Preliminary Results

RNS Number : 6653D

Access Intelligence PLC

01 April 2014

 



FOR RELEASE                                                                                                   

7.00AM

01 APRIL 2014

ACCESS INTELLIGENCE PLC

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

PRELIMINARY RESULTS FOR THE YEAR ENDED 30 NOVEMBER 2013

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 2013.

Highlights

·      Turnover increased 4% to £8,388,000 (2012: £8,053,000)

·      Contracted not yet invoiced revenue up 21% to £6,623,000 (2012: £5,453,000)

·      Recurring revenue up 9% to £6,062,000 (2012: £5,562,000) at 72% of sales (2012: 69%)

·      Adjusted EBITDA up 57% to £576,000 (2012: £368,000)*

·      Loss after tax was £2,612,000 (2012: loss £114,000)

·      Loss per share was 1.11p (2012: loss 0.05p)

·      Cash balance of £1,521,000 (2012: £2,772,000)

·      Total technology spend of £4,151,000 (2012:£1,929,000) of which £1,686,000 (2012: £706,000) was capitalised

*The adjusted EBITDA has been arrived at before impairment charges and exceptional costs.

Michael Jackson, Executive Chairman, commented:

"This year we have continued to invest in the strategic development of both the Company and its innovative software solutions with 49% of our revenues funding technical and R&D activities.

During the year we have benefitted from the additional investment made during 2012 and 2013, which can be seen in the new contracts signed during 2013 and the 21% increase in revenues contracted not yet invoiced."

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/Catherine Miles	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 2013.

This year we have continued to invest in the strategic development of both the Company and its innovative software solutions. During the year we have benefitted from the additional investment made during 2012 and 2013, which can be seen in the new contracts signed during 2013 and the 21% increase in revenues contracted not yet invoiced.

Our strategy continues to evolve and the potential for synergies and interoperability between our products continues to grow, with customers recognising the potential for considerable benefits from utilising our combined suite of products.

Outlook

Organisations operating in both regulated and non-regulated markets across the world, continue to recognise the fundamental importance of using software solutions 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. Meeting these demands will continue to be at the core of our strategy and will remain the driver for our continued innovation of our leading SaaS based solutions.

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 4% to £8,388,000 (2012: £8,053,000).

Our continued commitment to the software-as-a-service business model has enabled us to build long-term visibility of revenues and in 2013 recurring revenues at £6,062,000 (2012: £5,562,000), accounted for 72% (2012: 69%) of total revenues.

At 30 November 2013, deferred revenue stood at £2,714,000 (2012: £2,732,000) reflecting the change in timing of raising invoices to customer, while our contracted not yet invoiced revenue grew 21% to £6,623,000 (2012: £5,453,000).

Operating loss was £2,530,000 (2012: loss £390,000). In arriving at the operating loss we have charged £360,000 (2012: £276,000) for the depreciation and amortisation; £2,607,000 non-cash, impairment charges (2012: £nil) and £40,000 (2012: £36,000) for share-based payments.

Earnings before interest, tax, depreciation and amortisation (EBITDA) pre-impairment charges was up significantly to £437,000 (2012: loss £114,000).

As indicated last year, we have invested significantly in developing our products. This development momentum gathered pace through 2013 and the Group engaged an average of 84 (2012: 75) technical staff who support both the existing product offering as well as developing it. In 2013 £4,151,000 (2012 £1,929,000) was spent across the Group on research and development and other technical expenditure. Our commitment to the future represents 49% of revenue (2012: 24%).

2014 will see continued investment across the Company's brands with the full benefits expected to come through in the latter parts of the current financial year.

Loss per share

The basic loss per share was 1.11p (2012: loss 0.05p).

Cash

Cash at the year-end stood at £1,521,000 (2012: £2,772,000), the change reflecting the significant investments made, which continues to be made into 2014.

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 2013.

OPERATIONS

Software as a Service

Business Performance Management

AITrackRecord has maintained its position as a strategic solution, fundamental to the on-going operations of leading financial organisations, with the benefits of this position recognised during 2013 with a significant increase to the recurring revenue.

From a development perspective we have increased the operational effectiveness of the AITrackRecord team by implementing standard controls, quality procedures and formalisation of the specifications and change control processes. These additional procedures and quality management controls, have assisted in the signing of a significant contract with RBS and higher than ever monthly recurring professional services revenue for the brand as a whole.

