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“
Eckoh’s expertise, approach and professionalism was
exceptional. They delivered us a series of solutions
and services which exceeded expectations.
”
Chris Scoggins, Chief Executive, National Rail Enquiries
www.eckoh.com
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Contents
The Future
Contents
Highlights of the Year
Chairman’s Statement
The Business Review
Board of Directors
Directors’ Report
Corporate Governance
Statement of Directors’ Responsibilities
Independent Auditors’ Report
Consolidated Income Statement
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Cash Flow Statement
Notes to the Financial Statements
Company Financial Statements
Notes to the Company Financial Statements
Shareholder Information
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Annual Report 2009
“Our solutions and capability
provide our clients with a way of
delivering efficiency without
compromising customer quality.
Using a blend of live agents and our
automation is a cost effective and
viable option that is proven to
significantly reduce call handling
costs.”
Nik Philpot, CEO, Eckoh
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Overview
Overview
Eckoh is a leading provider of hosted
speech recognition services, with over 7
years of experience in successfully
deploying speech solutions. These allow our
clients to efficiently manage their contact
centres by replacing the more repetitive calls
with an effective and intuitive automated
service. Our solutions address high volume
service requests including billing queries,
delivery tracking services, travel timetable
checks or transactional payments at a fraction
of the cost of a live agent and on a 24 hour
a day basis.
By automating high volume interactions our clients
free up real people – their agents – to undertake
more complex work; work that’s more valuable to
their business and more satisfying to them.
All our solutions are designed to enhance and
streamline the customer experience to allow the
caller to achieve a one call resolution. As a result,
our clients have been able to significantly reduce
costs in infrastructure, increase efficiencies, unlock
new revenue streams and improve customer
satisfaction and retention.
The challenging macro-economic climate is
impacting most organisations, who have to work
within constrained budgets yet still find ways to
provide the highest levels of customer service.
During times of economic pressure, their
customers are more cost-conscious, and are
therefore more likely to be querying bills, checking
accounts, etc.
In order to bridge this dichotomy of increased
customer service with lower spending ability many
organisations are turning to self-service solutions.
Eckoh have a proven track record of providing
automation solutions that deliver an ROI in months
if not weeks. Our pay-as-you-go commercial
models mean that costs are tied directly to
consumption versus the alternative options where
a major capital investment is required. As customer
retention becomes a greater focus amongst
organisations, our speech based solutions offer a
more personalised caller experience and can be a
powerful tool to maintain customer relationships.
From business understanding, speech application
design, development, systems integration and
project management through to testing and
deployment, Eckoh works with our clients to tailor
the right solution to fit their present and future
business needs
“Over the many years we have
worked with them Eckoh has
consistently proved to be absolutely
the right supplier of choice for
Vue...they are flexible, responsive
and have a desire to deliver the best
quality service at all levels which
makes them an absolute pleasure
to work with.”
Steve Knibbs, COO, Vue Cinemas
Annual Report 2009
03
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Highlights of the Year
Highlights of the Year
Financial highlights:
Operational highlights:
(cid:129) Adjusted* profit before tax £0.2m in 2008/9,
(cid:129) Significant recent contract wins with the Ministry
an improvement of £1.8m from 2007/8
(cid:129) Loss before tax on continuing operations reduced
from £2.2m in 2007/8 to £0.7m in 2008/9
(cid:129) Gross profit of £6.2m (2008: £6.0m) despite
a 25% reduction in revenue
(cid:129) Revenues and gross margins within the Speech
Solutions division both increased by 10% to
£6.7m (2008: £6.1m) and £4.3m (2008: £3.9m)
respectively
(cid:129) Administrative expenses excluding exceptional
items decreased by 22% to £6.5m (2008: £8.3m)
of Justice, Capita and a global financing
company to hit full run rate in early 2009/10
contributing significantly to the anticipated profit
for the year ahead
(cid:129) Recent long term contract renewals with Ideal
Shopping, Northern Ireland Electricity and Three
Valleys Water
(cid:129) Challenging economic conditions continue to
provide growth opportunities from large
organisations looking to cut costs but maintain
high standard of customer services
Outlook:
(cid:129) Balance sheet holding £5.2m cash with an
(cid:129) Growth in Speech Solutions division expected to
additional £3.2m of outstanding consideration
from the sale of non core businesses to be
received by June 2010
* on continuing operations excluding exceptional items and
amortisation of intangible assets
continue, representing an increasingly large
proportion of overall Group revenue
(cid:129) New and recently awarded contracts to continue
to increase revenue contribution through
2009/2010 onwards
(cid:129) New VoiceXML call handling platform to ensure
competitive advantage, deliver better service to
current customers and help gain new clients
(cid:129) On track to grow revenues and profitability in
2009/2010
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Annual Report 2009
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Chairman’s Statement
The year to 31 March 2009, has been the
first in which the management have
been able to focus their efforts fully on
growing the Speech Solutions division
following the restructuring and sale of non
core businesses seen in recent years, whilst still
targeting to reduce costs where possible.
Peter Reynolds
Chairman
I am delighted to be able to report that the results
of these efforts can be seen in a transformation in
the financial performance of the Group. The 25%
reduction in group revenue to £19.1m
(2008: £25.6m) has not given rise
to a corresponding decrease in
gross profit, which
amounted to £6.2m to
(2008: £6.0m). Alongside
this there has been a
significant decrease in
administrative expenses
of 22% to £6.5m
(excluding exceptional
costs) which has enabled
the Group to turn around
an adjusted* loss before tax
of £1.6m suffered in 2007/8
into an adjusted* profit this year
of £0.2m. The loss before tax on
continuing operations reduced from £2.2m in
2007/8 to £0.7m in 2008/9.
The strategy of the management to focus their
sales efforts on securing larger contracts has also
borne fruit with significant contract wins achieved
in the year from the likes of the Ministry of Justice
and a global financing company, which will not
only ensure that growth continues but increases
into the coming year.
* on continuing operations excluding exceptional items and
amortisation of intangible assets
Chairman’s Statement
Furthermore, the quality of the services provided
by Eckoh has again been demonstrated with long
term renewals with key clients such as Ideal
Shopping, Northern Ireland Electricity, and Three
Valleys Water.
The decline in headline revenues has mainly arisen
from the deliberate reduction in the low margin
activity in the Client IVR division. Eckoh is targeting
a smaller number of sustainable and quality client
accounts with an appropriate margin going
forward and where this criteria is not met then
these accounts are not being renewed. Eckoh has
positioned itself as a best practice Service Provider
in the media sector and the selection as a
preferred supplier to the BBC is testament to the
success of this.
We have recently made a significant investment in
the core technology on which our services operate
which will help to consolidate our position as
market leader for hosted speech recognition
services and will ensure that we retain that
position for the foreseeable future.
In difficult economic times, we are well positioned
to progress even further with our market
capitalisation largely represented by cash and with
no debt on the balance sheet. The Directors are
looking forward to the coming years with
optimism and look forward to our efforts being
reflected in greater value for shareholders.
A key asset at Eckoh is the employees, who have
been critical in helping us to establish our strong
reputation for quality and service in the market.
I would like to take this opportunity to thank them
wholeheartedly for their commitment, loyalty and
efforts throughout the year.
Annual Report 2009
05
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Leading the Way
“Eckoh's longstanding expertise and
their best of breed technology has made
them the ideal partner to work with.”
Gerald Robertson, Chief Operating Officer, TFCC
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Annual Report 2009
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Leading the Way
Technology and infrastructure investment
To ensure that we keep our market
leading position and retain existing clients,
it is vital that the services we provide
and the technology that they utilise are best of
breed”. We have made a significant investment
in a VoiceXML platform from Holly Connects,
a leading vendor of software voice platforms.
This investment forms part of a multi-year
programme that will enable us to expand our
capabilities and offer more application services in
a highly reliable, secure and scalable web services
framework. Our hosting platforms provide a
robust, fault tolerant infrastructure so our clients
can focus on their core business activity.
We have upgraded our speech recognition
software by purchasing Nuance Recognizer 9,
which is clearly established as the industry leader.
The Nuance Recognizer will increase the
performance and quality of our speech-based
solutions. Our investment in this sophisticated
technology enhances our capability to deliver
significant performance improvements including
increased automation rates and decreased call
durations. Alongside this decision we have
purchased the Nuance Verifier, which will allow us
to offer to the market an identification and
verification (ID&V) technology delivering a voice
authentication process that provides a reassuring
and effective method for both authenticating and
protecting a customer’s identity.
Leading the Way
The combination of these investments
demonstrates our commitment to adopting the
latest technology. These will not only deliver
improvements in performance to future services
but give our clients the confidence that we
continue to invest in the technology and
infrastructure on which their business-critical
solutions rely.
“We needed a service provider who
had the necessary expertise and
technical infrastructure to deliver an
extremely robust solution together
with experience of operating high
volume speech recognition
applications.”
Jonny Shipp, Head of Content Standards, O2
Annual Report 2009
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The Business Review
The Business Review
Introduction
The 2007/8 Business Review stated that
significant changes made in that year
would create a far stronger business
going into 2008/9. The board is pleased to
announce that these results achieved our
goals, with increased revenues in the Speech
Solutions division, increased margins and a
reduced cost base leading to a much improved
financial performance and a positive outlook.
The 25% reduction in group revenue to £19.1m
(2008: £25.6m) has not given rise to a
corresponding decrease in gross profit, which
amounted to £6.2m (2008: £6.0m). This was due
to growth in the Speech Solutions business and
the higher margins arising from that division,
alongside a planned reduction in the very low
margin Client IVR activity. A decrease in
administrative expenses excluding exceptional
items of 22% from £8.3m to £6.5m has enabled
the Group to turn around an adjusted* loss before
tax suffered in 2007/8 of £1.6m into an adjusted*
profit of £0.2m. The loss before tax on continuing
operations reduced from £2.2m in 2007/8 to
£0.7m in 2008/9.
* on continuing operations excluding exceptional items and
amortisation of intangible assets
Speech Solutions
The Speech Solutions division is the UK’s largest
provider of hosted speech recognition services.
Its main target market is large businesses and
organisations with contact centre operations who
are looking to reduce their costs by switching the
more rudimentary and repetitive calls to an
effective and user-friendly automated service.
Using Eckoh’s solutions, organisations can address
high volume customer service requests such as
billing queries, delivery tracking services, travel
timetable checks or transactional payments, at a
fraction of a cost of a live agent and on a 24 hour-
a-day basis. The services are used by a wide range
of mass market organisations to serve millions of
their customers each year.
08
Annual Report 2009
The Speech Solutions division has made strong
progress in the year with revenues and margins
both increasing by 10% to £6.7m (2008: £6.1m)
and £4.3m (2008: £3.9m) respectively.
In 2008/9, the division began to see the initial
benefits from the challenging macro-economic
climate as organisations working with constrained
budgets looked for ways of delivering efficient yet
high quality customer services through Eckoh’s
cost-effective automated response solutions.
However, with a successful sale process taking on
average around 12 months from initial contact to
service launch, the real impact from the
opportunities arising directly from the tough
economic conditions will not be seen until
2009/10 and 2010/11. The division also saw
increased interest from companies who are
seeking to repatriate non-UK based call centres,
which continue to be unpopular with UK
consumers, without adding substantially to their
cost base. A more efficient UK based contact
centre operation, using a blend of live agent
services and Eckoh’s automation solutions is a real
and viable alternative, both from a financial and
customer-centric perspective, to an existing off-
shore operation.
Outlook for Speech Solutions Division
The length of contracts in this division are
generally for periods of at least three years, and
usually with guaranteed minimum levels of
revenue either from fixed recurring fees or from
specified volumes of call traffic or transactions.
As a result, Eckoh has good visibility on future
revenues and we can talk with confidence about
another period of strong growth in 2009/10.
Additionally, the division is also seeing clients
turning to Eckoh to provide customer contact
services through complementary channels to the
phone such as the web or mobile. Having already
established a reputation of providing high quality
speech services, the additional cost benefits of
working with Eckoh as a single supplier in these
other areas is likely to attract more clients to adopt
this strategy going forward.
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The Business Review
The Business Review Continued
Client IVR
The Client Interactive Voice Response (“IVR”)
division operates in the media sector working with
companies to generate incremental revenue
streams through a wide variety of premium priced
interactive services such as competitions, votes and
information lines delivered to the consumer over
the telephone or on their mobile.
The revenue generated by the Client IVR division
can be divided into two streams. The first stream is
where Eckoh acts effectively as a network operator
using its telephony infrastructure to provide
network services for third parties to operate
premium rate services. Eckoh will provide the
inbound telephone numbers or SMS shortcodes
and either deliver traffic to the client’s own
equipment or host the services on the client’s
behalf, retaining a small proportion of any revenue
generated. Eckoh will have little or no involvement
in the running of these services and does not need
to allocate significant resource to these clients and
as a result the margins tend to be reasonably low.
The second revenue stream occurs where Eckoh
operate as a Service Provider for large media
owners such as Trinity Mirror and IPC Magazines.
Eckoh will be very involved in the technical
development and operation of these competitions,
votes and other premium rate promotions,
ensuring that the services are operated in a
manner that is compliant with the relevant
regulatory codes. Consequently, Eckoh employs
a broader team of skilled individuals to work on
these accounts and a larger share of the revenue
remains with Eckoh to cover the cost of those
individuals and the wider resource utilised across
the company.
The complexity of the services provided to large
corporate clients is such that it is not unusual for
several months to pass from the announcement of
a new contract to the actual commencement of
revenues, and there is often a further period until
the revenues reach full run rate. For example,
moving into 2009/10 the significant contract wins
announced in the summer of 2008, with a global
financial services company and the Ministry of
Justice, are only now beginning to approach their
full revenue run rate. This will see even stronger
growth in revenue and margin in the coming year
as these new revenues layer on top of the
recurring revenues generated from the existing
client base who tend to be contracted for a period
of around three to seven years.
Investment in new technology
To ensure that Eckoh keep its market leading
position and retain existing clients, it is vital that
the services provided and the technology that they
utilise, are best of breed. As a result, in recent
months the Group made a major investment in a
new VoiceXML call handling platform, which over
a number of years is expected to increase in size
and ultimately replace our existing platform.
Alongside this decision the speech recognition
software was updated and upgraded by purchasing
the established industry leader, Nuance Recognizer
9. The combination of these decisions will not only
deliver improvements in performance to future
services but provide clients with the reassurance
that Eckoh continues to invest in the technology
on which their business critical solutions rely.
Investment in sales and marketing
Over the past six months, the sales and marketing
team has been enlarged to take advantage of the
exciting opportunities that currently exist.
Economies of scale are available when developing
services such that newly won high value contracts
do not require additional headcount thus resulting
in the revenue generated adding substantially to
the profits of the Group. Much of the growth to
be seen in 2009/10 will result from contracts
already won in prior years. It is anticipated that the
current sales pipeline will contribute to Eckoh’s
growth in 2010/11.
Annual Report 2009
09
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Voice Recognition Strengthens Security
Voice Recognition Strengthens Security
There are a wide range of options to choose
from for security including; touch-tone PINs,
agent identification questions, pre-chosen
passwords and now, voice authentication.
The biometric technology captures specific
physical characteristics of the human voice,
using those characteristics to identify callers,
something that other security measures just
cannot do. From securing financial
transactions to allowing access to confidential
information, voice authentication takes
security to a whole new level.
Our recent purchase of Nuance Verifier,
Nuance’s advanced voice authentication
software, will enable Eckoh to provide clients
with the ability to gather secure access to
sensitive information over the telephone.
The Nuance Verifier voice authentication
software creates individual voiceprints to
authenticate callers by their voices, enabling
secure access to information. The Nuance
Verifier will allow us to offer identification
and verification (ID&V) technology delivering
a voice authentication process that provides a
reassuring and effective method for both
authenticating and protecting a customer’s
identity.
The voice recognition technology coupled
with our experience in delivering speech
solutions offers our clients the scope to
increase the calls that can be automated and
by adding the voice authentication element
will not only reduce their customers’ exposure
to fraud, reduce contact centre costs but
provide greater levels of customer satisfaction.
