Preliminary Results

RNS Number : 0307O

Actual Experience PLC

27 January 2023

 

27 January 2023

Actual Experience plc
(the "Company" or "Actual Experience" or "Actual")

Preliminary Results

Actual Experience plc (AIM: ACT), the Human Experience (HX) software-as-a-service company, announces its preliminary results for the year ended 30 September 2022.

Financial highlights

· Group revenue of £1.18m (2021: £1.74m). Decrease attributable to the non-renewal of two legacy product contracts

· Loss for the year of £5.27m (2021: £5.85m). The levels of monthly operating costs were reduced significantly by the year end compared to levels recorded earlier in the year

· Net cash at year end of £2.87m (2021: £8.22m). Post year-end funding of £2.8m (net) to be used to fund the working capital requirements of the Company and to strengthen its balance sheet to enable it to build financial credibility with larger blue-chip customers

Operational highlights

· Significant refresh of the Board and C-suite leadership bringing critical skills and experience in SaaS scale-ups

· Extensive market research project to identify and define our target audience and their pain points

· Applied our legacy technology to this newly emerged market problem

· Rebranded and repositioned our messaging and the the problem we solve

· Scaled our infrastructure to service enterprise customers

· Built and launched a brand new offering, our Digital Workplace Management Platform

· Completed a £3.1m (gross) equity fundraise after the year-end

Current trading and outlook

· We are in advanced discussions with a large UK central government department and expect this process to complete in spring 2023

· We are also in advanced discussions with two leading professional services firms:

o  The larger of these processes should complete by late spring 2023

o  The second commenced more recently but indications are that this will complete during summer 2023

· We are working closely with our existing channel partners such as Verizon and Vodafone, and new partners such as LACE, as well as increasing the size of our sales team, to identify new sales leads

Kirsten English, Executive Chair of Actual Experience plc, commented:

"During 2022, there has been meaningful change impacting every part of the business. This means our company is now positioned to capitalise on the growing market opportunity for digital workplace services.

In recent months, we have gained important new capabilities in the Company; new product, a revitalised sales team and significant changes to the Board and leadership of the Company. Our efforts are now focussed on making sales in the rapidly emerging market sector for digital workplace management tools. The economic conditions in the UK remain uncertain, sales cycles are lengthy, but we have built a solid pipeline through both our partners and, more recently, our 'Direct Sales' efforts.

I would like to thank Actual's dedicated and innovative staff, plus our customers, partners, and investors for their support this past year and look forward to delivering on our potential."

Enquiries:

Actual Experience plc Steve Bennetts, Chief Financial Officer	Tel: [phone]
Singer Capital Markets Advisory LLP Shaun Dobson James Fischer Turner Pope Investments (TPI) Ltd James Pope Andy Thacker	Tel: [phone] Tel: [phone]
MHP Communications Reg Hoare Matthew Taylor	Tel: [phone] [e-mail]

About Actual Experience

Actual Experience's goal is to make the digital world work for everyone, everywhere, all of the time. As the working world evolves post-pandemic, the global shift to a flexible hybrid model has brought with it a significant challenge; how do businesses create an environment that gives their people what they need to thrive, whilst protecting the commercial efficiency of the business and driving growth at the same time?

By underpinning their strategic decision making with our data-driven insights, our customers gain the clarity and confidence needed to build sustainable digital ecosystems within their organisations - delivering both a great employee experience and increasing the efficiency of the digital workplace. Powered by over 10 years of academic Human Experience research, our Digital Workplace Management System doesn't need any interaction with employees to provide a unique and highly actionable dataset that People, Technology and Finance leaders can rely upon to plan impactful projects against their most critical agenda items including wellbeing, profitability, DE&I and ESG initiatives.

Actual Experience is listed on the London Stock Exchange (AIM: ACT). Our corporate headquarters are in Bath, UK. Actual Experience's unique and patented digital analytics-as-a-service is founded on cutting-edge research from Queen Mary University of London.

For further information please visit www.actual-experience.com  

Chair's Statement

Overview

Although 2022 was, in some ways, a difficult year for the Group, we made significant changes which should position the company to take advantage of the growing demand for digital workplace services.

