Interim Results

RNS Number : 5509T

Access Intelligence PLC

21 July 2020

 

ACCESS INTELLIGENCE PLC

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

INTERIM RESULTS

 

Access Intelligence (AIM: ACC), the technology innovator delivering Software-as-a-Service ("SaaS") solutions for the PR, communications and marketing industries, announces its unaudited half year results for the six months ended 31 May 2020.

Highlights:

· The Group's first half revenue increased by approximately 52% to £9.4 million (H1 2019: £6.2 million).

· Excluding Pulsar, which was acquired in H2 2019, revenue increased by 10% to £6.8 million.

·     Annual Contract Value ("ACV") base increased by £1.06 million (12% annualised) to £19.1 million (H1 2019: growth of £0.5m to £12.9 million).

· The Group delivered an Adjusted EBITDA* loss in the period of £147,000 (H1 2019: profit of £379,000) which includes the effects of IFRS 16 from 1 December 2019 (which resulted in an increase in Adjusted EBITDA* of £393,000 for the period).

·     Excluding the loss contributed during the period by Pulsar, Adjusted EBITDA was £573,000.

· At 31 May 2019, cash balance was £2.65 million (H1 2019: £1.76 million and FY 2019: £2.0m).

·     The Group's robust response to COVID-19 disruption prevented a possible impact on client service, product development or the Company's sales and marketing capabilities.

· COVID-19 response measures included £1.1m of cost savings of which £1.0m will be realised in H2 2020.

·   Acquisition of Pulsar combined with investment in technology has strengthened the product portfolio opening up new global markets and sector opportunities that will secure growth into H2 and beyond.

Christopher Satterthwaite, non-executive Chairman, commented:

"Against a backdrop of global economic disruption prompted by COVID-19, the resilience shown by the Group in delivering revenue growth of 52% to £9.4m with ACV increasing by 12% to £19.1m has been demonstrated. The strength of the Group operating model, its technological capability and exceptional customer service are making it the 'go to' software group for the PR, communications and marketing industries. While the second half of the year will present challenges with continuing uncertainty on the timing of new sales, the expanded product portfolio including Pulsar provides resilience and the board remain confident in the long term growth opportunities available to the Group as we continue to seek  new sector and territorial opportunities."

* Adjusted EBITDA is earnings before interest, tax, depreciation and amortisation and adjusted for share based payments, share of losses of an associate and non-recurring expenses primarily relating to the acquisition and integration of Pulsar in the current period and ResponseSource in the prior period.

For further information:

Access Intelligence plc  020 3426 4024

Joanna Arnold (CEO) / Mark Fautley (CFO)   

finnCap Limited (Nominated Adviser and Broker)   020 7220 0500

Corporate Finance:

Marc Milmo / Kate Bannatyne / Matthew Radley     

Corporate Broking:

Alice Lane / Sunila de Silva

Prior to publication, the information contained within this announcement was deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). With the publication of this announcement, this information is now considered to be in the public domain.

 

Chairman's statement

I am pleased to announce our unaudited interim results for the six months ended 31 May 2020.

In the first half of 2020, the Group increased revenue by 52% to £9.4million while delivering double digit ACV growth in its existing Vuelio and ResponseSource brands, and 18% ACV growth in newly acquired Pulsar.  

As an audience intelligence and social listening platform and acquired in October 2019, Pulsar has expanded the Group's portfolio, opening up new product, territorial and sector opportunities and providing resilience against market volatility. While the acquisition has reduced the Group's gross margin and Adjusted EBITDA in the short term due to planned investment in sales and marketing to scale the business and leverage its fixed data costs, this investment has enabled Pulsar to deliver 18% annualised growth during the period.

The acquisition continues to contribute to the overall growth potential of the Group which combines technologies that provide real-time, actionable insights from consumer trends, media commentary, political and stakeholder engagement to improve reputation management and marketing effectiveness.

The progress delivered by the Group during the period is a testament to the underlying resilience of the Group given the impact the COVID-19 crisis has had on the global economy which has been seen in the slowing of the Group's sales cycles and an increase in client financial vulnerability.

