MAIS.L Regulatory News (MAIS)

May 23, 2014

blur Group plc

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

Final Results

blur Group plc (BLUR), a business services marketplace in the cloud at blurgroup.com, is pleased to announce audited final results for the year ended 31 December 2013.

Operational Highlights

● Creation of global HQ in Exeter, UK supported by regional sales offices in US and London, UK

● Launch of blur 3.0 - multiple enhancements made to trading platforms including the re-architecture of the platform to support high volumes of briefs, projects, partners, experts and customers

● Project bands on the Global Services Exchange increased to receive projects of over $1m in Q1, rising again to $5m in Q3 2013

● In 2013, 2,086 new briefs were submitted, 169% up on 2012

● Successful share placing conducted in June 2013, raising $11.97m (£7.62m) before expenses

Financial Highlights

● Total project booking intake1 increased by $19.8m to $22.2m (2012 $2.4m)

● Revenue increased by 70.1% to $4.78m (2012 $2.81m)

● Gross profit increased by 58.9% to $1.16m (2012 $0.73m)

● LBITDA2 increased to $6.37m (2012 $1.81m)

● Cash balance as at 31 December 2013 of $9.56m (2012 $4.45m)

1The total bookings intake represents the project values (excluding listing fees) as agreed and confirmed by the customer in the year. It is used to measure the total expected revenue to be recognized over the life cycle of these projects and can include a proportion that is contingent, with revenues being recognized in the current and future periods, either over timelines or upon milestones being achieved. This booking value may change over time due to the scale, contingent elements and complexity of projects.

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

Post Year End Highlights

● Proposed capital raising to raise approximately $20 million by way of a placing, and up to an additional $2 million through an open offer, to continue growth through investment in sales, technology, marketing and customer services, strengthen the Balance Sheet and take the Company through to profitability

Philip Letts, blur Group CEO, said:

"Our goal in 2014 is to firmly establish blur Group in the enterprise space, delivering consistently on a higher volume of projects. We will continue to attract and deliver for the small business at scale and increasingly cost effectively. Developments in our technology platform, embedded in our blur 4.0 launch, will deliver true enterprise levels of scalability and automation. We believe this move will provide organizations with the confidence to use what we call 'services-commerce' to source every aspect of the long-tail of their services procurement.

"We made good progress in 2013, but I strongly believe that we have only scratched the surface. We are confident that we are at the cusp of major, profitable growth as the benefits of s-commerce are experienced and understood by our markets. I look forward with confidence into 2014 and beyond."

For further information please contact:

About blur Group plc atblurgroup.com

blur Group's Global Services Exchange is a business services marketplace that enables 45,000+ business users in 145 countries to buy, sell and deliver core business services and take advantage of Software as a Transaction™ to pay for those projects. blur Group is a public technology company (BLUR: LSE AIM).

Chairman and Chief Executive's Report

Overview

blur Group has grown in every dimension during 2013, taking further our stated intent to disrupt the traditional way in which businesses buy and sell services. Replacing the traditional services exchange model with a better, more effective and higher value way that hugely benefits both buyer and provider, acting against the interests of entrenched, tired relationships.

A big step taken during 2013 was to make our offer attractive and usable to every size of business from small to enterprise, resulting in a significant increase in average brief value. Our growth tells us that our addressable market appears to have few bounds and we believe we have only put our toe into the water of this new way of buying and supplying services.

We continue to develop as a business, making continual investments in our technology platform and our teams. I am pleased to say that we now have an amazing group of people driving the business, all bound by a culture that takes as its mission to positively change the face of services-commerce, forever.

Financial Growth, Fundraising & Key Metrics

Our results over the year were encouraging with strong growth in our revenue line.

The total bookings intake* for 2013 increased by $19.8m to $22.2m (2012:$2.4m) and of this $4.8m was recognized as revenue in the year (2012:$2.8m) and $17.4m (2012:$0.3m) will be recognized as revenue in the future if and when delivery of the services booked in 2013 have completed.