The marketplace for tools which improve the digital workplace is growing. Forrester, Gartner, and McKinsey publications, inter alia, show that this is an emergent market with a variety of service offerings designed to monitor and improve performance. Based on our analysis, in our opinion none of our competitors match the capability of Actual's new Digital Workplace Management Platform (DWMP) when it comes to providing the insights that corporate boards and management teams need to address in the complex, hybrid working environment. Our new product is more than a network performance tool, we provide continual and reliable data in a dashboard format which monitors employee wellbeing and signals where investments can be made to increase productivity.

Strategy

During 2022, we have increased our focus and pace of execution. Our strategy has been to build out the product, sales, and marketing capability of the company. Scarlet Jeffers joined in October 2021 as Chief Product Officer and DWMP was soft launched in May 2022. This was a significant achievement by the team. In May, Roy Jugessur joined as Chief Revenue Officer to professionalise our sales approach and kick start our Direct sales capability, whilst enhancing relationships with our major channel partners. We also rebranded the company for marketing purposes. During the year, we reviewed and reduced the cost base and decreased the 'cash burn rate' to allow us to invest in more 'front end' resources and give time for the new strategy to take root. And in October (following September roadshows), we raised capital to invest further in these capabilities and opportunities.

Please see the Interim Chief Executive's statement for an update on the development of our sales pipeline.

Board and Governance

During 2022, we have made important changes to leadership and governance. I stepped into the role of Chair in March and initiated a series of changes to refine our leadership and governance and ensure it is fit for the next stage of the Company's development. In addition to the senior management appointments mentioned above, our founder Chief Executive Officer, Dave Page, moved to a new role as Chief Strategy Officer with a mandate to secure more partnership business and became an advisor to the Board. I wanted to update you on the search for the new CEO. The process has yielded excellent internal and external candidates but is not yet concluded. However, we have an experienced management team whose focus is primarily on sales at this time. Consequently, Steve Bennetts will remain as Interim CEO (as well as being the CFO) and I will remain as Executive Chair until the new CEO comes on board. Richard Steele joined the Board in June 2022 and assumed the role of Chair of Audit in September when he replaced Sir Bryan Carsberg, who stepped down after eight years as a director. We thank Sir Bryan for his support and wisdom. In October 2022, Harmesh Suniara was appointed to the Board; Harmesh is a portfolio manager at Lombard Odier (a cornerstone investor in the recent fundraise).

Equity Placing

In October we went to the public market for additional funding and raised £2.8m (net). Our joint brokers were Singer Capital Markets and Turner Pope Investments as we targeted both professional and high net worth investors. The purpose of the fundraise was to increase our 'cash runway' to enable the new team and market positioning to make an impact.

Further details of our operational and financial considerations are outlined in the Interim Chief Executive statement and note 1 to the financial information.

Summary

During 2022, there has been meaningful change impacting every part of the business. This means our company is now positioned to capitalise on the growing market opportunity for digital workplace services.

In recent months, we have gained important new capabilities in the Company; new product, a revitalised sales team and significant changes to the Board and leadership of the Company. Our efforts are now focussed on making sales in the rapidly emerging market sector for digital workplace management tools. The economic conditions in the UK remain uncertain, sales cycles are lengthy, but we have built a solid pipeline through both our partners and, more recently, our 'Direct Sales' efforts.

I would like to thank Actual's dedicated and innovative staff, plus our customers, partners, and investors for their support this past year and look forward to delivering on our potential by booking orders and generating revenues in the current year and beyond.

Kirsten English

Chair

26 January 2023

Interim Chief Executive's Statement

One of the most profound and far-reaching business changes in recent times is the widespread adoption of employee hybrid working, often referred to as 'The Future of Work'. This has presented leadership teams with a once-in-a-generation opportunity to transform the digital environment for their employees. Having invested vast sums in the past in optimising their offices for employee digital experience, enterprises are now embracing this hybrid working environment by prioritising the 'human experience' of their digital business applications to ensure their employees are as productive as ever, anytime and anywhere. This important trend is now increasingly recognised by leading commentators such as Forrester and Gartner, who suggest that 2023 will be the start of a period when organisations prioritise investment in technologies that improve the human experience of their digital infrastructure.

Actual Experience is ideally placed to stake out a leadership position in this nascent Human Experience (HX) sector, thanks to its patented technology and many years of know-how. Uniquely, our SaaS solution provides actionable insights from the only perspective that matters, the human perspective. By acting as a proven-to-be-accurate proxy for employees accessing an enterprise's major applications, Actual is able to determine which employees are experiencing poor digital performance and then identify the areas requiring improvement.

