Final Results

RNS Number : 7671L

Access Intelligence PLC

30 April 2015

 



FOR RELEASE                                                                                                   

7.00AM

30 April 2015

ACCESS INTELLIGENCE PLC

("Access Intelligence" or "the Company" or "the Group")

PRELIMINARY RESULTS FOR THE YEAR ENDED 30 NOVEMBER 2014

Access Intelligence Plc (AIM: ACC), a leading supplier of Software-as-a-Service (SaaS) solutions for the full life cycle management of a company's governance, risk and compliance, announces its unaudited results for the year ended 30 November 2014.

Highlights

·      Turnover increased 2% to £8,546,000 (2013: £8,388,000)

·      Contracted not yet invoiced revenue up 3% to £6,790,000 (2013: £6,623,000)

·      Recurring revenue up 8% to £6,595,000 (2013: £6,062,000) at 77% of sales (2013: 72%)

·      EBITDA down 3% to £426,000 (2013: £437,000)

·      Loss after tax was £1,082,000 (2013: loss £2,612,000)

·      Loss per share was 0.46p (2013: loss 1.11p)

·      Cash balance of £1,144,000 (2013: £1,521,000)

·      Total technology spend of £3,940,000 (2013: £4,151,000) of which £1,573,000 (2013: £1,686,000) was capitalised

Michael Jackson, Executive Chairman, commented:

"This year we have continued to invest in the strategic development of the Company's new software products which are due for gradual customer implementation in the latter part of the first half year of 2015. During the year the Company has continued to sign new SaaS contracts which is reflected in a 3% increase in revenues contracted not yet invoiced".

Our strategy continues to be to provide products which both new and existing customers can use as part of a combined suite of products allowing operational synergies and interoperability.

For further information:

Access Intelligence plc

Michael Jackson (Chairman)                                                            0843 659 29 40

Joanna Arnold (COO)                                                                       0843 659 29 40

Kole Dhoot (CFO)                                                                             0843 659 29 40

Sanlam Securities UK Limited (Nominated Adviser & Broker)

Simon Clements/David Worlidge                                                      020 7628 2200

Notes to Editors:

Access Intelligence plc. has a portfolio of Software-as-a-Service ("SaaS") brands delivering Governance, Risk and Compliance solutions to the public and private sector.  The board is headed by Michael Jackson as Executive Chairman, Joanna Arnold as COO and Kole Dhoot as CFO.

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 and Strategic Report

I am pleased to announce our results for the year ended 30 November 2014.

This year we have continued to invest in the strategic development of the Company's new software products which are due for gradual customer implementation in the latter part of the first half year of 2015. During the year the Company has continued to sign new SaaS contracts which is reflected in a 3% increase in revenues contracted not yet invoiced.

Our strategy continues to be to provide products which both new and existing customers can use as part of a combined suite of products allowing operational synergies and interoperability.

Outlook

Organisations continue to recognise the fundamental importance of using software, particularly those operating in both regulated and non-regulated markets across the world, to provide the necessary governance, risk and compliance data, combined with insightful and responsive management information, which enables them to reduce costs, improve performance and mitigate risks. The core of our strategy remains, and will remain, to meet these demands by using innovative and market- leading SaaS based solutions.

We believe that during 2015 the Group will benefit from the significant investment made in new product development in previous years. This exceptional level of investment to redevelop our integrated software platform will come to an end in 2015.

I would like to take this opportunity on behalf of the Board to thank you for your continued support

of Access Intelligence.

Strategic Report

Results

Revenue was up by 2% to £8,546,000 (2013: £8,388,000).

Our continued commitment to the Software-as-a-Service business model has enabled us to build long-term visibility of revenues and in 2014 recurring revenues on continuing operations, at £6,595,000 (2013: £6,062,000) accounted for 77% (2013: 72%) of total revenues. Total revenue was however impacted by lower than expected one-off consultancy revenue due to focus on delivering internal development projects. Existing customers looking to migrate to our new software products delayed one-off projects for delivery on the new platform in 2015 and 2016.

At 30 November 2014, deferred revenue stood at £3,246,000 (2013: £2,714,000) reflecting the change in timing of raising invoices to customers, while our contracted not yet invoiced revenue grew 3% to £6,790,000 (2013: £6,623,000).

