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ANALYTICS
INSIGHT
ACTION
Annual Report 2017
IntroductIon
B RING
BUFFERING
SL W
SYNCING
B RING
BUFFERING
C NSTANT
CRASHING
F ILED
CONNECTIONS
IntroductIon
StrAtegIc report
governAnce
fInAncIAl StAtementS
AddItIonAl InformAtIon
We all experience poor
digital quality
Global E-commerce
sales
It’s the end of the day and the sales
application is working at half speed.
You’ll be working late again to log
today’s sales. This is poor digital
quality – it affects your ability to
work productively, and ruins your
experience of a website or
application.
90%
B2B
See Market overview
on page 10
2017 HIGHLIGHTS
Financial
Revenue
Loss per share
£0.36m
17.72p
£7.40m
£18.21m
Cash and term deposits
Loss for the year
Operational
• 2017 was a year in which we prepared
the business for large scale production
with our Channel Partners
• Signing of a multi-year framework
agreement with Proquire, the
procurement arm of Accenture, our
fourth MSA
• Increased head count to support
Channel Partner development from
57 to 80
• Improvement of processes throughout
the business to enable better working
with our partners
• Improvement of product in terms of
stability and automation in order to be
able to operate at scale with partners
CONTENTS
Introduction
Improving user experience
How it works
How it works in practice
Strategic report
Chairman’s statement
Market overview
Our business model
Chief Executive’s statement
Our strategy
Financial review
Principal risks and uncertainties
Governance
Board of Directors
Directors’ report
Directors’ responsibilities statement
Corporate governance report
Directors’ remuneration report
02
04
06
08
10
12
14
16
18
20
22
24
25
26
30
32
Financial statements
Independent auditors’ report
Consolidated statement of
comprehensive income
36
Consolidated statement of changes in equity 37
Consolidated statement of financial position 38
Consolidated statement of cash flows
39
Notes to the consolidated financial statements 40
55
Company statement of changes in equity
56
Company statement of financial position
Company statement of cash flows
57
Notes to the Company financial statements 58
Additional information
Notice of Annual General Meeting
Notes relating to Annual General Meeting
Glossary of terms
Sources
Actual Experience plc Annual Report 2017
62
63
64
65
01
IntroductIon
Improving user experience
through digital insight
We don’t have to accept inconsistent
digital experience. Actual Experience
analyses the digital supply chains that
deliver digital products and services to
leading brands around the world. Our
analytics provide the insight required to
bring consistency to the quality of the
digital experience of their customers
and staff.
Global digital economy
$25.3t
02
Actual Experience plc Annual Report 2017
MARVELL US
MEETINGS
C NSTANT
COMMS
IntroductIon
StrAtegIc report
governAnce
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AddItIonAl InformAtIon
MARVELL US
MEETINGS
C NSTANT
COMMS
IN TANT
ACCESS
Actual Experience plc Annual Report 2017
03
IntroductIon
How it works
PROVIDING
ANALYTICS
& INSIGHT TO
IMPROVE DIGITAL
QUALITY
We all experience digital quality problems at
home, on the phone, and in the office, which
disrupt our working and reduce our productivity.
Actual Experience Analytics-as-a-Service has
been uniquely designed to solve this problem.
Actual Experience’s analytics have far-reaching
applicability, with the potential to benefit any
organisation with a digital business or footprint.
04
Actual Experience plc Annual Report 2017
IntroductIon
StrAtegIc report
PROBLEMS
DATA
Office working can be unproductive
when you need information now,
and your CRM is holding you up.
SL W
SYNCING
Mobile working is a challenge
when you’re on the go, and your
email is running behind.
B RING
BUFFERING
Distributed collaboration gets
frustrating when your video
conferencing tool isn’t working
as well as you are.
ANALYTICS
Digital Users
Actual Experience Digital User software is lightweight
and sits on the laptops, PCs and phones of a small
sample of real users. Digital Users continuously take
detailed measurements of every point on the path
between the application and the user (including the
application itself) and send this measurement data up
to the Analytics Cloud.
For a large customer,
we make
38,000
measurements per minute
Every point on the path is a
different business or technology
in a long chain between user
and application.
See 0ur strategy
on page 16
IntroductIon
StrAtegIc report
Analytics Cloud
The Actual Experience Analytics Cloud continuously
receives measurement data from the Digital Users
and analyses this data in real time using patented
technology. This analysis is essential in order to provide
the insights necessary to improve digital quality.
For a large customer the
Analytics Cloud makes
7 million
calculations per minute
The cause of the quality
problem is somewhere
in this chain.
INSIGHT
Quality Dashboard
The Actual Experience Quality Dashboard
provides actionable data for Service Providers
to pinpoint the cause of poor digital quality. This
insight can be used to fix or improve the digital
quality problems that users are experiencing in
their homes, on their phones or in the office.
Actionable information
Below is our Quality Dashboard, which simply
shows where the problem is in the chain that sits
between the user and the application, and what
sort of action needs to be taken to solve the
problem.
CURRENT TOP ISSUES
00.00 18 Oct to 00.00 25 Oct (UTC)
Frankfurt SFDC Sales...
1. 13.108.1.245
Severity: 47.7%
(116.4)
Supplier: Salesforce.com
2. Server
Severity: 45.6%
(111.2)
Supplier: Server
3. 108.61.113.133
Severity: 4.1%
(9.9)
Supplier: Choopa
4. 129.250.4.96
Severity: 2.7%
(6.5)
Supplier: NTT America
IntroductIon
StrAtegIc report
governAnce
fInAncIAl StAtementS
AddItIonAl InformAtIon
ACTION
Office
The Quality Dashboard might show, for example,
that there is a problem with the company’s
internet service provider. Armed with this
information the IT department is able to take
action, such as contacting the ISP to resolve
the issue.
OUTCOMES
IN TANT
ACCESS
Mobile
The Quality Dashboard might show, for example,
that there is a problem with the mobile
application. Armed with this information the
IT department migrates the email accounts
to an application that is specifically designed
to work on mobile.
C NSTANT
COMMS
Home
The Quality Dashboard might show, for example,
that there is a problem with the wifi in the home.
Armed with this information the user is able
to take action, such as connecting their laptop
to the router via cable, enabling them to video
conference without the buffering.
MARVELL US
MEETINGS
Actual Experience plc Annual Report 2017
05
IntroductIon
How it works in practice
As well as providing our
customer with unambiguous
visibility and assurance during
change, the Vodafone account
team found Actual Experience
analytics allowed them to
efficiently focus on areas of the
account most critical to their
business, and augment an
already strong relationship with
additional mission-critical data.
Matt Barclay
Vodafone account manager
06
Actual Experience plc Annual Report 2017
IntroductIon
StrAtegIc report
governAnce
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AddItIonAl InformAtIon
IN TANT
ACCESS
Managing digital quality
throughout transformation
Actual Experience Analytics-as-a-Service has been
deployed globally at an international Government
department by Vodafone to ensure that customer
experience of critical applications is managed and
improved throughout an ongoing programme of change
to the Government department’s digital infrastructure.
This enabled Vodafone and the Government department
to assure the success and impact of changes as they
were made.
The international Government department found that
their digital supply chain and customer demand changed
constantly, and concluded that all critical applications
must be continuously managed.
They now view Actual Experience’s end user experience
scores as the benchmark by which to measure the
success of any digital transformation, and have found
Actual Experience’s insight invaluable throughout
the process.
86%
of organisations believe
they should execute a
business transformation
initiative regularly
Actual Experience plc Annual Report 2017
07
StrAtegIc report
Chairman’s statement
“ I am pleased to report that 2017 was
a year in which we made significant
progress towards production with
our global Channel Partners.”
Stephen Davidson
Chairman
08
Actual Experience plc Annual Report 2017
IntroductIon
StrAtegIc report
governAnce
fInAncIAl StAtementS
AddItIonAl InformAtIon
Fundraise
I would also like to thank our shareholders,
both pre-existing and those who joined the
register in 2017. These include institutions who
participated in raising £17.5 million in the year
to fund the increased investment in
accelerated deployment.
Outlook
Revenues decreased in 2017 as a consequence
of our strategy to focus solely on existing
Channel Partners. 2018 is a year in which we
will see our first significant commercial
deployment and revenues. It’s a year in which
we must deliver and we look forward with
eager anticipation and confidence.
Stephen Davidson
Chairman
16 January 2018
I am pleased to report that 2017 was a year in
which we made significant progress towards
production with our global Channel Partners.
After we signed a fourth global Channel
Partner early in the year, the next stage of
development has been to support those
partners for wide-scale deployment of our
service within their customer bases.
Given the huge opportunity within these
customer bases, the Board took the decision to
focus efforts solely on those existing partners
and to provide them with the tools and levels
of support needed for wider deployment.
Investment has been made into refining our
technology, both in terms of its operation and
scalability and how it operates within the
processes of our Channel Partners. Those
refinements have been successfully developed
and tested and we now look forward to
significant commercial deployment.
The importance of cyber security has never
been more apparent to all organisations and
I am proud to report that Actual Experience
has gained both Cyber Essentials and Cyber
Essentials Plus accreditation. These reflect
industry best practice and foster confidence
for our Channel Partners and their customers.
Our people are critical to our success and I’m
delighted to relay that employee engagement
scores are high, both by internal and external
measures. On behalf of the Board, I thank
all of our colleagues for their exceptional
commitment.
TIMELINE
1999
Professor Jonathan Pitts of Queen
Mary University of London worked
on quality-based approach to voice
packet queueing
2001
Dave Page suggested digital
Voice of the Customer approach
to research
2008
Prof made the digital Voice of the
Customer approach work
Prof and Dave agreed to work
on developing a business based
on the technology
Dave set up shop in his home
basement
2009
Limited Company established
and initial convertible loan
funding raised
Dave moved the business into
an office
Commercial development began
2010
First customer signed
Stage 1 seed funding raised
2011
Stage 2 seed funding raised
2013
£5m funding
2014
Admission to AIM
2015
£16m funding
Signed an MSA with a Forbes
Top 100 Company
Signed an MSA with Verizon
Signed an MSA with Vodafone
2017
£17.5m funding. Proceeds used
to increase scalability of products
and processes
Signed an MSA with Accenture
Actual Experience plc Annual Report 2017
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StrAtegIc report
Market overview
INCREASING
NEED FOR
IMPROVED
DIGITAL
QUALITY
The global economy is becoming more digital. In 2017,
UNCTAD reported that worldwide e-commerce sales
reached $25.3t, of which 90% were B2B transactions.
This is where Actual Experience is currently focused.
With the increasing monetary value of digital transactions,
it is more important than ever that the quality of the journeys
supporting these transactions is consistently good. That is where
Actual Experience comes in. Actual Experience manages the
quality of the digital journeys that feed the $25t digital economy,
ensuring that users everywhere can complete their digital
transactions quickly and easily.
E-commerce market
(UNCTAD 2017)
$25.3t
(UNCTAD 2016: $22.1t)
10
Actual Experience plc Annual Report 2017
IntroductIon
StrAtegIc report
governAnce
fInAncIAl StAtementS
AddItIonAl InformAtIon
Manufacturing (USA)
Percentage of sales in 2015
Online orders accepted for manufactured products, where the price
and terms of sale are negotiated over the Internet, electronic mail
or other online system.
Total sales 2015
$3,506bn
(2014: $3,612.3bn)
Digital
63.2%
(+1.8%)
Percentage of sales in 2014
Digital
61.4%
Wholesale (USA)
Percentage of sales in 2015
Total e-commerce sales for merchant wholesalers in the US,
including manufacturers’ sales branches and offices.
Total sales 2015
$2,198.8bn
(2014: $2,158.8bn)
Digital
30.2%
(+2.1%)
Percentage of sales in 2014
Digital
28.1%
Retail (USA)
Percentage of sales in 2015
Sales from e-commerce for US retailers, estimate based on a
sample by the Annual Retail Trade Survey.
Total sales 2015
$340.4bn
(2014: $298.7bn)
Services (USA)
E-commerce revenues for selected industries in the US.
Revenues are the Dollar value of transactions and contracts
between reporting firms and their customers.
Total sales 2015
$549.7bn
(2014: $511.8bn)
Digital
7.2%
(+0.8%)
Percentage of sales in 2014
Digital
6.4%
Percentage of sales in 2015
Digital
3.9%
(+0.1%)
Percentage of sales in 2014
Digital
3.8%
Non-digital
36.8%
Non-digital
38.6%
Non-digital
69.8%
Non-digital
71.9%
Non-digital
92.8%
Non-digital
93.6%
Non-digital
96.1%
Non-digital
96.2%
Actual Experience plc Annual Report 2017
11
StrAtegIc report
Our business model
Annuity revenue model
We provide Analytics-as-a-Service to our
Channel Partners. They pass this on to their
enterprise customers. This gives the enterprise
customers the actionable insight that they can
use to improve their customers’ digital journeys.
We sell our Channel Partners analytic capacity in our Analytics
Cloud. The greater the required capacity, the greater the fee.
Actual Experience revenue from a Channel Partner’s
multinational enterprise customer may be in excess of $500k
per annum, based on the analytic capacity required. Our
Channel Partners have hundreds of multinational customers
and thousands of small and medium-sized business customers.
Digital Users are licensed for free. This enables customers to
install them wherever they may need them. A fee is only
incurred when a Channel Partner chooses to analyse the
measurements made by the Digital User.
Full adoption of Actual Experience within a Channel Partner’s
customer is expected to take from 12 months to two years.
Full rollout of our Analytics-as-a-Service (AaaS) by a Channel
Partner amongst their customers is likely to take three to
five years.
We have developed unique IP that
allows us to deliver high value
propositions for our Channel Partners
and their customers
12
Actual Experience plc Annual Report 2017
KEY STRENGTHS
Intellectual property
Patents
We have patents granted in the US and China
and pending in Europe.
Trade secrets
It has taken the last eight and a half years,
since the creation of the Company, to make
the patented technology work effectively in
the real world.
Expertise
Within the R&D team we have particular
expertise in the field of mathematics,
and in Sales we have deep experience
in understanding the operation of
Channel Partners.
Process and platform
Our AaaS platform has been live since 2011,
with continual improvements being made.
The value proposition is now firmly
established amongst our Channel Partners.
Channel Partnerships
We are focused on developing relationships
with large Channel Partners, who have access
to an enormous number of business and
consumer customers.
First mover advantage
Although there are many vendors targeting
budgets for the improvement of digital
journeys, the Board remains convinced that
we are uniquely positioned amongst these
vendors because of our ability to analyse
complex digital supply chains.
IntroductIon
StrAtegIc report
governAnce
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AddItIonAl InformAtIon
GENERATING VALUE
WHO BENEFITS
AaaS
Our AaaS provides actionable information for our
Channel Partners to improve digital journeys that
exist in a highly complex digital supply chain made
up of numerous businesses and technologies.
Scalable operating model
We have invested considerable time and effort
working with our Channel Partners to be built into
their customer offerings. Over time, Channel
Partners will increasingly become able to scale
their rollout of our AaaS independently, and in
maturity they will require minimal support from
Actual Experience.
Vast market opportunity
Our AaaS improves the quality of the digital
journeys that make up the $25t global digital
economy. As the number of transactions that take
place digitally increases, the need for consistency
and quality to support the global digital economy
will only increase.
Channel Partners
Our AaaS improves the operational efficiency of
Channel Partners, reducing the cost of service
delivery and differentiating their offerings
in the market.
End users
Clients, their staff and customers
Business leaders are increasingly aware that the
productivity of their staff and the satisfaction of
their online customers relies heavily on the quality
of their digital journeys. With Actual Experience,
end users have actionable information to
continuously improve the quality of digital journeys.
Shareholders
Long-term capital growth
Actual Experience are building a platform that
can access the global digital economy at scale
through channel partnerships. Successful
execution with our existing channel partners will
lay the foundations for enormous growth
potential in the next ten years through our
existing and new channel partner relationships.
Employees
Actual Experience is dedicated to ensuring the
happiness and success of our employees.
Providing rewarding careers at the cutting edge
of technology, staff are encouraged to grow with
the business and are provided with regular
opportunities for personal development.
Actual Experience plc Annual Report 2017
13
StrAtegIc report
Chief Executive’s statement
“ We believe we are approaching an
inflection point for the business in
2018. This year should see more and
larger deployments as our Channel
Partners build towards large scale
global rollout.”
Dave Page
Chief Executive Officer
14
IntroductIon
StrAtegIc report
governAnce
fInAncIAl StAtementS
AddItIonAl InformAtIon
Introduction
2017 has seen the Company make continued
progress against its strategic objectives. At the
start of the financial year an agreement was
signed with Proquire, the procurement arm of
Accenture plc. This meant that four of the
world’s largest service providers were now
actively preparing to take our offering to their
customer bases, and the Board therefore took
the decision to focus all of the Company’s
resources and efforts during the year on taking
those partners through to production.
Following a successful fundraise in February
2017, we have been able to commit further
investment into each of our Channel Partners,
to truly understand their processes and
provide them with the support that they need
for deployment of our technology. It has been
a learning process, both for the Company and
each of its partners and through what we have
learnt we have been able to adapt, modify and
enhance our product.
The first production deployments have been
successfully made, on a small scale, and we
have come a long way towards larger scale
deployments which we expect to take place
in the fiscal year 2018.
