NLG.L Regulatory News (NLG)

23 January 2014

Arria NLG plc

 ("Arria", the "Company" or the "Group")

Final Results for the year ended 30 September 2013

Arria NLG plc (AIM: NLG), a leader in the development and deployment of natural language generation ("NLG") technologies, announces its final results for the year ended 30 September 2013.

Financial Highlights:

· Revenue £816,178 (2012: £62,554)

· Gross profit £676,694 (2012: £29,101)

· Loss before tax of £13.01m (2012: £6.52m)

· £5.3m raised to 30 September 2013 (a further £4.2m raised post year end) to fund full acquisition of Data2Text Limited and working capital

· Cash at 30 September 2013 £3.9m (as at 30 September 2012: £8.7m)

Operational Highlights:

· Successfully completed admission to trading on AIM, a market of the London Stock Exchange on 5 December 2013

· Concluded the acquisition of the remaining 80% of Data2Text Limited not already owned subsequent to year end on 25 October 2013

· Completed two foundational contracts for use of the Arria NLG Engine, one for 2013 licensing of the Arria NLG Engine software to monitor compressors on oil platforms in the Gulf of Mexico, and the other for expanding the use of the Arria NLG Engine across additional equipment classes

o Consequent contract extension with oil & gas super-major awarded post period end on a month by month basis

Stuart Rogers, Chief Executive Officer of Arria NLG plc, commented:

"The Directors believe that the prospects for the Group are very bright. Negotiations continue with existing clients to expand the scope of our relationships which the Directors expect to result in deeper and longer engagements.

"Simultaneously, the Director's believe that the platform offered by the Company's shares being admitted to trading on AIM, and the debut of Natural Language Generation as a key note concept at the Society of Petroleum Engineers Intelligent Energy conference in Dubai during October 2013, positions the Group to succeed in the coming months and years in delivering its vision to be the global leader in the development and deployment of mission critical, core industrial enterprise level NLG software technologies.

"We look forward to being in a position to announce further operational developments in due course."

Contacts:

Overview

Arria is a UK headquartered software development business. Its core product, the Arria NLG Engine, originated from research at the University of Aberdeen, a leading institution in the field of Natural Language Generation. Arria's target is to be the global leader in the development and deployment of mission critical, core industrial, enterprise level NLG software technologies.

Its technology is already deployed in a mission critical environment, monitoring large scale industrial machinery located on oil and gas production platforms in deepwater Gulf of Mexico for a major global oil and gas company. It is also in use at the Met Office.

Chairman's Statement

Arria NLG has had a successful year of growth and development on a number of fronts, all in accordance with the Group's objective to be the global leader in the development and deployment of mission critical, core industrial, enterprise level analysis and natural language reporting on large data sets.

Since the end of our last fiscal year on 30 September 2013, Arria NLG plc has completed a successful private placement fund raise of US$15.8 million, completed the full acquisition of Data2Text Limited and begun to trade publicly on AIM, a market operated by the London Stock Exchange. 

Although it is early days for the Group's business, its technology is already deployed in a mission critical environment monitoring large scale industrial machinery located on oil and gas production platforms in deepwater Gulf of Mexico for a major global oil and gas company and the technology also is deployed at a government meteorology service.

The Group's core technology, the Arria NLG Engine, is an advanced software technology that through knowledge capture, analysis and communication seeks to emulate the analysis and reporting performed by experts working within the relevant enterprise. It analyses large sets of data and makes sense of them. It can automatically make large sets of data communicate directly to users, not merely in numbers or spread sheets that require further analysis and explanation, but in rich, compelling narratives intended to replicate what would have been written by those experts.

A key objective of Big Data analytics is to generate plain English narratives which people can use to make better decisions and to work more efficiently, adding value to business. Today this process of producing what is known as "actionable analytics" still depends on intervention by human experts. The acute shortage of such human experts is a significant limitation on releasing the value locked within Big Data. The Arria NLG Engine has the potential to unlock that value by effectively undertaking the expert's role in respect of defined analytical and reporting tasks.

Arria NLG has developed a commercial system for oil and gas, an industry that is especially concerned about "knowledge loss" as experienced experts retire. Both cognitive psychology and our experiences suggest that formation of new experts by automatically generating high-quality reports identifying key facts and highlighting relationships between them can narrow the performance gap between novice and experienced experts. NLG software works around the clock helping experts improve the performance and safety of the most complex, large-scale production equipment being used by global corporations. 

We are greatly encouraged by the growing interest in Arria's core technology from companies that are now aware of our capabilities in the oil and gas sector through industry conferences, company presentations and news articles published in connection with the AIM flotation. We are confident that we will advance our existing presence in the oil and gas sector and that over the coming months we will achieve initial traction with new clients whilst extending our engagements with our existing clients.

