MAIS.L Regulatory News (MAIS)

blur Group plc

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

2015 Final Results

& Q1 2016 Quarterly Metrics Update

blur Group plc (AIM: BLUR), the world's first Enterprise Services Platform and marketplace, is pleased to announce its audited final results for the year ended 31 December 2015 and to provide the market with its Q1 2016 key metrics.

2015 Operational highlights

· Transition to an Enterprise-only strategy complete. Evolved from the early stage, proof-of-concept phase, supporting small buyers and sellers to an Enterprise*-focused strategy that supports larger organizations.

· blur 5.0 launched - a fully Enterprise level platform with the security, features and automation required for adoption within a large corporate environment.

· Launch of high margin SaaS Premium Services products - Buyer Plans, Service Provider Subscriptions and Premium Services offerings.

· Elimination of all contingent projects in the Marketplace.

· Enhanced quality control of projects, customers and Service Providers.

2015 Financial highlights

1 LBITDA is loss before interest, tax, depreciation and amortization, foreign exchange movements and share option costs.

· Financial Reporting Council (FRC) enquiry closed - blur's accounting policy and position as 'principal' within project transactions confirmed as reasonable.

· Clear, robust and proven revenue recognition processes implemented.

· Phasing out of Listing Fee income - replaced by 'Single User Access Fee' in H2 2015; improved up-front project vetting processes; greater proportion of projects completing.

· 2015 revenue in line with expectations.

· Administrative and development costs reduced as efficiency increases and the platform reaches Enterprise maturity.

· 2015 LBITDA improved by 1% compared to 2014 and ahead of expectations. Q4 2015 LBITDA improved by 40% compared to Q3 2015.

· Cash burn reduced in Q4 2015 by 58% compared to Q3 2015.

Post period end Highlights

**blur defines the Enterprise as a business with 50 or more employees

· Operating costs down 25% in Q1 2016 compared to Q4 2015 as platform maturity and higher quality revenue streams drive further operational efficiencies.

· Underlying cash burn (excluding Foreign Exchange movements) reduced by 33% to $1.0 million in Q1 2016 from $1.5 million in Q4 2015.

· 2014 R&D tax credit of $0.5 million received in Q1 2016.

· Cash at end of Q1 2016 was $5.8 million.

· Conversion rate of all Pitching On to Completed projects increased from 75% in Q4 2015 to 82% in Q1 2016.

· Level of Enterprise repeat Kicked Off projects at 96% in Q1 2016 compared to 84% in Q4 2015.

· Proportion of Enterprise Kicked Off projects increased from 66% in Q4 2015 to 75% in Q1 2016.

Philip Letts, blur Group CEO, commented:

"The team at blur worked hard in 2015 to complete the transition to an Enterprise-focused strategy. This means that in 2016 we operate a comprehensive next generation solution for Enterprises to better manage their indirect business services spend.

"Now that our Enterprise transition is complete, I remain convinced that our Enterprise strategy is the right one for blur and its stakeholders. Acquiring repeating, loyal accounts is key to our future success. By maintaining high levels of delivery and focusing on helping our customers buy business services better, blur will continue on its path to profitability.

"Q1 2016 saw further progress executing on our Enterprise strategy. Our engagements with Enterprise customers tell us that business leaders are becoming increasingly aware of the need to prioritize the control of unnecessary cost and risk in their unmanaged, indirect business services spend. Increasingly these Enterprises are recognizing that blur's unique combination of cloud software and managed services offers an efficient, digital and agile solution to drive new efficiencies in indirect spend.

We recognized that our Enterprise strategy would lead to an extension of the sales cycle. The decentralized nature of indirect procurement in a large Enterprise, combined with the time that can be taken for an Enterprise to identify and quantify their indirect spend problem, means that we expect the cycle between initial meetings and the placement of higher volumes of project spend with blur to extend over several quarters.

