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Transforming
user experience
Actual Experience plc
Annual Report 2018
Through evidence,
not guesswork
In today’s digital world, the user experience of digital
services is critical to the success of any business.
Excellent user experiences can increase productivity
of staff, increase revenue from loyal customers
and improve brand reputation.
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Highlights
An inflection point
Financial
Revenue
£1.08m
16.08p
Loss per share
Loss for the year
£7.21m
£10.78m
Cash and cash equivalents
Operational
• The successes of 2018 validated the market
opportunity, partner processes and our product
• We received an Open Purchase Order (PO) from
a Channel Partner, enabling us to do business
with them more easily, the value of the PO
was increased towards the end of the year
• First full-scale deployment of a large customer
from one of our Channel Partners
• First small-scale deployment to grow to
full scale within a Channel Partner
Introduction
Highlights
How it works
How it works in practice
Strategic report
Chairman’s statement
Market insight
Business model
Chief Executive’s statement
Commercialisation strategy
Strategy in action
Operating review
Corporate Social Responsibility
Focus on our people
Financial review
Principal risks and uncertainties
Governance
Board of Directors
Directors’ report
Directors’ responsibilities statement
Corporate governance report
Audit Committee report
Directors’ remuneration report
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Financial statements
Independent auditors’ report
Consolidated statement of
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comprehensive income
Consolidated statement of changes in equity 45
Consolidated statement of financial position 46
Consolidated statement of cash flows
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Notes to the consolidated
financial statements
Company statement of changes in equity
Company statement of financial position
Company statement of cash flows
Notes to the Company financial statements
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To enhance your experience navigating this
report look out for the following symbol:
Additional insight by
Actual Experience’s experts
Other information
Notice of Annual General Meeting
Notes relating to Annual General Meeting
Glossary of terms
Sources
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Actual Experience plc Annual Report 2018
1
Every day, users worldwide suffer
from poor digital quality
IT departments are often
guessing what’s causing these
problems and how best to fix them
SL W
SYNCING
B RING
BUFFERING
2
How it works
Our analytics remove
the guesswork
Our Analytics-as-a-Service (AaaS) is able to understand the human experience of the entire digital business
of a business, in real time. We call it User Experience 2.0. By correlating behaviour across the digital supply
chain with human experience scores, we analyse the digital world through the lens of human experience.
This unique proposition enables our customers to pinpoint the causes of poor digital experience for their
customers and staff. Our AaaS is the only such tool that is human centric and supply chain aware.
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Analytics
MEASURING
PERFORMANCE
For a large customer, we make
38,000
measurements per minute
Insight
REMOVING THE
GUESSWORK
For a large customer the
Analytics Cloud makes
7 million
calculations per minute
Digital Users
Actual Experience Digital Users (DU) sit inside the
end-customer’s environment. They can be installed onto
laptops, PCs and phones, onto servers and routers or
built into the software and hardware that our customers
provide. DUs continually take measurements across the
digital supply chain of networks, data centres, servers
and applications that sits between the application or
service being measured and the user, and send this
measurement data to our Analytics Cloud.
Analytics Cloud
The Actual Experience Analytics Cloud receives
measurement data from the DUs and analyses this data
in real time using our patented technology. By correlating
the data received from the DUs with our Human Experience
Scores, our analytics can locate the causes of poor digital
experience, removing the guesswork from improving
digital quality.
Action
INFORMED
IMPROVEMENTS
Quality Dashboard
The Quality Dashboard provides the data for our customers
to pinpoint the causes of poor digital quality, in real time.
Using the insight provided they can focus resources on
improving and fixing the areas that are impacting on the
human experience of their digital business.
Our Digital Quality Score represents a good proxy of
the human experience of any application. If the
experience of an application or service would leave a
user feeling irritated, our scores will be low. A higher
score indicates a more consistent experience of the
service being analysed.
Actual Experience plc Annual Report 2018
Actual Experience plc Annual Report 2018
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What this means for businesses
“User Experience 2.0 puts business leaders
back in charge. They can confidently
develop their digital business with visibility
and control over their global digital
supply chain.”
Dave Page
Chief Executive Officer
Outcomes
MEASURABLE
BENEFITS
Enhance brand perception
Poor quality and inconsistent experience of digital services
affect customers’ perception of the associated brand.
By providing the insight that brands were previously
lacking, we enable them to provide a consistent
human experience thereby enhancing customers’
perception of the brand.
In 2017
39%
of consumers would stop shopping with a brand
if the website crashes or is too slow
Improve productivity
When a digital application or service isn’t working properly,
staff can’t work productively. Using our products,
businesses can ensure the digital services that are critical
to the day-to-day running of the business are working
consistently, thereby improving the productivity of staff.
Percentage of total wage bill
3%
lost to poor digital quality
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Actual Experience plc Annual Report 2018 4
See Market insight on page 10
DEL YED
DATA
NUIS NCE
NETWORKS
Created by Georgiana Ionescu NUIS NCE
NETWORKS
How it works in practice
STRUGGLING
STAFF
to
SUPER
SERVICE
A high-tech Global Engineering Firm that relies on cloud services
to enable close collaboration across its global business turned to
one of our Channel Partners for support.
Problems
FAILING
APPLICATIONS
• Poor service quality for
applications, such as video calling
• Issues being reported across
multiple sites
• Other tools confirmed the poor
performance, and provided
additional evidence, but nothing
actionable. So far, they had been
unable to solve the problem
14 applications
targeted across
13 locations
Solutions
ACTIONABLE
INSIGHT
Built in analytics:
The Channel Partner built our Analytics-as-a-Service
(AaaS) into the solution they provided to their customer.
Proactive monitoring and improvement:
This approach enabled our Partner to monitor and
improve the end user experience. Our analytics
identified multiple issues across the target locations
within 3 weeks of deployment.
Identifying the problem suppliers:
Using our analytics two main issues were highlighted,
affecting sites in China. Two suppliers were identified
as responsible for the poor quality the end users
were experiencing.
Outcomes
SUPER
SERVICE
• Actionable data that had a direct impact on the
business. Once fixes were initiated, end users
saw a rapid improvement in service quality
• Rapid identification and resolution
of issues affecting their users
• Actual is being rolled out as an ongoing business
critical tool across multiple locations and services
Digital supply
chain monitored
24/7
6 Actual Experience plc Annual Report 2018
Created by Georgiana Ionescu
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What this means for businesses
“Without our analytics, the problems staff are
encountering with the applications they use on
a daily basis would have gone unresolved.
Actual enabled this global firm to quickly and
simply locate the cause of the poor quality
and introduce the required fixes.”
Brenda Belleville
Global Business Director
Actual Experience plc Annual Report 2018
7
Chairman’s statement
Generating increased
revenues
The large-scale implementation of our
Analytics-as-a-Service (AaaS) represents
the first validation of the market opportunity
for Actual Experience. The Board remains
confident that large enterprise customers of
our Channel Partners, deployed at full scale,
can deliver revenues in the order of
$500,000 per annum to the Company.
The typical size and type of organisation
with whom we have chosen to partner,
means that a committed Channel Partner
has the potential to deliver at least $10m
annual revenue to Actual Experience. We still
have some distance to go before achieving
this target, but it is one for which we have
prepared the business and which we believe
we can achieve.
Strategy
The market opportunity for Actual is vast.
In 2017, UNCTAD, the main U.N. body
dealing with trade, investment and
development issues, estimated the value
of the global digital economy to be $25t,
made up of digital transactions between
businesses and their customers.
The use of our analytics enables, for the first
time, the leaders of these businesses to see
when their customers or employees are
struggling with poor digital quality and
identify the areas impacting their digital
experience. Our unique proposition,
supporting businesses to improve the user
experience of their digital products and
services through the use of our AaaS, gives
our analytics far-reaching applicability, with
the potential to benefit the entire global
digital economy.
We will continue development, ensuring
that our product is simple to deploy and
use and that our Partners and their
customers can readily make full use of
our analytic capabilities.
Financials and cash
As a result of the first large scale customer
deployment and its part year contribution,
revenue for the year increased to £1.08m
(2017: £0.36m) with an exit Annual Recurring
Revenue figure of £1.6m. After the year end
this figure has further increased to £1.8m as
at December 2018. Given this level of
recurring revenue and year end cash
balances of £10.8m, the Board remains
confident that Actual is well positioned to
introduce our AaaS into the global digital
economy at scale.
I am pleased to report that 2018
was the year in which we
delivered the first full scale
customer deployments with one
of our Channel Partners. Our
singular focus throughout the year
on supporting our Partners to
achieve these deployments was
effective, and we were able to roll
out our analytics on time and at
scale. A second large order was
announced in June, however, the
revenues from the second
customer deployment are not
included in our FY‘18 financial
results. Its associated revenues
will contribute to the current fiscal
year’s revenue figure.
In addition to those announced, throughout
the year we saw a number of smaller
deployments into the customers of our
Channel Partners. Much like the growth
demonstrated by the second announced
deployment, we expect some of these to
grow in size and value reaching large scale
over the next 12-24 months.
“Our singular focus on
supporting our Partners
to achieve large scale
deployment was effective,
delivering greater revenue
than in previous years.”
Stephen Davidson
Non-executive Chairman
8 Actual Experience plc Annual Report 2018
8 Actual Experience plc Annual Report 2018
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Channel Partners
Working closely with two of our Channel
Partners during the year has allowed these
two Partners to create a template for
installing our analytics at scale into their
large customers. Now that this template is
in place, and its effectiveness evidenced,
we are seeing an increase in momentum
and engagement within these Partners. I
thank them for the significant investment
of resources they are making in deploying
our AaaS and their continued confidence
in our services.
Our people
Our people continue to be the core of our
success. I am delighted that employee
engagement scores continue to be high
and above the industry benchmark.
Further details of those results, support and
benefits can be found on pages 22-25 of this
report. With the rest of the Board, I would
like to extend my gratitude to all of our
colleagues for their hard work and dedication
throughout the year.
Shareholders
In September we hosted a Capital Markets
Day. Attendees had the opportunity to hear
from one of our customers first hand, as well
as seeing a live demonstration of our service
and an update on progress within
the business. I would like to thank all of our
shareholders for their time and continued
support to the Company.
Outlook
In 2018, revenues increased materially,
in validation of our business model,
establishing long-term annuity revenues.
Our focus is now to build on the success
of 2018, working closely with our Channel
Partners, to develop a pipeline and bring
an increasing number of customers into
production. We expect progress to increase
as the year goes on. The Board continues
to be confident that we can capitalise on
the massive market opportunity that is
before us, and we look forward to converting
that potential.
Stephen Davidson
Non-executive Chairman
15 January 2019
Investment case
UNIQUE
PATENTED IP
We have developed unique IP that
allows us to deliver differentiated value
propositions for our Channel Partners
and their customers. We have patents
granted in the US and China, and
pending in Europe, and over ten years
of research and development
expertise.
See pages 12-13
LARGE
ADDRESSABLE
MARKET
In 2017, UNCTAD measured
The Global Digital Economy at
$25.3t
LARGE CHANNEL
PARTNERS ENGAGED
Our Channel Partners are some of the
largest service providers in the world;
building our AaaS into their products
and processes will enable us to scale
quickly and reach further into the
Global Digital Economy.
PRODUCT AND MARKET
VALIDATION
This year we have seen the first
two full-scale deployments of our
AaaS within customers of two
different Channel Partners.
These deployments, and the Open
Purchase Orders announced during
the year, validate the product and
process improvements completed
in 2017 and supports the Board’s
belief that a Channel Partner’s
largest customers can be worth
$500k per annum to Actual
Experience when fully deployed.
See pages 10-11
See pages 18-19
SCALABLE
TECHNOLOGY
Our Digital Users are lightweight
software that can be built into both
the software and hardware that
supplies digital journeys globally.
Being built into the products, as well
as the services, provided by our
Channel Partners will enable us to
reach deeper into the Global Digital
Economy as we become integral,
rather than additional, to the services
provided by our Channel Partners.
FUNDS AVAILABLE
TO ACCELERATE
DEPLOYMENT
We exited 2018 with
£10.8m
cash
See pages 20-21
See pages 26-27
Actual Experience plc Annual Report 2018
Actual Experience plc Annual Report 2018
9
9
Market insight
The hidden cost of
lost productivity
The evidence
Digital Quality Score of 80
The cost to businesses of poor digital performance
= no time lost in an 8 hour working day
whilst often hidden is very much real.
