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Netcall's main product is a call-back software product called QueueBuster. It permits callers to simply leave their phone numbers at call-centres and be called back when an operative becomes available. It not only improves call-centre productivity but also stops customers becoming frustrated at being left on hold for ages.
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The product accounted for around 80 per cent of turnover in the six months to end-December 2008 and it still has no direct competitor. Recurring revenues from hosting the service, maintenance and support totalled £1.48m and the increase in sales was wholly attributable to non-financial customers including government agencies, Virgin Holidays and Interflora.
In the full year, Netcall expects non-financial turnover to increase from 46 to 54 per cent of the total. And with minimal capital spending, net cash balances grew a third over the six months even after spending £450,000 on share buy-backs.
Netcall has over 100 customers and supplies QueueBuster in 14 languages. It sells both directly (59 per cent of half-year sales) and via partners led by Cable & Wireless and BT. And, unlike many companies at the moment, Netcall remains confident about prospects.
Broker WH Ireland forecasts 12-month sales rising from £3.6m to £4.05m and profits excluding share-based payment charges (down from £150,000 to £101,000 in the half year) up from £710,000 to £900,000. There should be more deferred tax credits to use as Netcall still has £8m of tax losses, of which £2m are recognised on the balance sheet. The broker does not expect a dividend until at least 2010-11, but Netcall may pay one sooner than that.
NETCALL (NET) |
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|---|---|---|---|---|
| ORD PRICE: | 13.25p | MARKET VALUE: | £8.29m | |
| TOUCH: | 13-13.5p | 12-MONTH HIGH: | 22.25p | LOW: 7.75p |
| DIVIDEND YIELD: | nil | PE RATIO: | 10 | |
| NET ASSET VALUE: | 6p | CASH: | £3.60m | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 1.69 | 133 | 1.02 | nil |
| 2008 | 2.01 | 439 | 0.67 | nil |
| % change | +19 | +230 | -34 | – |
Ex-div: na Payment: na Aim: software |
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Netcall has lots of operational attractions to woo investors. We upgrade the shares to a buy.
Last IC view: Fairly priced, 16p, 20 Mar 2008
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