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blur (Group) plc (BLUR)

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Tuesday 09 April, 2013

blur (Group) plc

Final Results

RNS Number : 8625B
blur (Group) plc
09 April 2013
 

 

Embargoed for release at 7am

London, April 9th, 2013

 

blur (Group) plc

("blur Group", the "Group" or the "Company")

Final Results

 

blur (Group) Plc (BLUR), the technology company that is seeking to fundamentally reinvent commerce, is pleased to announce audited final results for the year ended 31 December 2012.

 

Financial Highlights   

 


FY 2012

FY 2011

Yr on Yr

Revenue

$2.81m

$0.89m

216%

Gross profit

$0.73m

$0.44m

66%

LBITDA

($1.81m)

($0.60m)

202%

Cash balance

$4.45m1

$0.15m

2867%

 

1 This follows the Placing at the time of the IPO in October 2012, raising $6.11 million before expenses

 

Operational Highlights

 

●    Three new Exchanges launched in the year, Technology, Legal and Accounting, bringing the total number of Exchanges to eight

●    Multiple enhancements made to blur Trading platform including the re-architecture of the platform to support high volumes of briefs, customers, partners and experts

●    Corporate sales team established, formal outbound digital marketing programs introduced and in May 2012, a US sales operation was commenced in Dallas

●    Successful IPO in October 2012, raising $6.11 million before expenses

●    Two new senior management team appointments in January 2013, Belinda Wrigley as Group Finance Director and Mitch Faigen as Global Head of Exchange Development

 

Current Trading and Q1 2013 Metrics

 

●    Metrics demonstrate continued strong growth of the Exchange

●    Briefs submitted totaled 359 for the quarter, an increase of 178% and expert numbers passed 25,000

 

Philip Letts, blur (Group) Plc CEO, commented: "As Amazon and eBay have fundamentally changed the way in which consumers buy day-to-day products, blur Group is seeking to fundamentally alter the way businesses buy core services. blur Group is the first to market with a comprehensive, cloud-based, efficient and open platform that uses the power of internet software and digital communications to challenge the 'old economy'.

 

"The focus in the year ahead will be on continuing to grow the community of high quality expert service providers on the Exchange, further enhance the power of blur Trading to provide an even more efficient, scalable and flexible project delivery platform, increase our number of partners to provide greater depth to our eco-system and through all these activities grow the number of customers using the Exchange.

 

"Q1 2013 metrics announced this morning show a continued acceleration in our growth and we are confident in achieving another strong year in 2013."

 

For further information, please contact:

 

blur (Group) plc

investors.blurgroup.com

Philip Letts, CEO/ Belinda Wrigley, Group FD

Tel:  +44 20 3176 0548



N+1 Singer


Shaun Dobson / Matt Thomas

Tel:  +44 20 7496 3000



Newgate Threadneedle


Caroline Evans-Jones/ Josh Royston/ Hilary Millar

Tel:  +44 20 7653 9850

 

About blur (Group) plc

blur Group is a technology company reinventing how businesses do commerce at blurgroup.com. Its Global Services Exchange delivers services differently: a new way to buy, manage and pay for core services. Over 25,000 businesses in 141 countries have adopted this s-commerce platform and changed the way they work.

 

blur Group (BLUR) is a public company headquartered in the UK with offices in the US and Europe. It is listed on the London Stock Exchange's AIM market. blur was founded in January 2006 and launched in alpha in 2007 with the full, formal launch of the Global Services Exchange ("the Exchange") in January 2010.

 

At that time, just over three briefs per month were submitted. Now 100 briefs per month from companies like Broadridge, Coral, ebay, Exceed, HCA, Momentive, Red Commerce, the Financial Times, Berlitz, Butlins, GE Healthcare and Tyco are received. Over the same time, average brief value has grown from approximately $1,500 in 2010 to $10,800 in Q1 2013. Today, more than 1,800 briefs have been submitted with a combined submitted brief value of over $24 million. These briefs have come from the US, UK, Europe, Africa and Asia with the potential for over 25,000 expert service providers on eight exchanges available to respond to them, as at the end of Q1.

 

 

 

Chairman's Statement

Overview

 

blur Group is different. From the very nature of our business model, designed to upset an established procurement model that has fed a multi-trillion dollar industry, through the cloud technology platform that delivers our customers' and experts' needs, to the belief and commitment of each and every one of our employees, blur Group is different. 2012 marks a significant step in the evolution of a vision that began in 2007 when we started to build an online community and market place where our expert service providers could showcase their talents and pitch for business based solely on their expertise, rather than the costly, ancillary trappings that have become the staple of the big agency or service provider world.

 

Our metrics and performance to date prove that the corporate world is waking up to the myriad benefits of the Exchange. In early 2010, when the Exchange formally launched, just over three briefs per month were submitted. In Q4 2012 this had risen to around 80 per month from companies like Broadridge, Coral, Exceed, Fantasy World, Red Commerce, the Financial Times, Berlitz, Butlins, GE Healthcare and Tyco. Over the same time, average brief value has grown from approximately $1,500 in 2010 to an average of $16,050 in Q4 2012. By the end of the first quarter 2013, the cumulative total of briefs submitted reached 1770 with a combined brief value of over $24 million. These briefs are available to our expert community to pitch for, and in the event that they lead to successful projects, then they become revenue generating for the Group.

