Actual Experience plc

(“Actual Experience” or the “Company”)

Audited Annual Results for the year ended 30 September 2014

Actual Experience plc (AIM: ACT), the analytics as a service company, is pleased to announce its audited results for the twelve months ended 30 September 2014, the Company’s first full year’s results since listing on AIM on 13 February 2014.

Highlights

The Company has achieved substantial progress in the development of its business during the financial year.

  • Material commercial progress with global channel partners
  • National media coverage of our analysis published in Ofcom’s triennial infrastructure report
  • Significant strengthening of sales and senior management teams, and Board
  • Established US operation
  • Completed a £4.1 million funding round in November 2013, led by Henderson
  • Listed on AIM in February 2014

Opportunity

In the world of physical products and services, successful companies have for years adopted science-based, data-driven processes that measure all aspects of production in order to manage quality and maintain brand position in the market. These are not one-time improvements, but elements of a relentless supply chain management journey to ensure product excellence, as a result of which customers can enjoy seemingly perfect consumer goods.

Yet, in the digital world – whether at home, in the office, or on a smartphone – consumers are often frustrated by products for banking, shopping, work, TV, navigation and so much more. This is a serious quality problem, in large part due to the pervasive absence of science and data to assist businesses with digital supply chain management and quality improvement, which depresses revenue and reduces brand value.

Our professional and personal lives are becoming increasingly digital, with the global digital economy already exceeding $8 trillion. Business leaders must focus on digital product quality as relentlessly as they have done in the physical world. Actual Experience brings the necessary digital science, data and methods for this to be accomplished.

Progress

In the first half of the fiscal year, in February 2014, we completed our admission to AIM, raising sufficient capital to scale our business. In the second half of the year we focused on the investment of this capital into people, processes and practices, technology development and strategic market activities.

Our new digital methods continue to be validated, most recently with the inclusion of our analysis of Digital Britain in Ofcom’s recent triennial state-of-the-nation report. We have also been fortunate to be able to further our relationships with strategic business and channel partner prospects, into which we are commensurately investing effort.

On the development front, we intend to expand our analytical capabilities to fully incorporate mobile services and platforms. Business leaders will be able to view digital quality analysis on their mobile devices, and mobile workforces will be incorporated into the digital supply chain management discipline.

On the market front, we will continue to build awareness amongst industry analysts and media of the opportunity for businesses to manage digital product and service quality as a means to improving the digital business.

Strategy

Our strategy is to create and dominate the global market for digital supply chain management services. We believe that every business is increasingly digital. Businesses are recognising that they must improve the quality of their digital products in order to remain competitive. This means that the market opportunity for the Company is truly global. Our goal is to create value for shareholders by addressing this opportunity and realising the potential of the business.

Outlook

Dave Page, CEO, commented “Following a year of hard work by a very talented growing team, I am more convinced and excited than ever about Actual Experience’s opportunity to create and lead digital supply chain management in an $8 trillion (and growing) global digital economy. Customer feedback to date has been very positive. We hope to bring significant news of customer adoption by major businesses in 2015, such as the recently announced Ofcom order, which will help us accelerate into this vast market.”

Enquiries:

Actual Experience plc
Dave Page, Chief Executive Officer
Steve Bennetts, Chief Financial Officer
via Newgate Threadneedle
Nplus1 Singer Advisory LLP
Shaun Dobson
Lauren Kettle
Tel: +44 (0)207 496 3000
Newgate Threadneedle
Tim Thompson
Robyn McConnachie
Lois Engstrand
Tel: +44 (0)207 653 9850

About Actual Experience plc
For businesses of any size and for broadband users at home, the only thing that really matters is whether they are hindered or enabled by the digital services they consume. Actual Experience improves the quality of digital products and services delivered across global digital supply chains, allowing people and businesses to work and interact more effectively.

Income Statement and Statement of Comprehensive Income for the year ended 30 September 2014

Year ended
30 September
2014
14 months
ended
30 September
2013
Notes £ £
Revenue from continuing operations 567,469 444,571
Cost of sales (249,231) (209,517)
Gross profit 318,238 235,054
Administrative expenses 2 (1,916,029) (1,007,994)
Other operating income 5,986 -
Adjusted LBIT1 (1,141,317) (772,940)
AIM flotation expenses (450,488) -
Operating loss from continuing operations (1,591,805) (772,940)
Finance income 12,067 -
Fair value loss on financial instruments (4,127) (11,854)
Loss before taxation (1,583,865) (784,794)
Taxation 3 277,652 67,584
Total comprehensive loss for the year (1,306,213) (717,210)
Total comprehensive loss attributable to owners of the parent (1,306,213) (717,210)
Loss per ordinary share2
Basic and diluted on loss from continuing operations 4 (4.74)p (3.63)p

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

2 The loss per share for the comparative period has been restated to adjust for the capital reorganisation which took place during the current year.

