TIDMATQT
RNS Number : 4144V
ATTRAQT Group PLC
30 January 2017
30 January 2017
ATTRAQT Group plc
("ATTRAQT", the "Group" or the "Company")
UNAUDITED PRELIMINARY FULL YEAR RESULTS
ATTRAQT Group plc (AIM: ATQT), a leading provider of visual
merchandising, ecommerce site search and personalised
recommendation technology, announces its unaudited preliminary
results for the twelve months ended 31 December 2016.
Financial Highlights
-- Revenue growth of 22% to GBP3.6m (FY15: GBP2.9m)
o Recurring revenue(1) increased 22% to GBP3.2m (FY15:
GBP2.7m)
-- Adjusted EBITDA(2) losses were GBP1.6m, in line with
expectations, reflecting the accelerated investment in the
business
-- Losses before tax were GBP1.9m, in line with expectations (FY15: loss GBP0.7m)
-- Adjusted basic EPS loss 6.6 pence per share (FY15: loss 3.1 pence per share)
-- Exit Rate (period end contracted annualised billing) up 15% to GBP3.9m (FY15: GBP3.4m)
-- Gross margins increased to 86.2% (FY15: 83.5%)
-- Cash at period end GBP1.2m (FY15: GBP3.0m)
(1) . Monthly recurring revenue accrued January-December
2016.
(2.) Adjusted EBITDA refers to earnings before interest, tax,
depreciation, amortization and share based payments
Operational Highlights
-- Continued sales momentum with 42 deals in the year, including
31 new clients, bringing the total to 121 (FY15: 110)
o New clients include: Fraser Hart & Fields, Volcom, Matches
Fashion, Moss Bros., Russell & Bromley, JoJo Maman Bebe, Eddie
Bauer, L.K. Bennett, The North Face, OKA Direct, Timberland, Vans
(Europe) and Victoria Beckham
-- Average newly signed deal value increased to GBP32.3k (FY15: GBP28.4k)
-- US sales operations performing well with seven new customers
signed, bringing the total clients in North America to 19 (FY15:
21)
-- 37 new customer implementations delivered, bringing total
number of live sites to 134 (FY15: 154)
-- Continued investment in upgrading the Freestyle Merchandising
platform ('the Platform'), with three new core code releases in the
period
Andre Brown, CEO of ATTRAQT Group plc, commented,
"I'm pleased to report another year of good progress with the
Group continuing to grow both its revenues and client base in the
UK and North America, whilst at the same time increasing gross
margin. We have signed 42 new deals in the period, including
several large global retailers and have delivered a 22 per cent.
Increase in revenue for the year.
"Our objective is to deliver strong profitable growth by
becoming the clear global leader in online visual merchandising.
With an exit rate of GBP3.9m, good growth in recurring revenue and
a strong sales pipeline for H1 2017, we are confident in the
continued success of ATTRAQT for 2017 and the foreseeable
future."
For further information, please contact:
ATTRAQT Group plc via Newgate
André Brown, CEO
Mark Johnson, CFO
N+1 Singer Tel: 020 7496 3000
Shaun Dobson, Lauren Kettle
Newgate Tel: 020 7653 9850
Adam Lloyd, Charlotte Coulson, Sophie O'Donoghue
About ATTRAQT
ATTRAQT launched its merchandising platform, Freestyle
Merchandising, in 2009 which included product recommendations, site
search and visual merchandising. The client base has now grown to
121 clients, including Tesco Clothing (part of Tesco Plc (LSE:
TSCO)), boohoo.com (LSE: BOO) and Superdry (LSE: SGP). The Group
has market presence in Western Europe and North America with
offices in London and Chicago. For more information, please visit:
http://attraqt.com
Chairman's Statement
I am delighted to report continued strong progress for ATTRAQT
in 2016 with sustained sales momentum. The Company signed 42 deals
in the period, including 31 new clients, and increased the average
new client deal value to GBP32.3k per annum.
The financial results for FY 2016 are very encouraging with the
Company delivering revenue growth of 22 per cent. to GBP3.6m, which
includes a 22 per cent. increase in recurring revenue to GBP3.9m.
The business showed good control of costs during the period to
deliver an EBITDA loss of GBP1.6m, in line with expectations and
reflecting the accelerated investment in the business. Gross
margins increased to 86.2 per cent.
Expansion in the North America market progressing well, as
demonstrated by the signing of seven new clients, including Eddie
Bauer and Volcom.
The Company continues to invest and develop its core software
platform, specifically upgrading the Freestyle Merchandising
platform which saw seven new core code releases during the period.
On a backdrop of continued solid growth and exciting times for
ATTRAQT, the Board looks forward to the future with confidence.
Nick Habgood
Chairman
30 January 2017
CEO's Statement
Introduction
ATTRAQT continues to deliver strong operational and financial
progress. We have grown our client base in both the UK and North
America, reaching out to larger multi-national retailers as
evidenced by our increasing average new client deal value and gross
margin.
Business model
The Group's business model is based on a recurring monthly
service fee plus a one-off set-up fee and additional follow-on
project fees. Clients contract up for a minimum of 12 months, with
some larger clients signing up for a longer period of two
years.
The current sales model is based on direct sales via a dedicated
sales team. Due to the importance of the functionality provided by
the Platform to our clients, client retention is strong with most
clients automatically renewing at the end of the contractual
term.
Growth strategy
The Group's objective is to become the global leader in online
visual merchandising.