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Annual Report 2009
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The Business Review
The Business Review Continued
The Client IVR division is complementary to the
Speech Solutions division and the management
continues to explore ways in which the division can
contribute further to the profitability of the Group.
Administrative expenses
During the previous financial year, some non core
activities were sold resulting in a review of the
central overhead required to support the smaller
remaining core business. As a result, we have seen
pre-exceptional administrative expenses reduce by
23% from £8.3m to £6.5m. These costs continue
to be subject to review as demonstrated by an
opportunity taken in March 2009 to halve the
space rented for the Group office in Hemel
Hempstead. The cost benefit from this move will
be in the region of £0.2m to be seen in 2009/10.
However, the substantial growth being
experienced by the Speech division in particular
will see an increase in headcount initially in the
sales and marketing area and eventually in the
technical areas as resource is modestly increased to
cope with the anticipated influx of new business.
Overall, the saving in property costs will be offset
by the increased headcount and a moderate
increase in administrative costs is likely in 2009/10.
The Client IVR division stabilised during 2008/9
following the difficulties experienced in the premium
rate industry during early 2007. As expected,
revenues have declined in the division by 36% to
£12.4m (2008: £19.5m). However, most of the
revenue reduction has come from very low margin
business with the overall margin generated by the
division increasing from 11% to 15% and resulting
in only a 10% reduction in margin from £2.1m to
£1.9m. A thorough review of the division was
undertaken in early 2008 which has resulted in
administrative expenses of the division decreasing
by 40% to £1.2m (2008: £2.1m). As a result, the
profit generated by the division has increased from
£0.1m to £0.7m.
Outlook for Client IVR
Contracts in the Client IVR division tend to be for
shorter periods of time than those held in the
Speech Solutions division and operate at
significantly lower margins. Media owners remain
under pressure to increase revenue despite a
background of falling circulations and advertising.
The operation of premium rate services is an
attractive means of making up the shortfall whilst
increasing the interaction with the readers,
listeners and viewers of those media.
Eckoh has invested in the compliance aspect of the
services, using the technical expertise from the
Speech Solutions division to develop systems to
ensure that all premium rate services are run in a
fully compliant manner. The industry as a whole
has seen smaller operators disappear from the
market leaving Eckoh as one of only a handful
remaining. Media owners looking to run these
services are approaching Eckoh to explore
opportunities in the area, and the division is
beginning to see a level of confidence and modest
growth return to the sector. For example, Eckoh
was successful in being approved as a preferred
supplier by the BBC in its recent process and we
would anticipate new business to emerge from
this relationship in the future.
Annual Report 2009
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The Business Review
The Business Review Continued
Exceptional costs
Group outlook
The trend seen in 2008/9 is expected to continue
into the coming years with the Speech Solutions
division representing an increasingly large
proportion of the overall revenues. The higher
margin achieved in this area will increase the
blended margin in the Group. In addition,
increases in headcount will be moderate in
comparison to the growth in revenue meaning
that net profit growth will substantially be
following the growth in Speech margins.
The Directors are delighted that the efforts
consumed in selling non core businesses and
restructuring the remaining core activities have got
the Group to the point which has long been
anticipated whereby each and every new contract
won is expected to feed the profit line.
The Directors are pleased with the progress made
and are committed to ensure that shareholders
obtain value from these efforts.
£0.8m of exceptional costs were suffered during
the year. £0.6m related to the full and final
settlement of all claims made by Channel Four
Television Corporation in relation to alleged
breaches of contractual duties in relation to the
“Richard and Judy” programme. Whilst these
breaches are not admitted, the cost of contesting
the claim in terms of money and management
effort meant that a settlement by mediation was
considered a sensible way to conclude the matter.
This particular legal issue caused significant
disruption to the business and prompted the Board
to look at some opportunities to provide
shareholder value through a corporate transaction.
However, a combination of global economic
conditions, increased optimism about the growth
prospects of the business as well as the settlement
of the Channel 4 issue caused these discussions to
be terminated and legal and professional costs of
£0.2m have been expensed to the Income Statement.
Balance sheet
The Group reports £5.2m (2008: £6.8m) of cash
and short term investments as at the year end.
The reduced cash balance is a result of the
unwinding of the working capital benefit from
running high levels of Client IVR revenues.
Net current assets excluding cash and short term
investments at the year end were £0.7m compared
to a net current liability on the same basis of
£1.5m at 31 March 2008. In addition to the
substantial cash balance, £3.2m remains
outstanding at the balance sheet date from the
sale of non core subsidiaries over the past couple
of years. This is all being paid on time and is
scheduled to be fully repaid by June 2010.
12
Annual Report 2009
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Board of Directors
Peter Reynolds – Non-executive Chairman (cid:129) (cid:129) (cid:129)
Peter joined the board in September 2003.
He is also currently Executive Chairman of Swallow
Ventures Limited, a company specialising in CRM
software, a non-executive director of Silence
Therapeutics plc, a European Biopharmaceutical
company, Waltech plc, a payment systems supplier
and Vialogy plc, a USA based software company
specialising in security and defence. Peter is Chairman
of the Board, as well as Chairman of the Audit,
Nomination and Remuneration Committees.
Nik Philpot – Chief Executive Officer (cid:129)
Nik joined the Board in February 1999, appointed
COO and Deputy CEO in September 2001 and
appointed CEO in September 2006. Nik was a
co-founder of Symphony Telecom and formerly
worked for British Telecom. As co-founder of
Eckoh he has created the UK’s largest automation
solutions provider for the contact centre and
media industries. Nik has 22 years experience in
the voice services industry.
Adam Moloney – Group Finance Director
Adam joined the Company in May 2003, joining
the board as a Director in July 2004. He has
worked in senior financial roles for a number of
organisations and immediately prior to joining
Eckoh, was Manager of Finance & Operations for
the UK arm of New York based IT hardware
reseller, Resilien Inc.
Jim Hennigan – Executive Director
Following a 20 year career in IT, including senior
roles at Apple and Marks & Spencer, Jim joined
Eckoh in 2000 as Group CTO, becoming
Managing Director of its speech solutions business
in 2002, and appointed to the Board in February
2007. Jim is a recognised authority on automated
multi-channel contact centre solutions and their
impact on business performance, staff and
customer satisfaction.
Board of Directors
Board Committees
(cid:129) Member of the Audit
Committee
(cid:129) Member of the
Remuneration
Committee
(cid:129) Member of the
Nomination
Committee
Annual Report 2009
13
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Delivering the Scalability your Business Demands
“Acquiring or building a technology
platform capable of managing our
extreme call peaks would have been
prohibitively costly. The hosted route
has proved ideal, since we haven’t
had to invest in technology or the
expertise to support it; that’s all
taken care of.”
Bill Graham, Chief Operating Officer – Electricity
Infrastructure, Northern Ireland Electricity
14
Annual Report 2009
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Delivering the Scalability your Business Demands
Delivering the Scalability your Business Demands
“The platform’s scalability is exactly
what we need. When the stock
market’s going crazy – that’s when
the pressure is on. We have the
confidence and the evidence that the
service will stand up to such heavy
demand.”
Darren Hepworth, Vice President, Customer Contact
Centre, TD Waterhouse
Our carrier-grade platform has the
scalability to handle over 650,000 calls
an hour and up to 8,000 simultaneously.
Our platform has the capacity to manage even
the most dramatic and unexpected call peaks,
making it the most scalable and flexible
speech-enabled platform in Europe.
We have proven experience in providing services
that have very high volume call profiles.
The solution we provide to National Rail Enquiries
TrainTracker™ service saw unexpected and
dramatic volumes in calls arising from the
bombings on 7 July 2005 and the extreme snow
conditions on 2 February 2009. We also have
experience in high volume calls lasting for
particular time periods; for example the
commentary and results services for William Hill
during the Cheltenham Gold Cup racing.
We continually invest in our hosting platform and
infrastructure enabling our clients to substantially
reduce their upfront investment expenditure,
reduce operational costs and the impact on
internal resource whilst taking advantage of
deploying the latest advanced speech recognition
and IVR technology.
We host a large number of applications across a
broad range of sectors, enabling our clients to
reduce the cost per call, increase call response
times and utilise agents for more valuable and
complex calls.
All of our solutions are underpinned by a common
technology and telephony platform, that means all
of our clients’ automation requirements – from
speech, SMS, web to touch tone IVR – can be met
via a single infrastructure, protecting them from
the need for large scale technology investment –
now or in the future.
Annual Report 2009
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Directors’ Report
Directors’ Report
The Directors of Eckoh plc present their
annual report, together with the
audited financial statements of the
Company and the Group for the year ended 31
March 2009.
Research and development
The Group capitalised £0.4m (2008: £0.1m) of
development expenditure during the year as an
intangible asset as it expanded its product portfolio
and produced bespoke solutions for customers.
Principal activity
Financial instruments
The principal activity of Eckoh plc and its subsidiary
undertakings ("the Group") is the provision of
hosted speech recognition services and outsourced
automated solutions. The Chairman’s Statement
(page 5) and the Business Review (pages 8 to 12)
report on the progress made in the financial year
under review.
The principal subsidiary undertakings are listed on
page 65.
Results and dividends
The audited financial statements and related notes
for the year ended 31 March 2009 are set out on
pages 33 to 67. The Group’s loss for the year is set
out in the Income Statement on page 33.
The Company intends to reinvest any future
earnings to finance the growth of its business and
does not anticipate paying any dividends in the
foreseeable future.
The Group’s financial risk management is
discussed in note 3. The Directors’ regularly assess
the Group’s key commercial risks, which are
considered to be the competitive market sector
and the infrastructure stability. Commercial risks
are managed through the introduction of new
products and services and by maintaining high
levels of customer service. Infrastructure stability is
managed through 24 hour technical monitoring.
The financial instruments of the Group are set out
in the notes to the financial statements on pages
37 to 62. Please refer to note 2 for a summary of
principal accounting policies; to note 3 for the
Group’s financial risk management policies in
relation to liquidity risk or cash flow risk, interest
rate risk and foreign currency risk, as well as capital
management; to note 17 for credit risk and loans
and other receivables; to note 18 for short-term
investments; to note 19 for cash and cash equivalents
and to note 20 for trade and other payables.
Related party transactions are disclosed in note 27.
Annual general meeting
The next Annual General Meeting of the Company
will be held at 10:00 on 28 October 2009.
Details of the business to be proposed at the
Annual General Meeting are contained within the
Notice of Meeting, which accompanies this Report.
Directors
The current Directors of the Company are shown
on page 13.
The articles of association require that at the Annual
General Meeting one third, or as near as possible,
of the Directors will retire by rotation. Nik Philpot
will retire by rotation and put himself forward for
re-election at the Annual General Meeting.
16
Annual Report 2009
T25568 Eckoh Annual Report 2009:T25568 Eckoh Annual Report 2009 16/9/09 13:29 Page 18
Directors’ Report
Directors’ Report Continued
Directors’ remuneration
Name
N B Philpot
A P Moloney (i)
J P Hennigan
H R P Reynolds
Total
Salary
and fees
£’000
207
118
150
60
535
Bonus
£’000
59
36
42
-
137
Other
2009 Total
2008 Total
benefits
£’000
£’000
£’000
2
14
2
13
31
268
168
194
73
703
210
132
153
71
566
The information contained in this table has been audited.
Notes:
(i) Included within the other benefits paid to A P Moloney is an employer pension contribution of £12,000
(2008: £12,000). There were no other pension costs during the year.
Gains on the exercise of share options in the year ended 31 March 2009 totalled £nil (2008: £116,000).
Directors’ interests
The interests of the Directors in the share capital of the Company and their options in respect of shares in
the Company are shown below. No Director has had any material interest in a contract of significance
(other than service contracts) with the Company or with any subsidiary company during the year.
Directors’ interests in shares
The interests, all of which are beneficial, of the Directors (and their immediate families) in the share capital
of the Company are set out below:
31 May 2009
Ordinary shares
31 March 2009
Ordinary shares
1 April 2008
Ordinary shares
of 0.25 pence each
of 0.25 pence each
of 0.25 pence each
2,502,000
2,282,000
2,282,000
135,000
646,550
172,000
-
646,550
15,000
-
646,550
15,000
N B Philpot (i)
A P Moloney
H R P Reynolds (ii)
J P Hennigan
Notes:
(i) N B Philpot’s spouse is the beneficial owner of 80,000 shares which are included above.
(ii) Included in H R P Reynolds’ shareholding is 258,620 shares held in the name of Brewin Nominees Limited.
The Directors’ Report continues on page 19.
Annual Report 2009
17
T25568 Eckoh Annual Report 2009:T25568 Eckoh Annual Report 2009 16/9/09 13:33 Page 19
European Reach and Capability
European Reach and Capability
We have been working to create a network
which will allow calls to be delivered from all
major European territories to our call
processing platform in the UK. This new
capability strengthens our ability to provide
cost-effective hosting facilities on a pan-
European scale to our clients.
Our advanced technical capability has placed
us in a strong position to successfully extend
our offering into these new territories.
We have been awarded a significant contract
by a global financial services company to
provide an automated telephony self-service
platform for handling customer enquiries
across Europe. Calls will be routed from
European destinations including the UK,
France, Spain, Germany, Italy, Sweden,
The Netherlands, Belgium and Norway to our
hosted platform located at both of our UK
data centres. We are expecting to process
approximately 40 million minutes of traffic
annually for this client alone.
18
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Directors’ Report
Directors’ Report Continued
Directors’ share options
The Directors’ interests in share options are shown in the following table:
Note
At 1 April
2008
(number)
Granted
in year
(number)
Lapsed
At 31 March
in year
(number)
2009
(number)
Exercise
price
(pence)
Earliest
date for
exercise
Latest
date for
exercise
N B Philpot
b 3,000,000
A P Moloney
J P Hennigan
a
b
380,710
337,702
b 1,000,000
c
b
a
b
c
b
b
b
a
b
800,000
200,000
250,000
750,000
900,000
100,000
200,000
800,000
34,014
500,000
c 1,000,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- 3,000,000
-
-
380,710
337,702
- 1,000,000
-
-
-
-
-
-
-
-
-
-
800,000
200,000
250,000
750,000
900,000
100,000
200,000
800,000
34,014
500,000
- 1,000,000
6.50
7.88
7.88
8.75
8.75
8.75
8.50
8.75
8.75
8.75
7.75
27.06.05
27.06.12
07.10.07
07.10.14
07.10.07
07.10.14
13.09.08
13.09.15
31.07.10
31.07.17
31.07.10
31.07.17
28.02.08
28.02.15
13.09.08
13.09.15
31.07.10
31.07.17
31.07.10
31.07.17
07.03.05
07.03.12
10.75
28.11.05
28.11.12
7.88
8.75
8.75
07.10.07
07.10.14
13.09.08
13.09.15
31.07.10
31.07.17
The information contained in this table has been audited.
Notes:
a Granted under the Inland Revenue approved Appendix to the Eckoh plc Share Option Scheme (1999).
b Granted under the Eckoh plc Share Option Scheme (1999) but not qualifying for Inland Revenue approval.
c Granted under the Eckoh plc 2007 Enterprise Management Incentive (“EMI”) Share Option Plan.
The performance target attaching to the above options is that the closing price of a share, on any day
following the third anniversary of the date of grant, must be greater than the exercise price of the Option
by RPI plus 15%.
Share capital and reserves
Details of changes in the authorised and issued share capital and reserves of the Company are shown in
notes 23 and 24 to the financial statements.
Share schemes
The Directors believe that a key element in attracting, motivating and retaining employees of the highest
calibre is employee involvement in the performance of the Group through participation in share schemes.
By doing so, the Directors believe that employees’ interests will be aligned with those of shareholders.
Details of options granted under the share option schemes are set out in note 25 to the financial
statements. All permanent employees are eligible to join a scheme.
