TIDMNLG
RNS Number : 7182R
Arria NLG PLC
30 June 2015
The following amendments have been made to the 'Interim Results
for the six months ended 31 March 2015' announcement released on 30
June 2015 at 7:00 a.m. under RNS No 5797R.
The number of warrants to be issued pursuant to the issue of the
GBP1.902 million of convertible loan notes has been amended from
approximately 5.972 million to approximately 4.755 million.
All other details remain unchanged.
The full amended text is shown below.
Arria NLG plc
("Arria NLG" or the "Company")
Interim Results for the six months ended 31 March 2015
Arria NLG plc (AIM: NLG), a leader in the development and
deployment of Natural Language Generation ("NLG") technologies,
announces its Interim Results for the six months ended 31 March
2015.
Operational Highlights
-- Number of clients contributing to revenue in the period has
more than doubled to 5 (HY14: 2)
-- Total new client engagements in period is running at an average of 1 per month
-- Client engagement roster strengthened in Oil & Gas with a
proof of concept for major O&G Services company and Heads of
Agreement with BG Group announced in the period
-- Client reach broadens beyond Oil & Gas and Meteorology
into Agronomy, Aviation, Insurance and Assurance
-- First sales of NLG Toolkit recorded in the period directly
into the financial services industry
-- IBM Watson(TM) Partnership Agreement announced in the period by IBM
Financial Highlights
-- Revenues up 174% to GBP904k (GBP330k HY14)
-- Operating costs excluding amortization and share based
payment charges down 41% to GBP2.3 million (GBP3.9 million
HY14)
-- Operating loss excluding amortization and share based payment
charges down 51% to GBP1.9 million (GBP3.9 million HY14)
-- Concluded private placing raising GBP408k from existing shareholders in February 2015
-- Concluded GBP3.080 million convertible loan note, 1 October 2014
-- Subsequent to the period end, concluded further fundraising
of GBP1.902 million by way of convertible loan notes and issue of
unlisted warrants (see note 15 for further details)
Commenting on the results, Stuart Rogers Arria Chairman and
Chief Executive said "We have continued to make good and steady
progress across the first half of the financial year in delivering
the Company's strategic plan. It is particularly pleasing to see
the uptick in new client engagements, which has been running at an
average of one per month since the beginning of this fiscal year,
and also new clients contributing to revenues in the period which
has more than doubled. The broadening of our reach into new sectors
to build on our historic focus of Oil & Gas and Financial
Services can only serve the Company well. Continued traction and
delivery of new client engagements and the transitioning of those
clients through our engagement process into licensing revenues will
be the driving focus during the second half of 2015 and beyond. I
am delighted we have concluded this next stage of our capital
raising, which provides stability and support to our current
operations as it directly addresses our near to medium-term working
capital requirements. Such strong support of Arria NLG's business
direction is indicative of the participating shareholders' belief
in the long term value proposition of Arria's Natural Language
Generation technology".
For further information, please visit www.arria.com or
contact:
Arria NLG plc Tel +44 (0) 20 7100
Stuart Rogers, Chairman and 4540
Chief Executive
Allenby Capital, Nominated Tel: +44 (0)20 3328
Adviser and Joint Broker 5656
Nick Naylor
Jeremy Porter
James Reeve
Westhouse Securities, Joint Tel: +44 (0) 20 7601
Broker 6100
Antonio Bossi
Robert Finlay
IFC Advisory, Financial PR Tel: 44 (0) 20 3053
and IR 8671
Tim Metcalfe tim.metcalfe@investor-focus.co.uk
Graham Herring graham.herring@investor-focus.co.uk
CHAIRMAN'S STATEMENT
I am pleased to present our financial results for the six months
ending 31 March 2015 and to update you on our progress made during
the first half of this financial year. Whilst the loss of the Shell
contract in April 2015 was a serious and unexpected setback to the
business it must not overshadow the significant progress that has
been made during the period and beyond in extending and
strengthening both the client base and product road map that will
deliver profitability and our strategic goals over the coming
years. The continued commitment and support from Arria's
shareholder group is testament to their ongoing belief in the
medium and long term value proposition of the Company's NLG
capabilities and in particular of Arria's positioning within the
market as the dominant force in realising the commercial potential
of Natural Language Generation.
Commercial Progress & Business Update
As Arria developed its plan going into 2014, our forecasts
assumed that the Company would gain one new client engagement per
quarter going forward. As it has turned out, since the beginning of
this financial year, we have achieved on average a pace of
approximately one new client engagement per month. This is a good
and needed diversification of our business. The addition of new
clients and contracts during late 2014 into 2015 is an offset to an
Oil & Gas industry coping with the impact of a dramatically
reduced price of its core product. It was also encouraging to see
the number of clients contributing to revenues in the period has
more than doubled from two to five when compared to the prior
period, whilst the total number of client relationships has
increased from three at the start of the financial year to ten and
counting at the time of releasing these interim results during the
first half of the financial year, we have added two financial
services companies (a global bank and a large insurance company),
two software partnerships, including one with IBM Watson, an
aviation manufacturer with diagnostic reporting focused on jet
aircraft engines, a US-based agribusiness called Farmlink, an
expansion of the UK Met Office applications and a heads of
agreement with BG Group indicating their state of negotiations with
Arria.
Between 1 April 2015 and the date of releasing these interim
results we have continued to deliver strong new client engagement
success. We have deepened our engagements in Meteorology with the
relationship with Meteo Group to develop a weather report module
for two regions in Europe and extended our repertoire to encompass
search engine optimisation through a project with the UK Met Office
aimed at enhancing the quality of content deployed through its
digital channels. We have broadened our offering and reach within
financial services through a pilot engagement with the UK arm of a
global financial services group to demonstrate Arria's report
writing capabilities in parts of the client's reporting ecosystem.
Our most recent agreement was a pilot engagement with a major
global online travel company to use NLG to create tailored
responses to travel queries from online booking platforms and
websites.
The state of the forward client prospecting pipeline is robust,
and we are moving prospects through their component stages of
client engagement faster in order to achieve revenues earlier.
