Final Results for the Year Ended 30 June 2011

Financial highlights

• Group revenues increase by 14% to £5,246,070; up from £4,604,409
• Profit before taxation fell to £39,356; down from £102,613
• Profit after taxation was £66,914; down from £99,430
• Closing net cash, less outstanding loan balance, of £191,966

Operational highlights

• Ancora Solutions acquired in January 2011
• CallScripter core revenues increase by 40%
• CallScripter secure new global ISV distribution agreements
• New Disaster Recovery and Data Centre commissioned
• Ansaback clients and billable minutes increased in the year
• IP3 Telecom now has 280 clients live on the Network Platform (2010: 251)

CHAIRMAN'S STATEMENT

Financial summary

In 2011, along with many other companies, we found the first 6 months of the New Year extremely unpredictable. At the time of the Interim Statement, the Board reported that trading was demanding and this proved to be the case in the Group's second half. 

Nevertheless the Board is pleased to report progress in its plans and recorded a profit for the 6^th consecutive year. The Group's final profits, however, were adversely affected by: a volatile trading environment for Ansaback; substantial CallScripter bad debts (£29,709); the costs of the Government's concessionary wedding day holiday; and the professional costs associated with the Ancora acquisition.

Having had a record December 2010, the Ansaback contact centre business saw a serious ebb in call traffic between January and April, followed by a recovery in May and June. This volatility heavily impacted the Ansaback divisional profits in the second half of the year as the contact centre grappled with adjusting staffing levels and costs to match the changing revenues.

CallScripter sales improved and, when non-core dialler licence resales are excluded, were 40% higher than last year.

The Group achieved a profit before taxation for the year to June 2011 of £39,356 (2010: £102,613), on a turnover of £5,246,070 (2010: £4,604,409).

During the year ended 30 June 2011 the Group purchased Ancora Solutions and invested in a new disaster recovery facility. The closing net cash of £191,966 and current banking facilities are sufficient for the Group's ongoing purposes.

Acquisition of Ancora Solutions

On 21 January 2011 we announced the acquisition, via our main operating subsidiary IPPlus (UK) Limited, of the business, assets and goodwill of Ancora Solutions Limited for a consideration of £474,000.

For the year ended 30 November 2009, the latest accounts available, Ancora had Revenues of £720,814, a Profit after Tax of £81,683 and Net Assets of £206,479 at the year end.

Of the amount to be paid, £279,000 was settled in cash on completion; £84,000 will be deferred and paid in cash over a period of 42 months, while the balance was settled through the issue of 1,930,435 ordinary 1p shares in the Company issued at a price of 5.75p per share. NatWest Bank provided a £150,000 loan over 3 years to help fund this deal.

Ancora is an established regional leader in document storage and secure document destruction serving many leading blue chip companies within the legal, medical, property, and transportation sectors.  The division also provides specialist removal services. Richard Clement, who has been the lead executive director for the past two years, joined the Group bringing with him his team of archive specialists.

The acquisition of Ancora extends our offering by providing outsourced office services to a wide range of prestigious clients. It broadens our activities into both the private and public sector, particularly where compliance and regulatory storage is needed. The Ancora team have built an impressive customer base and an enviable reputation using their bespoke software for cataloguing and indexing vital document management storage.

As part of the Group, Ancora will benefit from additional resources and complementary technical, administrative and marketing skills that will enable it to maximise opportunities within the specialised markets it serves. The ability to use the Ansaback contact centre to take client requests and sales enquiries, 24 hours a day, will also provide a differentiator from its competitors.

Disaster recovery facility

A new Disaster Recovery and Data Centre facility was set up to provide improved continuity and resilience to the Group should the existing contact centre become disrupted or inaccessible. We plan to offer these disaster recovery services to other regional businesses that require a similar backup facility which will help defray the running costs and one client has already signed up for these additional services.

