Actual Experience : Interim Results to 31 March 2021

1 June 2021

Actual Experience plc

(the "Company" or "Actual Experience" or "Actual")

UNAUDITED CONSOLIDATED INTERIM RESULTS

for the six months ended 31 March 2021

Actual Experience plc (AIM: ACT), the analytics-as-a-service company, is pleased to announce its unaudited consolidated interim results for the six months ended 31 March 2021.

Highlights

• Revenue of £889,467 (H1 FY20: £971,516)
• Gross profit of £446,902 (H1 FY20: £507,099)
• Operating loss before exceptional item of £2,185,439 (H1 FY20: £2,620,436)
• Loss per share of 4.29p (H1 FY20: loss per share of 6.06p)
• Equity placing in January 2021 raised gross proceeds of £10 million
• Cash and cash equivalents at 31 March 2021 of £10,064,778 (30 September 2020: £2,754,274)
• Successfully completed a large-scale Business Impact Assessment ("BIA") project with a leading global energy supplier and in negotiations to establish a longer-term relationship
• Currently in advanced discussions with a global FMCG organisation with regard to an initial BIA project
• Commenced direct sales and marketing activities to complement existing Channel Partner sales approach

Dave Page, CEO of Actual Experience plc, said: "We are pleased with the increasing level of interest in our services, and the success of our recent equity placing gives us the resources to respond to this significant opportunity. In particular, I am excited by the progress of our newly established direct sales team and the promising opportunities that are emerging. This team complements our existing Channel Partner strategy and I look forward to being able to share further details of this initiative in the coming months. We are seeing increased focus and progress from our Channel Partners with regard to sales execution, and this represents significant validation that they and their enterprise customers understand the value of our service offering.

The continuing improvement in customer and Partner engagement evidences the value of our dataset to businesses as they focus on new ways of working, and helps enterprises improve their efficiency as well as driving their Environmental, Social, Governance, Diversity, Equality and Inclusion ambitions. As the global economy becomes ever more reliant on digital technology and more flexible workplaces, the need for our services is greater than ever."

Enquiries:
Actual Experience plc	via Alma PR
Dave Page, Chief Executive Officer
Steve Bennetts, Chief Financial Officer
N+1 Singer Advisory LLP	Tel: +44	(0)207 496 3000
Shaun Dobson
Iqra Amin
Alma PR
Josh Royston	Tel: +44	(0)7780 901979
Robyn Fisher	Tel: +44	(0)7540 706191
Caroline Forde	Tel: +44	(0)7779 664584

About Actual Experience

Actual Experience's goal is to significantly improve the performance of the digital world.

The Company enables its customers to optimise their digital ecosystems to increase productivity and enhance brand experiences through Human Experience Management.

Developed from 10 years of academic research and using patented technology, the Company's Human Experience Management Services analyse the human experience of digital services. The Company's service provides organisations with actionable information whereby changes to their systems can be made to optimise and improve digital experience for customers and employees. For any organisation, this means that their most valuable assets - their employees - are liberated from digital slow time, their online brand reputation can be protected and they can make informed system investment decisions. As the global economy becomes ever more reliant on digital technology and more flexible workplaces, the need for the Company's services is greater than ever.

Actual Experience is listed on the London Stock Exchange (AIM: ACT). Our corporate headquarters is in Bath, UK. Actual Experience's unique and patented digital analytics-as-a-service is founded on cutting-edge research at Queen Mary University of London.

For further information please visit www.actual-experience.com

COVID-19

More than a year on from its start, companies all around the world continue to be impacted by the unprecedented effects of COVID-19. Actual Experience, though not immune to the impact, has weathered the pandemic well, largely due to our successful business continuity plan, and as the easing of nationwide lockdown has begun, the wellbeing and safety of our people, Channel Partners and their customers remains a top priority of the Company. Our office remains closed and all employees are working from home with no impact or disruption to business operations. We have been able to continue supporting our Partners and their enterprise customers while maintaining efficient service levels.

BUSINESS REVIEW

Following our successful equity placing in January, we completed a thorough strategic review of business operations and the decisions arising from this are now being implemented. In particular, we are developing a direct sales and marketing capability. This initiative complements our Partner programme and will enable us to generate further demand for our services with enterprise customers. We have reviewed the lists of the best sales prospects with our most active Channel Partners and have agreed a refreshed process for securing contracts with those customers. We expect that sales generated directly will be serviced by our Channel Partners.