Operating loss was £819,000 (2013: loss £2,530,000). In arriving at the operating loss we have charged £409,000 (2013: £360,000) for the depreciation and amortisation, £798,000 non-cash impairment charges (2013: £2,607,000) and £36,000 (2013: £40,000) for share-based payments.

Earnings before interest, tax, depreciation and amortisation (EBITDA) pre-impairment charges was down slightly to £426,000 (2013: £437,000).

As indicated last year, we have invested significantly in developing our products. The Group engaged an average of 71 (2013: 77) technical staff who support both the existing product offering as well as developing it. In 2014 £3,940,000 (2013: £4,151,000) was spent across the group on research and development and other technical expenditure. Our commitment to the future represents 46% of revenue (2013: 49%). This will continue to reduce in 2015 and 2016.

2015 will see continued investment across the Company's brands with the full benefits expected to come through towards the end of the current financial year and into 2016.

Loss per share

The basic loss per share was 0.46p (2013: loss 1.11p).

Cash

Cash at the year end stood at £1,144,000 (2013: £1,521,000) broadly in line with expectations and reflecting the ongoing impact of R&D capitalisation.

Dividend

As a result of the significant investment the Company has made in the strategic product innovation and sales development, the directors propose not to pay a dividend for 2014.

OPERATIONS

Software as a Service

Business Performance Management

Whilst maintaining its presence in financial services, AITrackRecord has gone through a pivotal year for research and development in 2014. AITrackRecord was the first brand within Access Intelligence to undergo a significant rewrite and forms the basis of the Group's integration strategy to deliver an end-to-end GRC product lifecycle. The new dynamic product offers customers an unprecedented level of configurability, flexibility and future-proofing, enabling them to realise ongoing ROI within the backdrop of an ever-evolving regulatory environment.

During 2014, AITrackRecord partnered with a number of customers and prospects to showcase these market-leading developments and ensure it is well positioned for launch in early 2015. Revenues were significantly impacted by a reduction in one-off consultancy projects as customers delayed decision-making until migration to the new platform.

e-Procurement and Supplier Risk Management

Customer retention remained high during the financial year, however total contract value has declined on renewal due to public sector budget cuts. Our presence in local authorities was further consolidated with new customer wins. We also saw customer wins from a wide cross section of the public sector and the NHS and Housing sectors. The Due North professional services team was strengthened returning their best ever year, seeing particular success in offering a fully managed e-auction service.

In January 2014, Due North strengthened its management team by appointing Malcolm McClen as Operations Director to take accountability for ongoing operational management and Barry Mellor joined as Strategic Account Director.

During 2014 customers began User Acceptance testing of our redeveloped ProContract version 3. Customer feedback has been positive, in particular the new look and feel and ease of use of the system We also maintained our existing version 2 product by releasing five updates during the course of the year. A new FMS integration solution was also developed, allowing customers to link ProContract to their finance systems to reduce time, control spend and improve accuracy.

Stakeholder and Reputation Management

In the financial year, AIMediaComms enjoyed significant success in both the public and private sectors. In all, AIMediaComms signed a significant number of new SaaS contracts, with 28% of these coming from the private sector, including a number of FTSE 100 companies from banking, utilities and telecoms. As in previous years, pricing pressure within the public sector continues.

Within the financial year, AIMediaComms added two new services to its portfolio of media and stakeholder engagement software. The first of these was a new political monitoring service that delivers real-time, targeted and accurate alerts on political, regulatory and public administration issues. The second was an updated Online Media Newsroom offering that has been deployed in a number of major companies.

These new modules and the ongoing development of our core platform, Vuelio, will help to ensure AIMediaComms maintains its current competitive advantage in the industry, and delivers further growth.

Business Continuity and Incident Management

AIControlPoint consolidated its position in 2014, and despite a small number of customer losses, maintained its presence in Oil and Gas. It also expanded its aviation client base to include a number of international airports. It broadened its utilisation within these key sectors from traditional crisis management to integration with customers' daily operations, further validating its return on investment.

