ATQT.L Regulatory News (ATQT)

30 January 2017

ATTRAQT Group plc

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

UNAUDITED PRELIMINARY FULL YEAR RESULTS

ATTRAQT Group plc (AIM: ATQT), a leading provider of visual merchandising, ecommerce site search and personalised recommendation technology, announces its unaudited preliminary results for the twelve months ended 31 December 2016.

Financial Highlights

· Revenue growth of 22% to £3.6m (FY15: £2.9m)

o Recurring revenue1 increased 22% to £3.2m (FY15: £2.7m)

· Adjusted EBITDA2 losses were £1.6m, in line with expectations, reflecting the accelerated investment in the business

· Losses before tax were £1.9m, in line with expectations (FY15: loss £0.7m)

· Adjusted basic EPS loss 6.6 pence per share (FY15: loss 3.1 pence per share)

· Exit Rate (period end contracted annualised billing) up 15% to £3.9m (FY15: £3.4m)

· Gross margins increased to 86.2% (FY15: 83.5%)

· Cash at period end £1.2m (FY15: £3.0m)

1. Monthly recurring revenue accrued January-December 2016.

2. Adjusted EBITDA refers to earnings before interest, tax, depreciation, amortization and share based payments

Operational Highlights

· Continued sales momentum with 42 deals in the year, including 31 new clients, bringing the total to 121 (FY15: 110)

o New clients include: Fraser Hart & Fields, Volcom, Matches Fashion, Moss Bros., Russell & Bromley, JoJo Maman Bebe, Eddie Bauer, L.K. Bennett, The North Face, OKA Direct, Timberland, Vans (Europe) and Victoria Beckham

· Average newly signed deal value increased to £32.3k (FY15: £28.4k)

· US sales operations performing well with seven new customers signed, bringing the total clients in North America to 19 (FY15: 21)

· 37 new customer implementations delivered, bringing total number of live sites to 134 (FY15: 154)

· Continued investment in upgrading the Freestyle Merchandising platform ('the Platform'), with three new core code releases in the period

Andre Brown, CEO of ATTRAQT Group plc, commented,

"I'm pleased to report another year of good progress with the Group continuing to grow both its revenues and client base in the UK and North America, whilst at the same time increasing gross margin. We have signed 42 new deals in the period, including several large global retailers and have delivered a 22 per cent. Increase in revenue for the year.

"Our objective is to deliver strong profitable growth by becoming the clear global leader in online visual merchandising. With an exit rate of £3.9m, good growth in recurring revenue and a strong sales pipeline for H1 2017, we are confident in the continued success of ATTRAQT for 2017 and the foreseeable future."

For further information, please contact:

About ATTRAQT

ATTRAQT launched its merchandising platform, Freestyle Merchandising, in 2009 which included product recommendations, site search and visual merchandising. The client base has now grown to 121 clients, including Tesco Clothing (part of Tesco Plc (LSE: TSCO)), boohoo.com (LSE: BOO) and Superdry (LSE: SGP). The Group has market presence in Western Europe and North America with offices in London and Chicago. For more information, please visit: http://attraqt.com 

Chairman's Statement

I am delighted to report continued strong progress for ATTRAQT in 2016 with sustained sales momentum. The Company signed 42 deals in the period, including 31 new clients, and increased the average new client deal value to £32.3k per annum.

The financial results for FY 2016 are very encouraging with the Company delivering revenue growth of 22 per cent. to £3.6m, which includes a 22 per cent. increase in recurring revenue to £3.9m. The business showed good control of costs during the period to deliver an EBITDA loss of £1.6m, in line with expectations and reflecting the accelerated investment in the business. Gross margins increased to 86.2 per cent.

Expansion in the North America market progressing well, as demonstrated by the signing of seven new clients, including Eddie Bauer and Volcom.

The Company continues to invest and develop its core software platform, specifically upgrading the Freestyle Merchandising platform which saw seven new core code releases during the period. On a backdrop of continued solid growth and exciting times for ATTRAQT, the Board looks forward to the future with confidence.

Nick Habgood

Chairman

30 January 2017

CEO's Statement

Introduction

ATTRAQT continues to deliver strong operational and financial progress. We have grown our client base in both the UK and North America, reaching out to larger multi-national retailers as evidenced by our increasing average new client deal value and gross margin.

