Final Results for the year ended 31 December 2017
12 February 2018
Proxama PLC
("Proxama" or the "Company")
Final Results for the year ended 31 December 2017
Proxama Plc, (AIM: PROX), the leading mobile location and data and intelligence expert, is pleased to announce its audited final results for the year ended 31 December 2017.
Highlights
Sound financial footing
· Revenue increased by 75% to £471,993 (2016: £269,062)
· Headcount significantly reduced to 23 (2016: 60)
· Significant reductions in HR, office, IT, communications costs as well as a review of third party professional fees
· Subject to any exceptional charges, the directors expect administrative costs from continuing operations (£4,893,319 for the year ended 31 December 2017) to be reduced by at least 50% in 2018 - with the Company now operating at its lowest ever cost base
· £3.1 million placing and open offer completed in July 2017
· One-off exceptional income relating to the write-off of debt during the year of £637,006 in 2017 (2016: £nil) - leaving the Company debt free
· Digital Payments division sold for an initial cash consideration of £1.0 million plus potential deferred consideration of up to £1.0 million payable over the next 18 months
· As at 31 December 2017, the Company's net assets were £2,551,731 (2016: £435,760) of which £1,140,239 (2016: £2,026,764) were cash and cash equivalents
The right team in place
· Kelvin Harrison appointed as non-executive Chairman in February 2017
· Dan Francis appointed as Chief Strategy Officer in June 2017
· Mark Slade appointed as CEO in October 2017
· David Rae appointed as CFO, announced separately today
· Established advisory board and secured the services of two leading figures in the attribution, AI, location and brand marketing fields - David Philipson and Dan Wilson
· Post period end, announced on 12 February 2018 the proposal to change the Company's name to Location Sciences Group PLC ("Location Sciences")
New products developed and monetised
· The Company exceeded its three KPIs: -
· Monetisation of four Location Science products
· More than 5 million consumers (7 million as at 31 December 2017)
· More than 5 billion data points (14 billion as at 31 December 2017)
· Monetise our 14 billion+ data points by data partnership arrangements - generating recurring monthly revenues for the Company
Commenting on the results, Mark Slade, Chief Executive of Proxama, said:-
"As digital spend migrates to mobile, rising to £5.4 billion in 2017 (£3.8 billion in 2016), location becomes a key component of all aspects of the campaign lifecycle. The Company is therefore in a strong position to offer its products and services to both brands and agencies across any campaign with a location component.
We are now in a much stronger financial position, with our lowest ever cost base, no debt, a much leaner, expert team and the right skill sets in place to monetise our 14 billion+ data points through partnership arrangements, generating recurring monthly revenues."
A copy of this announcement and the Company's report & accounts are available on the Company's website, www.proxama.com.
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For further information, please contact: |
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Proxama PLC |
Via Redleaf Communications |
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Mark Slade, CEO |
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Stockdale Securities Limited |
Tel: +44 (0) 20 7601 6100 |
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Tom Griffiths / Ed Thomas |
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Redleaf Communications |
Tel: +44 (0) 20 3757 6880 |
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Charlie Geller / Fiona Norman |
About Proxama PLC:
· Proxama PLC is an AIM listed mobile location data and intelligence business, operating under the trading name, Location Sciences.
· Location Sciences helps companies connect the online world with the offline world using mobile location technology data. We combine cutting-edge mobile location data collection with proprietary machine learning analytics to create new value and insights from location information.
· Location Sciences is media-agnostic and works with a variety of media, advertising, technology partners - plus the world's biggest brands. Our technology is well positioned to fulfil the need for greater accuracy and accountability in a growing market that is increasingly looking for superior data and verification.
CHAIRMAN'S STATEMENT
From Proxama to Location Sciences
The Board is pleased to report that during 2017 it completed the transformation of Proxama plc from the previous two business divisions (Payments and Proximity Marketing) to the single Location Sciences business ("Location Sciences").
Key highlights include the £3.1 million placing and open offer announced on 30 June 2017, and the disposal of the Payments division announced on 1 November 2017, which raised additional working capital for the business, significantly reduced the ongoing cost base and removed all the debt. These are three major steps towards a sounder financial future for the Company.
There were also key strategic steps forward, in particular, the Location Sciences business name, brand and product were introduced to the market, along with the appointment of a new CEO, new members of the Board and management team as well as an exciting new product set.
Last but not least, we met our three major 2017 KPIs, namely:
· the monetisation of our 4 Location Science products;
· exceeding 5 million consumers (7 million as at 31 December 2017); and
· exceeding 5 billion data points (14 billion as at 31 December 2017).
Market Review
2017 saw pressure on the advertising and marketing sector for brands, agencies and their suppliers to account for their spend, particularly in mobile and digital. Some of the most dominant companies such as Google and Facebook saw the services they offer come under increasing scrutiny as the demand for transparency and accountability across the marketing industry rose.
As digital spend migrates to mobile, rising to £5.4 billion in 2017 (£3.8 billion in 2016), location becomes a key component of all aspects of the campaign lifecycle. Location Sciences is therefore in a strong position to offer its products and services to both brands and agencies across any campaign with a location component. This is demonstrated by the extension of our products to the measurement of "out of home" (OOH) campaigns. In parallel with the marketing sector, we are also monetising our data and services in transport planning with projects using Location Sciences data and services in both London (city planning) and Manchester (transport aggregation).
We have also continued to monetise our 14 billion+ data points by data partnership arrangements which by the year end were generating promising recurring monthly revenues for the Company.
Board Changes
During the year, as previously announced, David Bailey, John Kennedy and Mike Woods all left the business; I would like to thank them all for their contributions. I joined as Chairman in February, Dan Francis was promoted to Chief Strategy Officer in June and Mark Slade was appointed CEO in October 2017. We have all made investments (as previously disclosed) in the Company. After year-end, as separately announced today, David Rae joined the Board as CFO enhancing the Board's financial and strategic capabilities as well as bringing experience in delivering rapid growth for ambitious companies. Some continuity is provided by Non-Executive Director, Shaun Gregory. However, what we now have is a totally revamped Board, who have developed a new strategy for the business, to which it is totally committed.
Outlook
2017 saw an unprecedented amount of change for Proxama: the sale of the Payments division; a new Board, including a CEO and management team; becoming completely debt free; a significant restructuring of the business, resulting in materially reduced costs; and raising the working capital to invest in Location Sciences.
The Company is now in its strongest position yet, strategically, financially, operationally and in terms of its market position. I thank all those who worked in the business in 2017 for their efforts and commitment and look forward to working with the team in 2018.
CHIEF EXECUTIVE OFFICER'S REPORT
Introduction
We started the year as two businesses - the Payments division and the Proximity Marketing division, and ended the year as a single focused business, Location Sciences. Subject to shareholder approval, we will also change the Company's name to Location Sciences Group plc at the Company's AGM in 2018.
As previously reported, the Board felt that proximity marketing lacked the scale and targeting to compete in the digital marketing sales space. Even large digital sales operations in the UK were struggling to compete with the duopoly of Facebook and Google. Combined with the cost of running the sales function, it was clear this business model was not working. The real value in the business was the location data picked up as a byproduct of running proximity marketing. This required less scale to be attractive to our customers as the insight gained on 7 million consumers was enough to make marketing decisions.
Financial results
As detailed below, the Company disposed of its Digital Payments division on 31 October 2017, as such the Company's consolidated financial statements show the continuing operations of the Company, including a restatement of 2016 activity.
In 2017, revenue increased to £471,993 (2016: £269,062). In addition, the Company received £283,361 of grant income (2016: £551,666).
Administrative costs for continuing operations were £4,893,319 (2016: £4,312,205). The Company also experienced a one-off exceptional income relating to the write-off of debt during the year of £637,006 (2016: £nil). The Company's administrative costs for continuing operations have been significantly reduced; compared to 2017, the directors expect administrative costs to reduce by at least 50% in 2018.
The business delivered an operating loss of £3,660,000 (2016: £4,041,687) and a loss for the year after discontinued operations and taxation of £5,374,380 (2016: £5,193,586).
The loss attributable to discontinued operations for the 10 months to 31 October 2017 was £1,852,712.
Sale of the Digital Payments Division and £3.1 million Placing and Open Offer
On 31 October 2017, the Digital Payments division was sold to LHH2 APS, a private Danish company, for an initial cash consideration of £1.0 million (less working capital of approximately £0.3 million and transaction costs) plus potential deferred consideration of up to £1.0 million over the next 18 months, subject to certain performance conditions.
The cash funds received from the sale of the Digital Payments division have been used to further strengthen the Company's balance sheet, following the successful placing and open offer in July 2017 which generated gross proceeds of £3.1 million and resulted in all the Company's debt being cleared.
We have taken significant measures to reduce overheads
The Location Sciences division now operates with its lowest cost base since inception, with administrative costs now running at less than half of 2017's, with further cost reduction measures planned for the early part of 2018. As part of this rationalisation and resource focus exercise, our headcount reduced to 23 at the end of 2017 (2016: 60). We anticipate the headcount reducing further during 2018.
The cost reduction programme has looked at all areas of the business to align the ongoing overheads with the future Location Sciences business model. This included, inter alia, reductions in personnel, HR, office, IT, communications costs as well as a review of the third party professional fees incurred by the business.
With the actions taken and to be taken, I am confident that we have the right resources in place at the right cost level, to deliver our Location Science business model as well as create value for shareholders.