Performance Review

Our previously communicated plans to pivot Actual's strategic focus to address the strong and pervasive commercial need for hybrid working data resulted in 2022 being a year of transition for the business. The Company has emerged from this period of change with a refreshed and reinvigorated leadership team and the launch of our market-leading Digital Workplace Management Platform (DWMP). We are pleased with the consistently positive market reaction to the DWMP from both channel partners and prospective enterprise customers.

Revenue for the year ended 30 September 2022 was generated entirely from legacy sales engagements and amounted to £1.2m (2021: £1.7m); as previously announced, this decrease is attributable to legacy contracts that were not renewed during the year and which did not involve our new DWMP product.

During the year, significant cost reductions, amounting to approximately a third of peak monthly spending (savings of over £0.2m per month) were achieved through reduced headcount and other operational initiatives. This will benefit the current financial year that commenced in October 2022 by lowering the Company's cash burn and break even point.

Net cash at 30 September 2022 was £2.9m (30 September 2021: £8.2m). Following the fund raise completed in October 2022 which raised net proceeds of £2.8m, Actual Experience retains a solid financial position, with net cash of £4.1m at 31 December 2022. However, at this time the Group remains loss-making and it will be necessary to win significant new sales orders.

People and culture

Our skilled employees are key stakeholders in the success of the Company and I would like to thank them for their ongoing hard work and dedication. 2022 has been a year of challenge and change for our people but through their continuing commitment and focus on achieving our strategic goals, the Company has emerged in a stronger position to execute our growth initiatives and stake a leadership position in the emerging SaaS market for Human Experience solutions.

Actual's corporate culture is at the heart of everything we do. I strongly support the Company's core values and behaviours which we expect every employee to uphold and which underpin the corporate strategy and decision making process. This culture ensures that the Company is fair, ethical and supportive towards all employees and stakeholders, making it a place where people are able to work effectively and achieve their career goals.

Platform development

An intrinsic element of the profound changes in Actual during the year has been the evolution of the Company's technology focussed culture to a more sales-led focus. As part of this, management has listened carefully to feedback from existing and prospective customers with regard to their requirements for comprehensive, easily accessible, and timely information regarding the employee experience of hybrid working. This resulted in a market-led definition of the required product to address enterprise needs

Fortunately, Actual has been able to re-purpose its established and patented algorithms and 'know-how' to provide the computational core of our new SaaS offering, the DWMP. This was launched in summer 2022 and includes an interface/portal that provides rich information on the operational capabilities of the digital workplace, by user, department, and geography.

In August 2022, the Company completed an initial deployment of the DWMP with an existing customer and then proceeded to live service in October 2022. The platform has proven to work reliably at scale in this large deployment and is already providing a wealth of actionable information regarding opportunities to derive digital workplace efficiencies. This has resulted in strongly positive customer feedback.

Our markets

While still maintaining a direct sales capability, the importance and ubiquity of the need for a compelling technology solution to support hybrid working means that Actual will increasingly seek to establish partnerships with leading technology solution providers, as well as consultancies focussing on the people dimension of hybrid working.

We believe that there is a widespread need for our technology and that it will appeal especially to large global enterprises with complex digital infrastructure and applications.

Partner programme

We are pleased with the on-going support and continuing commitment of our commercial channel partners Verizon and Vodafone, both of whom are actively promoting DWMP to their customer base. Most of the sales leads currently being pursued by Actual are being generated in this way.

As a strategic priority, Actual is actively seeking new partner relationships with leading technology and consulting companies. Several of these projects are well advanced and we expect to announce new partners in due course.

As announced in December 2022, the Company is particularly pleased with its recent progress with LACE Partners, a specialist HR consultancy with a 'Big Four' heritage. Together with LACE, Actual is actively pursuing several opportunities with LACE's large global clients.

Our current and prospective partners share our view of the need for a compelling technology offering that addresses the business need for comprehensive and timely information on the impact of hybrid working on the productivity and well-being of their employees. While several established technology companies claim to have a viable product offering, our partners confirm that Actual's DWMP is ideally placed to stake a leadership position in this emerging market.

Sales pipeline

At the time of the fundraise in September 2022 we talked about our order pipeline and how we collaborate with our partners to generate sales leads. Our primary focus subsequently has been on landing high value contracts with several key prospects as this is the fastest route to obtaining paying customers, generating revenue and improving our cash position.