However, our Enterprise-focus continues to drive efficiencies which will lead to further improvements in our cash flows."

For further information, please contact:

blur Group plc investors@blurgroup.com

Tim Allen Tel: +44 (0) 1392 927618

Shaun Dobson/Jen Boorer N+1 Singer

Tel: +44 (0) 20 7496 3000

Dominic Barretto/Alistair de Kare-Silver Yellow Jersey PR

Tel: +44 (0) 7825 916 715

Chairman's Statement

Prior to 2015 blur Group invested in developing and proving a new concept in business services procurement, which resulted in the development of a service provider base of over 60,000 and the use of our evolving technology platform by a broad spectrum of organizations seeking a new and efficient way of procuring business services. In 2015, blur Group applied this experience and resultant V5.0 of the technology platform to the international Enterprise market and successfully started to achieve recognition from this target customer base that blur offers a new, agile and cost effective way in which business services can be procured. In turn blur's sales and marketing efforts, delivery processes and internal controls have been polished to ensure a high quality customer experience and provide our staff, investors and service providers with confidence in the relevance of the business model.

By introducing industry-based calculators and business intelligence tools, blur Group has helped its current portfolio of key Enterprise customers shape and quantify wasteful spending within their organizations. Framing initial conversations with new prospects around potential savings has helped them engage with blur. Our messaging around indirect spend cost reduction for Enterprises has proved timely with an increasing number of businesses prioritizing this strategy, especially as uncertainty continues in the global economy.

blur Group is no longer proactively pursuing high volume transactional sales via single, low-value project submissions, but rather partnering with Enterprise customers to help them achieve larger scale savings. Our offering is unique, combining both cloud software and managed services through a single platform. It is a highly accessible cloud based solution that benefits either several functions across any large organization or a centralized procurement strategy.

A consequence of our transition to the larger Enterprise is the inevitable extension of the sales cycle. Despite this challenge (for which we have tuned our sales and marketing approach and reset our investment levels) we are confident that the Enterprise strategy is the right one to build long-term shareholder value. Our buyer plan products and the introduction of premium services are influencing our model and should show improvements to our margins as they are adopted.

The Executive team have continued to work hard to improve blur's own efficiency, with administrative costs significantly reduced in the second half of the year. For 2016, we will continue to leverage costs and maintain a tight focus on cash.

The conclusion of the Financial Reporting Council's enquiry has confirmed our recognition as Principal in our market and the implementation of robust revenue recognition policies. To support the continued development of the Group we have appointed new Board members in 2015. Each brings a high degree of expertise in their field, together with extensive Enterprise software experience.

I believe we have a Board and management team that understand the customers and the market in which blur operates and an organization that can leverage the investment made in developing its business model, its staff and its technology to achieve success in the Enterprise market. I would like to thank them, as well as all the staff, for their commitment and outstanding efforts in 2015 in achieving the difficult transition to an Enterprise focused delivery platform and service.

Finally, I would like to thank blur's shareholders and stakeholders for their continued support of the business and for their input and help in developing the business model and structure.

David Sherriff

Chairman

26 April 2016

Chief Executive Officer's Report

The team at blur worked hard in 2015 to complete the transition to an Enterprise-focused strategy. This means that in 2016 we operate a comprehensive next generation solution for Enterprises to better manage their indirect business services spend.

At the same time, we achieved considerable internal cost efficiencies with a step change reduction in our cash burn rate once blur 5.0 was completed in H2. We expect that our operational gearing will drive future improvements in our financial performance.

We have built an end-to-end services procure-to-pay platform that provides Enterprises with the ability to efficiently outsource the purchasing, management, payment and delivery of business services. This solution combines managed services, cloud software and a global marketplace of service providers in a single platform that is driven by machine intelligence and data analysis.