Throughout the year ATTRAQT has continued to build on its
business plan, founded on four key elements:
1) Invest in sales and marketing to grow client base and recurring revenue;
2) Expand the Company's production capacity to keep pace with accelerating sales;
3) Develop strategic partnerships - both sales and technology -
to accelerate sales growth and extend our product offering; and
4) Extend the capabilities of the platform through continued
investment in research and development, adding new features and
creating new products to initiate new revenue streams.
Review of Sales & Operations
ATTRAQT continues to deliver strong operational results, with 42
deals during the year, of which 31 were new clients, bringing the
total to 121 (FY15: 110). The Company also delivered 37 new
customer implementations, bringing the total number of live sites
to 185 (FY15: 154).
The Company experienced an outage at its data centre during H1,
which was quickly addressed and subsequently transitioned to a new
data centre provider. There was an increase in customer attrition
of nine directly as a result of the outage.
A key focus for ATTRAQT remains the development of the North
American business. Progress has been encouraging as demonstrated by
client wins in the region, including Eddie Bauer and Volcom. Given
the size of the market we believe there are still a significant
number of opportunities available to expand ATTRAQT's footprint in
the region.
The Company maintained investment in upgrading the Platform,
with seven new core code releases in the period including by
example:
-- Hypercaching: Hypercaching gives ATTRAQT the option to deploy
its platform with an extra layer where product details are cached
at the rules engine level. This means that the merchandising
database and search engine do less work and only have to deliver
product ID results to the hypercache layer once. The product cache
layer adds all the product information to the response that goes to
the client rather than it having to be retrieved from the search
and merchandising database. The product ordering (balance factors)
and guided navigation also come from the product cache layer. This
provides the platform with significant scale and performance
advantage.
-- Built-in AB Testing: Allows the client to have ATTRAQT
automatically split traffic between multiple merchandising rules
and report on comparative conversion rates of each test.
-- Rule Synchronisation: Functionality to copy merchandising
rules so clients with multiple instances/regions save time setting
up rules that they want to be the same across regions.
Financial Review
Total revenue increased by 22.6 per cent. to GBP3.6m (FY15:
GBP2.9m), as new customers were added and existing customers
commissioned additional sites. The recurring monthly revenue from
live clients rose 21.7 per cent. from GBP2.7m to GBP3.2m, now
representing 90 per cent. (FY15: 91 per cent.) of total Group
revenue. The Exit Rate (year-end contracted annualised billing) for
2016 was up 6.1 per cent. to GBP3.9m.
The Group showed good management of costs to deliver recorded
losses before tax and at EBITDA level in line with management
expectations. Losses before tax increased to GBP1.9m (FY15:
GBP0.7m) and adjusted EBITDA losses for the year increased to
GBP1.6m (FY15: GBP0.2m). The planned investment of the proceeds of
the 2015 fundraising in expanding sales, marketing and production
lead to the EBITDA losses increasing in the short-term, reflecting
investment in the Group's operational expansion; however, the rate
of growth is expected to accelerate as a result, with a return to
EBITDA profitability in the mid-term.
ATTRAQT continues to invest in technical enhancements to the
existing product offerings and in new products. Some of this cost
is capitalised and some is absorbed as part of the operating costs
of the business.
Outlook
ATTRAQT has seen another year of sustained growth of revenues
and client base in the UK and North America, whilst at the same
time increasing gross margin. We have signed 42 new deals in the
period, including several marquee retailers and have delivered a 22
per cent. increase in revenue for the year.
Our objective is to deliver strong profitable growth and become
the technology partner of choice for leading online retailers. With
an exit rate of GBP3.9m, good growth in recurring revenue and a
strong sales pipeline for H1 2017, we are confident in the
continued success of ATTRAQT for 2017 and the foreseeable
future.
André Brown
Chief Executive Officer
30 January 2017
ATTRAQT Group PLC
Unaudited consolidated statement of comprehensive income
For the year ended 31 December 2016
Year to Year to
31 December 31 December
Note 2016 2015
GBP'000 GBP'000
Revenue 4 3,569 2,911
Cost of sales (490) (480)
------------- -------------
Gross profit 3,079 2,431
Administrative expenses (5,023) (3,045)
Exceptional administrative
expense 5 - (118)
Total administrative expenses (5,023) (3,220)
Loss from operations 6 (1,944) (732)
Finance income 2 -
------------- -------------
Loss before tax (1,942) (732)
Tax credit 8 151 80
------------- -------------
Loss for the year (1,791) (652)
============= =============
Other comprehensive income:
Items that will be reclassified
subsequently to profit or
loss:
Exchange differences on translation
of foreign operations 14 (6)
Total other comprehensive
income 14 (6)
Total comprehensive loss for
the year attributable to shareholders
of the parent (1,777) (658)
============= =============
Loss per share attributable
to the
ordinary equity holders of
the company
Basic and diluted EPS 9 (6.6p) (3.1p)
Unaudited consolidated statement of financial position
As at 31 December 2016
Note 2016 2015
GBP'000 GBP'000
Assets
Non-current assets
Property, plant and equipment 10 39 27
Intangible assets 11 247 170
-------- --------
286 197
Current assets
Trade and other receivables 13 537 473
Corporation tax receivable 13 214 61
Cash and cash equivalents 3 1,157 2,996
-------- --------
1,908 3,530
-------- --------
Total assets 2,194 3,727
Liabilities
Current liabilities
Trade and other payables 14 774 700
Total liabilities 774 700
-------- --------
NET ASSETS 1,420 3,027
======== ========
Issued capital and reserves
attributable to owners of
the parent
Share capital 16 269 269
Share premium 4,253 4,253
Merger reserve 1,457 1,457
Share based payment reserve 647 477
Foreign exchange reserve (18) (32)
