TIDMACT
RNS Number : 6569A
Actual Experience PLC
23 January 2020
23 January 2020
Actual Experience plc
(the "Group", the "Company" or "Actual Experience")
Preliminary Results
Actual Experience plc (AIM: ACT), the analytics-as-a-service
company, is pleased to announce its preliminary results for the
year ended 30 September 2019.
Highlights
-- Revenue increased 79% to GBP1.93m (2018: GBP1.08m), largely
as a result of the annualisation of the two large customer
engagements secured in the prior year
-- Reduction in loss for the year to GBP5.91m (2018: loss of GBP7.21m)
-- Signing of two new 'land and expand' type customer
engagements, signalling progress with our managed service offerings
based on our analytics
-- Successful evaluation by Vodafone of the deployment of our
digital user software on their Universal Customer Premises
Equipment (uCPE) hardware
-- Expansion of an open purchase order ("PO") from one of our
Channel Partners, following their confidence in our ability to
deliver at scale and provide tangible benefits to their
customers
-- Completion of GBP3m Placing in July 2019, to support ongoing Channel Partner development.
-- Active discussions towards partnership with potential new partners
Post-period end
-- Partner led change of our go-to-market strategy from a
managed services to a professional services approach, in order to
initiate quicker and broader customer engagements
Dave Page, CEO of Actual Experience plc, said: "We have been
working hard for over ten years to reach this point and to move
into our next chapter of growth. The growing awareness of Actual
Experience in the market, resulting in enquiries from potential new
partners, and the acceleration of activity at Verizon in
particular, along with the continual alignment of our business
towards the professional services offerings of our partners, means
that we head into 2020 with optimism for the potential of the year
ahead."
Enquiries:
Actual Experience plc via Alma PR
Dave Page, Chief Executive Officer
Steve Bennetts, Chief Financial Officer
N+1 Singer Advisory LLP Tel: +44 (0)207 496
Shaun Dobson 3000
Lauren Kettle
Alma PR
Caroline Forde, Josh Royston, Helena Bogle Tel: +44 (0)203 405
0205
About Actual Experience
Actual Experience's goal is to significantly improve the
performance of the digital world.
The Company enables its partners to optimise their customers'
digital ecosystem to increase productivity and enhance brand
experiences through Human Experience Management.
Developed from 10 years of academic research and three patents,
the Company's Human Experience Management Services, reports on the
human experience of a digital service. The Company's service
provides organisations with information on where the changes need
to be made to ensure optimum levels of digital experience for
customers and employees. This enables them to recover lost
productivity, protect their brand reputation and make informed
investment decisions.
Actual Experience is listed on the London Stock Exchange (AIM:
ACT). Our corporate headquarters is in Bath, UK. Actual
Experience's unique and patented digital analytics-as-a-service is
founded on cutting-edge research at Queen Mary University of
London.
For further information please visit
www.actual-experience.com
Chairman's Statement
As we closed out the 2018 Financial Year, we did so with a sense
that our Financial Year 2019 (FY19), the year we are reporting on,
would mark an inflection point for Actual Experience. We had
secured our first two significant customer deployments and were
experiencing growing momentum with our Channel Partners. We had
proven the potential of our unique technology and had invested in
our operations, infrastructure and capabilities to be able to
implement and support significant deployments at scale.
While there were successes through FY19, including the signing
of two new 'land and expand' type customer engagements and
Vodafone's successful evaluation of the deployment capability of
our digital user software onto their uCPE devices, it would take
another year of detailed discussions with our Channel Partners for
us to jointly find the optimal 'recipe' to target their extensive
customer bases. As we enter FY20, we believe that we now have the
right go-to-market strategy to drive greater new customer wins via
our Channel Partners.
This new approach shifts initial customer engagement from
IT-focused managed service offerings, in which our analytics were
predominantly used by the IT division within a business, to a more
business oriented Professional Services approach, targeting the
leadership teams within enterprises.
We believe our analytics will be used to deliver paid-for
impactful 1-3 month analysis of an organisation's digital
ecosystem, quantifying the time lost to the enterprise through poor
human experience associated with their digital offerings and
infrastructure. The resulting short, high impact reports provide a
compelling business case for progression onto identifying ongoing
digital improvement opportunities, following our existing recurring
AaaS revenue model. This new approach aims to shorten sales cycles,
grow our applicability and deliver value to customers significantly
faster.
Financials and cash
The Company continued to make financial progress in the year.
Revenue for the 12 months increased 79% to GBP1.93m (FY18:
GBP1.08m), largely as a result of the annualisation of the two
large customer engagements secured in the prior year. The Company
exited the year with Annualised Recurring Revenues ("ARR") of
GBP2.0m (FY18: GBP1.6m). Cash as at 30 September 2019 was GBP7.9m
(FY18: GBP10.8m).