The application being used is performing well.
Using our digital quality
scores, it is easy to see the
impact variability has on
human experience.
At a digital quality score of
80, a user would be at their
most productive.
MANAGING THE QUALITY
OF USERS’ DIGITAL
JOURNEYS AND THE
CONSISTENCY OF THEIR
EXPERIENCE IS WHERE
ACTUAL EXPERIENCE
ADDS VALUE.
Market overview
Ecommerce market (UNCTAD 2017)
$25.3t
In an increasingly digital world, the impact of
poor digital quality is a key driver of poor
productivity.
Productivity growth in advanced economies,
such as the US and Europe, remains tepid even
amid unprecedented technological change.
In this environment it is crucial that businesses,
of all sizes, are alert to the impact poor digital
quality can have on the productivity and
engagement of their workforce.
Variability in digital quality adversely affects
employee productivity. Based on our analysis
of a year’s worth of data from real-world
deployments, we can see that just a 10 point
drop in the digital quality score equates to
about an hour of lost productivity,
per employee.
Our digital quality score represents a proxy
of how a human user would describe their
experience of a digital service or application,
if you were to ask them. A low score indicates
poor digital quality and a variable experience
for the user, a high score indicates good digital
quality and a consistent experience for the
user, with no variability, giving good user
experience.
Actual Experience enables businesses to
address the causes of variability and poor
quality within the digital supply chains that
serve their employees. Taking action to
improve the digital quality score improves
the productivity of employees, saving
businesses money.
10 Actual Experience plc Annual Report 2018
10 Actual Experience plc Annual Report 2018
Digital Quality Score of 70
= ~1hr lost in an 8 hour working day,
for one employee
The inconsistency of the digital experience of the
application is having an impact on the user.
Digital Quality Score of 60
= ~2hrs lost in an 8 hour working day,
for one employee
The user experience of the application is very inconsistent.
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For a Fortune 500 Company, with
just 20% digital business
processes, a digital quality score
of 70 would cost around $200m in
lost staff time a year.
When first introducing our
analytics, customers typically have
a digital quality score of between
60 and 70.
At a digital quality score of 60, a
user would lose around two hours
a day to inconsistency and poor
quality digital experience.
Even a 10 point change in
the average Digital Quality
Score has a significant
impact on time lost.
$200m
of lost staff time per year.
What this means for businesses
“Without a firm grip on human experience, businesses are
guessing as to the effects of the variability in their digital supply
chains on employee productivity. Using Actual Experience
enables businesses to see the impact poor digital quality
is having on their employees, and by taking action
businesses can see significant improvements to
productivity within their teams.”
Professor Jonathan Pitts
Chief Science Officer
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Actual Experience plc Annual Report 2018
Actual Experience plc Annual Report 2018
11
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Business model
Our unique IP allows us to deliver high
value to Partners and stakeholders
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 9½ 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.
Annuity revenue model
We provide Analytics-as-a-Service
(AaaS) to our Channel Partners.
They build our AaaS into the solutions,
hardware and software that they
provide to their customers. This gives
our Partners and their customers the
actionable insight needed 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. We expect, on
average, the revenue to us from a Channel
Partner’s customer to be $500k per annum,
with the full-scale deployments that took place
this year validating that expectation. Our Channel
Partners have hundreds of customers at the scale
of those deployed this year, and thousands of
small and medium-sized business customers.
Digital Users (DUs) are licensed for free.
This enables customers to install them wherever
they may need them. Fees are charged on a
per analytic basis, for analysis of the DU
measurements.
As we have seen in this past year, some customers
will deploy at full scale immediately and some
will grow to full scale over a longer period. 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 AaaS by a Channel Partner
amongst their customers is likely to take three
to five years.
“As our Channel Partners build
Actual Experience into the five or
seven year service packages they
provide to their customers, we are
starting to see the first revenues
fitting our business model:
annuity revenues, recurring over
a number of years.”
Dave Page
Chief Executive Officer
12 Actual Experience plc Annual Report 2018
12 Actual Experience plc Annual Report 2018
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GENERATING VALUE
WHO BENEFITS
AaaS
Our AaaS provides actionable information for our
Channel Partners to improve the digital journeys
that exist in a highly complex digital supply chain
made up of numerous businesses and technologies.
Using our analytics, businesses can fix the causes
of the poor digital quality that impact their
customers’ perception of their brand and the
productivity of their staff.
Scalable operating model
We have invested considerable time and effort
working with our Channel Partners to be built into
their customer offerings. We will continue our focus
to be built, not only into their solutions but also, into
their software and hardware. Channel Partners will
increasingly become able to scale the 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 increase, the need for consistency
and quality to support the global digital economy
will only increase.
Channel Partners
Our AaaS improves the operational efficiency of our
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, they have actionable
information to continuously improve the quality of
digital journeys.
Shareholders
Long-term capital growth
With our long-term aim of being built into the solutions,
software and hardware supplied by our Channel
Partners, Actual Experience will be positioned to become
the digital quality management tool to the entire global
digital economy. Successful execution with our existing
Channel Partners will lay the foundation for enormous
growth potential in the next 10 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 2018
Actual Experience plc Annual Report 2018
13
13
Chief Executive’s statement
Significant progress
and growth
2018 has been a year of significant
progress and growth for the
Company. The hard work and
preparation of previous years came
to fruition as we were able to
announce the first full-scale
deployment of our analytics within
the customers of two of our
Channel Partners. The product and
process improvements completed
in previous years, with the goal of
getting us to this point, have been
validated with the value of these
first deployments supporting our
estimation that a large customer of
one of our Channel Partners when
fully deployed, can deliver revenues
in order of $500,000 per annum to
the Company.
We are at the inflection point we have been
working towards, with the first of our
Partners now deploying our analytics at a
large scale into their customers. This year,
we need to leverage the success of these
initial full-scale deployments converting the
momentum into an increasing pipeline and
ultimately revenue, continually improving our
level of Annual Recurring Revenue (ARR).
(Annual Recurring Revenue is management’s
best estimate of expected revenues of at
least 12 months in duration, based on
ongoing commercial arrangements). We will
continue to focus on our four Channel
Partners until the pipeline and associated
deal flow that they generate is systematic
and engrained into their processes and
planning, creating a more predictable and
consistent revenue stream for us.
Our Partners can be confident that we have
a product that can serve their customers at
the scale and speed demanded by large
enterprises, with these first full-scale
deployments acting as the proof-points
required for further deployments at scale.
We have seen engagement levels increase
among our Channel Partners following these
deployments, and we are expecting for the
first time one of our Partners to have their own
internal revenue forecast for our product
with resources committed wholly to us
within their product and sales organisations.
Once these systems and processes are fully
implemented, we expect them to be a driver of
revenue in FY’19, and into the years to come.
“The inflection point that
we have been working
towards for 9½ years
has been reached.”
Dave Page
Chief Executive Officer
14 Actual Experience plc Annual Report 2018
14 Actual Experience plc Annual Report 2018
Product development
The large deployments validate that the
product is fit for purpose. Now we have a
relentless focus to reduce the skills required
by our Channel Partners throughout the
product life cycle. By so doing we can,
first of all, reduce the time and effort of our
Partners in deploying these large projects
and, secondly, as the skill levels required
reduce, we can work our way into mid-tier
and ultimately into small business customers.
The simplification of the product life cycle is
key to our expanding into the addressable
market for our technology and, equally, it is
the aim of our Partners that digital quality
management becomes available to as many
of their customers as possible.
Current trading and outlook
Now that the first two full-scale deployments
of our analytics within the customers of
our Channel Partners are in place, and we
are seeing increasing momentum within
those Partners, the inflection point that we
had been anticipating has been reached.
The goal for this year is to maximise on
the opportunity within our Partners by
leveraging the success of the previous year
and building the ARR business. We are
confident that these initial deployments
will serve as the start of a growing pipeline
of deals and expect to see the number and
rate of deployments increase gradually
throughout FY’19, bringing another year of
increased revenue and continually improving
our level of ARR for the years to come.
Dave Page
Chief Executive Officer
15 January 2019
We remain focused on being increasingly
built into the deals, products and services
of our Channel Partners. This built-in model
means that we will be automatically part of
the products and services consumed by
our Partners’ customers, rather than sold
individually to each customer on every
occasion and is a feature of our wider strategy
focused on building strong relationships with
our Channel Partners. Once we are fully
built-in, the challenge of per-customer sales
is removed and we will move into more fluid
deal flow and revenue generation.
Open Purchase Order (PO)
We are encouraged by the expansion of the
open PO, another signal that our Partners
are confident in their ability to further deploy
our analytics into their customer base.
We expect acceleration to be slow at first
and build throughout the year as deals move
through the pipeline and into deployment.
Sales and marketing
As the number and scale of deployments
increase, we are developing a more robust
sales process in partnership with our
Channel Partners, ensuring that we make
the most of the opportunity that these initial
successes have given us. To support our
partners, our sales and marketing teams are
focusing on ensuring they have the tools
they need to effectively bring our proposition
to their customers.
Our messaging, which we have been
developing over a number of years, will
continue to be simplified.
We will increase our marketing efforts,
implementing a programme of digital
marketing to support our marketing within
our Channel Partners.
To enable our Channel Partners to become
more self-sufficient in the use and
implementation of our product, we will be
providing web-based training.
Supporting our partners in the selling,
implementation and use of our product will
facilitate the building of pipeline and ease of
deployment.
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Actual Experience plc Annual Report 2018
Actual Experience plc Annual Report 2018
15
15
Commercialisation strategy
Becoming built into solutions,
hardware and software
Now that we have the first successful large-scale deployments with our Channel Partners
our focus is on building on this success, supporting our customers to achieve more
successful deployments within their customers.
The two large-scale deployments announced
during the year were our biggest to date
Deployment 1
• Large healthcare provider
• 4,544 analytics
• 438 sites
Deployment 2
• Large government organisation
• 905 analytics
• 67 sites
1
COMMERCIAL
ROLLOUT
With the first large-scale deployments having
taken place, we are at the pivotal stage we
have been working towards for a number of
years. The hard work completed in FY’17 in
improving our processes and our products to
better support our Channel Partners has
been validated, and we are now focused on
leveraging this initial success.
We have earned the commitment of the first
of our Partners to accelerated progress
through the creation of joint forecasts, which
will deliver increasing deal flow and revenue.
We are continuing to work towards being
built in to the solutions, hardware and
software of our Partners, bringing our
product to more of the global digital
economy.
See page 18
2 PRODUCT INNOVATION
Continuous simplification of our product life
cycle is key to our success. To achieve this
simplification, we are constantly working to
reduce the skill level required to deploy,
configure and use our product.
Progress so far
• Launch of Computer-Aided-Design
feature (CAD) to facilitate the
deployment of large numbers of
Digital Users (DUs)
• Development of new dashboards to
simplify the understanding of our data
Releases made
available in 2018
13
See page 19
3
EXCELLENT SERVICE
Our Partners and their Customers have high
expectations of our Analytics-as-a-Service.
Supporting our Channel Partners to deploy
and use our software is integral to our
service offering.
Current focus
• Evolving and developing our 24x7
support function
• Continuous training and development
• Enhancing 2nd and 3rd line support
Support tickets
resolved by 1st line
support
87%
16 Actual Experience plc Annual Report 2018
16 Actual Experience plc Annual Report 2018
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Where we
are today
Large
customer
production
deployments
Commercialisation road map
Work to get
partners in
production*
Signing partner
framework
agreements
Small customer
production
deployments
Systemic
channel revenue
at scale
Global expansion
beyond four current
Channel Partners
Integrated
into Channel
Partners’ hardware
and software
Singular focus on four publicly announced partners
*POC, trial customer deployments,
process integration, sales training
Next steps
• Develop tools to support different use cases
• Continuous reduction in the skill level required
across the product life cycle, making it easier,
quicker and cheaper for our partners to deploy
our technology and giving us access to more
deals with smaller businesses
Future priorities
• Supporting the Channels as they scale
• Continuous process improvements
• Development of ‘centre of excellence’
for supporting our partners
Our key Channel Partners provide
global reach though initially our focus
is on North America and Europe.
