Final Results for the Year Ended 30 June 2012

IPPlus Plc today announces its final audited results for the year ended 30 June 2012.

Extracts of the final results appear below and the full version of the Company's audited annual accounts will shortly be made available on the Company's website.

Commenting on the Company's results, CEO, William Catchpole, said: "The Group has made significant progress in the year which has seen increases in divisional activity leading to a commensurate rise in the Group's profits. I am delighted with our performance and look forward to further success in the coming financial year"

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CHAIRMAN'S STATEMENT

FOR THE YEAR ENDED 30 JUNE 2012

Financial Highlights

• Group revenues increase by 29 per cent. to £6,784,159 up from £5,246,070
• Profit before taxation increased  to £330,665 up from £39,356
• Profit after taxation rose to £408,096 up from £66,914
• Closing cash balance of £396,517, giving a net balance of £317,350 after bank debt
• Investment in Commercial Finance Brokers (UK) Limited sold for a profit of £39,960
• Capital expenditure during the year of £321,599

Operational Highlights

• Ansaback secured a significant three year contract with a major utility company
• Ansaback revenues increased by 25 per cent. to £4,917,176
• CallScripter revenues increased by 24 per cent. to £1,183,283
• CallScripter secured new international distribution agreements
• CallScripter wins order for 230 agent licences for European banking client in July 2012
• IP3 Telecom commissioned a new secure data centre for 2012/13
• Ancora performed below expectations but cash positive

Financial Summary

Notwithstanding challenging trading conditions, the Board is pleased to report steady progress and the Group recorded a substantially improved profit. The Group achieved a profit before taxation for the year ended 30 June 2012 of £330,665 (2011: £39,356), on a turnover of £6,748,159 (2011: £5,246,070).

The Board has continued to invest in the Group's businesses and in the year ended 30 June 2012 invested £321,599 to improve the services that can be offered to our clients. During the current financial year the Board proposes to invest a further £120,000 to develop IP3 Telecom's offerings to our customers as a further step in our policy to broaden our activities.

The Group's investment in Commercial Finance Brokers (UK) Limited ("CFB"), in whom we held a 40 per cent. stake, has been sold to its two executive directors to realise a profit on disposal of £39,960. Following this divestment the Group will continue to trade with CFB by selling services to it. The terms of the sale provide for the consideration to be settled over the next 31 months.

Tight fiscal and credit control has helped this year and the Group was only lightly impacted by bad debts compared with the previous year. Continued care and vigilance over credit control will be an on-going necessity despite the majority of clients being on Direct Debits.

The existing cash position of £396,517 and current bank facilities are sufficient for the Group's purposes. Against the present background of banks' limited appetite to lend to small businesses, the Board considers it prudent to maintain a healthy cash balance.

Business Summary

CallScripter increased its overall revenue by 24 per cent. in the year and recurring revenue streams increased by £168k. Despite continuing delays in some clients' procurement processes, the divisional loss reduced by £146,628. The total number of licences worldwide is now in excess of 15,700 which have been deployed in 35 countries.

The division has also made further progress in establishing new channels for its software in the year. In July 2012, we received confirmation of a German banking order for 230 agent licences which had been anticipated in June but the order was delayed. This business was generated through our new relationship with Genesys and one of its strategic European Middle East and Asia channel partners.

Ansaback has had an industrious year and secured a prestigious contract to provide emergency help desk cover for a major utility company. However, as we move towards larger clients, its business model is evolving with a greater need for more dedicated seats than previously. This trend reduces the margin that Ansaback earns but provides greater visibility and guaranteed earnings. Our physical disaster recovery unit at Martlesham, branded as Suffolk Disaster Recovery, is fully operational and, as well as providing back up facilities to our call centre, now has two external clients utilising all of its spare capacity.

IP3 Telecom has continued to win new accounts and launch additional services to augment its existing product range. The majority of Ansaback clients now use IP3's network telephony platform to enhance services and provide primary disaster recovery functions. We anticipate continued growth from these services and additional resources are being directed to it.

Ancora Solutions traded below expectations having lost a significant archiving contract in December and earned reduced fees from another. This impacted adversely on its results although the division continued to make a positive cash contribution to the Group. New initiatives are now in place to bring the division back on track.

People

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

Dividend

Each year the Board decides whether to declare a dividend, return capital to shareholders or purchase shares in the market to be held as treasury stock. Its decision is taken principally in the light of: the Group's present net cash balance; its future working capital requirements; investment plans for the future development of the Group; the relative rates of Income and Capital Gains taxes; and the banking climate, with particular regard to their willingness to support SMEs.