Shareholders and Placing
We are grateful for the ongoing support of our investors. The
Placing in July 2019 has extended the period in which we have the
ability to support the future potential development of the Partner
channel.
The results being achieved by our Partners and their end
customers in terms of improved human experience, are being noted
within the broader market. This is generating a number of enquiries
and we are in active discussions with potential additional
partners. This growing awareness of Actual Experience and our Human
Experience Management capability bodes well for the future and the
funds from the Placing, combined with the work we have carried out
to refine our Partner go-to-market strategy, mean we have the
ability to support new Partners as soon as they are signed.
People
Actual Experience continued to welcome many talented individuals
to the Company through the course of the year. On behalf of the
Board, I would like to take this opportunity to thank our staff in
both the UK and US for their dedication to the business. Their hard
work is the foundation of our success.
Outlook
We are actively seeking new business opportunities and
progressing discussions with our existing Partners. While the
extension of current contracts and the timing of new contracts
remains uncertain, these discussions are well progressed and are
expected to result in additional new revenue for the Group.
Furthermore, the Group is proactively restructuring the business to
align itself with the evolved sales model, which will result in a
reduction of the cost base over the next 12 months as well as
delivering operational efficiencies. The anticipated revenue growth
and reduction in the cost base will ensure that the Group maintains
sufficient liquidity to meet its ongoing needs. The Financial
Review gives further comment on the liquidity position.
We believe the opportunity for Actual Experience remains
significant. We have no direct competitors, successful customer
deployments, a significant market opportunity and the Partners with
which to address it, together with a broadening route to market.
Consequently, the Board believes we have the ability to become a
significant global player in the market for Human Experience
Management and hopes to report further successes to you later this
year.
Stephen Davidson
Chairman
Chief Executive's Statement
The 2019 financial year saw the business secure notable
commercial milestones, giving us confidence in our technology and
that we are heading towards successful commercialisation and
revenue acceleration. However, the real progress in the year has
been the pivot in our partners thinking. This has resulted in a
partner led change to our sales model from managed services to
professional services as a way of initiating quicker and broader
customer engagements.
In close conjunction with our Channel Partners we have sought to
evolve our technology offering and service proposition. Our
messaging and solution is more sharply focused on the negative
impact of sub-optimal Human Experience on brand and productivity.
Instead of interacting only with the IT departments, the
professional service offerings target business leaders with insight
into the cost to their business of poor Human Experience.
While there has been some frustration both for us and our
Partners at the time it has taken to convert their sales pipelines,
we believe the launch of our Partners' professional services
offerings will shorten sales and deployment cycles, deliver value
to customers significantly faster and provide a scalable means of
addressing both the enterprise and mid-tier markets.
Link between Human Experience and Productivity
We have been able to establish a link between our proprietary
Human Experience scores and the amount of time an employee wastes
each day waiting for business applications to respond. Wasted
employee time can be readily converted to wasted payroll, providing
a clear financial measure as to the cost of poor human experience.
Typically one to three percent of a company's payroll is used to
pay staff to do nothing; by way of an example, recent analysis of
two blue chip businesses produced wasted payroll numbers of $139m
and $400m respectively. Now, by offering to audit a company's
digital business, our partners can rapidly produce a wasted payroll
estimate, which can establish the business case for ongoing work to
improve human experience and recover lost employee time and wasted
payroll. This Human Experience audit capability has been the
catalyst for the transformation of our relationships with Verizon
and other active and potential partners.
Important Commercial Milestones in 2019
We received a new open purchase order ("PO") from one of our
Channel Partners in February 2019. This PO was in addition to the
orders received in 2017 and 2018. The expansion of the Open PO was
encouraging and confirmation that our Channel Partner is confident
in our ability to deliver at scale and provide tangible benefit to
their customers.
We were pleased to secure two significant 'Land & Expand'
deployments through the course of the year. Our Channel Partners'
customers are typically large global blue-chip enterprises. These
opportunities tend to start small and grow to full scale within two
years, with the potential to deliver revenues in the order of
$500,000 per annum per customer to the Company. One of these
deployments has already started to expand, thereby providing good
strategic validation. These deployments represent satisfying
progress with managed service offerings based on our analytics. We
do, however, expect the new professional services offerings to
contribute to an acceleration of deals and revenue in 2020 and
beyond.
We were delighted to announce the major milestone of the
successful evaluation by Vodafone of our product. Vodafone assessed
the deployment capability of our product on Universal Customer
Premises Equipment (uCPE). This means that our product can be
quickly deployed if a customer has a uCPE device installed.
Sales and Marketing
As our partners develop their relationships with us over time,
our engagement approach had naturally shifted from business
development to sales. 2019 has seen the most significant changes in
our sales personnel and processes in the history of our Company.