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.
Actual Experience plc Annual Report 2018
Actual Experience plc Annual Report 2018
17
17
Strategy in action
Leveraging
success
Following years of hard work and dedication, we have
reached a pivotal moment for Actual Experience.
1
Commercial
rollouts
With the first two large-scale deployments successfully complete,
our partners have a template for deployment that
is referenceable and repeatable.
What this means for us
“With these two large customers the
market opportunity and the product
and process improvements we
undertook prior to these full-scale
deployments have been validated.”
Dave Page
Chief Executive Officer
Number of digital users
Number of digital users
+1,169
+290
Our goal for FY’19 is to leverage that success,
supporting our customers to complete more
large-scale deployments amongst their customers
more quickly throughout the year. By using these
deployments as a template, our Partners will be
able to accelerate deal flow and scale.
Deployed at scale
Being able to deploy our analytics at this scale
would have been impossible without the product
and process improvements that were made during
the previous year. We now know that we have an
offering that is able to be deployed at the scale
required by the largest customers of our Channel
Partners, and in a way that meets the requirements
of the Channel Partners and their end customers.
Customer satisfaction
These deployments were successful, not just in
terms of the effectiveness of the analytics or the
numbers deployed, but also in terms of customer
satisfaction; the Channel Partners and their end
customers are both happy with the results so far and
enthusiastic about continuing to use our analytics.
Next steps
These two initial deployments have created a
step-change in engagement without those Channel
Partners. The business of this next year is to convert
this enthusiasm into a forecast and pipeline,
becoming built in to the deal flow of our partners,
with revenue accelerating as FY’19 goes on.
18 Actual Experience plc Annual Report 2018
18 Actual Experience plc Annual Report 2018
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2
Product
innovation
To date, the focus of our product development has been to get our
product ready to be deployed at a large scale within a customer of
one of our Channel Partners.
Simplification
Now that our product is fit for purpose, we
are focusing on continuously reducing the
skill level required across the product lifecycle.
This simplification will serve to broaden the
addressable market for our product.
• Deploy – deployment of our DUs within a
business – to become zero touch
• Configure – the analytics and our analytics
cloud – increasingly system supported
• Use – in our primary use cases:
troubleshooting and quality improvement
– providing answers that require no
interpretation.
Insight
In addition to the continuous simplification of
the product, we are concentrating our research
to provide greater insight from the data that our
DUs gather. These developments will enable us
to deliver increasing value to our customers,
giving them faster results and a deeper
understanding of the areas affecting the
experience of their end users.
Person hours spent in
FY’18 on R&D
56,000
To ensure we retain our
competitive advantage, we
continue to build innovation
into our product.
Actual Experience plc Annual Report 2018
Actual Experience plc Annual Report 2018
19
19
Operating review
Ready to scale
During the past year, we have
successfully managed the first
large-scale deployments of
analytics within the end-customers
of two Channel Partners.
Significant process and structural activity,
carried out in 2017, created the frameworks
that ensured the business was able to
support multiple large enterprise deliveries.
Each element of the Operations Team has a
clear matrix, driven by customer forecasts,
that allows scaling to be managed effectively
and efficiently. An integrated people-plan
underpins all of our activity, blending
experienced hiring with internal training
programmes and an Apprenticeship scheme.
We can now be confident that we are ready
to service multiple Channel Partners as they
continue to scale, delivering more and larger
deployments of our analytics amongst their
customers.
24x7 support
Operations have completed the building of a
full-service help desk to support our customers
24 hours a day, seven days a week. Using ITIL
best practice, we have created a support
model that is easy for customers to engage
with, use, and can be scaled quickly. Processes
have been designed to ensure that new team
members can be efficiently trained in a short
period and ready to support customers by
resolving incidents under the supervision of an
experienced colleague.
Support structures have been designed to
resolve over 80% of requests at first point of
contact, Tier 1 teams working directly with
partners to resolve problems. More complex
issues are seamlessly escalated to Tier 2
experts who not only provide the deep
knowledge necessary but have an ongoing
focus on knowledge transfer to
their colleagues.
Ensuring that our support function is fit for
purpose to serve our Channel Partners and
their end-customers is critical to the
Company’s success. We will maintain our
focus on developing our processes, making
sure that we are exceeding the expectations
of our Partners in terms of service and
support. As the number of deployments
increases, we will continuously assess this
area of the business to maintain our ability to
service Partners at scale.
“Our Partners are
naturally demanding,
as are their Customers,
and we have to exceed
their expectations.”
Robin Young
Chief Operating Officer
20 Actual Experience plc Annual Report 2018
20 Actual Experience plc Annual Report 2018
Change Advisory Board and Project
Management Office
With Company growth, the need to establish
more robust procedures to support our
change portfolio and manage projects
throughout the business has emerged.
One of the most significant and wide-
ranging procedural improvements was the
implementation of a Change Advisory Board
(CAB), which works in conjunction with our
Prince-2-driven Project Management Office.
When GDPR hit – we were ready!
In readiness for GDPR, a year-long
programme of staff training, cataloguing
data and review of company systems was
completed. Final non-compliant systems
were removed a month before the GDPR
deadline following a complex
decommissioning project. As a critical area
of importance to our Channel Partners and
end-customers, regular system reviews are
undertaken.
Training and development
Supporting our employees through training
and development is important to the success
of the Company. Our Operations Team use
a training and development framework
designed to guide individuals through a
growth path. A mixture of technical and
personal skills become the basis for
each team member to develop, add ever
increasing value, and build their career.
This internally focused programme
minimises the need for significant
external recruitment.
Our aim is to create a centre of excellence
within Actual, where our internal support
team are the main holders of knowledge and
insight about our technology and product.
Increasing the depth and breadth of
knowledge in this area will support our
product goals, and create a service offering
that is truly scalable.
Robin Young
Chief Operating Officer
15 January 2019
CAB exists to approve and prioritise change
across the business. Representing all areas,
it operates as a single, central entity to
consider individual requests within the
whole business context. Cross-functional
assessment results in efficient resource
allocation and produces well-defined
requirements for different teams to deliver.
It is the channel through which the business
responds to internal or Customer requests,
and provides communication, to employees
and Customers, about changes that will
affect them.
Throughout the year our CAB has seen
128 business projects through to completion,
including 13 new product releases and
76 internal business changes. This system
means that as the number and complexity
of new product releases, updates and other
projects continues to increase, the business
will be able to deliver these to our Partners
in a timely and organised fashion.
Information security
Cyber security remains a key area of focus for
us and our Channel Partners. This year in
addition to retaining the Cyber Essentials Plus
accreditation, we completed an intensive
assessment through the IASME Governance
process. External audits have consistently
been impressed with the innovative approach
to security training, delivered to every part of
the organisation using a tailored Learning
Management System (LMS).
Over the last year, we (like many
organisations of similar size) have detected
a number of cyber-attacks. Our defence
systems are high-quality, wide-ranging and
cover all elements of the business.
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Actual Experience plc Annual Report 2018
Actual Experience plc Annual Report 2018
21
21
Corporate Social Responsibility
Creating a great
working environment
In addition to creating a great working
environment for our employees, we recognise
the importance of having a positive impact on
the local community and supporting charities
and causes across the globe.
Throughout the year we have supported our
employees to take part in community and
charity events. In FY’19 we will be building
on this foundation to develop a Corporate
Social Responsibilty (CSR) plan, enabling us
to increase our impact on the charities and
communities that we support.
Community and charitable activities
Our employees support a variety of charities
by taking part in events and raising funds
during the year. In FY’18 employees took part
in the Bath Boules event, which raises funds
for local charities via the Bath Boules Trust.
In addition to our annual participation in this
event, following feedback in the Employee
Engagement Survey, we launched payroll
giving in the year enabling employees to
make donations to charities of their choice
directly through payroll.
As well as employee participation in
charitable events in the local community, in
2018 we supported one of our employees to
take a sabbatical using her professional
expertise working for the Kyaninga Child
Development Centre in Uganda. She said,
“Doing this kind of work in Uganda was
interesting, fun and also challenging. I came
home with a renewed appreciation of many
things including my job at Actual. We work
for a company that really supports people, as
evidenced by them allowing me the time to
go and pursue one of my dreams!”
Training hours provided
+225
New staff during the year
+20
We want to continue to support and
encourage our employees to be involved
with the local community, supporting
charities and making a positive impact. In
FY’19 we will increase the number and
expand the type of events that we take part
in to support charities and the local
community, recognising that our employees
want to support organisations that are
meaningful to them using their skills to
benefit others.
Our people
Our people are key to our success. It is
important that we encourage our diverse and
talented team, creating an environment where
they can enjoy coming to work, have fun and
thrive in their careers while meeting their
personal development goals. We offer a variety
of benefits to our employees including, health
insurance, share options, company events and
parties, in-office yoga, and a free lunch on
Fridays. By ensuring that all of our employees
enjoy their roles and working together, we are
making sure that we have the best team in
place to support our customers.
Training and development priorities: In order
to provide the best products and services for
our customers, our employees need to be
knowledgeable in their areas and confident
in their roles. In the year, we launched our
LMS for employees which provides the
learning content they need for their roles,
as well as more general training in areas
such as GDPR and security.
Throughout FY’19 we will continue to grow
our training and development offering. As
well as adding to our LMS, we will formally
launch Personal Development Plans (PDPs)
for all employees. These will enable
managers to support their teams to achieve
their career and personal development goals,
highlighting areas where additional support
is required and pinpointing the resources
needed to support our employees.
Apprenticeships and mentoring initiatives:
Our employees supported two local schools
by mentoring a group of 30 students. The
mentoring sessions took place in our Bath
HQ, with the team of employees working
with the students on areas such as CV
writing and confidence. This was a great
opportunity, not only for the students
themselves who got to see a real workplace
and consider pathways for their lives after
school, but also for our employees who
developed their presentation and leadership
skills during the six-week programme.
22 Actual Experience plc Annual Report 2018
22 Actual Experience plc Annual Report 2018
Apprenticeships
AN ‘ACTUAL’
JOURNEY
Meet Ben Durrant,
Apprentice Service Desk
Support Analyst
Why did you choose to do an
apprenticeship?
The idea of doing an apprenticeship
was suggested to me by my dad,
after I decided to decline a place at the
University of Lincoln. The idea of doing an
apprenticeship appealed to me as it would
provide good work experience, while
getting paid and earning a qualification.
What was the best thing about it?
Aside from the “getting paid to learn
instead of paying to learn” aspect, I also
like how practical apprenticeships are.
I much prefer to learn by doing, rather
than studying.
How do you find working at
Actual Experience?
I love working at Actual, the culture is
very welcoming and friendly. The food
on Fridays is an obvious upside, but
ultimately it’s the people around you that
affect whether you enjoy your job.
What will you do when your
apprenticeship has finished?
Initially I’ll stay on the Tier 1 service desk,
but eventually I plan to progress into other
teams. I’d like to be somewhere in the
design/UI area but will need to brush
up on my skills before I get there.
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We encourage
collaboration
between teams.
As part of our commitment to supporting
learning and development, we took on an
apprentice in the year. With a dedicated
development plan, and support from
management and HR, he has been learning
about our business with the view to
becoming a fully certified Service Desk
Analyst. This will be the first step on his
career development with us, as many of our
Service Desk team grow within the company,
taking on new roles within Operations as
they further develop their skills.
Culture and values
Having a strong culture and values is vital to
the success of any organisation. At Actual, it
is important to us that our employees feel
valued and part of a team that works
together to achieve its goals.
We have regular All Company Updates,
during which Dave Page and other members
of the Leadership Team update employees
about company progress, new initiatives and
product developments. We are a dispersed
team, with employees based in the US and
Europe, so these regular updates (which can
be accessed via phone and video) are key to
ensuring that all of our employees are fully
engaged with the business.
We like to encourage a culture of curiosity
and learning within our teams. To support
learning and sharing of knowledge within the
Company, we run a series of ‘Lunch and
Learns’. These sessions take place over
lunch breaks with presentations from our
staff about projects they have been working
on, introducing new initiatives to the team,
and external speakers on topics such as
entrepreneurship and charity work.
