The pipeline of
opportunities through partners continues to grow, particularly across new
customers.
Innovation and product development
Netcall continues to keep up the pace of innovation through iterative product
development and complementary acquisitions which have broadened Netcall's
product offering.
The incorporation of Parble's IDP technology into the Liberty platform
introduces new generative AI features to enhance customer solutions and expand
capabilities, creating value for the customer and new opportunities for the
business.
Frequent updates to Liberty Converse CX have delivered enhanced features,
improving performance and interactions across web, mobile, social media, and
voice channels. These updates include generative AI capabilities such as
conversation translation, sentiment analysis, and message tone adjustment. The
Retrieval Augmented Generation (RAG) pipeline of Ask Liberty offers intuitive
Conversational AI, providing natural language Q&A grounded in real
content, and has been deployed for agent guidance and call scripting.
For the remainder of the financial year, the Group's focus will be to leverage
the recently acquired capabilities across the Liberty platform. This includes
enabling the automatic generation of Liberty Create Apps from Liberty Spark
process maps, reducing the effort and cost of deploying digital transformation
projects.
Interest in Netcall industry specific Hubs remains strong. Collaboration with
NHS has driven product development within our Health team with solutions
including Clinic Utilisation, for the management of ad-hoc clinic capacity,
and the Directory App, for managing staff directories, recently released.
Interest from our Local Government user group has led to the development of a
solution to manage Gas Repairs within a council's housing stock.
(1) Gartner, Quick Answer: Beyond RPA, BPA and Low Code - The Future Is BOAT
11 July 2024
Financial Review
ACV is a key metric for the Group, serving as a leading indicator of future
revenue. The Board closely monitors year-on-year ACV growth as a key financial
measure. This metric reflects the annual value of new business won, along with
upsell and cross-sell into the Group's existing customer base, less any
customer reductions or cancellation.
At December 2024, Cloud ACV reached £29.9m, a 47% increase from the same
period last year (H1-FY24: £20.3m). This high rate of growth was driven by
the Group's successful land-and-expand strategy and the benefit of
acquisitions. Total ACV rose by 31% to £39.4m (H1-FY24: £30.1m). Excluding
the effect of acquisitions, organic growth in Cloud ACV was 20% and Total ACV
was 13%.
The table below sets out ACV for the last three reporting periods:
£'m ACV H1-FY25 FY24 H1-FY24
Cloud services 29.9 22.3 20.3
Product support contracts 9.5 9.9 9.8
Total 39.4 32.2 30.1
Group revenue increased by 22% to £23.0m (H1-FY24: £18.9m). Excluding the
effects of acquisitions in the period, revenue grew by 12%. Intelligent
Automation solutions revenue rose by 33% to £12.8m. Customer Engagement
solutions revenue increased by 10% to £10.0m, up from £9.05m in H1-FY24,
fuelled by significant growth in cloud contact centre subscription revenue of
41% to £3.53m (H1-FY24: 43% to £2.50m).
The table below sets out revenue by component for the last three interim
periods:
£'m Revenue H1-FY25 H1-FY24 H1-FY23
Cloud services 13.4 9.3 7.8
Product support contracts 4.8 4.9 4.6
Total Cloud services & Product support contracts 18.2 14.2 12.4
Communication services 1.5 1.3 1.3
Product 0.6 1.0 1.2
Professional services 2.7 2.4 2.6
Total Revenue 23.0 18.9 17.5
Revenue from Cloud services (subscription and usage fees of our cloud-based
offerings) was 45% higher at £13.43m (H1-FY24: £9.28m), including a £1.73m
contribution from acquisitions. Product support contract revenues decreased by
3% to £4.80m (H1-FY24: £4.93m), as expected mainly due to on-premise to
cloud migrations. Consequently, recurring revenues from these services
accounted for 79% of total revenue, up from 75% in the first half of the
previous financial year.
Communication services revenue, comprising fees for telephony and messaging
services, was 17% higher at £1.54m (H1-FY25: £1.32m) driven by higher fees
from the financial service sector.
Product revenue for software license sales and supporting hardware decreased
by 37% to £0.61m (H1-FY24: £0.97m), reflecting the shift towards cloud
solutions over on-premises options. We anticipate this trend to continue.
Professional services revenue was £2.67m (H1-FY24: £2.42m). This revenue
stream varies based on the ratio of direct and indirect sales, and whether
customer demand is for full application development or support for their own
development teams. Additionally, certain of our partners can provide
professional services to customers, whether they sell our products directly or
indirectly.
