TIDMBLUR
RNS Number : 7221R
Blur Group PLC
30 June 2015
blur Group plc
("blur," the "Group" or the "Company")
2014 Final Results
& Board and Management changes
blur Group plc (BLUR), the world's largest online marketplace
for business services, is pleased to announce its audited final
results for the year ended 31 December 2014.
Financial Highlights
-- Revenue increased by 35.5% to $4.72m (Adjusted $3.48m in 2013(1) ).
-- Gross profit increased to $1.65m (Adjusted $0.67m in 2013).
-- LBITDA(2) increased to $10.34m in 2014 (Adjusted $6.5m in 2013).
-- Cash balance as at 31 December 2014 of $17.40m (Adjusted 2013 $9.56m).
2014 Operational Highlights
-- Larger enterprise customers submitted $28.5m of projects in
2014, an increase of 90% on 2013, and the platform saw Amazon,
Solvay and Danone as new customers.
-- 37.7% of projects kicked off were by repeat customers.
-- The Service Provider community increased by 69% to 49,555 (34,109 in 2013).
-- Launch of blur 4.0 with a focus on enterprise first and
mobile. 9% of projects were briefed from smartphones.
-- In 2014, 3,681 new projects were submitted; a 57% increase on 2013.
-- Added investment of $22m (gross) from the placing and open offer in June 2014.
(2) LBITDA is loss before interest, tax, depreciation and
amortization.
(2) 2013 financials restated for revised revenue recognition
policy with zero revenue now being recognised at kick off date and
adjusted for larger projects suspended in 2014
Post Year End Highlights
-- Introduction of Premium Services, and paid subscription plans
for both buyers and Service Providers
-- Enterprise Service Providers are now 5% of blur's community
and have grown to match that of the enterprise Customer. The likes
of WPP, Edelman, and Bain and Co have all joined in 2015.
-- Repeat projects have increased during H1 2015 to just below 50% (75% increase on 2014)
-- Through the funding blur has received from investors, it has
significantly invested into the development of its technology
platform and its community providing a marketplace that will both
attract enterprise customers and provide an enterprise class
service.
-- Increased efficiencies and cost controls including reduction
in headcount from 84 to 65 resulting in falling monthly cash
costs
-- Appointment of Tim Allen as CFO, who joins the blur
management team on 20 July 2015 from Cambium Networks. Tim Allen is
expected to be appointed to the Board by the end of the year.
-- Further strengthening of the management team. David Sherriff
appointed as Deputy Chairman and Lead Independent Director in
February 2015. Promotion of Co-Chief Operating Officers, Gerry
Gross based in the US, who takes responsibility for enterprise
sales and blur's regional offices; and Helen Blackmore, based in
Exeter, UK, takes responsibility for back office integration,
people operations, marketplace utilisation and group-wide
processes.
-- Non-Executive Director, Robert Brooksbank leaves the Board as
of 30(th) June 2015. New non-executive director will be appointed
shortly.
-- The Financial Reporting Council (FRC) inquiry announced on
10th April 2015 remains on going. The Board have been working with
the support of its new auditors, KPMG, to provide appropriate
responses and conclude outstanding queries.
Philip Letts, blur Group CEO, said:
"2014 signified an important shift at blur Group, simply, the
transition to the larger enterprise. The business has learned and
matured and is now successfully attracting both the enterprise
buyer and service provider We have moved from being a broad-based
business, servicing a wide range of small, medium and large
customers, to one that today is focused on the medium and large
enterprise. I believe that with our fundraise in 2014 coupled with
established maturity in reporting we have the cash resources to
execute our strategy. I would also like to take this opportunity to
thank Robert for the significant time and support that he has given
to the Group over the past few years."
blur Group plc Tel: +44 (0) 1392 927
Philip Letts/Barbara 189
Spurrier
N+1 Singer
Shaun Dobson/Jen Boorer Tel: +44 (0) 20 7496
3000
Yellow Jersey Tel: +44 (0) 7768 537
Dominic Barretto 739
blur Group plc audited Annual Report and Financial Statements
for the year ending 31 December 2014 are now available for you to
download and review on blur's website at
www.blurgroup.com/investors/#reports
About blur Group plc at blurgroup.com
blur operates the world's largest online marketplace for
business services. To date almost 60,000 businesses have used blur
to buy or sell services online, including companies like Amazon,
Regus, Caterpillar, Argos, Danone and GE submitting over $450m of
services requirements to blur's platform.
blur Group is a public company listed on the London Stock
Exchange's AIM market (BLUR) and is headquartered in the UK with
regional sales offices in the US and Europe.
Chairman & CEO Statement
2014 signified an important shift at blur Group, simply, the
transition to the Enterprise. I have seen the business mature and
successfully attract both the Enterprise buyer and Service Provider
resulting in a move from a broad-based business, servicing a wide
range of small, medium and large customers, to one that today is
largely focused on the medium and large enterprise. The evolution
to the Enterprise is our future, and whilst it is never an easy or
simple transition, by shaping our technology, and having great
people, we are able to succeed in disrupting the way Enterprise
businesses buy and sell business services.
We must remember that a business model like ours has not been
tried and tested before so we have been fortunate that our
shareholders believed and supported us with significant investment
in 2014. As a result, we have been able to learn and mature,
continuing our path towards delivering the value we have always
promised both to our shareholders and customers. I have already
seen blur's global sales teams evolve, grow and become focused
solely on the Enterprise customer, our technology advance from blur
3.0 to blur 4.0 - leading on Enterprise first and mobile, as well
as significant improvements in our internal processes to in order
to increase efficiencies and drive our internal costs down. We
embedded ourselves further into our new HQ in Exeter, and utilised
our own platform to drive our own business initiatives, this
combined with our drive on efficiencies saw our full-time headcount
reduce from 81 to 65 within the year. No easy feat with over 65,000
customers and service providers to manage. This growth and the
increasing adoption of the marketplace by Enterprise customers has
been enabled by the investment in both technology supporting the
marketplace and the development of our service provider community
which now numbers some 60,842 providers. This investment is
significant over the last 8 years. This all drives us to one main
aim; to further enable our scalability and transition into an
international Enterprise business.
As from H1 2015 the group is trading on a strong and stable
basis. Looking forward, with matured processes, management
stability, a clear simple strategy and a strong set of advisors and
auditors; I can confidently state that the business has clear and
strong controls in place to manage all key aspects of the business,
and in my opinion, we are on track. As you will have seen from
recent announcements, we have been winning new Enterprise customers
including Amazon, Argos and Danone, and are continuing to attract
large numbers of Enterprise class service providers and building
repeat business especially with our Enterprise customers. To
further strengthen our foundations we have taken steps to build the
leadership team at blur, firstly with the appointment of David
Sherriff as Deputy Chairman and Lead Independent Director in
February 2015. We are also pleased to add strength to the Finance
team with the appointment of a new Chief Financial Officer, Tim
Allen, who joins blur in July 2015 from Cambium Networks and who
will have a clear focus on cash management and cost control. It is
expected that Tim Allen will be appointed to the Board by the end
of the year. We also expect to appoint a new non-executive director
shortly to take over from Robert Brooksbank as chairman of the
audit committee. We would like to thank Robert, who will leave the
Board as of 30(th) June 2015, for the significant time and support
that he has given the Group over the past few years. We have also
promoted Co-Chief Operating Officers, Gerry Gross based in the US,
who takes responsibility for Enterprise sales and blur's regional
offices; and Helen Blackmore, based in Exeter, UK, takes
responsibility for back office integration, people operations,
marketplace utilisation and group-wide processes. We are clear,
internally, that our passion to achieve our Mission remains
unchanged. Our people are working exceptionally hard to give our
buyers and Service Providers a great experience every time they use
our platform, and now our customers are not only returning to blur
but they are sharing their experiences - ranking blur 8.3/10 on
Trustpilot customer feedback website.
I am confident that with our current cash balances, supported by
the fundraise in 2014 and now established maturity in reporting, we
have the cash resources to support blur's journey. We continue to
'tune' our business to ensure we have the right mix of people and
service partners, and are seeking and developing deeper
relationships with our customers, such that our goal is now to
develop Enterprise Ecosystems within some of the world's largest
businesses. It is becoming clear, as we better understand the
Enterprise space that there are three key solutions that we see the
Enterprise market looking to blur for: Managing the indirect spend,
which we call Tail Spend, access to supplier diversity and driving
to a 'Size Zero Enterprise', which we have been recently promoting
with 'doing business better'. By building our product base and
introducing new Premium Services, and Subscriptions and Licenses
throughout 2015, blur is now set to support the future adoption of
the Enterprise buyer and service provider driving to its goal of
having one to two hundred large Enterprise customers using the
platform serviced by an increasing number of Enterprise suppliers.
With dozens of large Enterprise buyers and thousands of large
Enterprise service providers already in place we have a strong
start.
I would like to thank the team at blur, our Service Providers,
our customers, our shareholders and our advisors, who have shown
belief and confidence in our ability to get the world buying
services online.
blur Strategy
Strategic Outcome
We plan, by the end of this Strategic Planning period, to be a
profitable, cash generative and trusted business that provides
thousands of enterprise businesses worldwide with a new and better
way to buy and sell services. We continue to monitor our overall
progress by revenue and gross margin growth.
Strategic Assets & Stakeholders
We focus our resources on our five strategic assets - our
platform, our service providers, our market insight, our data and
our business model and serve five key stakeholders - our people,
our investors, the market at large, our buyers, and our service
providers.
Growth Equation
We believe that the more customer advocates we have in more
enterprise accounts, each achieving personal and business success
from use of the blur platform, the more they will repeat buy,
resulting in a lower cost of sale and higher operating
profitability. We have metrics that monitor this equation
throughout the project cycle.
US First
The US is a large market that traditionally adopts new and
better ways of doing business earlier than others. Given this, we
are increasingly focusing our marketing and sales resources towards
the US, while not forgetting the UK and Europe. We plan to start
targeting Asia later in 2015.
Automation
The more we are able to automate our business model, the lower
our cost to serve, and the greater our capacity to scale. We strive
to augment or remove human intervention in our processes. We
monitor our revenue per employee as a key metric of increasing
productivity.
Enterprises & Partnerships
We aim to deliver our proposition into larger enterprises who
want to become more efficient and effective. We will increasingly
reach these organisations through partnerships with major
management consultancies and professional services organisations.
We will measure our effectiveness by percentage of enterprise
adoption and repeat purchase metrics.
Strategic Path
We have invested significantly in our technology and the
development of the service provider community putting us at the
forefront of innovation. We are a growth company focused on repeat
projects from a growing enterprise customer base that provides a
higher quality income stream and more reliable revenues.
We plan to increase our productivity through technology and
process automation, growing the volume of business by targeting the
US and strategic partnerships, and developing 'Premium' services as
well as subscription and licences for both Enterprise buyers and
service providers which will increase our gross margin. Based on
our cash forecasts the current cash position provides the funding
for the business to allow us to execute our strategy.
Philip Letts
Chairman & CEO
30 June 2015
Strategic Report
Business Overview
2014 was the year of transition. The change of the 2013 revenue
recognition policy and following the ongoing review by the FRC, we
have now fully embedded the changes into the business processes
across the company. Governance at Board level was strengthened with
the appointment in February 2015 of David Sherriff as Deputy
Chairman and Senior Independent Director and continuity in the
management team. The addition of Tim Allen as Chief Financial
Officer in July 2015 will strengthen the senior management team
with specific focus on cash management and cost control.