Positively, this reflects the broadening and accelerating nature of
certain key partnerships. Typically, when we employ salespeople to
work with one of our partners, we expect them to have worked in
sales at that partner or to have spent time selling software to
that partner. Equally, in terms of process, as the number of
pipeline opportunities increases, we have matched this with a
rigorous sales culture. We have been supported in this endeavour by
Duncan Mitchell who was until recently Senior Vice President at
Cisco Systems.
Product Development
By focusing on simplification and automation, we are
continuously reducing the level of skill required to deploy and use
our Analytics-as-a-Service (AaaS), thus enabling Channel Partners'
to deploy our technology more easily, at larger scale, quicker, and
to address mid-sized customers.
We are also focused on enabling our technology to be integrated
into hardware, software and other Partner offerings. Over time,
this means that our technology can be included as part of the
delivery of a Partner's own products and services to its customers.
Because our technology can improve the human experience of arguably
any digital service offering from our Partners, that ability to be
built into these offerings means that a Partner could address most
if not all its customers with our value propositions. This has
clear and exciting implications for our ability to address a
significant amount of the global digital economy.
Current trading and outlook
We have been working hard for over ten years to reach this point
and to move into our next chapter of growth. The growing awareness
of Actual Experience in the market, resulting in enquiries from
potential new partners, and the acceleration of activity at Verizon
in particular, along with the continual alignment of our business
towards the professional services offerings of our partners, means
that we head into 2020 with optimism for the potential of the year
ahead.
Dave Page
Chief Executive Officer
Financial Review
Financial Review
Revenue recognised in the year ended 30 September 2019 was
GBP1,934,082 (2018: GBP1,076,463) and relates to the supply of
analytical services and associated consultancy activities to
customers.
99% of revenue was derived from sales to Channel customers
(2018: 95%) with the balance arising from direct sales. This high
percentage reflects the Group's strategic focus on generating
revenue growth from its Channel Partners.
Gross profit
The gross profit for the year was GBP790,966, a significant
improvement from the prior year (2018: loss of GBP88,645). This
reflects the inherent scalability of our business model as well as
improved operational efficiency as the Group continues to provide
full support to its Channel Partners.
Expenses
Administrative expenses comprising R&D, operational support,
sales and marketing, finance and administration costs, and foreign
exchange gains and losses, totalled GBP7,050,417, a decrease of
GBP243,055 compared to the prior year. This decrease reflects the
focus on effective management of the Group's expense base, as well
as greater operational efficiencies. Personnel costs continue to be
the largest expense and represent approximately 81% of the Group's
cost base. The functional cost breakdown is as follows;
Administrative Expenses 2019 GBP 2018 GBP
Research and development 2,546,368 2,555,825
---------- ----------
Operational support 1,112,153 1,120,428
---------- ----------
Sales and marketing 2,403,106 2,559,403
---------- ----------
Finance and administration 1,066,049 1,101,868
---------- ----------
Foreign exchange gains (77,259) (44,052)
---------- ----------
Total 7,050,417 7,293,472
---------- ----------
Tax
The tax credits recognised in the current and previous financial
year arose from the accrual of R&D tax credits.
Loss for the year
Losses after tax totalled GBP5,911,950 (2018: loss of
GBP7,211,796). This reduction in losses is the result of
significantly higher revenues and a decrease in administrative
expenses, which reflects a continuing focus on rigorous expense
management as well as operational efficiencies.
Loss per share
The loss per share for the year was 13.04p (2018: loss per share
of 16.08p). The reduction in loss per share reflects the decrease
in total comprehensive loss for the year as well as an increase in
the weighted average number of ordinary shares in issue.
Dividend
No dividend has been proposed for the year ended 30 September
2019 (2018: GBPnil).
Cash flow
We are investing in the growth of our operations to address what
we believe to be a significant commercial opportunity and our cash
flow from operations was therefore negative during the year ended
30 September 2019, and in line with expectations.
The Group's costs are mostly operating related, with very little
investment required for capital infrastructure. Cash used by
operating activities was GBP4,418,091 for the year, compared to
cash used of GBP6,433,222 for the year ended 30 September 2018,
with the improvement reflecting the reduction in losses. This
operating cash requirement was substantially funded by cash
reserves, which were augmented by net proceeds of GBP2,782,833 from
the July 2019 Placing. The Group ended the year with cash totalling
GBP7,876,634 (2018: GBP10,776,516).
Free cash flow for the year was GBP(5,629,771) (2018:
GBP(7,629,560)). Free cash flow is defined as net cash flows used
in operating activities, plus development of intangible assets,
plus purchase of property, plant, and equipment.
