Final Results

RNS Number : 7671L
Access Intelligence PLC
30 April 2015
 



FOR RELEASE                                                                                                   

7.00AM

30 April 2015

 

ACCESS INTELLIGENCE PLC

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

 

PRELIMINARY RESULTS FOR THE YEAR ENDED 30 NOVEMBER 2014

 

Access Intelligence Plc (AIM: ACC), a leading supplier of Software-as-a-Service (SaaS) solutions for the full life cycle management of a company's governance, risk and compliance, announces its unaudited results for the year ended 30 November 2014.

 

Highlights

·      Turnover increased 2% to £8,546,000 (2013: £8,388,000)

·      Contracted not yet invoiced revenue up 3% to £6,790,000 (2013: £6,623,000)

·      Recurring revenue up 8% to £6,595,000 (2013: £6,062,000) at 77% of sales (2013: 72%)

·      EBITDA down 3% to £426,000 (2013: £437,000)

·      Loss after tax was £1,082,000 (2013: loss £2,612,000)

·      Loss per share was 0.46p (2013: loss 1.11p)

·      Cash balance of £1,144,000 (2013: £1,521,000)

·      Total technology spend of £3,940,000 (2013: £4,151,000) of which £1,573,000 (2013: £1,686,000) was capitalised

 

Michael Jackson, Executive Chairman, commented:

 

"This year we have continued to invest in the strategic development of the Company's new software products which are due for gradual customer implementation in the latter part of the first half year of 2015. During the year the Company has continued to sign new SaaS contracts which is reflected in a 3% increase in revenues contracted not yet invoiced".

 

Our strategy continues to be to provide products which both new and existing customers can use as part of a combined suite of products allowing operational synergies and interoperability.

 

For further information:

 

Access Intelligence plc

Michael Jackson (Chairman)                                                            0843 659 29 40

Joanna Arnold (COO)                                                                       0843 659 29 40

Kole Dhoot (CFO)                                                                             0843 659 29 40

 

Sanlam Securities UK Limited (Nominated Adviser & Broker)

Simon Clements/David Worlidge                                                      020 7628 2200

 

Notes to Editors:

Access Intelligence plc. has a portfolio of Software-as-a-Service ("SaaS") brands delivering Governance, Risk and Compliance solutions to the public and private sector.  The board is headed by Michael Jackson as Executive Chairman, Joanna Arnold as COO and Kole Dhoot as CFO.

 

Forward looking statements

 

This announcement contains forward-looking statements.

 

These statements appear in a number of places in this announcement and include statements regarding our intentions, beliefs or current expectations concerning, among other things, our results of operations, revenue, financial condition, liquidity, prospects, growth, strategies, new products, the level of product launches and the markets in which we operate.

Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those in the forward-looking statements as a result of various factors.

 

These factors include any adverse change in regulations, unforeseen operational or technical problems, the nature of the competition that we will encounter, wider economic conditions including economic downturns and changes in financial and equity markets. We undertake no obligation publicly to update or revise any forward-looking statements, except as may be required by law.

 

Chairman's Statement and Strategic Report

 

I am pleased to announce our results for the year ended 30 November 2014.

 

This year we have continued to invest in the strategic development of the Company's new software products which are due for gradual customer implementation in the latter part of the first half year of 2015. During the year the Company has continued to sign new SaaS contracts which is reflected in a 3% increase in revenues contracted not yet invoiced.

 

Our strategy continues to be to provide products which both new and existing customers can use as part of a combined suite of products allowing operational synergies and interoperability.

 

Outlook

 

Organisations continue to recognise the fundamental importance of using software, particularly those operating in both regulated and non-regulated markets across the world, to provide the necessary governance, risk and compliance data, combined with insightful and responsive management information, which enables them to reduce costs, improve performance and mitigate risks. The core of our strategy remains, and will remain, to meet these demands by using innovative and market- leading SaaS based solutions.

 

We believe that during 2015 the Group will benefit from the significant investment made in new product development in previous years. This exceptional level of investment to redevelop our integrated software platform will come to an end in 2015.

 

I would like to take this opportunity on behalf of the Board to thank you for your continued support

of Access Intelligence.

 

Strategic Report

 

Results

 

Revenue was up by 2% to £8,546,000 (2013: £8,388,000).

 

Our continued commitment to the Software-as-a-Service business model has enabled us to build long-term visibility of revenues and in 2014 recurring revenues on continuing operations, at £6,595,000 (2013: £6,062,000) accounted for 77% (2013: 72%) of total revenues. Total revenue was however impacted by lower than expected one-off consultancy revenue due to focus on delivering internal development projects. Existing customers looking to migrate to our new software products delayed one-off projects for delivery on the new platform in 2015 and 2016.

