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The advent of GenAI (and specifically Agentic AI) is set to profoundly influence the technology landscape. This note explains why Agentic AI holds such potential and, how Netcall should be a major beneficiary. As such while we’re not changing our forecasts at this stage we’re even more confident regarding Netcall’s growth opportunities. If you’re looking exposure to GenAI, coupled with a strong business model and USPs - look no further.
Netcall plc
FYJun25 results are expected to be in-line, achieved through strong organic revenue and Cloud ACV growth of +10% and +26% y/y respectively. This has been compounded by recent acquisitions for overall Cloud ACV growth of +52% y/y to £33.9m (FY24 £22.3m). Driving this, Netcall has seen a combination of strong demand from both new and existing customers, which both continue to invest more in Netcall’s Liberty Cloud platform, in turn unlocking savings and efficiencies. Recent organic and inorganic investment has strengthened the Liberty platform and strongly positions the company as a logical consolidator in its large, focused and structurally growing target market.
Interims to December are consistent with a previous update and demonstrate another strong trading period, as Netcall has continued to achieve strong organic growth revenue: +10% y/y and Cloud ACV: +20% y/y. While recent acquisitions have further enhanced these metrics and hence Group Cloud ACV grew +47% to £29.9m and EBITDA is up +18% y/y to £5.7m. Following this strong H1, Netcall is well positioned wrt. FY25 estimates and also the longer-term given its exposure to structurally growing markets and how recent organic and inorganic investment have enhanced the Liberty platform, such making Netcall a logical consolidator is its large (but focussed) target market. In a highly uncertain environment, we think Netcall offers investors an enticing combination of predicable and compounding potential returns.
Winter isn’t coming - it’s here. As thanks to our best friends in Government, the UK economy isn’t running ‘tickety-boo’ and as a result, finding resilient businesses isn’t easy. We think today’s H1 update from Netcall which details very strong top-and-bottom line growth further highlights how Netcall is one such rare example, as it shows how the business can support consistent double-digit organic growth and cash-funded M&A (where targets are carefully considered, rather than made for one-off gains). We argue that such attributes (and therefore similar financial prospects) are few and far between and make NET a ‘must have stock’. We keep estimates unchanged, but FY25 KPI’s are well underpinned by this strong H1.
Netcall reference that the company has traded well YTD, and in line with Jun-25 expectations, thanks to a combination of “double-digit organic ACV growth” and also recent acquisitions: Govtech, Parble and also Skore, earlier this year. Driving organic growth, NET call out continued strong uptake for Converse CX - its cloud contact centre, which now also offers AI, to further enhance customer service and team productivity, though features such as intuitive customer chatbots, interactions, advanced speech recognition and conversation summarisation. This adoption not only validates recent investment, but also highlights NET’s growth opportunity not only in respect to new customers, but also how investment should stimulate on-prem CX customers to migrate to the cloud. NET also reference encouraging developments regarding recent M&A, for example Govtech is seeing “strong momentum in new public sector wins” while NET has also achieved its first sale of Parble’s Intelligent Document Processing to an existing customer demonstrating how this technology is highly complementary, as it provides Netcall a strong ‘data ingestion engine’ solution and so enables Intelligent Automation customers to achieve further process automation. All told, we believe NET is very strong position and indeed our forecasts reflect this too, as we see revs and profit accelerating over the forecast horizon. We believe these trends are starting to be reflected in the SP, though the stock still trades on a 6% FYJun26 (EV) FCF yield and hence still offers upside to our 140p target. A quality company, that is executing well.
We were expecting FY25 to be somewhat of a fallow period (as profit was due to be supressed by investment) but fast forward 9 months (and three acquisitions), the outlook has transformed as we’re now looking for +21% sales growth and +15% EBITDA. Furthermore we see strong returns continuing into FY26, as per maiden estimates, showing +19% EBITDA growth. We highlight that such returns are not ‘instead of’ organic growth (which continues to be very strong, as per FY24 results) but rather ‘in addition to’. Indeed we would opine that few companies in our universe have such a clear organic story, and as well, both a means and opportunity to complement this via M&A. Despite this, NET trades at a clear discount vs. peers
With a class-leading low-code solution, acting as the ‘hub’, Netcall is now adding ‘spokes’ (i.e. capabilities) at pace and accelerating growth in the process. For today, the company has announced its third acquisition of 2024: Smart & Easy (trading as “Parble”). We upgrade revs and EPS both +2% (i.e. its only small) but as ever - its tech is very relevant and complementary. When taken in combination with Skore and Govtech, we have now upgraded FYJun25 revs and EPS +12% and 20% resp., thus contributing to +21% and +15% revs and EPS growth in FY25. These are strong returns and makes for a compelling investment case. Trading on a 7% FY25 FCF yield, this potential (of compounding growth) has not been priced correctly, in our view.