The following progress has been achieved on these sales engagements in recent months:

· We are in advanced discussions with a large UK central government department. This is a sales process run to rigorous procurement standards and is therefore competitive. This process is scheduled to complete in spring 2023.

· We are also in advanced discussions with two leading professional services firms. The larger of these is running a full process to select their chosen HX supplier and we believe that this process should also complete in spring 2023. Discussions with the second firm commenced more recently but indications are that this is an engagement that will complete by summer 2023.

We are working closely on these projects with our partners Verizon and Vodafone and we are in the process of expanding our sales team to ensure that we have the capacity for handling these and other large enterprise opportunities. In our experience, enterprise sales cycles are typically 9 to 12 months, although recent economic uncertainty in the UK has extended the process for some prospects.

While our primary focus in recent months has been to drive these engagements to the point of placing orders, we also continue to identify new sales leads both with our partners and through direct selling efforts. We have also progressed our previously announced relationship with leading HR Consultancy LACE,  to both nurture opportunities within the HR community and develop joint marketing initiatives.

As noted in our Annual Report, we continue to receive positive feedback regarding our DWMP from existing and prospective customers as well as from our partners. While several large technology companies in the IT tooling space have recently started to play into the Digital Experience (DX) category, we retain our unique selling point having spent the last decade refining our patented algorithms and analysis. Rather than just reporting them, we translate a multitude of IT data points into quantified, prioritised actions to improve the digital workplace.

The successful completion of these sales leads remains of paramount importance to the Group. As outlined in further detail in the Financial Review and note 1 of the financial information, if the Group is not able to secure an appropriate combination of new revenue contracts and/or cost reductions and without further sources of finance being identified and obtained, then it may not have sufficient resources to meet its liquidity requirements for the foreseeable future. Accordingly, a material uncertainty exists which may cast significant doubt about its ability to continue as a going concern.

Technology investment

Actual will continue to work closely with its partners and enterprise customers to add high-value features to the DWMP to maintain its technology leadership position.

As our commercial sales activities increase, a priority for us is to continue to develop the scalability of our data centres so that they are able to meet the demands of the world's largest companies while improving our gross margins to 90%.

Summary and Outlook

Since our trading update issued in mid-December 2022, we have continued to make progress in all our major workstreams. As previously stated, our sales cycles remains lengthy and efforts to reduce this have been hampered by the challenging general business environment, including higher interest rates and reduced levels of economic growth. Further details of our operational and financial considerations are outlined in the  Financial Review and note 1 of the financial information.

Despite this economic backdrop, Actual is well placed to meet the strong and wide-spread enterprise demand for data to enable effective management of employee productivity and well-being. Our clear focus and priority is to continue to develop our pipeline of sales prospects and convert these as efficiently as possible to recurring high-margin SaaS revenue streams. In particular, we expect to be able to work closely with our existing and prospective channel partners to access large enterprise prospects. I am confident that the Company has taken the necessary steps to ensure that it is well positioned to take advantage of the commercial opportunity to stake a leadership position in one of the most significant enterprise technology developments in recent years.

Steve Bennetts

Interim CEO & CFO

26 January 2023

Financial Review

Revenue

Revenue recognised in the year ended 30 September 2022 was £1,182,956 (2021: £1,741,207) and relates to the supply of hybrid workplace Sofware-as-a-Service (SaaS) and associated consultancy services to customers. The reduction in revenue substantially arises from the non-renewal or cancellation of service for two legacy customers.

99% of revenue was derived from sales to Channel customers (2021: 99%) with the balance arising from direct sales.

Cost of sales and gross profit

The gross profit for the year was £338,052 (2021: £833,209); the decrease from the prior year is a result of lower revenues and the fixed cost element in data centre cloud costs. Included in cost of sales are data centre expenses of £518,151 (2021: £534,262), and salary and related costs of customer support teams totaling £326,753 (2021: £373,736).