Annual Report 2009
19
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Directors’ Report
Directors’ Report Continued
Charitable and political donations
Environmental report
The Group made no political donations during the
current or prior year. Charitable donations totalled
£1,380 during the year (2008: £300).
Employees
The Directors believe that the Group’s employees
are a source of competitive advantage.
The Directors recognise that continued and
sustained improvement in the performance of the
Group depends on its ability to attract, motivate
and retain employees of the highest calibre.
The Group is committed to the principle of equal
opportunity in employment. It seeks to ensure that
no employee or applicant is treated less favourably
on the grounds of gender, marital status, nationality,
race, colour, ethnic or national origin, religion,
disability or sexual orientation or is disadvantaged
by conditions or requirements, including age limits,
which cannot be objectively justified. Entry into
and progression within the Group are solely
determined by the application of job criteria,
personal aptitude and competence.
It is the Group’s policy to apply best practice in the
employment of disabled people. Full and fair
consideration is given to every application for
employment from disabled persons whose
aptitude and skills can be utilised in the business
and to their training and career development.
This includes, wherever possible, the retraining
and retention of staff who become disabled during
their employment.
All staff are informed of matters concerning their
interest as employees and the financial and
economic factors affecting the business.
Established management communication channels
have been supplemented by monthly
presentations to staff by Directors to explain
developments of particular significance.
The Directors recognise the importance and
responsibility of ensuring that the Group’s
businesses are conducted with respect and care for
the environment. Environmental management is
monitored by the Board through the internal
control risk management process.
Payments to creditors
The Company and its subsidiaries have a variety of
payment terms with their suppliers. The Group
agrees payment terms with its suppliers when it
enters into binding purchasing contracts for the
supply of goods and services. The Company seeks
to abide by these payment terms when it is
satisfied that the supplier has provided the goods
or services in accordance with the agreed terms
and conditions. At 31 March 2009 the amount of
trade creditors shown in the balance sheet
represents 44 days of average purchases for the
Group (2008: 33 days). The Company had no
trade creditors at 31 March 2009.
Statement of disclosure of information
to auditors
As far as the Directors are aware there is no
information relevant to the audit of which the
Company’s auditors are unaware and the Directors
have taken all steps that they ought to have taken
as Directors in order to make themselves aware of
any such relevant information and to establish that
the Company’s auditors are aware of that
information.
Auditors
A resolution to reappoint BDO Stoy Hayward LLP
as auditors of the Company, and to authorise the
Directors to set their fees will be submitted to the
forthcoming Annual General Meeting.
By order of the Board
Adam Moloney
Company Secretary
12 June 2009
20
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Corporate Governance
Compliance statement
The Board of Eckoh plc recognises its
responsibilities to maintain high
standards of corporate governance
throughout the Group. The Board continues to
give careful consideration to the principles of
corporate governance as set out in the
Combined Code published by the Financial
Services Authority, although as a company
listed on AIM it is not required to comply with
the Combined Code. The Company is
committed to complying with the Combined
Code so far as is practicable and appropriate
for a public company of its size and nature.
Board of directors
The Chairman is responsible for the effective
running of the Board of Directors. The Board
currently has four members, comprising the
Non-executive Chairman, the Chief Executive, the
Group Finance Director and an Executive Director.
The Board has considered the independence of its
Non-executive Chairman, Peter Reynolds, and after
due consideration, has concluded that he is
independent. He does not have any involvement in
the day-to-day management of the Company or
its subsidiaries.
The biographical details of the Board members are set
out on page 13.
There is a schedule of formal matters specifically
reserved for the full Board’s consideration, including
a policy enabling Directors to take independent
professional advice in the furtherance of their
duties at the Company’s expense. The Board
programme is designed so that Directors have a
regular opportunity to consider the Group’s strategy,
policies, budgets, progress reports and financial
position and to arrive at a balanced assessment of
the Group’s position and prospects. In addition,
strategic developments are on the agenda at each
Board meeting and, where appropriate, the Board
programme also includes a day set aside purely for
strategic review and planning.
Corporate Governance
The Company has a clear division of responsibility
between the roles of Chairman and Chief
Executive within the business.
The Non-executive Chairman has a responsibility
to ensure that the strategies and policies proposed
by the Executive Directors are fully discussed and
critically examined, not only with regard to the
best long-term interests of shareholders, but also
having regard to the Company’s relationships with
its employees, customers and suppliers. The Board
and its Committees are supplied with information
and papers to ensure that all aspects of the
Company’s affairs are reviewed on at least an
annual basis.
Day-to-day management of the business is delegated
to the Management Team, consisting of the three
Executive Directors and certain senior managers,
which meets monthly. The Board is dependent on
the Management Team for the provision of
accurate, complete and timely information and the
Directors may seek further information where
necessary. The Chairman is responsible for
ensuring that all Directors are properly briefed on
issues arising at Board meetings.
Under the Company’s articles of association, each
year at least one third of the Directors must retire
and submit themselves for re-election by the
shareholders at the Annual General Meeting.
The communication accompanying the Company’s
Notice of Annual General Meeting sets out
reasons for the Board’s belief that the individual
should be re-elected.
Board committees
Certain responsibilities are delegated to the
Remuneration Committee, the Audit and the
Nomination Committees. The three committees
have written terms of reference, which define their
authorities, duties and membership. The written
terms of reference are available for inspection at
the Company’s registered office during normal
business hours on any weekday excluding public
holidays. Details of membership of the
committees are given on page 13.
Continued on page 24
Annual Report 2009
21
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Multi-Channel Capabilities
Eckoh provides Parcelforce Worldwide’s parcel
tracking and redeliveries automated services
together with the Royal Mail Group’s Track
and Trace service. The service is delivered
through IVR and web capability and allows
their customers to track and rebook deliveries.
As a result our name and address capture
module processes thousands of calls, changes
are frequently made to continuously increase
the success rate achieved, ensuring that it is
best of breed in the industry.
"We believe Eckoh and BT’s hosted
solution not only provides us with
the flexibility we need to cater for
the variable peaks in our business
but most importantly delivers a
quality of service and convenience
that will impress our customers and
enhance our business relationship
with them."
Emma Bailey, Manager for Customer Service Policy
Manager, Parcelforce
22
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Multi-Channel Capabilities
Multi-Channel Capabilities
Offering your customers the choice
We offer a multi-channel approach with our
solutions capable of being implemented across the
web, mobile and telephone. Our clients can provide
more choice to their customers for less cost, with
the ability to choose the relevant medium to
ensure a consistent and integrated experience is
applied across all communication channels.
Our solutions allow our clients to enhance the
customer experience and maintain the ongoing
relationships by providing their customers with
additional services, complementary information
and reminders. There is an increasingly growing
trend with our existing clients to expand how they
communicate with their customers by adding
additional channels to their solution and new
clients are approaching Eckoh to provide a broader
multi-channel solution.
As customers are being assisted by automated
self-service, intelligent information can be
captured utilising adaptive personalisation
techniques. Repeat callers can be identified and
relevant information can be presented back to
them based on their call history. For example;
linking a customer to a specific fault and providing
fault updates or providing return train journey
details following a previous enquiry.
We provide Vue Entertainment an advanced
speech solution ranging from requesting film and
screen information as well as the ability to book
and pay for tickets. Confirmation of bookings is
then complemented by text message detailing
booking information and reference number.
“We have found that Eckoh were
extremely responsive to our needs
and have demonstrated that they can
deliver a top quality speech
recognition service in a tight
timeframe. We wanted a provider
who not only has the necessary
capacity to cope with the extreme
peaks of response that the cinema
market requires but also has future
growth plans to match our own.”
Roland Jones, IT Director, Vue Entertainment
Using the award winning Journey Finder
technology, the TrainTracker™ service is delivered
by both an IVR and SMS functionality.
This integrated approach enables cross pollination
of user preferences between the services and
enhances the adaptive personalisation techniques
and capabilities available.
“There’s benefit for everyone – for
travellers who get the information
they need quickly, for the train
operating companies who can offer
customers more communication
choices and for contact centre
advisors, who can focus on more
complex and, therefore, more
rewarding tasks.”
Chris Scoggins, CEO, National Rail Enquiries
Annual Report 2009
23
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Corporate Governance
Corporate Governance Continued
The Audit Committee formally met twice during
the period under review, with no absentees.
Adam Moloney, the Group Finance Director,
attends all Audit Committee meetings by invitation
and provides advice to the Committee where
appropriate. The Chief Executive Officer was
invited to and attended both meetings.
The Company’s auditors attended both meetings
and the Committee considered reports issued by
them. The auditors have direct access to the Audit
Committee without the presence of the Executive
Directors. The Committee reviews the effectiveness
of the Company’s internal financial controls by
reference to reports from the external auditors.
The Committee also reviews the scope and results
of the external audit as well as its cost effectiveness.
The Audit Committee annually reviews the
requirement for an internal audit function.
The Committee has decided that none is necessary
at present. Instead, other monitoring processes
have been applied to provide assurance to the
Board that the system of internal control is
functioning satisfactorily. Internal controls are
discussed under the internal control and risk
management section below.
The Nomination Committee is responsible for the
formal selection process of Executive and Non
executive Directors. The normal selection process
involves the formulation of a clear job description
and ideal candidate profile, the appointment of
independent recruitment consultants, if appropriate,
and interviews of suitable candidates by the
Committee and one or more of the Executive
Directors. A short list of candidates then meets
with the remaining Directors. Following feedback
from all Directors, and after due consideration,
the Nomination Committee recommends the
appointment of the chosen candidate.
The principal objectives of the Remuneration
Committee are to review the performance of the
Executive Directors and make recommendations to
the Board on matters relating to their
remuneration and terms of employment.
Internal control and risk management
The Directors formally acknowledge their
responsibility for establishing effective internal
control within the Company. In this context,
control is defined as those policies, processes,
tasks and behaviours established to ensure that
business objectives are achieved most cost
effectively, assets and shareholder value are
safeguarded and laws, regulations and policies are
complied with.
The Board has put in place a system of internal
controls, set within a framework of a clearly
defined organisational structure, with well
understood lines of responsibility, delegation of
authority, accountability, policies and procedures
which is supported by training, budgeting,
reporting and review procedures.
A long-term business plan and an annual
operating budget are prepared by management
and are reviewed and approved by the Board prior
to the commencement of each financial year.
Monthly reporting and analysis of results against
budget, risk assessment and related internal
controls and forecasts are received, discussed by
management and reported to the Board.
There are ongoing processes for identifying,
evaluating and managing the Company’s
significant risks and related internal controls which
are integrated into the Company’s operations.
Such processes are reported to, and reviewed by,
the Board at each meeting. These processes have
identified the risks most important to the Company
(business, operational, financial and compliance),
determined the financial implications, and assessed
the adequacy and effectiveness of their control.
The reporting and review processes provide routine
assurance to the Board as to the adequacy and
effectiveness of the internal controls.
24
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Corporate Governance
Corporate Governance Continued
Shareholder relations
Going concern
Under company law, the Company’s Directors are
required to consider whether it is appropriate to
prepare financial statements on the basis that the
Company and the Group are going concerns.
As part of its normal business practice the Group
prepares annual and longer term plans and, in
reviewing this information, the Company’s
Directors are satisfied that the Group and the
Company have reasonable resources to enable
them to continue in business for the foreseeable
future. For this reason the Company and the
Group continue to adopt the going concern basis
in preparing the financial statements
The Company holds meetings with its major
institutional investors and general presentations
are given covering the interim and preliminary
results. The Chairman, Peter Reynolds met with
shareholders and brokers during the period under
review. The Chairman is available to attend
presentation meetings and other presentations on
an ongoing basis. All Directors have access to the
Company’s nominated advisors who give feedback
from shareholders and receive copies of broker
update documents.
All shareholders have the opportunity to raise
questions at the Company’s Annual General
Meeting, or leave written questions, which will be
answered in writing as soon as possible. At the
meeting the Chairman will give a statement on the
Group’s performance during the year, together
with a statement on current trading conditions.
In addition to regular financial reporting,
significant matters relating to the trading or
development of the business are disseminated to
the market by way of Stock Exchange
announcements. The Company’s Annual Report
and Accounts, Interim Statements and other major
announcements are published on the Company’s
corporate website at www.eckoh.com.
Annual Report 2009
25
T25568 Eckoh Annual Report 2009:T25568 Eckoh Annual Report 2009 16/9/09 13:43 Page 27
Outbound Services
Outbound Services
Outbound services are becoming increasingly
popular for our clients that want to
proactively communicate with their customers
and deter inbound calls as part of expanding
their multi-channel self-service approach.
Eckoh’s hosted outbound services can be
rapidly deployed and offers clients an
effective and powerful means of notifying
and distributing relevant and content specific
information to their customers combined with
the capability to interact and complete a call
to action, all within the one call.
Simple information and transactions can be
automated allowing our clients agents to deal
with more complex interactions and customer
inquiries therefore freeing up valuable
resources and maximising call centre
efficiency. By using speech recognition we
offer the ability to route calls back to a live
agent if necessary. The outbound solution
provides our clients with a higher degree of
control over communications and efficiently
manages an agent’s time to focus on higher
value calls thereby reducing costs. The service
Eckoh provides is an effective communication
tool for customer retention as a means of
alerting customers to special offers, service
updates or appointment reminders.
Examples where outbound services are
proving successful with our clients includes
sending automated payment notifications
(for bills, credit cards, loans etc), which
reduces the cost and time of an agent chasing
collections and provides the caller with a
convenient means of settling their account.
Outbound services are effective within the
travel industry where clients are able to send
real-time alerts and update travel information
to their customers.
26
Annual Report 2009
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Statement of Directors’ Responsibilities
Statement of Directors’ Responsibilities
The directors are responsible for keeping
proper accounting records which
disclose with reasonable accuracy at any
time the financial position of the group, for
safeguarding the assets of the company, for
taking reasonable steps for the prevention and
detection of fraud and other irregularities and
for the preparation of a Directors’ Report
which complies with the requirements of the
Companies Act 1985.
The directors are responsible for preparing the
annual report and the financial statements in
accordance with the Companies Act 1985.
The directors are also required to prepare financial
statements for the group in accordance with
International Financial Reporting Standards as
adopted by the European Union (IFRSs) and the
rules of the London Stock Exchange for companies
trading securities on the Alternative Investment
Market. The directors have chosen to prepare
financial statements for the company in
accordance with UK Generally Accepted
Accounting Practice.
Group financial statements
International Accounting Standard 1 requires that
financial statements present fairly for each financial
year the group’s financial position, financial
performance and cash flows. This requires the
faithful representation of the effects of transactions,
other events and conditions in accordance with
the definitions and recognition criteria for assets,
liabilities, income and expenses set out in the
International Accounting Standards Board’s
‘Framework for the preparation and presentation
of financial statements’. In virtually all circumstances,
a fair presentation will be achieved by compliance
with all applicable IFRSs. A fair presentation also
requires the Directors to:
(cid:129) consistently select and apply appropriate
accounting policies;
(cid:129) present information, including accounting
policies, in a manner that provides relevant,
reliable, comparable and understandable
information; and
(cid:129) provide additional disclosures when compliance
with the specific requirements in IFRSs is
insufficient to enable users to understand the
impact of particular transactions, other events
and conditions on the entity’s financial position
and financial performance.
Parent company financial statements
Company law requires the directors to prepare
financial statements for each financial year which
give a true and fair view of the state of affairs of
the company and of the profit or loss of the
company for that period. In preparing these
financial statements, the directors are required to:
(cid:129) select suitable accounting policies and then
apply them consistently;
(cid:129) prepare the financial statements on the going
concern basis unless it is inappropriate to presume
that the company will continue in business.
(cid:129) make judgements and estimates that are
reasonable and prudent; and
(cid:129) state whether applicable accounting standards
have been followed, subject to any material
departures disclosed and explained in the
financial statements.
Financial statements are published on the group’s
website in accordance with legislation in the
United Kingdom governing the preparation and
dissemination of financial statements, which may
vary from legislation in other jurisdictions.