The year ahead
As we continue our external focus on
supporting our Channel Partners, our
internal focus will remain on supporting our
staff to achieve our business goals, part of
this support will be continuing to develop our
CSR programme.
Encouraging our employees to become
involved in our CSR initiatives will be a key
focus. Using their skills within the local
community will help our people to continue
to grow, giving increased job satisfaction and
a greater sense of well-being.
Actual Experience plc Annual Report 2018
Actual Experience plc Annual Report 2018
23
23
Focus on our people
A collaborative
workplace where
talent thrives
We attract
THE BEST
TALENT
The market for talent within the IT and
software industries is very competitive.
We have built our Bath HQ and
employee benefits package to enable us
to compete with the big technology
companies in the south west. Our
employees enjoy a relaxed and vibrant
office environment where we support
them to be the best that they can be,
achieving success in their roles and
developing their careers and
personal goals.
We encourage
DIVERSITY WITHIN
OUR TEAM
We believe that diversity of experience
and background within teams
encourages creativity. We have policies
and procedures in place to support all
employees. While our gender split
continues to be higher than the industry
average, at 25% female, we are
proactively looking to improve this as
we believe in the importance of our
team reflecting the customers we serve.
Total staff split
by gender
65 Male employees
25 Female employees
At Actual Experience, our
people are key to our
success. We are proud of our
ability to attract and retain the
best people who work hard
to ensure that our product
delights our customers.
Employees
90
“Actual Experience is
a great place to work,
filled with people who
are passionate about
their jobs and enjoyable
to work with.”
Renée Jacobs
Business Projects Manager
24 Actual Experience plc Annual Report 2018
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We equip
OUR PEOPLE WITH
THE RIGHT SKILLS
We care
WHAT OUR
PEOPLE THINK
We support
THE LOCAL
COMMUNITY
We recognise that enabling our
employees to continue to develop, learn
and grow is integral, not only to their
success as individuals, but also to our
success as a company. In 2018, we
started work on developing our learning
management system to support all
employees to gain the knowledge and
skills they need to excel in their careers.
We encourage our employees to take
part in our six-monthly Employee
Engagement Surveys. These surveys
act as a temperature check for our
business, gathering the feedback of our
staff enables us to understand what is
important to them and to introduce
improvements throughout the business.
As an employer in Bath, we recognise
that we have an impact on the local
community. Our employees are excited
by the opportunity to support local
charities and get involved in the
community. As well as taking part in
fundraising activities for local charities,
in FY’18 members of our team
mentored students from two local
schools, a project that benefits the
students and our employees alike.
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Investment in learning
and development
+£35k
Staff engagement rate
Actual Experience
Engagement Survey
93%
We took part in the Bath Boules event.
Actual Experience plc Annual Report 2018
25
Financial review
Revenue
Revenue recognised in the year ended
30 September 2018 was £1,076,463 (2017:
£364,832) and relates to the supply of
analytical services and associated
consultancy activities to customers.
95% of revenue was derived from sales
to Channel customers (2017: 68%) 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
The gross loss for the year was £88,645,
a significant reduction from the prior year
(2017: loss of £935,852). In addition to the
increase in revenue, the Group further
improved the efficiency of its infrastructure
while continuing to provide full support for
its Channel Partners.
Expenses
Administrative expenses comprising R&D,
operational support, sales and marketing,
finance and administration costs, and foreign
exchange gains and losses, totalled
£7,293,472, an increase of £316,658
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 75% of the Group’s
cost base. The functional cost breakdown is
on the facing page.
“The Group ended the
year with cash totalling
£10.78m.”
Steve Bennetts
Chief Financial Officer
26 Actual Experience plc Annual Report 2018
26 Actual Experience plc Annual Report 2018
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Human rights policy
We have adopted a formal equal
opportunities policy which is contained
in our 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, gender, disability, sexual
orientation, marriage or civil partnership,
pregnancy or maternity, religion or belief,
or age.
Employees
As at 30 September 2018 the Group
employed 90 people in two offices (2017:
80 people), of whom 65 were male and 25
were female. As at the date of this document,
of the seven senior members of
management, one is female.
Directors
Details of the Directors who served during
the year ending 30 September 2018 are
noted in the 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
15 January 2019
Administrative Expenses
Research and development
Operational support
Sales and marketing
Finance and administration
Foreign exchange gains/(losses)
Total
Tax
The tax credits recognised in the current and
previous financial year arose from the accrual
of R&D tax credits.
Loss for the year
Losses after tax totalled £7,211,796 (2017:
loss of £7,397,149). These losses are primarily
generated by employee costs and related
expenses.
Loss per share
The loss per share for the year was 16.08p
(2017: loss of 17.72p). The reduction in loss
per share is primarily the result of an
increase in the weighted average number of
ordinary shares in issue during the year.
Dividend
No dividend has been proposed for the year
ended 30 September 2018 (2017: £nil).
Cash flow
We are investing in the growth of our
operations to address what we believe to be
a significant commercial opportunity and our
cash flow from operations was therefore
negative during the year ended
30 September 2018, and 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 £6,433,222 for
the year, compared to cash used of
£7,086,016 for the year ended 30 September
2017. This operating cash requirement was
substantially funded by cash reserves and
the Group ended the year with cash and
term deposits totalling £10,776,516
(2017: £18,209,850).
Free cash flow for the year was £(7,629,560)
(2017: £(8,175,879)). Free cash flow is defined
as net cash flows used in operating activities,
plus development of intangible assets, plus
purchase of property, plant and equipment.
2018
£
2,555,825
1,120,428
2,559,403
1,101,868
(44,052)
7,293,472
2017
£
2,268,142
925,777
2,635,094
1,030,139
117,662
6,976,814
Software development capitalisation
The Directors believe that the software
development capitalisation criteria in
IAS38 have been met and accordingly
cumulative development costs, net of
amortisation charges, of £1,579,227 have
been capitalised as at 30 September 2018
(2017: £1,266,261).
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 48 to 53.
Principal risks and uncertainties
The principal risks and uncertainties facing
the Group are set out on pages 28 and 29.
Key performance indicators (KPIs)
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 £1,076,463 (2017:
£364,832) and the level of cash and term
deposits held in the business of £10,776,516
(2017: £18,209,850). 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.
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 a materially adverse
impact on the environment.
Actual Experience plc Annual Report 2018
Actual Experience plc Annual Report 2018
27
27
Principal risks and uncertainties
Risk management framework
In common with all businesses, we are exposed to risks and uncertainties as an inherent part of creating value for our 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. The identification of risk therefore continues to be an important
activity and effective risk management is 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 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 meets 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.
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
achieving our strategic operations are as summarised
on the opposite side:
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
•
• Funding and resource allocation
Implementation of risk mitigations
MASTER RISK REGISTER
28 Actual Experience plc Annual Report 2018
28 Actual Experience plc Annual Report 2018
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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.
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.
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.
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.
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, there could be a
material adverse impact on our financial position.
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 analytical 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.
Developing the human resources function
The HR function is leading new initiatives and enhancing existing processes with
regard to recruitment activities, employment practices and staff benefits.
The Group has introduced share-based compensation as 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. The Group has 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 2018
Actual Experience plc Annual Report 2018
29
29
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 Chairman of
Rosenblatt plc, 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
$1 billion 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 EY 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 $1 billion.
E
30 Actual Experience plc Annual Report 2018
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Committee membership
Executive Board
Audit
Remuneration
Nomination
Risk
Denotes Chairman
Independence
n Independent
n Non-independent
3
4
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 Managing Partner,
Technology at 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 Navenio
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.
E
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Actual Experience plc Annual Report 2018
31
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 2018. 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 2018 are
set out in the Consolidated statement of comprehensive income on
page 44.
The Directors do not propose payment of a dividend for the year
ended 30 September 2018 (2017: 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 1
to 29. 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 30 and 31.
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 39 to 40. 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 Remuneration report.
As permitted by the Articles of Association, in accordance with the
provisions 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. 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 2018 there were in issue
44,902,338 fully paid ordinary shares. All shares are freely transferable
and rank pari passu in all respects, including voting and dividend rights.
Substantial shareholdings
As at 31 December 2018, shareholders holding more than 3% of the
share capital of Actual Experience plc were as follows:
Name of shareholder
Number of shares % of voting rights
IP Group plc
Lombard Odier
M&G
Mr Michael Edge
Queen Mary University of London
Mr Dave Page
Professor Jonathan Pitts
Allianz
Ruffer
9,928,384
6,862,224
6,615,674
3,195,000
2,610,000
1,932,368
1,879,750
1,704,594
1,519,488
22.11%
15.28%
14.73%
7.12%
5.81%
4.30%
4.19%
3.80%
3.38%
Save as referred to above, the Directors are not aware of any persons
as at 31 December 2018 who were interested in three percent 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 1 March 2019 at the London office of
Osborne Clarke. On pages 70 and 71 is the Notice of the AGM, which
gives details of the resolutions to be proposed to shareholders.
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.
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 Directors are aware, there is no relevant audit
•
information of which the Company and the Group’s auditors are
unaware, and
the Directors have taken all the steps that ought to have been
taken as Directors 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
15 January 2019
32 Actual Experience plc Annual Report 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 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
that 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 the
Corporate governance 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 2018
33
Corporate governance report
Chairman’s Corporate Governance Statement
Dear fellow shareholders
Since our listing on AIM in February 2014 the Board has been
committed to good corporate governance in the management
and operation of the Group’s business. While adherence to the
UK Corporate Governance Code was not mandatory the
Company sought to follow its recommendations wherever
practical.
In March 2018, the London Stock Exchange introduced a new
requirement for companies listed on AIM to apply a recognised
corporate governance code by 28 September 2018. Having
obtained advice from both the Company’s legal advisers and
Nomad, the Board decided to adopt the Quoted Companies
Alliance Corporate Governance Code for Small and Mid-Size
Quoted Companies (the QCA Code) with effect from
28 September 2018.
The QCA Code, which was fully updated in April 2018, sets out
ten corporate governance principles and requires the Company
to publish certain related disclosures; these will appear in this
Annual Report and on our website, in accordance with the
recommendations in the QCA Code. This information will be
reviewed annually and the date of this review will be noted on
our website.
The Directors recognise the importance of sound corporate
governance and fully support the adoption of the QCA Code.
Furthermore, we remain committed to delivering the long-term
success of the Group through an effective framework of
leadership, management and controls.
Stephen Davidson
Non-executive Chairman
15 January 2019
Board composition
We are led by a strong and effective Board of Directors.
The Board 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
Non-executive Chairman
Sir Bryan Carsberg
Dr Mark Reilly
Paul Spence
Non-executive Directors
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 30 and 31.
“The Directors recognise
the importance of sound
corporate governance and
fully support the adoption
of the QCA code.”
Stephen Davidson
Non-executive Chairman
34 Actual Experience plc Annual Report 2018
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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 is responsible for the Group’s strategy and for its overall
management. The operation of the Board is documented in a formal
schedule of matters reserved for its approval. These include matters
relating to:
• The Group’s strategic aims and objectives.
• The structure and capital of the Group.
• Financial reporting, financial controls and dividend policy.
•
Internal control, risk, and the Group’s risk appetite.
• The approval of significant contracts and expenditure.
• Effective communication with shareholders.
• Changes to Board membership or structure.
Apart from the matters above, the Board has delegated all authority
to the Executive Directors on the 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.
Board meetings
The Board met six times in the 2018 fiscal year. In addition, the
Non-executive Directors communicate directly with executive
Directors and senior management between formal Board meetings.
The Board held a dedicated meeting to discuss strategy in May 2018
and intends to schedule similar meetings annually.
Directors are expected to attend all meetings of the Board and
Committees on which they sit, and to devote sufficient time to the
Group’s affairs to enable them to fulfil their duties as Directors. In the
event that Directors are unable to attend a meeting, their comments
on papers to be considered at the meeting will be discussed in
advance with the Chairman so that their contribution can be included
in the wider Board discussion.