Business model

The Group's business model is based on a recurring monthly service fee plus a one-off set-up fee and additional follow-on project fees. Clients contract up for a minimum of 12 months, with some larger clients signing up for a longer period of two years.

The current sales model is based on direct sales via a dedicated sales team. Due to the importance of the functionality provided by the Platform to our clients, client retention is strong with most clients automatically renewing at the end of the contractual term.

Growth strategy

The Group's objective is to become the global leader in online visual merchandising.

Throughout the year ATTRAQT has continued to build on its business plan, founded on four key elements:

1) Invest in sales and marketing to grow client base and recurring revenue;

2) Expand the Company's production capacity to keep pace with accelerating sales;

3) Develop strategic partnerships - both sales and technology - to accelerate sales growth and extend our product offering; and

4) Extend the capabilities of the platform through continued investment in research and development, adding new features and creating new products to initiate new revenue streams.

Review of Sales & Operations

ATTRAQT continues to deliver strong operational results, with 42 deals during the year, of which 31 were new clients, bringing the total to 121 (FY15: 110). The Company also delivered 37 new customer implementations, bringing the total number of live sites to 185 (FY15: 154).

The Company experienced an outage at its data centre during H1, which was quickly addressed and subsequently transitioned to a new data centre provider. There was an increase in customer attrition of nine directly as a result of the outage.

A key focus for ATTRAQT remains the development of the North American business. Progress has been encouraging as demonstrated by client wins in the region, including Eddie Bauer and Volcom. Given the size of the market we believe there are still a significant number of opportunities available to expand ATTRAQT's footprint in the region.

The Company maintained investment in upgrading the Platform, with seven new core code releases in the period including by example:

§ Hypercaching: Hypercaching gives ATTRAQT the option to deploy its platform with an extra layer where product details are cached at the rules engine level. This means that the merchandising database and search engine do less work and only have to deliver product ID results to the hypercache layer once. The product cache layer adds all the product information to the response that goes to the client rather than it having to be retrieved from the search and merchandising database. The product ordering (balance factors) and guided navigation also come from the product cache layer. This provides the platform with significant scale and performance advantage.

§ Built-in AB Testing: Allows the client to have ATTRAQT automatically split traffic between multiple merchandising rules and report on comparative conversion rates of each test.

§ Rule Synchronisation: Functionality to copy merchandising rules so clients with multiple instances/regions save time setting up rules that they want to be the same across regions.

Financial Review

Total revenue increased by 22.6 per cent. to £3.6m (FY15: £2.9m), as new customers were added and existing customers commissioned additional sites. The recurring monthly revenue from live clients rose 21.7 per cent. from £2.7m to £3.2m, now representing 90 per cent. (FY15: 91 per cent.) of total Group revenue. The Exit Rate (year-end contracted annualised billing) for 2016 was up 6.1 per cent. to £3.9m.

The Group showed good management of costs to deliver recorded losses before tax and at EBITDA level in line with management expectations. Losses before tax increased to £1.9m (FY15: £0.7m) and adjusted EBITDA losses for the year increased to £1.6m (FY15: £0.2m). The planned investment of the proceeds of the 2015 fundraising in expanding sales, marketing and production lead to the EBITDA losses increasing in the short-term, reflecting investment in the Group's operational expansion; however, the rate of growth is expected to accelerate as a result, with a return to EBITDA profitability in the mid-term.

ATTRAQT continues to invest in technical enhancements to the existing product offerings and in new products. Some of this cost is capitalised and some is absorbed as part of the operating costs of the business.

Outlook

ATTRAQT has seen another year of sustained growth of revenues and client base in the UK and North America, whilst at the same time increasing gross margin. We have signed 42 new deals in the period, including several marquee retailers and have delivered a 22 per cent. increase in revenue for the year.

Our objective is to deliver strong profitable growth and become the technology partner of choice for leading online retailers. With an exit rate of £3.9m, good growth in recurring revenue and a strong sales pipeline for H1 2017, we are confident in the continued success of ATTRAQT for 2017 and the foreseeable future.

André Brown

Chief Executive Officer

30 January 2017

ATTRAQT Group PLC

Unaudited consolidated statement of comprehensive income

For the year ended 31 December 2016

Unaudited consolidated statement of financial position

As at 31 December 2016

Unaudited consolidated statement of cash flows

for the year ended 31 December 2016

Unaudited consolidated statement of changes in equity

for the year ended 31 December 2016

Reserves

The following describes the nature and purpose of each reserve within equity:

Notes forming part of the unaudited consolidated financial statements

for the year ended 31 December 2016

1. Accounting policies

General information

The principal activity of ATTRAQT Group PLC ("the Company") and its subsidiaries (together "the Group") is the development and provision of eCommerce site search, merchandising and product recommendation technology.

