MAIS.L Regulatory News (MAIS)

blur Group plc

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

2014 Final Results

& Board and Management changes

blur Group plc (BLUR), the world's largest online marketplace for business services, is pleased to announce its audited final results for the year ended 31 December 2014.

Financial Highlights 

· Revenue increased by 35.5% to $4.72m (Adjusted $3.48m in 20131).

· Gross profit increased to $1.65m (Adjusted $0.67m in 2013).

· LBITDA2 increased to $10.34m in 2014 (Adjusted $6.5m in 2013).

· Cash balance as at 31 December 2014 of $17.40m (Adjusted 2013 $9.56m).

2014 Operational Highlights

· Larger enterprise customers submitted $28.5m of projects in 2014, an increase of 90% on 2013, and the platform saw Amazon, Solvay and Danone as new customers.

· 37.7% of projects kicked off were by repeat customers.

· The Service Provider community increased by 69% to 49,555 (34,109 in 2013).

· Launch of blur 4.0 with a focus on enterprise first and mobile. 9% of projects were briefed from smartphones.

· In 2014, 3,681 new projects were submitted; a 57% increase on 2013.

· Added investment of $22m (gross) from the placing and open offer in June 2014.

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

2 2013 financials restated for revised revenue recognition policy with zero revenue now being recognised at kick off date and adjusted for larger projects suspended in 2014

Post Year End Highlights

· Introduction of Premium Services, and paid subscription plans for both buyers and Service Providers

· Enterprise Service Providers are now 5% of blur's community and have grown to match that of the enterprise Customer. The likes of WPP, Edelman, and Bain and Co have all joined in 2015.

· Repeat projects have increased during H1 2015 to just below 50% (75% increase on 2014)

· Through the funding blur has received from investors, it has significantly invested into the development of its technology platform and its community providing a marketplace that will both attract enterprise customers and provide an enterprise class service.

· Increased efficiencies and cost controls including‎ reduction in headcount from 84 to 65 resulting in falling monthly cash costs

· Appointment of Tim Allen as CFO, who joins the blur management team on 20 July 2015 from Cambium Networks. Tim Allen is expected to be appointed to the Board by the end of the year.

· Further strengthening of the management team. David Sherriff appointed as Deputy Chairman and Lead Independent Director in February 2015. Promotion of Co-Chief Operating Officers, Gerry Gross based in the US, who takes responsibility for enterprise sales and blur's regional offices; and Helen Blackmore, based in Exeter, UK, takes responsibility for back office integration, people operations, marketplace utilisation and group-wide processes.

· Non-Executive Director, Robert Brooksbank leaves the Board as of 30th June 2015. ‎New non-executive director will be appointed shortly.

· The Financial Reporting Council (FRC) inquiry announced on 10th April 2015 remains on going. The Board have been working with the support of its new auditors, KPMG, to provide appropriate responses and conclude outstanding queries.

Philip Letts, blur Group CEO, said:

"2014 signified an important shift at blur Group, simply, the transition to the larger enterprise. The business has learned and matured and is now successfully attracting both the enterprise buyer and service provider We have moved from being a broad-based business, servicing a wide range of small, medium and large customers, to one that today is focused on the medium and large enterprise. I believe that with our fundraise in 2014 coupled with established maturity in reporting we have the cash resources to execute our strategy. I would also like to take this opportunity to thank Robert for the significant time and support that he has given to the Group over the past few years."

blur Group plc audited Annual Report and Financial Statements for the year ending 31 December 2014 are now available for you to download and review on blur's website at www.blurgroup.com/investors/#reports

About blur Group plc at blurgroup.com

blur operates the world's largest online marketplace for business services. To date almost 60,000 businesses have used blur to buy or sell services online, including companies like Amazon, Regus, Caterpillar, Argos, Danone and GE submitting over $450m of services requirements to blur's platform.

blur Group is a public company listed on the London Stock Exchange's AIM market (BLUR) and is headquartered in the UK with regional sales offices in the US and Europe.

 Chairman & CEO Statement

2014 signified an important shift at blur Group, simply, the transition to the Enterprise. I have seen the business mature and successfully attract both the Enterprise buyer and Service Provider resulting in a move from a broad-based business, servicing a wide range of small, medium and large customers, to one that today is largely focused on the medium and large enterprise. The evolution to the Enterprise is our future, and whilst it is never an easy or simple transition, by shaping our technology, and having great people, we are able to succeed in disrupting the way Enterprise businesses buy and sell business services.

We must remember that a business model like ours has not been tried and tested before so we have been fortunate that our shareholders believed and supported us with significant investment in 2014. As a result, we have been able to learn and mature, continuing our path towards delivering the value we have always promised both to our shareholders and customers. I have already seen blur's global sales teams evolve, grow and become focused solely on the Enterprise customer, our technology advance from blur 3.0 to blur 4.0 - leading on Enterprise first and mobile, as well as significant improvements in our internal processes to in order to increase efficiencies and drive our internal costs down. We embedded ourselves further into our new HQ in Exeter, and utilised our own platform to drive our own business initiatives, this combined with our drive on efficiencies saw our full-time headcount reduce from 81 to 65 within the year. No easy feat with over 65,000 customers and service providers to manage. This growth and the increasing adoption of the marketplace by Enterprise customers has been enabled by the investment in both technology supporting the marketplace and the development of our service provider community which now numbers some 60,842 providers. This investment is significant over the last 8 years. This all drives us to one main aim; to further enable our scalability and transition into an international Enterprise business.

As from H1 2015 the group is trading on a strong and stable basis. Looking forward, with matured processes, management stability, a clear simple strategy and a strong set of advisors and auditors; I can confidently state that the business has clear and strong controls in place to manage all key aspects of the business, and in my opinion, we are on track. As you will have seen from recent announcements, we have been winning new Enterprise customers including Amazon, Argos and Danone, and are continuing to attract large numbers of Enterprise class service providers and building repeat business especially with our Enterprise customers. To further strengthen our foundations we have taken steps to build the leadership team at blur, firstly with the appointment of David Sherriff as Deputy Chairman and Lead Independent Director in February 2015. We are also pleased to add strength to the Finance team with the appointment of a new Chief Financial Officer, Tim Allen, who joins blur in July 2015 from Cambium Networks and who will have a clear focus on cash management and cost control. It is expected that Tim Allen will be appointed to the Board by the end of the year. We also expect to appoint a new non-executive director shortly to take over from Robert Brooksbank as chairman of the audit committee. We would like to thank Robert, who will leave the Board as of 30th June 2015, for the significant time and support that he has given the Group over the past few years. We have also promoted Co-Chief Operating Officers, Gerry Gross based in the US, who takes responsibility for Enterprise sales and blur's regional offices; and Helen Blackmore, based in Exeter, UK, takes responsibility for back office integration, people operations, marketplace utilisation and group-wide processes. We are clear, internally, that our passion to achieve our Mission remains unchanged. Our people are working exceptionally hard to give our buyers and Service Providers a great experience every time they use our platform, and now our customers are not only returning to blur but they are sharing their experiences - ranking blur 8.3/10 on Trustpilot customer feedback website.