Software development capitalisation
The Directors believe that the software development
capitalisation criteria in IAS38 have been met and accordingly
development costs, net of amortisation charges, of GBP1,792,465
have been capitalised as at 30 September 2019 (2018:
GBP1,579,227).
Accounting policies
The Group's financial statements have been prepared in
accordance with International Financial Reporting Standards. The
Group's significant accounting policies have been applied
consistently throughout the year.
Principal risks and uncertainties and going concern
As in previous years the Group has continued to utilise its cash
resources to fund losses whilst the sales pipeline is being
established. The cash balance as at 30 September 2019 was GBP7.9m
which will provide the Group with sufficient resources to meets its
liquidity requirements for the next 18 months, based on its current
forecast of sales growth and cost efficiencies.
We are actively seeking new business opportunities and
progressing discussions with our existing Partners. As at year end,
the extension of current revenue contracts and the timing of new
revenue contracts remains uncertain. However, the discussions are
well progressed and are expected to result in additional new
revenue for the Group. Furthermore, the Group is also proactively
restructuring the business to align itself with the evolved sales
model which will result in a reduction of the cost base over the
next 12 months as well as operational efficiencies. The revenue
growth and reduction in the cost base will ensure that there is
sufficient liquidity for the Group's needs.
After making appropriate enquiries and considering the
assumptions and uncertainties described above, the Directors
consider that it is appropriate to adopt the going concern basis in
preparing the consolidated financial statements. Accordingly, the
financial statements do not include any adjustments which would be
required if the going concern basis of preparation was deemed to be
inappropriate. However, if the Group is unable to deliver the
proposed revenue growth and cost reductions, it would give rise to
a material uncertainty which may cast significant doubt about the
Group's ability to continue as a going concern.
Key performance indicators
As the Group is in the process of development and
commercialisation of its services, the Directors consider the key
quantitative performance indicators to be sales revenues of
GBP1,934,082 (2018: GBP1,076,463) and the level of cash held in the
business of GBP7,876,634 (2018: GBP10,776,516). The Board performs
regular reviews of actual results against budget, and management
monitors cash balances on a monthly basis to ensure that the
business has sufficient resources to enact its current strategy.
Certain non-financial measures, such as the number of active
customers and deployed Digital Users, are monitored on a monthly
basis. The Board will continue to review the KPIs used to assess
the business as it grows.
Steve Bennetts
Chief Financial Officer
Financial statements
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 September 2019
2019 2018
Note GBP GBP
------------------------------------------------------------------ ---- ----------- -----------
REVENUE 2 1,934,082 1,076,463
Cost of sales (1,143,116) (1,165,108)
------------------------------------------------------------------ ---- ----------- -----------
GROSS PROFIT/(LOSS) 790,966 (88,645)
Administrative expenses (7,050,417) (7,293,472)
------------------------------------------------------------------ ---- ----------- -----------
OPERATING LOSS 4 (6,259,451) (7,382,117)
Finance income 54,235 89,061
Finance expense (34,687) -
------------------------------------------------------------------ ---- ----------- -----------
Finance income - net 19,548 89,061
------------------------------------------------------------------ ---- ----------- -----------
LOSS BEFORE TAX (6,239,903) (7,293,056)
Tax 5 327,953 81,260
------------------------------------------------------------------ ---- ----------- -----------
LOSS FOR THE YEAR (5,911,950) (7,211,796)
------------------------------------------------------------------ ---- ----------- -----------
Other comprehensive expense:
Items that may be reclassified to profit or loss:
Foreign currency difference on translation of overseas operations (7,241) (29,951)
------------------------------------------------------------------ ---- ----------- -----------
TOTAL COMPREHENSIVE EXPENSE FOR THE YEAR (5,919,191) (7,241,747)
------------------------------------------------------------------ ---- ----------- -----------
LOSS PER ORDINARY SHARE
Basic and diluted 6 (13.04)p (16.08)p
------------------------------------------------------------------ ---- ----------- -----------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 September 2019
Share Share Accumulated Total
capital Premium losses equity
GBP GBP GBP GBP
----------------------------------------------- ------- ---------- ------------ -----------
At 1 October 2017 89,522 31,808,130 (11,839,635) 20,058,017
------------------------------------------------ ------- ---------- ------------ -----------
Loss for the year - - (7,211,796) (7,211,796)
Other comprehensive expense for the year - - (29,951) (29,951)
------------------------------------------------ ------- ---------- ------------ -----------
Total comprehensive expense for the year - - (7,241,747) (7,241,747)
Issue of shares 283 119,883 - 120,166
Share-based payment expense - - 177,413 177,413
------------------------------------------------ ------- ---------- ------------ -----------
At 30 September 2018 89,805 31,928,013 (18,903,969) 13,113,849
------------------------------------------------ ------- ---------- ------------ -----------
At 30 September 2018 - as previously presented 89,805 31,928,013 (18,903,969) 13,113,849
Change of accounting policy - - (55,221) (55,221)