The Group's Remaining Performance Obligations ("RPO"), representing the total
of future contracted revenue not yet recognised, inclusive of deferred income,
increased 23% to £71.1m (H1-FY24: £58.0m). This growth includes a £6.4m
contribution from acquisitions and highlights the significant revenue
available to be recognised in future periods. Within this, current RPO, which
is revenue due to be recognised within the next 12-months, increased by 17% to
£37.1m (H1-FY24: £31.8m).
Adjusted EBITDA for the Group increased by 18% to £5.70m (H1-FY24: £4.83m),
representing a margin of 25% of revenue (H1-FY24: 26%), with the Govtech and
Parble acquisitions contributing £0.46m. The 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, which is now
substantially complete.
Group operating profit remained level at £3.47m (H1-FY24: £3.47m), with the
higher adjusted EBITDA offset by acquisition related charges, including
amortisation of acquired intangibles, non-recurring transaction costs, and
post-completion services, which were £0.77m higher than the previous period.
Following the cash utilised for the Govtech and Parble acquisitions, interest
income was lower, resulting in a £0.19m reduction in finance income compared
to the prior period, which led to a 5% decrease in profit before tax to
£3.69m (H1-FY24: £3.87m).
The Group recorded a tax charge of £0.81m (H1-FY24: £0.30m). The effective
rate of tax is lower than the headline rate of corporation tax as the Group
benefited from tax relief from the exercise of share options during the period
and R&D deductions. The prior period included utilisation of tax losses
that were previously unrecognised as deferred tax assets.
Basic earnings per share was 1.74 pence (H1-FY24: 2.23 pence) and increased by
7% to 2.22 pence on an adjusted basis (H1-FY24: 2.08 pence) reflecting
adjustments for the acquisition related charges. Diluted earnings per share
was 1.72 pence (H1-FY24: 2.14 pence) and increased by 10% to 2.19 pence on an
adjusted basis (H1-FY24: 1.99 pence).
In the first half, cash flow from operations, excluding non-recurring
acquisition-related costs, was £1.63m (H1-FY24: £4.71m). Cash conversion is
typically higher in the second half of the financial year due to the timing of
annual billings for Cloud service and support contracts. Additionally, the
previous period included a £3.1m customer renewal receipt outstanding at
FY23, making the cash flow comparable from the prior period when this is
excluded.
Spending on research and development, including capitalised software
development, increased to £3.38m (H1-FY24: £2.67m), of which capitalised
software expenditure was £1.51m (H1-FY24: £1.15m).
Total capital expenditure was £1.80m (H1-FY24: £1.24m), with the balance
after capitalised development being £0.30m (H1-FY24: £0.09m) relating to
routine IT purchases.
On 6 August 2024, the Company acquired Govtech Holdings Limited ('Govtech')
for a total consideration of up to £13.0m (see note 8 for further
information). During the reporting period, Govtech generated £1.50m in
revenue and an adjusted EBITDA of £0.30m. The consideration paid in the
period amounted to £9.15m in cash, with an additional £0.16m accrued as
post-completion services under IFRS 3, as the former owners of Govtech
continued to work in the business following its acquisition.
In addition, on 13 September 2024 the Company acquired Smart & Easy NV
(trading as 'Parble') for a total consideration of up to €8.70m (see note 8
for further information). During the reporting period, Parble generated
£0.42m in revenue and an adjusted EBITDA of £0.16m. The consideration paid
in the period amounted to €4.13m (£3.49m) in cash. Additionally, €1.01m
(£0.86m) of net debt was assumed which was repaid at completion. An
additional £0.05m was accrued as post-completion services under IFRS 3, as
the former owners of Parble continued to work in the business following its
acquisition.
As a result, Group cash at the end of the period was £22.0m (30 June 2024:
£34.0m). Net funds, stated after including lease liabilities, were £20.9m at
31 December 2024 (30 June 2024: £33.5m). The Company has no debt on its
balance sheet.
A final dividend of 0.89 pence per share for the year ended 30 June 2024 was
approved by shareholders at the AGM on 17 December 2024. The amount payable,
£1.47m, is included as a liability in the 31 December 2024 balance sheet and
was paid on 7 February 2025.