I am confident that with our current cash balances, supported by the fundraise in 2014 and now established maturity in reporting, we have the cash resources to support blur's journey. We continue to 'tune' our business to ensure we have the right mix of people and service partners, and are seeking and developing deeper relationships with our customers, such that our goal is now to develop Enterprise Ecosystems within some of the world's largest businesses. It is becoming clear, as we better understand the Enterprise space that there are three key solutions that we see the Enterprise market looking to blur for: Managing the indirect spend, which we call Tail Spend, access to supplier diversity and driving to a 'Size Zero Enterprise', which we have been recently promoting with 'doing business better'. By building our product base and introducing new Premium Services, and Subscriptions and Licenses throughout 2015, blur is now set to support the future adoption of the Enterprise buyer and service provider driving to its goal of having one to two hundred large Enterprise customers using the platform serviced by an increasing number of Enterprise suppliers. With dozens of large Enterprise buyers and thousands of large Enterprise service providers already in place we have a strong start.

I would like to thank the team at blur, our Service Providers, our customers, our shareholders and our advisors, who have shown belief and confidence in our ability to get the world buying services online.

blur Strategy

Strategic Outcome

We plan, by the end of this Strategic Planning period, to be a profitable, cash generative and trusted business that provides thousands of enterprise businesses worldwide with a new and better way to buy and sell services. We continue to monitor our overall progress by revenue and gross margin growth.

Strategic Assets & Stakeholders

We focus our resources on our five strategic assets - our platform, our service providers, our market insight, our data and our business model and serve five key stakeholders - our people, our investors, the market at large, our buyers, and our service providers.

Growth Equation

We believe that the more customer advocates we have in more enterprise accounts, each achieving personal and business success from use of the blur platform, the more they will repeat buy, resulting in a lower cost of sale and higher operating profitability. We have metrics that monitor this equation throughout the project cycle.

US First

The US is a large market that traditionally adopts new and better ways of doing business earlier than others. Given this, we are increasingly focusing our marketing and sales resources towards the US, while not forgetting the UK and Europe. We plan to start targeting Asia later in 2015.

Automation

The more we are able to automate our business model, the lower our cost to serve, and the greater our capacity to scale. We strive to augment or remove human intervention in our processes. We monitor our revenue per employee as a key metric of increasing productivity.

Enterprises & Partnerships

We aim to deliver our proposition into larger enterprises who want to become more efficient and effective. We will increasingly reach these organisations through partnerships with major management consultancies and professional services organisations. We will measure our effectiveness by percentage of enterprise adoption and repeat purchase metrics.

Strategic Path

We have invested significantly in our technology and the development of the service provider community putting us at the forefront of innovation. We are a growth company focused on repeat projects from a growing enterprise customer base that provides a higher quality income stream and more reliable revenues.

We plan to increase our productivity through technology and process automation, growing the volume of business by targeting the US and strategic partnerships, and developing 'Premium' services as well as subscription and licences for both Enterprise buyers and service providers which will increase our gross margin. Based on our cash forecasts the current cash position provides the funding for the business to allow us to execute our strategy.

Philip Letts

Chairman & CEO

30 June 2015 

Strategic Report

Business Overview

2014 was the year of transition. The change of the 2013 revenue recognition policy and following the ongoing review by the FRC, we have now fully embedded the changes into the business processes across the company. Governance at Board level was strengthened with the appointment in February 2015 of David Sherriff as Deputy Chairman and Senior Independent Director and continuity in the management team. The addition of Tim Allen as Chief Financial Officer in July 2015 will strengthen the senior management team with specific focus on cash management and cost control.

Our technology and processes continue to improve and we are now Enterprise-ready with momentum growing as the year has progressed.

We are also now seeing operational efficiencies in our model with a reduction in staff numbers improving our revenue per employee metric. 

Business Model

The move to the Enterprise is key to eliminating the previous reliance on large contingent projects that by and large caused the amendment to prior year's revenue and the reported revenue recognition issues. We have developed new qualification processes throughout our Delivery functions that largely eliminate the risk from contingent projects. Enterprise customers are typically financially stable, robust in their project requirements, and once they have adopted the blur model come back for repeat projects. Cash conversion from Enterprise customers is considerably more consistent and predictable. This is evidenced in our improved invoice to cash profile that began in H2 2014 and is continuing through 2015.

blur as a company is now Enterprise ready with a vast array of Enterprise class service providers to meet our Enterprise customer's demands, and internally all business processes are now Enterprise standard. The move to the Enterprise is being supported by more Enterprise sales people, with the first purely Enterprise focused position added in July 2015, and Enterprise customer support, financed by a gradual move away from spend on direct marketing.

Market & Trends

blur continues to enjoy first mover advantage in the e-commerce services sector. As e-commerce services grows and becomes more widely known, especially with enterprise customers this business opportunity may attract a competitor that is larger or who has greater financial resources.

blur is investing to expand our lead in technology, expertise, and size of service provider and customer communities and believes it has a lead and level of knowledge and expertise which would take several years to replicate.

The move to the Enterprise is being supported by investment in more Enterprise sales people and customer support, financed by a gradual move away from purely direct marketing.

Technology

blur 4.0 was launched in 2014 to attract more enterprise-class customers. The component-based platform architecture was built for customers using desktop, mobile and tablet devices. The platform's framework enhances the customer experience with a unified browsing experience on any device (iOS, Android and Windows Phone) and at any screen size or resolution for desktop users.

blur 4.0 enables automation of the pitch selection process, shaving weeks off the time taken by customers to find a solution that meets their exact requirements.

The shortlist will be generated by the machine intelligence capabilities of blur Sense™ which uses a set of proprietary algorithms to automatically match buyers and their pitches. blur 5.0 can enable the business to rapidly scale with fewer human interventions, and will be a big move towards the first generation ERP (Enterprise Resource Planning) platforms designed specifically for services. Later the platform will be extended with API (Application Programming Interface) so that blur 5.0 will integrate easily with other enterprise software platforms.

People - the blur way

Our people are 100% customer obsessed with quality as the key driver whether it is our service, clear communication, product, data, or performance. We pride ourselves on having 'Zero Passengers', meaning everyone is hands-on, 'managing from the middle', and contributing to our and our customers success. No matter the role, everyone adds value with 'Zero Inefficiency' that means we have a high impact start, followed by a strong middle, and an awesome end.

Governance & Controls

In the period under review, the Governance of the Group was enhanced in two main areas, firstly with the appointment of KPMG in November 2014 as the Group's auditors and secondly the appointment on the 8th February 2015 of David Sherriff to the position of Deputy Chairman and Senior Independent Director.

As well as further strengthening Board governance, David Sherriff will be working with the Board to explore the options available to the Group with regards to increasing the Company's profile and providing further growth and investment opportunities for both current and future shareholders.

The Size Zero Enterprise

We believe that the 'rules of business', fashioned over centuries since the industrial revolution, are there to be broken. What we are seeing is the rise of slimmer, smarter businesses that operate in new ways, taking advantage of new collaborative technologies and a globally available resource base. These organisations are 'just big enough', highly focused on delivering value, and use data to drive insights and innovation. Some of these businesses were start-ups not that long ago and some are long-established. They all share a new mind-set and belief that growth does not mean the number of people you have in your organisation, but the value you create. We call these organisations, Size Zero Enterprises. They are the businesses that the blur model enables.

