6
March 2024
NETCALL PLC
("Netcall", the "Company", or
the "Group")
Interim results for the six
months ended 31 December 2023
Cloud momentum driving
growth
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
2023.
Financial highlights
|
H1 FY24
|
H1 FY23
|
|
Revenue
|
£18.9m
|
£17.5m
|
+8%
|
Cloud services revenue
|
£9.28m
|
£7.85m
|
+18%
|
Total annual contract
value(1) (ACV)
|
£30.1m
|
£26.5m
|
+14%
|
Cloud services ACV
|
£20.3m
|
£17.1m
|
+19%
|
Underlying Cloud Net Retention
Rate(2)
|
119%
|
119%
|
|
Adjusted
EBITDA(3)
|
£4.83m
|
£4.43m
|
+9%
|
Profit before tax
|
£3.87m
|
£2.41m
|
+61%
|
Adjusted basic earnings per
share
|
2.08p
|
1.86p
|
+12%
|
Group cash at period end
|
£28.6m
|
£20.4m
|
+40%
|
Operational highlights
·
|
Cloud subscriptions remain the
primary driver of growth, with cloud services revenue growing by
18% to £9.28m and accounting for
88% of new bookings.
|
·
|
New customers drove strong demand,
representing 33% of new cloud bookings, an
increase of 11 percentage points from the prior period.
|
·
|
With cloud subscriptions growing,
the proportion of Group revenues that are recurring has increased
by 4 percentage points to 75%, leading to strong cash flow
generation.
|
·
|
Strong demand for cloud contact
centre solutions which accelerated growth in
Customer Engagement revenue.
|
·
|
Continued expansion of revenues
within the existing base, reflected in the cloud net retention rate
of 111% or 119% excluding the effect of the significant contract
win announced in June 2022 and renewed in July 2023.
|
·
|
Growing number of customers and
partners deploying Liberty AI capabilities.
|
·
|
Board succession and executive
leadership changes as previously announced are now complete,
ensuring continuing, effective leadership of the
Company.
|
·
|
Acquisition of Skore Labs Limited
("Skore"), completed after the period, enhancing the Group's
product offering and increasing both the market opportunity and
cross-sell potential.
|
·
|
The Board is confident in delivering
on its expectations and completing another successful
year.
|
James Ormondroyd,
Chief Executive, said:
"These results reflect a good start to the year, with strong
uptake of our Cloud offering from new and existing customers. This
growing base of cloud subscriptions is providing increased
visibility and cash flows, supporting continued investment into our
business.
"We are pleased to have acquired Skore post period end,
bringing a highly complementary bolt-on solution and enhancing our
offering as a one-stop-shop digital transformation toolkit. We are
seeing good early interest for our combined offering across our
joint customer bases.
"We enter the second half with continued positive trading
momentum, a higher base of recurring revenues and a healthy
pipeline of opportunities. This, combined with a programme of
continued product enhancements to unlock new growth opportunities,
gives us confidence in the Group'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).
(2) 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 upsells 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. The underlying cloud net retention rate is
calculated excluding the impact of the significant contract win
announced in June 2022 and renewed in July 2023 (see note 8 for
additional information).
.
(3) Profit before interest, tax, depreciation and amortisation
adjusted to exclude the effects of share-based payments,
acquisition related costs, impairment, profit or loss on disposals,
contingent consideration and non-recurring transaction
costs.
Enquiries:
Netcall plc
|
Tel. +44 (0) 330 333
6100
|
James Ormondroyd, CEO
Henrik Bang, Chair
Richard Hughes, CFO
|
|
|
|
Canaccord Genuity Limited (Nominated Adviser and Joint Broker)
|
Tel. +44 (0) 20 7523
8000
|
Simon Bridges/ Andrew
Potts
|
|
|
|
Singer Capital Markets (Joint
Broker)
|
|
Harry Gooden / Asha
Chotai
|
Tel. +44 (0) 20 7496 3000
|
|
|
Alma Strategic Communications
|
Tel. +44 (0) 20 3405
0205
|
Caroline Forde / Hilary Buchanan /
Robyn Fisher
|
|
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 delivered a good
performance for the six months to 31 December 2023, in line with
management expectations. Revenue for the first half increased 8% to
£18.9m (H1-FY23: £17.5m) delivering adjusted EBITDA growth of 9% to
£4.8m (H1-FY23: £4.4m).
Netcall's cloud offerings, which
help businesses to modernise their operations, reduce costs and
enhance customer experience, continued to drive growth in the first
half of the financial year. Cloud services revenue rose by 18% to
£9.28m and cloud subscriptions accounted for 88% of new bookings in
the period.