Unaudited consolidated income statement for the six months to 31 December 2024
£'000 Unaudited Unaudited Audited
Six months to Six months to 12 months to
31 December 2024 31 December 2023 30 June 2024
Revenue 23,041 18,914 39,057
Cost of sales (3,869) (2,518) (5,612)
Gross profit 19,172 16,396 33,445
Administrative expenses (15,726) (12,949) (28,050)
Other gains/(losses) - net 28 18 31
Adjusted EBITDA 5,700 4,828 8,440
Depreciation (244) (188) (398)
Amortisation of acquired intangible assets (527) (261) (581)
Amortisation of other intangible assets (811) (603) (1,228)
Profit on disposal of property, plant and equipment 19 - -
Non-recurring transaction fees (229) - -
Post-completion services (274) - (156)
Share-based payments (160) (311) (651)
Operating profit 3,474 3,465 5,426
Finance income 281 422 943
Finance costs (65) (13) (40)
Finance income - net 216 409 903
Profit before tax 3,690 3,874 6,329
Tax charge (812) (295) (475)
Profit for the period 2,878 3,579 5,854
Earnings per share - pence
Basic 1.74 2.23 3.61
Diluted 1.72 2.14 3.46
All activities of the Group in the current and prior periods are classed as
continuing. All of the profit for the period is attributable to the
shareholders of Netcall plc.
Unaudited statement of comprehensive income for the six months to 31 December
2024
£'000 Unaudited Unaudited Audited
Six months to Six months to 12 months to
31 December 2024 31 December 2023 30 June 2024
Profit for the period 2,878 3,579 5,854
Other comprehensive income
Items that may be reclassified to profit or loss
Exchange differences arising on translation of foreign operations (35) - (5)
Total other comprehensive income for the period (35) - (5)
Total comprehensive income for the period 2,843 3,579 5,849
All of the comprehensive income for the period is attributable to the
shareholders of Netcall plc.
Unaudited consolidated balance sheet at 31 December 2024
£'000 Unaudited Unaudited Audited
31 December 2024 31 December 2023 30 June 2024
Assets
Non-current assets
Property, plant and equipment 638 668 685
Right-of-use assets 943 422 357
Intangible assets 50,921 30,737 33,596
Deferred tax asset 642 1,456 876
Financial assets at fair value through other comprehensive income 100 72 72
Total non-current assets 53,244 33,355 35,586
Current assets
Inventories 15 13 36
Other current assets 2,624 2,515 2,313
Contract assets 299 292 207
Trade receivables 4,099 3,577 4,752
Other financial assets at amortised cost 82 95 139
Cash and cash equivalents 21,970 28,618 34,008
Total current assets 29,089 35,110 41,455
Total assets 82,333 68,465 77,041
Liabilities
Non-current liabilities
Contract liabilities 469 691 806
Borrowings - - 9
Lease liabilities 945 416 358
Deferred tax liabilities 3,206 1,272 1,407
Total non-current liabilities 4,620 2,379 2,580
Current liabilities
Trade and other payables 10,921 6,995 7,841
Dividend payable 1,470 1,338 -
Contract liabilities 22,871 19,826 26,009
Borrowings - - 10
Lease liabilities 166 108 104
Total current liabilities 35,428 28,267 33,964
Total liabilities 40,048 30,646 36,544
Net assets 42,285 37,819 40,497
Equity attributable to the owners of Netcall plc
Share capital 8,350 8,157 8,339
Share premium 5,574 5,574 5,574
Other equity 4,900 4,900 4,900
Other reserves 738 3,040 403
Retained earnings 22,723 16,148 21,281
Total equity 42,285 37,819 40,497
Unaudited consolidated statement of changes in equity at 31 December 2024
£'000 Share capital Share premium Other equity Other reserves Retained earnings Total equity
Balance at 30 June 2023 8,108 5,574 4,900 3,056 13,739 35,377
Proceeds from share issue 49 - - - - 49
Equity-settled share-based payments - - - 288 - 288
Reclassification following exercise or lapse of share options - - - (168) 168 -
Tax charge relating to share options - - - (136) - (136)
Dividends declared - - - - (1,338) (1,338)
Transactions with owners 49 - - (16) (1,170) (1,137)
Profit for the period - - - - 3,579 3,579
Other comprehensive income for the period - - - - - -
Profit and total comprehensive income for the period - - - - 3,579 3,579
Balance at 31 December 2023 8,157 5,574 4,900 3,040 16,148 37,819
Proceeds from share issue 182 - - - - 182
Equity-settled contingent consideration - - - 153 - 153
