Unaudited Preliminary Results for the year ended 31 December 2014
RNS Number : 7840I
Cloudbuy PLC
30 March 2015
cloudBuy plc
("cloudBuy" or the "Company")
Unaudited Preliminary Results for the year ended 31 December 2014
cloudBuy plc (AIM: CBUY), the cloud e-commerce marketplace, today announces is unaudited preliminary results for the year ended 31 December 2014.
Key Points
Financial:
· Turnover decreased by 29% to £2.124m (2013: £3.004m)
· Operating expenses before share based payments increased to £5.867m (2013: £3.274m) reflecting the increase in costs associated with the launch in Asia Pacific and strengthening of the team resulting in already signed contracts worth
USD$25m per year on a low 10% take-up. $75m at 30%, $150m at 60% take-up of a potential $250m per year at 70% margin
· Cash and cash equivalents increased to £4.546m (2013: £4.157m) as at 31 December, 2014
Operational:
· Successful placing to raise £4.3 million (before costs) in October, 2014
· Exclusive agreement with Visa Worldwide Pty. Limited (Asia Pacific) extended to 5 years with a widened scope of service
· Working with 14 banks across US, Europe, India, Singapore, Hong Kong and Australia
· Spend Analysed increased by 50% from $500 billion to $750 billion with a further $ 750 billion in Tungsten for a total of $ 1.5 trillion analysed across cloudBuy and Tungsten
· Refocusing of Group's activities in fast growing Asia Pacific region
· Agreement with a financial institution in Hong Kong to develop a marketplace
· Agreement with Confederation of Indian Industry to develop a global trading marketplace
· Agreement with a trade association in Singapore to develop a marketplace (post year end)
· Procurement contract wins in India with SYNISE and in Australia with a State Government
· Launch of @UK Marketplace, the first British B2B e-marketplace for SMEs
· Launch of breeze-e and Staffordshire County Council care marketplaces
· All party support for Care and our national solution for NHS patient budgets with NHS Shared Business Services
· Post year end, entry into the strategic US market with reference site, major commercial partner and banking partner
Ronald Duncan, Executive Chairman of cloudBuy, commented:
"2014 saw significant investment in both our technology and international expansion and we expect these to deliver a step change in our 2015 results as our signed contracts go live and start generating revenues. Entering 2014 our pipeline was, to a large extent, reliant on UK public sector and large procurement opportunities in Australia, which have proved to move slowly.
We have focused on the delivery of our international expansion at the expense of short term UK and professional services revenues. In 2014, we have not recognised any of the investment in either our products or our partnerships. We expect £1m of partnership investments to be recognised in 2015 as the revenues come on stream.
The fast growing Asian market required an enhanced product in the form of "marketplace in a box" which we have now developed. We expect our customers to launch shortly in Hong Kong, Singapore and India, giving us a USD$25m per year revenue opportunity based on a low 10% take-up from the contracts signed to date.
Our agreement with Visa has been extended with both a 5 year agreement and a widened scope of service. 14 banks across the US, Europe and the Asia Pacific are now promoting our products and services, giving us a strong presence in the most active e-commerce markets."
For further information, please contact:
| cloudBuy plc Ronald Duncan, Chairman |
Tel: 0118 963 7000 |
| Westhouse Securities Limited Tom Griffiths/Richard Johnson |
Tel: 020 7601 6100 |
| Newgate Robyn McConnachie / Tim Thompson |
Tel 020 7653 9850 |
For more information, visit www.cloudbuy.com
Chairman's Statement
2014 saw cloudBuy continue to transition the business from a UK Public Sector focus to become a global e-commerce provider to address the countries and regions exhibiting growing demand for e-commerce solutions.
B2B e-commerce is finally becoming part of mainstream business activity and marketplaces are driving uptake. It is very clear that the biggest global opportunity for B2B e-commerce lies in Asia Pacific and to be part of this requires that we focus our efforts there now.
In response to this opportunity and in support of our exclusive agreement with Visa (AP) which focuses on Asia Pacific, 2014 saw cloudBuy prioritise our sales activities and resources into this area.
The results have been encouraging and to date high profile marketplaces have been signed in Hong Kong, Singapore and India. These marketplaces are now beginning to generate their first revenues and our task in 2015 is to exploit this growth with sales and delivery teams, to generate further revenues.
In 2014 we invested in creating the 'people infrastructure' to support growth and in the development of our solutions to meet the business challenges of customers trading globally. We raised the funds required to ensure that we could both deliver the projects and have the resources ready to capture the revenues.
The Group appointed Jonathan Holden as Chief Operating Officer and Director of the Company. Jonathan joined cloudBuy in January 2014 to help drive expansion and he has responsibility for global partnerships, including Visa.
The current energy and appetite for e-commerce in Asia is seeing major investments flowing into e-commerce businesses, particularly in India where new B2C-focused companies such as Flipkart and Snapdeal, are taking on Amazon with investments of several billion dollars. In September 2014 the IPO for Alibaba, the Chinese online marketplace company, was the world's largest ever at $25 billion.
To take a slice of the e-commerce opportunity in Asia, our strategy is to partner with high profile 'brands' in each country that have established communities eager to trade. The cloudBuy technology will underpin the new open B2B marketplaces fronted by these brands. For example, our win with the Confederation of Indian Industry to power their marketplace for 8,000 Indian manufacturers has given the cloudBuy brand visibility across Asia Pacific at a tiny fraction of the investment needed to launch B2C marketplaces.
We have created a new 'marketplace in a box' solution to power the marketplaces, which supports local language, currency and taxation, and can be rolled out quickly. cloudBuy has revenue opportunities from the sales transactions flowing through the marketplaces and in add-on sales of cloudSell e-commerce functionality to suppliers trading through the marketplaces.
The cloudSell capabilities we have also developed in 2014 round-out our solution set for buyers and sellers, and the technologies which bring them together to do business. cloudSell and 'marketplace in a box' complement our traditional cloudBuy closed procurement portal and Spend Insight functionality which have opportunities primarily in the UK, North America and Australia.
Spend analysed increased by 50% to $ 750 billion from $ 500 billion and when combined with our licensee Tungsten's spend of $ 750 billion the total analysed across both companies is $ 1.5 trillion. This provides a quantitative indication of our growing future pipeline, which we are working to monetise.
In the UK we have continued to focus on the care sector as an emerging opportunity for growth. Policies mean that citizens will be selecting and purchasing their own combinations of care services from online care marketplaces. cloudBuy powers a number of these marketplaces and is well placed to drive revenue from on-boarding suppliers from the large pool of providers which work in the care sector. The UK is pioneering in online selection of care services and there is potential for other countries to adopt this approach in the future.
In 2014 we have had to balance the resourcing of our large emerging opportunities with our traditional UK-based public sector business. This has been challenging and we have sacrificed short term lower level revenues for longer term higher value revenues.
