TIDMNLG
RNS Number : 7357I
Arria NLG PLC
11 December 2015
11 December 2015
Arria NLG plc
("Arria", the "Company" or the "Group")
Final Results for the year ended 30 September 2015
Arria NLG plc (AIM: NLG), a leader in the development and
deployment of natural language generation ("NLG") technologies, is
pleased to announce its final results for the year ended 30
September 2015.
Financial Highlights:
-- Revenue GBP1.476 million (2014: GBP0.787 million)
-- EBITDA loss before share based payment charges of GBP4.2
million (2014: loss of GBP6.4 million)
-- Loss before tax of GBP8.3 million (2014: loss of GBP10.9 million)
-- Cash at 30 September 2015 GBP2.3 million (as at 30 September 2014: GBP1.7 million)
-- Company raised GBP4.345 million through the issue of
unsecured convertible loan notes and GBP0.408 million before
expenses through an issue of Ordinary shares
-- Subsequent to the year end, the Company issued 18,750,000
Ordinary shares at a price of 0.32 per share, with GBP5.1 million
being invested in sharing agreements where settlements will be
received over 18 months (see note 7) and a further GBP0.217 million
in convertible loan notes
Operational Highlights:
-- Expanding the commercial reach and opportunity for Arria's
NLG technology beyond oil and gas most notably into aviation and
financial services (insurance and banking)
-- Deepened engagements in meteorology with Meteo Group to
develop a weather report module for two regions in Europe
-- Engagement with the UK arm of a global financial services
group to demonstrate Arria's report writing capabilities
-- Engagement with a major global online travel company to use
NLG to create tailored responses to travel queries from online
booking platforms and websites
-- Initial agreement was completed with a global consumer
products company for an application of Arria's NLG technology to
create a range of textual outputs relating to business intelligence
metrics across their business lines
-- Entering into a partnership agreement with IBM Watson(TM)
-- Development of Arria's NLG Software Development Kit and Software as a Service Product
-- Received notice of grant for Arria's configurable
Microplanner patent from the US Patent and Trademark Office and
continued the development and protection of the Group's
intellectual property portfolio
Stuart Rogers, Chairman and Chief Executive of Arria NLG plc,
commented: "As one can see from the periodic announcements we made
of Arria's commercial progress throughout the year, a number of
industries concluded that Natural Language Generation software
capabilities from Arria were valuable additions to their
operations. These industries included agriculture, aviation, oil
& gas services, insurance, artificial intelligence, banking,
meteorology, online travel and consumer packaged goods. For the
most part, the contracts were with large, global companies that
constitute an impressive list of names underlying last year's
commercial progress. As we look back over the accomplishments of
the past year, we recognize how far we have progressed, and how
well the Group is positioned for accelerated growth. The
convergence of Big Data, scarce analytical resources, and the
inability for many industries to continue their growth trajectories
on the back of human capital alone, represents the predominant
opportunity, and the core focus where Arria is building its
business and extending its technology today and into the
future."
For further information, please visit www.arria.com or
contact:
Arria NLG plc Tel +44 (0)20 7100 4540
Stuart Rogers
Chairman and Chief Executive
----------------------------------- ---------------------------------------
Allenby Capital Tel: +44 (0)20 3328 5656
Nominated Adviser & Joint Broker
Nick Naylor
Jeremy Porter
James Reeve
----------------------------------- ---------------------------------------
MSL Capital Markets - Lead Manager Tel: +64 (0)4 472 2716
Andrew McDouall
Justine Dunnett
Peter Lynds
----------------------------------- ---------------------------------------
Westhouse Securities - Joint Broker Tel: +44 (0)20 7601 6100
Antonio Bossi
Robert Finlay
----------------------------------- ---------------------------------------
IFC Advisory - Financial PR and Tel: +44 (0)20 3053 8671
IR tim.metcalfe@investor-focus.co.uk
Tim Metcalfe graham.herring@investor-focus.co.uk
Graham Herring heather.armstrong@investor-focus.co.uk
Heather Armstrong
----------------------------------- ---------------------------------------
Arria NLG
Arria NLG's core product is known as the Arria NLG Engine, a
form of artificial intelligence software, specialised in extracting
information from complex data sources and communicating that
information in natural language (i.e. as if written by a human).
The scientific foundation for the Arria NLG Platform is based on
more than 30 years of research and development by the Data2Text
Founders at the University of Aberdeen. For additional information,
visit www.arria.com. Follow Arria NLG on Twitter, LinkedIn, Google+
and YouTube.