Board changes

In January we welcomed Bernie Waldron to the Board as a non-executive director. Bernie has 27 years' experience in the global technology and business services marketplace including positions as Director of Business Strategy for IBM in New York, General Manager of IBM's Industrial Sector business for Europe, Middle East and Africa, and Executive Chairman of the former Maersk Data Group of companies based in Copenhagen.

Steve Allen resigned in December 2010 and the Board thanks him for his contribution and wishes him well in the future.

Dividend

The Company will not be declaring a dividend.

People

I would like to thank all of the directors and employees for their efforts during the past year. Their commitment, loyalty and support are appreciated and are vital to achieving further positive progress.

Outlook

Whilst the outlook remains challenging, the directors remain confident about the future prospects for the Group.

Philip Dayer

2 September 2011

BUSINESS REVIEW

FOR THE YEAR ENDED 30 JUNE 2011

Business summary

IPPlus PLC operates through two principal subsidiaries, CallScripter Ltd and IPPlus (UK) Limited.

The Group trades under four trading styles namely CallScripter, Ansaback, Ancora Solutions and IP3 Telecom.

CallScripter is an enhanced customer interaction software suite specifically developed for contact centres, telesales and telemarketing operations. Our clients gain major benefits by introducing CallScripter's dynamic scripting environment and advanced reporting software into their organisations. The software facilitates the rapid set-up, handling and reporting of sophisticated inbound, outbound and e-mail campaigns.

Ansaback is a 24 hours a day, 7 days a week bureau telephony service providing order lines, overflow and out of hours call handling, emergency cover, dedicated phone resource, non-geographic, low call and Freephone telephone facilities as well as disaster recovery lines and other ancillary telecommunication services.

Ancora Solutions is an established regional leader in document storage and secure document destruction serving many leading blue chip companies within the legal, medical, property, and transportation sectors. 

IP3 Telecom is the telephony services arm of the Ansaback business providing a range of network level interactive call services.  With options for self-sufficiency or fully managed services, the platform gives the user the ability to run a professional call handling operation without the necessity for expensive hardware, installation, and on-going maintenance costs.  Clients can route their required services through our web portal, allowing them to monitor their call traffic in real time.

The market

Despite continued turbulence in the UK economy, and more widely in the international market place, contact centres remain an important characteristic of the modern business enterprise. The Ansaback contact centre, operating a 24/7 bureau service, is well placed as it has a broad range of clients requiring services across multiple market sectors. The vitality of the UK market is further confirmed by the recent announcement that Santander are relocating their contact centre back to the United Kingdom.

Contact centre technology continues to evolve and the options available to the prospective clients are ever changing with the recent trend being to opt for some dedicated fixed seats and then spill over into the bureau thereby maximising the time of the dedicated agents.

The diversity of clients using CallScripter software does however provide a cushion from being too sector specific. Our contact centre, which operates as a 24/7 bureau service, is also well positioned as its broad range of clients require different services which again provides a similar degree of insulation from movements in specific markets.

Contact centres handling a myriad of client contacts, via phone, email and text, continue to emerge throughout the world and CallScripter software now provides systems in 26 countries.  In addition further additional opportunities are possible with contact centres that adapt their existing style but still require a unified dashboard and controlled instructions for the agent positions. CallScripter fills this niche requirement and continues to capitalise on this continuing trend.

Risks

Principal business risks and uncertainties

The principal risks facing the Group and discussed by the Board relate broadly to its acquisition strategy, intellectual property, the market place and competitive environment, dependence on key people and information technology.

Acquisitions: The Group's strategy includes seeking acquisitions of companies or businesses that are complementary to its businesses. As a consequence there is a risk that management's attention may be diverted and the Group's ongoing business may be disrupted or the Group may fail to retain key acquired personnel, or encounter difficulties in integrating acquired operations. The directors remain aware of this disruption and plan to ensure that the main business is not affected.