I am confident that we have accomplished the most difficult tasks in 2014 by credibly entering new markets, rounding out the product set, building the team and establishing multiple avenues for growth. This has taken investment and management focus. While 2014 saw a number of contracts signed, our focus has been on getting ready to exploit the bigger opportunities which are emerging.
We are now highly visible in India, Singapore and Hong Kong with a strong presence and growing opportunities in the Middle East, Australia and first wins in North America.
We have over £1m of already delivered UK project work that we expect to recognise in 2015 as the projects go live.
As in the prior year, the Board is not recommending the payment of a dividend for 2014. In the immediate future, the Board is committed to building the Group's business and accordingly all the Group's financial resources are being applied to this end. In the longer term, the Directors intend to adopt a progressive dividend policy appropriate to the Group's financial performance.
Outlook
2014 saw significant investment in both our technology and international expansion and we expect these to deliver improved results in 2015. Entering 2014 our pipeline was, to a large extent, reliant on UK public sector and procurement opportunities in Australia, which have proved to move slowly. The execution of our strategy in 2014 sees us enter 2015 with signed contracts in a spread of geographies and a diverse pipeline made up of a wider range of cloudBuy's solutions in more countries. We are represented in the most active e-commerce markets and, in Visa, we have one of the largest global players as a strategic partner.
We have an exceptional group of employees and on behalf of the Board and shareholders, I would like to thank all our employees for their hard work and effort during the year and we look forward together to a successful year in 2015.
Ronald Duncan
Executive Chairman
30 March 2015
Strategic Report
Overview
2014 marked a step change for cloudBuy in its move to become a truly global company with the ability to exploit opportunities in the world's thriving markets for e-commerce and digital business - and a product set enhanced to meet the challenge.
At the beginning of 2014 the organisation was still a UK-focused business with a single sales resource in Australasia; by the end of the year there were teams and/or resellers in Australasia, Singapore, Hong Kong, India and Dubai, with contract wins in each location.
cloudBuy's partnership with Visa AP continues to be of strategic importance. Visa AP has developed programmes, such as the 'Powering Business Everywhere' initiative, to support the accelerated e-business growth being experienced in economies such as Hong Kong and Singapore. cloudBuy's solutions support the P2P (Procure to Pay) and Spend Management elements of this campaign. We have invested a large amount of development resources to support the Visa partnership and have responded when Visa's rollout has taken us into new countries. This will begin to produce returns in 2015.
Visa has also been introducing cloudBuy to banks across the different geographies and, largely driven by this, we now have 14 major banks introducing our cloudBuy products to customers (up from just 1 in 2013). The breakdown is now as follows:
· 4 in India
· 3 in Europe
· 2 in Australia
· 2 in Singapore
· 1 in Hong Kong
· 1 in New Zealand
· 1 in North America
We are developing a pipeline of cloudBuy procurement opportunities with these banks and other organisations.
"Visa has a significant focus on digitisation of B2B payments. In collaboration with established global technology providers such as cloudBuy, Kofax, Invapay and Spendvision, Visa is able to give businesses a comprehensive and effective approach to managing their financial processes and address the challenges of visibility and predictability."
Source: Visa Australian press release, February, 2015
In 2014 cloudBuy was selected to power open marketplaces in Hong Kong, India and Singapore. Our strategy has been to partner with existing brands which already have large communities of customers or members, to launch these marketplaces. We will on-board suppliers to the marketplaces and take the opportunity to upgrade these organisations from non-transactional directory listings to enhanced cloudSell e-commerce functionality. Across these three geographies we have marketplaces going live in 2015 with existing supplier bases in excess of 35,000. We have been working with Visa AP and its banks to support this activity as each merchant requires a transactional website and potentially an internet merchant account if they wish to be able to accept secure card payments.
The e-commerce marketplace revenue model for cloudBuy can be summarised as:
· Marketplace set-up work
· On-boarding sellers to the marketplace and selling them enhanced cloudSell e-commerce functionality
· A percentage of the value of the sales flowing through the marketplace - typically between 2 and 5% for B2B transactions
· Annual maintenance and hosting fees for the marketplace
Different marketplaces and agreements will feature these revenue elements in different proportions.
Three sales strategies were developed in 2014 to address the different country market opportunities:
| Home Market (UK) | Mature e-commerce Market (North America) | Growth e-commerce Market (India; Asia; ME; Aus/NZ) |
| Exploit opportunities from cloudBuy's complete product set - cloudBuy; cloudSell; marketplaces & portals | Sell cloudBuy e-procurement to large organisations | Power hi-profile branded marketplaces and procurement portals |
| On-board suppliers to existing marketplaces, e.g. Care, Further Education, and upsell cloudSell e-commerce capabilities | Sell Spend Insight to large organisations | On-board suppliers to marketplaces and upsell cloudSell e-commerce capabilities |
| Upsell cloudSell to company formation customers |
| Upsell enhanced e-commerce web sites using resellers such as web design agencies |
There is a real appetite for e-business solutions across all of Asia Pacific, ranging from e-commerce for businesses, through to corporate e-procurement and smart government. cloudBuy procurement is still a strategic sale to large corporate and government bodies and takes time. B2B e-commerce for businesses of all sizes has a much faster sales cycle and we are winning e-commerce business in all geographies, apart from Australasia where there remains a pipeline of large procurement opportunities to be closed.
Our experience in company formations in the UK also provides an opportunity for us in regions like the Middle East where smart government initiatives are looking to replace inefficient, paper-based processes with online solutions.
Detailed country strategies are outlined in the Global Operations section of the Operational Report.
To enhance our capability to execute on volume, in 2014 we strengthened our customer support, project management and technical capabilities across all areas, and created a 24/7 operation which can support customers in the major languages that we have encountered. At the same time we have been enhancing our solutions to support these languages and to deal with the complex currency and tax challenges faced in global trade. We have also redesigned the entire system to work intuitively on a range of devices, as the growth in e-business is being driven by the proliferation of smart phones and tablets used by businesses and consumers.
We are increasing our operations in India to include quality testing, website and marketplace standard configuration, local project management and 24/7 technical support. Customer Service is now 24/7 with call centres in the UK, India and Hong Kong. We are scoping requirements for the Middle East and North America.
To support the number of companies that we have to 'touch' we have developed a reseller model which allows us to work with partners such as local design agencies that own the day to day relationship with the customer and manage and deploy our software.
To drive the execution of our globalisation strategy, each of the three Executive Directors has focused their attention on key territories - Lyn Duncan: India; Jonathan Holden: Middle East/Asia; Ronald Duncan: North America. The time needed to exploit the growing opportunities in these regions and to set up local capabilities has highlighted the need to also strengthen the management team based in the UK.
In the second half of 2014 we looked to enhance our sales, customer services and marketing management. After an extensive search we are pleased that the 3 roles have been filled since the year end by Marc Frost, Chief Sales Officer; Lucy Auchincloss, Head of Customer Services; and Peter Robertshaw, Head of Marketing.
After a year of creating strategic and high profile opportunities in each of these areas in 2014 we are in good shape to deliver the business in 2015.
