Final Results
26 March 2019
ACCESS INTELLIGENCE PLC
("Access Intelligence", the "Company" or the "Group")
FINAL RESULTS FOR THE YEAR ENDED 30 NOVEMBER 2018
Access Intelligence Plc (AIM: ACC), a leading supplier of Software-as-a-Service (SaaS) solutions for communications and reputation management, announces its final results for the year ended 30 November 2018.
Highlights
· Completed the acquisition of ResponseSource Ltd ("ResponseSource"), adding depth and breadth to our media and influencer network as well as over 1,500 new customers, including L'Oreal, Panasonic, Pizza Express, Accenture, Deloitte and KPMG, in addition to the majority of the UK's Top 150 PR agencies.
· The ResponseSource acquisition has also provided new media enquiry and jobs services for journalists, in addition to replacements for PR wire distribution services that are currently provided by third parties.
· Increasing momentum in new business, adding a number of blue-chip enterprises and large public-sector bodies including Investec, Honda, RBS, Qatar Airlines, Carlsberg, the Football Association, E.On Energy, the Crown Prosecution Service, and Hill & Knowlton.
· Revenue increased by 10.2% year-on-year to £8.89 million. Excluding ResponseSource, revenue increased by 7.5% to £8.67 million.
· Annual Contract Value ("ACV") base increased by 45% to £12.4 million (2017: £8.6 million). Excluding ResponseSource, ACV increased by 7.5%.
· Adjusted EBITDA profit of £0.03 million (2017: loss of £1.36 million).
· At 30 November 2018, cash balance of £5.3 million (2017: £0.67 million), of which £2.1 million (2017: £Nil) related to ResponseSource deferred consideration.
Christopher Satterthwaite, Non-Executive Chairman of Access Intelligence, commented: "I am delighted to have joined Access Intelligence at such an exciting time for the business. Our fundamentals are robust, we have strong commercial momentum, and the ResponseSource acquisition provides a platform to accelerate the expansion of our network and enhance the Group's ability to provide a growing client base with data-driven communications intelligence."
For further information:
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Access Intelligence Plc |
0843 659 2940 |
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Joanna Arnold (CEO) Mark Fautley (CFO) |
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Allenby Capital Limited (Nominated Adviser and Broker) |
020 3328 5656 |
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David Worlidge / Nicholas Chambers / Graham Bell |
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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 present my first annual report as Chairman of Access Intelligence Plc, following my appointment in September 2018. The Group is at a transformational stage following a series of successful acquisitions that have accelerated product development to produce the leading reputation management platform for PR, public affairs and influencer marketing, under the Vuelio brand. The period of investment in Vuelio has created a sophisticated, intuitive platform that is delivering a step change in the relationships communications professionals build with journalists, social media influencers, government and other industry stakeholders and transforming the effectiveness of reputation management activity.
Access Intelligence, with the Vuelio brand, is an exciting business that is scaling based on a sound revenue model and size of opportunity in the marketplace. Vuelio is a software as a service (SaaS) business where revenue is underpinned by a growing, recurring revenue base of subscriptions on annual or multi-year contracts. In 2018, approximately 99% of revenue was generated by customers on SaaS contracts, billed predominantly annually in advance. The strength of this model positions the business to capitalise on the pace of change in an increasingly complex media, digital and social media landscape. It is a world where organisations face greater reputational risk than ever before alongside an ever-increasing challenge to build the relationships needed with media, social media and government influencers that deliver for their customers. This climate has accelerated demand for intelligence and workflow tools that support communications professionals in monitoring, measuring, analysing, engaging and targeting influencers using a single, holistic platform. Vuelio offers the depth of insight and tools that communications professionals need to stay ahead of organisational requirements and market trends with an outstanding platform that combines reputational intelligence with intuitive and flexible workflow capabilities for real-time influencer targeting.
Group performance
The 2018 results demonstrate the progress achieved by the Group with its Vuelio platform. In 2018, the Group capitalised on market momentum to gain considerable traction with new enterprise clients including Investec, Honda, RBS, Carlsberg and the FA, as well as global communications agencies such as Hill & Knowlton. Excluding the impact of acquisitions, revenue from continuing operations increased by 7.6% to £8.67 million, whilst EBITDA loss decreased to £0.46 million compared with £2.47 million in 2017. Adjusted EBITDA profit reached £0.05 million, compared to an adjusted loss of £1.36 million in 2017.
Revenue growth and reduction in EBITDA loss accompanied the acquisition of ResponseSource Ltd ("ResponseSource") in Q4 2018, reflecting the commitment of the Access Intelligence leadership team to execute strategic and operational priorities simultaneously. The acquisition of ResponseSource added depth and breadth to our media and influencer network as well as over 1,500 new customers, including household brand names including L'Oreal, Panasonic and Pizza Express; accounting and consulting firms Deloitte, KPMG and Accenture, and the majority of the UK's top 150 PR agencies. It is an exceptional addition to the Group, producing a combined customer base of more than 3,000 organisations and opening up significant new revenue opportunities, including increasing average spend by customer as point solution clients are upsold to the integrated Vuelio platform. For full year 2018, ResponseSource revenues stood at £3.4 million, and contributed to Group revenue for the final month of last year.
Growth strategy
The Access Intelligence leadership team is confident of the ongoing growth opportunity into 2019 and beyond. Sustained investment in product development, including the integration of ResponseSource will result in enhancements that are expected to deliver improved retention, greater cost synergies and margin improvements. By bringing together the functionality of ResponseSource and Vuelio, it will unlock value inherent in the vast store of media data built up across both organisations. The leadership team expect these enhancements to positively impact revenue from the middle of 2019.
Alongside direct product improvements, there is continued investment in the Access Intelligence stakeholder network. Global media brands, ranging from UK national newspapers to leading consumer and trade magazines, use ResponseSource and, in 2018, a number of important new partnerships were established with organisations ranging from providers of UK political data to international resellers. This increases the strength and reach of the core product offering, while expanding the value of Vuelio platform to the communications and marketing industries.
Board changes
On behalf of the Board, I would like to thank my predecessor, Michael Jackson, for his significant contribution to the Group as Chairman. We look forward to his ongoing advice and insight in his new role as a Non-Executive Director.
People first
The growth and the potential to accelerate into 2019 and beyond is only possible because of the strength of the Access Intelligence team. Our investment in people reflects our commitment to ensuring we create a workplace for the most talented in the industry.
I would like to take this opportunity to thank our fantastic team for their phenomenal work ethic, commitment and sense of adventure.
This is a very exciting time to join Access Intelligence and, on behalf of the board, I would like to thank you for your continued support.
We all look forward to working with you over the coming years as we expand a business that has the potential to transform the marketplace for the good of our customers and our network alike.
C Satterthwaite
Chairman
Strategic Report (extract)
Results
During the 2018 financial year, the Group has continued to deliver organic growth and has returned to adjusted EBITDA profitability, whilst completing the acquisition of ResponseSource to add significant scale.
One of the key financial metrics monitored by the board is the change in customer Annual Contract Value ('ACV') base year-on-year. This metric reflects the annual value of new business won, plus upsells into our existing customer base, less any customer losses. It is an important metric for the Group as it is a leading indicator of future revenue. During 2018, the Group's ACV base grew organically by £0.6 million (7%) to £9.1 million. Including the impact of the ResponseSource acquisition, the Group's ACV base stood at £12.4 million at 30 November 2018.
Revenue from continuing operations increased by 10% year-on-year to £8,888,000 (2017: £8,063,000). Recurring revenue comprised 99% of the total (2017: 99%), with sales teams incentivised to focus on high contribution SaaS products. Vuelio revenue grew by 7.5% to £8,666,000 whilst ResponseSource revenue for the part-month post acquisition was £222,000.
The Group's continuing operations delivered an adjusted profit before interest, tax, depreciation and amortisation (EBITDA) for the year of £34,000 (2017: loss of £1,364,000). This figure being adjusted for non-recurring items of £473,000 (2017: £854,000) and a share of loss of associate of £222,000 (2017: £254,000), the EBITDA loss from continuing operations for the year was £661,000 (2017: loss of £2,472,000). Adjusted EBITDA from continuing operations excluding ResponseSource was £35,000 whilst EBITDA from continuing operations excluding ResponseSource was a loss of £477,000.
Operating loss from continuing operations was £1,557,000 (2017: £3,450,000). In arriving at the operating loss, the Group has incurred £526,000 (2017: £1,595,000) in research and development expenditure, £20,000 (2017: £107,000) in restructuring costs and charged £896,000 (2017: £978,000) in depreciation and amortisation.
The Group made a loss for the year from discontinued operations of £155,000 (2017: profit of £558,000). Further information relating to discontinued operations is provided on page 27 of the Strategic Report and within note 6 to the consolidated financial statements.
2019 will see continued focus on growth in revenue and gross margin, whilst the Group further develops the Vuelio product.
Loss per share
The basic loss per share from continuing operations was 2.98p (2017 restated: 10.15p). Basic loss per share from discontinued operations was 0.34p (2017 restated: earnings of 1.70p). 2017 earnings per share figures have been restated to reflect the one-for-ten share consolidation completed during 2018.
Cash
In May 2018, the Group raised £2,800,000 before expenses for investment in the Vuelio platform by the issue of 70,000,000 Ordinary 0.5p shares at a price of 4p per share. These shares were subsequently subject to the one-for-ten share consolidation. In November 2018 and after the share consolidation, a further £6,800,000 before expenses was raised to fund the acquisition of ResponseSource Ltd by the issue of 14,320,000 Ordinary 5p shares at a price of 47.5p per share. Cash at the year-end stood at £5,300,000 (2017: £673,000) whilst net cash, calculated as cash held less loan notes and other loans, was £4,223,000 (2017: net debt of £2,700,000).
Key performance indicators
Management accounts are prepared on a monthly basis which provide performance indicators covering revenue, gross margins, EBITDA, result before tax, result after tax, cash balances and recurring revenue. The key performance indicators for the year are:
|
£'000 |
2018 |
2017 |
|
Revenue |
8,888 |
8,063 |
|
Gross margin (%) |
65% |
65% |
|
Adjusted EBITDA - profit/(loss) |
34 |
(1,364) |
|
EBITDA - loss |
(661) |
(2,472) |
|
Loss before taxation |
(1,717) |
(3,793) |
|
Loss after taxation |
(1,355) |
(3,335) |
|
Cash balances |
5,300 |
673 |
|
Recurring revenue |
8,801 |
8,020 |
These performance indicators are measured against both an approved budget and the previous year's actual results. Further analysis of the Group's performance is provided earlier in this Strategic Report.
Each month the Board assesses the performance of the Group based on key performance indicators. These are used in conjunction with the controls described in the corporate governance statement and relate to a wide variety of aspects of the business, including: new business and renewal sales performance; marketing, development and research activity; year to date financial performance, profitability forecasting and cash flow forecasting.
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 2018 (2017: £Nil).