Statement of Financial Position
I am pleased to report that due to the actions of the Board, the financial position of the Company significantly improved during 2017.
As at 31 December 2017, the Company's net assets were £2,551,731 (2016: £435,760) of which £1,140,239 (2016: £2,026,764) were cash and cash equivalents.
Net current assets were £1,155,979 as at 31 December 2017, compared to net current liabilities of £4,001,447 as at 31 December 2016. The main impact on net current assets was the repayment and conversion of the Company's debts during the year. Company borrowings were £4,756 (representing finance lease agreements) as at 31 December 2017 (2016: £5,227,599).
The Company's improved financial position provides a solid foundation to deliver the Location Sciences business plan in 2018 and beyond.
The changing data landscape
The last year has seen some important changes in the regulation around data, and the Company, as part of its general risk management efforts, identified data privacy risk as an area needing focus. This focus is necessitated by the European Union General Data Protection Regulation ("EU GDPR"), which replaces the previous 1995 Data Protection Directive (Directive 95/46/EC), with a new, binding regulatory framework across all EU member states and comes into force in May 2018. As the Company is processing data within the EU and/or processing data of EU residents, the regulation creates compliance obligations for the Company and various affirmative requirements enabling EU residents to exercise their rights under the law. In addition, the UK is changing its national legislation via a new Data Protection Bill (replacing the Data Protection Act 1998 c29), to reflect the GDPR, and the EU ePrivacy regulations which will tighten the control of electronic data for marketing, profiling, etc. The Company has been working throughout last year both internally and with industry consultants and the ICO to prepare for May 2018 for both the supply of data from its app publisher partners and for the provision of data services to its customers both ongoing and new and expects to be fully compliant with all relevant legislation.
Furthermore, the Company sees an opportunity in the marketplace for fully compliant, audited and permissioned first party mobile data. Data providers which fall short of the required standards will see their data being worth less and they may not be able to supply some agencies and brands without the relevant standards being in place.
Location Sciences, a new beginning
Location Sciences was officially launched in September 2017 and made significant progress in the latter part of the year.
Although we use complicated data storage techniques, processing up to 100 million data points a day, and have leading edge iOS and Android software to obtain data from phones, our business is relatively simple.
Location Sciences is derived from ultra-precise geo-location technology combined with sophisticated data analytics providing valuable insights into the mobile consumer, enabling companies to bridge the gap between the digital and physical world.
Our leading location technologies collect unique anonymised data on real-world consumer actions using mobile geo-location and Bluetooth beacons. We believe this provides unrivalled coverage and accuracy.
When this data is combined with our machine learning techniques and data science teams, we are able to deliver actionable insights and analysis into their behaviour. We can answer questions like:
· Where should I put my next store/restaurant?
· How loyal are my customers and which other competitor stores do they go to?
· Is my OOH advertising or digital advertising leading customers into store?
· What's the make-up of customers going near to my out of home advertising?
· Is my location advertising effective and accurate?
· What's the catchment area of my customers?
Our Service Offering
1. Location data - this is a Data as a Service ("DaaS") product provided to sophisticated technology businesses who can integrate location data into their products and services
2. Audience data & verification - enriched location data, attached to points of interest, which can be used for insights and analytics, for example the analysis of a retail customer preferences (which shops do people go to, catchment area, competitive behaviour)
3. OOH ("Out of Home") - the measurement and analysis of out of home advertising on store visits
4. O2O ("Online to Offline") - the impact of digital advertising on driving store visits
What makes us special?
· One of the largest trackable consumer footprint in the UK, many millions of consumers, and growing every day
· Our data is collected first-party, with permission, directly from the mobile operating system, and we see consumer movement 24 x 7 to allow for accurate attribution
· We're media agnostic, which means we give an unbiased view on the data and insights generated from your campaigns. This means we can work with all media owners including the Facebook and Google duopoly.
· The only non-US Google certified "Location Services Provider". We have just started on this partnership and are hopeful of a strong revenue and gross margin contribution from the product line
· Our data becomes and more valuable - the more we learn about our audience the better our platform's machine learning algorithms are at determining behaviour. This provides a barrier to entry and increases our differentiation
· Timing - the explosion of the app stores and location data from apps has occurred as data processing and storage costs have tumbled. This business model was simply not possible 5 years ago
Measuring Success
Location Sciences' business model is DaaS, as such the key performance indicators set by the Board focus on consumer reach and the number of data points these consumers generate. The Board believes together these will lead to significant revenue generation as well as a rapid appreciation in underlying asset value.
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Target KPI |
KPI as of 31 Dec 2017 |
KPI performance |
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Audience1 |
5 million |
7 million |
+46% |
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Data points2 |
5 billion |
14 billion |
+180% |
1 "Audience" is defined as the total number of consumers who have a mobile phone with iOS or Android apps embedded with the Location Sciences technology.
2 A "data point" is defined as any device event that Location Sciences records and stores, such as a location event, device status change or beacon interaction.
These figures, together with our precision location technology set Location Sciences apart from its competitors in the UK.
Advisory Panel
In addition to the industry experience of our executive and non-executive team member, the Company has also secured the services of two leading figures in the attribution, AI, location and brand marketing fields.
David Phillipson
David is an Adtech entrepreneur specialising in mobile, location and SDK technologies. Previously, David has founded, grown and exited several businesses most notably Ad-X tracking, a mobile analytics and attribution platform which was sold to Criteo (CRTO) in 2013. David went on to complete his four year earn out with Criteo performing the roles of Managing Director of Mobile Solutions where he built and grew Criteo's In-App retargeting product, opening offices in US, Asia and across Europe and most recently General Manager of outdoor and offline where his team-built GPS and beacon technology to allow retargeting and attribution based on consumers store visit behaviour.
Dan Wilson
Dan has nearly 20 years' experience in mobile and Adtech and has spent several years in senior positions at Amobee and PubMatic. More recently, he created and ran the global data and programmatic division at mobile location specialist Blis. He is currently CEO of LMX, a planned futures and options market for media.
The advisory panel gives us first-hand experience of building location and attribution businesses and senior relationships to help move our business forward. We plan to grow the panel during 2018.
Outlook
I am extremely excited going into 2018. We have made some good progress in bringing the Company's costs under control, including moving both the London and Norwich offices to smaller and more cost-effective sites. I am encouraged by the interest we are receiving from potential customers in our data, but I am acutely aware that we need to start delivering meaningful revenues across our core enhanced data products. From my experience in marketing, I am confident that there is tremendous value in the ability to analyse real world movements of millions of consumers. It is just a matter of time and education before the market will use this in earnest - the really exciting times will come in the years ahead as we and our customers all develop a greater understanding of the potential.
It is clear that our metamorphosis into a DaaS business is well on track. We are still a new business in a new industry in the UK, so we need to remain agile and also focused on where the best revenue generating opportunities are. We have so much interest from a plethora of verticals that it is very easy to become distracted. I have spent the last few months since being appointed as CEO meeting as many potential customers as possible to obtain a better understanding of where the best opportunities lie in the short and long term.
The biggest impact to the business I have seen so far is the changes in both sales and engineering teams. We have hired experienced people which is already helping our product build and commercial pipeline. We have also built a new advisory panel of experienced industry veterans to help move the business forward and shape the product. The advisory panel is also a huge testament to the value we have in our data and will be helpful in ensuring we are on the right track and maximise the opportunities available to us.