Our technology and processes continue to improve and we are now
Enterprise-ready with momentum growing as the year has
progressed.
We are also now seeing operational efficiencies in our model
with a reduction in staff numbers improving our revenue per
employee metric.
Business Model
The move to the Enterprise is key to eliminating the previous
reliance on large contingent projects that by and large caused the
amendment to prior year's revenue and the reported revenue
recognition issues. We have developed new qualification processes
throughout our Delivery functions that largely eliminate the risk
from contingent projects. Enterprise customers are typically
financially stable, robust in their project requirements, and once
they have adopted the blur model come back for repeat projects.
Cash conversion from Enterprise customers is considerably more
consistent and predictable. This is evidenced in our improved
invoice to cash profile that began in H2 2014 and is continuing
through 2015.
blur as a company is now Enterprise ready with a vast array of
Enterprise class service providers to meet our Enterprise
customer's demands, and internally all business processes are now
Enterprise standard. The move to the Enterprise is being supported
by more Enterprise sales people, with the first purely Enterprise
focused position added in July 2015, and Enterprise customer
support, financed by a gradual move away from spend on direct
marketing.
Market & Trends
blur continues to enjoy first mover advantage in the e-commerce
services sector. As e-commerce services grows and becomes more
widely known, especially with enterprise customers this business
opportunity may attract a competitor that is larger or who has
greater financial resources.
blur is investing to expand our lead in technology, expertise,
and size of service provider and customer communities and believes
it has a lead and level of knowledge and expertise which would take
several years to replicate.
The move to the Enterprise is being supported by investment in
more Enterprise sales people and customer support, financed by a
gradual move away from purely direct marketing.
Technology
blur 4.0 was launched in 2014 to attract more enterprise-class
customers. The component-based platform architecture was built for
customers using desktop, mobile and tablet devices. The platform's
framework enhances the customer experience with a unified browsing
experience on any device (iOS, Android and Windows Phone) and at
any screen size or resolution for desktop users.
blur 4.0 enables automation of the pitch selection process,
shaving weeks off the time taken by customers to find a solution
that meets their exact requirements.
The shortlist will be generated by the machine intelligence
capabilities of blur Sense(TM) which uses a set of proprietary
algorithms to automatically match buyers and their pitches. blur
5.0 can enable the business to rapidly scale with fewer human
interventions, and will be a big move towards the first generation
ERP (Enterprise Resource Planning) platforms designed specifically
for services. Later the platform will be extended with API
(Application Programming Interface) so that blur 5.0 will integrate
easily with other enterprise software platforms.
People - the blur way
Our people are 100% customer obsessed with quality as the key
driver whether it is our service, clear communication, product,
data, or performance. We pride ourselves on having 'Zero
Passengers', meaning everyone is hands-on, 'managing from the
middle', and contributing to our and our customers success. No
matter the role, everyone adds value with 'Zero Inefficiency' that
means we have a high impact start, followed by a strong middle, and
an awesome end.
Governance & Controls
In the period under review, the Governance of the Group was
enhanced in two main areas, firstly with the appointment of KPMG in
November 2014 as the Group's auditors and secondly the appointment
on the 8th February 2015 of David Sherriff to the position of
Deputy Chairman and Senior Independent Director.
As well as further strengthening Board governance, David
Sherriff will be working with the Board to explore the options
available to the Group with regards to increasing the Company's
profile and providing further growth and investment opportunities
for both current and future shareholders.
The Size Zero Enterprise
We believe that the 'rules of business', fashioned over
centuries since the industrial revolution, are there to be broken.
What we are seeing is the rise of slimmer, smarter businesses that
operate in new ways, taking advantage of new collaborative
technologies and a globally available resource base. These
organisations are 'just big enough', highly focused on delivering
value, and use data to drive insights and innovation. Some of these
businesses were start-ups not that long ago and some are
long-established. They all share a new mind-set and belief that
growth does not mean the number of people you have in your
organisation, but the value you create. We call these
organisations, Size Zero Enterprises. They are the businesses that
the blur model enables.
We are living the Size Zero Enterprise story ourselves. 12
months ago, blur Group relocated from its London premises and moved
150 miles west to Exeter saving around $240,000 on property costs.
blur itself is now on the journey to become truly Size Zero with
every relevant job, task or project being posted on to the
Platform. It has itself grown in revenues with a reduction in
staff.
Operational Highlights
Transitioning to the Enterprise
2014 and into 2015 has been all about optimizing the platform,
marketplace and delivery for our transition to servicing the
Enterprise customer*.
Platform
The launch of blur 4.0 in 2014 began blur's move to focus on the
Enterprise customer and Enterprise service provider. Releases
throughout 2014 and into 2015 have steadily reinforced our focus on
the Enterprise. It improves customer experience, enhances the
Enterprise value proposition, and improves conversion rates and
repeat business. Key developments:
-- Technology platform that allows integration through apps into
the Enterprise systems of our buyers and service providers
-- Platform built to be fully responsive (mobile optimized). Our
mobile/tablet first approach meant 9% of projects briefed were from
smartphones in 2014
-- Unified Enterprise Level Dashboards in Project Space rolled
out for customers and service providers - delivering an improved
project delivery tool to enable quicker and efficient task
management, file sharing and messaging between the customer,
service provider and blur's Project team. Accessed anywhere and all
securely cloud hosted
New Product
Development of Premium Services in 2014 - led to the launch of
Premium Services in 2015, which add additional value for both
customer and blur and provide significant gross margin to the
bottom line.
Customers
Enterprise Customers
The addition of Enterprise customers in 2014 including Amazon,
Solvay, and Danone evidence s-commerce market acceptance, customer
credit maturity and confirm blur's expanding addressable market.
Key developments:
-- $28.5 million of projects submitted by Enterprise customers
in 2014 an increase of 90% y-o-y
-- 35.7% of projects come from existing customers by year end
increasing to nearly 50% post year end demonstrating the
reliability and value of our Marketplace to Enterprise customers
and their increasing relevance on buying and selling services
online
Enterprise customers - companies or groups with more than $500m
turnover per annum
SME Customers
During 2014, the proportion of SME customers submitting
commercially viable projects onto blur's marketplace started to
reduce, with this trend accelerating in the second half of the
year. Regarding SME customers, whilst they have bona fide projects
to be fulfilled, the Group has been affected by the lower credit
quality and resulting failure of a proportion of the projects
submitted by this category of customer. The SME customer has,
however, allowed the Group to learn how complex projects flow and
understand the barriers that may be encountered and cause projects
to derail during their path to completion often resulting in an
increased level of support by blur and increased cost
implication.
The Group's reliance on the SME customer through to 2014
resulted in a number of projects failing to reach completion
therefore affecting revenues as well as having a cost impact for
blur. In 2015, to enable the majority of projects from SME's to be
commercially viable and profitable; the Group has instigated
payment in advance for these customers to ensure credit risk is
reduced and cash flow improved. The Group continues to increasingly
focus on the Enterprise customer.
Service Providers
Service Provider Growth - the number of service providers on our
platform has increased from 34,109 at the end of 2013 to 49,555 at
the end of 2014. As the total service providers reached around
50,000, it represented a tipping point when we experienced
Enterprise service providers increasingly being acquired into the
community.
Enterprise Class Service Providers - to match the growth in
Enterprise customers we are growing the number of enterprise-class
service providers including Edelman, Weidmann Electrical
Technology, WPP and Bain & Co. who have already joined our
platform.
Ecosystem
blur Productivity increase - blur's policy is to have a minimum
of 20% of its service needs delivered using its own platform. In
2014 this policy enabled a 23% reduction in headcount from 84 to 65
FTEs by 2014 year end
Improvements in our technology and platform have led to
increased operational efficiencies in 2015 and as a result
positively impacted gross margin through the year and is expected
to continue in future periods.
Financial Highlights
Year on Year
Measure 2014 2013 Restated Growth
-------------- ---------- ------------------- -------------
Revenue $4.72m $3.48m 35%
-------------- ---------- ------------------- -------------
Gross profit $1.64m $0.67m 144%
-------------- ---------- ------------------- -------------
LBITDA(2) $(10.34)m $(6.35)m (63)%
-------------- ---------- ------------------- -------------
Cash balance $17.4m $9.56m 82%
-------------- ---------- ------------------- -------------
(2) LBITDA is loss before interest, tax, depreciation and
amortization.
Financial Reporting Council Enquiry
As at 30 June 2015 (date of signing accounts) the Financial
Reporting Council ("FRC") enquiry announced on 10(th) April 2015 is
on-going. The Board has been working with the support of its new
auditors, KPMG, to provide appropriate responses and conclude
outstanding queries. The Directors have made certain changes and
improvements to the financial statements based on the
correspondence to date, but until the FRC enquiry is completed, the
Board have continued to present the Financial Statements in
accordance with accounting policies it considers appropriate.
Changes to Accounting Policies
Further to our discussions with the FRC the Group has made a
correction to the revenue recognition policy to reflect consistency
in blur's position as principal resulting in a $229,569 adjustment
to the 2013 revenues. The point from which project revenue is
recognised has been changed with zero being recognised at kick off
(10% recognised at kick off originally in 2013) and the total
project revenue now being recognised in full over the life of the
project to completion. The change does not affect the quantum of
revenue recognised on a project, only the timing.
The reduction in project revenues recognised resulting from a
change in the revenue recognition policy was off-set by a reduction
in the provision for service provider costs in 2013 of
$183,655.
To support the appropriate treatment of costs relating to the
delivery of projects and to be consistent with the application of
blur's position as principal, the cost of blur staff directly
involved in the projects from submission through to completion,
have been reallocated to cost of sales with an identical reduction
in overhead costs. The impact has been to increase the cost of
sales comparative for 2013 by $345,968.
A number of the larger 2013 projects submitted by SME's were
suspended in the latter part of 2014. In preparing these financial
statements the directors have reconsidered the application of their
accounting policy to such projects and concluded that it was not
appropriate to recognise revenue on this type of project until
there exists better evidence that the amount of revenue can be
measured reliably and that economic benefits will be received.
Accordingly, this resulted in further correction of $1,069,326 in
2013 revenues. The reduction in projects revenues was
$1,069,326.
The reduction in recognised project revenue was off-set by a
reduction in the provision for service provider costs of $965,293
included in cost of sales. Cost of sales has been impacted by three
adjustments:
1) the reduction in project costs due to the change in
accounting policy recognising revenue only from kick off;
2) reduction in cost of experts for the correction for 2013
projects; and
3) reallocating the cost of blur staff involved in projects to
cost of sales from overheads.
The restatement is set out in note 2d on page 44.
Revenue
Revenue for the year increased by 35.5%% to $4.72m (2013
Restated: $3.48m).
Gross Margin
To support the appropriate treatment of costs relating to the
delivery of projects and to be consistent with the application of
blur's position as principal, the cost of blur staff directly
involved in the projects from submission through to completion,
have been reallocated to cost of sales with an identical reduction
in overhead costs. The impact has been to increase cost of sales
for 2014 by $939,610 ($345,968: 2013). Following the
reclassification of blur customer success staff costs to cost of
sales, gross margin has reduced for 2013 (19.2%) and 2014
(34%).
Gross profit was $1.65m in 2014. This takes into account the
reclassification set out above of blur staff costs in customer
success (2013 Restated: $0.67m), a 146.3% increase
year-on-year.
Profit/Loss
The LBITDA (Loss before Interest, Tax, Depreciation and
Amortization) for the year was $10.34m (2013 Restated: $6.35m) and
includes share-based payments cost of $0.46m (2013: $0.50m).