The following table shows Directors’ attendance at scheduled Board
and Committee meetings during the year:
Board
Audit
Remuneration
Risk
Stephen Davidson
Sir Bryan Carsberg
Paul Spence
Mark Reilly
Dave Page
Robin Young
Steve Bennetts
*attended by invitation
6/6
6/6
6/6
6/6
6/6
5/6
6/6
3/3*
3/3
3/3
3/3
3/3*
-
3/3*
3/3
3/3
-
3/3
3/3*
-
3/3*
2/3*
-
3/3
-
3/3
3/3
3/3
The Chairman, aided by the Company Secretary, is responsible for
ensuring that the Directors receive accurate and timely information.
Board Committees
The Board has delegated certain powers and duties to the Audit, Remuneration, Risk and Nomination Committees, details of which are set out
in the table below. Each Committee has written terms of reference setting out its duties, authority and reporting responsibilities. Copies of these
terms of reference are available on the Company website (www.actual-experience.com). The terms of reference of each Committee is reviewed
annually by the Board to ensure they remain appropriate and reflect changes to legislation, regulation and best practice.
The workload of the Committees is greater than the scheduled meetings would indicate as ad hoc meetings and communications between
meetings are frequently required.
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.
The Audit committee report on page
38 contains more detail on the
Committee's role.
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.
The Remuneration committee report
on page 39 contains more detail on
the Committee's role.
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.
The Principal risks and uncertainties
on pages 28 and 29 contains more
detail on the Committee's role.
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 2018
35
Corporate governance report continued
The Company Secretary compiles the Board and Committee papers,
which are electronically circulated to Directors at least two days
prior to meetings. The Company Secretary provides minutes of
each meeting and every Director is aware of the right to have any
concerns minuted.
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.
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.
Insurance
The Board has in place Directors’ and Officers’ Liability insurance.
Board performance
In September 2018 each Director completed a questionnaire
designed to measure the effectiveness of Board performance.
The consolidated results of this exercise were subsequently reviewed
by the Board. While no major performance impairments were noted,
several minor matters were identified for further attention.
It is intended that Board performance will be assessed on an annual basis
and any significant matters arising will be noted in the Annual Report.
The QCA corporate governance code
The Board has adopted the Quoted Companies Alliance (QCA) Corporate Governance Code. Set out below is how we currently
comply with the key principles set out in the QCA code.
Statement of Compliance with the QCA Corporate Governance Code
Governance principles
Compliant Explanation
Deliver
growth
1. Establish a strategy and business
model which promote long-term value
for shareholders.
2. Seek to understand and meet
shareholder needs and expectations.
3. Take into account wider stakeholder
and social responsibilities and their
implications for long-term success.
4. Embed effective risk management,
considering both opportunities and
threats, throughout the organisation.
Maintain
a dynamic
management
framework
5. Maintain the Board as
a well-functioning, balanced
team led by the Chair.
6. Ensure that between them the
Directors have the necessary
up-to-date experience, skills and
capabilities.
Our strategy is focussed on our four Channel Partners,
until we produce channel revenue at scale.
Regular dialogues are held with shareholders.
The CEO meets regularly with analysts and investors.
The company also uses the Annual General Meeting
as an opportunity to communicate with its shareholders.
Actual Experience’s business model can be found
within the Strategic Report of this document. In it we
identify our stakeholders including our Channel Partners,
end users, shareholders and employees. The principal
ways in which their feedback is gathered is via meetings
and conversations, and through our support system
for customers.
The Board is responsible for ensuring the Group has
effective and sound systems of internal controls, which are
designed to manage the risk of failure to achieve business
objectives and provide reasonable assurance against
material misstatements and loss. The Board, with the
advice of the Audit Committee, has reviewed the
effectiveness of the systems of internal control for the
year to 30 September 2018.
The composition and experience of the Board is shown
in the Annual Report. The Board has a formal schedule of
matters reserved for its approval and is supported by the
Audit, Remuneration, Risk and Nomination Committees.
All Directors are required to devote sufficient time to carry
out their role.
The Board is satisfied that, between the Directors, it has an
effective and appropriate balance of skills and experience,
including in the areas of technology and software, business
transformation and management, capital markets, change
management and governance. To ensure that the Directors
maintain appropriate skills they are provided with training
when identified as appropriate by the Chairman.
Further reading
See pages 16-17
www.actual-experience.com/
about/investors/board-and-
governance/governance/
See pages 12-13
www.actual-experience.com/
about/investors/board-and-
governance/governance/
See pages 32-33
www.actual-experience.com/
about/investors/board-and-
governance/governance/
36 Actual Experience plc Annual Report 2018
Governance principles
Compliant Explanation
Maintain
a dynamic
management
framework
7. Evaluate Board performance based
on clear and relevant objectives,
seeking continuous improvement.
8. Promote a corporate culture
that is based on ethical values and
behaviours.
9. Maintain governance structures
and processes that are fit for purpose
and support good decision-making by
the Board.
10. Communicate how the Company
is governed and is performing
by maintaining a dialogue with
shareholders and other relevant
stakeholders.
Build trust
The Board regularly considers and evaluates its own
performance and effectiveness and that of the individual
Directors and Board Committee members. The first Board
Effectiveness Assessment was completed by all Directors in
September 2018.
The Board believes that the promotion of a corporate
culture based on sound ethical values and behaviours is
essential to creating a workplace environment that allows
people to flourish and this will contribute to enhancing
shareholder value.
The Board is collectively responsible for the long-term
success of Actual Experience. It has a schedule of matters
reserved for its approval which covers the key areas of the
management and governance of the Company.
The Reports, Results and Presentation page can be found
on the Company’s website. Results from our AGMs are
announced via RNS, and historical announcements can be
accessed via the RNS and News page of our website.
www.actual-experience.com/
about/investors/reports-results-
and-presentations/reports-
results-and-presentations/
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Further reading
See page 36
www.actual-experience.com/
about/investors/board-and-
governance/governance/
See pages 32-33
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Internal controls
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.
The principal elements of the Group’s internal control system are:
i. Close management of the day to day activities of the Group by the
Executive Directors.
ii. An organisational structure with defined levels of responsibility,
which promotes entrepreneurial decision-making and rapid
implementation whilst minimising risks.
iii. A comprehensive annual budgeting process producing a detailed
integrated profit and loss, balance sheet and cash flow, which is
approved by the Board.
iv. Detailed monthly reporting of performance against budget.
v. Central control over key areas such as capital expenditure
authorisation and banking facilities.
The Group continues to review its system of internal control to
ensure compliance with best practice, whilst also having regard to
its size and the resources available. The Board considers that the
introduction of an internal audit function is not appropriate at
this time.
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 Meeting on
page 70. This Notice of Meeting has been circulated to shareholders
and is on the Company’s website.
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.
Stephen Davidson
Non-executive Chairman
15 January 2019
Actual Experience plc Annual Report 2018
37
Audit Committee report
Duties
The main duties of the Audit Committee are set out in its Terms
of Reference, which are available on the Company’s website
(www.actual-experience.com) and on request from the Company
Secretary.
The main items of business considered by the Audit Committee
during the year included:
•
• consideration of the external audit report and management
review of the financial statements and Annual Report,
representation letter,
• going concern review,
•
•
•
• meetings with the auditor with and without management present.
review of the 2018 audit plan and audit engagement letter,
review of the risk management and internal control systems,
review of the interim results,
Role of the Auditor
The Audit Committee monitors the relationship with the auditor,
PwC LLP, to ensure that auditor independence and objectivity are
maintained. As part of its review the Committee monitors the
provision of any non-audit services by the external Auditor.
The Audit Committee recommends that PwC LLP be re-appointed
as the Group’s Auditor at the next AGM.
Audit process
The Auditor prepares an audit plan for the full year financial
statements. The audit plan sets out the scope of the audit, areas of
special focus and audit timetable. This plan is reviewed and agreed
in advance by the Audit Committee. The Auditor also carries out a
review of interim financial reporting. Following the audit of the annual
financial statements and the review of the interim report, the Auditor
presents its findings to the Audit Committee for discussion. No major
areas of concern were highlighted by the Auditor during the year.
However, areas of significant risk and matters of audit judgment are
regularly discussed.
Internal audit
At present, in keeping with the size and level of complexity of the
affairs of the Group, it does not have an internal audit function.
The Committee keeps under review the desirability of establishing
an internal audit function.
Risk management and internal controls
As described on page 28 of the Corporate Governance Report, the
Group has established a framework of risk management and internal
control systems, policies and procedures. The Audit Committee is
responsible for reviewing the risk management and internal control
framework and ensuring that it operates effectively. During the year,
the Committee has reviewed the framework and the Committee is
satisfied that it is currently operating effectively.
Whistleblowing
The Group has in place a whistleblowing policy which sets out
the formal process by which an employee of the Group may, in
confidence, raise concerns about possible improprieties in financial
reporting or other matters. Whistleblowing is a standing item on the
Committee’s agenda, and updates are provided at each meeting.
During the year, there were no incidents for consideration.
Introduction to the Audit Committee report
Dear shareholders
I am pleased to present the report of the Audit Committee, which
provides a summary of the Committee’s role and activities during
the year ending 30 September 2018. In summary, these activities
help to ensure that the interests of shareholders are protected and
the Group’s reporting is fair, balanced and understandable.
The Audit Committee is responsible for monitoring the financial
reporting process, including the integrity of the financial
statements, reviewing financial disclosures, the application of
accounting policies, and accounting judgments. It reviews the
Group’s internal control and risk management systems, monitors
the extent and nature of the non-audit services undertaken by
external auditors, advises on the appointment of external auditors
and maintains a regular dialogue with external auditors, both with
and without executives.
Sir Bryan Carsberg
Audit Committee Chairman
15 January 2019
Members of the Audit Committee
During the year, the Committee consisted of three Non-executive
Directors: Mark Reilly, Paul Spence, and Bryan Carsberg, its
Chairman. By invitation, meetings of the Committee may be attended
by the Chairman of the Board, the Chief Executive Officer and the
Chief Financial Officer. The Committee met three times in the year.
The Board is satisfied the Chairman of the Committee has recent
and relevant financial experience. He is a Chartered Accountant
and served for six years as Secretary General of the International
Accounting Standards Committee and in senior roles both in the
Public Sector and as a Non-executive Director of leading technology
companies.
The Committee’s deliberations are reported at the subsequent Board
meeting and the minutes of each meeting are made available to all
members of the Board.
38 Actual Experience plc Annual Report 2018
Directors’ remuneration report
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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
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.
The objective of the Group’s remuneration policy is to attract,
motivate, and retain high quality individuals who will contribute fully
to the success of the Group. The Committee seeks to ensure that a
competitive and appropriate base salary is paid to Executive 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.
Pension and other benefits
As with all employees, the Executive Directors may participate in the
Group defined contribution pension scheme. In the 2018 fiscal year,
the maximum employer pension contribution was 3% of base salary.
The only other significant benefits that Executive Directors are
entitled to are private health insurance and life assurance.
3
3
3
3
3
3
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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Actual Experience plc Annual Report 2018
39
Directors’ remuneration report continued
Directors’ remuneration (audited)
The remuneration of the Board Directors of Actual Experience plc during the year ended 30 September 2018 was:
Salary
and
fees
£
Employer
pension
contributions
£
Healthcare
£
Stephen Davidson1
Dave Page
Steve Bennetts1
Robin Young1
Sir Bryan Carsberg1
Dr Mark Reilly
Paul Spence1
Total
50,000
150,000
130,000
150,000
25,000
25,000
25,000
555,000
–
2,250
2,600
–
–
–
–
4,850
–
402
741
436
–
–
–
Total
Year ended
30 September
2018
£
Total
Year ended
30 September
2017
£
50,000
157,652
138,341
155,436
25,000
25,000
25,000
50,000
151,158
127,006
150,169
25,000
25,000
25,000
Bonus
£
–
5,000
5,000
5,000
–
–
–
1,579
15,000
576,429
553,333
1 In addition, certain Directors hold share option scheme interests in the Group. Fair value share-based payment charges recognised in the Consolidated Statement of
Comprehensive Income attributable to these Directors are: Stephen Davidson £0 (2017: £1,841), Steve Bennetts £3 (2017: £1,176), Robin Young £5,380 (2017: £12,519),
Sir Bryan Carsberg £0 (2017: £1,841), and Paul Spence £8,975 (2017: £21,351).