Arria targets clients who have multiple NLG use cases to develop a
deeper, long term relationship, to one where we constantly move
through a cycle of engaging around a new use case, configuring and
deploying that use case, establishing a license and then repeating
the cycle. Even in light of the severe budgetary pressures on Oil
& Gas companies, including at Shell and despite the set back of
the termination of our contract with Shell, Oil & Gas remains
an opportunity: even as the Oil & Gas companies slash expenses
and personnel, their need for innovative technologies like those of
Arria NLG addressing uptime, productivity and safety, remain
crucial. Our focus in Oil & Gas initially was on complex
topside rotating equipment in deep-water operations, but has
expanded to include sub-sea systems, wells, leak detection
reporting, control systems and drilling. Aviation manufacturing is
a straight-forward extension of monitoring complex rotating
equipment. Financial Services is a natural category for Arria NLG,
particularly bank and insurance companies working through issues in
risk management, management reporting, and client investment
account reporting.
IBM Watson(TM) Partnership
IBM Watson(TM) is a growing business within one of the world's
largest technology companies. IBM Watson(TM) and Arria NLG are
complementary rather than competing technologies, and last year IBM
sought out Arria to join IBM Watson's Partnership Programme. Arria
completed its first IBM Watson(TM) application recently, one
focused on leak detection for chemical plants and oil
refineries.
Arria NLG was selected by IBM to exhibit at the World of Watson
event in Brooklyn New York on 5-6 May 2015. IBM Watson has over 270
partners, and we were one of only 21 partners who were invited by
IBM to demonstrate our IBM Watson(TM) application at the exclusive
event with 1200 attendees.
The Arria NLG application, named 'POLUS', is a computing
solution that provides actionable insights to engineers in chemical
plants and refineries with its two components:
1. Real-time reporting - powered by Arria NLG: using Natural
Language Generation (NLG) to turn data into text, the system
embodies the expertise of the smartest Oil and Gas engineers to
write informative reports about systems behaviour in less than 60
seconds.
2. Intelligent query - powered by IBM Watson: gives instant
answers to questions about regulatory legislation.
NLG Software Development Toolkit (SDK)
Arria has developed a robust NLG developer toolkit that we
expect will have a significant positive impact on the Company's
ability to grow its business, revenues and bottom line. The toolkit
was created to improve our own internal operations by automating -
and thereby accelerating - the development of applications for the
Arria NLG Engine. For example, the first Farmlink application was
deployed within only 12 weeks after the first planning meetings
with the client. The toolkit allows us to better align the timing
of gaining new clients and hiring new developers. Developers can
become productive within Arria much faster, as the toolkit handles
many of the NLG aspects of the applications being developed.
The creation of the toolkit now allows us to significantly
reduce the growth of the cost curve going forward. The majority of
the expense growth in our forecasts is related to the hiring of new
developers as we gain new clients and expand work within existing
clients. While the team evolving the core technology of the Arria
NLG Engine remains in Aberdeen, the bulk of our future hiring of
developers will shift to a lower cost market. The quality of the
developers will remain high, and the toolkit will ensure that the
quality, integrity and efficiency of our code development across
all NLG applications (client-focused and our core technology) are
of the highest standards.
A further benefit of the NLG toolkit is that it is
separately-licensable as a stand alone product. Having already
launched the SDK product offering in a beta form in the period we
will be deploying a shrink wrapped packaged product offering later
in the year. Those large organisations with a "do-it-yourself"
mindset who are well supported by their internal IT functions, will
be able to license the Arria NLG toolkit to build their own NLG
reports. They will license the technology, purchase the training,
and potentially outsource the development of some applications back
to Arria to address their growing demands for NLG reports.
Future Commercial Direction
In terms of acceleration of client engagements and reducing the
time from initial engagement to first and recurring revenue
generation, focus and business development will be invested in a
number of key areas:
-- to enhance the Company's development toolkit to take it to
the next level of robust functionality enabling the Company to
further market the toolkit for licensing to third parties, which
will be starting late this year;
-- to develop shrink-wrapped packaged natural language
generation (NLG) applications that help solve specific issues,
licensed to clients in specific industries. Of these packaged NLG
applications, several are in the planning stages - in financial
services, including insurance management reporting, accounting and
process automation, and in media/advertising, including campaign
analysis. The Company expects that one of these will be available
for marketing and licensing later this year.
-- to invest in Arria's existing partnership with IBM Watson,
both progressing the current application focused on the Oil &
Gas industry, and also developing other applications that run off
the IBM Watson platform.
Arria's business development and sales will expand to deliver on
the above developments in our product offerings. We will continue
to license to global industrial clients to help monitor their
equipment and critical operations. Expanded focus is on business
insight systems where narrative is a key component. Business
process automation, where critical staff are either hard to find or
hard to fund, is part of this sales expansion as well. And, as
previously mentioned, there will be the NLG Toolkit, Arria's
software development toolkit, for those clients who wish to develop
their own NLG systems.
The sales force will divide into three coordinated teams, 1)
Platform Sales, which to date has supported the core of our
activity of configuring specific use cases for large global
clients, 2) Product Sales which will market a higher velocity of
shrink-wrapped and Software as a Service (SaaS)-delivered NLG
products that require little configuration in order to deploy, and
3) Channel Sales which will focus on the NLG Toolkit, and on sales
through partnerships and Value-added Resellers (VARs).
Financial Review
The Group continued to invest in and execute its strategic plan
during the first half of the fiscal year. Key highlights are
illustrated below:
-- Revenues increased by 173% to GBP904k (GBP330k HY14). The
increase primarily reflected the full impact of the 2014 Shell
contract in the current period compared to the same period in the
prior year. It was also encouraging to see the number of clients
contributing to revenues in the period double from two to four when
compared to the prior period.
-- Operating costs excluding amortisation and share based
payments charges reduced by 41% to GBP2.3 million (GBP3.9 million
HY14). The reduction reflects a combination of the impact of the
reduction in non-recurring transaction costs relating to the
flotation that concluded in the prior period along with the
right-sizing of the operating cost base following the
flotation.