Retained earnings (5,188) (3,397)
-------- --------
TOTAL EQUITY 1,420 3,027
======== ========
Unaudited consolidated statement of cash flows
for the year ended 31 December 2016
Note 2016 2015
GBP'000 GBP'000
Cash flows from operating
activities
Loss for the year (1,791) (652)
Adjustments for:
Depreciation of property,
plant and equipment 10 26 28
Amortisation of intangible
fixed assets 11 198 139
Income tax credit 8 (151) (80)
Share based payment expense 17 170 255
Foreign exchange loss 14 (6)
-------- ----------------
(1,534) (316)
(Increase) in trade and other
receivables (64) (163)
Increase/(decrease) in trade
and other payables 74 160
-------- ----------------
Cash used in operations (1,524) (319)
Income taxes received - 138
-------- ----------------
Net cash flows from operating
activities (1,524) (181)
Investing activities
Purchases of property, plant
and equipment 10 (38) (5)
Development of intangibles 11 (275) (189)
Interest received (2) -
Net cash used in investing
activities (315) (194)
Financing activities
Issue of ordinary shares,
net of issue costs - 3,064
Net cash from investing and
financing activities (315) 2,870
Net increase in cash and cash
equivalents (1,839) 2,689
Cash and cash equivalents
at beginning of year 2,996 307
-------- ----------------
Cash and cash equivalents
at end of year 3 1,157 2,996
======== ================
Unaudited consolidated statement of changes in equity
for the year ended 31 December 2016
Share Share Merger reserve Share based Foreign exchange Retained Total
capital premium payment reserve reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
1 January 2015 206 1,252 1,457 222 (26) (2,745) 366
Loss for the year - - - - - (652) (652)
Translation of
foreign entity - - - - (6) - (6)
Total
comprehensive
Income for the
year - - - - (6) (652) (658)
--------- --------- --------------- ----------------- ------------------ ---------- --------
Share based
payment charge - - - 255 - - 255
Issue of share
capital 63 3,222 - - - - 3,285
Issue costs - (221) - - - - (221)
31 December 2015 269 4,253 1,457 477 (32) (3,397) 3,027
--------- --------- --------------- ----------------- ------------------ ---------- --------
Loss for the year - - - - - (1,791) (1,791)
Translation of
foreign entity - - - - 14 - 14
Total
comprehensive
Income for the
year - - - - 14 (1,791) (1,777)
--------- --------- --------------- ----------------- ------------------ ---------- --------
Share based
payment charge - - - 170 - - 170
31 December 2016 269 4,253 1,457 647 (18) (5,188) 1,420
--------- --------- --------------- ----------------- ------------------ ---------- --------
Reserves
The following describes the nature and purpose of each reserve
within equity:
Reserve Description and purpose
Share premium Amount subscribed for share capital
in excess of nominal value.
Merger reserve The merger reserve results from
the application of merger accounting
on the merger of ATTRAQT Inc. and
ATTRAQT Limited.
Share based payment The share based payment reserve
reserve represents equity settled share
based employee remuneration until
such share options are exercised.
Foreign exchange The difference arising on the translation
reserve of the assets and liabilities of
the overseas subsidiary company
into the functional currency of
the Group.
Retained earnings All other net gains and losses and
transactions with owners (e.g. dividends)
not recognised elsewhere.
Notes forming part of the unaudited consolidated financial
statements
for the year ended 31 December 2016
1. Accounting policies
General information
The principal activity of ATTRAQT Group PLC ("the Company") and
its subsidiaries (together "the Group") is the development and
provision of eCommerce site search, merchandising and product
recommendation technology.
The principal trading subsidiaries are ATTRAQT Limited and
ATTRAQT Inc.
The Company is a public limited company which is quoted on the
Alternative Investment Market of the London Stock Exchange and is
incorporated and domiciled in the UK. The address of the registered
office is 3 Waterhouse Square, 138 Holborn, London, EC1N 2SW.
The registered number of the company is 8904529.
Basis of preparation
The consolidated financial statements are for the year ended 31
December 2016. They have been prepared in compliance with
International Financial Reporting Standards (IFRSs) and IFRS
Interpretations Committee (IFRIC) interpretations as adopted by the
European Union as at 31 December 2016 and those parts of the
Companies Act 2006 applicable to companies reporting under IFRS.
The consolidated financial statements have been prepared under the
historical cost convention and are presented in Sterling rounded to
the nearest thousand except where indicated otherwise.
A business combination is a "common control combination" if the
combining entities are ultimately controlled by the same party
(including the same individual shareholder or a group of
shareholders acting together in accordance with a contractual
arrangement) both before and after the combination and the common
control is not transitory.
For the purposes of the consolidated financial information, the
initial creation of the ATTRAQT Group PLC group has been treated as
a business combination involving entities under common control.
Business combinations involving entities under common control fall
outside the scope of IFRS 3: Business Combinations. In accordance
with IAS 8, Accounting Policies, Changes in Accounting Estimates
and Errors, management have considered the pronouncements of other
standard-setting bodies in developing an accounting policy for
common control combinations. The group adopted the prevailing
accounting treatment defined under UK Generally Accepted Accounting
Practice at the time of the transaction as permitted under
IFRS.
Going concern
The financial statements have been prepared under the going
concern basis as the directors have undertaken a review of the
future financing requirements of the ongoing operation of the group
and are satisfied that sufficient cash together with bank and other
facilities is available to meet its working capital requirements
for at least 12 months from the date of signing these financial
statements. The directors accordingly consider it appropriate for
the financial statements to be prepared on a going concern basis as
disclosed in page xx of the Directors Report.