This resulted in an increase in
Cloud ACV and Total ACV by 19% and 14% respectively to £20.3m and
£30.1m, providing visibility of future revenue performance. On an
underlying basis, these growth rates were
28% and 19%, excluding the significant contract announced in June
2022 and renewed in July 2023.
Customer acquisition was robust in
the period, with 33% of new cloud bookings from new customers
(H1-FY23: 22%). The Group also continues to expand its revenues
within the existing base, reflected in the cloud net retention rate
of 111% or 119% on an underlying basis (H1-FY23: 149% and 119%
respectively).
Almost one quarter of Customer
Engagement customers are now integrating both Customer Engagement
and Intelligent Automation solutions, highlighting both the
stickiness of the Group's existing client base and the significant
potential for further cross-selling opportunities as customers
choose to further embed Netcall's solutions into their
platforms.
Investment in the Group's
established growth strategies is ongoing, including a regular pace
of product enhancements which continue to unlock new growth
opportunities. The previously announced investment programme into
the cloud-based Customer Engagement solutions to address the
growing demand has commenced. As planned, the costs of this
programme will be weighted toward the second half of FY24 and
should position the Group to enjoy further growth
thereafter.
The Group's platform roadmap has
been accelerated by the acquisition of Skore, a highly
complementary technology that enhances the Liberty offering. This
acquisition has strengthened Netcall's position as a one-stop-shop
digital transformation toolkit, providing increased cross-selling
potential and an expanded market opportunity. The Skore offering
has now been launched to the existing Netcall customer base and
technology integration into the Liberty platform is progressing as
planned.
With Cloud accounting for a larger
proportion of the overall business, the Group's recurring revenues
are rising strongly, leading to improved cash flow generation. The
Group's cash position increased to £28.6m at the end of the period
(30 June 2023: £24.8m), with no debt on its balance
sheet.
Current Trading and Outlook
The Group has maintained its
positive momentum in the beginning of the second half. The
acquisition of Skore, after the period end, enhanced the Group's
product offering and opens up new business opportunities. With its
organic investment strategies and a programme of continued product
enhancements to unlock new growth opportunities, Netcall is
well-positioned to seize the growing market opportunity. The
sustained momentum for Cloud is driving growth of predictable
recurring revenue, with the contracted base of revenue yet to be
recognised increasing to £58m.
Netcall continues to benefit from
favourable market drivers, including the rapid acceleration of
cloud and AI technologies. This, coupled with a robust balance
sheet, a higher base of recurring revenues and a healthy order
book, provides the Board with confidence in the Group's ongoing
success.
Business Review
Netcall helps customers implement
their digital strategies successfully, creating more intelligent,
efficient, and customer-centric organisations. This enhances their
overall effectiveness, competitiveness, and sustainability across
industries, from councils and hospitals to financial institutions,
as they all strive to deliver better outcomes for their
stakeholders.
Netcall's Liberty platform addresses
these demands by combining Intelligent Automation and Customer
Engagement software in a one-stop-shop digital transformation
toolkit. It integrates process mapping and analysis, low-code, RPA,
contact centre and AI solutions to enable rapid process automation,
operational efficiencies, and improved customer
experience.
The Liberty platform's distinctive
feature is unifying complementary solution categories which work
together to support the implementation of successful automation
programmes. The availability of Intelligent Automation and Customer
Engagement technologies on one, easy-to-use platform with the
inclusion of industry specific implementations continues to provide
competitive differentiation in the market.
Through the acquisition of Skore
post period end, Netcall added process mapping and analysis to the
Liberty platform toolkit, a key foundation component of business
process automation. This enables users to rapidly map processes,
identify problems and opportunities for optimisation, and drive
operational improvements. By integrating process mapping with
Liberty's existing low-code application capabilities, customers can
map and then automate processes faster and easier, increasing
Liberty's addressable market and providing significant
cross-selling potential across Netcall's existing customer
base.
Strategy
Netcall actively pursues market
opportunities through a four-pillar growth strategy: acquire new
customers, expand within the existing customer base, innovate
products continuously, and expand the partner network.
The Group focuses primarily on
financial services, healthcare, and public sector industries, which
contributed 89% of the Group's total revenues during the period.
Netcall principally targets customers with complex operations,
large customer and employee bases, and many stakeholders, often
facing an extensive regulatory landscape.
The Liberty platform's adaptability
and its seamless integration with cloud services enable customers
to increase their platform usage, supporting their expansion
objectives.
Netcall continues to maintain high
customer satisfaction and employee engagement levels in the period,
providing a strong foundation for future growth of the
business.
Customer base expansion
New customer acquisition was robust
in the period as more organisations across sectors chose to partner
with Netcall on their digital transformation journeys. Orders for
Cloud services drove the new wins,
especially sales of the Group's cloud contact centre solution. The
growing customer base lays the foundations from which to grow
long-term and valuable relationships.
