ACT.L Regulatory News (ACT)

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF EU REGULATION 596/2014 (WHICH FORMS PART OF DOMESTIC UK LAW PURSUANT TO THE EUROPEAN UNION (WITHDRAWAL) ACT 2018) ("UK MAR")). IN ADDITION, MARKET SOUNDINGS (AS DEFINED IN UK MAR) WERE TAKEN IN RESPECT OF THE PLACING WITH THE RESULT THAT CERTAIN PERSONS BECAME AWARE OF INSIDE INFORMATION (AS DEFINED IN UK MAR), AS PERMITTED BY UK MAR. THIS INSIDE INFORMATION IS SET OUT IN THIS ANNOUNCEMENT. THEREFORE, THOSE PERSONS THAT RECEIVED INSIDE INFORMATION IN A MARKET SOUNDING ARE NO LONGER IN POSSESSION OF SUCH INSIDE INFORMATION RELATING TO THE COMPANY AND ITS SECURITIES.

FOR IMMEDIATE RELEASE

7 November 2023

Actual Experience plc

Company Update, Intention to Appoint Administrators and Suspension of Trading in Shares

Actual Experience plc (AIM: ACT), the analytics-as-a-service company (the "Company" and, together with its subsidiary undertakings, the "Group"), provides the following update regarding its recent trading performance, financial position, and efforts to raise further funding.

Introduction

The Company disclosed in its unaudited consolidated interim results for the six months ended 31 March 2023 (the "Interim Results", released on 12 June 2023) that, based on its latest "base case" assessment, and in the absence of cost reductions or significant commercial progress, the Company was forecast to run out of cash by December 2023. As part of the Interim Results, the Company's board of directors (the "Board") also prepared a severe, but plausible, downside scenario based on significantly more pessimistic sales forecasts, with corresponding reductions in controllable costs. In this scenario, the Company was forecast to run out of cash by November 2023. 

Current Trading and Financial Position

During the financial year ended 30 September 2022, the Company reduced ongoing expenses from £680,000 per month to £460,000 and expenses have been maintained at this level during the financial year ended 30 September 2023 ("FY2023"). During FY2023 and subsequently, the Board has been constantly reviewing the Company's cost profile and organisational structure, however, the Board also formed the view that the Company had reduced headcount and its operating cost base to the lowest viable level while still retaining the ability to deliver commercial objectives regarding order acquisition and customer support, as well as developing additional required product features.

Although the Company made commercial progress during FY2023, securing new revenue contracts and significant sales has taken longer than expected and, as a result, trading has largely tracked the severe, but plausible, downside scenario announced in the Interim Results. This, along with additional costs exploring strategic options as outlined below, has resulted in a depletion of the Company's cash reserves and without new funding, the Company would have inadequate funds to continue trading after late November 2023.

Strategic Options

The Company also announced in the Interim Results that if it were unable to secure an appropriate combination of new revenue contracts, cost reductions, and/or further funding, then the Company may not have sufficient resources to meet its liquidity requirements over the foreseeable future. As described above and at the current time, the Company has been unable to secure significant new revenue contracts or cost reduction and so the Board has been exploring an equity fundraise to increase the Company's cash reserves and has been in active discussions with existing and potential shareholders over the last few months.

On 14 August 2023, the Company submitted a letter to HMRC seeking advanced assurance under the Income Tax Act 2007 that it is eligible to issue shares to investors that would benefit from relief from taxation under the enterprise investment scheme ("EIS") regime, reflecting the Board's view that receiving advanced assurance from HMRC provided the greatest chance for a successful equity fundraise. While exploring an equity fundraise, the Company has been in discussions with various venture capital trust and EIS funds along with other potential investors. Despite the Company submitting information and replying promptly to queries, HMRC have not, as at the date of this announcement, provided a formal response regarding the Company's application within HMRC's published timescales for responding to applications for advanced assurance.

It is the Board's view that it is now highly uncertain whether any formal approval regarding its application could be expected from HMRC within the required timescales, having regard to the Company's rapidly depleting cash reserves.

Alongside progressing a possible equity fundraise, the Company has explored other strategic options with the assistance of FRP Advisory Trading Limited ("FRP Advisory"), including an accelerated M&A process to seek an acquirer of the Group's business and assets, and contingency planning. In relation to accelerated M&A, FRP Advisory contacted a number of potential acquirers on the Company's behalf, however received no firm indications of interest in response. The Board therefore terminated this process due to the lack of interest and the significant ongoing costs involved.

Having considered the Company's rapidly depleting cash position and the lack of progress regarding an equity fundraise and the other strategic options explored, it is the Board's view that it is unlikely to be able to secure the funding that it requires or complete an alternative transaction in a timely manner to secure the Company's future and so is now taking action to protect value for the Company's creditors and other stakeholders.

The Board has therefore regrettably resolved to file a notice to appoint administrators to the Company with such appointment expected to take effect later today.

Resignation of nominated adviser and joint brokers

As a result of the Company's intention to appoint administrators, Singer Capital Markets Advisory LLP and Turner Pope Investments (TPI) Ltd have informed the Company of their resignations as nominated adviser and joint broker and joint broker to Actual Experience plc respectively, effective immediately on the release of this announcement. Pursuant to AIM Rule 1, if a replacement nominated adviser is not appointed within one month of today's date, the admission of the Ordinary Shares to trading on AIM will be cancelled. The Company has no current intention of appointing a replacement nominated adviser.

In light of the above, the Board announces that it has requested a suspension of trading in the Company's ordinary shares on AIM with effect from 07.30 a.m. today.

Further announcements will be made in due course.

Enquiries:

The person responsible for arranging release of this announcement on behalf of the Company is Steve Bennetts, Chief Financial Officer.