------------------------------------------------ ------- ---------- ------------ -----------
Restated total equity at 1 October 2018 89,805 31,928,013 (18,959,190) 13,058,628
------------------------------------------------ ------- ---------- ------------ -----------
Loss for the year - - (5,911,950) (5,911,950)
Other comprehensive expense for the year - - (7,241) (7,241)
------------------------------------------------ ------- ---------- ------------ -----------
Total comprehensive expense for the year - - (5,919,191) (5,919,191)
Issue of shares 4,444 2,995,557 - 3,000,001
Expenses of share issue - (217,168) - (217,168)
Share-based payment expense - - 83,199 83,199
------------------------------------------------ ------- ---------- ------------ -----------
At 30 September 2019 94,249 34,706,402 (24,795,182) 10,005,469
------------------------------------------------ ------- ---------- ------------ -----------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 September 2019
2019 2018
Note GBP GBP
------------------------------ ---- ------------ ------------
ASSETS
Non-current assets
Property, plant and equipment 140,806 250,250
Right-of-use assets 894,398 -
Intangible assets 8 1,792,465 1,579,227
------------------------------ ---- ------------ ------------
TOTAL NON-CURRENT ASSETS 2,827,669 1,829,477
------------------------------ ---- ------------ ------------
Current assets
Trade and other receivables 681,670 684,578
Income tax receivable 5 296,866 735,634
Cash and cash equivalents 7 7,876,634 10,776,516
------------------------------ ---- ------------ ------------
TOTAL CURRENT ASSETS 8,855,170 12,196,728
------------------------------ ---- ------------ ------------
TOTAL ASSETS 11,682,839 14,026,205
------------------------------ ---- ------------ ------------
LIABILITIES
Non-current liabilities
Deferred tax 5 (14,317) (26,863)
Lease liabilities (866,134) -
------------------------------ ---- ------------ ------------
TOTAL NON-CURRENT LIABILITIES (880,451) (26,863)
------------------------------ ---- ------------ ------------
Current liabilities
Trade and other payables (689,426) (885,493)
Lease liabilities (107,493) -
------------------------------ ---- ------------ ------------
TOTAL CURRENT LIABILITIES (796,919) (885,493)
------------------------------ ---- ------------ ------------
TOTAL LIABILITIES (1,677,370) (912,356)
------------------------------ ---- ------------ ------------
NET ASSETS 10,005,469 13,113,849
------------------------------ ---- ------------ ------------
EQUITY
Share capital 94,249 89,805
Share premium 34,706,402 31,928,013
Accumulated losses (24,795,182) (18,903,969)
------------------------------ ---- ------------ ------------
TOTAL EQUITY 10,005,469 13,113,849
------------------------------ ---- ------------ ------------
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30 September 2019
2019 2018
Note GBP GBP
------------------------------------------------------------ ---- ----------- -----------
Cash flows from operating activities
Loss before income tax (6,239,903) (7,293,056)
Adjustments for:
Depreciation of property, plant and equipment 125,136 138,422
Depreciation of right-of-use assets 111,788 -
Amortisation 8 982,808 844,898
Loss on disposal of property, plant and equipment - 522
Non-cash employee benefits expense - share-based payments 83,199 177,413
Finance income - net (19,548) (89,061)
------------------------------------------------------------ ---- ----------- -----------
Operating cash outflow before changes in working capital (4,956,520) (6,220,862)
------------------------------------------------------------ ---- ----------- -----------
Increase in trade and other receivables (2,446) (173,317)
(Decrease)/increase in trade and other payables (213,300) 58,110
------------------------------------------------------------ ---- ----------- -----------
Cash used in operations (5,172,266) (6,336,069)
Income taxes received/(paid) 754,175 (97,153)
------------------------------------------------------------ ---- ----------- -----------
Net cash flows used in operating activities (4,418,091) (6,433,222)
------------------------------------------------------------ ---- ----------- -----------
Cash flows from investing activities
Development of intangible assets 8 (1,196,046) (1,157,864)
Purchases of property, plant and equipment (15,634) (38,474)
Transfers to term deposits with more than 3 months maturity - 5,000,000
Finance income 54,235 89,061
------------------------------------------------------------ ---- ----------- -----------
Net cash (outflow)/inflow from investing activities (1,157,445) 3,892,723
------------------------------------------------------------ ---- ----------- -----------
Cash flows from financing activities
Proceeds from issue of share capital, net of costs 2,782,833 120,166
Principal element of lease payments (138,630) -
Inflow/Outflow to Employee Benefit Trust 27,101 (18,000)
------------------------------------------------------------ ---- ----------- -----------
Net cash inflow from financing activities 2,671,304 102,166
------------------------------------------------------------ ---- ----------- -----------
Decrease in cash and cash equivalents (2,904,232) (2,438,333)
Effect of exchange rate fluctuations on cash held 4,350 4,999
Cash and cash equivalents at start of year 10,776,516 13,209,850
------------------------------------------------------------ ---- ----------- -----------
Cash and cash equivalents at end of year 7 7,876,634 10,776,516
------------------------------------------------------------ ---- ----------- -----------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 September 2019
1 Basis of preparation
Actual Experience plc is a public limited company domiciled in
the United Kingdom and incorporated in England. The Company's
registered office is Quay House, The Ambury, Bath, BA1 1UA.