CONSOLIDATED INCOME STATEMENT
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Notes |
2017 |
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2016 |
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Continuing operations |
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£ |
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£ |
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Revenue |
3 |
471,993 |
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269,062 |
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||
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Cost of sales |
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(165,719) |
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(579,424) |
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||
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||
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Gross profit/(loss) |
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306,274 |
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(310,362) |
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Grant income |
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283,361 |
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551,666 |
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||
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|
|
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||
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Other income |
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6,678 |
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29,214 |
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||
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|
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|
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Administrative expenses |
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(4,893,319) |
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(4,312,205) |
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||
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Administrative expenses - non-recurring item |
6 |
637,006 |
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- |
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Operating loss |
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(3,660,000) |
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(4,041,687) |
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Finance income |
4 |
1,498 |
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1,697 |
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Finance expense |
5 |
(143,279) |
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(749,648) |
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Loss on ordinary activities before taxation |
6 |
(3,801,781) |
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(4,789,638) |
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Taxation |
9 |
280,113 |
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410,127 |
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Discontinued operations |
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Loss for the year from discontinued operations |
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(1,852,712) |
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(814,075) |
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Loss for the year attributable to owners of the parent |
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(5,374,380) |
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(5,193,586) |
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Loss per share - basic and diluted |
10 |
(0.08p) |
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(0.39p) |
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|||
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Loss per share from continued operations - basic and diluted |
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(0.05p) |
|
(0.33p) |
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||
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Loss per share from discontinued operations - basic and diluted |
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(0.03p) |
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(0.06p) |
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||
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|
|
|
|
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|||
The loss for the year from discontinued operations is from revenue of £1,056,935.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
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2017 |
|
2016 |
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||
|
|
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£ |
|
£ |
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||
|
|
|
|
|
|
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||
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Loss for the year |
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(5,374,380) |
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(5,193,586) |
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|
|
|
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Items that will be reclassified subsequently to profit and loss: |
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|
|
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||
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|
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|
|
|
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||
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Foreign exchange difference arising on consolidation |
|
111,043 |
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(18,187) |
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||
|
|
|
|
|
|
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||
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Other comprehensive income |
|
111,043 |
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(18,187) |
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||
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|
|
|
|
|
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||
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Total comprehensive loss for the financial year attributable to owners of the parent |
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(5,263,337) |
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(5,211,773) |
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION
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Notes |
2017 |
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2016 |
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Assets |
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£ |
|
£ |
|
Non-current Assets |
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|
|
|
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Intangible assets Property, plant and equipment |
11 12 |
1,379,902 16,437 |
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4,751,607 44,925 |
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|
|
1,392,339 |
|
4,796,532 |
|
Current Assets |
|
|
|
|
|
Trade and other receivables |
13 |
233,387 |
|
1,075,456 |
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Current tax asset |
|
269,428 |
|
456,260 |
|
Cash and cash equivalents |
14 |
1,140,239 |
|
2,026,764 |
|
|
|
1,643,054 |
|
3,558,480 |
|
Current Liabilities |
|
|
|
|
|
Trade and other payables |
15 |
(482,906) |
|
(2,337,253) |
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Current portion of borrowings |
16 |
(4,169) |
|
(5,222,674) |
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|
|
(487,075) |
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(7,559,927) |
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|
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Net Current Assets/(Liabilities) |
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1,155,979 |
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(4,001,447) |
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|
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2,552,318 |
|
795,085 |
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Non-current liabilities |
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|
|
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Non-current borrowings |
16 |
(587) |
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(4,925) |
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Deferred tax liabilities |
17 |
- |
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(354,400) |
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|
|
|
|
|
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Net Assets |
|
2,551,731 |
|
435,760 |
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|
|
|
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|
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Equity |
|
|
|
|
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Share capital |
19 |
11,677,628 |
|
10,475,177 |
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Share premium account |
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15,189,919 |
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10,991,445 |
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Share-based payment reserve |
|
107,170 |
|
262,447 |
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Merger relief reserve |
|
11,605,556 |
|
11,605,556 |
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Translation reserve |
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- |
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(44,679) |
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Capital reserve |
|
209,791 |
|
209,791 |
|
Equity reserve |
|
1,934,797 |
|
44,160 |
|
Other reserve |
|
(9,225,108) |
|
(9,225,108) |
|
Retained earnings |
|
(28,948,022) |
|
(23,883,029) |
|
|
|
|
|
|
|
Total Equity |
|
2,551,731 |
|
435,760 |
The financial statements were authorised for issue by the board of directors and were signed on its behalf by:
Mark Slade, Chief Executive Officer
Date: 12 February, 2018
Registered number - 06458458
CONSOLIDATED STATEMENT OF CASH FLOWS
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|
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2017 |
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2016 |
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Cash flows from operating activities |
|
£ |
|
£ |
|
|
|
|
|
|
|
Loss for the year before tax |
|
(5,654,493) |
|
(5,782,606) |
|
Adjustments for: |
|
|
|
|
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Depreciation of property, plant and equipment |
|
34,449 |
|
94,574 |
|
Amortisation of intangible assets |
|
1,078,797 |
|
934,937 |
|
Impairment of intangibles assets |
|
350,431 |
|
431,480 |
|
Loss on disposal of assets |
|
1,388,196 |
|
12,689 |
|
Financial income |
|
(1,498) |
|
(1,781) |
|
Financial expense Foreign exchange differences |
|
143,279 8,065 |
|
749,845 10,981 |
|
Share-based payments |
|
87,746 |
|
80,446 |
|
|
|
(2,625,028) |
|
(3,469,435) |
|
|
|
|
|
|
|
Decrease in trade and other receivables |
|
842,069 |
|
804,289 |
|
(Decrease)/Increase in trade and other payables |
|
(1,826,317) |
|
322,267 |
|
|
|
|
|
|
|
Cash used in operations |
|
(3,549,276) |
|
(2,342,879) |
|
Income taxes received |
|
456,260 |
|
684,277 |
|
|
|
|
|
|
|
Net cash used in operating activities |
|
(3,093,016) |
|
(1,658,602) |
|
Net cash flow from continuing operating activities |
|
(3,288,795) |
|
(2,026,324) |
|
Net cash flow from discontinued operating activities |
|
195,779 |
|
367,722 |
|
Net cash flow from operating activities |
|
(3,093,016) |
|
(1,658,602) |
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
Interest received |
|
1,498 |
|
1,781 |
|
Additions to intangible assets |
|
(687,639) |
|
(1,117,415) |
|
Purchase of property, plant and equipment |
|
(6,316) |
|
(28,113) |
|
Proceeds from sales of subsidiaries, net of cash disposed |
|
773,106 |
|
- |
|
Proceeds on disposal of property, plant and equipment |
|
- |
|
2,459 |
|
|
|
|
|
|
|
Net cash used in investing activities |
|
(80,649) |
|
(1,141,288) |
|
Net cash flow from continuing investing activities |
|
221,177 |
|
(740,911) |
|
Net cash flow from discontinued investing activities |
|
(301,826) |
|
(400,377) |
|
Net cash flow from investing activities |
|
(80,649) |
|
(1,141,288) |
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
Interest paid |
|
(143,279) |
|
(209,011) |
|
Issue of share capital |
|
5,400,925 |
|
2,077,288 |
|
Convertible loan note redeemed |
|
(738,775) |
|
- |
|
New long-term loan Repayment of bank loans New finance lease agreements Repayment of finance lease agreements |
|
- (2,500,000) - (4,072) |
|
900,000 - 11,699 (5,622) |
|
|
|
|
|
|
|
Net cash from financing activities |
|
2,014,799 |
|
4,574,354 |
|
Net cash flow from discontinued financing activities |
|
(2) |
|
- |
|
|
|
|
|
|
|
Net (decrease)/increase in cash and cash equivalents |
|
(997,568) |
|
1,774,464 |
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of year |
|
2,026,764 |
|
270,487 |
|
Exchange differences on cash and cash equivalents |
|
111,043 |
|
(18,187) |
|
|
|
|
|
|
|
Cash and cash equivalents at end of year |
|
1,140,239 |
|
2,026,764 |
|
|
|
|
|
|
|
Cash flows of discontinued operation |
|
|
|
|
|
|
|
|
|
|
|
Non-cash financing activities: |
|
|
|
|
|
Discount on share options Loans written-off Share options granted on release of bank loan |
|
190,203 482,935 1,934,797 |
|
- - - |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
|
|
Share capital |
Share premium |
Share-based payment reserve |
Merger relief reserve |
Translation reserve |
Capital Reserve |
Equity reserve |
Other reserve |
Retained earnings |
Total |
|
|
£ |
£ |
£ |
£ |
£ |
£ |
£ |
£ |
£ |
£ |
|
At 1 January 2016 |
10,195,024 |
8,703,332 |
934,966 |
11,605,556 |
(26,492) |
209,791 |
535,138 |
(9,225,108) |
(19,442,409) |
3,489,798 |
|
Loss for the year |
- |
- |
- |
- |
- |
- |
- |
- |
(5,193,586)
|
(5,193,586)
|
|
Other comprehensive income |
- |
- |
- |
- |
(18,187) |
- |
- |
- |
- |
(18,187) |
|
Total comprehensive income for the period attributable to equity holders |
- |
- |
- |
- |
(18,187) |
- |
- |
- |
(5,193,586)
|
(5,211,773) |
|
Issue of shares |
280,153 |
2,288,113 |
- |
- |
- |
- |
- |
- |
- |
2,568,266 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity to be issued |
- |
- |
- |
- |
- |
- |
(490,978) |
- |
- |
(490,975) |
|
Share-based payments Share-based transfer |
-
- |
-
- |
80,446
(752,965) |
-
- |
-
- |
-
- |
-
- |
-
- |
-
752,965 |
80,446
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total transactions with owners |
280,153 |
2,288,113 |
(672,519) |
- |
- |
- |
(490,978) |
- |
752,965 |
2,157,734 |
|
Total movement in shareholders' equity |
280,153 |
2,288,113 |
(672,519) |
- |
(18,187) |
- |
(490,978) |
- |
(4,440,621) |
(3,054,039) |
|
|
|
|
|
|
|
|
|
|
|
|
|
At 31 December 2016 |
10,475,177 |
10,991,445 |
262,447
|
11,605,556 |
(44,679) |
209,791 |
44,160 |
(9,225,108) |
(23,883,029) |
435,760 |
|
At 1 January 2017 |
10,475,177 |
10,991,445 |
262,447
|
11,605,556 |
(44,679) |
209,791 |
44,160 |
(9,225,108) |
(23,883,029) |
435,760 |
|
Loss for the year |
- |
- |
- |
- |
- |
- |
- |
- |
(5,374,380)
|
(5,374,380)
|
|
Other comprehensive income |
- |
- |
- |
- |
111,043 |
- |
- |
- |
- |
111,043 |
|
Total comprehensive income for the period attributable to equity holders |
- |
- |
- |
- |
111,043 |
- |
- |
- |
(5,374,380) |
(5,263,337) |
|
Issue of shares |
1,202,451 |
4,198,474 |
- |
- |
- |
- |
- |
- |
-
|
5,400,925 |
|
Equity element of convertible loan |
- |
- |
- |
- |
- |
- |
1,934,797 |
- |
- |
1,934,797 |
|
Equity transfer |
- |
- |
- |
- |
- |
- |
(44,160) |
- |
- |
(44,160) |
|
Translation transfer |
- |
- |
- |
- |
(66,364) |
- |
- |
- |
66,364 |
- |
|
Share-based payments |
- |
- |
87,746 |
- |
- |
- |
- |
- |
- |
87,746 |
|
Share-based transfer |
- |
- |
(243,023) |
- |
- |
- |
- |
- |
243,023 |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total transactions with owners |
1,202,451 |
4,198,474 |
(155,277) |
- |
(66,364) |
- |
1,890,637 |
- |
309,387 |
7,379,308 |
|
Total movement in shareholders' equity |
1,202,451 |
4,198,474 |
(155,277) |
- |
44,679 |
- |
1,890,637 |
- |
(5,064,993) |
2,115,971 |
|
At 31 December 2017 |
11,677,628 |
15,189,919 |
107,170
|
11,605,556 |
- |
209,791 |
1,934,797 |
(9,225,108) |
(28,948,022) |
2,551,731 |
1. GENERAL INFORMATION
Prior to the disposal of the Digital Payments division on 31 October 2017 and the subsequent restructuring of the business, Proxama Plc ("the Company") and its subsidiaries (together 'the Group') operated three divisions, namely, Digital Payments, Proximity Marketing and Location Data and Insights, trading as Location Sciences AI Limited (formerly Proxama Solutions Limited) and Aconite Solutions Limited. Following the disposal and restructuring exercise, the business focused on Location Data and Insights, providing four core products to its customers, namely; Location Data - this is a DaaS product provided to sophisticated technology businesses who can integrate location data into their products and services; Audience Data & verification - enriched location data, attached to points of interest, which can be used for insights and analytics, for example the analysis of a retail customer preferences (which shops do people go to, catchment area, competitive behaviour); OOH ("Out of Home") - the measurement and analysis of out of home advertising on store visits; and O2O ("Online to Offline") - the impact of digital advertising on driving store visits.
