TIDMCBUY
RNS Number : 1431A
Cloudbuy PLC
22 March 2017
cloudBuy PLC
("cloudBuy" or "The Company")
Final Results for the year ended 31 December 2016 and Date for
AGM.
1. Final results for the year ended 31 December 2016
Key Points
-- Operating loss excluding share based payments of
GBP3,361,630, a reduction of 39% on 2015. An increased focus has
allowed a simplification of the business with a withdrawal from
certain markets. This requires fewer sales and marketing resources,
resulting in a reduced cost base and further ongoing
reductions.
-- Revenue is in line with market expectations at GBP1,714,491 a
reduction of 2% on 2015, with revenue from new contracts offset by
the ending of 2 major contracts.
-- As a result of the continuing lack of revenue growth and
continuing losses, management action has been taken to focus on the
more immediate and most profitable geographical and product
areas.
-- 4 new customer contracts were won in 2016, all with large
customers with implementation and ongoing SaaS revenue.
-- Revenue focus for 2017 will be on the PHBChoices UK Care Marketplace and existing customer implementations and transaction revenue.
Ronald Duncan, Executive Chairman of cloudBuy, commented:
"2016 was again a difficult year with flat revenue and a
significant loss incurred. The Company has learned from the lack of
revenue success and taken clear actions to simplify the business
and we are now focussing our efforts on fewer but more tangible
prospects for revenue including, in particular, our PHBChoices
marketplace through our customer NHS Shared Business Services.
In the 2015 results announcement, I referenced a number of
painful lessons learned with the need to focus on projects that
have a larger upfront fee to both mitigate the risk and provide a
larger incentive for the customer to continue through to the
transaction revenue phase. This Strategy has been effected with 4
new customer contracts won in 2016, all with large customers with
implementation and ongoing SaaS revenue. The 2 contracts won for
marketplaces include the opportunity for transaction based revenue
and are with customers who have credible investment plans to drive
the success of their marketplaces.
Prospects which do not meet our Strategy have not been pursued
and we have already stopped some non- performing contracts and
continue to evaluate the future direction of those existing
contracts which have not produced revenue to determine if we should
continue to invest resource.
The medium to long term outlook is positive based on the lower
cost and more effective operating model. "
The company also announces that its report and accounts for the
year ended 31 December 2016 and notice of Annual General Meeting
("AGM") will be sent to shareholders today and will be available on
its website: investor.cloudbuy.com.
2. AGM Date
The Company's AGM will be held on 18 April 2017 at 11.00 am at
its registered office, 5 Jupiter House, Calleva Park, Aldermaston,
Berkshire RG7 8NN.
3. Extract from Annual Report and Accounts
The information included below is an extract from the Report and
Accounts for 2016.
For further information, please contact:
CloudBuy PLC Tel: 0118 963 7000
David Gibbon, CFO
Arden Partners plc - NOMAD Tel: 0207 614 5900
and Broker
Steve Douglas / Patrick
Caulfield
About cloudBuy PLC
cloudBuy, (AIM: CBUY), provides cloud solutions for buyers and
sellers - and brings them together to trade securely and ethically
via an increasing number of public e-marketplaces and private
purchasing portals around the world, powered by cloudBuy e-commerce
technology.
cloudBuy solutions for buyers help B2B purchasers understand and
control their spend, to reduce costs and increase value. Our
cloudSell solutions enable sellers of all sizes, from startups to
corporates, reach new customers and grow their business.
cloudBuy's technology platform powers web sites, public
marketplaces and private purchasing portals that enable all types
of online interactions and relationships including, citizen and
business to government; consumer to business; and business to
business.
For more information visit: www.cloudbuy.com
Twitter: @cloudbuyplc
Extract from Annual Report and Accounts 2016
Chairman's Statement
During 2016 and in the second half in particular, our focus was
very much on revenue generation and identifying which of our
opportunities was going to deliver material levels of future
revenue.
The single largest one of these is PHBChoices where the NHS has
a number of challenges to meet the Government's target to introduce
Personal Health Budgets ("PHBs"). These challenges include, the
mixture of austerity and budget pressures facing the NHS. There is
now a target for mass implementation of PHBs by 2020 with progress
measures in place and a requirement to move from manual processing
to a technical solution. Our marketplace solution provides all of
this, the system is live and being rolled out through our customer
NHS Shared Business Services ("NHS SBS"). Our pilot customers
working with the NHS SBS and cloudBuy joint team have learned a
great deal from the initial work and have streamlined our
technology and processes to create a solution that can scale
quickly to support all Clinical Commissioning Groups ("CCG's").
PHBChoices is well placed to become the technology of choice for
CCG's.
Elsewhere, having implemented a number of marketplaces, we have
only worked with prospect organisations that have committed budget
for the implementation of marketplaces and have clear plans and the
resources to make them a success. This has allowed us to streamline
our efforts and cut costs, as well as ensuring that management has
the bandwidth to focus on the key areas for growth.