The innovation and process development throughout the year has ensured that AITrackRecord can continue to provide customers with significant value and maintain the brand's position as a key strategic partner.

e-Procurement and Supplier Risk Management

Despite cut backs in public sector spending, Due North has continued to develop its presence in the market opening 29 new accounts during 2013. In July Alan Gray took up the position of non-executive Chairman at Due North and Joanna Arnold took responsibility for overseeing the on-going operational management.

During 2013 Due North was selected for Gartner's highly regarded Strategic Sourcing Suite Magic Quadrant report. It reviewed the leading procurement solutions available around the world and has helped to further develop the brand's reputation during the year.

Stakeholder and Reputation Management

AIMediaComms' presence in the public sector has remained strong during 2013. Despite the significant reforms in the NHS and reductions in public spending, the brand signed 12 new public sector organisations including 6 NHS bodies. AIMediaComms has also continued to develop its presence in the private sector, signing 13 new name customers including: Skanska, G4S and Scottish and Southern Energy.

2013 has also seen the first/beta release of AIMediaComms' social media monitoring tool, which has been specifically designed to complement the existing political monitoring and PR management modules. The new functionality will help to ensure AIMediaComms is able to maintain its current competitive advantage in the industry.

Business Continuity and Incident Management

AIControlPoint has maintained its strong presence in the aviation and finance sectors and has most notably acquired 2 key strategic accounts in the oil and gas sector, further validating AIControlPoint's strong reputation within the industry. 

During 2013 AIControlPoint launched its new Emergency Rota module, which has been specifically designed to meet the requirements of both the aviation and oil and gas markets. The new functionality has proved popular with existing customers and has enabled AIControlPoint to approach existing prospects with a new offering.

AIControlPoint was also selected by leading technology analysts, Gartner, as a 'Cool Vendor' for 2013, under the category for business continuity management and IT disaster recovery.

Division in recovery

Training and Competence

AITalent's operating losses including one-off charges were £264,000 up from prior years due to the follow on effects in the early part of 2013 of significant restructuring (2012: £236,000). Included in operating losses were one-off costs of £20,000 (2012: £171,000), relating to the staff re-organisation.

AITalent has continued to focus on highly regulated and high risk industries, seeing particular growth in the financial services market, including signing new contracts with Kleinwort Benson and Hoare Bank. The brand continues to maintain its presence in the pharmaceutical market and significant growth in financial services, it offers growth opportunities for other brands in the Group, especially AITrackRecord where there are opportunities to introduce the powerful talent and performance management functionality.

IT Support Services

Infrastructure (IaaS), Cloud and Data Security Management

Willow Starcom has continued to develop its presence as a provider of cloud and hosted solutions and has significantly benefitted from the restructure of its operations; moving away from the legacy hardware support model, to business development in a significant growth services market. Willow Starcom has once again delivered substantial growth during the year, with significant new signings during 2013. In addition, Willow Starcom's AICloud brand has continued to develop amongst new and existing customers within Access Intelligence.

Willow Starcom has made significant investment in both the technology solution and management processes, which has helped the Access Intelligence brands in securing new business, providing a suitable hosting environment for some of the world's largest blue chip companies. This investment will continue to drive Willow Starcom's success in the coming year.

Centralised Development Operations

2013 was the first full year of operations for Access Intelligence's Centre of Excellence in York. During 2013, development operations have been migrated to a centralised, industry-standard Application Lifecycle Management toolset. This toolset, in conjunction with centralised quality management processes and people management, has increased the efficiency of solution development; from initial requirements gathering through to commissioning and deployment of new and updated applications.

Customer support operations have been consolidated into a single, cross-product support operation. This has improved customer satisfaction levels through improved issue resolution efficiency and effectiveness.

This year we have realised the first phase of the new software architecture, which will enable us to transition away from legacy technology in certain parts of the Group and benefit from cutting edge technologies and techniques to provide a high-quality, resilient, configurable and performant platform for future product delivery. The configurability of products based on the new software architecture will enable us to significantly reduce our time-to-market and provides us with a route to move from being a vendor of operational risk and compliance management tools, to a provider of services in the Enterprise GRC market.

Strategy and Market

There continues to be growing pressures on companies around the world to improve corporate governance in line with industry regulations and demands from key stakeholders. Access Intelligence's solutions continue to be used both operationally and at a strategic level, to enable our customers to mitigate risk and develop their competitive advantage. This key driver, combined with Access Intelligence's product innovation and extensive industry experience, has enabled the company to benefit from growth in both short term and long term revenue.

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.

In 2014 will we will continue to invest in the development of our products. Our focus over the coming year will continue to be on realising the benefits from brand synergies throughout our commercial activities.

Directors and Staff

2013 has demonstrated that our core belief of building a company 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 2013 and we expect to benefit from this in the coming years. As a Company, we have delivered advances and I look forward to our continued operational successes in 2014.