The Company is a public limited company, limited by shares, which is listed on the Alternative Investment Market of the London Stock Exchange and is incorporated and domiciled in the United Kingdom.
2. ACCOUNTING POLICIES
Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") and IFRIC interpretations as adopted by the European Union, and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.
The consolidated financial statements have been prepared under the historical cost convention basis as discussed in the accounting policies below.
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). The Company beneficially owns 100% of the voting rights in all of its subsidiaries. Control is achieved when the Company is exposed, or has rights, to variable returns from its involvement with the investee and has ability to affect those returns through its power over the investee.
Subsidiaries are fully consolidated from that date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.
The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement. Acquisition costs are expensed as incurred.
Consideration where payment is contingent on future employment is excluded from the acquisition accounting and is recognised as a post-acquisition expense charged to the income statement.
Going Concern
During the year the Company continued to operate at a trading loss, however, following the completion of the restructuring process, where the loss-making payments division was divested, and significant cost reductions were made, it ended the year with an improved financial outlook. In addition, the Company completed a £3.1 million placing and repaid all its loan facilities, ending the year with £1.1 million of cash resources.
The Company also made good commercial progress, with the successful launch of the Locations Sciences business which was generating revenues from its four main product lines by the year end. Notwithstanding the positive progress in 2017, there remains a sensitivity to the timing of sales, grant receipts and earn-out income from the disposal of the Payments division. Consequently, near term cash resources will continue to be closely monitored and controlled due to the associated working capital requirements of the Company in delivering its growing order pipeline and winning new business. To deliver its growth plans, the Board may also consider raising additional capital in 2018.
Based on the current status, after making enquiries and considering the progress of the Company during 2017, the directors have a reasonable expectation that the Company will be able to execute its plans in the medium term such that Company will have adequate resources to continue in operational existence for the foreseeable future. This provides the directors assurance on the Company's ability to continue as a going concern, and therefore adopt the going concern basis of accounting in preparing the annual financial statements.
Adoption of new accounting standards
For the purposes of the preparation of these consolidated financial statements, the Company has applied all standards and interpretations that are effective for accounting periods beginning on or after 1 January 2017. The adoption of new standards and interpretations in the year has not had a material impact on the Company's financial statements.
No new standards, amendments or interpretations to existing standards that have been published and that are mandatory for the Company's accounting periods beginning on or after 1 January 2018, or later periods, have been adopted early. The directors haven't yet assessed the impact on the adoption of the following standards and interpretations will have on the Company's financial statement:
· IFRS 9 Financial Instruments (effective 1 January 2019)
· IFRS 15 Revenue from contracts with customers (effective 1 January 2018)
· IFRS 16 Leasing (effective 1 January 2019)
· IAS 12 Income Taxes (effective 1 January 2019)
The adoption of IFRS16 will require the Company to recognise in its Statement of Financial Position the asset and financial commitment associated with properties under operating leases.
Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker for the use in strategic decision making and monitoring of performance. The Company considers the chief operating decision maker to be the Executive Board.
Revenue Recognition
Revenue represents the invoice value of services and software licences provided to external customers in the period, stated exclusive of value added tax.
Consideration received from customers in respect of services is only recorded as revenue to the extent that the Company has performed its contractual obligations in respect of that consideration. Management assess the performance of the Company's contractual obligations against project milestones and work performed to date.
Revenue from software licences sold in conjunction with services is invoiced separately from those services and recognised over the period of the licence.
Revenue from software development is recognised to the extent that the Company has obtained the right to consideration through its performance.
Grants
Grants received on capital expenditure are initially recognised within deferred income on the Company's Statement of Financial Position and are subsequently recognised in the Income Statement on a systematic basis over the useful life of the related capital expenditure.
Grants for revenue expenditure are presented as part of the Income Statement in the periods in which the expenditure is recognised.
Foreign currencies
Items included in the financial statements of each of the Company's entities are measured using the currency of the primary economic environment in which the entity operates ("the functional currency"). The consolidated financial statements are presented in sterling, which is the Parent's functional and Company's presentational currency.
Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date.
The results and financial position of all Company entities that have a functional currency different from the presentational currency of the Company are translated into sterling as follows:
· Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
· Income and expenses for each income statement are translated at the average exchange rate for the month where these approximate the exchange rate at the date of the transaction; and
· All resulting exchange differences are recognised within other comprehensive income and taken to the foreign exchange reserve.
Financial instruments
Loans and receivables are recognised initially at fair value and subsequently held at amortised cost using the effective interest rate method, less provision for impairment. Discounting is omitted where the effect of discounting is immaterial. The Company's cash and cash equivalents, trade and most other receivables fall within this class.
Trade receivables are first assessed individually for impairment, or collectively where the receivables are not individually significant. Where there is no objective evidence of impairment for an individual receivable, it is included in a Company of receivables with similar credit risk characteristics and these are collectively assessed for impairment. Movements in the provision for doubtful debts are recorded in the Income Statement within operating expenses.
The Company's financial liabilities include trade and other payables, accruals and borrowings.
Trade and other payables are recognised initially at fair value and subsequently held at amortised cost.
Trade payables are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.
Financial instruments issued by the Company are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities.
Interest-bearing borrowings are stated at amortised cost using the effective interest method. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability.
Convertible loan notes are also stated at amortised cost using the effective interest method.
Derivative financial instruments are accounted for at fair value through profit and loss (FVTPL).
Property, plant and equipment
Property, plant and equipment are stated at cost, net of depreciation and any provision for impairment in value. Depreciation is provided on all property, plant and equipment, at rates calculated to write off the cost, less estimated residual value, of each asset on a straight-line basis over its expected useful economic life. Depreciation is recognised within administrative expenses within the Consolidated Income Statement.
The principal annual rates used for this purpose are:
Computer and office equipment 33.33% per annum
Goodwill
Goodwill represents the excess of the cost of acquisition over the fair value of the identifiable net assets acquired and is capitalised.
Goodwill is subject to annual impairment testing. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Goodwill is allocated to those cash-generating units that are expected to benefit from the synergies of the related business combination and represent the lowest level within the Company at which management monitors the related cash flows. The recoverable amount is tested annually or when events or changes in circumstances indicate that it may be impaired. The recoverable amount is the higher of the fair value less costs and the value in use in the Company. An impairment loss is recognised to the extent that the carrying value exceeds the recoverable amount. In determining a value in use, estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the cash generating unit that have not already been included in the estimate of future cash flows.
Internally developed software
Intangible assets are predominantly internally generated software development costs for location science technologies. Development costs are capitalised when certain criteria are met. The product must be technically feasible, sale is intended, a market exists, expenditure can be measured reliably, and sufficient resources are available to complete the project. The extent of capitalisation is limited to the amount which, taken together with further related costs, will be recovered from the future economic benefits related to the asset. When the Board is sufficiently confident that all of the criteria for capitalisation are met, development costs are capitalised and amortised over the expected useful life, currently 5 years, from the date that the asset is available for use. Development costs that have been capitalised, but where amortisation has not yet commenced are reviewed annually for impairment. If no intangible asset can be recognised based on the above then development costs are recognised within administrative expenses in the Consolidated Income Statement in the period in which they are incurred.
Other intangibles
Acquired trademarks and intellectual property rights are recognised as an asset at cost, or deemed cost, less accumulated amortisation and any recognised impairment loss.
Amortisation is charged so as to write off the cost or valuation of intangible assets less any residual value over their estimated useful lives on the following basis:
Trademarks and intellectual property rights 10% straight line
Customer relationships 25% straight line
Impairment of property, plant and equipment and intangible assets
At each Statement of Financial Position date, the Company performs an impairment review in respect of goodwill and any intangible assets not yet ready for use and reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered any impairment. If any such indication exists, the recoverable amount of the asset (being the higher of fair value less costs to sell and value in use) is estimated in order to determine the extent of any impairment. Any impairment loss is recognised as an expense in the Income Statement in the period in which it was identified.