CHAIRMAN'S STATEMENT
I am pleased to present our financial results for the year ended
30 September 2015 and to update you on our progress made during
this past financial year. At the inception of the Company four
years ago, we set out to commercialise our innovative Natural
Language Generation ("NLG") technology, by bringing the more than
30 years of research and development in Natural Language Generation
out of the universities and applying it to real world critical
operational challenges in a variety of industries. Businesses are
challenged by the need for faster, more insightful analysis, with
the sheer volume of data, and with scarce analytical resources to
get the job done. Arria's NLG core technologies allow our customers
to stay on top of the insights from their growing masses of data in
real time, helping to overcome their operational challenges and to
do so in a way that is faster, smarter and cheaper. The technology
is coming of age as the challenges it addresses are some of the
fundamental obstacles to businesses achieving their goals, and thus
it is being taken up through multiple applications in a variety of
key industry segments.
Revenue for the year increased by 88% to GBP1.476 million (2014:
GBP0.787 million). As in the prior year, revenue was predominantly
attributable to the Company's contract with Shell, which was
terminated in April 2015. More importantly and despite this
set-back, clients contributing to revenue in the current year
increased by 250% from 2 to 7, whilst total client engagements
during the year rose by 300% from 3 to 12, and most significantly
non-Shell revenues rose by over 440% when compared to the prior
year as we continued to process new clients through our engagement
process.
The Group's loss before tax for the year narrowed by 24% to
GBP8.3 million (2014: loss before tax GBP10.9 million), the
reduction in loss before tax compared to the prior year reflects
the increase in both revenues and gross profits in the year,
combined with a 27% reduction in operating costs excluding non-cash
items.
Over the last two years our foundational clients have helped us
move from the lab to the marketplace. Over the next twelve months
it is our goal to further expand Arria's platform sales force in
the USA and Europe, and undertake a major new release of our
patented core technologies. We will release whole new cloud-based
products and high-volume NLG services in response to the requests
we have received from the marketplace.
During this past year, Arria pursued its strategy of
diversifying well beyond its origins in weather and the oil &
gas industry. In prior years, Shell was the Company's primary
commercial focus, and whilst the loss of the Shell contract in
April 2015 was a serious and unexpected setback to the business,
the cause was not difficult to see, and it had nothing to do with
the potential value achieved through Arria's NLG technology: simply
stated, during 2014, crude oil prices plummeted from a peak value
of $107 per barrel to settle somewhere near $40. The
diversification beyond Arria's traditional focus on oil & gas
began well ahead of the collapse in crude oil prices. As Arria
developed its plans going into 2015, our forecasts assumed that the
Company would gain one new client engagement per quarter going
forward. As it has turned out, over the course of this financial
year, we have achieved on average approximately one new client
engagement per month. This achievement resulted from the planned
diversification of our business.
As one can see from the periodic announcements we made of this
commercial progress throughout the year, a number of industries
concluded that Natural Language Generation software capabilities
from Arria were valuable additions to their operations. These
industries included agriculture, aviation, oil & gas services,
insurance, artificial intelligence, banking, meteorology, online
travel and consumer packaged goods. For the most part, the
contracts were with large, global companies that constitute an
impressive list of names underlying last year's commercial
progress. The continued commitment and support from Arria's major
shareholders 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
leading force in realising the commercial potential of Natural
Language Generation.
Commercial Progress & Business Update
(MORE TO FOLLOW) Dow Jones Newswires
December 11, 2015 02:00 ET (07:00 GMT)
Between 1 October 2014 and the date of releasing these annual
results we have continued to deliver further new client wins. 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 broadened our offering and reach within financial
services through an initial 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. Two
recent agreements were for an initial engagement with a major
global online travel company to use NLG to create tailored
responses to travel queries from online booking platforms and
websites, and an initial agreement was completed with a global
consumer products company for an application of Arria NLG's
technology to create a range of textual outputs relating to
business intelligence metrics across their business lines.
Oil & Gas Services, Meteorology, Banking, Insurance,
Aviation, Online Travel Services, Consumer Packaged Goods and
Business Consulting (Artificial Intelligence): it is an impressive
list of global corporations that make up Arria's growing client
list, and an impressive achievement that so many of these clients
have been added in just the last year. Businesses, consulting
groups and government agencies increasingly are turning to
artificial intelligence tools to help them solve increasingly
complex and critical challenges in their process and operations. In
an age of shrinking margins, growing volumes of data to process and
scarcity of insightful analytical resources, Arria's technology is
increasingly being sought out to help businesses achieve their
corporate and process goals in a timely and profitable manner.
Arria's commercial achievements of this past year are indicative
that our technology fills a recognised and sought after set of
needs, and that those needs are growing both in size and in
criticality.