The maintenance and integrity of the group’s
website is the responsibility of the directors.
The directors’ responsibility also extends to the
ongoing integrity of the financial statements
contained therein.
Annual Report 2009
27
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Self-Service Solutions in Partnership with BT
“Eckoh has consistently
demonstrated client service
excellence through their leading
market expertise, speed of customer
response and through their state of
the art deployment of sophisticated
client handling solutions and
broader self-service options to our
customers.”
Chris Pike, BT Global Services
28
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Self-Service Solutions in Partnership with BT
Self-Service Solutions in Partnership with BT
Eckoh formed a strategic business alliance
with BT in 2003 to capitalise on the
growing opportunity for automated
self-service solutions. Working in partnership
we have helped 20 customers across the financial
services, government, utilities, retail & distribution,
telecoms and travel & leisure sectors to
transform their business operations through
the introduction of hosted automated services.
Together Eckoh and BT have combined our
competencies to create an unparalleled self-service
proposition. The recent launch of BT’s ‘Making
Contact Centres Efficient’ programme is an
innovative proposition that addresses a common
problem that organisations face with their contact
centres – how to deliver excellent customer service
whilst driving down costs.
The proposition combines best-of-breed
technology and professional services solutions to
provide organisations with a combination of
products and services that enable them to deliver
better customer service whilst simultaneously
controlling costs to serve customers.
BT will initially focus on the self-service element of
the programme; helping customers reduce costs
by automating transactions through speech-driven
services. Eckoh is an integral part of BT’s delivery
strategy, we utilise our expertise in successfully
delivering voice self-service solutions that are
proven to significantly reduce call handling costs
without compromising service quality.
“As Eckoh and BT’s track record in
the travel sector has proven, the
introduction of this automated
service means we will have the
capability to dramatically improve
information availability whilst
reducing the cost of providing this
vital customer service.”
Tom Voice, Director, BAA Retail
Annual Report 2009
29
T25568 Eckoh Annual Report 2009:T25568 Eckoh Annual Report 2009 16/9/09 13:52 Page 31
Offshore Contact Centres
Offshore Contact Centres
There has been a marked increase in
organisations wanting to repatriate non-UK
based contact centres, which continue to be
unpopular with UK consumers. Of course, this
repatriation requires a significant investment
which few boards are prepared to approve in
today’s challenging economic environment.
A more efficient UK based contact centre
operation using a blend of live agent services
and Eckoh’s automation is a real and viable
alternative both from a financial and
customer-centric perspective to an existing
off-shore operation. By automating routine
but high volume call queries, we free up
advisors to handle those calls that need the
human touch. Where we partially automate a
call and then forward it to a live agent, we
also provide all of the information captured up
to that time, to save the caller time and
frustration. Automation without compromise
is at the heart of the Eckoh offering.
"Eckoh has a proven track record
and reputation for delivering high
quality, hosted automated solutions
but we've also been tremendously
impressed with their innovative and
flexible approach to our business,
which made our decision to select
them an easy one. We have a clear
strategy to improve the communication,
information and service that we
provide to our customers and we
know that Eckoh will work in
partnership with us to deliver on
that goal over the next 3 years."
Andrew Fryatt, CEO, Ideal Shopping Direct
30
Annual Report 2009
T25568 Eckoh Annual Report 2009:T25568 Eckoh Annual Report 2009 16/9/09 13:53 Page 32
Independent Auditor’s Report
Independent Auditor’s Report
Independent auditor’s report to the
shareholders of Eckoh plc
We have audited the group and
parent company financial statements
(the “financial statements”) of
Eckoh plc for the year ended 31 March 2009
which comprise the consolidated income
statement, the consolidated and company
balance sheets, the consolidated cash flow
statement, the consolidated statement of
changes in equity and the related notes.
These financial statements have been prepared
under the accounting policies set out therein.
Respective responsibilities of directors
and auditors
The directors’ responsibilities for preparing the
annual report and group financial statements in
accordance with applicable law and International
Financial Reporting Standards (IFRSs) as adopted
by the European Union and for preparing the
parent company financial statements in
accordance with applicable law and United
Kingdom Accounting Standards (United Kingdom
Generally Accepted Accounting Practice) are set
out in the statement of directors’ responsibilities.
Our responsibility is to audit the financial
statements in accordance with relevant legal and
regulatory requirements and International
Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the
financial statements give a true and fair view and
have been properly prepared in accordance with
the Companies Act 1985 and whether the
information given in the directors’ report is
consistent with those financial statements.
We also report to you if, in our opinion, the
company has not kept proper accounting records,
if we have not received all the information and
explanations we require for our audit, or if
information specified by law regarding directors’
remuneration and other transactions is not
disclosed. We read other information contained in
the annual report, and consider whether it is
consistent with the audited financial statements.
This other information comprises only the
highlights of the year, the chairman’s statement,
the business review, the directors’ report, the
corporate governance statement and the
statement of directors’ responsibilities.
We consider the implications for our report if we
become aware of any apparent misstatements or
material inconsistencies with the financial
statements. Our responsibilities do not extend to
any other information.
Our report has been prepared pursuant to the
requirements of the Companies Act 1985 and for
no other purpose. No person is entitled to rely on
this report unless such a person is a person
entitled to rely upon this report by virtue of and
for the purpose of the Companies Act 1985 or has
been expressly authorised to do so by our prior
written consent. Save as above, we do not accept
responsibility for this report to any other person or
for any other purpose and we hereby expressly
disclaim any and all such liability.
Continued overleaf
Annual Report 2009
31
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Independent Auditor’s Report
Independent Auditor’s Report Continued
Basis of audit opinion
We conducted our audit in accordance with
International Standards on Auditing (UK and
Ireland) issued by the Auditing Practices Board.
An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures
in the financial statements. It also includes an
assessment of the significant estimates and
judgments made by the directors in the
preparation of the financial statements, and of
whether the accounting policies are appropriate to
the group’s and company’s circumstances,
consistently applied and adequately disclosed.
We planned and performed our audit so as to
obtain all the information and explanations which
we considered necessary in order to provide us
with sufficient evidence to give reasonable
assurance that the financial statements are free
from material misstatement, whether caused by
fraud or other irregularity or error. In forming our
opinion we also evaluated the overall adequacy
of the presentation of information in the financial
statements.
Opinion
In our opinion:
(cid:129) the group financial statements give a true and
fair view, in accordance with IFRSs as adopted by
the European Union, of the state of the group’s
affairs as at 31 March 2009 and of its loss for the
year then ended;
(cid:129) the parent company financial statements give a
true and fair view, in accordance with United
Kingdom Generally Accepted Accounting
Practice, of the state of the parent company’s
affairs as at 31 March 2009;
(cid:129) the financial statements have been properly
prepared in accordance with the Companies Act
1985; and
(cid:129) the information given in the directors’ report is
consistent with the financial statements.
BDO Stoy Hayward LLP
Chartered Accountants and Registered Auditors
Hatfield
12 June 2009
32
Annual Report 2009
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Consolidated Income Statement
Consolidated Income Statement
for the year ended 31 March 2009
Pre
2009
Exceptional
Exceptional
Total
£’000
Pre
2008
Exceptional
Exceptional
Total
£’000
Continuing operations
Revenue
Cost of sales
Gross profit
Notes
4
4
Administrative expenses
4, 6
£’000
19,109
(12,940)
6,169
(6,458)
Items
£’000
-
-
-
(811)
£’000
19,109
25,590
(12,940)
(19,579)
6,169
(7,269)
6,011
(8,310)
Items
£’000
-
-
-
(447)
25,590
(19,579)
6,011
(8,757)
Loss from operating
activities
Interest receivable
Profit / (Loss)
before taxation
Taxation
Profit / (Loss) for the year
from continuing operations
Discontinued operations
Post tax (loss) / profit
for the year from
discontinued operations
5
(289)
(811)
(1,100)
(2,299)
(447)
(2,746)
4,9
4
10
382
-
382
569
-
569
93
-
93
(811)
-
(718)
(1,730)
(447)
(2,177)
--
-
-
(811)
(718)
(1,730)
(447)
(2,177)
4,11
(160)
-
(160)
2,647
-
2,647
(Loss) / Profit for the year
(67)
(811)
(878)
917
(447)
470
(Loss) / earnings
per share (pence)
Basic and diluted
Loss per share from
continuing (pence)
Basic and diluted
12
12
(0.44)
(0.36)
0.24
(1.09)
Annual Report 2009
33
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Consolidated Balance Sheet
Consolidated Balance Sheet
as at 31 March 2009
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Loans and other receivables
Current assets
Inventories
Trade and other receivables
Short-term investments
Cash and cash equivalents
Total assets
Liabilities
Current liabilities
Trade and other payables
Obligations under finance leases
Non-current liabilities
Obligations under finance lease
Provisions
Net assets
Shareholders’ equity
Share capital
Capital redemption reserve
Share premium
Currency reserve
Retained earnings
Total shareholders’ equity
2009
£’000
2008
£’000
Notes
13
14
17
16
17
18
19
20
21
21
22
376
714
1,700
2,790
4
4,476
2,821
2,421
9,722
114
743
3,293
4,150
13
6,382
1,530
5,307
13,232
12,512
17,382
(3,812)
(7,896)
(3)
(5)
(3,815)
(7,901)
-
(79)
(79)
(2)
(17)
(19)
8,618
9,462
23,24
24
24
24
24
499
198
695
(47)
7,273
8,618
499
198
695
(27)
8,097
9,462
The financial statements on pages 33 to 62 were approved and authorised for issue by
the Board of Directors on 12 June 2009 and signed on its behalf by:
Adam Moloney – Group Finance Director
34
Annual Report 2009
T25568 Eckoh Annual Report 2009:T25568 Eckoh Annual Report 2009 16/9/09 13:53 Page 36
Consolidated Statement of Changes in Equity
Consolidated Statement of Changes in Equity
as at 31 March 2009
Share
Capital
£’000
Capital
redemption
reserve
£’000
Share
premium
£’000
Retained
earnings
£’000
Currency
reserve
£’000
Balance at 1 April 2007
Profit for the period
Exchange differences and net
income recognised directly in equity
Total recognised income and expense
Share based payment charge
Shares issued under the option schemes
Shares held by Share Incentive Plan
Balance at 31 March 2008
Balance at 1 April 2008
Loss for the period
Exchange differences and net
income recognised directly in equity
Total recognised income and expense
Share based payment charge
491
198
477
-
-
-
-
8
-
499
499
-
-
-
-
-
-
-
-
-
-
198
198
-
-
-
-
-
-
-
-
226
(8)
695
695
-
-
-
-
Balance at 31 March 2009
499
198
695
Total
shareholders
equity
£’000
8,689
470
(20)
450
97
234
(8)
7,530
470
-
470
97
-
-
(7)
-
(20)
(20)
-
-
-
8,097
(27)
9,462
8,097
(878)
-
(878)
54
7,273
(27)
-
(20)
(20)
-
(47)
9,462
(878)
(20)
(898)
54
8,618
Annual Report 2009
35
T25568 Eckoh Annual Report 2009:T25568 Eckoh Annual Report 2009 16/9/09 13:53 Page 37
Consolidated Cash Flow Statement
Consolidated Cash Flow Statement
for the year ended 31 March 2009
Cash flows from operating activities
Continuing operations
Cash utilised in operations
Interest paid
Net cash utilised in continuing operating activities
Discontinued operations
Cash generated from operations
Interest paid
Taxation
Net cash (utilised in) / generated from discontinued operating activities
Cash flows from investing activities
Continuing operations
Purchase of property, plant and equipment
Purchases of intangible fixed assets
(Increase) / Decrease in short-term investments
Loans repaid by third parties
Interest received
Net cash (utilised in) / generated in continuing investing activities
Discontinued operations
Purchase of property, plant and equipment
Purchases of intangible fixed assets
Net proceeds on disposal of business operations
Net cash generated from discontinued investing activities
Cash flows from financing activities
Continuing operations
Issue of shares
Capital element of finance lease rental payments
Net cash (utilised in) / generated from continuing financing investing activities
Notes
2009
£’000
2008
£’000
29
(2,799)
(5,870)
-
-
(2,799)
(5,870)
29
(37)
-
(45)
(82)
(443)
(383)
(1,291)
500
382
(1,235)
-
-
1,234
1,234
-
(4)
(4)
629
-
(10)
619
(336)
(109)
1,000
1,500
591
2,646
(13)
(38)
666
615
226
-
226
Decrease in cash and cash equivalents
Cash and cash equivalents at the start of the period
Cash and cash equivalents at the end of the period
(2,886)
(1,764)
5,307
2,421
7,071
5,307
19
19
36
Annual Report 2009
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Notes to the Financial Statements
Notes to the Financial Statements
for the year ended 31 March 2009
1. Basis of preparation
The consolidated financial statements of Eckoh plc
have been prepared in accordance with International
Financial Reporting Standards as adopted by the
European Union. These financial statements have
been prepared in accordance with those IFRS
standards and IFRIC interpretations issued and
effective or issued and early adopted as at 31
March 2009.
IFRS 8, ‘Operating Segments’ is a new standard
which is effective for annual reporting periods
beginning on or after 1 January 2009. The Group
adopted this standard in the year ended 31 March
2008. The effect of the early adoption is seen in
the segmental disclosures but it has had no impact
on the financial results.
At year end, the following standards and
interpretations, which have not been applied in
these financial statements, were in issue but not
yet effective:
IFRS 1 (Revised) First Time Adoption of
International Financial Reporting Standards
IFRS 1 and IAS 27 (Amendments) Cost of an
Investment in a Subsidiary, Jointly Controlled Entity
or Associate
IFRS 2 (Amendment) Vesting Conditions and
Cancellations
IFRS 3 (Revised) Business Combinations
IAS 1 (Amendments) Presentation of Financial
Statements: A Revised Presentation
IAS 23 (Revised) Borrowing Costs
Amendments to IAS 27 Consolidated and
Separate Financial Statements
IAS 32 and IAS 1 (Amendments) Puttable Financial
Instruments and Obligations arising on Liquidation
IAS 39 (Amendment) Financial Instruments:
Recognition and Measurement:
Eligible Hedged Items
IAS 39 and IFRS 7 (Amendments) Reclassification
of Financial Instruments
IFRIC 13 Customer Loyalty Programmes
IFRIC 15 Agreements for the Construction of Real
Estate
IFRIC 16 Hedges of a Net Investment in a Foreign
Operation
IFRIC 17 Distribution of Non-cash Assets to
Owners
The Directors anticipate that the adoption of these
standards and interpretations in future periods will
have no material impact on the recognition and
measurement of the financial statements of the
Group but will affect disclosure.
The principal accounting policies, which have been
consistently applied, are described below.
2. Summary of principal accounting policies
Critical accounting policies, estimates and
adjustments
The preparation of financial statements requires
the use of certain critical accounting estimates.
It also requires management to exercise judgement
in the process of applying the Group's accounting
policies. Estimates and judgements are continually
evaluated and are based on historical experience
and reasonable expectations of future events.
Actual results may differ from those estimates.
The accounting policies cover areas that are
considered by the Directors to require estimates
and assumptions which have a significant risk of
causing a material adjustment to the carrying
amounts of assets and liabilities within the next
financial year. The policies, and the related notes
to the financial statements, are found below:
Intangible assets
Trade and other receivables
Provisions
Share based payment
note 13
note 17
note 22
note 25
Annual Report 2009
37
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Notes to the Financial Statements
Notes to the Financial Statements Continued
for the year ended 31 March 2009
Basis of consolidation
The Group financial statements consolidate the
accounts of the Company and its subsidiary
undertakings. The results of subsidiaries acquired
are included in the consolidated income statement
from the date on which control passes to the Group
and are included until the date on which the Group
ceases to control them. Subsidiaries are all entities
over which the Group has power to control the
financial and operating policies so as to obtain
benefits from their activities. Transactions between
Group companies are eliminated on consolidation.