 

At 30 November 2014, deferred revenue stood at £3,246,000 (2013: £2,714,000) reflecting the change in timing of raising invoices to customers, while our contracted not yet invoiced revenue grew 3% to £6,790,000 (2013: £6,623,000).

 

Operating loss was £819,000 (2013: loss £2,530,000). In arriving at the operating loss we have charged £409,000 (2013: £360,000) for the depreciation and amortisation, £798,000 non-cash impairment charges (2013: £2,607,000) and £36,000 (2013: £40,000) for share-based payments.

 

Earnings before interest, tax, depreciation and amortisation (EBITDA) pre-impairment charges was down slightly to £426,000 (2013: £437,000).

 

As indicated last year, we have invested significantly in developing our products. The Group engaged an average of 71 (2013: 77) technical staff who support both the existing product offering as well as developing it. In 2014 £3,940,000 (2013: £4,151,000) was spent across the group on research and development and other technical expenditure. Our commitment to the future represents 46% of revenue (2013: 49%). This will continue to reduce in 2015 and 2016.

 

2015 will see continued investment across the Company's brands with the full benefits expected to come through towards the end of the current financial year and into 2016.

 

Loss per share

 

The basic loss per share was 0.46p (2013: loss 1.11p).

 

Cash

 

Cash at the year end stood at £1,144,000 (2013: £1,521,000) broadly in line with expectations and reflecting the ongoing impact of R&D capitalisation.

 

Dividend

 

As a result of the significant investment the Company has made in the strategic product innovation and sales development, the directors propose not to pay a dividend for 2014.

 

OPERATIONS

 

Software as a Service

 

Business Performance Management

 

Whilst maintaining its presence in financial services, AITrackRecord has gone through a pivotal year for research and development in 2014. AITrackRecord was the first brand within Access Intelligence to undergo a significant rewrite and forms the basis of the Group's integration strategy to deliver an end-to-end GRC product lifecycle. The new dynamic product offers customers an unprecedented level of configurability, flexibility and future-proofing, enabling them to realise ongoing ROI within the backdrop of an ever-evolving regulatory environment.

 

During 2014, AITrackRecord partnered with a number of customers and prospects to showcase these market-leading developments and ensure it is well positioned for launch in early 2015. Revenues were significantly impacted by a reduction in one-off consultancy projects as customers delayed decision-making until migration to the new platform.

 

e-Procurement and Supplier Risk Management

 

Customer retention remained high during the financial year, however total contract value has declined on renewal due to public sector budget cuts. Our presence in local authorities was further consolidated with new customer wins. We also saw customer wins from a wide cross section of the public sector and the NHS and Housing sectors. The Due North professional services team was strengthened returning their best ever year, seeing particular success in offering a fully managed e-auction service.

 

In January 2014, Due North strengthened its management team by appointing Malcolm McClen as Operations Director to take accountability for ongoing operational management and Barry Mellor joined as Strategic Account Director.

 

During 2014 customers began User Acceptance testing of our redeveloped ProContract version 3. Customer feedback has been positive, in particular the new look and feel and ease of use of the system We also maintained our existing version 2 product by releasing five updates during the course of the year. A new FMS integration solution was also developed, allowing customers to link ProContract to their finance systems to reduce time, control spend and improve accuracy.

 

Stakeholder and Reputation Management

 

In the financial year, AIMediaComms enjoyed significant success in both the public and private sectors. In all, AIMediaComms signed a significant number of new SaaS contracts, with 28% of these coming from the private sector, including a number of FTSE 100 companies from banking, utilities and telecoms. As in previous years, pricing pressure within the public sector continues.

 

Within the financial year, AIMediaComms added two new services to its portfolio of media and stakeholder engagement software. The first of these was a new political monitoring service that delivers real-time, targeted and accurate alerts on political, regulatory and public administration issues. The second was an updated Online Media Newsroom offering that has been deployed in a number of major companies.

 

These new modules and the ongoing development of our core platform, Vuelio, will help to ensure AIMediaComms maintains its current competitive advantage in the industry, and delivers further growth.

 

Business Continuity and Incident Management

 

AIControlPoint consolidated its position in 2014, and despite a small number of customer losses, maintained its presence in Oil and Gas. It also expanded its aviation client base to include a number of international airports. It broadened its utilisation within these key sectors from traditional crisis management to integration with customers' daily operations, further validating its return on investment.