It is pleasing to note that progress with our
most recently signed Channel Partner has
been faster and smoother than with previous
engagements. This underlines our belief that
the need for our Analytics-as-a-Service (AaaS)
is becoming evermore important in an
increasingly digital world, as well as reflecting
improvements in our product and
implementation processes.
We believe we are approaching an inflection
point for the business in 2018. We have been
readying our product and partners for
production since the initial signing of Master
Service Agreements (MSAs). This year should
see more and larger deployments as they build
towards large scale global rollout. To ensure the
success of these rollouts, we will remain focused
on our four Channel Partners. This focus will
enable us to achieve operational excellence
and ensure partner satisfaction.
We continue to maintain a small base of important
direct enterprise customers. Their feedback has
been, and continues to be, extremely useful in
helping to develop our product.
Market opportunity
In 2017 the global digital economy reached over
$25t, and the number of transactions that make
up this economy is growing year on year. As the
digital world becomes an increasingly important
utility for businesses, the need for quality and
consistency to support these valuable
transactions is only increasing.
The global digital economy is made up of an
increasing number of businesses, that in turn
are part of the global digital supply chain. As the
value of the global digital economy increases,
business leaders demand digital quality for
their staff and customers. While hundreds of
products exist that can manage the individual
components, we believe that our AaaS is the
only product that has been built from the
ground up to manage the entire global digital
supply chain, providing the insight required to
improve the quality and consistency of staff
and customer digital experiences.
Strategy overview
In 2017, we increasingly focused all of our
efforts on our four signed Channel Partners.
In turn, they are focusing their deployment of
Actual Experience into their largest enterprise
customers.
Our digital AaaS is being embedded into
the processes and products of our Channel
Partners, enabling them to deliver a consistent
and reliable digital experience across complex
global digital supply chains for their enterprise
customers, to the benefit of the customers and
employees of those enterprises.
Operational review
We have made considerable progress in the
year across our operations:
Organisational structure
Overall head count during the year increased
from 57 to 80, with the majority of investment
being in R&D and operational staff, reflecting
the Company’s focus on its existing Channel
Partners. Whilst overall numbers have
increased, the business has streamlined,
resulting in a more effective organisation
singularly focused on execution excellence
with our Channel Partners.
Product development
Through 2017 we have learnt, together with our
partners, how their processes and our product
can be simplified and improved to aid deployment
at global scale. For instance, in August, we were
pleased to announce that we had received an
open PO from one of our Channel Partners.
This PO reflected certain procurement process
improvements made, enabling us to more easily
fulfil orders from that partner. As with the open
PO, the other process and product developments
support our ability to deploy our product globally
at scale, and therefore to tap into our partners’
vast customer bases.
Channel Partner update
The progress that we have made within each
of our Channel Partners throughout the course
of the year has vindicated our strategic
decision to concentrate on them solely.
At the time of the Placing in February, the
Company was able to announce that it had
received the first order from a Channel Partner
to begin production rollout of a major customer.
Since then, further deployments have taken
place within further customers. The overall
demand from our Channel Partners is greater
than we had originally envisaged, with
the desire for faster and more widespread
deployment balanced by the operational need
to get it right first time, every time.
Current trading and outlook
In 2017, we have seen initial small scale
commercial deployments through our Channel
Partners and, working with them, have
implemented product and process
improvements. This was no small challenge
and has drawn heavily on the skills and
experience of our employees. As a result, we
believe we are now ready to do business with
our Channel Partners at the scale and speed
they require. We are confident that 2018 will
bring the first fruits of the hard work of
previous years, with significantly larger scale
deployments and accompanying revenue.
Dave Page
Chief Executive Officer
16 January 2018
Actual Experience plc Annual Report 2017
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StrAtegIc report
Our strategy
To continue to focus on our four
Channel Partners until we produce
channel revenue at scale.
FOCUSED
ON OUR KEY
CHANNEL
PARTNERS
Verizon is a global leader delivering
innovative communications and
technology solutions that improve the way
their customers live, work and play.
Vodafone is one of the world’s largest
telecommunications companies providing
a wide range of services including voice,
messaging and data across mobile and
fixed networks.
Accenture solves their clients’ toughest
challenges by providing unmatched
services in strategy, consulting, digital,
technology and operations.
A Forbes’ Top 100 global brand
A brand that provides professionals with
the intelligence, technology and human
expertise they need to find trusted answers.
16
Actual Experience plc Annual Report 2017
IntroductIon
StrAtegIc report
governAnce
fInAncIAl StAtementS
AddItIonAl InformAtIon
STRATEGIC ROADMAP
Singular focus on four publicly announced partners
Where we are today
04
03
Systemic
channel revenue
at scale
Global
expansion
beyond four
current Channel
Partners
02
Integrated
into Channel
Partner’s
hardware and
software
01
Large
customer
production
deployments
Work to get
partners in
production*
Small customer
production
deployments
Signing partner
framework
agreements
Product deployment to solve teething
problems and access scale
*POC, trial customer deployments,
process integration, sales training
01
Now that our Channel Partners are deploying customers at
small scale, we will continue to deliver process and product
improvements to help them deploy our technology inside
their customers more quickly and more easily in order to
increasingly access the full scale of opportunity within these
partner organisations. The first sign of success will be the
first large customer deployments taking place.
03
04
02
Focus will then shift to integrating our software with the
hardware and software of our partners in such a way that
when their products are deployed Actual Experience is
already inside. This will increase the scale and pace of
rollout of our analytics.
We will then focus on supporting our Channel Partners
with the speed and scale of rollout increasing.
When systemic channel revenue growth has been achieved,
we believe that we will have proved that we can take any
large organisation (such as our current partners) from initial
business development all the way to successfully and
efficiently deploying our technology among their customer
base at scale. We would then look to replicate this approach
across the industry, beyond the four focus Channel Partners
of today.
Actual Experience plc Annual Report 2017
17
StrAtegIc report
Financial review
“ The Group ended the year with
cash and term deposits totalling
over £18.2m.”
Steve Bennetts
Chief Financial Officer
18
Actual Experience plc Annual Report 2017
Revenue
Revenue recognised in the year ended 30 September 2017 was
£364,832 (2016: £716,346) and relates to the supply of analytical
services and associated consultancy activities to customers.
68% of revenue was derived from sales to channel customers
(2016: 60%) with the balance arising from direct sales. This
increased percentage reflects the Group’s strategic focus on
generating revenue growth from its Channel Partners.
Gross loss
As noted in the Chief Executive’s statement, the Group
continued to make significant investment during the year to
establish the infrastructure required to fully support its Channel
Partners, including a 24-hour support centre. The set-up costs
of this support infrastructure resulted in a gross loss for the year
of £935,852 (2016: loss of £238,466).
Expenses
Administrative expenses comprising R&D, operational support,
sales and marketing, finance and administration costs and
foreign exchange gains and losses totalled £6,976,814, an
increase of £1,170,515 compared to the prior year. This increase
reflects the continued investment made by the Group in
technology development and operational support infrastructure.
Personnel costs continue to be the largest expense and
represent approximately 68% of the Group’s cost base.
The functional cost breakdown is as follows:
2017
£
2016
£
Research and development
2,268,142
1,215,950
Operational support
925,777
476,912
Sales and marketing
2,635,094
3,320,447
Finance and administration
1,030,139
937,878
Foreign exchange losses/(gains)
117,662
(144,888)
Total
6,976,814
5,806,299
Tax
The tax credits recognised in the current and previous financial
year arose from the receipt of R&D tax credits.
Loss for the year
Losses after tax for the year ended 30 September 2017 totalled
£7,397,149 (2016: loss of £5,671,072). These losses are primarily
generated by employee costs and related expenses.
Loss per share
The loss per share for the year was 17.72p (2016: loss of 15.21p).
Earnings per share have been impacted by the increases in
operating costs.
Dividend
No dividend has been proposed for the year ended
30 September 2017 (2016: £nil).
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The Board will continue to review the KPIs
used to assess the business as it grows.
Environmental matters
As far as the Directors are aware, the Group’s
business does not cause an adverse impact on
the environment.
Human rights policy
Actual Experience has adopted a formal equal
opportunities policy which is contained in its
employee handbook. The aim of the policy is to
ensure that there is no discrimination against
any employee or job applicant either directly or
indirectly on the grounds of race, sex, disability,
sexual orientation, marriage or civil partnership,
pregnancy or maternity, religion or belief, or age.
Employees
As at 30 September 2017 the Group employed
80 people in three offices (2016: 57 people), of
which 56 were male and 24 were female. As at
the date of this document, of the six senior
members of management, one is female.
Directors
Details of the Directors who served during the
year ending 30 September 2017 are noted in
the Directors’ remuneration report. All seven of
the Directors serving on the Board at the year
end were male.
On behalf of the Board.
Steve Bennetts
Chief Financial Officer
16 January 2018
Cash flow
Actual Experience is investing in the growth of
its operations to address what it believes to be
a significant commercial opportunity and its
cash flow from operations was therefore
negative during the year ended 30 September
2017, in line with expectations. The Group’s
costs are mostly operating related, with very
little investment required for capital
infrastructure. Cash used by operating
activities was £7,086,016 for the year,
compared to cash used of £5,210,287 for the
year ended 30 September 2016. This operating
cash requirement was substantially funded
by cash reserves and the Group ended the
year with cash and term deposits totalling
£18,209,850 (2016: £9,415,886).
Software development capitalisation
The Directors believe that the software
development capitalisation criteria in IAS38
have been met and accordingly development
costs, net of amortisation charges, of
£1,266,261 have been capitalised as at
30 September 2017 (2016: £516,041).
Accounting policies
The Group’s financial statements have been
prepared in accordance with International
Financial Reporting Standards. The Group’s
significant accounting policies have been
applied consistently throughout the year and
are described on pages 40 to 45.
Principal risks and uncertainties
The principal risks and uncertainties facing the
Group are set out on pages 20 and 21.
Key performance indicators
As the Group is in the process of development
and commercialisation of its services, the
Directors consider the key quantitative
performance indicators to be sales revenues
of £364,832 (2016: £716,346) and the level of
cash and term deposits held in the business
of £18,209,850 (2016: £9,415,886). The Board
performs regular reviews of actual results
against budget, and management monitors
cash balances on a monthly basis to ensure
that the business has sufficient resources to
enact its current strategy. Certain non-financial
measures, such as the number of deployed
Digital Users, are monitored on a monthly basis.
Actual Experience plc Annual Report 2017
19
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Principal risks and uncertainties
Risk management framework
In common with all businesses, Actual Experience is exposed to risks and uncertainties as an inherent part of creating value for its shareholders.
The Board recognises that effective risk management is fundamental to the Group’s ability to meet its strategic objectives and it is the Board’s
responsibility to ensure that risk is appropriately managed across the Group. Following the formation of the Risk Committee and the establishment
of a comprehensive Risk Policy in the previous financial year, the current focus has been to continue this important initiative and ensure that
effective risk management activities are ingrained in all aspects of our business.
The Risk Committee is chaired by Non-executive Director Paul Spence and has functional representation from senior management, including the
CEO and CFO. The Risk Committee meet two or three times per year and report their findings to the Board.
The Risk Policy defines how and at what frequency risks shall be reviewed. The Executive Risk Committee meet on a monthly basis and
membership is made up of key operational managers. Each representative is responsible for the evaluation and implementation of risk mitigation
within their functional areas.
It is the responsibility of the Executive Risk Committee to maintain the master risk register. This register lists recognised risks and categorises them
into risk themes. Resource and mitigation priorities are assessed based on likelihood and impact of risk occurrence.
Risk governance overview
ACTUAL EXPERIENCE BOARD (RISK RELATED ACTIVITIES)
• Agrees risk governance framework
• Sets level of risk appetite
• Approves Risk Policy
BOARD RISK COMMITTEE
Terms of reference
• Reviews risk management framework and effectiveness
• Reviews key residual risk
• Recommends to Board appropriate levels of risk appetite
• Recommends changes to policy
EXECUTIVE RISK COMMITTEE
• Operational review and management of risk
• Allocation of risk to owners and agree risk assessment
•
Implementation of risk mitigation
• Funding and resource allocation
MASTER RISK REGISTER
Principal operational risks
The key challenges, risks and uncertainties facing the Group arise from the early stage of the Group’s maturity, the anticipated rapid growth in its
operations, and the constantly changing nature of associated technologies such as mobile telephony and cloud computing.
The Group’s financial risks are detailed in note 3 to the consolidated financial statements. The Board considers that the principal operational risks
to Actual Experience achieving its strategic operations are as follows:
20
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Description of risk
Mitigation of risk
Technology ownership, change and competition
Fundamental to the Group’s business is a combination of patents and
know-how. Our success will, in part, depend on our ability to maintain
adequate protection of this intellectual property and know-how.
Our revenue and profitability are affected by the extent to which there
is increasing requirement for, and development by our competitors of,
additional product features and capabilities. Significant investments
are made in new product development to address these requirements,
and there can be no guarantee that we will be able to generate
sufficient revenue to offset the associated development costs.
There are also risks relating to difficulties and delays in the
development process of new products and features, and their
acceptance by customers. If a future competitor successfully launches
new products or features, which we are unable to match, then we
could lose market share with a corresponding impact on our
operational results.
Managing rapid growth
The anticipated rapid growth of our business may place a significant
strain on our management, operational, and financial resources. If we
are unable to address this growth in a timely and profitable manner, as
a result of not being able to recruit skilled employees or effectively
scale our operations, this could have a material adverse impact on our
financial position.
Product protection and innovation
The Group retains the services of a leading patent attorney and ensures that all
reasonable steps are taken to protect its patented technology. In addition, enhanced
procedures have been introduced to ensure that critical know-how is identified and
recorded, with appropriate controls over access to these records.
We have an ongoing programme, both internal and with our commercial partners,
to constantly identify evolving customer needs and potential competitor advances.
The resulting feedback informs our new product development priorities and helps
to ensure that the Group maintains its technology leadership in the evolving digital
quality management sector. We focus our development efforts on features that
meet an identified market requirement and are likely to generate sufficient revenue
to fund their development. We have developed internal processes for prioritising
and reviewing our development projects.
Investing in operational excellence
The Board and management are continually reviewing and enhancing our internal
controls and processes. A critical objective of this analysis is to ensure that
capability to scale operations is a core consideration within each business function,
and that all functions interoperate efficiently as required to deliver and support our
services at scale.
Acceptance of the Group’s analytic services
and pricing model
The Group is at an early stage of development and its ultimate
success will depend on the acceptance of its analytic services and
pricing model by channel customers. Successful engagement with
large channel customers typically requires the completion of an
extensive on-boarding process and the timescales for this are both
lengthy and time consuming.
Developing improved customer engagement practices
Management has acquired considerable experience in partnering with large
channel customers and seeks to apply best practice learning to drive efficiencies
and improve its operational capabilities.
While prioritising sales efforts on channel development, the Group will continue
to maintain a number of direct customer engagements to ensure a thorough
understanding is maintained of both evolving digital quality management practices
in the enterprise sector and the pricing characteristics of this service.
Dependence on key executives and personnel and
recruitment and retention of new talent
The Group is dependent on its senior management and skilled
technical personnel. Whilst much of the Group’s know-how is
documented, senior managers and members of the technical team
each contribute valuable skills and know-how to the business and,
despite contractual confidentiality agreements in favour of the Group,
there can be no guarantee that those individuals will not join
competitors or establish themselves in competition with the Group in
the future.
Failure to retain the services of any of these people may adversely
affect the Group’s ability to achieve its commercial objectives.
In addition, the Group continues to expand rapidly. It is essential that
the Group is able to attract employees of a high calibre to drive its
future success.
Information security
The Group regards information within the business as a key asset and
recognises the risk and impact on the business of breaches
to the integrity of information relating to the business.
Strengthening of the human resources function
During the year the Group recruited an experienced HR Director, who is leading
new initiatives and enhancing existing processes with regard to recruitment
activities, employment practices and staff benefits.
The Group believes that share-based compensation is a critical element of its ability
to attract, retain, and motivate key talent and will continue to issue options in
accordance with its policy in this area. During the year the Group introduced a
defined contribution pension scheme, health insurance, life insurance and other
employee benefits, ensuring that the Group remains competitive with market
practice.
Investment will continue to be made in human resource systems and procedures
to ensure compliance with legislation and effective interactions with employees.
Effective protection of information security and data integrity
The Group has in place systems and processes for the classification and control of
access to information within a number of areas of the business, and the security
around access to Company information continues to be strengthened by the
enforcement of enhanced security processes and practices. The level of monitoring
performed of the production cloud infrastructure is reviewed regularly to identify
any areas that require improvement. The Company is vigilant to security
vulnerability announcements in the industry to ensure that any protective action is
taken as soon as practicable. Information integrity is protected by regular off-site
back-ups, and disaster recovery and business continuity plans are in place to
ensure robust sustainability of operations.