Consolidated Statement of Comprehensive Income
Year ended 30 November 2018
|
|
Note |
2018 |
2017 |
|
Revenue |
3 |
8,888 |
8,063 |
|
Cost of sales |
|
(3,083) |
(2,823) |
|
Gross profit |
|
5,805 |
5,240 |
|
Recurring administrative expenses |
|
(5,771) |
(6,604) |
|
Adjusted EBITDA |
|
34 |
(1,364) |
|
Non-recurring administrative expenses |
5 |
(473) |
(854) |
|
Share of loss of associate |
15 |
(222) |
(254) |
|
Share based payments |
25 |
- |
- |
|
EBITDA |
|
(661) |
(2,472) |
|
Depreciation of tangible fixed assets |
16 |
(78) |
(71) |
|
Amortisation of intangible assets |
14 |
(818) |
(907) |
|
Operating loss |
5 |
(1,557) |
(3,450) |
|
Financial expense |
10 |
(160) |
(343) |
|
Loss before taxation |
|
(1,717) |
(3,793) |
|
Taxation credit |
11 |
362 |
458 |
|
Loss for the year from continuing operations |
|
(1,355) |
(3,335) |
|
(Loss)/profit for the year from discontinued operations |
6 |
(155) |
558 |
|
Loss for the year |
|
(1,510) |
(2,777) |
|
Other comprehensive income |
|
- |
- |
|
Total comprehensive income for the period attributable to the owners of the Parent Company |
|
(1,510) |
(2,777) |
|
|
|
|
|
|
Earnings per share |
|
Continuing |
Continuing |
|
Basic loss per share |
13 |
(2.98)p |
(10.15)p |
|
Diluted loss per share |
13 |
(2.98)p |
(10.15)p |
|
|
|
|
|
|
|
|
Continuing and Discontinued |
Continuing and Discontinued |
|
Basic loss per share |
13 |
(3.32)p |
(8.45)p |
|
Diluted loss per share |
13 |
(3.32)p |
(8.45)p |
*2017 Earnings per share information has been restated to reflect the one-for-ten share consolidation completed in 2018.
Consolidated Statement of Financial Position
At 30 November 2018
|
|
Note |
2018 |
2017 |
|
Non-current assets |
|
|
|
|
Intangible assets |
14 |
14,033 |
6,231 |
|
Investment in associate |
15 |
318 |
280 |
|
Property, plant and equipment |
16 |
167 |
146 |
|
Deferred tax assets |
23 |
37 |
206 |
|
Total non-current assets |
|
14,555 |
6,863 |
|
Current assets |
|
|
|
|
Trade and other receivables |
17 |
3,640 |
2,968 |
|
Current tax receivables |
|
362 |
458 |
|
Cash and cash equivalents |
26 |
5,300 |
673 |
|
Assets classified as held for sale |
7 |
- |
270 |
|
Total current assets |
|
9,302 |
4,369 |
|
Total assets |
|
23,857 |
11,232 |
|
Current liabilities |
|
|
|
|
Trade and other payables |
19 |
3,913 |
1,558 |
|
Accruals |
|
1,006 |
1,149 |
|
Provisions |
27 |
75 |
- |
|
Deferred revenue |
20 |
6,354 |
4,137 |
|
Interest bearing loans and borrowings |
18 |
210 |
2,489 |
|
Liabilities classified as held for sale |
7 |
- |
260 |
|
Total current liabilities |
|
11,558 |
9,593 |
|
Non-current liabilities |
|
|
|
|
Provisions |
27 |
96 |
226 |
|
Interest bearing loans and borrowings |
18 |
867 |
884 |
|
Deferred tax liabilities |
23 |
609 |
206 |
|
Total non-current liabilities |
|
1,572 |
1,316 |
|
Total liabilities |
|
13,130 |
10,909 |
|
Net assets |
|
10,727 |
323 |
|
Equity |
|
|
|
|
Share capital |
24 |
3,189 |
1,743 |
|
Treasury shares |
|
(148) |
(148) |
|
Share premium account |
|
13,075 |
2,352 |
|
Capital redemption reserve |
|
191 |
191 |
|
Share option reserve |
|
348 |
348 |
|
Equity reserve |
|
- |
255 |
|
Retained earnings |
|
(5,928) |
(4,418) |
|
Total equity attributable to the equity holders of the Parent Company |
|
10,727 |
323 |
Consolidated Statement of Changes in Equity
Year ended 30 November 2018
|
|
Share capital |
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 2016 |
1,580 |
(148) |
1,458 |
191 |
377 |
255 |
(1,670) |
2,043 |
|
Total comprehensive loss for the year |
- |
- |
- |
- |
- |
- |
(2,777) |
(2,777) |
|
Issue of share capital |
163 |
- |
894 |
- |
- |
- |
- |
1,057 |
|
Share-based payments |
- |
- |
- |
- |
(29) |
- |
29 |
- |
|
At 1 December 2017 |
1,743 |
(148) |
2,352 |
191 |
348 |
255 |
(4,418) |
323 |
|
Total comprehensive loss for the year |
- |
- |
- |
- |
- |
- |
(1,510) |
(1,510) |
|
Conversion of convertible loan notes |
340 |
- |
2,193 |
- |
- |
(255) |
- |
2,278 |
|
Issue of share capital |
1,106 |
- |
8,530 |
- |
- |
- |
- |
9,636 |
|
At 30 November 2018 |
3,189 |
(148) |
13,075 |
191 |
348 |
- |
(5,928) |
10,727 |
Share capital and share premium account
When shares are issued, the nominal value of the shares is credited to the share capital reserve. Any premium paid above the nominal value is taken to the share premium account. Access Intelligence plc shares have a nominal value of 5p per share. Directly attributable transaction costs associated with the issue of equity investments are accounted for as a reduction from the share premium account.
Treasury shares
The returned shares are now held in treasury and attract no voting rights. The return of shares has been accounted for in accordance with IAS 32 'Financial instruments: Presentation' such that the instruments have been deducted from equity with no gain or loss recognised in profit or loss.
Share option reserve
This reserve arises as a result of amounts being recognised in the income statement relating to share-based payment transactions granted under the Group's share option scheme. The reserve will fall as share options vest and are exercised over the life of the options.
Capital redemption reserve
This reserve arises as a result of keeping with the doctrine of capital maintenance when the Company purchases and redeems its own shares. The amounts transferred into/out from this reserve from a purchase/redemption is equal to the amount by which share capital has been reduced/increased, when the purchase/redemption has been financed wholly out of distributable profits, and is the amount by which the nominal value exceeds the proceeds of any new issue of share capital, when the purchase/redemption has been financed partly out of distributable profits.
Equity reserve
The equity reserve arises as a result of the equity component that has been recognised on the convertible loan notes that have been issued by the Group (see note 18: 'Interest bearing loans and borrowings'). The reserve is determined by deducting the amount of the liability component from the fair value of the convertible loan notes as a whole, net of income tax effects and the relative proportion of the directly attributable transaction costs associated with the issue of the compound instruments.
Retained earnings
The retained earnings reserve records the accumulated profits and losses of the Group since inception of the business. Where subsidiary undertakings are acquired, only profits and losses arising from the date of acquisition are included.
Consolidated Statement of Cash Flow
Year ended 30 November 2018
|
|
Note |
2018 |
2017 |
|
Loss for the year |
|
(1,510) |
(2,777) |
|
Adjusted for: |
|
|
|
|
Taxation |
11 |
(362) |
(458) |
|
Depreciation and amortisation |
14,16 |
896 |
978 |
|
Financial expense |
10 |
160 |
343 |
|
Share of loss of associate |
|
222 |
254 |
|
Profit on sale of AIControlPoint Limited |
6 |
- |
(592) |
|
Loss on sale of A.I. Talent Limited |
6 |
64 |
- |
|
Operating cash outflow before changes in working capital |
|
(530) |
(2,252) |
|
Decrease/(Increase) in trade and other receivables |
|
174 |
(576) |
|
Increase in trade and other payables |
|
2,414 |
731 |
|
Net cash inflow/(outflow) from operations before taxation |
|
2,058 |
(2,097) |
|
Taxation received |
|
458 |
436 |
|
Net cash inflow/(outflow) from operations |
|
2,516 |
(1,661) |
|
Cash flows from investing |
|
|
|
|
Acquisition of property, plant and equipment |
16 |
(78) |
(118) |
|
Acquisition of software licenses |
14 |
(36) |
(79) |
|
Cost of software development |
14 |
(1,344) |
- |
|
Disposal of AIControlPoint (net of expenses) |
6 |
- |
615 |
|
Disposal of A.I. Talent Limited (net of expenses) |
6 |
(5) |
- |
|
less: cash and cash equivalents disposed of |
6 |
(142) |
- |
|
Move to held for sale of A.I. Talent Limited |
|
- |
(5) |
|
Investment in associate |
15 |
(260) |
- |
|
Acquisition of ResponseSource Ltd |
8 |
(5,000) |
- |
|
Net cash (outflow)/inflow from investing |
|
(6,865) |
413 |
|
Cash flows from financing activities |
|
|
|
|
Interest paid |
|
(160) |
(298) |
|
Issue of shares |
24 |
9,136 |
1,017 |
|
Exercise of share options |
24 |
- |
40 |
|
Net cash inflow from financing |
|
8,976 |
759 |
|
Net increase/(decrease) in cash and cash equivalents |
26 |
4,627 |
(489) |
|
Opening cash and cash equivalents |
26 |
673 |
1,162 |
|
Closing cash and cash equivalents |
26 |
5,300 |
673 |
Notes to the Consolidated Financial Statements
1. General Information
Access Intelligence Plc ('the Company') and its subsidiaries (together the 'Group') provide software for companies looking to build, maintain and protect their reputation through communications management.
The financial information set out in the announcement does not constitute the Company's statutory accounts for the years ended 30 November 2018 or 2017. The financial information for the year November 30 June 2017 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 financial information for the year ended 30 November 2018 is derived from the audited statutory accounts for the year ended 30 November 2018 on which the auditors have given an unqualified report, that did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006.
The Company is a public limited company under the Companies Act 2006 and is listed on the AIM market of the London Stock Exchange and is incorporated and domiciled in the UK. The address of the Company's registered office is provided in the Directors and Advisers page of the Annual Report.
2. Accounting policies
The principal accounting policies applied in the preparation of these financial statements are set out below.
These policies have been applied consistently to all the years presented, unless otherwise stated.
Basis of preparation
These 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 consolidated financial statements have been prepared under the historical cost convention and on a going concern basis.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies.
Going concern
The Strategic Report and opening pages to the annual report discuss Access Intelligence's business activities and headline results, together with the financial statements and notes which detail the results for the year, net current liability position and cash flows for the year ended 30 November 2018. The Board has further considered 12 month cash flow forecasts from the date of signing the accounts and consider the assumptions used therein to be reasonable and reflective of the long-term 'software as a service' contracts and contracted recurring revenue.
The Board has concluded that they have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements.
Significant judgements
In addition to going concern, the areas involving a high degree of judgement or complexity relate to:
the recognition of deferred tax assets in relation to losses (refer to note 23); and
the recoverability of trade receivables (refer to note 17).