Intellectual property rights ("IPR"): The Group is reliant on IPR surrounding its internally generated and licensed-in software. Whilst it relies upon IPR protections including patents, copyrights and contractual provisions, it may be possible for third parties to obtain and use the Group's intellectual property without its authorisation. Third parties may also challenge the validity and/or enforceability of the Group's IPR, although the directors do not envisage this risk to be significant. In addition, the directors are aware of the supply risk of losing key software partners. As these are not a significant part of the core products, this would only have a short-term impact on the Group as it sought to identify and then train staff in alternative products.

Market place and competition: The sector in which the Group's CallScripter division operates in and/or routes to market may undergo rapid and unexpected changes or not develop at a pace in line with the directors' expectations. It is also possible that competitors will develop similar products; the Group's technology may become obsolete or less effective; or that consumers use alternative channels of communications, which may reduce demand for the Group's products and services. In addition, the Group's success depends upon its ability to develop new, and enhance existing, products on a timely and cost effective basis, that meet changing customer requirements and incorporate technological advancements. The director's review the market movements, client requirements and competitive suppliers to ensure that the current portfolio is as required. The Ansaback and Ancora markets are wide and diverse, and while other competitors may enter the arena, divisional success rests with the sales team. The directors ensure that the team are properly directed, trained and motivated to address this issue.

Key personnel: The Group depends on the services of its key technical, operations, sales and management personnel. The loss of the services of any one or more of these persons could have a material adverse effect on the Group's business. The Group maintains an active policy to identify, hire, train, motivate and retain highly skilled personnel in key functions.

Information technology: Data security and business continuity pose inherent risks for the Group. The Group invests in and keeps under review formal data security and business continuity policies which are independently audited.

Financial risk management objectives and policies

The principal financial instruments used by the Group, from which financial risk arises, are trade receivables, cash at bank and trade and other payables. The Group has no significant net foreign currency monetary assets or liabilities nor any significant hedged transactions or positions. The Board has overall responsibility for the determination of the Group's financial risk management objectives and policies and, while retaining ultimate responsibility for them, it has delegated the authority for the designing, operating and reporting thereof to the Group's finance function. The overall objective is to set policies that seek to reduce risk as far as possible without unduly affecting the Group's competitiveness and flexibility. Further details regarding these policies are set out below.

Credit risk: Credit risk is the risk of financial loss to the Group if a customer or a counter party to a financial instrument fails to meets it contractual obligations. The Group is mainly exposed to credit risk from credit sales. It is Group policy to assess the credit risk of new customers before entering contracts and it has a frequent and proactive collections process. The concentration of credit risk is limited due to the large and unrelated customer base comprising mainly blue chip companies and public sector organisations. Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. At the year end the Group's cash at bank was held with two major UK clearing banks.

Market risk: The directors consider that exposure to market risk, arising from the Group's use of interest-bearing and foreign currency financial instruments, is not significant. This is assessed in note 24 of the Company's Annual Report and Accounts.

Liquidity risk: Liquidity risk arises from the Group's management of working capital. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. The directors review an annual 12 month cash flow projection as well as information regarding cash balances on a monthly basis. At the balance sheet date, liquidity risk was considered to be low given the fact the Group is cash generative and cash and cash equivalents are thought to be at acceptable levels.

The risks to the CallScripter division remain unchanged - principally the ability of our sales team and the partner resellers to achieve market penetration. The channels to market, be they via OEM (Original Equipment Manufacturer) arrangements or integrated with a dialler as part of a tailored call handling solution, need constant attention to preserve existing market share.

The main risk within Ansaback is the exposure to the failure of a major client, as the top 20 clients represent 62% of turnover. However, no individual client accounts for more than 10% of the total turnover. Continued vigilance is taken with credit control to minimise this exposure, with bad debts remaining at a low level in the year.

Additional risks include the technology utilised in the contact centre and we have a modern telephone switch. This switch includes fail-over systems to further increase our business continuity/disaster recovery readiness whilst also enabling us to offer additional services to clients. It is also split across two locations to further reduce the risk of failure.