In emerging areas such as the Middle East we have moved to a
reseller model with partners that have credibility and reach. We
will not recruit our own team in new areas going forward.
All of this taken together has resulted in cost reduction and a
more effective use of time across all of the cloudBuy team and in
2017 we are well positioned for future growth with a smaller number
of projects that are forecast to produce meaningful revenue.
Strategic Report
Operational Highlights
During 2016 we focused on the key opportunities that we had
developed over the previous period. This included winning 4 new
contracts that have been announced during the year.
UK
Our major focus has remained PHBChoices which has started to
gain momentum. During the year and in the first quarter of 2017, we
have worked with early adopters and it has become clear that the
opportunity is much larger and more all-encompassing than we
initially thought. Based on feedback to date, CCG's not only
require a solution for PHBs, they also have no systems in place for
the current cohorts of patients with notional budgets. These are
budgets where NHS or Local Authority staff purchase care on behalf
of the individual and CCG's typically have around 2,000 of these
each at any given time, a national total therefore of approximately
400,000. Additionally these CCG's have asked for PHBChoices to be
opened up to the public, allowing all citizens to meet their care
needs using the system, regardless of whether they qualify for a
budget or not.
We have responded to these requirements by substantially
developing the solution and a public facing portal is in final
test, ready for suppliers to add their content. Suppliers are
currently attached to a locked down CCG view, this development will
allow them to market their goods and services on a national
platform to the fragmented 'self-funder' market.
With NHS SBS we are focused on the immediate government target
for the NHS of 100,000 PHB by 2020, which we estimate will have an
annual spend of around GBP7bn. CCG's will have to formally report
on their progress against their individual targets from April 2017,
and as the reporting deadline has moved closer we have seen an
increase in the number of CCG's contacting NHS SBS to ask how they
can go live.
In order to ensure that we have no barriers to take up we have
removed the requirement for a CCG to pay for blocks of users,
allowing all CCG's to come on board with no up-front costs. This
has had a positive impact on potential users with increasing
numbers of CCG's engaged in a sign up process.
With a limited number of early PHB holders now live and
transacting we anticipate meaningful growth in 2017, based on the
work that we are currently undertaking with CCG's to identify and
on-board additional individuals with budgets.
During the year we also won a competitive bid to provide a
marketplace to the Federation of Small Business (FSB), the project
was revenue generative immediately with set up fees and a base
licence. As with PHBChoices there is also a transaction fee which
will be equally shared between cloudBuy and the FSB. The
marketplace is now live and onboarding suppliers, initial take up
is encouraging, however real monetisation will only occur if and
when suppliers transact. The FSB are actively engaged and have
committed resources and marketing to the project in order to make
it a commercial success.
We also won a 7 year contract for a purchasing portal for the
University of Exeter, with implementation expected to be completed
in 2017.
Asia Pacific
Our key win in this region has been with United Overseas Bank
(UOB) where we are providing a marketplace for the bank's SME
customers, giving access to special offers and competitive pricing
from a range of flagship suppliers. The initial suppliers are all
large organisations with whom the bank has a strategic
relationship. The marketplace is initially planned to go live in
Singapore, with a wider Asia Pacific roll out being considered for
Q3/4 and 2018. The contract is revenue generating with set up fees,
licence and transaction fees payable to cloudBuy. We are currently
working with the suppliers to integrate their booking and inventory
systems with the UOB marketplace.
The CII marketplace in India has continued to develop with circa
40,000 products featured and available for purchase. The majority
of the content is manufacturing based and early transactions are
subject to request for quote rather than ecommerce basket purchase.
These early suppliers are receiving orders and a small number are
interested in purchasing their own cloudBuy B2B websites as a
consequence.
To support the ongoing roll out of the marketplace in India,
Microsoft has partnered with cloudBuy to integrate its two new apps
into the cloudBuy product suite, allowing suppliers in rural areas
to manage content on the CII marketplace and their own websites,
with low broadband connectivity from their mobile phones.
In Australia our flagship project with New South Wales
HealthShare will provide spend analysis to 33 hospitals and health
organisations in the region. We have identified significant savings
opportunities for our client during implementation and this has
generated further interest from other Australian States in using
the product
North America
Our project with the York District School Board in Ontario has
continued to progress and we have undertaken substantial
development to customise the procurement environment to integrate
with the schools finance system and to support the purchasing
processes used in the education environment. Our early adopter
client has been showcasing the system to other boards and we have
an active pipeline of opportunities across the region.
Middle East
We have made progress in Egypt with an agreement to work with
eFinance and Visa to roll out the full range of cloudBuy
technologies. eFinance will act as the formal reseller for cloudBuy
and provide technical support and product hosting for its
clients.
In Saudi Arabia we have been supporting our partner the Bin
Shamikh Group in their prospecting activities. We are currently
working with them to set up an entity within Saudi Arabia to help
facilitate these sales.
