Final Results

RNS Number : 7849D

Access Intelligence PLC

02 May 2017

 

The information contained within this announcement is 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 via a Regulatory Information Service ("RIS"), this inside information is now considered to be in the public domain.

2 May 2017

ACCESS INTELLIGENCE PLC

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

FINAL RESULTS FOR THE YEAR ENDED 30 NOVEMBER 2016

Access Intelligence Plc (AIM: ACC), a leader in corporate communications and reputation management software, announces its final results for the year ended 30 November 2016.

Strategic Highlights:

·    Group now focused solely on corporate communications and reputation management. Three non-core business divestments completed, two before year end, one after.

·     Integration of June 2015 asset acquisition complete, resulting in the migration of 1,192 profitable customers to the new Vuelio platform.

·    Exited loss-making customer contracts acquired as part of the acquisition before the migrations to protect gross margins.

·    Launch of the new Vuelio offering with a unique integrated PR, public affairs and social engagement solution in the UK market.

Financial highlights:

·    Recurring revenue from continuing operations increased by 39% and total revenue from continuing operations increased by 43%, reflecting the full year impact of the acquisition in June 2015.

·    Gross margin reduced to 69% excluding one-time expenses, again reflecting the full year impact of the acquisition. The gross margin reduction was minimised through exiting non-profitable contracts during H2 2016 instead of migrating them to the Vuelio platform, with the resulting revenue impact to flow through in the 2017 financial year.

·    Total development and technical expense in the Consolidated Statement of Comprehensive Income relating to continuing operations increased to £1,664,000 in FY16 from £650,000 in the prior year as a result of investment in the Vuelio platform.

·     A further £522,000 of development expenditure relating to continuing operations was capitalised in 2016 compared to £417,000 in 2015.

·    Monthly operational spend excluding 3rd party content and hosting, restructuring, and migration expense reduced from £825,000 in Q4 2015 to £629,000 in Q4 2016, with further forecast savings bringing it down to £517,000 by Q4 2017.

·    The Group had cash balances in excess of £1.1 million at the year end.

Michael Jackson, Non-Executive Chairman of Access Intelligence, commented:

"Over the last twelve months, we have continued the realignment of the Access Intelligence portfolio to position and support Vuelio as its flagship brand, one poised to take advantage of big opportunities in the communications management market. We have effectively built a new Vuelio business, in part through the integration of assets acquired in 2015, but also through an accelerated programme of development and product upgrades for longstanding Vuelio customers. Having completed the all-encompassing migration project, the first four months of 2017 trading have seen improved new business sales and renewal rates and we are confident that we have the makings of a good business."

For further information:

Access Intelligence Plc                                                                                                                        0843 659 2940

Michael Jackson (Non-Executive Chairman)                                                                

Joanna Arnold (CEO)                                                                                                             

Allenby Capital Limited                                                                                                                                                                                                    
David Worlidge / James Thomas                                                                                                      020 3328 5656

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

I am pleased to announce our results for the year ended 30 November 2016.

Over the last twelve months, we have continued the realignment of the Access Intelligence portfolio    to position and support Vuelio as its flagship brand, one poised to take advantage of big opportunities    in the communications management market. We have effectively built a new Vuelio business, in part through the integration of assets acquired from our competitor Cision in 2015, but also with an accelerated programme of development and product upgrades for longstanding Vuelio customers.

The integration centred on a large migration project bringing more than a thousand customers - worth millions of pounds of revenue - on to the Vuelio platform, in conjunction with restructuring of both operational and commercial parts of the business. This restructuring and refocusing on Vuelio included the divestment of non-core subsidiary companies Due North Limited and AITrackRecord Limited during the year, as well as AIControlPoint Limited after the year end. At the same time, the development work, essential for migration, has protected our existing business and opened new opportunities. With costs associated with reorganisations and migrations, it was always going to be a challenging year, I'm pleased to say it has also been rewarding and operationally successful.

Following this hard work of integration, our 2017 strategy is largely one of consolidation providing a foundation for incremental growth from 2018 onwards. We believe there are significant short-term opportunities for Vuelio in the UK market: a number of major competitors are still engaged in their own M&A activity; at the same time, the unique mix of the Vuelio portfolio leads us to believe that the business will benefit from recent political upheaval and attendant growth in the market for integrated PR and public affairs solutions. 2017 will also bring the launch of mobile, networked communications services, the first outputs from an innovative roadmap that we expect will secure sustainable growth through 2018 and beyond.

2017 has started well with the completion of migrations of the final and most complex customers onto our enhanced Vuelio platform. Following the consolidation of the 1,192 migrated acquisition customers with our existing PR and Communications customer base, we expect to see a small increase in our contracted Software as a Service (SaaS) customer base through 2017.

