Final Results

County Contact Centres PLC 07 August 2003 COUNTY CONTACT CENTRES PLC CHAIRMAN'S STATEMENT FOR THE YEAR ENDED 30 JUNE 2003 In my half-yearly statement to the end of December, I told shareholders that your directors remained confident that our products and services met clients' needs at the right price and expected to report a satisfactory result at the end of June. Although things have improved, I'm afraid they have not moved as fast as we expected. This is partially due to the uncertainty amongst potential buyers of software caused by the Iraqi conflict, the SARS virus and many other issues referred to by other Chairmen up and down the land. The cash outflow is significantly less than the loss for the year because, as announced at the half year, our small fund-raising amongst existing shareholders attracted over £200,000 with three directors contributing £75,650. In addition, as you know from the half-yearly report, we had arranged loan guarantee scheme funding of which £100,000 has already been received. The remaining £150,000 is likely to be released in the very near future, as we met the required criteria in May when the group booked turnover of £172,000 resulting in a pre-tax profit of £14,800. Consistent profits depend upon successful sales and re-licences of CallScripter, which we are satisfied is now "best of breed" amongst call centre software. However, like other specialists, we have had great difficulty selling into a client market that is watching its own expenditure like a hawk. The CallScripter pipeline of possible deals under negotiation totals over £2.5m, covering 50 potential buyers with annual contracts ranging from £8,000 to £250,000. However despite very professional efforts to bring forward signature dates of clients who have carried out due diligence tests, and are clearly satisfied that the product meets their needs, we have encountered purchasing freezes similar to those reported elsewhere in the industry. On a more positive note the call centre services of Ansaback have continued to grow and has achieved a 39% increase in annual turnover and successfully expanded its client base. With the cessation of hostilities and both consumer and producer activities resuming to a more consistent level the directors are confident that Ansaback can capitalise on its momentum and maintain its objective of filling the call centre. Further details of its progress are detailed in the Business Review. In these circumstances, you will be pleased to know that the group has strictly controlled its own costs, particularly payroll which makes up nearly 70% of our outgoings. We have also received confirmation of another successful Research and Development claim, relating to CallScripter, which will result in the repayment of £51,499 of tax. In summary, our bank has supported our business strategy with a Small Firm Loan and your directors have invested additional money in the business. CallScripter has been updated and is satisfying all the technical requirements requested by clients, while Ansaback has sold 39% more than last year. We will obviously not be paying a dividend and ask for shareholders' understanding whilst we drive on to monthly break-even during 2004. This will be challenging but is achievable. Peter Brown Chairman 6th August 2003 BUSINESS REVIEW FOR THE YEAR ENDED 30 JUNE 2003 The group has continued developing its services and products, and despite the difficult trading between February and April 2003, experienced by many organisations, the group's turnover on continuing activities has increased by 18%, while strict control of costs has reduced the loss in the 2nd half of the year. The group is well placed to continue progress on its business plan. Ansaback Ansaback, as a bureau call centre, operates in a niche where the quality of the service offering is high on relatively low volumes, and the underlying increased sales trend is particularly encouraging in the light of many large companies migrating their call centre and back office functions offshore, especially to India where labour costs are a fraction of the UK rates. The perception of a neutral British dialect is also an important driver to those clients who wish to present a polished UK image. We are not trying to win high volume, low value business and are therefore confident that offshore services do not pose a major challenge in either poaching existing accounts or inhibiting our ability to secure new business within the UK. Throughout the year we have continued to attract new quality businesses that seek a cost effective overflow and out of hours solution and as more companies tussle for market share, those businesses offering a 24-hour service in a cost effective manner are more likely to win over those which elect to stick with the traditional Monday to Friday 9.00 - 5.30 offering. The opening hours of the large supermarkets have led the way in their fight for market share and are now competing head to head 24 hours a day 7 days a week. The knock-on effect to a supermarket supplier