TIDMACC
RNS Number : 9566T
Access Intelligence PLC
26 March 2019
26 March 2019
ACCESS INTELLIGENCE PLC
("Access Intelligence", the "Company" or the "Group")
FINAL RESULTS FOR THE YEARED 30 NOVEMBER 2018
Access Intelligence Plc (AIM: ACC), a leading supplier of
Software-as-a-Service (SaaS) solutions for communications and
reputation management, announces its final results for the year
ended 30 November 2018.
Highlights
-- Completed the acquisition of ResponseSource Ltd
("ResponseSource"), adding depth and breadth to our media and
influencer network as well as over 1,500 new customers, including
L'Oreal, Panasonic, Pizza Express, Accenture, Deloitte and KPMG, in
addition to the majority of the UK's Top 150 PR agencies.
-- The ResponseSource acquisition has also provided new media
enquiry and jobs services for journalists, in addition to
replacements for PR wire distribution services that are currently
provided by third parties.
-- Increasing momentum in new business, adding a number of
blue-chip enterprises and large public-sector bodies including
Investec, Honda, RBS, Qatar Airlines, Carlsberg, the Football
Association, E.On Energy, the Crown Prosecution Service, and Hill
& Knowlton.
-- Revenue increased by 10.2% year-on-year to GBP8.89 million.
Excluding ResponseSource, revenue increased by 7.5% to GBP8.67
million.
-- Annual Contract Value ("ACV") base increased by 45% to
GBP12.4 million (2017: GBP8.6 million). Excluding ResponseSource,
ACV increased by 7.5%.
-- Adjusted EBITDA profit of GBP0.03 million (2017: loss of GBP1.36 million).
-- At 30 November 2018, cash balance of GBP5.3 million (2017:
GBP0.67 million), of which GBP2.1 million (2017: GBPNil) related to
ResponseSource deferred consideration.
Christopher Satterthwaite, Non-Executive Chairman of Access
Intelligence, commented: "I am delighted to have joined Access
Intelligence at such an exciting time for the business. Our
fundamentals are robust, we have strong commercial momentum, and
the ResponseSource acquisition provides a platform to accelerate
the expansion of our network and enhance the Group's ability to
provide a growing client base with data-driven communications
intelligence."
For further information:
Access Intelligence Plc 0843 659 2940
Joanna Arnold (CEO)
Mark Fautley (CFO)
Allenby Capital Limited (Nominated Adviser
and Broker) 020 3328 5656
David Worlidge / Nicholas Chambers / Graham Bell
Forward looking statements
This announcement contains forward-looking statements.
These statements appear in a number of places in this
announcement and include statements regarding our intentions,
beliefs or current expectations concerning, among other things, our
results of operations, revenue, financial condition, liquidity,
prospects, growth, strategies, new products, the level of product
launches and the markets in which we operate.
Readers are cautioned that any such forward-looking statements
are not guarantees of future performance and involve risks and
uncertainties, and that actual results may differ materially from
those in the forward-looking statements as a result of various
factors.
These factors include any adverse change in regulations,
unforeseen operational or technical problems, the nature of the
competition that we will encounter, wider economic conditions
including economic downturns and changes in financial and equity
markets. We undertake no obligation publicly to update or revise
any forward-looking statements, except as may be required by
law.
Chairman's Statement
I am pleased to present my first annual report as Chairman of
Access Intelligence Plc, following my appointment in September
2018. The Group is at a transformational stage following a series
of successful acquisitions that have accelerated product
development to produce the leading reputation management platform
for PR, public affairs and influencer marketing, under the Vuelio
brand. The period of investment in Vuelio has created a
sophisticated, intuitive platform that is delivering a step change
in the relationships communications professionals build with
journalists, social media influencers, government and other
industry stakeholders and transforming the effectiveness of
reputation management activity.
Access Intelligence, with the Vuelio brand, is an exciting
business that is scaling based on a sound revenue model and size of
opportunity in the marketplace. Vuelio is a software as a service
(SaaS) business where revenue is underpinned by a growing,
recurring revenue base of subscriptions on annual or multi-year
contracts. In 2018, approximately 99% of revenue was generated by
customers on SaaS contracts, billed predominantly annually in
advance. The strength of this model positions the business to
capitalise on the pace of change in an increasingly complex media,
digital and social media landscape. It is a world where
organisations face greater reputational risk than ever before
alongside an ever-increasing challenge to build the relationships
needed with media, social media and government influencers that
deliver for their customers. This climate has accelerated demand
for intelligence and workflow tools that support communications
professionals in monitoring, measuring, analysing, engaging and
targeting influencers using a single, holistic platform. Vuelio
offers the depth of insight and tools that communications
professionals need to stay ahead of organisational requirements and
market trends with an outstanding platform that combines
reputational intelligence with intuitive and flexible workflow
capabilities for real-time influencer targeting.
Group performance
The 2018 results demonstrate the progress achieved by the Group
with its Vuelio platform. In 2018, the Group capitalised on market
momentum to gain considerable traction with new enterprise clients
including Investec, Honda, RBS, Carlsberg and the FA, as well as
global communications agencies such as Hill & Knowlton.
Excluding the impact of acquisitions, revenue from continuing
operations increased by 7.6% to GBP8.67 million, whilst EBITDA loss
decreased to GBP0.46 million compared with GBP2.47 million in 2017.
Adjusted EBITDA profit reached GBP0.05 million, compared to an
adjusted loss of GBP1.36 million in 2017.
Revenue growth and reduction in EBITDA loss accompanied the
acquisition of ResponseSource Ltd ("ResponseSource") in Q4 2018,
reflecting the commitment of the Access Intelligence leadership
team to execute strategic and operational priorities
simultaneously. The acquisition of ResponseSource added depth and
breadth to our media and influencer network as well as over 1,500
new customers, including household brand names including L'Oreal,
Panasonic and Pizza Express; accounting and consulting firms
Deloitte, KPMG and Accenture, and the majority of the UK's top 150
PR agencies. It is an exceptional addition to the Group, producing
a combined customer base of more than 3,000 organisations and
opening up significant new revenue opportunities, including
increasing average spend by customer as point solution clients are
upsold to the integrated Vuelio platform. For full year 2018,
ResponseSource revenues stood at GBP3.4 million, and contributed to
Group revenue for the final month of last year.
Growth strategy
The Access Intelligence leadership team is confident of the
ongoing growth opportunity into 2019 and beyond. Sustained
investment in product development, including the integration of
ResponseSource will result in enhancements that are expected to
deliver improved retention, greater cost synergies and margin
improvements. By bringing together the functionality of
ResponseSource and Vuelio, it will unlock value inherent in the
vast store of media data built up across both organisations. The
leadership team expect these enhancements to positively impact
revenue from the middle of 2019.
Alongside direct product improvements, there is continued
investment in the Access Intelligence stakeholder network. Global
media brands, ranging from UK national newspapers to leading
consumer and trade magazines, use ResponseSource and, in 2018, a
number of important new partnerships were established with
organisations ranging from providers of UK political data to
international resellers. This increases the strength and reach of
the core product offering, while expanding the value of Vuelio
platform to the communications and marketing industries.
Board changes
On behalf of the Board, I would like to thank my predecessor,
Michael Jackson, for his significant contribution to the Group as
Chairman. We look forward to his ongoing advice and insight in his
new role as a Non-Executive Director.
People first
The growth and the potential to accelerate into 2019 and beyond
is only possible because of the strength of the Access Intelligence
team. Our investment in people reflects our commitment to ensuring
we create a workplace for the most talented in the industry.
I would like to take this opportunity to thank our fantastic
team for their phenomenal work ethic, commitment and sense of
adventure.
This is a very exciting time to join Access Intelligence and, on
behalf of the board, I would like to thank you for your continued
support.
We all look forward to working with you over the coming years as
we expand a business that has the potential to transform the
marketplace for the good of our customers and our network
alike.
C Satterthwaite
Chairman
Strategic Report (extract)
Results
During the 2018 financial year, the Group has continued to
deliver organic growth and has returned to adjusted EBITDA
profitability, whilst completing the acquisition of ResponseSource
to add significant scale.
One of the key financial metrics monitored by the board is the
change in customer Annual Contract Value ('ACV') base year-on-year.
This metric reflects the annual value of new business won, plus
upsells into our existing customer base, less any customer losses.
It is an important metric for the Group as it is a leading
indicator of future revenue. During 2018, the Group's ACV base grew
organically by GBP0.6 million (7%) to GBP9.1 million. Including the
impact of the ResponseSource acquisition, the Group's ACV base
stood at GBP12.4 million at 30 November 2018.
Revenue from continuing operations increased by 10% year-on-year
to GBP8,888,000 (2017: GBP8,063,000). Recurring revenue comprised
99% of the total (2017: 99%), with sales teams incentivised to
focus on high contribution SaaS products. Vuelio revenue grew by
7.5% to GBP8,666,000 whilst ResponseSource revenue for the
part-month post acquisition was GBP222,000.
The Group's continuing operations delivered an adjusted profit
before interest, tax, depreciation and amortisation (EBITDA) for
the year of GBP34,000 (2017: loss of GBP1,364,000). This figure
being adjusted for non-recurring items of GBP473,000 (2017:
GBP854,000) and a share of loss of associate of GBP222,000 (2017:
GBP254,000), the EBITDA loss from continuing operations for the
year was GBP661,000 (2017: loss of GBP2,472,000). Adjusted EBITDA
from continuing operations excluding ResponseSource was GBP35,000
whilst EBITDA from continuing operations excluding ResponseSource
was a loss of GBP477,000.
Operating loss from continuing operations was GBP1,557,000
(2017: GBP3,450,000). In arriving at the operating loss, the Group
has incurred GBP526,000 (2017: GBP1,595,000) in research and
development expenditure, GBP20,000 (2017: GBP107,000) in
restructuring costs and charged GBP896,000 (2017: GBP978,000) in
depreciation and amortisation.
The Group made a loss for the year from discontinued operations
of GBP155,000 (2017: profit of GBP558,000). Further information
relating to discontinued operations is provided on page 27 of the
Strategic Report and within note 6 to the consolidated financial
statements.
2019 will see continued focus on growth in revenue and gross
margin, whilst the Group further develops the Vuelio product.
Loss per share
The basic loss per share from continuing operations was 2.98p
(2017 restated: 10.15p). Basic loss per share from discontinued
operations was 0.34p (2017 restated: earnings of 1.70p). 2017
earnings per share figures have been restated to reflect the
one-for-ten share consolidation completed during 2018.
Cash
In May 2018, the Group raised GBP2,800,000 before expenses for
investment in the Vuelio platform by the issue of 70,000,000
Ordinary 0.5p shares at a price of 4p per share. These shares were
subsequently subject to the one-for-ten share consolidation. In
November 2018 and after the share consolidation, a further
GBP6,800,000 before expenses was raised to fund the acquisition of
ResponseSource Ltd by the issue of 14,320,000 Ordinary 5p shares at
a price of 47.5p per share. Cash at the year-end stood at
GBP5,300,000 (2017: GBP673,000) whilst net cash, calculated as cash
held less loan notes and other loans, was GBP4,223,000 (2017: net
debt of GBP2,700,000).