To reduce the operational risks we have opened a Disaster Recovery and Data Centre facility at an office 5 miles away from the main building. This office can accommodate 30 agents and has independent telephone lines, phone switch and computer data systems synchronised to the main building that can automatically fail-over in the event of a major incident occurring. Looking at other risks within the contact centre, to lower our susceptibility to power outages, we have a standby generator in case of power cuts, while our main computer systems have been upgraded to improve their resilience and minimise any down-time should a problem arise.

The risk to Ancora Solutions is mainly within the archiving component of the division. This risk is a combination of the impact of a loss of a significant customer and the inability to replace such a customer quickly. Digital storage solutions and document scanning are becoming more prevalent as a means of document storage and the division is mindful that it needs to further develop its digital offering. Legislation changes affecting document record retention dates may affect the number of records held and the division needs to ensure that it complies with all relevant data protection requirements. Security of records, the pulping of these records and compliance with current legislation may force changes in working practice.

IP3 Telecom uses a network telephony platform with triple redundancy (sites in London, Birmingham and Manchester), but could be affected if there was a major carrier breakdown affecting the entire network.

Review of operations

In a challenging year for UK businesses, we are pleased to announce continued growth in turnover from the Group. A summary of the operational highlights in the year to June 2011 follows.

CallScripter

CallScripter sales improved and, when dialler licence resales are excluded, were 40% higher than last year.

The market remains challenging, and contracts are slow to close, but our revitalised team have struck a new ISV (Integrated Software Vendor) distributor agreement and reseller agreement in the United States, which is expected to add momentum to move the product into the larger deal arena.

Part of the strategy to gear up for larger scale users has meant the introduction of an Agile product methodology - a system designed to ensure new software is deployed in a timely manner incorporating end user feedback during the development cycle.

Pleasingly CallScripter 4.5 has achieved AVAYA compliance approval for use with their "Proactive Contact 4 customer contact solution" and this will add further sales impetus and opportunities.

The CallScripter user group and annual awards were held at the Globe Theatre which was deemed to be an ideal venue for the world's greatest "script" writer.  CallScripter's latest release was also launched at the NEC UK Contact Centre Expo during September 2010. This latest version of the product has been totally rebranded to show a fresh new look whilst offering enhanced reporting functionality and full integration into a hosted outbound dialler platform. This year's UK Call Centre expo was well attended by serious buyers and is a useful source of new business for the division.

The OEM (Original Equipment Manufacturer) collaboration with Interactive Intelligence Inc. (ININ) has seen them successfully develop their sales in a number of territories.

Part of CallScripter's channel to market is the network hosted ASP (Application Service Provider) route now commonly referred to as SaaS (Software as a Service). This allows businesses to use the product on a "needs basis" without either complex licensing or in-house technical support. Clients who use this method have access to a low cost entry model which suits a number of organisations where internal IT resources are limited.

Professional services

Using proven methodologies our highly experienced team of consultants provide the guidance and expertise to ensure a successful implementation. We are committed to expediting a rapid return on investment for the clients buying our solution by offering a comprehensive range of services that help them achieve results.

Educational services

CallScripter provides dedicated classroom and on-site training as well as optional customised training courses that can be developed to meet the client's specific business users' requirements.

Support & maintenance

CallScripter offers a range of support packages, providing fast, efficient and comprehensive support designed to match the particular needs of our clients' organisation and complement their existing skills and resources.

Outlook

The market continues to be highly competitive and users remain slow to conclude contracts. However once the client is onboard and they and their agents see the benefits of CallScripter, it is rare for them to migrate to other providers.

Ansaback

Turnover increased from £3,795,716 to £3,948,184 in the year.

Our market sectors continue to be diverse as shown below:

In the six months to December billable minutes, our main Key Performance Indicator, were 5.5% higher than the previous year. However, the second half brought significant volatility to the market with a substantive drop in call volumes being spread across all sectors. This caused manning issues as the agent levels were reduced to match the sales levels.