The Group saw particularly good
demand in healthcare in the period through its Patient Hub
solution, with several new customer wins. An example is a recent
contract with NHS Devon where Netcall is providing a waiting list
solution across the customer's care area with a population of 1.3
million people.
The Group also continues to see
momentum in additional industry segments. A highlight in the period
is Transport for London (TfL), who partnered with Netcall to deploy
a product acceptance solution, which manages certification for TfL
of equipment and vehicles used on the underground network. This app
is already in use by Network Rail, who shared it with TfL to speed
up their deployment.
Land and expand
The Group's land-and-expand strategy
has remained a central focus and cross/upselling products continues
to be a source of value, as customers increasingly deploy upgrades
and new Netcall solutions. This is reflected in the consistently
high cloud net retention rate of 111% or 119% on an underlying
basis.
The proportion of Customer
Engagement customers who have also purchased Intelligent Automation
solutions continues its progression, up 2 percentage points to 23%,
with the average increase in contract value of a customer taking
both solutions being on average 3x that of a standalone Customer
Engagement contract.
In addition, on-premise contact
centre customers migrating to Netcall's cloud environment in order
to leverage greater flexibility and lower operating costs is a
growing trend, resulting in an approximately 60% uplift in annual
contract values. This trend is reflected in the strong growth now
coming through the reported financials in Customer Engagement
revenue, up 9% in the period, driven in part by a 43% increase in
cloud contact centre revenue.
Growing the partner channel
Netcall has established a partner
network that includes large global advisory firms and niche
technology specialists. This network enables the Group to access
new markets and opportunities in the UK and overseas. Throughout
the period, Netcall's partner network has continued to grow, and
sales via indirect channels accounted for 20% of order bookings.
The Group signed up six new partners in the period, bringing the
total number of signed partners to more than 40. The Board remains
committed to its strategic priority of expanding this network with
a focus on improving delivery capabilities for partners.
Innovation and product development
Underpinning the Group's broadening
and deepening customer base is a continuous pace of innovative
product development and platform expansion to offer customers
enhanced features and capabilities. This supports the Group's
land-and-expand strategy, unlocking opportunities for new customer
acquisition as well as cross- and up-selling through new product
functionalities.
Customers using the Netcall Liberty
platform benefit from this strategy. They receive regular updates
and new features that improve their platform experience. The
enhancements also included customer requests, upvoted by peers in
the Netcall Community Ideas Portal, in releases within the period.
This supports the Group's mission of being a partner to its
customers on their digital transformation journey.
Netcall's Liberty AI is an
innovative artificial intelligence solution that enables customers
to easily integrate custom or pre-trained AI models in their
applications or interactions. A growing number of customers and
partners are deploying Liberty AI capabilities, together with an
increasing level of sales engagements exploring how AI can unlock
value for customers. Liberty AI is set to include generative AI
features that will allow customers to enrich their engagement and
automation apps with chat summarisation, topic extraction, and
sentiment analysis. These features are expected to launch in Q2 /
Q3 2024, followed by more functionality throughout the
year.
The Group regularly updates its
industry-tailored offerings built on the Liberty platform, or
'hubs', to meet the evolving needs of its customers. The Group's
hubs include Citizen Hub and Tenant Hub, which are full-stack,
low-code case management, workflow and process automation solutions
for councils and housing providers; and Patient Hub, a patient
engagement portal that offers appointment notifications, waiting
list validation, patient initiated follow up and NHS App
integration.
New applications for these hubs are planned for
the second half of the year, which are expected to generate
additional revenue streams. These include Diagnostic Booking, which
automates appointment booking for scans; and Rent-IQ, which assists
housing providers to proactively manage rent arrears.
Skore's process discovery and mapping solution
is currently being integrated into the Liberty platform and is
expected to be available by April 2024. The product development
roadmap includes introducing industry-specific process templates,
as well as using AI within Liberty to make process mapping and
automation efficient and smarter.
Financial Review
Year-on-year growth in 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. ACV is a key 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 19% higher at £20.3m
(H1-FY23: £17.1m). Cloud ACV growth, driven by the Group's
successful land-and-expand strategy, contributed to a 14%
year-on-year increase in Total ACV to £30.1m (H1-FY23: £26.5m).
This marks a milestone for the Group, as it surpasses the £30m
threshold for the first time. Underlying
Cloud and Total ACV growth, excluding the significant contract
renewal announced in July 2023, was 28% and 19% respectively (see
note 8 for further information).