 

This is particularly encouraging as the earliest adopters of a new way of working will always be the hardest to entice as there is a sense of the unknown and an inherent level of risk in turning away from the status quo. The increasing number of repeat customers to our platform is evidence of the rewards that these pioneers have experienced. It is hard to believe now that the architects of e-commerce, such as Amazon and eBay, ever faced questions about the validity of their offering. In less than twenty years they have changed the very nature of consumer spending and continue to go from strength to strength.

 

At blur Group, we believe we have the opportunity to effect the same paradigm shift in the way that businesses procure services, by championing services commerce: 's-commerce'. Furthermore, we believe that our progress to date shows that we are well on the way to achieving this.

 

IPO

 

The Company's listing on London's Alternative Investment Market in October 2012 was undoubtedly blur Group's focal point of the year. Having been in the tech space from the start of the commercial internet, through the dotcom boom and now into the open world of web 2.0, I'm all too aware that a lead in a new and exciting tech space can be fleeting. So the IPO was to show that lead to the world, and provide the tools to hold on to it and scale effectively and internationally in order to stay in front.

 

Having completed one of the UK's largest angel funding rounds in 2011 we were pleased and encouraged to see a similar enthusiasm from institutional investors and delighted to welcome several of them as shareholders.

 

The funds generated through the IPO have enabled us to accelerate our investment in technology and people, whilst the increased profile helps us educate the business world to the opportunity before it.

 

Future

 

Technology remains at the forefront of our very proposition. We continue to invest in the platform and improve the procurement process for both experts and corporates alike. 2013 will see the launch of blur trading 3.0 which adds a simple, consumer style experience and readies us to scale to tens of thousands of businesses, in over 150 countries, buying services projects - quickly, easily and cost effectively. We have a strong pipeline of innovative new tools which will further enhance the experience and embed us deeper in our ecosystems' operations.

 

Just as the very idea that consumers would ever buy books and other goods without seeing and touching them first proved visionary, we believe that s-commerce can really change the way in which businesses both procure services and get them delivered.

 

We have a fantastic team in place, whose talent and commitment are the heart of blur Group. With their continued efforts and a growing global community of expert service providers and customers, I am confident that s-commerce's step into the mainstream is just around the corner.

 

 

Philip Letts

Chairman & CEO

 

 

Operational Review

 

Introduction

 

In its first year as a public company, blur Group enjoyed another year of strong execution and growth. Significant enhancements were completed to the Group's proprietary cloud based trading platform, key investments were made in people and three new Exchanges were launched.

 

The Group saw continued growth in all of its key indicators for experts, briefs and brief values and the performance in the year is further proof of our incredible journey to date. The brief count more than doubled and total value of briefs submitted in 2012 increased by 330% compared to the prior year.

 

Our ambition has always been to build a UK-based global technology success story and the Group's IPO in October 2012 was a key part in helping us to achieve that goal. We believe the scalability of the blur Group model, in terms of volume, size and value of projects as well as buyer and seller profiles, creates a unique reach and proposition for creative and business services. Our successes in 2012 are only the first step as a public company.

 

Growth of the Global Services Exchange

 

The Exchange is enabled by a scalable, cloud-based s-commerce platform known as blur Trading. From the inception of blur Group, the intention was to develop a platform architecture that would support the goal of the Exchange to change the way that businesses buy services and, as a result, be streamlined and more cost-efficient. The initial systems were developed as part of the research and development phase - starting with the crowd platforms and then, in turn, the brief and pitch apps.

 

The emergence of cloud technologies has supported this solution and these technologies now underpin the Exchange technology platform, enabling anyone to brief from anywhere and service providers to pitch from anywhere.

 

blur Group is committed to the ongoing improvement and continued evolution of the Exchange and a number of significant enhancements were completed during the year in line with this development programme. 2012 saw the launch of the second generation of the platform, blur Trading 2.0, which was re-architected to support high volumes of briefs, customers, partners and experts in a cost-effective, profitable fashion, ensuring the scalability of the platform.

 

A major new feature to enhance the customer experience was launched in the year, the project space including an innovative project timeline. This provides project management and scheduling tools and a collaboration space provided to all Exchange users. This further streamlines the Exchange process, brings benefits to both service provider and buyer, and reduces the time to run a project from brief through to completion.

 

The final quarter saw further platform developments to improve the overall experience for experts with an increased focus on facilitating the pitch process by providing a direct brief visibility as well as continuing the networking aspects of the expert communities. In addition, we revamped our Exchange sites to increase the transactional nature of the sites as part of our s-commerce positioning.

 

Development has continued in 2013, with the launch of Premium Account, a new function that allows our customers to handle multiple briefs and users from one dashboard.  The service aims to make the whole delivery process faster regardless of location, price, service type and industry across businesses of all sizes.