Significant estimates
Further to the significant judgements above the areas where key assumptions and estimates have been made by management relate to:
the impairment testing of goodwill and capitalised development costs and other non-current assets. A full impairment review has been performed on a "value in use" basis, which requires estimation of future net operating cashflows, the time period over which they occur, an appropriate discount rate and an appropriate growth rate. Further details, including sensitivity analysis are given in note 14 and the accounting policy is set out in note 2; and
the charge for share-based payment transactions which include assumptions on future share prices movements, expected future dividends, and risk-free discount rates (refer to note 25).
New standards and interpretations
The adoption of the following mentioned amendments in the current year have not had a material impact on the Group's/Company's financial statements.
Amendment to IAS 7 Statement of Cash Flows: Disclosure initiative
Amendment to IAS 12 Income Taxes: Recognition of deferred tax assets for unrealised losses
Annual Improvements to IFRSs (2014 - 2016): Clarification of the scope of IFRS 12 Disclosure of Interests in Other Entities
New standards, amendments and interpretations issued but not yet effective
Standards issued but not yet effective up to the date of issuance of the Company's financial statements are listed below. The listing is of standards and interpretations issued, which the Company reasonably expects to be applicable at a future date. The Company does not intend to adopt those standards until they become effective.
The group has not yet adopted IFRS 9 'Financial Instruments' (Issued July 2014), IFRS 15 'Revenue from Contracts with Customers' (Issued May 2014), Clarifications to IFRS 15 'Revenue from Contracts with Customers' (Issued April 2016) and IFRS 16 'Leases' (Issued January 2016). The directors have undertaken an assessment of IFRS 9 and IFRS 15, and do not consider the impact of these to be material to the Group. The directors are undertaking a preliminary assessment of the implementation of IFRS 16, however a more thorough review of the impact of the standards will be performed ahead of the next financial reporting period. IRFS 9 and IFRS 15 are effective for accounting periods beginning on or after 1 January 2018. IFRS 16 is effective for accounting periods beginning on or after 1 January 2019.
Effective for November 2019 financial statements
Amendment to IFRS 2 Share-based Payment: Classification and measurement of share-based payment transactions
IFRS 9 Financial Instruments
IFRS 15 Revenue from Contracts with Customers
Clarifications to IFRS 15 Revenue from Contracts with Customers
Annual Improvements to IFRSs (2014 - 2016): IFRS 1 First-time Adoption of International Financial Reporting Standards and IAS 28 Investments in Associates and Joint Ventures
IFRIC 22 Foreign Currency Transactions and Advance Consideration
Effective for November 2020 financial statements
Amendments to IAS 28 Investments in Associates and Joint Ventures: Long-term interests in Associates and Joint Ventures
Amendments to IFRS 9 Financial Instruments: Prepayment features with negative compensation
IFRS 16 Leases
IFRIC 23 Uncertainty over Income Tax Treatments
Basis of consolidation
The Group financial statements comprise the financial statements of the Company and all of its subsidiary undertakings made up to the financial year end. Subsidiaries are entities that are controlled by the Group. Control exists when the Group has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are currently exercisable or convertible are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.
The results of subsidiary undertakings acquired or disposed of in the year are included in the Group statement of comprehensive income from the effective date of acquisition or to the effective date of disposal. Accounting policies are consistently applied throughout the Group. Inter-company balances and transactions have been eliminated. Material profits from inter-company sales, to the extent that they are not yet realised outside the Group, have also been eliminated.
Associates are all entities over which the Group has significant influence but not control or joint control. This is generally the case where the Group holds between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting after initially being recognised at cost.
Under the equity method of accounting, the Group's investments in associates are initially recognised at cost and adjusted thereafter to recognise the Group's share of the post-acquisition profits or losses of the investee in profit or loss, and the Group's share of movements in other comprehensive income of the investee in other comprehensive income. Dividends received or receivable from associates are recognised as a reduction in the carrying amount of the investment.
When the Group's share of losses in an equity-accounted investment equals or exceeds its interest in the entity, including any other unsecured long-term receivables, the Group does not recognise further losses unless it has incurred obligations or made payments on behalf of the other entity.
Unrealised gains on transactions between the Group and its associates are eliminated to the extent of the Group's interest in these entities. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of equity accounted investees have been changed where necessary to ensure consistency with the policies adopted by the Group.
Disposal groups held for sale
The Group classifies assets and liabilities as held for sale once they are available for sale in their present condition and the sale satisfies the criteria to be highly probable. The held for sale classification applies to a group of assets and liabilities directly associated with those assets, to be disposed of in a single transaction.
Disposal groups classified as held for sale are carried at the lower of the carrying amount and fair value less costs to sell. Assets that form part of disposal groups classified as held for sale are not depreciated or amortised.
Discontinued operations
The Group classifies an operation as discontinued from the earlier of the date the operation meets the criteria to be classified as held for sale or the date the Group disposes of the operation.
Results of discontinued operations are shown separately in the statement of comprehensive income. Prior periods are re-presented so that the presentation relates to all periods for operations that have been discontinued by the end of the current reporting period.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.
Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of fixtures, fittings and equipment taking into account any estimated residual value. The estimated useful lives are as follows:
Fixtures, fittings and equipment - 3 - 5 years
Leasehold improvements - over lease term
Intangible assets - Goodwill
Goodwill represents amounts arising on acquisition of subsidiaries. Goodwill represents the difference between the cost of the acquisition and the fair value of the net identifiable assets and contingent liabilities acquired. Identifiable intangible assets are those which can be sold separately or which arise from legal rights regardless of whether those rights are separable.
Goodwill on acquisition of subsidiaries is included in intangible assets. Goodwill is allocated to cash generating units and is not amortised, but is tested annually for impairment.
Intangible assets - Research and development expenditure
Research costs are expensed as incurred. Development expenditures on an individual project are recognised as an intangible asset when the Group can demonstrate:
the technical feasibility of completing the intangible asset so that the asset will be available for use or sale
its intention to complete and its ability and intention to use or sell the asset;
how the asset will generate future economic benefits;
the availability of resources to complete the asset; and
the ability to measure reliably the expenditure during development.
Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortisation and accumulated impairment losses.
Amortisation of the asset begins from the date development is complete and the asset is available for use, which may be before first sale. It is amortised over the period of expected future benefit. Amortisation is recorded in administration expenses. During the period of development, the asset is tested for impairment annually.
In 2018 there were five (2017: Nil) capitalised development projects. The prior year projects both related to the development of new functionality within the Vuelio platform. The directors assessed the capitalisation criteria of its internally generated material intangible assets through review of the output of the work performed, the specific costs proposed for capitalisation, the likely completion of the work and the likely future benefits to be generated from the work. The directors assess the useful life of the completed capitalised development projects to be five years from the date of the first sale or when benefits begin to be realised and amortisation will begin at that time.
Intangible assets - Database
On acquisition in prior years, a fair value was calculated in respect of the PR and media contacts database acquired. Subsequent expenditure on maintaining this database is expensed as incurred. Amortisation is calculated on a straight-line basis over the estimated useful economic life of the database. It is the directors' view that this useful economic life is three years based on the level of ongoing investment required to maintain the quality of data in the database.
Intangible assets - Customer relationships
On acquisition of businesses, a fair value was calculated in respect of the customer relationships acquired. Amortisation is calculated on a straight-line basis over the estimated useful economic life of the customer relationships. It is the directors' view that this useful economic life is up to nine years, based on known and forecast customer retention rates.
Intangible assets - Brand value
Acquired brands, which are controlled through custody or legal rights and could be sold separately from the rest of the Group's businesses, are capitalised where fair value can be reliably measured. The Group applies a 20-year straight line amortisation policy on all brand values. The conclusion is that a realistic life for the brand equity would be a 'generation' or 20 years. Where there is an indication of impairment, the directors will perform an impairment review by analysing the future discounted cash flows over the remaining life of the brand asset to determine whether impairment is required.
Software licences
Software licences include software that is not integral to a related item of hardware. These items are stated at cost less accumulated amortisation and any impairment. Amortisation is calculated on a straight line basis over the estimated useful economic life. Although perpetual licences are maintained under support and maintenance agreements, a useful economic life of five years has been determined.
Impairment of non-financial assets
The carrying amounts of the Group's assets other than deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated based upon the value in use.
For goodwill, assets that have an indefinite useful life and intangible assets that are not yet available for use, the recoverable amount is estimated at each reporting date. The recoverable amount is the higher of the fair value less costs to sell and value in use of the cash generating unit containing the goodwill or intangible assets with an indefinite useful life.
An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in the profit or loss.
Impairment losses recognised in respect of cash-generating units are allocated first to the carrying amount of the goodwill allocated to that cash-generating unit and then to the carrying amount of the other assets in the unit on a pro rata basis, applied in priority to non-current assets ahead of more liquid items. A cash-generating unit is the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows from other assets or groups of assets.
Reversals of impairment
An impairment loss in respect of goodwill is not reversed. In respect of other assets, an impairment loss is reversed when there is an indication that the impairment loss may no longer exist and there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
Financial instruments
Financial instruments comprise trade and other receivables, cash and cash equivalents, loans and borrowings, trade and other payables and other financial liabilities.
Financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs, except as described below. Subsequent to initial recognition financial instruments are measured as described below.
A financial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the Group's contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial asset to another party without retaining control of substantially all risks and rewards of the asset. Financial liabilities are derecognised if the Group's obligations specified in the contract expire or are discharged or are cancelled.
Trade and other receivables are recorded initially at fair value and subsequently measured at amortised cost, using the effective interest method, less provision for impairment. Specific impairment provisions are made when management consider the debtor irrecoverable and these are charged to the income statement. Trade and other payables are recorded initially at fair value and subsequently measured at amortised cost, using the effective interest method.
Cash and cash equivalents include cash in hand, deposits held at call with banks, and other short term highly liquid investments.
Loans and borrowings and other financial liabilities, which include the convertible redeemable loan notes, are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost using the effective interest rate method. Interest expense is measured on an effective yield basis and recognised in the income statement over the relevant period.
Issue costs are apportioned between the liability and equity components of the convertible loan notes based upon their relative carrying amounts at the date of issue. The portion relating to the equity component is recognised in equity. Finance payments associated with financial liabilities are dealt with as part of finance expenses.
The Group may enter into derivative financial instruments for risk management purposes. Derivatives are initially recognised at fair value on the date the derivative contract is entered into and are subsequently re-measured at their fair value with gains and losses recognised through profit or loss. The Group does not hold or issue derivative financial instruments for trading purposes.
Convertible loan notes
The component parts of compound instruments issued by the Group are classified separately as financial liabilities and equity in accordance with the substance of the contractual arrangement. At the date of issue, in the case of a convertible loan note denominated in the functional currency of the issuer that may be converted into a fixed number of equity shares, the fair value of the liability component is estimated at the present value of the stream of future cash flows (including both coupon payments and redemption) discounted at the market rate of interest that would have been applied to an instrument of comparable credit quality with substantially the same cash flows, on the same terms, but without the conversion option. This amount is recorded as a liability on an amortised cost basis using the effective interest method until extinguished upon conversion or at the instrument's maturity date. Non-substantial modifications are accounted for by amortising any adjustment to the carrying amount of the liability over the remaining term of the modified liability.
