MNO.L Regulatory News (MNO)

31 October 2018

Maestrano Group PLC ("Maestrano" or the "Company" or the "Group")

Year to 30 June 2018 Audited Results

Reduced EBITDA loss while strategic projects continue

Maestrano Group PLC (AIM: MNO), the cloud business integration platform with cross-app data synchronization announces audited results for the year ended 30 June 2018.

+ Constant currency reflects the results had the underlying transactional currencies, (i.e USD, AUD and GBP) remained constant across the full financial year.

Key Financial Highlights

· Total revenue down 16% in reported currency and 12% at constant currency. The decline was a result of the company focusing on a small number of key new projects. As a result, implementation revenue declined 15% (10% at constant currency) with recurring revenue down 37% (35% at constant currency).

· Other expenses were reduced by 23% (20% at constant currency) as the company focused its resources on these key clients.

· Underlying EBITDA before unusual one-off items was a loss of £1,068K, an improvement of £422K, or 28% driven by the reduction in the costs noted above.

Key Operational Highlights

Successful AIM Admission achieved in May 2018, raising gross proceeds of £6m to fund expansion

FY18 operations were focused around ongoing deployment projects with our 4 key clients. Revenue of £306K from a major non-banking contract is now expected to be recognised in FY19 due to extension of the project delivery timeframe.

Direct recurring revenue from historical SMB clients declined as the company executed a revised go to market approach of securing strategic enterprise customers whereby end-user subscribers are acquired via those enterprise customers.

Expenses were lower in FY18 as resources were focused on key client deliverables and discretionary expenditure was minimised.

Income from Australian government grants remained flat year on year.

Ian Buddery, Chairman of Maestrano, commented:

"In the 2018 fiscal year we undertook Admission to the AIM market, which successfully raised funds to underpin operations during this vital period and attract an impressive list of new shareholders.

Since admission, we have been substantially engaged in the completion of customer engagement platforms for our major banking clients in the USA and Australia, while work continued on the reseller platform being developed for our major USA technology distribution client.

These efforts are now coming to fruition and we expect to make significant announcements over the coming months, including the go-live of our major USA banking client in November, our major USA distribution client in December and a contract extension with our Australian banking client, for a go-live in March 2019.

We are proud of the performance of our team, who continue to give their all to exceed customers' expectations. Moving into fiscal year 2019 and 2020 with these major platforms deployed, our focus will be on end-user acquisition to drive recurring revenue growth."

The Annual Report and Accounts will be sent to shareholders in due course, and in any event not later than 9th November, 2018 and will be made available today on the Group's website:

www.maestrano.com

The Company also announces that the Annual General Meeting of the Company will be held on 13th December, 2018 at the offices of Grant Thornton UK LLP, 30 Finsbury Square, London, EC2P 2YU. 

Enquiries:

About Maestrano

Maestrano develops and deploys a patented cloud-based Platform as a Service that serves the needs of Small to Medium Businesses (SMBs) and large Enterprises (such as major banks and global accounting firms) to access real time, automated management data efficiently on an integrated platform. This technology is called Master Data Management (MDM).

Further information on the Group is available at www.maestrano.com

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) 596/2014.Revenue for the financial year was down 16% on the prior year, as the Company executed the revised go to market approach of securing strategic enterprise customers whereby end-user subscribers are acquired via major enterprise customers. Expenses were reduced by 23% as the new indirect channel to market model has allowed for the elimination of some operating costs.

Maestrano Group plc

Strategic report

30 June 2018

1. Chairman's statement

The financial year ended 30 June 2018 saw Maestrano undertake a profound evolution of our business. We secured several large-scale enterprise contracts during the first-half of the year and embarked on deployment projects during the second-half of the year that will drive revenue for the year ending 30 June 2019 and beyond.

Revenue for the financial year was down 16% on the prior year, as the Company executed the revised go to market approach of securing strategic enterprise customers whereby end-user subscribers are acquired via major enterprise customers. Operating expenses were reduced by 23% as the new indirect channel to market model has allowed for the elimination of some operating costs.

The company was admitted to AIM during the second half of the year, raising approximately £5 million, net of associated expenses, which will be deployed to fund the growth of the business over the period ahead. Our objective in deploying funds is to secure significant end user subscriber growth via our new enterprise customers, and accordingly grow shareholder value by delivering the best possible data integration and business insights experiences to our major clients and their end-users.