Statement of Changes in Equity for the year ended 30 September 2014

Share capital Share premium Retained
earnings/

(accumulated
losses)
Total
£ £ £ £
At 31 July 2012 3 1,403,790 (1,002,995) 400,798
Loss and total comprehensive loss for the period - - (717,210) (717,210)
Share based payment expense - - 31,502 31,502
At 30 September 2013 3 1,403,790 (1,688,703) (284,910)
Loss and total comprehensive loss for the year - - (1,306,213) (1,306,213)
Issue of shares 857 4,720,480 - 4,721,337
Bonus share issue for capital reorganisation 56,828 (56,828) - -
Cancellation of share premium account - (5,933,096) 5,933,096 -
Share based payment expense - - 34,588 34,588
At 30 September 2014 57,688 134,346 2,972,768 3,164,802

Statement of Financial Position as at 30 September 2014

As at 30
September
2014
As at 30
September 2013
As at 1 August
2012
Notes £ £ £
Assets
Non-current assets
Property, plant and equipment 16,412 9,130 8,530
Intangible assets 186,354 - -
Investments 500 - -
Total non-current assets 203,266 9,130 8,530
Current assets
Trade and other receivables 135,777 82,146 46,176
Income tax receivable 3 159,945 - -
Cash and cash equivalents 5 2,942,805 326,534 393,220
Total current assets 3,238,527 408,680 439,396
Total assets 3,441,793 417,810 447,926
Liabilities
Non-current liabilities
Deferred tax (3,373) (1,844) -
Total non-current liabilities (3,373) (1,844) -
Current liabilities
Trade and other payables (273,618) (189,022) (47,128)
Loans - (511,854) -
Total current liabilities (273,618) (700,876) (47,128)
Total liabilities (276,991) (702,720) (47,128)
Net assets/(liabilities) 3,164,802 (284,910) 400,798
Equity
Share capital 57,688 3 3
Share premium 134,346 1,403,790 1,403,790
Retained earnings/(accumulated losses) 2,972,768 (1,688,703) (1,002,995)
Total equity 3,164,802 (284,910) 400,798

Statement of Cash Flows for the year ended 30 September 2014

Year
ended
30 September
2014
14 months
ended
30 September
2013
Notes £

£

Cash flows from operating activities
Loss before tax (1,583,865) (784,794)
Adjustment for non-cash items:
Depreciation of property, plant and equipment 7,738 7,247
Amortisation of intangible assets 39,771 -
Share based payment charge 34,588 31,502
Finance income (12,067) -
Fair value loss on financial instruments 4,127 11,854
Operating cash outflow before changes in working capital (1,509,708) (734,191)
Movement in trade and other receivables (53,630) (35,970)
Movement in trade and other payables 84,595 141,894
Cash flow from operations (1,478,743) (628,267)
Tax received 119,236 69,428
Net cash flows used in operating activities (1,359,507) (558,839)
Cash flows from investing activities
Development of intangible assets (226,125) -
Purchases of property, plant and equipment (15,020) (7,847)
Purchase of subsidiary undertaking (500) -
Finance income 12,067 -
Net cash outflow from investing activities (229,578) (7,847)
Cash flows from financing activities
Additions to borrowings - 500,000
Repayment of borrowings (2,202) -
Proceeds from issue of share capital 4,207,558 -
Net cash inflow from financing activities 4,205,356 500,000
Increase/(decrease) in cash and cash equivalents 2,616,271 (66,686)
Cash and cash equivalents at start of year/period 326,534 393,220
Cash and cash equivalents at end of year/period 5 2,942,805 326,534

Notes to the financial information for the year ended 30 September 2014

1. Basis of preparation

Actual Experience plc is a public limited company domiciled in the United Kingdom.

The Company’s registered office is The Tramshed, Beehive Yard, Walcot Street, Bath, BA1 5BB.

The figures and financial information for the year ended 30 September 2014 and for the fourteen-month period ended 30 September 2013 contained in this announcement were compiled from an extract of the relevant accounts and do not constitute statutory accounts. The accounts for the fourteen month period ended 30 September 2013 have been delivered to the Registrar of Companies. The accounts for the year ended 30 September 2014 have not yet been delivered to the Registrar of Companies.

Going Concern

The financial statements have been prepared on a going concern basis which the Directors believe to be appropriate for the following reasons.