 

During 2014, AIControlPoint's new Emergency Rota module was embedded in multiple major oil companies, whilst its AINotify module was enhanced to provide rich multilingual capabilities for its international offering. A collaboration between AIControlPoint and AIMediaComms resulted in the cross-sell of Vuelio into AICP's Oil and Gas community, who will use the system to coordinate press releases in the event of an incident affecting multiple operator/service companies and the emergency services.

 

As part of Access Intelligence's wider strategic positioning, development began at the end of 2014 to integrate AIControlPoint's incident management capability into a centralised platform to deliver an integrated Governance, Risk and Compliance lifecycle.

 

Division in recovery

 

Training and Competence

 

AITalent's operating losses including one-off charges were £146,000 (2013: £264,000). Losses are now reducing as a result of the period of restructuring having now been substantially completed.

 

AITalent has continued to focus on highly regulated and high-risk industries, seeing modest growth in the financial services market. The brand continues to maintain its presence in the pharmaceutical market with its compliance for the FDA 21 CFR Part 11 code. AITalent also represents a growth opportunity for other brands in the group, especially AITrackRecord, where the two propositions complement each other to offer powerful talent and performance management functionality.

 

IT Support Services

 

Infrastructure (IaaS), Cloud and Data Security Management

 

Willow Starcom had another successful year and saw significant wins under both the Willow Starcom and AICloud brands.

 

Further development of its cloud and hosted solutions business and increased investment in both technology and people enabled the Company to offer a wide range of On-Premise and Hosted Solutions and to capitalise on the growing requirement for hybrid infrastructure environments.

 

In addition to growing its traditional client base, Willow Starcom has provided a Data Centre and Enterprise Grade platform for Access Intelligence to develop and host its product portfolio on.

 

Under the AICloud brand the solution enabled Access Intelligence subsidiary companies to offer a complete Hosted SaaS Solution and an increasing number of Access Intelligence clients utilised the AICloud Solution either as a dedicated solution or as part of a shared resource platform.

 

On 21 April 2015 Access Intelligence Plc disposed of 100% of the issued share capital of Willow Starcom Ltd, being the IT support services segment disclosed in note 4, for a net consideration totalling £1,200,000.

 

Centralised Development Operations

 

2014 was a pivotal year for Access Intelligence as it completed the first wave of product development for market testing. Customers at Due North and AITrackRecord were engaged in significant alpha and beta testing projects with positive feedback on the new applications. The investment made by Access Intelligence in its York-based software engineering Centre of Excellence was key, compounding its strategy of migrating to a centralised Application Lifecycle Management toolset integrated with excellent quality management and customer delivery.

 

The first phase of the new software architecture was configured to deliver a major pilot for a FTSE 100 customer subject to comprehensive FCA regulation. Towards the end of 2014, expansion of the platform into phase two began with the development of core functionality for AIControlPoint and AITalent. This next phase will provide Access Intelligence with an innovative, highly configurable and resilient platform for the Enterprise Governance, Risk and Compliance market.

 

2014 also saw the raising of Access Intelligence's profile to Tier 1 supplier status with all of our major regulated customers. This required additional investment in quality and information security alongside comprehensive customer audits to demonstrate our industry standard compliance.

 

Strategy and Market

 

The rising evidentiary burden in highly regulated industries such as Oil and Gas, Pharmaceuticals and Financial Services is a key driver for Enterprise GRC solutions. The focus on senior accountability to drive good corporate governance, mitigate risk and develop competitive advantage ensures that Access Intelligence's solutions remain firmly on our customers' strategic and operational agendas.

 

The speed of change and adoption of next regulations means that customers demand an unprecedented level of configurability and flexibility in their software investments. Access Intelligence's innovative centralised platform will enable us to deliver a seemingly tailor-made solution to a highly diverse customer base on a single multi-tenanted architecture. This will significantly reduce our time-to-market for new regulatory requirements as well as empower customers to develop a significant level of autonomy in administering their own unique environment within the AI platform.

 

Software-as-a-Service based solutions continue to provide companies with a high performing, resilient and value-driven alternative to managing and maintaining software applications within their own infrastructure. Access Intelligence has utilised this software development and delivery method as a key component of its strategy, providing not only significant benefits to customers, but ensuring investors can benefit from increased innovation with a shorter time to market, a stable base for revenue growth and a long-term visibility of performance.