Key performance indicators
Management accounts are prepared on a monthly basis which
provide performance indicators covering revenue, gross margins,
EBITDA, result before tax, result after tax, cash balances and
recurring revenue. The key performance indicators for the year
are:
GBP'000 2018 2017
Continuing Operations
----------------------- ------- -------
Revenue 8,888 8,063
Gross margin (%) 65% 65%
Adjusted EBITDA -
profit/(loss) 34 (1,364)
EBITDA - loss (661) (2,472)
Loss before taxation (1,717) (3,793)
Loss after taxation (1,355) (3,335)
Cash balances 5,300 673
Recurring revenue 8,801 8,020
These performance indicators are measured against both an
approved budget and the previous year's actual results. Further
analysis of the Group's performance is provided earlier in this
Strategic Report.
Each month the Board assesses the performance of the Group based
on key performance indicators. These are used in conjunction with
the controls described in the corporate governance statement and
relate to a wide variety of aspects of the business, including: new
business and renewal sales performance; marketing, development and
research activity; year to date financial performance,
profitability forecasting and cash flow forecasting.
Dividend
As a result of the significant investment the Company has made
in the strategic product innovation and sales development, the
directors do not propose to pay a dividend for 2018 (2017:
GBPNil).
Consolidated Statement of Comprehensive Income
Year ended 30 November 2018
Note 2018 2017
GBP'000 GBP'000
--------------------------------------------- ----- ----------------- -----------------
Revenue 3 8,888 8,063
Cost of sales (3,083) (2,823)
Gross profit 5,805 5,240
Recurring administrative expenses (5,771) (6,604)
Adjusted EBITDA 34 (1,364)
Non-recurring administrative expenses 5 (473) (854)
Share of loss of associate 15 (222) (254)
Share based payments 25 - -
EBITDA (661) (2,472)
Depreciation of tangible fixed assets 16 (78) (71)
Amortisation of intangible assets 14 (818) (907)
Operating loss 5 (1,557) (3,450)
Financial expense 10 (160) (343)
Loss before taxation (1,717) (3,793)
Taxation credit 11 362 458
Loss for the year from continuing operations (1,355) (3,335)
(Loss)/profit for the year from discontinued
operations 6 (155) 558
Loss for the year (1,510) (2,777)
Other comprehensive income - -
Total comprehensive income for the
period attributable to the owners of
the Parent Company (1,510) (2,777)
Earnings per share Continuing Continuing
Operations Operations
2018 2017
Restated
--------------------------------------------- ----- ----------------- -----------------
Basic loss per share 13 (2.98)p (10.15)p
Diluted loss per share 13 (2.98)p (10.15)p
Continuing Continuing
and Discontinued and Discontinued
Operations Operations
2018 2017
Restated
Basic loss per share 13 (3.32)p (8.45)p
Diluted loss per share 13 (3.32)p (8.45)p
*2017 Earnings per share information has been restated to
reflect the one-for-ten share consolidation completed in 2018.
Consolidated Statement of Financial Position
At 30 November 2018
Note 2018 2017
GBP'000 GBP'000
------------------------------------------------ ---- --------- ---------
Non-current assets
Intangible assets 14 14,033 6,231
Investment in associate 15 318 280
Property, plant and equipment 16 167 146
Deferred tax assets 23 37 206
Total non-current assets 14,555 6,863
Current assets
Trade and other receivables 17 3,640 2,968
Current tax receivables 362 458
Cash and cash equivalents 26 5,300 673
Assets classified as held for sale 7 - 270
Total current assets 9,302 4,369
Total assets 23,857 11,232
Current liabilities
Trade and other payables 19 3,913 1,558
Accruals 1,006 1,149
Provisions 27 75 -
Deferred revenue 20 6,354 4,137
Interest bearing loans and borrowings 18 210 2,489
Liabilities classified as held for sale 7 - 260
Total current liabilities 11,558 9,593
Non-current liabilities
Provisions 27 96 226
Interest bearing loans and borrowings 18 867 884
Deferred tax liabilities 23 609 206
Total non-current liabilities 1,572 1,316
Total liabilities 13,130 10,909
Net assets 10,727 323
Equity
Share capital 24 3,189 1,743
Treasury shares (148) (148)
Share premium account 13,075 2,352
Capital redemption reserve 191 191
Share option reserve 348 348
Equity reserve - 255
Retained earnings (5,928) (4,418)
Total equity attributable to the equity holders
of the Parent Company 10,727 323
Consolidated Statement of Changes in Equity
Year ended 30 November 2018
Share Treasury Share Capital Share Equity Retained Total
capital shares premium redemption option reserve earnings GBP'000
GBP'000 GBP'000 account reserve reserve GBP'000 GBP'000
GBP'000 GBP'000 GBP'000
--------------------- -------- -------- -------- ----------- -------- -------- --------- --------
Group
At 1 December
2016 1,580 (148) 1,458 191 377 255 (1,670) 2,043
Total comprehensive
loss for the
year - - - - - - (2,777) (2,777)
Issue of share
capital 163 - 894 - - - - 1,057
Share-based payments - - - - (29) - 29 -
At 1 December
2017 1,743 (148) 2,352 191 348 255 (4,418) 323
Total comprehensive
loss for the
year - - - - - - (1,510) (1,510)
Conversion of
convertible loan
notes 340 - 2,193 - - (255) - 2,278
Issue of share
capital 1,106 - 8,530 - - - - 9,636
At 30 November
2018 3,189 (148) 13,075 191 348 - (5,928) 10,727
Share capital and share premium account
When shares are issued, the nominal value of the shares is
credited to the share capital reserve. Any premium paid above the
nominal value is taken to the share premium account. Access
Intelligence plc shares have a nominal value of 5p per share.
Directly attributable transaction costs associated with the issue
of equity investments are accounted for as a reduction from the
share premium account.
Treasury shares
The returned shares are now held in treasury and attract no
voting rights. The return of shares has been accounted for in
accordance with IAS 32 'Financial instruments: Presentation' such
that the instruments have been deducted from equity with no gain or
loss recognised in profit or loss.
Share option reserve
This reserve arises as a result of amounts being recognised in
the income statement relating to share-based payment transactions
granted under the Group's share option scheme. The reserve will
fall as share options vest and are exercised over the life of the
options.
Capital redemption reserve
This reserve arises as a result of keeping with the doctrine of
capital maintenance when the Company purchases and redeems its own
shares. The amounts transferred into/out from this reserve from a
purchase/redemption is equal to the amount by which share capital
has been reduced/increased, when the purchase/redemption has been
financed wholly out of distributable profits, and is the amount by
which the nominal value exceeds the proceeds of any new issue of
share capital, when the purchase/redemption has been financed
partly out of distributable profits.
Equity reserve
The equity reserve arises as a result of the equity component
that has been recognised on the convertible loan notes that have
been issued by the Group (see note 18: 'Interest bearing loans and
borrowings'). The reserve is determined by deducting the amount of
the liability component from the fair value of the convertible loan
notes as a whole, net of income tax effects and the relative
proportion of the directly attributable transaction costs
associated with the issue of the compound instruments.
Retained earnings
The retained earnings reserve records the accumulated profits
and losses of the Group since inception of the business. Where
subsidiary undertakings are acquired, only profits and losses
arising from the date of acquisition are included.
Consolidated Statement of Cash Flow
Year ended 30 November 2018
Note 2018 2017
GBP'000 GBP'000
--------------------------------------------------- ----- -------- --------
Loss for the year (1,510) (2,777)
Adjusted for:
Taxation 11 (362) (458)
Depreciation and amortisation 14,16 896 978
Financial expense 10 160 343
Share of loss of associate 222 254
Profit on sale of AIControlPoint Limited 6 - (592)
Loss on sale of A.I. Talent Limited 6 64 -
Operating cash outflow before changes in
working capital (530) (2,252)
Decrease/(Increase) in trade and other receivables 174 (576)
Increase in trade and other payables 2,414 731
Net cash inflow/(outflow) from operations
before taxation 2,058 (2,097)
Taxation received 458 436
Net cash inflow/(outflow) from operations 2,516 (1,661)
Cash flows from investing
Acquisition of property, plant and equipment 16 (78) (118)
Acquisition of software licenses 14 (36) (79)
Cost of software development 14 (1,344) -
Disposal of AIControlPoint (net of expenses) 6 - 615
Disposal of A.I. Talent Limited (net of expenses) 6 (5) -
less: cash and cash equivalents disposed
of 6 (142) -
Move to held for sale of A.I. Talent Limited - (5)
Investment in associate 15 (260) -
Acquisition of ResponseSource Ltd 8 (5,000) -
Net cash (outflow)/inflow from investing (6,865) 413
Cash flows from financing activities
Interest paid (160) (298)
Issue of shares 24 9,136 1,017
Exercise of share options 24 - 40
Net cash inflow from financing 8,976 759
Net increase/(decrease) in cash and cash
equivalents 26 4,627 (489)
Opening cash and cash equivalents 26 673 1,162
Closing cash and cash equivalents 26 5,300 673
Notes to the Consolidated Financial Statements
1. General Information
Access Intelligence Plc ('the Company') and its subsidiaries
(together the 'Group') provide software for companies looking to
build, maintain and protect their reputation through communications
management.
The financial information set out in the announcement does not
constitute the Company's statutory accounts for the years ended 30
November 2018 or 2017. The financial information for the year
November 30 June 2017 is derived from the statutory accounts for
that year, which were prepared under IFRSs, and which have been
delivered to the Registrar of Companies. The financial information
for the year ended 30 November 2018 is derived from the audited
statutory accounts for the year ended 30 November 2018 on which the
auditors have given an unqualified report, that did not contain a
statement under section 498(2) or 498(3) of the Companies Act
2006.
The Company is a public limited company under the Companies Act
2006 and is listed on the AIM market of the London Stock Exchange
and is incorporated and domiciled in the UK. The address of the
Company's registered office is provided in the Directors and
Advisers page of the Annual Report.
2. Accounting policies
The principal accounting policies applied in the preparation of
these financial statements are set out below.
These policies have been applied consistently to all the years
presented, unless otherwise stated.
Basis of preparation
These financial statements have been prepared in accordance with
International Financial Reporting Standards ('IFRS's') as adopted
by the European Union, and with those parts of the Companies Acts
applicable to companies reporting under IFRS. The consolidated
financial statements have been prepared under the historical cost
convention and on a going concern basis.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Group's accounting policies.
Going concern
The Strategic Report and opening pages to the annual report
discuss Access Intelligence's business activities and headline
results, together with the financial statements and notes which
detail the results for the year, net current liability position and
cash flows for the year ended 30 November 2018. The Board has
further considered 12 month cash flow forecasts from the date of
signing the accounts and consider the assumptions used therein to
be reasonable and reflective of the long-term 'software as a
service' contracts and contracted recurring revenue.
The Board has concluded that they have a reasonable expectation
that the Company and the Group have adequate resources to continue
in operational existence for the foreseeable future. For this
reason, they continue to adopt the going concern basis in preparing
the financial statements.
Significant judgements
In addition to going concern, the areas involving a high degree
of judgement or complexity relate to:
the recognition of deferred tax assets in relation to losses
(refer to note 23); and
the recoverability of trade receivables (refer to note 17).
Significant estimates
Further to the significant judgements above the areas where key
assumptions and estimates have been made by management relate
to:
the impairment testing of goodwill and capitalised development
costs and other non-current assets. A full impairment review has
been performed on a "value in use" basis, which requires estimation
of future net operating cashflows, the time period over which they
occur, an appropriate discount rate and an appropriate growth rate.
Further details, including sensitivity analysis are given in note
14 and the accounting policy is set out in note 2; and
the charge for share-based payment transactions which include
assumptions on future share prices movements, expected future
dividends, and risk-free discount rates (refer to note 25).
New standards and interpretations
The adoption of the following mentioned amendments in the
current year have not had a material impact on the
Group's/Company's financial statements.