Revenue from continuing operations in March 2017 was £653,000 with gross margin of 66%, a reduction as a result of exiting non-profitable customer contracts pre-migration to minimise gross margin reduction. We have seen a significant improvement in new business sales performance and retention rates in the first four months of the current year and expect this to continue as our enhanced product gains further traction in the market.

The full benefit of the restructuring undertaken during H2 2016 will not be seen until 2017, with monthly operational spend excluding 3^rd party content and hosting, restructuring, and migration expense expected to reduce from £629,000 in Q4 2016 to £517,000 by Q4 2017. This represents an annualised saving of £1.3 million. After emerging from an all-encompassing period of acquisition integration, we are confident that we have the makings of a good business.

I would like to take this opportunity to thank you on behalf of the board for your continued support of Access Intelligence.

Michael Jackson

Non-Executive Chairman
 

Strategic Report (Extract)

Results

2016 has been another year of transformation with the further integration of the business assets acquired in June 2015. It has included the build and launch of our new Vuelio platform, the successful migration of 1,192 customers to this platform and the divestment of two, non-core businesses.

Recurring revenues from continuing operations increased 39% to £8,834,000 (2015: £6,366,000) including the full year contribution from the business acquired in June 2015, with recurring revenues constituting 92% of revenues (2015: 95%).

Gross margin from continuing operations declined to 56% (2015: 72%), primarily due to the full year impact of the acquired business which runs at a lower margin than the other parts of the business due to the cost associated with the provision of third party data content to support monitoring and insights services in the software platform. The gross margin also reflects £1,244,000 (2015: £332,000) of one-off costs associated with the transitional hosting and migration of the 1,192 migrated customers to our new Vuelio platform. The gross margin excluding these one-time costs was 69% (2015: 77%).

The Group continued to undertake extensive restructuring during the year, integrating the acquired business, divesting non-core businesses in the second half of the year, and restructuring and reducing costs in the remaining business. The full year benefit of this second half activity is not fully reflected in the 2016 financial performance, however administrative expenses include one-off redundancy and legal costs associated with this restructuring of £285,000 (2015: £260,000).

As a result of the restructuring and refocusing of the business during the year, earnings before interest, tax, depreciation and amortisation (EBITDA) from continuing operations declined to a loss of £2,027,000 (2015: loss £951,000 before impairment charges of £30,000). Excluding the one-off expenses referenced above, EBITDA from continuing operations was a loss of £498,000 (2015: loss of £359,000).

Operating loss from continuing operations before impairments was £3,042,000 (2015: loss £1,541,000).   In arriving at the operating loss the Group has incurred £1,664,000 (2015: £650,000) in research and development expenditure and charged £1,015,000 (2015: £590,000) for depreciation and amortisation, £Nil (2015: £153,000) in acquisition costs, £Nil (2015: £70,000) loss on disposal of fixed assets and £285,000 (2015: £260,000) in restructuring costs.

The Group made a profit for the year from discontinued operations of £1,511,000 (2015: loss of £1,934,000). Further information relating to discontinued operations is provided on page 28 of the Strategic Report and within note 6 to the consolidated financial statements.

2017 will see continued restructuring of the business and investment in the Vuelio brand with the full benefits expected to come through towards the end of the current financial year and into 2018.

Loss per share

The basic loss per share from continuing operations was 1.10p (2015: loss 0.52p). Basic earnings per share from discontinued operations was 0.48p (2015: loss 0.76p).

Cash

Cash at the year-end stood at £1,162,000 (2015: £1,523,000) whilst net debt, calculated as loan notes less cash held, decreased to £2,113,000 (2015: £2,593,000) during the year.

Dividend

As a result of the significant investment the Company has made in the strategic product innovation and sales development, the directors do not propose to pay a dividend for 2016 (2015: £Nil).

Disposal of non-core assets

During the year and after the reporting date, the Group has continued to divest non-core subsidiary companies as part of its strategy to focus on the Vuelio reputation and communications management business.

Due North Limited

On 3 February 2016, Access Intelligence agreed terms to dispose of 100% of the issued share capital of its subsidiary Due North Limited, for a consideration totalling £4,500,000. Group profit on disposal of Due North Limited was £1,664,000. Company profit on disposal was £3,076,000.

AITrackRecord Limited

On 1 July 2016, Access Intelligence agreed terms to dispose of 100% of its subsidiary AITrackRecord Limited to TrackRecord Holdings Limited, a newly formed company. Consideration comprised 20% of the share capital of TrackRecord Holdings Limited and a deferred cash payment of £101,000. Group profit on disposal of AITrackRecord Limited was £585,000. Company profit on disposal was £632,000.