The financial information on pages 10 to 13 is extracted from
the Group's consolidated financial statements for the year ended 30
September 2019, which were approved by the Board of Directors on 22
January 2020.
The financial information does not constitute statutory accounts
within the meaning of sections 434(3) and 435(3) of the Companies
Act 2006 or contain sufficient information to comply with the
disclosure requirements of International Financial Reporting
Standards (IFRS) and related interpretations as adopted for use in
the European Union.
The Group's auditors, PricewaterhouseCoopers LLP, have given an
unqualified audit opinion on the consolidated financial statements
for the year ended 30 September 2019. The auditors' report included
an emphasis of matter on going concern which the auditors drew
attention without qualifying their report. The consolidated
financial statements will be filed with the Registrar of Companies,
subject to their approval by the Company's shareholders on 12 March
2020 at the Company's Annual General Meeting.
The financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs) as adopted by
the European Union, the interpretations of International Financial
Reporting Interpretations Committee (IFRIC) and the Companies Act
2006 applicable to companies reporting under IFRS. Whilst the
financial information included in this preliminary announcement has
been prepared in accordance with International Financial Reporting
Standards (IFRS), this announcement does not contain sufficient
information to comply with IFRS. The accounting policies used in
the preparation of these audited financial statements are
consistent with those used in the preparation of the audited
financial statements for the year ended 30 September 2018, as
described in those financial statements, except where newly
applicable accounting standards apply. New standards or
interpretations which came into effect for the current reporting
period, including IFRS 15 "Revenue from contracts with customers"
and IFRS 9 "Financial Instruments", did not have a material impact
on the net assets or results of the Group. The Group has elected to
adopt IFRS 16 "Leases" earlier than required, as permitted by the
IASB, and adopted the new rules retrospectively but recognised the
cumulative effect of initially applying the new standard on 1
October 2018.
Going concern
As in previous years the Group has continued to utilise its cash
resources to fund losses whilst the sales pipeline is being
established. The cash balance as at 30 September 2019 was GBP7.9m
which will provide the Group with sufficient resources to meets its
liquidity requirements for the next 18 months, based on its current
forecast of sales growth and cost efficiencies.
The Group is actively seeking new business opportunities and
progressing discussions with its existing Partners. As at year end,
the extension of current revenue contracts and the timing of new
revenue contracts remains uncertain. However, the discussions are
well progressed and are expected to result in additional new
revenue for the Group. Furthermore, the Group is also proactively
restructuring the business to align itself with the evolved sales
model which will result in a reduction of the cost base over the
next 12 months as well as operational efficiencies. The revenue
growth and reduction in the cost base will ensure that there is
sufficient liquidity for the Group's needs.
After making appropriate enquiries and considering the
assumptions and uncertainties described above, the Directors
consider that it is appropriate to adopt the going concern basis in
preparing the consolidated financial statements. Accordingly, the
financial statements do not include any adjustments which would be
required if the going concern basis of preparation was deemed to be
inappropriate. However, if the Group is unable to deliver the
proposed revenue growth and cost reductions, it would give rise to
a material uncertainty which may cast significant doubt about the
Group's ability to continue as a going concern.
2 Revenue
The information that is presented to the Chief Executive
Officer, who is considered to be the Chief Operating Decision Maker
(CODM), for the purposes of resource allocation and assessment of
performance, is based wholly on the overall activities of the
Group. Due to the current size and activities of the Group, there
is a high degree of centralisation of activities. The Directors
therefore consider that there is one operating, and hence one
reportable segment for the purposes of presenting information under
IFRS8; that of "Digital experience quality analytics services and
associated consultancy services". There are no differences between
the segment results and the Consolidated Statement of Comprehensive
Income. The assets and liabilities information presented to the
CODM is consistent with the Consolidated Statement of Financial
Position.
During the year ended 30 September 2019 the Group had two
customers who generated more than 10% of total revenue. These
customers generated 79% and 17% of revenue respectively.
During the year ended 30 September 2018 the Group had one
customer who generated more than 10% of total revenue. This
customer generated 81% of revenue.