Amendment to IAS 7 Statement of Cash Flows: Disclosure
initiative
Amendment to IAS 12 Income Taxes: Recognition of deferred tax
assets for unrealised losses
Annual Improvements to IFRSs (2014 - 2016): Clarification of the
scope of IFRS 12 Disclosure of Interests in Other Entities
New standards, amendments and interpretations issued but not yet
effective
Standards issued but not yet effective up to the date of
issuance of the Company's financial statements are listed below.
The listing is of standards and interpretations issued, which the
Company reasonably expects to be applicable at a future date. The
Company does not intend to adopt those standards until they become
effective.
The group has not yet adopted IFRS 9 'Financial Instruments'
(Issued July 2014), IFRS 15 'Revenue from Contracts with Customers'
(Issued May 2014), Clarifications to IFRS 15 'Revenue from
Contracts with Customers' (Issued April 2016) and IFRS 16 'Leases'
(Issued January 2016). The directors have undertaken an assessment
of IFRS 9 and IFRS 15, and do not consider the impact of these to
be material to the Group. The directors are undertaking a
preliminary assessment of the implementation of IFRS 16, however a
more thorough review of the impact of the standards will be
performed ahead of the next financial reporting period. IRFS 9 and
IFRS 15 are effective for accounting periods beginning on or after
1 January 2018. IFRS 16 is effective for accounting periods
beginning on or after 1 January 2019.
Effective for November 2019 financial statements
Amendment to IFRS 2 Share-based Payment: Classification and
measurement of share-based payment transactions
IFRS 9 Financial Instruments
IFRS 15 Revenue from Contracts with Customers
Clarifications to IFRS 15 Revenue from Contracts with
Customers
Annual Improvements to IFRSs (2014 - 2016): IFRS 1 First-time
Adoption of International Financial Reporting Standards and IAS 28
Investments in Associates and Joint Ventures
IFRIC 22 Foreign Currency Transactions and Advance
Consideration
Effective for November 2020 financial statements
Amendments to IAS 28 Investments in Associates and Joint
Ventures: Long-term interests in Associates and Joint Ventures
Amendments to IFRS 9 Financial Instruments: Prepayment features
with negative compensation
IFRS 16 Leases
IFRIC 23 Uncertainty over Income Tax Treatments
Basis of consolidation
The Group financial statements comprise the financial statements
of the Company and all of its subsidiary undertakings made up to
the financial year end. Subsidiaries are entities that are
controlled by the Group. Control exists when the Group has the
power, directly or indirectly, to govern the financial and
operating policies of an entity so as to obtain benefits from its
activities. In assessing control, potential voting rights that are
currently exercisable or convertible are taken into account. The
financial statements of subsidiaries are included in the
consolidated financial statements from the date that control
commences until the date that control ceases.
The results of subsidiary undertakings acquired or disposed of
in the year are included in the Group statement of comprehensive
income from the effective date of acquisition or to the effective
date of disposal. Accounting policies are consistently applied
throughout the Group. Inter-company balances and transactions have
been eliminated. Material profits from inter-company sales, to the
extent that they are not yet realised outside the Group, have also
been eliminated.
Associates are all entities over which the Group has significant
influence but not control or joint control. This is generally the
case where the Group holds between 20% and 50% of the voting
rights. Investments in associates are accounted for using the
equity method of accounting after initially being recognised at
cost.
Under the equity method of accounting, the Group's investments
in associates are initially recognised at cost and adjusted
thereafter to recognise the Group's share of the post-acquisition
profits or losses of the investee in profit or loss, and the
Group's share of movements in other comprehensive income of the
investee in other comprehensive income. Dividends received or
receivable from associates are recognised as a reduction in the
carrying amount of the investment.
When the Group's share of losses in an equity-accounted
investment equals or exceeds its interest in the entity, including
any other unsecured long-term receivables, the Group does not
recognise further losses unless it has incurred obligations or made
payments on behalf of the other entity.
Unrealised gains on transactions between the Group and its
associates are eliminated to the extent of the Group's interest in
these entities. Unrealised losses are also eliminated unless the
transaction provides evidence of an impairment of the asset
transferred. Accounting policies of equity accounted investees have
been changed where necessary to ensure consistency with the
policies adopted by the Group.
Disposal groups held for sale
The Group classifies assets and liabilities as held for sale
once they are available for sale in their present condition and the
sale satisfies the criteria to be highly probable. The held for
sale classification applies to a group of assets and liabilities
directly associated with those assets, to be disposed of in a
single transaction.
Disposal groups classified as held for sale are carried at the
lower of the carrying amount and fair value less costs to sell.
Assets that form part of disposal groups classified as held for
sale are not depreciated or amortised.
Discontinued operations
The Group classifies an operation as discontinued from the
earlier of the date the operation meets the criteria to be
classified as held for sale or the date the Group disposes of the
operation.
Results of discontinued operations are shown separately in the
statement of comprehensive income. Prior periods are re-presented
so that the presentation relates to all periods for operations that
have been discontinued by the end of the current reporting
period.
Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and impairment losses.
Depreciation is charged to the income statement on a
straight-line basis over the estimated useful lives of fixtures,
fittings and equipment taking into account any estimated residual
value. The estimated useful lives are as follows:
Fixtures, fittings and equipment - 3 - 5 years
Leasehold improvements - over lease term
Intangible assets - Goodwill
Goodwill represents amounts arising on acquisition of
subsidiaries. Goodwill represents the difference between the cost
of the acquisition and the fair value of the net identifiable
assets and contingent liabilities acquired. Identifiable intangible
assets are those which can be sold separately or which arise from
legal rights regardless of whether those rights are separable.
Goodwill on acquisition of subsidiaries is included in
intangible assets. Goodwill is allocated to cash generating units
and is not amortised, but is tested annually for impairment.
Intangible assets - Research and development expenditure
Research costs are expensed as incurred. Development
expenditures on an individual project are recognised as an
intangible asset when the Group can demonstrate:
the technical feasibility of completing the intangible asset so
that the asset will be available for use or sale
its intention to complete and its ability and intention to use
or sell the asset;
how the asset will generate future economic benefits;
the availability of resources to complete the asset; and
the ability to measure reliably the expenditure during
development.
Following initial recognition of the development expenditure as
an asset, the asset is carried at cost less any accumulated
amortisation and accumulated impairment losses.
Amortisation of the asset begins from the date development is
complete and the asset is available for use, which may be before
first sale. It is amortised over the period of expected future
benefit. Amortisation is recorded in administration expenses.
During the period of development, the asset is tested for
impairment annually.
In 2018 there were five (2017: Nil) capitalised development
projects. The prior year projects both related to the development
of new functionality within the Vuelio platform. The directors
assessed the capitalisation criteria of its internally generated
material intangible assets through review of the output of the work
performed, the specific costs proposed for capitalisation, the
likely completion of the work and the likely future benefits to be
generated from the work. The directors assess the useful life of
the completed capitalised development projects to be five years
from the date of the first sale or when benefits begin to be
realised and amortisation will begin at that time.
Intangible assets - Database
On acquisition in prior years, a fair value was calculated in
respect of the PR and media contacts database acquired. Subsequent
expenditure on maintaining this database is expensed as incurred.
Amortisation is calculated on a straight-line basis over the
estimated useful economic life of the database. It is the
directors' view that this useful economic life is three years based
on the level of ongoing investment required to maintain the quality
of data in the database.
Intangible assets - Customer relationships
On acquisition of businesses, a fair value was calculated in
respect of the customer relationships acquired. Amortisation is
calculated on a straight-line basis over the estimated useful
economic life of the customer relationships. It is the directors'
view that this useful economic life is up to nine years, based on
known and forecast customer retention rates.
Intangible assets - Brand value
Acquired brands, which are controlled through custody or legal
rights and could be sold separately from the rest of the Group's
businesses, are capitalised where fair value can be reliably
measured. The Group applies a 20-year straight line amortisation
policy on all brand values. The conclusion is that a realistic life
for the brand equity would be a 'generation' or 20 years. Where
there is an indication of impairment, the directors will perform an
impairment review by analysing the future discounted cash flows
over the remaining life of the brand asset to determine whether
impairment is required.
Software licences
Software licences include software that is not integral to a
related item of hardware. These items are stated at cost less
accumulated amortisation and any impairment. Amortisation is
calculated on a straight line basis over the estimated useful
economic life. Although perpetual licences are maintained under
support and maintenance agreements, a useful economic life of five
years has been determined.
Impairment of non-financial assets
The carrying amounts of the Group's assets other than deferred
tax assets, are reviewed at each reporting date to determine
whether there is any indication of impairment. If any such
indication exists, the asset's recoverable amount is estimated
based upon the value in use.
For goodwill, assets that have an indefinite useful life and
intangible assets that are not yet available for use, the
recoverable amount is estimated at each reporting date. The
recoverable amount is the higher of the fair value less costs to
sell and value in use of the cash generating unit containing the
goodwill or intangible assets with an indefinite useful life.
An impairment loss is recognised whenever the carrying amount of
an asset or its cash-generating unit exceeds its recoverable
amount. Impairment losses are recognised in the profit or loss.
Impairment losses recognised in respect of cash-generating units
are allocated first to the carrying amount of the goodwill
allocated to that cash-generating unit and then to the carrying
amount of the other assets in the unit on a pro rata basis, applied
in priority to non-current assets ahead of more liquid items. A
cash-generating unit is the smallest identifiable group of assets
that generates cash inflows that are largely independent of the
cash inflows from other assets or groups of assets.
Reversals of impairment
An impairment loss in respect of goodwill is not reversed. In
respect of other assets, an impairment loss is reversed when there
is an indication that the impairment loss may no longer exist and
there has been a change in the estimates used to determine the
recoverable amount. An impairment loss is reversed only to the
extent that the asset's carrying amount does not exceed the
carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been
recognised.
Financial instruments
Financial instruments comprise trade and other receivables, cash
and cash equivalents, loans and borrowings, trade and other
payables and other financial liabilities.
Financial instruments are recognised initially at fair value
plus, for instruments not at fair value through profit or loss, any
directly attributable transaction costs, except as described below.
Subsequent to initial recognition financial instruments are
measured as described below.
A financial instrument is recognised if the Group becomes a
party to the contractual provisions of the instrument. Financial
assets are derecognised if the Group's contractual rights to the
cash flows from the financial assets expire or if the Group
transfers the financial asset to another party without retaining
control of substantially all risks and rewards of the asset.
Financial liabilities are derecognised if the Group's obligations
specified in the contract expire or are discharged or are
cancelled.
Trade and other receivables are recorded initially at fair value
and subsequently measured at amortised cost, using the effective
interest method, less provision for impairment. Specific impairment
provisions are made when management consider the debtor
irrecoverable and these are charged to the income statement. Trade
and other payables are recorded initially at fair value and
subsequently measured at amortised cost, using the effective
interest method.
Cash and cash equivalents include cash in hand, deposits held at
call with banks, and other short term highly liquid
investments.
Loans and borrowings and other financial liabilities, which
include the convertible redeemable loan notes, are initially
measured at fair value, net of transaction costs, and are
subsequently measured at amortised cost using the effective
interest rate method. Interest expense is measured on an effective
yield basis and recognised in the income statement over the
relevant period.
Issue costs are apportioned between the liability and equity
components of the convertible loan notes based upon their relative
carrying amounts at the date of issue. The portion relating to the
equity component is recognised in equity. Finance payments
associated with financial liabilities are dealt with as part of
finance expenses.