The number of briefs submitted to the platform rose in 2013 to 2,086 from 776 in 2012 (169% growth) with an average brief value rising to $37,969 from $12,738. Briefs are available to our expert community to pitch for, and in the event they lead to a successful project, they then become revenue generating for the Group. Significantly, we converted 579 (140% growth) briefs into live projects.

The demand for large projects submitted through blur Group's Exchange led to us increasing our project ceiling to $5 million during the year, having started in Q1 2013 at just $1million. The agility of our business allows us to adapt to market demands and facilitate use of the Exchange for changing market opportunities.

There were around 1,012 new business users (customers and experts) adopting the Exchange each month in 2013. The size of the projects is growing and we are seeing increasingly larger projects coming on to the Exchange. Some of the new customers using the Exchange for the first time in 2013 included Danone, Regus, Octopus Investments, Cuchura, The Red Flag Group, Randall & Aubin, Mobil2 and Benicomp, showing the global reach and applicability of the Exchange for any size of business, and any size of project.

In order to facilitate our growth, we successfully raised $11.97 million (£7.62 million) before expenses in June 2013 and I would like to thank both the existing and new institutions and individual investors that took part in the Placing. This funding enabled us to accelerate our growth on a global basis and across all areas of service-commerce.

We continue to invest in our growth and expect this to continue through 2014.

\* The total bookings intake represents the project values (excluding listing fees) as agreed and confirmed by the customer in the year. It is used to measure the total expected revenue to be recognized over the life cycle of these projects and can include a proportion that is contingent, with revenues being recognized in the current and future periods, either over timelines or upon milestones being achieved. This booking value may change over time due to the scale, contingent elements and complexity of projects.

Technology & Infrastructure Growth

We are, at heart, a technology business. The year under review saw the launch of blur 3.0 which, at the time, was the most significant advance that we had made, adding multi-device management, increased speed, scalability, improved user experience, along with integrated and intuitive management to our cloud-based platform. blur 3.0 enabled us to add further capability through the year, including 'blur Sense', an intelligent recommendation engine to automate part of the selection process; along with more advanced project management and integrated billing.

In the latter part of 2013, the technology team were developing the next version of trading platform blur 4.0 which is being rolled out in the first half of 2014.

We also made investments in supporting the long-term growth of the business in terms of capacity, culture and talent, ensuring we have the scalability and the right environment to take advantage of what is clearly a massive business growth opportunity. In November, we completed the move of our global headquarters to a newly-built science park in Exeter in the South West of England. The move creates a campus that allows us to expand easily and at low cost plus we now have an environment that lends itself to creative development. Indeed, while there are four excellent universities nearby to provide future technology and thought leaders, one of the more surprising aspects of our move has been how easy it has been to attract highly gifted individuals from other organizations and walks of life to join us and re-locate to the South West. During 2013 we also opened our second office in the US in Southern California, the fourth in total.

blur Group has continued to invest to ensure that we have the very best in the marketplace and the right people in the right positions to provide an optimal framework to support the business as it continues its rapid growth. As well as attracting new people to blur Group, it has been particularly rewarding to promote from within, recognizing the achievements and hard work of those who have already achieved so much with blur. Included within this is Jon Hogg who has been promoted to Chief Platform Officer and Dorothy Mead who has risen to Chief Acquisition Officer. The total number of employees at the year-end was 74, up from 40 at the end of the prior year.

Growth of the corporate sales teams

Throughout 2013 more businesses became exchange adopters: using services-commerce in different functions and categories across their organizations. As blur Group's business grows customer experience warrants even greater focus and so a newly created position; Chief Community Officer was created. In this role Kara Cardinale has developed two key divisions: Customer Success, with the goal to enhance customer service and experience, and Projects & Payments which handles the project delivery process from kick-off to completion.