An analysis of revenues by geographic location of customers is
set out below:
2019 2018
GBP GBP
------------------------- --------- ---------
United Kingdom 396,300 179,071
United States of America 1,537,782 897,392
------------------------- --------- ---------
1,934,082 1,076,463
------------------------- --------- ---------
3 Internally-generated intangible assets - research and
development expenditure
Expenditure on research activities is recognised as an expense
in the period in which it is incurred. Development costs incurred
on specific projects are capitalised when all the following
criteria are satisfied:
(a) completion of the intangible asset is technically feasible
so that it will be available for use or sale;
(b) the Group intends to complete the intangible asset and use or sell it;
(c) the Group has the ability to use or sell the intangible
asset and the intangible asset will generate probable future
economic benefits over and above cost;
(d) there are adequate technical, financial and other resources
to complete the development and to use or sell the intangible
asset; and
(e) the expenditure attributable to the intangible asset during
its development can be measured reliably.
The Directors believe that the criteria for capitalising
development costs have been met in respect of certain projects.
Consequently, the identifiable costs relating to these projects
have been capitalised as intangible assets. The capitalised costs
are being amortised over the estimated useful lives of those assets
and the amortisation charge for the period is included within
'Administrative expenses' in the Consolidated Statement of
Comprehensive Income. Expenses for research and development include
associated wages and salaries, material costs and directly
attributable overheads.
The estimated useful life of the development costs capitalised
is two years. Amortisation commences when the project is available
for use within the business.
Intangible assets that are subject to amortisation are reviewed
for impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. An impairment loss
is recognised for the amount by which the asset's carrying amount
exceeds its recoverable amount. The recoverable amount is the
higher of an asset's fair value less costs of disposal and value in
use. For the purpose of assessing impairment, assets are grouped at
the lowest levels for which there are largely independent cash
flows (cash-generating units). Prior impairments of non-financial
assets (other than goodwill) are reviewed for possible reversal at
each reporting date.
4 Operating Loss
2019 2018
GBP GBP
-------------------------------------------------------------------------------------- --------- ---------
Loss from operations is stated after charging/(crediting) to administrative expenses:
Depreciation on property, plant and equipment 125,136 138,422
Depreciation of right-of-use assets 111,788 -
Amortisation of intangible assets 982,808 844,898
Loss on disposal of property, plant and equipment - 522
Operating lease rentals - land and buildings - 239,380
Employee costs 5,133,281 5,477,969
Foreign exchange losses/gains (77,259) (44,052)
--------------------------------------------------------------------------------------- --------- ---------
Auditors' remuneration:
- Audit of these financial statements 43,000 33,000
--------------------------------------------------------------------------------------- --------- ---------
Total auditors' remuneration 43,000 33,000
--------------------------------------------------------------------------------------- --------- ---------
5 Tax on loss
2019 2018
GBP GBP
----------------------------------------------- --------- ---------
Current tax:
UK Corporation tax on losses of the year (296,866) (271,759)
Prior year adjustment (30,911) 104,227
Overseas taxes 12,370 97,153
Deferred tax:
Origination and reversal of timing differences (12,546) (10,881)
----------------------------------------------- --------- ---------
Total tax credit (327,953) (81,260)
----------------------------------------------- --------- ---------
Factors affecting the current tax credits
The tax assessed for the year varies from the standard UK
company rate of corporation tax as explained below:
2019 2018
GBP GBP
-------------------------------------------------------------------- ----------- -----------
Loss before tax (6,239,903) (7,293,056)
-------------------------------------------------------------------- ----------- -----------
Tax at the UK corporate tax of 19.00% (2018: 19.50%) (1,185,582) (1,422,146)
Effects of:
Expenses not deductible for tax purposes 231,498 216,657
Unrecognised deferred tax asset on losses 1,010,552 1,409,086
Tax relief in respect of exercise of share options - (52,048)
Research and development enhancement in respect of the current year (354,985) (338,643)
Prior year adjustment (30,911) 104,227
Change in rate of tax used to calculate deferred tax liability 1,475 1,607
-------------------------------------------------------------------- ----------- -----------
Tax credit for the year (327,953) (81,260)
-------------------------------------------------------------------- ----------- -----------
The Group has tax losses carried forward of approximately
GBP30,355,000 (2018: GBP25,006,000).
The Group has incurred qualifying expenditure on research and
development projects which has given rise to tax credits due from
HM Revenue and Customs. At 30 September 2019, the amount due from
HMRC was GBP296,866 (2018: GBP735,634).