Continued IP Protection Through Patents
Arria was granted its first patent in 2014, and two more
followed during this last reporting year. One of these was granted
for a unique and powerful feature that produces multilayered
reports that allow Arria's clients to interactively drill down into
automatically generated narratives to illuminate key aspects of the
relevant data, to call up automatically generated graphs and
charts, and to hyperlink to reference works, video tutorials and
other functionality features. The most recent patent granted was
for Arria's configurable Microplanner, a key element of the Arria
NLG Software Engine that is directly configurable via the
specification of rules dictating how sentences should be compiled
from component words, phrases and context.
Future Commercial Direction
In 2016 we will see Arria's core Natural Language Generation
technology extended in two new directions. While we will maintain
strong commercial progress selling customised instances of our NLG
platform to large industrial clients, we will also be bringing two
new product groups to market. We will be giving developers anywhere
the ability to use our NLG technology to build their own natural
language generation applications through the release of a set of
tools and micro-services we call the NLG Software Development Kit
(SDK). In addition, we will be launching our first standalone
Software as a Service product, targeting the financial management
and reporting market.
Arria's NLG Software Development Kit (SDK)
We have developed the Arria NLG SDK, a robust 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 SDK was created to improve our own internal operations by
making easier the development of applications that use Arria's core
NLG technology. The acceleration of the development process that
this brings allows us to better align the timing of client
acquisition and new developer hiring. Developers can become
productive within Arria much faster, as the SDK provides support
for many application development tasks that previously had to be
carried out manually.
The creation of the SDK 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 SDK will ensure that the
quality, integrity and efficiency of our code development across
all NLG applications (client-focused and our core technology) are
consistently of the highest standard.
A further benefit of the SDK is that it is separately licensable
to third parties as a standalone product. We have already launched
the SDK product offering in a beta form in the period, and 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 SDK to build their own NLG applications.
Similarly, applications developers anywhere who wish to add a
narrative NLG layer to their products will be able to licence and
use the Arria NLG SDK. From personal healthcare applications for
mobile devices to large scale enterprise solutions, Arria's
technology will provide the ability to embed natural language
generation as a standard feature.
Natural Language Generation as a Service
Over the last three years Arria has been working with clients
and partners globally to identify applications of our technology
that have the potential to be standalone solutions. The first of
these solutions will be released in 2016 as a Software as a Service
(SaaS) product. It promises to provide financial managers in any
business with a swift and intuitive way to provide rich narrative
reports on the health, status and potential of their enterprise.
The launch of this first NLG SaaS product will see Arria move from
exclusively selling the NLG Engine via bespoke professional service
engagements, to having a client base who can sign up for an NLG
service with just a few mouse clicks and a credit card. Over the
last twelve months Arria has built up its product team in Sydney,
Australia under the stewardship of Dr Robert Dale, Arria's Chief
Technology Officer, to deliver this product line.
IBM Watson(TM) Partnership
IBM Watson(TM) is a growing business within one of the world's
largest technology companies. IBM Watson's(TM) focus on text
analysis and Arria's focus on Natural Language Generation provide
two complementary technologies, leading IBM to seek out Arria to
join IBM Watson's(TM) Partnership Programme. Arria recently
completed its first IBM Watson(TM) application integrating these
technologies, with a focus 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. Whilst IBM Watson(TM)
has over 270 partners, Arria 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.
Arria's scientists continue to partner closely with Watson's
core R&D team in Austin Texas, and our commercial team is an
active participant in the Watson Ecosystem in the USA and Europe.
In October 2015, Dr Robert Dale presented alongside Rob Hyde, IBM
Watson's(TM) CTO, to a select group of IBM's top 20 global Watson
clients in London.
Arria's NLG technologies provides a natural complement to IBM's
Natural Language Processing (NLP) suite of products. While Watson
primarily focuses on extracting information from textual data,
Arria's technology 'completes the loop' by converting structured
data sources into narrative content and insight.
Arria's POLUS product for Oil and Gas Leak Detection provides an
example of the two technologies working together:
1. Real-time reporting, using Arria's NLG technology to turn
data into text: the application embodies the expertise and best
practice of engineers to generate informative narrative reports
about complex plant and systems behaviour in minutes and
seconds.
2. Intelligent query, powered by IBM Watson(TM) : the
application leverages Watson's question answering technology to
give instant answers to questions about complex regulatory
legislation.
Capital Raising
During the year the Company raised approximately GBP4.345
million through the issue of unsecured convertible loan notes to
existing shareholders of the Company, further information on which
is included in note 6. Also during the year the Company raised
GBP0.408 million before expenses through an issue of Ordinary
shares. These funds have been used to continue the marketing of the
Group's services to potential new clients and service the Group's
existing clients including entering into a partnership agreement
with IBM Watson(TM) , extending the Group's portfolio of existing
patent applications and extending that portfolio into new
applications, developing the Arria NLG Engine and the NLG toolkit,
and supporting the ongoing working capital requirements of the
Group.