AIControlPoint

On 14 March 2017, Access Intelligence Plc transferred the trade and assets of its division AIControlPoint  to its subsidiary company formed during the year, AIControlPoint Limited. On 16 March 2017, Access Intelligence Plc disposed of 100% of the issued share capital of AIControlPoint Limited for a consideration totalling £782,000. Group profit on disposal of the subsidiary was £588,000, Company profit on disposal was £639,000.

Consolidated Statement of Comprehensive Income

Year ended 30 November 2016

		2016	2015 (restated)
	Note	£'000	£'000
Revenue	3	9,598	6,687
Cost of sales		(4,241)	(1,881)
Gross profit		5,357	4,806
Administrative expenses		(8,295)	(6,321)
Share of loss of associate		(91)	-
Share-based payment		(13)	(26)
Operating loss before impairment		(3,042)	(1,541)
Impairment of intangibles	11	-	(30)
Operating loss		(3,042)	(1,571)
Financial income		-	1
Financial expense		(395)	(266)
Loss before taxation		(3,437)	(1,836)
Taxation (charge)/credit	8	(37)	527
Loss for the year from continuing operations		(3,474)	(1,309)
Profit/(loss) for the year from discontinued operations	6	1,511	(1,934)
Loss for the year		(1,963)	(3,243)
Other comprehensive income		-	-
Total comprehensive income for the period attributable to the owners of the Parent Company		(1,963)	(3,243)

Earnings per share

	Note	Continuing Operations 2016	Continuing Operations 2015 (restated)
Basic loss per share	10	(1.10)p	(0.52)p
Diluted loss per share	10	(1.10)p	(0.52)p

		Continuing and Discontinued Operations 2016 £'000	Continuing and Discontinued Operations 2015 £'000
Basic loss per share	10	(0.62)p	(1.28)p
Diluted loss per share	10	(0.62)p	(1.28)p

Consolidated Statement of Financial Position

At 30 November 2016
	Note	2016 £'000	2015 £'000
Non-current assets
Property, plant and equipment		100	273
Intangible assets	11	7,062	7,423
Investments in associates		534	-
Deferred tax assets		230	865
Total non-current assets		7,926	8,561
Current assets
Trade and other receivables		2,565	3,628
Current tax receivables		436	101
Cash and cash equivalents		1,162	1,523
Assets classified as held for sale	7	381	3,869
Total current assets		4,544	9,121
Total assets		12,470	17,682
Current liabilities
Trade and other payables		1,301	1,225
Accruals		941	1,625
Provisions		27	130
Deferred revenue		3,772	4,643
Interest bearing loans and borrowings	12	1,374	1,277
Liabilities classified as held for sale	7	507	1,455
Total current liabilities		7,922	10,355
Non-current liabilities
Provisions		374	391
Interest bearing loans and borrowings	12	1,901	2,839
Deferred tax liabilities		230	336
Total non-current liabilities		2,505	3,566
Total liabilities		10,427	13,921
Net assets		2,043	3,761
Equity
Share capital		1,580	1,535
Treasury shares		(148)	(148)
Share premium account		1,458	1,271
Capital redemption reserve		191	191
Share option reserve		377	364
Equity reserve		255	255
Retained earnings		(1,670)	293
Total equity attributable to the equity holders of the Parent Company		2,043	3,761

 

Consolidated Statement of Changes in Equity

Year ended 30 November 2016

	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 2014	1,324	(148)	224	191	338	126	3,536	5,591
Total comprehensive loss for the year	-	-	-	-	-	-	(3,243)	(3,243)
Equity component of convertible loan notes net of deferred tax	-	-	-	-	-	129	-	129
Transactions with owners
Issue of share capital	211	-	1,047	-	-	-	-	1,258
Share-based payments	-	-	-	-	26	-	-	26
At 1 December 2015	1,535	(148)	1,271	191	364	255	293	3,761
Total comprehensive loss for the year	-	-	-	-	-	-	(1,963)	(1,963)
Transactions with owners
Issue of share capital	45	-	187	-	-	-	-	232
Share-based payments	-	-	-	-	13	-	-	13
At 30 November 2016	1,580	(148)	1,458	191	377	255	(1,670)	2,043