To support the rapidly growing scale of the business globally, blur Group has strengthened its operational team across all regions. Gerry Gross was promoted to Chief Commercial Officer with a remit to drive growth of enterprise-class customers from regional sales offices in London, Dallas and the west coast of US.

Corporate customers are more likely to provide a greater flow of repeat business on a more frequent basis than smaller companies. The corporate sales team has therefore been expanded both in EMEA and the US and has already made significant strides including the largest project ever brought through the Global Services Exchange, so far. As part of its expanding partner program blur has partnered with Alibaba to promote blur to its business customers and grow into the Asia Pacific region.

Our Strategy & Business Model

This year we conducted research to determine the level of inertia in services buying. We found that while 89% of decision makers believed better service providers were available outside their existing network, the same number were still likely to approach their existing service providers when a new project arose. 93% of decision makers said that while they would like to find a new service partner, the majority of these (83%) felt that their procurement processes prevented them from being able to enjoy the potential benefits this would bring.

Our strategy and business directly addresses the needs of these services buyers. We have built a services-commerce platform that enables projects to be briefed, sourced, delivered and paid for from providers around the world without recourse to traditional Request for Proposals, lengthy selection processes and the inability to switch provider for ad-hoc projects. Our Exchange allows both buyers and sellers to join blur and deliver projects with blur's management expertise in a services-commerce environment, driving services buying for business much like the way e-commerce has changed the way consumers source and buy.

Our ambition is to change the services buying market for business of all sizes, much like the major players have done in the consumer market. We believe that we have made the right steps to do this and have a true first mover advantage. We invest in customer acquisition channels such as pay-per-click, search engine optimization, content marketing and automation, 3rd party networks, social media and have built a corporate sales force to target medium and large businesses. As part of our drive to stay ahead of business opportunities, we monitor returns from each of these activities closely and have clear metrics so that we understand what works, what does not and what cost in this emerging market.

Future Plans

Our goal in 2014 is to firmly establish blur Group in the Enterprise, delivering consistently on a higher volume of projects. We will continue to attract and deliver for the small business at scale and increasingly cost effectively. Developments in our technology platform, embedded in our blur 4.0 launch, will deliver true enterprise levels of scalability and automation. We believe this move will provide organizations with the confidence to use what we call 's-commerce' to source every aspect of the long-tail of their services procurement.

While we are all about technology, we are also completely dependent on continuing to attract and retain the brightest talent at all levels across all teams and all regions, and it is this high performing team, 74 at the end of 2013, that will drive blur Group's next and vital phase of growth. As part of this growth the Group is committed to the hiring of a new non-executive Chairman so to have the pillars in place to support the growth plans and also a Chief Financial Officer to further strengthen the team and take the business to the next stage of development and beyond. With our HQ move now complete, and expansion into new regions beginning, we are well on our way to fulfilling our ambition to be a global technology success story from our UK base.

This growth will be supported by a proposed capital fundraising to raise approximately $20 million (£11.9 million) by way of a placing and up to $2 million (£1.2 million) through an open offer, which will strengthen the balance sheet as larger enterprises make use of the Exchange and take the business through to profitability.

We made good progress in 2013, but I strongly believe that we have only scratched the surface. We are confident that we are at the cusp of major growth as the benefits of s-commerce are experienced and understood by our markets.

I look forward with confidence into 2014 and beyond.

Philip Letts

Chairman & CEO

Strategic report

Business Overview

blur Group's s-commerce platform for the delivery of business services projects is changing the services landscape with its streamlined approach and simple project-to-delivery process. Approaching 45,000 business users have now adopted the platform across 145 different countries.

blur's Global Services Exchange begins with project submission, listing to the expert community, shortlisting best pitches for selection by the customer and continues through to project management, delivery and payments. The journey of a project through the platform is automated with management from blur's support teams to keep projects moving smoothly through to completion.

blur Group has grown rapidly since the Exchange fully launched in 2010, with the number of projects submitted through our platform growing from 135 in 2010 to 2,086 in 2013, an increase of 169% on the number submitted in the previous year, and the number of experts growing to over 39,000 today.