Enterprise Investment
blur, through the funding it has received from investors, has
invested significantly since its inception in the development of
its technology platform and its community (now numbering some
60,842 service providers of which 5% are considered Enterprise
class organisations) in order to provide a marketplace that will
both attract Enterprise customers and provide an enterprise class
service to meet their requirements.
Costs
Administrative costs increased to $12.62m (2013 Restated:
$7.21m) as a result of continuing investment in technology and
people but also the effects of bad debt and currency headwinds. The
credit risk associated with the customers using the marketplace in
2013 and 2014 resulted in an $826,885 bad debt provision included
in administrative costs.
During 2014 the number of full-time employees reduced from 81 to
65 by the end of 2014 with a subsequent reduction in staff
costs.
Loss before Tax
The loss before tax is $11m (2013 Restated: $6.5m), and includes
$0.53m (2013 Restated: $0.24m) of R&D tax credit.
Tax Losses
Tax losses for the Group up to the end of December 2014 amount
to a total of $15.4m.
Cash
Cash balance at year-end was $17.40m (31 December 2013: $9.56m).
Cash outflow from operating activities of $9.65m and an increase in
investment and financing activities of $19.0m. Cash balance at
30(th) June 2015 is $12.2m.
Consolidated statement of total comprehensive income
for the year ended 31 December 2014
Restated
2014 2013
Note US$ US$
--------------- ---------------
Revenue 4 4,715,208 3,479,796
Cost of sales (3,069,604) (2,810,896)
Gross profit 1,645,604 668,900
Total administrative expenses 5 (12,624,953) (7,210,776)
Loss from operations (10,979,349) (6,541,876)
Finance income 7 93,459 31,177
Finance expense 7 (143,660) (27)
--------------- ---------------
Loss before tax (11,029,550) (6,510,726)
Tax credit 8 530,487 240,607
--------------- ---------------
Loss for the year attributable
to equity holders of the parent
company (10,499,063) (6,270,119)
Consolidated statement of total Restated
other comprehensive income for 2014 2013
the year ended 31 December 2014 US$ US$
(Loss) for the year (10,499,063) (6,270,119)
--------------- ---------------
Other comprehensive income
--------------- ---------------
Exchange gains/(losses) arising
on the translation of foreign subsidiaries
(could subsequently be reclassified
to profit and loss) (1,544,473) 364,171
--------------- ---------------
Total comprehensive losses attributable
to equity holders of the parent
company (12,043,536) (5,905,948)
--------------- ---------------
Basic and diluted loss per share
for losses attributable to the
owners of the parent during the
year 9 (0.27) (0.23)
=============== ===============
The results reflected above relate to continuing activities.
Consolidated statement of financial position
At 31 December 2014
Restated
2014 2013
Note US$ US$
--------------------- ------------
Non-current assets
Property, plant and equipment 10 129,364 174,050
Intangible assets 11 2,269,284 960,673
Total non-current assets 2,398,648 1,134,723
--------------------- ------------
Current assets
Trade and other receivables 12 1,740,885 3,593,796
Tax Receivable 766,631 398,563
Cash and cash equivalents 17,401,774 9,561,462
Total current assets 19,909,290 13,553,821
--------------------- ------------
Total assets 22,307,938 14,688,544
--------------------- ------------
Current liabilities
Trade and other payables 13 1,946,046 3,538,657
Social security and other
taxes 75,198 237,832
Loans and borrowings 14 15,632 15,425
Total current liabilities 2,036,876 3,791,914
--------------------- ------------
Total liabilities 2,036,876 3,791,914
--------------------- ------------
Net assets 20,271,062 10,896,630
Issued capital and reserves attributable
to owners of parents
Called up share capital 15 769,179 475,845
Share premium 37,425,856 16,765,333
Equity conversion reserve 8,967 8,967
Merger reserve 1,712,666 1,712,666
Share - based payment reserve 20 1,074,047 609,935
Foreign exchange reserve (1,230,306) 314,167
Retained losses (19,489,346) (8,990,283)
--------------------- ------------
20,271,063 10,896,630
--------------------- ------------
The financial statements were approved and authorised for issue
by the Board of Directors on 30 June 2015 and were signed on its
behalf by:
Philip Letts
Chairman and CEO
Company Registration Number: 08188404
Consolidated statement of changes in equity
Called
up Equity Foreign Share-based
share Share conversion exchange Merger payment Retained
capital premium reserve reserve reserve reserve losses Total
US$ US$ US$ US$ US$ US$ US$
--------- ------------ ------------ ------------ ------------ ------------ ------------- ----------------------
Equity
as at
31 December
2012 396,076 5,492,437 8,967 (50,004) 1,712,666 107,079 (2,720,164) 4,947,057
Loss for
the period - - - - - - (6,270,119) (6,270,119)
Other comprehensive
Income - - - 364,171 - - - 364,171
--------- ------------ ------------ ------------ ------------ ------------ ------------- ----------------------
Total comprehensive
Profit/(loss)-
Restated - - - 364,171 - - (6,270,119) (59,05,948)
Issue of
ordinary
shares 79,769 11,885,563 - - - - - 11,965,332
Issue costs
recognized
in equity - (612,667) - - - - - (612,667)
Share-based
payments
Reserve - - - - - 502,856 - 502,856
Equity
as at
31 December
2013 475,845 16,765,333 8,967 314,167 1,712,666 609,935 (8,990,283) 10,896,630
--------- ------------ ------------ ------------ ------------ ------------ ------------- ----------------------
Loss for
the period - - -- - - - (10,499,063) (10,499,063)
Other comprehensive
Income/(loss) - - - (1,544,473) - - - (1,544,473)
Total comprehensive
profit/(loss) - - - (1,544,473) - - (10,499,063) (12,043,536)
Issue of
ordinary
shares 293,334 21,706,681 - - - - - 22,000,015
Issue costs
recognized
in equity - (1,046,158) - - - - - (1,046,158)
Share-based
payments - - - - - 464,111 - 464,111
--------- ------------ ------------ ------------ ------------ ------------ ------------- ----------------------
Equity
as at
31 December
2014 769,179 37,425,856 8,967 (1,230,306) 1,712,666 1,074,046 (19,489,346) 20,271,062
--------- ------------ ------------ ------------ ------------ ------------ ------------- ----------------------
for the year ended 31 December 2014
Consolidated statement of cashflows
2014 Restated
Note US$ 2013
US$
------------- --------------
Loss after taxation (10,499,063) (6,270,119)
Interest (income)/expense (net) 7 50,201 (31,150)
Income tax credit (530,487) (240,607)
Impairment of forward currency contract (136,018) -
Depreciation of property, plant and equipment 10 77,809 35,925
Amortization of intangible assets 11 561,722 157,227
Share-based payments charge 6 464,111 502,856
Loss on disposal of property, plant and equipment 5 51,414 4,485
------------- --------------
Cash outflows from operating activities before
changes in working capital (9,960,311) (5,841,383)
(Increase)/Decrease in trade and other receivables 1,866,378 (1,897,556)
Increase/(Decrease) in trade and other payables (1,637,635) 2,201,416
------------- --------------
Cash used in operations (9,731,567) (5,537,523)
Interest received 94,252 31,177
Interest paid (7,642) (27)
Income tax paid (10,846) (16,567)
------------- --------------
Net cash used in operations (9,655,803) (5,522,940)
------------- --------------
Purchase of property, plant and equipment (70,016) (176,275)
Proceeds on disposal of property, plant & equipment - 547
Investment in intangible assets (1,910,771) (913,370)
Net cash used in investing activities (1,980,787) (1,089,098)
------------- --------------
Issue of share capital 22,000,015 11,965,332
Issue cost of shares (1,046,158) (612,667)
Proceeds from convertible debts 15,632 -
------------- --------------
Net cash generated in financing activities 20,969,489 11,352,665
------------- --------------
Net increase in cash and cash equivalents 9,332,899 4,740,628
Cash and cash equivalents at beginning of period 9,561,462 4,453,336
Effect of foreign exchange translation on cash and equivalents (1,492,587) 367,498
------------- --------------
Cash and cash equivalents at end of period 17,401,774 9,561,462
------------- --------------
for the year ended 31 December 2014
Notes to the consolidated financial information
1. Accounting policies
Basis of preparation
The principal accounting policies adopted in the preparation of
the financial statements are set out below. The policies have been
consistently applied to all the years presented, unless otherwise
stated. These financial statements have been prepared in accordance
with International Financial Reporting Standards, International
Accounting Standards and Interpretations (collectively IFRSs)
issued by the International Accounting Standards Board (IASB) as
adopted by the European Union ("adopted IFRSs").
The preparation of financial statements in compliance with
adopted IFRSs requires the use of certain critical accounting
estimates. It also requires Group management to exercise judgment
in applying the Group's accounting policies. The areas where
significant judgments and estimates have been made in preparing the
financial statements and their effect are disclosed in note 2.
The Group financial statements consolidate the financial
statements of the Company and its subsidiaries (together referred
to as "the Group"). The parent Company financial statements present
information about the Company as a separate entity and not about
its Group.
Basis of consolidation
Where the Company has the power, either directly or indirectly,
to govern the financial and operating policies of another entity or
business so as to obtain benefits from its activities, it is
classified as a subsidiary. The consolidated financial statements
present the results of the Company and its subsidiaries ("the
Group") as if they formed a single entity. Intercompany
transactions and balances between Group companies are therefore
eliminated in full.
The consolidated financial statements incorporate the results of
business combinations using the purchase method. In the
consolidated statement of financial position, the acquirees's
identifiable assets, liabilities, and contingent liabilities are
initially recognised at their fair values at the acquisition date.
The results of acquired operations are included in the consolidated
income statement from the date on which control is obtained.
Inter-company transactions, balances and unrealised gains and
losses (where they do not provide evidence of impairment of the
asset transferred) on transactions between Group companies are
eliminated.
Merger accounting
In 2012 when blur Group plc was included as the new ultimate
parent entity as part of a group reconstruction arrangement, the
reconstructed Group was consolidated using merger accounting
principles as outlined in Financial Reporting Standard 6 ("FRS")
Acquisitions and Mergers (UK) and treated the reconstructed group
as if it had always been in existence. Any difference between the
nominal value of shares issued in the share exchange and the book
value of the shares obtained is recognized in a merger reserve.
The Company has taken advantage of merger relief available under
Companies Act 2006 in respect of the share for share exchange as
the issuing company has secured more than 90% equity in the other
entity. The carrying value of the investment is carried at the
nominal value of the shares issued.
Going concern
The Directors have prepared a cash flow forecast covering a
period extending beyond 12 months from the date of these financial
statements. blur is a disruptive and evolving technology company
and there are the existence of uncertainties in the forecast as a
result. The forecast contains certain assumptions about the
performance of the business including growth in future revenue (a
key assumption/sensitivity/risk in an rapidly evolving technology
business); the cost model and margins; and importantly the level of
cash recovery from trading. The directors are aware of the risks
and uncertainties facing the business as it embarks on its new
strategy but the assumptions used are the Directors' best estimate
of the future development of the business.
After considering the forecasts and the risks, the Directors
have a reasonable expectation that the Group has adequate resources
to continue in operational existence for the foreseeable future.
For these reasons, they continue to adopt the going concern basis
of accounting in preparing the annual financial statements. As with
any disruptive, evolving technology company there is always an
inherent risk over the ability of the Group and Company to continue
as a going concern if forecasts are not met and cash resources are
not adequate. The financial statements do not include any
adjustments that would result from the going concern basis of
preparation being inappropriate.