Consolidated Statement of Cash Flow

Year ended 30 November 2016

	Notes	2016 £'000	2015 £'000
Loss for the year		(1,963)	(3,243)
Adjusted for:
Taxation	8	64	(734)
Depreciation and amortisation		1,078	948
Impairment of intangible assets	11	-	1,899
Share option charge		13	26
Financial income		-	(1)
Financial expense		395	266
Loss on disposal of property, plant and equipment		-	70
Share of loss of associate		91	-
Profit on sale of Due North Limited	6	(1,664)	-
Profit on sale of AITrackRecord Limited	6	(585)	-
Profit on sale of Willow Starcom Limited	6	-	(900)
Operating cash outflow before changes in working capital		(2,571)	(1,669)
Decrease/(Increase) in trade and other receivables		934	(496)
Decrease in inventories		-	8
(Decrease)/Increase in trade and other payables		(1,228)	345
Net cash outflow from operations before taxation		(2,865)	(1,812)
Taxation received		-	237
Net cash outflow from operations		(2,865)	(1,575)
Cash flows from investing
Interest received		-	1
Acquisition of property, plant and equipment and software licences		(17)	(66)
Cost of software development		(579)	(1,541)
Acquisition of trade and assets		-	(1,340)
Disposal of Due North Limited (net of expenses)		4,030	-
less: cash and cash equivalents disposed of		77	-
Disposal of AITrackRecord Limited (net of expenses)		7	-
less: cash and cash equivalents disposed of		(10)	-
Disposal of Willow Starcom Limited (net of expenses)		-	1,487
less: cash and cash equivalents disposed of		-	(346)
Move to held for sale of Due North Limited		-	(207)
Net cash inflow/(outflow) from investing		3,508	(2,011)
Cash flows from financing activities
Interest paid		(336)	(192)
Issue of shares		-	1,200
Exercise of share options		232	58
(Repayment)/issue of loan notes		(900)	2,900
Net cash (outflow)/inflow from financing		(1,004)	3,966
Net (decrease)/increase in cash and cash equivalents		(361)	379
Opening cash and cash equivalents		1,523	1,144
Closing cash and cash equivalents		1,162	1,523

Notes to the Consolidated Statements

1.    Basis of preparation

The financial information set out in the announcement does not constitute the company's statutory accounts for the years ended 30 November 2016 or 2015.  The financial information for the year ended 30 November 2015 is derived from the statutory accounts for that year, which were prepared under IFRSs, and which have been delivered to the Registrar of Companies.  The auditor's report on those accounts was unqualified, did not contain a statement under either Section 498(2) or Section 498(3) of the Companies Act 2006 and did not include references to any matters to which the auditors drew attention by way of emphasis. 

The financial information for the year ended 30 November 2016 is derived from the audited statutory accounts for the year ended 30 November 2016 on which the auditor has given an unqualified report, that did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006 and did not include references to any matters to which the auditors drew attention by way of emphasis.  The statutory accounts will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

These extracts from the financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS's') as adopted by the European Union, and with those parts of the Companies Acts applicable to companies reporting under IFRS.

The extracts from the consolidated financial statements have been prepared under the historical cost convention and on a going concern basis.

2.    Basis of consolidation

The Group results comprise the financial statements of Access Intelligence plc and its subsidiaries as at 30th November 2016. 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 or delivery of infrastructure not being significant in relation to total Group revenue.

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

	Continuing Operations 2016 £'000	Continuing Operations 2015 £'000
United Kingdom	8,484	6,067
European Union	390	234
Rest of the world	724	386
	9,598	6,687

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 Executive Officer and the Board. The Reputation and Governance, Risk & Compliance segments derive their revenues from software licence sales and support and training revenues. As a result of the Group's divestments and acquisitions during the year the segments reported have changed to reflect the Board's focus. The segments are:

·     Reputation

·     Governance, Risk & Compliance

·     Discontinued - Disposals & Held for Sale

·     Head Office

The segment information for the year ended 30 November 2016 is as follows:

	Reputation £'000	Governance Risk and Compliance £'000	Head office £'000	Consolidation adjustment £'000	Continuing operations £'000	Discontinued Disposals £'000	Discontinued Held for sale £'000	Consolidated adjustment £'000	Discontinued operations £'000	Total £'000
External revenue	9,108	490	-	-	9,598	544	789	-	1,333	10,931
Operating (loss)/profit	(2,784)	(41)	(432)	306	(2,951)	(714)	(16)	40	(690)	(3,641)
Share of loss of associate	-	-	(91)	-	(91)	-	-	-		(91)
Profit on sale of subsidiary	-	-	-	-	-	-	-	2,228	2,228	2,228
Financial income	-	-	2,500	(2,500)	-	-	-	-	-	-
Financial expense	-	-	(395)	-	(395)	-	-	-	-	(395)
Taxation	56	(33)	(73)	13	(37)	-	(27)	-	(27)	(64)
(Loss)/profit after taxation	(2,728)	(74)	1,509	(2,181)	(3,474)	(714)	(43)	2,268	1,511	(1,963)
Reportable segment assets	10,058	409	9,468	(7,757)	12,178	-	292	-	292	12,470
Reportable segment liabilities	12,648	215	4,747	(7,690)	9,920	-	507	-	507	10,427
Other information: Additions to property, plant and equipment	14	-	4	-	17	-	-	-	-	17
Depreciation and amortisation	1,304	5	54	(348)	1,015	55	8	-	63	1,078