Financial results
In the year ended 31 December 2014, the group's revenue decreased by 29% to £2,124,742 (2013: £3,004,102) and the loss before taxation increased to £4,625,492 (2013: loss of £936,417).
Sales of Web and e-commerce services recorded a decrease of 33% in the year to £1,370,234 (2013: £2,044,458).
Revenue from company formation services decreased by 16% to £649,186 (2013: £773,137) in the year reflecting Companies House's continued increase in market share in electronic formations.
Revenue from coding decreased by 43.5% to £105,322 (2013: £186,507).
Gross margin for the year was 81% (2013: 85%).
Operating expenses before share based payments increased to £5,866,509 (2013: £3,273,579). The increase in large part reflects the strengthening of the team with staff costs (salary/NI/pension) increasing year on year by £1,286,888 to £2,934,651. A total of £490,184 was charged as the "cost" of share options granted to employees and shares issued to them under the Share Incentive Plan (2013: charge £217,790).
The investment in operating expenses resulted in signed contracts by the year end worth USD$25m per year on a low 10% take-up. $75m at 30%, $150m at 60% take-up of a potential $250m per year at 70% margin. These are expected to be implemented shortly and start generating revenues along with the other contracts that have been announced since the year end.
The rapid delivery of these contracts has required some contract resource, and we expect operational costs to reduce as the contracts are implemented.
At 31 December 2014 the Group had cash and cash equivalents of £4,545,717 (31 December 2013: £4,157,347).
Risks and Uncertainties facing the Business
We have been able to manage our growth in the B2B procurement space since sales and lead times are long and there is enough time to resource up. There is a risk with the cloudSell e-commerce sites and "marketplace in a box" style products of a high rate of exponential growth.
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.
The rapid expansion of our company has another set of risks. We have chosen to get the business foundations right prior to expansion. This reduces the financial risk but increases the operational risk. We have mitigated this risk by raising money in advance so that we can resource up as the business expands.
Lyn Duncan
CEO
30 March 2015
Operational Report
Global Operations
Throughout 2014 we focused on our globalisation strategy by investing in our products to support global trade; putting the right people and resellers in place in country; and nurturing our strategic relationship with Visa. 2014 saw some contract wins that will drive further revenue. In 2015 more wins are to be announced and marketplaces delivered, and there is a growing pipeline of opportunities.
Hong Kong & China
We registered cloudBuy Hong Kong in 2014 and recently appointed Emmi Wong as General Manager.
Throughout 2014 we worked closely with Visa AP to win a contract with a regional financial institution. This will result in a new marketplace being launched in H1 2015, powered by the cloudBuy 'marketplace-in-a-box'. The marketplace will be branded by the regional financial institution and cover Hong Kong, Taiwan, China, Singapore, India, Australia and New Zealand. It will migrate an existing trade directory with 8,500 listed businesses, into a transactional B2B marketplace. The marketplace has been built and is in user acceptance testing with the financial institution.
The cloudBuy revenue opportunity is from:
· an initial marketplace set up fee and annual hosting
· cloudSell e-commerce website sales to the 8,500 existing businesses
· the additional organisations attracted by the marketplace launch
Reseller partnerships are being established with local design agencies to target their existing customers for cloudSell e-commerce websites. The design agencies will manage the local relationships and contract with cloudBuy.
We have enhanced our product to include Traditional and Simplified Chinese languages, including mobile apps, to support the marketplace and websites. cloudBuy also includes Cantonese and Mandarin call centre services.
Emmi is now developing pipeline opportunities in Hong Kong and China.
India
Nilesh Gopali was appointed as the new Head of cloudBuy India in May, 2014.
In September Nilesh and Ronald Duncan signed an agreement with Synise to work with them and their 80 large corporate customers to provide cloudBuy purchasing solutions connected to their 18,000 suppliers.
In December Nilesh and Lyn Duncan signed an agreement with The Confederation of India Industry (CII) to provide a B2B marketplace for their 7,000 members, powered by the cloudBuy 'marketplace-in-a-box'. We plan to launch the CII marketplace at their 'Global Exhibition on Services' event in April 2015. This is a high profile event, opened by the Indian Prime Minister.
The cloudBuy revenue opportunity is from:
· cloudSell e-commerce website sales to the 7,000 existing CII member businesses
· a percentage of the sales transactions which go through the marketplace
We will drive this pipeline through our own team in India. We are also engaging local web design agencies as cloudBuy resellers.
Nilesh is working closely with Visa AP and is in discussions with four financial institutions in India.
We are increasing our operations in India to include quality testing, website and marketplace standard configuration, local project management and technical support.
Middle East
The reseller partnership with Dr Usman Zafar & DU Consulting, which was announced in August, has already generated several exciting opportunities in the UAE. We are working closely with Visa MENA and looking forward to developing the pipeline in 2015.
SE Asia & Australasia
Tim Boucaut has been appointed cloudBuy's GM for SE Asia & Australasia. Reseller partnerships are being explored.
At the end of 2014, working closely with Visa AP, we signed an agreement with a Trade Association in Singapore to launch a new marketplace in 2015. The association has 7,000 members.
The cloudBuy revenue opportunity is from:
· cloudSell e-commerce website sales to the 7,000 existing businesses
· a percentage of the sales transactions which go through the marketplace
In 2015, we joined Visa AP at their launch event for strategic partners in Singapore. As a result we are in discussions with several local financial institutions covering SE Asia.
In Australia we are working closely with Visa Australia and in discussions with local financial institutions, primarily focused upon State Government, Health & Education. Our strategy is to win large high profile organisations which will unlock a sector. This is taking more time than initially expected but we have made progress to this end with the win of our first State Government. In 2014 we ran several Spend Insight reports that highlighted the opportunity in the States Health sectors. A pipeline of large corporate purchasing opportunities is developing and there are marketplace opportunities in Education and Care.
UK
The UK is cloudBuy's most mature market and we are actively selling all elements of the cloudBuy solution set.
In the last quarter of 2014, we delivered the @UK Marketplace, a national SME marketplace for business essentials and care marketplaces for Breeze-e and Staffordshire. We attended all three main party political conferences, securing ministerial level discussions at each event for our care marketplace solutions. UniBuy, the purchasing portal for UK higher education, is now under the management of cloudBuy and we are working closely with Universities and their supply chain to drive more business through the portal.
We continue to work closely with Visa Europe and their member banks. cloudBuy is working with several UK banks.
Marc Frost, who joined cloudBuy early in January 2015 as Chief Sales Officer, is now taking primary responsibility for client relationships in the UK. A major focus will be to on-board a proportion of the 146,000 suppliers in the UK care industry to the marketplaces powered by cloudBuy.
North America
Al Powell, cloudBuy's new VP for sales based in San Francisco, has quickly developed a pipeline of new business opportunities.