We are living the Size Zero Enterprise story ourselves. 12 months ago, blur Group relocated from its London premises and moved 150 miles west to Exeter saving around $240,000 on property costs. blur itself is now on the journey to become truly Size Zero with every relevant job, task or project being posted on to the Platform. It has itself grown in revenues with a reduction in staff.

Operational Highlights

Transitioning to the Enterprise

2014 and into 2015 has been all about optimizing the platform, marketplace and delivery for our transition to servicing the Enterprise customer*.

Platform

The launch of blur 4.0 in 2014 began blur's move to focus on the Enterprise customer and Enterprise service provider. Releases throughout 2014 and into 2015 have steadily reinforced our focus on the Enterprise. It improves customer experience, enhances the Enterprise value proposition, and improves conversion rates and repeat business. Key developments:

· Technology platform that allows integration through apps into the Enterprise systems of our buyers and service providers

· Platform built to be fully responsive (mobile optimized). Our mobile/tablet first approach meant 9% of projects briefed were from smartphones in 2014

· Unified Enterprise Level Dashboards in Project Space rolled out for customers and service providers - delivering an improved project delivery tool to enable quicker and efficient task management, file sharing and messaging between the customer, service provider and blur's Project team. Accessed anywhere and all securely cloud hosted

New Product

Development of Premium Services in 2014 - led to the launch of Premium Services in 2015, which add additional value for both customer and blur and provide significant gross margin to the bottom line.

Customers

Enterprise Customers

The addition of Enterprise customers in 2014 including Amazon, Solvay, and Danone evidence s-commerce market acceptance, customer credit maturity and confirm blur's expanding addressable market. Key developments:

· $28.5 million of projects submitted by Enterprise customers in 2014 an increase of 90% y-o-y

· 35.7% of projects come from existing customers by year end increasing to nearly 50% post year end demonstrating the reliability and value of our Marketplace to Enterprise customers and their increasing relevance on buying and selling services online 

Enterprise customers - companies or groups with more than $500m turnover per annum

SME Customers

During 2014, the proportion of SME customers submitting commercially viable projects onto blur's marketplace started to reduce, with this trend accelerating in the second half of the year. Regarding SME customers, whilst they have bona fide projects to be fulfilled, the Group has been affected by the lower credit quality and resulting failure of a proportion of the projects submitted by this category of customer. The SME customer has, however, allowed the Group to learn how complex projects flow and understand the barriers that may be encountered and cause projects to derail during their path to completion often resulting in an increased level of support by blur and increased cost implication.

The Group's reliance on the SME customer through to 2014 resulted in a number of projects failing to reach completion therefore affecting revenues as well as having a cost impact for blur. In 2015, to enable the majority of projects from SME's to be commercially viable and profitable; the Group has instigated payment in advance for these customers to ensure credit risk is reduced and cash flow improved. The Group continues to increasingly focus on the Enterprise customer.

Service Providers

Service Provider Growth - the number of service providers on our platform has increased from 34,109 at the end of 2013 to 49,555 at the end of 2014. As the total service providers reached around 50,000, it represented a tipping point when we experienced Enterprise service providers increasingly being acquired into the community.

Enterprise Class Service Providers - to match the growth in Enterprise customers we are growing the number of enterprise-class service providers including Edelman, Weidmann Electrical Technology, WPP and Bain & Co. who have already joined our platform.

Ecosystem

blur Productivity increase - blur's policy is to have a minimum of 20% of its service needs delivered using its own platform. In 2014 this policy enabled a 23% reduction in headcount from 84 to 65 FTEs by 2014 year end

Improvements in our technology and platform have led to increased operational efficiencies in 2015 and as a result positively impacted gross margin through the year and is expected to continue in future periods.

Financial Highlights

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

Financial Reporting Council Enquiry

As at 30 June 2015 (date of signing accounts) the Financial Reporting Council ("FRC") enquiry announced on 10th April 2015 is on-going. The Board has been working with the support of its new auditors, KPMG, to provide appropriate responses and conclude outstanding queries. The Directors have made certain changes and improvements to the financial statements based on the correspondence to date, but until the FRC enquiry is completed, the Board have continued to present the Financial Statements in accordance with accounting policies it considers appropriate.

Changes to Accounting Policies

Further to our discussions with the FRC the Group has made a correction to the revenue recognition policy to reflect consistency in blur's position as principal resulting in a $229,569 adjustment to the 2013 revenues. The point from which project revenue is recognised has been changed with zero being recognised at kick off (10% recognised at kick off originally in 2013) and the total project revenue now being recognised in full over the life of the project to completion. The change does not affect the quantum of revenue recognised on a project, only the timing.

The reduction in project revenues recognised resulting from a change in the revenue recognition policy was off-set by a reduction in the provision for service provider costs in 2013 of $183,655.

To support the appropriate treatment of costs relating to the delivery of projects and to be consistent with the application of blur's position as principal, the cost of blur staff directly involved in the projects from submission through to completion, have been reallocated to cost of sales with an identical reduction in overhead costs. The impact has been to increase the cost of sales comparative for 2013 by $345,968.

A number of the larger 2013 projects submitted by SME's were suspended in the latter part of 2014. In preparing these financial statements the directors have reconsidered the application of their accounting policy to such projects and concluded that it was not appropriate to recognise revenue on this type of project until there exists better evidence that the amount of revenue can be measured reliably and that economic benefits will be received. Accordingly, this resulted in further correction of $1,069,326 in 2013 revenues. The reduction in projects revenues was $1,069,326.

The reduction in recognised project revenue was off-set by a reduction in the provision for service provider costs of $965,293 included in cost of sales. Cost of sales has been impacted by three adjustments:

1) the reduction in project costs due to the change in accounting policy recognising revenue only from kick off;

2) reduction in cost of experts for the correction for 2013 projects; and

3) reallocating the cost of blur staff involved in projects to cost of sales from overheads.

The restatement is set out in note 2d on page 44.

Revenue

Revenue for the year increased by 35.5%% to $4.72m (2013 Restated: $3.48m).

Gross Margin

To support the appropriate treatment of costs relating to the delivery of projects and to be consistent with the application of blur's position as principal, the cost of blur staff directly involved in the projects from submission through to completion, have been reallocated to cost of sales with an identical reduction in overhead costs. The impact has been to increase cost of sales for 2014 by $939,610 ($345,968: 2013). Following the reclassification of blur customer success staff costs to cost of sales, gross margin has reduced for 2013 (19.2%) and 2014 (34%).

Gross profit was $1.65m in 2014. This takes into account the reclassification set out above of blur staff costs in customer success (2013 Restated: $0.67m), a 146.3% increase year-on-year.

Profit/Loss

The LBITDA (Loss before Interest, Tax, Depreciation and Amortization) for the year was $10.34m (2013 Restated: $6.35m) and includes share-based payments cost of $0.46m (2013: $0.50m).

Enterprise Investment

blur, through the funding it has received from investors, has invested significantly since its inception in the development of its technology platform and its community (now numbering some 60,842 service providers of which 5% are considered Enterprise class organisations) in order to provide a marketplace that will both attract Enterprise customers and provide an enterprise class service to meet their requirements.