The equity component is determined by deducting the amount of the liability component and deferred tax liability from the fair value of the compound instrument as a whole. This is recognised and included in equity, and is not subsequently re-measured.
Provisions
Provisions are recognised when there is a present obligation (legal or constructive) as a result of a past event, it is probable that the obligation will be required to be settled, and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Provisions are discounted when the time value of money is material.
Current and deferred income tax
The tax expense for the year comprises current and deferred tax. Tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination, and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the reporting date.
The recognition of deferred tax assets is based upon whether it is more likely than not that sufficient and suitable taxable profits will be available in the future, against which the reversal of temporary differences can be deducted. Recognition, therefore, involves judgement regarding the future financial performance of the particular legal entity or tax group in which the deferred tax asset has been recognised.
Historical differences between forecast and actual taxable profits have not resulted in material adjustments to the recognition of deferred tax assets.
Share-based payments
The Group issues equity-settled share-based payments to certain employees. These equity-settled share-based payments are measured at fair-value at the date of the grant. Where material, the fair value as determined at the grant date is expensed on a straight-line basis over the vesting period, based on the Group's estimate of shares that will eventually vest.
Fair value is measured by use of the Black-Scholes method. The charges to profit or loss are recognised in the subsidiary employing the individual concerned.
Employee benefits
Individual subsidiaries of the Group operate defined contribution pension schemes for their employees. The assets of the schemes are not managed by the Group and are held separately from those of the Group. The annual contributions payable are charged to the income statement when they fall due for payment.
Revenue
Revenue represents the amounts derived from the provision of goods and services, stated net of Value Added Tax. The methodology applied to income recognition is dependent upon the goods or services being supplied.
In respect of income relating to annual or multi-year service contracts and/or hosted services which are invoiced in advance, it is the Group's policy to recognise revenue on a straight line basis over the period of the contract. The full value of each sale is credited to deferred revenue when invoiced to be released to the statement of comprehensive income in equal instalments over the contract period.
During the course of a customer's relationship with the Group, their system may be upgraded. These upgrades can be separated into two distinct types:
Specific upgrades, i.e. moving from an old legacy system to one of the Group's latest products. This would require the migration of the customer's data from the old system and the set-up of their new system; and
Non-specific upgrades, i.e. enhancements to customers' systems as a result of internal development effort to improve the stability or functionality of the platform for all customers.
Customers do not have a contractual right to non-specific upgrades and therefore, the provision of these non-specific upgrades are accounted for as part of the related service contract as explained above.
For specific upgrades, customers are required to purchase these separately through signing a new contract which sets out the one-off professional service fee for the upgrade to cover migration costs and any increase in their annual subscription fee. The provision of this specific upgrade is therefore, accounted for as a separate service contract as explained above.
The Group does not have any further obligations that it would have to provide for under the subscription arrangements.
Operating lease payments
Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives received are recognised in the income statement as an integral part of the total lease expense.
Finance income and finance expenses
Finance income and finance expenses are recognised in profit or loss as they accrue, using the effective interest method. Finance income relates to interest income on the Group's bank account balances.
Interest payable comprises interest payable or finance charges on loans classified as liabilities.
In relation to interest relating to the convertible redeemable loan notes, the charge to profit or loss is an 'effective interest charge' over the period as opposed to the actual interest paid or payable. The effective interest charge is higher than the actual interest paid.
Dividend distributions
Dividend distributions are recognised as transactions with owners on payment when liability to pay is established.
Foreign exchange
The individual financial statements of each Group company are presented in the currency of the primary economic environment in which it operates (its functional currency). The results and financial position of each Group company are expressed in pounds sterling, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements.
In preparing the financial statements of the individual companies, transactions in currencies other than the entity's functional currency (foreign currencies) are recorded at the rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in profit or loss for the year.
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 generated from the following territories:
|
|
Continuing |
Continuing |
|
United Kingdom |
8,189 |
7,296 |
|
European Union |
453 |
448 |
|
Rest of the world |
246 |
319 |
|
|
8,888 |
8,063 |
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 segment derives its revenues from software subscription sales and support and training revenues. The segments are:
· Reputation
· Discontinued - Disposals & Held for Sale
· Head Office
2018
The segment information for the year ended 30 November 2018, is as follows:
|
|
Reputation
£'000 |
Head office £'000 |
Consolidation adjustment £'000 |
|
Continuing operations £'000 |
Discontinued Disposals £'000 |
Discontinued Held for sale £'000 |
Consolidations adjustment £'000 |
Discontinued operations £'000 |
Total
£'000 |
|
|
External revenue |
8,888 |
- |
- |
|
8,888 |
145 |
- |
- |
145 |
9,033 |
|
|
(Loss)/profit pre-below adjustments |
(1,430) |
(37) |
132 |
|
(1,335) |
(91) |
- |
- |
(91) |
(1,426) |
|
|
Share of loss of associate |
- |
(222) |
- |
|
(222) |
- |
- |
- |
- |
(222) |
|
|
Loss on sale of subsidiary |
- |
- |
- |
|
- |
- |
- |
(64) |
(64) |
(64) |
|
|
Financial expense |
(6) |
(154) |
- |
|
(160) |
- |
- |
- |
- |
(160) |
|
|
Taxation |
362 |
- |
- |
|
362 |
- |
- |
- |
- |
362 |
|
|
(Loss)/Profit after taxation |
(1,074) |
(413) |
132 |
|
(1,355) |
(91) |
- |
(64) |
(155) |
(1,510) |
|
|
Reportable segment assets |
1,257 |
23,691 |
(1,092) |
|
23,856 |
- |
- |
- |
- |
23,856 |
|
|
Reportable segment liabilities |
(6,891)
|
-6,559 |
320 |
|
(13,130) |
- |
- |
- |
- |
-13,130 |
|
|
Other information: |
78 |
- |
- |
|
78 |
- |
- |
- |
- |
78 |
|
|
Additions to property, plant |
|
||||||||||
|
and equipment |
|||||||||||
|
Depreciation and amortisation |
1,193 |
34 |
(331) |
|
896 |
2 |
- |
- |
- |
896 |
|
2017
The segment information for the year ended 30 November 2017, is as follows:
|
|
Reputation
£'000 |
Head office £'000 |
Consolidation adjustment £'000 |
Continuing operations £'000 |
Discontinued Disposals £'000 |
Discontinued Held for sale £'000 |
Consolidations adjustment £'000 |
Discontinued operations £'000 |
Total
£'000 |
||||||||||
|
External revenue |
8,063 |
- |
- |
8,063 |
328 |
388 |
- |
716 |
8,779 |
||||||||||
|
(Loss)/profit pre below adjustments |
(3,297) |
(303) |
404 |
(3,196) |
151 |
(185) |
- |
(34) |
(3,230) |
||||||||||
|
Share of loss of associate |
- |
(254) |
- |
(254) |
- |
- |
- |
- |
(254) |
||||||||||
|
Profit on sale of subsidiary |
- |
- |
- |
- |
- |
- |
592 |
592 |
592 |
||||||||||
|
Financial income |
- |
- |
- |
- |
- |
- |
- |
- |
- |
||||||||||
|
Financial expense |
(5) |
(338) |
- |
(343) |
- |
- |
- |
- |
(343) |
||||||||||
|
Taxation |
458 |
- |
- |
458 |
- |
- |
- |
- |
458 |
||||||||||
|
(Loss)/Profit after taxation |
(2,844) |
(895) |
404 |
(3,335) |
151 |
(185) |
592 |
558 |
(2,777) |
||||||||||
|
Reportable segment assets |
8,583 |
9,751 |
(7,324) |
10,980 |
- |
270 |
- |
270 |
11,250 |
||||||||||
|
Reportable segment liabilities |
13,996 |
4,262 |
(7,591) |
10,667 |
- |
260 |
- |
260 |
10,927 |
||||||||||
|
Other information: |
28 |
90 |
- |
118 |
- |
- |
- |
- |
118 |
||||||||||
|
Additions to property, plant |
|||||||||||||||||||
| and equipment | |||||||||||||||||||
| Depreciation and amortisation | 1,366 | 35 | (423) | 978 | - | 6 | - | 6 | 984 | ||||||||||
5. Operating Loss
Operating loss is stated after charging
|
|
2018 |
2017 |
|
Depreciation of property, plant and equipment |
78 |
71 |
|
Amortisation of development costs |
311 |
287 |
|
Amortisation of brand values |
61 |
60 |
|
Amortisation of software licences |
64 |
62 |
|
Amortisation of database |
201 |
332 |
|
Amortisation of customer list |
181 |
166 |
|
Loss on foreign currency translation |
12 |
11 |
|
Non-recurring items (see below) |
473 |
854 |
|
Operating lease charges - land and buildings |
358 |
509 |
|
Auditor's remuneration (see below) |
96 |
55 |
|
Research and development and other technical expenditure (income statement) (a further £1,344,000 (2017: £Nil) was capitalised) |
526 |
1,595 |
|
Increase in provision for receivables |
130 |
54 |
The non-recurring costs are made up of the following:
|
|
2018 |
2017 |
|
Compensation and notice payments - all staff |
20 |
107 |
|
Acquisition costs |
183 |
- |
|
Non-recurring transitional hosting, migration and integration costs |
270 |
747 |
|
|
473 |
854 |
Auditor's remuneration is further analysed as:
|
|
2018 |
2017 |
|
Fees payable to the Company's auditor for the audit of the Company's annual accounts |
31 |
24 |
|
The audit of the Company's subsidiaries, pursuant to legislation |
33 |
23 |
|
Tax services |
8 |
8 |
|
Non-audit fees related to acquisitions |
24 |
- |
|
|
96 |
55 |
6. Discontinued operations
A.I. Talent Ltd
In May 2018, the Group sold its subsidiary A.I. Talent Ltd for cash consideration of £1. This business unit had been reported as a discontinued operation and classified as held for sale at 30 November 2017 following the commitment of the Group's management in 2017 to sell the entity.
