Interim Results for the Six Months Ended 31 December 2014

IPPlus Plc today announces its unaudited interim results for the six months ended 31 December 2014.

Extracts from the Company's half-yearly report appear below and the full version will shortly be made available on the Company's website www.ipplusplc.com.

The below statements are presented to show the continuing activities of the Group and the discontinued activities, the latter being the Ancora Solutions division disposed of at the end of the interim period.

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Financial Highlights

• Long term clients and recurring revenues increased to 68% of total turnover (December 2013: 50%)
• Successful sale of Ancora Solutions to Restore PLC for £500,000
• CallScripter losses halved. Revenue growth and cost reduction continue
• IP3 Telecom sees 34% revenue growth
• PCI-PAL secures new contracts for major UK businesses
• New Board appointments
• Cash and cash equivalents balance of £352,492 at 31 December, with a further £500,000 received on 2 January 2015, following the sale of Ancora Solutions
• Ansaback fixed term utility contract ends, as anticipated, leading to a reduction in revenue
• Ansaback signs new partner contract handling 40 new client accounts

Basic and diluted earnings/(loss) per share (EPS)

*     During the year to June 2014 the CallScripter intangible assets were impaired, giving rise to a charge of £322,974. This charge, whilst non-cash affecting, was a corollary of the lower than expected performance from CallScripter.

**    Subsequent to the purchase of the freehold building, the sub-tenant of the upper floor agreed to the early termination of its lease in consideration of which it paid the Group the sum of £352,367. This early termination payment was recorded as a profit in the results for the year ended 30 June 2014.

Chairman's statement

Financial Summary

Although we are reporting a loss, the Board believes that it has taken a number of steps over recent months which will allow the Group to improve performance going forward. Recurring revenues and long term contracts increased to £2,281,074 in the six months to 31 December 2014 (31 December 2013: £2,211,476) and now represent 68% of total turnover (31 December 2013: 50%)

Overall the Group generated a loss on continuing activities of £86,492 and a loss on discontinued activities of £77,148, making a total loss before taxation for the six months to 31 December 2014 of £163,640. (31 December 2013: profit of £613,700, including a one-off profit of £352,367). This was achieved on a reduced revenue of £3,736,943 (31 December 2013: £4,714,745), reflecting the end of a fixed term contract with a utility provider.

As expected the Group faced a number of challenges in the period; adjusting to the expiry of the utility contract with the commensurate decrease in turnover and margin; broadening the PCI-PAL customer base; ensuring the focus of the new CallScripter team and completing the sale of Ancora Solutions. Looking forwards however, the Board is confident that the Group's diverse range of high quality niche service businesses, with their differing drivers, its capacity for growth  and its  strong balance sheet means that it is well placed to progress from here.

The Group's cash position at 31 December 2014 was £352,492, with a further £500,000 being received on 2 January 2015 from Restore PLC as a result of the disposal of Ancora Solutions.

Disposal

As announced on 2 January 2015 the Board is pleased to report the successful sale of the Ancora Solutions trading division, which provided document archiving, shredding and library removals services, on 31 December 2014.

In the 6 months to 31 December 2014, Ancora Solutions reported revenues of £362,703 and a loss on discontinued activities of £77,148. This loss comprises of a core loss of £61,526, reorganisation costs of £98,319 and a profit on disposal of £82,697 (after taking into account the estimated outstanding lease costs on warehouse rentals). The net book value of the assets disposed of at 31 December 2014 was £286,313.

As stated in the Group's last Annual Report and Accounts, the Board had been actively reviewing Ancora's operations. Following this review, it was concluded that Ancora Solutions was non-core to the Group's business operations and as Ancora Solutions was relatively small in scale; an owner with a stronger presence in its sector could potentially derive more value from the business. Under the terms of the disposal, Restore PLC purchased the entire fixed assets, payroll and existing contracts of Ancora Solutions in return for a cash consideration of £500,000.

The Group intends to use the proceeds from the disposal to strengthen its working capital position.

Board Changes

After nearly nine years' service Philip Dayer stood down as a Non-Executive Director and Chairman on 31 December 2014. The Board wishes to express its tremendous gratitude to Philip for his loyal service to the Group and extends its best wishes to him.

I joined the Board on 29 August 2014, as a Non-Executive Director, and on 1 January 2015 took over the role of Chairman.

On 30 September 2014 Bernard Waldron also stood down as a Non-Executive Director and similarly the Group extends its gratitude to him for his service.

On 1 January 2015 the Group appointed Jason Starr as his replacement. Jason is Chief Executive Officer of Dillistone Group plc, the AIM quoted International supplier of software and services for the recruitment sector.

Business Summary

IPPlus PLC operates through two subsidiaries, IPPlus (UK) Limited and CallScripter Limited.  Within these the Group operates four principal businesses namely Ansaback (which includes IP3 Telecom and PCI-PAL) and CallScripter.

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 resources, as well as disaster recovery lines and facilities, and other ancillary telecommunication services.

IP3 Telecom is the telephony services arm of Ansaback and provides a range of network level interactive call services including non-geographic and Freephone telephone facilities.  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.

PCI-PAL is a hosted telephony Level 1 compliant credit card solution designed to prevent card fraud by eliminating credit card data being handled or stored at a clients' premises.