Costs

Administrative costs increased to $12.62m (2013 Restated: $7.21m) as a result of continuing investment in technology and people but also the effects of bad debt and currency headwinds. The credit risk associated with the customers using the marketplace in 2013 and 2014 resulted in an $826,885 bad debt provision included in administrative costs.

During 2014 the number of full-time employees reduced from 81 to 65 by the end of 2014 with a subsequent reduction in staff costs.

Loss before Tax

The loss before tax is $11m (2013 Restated: $6.5m), and includes $0.53m (2013 Restated: $0.24m) of R&D tax credit.

Tax Losses

Tax losses for the Group up to the end of December 2014 amount to a total of $15.4m.

Cash

Cash balance at year-end was $17.40m (31 December 2013: $9.56m). Cash outflow from operating activities of $9.65m and an increase in investment and financing activities of $19.0m. Cash balance at 30th June 2015 is $12.2m.

Consolidated statement of total comprehensive income

for the year ended 31 December 2014

The results reflected above relate to continuing activities.

Consolidated statement of financial position

At 31 December 2014

The financial statements were approved and authorised for issue by the Board of Directors on 30 June 2015 and were signed on its behalf by:

Philip Letts

Chairman and CEO

Company Registration Number: 08188404

Consolidated statement of changes in equity

for the year ended 31 December 2014 

Consolidated statement of cashflows

for the year ended 31 December 2014

Notes to the consolidated financial information

1. Accounting policies

Basis of preparation

The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated. These financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRSs) issued by the International Accounting Standards Board (IASB) as adopted by the European Union ("adopted IFRSs").

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

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

Basis of consolidation

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

The consolidated financial statements incorporate the results of business combinations using the purchase method. In the consolidated statement of financial position, the acquirees's identifiable assets, liabilities, and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the consolidated income statement from the date on which control is obtained. Inter-company transactions, balances and unrealised gains and losses (where they do not provide evidence of impairment of the asset transferred) on transactions between Group companies are eliminated.

Merger accounting

In 2012 when blur Group plc was included as the new ultimate parent entity as part of a group reconstruction arrangement, the reconstructed Group was consolidated using merger accounting principles as outlined in Financial Reporting Standard 6 ("FRS") Acquisitions and Mergers (UK) and treated the reconstructed group as if it had always been in existence. Any difference between the nominal value of shares issued in the share exchange and the book value of the shares obtained is recognized in a merger reserve.

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

Going concern

The Directors have prepared a cash flow forecast covering a period extending beyond 12 months from the date of these financial statements. blur is a disruptive and evolving technology company and there are the existence of uncertainties in the forecast as a result. The forecast contains certain assumptions about the performance of the business including growth in future revenue (a key assumption/sensitivity/risk in an rapidly evolving technology business); 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 as it embarks on its new strategy but the assumptions used are the Directors' best estimate of the future development of the business.

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. As with any disruptive, evolving technology company there is always an inherent risk over the ability of the Group and Company to continue as a going concern if forecasts are not met and cash resources are not adequate. The financial statements do not include any adjustments that would result from the going concern basis of preparation being inappropriate.

Functional and presentation currency

The functional currency of the Company is Sterling (£). The presentational currency of the Company is the US Dollar ($).

Changes in accounting policies and disclosures

(a) New and amended standards adopted by the Group

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 2014. However, none of them has a material impact on the Group's consolidated financial statements.

(b) New, amended standards, interpretations not adopted by the Group

A number of new standards, amendments to standards and interpretations to existing standards have been published that are mandatory for the Group's accounting periods beginning after 1 January 2015, or later periods, where the Group intends to adopt these standards, if applicable, when they become effective. The Group has disclosed below those standards that are likely to be applicable to the Group and is currently assessing the impact of these standards.

· Annual improvements 2012 and 2013 cycles (effective date: 1 July 2014) - improvements to various standards.

· Annual improvements 2014 cycle (effective date: 1 January 2016) - improvements to various standards.

· IFRS 15, 'Revenue from contracts with customers' (effective date: being reassessed) - this replaces IAS 18 Revenue, IAS 11 Construction Contracts and some revenue-related Interpretations. It establishes a new five-step model that will apply to revenue arising from contracts with customers. Under IFRS 15 revenue is recognised at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The principles in IFRS 15 provide a more structured approach to measuring and recognising revenue.

· IFRS 9 'Financial instruments' (effective date: 1 January 2018) - this replaces most of the guidance of

IAS 39 Financial Instruments: Recognition and Measurement.  The standard introduces new requirements for classification and measurement, impairment, and hedge accounting.

Revenue Recognition

Revenue represents the gross value of services provided to customers in respect of revenue earned, net of discounts, sales taxes, accrued, and deferred amounts.

There are two principal sources of revenue:

Project revenue

Being revenue from projects that list on blurs' marketplace, where the customer, in conjunction with blur, selects the expert supplier and a legally binding contract between blur and its customers is established (commonly referred to as ''kick-off'').

At this stage blur has assumed the principal contractual responsibility to deliver the agreed services, the delivery of the service has commenced, and project revenue recognition commences.

Project revenue is recognised on either a timeline, or milestone basis. Timeline refers to the date the delivery of the service commences to the date it is completed. Milestone refers to specific performance targets within each project until completion.

Under the project milestone method, the milestones inserted in the Statement of Work broadly are indicative of the stage of completion and reflect the value of work completed.

In the case of milestone projects, the expert service provider/customer confirms the proportion of costs incurred to date and the resulting cost to completion which gives the indication of the percentage of completion. This is done on the platform collaboration area that is updated by the expert, supported at period end with additional electronic confirmation. The milestones represent invoicing points during the lifecycle of the project and the generation of an invoice will represent additional support that the milestone has been achieved.

Where a project has regular deliverables and is relatively short in duration, the project timeline is used to determine the stage of completion. Such timeline is from when an expert has been appointed, to completion.

The timeline basis is only used where the time taken is a reasonable indicator of the stage of completion.

Where any element of a project is contingent upon either completion or specific milestones or deliverables, the contingent element of the project is separately identified and revenue recognised only when the contingent element is completed.

Where a project is delayed or suspended for whatever reason, the revenue recognised on a timeline basis is initially fixed to the date of suspension. Revenue will only be further recognised if the project is deemed to be commercially viable with an expectation that it will be realised in cash.

Where the project is delayed and a new completion date established, the revenue is recognised over the longer period to the revised completion date. Where the project is suspended, no revenue is recognised during the period of suspension. Where a project is cancelled, the project is assessed as to the stage of completion. Blur will specifically reference the cancelled projects' Statement of Works, surveys of work performed, and the proportion of costs incurred in order to assess the amount of revenue to reasonably recognise.

Listing Fee Revenue

Being revenue from customers where the project is cancelled after listing and there is an expectation of collection. The Listing fee is a mandatory charge when a customer listed a project and decided to close their trading account or not to select an expert. The project is listed when the customer submits their project brief and opens a trading account. The listing fee covers the customer's use of their trading account and the cost of time spent developing pitches and running them through the marketplace process.

Prior to a project being formally cancelled, revenue recognised is reduced to the extent of costs incurred. An approximation of costs incurred is typically 10% of project value.