Netcall trades on 28x FY24 P/E or alternatively a 10% FCF yield, so by one metric NET looks fully valued and by the other, absurdly cheap. The current share price therefore reflects differing opinions as to which is ‘right’. What’s less subjective however is that cash (not earnings) can be reinvestedand this is exactly what Netcall has started in earnest: acquiring complementary technology and customers, though selective M&A. Consequently, we believe the market hasn’t yet acknowledged how quickly NET could realise its ambition to become a leading Intelligence Automation vendor and how shareholder returns could compound as a result.
The war-chest deployed on some attractive M&A When we last wrote, we highlighted that NET’s £34m net cash could be used on M&A to augment its proven organic growth engine (we forecast 11% y/y organic revenue growth for FY25). Today’s acquisition is exactly that, adding £3.4m ARR, increasing the UK council customer base by 31% and adding an automation product that presents cross-sell opportunities and makes NETs offer that much stickier. The incoming management team are well incentivised by a two-year earnout (and a further year of lockup) if they can achieve a £5.2m ACV, which of course, would benefit NET from materially higher earnings, offsetting the added cost. The initial consideration is at a modest price of 2.4x FY24 ARR, if the earnout is achieved this reaches 2.5x ARR. All in all, a good use of cash that makes NET a better proposition.
A compounder, delivering excess cash returns
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Hybridan Chefs research@hybridan.com Banquet Buffet*** Active Energy Group 1.2p £1.9m (AEG.L) The international biomass based renewable energy business, announces that the Company has received the cash payment of $1.65m from the PDI Parties pursuant to the Settlement Agreement, details of which were announced on 5 March 2024. The Board continues to examine the most expedient ways to commence CoalSwitch® fuel production, using its proprietary technologies, and will provide an update to shareholders at the earliest opportunity. Audioboom 247.5p £40.5m (BOOM.L) The podcast company, announces the extension of partnerships with top-tier podcasts with: The Tim Dillon Show, Crime Weekly, True Crime Obsessed, Real Ghost Stories and I Think Not. The five shows are a key part of the Audioboom Creator Network, contributing more than 90 million downloads to the network during 2023. Audioboom will continue to provide commercial services to the shows including monetisation of the podcasts through Showcase, the Company's automated global ad marketplace. Braveheart Investment Group 8p £5.1m (BRH.L) The provider of debt/equity and advisory services to SMEs announces that between 4 March 2024 and 5 March 2024, the Company has purchased a further 4,000,000 ordinary shares in Autins Group plc at an average price of 8 pence per share for a total cash consideration of £320k. Following these purchases, Braveheart now holds 23.42% per cent. of the issued share capital of Autins. Autins specialises in solving acoustic and thermal problems in the automotive industry and other specialist applications. Duke Capital 29.75p £123.6m (DUKE.L) A provider of hybrid capital solutions for SME business owners in Europe and North America, announces the successful exit of its investment in Fairmed Healthcare AG, a Switzerland-based provider of high-quality generic prescription medicines, over-the-counter pharmaceuticals, dermocosmetics. Headline cash consideration of EUR11.4m, providing Duke with additional liquidity for new deployments into its pipeline of long-established, profitable businesses. Payment of EUR6.0m has been received with the balance of EUR5.4m to be paid by 31 March 2024. Harland & Wolff 12.25p £21.2m (HARL.L) The company focused on strategic infrastructure projects and physical asset lifecycle management, announces that it has signed a five-year Master Services Agreement for the fabrication of large structures with a global oil services company supplying subsea infrastructure across the major hydrocarbon basins. The Company has now received its first purchase order to fabricate six subsea structures with a contract value of approximately £3m. These structures will be built over the next 18 months at the Company's Arnish site in a staged delivery programme with an expected completion date in H1 2025. Likewise Group 19p £46.4m (LIKE.L) The growing and progressive UK floor coverings distributor announce a positive start to 2024. Sales revenue to the end of February has increased by 11.5% to £22.8m, and sales in Likewise Branded businesses have increased by 20.1% to £15.4m, with average daily sales increasing by 14.5%. The Group has continued to invest and increase its market presence with 11 additional executives being recruited recently to enlarge the Sales Teams throughout the UK. The Group continues to look forward with optimism as it accelerates towards its medium-term objectives. Microsalt 90p £38.9m (SALT.L) A company producing full-flavour, low-sodium salt for food manufacturers and consumers, announce that it has received a Notice of Allowance from the United States Patent and Trademark Office for Patent Application No. 18/175,028. The Patent Application entitled Low Sodium Salt Composition, concerns the production of MicroSalt, a low-sodium salt that adheres better to foods than a traditional salt (which is not adhered to a carrier particle). The notice of allowance strengthens the Company’s IP position worldwide. Once granted, the patent is expected to expire in 2039. Netcall 91p £149.2m (NET.L) The provider of intelligent automation and customer engagement software, announces its unaudited interim results for the six months ended 31 December 2023. Revenue increased 8% to £18.9m (H1 FY23: £17.5m), as a result adjusted EBITDA increased 9% to £4.83m (H1 FY23: £4.43m) Profit before tax increased 61% to £3.87m. Group cash at period end was £28.6m. 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. The Board is confident in delivering on its expectations. Roadside Real Estate 3.75p £5.4m (ROAD.L) A real estate business focused on building and scaling a portfolio of modern roadside retail assets, including modern EV charging infrastructure announces that its joint venture with Meadow Partners LLP, to acquire and develop a portfolio of UK-based Roadside Real Estate assets, has completed its second acquisition. The JV has acquired an asset in Gosport for a total cost of £2.83m. Meadow will own and fund 97% of the JV while Roadside will own and fund 3%. The JV has a prospective roadside real estate investment pipeline in excess of £150m. Science in Sport 16p £28.8m (SIS.L) The performance nutrition company serving athletes, sports enthusiasts, and the active lifestyle community, announces an unaudited trading update in respect of the financial year ended 31 December 2023 (FY23). FY23 revenue of £62.8m (FY22: £63.8m), a reduction of 1.6%, whilst gross margin improved by 1 point to 43% (FY22: 42%). Adjusted EBITDA of £2.0m (FY22: £(2.7)m loss), and cash of £2.1m (FY22: £0.9m) and net debt of £12.9m (FY22: £10.9m) with headroom in facilities of over £3.3m as at 31 December 2023. Management is taking a balanced view on prospects for 2024 following new focus areas and the new operating model post the recent restructuring.