 

International expansion

 

blur Group now has customers and expert service providers from over 140 countries. As an example, the 1,200th brief was for a marketing campaign for a Portuguese incubator, the 1,300th brief was from eBay in the US which was delivered by experts in the UK, with these examples showing the global reach of the Exchange and its ability to service all types of business, anywhere, through its cloud-based trading platform. This year also saw the 1,000th brief milestone passed - a brief from Coral, one of the repeat customers on the Exchange.

 

In 2012, a total of 91% (2011: 97%) of revenue came from the US and the UK, with the remaining briefs coming from 26 other countries, including South Africa, Singapore, Croatia, Afghanistan and Saudi Arabia.

 

Increasing number of Exchanges

 

The Global Services Exchange provides a platform for the procurement and delivery of the full spectrum of business services. 2012 saw the go live of three new Exchanges on the Global Services Exchange; IT in August, Legal and Accounting in December, bringing the total number to eight. Our growing customer base around the world can buy most of their core services requirements from one online s-commerce platform.

 

Partner and Affiliate programme

 

The final quarter of the year also saw the launch of blur Group's new partner program at partners.blurgroup.com, providing additional value and access to services for both its expert service providers and customers. It launched its affiliate program ataffiliates.blurgroup.comenabling any business around the world to carry blur Group's unique brief app, earning money for briefs that are listed on the Exchange submitted through their own site. An example of partner signed during the year was XTM International, a translation technology business.  Our partners and affiliates not only provide for additional revenue streams for the Group, but also extend the eco-system of the Exchange, enhancing the power and capabilities of the platform, strengthening its position at the centre of s-commerce.

 

Exchange users

 

Since formally launching the Global Services Exchange in early 2010, blur Group has seen an evolution in Exchange usage. Early adopters were typically smaller businesses, seeking to fulfill one or two projects a year in the area of marketing or design. With the growth of the number of Exchanges and the proven benefits of s-commerce such as increased quality, decreased time and cost, the Exchange is now seeing exciting growth in the number of larger businesses as customers. These customers are placing multiple briefs on the Exchange for projects ranging from IT, through legal, accounting and design and Premium Account has been designed to enhance the experience for these exchange adopters.

 

The technology sector was the most prolific user of the exchange with nearly a fifth of all briefs from technology companies through the year, representing 18% of all briefs submitted. But perhaps more surprising was the sheer spread of verticals that started using the exchange as buyers.

 

Growth in Experts

 

During 2012, almost 10,000 new experts, agencies and services firms joined the Exchange with the majority joining the established Designs, Marketing and Media exchanges and with the Technology Exchange the fastest growing of the new crowd platforms so at the end of the year there were 23,275 experts on the eight exchanges compared with 13,350 at the end of2011.

 

People

 

We continue to invest in hiring talented people in the UK and US to support our growth. In 2012 a corporate sales team was established, formal outbound digital marketing programs introduced and in May 2012, a US sales operation was commenced in Dallas. During the final quarter, blur increased headcount to 40 to support our aggressive growth targets in 2013, with new staff joining the Exchange Support, Sales, Marketing and Technology functions in both the UK and the US.

 

The Group's board was strengthened ahead of the IPO through the appointment of Richard Bourne-Arton (owner of UK Hydro) and Robert Brooksbank (CFO of Carclo Plc) as Non-executive Directors to its main board. Strategic and Operational Advisory boards were also formalised, comprising leading industry and business figures including Archie Norman (Chairman ITV), Kevin Lomax (ex-CEO Misys), Tim Schoonmaker (ex-CEO Odeon Cinemas) and David Sola (MD Houlihan Lokey and ex-Softbank). These boards provide invaluable advice to blur Group as it continues on its growth path.

 

At the start of 2013, two new senior management team appointments were announced, Belinda Wrigley as Group Finance Director and Mitch Faigen as Global Head of Exchange Development. These two roles complete the senior management team structure for 2013, augmenting the extensive experience in technology and exchange business of the current team.

 

Evolving marketplace

 

The global market for services, both creative and business, shows continued growth and can be considered a trillion dollar opportunity. Global advertising spend is set to grow by around 10 per cent. over the next two years to approximately $600 billion in 2014 (Source: ZenithOptimedia advertising forecast, June 2012) and the market for IT services was estimated to be $874 billion in 2012 and forecast to grow to $1 trillion by 2016 (Source: Gartner, Inc. April 2012).

 

Yet the model for buying, and indeed selling, services has had little disruption: procurement systems, outsourcing trends have not fundamentally altered the traditional steps of RFP, selection and delivery and often result in long-term lock-in contracts. Large firms have tried to centralize all functions into a global services center, but for smaller business producing shortlists and creating preferred supplier lists is still at the root of services delivery. blur Group believes it is time for this model to be disrupted and for businesses to see an equivalent of the e-commerce revolution which has changed the way consumers buy products.

 

s-commerce now enables businesses to modify the buying of services into a single online model which gains the efficiencies of a single platform to deliver all services without having to use a centralized procurement function. It is a new and different way to deliver services and the Global Services Exchange is built to provide the capability to all sizes of business for all types of services projects.