Cost and Operational Efficiencies
Management has increasingly focussed on cost and operational
efficiencies to reduce losses. Actions taken during the 2015 and
2016 resulted in a reduction in administrative expenses of
GBP2,104,693 which represents a 31% reduction. These actions
include exiting from geographies which have limited opportunity for
profit and an increased focus on products and geographies which
have the highest chance of profit and shareholder return. The Board
continues to seek efficiencies in the business.
Research and Development
Investment in the Group's products to enhance Intellectual
Property is a key foundation of future growth. Research and
Development principally represents the cost of employee time spent
on new products and features. Investment in Research and
Development increased in the year to GBP623,649 from GBP594,761 in
2015.
Financial Results
In the year ended 31 December 2016, the group's revenue
decreased by 2% to GBP1,714,491 (2015: GBP1,748,037) and the loss
before taxation reduced to GBP4,271,795 (2015: loss of
GBP6,064,829).
Sales of Web and ecommerce services increased by 12%
GBP1,165,734 (2015: GBP1,039,420).
Revenue from company formation services decreased by 20% to
GBP492,542 (2015: GBP616,566) in the year reflecting Companies
House's continued increase in market share in electronic
formations.
Revenue from coding decreased by 39% to GBP56,215 (2015:
GBP92,051).
Gross margin for the year was 83% (2015: 80%) reflecting the
change in mix with an increase in Web and ecommerce services which
have a higher gross margin).
Operating expenses before share based payments reduced to
GBP4,778,206 (2015: GBP6,882,899). The reduction is as a result of
management action to improve efficiency and reduce costs with staff
costs (salary/NI/pension) reducing year on year by GBP853,602 to
GBP3,267,119. A total of GBP694,360 was charged as share based
payments, representing the calculated "cost" of share options
granted to employees and shares issued to them under the Share
Incentive Plan (2015: charge GBP591,308).
At 31 December 2016 the Group had cash and cash equivalents of
GBP1,035,826 (31 December 2015: GBP754,217).
Risks and Uncertainties facing the Business
We have been able to manage our resource levels in the Web and
ecommerce services space since sales and lead times are long and
there is enough time to resource up where required.
There is an ongoing risk in terms of information security. We
have well established systems that have been operating successfully
since 1999 to manage and mitigate this risk. A single exploit could
result in severe reputational and monetary damage to the company
and its shareholders and we continue our work to stop this from
occurring using our internal processes and external audit to ISO
9001 (business processes), ISO 27001(Information Security) and
PCI/DSS level 1 (highest level accreditation for Payment Card
Industry Data Security Standard).
Outlook
Our focussed approach to pipeline development and execution has
enabled significant cost reduction in 2016 and Q1 2017. This has
given a stronger base as the business focuses on near and medium
term revenue growth with a significant concentration on PHBChoices
as our major opportunity.
Group Statement of Comprehensive Income
For the year ended 31 December 2016
2016 2015
Notes GBP GBP
------------------------------------ ------ ------------ ------------
Revenue 4 1,714,491 1,748,037
Cost of sales (297,915) (348,658)
------------------------------------ ------ ------------ ------------
Gross profit 1,416,576 1,399,379
Administrative expenses (4,778,206) (6,882,899)
Share based payments 19 (694,360) (591,308)
------------------------------------ ------ ------------ ------------
Operating loss 5 (4,055,990) (6,074,828)
Finance income - interest
received 8 292 12,314
Finance costs (216,097) (2,315)
------------------------------------ ------ ------------ ------------
Loss on ordinary activities
before taxation (4,271,795) (6,064,829)
Income tax expense 9 157,136 91,373
------------------------------------ ------ ------------ ------------
Loss for the year attributable
to equity shareholders of
the parent (4,114,659) (5,973,456)
Other comprehensive income
- item which will or may
be reclassified to profit
and loss
Exchange gain arising on
translation of foreign operations (359,186) 17,441
Total comprehensive income (4,473,845) (5,956,015)
Loss per share
Basic and diluted 10 3.2p 4.8p
------------------------------------ ------ ------------ ------------
Revenue and operating loss for the year all derive from
continuing operations.
The loss attributable to the owners of the parent company is a
loss of GBP4,248,709 (2015 - loss of GBP4,988,401). Total
comprehensive income attributable to owners of the parent company
is GBP4,248,709 (2015 - loss of GBP4,988,401).