During 2015 our focus has been on the Enterprise customer and service provider. blur 5.0 saw the platform piloted by a growing number of larger Enterprises. At the same time, we saw an increase in repeat projects from existing Enterprises. Indeed, in Q4 2015 84% of Enterprise projects came from existing customers.

Business leaders are eager to improve profitability and cash flow. They are looking to be more innovative in the way they approach cost reduction. Digital procurement strategies are becoming increasingly popular.

Over the last 12 months, we have met with customers and prospects to better understand their cost reduction strategies. Certain companies, for example, those in oil and gas and FMCG sectors, are looking closely at indirect spend management as a means to make immediate cost savings. They already see the potential to eliminate wasteful spending and inefficiencies within the procurement of business services.

This approach combined with a tighter partnership between our sales and delivery teams has helped us streamline our positioning and our services to more effectively identify and address the business-critical requirements of our customers.

One size does not fit all when it comes to procuring business services across the Enterprise. This has driven us to create a core service offering for all customers, with a suite of wraparound premium services to meet the individual needs and requirements of each project. Buyers have complete control of their project delivery through the use of blur's platform.

Our marketing team has concentrated on developing channels that cost effectively acquire Enterprise customers rather than projects, signaling a move away from broader digital advertising acquisition. We target customers and prospects on their company wide indirect spend issues with sustainable long-term savings being a key element. This move has resulted in a significant reduction in our cost of acquisition. Our key message; eliminating the waste and inefficiency inherent across the indirect procurement process is resonating with customers across our primary markets of Western Europe and North America.

In delivery, we continue to enhance our offering by showcasing the benefits of cloud software and managed services to source and deliver projects. The improved technology associated with the release of blur 5.0 brings a superior level of automation to some of the standard aspects of project management processes. This allows our people to remain dedicated to enhancing the customer experience and repeat business.

Our improved understanding of our Enterprise customers has influenced further development of our cloud-based software, resulting in an Enterprise-grade solution. We start 2016 with an Enterprise platform engineered to support large scale projects. Whether shortening the pitch process or using a greater degree of machine-intelligence to better match a service provider with a buyer, we are constantly listening to our customers and adding new features to improve their experience. This will result in the next iteration of our platform, blur 6.0 to be in line with management expectations, which we will begin to rollout in the first half of 2016.

Financially, we have seen a decline in project revenues over the period. However, I believe this to be transitional as we shift from higher volume, small business project sales to Enterprise account-driven sales. These changes are leading to an increasing mix of Enterprise revenues and repeat buyers.

In Q4 2015 the proportion of Enterprise projects Kicking Off rose to 66% and the conversion rate of Pitching On to Completed Projects reached 75%. These statistics are a sign of things to come.

Another indicator of our improving revenue quality is the phasing out of Listing Fee revenues. With our rejection of contingent projects and the move away from online advertising driven business, we are seeing a higher rate of project completion and greater initial income from buyer plans and premium service products. Driving growth in these product areas will prove important in increasing future gross profitability.

During the year a major step forward was taken with the conclusion of the Financial Reporting Council's enquiry into blur's Annual Report and Accounts for the year ended 31 December 2013. Restating the results for that year was a challenging experience for the whole Group, but we also saw affirmation of blur's judgement that it takes the role of principal in its transactions with its customers. We have also confirmed a set of revenue recognition policies that are robust, clear and appropriate.

Now that our Enterprise transition is complete, I remain convinced that our Enterprise strategy is the right one for blur and its stakeholders. Acquiring repeating, loyal accounts is key to our future success. By maintaining high levels of delivery and focusing on helping our customers buy business services better, blur will continue on its path to profitability.

Outlook

Q1 2016 saw further progress executing on our Enterprise strategy. During the period our engagements with Enterprise customers tell us that business leaders are becoming increasingly aware of the need to prioritize the control of unnecessary cost and risk in their unmanaged, indirect business services spend. Increasingly these Enterprises are recognizing that blur's unique combination of cloud software and managed services offers an efficient, digital and agile solution to drive new efficiencies in indirect spend.