Directors’ shareholdings (audited)
The interests of the Directors holding office at 30 September 2018 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
2018
Number
20,000
1,932,368
175,500
2,600
–
65,500
–
2018
%
0.04
4.30
0.39
0.01
–
0.15
–
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 2018 were:
Steve Bennetts
Steve Bennetts
Stephen Davidson
Robin Young
Robin Young
Sir Bryan Carsberg
Paul Spence
At 1 October
2017
Granted during
year
At 30 September
2018
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
15 January 2019
40 Actual Experience plc Annual Report 2018
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 2018 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 International Financial Reporting Standards (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 2018; 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: £364,000 (2017: £370,000), based on 5% of loss before tax.
• Overall company materiality: £325,000 (2017: £370,000), based on 5% of loss before tax.
• The audit has scoped in all operations being Actual Experience plc and Actual Experience Inc.
• Overall coverage is therefore 100% of group operations.
• All work is performed by the group auditor.
• Risk that internally generated intangible assets capitalised 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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Actual Experience plc Annual Report 2018
41
Independent auditors’ report to the members of Actual Experience plc continued
Key audit matter
How our audit addressed the key audit matter
Risk that internally generated intangible assets capitalised do not
qualify for recognition and that costs previously capitalised may not
be recoverable.
Group and parent Company.
We have considered whether the amounts capitalised in the year
meet the criteria for capitalisation set out in IAS 38. This included
meeting with appropriate members of management involved with the
projects to understand the nature of them and testing on a sample
basis the specific costs capitalised.
We focus on this area because of the magnitude of the cumulative
capitalised development expenditure of £1.6m and the risk that
amounts may not be recoverable if future revenue growth is not
realised. Furthermore, we note that judgment is applied by
management whether the costs that are capitalised in the year meet
the criteria in IAS 38. This risk is set out in the critical accounting
estimates and areas of judgement included in note 2.
For cumulative amounts capitalised we considered and challenged
management on the economic benefits expected to flow from the
technology introduced from the projects. Management demonstrated
the operation of new technology developments that had been
completed and demonstrated a market for them, given the customer
agreements that had been put in place and which were expected to
deliver growth in revenues in the future.
As a result of our work we determined that the judgement of
management that the amounts capitalised were not impaired to
be reasonable.
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 as it represents a
significant portion of loss before tax adjusted for intercompany revenue transactions. It does not generate external revenue.
Due to the availability of centralised financial information and the centralised accounting function, the component audit of Actual Experience
Inc. is performed by the group engagement team.
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
Company financial statements
Overall materiality
£364,000 (2017: £370,000).
How we determined it
5% of loss before tax.
£325,000 (2017: £370,000).
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 £123,000 and £364,000.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £18,200 (Group audit)
(2017: £20,650) and £18,200 (Company audit) (2017: £20,650) as well as misstatements below those amounts that, in our view, warranted
reporting for qualitative reasons.
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.
42 Actual Experience plc Annual Report 2018
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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 2018 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 33, 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.
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
15 January 2019
Actual Experience plc Annual Report 2018
43
Consolidated statement of comprehensive income
for the year ended 30 September 2018
REVENUE
Cost of sales
GROSS LOSS
Administrative expenses
OPERATING LOSS
Finance income
LOSS BEFORE TAX
Tax
LOSS FOR THE YEAR
Other comprehensive (expense)/income:
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
4
5
7
8
2018
£
1,076,463
(1,165,108)
(88,645)
(7,293,472)
(7,382,117)
89,061
(7,293,056)
81,260
2017
£
364,832
(1,300,684)
(935,852)
(6,976,814)
(7,912,666)
40,849
(7,871,817)
474,668
(7,211,796)
(7,397,149)
(29,951)
70,693
(7,241,747)
(7,326,456)
9
(16.08)p
(17.72)p
44 Actual Experience plc Annual Report 2018
Consolidated statement of changes in equity
for the year ended 30 September 2018
At 1 October 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
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 2018
Note
Share
capital
£
Share
premium
£
Accumulated
losses
£
Total
equity
£
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
–
–
–
283
–
–
–
–
119,883
–
(7,211,796)
(29,951)
(7,241,747)
–
177,413
(7,211,796)
(29,951)
(7,241,747)
120,166
177,413
89,805
31,928,013
(18,903,969)
13,113,849
17
20
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Actual Experience plc Annual Report 2018
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Consolidated statement of financial position
as at 30 September 2018
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 15 January 2019.
Stephen Davidson
Non-executive Chairman
Steve Bennetts
Chief Financial Officer
Company number: 06838738
Note
2018
£
2017
£
10
11
250,250
1,579,227
350,704
1,266,261
1,829,477
1,616,965
12
8
13
14
684,578
735,634
–
10,776,516
487,189
568,102
5,000,000
13,209,850
12,196,728
19,265,141
14,026,205
20,882,106
8
(26,863)
(26,863)
(37,744)
(37,744)
15
(885,493)
(786,345)
(885,493)
(786,345)
(912,356)
(824,089)
13,113,849
20,058,017
17
17
18
89,805
31,928,013
(18,903,969)
89,522
31,808,130
(11,839,635)
13,113,849
20,058,017
46 Actual Experience plc Annual Report 2018
Consolidated statement of cash flows
for the year ended 30 September 2018
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 (paid)/received
Net cash flows used in operating activities
Cash flows from investing activities
Development of intangible assets
Purchases of property, plant and equipment
Transfers from/(to) term deposits with more than three months’ maturity
Finance income
Net cash inflow/(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
(Decrease)/increase 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
10
11
20
11
10
13
17
2018
£
2017
£
(7,293,056)
(7,871,817)
138,422
844,898
522
177,413
(89,061)
(6,220,862)
(173,317)
58,110
(6,336,069)
(97,153)
107,233
162,059
1,014
154,987
(40,849)
(7,487,373)
(83,913)
221,661
(7,349,625)
263,609
(6,433,222)
(7,086,016)
(1,157,864)
(38,474)
5,000,000
89,061
(912,279)
(177,584)
(5,000,000)
40,849
3,892,723
(6,049,014)
120,166
(18,000)
16,987,586
(55,950)
102,166
16,931,636
(2,438,333)
4,999
13,209,850
3,796,606
(2,642)
9,415,886
14
10,776,516
13,209,850
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Actual Experience plc Annual Report 2018
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Notes to the consolidated financial statements
for the year ended 30 September 2018
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 2018. These include comparatives for the year ended
30 September 2017.
The Company’s registered office is Quay House, The Ambury, Bath, BA1 1UA.
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.
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 2018, the Group had a cash and cash equivalents position of £10,776,516 with no bank debt. The Directors have prepared
detailed monthly projections of future cash flows for the remainder of the financial year to September 2019 and the subsequent financial year,
2020. 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 2020. 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.
48 Actual Experience plc Annual Report 2018
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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 2018
49
Notes to the consolidated financial statements continued
for the year ended 30 September 2018
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.
Subsequent to initial recognition, assets are measured at either amortised cost, fair value through other comprehensive income or fair value
through statement of comprehensive income.
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. Cash and cash equivalents are held in either UK sterling
or US dollars and are placed on deposit in UK and US banks.
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 held 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 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 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 £878,378 (2017:
£58,113). A one-year increase in the period over which such development costs are amortised would have reduced loss before income tax by
£285,353 (2017: £31,847).
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
There have been no material impacts following new and revised standards which are relevant to the Group.
Certain new standards, amendments and interpretations to existing standards have been published and are mandatory for accounting periods
beginning on and after 1 October 2018 or later but the Group has chosen not to adopt early. These include the following standards which are
relevant to the Group:
• Amendments to IFRS 2 Share-based payment to clarify the classification and measurement of share-based payment transactions.
•
•
•
IFRS 9 Financial instruments.
IFRS 15 Revenue from contracts with customers.
IFRS 16 Leases.
IFRS 15 replaces IAS 18 ‘Revenue’ and IAS 11 ‘Construction Contracts’ and is effective for annual periods beginning on or after 1 January 2018.
Actual Experience plc Annual Report 2018
51
Notes to the consolidated financial statements continued
for the year ended 30 September 2018
2 Significant accounting policies continued
Changes in accounting policies continued
The core principle of IFRS 15 is that revenue reflects the transfer of goods or services to customers in an amount that reflects the consideration
to which an entity expects to be entitled.
The recognition of such revenue is in accordance with five steps to: identify the contract; identify the performance obligations; determine
the transaction price; allocate the transaction price to the performance obligations; and recognise revenue when the performance obligations
are satisfied.
As part of the implementation, the Group has conducted a thorough analysis of all material revenue streams and customer contracts. In all
cases the Group’s current accounting policy was assessed as consistent with the requirements of IFRS 15 and therefore no restatements to
revenue figures are expected upon implementation.
IFRS 9 ‘Financial Instruments’ is the IASB’s replacement of IAS 39 ‘Financial Instruments: Recognition and Measurement’. The Standard
includes requirements for recognition and measurement, impairment, derecognition and general hedge accounting. The Group does not
currently expect the adoption of the standard to have a significant impact on its consolidated results or financial position, but will result in
increased disclosure.
The Group is continuing to assess the impact of adopting IFRS 16, which will be effective for the year ending 30 September 2020.
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 achieve an appropriate balance of risk and expected profits, while avoiding excessive risk. 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
It should be noted that the same policy is applied to the Company as is applied to the Group.
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 2017 and 30 September 2018.
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.
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 2018, the Group’s trade receivables balance was £418,904 (30 September 2017: £9,968). 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.
52 Actual Experience plc Annual Report 2018
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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 monitors rolling cash flow forecasts to ensure
sufficient cash is available for anticipated cash requirements.
At 30 September 2018, the Group had £10,776,516 (30 September 2017: £13,209,850) of cash and cash equivalents and current asset
investments in the form of bank deposit accounts with maturity terms of over 3 months amounting to £nil (30 September 2017: £5,000,000).
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.
The Group’s capital is made up of share capital, share premium and accumulated losses totalling at 30 September 2018: £13,113,849
(30 September 2017: £20,058,017).
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 2018 the Group had one customer who generated more than 10% of total revenue. This customer
generated 81% of revenue.
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.
An analysis of revenues by geographic location of customers is set out below:
United Kingdom
United States of America
Europe
2018
£
179,071
897,392
–
1,076,463
2017
£
240,597
113,435
10,800
364,832
Actual Experience plc Annual Report 2018
53
Notes to the consolidated financial statements continued
for the year ended 30 September 2018
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 gains/(losses)
Note
10
11
6
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
2018
£
2017
£
138,422
844,898
522
239,380
5,477,969
(44,052)
107,233
162,059
1,014
257,877
4,761,152
117,662
33,000
33,000
33,000
33,000
2018
Number
2017
Number
7
44
33
9
93
2018
£
7
36
27
6
76
2017
£
5,660,258
599,447
198,715
177,413
4,905,356
515,798
97,290
154,987
6,635,833
5,673,431
576,429
553,333
Directors’ emoluments disclosed above include £150,000 paid to each of the two highest paid Directors (2017: £150,000 and £150,000
respectively); one of these Directors has share options due under an incentive plan, but these Directors did not exercise any share options
in the year.
The Remuneration report on pages 39 and 40 detail Directors’ interests in share options.
Included within total employee costs of £6,635,833 (2017: £5,673,431) is £1,157,864 (2017: £912,279) which has been capitalised within
development costs in accordance with IAS 38 (see note 11). The remaining £5,477,969 (2017: £4,761,152) has been expensed in the Consolidated
statement of comprehensive income.
7 Finance income
Bank interest receivable
2018
£
2017
£
89,061
40,849
54 Actual Experience plc Annual Report 2018
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8 Tax
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 of 19.50% (2017: 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
2018
£
2017
£
(167,532)
97,153
(10,881)
(81,260)
(568,102)
76,650
16,784
(474,668)
2018
£
2017
£
(7,293,056)
(7,871,817)
(1,422,146)
(1,574,363)
216,657
1,409,086
(52,048)
(338,643)
104,227
1,607
75,001
1,803,286
(150,275)
(625,354)
–
(2,963)
(81,260)
(474,668)
The Group has tax losses carried forward of approximately £25,006,000 (2017: £17,754,000).