Actual Experience plc Annual Report 2017
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Board of Directors
STEPHEN DAVIDSON
Non-executive Chairman
DAVE PAGE
Chief Executive Officer
STEVE BENNETTS
Chief Financial Officer
ROBIN YOUNG
Chief Operating Officer
Appointed to Board:
February 2014
Appointed to Board:
February 2014
Appointed to Board:
February 2014
Appointed to Board:
September 2014
Independent:
Yes
Independent:
No
Independent:
No
Independent:
No
Stephen is currently Non-
executive Chairman of JSE
listed Datatec Limited,
Non-executive Director of
Informa plc and Non-executive
Director of Restore plc. In his
earlier career, Stephen was
CFO, then CEO, of Telewest
Communications plc and Vice
Chairman of investment banking
at WestLB Panmure.
Robin was appointed Chief
Operating Officer in October
2015, having previously joined
the Board as a Non-executive
Director in September 2014.
Robin has extensive CIO, COO,
technology and operations
experience, serving at blue-chip
public companies including
Mitchells & Butlers,
GlaxoSmithKline, Procter &
Gamble and Ford Motor
Company. He also brings
considerable City knowledge
and expertise having spent
almost a decade with HBOS
and Citigroup.
Dave has diverse commercial
and technical IT experience.
He has advised on multinational
corporate business systems,
with roles in enterprise,
outsourcing, software and
hardware companies. Dave was
the founding member of the
management team at Nexagent,
a venture funded software
business acquired by EDS in
2008. In 1998, Dave established
and led the Consulting team for
the $1bn European Service
Provider line of business at
Cisco. Before this, Dave worked
at IBM Global Services, BT
Global Services and NatWest
on numerous aspects of
corporate IT infrastructure.
Steve joined Actual Experience
in October 2013. He qualified as
a Chartered Accountant with
Ernst & Young and
subsequently has spent most of
his career in the technology
sector. Initially Steve worked as
EMEA Finance Director at
several NASDAQ-quoted
technology companies where
he gained valuable international
experience as well as leading
the accounting, HR, legal, and
administrative functions. This
period included leadership of
the team put in place to
establish Amazon’s European
operations, including managing
the early hyper-growth in the
UK and Germany. Subsequently
Steve has worked at VC funded
UK-based technology
companies; a highlight of this
period included the trade sale of
Content Technologies for
approximately $1bn.
B
B
B
B
22
Actual Experience plc Annual Report 2017
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SIR BRYAN CARSBERG
Non-executive Director
DR MARK REILLY
Non-executive Director
PAUL SPENCE
Non-executive Director
Appointed to Board:
July 2014
Appointed to Board:
February 2014
Appointed to Board:
February 2016
Independent:
Yes
Independent:
No
Independent:
Yes
The former Director General of
OFT and Oftel, Sir Bryan
Carsberg brings to the Board
vast experience of the
communications industry. He
was instrumental in introducing
competition regulation in the
telecoms industry, has held
Board positions with Cable &
Wireless Communications plc,
Inmarsat plc and RM plc, and in
2002 was Expert Adviser to the
Joint Parliamentary Committee
to undertake pre-legislative
scrutiny of the proposed new
Communications bill, now the
Communications Act, 2003.
Paul has spent much of his
career with Capgemini and its
predecessor companies, during
which time his roles included
deputy Group CEO and CEO of
Capgemini Global Outsourcing
Services. He has extensive
experience of the outsourcing
industry in both the public and
private sectors, as well as broad
international experience, having
lived in and been responsible
for, at various times, the North
American, Latin American,
Australian, Asian, and European
markets. Paul is a graduate of
the Wharton School at the
University of Pennsylvania and
is currently a Non-executive
Director of G4S.
Mark is Head of the Technology
division of IP Group plc, one of
the UK’s leading intellectual
property commercialisation
specialists and an investor in
Actual Experience. He has led
investments in, and played a key
role in the growth of, numerous
innovative high-tech companies
such as Ultrahaptics Ltd and
Mirriad Ltd. He has overseen
successful IP Group exits such
as mobile software company
Overlay Media and AIM-listed
Tracsis plc. Prior to joining IP
Group, Mark was the founder
and Managing Director of
Remarkable Innovation, a
Singapore-based technical due
diligence company. He spent his
early career in the ICT sector,
working with a range of
organisations from blue-chip
multinationals and NGOs to
early stage start-ups. Mark
holds a PhD in Engineering from
the University of Cambridge.
B
B
B
Committee membership
B
Executive Board
Remuneration
Nomination
Audit
Risk
Denotes Chairman
Independence
n Independent
n Not independent
3
4
Actual Experience plc Annual Report 2017
23
governAnce
Directors’ report
The Directors present their report and audited consolidated financial
statements of the Group and of the Company for the year ended
30 September 2017. These will be laid before the shareholders of the
Company at the next Annual General Meeting (AGM).
General information and principal activities
Actual Experience plc is listed on the AIM market of the London Stock
Exchange (LSE:ACT). The Company is domiciled in the United Kingdom,
incorporated in England and Wales, registration number 06838738, and the
address of its registered office is Quay House, The Ambury, Bath BA1 1UA.
The principal activity of the Group is the provision of digital experience
quality analytics.
Results and dividends
The results of the Group for the year ended 30 September 2017 are set out
in the Consolidated statement of comprehensive income on page 36.
The Directors do not propose payment of a dividend for the year ended
30 September 2017 (2016: nil).
Review of the year
A summary of the Group’s progress and development is set out in
the Chairman’s statement, the Chief Executive’s statement, and the
Financial review, which form part of the Strategic report on pages 8 to
21. This analysis includes comments on the position of the Group at the
end of the financial year, an indication of likely future developments in
the business of the Group and details of the Group’s activities in the field
of research and development.
Directors
The Directors of the Company who served during the year and up to the
date of approval of the financial statement are as follows:
• Stephen Davidson (Non-executive Chairman)
• Dave Page (Chief Executive Officer)
• Steve Bennetts (Chief Financial Officer and Company Secretary)
• Robin Young (Chief Operational Officer)
• Sir Bryan Carsberg (Non-executive Director)
• Dr Mark Reilly (Non-executive Director)
• Paul Spence (Non-executive Director)
Short biographies of each Director are provided on pages 22 and 23.
Substantial holdings
As at 31 December 2017, shareholders holding more than 3% of the
share capital of Actual Experience plc were as follows:
Name of shareholder
IP Group plc
Lombard Odier
M&G
Mr Michael Edge
Queen Mary University of London
Mr Dave Page
Professor Jonathan Pitts
Ruffer
Allianz
Number of
shares
% of voting
rights
9,928,384
6,870,974
6,615,674
3,195,000
2,610,000
1,932,368
1,879,750
1,877,677
1,709,594
22.15%
15.33%
14.76%
7.13%
5.82%
4.31%
4.19%
4.19%
3.81%
Save as referred to above, the Directors are not aware of any persons
as at 31 December 2017 who were interested in three per cent or more
of the voting rights of the Company or could directly or indirectly, jointly
or severally, exercise control over the Company.
Financial risk management objectives and policies
The Group’s financial risk management objectives and policies are shown
in note 3 to the consolidated financial statements. The main risks arising
from the Group’s financial instruments are interest rate risk, exchange rate
risk, credit risk, and liquidity risk, which are continuously monitored by the
Board. The Group extends credit only to recognised creditworthy third
parties, and trade receivable balances are monitored to minimise the
Group’s exposure to bad debts. Details of the Group’s trade receivables
are shown in note 12 to the consolidated financial statements.
Employment policies
The Group is committed to providing equality of opportunity to all
existing and prospective employees without unlawful or unfair
discrimination. Full support is given to the employment and
advancement of disabled persons.
Annual General Meeting
The AGM will be held at 11am on 28 February 2018 at the London office
of Osborne Clarke. On page 62 is the Notice of the AGM, which gives
details of the resolutions to be proposed to shareholders.
Directors’ interests and indemnity arrangements
Directors’ interests in the shares of the Company, including family
interests, are disclosed in the Directors’ remuneration report on pages
30 and 31.
Independent auditors
The independent auditors, PricewaterhouseCoopers LLP, have indicated
their willingness to continue in office and a resolution that they be
reappointed will be proposed at the AGM.
As permitted by the Articles of Association, in accordance with Section
234 of the Companies Act 2006, the Group has maintained insurance
throughout the year for its Directors and officers against the
consequences of actions brought against them in relation to their duties
for the Company. No Director had, during or at the end of the year, a
material interest in any contract which was significant in relation to the
Group’s business except in respect of service agreements and share
options and as disclosed in the Directors’ remuneration report. The Group
has granted no indemnities to any of its Directors against liability in
respect of proceedings brought by third parties.
Share capital
Details of the Group’s issued share capital are shown in note 17 to the
consolidated financial statements.
The share capital comprises one class of ordinary shares and these are
listed on AIM. As at 31 December 2017 there were in issue 44,816,213
fully paid ordinary shares. All shares are freely transferable and rank pari
passu for voting and dividend rights.
24
Actual Experience plc Annual Report 2017
Statement of disclosure of information to the auditors
Each of the persons who are Directors of the Company at the date when
this report was approved has confirmed that:
• so far as the Director is aware, there is no relevant audit information
of which the Company and the Group’s auditors are unaware, and
the Director has taken all the steps that ought to have been taken as
a Director in order to be aware of any relevant audit information and
to establish that the Company and Group’s auditors are aware of that
information.
•
The Strategic report and Directors’ report were approved and signed by
order of the Board.
Steve Bennetts
Chief Financial Officer and Company Secretary
16 January 2018
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Directors’ responsibilities statement
The Directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and regulation.
The Directors are also responsible for safeguarding the assets of the
Group and Company and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
Company law requires the Directors to prepare financial statements for
each financial year. Under that law the Directors have prepared the
Group financial statements in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the European Union and
company financial statements in accordance with International Financial
Reporting Standards (IFRSs) as adopted by the European Union. Under
company law the Directors must not approve the financial statements
unless they are satisfied that they give a true and fair view of the state of
affairs of the Group and Company and of the profit or loss of the Group
and Company for the period. In preparing the financial statements, the
Directors are required to:
• select suitable accounting policies and then apply them consistently;
• state whether applicable IFRSs as adopted by the European Union
have been followed for the Group financial statements and IFRSs as
adopted by the European Union have been followed for the Company
financial statements, subject to any material departures disclosed
and explained in the financial statements;
• make judgements and accounting estimates that are reasonable and
•
prudent; and
• prepare the financial statements on the going concern basis unless it
is inappropriate to presume that the Group and Company will
continue in business.
•
The Directors are responsible for keeping adequate accounting records
that are sufficient to show and explain the Group and Company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the Group and Company and enable them to ensure
that the financial statements comply with the Companies Act 2006 and,
as regards the Group financial statements, Article 4 of the IAS Regulation.
The Directors are responsible for the maintenance and integrity of the
Company’s website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ from
legislation in other jurisdictions.
The Directors consider that the annual report and accounts, taken
as a whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Group and
Company’s performance, business model and strategy.
Each of the Directors, whose names and functions are listed in
Directors’ report confirm that, to the best of their knowledge:
•
the Company financial statements, which have been prepared in
accordance with IFRSs as adopted by the European Union, give a
true and fair view of the assets, liabilities, financial position and loss
of the Company;
the Group financial statements, which have been prepared in
accordance with IFRSs as adopted by the European Union, give a
true and fair view of the assets, liabilities, financial position and loss
of the Group; and
the Directors’ report includes a fair review of the development and
performance of the business and the position of the Group and
Company, together with a description of the principal risks and
uncertainties that it faces.
Actual Experience plc Annual Report 2017
25
governAnce
Corporate governance report
On behalf of the Board I am pleased to present the
Actual Experience plc Corporate governance report
for the year ended 30 September 2017.
In this report we provide an overview of our corporate governance
policies. We highlight the roles and responsibilities of the Board, its
members and Committees and outline the Group’s management
structure and controls.
The Directors recognise the importance of sound corporate
governance and remain committed to delivering the long-term
success of the Group through an effective framework of leadership,
management and controls.
Stephen Davidson
Chairman
16 January 2018
26
Actual Experience plc Annual Report 2017
Actual Experience is an AIM-quoted Company and, accordingly,
compliance with the UK Corporate Governance Code (the Code) is not
mandatory. However, the Group remains committed to high standards of
corporate governance and seeks to comply with the Code to the extent
appropriate in its circumstances.
The report set out below describes how the Company applies certain
principles identified in the Code. In addition, the Company seeks to
follow the recommendations of the Quoted Companies Alliance in
relation to the corporate governance of companies on AIM.
Board composition
Actual Experience is led by a strong and effective Board of Directors.
The Board structure is comprised of the following individuals:
Executive:
Dave Page
Chief Executive Officer
Steve Bennetts
Chief Financial Officer
Robin Young
Chief Operating Officer
Non-executive:
Stephen Davidson
Chairman
Sir Bryan Carsberg
Dr Mark Reilly
Paul Spence
The Board considers that it contains a range of skills, experience and
knowledge that is appropriate for the business. Furthermore, the Board
members are of sufficient calibre to bring independent judgement of
issues of strategy, performance, resources, and standards of conduct,
which are vital to the success of the Group. The Board believes that it
operates in an open and constructive manner and works effectively.
Brief biographies of the Directors, together with their membership of
Board Committees, are set out on pages 22 and 23.
Independence of Non-executive Directors
The Board considers many criteria in assessing the independence of
the Non-executive Directors including the criteria recommended by
the Quoted Companies Alliance. The Non-executive Chairman and
the Non-executive Directors are all considered by the Board to be
independent of management and free of any relationship which could
materially interfere with the exercise of their independent judgement,
subject to the following: Dr Mark Reilly is an employee of the Company’s
largest shareholder, IP Group.
Board operation
The Board met five times during the year ended 30 September 2017
to monitor trading performance, review budgets and strategy, oversee
shareholder reporting, and to receive and consider reports from Board
Committees. In addition, ad hoc meetings were convened to deal with
procedural matters. Attendance at the scheduled Board meetings
during the year was as follows:
Number of scheduled meetings
Stephen Davidson (Chairman)
Sir Bryan Carsberg
Dr Mark Reilly
Paul Spence
Dave Page
Steve Bennetts
Robin Young
5
5
5
5
5
5
5
5
In addition to the formal scheduled meetings the Board held informal
discussions with Executive Directors and senior operational managers
on strategic business development and other topics important to the
Group’s progress throughout the year.
The Chairman provides leadership to the Board. He is responsible for
setting the agenda for Board meetings, ensuring that the Directors
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receive on a timely basis the information that they need to participate in
Board meetings, and that the Board has sufficient time to discuss issues
on the agenda, especially those relating to strategy and governance.
The Chairman is available to shareholders to discuss strategy and
governance issues, and any views arising from this route are also
communicated to the Board as a whole.
understanding that they will at all times act in accordance with the best
interests of the Group, its shareholders and employees, and that their
actions will be consistent with the Group’s financial and strategic plans
and objectives and in conformity with relevant legislation and best
practice and that they will report regularly to the Board on the execution
of these responsibilities.
The Chief Executive Officer is responsible for leadership of the Actual
Experience management team and its employees on a day-to-day basis. In
conjunction with senior management he is responsible for the execution of
strategy approved by the Board and the implementation of Board decisions.
The Board is collectively responsible for the long-term success of Actual
Experience. Its principal role is to provide leadership for the Group
within a framework of prudent and effective controls, which enables risk
to be assessed and managed. The Board considers the management
team’s strategic proposals and, following a rigorous review, determines
the Group’s strategy and ensures that the necessary resources are in
place for the management team to execute that strategy.
Conflicts of interest
To address the provisions of Section 175 of the Companies Act 2006
relating to conflicts of interest, the Company’s Articles of Association
allow the Board to authorise situations in which a Director has, or may
have, a conflict of interest. Directors are required to give notice of any
potential situation or transactional conflict that is to be considered at
the next Board meeting and, if considered appropriate, conflicts are
authorised. Directors are not permitted to participate in such
considerations or to vote regarding their own conflicts.
The Board has received no notice from Directors of potential or actual
conflicts of interest.
The Board has a schedule of matters reserved for its approval which
includes strategy, acquisition and disposal of subsidiaries and
intellectual property, annual budgets and progress to the achievement
of these budgets, reviews of any significant risks facing the Group,
receiving reports on the views of Company shareholders, consideration
of major capital projects, and significant financing matters.
Reappointment of Directors
The Company’s Articles of Association require that at each Annual
General Meeting (the AGM) one-third of Directors shall retire and seek
reappointment by shareholders. Additionally, any new Director
appointed by the Board is required by the Articles to retire at the next
AGM and to seek appointment by shareholders.
The Board has delegated all authorities other than those contained in
the schedule of matters reserved to the Executive Directors on the
Insurance
The Board has in place Directors’ and Officers’ liability insurance.
Board Committees
The Board has delegated certain powers and duties to the Board Committees, all of which operate within clearly defined terms of reference and
in accordance with the Code, where applicable. The Code recommends that all the members of the Remuneration and the Audit Committee are
independent Non-executive Directors; while keeping this recommendation in mind, the Board considered it desirable for Dr Reilly to be Chairman
of the Remuneration Committee and a member of the Audit Committee, even though he was not fully independent. As allowed by the Code, the
Chairman is a member of, but not Chairman of, the Remuneration Committee.
The workload of the Committees is greater than the scheduled meetings would indicate as ad hoc meetings and communications between
meetings are frequently required.