The table below sets out ACV for the
last three reporting periods:
£'m ACV
|
H1-FY24
|
FY23
|
H1-FY23
|
Cloud services
|
20.3
|
18.1
|
17.1
|
Product support contracts
|
9.8
|
9.8
|
9.4
|
Total
|
30.1
|
27.9
|
26.5
|
Group revenue rose by 8% to £18.9m
(H1-FY23: £17.5m). On an underlying basis, revenue growth increased
by 3 percentage points from 8% in H1-FY23 to 11% in the current
period. Intelligent Automation solutions' revenue grew by 7% to
£9.64m, or 14% on an underlying basis. Customer Engagement
solutions' revenue increased by 9% to £9.05m, up from 4% in
H1-FY23, underpinned by significant growth in cloud contact centre
subscription revenue of 43% to £2.50m (H1-FY23: 17% to
£1.74m).
The table below sets out revenue by
component for the last three interim periods:
£'m Revenue
|
H1-FY24
|
H1-FY23
|
H1-FY22
|
Cloud services
|
9.3
|
7.8
|
4.9
|
Product support contracts
|
4.9
|
4.6
|
4.4
|
Total Cloud services & Product support
contracts
|
14.2
|
12.4
|
9.4
|
Communication services
|
1.3
|
1.3
|
1.5
|
Product
|
1.0
|
1.2
|
1.1
|
Professional services
|
2.4
|
2.6
|
2.7
|
Total Revenue
|
18.9
|
17.5
|
14.7
|
Revenue from Cloud services
(subscription and usage fees of our cloud-based offerings) was 18%
higher at £9.28m (H1-FY23: £7.85m). Product support contracts also
grew by 7% to £4.93m (H1-FY23: £4.61m). As a result, recurring
revenues from these services accounted for 75% of total revenue, up
from 71% in the first half of the last financial year.
Communication services revenue,
which consists of fees for telephony and messaging services, was
£1.32m (H1-FY23: £1.31m).
Product revenue for software license
sales and supporting hardware decreased as expected by 20% to
£0.97m (H1-FY23: £1.21m) as more customers opted for cloud
solutions over on-premises ones. We anticipate this trend to
persist in the future.
Professional services revenue was
£2.42m (H1-FY23: £2.55m). 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"), being the total of future contracted revenue
with customers that have not yet been recognised, inclusive of
deferred income, increased 6% to £58.0m (H1-FY23: £54.5m)
demonstrating the material amount of revenue available to the
Company to be recognised in future periods. Within this, current
RPO, being revenue due to be recognised within the next 12-months,
increased by 6% to £31.8m (H1-FY23: £30.0m) or 14% on an underlying
basis.
The Group's adjusted EBITDA
increased by 9% to £4.83m (H1-FY23: £4.43m), a margin of 26% of
revenue (H1-FY23: 25%). The higher margin reflecting an increased
contribution from Cloud services in the period, before an expected
short-term margin reduction in future periods from the Group's
investment programme into its cloud Customer Engagement
offering.
The higher adjusted EBITDA led to a
42% increase in operating profit to £3.47m (H1-FY23: £2.45m) with
charges for depreciation and amortisation being broadly level
compared to the previous period. The share-based payment charge for
the period was £0.31m, which was £0.21m lower than the prior period
(H1-FY23: £0.52m). The Group did not incur any charges for post
completion services in the period (H1-FY23: £0.37m).
As a result, profit before tax was
61% higher at £3.87m (H1-FY23: £2.41m).
The Group recorded a tax charge of
£0.30m (H1-FY23: credit £15,000). The effective rate of tax is
lower than the headline rate of corporation tax as the Group
utilised tax losses that were previously unrecognised as deferred
tax assets. The Group also benefited from tax relief from the
exercise of share options during the period.
Basic earnings per share was 40%
higher at 2.23 pence (H1-FY23: 1.59 pence) and increased by 12% to
2.08 pence on an adjusted basis (H1-FY23: 1.86 pence). Diluted
earnings per share was 42% higher at 2.14 pence (H1-FY23: 1.51
pence) and increased by 12% to 1.99 pence on an adjusted basis
(H1-FY23: 1.77 pence).
Cash generated from operating
activities was £5.13m (H1-FY23: £5.21m), being a conversion of 106%
of adjusted EBITDA (H1-FY23: 118%).
Spending on research and
development, including capitalised software development, increased
by 7% to £2.67m (H1-FY23: £2.50m) of which capitalised software
expenditure was £1.15m (H1-FY23: £1.14m).
Total capital expenditure was £1.24m
(H1-FY23: £1.52m); the balance after capitalised development, being
£0.09m (H1-FY23: £0.38m) relating to routine IT equipment
purchases.