We recognized that our Enterprise strategy would lead to an extension of the sales cycle. The decentralized nature of indirect procurement in a large Enterprise, combined with the time that can be taken for an Enterprise to identify and quantify the issue, means that we expect the cycle between initial meetings and the placement of high volumes of project spend with blur to extend over several quarters.

However, our Enterprise-focus continues to drive internal efficiencies which will lead to further reductions in our cash burn rate.

I would like to thank all of our employees, our customers and our shareholders for their continued support.

Philip Letts

Chief Executive Officer

26 April 2016

2015 Financial Review

Financial Reporting Council enquiry

In March 2015, the Financial Reporting Council informed the Group of an enquiry into the Annual Report for year ended 31 December 2013.

The principal issues raised were whether the Company was principal or agent in relation to the outsourcing services it provides, whether revenue was recognized only when there was sufficient evidence to conclude that the stage of completion could be assessed reliably and that it was probable that economic benefits would be received, and whether the strategic report gave a fair and balanced analysis of the Company's performance.

This enquiry concluded on 30 September 2015. No further adjustments or restatements were required to the restated results for the year ended 31 December 2013 published in the 2014 Annual Report on 30 June 2015. In addition, no further adjustments or changes are required to the 2014 results included in the Annual Report to 31 December 2015. The Financial Reporting Council agreed that it was reasonable for the company to view itself as principal rather than agent.

Revenue

Revenue for the year decreased by 43% to $2.70m (2014: $4.72m) within which Project fee revenue declined by 25% to $1.95m (2014: $2.59m). As the Group transitioned to an Enterprise-only strategy, it removed access to all contingent projects in the Marketplace and ceased direct marketing activities aimed at the SME market.

blur has experienced longer sales cycles in the more mature Enterprise market, while revenue from one-off SME projects dropped off more quickly, which led to the decline in project revenues. However, the overall quality and collectability of blur's project revenues has improved during the year.

Cancellation fee income (previously Listing fees) declined by 70% to $0.63m (2014: $2.13m). The improving quality of projects during the year, which has led to a higher proportion of projects completing, drove this decline. Income from Access fees (including subscriptions) totaled $0.10m with the Single User Access Fee and Subscriptions being launched in H2 2015. The newly launched Premium Service products generated $0.02m of income in the year.

Gross margin

From 2014 blur includes the cost of blur staff directly involved in the delivery of projects from listing to completion, in cost of sales.

Gross profit was $0.29m in 2015 (2014: $1.65m). The reduction has been driven by the reduction in Cancellation fee (previously Listing fee) income. The staff costs charged to cost of sales reduced by 11% to $0.84m (2014: $0.94m).

LBITDA

The LBITDA (Loss before Interest, Tax, Depreciation and Amortization, Foreign Exchange movements and Share Option costs) for the year reduced by 1% to $8.90m (2014: $9.01m) despite the reduction in gross profit. Q4 2015 LBITDA improved by 40% compared to Q3 2015. This was largely driven by the reduction in administrative costs.

Costs

Administrative costs decreased by 13% to $11.0m (2014: $12.62m) due to blur's increasing ability to improve efficiency with the launch of blur 5.0.

As anticipated, operational efficiencies continued to improve in Q4 with the Group increasingly able to streamline its processes. The structural changes made in Q3 and Q4 2015 led to a 58% reduction in the underlying cash burn in Q4, compared to Q3.

The credit risk associated with the customers using the marketplace in 2015 resulted in a $0.85m (2014: $0.83m) bad debt provision included in administrative costs, the majority of which was incurred in H1.

During 2015 the average number of full-time employees reduced from 65 to 50 with a consequent reduction in staff costs. Share-based payments costs of $0.52m (2014: $0.46m) remained broadly flat year-on-year.

Loss after tax

The loss after tax for the year reduced to $10.1m (2014: $10.5m).

