Interim Results

RNS Number : 4069N

Actual Experience PLC

18 May 2015

 

18 May 2015

Actual Experience plc

("Actual Experience" or "the Group")

UNAUDITED CONSOLIDATED INTERIM RESULTS

 for the six months ended 31 March 2015

Actual Experience plc (AIM: ACT) is pleased to announce its unaudited consolidated interim results for the six months ended 31 March 2015.

Financial Highlights

·	Revenue increased by 21% to £329,238 (31 March 2014: £272,081)
·	Adjusted LBIT1; loss of £1,012,236 (31 March 2014: loss of £381,899)
·	Loss per share of 3.12p (31 March 2014: loss per share of 2.51p)
·	Cash balance of £2,008,340 (30 September 2014: £2,942,805)

¹Adjusted LBIT comprises earnings before finance income, fair value loss on financial instruments, tax and flotation expenses.

Operational Highlights

·	Significant extension of our relationship with Ofcom and inclusion of our analysis in their triennial state-of-the-nation report on Digital Britain.
·	Continued expansion of our customer base and repeat business with existing customers.
·	Further progress in our engagements with global channel partners.
·	Post period end we closed our largest contract to date with a major global organisation which is listed in the top 100 of Forbes' Most Valuable Brands.

David Page, Chief Executive Officer, commented:

"I am pleased to announce our results for the six months to 31 March 2015. During this period we continued to extend our customer base through direct sales activities while developing our strategically important relationships with global channel partners. We continue to be excited by the market response to our technology and I look forward to announcing further details of our progress later this year."  

Enquiries:

Actual Experience plc  Dave Page, Chief Executive Officer Steve Bennetts, Chief Financial Officer	via Alma PR
Nplus1 Singer Advisory LLP Shaun Dobson / Lauren Kettle	Tel: [phone]
Alma PR
Josh Royston	Tel: [phone]
Hilary Buchanan	Tel: [phone]

The consolidated interim results are available electronically on the Company's website:

 www.actual-experience.com.

About Actual Experience plc

Actual Experience is the market leader in advanced analytics for managing digital business quality. An automatic and continuous analysis of digital products and services makes plain the impact of poor digital quality across the business. Digital business quality is not a destination, it's a journey. Our science-based, data-driven analytics service is designed for those who care passionately about leading that journey to consistent digital quality. To learn more about our passion for digital quality, visit www.actual-experience.com. © Actual Experience plc 2015. Actual Experience® and BbFix® are registered trademarks of Actual Experience plc.

 

Business Review

I am pleased to report the Group's consolidated interim results for the six months ended 31 March 2015. 

Introduction

Actual Experience is fundamentally about digital business quality. We enable our customers to improve the quality of their digital products by applying techniques used over the past decades in the physical product world, such as six-sigma and lean manufacturing, to the digital world. These tried and tested techniques have been shown to dramatically improve product quality and reduce costs in many physical production industries. However, until now, they have not been applied in the rapidly expanding digital world.

Actual Experience has developed a proprietary cloud service offering, which can provide both historical and real-time analysis to customers to enable them to pinpoint issues within their digital supply chain (whether that be business applications, third party providers, the internet, the IT department, etc.) and subsequently improve the digital quality of their product or service, and thus improve their digital brand. Our customers call this Digital Supply Chain Management ("DSCM").

We are seeing growing evidence that businesses are now waking up to the fact that the quality of their digital products and services is a business issue, not a technology issue, and that businesses must care about quality of their digital products as much as that of their physical products.

The Company generates revenues on an Analytics-as-a-Service ("AaaS") basis, applying a simple charging methodology where clients purchase "analytic capacity" on a scale basis driven by the size of the customer.

Market

The market for DSCM is large and growing. Businesses are increasingly digital, delivering some aspect of a digital product or service to customers, staff and partners, and some companies are completely digital (mobile app companies, content provider, etc). Our customers are spread across the global digital ecosystem, including internet service providers; managed service providers; integrators; cloud providers; large, small and blue chip businesses; regulators and the government. Our software is applicable to any business which relies on digital products and services or trade online, either B2B or B2C, and which wishes to survive and differentiate itself in a competitive digital marketplace. We believe our addressable market is the multi-trillion pound global digital economy.