The segment information for the year ended 30 November 2015 (restated) is as follows:

	Reputation £'000	Governance Risk and Compliance £'000	Head office £'000	Consolidation adjustment £'000	Continuing operations £'000	Discontinued Disposals £'000	Discontinued Held for sale £'000	Consolidated adjustment £'000	Discontinued operations £'000	Total £'000
External revenue	6,119	568	-	-	6,687	3,441	728	-	4,169	10,856
Operating (loss)/profit	(1,716)	(175)	760	(410)	(1,541)	(863)	(309)	-	(1,172)	(2,712)
Profit on sale of subsidiary	-	-	-	-	-	-	-	900	900	900
Impairment	-	(30)	-	-	(30)	(1,692)	(177)	-	(1,869)	(1,899)
Financial income	-	-	1	-	1	-	-	-	-	1
Financial expense	-	-	(266)	-	(266)	-	-	-	-	(266)
Taxation	401	23	82	21	527	266	(59)	-	207	734
(Loss)/profit after taxation	(1,315)	(182)	577	(389)	(1,309)	(2,289)	(545)	900	(1,934)	(3,243)
Reportable segment assets	13,393	374	10,853	(11,658)	12,962	4,555	165	-	4,720	17,682
Reportable segment liabilities	10,909	2,124	9,630	(13,605)	9,058	3,676	1,186	-	4,862	13,921
Other information: Additions to property, plant and equipment	12	1	10	-	23	44	-	-	44	66
Depreciation and amortisation	577	22	102	(110)	591	338	15	-	353	944

5.    Operating Loss

Operating loss is stated after charging:

	2016 £'000	2015 £'000
Depreciation of property, plant and equipment	176	162
Amortisation of development costs	218	124
Amortisation of brand values	60	60
Amortisation of software licences	63	36
Amortisation of database	272	138
Amortisation of customer list	226	70
Loss on disposal of property, plant and equipment	-	70
Impairment of intangible assets	-	30
(Profit) on foreign currency translation	(6)	-
Exceptional costs (see below)	285	260
Operating lease charges - land and buildings	571	574
Auditor's remuneration (see below)	62	85
Share based payments	13	26
Research and development and other technical expenditure (income statement) (a further £522,000 (2015: £417,000) was capitalised)	1,664	650
Increase in provision for receivables	39	46

Exceptional costs in the year ended 30 November 2016 were incurred as a result of restructuring and non-recurring one off termination of employment costs for staff and directors, along with associated legal fees. The exceptional costs are made up of the following:

	2016 £'000	2015 £'000
Compensation for loss of office - directors	-	88
Compensation and notice payments - all staff	285	134
Legal costs incurred on compensation of loss of office for directors	-	38
	285	260

6.    Discontinued operations

The following tables provide combined information for all discontinued operations. The current year figures include the results of Due North Limited, AITrackRecord Limited and AIControlPoint plus consolidation adjustments. The prior year comparative figures also include the results of Willow Starcom Limited which was sold during the year ended 30 November 2015.

	2016 £'000	2015 £'000
Results of discontinued operation
Revenue	1,333	4,169
Expenses	(2,023)	(6,310)
Results from operating activities	(690)	(2,141)
Tax	(27)	207
Results from operating activities, net of tax	(717)	(1,935)
Gain on sale of discontinued operation	2,228	-
Tax on gain on sale of discontinued operation	-	-
Profit/(loss) for the year	1,511	(1,935)
Basic earnings per share	0.48p	(0.77)p
Diluted earnings per share	0.48p	(0.77)p

The profit/(loss) from discontinued operations of £1,511,000 (2015: loss of £1,935,000) is entirely attributable to the owners of the Company.