Group cash at the end of the period
was £28.6m (30 June 2023: £24.8m), representing a 15% increase on
the year-end position. Net funds, stated after including lease
liabilities, were £28.1m at 31 December 2023 (30 June 2023:
£24.3m). The Company has no debt on its balance sheet.
A final dividend of 0.83 pence per
share for the year ended 30 June 2023 was approved by shareholders
at the AGM on 19 December 2023. The amount payable, which was
£1.34m, is included as a liability in the 31 December 2023 balance
sheet and was paid on 9 February 2024.
Unaudited consolidated income statement for the six months to
31 December 2023
£'000
|
|
Unaudited
Six months
to
31
December 2023
|
Unaudited
Six months
to
31
December 2022
|
Audited
12 months
to
30
June 2023
|
Revenue
|
|
18,914
|
17,532
|
36,040
|
Cost of sales
|
|
(2,518)
|
(2,922)
|
(5,768)
|
Gross profit
|
|
16,396
|
14,610
|
30,272
|
|
|
|
|
|
Administrative expenses
|
|
(12,949)
|
(12,257)
|
(26,522)
|
Other gains/(losses) - net
|
|
18
|
100
|
62
|
|
|
|
|
|
Adjusted EBITDA
|
|
4,828
|
4,433
|
8,003
|
Depreciation
|
|
(188)
|
(189)
|
(377)
|
Amortisation of acquired intangible
assets
|
|
(261)
|
(261)
|
(522)
|
Amortisation of other intangible
assets
|
|
(603)
|
(649)
|
(1,287)
|
Post-completion services
|
|
-
|
(366)
|
(365)
|
Share-based payments
|
|
(311)
|
(515)
|
(1,640)
|
|
|
|
|
|
Operating profit
|
|
3,465
|
2,453
|
3,812
|
|
|
|
|
|
Finance income
|
|
422
|
102
|
344
|
Finance costs
|
|
(13)
|
(144)
|
(155)
|
Finance income/(costs) -
net
|
|
409
|
(42)
|
189
|
|
|
|
|
|
Profit before tax
|
|
3,874
|
2,411
|
4,001
|
|
|
|
|
|
Tax (charge)/ credit
|
|
(295)
|
15
|
205
|
Profit for the period
|
|
3,579
|
2,426
|
4,206
|
|
|
|
|
|
Earnings per share - pence
|
|
|
|
|
Basic
|
|
2.23
|
1.59
|
2.69
|
Diluted
|
|
2.14
|
1.51
|
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.
Unaudited statement of comprehensive income for the six months
to 31 December 2023
£'000
|
|
Unaudited
Six months
to
31
December 2023
|
Unaudited
Six months
to
31
December 2022
|
Audited
12 months
to
30
June 2023
|
|
|
|
|
|
Profit for the period
|
|
3,579
|
2,426
|
4,206
|
|
|
|
|
|
Other comprehensive income
|
|
|
|
|
Items that may be reclassified to profit or
loss
|
|
|
|
|
Exchange differences arising on
translation of foreign operations
|
|
-
|
1
|
8
|
Total other comprehensive income for the
period
|
|
-
|
1
|
8
|
|
|
|
|
|
Total comprehensive income for the period
|
|
3,579
|
2,427
|
4,214
|
All of the comprehensive income for
the period is attributable to the shareholders of Netcall
plc.
Unaudited consolidated balance sheet at 31 December
2023
£'000
|
|
Unaudited
31
December 2023
|
Unaudited
31
December 2022
|
Audited
30 June
2023
|
Assets
|
|
|
|
|
Non-current assets
|
|
|
|
|
Property, plant and
equipment
|
|
668
|
727
|
699
|
Right-of-use assets
|
|
422
|
363
|
298
|
Intangible assets
|
|
30,737
|
30,224
|
30,453
|
Deferred tax asset
|
|
1,456
|
1,240
|
1,767
|
Financial assets at fair value
through other comprehensive income
|
|
72
|
72
|
72
|
Total non-current assets
|
|
33,355
|
32,626
|
33,289
|
Current assets
|
|
|
|
|
Inventories
|
|
13
|
128
|
31
|
Other current assets
|
|
2,515
|
2,541
|
2,333
|
Contract assets
|
|
292
|
905
|
599
|
Trade receivables
|
|
3,577
|
3,663
|
4,468
|
Other financial assets at amortised
cost
|
|
95
|
34
|
57
|
Cash and cash equivalents
|
|
28,618
|
20,419
|
24,753
|
Total current assets
|
|
35,110
|
27,690
|
32,241
|
Total assets
|
|
68,465
|
60,316
|
65,530
|
Liabilities
|
|
|
|
|
Non-current liabilities
|
|
|
|
|
Contract liabilities
|
|
691
|
675
|
787
|
Lease liabilities
|
|
416
|
353
|
292
|
Deferred tax liabilities
|
|
1,272
|
1,079
|
