Netcall rings in the profits

Demand for Netcall 's efficiency-boosting telephone call-back service is surging as both the public and private sector face tightening budgets. Moreover, chief executive Henrik Bang says that second-half order intake is "significantly higher" than last year with the majority of these orders from the private sector.

The public sector division – which generates half of the company's sales – still enjoyed strong demand in the period, with new clients such as The London Borough of Lewisham signing up to Netcall's software. This contract win momentum propelled product and professional services revenues up by 22 per cent to £2.24m. With maintenance revenues rising 18 per cent to £3.2m and the Software as a Service offering gaining traction, recurring revenues have surged 11 per cent to £5.1m and now represent just under 70 per cent of total sales.

Cash profit margins increased from 18 per cent to 22.3 per cent, helped by £1.8m in cost savings, but with continued investment into research and development (R&D) expected – especially as Netcall extends its platform to include the web, mobile, data and voice – any further savings will be ploughed back into R&D.

Analyst Andrew Darley at FinnCap expects a 20 per cent rise in full-year adjusted EPS to 1.8p and has a 30p target price.

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