Cash and cash equivalents
Cash and cash equivalents are defined as cash in hand, demand deposits and short-term, highly liquid investments which are readily convertible to known amounts of cash, subject to insignificant risk of changes in value, and have a maturity of less than 3 months from the date of acquisition.
For the purposes of the statement of cash flows, cash and cash equivalents consist of cash in hand and bank deposits.
Current taxation
The tax currently receivable is based on the taxable loss for the period and relates to R & D tax credits. Taxable loss differs from net loss as reported in the consolidated income statement because it excludes items of income or expense that are taxable or deductible in other periods and it further excludes items that are never taxable or deductible. This is calculated using rates and laws enacted or substantively enacted at the reporting date.
Deferred taxation
Deferred tax is provided for using the liability method on temporary differences at the balance sheet date between tax basis of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are recognised in full for all temporary differences other than those relating to goodwill on investments in subsidiaries. Deferred tax assets are recognised for all deductible temporary differences carried forward of unused tax credits and unused tax losses to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and carry-forward of unused tax credits and unused losses can be utilised.
The carrying amount of deferred tax assets is assessed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each balance sheet date and are recognised to the extent that it is probable that future taxable profits will allow the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised, or the liability settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date.
Employee benefits
The Company operates an equity-settled, share-based compensation plan. Equity-settled share-based payments are measured at fair value at date of grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Company's estimate of shares that will eventually vest. Fair value is measured by use of the Black Scholes or a binomial options valuation model as appropriate depending on the terms of the options.
Leases
Leases in which a significant portion of the risks and rewards are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the Income Statement on a straight-line basis over the period of the lease.
Assets held under finance leases are recognised as assets of the Company at the fair value at the inception of the lease or if lower, at the present value of the minimum lease payments. The related liability to the lessor is included in the Statement of Financial Position as a finance lease obligation. Lease payments are apportioned between interest expenses and capital redemption of the liability. Interest is recognised immediately in the Income Statement, unless attributable to qualifying assets, in which case they are capitalised to the cost of those assets.
Equity
Equity comprises:
Share capital - the nominal value of ordinary shares is classified as equity.
Share premium - represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue.
Share-based payment reserve - represents equity settled share-based employee remuneration.
Merger relief reserve - the difference between cost or fair value and the nominal value of shares issued on the exchange of shares with Location Sciences AI Limited (formerly Proxama Solutions Ltd) and on acquisition of subsidiaries where shares are issued as part of the consideration.
Translation reserve - the foreign exchange difference arising on consolidation.
Capital reserve - represents a capital contribution to the Company.
Equity reserve - represents the equity element of the convertible loan note and the fair value of shares to be issued under deferred consideration arrangements.
Other reserve - the balance of the amount recognised as issued equity instruments arising on restatement of Locations Sciences AI Limited (formerly Proxama Solutions Ltd) to reflect the parent equity structure, further to the reverse acquisition basis of accounting adopted in 2013 on the share exchange by Proxama Plc for 100% of the shares of Location Sciences AI Limited.
Retained earnings - includes all current and prior period retained profits/(losses).
Equity instruments issued by the Company are recorded as the proceeds received, net of direct issue costs.
Critical accounting estimates and judgements
The preparation of financial information in conformity with IFRS requires the directors to make critical accounting estimates and judgements that affect the application of policies and reported amounts of assets and liabilities, income and expenses. An assessment of the impact of these estimates and judgements on the financial statements is set out below.
Estimates and judgements 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. Actual results could differ from these estimates and any subsequent changes are accounted for with an effect on income at the time such updated information is available.
Estimates in applying the Company's accounting policies:
Fair values for employee share schemes
The establishment of fair values in respect of employee services received in exchange for share options require the exercise of judgement and estimation in respect of the life of the option, the expected dividend yield and, in particular, the expected volatility of the underlying shares. A calculated value for the latter may not accurately reflect the future share price movements given the Company's stage of development.
Critical judgements in applying the Company's accounting policies:
Assessing whether development costs meet the criteria for capitalisation
The point at which development costs meet the criteria for capitalisation is critically dependent on management's judgement of the point at which technical feasibility is demonstrable. Commercial success of the development projects remains uncertain at the time of recognition and therefore impairment reviews are undertaken based on current estimates of future revenue streams. This assessment has resulted in the impairment of £350,431 (2016: £32,086) of development costs, previously capitalised for which the underlying projects are no longer being pursued.
Classification and valuation of financial instruments
The Company has issued financial instruments including conversion features and warrants. The valuation of these financial instruments, including Level 3 fair values where there are no observable market inputs, are performed in consultation with third party valuation specialists, with the overall aim of maximising the use of market based information.
Impairment of goodwill and other intangible assets
There are a number of assumptions management have considered in performing impairment reviews of goodwill and intangible assets, as determining whether such assets are impaired requires an estimation of the value in use of the cash generating units to which goodwill and other intangible assets have been allocated. The value in use calculation requires the directors to estimate the future cash flows expected to arise from the cash generating unit and a suitable discount rate in order to calculate the present value. An impairment of goodwill of £nil has been recognised in the year (note 11).
3. SEGMENTAL ANALYSIS
Operating segments are based on internal reports about components of the Company, which are regularly reviewed and used by the Board of Directors being the Chief Operating Decision Maker ("CODM") for strategic decision making and resource allocation, in order to allocate resources to the segment and to assess its performance.
The Company's operations in 2017 were structured as four trading companies, prior to the sale of the Digital Payments division, and its financial reporting is reported to the CODM information on three segments: Digital Payments, Proximity Marketing and Location Data and Insight. The Digital Payments segment predominantly focused on the migration of Card Payment systems to the EMV Standard known as "Chip and Pin" from old magnetic stripe systems. The Proximity Marketing segment centres on providing location-based marketing for Mobile devices, typically Smartphones. Location Data and Insight uses the 100m+ data points a day the Company processes in combination with its data analytics to provide insights to brands, agencies and other organisations.
It should be noted that a segmental analysis of the Balance Sheet is not part of routine management reporting and consequently no segmental analysis of assets is shown here.
An analysis of continuing operation revenue is as follows:
|
|
2017 |
|
2016 |
|
|
£ |
|
£ |
|
|
|
|
|
|
Digital Payments (discontinued operations)1 |
- |
|
64,873 |
|
Proximity Marketing Location Data and Insights |
327,180 144,813 |
|
204,189 - |
|
|
|
|
|
|
Total Revenue |
471,993 |
|
269,062 |
|
|
|
|
|
1 the Digital Payment revenues for the 10 months to 31 October 2017 prior to disposal by the Group were £1,056,935
An analysis of EBITDA is as follows:
|
|
2017 |
|
2016 |
|
|
£ |
|
£ |
|
|
|
|
|
|
Proximity Marketing |
(2,932,139) |
|
(2,737,899) |
|
Location Data and Insights |
(1,297,795) |
|
- |
|
|
|
|
|
|
Total EBITDA for continuing operations |
(4,229,934) |
|
(2,737,899) |
|
Total EBITDA for discontinued operations |
(464,516) |
|
(835,116) |
|
Total EBITDA |
(4,694,450) |
|
(3,573,015) |
An analysis of loss before tax is as follows:
|
|
2017 |
|
2016 |
|
|
£ |
|
£ |
|
|
|
|
|
|
Proximity Marketing |
(2,911,851) |
|
(4,789,638) |
|
Location Data and Insights |
(1,288,815) |
|
- |
|
|
|
|
|
|
Total loss before tax continuing operations |
(3,801,781) |
|
(4,789,638) |
|
Total loss before tax discontinued operations |
(1,852,712) |
|
(992,968) |
|
Total loss before tax |
(5,654,493) |
|
(5,782,606) |
|
|
|
|
|
4. FINANCE INCOME
|
|
2017 |
|
2016 |
|
|
£ |
|
£ |
|
|
|
|
|
|
Income from cash and cash equivalents |
1,498 |
|
1,697 |
|
|
|
|
|
5. FINANCE EXPENSE
|
|
2017 |
|
2016 |
|
|
£ |
|
£ |
|
|
|
|
|
|
Bank interest |
562 |
|
180,586 |
|
Finance lease interest Interest payable on convertible loan note |
- - |
|
87 65,984 |
|
Finance cost on convertible loan note |
131,710 |
|
485,335 |
|
Other loan interest |
11,007 |
|
17,656 |
|
|
|
|
|
|
|
143,279 |
|
749,648 |
|
|
|
|
|
6. LOSS BEFORE TAXATION
Exceptional items in 2017 relate to the following:
|
|
2017 |
|
2016 |
|
|
£ |
|
£ |
|
Discount on settlement of bank loan |
(190,203) |
|
- |
|
Discount on settlement of convertible loan |
(482,935) |
|
- |
|
Restructuring costs |
36,132 |
|
- |
|
|
(637,006) |
|
- |
|
|
2017 |
|
2016 |
|
|
£ |
|
£ |
|
|
|
|
|
|
The loss before taxation is stated after charging/(crediting):
|
|
|
|
|
Depreciation of property, plant and equipment - Owned - Held under hire purchase agreements |
30,559 3,890 |
|
90,053 5,057 |
|
Loss/(Profit) on disposal of tangible assets |
- |
|
12,689 |
|
Amortisation of intangible assets |
1,078,797 |
|
934,937 |
|
Impairment of intangible assets |
350,431 |
|
431,480 |
|
Government grants |
(283,361) |
|
(551,666) |
|
Research and development expensed as incurred in administrative expenses |
- |
|
264,034 |
|
Operating lease rentals |
|
|
|
|
- Land and buildings |
96,027 |
|
246,533 |
|
- Plant and machinery |
- |
|
1,323 |
|
Share-based payments |
87,746 |
|
80,446 |
|
Net foreign exchange losses |
8,065 |
|
10,981 |
|
Auditors remuneration: |
|
|
|
|
For audit services |
|
|
|
|
- Company audit |
15,000 |
|
38,500 |
|
- Subsidiary audits |
15,000 |
|
17,500 |
|
For tax advisory services |
- |
|
15,000 |
|
|
|
|
|
7. STAFF COSTS
The average number of persons employed by the Company during the year, including executive directors, was:
|
|
2017 |
|
2016 |
|
|
Number |
|
Number |
|
|
|
|
|
|
Management |
8 |
|
12 |
|
Research and development |
29 |
|
43 |
|
Commercial and client services |
10 |
|
14 |
|
|
|
|
|
|
|
47 |
|
69 |
Included within the above totals, 10 (2016: 11) research and development staff relate to the discontinued operation.