Statement of Financial Position
For the year ended 31 December 2016
Group Company
--------------------------- --------------------------
2016 2015 2016 2015
Notes GBP GBP GBP GBP
-------------------------------- ------ ------------- ------------ ------------ ------------
Assets
Non-current assets
Goodwill 11 - - - -
Other intangible assets 12 9,865 4,730 9,865 4,730
Property, plant and
equipment 13 181,683 194,758 98,336 118,823
Investments 14 - - 40,000 40,000
-------------------------------- ------ ------------- ------------ ------------ ------------
191,548 199,488 148,201 163,553
-------------------------------- ------ ------------- ------------ ------------ ------------
Current assets
Trade and other receivables 15 522,344 431,628 2,383,533 2,203,482
Taxes recoverable 207,136 50,000 207,136 50,000
Cash and cash equivalents 16 1,035,826 754,217 968,391 710,174
-------------------------------- ------ ------------- ------------ ------------ ------------
1,765,306 1,235,845 3,559,060 2,963,656
-------------------------------- ------ ------------- ------------ ------------ ------------
Total assets 1,956,854 1,435,333 (3,707,261) 3,127,209
-------------------------------- ------ ------------- ------------ ------------ ------------
Liabilities
Current liabilities
Trade and other payables 17 (1,018,951) (888,821) (837,833) (874,308)
Current tax liabilities - - - -
Financial liabilities 18 - - - -
- borrowings
-------------------------------- ------ ------------- ------------ ------------ ------------
(1,018,951) (888,821) (837,833) (874,308)
-------------------------------- ------ ------------- ------------ ------------ ------------
Non-current liabilities
Financial liabilities
- borrowings 18 (3,073,621) - (3,104,998) (31,377)
-------------------------------- ------ ------------- ------------ ------------ ------------
(3,073,621) - (3,104,998) (31,377)
-------------------------------- ------ ------------- ------------ ------------ ------------
Total liabilities (4,092,572) (888,821) (3,942,831) (905,685)
-------------------------------- ------ ------------- ------------ ------------ ------------
Total net (liabilities)/assets (2,135,718) 546,512 (235,570) 2,221,524
-------------------------------- ------ ------------- ------------ ------------ ------------
Shareholders' equity
Called up share capital 19 1,304,327 1,283,865 1,304,327 1,283,865
Share premium account 19 5,534,164 5,421,626 5,534,164 5,421,626
Other reserve 1,594,285 630,030 964,255 -
Share-based payment
reserve 987,114 292,754 987,114 292,754
Currency translation (308,847) 50,339
Accumulated losses (11,246,761) (7,132,102) (9,025,430) (4,776,721)
-------------------------------- ------ ------------- ------------ ------------ ------------
Total equity attributable
to equity shareholders
of the parent (2,135,718) 546,512 (235,570) 2,221,524
-------------------------------- ------ ------------- ------------ ------------ ------------
Statement of Cash Flows
For the year ended 31 December 2016
Group Company
-------------------------- --------------------------
2016 2015 2016 2015
Notes GBP GBP GBP GBP
---- ------------------------------------------------- ------------ ------------ ------------ ------------
Cash flows from operating
activities
Loss before taxation (4,271,795) (6,064,829) (4,405,845) (5,079,774)
Adjustments for:
Finance income/cost 215,805 (9,999) 214,177 (12,314)
Depreciation of property,
plant & equipment 91,366 81,810 72,735 80,528
Amortisation of other
intangible assets 18,461 39,286 18,461 39,287
Share based payments 694,360 591,308 694,360 591,308
Changes in working
capital
Trade and other receivables (90,716) 731,882 (180,051) (420,563)
Trade and other payables (43,967) (216,845) (210,572) (112,249)
Currency translation (369,438) 17,441 - -
Net cash used by operations (3,755,924) (4,829,946) (3,796,735) (4,913,777)
Tax (paid)/received - 160,828 - 160,828
Net cash used in operating
activities (3,755,924) (4,669,118) (3,796,735) (4,752,949)
Cash flows from investing
activities
Interest paid (3,750) (2,315) (2,122) -
Purchase of other
intangible assets (23,596) (5,605) (23,596) (5,605)
Purchase of property,
plant and equipment (68,039) (155,126) (52,248) (89,644)
Net cash used in investing
activities (95,385) (163,046) (77,965) (95,249)
Cash flows from financing
activities
Issue of ordinary
shares 133,000 1,028,350 133,000 1,028,350
Issue of loan notes 3,999,626 - 3,999,626 -
Interest received 292 12,314 292 12,314
-------------------------------------------------- --- ------------ ------------ ------------ ------------
Net cash generated
from financing 4,132,918 1,040,664 4,132,918 1,040,664
-------------------------------------------------- --- ------------ ------------ ------------ ------------
Net increase/(decrease)
in cash and cash
equivalents 281,609 (3,791,500) 258,217 (3,807,534)
Cash and cash equivalents
at beginning of period 754,217 4,545,717 710,174 4,517,708
-------------------------------------------------- --- ------------ ------------ ------------ ------------
Cash and cash equivalents
at end of period 16 1,035,826 754,217 968,391 710,174
-------------------------------------------------- --- ------------ ------------ ------------ ------------
Statements of Changes in Shareholders' Equity
For the year ended 31 December 2016
Share Share Other Share Currency Accumul-ated Share-holders'
capital premium reserve based translation losses equity
payments
reserve
Group GBP GBP GBP GBP GBP GBP GBP
---------------- ---------- ---------- ---------- ---------- ------------- -------------- ---------------
At 31 December