-- Average net monthly costs during the period, excluding
non-recurring transaction related costs, amortisation, depreciation
and share based payments charges were GBP325k (GBP521k HY14)
representing a 37% decrease against the same period in the prior
year
-- Average staff numbers for the period was 49 (54 HY14). At the
balance sheet date, c.65% of staff were involved in the delivery
side of the business (50% HY14). The percentage of total staff
involved in delivery will increase as staff numbers grow.
-- During the period the Company had drawn down on the first
tranche of convertible loan funding of GBP1.232 million out of a
total facility of GBP3.080 million made available by The Ikonic
Fund SAC (Bahamas) Limited ("Ikonic"), at 30 September 2014
-- At the balance sheet date the Group had GBP1.0 million net
cash on hand and net assets of GBP21.3 million
-- Subsequent to the period end, the Company agreed to receive
early payment of the GBP1.848 million of loan notes from Ikonic
still to be drawn down under subscription agreement entered in to
on 30 September 2014. These amounts were not due to be received by
the Company in installments on or before 31 December 2015 and 31
March 2016
-- Subsequent to the period end the Company successfully
concluded a subscription for an additional GBP1.902 million of
convertible loan notes of GBP1.00 each with certain of the
Company's existing shareholders, whose principle terms were as
follows;
o The new Convertible Loan Notes will mature at the latest on 31
October 2019 and are convertible, at the election of the holder at
any time during the term, into new ordinary shares of GBP0.001p
each in the Company at a price of GBP0.40p per new ordinary
share
o The new Convertible Loan Notes will bear interest of 5.0% per
annum over the Bank of England base rate (currently 0.5%). Interest
will be payable annually in cash or, at the Company's election, by
conversion in to new ordinary shares on the same terms at the
Convertible Loan Notes issued to Ikonic at 30 September 2014
o Purchasers of the GBP1.902 million of Convertible Loan Notes
will be issued with approximately 4.755 million unlisted warrants
to subscribe for New Ordinary Shares in the Company (the "B
Warrants") and in consideration for accelerating the payment of the
balance of the September 2014 convertible loan notes, Ikonic will
be issued with 6 million B Warrants. The B Warrants will be
exercisable at 12p per new ordinary share at any time until 31
October 2019. An additional 1 million B Warrants will be issued to
defray some of the costs incurred by one of the financial advisers
who helped structure and organize this capital programme
o The Company has agreed to pay certain costs which Ikonic will
incur in making the early payments under the Ikonic Notes
o The new Convertible Loan Notes loan notes would mature on the
earlier of conversion or 31 October 2019
Going Concern
In considering the ability of the Group to meet its financial
obligations as they fall due, the Board has considered the expected
trading performance of the Group, including working capital
requirements and the level of overheads to be funded. The Directors
are satisfied based on the supporting business plan and cash flow,
following the successful conclusion of the recent issue of
convertible loan notes and expectation of successful conclusion of
further equity fundraising, the Group has adequate resources to
continue in operational existence for the foreseeable future and,
accordingly, continue to adopt the going concern basis in preparing
the financial statements and the Directors remain confident in the
future prospects of the Group.
Outlook and prospects
As we move into the second half of this financial year and
beyond we are focused on the opportunity, determined to grow and
succeed and committed to expanding on the commercial progress
achieved in the first half of the year. The depth and breadth of
client traction realised in the last eight months with client
engagements increasing from two to ten is a vindication of our
engagement strategy and indicates that large global organisations
see real value in the business case for NLG and Arria NLG as the
partner to deliver that business case. Our offering is further
strengthened with the first commercial deployment of the NLG
Toolkit that is already underway and the launch of our first
product later in the year.
Arria NLG has sales and marketing personnel in the UK, the US
and the Pacific Rim. We are actively seeking client engagements and
new NLG applications in the oil & gas industry, in regulatory
defense and financial services, in power and water systems, mining,
healthcare and with data and application platform partners. The
Group and its core technology are well positioned to rapidly and
increasingly capitalise on this pipeline of potential clients. Our
client prospects are supported by the growing recognition of the
significant challenges large enterprises face with the growth, size
and complexity of their data repository, and the ways which Arria's
NLG technologies meet and overcome these challenges.
I would like to thank the entire Arria team for its mastery and
creative efforts and especially thank our shareholders for their
unwavering support of our global vision to become the leading
global provider of NLG applications through commercialising the
opportunities in front of us.
Stuart Rogers
Chairman and Chief Executive
29 June 2015
INTERIM CONDENSED STATEMENT OF COMPREHENSIVE INCOME
Six months ended Six months ended Year ended
31 March 2015 31 March 2014 30 September 2014
Unaudited Unaudited Audited
Notes (GBP000's ) (GBP000's ) (GBP000's )
Revenue 6 904 330 787
------------------ ---------------- -----------------
Cost of sales (533) (283) (655)
------------------ ---------------- -----------------
Gross profit 371 47 132
Administrative expenses
- Share-based payments (31) (61) (47)
- Amortisation of intangibles (705) (1,412) (2,762)
- Impairment of intangibles - - (1,653)
- Other administrative costs (2,314) (3,929) (6,607)
------------------ ---------------- -----------------
Total administrative expenses (3,050) (5,402) (11,069)
------------------ ---------------- -----------------
Operating loss 5 (2,679) (5,355) (10,937)
------------------ ---------------- -----------------
Finance income - - 24
Finance expense (24) 20 (2)
------------------ ---------------- -----------------
Loss before tax (2,703) (5,335) (10,915)
Taxation credit 7 178 146 305
------------------ ---------------- -----------------
Loss after tax for the period (2,525) (5,189) (10,610)
------------------ ---------------- -----------------
Other Comprehensive Income
Items that may be subsequently reclassified to profit or loss:
Currency translation differences (26) - 12
Total comprehensive loss for the period (2,551) (5,189) (10,598)
------------------ ---------------- -----------------
Loss per share
Basic and diluted loss per share 8 (0.02 )p (0.05 )p (0.11 )p
------------------ ---------------- -----------------
The results reflected above relate to continuing activities.