Foreign currency

The functional currency of blur Group plc and blur Ltd is Pound Sterling, whereas of blur Inc is US Dollars.

The presentational currency is US Dollars ($), as the Group's management believe that in the future the majority of revenues and activity will be generated in US Dollars. This is consistent with prior years.

The exchange rates used for translating the statement of financial position at 31 December 2014 was at closing rate of £1 = US$1.5632 (2013: US$1.6488) and the statement of comprehensive income at average rate of US$1.6410 (2013: US$1.5642).

Transactions entered into by a group company in a currency other than the functional currency of that entity are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates at the reporting date.

Translation gains/losses arising on consolidation on monetary assets and liabilities denominated in a currency other than the financial currency of the company holding them are recognized in other comprehensive income. Translation gains/losses in accounts of an individual company are taken into the statement of comprehensive income.

Foreign currency translation

Functional and presentational currency

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The Company's functional currency is Sterling and the Group's presentational currency is USD.

a) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at the reporting period end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement.

b) Group companies

The results and financial position of all Group entities that have a functional currency different from the presentation currency are translated into the presentation currency as follows:

· Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of the balance sheet.

· Income and expenses for each income statement are translated at the rate of exchange at the transaction date. Where this is not possible, the average rate for the period is used but only if there is no significant fluctuation in the rate and;

On consolidation, exchange differences arising from the translation of the net investment in foreign entities are recognised in other comprehensive income and accumulated in a separate component of equity. Post transition exchange differences are recycled to profit or loss as a reclassification adjustment upon disposal of the foreign operation.

Derivative instruments

The Group uses forward exchange contracts to mitigate exposure to foreign currency risks. Gains or losses from utilising these instruments are recognised in the income statement in the period in which they occur.

Fair Value Hierarchy

All financial instruments measured at fair value must be classified into of the levels below:

· Level 1: Quoted prices, in active markets

· Level 2: Fair Inputs other than quoted market prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

· Level 3: Inputs that are not based on observable market data

Trade receivables

Trade receivables are amounts due from customers for services provided in the ordinary course of business and are stated net of any provision for impairment. Impairment provisions are recognized 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 of bad debt provision; such provisions are recorded in a separate allowance account with the loss being recognized within administrative expenses in the 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.

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 or outstanding credit card balances.

Convertible debt

The proceeds received on issue of the Group's convertible debt are allocated into their liability and equity components. The amount initially recognized and attributed to the debt component equals the discounted redemption value of the financial instrument, discounted at a deemed market rate of interest (the effective interest rate) and not the financial instrument's coupon rate. The deemed rate of interest utilised in the estimation was compared to the rate of interest that was payable on a similar debt instruments that do not include an option to convert.

Subsequently, the debt component is accounted for as a financial liability measured at amortized cost until extinguished on conversion or maturity of the convertible loan. The remainder of the proceeds are allocated to the equity reserve within shareholders' equity, net of income tax effects.

Share Capital

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

The Group only has one class of ordinary shares, denominated as £0.01 (2013:£0.01) ordinary shares, as set out in note 15.

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

Leases

Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Rent paid on operating leases is charged to the statement of comprehensive income on a straight line basis over the term of the lease.

Property, plant and equipment

Items of property, plant and equipment are initially recognized at cost.

Depreciation is provided on all items of property, plant and equipment so as to write off their carrying value over their expected useful economic lives. It is provided at the following rates:

Furniture, fixtures and fittings - 33% per annum straight line

Computer equipment - 33% per annum straight line

Intangible Assets

The development of the trading platform is capitalized as an intangible asset. Development activities involve a planned investment in the building and enhancement of the trading platform. The development expenditure of the platform is recognized as intangible assets when the following criteria are met:

1. It is technically feasible to complete the development of the platform so that it will be available for use;

2. Management intends to complete and use or sell the platform;

3. There is an ability to use or sell the platform;

4. It can be demonstrated how the platform will generate future economic benefits;

5. Adequate technical, financial and other resources to complete the development of the platform and to use or sell the use of the platform are available; and

6. The expenditure attributable to development of the platform can be measured reliably.

Expenditure being capitalized includes internal staff time and cost spent directly on developing the trading platform.

Capitalized development expenditure is measured at cost less accumulated amortization and accumulated impairment costs. The amortization period is over 48 months on a straight line basis.

Taxation

Income tax expense represents the sum of the current tax and deferred tax charge for the year.

Current taxes are based on the results shown in the financial statements and are calculated according to local tax rules, using tax rates enacted or substantively enacted by the reporting date. During the year, the current tax charge is nil as there are tax losses for the year. R&D credits are recognized as and when eligible, within the tax charge/credit in the financial statements in accordance with IAS 12.

Deferred tax is recognized in respect of relevant temporary differences that have originated but not reversed at the balance sheet date. A deferred tax asset is recognized to the event that it is probable that future taxable profits will be available against which temporary differences can be utilised. Management has elected not to recognize the deferred tax asset due the lack of certainty of future profitability as the Group is still in its early stage of maturity.

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

Share-based payment

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

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

Expense is recognized for awards that ultimately vest, as long as the option holder remaining in employment with the Group.

2. Critical accounting estimates and judgements

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

Judgements and accounting estimates and assumptions

(a) Revenue Recognition

Revenue is recognized on a gross basis, as our evaluation and assessment of the indicators under IAS 18 supports the fact that blur is acting as principal for the majority of projects. The factors that are considered and prove decisive in the conclusion of this assessment include the following:

· blur has the latitude to agree the fee for each project;

· blur has primary responsibility providing the services to a customer.

· blur is responsible for the quality of the service delivery, delivered on time, budget and to a sufficiently high standard. This includes the management of the service delivery of the expert; and

· blur facilitates both commercial terms and the project management for each project

Although blur passes on some of the credit risk onto the expert it engages to deliver the services to its customers, it does not consider this is sufficiently persuasive in light of the other factors noted above to suggest that accounting for the transaction as principal is not appropriate.

Revenue from projects is assessed on an individual project by project basis with revenue earned being ascertained based on the stage of completion of the project which is estimated using a combination of milestones in the contract and a proportion of total time expected to be required to undertake the contract which has been performed. Estimates of the total time expected to undertake the contracts are made on a regular basis and subject to management review.

The amounts by which revenue exceeds billing is shown as part of prepayments and accrued income in note 12 and the amount by which progress billing exceeds revenue is shown as deferred revenue in note 13.

Revenue represents the gross value of services provided to customers in respect of revenue earned, net of discounts, sales taxes, accrued, and deferred amounts.

Revenues are recognised when it has been determined that the economic benefit associated with the transaction will flow, received or receivable by the respective entity on its own account. Therefore amounts collected on behalf of third parties, such as the revenue authority for sales or Value Added Taxes, are not included as economic benefits which flow to blur.

Revenue at blur is measured at the fair value of the consideration received or receivable, once it can be accurately established that a valid contract has come into existence between blur and customer, as evidenced with reference to the Terms and Conditions in issue at the time of the transaction. Such evidence will take the form of a Statement of Works, blur Terms, Project Terms, the Project Pitch, notes and comments in the Project collaboration area or direct correspondence between blur and the Customer and / or Expert.