Finance income of $0.2m (2014: $0.1m) reflects higher cash balances held on deposit. Taxation includes $0.45m (2014: $0.53m) of R&D tax credit.

Tax losses

Tax losses for the Group up to the end of December 2015 amount to a total of $22.5m, none of which are recognized as a deferred tax asset.

Cash

The cash balance at year-end was $7.1m (31 December 2014: $17.4m).

Operating cash outflow from operating activities was $7.8m (2014: $9.7m) and working capital decreased by $0.8m (2014: decrease $0.2m). Investments in intangible technology assets totaled $1.5m (2014: $1.9m), primarily reflecting the capitalization of internal technology development.

Trade receivables

Historically, blur had a diverse list of customers, with differing levels of credit risk. There were significant levels of bad debts in respect of small and medium sized businesses as blur tested the marketplace.

The transition to an Enterprise-only strategy, the denial of access to the marketplace to contingent projects and an increased focus on collections has served to mitigate this credit risk in 2015.

Q1 2016 Quarterly Update

During Q1 2016 the Group continued with its strategic focus on securing high-quality Enterprise customers with a propensity for repeat business. As anticipated, Enterprise customers continue to make up an increasing proportion of blur's overall revenue and project base.

Q1 2016 saw another consecutive increase in the proportion of Enterprise projects Pitching On (62% in Q4 2015 to 76% in Q1 2016) and Kicked Off (66% in Q4 2015 to 75% in Q1 2016) as blur's sales and marketing teams continue to develop new relationships with targeted Enterprise accounts.

Two new Enterprise customers Kicked Off projects in the quarter; one a US-based Systems Integrator, the other a UK-based firm of solicitors. We continue to focus on providing Enterprise-class customer service, with blur's Trustpilot rating reaching a high of 9.1.

blur's higher margin offerings continued to evolve in the period, with an 50% increase in Q1 compared to Q4 2015. While Premium Services currently make up a relatively small proportion of income in the quarter, continuing their growth will be a key driver of profitability for blur. blur expects these revenues to increase as Enterprise customers increase their rate of business services spend through blur's platform.

Again, blur again saw improvements in its operating cost base as the focus on the Enterprise, together with the completion of blur's 5.0 platform in Q4 2015, drove further internal efficiencies. Operating costs reduced by 25% in Q1, compared to Q4 2015. When compared to Q3 2015, Q1 2016's operating costs have been reduced by 57%.

The Group's cash balance at the end of Q1 2016 totaled $5.8 million compared to $7.1 million at the end of Q4 2015. An R&D tax credit of $0.5 million, relating to 2014, was received in the period. Cash has been impacted by $0.5 million of unrealized exchange losses in the last two quarters and $0.3 million of unrealized exchange movements in Q1 2016, as the valuation of blur's sterling denominated cash balances was impacted by the decline in the GBP: USD exchange rate in Q1 2016. Excluding these exchange movements, the cash burn for Q1 2016 was $1.0 million.

Consolidated Statement of Total Comprehensive Income

for the year ended 31 December 2015

The results reflected above relate to continuing activities.

The accompanying notes are an integral part of these financial statements.

Consolidated Statement of Financial Position

At 31 December 2015

The financial statements were approved and authorized for issue by the Board of Directors on 26 April 2016 and were signed on its behalf by:

Philip Letts Tim Allen

CEO CFO

Company Registration Number: 08188404

The accompanying notes are an integral part of these financial statements.

Consolidated Statement of Changes in Equity

for the Year Ended 31 December 2015

Consolidated Statement of Cashflows

for the Year Ended 31 December 2015

The accompanying notes are an integral part of these financial statements.

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 judgement in applying the Group's accounting policies. The areas where significant judgements 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' identifiable assets, liabilities, and contingent liabilities are initially recognized 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 unrealized gains and losses (where they do not provide evidence of impairment of the asset transferred) on transactions between Group companies are eliminated.