The above statement should be read in conjunction with the
accompanying notes.
INTERIM CONDENSED STATEMENT OF FINANCIAL POSITION
As at As at As at
31 March 2015 31 March 2014 30 September 2014
Unaudited Unaudited Audited
Notes (GBP000's ) (GBP000's ) (GBP000's )
ASSETS
Non-current assets
Goodwill 14,353 14,353 14,353
Other intangible assets 9 9,443 13,125 10,148
Property, plant and equipment 10 158 230 202
Trade and other receivables 174 175 174
------------- ------------- -----------------
24,128 27,883 24,877
------------- ------------- -----------------
Current assets
Trade and other receivables 688 298 724
Cash and cash equivalents 1,016 4,141 1,743
------------- ------------- -----------------
1,704 4,439 2,467
------------- ------------- -----------------
TOTAL ASSETS 25,832 32,322 27,344
------------- ------------- -----------------
EQUITY AND LIABILITIES
Equity attributable to holders of the parent
Ordinary share capital 12 104 103 103
Share premium 12 6,764 6,429 6,429
Merger reserve 13 28,092 28,092 28,092
Other reserves 8 22 34
Retained loss (13,678) (5,749) (11,184)
------------- ------------- -----------------
TOTAL EQUITY 21,290 28,897 23,474
------------- ------------- -----------------
Non-current liabilities
Deferred tax 1,799 2,066 1,933
------------- ------------- -----------------
Current liabilities
Trade and other payables 1,488 1,359 1,937
Borrowings 11 1,255 - -
------------- ------------- -----------------
2,743 1,359 1,937
TOTAL LIABILITIES 4,542 3,425 3,870
------------- ------------- -----------------
TOTAL EQUITY AND LIABILITIES 25,832 32,322 27,344
------------- ------------- -----------------
The above statement should be read in conjunction with the
accompanying notes.
INTERIM CONDENSED STATEMENT OF CHANGES IN EQUITY
Accumu- Non-
Share Share Merger Other lated Controlling Total
Capital Premium Reserve Reserves Losses Total Interest Equity
Notes (GBP000's )(GBP000's )(GBP000's )(GBP000's )(GBP000's )(GBP000's ) (GBP000's )(GBP000's )
As at 1 October
2013
(Audited) 66 4,222 3,131 - (2,498) 4,921 24,404 29,325
Issue of shares 12 59 8,880 24,961 - - 33,900 - 33,900
Repurchase and
cancelation of
shares 12 (22) - - 22 - - - -
Share issue
transaction
costs 12 - (1,064) - - - (1,064) - (1,064)
Share based
payment expense - - - - 61 61 - 61
Acquisition of
non-controlling
interests - - - - (3,732) (3,732) (24,404) (28,136)
Capital
reduction 12 - (5,609) - - 5,609 - - -
--------- --------- --------- --------- --------- --------- ----------- ---------
Total
contributions
by owners of
the company 37 2,207 24,961 22 1,938 29,165 (24,404) 4,761
Total
comprehensive
loss - - - - (5,189) (5,189) - (5,189)
--------- --------- --------- --------- --------- --------- ----------- ---------
As at 31 March
2014
(Unaudited) 103 6,429 28,092 22 (5,749) 28,897 - 28,897
--------- --------- --------- --------- --------- --------- ----------- ---------
As at 1 April
2014
(Unaudited) 103 6,429 28,092 22 (5,749) 28,897 - 28,897
Share based
payment expense - - - - (14) (14) - (14)
--------- --------- --------- --------- --------- --------- ----------- ---------
Total
contributions
by owners of
the company - - - - (14) (14) - (14)
Loss for the
year - - - - (5,421) (5,421) - (5,421)
Other
comprehensive
income/(loss) - - - 12 - 12 - 12
--------- --------- --------- --------- --------- --------- ----------- ---------
Total
comprehensive
loss - - - 12 (5,421) (5,409) - (5,409)
--------- --------- --------- --------- --------- --------- ----------- ---------
As at 30
September 2014
(Audited) 103 6,429 28,092 34 (11,184) 23,474 - 23,474
--------- --------- --------- --------- --------- --------- ----------- ---------
As at 1 October
2014
(Audited) 103 6,429 28,092 34 (11,184) 23,474 - 23,474
Issue of shares 12 1 407 - - - 408 - 408
Share issue
transaction
costs 12 - (72) - - - (72) - (72)
Share based
payment expense - - - - 31 31 - 31
--------- --------- --------- --------- --------- --------- ----------- ---------
Total
contributions
by owners of
the company 1 335 - - 31 367 - 367
Loss for the
year - - - - (2,525) (2,525) - (2,525)
Other
comprehensive
income/(loss) - - - (26) - (26) - (26)
--------- --------- --------- --------- --------- --------- ----------- ---------
Total
comprehensive
loss - - - (26) (2,525) (2,551) - (2,551)
--------- --------- --------- --------- --------- --------- ----------- ---------
As at 31 March
2015
(Unaudited) 104 6,764 28,092 8 (13,678) 21,290 - 21,290
--------- --------- --------- --------- --------- --------- ----------- ---------
The above statement should be read in conjunction with the
accompanying notes.