 

With s-commerce there is a limited competitive landscape: there are some platforms which automate or provide support for part of the delivery process - matchmaking services which do not then see the project through to delivery, procurement platforms which automate the negotiation and bidding parts of the selection process and project management and collaboration tools to help the delivery, or platforms which manage the buying of business products and commodities. The main competition for blur Group remains the incumbent suppliers: for many businesses these are long-term relationships and the very large network providers, whether it's in IT, Accounting, Legal or creative services are likely to remain incumbent. However the market not addressed by these large suppliers is significant and opening this up is the cornerstone of blur Group's model.

 

Taking this new model and combining it with the worldwide market for services presents a significant opportunity for blur Group. Businesses seek alternatives to their large incumbent service providers whether due to disillusionment with existing providers, or simply as a more efficient way to select and work with smaller suppliers from both local and geographically distant regions and now with services commerce, blur Group has facilitated this transition.

 

Financial Performance

 

$2.8m revenue, 216% year on year growth, in line with forecast

blur Group has delivered a strong financial performance driven by substantial growth in average brief value and the number of briefs completed on the Exchange. Total revenue for the year increased by 216% to $2.81m (2011: $0.89m), maintaining the high growth rates experienced each year since launch, over 200% per annum for 4 consecutive years.

 

blur Group's revenue model is driven by the Company acting as principal for the customer by managing the selection, payment and project collaboration process. In 2012, blur Group generated revenues from listing fees and project revenues., Buyers pay a listing fee for each brief submitted, equal to 10 per cent of the brief's value or a minimum of $375. This covers use of the software, access to experts and use of the Exchange support function and is currently waived on briefs that progress to live projects.  Chiefly, blur recognises the total project fees charged to the customer and will compensate the service provider up to 80% of the value of the project. 

 

Following the launch of the partner and affiliate programme and Premium Account in 2013, developed in 2012, blur Group will benefit from additional sources of revenue in 2013 onwards.

 

Approximately 25% of customers were repeat customers in 2012 compared to 10% in the prior year demonstrating the quality offering of the Global Service Exchange through the retention of its customers.

 

Gross margin $0.7m, 26% of sales

The Company delivered gross profit in the year of $0.73m (2011: $0.44m), a 66% increase year on year but a reduction in margin from 49% of sales in 2011 to 26% in 2012. The reduced gross margin reflects the higher proportion of project revenues and a move to a pure platform-driven model which, while lower margin, provides for a higher quality of revenue moving forward.

 

LBITDA1 of $1.81m

The LBITDA of $1.81m includes an exceptional bad debt provision of $0.1m relating to one customer, whose funding did not materialise as anticipated and share based payments of $0.11m.

 

Administrative costs increased to $2.60m (2011: $1.06m) reflecting the increased investment in people and technology to support the growth of the Exchange.  During 2012 the number of employees grew from 14 to 40 by 31 December.  The loss after tax is $1.74m compared to $0.66m in 2011, and includes a $0.13m R&D tax credit.

 

1 LBITDA is loss before interest, tax, depreciation and amortization.

 

Cash balance $4.45m

Cash balance at the year end were $4.45 million (31 December 2011: $0.15m), including net proceeds of the of the placing at the time of the Company's IPO in October 2012, proceeds of which were $6.11m.

 

Operating cash outflow for the period was $2.16m, reflecting a loss from operating activities of $1.74m and an increase in working capital of $0.45m. Investments in assets totaled $0.27m, reflecting the capitalisation of internal technology costs and small purchases of fixed assets.

 

Current Trading and Q1 2013 Metrics

 

Q1 metrics, show a continuation of the impressive quarter on quarter growth in the number of briefs achieved since the Exchange launched, with a 178% increase in briefs submitted to the Global Services Exchange in the first quarter of 2013 compared with first quarter 2012, and an increase of 43% over Q4 2012, and a 254% increase in the number of projects completed in the quarter compared with Q1 2012 and 23% increase on Q4 2012.  359 briefs were submitted, compared to 250 in the previous quarter and the total value of briefs was $3.9m, compared to $4.0m in the previous quarter.

 

The Q1 metrics provide a good indication of the results of the investment in growth post IPO.

 

Strategy and Outlook

 

As Amazon and eBay have fundamentally changed the way in which consumers buy day-to-day products, blur Group is seeking to fundamentally alter the way businesses buy core services. blur Group is the first to market with a comprehensive, cloud-based, efficient and open platform that uses the power of internet software and digital communications to challenge the 'old economy'.

 

The focus in the year ahead will be on continuing to grow the community of high quality expert service providers on the Exchange, further enhance the power of blur Trading to provide an even more efficient and flexible project delivery platform, increase our number of partners to provide greater depth to our eco-system and through all these activities grow the number of customers using the Exchange.

 

Q1 2013 metrics show a continued acceleration in our growth and we are confident in achieving another strong year in 2013.