Expenses

Administrative expenses comprising R&D, operational support, sales and marketing, finance and administration costs, and foreign exchange gains and losses, totalled £5,822,516, a decrease of £899,398 compared to the prior year. Most of this decrease is due to a non-recurring impairment charge in 2021, as well as the significant decrease in employee numbers in 2022 through a combination of planned reductions and attrition. This was partly offset by higher corporate costs, including audit fees and insurance premiums. The functional cost breakdown is as follows:

	2022	2021
Administrative expenses	£	£
Research & development	1,735,384	2,131,682
Impairment to previously capitalised development spend	-	820,110
Operational support	1,317,241	1,008,287
Sales & marketing	1,302,291	1,548,040
Finance & administration	1,468,617	1,209,945
Foreign exchange losses	(1,017)	3,850
Total	5,822,516	6,721,914

Tax

The higher tax credit recognised in the current financial year has arisen from the R&D tax credit claim relating to the innovative development projects required for the Company's recently launched Digital Workplace Management Platform.

Loss for the year and net asset position

Losses after tax totalled £5,274,002 (2021: loss of £5,847,195). This decrease in losses is the result of lower administrative expenses, partly offset by lower revenues, as well as a higher tax credit in 2022.

Net assets at year end were £3,482,623 (2021: £8,835,936)

Loss per share

The loss per share for the year was 9.19p (2021: loss per share of 10.84p). The decrease in loss per share reflects the decrease in total comprehensive loss for the year.

Dividend

No dividend has been proposed for the year ended 30 September 2022 (2021: £nil).

Cash flow

We are investing in the growth of our operations to address what we believe to be a significant commercial opportunity and our cash flow from operations was therefore negative during the year ended 30 September 2022, in line with expectations.

The Group's costs are mostly operating related, with very little investment required for capital infrastructure. Cash used by operating activities was £4,500,771 for the year, compared to cash used of £3,145,093 for the year ended 30 September 2021, with the increase primarily arising from the lower level of revenues and lower R&D tax credits received. This operating cash requirement was funded by cash reserves. The Group ended the year with cash totalling £2,871,344 (2021: £8,216,198).

Free cash flow for the year was £(5,279,050) (2021: £(3,861,700)). Free cash flow is defined as net cash flows used in operating activities, plus development of intangible assets, plus purchase of property, plant and equipment.

Accounting policies

The Group's financial statements have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006. The Group's significant accounting policies have been applied consistently throughout the year.

Principal risks and uncertainties and going concern

As more fully described in note 1 to the financial information, the amounts and timing of future revenues remain uncertain. If the Group is unable to secure an appropriate combination of new revenue contracts, cost reductions, and/or further sources of finance, then it may not have sufficient resources to meet its liquidity requirements for the foreseeable future. A material uncertainty exists which may cast significant doubt about its ability to continue as a going concern.

Other risks and uncertainties are summarised in the Annual Report.

Key performance indicators

As the Group is in the process of developing and commercialising its services, the Directors consider the key quantitative performance indicators to be sales revenues of £1,182,956 (2021: £1,741,207) and the level of cash held in the business of £2,871,344 (2021: £8,216,198). The Board performs regular reviews of actual results against budget, and management monitors cash balances on a monthly basis to ensure that the business has sufficient resources to enact its current strategy. Certain non-financial measures, such as the number of active customers and deployed DUs, are monitored on a monthly basis. The Board will continue to review the KPIs used to assess the business as it grows.

Steve Bennetts

Chief Financial Officer

26 January 2023

Financial information

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 30 SEPTEMBER 2022

		2022	2021
	Note	£	£
REVENUE	2	1,182,956	1,741,207
Cost of sales		(844,904)	(907,998)
GROSS PROFIT		338,052	833,209
Administrative expenses		(5,822,516)	(6,721,914)
OPERATING LOSS	3	(5,484,464)	(5,888,705)
Finance income		11,408	2,734
Finance expense		(23,391)	(27,285)
Finance expense - net		(11,983)	(24,551)
LOSS BEFORE TAX		(5,496,447)	(5,913,256)
Tax	4	222,445	66,061
LOSS FOR THE YEAR		(5,274,002)	(5,847,195)
Other comprehensive income/(expense):
Items that may be reclassified to profit or loss:
Foreign currency difference on translation of overseas operations		31,945	(19,314)
TOTAL COMPREHENSIVE EXPENSE FOR THE YEAR		(5,242,057)	(5,866,509)
LOSS PER ORDINARY SHARE
Basic and diluted	5	(9.19)p	(10.84)p