However, the outlook for new business remains positive, allowing us to continue growing the division. New contracts, along with the retention of our Blue Chip client base, are also key to this continued progress. Referral business, alongside our specialisation in the DRTV, charity and telecoms sectors, remains strong and despite specialisation in several sectors we continue to have a wide diversity of clients. We continue to provide clients with detailed data and Ansaback is monitored and controlled on the actual and predicted billable minutes. This Key Performance Indicator, as well as the number of agent call minutes per hour, is reviewed on a daily basis to ensure the correct levels of staff efficiencies within the contact centre. We also scrutinise our Grade of Service and Percentage of Calls Answered to maintain our contracted Service Level Agreements of answering 80% of calls presented within 20 seconds.

The demand for both outbound and dedicated services has increased year on year, with changes in client requirements evident as the contact centre capacity grows and brings larger prospective business within range. This type of service offering is expected to grow, bringing new management challenges as well as a different cost structure based on hourly income as opposed to the current main Key Performance Indicator of billable minutes.    

IP3 Telecom

IP3Telecom has had a year of consistent improvement with the addition of several prestigious clients. The range of network based interactive call services and the ability of the platform to allow fast and efficient configuration of services with detailed logging for reviewing changes makes for a compelling proposition.

The services are hosted across resilient platforms with triple redundancy for location, infrastructure and service providers. Web access allows remote management from anywhere in the world, without any proprietary software requirements. Clients have the ability to monitor call traffic in real time or have periodic reports sent via email.

Ancora Solutions

Ancora Solutions' first 5 months within the group have started well and are in line with the directors' expectations. The business comprises five components:

• Document Archiving
• Confidential Destruction & Shredding
• Removals
• Library Moves
• Storage (Industrial, Scientific and Medical)

The principal activity of Document Archiving, currently serving over 60 clients, is a process that utilises 40,000 square feet of rented warehouse space. Archive boxes and bankers' boxes are catalogued by an expert team of archivists to provide "easy pick" and collect services for document retrieval. Document Storage, with highly accurate records management, is vital for the legal, financial services, transport and medical professions that use the service.

The other components of the division comprise:

• Confidential Destruction - Documents are securely destroyed on site and then the shredded paper is sent for recycling. Ancora is a licensed waste carrier and provides certificates of destruction.
• Specialist Removals & Storage - Using the existing team and resources, this service is offered to the scientific, medical and industrial sectors operating both nationally and internationally.
• Library moves - Using the existing staff, who have considerable experience in the cataloguing and moving of libraries, providing a bespoke solution to fulfil each business brief. Enquiries for moves and consolidation of libraries have been increasing, with the current austerity measures driving cost saving reviews. 
• Storage - Ancora also offers a general storage facility.

The prospects of increasing the services offered to the new and existing client base are encouraging. The current premises have considerable space still to be racked out and full occupation will enhance the profitability of the division as the key metric is density of boxes per square foot.

Employee relations and social responsibilities

The Group is delighted that, in addition to its Investor in People award, it has subsequently achieved the Health and Well-Being award. This review further praised the work environment and highlighted the strong culture towards healthy staff.

The Group encourages car sharing, bus usage and the cycle to work initiative. 

The Group was awarded a Carbon Champions certification for its ecological and green initiatives regarding technology.

During the year the Group embarked on an Apprenticeship Scheme which was open to all staff. 8 agents are undertaking the NVQ Level 2 Customer Services Apprenticeship while a further 3 are taking the NVQ Level 2 Management and Team Leader Apprenticeship. These courses are close to completion and have been very well received by all concerned.

The Group's employees support a designated charity every year and raised £1,075 for the East Anglian Air Ambulance.

Summary and outlook

The Group has made progress in 2011 despite adverse circumstances and, given its broader business base, looks forward to reporting further progress.

William A Catchpole

2 September 2011

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2011

All activities of the Group are classed as continuing.

The accompanying accounting policies and notes form an integral part of these financial statements.

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2011

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2011

The accompanying accounting policies and notes form an integral part of these financial statements.

The Board of Directors approved and authorised the issue of the financial statements on 2 September 2011.

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2011

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2011

The accompanying accounting policies and notes form an integral part of these financial statements.