BOARD COMMITTEES
Audit Committee
The Audit Committee determines
and examines matters relating to the
financial affairs of Actual Experience
including the terms of engagement
of the Company’s auditors and, in
consultation with the auditors, the
scope of the audit. It receives and
reviews reports from management
and the Company’s auditors relating
to the half yearly and annual financial
statements and the accounting and
the internal control systems in use
throughout the Company.
Remuneration Committee
The Remuneration Committee
reviews and makes recommendations
in respect of the Directors’
remuneration and benefits packages,
including share options and the
terms of their appointment. The
Remuneration Committee also makes
recommendations to the Board
concerning the allocation of share
options to employees under the Share
Option Scheme.
Nominations Committee
The Nominations Committee monitors
the size and composition of the Board
and the other Board Committees, is
responsible for identifying suitable
candidates for Board membership
and monitors the performance and
suitability of the current Board on an
ongoing basis.
Risk Committee
The Risk Committee determines
the overall process to identify,
manage and control risk within
Actual Experience. It is responsible
for developing the Risk Policy and
approving any subsequent changes
to its content. The Risk Committee
receives reports from management
on the residual risks within Actual
Experience and determines the
appropriate level of risk appetite for
the Company.
Chairman:
Sir Bryan Carsberg
Members:
Dr Mark Reilly
Paul Spence
Chairman:
Dr Mark Reilly
Members:
Stephen Davidson
Sir Bryan Carsberg
Chairman:
Stephen Davidson
Members:
Dave Page
Dr Mark Reilly
Paul Spence
Chairman:
Paul Spence
Members:
Steve Bennetts
Dave Page
Robin Young
Actual Experience plc Annual Report 2017
27
governAnce
Corporate governance report continued
Audit Committee
The Audit Committee meets at least twice a year and reports to the
Board its conclusions and recommendations on matters related to the
interim and annual financial statements and the effectiveness of internal
controls and risk management. It discusses with management on an
ongoing basis the reporting of operational results and the financial
condition of the Group and presents its findings to the Board.
Nominations Committee
The Nominations Committee meets as and when required, with its
primary functions being to provide a formal and transparent procedure
for the appointment of new Directors to the Board and to discuss issues
relating to Board and Committee composition and balance as well as
succession planning.
Details of the membership and attendance at Audit Committee
meetings during the year are shown below:
Number of scheduled meetings
Sir Bryan Carsberg (Chairman)
Dr Mark Reilly
Paul Spence
Dave Page1
Steve Bennetts1
1 By invitation
3
3
3
3
3
3
The Board considers that the members of the Committee have sufficient
competence to understand, analyse and when necessary challenge the
management accounts and public financial statements.
The Nominations Committee comprises Stephen Davidson, who is
Chairman, Dr Mark Reilly, Paul Spence, and Dave Page.
Internal control and risk management
The Board is responsible for maintaining a sound system of internal
financial and operational control and the ongoing review of their
effectiveness. The Board’s measures are designed to manage, not
eliminate, risk and such a system provides reasonable but not absolute
assurance against material misstatement or loss. Whilst the Company,
as a small AIM-listed company, is not required to comply with the full
provisions of the Internal Control Guidance for Directors on the
Combined Code (The Turnbull Report), the Board considers that the
internal controls do meet many of those requirements and are adequate
given the size of the Company.
Some key features of the internal control system are:
Executive Directors and a representative of the auditors are normally
invited to attend meetings of the Committee. The auditors also have
unrestricted access to the Chairman of the Audit Committee.
i. Management accounts information, budgets, forecasts and business
risk issues are regularly reviewed by the Board.
ii. The Company has operational, accounting and employment policies
in place.
In addition, the Committee has reviewed the necessity for the
establishment of an internal audit function but considers that, given the
present size and complexity of the Group and the close involvement of
the Executive Directors in the operational management of the business,
there is currently no requirement for this function.
iii. The Board actively identifies and evaluates the risks inherent in the
business and ensures that appropriate controls and procedures are
in place to manage these risks.
iv. There is a clearly defined organisational structure.
v. There are well-established financial reporting and control systems.
Remuneration Committee
The composition and activities of the Remuneration Committee are as
described in the Directors’ remuneration report on pages 30 and 31.
Risk Committee
The Risk Committee meets two to three times a year and advises the
Board on the Group’s overall risk appetite, develops the Group’s risk
management strategy, advises the Audit Committee and the Board on
risk exposures, reviews the level of risk within the Group and assesses
the effectiveness of the Group’s risk management systems.
Details of the membership and attendance at Risk Committee meetings
during the year are shown below:
Number of scheduled meetings
Paul Spence (Chairman)
Dave Page
Steve Bennetts
Robin Young
2
2
2
2
2
Senior managers are normally invited to attend meetings of the Committee.
Further information on the Group’s management of Risk may be found
on pages 20 and 21.
Communication with shareholders and the AGM
The Board recognises that it is accountable to shareholders for the
performance and activities of the Group and attaches considerable
importance to maintaining regular dialogue and meetings with
shareholders.
Apart from the AGM, the Group communicates with its shareholders
by way of the Annual Report and financial statements and via the
Company’s website (www.actual-experience.com) which is kept
updated with preliminary and interim results, and announcements to
the Stock Exchange.
The AGM offers a valuable opportunity to shareholders to meet and
communicate with the Board. At the meeting the Board gives a business
presentation which is followed by a question and answer session,
offering shareholders an opportunity to question the Board on any
matters affecting the Group’s performance. The Chairmen of the Audit,
Remuneration, Risk, and Nominations Committees are available at the
AGM to answer questions. Details of the resolutions to be proposed
at the AGM can be found in the Notice of Annual General Meeting on
page 62. This Notice of Annual General Meeting has been circulated
to shareholders and is on the Company’s website.
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Whistleblowing policy
The Board has adopted a whistleblowing policy. The aim of the policy is
to encourage all employees regardless of seniority to bring matters which
cause them concern to the attention of the Non-executive Directors.
Going concern
The Board is required to assess whether the Group has adequate
resources to continue operations for the foreseeable future. After
making enquiries, the Directors have a reasonable expectation that the
Company and the Group will continue in operational existence for the
foreseeable future (being a period of at least 12 months from the date of
this report). For this reason, they continue to adopt the going concern
basis for preparing the financial statements.
Approved by the Board of Directors and signed on its behalf.
Steve Bennetts
Chief Financial Officer
16 January 2018
Actual Experience plc Annual Report 2017
29
governAnce
Directors’ remuneration report
Remuneration Committee
The responsibilities of the Committee are to advise upon and make
recommendations to the Board on the Group’s remuneration policies
and, within the framework established by the Board, to recommend the
remuneration of the Executive Directors. The CEO and CFO are invited
to attend meetings to discuss remuneration packages and bonus
schemes for senior executives within the Group, as well as the awarding
of share options to such persons under any share scheme adopted
by the Group.
Dr Mark Reilly chairs the Committee and Stephen Davidson and Sir
Bryan Carsberg served on the Committee during the year. Attendance
at the scheduled Committee meetings during the year was as follows:
Number of scheduled meetings
Dr Mark Reilly (Chairman)
Stephen Davidson
Sir Bryan Carsberg
Dave Page1
Steve Bennetts1
1 By invitation
2
2
2
2
2
2
The Remuneration Committee will assess the performance of the
Executive Directors and other senior managers in the context of
recommending their annual remuneration, bonus awards, and share
option grants to the Board for final determination. The remuneration of
the Non-executive Directors is recommended by the Executive Directors
and takes account of the time spent on Board and Committee matters.
The Board will make the final determination although no Director will
participate in any discussion about his own remuneration.
An important objective of the Committee is to ensure that a competitive
and appropriate base salary is paid to Directors and senior managers,
together with incentive arrangements that are:
• aligned with shareholders’ interests and with long-term business
strategies;
• measured against challenging and well-defined financial targets
•
(which are set in advance); and
transparent and without ‘soft’ non-financial targets which could
otherwise allow undue discretion to award bonuses that do not
reflect actual financial performance.
Remuneration policy
It is the Group’s policy that Executive Directors should have contracts
with an indefinite term providing for a maximum of six months’ notice.
In the event of early termination, the Directors’ contracts provide for
compensation up to a maximum of basic salary for the notice period.
The main elements of the remuneration package for Executive Directors
and senior management are:
Base annual salary
The base salary is reviewed annually by the Remuneration Committee
and any change in salary is applied from the beginning of each calendar
year. In determining the base annual salary the Remuneration
Committee takes into account several factors, including the current
position and development of the Group, individual contribution, and
market salaries for comparable organisations.
Discretionary annual bonus arrangements
All Executive Directors and senior managers are eligible for a
discretionary annual bonus which is paid in accordance with a bonus
scheme developed by the Remuneration Committee. This takes into
account performance against defined personal objectives and the
financial performance of the Group.
Share incentive schemes
The Group operates share option plans, under which certain Directors
and senior management have been granted options to subscribe for
ordinary shares. All options are equity settled. The options are subject
to service conditions, have an exercise price of between 9.09 pence and
302.50 pence and the vesting period is up to four years. If the options
remain unexercised after a period of ten years from the date of grant,
the options expire. The Group has no legal or constructive obligation to
repurchase or settle the options in cash.
Remuneration policy for Non-executive Directors
Non-executive Directors are employed on letters of appointment which
have an initial fixed term of three years and which may be terminated at
any time by either party with three months’ notice.
Remuneration for Non-executive Directors is set by the Chairman and
the Executive members of the Board. Non-executive Directors do not
participate in bonus schemes. Stephen Davidson, Sir Bryan Carsberg
and Paul Spence have each been awarded share options, as shown on
the next page.
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Directors’ remuneration (audited)
The remuneration of the Board Directors of Actual Experience plc during the year ended 30 September 2017 was:
Stephen Davidson1
Dave Page
Steve Bennetts1
Robin Young1
Sir Bryan Carsberg1
Dr Mark Reilly
Paul Spence1
Total
Salary
and
fees
£
Employer
pension
contributions
£
Healthcare
£
Bonus
£
Total
Year ended
30 September
2017
£
Total
Year ended
30 September
2016
£
50,000
150,000
125,000
150,000
25,000
25,000
25,000
550,000
–
1,000
1,733
–
–
–
–
2,733
–
158
273
169
–
–
–
600
–
–
–
–
–
–
–
–
50,000
151,158
127,006
150,169
25,000
25,000
25,000
553,333
50,000
145,000
115,000
112,500
25,000
25,000
16,667
489,167
1 In addition, certain Directors hold share option scheme interests in the Group. Fair value share-based payment charges recognised in the Consolidated income statement
and other comprehensive income attributable to these Directors are: Stephen Davidson £1,841 (2016: £5,159), Steve Bennetts £1,176 (2016: £2,756), Robin Young £12,519
(2016: £25,943), Sir Bryan Carsberg £1,841 (2016: £2,756), and Paul Spence £21,351 (2016: £19,284).
Directors’ shareholdings (audited)
The interests of the Directors holding office at 30 September 2017 in the shares of the Company, including family interests, were:
Stephen Davidson
Dave Page
Steve Bennetts
Robin Young
Sir Bryan Carsberg
Dr Mark Reilly
Paul Spence
Ordinary shares of 0.2p each
2017
Number
20,000
1,932,368
175,500
7,200
–
65,500
–
2017
%
0.04
4.31
0.39
0.01
–
0.14
–
Directors’ interests in share options (audited)
Directors’ interests in share options, granted under either the Actual Experience plc Enterprise Management Incentive Share Option Scheme or the
Actual Experience plc Unapproved Share Option Scheme, to acquire ordinary shares of 0.2 pence each in the Company at 30 September 2017 were:
Steve Bennetts
Steve Bennetts
Stephen Davidson
Robin Young
Robin Young
Sir Bryan Carsberg
Paul Spence
At 1 October
2016
Granted during
year
At 30 September
2017
Exercise price
Vesting dates
227,250
22,500
70,000
70,000
30,000
70,000
70,000
–
–
–
–
–
–
–
227,250
22,500
70,000
70,000
30,000
70,000
70,000
14.25 pence
54.50 pence
186.50 pence
207.50 pence
262.50 pence
186.50 pence
277.50 pence
2014 - 2017
2014 - 2017
2015 - 2017
2016 - 2018
2016 - 2019
2015 - 2017
2016 - 2018
Share options are subject to employment conditions and vest in equal annual instalments over the vesting period.
Other transactions that occurred with Directors during the year are detailed in note 21 to the financial statements under Related party transactions.
Dr Mark Reilly
Chairman of the Remuneration Committee
16 January 2018
Actual Experience plc Annual Report 2017
31
fInAncIAl StAtementS
Independent auditors’ report to the members
of Actual Experience plc
Report on the audit of the financial statements
Opinion
In our opinion, Actual Experience plc’s Group financial statements and Company financial statements (the “financial statements”):
• give a true and fair view of the state of the Group’s and of the Company’s affairs as at 30 September 2017 and of the Group’s loss and the Group’s
and the Company’s cash flows for the year then ended;
• have been properly prepared in accordance with IFRSs as adopted by the European Union and, as regards the Company’s financial statements,
as applied in accordance with the provisions of the Companies Act 2006; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements, included within the Annual Report, which comprise: the consolidated and Company statements of
financial position as at 30 September 2017; the consolidated statement of comprehensive income, the consolidated and Company statements of
cash flows, and the consolidated and Company statements of changes in equity for the year then ended; and the notes to the financial statements,
which include a description of the significant accounting policies.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our responsibilities under
ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of our report. We believe that the
audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the
UK, which includes the FRC’s Ethical Standard, as applicable to listed entities, and we have fulfilled our other ethical responsibilities in accordance
with these requirements.
Our audit approach
Overview
Materiality
Audit scope
Key audit
matters
• Overall Group materiality: £370,000 (2016: £295,000), based on 5% of loss before tax.
• Overall Company materiality: £370,000 (2016: £295,000), based on 5% of loss before tax.
• The audit has scoped in all operations in both Actual Experience plc and Actual Experience Inc.
• Overall coverage is therefore 100% of Group operations.
• Actual Experience Inc. represents approximately 17% of loss before tax adjusted for intercompany revenue transactions.
• All work is performed by the Group auditor.
•
Internally generated intangible assets do not qualify for recognition and that costs previously capitalised may not be
recoverable (Group and parent).
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular,
we looked at where the Directors made subjective judgements, for example in respect of significant accounting estimates that involved making
assumptions and considering future events that are inherently uncertain. As in all of our audits we also addressed the risk of management override
of internal controls, including evaluating whether there was evidence of bias by the Directors that represented a risk of material misstatement
due to fraud.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of the financial statements
of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) identified by the
auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit; and directing the efforts
of the engagement team. These matters, and any comments we make on the results of our procedures thereon, were addressed in the context of
our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
This is not a complete list of all risks identified by our audit.
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Key audit matter
How our audit addressed the key audit matter
Internally generated intangible assets do not qualify for recognition
and that costs previously capitalised may not be recoverable
Actual Experience plc
Group and parent Company
In reference to the recognition of intangible assets, we have challenged
management’s assessments against the criteria as set out in IAS 38. This
included the interview of appropriate members of management, testing of
capitalised costs and the assessment of future economic benefit forecasts.
We note that in reference to the generation of economic benefit under IAS
38 that revenue levels are modest as the Company continues to mature.
We have challenged management’s judgement that no impairment is
required in relation to capitalised assets and believe that management
has demonstrated a market for the assets through signed framework
agreements and further pipeline opportunities. We note, however, that
this assessment is based on the future anticipated conversion of these
agreements and opportunities into revenue generation.
As a result of our work we determined that the judgement of management
in regards to the capitalisation of ongoing projects is reasonable.
Furthermore, we have determined that management’s assessment that
no impairment is required in respect to previously capitalised projects is
reasonable. We note, however, that intangible assets remain sensitive to
future revenue growth.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole,
taking into account the structure of the Group and the Company, the accounting processes and controls, and the industry in which they operate.
Actual Experience plc is structured with one reporting component, Actual Experience Inc., reporting into the parent operations in the UK as
Actual Experience plc.
Actual Experience Inc. does not require a local statutory audit and therefore is scoped in as a significant component for the purposes of supporting
the overall Group audit as it represents a significant portion of loss before tax adjusted for intercompany revenue transactions.
Due to the availability of centralised financial information and accounting function, the component audit of Actual Experience Inc. is performed by
the Group engagement team.
As outlined, Actual Experience Inc. represents a significant portion of loss before tax adjusted for intercompany revenue transactions. All revenue
transactions are intercompany and therefore Actual Experience Inc. does not contribute towards external revenue of the Group.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with
qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual
financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial
statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group financial statements
Overall materiality
£370,000 (2016: £295,000).
How we determined it
5% of loss before tax.
Company financial statements
£370,000 (2016: £295,000).
5% of loss before tax.
Rationale for benchmark
applied
Based on the benchmarks used in the annual report,
loss before tax is the primary measure used by the
shareholders in assessing the performance of the Group,
and is a generally accepted auditing benchmark.
We believe that loss before tax is the primary measure
used by the shareholders in assessing the performance of
the entity, and is a generally accepted auditing benchmark.
For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group materiality. The range of
materiality allocated across components was between £125,000 and £370,000.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £20,650 (Group audit)
(2016: £14,750) and £20,650 (Company audit) (2016: £14,750) as well as misstatements below those amounts that, in our view, warranted reporting
for qualitative reasons.