	2016 £'000	2015 £'000
Cash flows from/(used in) discontinued operation
Net cash from operating activities	257	1,162
Net cash used in investing activities	(15)	(977)
Net cash used in financing activities	(465)	-
Net cash flows for the year	(222)	(185)

The following is a breakdown of the effects of the disposal of Due North Limited and AITrackRecord Limited on the financial position of the Group:

	2016 £'000
Goodwill	412
Property, plant and equipment	95
Intangible assets	2,614
Trade and other receivables	465
Cash and cash equivalents	140
Deferred tax assets	(409)
Trade and other payables	(905)
Net assets and liabilities	2,412
Consideration received, satisfied in shares of TrackRecord Holdings Limited	625
Consideration received, satisfied in cash	4,601
Cash and cash equivalents disposed of	140

7.    Disposal group held for sale

AIControlPoint, a branch of the Parent Company is presented as a disposal group held for sale following the commitment of the Group's management in 2016 to a plan to sell the business. Efforts to sell the disposal group had therefore commenced before the year end, with the sale being completed on 16 March 2017 (see note 30).

At the prior year end, Due North Limited was presented as a disposal group held for sale following the commitment of the Group's management to a plan to sell the entity with the sale being completed on 3 February 2016 (see note 6).

At 30 November, the disposal group comprised the following assets and liabilities:

Assets classified as held for sale

	2016 £'000	2015 £'000
Goodwill	89	412
Development costs	-	2,661
Other intangible fixed assets	3
Property, plant and equipment	-	75
Trade and other receivables	289	514
Cash and cash equivalents	-	207
	381	3,869

Liabilities classified as held for sale

	2016 £'000	2015 £'000
Trade and other payables	75	401
Deferred income	432	621
Deferred tax liabilities	-	433
	507	1,455

8.    Taxation

	2016 £'000	2015 £'000
Current income taxes credit:
UK corporation tax credit for the year	(333)	-
Adjustment in respect of prior year	(103)	-
Total current income tax credit	(436)	-
Deferred tax (note 23)
Impact of change in tax rate	-	27
De-recognition of deferred tax assets	194	80
Origination and reversal of temporary differences	279	(634)
Total deferred tax	473	(527)
Total tax charge/(credit)	37	(527)

As shown above the tax assessed on the loss on ordinary activities for the year is higher than (2015: higher than) the standard rate of corporation tax in the UK of 20% (2015: 20.3%).

The differences are explained as follows:

Factors affecting tax credit

	2016 £'000	2015 £'000
Loss on ordinary activities before tax from continuing operations	(3,437)	(1,836)
Profit/(loss) on ordinary activities before tax from discontinued operations	1,538	(2,141)
Loss on ordinary activities before tax	(1,899)	(3,977)
Loss on ordinary activities multiplied by effective rate of tax	(380)	(809)
Expenses not deductible for tax purposes	666	274
Adjustment in respect of prior year	(103)	-
De-recognition of deferred tax assets	141	80
Additional R&D claim CTA 2009	(260)	(279)
Total tax charge/(credit)	64	(734)
Tax charge/(credit) reported in the Consolidated Statement of Comprehensive Income	37	(527)
Tax charge/(credit) attributable to discontinued operations	27	(207)
Total tax charge/(credit)	64	(734)

Factors that may affect future tax expenses

A reduction in the UK corporation tax rate from 20% to 19% (effective from 1 April 2017) was substantively enacted in October 2015.  A  further  reduction  in  the  tax  rate  from  19%  to  17%  (effective  from  1  April  2020)  was  substantively  enacted  in  September  2016.  These  rates  there-   fore    have    been    considered    when    calculating    the    deferred    tax    at    the    reporting  date.

9.    Dividend paid

Due to the significant and ongoing investment in developing our products, the directors do not propose a dividend in respect of the year ended 30 November 2016.

10.  Earnings per share

The calculation of earnings per share is based upon the total Group loss for the year of £1,963,000 (2015: loss of £3,243,000) divided by the weighted average number of ordinary shares in issue during the year which was 315,301,844 (2015: 252,593,681).

In 2016 and 2015 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:

	Continuing Operations	Discontinued Operations	Total	Continuing Operations	Discontinued Operations	Total
Numerator	2016 £'000	2016 £'000	2016 £'000	2015 (restated) £'000	2015 (restated) £'000	2015 £'000
(Loss)/Profit for the year and earnings used in basic EPS	(3,474)	1,511	(1,963)	(1,309)	(1,934)	(3,243)
Earnings used in diluted EPS	(3,474)	1,511	(1,963)	(1,309)	(1,934)	(3,243)
Denominator	'000	'000	'000	'000	'000	'000
Weighted average number of shares used in basic EPS	315,302	315,302	315,302	252,594	252,594	252,594
Effects of:
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
Weighted average number of shares used in diluted EPS	315,302	315,302	315,302	252,594	252,594	252,594
Basic (Loss)/ earnings per share (pence)	(1.10)	0.48	(0.62)	(0.52)	(0.76)	(1.28)
Diluted loss per share for the year (pence)	(1.10)	0.48	(0.62)	(0.52)	(0.76)	(1.28)

The total number of options and warrants granted at 30 November 2016 of 24,353,073 (2015:  33,958,676)

would generate £716,379 (2015: £984,626) in cash if exercised. At 30 November 2016, 220,000 (2015: 545,000) were priced above the mid-market closing price of 4.625p per share (2015: 5.13p per share) and 24,133,073 (2015: 33,413,676) were below.

