News blog
Netcall
- BY: Andrew Hore |
- POSTED: 27/09/2010 |
An initial contribution from the October 2009 purchase Q-Max helped Netcall improve its underlying profit in the year to June 2010 but the purchase of Telephonetics will have a greater influence this year.
The telecoms call-back and speech recognition software provider acquired Aim-quoted Telephonetics just after the year end and it will contribute 11 months figures in 2010-11.
Revenues edged up from £3.93m to £4.13m in 2010-11, including the £1.19m contribution from workplace management software provider Q-Max. Licence sales of the core QueueBuster call-back software were disappointing. The reported figures show a loss but excluding share-based payments, amortisation and acquisition costs the profit improved from £976,000 to £1.04m. There was a sharp fall in interest income.
The customer base has more than doubled to over 600. This provides cross-selling opportunities and it is no longer dominated by financial services companies, although there will be more exposure to the public sector and health. Cinema booking systems account for nearly one-quarter of pro-forma revenues but its importance will decline. The Movieline business is expected to report lower revenues as film bookings are increasingly done on the web.
Netcall has already achieved £500,000 of cost savings following the Telephonetics acquisition and house broker Evolution believes that this can increase to £1.5m.
Evolution forecasts revenues of £14.1m this year with all the growth coming from Telephonetics. Recurring revenues will be more than two-thirds of the total.
Netcall still has around £1.8m of recognised and unrecognised tax losses but the enlarged group will start paying tax.
Evolution forecasts a profit of £2.3m for the current year, rising to £2.4m in 2011-12.
At 12.5p a share, Netcall is valued at £15.3m. The shares are trading on nine times prospective 2010-11 earnings.
Pro-forma cash is more than £4m and the business is expected to be cash generative so that cash pile should rise over the next few years.
However, that assumes that no more acquisitions are made. In the short-term, Netcall will probably focus on completing the integration of Telephonetics. It is still interested in other consolidation opportunities in a fragmented market, though. Management wants to buy businesses with proven revenue streams and profitable or trading at around breakeven.
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