Access Intelligence Regulatory News (ACC)

2 March 2018

ACCESS INTELLIGENCE PLC

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

FINAL RESULTS FOR THE YEAR ENDED 30 NOVEMBER 2017

Access Intelligence Plc (AIM: ACC), a leader in corporate communications and reputation management software, announces its final results for the year ended 30 November 2017.

Strategic highlights

· The launch of the new Vuelio offering with a unique integrated PR, public affairs and social engagement solution has been positively received by the UK market

· A strong performance in new business and increased upsell into the existing client base reflects the relevance of the Group's combined portfolio offering

· The Vuelio platform is increasingly playing the role of communications memory for client organisations, boosted by stringent audit requirements imposed by incoming General Data Protection Regulation

· The Group has achieved significant cost reductions through renegotiated supplier contracts, office consolidation and headcount reduction, with the latter achieved while maintaining high levels of customer support, reflected in improved renewal rates

· Addition of a significant number of blue-chip clients, including Dyson, RAC, PZ Cussons, CPPIB, NICE, Greater Anglia, Highways England, Smith & Nephew and Deutsche Lufthansa

Financial highlights

· The Group achieved Annual Contract Value (ACV) growth of £600k over the second half of the year, an annualised growth rate of nearly 15%. The benefit of this will flow through into revenue in the 2018 financial year

· Total future contracted revenue grew 35% to £7.1 million, reflecting net growth in ACV combined with success at selling multi-year contracts. This provides us with good visibility of long-term, recurring revenue growth

· During the year, the Group invested a further £1.6 million into the development of the Vuelio platform, delivering a product that is stable, secure and fully integrated to support the full range of client requirements

· The Group has 99% recurring revenue, with sales teams incentivised to focus on high contribution SaaS products

· In December 2017 the Group received notices from all holders of its £2.35 million convertible loan notes to convert these into equity. This has significantly strengthened the Group's Balance Sheet and resulted in an ongoing annual interest saving of approximately £0.2 million

Michael Jackson, Non-Executive Chairman of Access Intelligence, commented: "I am delighted that our 2015 acquisition and last year's integration work has resulted in a stable and growing business. Cost savings created in the second half of 2017 will impact fully in 2018, and, combined with our ACV growth, provide a strong platform for growth as we continue to disrupt and transform the communications management market."

For further information:

Forward looking statements

This announcement contains forward-looking statements.

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

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

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

Chairman's Statement

I am pleased to announce our results for the year ended 30 November 2017.

When we concluded our restructuring in Q1 2017, Access Intelligence had transformed from a diverse portfolio into a streamlined operation focused on the Vuelio brand, and launched a unique reputation management platform integrating solutions for PR, public affairs and social engagement.

Throughout the remainder of 2017, this new Vuelio platform allowed us to grow our Annual Contract Value ('ACV') base through upsells into the existing customer base and increasing the number and value of new customer wins - all while maintaining industry-leading rates of customer retention.

New business sales increased from an average of £65,000 per month in August to October 2016 to an average of £160,000 per month from the second quarter 2017 onwards; customer retention is up from 56 per cent to a consistent performance of over 80 per cent by value; and we have achieved ACV growth of £600,000 over the past six months, reflecting an annualised run rate of £1.2 million net ACV growth. By 30 November 2017, our total future contracted revenue had increased 35% year on year to £7.1 million.

Simply put, the business is now stable and growing. From October 2017 onwards, having dramatically reduced our operational costs over the previous nine months we have started to generate cash. Through renegotiating supplier contracts, consolidating office space and reducing headcount by almost 50 per cent, we have achieved annualised savings of £1.2 million over the past 12 months - all while maintaining high levels of customer support reflected in our improved renewal rates.

The new year has brought further stability. In December 2017 we received notices from all holders of the £2.35 million convertible loan notes to convert these into equity. This has significantly strengthened our Balance Sheet and will result in an ongoing interest saving of around £0.2 million each year. 2018 also offers significant opportunity in the form of General Data Protection Regulation (GDPR) - Vuelio is uniquely positioned to help the communications market meet these stringent new data privacy requirements.

In the past six months we have welcomed a number of major brands as new customers, including Dyson, RAC, PZ Cussons, CPPIB, NICE, Greater Anglia, Highways England, Smith & Nephew and Deutsche Lufthansa. We are delighted that clients of this calibre will be joining us for the next stage of Access Intelligence's journey, as we continue to invest in our people and our product to disrupt and transform the communications management market.

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

Sincerely

M Jackson

Chairman

Strategic Report (extract)

Results

2017 has seen the Group transition from a business focussing on the integration of acquired operations and customers into one with a unique product focussing on growth.