Their aggregate remuneration comprised:
|
|
2017 |
|
2016 |
|
|
£ |
|
£ |
|
|
|
|
|
|
Wages and salaries |
2,718,377 |
|
3,861,225 |
|
Social security costs |
303,854 |
|
450,142 |
|
Pension costs |
14,801 |
|
23,019 |
|
Expense of share-based payments |
87,746 |
|
80,446 |
|
|
|
|
|
|
|
3,124,778 |
|
4,414,832 |
Included within the above totals, £1,198,869 (2016: £1,196,623) relates to the discontinued operation.
8. KEY MANAGEMENT COMPENSATION
Details of aggregate key management emoluments for the year are as follows:
|
|
2017 |
|
2016 |
|
|
|
£ |
|
£ |
|
|
|
|
|
|
|
|
Salaries and other short-term employee benefits |
734,761 |
|
634,064 |
|
|
Pension costs |
773 |
|
1,234 |
|
|
Expense of share-based payments |
17,134 |
|
14,738 |
|
|
|
|
|
|
|
|
|
752,668 |
|
650,036 |
|
The directors are of the opinion that the key management of the Company comprises the executive and non-executive directors of Proxama Plc. These persons have authority and responsibility for planning, directing, and controlling the activities of the entity, directly or indirectly. At 31 December 2017, key management comprised eight (2016: seven) people. The remuneration of the highest paid director is £181,280 (2016: £171,304).
9. CORPORATION TAX CHARGE
(a) Analysis of credit in the period
|
|
2017 |
|
2016 |
|
|
£ |
|
£ |
|
|
|
|
|
|
Current tax: |
|
|
|
|
|
|
|
|
|
UK corporation tax |
(193,113) |
|
(456,220) |
|
Deferred tax: |
|
|
|
|
|
|
|
|
|
UK deferred tax movement (note 16) |
(87,000) |
|
(132,800) |
(b) Factors affecting the tax credit for the period
The tax assessed for the period does not reflect an expense equivalent to the profit before tax multiplied by the UK standard rate of corporation tax of 19.25% (2016: 20%) as explained below:
|
|
2017 |
|
2016 |
|
|
£ |
|
£ |
|
|
|
|
|
|
Loss before tax |
(3,801,781) |
|
(5,782,606) |
|
|
|
|
|
|
Loss before tax multiplied by the standard rate of |
|
|
|
|
corporation tax |
(731,843) |
|
(1,156,521) |
|
Non-deductible expenses |
215,069 |
|
104,203 |
|
Unrecognised deferred tax asset |
346,477 |
|
611,466 |
|
Additional deduction for R&D expenditure |
(151,828) |
|
(334,699) |
|
Surrender of tax losses for R&D tax credit |
66,247 - |
|
162,845 6,726 |
|
Other differences |
62,225 |
|
16,960 |
|
|
|
|
|
|
|
|
|
|
|
Total tax for the period |
(193,113) |
|
(589,020) |
Subject to the UK tax authority's agreement, the Company has UK tax losses of approximately £19,200,000 (2016: £20,160,000) available for carry forward and offset against future taxable profits arising from the same trade. The Company has a potential deferred tax asset of £3,260,000 (2016: £3,629,000) which will not be recognised until it is regarded as more likely than not that there will be sufficient taxable profits from which the tax losses can be deducted. In addition, no deferred tax asset is recognised in respect of future tax deductions on exercise of share options.
10. LOSS PER SHARE
The calculation of loss per share is based on the loss of £5,374,380 (2016: £5,193,586) and on the number of shares in issue, being the weighted average number of equity shares in issue during the period of 7,157,915,871 0.01p ordinary shares (2016: 1,332,551,074 0.01p ordinary shares). A separate adjusted loss per share calculation has been prepared related to the loss before exceptional items for the prior year.
|
|
2017 |
|
2016 |
||||
|
|
|
|
|
||||
|
Loss for the year |
(5,374,380) |
|
(5,193,586) |
||||
|
Add back: |
|
|
|
||||
|
Exceptional items |
637,006 |
|
- |
||||
|
|
|
|
|
||||
|
Adjusted loss |
(4,737,374) |
|
(5,193,586) |
||||
|
|
|
|
|
||||
|
Loss per share - basic and diluted |
(0.08p) |
|
(0.39p) |
||||
|
|
|
|
|
||||
|
Adjusted loss per share - basic and diluted
|
(0.06p) |
|
(0.39p) |
||||
|
Loss per share from continued operations - basic and diluted |
(0.05p) |
|
(0.33p) |
|
|||
|
Loss per share from discontinued operations - basic and diluted |
(0.03p) |
|
(0.06p) |
|
|||
|
|
|
|
|
||||
Dilutive instruments
Instruments that could potentially dilute basic loss per share in the future but are not included in the calculation of diluted loss per share because they are anti-dilutive, related to share options, warrants and convertible loan notes in the period.
11. INTANGIBLE ASSETS
|
|
Trademarks |
Goodwill |
Customer relationships |
Intellectual Property Rights |
Development costs |
Total |
|
|
|
£ |
£ |
£ |
£ |
£ |
£ |
|
|
Cost |
|
|
|
|
|
|
|
|
At 1 January 2016 |
5,102 |
659,288 |
1,000,000 |
6,001 |
4,443,175 |
6,113,566 |
|
|
Additions (internally developed) |
- |
- |
- |
- |
1,117,415 |
1,117,415 |
|
|
At 31 December 2016 |
5,102 |
659,288 |
1,000,000 |
6,001 |
5,560,590 |
7,230,981 |
|
|
Additions (internally developed) Disposals |
-
- |
-
(659,288) |
-
(1,000,000) |
-
- |
687,639
(4,011,399) |
687,639
(5,670,687) |
|
|
At 31 December 2017 |
5,102 |
- |
- |
6,001 |
2,236,830 |
2,247,933 |
|
|
|
|
|
|
|
|
|
|
|
Amortisation and impairment |
|
|
|
|
|
|
|
|
At 1 January 2016 |
1,874 |
- |
260,000 |
3,000 |
848,083 |
1,112,957 |
|
|
Charge for the year Impairment |
510 - |
- 399,394
|
240,000 - |
600 - |
693,827 32,086 |
934,937 431,480 |
|
|
At 31 December 2016 |
2,384 |
399,394 |
500,000 |
3,600 |
1,573,996 |
2,479,374 |
|
|
Charge for the year |
603 |
- |
200,000 |
650 |
877,544 |
1,078,797 |
|
|
Impairment On disposals |
- - |
- (399,394) |
- (700,000) |
- - |
350,431 (1,941,177) |
350,431 (3,040,571) |
|
|
At 31 December 2017 |
2,987 |
- |
- |
4,250 |
860,794 |
868,031 |
|
|
|
|
|
|
|
|
|
|
|
Net book amount |
|
|
|
|
|
|
|
|
At 31 December 2017 |
2,115 |
- |
- |
1,751 |
1,376,036 |
1,379,902 |
|
|
At 31 December 2016 |
2,718 |
259,894 |
500,000 |
2,401 |
3,986,594 |
4,751,607 |
|
Internal development represents the cost incurred in developing the Company's DaaS platform and software development kits. These internal costs have been capitalised in accordance with the Company's accounting policies where all the conditions for capitalisation have been met.
The directors have identified a number of R&D projects related to the Digital Payments business sitting within Location Sciences AI Limited that were not transferred as part of the disposal. Due to the fact that the directors see the likelihood of future revenues attributable to these products as low, the decision has been made to fully impair the value of these products totalling £350,431.
Impairment of research and development is considered within the conditions of capitalisation. Amortisation charges are included in administrative expenses in the Income Statement.
Other intangible assets represent amounts paid to third parties for acquiring trademarks and intellectual property rights.
|
|
Carrying amount of intangibles before impairment |
Value in use |
Impairment |
|
|
£'000 |
£'000 |
£'000 |
|
Digital Payments |
350 |
0 |
350 |
As noted above, formal impairment testing has been undertaken for intangibles and an impairment of £350,431 is recognised. The goodwill wholly relates to the Digital Payments division which was disposed of in 2017.