1,151
|
Total non-current liabilities
|
|
2,379
|
2,107
|
2,230
|
Current liabilities
|
|
|
|
|
Trade and other payables
|
|
6,995
|
7,906
|
7,232
|
Dividend payable
|
|
1,338
|
839
|
-
|
Contract liabilities
|
|
19,826
|
16,843
|
20,578
|
Lease liabilities
|
|
108
|
119
|
113
|
Total current liabilities
|
|
28,267
|
25,707
|
27,923
|
Total liabilities
|
|
30,646
|
27,814
|
30,153
|
Net
assets
|
|
37,819
|
32,502
|
35,377
|
|
|
|
|
|
Equity attributable to the owners of Netcall
plc
|
|
|
|
|
Share capital
|
|
8,157
|
7,993
|
8,108
|
Share premium
|
|
5,574
|
5,574
|
5,574
|
Other equity
|
|
4,900
|
4,900
|
4,900
|
Other reserves
|
|
3,040
|
3,827
|
3,056
|
Retained earnings
|
|
16,148
|
10,208
|
13,739
|
Total equity
|
|
37,819
|
32,502
|
35,377
|
Unaudited consolidated statement of changes in equity at 31
December 2023
£'000
|
Share
capital
|
Share
premium
|
Other
equity
|
Other
reserves
|
Retained
earnings
|
Total
equity
|
Balance at 30 June 2022
|
7,587
|
3,015
|
4,900
|
4,462
|
7,454
|
27,418
|
Proceeds from share issue
|
406
|
2,559
|
-
|
-
|
-
|
2,965
|
Increase in equity reserve in
relation to options issued
|
-
|
-
|
-
|
392
|
-
|
392
|
Reclassification following exercise
or lapse of share options
|
-
|
-
|
-
|
(1,167)
|
1,167
|
-
|
Tax credit relating to share
options
|
-
|
-
|
-
|
139
|
-
|
139
|
Dividends declared
|
-
|
-
|
-
|
-
|
(839)
|
(839)
|
Transactions with owners
|
406
|
2,559
|
-
|
(636)
|
328
|
2,657
|
Profit for the period
|
-
|
-
|
-
|
-
|
2,426
|
2,426
|
Other comprehensive income for the
period
|
-
|
-
|
-
|
1
|
-
|
1
|
Profit and total comprehensive income for the
period
|
-
|
-
|
-
|
1
|
2,426
|
2,427
|
Balance at 31 December 2022
|
7,993
|
5,574
|
4,900
|
3,827
|
10,208
|
32,502
|
Proceeds from share issue
|
115
|
-
|
-
|
-
|
-
|
115
|
Increase in equity reserve in
relation to options issued
|
-
|
-
|
-
|
707
|
-
|
707
|
Reclassification following exercise
or lapse of share options
|
-
|
-
|
-
|
(1,751)
|
1,751
|
-
|
Tax credit relating to share
options
|
-
|
-
|
-
|
266
|
-
|
266
|
Transactions with owners
|
115
|
-
|
-
|
(778)
|
1,751
|
1,088
|
Profit for the period
|
-
|
-
|
-
|
-
|
1,780
|
1,780
|
Other comprehensive income for the
period
|
-
|
-
|
-
|
7
|
-
|
7
|
Profit and total comprehensive income for the
period
|
-
|
-
|
-
|
7
|
1,780
|
1,787
|
Balance at 30 June 2023
|
8,108
|
5,574
|
4,900
|
3,056
|
13,739
|
35,377
|
Proceeds from share issue
|
49
|
-
|
-
|
-
|
-
|
49
|
Increase in equity reserve in
relation to options issued
|
-
|
-
|
-
|
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
|
Unaudited consolidated cash flow statement for the six months
to 31 December 2023
£'000
|
Unaudited
Six months
to
31
December 2023
|
Unaudited
Six months
to
31
December 2022
|
Audited
12 months
to
30
June 2023
|
Cash
flows from operating activities
|
|
|
|
Profit before income tax
|
3,874
|
2,411
|
4,001
|
Adjustments for:
|
|
|
|
Depreciation and
amortisation
|
1,052
|
1,099
|
2,186
|
Share-based
payments
|
311
|
515
|
1,640
|
Finance (income)/costs -
net
|
(409)
|
42
|
(189)
|
Other non-cash
expenses
|
-
|
6
|
6
|
Changes in operating assets and
liabilities, net of effects from acquisition of
subsidiaries:
|
|
|
|
Decrease/ (increase) in
inventories
|
18
|
(91)
|
7
|
Decrease/ (increase) in
trade receivables
|
890
|
41
|
(765)
|
Decrease/ (increase) in
contract assets
|
307
|
(15)
|
281
|
Increase in other
financial assets at amortised cost
|
(39)
|
(27)
|
(49)
|
(Increase)/ decrease in
other current assets
|
(179)
|
207
|
416
|
Decrease in trade and
other payables
|
(264)
|
(62)
|
(1,148)
|
(Decrease)/ increase in
contract liabilities
|
(847)
|
988
|
4,835
|
Cash
generated from operations