During 2014, AIControlPoint's new Emergency Rota module was embedded in multiple major oil companies, whilst its AINotify module was enhanced to provide rich multilingual capabilities for its international offering. A collaboration between AIControlPoint and AIMediaComms resulted in the cross-sell of Vuelio into AICP's Oil and Gas community, who will use the system to coordinate press releases in the event of an incident affecting multiple operator/service companies and the emergency services.

As part of Access Intelligence's wider strategic positioning, development began at the end of 2014 to integrate AIControlPoint's incident management capability into a centralised platform to deliver an integrated Governance, Risk and Compliance lifecycle.

Division in recovery

Training and Competence

AITalent's operating losses including one-off charges were £146,000 (2013: £264,000). Losses are now reducing as a result of the period of restructuring having now been substantially completed.

AITalent has continued to focus on highly regulated and high-risk industries, seeing modest growth in the financial services market. The brand continues to maintain its presence in the pharmaceutical market with its compliance for the FDA 21 CFR Part 11 code. AITalent also represents a growth opportunity for other brands in the group, especially AITrackRecord, where the two propositions complement each other to offer powerful talent and performance management functionality.

IT Support Services

Infrastructure (IaaS), Cloud and Data Security Management

Willow Starcom had another successful year and saw significant wins under both the Willow Starcom and AICloud brands.

Further development of its cloud and hosted solutions business and increased investment in both technology and people enabled the Company to offer a wide range of On-Premise and Hosted Solutions and to capitalise on the growing requirement for hybrid infrastructure environments.

In addition to growing its traditional client base, Willow Starcom has provided a Data Centre and Enterprise Grade platform for Access Intelligence to develop and host its product portfolio on.

Under the AICloud brand the solution enabled Access Intelligence subsidiary companies to offer a complete Hosted SaaS Solution and an increasing number of Access Intelligence clients utilised the AICloud Solution either as a dedicated solution or as part of a shared resource platform.

On 21 April 2015 Access Intelligence Plc disposed of 100% of the issued share capital of Willow Starcom Ltd, being the IT support services segment disclosed in note 4, for a net consideration totalling £1,200,000.

Centralised Development Operations

2014 was a pivotal year for Access Intelligence as it completed the first wave of product development for market testing. Customers at Due North and AITrackRecord were engaged in significant alpha and beta testing projects with positive feedback on the new applications. The investment made by Access Intelligence in its York-based software engineering Centre of Excellence was key, compounding its strategy of migrating to a centralised Application Lifecycle Management toolset integrated with excellent quality management and customer delivery.

The first phase of the new software architecture was configured to deliver a major pilot for a FTSE 100 customer subject to comprehensive FCA regulation. Towards the end of 2014, expansion of the platform into phase two began with the development of core functionality for AIControlPoint and AITalent. This next phase will provide Access Intelligence with an innovative, highly configurable and resilient platform for the Enterprise Governance, Risk and Compliance market.

2014 also saw the raising of Access Intelligence's profile to Tier 1 supplier status with all of our major regulated customers. This required additional investment in quality and information security alongside comprehensive customer audits to demonstrate our industry standard compliance.

Strategy and Market

The rising evidentiary burden in highly regulated industries such as Oil and Gas, Pharmaceuticals and Financial Services is a key driver for Enterprise GRC solutions. The focus on senior accountability to drive good corporate governance, mitigate risk and develop competitive advantage ensures that Access Intelligence's solutions remain firmly on our customers' strategic and operational agendas.

The speed of change and adoption of next regulations means that customers demand an unprecedented level of configurability and flexibility in their software investments. Access Intelligence's innovative centralised platform will enable us to deliver a seemingly tailor-made solution to a highly diverse customer base on a single multi-tenanted architecture. This will significantly reduce our time-to-market for new regulatory requirements as well as empower customers to develop a significant level of autonomy in administering their own unique environment within the AI platform.

Software-as-a-Service based solutions continue to provide companies with a high performing, resilient and value-driven alternative to managing and maintaining software applications within their own infrastructure. Access Intelligence has utilised this software development and delivery method as a key component of its strategy, providing not only significant benefits to customers, but ensuring investors can benefit from increased innovation with a shorter time to market, a stable base for revenue growth and a long-term visibility of performance.

2015 promises to be an exciting year for Access Intelligence as we complete the migration of our suite of niche GRC products onto the centralised Enterprise GRC platform. Our focus over the coming year will be continuing to grow our brand recognition within GRC and realising the benefits of our integrated platform throughout our commercial activities.