Functional and presentation currency
The functional currency of the Company is Sterling (GBP). The
presentational currency of the Company is the US Dollar ($).
Changes in accounting policies and disclosures
(a) New and amended standards adopted by the Group
The Group has applied any applicable new standards, amendments
to standards and interpretations that are mandatory for the
financial year beginning on or after 1 January 2014. However, none
of them has a material impact on the Group's consolidated financial
statements.
(b) New, amended standards, interpretations not adopted by the Group
A number of new standards, amendments to standards and
interpretations to existing standards have been published that are
mandatory for the Group's accounting periods beginning after 1
January 2015, or later periods, where the Group intends to adopt
these standards, if applicable, when they become effective. The
Group has disclosed below those standards that are likely to be
applicable to the Group and is currently assessing the impact of
these standards.
-- Annual improvements 2012 and 2013 cycles (effective date: 1
July 2014) - improvements to various standards.
-- Annual improvements 2014 cycle (effective date: 1 January
2016) - improvements to various standards.
-- IFRS 15, 'Revenue from contracts with customers' (effective
date: being reassessed) - this replaces IAS 18 Revenue, IAS 11
Construction Contracts and some revenue-related Interpretations. It
establishes a new five-step model that will apply to revenue
arising from contracts with customers. Under IFRS 15 revenue is
recognised at an amount that reflects the consideration to which an
entity expects to be entitled in exchange for transferring goods or
services to a customer. The principles in IFRS 15 provide a more
structured approach to measuring and recognising revenue.
-- IFRS 9 'Financial instruments' (effective date: 1 January
2018) - this replaces most of the guidance of
IAS 39 Financial Instruments: Recognition and Measurement. The
standard introduces new requirements for classification and
measurement, impairment, and hedge accounting.
Revenue Recognition
Revenue represents the gross value of services provided to
customers in respect of revenue earned, net of discounts, sales
taxes, accrued, and deferred amounts.
There are two principal sources of revenue:
Project revenue
Being revenue from projects that list on blurs' marketplace,
where the customer, in conjunction with blur, selects the expert
supplier and a legally binding contract between blur and its
customers is established (commonly referred to as "kick-off").
At this stage blur has assumed the principal contractual
responsibility to deliver the agreed services, the delivery of the
service has commenced, and project revenue recognition
commences.
Project revenue is recognised on either a timeline, or milestone
basis. Timeline refers to the date the delivery of the service
commences to the date it is completed. Milestone refers to specific
performance targets within each project until completion.
Under the project milestone method, the milestones inserted in
the Statement of Work broadly are indicative of the stage of
completion and reflect the value of work completed.
In the case of milestone projects, the expert service
provider/customer confirms the proportion of costs incurred to date
and the resulting cost to completion which gives the indication of
the percentage of completion. This is done on the platform
collaboration area that is updated by the expert, supported at
period end with additional electronic confirmation. The milestones
represent invoicing points during the lifecycle of the project and
the generation of an invoice will represent additional support that
the milestone has been achieved.
Where a project has regular deliverables and is relatively short
in duration, the project timeline is used to determine the stage of
completion. Such timeline is from when an expert has been
appointed, to completion.
The timeline basis is only used where the time taken is a
reasonable indicator of the stage of completion.
Where any element of a project is contingent upon either
completion or specific milestones or deliverables, the contingent
element of the project is separately identified and revenue
recognised only when the contingent element is completed.
Where a project is delayed or suspended for whatever reason, the
revenue recognised on a timeline basis is initially fixed to the
date of suspension. Revenue will only be further recognised if the
project is deemed to be commercially viable with an expectation
that it will be realised in cash.
Where the project is delayed and a new completion date
established, the revenue is recognised over the longer period to
the revised completion date. Where the project is suspended, no
revenue is recognised during the period of suspension. Where a
project is cancelled, the project is assessed as to the stage of
completion. Blur will specifically reference the cancelled
projects' Statement of Works, surveys of work performed, and the
proportion of costs incurred in order to assess the amount of
revenue to reasonably recognise.
Listing Fee Revenue
Being revenue from customers where the project is cancelled
after listing and there is an expectation of collection. The
Listing fee is a mandatory charge when a customer listed a project
and decided to close their trading account or not to select an
expert. The project is listed when the customer submits their
project brief and opens a trading account. The listing fee covers
the customer's use of their trading account and the cost of time
spent developing pitches and running them through the marketplace
process.
Prior to a project being formally cancelled, revenue recognised
is reduced to the extent of costs incurred. An approximation of
costs incurred is typically 10% of project value.
Foreign currency
The functional currency of blur Group plc and blur Ltd is Pound
Sterling, whereas of blur Inc is US Dollars.
The presentational currency is US Dollars ($), as the Group's
management believe that in the future the majority of revenues and
activity will be generated in US Dollars. This is consistent with
prior years.
The exchange rates used for translating the statement of
financial position at 31 December 2014 was at closing rate of GBP1
= US$1.5632 (2013: US$1.6488) and the statement of comprehensive
income at average rate of US$1.6410 (2013: US$1.5642).
Transactions entered into by a group company in a currency other
than the functional currency of that entity are recorded at the
rates ruling when the transactions occur. Foreign currency monetary
assets and liabilities are translated at the rates at the reporting
date.
Translation gains/losses arising on consolidation on monetary
assets and liabilities denominated in a currency other than the
financial currency of the company holding them are recognized in
other comprehensive income. Translation gains/losses in accounts of
an individual company are taken into the statement of comprehensive
income.
Foreign currency translation
Functional and presentational currency
Items included in the financial statements of each of the
Group's entities are measured using the currency of the primary
economic environment in which the entity operates (the functional
currency). The Company's functional currency is Sterling and the
Group's presentational currency is USD.
a) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at the
reporting period end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in the
income statement.
b) Group companies
The results and financial position of all Group entities that
have a functional currency different from the presentation currency
are translated into the presentation currency as follows:
-- Assets and liabilities for each balance sheet presented are
translated at the closing rate at the date of the balance
sheet.
-- Income and expenses for each income statement are translated
at the rate of exchange at the transaction date. Where this is not
possible, the average rate for the period is used but only if there
is no significant fluctuation in the rate and;
On consolidation, exchange differences arising from the
translation of the net investment in foreign entities are
recognised in other comprehensive income and accumulated in a
separate component of equity. Post transition exchange differences
are recycled to profit or loss as a reclassification adjustment
upon disposal of the foreign operation.
Derivative instruments
The Group uses forward exchange contracts to mitigate exposure
to foreign currency risks. Gains or losses from utilising these
instruments are recognised in the income statement in the period in
which they occur.
Fair Value Hierarchy
All financial instruments measured at fair value must be
classified into of the levels below:
-- Level 1: Quoted prices, in active markets
-- Level 2: Fair Inputs other than quoted market prices included
within Level 1 that are observable for the asset or liability,
either directly or indirectly.
-- Level 3: Inputs that are not based on observable market
data
Trade receivables
Trade receivables are amounts due from customers for services
provided in the ordinary course of business and are stated net of
any provision for impairment. Impairment provisions are recognized
when there is objective evidence (such as significant financial
difficulties on the part of the counterparty or default or
significant delay in payment) that the Group will be unable to
collect all of the amounts due under the terms receivable, the
amount of such a provision being the difference between the net
carrying amount and the present value of the future expected cash
flows associated with the impaired receivable. For trade
receivables, which are reported net of bad debt provision; such
provisions are recorded in a separate allowance account with the
loss being recognized within administrative expenses in the
statement of comprehensive income. On confirmation that the trade
receivable will not be collectable, the gross carrying value of the
asset is written off against the associated provision.
Cash and cash equivalents
Cash and cash equivalents includes cash in hand, deposits held
at call with banks, other short term highly liquid investments with
original maturities of three months or less, and for the purpose of
the statement of cash flows - bank overdrafts or outstanding credit
card balances.
Convertible debt
The proceeds received on issue of the Group's convertible debt
are allocated into their liability and equity components. The
amount initially recognized and attributed to the debt component
equals the discounted redemption value of the financial instrument,
discounted at a deemed market rate of interest (the effective
interest rate) and not the financial instrument's coupon rate. The
deemed rate of interest utilised in the estimation was compared to
the rate of interest that was payable on a similar debt instruments
that do not include an option to convert.
Subsequently, the debt component is accounted for as a financial
liability measured at amortized cost until extinguished on
conversion or maturity of the convertible loan. The remainder of
the proceeds are allocated to the equity reserve within
shareholders' equity, net of income tax effects.
Share Capital
Financial instruments issued by the Company are classified as
equity only to the extent that they do not meet the definition of a
financial liability or financial asset.
The Group only has one class of ordinary shares, denominated as
GBP0.01 (2013:GBP0.01) ordinary shares, as set out in note 15.
The Company's ordinary shares are classified as equity
instruments.
Leases
Leases where the lessor retains substantially all the risks and
benefits of ownership of the asset are classified as operating
leases. Rent paid on operating leases is charged to the statement
of comprehensive income on a straight line basis over the term of
the lease.
Property, plant and equipment
Items of property, plant and equipment are initially recognized
at cost.
Depreciation is provided on all items of property, plant and
equipment so as to write off their carrying value over their
expected useful economic lives. It is provided at the following
rates:
Furniture, fixtures and fittings - 33% per annum straight line
Computer equipment - 33% per annum straight line
Intangible Assets
The development of the trading platform is capitalized as an
intangible asset. Development activities involve a planned
investment in the building and enhancement of the trading platform.
The development expenditure of the platform is recognized as
intangible assets when the following criteria are met:
1. It is technically feasible to complete the development of the
platform so that it will be available for use;
2. Management intends to complete and use or sell the platform;
3. There is an ability to use or sell the platform;
4. It can be demonstrated how the platform will generate future economic benefits;
5. Adequate technical, financial and other resources to complete
the development of the platform and to use or sell the use of the
platform are available; and
6. The expenditure attributable to development of the platform can be measured reliably.
Expenditure being capitalized includes internal staff time and
cost spent directly on developing the trading platform.
Capitalized development expenditure is measured at cost less
accumulated amortization and accumulated impairment costs. The
amortization period is over 48 months on a straight line basis.
Taxation
Income tax expense represents the sum of the current tax and
deferred tax charge for the year.
Current taxes are based on the results shown in the financial
statements and are calculated according to local tax rules, using
tax rates enacted or substantively enacted by the reporting date.
During the year, the current tax charge is nil as there are tax
losses for the year. R&D credits are recognized as and when
eligible, within the tax charge/credit in the financial statements
in accordance with IAS 12.
Deferred tax is recognized in respect of relevant temporary
differences that have originated but not reversed at the balance
sheet date. A deferred tax asset is recognized to the event that it
is probable that future taxable profits will be available against
which temporary differences can be utilised. Management has elected
not to recognize the deferred tax asset due the lack of certainty
of future profitability as the Group is still in its early stage of
maturity.
The deferred tax asset on shares and share option charges is
affected by the difference between the grant price of the shares
and share options and the market price of the Company's shares at
the accounting year end. If the market value of the shares at the
date of exercise were to be lower than the market value at the
account year end the amount of tax relief obtained would be less
than anticipated in the deferred tax calculations.
Share-based payment
In accordance with IFRS 2 'Share-based payments', the Group
reflects the economic cost of awarding shares and share options to
employees and directors by recording an expense in the statement of
comprehensive income equal to the fair value of the benefit
awarded. The expense is recognized in the statement of
comprehensive income over the vesting period of the award.