Subsequent to the year end the Company issued 18,750,000 new
Ordinary shares of GBP0.001 pence each at an issue price of
GBP0.32, further details of which are included in note 7 below.
Arria will continue to explore options for additional funding in
2016 as required to support its operations and growth as
appropriate opportunities arise.
Future Outlook
(MORE TO FOLLOW) Dow Jones Newswires
December 11, 2015 02:00 ET (07:00 GMT)
The Directors believe that the prospects for the Group are
brighter now than ever before. Negotiations continue with existing
and prospective clients to expand the scope of our relationships,
which the Directors expect to result in deeper and longer
engagements. The Directors believe that by bringing to market both
stand alone Software as a Service (SaaS) products, and a suite of
Natural Language Generation tools and micro-services, the potential
for diversified and annualised license revenues will be improved.
The Company's sales pipeline continues to strengthen in depth and
reach as evidenced by the announcements of new client activity with
globally renowned corporations in the financial services and
aviation sectors. The Directors therefore believe that the Group is
well positioned to succeed in the coming months and years in
delivering its vision to be the global leader in the
commercialisation of NLG software technologies. The Directors also
believe that the platform afforded to the Company by its public
company status will facilitate the fund raising activities of the
Company as it continues to use equity and loan funding to support
the delivery of its strategic plan in the period through to
achieving cash flow break even and sustainable profitability.
Summary
As we look back over the accomplishments of the past year, we
recognise how far we have progressed, and how well the Group is
positioned for accelerated growth. The convergence of Big Data,
scarce analytical resources, and the inability for many industries
to continue their growth trajectories on the back of human capital
alone, represents the predominant opportunity and the core focus,
where Arria is building its business and extending its technology
today and into the future. The vast challenges of all of the data
created and captured by significant industries will continue to
drive company agendas and budgets, and Arria is there to help turn
those challenges into articulate analytical solutions.
Stuart Rogers
Chairman and Chief Executive
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR
ENDED 30 SEPTEMBER 2015
Year ended Year ended
30 September 30 September
2015 2014
Notes (GBP000's) (GBP000's)
Revenue 1,476 787
------------------- -------------
Cost of sales (922) (655)
------------------- -------------
Gross profit 554 132
Administrative expenses
- Share-based payments 5 (2,348) (47)
- Amortisation of intangibles (1,410) (2,762)
- Impairment of intangibles (133) (1,653)
- Other administrative costs 3 (4,818) (6,607)
------------------- -------------
Total administrative expenses (8,709) (11,069)
------------------- -------------
Operating loss 3 (8,155) (10,937)
------------------- -------------
Finance income - 24
Finance expense (117) (2)
------------------- -------------
Loss before tax (8,272) (10,915)
------------------- -------------
Taxation credit 991 305
------------------- -------------
Loss for the year (7,281) (10,610)
------------------- -------------
Other comprehensive income
Items that may be subsequently reclassified
to profit or loss:
Currency translation differences (11) 12
------------------- -------------
Total comprehensive expense for the
year (7,292) (10,598)
------------------- -------------
Attributable to:
- owners of the parent (7,292) (10,598)
Loss per share
Basic and diluted loss per share 4 (0.07)p (0.11)p
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2015
2015 2014
Notes (GBP000's) (GBP000's)
ASSETS
Non-current assets
Goodwill 14,353 14,353
Other intangible assets 8,605 10,148
Property, plant and equipment 148 202
Trade and other receivables 182 174
------------------- -----------
23,288 24,877
------------------- -----------
Current assets
Trade and other receivables 289 724
Cash and cash edquivalents 2,299 1,743
------------------- -----------
2,588 2,467
------------------- -----------
TOTAL ASSETS 25,876 27,344
=================== ===========
EQUITY AND LIABILITIES
Equity attributable to owners of
the parent
Share capital 104 103
Share premium 6,764 6,429
Merger reserve 21,830 28,092
Other reserves 11 34
Accumulated losses (9,843) (11,184)
------------------- -----------
TOTAL EQUITY 18,866 23,474
=================== ===========
Non-current liabilities
Deferred tax 1,581 1,933
Borrowings 6 3,663 -
Derivative liability 666 -
------------------- -----------
5,910 1,933
Current liabilities
Trade and other payables 1,100 1,937
------------------- -----------
TOTAL LIABILITIES 7,010 3,870
=================== ===========
TOTAL EQUITY AND LIABILITIES 25,876 27,344
=================== ===========
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED
30 SEPTEMBER 2015
Non-
Share Share Merger Othere Accumulated controlling Total
Capital Premium Reserves 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 66 4,222 3,131 - (2,498) 4,921 24,404 29,325
Issue of shares 59 8,880 24,961 - - 33,900 - 33,900
Repurchase
and
cancellation
of shares (22) - - 22 - - - -
Share issue
transaction
costs - (1,064) - - - (1,064) - (1,064)
Share based
payment expense 5 - - - - 47 47 - 47
Acquisition
of
non-controlling
interests - - - - (3,732) (3,732) (24,404) (28,136)
Capital
reduction - (5,609) - - 5,609 - - -
----------- ----------- ----------- ----------- ------------ ----------- ------------ -----------
Total
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December 11, 2015 02:00 ET (07:00 GMT)
contributions
by owners
of the Company 37 2,207 24,961 22 1,924 29,151 (24,404) 4,747
Loss for the
year - - - - (10,610) (10,610) - (10,610)
Foreign exchange
on translation
reserve - - - 12 - 12 - 12
Loss and total
comprehensive
expense for
the year - - - 12 (10,610) (10,598) - (10,598)
----------- ----------- ----------- ----------- ------------ ----------- ------------ -----------
As at 30
September
2014 103 6,429 28,092 34 (11,184) 23,474 - 23,474
=========== =========== =========== =========== ============ =========== ============ ===========
As at 1 October
2014 103 6,429 28,092 34 (11,184) 23,474 - 23,474
Issue of shares 1 407 - - - 408 - 408
Share issue
transaction
costs - (72) - - - (72) - (72)
Share based
payment expense 5 - - - - 2,348 2,348 - 2,348
Transfer of
merger reserve
to accumulated
losses - - (6,262) - 6,262 - - -
----------- ----------- ----------- ----------- ------------ ----------- ------------ -----------
Total
contributions
by owners
of the Company 1 335 (6,262) - 8,610 2,684 - 2,684
Loss for the
year - - - - (7,281) (7,281) - (7,281)
Foreign exchange
on translation
reserve - - - (11) - (11) - (11)
Recycling
of foreign
exchange
reserve
on liquidation
of subsidiary - - - (12) 12 - - -
----------- ----------- ----------- ----------- ------------ ----------- ------------ -----------
Loss and total
comprehensive
expense for
the year - - - (23) (7,269) (7,292) - (7,292)
----------- ----------- ----------- ----------- ------------ ----------- ------------ -----------
As at 30
September
2015 104 6,764 21,830 11 (9,843) 18,866 - 18,866
=========== =========== =========== =========== ============ =========== ============ ===========
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30
SEPTEMBER 2015
Year ended Year ended
30 September 30 September
2015 2014
Notes (GBP000's) (GBP000's)
Cash flows from operating activities
Loss before taxation (8,272) (10,915)
Adjustments for:
Depreciation of plant and equipment 92 70
Loss on sale of assets - 4
Finance income - (24)
Finance expense 117 2
Amortisation of intangible assets 1,410 2,762
Impairment of intangibles 133 1,653
Tax credit received 639 26
Share based payments 5 2,348 47
------------------------- ----------------------
Operating cash out flows before movements
in working capital (3,533) (6,375)
------------------------- ----------------------
Decrease in trade and other receivables 426 57
Decrease in trade and other payables (919) (697)
------------------------- ----------------------
Net cash used in operating activities (4,026) (7,015)
------------------------- ----------------------
Cash flows from investing activities
Acquisition of subsidiary undertaking - (3,125)
Purchase of plant and equipment (38) (29)
Proceeds from sale of plant and equipment - 2
Purchase of intangible assets - (81)
------------------------- ----------------------
Net cash used in investing activities (38) (3,233)
------------------------- ----------------------
Cash flows from financing activities
Repayment of loan notes and other
debt - (50)
Proceeds from loan notes 4,345 -
Loan note issue transaction costs (131) -
Interest paid (2) _
Share issue transaction costs (72) (416)
Proceeds from issue of Ordinary and
Preference shares 408 8,614
------------------------- ----------------------
Net cash generated from financing
activities 4,548 8,148
------------------------- ----------------------
Net increase/(decrease) in cash and
cash equivalents 484 (2,100)
Cash and cash equivalents at the beginning
of the year 1,743 3,939
Exchange gains/(losses) on cash and
cash equivalents 72 (96)
------------------------- ----------------------
Cash and cash equivalents at end of
the year 2,299 1,743
NOTES
1. BASIS OF PREPARATION
The financial information presented in this announcement is
extracted from the Group's audited financial statements for the
year ended 30 September 2015.
The announcement for the year ended 30 September 2015 was
approved by the Board of Directors on 10 December 2015. The
financial information set out above does not constitute statutory
accounts within the meaning of Section 434 of the Companies Act
2006. Statutory accounts for the year ended 30 September 2015 will
be delivered to shareholders by the end of December, together with
notice of the Annual General Meeting to be held on 28 January 2016.