Given our first mover advantage, intellectual property and years of data analytics, we believe the barriers to entry are high. We have a patent pending with the European Patent Office and the United States Patent and Trademark Office, as well as a patent awarded in China. Furthermore, we have been continuously building on our academic research over the last six years, implementing our real-time analysis engines in the real world. This accumulated know-how in the Company's 'Analytics Engines' provides us with an increasing competitive advantage, representing a significant obstacle for potential competitors and relates to the practical difficulties regarding the implementation of the Company's algorithms.

Strategy

The Company has two routes to market: direct and through channel partners. The six month period under review saw record sales volumes delivered via direct sales to both existing and new customers.

However, the market opportunity cannot be effectively accessed directly, and channel partners are the only realistic route to address this sizeable market. Due to relatively low friction of our AaaS business model, delivering services through channel partners is exciting from a revenue growth and gross margin perspective.

In recognising the ability to accelerate this growth via the channel route, we have chosen to invest the majority of our resources in nurturing channel opportunities over the last three years.

Operational Development

During the period we have continued to build and progress with our channel partners. As previously indicated, the result of this investment will be a change in sales mix towards larger, channel-style deals. These type of contract wins can significantly accelerate the growth profile of the business, though typically take longer to finalise.

As announced separately today, we were delighted to sign post period end our largest customer contract to date with a major global organisation which is listed in the top 100 of Forbes' Most Valuable Brands. Under the terms of the three-year agreement, Actual Experience will analyse the organisation's digital supply chain to ensure that the quality of products delivered to end customers is always transparent to leaders across the business, in order to optimise the customers' digital experience. The pipeline for these deals continues to build and we are confident in closing further contracts over the next 24 months. We expect to make further announcements concerning our progress with channel partners over the coming months.

We are pleased to have made positive early progress with Ofcom, where our crowd-sourced data, enabled by the BbFix project, has been used to analyse Digital Britain. The result of this early work was the publication of Ofcom's "State of the Nation" report which highlighted our key findings, namely that digital quality is not solely dependent on speed but is affected by a number of additional factors that occur across the UK's national digital supply chain. Our work continues with Ofcom where our crowd-sourced data will be used to analyse on-line services for customers. This validates that our digital quality analysis capabilities can be leveraged equally for governments as for businesses, as we can analyse the entire path of all digital products, be they for staff, customers or consumers.

During the period we have continued to invest in our product offering, particularly our mobile product. This year we expect to roll-out an update to our AaaS business offering. This will put more analytic power into the hands of our customers, simplify use, and put digital quality into the pockets of business leaders on mobile phones.

Outlook

We are pleased with our progress in the period, in which we have continued to extend our customer base through direct sales activities, while developing our strategically important relationships with global channel partners. The investment we have made in the business, including bolstering our sales teams and enhancing our product offerings, means we are well positioned to capitalise on our strong and growing pipeline and we are confident in our ability to convert this into revenue.  

The second half of the year has started strongly and we continue to be excited by the market response to our technology. We are pleased to be able to announce today the recent contract win with a major global organisation, our largest customer contract to date, and we are optimistic for the remainder of the year and beyond.

Dave Page                            

Chief Executive Officer

18 May 2015

Financial Review

Consolidated income statement

The Group increased its revenue in the period by 21% to £329,238 (2013: £272,081), with the majority of this continuing to be derived from direct sales in the UK. We commenced service for several new customers, as well as the recently announced major new project with Ofcom. We continue to expect non-UK revenue to increase as we develop sales channels with global partners.

The gross profit margin decreased from 56% in the first half of 2014 to 39% in the corresponding period in 2015. This reflects the investment made in our customer support team during the period.

Operating costs increased to £1,139,559, compared to £990,764 in the corresponding period in 2014. The primary reasons for this increase are the higher headcount levels in 2015, coupled with our ongoing costs as an AIM-quoted company.

As a result the Group recorded an operating loss of £1,012,236 (31 March 2014: loss of £832,387) and a loss per share of 3.12p (31 March 2014: loss per share of 2.51p).