INTERIM CONDENSED STATEMENT OF CASH FLOWS
Six months ended Six months ended Year ended
31 March 2015 31 March 2014 30 September 2014
Unaudited Unaudited Audited
Notes (GBP000's ) (GBP000's ) (GBP000's )
Cash flows from operating activities
Loss before taxation (2,703) (5,355) (10,915)
Adjustments for:
Depreciation of plant and equipment 10 53 34 70
Loss on sale of assets - - 4
Interest received - - (24)
Interest paid 24 - 2
Amortisation of intangible assets 9 705 1,412 2,762
Impairment of intangibles - - 1,653
Tax credit received 45 - 26
Share based payments 31 61 47
---------------- ---------------- -----------------
Operating cash outflows before movements in
working capital (1,845) (3,848) (6,375)
---------------- ---------------- -----------------
Decrease/(Increase) in trade and other
receivables 57 1,130 57
(Decrease)/Increase in trade and other
payables (554) (1,845) (697)
---------------- ---------------- -----------------
Net cash used in operating activities (2,342) (4,563) (7,015)
---------------- ---------------- -----------------
Cash flows from investing activities
Acquisition of subsidiary undertaking - (3,125) (3,125)
Purchase of plant and equipment 10 (9) (15) (29)
Proceeds from sale of plant and equipment - - 2
Purchase of intangible assets 9 - (55) (81)
---------------- ---------------- -----------------
Net cash used in investing activities (9) (3,195) (3,233)
---------------- ---------------- -----------------
Cash flows from financing activities
Proceeds from loan notes 1,232 - -
Repayment of loan notes and other debt - (325) (50)
Interest paid (1) (1) -
Share issue transaction costs (92) - (416)
Proceeds from issue of ordinary and
preference shares 12 408 8,416 8,614
---------------- ---------------- -----------------
Net cash from financing activities 1,547 8,090 8,148
---------------- ---------------- -----------------
Net (decrease)/increase in cash and cash
equivalents (804) 332 (2,100)
Cash and cash equivalents at the beginning of
the period 1,743 3,939 3,939
Exchange gains/(losses) on cash and cash
equivalents 77 (130) (96)
---------------- ---------------- -----------------
Cash and cash equivalents at end of the
period 1,016 4,141 1,743
---------------- ---------------- -----------------
The above statement should be read in conjunction with the
accompanying notes.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS FOR THE SIX MONTHS
ENDED 31 MARCH 2015
1. GENERAL INFORMATION
The condensed interim financial statements are for ARRIA NLG plc
(the Company) and its controlled entities (the Group).
The Group develops software that provides Natural Language
Generation ("NLG") services and SaaS (Software as a Service)
services to industry.
The Company is a public limited company domiciled in the United
Kingdom and incorporated under registered number 07812686 in
England and Wales. The Company was incorporated on 17 October 2011.
The Company's registered office is Space One, 1 Beadon Road,
Hammersmith, London W6 0EA, United Kingdom.
These condensed interim financial statements do not comprise
statutory accounts within the meaning of section 434 of the
Companies Act 2006. Statutory accounts for the year ended 30
September 2014 were approved by the directors on 11 December 2014
and delivered to the Registrar of Companies. The report of the
auditors on those accounts was unqualified, however did contain an
emphasis of matter paragraph and did not contain any statement
under section 498 of the Companies Act 2006. These condensed
interim financial statements have not been reviewed or audited.
2. BASIS OF PREPARATION
These condensed interim financial statements for the six months
ended 31 March 2015 have been prepared using recognition and
measurement principles of International Financial Reporting
Standards ("IFRS") as adopted by the European Union and the AIM
rules for Companies. The condensed interim financial statements
should be read in conjunction with the annual financial statements
for the year ended 30 September 2014, which have been prepared in
accordance with IFRSs as adopted by the European Union. As
permitted by AIM rules, the Group has not applied IAS34 'Interim
reporting' in preparing this interim report.
Going Concern
The Directors have prepared a detailed business plan and cash
flow forecast for the period to 30 June 2016. The forecast contains
certain assumptions about the level of future sales and the Group's
operating performance. In considering the ability of the Group to
meet its financial obligations as they fall due, the Board has
considered the expected trading performance of the Group, including
working capital requirements and the level of overheads to be
funded.
The Directors are satisfied based on the supporting business
plan and cash flow, and expectation of further equity fund raising
the Group has adequate resources to continue in operational
existence for the foreseeable future and accordingly, continue to
adopt the going concern basis in preparing the financial
statements.
3. ACCOUNTING POLICIES
The accounting policies adopted are consistent with those of the
previous financial year. None of the new standards which were
applicable for the first time in the period commencing 1 October
2014 have had a material impact on the financial statements. There
are no new standards or interpretations that are not yet effective
that would be expected to have a material impact on the Group.
4. ESTIMATES
In preparing these Condensed interim financial statements, the
significant judgments made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty
were the same as those that applied to the consolidated financial
statements for the year ended 30 September 2014.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS continued
5 OPERATING LOSS
The Group's operating loss has been arrived at after
charging:
Six months ended Six months ended Year ended
31 March 2015 31 March 2014 30 September 2014
Unaudited Unaudited Audited
(GBP000's ) (GBP000's ) (GBP000's )
Employee costs 2,200 2,184 4,777
Operating lease rentals 130 139 258
Depreciation charge 53 34 70
Research and development* 430 478 32
Foreign exchange losses/(gains) (120) 258 261
Legal and professional fees 199 708 1,089
*Research and development costs contain GBP415,126 of employee
related costs
6. SEGMENT INFORMATION
The Board of Directors is the Group's chief operating
decision-maker. Management has determined the operating segments
based on the information reviewed by the Board of Directors for the
purpose of resource allocation and assessment of performance, and
it is considered that is one operating segment, being the provision
of computer software which is all generated from one geographical
location, being the UK. Corporate costs are head office costs which
cannot be allocated to the segment.