Fair value is measured by the use of a Black-Scholes model,
which takes into account conditions attached to the vesting and
exercise of the equity instruments. The expected life used in the
model is adjusted, based on management's best estimate, for the
effects of non-transferability, exercise restrictions and
behavioural considerations.
Expense is recognized for awards that ultimately vest, as long
as the option holder remaining in employment with the Group.
2. Critical accounting estimates and judgements
In preparing the financial statements, the directors make
certain estimates and assumptions regarding the future. Estimates
and judgements are continually evaluated based on historical
experience and other factors, including the expectations of future
events that are believed to be reasonable under the circumstances.
In the future, actual experience may differ from these estimates
and assumptions. The estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the financial year are
discussed below.
Judgements and accounting estimates and assumptions
(a) Revenue Recognition
Revenue is recognized on a gross basis, as our evaluation and
assessment of the indicators under IAS 18 supports the fact that
blur is acting as principal for the majority of projects. The
factors that are considered and prove decisive in the conclusion of
this assessment include the following:
-- blur has the latitude to agree the fee for each project;
-- blur has primary responsibility providing the services to a
customer.
-- blur is responsible for the quality of the service delivery,
delivered on time, budget and to a sufficiently high standard. This
includes the management of the service delivery of the expert;
and
-- blur facilitates both commercial terms and the project
management for each project
Although blur passes on some of the credit risk onto the expert
it engages to deliver the services to its customers, it does not
consider this is sufficiently persuasive in light of the other
factors noted above to suggest that accounting for the transaction
as principal is not appropriate.
Revenue from projects is assessed on an individual project by
project basis with revenue earned being ascertained based on the
stage of completion of the project which is estimated using a
combination of milestones in the contract and a proportion of total
time expected to be required to undertake the contract which has
been performed. Estimates of the total time expected to undertake
the contracts are made on a regular basis and subject to management
review.
The amounts by which revenue exceeds billing is shown as part of
prepayments and accrued income in note 12 and the amount by which
progress billing exceeds revenue is shown as deferred revenue in
note 13.
Revenue represents the gross value of services provided to
customers in respect of revenue earned, net of discounts, sales
taxes, accrued, and deferred amounts.
Revenues are recognised when it has been determined that the
economic benefit associated with the transaction will flow,
received or receivable by the respective entity on its own account.
Therefore amounts collected on behalf of third parties, such as the
revenue authority for sales or Value Added Taxes, are not included
as economic benefits which flow to blur.
Revenue at blur is measured at the fair value of the
consideration received or receivable, once it can be accurately
established that a valid contract has come into existence between
blur and customer, as evidenced with reference to the Terms and
Conditions in issue at the time of the transaction. Such evidence
will take the form of a Statement of Works, blur Terms, Project
Terms, the Project Pitch, notes and comments in the Project
collaboration area or direct correspondence between blur and the
Customer and / or Expert.
The contract value of each project of a customer is usually
determined by agreement between blur and its customer. This total
contract value is measured at fair value of the consideration
received or receivable taking into account any trade discounts or
other adjustments allowed by blur.
The total amount and value of revenue to recognise in each
reporting period, for each revenue stream blur classifies is
detailed in note 4.
blur recognises revenue when the following criteria are
satisfied:
a. The amount or value of the revenue recognised can be reliably
measured, which occurs when the Customer Success team, customer and
expert have agreed the contract value upon appointment of the
expert. The measurement date for revenue recognition is from the
date an expert is appointed to the point that the performance has
been completed.
b. It is probable that the economic benefits associated with the
transaction will flow to blur, when the performance obligation is
confirmed in the Statement of Works or project brief confirmed
between the contracting parties and to the extent that there exists
a track record of successful progress of similar projects. The
transfer of economic benefits to blur must be fixed, determinable
and reasonably assured.
c. The stage of completion of the transaction at the end of the
reporting period can be measured reliably, as set out in the
detailed measurement guidance in section 5 of this policy
d. The costs incurred for the transaction and the costs to
complete the transaction can be measured reliably, with reference
to the individual contract terms, Statement of Works and project
revenue measurement guidance
There are two principal sources of revenue:
Project revenue
Project revenue is recognised on either a timeline, or milestone
basis. Timeline refers to the date the delivery of the service
commences to the date it is completed. Milestone refers to specific
performance targets within each project until completion.
Under the project milestone method, the milestones inserted in
the Statement of Work broadly are indicative of the stage of
completion and reflect the value of work completed.
In the case of milestone projects, the expert service
provider/customer confirms the proportion of costs incurred to date
and the resulting cost to completion which gives the indication of
the percentage of completion. This is done on the platform
collaboration area that is updated by the expert, supported at
period end with additional electronic confirmation.
Where a project has regular deliverables and is relatively short
in duration, the project timeline is used to determine the stage of
completion. Such timeline is from inception, being the date the
project brief is submitted onto the exchange, to completion.
The timeline basis is only used where the time taken is a
reasonable indicator of the stage of completion.
Revenues are recognised when it is probable that the economic
benefits associated with the transaction will flow to blur.
Where any element of a project is contingent upon either
completion or specific milestones or deliverables, the contingent
element of the project is separately identified and revenue
recognised only when the contingent element is completed.
Where a project is delayed or suspended for whatever reason, the
revenue recognised on a timeline basis is initially fixed to the
date of suspension. Revenue will only be further recognised if the
project is deemed to be commercially viable.
Where the project is delayed and a new completion date
established, the revenue is recognised over the longer period to
the revised completion date. Where the project is suspended, no
revenue is recognised during the period of suspension. Where a
project is cancelled, the project is assessed as to the stage of
completion. blur will specifically reference the cancelled
projects' Statement of Works, surveys of work performed, and the
proportion of costs incurred in order to assess the amount of
revenue to reasonably recognise.
Stage of completion estimate
blur will calculate the revenue for each sample project using
the appropriate % of completion methods indicated below based on
the total project value. If one of the methodologies indicated
below is not relevant or appropriate for the commercial nature of
the project selected, then another method will be chosen:
-- SoW milestone method - % completion based on the stages or
milestones being met as set out in the SoW which has been agreed by
the expert and customer;
-- Expert/customer confirmation method - % completion based on
external confirmation received from the expert or customer on the
progress of the project. In the event of a difference in opinion
between the expert and the customer, the lower % completion basis
shall apply;
-- Project Space milestone basis - % of completion based on the
status of the project in Project Space on the Exchange;
-- Time allocation method - % completion based on the time
elapsed from the date of project submission to the estimated or
target date of project completion (as set out in the SoW or other
relevant documentation).
If the project is delayed and a new revised completion date is
set, the revenue should be recognised over the longer period.
If the project is suspended, no revenue should be recognised
during the suspended period. If a project completes during a
reporting period, then blur will recognise 100% of the revenue by
the reporting date; and
-- Other third party cost or confirmation method - % completion
based on other external third party costs incurred (for example
media spend) or confirmation.
Listing Fee Revenue
Being revenue from customers where the project is cancelled
after listing and there is an expectation of collection. The
Listing fee is a mandatory charge when a customer listed a project
and decided to close their trading account or not to select an
expert. The project is listed when the customer submits their
project brief and opens a trading account. The listing fee covers
the customer's use of their trading account and the cost of time
spent developing pitches and running them through the Exchange
process.
The listing fee is legally binding as set out the blur's
Standard customer terms and conditions, and in respect of payment
being disputed, legal judgement has been granted in favour of blur
and enforcement pursued thereafter. The assessment is made by blur
as to whether the listing fees probable economic benefit will flow
to blur, and supports recognising the full value of listing fees
either paid or outstanding, with an impairment of the value of
outstanding listing fees being provided in full.
(b) Intangible Assets
Intangible assets include the capitalized development costs of
the trading platform. These costs are assessed based on
management's view of the technology team's time spent on projects
that enhance the trading platform, supported by internal time
recording and considering the requirements of IAS 38 'Intangible
assets'. The development cost of the platform is amortized over the
useful life of the asset. The useful life is based on the
management's estimate of the period that the asset will generate
revenue, which is reviewed on a project by project basis for
continued appropriateness. The carrying value is tested for
impairment when there is an indication that the value of the assets
might be impaired. When carrying out impairment tests these would
be based upon management judgement. Future events could cause the
assumptions to change; therefore this could have an adverse effect
on the future results of the Group.
(c) Trade receivables - provision for impairment
Management has provided for all debts, individually, which are
deemed doubtful at their estimated irrecoverable amount. Management
apply their judgement on whether there is objective evidence that
trade receivables should be impaired.
In 2015 the internal process for credit risk monitoring and
management was enhanced to include detailed customer credit checks
prior to projects being listed. The quality of credit worthy
customer has improved over the period being a reflection of both
improved credit control process and the transition to Enterprise
customers.
(d) Restatement of the prior year
The Board, at the time, considered that the Revenue Recognition
policy as revised and applied to the 2013 year end reflected an
appropriate revenue recognition methodology. However, as a growing
business, the dynamics of projects forming the revenue of the
company continues to evolve with more complex and longer life cycle
projects, including contingent fee arrangements, being submitted to
the platform since mid 2013. The way that these projects flow
through the platform, and the associated complications with
projects of this increasingly complex nature, has been better
understood since several projects have progressed through to
completion.
Following the Financial Reporting Council enquiry, the Board has
decided to make changes in relation to the timeline to commence
recognising revenue which previously started when a binding
contract with the customer was created. This is at the point of
listing the project and irrespective of whether the project
progressed or not, the customer would be committed to pay a minimum
of 10% of the project fee. However, the Board has now concluded
that it is correct to start recognising revenue when commercial
contracts are agreed and a project expert has been appointed
(commonly referred to as" kick-off"). blur consider that this
method ensures that blur aligns it's revenue recognition with the
full delivery of the project from when the combined work of blur
and the service provider have commenced and that, compared to the
previous method of recognising 10% on kick-off, a delay in
recognising revenue on projects to start from 0% at kick-off
reflects a correct revenue recognition approach.
In conjunction with our new auditors KPMG, the directors have
also reconsidered the application of their accounting policy to
2013 projects and concluded that it was not appropriate to
recognise revenue on this type of project until there exists better
evidence that the amount of revenue can be measured reliably and
that economic benefits will be received. As mentioned previously,
the dynamics of projects forming the revenue of the company
continues to evolve with more complex and longer life cycle
projects being submitted to the platform. It has therefore been
decided to make a correction to 2013 revenues where projects have
subsequently been suspended as a prior year adjustment.
The cost of blur staff within customer success, directly
involved with the delivery, management and completion of projects,
has been reallocated from overheads to cost of sales to reflect
internal staff costs that are directly relevant to the delivery of
projects. This reallocation has increased cost of sales in 2013 by
$345,968 with a corresponding decrease in administration costs.
As a result, the 2014 financial statements include revised 2013
comparatives: i) to reflect the change in revenue recognition from
kick-off onwards by recognising zero at kick off instead of 10%,
which has reduced 2013 revenue by $229,569; and ii) to project
revenue to reflect a change in the assessment of projects that were
not based on a fully understood project delivery track record,
which has reduced 2013 revenue by a further $1,192,284; iii) to
reduce 2013 revenues to the extent of costs incurred, increasing
revenues by $122,958; iv) to reduce the expert cost of sale for the
project revenue reversed, reducing cost of sales by $965,293: to
reduce the expert cost of sale for the adjustment in revenue
recognition at kick off to zero, reducing cost of sales by $183,636
and v) to cost of sales to reflect internal staff costs relevant to
the delivery of projects, which has increased 2013 cost of sales by
$345,968. The impact on brought forward reserves from 2012 is not
considered material and therefore no adjustment has been made to
earlier years.