A summary of the Group's results is set out below. 

		Six months	Year
	Six months	ended	ended
	ended	31 March	30 September
	31 March	2014	2014
	2015	(restated)1	(restated)1
	£	£	£
Revenue	329,238	272,081	567,469
Gross profit	127,323	152,391	318,238
Operating loss	(1,012,236)	(832,387)	(1,589,523)
Loss for the period	(899,214)	(658,247)	(1,303,931)

¹ The comparative financial information has been restated to include the financial results of the Company's US subsidiary and hence is unaudited.

 

Balance sheet

The Group has a debt free balance sheet and cash balances decreased by £934,465 in the period, from £2,942,805 at 30 September 2014 to £2,008,340 at 31 March 2015. The main elements of this movement were:

		Six months	Year
	Six months	ended	ended
	ended	31 March	30 September
	31 March	2014	2014
	2015	(restated)1	(restated)1
	£	£	£
Net cash used in operating activities	(763,785)	(870,912)	(1,360,007)
Net cash from investing activities	(170,680)	(86,000)	(229,078)
Net cash from financing activities	-	4,205,265	4,205,356
Movement during the period	(934,465)	3,248,353	2,616,271

¹ The comparative financial information has been restated to include the financial results of the Company's US subsidiary and hence is unaudited.

 

Actual Experience plc

Consolidated income statement and statement of comprehensive income

For the six months ended 31 March 2015

		Unaudited	Unaudited
	Unaudited	Six months	Year
	Six months	ended	ended
	ended	31 March	30 September
	31 March	2014	2014
	2015	(restated)1	(restated)1
	£	£	£
Revenue from continuing operations	329,238	272,081	567,469
Cost of sales	(201,915)	(119,690)	(249,231)
Gross profit	127,323	152,391	318,238
Administrative expenses	(1,139,559)	(990,764)	(1,913,747)
Other operating income	-	5,986	5,986
Adjusted LBIT2	(1,012,236)	(381,899)	(1,139,035)
AIM flotation expenses	-	(450,488)	(450,488)
Operating loss from continuing operations	(1,012,236)	(832,387)	(1,589,523)
Finance income	7,562	499	12,067
Finance expense	(31)	-	-
Fair value loss on financial instruments	-	(4,218)	(4,127)
Loss before taxation	(1,004,705)	(836,106)	(1,581,583)
Taxation	105,491	177,859	277,652
Loss after tax for the period/year	(899,214)	(658,247)	(1,303,931)
Other comprehensive income/(expense):
Items that are or may be reclassified to profit or loss:
Foreign currency translation differences - foreign operations	(6,354)	-	(786)
Total comprehensive loss for the period/year	(905,568)	(658,247)	(1,304,717)
Loss per ordinary share
Basic and diluted	(3.12p)	(2.51p)	(4.74p)

¹ The comparative financial information has been restated to include the financial results of the Company's US subsidiary.

² Adjusted LBIT comprises earnings before finance income and expense, fair value loss on financial instruments, tax and flotation expenses.

 

Actual Experience plc

Consolidated statement of financial position

As at 31 March 2015

		Unaudited	Unaudited
	Unaudited	At 31 March	At 30 September
	At 31 March	2014	2014
	2015	(restated)1	(restated)1
	£	£	£
Non-current assets
Property, plant and equipment	27,930	16,733	16,412
Intangible assets	295,439	70,550	186,354
Total non-current assets	323,369	87,283	202,766
Current assets
Trade and other receivables	237,179	227,568	135,777
Income tax receivable	106,000	179,456	159,945
Cash and cash equivalents	2,008,340	3,574,887	2,942,805
Total current assets	2,351,519	3,981,911	3,238,527
Total assets	2,674,888	4,069,194	3,441,293
Non-current liabilities
Deferred tax	(3,373)	(3,441)	(3,373)
Total non-current liabilities	(3,373)	(3,441)	(3,373)
Current liabilities
Trade and other payables	(342,382)	(274,823)	(271,622)
Total current liabilities	(342,382)	(274,823)	(271,622)
Total liabilities	(345,755)	(278,264)	(274,995)
Net assets	2,329,133	3,790,930	3,166,298
Equity
Share capital	57,688	57,688	57,688
Share premium	134,346	134,346	134,346
Retained earnings	2,137,099	3,598,896	2,974,264
Total equity	2,329,133	3,790,930	3,166,298

¹ The comparative financial information has been restated to include the financial results of the Company's US subsidiary.