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 client base, less any customer losses. It is an important metric for the Group as it is a leading indicator of future revenue. During 2017, the Group's annual contract value base grew by £750,000, with the growth accelerating in the second half of the year and an average growth of £100,000 per month from June to November 2017, an annualised growth rate of nearly 15%.

The Group also monitors total contracted future revenue, comprising deferred income plus contracted revenue not invoiced. At 30 November 2017, total contracted future revenue grew by 35% to £7,123,000 (2016: £5,291,000). Included within this total was an amount relating to contracted revenue not invoiced of £2,986,000 (2016: £1,720,000). This is also an important metric for the Group as it is a leading indicator of multi-year growth in the business.

A.I. Talent Limited has been moved to Held for Sale. The comparative consolidated statement of comprehensive income has been re-presented to show the results of A.I. Talent Limited as discontinued operations separately from continuing operations.

Revenue from continuing operations reduced by 11% year on year to £8,063,000 (2016 restated: £9,108,000), with recurring revenue comprising 99% of the total (2016 restated: 99%). with sales teams incentivised to focus on high contribution SaaS products. The decrease in revenue, which brought about a reduction in gross margin to 65% during the year (2016 restated: 68%), reflects the decision by management to exit non-profitable contracts in combination with expected client churn. Due to the majority of the growth in the Group's annual contract value base occurring in the second half of the year, the benefit will flow through into revenue in the 2018 financial year.

The Group's continuing operations delivered an adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) loss for the year of £1,364,000 (2016 restated: £358,000). This figure being adjusted for non-recurring items of £854,000 (2016 restated: £1,529,000), a share of loss of associate of £254,000 (2016: £91,000) and a share based payments charge of £Nil (2016: £13,000), the EBITDA loss from continuing operations for the year was £2,472,000 (2016 restated: loss of £1,991,000).

Operating loss from continuing operations was £3,450,000 (2016 restated: £3,001,000). In arriving at the operating loss, the Group has incurred £1,595,000 (2016 restated: £1,059,000) in research and development expenditure, £107,000 (2016: £285,000) in restructuring costs and charged £978,000 (2016 restated: £1,010,000) in depreciation and amortisation.

The Group made a profit for the year from discontinued operations of £558,000 (2016 restated: £1,437,000). Further information relating to discontinued operations is provided within the Strategic Report and within note 6 to the consolidated financial statements.

2018 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 1.01p (2016 restated: 1.08p). Basic earnings per share from discontinued operations was 0.17p (2016 restated: 0.46p).

Cash

In July 2017, the Group raised £1,020,000 by the issue of 31,384,615 Ordinary Shares at a price of 3.25p per share. Cash at the year-end stood at £673,000 (2016: £1,162,000) whilst net debt, calculated as loan notes and other loans less cash held, was £2,700,000 (2016: £2,113,000) at the year end.

Key performance indicators

On a monthly basis management accounts are prepared 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:

These performance indicators are measured against both an approved budget and the previous year's actual results.

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 2017 (2016: £Nil).

Consolidated Statement of Comprehensive Income

Year ended 30 November 2017

Consolidated Statement of Financial Position

As at 30 November 2017

.

Consolidated Statement of Changes in Equity

Year ended 30 November 2017

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 0.5p 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 17: '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 2017

Notes to the Consolidated Financial Statements

1. Basis of preparation

The financial information set out in the announcement does not constitute the company's statutory accounts for the years ended 30 November 2017 or 2016. The financial information for the year ended 30 November 2016 is derived from the statutory accounts for that year, which were prepared under IFRSs, and which have been delivered to the Registrar of Companies. The auditor's report on those accounts was unqualified, did not contain a statement under either Section 498(2) or Section 498(3) of the Companies Act 2006 and did not include references to any matters to which the auditors drew attention by way of emphasis.

The financial information for the year ended 30 November 2017 is derived from the audited statutory accounts for the year ended 30 November 2017 on which the auditor has given an unqualified report, that did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006 and did not include references to any matters to which the auditors drew attention by way of emphasis. The statutory accounts will be delivered to the Registrar of Companies following the Company's Annual General Meeting.

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

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

2. Basis of consolidation

The Group results comprise the financial statements of Access Intelligence plc and its subsidiaries as at 30th November 2017. They are presented in Sterling and all values are rounded to the nearest thousand pounds (£'000).

3. Revenue

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

The Group's revenue was generated from the following territories:

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. As a result of the Group's divestments during the year the segments reported have changed to reflect the Board's focus. The segments are:

· Reputation

· Discontinued - Disposals & Held for Sale

· Head Office

2017

The segment information for the year ended 30 November 2017, is as follows:

2016

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

5. Operating Loss

Operating loss is stated after charging

Non-recurring items in the year ended 30 November 2017 were incurred as a result of restructuring and one off termination of employment costs for staff, along with associated legal fees. The non-recurring costs are made up of the following:

Auditor's remuneration is further analysed as:

6. Discontinued operations

Due North Limited

In February 2016, the Group sold its subsidiary Due North Limited.