The principal trading subsidiaries are ATTRAQT Limited and ATTRAQT Inc.

The Company is a public limited company which is quoted on the Alternative Investment Market of the London Stock Exchange and is incorporated and domiciled in the UK. The address of the registered office is 3 Waterhouse Square, 138 Holborn, London, EC1N 2SW.

The registered number of the company is 8904529.

Basis of preparation

The consolidated financial statements are for the year ended 31 December 2016. They have been prepared in compliance with International Financial Reporting Standards (IFRSs) and IFRS Interpretations Committee (IFRIC) interpretations as adopted by the European Union as at 31 December 2016 and 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 and are presented in Sterling rounded to the nearest thousand except where indicated otherwise.

A business combination is a ''common control combination'' if the combining entities are ultimately controlled by the same party (including the same individual shareholder or a group of shareholders acting together in accordance with a contractual arrangement) both before and after the combination and the common control is not transitory.

For the purposes of the consolidated financial information, the initial creation of the ATTRAQT Group PLC group has been treated as a business combination involving entities under common control. Business combinations involving entities under common control fall outside the scope of IFRS 3: Business Combinations. In accordance with IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors, management have considered the pronouncements of other standard-setting bodies in developing an accounting policy for common control combinations. The group adopted the prevailing accounting treatment defined under UK Generally Accepted Accounting Practice at the time of the transaction as permitted under IFRS.

Going concern

The financial statements have been prepared under the going concern basis as the directors have undertaken a review of the future financing requirements of the ongoing operation of the group and are satisfied that sufficient cash together with bank and other facilities is available to meet its working capital requirements for at least 12 months from the date of signing these financial statements. The directors accordingly consider it appropriate for the financial statements to be prepared on a going concern basis as disclosed in page xx of the Directors Report.

Changes in accounting policies

The Directors continue to monitor the impact of future changes to the reporting requirements but do not believe the proposed changes will significantly impact the financial statements.

At the date of authorisation of these financial statements, certain new standards, amendments and interpretations to existing standards applicable to the Group have been published but are not yet effective, and have not been adopted early by the Group.

Basis of consolidation

Where the company has control over an investee, it is classified as a subsidiary. The company controls an investee if all three of the following elements are present: power over the investee, exposure to variable returns from the investee, and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts and circumstances indicate that there may be a change in any of these elements of control.

The consolidated financial statements present the results of the company and its subsidiaries ("the Group") as if they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.

Revenue

Revenue represents sales to external customers at invoiced amounts less value added tax or local taxes on sales. Where work is completed at the year-end but not invoiced, the ATTRAQT Group accrues for this income.

The Group derives the majority of its revenue from the provision of eCommerce services to online retailers which includes site search, merchandising and product recommendation technology. These are recurring revenues that are recognised on a monthly basis.

Revenue from services provided by the ATTRAQT Group is recognised when the ATTRAQT Group has performed its obligations and in exchange obtained the right to consideration which can be reliably measured and it is probable economic benefits will flow to the entity.

If amounts have been invoiced in advance for services, these amounts are deferred until the service has been provided to the client at which point the income is recognised. Within the ATTRAQT Group income is recognised across two streams:

· Recurring revenues - a monthly subscription fee is earned from customers to the software as a service platform. Operation of the service is provided for a fixed term.

· One-off fees - work is undertaken for existing clients to expand or upgrade the service they receive and this is billed for separately. Revenue is recognised on stage of completion on this work. Stage of completion is calculated based on estimated hours to complete the work versus the number of hours already done.

Foreign currency

Transactions entered into by Group entities in a currency other than the currency of the primary economic environment in which it operates (the "functional currency") are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the reporting date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in profit or loss.

On consolidation, the results of overseas operations are translated into Sterling Pounds at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations, including goodwill arising on the acquisitions of those operations, are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income and accumulated in the foreign exchange reserve.

Exchange differences recognised in profit or loss in Group entities separate financial statements on the translation of long-term monetary items forming part of the Group's net investment in the overseas operation concerned are reclassified to other comprehensive income and accumulated in the foreign exchange reserve on consolidation.