NET LIKE BRH BOOM 4PD1 8D9
While no company can ever be complacent enough ‘to announce victory’ we believe Netcall inspires a level of confidence to think several years ahead – way beyond its current £30m ACV, thanks to the business’ impressive and consistent growth (u/l Cloud ACV +28% y/y) which is being cleverly carved from a highly defined (but large) target market, whereby both existing and prospective customers still offer material growth potential. Indeed in conjunction with an accelerating product roadmap (empowering faster application development) and as well a proven go-to-market strategy (which should increasingly achieve networks effects and self-service) we foresee reducing capital intensity, alongside sustainable growth, such that margins should trend up over the long-term. We see very little of this currently priced in – with NET trading on a 5% FCF yield – versus well underpinned FY expectations.
In a business/macro environment that’s far from benign, Netcall stands out through its consistent and compounding growth - 1H24 again a good example, as u/l ACV has continued to grow strongly: +18%, driven by Cloud products: +28%. Total ACV now £30.1m. We attribute this success to market tailwinds (shifting spending patterns in NET’s favour) and also through smart execution and product design, as through a targeted approach, the company is able to better serve customers (and so out-compete larger incumbents). The company’s large TAM and focus provide optimism this trend can continue and bring with it material scale. Also announced today a small bolt on: Skore Labs: £2m initial consideration and last reported £0.65m ARR (up 179% y/y) which is a ‘process automation mapping and design’ software vendor and so is highly relevant and complementary to Liberty Create/NET’s existing business. We upgrade FY25e revs and EBITDA +2% (in Skore’s first full-year of ownership) while separate to this, existing FY24/25 forecasts are left unchanged after another very encouraging trading period.
FYJun23 results are in line and confirm a very strong year: sales +18% y/y (recurring +32%, now 72%/sales), while ACV is up strongly too: +15% y/y (or 20% u/l) driven by a noticeable uptick in new biz and also 122% NRR. All these metrics scream ‘quality business, doing well’and so given this, a c.7% FCF yield doesn’t stack up. We sense that the market is either hung up on NET’s contract renegotiation and/or market risks. This note address both these points and how these concerns are over-done and/or inaccurate. There’s an exciting and quality business here.
FYJun23 sales and EBITDA are both line at £36.0m (+18% y/y) and £8.0m (+25% y/y), while y/e net cash is materially a/h at £24.8m, such implying very strong FCF of c.£8.5m (~145% conversion) and considerably a/h of our £3.9mE. Y/e ACV: £27.9m ~+15% y/y, but 6% shy of our forecast, as Netcall has not benefitted from the anticipated growth of a key account and rather this contract has been renegotiated (from $7m pa. to $4m) albeit now with a longer duration: running for a further 5 years, not 2. The timing of this renegotiation hasn’t materially influenced FY23 trading but will in FY24, so we trim estimates accordingly - sales: from £41.1m to £38.7m and EBITDA: from £9.3m to £8.0m. These changes correspond to the delta to the new agreement and importantly do not reflect a dip in customer demand, which remains “healthy” and is evidenced by +32% u/l Cloud ACV growth. Also worth noting: the new contract does not reflect customer dissatisfaction, nor Netcall’s ability to deliver (as Liberty is now live in >60 countries). So while’s today’s news is frustrating, we see it as a single (and one-off event) which does not impact long-term growth prospects and therefore our positive stance.
$19m (or $7m ARR) deals with global FS providers don’t grow on trees. So when this contract did land in June 2022, we certainly took note. Our assessment is this was no fluke and instead it represents a step-up in an already established trend, where Netcall’s Intelligent Automation products are seeing very strong growth, as they drive process automation and digitisation in large organisations and this materially improves operational efficiency. Highlighting this, our research finds that >80% Enterprises are investing in such programmes and what’s more – low-code technology is playing a key role. This suggests that Netcall is executing in a huge and growing market and hence we’re optimistic that H1’s accelerating growth (+19% y/y) could represent the start of a multi-year trend. We don’t think the market has yet grasped this, or how profit and cash flow could scale as a result. We initiate with a Buy and 140p target price.