Investments in subsidiary undertakings are
accounted for using the purchase method of
accounting. The cost of an acquisition is measured
as the fair value of the assets given, equity
instruments issued and liabilities incurred or
assumed at the date of exchange, plus costs
directly attributable to the acquisition. Identifiable
assets acquired and liabilities and contingent
liabilities assumed in a business combination are
measured initially at their fair values at the
acquisition date. The excess of the cost of
acquisition over the fair value of the Group's share
of the identifiable net assets acquired is recorded
as goodwill. If the cost of acquisition is less than
the fair value of the Group's share of the net
assets of the subsidiary acquired, the difference is
recognised directly in the income statement.
Business combinations prior to 1 April 2006 have
not been restated under an IFRS basis due to the
application of an exemption under IFRS 1.
Intangible fixed assets
(a) Goodwill Goodwill represents the excess of
the fair value of the consideration paid over the
fair value attributable to the net assets acquired
and is capitalised on the Group balance sheet.
Prior to the adoption of IFRS, goodwill amortised
over a period not exceeding 20 years. Following
the adoption of IFRS, goodwill was frozen at its
value at the date of transition, is not amortised
and is reviewed for impairment at least annually.
Any impairment is recognised in the period in
which it is identified.
(b) Intangible fixed assets Intangible fixed assets
acquired by the Group are capitalised at the fair
value of the consideration paid and amortised over
their expected useful economic lives using the
straight line method. The amortisation costs are
shown within the administrative expenses of the
Group. The expected useful economic life of
intangible fixed assets is assessed for each
acquisition as it arises, and is generally assumed to
be three years.
(c) Research and development Research costs
are charged to the income statement in the year in
which they are incurred. Development expenses
include expenses incurred by the Group to develop
new products and enhance its systems.
Development costs are predominantly the time
costs of Eckoh employees involved in the
development of a new service for a client which
are capitalised as intangible fixed assets when it is
probable that the project will be a success,
considering its commercial and technological
feasibility, and costs can be measured reliably.
Development costs that do not meet those criteria
are expensed as incurred. Capitalised development
costs are amortised on a straight line basis over the
estimated minimum duration of the commercial
contract that they arose from. In the absence of a
specific commercial contract the capitalised
development costs are amortised over the
estimated useful life of the asset, which is
generally assumed to be three years.
Amortisation is charged to administrative expenses
in the income statement.
The carrying value of intangible fixed assets is
assessed at the end of each financial year for
impairment. See the policy entitled impairment of
assets below.
38
Annual Report 2009
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Notes to the Financial Statements
Notes to the Financial Statements Continued
for the year ended 31 March 2009
Impairment of non-financial assets
An impairment loss is recognised in the income
statement for the amount by which the asset's
carrying amount exceeds its recoverable amount.
The recoverable amount is the higher of the asset’s
fair value less costs to sell, and the value-in-use
based on an internal discounted cash flow
evaluation. For the purpose of assessing impairment,
assets are grouped at the lowest levels for which
there are separately identifiable cash flows.
All assets are subsequently reassessed for indications
that an impairment loss previously recognised may
no longer exist. An impairment review only takes
place when there are indications of impairment.
Property, plant and equipment
Property, plant and equipment is stated at cost or
fair value at acquisition, net of depreciation and
any provisions for impairment. Cost includes
expenditure that is directly attributable to the
acquisition of the items.
Subsequent costs are included in the asset’s
carrying amount or recognised as a separate asset,
as appropriate, only when it is probable that future
economic benefits associated with the item will
flow to the Group and the cost of the item can be
measured reliably. All other repairs and maintenance
are charged to the income statement during the
financial period in which they are incurred.
The gain or loss arising on the disposal of an asset
is determined by comparing the disposal proceeds
and the carrying amount of the asset and is
recognised in the income statement. Depreciation
is calculated using the straight-line method to
allocate the cost of each asset to its estimated
residual value over its expected useful life, as follows:
Motor vehicles – straight line over 3 years
Fixtures and equipment – straight line over 3
years or the remaining term of the property lease
as appropriate
Material residual values and useful lives are
reviewed, and adjusted if appropriate, at least
annually. An asset’s carrying amount is written
down immediately to its recoverable amount if the
asset’s carrying amount is greater than its
estimated recoverable amount.
Financial assets
Financial assets include investments in companies
other than Group companies, trade and other
receivables (see separate policy) financial receivables
held for investment purposes, treasury shares and
other securities. A permanent impairment is
provided as a direct reduction of the securities
account.
The Group classifies its financial assets in the
following categories: available for sale investments
and loans and receivables. The classification depends
on the purpose for which the investments were
acquired. The classification is determined by
management at initial recognition and the designation
is re-evaluated at each balance sheet date.
(a) available-for-sale investments: are non-
derivative financial assets that are either
designated in this category or not classified in any
of the other categories. They are included within
non-current assets unless management intends to
dispose of the investment within 12 months of the
balance sheet date.
(b) loans and receivables: are non-derivative
financial assets with fixed or determinable
payments that are not quoted in an active market
and with no intention of trading. They are
included within current assets, with the exception
of those with maturities greater than one year,
which are included within non-current assets.
Loans and receivables are included within trade
and other receivables in the balance sheet.
Gains and losses arising from investments
classified as available-for-sale are recognised in the
income statement when they are sold or when the
investment is impaired.
Annual Report 2009
39
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Notes to the Financial Statements
Notes to the Financial Statements Continued
for the year ended 31 March 2009
In the case of impairment of available-for-sale
assets, any loss previously recognised in equity is
transferred to the income statement. Impairment
losses recognised in the income statement on
equity instruments are not reversed through the
income statement. Impairment losses recognised
previously on debt securities are reversed through
the income statement when the increase can be
related objectively to an event occurring after the
impairment loss was recognised in the income
statement.
An assessment for impairment is undertaken
annually. Management consider the financial
information in respect of entities from which
receivables are due.
A financial asset is derecognised only where the
contractual rights to the cash flows from the asset
expire or the financial asset is transferred and that
transfer qualifies for derecognition. A financial
asset is transferred if the contractual rights to
receive the cash flows of the asset have been
transferred or the Group retains the contractual
rights to receive the cash flows of the asset but
assumes a contractual obligation to pay the cash
flows to one or more recipients. A financial asset
that is transferred qualifies for derecognition if the
Group transfers substantially all the risks and
rewards of ownership of the asset, or if the Group
neither retains nor transfers substantially all the
risks and rewards of ownership but does transfer
control of that asset.
Inventories
Inventories are valued at the lower of cost and net
realisable value. The cost of finished goods and
work in progress comprises design costs, direct
labour and other direct costs. Net realisable value
is the estimated selling price in the ordinary course
of business less applicable selling expenses.
Trade and other receivables
Trade and other receivables are stated at amortised
cost less provision for impairment. A provision for
the impairment of trade receivables is made when
there is objective evidence that the Group will not
be able to collect all amounts due to it in accordance
with the original terms of those receivables.
The amount of the provision is determined as the
difference between the asset's carrying amount and
the present value of estimated future cash flows,
discounted at the effective interest rate.
The amount of the provision is recognised in the
income statement. Other receivables are stated at
amortised cost less provision for impairment.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand,
deposits held at call with banks, other short-term
investments, with maturities of three months or
less that are readily convertible into known amounts
of cash and which are subject to an insignificant
risk of changes in value and bank overdrafts.
Bank overdrafts are shown within borrowings in
current liabilities on the balance sheet.
Short-term investments
Short-term investments comprise funds which
have been invested in short-term deposit accounts
with maturities of less than twelve months and
amounts held in escrow. Credit and liquidity risk
management is described in note 3.
Equity
Equity comprises the following:
Share capital represents the nominal value of
ordinary shares.
Capital redemption reserve represents the
maintenance of capital following the share buy
back and tender offer.
Share premium reserve represents consideration
for ordinary shares in excess of the nominal value.
Currency reserve represents exchange differences
arising on consolidation of Group companies with
a functional currency different to the presentation
currency.
Retained earnings represent retained profits.
40
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Notes to the Financial Statements
Notes to the Financial Statements Continued
for the year ended 31 March 2009
Foreign currency transactions
(a) Functional and presentation currency Items
included in the financial statements of each of the
Group’s entities are measured using the currency
of the primary economic environment in which the
entity operates (the ‘functional currency’).
The consolidated financial statements are
presented in Sterling, which is the Group’s
functional and presentation currency.
(b) Group companies The results and position of
all Group companies that have a functional currency
different from the presentation currency are
translated into the presentation currency as follows:
(i) assets and liabilities are translated at the closing
rates of exchange ruling at the balance sheet date;
(ii) income and expenses are translated at the
average exchange rates. If however the average
exchange rate is not a reasonable approximation
of the exchange rates prevailing on the date of the
transactions, the income and expenses are translated
at the exchange rates at the transaction dates; and
(iii) resulting exchange differences are recognised
as a separate component of equity.
Differences on exchange arising from the
retranslation of the net investment in foreign
entities are taken to shareholders equity on
consolidation. When a foreign entity is sold, such
exchange differences are recognised in the income
statement as part of the profit or loss on disposal.
Goodwill and fair value adjustments arising on the
acquisition of a foreign entity are treated as assets
and liabilities of the foreign entity and as such are
translated at the closing rate.
Leases
Leases are classified as finance leases whenever
the terms of the lease transfer substantially all the
risks and rewards of ownership to the lessee.
All other leases are classified as operating leases.
Assets held under finance leases are recognised
assets of the Group at their fair value or, if lower,
at the present value of the minimum lease payments,
each determined at the inception of the lease.
The corresponding liability to the lessor is included
in the balance sheet as a finance lease obligation.
Lease payments are apportioned between finance
charges and reduction of the lease obligation so as
to achieve a constant rate of interest on the
remaining balance of the liability. Finance charges
are charged directly against income.
Rentals payable under operating leases are
charged to income on a straight-line basis over the
term of the relevant lease. Benefits received and
receivable as an incentive to enter into an
operating lease are also spread on a straight-line
basis over the lease term.
Provisions
Provisions are recognised when: the Group has a
present legal or constructive obligation as a result
of past events; it is more likely than not that an
outflow of resources will be required to settle the
obligation; and the amount has been reliably
estimated. Provisions are not recognised for future
operating losses.
Provisions are measured at the present value of
management’s best estimate of the expenditure
required to settle the present obligation at the
balance sheet date. The discount rate used reflects
current market assessments of the time value of
money and the risks specific to the liability.
Employee benefits
(a) Pensions The Group operates a group personal
pension scheme. The assets of the schemes are
held separately from those of the Group in
independently administered funds. Contributions
payable are charged in the income statement in
the year in which they are incurred.
(b) Bonus schemes The Group recognises a
liability and an expense for bonuses payable to: i)
employees based on a formula that takes in to
account gross profit; and ii) senior management
and executive directors based on a formula that
takes in to account operating profit. A provision is
recognised where there is a past practice that has
created a constructive obligation.
Annual Report 2009
41
T25568 Eckoh Annual Report 2009:T25568 Eckoh Annual Report 2009 16/9/09 13:55 Page 43
Notes to the Financial Statements
Notes to the Financial Statements Continued
for the year ended 31 March 2009
(c) Share-based payments From time to time on
a discretionary basis, the Board of Directors award
high-performing employees bonuses in the form
of share options. The options are subject to a three
year vesting period and their fair value is
recognised as an employee benefits expense with
a corresponding increase in equity over the vesting
period. The fair value of share options granted is
recognised within staff costs with a corresponding
increase in equity. The proceeds received are
credited to share capital and share premium when
the options are exercised.
The fair value of share options was measured
using the QCA-IRS option valuer using the Black-
Scholes formula, taking into account the terms
and conditions upon which the grants were made.
The amount recognised as an expense is adjusted
to reflect the actual number of share options that
vest except where forfeiture is only due to share
prices not achieving the threshold of vesting.
IFRS 2 has been applied to all options granted
after 7 November 2002 which have not vested on
or before 1 April 2006. A deferred tax adjustment
is also made relating to the intrinsic value of the
share options at the balance sheet date (see
separate policy).
As a result of the grant of share options since 6
April 1999 the Company will be obliged to pay
employer’s National Insurance contributions on the
difference between the market value of the
underlying shares and their exercise price when
the options are exercised. A provision is made for
this liability using the value of the Company’s
shares at the balance sheet date and is spread over
the vesting period of the share options.
(d) Employee share ownership plan The Group's
Employee Share Ownership Plan (‘ESOP’) is a
separately administered trust. The assets of the
ESOP comprise shares in the Company and cash.
The assets, liabilities, income and costs of the ESOP
have been included in the financial statements in
accordance with SIC 12, ‘Consolidation - Special
purpose entities’ and IAS 32, ‘Financial Instruments:
Disclosure and Presentation’. The shares in the
Company are included at cost to the ESOP and
deducted from shareholders' funds.
When calculating earnings per share these shares
are treated as if they were cancelled.
Revenue recognition
Revenue represents the fair value of goods and
services sold, net of Value Added Tax, and after
eliminating sales within the Group.
Revenue relating to the development and/or
implementation of speech applications for specific
customers is recognised on delivery if it can be
demonstrated that all build phase obligations have
been fulfilled and there is no ongoing obligation to
provide ongoing speech services. Where these
criteria are not met, the revenue is deferred and
recognised in the income statement over the initial
contract term.
Call revenue from Speech Solutions and Client IVR
is recognised when the Group has determined
users have accessed its services via a telephone
carrier network and/or the Group's
telecommunications call processing equipment
connected to that network.
Costs of sale Costs of sale primarily comprise
revenue share payments to clients.
Exceptional items Exceptional items are
significant instances of income or expenditure
which arise from specific events outside the
ordinary trading of the group and are considered
to be non-recurring.
Taxation
Current tax is the tax currently payable based on
taxable profit for the year.
Deferred taxation is provided in full, using the
liability method, on temporary differences arising
between the tax bases of assets and liabilities and
their carrying amounts in the consolidated
financial statements. Deferred tax is not provided
if it arises from initial recognition of an asset or
liability in a transaction, other than a business
combination, that at the time of the transaction
affects neither accounting nor taxable profit nor
loss. Deferred tax is calculated at tax rates that are
expected to apply to their respective period of
realisation, provided they are enacted or substantively
enacted at the balance sheet date.
42
Annual Report 2009
T25568 Eckoh Annual Report 2009:T25568 Eckoh Annual Report 2009 16/9/09 13:55 Page 44
Notes to the Financial Statements
Notes to the Financial Statements Continued
for the year ended 31 March 2009
Deferred tax assets are recognised to the extent
that it is probable that future taxable profit will be
available against which the temporary differences
can be utilised.
Deferred tax on temporary differences associated
with shares in subsidiaries is not provided if
reversal of these temporary differences can be
controlled by the Group and it is probable that
reversal will not occur in the foreseeable future.
Changes in deferred tax assets or liabilities are
recognised as a component of tax expense in the
income statement, except where they relate to
items that are charged or credited directly to
equity in which case the related deferred tax is also
charged or credited directly to equity.
Financial liabilities
Financial liabilities are obligations to pay cash or
other financial assets and are recognised when the
Group becomes a party to the contractual
provisions of the instrument. Financial liabilities are
stated at amortised cost.
A financial liability is derecognised only when the
obligation is discharged, is cancelled or it expires.
3. Financial risk management
The operations of the Group expose it to a variety
of financial risks: liquidity risk, interest rate risk and
foreign currency risk. Policies for managing these
risks are set by the Board following recommendations
from the Group Finance Director. All financial risks
are managed centrally. The policy for each of the
above risks is described in more detail below.
The Group’s financial instruments comprise cash,
short-term investments and various items, such as
receivables and payables that arise directly from its
operations. It is, and has been throughout the year
under review, the Group’s policy that no trading in
financial instruments shall be undertaken. Similarly
the Group did not undertake any financial hedging
arrangements during the year under review.
The year-end position reflects these policies and
there have been no changes in policies or risks
since the year-end.