The proof-of-concept phase of the Group's growth is over. With the adoption of s-commerce accelerating, the major focus in the latter part of 2013 was the industrialisation of blur's Global Service Exchange. The launch of blur 3.0 in April was a fundamental step, providing the foundations for greater scalability and growth of the Exchange. Technology remains at the heart of what we do and who we are, and it should therefore come as little surprise that blur 3.0 has been usurped with the launch of blur 4.0 in April 2014; as dramatic a step up as blur 3.0 was on its previous iteration.

As the Exchange has developed, the profile of both customers and service providers has evolved with larger businesses now both buying and selling services across blur's 10 categories and the projects themselves are growing in complexity, duration and scope.

Business Model

blur Group's business model is designed to disrupt how organizations source and buy services. It replaces the traditional way people buy, replacing it with a new, open, modern, and interactive platform, where buyers and expert providers can meet with blur Group and conduct business.

Context

As businesses go through the growth cycle from start-up to mid size to corporate their structures become more formal, their processes more defined and their governance extends to accommodate thousands of employees. blur poses the notion that there is a different way to grow, with scalability accessed 'on demand' in the cloud, sourcing and providing on a flexible project-by-project basis.

The scope to improve the services procurement model is significant, as the sourcing of services has changed very little since businesses first started buying services externally. Typically large services providers seek to lock-in 'retained' relationships with their customers which can last for years. Recent research commissioned by blur Group in the USA revealed 65% of procurement decision makers at large companies feel keeping a long-term relationship with a service provider results in the provider offering fewer innovative solutions. The same research revealed that the average business service buyer/seller relationship can be as long at 10.5 years. There is clearly demand for change.

Buyer Benefits

The blur approach offers buyers the following benefits from services-commerce:

● Faster project delivery. The structured, competitive tendering process typically shortens the service provider selection process. blur Group's project management and monitoring tools with input from the Exchange Support team leads to quicker project kick-off and completion timescales

● Greater choice and transparency. Service providers from all over the world with specialized expertise pitch for business therefore widening the choice of provider without compromising quality

● Reduced cost. As each project goes through a competitive tendering process, there is more scope to reduce project costs

● Efficiencies. Because blur's platform handles delivery and payment, customers are saved administrative time and money in onboarding new service providers and processing payments

Service Provider Benefits

Service providers gain the following benefits from using the Global Services Exchange:

● Larger target customer base. blur Group's experts have access to projects that previously were only available to local or larger service providers

● Reduced cost. There can be a significant reduction in the amount of time and resources spent on winning new business

● Reduced administration. As well as providing project management tools and support, blur also handles the payment process mitigating risk for both buyer and seller

Outcome

Through the latter half of 2013 blur Group saw a marked increase in the number of 'enterprise-class' customers coming to its Global Service Exchange. blur grew its platform to include the ability to run projects with values over $1m in Q1 2013 followed by a further increase to accommodate projects up to $5m in value in Q3 2013 and project values can increase over $5m ceiling following submission. The enterprise-class customer offers both individual large project briefs that run over several years and multiple $100k+ projects per annum that have a 6-18 month duration.

blur Group's Growth Model

blur Group attracts new users to the exchange through a combination of online acquisition and inbound and outbound sales. blur has invested heavily in 2013 in systems such as Marketo and salesforce.com to support the marketing and sales processes.

Ongoing growth will be based on our ability to continue to attract new business users to the platform, while encouraging repeat usage by existing customers, especially larger enterprise-class customers that submit both significant size projects and have multiple needs across all categories. Repeat customers by their very nature have a lower ongoing acquisition cost, and their projects typically need less monitoring as they are more familiar with the exchange and blur's operating model.

Moving repeat customers from being exchange users, who have used the exchange for projects within one category, to becoming exchange adopters who have fundamentally changed the way they procure their services across all categories, is an important aspirational goal.