The Group may enter into derivative financial instruments for
risk management purposes. Derivatives are initially recognised at
fair value on the date the derivative contract is entered into and
are subsequently re-measured at their fair value with gains and
losses recognised through profit or loss. The Group does not hold
or issue derivative financial instruments for trading purposes.
Convertible loan notes
The component parts of compound instruments issued by the Group
are classified separately as financial liabilities and equity in
accordance with the substance of the contractual arrangement. At
the date of issue, in the case of a convertible loan note
denominated in the functional currency of the issuer that may be
converted into a fixed number of equity shares, the fair value of
the liability component is estimated at the present value of the
stream of future cash flows (including both coupon payments and
redemption) discounted at the market rate of interest that would
have been applied to an instrument of comparable credit quality
with substantially the same cash flows, on the same terms, but
without the conversion option. This amount is recorded as a
liability on an amortised cost basis using the effective interest
method until extinguished upon conversion or at the instrument's
maturity date. Non-substantial modifications are accounted for by
amortising any adjustment to the carrying amount of the liability
over the remaining term of the modified liability.
The equity component is determined by deducting the amount of
the liability component and deferred tax liability from the fair
value of the compound instrument as a whole. This is recognised and
included in equity, and is not subsequently re-measured.
Provisions
Provisions are recognised when there is a present obligation
(legal or constructive) as a result of a past event, it is probable
that the obligation will be required to be settled, and a reliable
estimate can be made of the amount of the obligation. The amount
recognised as a provision is the best estimate of the consideration
required to settle the present obligation at the end of the
reporting period, taking into account the risks and uncertainties
surrounding the obligation. Provisions are discounted when the time
value of money is material.
Current and deferred income tax
The tax expense for the year comprises current and deferred tax.
Tax is recognised in the income statement except to the extent that
it relates to items recognised directly in equity, in which case it
is recognised in equity.
Current tax is the expected tax payable on the taxable income
for the year, using tax rates enacted or substantively enacted at
the reporting date, and any adjustment to tax payable in respect of
previous years.
Deferred tax is provided on temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. The following
temporary differences are not provided for: the initial recognition
of goodwill; the initial recognition of assets or liabilities that
affect neither accounting nor taxable profit other than in a
business combination, and differences relating to investments in
subsidiaries to the extent that they will probably not reverse in
the foreseeable future. The amount of deferred tax provided is
based on the expected manner of realisation or settlement of the
carrying amount of assets and liabilities, using tax rates enacted
or substantively enacted at the reporting date.
The recognition of deferred tax assets is based upon whether it
is more likely than not that sufficient and suitable taxable
profits will be available in the future, against which the reversal
of temporary differences can be deducted. Recognition, therefore,
involves judgement regarding the future financial performance of
the particular legal entity or tax group in which the deferred tax
asset has been recognised.
Historical differences between forecast and actual taxable
profits have not resulted in material adjustments to the
recognition of deferred tax assets.
Share-based payments
The Group issues equity-settled share-based payments to certain
employees. These equity-settled share-based payments are measured
at fair-value at the date of the grant. Where material, the fair
value as determined at the grant date is expensed on a
straight-line basis over the vesting period, based on the Group's
estimate of shares that will eventually vest.
Fair value is measured by use of the Black-Scholes method. The
charges to profit or loss are recognised in the subsidiary
employing the individual concerned.
Employee benefits
Individual subsidiaries of the Group operate defined
contribution pension schemes for their employees. The assets of the
schemes are not managed by the Group and are held separately from
those of the Group. The annual contributions payable are charged to
the income statement when they fall due for payment.
Revenue
Revenue represents the amounts derived from the provision of
goods and services, stated net of Value Added Tax. The methodology
applied to income recognition is dependent upon the goods or
services being supplied.
In respect of income relating to annual or multi-year service
contracts and/or hosted services which are invoiced in advance, it
is the Group's policy to recognise revenue on a straight line basis
over the period of the contract. The full value of each sale is
credited to deferred revenue when invoiced to be released to the
statement of comprehensive income in equal instalments over the
contract period.
During the course of a customer's relationship with the Group,
their system may be upgraded. These upgrades can be separated into
two distinct types:
Specific upgrades, i.e. moving from an old legacy system to one
of the Group's latest products. This would require the migration of
the customer's data from the old system and the set-up of their new
system; and
Non-specific upgrades, i.e. enhancements to customers' systems
as a result of internal development effort to improve the stability
or functionality of the platform for all customers.
Customers do not have a contractual right to non-specific
upgrades and therefore, the provision of these non-specific
upgrades are accounted for as part of the related service contract
as explained above.
For specific upgrades, customers are required to purchase these
separately through signing a new contract which sets out the
one-off professional service fee for the upgrade to cover migration
costs and any increase in their annual subscription fee. The
provision of this specific upgrade is therefore, accounted for as a
separate service contract as explained above.
The Group does not have any further obligations that it would
have to provide for under the subscription arrangements.
Operating lease payments
Payments made under operating leases are recognised in the
income statement on a straight-line basis over the term of the
lease. Lease incentives received are recognised in the income
statement as an integral part of the total lease expense.
Finance income and finance expenses
Finance income and finance expenses are recognised in profit or
loss as they accrue, using the effective interest method. Finance
income relates to interest income on the Group's bank account
balances.
Interest payable comprises interest payable or finance charges
on loans classified as liabilities.
In relation to interest relating to the convertible redeemable
loan notes, the charge to profit or loss is an 'effective interest
charge' over the period as opposed to the actual interest paid or
payable. The effective interest charge is higher than the actual
interest paid.
Dividend distributions
Dividend distributions are recognised as transactions with
owners on payment when liability to pay is established.
Foreign exchange
The individual financial statements of each Group company are
presented in the currency of the primary economic environment in
which it operates (its functional currency). The results and
financial position of each Group company are expressed in pounds
sterling, which is the functional currency of the Company, and the
presentation currency for the consolidated financial
statements.
In preparing the financial statements of the individual
companies, transactions in currencies other than the entity's
functional currency (foreign currencies) are recorded at the rates
of exchange prevailing on the dates of the transactions. At each
reporting date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates
prevailing at that date. Non-monetary items that are measured in
terms of historical cost in a foreign currency are not
retranslated.
Exchange differences arising on the settlement of monetary
items, and on the retranslation of monetary items, are included in
profit or loss for the year.
3. Revenue
The Group's revenue is primarily derived from the rendering of
services with the value of sales of goods or delivery of
infrastructure not being significant in relation to total Group
revenue.
The Group's revenue was generated from the following
territories:
Continuing Continuing
Operations Operations
2018 2017
GBP'000 GBP'000
------------------ ----------- -----------
United Kingdom 8,189 7,296
European Union 453 448
Rest of the world 246 319
8,888 8,063
4. Segment reporting
Segment information is presented in respect of the Group's
operating segments which are based upon the Group's management and
internal business reporting.
Inter-segment pricing is determined on an arm's length
basis.
Segment results, assets and liabilities include items directly
attributable to a segment as well as those that can be allocated on
a reasonable basis. Unallocated items comprise mainly head office
expenses.
Segment non-current asset additions show the amounts relating to
property, plant and equipment and intangible assets including
goodwill. All non-current assets are located in the UK.
Operating segments
The Group operating segments have been decided upon according to
their revenue model and product or service offering being the
information provided to the Chief Executive Officer and the Board.
The Reputation segment derives its revenues from software
subscription sales and support and training revenues. The segments
are:
-- Reputation
-- Discontinued - Disposals & Held for Sale
-- Head Office
2018
The segment information for the year ended 30 November 2018, is
as follows:
Reputation Head Consolidation Continuing Discontinued Discontinued Consolidations Discontinued Total
office adjustment operations Disposals Held for adjustment operations
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 sale GBP'000 GBP'000 GBP'000
GBP'000
External
revenue 8,888 - - 8,888 145 - - 145 9,033
(Loss)/profit
pre-below
adjustments (1,430) (37) 132 (1,335) (91) - - (91) (1,426)
Share of
loss of
associate - (222) - (222) - - - - (222)
Loss on
sale of
subsidiary - - - - - - (64) (64) (64)
Financial
expense (6) (154) - (160) - - - - (160)
Taxation 362 - - 362 - - - - 362
(Loss)/Profit
after
taxation (1,074) (413) 132 (1,355) (91) - (64) (155) (1,510)
Reportable
segment
assets 1,257 23,691 (1,092) 23,856 - - - - 23,856
Reportable
segment
liabilities (6,891) -6,559 320 (13,130) - - - - -13,130
Other
information: 78 - - 78 - - - - 78
Additions
to property,
plant
and equipment
Depreciation
and
amortisation 1,193 34 (331) 896 2 - - - 896
2017
The segment information for the year ended 30 November 2017, is
as follows:
Reputation Head Consolidation Continuing Discontinued Discontinued Consolidations Discontinued Total
office adjustment operations Disposals Held adjustment operations
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 for sale GBP'000 GBP'000 GBP'000
GBP'000
--------------- ----------- -------- -------------- ----------- ------------- ------------- --------------- ------------- --------
External
revenue 8,063 - - 8,063 328 388 - 716 8,779
(Loss)/profit
pre below
adjustments (3,297) (303) 404 (3,196) 151 (185) - (34) (3,230)
Share
of loss
of associate - (254) - (254) - - - - (254)
Profit
on sale
of subsidiary - - - - - - 592 592 592
Financial - - - - - - - - -
income
Financial
expense (5) (338) - (343) - - - - (343)
Taxation 458 - - 458 - - - - 458
(Loss)/Profit
after
taxation (2,844) (895) 404 (3,335) 151 (185) 592 558 (2,777)
Reportable
segment
assets 8,583 9,751 (7,324) 10,980 - 270 - 270 11,250
Reportable
segment
liabilities 13,996 4,262 (7,591) 10,667 - 260 - 260 10,927
Other
information: 28 90 - 118 - - - - 118
Additions
to
property,
plant
and equipment
Depreciation
and
amortisation 1,366 35 (423) 978 - 6 - 6 984
5. Operating Loss
Operating loss is stated after charging
2018 2017
GBP'000 GBP'000
-------------------------------------------------------- -------- --------
Depreciation of property, plant and equipment 78 71
Amortisation of development costs 311 287
Amortisation of brand values 61 60
Amortisation of software licences 64 62
Amortisation of database 201 332
Amortisation of customer list 181 166
Loss on foreign currency translation 12 11
Non-recurring items (see below) 473 854
Operating lease charges - land and buildings 358 509
Auditor's remuneration (see below) 96 55
Research and development and other technical
expenditure (income statement) (a further GBP1,344,000
(2017: GBPNil) was capitalised) 526 1,595
Increase in provision for receivables 130 54
The non-recurring costs are made up of the following:
2018 2017
GBP'000 GBP'000
---------------------------------------------- -------- --------
Compensation and notice payments - all staff 20 107
Acquisition costs 183 -
Non-recurring transitional hosting, migration
and integration costs 270 747
473 854
Auditor's remuneration is further analysed as:
2018 2017
GBP'000 GBP'000
-------------------------------------------------- -------- --------
Fees payable to the Company's auditor for the
audit of the Company's annual accounts 31 24
The audit of the Company's subsidiaries, pursuant
to legislation 33 23
Tax services 8 8
Non-audit fees related to acquisitions 24 -
96 55
6. Discontinued operations
A.I. Talent Ltd
In May 2018, the Group sold its subsidiary A.I. Talent Ltd for
cash consideration of GBP1. This business unit had been reported as
a discontinued operation and classified as held for sale at 30
November 2017 following the commitment of the Group's management in
2017 to sell the entity.