The Group reacted quickly to mitigate the impact, firstly by protecting the safety of employees by enabling secure remote working that ensured lockdown had no impact on client service, product development or sales and marketing. At the same time, the Group completed a comprehensive review of costs to identify and implement measures, including taking advantage of government support such as the job retention scheme, that are expected to realise over £1.1m of savings in the current financial year, with £1.0m of this benefit in the second half. These precautionary measures taken are expected to minimise the potential negative impact of COVID-19 on the Group's performance in the current financial year, especially given the uncertainty that remains for the second half of the financial year. Of these savings, it is anticipated that £0.1m will flow through into the next financial year where further opportunities for cost reduction continue to be evaluated.

Alongside the robust underlying performance amongst the Group's existing client base, the period also saw new business success across the Group with clients added including global brands spanning the public, private and charity sectors. New client wins included Aegon, Allen & Overy, Astra-Zeneca, Chanel, the Co-operative Group, Lotus, Ministry of Justice, Nintendo, OFGEM and the WWF. In the USA, Pulsar won new clients including Dow Jones, the International Monetary Fund, Levi Strauss and Twitter. The wins reflect the strength of the improved and expanded product portfolio.

Looking ahead, the Directors remain confident about the longer-term growth opportunity as the Group continues to actively pursue new business opportunities and capitalise on opportunities to improve retention, realise cost synergies and enhance margin. Particularly, the functionality and data set that Pulsar adds to the Group will unlock value and accelerate growth by expanding the potential of the underlying technology and its benefit to PR, communications and marketing industries.

However, the confidence in outlook for the Group has to be set against the impact of COVID-19 on the market. In particular this has had inevitable effect on the rate of new business wins as potential new customers put certain projects on hold and delayed investing in new technology products. This slow down in new business wins has meant that, despite further ACV growth of £0.3 million in June 2020, the Group's new sales were approximately 19% behind the Board's expectations at 30 June 2020. This uncertainty means that whilst the resilience and strength that the business demonstrated in the first half has been very satisfactory, with the Board encouraged by the recurring nature of the Group's revenue (H1 2020: 94%), the Group's ability to generate new business in line with our original 2020 expectations remains unclear.

Given the nature of the Company's SaaS based recurring revenue model, the Group's ability to deliver against its pipeline of sales opportunities will prove key as we look forward to the next financial year, as the Group's run rate revenue at the year-end will be an important indicator to the outlook.  Notwithstanding the current environment, I remain confident in the long-term growth opportunities available to the Group as we continue to seek to open new sector and territorial opportunities. 

Results for the half year

A key financial metric monitored by the Board is the growth in the ACV base year-on-year. This reflects the annual value of new business won, together with upsell into the Company's existing customer base as it delivers against its land and expand strategy, less any customer losses. It is an important metric for the Group as it is a leading indicator of future revenue.

During the period, the Group's ACV base grew by £1.06 million (12% annualised) to £19.1 million (H1 2019: growth of £0.45m to £12.9 million). Vuelio and ResponseSource ACV grew by 10% annualised in the period whilst Pulsar ACV grew by 18% annualised.

Revenue for the period grew by 52% to £9.4 million (H1 2019: £6.2 million). The year-on-year increase was primarily driven by the Pulsar acquisition, plus the growth in ACV delivered by Vuelio and ResponseSource during the second half of the 2019 financial year and the first half of 2020. £6.8 million of revenue in the period related to Vuelio and ResponseSource (10% growth) and £2.6 million related to Pulsar. Recurring revenue comprised 94% of total revenue (H1 2019: 98%).

Gross profit from continuing operations increased by 42% year-on-year to £6.65 million (H1 2019: £4.68 million) with the Group delivering a gross margin of 71% (H1 2019: 76%). Gross margin was diluted compared to the prior period due to higher fixed data costs in Pulsar. Excluding the impact of Pulsar, gross margin increased to 77% for the period.

Adjusted earnings before interest, tax, depreciation and amortisation ("EBITDA") were a loss of £147,000 compared to a profit £379,000 in H1 2019. Adjusted EBITDA for the period comprises an Adjusted EBITDA profit of £573,000 delivered by the Group excluding Pulsar, offset by Pulsar's Adjusted EBITDA loss of £720,000. The impact of the Group's adoption of IFRS 16 from 1 December 2019 has resulted in an improvement in Adjusted EBITDA for the period of £393,000 (H1 2019: £Nil).