As at 30 September 2014, the Company had a cash position of £2.94m, with no bank debt. The directors have prepared detailed monthly projections of expected future cash flows for the remainder of the financial year to September 2015 and the subsequent financial year, 2016. The base case forecast includes expected revenue growth, together with further investment in the cost base, leading to the commencement of positive monthly cash flows during the latter part of the period.

Because of the Company’s early stage of development there is uncertainty regarding the timing of future levels of revenue growth, therefore cashflow projections for a sensitivity scenario have also been prepared which include future sales at the current run rate whilst maintaining the current level of operating expenditure. The directors consider that the level of operating costs can be flexed so they are commensurate with the level of sales achieved. As a consequence, under the sensitivity scenario the existing cash resources would be sufficient to enable the Company to fund its operations for at least 12 months from the date of approval of the Annual Report. In the event that the sensitivity scenario continued during 2016, additional sources of funding could be required and the directors have a reasonable expectation that such funding could be obtained at that time if required.

After due consideration, the directors have concluded that there is a reasonable expectation that the Company has 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.

2. Loss from operations

Year to
30 September
2014

£
14 months to
30 September
2013£
Loss from operations is stated after charging:
Depreciation on owned property, plant and equipment 7,738 7,247
Amortisation of intangible assets 39,771
Operating lease rentals – land and buildings 50,000 47,200
Staff costs 1,132,971 854,337
Foreign exchange losses 1,297 831

3. Taxation

Tax on loss on ordinary activities

Year to
30 September
2014£
14 months to
30 September
2013£
Current tax:
Corporation tax on losses of the year/period (279,181) (69,428)
Deferred tax:
Origination and reversal of timing differences 1,529 1,844
Total tax credit (277,652) (67,584)

Factors affecting the current tax charges

The tax assessed for the year/period varies from the standard UK company rate of corporation tax as explained below.

Year to
30 September
2014£
14 months to
30 September
2013£
Loss on ordinary activities before tax (1,583,865) (784,794)
Tax at the UK corporate tax rate of 22% (2013: 23.57%) (348,450) (184,976)
Effects of:
Expenses not deductible for tax purposes 122,747 10,638
Unrecognised deferred tax asset on losses 156,276 176,182
Research and development tax credits received in respect of the prior period (119,236) (69,428)
Research and development enhancement in respect of the current year (88,916)
Change in rate of tax used to calculate deferred tax liability (73)
Tax credit for the year/period (277,652) (67,584)

The Company has tax losses carried forward of £1,923,171 (2013: £1,212,820).

The standard rate of corporation tax in the UK changed from 23% to 21% with effect from 1 April 2014. Accordingly, the Company’s losses for the accounting period are based on an effective rate of 22%. The main rate of corporation tax will further reduce to 20% with effect from 1 April 2015 and this is the rate used to calculate the deferred tax balances. The impact of the change in the tax rate has been immaterial.

During the year the Company has incurred qualifying expenditure on research and development projects which has given rise to tax credits due from HM Revenue and Customs to the Company of £159,945 (2013: £nil).

At 30 September 2014, the Company had unrecognised deferred tax assets totalling £403,866 (2013: £254,692) which relate to losses. The Company has not recognised this asset in the statement of financial position due to the uncertainty in the timing of when it is probable that future taxable profit will be available against which the unused tax losses and unused tax credits can be utilised.

4. Loss per share

Basic loss per share is calculated by dividing the loss attributable to the owners of the parent by the weighted average number of ordinary shares in issue during the year. Diluted loss per share is calculated by adjusting the weighted average number of ordinary shares in issue during the year to assume conversion of all dilutive potential ordinary shares.

The Company has two classes of potentially dilutive ordinary shares. Firstly, those share options granted to employees where the exercise price is less than the average market price of the Company’s ordinary shares during the year. Secondly, the convertible loans that were outstanding during the period ended 30 September 2013. However, due to losses incurred in both the current and previous financial year there is no dilutive effect from the potential exercise of these dilutive shares.