By order of the board

M Jackson

Executive Chairman

1 April 2014

Consolidated Statement of Comprehensive Income

Year ended 30 November 2013

	Note	2013  £'000	2012 £'000
Revenue	3	8,388	8,053
Cost of sales		(2,245)	(2,398)
Gross profit		6,143	5,655
Administrative expenses		(6,026)	(6,009)
Share-based payment		(40)	(36)
Operating profit/(loss) before impairment		77	(390)
Impairment of intangibles		(2,607)	-
Operating loss	5	(2,530)	(390)
Financial income		10	23
Financial expense		(119)	(130)
Loss before taxation		(2,639)	(497)
Taxation credit	6	27	383
Loss for the year attributable to the equity holders of the parent company		(2,612)	(114)
Other comprehensive income		-	-
Total comprehensive income for the period attributable to the owners of the parent company		(2,612)	(114)
Earnings per share
Basic and diluted loss per share	7	(1.11)p	(0.05)p

Consolidated Statement of Financial Position

At 30 November 2013

	Note	2013 £'000	2012 £'000
Non-current assets
Property, plant and equipment		617	472
Intangible assets	8	7,807	8,846
Deferred tax assets		610	720
Total non-current assets		9,034	10,038
Current assets
Inventories		168	191
Trade and other receivables		2,023	2,244
Current tax receivables		337	-
Cash and cash equivalents		1,521	2,772
Total current assets		4,049	5,207
Total assets		13,083	15,245
Current liabilities
Trade and other payables		1,030	1,012
Accruals and deferred income		3,414	3,400
Interest bearing loans and borrowings	9	754	-
Total current liabilities		5,198	4,412
Non-current liabilities
Trade and other payables		-	37
Interest bearing loans and borrowings	9	507	1,217
Deferred tax liabilities		712	494
Total non-current liabilities		1,219	1,748
Total liabilities		6,417	6,160
Net assets		6,666	9,085
Equity
Share capital		1,324	1,286
Treasury shares		(148)	(148)
Share premium account		224	-
Capital redemption reserve		191	191
Share option reserve		331	284
Equity reserve		126	126
Retained earnings		4,618	7,346
Total equity attributable to the equity holders of the parent company		6,666	9,085

Consolidated Statement of Changes in Equity

Year ended 30 November 2013

	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 2011	1,286	(148)	-	191	226	126	7,915	9,596
Total comprehensive loss for the year	-	-	-	-	-	-	(114)	(114)
Transactions with owners
Share-based payments - current year	-	-	-	-	36	-	-	36
Tax reversal relating to share-based payment	-	-	-	-	22	-	-	22
Dividends recognised as distributions to owners	-	-	-	-	-	-	(455)	(455)
At 30 November 2012	1,286	(148)	-	191	284	126	7,346	9,085
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

Consolidated Statement of Cash Flow

Year ended 30 November 2013

	2013  £'000	2012 £'000
Loss for the year	(2,612)	(114)
Adjusted for:
Taxation	(27)	(383)
Depreciation and amortisation	360	276
Amortisation and impairment of intangible assets	2,607	-
Share option charge	40	36
Interest income	(10)	(23)
Interest expense	119	130
Loss on disposal of property, plant and equipment	2	-
Operating cash inflow/(outflow) before changes in working capital	479	(78)
(Increase) in trade and other receivables	(116)	(555)
Decrease in inventories	23	62
Increase in trade and other payables	317	634
Net cash inflow from operations before taxation	703	63
Taxation received	45	20
Net cash inflow from operations	748	83
Cash flows from investing
Interest received	10	23
Acquisition of property, plant and equipment and software licences	(389)	(462)
Proceeds of release of escrow (2011 sale of subsidiary (net of costs))	-	243
Cost of software development	(1,686)	(715)
Net cash outflow from investing	(2,065)	(911)
Cash flows from financing activities
Interest paid	(76)	(80)
Issue of shares and share option exercise proceeds	262	-
Repayment of borrowings	(4)	(25)
Payment of dividend	(116)	(455)
Net cash inflow/(outflow) from financing	66	(560)
Net decrease in cash and cash equivalents	(1,251)	(1,388)
Opening cash and cash equivalents	2,772	4,160
Closing cash and cash equivalents	1,521	2,772

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 2013.

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 2012 have been delivered to the Registrar of Companies and those for 2013 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 2013. 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:

	2013 £'000	2012 £'000
United Kingdom	7,898	7,412
European Union	186	182
Rest of the world	304	459
	8,388	8,053

All non-current assets are held in the United Kingdom as they were in 2012. No customer represents 10% or more of revenue as was the case in 2012.