We have now successfully completed the first large scale Business Impact Assessment ("BIA") engagement with a customer of one of our Channel Partners, a large energy company. Actual Experience's software was used to analyse the digital experience of thousands of home and office- based employees. The company and our partner are both delighted with the results of the project and discussions are currently underway to put in place a longer-term relationship. It represents a significant milestone for the Company, confirming the emerging opportunity for the BIA offering to meet the needs of our Channel Partners and their large enterprise customers as they address the continuing challenges

of COVID-19-related changes and newly established ways of working across the world. In addition, we are currently in advanced discussions with a global FMCG organisation; this is the first large-scale BIA opportunity generated by our direct sales efforts.

As noted in the Financial Review, revenues decreased in the first half of the year by 8.5% from the corresponding period in the prior year. Half of this reduction is due to the decrease in the sterling value of sales in U.S. dollars and the balance arises from the cancellation of small legacy contracts.

Following the successful equity placing in January 2021, it is expected that administrative costs will increase in the second half of the current fiscal year as key hires are recruited, particularly in the Company's customer facing teams. The Company has already recruited additional direct sales executives in response to the expanding pipeline of sales prospects, as well as commencing demand generating marketing programmes.

Board Changes

In April 2021, we announced that Stephen Davidson has informed the Board of his intention to retire from his role as Chairman by the time of the 2022 AGM, in what will be his ninth year with the Company. The Board has begun the process to identify his replacement.

Market

The global digital economy is currently seen as accounting for about a third of the total world economy, and we believe that digital activities will continue to grow as businesses strive to further refine and enhance their value propositions to their customers.

Our Analytics-as-a-Service (AaaS) gives our customers insight into impact that the digital workplace is having on employees and business efficiency. With zero employee interaction, our analytics establish a highly actionable, scientific and quantified dataset for leaders responsible for delivering the business objectives for new ways of working.

We now have a number of large Channel Partners building our analytics into their processes in a way that will enable us to continue to scale and reach further into the global digital economy.

The market opportunity for Actual Experience remains large and is rapidly growing, driven by heavy reliance on the digital workplace and the shift towards remote and hybrid working models. As the pandemic has progressed and the timescale of remote working prolonged, we observe that the Boards of large corporations require broader data sets to provide clearer insight on their employees' wellbeing, with duty of care an increasingly important consideration. Our analytics can provide this on both an aggregated and individual basis. Even with a return to office working or a more flexible, hybrid model, we believe that this duty of care will remain firmly on the corporate agenda.

Strategy

Over the past year, the Company has completed its pivot from managed services to professional services and our primary focus is to deliver a successful PS consulting led offering to our customers. Our aim is to continue to harness and execute on the momentum we have seen within our Channel Partners and the funnel that they have developed.

In order to ensure future growth in our pipeline of opportunities we will continue to develop a direct sales capability. This initiative is progressing well and we are pleased, in particular, with the success achieved with a global FMCG on our second large-scale BIA project.

Product development

Over the next year, we will continue to invest in the development of our technology to ensure our product is made even more user friendly for our Channel Partners and their customers. This will result in a significant reduction in the skill and knowledge required by our Channel Partners and will deliver value to their customers more quickly. We have reviewed the proposals for further development work on our product to ensure that we continue to undertake only work that is expected to increase our revenue potential in the near future.

We have made further improvements in the reporting of analysis of users' human experience, including better user interfaces. A key element of this is the automation of the report generation for PS

engagements. The objective for this shift is to reduce our Partners' reliance upon us to generate the reports and give our Partners the ability to generate and execute the reports with ease.

In addition, we will use part of the proceeds of the equity placing to efficiently and effectively scale our data centres to cope with the anticipated increase in the number and size of customer deployments.

Sales & Marketing

As highlighted at the time of the equity placing, a significant portion of the funds raised is being used to invest further in our sales and marketing programmes, particularly as we look to increase the level of direct customer engagements alongside our channel partner approach. Early indications are that these direct sales and marketing efforts will bear fruit. The Board is firmly of the belief that further digitisation, the current working environment, and the increasing recognition of the importance of employee wellbeing create the ideal opportunity for our services.