Directors and Staff

2014 has demonstrated that our core belief of building a Group based on the expertise, experience and integrity of our industry-leading team is delivering significant value. I would like to thank all our staff for their hard work and commitment, which has enabled us to recognise considerable progress during 2014 and we expect to benefit from this in the coming years. As a Group we have delivered advances, and I look forward to our continued operational successes in 2015.

Consolidated Statement of Comprehensive Income

Year ended 30 November 2014

	Note	2014 £'000	2013 £'000
Revenue	3	8,546	8,388
Cost of sales		(2,368)	(2,245)
Gross profit		6,178	6,143
Administrative expenses		(6,163)	(6,026)
Share-based payment		(36)	(40)
Operating profit/(loss) before impairment		(21)	77
Impairment of intangibles		(798)	(2,607)
Operating loss	5	(819)	(2,530)
Financial income		1	10
Financial expense		(115)	(119)
Loss before taxation		(933)	(2,639)
Taxation credit	6	(149)	27
Loss for the year attributable to the equity holders of the parent company		(1,082)	(2,612)
Other comprehensive income		-	-
Total comprehensive income for the period attributable to the owners of the parent company		(1,082)	(2,612)
Earnings per share
Basic and diluted loss per share	7	(0.46)p	(1.11)p

Consolidated Statement of Financial Position

At 30 November 2014

	Note	2014 £'000	2013 £'000
Non-current assets
Property, plant and equipment		523	617
Intangible assets	8	8,406	7,807
Deferred tax assets		419	610
Total non-current assets		9,348	9,034
Current assets
Inventories		142	168
Trade and other receivables		2,613	2,023
Current tax receivables		237	337
Cash and cash equivalents		1,144	1,521
Total current assets		4,136	4,049
Total assets		13,484	13,083
Current liabilities
Trade and other payables		1,526	1,030
Accruals and deferred income		4,050	3,414
Interest bearing loans and borrowings	9	-	754
Total current liabilities		5,576	5,198
Non-current liabilities
Trade and other payables		60	-
Interest bearing loans and borrowings	9	1,301	507
Deferred tax liabilities		956	712
Total non-current liabilities		2,317	1,219
Total liabilities		7,893	6,417
Net assets		5,591	6,666
Equity
Share capital		1,324	1,324
Treasury shares		(148)	(148)
Share premium account		224	224
Capital redemption reserve		191	191
Share option reserve		338	331
Equity reserve		126	126
Retained earnings		3,536	4,618
Total equity attributable to the equity holders of the parent company		5,591	6,666

Consolidated Statement of Changes in Equity

Year ended 30 November 2014

	Share capital £'000	Treasury shares £'000	Share premium account £'000	Capital redemption reserve £'000	Share option reserve £'000	Equity reserve £'000	Retained earnings £'000	Total £'000
Group
At 1 December 2012	1,286	(148)	-	191	284	126	7,346	9,085
Total comprehensive loss for the year	-	-	-	-	-	-	(2,612)	(2,612)
Transactions with owners
Shares issued in year	38	-	-	-	-	-	-	38
Share premium on shares issued in year	-	-	224	-	-	-	-	224
Share-based payments - current year	-	-	-	-	40	-	-	40
Tax reversal relating to share-based payment	-	-	-	-	7	-	-	7
Dividends recognised as distributions to owners	-	-	-	-	-	-	(116)	(116)
At 30 November 2013	1,324	(148)	224	191	331	126	4,618	6,666
At 1 December 2013	1,324	(148)	224	191	331	126	4,618	6,666
Total comprehensive loss for the year	-	-	-	-	-	-	(1,082)	(1,082)
Transactions with owners
Share-based payments - current year	-	-	-	-	36	-	-	36
Tax reversal relating to share-based payment	-	-	-	-	(29)	-	-	(29)
At 30 November 2014	1,324	(148)	224	191	338	126	3,536	5,591