Changes in accounting policies
The Directors continue to monitor the impact of future changes
to the reporting requirements but do not believe the proposed
changes will significantly impact the financial statements.
At the date of authorisation of these financial statements,
certain new standards, amendments and interpretations to existing
standards applicable to the Group have been published but are not
yet effective, and have not been adopted early by the Group.
Basis of consolidation
Where the company has control over an investee, it is classified
as a subsidiary. The company controls an investee if all three of
the following elements are present: power over the investee,
exposure to variable returns from the investee, and the ability of
the investor to use its power to affect those variable returns.
Control is reassessed whenever facts and circumstances indicate
that there may be a change in any of these elements of control.
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.
Revenue
Revenue represents sales to external customers at invoiced
amounts less value added tax or local taxes on sales. Where work is
completed at the year-end but not invoiced, the ATTRAQT Group
accrues for this income.
The Group derives the majority of its revenue from the provision
of eCommerce services to online retailers which includes site
search, merchandising and product recommendation technology. These
are recurring revenues that are recognised on a monthly basis.
Revenue from services provided by the ATTRAQT Group is
recognised when the ATTRAQT Group has performed its obligations and
in exchange obtained the right to consideration which can be
reliably measured and it is probable economic benefits will flow to
the entity.
If amounts have been invoiced in advance for services, these
amounts are deferred until the service has been provided to the
client at which point the income is recognised. Within the ATTRAQT
Group income is recognised across two streams:
-- Recurring revenues - a monthly subscription fee is earned
from customers to the software as a service platform. Operation of
the service is provided for a fixed term.
-- One-off fees - work is undertaken for existing clients to
expand or upgrade the service they receive and this is billed for
separately. Revenue is recognised on stage of completion on this
work. Stage of completion is calculated based on estimated hours to
complete the work versus the number of hours already done.
Foreign currency
Transactions entered into by Group entities in a currency other
than the currency of the primary economic environment in which it
operates (the "functional currency") are recorded at the rates
ruling when the transactions occur. Foreign currency monetary
assets and liabilities are translated at the rates ruling at the
reporting date. Exchange differences arising on the retranslation
of unsettled monetary assets and liabilities are recognised
immediately in profit or loss.
On consolidation, the results of overseas operations are
translated into Sterling Pounds at rates approximating to those
ruling when the transactions took place. All assets and liabilities
of overseas operations, including goodwill arising on the
acquisitions of those operations, are translated at the rate ruling
at the reporting date. Exchange differences arising on translating
the opening net assets at opening rate and the results of overseas
operations at actual rate are recognised in other comprehensive
income and accumulated in the foreign exchange reserve.
Exchange differences recognised in profit or loss in Group
entities separate financial statements on the translation of
long-term monetary items forming part of the Group's net investment
in the overseas operation concerned are reclassified to other
comprehensive income and accumulated in the foreign exchange
reserve on consolidation.
Financial assets
Loans and receivables
These assets are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They
arise principally through the provision of services to customers
(e.g. trade receivables), but also incorporate other types of
contractual monetary asset. They are initially recognised at fair
value plus transaction costs that are directly attributable to
their acquisition or issue, and are subsequently carried at
amortised cost using the effective interest rate method, less
provision for impairment.
Impairment provisions are recognised 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, such
provisions are recorded in a separate allowance account with the
loss being recognised within administrative expenses in the
consolidated 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.
From time to time, the Group elects to renegotiate the terms of
trade receivables due from customers with which it has previously
had a good trading history. Such renegotiations will lead to
changes in the timing of payments rather than changes to the
amounts owed and, in consequence, the new expected cash flows are
discounted at the original effective interest rate and any
resulting difference to the carrying value is recognised in the
consolidated statement of comprehensive income (operating
profit).
The Group's loans and receivables comprise trade and other
receivables and cash and cash equivalents in the consolidated
statement of financial position. Their carrying value approximates
fair value at both reporting dates.
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.
Financial liabilities
Other financial liabilities
Other financial liabilities include the following items:
-- Trade payables and other short-term monetary liabilities,
which are initially recognised at fair value and subsequently
carried at amortised cost using the effective interest method.
-- Bank overdrafts are shown within loans and borrowings in
current liabilities on the consolidated statement of financial
position.
Leases
Where the risks and rewards of ownership of an asset are
transferred to the group as lessee, the lease is treated as a
finance lease. Other leases are treated as operating leases. Future
instalments payable under finance leases net of finance charges are
included in creditors with the corresponding asset values recorded
in property, plant and equipment and depreciated over the shorter
of their estimated useful lives or their lease terms. Lease
payments are apportioned between the finance element, which is
charged to the income statement as interest, and the capital
element, which reduces the outstanding obligation for future
instalments.
Payments under operating leases are charged to the statement of
comprehensive income on a straight line basis over the lease
term.
Share capital
Financial instruments issued by the Group are classified as
equity only to the extent that they do not meet the definition of a
financial liability or financial asset.
The Group's ordinary shares are classified as equity
instruments.
Income taxes
Current income tax assets and liabilities comprise those
obligations to fiscal authorities in the countries in which the
Group carries out its operations. They are calculated according to
the tax rates and tax laws applicable to the fiscal period and the
country to which they relate. All changes to current tax
liabilities are recognised as a component of tax expense in the
income statement unless the tax relates to an item taken directly
to equity in which case the tax is also taken directly to equity.
Tax relating to items recognised in other comprehensive income is
recognised in other comprehensive income.