Joiners Harmony Energy Income Trust HEIT.L) has joined join the Specialist Fund Segment of the Main Market raising £186.5m. The Company's investment objective is to invest in commercial scale energy storage and renewable energy generation projects, with an initial focus on a diversified portfolio of battery energy storage systems located in Great Britain. The Company has contracted with Tesla Motors Limited in respect of its initial portfolio of battery storage projects, to be acquired on IPO. Leavers EverARC Holdings has left the Official List in anticipation of the closing of its previously announced acquisition of SK Invictus Intermediate S.à.r.l. Trading of the enlarged group on the NYSE is anticipated to begin on 9 November 2021 What’s cooking in the IPO kitchen? Ashtead Tech, subsea equipment rental and solutions provider for the global offshore energy sector to join AIM. The Directors have a high degree of confidence in the Group achieving no less than £52m of revenue, £21.5m of Adjusted EBITDA and £12.8m of Adjusted EBITA for FY21 Due 23 Nov. Offer TBA. Atrato Onsite Energy, a new closed-ended investment company established to invest in a diversified portfolio of onsite renewable energy assets to join the Main Market (Premium). Targeting a £150m raise. Due by end Nov. Eneraqua Technologies to join AIM. The Group is a specialist in energy and water efficiency. The principal activity of the Group is the provision of turnkey solutions for decarbonisation through heating and hot water systems for multiple occupancy social housing and commercial projects. Capital to be raised on Admission: £12m primary and £8m secondary. Anticipated Mkt Cap on admission: £92.0m. Due 22 Nov. DSW Capital to join AIM. DSW is a challenger mid-market professional services business headquartered in the Northwest of England. DSW operates a licencing model and licences the DSW and associated brand names in return for a royalty based on a percentage of fee income. Due early Dec. Raising £5m. Spiritus Mundi due to join the Main Market (Standard), a special purpose acquisition vehicle which will seek acquisition targets in Europe and Asia in the clinical diagnostics sector . The Company has already raised approximately £1.2m in a pre-IPO fundraising round. Recycling Tech Group to join AIM, a UK-based engineering, research and manufacturing company that has developed a modular and mass producible machine, the RT7000, which processes hard to recycle plastic waste into a synthetic oil that can be sold back to the petrochemicals industry as a chemical feedstock to make new plastics. Targeting a £40m raise. Due December. PYX Resources Limited , a producer of premium zircon, to dual list on the Main Market (Standard), a producer of premium zircon. The Company is currently listed on the National Stock Exchange of Australia, (NSX:PYX), which will remain its primary listing. Due 15 Nov, Mkt Cap c.£358m. Foresight Sustainable Forestry Company to join the Main Market (Premium), an externally managed investment company that will invest in UK forestry and afforestation assets. Raising up to £200m. Due 24 Nov. Travel Chapter Holdings to join AIM. Travel Chapter operates a leading online platform in the structurally growing UK holiday rental market, connecting a supplier base of property owners with their customers and providing a market leading service proposition to both. Offer TBA. Due mid Nov. ATOME headquartered in Leeds, focussed on the large-scale production of green hydrogen and ammonia intends to join AIM towards the end of the year. ATOME intends to be spun-out from AIM-listed President Energy Plc, an oil and gas company which has incubated and financially supported ATOME to date, by way of a dividend in specie and flotation. Life Science REIT to join AIM raising up to £100m. This will be the first London listed real estate investment trust (REIT) focused on UK life science properties. Due mid Nov. Alinda Capital Infrastructure Investments to join the Specialist Fund Segment of the Main Market of the London Stock Exchange raising up to £350m. Due Late November. Nu-Oil and Gas to acquire Guardian Maritime Ltd and Guardian Barriers IP Ltd and become Guardian Global Security plc and join the Main Market (Standard). Guardian is a technology group that supplies products to prevent unauthorised entry into areas that are deemed to have value, with maritime security being the main focus initially. Q4 2021. ProCook, the UK's leading direct-to-consumer specialist kitchenware brand, is considering applying for admission of the Shares to the Main Market (Premium). ProCook's revenue grew by 37% to £53.4m in FY21 (ending 4 April 2021), with Adjusted EBITDA growing by 246% to £13.3m in the same period. Due in November. Rubix Group Holdings, the market leading pan-European distributor of industrial maintenance, repair and overhaul products and services to IPO on the Main Market (Premium). In the six months ended 30 June 2021, Rubix generated revenue from ongoing operations of EUR1,312m and adjusted EBITDA of EUR123m (9.4% adjusted EBITDA margin from ongoing operations), an increase of 10.6% and 19.3% compared to the six months ended 30 June 2020, respectively. Raising EUR850m, potential sale of existing ordinary shares by current shareholders. Raising EUR 850m. Due early Nov. Firering Strategic Minerals to join AIM, a holding company for a group of exploration and development companies set up to focus on developing assets towards the ethical production of critical metals. The Company's portfolio of assets is located in Côte d'Ivoire and contains projects that the Directors believe to be prospective for lithium and columbite-tantalite. Due Early Nov. Offer TBA. Pantheon Infrastructure to join the Main Market (Premium). PINT will make investments in private infrastructure assets. Due Mid Nov. M7 Regional E-Warehouse REIT intends to apply for