RHETORICAL, the voice synthesis specialist, has reported a 70% surge in sales that has allowed the Edinburgh-based company to keep losses level despite increasing headcount by a third last year.

Turnover from the company's rVoice software, the latest edition of which was launched last October, jumped to (pounds) 1.7m in 2002. Net losses were held steady at (pounds) 1.6m, while gross profits rose from (pounds) 500,000 previously to (pounds) 1.1m last year.

The company, which is nearing its third anniversary since spinning out from the University of Edinburgh, has developed text-to-speech software that converts any type of written word into speech that is almost indistinguishable from the human voice.

That is being used in a variety of applications in the telecoms sector, such as delivering e-mail messages to wireless customers via mobile phone.

Marc Moens, chief executive of Rhetorical, said that growth in 2002 had continued into the current year, keeping the company on track to reach break-even in about six months. He added that Rhetorical, whose last funding round in November 2001 raised (pounds) 4.3m, would not need any additional external cash before then.

''We don't have to go out for any more money before we get to breakeven,'' he said. Although a fresh equity injection has not been discussed formally, he added that returning to the venture capital market with a profitable company was ''certainly a possibility''.

Rhetorical now employs 45 people, mostly in Edinburgh but a few operating out of sales offices in London, Germany and Boston in the US.

The opening of the Boston office followed the signing of contracts with US giant Verizon Wireless, which has integrated Rhetorical's rVoice product into its own mobile offering.

Similarly, the Scottish firm's technology is also being used by UK mobile operator Orange to give voice to Ananova, the animated newsreader that delivers headlines, weather and similar information to Orange customers.

Beyond the mobile arena, rVoice is also being used to generate automated out-going telephone calls from businesses such as contact centres. For example, Birmingham-based Truancy Call, which serves about 150 UK schools, uses the software to ring up parents of children who are not in school. If parents are not aware of their child's absence, they can push a button that automatically connects them with a school

official.

Rhetorical says its software can easily generate voices with a wide variety of accents, and is already deployed in countries as varied as Germany and Greece to the US and Australia, the latter of which requires authentic pronunciation of Aboriginal place names.

The company also recently launched America's Spanish, a fully-bilingual version that can automatically switch between Spanish and English, even in mid-sentence.

Moens said the company was continuing to invest in rVoice, and expected to make further product announcements during the next few months.

Moens and his co-founders, chairman Peter Denyer and chief technology officer Paul Taylor, own about 51% of the business. The rest is in the hands of a number of venture capital investors, such as Scottish Equity Partners, Pentech, Friends Ivory & Sime, Artemis, Pennine VCT and Capital for Companies.