Actual Experience plc Annual Report 2017
33
fInAncIAl StAtementS
Independent auditors’ report to the members
of Actual Experience plc continued
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which ISAs (UK) require us to report to you when:
•
•
the Directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
the Directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about
the Group’s and Company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from
the date when the financial statements are authorised for issue.
However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the Group’s and Company’s ability to
continue as a going concern.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report thereon.
The Directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and,
accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the
other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be
materially misstated. If we identify an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude
whether there is a material misstatement of the financial statements or a material misstatement of the other information. If, based on the work we
have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing
to report based on these responsibilities.
With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by the UK Companies Act 2006
have been included.
Based on the responsibilities described above and our work undertaken in the course of the audit, ISAs (UK) require us also to report certain
opinions and matters as described below.
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and Directors’ Report for the
year ended 30 September 2017 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements.
In light of the knowledge and understanding of the Group and Company and their environment obtained in the course of the audit, we did not
identify any material misstatements in the Strategic Report and Directors’ Report.
Responsibilities for the financial statements and the audit
Responsibilities of the Directors for the financial statements
As explained more fully in the Directors’ responsibilities statement set out on page 25, the Directors are responsible for the preparation of the
financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The Directors are also
responsible for such internal control as they determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Company’s ability to continue as a going
concern, disclosing as applicable matters related to going concern and using the going concern basis of accounting unless the Directors either
intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether
due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance with Chapter 3 of Part 16
of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or
to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
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Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit; or
• adequate accounting records have not been kept by the company, or returns adequate for our audit have not been received from branches not
visited by us; or
• certain disclosures of directors’ remuneration specified by law are not made; or
•
the company financial statements are not in agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Colin Bates (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
Bristol
16 January 2018
Actual Experience plc Annual Report 2017
35
fInAncIAl StAtementS
Consolidated statement of comprehensive income
for the year ended 30 September 2017
REVENUE
Cost of sales
GROSS LOSS
Administrative expenses
OPERATING LOSS
Finance income
LOSS BEFORE TAX
Tax
LOSS FOR THE YEAR
Other comprehensive income/(expense):
Items that may be reclassified to profit or loss:
Foreign currency difference on translation of overseas operations
TOTAL COMPREHENSIVE LOSS FOR THE YEAR
LOSS PER ORDINARY SHARE
Basic and diluted
Note
2017
£
2016
£
4
5
7
8
364,832
(1,300,684)
716,346
(954,812)
(935,852)
(238,466)
(6,976,814)
(5,806,299)
(7,912,666)
40,849
(7,871,817)
474,668
(6,044,765)
61,946
(5,982,819)
311,747
(7,397,149)
(5,671,072)
70,693
(105,310)
(7,326,456)
(5,776,382)
9
(17.72)p
(15.21)p
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Consolidated statement of changes in equity
for the year ended 30 September 2017
At 1 October 2015
Loss for the year
Other comprehensive expense for the year
Total comprehensive loss for the year
Issue of shares
Share-based payment expense
At 30 September 2016
Loss for the year
Other comprehensive income for the year
Total comprehensive loss for the year
Issue of shares
Cost of share issue
Share-based payment expense
At 30 September 2017
(Accumulated
losses)/
retained
earnings
£
Share
premium
£
Total
equity
£
14,774,154
874,855
15,723,036
–
–
–
61,016
–
(5,671,072)
(105,310)
(5,776,382)
–
233,361
(5,671,072)
(105,310)
(5,776,382)
61,885
233,361
Share
capital
£
74,027
–
–
–
869
–
74,896
14,835,170
(4,668,166)
10,241,900
–
–
–
14,626
–
–
–
–
–
17,588,902
(615,942)
–
(7,397,149)
70,693
(7,326,456)
–
–
154,987
(7,397,149)
70,693
(7,326,456)
17,603,528
(615,942)
154,987
89,522
31,808,130
(11,839,635)
20,058,017
Note
17
17
20
Actual Experience plc Annual Report 2017
37
Note
2017
£
2016
£
10
11
12
8
13
14
8
350,704
1,266,261
1,616,965
281,476
516,041
797,517
487,189
568,102
5,000,000
13,209,850
352,129
340,259
–
9,415,886
19,265,141
10,108,274
20,882,106
10,905,791
(37,744)
(37,744)
(20,960)
(20,960)
15
(786,345)
(642,931)
(786,345)
(642,931)
(824,089)
(663,891)
20,058,017
10,241,900
17
17
18
89,522
31,808,130
(11,839,635)
74,896
14,835,170
(4,668,166)
20,058,017
10,241,900
fInAncIAl StAtementS
Consolidated statement of financial position
as at 30 September 2017
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
TOTAL NON-CURRENT ASSETS
Current assets
Trade and other receivables
Income tax receivable
Investments
Cash and cash equivalents
TOTAL CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
Non-current liabilities
Deferred tax
TOTAL NON-CURRENT LIABILITIES
Current liabilities
Trade and other payables
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Share capital
Share premium
Accumulated losses
TOTAL EQUITY
Approved by the Board of Directors and authorised for issue on 16 January 2018.
Stephen Davidson
Chairman
Steve Bennetts
Chief Financial Officer
Company number: 06838738
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Consolidated statement of cash flows
for the year ended 30 September 2017
Cash flows from operating activities
Loss before tax
Adjustment for non-cash items:
Depreciation of property, plant and equipment
Amortisation of intangible assets
Loss on disposal of property, plant and equipment
Share-based payment charge
Finance income
Operating cash outflow before changes in working capital
Movement in trade and other receivables
Movement in trade and other payables
Cash flows used in operations
Tax received
Net cash flows used in operating activities
Cash flows from investing activities
Development of intangible assets
Purchases of property, plant and equipment
Transfers to term deposits with more than 3 months’ maturity
Finance income
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from issue of share capital, net of costs
Loan to Employee Benefit Trust
Net cash inflow from financing activities
Increase/(decrease) in cash and cash equivalents
Effect of exchange rate fluctuations on cash held
Cash and cash equivalents at start of year
Cash and cash equivalents at end of year
Note
2017
£
2016
£
10
11
20
11
10
13
17
(7,871,817)
(5,982,819)
107,233
162,059
1,014
154,987
(40,849)
(7,487,373)
(83,913)
221,661
(7,349,625)
263,609
49,376
345,129
–
233,361
(61,946)
(5,416,899)
(63,961)
94,983
(5,385,877)
175,590
(7,086,016)
(5,210,287)
(912,279)
(177,584)
(5,000,000)
40,849
(494,784)
(286,180)
–
61,946
(6,049,014)
(719,018)
16,987,586
(55,950)
16,931,636
61,885
–
61,885
3,796,606
(2,642)
9,415,886
(5,867,420)
8,084
15,275,222
14
13,209,850
9,415,886
Actual Experience plc Annual Report 2017
39
fInAncIAl StAtementS
Notes to the consolidated financial statements
for the year ended 30 September 2017
1 Basis of preparation
Actual Experience plc is a public limited company domiciled in the United Kingdom and incorporated in England. The financial statements
of Actual Experience plc are audited financial statements for the year to 30 September 2017. These include comparatives for the year ended
30 September 2016.
The Company’s registered office is Quay House, The Ambury, Bath, BA1 1UA.
Business combinations and basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries)
made up to 30 September each year. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating
policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable or
convertible are taken into account. The financial statements of subsidiaries are included in the financial statements from the date that control
commences until the date that control ceases.
Where the acquisition is treated as a business combination, the purchase method of accounting is used to account for the acquisition of subsidiaries
by the Company.
The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date
of exchange. Acquisition costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the acquisition date. The excess of the cost of acquisition over the fair value of the
Company’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of the acquisition is less than the fair value of net assets
of the subsidiary acquired, the difference is recognised directly in the income statement.
Accounting policies adopted are consistent across the Group. All intra-Group balances and transactions, including unrealised profits arising from
intra-Group transactions, are eliminated fully on consolidation.
Going concern
At 30 September 2017, the Group had a cash and cash equivalents position of £13,209,850 with no bank debt. In addition, the Group had current
asset investments in the form of bank deposit account with maturity of more than three months, amounting to £5,000,000. The Directors have
prepared detailed monthly projections of future cash flows for the remainder of the financial year to September 2018 and the subsequent financial
year, 2019. 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 2019. Additional scenarios have been modelled reflecting differing revenue growth rates with
corresponding adjustments to the level of investment in the Group’s cost base; these scenarios indicate broadly similar cash flow trends.
After due consideration, the Directors have concluded that there is a reasonable expectation that the Group 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 Significant accounting policies
The financial statements have been prepared under the historical cost convention, except where fair values are adopted as required, in accordance
with International Financial Reporting Standards as adopted by the European Union (IFRS) and with the Companies Act 2006 as applicable to
companies using IFRS and to IFRS IC interpretation.
The principal accounting policies applied are set out below:
2.1 Foreign currencies
(a) Functional and presentational currency
Items included in the financial statements are measured using the currency of the primary economic environment in which the Group operates
(the functional currency) which is UK sterling (£). The financial statements are presented in pounds sterling (£), which is the Group’s presentational
currency. All amounts are rounded to the nearest £. The results and financial position of Actual Experience Inc. have a functional currency different
from the presentation currency and are translated into the presentation currency as follows:
• assets and liabilities are translated at the closing rate at the date of the balance sheet;
•
income and expenses are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of
the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the dates of the transactions); and
• all resulting exchange differences are recognised in other comprehensive income and as a separate component of equity.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions.
Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates
of monetary assets and liabilities denominated in foreign currencies are recognised in the Consolidated statement of comprehensive income.
Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
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2.2 Revenue recognition
Revenue is recognised at the fair value of the consideration received or receivable for the sale of services in the ordinary course of business and
is shown net of Value Added Tax. The Group primarily earns revenues from the sale of digital experience quality analytics services and associated
consultancy services.
Revenue from the digital experience quality analytics service is recognised over the period in which the services are performed, on a straight-line
basis. Revenues from associated consultancy services and associated other services such as training are recognised when delivery to the customer
has been completed.
The difference between the amount of revenue recognised and the amount invoiced to a particular customer is included in the Consolidated
statement of financial position as deferred or accrued income as appropriate. Amounts included in deferred income are expected to be recognised
within one year and are included within current liabilities.
2.3 Internally-generated intangible assets – research and development expenditure
Expenditure on research activities is recognised as an expense in the period in which it is incurred. Development costs incurred on specific projects
are capitalised when all the following criteria are satisfied:
(a) completion of the intangible asset is technically feasible so that it will be available for use or sale;
(b) the Group intends to complete the intangible asset and use or sell it;
(c) the Group has the ability to use or sell the intangible asset and the intangible asset will generate probable future economic benefits over and
above cost;
(d) there are adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and
(e) the expenditure attributable to the intangible asset during its development can be measured reliably.
The Directors believe that the criteria for capitalising development costs have been met in respect of certain projects. Consequently the identifiable
costs relating to these projects have been capitalised as intangible assets. The capitalised costs are being amortised over the estimated useful
lives of those assets and the amortisation charge for the period is included within ‘Administrative expenses’ in the Consolidated statement of
comprehensive income. Expenses for research and development include associated wages and salaries, material costs and directly
attributable overheads.
The estimated useful life of the development costs capitalised is two years. Amortisation commences when the project is available for use within
the business.
Intangible assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds
its recoverable amount. The recoverable amount is the higher of an asset’s fair value, less costs of disposal and value in use. For the purpose
of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash flows (cash-generating units).
Prior impairments of non-financial assets (other than goodwill) are reviewed for possible reversal at each reporting date.
2.4 Property, plant and equipment
Property, plant and equipment is stated at cost, less accumulated depreciation and any impairment losses. Cost includes the original purchase price
of the asset and the costs attributable to bringing the asset to its working condition for its intended use. Depreciation is charged so as to write off
the costs of assets over their estimated useful lives, on the following basis:
Leasehold improvements
Fixtures, fittings and equipment
Computer equipment
Five years straight-line
Five years straight-line
Three years straight-line
The gain or loss arising on the disposal of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset
and is recognised in the Consolidated statement of comprehensive income.
Impairment of property, plant and equipment
At each period end, the Group reviews the carrying amounts of its property, plant and equipment assets to determine whether there is any
indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order
to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the
Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value, less costs to sell and value in use. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks
specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating
unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable
amount. An impairment loss is recognised as an expense immediately.
Actual Experience plc Annual Report 2017
41
fInAncIAl StAtementS
Notes to the consolidated financial statements continued
for the year ended 30 September 2017
2 Significant accounting policies continued
2.5 Financial instruments
Financial assets and financial liabilities are recognised in the Consolidated statement of financial position when the Group becomes party to the
contractual provisions of the instrument. Financial assets are de-recognised when the contractual rights to the cash flows from the financial asset
expire or when the contractual rights to those assets are transferred. Financial liabilities are de-recognised when the obligation specified in the
contract is discharged, cancelled or expired.
2.5.1 Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost. Appropriate provisions for estimated
irrecoverable amounts are recognised in the Consolidated statement of comprehensive income when there is objective evidence that the assets
are impaired.
2.5.2 Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, demand deposits, and other short-term highly liquid investments that are readily convertible
to a known amount of cash and are subject to an insignificant risk of changes in value.
2.5.3 Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments
issued by the Company are recorded at the proceeds received, net of direct issue costs.
2.5.4 Trade and other payables
Trade payables are initially measured at their fair value and are subsequently measured at their amortised cost using the effective interest rate
method; this method allocates interest expense over the relevant period by applying the ‘effective interest rate’ to the carrying amount of the liability.
2.5.5 Investments
Investments comprise amounts in a bank deposit account which has a maturity date between three months and twelve months after the balance
sheet date.
2.6 Current and deferred tax
The tax expense/(credit) represents the sum of the tax currently payable or recoverable and the movement in deferred tax assets and liabilities.
Current tax is based upon taxable profit/(loss) for the year. Taxable profit/(loss) differs from net profit/(loss) as reported in the Consolidated
statement of comprehensive income because it excludes items of income or expense that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible.
The Group’s liability or receivable for current tax is calculated by using tax rates that have been enacted or substantively enacted by the
reporting date.
Credit is taken in the accounting period for research and development tax credits, which have been claimed from HM Revenue and Customs,
in respect of qualifying research and development costs incurred. Research and development tax credits have been accounted for on an
accruals basis.
Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled based upon
tax rates that have been enacted or substantively enacted by the reporting date. Deferred tax is charged or credited in the Consolidated statement
of comprehensive income, except when it relates to items credited or charged directly to equity, in which case the deferred tax is also dealt with
in equity.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the liability method. Deferred tax
liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the
temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a
transaction that affects neither the profit nor the accounting period.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be recovered.
2.7 Operating leases
Rentals payable under operating leases are charged to the Consolidated statement of comprehensive income on a straight-line basis over the term
of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the
lease asset are consumed.
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2.8 Share-based payments
The Company issues equity settled share-based payments to certain employees.
Equity settled share-based payments are measured at fair value at the date of grant and expensed in the Consolidated statement of comprehensive
income on a straight-line basis over the vesting period, along with a corresponding increase in equity. At each reporting date, the Company revises
its estimate of the number of equity instruments expected to vest as a result of the effect of non-market-based vesting conditions. The impact of the
revision of the original estimates, if any, is recognised in the Consolidated statement of comprehensive income such that the cumulative expense
represents the revised estimate, with a corresponding adjustment to equity reserves.
The fair value of share options is determined using a Black-Scholes model, taking into consideration the Directors’ best estimate of the expected life
of the option.
2.9 Investment in subsidiaries
Shares in the Group undertakings are stated at cost less any provision for impairment.
The Company assesses investments for impairment whenever events or changes in circumstances indicate that the carrying value of an investment
may not be recoverable. If any such indication of impairment exists, the Company makes an estimate of the recoverable amount. If the recoverable
amount of the cash-generating unit is less than the value of the investment, the investment is considered to be impaired and is written down to its
recoverable amount. An impairment loss is recognised immediately in the Consolidated statement of comprehensive income.
Critical accounting estimates and areas of judgement
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future
events that are believed to be reasonable under the circumstances. Actual results may differ from these estimates. The estimates and assumptions
that have the most significant effects on the carrying amounts of the assets and liabilities in the financial information are discussed below:
Research and development costs
The assessment of when development expenditure meets the recognition criteria required for capitalisation requires judgement as to the technical
feasibility and commercial viability of products and ideas that are under development. These judgements are subjective and, to the extent that actual
circumstances differ, there can be an increase or decrease in the amount of expenditure expensed to the Consolidated statement of
comprehensive income.
When development expenditure is capitalised, the Directors also make a judgement in respect of the expected useful lives of the intangible
development costs and an appropriate amortisation charge is made. The useful economic life of the development costs is two years. A one-year
reduction in the period over which such development costs are amortised would have increased loss before income tax by £58,113 (2016: £371,000).
A one-year increase in the period over which such development costs are amortised would have reduced loss before income tax by £31,847
(2016: £115,000).
Equity settled share-based payments
The estimation of share-based payment costs requires the selection of an appropriate valuation method, consideration as to the inputs necessary
for the valuation model chosen and the estimation of the number of awards that will ultimately vest. Inputs subject to judgement relate to the future
volatility of the share price of comparable companies, the Group’s expected dividend yields, risk-free interest rates and expected lives of the options.