admission onto The Property Stock Exchange (Wholesale Segment). On Admission, the company plans to acquire a portfolio of UK retail warehouses worth £120m from M7 Real Estate Investment Partners VIII. The portfolio currently comprises 18 retail warehouse properties across the UK totalling 978,317 sq ft and fully let to 53 occupiers. Rent collections for Q2 2021 stand at 93% and are expected to revert to 100% in the coming quarters. Central Copper Resources, a company focused on delivering a high grade copper project into production and exploration of assets in the DRC and in the Republic of Zambia to join AIM. By 2022, CCR intends to be ready to commence the project financing of its Mbamba Kilenda copper project. Due Mid Nov. Offer TBC. Our daily digest of news from UK listed Small and Mid caps Banquet Buffet Altus Strategies 72p £57.9m (ALS.L) Altus announces the discovery of further hard rock artisanal gold workings from field reconnaissance at the Company's 100% owned Gabal Al-Shaluhl (348 km2) and Wadi Jundi (696 km2) projects, located in the Eastern Desert of Egypt. The Company's 100% owned subsidiary, Akh Gold Ltd (Akh Gold), holds four gold exploration projects totalling 1,565 km2 in Egypt. The Projects were granted this year as part of a competitive international bid round undertaken by the Egyptian Mineral Resources Authority (EMRA). Fourteen hard rock artisanal gold workings discovered across two Projects in Egypt. Workings are up to 30m wide and 100m long with several mechanically excavated. More than 50 hard rock gold workings now confirmed across the Projects to date. At least 35 further remote sensing targets remaining to be assessed. Discoveries validate the Company's target generation process in Egypt. AMTE Power 165p £58.15m (AMTE.L) The developer and manufacturer of lithium-ion and sodium-ion battery cells for specialist markets, has been actively engaged in discussions at a senior level with government bodies and global corporations throughout COP26. With one quarter of the worlds global emissions coming from transport, it is not surprising that transport is a major theme across COP26. The AMTE senior team have been participating on multiple panels and roundtables with a particular focus on Electric Vehicle adoption and Energy Storage, including: 'Scottish Drive for Innovation' focus on Scotland's move towards a green economy (1 November ). Scaling EVs: An open conversation about the key challenges' a roundtable event, sponsored by Octopus Energy and attracting industry leaders from the automotive industry (8 November). 'The Storage and Transportation of Energy' an MSIP Demonstrator and Showcase event (11 November). Blue Prism 1,126p £1,093m (PRSM.L) Blue Prism a global leader in Intelligent Automation, provides an update on trading for the fiscal year ended 31st October 2021. Total bookings, including renewals, for FY21 are expected to be circa £221m, compared to £180m last year. Net new bookings are expected to be circa £114m, compared to £122m last year. On a constant currency basis, this represents 3% decline. For the second half of the fiscal year, net new bookings declined by 16%, or 13% on constant currency basis, year-on-year. The exit rate of Annualised Recurring Revenue (ARR) is expected to be circa £179m, representing 17% annual growth or 20% on a constant currency basis. Blue Prism continues to expect revenues to be around £167m and an EBITDA loss of between £14-19m, as originally communicated on the 28th September. Crossword Cybersecurity* 38p £28.5m (CCS.L) The technology commercialisation company focused on cyber security and risk management has partnered with Dark Beam Ltd, to integrate Darkbeam's cyber risk audits into its online supplier assurance and third-party risk management platform, Rizikon. Darkbeam's instant digital risk audits will give Rizikon customers a real-time cyber risk rating as part of the overall third-party assurance assessment on the platform. This additional functionality will help organisations to further minimise the threat of their digital ecosystem being exploited via their supply chain and supplier relationships. Rizikon users will be able to see the headline cyber risk rating on each supplier's scorecard, with the option of a more detailed cyber risk rating scan as either a one-time purchase or as part of their Rizikon subscription. Eckoh 46.8p £119.3m (ECK.L) The global provider of secure payment products and customer contact solutions, announces it has won a significant contract with a leading global food and drink company. The Company will provide Secure Payments services from its Cloud platforms to the new client's global contact centre operations. The three-year contract, won following a successful competitive tender process, is worth a minimum of $1.5m in total and comes with the expectation that this will be exceeded, and that over time Eckoh has the opportunity to significantly upscale the value of the relationship. The solution will be first deployed in the US before being rolled out to as many as 28 further countries over the contract term. This contract will help support the forecast growth in the next financial year and beyond. This is Eckoh's largest ever contract win for a Cloud solution delivered into multiple territories. We expect to see more global procurement contracts like this for Cloud delivery, as major enterprises seek to uphold rigorous security standards consistently across all of their regions. GYG 58p £27m (GYG.L) The market leading superyacht painting, supply and maintenance company, today provides a trading update for the current financial year. As a direct result of the significant operational and financial disruption caused by Nobiksrug, GYG will now deliver a financial outturn for 2021 much lower than the Board's previous expectations. Importantly, the Board is confident that the Group will remain profitable at the EBITDA level in the current year. The Board also reiterates that, after further thorough review, it is confident that the Group can meet its working capital requirements and repay its borrowings as they fall due providing that the Nobiskrug situation is resolved before 31 December 2021, which the Board fully expects. On this basis, the Board does not believe that the Company will need to seek additional funding from shareholders in the foreseeable future to maintain operations or to meet its obligations. Ideagen 287.5p £734m (IDEA.L) The supplier of Information Management Software to highly regulated industries, has acquired Compliance Technology Holdings Pty Ltd t/a CompliSpace for an upfront consideration of AUD$105m (c. £57.7m) plus a deferred conditional earnout payment of up to AUD$5m (c.