Adjusted EBITDA excludes certain non-recurring items totalling £730,000 for the period (H1 2019: £662,000), in addition to the Group's share of loss of an associate of £74,000 (H1 2019: £92,000) and a share-based payments charge of £46,000 (H1 2019: £21,000).

Non-recurring items in the period included transition and migration costs in respect of acquisitions of £730,000 (H1 2019: £662,000). It is not anticipated that the transition and migration costs in respect of acquisitions will continue into the financial year ended 30 November 2021. Reported EBITDA loss from continuing operations was £997,000 (H1 2019: loss of £396,000).

The Group increased its investment in the Vuelio and Pulsar platforms with identifiable new product development activity being capitalised. The Group capitalised development costs of £958,000 for the period (H1 2019: £1,048,000), with a further £782,000 (H1 2019: £408,000) of product, research and development costs being expensed through profit and loss.

The Group's operating loss from continuing operations was £2,683,000 (H1 2019: loss £1,383,000). The Group incurred £1,686,000 of depreciation and amortisation charges (H1 2019: £987,000).

The basic loss per share was 3.91p (H1 2019: loss 2.36p).

The Group held cash at the end of the period of £2,647,000 (H1 2019: £1,762,000).

Christopher Satterthwaite

Non-executive Chairman

 

Access Intelligence Plc

Consolidated Statement of Comprehensive Income

for the six months ended 31 May 2020

	Unaudited 6 months ended	Unaudited 6 months ended	Audited Year ended
	31-May-20	31-May-19	30-Nov-19
Continuing operations	£'000	£'000	£'000
Revenue	9,379	6,159	13,429
Cost of sales	(2,733)	(1,478)	(3,395)
Gross profit	6,646	4,681	10,034
Recurring administrative expenses	(6,793)	(4,302)	(9,229)
Adjusted EBITDA	(147)	379	805
Non-recurring administrative expenses	(730)	(662)	(1,777)
Share of loss of associate	(74)	(92)	(201)
Share-based payments	(46)	(21)	(63)
EBITDA	(997)	(396)	(1,236)
Depreciation of tangible fixed assets	(430)	(47)	(169)
Amortisation of intangible assets - internally generated	(525)	(428)	(840)
Amortisation of intangible assets - acquisition related	(731)	(512)	(854)
Operating loss	(2,683)	(1,383)	(3,099)
Gain arising on acquisition	-	-	298
Financial income	2	-	2
Financial expense	(187)	(58)	(95)
Loss before tax	(2,868)	(1,441)	(2,894)
Taxation credit	48	-	734
Loss for the period	(2,820)	(1,441)	(2,160)
Other comprehensive income	-	-	-
Total comprehensive loss for the period attributable to the owners of parent company	(2,820)	(1,441)	(2,160)
Earnings per share:
Basic loss per share	(3.91)p	(2.36)p	(3.44)p
Diluted loss per share	(3.91)p	(2.36)p	(3.44)p

Access Intelligence Plc

Consolidated Statement of Financial Position

at 31 May 2020

	Unaudited		Unaudited		Audited
	As at		As at		As at
	31-May-20		31-May-19		30-Nov-19
	£'000		£'000		£'000
Non-current assets
Intangible assets	15,880		14,188		16,143
Investments in associates	43		226		117
Property, plant and equipment	860		170		884
Right of use asset	2,405		-		-
Deferred tax asset	21		37		21
Total non-current assets	19,209		14,621		17,165
Current assets
Trade and other receivables	6,429		4,344		7,737
Current tax receivables	617		362		995
Cash and cash equivalents	2,647		1,762		2,001
Total current assets	9,693		6,468		10,733
TOTAL ASSETS	28,902		21,089		27,898
Current liabilities
Trade and other payables	4,941		2,037		3,807
Accruals	836		1,162		1,206
Provisions	-		171		-
Deferred revenue	8,105		6,749		7,935
Lease liabilities	277		-		-
Interest bearing loans and borrowings	12		139		23
Total current liabilities	14,171		10,258		12,971
Non-current liabilities
Provisions	213		-		213
Lease liabilities	2,626		-		-
Interest bearing loans and borrowings	-		840		-
Deferred tax liabilities	595		609		643
Total non-current liabilities	3,434		1,449		856
TOTAL LIABILITIES	17,605		11,707		13,827
NET ASSETS	11,297		9,382		14,071
Equity
Share capital	3,961		3,204		3,961
Treasury shares	(148)		(148)		(148)
Share premium	17,242		13,135		17,242
Capital redemption reserve	191		191		191
Share option valuation reserve	457		369		411
Other reserve	502		-		502
Retained earnings	(10,908)		(7,369)		(8,088)
TOTAL EQUITY ATTRIBUTABLE TO EQUITY SHAREHOLDERS	11,297		9,382		14,071