 

 

 

Consolidated financial statements blur (Group) plc

Consolidated statement of total comprehensive income

 

 

 


Year ended

31 December

Year ended

31 December



2012

2011


Note

US$

US$

Revenue

3

2,807,493

888,604

Cost of sales


(2,079,815)

(452,179)





Gross profit


727,678

436,425





Administrative expenses excluding exceptional expense


(2,501,096)

(1,064,288)

Exceptional expense


(96,507)

-

 

Total administrative expenses


 

(2,597,603)

 

(1,064,288)

 

Other Income


 

10,296

 

-





Loss from operations


(1,859,629)

(627,863)





Finance Income


2,544

-

Finance expense


(15,287)

(47,442)





Loss before tax


(1,872,372)

(675,305)





Tax Credit


127,688

-





Loss for the year attributable to equity holders of the parent company


(1,744,684)

(675,305)

Exchange (losses)/gains arising on the translation of foreign subsidiaries


(69,265)

18,824

Total comprehensive losses attributable to equity holders of the parent company


(1,813,949)

(656,481)

Basic loss per share for losses attributable to the owners of the parent during the year


(0.09)

(0.39)

 

 

 

 

The results reflected above relate to continuing activities.

 

 

 

Consolidated statement of financial position

 



As at

31 December

As at

31 December



2012

2011


Note

US$

US$

Non-current assets




Property, plant and equipment


39,954

15,170

Intangible assets


208,408

-

Total non-current assets


248,362

15,170





Current assets




Trade and other receivables


1,684,754

104,986

Cash and cash equivalents


4,453,335

145,460

Total current assets


6,138,089

250,446





Total assets


6,386,451

265,616





Current liabilities




Trade and other payables


1,424,304

353,505

Loans and borrowings


-

58,508

Total current liabilities


1,424,304

412,013





Non-current liabilities




Loans and borrowings


15,090

186,141

Total non-current liabilities


15,090

186,141





Total liabilities


1,439,394

598,154





Net assets /(liabilities)


4,947,057

(332,538)

Issued capital and reserves attributable to owners of the parent




Called up share capital

5

396,076

261,986

Share premium


5,492,437

-

Equity conversion reserve


8,967

182,145

Merger reserve


1,712,666

179,550

Share - based payment reserve


107,079

-

Foreign exchange reserve


(50,004)

19,261

Retained losses


(2,720,164)

(975,480)

Total equity


4,947,057

(332,538)

 

 

 

 

Consolidated statement of changes in equity

 


Called up

Foreign


Share-




 share

currency

Merger

based

Retained



capital

premium

reserve

 Reserve

 

reserve

payment reserve

losses

Total


US$

US$

US$

US$


US$

US$

US$

Equity as at

31 December 2010

484

-

208,299

437

(481)

-

(279,008)

(70,269)

Loss for the period

-

-

-

-

-

-

(675,305)

(675,305)

Other comprehensive Income

-

-

-

18,824

-

-

-

18,824

Total comprehensive loss

-

-

-

18,824

-

-

(675,305)

(656,481)

Issue of convertible loan notes

-

-

53,439

-

-

-

-

53,439

Conversion of convertible loan notes

13,549

-

(79,593)


161,193

-

(21,167)

73,982

Issue of ordinary shares

247,953

-

-


18,838

-

-

266,791

Equity as at

31 December 2011

261,986

-

182,145

19,261

 

179,550

-

(975,480)

(332,538)

Loss for the period

-

-

--

-

-

-

(1,744,684)

(1,744,684)

Other comprehensive loss

-

-

-

(69,265)

-

-

-

(69,265)

Total comprehensive loss

-

-

-

(69,265)

-

-

(1,744,684)

(1,813,949)

Conversion of convertible loan notes

26,304

-

(173,178)

-

352,299

-

-

205,425

Issue of ordinary shares

29,103

-

-

-

1,180,817

-

-

1,209,920

Issue of ordinary shares on IPO

78,683

6,035,332

-

-

-

-

-

6,114,015

IPO costs recognised in equity

-

(542,895)

-

-

-

-

-

(542,895)

Share-based payments reserve

-

-

-

-

-

107,079

-

107,079

Equity as at

31 December 2012

396,076

5,492,437

8,967

(50,004)

1,712,666

107,079

(2,720,164)

4,947,057

 

 

 

 

Consolidated cashflow statement

 


 

 

2012

US$

 

 

2011

US$

Operating activities



Loss after taxation

(1,744,684)

(675,305)

Interest expense (net)

12,743

47,442

Income tax credit

(127,688)

-

Depreciation of property, plant and equipment

13,005

22,880

Share-based payments

105,241

-

Amortization of intangible assets

28,721

-

Cash outflows from operating activities before changes in working capital

(1,712,662)

(604,983)

(Increase)/Decrease in trade and other receivables

(1,579,768)

148,969

Increase/(Decrease) in trade and other payables

1,129,307

221,047

Cash used in operations

(2,163,123)

(234,967)




Investing activities



Purchase of property, plant and equipment

(37,288)

(10,119)

Investment in intangible Assets

(237,631)

-

Net cash used in investing activities

(274,919)

(10,119)

Financing activities



Issue of share capital (PLC) (IPO)

6,114,015

-

Issue cost of shares (PLC)

(542,895)

-

Issue of share capital (Ltd)

1,209,920

347,966

Issue cost of shares (Ltd)

(46,337)

-

Net cash generated in financing activities

6,734,703

347,966

Net increase in cash and cash equivalents

4,296,031

102,880

Cash and cash equivalents at beginning of period

145,460

45,809

Effect of foreign exchange translation on cash and equivalents

11,214

(3,229)

Cash and cash equivalents at end of period

4,453,335

145,460







 

 

 

 

 

Notes to the consolidated financial information

 

 

1.         Accounting policies

 

Basis of preparation

The financial information set out in these final results does not constitute the Company's statutory accounts for 2011 or 2012.