Going concern

The Directors have prepared a cash flow forecast covering a period extending 12 months from the date of approval of these financial statements which shows that the Group will have sufficient cash to meet its debts as they fall due over that period. blur is a disruptive and evolving technology company and uncertainties exist in the forecast as a result. The forecast contains certain assumptions about the performance of the business including growth in future revenue, both in project revenues and in premium services, the cost model and margins, and the level of cash recovery from trading. In the next 12 months, the most critical assumptions are those concerning the control of costs. 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 over the period of the forecast. For these reasons, they continue to adopt the going concern basis of accounting in preparing the annual financial statements. However, beyond the forecast period the Group will need either to substantially increase its revenues or take actions to ensure it remains sufficiently funded. 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 ($). The Directors consider the US Dollar is the most appropriate presentational currency.

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 2015. 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 2016, 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 2014 cycle (effective date: 1 January 2016) - improvements to various standards.

· IFRS 15, 'Revenue from contracts with customers' (effective date:1 January 2016) - 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 recognized 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 recognizing 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.

· IFRS 16 'Leases' (effective date: 1 January 2019) - changes fundamentally the accounting for leases by lessees. It eliminates the current IAS 17 dual accounting model, which distinguishes between on-balance sheet finance leases and off-balance sheet operating leases and, instead, introduces a single, on-balance sheet accounting model that is similar to current finance lease 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 blur's marketplace, where the customer, in conjunction with blur, selects the service provider and a legally binding contract between blur and its customers is established (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 recognized 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 are broadly indicative of the stage of completion and reflect the value of work completed.

In the case of milestone projects, the service provider and 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, Project Space, that is updated by the service provider, 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.

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 recognized only when the contingent element is completed.

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

Where the project is delayed and a new completion date established, the revenue is recognized over the longer period associated with the revised completion date. Where the project is suspended, no revenue is recognized 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 recognize.

Cancellation (previously Listing fee) revenue

Being revenue from customers where a commenced project is cancelled and there is an expectation of collection of the cancellation fee. The Cancellation fee is a contractual charge when a customer lists a project that subsequently cancels.

Foreign currency

The functional currency of blur Group plc and blur Ltd is Pound Sterling, whereas of blur Inc. it 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 2015 was at a closing rate of £1 = US$1.4804 (2014: US$1.5632) and the statement of comprehensive income at an average rate of US$1.4804 (2013: US$1.6410).

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 recognized in the income statement.

On consolidation, exchange differences arising from the translation of the net investment in foreign entities are recognized in other comprehensive income and accumulated in a separate component of equity. 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 utilizing these instruments are recognized 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 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 utilized 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 (2014: £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

External software - 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 development 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.

Each version released builds incrementally on the prior release (as opposed to being a completely new platform) so no prior costs are written off.

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 extent that it is probable that future taxable profits will be available against which temporary differences can be utilized. 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 behavioral considerations.

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) Going concern

As set out in note 1 the Directors have prepared a cash flow forecast covering a period extending 12 months from the date of approval of these financial statements which shows that the Group will have sufficient cash to meet its debts as they fall due over that period. blur is a disruptive and evolving technology company and uncertainties exist in the forecast as a result. The forecast contains certain assumptions about the performance of the business including growth in future revenue, both in project revenues and in premium services, the cost model and margins, and the level of cash recovery from trading. In the next 12 months, the most critical assumptions are those concerning the control of costs.

(b) 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 service provider 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.

blur recognizes revenue when the following criteria are satisfied:

a. The amount or value of the revenue recognized can be reliably measured, which occurs when the Customer Success team, customer and service provider have agreed the contract value upon appointment of the service provider. The measurement date for revenue recognition is from the date a service provider 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

Project revenue

Project revenue is recognized 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. There can be judgement required in estimating the stage of completion of a project and hence the value of the revenue to be recognized at a point in time.