Access Intelligence Plc

Consolidated Statement of Changes in Equity

for the six months ended 31 May 2020

					Share
	Share	Treasury	Share	Capital	option	Other	Retained	Total
	capital	Shares	premium	redemption	valuation	reserve	earnings
			account	reserve	reserve
	£'000	£'000	£'000	£'000	£'000	£'000	£'000	£'000
At 1 December 2018	3,189	(148)	13,075	191	348	-	(5,928)	10,727
Total comprehensive income for the period	-	-	-	-	-	-	(1,441)	(1,441)
Exercise of share options	15	-	60	-	-	-	-	75
Share-based payments	-	-	-	-	21	-	-	21
At 31 May 2019	3,204	(148)	13,135	191	369	-	(7,369)	9,382
Total comprehensive income for the period	-	-	-	-	-	-	(719)	(719)
Issue of share capital	757	-	4,107	-	-	-	-	4,864
Share-based payments	-	-	-	-	42	-	-	42
Arising on acquisition	-	-	-	-	-	502	-	502
At 30 November 2019	3,961	(148)	17,242	191	411	502	(8,088)	14,071
Total comprehensive income for the period	-	-	-	-	-	-	(2,820)	(2,820)
Share-based payments	-	-	-	-	46	-	-	46
At 31 May 2020	3,961	(148)	17,242	191	457	502	(10,908)	11,297

 

Access Intelligence Plc

Consolidated Statement of Cash Flow

for the six months ended 31 May 2020

	Unaudited 6 months ended		Unaudited 6 months ended		Audited Year ended
	31-May-20		31-May-19		30-Nov-19
	£'000		£'000		£'000
Loss for the year attributable to shareholders	(2,820)		(1,441)		(2,160)
Adjustments for:
Taxation	(48)		-		(734)
Depreciation and amortisation	1,686		987		1,863
Share option charge	46		21		63
Share of loss of associate	74		92		201
Financial income	(2)				(2)
Financial expense	187		58		95
Gain arising on acquisition	-		-		(298)
Operating cash outflow before working capital changes	(877)		(283)		(972)
Decrease/(increase) in trade and other receivables	1,408		(698)		(1,790)
Increase/(decrease) in trade and other payables	1,171		(1,362)		(864)
Net cash inflow/(outflow) from operations	1,702		(2,343)		(3,626)
Tax received	378		-		-
Net cash inflow/(outflow) from operating activities	2,080		(2,343)		(3,626)
Investing
Interest received	2		-		-
Acquisition of PPE	(118)		(49)		(856)
Acquisition of software licences	(34)		(48)		(56)
Cost of software development	(958)		(1,048)		(2,337)
Acquisition of Pulsar	-		-		(43)
Loan to associate	(100)		-		-
Net cash outflow from investing activities	(1,208)		(1,145)		(3,292)
Financing
Interest paid	(187)		(125)		(124)
Repayment of loans	(11)		-		(918)
Lease liabilities paid	(28)		-		-
Issue of shares	-		-		4,521
Exercise of share options	-		75		140
Net cash outflow from financing activities	(226)		(50)		3,619
Net increase/(decrease) in cash	646		(3,538)		(3,299)
Opening cash and cash equivalents	2,001		5,300		5,300
Closing cash and cash equivalents	2,647		1,762		2,001

Notes

1.  Unaudited notes

Basis of preparation and accounting policies

The financial information for the six months to 31 May 2020 is unaudited and was approved by the Board of Directors on 20 July 2020.

The interim financial statements do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements for the year ended 30 November 2019.

The interim financial information for the six months ended 31 May 2020, including comparative financial information has been prepared on the basis of the accounting policies set out in the last annual report and accounts, with the exception of IFRS 16 Leases, and in accordance with International Financial Reporting Standards ("IFRS"). The Group has initially adopted IFRS 16 Leases from 1 December 2019.