At 30 November 2016 7,872,941 (2015: 9,258,676) staff options were eligible for exercising at an average price of 2.96p (2015: 3.2p). Also eligible for exercising are the 14,491,897 warrants priced at 2.75p per share held by Elderstreet VCT plc, D Lowe and other individuals consequent to an initial investment in the Company in October 2008.

The below table shows the amount of outstanding convertible loan notes at 30 November 2016 and the amount of shares they would convert into if the holder chooses the conversion option:

Holder	Loan Notes £'000	Convert into shares '000	Date of conversion
Elderstreet VCT	500	12,500	31 December 2017
Unicorn AIM VCT	750	18,750	31 December 2017
Elderstreet VCT	200	6,667	4 December 2019
Hawk Investments	300	10,000	4 December 2019
Kestrel Partners LLP	400	13,333	4 December 2019
Octopus AIM VCT	200	6,667	4 December 2019
Total	2,350	67,917

11.  Intangible fixed assets

	Brand Value £'000	Goodwill £'000	Development Costs £'000	Software Licences £'000	Database £'000	Customer relationships £'000	Total £'000
Cost
At 1 December 2014	1,369	12,005	4,692	160	-	-	18,226
Capitalised during the year	-	-	1,533	68	-	-	1,601
Additions through business combination	-	2,043	-	8	997	830	3,878
Disposals	-	(1,430)	-	-	-	-	(1,430)
Held for sale	-	(1,481)	(2,846)	-	-	-	(4,327)
At 1 December 2015	1,369	11,137	3,379	236	997	830	17,948
Capitalised during the year	-	-	522	57	-	-	579
Disposals	-	(1,872)	(1,800)	-	-	-	(3,672)
Held for sale	-	(89)	(183)	(150)	-	-	(422)
At 30 November 2016	1,369	9,176	1,918	143	997	830	14,433
Amortisation and impairment
At 1 December 2014	409	8,776	552	83	-	-	9,820
Charge for the year	60	-	378	44	138	70	690
Disposals	-	(630)	-	-	-	-	(630)
Held for sale	-	(1,069)	(185)	-	-	-	(1,254)
Impairment in year	-	-	1,899	-	-	-	1,899
At 1 December 2015	469	7,077	2,644	127	138	70	10,525
Charge for the year	60	-	265	71	272	226	894
Disposals	-	(1,872)	(1,846)	-	-	-	(3,718)
Held for sale	-	-	(183)	(147)	-	-	(330)
At 30 November 2016	529	5,205	880	51	410	296	7,371
Net Book Value
At 30 November 2016	840	3,971	1,038	92	587	534	7,062
At 30 November 2015	900	4,060	735	109	859	760	7,423

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 carrying value of capitalised development costs which are not yet being amortised and goodwill, allocated to each CGU are:

2016	Development Costs £'000	Goodwill £'000
Continuing operations
Access Intelligence plc	-	-
Access Intelligence Media and Communications Ltd	-	1,928
AIMediaData Ltd.	-	2,043
	-	3,971

2015	Development Costs £'000	Goodwill £'000
Continuing operations
Access Intelligence plc	-	89
Access Intelligence Media and Communications Ltd	-	1,928
AIMediaData Ltd.	78	2,043
	-	4,060

At the reporting 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 goodwill impairment assessment and covering a ten-year period based on financial budgets and forecasts as approved by the Board with no terminal value for other intangible assets. Ten years were selected as this represents the estimated lifetime of the software platforms.

The key assumptions used for value-in-use calculations are those regarding revenue growth rates and discount rates over the forecast period. 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 and forecasts in the first three years, followed by applying specific growth rates for which the key assumptions in respect of annual revenue growth rates range between 0% and 7% from year 4 onwards.

The discount rate used for all companies was 12%, based on an assessment of the Group's cost of capital and on comparison with other listed technology companies. The terminal growth rate used for the purposes of goodwill impairment assessments was 2.5%. The Board considered that no impairment to goodwill is necessary based on the value-in-use reviews of Access Intelligence Media & Communications Limited and AIMediaData Limited.