The main cloudBuy revenue opportunity is for:
· cloudBuy private purchasing portals
· cloudBuy Spend Insight
We have been working with Visa Canada and a North American financial institution for several months and are actively prospecting their large corporate customers across the USA and Canada.
cloudBuy is in discussions with Visa USA and local financial institutions.
Summary
In 2014 cloudBuy put into place more elements of its globalisation strategy, covering product enhancements; local teams and resellers; and the evolution of the relationship with Visa. Our strategy of partnering with strong local brands to launch marketplaces powered by cloudBuy and then following up to on-board suppliers, is proving to be a model with revenue potential in several territories.
Jonathan Holden
COO
30 March 2015
Group Statement of Comprehensive Income
For the year ended 31 December 2014
|
|
| 2014 | 2013 |
|
| Notes | £ | £ |
|
|
|
|
|
| Revenue | 4 | 2,124,742 | 3,004,102 |
| Cost of sales |
| (397,541) | (442,950) |
| Gross profit |
| 1,727,201 | 2,561,152 |
| Administrative expenses |
| (5,866,509) | (3,273,579) |
| Share based payments | 19 | (490,184) | (217,790) |
| Operating loss | 5 | (4,629,492) | (930,217) |
| Finance income - interest received Finance costs |
8 | 4,220 - | - (6,200) |
| Loss on ordinary activities before taxation |
| (4,625,272) | (936,417) |
| Income tax expense | 9 | 59,417 | 60,360 |
| Loss for the year attributable to equity shareholders of the parent |
| (4,565,855) | (876,057) |
| Other comprehensive income - item which will or may be reclassified to profit and loss |
|
|
|
| Exchange gain arising on translation of foreign operations |
| 17,514 | 15,393 |
| Total comprehensive income |
| (4,548,341) | (860,664) |
| Loss per share |
|
|
|
| Basic and diluted | 10 | (4.1)p | (1.0)p |
Revenue and operating loss for the year all derive from continuing operations.
The loss attributable to the owners of the parent company is £3,849,457 (2013 - loss of £852,158). Total comprehensive income attributable to owners of the parent company is £3,849,457 (2013 - (£852,158)).
Statements of Financial Position
As at 31 December 2014
|
|
| Group | Company | ||
|
|
| 2014 | 2013 | 2014 | 2013 |
|
| Notes | £ | £ | £ | £ |
| Assets |
|
|
|
|
|
| Non-current assets |
|
|
|
|
|
| Goodwill | 11 | - | - | - | - |
| Other intangible assets | 12 | 38,411 | 202,649 | 38,411 | 202,649 |
| Property, plant and equipment | 13 | 121,442 | 114,762 | 109,707 | 112,093 |
| Investments | 14 | - | - | 40,000 | 31,377 |
|
|
| 159,853 | 317,411 | 188,118 | 346,119 |
| Current assets |
|
|
|
|
|
| Trade and other receivables | 15 | 1,163,507 | 998,392 | 1,782,917 | 1,066,263 |
| Taxes recoverable |
| 119,455 | 60,660 | 119,455 | 60,360 |
| Cash and cash equivalents | 16 | 4,545,717 | 4,157,347 | 4,517,708 | 4,103,304 |
|
|
| 5,828,679 | 5,216,399 | 6,420,080 | 5,229,927 |
| Total assets |
| 5,988,532 | 5,533,810 | 6,608,198 | 5,576,046 |
|
|
|
|
|
|
|
| Liabilities |
|
|
|
|
|
| Current liabilities |
|
|
|
|
|
| Trade and other payables | 17 | (1,105,654) | (687,548) | (986,545) | (689,902) |
| Current tax liabilities |
| - | - | - | - |
| Financial liabilities - borrowings | 18 | - | - | - | - |
|
|
| (1,105,654) | (687,548) | (986,545) | (689,902) |
| Non-current liabilities |
|
|
|
|
|
| Financial liabilities - borrowings | 18 | - | - | (31,377) | (31,377) |
|
|
| - | - | (31,377) | (31,377) |
| Total liabilities |
| (1,105,654) | (687,548) | (1,017,922) | (721,279) |
| Total net assets |
| 4,882,878 | 4,846,262 | 5,590,276 | 4,854,767 |
|
Shareholders' equity |
|
|
|
|
|
| Called up share capital | 19 | 1,212,140 | 1,089,304 | 1,212,140 | 1,089,304 |
| Share premium account | 19 | 3,971,946 | 16,880,351 | 3,971,946 | 16,880,351 |
| Other reserve |
| 630,030 | 630,030 |
|
|
| Share-based payment reserve |
| 194,510 | (295,674) | 194,510 | (295,674) |
| Currency translation |
| 32,898 | 15,393 |
|
|
| Accumulated (losses)/profit |
| (1,158,646) | (13,473,142) | 211,680 | (12,819,214) |
| Total equity attributable to equity shareholders of the parent |
|
4,882,878 |
4,846,262 |
5,590,276 |
4,854,767 |
Statements of Cash Flows
For the year ended 31 December 2014
|
|
| Group | Company | ||
|
|
| 2014 | 2013 | 2014 | 2013 |
|
| Notes | £ | £ | £ | £ |
| Cash flows from operating activities |
|
|
|
|
|
| Loss before taxation |
| (4,625,272) | (936,417) | (3,909,519) | (912,518) |
| Adjustments for: |
|
|
|
|
|
| Finance income/cost |
| (4,220) | 6,200 | (4,220) | 6,200 |
| Depreciation of property, plant & equipment |
| 81,712 | 58,045 | 77,448 | 57,670 |
| Amortisation of other intangible assets |
| 164,238 | 168,083 | 164,238 | 168,083 |
| Share based payments |
| 490,184 | 217,790 | 490,184 | 217,790 |
| Changes in working capital |
|
|
|
|
|
| Trade and other receivables |
| (165,115) | (345,202) | (716,654) | (426,156) |
| Trade and other payables |
| 419,340 | (24,250) | 297,620 | (7,109) |
| Currency translation |
| 17,514 | 15,393 |
|
|
| Net cash used by operations |
| (3,621,619) | (840,358) | (3,600,903) | (896,040) |
|
Tax (paid)/received |
|
(621) |
50,180 |
- |
50,480 |
| Net cash used in operating activities |
| (3,622,240) | (790,178) | (3,600,903) | (845,560) |
|
Cash flows from investing activities |
|
|
|
|
|
| Interest paid |
| - | (6,200) | - | (6,200) |
| Purchase of Investments |
| -- | - | (8,623) | - |
| Purchase of other intangible assets |
| - | (12,579) | - | (12,579) |
| Purchase of property, plant and equipment |
| (88,392) | (78,033) | (75,072) | (75,612) |
| Net cash used in investing activities |
| (88,392) | (96,812) | (83,695) | (94,391) |
| Cash flows from financing activities |
|
|
|
|
|
| Issue of ordinary shares Interest received Movement in bank overdraft |
| 4,094,782 4,220 - | 5,105,100 - (60,763) | 4,094,782 4,220 -- | 5,105,100 - (61,845) |
| Net cash generated from financing |
| 4,099,002 | 5,044,337 | 4,099,002 | 5,043,255 |
| Net increase/(decrease) in cash and cash equivalents |
| 388,370 | 4,157,347 | 414,404 | 4,103,304 |
|
Cash and cash equivalents at beginning of period |
|
4,157,347 |
- |
4,103,304 |
- |
| Cash and cash equivalents at end of period | 16 | 4,545,717 | 4,157,347 | 4,517,708 | 4,103,304 |
Statements of Changes in Shareholders' Equity
For the year ended 31 December 2014
|
| Share capital | Share premium | Other reserve | Share based payments reserve | Currency translation | Accumul-ated losses | Share-holders' equity |
| Group | £ | £ | £ | £ | £ | £ | £ |
|
|
|
|
|
|
|
|
|
| At 31 December 2012 | 849,030 | 11,508,523 | 630,030 | (267,462) | - | (12,597,085) | 123,036 |