The net impact of the prior year adjustment on results before
tax and net assets has been $22,091 and ($23,286). There is an
immaterial impact on Earnings per Share as a result.
The restatement of 2013 comprises the following
Restated
2013 Change 2013
------------------------------------------ ------------- ------------- -------------
US$ US$
------------------------------------------ ------------- ------------- -------------
Project revenue - correction
of revenue recognition policy 603,615 (229,569)
------------------------------------------ ------------- ------------- -------------
Project revenue - correction
of 2013 projects 838,871 (1,192,284)
------------------------------------------ ------------- ------------- -------------
Correction to reduce revenue
to the extent of costs 442,740 122,958
------------------------------------------ ------------- ------------- -------------
Revenues 4,778,691 (1,298,895) 3,479,796
------------------------------------------ ------------- ------------- -------------
Cost of sales - experts re correction
of revenue recognition policy (183,655)
------------------------------------------ ------------- ------------- -------------
Cost of sales - experts re correction
of 2013 projects 3,613,857 (965,293) 2,464,909
------------------------------------------ ------------- ------------- -------------
Cost of sales - blur staff reallocation 345,968 345,968
------------------------------------------ ------------- ------------- -------------
Total cost of sales 3,613,857 (802,961) 2,810,896
------------------------------------------ ------------- ------------- -------------
Gross margin 1,164,834 (495,934) 668,900
------------------------------------------ ------------- ------------- -------------
Overheads - reduction in staff
due to reallocation (345,968)
------------------------------------------ ------------- ------------- -------------
Bad debt provision reduction
- change in accounting estimate (174,021)
------------------------------------------ ------------- ------------- -------------
Foreign exchange adjustment 1,984
------------------------------------------ ------------- ------------- -------------
Total administrative expenses 7,728,781 (518,005) 7,210,776
------------------------------------------ ------------- ------------- -------------
Loss before tax (6,632,797) 22,071 (6,510,726)
------------------------------------------ ------------- ------------- -------------
Statement of Comprehensive Income
Statement of Financial Position
Restated
2013 Change 2013
--------------------------------- ------------ ------------ ------------
US$ US$
--------------------------------- ------------ ------------ ------------
Non-current assets 1,134,723 1,134,723
--------------------------------- ------------ ------------ ------------
Current Assets
--------------------------------- ------------ ------------ ------------
Trade and other receivables 3,674,522 (884,080) 2,790,442
--------------------------------- ------------ ------------ ------------
Accrued Revenues 951,728 (609,757) 341,971
--------------------------------- ------------ ------------ ------------
Other current assets 10,421,408 10,421,408
--------------------------------- ------------ ------------ ------------
Total current assets 15,047,658 (1,493,837) 13,553,821
--------------------------------- ------------ ------------ ------------
Current liabilities
--------------------------------- ------------ ------------ ------------
Trade and other payables 336,051 (30,291) 305,760
--------------------------------- ------------ ------------ ------------
Expert Accruals 2,369,024 (1,198,020) 1,171,004
--------------------------------- ------------ ------------ ------------
Deferred Revenue 1,517,738 (273,387) 1,244,351
--------------------------------- ------------ ------------ ------------
Other current liabilities 1,070,799 1,070,799
--------------------------------- ------------ ------------ ------------
Total current liabilities 5,309,037 (1,517,123) 3,791,914
--------------------------------- ------------ ------------ ------------
Net Assets 10,873,344 23,286 10,896,630
--------------------------------- ------------ ------------ ------------
Capital & Reserves (unaltered) 19,572,746 19,572,746
--------------------------------- ------------ ------------ ------------
Retained losses (9,012,374) 22,091 (8,990,283)
--------------------------------- ------------ ------------ ------------
Foreign Exchange Reserve 312,972 1,195 314,167
--------------------------------- ------------ ------------ ------------
Total adjustment to capital and
reserves 10,873,344 23,286 10,896,630
--------------------------------- ------------ ------------ ------------
3. Financial instruments - Risk Management
General objectives, policies and processes
The overall objective of the Board is to set policies that seek
to reduce risk as far as possible without unduly affecting the
Group's competitiveness and flexibility. Further details regarding
these policies are set out below.
The Board reviews its monthly reports through which it assesses
the effectiveness of the processes put in place and the
appropriateness of the objectives and policies it sets.
The Group reports in US Dollars. All funding requirements and
financial risks are managed based on policies and procedures
adopted by the Board of Directors.
Forward contracts are used to control foreign exchange risk. The
Group has entered into a forward exchange contract for the purchase
of dollars for sterling for the next financial year. Hedge
accounting is not applied in respect of these derivatives.
The Group's criteria for entering into a forward currency
contract would require that the instrument must
-- be related to anticipated foreign currency receipt
-- involve the same currency as the foreign currency receipt
-- reduce the risk of foreign currency exchange movements on the Group's operations
At 31 December 2014 the Group had one commitment under forward
foreign exchange contract.
i) Categories of financial assets and liabilities
The principal financial instruments used by the Group, from
which financial instrument risk arises, are as follows:
-- Trade receivables
-- Cash and cash equivalents
-- Trade and other payables
-- Borrowings and convertible loan notes
Trade and other receivables are initially measured at fair value
and subsequently at amortized cost. Book values and expected cash
flows are reviewed by the Board and any impairment charged to the
consolidated statement of comprehensive income in the relevant
period.
Trade and other payables are measured at book value. The book
value of financial assets and liabilities equates to their fair
value
A summary of the financial instruments held by category is
provided below:
Restated
Financial assets 2014 2013
US$ US$
---------------------------------- ------------------------- ------------
Cash and cash equivalents 17,401,774 9,561,462
Trade receivables - due
at reporting date 1,453,103 3,299,666
Trade receivables - not
due at reporting date - 258,348
---------------------------------- ------------------------- ------------
Gross trade receivables 1,453,103 3,558,014
Less: Provision for impairment (620,001) (734,925)
---------------------------------- ------------------------- ------------
Trade receivables - net
of provision 833,102 2,823,089
Accrued Income - not due
at reporting date 614,124 341,971
R&D Tax Credit - due at
reporting date 766,631 353,154
Other receivables 293,659 474,145
---------------------------------- ------------------------- ------------
Total 2,507,516 3,992,359
---------------------------------- ------------------------- ------------
Trade receivables principally comprise amounts outstanding for
sales to customers and are net of provision for doubtful
recoverability. An impairment review of outstanding trade
receivables is carried out at the period end and a specific amount
provided for. The average debtor days to settle invoices are 102
days (2013 Restated: 268 days).
Trade receivables that are due at the reporting date and have
been reviewed and impaired when the collectability is considered
unlikely. The credit quality of customers in 2013 and early 2014
has resulted in a greater than expected provision for
impairment.
R&D Tax Credit is expected to be received within 3 months of
the date of signing the Annual Report.
Financial liabilities
Restated
2014 2013
US$ US$
---------------------------------- ---------- ----------
Trade payables 603,615 336,051
Expert costs accrual 831,245 1,307,921
Other accrual 369,167 646,046
Derivative financial liabilities
- forward currency contract 136,018 -
Convertible loan notes 15,632 15,425
---------------------------------- ---------- ----------
Total trade and other payables. 1,961,677 2,305,443
---------------------------------- ---------- ----------
Trade payables and accruals principally comprise amounts
outstanding for trade purchases and ongoing costs. The average
credit period taken for trade purchases is 31 days (2013 Restated -
26 days).
Cash and cash equivalents
Cash and cash equivalents are held in Sterling and US dollars
and placed on deposit in UK banks and US banks.
ii) Credit risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations. The Group is mainly exposed to credit
risk from credit sales. At 31 December 2014 the Group has net trade
receivables of US$833,101 (2013 Restated - US$2,823,089).
The Group is exposed to credit risk in respect of these balances
such that, if one or more customers encounter financial
difficulties, this could materially and adversely affect the
Group's financial results. The Group attempts to mitigate credit
risk by assessing the credit rating of new customers prior to
entering into contracts and by entering contracts with customers
with agreed credit terms. The Group also mitigates the credit risk
when the customer for a project has not paid for the outstanding
debt, the expert associated with the project will also not be paid,
irrespective of whether or not the service has been delivered.
Customer credit risk is subject to the Group's established
policy, procedures and control relating to customer credit risk
management. Credit quality of a customer is assessed based on a
credit rating scorecard and individual credit limits are defined in
accordance with this assessment. The customers accepted through the
credit risk process in 2013 and the first half of 2014 have
resulted in bad debt and project failure issues. The larger part of
trade receivables relied on customers that were SMEs, early stage
ventures and based in geographies that were more difficult to
ensure payment. Several of these customers went into administration
rendering the receivable impaired. The credit risk process has
since been revised with new customers where the profile and credit
rating is outside the required criteria, having to make payment up
front prior to a project being listed. This process may result in a
reduced number of projects being listed but the resulting
conversion of trade receivables to cash has significantly
improved.
At 31 December 2014, the Group had 5 customers (2013 Restated: 6
customers) that owed the Group more than $100,000 each and
accounted for approximately 51% (2013 Restated: 46%) of all the
receivables outstanding.
The analysis below shows the ageing of trade and other
receivables and the movement in bad debt provision in the year:
Restated
2014 2013
US$ US$
---------------------------------- ------------- -----------
Up to 3 months 2,492,793 2,262,040
3 to 6 months 82,393 487,501
Above 6 months 552,331 1,977,743
---------------------------------- ------------- -----------
Gross 3,127,517 4,727,284
Less: allowance for receivables (620,001) (734,925)
---------------------------------- ------------- -----------
Net 2,507,516 3,992,359
---------------------------------- ------------- -----------
Allowance for impairment: 2014 2013
US$ US$
---------------------------------- ------------- -----------
Opening balance 918,359 671,450
Utilised during the year (1,125,242) (406,996)
Increase during the year 826,885 470,471
---------------------------------- ------------- -----------
Closing balance 620,002 734,925
---------------------------------- ------------- -----------
The provision for bad debts increased during the year as the
Group's policy is to provide fully against receivables due for more
than 120 days and listing fee invoices that have not been paid
during the year. A corresponding provision is made against the
expert invoice or accrual to reflect the reduced associated
liability.
(iii) Liquidity risk
Liquidity risk arises from the Group's management of working
capital. It is the risk that the Group will encounter difficulty in
meeting its financial obligations as they fall due. The Group's
policy is to ensure that it will always have sufficient cash to
allow it to meet its liabilities when they become due. To achieve
this aim, it seeks to maintain cash balances to meet expected
requirements for a period of at least 30 days. The table below
analyses the Group's financial liabilities by contractual
maturities. All amounts disclosed in the table are the contractual
undiscounted cash flows.
Restated
2014 2013
US$ US$
------------------------------------ ----------- -----------
Ageing of trade & other payables:
Up to 3 months 1,860,309 2,125,921
3 to 6 months 75,950 97,560
Above 6 months 84,985 66,538
------------------------------------ ----------- -----------
Gross 2,021,244 2,290,019
------------------------------------ ----------- -----------
(iv) Foreign exchange risk
Functional and presentational currency
Items included in the financial statements are measured using
the currency of the primary economic environment in which the
Company operates ("the functional currency") which is considered by
the directors to be the Pounds Sterling (GBP). The financial
statements have been presented in US Dollars. The effective
exchange rate at 31 December 2014 was GBP1 =US$1.5632 (2013: GBP1 =
US$1.6488).
Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year
end exchange rates of monetary assets and liabilities denominated
in foreign currencies are recognised in the statement of
comprehensive income.
Transactions in the accounts of individual Group companies are
recorded at the rate of exchange ruling on the date of the
transaction. Monetary assets and liabilities denominated in foreign
currencies are translated at the rates ruling at the year end. All
differences are taken to the statement of comprehensive income.
Foreign exchange risk arises when group entities enter into
transactions denominated in a currency other than their functional
currency. The Group's policy is, where possible, to allow customers
to settle liabilities denominated in the customer's functional
currency, being primarily Dollar or Pound Sterling.
During 2014 the exposure to exchange rate variances had a
significant impact as Dollar movement exceeded 10% during the year,
peaking at $1.1.704 in June 2014. As a significant proportion of
the costs are payable in Pound Sterling, the impact of presenting
these costs in Dollars and the reduction in value of net assets,
has resulted in a foreign exchange charge of $810,910 in 2014.
In order to monitor the continuing effectiveness of this policy,
the Board receives a monthly forecast, analysed by the major
currencies held by the Group, of liabilities due for settlement and
expected cash reserves.
The Group is predominantly exposed to currency risk on sales and
purchases made from customers and experts based in the USA and the
Euro-zone. Sales and purchases from customers, experts and
suppliers are made on a central basis and the risk is monitored
centrally. Apart from these particular cash-flows the Group aims to
fund expenses and investments in the respective currency and to
manage foreign exchange risk at a local level by matching the
currency in which revenue is generated and expenses are
incurred.
To reduce the impact of currency risk, the Group holds US Dollar
deposits for more than 60% of the cash balances.
Forward contracts are used to control foreign exchange risk. The
Group has entered into a forward exchange contract for the purchase
of dollars for sterling for the next financial year. Hedge
accounting is not applied in respect of these derivatives.
The Group's criteria for entering into a forward currency
contract would require that the instrument must:
-- be related to anticipated foreign currency receipt
-- involve the same currency as the foreign currency receipt
-- reduce the risk of foreign currency exchange movements on the Group's operations
At 31 December 2014 the Group had one commitment under forward
foreign exchange contract.
Financial instruments note
Fair Value Hierarchy
All financial instruments measured at fair value must be
classified into of the levels below:
-- Level 1: Quoted prices, in active markets
-- Level 2: Fair Inputs other than quoted market prices included
within Level 1 that are observable for the asset or liability,
either directly or indirectly.
-- Level 3: Inputs that are not based on observable market
data
The fair value hierarchy of financial instruments held at fair
value is shown below:
31 December 31 December
2014 2013
US$ US$
------------ ------------
Level Level
2 2
Financial liabilities
Derivative financial liabilities
(fair value through profit
or loss) 136,018 -
============ ============
As at 31 December 2014, the Group's net exposure to foreign
exchange risk was as follows for those entities with Pound Sterling
functional currencies:
US Dollar Euro Canadian Dollar Total
US$ US$ US$ US$
--------------------------------- ---------- -------- ---------------- ----------
As at 31 December 2014
Trade and other receivables 1,409,073 11,927 - 1,421,000
Cash and cash equivalents 7,960,729 39,465 - 8,000,194
Trade and other payables (193,034) (2,714) - (195,748)
--------------------------------- ---------- -------- ---------------- ----------
Net assets 9,176,768 48,678 - 9,225,446
--------------------------------- ---------- -------- ---------------- ----------
Restated As at 31 December 2013
Trade and other receivables 2,099,827 39,529 351 2,139,707
Cash and cash equivalents 79,984 13,842 974 94,800
Trade and other payables (79,216) (3,917) - (83,133)
--------------------------------- ---------- -------- ---------------- ----------
Net assets 2,100,595 49,454 1,325 2,151,374
--------------------------------- ---------- -------- ---------------- ----------
The impact of 10% movement in foreign exchange rate of US$ will
result in an increase/decrease of net assets by $920,704 for 2014
(2013 - $155,979). The average US$ exchange rate used for 2014 is
1.641 (2013- 1.5642), with a closing rate of 1.5632 (2013-
1.6488).
(v) Capital Management
The Group's capital is made up of share capital, share premium,
equity conversion reserve, merger reserve, foreign currency
reserve, share-based payment reserve and retained losses totalling
at 31 December 2014 US$20,271,063 (2013: US$10,896,630).
The Group's objectives when maintaining capital are:
-- To safeguard the entity's ability to continue as a going
concern, so that it can continue to provide returns for
shareholders and benefits for other stakeholders; and
-- To provide an adequate return to shareholders by pricing
products and services commensurately with the level of risk.
To meet these objectives, the Group reviews the budgets and
forecasts on a quarterly basis to ensure there is sufficient
capital to meet the needs of the group through to profitability and
positive cash flow.
The capital structure of the Group consists of shareholders
equity as set out in the consolidated statement of changes in
equity. All working capital requirements are financed from existing
cash resources.
(vi) Capital risk management
The Group's objectives when managing capital are to safeguard
the Group's ability to continue as a going concern in a volatile
and tight credit economy.
The Group will also seek to minimise the cost of capital and
attempt to optimise the capital structure, which currently means
maintaining equity funding and keeping debt levels to insignificant
amounts of lease funding. Share capital and premium together amount
to $38,195,035 (see Note 15).
Whilst the group does not currently pay dividends it is part of
the capital strategy to provide returns for shareholders and
benefits for other members in the future. However, the Group is
planning growth and it will continue to be important to maintain
the Groups credit rating and ability to borrow should acquisition
targets become available.
Capital for further development of the Group's activities will,
where possible, be achieved by share issues or other finance as
appropriate.
4. Segmental analysis
The Group currently has one reportable segment, provision of
services and categorises all revenue from operations to this
segment.
The Group currently has two reportable categories which are:
1. project revenues - for the provision of services from
projects that list on blurs' marketplace, where the customer
accepts the bid from the expert supplier and a legally binding
contract between blur and its customers is established
2. listing fee revenues - where the project is cancelled after
listing and there is an expectation of collection. The Listing fee
is a mandatory charge when a customer listed a project and decided
to close their trading account or not to select an expert.
Project Revenue Listing Fees
Restated 2013
2014 2013 2014 Restated 2013
US$ US$ US$ US$
US$ US$ US$ US$
--------------- ---------------------- ----------------- ---------- --------------
UK 939,597 700,569 752,458 166,754
USA 1,303,606 2,083,377 745,811 193,371
Rest of World 346,914 268,078 626,822 67,647
--------------- ---------------------- ----------------- ---------- --------------
Total 2,590,117 3,052,024 2,125,091 427,772
--------------- ---------------------- ----------------- ---------- --------------
The Group operates in three main geographic areas: UK, USA and
Rest of the World. Revenue and non-current assets by origin of
geographical segment for all entities in the Group is as
follows:
Revenue Non-current assets
2014 Restated 2013 2014 Restated 2013
US$ US$ US$ US$
UK 1,692,055 867,323 2,394,434 1,126,284
USA 2,049,417 2,276,748 4,214 8,439
Rest of World 973,736 335,725 - -
--------------- ---------------------- -------------- ---------- -------------------
Total 4,715,208 3,479,796 2,398,648 1,134,723
--------------- ---------------------- -------------- ---------- -------------------
5. Loss from operations
The operating loss as at 31 December 2014 is stated after
charging:
Restated
2014 2013
US$ US$
------------------------------------- --------------------------------- ----------
Amortization of intangibles 561,722 157,227
Auditors' remuneration:
Audit fees - Subsidiaries - 108,418
- Company 266,843 10,950
Non-audit fees - taxation advisory
and compliance services 59,443 34,775
- other assurance services -
interim review 16,398 7,039
Bad debt provision 826,885 734,925
Depreciation of property, plant
and equipment 77,809 35,925
Loss on disposal of property,
plant & equipment 51,414 4,485
Staff costs (note 6) 4,268,210 2,933,078
Operating lease expense - buildings 471,260 172,728
Research and development costs - 177,282
Foreign exchange losses 810,910 131,669
Other administrative expenses 5,214,059 2,702,275
------------------------------------- --------------------------------- ----------
Total administrative and other
expenses 12,624,953 7,210,776
------------------------------------- --------------------------------- ----------
6. Staff costs
Staff costs (including Directors emoluments) incurred in the
year were as follows:
Restated
2014 2013
US$ US$
------------------------------ ------------ ----------
Wages and salaries 4,939,019 2,974,178
Social security costs 598,972 245,904
Share-based payments 464,111 502,856
------------------------------- ------------ ----------
Gross staff costs 6,002,102 3,722,938
Less: Amounts capitalized:
Wages and salaries (1,584,825) (714,377)
Social security
costs (149,067) (75,483)
------------------------------- ------------ ----------
(1,733,892) (789,860)
Wages and salaries 3,354,194 2,259,801
Social security costs 449,905 170,421
Share-based payments 464,111 502,856
------------------------------- ------------ ----------
Net staff costs 4,268,210 2,933,078
------------------------------- ------------ ----------
The average monthly number of permanent employees during the
period was as follows:
Restated
2014 2013
Number Number
------------------- ------- ---------
Directors 6 5
Staff
Administration 8 7
Customer Services 15 8
Marketing 6 7
Sales 11 14
Technology 26 18
------------------- ------- ---------
72 59
------------------- ------- ---------
Restated
2014 2013
US$ US$
----------------------------- -------- ---------
Key management personnel
Emoluments and compensation 756,675 472,284
Employers social security 67,859 39,276
----------------------------- -------- ---------
824,534 511,560
Share-based payments 117,535 291,673
----------------------------- -------- ---------
942,069 803,233
----------------------------- -------- ---------
7. Finance income and expenses
Restated
2014 2013
US$ US$
----------------------------- ------------------------------------------ ---------
Finance income
Interest from bank 93,459 31,177
Finance expense
Convertible loan note
interest (872) (27)
Fair value loss on foreign
exchange contracts (142,788) -
----------------------------- ------------------------------------------ ---------
(143,660) (27)
The foreign exchange expense includes $6,770 relating to the
foreign exchange contract where the potential loss is calculated at
the average exchange rate in the statement of income and the
provision in the balance sheet is reflected at the exchange rate as
at the end of December 2014
8. Income tax
Analysis of the Tax Credit
No liability to UK corporation tax arose on ordinary activities
for the year ended 31 December 2014 nor for the year ended 31
December 2013. However, a receivable cash tax credit in respect of
the UK R&D activity has been recognized.
In 2012 the Group was approved by HMRC for the R&D Tax
Credit pilot scheme that assures the Group that their R&D Tax
Credits will be approved and processed without further support for
a 3-5 year period. The R&D Tax Credit receipt from HMRC is
likely to be received within a few months of the submission of the
corporate tax return for blur Limited.
Restated
2014 2013
US$ US$
------------------------------- --------- ---------
Tax credit - current year 535,165 240,607
- prior year 6,168 0
Overseas tax (10,846) 0
------------------------------- ---------
530,487 240,607
------------------------------- --------- ---------
Factors Affecting the Tax Charge
The reasons for the difference between the actual tax charge for
the year and the standard rate of corporation tax in the United
Kingdom applied to the result for the year are as follows:
Restated
2014 2013
US$ US$
------------------------------------ ------------- ------------
Loss before tax (11,029,550) (6,510,725)
Tax credit at 21.5% (2013:23.25%) 2,371,353 1,518,879
Non-deductible expenses (110,838) (153,469)
Accelerated (depreciation)/capital
allowance (16,027) 27,830
Higher tax rates on overseas
earnings (5,016) (3,964)
Utilization of overseas tax losses 0 4,541
Losses carried forward (2,250,317) (1,399,871)
Prior year R&D tax credit 6,168
Current year R&D tax credit 535,164 246,661
Income tax credit 530,487 240,607
------------------------------------ ------------- ------------
The Group has carried forward losses and accelerated timing
differences amounting to US$ 15,392,810 as of 31 December 2014
(2013 Restated - $7,231,804). As the timing and extent of taxable
profits are uncertain, the deferred tax asset US$ 3,078,562 (2013
Restated: $1,663,315) arising on these losses (at 20% future tax
rate) and accelerated timing differences has not been recognized in
the financial statements.