|
|
2018 |
2017 |
|
Results of discontinued operations |
|
|
|
Revenue |
145 |
388 |
|
Expenses |
(236) |
(573) |
|
Results from operating activities |
(91) |
(185) |
|
Tax |
- |
- |
|
Results from operating activities, net of tax |
(91) |
(185) |
|
Loss on sale of discontinued operation |
(64) |
- |
|
Tax on gain on sale of discontinued operation |
- |
- |
|
Loss for the year from discontinued operations |
(155) |
(185) |
|
Earnings per share |
|
|
|
Basic earnings per share |
(0.34)p |
(0.56)p |
|
Diluted earnings per share |
(0.34)p |
(0.56)p |
|
|
2018 |
2017 |
|
Cash flows from/(used in) discontinued operation |
|
|
|
Net cash from operating activities |
(6) |
(236) |
|
Net cash used in investing activities |
- |
- |
|
Net cash used in financing activities |
- |
- |
|
Net cash flows for the year |
(6) |
(236) |
The following is a breakdown of the effects of the disposal of A.I. Talent Ltd on the financial position of the Group:
|
|
2018 |
|
Trade and other receivables |
72 |
|
Cash and cash equivalents |
142 |
|
Deferred tax assets |
1 |
|
Trade and other payables |
(295) |
|
Net assets |
(80) |
|
Consideration received, satisfied in cash |
- |
|
Cash and cash equivalents disposed of |
142 |
AIControlPoint Limited
In March 2017, the Group sold its subsidiary AIControlPoint Limited for cash consideration of £745,000. This business unit as reported as a discontinued operation and classified as held for sale at 30 November 2016 following the commitment of the Group's management in 2016 to sell the entity.
|
|
2018 |
2017 |
|
Results of discontinued operations |
|
|
|
Revenue |
- |
328 |
|
Expenses |
- |
(178) |
|
Results from operating activities |
- |
151 |
|
Tax |
- |
- |
|
Results from operating activities, net of tax |
- |
151 |
|
Gain on sale of discontinued operation |
- |
592 |
|
Tax on gain on sale of discontinued operation |
- |
- |
|
Profit for the year from discontinued operations |
- |
743 |
|
Earnings per share |
|
|
|
Basic earnings per share |
- |
2.26p |
|
Diluted earnings per share |
- |
2.26p |
|
|
2018 |
2017 |
|
Cash flows from/(used in) discontinued operation |
|
|
|
Net cash from operating activities |
- |
- |
|
Net cash used in investing activities |
- |
- |
|
Net cash used in financing activities |
- |
- |
|
Net cash flows for the year |
- |
- |
All discontinued operations
The following tables provide combined information for all discontinued operations. The current year figures include the results of A.I. Talent Ltd plus consolidation adjustments. The prior year comparative figures include the results AIControlPoint Limited, which was sold during the year ended 30 November 2017, and A.I. Talent Ltd, which was held for sale in 2017 and was sold during the year ended 30 November 2018.
|
|
2018 |
2017 |
|
Results of discontinued operations |
|
|
|
Revenue |
145 |
716 |
|
Expenses |
(236) |
(750) |
|
Results from operating activities |
(91) |
(34) |
|
Tax |
- |
- |
|
Results from operating activities, net of tax |
(91) |
(34) |
|
(Loss)/Gain on sale of discontinued operation |
(64) |
592 |
|
Tax on gain on sale of discontinued operation |
- |
- |
|
(Loss)/profit for the year from discontinued operations |
(155) |
558 |
|
Earnings per share |
|
|
|
Basic earnings per share |
(0.34)p |
1.70p |
|
Diluted earnings per share |
(0.34)p |
1.70p |
The loss from discontinued operations of £155,000 (2017: profit of £558,000) is entirely attributable to the owners of the Company.
|
|
2018 |
2017 |
|
Cash flows from/(used in) discontinued operation |
|
|
|
Net cash from operating activities |
(6) |
(236) |
|
Net cash used in investing activities |
- |
- |
|
Net cash used in financing activities |
- |
- |
|
Net cash flows for the year |
(6) |
(236) |
7. Disposal group held for sale
At the prior year end, A.I. Talent 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 9 May 2018.
At 30 November, the disposal group comprised the following assets and liabilities:
|
Assets classified as held for sale |
2018 |
2017 |
|
Goodwill |
- |
- |
|
Development costs |
- |
- |
|
Other intangible fixed assets |
- |
2 |
|
Property, plant and equipment |
- |
- |
|
Trade and other receivables |
- |
263 |
|
Cash and cash equivalents |
- |
5 |
|
|
- |
270 |
|
Liabilities classified as held for sale |
2018 |
2017 |
|
|
- |
|
|
Trade and other payables |
- |
12 |
|
Deferred income |
- |
248 |
|
Deferred tax liabilities |
- |
- |
|
|
- |
260 |
8. Acquisition of business
On 9 October 2018, the Group entered into a share purchase agreement to acquire the entire issued share capital of ResponseSource Ltd ("ResponseSource"). The consideration for the acquisition was: £5,000,000 payable in cash plus the agreed amount of free cash in ResponseSource at the date of Completion; and £0.5 million by the allotment and issue of 793,651 Ordinary Shares of 5p each at a price of 63 pence per share.
The acquisition was completed on 5 November 2018 with payment of the initial cash consideration of £5,000,000 and allotment of the 793,651 Consideration Shares. An additional £1,854,000 consideration was paid on 17 December 2018 in respect of free cash in ResponseSource at the date of Completion. A further £200,000 has been retained in respect of a possible pre-acquisition tax liability of ResponseSource that has not yet crystallised. Should any tax charge crystallise, this will be deducted from the £200,000 retention with the balance being paid to the vendors.
The Board believe that the acquisition will fulfil a current need and longer term strategic aim to strengthen the Group's service to the journalist and PR sectors by improving Access Intelligence's media data and press release wire offering, as well as providing major upsell opportunities for core Vuelio services to ResponseSource's customers.
In the three-week period that ResponseSource was owned by the Group, it contributed revenue of £222,000 and a loss of £1,000. Had ResponseSource been included within the Group's results since 1 December 2017, total Group revenue would have been £12,090,000, adjusted EBITDA would have been £705,000 and total Group loss after tax would have been £1,073,000.
Consideration transferred
The following table summarises the acquisition date fair value of each major class of consideration transferred.
|
|
£'000 |
|
Cash - Initial consideration |
5,000 |
|
Cash - Deferred consideration (paid post year end) |
1,854 |
|
Cash - Deferred consideration (not yet paid) |
200 |
|
Shares |
500 |
|
Total consideration |
7,554 |
Acquisition related costs
The Group incurred acquisition related costs of £183,000 on legal fees, due diligence costs and stamp duty.
These costs have been included in 'non-recurring expenses'.
Identifiable assets acquired and liabilities assumed
The following table summarises the recognised amounts of assets acquired and liabilities assumed at the date of acquisition.
The intangible assets identified primarily comprise the fair values estimated for the software platform, media contacts database, customer list and brand acquired.
|
|
£'000 |
|
Property, plant and equipment |
22 |
|
Intangible assets |
3,466 |
|
Trade and other receivables |
761 |
|
Cash and cash equivalents |
2,198 |
|
Trade and other payables |
(320) |
|
Deferred tax |
(572) |
|
Accruals and deferred income |
(1,770) |
|
Total identifiable net assets acquired |
3,785 |
|
Goodwill |
3,769 |
|
Total consideration |
7,554 |
A cost-based approach was used to value the software platform, determining the likely cost of building an equivalent software platform from new. The useful life of the software platform has been estimated at 5 years.
A cost-based approach was used to value the media contacts database, determining the likely cost of building an equivalent media contacts database from new. The useful life of the database has been estimated at 3 years.
The customer list was valued by assessing a discounted cash flow for the acquired customer list, based on customer attrition rates and using a discount factor of 12%. This discount factor is in line with value-in-use calculations performed for intangibles testing (see Note 14). The useful life of the customer list has been estimated at 9 years.
Trade and other receivables include gross contractual amounts due of £622,000, of which £Nil was expected to be uncollectable at the date of acquisition.
Accruals and deferred income includes an amount of £1,671,000 which relates to the fair value of deferred revenue acquired. The fair value has been estimated based on the value of deferred revenue relating to contracts transferred, discounted in accordance with IFRS.
Goodwill
Goodwill recognised on this acquisition represents the difference between the consideration paid and the fair value of the net assets acquired. It includes the value inherent in the assembled workforce acquired. The goodwill arising has been recognised as follows:
|
|
£'000 |
|
Consideration transferred |
7,554 |
|
Fair value of identifiable net assets |
3,785 |
|
Goodwill |
3,769 |
9. Particulars of employees
|
|
2018 |
2017 |
|
The average number of persons (including directors) employed by the Group during the year was: |
|
|
|
Technical and support |
45 |
49 |
|
Commercial |
34 |
40 |
|
Finance and administration |
21 |
13 |
|
|
100 |
102 |
Costs incurred in respect of these employees were:
|
|
2018 |
2017 |
|
Wages and salaries costs |
5,207 |
4,801 |
|
Social security costs |
483 |
452 |
|
Pension costs |
99 |
130 |
|
Health insurance |
11 |
16 |
|
Employee benefits |
7 |
- |
|
Compensation for loss of office |
20 |
107 |
|
|
5,826 |
5,505 |
The compensation for loss of office charge of £20,000 (2017: £107,000) relates to 3 employees (2017: 16 employees) who were made redundant during the year.
The reportable key management personnel are considered to be comprised of the Company directors, the remuneration for whose services during the year is detailed in the table below.
Directors' remuneration
|
|
Salaries |
Fees |
2018 |
2017 |
|
Executive Directors |
|
|
|
|
|
J Arnold |
211,631 |
- |
211,631 |
212,225 |
|
M Fautley |
107,339 |
- |
107,339 |
- |
|
Non-Executive Directors |
|
|
|
|
|
C Satterthwaite |
20,000 |
- |
20,000 |
- |
|
M Jackson |
40,000 |
- |
40,000 |
40,000 |
|
C Pilling |
- |
30,000 |
30,000 |
30,000 |
|
J Hamer |
- |
30,000 |
30,000 |
5,000 |
|
D Lowe |
- |
- |
- |
20,000 |
|
|
378,970 |
60,000 |
438,970 |
307,225 |
J Arnold received health insurance benefits during the year of £462 (2017: £615). J Arnold received payments into a personal retirement money purchase pension scheme during the year of £6,509 (2017: £7,725).
M Fautley received payments into a personal retirement money purchase pension scheme during the year of £4,685 (2017:£Nil).
No other directors received any other benefits other than those detailed above.
The number of directors at 30 November 2018 accruing retirement benefits under money purchase schemes was two (2017: one).
The interests of the directors in share options are detailed in the Directors' Report on page 31 of this report. No directors exercised share options during the year.
10. Financial expense
|
|
2018 |
2017 |
|
Effective interest charged on convertible loan notes |
44 |
231 |
|
Interest charged on non-convertible loan notes |
110 |
106 |
|
Other interest |
6 |
6 |
|
Total financial expense |
160 |
343 |
11. Taxation
|
|
2018 |
2017 |
|
Current income tax: |
|
|
|
UK corporation tax credit for the year |
(362) |
(458) |
|
Adjustment in respect of prior year |
- |
- |
|
Total current income tax credit |
(362) |
(458) |
|
Deferred tax (note 23) |
||
|
Origination and reversal of temporary differences |
- |
- |
|
Total deferred tax |
- |
- |
|
Total tax credit |
(362) |
(458) |
As shown above the tax assessed on the loss on ordinary activities for the year is lower than (2017: higher than) the standard rate of corporation tax in the UK of 19% (2017: 20%).