This is the first statutory reporting period for the Company. Statutory accounts for the period ended 31 December 2012 for the Company have been reported on by the Independent Auditors. The Independent Auditors' Reports on the Annual Reports and Financial Statements for the period were unqualified, did not draw attention to any matters by way of emphasis, and did not contain statements under 498(2) or 498(3) of the Companies Act 2006.

Statutory accounts for the period ended 31 December 2012 will be delivered to the Registrar in due course. The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated. These financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRSs) issued by the International Accounting Standards Board (IASB) as adopted by the European Union ("adopted IFRSs").

 

The preparation of financial statements in compliance with adopted IFRSs requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies. The areas where significant judgments and estimates have been made in preparing the financial statements and their effect are disclosed in note 2.

 

The Group financial statements consolidate the financial statements of the Company and its subsidiaries (together referred to as "the Group").  The parent Company financial statements present information about the Company as a separate entity and not about its Group.

 

Basis of consolidation

Where the Group has power, either directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities, it is classified as a subsidiary.

Merger accounting

The accounting treatment in relation to the addition of blur (Group) PLC as a new UK holding Company of the Group falls outside the scope of the IFRS3 'Business Combinations'.  The share scheme arrangement constituted a combination of entities under common control as blur (Group) PLC was not a business as defined by IFRS 3 at the time that the Share Scheme became effective.  The relative rights of the shareholders remain unaltered post transaction.

 

Paragraph 10 of IAS8 'Accounting Policies, Changes in Accounting Estimates and Errors'  requires management to use its judgement in developing and applying a policy that is relevant, reliable, represents faithfully the transaction, reflects the economic substance of the transaction, is neutral, is prudent, and is complete in all material respects when selecting the appropriate methodology for consolidation accounting.

 

Paragraph 13 of the Financial Reporting Standard 6 ("FRS") Acquisitions and Mergers (UK) permits merger accounting as a result of a Group reconstruction when an addition of a new parent Company does not alter the relative rights of the shareholders and is facilitated entirely by a share for share exchange.

 

Management believes that it has met the criteria as defined by paragraph 13 of FRS6 and has treated the insertion of blur (Group) PLC as the ultimate parent entity as a Group reconstruction and have applied the FRS6 merger accounting principles to prepare the consolidated financial statements and treated the reconstructed Group as if it had always been in existence.  The difference between the nominal value of shares issued in the share exchange and the book value of the shares obtained is recognised in a merger reserve.  Comparative information is provided on the basis that the new group has always been in existence.

 

The Group has taken advantage of merger relief available under Companies Act 2006 in respect of the share for share exchange as the issuing company has secured more than 90% equity in the other entity. The carrying value of the investment is carried at the nominal value of the shares issued.

 

Revenue Recognition

Revenue represents the gross amounts billed to clients in respect of revenue earned and other client recharges, net of discounts, sales taxes, accrued, and deferred amounts.

 

Each type of revenue is recognised on the following basis:

 

a)   Project fees are recognised over the period of the relevant assignments or agreements, in line with project milestones.

b)   Retainer fees are spread over the period of the contract on a straight line basis.

c)   Listing fees are recognised as and when the event occurs and there is an expectation of collection.

 

Gross revenue is recognised as the Group acts as principal and not agent in its dealings with customers.  The Group facilitates both commercial terms and the project management support for each project brief and, in some circumstances, retains the credit risk for the transaction.  The Group is also responsible for the quality of the service delivery.

 

Foreign currency

The functional currency of blur (Group) PLC and blur Ltd., is Pound Sterling, whereas of blur Inc is US Dollars.  The presentational currency is US Dollars ($), as the Group's management believe that in the future the majority of revenues and activity will be generated in US Dollars.  Transactions entered into by a group company in a currency other than the functional currency of that entity are recorded at the rates ruling when the transactions occur.  Foreign currency monetary assets and liabilities are translated at the rates at the reporting date. 

 

Exchange differences arising on the translation of the financial statements into the presentational currency are recognised in other comprehensive income.

 

Intangible Assets

The development of the trading platform is capitalized as an intangible asset.  Development activities involve a planned investment in the building and enhancement of the trading platform.  Development expenditure is only capitalized if the development costs can be measured reliably and the platform being built will be completed and will generate future economic benefits in the form of cash flows to the Group.  Expenditure being capitalized includes internal staff time and cost spent directly on developing the trading platform.

Capitalized development expenditure is measured at cost less accumulated amortization and accumulated impairment costs.  The amortization period is over 48 months.

 

Provisions

The group currently only provides for potential unrecoverable trade receivables on the basis set out below and does not have recognised provisions for liabilities and legal disputes.

