|25 June 1997|
VOCALIS GROUP PLC ("Vocalis" or the "Group") RECORD PRELIMINARY RESULTS FOR THE YEAR ENDED 31st MARCH 1997
Vocalis, the voice technology and call processing company, announces today its preliminary results for the year ended 31st March 1997.
Highlights of the results include:
- Increase in turnover to £2m (1996: £0.5m) 275% - Turnover per person up to £44,000 (1996: £19,000) 132% - Increase in staff from 31 to 64 at year end - Gross profit up to £1.0m (1996: £0.2m) - Loss before tax of £1.9m (1996: £1.2m) - Loss per share of 6.1p (1996: 4.85p) - Increase in order book to £1.5m from £0.8m at time of interims 84%
Commenting on the results and future prospects, a spokesperson for the Vocalis Group said:
"The Group has made excellent progress in terms of sales and in the vital recruitment needed to support a rapidly growing operation."
For further information:
It gives me great pleasure to report to shareholders a year of considerable progress on all fronts for Vocalis.
In terms of sales and marketing, personnel, finance and technical achievements we have moved well towards the goals established before the public issue and the Group now has all of the components necessary for success.
The Groups turnover increased from £0.5m in 1996 to £2m in 1997 and gross margin from 31% to 52% of sales. Operating expenses increased from £1.4m to £3.1m as the Group further developed its products and expanded its sales and marketing strategy. The growth in operating expenses is largely due to the increase in staff, the majority of whom are employed in sales, marketing and product development.
The order book at the year end of £1.5m is at a level substantially higher than last year and at the time of the interim announcement.
Flotation on the London Stock Exchange
As shareholders will be aware £4.4m net of expenses was raised in our flotation on the London Stock Exchange in July 1996. At the year end the Group had £2.9m in cash or on deposit. The funds so far utilised have been spent on improving all our products for current and future sales and on building the sales and marketing teams and adding to our technical and support facilities.
Jonathan Hart joined the Company in September 1996 and was appointed to the Board as Sales Director in March 1997. Susan Dark, due to a change in her employment, now spends the majority of her time in Germany, and for this reason will not stand for election at the forthcoming AGM.
The strength of your company lies in the quality and dedication of all of the people who work in it. A major part of this years activity has been in recruiting the additional people who will be necessary if we are to grow at the pace required. This has not been an easy task but most of the positions have now been filled.To staff that have worked at Vocalis for some years, we wish to record our appreciation for the work they have undertaken to date and in addtion we welcome the considerable number of employees that have joined Vocalis subsequent to its flotation.
The strategy of your Group is to develop and sell products in those applications where our core technology of interactive voice recognition fits into the world of telecommunications. From the Chief Executives report which follows, you will get a sense of the progress that is being made in both technical, and sales and marketing matters; progress which, I believe, puts us at the forefront of companies in our chosen field.
Chief Executives Report
As indicated in the Chairmans report, the Group has made excellent progress in terms of sales and in the vital recruitment needed to support a rapidly growing operation. Although we are still in the early stages of the market for voice recognition systems, demand is growing for Vocalis products. With the new people recruited since the flotation we have been better able to respond to and further fuel that demand.
During the year there have been commercial, operational and technical developments which underpin our continued growth and position us as a world leading voice recognition company.
Vocalis operates in three major markets; Public Telephone Operator (PTO) services, corporate call centres and the telephone operator assistant market.
To serve the PTO market, Vocalis develops Intelligent Network applications that run on our Speechtel platform (previously called Network Services Platform). A key OEM relationship has been established with Ericsson to market and sell this product world-wide. A major system was delivered to Telekom Malaysia to provide partly automated directory enquiries and this is now operational. In late March, to be recognised in the next financial year, a further order worth £1.2m was secured to supply the directory enquiries system to a European PTO. This will be provided together with enhancements and some new applications including automated reverse charge requests. Further applications for Speechtel are under development which will create new market opportunities for the product. These applications include changed number announcement with call completion, personal numbering services, voice controlled voice mail and voice dialling. An order for a trial voice dialling system was received from our Asia Pacific distributor, Keppel Communications in Singapore.
Business Application Platform
In the corporate call centre market we provide custom applications on our Business Application Platform. These are sold to corporate clients for call centre automation and continue to generate increasing new business. Telephone banking continues to be an important market for the Business Application Platform both in the UK and overseas. This year we have introduced and sold a new application supporting customer service in the utility sector.
The telephone operator assistant market has been entered with the development of Operetta. This product attaches to a companys private telephone system and provides natural automation of the dialogue that normally takes place with a human operator. In both the UK and the USA distributors are now acting as channels to market for this product. New language versions of Operetta are being developed for other markets. The current release of Operetta recognises up to 100 names and is targetted at small to medium sized operations. A version of the product which will recognise more names is under development and will extend the market for Operetta into larger organisations.
The Group is now outsourcing the assembly of most of its products to a well established manufacturer capable of handling large volumes. This company has facilities in the USA and Far East to cater for our eventual production needs in these regions, and it is not anticipated that in the foreseeable future the Group will have to re-establish its own manufacturing facility.
The market for interactive voice response systems and voice mail is more mature in North America than in the rest of the world. To enter this market a small sales and technical support office was established in California in the autumn of 1996. Operetta has now been adapted for the North American market and early distribution channels have been established.