Liquidity risk
Through detailed cash flow forecasting and capital
expenditure planning, the Group monitors
working capital and capital expenditure
requirements and through the use of rolling short-
term investments ensures that cash is available to
meet obligations as they fall due. Cash at bank is
pooled and invested in overnight money market
accounts and deposits. The Group’s treasury policy
requires that funds which are surplus to the ongoing
trading of the business are invested in short-term
(less than 12 months) deposit accounts across
several separate institutions to spread risk. Each
individual deposit is not to exceed £500,000 and
the institutions are based in the UK and Ireland.
Annual Report 2009
43
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Notes to the Financial Statements
Notes to the Financial Statements Continued
for the year ended 31 March 2009
Interest rate risk
The Group principally finances its operations through shareholders’ equity and working capital. The Group
had no borrowings during the year, other than finance leases and its only material exposure to interest rate
fluctuations was on its cash deposits, short-term deposits and the Symphony receivable.
The Group has adopted a sensitivity analysis that measures changes in the fair value of financial instruments
and any resultant impact on the income statement of an increase or decrease of 2% in market interest rates.
(Decrease)/increase in fair value of loans and other receivables
(Decrease)/increase in fair value of short-term investments
Impact on income statement: (loss)/gain
£’000
(58)
(39)
(116)
£’000
58
39
116
2% decrease in interest rates
2% increase in interest rates
Foreign currency risk
The Group’s principal exposure to exchange rate fluctuations arises on the translation of overseas net assets,
profits and losses into the presentation currency. This risk is managed by taking differences that arise on the
retranslation of the net overseas investments to the currency reserve. Foreign currency risk on cash balances
is monitored through cash flow forecasting and currency is held in foreign currency bank accounts only to
the extent that it is required for working capital purposes. No sensitivity analysis is provided in respect of
foreign currency risk as due to the Group’s working capital management practices, the risk is considered to
be immaterial.
Capital management
The Board’s policy is to maintain a strong capital base with the joint objectives to maintain investor, creditor
and market confidence and to sustain future development of the business. Capital comprises all components
of equity (i.e. share capital, capital redemption reserve, share premium, currency reserve and retained
earnings). The Board manages the capital structure and makes adjustments as required in the light of
changes in economic conditions. The Board may return capital to shareholders, issue new shares or sell
assets in order to maintain capital.
Credit risk management is described in note 17.
44
Annual Report 2009
T25568 Eckoh Annual Report 2009:T25568 Eckoh Annual Report 2009 16/9/09 13:55 Page 46
Notes to the Financial Statements
Notes to the Financial Statements Continued
for the year ended 31 March 2009
Categories of financial assets and financial liabilities
The Directors consider that the carrying value of all financial assets and liabilities is approximate to their fair value.
Current financial assets
Trade receivables (note 17)
Other receivables (note 17)
Loans and receivables (note 17)
Short-term investments (note 18)
Cash and cash equivalents (note 19)
Total current financial assets
Non-current financial assets
Loans and receivables (note 17)
Total non-current financial assets
Total financial assets
Financial liabilities
Loans and receivables
2009
£’000
2008
£’000
1,020
27
1,620
2,821
2,421
7,909
968
53
1,752
1,530
5,307
9,610
1,700
1,700
3,293
3,293
9,609
12,903
All financial liabilities held by the Group are measured at amortised cost and comprise trade payables of
£1,980,000 (2008: £3,983,000), other payables of £27,000 (2008: £84,000) and obligations under finance
leases of £3,000 (2008: £7,000). See notes 20 and 21 for further details.
Annual Report 2009
45
T25568 Eckoh Annual Report 2009:T25568 Eckoh Annual Report 2009 16/9/09 13:55 Page 47
Notes to the Financial Statements
Notes to the Financial Statements Continued
for the year ended 31 March 2009
4. Segment analysis
The Group's primary operating segments reflect the internal financial reporting structure. Eckoh plc
operates two business segments Speech Solutions and Client IVR, these business segments are reported
within continuing operations. Discontinued operations relate primarily to the Connection Makers business
(see note 11). The business segments are described in detail in the business review on page 8. All revenue
originates from the United Kingdom. Unallocated centrals costs, assets and liabilities and cash flows relate
to the entity as a whole and can not be allocated to individual segments. The revenues and operating
results generated by the business segments within continuing operations are summarised as follows:
2009
Revenue
Gross profit
Administrative expenses
Net interest receivable
Profit/(loss) before taxation
Taxation
Post tax loss from disposal of operations
Speech
Solutions
£’000
6,674
4,279
(2,616)
-
1,663
-
-
Client
IVR
£’000
Central
costs
£’000
12,435
1,890
(1,235)
-
655
-
-
-
-
(3,418)
382
(3,036)
-
--
Profit/(loss) after taxation
1,663
655
(3,036)
2008
Revenue
Gross profit
Administrative expenses
Net interest receivable
Profit/(loss) before taxation
Taxation
Post tax gain from disposal of operations
Speech
Solutions
£’000
6,065
3,881
(2,845)
-
1,036
-
-
Client
IVR
£’000
Central
costs
£’000
19,525
2,130
(2,065)
-
65
-
-
-
-
(3,847)
569
(3,278)
(2,177)
-
-
-
-
Profit/(loss) after taxation
1,036
65
(3,278)
(2,177)
Total
continuing
operations
£’000
19,109
6,169
(7,269)
382
(718)
-
(129)
(718)
Total
continuing
operations
£’000
25,590
6,011
(8,757)
569
Discontinued
operations
£’000
Total
£’000
-
-
(37)
51
14
(45)
(129)
(160)
19,109
6,169
(7,306)
433
(704)
(45)
(878)
Discontinued
operations
£’000
Total
£’000
4,682
2,177
30,272
8,188
(1,648)
(10,405)
62
591
(10)
2,066
2,647
631
(1,586)
(10)
2,066
470
In 2008/9 there were two customers which individually accounted for more than 10% of the total revenue
of the company (2007/8: one customer). Revenue from these customers in 2008/9 totalled £6,617,394
(2007/8: £9,067,153).
46
Annual Report 2009
T25568 Eckoh Annual Report 2009:T25568 Eckoh Annual Report 2009 16/9/09 13:55 Page 48
Notes to the Financial Statements
Notes to the Financial Statements Continued
for the year ended 31 March 2009
5. Loss from operating activities
The Group’s operating loss is arrived at after charging:
Employee benefits expense (note 7)
Depreciation (note 14)
Amortisation (note 13)
Impairment of available for sale financial assets (note 6 & 15)
Operating lease payments
Restructuring costs (note 6)
Litigation costs (note 6)
Aborted corporate transaction costs (note 6)
Property reorganisation costs
Loss on disposal of property, plant and equipment
6. Exceptional items
2009
£’000
2008
£’000
3,034
5,278
474
121
-
501
16
627
168
131
-
634
176
288
252
159
-
-
-
36
During the year ended 31 March 2009, the Group incurred some non recurring items of expenditure.
The largest item was £627,000 relating to the final settlement and legal costs arising from a claim made by
Channel Four Television Corporation in relation to alleged breaches of contractual duties relating to the
“Richard and Judy” programme. Although this claim was strongly disputed, a commercial decision was
made to go to mediation to settle the claim due to the potential costs and uncertainties of disputing the
claim in court. No provision for this expense was made in the prior financial year due to the uncertainty of
whether a cost would eventually arise.
This particular legal issue caused significant disruption to the business and prompted the Board to look at
some opportunities to provide shareholder value through a corporate transaction. However, a combination
of global economic conditions, increased optimism about the growth prospects of the business as well as
the settlement of the Channel 4 issue caused these discussions to be terminated and legal and professional
costs of £168,000 have been expensed to the Income Statement.
During the year ended 31 March 2008, the Group undertook a cost reduction programme incurring
employee restructuring costs of £159,000. The programme was completed in the year ended 31 March
2009 resulting in a further £16,000 of employee restructuring costs being incurred.
An impairment write off of £288,000 was made in the prior year in relation to the investment held in
eDirectory.co.uk plc which went into administration on 29 April 2008.
Annual Report 2009
47
T25568 Eckoh Annual Report 2009:T25568 Eckoh Annual Report 2009 16/9/09 13:55 Page 49
Notes to the Financial Statements
Notes to the Financial Statements Continued
for the year ended 31 March 2009
7. Employee benefits expense
Wages and salaries
Less: Internal development costs capitalised in the year
Amortisation of internal development costs
Social security costs
Pension costs
Share based payments
2009
£’000
2,972
(326)
29
300
5
54
2008
£’000
4,754
(88)
18
489
8
97
3,034
5,278
The Directors’ report on page 16 provides further details on the Directors’ emoluments. The average
number of people (including executive directors) employed by the Group during the year was:
Technical support
Customer services
Administration and management
8. Auditor remuneration
2009
Number
2008
Number
35
15
36
86
45
37
38
120
During the year the Group obtained the following services from the Group’s auditor at costs as detailed
below:
Fees payable for the audit of the parent company and consolidated accounts
Fees payable for other services:
The audit of subsidiary undertakings comprising continuing operations
The audit of subsidiary undertakings comprising discontinued operations
Services relating to the premium rate services regulation
Services relating to aborted transaction due diligence
Taxation services
Total fees payable to the Group’s auditor
2009
£’000
25
43
2
-
3
50
123
2008
£’000
30
40
13
7
-
23
113
The fees payable for the audit of the parent company and consolidated accounts are borne
by a subsidiary undertaking.
48
Annual Report 2009
T25568 Eckoh Annual Report 2009:T25568 Eckoh Annual Report 2009 16/9/09 13:55 Page 50
Notes to the Financial Statements
Notes to the Financial Statements Continued
for the year ended 31 March 2009
9. Interest receivable and interest payable
Continuing operations
Bank interest receivable
Interest receivable on loans and other receivables
Discontinued operations
Interest receivable on loans and other receivables (note 11)
Total interest receivable
10. Taxation
Continuing operations
Current tax
Deferred tax
Taxation
2009
£’000
247
135
382
2008
£’000
245
324
569
51
62
433
631
2009
£’000
2008
£’000
-
-
-
-
-
-
The tax charge for the year is different to the standard rate of corporation tax in the UK (28%). The
differences are explained below:
Continuing operations
Loss on ordinary activities before taxation
Loss on ordinary activities multiplied by rate of corporation tax
in the UK of 28% (2008: 30%)
Effect of expenses not deductible for tax purposes
Effect of capital allowances in excess of depreciation
Effect of income not chargeable to tax
Effect of tax losses carried forward
Current tax charge for the year
2009
£’000
2008
£’000
(718)
(2,177)
(201)
(653)
7
7
(12)
199
-
67
13
-
573
-
No deferred tax assets have been recognised in respect of tax losses and other temporary differences on the
grounds that there is insufficient evidence that the assets will be recoverable. Unprovided deferred taxation
assets total £5,412,000 (2008: £5,232,000) in respect of trading losses and £8,768,700 (2008: £6,385,000)
in respect of capital losses of which £6,277,000 (2008: £6,277,000) are restricted. In addition there are
other temporary timing differences resulting in unprovided deferred tax assets of £266,000 (2008: £258,000).
Annual Report 2009
49
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Notes to the Financial Statements
Notes to the Financial Statements Continued
for the year ended 31 March 2009
11. Post tax loss for the year from discontinued operations
Discontinued operations relate to the three trading divisions of Eckoh Projects Limited (formerly Connection
Makers Limited), a wholly owned subsidiary and some costs arising from the administration of
eDirectory.co.uk plc who had acquired Freecom.net Limited from the Group in 2005.
Following a detailed review of the Eckoh Projects business, the Board took the decision to close the Dating
division, which had become unprofitable, at the end of September 2007. On 1 October 2007, the trade and
assets of the Television division were sold for £1.00m payable in cash over two years. During the year ended
31 March 2009 an agreement was made to reduce the consideration payable for the Television division by
£150,000. On 14 November 2007, the assets of the second television channel were sold for £0.14m payable
in cash over two years. On 1 January 2008, the trade and assets of the Chat division were sold for £1.75m
payable in cash over two years. The results of Eckoh Projects are disclosed within discontinued operations.
Prior to the sale of Freecom.net Limited by the Group in 2005, a lease for their main office building in
Dudley was guaranteed by the Group. During 2008, the acquirer of Freecom.net Limited, eDirectory.co.uk
plc went into administration causing the lease to become the responsibility of Eckoh plc and with £73,000
of associated onerous lease costs to be incurred. The lease will be terminated with effect from December
2009 and no additional costs are anticipated.
The profit on discontinued operations was determined as follows:
2009
£’000
2008
£’000
Profit from disposal of operations
Consideration
Cash
Deferred cash
Cash consideration
Discounting on deferred cash
Net consideration received
Cost of disposal - paid
- accrued
Net assets disposed
Intangible assets
Property, plant and equipment
Trade and other receivables
-
(150)
(150)
21
(129)
-
-
-
-
-
Pre and post-tax (loss) / gain from the disposal of operations
(129)
No cash or cash equivalents was disposed of with the sale of these operations (2008: £nil).
600
2,290
2,890
(197)
2,693
(319)
(154)
(1)
(120)
(33)
2,066
50
Annual Report 2009
T25568 Eckoh Annual Report 2009:T25568 Eckoh Annual Report 2009 16/9/09 13:55 Page 52
Notes to the Financial Statements
Notes to the Financial Statements Continued
for the year ended 31 March 2009
Trading result of discontinued operations
Revenue
Gross profit
Administrative expenses
Interest receivable/(payable)
Profit before taxation
Taxation
Post-tax (loss) / profit for the year from discontinued operations
Post-tax (loss) / gain from the disposal of operations
2009
£’000
2008
£’000
-
-
4,682
2,177
(37)
(1,648)
51
14
(45)
(31)
(129)
(160)
62
591
(10)
581
2,066
2,647
Basic and diluted earnings per share (note 12)
(0.08) pence 1.33 pence
The taxation charge in the year ended 31 March 2009 is an adjustment in respect of the prior year.
12. Earnings per share
Basic earnings per ordinary share is calculated on the basis of the weighted average number of ordinary
shares of 199,688,710 (2008: 197,216,792) in issue during the year ended 31 March 2009 after adjusting
for shares held by the Employee Share Ownership Plan of 70,866 (2008: 70,866) and the loss for the period
attributable to equity holders of the parent of £0.9m (2008: profit of £0.5m).
In calculating diluted earnings per share, the weighted average number of ordinary shares in issue, after
adjusting for shares held by the Employee Share Ownership Plan is further adjusted to include the dilutive
effect of potential ordinary shares. The potential ordinary shares represent share options granted to
employees where the exercise price is less than the average market price of ordinary shares in the period.
The total number of options in issue is disclosed in note 25. The dilutive effect of potential ordinary shares
outstanding at the end of the year is nil (2008: nil).
Denominator
Weighted average number of shares in issue in the period
Shares held by employee ownership plan
Number of shares used in calculating basic earnings per share
Dilutive effect of share options
Number of shares used in calculating diluted earnings per share
2009
£’000
2008
£’000
199,760
199,288
(71)
(71)
199,689
199,217
-
-
199,689
199,217
Annual Report 2009
51
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Notes to the Financial Statements
Notes to the Financial Statements Continued
for the year ended 31 March 2009
Goodwill
£’000
Internally
developed
computer
software
£’000
Customer
contracts
£’000
Other
intangible
assets
£’000
Total
£’000
17,980
-
(2,058)
15,922
-
-
15,922
17,980
-
(2,058)
15,922
-
-
15,922
-
-
427
144
(101)
470
381
-
851
254
170
(65)
359
119
-
478
373
111
199
-
(199)
-
-
-
-
199
-
(199)
-
-
-
-
-
-
45
3
(30)
18
2
-
20
38
6
(29)
15
2
-
17
3
3
18,651
147
(2,388)
16,410
383
-
16,793
18,471
176
(2,351)
16,296
121
-
16,417
376
114
13. Intangible assets
Group
Cost
At 1 April 2007
Additions
Disposals
At 31 March 2008
Additions
Disposals
At 31 March 2009
Amortisation
At 1 April 2007
Charge for the year
Disposals
At 31 March 2008
Charge for the year
Disposals
At 31 March 2009
Carrying amount
At 31 March 2009
At 31 March 2008
52
Annual Report 2009
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Notes to the Financial Statements
Notes to the Financial Statements Continued
for the year ended 31 March 2009
14. Property, plant and equipment
Fixtures and equipment Motor vehicles
£’000
£’000
Cost
At 1 April 2007
Additions
Disposals
At 31 March 2008
Additions
Disposals
At 31 March 2009
Depreciation
At 1 April 2007
Charge for the year
Disposals
At 31 March 2008
Charge for the year
Disposals
At 31 March 2009
Carrying amount
At 31 March 2009
At 31 March 2008
4,804
349
(235)
4,918
443
(291)
5,070
3,656
634
(115)
4,175
474
(293)
4,356
714
743
4
-
(4)
-
-
-
-
4
-
(4)
-
-
-
-
-
-
Total
£’000
4,808
349
(239)
4,918
443
(291)
5,070
3,660
634
(119)
4,175
474
(293)
4,356
714
743
The carrying amount of property, plant and equipment includes £3,000 (2008: £7,000) in respect of assets
held under finance lease contracts. The depreciation charge in respect of assets held under finance lease
was £4,000 (2008: £10,000).