12. PROPERTY, PLANT AND EQUIPMENT
|
|
Office Equipment |
Computer Equipment |
Total |
|
|
£ |
£ |
£ |
|
Cost |
|
|
|
|
At 1 January 2016 |
220,420 |
217,704 |
438,124 |
|
Additions |
16,258 |
11,855 |
28,113 |
|
Disposals |
(58,061) |
(145,608) |
(203,669) |
|
At 31 December 2016 |
178,617 |
83,951 |
262,568 |
|
Additions |
6,316 |
- |
6,316 |
|
Disposals |
(5,944) |
(4,435) |
(10,379) |
|
At 31 December 2017 |
178,989 |
79,516 |
258,505 |
|
|
|
|
|
|
Depreciation |
|
|
|
|
At 1 January 2016 |
149,373 |
161,681 |
311,054 |
|
Charge for the year |
55,768 |
39,342 |
95,110 |
|
Eliminated on disposals |
(57,661) |
(130,860) |
(188,521) |
|
At 31 December 2016 |
147,480 |
70,163 |
217,643 |
|
Charge for the year |
22,674 |
11,775 |
34,449 |
|
Eliminated on disposal |
(5,944) |
(4,080) |
(10,024) |
|
At 31 December 2017 |
164,210 |
77,858 |
242,068 |
|
|
|
|
|
|
Net book amount |
|
|
|
|
At 31 December 2017 |
14,779 |
1,658 |
16,437 |
|
At 31 December 2016 |
31,137 |
13,788 |
44,925 |
Hire purchase agreements
Included within the net book value of £16,437 is £5,524 (2016: £9,424) relating to assets held under finance lease agreements. The depreciation charged in the year in respect of such assets amounted to £3,900 (2016: £5,057).
13. TRADE AND OTHER RECEIVABLES
|
|
2017 |
|
2016 |
|
|
£ |
|
£ |
|
|
|
|
|
|
Trade receivables |
34,095 |
|
817,188 |
|
Prepayments and accrued income |
12,342 |
|
3,019 |
|
Other receivables |
186,950 |
|
255,249 |
|
|
|
|
|
|
|
233,387 |
|
1,075,456 |
Trade receivables comprise amounts due from customers for services provided. All amounts are short term. The net carrying amount of trade receivables is considered a reasonable approximation of fair value. Average credit terms were 7 days (2016: 30) and average debtor days outstanding were 44 (2016: 164).
An aged analysis of trade receivables that were over one month old at the year end excluding the amounts impaired is presented below:
|
|
2017 |
|
2016 |
|
|
£ |
|
£ |
|
|
|
|
|
|
Outstanding between one and two months |
4,035 |
|
- |
|
Outstanding between two and three months |
- |
|
10,620 |
|
Outstanding over three months |
- |
|
230,080 |
|
|
|
|
|
|
|
4,035 |
|
240,700 |
Trade receivables as a whole have decreased due to the overall decrease in revenue compared to 2017, which is a result of the restructuring of the Company during the year.
All of the Company's trade and other receivables have been reviewed for impairment. An impairment provision of £9,065 (2016: £5,000) has been recognised in the year.
14. CASH AND CASH EQUIVALENTS
|
|
2017 |
|
2016 |
|
|
£ |
|
£ |
|
|
|
|
|
|
Cash at bank |
1,140,239 |
|
2,026,764 |
15. TRADE AND OTHER PAYABLES
|
|
2017 |
|
2016 |
|
|
£ |
|
£ |
|
|
|
|
|
|
Trade payables |
152,394 |
|
232,842 |
|
Taxation and social security |
58,555 |
|
535,528 |
|
Accruals |
155,405 |
|
261,010 |
|
Deferred income |
- |
|
1,155,227 |
|
Other payables |
116,552 |
|
152,646 |
|
|
|
|
|
|
|
482,906 |
|
2,337,253 |
The directors consider that the carrying amount of trade and other payables approximated their fair value.
Trade payables are paid between 30 and 60 days of receipt of the invoice.
16. BORROWINGS
|
|
2017 |
|
2016 |
|
|
£ |
|
£ |
|
Current portion of borrowings |
|
|
|
|
Bank loans |
- |
|
2,500,000 |
|
Convertible loan notes |
- |
|
2,655,662 |
|
Derivative financial instrument |
- |
|
63,113 |
|
Finance lease agreements |
4,169 |
|
3,899 |
|
|
4,169 |
|
5,222,674 |
|
|
|
|
|
|
Non-current borrowings |
|
|
|
|
Bank loans |
- |
|
- |
|
Convertible loan notes |
- |
|
- |
|
Finance lease agreements |
587 |
|
4,925 |
|
|
587 |
|
4,925 |
|
Bank loans |
2017 |
|
2016 |
|
|
£ |
|
£ |
|
Current portion of borrowings |
- |
|
2,500,000 |
|
Non-current borrowings |
- |
|
- |
|
|
- |
|
2,500,000 |
Barclays Loan: the Barclays loan of £2,500,000 was partially repaid in the year with the balance being exchanged for share warrants. £375,000 was repaid in August 2017 and 3,863,021,931 share warrants were issued with an exercise price of 0.03p. The fair value of the warrants issued of £1,934,797 is shown in the equity reserve in the Statement of Financial Position. The £190,203 discount on settlement of the bank loan is shown in note 5.
White Angle Convertible Loan Notes: the convertible loan note with a capital value of £400,000 was partly cancelled in the year with the balance being converted into shares. In June 2017, £100,000 of the convertible loan notes were cancelled and £300,000 were converted into ordinary shares at a price of 0.03p per share. The £482,935 discount on settlement of the convertible loan is shown in note 5.
Darwin Capital Limited Convertible Loan Notes: the £2,000,000 convertible loan notes were all converted into ordinary shares during the first quarter of 2017 as follows:
· £300,000 converted in January 2017 into 75,373,854 ordinary shares at a price of 0.398016 pence
· £900,000 converted in February 2017 into 319,774,878 ordinary shares at a price of 0.281448 pence
· £800,000 converted in March 2017 into 292,937,282 ordinary shares at a price of 0.273096 pence
· In addition, Darwin Capital Limited were issued with 558,352,249 share warrants with an exercise price of 0.1692 pence per share.
|
Finance lease agreements |
2017 |
|
2016 |
|
|
£ |
|
£ |
|
Gross finance lease liabilities - minimum lease payments: |
|
|
|
|
Within one year |
4,169 |
|
3,899 |
|
Later than one year and no later than five years |
587 |
|
4,925 |
|
|
4,756 |
|
8,824 |
|
Less: Future finance charges on finance leases |
- |
|
- |
|
Present value of finance lease liabilities |
4,756 |
|
8,824 |
Finance lease agreements are secured on the assets concerned. Interest rates are fixed for the term of the agreements which are payable by equal fixed monthly amounts where applicable.
17. DEFERRED TAX LIABILITIES
The Company had recognised a deferred tax liability on the fair value of the intangible assets acquired through the acquisition of Aconite, which has been derecognised further to disposal, as follows:
|
|
£ |
|
At 1 January 2017 |
354,400 |
|
Charge for year |
(87,000) |
|
Eliminated on disposal |
(267,400) |
|
At 31 December 2017 |
- |
18. FINANCIAL INSTRUMENTS AND TREASURY RISK MANAGEMENT
Treasury risk management
The Company manages a variety of market risks, including the effects of changes in foreign exchange rates, liquidity and counterparty risks.
Credit risk
The Company's principal financial assets are bank balances, cash, trade and other receivables.
The credit risk on liquid funds is limited because the counterparties are UK banks or "Blue Chip" companies with high credit ratings assigned by international credit rating agencies.
As a result, investment returns and credit risk to the Company in this regard are not material to the financial statements.
The Company's maximum exposure to credit risk is limited to the carrying amount of financial assets at the reporting date. No collateral is held in respect of these amounts which are expected to be received in full. In order to manage credit risk, credit limits are reviewed on a regular basis in conjunction with debt ageing and collection history.
Currency risks
The Company's operations are located in the United Kingdom. The Company's transactions are primarily denominated in sterling with little exposure to foreign currency risks. Due to the limited risks to the Company, forward exchange contracts are not considered necessary and are not used. At the year end, the Company operated sterling bank accounts only.
The translation risk on the Company's foreign exchange payables and receivables is considered to be immaterial due to their short-term nature.
Liquidity risk
The Company has sufficient capital resources to meet its external current liabilities as they fall due in 2018.
Operational cash flow represents on going trading revenue and costs, administrative costs and research and development activities. The Company manages its liquidity requirements by the use of both short-term and long-term cash flow forecasts. The Company's policy is to ensure facilities are available as required or to issue equity share capital to ensure cash resources available are in accordance with long-term cash flow forecasts. The Company currently has no undrawn committed facilities as at 31 December 2017.
The Company actively manages its working capital to ensure it has sufficient funds for operations and planned research and development activities.
The Company's main financial liabilities include trade payables and operational costs. All amounts for trade and other payables are due for payment in accordance with agreed settlement terms with suppliers or statutory deadlines. All such payment terms are within six months.
Capital management
The Company's activities are of a type and stage of development where the most suitable capital structure is that of one primarily financed by equity. The directors will reassess the future capital structure when projects under development are sufficiently advanced.
The Company's financial strategy is to utilise its resources and current trading revenue streams to further appraise and test the Company's research and development projects and support their commercialisation. The Company keeps investors informed of its progress with its projects through regular announcements and raises additional equity finance at appropriate times.