The following is an analysis of revenues and results from
operations and assets by business segment:
Revenue Six months ended Six months ended Year ended
31 March 2015 31 March 2014 30 September 2014
Unaudited Unaudited Audited
(GBP000's ) (GBP000's ) (GBP000's )
Provision of computer software 904 330 787
---------------- ---------------- -----------------
Total 904 330 787
================ ================ =================
Loss before tax Six months ended Six months ended Year ended
31 March 2015 31 March 2014 30 September 2014
Unaudited Unaudited Audited
(GBP000's) (GBP000's) (GBP000's)
Provision of computer software (1,762) (1,751) (5,188)
Corporate costs (941) (3,584) (5,727)
---------------- ---------------- -----------------
Total (2,703) (5,335) (10,915)
================ ================ =================
Assets As at As at As at
31 March 2015 31 March 2014 30 September 2014
Unaudited Unaudited Audited
(GBP000's) (GBP000's) (GBP000's)
Provision of computer software 25,571 28,268 26,072
Corporate costs 261 4,054 1,272
---------------- ---------------- -----------------
Total 25,832 32,322 27,344
================ ================ =================
NOTES TO THE CONDENSED FINANCIAL STATEMENTS continued
6. SEGMENT INFORMATION (continued)
Entity-wide information
Total revenue from activities by geographical area is detailed
below:
Revenue by geography
Six months ended Six months ended Year ended
31 March 2015 31 March 2014 30 September 2014
Unaudited Unaudited Audited
(GBP000's ) (GBP000's ) (GBP000's )
Revenue derived from the United States 862 301 749
Revenue derived from the Rest of World 42 29 38
---------------- ---------------- -----------------
Total Revenue 904 330 787
================ ================ =================
Revenue of individual customers accounting for greater than 10%
of revenue
Six months ended Six months ended Year ended
31 March 2015 31 March 2014 30 September 2014
Unaudited Unaudited Audited
(GBP000's ) (GBP000's ) (GBP000's )
Customer A - United States 807 301 749
Other Customers - Rest of World 97 29 38
---------------- ---------------- -----------------
Total Revenue 904 330 787
================ ================ =================
7. INCOME TAX
Income tax credit is recognised based on management's estimate
of the weighted average annual income tax rate expected for the
full financial year. The average UK annual tax rate used for the
year to 30 September 2014 was 22%. The UK tax rate for the six
months ended 31 March 2015 was 21%.
8. LOSS PER SHARE
Basic earnings per share for each period is calculated by
dividing the earnings attributable to shareholders by the weighted
average number of ordinary shares in issue during the period based
on the capital structure of Arria NLG plc. Details of the earnings
and weighted average number of ordinary shares used in each
calculation are set out below. As the Group is loss-making, share
options in issue are anti-dilutive and therefore diluted loss per
share is equal to the basic loss per share.
Six months ended Six months ended Year ended
31 March 2015 31 March 2014 30 September 2014
Unaudited Unaudited Audited
(GBP000's ) (GBP000's ) (GBP000's )
Loss attributable to owners of the parent (2,525) (5,189) (10,610)
---------------- ---------------- -----------------
Weighted average number of shares Number Number Number
(000's) (000's) (000's)
For basic and diluted loss per share 102,952 99,182 99,182
---------------- ---------------- -----------------
Basic and diluted loss per share (0.02 )p (0.05 )p (0.11 )p
================ ================ =================
NOTES TO THE CONDENSED FINANCIAL STATEMENTS continued
9. OTHER INTANGIBLE ASSETS
Capitalised Total other
Intellectual development intangible
property costs Assets
(GBP000's ) (GBP000's ) (GBP000's )
Cost
At 1 October 2013 (Audited) 19,032 573 19,605
Additions - 55 55
------------ ----------- -----------
At 31 March 2014 (Unaudited) 19,032 628 19,660
------------ ----------- -----------
At 1 April 2014 (Unaudited) 19,032 628 19,660
Additions - 26 26
------------ ----------- -----------
At 30 September 2014 (Audited) 19,032 654 19,686
------------ ----------- -----------
At 1 October 2014 (Audited) 19,032 654 19,686
------------ ----------- -----------
At 31 March 2014 (Unaudited) 19,032 654 19,686
------------ ----------- -----------
Accumulated amortisation
At 1 October 2013 (Audited) 5,123 - 5,123
Amortisation 1,412 - 1,412
------------ ----------- -----------
At 31 March 2014 (Unaudited) 6,535 - 6,535
------------ ----------- -----------
At 1 April 2014 (Unaudited) 6,535 - 6,535
Amortisation 1,315 35 1,350
Inpairment expense 1,653 - 1,653
------------ ----------- -----------
At 30 September 2014 (Audited) 9,503 35 9,538
------------ ----------- -----------
At 1 October 2014 (Audited) 9,503 35 9,538
Amortisation 533 172 705
------------ ----------- -----------
At 31 March 2015 (Unaudited) 10,036 207 10,243
------------ ----------- -----------
Carrying amount
At 1 October 2013 (Audited) 13,909 573 14,482
------------ ----------- -----------
At 31 March 2014 (Unaudited) 12,497 628 13,125
------------ ----------- -----------
At 1 April 2014 (Unaudited) 12,497 628 13,125
------------ ----------- -----------
At 30 September 2014 (Audited) 9,529 619 10,148
------------ ----------- -----------
At 1 October 2014 (Audited) 9,529 619 10,148
------------ ----------- -----------
At 31 March 2015 (Unaudited) 8,996 447 9,443
============ =========== ===========
The intangible assets arose on the acquisition of Data2Text
Limited on 1 May 2012, SQi3 Solutions Limited on 28 September 2012
and Global IP Inc., on 29 September 2012.