| Shares issued in the year | 240,274 | 5,371,828 | - | (246,002) | - | - | 5,366,100 |
| Share based payments | - | - | - | 217,790 | - | - | 217,790 |
| Exchange in year | - | - | - | - | 15,393 | - | 15,393 |
| Retained loss for the year | - | - | - | - | - | (876,057) | (876,057) |
| At 31 December 2013 | 1,089,304 | 16,880,351 | 630,030 | (295,674) | 15,393 | (13,473,142) | 4,846,262 |
| Share premium cancellation | -
| (16,880,351) |
| - | - | 16,880,351 | - |
| Shares issued in the year | 122,836 | 3,971,946 | - | - | - | - | 4,094,782 |
| Share based payments | - | - | - | 490,184 | - | - | 490,184 |
| Exchange in year | - | - | - | - | 17,505 | - | 17,505 |
| Retained loss for the year | - | - | - | - | - | (4,565,855) | (4,565,855) |
| At 31 December 2014 | 1,212,140 | 3,971,946 | 630,030 | 194,510 | 32,898 | (1,158,646) | 4,882,878 |
|
|
|
|
|
|
|
|
|
| Company |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| At 31 December 2012 | 849,030 | 11,508,523 |
| (267,462) |
| (11,967,056) | 123,035 |
| Shares issued in the year | 240,274 | 5,371,828 |
| (246,002) |
| - | 5,366,100 |
| Share based payments | - | - |
| 217,790 |
| - | 217,790 |
| Retained loss for the year | - | - |
| - |
| (852,158) | (852,158) |
| At 31 December 2013 | 1,089,304 | 16,880,351 |
| (295,674) |
| (12,819,214) | 4,854,767 |
| Share premium cancellation | -
| (16,880,351) |
| - |
| 16,880,351 | - |
| Shares issued in the year | 122,836 | 3,971,946 |
| - |
| - | 4,094,782 |
| Share based payments | - | - |
| 490,184 |
| - | 490,184 |
| Retained loss for the year | - | - |
| - |
| (3,849,457) | (3,849,457) |
| At 31 December 2014 | 1,212,140 | 3,971,946 |
| 194,510 |
| 211,680 | 5,590,276 |
The other reserve arises because shares issued on the acquisition of subsidiaries have been recorded at par value and no share premium recognised.
Notes to the Financial Statements
For the year ended 31 December 2014
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 £4,625,272 and at the year-end had cash balances of £4,545,717. The directors of the Group have prepared detailed projections and cash flow forecasts through to 31 December 2014. 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 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 2014.
IFRS 7 Financial Instruments: Disclosures (Amendment)
(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 2 | Share-based Payment (Amendment) | (effective 1 July 2014) |
| IFRS 7 | Financial Instruments: Disclosures (Amendment) | (effective 1 January 2016) |
| IFRS 8 | Operating Segments (Amendment) | (effective 1 July 2014) |
| IFRS 9 | Financial Instruments (Amendment) | (effective 1 January 2015) |
| IFRS 12 | Disclosure of Interests in Other Entities (Amendment) | (effective 1 January 2016) |
| IAS 1 | Presentation of Financial statements (Amendment) | (effective 1 January 2016) |
| IAS 19 | Employee Benefits (Amendment) | (effective 1 January 2016) |
| IAS 28 | Investments in Associates and Joint Ventures (Amendment) | (effective 1 January 2016) |
| IAS 38 | Intangible Assets (Amendment) | (effective 1 January 2016) |
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.
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:
| 2013 |
|
|
|
|
|
| Company Formation Services | Web and eCommerce services | Coding International Limited | Total |
|
| £ | £ | £ | £ |
| Revenue | 773,137 | 2,044,458 | 186,507 | 3,004,102 |
| Cost of Sales | (345,723) | (97,227) | - | (442,950) |
| Gross profit | 427,414 | 1,947,231 | 186,507 | 2,561,152 |
| 2014 |
|
|
|
|
|
| Company Formation Services | Web and e-Commerce services | Coding International Limited | Total |
|
| £ | £ | £ | £ |
| Revenue | 649,186 | 1,370,234 | 105,322 | 2,124,742 |
| Cost of Sales | (308,800) | (88,741) | - | (397,541) |
| Gross profit | 340,386 | 1,281,493 | 105,322 | 1,727,201 |
All of the revenue derives from services provided in the United Kingdom. During 2014 one customer for web and eCommerce services was responsible for revenue of £383,200 (2013: one customer, £450,000) otherwise no single customer was responsible for greater than 10% of the Group's revenues.
5. Operating loss
|
| 2014 | 2013 |
|
| £ | £ |
| This is stated after the following: |
|
|
| Staff costs (see note 7) | 3,424,835 | 1,865,553 |
| Depreciation of property, plant and equipment (see note 13) | 81,712 | 58,045 |
| Amortisation of other intangible assets (see note 12) | 164,238 | 168,083 |
| Research and development costs recognised as an expense | 475,385 | 324,685 |
|
|
|
|
6. Auditors remuneration
Amounts payable to James Cowper LLP in respect of audit and non-audit services
|
| 2014 | 2013 |
|
| £ | £ |
| Audit of Company and consolidated accounts | 12,650 | 16,500 |
| Audit of subsidiaries | 1,000 | 1,000 |
| Other services relating to: |
|
|
| Taxation | 8,475 | 3,300 |
7. Employees
|
| 2014 | 2013 |
|
| £ | £ |
| Staff costs including directors comprised: |
|
|
| Wages and salaries | 2,431,735 | 1,504,292 |
| Pension | 243,827 | - |
| Social security costs | 259,089 | 143,471 |
| Share based payments | 490,184 | 217,790 |
|
| 3,424,835 | 1,865,553 |
|
| No. | No. |
| The average monthly number of persons (including Directors) employed by the Group during the year was: |
|
|
|
|
|
|
| Management and administration | 13 | 8 |
| Technical and delivery | 49 | 31 |
| Sales and marketing | 9 | 7 |
|
| 71 | 46 |
Directors remuneration
|
| 2014 | 2014 | 2014 | 2013 |
| Emoluments for qualifying services: | Salary/Fees | Pension | Total | Total |
|
| £ | £ | £ | £ |
| PH Broughton (appointed 17 October 2013) | 10,000 | - | 10,000 | 1,667 |
| D Chellingsworth (appointed 17 October 2013) | 25,000 | - | 25,000 | 5,224 |
| RJ Duncan | 49,500 | 146,400 | 195,900 | 78,000 |
| HL Duncan | 53,100 | 75,000 | 128,100 | 78,000 |
| JR Holden (appointed 4 September 2014) | 50,000 | - | 50,000 | - |
| DJ Holloway | - | - | - | - |
| 31 December 2014 | 187,600 | 221,400 | 409,000 | 162,891 |
In 2013 all of the payments above relate to salary or fees. During the year RJ Duncan and HL Duncan received lump sum contributions into their SIP pension schemes of £195,200 and £100,000 respectively. R J Duncan's payment was a one off contribution and his scheme is no longer accepting contributions. These payments were in lieu of part salary for the year to 31 March 2015. The amounts are being charged to the profit and loss over that period. 90,909 shares were issued to PH Broughton in lieu of remuneration and calculated at 33p per share and are released to him in equal quarterly portions over 3 years and are shown in the emoluments above. None of the Directors exercised share options in the year.