 

2015 promises to be an exciting year for Access Intelligence as we complete the migration of our suite of niche GRC products onto the centralised Enterprise GRC platform. Our focus over the coming year will be continuing to grow our brand recognition within GRC and realising the benefits of our integrated platform throughout our commercial activities.

  

Directors and Staff

 

2014 has demonstrated that our core belief of building a Group based on the expertise, experience and integrity of our industry-leading team is delivering significant value. I would like to thank all our staff for their hard work and commitment, which has enabled us to recognise considerable progress during 2014 and we expect to benefit from this in the coming years. As a Group we have delivered advances, and I look forward to our continued operational successes in 2015.

 

Consolidated Statement of Comprehensive Income

Year ended 30 November 2014

 


Note

2014 £'000

2013 £'000





Revenue

3

8,546

8,388

Cost of sales


(2,368)

(2,245)

Gross profit


6,178

6,143

Administrative expenses


(6,163)

(6,026)

Share-based payment


(36)

(40)

Operating profit/(loss) before impairment


(21)

77

Impairment of intangibles


(798)

(2,607)

Operating loss

5

(819)

(2,530)

Financial income


1

10

Financial expense


(115)

(119)

Loss before taxation


(933)

(2,639)

Taxation credit

6

(149)

27

Loss for the year attributable to the equity holders of the parent company


(1,082)

(2,612)

Other comprehensive income


-

-

Total comprehensive income for the period attributable to the owners of the parent company


 

(1,082)

 

(2,612)









Earnings per share








Basic and diluted loss per share

7

(0.46)p

(1.11)p

 



 

Consolidated Statement of Financial Position

At 30 November 2014

 


Note

2014
£'000

2013
£'000

Non-current assets




Property, plant and equipment


523

Intangible assets

8

8,406

Deferred tax assets


419

610

Total non-current assets


9,348

9,034

Current assets




Inventories


142

Trade and other receivables


2,613

Current tax receivables


237

Cash and cash equivalents


1,144

1,521

Total current assets


4,136

4,049

Total assets


13,484

13,083

Current liabilities




Trade and other payables


1,526

Accruals and deferred income


4,050

3,414

Interest bearing loans and borrowings

9

-

754

Total current liabilities


5,576

5,198

Non-current liabilities




Trade and other payables


60

-

Interest bearing loans and borrowings

9

1,301

507

Deferred tax liabilities


956

712

Total non-current liabilities


2,317

1,219

Total liabilities


7,893

6,417

Net assets


5,591

6,666

Equity




Share capital


1,324

1,324

Treasury shares


(148)

(148)

Share premium account


224

224

Capital redemption reserve


191

191

Share option reserve


338

331

Equity reserve


126

126

Retained earnings


3,536

4,618

Total equity attributable to the equity holders of the parent company


5,591

6,666

 



 

Consolidated Statement of Changes in Equity

Year ended 30 November 2014

 


 

 

 

Share capital
£'000

 

 

 

Treasury shares
£'000

 

 

Share
premium
account £'000

 

 

Capital redemption reserve
£'000

 

 

Share option reserve
£'000

 

 

 

Equity reserve
£'000

 

 

 

Retained earnings
£'000

 

 

 

 

Total
£'000

Group









At 1 December 2012

 

1,286

(148)

-

191

284

126

7,346

9,085

Total comprehensive loss for the year

-

-

-

-

-

-

(2,612)

(2,612)

Transactions with owners









Shares issued in year

38

-

-

-

-

-

-

38

Share premium on shares issued in year

-

-

224

-

-

-

-

224

Share-based payments - current year

-

-

-

-

40

-

-

40

Tax reversal relating to share-based payment

-

-

-

-

7

-

-

7

Dividends recognised as distributions to owners

-

-

-

-

-

-

(116)

(116)

At 30 November 2013

1,324

(148)

224

191

331

126

4,618

6,666

At 1 December 2013

1,324

(148)

224

191

331

126

4,618

6,666

Total comprehensive loss for the year

-

-

-

-

-

-

(1,082)

(1,082)

Transactions with owners









Share-based payments - current year

-

-

-

-

36

-

-

36

Tax reversal relating to share-based payment

-

-

-

-

(29)

-

-

(29)

At 30 November 2014

1,324

(148)

224

191

338

126

3,536

5,591

 

 

 

 

 

 

 

 

 

Consolidated Statement of Cash Flow

Year ended 30 November 2014

 


2014

 £'000

2013

 £'000

Loss for the year

(1,082)

(2,612)

Adjusted for:



Taxation

149

(27)