A provision shall be recognised only in the event that certain criteria are met, these being:

·      an obligation has arisen as a result of blur Group's past activities

·      a cash outflow will be required to settle the obligation; and

·      a reliable estimate can be made of the obligation.

 

Share-based payment

 

In accordance with IFRS 2 'Share-based payments', the Group reflects the economic cost of awarding shares and share options to employees and directors by recording an expense in the statement of comprehensive income equal to the fair value of the benefit awarded. The expense is recognised in the statement of comprehensive income over the vesting period of the award.

 

Fair value is measured by the use of a Black-Scholes model, which takes into account conditions attached to the vesting and exercise of the equity instruments. The expected life used in the model is adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

 

2.       Critical accounting estimates and judgements

The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including the expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the financial year are discussed below.

 

Judgements and accounting estimates and assumptions

 

(a)     Revenue recognition

The gross value of transactions is recognised as the Group acts as principal in its dealings with customers.  The Group facilitates both commercial terms and the project management support for each project brief and, in some circumstances, retains the credit risk transactions it facilitates.

 

Revenue is either recognised in the statement of comprehensive income or deferred based on a review of all live projects on the exchange platform at the period end.  Based on the judgement of management and with reference to the stage of completion of a project or brief, a determination of the appropriate revenue to recognise is made.  Following this assessment, an appropriate adjustment to deferred income is made.  In the current year the value of the deferred revenue is $326,301 (2011 - $47,342).

 

(b)     Property, plant and equipment

Property, plant and equipment are depreciated over the useful lives of the assets. Useful lives are based on the management's estimates of the period that the assets will generate revenue, which are reviewed annually for continued appropriateness. The carrying values are tested for impairment when there is an indication that the value of the assets might be impaired. When carrying out impairment tests these would be based upon future cash flow forecasts and these forecasts would be based upon management judgement. Future events could cause the assumptions to change; therefore this could have an adverse effect on the future results of the Group.

 

(c)   Intangible Assets

Intangible assets include the capitalised development costs of the trading platform.  These costs are assessed based on management's view of the technology team's time spent on projects that enhance the trading platform, supported by internal time recording and considering the requirements of IAS 38 'Intangible assets'.  The development cost of the platform is amortised over the useful life of the asset.  The useful life is based on the management's estimate of the period that the asset will generate revenue, which is reviewed annually for continued appropriateness.  The carrying value is tested for impairment when there is an indication that the value of the assets might be impaired.  When carrying out impairment tests these would be based upon future cash flow forecasts and these forecasts would be based upon management judgement. Future events could cause the assumptions to change; therefore this could have an adverse effect on the future results of the Group.

 

(d)  Share based payments

Share options are measured at their fair value utilising the Black-Scholes valuation model, which takes into account conditions attached to the vesting and exercise of the equity instruments. The expected life used in the model is adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

 

The modification splitting the options into 15 options for each one held resulted in a modification to the exercise price for all the existing options, reducing the exercise price by 15 to align the options with the share equivalent in blur (Group) plc.

 

 (e) Deferred tax asset

A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary differences can be utilised. Management has elected not to recognise the deferred tax asset due the lack of certainty of future profitability as the Group is still in its early stage of maturity. 

 

The deferred tax asset on shares and share option charges is affected by the difference between the grant price of the shares and share options and the market price of the Company's shares at the accounting year end.  If the market value of the shares at the date of exercise were to be lower than the market value at the account year end the amount of tax relief obtained would be less than anticipated in the deferred tax calculations.

 

 

 

3.       Segmental analysis

The Group currently has one reportable segment, provision of services and categorises all revenue from operations to this segment

 


Year ended

31 December

Year ended

31 December


2012

2011


US$

US$

Revenue arises from:



Provision of services

     2,807,493

888,604

Less : Cost of sales

2,079,815

452,179

Gross Profit

727,678

436,424

Other Income

10,296

-

Administration expenses

2,597,603

1,064,288

Operating Loss

(1,859,629)

(627,863)

Finance Charges (Net)

(12,743)

(47,442)

Loss before tax

(1,872,372)

(675,305)

 

The above 2012 revenue includes $496,781 relating to one customer. This compares to $267,156 of revenue generated from the largest customer in 2011.

The Group operates in three main geographic areas: UK, USA and Rest of the World. Revenue and non-current assets by origin of geographical segment for all entities in the group is as follows:


       Revenue

                                         Non current assets


Year ended

31 December 2012

Year ended

31 December 2011

Year ended

31 December 2012

Year ended

31 December 2011


US$

US$

US$

US$

UK

996,010

831,631

244,098

15,170

USA

1,549,322

32,288

2,132

-

Rest of World

262,161

24,685

-

-

Total

2,807,493

888,604

246,230

15,170

 

 

4.       Loss from operations

The operating loss as at 31 December 2012 is stated after charging:


Year ended

31 December

Year ended

31 December


2012

2011


US$

US$

Amortisation of intangibles

28,721

-

Auditors' remuneration:



Audit fees - Subsidiaries

  85,481

-

                       Company

9,498

-

Bad debt provision*

259,827

-

Depreciation of fixed assets

13,005

22,880

Staff costs

1,211,649

475,029

Administrative expenses

989,422

566,379

Total administrative and other expenses

2,597,603

1,064,288

 

 

The bad debt provision of $259,827 includes a $96,507 exceptional item relating to the margin exposure of one customer, whose funding did not materialise as anticipated. 

