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NOTIFICATION OF MAJOR INTEREST IN SHARES
Jun 22, 2017
cloudBuy plc, the global provider of cloud-based e-commerce marketplaces and B2B buyer and supplier solutions, today provides an notifications of major interests in shares
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£1,475,700 Funding
May 25, 2017
the final £1,475,700 of the total £5,750,000 funds available has been drawn down under the interest bearing loan
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NOTIFICATION OF MAJOR INTEREST IN SHARES
May 23, 2017
cloudBuy plc, the global provider of cloud-based e-commerce marketplaces and B2B buyer and supplier solutions, today provides an notifications of major interests in shares
read more
NOTIFICATION OF MAJOR INTEREST IN SHARES
May 23, 2017
cloudBuy plc, the global provider of cloud-based e-commerce marketplaces and B2B buyer and supplier solutions, today provides an notifications of major interests in shares
read more
Directorate Change
May 15, 2017
cloudBuy, the global provider of cloud-based eCommerce marketplaces and B2B buyer and supplier solutions, announces that Jonny Holden, Chief Operating Officer, will leave by mutual consent...
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Final Results for the year ended 31 December 2016 and Date for AGM

Mar 22, 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 £3,361,630, 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 £1,714,491 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

David Gibbon, CFO

Tel: 0118 963 7000

Arden Partners plc – NOMAD and Broker

Steve Douglas / Patrick Caulfield

Tel: 0207 614 5900

 

 

 

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 £7bn.  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 £2,104,693 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 £623,649 from £594,761 in 2015.

Financial Results

In the year ended 31 December 2016, the group’s revenue decreased by 2% to £1,714,491 (2015: £1,748,037) and the loss before taxation reduced to £4,271,795 (2015: loss of £6,064,829).

Sales of Web and ecommerce services increased by 12% £1,165,734 (2015: £1,039,420).

Revenue from company formation services decreased by 20% to £492,542 (2015: £616,566) in the year reflecting Companies House’s continued increase in market share in electronic formations.

Revenue from coding decreased by 39% to £56,215 (2015: £92,051).

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 £4,778,206 (2015: £6,882,899). 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 £853,602 to £3,267,119. A total of £694,360 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 £591,308).

At 31 December 2016 the Group had cash and cash equivalents of £1,035,826 (31 December 2015: £754,217).

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

£

£

 

 

 

 

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

Finance costs

 

8

292

(216,097)

12,314

(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 £4,248,709 (2015 – loss of £4,988,401). Total comprehensive income attributable to owners of the parent company is £4,248,709 (2015 – loss of £4,988,401). 

 

Statement of Financial Position

For the year ended 31 December 2016

 

 

 

 

Group

 

Company

 

 

2016

2015

2016

2015

 

Notes

£

£

£

£

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 - borrowings

18

 

 

(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

£

£

£

£

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

Issue of loan notes

Interest received

 

133,000

3,999,626

292

1,028,350

12,314

133,000

3,999,626

292

1,028,350

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 capital

Share premium

Other reserve

Share based payments reserve

Currency translation

Accumul-ated losses

Share-holders’ equity

Group

£

£

£

£

£

£

£

 

 

 

 

 

 

 

 

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 capital

Share premium

Other reserve

Share based payments reserve

 

Accumul-ated losses

Share-holders’ equity

 

Company

£

£

£

£

 

£

£

 

 

 

 

 

 

 

 

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: £630,030; Company: £Nil) and convertible loan notes have been issued which fall to be treated as having an equity component (Group and Company: £964,255). 

 

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 £4,114,659 and at the year-end had cash balances of £1,035,826.  The directors of the Group have prepared detailed projections and cash flow forecasts through to 31 December 2018. These forecasts include the £1,475,700 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

Services

Web and ecommerce

services

Coding International

Limited

Total

 

      £

      £

      £

       £

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

Services

Web and ecommerce

services

Coding International

Limited

Total

 

      £

       £

   £

       £

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

 

£

£

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

 

£

£

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 £24,150,000 (2015: £21,700,000) 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

 

£

£

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).