Financial assets

Loans and receivables

These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of services to customers (e.g. trade receivables), but also incorporate other types of contractual monetary asset. They are initially recognised at fair value plus transaction costs that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.

Impairment provisions are recognised when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay in payment) that the Group will be unable to collect all of the amounts due under the terms receivable, the amount of such a provision being the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable. For trade receivables, which are reported net, such provisions are recorded in a separate allowance account with the loss being recognised within administrative expenses in the consolidated statement of comprehensive income. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written off against the associated provision.

From time to time, the Group elects to renegotiate the terms of trade receivables due from customers with which it has previously had a good trading history. Such renegotiations will lead to changes in the timing of payments rather than changes to the amounts owed and, in consequence, the new expected cash flows are discounted at the original effective interest rate and any resulting difference to the carrying value is recognised in the consolidated statement of comprehensive income (operating profit).

The Group's loans and receivables comprise trade and other receivables and cash and cash equivalents in the consolidated statement of financial position. Their carrying value approximates fair value at both reporting dates.

Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short term highly liquid investments with original maturities of three months or less, and - for the purpose of the statement of cash flows - bank overdrafts.

Financial liabilities

Other financial liabilities

Other financial liabilities include the following items:

· Trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method.

· Bank overdrafts are shown within loans and borrowings in current liabilities on the consolidated statement of financial position.

Leases

Where the risks and rewards of ownership of an asset are transferred to the group as lessee, the lease is treated as a finance lease. Other leases are treated as operating leases. Future instalments payable under finance leases net of finance charges are included in creditors with the corresponding asset values recorded in property, plant and equipment and depreciated over the shorter of their estimated useful lives or their lease terms. Lease payments are apportioned between the finance element, which is charged to the income statement as interest, and the capital element, which reduces the outstanding obligation for future instalments.

Payments under operating leases are charged to the statement of comprehensive income on a straight line basis over the lease term.

Share capital

Financial instruments issued by the Group are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset.

The Group's ordinary shares are classified as equity instruments.

Income taxes

Current income tax assets and liabilities comprise those obligations to fiscal authorities in the countries in which the Group carries out its operations. They are calculated according to the tax rates and tax laws applicable to the fiscal period and the country to which they relate. All changes to current tax liabilities are recognised as a component of tax expense in the income statement unless the tax relates to an item taken directly to equity in which case the tax is also taken directly to equity. Tax relating to items recognised in other comprehensive income is recognised in other comprehensive income.

Deferred taxation

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the consolidated statement of financial position differs from its tax base, except for differences arising on:

· the initial recognition of goodwill;

· the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting or taxable profit; and

· investments in subsidiaries and jointly controlled entities where the Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised.

The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered).

Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:

· the same taxable Company; or

· different Company entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be settled or recovered.

Segmental reporting

For the purpose of IFRS 8, the chief operating decision maker takes the form of the Board of Directors. The Directors' opinion is that the business of the group is to provide cloud based E-commerce solutions. Based on this, there is considered to be one reportable segment. The internal and external reporting is on a consolidated basis with transactions between group companies eliminated on consolidation. Therefore, the financial information of the single segment is the same as that set out in the consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated statement of financial position and statement of cash flows.

Internally generated intangible assets (development costs)

Expenditure on internally developed products is capitalised if it can be demonstrated that:

· it is technically feasible to develop the product for it to be sold;

· adequate resources are available to complete the development;

· there is an intention to complete and sell the product;

· the Group is able to sell the product;

· sale of the product will generate future economic benefits; and

· expenditure on the project can be measured reliably.

Capitalised development costs are amortised over three years. The amortisation expense is included within administrative expenses in the consolidated statement of comprehensive income.

Development expenditure not satisfying the above criteria and expenditure on the research phase of internal projects are recognised in the consolidated statement of comprehensive income as incurred.

Property, plant and equipment

Items of property, plant and equipment are initially recognised at cost. As well as the purchase price, cost includes directly attributable costs and the estimated present value of any future unavoidable costs of dismantling and removing items. The corresponding liability is recognised within provisions.

Property plant and equipment is depreciated over its estimated useful economic life taking into account their residual values. The estimated useful economic life of these assets is:

Share based payments

The Group has issued share options to certain employees, in return for which the Group receives services from those employees. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense.