Taking these factors into consideration the Board has decided that the optimum method to return value to shareholders is to seek authority to purchase the Company shares in the market. The Board has therefore decided not to declare a dividend and proposes to commit £40,000 to this exercise.

Outlook

Whilst the general outlook remains uncertain, the directors are confident about the future prospects for the Group and look forward to reporting further progress.

Philip Dayer

31 August 2012

BUSINESS REVIEW

FOR THE YEAR ENDED 30 JUNE 2012

Business Summary

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

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

CallScripter is an enhanced customer interaction software suite specifically developed for contact centres, telesales and telemarketing operations. Its 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  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.

IP3 Telecom, the telecommunications arm of Ansaback, is a cutting edge provider of hosted "Cloud" telephony technology, providing bespoke automated Interactive Voice Response ("IVR") solutions to the banking and financial sectors, hosted contact centre infrastructure for businesses, telephone numbers, campaign response, call recording, reporting and lone worker staff lines. The triple sited network ensures a robust infrastructure capable of handling high volumes and peaks in call traffic within one of the most reliable intelligent telephony networks in the UK.

Ancora Solutions provides secure document archiving, confidential shredding, library moves and specialist removals serving many leading blue chip companies within the legal, medical, property, and transportation sectors.

The Market

Off shore and home workers may have a role to play but the call centre that most people can relate to continues to evolve here in the UK. The necessity for businesses to offer excellent services around the clock lends itself to our outsourced Ansaback model. We continue to win prestige accounts who seek a cost effective yet friendly UK customer facing solution.  We have increased our dedicated fixed seats and prospect for larger clients who seek a mix of dedicated and bureau desks.

Whilst IP3 Telecom has a large domestic market, it has recently achieved wins in mainland Europe.  Technological advances continue to transform this market at a rapid pace creating a spectrum of services providing us with excellent prospects for growth. 

The market for our CallScripter software is not bounded by the UK and the percentage of our business now conducted abroad is approaching 40 per cent. with an anticipation of further growth in new territories.

Ancora Solutions' archiving and secure destruction market is focused on the Eastern Region and London. With the implementation of a new web based archiving system this market area should expand as clients come to expect electronic delivery of files.

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 potential 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, trademarks 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 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 directors' review market movements, client requirements and alternative suppliers' offerings to ensure that the current portfolio remains competitive. The Ansaback and Ancora markets are wide and diverse with few barriers to entry to preclude other competitors. The directors ensure that the team are properly directed, trained and motivated to address this issue.

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 63 per cent. of turnover. However no individual client accounts for more than 10 per cent. 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 40 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.

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.

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. Legislative 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.

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 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 to these financial statements.

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.

Review of Operations

We are pleased to announce continued growth in Group turnover and profitability. A summary of the operational highlights in the year to June 2012 follows:

Ansaback

• Revenue increased by 25 per cent. compared with the twelve months to June 2011
• Fixed seat revenue from dedicated and outbound services increased by 213 per cent.
• 402 clients, up from 370 in June 2011 
• Prestigious new contract won with a major utility company

Our spread of market sectors has meant that we have not been adversely affected by the difficult trading in any one area. We have seen some fluctuations in call volumes and the charity sector in particular has seen fewer campaigns. However Telecoms continues to be strong, adding many new clients over the last twelve months.

As we move towards larger clients, our business model is evolving with a greater need for more dedicated seats than previously. This trend reduces the margin that Ansaback earns but provides greater visibility and guaranteed earnings and is a consequence of the overall expansion into larger contracts.

As a result there has been a substantial increase in the seats required within the call centre and the associated infrastructure and systems required to service these. We now have 142 agent positions, representing the most significant change to the layout and agent seat capacity since setting up the operation.

The following table shows the Ansaback Client Turnover by Market Sector:

Direct Response TV - 18%

Call Centre Partners - 13%

Utilities - 13%

Telecoms - 12%

R/etail - 11%

Charity - 9%

Accident Management - 6%

Service Industry - 6%

Business Services - 4%

Travel - 1%

Other - 7%

Ansaback - IP3 Telecom

• revenue increased by 68 per cent. year on year to £316,042
• 175 per cent. increase in minutes compared to the corresponding prior year period
• hosted contact centre technology rolled out for Ansaback dedicated agents

The majority of Ansaback clients now route over the IP3 Network, whilst the few that have declined the move have specific reasons for maintaining their existing call routing. The business tends to be recurring revenue with limited amendments required once the set up phase has been completed. The clients have the benefit of self service access 24/7 to detailed call logging, call recording and service administration through the IP3 web portal.