Deferred taxation
Deferred tax assets and liabilities are recognised where the
carrying amount of an asset or liability in the consolidated
statement of financial position differs from its tax base, except
for differences arising on:
-- the initial recognition of goodwill;
-- the initial recognition of an asset or liability in a
transaction which is not a business combination and at the time of
the transaction affects neither accounting or taxable profit;
and
-- investments in subsidiaries and jointly controlled entities
where the Group is able to control the timing of the reversal of
the difference and it is probable that the difference will not
reverse in the foreseeable future.
Recognition of deferred tax assets is restricted to those
instances where it is probable that taxable profit will be
available against which the difference can be utilised.
The amount of the asset or liability is determined using tax
rates that have been enacted or substantively enacted by the
reporting date and are expected to apply when the deferred tax
liabilities/(assets) are settled/(recovered).
Deferred tax assets and liabilities are offset when the Group
has a legally enforceable right to offset current tax assets and
liabilities and the deferred tax assets and liabilities relate to
taxes levied by the same tax authority on either:
-- the same taxable Company; or
-- different Company entities which intend either to settle
current tax assets and liabilities on a net basis, or to realise
the assets and settle the liabilities simultaneously, in each
future period in which significant amounts of deferred tax assets
or liabilities are expected to be settled or recovered.
Segmental reporting
For the purpose of IFRS 8, the chief operating decision maker
takes the form of the Board of Directors. The Directors' opinion is
that the business of the group is to provide cloud based E-commerce
solutions. Based on this, there is considered to be one reportable
segment. The internal and external reporting is on a consolidated
basis with transactions between group companies eliminated on
consolidation. Therefore, the financial information of the single
segment is the same as that set out in the consolidated statement
of comprehensive income, the consolidated statement of changes in
equity, the consolidated statement of financial position and
statement of cash flows.
Internally generated intangible assets (development costs)
Expenditure on internally developed products is capitalised if
it can be demonstrated that:
-- it is technically feasible to develop the product for it to be sold;
-- adequate resources are available to complete the development;
-- there is an intention to complete and sell the product;
-- the Group is able to sell the product;
-- sale of the product will generate future economic benefits; and
-- expenditure on the project can be measured reliably.
Capitalised development costs are amortised over three years.
The amortisation expense is included within administrative expenses
in the consolidated statement of comprehensive income.
Development expenditure not satisfying the above criteria and
expenditure on the research phase of internal projects are
recognised in the consolidated statement of comprehensive income as
incurred.
Property, plant and equipment
Items of property, plant and equipment are initially recognised
at cost. As well as the purchase price, cost includes directly
attributable costs and the estimated present value of any future
unavoidable costs of dismantling and removing items. The
corresponding liability is recognised within provisions.
Property plant and equipment is depreciated over its estimated
useful economic life taking into account their residual values. The
estimated useful economic life of these assets is:
Plant and - 4 years
machinery
Fixtures - 4 years
and fittings
Share based payments
The Group has issued share options to certain employees, in
return for which the Group receives services from those employees.
The fair value of the employee services received in exchange for
the grant of the options is recognised as an expense.
The total amount to be expensed is determined by reference to
the fair value of the options granted including any market
performance conditions (for example the Company's share price) but
excluding the impact of any service or non-market performance
vesting conditions (for example the requirement of the grantee to
remain an employee of the Group).
Non market vesting conditions are included in the assumptions
regarding the number of options that are expected to vest. The
total expense is recognised over the vesting period. At the end of
each period the Group revises its estimates of the number of
options expected to vest based on the non-market vesting
conditions. It recognises the impact of any revision in the income
statement with a corresponding adjustment to equity.
2. Significant accounting judgements and estimates
The Group makes certain estimates and assumptions regarding the
future. Estimates and judgements are continually evaluated based on
historical experience and other factors, including 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 next
financial year are discussed below.
Share based payments
Share options are recognised as an expense based on their fair
value at date of grant. The fair value of the options is estimated
through the use of a valuation model - which require inputs such as
the risk-free interest rate, expected dividends, expected
volatility and the expected option life - and is expensed over the
vesting period. Some of the inputs used to calculate the fair value
are not market observable and are based on estimates derived from
available data, such as employee exercise behaviour and employee
turnover.
Capitalisation of development costs
It is a requirement under IFRS that development costs that meet
the criteria prescribed in the standard are capitalised. The
assessment of each project requires that a judgement is made as to
the commercial viability and the ability of the company to bring
the product to market.
3. Financial instruments - Risk Management
The Company is exposed through its operations to the following
financial risks:
-- Credit risk
-- Foreign exchange risk
-- Liquidity risk
In common with all other businesses, the Group is exposed to
risks that arise from its use of financial instruments. This note
describes the Group's objectives, policies and processes for
managing those risks and the methods used to measure them. Further
quantitative information in respect of these risks is presented
throughout these financial statements.
There have been no substantive changes in the Group's exposure
to financial instrument risks, its objectives, policies and
processes for managing those risks or the methods used to measure
them from previous periods unless otherwise stated in this
note.
Principal financial instruments
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
A summary of the financial instruments held by category is
provided below.
Financial liabilities
A summary of financial liabilities is shown below. All financial
liabilities held by the Group at 31 December 2016 are classified as
held at amortised cost.
2016 2015
Financial assets
GBP'000 GBP'000
Current
Trade receivables 340 369
Other receivables 85 14
-------- --------
425 383
======== ========
Cash and cash equivalents 1,157 2,996
======== ========
All financial assets held by the Group at 31 December 2016 are
classified as loans and receivables and there is no difference
between the carrying amount and the fair value.