The Directors draw on a variety of sources to aid in the determination of the appropriate data to use in such calculations.
Recoverability of deferred tax assets
Deferred tax assets are recognised only to the extent that it is considered probable that those assets will be recoverable. This involves an
assessment of when those deferred tax assets are likely to reverse and a judgement as to whether or not there will be sufficient taxable profits
available to offset the tax assets when they do reverse. This requires assumptions regarding future probability and is therefore inherently uncertain.
To the extent that assumptions regarding future probability change, there can be an increase or decrease in the level of deferred tax assets
recognised which can result in a charge or credit to the Consolidated statement of comprehensive income in the period in which the change occurs.
Changes in accounting policies
The following new and amended IFRS and IFRIC interpretations are mandatory as of 1 October 2016 unless otherwise stated and the impact
of adoption is described below.
There are no other changes to IFRS effective in the year which have a material impact on the Group.
IFRS 13 Fair Value Measurement
IFRS 13 does not affect when fair value is used, but rather describes how to measure fair value where fair value is required or permitted by IFRS.
There was no impact on the Group from the adoption of IFRS 13.
Actual Experience plc Annual Report 2017
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fInAncIAl StAtementS
Notes to the consolidated financial statements continued
for the year ended 30 September 2017
Changes in accounting policies continued
Accounting standards and interpretations not applied
At the date of authorisation of these financial statements, the following IFRSs, IASs and Interpretations were in issue but not yet effective.
Their adoption is not expected to have a material effect on the financial statements unless otherwise indicated:
•
•
•
•
•
•
IAS 1: Disclosure initiative (effective 1 January 2016);
IAS 16 and IAS 38: Clarification of acceptable methods of depreciation and amortisation (effective 1 January 2016);
IFRS 15: Revenue from contracts with customers (effective 1 January 2018);
IFRS 9: Financial instruments (effective 1 January 2018);
IFRS 16: Leases (effective 1 January 2019); and
IAS 12: Income taxes (effective 1 January 2016).
3 Financial risk management
The Board has overall responsibility for the determination of the Group’s risk management objectives and policies. The overall objective of the Board
is to set policies that seek to reduce risk as far as possible without unduly affecting the Group’s competitiveness and flexibility. The Group does not
use derivative financial instruments such as forward currency contracts or similar instruments. The Group does not issue or use financial
instruments of a speculative nature.
The Group is exposed to the following financial risks:
• Credit risk
• Liquidity risk
• Market risk
To the extent that financial instruments are not carried at fair value in the Consolidated statement of financial position, book value approximates to
fair value at 30 September 2016 and 30 September 2017.
Trade and other receivables are measured at fair value and amortised cost. Book values and expected cash flows are reviewed by the Board and any
impairment charged to the Consolidated statement of comprehensive income in the relevant period.
Cash and cash equivalents are held in either UK sterling or US dollars and are placed on deposits in UK and US banks. Trade and other payables are
measured at book value and amortised cost.
Credit risk
Credit risk is the risk of loss to the Group if a customer or counterparty to financial instruments fails to meet its contractual obligation. Credit risk
arises from the Group’s cash and cash equivalents and receivables balances. The concentration of the Group’s credit risk is considered by
counterparty, geography and currency.
The Group gives careful consideration to which organisation it uses for its banking services in order to minimise credit risk. The Group has a
significant concentration of cash held in accounts with three large banks in the UK, one institution with an A+ credit rating, one with a BBB+ credit
rating and one with a BBB- credit rating (long term, as assessed by Fitch). The amounts of cash held on deposit with those banks at each reporting
date can be seen in note 14. All of the cash and cash equivalents held with those banks at each reporting date were denominated in UK sterling or
US dollars. The Directors are satisfied that the level of risk inherent in holding the cash deposits with three banks is low given the credit ratings
assessed. The Directors monitor the levels of cash held by the Group on a regular basis and, if necessary, will mitigate any perceived increase in the
level of risk by spreading the cash deposits across other institutions.
The nature of the Group’s business and current stage of its development are such that individual customers can comprise a significant proportion
of its trade and other receivables at any point in time. The Group mitigates the associated risk by close monitoring of the debtor ledger.
At 30 September 2017, the Group’s trade receivables balance was £9,968 (30 September 2016: £59,613). The carrying amount of financial assets
recorded in the financial statements represents the Group’s maximum exposure to credit risk. An allowance for impairment is made where there
is an identified loss event which, based on previous experience, is evidence of a reduction in the recoverability of the cash flows. In the Directors’
opinion, there has been no impairment of financial assets at any point during the year.
No collateral is held by the Group as security in relation to its financial assets.
The Directors consider the above measures to be sufficient to control the credit risk exposure.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. This risk is managed by ensuring that
sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. The Group’s cash is held in bank accounts
with notice periods no greater than three months and management continually monitor rolling cash flow forecasts to ensure sufficient cash is
available for anticipated cash requirements.
At 30 September 2017, the Group had £13,209,850 (30 September 2016: £9,415,886) of cash and cash equivalents and current asset investments
in the form of bank deposit accounts with maturity terms of over three months amounting to £5,000,000 (30 September 2016: £nil).
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Market risk
Market risk is the risk of loss that may arise from changes in market factors such as interest rates and foreign exchange rates. The Group’s activities
expose it primarily to the financial risks of changes in foreign currency exchange rates. The Group’s exposure to foreign currency risk has been
limited, as the majority of its invoicing and payments are in UK sterling. There are no significant balances held in foreign currencies at each reporting
date and it has made no payments in foreign currencies other than US dollar and Euro. Accordingly, the Board has not presented any sensitivity
analysis in this area as it is immaterial.
The carrying values of trade and other receivables, trade and other payables and cash and cash equivalents approximate their fair values due to
their relatively short periods to maturity. Fair value measurements are determined in accordance with the following levels:
Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities.
Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3: Prices or valuations that require management inputs that are both significant to the fair value measurement and unobservable.
Fair values of all financial assets and liabilities are classified as Level 3 financial instruments, except cash and cash equivalents which is classified
as Level 2.
Capital risk management
The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development
of the business.
The Group’s objective when managing capital is to maintain adequate financial flexibility to preserve its ability to meet financial obligations, both
current and long term. The capital structure of the Group is managed and adjusted to reflect changes in economic circumstances. In determining
how the Group should be financed, through a combination of debt and equity, the Board seeks to maintain a balance between the higher returns
that might be possible with higher levels of borrowing and the advantages and security afforded by equity capital.
The Group’s capital is made up of share capital, share premium and retained earnings totalling at 30 September 2017: £20,058,017 (30 September
2016: £10,241,900).
The Group funds its expenditures on commitments from existing cash and cash equivalent balances, primarily received from issuances of
shareholders’ equity. There are no externally imposed capital requirements.
Financing decisions are made by the Board based on forecasts of the expected timing and level of capital and operating expenditure required
to meet the Group’s commitments and development plans.
4 Segmental reporting
The information that is presented to the Chief Executive Officer, who is considered to be the Chief Operating Decision Maker (CODM), for the
purposes of resource allocation and assessment of performance, is based wholly on the overall activities of the Group. Due to the current size
and activities of the Group, there is a high degree of centralisation of activities. The Directors therefore consider that there is one operating, and
hence one reportable segment for the purposes of presenting information under IFRS8; that of “Digital experience quality analytics services and
associated consultancy services”. There are no differences between the segment results and the Consolidated statement of comprehensive income.
The assets and liabilities information presented to the CODM is consistent with the Consolidated statement of financial position.
During the year ended 30 September 2017 the Group had two customers who generated more than 10% of total revenue. These customers
generated 28% and 26% of revenue respectively.
During the year ended 30 September 2016 the Group had three customers who generated more than 10% of total revenue. These customers
generated 30%, 18% and 14% of revenue respectively.
An analysis of revenues by geographic location of customers is set out below:
United Kingdom
United States of America
Europe
Rest of the world
2017
£
240,597
113,435
10,800
–
364,832
2016
£
343,928
357,093
5,325
10,000
716,346
Actual Experience plc Annual Report 2017
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fInAncIAl StAtementS
Notes to the consolidated financial statements continued
for the year ended 30 September 2017
5 Loss from operations
Loss from operations is stated after charging/(crediting) to administrative expenses:
Depreciation on property, plant and equipment
Amortisation of intangible assets
Loss on disposal of property, plant and equipment
Operating lease rentals – land and buildings
Employee costs
Foreign exchange losses/(gains)
Note
10
11
6
2017
£
2016
£
107,233
162,059
1,014
257,877
4,761,152
117,662
49,376
345,129
–
286,907
3,724,443
(144,889)
Auditors’ remuneration:
Audit of these financial statements
Total auditors’ remuneration
6 Employee costs
The average monthly number of persons (including Directors) employed by the Group during the year was:
Directors
Sales and support
Software development
Administration
The aggregate remuneration, including Directors, comprised:
Wages and salaries
Social security costs
Other pension costs
Share-based expense (note 20)
Directors’ remuneration comprised:
Emoluments for qualifying services
33,000
33,000
28,550
28,550
2017
Number
2016
Number
7
36
27
6
76
2017
£
7
28
17
4
56
2016
£
4,905,356
515,798
97,290
154,987
3,605,951
380,824
–
233,361
5,673,431
4,220,136
553,333
489,167
Directors’ emoluments disclosed above include £150,000 paid to each of the two highest paid Directors (2016: £145,000 and £112,500 respectively);
these Directors did not exercise any share options in the year and no options are due under incentive plans.
The Directors’ remuneration report on pages 30 and 31 details Directors’ interests in share options.
Included within total employee costs of £5,673,431 (2016: £4,220,136) is £912,279 (2016: £494,784) which has been capitalised within development
costs in accordance with IAS 38 (see note 11). The remaining £4,761,152 (2016: £3,724,443) has been expensed in the Consolidated statement of
comprehensive income.
7 Finance income
Bank interest receivable
2017
£
2016
£
40,849
61,946
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8 Taxation
Tax on loss on ordinary activities
Current tax:
UK corporation tax on losses of the year
Overseas taxes
Deferred tax:
Origination and reversal of timing differences
Total tax credit
Factors affecting the current tax credits
The tax assessed for the year varies from the standard UK company rate of corporation tax as explained below:
Loss on ordinary activities before tax
Tax at the UK corporate tax rate of 20.00% (2016: 20.00%)
Effects of:
Expenses not deductible for tax purposes
Unrecognised deferred tax asset on losses
Tax relief in respect of exercise of share options
Research and development enhancement in respect of the current year
Prior year adjustment
Change in rate of tax used to calculate deferred tax liability
Tax credit for the year
2017
£
2016
£
(568,102)
76,650
(340,264)
16,415
16,784
12,102
(474,668)
(311,747)
2017
£
2016
£
(7,871,817)
(5,982,819)
(1,574,363)
(1,196,564)
75,001
1,803,286
(150,275)
(625,354)
–
(2,963)
134,841
1,335,159
(217,254)
(364,226)
(5)
(3,698)
(474,668)
(311,747)
The Group has tax losses carried forward of approximately £17,754,000 (2016: £10,060,000).
During the year the Group has incurred qualifying expenditure on research and development projects which has given rise to tax credits due from
HM Revenue and Customs to the Group of £568,102 (2016: £340,259).
Deferred tax
Deferred tax relates to the following:
Accelerated depreciation for tax purposes
Deferred tax liability
Reconciliation of deferred tax liabilities
Balance at the beginning of the year
Charge to the Consolidated statement of comprehensive income
Balance at the end of the year
2017
£
37,744
37,744
2017
£
20,960
16,784
37,744
2016
£
20,960
20,960
2016
£
8,858
12,102
20,960
At 30 September 2017, the Group had unrecognised deferred tax assets totalling £3,018,180 (2016: £1,710,288), which relate to losses. The Group has
not recognised this asset in the Consolidated 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.
Actual Experience plc Annual Report 2017
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Notes to the consolidated financial statements continued
for the year ended 30 September 2017
9 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 one class of potentially dilutive ordinary shares, being 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. 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.
Total loss attributable to the equity holders of the parent
Weighted average number of ordinary shares in issue during the year
Loss per share
Basic and diluted on loss for the year
The weighted average number of shares in issue throughout the year is as follows:
Issued ordinary shares at the beginning of the year
Effect of shares issued in October 2015
Effect of shares issued in March 2016
Effect of shares issued in August 2016
Effect of shares issued in November 2016
Effect of shares issued in January 2017
Effect of shares issued in February 2017
Effect of shares issued in March 2017
Effect of shares issued in July 2017
Effect of shares issued in September 2017
2017
£
2016
£
(7,397,149)
(5,671,072)
Number
Number
41,733,648
37,288,000
(17.72)p
(15.21)p
2017
£
37,447,838
–
–
–
58,284
6,658
4,182,192
21,847
15,462
1,367
2016
£
37,013,338
118,532
154,363
1,767
–
–
–
–
–
–
Weighted average number of shares at the end of the year
41,733,648
37,288,000
10 Property, plant and equipment
Cost
At 1 October 2015
Additions
At 30 September 2016
Additions
Disposals
Foreign currency translation differences
At 30 September 2017
Accumulated depreciation
At 1 October 2015
Charge for the year
At 30 September 2016
Charge for the year
Reclassifications
Disposals
Foreign currency translation differences
At 30 September 2017
Net book value
At 30 September 2017
At 30 September 2016
At 30 September 2015
48
Actual Experience plc Annual Report 2017
Leasehold
improvements
£
Fixtures,
fittings and
equipment
£
Computer
equipment
£
–
168,488
168,488
5,421
–
–
173,909
–
13,701
13,701
34,172
–
–
–
9,009
48,407
57,416
20,560
–
–
77,976
1,830
5,721
7,551
13,439
(468)
–
–
Total
£
80,623
286,181
366,804
177,483
(1,721)
(144)
71,614
69,286
140,900
151,502
(1,721)
(144)
290,537
542,422
34,122
29,954
64,076
59,622
468
(707)
(136)
35,952
49,376
85,328
107,233
–
(707)
(136)
47,873
20,522
173,373
191,718
126,036
154,787
–
57,454
49,865
7,179
167,214
350,704
76,824
37,492
281,476
44,671
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11 Intangible assets
Cost
At 1 October 2015
Additions
At 30 September 2016
Additions
At 30 September 2017
Accumulated amortisation and impairment losses
At 1 October 2015
Charge for the year
At 30 September 2016
Charge for the year
At 30 September 2017
Net book value
At 30 September 2017
At 30 September 2016
At 30 September 2015
Development
costs
£
547,470
494,784
1,042,254
912,279
Total
£
547,470
494,784
1,042,254
912,279
1,954,533
1,954,533
181,084
345,129
526,213
162,059
181,084
345,129
526,213
162,059
688,272
688,272
1,266,261
1,266,261
516,041
366,386
516,041
366,386
Amortisation and impairment charge
The amortisation of development costs is recognised within administrative expenses in the Consolidated statement of comprehensive income.
12 Trade and other receivables
Trade receivables
Other receivables
Loan to Employee Benefit Trust
Prepayments and accrued income
2017
£
9,968
226,207
55,950
195,064
487,189
2016
£
59,613
117,622
–
174,894
352,129
Contractual payment terms with the Group’s customers are typically 30 to 90 days.
There are no provisions for impairment losses in respect of trade and other receivables. There are no trade receivables past due and not impaired
and there is no provision for impaired receivables in either 2017 or 2016. The credit quality of those trade receivables not past due and not impaired
is considered good. The Directors believe that the carrying value of trade and other receivables represents their fair value. In determining the
recoverability of trade receivables the Board considers any change in the credit quality of the receivable from the date credit was granted up to the
reporting date. For details on credit risk management policies, refer to note 3.
13 Investments
Term deposit accounts
2017
£
5,000,000
5,000,000
2016
£
–
–
The Group has a fixed term bank deposit account with a maturity date between three months and twelve months after the balance sheet date.
All term deposits are held with financial institutions with a credit rating of A+.
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fInAncIAl StAtementS
Notes to the consolidated financial statements continued
for the year ended 30 September 2017
14 Cash and cash equivalents
Bank credit rating:
A+
A3
BBB+
BBB-
Cash and cash equivalents
2017
£
2,549,604
–
8,607,282
2,052,964
2016
£
5,035,122
82,819
4,297,945
–
13,209,850
9,415,886
The above gives an analysis of the credit rating of the financial institutions where cash balances are held.
All of the Group’s cash and cash equivalents at 30 September 2017 are held in instant access current accounts or short-term deposit accounts.
Balances are denominated in UK sterling (£) and US dollars ($) as follows:
Denominated in UK sterling
Denominated in US dollars
Cash and cash equivalents
2017
£
2016
£
12,961,619
248,231
9,188,484
227,402
13,209,850
9,415,886
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.
15 Trade and other payables
Trade payables
Other tax and social security
Other creditors
Accruals
Deferred income
2017
£
101,669
136,245
47,712
416,751
83,968
786,345
2016
£
140,737
115,920
9,963
286,186
90,125
642,931
Trade and other payables principally comprise amounts outstanding for trade purchases and ongoing costs. They are non-interest bearing and are
normally settled on 30-45 day terms.
The Directors consider that the carrying value of trade and other payables approximate their fair value.