The IP3 website is generating a steady flow of new business enquiries, and combined with the efforts of the sales team is contributing towards the growth of the IP3 direct client base.  IP3 have grown in competence in the IVR arena, and specialise in the more complex service configurations such as bespoke and 100 per cent. self-service telephone automation. 

The division now offers multi-lingual IVR voice messaging along with advanced text to speech allowing further positive differentiation from the competition when prospecting for larger clients.

CallScripter

CallScripter revenues improved and the division grew by 24 per cent. compared with the same period last year. As the division has successfully gained critical mass it has been able to absorb overheads and losses have reduced significantly.

The OEM collaboration with Interactive Intelligence has increased revenue in a number of territories and a number of new direct relationships are now in place with some of its largest resellers internationally.  The existing OEM agreement has been updated following a complete pricing review.

Part of CallScripter's channel to market is the network hosted ASP (Application Service Provider) route now commonly referred to as a "Cloud" service which 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. Internationally this also enables us to offer a low cost direct channel and, like many other software vendors, we anticipate further growth via this route in the coming years.

As a result of our relationship with Genesys, CallScripter has been selected as a strategic part of ProtoCall One's G-Cloud solution. ProtoCall are a leading Genesys System Integrator in the United Kingdom. This will be the first Genesys Cloud service offering in Europe.

The order, in early July 2012, from a German bank for 230 seats was important as it crystallised a considerable effort with a Genesys European channel partner and after exhaustive evaluation CallScripter was the clear winner. 

We have also seen growth from existing clients, including one which has implemented CallScripter into new contact centres in Australia and the United States. 

The market remains testing but our revitalised partner team has struck new deals in the United States, which will add revenue over the coming months, continuing the strategy orchestrated over 2 years ago.

CallScripter was also selected by ELoyalty to enrich their own desktop environment with a world class scripting solution supporting both inbound and outbound calling. ELoyalty, a gold certified partner for Cisco in the United States, provides a suite of applications for Cisco UCCE icApplications ™ which extend the functionality and services offered by Cisco as standard.

Our new CallScripter software development has been primarily focused on network cloud solutions. To this end, October's Call Centre Expo saw the launch of a new CallScripter web based diary solution (a much requested item) and a prototype visual editor. This will be part of the CallScripter V5 General Availability release in September 2012. Further web portals, scheduled for release alongside V5, will form the basis of a new cloud based reporting tool.

Ancora Solutions

After five months of sales and profits, which were close to expectations, December proved to be a very difficult month which had a major effect on the divisional result. The ongoing impact of losing a large archiving and shredding client reduced revenues and, in addition, with the continuing weak economy, there has been a significant reduction in specialist relocations, both in terms of enquiries and repeat business.

Ancora added a new fleet of vehicles which are more fuel efficient and provide tracking to monitor performance and enhanced security for clients. A cardboard compacting system was also introduced which increases our spread of recycling options. New software with bar coding scanners and an online web portal have been introduced and on the back of this we have successfully won new contracts. The business has been refocused to bring its performance more in line with our expectations.

Employee Relations and Social Responsibilities

The Group continues to advocate a healthy staff policy via its participation in Investors in People together with a Health and Well being policy for encouraging healthy practices. It is actively engaged with Carbon Champions for its ecological and green initiatives regarding technology with the most recently acquired computers using 1/5 of the power of the old PC's. We have introduced new policies including a Low Carbon and Environmental Purchasing Policy, while the Group encourages car sharing, bus usage and the cycle to work initiative. 

All this work enabled us to achieve the Bronze Carbon Charter Award.

In addition, electronic correspondence with shareholders was announced in July. This initiative will reduce printing and posting unnecessary correspondence thereby further reducing the carbon cost.

An internal apprentice scheme was initiated whereby call centre staff could work for a week in each of our divisions. This gave management the chance to evaluate whether these employees had potential to progress to a full time role and, of the six apprentices who took part, two have been promoted to new roles. Based on its popularity and success this process will be repeated in the coming year.

The Group's employees support a designated charity every year and raised £3,033 for Ormiston Children and Families Trust.

Summary and Outlook

In the year ended 30 June 2012 the Group has advanced on a number of fronts and whilst market conditions remain difficult the Board look forward to reporting further progress.

William A Catchpole

31 August 2012

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 JUNE 2012

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 2012

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 30 JUNE 2012

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 31 August 2012.

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 JUNE 2012

CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)

FOR THE YEAR ENDED 30 JUNE 2012

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 JUNE 2012

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