Netcall

Netcall Dividend Analysis and Summary

• Dividend: Final ordinary dividend of 0.94p per share (FY24: 0.89p; +6%).
• Policy: Payout targeted at 25% of adjusted EPS. FY25 adjusted EPS 3.75p ? payout equals c. 25%.
• Ex-dividend date: 29/12/2025.
• Record date: 30/12/2025.
• Payment date: 09/02/2026.
• Estimated cash cost: £1.57m (subject to AGM approval).
• Dividend cover:
  • On adjusted EPS: ~4.0x (3.75p / 0.94p).
  • On statutory EPS (2.45p): ~2.6x.
  • Cash flow coverage: FY25 operating cash flow £10.3m vs proposed dividend £1.57m (~6.6x).

• Support from recurring revenues: Recurring revenue rose to 80% of total; Cloud ACV up 52% to £33.9m; total ACV up 31% to £42.2m. A contracted order book of £79m (RPO) underpins future cash generation.
• Earnings and cash generation: Adjusted EPS grew 5% to 3.75p, comfortably covering the dividend at the 25% policy. Operating cash flow of £10.3m and net cash of £27.2m (no debt) provide strong liquidity even after acquisition outflows.
• Growth trajectory: Dividend growth of +6% aligns with steady adjusted earnings progress and management’s stated payout policy. Given continued mix shift to cloud subscriptions and 118% cloud NRR, mid-single-digit dividend growth looks reasonable under current policy.
• Capital allocation: Management prioritises growth (organic R&D up 28% to £7.3m; selective M&A), with dividends a secondary but disciplined use of cash (fixed at ~25% of adjusted EPS). This supports sustainability but limits the likelihood of a materially higher payout ratio near term.