who doesn't wish to be open but needs a 24-hour manned service to provide emergency call out cover means that it is imperative on them to find a solution, which in several cases we are now fulfilling. Clients utilising Ansaback have risen over 17% in the year while the number of scripts live in the call centre have crossed the 500 level, reflecting clients who have multiple scripts for different divisions and subsidiaries and a number of other call centres who overflow to us when they are closed or have staffing problems. This role as the "call centre's call centre" is likely to increase, particularly with those small call centres who already use the CallScripter software and can easily pass a copy of the scripts needed. The Forestry Commission high wire adventure company, mentioned in the interim accounts, launched its booking service in March. Four centres are now established and call volumes have steadily increased, as their season gets under way. In May, billable minutes jumped up by 26% after the end of the Iraqi conflict. As more businesses resume advertising and marketing the number of calls taken should correspondingly continue to rise. June and July have also maintained higher traffic levels and we are confident that the pattern of continuing growth seen over the past 2 years will remain. Watching key performance indicators, as well as using our own in-house monitoring software, has helped fine-tune the staffing levels and thereby increased the cost efficiency of the call centre. The sales team was re-organised in March and the benefits of that re-organisation and specialisation are now filtering through, while the formation of a client services division provides new clients with a focused aftercare service. CallScripter The software division has had to endure continued resistance to order placing although the prospective order pipeline is significant. Our push to secure more contracts has been partially rewarded, with both new clients taking our call centre software as well as one large existing client placing additional and bespoke business with us. We have adjusted our forecasts for the next year after setting ambitious targets in the past year, which, due to market conditions, turned out to be extremely difficult to achieve. A headcount reduction for the CallScripter division lowered the cost base and the new re-trenched team are firmly focused on driving the business forward. Throughout the year the product has been dramatically improved with version 2.0 being launched at the NEC in September 2002. The new features, and even easier to use control tools programmed in the latest .net software version, make CallScripter a compelling product for consideration to any business needing call centre software or contemplating improving outdated systems. However, as the larger call centres tend to have a longer lead-time and many more processes to satisfy before a final decision is made the length of time between initial contact and final order can be significant. A new international order has been secured in Sweden and further promising enquiries have been received from the recent French call centre show, while U.K. demonstrations have included many well-known companies. The agreement with Nextira One failed to produce any business in the year reflecting the difficulties of this newly demerged sales arm of Alcatel and although agents were appointed in both Germany and Holland they have similarly failed to deliver any firm business despite promising demonstrations and encouraging feedback. Other Activities During the year two new business activities were started to augment and complement the existing infrastructure. Lots of Jobs, a recruitment consultancy, was set up to reduce the cost of recruiting for Ansaback and provide staff for other local 3rd party companies, while Tier One Telecoms was set up to offer a range on NGN's (non geographic numbers) and LCR (least cost routing) to our client base. Both these businesses will have a low level of activity until the core businesses reach sustained profitability. It is not anticipated that they will generate significant revenues in the next financial year. Company Balance Sheet During the year, the company has provided £5,400,000 against the amount receivable from its subsidiary, County Contact Centres (UK) Limited. While the directors are satisfied that this amount will be recoverable when the group achieves profitability, they acknowledge that this is a long term view. In light of the current level of activity, the directors believe that it is appropriate to provide against the majority of the balance recoverable making the position shown in the company balance sheet compatible with the group position. This adjustment has no effect on the consolidated results. William A Catchpole 6 August 2003 CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30 JUNE 2003 2003 2002 £ £ Turnover Continuing operations 1,276,956 1,079,642 Discontinued operations - 219,330 --------- --------- Turnover 1,276,956 1,298,972 Cost of sales