BST.L Regulatory News (BST)

8 March 2019

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.

Big Sofa Technologies Group plc

("Big Sofa Technologies" or the "Company")

Final Results for the Year Ended 31 December 2018

Big Sofa Technologies (AIM:BST), an international video analytics provider to the insight and analytics industries, announces results for the twelve months ended 31 December 2018.

2018 Financial Highlights

· Revenues increased by 29% to £1.7 million (2017: £1.3 million)

· Gross profit increased by 16% to £1.0 million (2017: £0.8 million)

· Operating expenses reduced by 5% to £4.7 million (2017: £4.9 million)

o Programme of annualised cost savings and technology efficiencies initiated during 2018 that are expected to reduce 2019 operating expenses by approximately £1.0 million compared to 2018

· Loss for the year reduced by 13% to £3.4 million (2017: £3.9 million)

· Investments made into Big Sofa Technologies during the year of £4.6 million

o £3.4 million from Ipsos, a Big Sofa Technologies customer and one of the world's largest market research organisations

o £0.35 million from current/former directors of Big Sofa Technologies

· Eliminated Company debt through part conversion and repayment of the remaining approximately £0.65 million Eridge Capital Limited convertible loan

2018 Operational Highlights

· Work undertaken for customers including Ipsos, 84.51˚, Target Corporation, Procter & Gamble and a large US-based multinational food and beverage company

· Growing traction with Ipsos, which accounted for approximately a quarter of revenues

· Revenues generated from strategic integration of video into large scale surveys were approximately £0.35 million

· Revenues generated from projects to analyse behaviour at scale were approximately £0.8 million

· Revenues from Big Sofa Technologies' analytics platform (renamed Visual Insight System), which enables clients to upload, store and manage video, were approximately £0.45 million

· Significant platform improvements to stability, scalability, ingestion capacity, machine learning capability and user experience

Board Changes

· Appointed global consumer insight and strategy industry leader, Kirsty Fuller, as Chief Commercial Officer in October 2018 and subsequently as Chief Executive Officer in November 2018 (replacing Simon Lidington who became a non-executive director; Simon will not stand for re-election as a director of the Company at the Annual General Meeting. He will resign with effect from 1 April 2019 but will remain as a consultant)

· Appointed John Haworth, Chief Financial Officer of Ipsos MORI UK, a UK subsidiary of Ipsos and a 20% shareholder in Big Sofa Technologies, as a non-executive director (replacing Laurence Stoclet as Ipsos' nominated director)

· Adam Reynolds and Paul Clark stepped down as non-executive directors in June and October 2018 respectively, both in support of efforts to streamline the board while maintaining an appropriate level of governance

Post Year-End Highlights

· Following completion of platform improvement works and through other technology efficiencies, £0.35 million of technology-related annualised cost savings to be achieved in 2019 versus 2018 (part of the £1.0 million of annualised cost savings)

· Successful platform integrations into customer knowledge management systems and complementary technology platforms to facilitate deeper strategic integration at the partner or client level

o First Stop Data Shop - system used by Procter & Gamble

o KnowledgeHound - technology platform for quantitative data and research

o Ipsos - ongoing integrations across key service lines

Kirsty Fuller, Chief Executive Officer of Big Sofa, commented:

"My priority on becoming Chief Executive Officer in November 2018 was to initiate a strategic review and identify areas for cost savings. With a significant R&D programme having completed at year-end, I was able to initiate a programme of material annualised cost savings with a restructuring of the entire team, a refocus on streamlined, efficient processes and a sharpening of the selling proposition. As a result, we began 2019 as a stronger, leaner business.

2019 is an important year for Big Sofa Technologies. It sees the Company step forward confidently with a new vision, a new suite of client offerings, and a more robust and exciting technology capability."

Enquiries:

About Big Sofa Technologies Group plc

Big Sofa Technologies is an insight-led technology company. The design and development of our technology has been guided by expert understanding of the insight and analytics industries and the needs, pressures and business questions of the clients they serve.

We uncover and analyse new-to-the-industry behavioural data sets in video, enabled by the power of our pioneering data capture and platform technology. We are innovating both in how video-led projects and programmes are designed and in how the data is analysed, showcased, embedded and re-mined.

Our software platform collates, analyses and organises large volumes of raw/unstructured video enabling our clients, which include leading market research and data companies and major household brands, to perform detailed and sophisticated consumer insight analysis and make genuine use of video content.

Big Sofa Technologies' shares are admitted to trading on the London Stock Exchange's AIM market under the ticker BST.L.

To find out more, visit www.bigsofatech.com

Follow us on twitter at @bigsofatech

Chairman's Statement

Big Sofa Technologies continued to build its customer base in 2018. During the year, the Company's clients included Ipsos, 84.51˚, Target Corporation, Procter & Gamble and a large US-based multinational food and beverage company. I draw confidence from the fact that diverse and substantial organisations such as these are engaging with Big Sofa Technologies and our video analytics capabilities.