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 30 SEPTEMBER 2022

		Share	Share	Accumulated	Total
		capital	premium	losses	equity
		£	£	£	£
At 1 October 2020		95,284	34,768,349	(29,666,862)	5,196,771
Loss for the year		-	-	(5,847,195)	(5,847,195)
Other comprehensive expense for the year		-	-	(19,314)	(19,314)
Total comprehensive expense for the year		-	-	(5,866,509)	(5,866,509)
Transactions with owners, in their capacity as owners
Issue of shares		19,254	9,444,106	-	9,463,360
Share-based payment charge		-	-	42,314	42,314
At 30 September 2021		114,538	44,212,455	(35,491,057)	8,835,936
Loss for the year		-	-	(5,274,002)	(5,274,002)
Other comprehensive exchange income for the year		-	-	31,945	31,945
Total comprehensive expense for the year		-	-	(5,242,057)	(5,242,057)
Transactions with owners, in their capacity as owners
Issue of shares		832	28,935	-	29,767
Share-based payment credit		-	-	(141,023)	(141,023)
At 30 September 2022		115,370	44,241,390	(40,874,137)	3,482,623

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

FOR THE YEAR ENDED 30 SEPTEMBER 2022

		2022	2021
	Note	£	£
ASSETS
Non-current assets
Property, plant and equipment		35,249	48,879
Right-of-use assets		559,022	670,814
Intangible assets	7	968,780	897,199
TOTAL NON-CURRENT ASSETS		1,563,051	1,616,892
Current assets
Trade and other receivables		281,866	584,819
Income tax receivable	4	220,117	44,103
Cash and cash equivalents	6	2,871,344	8,216,198
TOTAL CURRENT ASSETS		3,373,327	8,845,120
TOTAL ASSETS		4,936,378	10,462,012
LIABILITIES
Non-current liabilities
Deferred tax		(6,494)	(8,901)
Lease liabilities		(485,622)	(604,894)
TOTAL NON-CURRENT LIABILITIES		(492,116)	(613,795)
Current liabilities
Trade and other payables		(842,366)	(897,041)
Lease liabilities		(119,273)	(115,240)
TOTAL CURRENT LIABILITIES		(961,639)	(1,012,281)
TOTAL LIABILITIES		(1,453,755)	(1,626,076)
NET ASSETS		3,482,623	8,835,936
EQUITY
Share capital		115,370	114,538
Share premium		44,241,390	44,212,455
Accumulated losses		(40,874,137)	(35,491,057)
TOTAL EQUITY		3,482,623	8,835,936

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 30 SEPTEMBER 2022

		2022	2021
	Note	£	£
Cash flows from operating activities
Loss before tax		(5,496,447)	(5,913,256)
Adjustments for:
Depreciation of property, plant and equipment		27,260	48,413
Depreciation of right-of-use assets		111,792	111,792
Amortisation of intangible assets	7	689,875	933,780
Impairment of intangible assets	7	-	820,110
Loss/(Profit) on disposal of property, plant and equipment		3,485	(359)
Non-cash employee benefits - share-based payments (credit)/expense		(141,023)	42,314
Finance income		(11,408)	(2,734)
Finance expense		23,391	27,285
Operating cash outflow before changes in working capital		(4,793,075)	(3,932,655)
Decrease in trade and other receivables		302,953	94,827
(Decrease/increase in trade and other payables		(54,673)	373,405)
Cash used in operations		(4,544,795)	(3,464,423)
Income taxes received		44,024	319,330
Net cash outflow from operating activities		(4,500,771)	(3,145,093)
Cash flows from investing activities
Development of intangible assets		(761,456)	(678,308)
Purchases of property, plant and equipment		(16,823)	(38,300)
Proceeds from sale of property, plant and equipment		-	363
Finance income		11,408	2,734
Net cash outflow from investing activities		(766,871)	(713,511)
Cash flows from financing activities
Proceeds from issue of share capital, net of costs		29,767	9,463,360
Principal element of lease payments		(115,239)	(138,630)
Interest element of lease payments		(23,391)	-
Employee Benefit Trust - repayment		-	(23)
Net cash (outflow)/inflow from financing activities		(108,863)	9,324,707)
(Decrease)/increase in cash and cash equivalents		(5,376,505)	5,466,103
Effect of exchange rate fluctuations on cash held		31,651	(4,179)
Cash and cash equivalents at start of year		8,216,198	2,754,274
Cash and cash equivalents at end of year	6	2,871,344	8,216,198

  NOTES TO THE FINANCIAL INFORMATION

FOR THE YEAR ENDED 30 SEPTEMBER 2022

1  Basis of preparation

Actual Experience plc is a public limited company which is listed on the AIM market of the London Stock Exchange and incorporated and domiciled in the United Kingdom and incorporated in England. The Company's registered office is Quay House, The Ambury, Bath, BA1 1UA.