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.

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 2013 is as follows:

2013	Software as a service £'000	IT support services £'000	Head office £'000	AI Talent Ltd  £'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	(1,369)	(264)	(64)	77
Impairments	(655)			(1,952)		(2,607)
Finance income	9	-	1	-	-	10
Finance costs	-	-	(119)	-	-	(119)
Taxation	(39)	-	-	66	-	27
Profit from discontinued operations	-	-	-	-	-	-
Profit/(loss) after taxation	911	178	(1,487)	(2,150)	(64)	(2,612)
Reportable segment assets	9,756	1,888	11,671	542	(10,774)	13,083
Reportable segment liabilities	4,305	1,252	5,969	1,595	(6,704)	6,417
Other information:
Additions to property, plant and equipment	65	142	160	1	(7)	361
Depreciation and amortisation	115	99	83	6	57	360

The segment information for the year ended 30 November 2012, is as follows:

2012	Software as a service £'000	IT support services £'000	Head office £'000	AI Talent Ltd £'000	Consolidation adjustment £'000	Total £'000
External revenue	5,343	1,736	-	974	-	8,053
Internal revenue	-	263	-	-	(263)	-
Operating profit/(loss)	1,072	173	(1,365)	(236)	(34)	(390)
Finance income	11	1	11	-	-	23
Finance costs	-	-	(125)	(5)	-	(130)
Taxation	107	10	210	19	37	383
Profit from discontinued operations			-			-
Profit/(loss) after taxation	1,190	184	(1,269)	(222)	3	(114)
Reportable segment assets	8,001	1,458	10,545	501	(5,260)	15,245
Reportable segment liabilities	3,479	849	4,529	1,255	(3,952)	6,160
Other information:
Additions to property, plant and equipment	67	129	212	3	(34)	377
Depreciation and amortisation	152	77	33	14	-	276

5.         Operating loss

Operating loss is stated after charging:

	2013 £'000	2012 £'000
Depreciation of property, plant and equipment	214	154
Amortisation of development costs	48	37
Amortisation of brand values	69	68
Amortisation of software licences	30	17
Loss on disposal of property, plant and equipment	2	-
Impairment of intangibles	2,607	-
Exceptional costs (see below)	139	446
Operating lease charges - land and buildings	433	398
Auditor's remuneration	55	60
Share based payments	40	36
Research and development and other technical expenditure	2,465	1,224
(a further £1,686k (2012: £706k) was capitalised)
Cost of inventories	422	400
(Release of)/increase in provision for receivables	(139)	50

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:

	2013 £'000	2012 £'000
Compensation for loss of office - director	4	-
Compensation and notice payments - all staff	34	180
Recruitment and temporary staff fees	-	213
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	53
	139	446

6.         Taxation

	2013 £'000	2012 £'000
Current income taxes credit:
UK corporation tax credit for the year	(226)	-
Adjustment in respect of prior year	(136)	(10)
Total current income tax credit	(362)	(10)
Deferred tax
Impact of change in tax rate	(21)	(11)
Origination and reversal of temporary differences	356	(362)
Total deferred tax	335	(373)
Total tax credit	(27)	(383)

As shown above the tax assessed on the loss on ordinary activities for the year is lower than (2012: higher than) the standard rate of corporation tax in the UK of 23.3% (2012: 24.7%).

The differences are explained as follows:

	2013 £'000	2012 £'000
Loss on ordinary activities before tax	(2,639)	(497)
Loss on ordinary activities by effective rate of tax of 23.3% (2012: 24.7%)	(616)	(122)
Expenses not deductible for tax purposes	34	22
Adjustment in respect of prior year	(136)	(10)
Additional R&D claim CTA 2009	691	(273)
Total tax credit	(27)	(383)

Factors that may affect future tax expenses:

In March 2013 the Chancellor proposed changes to further reduce the main rate of corporation tax by 2% to 21% from 1 April 2014 and by a further 1% from April 2015. These changes become substantively enacted on 2 July 2013 and therefore the effect of the rate reductions on deferred tax balances as at 30 November 2013 have been included in the figures above. All deferred tax assets and liabilities are assumed to reverse or be utilised at 20%.

7.         Earnings per share

The calculation of earnings per share is based upon the loss after taxation of £2,612,000 (2012: loss of £114,000) divided by the weighted average number of ordinary shares in issue during the year which was 233,560,576 (2012: 227,604,029).