Outlook

The market opportunity for Actual Experience continues to grow as almost all businesses seek to develop and prioritise their digital workplace as part of their post-pandemic 'new ways of working' strategy. The dataset provided by our product is used to improve the digital workplace and create a uniformly high standard of service for all employees. This will in turn improve business efficiency, support commercial growth, and facilitate the reduction of business travel and the associated level of carbon emissions.

Since the start of the calendar year, direct sales and marketing activities have already created significant new opportunities with a number of well-known global blue-chip organisations, and there is clear promise of more to come.

The Company now has a solid operational basis for business acceleration based on validation of the first BIA projects, improving Channel Partner sales execution, and our new direct sales and marketing capability. The progress we have seen since launching our professional service offering confirms that our customers understand the value delivered by our offering.

The Board would like to thank all of our staff for the professionalism and dedication that they have shown throughout this difficult period and their unswerving attention to supporting our Partners to help them navigate the challenges presented.

FINANCIAL REVIEW

Consolidated Income Statement

Total revenue for the six months to 31 March 2021 was £889,467, a decrease on the prior year of 8.5% (H1 FY20: £971,516); at constant £ to US $ exchange rates, the decrease was 4.3%. This adjusted decrease reflects the cancellation of small legacy accounts. The Company continued to focus on indirect sales with its partners during the period, with revenues from Channel Partners accounting for 97.9% of sales (H1 FY20: 99.5%).

A gross profit of £446,902 was achieved in the period, compared to the gross profit of £507,099 in the corresponding period in 2020. The gross margin for the six months was 50.2%, a decrease of 2.0% on the prior period (H1 FY20: 52.2%); at constant exchange rates, the gross margin for both periods would have been broadly similar.

Administrative costs amounted to £2,632,341, compared to £3,127,535 in the six months to 31 March 2020. This reduction resulted from the decrease in headcount following the restructuring of operations in February 2020. Following the recent equity placing, it is expected that administrative costs will increase in the second half of the current fiscal year as key hires are recruited, in particular in the Company's customer facing teams.

The functional cost breakdown is as follows:

	Six months	Six months	Year
	ended	ended	ended
	31 March	31 March	30 September
	2021	2020	2020
	£	£	£
Research and development	1,018,316	1,082,459	1,960,213
Operational support	489,335	577,721	1,055,113
Sales and marketing	564,187	948,945	1,512,709
Finance and administration	535,780	514,376	1,045,116
Foreign exchange losses	24,723	4,034	27,458
Total	2,632,341	3,127,535	5,600,609

As disclosed in the notes to the Company's 2020 Financial Statements, and in accordance with the requirements of IAS 38, qualifying development expenditure is capitalised and amortised over the estimated useful life of the developed assets. Total expenditure on research and development in the six months to 31 March 2021, prior to IAS 38 adjustments, was £861,558 (H1 FY20: £1,264,860).

Development expenditure and the related IAS 38 capitalisation and amortisation charges are as follows:

	Six months	Six months	Year
	ended	ended	ended
	31 March	31 March	30 September
	2021	2020	2020
	£	£	£
R&D expenditure pre-IAS 38 adjustment	861,558	1,264,860	2,140,529
Capitalised costs	(391,444)	(584,566)	(1,132,440)
Amortisation	548,202	402,165	952,124
Net IAS 38 adjustment	156,758	(182,401)	(180,316)
R&D expenditure post-IAS 38
adjustment	1,018,316	1,082,459	1,960,213

The Company continues to benefit from the tax relief given in the UK on qualifying development expenditure. This research and development tax credit is estimated at £46,781 for the period (H1 FY20: £154,314) and substantially accounts for the tax credit in the Consolidated Income Statement.

The Group recorded an operating loss in the period of £2,185,439 (H1 FY20: loss of £3,031,961) and

a loss per share of 4.29p (H1 FY20: loss per share of 6.06p). A summary of the Group's results is set out below

	Six months	Six months	Year
	ended	ended	ended
	31 March	31 March	30 September
	2021	2020	2020
	£	£	£
Revenue	889,467	971,516	1,960,933
Gross profit	446,902	507,099	1,020,400
Operating loss	(2,185,439)	(3,031,961)	(4,991,734)
Loss for the period/year	(2,150,074)	(2,868,224)	(4,681,488)

Balance sheet

The Group has a debt free balance sheet. Cash and cash equivalents increased during the period, from £2,754,274 at 30 September 2020 to £10,064,778 at 31 March 2021. This increase arose from the