Equity-settled share based payments - - - 299 - 299
Reclassification following exercise or lapse of share options - - - (2,858) 2,858 -
Tax charge relating to share options - - - (226) - (226)
Transactions with owners 182 - - (2,632) 2,858 408
Profit for the period - - - - 2,275 2,275
Other comprehensive income for the period - - - (5) - (5)
Profit and total comprehensive income for the period - - - (5) 2,275 2,270
Balance at 30 June 2024 8,339 5,574 4,900 403 21,281 40,497
Proceeds from share issue 11 - - - - 11
Equity-settled contingent consideration - - - 78 - 78
Equity-settled share based payments - - - 152 - 152
Reclassification following exercise or lapse of share options - - - (34) 34 -
Tax charge relating to share options - - - 174 - 174
Dividends declared - - - - (1,470) (1,470)
Transactions with owners 11 - - 370 (1,436) (1,055)
Profit for the period - - - - 2,878 2,878
Other comprehensive income for the period - - - (35) (35)
Profit and total comprehensive income for the period - - - (35) 2,878 2,843
Balance at 31 December 2024 8,350 5,574 4,900 738 22,723 42,285
Unaudited consolidated cash flow statement for the six months to 31 December
2024
£'000 Unaudited Unaudited Audited
Six months to Six months to 12 months to
31 December 2024 31 December 2023 30 June 2024
Cash flows from operating activities
Profit before income tax 3,690 3,874 6,329
Adjustments for:
Depreciation and amortisation 1,582 1,052 2,207
Share-based payments 160 311 651
Finance income - net (216) (409) (903)
Other non-cash expenses (19) - -
Changes in operating assets and liabilities, net of effects from acquisition
of subsidiaries:
Decrease/ (increase) in inventories 21 18 (5)
Decrease/ (increase) in trade receivables 1,248 890 (249)
(Increase)/ decrease in contract assets (53) 307 393
Decrease/ (increase) in other financial assets at amortised cost 80 (39) (77)
Decrease/ (increase) in other current assets 125 (179) 29
Increase/ (decrease) in trade and other payables 406 (264) 182
(Decrease)/ increase in contract liabilities (5,558) (847) 5,249
Cash generated from operations 1,466 4,714 13,806
Analysed as:
Cash flows from operations before payment of non-recurring transaction costs 1,628 4,714 13,806
Non-recurring transaction cost payments (see note 4) (162) - -
Interest received 281 422 943
Interest paid (9) (4) (10)
Income taxes paid (117) - (11)
Net cash inflow from operating activities 1,621 5,132 14,728
Cash flows from investing activities
Payment for acquisition of subsidiary, net of cash acquired (11,807) - (1,633)
Payment for property, plant and equipment (86) (92) (252)
Payment of software development costs (1,507) (1,147) (2,322)
Payment for other intangible assets (209) - -
Proceeds from sales of property, plant and equipment 19 - -
Net cash outflow from investing activities (13,590) (1,239) (4,207)
Cash flows from financing activities
Proceeds from issue of ordinary shares 11 49 231
Repayment of borrowings (19) - (4)
Lease payments (48) (78) (152)
Dividends paid to Company's shareholders - - (1,338)
Net cash outflow from financing activities (56) (29) (1,263)
Net (decrease)/ increase in cash and cash equivalents (12,025) 3,864 9,258
Cash and cash equivalents at beginning of period 34,008 24,753 24,753
Effects of exchange rate changes on cash and cash equivalents (13) 1 (3)
Cash and cash equivalents at end of period 21,970 28,618 34,008
Notes to the financial information for the six months ended 31 December 2024
1. General information
Netcall plc (AIM: "NET", "Netcall", "Group" or the "Company") is a leading
provider of intelligent automation and customer engagement software. It is a
public limited company which is quoted on AIM (a market of the London Stock
Exchange). The Company's registered address is Suite 203, Bedford Heights,
Brickhill Drive
Bedford, UK MK41 7PH and the Company's registered number is 01812912.
2. Basis of preparation
The Group interim results consolidate those of the Company and its
subsidiaries (together referred to as the 'Group'). The principal trading
subsidiaries of Netcall are Netcall Technology Limited, Netcall Systems
Limited, Govtech Solutions Limited, Skore Labs Limited, and Smart and Easy NV.