|
4,714
|
5,114
|
11,221
|
Analysed as:
|
|
|
|
Cash flows from operations before post completion
service consideration payments
|
4,714
|
5,137
|
11,597
|
Payment of post completion
service consideration
|
-
|
(23)
|
(376)
|
Interest received
|
422
|
102
|
344
|
Interest paid
|
(4)
|
(4)
|
(8)
|
Income taxes paid
|
-
|
-
|
-
|
Net
cash inflow from operating activities
|
5,132
|
5,212
|
11,557
|
|
|
|
|
Cash
flows from investing activities
|
|
|
|
Payment for property, plant and
equipment
|
(92)
|
(363)
|
(458)
|
Payment of software development
costs
|
(1,147)
|
(1,138)
|
(2,267)
|
Payment for other intangible
assets
|
-
|
(19)
|
(19)
|
Net
cash outflow from investing activities
|
(1,239)
|
(1,520)
|
(2,744)
|
|
|
|
|
Cash
flows from financing activities
|
|
|
|
Proceeds from issue of ordinary
shares
|
49
|
2,965
|
3,079
|
Interest paid on Loan
Notes
|
-
|
(202)
|
(204)
|
Repayment of borrowings
|
-
|
(3,500)
|
(3,500)
|
Lease payments
|
(78)
|
(140)
|
(214)
|
Dividends paid to Company's
shareholders
|
-
|
-
|
(839)
|
Net
cash outflow from financing activities
|
(29)
|
(877)
|
(1,678)
|
|
|
|
|
Net
increase in cash and cash equivalents
|
3,864
|
2,815
|
7,135
|
Cash and cash equivalents at
beginning of period
|
24,753
|
17,605
|
17,605
|
Effects of exchange rate changes on
cash and cash equivalents
|
1
|
(1)
|
13
|
Cash
and cash equivalents at end of period
|
28,618
|
20,419
|
24,753
|
Notes to the financial information for the six months ended 31
December 2023
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 and Netcall Systems
Limited.
These condensed half year financial
statements for the six months ended 31 December 2023 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 2023, which has been prepared in accordance with
UK-adopted international accounting
standards.
This results announcement is
unaudited and does not constitute statutory accounts of the Group
within the meaning of sections 434(3) and 435(3) of the Companies
Act 2006 (the 'Act'). The balance sheet at 30 June 2023 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 2023 statutory accounts.
The results for the six months ended
31 December 2023 were approved by the Board on 5 March 2024. A copy of these interim results will be
available on the Company's web site www.netcall.com from 6 March 2024.
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 2023.
3.
Segmental analysis
The Board considers that there is
one operating business segment being the design, development, sale
and support of software products and services, which is consistent
with the information reviewed by the Board when making strategic
decisions. Resources are reviewed on the basis of the whole of the
business performance.
The key segmental measure is
adjusted EBITDA which is profit before interest, tax, depreciation,
amortisation, acquisition and reorganisation expenses and
share-based payments, a reconciliation of which is set out on the
consolidated income statement.
4.
Earnings per share
The basic earnings per share is
calculated by dividing the net profit attributable to equity
holders of the Company by the weighted average number of ordinary
shares in issue during the year excluding those held in
treasury:
|
Six months
to
31
December 2023
|
Six months
to
31
December 2022
|
12 months
to
30
June 2023
|
Net earnings attributable to ordinary
shareholders (£'000s)
|
3,579
|
2,426
|
4,206
|
Weighted average number of ordinary
shares in issue (000s)
|
160,545
|
152,869
|
156,352
|
Basic earnings per share (pence)
|
2.23
|
1.59
|
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 period, adjusted for potentially dilutive shares that
are not anti-dilutive.