Deferred tax
Deferred tax relates to the following:
2019 2018
GBP GBP
----------------------------- ------ ------
Accelerated depreciation for
tax purposes 14,317 26,863
----------------------------- ------ ------
Deferred tax liability 14,317 26,863
----------------------------- ------ ------
Reconciliation of deferred tax liabilities
2019 2018
GBP GBP
------------------------------------- -------- --------
Balance at the beginning of the
year 26,863 37,744
Credit to the Consolidated Statement
of Comprehensive Income (12,546) (10,881)
------------------------------------- -------- --------
Balance at the end of the year 14,317 26,863
------------------------------------- -------- --------
The Group has not recognised the net deferred tax asset in
respect of tax losses in the Consolidated Statement of Financial
Position due to the uncertainty in the timing of when it is
probable that future taxable profit will be available against which
the unused tax losses and unused tax credits can be utilised. The
Group has not recognised the net deferred tax asset of GBP13,469
(2018: GBP12,135) arising on the recognition of right-of-use assets
and the associated lease liability following the adoption of IFRS
16 on the basis that it is not material.
6 Loss per ordinary share
Basic loss per share is calculated by dividing the loss
attributable to the owners of the parent by the weighted average
number of ordinary shares in issue during the year. Diluted loss
per share is calculated by adjusting the weighted average number of
ordinary shares in issue during the year to assume conversion of
all dilutive potential ordinary shares.
The Company has one class of potentially dilutive ordinary
shares, being those share options granted to employees where the
exercise price is less than the average market price of the
Company's ordinary shares during the year. However, due to losses
incurred in both the current and previous financial year there is
no dilutive effect from the potential exercise of these dilutive
shares.
2019 2018
GBP GBP
------------------------------------------------------------ ----------- -----------
Total loss attributable to the equity holders of the parent (5,911,950) (7,211,796)
------------------------------------------------------------ ----------- -----------
No. No.
-------------------------------------------------------------------- ---------- ----------
Weighted average number of ordinary shares in issue during the year 45,334,606 44,845,951
-------------------------------------------------------------------- ---------- ----------
Loss per share
Basic and diluted on loss for the year (13.04)p (16.08)p
-------------------------------------------------------------------- ---------- ----------
The weighted average number of shares in issue throughout the
year is as follows:
2019 2018
--------------------------------------------------------- ---------- ----------
Issued ordinary shares at the beginning of the year 44,902,338 44,761,213
Effect of shares issued in October 2017 - 50,329
Effect of shares issued in February 2018 - 22,279
Effect of shares issued in June 2018 - 12,130
Effect of shares issued in July 2019 432,268 -
--------------------------------------------------------- ---------- ----------
Weighted average number of shares at the end of the year 45,334,606 44,845,951
--------------------------------------------------------- ---------- ----------
7 Cash and cash equivalents
2019 2018
Bank credit rating: GBP GBP
-------------------------- --------- ----------
A+ 3,754,036 2,564,438
BBB+ - 4,123,384
BBB- 4,122,598 4,088,694
-------------------------- --------- ----------
Cash and cash equivalents 7,876,634 10,776,516
-------------------------- --------- ----------
The above gives an analysis of the credit rating of the
financial institutions where cash balances are held.
All of the Group's cash and cash equivalents at 30 September
2019 and 30 September 2018 are held in instant access current
accounts or short-term deposit accounts. Balances are denominated
in UK sterling (GBP) and US dollars ($) as follows:
2019 2018
GBP GBP
--------------------------- --------- ----------
Denominated in UK sterling 7,015,209 10,359,870
Denominated in US dollars 861,425 416,646
--------------------------- --------- ----------
Cash and cash equivalents 7,876,634 10,776,516
--------------------------- --------- ----------
The Directors consider that the carrying value of cash and cash
equivalents approximates to their fair value.
8 Intangible Assets
Development
costs
GBP
----------------------------------------------- -----------
Cost
At 1 October 2017 1,954,533
Additions 1,157,864
----------------------------------------------- -----------
At 30 September 2018 3,112,397
Additions 1,196,046
----------------------------------------------- -----------
At 30 September 2019 4,308,443
----------------------------------------------- -----------
Accumulated amortisation and impairment losses
----------------------------------------------- -----------
At 1 October 2017 688,272
Charge for the year 844,898
----------------------------------------------- -----------
At 30 September 2018 1,533,170
Charge for the year 982,808
----------------------------------------------- -----------
At 30 September 2019 2,515,978
----------------------------------------------- -----------
Net book value
At 30 September 2019 1,792,465
----------------------------------------------- -----------
At 30 September 2018 1,579,227
----------------------------------------------- -----------
At 30 September 2017 1,266,261
----------------------------------------------- -----------
Amortisation and impairment charge
The amortisation of development costs is recognised within
administrative expenses in the Consolidated Statement of
Comprehensive Income.
9 Report and Accounts
The Company's Report and Accounts for the year ended 30
September 2019, together with a notice convening the Company's
annual general meeting, will be posted to shareholders in due
course.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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