£2.7m). Founded in 2007, CompliSpace is a fast-growing provider of SaaS-enabled governance, risk and compliance (GRC) management solutions to private and public sector customers. CompliSpace's principal focus is in the education and social care sectors where Ideagen sees globally compelling structural growth tailwinds. CompliSpace serves more than 950 clients in Australia including more than 730 schools and 135 aged care facilities across the country. CompliSpace's proprietary software platform simplifies complex and time-consuming GRC tasks covering Policy Management, Learning and Assurance by mapping a company's policies and procedures to regulatory obligations, supported by online learning, and automated workflow and reporting. This helps customers focus on their core purpose, centralising information in an easily navigable manner allowing for better overall governance. CompliSpace currently has annualised proforma revenues of approximately AUD$19.0m (c. £10.4m) of which 88% is recurring and has grown by approximately 20% over the last twelve months. The earn-out is payable dependent on approximately 20% per annum recurring revenue growth over the next 24 months to reach ARR of AUD$23.5m (c.£12.8m) by the second anniversary of acquisition. Ideagen also expects to benefit from operational leverages such that CompliSpace will achieve EBITDA margins comparable to the Group's in the first full year of ownership to April 2023. Induction 51.5p £47.4m (INHC.L) The virtual care platform driving digital transformation of healthcare systems worldwide, announces that a two-year contract has been awarded by the Department of Work and Pensions to Induction's partner Involve Visual Collaboration Limited, a UK video specialist, to provide communications services to support the virtualisation of the UK benefits system. The contract includes options for the DWP to extend the agreement term for up to a further two years. As part of this significant contract, Induction will supply DWP with its web-based video consultation platform, Induction Attend Anywhere, allowing members of the public to hold a video consultation with DWP assessors in relation to their financial support needs as an alternative to a face-to-face meeting. The contract value to Involve is up to £3.95m for the initial two years, totalling up to £7.79m for the full four years. Learning Technologies 190p £1,495m (LTG.L) The provider of services and technologies for digital learning and talent management, announced the appointment of Katharina Kearney-Croft as Chief Financial Officer with immediate effect. Katharina was previously Interim CFO at SIG plc and has held a number of financial leadership roles through her career including at The Vitec Group plc where she was Group Finance Director, Rexam plc and The BOC Group plc. Netcall 83.5p £124m (NET.L) The provider of intelligent automation and customer engagement software, has today redeemed £3.5m of its existing £7m loan note with BGF Nominees Limited (part of the BGF Group Plc). The Loan Note was issued by the Company to part fund the acquisition of MatsSoft Limited in August 2017. The Loan Note has an annual interest rate of 8.5% and is repayable on or before 31 March 2025. In connection with the Loan Note, BGF Investments LP were issued with options over 4,827,586 ordinary shares in the capital of Netcall, at a price of 58 pence per share. Under the terms of the Loan Note, Netcall are able to issue an early redemption notice at any time after the four-year anniversary of the date of the Loan Note. The interest cost resulting from the early redemption is £0.3m and the repayment will reduce the annual interest costs of the Loan Note from £0.6m to £0.3m.
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Amino Technologies (AMO): Corp | ANGLE (AGL): Corp | Netcall (NET): Corp
Netcall plc ANGLE plc
As revealed at the January trading update, interims to December 2019 have delivered £2.1m EBITDA from revenue of £12.3m, representing 48% of full-year targets with period-end net cash/ debt of breakeven after payment of £1.6m MatsSoft deferred consideration. Given the evident opportunity, management is expected to minimise free cash flow subject to a £1.0-1.5m buffer, through reinvestment in R&D and sales and marketing, with £16.6m ACV (annualised contract values) having grown 10% (Low-code ACV +21%). ACV in turn drives growth in recognised revenue (+13% underlying, including 22% from Low-code) as well as visibility, giving increased certainty to forecasts. Case studies abound to show the application of Low-code to client benefit, in the case of Hampshire Trust Bank delivering a project four months early and at one third of the anticipated cost; with such compelling alternatives to laborious and IT projects, Netcall’s Liberty Create solution grabs customer attention. With the cash flow certainty of the Liberty Converse customer engagement platform, and the opportunity in Liberty Create delivering evidence of a trend to momentum in growth in FY20 (June year-end), we reiterate our 90p target price.