At 31 December 2016 the three largest customers owed a total of
GBP42,000. The directors do not consider that there is any reason
to provide against any part of this balance.
Financial liabilities
2016 2015
GBP'000 GBP'000
Trade payables 203 83
Other payables 189 338
-------- --------
392 421
All financial liabilities held by the Group at 31 December 2016
are classified as held at amortised cost.
General objectives, policies and processes
The Board has overall responsibility for the determination of
the Company's risk management objectives and policies and, whilst
retaining ultimate responsibility for them, it has delegated the
authority for designing and operating processes that ensure the
effective implementation of the objectives and policies to the
Company's Chief Executive Officer. The Board receives quarterly
reports from the Company Chief Financial Officer through which it
reviews the effectiveness of the processes put in place and the
appropriateness of the objectives and policies it sets.
The overall objective of the Board is to set policies that seek
to reduce risk as far as possible without unduly affecting the
Company's competitiveness and flexibility. Further details
regarding these policies are set out below:
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. It is Group policy, implemented locally, to
assess the credit risk of new customers before entering contracts.
Such credit ratings take into account local business practices.
Credit risk also arises from cash and cash equivalents and
deposits with banks and financial institutions. For banks and
financial institutions, only independently rated parties with
minimum rating "A" are accepted.
Further disclosures regarding trade and other receivables are
provided in note 13.
Cash at bank
A significant amount of cash is held with the following
institutions:
Balance Balance
at at
31 December 31 December
2016 2015
GBP'000 GBP'000
Barclays Bank Plc 1,136 2,987
Citibank 21 9
============ ============
On 8 January 2015 the Group obtained an overdraft facility with
Barclays Bank for up to GBP50,000. This is available for immediate
drawdown. It is secured over the assets of ATTRAQT Limited.
Foreign exchange risk
Foreign exchange risk arises when the Group enters into
transactions denominated in a currency other than the functional
currency. The Group's policy is, where possible, to allow entities
to settle liabilities denominated in their functional currency
(primarily Sterling Pounds) with the cash generated from their own
operations in that currency.
In order to monitor the continuing effectiveness of this policy,
the CEO reviews a monthly forecast, analysed by the major
currencies held by the Group, of liabilities due for settlement and
expected cash reserves.
Liquidity risk
Liquidity risk arises from the Group's management of working
capital. The Group manages the risk that it will encounter
difficulty in meeting its financial obligations as they fall due by
forecasting its short term cash position on a regular basis.
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
(or agreed facilities) to meet expected requirements for a period
of at least 30 days.
The Board receives rolling 12-month cash flow projections on a
quarterly basis as well as information regarding cash balances. At
the end of the financial year, these projections indicated that the
Group expected to have sufficient liquid resources to meet its
obligations under all reasonably expected circumstances.
In the management of liquidity risk, the group monitors and
tries to maintain a level of cash and cash equivalents deemed
adequate by management to finance the Group's operations and
mitigate the effects of fluctuations in cash flows.
The following table sets out the contractual maturities
(representing undiscounted contractual cash-flows) of financial
liabilities:
Between Between Between
3 and 1 and 2 and
Up to 3 12 2 5 Over
months months years years 5 years
At 31 December
2015 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Trade and other
payables 421 - - - -
-------- -------- -------- -------- --------
Total 421 - - - -
======== ======== ======== ======== ========
Between Between Between
3 and 1 and 2 and
Up to 3 12 2 5 Over
months months years years 5 years
At 31 December
2016 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Trade and other
payables 362 30
-------- -------- -------- -------- --------
Total 362 30 - - -
======== ======== ======== ======== ========
4. Revenue
Revenue arises from the rendering
of services 2016 2015
GBP'000 GBP'000
Recurring revenues 3,205 2,652
One-off fees 364 259
-------- --------
Total rendering 3,569 2,911
======== ========
There are three customers contributing 12, 9 and 8 per cent.
respectively to Group revenues. The Directors are not concerned
about the continuance of these relationships.
Geographical split of revenue 2016 2015
GBP'000 GBP'000
UK 3,279 2,785
North America 290 126
-------- --------
Total revenue 3,569 2,911
======== ========
The Group reports geographical revenue on the basis of the
revenue of the relevant statutory billing entity.
5. Exceptional administrative expenses
There were no exceptional administrative expenses for 2016
(FY15: GBP118,000 being (i) GBP61,000 of costs incurred in respect
of the secondary purchase of 5,000,000 shares in December 2015 done
in conjunction with the December 2015 placing of 6,316,346 new
shares on AIM, and (ii) GBP57,000 of costs related to the
non-recurring award of a bonus to Andre Brown regarding the IPO in
2014 and the placing in December 2015.)
6. Loss from operations
Loss from operations is taken after taking account of the
following items:
2016 2015
GBP'000 GBP'000
Employee benefits (see note 7) 2,775 2,033
Depreciation of property, plant
and equipment 26 28
Amortisation of intangible assets 198 139
Operating lease expense 22 22
Audit and non-audit services:
Fees payable to the company's
auditors for the audit of the
Group annual accounts:
* Company annual accounts 18 16
* Group annual accounts 31 27
Fees payable to the company's
auditor and its associates for
other services:
For tax services 14 8
Corporate finance advisory - -
Research and Development costs
expensed 198 139
7. Employee benefit expenses
2016 2015
GBP'000 GBP'000
Staff costs (including directors)
comprise:
Wages and salaries 2,480 1,837
Social security contributions
and similar taxes 295 196
-------- --------
2,775 2,033
======== ========
The charge related to share based payments in 2016 was
GBP170,000 (FY15 - GBP255,000)
Key management personnel compensation
Key management personnel are those persons having authority and
responsibility for planning, directing and controlling the
activities of the Group, which comprises only the directors of the
company.