Cancellation fee (previously listing fee) revenue

The Cancellation fee is a mandatory charge when a customer, having listed a project decides to close their trading account or not to select an expert. Judgement may be required to assess the extent to which 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.

(c) 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. The impairment tests require assumptions about future events which require management judgement.

(d) 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 customers has improved over the period being a reflection of both improved credit control process and the transition to Enterprise customers.

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'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; and

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

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 60 days (2014: 102 days).

Trade receivables that are due at the reporting date and have been reviewed and impaired when the collectability is considered unlikely.

R&D Tax Credit of $482,908 was received in January 2016.

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 38 days (2014 : 31 days).

Cash and cash equivalents

Cash and cash equivalents are held in Sterling, Euros 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 2015 the Group has net trade receivables of US$258,724 (2014 - US$833,102).

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 by withholding payment to the service provider associated with the project

At 31 December 2015, the Group had no customers (2014: five customers) that owed the Group more than $100,000 each and accounted for 0% (2014: 51%) of all the net 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 150 days. A corresponding provision is made against the service provider invoice or accrual to reflect the reduced associated liability.

(iii) Liquidity risk

Short-term 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.

Longer term liquidity risk is the ability of the Group to continue as a going concern. This risk is managed by the preparation by the Directors of cash flow forecasts and the close management of expenditure.

(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 Pounds Sterling (£). The financial statements have been presented in US Dollars. The effective exchange rate at 31 December 2015 was £1 = US$1.4804 (2014: £1 = US$1.5632).

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.

The Group is predominantly exposed to currency risk on sales and purchases made from customers and service providers based in the USA and the Eurozone. Sales and purchases from customers, experts and suppliers are made on a central basis and the risk is monitored centrally. Apart from these particular cashflows 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.

Forward contracts are used to control foreign exchange risk. 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; and

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

At 31 December 2015 the Group had no commitments under forward foreign exchange contracts.

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 2015, 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 $15,793 for 2015 (2014: $920,704). The average US$ exchange rate used for 2015 is 1.521 (2014: 1.641), with a closing rate of 1.4804 (2014: 1.5632).

(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 totaling at 31 December 2015 US$9,964,927 (2014: US$20,271,062).

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 at least 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 minimize the cost of capital and attempt to optimize 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 Group's credit rating and ability to borrow should acquisition targets become appropriate and 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 categorizes all revenue from operations to this segment.

The Group currently has four 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. cancellation fees (formerly listing fees) - where the project is cancelled after listing and there is an expectation of collection. The Cancellation fee is a mandatory charge when a customer listed a project and decided to close their trading account or not to select an expert;

3. premium services - comprising wraparound support services for projects, including blur Manage Ultra, blur Protect Advanced, blur Express, and blur Engage; and

4. subscriptions and licenses - for the provision of tiered annual subscriptions to service providers to gain access to high value project opportunities and market insights; the provision of access to blur's software Platform and for the provision of subscriptions of blur Data, which analyses the business services landscape including category trends, pricing and timeline forecasts.

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:

The total loss from operations of $10.7m predominantly relates to project revenue/cancellation fees which make up 97% of revenue. The vast majority of the costs of sales and overheads for 2015 relate to the head office in the UK. Given this, the directors consider the split of costs across geographical segments would be arbitrary and judgmental. Therefore, they consider reporting the loss by geographical segment could be mis-leading in this early phase of blur's development.

5. Loss from operations

The operating loss as at 31 December 2015 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:

Key management personnel comprise of the Board of Directors and the Chief Financial Officer if he is not a Board member.

During the year the Directors were awarded a total of 460,000 share options (2014: 1,000,000) at a weighted average exercise price of £0.2739 (2014: £0.66). No share options were received or receivable in respect of qualifying services under a long term incentive scheme. No share options were exercised during the year. Remuneration disclosed above includes the following amounts paid to the highest paid Director:

In the year ended 31 December 2015 the highest paid Director received nil share options (2014: 500,000). No share options were exercised by this Director in the current financial year (2014: nil).