Prelims demonstrate the strength of the opportunity in development of the Low-code platform (Liberty Create), with strong sales alongside evident momentum in cross sales to the Liberty Converse (Customer Engagement) and Liberty Connect (Communication Platform) client base. Low-code bookings (£6m) exceeded other bookings (£4.5m) for the first time, with cloud & product bookings growing 62%. As the transition to cloud accelerates, visibility improves, driving group annual contract value (ACV) of both cloud and recurring support revenue (+10% to £15.7m). Group revenue growth of 5% included Low-code +35%, from existing and new customers. The strengthening balance sheet (£1.1m net cash at FY June 19 vs £1.1mE net debt) demonstrates how the cash-generative Liberty platform is funding strong growth in Low-code. Forecasts are unchanged save for the improved cash position; visibility is improving, and group level growth is coming through as the Liberty and Low-code cloud services recurring revenue (£5.7m) gain critical mass to add spice to the consistent but low growth of the more traditional product licence model. Target 90p reiterated.
Independent Oil & Gas (IOG): Corp Gas reception facilities acquisition and Harvey update | Netcall (NET): Corp Trading update – building cloud revenue | Quartix (QTX): Corp Fleet performance underpins H1 | Sopheon (SPE): Corp Trading update: sunshine and Cloud | Synairgen (SNG): Corp COPD Phase II clinical trial update
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Netcall (NET): Corp Trading update | Proactis (PHD): Corp APF progress
Netcall plc PROACTIS Holdings PLC
Netcall interims demonstrate an increase in quality and growth, with cloud bookings exceeding product bookings for the first time, increasing visibility. Reporting one year on from the acquisition of MatsSoft in 1H18, low code annual contract value (ACV) of £4.2m has grown by 48% since acquisition in August, and 40% in the last year – generating growing momentum within group ACV growth of 11% to £15.1m – ACV representing total contract value divided by the average contract length. New customer wins, and significant levels of cross sales and up sales, accompanied by strong customer renewals, delivered trading in line with unchanged full-year expectations. Our target price of 90p remains unchanged, framed within the strategic aim of capping free cash flow to £1m and investing all reasonable capacity in growth in the clearly very strong opportunity in low code and cloud services, accelerating group growth into FY20 and beyond.
Netcall (NET): Corp Interim trading update | Omega Diagnostics (ODX): Corp Visitect CD4 progress report | Savannah Resources (SAV): Corp Mina do Barroso project update | Sopheon (SPE): Corp Further positive trading update
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Prelims to June are in line with the July trading update, demonstrating the robust customer engagement platform as well as the significant opportunity of the MatsSoft Low Code platform, with the renewal of key accounts, at higher revenue levels, alongside new customer wins and cross sales. With the addition of MatsSoft, contributing nearly 11 months to FY18, annualised cloud services revenue grew by 321% to £4.8m, further strengthening recurring revenue to 71% of group revenue. The opportunity to accelerate revenue growth, through investment in sales & marketing, product development, and service delivery, is being embraced and we adjust forecasts to accommodate enhanced investment – which we expect will lead to cloud services revenue growth of over 20% in FY19, rising to 35% in FY20. Target 90p (75p), with recognition by Forrester and Gartner illustrating excellence and opportunity, and further proof of execution offering upside more appropriate to a high growth low code stock.
Interims to Dec 2017 report performance in line with unchanged operational expectations, and uplift to PBT and EPS (FY18 & FY19, +2.8% and +5%) from positive non cash changes. The August acquisition of low code software provider MatsSoft substantially increased the addressable market: low code accelerates clients’ digital transformation, reducing complexity to enable the business to lead and IT to support, while enabling rapid design and delivery of specialist applications. Through low code deployment to the Netcall client base, as well as the potential MatsSoft client base, prospects are enhanced: we look forward to further demonstration of potential through execution. With the May 2017 IPO of US low code peer Appian (at $12, now $28.66, trading at 8.3x FY18 sales), MatsSoft, a global top 13 low code provider, is in a highly desirable position at the right time. With Blue Prism (an Appian partner) showing that UK markets appreciate high growth tech, MatsSoft’s take up by customers and increased understanding among investors can transform Netcall as MatsSoft gains confidence and scale. We lift our target price to 75p (70p), en route to far more punchy valuations as potential transforms to execution and delivery.