The total amount to be expensed is determined by reference to the fair value of the options granted including any market performance conditions (for example the Company's share price) but excluding the impact of any service or non-market performance vesting conditions (for example the requirement of the grantee to remain an employee of the Group).

Non market vesting conditions are included in the assumptions regarding the number of options that are expected to vest. The total expense is recognised over the vesting period. At the end of each period the Group revises its estimates of the number of options expected to vest based on the non-market vesting conditions. It recognises the impact of any revision in the income statement with a corresponding adjustment to equity.

2. Significant accounting judgements and estimates

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

Share based payments

Share options are recognised as an expense based on their fair value at date of grant. The fair value of the options is estimated through the use of a valuation model - which require inputs such as the risk-free interest rate, expected dividends, expected volatility and the expected option life - and is expensed over the vesting period. Some of the inputs used to calculate the fair value are not market observable and are based on estimates derived from available data, such as employee exercise behaviour and employee turnover.

Capitalisation of development costs

It is a requirement under IFRS that development costs that meet the criteria prescribed in the standard are capitalised. The assessment of each project requires that a judgement is made as to the commercial viability and the ability of the company to bring the product to market.

3. Financial instruments - Risk Management

The Company is exposed through its operations to the following financial risks:

· Credit risk

· Foreign exchange risk

· Liquidity risk

In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note describes the Group's objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.

There have been no substantive changes in the Group's exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note.

Principal financial instruments

The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:

· Trade receivables

· Cash and cash equivalents

· Trade and other payables

A summary of the financial instruments held by category is provided below.

Financial liabilities

A summary of financial liabilities is shown below. All financial liabilities held by the Group at 31 December 2016 are classified as held at amortised cost.

All financial assets held by the Group at 31 December 2016 are classified as loans and receivables and there is no difference between the carrying amount and the fair value.

At 31 December 2016 the three largest customers owed a total of £42,000. The directors do not consider that there is any reason to provide against any part of this balance.

All financial liabilities held by the Group at 31 December 2016 are classified as held at amortised cost.

General objectives, policies and processes

The Board has overall responsibility for the determination of the Company's risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Company's Chief Executive Officer. The Board receives quarterly reports from the Company Chief Financial Officer through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets.

The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Company's competitiveness and flexibility. Further details regarding these policies are set out below:

Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group is mainly exposed to credit risk from credit sales. It is Group policy, implemented locally, to assess the credit risk of new customers before entering contracts. Such credit ratings take into account local business practices.

Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. For banks and financial institutions, only independently rated parties with minimum rating "A" are accepted.

Further disclosures regarding trade and other receivables are provided in note 13.

Cash at bank

A significant amount of cash is held with the following institutions:

On 8 January 2015 the Group obtained an overdraft facility with Barclays Bank for up to £50,000. This is available for immediate drawdown. It is secured over the assets of ATTRAQT Limited.

Foreign exchange risk

Foreign exchange risk arises when the Group enters into transactions denominated in a currency other than the functional currency. The Group's policy is, where possible, to allow entities to settle liabilities denominated in their functional currency (primarily Sterling Pounds) with the cash generated from their own operations in that currency.

In order to monitor the continuing effectiveness of this policy, the CEO reviews a monthly forecast, analysed by the major currencies held by the Group, of liabilities due for settlement and expected cash reserves.

Liquidity risk

Liquidity risk arises from the Group's management of working capital. The Group manages the risk that it will encounter difficulty in meeting its financial obligations as they fall due by forecasting its short term cash position on a regular basis.

The Group's policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. To achieve this aim, it seeks to maintain cash balances (or agreed facilities) to meet expected requirements for a period of at least 30 days.

The Board receives rolling 12-month cash flow projections on a quarterly basis as well as information regarding cash balances. At the end of the financial year, these projections indicated that the Group expected to have sufficient liquid resources to meet its obligations under all reasonably expected circumstances.

In the management of liquidity risk, the group monitors and tries to maintain a level of cash and cash equivalents deemed adequate by management to finance the Group's operations and mitigate the effects of fluctuations in cash flows.

The following table sets out the contractual maturities (representing undiscounted contractual cash-flows) of financial liabilities:

4. Revenue

There are three customers contributing 12, 9 and 8 per cent. respectively to Group revenues. The Directors are not concerned about the continuance of these relationships.

The Group reports geographical revenue on the basis of the revenue of the relevant statutory billing entity.