The value-in-use calculations for Access Intelligence Media & Communications Limited and AIMediaData Limited exceeded the carrying values of goodwill and relating to those companies.

Sensitivity analysis has been performed on reasonably possible changes in assumptions upon which recoverable amounts have been estimated. Based on the sensitivity analysis, a reduction of 51% in EBITDA delivered by Access Intelligence Media & Communications Limited would result in the carrying value of its goodwill being to equal its recoverable amount. For AIMediaData Limited, a 36% reduction in EBITDA would result in the carrying value of its goodwill being equal to its recoverable amount. For both companies, an increase in the discount rate by 12 percentage points would still not result in the carrying value of goodwill exceeding the recoverable amount.

Based on the sensitivity analysis, a reduction of 49% in EBITDA delivered by Access Intelligence Media & Communications Limited would result in the carrying value of its other intangible assets being to equal its recoverable amount. For AIMediaData Limited, a 26% reduction in EBITDA would result in the carrying value of its other intangible assets being equal to its recoverable amount. For both companies, an increase in the discount rate by 12 percentage points would still not result in the carrying value of other intangible assets exceeding the recoverable amount.

Other impairments

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

In 2016, development costs of £Nil (2015: £177,000) were impaired as a result of projects that did not perform as expected.

The directors considered that there were no indicators of impairment relating to the remaining intangible fixed assets at 30 November 2016.

12.  Interest bearing loans and borrowing

	2016 £'000	2015 £'000
Current
Convertible loan notes	1,264	1,277
Non-convertible loan notes	110	-
	1,374	1,277
Non-current
Convertible loan notes	1,052	1,009
Non-convertible loan notes	849	1,830
	1,901	2,839

On 30th June 2009 £1,750,000 convertible loan notes were issued. At 30 November 2015 and 30 November 2016, £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 on 30th June 2015 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 2014, the Company agreed terms with Elderstreet VCT (a company related to Chairman Michael Jackson) and Unicorn AIM VCT plc to extend the loans 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. In January 2016, the maturity dates of the loan notes were extended to 31 December 2016 with all other terms remaining unchanged. The carrying value of these loans at the prior year-end, including accrued interest, was £1,277,000.

In December 2016 the maturity dates of the loan notes were further extended to 31 December 2017 with all other terms remaining unchanged. These notes are classified as current at the year end.

In December 2014 the Company issued £1,100,000 of convertible loan notes. These loan notes are redeemable at par or convertible to ordinary shares at 3p per ordinary share on or before maturing on 3 December 2019 and carry a coupon rate of 8% per annum payable semi-annually until such time as they are repaid or converted.

No redemptions or conversions of the convertible loan stock arose in the year ended 30 November 2016.

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:

	2016 £'000	2015 £'000
Proceeds of issue of convertible loan notes	-	1,100
Existing loan notes rolled over	2,350	1,250
Equity component	(255)	(255)
Deferred taxation	(79)	(79)
Initial fair value of liability component	2,016	2,016
Cumulative interest charged	1,009	792
Cumulative interest paid	(709)	(522)
Liability component at 30 November	2,316	2,286

The equity component of £255,000 (2015: £255,000) has been credited to equity reserve. The interest charged for the year is calculated by applying an effective rate of interest of 10.1% (2015: 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 statement of financial position at 30 November 2016 represents the effective interest rate less interest paid to that date.

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

	2016 £'000	2015 £'000
Opening loan liability	2,286	1,301
Issue of convertible loan notes	-	941
Interest charged for the year	217	191
Interest paid in the year	(187)	(147)
Liability component at 30 November	2,316	2,286

On 22 June 2015 the Company issued £1,818,000 of non-convertible loan notes which carried an interest rate of 10% for one year rising to 12% thereafter. Interest is payable quarterly in arrears. The loans notes are fully repayable in five years.

	2016 £'000	2015 £'000
Opening loan liability	1,830	-
Issue of non-convertible loan notes	-	1,818
Costs associated with the issue of loans	-	(18)
Repayment of non-convertible loan notes	(900)	-
Interest charged for the year	178	75
Interest paid in the year	(149)	(45)
Liability component at 30 November	959	1,830

13.  Availability of Annual Report and AGM date

Copies of the Report and Accounts have been posted to shareholders where requested and the document is available from the Company's website (www.accessintelligence.com). It is intended that the annual general meeting will take place at the Company's registered office, Longbow House, 14-20 Chiswell Street, London, EC1Y 4TW, at 10.30am on Friday 26 May 2017.

 

END

 

 

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