2018 2017
GBP'000 GBP'000
----------------------------------------------- -------- --------
Results of discontinued operations
Revenue 145 388
Expenses (236) (573)
Results from operating activities (91) (185)
Tax - -
Results from operating activities, net of tax (91) (185)
Loss on sale of discontinued operation (64) -
Tax on gain on sale of discontinued operation - -
Loss for the year from discontinued operations (155) (185)
Earnings per share
Basic earnings per share (0.34)p (0.56)p
Diluted earnings per share (0.34)p (0.56)p
2018 2017
GBP'000 GBP'000
------------------------------------------------- -------- --------
Cash flows from/(used in) discontinued operation
Net cash from operating activities (6) (236)
Net cash used in investing activities - -
Net cash used in financing activities - -
Net cash flows for the year (6) (236)
The following is a breakdown of the effects of the disposal of
A.I. Talent Ltd on the financial position of the Group:
2018
GBP'000
------------------------------------------ --------
Trade and other receivables 72
Cash and cash equivalents 142
Deferred tax assets 1
Trade and other payables (295)
Net assets (80)
Consideration received, satisfied in cash -
Cash and cash equivalents disposed of 142
AIControlPoint Limited
In March 2017, the Group sold its subsidiary AIControlPoint
Limited for cash consideration of GBP745,000. This business unit as
reported as a discontinued operation and classified as held for
sale at 30 November 2016 following the commitment of the Group's
management in 2016 to sell the entity.
2018 2017
GBP'000 GBP'000
------------------------------------------------- -------- --------
Results of discontinued operations
Revenue - 328
Expenses - (178)
Results from operating activities - 151
Tax - -
Results from operating activities, net of tax - 151
Gain on sale of discontinued operation - 592
Tax on gain on sale of discontinued operation - -
Profit for the year from discontinued operations - 743
Earnings per share
Basic earnings per share - 2.26p
Diluted earnings per share - 2.26p
2018 2017
GBP'000 GBP'000
------------------------------------------------ -------- --------
Cash flows from/(used in) discontinued operation
Net cash from operating activities - -
Net cash used in investing activities - -
Net cash used in financing activities - -
Net cash flows for the year - -
All discontinued operations
The following tables provide combined information for all
discontinued operations. The current year figures include the
results of A.I. Talent Ltd plus consolidation adjustments. The
prior year comparative figures include the results AIControlPoint
Limited, which was sold during the year ended 30 November 2017, and
A.I. Talent Ltd, which was held for sale in 2017 and was sold
during the year ended 30 November 2018.
2018 2017
GBP'000 GBP'000
---------------------------------------------- -------- --------
Results of discontinued operations
Revenue 145 716
Expenses (236) (750)
Results from operating activities (91) (34)
Tax - -
Results from operating activities, net of tax (91) (34)
(Loss)/Gain on sale of discontinued operation (64) 592
Tax on gain on sale of discontinued operation - -
(Loss)/profit for the year from discontinued
operations (155) 558
Earnings per share
Basic earnings per share (0.34)p 1.70p
Diluted earnings per share (0.34)p 1.70p
The loss from discontinued operations of GBP155,000 (2017:
profit of GBP558,000) is entirely attributable to the owners of the
Company.
2018 2017
GBP'000 GBP'000
------------------------------------------------- -------- --------
Cash flows from/(used in) discontinued operation
Net cash from operating activities (6) (236)
Net cash used in investing activities - -
Net cash used in financing activities - -
Net cash flows for the year (6) (236)
7. Disposal group held for sale
At the prior year end, A.I. Talent Limited was presented as a
disposal group held for sale following the commitment of the
Group's management to a plan to sell the entity with the sale being
completed on 9 May 2018.
At 30 November, the disposal group comprised the following
assets and liabilities:
Assets classified as held for sale 2018 2017
GBP'000 GBP'000
----------------------------------- -------- --------
Goodwill - -
Development costs - -
Other intangible fixed assets - 2
Property, plant and equipment - -
Trade and other receivables - 263
Cash and cash equivalents - 5
- 270
Liabilities classified as held for sale 2018 2017
GBP'000 GBP'000
-
Trade and other payables - 12
Deferred income - 248
Deferred tax liabilities - -
- 260
8. Acquisition of business
On 9 October 2018, the Group entered into a share purchase
agreement to acquire the entire issued share capital of
ResponseSource Ltd ("ResponseSource"). The consideration for the
acquisition was: GBP5,000,000 payable in cash plus the agreed
amount of free cash in ResponseSource at the date of Completion;
and GBP0.5 million by the allotment and issue of 793,651 Ordinary
Shares of 5p each at a price of 63 pence per share.
The acquisition was completed on 5 November 2018 with payment of
the initial cash consideration of GBP5,000,000 and allotment of the
793,651 Consideration Shares. An additional GBP1,854,000
consideration was paid on 17 December 2018 in respect of free cash
in ResponseSource at the date of Completion. A further GBP200,000
has been retained in respect of a possible pre-acquisition tax
liability of ResponseSource that has not yet crystallised. Should
any tax charge crystallise, this will be deducted from the
GBP200,000 retention with the balance being paid to the
vendors.
The Board believe that the acquisition will fulfil a current
need and longer term strategic aim to strengthen the Group's
service to the journalist and PR sectors by improving Access
Intelligence's media data and press release wire offering, as well
as providing major upsell opportunities for core Vuelio services to
ResponseSource's customers.
In the three-week period that ResponseSource was owned by the
Group, it contributed revenue of GBP222,000 and a loss of GBP1,000.
Had ResponseSource been included within the Group's results since 1
December 2017, total Group revenue would have been GBP12,090,000,
adjusted EBITDA would have been GBP705,000 and total Group loss
after tax would have been GBP1,073,000.
Consideration transferred
The following table summarises the acquisition date fair value
of each major class of consideration transferred.
GBP'000
------------------------------ -------
Cash - Initial consideration 5,000
Cash - Deferred consideration
(paid post year end) 1,854
Cash - Deferred consideration
(not yet paid) 200
Shares 500
Total consideration 7,554
Acquisition related costs
The Group incurred acquisition related costs of GBP183,000 on
legal fees, due diligence costs and stamp duty.
These costs have been included in 'non-recurring expenses'.
Identifiable assets acquired and liabilities assumed
The following table summarises the recognised amounts of assets
acquired and liabilities assumed at the date of acquisition.
The intangible assets identified primarily comprise the fair
values estimated for the software platform, media contacts
database, customer list and brand acquired.
GBP'000
------------------------------ -------
Property, plant and equipment 22
Intangible assets 3,466
Trade and other receivables 761
Cash and cash equivalents 2,198
Trade and other payables (320)
Deferred tax (572)
Accruals and deferred
income (1,770)
Total identifiable net
assets acquired 3,785
Goodwill 3,769
Total consideration 7,554
A cost-based approach was used to value the software platform,
determining the likely cost of building an equivalent software
platform from new. The useful life of the software platform has
been estimated at 5 years.
A cost-based approach was used to value the media contacts
database, determining the likely cost of building an equivalent
media contacts database from new. The useful life of the database
has been estimated at 3 years.
The customer list was valued by assessing a discounted cash flow
for the acquired customer list, based on customer attrition rates
and using a discount factor of 12%. This discount factor is in line
with value-in-use calculations performed for intangibles testing
(see Note 14). The useful life of the customer list has been
estimated at 9 years.
Trade and other receivables include gross contractual amounts
due of GBP622,000, of which GBPNil was expected to be uncollectable
at the date of acquisition.
Accruals and deferred income includes an amount of GBP1,671,000
which relates to the fair value of deferred revenue acquired. The
fair value has been estimated based on the value of deferred
revenue relating to contracts transferred, discounted in accordance
with IFRS.
Goodwill
Goodwill recognised on this acquisition represents the
difference between the consideration paid and the fair value of the
net assets acquired. It includes the value inherent in the
assembled workforce acquired. The goodwill arising has been
recognised as follows:
GBP'000
-------------------------------------- -------
Consideration transferred 7,554
Fair value of identifiable net assets 3,785
Goodwill 3,769
9. Particulars of employees
2018 2017
---------------------------------------------------- ---- ----
The average number of persons (including directors)
employed by the Group during the year was:
Technical and support 45 49
Commercial 34 40
Finance and administration 21 13
100 102
Costs incurred in respect of these employees were:
2018 2017
GBP'000 GBP'000
-------------------------------- -------- --------
Wages and salaries costs 5,207 4,801
Social security costs 483 452
Pension costs 99 130
Health insurance 11 16
Employee benefits 7 -
Compensation for loss of office 20 107
5,826 5,505
The compensation for loss of office charge of GBP20,000 (2017:
GBP107,000) relates to 3 employees (2017: 16 employees) who were
made redundant during the year.
The reportable key management personnel are considered to be
comprised of the Company directors, the remuneration for whose
services during the year is detailed in the table below.
Directors' remuneration
Salaries Fees 2018 2017
GBP GBP GBP GBP
------------------------ -------- ------ ------- -------
Executive Directors
J Arnold 211,631 - 211,631 212,225
M Fautley 107,339 - 107,339 -
Non-Executive Directors
C Satterthwaite 20,000 - 20,000 -
M Jackson 40,000 - 40,000 40,000
C Pilling - 30,000 30,000 30,000
J Hamer - 30,000 30,000 5,000
D Lowe - - - 20,000
378,970 60,000 438,970 307,225
J Arnold received health insurance benefits during the year of
GBP462 (2017: GBP615). J Arnold received payments into a personal
retirement money purchase pension scheme during the year of
GBP6,509 (2017: GBP7,725).
M Fautley received payments into a personal retirement money
purchase pension scheme during the year of GBP4,685
(2017:GBPNil).
No other directors received any other benefits other than those
detailed above.
The number of directors at 30 November 2018 accruing retirement
benefits under money purchase schemes was two (2017: one).
The interests of the directors in share options are detailed in
the Directors' Report on page 31 of this report. No directors
exercised share options during the year.
10. Financial expense
2018 2017
GBP'000 GBP'000
----------------------------------------------- -------- --------
Effective interest charged on convertible loan
notes 44 231
Interest charged on non-convertible loan notes 110 106
Other interest 6 6
Total financial expense 160 343
11. Taxation
2018 2017
GBP'000 GBP'000
-------------------------------------------------- -------- --------
Current income tax:
UK corporation tax credit for the year (362) (458)
Adjustment in respect of prior year - -
Total current income tax credit (362) (458)
Deferred tax (note 23)
Origination and reversal of temporary differences - -
Total deferred tax - -
Total tax credit (362) (458)
As shown above the tax assessed on the loss on ordinary
activities for the year is lower than (2017: higher than) the
standard rate of corporation tax in the UK of 19% (2017: 20%).
The differences are explained as follows:
Factors affecting tax credit 2018 2017
GBP'000 GBP'000
------------------------------------------------------- -------- --------
Loss on ordinary activities before tax from continuing
operations (1,717) (3,793)
(Loss)/profit on ordinary activities before tax
from discontinued operations (155) 558
Loss on ordinary activities before tax (1,872) (3,235)
Loss on ordinary activities multiplied by effective
rate of tax (356) (647)
Items not deductible for tax purposes 340 25
Items not taxable for tax purposes (65) (85)
Adjustment in respect of prior years - -
Additional R&D claim CTA 2009 (312) (193)
Deferred tax not recognised 31 442
Total tax credit (362) (458)
Tax credit reported in the Consolidated Statement
of Comprehensive Income (362) (458)
Tax charge attributable to discontinued operations - -
Total tax credit (362) (458)
Factors that may affect future tax expenses
A reduction in the UK corporation tax rate from 20% to 19%
(effective from 1 April 2017) was substantively enacted in October
2015. A further reduction in the tax rate from 19% to 17%
(effective from 1 April 2020) was substantively enacted in
September 2016. These rates therefore have been considered when
calculating the deferred tax at the reporting date.