2016 2015
GBP'000 GBP'000
Salary, Director fees, bonus
and benefits in kind 564 380
Share based payments (i) - 74
-------- --------
564 454
======== ========
(i) Relates to David Stirling who resigned as a director on 25 September 2015.
The Employer's National Insurance contributions expensed in the
period relevant to the Key management personnel compensation was
GBP59,000 (FY15: GBP52,000).
The remuneration of the highest paid director is shown in the
report of the Remuneration Committee.
Staff Numbers
The average monthly number of employees, including Directors and
individuals employed by the Group are as follows:
2016 2015
Sales 11 9
Technical 24 15
Management (including directors) 7 6
Administration 2 1
----- -----
42 31
===== =====
8. Income tax credit
2016 2015
GBP'000 GBP'000
Current tax credit
Current tax on loss for the
year (151) (61)
Adjustment to tax in respect
of previous periods - (19)
Total tax credit (151) (80)
======== ========
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 profits for the year are as follows:
2016 2015
GBP'000 GBP'000
Loss for the year (1,944) (732)
Expected tax charge based on
the standard rate of United Kingdom
corporation tax at the domestic
rate of 20% (2015 - 20.3%) (389) (148)
Expenses not deductible for tax
purposes 37 17
Depreciation for period (less
than)/in excess of capital allowances (13) (7)
Unrelieved tax losses arising
in the period 124 86
Additional deduction for R&D
expenditure (119) (85)
Adjustment to tax in respect
of previous periods - (19)
Surrender of tax losses for R&D
tax credit refund 92 66
Other deductions arising in the
period 117 10
--------- --------
Total tax credit (151) (80)
========= ========
9. Loss per share
2016 2015
Numerator GBP'000 GBP'000
Loss for the year and loss used
in basic and diluted EPS (1,791) (652)
=========== ===========
Denominator
Weighted average number of shares
used in basic and diluted EPS 26,942,340 21,127,841
Loss per share - basic and diluted (6.6p) (3.1p)
At the year end the Group had 1,341,680 exercisable share
options (2015: 1,341,680), however in accordance with IAS 33 where
there is a loss for the year, there is no dilutive effect of
options and therefore there is no difference between the basic and
diluted loss per share.
10. Property, plant and equipment
2016 2015
Plant Fixtures Total Plant Fixtures Total
& machinery & fittings & machinery & fittings
Cost GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance
at 1 January 194 2 196 189 2 191
Additions 36 2 38 5 - 5
------------- ------------ -------- ------------- ------------ --------
Balance
at 31 December 230 4 234 194 2 196
Accumulated
depreciation
and impairments
Balance
at 1 January 167 2 169 139 2 141
Depreciation
charge
for the
year 26 0 26 28 - 28
------------- ------------ -------- ------------- ------------ --------
Balance
at 31 December 193 2 195 167 2 169
Net book
value
At 31 December 37 2 39 27 - 27
At 31 December
prior year 27 - 27 50 - 50
11. Intangible assets
2016 2015
Software Software
Cost GBP'000 GBP'000
Balance at 1 January 974 785
Additions 275 189
--------- ---------
Balance at 31 December 1,249 974
Accumulated amortisation
Balance at 1 January 804 665
Amortisation charge
for the year 198 139
--------- ---------
Balance at 31 December 1,002 804
Net book value
At 31 December 247 170
At 31 December prior
year 170 120
12. Investments in subsidiaries
The subsidiaries of ATTRAQT Group PLC, all of which have been
included in these consolidated financial statements, are as
follows:
Name of subsidiary Shareholding Country of incorporation
and
principle place
of business
ATTRAQT Limited 100% UK
ATTRAQT Inc. (held through 100% USA
ATTRAQT Limited)
Investments in subsidiaries, associates and joint ventures are
held in the Statement of Financial Position of the Company at
historic cost less any allowance for impairment.
13. Trade and other receivables
2016 2015
GBP'000 GBP'000
Trade receivables 514 392
Less: allowance account for
bad and doubtful debts (174) (23)
-------- --------
340 369
Prepayments and accrued income 112 90
Corporation tax recoverable 214 61
Other receivables 85 14
-------- --------
Total trade and other receivables 751 534
======== ========
Invoices for services rendered are due immediately on the
rendering of the invoice, however the majority of customers settle
debts within 45 days of the date of the invoice.
As at 31 December 2016 trade receivables of GBP472,000 (2015:
GBP384,000) were technically past due of which GBP174,000 were
provided against (2015: GBP23,000). They relate to the customers
with no history of default. Payment of the overdue receivables is
expected in due course. The ageing analysis of these overdue
receivables is as follows:
2016 2015
GBP'000 GBP'000
Up to 3 months 311 351
3 to 6 months 83 33
6 to 12 months 78 -
Over 12 months - -
-------- --------
472 384
======== ========
As at 31 December 2016 trade receivables of GBP174,000 (2015:
GBP23,000) were considered bad or doubtful. If fully impaired the
amount of the debt would be written off from the allowance
account.
Movements on the allowance account for bad and doubtful
debts:
2016 2015
GBP'000 GBP'000
At 1 January 2016 23 3
Released during the year (43) (3)
Provided during the year 194 23
-------- --------
At 31 December 2016 174 23
======== ========
The movement on the provision for impaired receivables has been
included in administrative expenses in the consolidated statement
of comprehensive income.