The Group has financial risk management policies in place to ensure that all payables are paid within the credit time frame and no interest has been
charged by any suppliers as a result of late payment of invoices during the year.
16 Financial instruments
The principal financial instruments used by the Group, from which financial instrument risk arises are as follows:
• Trade and other receivables
• Trade and other payables
• Cash and cash equivalents
• Loan to Employee Benefit Trust
Investments – Term deposits
•
The carrying values of trade and other receivables, trade and other payables and cash and cash equivalents approximate their fair values due to
their relatively short periods to maturity.
Financial assets
The Group held the following financial assets:
Due within three months
Cash and cash equivalents
Trade receivables
Other receivables
Term deposits
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Actual Experience plc Annual Report 2017
2017
£
2016
£
13,209,850
9,968
51,371
5,000,000
9,415,886
59,613
63,768
–
18,271,189
9,539,267
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Financial liabilities
The Group held the following financial liabilities held at amortised cost (non-derivatives):
Non-derivative financial liabilities
Due within one year
Trade payables
Other payables
Total financial liabilities
17 Share capital
Total ordinary shares of 0.2p each at 1 October 2016
Issue of shares on 20 March 2017 in respect of a Placing
Issue of shares in respect of the exercise of share options
Costs of share issues
2017
£
2016
£
101,669
548,431
650,100
140,737
296,149
436,886
Number
37,447,838
7,000,000
313,375
–
Share
capital
£
74,896
14,000
626
–
Share
premium
£
14,835,170
17,486,000
102,902
(615,942)
Total
£
14,910,066
17,500,000
103,528
(615,942)
Total ordinary shares of 0.2p each as at 30 September 2017
44,761,213
89,522
31,808,130
31,897,652
As permitted by the provisions of the Companies Act 2006, the Company does not have an upper limit to its authorised share capital.
Changes to share capital during the year were as follows:
(i) 7,000,000 ordinary shares of 0.2p each were allotted at a price of 250 pence per share, for total cash consideration of £17,500,000, upon the
Placing of new equity shares;
(ii) 35,000 ordinary shares of 0.2p each were allotted at a price of 9.091 pence per share, for total cash consideration of £3,181, upon the exercise of
share options granted in the Company’s share option schemes;
(iii) 244,000 ordinary shares of 0.2p each were allotted at a price of 14.255 pence per share, for total cash consideration of £34,781, upon the
exercise of share options granted in the Company’s share option schemes;
(iv) 26,250 ordinary shares of 0.2p each were allotted at a price of 184.0 pence per share, for total cash consideration of £48,300, upon the exercise
of share options granted in the Company’s share option schemes;
(v) 8,125 ordinary shares of 0.2p each were allotted at a price of 212.5 pence per share, for total cash consideration of £17,266, upon the exercise of
share options granted in the Company’s share option schemes.
At 30 September 2017, the Company had only one class of share, being ordinary shares of 0.2p each.
18 Movement in (accumulated losses)/retained earnings reserve
At 30 September 2015
Loss for the year
Other comprehensive expense
Share-based payment charge
At 30 September 2016
Loss for the year
Other comprehensive income
Share-based payment charge
At 30 September 2017
(Accumulated losses)/
retained earnings
£
874,855
(5,671,072)
(105,310)
233,361
(4,668,166)
(7,397,149)
70,693
154,987
(11,839,635)
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fInAncIAl StAtementS
Notes to the consolidated financial statements continued
for the year ended 30 September 2017
19 Commitments
Operating lease commitments
The Group leases premises under operating lease agreements. The future aggregate minimum lease and service charge payments under operating
leases are as follows:
Land and buildings:
Amounts due within one year
Amounts due between two and five years
Total
2017
£
2016
£
211,318
423,667
634,985
210,852
627,027
837,879
The Company leases its head office premises in the UK. The tenancy agreement in respect of these premises commenced in February 2016 and
terminates in September 2027. The agreement has a break clause five years after the lease commencement date. The annual rent and service
charge payable under this agreement is £203,630; the minimum payments disclosed above relate to the period up to the first break clause date.
20 Share-based payments
Share options
The Company has a share option plan under which it grants options over ordinary shares to certain employees. Options are exercisable at a price
equal to the estimated market price of the Company’s shares on the date of the grant. The vesting period for shares is usually four years. The options
are settled in equity once exercised. If the options remain unexercised for a period after ten years from the date of grant, the options expire. Options
are forfeited if the employee leaves the Group before the options vest.
Details of the number of share options and the weighted average exercise price outstanding during the year are as follows:
At 30 September 2015
Granted in the year
Exercised in the year
Forfeited in the year
At 30 September 2016
Granted in the year
Exercised in the year
Forfeited in the year
At 30 September 2017
Number of share interests
EMI options
Unapproved
options
2,090,425
470,000
(434,500)
(167,250)
1,958,675
415,000
(313,375)
(209,3 75)
370,000
155,000
–
–
525,000
–
–
–
Total
2,460,425
625,000
(434,500)
(167,250)
2,483,675
415,000
(313,375)
(209,375)
1,850,925
525,000
2,375,925
Weighted
average
exercise price
per share
(pence)
75.60
272.40
(14.25)
(249.30)
124.3
288.31
(33.03)
(262.09)
152.82
There were 1,400,800 share options outstanding at 30 September 2017 (30 September 2016: 1,292,215), which were eligible to be exercised.
The remaining options were not eligible to be exercised as these are subject to employment period vesting conditions, some of which had not
been met at 30 September 2017.
Options have a range of exercise prices from 9.09 pence per share to 302.5 pence per share and have a weighted contractual life of 6.75 years.
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Details of the outstanding share options are given below:
Grant date
19/03/2010
22/06/2011
17/10/2011
21/05/2012
04/03/2013
01/10/2013
18/11/2013
23/12/2013
09/07/2014
21/07/2014
15/09/2014
24/10/2014
29/05/2015
05/06/2015
29/06/2015
24/07/2015
14/10/2015
07/03/2016
26/05/2016
06/06/2016
13/06/2016
19/01/2017
02/05/2017
01/08/2017
01/09/2017
Outstanding
Employees
entitled
Number of
options
Performance
conditions
Exercise
price(p)
1
2
2
1
2
1
1
1
2
1
2
1
4
1
5
2
7
4
8
1
1
17
14
1
1
247,500
96,700
63,600
48,125
160,750
227,250
47,000
22,500
140,000
80,000
80,000
50,000
185,000
30,000
75,000
80,000
130,000
100,000
108,750
10,000
10,000
188,750
160,000
25,000
10,000
2,375,925
Time served
Time served
Time served
Time served
Time served
Time served
Time served
Time served
Time served
Time served
Time served
Time served
Time served
Time served
Time served
Time served
Time served
Time served
Time served
Time served
Time served
Time served
Time served
Time served
Time served
9.091
9.091
9.091
14.255
14.255
14.255
14.255
54.500
186.500
186.500
184.000
175.000
207.500
207.500
212.500
212.500
262.500
277.500
282.500
282.500
282.500
277.500
302.500
290.000
295.000
Earliest
exercise
date
Expiry
date
25/01/2011
15/10/2011
17/10/2011
27/02/2013
11/06/2013
01/10/2014
11/11/2014
01/10/2014
09/07/2015
21/07/2015
06/01/2015
24/10/2015
25/11/2015
05/06/2016
29/05/2016
08/06/2016
17/08/2016
16/11/2016
07/03/2017
06/06/2017
13/06/2017
20/06/2017
01/01/2018
26/06/2018
26/06/2018
19/03/2020
22/06/2021
17/10/2021
21/05/2022
04/03/2023
01/10/2023
18/11/2023
23/12/2023
09/07/2024
21/07/2024
15/09/2024
24/10/2024
29/05/2025
05/06/2025
29/06/2025
24/07/2025
14/10/2025
07/03/2026
26/05/2026
06/06/2026
13/06/2026
19/01/2027
24/05/2027
01/08/2027
01/09/2027
The fair values were calculated using the Black-Scholes pricing model. The inputs into the model for options granted during the year were as follows:
Dividend yield
Expected volatility
Risk-free interest rate (%)
Life of options (years)
Weighted average exercise price (pence)
Weighted average share price (pence)
Granted on
19 January
2017
Granted on
24 May
2017
Granted on
1 August
2017
Granted on
1 September
2017
0%
17.4%
1.50%
10
277.5p
277.5p
0%
17.3%
1.50%
10
302.5p
302.5p
0%
17.1%
1.50%
10
290.0p
290.0p
0%
16.9%
1.50%
10
295.0p
295.0p
The Group uses historical data to estimate option exercise and employee retention within the valuation model. Expected volatilities are based
upon an estimate by the Directors taking account of the implied volatility as determined from the Company’s historical share price movements.
The risk-free rate for the year within the contractual life of the option is based on the UK gilt yield curve at the time of the grant. Any share options
which are not exercised within ten years from the date of grant will expire.
The Group recognised a charge of £154,987 (2016: £233,361) in the Consolidated statement of comprehensive income in respect of equity settled
share-based payment transactions in the year.
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fInAncIAl StAtementS
Notes to the consolidated financial statements continued
for the year ended 30 September 2017
21 Related party transactions
Remuneration of key personnel
The remuneration of the Directors, who are the key management personnel of the Group and the Company, is shown below:
Executive Directors – aggregate
Short-term employment benefits*
Non-executive Directors – aggregate
Short-term employment benefits*
Total
2017
£
2016
£
425,000
372,500
132,311
557,311
116,667
489,167
* In addition, certain Directors hold share options in the Company for which a fair value share-based charge of £38,728 has been recognised in the Consolidated statement
of comprehensive income (2016: £58,301).
Amounts outstanding to key personnel
As at 30 September 2017, no amounts were due to Directors in relation to reimbursement of fees and expenses arising in the ordinary course
of business (30 September 2016: £nil).
Transactions with shareholders and other related parties
During the year the Group 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:
Queen Mary University of London (note 1)
Sales – Analytical services
IP Group plc (note 1)
Purchases – Non-executive Director fees
Purchases – Recruitment fees
Inmarsat plc (note 2)
Sales – Analytical services
Amounts
invoiced
to related
party
2017
£
Amounts
invoiced
by related
party
2017
£
–
–
25,000
–
25,000
–
–
–
–
–
–
Amounts
invoiced
to related
party
2016
£
9,000
9,000
–
–
–
Amounts
invoiced
by related
party
2016
£
–
–
25,000
10,000
35,000
–
10,000
–
Note 1: Queen Mary University of London and IP Group plc are shareholders of the Company.
Note 2: One of the Company’s Directors, Sir Bryan Carsberg is a Director of Inmarsat plc. Mr Stephen Davidson previously held a directorship
at Inmarsat plc.
There were no amounts outstanding due from or to the related parties at 30 September 2017.
During the year ended 30 September 2017, the Company entered into numerous transactions with its subsidiary Company, which net off
on consolidation – these have not been shown above.
Ultimate controlling party
The Company has no single ultimate controlling party.
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Company statement of changes in equity
for the year ended 30 September 2017
At 1 October 2015
Loss and total comprehensive expense for the year
Issue of shares
Share-based payment expense
Share-based payment expense in respect of services provided to
subsidiary undertaking
At 30 September 2016
At 1 October 2016
Loss and total comprehensive expense for the year
Issue of shares
Cost of share issue
Share-based payment expense
Share-based payment expense in respect of services provided to
subsidiary undertaking
At 30 September 2017
Share
capital
£
Share
premium
£
(Accumulated
losses)/
retained
earnings
£
Total equity
£
74,027
14,774,154
860,479
15,708,660
–
869
–
–
–
61,016
–
(5,836,122)
–
163,804
(5,836,122)
61,885
163,804
–
69,557
69,557
74,896
14,835,170
(4,742,282)
10,167,784
74,896
14,835,170
(4,742,282)
10,167,784
–
14,626
–
–
–
17,588,902
(615,942)
–
(7,392,836)
–
–
107,997
(7,392,836)
17,603,528
(615,942)
107,997
–
–
46,990
46,990
89,522
31,808,130
(11,980,131)
19,917,521
Actual Experience plc Annual Report 2017
55
fInAncIAl StAtementS
Company statement of financial position
as at 30 September 2017
ASSETS
Non-current assets
Property, plant and equipment
Intangible assets
Investments
TOTAL NON-CURRENT ASSETS
Current assets
Trade and other receivables
Income tax receivable
Investments
Cash and cash equivalents
TOTAL CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
Non-current liabilities
Deferred tax
TOTAL NON-CURRENT LIABILITIES
Current liabilities
Trade and other payables
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
EQUITY
Share capital
Share premium
At 1 October
Loss for the year
Other charges in accumulated losses
Accumulated losses
TOTAL EQUITY
Approved by the Board of Directors and authorised for issue on 16 January 2018.
Stephen Davidson
Chairman
Steve Bennetts
Chief Financial Officer
Company number 06838738
56
Actual Experience plc Annual Report 2017
Note
C3
11
C4
2017
£
2016
£
348,060
1,266,261
139,056
1,753,377
278,081
516,041
92,067
886,189
C5
C11
C6
C7
481,675
568,102
5,000,000
13,035,558
339,571
340,259
–
9,333,067
19,085,335
10,012,897
20,838,712
10,899,086
C11
(37,744)
(37,744)
(20,960)
(20,960)
C8
(883,447)
(710,342)
(883,447)
(710,342)
(921,191)
(731,302)
19,917,521
10,167,784
17
17
89,522
31,808,130
(4,742,282)
(7,392,836)
154,987
74,896
14,835,170
860,479
(5,836,122)
233,361
C9
11,980,131
(4,742,282)
19,917,521
10,167,784
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AddItIonAl InformAtIon
Company statement of cash flows
for the year ended 30 September 2017
Cash flows from operating activities
Loss before tax
Adjustment for non-cash items:
Depreciation of property, plant and equipment
Amortisation of intangible assets
Loss on sale of property, plant and equipment
Share-based payment charge
Finance income
Operating cash outflow before changes in working capital
Movement in trade and other receivables
Movement in trade and other payables
Cash flows used in operations
Tax received
Net cash flows used in operating activities
Cash flows from investing activities
Development of intangible assets
Purchases of property, plant and equipment
Transfers to term deposits with more than 3 months’ maturity
Finance income
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from issue of share capital, net of costs
Loan to Employee Benefit Trust
Net cash inflow from financing activities
Increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at start of year
Cash and cash equivalents at end of year
2017
£
2016
£
(7,944,154)
(6,164,284)
105,243
162,059
1,014
107,997
(40,831)
(7,608,672)
(86,154)
173,105
(7,521,721)
340,261
48,254
345,129
–
163,804
(61,944)
(5,669,041)
(62,976)
298,607
(5,433,410)
192,005
(7,181,460)
(5,241,405)
(912,279)
(176,237)
(5,000,000)
40,831
(494,784)
(282,044)
–
61,944
(6,047,685)
(714,884)
16,987,586
(55,950)
16,931,636
61,885
–
61,885
3,702,491
9,333,067
(5,894,404)
15,227,471
13,035,558
9,333,067
Actual Experience plc Annual Report 2017
57
fInAncIAl StAtementS
Notes to the Company financial statements
for the year ended 30 September 2017
C1. Principal accounting policies
The financial statements of the Company are presented as required by the Companies Act 2006 and in accordance with IFRS.
The principal accounting policies adopted are the same as for those set out in the Group’s financial statements.
C2. Company results
The Company has elected to take the exemption under section 408 of the Companies Act 2006 not to present the parent company’s statement
of comprehensive income. The parent company’s result for the year ended 30 September 2017 was a loss of £7,392,836 (2016: loss of £5,836,122).
The audit fee for the Company is set out in note 5 of the Group’s financial statements.
C3. Property, plant and equipment
Leasehold
improvements
£
Fixtures,
fittings
and
equipment
£
Computer
equipment
£
71,224
65,149
136,373
150,256
(1,721)
Total
£
80,233
282,044
362,277
176,237
(1,721)
284,908
536,793
34,112
28,832
62,944
57,632
468
(706)
35,942
48,254
84,196
105,243
–
(706)
9,009
48,407
57,416
20,560
–
77,976
1,830
5,721
7,551
13,439
(468)
–
20,522
120,338
188,733
–
168,488
168,488
5,421
–
173,909
–
13,701
13,701
34,172
–
–
47,873
126,036
154,787
–
57,454
49,865
7,179
164,570
348,060
73,429
37,112
278,081
44,291
Cost
At 1 October 2015
Additions
At 30 September 2016
Additions
Disposals
At 30 September 2017
Accumulated depreciation
At 1 October 2015
Charge for the year
At 30 September 2016
Charge for the year
Reclassifications
Disposals
At 30 September 2017
Net book value
At 30 September 2017
At 30 September 2016
At 30 September 2015
58
Actual Experience plc Annual Report 2017
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C4. Investments
At 30 September 2017, the Company held the following investments in subsidiary companies:
Undertaking
Sector
Actual Experience Inc.