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 £735,634 (2017: £568,102). Of the £735,634 receivable, £463,815 relates to the period ended
30 September 2017 and £271,819 relates to the period ended 30 September 2018.
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
(Credit)/charge to the Consolidated statement of comprehensive income
Balance at the end of the year
2018
£
26,863
26,863
2018
£
37,744
(10,881)
26,863
2017
£
37,744
37,744
2017
£
20,960
16,784
37,744
At 30 September 2018, the Group had unrecognised deferred tax assets totalling £4,251,000 (2017: £3,018,180), 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 2018
55
Notes to the consolidated financial statements continued
for the year ended 30 September 2018
9 Loss per ordinary 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 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
Effect of shares issued in October 2017
Effect of shares issued in February 2018
Effect of shares issued in June 2018
2018
£
2017
£
(7,211,796)
(7,397,149)
No.
No.
44,845,951
41,733,648
(16.08)p
(17.72)p
2018
2017
44,761,213
–
–
–
–
–
–
50,329
22,279
12,130
37,447,838
58,284
6,658
4,182,192
21,847
15,462
1,367
–
–
–
Weighted average number of shares at the end of the year
44,845,951
41,733,648
56 Actual Experience plc Annual Report 2018
10 Property, plant and equipment
Cost
At 1 October 2016
Additions
Disposals
Foreign currency translation differences
At 30 September 2017
Additions
Disposals
Foreign currency translation differences
At 30 September 2018
Accumulated depreciation
At 1 October 2016
Charge for the year
Reclassifications
Disposals
Foreign currency translation differences
At 30 September 2017
Charge for the year
Disposals
Foreign currency translation differences
At 30 September 2018
Net book value
At 30 September 2018
At 30 September 2017
At 30 September 2016
11 Intangible assets
Cost
At 1 October 2016
Additions
At 30 September 2017
Additions
At 30 September 2018
Accumulated amortisation and impairment losses
At 1 October 2016
Charge for the year
At 30 September 2017
Charge for the year
At 30 September 2018
Net book value
At 30 September 2018
At 30 September 2017
At 30 September 2016
S
t
r
a
t
e
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c
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r
e
p
o
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o
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a
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c
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m
e
n
t
s
O
t
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e
r
i
n
f
o
r
m
a
t
i
o
n
Leasehold
improvements
£
168,488
5,421
–
–
173,909
–
–
–
Fixtures
fittings
and
equipment
£
57,416
20,560
–
–
77,976
3,294
–
–
Computer
equipment
£
140,900
151,502
(1,721)
(144)
290,537
35,180
(1,156)
161
Total
£
366,804
177,483
(1,721)
(144)
542,422
38,474
(1,156)
161
173,909
81,270
324,722
579,901
13,701
34,172
–
–
–
47,873
34,782
–
–
7,551
13,439
(468)
–
–
20,522
15,872
–
–
64,076
59,622
468
(707)
(136)
123,323
87,768
(634)
145
85,328
107,233
–
(707)
(136)
191,718
138,422
(634)
145
82,655
36,394
210,602
329,651
91,254
126,036
154,787
44,876
57,454
49,865
114,120
250,250
167,214
76,824
350,704
281,476
Development
costs
£
Total
£
1,042,254
912,279
1,954,533
1,157,864
1,042,254
912,279
1,954,533
1,157,864
3,112,397
3,112,397
526,213
162,059
688,272
844,898
526,213
162,059
688,272
844,898
1,533,170
1,533,170
1,579,227
1,579,227
1,266,261
1,266,261
516,041
516,041
Amortisation and impairment charge
The amortisation of development costs is recognised within administrative expenses in the Consolidated statement of comprehensive income.
Actual Experience plc Annual Report 2018
57
Notes to the consolidated financial statements continued
for the year ended 30 September 2018
12 Trade and other receivables
Trade receivables
Other receivables
Loan to Employee Benefit Trust
Prepayments and accrued income
2018
£
418,904
66,669
73,950
125,055
684,578
2017
£
9,968
226,207
55,950
195,064
487,189
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 2018 or 2017. The credit quality of those trade receivables not past due and
not impaired is considered good, and all amounts were received as at the date of this document. 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
2018
£
–
–
2017
£
5,000,000
5,000,000
At 31 September 2018, the Group had no fixed term bank deposit with a maturity date greater than 3 months (2017: £5,000,000). All term
deposits are held with financial institutions with a credit rating of A+.
14 Cash and cash equivalents
Bank credit rating:
A+
BBB+
BBB-
Cash and cash equivalents
2018
£
2,564,438
4,123,384
4,088,694
2017
£
2,549,604
8,607,282
2,052,964
10,776,516
13,209,850
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 2018 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
2018
£
2017
£
10,359,870
416,646
12,961,619
248,231
10,776,516
13,209,850
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.
58 Actual Experience plc Annual Report 2018
15 Trade and other payables
Trade payables
Other tax and social security
Other creditors
Accruals
Deferred income
2018
£
104,571
147,521
73,365
489,207
70,829
885,493
2017
£
101,669
136,245
47,712
416,751
83,968
786,345
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
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
2018
£
2017
£
10,776,516
418,904
49,490
–
13,209,850
9,968
51,371
5,000,000
11,244,910
18,271,189
2018
£
2017
£
104,571
633,401
737,972
101,669
548,431
650,100
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Actual Experience plc Annual Report 2018
59
Notes to the consolidated financial statements continued
for the year ended 30 September 2018
17 Share capital
Total ordinary shares of 0.2p each at 1 October 2017
Issue of shares in respect of the exercise of share options
Number
44,761,213
141,125
Share
capital
£
89,522
283
Share
premium
£
Total
£
31,808,130
119,883
31,897,652
120,166
Total ordinary shares of 0.2p each as at 30 September 2018
44,902,338
89,805
31,928,013
32,017,818
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) 38,000 ordinary shares of 0.2p each were allotted at a price of 9.091 pence per share, for total cash consideration of £3,455 upon the
exercise of share options granted in the Company’s share option schemes;
(ii) 48,125 ordinary shares of 0.2p each were allotted at a price of 14.255 pence per share, for total cash consideration of £6,860 upon the
exercise of share options granted in the Company’s share option schemes; and
(iii) 55,000 ordinary shares of 0.2p each were allotted at a price of 200.0 pence per share, for total cash consideration of £109,850, upon the
exercise of share options granted in the Company’s share option schemes.
At 30 September 2018, the Company had only one class of share, being ordinary shares of 0.2p each.
18 Movement in accumulated losses
At 30 September 2016
Loss for the year
Other comprehensive income
Shared-based payment charge
At 30 September 2017
Loss for the year
Other comprehensive expenses
Share-based payment charge
At 30 September 2018
Accumulated losses
£
(4,668,166)
(7,397,149)
70,693
154,987
(11,839,635)
(7,211,796)
(29,951)
177,413
(18,903,969)
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
2018
£
2017
£
208,861
223,655
432,516
211,318
423,667
634,985
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.
60 Actual Experience plc Annual Report 2018
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i
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f
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a
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n
Details of the number of share options and the weighted average exercise price outstanding during the year are as follows:
At 30 September 2016
Granted in the year
Exercised in the year
Forfeited in the year
At 30 September 2017
Granted in the year
Exercised in the year
Forfeited in the year
At 30 September 2018
Number of share interests
EMI
options
Unapproved
options
CSOP
options
1,958,675
525,000
415,000
(313,375)
(209,375)
–
–
–
1,850,925
525,000
–
–
–
–
–
147,500
(86,125)
(74,000)
–
(55,000)
(110,000)
157,500
–
(20,000)
Weighted
average
exercise price
per share
(pence)
124.30
288.31
(33.03)
(262.09)
152.82
305,000
(85.15)
(204,000)
Total
2,483,675
415,000
(313,375)
(209,375)
2,375,925
305,000
(141,125)
(204,000)
1,838,300
360,000
137,500
2,335,800
2,335,800
There were 1,630,216 share options outstanding at 30 September 2018 (30 September 2017: 1,400,800), 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 2018.
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 6.08 years.
Details of the outstanding share options are given below:
Grant date
19/03/2010
22/06/2011
17/10/2011
04/03/2013
01/10/2013
18/11/2013
23/12/2013
09/07/2014
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
24/05/2017
01/08/2017
01/09/2017
31/10/2017
18/01/2018
04/06/2018
18/06/2018
Employees
entitled
Number of
options
Performance
conditions
Exercise
price(p)
Earliest
exercise
date
Expiry
date
1
2
2
2
1
1
1
2
2
1
4
1
5
2
6
4
6
1
1
13
13
1
1
15
19
4
1
247,500
61,700
60,600
160,750
227,250
47,000
22,500
140,000
80,000
50,000
185,000
30,000
75,000
80,000
100,000
100,000
95,000
10,000
10,000
130,000
152,500
25,000
10,000
85,000
116,000
25,000
10,000
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
Time served
Time served
9.091
9.091
9.091
14.255
14.255
14.255
54.500
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
270.000
299.000
275.000
280.000
25/01/2011
15/10/2011
17/10/2011
11/06/2013
01/10/2014
11/11/2014
01/10/2014
09/07/2015
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
31/10/2017
03/04/2018
04/09/2018
18/06/2019
19/03/2020
22/06/2021
17/10/2021
04/03/2023
01/10/2023
18/11/2023
23/12/2023
09/07/2024
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
31/10/2027
18/01/2028
04/06/2028
18/06/2028
Outstanding
2,335,800
Actual Experience plc Annual Report 2018
61
Notes to the consolidated financial statements continued
for the year ended 30 September 2018
20 Share-based payments continued
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
31 October
2017
0%
17.3%
1.50%
10
270.0p
270.0p
Granted on
18 January
2018
0%
16.8%
1.50%
10
299.0p
299.0p
Granted on
4 June
2018
Granted on
18 June
2018
0%
16.9%
1.5%
10
275.0p
275.0p
0%
16.9%
1.5%
10
280.0p
280.0p
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 £177,413 (2017: £154,987) in the Consolidated statement of comprehensive income in respect of equity settled
share-based payment transactions in the year.
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
2018
£
2017
£
451,429
428,333
125,000
576,429
125,000
553,333
*
In addition, certain Directors hold share options in the Company for which a fair value share-based charge of £14,358 has been recognised in the Consolidated statement
of comprehensive income (2017: £38,728).
Amounts outstanding to key personnel
As at 30 September 2018, no amounts were due to Directors in relation to reimbursement of fees and expenses arising in the ordinary course of
business (30 September 2017: £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:
IP Group plc (note 1)
Purchases – Non-executive Director fees
Amounts
invoiced
to related
party
2018
£
–
–
Amounts
invoiced
by related
party
2018
£
25,000
25,000
Amounts
invoiced
to related
party
2017
£
–
–
Amounts
invoiced
by related
party
2017
£
25,000
25,000
Note 1: IP Group plc is a shareholder of the Company.
There were no amounts outstanding due from or to the related parties at 30 September 2018.
During the year ended 30 September 2018, 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.
62 Actual Experience plc Annual Report 2018
Company statement of changes in equity
for the year ended 30 September 2018
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
At 1 October 2017
Loss and total comprehensive expense for the year
Issue of shares
Share-based payment expense
Share-based payment credit in respect of services provided to subsidiary
undertaking
At 30 September 2018
Share
capital
£
74,896
–
14,626
–
–
Share
premium
£
Accumulated
losses
£
Total equity
£
14,835,170
(4,742,282)
10,167,784
–
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
89,522
31,808,130
(11,980,131)
19,917,521
–
283
–
–
–
119,883
–
(7,306,010)
–
202,268
(7,306,010)
120,166
202,268
–
(24,855)
(24,855)
89,805
31,928,013
(19,108,728)
12,909,090
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Actual Experience plc Annual Report 2018
63
Company statement of financial position
as at 30 September 2018
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 changes in accumulated losses
Accumulated losses
TOTAL EQUITY
Approved by the Board of Directors and authorised for issue on 15 January 2019.