A copy of the Statutory accounts will be available on the Company's
website, www.arria.com, shortly. The auditors' report on the
financial statements for the year ended 30 September 2015 is
unqualified and does not contain a statement under section 498(2)
or (3) of the Companies Act 2006, however it contains an emphasis
of matter in respect of going concern for reasons outlined in note
2. The Group's financial statements have been prepared in
accordance with International Financial Reporting Standards (IFRS)
as adopted by the EU.
2. GOING CONCERN
At the balance sheet date, the group had net assets of GBP18.9
million, including net cash of GBP2.3 million. The Group made a
loss before tax of GBP8.3 million and expects to continue to make
losses in the near term as it invests in developing new markets for
its products and secures its position in commercialising Natural
Language Generation. In the medium term, the focus will be on
growing revenues in order to achieve profitability and positive
cash flows.
(MORE TO FOLLOW) Dow Jones Newswires
December 11, 2015 02:00 ET (07:00 GMT)
Since the balance sheet date, 18,750,000 shares were subscribed
for at an issue price of GBP0.32 pence per share by an
institutional investor, Lanstead Partners L.P. ("Lanstead"). Of the
gross proceeds of GBP6.0 million, GBP0.9 million has been received
in cash and GBP5.1 million has been pledged to Lanstead under two
Sharing Agreements under which Lanstead will then make, subject to
the terms of those agreements, monthly settlements to the Company
over 18 months, the amount of which is determined with reference to
the Company's share price (as detailed in note 7).
The Directors have prepared a business plan and cash flow
forecast for the period to 31 January 2017. The forecast contains
certain assumptions about future sales, the gross margins
achievable and the level of other operating expenses. In addition
to this business plan, the Directors have considered various
downside sensitivities and management actions that could be
undertaken to ensure the ongoing operation of the Group and
Company. The Group is in the process of seeking further fundraising
in the form of equity or convertible debt to provide adequate
working capital to support the commercialisation of its Natural
Language Generation technology and enable the Group and Company to
continue as a going concern. The extent and frequency of funding
required will depend on the speed and quantum with which the Group
secures additional profitable revenue growth. The Directors are
confident of securing sufficient additional funding within the next
financial year, for its near term requirements.
Having reviewed the business plan and subject to the
uncertainties described above, the Directors have a reasonable
expectation that the Group and Company will have adequate resources
to continue operating for the foreseeable future. Therefore the
Directors continue to adopt the going concern basis in preparing
the financial statements and these Financial Statements do not
include adjustments that would result if the Group and Company were
unable to continue as a going concern. Should fundraising
negotiations prove unsuccessful, the Group and Company would be
unable to meet their debts as they fall due in the foreseeable
future. As a result, the Directors have concluded that pending
successful agreement of additional funding there exists a material
uncertainty which may cast significant doubt over the ability of
the Group and Company to continue as a going concern.
3. OPERATING LOSS
The Group's operating loss has been arrived
at after charging: Group Group
Year ended Year ended
30 September 30 September
2015 2014
(GBP000's) (GBP000's)
Operating lease rentals 258 258
Depreciation charge 92 70
Research and development (including employee
costs) 980 1,006
Legal and professional fees 613 1,089
Foreign exchange (gains) losses (228) 261
============================ ======================
4. LOSS PER SHARE
Basic earnings per share for each year is calculated by dividing
the earnings attributable to shareholders by the weighted average
number of Ordinary shares in issue during the year based on the
capital structure of the Company. Details of the earnings and
weighted average number of Ordinary shares used in each calculation
are set out below. As the entity is loss making, diluted and basic
earnings per share are equal.
Group Group
Year ended Year ended
30 September 30 September
2015 2014
(GBP000's) (GBP000's)
Loss attributable to owners of the parent (7,281) (10,610)
------------- -------------
Number Number
(000's) (000's)
Weighted average number of shares 102,951 99,182
------------- -------------
Basic earnings per share (0.07)p (0.11)p
Diluted earnings per share (0.07)p (0.11)p
============= =============
5. SHARE BASED PAYMENTS
a) Employee share schemes
The Company had a number of share option schemes in place in the
year ended 30 September 2015.
The Company grants options over Ordinary shares at its
discretion to Directors and management. Share options are granted
with vesting periods of between zero and five years from the date
of grant. Should the options remain unexercised after a period of
eight years from the date of grant the options will expire. Options
are exercisable at a price determined by the Board of Directors at
the time of grant.
Details for the share options granted, exercised, lapsed and
outstanding at the year end are as follows:
Weighted
Number of share options average
exercise
price
Outstanding at 1 October 2014 1,650,000 GBP0.603
Forfeited during the year (389,000)
2,160,000
Granted during the year ----------------------
Outstanding at 30 September 2015 3,421,000 GBP0.523
Exercisable at 30 September 2015 1,518,000 GBP0.600
-----------------------
Fair value of share options
The weighted average fair value of the share options granted in
the financial year, determined using the Black Scholes valuation
model was GBP0.0073 (2014: GBP0.106).