|
Six months
to
31
December 2023
|
Six months
to
31
December 2022
|
12 months
to
30
June 2023
|
Weighted average number of ordinary
shares in issue (000s)
|
160,545
|
152,869
|
156,352
|
Adjustments for share options
(000s)
|
6,818
|
7,775
|
10,630
|
Weighted average number of potential
ordinary shares in issue (000s)
|
167,363
|
160,644
|
166,982
|
Diluted earnings per share (pence)
|
2.14
|
1.51
|
2.52
|
Adjusted basic and diluted earnings
per share have been calculated to exclude the effect of
acquisition, contingent consideration and reorganisation costs,
share-based payment charges, amortisation of acquired intangible
assets and with 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
31
December 2023
|
Six months
to
31
December 2022
|
12 months
to
30
June 2023
|
Profit used for calculation of basic and diluted
EPS
|
3,579
|
2,426
|
4,206
|
Share based payments
|
311
|
515
|
1,640
|
Post-completion services
|
-
|
366
|
365
|
Amortisation of acquired
intangibles
|
261
|
261
|
522
|
Unwinding of discount - contingent
consideration & borrowings
|
-
|
29
|
29
|
Tax adjustment
|
(817)
|
(749)
|
(1,548)
|
Profit used for calculation of adjusted basic and diluted
EPS
|
3,334
|
2,848
|
5,214
|
Pence
|
Six months
to
31
December 2023
|
Six months
to
31
December 2022
|
12 months
to
30
June 2023
|
Adjusted basic earnings per share
|
2.08
|
1.86
|
3.33
|
Adjusted diluted earnings per share
|
1.99
|
1.77
|
3.12
|
5.
Dividends
Dividends paid or declared during
the period were as follows:
Six months to December
2023
|
Paid
|
Pence per
share
|
Cash flow
statement
(£'000)
|
Statement
of changes in equity
(£'000)
|
December
2023 balance sheet
(£'000)
|
|
|
|
|
|
|
Final ordinary dividend for year to
June 2023(1)
|
09/2/24
|
0.83p
|
-
|
1,338
|
1,338
|
|
|
|
-
|
1,338
|
1,338
|
Six months to December
2022
|
Paid
|
Pence per
share
|
Cash flow
statement
(£'000)
|
Statement
of changes in equity
(£'000)
|
December
2022 balance sheet
(£'000)
|
|
|
|
|
|
|
Final ordinary dividend for year to
June 2022
|
31/1/23
|
0.54p
|
-
|
839
|
839
|
|
|
|
-
|
839
|
839
|
(1) The final ordinary dividend for the year ended 30 June 2023
was approved at the Annual General Meeting held on 19 December
2023.
6.
Net funds reconciliation
£'000
|
31
December 2023
|
31
December 2022
|
30
June 2023
|
Cash and cash equivalents
|
28,618
|
20,419
|
24,753
|
Lease liabilities
|
(524)
|
(472)
|
(405)
|
Net
funds
|
28,094
|
19,947
|
24,348
|
7.
Post period-end acquisition
Following the end of the period, on
23 January 2024, Netcall acquired Skore Labs Limited
("Skore"), a cloud-based business process
discovery software provider.
For the year ended 31 December 2023,
Skore's revenues grew 96% to £449k (2022: £229k) with an adjusted
EBITDA loss of £55k (2022: loss of £159k) (figures from unaudited
managements accounts). Annual recurring revenue (ARR) from cloud
subscriptions increased by 179% to £651k (2022: £233k).
The value of initial consideration is
£2.0m comprising:
|
|
|
£'000
|
Initial cash consideration
|
|
|
1,800
|
Hold back cash
consideration
|
|
|
200
|
|
|
|
2,000
|
The hold back element of initial
consideration is payable 12-months from the date of
acquisition.
The contingent consideration of up to
£4.0 million and is payable subject to Skore achieving contracted
annualised value of software subscriptions ("Annualised
Subscription Value") growth from £0.6 million to £2.0 million
within three years of acquisition. The payment will be pro-rata,
measured annually, and paid 50% in cash and 50% in Netcall shares
with elements of both deferred until the end of the earnout period.
Any Netcall shares issued will be subject to a 12-month lock-in for
the management shareholders of Skore. The balance of the earnout
contingent consideration is payable in cash and is dependent on
achieving a minimum level of Annualised Subscription Value in the
earnout period.
8.
Additional information
Management also presents underlying
measures of both Total and Cloud ACV which excludes the impact of
the contract win and renewal announced on 10 June 2022 and 20 July
2023.
£'m
|
31
December 2023
|
31
December 2022
|
30
June 2023
|
Total ACV
|
30.1
|
26.5
|
27.9
|
Effect of contract win and
renewal
|
(2.6)
|
(3.3)
|
(2.6)
|
Total underlying ACV
|
27.5
|
23.2
|
25.3
|
£'m
|
31
December 2023
|
31
December 2022
|
30
June 2023
|
Cloud ACV
|
20.3
|
17.1
|
18.1
|
Effect of contract win and
renewal
|
(2.6)
|
(3.3)
|
(2.6)
|
Cloud underlying ACV
|
17.7
|
13.8
|
15.5
|