The differences are explained as follows:
|
Factors affecting tax credit |
2018 |
2017 |
|
Loss on ordinary activities before tax from continuing operations |
(1,717) |
(3,793) |
|
(Loss)/profit on ordinary activities before tax from discontinued operations |
(155) |
558 |
|
Loss on ordinary activities before tax |
(1,872) |
(3,235) |
|
Loss on ordinary activities multiplied by effective rate of tax |
(356) |
(647) |
|
Items not deductible for tax purposes |
340 |
25 |
|
Items not taxable for tax purposes |
(65) |
(85) |
|
Adjustment in respect of prior years |
- |
- |
|
Additional R&D claim CTA 2009 |
(312) |
(193) |
|
Deferred tax not recognised |
31 |
442 |
|
Total tax credit |
(362) |
(458) |
|
Tax credit reported in the Consolidated Statement of Comprehensive Income |
(362) |
(458) |
|
Tax charge attributable to discontinued operations |
- |
- |
|
Total tax credit |
(362) |
(458) |
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 therefore have been considered when calculating the deferred tax at the reporting date.
12. 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 2018.
13. Earnings per share
The calculation of earnings per share is based upon the total Group loss for the year of £1,510,000 (2017: loss of £2,777,000) divided by the weighted average number of ordinary shares in issue during the year which was 45,523,476 (2017 restated: 32,864,538).
In 2018 and 2017 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 making 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 |
2018 |
2018 |
2018 |
2017 |
2017 |
2017 |
|
(Loss)/profit for the year and earnings used in basic EPS |
(1,355) |
(155) |
(1,510) |
(3,335) |
558 |
(2,777) |
|
Earnings used in diluted EPS |
(1,355) |
(155) |
(1,510) |
(3,335) |
558 |
(2,777) |
|
Denominator |
|
|
|
|
|
|
|
Weighted average number of shares used in basic EPS ('000) |
45,523 |
45,523 |
45,523 |
32,864 |
32,864 |
32,864 |
|
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 ('000) |
45,523 |
45,523 |
45,523 |
32,864 |
32,864 |
32,864 |
|
Basic (Loss)/earnings per share (pence) |
(2.98) |
(0.34) |
(3.32) |
(10.15) |
1.70 |
(8.45) |
|
Diluted loss per share for the year (pence) |
(2.98) |
(0.34) |
(3.32) |
(10.15) |
1.70 |
(8.45) |
The total number of options or warrants granted at 30 November 2018 of 1,951,837 (2017 restated: 1,951,837) would generate £567,305 (2017: £567,305) in cash if exercised. At 30 November 2018, no options (2017 restated: 222,000) were priced above the mid-market closing price of 58p per share (2017 restated: 46.25p per share) and 1,951,837 (2017 restated: 1,729,837) were below.
Of the 1,951,837 options and warrants at 30 November 2018, 322,000 (2017 restated: 322,000) staff options were eligible for exercising at an average price of 26.9p (2017 restated: 26.9p). Also eligible for exercising were the 1,429,837 (2017 restated: 1,429,837) warrants priced at 27.5p per share held by Elderstreet VCT plc and other individuals consequent to an initial investment in the Company in October 2008.
14.Intangible fixed assets
|
|
Brand Value |
Goodwill |
Development Costs |
Software Licences |
Database |
Customer relationships |
Total |
|
Cost |
|||||||
|
At 1 December 2016 |
1,369 |
9,176 |
1,918 |
143 |
997 |
830 |
14,433 |
|
Capitalised during the year |
- |
- |
- |
79 |
- |
- |
79 |
|
Disposals |
- |
- |
- |
- |
- |
- |
- |
|
Held for sale |
- |
- |
(765) |
(26) |
- |
- |
(791) |
|
At 30 November 2017 |
1,369 |
9,176 |
1,153 |
204 |
997 |
830 |
13,729 |
|
Capitalised during the year |
- |
- |
1,344 |
36 |
- |
- |
1,380 |
|
On acquisition |
306 |
3,769 |
1,690 |
75 |
273 |
1,122 |
7,235 |
|
Disposals |
- |
(5,205) |
- |
(3) |
- |
- |
(5,208) |
|
At 30 November 2018 |
1,675 |
7,740 |
4,187 |
312 |
1,270 |
1,952 |
17,136 |
|
Amortisation and impairment |
|||||||
|
At 1 December 2016 |
529 |
5,205 |
880 |
51 |
410 |
296 |
7,371 |
|
Charge for the year |
60 |
- |
287 |
62 |
332 |
166 |
907 |
|
Disposals |
- |
- |
- |
- |
- |
- |
- |
|
Held for sale |
- |
- |
(765) |
(23) |
- |
- |
(788) |
|
At 30 November 2017 |
589 |
5,205 |
402 |
90 |
742 |
462 |
7,490 |
|
Charge for the year |
61 |
- |
311 |
64 |
201 |
181 |
818 |
|
Disposals |
- |
(5,205) |
- |
- |
- |
- |
(5,205) |
|
At 30 November 2018 |
650 |
- |
713 |
154 |
943 |
643 |
3,103 |
|
Net Book Value |
|||||||
|
At 30 November 2018 |
1,025 |
7,740 |
3,474 |
158 |
327 |
1,309 |
14,033 |
|
At 30 November 2017 |
780 |
3,971 |
751 |
106 |
255 |
368 |
6,231 |
The carrying value and remaining amortisation period of individually material intangible assets are as follows:
|
|
Carrying amount |
Remaining amortisation period |
||
|
|
2018 |
2017 |
2018 |
2017 |
|
Brand |
||||
|
Access Intelligence Media and Communications |
720 |
780 |
12 |
13 |
|
ResponseSource |
305 |
- |
20 |
- |
|
Development Costs |
||||
|
Access Intelligence Media and Communications - Vuelio Platform Development |
86 |
210 |
3 |
4 |
|
AIMediaData - Vuelio Platform Development |
1,723 |
541 |
5 |
4 |
|
ResponseSource - Platform Development |
1,665 |
- |
5 |
- |
|
Database |
||||
|
AIMediaData - PR & Media Contacts Database |
61 |
255 |
- |
1 |
|
ResponseSource - PR & Media Contacts Database |
266 |
- |
3 |
- |
|
Customer Relationships |
||||
|
AIMediaData - Acquired Customer Relationships |
202 |
368 |
2 |
3 |
|
ResponseSource - Acquired Customer Relationships |
1,107 |
- |
9 |
- |
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 goodwill allocated to each CGU is:
|
2018 |
Goodwill |
|
Continuing operations |
|
|
Access Intelligence Media and Communications Limited |
1,928 |
|
AIMediaData Limited |
2,043 |
|
ResponseSource Ltd |
3,769 |
|
|
7,740 |
|
2017 |
Goodwill |
|
Continuing operations |
|
|
Access Intelligence Media and Communications Limited |
1,928 |
|
AIMediaData Limited |
2,043 |
|
|
3,971 |
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 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 7.5% from year 4 onwards, with a terminal value after year five.
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 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 and Communications Limited, AIMediaData Limited and ResponseSource Ltd as the value-in-use calculations exceeded the carrying values of goodwill 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 53% in EBITDA delivered by Access Intelligence Media and Communications Limited would result in the carrying value of its goodwill and intangible assets being equal to the recoverable amount. For AIMediaData Limited, a 62% reduction in EBITDA would result in the carrying value of its goodwill and intangible assets being equal to the recoverable amount. For ResponseSource Ltd, a 66% reduction in EBITDA would result in the carrying value of its goodwill and intangible assets being equal to the recoverable amount.
For Access Intelligence Media and Communications Limited, a 15% percentage point increase in the discount rate would result in the carrying value of goodwill and intangible assets being equal to the recoverable amount. For AIMediaData Limited and ResponseSource Ltd, 23% percentage point and 17% percentage point increases respectively would result in the carrying value of goodwill and intangible assets being equal to 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 2018, no development costs (2017: £Nil) 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 2018.
15. Investment in associate
|
|
Investment in associate |
|
Cost |
|
|
At 30 November 2016 |
625 |
|
Additions |
- |
|
At 30 November 2017 |
625 |
|
Additions |
260 |
|
At 30 November 2018 |
885 |
|
Share of loss of associate and impairment |
|
|
At 30 November 2016 |
91 |
|
Share of loss of associate |
254 |
|
At 30 November 2017 |
345 |
|
Share of loss of associate |
222 |
|
At 30 November 2018 |
567 |
|
Net Book Value |
|
|
At 30 November 2018 |
318 |
|
At 30 November 2017 |
280 |
As part of the consideration for the disposal of AITrackRecord Limited, the Group received a 20% shareholding in TrackRecord Holdings Limited, a company registered in England and Wales. The fair value of this shareholding based on the funding raised by TrackRecord Holdings Limited was £625,000. The shareholding in TrackRecord Holdings Limited is treated as an investment in associate as the Group is not able to exercise control over the company, but is able to exercise significant influence over the company by way of its 20% shareholding and through J Arnold being the Group's representative on the board of TrackRecord Holdings Limited.
During the year ended 30 November 2018, the Group invested a further £260,000 in Track Record Holdings Limited, representing its 20% share of a £1,300,000 fundraising round.
During the year, the Group's share of the loss of TrackRecord Holdings Limited was £222,000 (2017: £254,000). As the Group applies the equity method of accounting for its investment in TrackRecord Holdings Limited, the carrying value of investments in associates is reduced by this share of loss at the year-end.