The calculation of the fair value of options issued requires the
use of estimates. The key assumptions are:
2015 2014
Weighted average share price GBP0.293 GBP0.780
Weighted average exercise price GBP0.523 GBP0.603
Expected life 3.00 3.00
Risk free rate 0.99% 0.99%
Expected dividend yields 0% 0%
A charge of GBP39,564 relating to share-based payments
attributable to Employee Share Schemes has been recognised in the
year and is included in the Consolidated Statement of Comprehensive
Income (2014: GBP47,345).
Share options outstanding at the end of the year have the
following expiry date and exercise prices:
2015
Number Exercise year
Scheme of shares Date of grant Exercise From To
price
Executive scheme 350,000 26/06/13 US$1.00 26/06/13 26/06/21
Executive scheme 300,000 26/06/13 US$1.00 26/06/14(1) 26/06/21(1)
Staff scheme 625,000 07/04/13 US$1.00 07/04/14 07/04/21
Staff scheme 11,000 28/11/13 US$1.60 28/05/14 28/05/22
Staff scheme 2,000 01/09/14 GBGBP0.41 01/09/14 01/09/22
Staff scheme 35,000 01/09/14 GBGBP0.41 01/09/14 01/09/22
Staff scheme 820,000 03/02/15 GBGBP0.35 03/02/15(3) 03/02/23(3)
Staff scheme 1,213,000 03/02/15 GBGBP0.35 03/02/15(4) 03/02/23(4)
Staff scheme 65,000 17/09/15 GBGBP0.40 17/09/15(2) 17/09/23(2)
--------------------
3,421,000
Total ---------------------
5. SHARE-BASED PAYMENTS continued
2014
Number Exercise year
Scheme of shares Date of Exercise From To
grant price
(MORE TO FOLLOW) Dow Jones Newswires
December 11, 2015 02:00 ET (07:00 GMT)
Executive 350,000 26/06/13 US$1.00 26/06/13 26/06/21
scheme
Executive 300,000 26/06/13 US$1.00 26/06/14(1) 26/06/21(1)
scheme
Staff 650,000 07/04/13 US$1.00 07/04/14 07/04/21
scheme
Staff 13,000 28/11/13 US$1.60 28/05/14 28/05/22
scheme
Staff 100,000 23/06/14 GBGBP0.57 23/06/15(1) 23/06/25(1)
scheme
Staff 200,000 30/06/14 GBGBP0.55 30/06/14(2) 23/06/24(2)
scheme
Staff 2,000 01/09/14 GBGBP0.41 01/09/14 01/09/22
scheme
Staff 35,000 01/09/14 GBGBP0.41 01/09/14 01/09/22
scheme -----------------------
1,650,000
Total --------------------------------
(1) Options vest 1/3 per year on anniversary of grant
(2) Options vest 1/3 on grant and 1/3 per year on anniversary of
grant
(3) Options vested 1/3 on 1 January 2015 and 1/3 per year on
anniversary of first vest
(4) Options vest 1/3 on 1 January 2016 and 1/3 per year on
anniversary of first vest
b) Non-employee share based payments
As described in note 6, in consideration for Ikonic agreeing to
the early drawdown of two installments of loan notes, the Company
agreed to grant 6,000,000 unlisted B Warrants for new Ordinary
shares in the Company. The Company also granted 3,123,740 unlisted
B Warrants to Utilico Investments Limited and 803,950 unlisted B
warrants to other investors.
The Company also committed to issue 1,000,000 unlisted B
Warrants exercisable at 12p per new Ordinary share for brokerage
services performed in the financial year.
These issues of unlisted B Warrants are being treated as
share-based payments and are accounted for as equity-settled share
based payments under IFRS 2. The unlisted B Warrants are
exercisable for a period of four years at 12p per new Ordinary
share.
The weighted average fair value of the unlisted B Warrants
granted was GBP0.215 and was determined using the Black-Scholes
valuation model. The calculation of the fair value requires the use
of estimates. The key assumptions used were:
2015 2014
Weighted average share GBP0.353 -
price
Exercise price GBP0.12 -
Expected life 4.0 -
Risk free rate 0.80% -
Expected dividend yields 0% -
A charge of GBP2.308 million relating to share-based payments
has been recognised in the year and is included in the Consolidated
Statement of Comprehensive Income (2014: Nil)
6. BORROWINGS
Group Group Company Company
30 September 30 September 30 September 30 September
2015 2014 2015 2014
(GBP000's) (GBP000's) (GBP000's) (GBP000's)
Unsecured
Convertible notes (i) 3,663 - 3,663 -
------------- ------------- ------------- -------------
3,663 - 3,663 -
============= ============= ============= =============
(i) Convertible notes
The Company issued the following convertible loan notes:
a) Ikonic Fund SAC Limited
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 of
the loan notes by 31 December 2014; (ii) GBP1.232 million of the
loan notes by 31 December 2015; and (iii) GBP0.616 million of the
loan notes by 31 March 2016.