Actual Experience plc

Consolidated statement of changes in equity

For the six months ended 31 March 2015

		Share	Share	Retained Earnings /
		Capital	Premium	(Losses)	Total
		£	£	£	£
Unaudited
At 1 October 2013		3	1,403,790	(1,688,703)	(284,910)
Loss for the year		-	-	(658,247)	(658,247)
Other comprehensive expense for the year		-	-	-	-
	Loss and total comprehensive expense for the period	-	-	(658,247)	(658,247)
	Issue of shares	857	4,720,480	-	4,721,337
	Bonus share issue for capital reorganisation	56,828	(56,828)	-	-
	Cancellation of share premium account	-	(5,933,096)	5,933,096	-
	Share based payment expense	-	-	12,750	12,750
	At 31 March 2014	57,688	134,346	3,598,896	3,790,930
Unaudited
At 1 October 2013		3	1,403,790	(1,688,703)	(284,910)
Loss for the year		-	-	(1,303,931)	(1,303,931)
Other comprehensive expense for the year		-	-	(786)	(786)
Loss and total comprehensive expense for the year		-	-	(1,304,717)	(1,304,717)
	Issue of shares	857	4,720,480	-	4,721,337
	Bonus share issue for capital reorganisation	56,828	(56,828)	-	-
	Cancellation of share premium account	-	(5,933,096)	5,933,096	-
Share based payment expense		-	-	34,588	34,588
At 30 September 2014		57,688	134,346	2,974,264	3,166,298
Unaudited
At 1 October 2014		57,688	134,346	2,974,264	3,166,298
	Loss for the period	-	-	(899,214)	(899,214)
	Other comprehensive expense for the period	-	-	(6,354)	(6,354)
	Loss and total comprehensive expense for the period	-	-	(905,568)	(905,568)
	Share based payment expense	-	-	68,403	68,403
	At 31 March 2015	57,688	134,346	2,137,099	2,329,133

 

Actual Experience plc

Consolidated statement of cash flows

for the six months ended 31 March 2015

		Unaudited	Unaudited
	Unaudited	Six months	Year
	Six months	ended	ended
	ended	31 March	30 September
	31 March	(restated)1	(restated)1
	2015	2014	2014
	£	£	£
Cash flows from operating activities
Loss before tax	(1,004,705)	(836,106)	(1,584,365)
Finance income	(7,562)	(499)	(12,067)
Finance expense	31	-	-
Adjustment for non-cash items: Depreciation of property, plant and equipment	5,691	3,275	7,738
Amortisation of intangible assets	51,917	5,071	39,771
Fair value loss on financial instruments	-	4,218	4,127
Share based payment charge	68,403	12,750	34,588
Operating cash outflow before changes in working capital	(886,225)	(811,291)	(1,510,208)
Movement in trade and other receivables	(99,801)	(145,422)	(53,630)
Movement in trade and other payables	62,805	85,801	84,595
Cash flow from operations	(923,221)	(870,912)	(1,479,243)
Tax received	159,436	-	119,236
Net cash flows used in operating activities	(763,785)	(870,912)	(1,360,007)
Cash flow from investing activities
Development of intangible assets	(161,002)	(75,621)	(226,125)
Purchase of property, plant and equipment	(17,209)	(10,878)	(15,020)
Finance income	7,562	499	12,067
Finance expense	(31)	-	-
Net cash outflow from investing activities	(170,680)	(86,000)	(229,078)
Cash flow from financing activities
Repayment of borrowings	-	(2,293)	(2,202)
Proceeds from issue of share capital	-	4,207,558	4,207,558
Net cash inflow from financing activities	-	4,205,265	4,205,356
(Decrease)/increase in cash and cash equivalents	(934,465)	3,248,353	2,616,271
Cash and cash equivalents at start of year / period	2,942,805	326,534	326,534
Cash and cash equivalents at end of year / period	2,008,340	3,574,887	2,942,805

¹ The comparative financial information has been restated to include the financial results of the Company's US subsidiary.