Summarised financial information for associate
The tables below provide summarised financial information for TrackRecord Holdings Limited, an associate which is considered material to the Group. The information disclosed reflects the amounts presented in the financial statements of TrackRecord Holdings Limited and not Access Intelligence Plc's share of those amounts.
|
|
Track Record Holdings Limited |
Track Record Holdings Limited |
|
Total current assets |
1,048 |
799 |
|
Total non-current assets |
785 |
787 |
|
Total current liabilities |
(246) |
(187) |
|
Net assets |
1,587 |
1,399 |
|
Access Intelligence Plc share of net assets (20%) |
318 |
280 |
|
Reconciliation to carrying amounts |
Track Record Holdings Limited |
Track Record Holdings Limited |
|
Opening net assets 1 December |
1,399 |
2,670 |
|
Issue of share capital |
130 |
- |
|
Share premium on issue of shares |
1,170 |
- |
|
Loss for the period |
(1,112) |
(1,271) |
|
Net assets |
1,587 |
1,399 |
|
Summarised statement of comprehensive income |
Track Record Holdings Limited |
Track Record Holdings Limited |
|
Revenue |
703 |
430 |
|
Loss for the period from continuing operations |
(1,112) |
(1,271) |
|
Other comprehensive income |
- |
- |
|
Total comprehensive income |
(1,112) |
(1,271) |
16. Property, plant & equipment
|
|
Fixtures, fitting and equipment |
Leasehold improvements |
Total |
|
Cost |
|||
|
At 1 December 2016 |
476 |
187 |
663 |
|
Additions |
26 |
92 |
118 |
|
Disposals |
(1) |
- |
(1) |
|
Classified as held for sale |
(47) |
- |
(47) |
|
At 1 December 2017 |
454 |
279 |
733 |
|
Additions |
76 |
2 |
78 |
|
Disposals |
(1) |
- |
(1) |
|
On acquisition of business |
22 |
- |
22 |
|
At 30 November 2018 |
551 |
281 |
832 |
|
Depreciation |
|||
|
At 1 December 2016 |
415 |
148 |
563 |
|
Charge for the year |
50 |
21 |
71 |
|
Disposals |
(1) |
- |
(1) |
|
Classified as held for sale |
(46) |
- |
(46) |
|
At 1 December 2017 |
418 |
169 |
587 |
|
Charge for the year |
49 |
29 |
78 |
|
Disposals |
- |
- |
- |
|
At 30 November 2018 |
467 |
198 |
665 |
|
Net Book Value |
|||
|
At 30 November 2018 |
84 |
83 |
167 |
|
At 30 November 2017 |
36 |
110 |
146 |
17. Trade and other receivables
|
|
2018 |
2017 |
|
Current assets |
||
|
Trade receivables |
2,618 |
1,925 |
|
Less: provision for impairment of trade receivables |
(182) |
(137) |
|
|
2,436 |
1,788 |
|
Prepayments and other receivables |
1,204 |
1,180 |
|
|
3,640 |
2,968 |
All trade receivables are reviewed by management and are considered collectible. The ageing of trade receivables which are past due and not impaired is as follows:
|
|
2018 |
2017 |
|
Days outstanding |
||
|
31-60 days |
556 |
505 |
|
61-90 days |
182 |
157 |
|
91-180 days |
375 |
377 |
|
|
1,112 |
1,039 |
Movements on the Group provision for impairment of trade receivables are as follows:
|
|
2018 |
2017 |
|
At 1 December |
137 |
78 |
|
Increase in provision |
130 |
84 |
|
Written off in year |
(85) |
(25) |
|
At 30 November |
182 |
137 |
|
Ageing of impaired debt |
2018 |
2017 |
|
Days outstanding |
||
|
91-180 days |
38 |
18 |
|
181-270 days |
43 |
21 |
|
More than 270 days |
101 |
98 |
|
|
182 |
137 |
The creation and release of a provision for impaired receivables has been included in 'administrative expenses' in the income statement. Amounts charged to the allowance account are generally written off, where there is no expectation of recovering additional cash.
The other asset classes within trade and other receivables do not contain impaired assets.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above together with our cash deposits totalling £5,300,000 (2017: £673,000). The Group does not hold any collateral as security.
As disclosed in note 22, credit risk is considered according to sector and necessary allowances are made when needed by assessing changes in our customers' credit profiles and credit ratings.
18. Interest bearing loans and borrowings
|
|
2018 |
2017 |
|
Current |
||
|
Convertible loan notes |
- |
2,359 |
|
Non-convertible loan notes |
110 |
110 |
|
Other |
100 |
20 |
|
|
210 |
2,489 |
|
Non-current |
||
|
Convertible loan notes |
- |
- |
|
Non-convertible loan notes |
838 |
844 |
|
Other |
29 |
40 |
|
|
867 |
884 |
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 M 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.
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.
During the current year, the 2009 convertible loan notes converted into 31,250,000 new ordinary shares at a conversion price of 4.0p, with conversion being effective on 31 December 2017 and the new shares being admitted to trading on the AIM market of the London Stock Exchange on 3 January 2018.
The 2014 convertible loan notes converted into 36,666,665 new ordinary shares at a conversion price of 3.0p, with conversion being effective and the new shares being admitted to trading on the AIM market of the London Stock Exchange on 29 January 2018.
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:
|
|
2018 |
2017 |
|
Proceeds of issue of convertible loan notes |
- |
- |
|
Existing loan notes rolled over |
2,350 |
2,350 |
|
Equity component |
(255) |
(255) |
|
Deferred taxation |
(79) |
(79) |
|
Initial fair value of liability component |
2,016 |
2,016 |
|
Cumulative interest charged |
1,265 |
1,240 |
|
Cumulative interest paid |
(1,003) |
(897) |
|
Converted into equity |
(2,278) |
- |
|
Liability component at 30 November |
- |
2,359 |
The equity component of £255,000 (2017: £255,000) was originally credited to equity reserve. This was transferred to share premium on conversion of the loan notes. The interest charged for the year is calculated by applying an effective rate of interest of 10.1% (2017: 10.1%) 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 2017 represents the effective interest rate less interest paid to that date.
The movement on the convertible loan note liability is summarised below:
|
|
2018 |
2017 |
|
Opening loan liability |
2,359 |
2,316 |
|
Interest charged for the year |
29 |
231 |
|
Interest paid in the year |
(106) |
(188) |
|
Converted into equity |
(2,282) |
- |
|
Liability component at 30 November |
- |
2,359 |
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. £900,000 of these loan notes were repaid on 22 April 2016.
|
|
2018 |
2017 |
|
Opening loan liability |
954 |
959 |
|
Interest charged for the year |
104 |
105 |
|
Interest paid in the year |
(110) |
(110) |
|
Liability component at 30 November |
948 |
954 |
19. Trade and other payables
|
Due within one year |
2018 |
2017 |
|
Trade and other payables |
3,284 |
1,262 |
|
Other taxes and social security costs |
324 |
206 |
|
VAT payable |
305 |
90 |
|
|
3,913 |
1,558 |
20. Deferred revenue
|
|
2018 |
2017 |
|
At 1 December |
4,137 |
3,772 |
|
Invoiced during the year |
9,434 |
9,064 |
|
Revenue recognised during the year |
(8,888) |
(8,063) |
|
On acquisition of business |
1,671 |
- |
|
Revenue recognised on items moved to held for sale during the year |
- |
(388) |
|
Deferred revenue moved to held for sale |
- |
(248) |
|
At 30 November |
6,354 |
4,137 |
21. Financial instruments
The Group's treasury activities are designed to provide suitable, flexible funding arrangements to satisfy the Group's requirements. The Group uses financial instruments comprising borrowings, cash, liquid resources and items such as trade receivables and payables that arise directly from its operations. The main risks arising from the Group financial instruments relate to the maintaining of liquidity across the four group entities and debt collection. The Board reviews policies for managing each of these risks and they are summarised below.
The Group finances its operations through a combination of cash resources, loan notes and equity. Short term flexibility is provided by moving resources between the individual subsidiaries. Exposure to interest rate fluctuations is minimal as all borrowings are at fixed rates of interest. The Group also has deposit facilities on which 0.75% interest was being earned throughout 2018 (2017: 1.25%) and will be optimising the use of these accounts going forward. The Group's exposure to interest rate risk is not significant and therefore no sensitivity analysis has been performed.
Small amounts of foreign currency risk exist in two subsidiaries which invoice in currencies other than sterling. Due to the relative size of the currency risks concerned no hedging takes place in Australian dollars, Euros or US dollars. At the year-end there were no open contracts, however the Group was holding a US dollar deposit of $Nil (2017: $2,044) which in 2017 was translated at the rate of 1.3399 for inclusion in the consolidated statement of financial position. This amounted to £Nil (2017: £1,526). There are no hedges against this balance.
The Group did not hold any other significant assets or liabilities in foreign denominated currencies at the reporting date. The directors do not consider that there is a significant exposure to foreign exchange risk and therefore no sensitivity analysis has been performed.
At 30 November 2018 borrowings comprised convertible loan notes of £Nil (2017: £2,359,000), non-convertible loan notes of £948,000 (2017: £948,000), and other loans of £129,000 (2017: £66,000).
There is no material difference between the fair values and book values of the Group's financial instruments. Short term trade receivables and payables have been excluded from the above disclosures.
The objectives of the Group's treasury activities are to manage financial risk, secure cost-effective funding where necessary and minimise the adverse effects of fluctuations in the financial markets on the value of the Group's financial assets and liabilities, on reported profitability and on the cash flow of the Group. Interest income is sought wherever possible and in 2018 produced £Nil (2017: £Nil) of income.
The Group's principal financial instruments for fundraising are through share issues.
|
2018 |
Loans, receivables and other payables |
Total |
|
Assets per the balance sheet |
||
|
Trade and other receivables excluding prepayments |
2,436 |
2,436 |
|
Cash and cash equivalents |
5,300 |
5,300 |
|
|
7,736 |
7,736 |
|
Liabilities per the balance sheet |
||
|
Trade and other payables excluding accruals |
3,913 |
3,913 |
|
Interest bearing loans and borrowings |
1,077 |
1,077 |
|
|
4,990 |
4,990 |
|
Undiscounted contractual maturity of financial liabilities |
||
|
Amounts due within one year |
|
4,233 |
|
Amounts due between one and five years |
|
867 |
|
|
|
5,100 |
|
Less: future interest charges |
|
(110) |
|
Financial liabilities carrying value |
|
4,990 |
The above analysis excludes corporation tax receivable.
|
2017 |
Loans, receivables and other payables |
Total |
|
Assets per the balance sheet |
||
|
Trade and other receivables excluding prepayments |
1,788 |
1,788 |
|
Cash and cash equivalents |
673 |
673 |
|
|
2,461 |
2,461 |
|
Liabilities per the balance sheet |
||
|
Trade and other payables excluding accruals |
1,558 |
1,558 |
|
Interest bearing loans and borrowings |
3,373 |
3,373 |
|
|
4,931 |
4,931 |
|
Undiscounted contractual maturity of financial liabilities |
||
|
Amounts due within one year |
|
1,759 |
|
Amounts due between one and five years |
|
1,156 |
|
Amounts that convert to equity |
|
2,359 |
|
|
|
5,274 |
|
Less: future interest charges |
|
(342) |
|
Financial liabilities carrying value |
|
4,931 |
The liquidity risk relating to the contractual liabilities listed above is managed on a local basis through their day to day cash management. The Group has invested significantly in restructuring the Group and building products written in current code bases, accordingly the Group is liquid with £5,300,000 (2017: £673,000) available cash resources against a liability payable within the next 12 months of £4,013,000 (2017: £1,759,000). Management monitor cash balances weekly. However, should any subsidiary, or the Company, find that it does not have the liquidity to pay a debt as it becomes due an inter-company cash transfer will be made available by another member of the Group.
22. Financial and operational risk management
The Group's activities expose it to a variety of financial risks which are managed by the Group and subsidiary management teams as part of their day-to-day responsibilities. The Group's overall risk management policy concentrates on those areas of exposure most relevant to its operations. These fall into four categories:
Competitive risk - that our products are no longer competitive or relevant to our customers;
Cash flow and liquidity risk - that we run out of the cash required to run the business;
Credit risk - that our customers do not pay;
Key personnel risk - that we cannot attract and retain talented people; and
Capital risk - that we do not have an optimal structure to allow for future acquisition and growth.
Further information on these risks and the Group's actions to mitigate them is provided on page 23 and 24 of the Strategic Report.