Netcall* (NET): Strong trading update (CORP) | Sopheon* (SPE): Another strong trading update (CORP) | Nasstar* (NASA): positive trading update (CORP) | Utilitywise* (UTW): Temporary suspension of trading (CORP) | Altitude* (ALT): Positive progress (CORP)
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Mirada plc (MIRA.L, 1.02p/£1.4m) Finals: Sales pipeline growth (29.09.17) | Osirium Technologies plc (OSI.L, 140p/£14.6m) Interims: Building sales and marketing channels (25.09.17) | Netcall plc (NET.L, 49.75p/£71.0m) Finals: MatsSoft adds low-code development (26.09.17) | Tekcapital plc (TEK.L, 21.5p/£9.2m) Proposed fundraising by subsidiary (28.09.17) | ECSC Group plc (ECSC.L, 130p/£11.8m) Interims: Difficult FY17; expansion plan reversed (27.09.17)
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Prelims reveal the steady and reliable core business generating recurring revenue +8% to £11.8m (from 64% recurring at FY16 to 70% at FY) and visibility (contracted multi-year order book increasing from £15.0m to £17.0m); and strong growth potential from the post period end acquisition of MatsSoft – delivering benefits from existing client systems and data through rapid app deployment. Steady EBITDA in Netcall’s core business shows the increase in the pace of the move from licence to SaaS, maintained at £4.5m (FY16: £4.5m) despite the more rapid transition to SaaS delivery compared with expectations. We look forward with interest to the turbo that MatsSoft injects into the Netcall model, given the enhanced product offering potential and larger market opportunity, derisked with a strong sales pipeline and an existing customer base open to the opportunities low-code can deliver. Target 70p reiterated.
Netcall has acquired Matssoft, a provider of low-code software which allows app development through visual design tools, reducing the need to code. The minimum £13.4m acquisition (£11.1m initial cash consideration) is funded by existing cash resources supplemented by a £7m 8.5% BGF eight-year loan note with associated options at 58p. Matssoft is the only UK low-code software vendor, one of the top 14 globally in a fast-growing vendor environment identified by Forrester in a market expected to grow to $19bn by 2020. Matssoft will contribute to Netcall's Liberty platform, adding recurring revenue and growth, and driving digital applications. Target 70p reiterated, with free cash flow yield of 4% into FY19.
Netcall has delivered very straight forward interims including an 8% increase in annualised recurring revenue to £11.3m (65% of FY17E revenue), as the conversion from licence sales to a hybrid of cloud and licence sales accelerates – leading to flat but improved quality of revenue. The extended visibility of multi-year SaaS contracts has given rise to order book growth of 14% to £16.6m. With the tried and tested ‘land and expand’ sales methodology delivering new contract wins, 4 out of 10 now being cloud based, the decision to accelerate investment in the platform is proving fruitful. Target 70p reiterated.
Netcall prelims demonstrate the execution of the strategic goals established 12 months ago, targeting an increased level of R&D to deliver a broader product platform; developing client options for SaaS, on premises, or hybrid delivery, as demonstrated with today's contract win; and rewarding shareholders with an enhanced dividend policy to FY17. Revised revenue expectations show growth from a lower base but at a higher margin, and maiden FY18 forecasts expecting 10% revenue growth and 11% EBITDA growth. Target 70p reiterated.
REDX Pharma (REDX.L) | Netcall (NET.L) | Pennant Group (PEN.L) | Alternative Networks (AN.L) | Chaarat Gold Holdings (CGH.L) | Immedia Group (IME.L) | Earthport (EPO . L) | Mercia Technologies (MERC.L) | Ilika (IKA.L) | CloudTag Inc (CTAG.L)
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Netcall has reported interims to December highlighting multiple positive trends: a 43% increase in the contracted order book (vs 1H15); recurring revenue of 64%; a growing proportion of SaaS contracts; and growth in licence sales with increases in value and size of on-premises contracts won. EBITDA of £2.1m was delivered from £8.1m revenue. While we nudge revenue -2% to accommodate the effect of the increased proportion of SaaS, with its deferred revenue recognition, corresponding positive margin movement means other forecasts are materially unchanged – bar cash, which we adjust up to reflect published dividend timing. 70p target reiterated, with the increase in R&D (as expected) showing success in achieving the migration to growth in cloud-based revenue.
Prelims highlight results in line with the trading update, and reveal key strategic developments regarding the use of the £13.7m net cash: the board has stated its intention to lift the total FY15 dividend payable by 144% to 2.2p (formerly 1.0pE), whilst also accommodating further investment in cloud deployment of the Liberty platform following increasing customer interest – as evidenced by a £1.4m SaaS contract win announced in August. The balance sheet retains capacity for material acquisitions. With clear strategic direction for investment in growth (organic and acquired), the target price of 70p (80p) also carries the benefit of a 4.3% FY16 yield, (currently 5.6%).
The People’s Operator*: Interims (CORP) | Netcall*: Prelims focus on use of cash (CORP) | Iofina*: Encouraging interim results (CORP) | Universe Group*: Interims in line (CORP) | Aggregated Micro Power*: Interim results (CORP) | Staffline: Growth opportunity strengthened (BUY)
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