Following a review of the business opportunities available to
the Group, the Directors determined to continue to focus on
developing the NLG software in advance of SQM3 in the near term. An
impairment review based on value in use was performed at the year
end resulting in an impairment charge of GBP1,653,111 being
recognised at 30 September 2014.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS continued
10. PROPERTY, PLANT AND EQUIPMENT
Computer Leasehold Office Furniture
Equipment Improvements Equipment & Fittings Total
(GBP000's ) (GBP000's )(GBP000's ) (GBP000's )(GBP000's )
Cost
At 1 October 2013 (Audited) 135 104 10 76 325
Additions 9 - - 6 15
--------- ------------ --------- ---------- ---------
At 31 March 2014 (Unaudited) 144 104 10 82 340
--------- ------------ --------- ---------- ---------
At 1 April 2014 (Unaudited) 144 104 10 82 340
Additions 14 - - - 14
Disposals (1) - - (7) (8)
--------- ------------ --------- ---------- ---------
At 30 September 2014 (Audited) 157 104 10 75 346
--------- ------------ --------- ---------- ---------
At 1 October 2014 (Audited) 157 104 10 75 346
Additions 9 - - - 9
Disposals (1) - - - (1)
--------- ------------ --------- ---------- ---------
At 31 March 2015 (Unaudited) 165 104 10 75 354
--------- ------------ --------- ---------- ---------
Accumulated depreciation
At 1 October 2013 (Audited) 39 21 2 14 76
Depreciation expense 18 8 1 7 34
--------- ------------ --------- ---------- ---------
At 31 March 2014 (Unaudited) 57 29 3 21 110
--------- ------------ --------- ---------- ---------
At 1 April 2014 (Unaudited) 57 29 3 21 110
Depreciation expense 21 9 1 5 36
Depreciation on disposals (1) - - (1) (2)
--------- ------------ --------- ---------- ---------
At 30 September 2014 (Audited) 77 38 4 25 144
--------- ------------ --------- ---------- ---------
At 1 October 2014 (Audited) 77 38 4 25 144
Depreciation expense 34 7 2 10 53
Depreciation on disposals (1) - - - (1)
--------- ------------ --------- ---------- ---------
At 31 March 2015 (Unaudited) 110 45 6 35 196
--------- ------------ --------- ---------- ---------
Carrying amount
At 1 October 2013 (Audited) 96 83 8 62 249
--------- ------------ --------- ---------- ---------
At 31 March 2014 (Unaudited) 87 75 7 61 230
--------- ------------ --------- ---------- ---------
At 1 April 2014 (Unaudited) 87 75 7 61 230
--------- ------------ --------- ---------- ---------
At 30 September 2014 (Audited) 80 66 6 50 202
--------- ------------ --------- ---------- ---------
At 1 October 2014 (Audited) 80 66 6 50 202
--------- ------------ --------- ---------- ---------
At 31 March 2015 (Unaudited) 55 59 4 40 158
========= ============ ========= ========== =========
NOTES TO THE CONDENSED FINANCIAL STATEMENTS continued
11. BORROWINGS
As at As at As at
31 March 2015 31 March 2014 30 September 2014
Unaudited Unaudited Audited
(GBP000's ) (GBP000's ) (GBP000's )
Loan notes 1,255 - -
------------- ------------- -----------------
Total 1,255 - -
============= ============= =================
Movements in borrowings are analysed as follows:
(GBP000's )
At 1 October 2013 (Audited) 346
Converted to ordinary shares (275)
Interest forgiven (24)
Repaid (50)
Interest charged 3
---------
At 31 March 2014 (Unaudited) -
=========
At 1 October 2014 (Audited) -
Loan drawdown 1,232
Interest charged 23
---------
At 31 March 2015 (Unaudited) 1,255
=========
On 30 September 2014 the Company entered into a subscription
agreement with the Ikonic Fund SAC Limited ("Ikonic"), pursuant to
which Ikonic agreed to subscribe for GBP3.08 million of loan notes
in three tranches, by the following dates: (i) GBP1.232 million
(circa US$2 million) of the loan notes by 31 December 2014; (ii)
GBP1.232 million (circa US$2 million) of the loan notes by 31
December 2015; and (iii) GBP0.616 million (circa US$1 million) of
the loan notes by 31 March 2016. The issue of the loan notes to
Ikonic will raise a total of GBP3.08 million (circa US$5.0 million)
for the Company.
Ikonic currently holds 3,125,000 Ordinary shares in the capital
of the Company representing approximately 3.01 per cent. of the
issued share capital of the Company, together with listed Warrants
to subscribe for an additional 3,125,000 Ordinary shares,
exercisable until 30 September 2017 at GBP1.33 per Ordinary share
("Warrants").
The loan notes are constituted by a loan note instrument dated
30 September 2014 (the "Instrument") which creates GBP3,080,000
(circa US$5,000,000) of loan notes. The loan notes have a maturity
date of 31 October 2019 (the "Maturity Date") and accrue interest
at a rate of 5% above the Bank of England base rate as at 31
October of each year.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS continued
12 SHARE CAPITAL AND PREMIUM
The issued share capital in the period was as follows:
Class A Class B
Ordinary Ordinary B Preference Preference
shares shares shares shares
Number Number Number Number
At 1 October 2013 (Audited) 35,784,852 - 24,550,630 5,077,573
----------- ------------- ------------- -----------
Issue of share capital 281,250 45,000,000 8,906,607 5,077,574
Conversion to ordinary shares on listing 66,496,622 (23,165,488) (33,457,237) (10,155,147)
Re-purchased and cancelled on listing - (21,834,512) - -
----------- ------------- ------------- -----------
At 31 March 2014 (Unaudited) 102,562,724 - - -
----------- ------------- ------------- -----------
At 1 April 2014 (Unaudited) 102,562,724 - - -
----------- ------------- ------------- -----------
At 30 September 2014 (Audited) 102,562,724 - - -
----------- ------------- ------------- -----------
At 1 October 2014 (Audited) 102,562,724 - - -
----------- ------------- ------------- -----------
Issue of capital 1,166,486 - - -
----------- ------------- ------------- -----------
At 31 March 2015 (Unaudited) 103,729,210 - - -
=========== ============= ============= ===========
Share Capital Share Premium Total
(GBP000's) (GBP000's) (GBP000's)
At 1 October 2013 (Audited) 66 4,222 4,288
Issue of ordinary share capital 45 8,880 8,925
Issue of Class A preference share capital 9 - 9
Issue of Class B preference share capital 5 - 5
Repurchase of ordinary share capital on listing (22) - (22)
Capital reduction - (5,609) (5,609)
Share issue transaction costs - (1,064) (1,064)
------------- ------------- -----------
At 31 March 2014 (Unaudited) 103 6,429 6,532
------------- ------------- -----------
At 1 April 2014 (Unaudited) 103 6,429 6,532
------------- ------------- -----------
At 30 September 2014 (Audited) 103 6,429 6,532
------------- ------------- -----------
At 1 October 2014 (Audited) 103 6,429 6,532
Issue of ordinary share capital 1 407 408
Share issue transaction costs - (72) (72)
------------- ------------- -----------
At 31 March 2015 (Unaudited) 104 6,764 6,868
============= ============= ===========
NOTES TO THE CONDENSED FINANCIAL STATEMENTS continued
13 MERGER RESERVE
(GBP000's )
At 1 October 2013 (Audited) 3,131
Acquisition of non-controlling interest in Data2Text 21,830
Acquisition of Global IP 3,131
---------
At 31 March 2014 (Unaudited) 28,092
---------
At 1 April 2014 (Unaudited) 28,092
---------
At 30 September 2014 (Audited) 28,092
---------
At 1 October 2014 (Audited) 28,092
---------
At 31 March 2015 (Unaudited) 28,092
=========
The merger reserve arose on the acquisition of SQi3 Solutions
Limited, Data2Text Limited and Global IP Inc., reflecting the
consideration paid in shares. The Company has taken advantage of
merger relief under the Companies Act 2006 and not recorded a
premium on these shares. The premium has been credited to the
merger reserve.