These condensed half year financial statements for the six months ended 31
December 2024 have been prepared in accordance with the AIM Rules for
Companies and should be read in conjunction with the annual financial
statements for the year ended 30 June 2024, which has been prepared in
accordance with UK-adopted international accounting standards.
This results announcement are unaudited and do not constitute statutory
accounts of the Group within the meaning of sections 434(3) and 435(3) of the
Companies Act 2006 (the 'Act'). The balance sheet at 30 June 2024 has been
derived from the full Group accounts published in the Annual Report and
Accounts 2023, which has been delivered to the Registrar of Companies and on
which the report of the independent auditors was unqualified and did not
contain a statement under either section 498(2) or section 498(3) of the Act.
The results have been prepared in accordance with the accounting policies set
out in the Group's 30 June 2024 statutory accounts.
The results for the six months ended 31 December 2024 were approved by the
Board on 4 March 2025. A copy of these interim results will be available on
the Company's web site www.netcall (http://www.netcall) .com from 6 March
2025.
The principal risks and uncertainties faced by the Group have not changed from
those set out on pages 11 and 12 of the annual report for the year ended 30
June 2024.
3. Segmental analysis
The Board considers that there is one operating business segment being the
design, development, sale and support of software products and services, which
is consistent with the information reviewed by the Board when making strategic
decisions. Resources are reviewed on the basis of the whole of the business
performance.
The key segmental measure is adjusted EBITDA which is profit before interest,
tax, depreciation and amortisation adjusted to exclude the effects of
share-based payments, impairment, profit or loss on disposals, and
acquisition, contingent consideration and non-recurring transaction costs, a
reconciliation of 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.
Six months to Six months to 12 months to
31 December 2024 31 December 2023 30 June 2024
Non-recurring transaction fees((1)) (229) - -
Post-completion services expense((2)) (274) - (156)
(503) - (156)
((1)) The Company incurred professional advisor fees of £0.23m (1H FY24:
£nil) in connection with the acquisition of Govtech Holdings Limited and
Smart & Easy NV of which £0.16m was paid in the period. These costs are
included in 'administrative expenses'.
((2)) A number of former owners of Skore Labs Ltd, Govtech Holdings Ltd and
Smart and Easy NV continued to work in the business following their
acquisitions 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:
Six months to Six months to 12 months to
31 December 2024 31 December 2023 30 June 2024
Net earnings attributable to ordinary shareholders (£'000) 2,878 3,579 5,854
Weighted average number of ordinary shares in issue (thousands) 164,981 160,545 162,293
Basic earnings per share (pence) 1.74 2.23 3.61
The diluted earnings per share has been calculated by dividing the net profit
attributable to ordinary shareholders by the weighted average number of shares
in issue during the period, adjusted for potentially dilutive shares that are
not anti-dilutive.
Six months to Six months to 12 months to
31 December 2024 31 December 2023 30 June 2024
Weighted average number of ordinary shares in issue (thousands) 164,981 160,545 162,293
Adjustments for share options (thousands) 2,593 6,818 7,021
Weighted average number of potential ordinary shares in issue (thousands) 167,574 167,363 169,314
Diluted earnings per share (pence) 1.72 2.14 3.46
Adjusted earnings per share have been calculated to exclude the effect of
share-based payments, impairment, profit or loss on disposals, amortisation of
acquired intangible assets, and acquisition, contingent consideration and
non-recurring transaction costs at a normalised rate of tax. The Board
believes this gives a better view of ongoing maintainable earnings. The table
below sets out a reconciliation of the earnings used for the calculation of
earnings per share to that used in the calculation of adjusted earnings per
share:
£'000s Six months to Six months to 12 months to
31 December 2024 31 December 2023 30 June 2024
Profit used for calculation of basic and diluted EPS 2,878 3,579 5,854
Share based payments 160 311 651
Post-completion services 274 - 156
Non-recurring transaction fees 229 - -
Profit on disposal of property, plant and equipment (19) - -
Amortisation of acquired intangibles 527 261 581
Unwinding of discount - contingent consideration 33 - 10
Tax adjustment (411) (817) (1,457)
Profit used for calculation of adjusted basic and diluted EPS 3,671 3,334 5,795
Pence Six months to Six months to 12 months to
31 December 2024 31 December 2023 30 June 2024
Adjusted basic earnings per share 2.22 2.08 3.57
Adjusted diluted earnings per share 2.19 1.99 3.42
6. Dividends
Dividends paid or declared during the period were as follows:
Six months to December 2024 Paid Pence per share Cash flow statement Statement of changes in equity December 2024 balance sheet
(£'000) (£'000) (£'000)
Final ordinary dividend for year to June 2024((1)) 7/02/25 0.89p - 1,470 1,470
- 1,470 1,470
Six months to December 2023 Paid Pence per share Cash flow statement Statement of changes in equity December 2023 balance sheet
(£'000) (£'000) (£'000)
Final ordinary dividend for year to June 2023 9/02/24 0.83p - 1,338 1,338
- 1,338 1,338
((1)) The final ordinary dividend for the year ended 30 June 2024 was approved
at the Annual General Meeting held on 17 December 2024.