2014 1,212,140 3,971,946 630,030 194,510 32,898 (1,158,646) 4,882,878
Shares issued
in the year 71,725 1,449,680 - (493,064) - - 1,028,341
Share based
payments - - - 591,308 - - 591,308
Exchange
in year - - - - 17,441 - 17,441
Retained
loss for
the year - - - - - (5,973,456) (5,973,456)
---------------- ---------- ---------- ---------- ---------- ------------- -------------- ---------------
At 31 December
2015 1,283,865 5,421,626 630,030 292,754 50,339 (7,132,102) 546,512
Shares issued
in the year 20,462 112,538 - - - - 133,000
Convertible
loan notes
issued in
the year - - 964,255 -- - - 964,255
Share based
payments - - - 694,360 - - 694,360
Exchange
in year - - - - (359,186) - (359,186)
Retained
loss for
the year - - - - - (4,114,659) (4,114,659)
---------------- ---------- ---------- ---------- ---------- ------------- -------------- ---------------
At 31 December
2016 1,304,327 5,534,164 1,594,285 987,114 (308,847) (11,246,761) (2,135,718)
---------------- ---------- ---------- ---------- ---------- ------------- -------------- ---------------
Statements of Changes in Shareholders' Equity
For the year ended 31 December 2016
Share Share Other Share Accumul-ated Share-holders'
capital premium reserve based losses equity
payments
reserve
Company GBP GBP GBP GBP GBP GBP
---------------- ---------- ---------- ---------- ---------- -------------- ---------------
At 31 December
2014 1,212,140 3,971,946 194,510 211,680 5,590,276
Shares issued
in the year 71,725 1,449,680 (493,064) - 1,028,341
Share based
payments - - 591,308 591,308
Retained
loss for
the year - - (4,988,401) (4,988,401)
----------------- ---------- ---------- ---------- ---------- -------------- ---------------
At 31 December
2015 1,283,865 5,421,626 292,754 (4,776,721) 2,221,524
Shares issued
in the year 20,462 112,538 - - - 133,000
Convertible
loan notes
issued in
the year - - 964,255 -- - 964,255
Share based
payments - - - 694,360 - 694,360
Retained
loss for
the year - - - - (4,248,709) (4,248,709)
----------------- ---------- ---------- ---------- ---------- -------------- ---------------
At 31 December
2016 1,304,327 5,534,164 964,255 987,114 (9,025,430) (235,570)
----------------- ---------- ---------- ---------- ---------- -------------- ---------------
The other reserve arises because shares issued on the
acquisition of subsidiaries have been recorded at par value and no
share premium recognised (Group: GBP630,030; Company: GBPNil) and
convertible loan notes have been issued which fall to be treated as
having an equity component (Group and Company: GBP964,255).
Notes to the Financial Statements
For the year ended 31 December 2016
1 General information
cloudBuy plc ("the Company") and its subsidiaries (together "the
Group)" provides an integrated software platform for eprocurement
and ecommerce the trading of goods and services between purchasers
such as public sector bodies and their suppliers, along with the
analysis and coding of spend and product data. The Group also
provides services to new businesses, including incorporation,
company secretary services and filing annual returns, using its
software platform. The Company is a public limited company which is
listed on the Alternative Investment Market of the London Stock
Exchange and is incorporated and operates in the UK.
The address of the registered office is:
5 Jupiter House,
Calleva Park,
Aldermaston,
Berkshire RG7 8NN.
2 Summary of significant accounting policies
The principal accounting policies applied in the preparation of
these financial statements are set out below. These policies have
been applied consistently to all the years presented, unless
otherwise stated.
2.1 Basis of accounting
These financial statements have been prepared in accordance with
IFRS as adopted by the European Union, and with those parts of the
Companies Act 2006 applicable to companies reporting under IFRS.
The financial statements have been prepared under the historical
cost convention.
The preparation of financial statements in conformity with IFRS
requires management to make judgements, estimates and assumptions
that affect the application of policies and reported amounts in the
financial statements. The areas involving a higher degree of
judgement or complexity, or areas where assumptions or estimates
are significant to the financial statements are disclosed in note
3.
As permitted under Section 408 of the Companies Act 2006 a
separate statement of comprehensive income for the parent company
has not been presented.
2.2 Going concern
The Group had a loss attributable to shareholders for the year
of GBP4,114,659 and at the year-end had cash balances of
GBP1,035,826. The directors of the Group have prepared detailed
projections and cash flow forecasts through to 31 December 2018.
These forecasts include the GBP1,475,700 undrawn element of the
loan facility. In considering these cash flow forecasts, the
directors have carefully considered the assumptions and
sensitivities and have concluded that the Group will be able to
continue trading within its current working capital position and
they have a reasonable expectation that the Group has adequate
resources to continue in operational existence for a period of 12
months from the date the accounts were signed and as such have
prepared the accounts on the going concern basis.
2.3 Consolidation
Subsidiary undertakings are all entities over which the Group
has the power to govern the financial and operating policies so as
to obtain benefit from their activities. Subsidiaries are fully
consolidated from the date on which control is transferred until
the date control ceases.