Disclosable deferred tax asset amounting to $257,019 (2013
Restated: $1,493,790) has arisen due to timing differences relating
to share options. This asset has not been recognized due to the
uncertainty surrounding the timing and extent of profits.
9. Loss per share
Loss per ordinary share has been calculated using the weighted
average number of shares in issue during the relevant financial
periods. The basis for calculating the basic loss per share is as
follows:
Restated
2014 2013
US$ US$
------------------------------------------------------------------------- ------------- ------------
Weighted average number of shares for the purpose of earnings per share 39,391,172 27,295,590
Loss after tax (10,499,063) (6,270,119)
Loss per share (0.27) (0.23)
------------------------------------------------------------------------- ------------- ------------
Due to the loss in the period the effect of the share options
were considered anti-dilutive and hence no diluted loss per share
information has been provided.
10. Property, plant and equipment
Furniture,
Computer Fixtures
Equipment and Fittings Total
US$ US$ US$
------------------------------------ ------------------- -------------- ----------
COST
At 1 January 2013 71,674 51,315 122,989
Additions 109,271 67,004 176,275
Disposals (3,920) (2,260) (6,180)
Exchange adjustment 1,592 977 2,569
------------------------------------ ------------------- -------------- ----------
At 31 December 2013 178,617 117,036 295,653
Additions 34,460 35,555 70,015
Disposals (73,006) (48,147) (121,153)
Exchange adjustment (5,462) (3,629) (9,091)
------------------------------------ ------------------- -------------- ----------
At 31 December 2014 134,609 100,815 235,424
------------------------------------ ------------------- -------------- ----------
DEPRECIATION
At 31 January 2013 44,492 38,543 83,035
Charge for period 26,963 8,962 35,925
Disposals (142) (1,005) (1,147)
Exchange adjustment 2,682 1,108 3,790
------------------------------------ ------------------- -------------- ----------
At 31 December 2013 73,995 47,608 121,603
Charge for period 45,316 32,493 77,809
Disposals (49,980) (37,811) (87,791)
Exchange adjustment (3,436) (2,125) (5,561)
------------------------------------ ------------------- -------------- ----------
At 31 December 2014 65,895 40,165 106,060
------------------------------------ ------------------- -------------- ----------
NET BOOK VALUE
At 31 December 2014 68,714 60,650 129,364
------------------------------ -------- ------- --------
Restated At 31 December 2013 104,622 69,428 174,050
------------------------------ -------- ------- --------
11. Intangible Assets
Trading Software Total
Platform Development
US$ US$ US$
----------------------------------- ---------- ------------- ----------
COST
At 1 January 2013 237,631 - 237,631
Additions - Internal Development 789,860 - 789,860
Additions - External Costs 92,183 31,327 123,510
Exchange adjustment 5,274 - 5,274
----------------------------------- ---------- ------------- ----------
At 31 December 2013 1,124,948 31,327 1,156,275
Additions - Internal Development - 176,879 1,910,771
Additions - External Costs 1,651,681 82,211
Disposals - (18,051) (18,051)
Exchange adjustment (58,403) (770) (59,173)
----------------------------------- ---------- ------------- ----------
At 31 December 2014 2,718,226 271,596 2,989,822
----------------------------------- ---------- ------------- ----------
AMORTIZATION
At 1 January 2013 29,223 - 29,223
Charge for the year 157,227 - 157,227
Exchange adjustment 9,152 - 9,152
----------------------------------- ---------- ------------- ----------
At 31 December 2013 195,602 - 195,602
Charge for period 521,998 39,724 561,722
Exchange adjustment (34,903) (1,883) (36,786)
----------------------------------- ---------- ------------- ----------
At 31 December 2014 682,697 37,841 720,538
----------------------------------- ---------- ------------- ----------
NET BOOK VALUE
At 31 December 2014 2,035,529 233,755 2,269,284
----------------------------------- ---------- ------------- ----------
Restated At 31 December
2013 929,346 31,327 960,673
----------------------------------- ---------- ------------- ----------
12. Trade and other receivables
Restated
2014 2013
US$ US$
--------------------------- ---------- ----------
Trade receivables - gross 1,453,103 3,558,014
Provision for impairment (620,001) (734,925)
--------------------------- ---------- ----------
Trade receivables - net 833,102 2,823,089
Prepayments 274,164 212,544
Accrued Income 614,124 341,971
Other receivables 19,495 212,395
Directors current account - 3,797
--------------------------- ---------- ----------
1,740,885 3,593,796
--------------------------- ---------- ----------
As at 31 December 2014 trade receivables of US$ 1,285,722 (2013:
US$ 3,067,337) were past due but not impaired, see note 3 for the
Group's assessment of the exposure to credit risk.
All amounts shown under receivables are due within one year.
13. Trade and other payables
Restated
2014 2013
US$ US$
---------------------------------- ---------- ----------
Current
Trade payables - Experts 120,623 336,051
Trade payables - Overheads 482,992 -
Other payables 26,809 4,287
Derivative financial liabilities
- forward currency contract 136,018
Deferred revenue - 1,244,351
Director's current account 15,228 -
Accruals - Experts 837,245 1,304,363
Accruals - Overheads 327,130 649,605
---------------------------------- ---------- ----------
1,946,046 3,538,657
---------------------------------- ---------- ----------
Forward rate exchange contracts for derivative financial
liabilities are not designed as hedging instruments. The maximum
exposure to credit risk at the reporting date is the fair value of
the derivative assets in the consolidated statement of financial
position.
Cash flow forward foreign exchange contracts
The currency risk on surplus inflows from short term receivables
is managed through the use of foreign exchange contracts. Contracts
have been established to hedge the estimated US Dollar cash flow
through to 27 July 2015.
14. Loans and borrowings
Restated
2014 2013
US$ US$
---------------------------- ------- ---------
Unsecured
Current 15,632 15,425
Total loans and borrowings 15,632 15,425
---------------------------- ------- ---------
Book value approximate to fair value for the convertible debt
and is stated at fair value at initial recognition and at amortized
cost subsequently.
The convertible loan notes (referred to as convertible debt II)
were issued in 2011 with a coupon rate of 15% at a total face value
of US$ 78,010. The loan notes are either repayable in four years
from the issue date at its total face value, with interest accrued
and payable as ordinary shares issued in the Company or can be
converted at any time within two years into shares at the holder's
option. The value of the liability component and the equity
conversion component were determined at the date the instrument was
issued.
During the period to 31 December 2012 loan note holders
converted their loan notes into ordinary shares of the Company.
Only one convertible loan note remains outstanding relating to
Peter Tahany. There is an on-going claim relating to the provision
of Mr Tahany's consultancy services from September 2009 to early
2010, but the Board considers any risk of incurring costs relating
to this claim remote.
Equity conversion Fair value
Face value reserve of liability
US$ US$ US$
------------------------ ----------- ------------------ --------------
As at 1 January 2013 15,090 8,967 15,090
Exchange adjustments 335 - 335
------------------------ ----------- ------------------ --------------
As at 31 December 2013 15,425 8,967 15,425
------------------------ ----------- ------------------ --------------
Accretion in loan note
liability value 793 - 793
Exchange adjustments (586) - (586)
------------------------ ----------- ------------------ --------------
As at 31 December 2014 15,632 8,967 15,632
------------------------ ----------- ------------------ --------------
15. Share capital
Share capital allotted and fully paid up
Ordinary shares of GBP0.01 carry the right to one vote per share
at general meetings of the Company and the rights to share in any
distribution of profits or returns of capital and to share in any
residual assets available for distribution in the event of a
winding up. The shares are denominated in Pounds Sterling and
translated at the historic rate.
The table below shows the movements in share capital for the
year:
Number of shares Share Capital $ Share Premium $
Movement in ordinary share capital 2014 2013 2014 2013 2014 2013
------------------------------------ ------------ ----------- -------- -------- ------------ -----------
Balance at 1 January 29,632,522 24,555,259 475,845 396,076 16,765,333 5,492,437
Issue of new shares 17,460,329 5,077,263 293,334 79,769 21,706,681 11,272,896
Share issue costs - - - - (1,046,158) -
Balance at 31 December 47,092,851 29,632,522 769,179 475,845 37,425,856 16,765,333
------------------------------------ ------------ ----------- -------- -------- ------------ -----------
In June 2014 an issue of 17,460,329 ordinary shares of GBP0.01
each at a consideration of GBP0.75 per share was placed in the
market. The Group has not issued any partly paid shares nor any
convertible securities, exchangeable securities or securities with
warrants. The Group does not hold any treasury shares.
16. Related party transactions
Compensation or other related payments to key management
personnel (including Directors):
Restated
2014 2013
US$ US$
--------------------------- -------- ---------
Consultancy fees(1) 196,920 140,778
Service fees (2) 251,900 154,460
Other Consultancy fees(3) 9,467 -
--------------------------- -------- ---------
458,287 295,238
--------------------------- -------- ---------
Out of above balances outstanding at year end in trade payables
and accruals are $26,675 (2013: $42,570)
1 The consultancy fees includes $196,920 paid to Revviva LLC, a
company in which K Cardinale has an interest. These were paid for K
Cardinale's director services.
2 Service fees of $251,900 (2013: $86,220) were paid to CFPro
Limited & Cambridge Financial Partners LLP for accounting and
consultancy support, companies in which Barbara Spurrier has an
interest.
3 Other consultancy fees paid to Steve Harvey during the year
prior to his employment with the Company.
Related party transactions are not included in compensation
costs to key personnel as set out in note 6.
The following loans are due (to)/from directors:
Restated
2014 2013
US$ US$
------------------------------------------ --------- ---------
P Letts:
Opening balance 3,797 396
Amounts advanced from the Group - 3,218
Expenses incurred on behalf of the Group (19,765) -
Exchange adjustments 740 183
------------------------------------------ --------- ---------
Closing balance (15,228) 3,797
------------------------------------------ --------- ---------
The loans are interest free and repayable on demand.
17. Events after the reporting date
On the 8th February 2015 David Sherriff was appointed to the
position of Deputy Chairman and Lead Independent Director.
In March 2015, the Financial Reporting Council informed the
Group of an enquiry that is on-going at the date the Financial
Statements were approved.
On 30 June 2015 we announced that Tim Allen will be appointed
Chief Financial Officer joining the Group on 20th July 2015.
18. Control
There is no ultimate controlling party.
19. Posting of Annual Report
blur Group plc's audited Annual Report and Financial Statements
for the year ending 31 December 2014 are available for you to
download and review on blur's website at
www.blurgroup.com/investors/#reports and will shortly be posted to
shareholders.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SDMFISFISEFM
Maistro (LSE:MAIS)
Historical Stock Chart
From May 2024 to Jun 2024
Maistro (LSE:MAIS)
Historical Stock Chart
From Jun 2023 to Jun 2024