23. Deferred tax assets and liabilities
The following are the major deferred tax assets and liabilities recognised by the Group and the movements thereon during the current year and the prior year:
|
|
Accelerated depreciation |
Convertible loan notes |
Share-based payments |
Tax losses |
Accelerated tax on assets |
On acquisition of subsidiaries |
Total |
|
At 1 December 2016 |
22 |
(29) |
- |
208 |
(201) |
- |
- |
|
Charge to profit or loss |
8 |
- |
- |
(32) |
24 |
- |
- |
|
At 30 November 2017 |
30 |
(29) |
- |
176 |
(177) |
- |
- |
|
|
|||||||
|
At 1 December 2017 |
30 |
(29) |
- |
176 |
(177) |
- |
- |
|
Charge to profit or loss |
12 |
29 |
- |
(164) |
123 |
- |
- |
|
On acquisition |
- |
- |
- |
- |
- |
(572) |
(572) |
|
At 30 November 2018 |
42 |
- |
- |
12 |
(54) |
(572) |
(572) |
|
|
|||||||
|
Attributable to: |
|
|
|
|
|
|
|
|
Continuing operations |
42 |
- |
- |
12 |
(54) |
(572) |
(572) |
|
Discontinued operations |
- |
- |
- |
- |
- |
- |
- |
|
Total |
42 |
- |
- |
12 |
(54) |
(572) |
(572) |
At the reporting date the Group had unused tax losses of approximately £6,900,000 (2017: £7,000,000) available for offset against future profits. A deferred tax asset has been recognised in respect of all available losses expected to be utilised against future taxable profits within three years based on the forecasts approved by the directors. The tax losses do not have any expiry date.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
Deferred tax assets totalling £1,161,000 (2017: £1,299,000) arising in respect of losses have not been included in the statement of financial position due to uncertainties in regard to their recoverability.
The following is the aggregate amounts of deferred tax balances in each group entity, after allowable offset, for financial reporting purposes:
|
|
2018 |
2017 |
|
Deferred tax assets |
37 |
206 |
|
Deferred tax liabilities |
(609) |
(206) |
|
Total |
(572) |
- |
24. Share capital
|
Equity: Ordinary shares of 5p each |
2018 |
2017 |
|
Allotted, issued and fully paid 63,772,754 ordinary shares of 5p each (2017: 348,674,357 ordinary shares of 0.5p each) |
3,189 |
1,743 |
|
|
2018 |
2017 |
|
Number of shares at 1 December |
348,674,357 |
315,935,118 |
|
New shares issued in year (pre-share consolidation) |
70,000,008 |
31,384,615 |
|
Share options exercised (pre-share consolidation) |
- |
1,354,624 |
|
Conversion of convertible loan notes (pre share consolidation) |
67,916,665 |
- |
|
Consolidation of shares |
(437,931,927) |
- |
|
New shares issued in year (post-share consolidation) |
15,113,651 |
- |
|
Number of shares at 30 November |
63,772,754 |
348,674,357 |
In January 2018, 31,250,000 shares were issued at 4p as a result of the conversion of the 2009 CLNs and 36,666,665 were issued at 3p as a result of the conversion of the 2014 CLNs.
In May 2018, 70,000,000 shares were issued at 4p in conjunction with a placing with existing shareholders and management.
In November 2018, the Company completed a one-for-ten share consolidation to reduce the number of Ordinary Shares in issue. To effect the Share Consolidation, it was necessary to issue an additional eight shares so that the Company's issued ordinary share capital was exactly divisible by 10.
Subsequent to the share consolidation, 14,320,000 shares were issued at 47.5p in a placing and 793,651 were issued as consideration at 63p.
On 21 September 2011 29,666,667 ordinary shares of 0.5 pence, and with a total nominal value of £148,333 were returned to the Company. Post consolidation, this equates to 2,966,666 5p shares held in treasury at the year end. The shares held in treasury have no voting rights, or rights to dividends and so the total issued share capital for voting and dividend purposes is 60,806,088 (2017 restated: 31,900,770).
Transaction costs associated with share issues in the year amounted to £465,000 (2017: £3,000). Transaction costs are accounted for as a reduction from the share premium account.
25. Equity-settled share-based payments
The Company has a share option scheme for employees of the Group.
Ordinary share options and warrants granted and subsisting at 30 November 2018 were as follows:
|
Date of grant |
Exercise price |
No of shares |
Exercisable between |
|
23 October 2008 |
27.5p |
1,429,837 |
No time limit |
|
03 April 2009 |
27.5p |
100,000 |
Apr 2012-Apr 2019 |
|
29 September 2009 |
43.75p |
200,000 |
Sep 2012-Sep 2019 |
|
04 December 2009 |
55.0p |
22,000 |
Dec 2012-Dec 2019 |
|
19 December 2011 |
22.0p |
100,000 |
Dec 2014-Dec 2021 |
|
24 October 2013 |
25.0p |
100,000 |
Oct 2016-Oct 2023 |
|
|
|
1,951,837 |
|
Details of the movements in the weighted average exercise price ("WAEP") and number of share options during the current and prior year are as follows:
|
|
At start of year |
Granted |
Exercised |
Forfeited |
At end of year |
|
WAEP 2017 |
2.94 |
- |
2.96 |
(3.13) |
2.91 |
|
WAEP 2018 |
2.91 |
- |
- |
- |
2.91 |
|
Options 2017 |
24,353,073 |
- |
(1,354,624) |
(3,480,070) |
19,518,379 |
|
Options 2018 |
19,518,379 |
- |
- |
- |
1,951,837* |
Due to the share consolidation in the year, the share options and warrants granted and subsisting at 1 December 2018 were adjusted on the basis of one option or warrant for every previous 10 options or warrants.
The range of prices at which options and warrants can be exercised is 22.0p to 55.0p.
No options were cancelled in the year (2017: Nil).
The weighted average price of shares on the date of exercise during the year was Nil pence (2017: 4.50 pence).
The option movements detailed above resulted in a share-based payment charge for the Group of £Nil (2017: £Nil). During 2018, there were no share options granted in the year.
Further details of share options exercisable at the year-end are provided in note 13.
There are no market, non-market or service conditions as part of the share option scheme. The only condition existing is that employees must still be in employment with the Company at the point they exercise the options.
26. Cash and cash equivalents
The Group monitors its exposure to liquidity risk based on the net cash flows that are available. The following provides an analysis of the changes in net funds:
|
|
At at 30 November 2017 |
Cash inflow |
At at 30 November 2018 |
|
Cash and cash equivalents |
673 |
4,627 |
5,300 |
|
|
At at 30 November 2016 |
Cash outflow |
At at 30 November 2017 |
|
Cash and cash equivalents |
1,162 |
(489) |
673 |
27. Commitments
Capital commitments
The Group had no capital commitments at the end of the financial year or prior year.
Operating lease commitments
Commitments for minimum lease payments in relation to operating leases are payable as follows:
|
|
Land and buildings |
|
|
|
2018 |
2017 |
|
Not later than one year |
278 |
246 |
|
Later than one year and not later than five years |
297 |
759 |
|
|
575 |
1,005 |
The Group leases various offices and storage units under non-cancellable fixed term operating lease agreements. The lease terms are up to 10 years, with break clauses ahead of the full term and the majority are not renewable at the end of the lease period.
There were no other operating lease commitments.
Provisions and contingent liabilities
|
|
Leasehold dilapidations £'000 |
|
At 1 December 2017 |
226 |
|
Released in the year |
(130) |
|
On acquisition |
75 |
|
At 30 November 2018 |
171 |
|
|
|
|
Due within one year |
75 |
|
Due after more than one year |
96 |
Leasehold dilapidations relate to the estimated cost of returning a leasehold property to its original state at the end of the lease in accordance with the lease terms. The main uncertainty relates to estimating the cost that will be incurred at the end of the lease. The earliest point at which it is considered that this amount may become payable is March 2019 for one leasehold property and December 2019 for another.
28. Related party transactions
Two (2017: two) of the directors have received all of their remuneration through their individual service companies during the year. The payments represent short term employee benefits. The amounts involved are as follows and relate to activities within their responsibilities as directors:
In all cases the directors are responsible for their own taxation and national insurance liabilities.
|
|
2018 |
2017 |
|
C Pilling (via The Personal Web Company Limited) |
30,000 |
30,000 |
|
J Hamer (via Fin Dec Limited) |
30,000 |
5,000 |
At the year-end Access Intelligence Plc owed Elderstreet Investments Limited, a company of which M Jackson is Chairman £8,337 (2017: £8,337).
During the year, interest on convertible loans of £30,685 (2017: £56,110) and on non-convertible loans of £36,000 (2017: £36,000) was paid to Elderstreet VCT plc, a company of which M Jackson is Chairman.
At the year end, an amount of £2,040 (2017: £2,040) was due from M Jackson.
During the year, Access Intelligence Plc recharged certain costs to Track Record Holdings Limited, an associate company. The total amount invoiced was £Nil (2017: £80,754) and the outstanding balance at the year end was £Nil (2017: £Nil).
During the year Access Intelligence Media and Communications Limited received services from Macranet Limited, a company in which M Jackson is a board member, totalling £31,500 (2017: £75,900). At the year end the Company owed £Nil (2017: £12,600) to Macranet Limited.
29. Pension commitments
Individual subsidiaries of the Group operate defined contribution pension schemes for their employees. The assets of the schemes are held separately from those of the Group. The annual contributions payable are charged to the income statement when they fall due for payment.
During the year £97,000 (2017: £130,000) was contributed by the Group to individual pension schemes. At 30 November 2018 no pension contributions were outstanding (2017: £Nil).
30. Events after the reporting date
On 15 February 2019, J Arnold exercised options over 300,000 ordinary shares of 5 pence each at exercise prices of between 22p and 27.5p per share. The total consideration paid in respect of the options exercised was £74,500. Following the admission of the 300,000 new shares, issued share capital comprised 64,072,754 Ordinary Shares of which 2,966,666 Ordinary Shares were held in treasury. Therefore, the total number of Ordinary Shares with voting rights was 61,106,088.
On 18 February 2019, the Company announced that it had granted options over 3,602,000 ordinary shares, equivalent to 5.92%. of the voting share capital of the Company, at an exercise price of 56p per share under the terms of the Access Intelligence plc Management Incentive Scheme. The options will only be capable of being exercised on or after the third anniversary of the date of grant and provided the share price equals or exceeds a base price of 56p at the time of exercise. Where capable of exercise, options may be exercised at any time before the tenth anniversary of the date of grant. The exact number of shares in respect of which an option can be exercised in aggregate during the exercise period is dependent on the share price at the time(s) of exercise and is a percentage of the number of shares under option, calculated as 20% if the share price is equal to 56p and rising on a straight-line basis to 100% when the share price reaches or exceeds 130p. As part of this grant of options, 1,600,000 and 400,000 options over Ordinary Shares have been granted to J Arnold and M Fautley respectively.
31. Availability of Annual Report
Copies of the Report and Accounts will be posted to shareholders where requested and the document will be available from the Company's website (www.accessintelligence.com) later today.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
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