The purchase method of accounting is used to account for the
acquisition of subsidiaries by the Group. The investment in
subsidiaries in the Company's statement of financial position is
shown at cost less provision for diminution in value.
Inter-company transactions, balances and unrealised gains and
losses on transactions between Group companies are eliminated.
2.4 Goodwill
Goodwill arising on acquisitions represents the excess of the
consideration given plus any associated costs for investments in
subsidiary undertakings over the fair value of the identifiable
assets and liabilities acquired. Adjustments are made to fair
values to bring the accounting policies of acquired businesses into
alignment with those of the Group. Provision is made for any
impairment in the value of goodwill. The costs of integrating and
reorganising acquired businesses are charged to the post
acquisition statement of comprehensive income.
In accordance with IFRS1, the Group has applied the exemption
from retrospectively recalculating goodwill which arose on
acquisitions prior to 1 January 2006. This goodwill is included at
its deemed cost, being the amount recorded under UK GAAP as at 1
January 2006. Goodwill is carried at cost less accumulated
impairment losses. Any impairment is recognised immediately in the
statement of comprehensive income and is not subsequently reversed.
Goodwill is allocated to cash generating units for the purpose of
impairment testing. Each of these cash generating units represents
the group's investment in each country of operation by primary
reporting segment.
Goodwill is tested for impairment annually. Gains and losses on
the disposal of an entity include the carrying amount of goodwill
relating to the entity sold.
2.5 Other intangible assets
Other intangible assets are shown at historical cost less
accumulated amortisation and impairment losses.
The costs directly associated with the development of
identifiable and unique software products controlled by the Group
and that will probably generate economic benefits exceeding costs
beyond one year are recognised as intangible assets and amortised
over their estimated useful lives. Other research and development
expenditure is written-off to the statement of comprehensive income
in the year in which it is incurred.
Amortisation is charged to administrative expense in the
statement of comprehensive income on a straight-line basis over the
estimated useful lives of the intangible asset unless such lives
are indefinite. Intangible assets with an indefinite useful life
are tested for impairment at each balance sheet date. Other
intangible assets are amortised from the date they are available
for use. The useful lives are as follows:
-- Software - 3 years
-- Development expenditure - 3 years
Amortisation periods and methods are reviewed annually and
adjusted if appropriate.
2.6 Property, plant and equipment
All are stated at cost less accumulated depreciation.
Depreciation of property, plant and equipment is provided to
write each asset down to its estimated residual value on a
straight-line basis over its estimated useful life, as follows:
-- Computer equipment - 3 years
-- Fixtures, fittings and equipment - 3 to 5 years
Residual values, remaining useful lives and depreciation methods
are reviewed annually and adjusted if appropriate.
Gains or losses on disposal are included in the statement of
comprehensive income.
2.7 Impairment of assets
The Group assess at each statement of financial position date
whether there is any indication that any of its assets have been
impaired. If such indication exists, the asset's recoverable amount
is estimated and compared to its carrying value.
For goodwill and intangible assets that have an indefinite life
and intangible assets not yet available for use, the recoverable
amount is estimated at each statement of financial position date
and whenever there is an indication of impairment.
An impairment loss is recognised for the amount by which the
asset's carrying amount exceeds its recoverable amount. Impairment
losses are recognised in the statement of comprehensive income.
2.8 Financial instruments
Financial assets and financial liabilities are recognised on the
group's statement of financial position when the group has become a
party to the contractual provisions of the instrument.
2.8.1 Trade receivables
Trade receivables are initially recognised at fair value and
then subsequently measured at amortised cost using the effective
interest rate method. Trade receivables do not carry any interest
and are stated at their nominal value as reduced by appropriate
allowances for estimated irrecoverable amounts.
2.8.2 Trade payables
Trade payables are initially recognised at fair value and then
subsequently measured at amortised cost using the effective
interest rate method. Trade payables are not interest bearing and
are stated at their nominal value.
2.8.3 Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair
value less attributable transaction costs. Subsequent to initial
recognition, interest-bearing borrowings are stated at amortised
cost with any difference between cost and redemption value being
recognised in the statement of comprehensive income over the period
of the borrowings on an effective interest rate basis.
2.8.4 Convertible and non-convertible loan notes
Convertible loan notes are separated into the equity and
liability components at the date of issue. The liability component
is recognised initially at its fair value. Subsequent to initial
recognition, it is carried at amortised carrying value using the
effective interest method until the liability is extinguished on
conversion or redemption of the loan notes. The equity component is
the residual amount of the convertible bond after deducting the
fair value of the liability component. This is recognised and
included in equity, net of deferred tax effect, and is not
subsequently remeasured.
Loan notes with no option to be converted to share capital and
that will be repaid in cash, are recognised in liabilities.
2.8.5 Equity Instruments
Equity instruments are recorded at the proceeds received, net of
direct issue costs.
2.9 Share based payments
The group has applied the requirements of IFRS 2: Share-based
Payments.