5. Exceptional administrative expenses

There were no exceptional administrative expenses for 2016 (FY15: £118,000 being (i) £61,000 of costs incurred in respect of the secondary purchase of 5,000,000 shares in December 2015 done in conjunction with the December 2015 placing of 6,316,346 new shares on AIM, and (ii) £57,000 of costs related to the non-recurring award of a bonus to Andre Brown regarding the IPO in 2014 and the placing in December 2015.)

6. Loss from operations

Loss from operations is taken after taking account of the following items:

7. Employee benefit expenses

The charge related to share based payments in 2016 was £170,000 (FY15 - £255,000)

Key management personnel compensation

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group, which comprises only the directors of the company.

(i) Relates to David Stirling who resigned as a director on 25 September 2015.

The Employer's National Insurance contributions expensed in the period relevant to the Key management personnel compensation was £59,000 (FY15: £52,000).

The remuneration of the highest paid director is shown in the report of the Remuneration Committee.

Staff Numbers

The average monthly number of employees, including Directors and individuals employed by the Group are as follows:

8. Income tax credit

The reasons for the difference between the actual tax charge for the year and the standard rate of corporation tax in the United Kingdom applied to profits for the year are as follows:

9. Loss per share

At the year end the Group had 1,341,680 exercisable share options (2015: 1,341,680), however in accordance with IAS 33 where there is a loss for the year, there is no dilutive effect of options and therefore there is no difference between the basic and diluted loss per share.

10. Property, plant and equipment

11. Intangible assets

12. Investments in subsidiaries

The subsidiaries of ATTRAQT Group PLC, all of which have been included in these consolidated financial statements, are as follows:

Investments in subsidiaries, associates and joint ventures are held in the Statement of Financial Position of the Company at historic cost less any allowance for impairment.

13. Trade and other receivables

Invoices for services rendered are due immediately on the rendering of the invoice, however the majority of customers settle debts within 45 days of the date of the invoice.

As at 31 December 2016 trade receivables of £472,000 (2015: £384,000) were technically past due of which £174,000 were provided against (2015: £23,000). They relate to the customers with no history of default. Payment of the overdue receivables is expected in due course. The ageing analysis of these overdue receivables is as follows:

As at 31 December 2016 trade receivables of £174,000 (2015: £23,000) were considered bad or doubtful. If fully impaired the amount of the debt would be written off from the allowance account.

Movements on the allowance account for bad and doubtful debts:

The movement on the provision for impaired receivables has been included in administrative expenses in the consolidated statement of comprehensive income.

Other classes of financial assets included within trade and other receivables do not contain impaired assets.

14. Trade and other payables

15. Deferred tax

No deferred tax assets have been recognised due to uncertainties over their ultimate recoverability.

16. Share capital

17. Share based payment

The company operates an EMI share option scheme for employees. The options are valid for 10 years from the date of grant. After satisfaction of any performance condition included in the award the options will become exercisable on the earlier of any of the following events:

- The third anniversary of the Date of Grant;

- On a change of Control of the Company as defined in the Plan rules;

- On a Sale or Disposal of the Company as defined in the Plan rules; or

- Following the exercise of discretion by the Board.

Details of the number of share options and the weighted average exercise price (WAEP) outstanding during the year are as follows:

The options outstanding at the year-end are set out below:

The company uses a Black Scholes model to estimate the cost of share options.

The following information is relevant in the determination of the fair value of options granted during the year. The assumptions inherent in the use of this model are as follows:

· The option life is the estimated average period over which the options will be exercised.

· There are no vesting conditions remaining which apply to the share options other than that they vest at the earlier of 3 years' continued service with the Group.

· No variables change during the life of the option (e.g. dividend yield remains zero).

· Volatility has been calculated over the 5 year period prior to the grant date by reference to the daily share price of comparable listed companies.

· Expectations of staff retention over the vesting period have been calculated by reference to the three year period prior to the grant date.

No options were granted during the year.

The total expense recognised during the year by the Group, for all schemes, was £170,000 (FY15: £255,000) of which £nil was recognised in respect of the shares that vested in the year and are Exercisable at year end (FY15: £209,000).

The weighted average remaining life of the options outstanding at the end of the year was 7.8 years (FY15: 8.8 years).

No options were exercised during the period.

18. Leases

Operating leases - lessee

The total future value of minimum lease payments is due as follows:

19. Related party transactions