15. Financial assets – available for sale
Cost
At 1 April
Impairment
At 31 March
2009
£’000
-
-
-
2008
£’000
288
(288)
-
The financial asset, represented by unlisted UK equity securities in eDirectory.co.uk plc, was fully impaired
during the financial year ended 31 March 2008.
Annual Report 2009
53
T25568 Eckoh Annual Report 2009:T25568 Eckoh Annual Report 2009 16/9/09 13:55 Page 55
Notes to the Financial Statements
Notes to the Financial Statements Continued
for the year ended 31 March 2009
Investment in subsidiary undertakings
The following are the principal subsidiary undertakings of the Group:
Subsidiary undertakings
Country of incorporation
Principal activities
Percentage of
share capital held
England and Wales
Speech Solutions and Client IVR
100%
France
Speech Solutions and Client IVR
100%(i)
Eckoh UK Limited
Eckoh France SAS
Eckoh Enterprises LBG
Eckoh Projects Limited
Avorta Limited
England and Wales
England and Wales
England and Wales
Dormant
Dormant
Dormant
Dormant
Dormant
Eckoh Technologies Limited
England and Wales
Intelliplus Group Limited
England and Wales
Intelliplus Limited
England and Wales
Non Trading
Medius Networks Limited
England and Wales
Non Trading
Telford Projects Limited
Swwwoosh Limited
England and Wales
England and Wales
365 Isle of Man Limited
Isle of Man
Dormant
Dormant
Dormant
(i) Share capital held by a subsidiary undertaking.
67% & 33%(i)
100%
100%(i)
100%(i)
100%
100%(i)
100%(i)
100%
100%(i)
100%(i)
All companies have 31 March year-ends. All trading companies operate principally in their country
of incorporation.
16. Inventories
Work in progress
17. Trade and other receivables
Amounts falling due within one year
Trade receivables
Less: provision for impairment of receivables
Net trade receivables
Loans and receivables
Other receivables
Prepayments and accrued income
Amounts falling due after one year
Loans and receivables (note 27)
54
Annual Report 2009
2009
£’000
4
4
2009
£’000
1,051
(31)
1,020
1,620
27
1,809
4,476
2008
£’000
13
13
2008
£’000
994
(26)
968
1,752
53
3,609
6,382
1,700
1,700
3,293
3,293
T25568 Eckoh Annual Report 2009:T25568 Eckoh Annual Report 2009 16/9/09 13:55 Page 56
Notes to the Financial Statements
Notes to the Financial Statements Continued
for the year ended 31 March 2009
The Directors’ consider that the carrying value of the trade and other receivables approximate to their fair value.
Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument
fails to meet its contractual obligations. Credit risk arises principally from the Group’s trade and other
receivables. Concentrations of credit risk with respect to trade receivables are limited due to working capital
practices of the market sector and the Group; and the nature of the Group’s customer base. The working
capital practices of the market sector within which the Group operates are such that the majority of the
trade receivables balance is due from the telephony carriers under a self bill agreement. The working capital
practices of the Group follow the PhonepayPlus regulations, making out-payments to clients once the
relevant trade receivable has been received. For other trade receivables, the reputable nature of the Group’s
customer base limits exposure to credit risk. At 31 March 2009, trade receivables that are past due but not
impaired represent £158,000 or 15.0% of the total trade receivables (2008: £144,000 or 14.7%). The past
due balance of £158,000 (2008: £144,000) represents receivables that are over 60 days past due.
The movement on the provision for the impairment of receivables of £5,000 (2008: reduction of £18,000)
relates to an unrecoverable receivable.
Loans and receivables include amounts in respect of the consideration paid for the Connection Makers TV
and Chat businesses totalling £456,000 (2008: £1,770,000). £456,000 (2008: £1,177,000) is recognised
within loans and receivables falling due within one year, and £nil (2008: £593,000) is recognised within
loans and receivables falling due after one year. The credit risk associated with the consideration receivable
is not considered to be material as due to the working capital practices of the market sector described
above, the amounts due are deducted from the out-payment made to the relevant purchaser.
The receivables for the Connection Makers businesses have been discounted at 10%. Also included within
other receivables is the amount receivable from Symphony Telecom of £2,722,000 (2008: £3,275,000).
£1,022,000 (2008: £575,000) is recognised within other receivables falling due within one year, and
£1,700,000 (2008: £2,700,000) is recognised within other receivables falling due after one year (see note
27). Interest receivable during the year in respect of this receivable totalled £135,000 (2008: £287,000).
The effective rate of interest is 4.54% (2008: 5.98%).
The discount rate of 10% used in relation to the Connection Makers deferred consideration has been
selected by assessing receivables with a similar risk profile.
18. Short-term investments
Sterling
Fixed rate
Floating rate
2009
£’000
2,821
2,821
2,504
317
2,821
2008
£’000
1,530
1,530
1,000
530
1,530
Of the amount presented within short-term investments, £316,600 (2008: £530,000) represents an amount
held in escrow in connection with a client contract. The amount will become available within three months
of the contract termination, expiry or re-negotiation. Short-term deposits have an average maturity of 3
months (2008: one month). The average interest rate on short-term deposits during the year was 4.95%
(2008: 5.77%).
Annual Report 2009
55
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Notes to the Financial Statements
Notes to the Financial Statements Continued
for the year ended 31 March 2009
19. Cash and cash equivalents
Sterling
Euro
Floating rate
2009
£’000
2,409
12
2,421
2,421
2,421
2008
£’000
5,223
84
5,307
5,307
5,307
Cash and cash equivalents comprise cash held by the Group. Surplus cash is placed in an interest bearing
account. The average interest rate on the interest bearing account during the year was 4.13% (2008:
5.70%).
The Group’s financial risk management is disclosed in note 3.
20. Trade and other payables
Trade payables
Other payables
Other taxation and social security
Accruals and deferred income
2009
£’000
2008
£’000
1,980
3,983
27
447
1,358
3,812
84
335
3,494
7,896
All of the above are payable within one year and trade payables that are more than three months old at the
year end represent £48,000 (2008: nil).
The Group’s exposure to liquidity risk is disclosed in note 3.
21. Obligations under finance leases
2009
Minimum
lease
payments
£’000
2009
Present
value of
minimum
lease
payments
£’000
2008
Minimum
lease
payments
£’000
2008
Present
value of
minimum
lease
payments
£’000
3
-
3
5
2
7
35
-
37
-
3
3
-
2
-
7
5
2
Amounts payable under finance leases
Within one year
After one year
Less future finance charges
Present value of lease obligations
Less amount due for settlement within one year
(shown under current liabilities)
Amount due for settlement after one year
56
Annual Report 2009
T25568 Eckoh Annual Report 2009:T25568 Eckoh Annual Report 2009 16/9/09 13:55 Page 58
Notes to the Financial Statements
Notes to the Financial Statements Continued
for the year ended 31 March 2009
22. Provisions
At 1 April 2008
Provided in year
Utilisation in year
Release in year
At 31 March 2009
Provision for
regulatory
review
£’000
Provision for
Dilapidations
£’000
17
-
-
(17)
-
-
79
-
-
79
Total
£’000
17
79
-
(17)
79
On exercise of share options issued after 6 April 1999, the Company will be required to pay National
Insurance on the difference between the exercise price and market value of the shares issued for employees
subject to UK taxation. In addition a provision has also been made for similar social security taxes affecting
employees not subject to UK taxation. The Company will become unconditionally liable to pay the National
Insurance and other similar taxes upon exercise of the options, which are exercisable over a period of up to
ten years from the date of grant. The Company spreads the liability over the period to vesting and adjusts it
according to the market value of the Company’s shares at each subsequent balance sheet date. Based on
the market value of the Company’s shares at 31 March 2009, no provision is required.
The provision for regulatory review related to the balance of potential costs in connection with a regulatory
review of the interactive television market. No further costs were incurred in relation to this matter and no
further costs are anticipated. As a result, no ongoing provision is required.
The dilapidation provision represents the current estimate of costs that would arise under the terms of the
lease agreement for Telford House should the Group decide not to renew the contract in 2015.
This provision has been discounted at 6%.
23. Share Capital
Ordinary shares
At 1 April 2007
Shares issued under the share option scheme
Shares held under Share Incentive Plan
At 1 April 2008
At 31 March 2009
Number of shares
Nominal value
£’000
196,509,576
491
3,250,000
(70,866)
199,688,710
199,688,710
8
-
499
499
Authorised share capital and significant terms and conditions
The total authorised number of shares is 1,000,000,000 ordinary shares with a nominal value of 0.25 pence
per share. All ordinary shares in issue are fully paid. The holders of ordinary shares are entitled to receive
dividends, if declared, and are entitled to vote at general meetings of the Company. There were no changes
to the authorised share capital during the period.
Potential ordinary shares are disclosed in note 25.
Annual Report 2009
57
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Notes to the Financial Statements
Notes to the Financial Statements Continued
for the year ended 31 March 2009
24. Reserves
At 1 April 2007
Profit for the year
Share based payment charge
Shares issued during the year under the share
option schemes
Shares held under Share Incentive Plan
Exchange differences
At 1 April 2008
Profit for the year
Share based payment charge
Exchange differences
At 31 March 2009
Share capital
£’000
Capital
redemption
reserve
£’000
491
198
Share
premium
reserve
£’000
477
Currency
reserve
£’000
Retained
earnings
£’000
(7)
7,530
-
-
8
-
-
-
-
-
-
-
499
198
-
-
-
-
-
-
-
-
226
(8)
-
695
-
-
-
499
198
695
-
-
-
-
(20)
(27)
-
-
(20)
(47)
470
97
-
-
-
8,097
(878)
54
-
7,273
The nature and purpose of each reserve within shareholders equity is described below:
Share capital represents the nominal value of ordinary shares. The capital redemption reserve represents the
maintenance of capital following the share buy back and tender offer. The share premium reserve
represents consideration for ordinary shares in excess of the nominal value. The currency reserve represents
exchange differences arising on consolidation of Group companies with a functional currency different to
the presentation currency and retained earnings represents retained profits.
The Group’s capital management policy is described in note 3.
25. Share based payment
The Eckoh plc Share Option Scheme (‘the Scheme’) was introduced in November 1999. Under the Scheme
the Board can grant options over shares in the Company to Group employees. The grant price of share
options is the middle market quotation price as derived from the Daily Official List of the London Stock
Exchange on the date of the grant. The contractual life of an option is ten years. Options granted under the
Scheme become exercisable subject to the share price exceeding RPI plus 15% after the third anniversary of
the grant date. Exercise of an option is subject to continued employment, with certain exceptions, as
specified in the Scheme rules.
The Eckoh plc Enterprise Management Incentive Scheme (‘the EMI Scheme’) was introduced in February
2007. Under the Scheme the Board can grant options over shares in the Company to Group employees.
The grant price of share options is the middle market quotation price as derived from the Daily Official List
of the London Stock Exchange on the date of the grant. The contractual life of an option is ten years.
Options granted under the EMI Scheme become exercisable subject to the percentage growth in earnings
per share in the three years following the year of grant being at least 5% (compounded) per annum.
Exercise of an option is subject to continued employment, subject to certain exceptions as specified in the
EMI Scheme rules.
58
Annual Report 2009
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Notes to the Financial Statements
Notes to the Financial Statements Continued
for the year ended 31 March 2009
The Eckoh plc Share Incentive Plan (‘the SIP’) was introduced in April 2007. Under the SIP, employees can
buy partnership shares worth up to up to £1,500 per annum and receive matching shares in the ratio of 2:1
by completing the partnership/matching share agreement. The purchase price will be the prevailing market
price on that day when the shares are purchased. The SIP trustees buy shares twice a year. Subject to continuing
employment, within three years of purchase partnership shares can be withdrawn from the SIP with a
corresponding charge to income tax and national insurance however, the associated matching shares can
not be withdrawn within the first three years. Subject to continuing employment, between three and five
years of the purchase date, both partnership and matching shares can be withdrawn from the SIP with a
corresponding charge to income tax and national insurance. Subject to continuing employment, five years
after the purchase date, both partnership and matching shares can be withdrawn from the SIP without a
corresponding charge to income tax and national insurance. Both partnership and matching shares can be
withdrawn from the SIP within five years of the purchase date without a corresponding charge to income tax
and national insurance subject to employment terminating for certain reasons as specified under the SIP rules.
The fair value of share options granted under the Scheme, the EMI Scheme and the SIP was measured using
the QCA-IRS option valuer based on the Black-Scholes formula, taking into account the terms and
conditions upon which the grants were made. The fair value per option granted and the assumptions used
in the calculation are as follows:
Share price (pence)
Exercise price (pence)
Number of employees
Shares under option
Vesting period (years)
Expected volatility
Option life (years)
Expected life (years)
Risk free rate
Expected dividends expressed as a dividend yield
Fair value per option (pence)
13 Sep 2005
31 Jul 2007
8.61
8.75
2
8.50
8.75
21
1,750,000
4,525,000
3
59%
10
3
3
43%
10
3
4.19%
5.49%
-
3.65
-
2.89
The expected volatility is based on historical volatility over the last three years. The expected life is the
average expected period to exercise. The risk free rate of return is the yield on zero-coupon UK government
bonds of a term consistent with assumed option life. A reconciliation of option movements over the year to
31 March 2009 is shown below:
Outstanding at 1 April
Granted
Forfeited
Exercised
Outstanding at 31 March
Exercisable at 31 March
2009
Number of
share options
2009
2009
Weighted
average
exercise price
2008
Number of
share options
2008
Weighted
average
exercise price
14,902,250
8.32 13,156,314
-
-
5,250,000
(1,609,613)
9.04
(254,064)
-
- (3,250,000)
13,292,637
8,767,637
8.24 14,902,250
7.97
8,102,250
7.88
8.75
8.67
7.19
8.32
7.97
The weighted fair value of options granted in the year was nil (2008: 2.89 pence).
The weighted average share price on exercise was nil (2008: 9.02 pence).
Annual Report 2009
59
T25568 Eckoh Annual Report 2009:T25568 Eckoh Annual Report 2009 16/9/09 13:56 Page 61
Notes to the Financial Statements
Notes to the Financial Statements Continued
for the year ended 31 March 2009
2009
2009
2009
2009
2008
2008
2008
2008
Weighted average remaining life
Weighted average remaining life
Weighted
average
exercise price
(pence)
6.5 – 8.5
8.5 – 10.5
7.34
8.75
10.5 – 12.5 10.75
16.5 – 20.0 19.85
Number of
shares
(000’s)
6,167
6,275
830
21
Expected
Contractual
-
0.8
-
-
4.2
7.8
3.7
0.2
Weighted
average
exercise price
(pence)
7.41
8.75
10.75
19.85
Number of
shares
(000’s)
6,794
6,807
1,280
21
Expected
Contractual
-
1.8
-
-
5.2
8.9
4.7
1.2
The total charge for the year relating to employee share based payment plans was £54,000 (2008:
£97,000) all of which related to equity-settled share based payment transactions.