The group issues equity-settled share-based payments to its
employees. Equity-settled share-based payments are measured at fair
value at the date of grant. The fair value determined at the grant
date of equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the group's
estimate of shares that will eventually vest.
Fair value is measured by use of a Black Scholes model. The
expected life used in the model has been adjusted, based on
management's best estimate, for the effect of non-transferability,
exercise restrictions, and behavioural considerations.
2.10 Pensions
All pension schemes operated by the Group are defined
contribution schemes. The costs are charged to the statement of
comprehensive income in the year in which they are incurred.
2.11 Revenue
Revenue is measured at fair value of consideration received or
receivable for goods sold and services provided to customers
outside the Group, net of Value Added Tax and any discounts.
Where invoices are raised in advance of the income being earned
through the performance of the service, the unearned portion is
included in the accounts as deferred income, and released to the
Profit and Loss Account as earned.
2.12 Leases
Rentals payable under operating leases are charged against
income on a straight line basis over the lease term. The Group does
not hold any assets under hire purchase contracts or finance leases
and has not received any benefits as an incentive to sign a lease
of whatever type.
2.13 Current and deferred taxation
The tax expense represents the sum of the tax currently payable
and deferred tax.
The current tax is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the statement of
comprehensive income because it excludes items of income or expense
that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The Group's
liability for current tax is calculated by using tax rates that
have been enacted or substantively enacted by the statement of
financial position date.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amount of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit, and is accounted for using the
balance sheet liability method.
Deferred tax liabilities are recognised for all taxable
temporary differences and deferred tax assets are recognised to the
extent that it is probable that taxable profits will be available
against which deductible temporary differences can be utilised.
Such assets and liabilities are not recognised if the temporary
difference arises from the initial recognition of goodwill or from
the initial recognition (other than in a business combination) of
other assets and liabilities in a transaction which affects neither
the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries and associates,
and interests in jointly controlled entities, except where the
group is able to control the reversal of the temporary difference
and it is probable that the temporary difference will not reverse
in the foreseeable future.
Deferred tax is calculated at the tax rates (and tax laws) that
have been enacted or substantively enacted by the statement of
financial position date. Deferred tax is charged or credited in the
statement of comprehensive income, except when it relates to items
credited or charged directly to equity, in which case the deferred
tax is also dealt with in equity.
2.14 Provisions
Provisions are recognised in the statement of financial position
when there is a present legal or constructive obligation as a
result of a past event, and it is probable that an outflow of
economic benefits will be required to settle the obligation.
2.15 Adoption of new or amended IFRSs
(a) The Company has adopted the following revisions and
amendments to IFRS issued by the International Accounting Standards
Board, which are relevant to and effective for the Company's
financial statements for the year beginning 1 January 2016.
IFRS 14 Regulatory Deferral Accounts (effective 1 January
2016)
IAS 16/38 Clarification of Acceptable Methods of Depreciation
and Amortisation (effective 1 January 2016)
Annual Improvements 2012-2014 Cycle (effective 1 January
2016)
IAS 1 Disclosure Initiative (Amendments to IAS 1) (effective 1
January 2016)
(b) At that date of authorisation of these Financial Statements,
the following Standards and Interpretations (International
Financial Reporting Interpretation Committee - IFRIC), which have
not been applied in these Financial Statements, were in issue but
not yet effective:
IFRS 15 Revenue from Contracts with Customers (effective 1
January 2018)
IFRS 16 Leases (effective 1 January 2019)
The Directors have considered the above new standards,
interpretations and amendments to published standards that are not
yet effective and concluded that they are either not relevant to
the Group or that they would not have a material impact on the
Group's financial statements.
3 Accounting estimates and judgements
Estimates and judgments are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances.
3.1. Critical accounting estimates and judgments
The Group makes estimates and assumptions concerning the future.
The resulting accounting estimates will, by definition, seldom
equal the related actual results. 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:
-- Goodwill has been tested for impairment by comparing the
amount of goodwill against future forecast results including cash
flows expected to be generated in the future by the appropriate
asset, cash-generating unit, or business segment.
-- The fair value of share-based payments is measured using a
binomial model which inherently makes use of significant estimates
and assumptions concerning the future applied by the directors.
-- Capitalised development expenditure is reviewed for
compliance with IAS 38 on an ongoing basis. The technical
feasibility and commerciality of development expenditure is
considered prior to capitalisation and the carrying values are
compared against future forecast results including cash flows
expected to be generated in the future for any indication of
potential impairment.
-- The convertible loan notes are apportioned between an equity
element and a liability element. This apportionment is calculated
applying judgements covering interest rates and discounts.
4 Revenue- Segmental Analysis
The Groups operating segments under IFRS have been determined
with reference to the information presented in the management
accounts reviewed by the Board of Directors.
The Group's main reportable segments are Company Formation and
web and ecommerce services. These are managed from one operating
platform and cannot be readily separated, so all management
decisions in connection with these segments are taken to ensure the
relevant skill sets are in place to maximise the return from these
resources.