8. Finance costs
|
| 2014 | 2013 |
|
| £ | £ |
| Interest on borrowings | - | 6,200 |
9. Taxation
|
| 2014 | 2013 |
|
| £ | £ |
| R&D tax credit | 59,962 | 60,360 |
| Adjustment in respect of prior years | (545) | - |
| Tax credit for the year | 59,417 | 60,360 |
|
Factors affecting tax charge for the year
|
|
|
| Loss on ordinary activities before taxation | (4,625,272) | (936,417) |
| Loss on ordinary activities before taxation multiplied by |
|
|
| Standard rate of UK corporation tax of 21.5% (2013: 23.5%) | (994,433) | (220,058) |
| Effects of: |
|
|
| Expenses not deductible for tax purposes | 2,149 | 470 |
| Share based payments | 105,390 | (6,630) |
| Capital allowances less in excess of depreciation and amortisation | (1,675) | (8,075) |
| R&D tax credit claim in respect of current year | (7,879) | (3,048) |
| Prior year | 583 | - |
| Carry forward of tax losses | 836,448 | 176,981 |
|
| 935,016 | 159,698 |
| Total tax credit | (59,417) | (60,360) |
The Group has estimated tax losses of £17,125,000 (2013: £12,692,000) 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.
10. Loss per share
The calculations for loss per share are based on the weighted average number of shares in issue during the year 112,126,850 (2013: 90,201,736) and the following losses:
|
| 2014 | 2013 |
|
| £ | £ |
| Unadjusted earnings: |
|
|
| Loss for the year attributable to equity shareholders of the parent | (4,565,855) | (876,057) |
| Add back: Share-based payments |
490,184 |
217,790 |
| Adjusted earnings | (4,075,671) | (658,267) |
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 one category of dilutive potential ordinary shares: share options. The company has made a loss and the potential share options are therefore anti-dilutive.
The basic and diluted loss per share calculated on the adjusted earnings is 3.6p (2013: 0.7p).
11. Goodwill
|
|
Cost | Provision for impairment |
Carrying value |
| Carrying Value Group | £ | £ | £ |
| 1 January 2013, 31 December 2013 and 2014 | 96,274 | (96,274) | - |
12. Other intangible assets
|
| Computer software | Development Expenditure | Total |
| Group and Company | £ | £ | £ |
| Cost: |
|
|
|
| 1 January 2013 | 124,293 | 446,094 | 570,387 |
| Additions | 2,679 | 9,900 | 12,579 |
| 1 January 2014 | 126,972 | 455,994 | 582,966 |
| Additions | - | - | - |
| 31 December 2014 | 126,972 | 455,994 | 582,966 |
| Amortisation: |
|
|
|
| 1 January 2013 | 96,679 | 115,555 | 212,234 |
| Charge for the year | 11,566 | 156,517 | 168,083 |
| 1 January 2014 | 108,245 | 272,072 | 380,317 |
| Charge for the year | 12,247 | 151,991 | 164,238 |
| 31 December 2014 | 120,492 | 424,063 | 544,555 |
|
|
|
|
|
| Carrying value at 1 January 2013 | 27,614 | 330,539 | 358,153 |
| Carrying value at 1 January 2014 | 18,727 | 183,922 | 202,649 |
| Carrying value at 31 December 2014 | 6,480 | 31,931 | 38,411 |
The remaining amortisation period for development expenditure is up to 2 years.
13. Property, plant and equipment
|
| Fixtures, fittings and equipment | Computer equipment | Total |
| Group | £ | £ | £ |
| Cost: |
|
|
|
| 1 January 2013 | 256,440 | 833,111 | 1,089,551 |
| Additions | -- | 78,033 | 78,033 |
| 1 January 2014 | 256,440 | 911,144 | 1,167,584 |
| Additions | 8,670 | 79,722 | 88,392 |
| 31 December 2014 | 265,110 | 990,866 | 1,255,976 |
| Depreciation: |
|
|
|
| 1 January 2013 | 255,796 | 738,981 | 994,777 |
| Charge for the year | 297 | 57,748 | 58,045 |
| 1 January 2014 | 256,093 | 796,729 | 1,052,822 |
| Charge for the year | 486 | 81,226 | 81,712 |
| 31 December 2014 | 256,579 | 877,955 | 1,134,534 |
|
|
|
|
|
| Carrying value at 1 January 2013 | 644 | 94,130 | 94,774 |
| Carrying value at 1 January 2014 | 347 | 114,415 | 114,762 |
| Carrying value at 31 December 2014 | 8,531 | 112,911 | 121,442 |
| Company | £ | £ | £ |
| Cost: |
|
|
|
| 1 January 2013 | 255,582 | 828,692 | 1,084,274 |
| Additions | -- | 75,612 | 75,612 |
| 1 January 2014 | 255,582 | 904,304 | 1,159,886 |
| Additions | 673 | 74,389 | 75,062 |
| 31 December 2014 | 256,255 | 978,693 | 1,234,948 |
| Depreciation: |
|
|
|
| 1 January 2013 | 254,938 | 735,185 | 990,123 |
| Charge for the year | 297 | 57,373 | 57,670 |
| 1 January 2014 | 255,235 | 792,558 | 1,047,793 |
| Charge for the year | 487 | 76,961 | 77,448 |
| 31 December 2014 | 255,722 | 869,519 | 1,125,241 |
|
|
|
|
|
| Carrying value at 1 January 2013 | 644 | 93,507 | 94,151 |
| Carrying value at 1 January 2014 | 347 | 111,746 | 112,093 |
| Carrying value at 31 December 2014 | 533 | 109,174 | 109,707 |
14. Investments
| Company |
|
| £ |
| Subsidiary undertakings (at cost): |
|
|
|
| 1 January 2013 and 2014 |
|
| 61,771 |
| Additions |
|
| 8,623 |
| 31 December 2014 |
|
| 70,394 |
| Provision for impairment: |
|
|
|
| 1 January 2013 and 2014 and 31 December 2014 |
|
| 30,394 |
|
|
|
|
|
| Carrying value at 1 January 2013 and 2014 |
|
| 31,377 |
| Carrying value at 31 December 2014 |
|
| 40,000 |
The investments shown above represents the Company's 100% holding in the ordinary shares of @Software PLC and its wholly owned subsidiary Software Limited (incorporated in the United Kingdom; non-trading) and Coding International Limited (incorporated in the United Kingdom; provides coding services for use in procurement). As Coding International Limited's balance sheet showed net liabilities full provision was made for impairment in the value of the investment in 2008.