The financial information at pages 9 to 12 is extracted from the Group's consolidated financial statements for the year ended 30 September 2022, which were approved by the Board of Directors on 25 January 2023.

The financial information does not constitute statutory accounts within the meaning of sections 434(3) and 435(3) of the Companies Act 2006 or contain sufficient information to comply with the disclosure requirements of UK-adopted international accounting standards and with the requirments of the Companies Act 2006 as applicable to companies reporting under those standards.

The Group's auditors, PricewaterhouseCoopers LLP, have given an unqualified audit opinion on the consolidated financial statements for the year ended 30 September 2022. The auditors' report included an emphasis of matter on going concern which the auditors drew attention to without qualifying their report. The consolidated financial statements will be filed with the Registrar of Companies, subject to their approval by the Company's shareholders on Tuesday 28 March 2023 at the Company's Annual General Meeting.

Going concern

As in previous years, the Group and Company have continued to utilise their cash resources to fund losses while the sales pipeline is being further developed. The Group's cash balance as at 30 September 2022 was £2.9m (30 September 2021: £8.2m) and further net proceeds of £2.8m were generated from the October 2022 Placing.

The amounts and timing of future revenues in the Group's budgets remain uncertain. The Group is experiencing an encouraging level of interest in its services and it is in active discussions with its channel partners and several large potential end-customers. The discussions are well progressed and are expected to result in additional revenue for the Group. However, at presen t a substantial proportion of the forecast revenue remains uncommitted and if the Group and Company are unable to secure an appropriate combination of new revenue contracts and/or cost reductions, then the Group and Company may not have sufficient resources to meet their liquidity requirements over the foreseeable future and be unable to continue as a going concern.

Based on the Group's latest "base case" assessment, and in the absence of cost reductions, the Group and Company is forecast to maintain positive cash reserves throughout the going concern period, albeit with very limited headroom for the period October 2023 through to March 2024. In addition, the Directors have also prepared a severe, but plausible downside scenario, based on significantly more pessimistic sales forecasts, with corresponding reductions in controllable costs. In this scenario, the Group and Company is forecast to run out of cash in January 2024 and as a result, without further sources of finance being identified and obtained, in such circumstances, the Group and Company would be unable to continue as a going concern.

Accordingly, a material uncertainty exists which may cast significant doubt about the Group's and the Company's ability to continue as going concern. Nevertheless, after making appropriate enquiries and considering the assumptions and uncertainties described above, the Directors have a reasonable expectation that the Group and Company will have adequate resources to continue operating at least until January 2024. The Directors are regularly reviewing the Group and Company's sales projections and, if deemed necessary, will complete a study of the Group's strategic options at the appropriate time. Therefore, the Directors continue to adopt the going concern basis in preparing the financial statements.

The financial statements do not include any of the adjustments that would be required if the Group or Company were unable to continue as a going concern.

2  Revenue

The information that is presented to the Chief Executive Officer (CEO), who is considered to be the Chief Operating Decision-Maker (CODM), for the purposes of resource allocation and assessment of performance, is based wholly on the overall activities of the Group. Due to the current size and activities of the Group, there is a high degree of centralisation of activities. The Directors therefore consider that there is one operating, and hence one reportable, segment for the purposes of presenting information under IFRS 8; that of Human Experience Management (HXM) Services. There are no differences between the segment results and the Consolidated Statement of Comprehensive Income. The assets and liabilities information presented to the CODM is consistent with the Consolidated Statement of Financial Position.

During the year ended 30 September 2022 the Group had two customers who generated more than 10% of total revenue. These customers generated 50% and 47% of revenue respectively.

During the year ended 30 September 2021 the Group had two customers who generated more than 10% of total revenue. These customers generated 79% and 20% of revenue respectively.