Financial Performance Highlights

Revenue

Revenue for the year increased by 70.1% to $4.78m (2012: $2.81m), delivering the fifth year of consecutive growth.

Gross Margin

The Group delivered gross profit in the year of $1.16m (2012: $0.73m), a 58.9% increase year on year but a reduction in margin from 25.9% of sales in 2012 to 24.4% in 2013. The reduced gross margin reflects the higher proportion of project revenues, as opposed to listing fees, and a move to a pure platform-driven model which, while lower margin, provides for a higher quality of revenue moving forward.

Profit / Loss

The LBITDA (Loss before Interest, Tax, Depreciation and Amortization) for the year was $6.37m (2012:$1.81m) and includes share based payments cost of $0.50m (2012:$0.11m).

Costs

Administrative costs increased to $7.73m (2012: $2.60m) reflecting the increased investment in people and technology to support the growth of the Exchange. During 2013 the number of employees grew from 40 to 74 by 31 December. The loss after tax is $6.3m compared to $1.74m in 2012, and includes a $0.24m (2012:$0.13m) of R&D tax credit.

Cash

Cash balance at the year-end was $9.56m (31 December 2012: $4.45m), including net proceeds of $11.4m placing in June 2013. Operating cash outflow for the period was $5.52m, reflecting an outflow from operating activities of $5.86m and a decrease in working capital of $0.33m. Investments in assets totalled $1.09m (2012: $0.27m), reflecting the capitalisation of internal technology costs and small purchases of fixed assets.

Trade receivables

As the business has grown significantly, the Group has benefited from a diverse list of clients but with a differing level of credit risks. As a result, the Group has now put into place sound application of credit control processes to improve the collection of its trade receivables.

Current Trading and Q1 2014 Metrics

The Group considers its key metrics that are used as indicators for business performance to be:

● Number of briefs submitted, and average value of a submitted brief;

● Number of projects kicked off;

● Number of experts using the exchange.

These metrics are indicators of the evolution of the demand and supply on the exchange and also how the company is converting these into projects, and therefore revenue. These metrics have been monitored constantly for 4 years and are reported externally on a quarterly basis. They are also highly visible as they update live on the Group's trading platform. A summary of the metrics is as follows:

Q1, 2014 metrics show high growth in the volume of submitted projects and average project values, greater penetration into global markets, and a broadening of services covered through the platform. 1,031 briefs were submitted in Q1 of 2014, compared to 359 in Q1 of 2013 and the total value of briefs was $73.7m, compared to $3.89m in the corresponding quarter.

How Revenue Is Recognized

blur Group revenue consists of:

1. Project revenue. This revenue is based on the project value that the customer submitted to the exchange and confirmed in the statement of work of deliverables. Project revenue is recognized in the period in which the project is delivered, as adjusted for the stage of completion of the project or milestone achievements.

blur recognizes project revenue on a gross basis, based on the project value confirmed on the statement of work, as our evaluation and assessment of the indicators under IFRS accounting standards supports the case that blur Group is acting as principal for each project in its dealings with its customers and experts.

2. Listing fee. This 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 the brief and opens the trading account. This covers the customer's use of their trading account and the cost of the time spent delivering pitches and running through the Exchange process.

As blur Group grows and evolves, the diversity of projects being submitted to the Exchange, both in terms of complexity, size and duration, continues to increase. Furthermore, the budget cap for projects being submitted on the Exchange has increased from $1m to $5m, indicating the increased size of project being sourced through blur Group.

During 2013 the average size of projects has increased from $13K in 2012 to over $38K in 2013, with the average value in the final quarter reaching $90k.

The most significant change blur Group has seen is that there is an increased frequency of projects submitted with total revenue values in excess of $1m and timelines stretching out in excess of 12 months. This trend is continuing into 2014.

This evolution has an impact on blur in several ways:

● Projects may be in progress on the exchange stretching over longer periods and therefore the revenue recognized in any one reporting period is only a proportion of the total project revenue leaving a significant revenue stream for future periods.