The Chief Operating Decision Maker, which is taken to be the
Board of Directors, evaluates the performance and resource
requirements of these segments in unison to ensure maximum
efficiencies within the business. Resources are shared; in
particular, technical support and research and development advances
are shared between the two in the form of improvements and
refinements being made to the underlying platform that hosts
them.
The Directors consider the most beneficial method of splitting
these segments to provide useful information to users of the
accounts is to provide details down to the Gross Profit level
only.
From then on any further detail would necessitate arbitrary cost
allocation that they do not use in managing the business and is not
considered meaningful in terms of how resources are actually
utilised. Similarly, any split of the statement of financial
position assets would involve arbitrary allocation.
Coding International is the Company's 100% trading subsidiary
and so these results are extracted from that company's own accounts
that are published separately and consolidated into these results
in accordance with statutory requirements. Details of the statement
of financial position for Coding International Limited can be
obtained from those accounts.
The revenue recognised and gross profit attributable between
reportable segments is shown below:
2015
-------------- ------------------ ------------------ --------------------- ----------
Company Formation Web and ecommerce Coding International Total
Services services Limited
-------------- ------------------ ------------------ --------------------- ----------
GBP GBP GBP GBP
-------------- ------------------ ------------------ --------------------- ----------
Revenue 616,566 1,039,420 92,051 1,748,037
-------------- ------------------ ------------------ --------------------- ----------
Cost of
Sales (300,210) (48,448) - (348,658)
-------------- ------------------ ------------------ --------------------- ----------
Gross profit 316,356 990,972 92,051 1,399,379
-------------- ------------------ ------------------ --------------------- ----------
2016
-------------- ------------------ ------------------ --------------------- ----------
Company Formation Web and ecommerce Coding International Total
Services services Limited
-------------- ------------------ ------------------ --------------------- ----------
GBP GBP GBP GBP
-------------- ------------------ ------------------ --------------------- ----------
Revenue 492,542 1,165,734 56,215 1,714,491
-------------- ------------------ ------------------ --------------------- ----------
Cost of
Sales (227,659) (70,256) - (297,915)
-------------- ------------------ ------------------ --------------------- ----------
Gross profit 264,883 1,095,478 56,125 1,416,576
-------------- ------------------ ------------------ --------------------- ----------
All of the revenue derives from services provided in the United
Kingdom. During both 2016 and 2015 no single customer was
responsible for greater than 10% of the revenues.
5 Operating loss
2016 2015
GBP GBP
------------------------------------- ---------- ----------
This is stated after the following:
Staff costs (see note 7) 3,961,479 4,712,029
Depreciation of property, plant
and equipment (see note 13) 91,366 81,810
Amortisation of other intangible
assets (see note 12) 18,461 39,286
Research and development costs
recognised as an expense 623,649 594,761
6 Taxation
2016 2015
GBP GBP
-------------------------------- -------- -------
R&D tax credit 60,000 50,000
Adjustment in respect of prior
years 97,136 41,373
-------------------------------- -------- -------
Tax credit for the year 157,136 91,373
-------------------------------- -------- -------
Factors affecting tax charge for
the year
Loss on ordinary activities before
taxation (4,271,795) (6,064,828)
---------------------------------------------- ------------ ------------
Loss on ordinary activities before
taxation multiplied by
Standard rate of UK corporation
tax of 20% (2015: 20.25%) (854,359) (1,228,128)
Effects of:
Expenses not deductible for tax
purposes 2,000 2,025
Share based payments 138,872 119,740
Capital allowances less than depreciation
and amortisation 5,732 10,790
R&D tax credit claim in respect
of current year (12,569) (22,107)
Prior year (97,136) (41,373)
Carry forward of tax losses 660,324 1,067,680
---------------------------------------------- ------------ ------------
697,223 1,136,755
---------------------------------------------- ------------ ------------
Total tax credit (157,136) (91,373)
---------------------------------------------- ------------ ------------
The Group has estimated tax losses of GBP24,150,000 (2015:
GBP21,700,000) available for carry forward against future trading
profit. No deferred tax asset has been recognised in respect of the
losses given the uncertainty regarding available future taxable
profits.
7 Loss per share
The calculations for loss per share are based on the weighted
average number of shares in issue during the year 129,968,645
(2015: 124,641,446) and the following losses:
2016 2015
GBP GBP
-------------------------------- ------------ ------------
Unadjusted earnings:
Loss for the year attributable
to equity shareholders of the
parent (4,114,659) (5,973,456)
Add back:
Share-based payments 694,360 591,308
-------------------------------- ------------ ------------
Adjusted earnings (3,420,299) (5,382,148)
-------------------------------- ------------ ------------
Diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. The company
has two categories of dilutive potential ordinary shares: share
options and convertible loan note. The company has made a loss and
these are therefore anti-dilutive.
The basic and diluted loss per share calculated on the adjusted
earnings is 2.6p (2015:4.3p).
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR UAOKRBWAOUAR
(END) Dow Jones Newswires
March 22, 2017 03:00 ET (07:00 GMT)
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