Depreciation and amortisation

409

360

Amortisation and impairment of intangible assets

798

2,607

Share option charge

36

40

Interest income

(1)

(10)

Interest expense

115

119

Loss on disposal of property, plant and equipment

2

2

Operating cash inflow before changes in working capital

426

479

(Increase) in trade and other receivables

(590)

(116)

Decrease in inventories

26

23

Increase in trade and other payables

1,192

317

Net cash inflow from operations before taxation

1,054

703

Taxation received

356

45

Net cash inflow from operations

1,410

748

Cash flows from investing



Interest received

1

10

Acquisition of property, plant and equipment and software licences

(140)

(389)

Cost of software development

(1,573)

(1,686)

Net cash outflow from investing

(1,712)

(2,065)

Cash flows from financing activities



Interest paid

(75)

(76)

Issue of shares and share option exercise proceeds

-

262

Repayment of borrowings

-

(4)

Payment of dividend

-

(116)

Net cash inflow/(outflow) from financing

(75)

66

Net decrease in cash and cash equivalents

(377)

(1,251)

Opening cash and cash equivalents

1,521

2,772

Closing cash and cash equivalents

1,144

1,521

 


Notes to the financial statements

 

1.         Basis of preparation

 

This announcement has been prepared in accordance with the Company's accounting policies, which in turn are in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union ("EU") applied in accordance with the provisions of the Companies Act 2006. IFRS is subject to amendment and interpretation by the International Accounting Standards Board ("IASB") and the IFRS Interpretations Committee and there is an on-going process of review and endorsement by the European Commission. The accounting policies comply with each IFRS that is mandatory for accounting periods ended 30 November 2014.

 

The results are unaudited, however we do not expect there to be any difference between the numbers presented and those within the annual report.

 

The financial information set out above does not constitute the Group's statutory accounts, but is derived from those accounts. The statutory accounts for the year ended 30 November 2013 have been delivered to the Registrar of Companies and those for 2014 will be delivered following the Group's annual general meeting.

 

2.         Basis of consolidation

 

The Group results comprise the financial statements of Access Intelligence plc and its subsidiaries as at 30th November 2014. They are presented in Sterling and all values are rounded to the nearest thousand pounds (£'000).

 

3.         Revenue

 

The Group's revenue is primarily derived from the rendering of services with the value of sales of goods being not significant in relation to total Group revenue.

 

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

 


2014

£'000

2013

£'000

United Kingdom

8,045

7,898

European Union

202

186

Rest of the world

299

304


8,546

8,388

 

All non-current assets are held in the United Kingdom as they were in 2013. No customer represents 10% or more of revenue as was the case in 2013.

 

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 operating decision maker, the executive Chairman. The software as a service segment derives its revenues from software licence sales and support and training revenues. The IT support services revenue derives from maintenance and back-up services. The segments are:

 

·      Software as a service

·      IT support services

·      Division in recovery - AITalent Ltd

·      Head Office

 

The segment information for the year ended 30 November 2014 is as follows:

 

2014

Software as a service £'000

IT support services £'000

AI Talent Ltd  £'000

Head office £'000

Consolidation adjustment £'000

Total £'000

External revenue

5,539

2,288

719

-

-

8,546

Internal revenue

-

368

-

-

(368)

-

Operating profit/(loss)

1,504

303

(146)

(1,672)

(10)

(21)

Impairments

-


(798)



(798)

Finance income

1

-

-

-

-

1

Finance costs

-

-

-

(115)

-

(115)

Taxation

109

(6)

(37)

(147)

(68)

(149)

Profit/(loss) after taxation

1,614

297

(981)

(1,934)

(78)

(1,082)

Reportable segment assets

11,635

2,101

406

9,996

(10,654)

13,484

Reportable segment liabilities

5,510

1,353

1,977

7,534

(8,481)

7,893

Other information:







Additions to property, plant and equipment

19

101

2

18

-

140

Depreciation and amortisation

144

93

17

270

(115)

409

 

The segment information for the year ended 30 November 2013, is as follows:

 

2013

Software as a service £'000

IT support services £'000

AI Talent Ltd  £'000

Head office £'000

Consolidation adjustment £'000

Total £'000

External revenue

5,648

2,089

651

-

-

8,388

Internal revenue

-

294

-

-

(294)

-

Operating profit/(loss)

1,596

178

(264)

(1,369)

(64)

77

Impairments

(655)


(1,952)



(2,607)

Finance income

9

-

-

1

-

10

Finance costs

-

-

-

(119)

-

(119)