The Company also has 100% investments in cloudbuy India Private Limited, incorporated in India, which provides ecommerce solutions to Indian companies and cloudbuy Pty Limited, incorporated in Australia, which provides ecommerce solutions in the Asia Pacific region. The addition in the year was additional investment in cloudbuy India Private Limited
15. Trade and other receivables
|
| Group | Company | ||
|
| 2014 | 2013 | 2014 | 2013 |
|
| £ | £ | £ | £ |
| Prepayments and accrued income | 236,177 | 484,777 | 216,169 | 479,229 |
| Amounts owed by related undertakings | - | - | 702,535 | 129,119 |
| Other receivables | 291,636 | 278,364 | 278,387 | 262,849 |
| Trade receivables | 635,694 | 235,251 | 585,826 | 195,066 |
|
| 1,163,507 | 998,392 | 1,782,917 | 1,066,263 |
The Group's financial assets are fairly short term in nature. The directors consider that the carrying value of trade and other receivables approximates to the fair value.
A provision of £480,992 (2013:£ 466,804) is included within amounts owed by related undertakings above.
Included in the Group's trade and other receivables balances are debtors with a carrying value of £223,373 which have been due for a period greater than three months against which a provision of £178,268 has been made.
The balance and all other balances have been due for less than three months and are considered to be recoverable.
16. Cash and cash equivalents
|
| Group | Company | ||
|
| 31 December | 1 January | 31 December | 1 January |
|
| 2014 | 2013 | 2014 | 2013 |
| Cash at bank and in hand | 4,545,717 | 4,157,347 | 4,517,708 | 4,103,304 |
|
| 4,545,717 | 4,157,347 | 4,517,708 | 4,103,304 |
Cash and cash equivalents (which are presented as a single class of asset on the face of the statement of financial position) comprise cash at bank and other short term highly liquid investments with a maturity of three months or less.
17. Trade and other payables
|
| Group | Company | ||
|
| 2014 | 2013 | 2014 | 2013 |
|
| £ | £ | £ | £ |
| Trade creditors | 307,213 | 270,073 | 297,785 | 263,274 |
| Other taxation and social security | 125,606 | 74,055 | 92,352 | 46,920 |
| Other creditors | 90,478 | 7,103 | 20,900 | - |
| Accruals and deferred income | 582,357 | 336,317 | 575,508 | 379,708 |
|
| 1,105,654 | 687,548 | 986,545 | 689,902 |
The Group's financial liabilities are fairly short term in nature and due for payment in a period of less than 6 months. In the opinion of the directors the book values equate to their fair value.
18. Borrowings
|
| Group | Company | ||
|
| 2014 | 2013 | 2014 | 2013 |
|
| £ | £ | £ | £ |
| Non current: |
|
|
|
|
| Bank loan | - | - | - | - |
| Amounts owed to Group undertakings | - | - | 31,377 | 31,377 |
|
| - | - | 31,377 | 31,377 |
The amount owed to Group undertakings has no fixed repayment schedule.
19. Share capital and share premium
|
| Number of shares | Ordinary shares | Share premium |
|
|
| £ | £ |
| At 1 January 2013 | 84,903,011 | 849,030 | 11,508,523 |
| Shares issued in connection with fund-raising | 16,064,500 | 160,645 | 5,140,640 |
| Shares issued on exercise of warrants | 2,000,000 | 20,000 | 20,000 |
| Shares issued in connection with exercise of options | 4,242,832 | 42,428 | 75,571 |
| Shares issued in connection with Share Incentive Plan | 745,462 | 7,455 | 238,548 |
| Shares issued for performance of services | 790,909 | 7,909 | 253,091 |
| Shares issued - other | 183,636 | 1,837 | 58,764 |
| Costs of share issues | - | -- | (414,786) |
| At 31 December 2013 | 108,930,350 | 1,089,304 | 16,880,351 |
| Share Premium cancellation Shares issued in connection with fund-raising |
10,000,000 |
100,000 | (16,880,351) 4,200,000 |
| Shares issued on exercise of warrants | 2,233,640 | 22,336 | 22,336 |
| Shares issued in connection with exercise of options | 50,000 | 500 | 1,250 |
| Costs of share issues | - | -- | (251,640) |
| At 31 December 2014 | 121,213,990 | 1,212,140 | 3,971,946 |
The total authorised number of ordinary shares is 250 million (2013: 250 million) with a par value of 1p each.
At the AGM held on 22 April 2014 a resolution for the cancellation of the balance then standing on the Company's Share Premium Account was passed. This cancellation was subject to confirmation by the High Court of Justice ("the Court"). The order of the Court was received on 18 June 2014 and £16,880,351 was transferred from the Share Premium Account to distributable reserves.
On 2 October 2014 10,000,000 ordinary shares were issued at 43p under a placing of shares.
Subscribers to the share issues in August 2009 were granted warrants to subscribe for a total of 10 million new ordinary shares at 2p per share. The warrants were exercisable up to five years after issue. At the AGM in 2014 the extension of the exercise period by another five years was approved. On 3 April 2014 500,000, on 11 April 2014 428,448 and on 29 December 1,250,000 ordinary shares were issued at 2p following the exercise of warrants, leaving warrants to subscribe for 2,053,836 shares outstanding.
During 2014 50,000 ordinary shares were issued at 3.5p following the exercise of share options.