7. Finance income and expenses

8. Income tax

Analysis of the tax credit

No liability to UK corporation tax arose on ordinary activities for the year ended 31 December 2015 nor for the year ended 31 December 2014. However, a receivable cash tax credit in respect of the UK R&D activity has been recognized.

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. A liability for overseas tax has been recognized on ordinary activities for the year ended 31 December 2015 in respect of Blur Inc.

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 temporary differences amounting to US$22,479,579 as of 31 December 2015 (2014: $15,392,810). As the timing and extent of taxable profits are uncertain, the deferred tax asset of US$4,046,324 (2014: $3,078,562) arising on these losses (at 18% future tax rate) and accelerated timing differences has not been recognized in the financial statements.

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 was 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 2015 trade receivables of US$160,192 (2014: US$1,285,722) 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 (including derivatives)

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.

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 ongoing 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:

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. Subsidiaries

The subsidiaries of the Company, all of which have been included in the consolidated financial information, are as follows:

* These investments are held by blur Limited.

17. Reserves

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

18. Leases

The Group's leases consist only of operating leases for office space. Non-cancellable operating lease rentals are payable as follows:

At 31 December 2015, the Group had no capital commitments in respect of property, plant and equipment.

19. Related party transactions

Out of above balances outstanding at year end in trade payables and accruals are $16,390 (2014: $43,906).

1 Consultancy fees of $191,646 (2014: $196,920) were 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 $68,822 (2014: $251,900) were paid to CFPro Limited and Cambridge Financial Partners LLP for accounting and consultancy support, companies in which Barbara Spurrier has an interest.

3 Other consultancy fees of $25,137 (2014: $9,467) were paid to Meguro LLP, a company in which Robert Wirszycz has an interest prior to him becoming a director.

4 License fees of $5,325 (2014: $17,231) were payable to Philip Letts for the use of blur logo artwork.

Related party transactions are not included in compensation costs to key personnel as set out in note 6, with the exception of payments to Revviva LLC in respect of K Cardinale's director services.

Revenue or other related receipts from key management personnel (including Directors):

1 Project revenue includes $1,521 (2014: $nil) in revenue recognized for projects carried out on behalf of Letts Estates Limited, a company in which Philip Letts has an interest. The projects were carried out on an arms-length basis. There are no amounts outstanding to or from the company at the period end.

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

The loans are interest free and repayable on demand.

20. Share-based payments

The Company operates two option schemes, namely an unapproved option scheme and an Enterprise Management Incentive (EMI) scheme. The share capital of the Company is denominated in Pounds Sterling. Therefore, disclosures are presented in Sterling.

At 31 December 2015, the following share options have been granted and are outstanding in respect of the ordinary shares:

At the 31 December 2015, 4,079,495 (2014: 3,622,295) options were in existence, 2,087,000 (2014: 1,727,350) under EMI scheme and 1,992,495 (2014: 1,894,945) under unapproved scheme. The options exercisable as at 31 December 2015 were NIL (2014: NIL). The contractual life is ten years and there is no cash settlement of the options. The options vests provided the employees remain in the service of the Company for a period of between two and four years from the grant date.

The fair values of the options are calculated using the Black-Scholes method. Assumptions used in this model for the year ended 31 December were:

EMI Scheme 2015 2014

Fair value at measurement date £0.14 £0.91

Exercise price £0.18 - £0.77 £0.66 - £7.93

Expected volatility 29% - 600% 112% - 600%

Expected life 4.00 Years 4.00 Years

Weighted Average Share Price at grant £0.24 £0.97

Risk-free rate 1.65%-1.831% 1.5%-2.25%

Unapproved Scheme 2015 2014

Fair value at measurement date £0.10 £0.66