Taxation

(39)

-

66

-

-

27

Profit/(loss) after taxation

911

178

(2,150)

(1,487)

(64)

(2,612)

Reportable segment assets

9,756

1,888

542

11,671

(10,774)

13,083

Reportable segment liabilities

4,305

1,252

1,595

5,969

(6,704)

6,417

Other information:







Additions to property, plant and equipment

-

142

1

160

(7)

361

Depreciation and amortisation

115

99

6

83

57

360

 

 

5.         Operating loss

 

Operating loss is stated after charging:


2014

£'000

2013

£'000

Depreciation of property, plant and equipment

233

214

Amortisation of development costs

80

48

Amortisation of brand values

60

69

Amortisation of software licences

36

30

Loss on disposal of property, plant and equipment

2

2

Impairment of intangibles

798

2,607

Exceptional costs (see below)

-

139

Operating lease charges - land and buildings

420

433

Auditor's remuneration

54

55

Share based payments

36

40

Research and development and other technical expenditure

2,363

2,465

(a further £1,573k (2013: £1,686k) was capitalised)



Cost of inventories

514

422

(Release of)/increase in provision for receivables

19

(139)

 

Exceptional costs in the year ended 30 November 2013 were incurred as a result of restructuring, incurring non-recurring one off termination of employment costs for staff and a director and associated legal fees; residual costs of closure and relocation of AITrackRecord Ltd's office to the York Development Centre and non-recurring costs incurred in setting up the new head office in London.

 

The exceptional costs are made up of the following:


2014

£'000

2013

£'000

Compensation for loss of office - director

-

4

Compensation and notice payments - all staff

-

34

Recruitment and temporary staff fees

-

-

Legal costs incurred on compensation of loss of office for a director

-

10

Legal costs on the sale and purchase agreement & onerous lease termination

-

91


-

139

 



 

6.         Taxation

 


2014

£'000

2013

£'000

Current income taxes credit:



UK corporation tax credit for the year

(237)

(226)

Adjustment in respect of prior year

(19)

(136)

Total current income tax credit

(256)

(362)




Deferred tax



Impact of change in tax rate

-

(21)

De-recognition of deferred tax assets

363

-

Origination and reversal of temporary differences

42

356

Total deferred tax

405

335

Total tax credit

149

(27)

 

 

As shown above the tax assessed on the loss on ordinary activities for the year is higher than (2013: lower than) the standard rate of corporation tax in the UK of 21.7% (2013: 23.3%).

 

The differences are explained as follows:

 


2014

£'000

2013

£'000

Loss on ordinary activities before tax

(933)

(2,639)

Loss on ordinary activities by effective rate of tax of 21.7% (2013: 23.3%)

  (202)

(616)

Expenses not deductible for tax purposes

142

34

Adjustment in respect of prior year

(19)

(136)

Write off deferred tax asset

363

-

Additional R&D claim CTA 2009

(135)

691

Total tax expense/(credit)

149

(27)

 

Factors that may affect future tax expenses:

 

The main rate of corporation tax was reduced to 21% from 1 April 2014 and is due to be further reduced by a further 1% from April 2015. All deferred tax assets and liabilities are assumed to cease or be utilised at 20%.

 

7.         Earnings per share

 

The calculation of earnings per share is based upon the loss after taxation of £1,082,000 (2013: loss of £2,612,000) divided by the weighted average number of ordinary shares in issue during the year which was 233,560,576 (2013: 233,560,576).

 

In 2014 and 2013 potential ordinary shares from the share option schemes and convertible loan notes have an anti- dilutive effect due to the Group being in a loss position. This includes the 500,000 share options granted during 2014 and would also have included the convertible loan notes issued after the reporting year (refer note 27) if these convertible loan notes had been issued before the end of the reporting period. As a result, dilutive loss per share is disclosed as the same value as basic loss per share.

 

 

This has been computed as follows:

 


2014

2013


Loss after tax £'000

Weighted average no of shares

Loss per share (pence)

Loss after tax
£'000

Weighted average no of shares

Loss per share (pence)

Loss attributable to ordinary shareholders

(1,082)

235,110,347

(0.46)

(2,612)

235,110,347

(1.11)

Dilutive effect of options

n/a

n/a

n/a

n/a

n/a

n/a

Dilutive effect of loan note conversion

n/a

n/a

n/a

n/a

n/a

n/a

Diluted loss per share for the year

(1,082)

235,110,347

(0.46)

(2,612)

235,110,347

(1.11)

 

 

On 21 September 2011 29,666,667 shares were returned to the Company and were held in Treasury at the year end. Once in treasury they were removed from the earnings per share calculation.