Key milestones

The Company's key developments during the year to 30 September 2013 are highlighted below:

· Completed two foundational contracts for use of the Arria NLG Engine by a client in the oil and gas sector, one for 2013 licensing of the Arria NLG Engine to monitor 28 compressors on six oil platforms in the Gulf of Mexico, and the other for expanding the use of the Arria NLG Engine across additional equipment classes;

· Concluded the acquisition of the 80% of Data2Text Limited that Arria did not own, ahead of the listing on AIM;

· Successfully concluding a US$4.5 million private placement fund raising;

· Successfully concluding a US$15.8 million private placement fund raising;

· Invested significantly in the further development and protection of the Groups' intellectual property portfolio;

· Continued significant forward momentum with Data2Text's existing client base, and working to fill the prospect pipeline in the oil and gas, financial services, and healthcare sectors;

· Continued investment into the development of the core Arria NLG Engine; and

· Finalised the Group's governance and management structure befitting of a global enterprise in preparation for the Company's admission to AIM (which occurred on 5 December 2013).

We were also pleased to announce, on 23 December 2013, our continuing relationship with Shell Exploration and Production Company ("Shell") on a month by month basis (starting 1 January 2014) until such time as new agreements are signed between us. The terms of the extension include Shell's continued usage of the Arria NLG Engine in the Gulf of Mexico and for on-going support work. We are also discussing the project definition to be included in longer term agreements for Shell's usage of the Arria NLG Engine and associated services, on terms and conditions to be determined.

Financials

Turnover for the period was £816,178 (period ended 30 September 2012: £62,554). This was predominantly attributable to the Company's contract with its oil and gas client. During 2013 the Group raised US$20.3 million (£4.2 million of which was raised post year end) and this has been used to fund the acquisition of Data2Text Limited, the development of the Arria NLG Engine, costs of securing a public listing of the Company's shares, marketing of the Group's services to potential new clients and expanding the Group's portfolio of patent applications. As a result of these heavy investments in the development of the Group's business, the Company reported a loss before tax of £13.0 million (2012 loss before tax: £6.5m). 

As we invest in our technology and commercial relationships, and given the stage of development of the Company, we may seek to raise additional capital as appropriate opportunities arise.

Outlook

The Directors believe that the prospects for the Group are very bright. Negotiations continue with existing clients to expand the scope of our relationships, which the Directors expect to result in deeper and longer engagements. Simultaneously, the Directors believe that the platform offered by the flotation on AIM, as well as the debut of NLG as a keynote concept at the 2013 Society of Petroleum Engineers Intelligent Energy conference, position the Group to succeed in the coming months and years in delivering its vision to be the global leader in the development and deployment of mission critical, core industrial enterprise level NLG software technologies. 

Loss per share

Notes

1. Basis of Preparation

The financial information presented in this Preliminary Announcement is extracted from the Group's audited financial statements for the year ended 30 September 2013. 

The preliminary announcement for the year ended 30 September 2013 was approved by the Board of Directors on 22 January 2014. The financial information set out above does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 30 September 2013 will be delivered to shareholders by the end of January, together with notice of the Annual General Meeting. A copy of the Statutory accounts will be available on the Company's website, www.arria.com, shortly. The auditors' report on the financial statements for the year ended 30 September 2013 is unqualified and does not contain a statement under section 498(2) or (3) of the Companies Act 2006. The Group's financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the EU.

2. Going Concern

At the balance sheet date, the group has net cash of £3.9 million. Since this date, additional cash of £8.3 million has been received through fund raising, and the Company has successfully listed on the Alternative Investment Market of the London Stock Exchange ("AIM"), which the Directors believe will facilitate further equity funding when necessary.

The consolidated balance sheet has net assets of £29,324,157 at 30 September 2013. The Group made a loss before tax of £13,012,044 and expects to continue to make losses as it invests in developing new markets for its products and securing its position in commercializing Natural Language Generation.

The Directors have prepared a business plan and cash flow forecast for the period to 31 January 2015. The forecast contains certain assumptions about future sales, the gross margins achievable and the level of other operating expenses. In addition to this business plan, the Directors have considered various downside sensitivities and management actions that could be undertaken to ensure the ongoing operation of the Group.

Based on the supporting business plan and expectation of further equity fundraising, the Directors believe the Group has adequate resources to continue in operational existence for the foreseeable future and accordingly, continue to adopt the going concern basis in preparing the financial statements.

3. Segment information

The Board of Directors is the group's chief operating decision-maker. Management has determined the operating segments based on the information reviewed by the Board of Directors for the purpose of resource allocation and assessment of performance and it is considered that is one operating segment, being the provision of computer software which is all generated from one geographical location, being the UK. Corporate costs relate to unallocated head office costs.

The following is an analysis of revenues and results from operations and assets by business segment:

Entity-wide information

Total revenue from activities by geographical area is detailed below:

There has been a change in the classification of goodwill and intangible assets from corporate to provision of computer software to better reflect the substance of the assets. Comparatives have been restated.

4. Operating loss

5. Loss per share

6. Posting of accounts and notice of annual general meeting

A copy of the annual report and accounts will be posted to shareholders of the Company by the end of January 2014, along with a notice of the Company's annual general meeting, to be held on 31 March, 2014, at 2.00pm at the offices of Travers Smith LLP, 10 Snow Hill, London, EC1A 2AL. A copy of the report and accounts and general meeting notice will also be available for download from the Company's website, www.arria.com.