The objective of IFRS 16 is to ensure a single lease accounting model and for lessees to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlining asset is of low value. The Group has applied the modified retrospective approach and measured the lease liability based on the remaining lease payments, discounted using the incremental borrowing rate as of the date of initial application. Right of use assets have been measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments.

The Group has elected to apply the standard to contracts that were previously identified as leases applying IAS 17 and IFRIC 4. The Group has also elected to use the exceptions proposed by the standard on lease contracts for which the lease term ends within 12 months as of the date of initial application, and lease contracts for which the underlying assets are low value.

The Group applies the standard to a portfolio of leases with similar characteristics, since it is reasonably

expected that the resulting effect is not materially different from applying the standard on a lease-by lease basis.

On transition to IFRS 16 on 1 December 2019, the Group recognised a £2,693,000 right-of-use asset, along with a corresponding lease liability of £2,930,000. During the period the Group recognised a credit of £393,000 to administrative expenses, a depreciation charge of £289,000 and a financial expense of £175,000 related to IFRS 16. As such, the application of IFRS 16 has resulted in an increase in EBITDA of £393,000, a reduction in operating loss of £104,000 and an increase in loss before tax of £71,000.

In addition, the application of the standard has resulted in an increase in cash flows from operating activities of £203,000 and an increase in cash outflows from financing activities of £203,000.

The preparation of the interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expense. Actual results may subsequently differ from those estimates.

In preparing the interim financial statements, the significant judgements made by management in applying the Group's accounting policies and key sources of estimation uncertainty were the same, in all material respects, as those applied to the consolidated financial statements for the year ended 30 November 2019.

The Group has elected to present comprehensive income in one statement.

Going concern assumption

The Group meets its day to day working capital requirements through its cash balance. It does not have

a bank loan or overdraft, although did have an other loan of £12,000 at the period end.

As a result of the market uncertainty due to the ongoing COVID-19 situation, the possible impact on

available cash during the next 12 months' trading has been modelled. The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within its existing cash deposits.

Consequently, after making enquires, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis of accounting in preparing the interim financial statements.

Cost of sales

Cost of Sales comprises third party costs directly related to the provision of services to customers. During

the prior year the Group changed the classification of certain employee salary costs which in previous years had been disclosed within Cost of Sales. As a result, £418,000 of staff costs that had previously been disclosed within Cost of Sales in the Income Statement for the six months ended 31 May 2019 have been reclassified to Administrative expenses.

Information extracted from the Group's 2019 Annual Report

The financial figures for the year ended 30 November 2019, as set out in this report, do not constitute statutory accounts but are derived from the statutory accounts for that financial year.

The statutory accounts for the year ended 30 November 2019 were prepared under IFRS and have been delivered to the Registrar of Companies. The auditors reported on those accounts. Their report was unqualified, did not draw attention to any matters by way of emphasis and did not include a statement under Section 498(2) or 498(3) of the Companies Act 2006.

2.  Earnings per share

The calculation of earnings per share is based upon the loss after tax for the respective period, for continuing operations only. The weighted average number of ordinary shares used in the calculation of basic earnings per share is based upon the number of ordinary shares in issue in each respective period.

The impact of share options granted under the company's share option are anti-dilutive due to the Group being in a loss-making position, so the weighted average number of ordinary shares used in the calculation of diluted earnings per share is the same as for basic earnings per share.

This has been computed as follows:

	6 months ended	6 months ended	6 months ended	6 months ended	Year ended	Year ended
	31-May-20	31-May-20	31-May-19	31-May-19	30-Nov-19	30-Nov-19
	Basic	Diluted	Basic	Diluted	Basic	Diluted
Loss after tax (£'000)	(2,820)	(2,820)	(1,441)	(1,441)	(2,160)	(2,160)
Number of shares ('000)*	72,180	72,180	60,981	60,981	62,740	62,740
Loss per share (pence)	(3.91)	(3.91)	(2.36)	(2.36)	(3.44)	(3.44)

3.  Availability of interim results

The interim results will not be sent to shareholders but will be available at the Company's registered office at The Johnson Building, 79 Hatton Garden, London, EC1N 8AW and on the Company's website: www.accessintelligence.com .

 

END

 

 

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