14 NON-CONTROLLING INTEREST
The non-controlling interest arose on the acquisition of
Data2Text Limited on 1 May 2012 and on the acquisition of Global IP
Inc., on 29 September 2012. The Group originally owned 20% of the
issued share capital of Data2Text Limited and recognised a
non-controlling interest in respect of the remaining 80% from 1 May
2012.
On 25 October 2013, the Company concluded the acquisition of the
remaining 80% of the share capital of Data2Text Limited over which
it had an option. Consideration was satisfied by GBP3,125,000 in
cash and the issue of 45,000,000 B ordinary shares with a total
value of GBP21,875,000. The B ordinary shares were converted into
23,165,488 ordinary shares (approximately 22.59% of the share
capital of the Company) when the Company's shares were admitted to
trading on the AIM Market of the London Stock Exchange on 5
December 2013. The remaining 21,834,512 B ordinary shares were
repurchased by the Company on listing.
Following the acquisition of Data2Text Limited, the Company
concluded the acquisition of the share capital of Global IP Inc.
over which it had already had control at the balance date.
Consideration for Global IP Inc. was in the form of 5,077,574 B
preference shares with a value of GBP3,135,910.
Non-Controlling
Interest
(GBP000's )
At 1 October 2013 (Audited) 24,404
Acquisition of non-controlling interest in Data2Text (22,926)
Acquisition of non-controlling interest in Global IP (1,478)
---------------
At 31 March 2014 (Unaudited) -
---------------
At 1 April 2014 (Unaudited) -
---------------
At 30 September 2014 (Audited) -
---------------
At 1 October 2014 (Audited) -
---------------
At 31 March 2015 (Unaudited) -
===============
NOTES TO THE CONDENSED FINANCIAL STATEMENTS continued
15 SUBSEQUENT EVENTS
Extended License Agreement with the UK Met Office
On 8 April 2015 the Company announced a new agreement to extend
the existing licence with the UK Met Office for a further year.
The agreement provides for an extension of the existing
licensing agreement for a further year. In particular, the
Agreement provides a new professional services contract to
integrate site-specific NLG forecasts into the UK Met Office's new
web page format. The new project will involve exploring the
utilisation of the existing site- specific NLG software as part of
the UK Met Office's optimised web content, and measuring the impact
of NLG content on the UK Met Office's search engine optimisation
strategy.
Termination of Contract
On 30 April 2015 the Company announced that Shell Exploration
Production Company (Shell) a subsidiary of Royal Dutch Shell had
terminated the contract that was previously entered into on 23 May
2014.
Licensing Agreement with MeteoGroup UK
On 11 May 2015 the Company announced that it will work with
MeteoGroup UK to develop a weather report module for two regions in
Europe, in consideration of contracted professional service fees.
Upon acceptance of this initial module by MeteoGroup, the agreement
provides annual licensing fees for the use of these modules.
Proof of Concept Pilot Agreement
On 13 May 2015 the Company announced that it has entered into a
paid for Proof of Concept Pilot Agreement with the UK arm of a
global financial services group.
Directorate Change
On 18 May 2015 the Company announced that Simon Small will step
down from his role as an Executive Director. The date and terms of
his departure are still being discussed.
Capital raise
The Company agreed to receive early payment of the GBP1.848
million of loan notes from Ikonic still to be drawn down under
subscription agreement entered into on 30 September 2014. These
amounts were not due to be received by the Company before 31
December 2015
The Company successfully concluded a subscription for an
additional GBP1.902 million of a total offer of up to approximately
GBP3.152 million in convertible loan notes of GBP1.00 each with
certain of the Company's existing shareholders, whose principle
terms were as follows;
o The new Convertible Loan Notes will mature at the latest at 31
October 2019 and are convertible, at the election of the holder at
any time during the term, into new ordinary shares of GBP0.001p
each in the Company at a price of GBP0.40p per new ordinary
share
o The new Convertible Loan Notes will bear interest of 5.0% per
annum over the Bank of England base rate (currently 0.5%). Interest
will be payable annually in cash or, at the Company's election, by
conversion in to new ordinary shares on the same terms at the
Convertible Loan Notes issued to Ikonic at 30 September 2014
o Purchasers of the GBP1.902 million of Convertible Loan Notes
will be issued with approximately 4.755 million unlisted warrants
to subscribe for new ordinary shares in the Company (the "B
Warrants") and in consideration for accelerating the payment of the
balance of the September 2014 convertible loan notes, Ikonic will
be issued with 6 million B Warrants. The B Warrants will be
exercisable at 12p per new ordinary share at any time until 31
October 2019. An additional 1 million B Warrants will be issued to
defray some of the costs incurred by one of the financial advisers
who helped structure and organize this capital programme
o The Company has agreed to pay certain costs which Ikonic will
incur in making the early payments under the Ikonic Notes.
o The new Convertible Loan Notes loan notes would mature on the
earlier of conversion or 31 October 2019
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR FMMATMBMJBFA
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