The contract value of each project of a customer is usually determined by agreement between blur and its customer. This total contract value is measured at fair value of the consideration received or receivable taking into account any trade discounts or other adjustments allowed by blur. 

The total amount and value of revenue to recognise in each reporting period, for each revenue stream blur classifies is detailed in note 4.

blur recognises revenue when the following criteria are satisfied:

a. The amount or value of the revenue recognised can be reliably measured, which occurs when the Customer Success team, customer and expert have agreed the contract value upon appointment of the expert. The measurement date for revenue recognition is from the date an expert is appointed to the point that the performance has been completed.

b. It is probable that the economic benefits associated with the transaction will flow to blur, when the performance obligation is confirmed in the Statement of Works or project brief confirmed between the contracting parties and to the extent that there exists a track record of successful progress of similar projects. The transfer of economic benefits to blur must be fixed, determinable and reasonably assured.

c. The stage of completion of the transaction at the end of the reporting period can be measured reliably, as set out in the detailed measurement guidance in section 5 of this policy

d. The costs incurred for the transaction and the costs to complete the transaction can be measured reliably, with reference to the individual contract terms, Statement of Works and project revenue measurement guidance

There are two principal sources of revenue:

Project revenue

Project revenue is recognised on either a timeline, or milestone basis. Timeline refers to the date the delivery of the service commences to the date it is completed. Milestone refers to specific performance targets within each project until completion.

Under the project milestone method, the milestones inserted in the Statement of Work broadly are indicative of the stage of completion and reflect the value of work completed.

In the case of milestone projects, the expert service provider/customer confirms the proportion of costs incurred to date and the resulting cost to completion which gives the indication of the percentage of completion. This is done on the platform collaboration area that is updated by the expert, supported at period end with additional electronic confirmation.

Where a project has regular deliverables and is relatively short in duration, the project timeline is used to determine the stage of completion. Such timeline is from inception, being the date the project brief is submitted onto the exchange, to completion.

The timeline basis is only used where the time taken is a reasonable indicator of the stage of completion.

Revenues are recognised when it is probable that the economic benefits associated with the transaction will flow to blur.

Where any element of a project is contingent upon either completion or specific milestones or deliverables, the contingent element of the project is separately identified and revenue recognised only when the contingent element is completed.

Where a project is delayed or suspended for whatever reason, the revenue recognised on a timeline basis is initially fixed to the date of suspension. Revenue will only be further recognised if the project is deemed to be commercially viable.

Where the project is delayed and a new completion date established, the revenue is recognised over the longer period to the revised completion date. Where the project is suspended, no revenue is recognised during the period of suspension. Where a project is cancelled, the project is assessed as to the stage of completion. blur will specifically reference the cancelled projects' Statement of Works, surveys of work performed, and the proportion of costs incurred in order to assess the amount of revenue to reasonably recognise.

Stage of completion estimate

blur will calculate the revenue for each sample project using the appropriate % of completion methods indicated below based on the total project value. If one of the methodologies indicated below is not relevant or appropriate for the commercial nature of the project selected, then another method will be chosen:

· SoW milestone method - % completion based on the stages or milestones being met as set out in the SoW which has been agreed by the expert and customer;

· Expert/customer confirmation method - % completion based on external confirmation received from the expert or customer on the progress of the project. In the event of a difference in opinion between the expert and the customer, the lower % completion basis shall apply;

· Project Space milestone basis - % of completion based on the status of the project in Project Space on the Exchange;

· Time allocation method - % completion based on the time elapsed from the date of project submission to the estimated or target date of project completion (as set out in the SoW or other relevant documentation).

If the project is delayed and a new revised completion date is set, the revenue should be recognised over the longer period.

If the project is suspended, no revenue should be recognised during the suspended period. If a project completes during a reporting period, then blur will recognise 100% of the revenue by the reporting date; and

· Other third party cost or confirmation method - % completion based on other external third party costs incurred (for example media spend) or confirmation.

Listing Fee Revenue

Being revenue from customers where the project is cancelled after listing and there is an expectation of collection. The Listing fee is a mandatory charge when a customer listed a project and decided to close their trading account or not to select an expert. The project is listed when the customer submits their project brief and opens a trading account. The listing fee covers the customer's use of their trading account and the cost of time spent developing pitches and running them through the Exchange process.

The listing fee is legally binding as set out the blur's Standard customer terms and conditions, and in respect of payment being disputed, legal judgement has been granted in favour of blur and enforcement pursued thereafter. The assessment is made by blur as to whether the listing fees probable economic benefit will flow to blur, and supports recognising the full value of listing fees either paid or outstanding, with an impairment of the value of outstanding listing fees being provided in full.

(b) Intangible Assets

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

(c) Trade receivables - provision for impairment

Management has provided for all debts, individually, which are deemed doubtful at their estimated irrecoverable amount. Management apply their judgement on whether there is objective evidence that trade receivables should be impaired.

In 2015 the internal process for credit risk monitoring and management was enhanced to include detailed customer credit checks prior to projects being listed. The quality of credit worthy customer has improved over the period being a reflection of both improved credit control process and the transition to Enterprise customers.

(d) Restatement of the prior year

The Board, at the time, considered that the Revenue Recognition policy as revised and applied to the 2013 year end reflected an appropriate revenue recognition methodology. However, as a growing business, the dynamics of projects forming the revenue of the company continues to evolve with more complex and longer life cycle projects, including contingent fee arrangements, being submitted to the platform since mid 2013. The way that these projects flow through the platform, and the associated complications with projects of this increasingly complex nature, has been better understood since several projects have progressed through to completion.

Following the Financial Reporting Council enquiry, the Board has decided to make changes in relation to the timeline to commence recognising revenue which previously started when a binding contract with the customer was created. This is at the point of listing the project and irrespective of whether the project progressed or not, the customer would be committed to pay a minimum of 10% of the project fee. However, the Board has now concluded that it is correct to start recognising revenue when commercial contracts are agreed and a project expert has been appointed (commonly referred to as'' kick-off''). blur consider that this method ensures that blur aligns it's revenue recognition with the full delivery of the project from when the combined work of blur and the service provider have commenced and that, compared to the previous method of recognising 10% on kick-off, a delay in recognising revenue on projects to start from 0% at kick-off reflects a correct revenue recognition approach.

In conjunction with our new auditors KPMG, the directors have also reconsidered the application of their accounting policy to 2013 projects and concluded that it was not appropriate to recognise revenue on this type of project until there exists better evidence that the amount of revenue can be measured reliably and that economic benefits will be received. As mentioned previously, the dynamics of projects forming the revenue of the company continues to evolve with more complex and longer life cycle projects being submitted to the platform. It has therefore been decided to make a correction to 2013 revenues where projects have subsequently been suspended as a prior year adjustment.

The cost of blur staff within customer success, directly involved with the delivery, management and completion of projects, has been reallocated from overheads to cost of sales to reflect internal staff costs that are directly relevant to the delivery of projects. This reallocation has increased cost of sales in 2013 by $345,968 with a corresponding decrease in administration costs.