The Group continues to invest appropriately in research and development in order to keep its products at the technological forefront of this rapidly developing market. Over the last year we have been successful in recruiting a number of high calibre people to augment the original team. Participation in EU sponsored projects can provide Vocalis with an effective way of testing new technology with potential end customers and collecting the speech data needed to develop new languages. Work on extending the language coverage of our voice recognition has progressed well and we are now able to offer several European languages. Trials have begun with PTT Telecom in Holland of our speaker verification technology, developed over the last year. This technology uses the unique characteristics of individual voiceprints which can authenticate callers using charge cards. Fraud in charge card usage is a major source of concern to telephone operators.
In another EU collaborative research project, an application is being developed and trialled to automate the collection of market research data over the telephone.
These research projects are creating new products and applications for the Group in areas where there is expected to be strong market demand.
As at 31st March 1997 the Group employed 64 people compared to 31 at the end of the previous financial year. The growth has been in engineering, research, marketing and sales to support the expansion of the Groups markets and to underpin further growth of the business. Although the job market is highly competitive, particularly for software engineers, we are pleased to have been able to attract high calibre people. The Group will continue to place emphasis on developing and training its people to meet the future demands of the business.
Much greater market awareness of voice recognition now exists than a year ago. Vocalis continues to play a leading role in educating the market about the availability and benefits of voice recognition systems. The past year has been a year of market growth and consolidation for some of the key voice recognition technology providers with some mergers and acquisitions taking place in the USA. A small number of new entrants are offering software for name recognition and call routing, similar to Operetta functionality. One USA based competitor has also introduced voice dialling to the market. However, we believe that other companies entering the field can only have a positive impact in fuelling the growth of these new markets. The Group continues to maintain a strong position as one of the very few voice recognition solution providers using its own technology.
Strong growth continues in the telecommunications market for both fixed and mobile public network providers. This growth, together with the increasing deployment of Intelligent Networks, is creating new requirements for value-added services. Competitive pressures upon PTOs are creating a climate where cost reduction of certain operator services is actively sought. This environment is expanding the opportunity for the Groups products, particularly Speechtel.
Public discussion on the potential development of legislation around the world to deter, or even ban, mobile phone users from dialling in the car is topical. This, coupled with the increase in cellular services, is expected to create demand for our voice dialling application as well as personal numbering and voice controlled voice mail over the next few years.
We see the potential for creating more standard applications which can be sold on the Business Application Platform, thus increasing market opportunity for this product. There are also exciting opportunities emerging with speaker verification technology.
Partnerships have been and continue to be an important channel to market for the Group. We intend to strengthen current relationships as well as develop new ones to ensure that with our current products and those under development we maintain our leading position and realise the full potential of this growing market.
Consolidated Profit and Loss Account for the year ended 31st March 1997
1997 1996 £000 £000 Turnover 2,007 535 Cost of sales (968) (368)
Gross profit 1,039 167 Other operating expenses (3,091) (1,423)
Operating loss (2,052) (1,256) Bank interest receivable 174 47
Loss on ordinary activities before and after taxation and retained loss for the year (1,878) (1,209)
Loss per share(on an adjusted basis) - pence (6.10) (4.85)
The losses for both years arise from continuing operations.
There are no recognised gains or losses in either year other than the loss for each year and therefore a statement of total recognised gains and losses has not been included.
Group Group Company 1997 1996 1997 £000 £000 £000 Fixed assets Intangible assets - 4 - Tangible assets 415 158 - Investments - - 1,761
415 162 1,761
Current assets Stocks 479 109 - Debtors 598 60 4,415 Short term cash deposits 2,700 1,200 - Cash at bank and in hand 201 79 -
3,978 1,448 4,415
Creditors: amounts falling due within one year (1,019) (353) (421)
Net current assets 2,959 1,095 3,994
Net assets 3,374 1,257 5,755
Capital and reserves Called-up share capital 1,605 611 1,605 Share premium account 4,150 1,149 4,150 Other reserves 1,070 1,070 - Profit and loss account (3,451) (1,573) -
3,374 1,257 5,755 Shareholders' funds Equity interests 3,374 837 5,755 Non-equity interests - 420 -
3,374 1,257 5,755
The Group's preliminary announcement includes a consolidation of the accounts of Vocalis Group plc and its two subsidiary undertakings, Vocalis Limited and Vocalis Inc.
Vocalis Limited is consolidated under merger accounting principles as if the Company had always owned it. Comparative information has been prepared on the same basis.
Consolidated Cash Flow Statement for the year ended 31st March 1997
1997 1996 £000 £000 Net cash outflow from operating activities (2,195) (632) Returns on investments and servicing of finance - interest received 174 46 Capital expenditure and financial investment - purchase of tangible fixed assets (352) (126)
Cash outflow before management of liquid resources and financing (2,373) (712) Management of liquid resources Increase in cash on deposit (1,500) (350) Financing Issue of ordinary share capital net of expenses 4,415 1,023 Redemption of preference shares (420) -
Net cash inflow from financing 3,995 1,023
Increase (decrease) in cash in the year 122 (39)
The financial information set out above does not comprise the Companys statutory accounts. Statutory accounts for the previous financial year ended 31st March 1996 have been delivered to the Registrar of Companies. The auditors report on those accounts was unqualified and did not contain any statement under section 237(2) or (3) of the Companies Act 1985.
The auditors have not reported on the accounts for year ended 31st March 1997, nor have any such accounts been delivered to the Registrar of Companies.