AITrackRecord Limited

In July 2016, the Group sold its subsidiary AITrackRecord Limited.

AIControlPoint Limited

In March 2017, the Group sold its subsidiary AIControlPoint Limited for cash consideration of £745,000. This business unit had been 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.

The following is a breakdown of the effects of the disposal of AIControlPoint Limited on the financial position of the Group:

A.I. Talent Limited

A.I. Talent Limited is presented as a disposal group held for sale following the commitment of the Group's management in 2017, to sell the business. This business unit had not been reported as a discontinued operation or classified as held for sale at 30 November 2016 and the comparative consolidated statement of comprehensive income has been re-presented to show the results of discontinued operations separately from continuing operations.

All discontinued operations

The following tables provide combined information for all discontinued operations. The current year figures include the results of AIControlPoint Limited and A.I. Talent Limited plus consolidation adjustments. The prior year comparative figures also include the results of Due North Limited and AITrackRecord Limited which were sold during the year ended 30 November 2016.

The profit from discontinued operations of £558,000 (2016: £1,437,000) is entirely attributable to the owners of the Company.

7. Disposal group held for sale

A.I. Talent Limited is presented as a disposal group held for sale following the commitment of the Group's management in 2017 to sell the business. Efforts to sell the disposal group had therefore commenced before the year end.

At the prior year end, AIControlPoint 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 14 March 2017 (see note 29).

At 30 November 2017 the disposal group comprised the following assets and liabilities:

Assets classified as held for sale

Liabilities classified as held for sale

8. Particulars of employees

Costs incurred in respect of these employees were:

The compensation for loss of office charge of £107,000 (2016: £285,000) relates to 16 employees (2016: 22 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

J Arnold received health insurance benefits during the year of £615 (2016: £883).

J Arnold received payments into a personal retirement money purchase pension scheme during the year of £7,725 (2016: £7,731).

No other directors received any other benefits other than those detailed above.

The number of directors at 30 November 2017 accruing retirement benefits under money purchase schemes was one (2016: one).

The interests of the directors in share options are detailed in the Directors' Report within the Annual Report. No directors exercised share options during the year.

9. Financial expense

10. Taxation

As shown above the tax assessed on the loss on ordinary activities for the year is higher than (2016: higher than) the standard rate of corporation tax in the UK of 20% (2016: 20%).

The differences are explained as follows:

Factors affecting tax credit:

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.

11. 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 2017.

12. Earnings per share

The calculation of earnings per share is based upon the total Group loss for the year of £2,777,000 (2016: loss of £1,963,000) divided by the weighted average number of ordinary shares in issue during the year which was 328,645,382 (2016: 315,301,844).

In 2017 and 2016 potential ordinary shares from the share option schemes and convertible loan notes have an anti- dilutive effect due to the Group being in a loss position. As a result, dilutive loss per share is disclosed as the same value as basic loss per share.

This has been computed as follows:

The total number of options and warrants granted at 30 November 2017 of 19,518,379 (2016: 24,353,073) would generate £567,305 (2016: £716,379) in cash if exercised. At 30 November 2017, 2,220,000 (2016: 220,000) were priced above the mid-market closing price of 4.0p per share (2016: 4.625p per share) and 17,298,379 (2016: 24,133,073) were below.

At 30 November 2017 3,220,000 (2016: 7,872,941) staff options were eligible for exercising at an average price of 2.69p (2016: 2.96p). Also eligible for exercising are the 14,298,379 (2016: 14,491,897) warrants priced at 2.75p per share held by Elderstreet VCT plc, D Lowe and other individuals consequent to an initial investment in the Company in October 2008.

The below table shows the amount of outstanding convertible loan notes at 30 November 2017 and the amount of shares they subsequently converted into as a result of the holders serving the Company notice to convert on 28 December 2017.

13. Intangible fixed assets

The carrying value and remaining amortisation period of individually material intangible assets are as follows:

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:

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% 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 and AIMediaData Limited 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 43% 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 37% reduction in EBITDA would result in the carrying value of its goodwill and intangible assets being equal to the recoverable amount. For both companies, an increase in the discount rate by 12 percentage points 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 2017, no development costs (2016: £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 2017.

14. Investment in associate

As part of the consideration for the disposal of AITrackRecord Limited during the prior year, 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 associates 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 period of ownership, the Group's share of the loss of TrackRecord Holdings Limited was £254,000 (2016: £91,000). 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.

Reconciliation to carrying amounts

Summarised statement of comprehensive income

15. Property, plant and equipment