As a result, the 2014 financial statements include revised 2013 comparatives: i) to reflect the change in revenue recognition from kick-off onwards by recognising zero at kick off instead of 10%, which has reduced 2013 revenue by $229,569; and ii) to project revenue to reflect a change in the assessment of projects that were not based on a fully understood project delivery track record, which has reduced 2013 revenue by a further $1,192,284; iii) to reduce 2013 revenues to the extent of costs incurred, increasing revenues by $122,958; iv) to reduce the expert cost of sale for the project revenue reversed, reducing cost of sales by $965,293: to reduce the expert cost of sale for the adjustment in revenue recognition at kick off to zero, reducing cost of sales by $183,636 and v) to cost of sales to reflect internal staff costs relevant to the delivery of projects, which has increased 2013 cost of sales by $345,968. The impact on brought forward reserves from 2012 is not considered material and therefore no adjustment has been made to earlier years.

The net impact of the prior year adjustment on results before tax and net assets has been $22,091 and ($23,286). There is an immaterial impact on Earnings per Share as a result.

The restatement of 2013 comprises the following

Statement of Comprehensive Income

Statement of Financial Position

3. Financial instruments - Risk Management

General objectives, policies and processes

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

The Board reviews its monthly reports through which it assesses the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets.

The Group reports in US Dollars. All funding requirements and financial risks are managed based on policies and procedures adopted by the Board of Directors.

Forward contracts are used to control foreign exchange risk. The Group has entered into a forward exchange contract for the purchase of dollars for sterling for the next financial year. Hedge accounting is not applied in respect of these derivatives.

The Group's criteria for entering into a forward currency contract would require that the instrument must

· be related to anticipated foreign currency receipt

· involve the same currency as the foreign currency receipt

· reduce the risk of foreign currency exchange movements on the Group's operations

At 31 December 2014 the Group had one commitment under forward foreign exchange contract.

i) Categories of financial assets and liabilities

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

· Borrowings and convertible loan notes

Trade and other receivables are initially measured at fair value and subsequently at amortized cost. Book values and expected cash flows are reviewed by the Board and any impairment charged to the consolidated statement of comprehensive income in the relevant period.

Trade and other payables are measured at book value. The book value of financial assets and liabilities equates to their fair value

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

Trade receivables principally comprise amounts outstanding for sales to customers and are net of provision for doubtful recoverability. An impairment review of outstanding trade receivables is carried out at the period end and a specific amount provided for. The average debtor days to settle invoices are 102 days (2013 Restated: 268 days).

Trade receivables that are due at the reporting date and have been reviewed and impaired when the collectability is considered unlikely. The credit quality of customers in 2013 and early 2014 has resulted in a greater than expected provision for impairment.

R&D Tax Credit is expected to be received within 3 months of the date of signing the Annual Report.

Financial liabilities

Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period taken for trade purchases is 31 days (2013 Restated - 26 days).

Cash and cash equivalents

Cash and cash equivalents are held in Sterling and US dollars and placed on deposit in UK banks and US banks.

ii) 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. At 31 December 2014 the Group has net trade receivables of US$833,101 (2013 Restated - US$2,823,089).

The Group is exposed to credit risk in respect of these balances such that, if one or more customers encounter financial difficulties, this could materially and adversely affect the Group's financial results. The Group attempts to mitigate credit risk by assessing the credit rating of new customers prior to entering into contracts and by entering contracts with customers with agreed credit terms. The Group also mitigates the credit risk when the customer for a project has not paid for the outstanding debt, the expert associated with the project will also not be paid, irrespective of whether or not the service has been delivered.

Customer credit risk is subject to the Group's established policy, procedures and control relating to customer credit risk management. Credit quality of a customer is assessed based on a credit rating scorecard and individual credit limits are defined in accordance with this assessment. The customers accepted through the credit risk process in 2013 and the first half of 2014 have resulted in bad debt and project failure issues. The larger part of trade receivables relied on customers that were SMEs, early stage ventures and based in geographies that were more difficult to ensure payment. Several of these customers went into administration rendering the receivable impaired. The credit risk process has since been revised with new customers where the profile and credit rating is outside the required criteria, having to make payment up front prior to a project being listed. This process may result in a reduced number of projects being listed but the resulting conversion of trade receivables to cash has significantly improved.

At 31 December 2014, the Group had 5 customers (2013 Restated: 6 customers) that owed the Group more than $100,000 each and accounted for approximately 51% (2013 Restated: 46%) of all the receivables outstanding.

The analysis below shows the ageing of trade and other receivables and the movement in bad debt provision in the year:

The provision for bad debts increased during the year as the Group's policy is to provide fully against receivables due for more than 120 days and listing fee invoices that have not been paid during the year. A corresponding provision is made against the expert invoice or accrual to reflect the reduced associated liability.

(iii) Liquidity risk

Liquidity risk arises from the Group's management of working capital. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. 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 to meet expected requirements for a period of at least 30 days. The table below analyses the Group's financial liabilities by contractual maturities. All amounts disclosed in the table are the contractual undiscounted cash flows.

(iv) Foreign exchange risk

Functional and presentational currency

Items included in the financial statements are measured using the currency of the primary economic environment in which the Company operates ("the functional currency") which is considered by the directors to be the Pounds Sterling (£). The financial statements have been presented in US Dollars. The effective exchange rate at 31 December 2014 was £1 =US$1.5632 (2013: £1 = US$1.6488).

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income.

Transactions in the accounts of individual Group companies are recorded at the rate of exchange ruling on the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the rates ruling at the year end. All differences are taken to the statement of comprehensive income.

Foreign exchange risk arises when group entities enter into transactions denominated in a currency other than their functional currency. The Group's policy is, where possible, to allow customers to settle liabilities denominated in the customer's functional currency, being primarily Dollar or Pound Sterling.

During 2014 the exposure to exchange rate variances had a significant impact as Dollar movement exceeded 10% during the year, peaking at $1.1.704 in June 2014. As a significant proportion of the costs are payable in Pound Sterling, the impact of presenting these costs in Dollars and the reduction in value of net assets, has resulted in a foreign exchange charge of $810,910 in 2014.

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

The Group is predominantly exposed to currency risk on sales and purchases made from customers and experts based in the USA and the Euro-zone. Sales and purchases from customers, experts and suppliers are made on a central basis and the risk is monitored centrally. Apart from these particular cash-flows the Group aims to fund expenses and investments in the respective currency and to manage foreign exchange risk at a local level by matching the currency in which revenue is generated and expenses are incurred.

To reduce the impact of currency risk, the Group holds US Dollar deposits for more than 60% of the cash balances.

Forward contracts are used to control foreign exchange risk. The Group has entered into a forward exchange contract for the purchase of dollars for sterling for the next financial year. Hedge accounting is not applied in respect of these derivatives.

The Group's criteria for entering into a forward currency contract would require that the instrument must:

· be related to anticipated foreign currency receipt

· involve the same currency as the foreign currency receipt

· reduce the risk of foreign currency exchange movements on the Group's operations

At 31 December 2014 the Group had one commitment under forward foreign exchange contract.