Year to
30 September
2014£
14 months to
30 September
2013£
Total loss attributable to the owners of the parent (1,306,213) (717,210)
No. No.
Weighted average number of ordinary shares in issue during the year/period 27,525,131 19,767,000
Loss per share
Basic and diluted on loss for the year/period (4.74)p (3.63)p

Adjusted earnings per share has been calculated so as to exclude the effect of non operating exceptional costs including related tax charges and credits. Adjusted earnings used in the calculation of basic and diluted earnings per share reconciles to basic earnings as follows:

Basic earnings (1,306,213) (717,210)
Non operating exceptional costs 450,488
Adjusted earnings (855,725) (717,210)
Adjusted loss per share
Basic and diluted on adjusted loss for the year/period (3.11)p (3.63)p

The weighted average number of shares in issue throughout the year/period is as follows:

Year to
30 September
2014
14 months to
30 September
2013
Issued ordinary shares at the beginning of the year/period 26,356 26,356
Adjustment to reflect capital reorganisation 19,740,644 19,740,644
Issued ordinary shares at the beginning of the year/period – adjusted 19,767,000 19,767,000
Effect of shares issued in November 2013 7,487,901
Effect of shares issued in February 2014 270,230
Weighted average number of shares at the end of the year/period 27,525,131 19,767,000

The weighted average number of shares in issue has been adjusted in each period to reflect the capital reorganisation which took place on 23 January 2014 in order to ensure that the loss per share figures are comparable across all periods.

5. Cash and cash equivalents

Bank credit rating: At
30 September
2014£
At
30 September
2013£
At
1 August
2012£
A 2,942,805 326,534 393,220
Cash and cash equivalents 2,942,805 326,534 393,220

The above has been analysed by the Fitch rating system and gives an analysis of the credit rating of the financial institution where cash balances are held.

All of the Company’s cash and cash equivalents at 30 September 2014 are held in instant access current accounts or short term deposit accounts. Balances are denominated in UK Sterling (£) and US Dollars ($) as follows:

At
30 September
2014£
At
30 September
2013£
At
1 August
2012£
Denominated in Pounds Sterling 2,924,344 326,534 393,220
Denominated in US Dollars 18,461
Cash and cash equivalents 2,942,805 326,534 393,220

The directors consider that the carrying value of cash and cash equivalents approximates to their fair value. For details of credit risk management policies, refer to note 3 of the annual report and accounts.

6. Related party transactions

Remuneration of key personnel

The remuneration of the Directors, who are the key management personnel of the Company, is shown below:

Year
ended
30 September
2014£
Period
ended
30 September
2013£
Executive directors – aggregate
Short-term employment benefits* 192,916 122,292
Non-executive directors – aggregate
Short-term employment benefits* 100,655
Total 293,571 122,292

* In addition, certain directors hold share options in the Company for which a fair value share based charge of £15,441 has been recognised in the statement of comprehensive income (2013: £nil).

Amounts outstanding to key personnel

As at 30 September 2014, no amounts were due to directors in relation to reimbursement of fees and expenses arising in the ordinary course of business (30 September 2013: £181).

Transactions with shareholders and other related parties

During the year the Company entered into transactions, in the ordinary course of business, with shareholders and other related parties. Transactions entered into, along with trading balances outstanding, are as follows:

Related party: Notes Amounts
invoiced
to related
party
2014£
Amounts
invoiced by
related
party
2014£
Amounts
invoiced by
related
party
2013£
Queen Mary and Westfield College, University of London 1
Purchases – Salary charge and secondment fees for research services 91,164 26,860
Purchases – Patent costs 683 3,969
1 91,847 30,829
IP2IPO Limited and its associated company, Techtran Group Limited
Sales – Analytical services 6,048
Purchases – Business support fees 6,000
Purchases – Non-executive Director fees 12,914
Purchases – Other office costs 195 254
Purchases – Other professional fees 3,708
6,048 16,817 6,254
Inmarsat plc 2
Sales – Analytical services 33,600
Henderson Global Investors 1
Sales – Analytical services 20,352

Note 1: Queen Mary and Westfield College, University of London, IP2IPO Limited and Henderson Global Investors are shareholders of the Company.
Note 2: Two of the Company’s directors have a common directorship of Inmarsat plc.

At 30 September 2014, invoiced sales of £20,352 to Henderson Global Investors were outstanding and included within trade receivables. This balance was received after the year end.

During the year, the following transactions took place between the Company and its subsidiary, Actual Experience Inc.:

Salary costs and staff expenses totalling £24,593 (2013: £nil) were paid by the Company on behalf of Actual Experience Inc. In addition, Actual Experience Inc. charged the company £41,919 (2013: £nil) for support services provided during the year.

At 30 September 2014, an amount of £16,905 (2013: £nil) was owed by the Company to Actual Experience Inc.

There were no amounts outstanding due from or to the other related parties at 30 September 2014 or at 30 September 2013.

Ultimate controlling party

The Company has no single ultimate controlling party.

7. Availability of the report and accounts

The Company’s report and accounts for the year ended 30 September 2014, together with a notice convening the Company’s annual general meeting, will be posted to shareholders in due course.