It is particularly significant that Ipsos, a Big Sofa Technologies customer and one of the world's largest market research organisations, invested an aggregate £3.4 million into the Company during 2018, resulting in its ownership of approximately 20 per cent of the business.

The Company's balance sheet benefitted both from investments of an aggregate £4.6 million during 2018, including from former and current directors, as well as from the elimination of the Company's debt through the part conversion and repayment of the Eridge Capital convertible loan on 31 May 2018.

Several changes were made to the composition of the board of directors during 2018.

On 26 September 2018, we welcomed John Haworth, Ipsos MORI UK's chief financial officer, as a non-executive director. Our teams are working together to raise awareness and increase adoption of our technology and services throughout Ipsos' global organisation. John, who is London-based, replaced Laurence Stoclet, who is Paris-based, as Ipsos' nominated director on the board of Big Sofa Technologies.

Kirsty Fuller was appointed to the board on 1 October 2018 and took over as Chief Executive Officer the following month. Kirsty is a leader in the global consumer insight and strategy industry and is already having a positive impact both on our strategic development and the management of costs. Kirsty replaced Simon Lidington who, having co-founded the business, moved into a non-executive director role from which the Company continues to benefit from his expertise. Simon will not stand for re-election as a director of the Company at the Annual General Meeting. He will resign with effect from 1 April 2019 but will remain as a consultant.

Adam Reynolds and Paul Clark stepped down as non-executive directors on 4 June 2018 and 10 October 2018 respectively, both in support of efforts to streamline the board of directors while maintaining an appropriate level of governance.

I am encouraged by the progress that Big Sofa Technologies continues to make in cultivating relationships with a growing number of large organisations and our deeper customer strategic integrations. I look forward to this positive momentum being continued.

Nick Mustoe

Non-executive Chairman

7 March 2019

Review of Operations

Strategy

I joined Big Sofa Technologies in October 2018 and took over as Chief Executive Officer the following month. My priority was to initiate a strategic review and identify areas for cost savings. The business had invested significantly in its technology platform architecture in 2018 - a programme which reached completion at the end of the year. With this fundamental R&D programme completed, I was able to initiate a programme of material annualised cost savings with a restructuring of the entire Big Sofa Technologies team, a refocus on streamlined, efficient processes and a sharpening of the selling proposition. This strategic review and implementation resulted in Big Sofa Technologies starting 2019 as a stronger, leaner business.

I see three pillars to our 2019 strategic roadmap:

Strategic integration with key Ipsos service lines

The investment by Ipsos represented a significant milestone in the strategic growth of Big Sofa Technologies. In 2019, there is a commitment to strategic integration programmes with key Ipsos service lines with a focus on the enablement of innovation in research approaches to drive revenue growth. This spans the integration of video and video analytics into survey and community platforms as well as new generation product testing and service evaluation. An invitation to the forthcoming Ipsos Leadership Conference will enable further progression of this agenda.

Visual Insight System

Alongside the Ipsos strategic partnership, the business will be building on its direct-to-client successes, developing a bespoke (and newly named) Visual Insight System (a dynamic, interactive knowledge management system applicable to all sizes of customer) for knowledge sharing, data re-mining and cross-discipline collaboration and connection. In 2018, we completed successful projects for clients including 84.51˚, the consumer insights subsidiary of Kroger, the second largest retailer in the world, Procter & Gamble, and a large US-based multinational food and beverage company. We aim to extend our reach beyond retail and consumer packaged goods into technology and media brands. With improved, interactive functionality being delivered in the first half of 2019, this offering has been renamed Visual Insight System.

Automated data extraction

Large scale data providers are investigating the automated extraction of data from video/film footage at scale. This pushes forward our machine learning roadmap delivered by our R&D function. The applications of this capability span manufacturing processes, healthcare and more. A small pilot was conducted with a potential partner in this space at the end of 2018. This third strategic pillar represents a new revenue stream for 2019 and may take time to build.

Revenues

Ipsos accounted for approximately a quarter of Big Sofa Technologies' revenues in 2018, predominantly derived from projects to strategically integrate video into large scale surveys.

Revenues generated from integration of video into large scale surveys were approximately £0.35 million in 2018.

Revenues generated from projects to analyse behaviour at scale were approximately £0.8 million in 2018. Using artificial intelligence and human-led tools, we transform unstructured content into meaningful and quantifiable data for clients. We completed successful projects of this nature during the year for 84.51˚, Procter & Gamble and a large US-based multinational food and beverage company.

Big Sofa's analytics platform, which enables clients to upload, store and manage video, generated approximately £0.45 million of revenue in 2018.

The balance of revenues in 2018 was derived from the production of videos for the presentation of client data and consulting fees.