● Where a project value is contingent on achieving certain milestones or deliverables, revenue is recognized when these milestones or deliverables are achieved. With the increase in project value and timescales, the gross value of projects may not be recognized in one accounting period. This leaves the Group with visibility of potential revenue for future periods. However, there is no assurance that all contingent milestones will be achieved, and accordingly those that are not achieved will not be reflected in revenue in future periods.

Principal risks and uncertainties

The key business risks affecting the Group are set out below:

Financial

The Group's activities expose it to some financial risks. The Group monitors these risks but does not consider it necessary to use any derivative financial instruments to hedge these risks.

● Liquidity risk

The Group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest in cash assets safely and profitably. The Group raised funds of $11.97m (£7.62m) in June 2013 and is aiming to raise additional funds in May 2014.

● Credit risk

Credit risk arises from exposure to outstanding receivables. Potential new customers are assessed for credit risk before credit is given, to minimize credit exposure.

● Currency risk

The Group manages its foreign exchange exposure on a net basis. No forward exchange or other such financial instruments have been used in the period.

Technology

The Group's performance is dependent on its technology keeping pace with developments in cloud and mobile technology, including volumes of data and growth in applications. The Group manages this risk by a commitment to research and development combined with ongoing dialogue with trading partners and sector specialists to ensure that market developments are understood.

Competition

blur has first mover advantage in the s-commerce sector. As s-commerce grows and becomes more widely known, this business opportunity may attract a competitor that is larger or who has greater financial resources. blur is investing rapidly to expand our lead in technology, expertise, and size of expert and customer communities and believes it has a lead and level of knowledge and expertise which would take several years to replicate.

Staff

Capitalizing on the s-commerce opportunity will also require blur to industrialize our business processes and expand our skill sets within short time frames. This will require us to recruit, train and develop a much larger employee base. To mitigate these risks, the business is investing to allow for future scaling and growth

Other

Continued acquisition of high quality services providers able to deliver high value projects over all categories is key to continued growth particularly as customers submit larger and more complex projects. It is also vital that the technology platform continues to develop to retain the business's first mover advantage and we continue to invest our time and resource in these areas.

On behalf of the Board

Philip Letts

Chairman and CEO

Consolidated statement of total comprehensive income

for the year ended 31 December 2013

The results reflected above relate to continuing activities.

Consolidated statement of financial position

At 31 December 2013

Consolidated statement of changes in equity

for the year ended 31 December 2013

Consolidated statement of cashflows

for the year ended 31 December 2013

Notes to the consolidated financial information

1. Accounting policies

Basis of preparation

The financial information set out in these final results does not constitute the Company's statutory accounts for the year ended 31 December 2012 or 2013.

Statutory accounts for 2012 have been delivered to the Registrar of Companies and those for 2013 will be delivered following the Company's annual general meeting. The Independent Auditors' Reports on the Annual Report and Financial Statements for each of 2012 and 2013 were unqualified and did not contain statements under the Companies Act 2006, s498(2) or (3). However, the audit report for the year ended 31 December 2013, drew attention to an emphasis of matter due to the uncertainty over going concern, further details are included in the going concern accounting policy below.

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 the recognition and measurement criteria of 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

The subsidiaries included in the consolidated financial statements are entities controlled by the Company. Control is where the Company has power, either directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

All inter-company transactions, balances, income and expenses are eliminated on consolidation.

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. The forecast contains certain assumptions about the performance of the business. These assumptions are the Directors' best estimate of the future development of the business. After considering the forecasts, the directors believe that it is necessary to increase the cash resources in order to increase working capital and to support its new growth initiatives. The Directors instigated a fund raising in May 2014 in order to secure $20m for the Group. Based on the confirmations received from potential investors, the Directors are confident that sufficient funds will be in place to support the going concern status of the Group. This fund-raising is subject to shareholder confirmation at the general meeting scheduled for 10 June 2014. However, should the business not be able to secure these funds from this fund-raising round, the Directors would take immediate actions to ensure that the business is viable to continue its trading on a day to day basis. These conditions indicate the existence of a material uncertainty which may cast significant doubt about the Group's ability to continue as a going concern. Nevertheless, after making enquiries and considering the uncertainties described, 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.