7. Net funds reconciliation
£'000 31 December 2024 31 December 2023 30 June 2024
Cash and cash equivalents 21,970 28,618 34,008
Borrowings - fixed interest - - (19)
Lease liabilities (1,111) (524) (462)
Net funds 20,859 28,094 33,527
8. Business combinations
Acquisition of Govtech Holdings Limited
On 6 August 2024, the Company acquired 100% of the issued share capital of
Govtech Holdings Limited ('Govtech'), a provider of digital process automation
solutions.
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 9,150
Deferred cash consideration 433
Contingent cash consideration 415
Contingent share consideration 11
10,009
The consideration for the transaction comprised:
· cash consideration of £9.15m paid on completion;
· deferred cash consideration of £0.45m (undiscounted) payable in
August 2025; and
· contingent consideration of up to £2.40m in cash and £1.00m in
Netcall shares, payable upon achievement of specific performance targets
within the two-year period following the completion date. As the arrangement
requires on-going provision of services to the Group by a number of the
previous shareholders of Govtech 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 1,200
Intangible assets - customer relationships 3,350
Intangible assets - brand 300
Property, plant and equipment 35
Right-of-use assets 225
Other current assets 433
Trade receivables 561
Cash and cash equivalents 1,689
Trade and other payables (575)
Contract liabilities (1,917)
Lease liabilities - current liabilities (27)
Lease liabilities - non-current liabilities (207)
Deferred tax liabilities (1,298)
Net identifiable assets acquired 3,769
Goodwill 6,240
Net assets acquired 10,009
The fair value of the acquired assets is provisional, pending receipt of the
final valuations for those assets.
The goodwill recognised is attributable to the future economic benefits
expected to be obtained from the integration of Govtech's solutions into the
Liberty product and to the workforce.
Subsequent to the date of acquisition, Govtech generated £1.50m of revenue
and profit after tax of £0.23m during the reporting period, which is included
within the Consolidated income statement.
The cash outflow as a result of the transaction is as follows:
£000
Initial cash consideration 9,150
Less: cash acquired (1,689)
Net cash outflow from investing activities 7,461
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 fair value of the consideration transferred is:
£000
Initial cash consideration 3,489
Deferred cash consideration 490
Contingent cash consideration 42
Contingent share consideration 67
4,088
The consideration for the transaction comprised:
· cash consideration of €4.13m (£3.49m) paid on completion.
Additionally, €1.01m (£0.86m) in net debt was assumed and repaid at
completion;
· deferred cash consideration of €0.60m (undiscounted) payable in
September 2025; and
· contingent consideration of up to €2.00m in cash and €2.00m
in Netcall shares, payable upon achievement of specific performance targets
within the three-year period following the completion date. As the arrangement
requires on-going provision of services to the Group by a number of the
previous shareholders of Parble 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 1,985
Intangible assets - customer relationships 279
Property, plant and equipment 3
Other current assets 24
Trade receivables 35
Contract assets 40
Cash and cash equivalents 481
Trade and other payables (333)
Contract liabilities (168)
Borrowings (1,338)
Deferred tax liabilities (566)
Net identifiable assets acquired 442
Goodwill 3,646
Net assets acquired 4,088
The fair value of the acquired assets is provisional, pending receipt of the
final valuations for those assets.
The goodwill recognised is attributable to the future economic benefits
expected to be obtained from the integration of Parble's digital process
automation solutions into the Liberty product and to the workforce.
Subsequent to the date of acquisition, Parble generated £0.42m of revenue and
profit after tax of £0.03m during the reporting period, which is included
within the Consolidated income statement.
The cash outflow as a result of the transaction is as follows:
£000
Initial cash consideration 3,489
Less: cash acquired (481)
Add: debt assumed and repaid in full at completion 1,338
Net cash outflow from investing activities 4,346
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