$126,983 non-audit professional fees were paid relating to the IPO.  Research and development costs that were expensed to the P&L in 2012 totalled $85,727 (2011- $92,742)

 

 

5.         Share capital

 

Share capital allotted and fully paid up

 

Ordinary shares of £0.01 carry the right to one vote per share at general meetings of the Company and the rights to share in any distribution of profits or returns of capital and to share in any residual assets available for distribution in the event of a winding up. The shares are denominated in Pounds Sterling and translated at the historic rate.

 

In September 2012, blur Limited successfully implemented the share for share exchange whereby blur (Group) PLC became the holding Company of the Group.  Under the Scheme of Arrangement, blur Limited's shares and options on issue as at 29th September 2012 were exchanged on a fifteen for one basis to blur (Group) plc shares and options.  All disclosures of shares and options in the report reflect this change as though the fifteen for one exchange had always been in place.

 

The table below shows the movements in share capital for the year:

 


Number of shares

Share Capital $

Share Premium $

Movement in ordinary share capital

2012

2011

2012

2011

2012

2011








Balance at the beginning of the year

16,242,180

30,000

261,986

484

-

-

Allotment of shares on division to £0.001p

-

14,970,000

-

1,241,466

-

-

Conversion of loan notes

1,630,575

840,000

26,304

13,549

-

-

Issue of new shares December 2011

-

402,180

-

6,487

-

-

Issue of new shares April 2012

1,804,455

-

29,103

-

-

-

Issue of new shares on IPO October 2012

4,878,049

-

78,683

-

5,492,437

-

Balance at the end of the year

24,555,259

16,242,180

396,076

261,986

5,492,437

-

 

On incorporation of blur Limited, two ordinary shares of £1.00 each were issued. During 2011 a resolution was passed to divide the shares into 2,000 shares of £0.001 each with a further 998,000 ordinary shares of £0.001 each were  issued at par value.  In December 2011 56,000 ordinary shares of £0.001 each at a consideration of £2 per share were issued on conversion of loan notes and 26,812 ordinary share of £0.001 each at a consideration of £6.34 per share were issued for cash consideration.

 

 During 2012 a further 108,725 ordinary shares of £0.001 each at a consideration of £2.30 per share were issued on conversion of loan notes and 120,297 ordinary shares of £0.001 each were issued for cash at a consideration of £6.34 per share

 

On the IPO 19,677,210 ordinary shares of £0.01 each at par were allotted as consideration to the holders of ordinary shares in blur Limited with 15 ordinary shares in blur (Group) plc being issued for every one share held in blur Limited.    On the IPO 4,878,049 ordinary shares of £0.01 each at a consideration of £0.82 per share were issued fully paid on completion of the Placing on Admission.

 

The Company has not issued any partly paid shares nor any convertible securities, exchangeable securities or securities with warrants.  The Company does not hold any treasury shares.

 

 

6.         Related party transactions

 

Included within cash as at 31 December 2012 is an amount of US$1,826 (2011: US$ 142,162) held in an account in the name of Phillip Letts. The account is operated solely on behalf of blur Limited, and all amounts are held in trust on behalf of blur Limited, and hence have been included within cash.

 

Compensation or other related payments to key management personnel (including Directors):

 


Year ended

31 December

Year ended

31 December


2012

2011


US$

US$




Consultancy fees*

95,118

48,000

Service fees **

105,163

6,819


200,281

54,819

 

Out of above balances outstanding at year end in Trade Payables are $298 (2011: $6,631)

 

*   The consultancy fees were paid to Revviva LLC, a company in which K Cardinale has an interest.  These were paid for for K Cardinale's  director services.

** The service fees were paid to Oloco Limited & Cambridge Financial Partners LLP for accounting and consultancy services.  Barbara Spurrier has an  interest in these companies.

***blur (Group) PLC has chosen to take the exemption under IFRS 8 not to disclose transactions with 100% subsidiaries.

 

Remuneration paid directly to all directors has been disclosed in note 6.

 

The following loans to/(from) directors subsisted:

 


Year ended

31 December

Year ended

31 December


2012

2011


US$

US$

P Letts:



Opening balance (owing to director) / owed by director

3,518

(8,925)

Amounts advanced from the Group

188,389

145,384

Amounts repaid to the Group

(191,574)

(132,946)

Exchange adjustments

63

5

Closing balance

396

3,518




 

The loans are interest free and repayable on demand.

 

 

7.         Events after the reporting date

 

Issues of share options:  On 2 January 2013 547,000 share options were issued to management and staff.  The exercise price was 78p per share and the options become exercisable four years after the grant date.

 

 

Philip Letts was granted 30,000 additional share options and Kara Cardinale was granted 25,000 additional share options on 25th January 2013.  The exercise price was 143.5p per share and the options become exercisable four years after the grant date.

 

 

8.         Control

 

The ultimate controlling party is that of Mr. P Letts, a director of the Company


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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