Continuing operations (879,192) (742,444) Discontinued operations - (2,354) --------- --------- Cost of sales (879,192) (744,798) Gross profit Continuing operations 397,764 337,198 Discontinued operations - 216,976 --------- --------- Gross profit 397,764 554,174 Administrative expenses Continuing operations (1,247,629) (1,082,255) Discontinued operations - (198,746) --------- --------- Administrative expenses (1,247,629) (1,281,001) Operating profit/(loss) Continuing operations (849,865) (745,057) Discontinued operations - 18,230 --------- --------- Operating loss (849,865) (726,827) Exceptional Items Profit on disposal of discontinued operations - 155,000 Other interest receivable and similar income 11,055 36,828 Interest payable and similar charges (1,126) (24) --------- --------- Loss on ordinary activities before taxation (839,936) (535,023) Tax on loss on ordinary activities 51,499 114,953 --------- --------- Loss on ordinary activities after taxation deducted from reserves (788,437) (420,070) ======== ======== Basic loss per share (2.8) p (1.6) p There were no recognised gains or losses for the year other than the loss disclosed above. CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2003 2003 2002 £ £ Fixed assets Tangible assets 88,321 136,596 ----------- ----------- 88,321 136,596 Current assets Debtors 420,053 566,423 Cash at bank and in hand 291,943 564,964 ----------- ----------- 711,996 1,131,387 Creditors: amounts falling due within one year (343,516) (301,108) ----------- ----------- Net current assets 368,480 830,279 Total assets less current liabilities 456,801 966,875 Creditors: amounts falling due after more than one year (76,663) - ----------- ----------- 380,138 966,875 ======== ======== Capital and reserves Share capital 297,908 268,572 Share premium account 6,045,563 5,873,199 Merger reserve 18,396 18,396 Profit and loss account (5,981,729) (5,193,292) ----------- ----------- Shareholders' funds 380,138 966,875 ======== ======== CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2003 2003 2002 £ £ Net cash outflow from operating activities (673,301) (1,190,722) Returns on investments and servicing of finance Interest received 11,055 36,828 Interest paid (1,126) (24) --------- ----------- Net cash inflow from returns on investments and servicing of finance 9,929 36,804 --------- ----------- Taxation 114,953 - Capital expenditure and financial investment Purchase of fixed assets (22,989) (16,940) Proceeds from sale of COUNTYWeb fixed assets - 155,000 Proceeds from sale of tangible fixed assets 20 15,062 --------- ----------- Net cash (outflow)/inflow from capital expenditure and financial investment (22,969) 153,122 --------- ----------- Financing Proceeds from issue of new shares 205,350 - Expenses paid in connection with share issue (3,650) - Receipt of bank loan 100,000 - Repayment of Borrowings (3,333) - --------- ----------- Net cash inflow from financing 298,367 - --------- ----------- Decrease in cash (273,021) (1,000,796) ======== ======== NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2003 1. BASIC LOSS PER SHARE The calculation of the basic loss per share is based on the loss of £788,437 (2002: £420,070) attributable to ordinary shareholders divided by the weighted average number of shares in issue during the year of 27,966,303 (2002: 26,857,172). No diluted loss per share is shown because all options are anti- dilutive. 2. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS 2003 2002 £ £ Shareholders' funds at 1 July 966,875 1,386,945 Loss for the financial year (788,437) (420,070) Issue of shares 205,350 - Issue expenses (3,650) - -------- -------- Shareholders' funds at 30 June 380,138 966,875 ======== ======== 3. RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS 2003 2002 £ £ Decrease in cash in the year (273,021) (1,000,796) Cash inflow from financing (96,667) - -------- ---------- Change in net funds resulting from cash flows (369,688) (1,000,796) ======== ======== Net funds at 1July 2002 564,964 1,565,760 Movement in net funds in the year (369,688) (1,000,796) -------- ---------- Net funds at 30 June 2003 195,276 564,964 ======== ======== 4. ANALYSIS OF CHANGES IN NET FUNDS At 1 At 30 July 2002 Movement June 2003 £ £ £ Cash at bank and in hand 564,964 (273,021) 291,943 Debt - (96,667) (96,667) -------- -------- -------- 564,964 (369,688) 195,276 ======== ======== ======== 5. INFORMATION The financial information above for the years ended 30 June 2002 and 2003 in respect of which the accounting policies are consistent, does not constitute the statutory financial statements for those years. It is anticipated that the annual report and accounts for the year ended 30 June 2003 will be posted to shareholders on or around Monday 11 August 2003. Copies will be available from the company's registered office, Melford Court, The Havens, Ransomes Europark, Ipswich, Suffolk, IP3 9SJ. This information is provided by RNS The company news service from the London Stock Exchange

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