During 2014 the number of options granted under the cloudBuy plc Share Option Scheme to subscribe for ordinary shares in the Company changed as follows:
|
| 2014 | 2013 | ||
|
| Number | Weighted average exercise price | Number | Weighted average exercise price |
|
|
|
|
|
|
| At 1 January | 7,279,541 | 26.0p | 8,405,144 | 9.2p |
| Options granted during the year | 1,050,000 | 38.8p | 3,230,000 | 38.9p |
| Options lapsed during the year | -- | - | (112,771) | 16.7p |
| Exercised in the year | (50,000) | 3.5p | (4,242,832) | 2.8p |
| At 31 December | 8,279,541 | 27.7p | 7,279,541 | 26.0p |
| Exercisable at the year end | 1,866,210 | 20.5p | 1,916,210 | 20.1p |
The options at 31 December 2014 are as follows:
Number of options under grant Subscription price per share Exercise period
500,000 45p December 2008 to December 2015
202,460 63p January 2009 to January 2016
613,750 1.75p August 2012 to August 2019
550,000 3.5p October 2013 to October 2020
2,133,331 11.625p December 2015 to December 2022
600,000 65p October 2015 to October 2017
2,630,000 33p October 2016 to October 2023
1,050,000 38.75p April 2017 to April 2024
Share based payments
The Group has a share option scheme under which the Remuneration Committee can grant options over shares in the Company to employees of the Group. Options are granted with a fixed option price equal, normally, to the market price of the shares under option at the date of grant. The contractual life of an option is normally 10 years. The scheme allows for performance criteria or market conditions to be attached to the options, but this has not generally been done. Options are valued using the Black Scholes option pricing model. The fair value of options granted and the assumptions used in the calculations are as follows:
| Grant Date | 31 Jan 06 | 28 Aug 09 | 24 Oct 10 | 24 Dec 12 | 14 Oct 13 | 14 Oct 13 | 2 Apr 14 |
|
| Share price at grant date | 63p | 1.6p | 3.5p | 11.625p | 43.5p | 43.5p | 38.75p |
|
| Exercise price | 63p | 1.75p | 3.5p | 11.625p | 65p | 33p | 38.75p |
|
| Number of employees | 31 | 37 | 31 | 9 | 3 | 21 | 9 |
|
| Shares originally under option
| 644,121 | 2,930,795 | 3,150,000 | 2,303,604 | 600,000 | 2,630,000 | 1,050,000 |
|
| Vesting period (years) | 3 | 3 | 3 | 3 | 2 to 3† | 3 to 5†† | 3 to 5†† |
|
| Expected volatility | 31% | 90% | 90% | 65% | 105% | 105% | 105% |
|
| Expected life (years) | 4 | 4 | 4 | 4 | 2.5 to 3.5 | 4 to 6 | 4 to 6 |
|
| Risk free rate | 4.30% | 2.45% | 1.75% | 0.9% % | 1.6% % | 1.6% % | 1.6% % |
|
| Rate ceasing employment before vesting (total) | 57% | 25% | 25% | 25% | 25% | 25% | 0% |
|
| Fair value per option | £0.15 | £0.003 | £0.015 | £0.04 | Average £0.19 | Average £0.27 | Average £0.23 |
|
† Vest in equal parts between 2nd and 3rd anniversary
†† Vest in equal parts between 3rd and 5th anniversary
No dividends were assumed. The expected volatility is based on the historical volatility of the Company's shares to the extent information was available and of the shares of similar entities. In addition to the grant above on 8 December 2005, options over 500,000 shares were also granted to former directors of the Company at an exercise price of 45p per share. As part of the terms of their compensation for loss of office in 2006 they were allowed to retain those options. These were valued at the date on which the directors ceased to be employees and the value written off as it was in respect of past services.
Share incentive plan
The Group has a share incentive plan under which shares can be awarded to all employees. The shares are held separately by the plan's Trustees. To date there have been three issues:
· On 5 April 2012 1,878,288 ordinary shares were issued at 11.5p per share;
· On 24 December 2012 1,703,229 ordinary shares were issued at 11.65p per share, and
· On 15 October 2013 745,462 ordinary shares were issued at 33p per share.
Cost of the shares issued is charged to the profit and loss account over three years, the period for which the shares must be held by the trustees before becoming available to the relevant employee
20. Financial instruments
|
| 2014 | 2013 |
|
| £ | £ |
| Financial assets |
|
|
| Floating rate interest bearing - cash | 4,545,717 | 4,157,347 |
Cash is held in current or short term deposit account.
All other finance assets are non-interest bearing.
There is no material difference between the book value of financial assets and liabilities noted above, and the fair value.
The main objective of the Groups treasury policy is to protect post-tax cash flows of the business from the adverse effects of financial risks.
The Groups financial assets and liabilities comprise cash and liquid resources, and various items, such as trade receivables and trade payables that arise directly from its operations. The Group has no undrawn borrowing facilities. The Group is not exposed to significant foreign exchange risk.
The Group does not enter into instruments for speculative purposes. The Group is exposed to credit risk predominantly from trade receivables and cash and cash equivalents held with banks. The group's exposure to bad debts is reduced as its major customers tend to be public sector bodies.
The Group finances its operations through funds raised from share issues.
Sensitivity analysis has not been performed as any impact is considered immaterial.
21. Financial commitments
|
| 2014 | 2013 |
| Present value of future commitments under non-cancellable operating leases: | £ | £ |
| Group |
|
|
| Land and buildings, falling due |
|
|
| - within 1 year | 65,955 | 35,648 |
| - within 2 to 5 years | 106,788 | 55,099 |
| - over 5 years | 34,938 | 38,846 |
|
| 207,681 | 129,593 |
| Company |
|
|
| Land and buildings, falling due |
|
|
| - within 1 year | 54,545 | 24,239 |
| - within 2 to 5 years | 70,624 | 18,933 |
|
| 125,169 | 43,172 |
22. Related party transactions
Mr RJ Duncan and Mrs HL Duncan are the landlords of a property which is occupied by the Group. The annual rent is currently £24,000 (2013: £24,000). Isabella M Deas Limited, a company owned by Mr Duncan's parents and in which he has a minority interest, is the landlord of a second property which is occupied by the Group. The annual rent is currently £24,000 (2013: £24,000). The leases on both properties are due for renewal in August 2017.
During the year an advance was made to each of Mr RJ Duncan and Mrs HL Duncan to cover expenditure incurred on behalf of the Company. The balance outstanding on each advance at the year-end was £20,000 and the maximum outstanding during the year on each was £45,000.
The Company acts as guarantor under the lease for the property occupied by its subsidiary Coding International Limited. The annual rent under the lease which runs for 15 years from March 2011 is £12,550.
There is no party which has Ultimate control of the Group.
Key management compensation
|
|
| 2014 | 2013 |
|
|
| £ | £ |
| Short term employee benefits |
| 888,877 | 336,197 |
| Share based payment remuneration |
| 128,760 | 18,846 |
|
|
| 1,017,637 | 355,043 |
Share based payment remuneration represents the value of options granted to key management valued as described in note 19 above.
The preliminary results do not constitute statutory financial statements within the meaning of section 434 of the Companies Act 2006 and have not been audited. Comparative figures in the preliminary results for the year ended 31 December 2013 have been taken from the Group's audited statutory financial statements on which the Group's auditors, James Cowper LLP, expressed an unqualified opinion.
The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 December 2013, as described in those financial statements.
Further copies of these results, and the full financial statements when published, will be available at the Company's registered office: cloudBuy plc, 5 Jupiter House, Calleva Park, Aldermaston, Berkshire RG7 8NN or on the Company's website at www.cloudbuy.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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