Technology Development and Integration

Throughout 2018, Big Sofa Technologies completed a comprehensive architecture rebuild, creating a more scalable video analytics platform. As a result, the platform:

- ingests and stores significantly higher volumes and file sizes

- enables clients to collate and curate media more easily as well as monitor compliance

- has an improved interface for intuitive navigation and interpretation

- has a smart, automated pipeline for rapid processing and quality checks

Cost Savings

A rolling roadmap of technology improvements will be implemented in an agile and timely manner in 2019 thanks to the platform architecture rebuild of 2018. However, with the substantial platform architecture rebuild completed, the Company will be able to realise, when aggregated with other technology efficiencies, approximately £0.35 million in technology-related annualised expense savings in 2019 compared to 2018. These savings form part of an overall programme of savings across the business in 2019 of approximately £1.0 million compared to 2018. This is the outcome of a thorough strategic review resulting in a streamlining of people and processes.

Outlook

2019 is an important year for Big Sofa Technologies. It sees the Company step forward confidently with a new vision, a new suite of client offerings, and a more robust and exciting technology capability. Our product roadmap combines enhancements to our interface, functionality, machine learning capabilities and overall user experience.

I believe that our three commercial pillars - Ipsos integration, direct-to-client Visual Insight System (from knowledge management to knowledge activation) and automated data extraction (machine learning) - represent a sound strategy for 2019. Combined with a more agile, exciting product roadmap, a fresh visual identity, and a team and office restructuring, we have a strong recipe for success.

Kirsty Fuller

Chief Executive Officer

7 March 2019

Financial Review

Summary Financial Performance

Revenues increased by 29 per cent to £1.7 million (2017: £1.3 million), the majority of which continued to come from the US.

Gross profit increased by 16 per cent, reflecting higher revenues, although the gross profit margin dropped from 65 to 58 per cent as we incurred higher initial costs for some of the large-scale behavioural analysis projects in the year. Having incurred set-up costs on these early projects, we do not expect to incur them again and therefore expect the margin to increase in the medium to long term.

Operating expenses reduced by 5 per cent to approximately £4.65 million, as the benefit of annualised cost savings initiated in the latter part of 2018 began to take effect.

Increased revenues and gross profit, combined with reduced expenses, resulted in the loss for the year reducing by 13 per cent to approximately £3.4 million (2017: £3.9 million).

Net cash outflow from operating activities was approximately £2.8 million (2017: £3.0 million). R&D investment (included within 'purchase of intangible assets' in the Consolidated Statement of Cash Flows) was approximately £0.7 million (2017: £0.6 million). In total, the Company has invested approximately £1.7 million between 2016-2018 in R&D. This investment has generated cash tax credits from HMRC of approximately £0.1 million in both 2017 and 2018 and £0.15 million in 2019 to date, all in respect of development work undertaken in 2016 and 2017. Additional cash tax credits for development work undertaken in 2018 are expected in 2019.

During the year we continued to invest in our technology platform, to develop new commercial relationships and to deepen existing ones. This has been funded, in part, through raising a total of £4.7 million of additional equity in 2018. This funding also enabled the Company to redeem the unconverted portion of the Eridge Capital Limited convertible loan (approximately £0.65 million). The Company is now debt free.

At the year-end the Company had net assets of approximately £2.0 million (2017: £0.45 million).

Joe MacCarthy

Chief Financial Officer

7 March 2019

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Notes to the preliminary financial statements

Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRSs), as adopted by the European Union ("adopted IFRSs") and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

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

Changes in accounting policies and disclosures

The Group has applied any applicable new standards, amendments to standards and interpretations that are mandatory for the financial year beginning on or after 1 January 2018 including IFRS 15 and IFRS 9. However, none of them has a material impact on the Group's consolidated financial statements.

Going concern

The directors have prepared a cash flow forecast covering a period extending beyond 12 months from the date of these financial statements. The forecast contains certain assumptions about the performance of the business including growth in future revenue, the cost model and margins; and importantly the level of cash recovery from trading. The directors are aware of the risks and uncertainties facing the business but the assumptions used are the directors' best estimate of the future development of the business.

The Group forecasts include additional funding requirements upon which the Group is dependent. The directors are satisfied that these funding requirements will be met. Additionally, in the event that the Group fails to meet its revenue predictions, the directors have outlined cost saving measures that will ensure there are enough funds to operate for at least the next twelve months. The directors are satisfied that this can be achieved.

After considering the forecasts and the risks, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For these reasons, they continue to adopt the going concern basis of accounting in preparing the annual financial statements. Nevertheless, the directors acknowledge that there is material uncertainty related to events or conditions that may cast significant doubt on the entity's ability to continue as a going concern and, therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of business.

The financial statements do not include any adjustments that would result if the Group was unable to continue as a going concern.

1. Earnings per share

Basic earnings per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period. The weighted average number of shares for the current and prior years included shares issued by Big Sofa Technologies Group plc.

Due to the loss in the periods the effect of the share options was considered anti-dilutive and hence no diluted loss per share information has been provided.

Annual Report and Accounts

Copies of the Annual Report and Accounts, together with a notice convening an annual general meeting will be available within the Investors section of the Company's website at www.bigsofatech.com later today.

Annual General Meeting

The annual general meeting of the Company will be held at 9.00 a.m. on 1 April 2019 at the offices of Kindred Agency Limited, 4th Floor, Dean Bradley House, 52 Horseferry Road, London SW1P 2AF.