2711 Centerville Road, Suite 400, Wilmington, County of New Castle, Delaware, 19880.
Sales and marketing services
Cost
At 1 October 2015
Additions
At 30 September 2016
Additions
At 30 September 2017
Impairment
At 1 October 2015, 30 September 2016 and 30 September 2017
Carrying value at 30 September 2017
Carrying value at 30 September 2016
Carrying value at 30 September 2015
C5. Trade and other receivables
Trade receivables
Other receivables
Loan to Employee Benefit Trust
Prepayments and accrued income
2017
£
9,968
226,207
55,950
189,550
481,675
Share of
issued
capital and
voting rights
2017
100%
£
22,509
69,558
92,067
46,989
139,056
–
139,056
92,067
22,509
2016
£
59,613
111,376
–
168,582
339,571
Contractual payment terms with the Company’s customers are typically 30 to 90 days.
There are no receivables for which allowance has been made. There are no provisions for impairment losses in respect of trade and other receivables.
There are no receivables at any of the year ends which were considered to be past due. The Directors believe that the carrying value of trade and other
receivables represents their fair value. In determining the recoverability of trade receivables the Board considers any change in the credit quality of the
receivable from the date credit was granted up to the reporting date. For details on credit risk management policies, refer to note 3.
C6. Current asset investments
Term deposit accounts
2017
£
5,000,000
5,000,000
2016
£
–
–
The Group has a fixed term bank deposit account with a maturity date between three months and twelve months after the balance sheet date.
Actual Experience plc Annual Report 2017
59
fInAncIAl StAtementS
Notes to the Company financial statements continued
for the year ended 30 September 2017
C7. Cash and cash equivalents
Bank credit rating:
A+
BBB+
BBB-
Cash and cash equivalents
2017
£
2,549,604
8,432,990
2,052,964
2016
£
5,035,122
4,297,945
–
13,035,558
9,333,067
The above gives an analysis of the credit rating of the financial institutions where cash balances are held.
All of the Company’s cash and cash equivalents at 30 September 2017 are held in instant access current accounts or short-term deposit accounts.
Balances are denominated in UK sterling (£) and US dollars ($) as follows:
Denominated in UK sterling
Denominated in US dollars
Cash and cash equivalents
2017
£
2016
£
12,961,618
73,940
9,188,484
144,583
13,035,558
9,333,067
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.
C8. Trade and other payables
Trade payables
Other tax and social security
Other creditors
Amounts due to subsidiary undertakings
Accruals
Deferred income
2017
£
90,339
136,245
25,188
206,176
425,499
–
883,447
2016
£
138,059
115,920
9,962
138,021
218,255
90,125
710,342
Trade and other payables principally comprise amounts outstanding for trade purchases and ongoing costs. They are non-interest bearing and are
normally settled on 30-45 day terms.
The Directors consider that the carrying value of trade and other payables approximate their fair value.
The Company has financial risk management policies in place to ensure that all payables are paid within the credit time frame and no interest has
been charged by any suppliers as a result of late payment of invoices during the year.
C9. Movement in (accumulated losses)/retained earnings reserve
At 30 September 2015
Loss for the year
Share-based payment charge
Share-based payment charge in respect of services provided to subsidiary undertaking
At 30 September 2016
Loss for the year
Share-based payment charge
Share-based payment charge in respect of services provided to subsidiary undertaking
At 30 September 2017
60
Actual Experience plc Annual Report 2017
(Accumulated
losses)/
retained
earnings
£
860,479
(5,836,122)
163,804
69,557
(4,742,282)
(7,392,836)
107,997
46,990
(11,980,131)
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C10. Employee costs
The average monthly number of persons (including Directors) employed by the Company during the year was
Directors
Sales and support
Software development
Administration
The aggregate remuneration, including Directors, comprised
Wages and salaries
Social security costs
Other pension costs
Share-based expense (note 20)
Directors’ remuneration comprised
Emoluments for qualifying services
2017
Number
2016
Number
6
31
27
6
70
6
23
17
4
50
2017
£
2016
£
4,106,830
478,628
77,063
107,997
2,948,163
345,186
–
163,804
4,770,518
3,457,153
528,333
472,500
Directors’ emoluments disclosed above include £150,000 paid to each of the two highest paid Directors (2016: £145,000 and £112,500 respectively),
these Directors did not exercise any share options in the year and no options are due under incentive plans.
The Directors’ remuneration report on pages 30 to 31 details Directors’ interests in share options.
Included within total employee costs of £4,770,518 (2016: £3,457,153) is £912,279 (2016: £494,784) which has been capitalised within development
costs in accordance with IAS 38 (see note 11). The remaining £3,858,239 (2016: £2,962,369) has been expensed in the Consolidated statement of
comprehensive income.
C11. Taxation
Deferred tax
Deferred tax relates to the following:
Accelerated depreciation for tax purposes
Deferred tax liability
Reconciliation of deferred tax liabilities
Balance at the beginning of the year
Charge to the Consolidated statement of comprehensive income
Balance at the end of the year
2017
£
37,744
37,744
2017
£
20,960
16,784
37,744
2016
£
20,960
20,960
2016
£
8,858
12,102
20,960
At 30 September 2017, the Company had unrecognised deferred tax assets totalling £3,018,180 (2016: £1,710,288), which relate to losses.
The Company has not recognised this asset in the Statement of financial position due to the uncertainty in the timing when it is probable
that future taxable profit will be available against which the unused tax losses and unused tax credits can be utilised.
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 £568,102 (2016: £340,259).
C12. Related party transactions
Details of external related party transactions are set out in note 21. The Company has entered into transactions with its wholly-owned subsidiary
undertaking, Actual Experience Inc. during the year. The Company incurred costs of £1,505,437 charged by Actual Experience Inc. during the year
(2016: £1,380,390). At 30 September 2017, an amount of £206,176 was due to the subsidiary Company (30 September 2016: £138,021 due to the
subsidiary Company).
Actual Experience plc Annual Report 2017
61
AddItIonAl InformAtIon
Notice of Annual General Meeting
Notice is given that the Annual General Meeting of Actual Experience plc
(the Company) will be held at the offices of Osborne Clarke, 1 London Wall,
London EC2Y 5EB at 11:00am on Wednesday 28 February 2018 for the
following purposes:
To consider and, if thought fit, to pass the following resolutions as
ordinary resolutions:
1. To receive the Company’s annual accounts, Strategic Report
and Directors’ and auditors’ reports for the year ended
30 September 2017.
2. To reappoint Robin Young, who, in accordance with the Articles of
Association, resigns by rotation and is eligible for reappointment.
3. To reappoint Dr Mark Reilly, who, in accordance with the Articles of
Association, resigns by rotation and is eligible for reappointment.
To consider and, if thought fit, to pass the following resolution as
a special resolution:
7. That, subject to the passing of resolution 6 and pursuant to section
570 of the Act, the Directors be and are generally empowered to allot
equity securities (within the meaning of section 560 of the Act) for
cash pursuant to the authorities granted by resolution 6 as if section
561(1) of the Act did not apply to any such allotment, provided that
this power shall be limited to:
7.1 the allotment of equity securities in connection with an offer of
equity securities (whether by way of a rights issue, open offer
or otherwise):
7.1.1 to holders of ordinary shares in the capital of the Company
in proportion (as nearly as practicable) to the respective
numbers of ordinary shares held by them; and
4. To reappoint PricewaterhouseCoopers LLP as auditors of
7.1.2 to holders of other equity securities in the capital of the
the Company.
5. To authorise the Directors to determine the remuneration of
the auditors.
6. That, pursuant to section 551 of the Companies Act 2006 (Act), the
Directors be and are generally and unconditionally authorised to
exercise all powers of the Company to allot Relevant Securities up to
an aggregate nominal amount of £29,877 provided that (unless
previously revoked, varied or renewed) these authorities shall expire
at the conclusion of the next Annual General Meeting of the
Company after the passing of this resolution or on the date falling
18 months after the passing of this resolution (whichever is the
earlier), save that, in each case, the Company may make an offer or
agreement before the authority expires which would or might require
Relevant Securities to be allotted after the authority expires and the
Directors may allot Relevant Securities pursuant to any such offer or
agreement as if the authority had not expired.
In this resolution, ‘Relevant Securities’ means shares in the
Company or rights to subscribe for or to convert any security into
shares in the Company; a reference to the allotment of Relevant
Securities includes the grant of such a right; and a reference to the
nominal amount of a Relevant Security which is a right to subscribe
for or to convert any security into shares in the Company is to the
nominal amount of the shares which may be allotted pursuant to
that right.
These authorities are in substitution for all existing authorities under
section 551 of the Act (which, to the extent unused at the date of this
resolution, are revoked with immediate effect from the passing of
this resolution).
Company, as required by the rights of those securities or,
subject to such rights, as the Directors otherwise
consider necessary,
but subject to such exclusions or other arrangements as
the Directors may deem necessary or expedient in relation
to treasury shares, fractional entitlements, record dates or
any legal or practical problems under the laws of any
territory or the requirements of any regulatory body or stock
exchange; and
7.2 the allotment of equity securities otherwise than pursuant to
paragraph 7.1 of this resolution) up to an aggregate nominal
amount of £8,963,
and (unless previously revoked, varied or renewed) this power shall
expire at the conclusion of the next Annual General Meeting of the
Company after the passing of this resolution or on the date falling
18 months after the passing of this resolution (whichever is the
earlier), save that the Company may make an offer or agreement
before this power expires which would or might require equity
securities to be allotted for cash after this power expires and the
Directors may allot equity securities for cash pursuant to any such
offer or agreement as if this power had not expired.
This power is in substitution for all existing powers under
section 570 of the Act (which, to the extent unused at the date of
this resolution, are revoked with immediate effect from the passing of
this resolution).
By order of the Board
Roy Stephen (Steve) Bennetts
Company Secretary
16 January 2018
Registered office
Quay House
The Ambury
Bath
BA1 1UA
United Kingdom
Registered in England and Wales No. 06838738
62
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AddItIonAl InformAtIon
Notes relating to Annual General Meeting
Entitlement to attend and vote
1. the right to vote at the meeting is determined by reference to the
register of members. Only those shareholders registered in the
register of members of the Company as at close of business on 26
February 2018 (or, if the meeting is adjourned, close of business on
the date which is two working days before the date of the adjourned
meeting) shall be entitled to attend and vote at the meeting in
respect of the number of shares registered in their name at that time.
Changes to entries in the register of members after that time shall be
disregarded in determining the rights of any person to attend or vote
(and the number of votes they may cast) at the meeting.
Proxies
2. a shareholder is entitled to appoint another person as his or her
proxy to exercise all or any of his or her rights to attend and to
speak and vote at the meeting. A proxy need not be a shareholder
of the Company.
A shareholder may appoint more than one proxy in relation to the
meeting, provided that each proxy is appointed to exercise the rights
attached to a different share or shares held by that shareholder.
Failure to specify the number of shares each proxy appointment
relates to or specifying a number which when taken together with
the numbers of shares set out in the other proxy appointments is in
excess of the number of shares held by the shareholder may result
in the proxy appointment being invalid.
A proxy may only be appointed in accordance with the procedures
set out in notes and the notes to the proxy form.
The appointment of a proxy will not preclude a shareholder from
attending and voting in person at the meeting.
3. A form of proxy is enclosed. When appointing more than one proxy,
complete a separate proxy form in relation to each appointment.
Additional proxy forms may be obtained by contacting the
Company’s Registrar by phone on 0871 664 0300 (calls cost 12p per
minute plus your phone company’s access charge. Calls outside the
United Kingdom will be charged at the applicable international rate.
Lines are open between 9.00am and 5.30pm, Monday to Friday
including public holidays in England and Wales) or the proxy form
may be photocopied. State clearly on each proxy form the number
of shares in relation to which the proxy is appointed.
To be valid, a proxy form must be received by post or (during normal
business hours only) by hand at the offices of the Company’s
Registrar, Link Asset Services, The Registry, 34 Beckenham Road,
Beckenham, Kent, BR3 4TU, no later than 11.00am on 26 February
2018 (or, if the meeting is adjourned, no later than 48 hours before
the time of any adjourned meeting).
4. CREST members who wish to appoint a proxy or proxies for
the meeting (or any adjournment of it) through the CREST electronic
proxy appointment service may do so by using the procedures
described in the CREST manual. CREST personal members or other
CREST sponsored members, and those CREST members who have
appointed a voting service provider(s), should refer to their CREST
sponsor or voting service provider(s), who will be able to take the
appropriate action on their behalf.
In order for a proxy appointment or instruction made using the
CREST service to be valid, the appropriate CREST message
(a CREST Proxy Instruction) must be properly authenticated
in accordance with Euroclear UK & Ireland Limited’s specifications
and must contain the information required for such instructions,
as described in the CREST manual. The message, regardless of
whether it constitutes the appointment of a proxy or is an amendment
to the instruction given to a previously appointed proxy, must, in
order to be valid, be transmitted so as to be received by Link Asset
Services (ID RA10) no later than 11.00am on 26 February 2018 (or, if
the meeting is adjourned, no later than 48 hours before the time of
any adjourned meeting). For this purpose, the time of receipt will be
taken to be the time (as determined by the timestamp applied to the
message by the CREST Applications Host) from which Link Asset
Services is able to retrieve the message by enquiry to CREST in the
manner prescribed by CREST. After this time, any change of
instructions to proxies appointed through CREST should be
communicated to the appointee through other means.
CREST members and, where applicable, their CREST sponsors or
voting service providers should note that Euroclear UK & Ireland
Limited does not make available special procedures in CREST for
any particular messages. Normal system timings and limitations will
therefore apply in relation to the input of CREST Proxy Instructions.
It is the responsibility of the CREST member concerned to take
(or, if the CREST member is a CREST personal member or sponsored
member or has appointed a voting service provider(s), to procure
that his or her CREST sponsor or voting service provider(s) take(s))
such action as shall be necessary to ensure that a message is
transmitted by means of the CREST system by any particular time.
In this connection, CREST members and, where applicable, their
CREST sponsors or voting service providers are referred, in
particular, to those sections of the CREST manual concerning
practical limitations of the CREST system and timings.
The Company may treat a CREST Proxy Instruction as invalid in the
circumstances set out in Regulation 35(5)(a) of the Uncertificated
Securities Regulations 2001.
Corporate representatives
5. a shareholder which is a corporation may authorise one or more
persons to act as its representative(s) at the meeting. Each such
representative may exercise (on behalf of the corporation) the same
powers as the corporation could exercise if it were an individual
shareholder, provided that (where there is more than one
representative and the vote is otherwise than on a show of hands)
they do not do so in relation to the same shares.
Documents available for inspection
6. the following documents will be available for inspection during
normal business hours at the registered office of the Company
from the date of this Notice until the time of the meeting. They will
also be available for inspection at the place of the meeting from at
least 15 minutes before the meeting until it ends.
a. Copies of the service contracts of the Executive Directors.
b. Copies of the letters of appointment of the Non-executive
Directors.
Biographical details of directors
7. biographical details of all those Directors who are offering
themselves for reappointment at the meeting are set out on pages 22
and 23 of the enclosed Annual Report and Accounts.
Actual Experience plc Annual Report 2017
63
AddItIonAl InformAtIon
Glossary of terms
Actual Experience plc is our legal entity. Our brand name is Actual
Experience, without the plc. Once we have introduced our brand name,
we often shorten it to Actual.
Analytics-as-a-Service (AaaS) – often shortened to AaaS,
Analytics-as-a-Service is the analysis of data (in our case, performance
data) in an application hosted on the web. These web-based solutions
offer businesses an alternative to developing internal hardware set-ups
just to perform business analytics.
Analytics Cloud – the Actual Experience Analytics Cloud receives
data from Digital Users, applies our algorithms to the data and
produces an objective score of digital experience quality and supply
chain diagnostics. Our patented technology is based on decades of
academic research.
CRM – Customer relationship management.
Digital Supply Chain – the combination of businesses and the
technologies they provide, including networks, IT infrastructure and
applications, that deliver a digital product or service.
Digital User (DU) is the measurement software component
of Actual Work and Actual Home.
Enterprise Customer – a large, typically multi national corporation
with hundreds or thousands of sites globally.
Production – When a customer of Actual Experience has DUs
deployed measuring a target.
Quality Dashboard – the Actual Experience Quality Dashboard
provides actionable data for Service Providers to pinpoint the cause of
poor digital quality. This insight, can be used to fix or improve the digital
quality problems that users are experiencing in their homes, on their
phones or in the office.
Voice of the Customer – the objective score produced in Actual’s
Analytics Cloud, which is an accurate proxy for what your customer
would tell you about their experience of your digital product or service.
MSA – Master Services Agreement
POC – Proof of Concept
PO – Purchase Order
64
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AddItIonAl InformAtIon
Sources
Pages 1 and 2
— UNCTAD, Information Economy Report, 2017
Page 7
— Making the change, planning, executing and measuring successful
Business Transformation Forbes Insights 2014
Pages 10 and 11
— United States Census Bureau, E-stats 2015: Measuring the Electric
Economy, May 2017
— UNCTAD, Information Economy Report, 2017
Actual Experience plc Annual Report 2017
65
AddItIonAl InformAtIon
Notes
66
Actual Experience plc Annual Report 2017
B RING
BUFFERING
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The papers used in this document are FSC® Recycled
and FSC mixed sources certified. Both stocks are
derived from well managed forests and controlled
sources. They are manufactured at mills which carry
ISO 14001 certification.
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Actual Experience plc
Quay House
The Ambury
Bath
BA1 1UA
www.actual-experience.com