12. Dividend paid
Due to the significant and ongoing investment in developing our
products, the directors do not propose a dividend in respect of the
year ended 30 November 2018.
13. Earnings per share
The calculation of earnings per share is based upon the total
Group loss for the year of GBP1,510,000 (2017: loss of
GBP2,777,000) divided by the weighted average number of ordinary
shares in issue during the year which was 45,523,476 (2017
restated: 32,864,538).
In 2018 and 2017 potential ordinary shares from the share option
schemes and convertible loan notes have an anti-dilutive effect due
to the Group being in a loss making position. As a result, dilutive
loss per share is disclosed as the same value as basic loss per
share.
This has been computed as follows:
Continuing Discontinued Total Continuing Discontinued Total
Operations Operations Operations Operations
Numerator 2018 2018 2018 2017 2017 2017
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------- ----------- ------------ -------- ----------- ------------ --------
(Loss)/profit
for the year
and earnings
used in basic
EPS (1,355) (155) (1,510) (3,335) 558 (2,777)
Earnings used
in diluted EPS (1,355) (155) (1,510) (3,335) 558 (2,777)
Denominator
Weighted average
number of shares
used in basic
EPS ('000) 45,523 45,523 45,523 32,864 32,864 32,864
Effects of:
Dilutive effect N/A N/A N/A N/A N/A N/A
of options
Dilutive effect N/A N/A N/A N/A N/A N/A
of loan note
conversion
Weighted average
number of shares
used in diluted
EPS ('000) 45,523 45,523 45,523 32,864 32,864 32,864
Basic (Loss)/earnings
per share (pence) (2.98) (0.34) (3.32) (10.15) 1.70 (8.45)
Diluted loss
per share for
the year (pence) (2.98) (0.34) (3.32) (10.15) 1.70 (8.45)
The total number of options or warrants granted at 30 November
2018 of 1,951,837 (2017 restated: 1,951,837) would generate
GBP567,305 (2017: GBP567,305) in cash if exercised. At 30 November
2018, no options (2017 restated: 222,000) were priced above the
mid-market closing price of 58p per share (2017 restated: 46.25p
per share) and 1,951,837 (2017 restated: 1,729,837) were below.
Of the 1,951,837 options and warrants at 30 November 2018,
322,000 (2017 restated: 322,000) staff options were eligible for
exercising at an average price of 26.9p (2017 restated: 26.9p).
Also eligible for exercising were the 1,429,837 (2017 restated:
1,429,837) warrants priced at 27.5p per share held by Elderstreet
VCT plc and other individuals consequent to an initial investment
in the Company in October 2008.
14.Intangible fixed assets
Brand Goodwill Development Software Database Customer Total
Value GBP'000 Costs Licences GBP'000 relationships GBP'000
GBP'000 GBP'000 GBP'000 GBP'000
------------------- -------- -------- ----------- --------- -------- -------------- --------
Cost
At 1 December
2016 1,369 9,176 1,918 143 997 830 14,433
Capitalised during
the year - - - 79 - - 79
Disposals - - - - - - -
Held for sale - - (765) (26) - - (791)
At 30 November
2017 1,369 9,176 1,153 204 997 830 13,729
Capitalised during
the year - - 1,344 36 - - 1,380
On acquisition 306 3,769 1,690 75 273 1,122 7,235
Disposals - (5,205) - (3) - - (5,208)
At 30 November
2018 1,675 7,740 4,187 312 1,270 1,952 17,136
Amortisation and impairment
At 1 December
2016 529 5,205 880 51 410 296 7,371
Charge for the
year 60 - 287 62 332 166 907
Disposals - - - - - - -
Held for sale - - (765) (23) - - (788)
At 30 November
2017 589 5,205 402 90 742 462 7,490
Charge for the
year 61 - 311 64 201 181 818
Disposals - (5,205) - - - - (5,205)
At 30 November
2018 650 - 713 154 943 643 3,103
Net Book Value
At 30 November
2018 1,025 7,740 3,474 158 327 1,309 14,033
At 30 November
2017 780 3,971 751 106 255 368 6,231
The carrying value and remaining amortisation period of
individually material intangible assets are as follows:
Carrying amount Remaining amortisation
period
2018 2017 2018 2017
GBP'000 GBP'000 Years Years
--------------------------------------------- -------- -------- ------------ -----------
Brand
Access Intelligence Media and Communications 720 780 12 13
ResponseSource 305 - 20 -
Development Costs
Access Intelligence Media and Communications
- Vuelio Platform Development 86 210 3 4
AIMediaData - Vuelio Platform Development 1,723 541 5 4
ResponseSource - Platform Development 1,665 - 5 -
Database
AIMediaData - PR & Media Contacts
Database 61 255 - 1
ResponseSource - PR & Media Contacts
Database 266 - 3 -
Customer Relationships
AIMediaData - Acquired Customer
Relationships 202 368 2 3
ResponseSource - Acquired Customer
Relationships 1,107 - 9 -
For the purpose of impairment testing, goodwill is allocated by
entity, which represent the Group's CGUs and the lowest level
within the Group at which the goodwill is monitored.
The carrying value of goodwill allocated to each CGU is:
2018 Goodwill
GBP'000
----------------------------------------------------- --------
Continuing operations
Access Intelligence Media and Communications Limited 1,928
AIMediaData Limited 2,043
ResponseSource Ltd 3,769
7,740
2017 Goodwill
GBP'000
----------------------------------------------------- --------
Continuing operations
Access Intelligence Media and Communications Limited 1,928
AIMediaData Limited 2,043
3,971
At the reporting date, impairment tests were undertaken by
comparing the carrying values of goodwill, capitalised development
costs and other assets with the recoverable amount of the CGU to
which the goodwill, capitalised development costs and other assets
have been allocated. The recoverable amount of the CGU is based on
value-in-use calculations.
These calculations use pre-tax cash flow projections covering a
five-year period based on approved budgets and forecasts in the
first three years, followed by applying specific growth rates for
which the key assumptions in respect of annual revenue growth rates
range between 0% and 7.5% from year 4 onwards, with a terminal
value after year five.
The key assumptions used for value-in-use calculations are those
regarding revenue growth rates and discount rates over the forecast
period. Growth rates are based on past experience, the anticipated
impact of the CGUs significant investment in research and
development, and expectations of future changes in the market.
The discount rate used for all companies was 12%, based on an
assessment of the Group's cost of capital and on comparison with
other listed technology companies. The terminal growth rate used
for the purposes of goodwill impairment assessments was 2.5%. The
Board considered that no impairment to goodwill is necessary based
on the value-in-use reviews of Access Intelligence Media and
Communications Limited, AIMediaData Limited and ResponseSource Ltd
as the value-in-use calculations exceeded the carrying values of
goodwill relating to those companies.
Sensitivity analysis has been performed on reasonably possible
changes in assumptions upon which recoverable amounts have been
estimated. Based on the sensitivity analysis, a reduction of 53% in
EBITDA delivered by Access Intelligence Media and Communications
Limited would result in the carrying value of its goodwill and
intangible assets being equal to the recoverable amount. For
AIMediaData Limited, a 62% reduction in EBITDA would result in the
carrying value of its goodwill and intangible assets being equal to
the recoverable amount. For ResponseSource Ltd, a 66% reduction in
EBITDA would result in the carrying value of its goodwill and
intangible assets being equal to the recoverable amount.
For Access Intelligence Media and Communications Limited, a 15%
percentage point increase in the discount rate would result in the
carrying value of goodwill and intangible assets being equal to the
recoverable amount. For AIMediaData Limited and ResponseSource Ltd,
23% percentage point and 17% percentage point increases
respectively would result in the carrying value of goodwill and
intangible assets being equal to the recoverable amount.
Other impairments
Other intangible assets are tested for impairment if indicators
of an impairment exist. Such indicators include performance falling
short of expectation.
In 2018, no development costs (2017: GBPNil) were impaired as a
result of projects that did not perform as expected.
The directors considered that there were no indicators of
impairment relating to the remaining intangible fixed assets at 30
November 2018.
15. Investment in associate
Investment in
associate
GBP'000
----------------------------- -------------
Cost
At 30 November 2016 625
Additions -
At 30 November 2017 625
Additions 260
At 30 November 2018 885
Share of loss of associate and impairment
At 30 November 2016 91
Share of loss of associate 254
At 30 November 2017 345
Share of loss of associate 222
At 30 November 2018 567
Net Book Value
At 30 November 2018 318
At 30 November 2017 280
As part of the consideration for the disposal of AITrackRecord
Limited, the Group received a 20% shareholding in TrackRecord
Holdings Limited, a company registered in England and Wales. The
fair value of this shareholding based on the funding raised by
TrackRecord Holdings Limited was GBP625,000. The shareholding in
TrackRecord Holdings Limited is treated as an investment in
associate as the Group is not able to exercise control over the
company, but is able to exercise significant influence over the
company by way of its 20% shareholding and through J Arnold being
the Group's representative on the board of TrackRecord Holdings
Limited.
During the year ended 30 November 2018, the Group invested a
further GBP260,000 in Track Record Holdings Limited, representing
its 20% share of a GBP1,300,000 fundraising round.
During the year, the Group's share of the loss of TrackRecord
Holdings Limited was GBP222,000 (2017: GBP254,000). As the Group
applies the equity method of accounting for its investment in
TrackRecord Holdings Limited, the carrying value of investments in
associates is reduced by this share of loss at the year-end.
Summarised financial information for associate
The tables below provide summarised financial information for
TrackRecord Holdings Limited, an associate which is considered
material to the Group. The information disclosed reflects the
amounts presented in the financial statements of TrackRecord
Holdings Limited and not Access Intelligence Plc's share of those
amounts.