Consolidated Statement of Cash Flow

Year ended 30 November 2014

	2014  £'000	2013  £'000
Loss for the year	(1,082)	(2,612)
Adjusted for:
Taxation	149	(27)
Depreciation and amortisation	409	360
Amortisation and impairment of intangible assets	798	2,607
Share option charge	36	40
Interest income	(1)	(10)
Interest expense	115	119
Loss on disposal of property, plant and equipment	2	2
Operating cash inflow before changes in working capital	426	479
(Increase) in trade and other receivables	(590)	(116)
Decrease in inventories	26	23
Increase in trade and other payables	1,192	317
Net cash inflow from operations before taxation	1,054	703
Taxation received	356	45
Net cash inflow from operations	1,410	748
Cash flows from investing
Interest received	1	10
Acquisition of property, plant and equipment and software licences	(140)	(389)
Cost of software development	(1,573)	(1,686)
Net cash outflow from investing	(1,712)	(2,065)
Cash flows from financing activities
Interest paid	(75)	(76)
Issue of shares and share option exercise proceeds	-	262
Repayment of borrowings	-	(4)
Payment of dividend	-	(116)
Net cash inflow/(outflow) from financing	(75)	66
Net decrease in cash and cash equivalents	(377)	(1,251)
Opening cash and cash equivalents	1,521	2,772
Closing cash and cash equivalents	1,144	1,521

Notes to the financial statements

1.         Basis of preparation

This announcement has been prepared in accordance with the Company's accounting policies, which in turn are in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU") applied in accordance with the provisions of the Companies Act 2006. IFRS is subject to amendment and interpretation by the International Accounting Standards Board ("IASB") and the IFRS Interpretations Committee and there is an on-going process of review and endorsement by the European Commission. The accounting policies comply with each IFRS that is mandatory for accounting periods ended 30 November 2014.

The results are unaudited, however we do not expect there to be any difference between the numbers presented and those within the annual report.

The financial information set out above does not constitute the Group's statutory accounts, but is derived from those accounts. The statutory accounts for the year ended 30 November 2013 have been delivered to the Registrar of Companies and those for 2014 will be delivered following the Group's annual general meeting.

2.         Basis of consolidation

The Group results comprise the financial statements of Access Intelligence plc and its subsidiaries as at 30th November 2014. They are presented in Sterling and all values are rounded to the nearest thousand pounds (£'000).

3.         Revenue

The Group's revenue is primarily derived from the rendering of services with the value of sales of goods being not significant in relation to total Group revenue.

The Group's revenue was split into the following territories:

	2014 £'000	2013 £'000
United Kingdom	8,045	7,898
European Union	202	186
Rest of the world	299	304
	8,546	8,388

All non-current assets are held in the United Kingdom as they were in 2013. No customer represents 10% or more of revenue as was the case in 2013.

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 operating decision maker, the executive Chairman. The software as a service segment derives its revenues from software licence sales and support and training revenues. The IT support services revenue derives from maintenance and back-up services. The segments are:

·      Software as a service

·      IT support services

·      Division in recovery - AITalent Ltd

·      Head Office

The segment information for the year ended 30 November 2014 is as follows:

2014	Software as a service £'000	IT support services £'000	AI Talent Ltd  £'000	Head office £'000	Consolidation adjustment £'000	Total £'000
External revenue	5,539	2,288	719	-	-	8,546
Internal revenue	-	368	-	-	(368)	-
Operating profit/(loss)	1,504	303	(146)	(1,672)	(10)	(21)
Impairments	-		(798)			(798)
Finance income	1	-	-	-	-	1
Finance costs	-	-	-	(115)	-	(115)
Taxation	109	(6)	(37)	(147)	(68)	(149)
Profit/(loss) after taxation	1,614	297	(981)	(1,934)	(78)	(1,082)
Reportable segment assets	11,635	2,101	406	9,996	(10,654)	13,484
Reportable segment liabilities	5,510	1,353	1,977	7,534	(8,481)	7,893
Other information:
Additions to property, plant and equipment	19	101	2	18	-	140
Depreciation and amortisation	144	93	17	270	(115)	409

The segment information for the year ended 30 November 2013, is as follows:

2013	Software as a service £'000	IT support services £'000	AI Talent Ltd  £'000	Head office £'000	Consolidation adjustment £'000	Total £'000
External revenue	5,648	2,089	651	-	-	8,388
Internal revenue	-	294	-	-	(294)	-
Operating profit/(loss)	1,596	178	(264)	(1,369)	(64)	77
Impairments	(655)		(1,952)			(2,607)
Finance income	9	-	-	1	-	10
Finance costs	-	-	-	(119)	-	(119)
Taxation	(39)	-	66	-	-	27
Profit/(loss) after taxation	911	178	(2,150)	(1,487)	(64)	(2,612)
Reportable segment assets	9,756	1,888	542	11,671	(10,774)	13,083
Reportable segment liabilities	4,305	1,252	1,595	5,969	(6,704)	6,417
Other information:
Additions to property, plant and equipment	-	142	1	160	(7)	361
Depreciation and amortisation	115	99	6	83	57	360

5.         Operating loss

Operating loss is stated after charging:

	2014 £'000	2013 £'000
Depreciation of property, plant and equipment	233	214
Amortisation of development costs	80	48
Amortisation of brand values	60	69
Amortisation of software licences	36	30
Loss on disposal of property, plant and equipment	2	2
Impairment of intangibles	798	2,607
Exceptional costs (see below)	-	139
Operating lease charges - land and buildings	420	433
Auditor's remuneration	54	55
Share based payments	36	40
Research and development and other technical expenditure	2,363	2,465
(a further £1,573k (2013: £1,686k) was capitalised)
Cost of inventories	514	422
(Release of)/increase in provision for receivables	19	(139)

Exceptional costs in the year ended 30 November 2013 were incurred as a result of restructuring, incurring non-recurring one off termination of employment costs for staff and a director and associated legal fees; residual costs of closure and relocation of AITrackRecord Ltd's office to the York Development Centre and non-recurring costs incurred in setting up the new head office in London.

The exceptional costs are made up of the following:

	2014 £'000	2013 £'000
Compensation for loss of office - director	-	4
Compensation and notice payments - all staff	-	34
Recruitment and temporary staff fees	-	-
Legal costs incurred on compensation of loss of office for a director	-	10
Legal costs on the sale and purchase agreement & onerous lease termination	-	91
	-	139

6.         Taxation

	2014 £'000	2013 £'000
Current income taxes credit:
UK corporation tax credit for the year	(237)	(226)
Adjustment in respect of prior year	(19)	(136)
Total current income tax credit	(256)	(362)
Deferred tax
Impact of change in tax rate	-	(21)
De-recognition of deferred tax assets	363	-
Origination and reversal of temporary differences	42	356
Total deferred tax	405	335
Total tax credit	149	(27)

As shown above the tax assessed on the loss on ordinary activities for the year is higher than (2013: lower than) the standard rate of corporation tax in the UK of 21.7% (2013: 23.3%).

The differences are explained as follows:

	2014 £'000		2013 £'000
Loss on ordinary activities before tax	(933)		(2,639)
Loss on ordinary activities by effective rate of tax of 21.7% (2013: 23.3%)		(202)	(616)
Expenses not deductible for tax purposes	142		34
Adjustment in respect of prior year	(19)		(136)
Write off deferred tax asset	363		-
Additional R&D claim CTA 2009	(135)		691
Total tax expense/(credit)	149		(27)

Factors that may affect future tax expenses:

The main rate of corporation tax was reduced to 21% from 1 April 2014 and is due to be further reduced by a further 1% from April 2015. All deferred tax assets and liabilities are assumed to cease or be utilised at 20%.

7.         Earnings per share

The calculation of earnings per share is based upon the loss after taxation of £1,082,000 (2013: loss of £2,612,000) divided by the weighted average number of ordinary shares in issue during the year which was 233,560,576 (2013: 233,560,576).

In 2014 and 2013 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 position. This includes the 500,000 share options granted during 2014 and would also have included the convertible loan notes issued after the reporting year (refer note 27) if these convertible loan notes had been issued before the end of the reporting period. As a result, dilutive loss per share is disclosed as the same value as basic loss per share.