The weighted average number of ordinary shares used in the calculation of diluted earnings per share is 233,560,576 (2012: 227,604,029). In 2013 and 2012 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. As a result, dilutive loss per share is disclosed as the same value as basic loss per share.

This has been computed as follows:

	2013			2012
	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	(2,612)	235,110,347	(1.11)	(114)	227,604,029	(0.05)
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	(2,612)	235,110,347	(1.11)	(114)	227,604,029	(0.05)

On the 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 2013 of 39,396,281 would generate £1,198,188 in cash if exercised. At 30 November 2013, 10,596,281 were priced above the mid-market closing price of 2.75p per share and 28,800,000 were below.

At the 30 November 2013 7,407,387 staff options were eligible for exercising at an average price of 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 2011	1,369	12,005	727	-	14,101
Capitalised during the year	-	-	706	132	838
At 30 November 2012	1,369	12,005	1,433	132	14,939
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
Amortisation and impairment
At 1 December 2011	68	5,550	353	-	5,971
Amortisation in year	68	-	37	17	122
At 30 November 2012	136	5,550	390	17	6,093
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
Net Book Value
At 30 November 2013	1,020	4,027	2,647	113	7,807
At 30 November 2012	1,233	6,455	1,043	115	8,846

Annual impairment testing for cash-generating units ("CGUs") containing goodwill and capitalized development costs not yet available for use

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
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

Pre-impairment 2012	Capitalised Development Costs £'000	Goodwill £'000	Total £'000
Software as a service:
Access Intelligence plc	37	89	126
Due North Ltd	988	1,033	2,021
Access Intelligence Media & Communications Ltd	5	1,928	1,933
AITrackRecord Ltd	1	-	1
	1,031	3,050	4,081
IT Support Services - Willow Starcom Ltd	-	800	800
Division in recovery - AI Talent Ltd	12	2,605	2,617
	1,043	6,455	7,498

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 approved by management with a terminal value.

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, the strengthening of the management team and corporate support resources over the past year and expectations of future changes in the market. The value in use calculations use information from approved budgets in the first two years, followed by applying specific growth rates for years 3 to 5 and a terminal value growth rate thereafter. The key assumptions in the value in use calculations, analysed by CGU are:

	Access Intelligence plc	Due North Ltd	Access Intelligence Media & Communications Ltd	Willow Starcom Ltd	AI Talent Ltd
Annual revenue growth rate (years 3 to 5)	3%	9%	7%	3%	11%

The discount rate used for all companies was between 11% and 13%, 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 was 2.5%.

The above assumptions provide impairment charges against goodwill as follows:

 - Due North    £620,000

 - AI Talent   £1,808,000

The circumstances and events giving rise to the impairment charges include below budget performance of these entities for the year ended 30 November 2013 and revisions of estimates of future growth rates.

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 impared the brand value of Cobent, the former and no longer used name of AI Talent 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 2013.

9.         Interest bearing loans and borrowings

	2013 £'000	2012 £'000
Current
Convertible loan notes	754	-
Non-current
Convertible loan notes	507	1,217

On 30 June 2009 £1,750,000 convertible loan notes were issued. At the start of the financial year, £1,250,000 of these loan notes were in issue, and were redeemable at par or convertible to ordinary shares at 4p per ordinary share on or before maturing 30 June 2014 and carried a coupon of 6% per annum, payable semi-annually until such time as they were repaid or converted in accordance with their terms. The holders 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 4 pence per share.

In November 2013, the Company agreed terms with Elderstreet VCT (a company related to the Chairman, Mr 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 4 pence 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 in November 2013, with the other incumbent note-holder, Unicorn AIM VCT plc. Accordingly, these notes are classified as current notes at the year end, however, these notes are redeemable at par or convertible to ordinary shares at 4p per ordinary share on or before maturing 31 December 2015 and carry a coupon of 6% until 30 June 2014, thereafter 8% per annum, payable semi-annually until such time as they were repaid or converted in accordance with their terms. The holders 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 4 pence per share.

No redemptions or conversions of the convertible loan stock arose in the year ended 30 November 2013.

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:

	2013 £'000	2012 £'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	486	367
Cumulative interest paid	(300)	(225)
Liability component at 30 November	1,261	1,217

The equity component of £126,000 (2012: £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% 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 2013 represents the effective interest rate less interest paid to that date.

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

	2013 £'000	2012 £'000
Opening loan liability	1,217	1,181
Interest charged for the year	119	111
Interest paid in the year	(75)	(75)
Liability component at 30 November	1,261	1,217

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 the evening of 1 April 2014. 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 10.00am on Monday, 28 April 2014.

 

END

 

 

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