An analysis of revenues by geographic location of customers is set out below:

	2022	2021
	£	£
United Kingdom	627,300	387,212
United States of America	555,656	1,353,995
	1,182,956	1,741,207

3   Operating loss

	2022	2021
	£	£
Loss from operations is stated after charging/(crediting):
Depreciation on property, plant and equipment	27,260	48,413
Depreciation of right-of-use assets	111,792	111,792
Amortisation of intangible assets	689,875	933,780
Employee costs	4,082,186	3,948,871
Foreign exchange (profits)losses	(1,017)	3,850
Impairment charge	-	820,110

4   Tax

Tax on loss

	2022	2021
	£	£
Current tax:
UK corporation tax on losses of the year	(220,117)	(63,705)
Overseas taxes	79	(4,178)
Deferred tax:
Origination and reversal of timing differences	(2,407)	1,822
Total tax credit	(222,445)	(66,061)

Factors affecting the current tax credits

The tax assessed for the year varies from the standard UK company rate of corporation tax as explained below:

	2022	2021
	£	£
Loss before tax	(5,496,447)	(5,913,256)
Tax at the UK corporate tax rate of 19% (2021: 19%)	(1,044,325)	(1,123,519)
Effects of:
(Income)/expenses not deductible for tax purposes	124,737	189,985
Unrecognised deferred tax asset on losses	773,509	897,765
Research and development enhancement in respect of the current year	(76,366)	(864)
Prior year adjustment	-	(19,602)
Employee share acquisition adjustment	-	(9,826)
Tax credit for the year	(222,445)	(66,061)

The Group has tax losses carried forward of approximately £43,450,000 (2021: £39,474,000).

The Group has incurred qualifying expenditure on research and development projects which has given rise to tax credits due from HM Revenue and Customs. At 30 September 2022, the amount due from HMRC was £220,117 (2021: £44,103).

5  Loss per ordinary share

Basic loss per share is calculated by dividing the loss attributable to the owners of the parent by the weighted average number of ordinary shares in issue during the year. Diluted loss per share is calculated by adjusting the weighted average number of ordinary shares in issue during the year to assume conversion of all dilutive potential ordinary shares. The Company has one class of potentially dilutive ordinary shares, being those share options granted to employees where the exercise price is less than the average market price of the Company's ordinary shares during the year. However, due to losses incurred in both the current and previous financial year, there is no dilutive effect from the potential exercise of these dilutive shares.

	2022	2021
	£	£
Total loss attributable to the equity holders of the parent	(5,274,002)	(5,847,195)

	No.	No.
Weighted average number of ordinary shares in issue during the year	57,400,891	53,911,253
Loss per share
Basic and diluted on loss for the year	(9.19)p	(10.84)p

6  Cash and cash equivalents

	2022	2021
Bank credit rating:	£	£
A+	811,068	-
A	2,060,276	5,215,643
A-	-	3,000,555
Cash and cash equivalents	2,871,344	8,216,198

The above gives an analysis of the credit rating of the financial institutions where cash balances are held.

All of the Group's cash and cash equivalents at 30 September 2022 are held in instant access current accounts or short-term deposit accounts. Balances are denominated in UK sterling (£) and US dollars ($) as follows:

	2022	2021
	£	£
Denominated in UK sterling	2,786,716	7,161,566
Denominated in US dollars	84,628	1,054,632
Cash and cash equivalents	2,871,344	8,216,198

The Directors consider that the carrying value of cash and cash equivalents approximates to their fair value.

7  Intangible assets

	Development costs
	£
Cost
At 1 October 2020	5,440,883
Additions	678,308
At 30 September 2021	6,119,191
Additions	761,456
At 30 September 2022	6,880,647
Accumulated amortisation and impairment losses
At 1 October 2020	3,468,102
Charge for the year	933,780
Impairment charge	820,110
At 30 September 2021	5,221,992
Charge for the year	689,875
On disposals	-
At 30 September 2022	5,911,867
Net book value
At 30 September 2022	968,780
At 30 September 2021	897,199

Amortisation and impairment charge

The amortisation of development costs is recognised within administrative expenses in the Consolidated Statement of Comprehensive Income. The Directors have reviewed the carrying value of the development costs at 30 September 2022 and have decided that no impairment charges are necessary for the current year (2021: impairment charge of £820,110).

8   Annual Report and Financial Statements

The Company's Annual Report and Financial Statements for the year ended 30 September 2022, together with a notice convening the Company's Annual General Meeting, will be posted to shareholders in due course.

 

END

 

 

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