 

Notes to the consolidated interim report

For the six months ended 31 March 2015

1          General information

Actual Experience plc (the "Company") is a public limited company domiciled in the UK and incorporated in England and Wales (registered number 06838738) and its registered office is The Tramshed, Beehive Yard, Walcot Street, Bath, BA1 5BB.

The principal activity of Actual Experience plc ("the Company") and its subsidiary company (together "Actual Experience" or "the Group") is the provision of digital quality Analytics-as-a-Service and associated consultancy services. 

The interim condensed consolidated financial statements were approved for issue on 18 May 2015.

2          Basis of preparation

These financial statements are prepared in accordance with International Financial Reporting Standards ("IFRS") and under the accounting policies set out in note 3 below. 

The interim condensed consolidated financial statements have been prepared under the historical cost convention and in accordance with AIM Rules for Companies. The interim condensed consolidated financial statements have been prepared on a going concern basis and are presented in Sterling to the nearest £.

The accounting policies used in the preparation of the interim condensed consolidated financial statements are consistent with those set out in the 2014 Annual Report and Accounts. Further IFRS standards or interpretations may be issued that could apply to the Group's financial statements for the year ending 30 September 2015. If any such amendments, new standards or interpretations are issued then these may require the financial information provided in this report to be changed. The Group will continue to review its accounting policies in the light of emerging industry consensus on the practical application of IFRS.

The preparation of financial information in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management's best knowledge of the amount, event or actions, actual events ultimately may differ from those estimates. The interim statement does not include all financial risk management information and disclosures required in annual financial statements; they should be read in conjunction with the financial information, as at 30 September 2014, summarised in the 2014 Annual Report and Accounts. There have been no significant changes in any risk management policies since 30 September 2014.

The interim condensed consolidated financial statements for the six months ended 31 March 2015 and for the six months ended 31 March 2014 do not constitute statutory accounts as defined in Section 434 of the Companies Act 2006 and are unaudited. The financial statements for the six months ended 31 March 2015 presents financial information for the consolidated group for the first time, including the financial results of the Company's wholly owned US subsidiary, Actual Experience Inc. The financial information for the year ended 30 September 2014 included in the audited financial statements for that year was not consolidated as, at that stage, the operations of the US subsidiary were not material to the group.  The comparative financial information in these interim results has been restated to include the financial results of the US subsidiary and hence is unaudited.

3          Segmental reporting

The Directors consider that there is one identifiable business segment that is engaged in providing individual products or services or a group of related products and services that comprise the core business.

The information reported to the Chief Executive Officer, who is considered to be the Chief Operating Decision Maker ("CODM"), for the purposes of resource allocation and assessment of performance is based wholly on the overall activities of the Group.  Due to the current size and activities of the Group there is a high degree of centralisation of activities. The Directors therefore consider that there is one operating, and hence one reportable, segment for the purposes of presenting information under IFRS8; that of "Digital supply-chain analytics services and associated consultancy services". There are no differences between the segment results and the condensed statement of comprehensive income. The assets and liabilities information presented to the CODM is consistent with the Income Statement and Statement of Financial Position.  All of the Group's assets and operations are located in the UK and the USA.

 

4          Loss per share

The calculation of basic and diluted loss per share for the 6 months to 31 March 2015 was based upon the loss attributable to ordinary shareholders of £899,214 (6 months to 31 March 2014: £658,247, year ended 30 September 2014: £1,303,931) and a weighted average number of ordinary shares in issue of 28,844,225 (6 months to 31 March 2014: 26,195,656, year ended 30 September 2014: 27,525,131), calculated as follows:

Weighted average number of ordinary shares

In thousands of shares

	Six months	Six months	Year
	ended	ended	ended
	31 March	31 March	30 September
	2015	2014	2014
Issued ordinary shares at start of period	28,844,225	26,356	26,356
Adjustment to reflect capital reorganisation	-	19,740,644	19,740,644
Issued ordinary shares at start of period - adjusted	28,844,225	19,767,000	19,767,000
Effect of shares issued	-	6,428,656	7,758,131
Weighted average number of shares at end of period	28,844,225	26,195,656	27,525,131

Due to the losses incurred there is no dilutive effect from the issue of share options. At 31 March 2015 there were 2,146,975 share options granted but not yet exercised (31 March 2014: 1,776,975; 30 September 2014: 2,281,975).