Other classes of financial assets included within trade and
other receivables do not contain impaired assets.
14. Trade and other payables
2016 2015
GBP'000 GBP'000
Trade payables 203 83
Accrued expenses 189 338
Deferred income 104 125
Other payables - tax and social
security payable 278 154
Total trade and other payables 774 700
======== ========
15. Deferred tax
No deferred tax assets have been recognised due to uncertainties
over their ultimate recoverability.
16. Share capital
Allocated, called up and fully paid
2016 2016 2015 2015
Number GBP'000 Number GBP'000
Ordinary shares
of GBP0.01 each
At 1 January 26,942,340 269 20,625,994 206
Shares issued
for cash during
the year - - 6,316,346 63
Shares issued
for non-cash - - - -
during the year
At 31 December 26,942,340 269 26,942,340 269
=========== ======== ============ ========
17. Share based payment
The company operates an EMI share option scheme for employees.
The options are valid for 10 years from the date of grant. After
satisfaction of any performance condition included in the award the
options will become exercisable on the earlier of any of the
following events:
- The third anniversary of the Date of Grant;
- On a change of Control of the Company as defined in the Plan rules;
- On a Sale or Disposal of the Company as defined in the Plan rules; or
- Following the exercise of discretion by the Board.
Details of the number of share options and the weighted average
exercise price (WAEP) outstanding during the year are as
follows:
2016 WAEP 2015 WAEP
Number Price Number Price (pence)
(pence)
Outstanding at the
beginning of the
year 2,702,569 40.86 1,341,680 31.59
Granted during the
year - - 1,360,889 50.00
Exercised during
the year - - - -
Expired during the
year - - - -
------------ --------- ------------ --------------
Outstanding at the
year end 2,702,569 40.86 2,702,569 40.86
============ ========= ============ ==============
Exercisable at the
year end 1,341,680 31.59 1,341,680 31.59
============ ========= ============ ==============
The options outstanding at the year-end are set out below:
Date of Expiry date Exercise 2016 2015
grant
Price Share Remaining Share Remaining
(p) options life options life
24 July 24 July
2013 2023 31.59 986,500 7 986,500 8
29 May 2014 29 May 2024 31.59 177,590 8 177,590 9
19 August 19 August
2014 2024 31.59 177,590 8 177,590 9
25 September 25 September
2015 2025 50.00 1,360,889 9 1,360,889 10
The company uses a Black Scholes model to estimate the cost of
share options.
The following information is relevant in the determination of
the fair value of options granted during the year. The assumptions
inherent in the use of this model are as follows:
-- The option life is the estimated average period over which the options will be exercised.
-- There are no vesting conditions remaining which apply to the
share options other than that they vest at the earlier of 3 years'
continued service with the Group.
-- No variables change during the life of the option (e.g. dividend yield remains zero).
-- Volatility has been calculated over the 5 year period prior
to the grant date by reference to the daily share price of
comparable listed companies.
-- Expectations of staff retention over the vesting period have
been calculated by reference to the three year period prior to the
grant date.
No options were granted during the year.
2015
-------------
25 September
Date 2015
No. 1,360,889
Fair Value
per Share
(p) 42.0
Share Price
on Grant
Date (p) 63.5
Exercise
Price (p) 50.0
Vesting Period 3 Years
Staff Retention
Factor 90%
5 Year Volatility 100%
Risk Free
Rate 0.583%
Total Fair
Value (GBP) 514,783
The total expense recognised during the year by the Group, for
all schemes, was GBP170,000 (FY15: GBP255,000) of which GBPnil was
recognised in respect of the shares that vested in the year and are
Exercisable at year end (FY15: GBP209,000).
The weighted average remaining life of the options outstanding
at the end of the year was 7.8 years (FY15: 8.8 years).
No options were exercised during the period.
18. Leases
Operating leases - lessee
The total future value of minimum lease payments is due as
follows:
Other operating leases:
2016 2015
GBP'000 GBP'000
Not later than one year 6 19
Later than one year and not later than five years - 5
Later than five years - -
-------- --------
6 24
======== ========
19. Related party transactions
Trading transactions
During the year Group companies entered into the following
transactions with related parties who are not members of the
Group.
Sales of goods Purchase of goods
------------------ --------------------
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
Powa Technologies
Limited 30 129 33 169
Azini Capital - - 20 -
Partners
------------------- -------- -------- --------- ---------
Amounts owed by Amounts owed to related
related parties parties
-------------------- --------------------------
2016 2015 2016 2015
GBP'000 GBP'000 GBP'000 GBP'000
Powa Technologies
Limited - 12 - 17
Azini Capital - - - -
Partners
None of the amounts above are secured against any assets of the
Group.
During the year Mr D M Wagner was a director of Powa
Technologies Limited. Nick Habgood is a partner in Azini Capital
Partners.
Sales of services to related parties were made at the Group's
usual list prices. Details of the directors' emoluments, together
with other related information, are set out in the Report of the
Remuneration Committee. There are no other related party
transactions.
The Company has not made any provision for bad or doubtful debts
in respect of related party debtors nor has any guarantee been
given or received during 2016 regarding related party
transactions.
20. Capital commitments
At 31 December 2016 the Group had no capital commitments (FY15:
GBPnil).
21. Availability of Report and Accounts
The Company's Report and Accounts for the year ended 31 December
2016 will be posted to shareholders in due course.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR LFFEILEIAFID
(END) Dow Jones Newswires
January 30, 2017 02:00 ET (07:00 GMT)
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