Track Record Track Record
Holdings Limited Holdings Limited
2018 2017
GBP'000 GBP'000
-------------------------------------------- ----------------- -----------------
Total current assets 1,048 799
Total non-current assets 785 787
Total current liabilities (246) (187)
Net assets 1,587 1,399
Access Intelligence Plc share of net assets
(20%) 318 280
Reconciliation to carrying amounts Track Record Track Record
Holdings Limited Holdings Limited
2018 2017
GBP'000 GBP'000
----------------------------------- ----------------- -----------------
Opening net assets 1 December 1,399 2,670
Issue of share capital 130 -
Share premium on issue of shares 1,170 -
Loss for the period (1,112) (1,271)
Net assets 1,587 1,399
Summarised statement of comprehensive Track Record Track Record
income Holdings Limited Holdings Limited
2018 2017
GBP'000 GBP'000
----------------------------------------------- ----------------- -----------------
Revenue 703 430
Loss for the period from continuing operations (1,112) (1,271)
Other comprehensive income - -
Total comprehensive income (1,112) (1,271)
16. Property, plant & equipment
Fixtures, fitting Leasehold improvements Total
and equipment GBP'000 GBP'000
GBP'000
---------------------------- ----------------- ---------------------- --------
Cost
At 1 December 2016 476 187 663
Additions 26 92 118
Disposals (1) - (1)
Classified as held for sale (47) - (47)
At 1 December 2017 454 279 733
Additions 76 2 78
Disposals (1) - (1)
On acquisition of business 22 - 22
At 30 November 2018 551 281 832
Depreciation
At 1 December 2016 415 148 563
Charge for the year 50 21 71
Disposals (1) - (1)
Classified as held for sale (46) - (46)
At 1 December 2017 418 169 587
Charge for the year 49 29 78
Disposals - - -
At 30 November 2018 467 198 665
Net Book Value
At 30 November 2018 84 83 167
At 30 November 2017 36 110 146
17. Trade and other receivables
2018 2017
GBP'000 GBP'000
---------------------------------- -------- --------
Current assets
Trade receivables 2,618 1,925
Less: provision for impairment of
trade receivables (182) (137)
2,436 1,788
Prepayments and other receivables 1,204 1,180
3,640 2,968
All trade receivables are reviewed by management and are
considered collectible. The ageing of trade receivables which are
past due and not impaired is as follows:
2018 2017
GBP'000 GBP'000
------------ -------- --------
Days outstanding
31-60 days 556 505
61-90 days 182 157
91-180 days 375 377
1,112 1,039
Movements on the Group provision for impairment of trade
receivables are as follows:
2018 2017
GBP'000 GBP'000
---------------------- -------- --------
At 1 December 137 78
Increase in provision 130 84
Written off in year (85) (25)
At 30 November 182 137
Ageing of impaired debt 2018 2017
GBP'000 GBP'000
------------------------ -------- --------
Days outstanding
91-180 days 38 18
181-270 days 43 21
More than 270 days 101 98
182 137
The creation and release of a provision for impaired receivables
has been included in 'administrative expenses' in the income
statement. Amounts charged to the allowance account are generally
written off, where there is no expectation of recovering additional
cash.
The other asset classes within trade and other receivables do
not contain impaired assets.
The maximum exposure to credit risk at the reporting date is the
carrying value of each class of receivable mentioned above together
with our cash deposits totalling GBP5,300,000 (2017: GBP673,000).
The Group does not hold any collateral as security.
As disclosed in note 22, credit risk is considered according to
sector and necessary allowances are made when needed by assessing
changes in our customers' credit profiles and credit ratings.
18. Interest bearing loans and borrowings
2018 2017
GBP'000 GBP'000
--------------------------- -------- --------
Current
Convertible loan notes - 2,359
Non-convertible loan notes 110 110
Other 100 20
210 2,489
Non-current
Convertible loan notes - -
Non-convertible loan notes 838 844
Other 29 40
867 884
On 30th June 2009 GBP1,750,000 convertible loan notes were
issued. At 30 November 2015 and 30 November 2016, GBP1,250,000 of
these loan notes were in issue.
The original terms were that these loan notes were redeemable at
par or convertible to ordinary shares at 4p per ordinary share on
or before maturing on 30th June 2015 and carried a coupon rate of
6% per annum payable semi- annually until such time as they were
repaid or were converted in accordance with their terms. The holder
of the notes may convert all or part of the notes held by them into
new ordinary shares in the Company on delivery to the Company of a
conversion notice at 4p per share.
In 2014, the Company agreed terms with Elderstreet VCT (a
company related to M Jackson) and Unicorn AIM VCT plc to extend the
loans such that they mature on 31 December 2015, with enhanced
interest at 8% during this extended period with conversion rights
unchanged at 4p per share. In January 2016, the maturity dates of
the loan notes were extended to 31 December 2016 with all other
terms remaining unchanged. The carrying value of these loans at the
prior year-end, including accrued interest, was GBP1,277,000. In
December 2016 the maturity dates of the loan notes were further
extended to 31 December 2017 with all other terms remaining
unchanged.
In December 2014 the Company issued GBP1,100,000 of convertible
loan notes. These loan notes are redeemable at par or convertible
to ordinary shares at 3p per ordinary share on or before maturing
on 3 December 2019 and carry a coupon rate of 8% per annum payable
semi-annually until such time as they are repaid or converted.
During the current year, the 2009 convertible loan notes
converted into 31,250,000 new ordinary shares at a conversion price
of 4.0p, with conversion being effective on 31 December 2017 and
the new shares being admitted to trading on the AIM market of the
London Stock Exchange on 3 January 2018.
The 2014 convertible loan notes converted into 36,666,665 new
ordinary shares at a conversion price of 3.0p, with conversion
being effective and the new shares being admitted to trading on the
AIM market of the London Stock Exchange on 29 January 2018.
The net proceeds received from the issues of the convertible
loan notes have been split between the liability element and an
equity component, representing the fair value of the embedded
option to convert the liability into equity of the Company, as
follows:
2018 2017
GBP'000 GBP'000
----------------------------------- --------- ---------
Proceeds of issue of convertible - -
loan notes
Existing loan notes rolled over 2,350 2,350
Equity component (255) (255)
Deferred taxation (79) (79)
Initial fair value of liability
component 2,016 2,016
Cumulative interest charged 1,265 1,240
Cumulative interest paid (1,003) (897)
Converted into equity (2,278) -
Liability component at 30 November - 2,359
The equity component of GBP255,000 (2017: GBP255,000) was
originally credited to equity reserve. This was transferred to
share premium on conversion of the loan notes. The interest charged
for the year is calculated by applying an effective rate of
interest of 10.1% (2017: 10.1%) to the liability component for the
12-month period. The liability component is measured at amortised
cost. The difference between the carrying amount of the liability
component at the date of issue and the amount reported in the
statement of financial position at 30 November 2017 represents the
effective interest rate less interest paid to that date.
The movement on the convertible loan note liability is
summarised below:
2018 2017
GBP'000 GBP'000
----------------------------------- -------- --------
Opening loan liability 2,359 2,316
Interest charged for the year 29 231
Interest paid in the year (106) (188)
Converted into equity (2,282) -
Liability component at 30 November - 2,359
On 22 June 2015 the Company issued GBP1,818,000 of
non-convertible loan notes which carried an interest rate of 10%
for one year rising to 12% thereafter. Interest is payable
quarterly in arrears. The loans notes are fully repayable in five
years. GBP900,000 of these loan notes were repaid on 22 April
2016.
2018 2017
GBP'000 GBP'000
----------------------------------- -------- --------
Opening loan liability 954 959
Interest charged for the year 104 105
Interest paid in the year (110) (110)
Liability component at 30 November 948 954
19. Trade and other payables
Due within one year 2018 2017
GBP'000 GBP'000
-------------------------------- -------- --------
Trade and other payables 3,284 1,262
Other taxes and social security
costs 324 206
VAT payable 305 90
3,913 1,558
20. Deferred revenue
2018 2017
GBP'000 GBP'000
---------------------------------- -------- --------
At 1 December 4,137 3,772
Invoiced during the year 9,434 9,064
Revenue recognised during the
year (8,888) (8,063)
On acquisition of business 1,671 -
Revenue recognised on items moved
to held for sale during the year - (388)
Deferred revenue moved to held
for sale - (248)
At 30 November 6,354 4,137
21. Financial instruments
The Group's treasury activities are designed to provide
suitable, flexible funding arrangements to satisfy the Group's
requirements. The Group uses financial instruments comprising
borrowings, cash, liquid resources and items such as trade
receivables and payables that arise directly from its operations.
The main risks arising from the Group financial instruments relate
to the maintaining of liquidity across the four group entities and
debt collection. The Board reviews policies for managing each of
these risks and they are summarised below.
The Group finances its operations through a combination of cash
resources, loan notes and equity. Short term flexibility is
provided by moving resources between the individual subsidiaries.
Exposure to interest rate fluctuations is minimal as all borrowings
are at fixed rates of interest. The Group also has deposit
facilities on which 0.75% interest was being earned throughout 2018
(2017: 1.25%) and will be optimising the use of these accounts
going forward. The Group's exposure to interest rate risk is not
significant and therefore no sensitivity analysis has been
performed.
Small amounts of foreign currency risk exist in two subsidiaries
which invoice in currencies other than sterling. Due to the
relative size of the currency risks concerned no hedging takes
place in Australian dollars, Euros or US dollars. At the year-end
there were no open contracts, however the Group was holding a US
dollar deposit of $Nil (2017: $2,044) which in 2017 was translated
at the rate of 1.3399 for inclusion in the consolidated statement
of financial position. This amounted to GBPNil (2017: GBP1,526).
There are no hedges against this balance.
The Group did not hold any other significant assets or
liabilities in foreign denominated currencies at the reporting
date. The directors do not consider that there is a significant
exposure to foreign exchange risk and therefore no sensitivity
analysis has been performed.
At 30 November 2018 borrowings comprised convertible loan notes
of GBPNil (2017: GBP2,359,000), non-convertible loan notes of
GBP948,000 (2017: GBP948,000), and other loans of GBP129,000 (2017:
GBP66,000).
There is no material difference between the fair values and book
values of the Group's financial instruments. Short term trade
receivables and payables have been excluded from the above
disclosures.
The objectives of the Group's treasury activities are to manage
financial risk, secure cost-effective funding where necessary and
minimise the adverse effects of fluctuations in the financial
markets on the value of the Group's financial assets and
liabilities, on reported profitability and on the cash flow of the
Group. Interest income is sought wherever possible and in 2018
produced GBPNil (2017: GBPNil) of income.
The Group's principal financial instruments for fundraising are
through share issues.
2018 Loans, receivables Total
and other payables GBP'000
GBP'000
-------------------------------------------- ------------------- --------
Assets per the balance sheet
Trade and other receivables excluding
prepayments 2,436 2,436
Cash and cash equivalents 5,300 5,300
7,736 7,736
Liabilities per the balance sheet
Trade and other payables excluding accruals 3,913 3,913
Interest bearing loans and borrowings 1,077 1,077
4,990 4,990
Undiscounted contractual maturity of financial liabilities
Amounts due within one year 4,233
Amounts due between one and five years 867
5,100
Less: future interest charges (110)
Financial liabilities carrying value 4,990
The above analysis excludes corporation tax receivable.
2017 Loans, receivables Total
and other payables GBP'000
GBP'000
-------------------------------------------- ------------------- --------
Assets per the balance sheet
Trade and other receivables excluding
prepayments 1,788 1,788
Cash and cash equivalents 673 673
2,461 2,461
Liabilities per the balance sheet
Trade and other payables excluding accruals 1,558 1,558
Interest bearing loans and borrowings 3,373 3,373
4,931 4,931
Undiscounted contractual maturity of financial liabilities
Amounts due within one year 1,759
Amounts due between one and five years 1,156
Amounts that convert to equity 2,359
5,274
Less: future interest charges (342)
Financial liabilities carrying value 4,931
The liquidity risk relating to the contractual liabilities
listed above is managed on a local basis through their day to day
cash management. The Group has invested significantly in
restructuring the Group and building products written in current
code bases, accordingly the Group is liquid with GBP5,300,000
(2017: GBP673,000) available cash resources against a liability
payable within the next 12 months of GBP4,013,000 (2017:
GBP1,759,000). Management monitor cash balances weekly. However,
should any subsidiary, or the Company, find that it does not have
the liquidity to pay a debt as it becomes due an inter-company cash
transfer will be made available by another member of the Group.
22. Financial and operational risk management
The Group's activities expose it to a variety of financial risks
which are managed by the Group and subsidiary management teams as
part of their day-to-day responsibilities. The Group's overall risk
management policy concentrates on those areas of exposure most
relevant to its operations. These fall into four categories:
Competitive risk - that our products are no longer competitive
or relevant to our customers;
Cash flow and liquidity risk - that we run out of the cash
required to run the business;
Credit risk - that our customers do not pay;
Key personnel risk - that we cannot attract and retain talented
people; and
Capital risk - that we do not have an optimal structure to allow
for future acquisition and growth.