This has been computed as follows:

	2014			2013
	Loss after tax £'000	Weighted average no of shares	Loss per share (pence)	Loss after tax £'000	Weighted average no of shares	Loss per share (pence)
Loss attributable to ordinary shareholders	(1,082)	235,110,347	(0.46)	(2,612)	235,110,347	(1.11)
Dilutive effect of options	n/a	n/a	n/a	n/a	n/a	n/a
Dilutive effect of loan note conversion	n/a	n/a	n/a	n/a	n/a	n/a
Diluted loss per share for the year	(1,082)	235,110,347	(0.46)	(2,612)	235,110,347	(1.11)

On 21 September 2011 29,666,667 shares were returned to the Company and were held in Treasury at the year end. Once in treasury they were removed from the earnings per share calculation.

The total number of options and warrants granted at 30 November 2014 of 38,436,281 (2013: 39,396,281) would generate £1,176,190 (2013: £1,198,188) in cash if exercised. At 30 November 2014, 34,936,281 (2013: 10,596,281) were priced above the mid-market closing price of 2.31p per share (2013: 2.75p) per share and 3,500,000 (2013: 28,800,000) were below.

At the 30 November 2014 6,947,387 (2013: 7,407,387) staff options were eligible for exercising at an average price of 4.2p (2013: 4.3p). Also eligible for exercising are the 21,300,000 warrants priced at 2.75p per share held by M Jackson, D Lowe and Elderstreet VCT plc consequent to their investment in October 2008.

All of the outstanding loan notes, £750,000 in favour of Unicorn AIM VCT plc and £500,000 in favour of Elderstreet VCT will be redeemed at par or convert to a total of 31,250,000 shares on 31 December 2015.

8.         Intangible fixed assets

	Brand value £'000	Goodwill £'000	Development costs  £'000	Software licences £'000	Total £'000
Cost
At 1 December 2012	1,369	12,005	1,433	132	14,939
Capitalised during the year	-	-	1,686	28	1,714
At 30 November 2013	1,369	12,005	3,119	160	16,653
At 1 December 2013	1,369	12,005	3,119	160	16,653
Capitalised during the year	-	-	1,573	-	1,573
At 30 November 2014	1,369	12,005	4,692	160	18,226
Amortisation and impairment
At 1 December 2012	136	5,550	390	17	6,093
Amortisation in year	68	-	48	30	146
Impairment in year	145	2,428	34	-	2,607
At 30 November 2013	349	7,978	472	47	8,846
At 1 December 2013	349	7,978	472	47	8,846
Amortisation in year	60	-	80	36	176
Impairment in year	-	798	-	-	798
At 30 November 2014	409	8,776	552	83	9,820
Net Book Value
At 30 November 2014	960	3,229	4,140	77	8,406
At 30 November 2013	1,020	4,027	2,647	113	7,807

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 pre-impairment carrying amounts of goodwill and capitalised development costs not yet available for use allocated to each CGU are:

Pre-impairment
2014	Capitalised Development Costs £'000	Goodwill £'000	Total £'000
Software as a service:
Access Intelligence plc	30	89	119
Due North Ltd	2,433	1,033	3,466
Access Intelligence Media & Communications Ltd	425	1,928	2,353
AITrackRecord Ltd	1,242	-	1,242
	4,130	3,050	7,180
IT Support Services - Willow Starcom Ltd	-	800	800
Division in recovery - AI Talent Ltd	44	2,605	2,649
	4,174	6,455	10,629

The difference between the pre-impairment capitalised development costs of £4,174,000 and the net book value of £4,140,000 at 30 November 2014 is a £34,000 impairment charge in the year ended 30 November 2013 pertaining to Due North Limited.

The difference between the pre-impairment goodwill of £6,455,000 and the net book value of £3,229,000 at 30 November 2014 is full impairment of goodwill on AITalent Limited (of which the final £798,000 is recognised in the year ended 30 November 2014) and a £620,000 prior year impairment against goodwill on Due North Limited.

Pre-impairment 2013	Capitalised Development Costs £'000	Goodwill £'000	Total £'000
Software as a service:
Access Intelligence plc	7	89	96
Due North Ltd	1,674	1,033	2,707
Access Intelligence Media & Communications Ltd	352	1,928	2,280
AITrackRecord Ltd	612	-	612
	2,645	3,050	5,695
IT Support Services - Willow Starcom Ltd	-	800	800
Division in recovery - AI Talent Ltd	36	2,605	2,641
	2,681	6,455	9,136

At the balance sheet 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 financial budgets and forecasts as approved by the Board with a terminal value for the IT Support Services and ten years based on financial budgets and forecasts as approved by the Board for the SaaS segments with no terminal value, except for goodwill impairment assessment purposes.