Note
C3
11
C4
2018
£
2017
£
249,270
1,579,227
114,201
348,060
1,266,261
139,056
1,942,698
1,753,377
C5
C11
C6
C7
677,435
735,634
–
10,702,764
481,675
568,102
5,000,000
13,035,558
12,115,833
19,085,335
14,058,531
20,838,712
C11
(26,863)
(26,863)
(37,744)
(37,744)
C8
(1,122,578)
(883,447)
(1,122,578)
(883,447)
(1,149,441)
(921,191)
12,909,090
19,917,521
17
17
89,805
31,928,013
89,522
31,808,130
(11,980,131)
(7,306,010)
177,413
(4,742,282)
(7,392,836)
154,987
C9
(19,108,728)
(11,980,131)
12,909,090
19,917,521
64 Actual Experience plc Annual Report 2018
Company statement of cash flows
for the year ended 30 September 2018
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 from/(to) term deposits with more than three months maturity
Finance income
Net cash inflow/(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
(Decrease)/increase in cash and cash equivalents
Cash and cash equivalents at start of year
Cash and cash equivalents at end of year
Note
C3
11
11
C3
C6
17
2018
£
2017
£
(7,484,423)
(7,944,154)
136,660
844,898
417
202,268
(89,019)
(6,389,199)
(195,760)
257,131
(6,327,828)
–
105,243
162,059
1,014
107,997
(40,831)
(7,608,672)
(86,154)
173,105
(7,521,721)
340,261
(6,327,828)
(7,181,460)
(1,157,864)
(38,287)
5,000,000
89,019
(912,279)
(176,237)
(5,000,000)
40,831
3,892,868
(6,047,685)
120,166
(18,000)
16,987,586
(55,950)
102,166
16,931,636
(2,332,794)
13,035,558
3,702,491
9,333,067
C7
10,702,764
13,035,558
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Actual Experience plc Annual Report 2018
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Notes to the Company financial statements
for the year ended 30 September 2018
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 2018 was a loss of £7,306,010 (2017: loss of
£7,392,836).
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
£
168,488
5,421
–
173,909
–
–
Fixtures,
fittings
and
equipment
£
57,416
20,560
–
77,976
3,294
–
Computer
equipment
£
136,373
150,256
(1,721)
284,908
34,993
(663)
Total
£
362,277
176,237
(1,721)
536,793
38,287
(663)
173,909
81,270
319,238
574,417
13,701
34,172
–
–
47,873
34,782
–
7,551
13,439
(468)
–
20,522
15,872
–
62,944
57,632
468
(706)
120,338
86,006
(246)
84,196
105,243
–
(706)
188,733
136,660
(246)
82,655
36,394
206,098
325,147
91,254
126,036
154,787
44,876
57,454
49,865
113,140
164,570
73,429
249,270
348,060
278,081
Cost
At 1 October 2016
Additions
Disposals
At 30 September 2017
Additions
Disposals
At 30 September 2018
Accumulated depreciation
At 1 October 2016
Charge for the year
Reclassifications
Disposals
At 30 September 2017
Charge for the year
Disposals
At 30 September 2018
Net book value
At 30 September 2018
At 30 September 2017
At 30 September 2016
66 Actual Experience plc Annual Report 2018
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C4. Investments
At 30 September 2018, the Company held the following investments in subsidiary companies:
Undertaking
Actual Experience Inc
Sector
251 Little Falls Drive, Wilmington, Delaware, Newcastle, USA, 19808
Sales and marketing services
Cost
At 1 October 2016
Additions
At 30 September 2017
Disposals
At 30 September 2018
Impairment
At 1 October 2016, 30 September 2017 and 30 September 2018
Carrying value at 30 September 2018
Carrying value at 30 September 2017
Carrying value at 30 September 2016
C5. Trade and other receivables
Trade receivables
Other receivables
Loan to Employee Benefit Trust
Prepayments and accrued income
Share of
issued
capital and
voting rights
2018
100%
£
92,067
46,989
139,056
(24,855)
114,201
–
114,201
139,056
92,067
2017
£
9,968
226,207
55,950
189,550
481,675
2018
£
418,904
66,669
73,950
117,912
677,435
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. Investments
Term deposit accounts
2018
£
–
–
2017
£
5,000,000
5,000,000
At 31 September 2018, the Group had no fixed term bank deposit with a maturity date greater than 3 months (2017: £5,000,000).
Actual Experience plc Annual Report 2018
67
Notes to the Company financial statements continued
for the year ended 30 September 2018
C7. Cash and cash equivalents
Bank credit rating:
A+
BBB+
BBB-
Cash and cash equivalents
2018
£
2,564,438
4,049,632
4,088,694
2017
£
2,549,604
8,432,990
2,052,964
10,702,764
13,035,558
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 2018 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
2018
£
2017
£
10,359,870
342,894
12,961,618
73,940
10,702,764
13,035,558
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 and deferred income
2018
£
93,947
147,521
65,170
361,552
454,388
1,122,578
2017
£
90,339
136,245
25,188
206,176
425,499
883,447
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
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
Loss for the year
Share-based payment charge
Share-based payment credit in respect of services provided to subsidiary undertaking
At 30 September 2018
Accumulated
losses
£
(4,742,282)
(7,392,836)
107,997
46,990
(11,980,131)
(7,306,010)
202,268
(24,855)
(19,108,728)
68 Actual Experience plc Annual Report 2018
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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
2018
Number
2017
Number
6
41
33
9
89
2018
£
6
31
27
6
70
2017
£
4,952,425
576,907
184,913
202,268
4,106,830
478,628
77,063
107,997
5,916,513
4,770,518
551,429
528,333
Directors’ emoluments disclosed above include £157,652 paid to each of the two highest paid directors (2017: £151,158 respectively); one of
these Directors has share options due under an incentive plan, but these Directors did not exercise any share options in the year.
The Directors’ remuneration report on pages 39 and 40 details the Directors’ interests in share options.
Included within total employee cost of £5,916,513 (2017: £4,770,518) is £1,157,864 (2017: £912,279) which has been capitalised within
development costs in accordance with IAS 38 (see note 11). The remaining £4,758,649 (2017: £3,858,239) 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
(Credit)/charge to the Consolidated statement of comprehensive income
Balance at the end of the year
2018
£
26,863
26,863
2018
£
37,744
(10,881)
26,863
2017
£
37,744
37,744
2017
£
20,960
16,784
37,744
At 30 September 2018, the Company had unrecognised deferred tax assets totalling £4,251,000 (2017: £3,018,180), 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 £735,634 (2017: £568,102). Of the £735,634 receivable, £463,815 relates to the period ended
30 September 2017 and £271,819 relates to the period ended 30 September 2018.
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 £1,198,408 charged by Actual Experience Inc. during the
year (2017: £1,505,437). At 30 September 2018, an amount of £361,552 was due to the subsidiary company (30 September 2017: £206,176 due to
the subsidiary company).
Actual Experience plc Annual Report 2018
69
Notice of Annual General Meeting to be held on 1 March 2019
This year you will not receive a form of proxy for the AGM in the post.
Instead, you will find instructions in the notes to this notice to enable
you to vote electronically and how to register to do so. Submission of
a proxy vote will not preclude you from attending and voting at the
Annual General Meeting in person and you may request a paper
form of proxy from our Registrars, Link Asset Services.
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 1 March 2019.
The purpose of the meeting is to consider and,
if thought fit, to pass the following resolutions
as ordinary resolutions:
1. To receive the Company’s Annual Financial Statements,
Strategic Report and Directors’ and auditors’ reports for
the year ended 30 September 2018.
2. To reappoint Stephen Davidson, who, in accordance with
the Articles of Association, resigns by rotation and is eligible
for reappointment.
3. To reappoint Steve Bennetts, who, in accordance with the
Articles of Association, resigns by rotation and is eligible
for reappointment.
4. To reappoint Paul Spence, who, in accordance with the Articles of
Association, resigns by rotation and is eligible for reappointment.
5. To reappoint PricewaterhouseCoopers LLP as auditors of
the Company.
6. To authorise the Directors to determine the remuneration of
the Auditors.
7. 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 £29,934 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).
To consider and, if thought fit, to pass the following
resolution as a special resolution:
8. That, subject to the passing of resolution 7 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 7
as if section 561(1) of the Act did not apply to any such allotment,
provided that this power shall be limited to:
8.1 the allotment of equity securities in connection with an offer of
equity securities (whether by way of a rights issue, open offer
or otherwise):
8.1.1 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
8.1.2 to holders of other equity securities in the capital of the
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
8.2 the allotment of equity securities otherwise than pursuant to
paragraph 8.1 of this resolution) up to an aggregate nominal
amount of £8,980, 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
15 January 2019
Registered office
Quay House
The Ambury
Bath
BA1 1UA
United Kingdom
Registered in England and Wales No. 06838738
70 Actual Experience plc Annual Report 2018
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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 27
February 2019 (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.
A proxy may only be appointed in accordance with the procedures
set out in notes.
The appointment of a proxy will not preclude a shareholder from
attending and voting in person at the meeting.
If a member wishes to appoint more than one proxy they may do
so at www.signalshares.com.
3. This year, you will not receive a form of proxy for AGM in the post.
Instead, you can vote online at www.signalshares.com. To register,
you will need your Investor Code, which can be found on your
share certificate or by contacting our registrar Link Asset
Services on the contact details provided below. Once logged on,
click the “Vote Online Now” button to vote. Proxy votes should be
submitted as early as possible and, in any event, no later than
11.00am on 27 February 2019. Submission of a proxy vote will not
preclude you from attending and voting at the Annual General
Meeting and voting in person.
To be effective, the proxy vote must be submitted at
www. signalshares.com so as to have been received by the
Company’s registrars no later than 11.00am on 27 February 2019
(or, if the meeting is adjourned, no later than 48 hours before the
time of any adjourned meeting). Any power of attorney or other
authority under which the proxy is submitted must be returned
to Link Asset Services, PXS1, 34 Beckenham Road, Beckenham,
Kent, BR3 4ZF.
You may request a hard copy proxy form directly from the
Registrars, Link Asset Services, on 0871 664 0300. (Calls cost 12p
per minute plus your phone company’s access charge). If you are
outside the United Kingdom, please call +44 371 664 0300. Calls
outside the United Kingdom will be charged at the applicable
international rate). Lines are open between 9.00am – 5.30pm
Monday to Friday, excluding public holidays in England and Wales.
If a paper form of proxy is requested from the registrar, it should
be completed and returned to Link Asset Services, PXS1, 34
Beckenham Road, Beckenham, Kent, BR3 4ZF to be received no
later than 11.00am on 27 February 2019.
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 LinkAsset Services (ID RA10) no later than 11.00am on
27 February 2019 (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.
Electronic voting
7. You may vote your shares electronically at www.signalshares.com.
On the home page search ‘Actual Experience PLC’ and then log in
or register using your Investor Code. To vote, click on the ‘Vote
Online Now’ button.
Biographical details of Directors
8. Biographical details of all those Directors who are offering
themselves for reappointment at the meeting are set out on
pages 30 and 31 of the enclosed Annual Report and Accounts.
Actual Experience plc Annual Report 2018
71
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 setups 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.
Annual Recurring Revenue – being management’s best estimate of
expected revenue of at least 12 months in duration, based on ongoing
commercial arrangements.
CRM – Customer Relationship Management.
CSOP – Company Share Option Plans.
Digital Quality Score – Our digital quality score represents a proxy
of how a human user would describe their experience of a digital
service or application, if you were to ask them. A low score indicates
poor digital quality and a variable experience for the user, a high
score indicates good digital quality and a consistent experience for
the user, with no variability, giving good user experience.
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.
EMI – Enterprise Management Incentives.
Enterprise Customer – A large, typically multi-national corporation
with hundreds or thousands of sites globally.
ITIL – Formerly an acronym for Information Technology Infrastructure
Library, is a set of detailed practices for IT service management that
focuses on aligning IT services with the needs of business.
MSA – Master Services Agreement.
PO – Purchase Order.
POC – Proof of Concept.
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.
72 Actual Experience plc Annual Report 2018
Sources
Page 4
webalive.com.au, Why People Don’t Buy from a Website
Page 8 and 9
UNCTAD, Information Economy Report, 2017
Page 10 and 11
UNCTAD, Information Economy Report, 2017
Financial Times, We may be missing the productivity revival in the global economy
Page 24 and 25
The Chartered Institute for IT, Diversity in IT 2017
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Actual Experience plc
Quay House
The Ambury
Bath
BA1 1UA
www.actual-experience.com