Further information on these risks and the Group's actions to
mitigate them is provided on page 23 and 24 of the Strategic
Report.
23. Deferred tax assets and liabilities
The following are the major deferred tax assets and liabilities
recognised by the Group and the movements thereon during the
current year and the prior year:
Accelerated Convertible Share-based Tax losses Accelerated On acquisition Total
depreciation loan notes payments GBP'000 tax on of subsidiaries GBP'000
GBP'000 GBP'000 GBP'000 assets GBP'000
GBP'000
--------------- ------------- ----------- ----------- ---------- ----------- ---------------- --------
At 1 December
2016 22 (29) - 208 (201) - -
Charge to
profit or
loss 8 - - (32) 24 - -
At 30 November
2017 30 (29) - 176 (177) - -
At 1 December
2017 30 (29) - 176 (177) - -
Charge to
profit or
loss 12 29 - (164) 123 - -
On acquisition - - - - - (572) (572)
At 30 November
2018 42 - - 12 (54) (572) (572)
Attributable
to:
Continuing
operations 42 - - 12 (54) (572) (572)
Discontinued - - - - - - -
operations
Total 42 - - 12 (54) (572) (572)
At the reporting date the Group had unused tax losses of
approximately GBP6,900,000 (2017: GBP7,000,000) available for
offset against future profits. A deferred tax asset has been
recognised in respect of all available losses expected to be
utilised against future taxable profits within three years based on
the forecasts approved by the directors. The tax losses do not have
any expiry date.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to offset current tax assets against
current tax liabilities and when the deferred tax assets and
liabilities relate to income taxes levied by the same taxation
authority on either the taxable entity or different taxable
entities where there is an intention to settle the balances on a
net basis.
Deferred tax assets totalling GBP1,161,000 (2017: GBP1,299,000)
arising in respect of losses have not been included in the
statement of financial position due to uncertainties in regard to
their recoverability.
The following is the aggregate amounts of deferred tax balances
in each group entity, after allowable offset, for financial
reporting purposes:
2018 2017
GBP'000 GBP'000
------------------------- -------- --------
Deferred tax assets 37 206
Deferred tax liabilities (609) (206)
Total (572) -
24. Share capital
Equity: Ordinary shares of 5p each 2018 2017
GBP'000 GBP'000
----------------------------------------------- -------- --------
Allotted, issued and fully paid 63,772,754
ordinary shares of 5p each (2017: 348,674,357
ordinary shares of 0.5p each) 3,189 1,743
2018 2017
---------------------------------------------------- ------------- -----------
Number of shares at 1 December 348,674,357 315,935,118
New shares issued in year (pre-share consolidation) 70,000,008 31,384,615
Share options exercised (pre-share consolidation) - 1,354,624
Conversion of convertible loan notes (pre
share consolidation) 67,916,665 -
Consolidation of shares (437,931,927) -
New shares issued in year (post-share
consolidation) 15,113,651 -
Number of shares at 30 November 63,772,754 348,674,357
In January 2018, 31,250,000 shares were issued at 4p as a result
of the conversion of the 2009 CLNs and 36,666,665 were issued at 3p
as a result of the conversion of the 2014 CLNs.
In May 2018, 70,000,000 shares were issued at 4p in conjunction
with a placing with existing shareholders and management.
In November 2018, the Company completed a one-for-ten share
consolidation to reduce the number of Ordinary Shares in issue. To
effect the Share Consolidation, it was necessary to issue an
additional eight shares so that the Company's issued ordinary share
capital was exactly divisible by 10.
Subsequent to the share consolidation, 14,320,000 shares were
issued at 47.5p in a placing and 793,651 were issued as
consideration at 63p.
On 21 September 2011 29,666,667 ordinary shares of 0.5 pence,
and with a total nominal value of GBP148,333 were returned to the
Company. Post consolidation, this equates to 2,966,666 5p shares
held in treasury at the year end. The shares held in treasury have
no voting rights, or rights to dividends and so the total issued
share capital for voting and dividend purposes is 60,806,088 (2017
restated: 31,900,770).
Transaction costs associated with share issues in the year
amounted to GBP465,000 (2017: GBP3,000). Transaction costs are
accounted for as a reduction from the share premium account.
25. Equity-settled share-based payments
The Company has a share option scheme for employees of the
Group.
Ordinary share options and warrants granted and subsisting at 30
November 2018 were as follows:
Date of grant Exercise price No of shares Exercisable
between
------------------ -------------- ------------ -------------
23 October 2008 27.5p 1,429,837 No time limit
Apr 2012-Apr
03 April 2009 27.5p 100,000 2019
Sep 2012-Sep
29 September 2009 43.75p 200,000 2019
Dec 2012-Dec
04 December 2009 55.0p 22,000 2019
Dec 2014-Dec
19 December 2011 22.0p 100,000 2021
Oct 2016-Oct
24 October 2013 25.0p 100,000 2023
1,951,837
Details of the movements in the weighted average exercise price
("WAEP") and number of share options during the current and prior
year are as follows:
At start of Granted Exercised Forfeited At end of
year year
------------- ----------- ------- ----------- ----------- ----------
WAEP 2017 2.94 - 2.96 (3.13) 2.91
WAEP 2018 2.91 - - - 2.91
Options 2017 24,353,073 - (1,354,624) (3,480,070) 19,518,379
Options 2018 19,518,379 - - - 1,951,837*
Due to the share consolidation in the year, the share options
and warrants granted and subsisting at 1 December 2018 were
adjusted on the basis of one option or warrant for every previous
10 options or warrants.
The range of prices at which options and warrants can be
exercised is 22.0p to 55.0p.
No options were cancelled in the year (2017: Nil).
The weighted average price of shares on the date of exercise
during the year was Nil pence (2017: 4.50 pence).
The option movements detailed above resulted in a share-based
payment charge for the Group of GBPNil (2017: GBPNil). During 2018,
there were no share options granted in the year.
Further details of share options exercisable at the year-end are
provided in note 13.
There are no market, non-market or service conditions as part of
the share option scheme. The only condition existing is that
employees must still be in employment with the Company at the point
they exercise the options.
26. Cash and cash equivalents
The Group monitors its exposure to liquidity risk based on the
net cash flows that are available. The following provides an
analysis of the changes in net funds:
At at 30 November Cash inflow At at 30 November
2017 GBP'000 2018
GBP'000 GBP'000
-------------------------- ----------------- ----------- -----------------
Cash and cash equivalents 673 4,627 5,300
At at 30 November Cash outflow At at 30 November
2016 GBP'000 2017
GBP'000 GBP'000
-------------------------- ----------------- ------------ -----------------
Cash and cash equivalents 1,162 (489) 673
27. Commitments
Capital commitments
The Group had no capital commitments at the end of the financial
year or prior year.
Operating lease commitments
Commitments for minimum lease payments in relation to operating
leases are payable as follows:
Land and buildings
2018 2017
GBP'000 GBP'000
---------------------------------- --------- ---------
Not later than one year 278 246
Later than one year and not later
than five years 297 759
575 1,005
The Group leases various offices and storage units under
non-cancellable fixed term operating lease agreements. The lease
terms are up to 10 years, with break clauses ahead of the full term
and the majority are not renewable at the end of the lease
period.
There were no other operating lease commitments.
Provisions and contingent liabilities
Leasehold dilapidations GBP'000
----------------------------- -------------------------------
At 1 December 2017 226
Released in the year (130)
On acquisition 75
At 30 November 2018 171
Due within one year 75
Due after more than one year 96
Leasehold dilapidations relate to the estimated cost of
returning a leasehold property to its original state at the end of
the lease in accordance with the lease terms. The main uncertainty
relates to estimating the cost that will be incurred at the end of
the lease. The earliest point at which it is considered that this
amount may become payable is March 2019 for one leasehold property
and December 2019 for another.
28. Related party transactions
Two (2017: two) of the directors have received all of their
remuneration through their individual service companies during the
year. The payments represent short term employee benefits. The
amounts involved are as follows and relate to activities within
their responsibilities as directors:
In all cases the directors are responsible for their own
taxation and national insurance liabilities.
2018 2017
GBP GBP
------------------------------------------------- ------ ------
C Pilling (via The Personal Web Company Limited) 30,000 30,000
J Hamer (via Fin Dec Limited) 30,000 5,000
At the year-end Access Intelligence Plc owed Elderstreet
Investments Limited, a company of which M Jackson is Chairman
GBP8,337 (2017: GBP8,337).
During the year, interest on convertible loans of GBP30,685
(2017: GBP56,110) and on non-convertible loans of GBP36,000 (2017:
GBP36,000) was paid to Elderstreet VCT plc, a company of which M
Jackson is Chairman.
At the year end, an amount of GBP2,040 (2017: GBP2,040) was due
from M Jackson.
During the year, Access Intelligence Plc recharged certain costs
to Track Record Holdings Limited, an associate company. The total
amount invoiced was GBPNil (2017: GBP80,754) and the outstanding
balance at the year end was GBPNil (2017: GBPNil).
During the year Access Intelligence Media and Communications
Limited received services from Macranet Limited, a company in which
M Jackson is a board member, totalling GBP31,500 (2017: GBP75,900).
At the year end the Company owed GBPNil (2017: GBP12,600) to
Macranet Limited.
29. Pension commitments
Individual subsidiaries of the Group operate defined
contribution pension schemes for their employees. The assets of the
schemes are held separately from those of the Group. The annual
contributions payable are charged to the income statement when they
fall due for payment.
During the year GBP97,000 (2017: GBP130,000) was contributed by
the Group to individual pension schemes. At 30 November 2018 no
pension contributions were outstanding (2017: GBPNil).
30. Events after the reporting date
On 15 February 2019, J Arnold exercised options over 300,000
ordinary shares of 5 pence each at exercise prices of between 22p
and 27.5p per share. The total consideration paid in respect of the
options exercised was GBP74,500. Following the admission of the
300,000 new shares, issued share capital comprised 64,072,754
Ordinary Shares of which 2,966,666 Ordinary Shares were held in
treasury. Therefore, the total number of Ordinary Shares with
voting rights was 61,106,088.
On 18 February 2019, the Company announced that it had granted
options over 3,602,000 ordinary shares, equivalent to 5.92%. of the
voting share capital of the Company, at an exercise price of 56p
per share under the terms of the Access Intelligence plc Management
Incentive Scheme. The options will only be capable of being
exercised on or after the third anniversary of the date of grant
and provided the share price equals or exceeds a base price of 56p
at the time of exercise. Where capable of exercise, options may be
exercised at any time before the tenth anniversary of the date of
grant. The exact number of shares in respect of which an option can
be exercised in aggregate during the exercise period is dependent
on the share price at the time(s) of exercise and is a percentage
of the number of shares under option, calculated as 20% if the
share price is equal to 56p and rising on a straight-line basis to
100% when the share price reaches or exceeds 130p. As part of this
grant of options, 1,600,000 and 400,000 options over Ordinary
Shares have been granted to J Arnold and M Fautley
respectively.
31. Availability of Annual Report
Copies of the Report and Accounts will be posted to shareholders
where requested and the document will be available from the
Company's website (www.accessintelligence.com) later today.
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
FR CKPDNNBKBANB
(END) Dow Jones Newswires
March 26, 2019 03:01 ET (07:01 GMT)
Access Intelligence (LSE:ACC)
Historical Stock Chart
From Apr 2024 to May 2024
Access Intelligence (LSE:ACC)
Historical Stock Chart
From May 2023 to May 2024