The Company manages capital on the basis of the carrying amount of equity, and debt with regard to maintaining sufficient liquidity to enable the Company to continue to trade and invest in commercialisation.
The amounts managed as capital by the Company for the reporting periods under review are summarised as follows:
|
|
2017 |
|
2016 |
|
|
£ |
|
£ |
|
|
|
|
|
|
Capital |
|
|
|
|
|
|
|
|
|
Total equity |
2,551,731 |
|
435,760 |
|
|
|
|
|
|
Total equity |
2,551,731 |
|
435,760 |
|
Borrowings |
4,756 |
|
5,227,599 |
|
Overall financing |
2,556,487 |
|
5,663,359 |
|
|
|
|
|
|
Equity to overall financing ratio |
1 |
|
0.08 |
Categories of financial instruments
All of the Company's financial assets are classified as loans and receivables.
The accounting policies applied are set out in note 2. The carrying amounts of financial assets as at 31 December 2017 are categorised as follows:
|
|
2017 |
|
|
2016 |
|
Carrying value of financial assets and liabilities within the consolidated statement of financial position: |
£ |
|
|
£ |
|
|
|
|
|
|
|
Financial assets classified as loans and receivables |
|
|
|
|
|
Trade and other receivables |
183,045 |
|
|
1,072,437 |
|
Cash and cash equivalents |
1,140,239 |
|
|
2,026,764 |
|
|
1,323,284 |
|
|
3,099,201 |
The directors consider that the carrying amount of trade and other receivables approximates their fair value.
The carrying amounts of financial liabilities and classifications is as follows:
|
Financial liabilities at amortised cost |
2017 £
|
|
2016 £ |
|
Trade and other payables |
424,351 |
|
646,498 |
|
Convertible loan notes |
- |
|
2,655,662 |
|
Other borrowings |
4,756 |
|
2,508,824 |
|
|
429,107 |
|
5,810,984 |
|
Financial liabilities at fair value |
2017 £ |
|
2016 £ |
|
Conversion feature on convertible loan |
- |
|
63,113 |
The derivative classified as a financial liability is based on a Level 3 valuation per the hierarchy as established by IFRS13, being derived from the volatility in the Company's share price.
The contractual maturity of financial liabilities is as follows:
|
At 31 December 2017 |
Within 6 months |
Between 6 - 12 months |
Between 1 to 2 years |
Total |
|
|
£ |
£ |
£ |
£ |
|
Trade and other payables |
424,351 |
- |
- |
424,351 |
|
Other borrowings |
2,084 |
2,085 |
587 |
4,756 |
|
|
426,435 |
2,085 |
587 |
429,107 |
|
At 31 December 2016 |
Within 6 months |
Between 6 - 12 months |
Between 1 to 2 years |
Total |
|
|
£ |
£ |
£ |
£ |
|
Trade and other payables |
646,498 |
- |
- |
646,498 |
|
Convertible loan notes |
- |
2,655,662 |
- |
2,655,662 |
|
Other borrowings |
1,949 |
2,501,950 |
4,925 |
2,508,824 |
|
|
648,447 |
5,157,612 |
4,925 |
5,810,984 |
19. SHARE CAPITAL
Allotted, called up and fully paid:
|
|
2017 |
|
2016 |
|
|
£ |
|
£ |
|
13,745,747,069 (2016: 1,721,245,256) ordinary shares of 0.01p each |
1,374,575 |
|
172,124 |
|
1,040,712,398 (2016: 1,040,712,398) deferred shares of 0.99p each |
10,303,053 |
|
10,303,053 |
|
|
11,677,628 |
|
10,475,177 |
|
|
|
|
|
Shares issued during the year
· On 6 January 2017 75,373,854 ordinary 0.01p shares were issued at a premium of 0.3980p per share.
· On 8 February 2017 319,774,878 ordinary 0.01p shares were issued at a premium of 0.2814p per share.
· On 27 March 2017 292,937,282 ordinary 0.01p shares were issued at a premium of 0.2731p per share.
· On 25 July 2017 367,501,733 ordinary 0.01p shares were issued at a premium of 0.03p per share.
· On 26 July 2017 9,968,914,066 ordinary 0.01p shares were issued at a premium of 0.03p per share.
· On 14 August 2017 1,000,000,000 ordinary 0.01p shares were issued at a premium of 0.03p per share.
Share rights
Ordinary shares have attached to them full voting, dividend and capital distribution (including on winding up) rights; they do not confer any rights of redemption.
Deferred shares have attached to them no voting, dividend or capital distribution (including on winding up) rights; they do not confer any rights of redemption.
20. SHARE-BASED PAYMENTS
The share option scheme was introduced by Location Sciences AI Limited (formerly Proxama Solutions Limited) on 29 September 2011. It was established to attract and retain the best available personnel for positions of responsibility, to provide additional incentive to employees, officers or consultants of the Company and to promote the success of the Company's business. Further to the acquisition of the business by Proxama Plc, the options are granted over shares in the parent entity. The share option scheme is administered by the directors.
During the period, three types of share-based payment arrangements (Option A, Option B and Options C), existed as follows:
For Option A, the options granted become exercisable three years from the vesting start date provided that option holder remains an employee, the company has achieved a 15% compound growth in its share price over the three years from the vesting start date. If the performance criteria above have not been achieved by the date which is three years from the vesting start date, then the options shall lapse at that date and cease to be exercisable. If the conditions have been met, the option will be settled in equity.
For Option B, the options granted become exercisable three years from the vesting start date provided that the option holder remains an employee, the Company has achieved EBITDA in the 12 months to 31 December 2017 of not worse than (£3,352,000). If the performance criteria above have not been achieved by the date which is three years from the vesting start date, then the options shall lapse at that date and cease to be exercisable. If the conditions have been met, the option will be settled in equity.
For Option C, the options granted become exercisable three years from the vesting start date provided that option holder remains an employee, the company has achieved revenues in the 12 months to 31 December 2020 of more than £3 million. If the performance criteria above have not been achieved, then the options shall lapse and cease to be exercisable. If the conditions have been met, the option will be settled in equity.
Details of the share options outstanding at the year end are as follows:
|
|
Weighted average exercise price (pence) 2017 |
Number 2017
|
Weighted average exercise price (pence) 2016 |
Number 2016
|
|
Outstanding at the beginning of the year |
0.017 |
38,865,269 |
0.025 |
43,758,682 |
|
Granted during the year |
0.004 |
1,553,723,782 |
0.005 |
18,432,939 |
|
Forfeited during the year |
0.016 |
(26,168,003) |
0.020 |
(9,418,065) |
|
Exercised during the year |
- |
- |
0.053 |
(13,908,287) |
|
Outstanding at the end of the year
|
0.004
|
1,566,421,048
|
0.017
|
38,865,269
|
The weighted average contractual life of options outstanding at year end is 2.9 years (2016: 8.1 years). The weighted average share prices at the date of the grant is 0.07p (2016:0.48). The range of exercise prices for the options outstanding at the year end is 0.004p - 0.05345p (2016: 0.0029p - 0.05345p).
Options have been valued using a Binomial option pricing model that takes into account factors specific to the share incentive planned including performance conditions. The exercise price of all the options in issue is 0.03p per ordinary share. The performance conditions include either a 15% compound growth in the share price over a three year period, a revenue target for the 12 months to 31 December 2020 or target share price. The inputs into the model for options granted in the year were as follows:
|
|
|
|
|
2017 |
|
|
Average share price (pence) |
0.03p |
||||
|
Exercise price (pence) |
0.035p |
||||
|
Expected volatility |
50% |
||||
|
Risk‑free interest rate |
2% |
||||
The expected volatility was determined with reference to both historic volatility and the industry volatility give the short period of time that the parent Company has been listed. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations, and is estimated at 10 years.
The Company recognised total expenses of £87,746 (2016: £80,447) related to equity settled, share-based payment transactions during the year.
21. OPERATING LEASE COMMITMENTS
The future aggregate minimum lease payments under non-cancellable operating leases are as follows:
|
|
Property And Total |
Property And Total |
|
|
2017 |
2016 |
|
|
£ |
£ |
|
|
|
|
|
No later than one year |
11,307 |
96,027 |
|
Later than one year and no later than five years |
- |
172,701 |
|
|
11,307 |
268,728 |
The Company leases all of its properties. The terms of property leases vary between properties, although they all tend to be tenant-repairing with periodic rent reviews and break clauses.
22. CAPITAL COMMITMENTS
No capital expenditure was committed to as at 31 December 2017 (2016: £nil).
23. RELATED PARTY TRANSACTIONS
As at 31 December 2017, S Gregory (a director), was owed £2,000 (2016: £2,000) by the Company.
During 2013 the Company issued a total of 1,000,000 50p loan notes to White Angle Ltd, a company wholly owned by Gavin Breeze, for a total of £500,000. Interest was accruing on the loan notes at 10% per annum (non-compound). Both the interest and the loan notes were repayable on the third anniversary of the issue of the loan note instrument. However, on 16 September 2015, £100,000 of the loan principal along with all the accrued interest at that point of £127,534 was repaid.
Following the successful placing and open offer on 24th July 2017, £300,000 of the White Angle Ltd loan notes were converted into 1,000,000 ordinary shares and the remaining £100,000 of loan notes were cancelled.
24. POST BALANCE SHEET EVENT
David Rae was appointed CFO of the Company on 12th February 2018.
This information is provided by RNS
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