31st Aug 2005 13:30
Eckoh Technologies PLC31 August 2005 For Immediate Release 31 August 2005 Eckoh Technologies plc ("Eckoh" or the "Company") Eckoh's wholly owned subsidiary Symphony Telecom Holdings plc to seek a separate listing on AIM Key Points: •Flotation of Symphony will create long-term value for Eckoh shareholders •Eckoh to focus on growing Speech Solutions division •Eckoh's management team delivering on its ongoing strategic review •Eckoh to hold a minimum of 64.64 per cent. of the issued ordinary share capital of Symphony •Symphony proposing to raise £4.51 million, before expenses with an expected market capitalisation of £12.75 million The transactionEckoh, one of Europe's leading speech application service providers, is pleasedto announce that Symphony Telecom Holdings plc ("Symphony"), a wholly ownedsubsidiary, is to seek a separate listing on AIM. The flotation of Symphony,which forms part of an ongoing strategic review of Eckoh will create long-termvalue for Eckoh's shareholders. As part of the flotation, Symphony is proposing to carry out a placing of10,997,561 ordinary shares in order to raise £4.51 million, before expenses. Asa result of the flotation of Symphony, Eckoh is expected to hold a minimum of64.64 per cent. of the issued ordinary share capital of Symphony on admission,and accordingly, Symphony will continue to be a subsidiary of Eckoh. Symphony'sfinancial results will therefore continue to be consolidated into the financialstatements of Eckoh and its subsidiary undertakings (the "Eckoh Group") untilsuch time as Eckoh's shareholding falls below 50 per cent. Rationale and reasons for the flotation of SymphonySince July 2004, Eckoh's directors and its advisor have been evaluating a numberof strategic options for Symphony, in order to create long-term value for Eckohand to simplify the Eckoh Group. Following Symphony's acquisition of AngliaTelecom Centres Limited ("Anglia Telecom") on 29 April 2005, the directors areof the opinion that the flotation of Symphony will achieve these objectives. Eckoh's continuing operationsFollowing the flotation of Symphony, the continuing Eckoh Group will operate twoprincipal trading divisions - Eckoh Speech Solutions and Eckoh IVR. Eckoh Speech SolutionsEckoh is a leading European provider of self-service call centre solutions usingadvanced speech recognition and related technologies. The Company has a speechalliance with BT to provide its corporate customers with hosted speechrecognition services. This contract was recently extended to 2010. Eckoh's current Speech Solutions' clients include TD Waterhouse, Barclays,William Hill, UGC and Vue Cinemas, ATOC (Association of Train OperatingCompanies), Northern Ireland Electricity and O2. During the year ended 31 March 2005, Speech Solutions increased turnover by 56per cent. to £5.0 million compared to the prior financial year (2004 - £3.2million) and generated a gross profit margin of 53 per cent. (2004 - 53 percent.). Eckoh IVREckoh's IVR division operates in two distinct markets, as follows: Advertised ServicesEckoh provides a range of consumer entertainment products such as dating,community chat, competitions and content services, which are available to bothfixed line and mobile users. During the year ended 31 March 2005, turnover from the advertised servicesmarket was £11.6 million (2004 - £11.6 million) with a gross margin of 43 percent. (2004 - 34 per cent.). Client ServicesEckoh delivers end-to-end IVR solutions including creation, design, development,implementation, deployment, hosting and reporting to a number of prominent mediaowners such as ITV, Trinity Mirror, Channel 4, IPC, EMAP and NorthcliffeNewspapers. During the year ended 31 March 2005, turnover from the client services marketwas £39.0 million (2004 - £22.6 million) and generated a gross profit margin of9 per cent. (2004 - 10 per cent.). Strategy of Eckoh's continuing operationsIt is intended that during the remainder of the current financial year, thedirectors will continue their strategic review of the continuing Eckoh Group,with a view to maximising long-term value for shareholders by focusing onEckoh's growing Speech Solutions business. This ongoing strategy is demonstratedby the announcement today of the flotation of Symphony and also by the recentannouncement on 1 August 2005, relating to the disposal of Freecom.net Limited("Freecom"), Eckoh's internet services subsidiary, to eDirectory.co.uk plc.During this review, Martin Turner will remain as CEO of Eckoh, although it isintended that he will step down from the executive Board following completion ofthe strategic review, which is expected by the end of the current financialyear. Current trading and prospectsOn 7 July 2005 Eckoh announced its preliminary results for the year ended 31March 2005. The Company reported a 28 per cent. increase in turnover to £79.7million (2004 - £62.5 million), an increase in pre-tax profits to £0.9 million(excluding intangible asset amortisation and impairment charges) (2004 pre-taxloss of £0.3 million) and an increase in year end cash balances to £13.3 million(2004 - £10.2 million) reflecting strong cash generation from operations duringthe financial year. Excluding Symphony and the recently disposed of Freecomsubsidiary, Eckoh generated a pre-tax loss for the year ended 31 March 2005 of£0.4 million (excluding intangible asset amortisation and impairment charges) onturnover of £55.6 million. Eckoh is currently trading broadly in line with management's expectations,although Speech Solutions revenues in the first half of the current financialyear are likely to be adversely impacted by lower call volumes to its cinematicketing services. Notwithstanding this trend, based on current trading, thefinancial performance of the Eckoh Group for the year ended 31 March 2005,recent commercial contract successes, including the renewal of the BT contract,the disposal of Freecom and ongoing discussions with a number of potential newclients, the Directors are confident of the Company's future prospects. Circular to shareholders and notice of EGM On admission of Symphony to trading on AIM, Eckoh will hold approximately 64.64per cent. of the issued share capital of Symphony. However, in anticipation of afuture transaction which could reduce Eckoh's holding in Symphony to below 50per cent., Eckoh is to seek the necessary approval of its shareholders at theextraordinary general meeting of the Company to be held at 10.00a.m. on 21September 2005. Accordingly, the Company has today posted a circular toshareholders, incorporating the necessary notice of EGM (the "Circular"). Wordsand expressions used in this announcement have the same meaning as those set outin the Circular. For further enquiries, please contact:Eckoh Technologies plc Tel: 08701 100 700Martin Turner, Chief Executive OfficerNik Philpot, Chief Operating OfficerAdam Moloney, Group Finance Director Evolution Securities Tel: 020 7071 4300Matt Wood / Bobbie Hilliam Buchanan Communications Tel: 020 7466 5000Jeremy Garcia Notes to Editor: About Symphony Holdings plc ("Symphony") Symphony comprises two wholly owned subsidiaries, Symphony Telecom Limited("Symphony Telecom") and Anglia Telecom Centres Limited ("Anglia Telecom") Symphony TelecomSymphony Telecom commenced trading in 1997 to exploit opportunities in the UKtelecoms market and established a fixed line operation in the UK targeting theSME marketplace through PBX equipment dealers. In February 1999, Symphony Telecom became part of the Eckoh Group. SymphonyTelecom's products and services now include fixed line, mobile, data productsand services, which are sold to the UK SME market. Symphony Telecom's turnover for the year ended 31 March 2005 was £21.0 million,generating pre-tax profits of £1.3 million. Anglia TelecomAnglia Telecom was founded in 1984 and specialises in mobile distribution forthe major UK mobile network operators (Orange, Vodafone, O2, T-Mobile and 3)through a network of over 280 dealers. Anglia Telecom also offers fixed lineservices to the UK SME market. Symphony acquired Anglia Telecom on 29 April 2005. Anglia Telecom's turnover forthe year ended 31 March 2005 was £30.5 million generating pre-tax profits of£1.3 million. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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