On 11 June 2015 Ikonic agreed to the early drawdown of the last
two installments. In consideration for the acceleration of these
drawdowns the Company agreed to pay certain costs which Ikonic
could incur in allowing the Company to drawdown earlier than
originally agreed. The amounts of GBP1.232 million and GBP0.616
million were received by the Company on 28 August 2015.
In consideration of Ikonic agreeing to the early drawdown of the
two instalments, the Company also granted 6,000,000 unlisted B
Warrants for new Ordinary shares (with a nominal value of GBP0.001
per share) in the Company, exercisable for a period of four years,
at GBP0.12p per new Ordinary share. These have been accounted for
as share based payments (see note 5).
Ikonic currently holds 3,125,000 Ordinary shares in the capital
of the Company representing approximately 3.0% of the issued share
capital of the Company. Ikonic also holds listed Warrants to
subscribe for an additional 3,125,000 Ordinary shares, exercisable
until 30 September 2017 at GBP1.33 per Ordinary share ("Warrants")
and unlisted B Warrants to subscribe for an additional 6,000,000
Ordinary shares, exercisable until 28 August 2019 at GBP0.12 per
Ordinary share ("B Warrants").
The loan notes are constituted by a loan note instrument dated
30 September 2014 (the "Instrument") which creates GBP3,080,000 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.
The Company can redeem the loan notes, without penalty or fee,
at any time upon 10 business days' notice to the holders of the
loan notes (the "Noteholders"). The Noteholders will be entitled to
convert the loan notes and any accrued but unpaid interest into new
Ordinary Shares at a price of GBP0.40 per share (subject to
adjustment in certain customary circumstances) during the first 10
business days of each calendar year and also following receipt of
notice that the Company intends to redeem the loan notes.
The interest payments shall be calculated with interest accruing
on the principal amount of the loan notes outstanding, compounding
on an annual basis. Interest payments can be paid (and Noteholders
can require them to be paid) through the issue of payment in kind
notes of equal nominal value in full or partial satisfaction of any
interest that has accrued but which remains unpaid in respect of
the loan notes up to that date.
b) Utilico Investments Limited
On 29 July 2015 the Company entered into a subscription
agreement with Utilico Investments Limited ("Utilico") a company
incorporated in Bermuda, pursuant to which Utilico has agreed to
subscribe for GBP1 million of convertible loan notes.
The loan notes are constituted by a loan note instrument dated
26 October 2015 (the "Instrument") which creates GBP3 million 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. Interest
payments begin on 31 October 2015 and will be payable annually on
31 October each calendar year thereafter (the "Interest Payment
Date") until the Maturity Date.
The Company can redeem the loan notes, without penalty or fee,
at any time upon 10 business days' notice to the holders of the
loan notes (the "Noteholders"). The Noteholders are entitled to
convert the loan notes and any accrued but unpaid interest into new
Ordinary Shares at a price of GBP0.40 per share (subject to
adjustment in certain customary circumstances) during the first 10
business days of each calendar year and also following receipt of
notice that the Company intends to redeem the loan notes.
The loan notes have attached, 3,123,740 unlisted B Warrants for
new Ordinary shares (with a nominal value of GBP0.001 per share) in
the Company, exercisable for a period of four years, at GBP0.12p
per new Ordinary share. These have been accounted for as share
based payments (see note 5).
c) Others
On 28 and 29 September 2015 the Company entered into
subscription agreements with certain other shareholders, pursuant
to which they agreed to subscribe for GBP265,000 of convertible
loan notes. The loan notes have attached, 803,950 unlisted B
Warrants for new Ordinary shares (with a nominal value of GBP0.001
per share) in the Company, exercisable for a period of four years,
at GBP0.12p per new Ordinary share. These have been accounted for
as share based payments (see note 5).
The loan notes for these other investors are constituted by the
same loan note instrument and conditions as Utilico.
Group Group Company Company
30 September 30 September 30 September 30 September
2015 2014 2015 2014
(GBP000's) (GBP000's) (GBP000's) (GBP000's)
Face value of notes issued 4,345 - 4,345 -
Derivative liability (666) - (666) -
Capitalised costs (131) - (131) -
Accrued Interest * 115 - 115 -
------------- ------------- ------------- -------------
Non-current liability 3,663 - 3,663 -
============= ============= ============= =============
* Accrued interest is calculated by applying the effective
interest rate of 10.51% to the liability component
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