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 into their organisation as the software facilitates the rapid set-up, handling and reporting of sophisticated inbound, outbound and e-mail campaigns.

Recurring revenues and long-term clients

The Group continues to build on its recurring revenues and long term clients. Recurring revenues and long term contracts increased to £2,281,074 in the six months to 31 December 2014 (31 December 2013: £2,211,476) and now represent 68% of total turnover (31 December 2013: 50%).

Review of Operations

Ansaback

As was forecast in the July 2014 trading update, Ansaback revenue fell in the six months to December 2014 primarily through a large utility client taking its business in-house when the existing contract finished in August. Having made the required adjustments to staffing levels, we continue to provide bad weather activation services and disaster recovery to this utility client but, in contrast to the extreme weather and ensuing work caused by seasonal storms in late 2013, the mild weather so far this winter has meant that the specialist activation team has had minimal extra work.

The re-organisation of the division, which remained profitable, saw us cut costs to re-align to the existing bureau revenues whilst new business was sought to fill the freed up capacity. The sales team has recently won two large and prestigious contracts which will make up some of the difference against previous performance. One is for a facilities management business and the other for a new major tourist attraction in London. The effect of these new contracts will take time to kick in but, along with a 53% rise in outbound work, the division is well placed to move forwards.

Bureau call traffic picked up in October and has remained buoyant, with increased call volumes from our key sectors, including R/etail, DRTV, Charity and other media response clients, as well as Telecoms, Accident Management and Energy sectors.

IP3 Telecom and PCI-PAL

IP3 Telecom, the telecommunications division of Ansaback, has traded in line with expectations and has continued to make good progress. In the first half of the year revenue increased by 34% compared with the same period last year, led by its PCI-PAL credit card solutions. PCI-PAL has full Payment Card Industry ("PCI") Level 1 Accreditation, which helps prevent credit card fraud.

Our existing PCI-PAL client portfolio is primarily blue chip household names that have chosen our solution after evaluating various competing solutions. These clients are happy to be reference sites and provide testimonials to our new prospective clients. The number of transactions and the values passing through our secure network are growing rapidly.

The PCI-PAL pipeline has grown strongly in the last six months and contains an increasing number of multinational clients and institutions who are in the process of becoming PCI compliant and eliminating from their premises sensitive data which, if lost in a data hack, would result in fines and reputational damage. It is worth noting that whilst our solution is tried and tested and does not require significant capital expenditure the time taken from decision to activation for a large business or enterprise remains significant.

The current infrastructure provides capacity above our existing requirements and provides 99.999% uptime.

The continued expansion of the PCI-PAL channel network is contributing to our pipeline and further strengthening the brand as a market leader. Although new competitors are emerging, we have a degree of first mover advantage and an excellent brand which is easily understood by the target market. As a result, we continue to be particularly excited by the prospects for PCI-PAL.

CallScripter

CallScripter has made progress in recovering its forward momentum. The first half of the year saw a 5% increase in revenue compared to the same period of the previous year (2014: £542,157; 2013: £517,733) which, with strict cost control, has resulted in a significant reduction in losses (2014: £82,679; 2013: £171,470) arising from senior level staff changes.

The partnership with Interactive Intelligence Inc. ("ININ"), a market leading full suite Contact Centre solution supplier, through their Global Alliance programme, remains strong.  The integration of the full version of CallScripter launched in August 2014 has already secured new orders and is also attracting interest from the existing EasyScripter customers looking for upgrades to the new product.  This is helping to secure long term maintenance revenue and some excellent reference clients.

A recent agreement to allow ININ to include CallScripter as part of their Communications as a Service ("CaaS") cloud-based offering presents a significant opportunity to grow monthly recurring revenues with 3 to 5 year contracts. The first CaaS contract was signed in Australia in December 2014 with CallScripter revenues expected to start by the end of the first quarter of calendar 2015; and is estimated to be worth around US$200,000 over the next 5 years.  We anticipate that more businesses in the 50-500 seat range will opt for a cloud based solution.  CaaS is a significant element of the ININ portfolio and CallScripter is now an option for the full customer base.

As a result of this activity we continue to see growth from channel sales versus direct clients, as planned, with the revenue split now showing a majority of channel versus direct sales. We also continue to see an increase in international sales versus UK sales.

Our effort remains to build on the ININ, Avaya, Cisco and Genesys relationships following our partner strategy put in place over 3 years ago to align with the market leaders. We also continue to consider requests from additional smaller partners to add scripting to their portfolio.

Dividend

Whilst the Board looks forward to implementing a progressive dividend policy when the Group is consistently trading profitably it is not declaring an interim dividend at this time.

Outlook

The Board is pleased that the Group has streamlined its activities and is focused on its growth areas. However business conditions remain challenging and the Board believes that these trading conditions will continue to be volatile with UK national election uncertainty looming.

The Group has adequate cash resources and anticipates good recurring and long term revenue streams, particularly within the call centre side of the business. We have succeeded in attracting a number of flagship customers who have trialled and selected our CallScripter and PCI-PAL technologies. Our challenge now is to grow these relationships to a larger-scale and overcome the procurement delays that inevitably come with large commercial customers and new technology deployment.

The Board remains confident that IPPlus' long term strategy is appropriate. The Group has a sound business base, and remains particularly excited by the potential of PCI-PAL.

Chris Fielding

Non-Executive Chairman

11 February 2015

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