 

The total number of options and warrants granted at 30 November 2014 of 38,436,281 (2013: 39,396,281) would generate £1,176,190 (2013: £1,198,188) in cash if exercised. At 30 November 2014, 34,936,281 (2013: 10,596,281) were priced above the mid-market closing price of 2.31p per share (2013: 2.75p) per share and 3,500,000 (2013: 28,800,000) were below.

 

At the 30 November 2014 6,947,387 (2013: 7,407,387) staff options were eligible for exercising at an average price of 4.2p (2013: 4.3p). Also eligible for exercising are the 21,300,000 warrants priced at 2.75p per share held by M Jackson, D Lowe and Elderstreet VCT plc consequent to their investment in October 2008.

 

All of the outstanding loan notes, £750,000 in favour of Unicorn AIM VCT plc and £500,000 in favour of Elderstreet VCT will be redeemed at par or convert to a total of 31,250,000 shares on 31 December 2015.



 

8.         Intangible fixed assets

 


Brand value £'000

Goodwill £'000

Development costs

 £'000

Software licences £'000

Total

£'000

Cost






At 1 December 2012

1,369

12,005

1,433

132

14,939

Capitalised during the year

-

-

1,686

28

1,714

At 30 November 2013

1,369

12,005

3,119

160

16,653

At 1 December 2013

1,369

12,005

3,119

160

16,653

Capitalised during the year

-

-

1,573

-

1,573

At 30 November 2014

1,369

12,005

4,692

160

18,226

Amortisation and impairment






At 1 December 2012

136

5,550

390

17

6,093

Amortisation in year

68

-

48

30

146

Impairment in year

145

2,428

34

-

2,607

At 30 November 2013

349

7,978

472

47

8,846

At 1 December 2013

349

7,978

472

47

8,846

Amortisation in year

60

-

80

36

176

Impairment in year

-

798

-

-

798

At 30 November 2014

409

8,776

552

83

9,820

Net Book Value






At 30 November 2014

960

3,229

4,140

77

8,406

At 30 November 2013

1,020

4,027

2,647

113

7,807

 

For the purpose of impairment testing, goodwill is allocated by entity, which represent the Group's CGUs and the lowest level within the Group at which the goodwill is monitored. 

 

The pre-impairment carrying amounts of goodwill and capitalised development costs not yet available for use allocated to each CGU are:

 

Pre-impairment




2014

Capitalised Development Costs £'000

Goodwill £'000

Total £'000

Software as a service:




Access Intelligence plc

30

89

119

Due North Ltd

2,433

1,033

3,466

Access Intelligence Media & Communications Ltd

425

1,928

2,353

AITrackRecord Ltd

1,242

-

1,242


4,130

3,050

7,180

IT Support Services - Willow Starcom Ltd

-

800

800

Division in recovery - AI Talent Ltd

44

2,605

2,649


4,174

6,455

10,629

 

 

The difference between the pre-impairment capitalised development costs of £4,174,000 and the net book value of £4,140,000 at 30 November 2014 is a £34,000 impairment charge in the year ended 30 November 2013 pertaining to Due North Limited.

 

The difference between the pre-impairment goodwill of £6,455,000 and the net book value of £3,229,000 at 30 November 2014 is full impairment of goodwill on AITalent Limited (of which the final £798,000 is recognised in the year ended 30 November 2014) and a £620,000 prior year impairment against goodwill on Due North Limited.

 

Pre-impairment

2013

Capitalised Development Costs £'000

Goodwill £'000

Total £'000

Software as a service:




Access Intelligence plc

7

89

96

Due North Ltd

1,674

1,033

2,707

Access Intelligence Media & Communications Ltd

352

1,928

2,280

AITrackRecord Ltd

612

-

612


2,645

3,050

5,695

IT Support Services - Willow Starcom Ltd

-

800

800

Division in recovery - AI Talent Ltd

36

2,605

2,641


2,681

6,455

9,136

 

 

At the balance sheet date, impairment tests were undertaken by comparing the carrying values of goodwill, capitalised development costs and other assets with the recoverable amount of the CGU to which the goodwill, capitalised development costs and other assets have been allocated. The recoverable amount of the CGU is based on value-in- use calculations. These calculations use pre-tax cash flow projections covering a five year period based on financial budgets and forecasts as approved by the Board with a terminal value for the IT Support Services and ten years based on financial budgets and forecasts as approved by the Board for the SaaS segments with no terminal value, except for goodwill impairment assessment purposes.