The key assumptions used for value-in-use calculations are those regarding revenue growth rates and discount rates over the forecast period. Management estimate discount rates using pre-tax rates that reflect the current market assessment of the time value of money and the risks specific to the CGUs. 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 value in use calculations use information from approved budgets in the first three years, followed by applying specific growth rates for which the key assumptions, analysed by CGU are:

	Access Intelligence plc	Due North Ltd	Access Intelligence Media & Communications Ltd	Willow Starcom Ltd	AI Talent Ltd	AI Track Record Ltd
Annual revenue growth rate (years 4 to 5)	10%	9%	7%	2%	11%	20%
Annual revenue growth rate (years 6 to 10)	5%	5%	5%	N/A	5%	5%

The discount rate used for all companies was between 10% and 14%, depending on the risk profiles for each CGU and varying growth rates to the cost base of each CGU have been applied commensurate to deliver the revenue projected. The terminal growth rate used for the purposes of goodwill impairment assessments was 2.5% except for Willow Starcom which was 2%.

After review of the value-in-use of AI Talent Limited, the Board considers that, although future profits are forecast, the recent history of losses in that company and net cash outflows forecast in the immediate future, mean that a provision should be recognised representing the full residual brought forward carrying value of goodwill, being £798,000.

Other impairments

Other intangible assets are tested for impairment if indicators of an impairment exist. Such indicators include performance falling short of expectation.

In 2013, development costs of £34,000 were impaired to take account of a project that did not generate the expected revenues. Additionally, the directors impaired the brand value of Cobent, the former and no longer used name of AITalent Ltd. The impairment charge arising was £145,000.

The directors considered that there were no further indicators of impairment relating to the remaining intangible fixed assets at 30 November 2014.

9.         Interest bearing loans and borrowings

	2014 £'000	2013 £'000
Current
Convertible loan notes	-	754
Non-current
Convertible loan notes	1,301	507

On 30th June 2009 £1,750,000 convertible loan notes were issued. At 30 November 2013 and 30 November 2014, £1,250,000 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 30th June 2014 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 November 2013, the Company agreed terms with Elderstreet VCT (a company related to Chairman Michael Jackson) to extend the loans for 18 months, 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. These notes are classified as non-current at the year end.

In March 2014 the Company agreed the same terms as those agreed with Elderstreet VCT, with the other incumbent note-holder, Unicorn AIM VCT plc. These notes are redeemable at par or convertible to ordinary shares at 4p per ordinary share on or before maturing on 31 December 2015 and carried a coupon rate of 6% until 30 June 2014, thereafter 8% per annum, payable semi-annually until such a time as they are repaid or converted in accordance with their terms. These notes are classified as non-current at the year end.

No redemptions or conversions of the convertible loan stock arose in the year ended 30 November 2014.

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:

	2014 £'000	2013 £'000
Proceeds of issue of convertible loan notes	1,250	1,250
Equity component	(126)	(126)
Deferred taxation	(49)	(49)
Initial fair value of liability component	1,075	1,075
Cumulative interest charged	601	486
Cumulative interest paid	(375)	(300)
Liability component at 30 November	1,301	1,261

The equity component of £126,000 (2013: £126,000) has been credited to equity reserve.The interest charged for the year is calculated by applying an effective rate of interest of 9.8% (2013: 9.8%) 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 balance sheet at 30 November 2014 represents the effective interest rate less interest paid to that date.

The movement on the convertible loan note liability is summarised below:

	2014 £'000	2013 £'000
Opening loan liability	1,261	1,217
Interest charged for the year	115	119
Interest paid in the year	(75)	(75)
Liability component at 30 November	1,301	1,261

10.        Availability of Annual Report and AGM date

Copies of the Report and Accounts will be posted to shareholders shortly where requested and will be available from the Company's website (www.accessintelligence.com) from 30 April 2015. It is intended that the annual general meeting will take place at the Company's registered office, 10-11 Charterhouse Square, London, EC1M 6EH, at 14.00pm on Thursday, 28 May 2015.

 

END

 

 

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