5          Related party transactions

During the period, the Group entered into transactions, in the ordinary course of business, with shareholders and other related parties.   Purchases entered into along with trading balances outstanding due to related parties are as follows:

	Amounts invoiced by related party			Amounts owed to related party
	H1 2015	H1 2014	FY 2014	H1 2015	H1 2014	FY 2014
	£	£	£	£	£	£
Queen Mary and Westfield College, University of London	-	69,055	91,847	-	22,791	-
IP2IPO Limited and its associated company, Techtran Group Limited	12,515	-	16,817	-	-	-

 

Sales entered into along with trading balances outstanding due from related parties are as follows:

	Amounts invoiced to related party			Amounts owed by related party
	H1 2015	H1 2014	FY 2014	H1 2015	H1 2014	FY 2014
	£	£	£	£	£	£
Inmarsat plc	-	-	33,600	-	-	-
Henderson Global Investors	-	-	20,352	-	-	20,352
IP2IPO Limited and its associated company, Techtran Group Limited	-	-	6,048	-	-	-
Queen Mary and Westfield College, University of London	15,400	-	-	-	-	-

6.   Availability of interim report

Electronic copies of this Interim Report will be available on the Company's website at www.actual-experience.com.

Forward-looking statements

This announcement may include certain forward-looking statements, beliefs or opinions, including statements with respect to the Group's business, financial condition and results of operations.  These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "anticipates", "targets", "aims", "continues", "expects", "intends", "hopes", "may", "will", "would", "could" or "should" or, in each case, their negative or other various or comparable terminology.  These statements are made by the Directors in good faith based on the information available to them at the date of this announcement and reflect the Directors' beliefs and expectations. By their nature these statements involve risk and uncertainty because they relate to events and depend on circumstances that may or may not occur in the future. A number of factors could cause actual results and developments to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, developments in the global economy, changes in government policies, spending and procurement methodologies, and failure in health, safety or environmental policies. No representation or warranty is made that any of these statements or forecasts will come to pass or that any forecast results will be achieved. Forward-looking statements speak only as at the date of this announcement and the Company and its advisers expressly disclaim any obligations or undertaking to release any update of, or revisions to, any forward-looking statements in this announcement. No statement in the announcement is intended to be, or intended to be construed as, a profit forecast or to be interpreted to mean that earnings per share for the current or future financial years will necessarily match or exceed the historical earnings. As a result, you are cautioned not to place any undue reliance on such forward-looking statements.

 

Statement of Directors' Responsibilities

The Directors confirm to the best of their knowledge that:

i)          The condensed interim financial information has been prepared in accordance with IAS 34 as adopted by the European Union; and

ii)         The interim management report includes a fair review of the information required by the FSA's Disclosure and Transparency Rules (4.2.7 R and 4.2.8 R).

Financial statements are published on the Company's website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in other jurisdictions.  The maintenance and integrity of the Company's website is the responsibility of the Directors.  The Directors' responsibility also extends to the ongoing integrity of the financial statements contained therein.

The Directors of Actual Experience plc and their functions are listed below.

Further information for Shareholders

Company number:	06838738
Registered office:	The Tramshed
	Beehive Yard
	Walcot Street
	Bath
	BA1 5BB
Directors:	Stephen Davidson (Chairman)
	Dave Page (Chief Executive Officer)
	Steve Bennetts (Chief Financial Officer)
	Sir Bryan Carsberg (Non-Executive Director) Dr Mark Reilly (Non-Executive Director)
	Robin Young (Non-Executive Director)
Company Secretary:	Steve Bennetts

 

END

 

 

IR PKODKCBKDDPD