 

The key assumptions used for value-in-use calculations are those regarding revenue growth rates and discount rates over the forecast period. Management estimate discount rates using pre-tax rates that reflect the current market assessment of the time value of money and the risks specific to the CGUs. Growth rates are based on past experience, the anticipated impact of the CGUs significant investment in research and development, and expectations of future changes in the market. The value in use calculations use information from approved budgets in the first three years, followed by applying specific growth rates for which the key assumptions, analysed by CGU are:

 


Access

Intelligence

plc

Due North Ltd

Access

Intelligence

Media &

Communications Ltd

Willow

Starcom

Ltd

AI Talent Ltd

 

 

 

AI Track Record Ltd

Annual revenue growth rate

(years 4 to 5)

10%

9%

7%

2%

11%

20%

Annual revenue growth rate (years 6 to 10)

5%

5%

5%

N/A

5%

5%

 

The discount rate used for all companies was between 10% and 14%, depending on the risk profiles for each CGU and varying growth rates to the cost base of each CGU have been applied commensurate to deliver the revenue projected. The terminal growth rate used for the purposes of goodwill impairment assessments was 2.5% except for Willow Starcom which was 2%.

 

After review of the value-in-use of AI Talent Limited, the Board considers that, although future profits are forecast, the recent history of losses in that company and net cash outflows forecast in the immediate future, mean that a provision should be recognised representing the full residual brought forward carrying value of goodwill, being £798,000.

 

Other impairments

 

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

 

In 2013, development costs of £34,000 were impaired to take account of a project that did not generate the expected revenues. Additionally, the directors impaired the brand value of Cobent, the former and no longer used name of AITalent Ltd. The impairment charge arising was £145,000.

 

The directors considered that there were no further indicators of impairment relating to the remaining intangible fixed assets at 30 November 2014.

 

9.         Interest bearing loans and borrowings

 


2014

£'000

2013

£'000

Current



Convertible loan notes

-

754

Non-current



Convertible loan notes

1,301

507

 

On 30th June 2009 £1,750,000 convertible loan notes were issued. At 30 November 2013 and 30 November 2014, £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 30th June 2014 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 November 2013, the Company agreed terms with Elderstreet VCT (a company related to Chairman Michael Jackson) to extend the loans for 18 months, such that they mature on 31 December 2015, with enhanced interest at 8% during this extended period with conversion rights unchanged at 4p per share. These notes are classified as non-current at the year end.

 

In March 2014 the Company agreed the same terms as those agreed with Elderstreet VCT, with the other incumbent note-holder, Unicorn AIM VCT plc. These notes are redeemable at par or convertible to ordinary shares at 4p per ordinary share on or before maturing on 31 December 2015 and carried a coupon rate of 6% until 30 June 2014, thereafter 8% per annum, payable semi-annually until such a time as they are repaid or converted in accordance with their terms. These notes are classified as non-current at the year end.

 

No redemptions or conversions of the convertible loan stock arose in the year ended 30 November 2014.

 

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:

 


2014

£'000

2013

£'000

Proceeds of issue of convertible loan notes

1,250

1,250

Equity component

(126)

(126)

Deferred taxation

(49)

(49)

Initial fair value of liability component

1,075

1,075

Cumulative interest charged

601

486

Cumulative interest paid

(375)

(300)

Liability component at 30 November

1,301

1,261

 

The equity component of £126,000 (2013: £126,000) has been credited to equity reserve.The interest charged for the year is calculated by applying an effective rate of interest of 9.8% (2013: 9.8%) to the liability component for the 12 month period. The liability component is measured at amortised cost. The difference between the carrying amount of the liability component at the date of issue and the amount reported in the balance sheet at 30 November 2014 represents the effective interest rate less interest paid to that date.

 

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

 


2014

£'000

2013

£'000

Opening loan liability

1,261

1,217

Interest charged for the year

115

119

Interest paid in the year

(75)

(75)

Liability component at 30 November

1,301

1,261

 

10.        Availability of Annual Report and AGM date

 

Copies of the Report and Accounts will be posted to shareholders shortly where requested and will be available from the Company's website (www.accessintelligence.com) from 30 April 2015. It is intended that the annual general meeting will take place at the Company's registered office, 10-11 Charterhouse Square, London, EC1M 6EH, at 14.00pm on Thursday, 28 May 2015.

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
FR PKCDPABKDQQB
UK 100

Latest directors dealings