Financial instruments note

Fair Value Hierarchy

All financial instruments measured at fair value must be classified into of the levels below:

· Level 1: Quoted prices, in active markets

· Level 2: Fair Inputs other than quoted market prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

· Level 3: Inputs that are not based on observable market data

The fair value hierarchy of financial instruments held at fair value is shown below:

As at 31 December 2014, the Group's net exposure to foreign exchange risk was as follows for those entities with Pound Sterling functional currencies:

The impact of 10% movement in foreign exchange rate of US$ will result in an increase/decrease of net assets by $920,704 for 2014 (2013 - $155,979). The average US$ exchange rate used for 2014 is 1.641 (2013- 1.5642), with a closing rate of 1.5632 (2013- 1.6488).

(v) Capital Management

The Group's capital is made up of share capital, share premium, equity conversion reserve, merger reserve, foreign currency reserve, share-based payment reserve and retained losses totalling at 31 December 2014 US$20,271,063 (2013: US$10,896,630).

The Group's objectives when maintaining capital are:

· To safeguard the entity's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders; and

· To provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.

To meet these objectives, the Group reviews the budgets and forecasts on a quarterly basis to ensure there is sufficient capital to meet the needs of the group through to profitability and positive cash flow.

The capital structure of the Group consists of shareholders equity as set out in the consolidated statement of changes in equity. All working capital requirements are financed from existing cash resources.

(vi) Capital risk management

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in a volatile and tight credit economy.

The Group will also seek to minimise the cost of capital and attempt to optimise the capital structure, which currently means maintaining equity funding and keeping debt levels to insignificant amounts of lease funding. Share capital and premium together amount to $38,195,035 (see Note 15).

Whilst the group does not currently pay dividends it is part of the capital strategy to provide returns for shareholders and benefits for other members in the future. However, the Group is planning growth and it will continue to be important to maintain the Groups credit rating and ability to borrow should acquisition targets become available.

Capital for further development of the Group's activities will, where possible, be achieved by share issues or other finance as appropriate.

4. Segmental analysis

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

The Group currently has two reportable categories which are:

1. project revenues - for the provision of services from projects that list on blurs' marketplace, where the customer accepts the bid from the expert supplier and a legally binding contract between blur and its customers is established

2. listing fee revenues - where the project is cancelled after listing and there is an expectation of collection. The Listing fee is a mandatory charge when a customer listed a project and decided to close their trading account or not to select an expert.

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

5. Loss from operations

The operating loss as at 31 December 2014 is stated after charging:

6. Staff costs

Staff costs (including Directors emoluments) incurred in the year were as follows:

The average monthly number of permanent employees during the period was as follows:

7. Finance income and expenses

The foreign exchange expense includes $6,770 relating to the foreign exchange contract where the potential loss is calculated at the average exchange rate in the statement of income and the provision in the balance sheet is reflected at the exchange rate as at the end of December 2014

8. Income tax

Analysis of the Tax Credit

No liability to UK corporation tax arose on ordinary activities for the year ended 31 December 2014 nor for the year ended 31 December 2013. However, a receivable cash tax credit in respect of the UK R&D activity has been recognized.

In 2012 the Group was approved by HMRC for the R&D Tax Credit pilot scheme that assures the Group that their R&D Tax Credits will be approved and processed without further support for a 3-5 year period. The R&D Tax Credit receipt from HMRC is likely to be received within a few months of the submission of the corporate tax return for blur Limited.

Factors Affecting the Tax Charge

 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 the result for the year are as follows:

The Group has carried forward losses and accelerated timing differences amounting to US$ 15,392,810 as of 31 December 2014 (2013 Restated - $7,231,804). As the timing and extent of taxable profits are uncertain, the deferred tax asset US$ 3,078,562 (2013 Restated: $1,663,315) arising on these losses (at 20% future tax rate) and accelerated timing differences has not been recognized in the financial statements. 

Disclosable deferred tax asset amounting to $257,019 (2013 Restated: $1,493,790) has arisen due to timing differences relating to share options. This asset has not been recognized due to the uncertainty surrounding the timing and extent of profits.

9. Loss per share

Loss per ordinary share has been calculated using the weighted average number of shares in issue during the relevant financial periods. The basis for calculating the basic loss per share is as follows:

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

NET BOOK VALUE

12. Trade and other receivables

As at 31 December 2014 trade receivables of US$ 1,285,722 (2013: US$ 3,067,337) were past due but not impaired, see note 3 for the Group's assessment of the exposure to credit risk.

All amounts shown under receivables are due within one year.

13. Trade and other payables

Forward rate exchange contracts for derivative financial liabilities are not designed as hedging instruments. The maximum exposure to credit risk at the reporting date is the fair value of the derivative assets in the consolidated statement of financial position.

Cash flow forward foreign exchange contracts

The currency risk on surplus inflows from short term receivables is managed through the use of foreign exchange contracts. Contracts have been established to hedge the estimated US Dollar cash flow through to 27 July 2015.

14. Loans and borrowings

Book value approximate to fair value for the convertible debt and is stated at fair value at initial recognition and at amortized cost subsequently.

The convertible loan notes (referred to as convertible debt II) were issued in 2011 with a coupon rate of 15% at a total face value of US$ 78,010. The loan notes are either repayable in four years from the issue date at its total face value, with interest accrued and payable as ordinary shares issued in the Company or can be converted at any time within two years into shares at the holder's option. The value of the liability component and the equity conversion component were determined at the date the instrument was issued.

During the period to 31 December 2012 loan note holders converted their loan notes into ordinary shares of the Company. Only one convertible loan note remains outstanding relating to Peter Tahany. There is an on-going claim relating to the provision of Mr Tahany's consultancy services from September 2009 to early 2010, but the Board considers any risk of incurring costs relating to this claim remote.

15. Share capital

Share capital allotted and fully paid up

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

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

In June 2014 an issue of 17,460,329 ordinary shares of £0.01 each at a consideration of £0.75 per share was placed in the market. The Group has not issued any partly paid shares nor any convertible securities, exchangeable securities or securities with warrants. The Group does not hold any treasury shares.

16. Related party transactions

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

Out of above balances outstanding at year end in trade payables and accruals are $26,675 (2013: $42,570)

1 The consultancy fees includes $196,920 paid to Revviva LLC, a company in which K Cardinale has an interest. These were paid for K Cardinale's director services.

2 Service fees of $251,900 (2013: $86,220) were paid to CFPro Limited & Cambridge Financial Partners LLP for accounting and consultancy support, companies in which Barbara Spurrier has an interest.

3 Other consultancy fees paid to Steve Harvey during the year prior to his employment with the Company.

Related party transactions are not included in compensation costs to key personnel as set out in note 6.

The following loans are due (to)/from directors:

The loans are interest free and repayable on demand.

17. Events after the reporting date

On the 8th February 2015 David Sherriff was appointed to the position of Deputy Chairman and Lead Independent Director. 

In March 2015, the Financial Reporting Council informed the Group of an enquiry that is on-going at the date the Financial Statements were approved.

On 30 June 2015 we announced that Tim Allen will be appointed Chief Financial Officer joining the Group on 20th July 2015.

18. Control

There is no ultimate controlling party.

19. Posting of Annual Report

blur Group plc's audited Annual Report and Financial Statements for the year ending 31 December 2014 are available for you to download and review on blur's website at www.blurgroup.com/investors/#reports  and will shortly be posted to shareholders.