Arria shares plunge as Shell cancels deal

Shares in Arria NLG fell nearly 75 per cent in morning trading, after the Scottish "big data" business said it had lost its largest customer and new fundraising talks had stalled, creating a "material uncertainty on the continuing financial viability of the company".

Arria uses artificial intelligence software developed at the University of Aberdeen to sift through thousands of data points and generate written reports in English - a process that would normally take professional analysts hours to complete.

But, in a trading update on Thursday, the group revealed that its contract with Royal Dutch Shell, which it had valued at up to $10m, had abruptly ended. It warned investors that this would have a "material adverse impact" on the company's trading, and revenues for the year were "now expected to be significantly below market expectations".

In addition, Arria said discussions with new investors had stalled as a result of the loss of the Shell contract. Last year, the group had admitted that it needed to raise money in order to stay in business.

In its trading update on Wednesday, it said: "There existed a material uncertainty on the continuing financial viability of the Company pending a successful agreement for additional funding.

"The company was until yesterday in advanced discussions with a number of institutional and other investors for a substantial equity fundraising at a share price significantly below the current market price . . . This fundraising was predicated on revenue expectations which included the continuation of the Shell contract and, therefore, the Company has suspended these discussions."

Arria added that it "will continue to explore all other financing options available to it . . . there can be no certainty, however, that further financing will be available to the Company on acceptable terms, or at all".

In the year to September 30 2014, the group posted losses of £12.4m on revenues of £816,000. It had listed on London's Junior AIM market in December 2013, and enjoyed an immediate threefold rise in its share price to £282.5. On Wednesday, its shares were trading at £31.

Following its trading update on Thursday, Arria shares fell a further 75 per cent to less than £9, with a market capitalisation below £9m.

According to company representatives, Arria has about 10 customers including the UK's Met Office, oil and gas group BG Group and US company Farmlink.

But it described its deal with Shell, a three-year agreement signed in May last year, as "material" to its trading. Arria said the oil company may return to the deal "when Shell is better placed to exploit the benefits offered by Arria's technology," and it believed that Shell's ending of the contact "does not reflect the value it sees in Arria's technology".

Shell did not immediately respond to requests for comment.

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