26. Pension commitments
The Group operates a group personal pension scheme and, in addition, the subsidiary company Eckoh UK
Limited operates a defined contribution pension scheme. The assets of the pension schemes are held
separately from those of the Group in independently administered funds. The pension charge represents
contributions payable by the Group to the funds. There were no outstanding contributions at the balance
sheet date.
27. Related party transactions
Eckoh plc is the parent and ultimate controlling company of the Eckoh Group, the consolidated financial
statements of which include the results of the following subsidiary undertakings (note 15):
(cid:129) Eckoh UK Limited
(cid:129) Eckoh France SAS
(cid:129) Eckoh Projects Limited (formerly Connection Makers Limited)
(cid:129) Intelliplus Limited
(cid:129) Medius Networks Limited
Each subsidiary is 100% owned by the Eckoh Group and is considered to be a related party.
As part of the financing arrangements for the acquisition of Anglia Telecom Centres Limited in April 2006,
Eckoh plc loaned Symphony Telecom Holdings plc (‘Symphony’) £7,500,000. £3,500,000 was repaid during
May 2006. On 18 July 2006, the date of the disposal of Symphony, amounts due to Eckoh plc totalled
£700,000. This amount was added to the principal of the loan, brining the loan to £4,700,000. A capital
repayment of £500,000 was received during the year ended 31 March 2009 (2008: £1,500,000).
The remaining capital amount of £2,700,000 is due to be repaid in two instalments, the final instalment is
due to be paid in June 2010. As at 31 March 2009, the balance on the loan to Symphony totals £2,722,000
(2008: £3,275,000). £1,022,000 (2008: £575,000) is reported within other receivables due within one year
and £1,700,000 (2008: £2,700,000) is reported within other receivables due after one year (note 17).
The loan bears interest at 1% above the Bank of England base rate and interest is payable six monthly in
arrears. The loan is not secured. Symphony is considered to be a related party. Interest receivable during the
year ended 31 March 2009 amounted to £135,000 (2008: £287,000).
60
Annual Report 2009
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Notes to the Financial Statements
Notes to the Financial Statements Continued
for the year ended 31 March 2009
Directors and key management includes the staff costs of the Directors’ and the Management Team.
Directors and other key management
Wages and salaries
Social security costs
Pension costs
Share based payments
2009
£’000
890
132
12
43
2008
£’000
831
94
12
80
1,077
1,017
The aggregate Directors’ emoluments are shown in the table below. An analysis of Directors’
emoluments is included in the Directors’ Report on page 16.
Directors’
Aggregate emoluments
28. Operating lease commitments
The Group had total commitments under non-cancellable operating leases as follows:
Land and buildings
Expiring within one year
Expiring within two to five years
Expiring after five years
2009
£’000
691
691
2009
£’000
397
504
79
980
2008
£’000
566
566
2008
£’000
252
908
454
1,614
The principal property under operating lease is the Group’s head office in Hemel Hempstead for which the
annual operating lease charge is £103,000. The term of the lease covers the period to 21 March 2015.
The Group also have an operating lease for a data centre in Heathrow, London at which some of its call
processing platform is located. The term of the lease covers the period to July 2010 at a charge of
£276,000 per annum.
Annual Report 2009
61
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Notes to the Financial Statements
Notes to the Financial Statements Continued
for the year ended 31 March 2009
29. Cash flow from operating activities
Continuing operations
Loss after taxation
Interest expense
Depreciation of property, plant and equipment
Amortisation of intangible assets
Impairment of investment
Share based payments
Exchange differences
Operating loss before changes in working capital and provisions
Decrease in inventories
Decrease in trade and other receivables
Decrease in trade and other payables
Increase/(Decrease) in provisions
Cash utilised in operations
Discontinued operations
(Loss) / profit after taxation
Loss / (profit) on disposal
Interest income
Taxation recognised in income statement
Depreciation of property, plant and equipment
Amortisation of intangible assets
Share based payments
Disposal of property, plant and equipment
Operating loss before changes in working capital and provisions
(Increase)/decrease in trade and other receivables
Decrease in trade and other payables
Cash (utilised in) / generated from operations
30. Financial Commitments
2009
£’000
(718)
(382)
474
121
-
54
(20)
(471)
9
1,687
(4,086)
62
(2,799)
(160)
129
(51)
45
-
-
-
-
(37)
-
-
(37)
2008
£’000
(2,177)
(569)
597
153
288
34
(20)
(1,694)
4
1,835
(5,516)
(499)
(5,870)
2,647
(2,066)
(62)
10
37
23
63
36
688
622
(681)
629
As at 31 March 2009, the Group had committed to spend £684,000 on the provision of a new VoiceXML
call handling platform and the associated upgrade of our speech recognition software to Nuance
Recognizer 9.
62
Annual Report 2009
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Company Financial Statements
Prepared under UK GAAP
Company balance sheet as at 31 March 2009
Fixed assets
Investments
Current assets
Debtors: amounts falling due within one year
Debtors: amounts falling due after more than one year
Short-term investments
Cash at bank and in hand
Creditors: amounts falling due within one year
Net current assets
Total assets less current liabilities
Net assets
Capital and reserves
Called up share capital
Capital redemption reserve
Share premium account
Share based payment
Profit and loss account
Total shareholders’ funds
Company Financial Statements
Notes
2009
£’000
2008
£’000
ii
iii
iii
iv
5,451
5,451
9,151
9,151
1,240
1,700
2,504
2,071
7,515
(10)
7,505
820
2,700
1,000
3,621
8,141
(8)
8,133
12,956
12,956
17,284
17,284
vii,viii
viii
viii
viii
viii
499
198
695
209
499
198
695
209
11,355
12,956
15,683
17,284
The financial statements on pages 63 to 67 were approved and authorised for issue by the Board of
Directors on 12 June 2009 and signed on its behalf by:
Adam Moloney – Group Finance Director
Annual Report 2009
63
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Notes to the Company Financial Statements
Notes to the Company’s Financial Statements
For the year ended 31 March 2009
Principal Accounting Policies
Basis of accounting The financial statements for
the Company have been prepared on the going
concern basis, under the historical cost convention
and in accordance with the Companies Act 1985
and applicable Accounting Standards in the United
Kingdom.
The principal accounting policies adopted by the
Company are described below.
Investments Long-term investments, held as fixed
assets, are stated at cost less provision for any
impairment in value.
Deferred taxation Deferred taxation is
recognised in respect of all timing differences that
have originated but not reversed at the balance
sheet date, where transactions or events that
result in an obligation to pay more tax in the
future or a right to pay less tax in the future have
occurred at the balance sheet date.
A net deferred tax asset is regarded as recoverable
and therefore recognised only when, on the basis
of all available evidence, it can be regarded as
more likely than not that there will be suitable
taxable profits against which to recover carried
forward tax losses and from which the future
reversal of underlying timing differences can be
deducted.
Deferred tax is measured at the average tax rates
that are expected to apply in the periods in which
the timing differences are expected to reverse,
based on tax rates and laws that have been
enacted or substantively enacted by the balance
sheet date. Deferred tax is measured on a non-
discounted basis.
Related party transactions FRS 8, ‘Related Party
Transactions’, requires the disclosure of the details
of material transactions between the reporting
entity and related parties. The Company has taken
advantage of exemptions under FRS 8 Paragraph
3(b) not to disclose transactions between Group
companies.
Share based payments The Company operates a
share option scheme which allowed certain Group
employees to acquire shares in the Company.
The fair value of share options granted is recognised
within the staff costs of the relevant group company
with a corresponding increase in equity. The fair
value is measured at grant date and spread over
the period up to the date when the recipient
becomes unconditionally entitled to payment.
The fair value of share options was measured
using the QCA-IRS option valuer using the Black-
Scholes formula, taking into account the terms
and conditions upon which the grants were made.
The amount recognised as an expense is adjusted
to reflect the actual number of share options that
vest except where forfeiture is only due to share
prices not achieving the threshold of vesting.
FRS 20 has been applied to all options granted
after 7 November 2002 which have not vested on
or before 1 January 2006. A deferred tax adjustment
is also made relating to the intrinsic value of the
share options at the balance sheet date.
As a result of the grant of share options since 6
April 1999 the Company will be obliged to pay
employer’s National Insurance contributions on the
difference between the market value of the
underlying shares and their exercise price when
the options are exercised. A provision is made for
this liability using the value of the Company’s
shares at the balance sheet date and is spread over
the vesting period of the share options.
The provision is held by the relevant group
company who employs the share option holders.
Cash flow statement The cash flows of the
Company are included in the consolidated cash
flow statement on page 36. Consequently the
Company is exempt under the terms of FRS 1
(revised) ‘Cash flow statements’ from publishing
a cash flow statement.
64
Annual Report 2009
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Notes to the Company Financial Statements
Notes to the Company’s Financial Statements Cont
For the year ended 31 March 2009
i. Operating expenses
Staff costs
Details of the Directors’ emoluments are given in the Directors’ Report on page 16. The Director’s
remuneration costs are borne by a subsidiary undertaking. The Company did not incur any staff costs
during the year (2008: £nil). The average number of employees (including directors) employed by the
company during the year was 4 (2008: 4).
Services provided by the Group’s auditor
Fees payable for the audit of the parent company and consolidated accounts of £25,000 (2008: £30,000)
were borne by a subsidiary undertaking.
ii. Investments in subsidiaries
Cost
At 1 April 2008
Additions
Impairment
At 31 March 2009
31 March
2009
£’000
9,151
54
(3,754)
5,451
Following the write off of intercompany debt during the year ended 31 March 2009, an impairment charge
of £1,161,000 was recognised in respect of the investment in Eckoh Projects Limited. In recognition of the
unlikely event that the tax losses available in Telford Projects Limited will be utilised, the value of the
investment was reduced to zero resulting in an impairment charge of £2,593,000.
The following are the principal subsidiary undertakings of the Company:
Subsidiary undertakings
Country of incorporation
Principal activities
Percentage of share capital held
Eckoh UK Limited
Eckoh France SAS
England and Wales
Speech Solutions and Client IVR
France
Speech Solutions and Client IVR
Telford Projects Limited
England and Wales
Dormant
Eckoh Projects Limited
England and Wales
IVR Services
100%
100%*
100%
100%
* Share capital held by a subsidiary undertaking.
The Company also holds 100% of the issued share capital of nine non-trading or dormant companies,
not shown above.
All trading companies operate principally in their country of incorporation and have March year-ends.
Annual Report 2009
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Notes to the Company Financial Statements
Notes to the Company’s Financial Statements Cont
For the year ended 31 March 2009
iii. Debtors
Other debtors
Amounts due from subsidiary undertakings
Prepayments and accrued income
Amounts due within one year
Other debtors
Amounts due after more than one year
iv. Creditors: amounts falling due within one year
Other creditors
v. Provisions for liabilities and charges
Total unprovided deferred tax assets are as follows
Tax losses available
Unprovided deferred tax asset
31 March
31 March
2009
£’000
1,048
181
11
1,240
1,700
1,700
2008
£’000
621
181
18
820
2,700
2,700
31 March
31 March
2009
£’000
10
10
2009
£’000
2008
£’000
8
8
2008
£’000
(2,881)
(2,881)
(767)
(767)
No deferred tax asset has been recognised on the grounds that there is insufficient evidence that the asset
will be recoverable.
vi. Loss of Holding Company
The Directors have taken advantage of the exemption available under section 230 of the Companies Act
1985 and have not presented a profit and loss account for the Company alone. During the year ended 31
March 2009 the Company made a loss of £4,328,000 (2008: £5,794,000).
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Notes to the Company Financial Statements
Notes to the Company’s Financial Statements Cont
For the year ended 31 March 2009
vii. Share capital
Company
Authorised
2009
£’000
2008
£’000
1,000,000,000 (2008: 1,000,000,000) ordinary shares of 0.25p each
250,000
250,000
Allotted, called up and fully paid
Date of issue and share type
Ordinary shares of 0.25p each
As at 1 April 2008
As at 31 March 2009
viii. Share capital and reserves
Balance at 1 April 2008
Loss for the year
Balance at 31 March 2009
ix. Share options and share based payments
Number of shares
Nominal value
£’000
199,688,710
199,688,710
499
499
Capital
redemption
on reserve
£’000
198
-
198
Share
premium
account
£’000
695
-
695
Share
based
payment
£’000
209
-
209
Profit
and loss
account
£’000
15,683
(4,328)
11,355
Share options and share based payments are disclosed in note 25 to the consolidated financial statements.
x. Related party transactions
The Company has taken advantage of the exemption conferred by FRS 8 paragraph 3(b) that transactions
between Group companies do not need to be disclosed. FRS 8 also provides a disclosure exemption
provided equivalent disclosure is made in the consolidated financial statements. Please refer to note 27.
Annual Report 2009
67
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Shareholder information
Shareholder information
Eckoh plc is a public limited company registered
and domiciled in the United Kingdom.
Dealings permitted on Alternative Investment
Market (AIM) of the London Stock Exchange.
Directors and Company Secretary
Peter Reynolds –
Non-executive Chairman
Nik Philpot –
Chief Executive Officer
Adam Moloney –
Group Finance Director and Company Secretary
Jim Hennigan –
Executive Director
Registered Office
Eckoh plc
Telford House
Corner Hall
Hemel Hempstead
Hertfordshire, HP3 9HN
www.eckoh.com
Registered in England and Wales,
Company number 3435822.
Registrar
Capita Registrars
The Registry
34 Beckenham Road
Beckenham
Kent, BR3 4TU
Nominated Advisor and Nominated Broker
Seymour Pierce Limited
20 Old Bailey
London, EC4M 7EN
Solicitor
Travers Smith
10 Snow Hill
London, ECA 2AL
Banker
Barclays Bank plc
11 Bank Court
Hemel Hempstead
Hertfordshire, HP1 1BX
Auditor
BDO Stoy Hayward LLP
Prospect Place
85 Great North Road
Hatfield
Hertfordshire, AL9 5BS
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Notes
Notes
Annual Report 2009
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The Future
The Future
We’re leading the way in the
development of intelligent
automated services, using a
combination of caller recognition and self
learning capabilities to provide personalised
services that remember, anticipate and cater
for individual customer behaviour.
We believe automation across all communication
channels should complement, not inhibit,
proactive customer management. We’re using
CRM techniques and technologies to capture and
report intelligence from every customer
interaction; information that helps our clients to
refine their products and services, improve
customer service and retention, embrace new
technologies, deliver cost efficiencies and return
on investment.
Customer expectations and the cost of keeping
pace with them are constantly rising. Automation
lets our clients keep pace, reduce the cost of
serving their customers without compromising
the ability to please them.
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Contents
The Future
Contents
Highlights of the Year
Chairman’s Statement
The Business Review
Board of Directors
Directors’ Report
Corporate Governance
Statement of Directors’ Responsibilities
Independent Auditors’ Report
Consolidated Income Statement
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Cash Flow Statement
Notes to the Financial Statements
Company Financial Statements
Notes to the Company Financial Statements
Shareholder Information
4
5
8
13
16
21
27
31
33
34
35
36
37
63
64
68
02
Annual Report 2009
“Our solutions and capability
provide our clients with a way of
delivering efficiency without
compromising customer quality.
Using a blend of live agents and our
automation is a cost effective and
viable option that is proven to
significantly reduce call handling
costs.”
Nik Philpot, CEO, Eckoh
T25568 Eckoh Annual Report 2009 Covers:T25568 Eckoh Annual Report 2009 Covers 18/9/09 16:37 Page 1
“
Eckoh’s expertise, approach and professionalism was
exceptional. They delivered us a series of solutions
and services which exceeded expectations.
”
Chris Scoggins, Chief Executive, National Rail Enquiries
www.eckoh.com
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always inspiring