Changes in accounting policies and disclosures

(a) New and amended standards adopted by the Group

The following new standards, amendments to standards and interpretations are mandatory and have been adopted by the Group for the first time for the financial year beginning on or after 1 January 2013 with no material impact on the Group:

● Amendment to IAS 1, 'Financial statement presentation', regarding other comprehensive income

● Improvements to IFRS (2009-2011)

● IFRS 10 - Consolidated Financial Statements

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

Certain 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 2014, or later periods, which the Group has decided not to adopt early when early adoption is available. None of these is expected to have a material impact on the consolidated financial statements of the Group. The following are the new and amended standards issued:

Revenue Recognition

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

Project revenue is assessed on an individual project by project basis with revenue being recognized based on the stage of completion of each project, commencing on the date that the project is submitted on to the Global Exchange Platform. The stage of completion is determined based on time or project milestones in the contract. Where a project is contingent on achieving certain milestones or deliverables, revenue is recognized when these milestones or deliverables are achieved.

Listing fees are recognized as when the project is cancelled after listing and there is an expectation of collection. This 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.

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 2013 was at closing rate of £1 = US$1.6488 (2012: US$1.613) and the statement of comprehensive income at average rate of US$1.5642 (2012: US$1.5853).

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 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.

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; 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 (2012:£0.01) ordinary shares.

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.

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 each project. 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 with a customer;

• blur has primary responsibility providing the services to a customer. blur are 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 and the amount by which progress billing exceeds revenue is shown as deferred revenue.

(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 future cash flow forecasts and these forecasts 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.

3. Segmental analysis

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

There was one customer with revenue of $725,537 which represents 10% or more of the Group revenue for 2013. This compares to $496,781 of revenue generated from the largest customer in 2012.

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:

4. Loss from operations

The operating loss as at 31 December 2013 is stated after charging:

\* The bad debt provision for 2012 of $259,827 included a $96,507 exceptional item relating to the margin exposure of one customer, whose funding did not materialise as anticipated.

In 2012, $126,983 non-audit professional fees were paid relating to the IPO.

5. 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.

 In September 2012, blur Limited successfully implemented the share for share exchange whereby blur Group plc became the holding Company of the Group. Under the Scheme of Arrangement, blur Limited's shares and options on issue as at 29th September 2012 were exchanged on a fifteen for one basis to blur Group plc shares and options. All disclosures of shares and options in the report reflect this change as though the fifteen for one exchange had always been in place.

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

In June 2013 an issue of 5,077,263 ordinary shares of £0.01 each at a consideration of £1.50 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.

6. Related party transactions

Included within cash as at 31 December 2013 is an amount of US$nil (2012: US$ 1,826) held in an account in the name of Phillip Letts. The account is operated solely on behalf of blur Limited, and all amounts are held in trust on behalf of blur Limited, and hence have been included within cash.

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 $42,570 (2012: $298)

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

** The service fees were paid to Oloco Limited & Cambridge Financial Partners LLP for accounting and consultancy services. Barbara Spurrier has an interest in these companies.

The following loans to directors subsisted:

The loans are interest free and repayable on demand.

7. Events after the reporting date

On 8 January 2014 125,000 share options were issued to management and staff. The exercise price was 574.0p per share and the options become exercisable four years after the grant date.

On 22 January 2014 577,000 share options were issued to management and staff. The exercise price was 792.5p per share and the options become exercisable four years after the grant date. Out of this options issue, Philip Letts, Kara Cardinale and James Davis were each granted 220,000, 35,000 and 35,000, respectively. All of James Davis's options lapsed following his resignation on 18 February 2014.

8. Control

There is no ultimate controlling party.