The Board has confidence in the long-term outlook for the business, given both current projects and a growing new opportunity pipeline. We believe that we have sophisticated and well differentiated data integration and business insights technology today, and we will continue to innovate as we build our business for the future.

This confidence is made possible by the ability, intelligence and drive of our teams around the world and I would like to express the Board's appreciation for their exceptional dedication and hard work.

_____________________________

Ian Buddery

Chairman

30 October 2018

2. Review of operations by the chief executive officer

The Group made strong operational progress during the year ended 30 June 2018, which saw the successful acquisition of major financial services customers and the commencement of complex deployment projects. However, revenue for the year was below expectations due to lower revenue recognition, arising from the additional effort required integrating components of an e-commerce platform for a major client. As that project remains ongoing this revenue will be recognised in the financial year ending 30 June 2019.

Market position

Maestrano provides a Master Data Management ('MDM') platform that enables medium and large enterprises to offer a differentiated service to their SMB customers, who benefit from data integration across existing popular cloud applications, the "enterprise's services", together with custom data analytics. The resulting solutions allow increasing customer engagement and business volume between enterprises and their SMB customers. 

In 2015, it was estimated that there were 125 million SMBs worldwide, responsible for around 65% of business employment and gross domestic product ('GDP'). A significant number of large enterprises, including banks, insurance companies, professional advisers and telecommunications providers provide products and services to the global SMB market. Maestrano's current core focus is the financial services industry, followed by professional services and distribution. 

Operational highlights 

Maestrano signed a multi-phase contract with a large and well-known USA based bank in December 2017 for a solution that is intended to reach up to 4 million SMB customers in due course. In February 2018, Maestrano signed a similar contract with a high-profile Australian bank for testing and pilot phases of a solution for its SMB customer base, initially targeted at the legal industry segment. Deployment of a custom platform for the Australian member firm of a global accounting organisation is ongoing and presents an opportunity for expansion to their other member firms around the world. Maestrano's first distribution enterprise client is a multinational value-add technology distributor, headquartered in the USA, which is undergoing a major digital transformation and will roll out a new platform based on Maestrano technologies across Asia Pacific and Europe.

Product engineering developments were primarily focused around performance and flexibility enhancements during the past year in preparation for the large-scale solutions that will enable Maestrano's customers to take to market, in addition to specific deployment efforts within these customer projects. A number of new cloud applications were integrated during the financial year, notably Talech's point of sales ('POS') solution for SMBs, and a key enhancement for Quickbooks Online, Intuit's accounting software-as-a-service ('SaaS'), via a new "Single Sign-On" capability.

Following the Company's successful admission to the AIM, the Group commenced recruitment for incremental engineering, customer support and sales specialists to support its future growth. In addition, a specialised online customer on-boarding and support services company has been contracted to assist Maestrano's major rollouts. The in-house engineering team is currently 18, augmented by closely managed outsourcing arrangements with partners in Australia and Pakistan. Additional engineers will be recruited in 2019 and a new partnership with a New Zealand outsourcing partner will be established.

The Group operates from offices in London, Sydney and New York City, and new, larger premises were secured in London in September 2018.

In September 2018, Andrew Pearson was appointed Deputy Chief Executive Officer. Andrew is a seasoned business executive who has successfully scaled cloud-based software companies in previous roles and adding his skills and deep experiences to the team will be of significant value as the Company grows its business.

2. Review of operations by the chief executive officer (continued)

Maestrano anticipates that revenue for the financial year ending 30 June 2019 will grow compared to the financial year ended 30 June 2018, in line with market expectations. Investors should be aware that this revenue growth is subject to achievement of project delivery timelines and subsequent end-user uptake, both of which may experience delays resulting from causes beyond Maestrano's control.

_____________________________

Stephane Ibos

Chief Executive Officer

30 October 2018

3. Financial review by the chief financial officer

As noted in the Chairman's statement the past year was critical for the Group with the corporate restructure completed and the Group successfully listed on the AIM. The new capital raised, net £5.0 million, provides the capital required to grow the Group's technical and sales resources to meet current contractual demands as well as to secure new major enterprise clients in the Group's target markets in UK, Europe and USA.

* Underlying EBITDA is the earnings, before interest expense, taxation, depreciation and amortisation adjusted for unusual

and other one-off items. A reconciliation between loss before tax, EBITDA and Underlying EBITDA is set out in note 7 to

the consolidated financial statements.

Revenue 

Total revenue for the financial year declined to £0.98 million due to the focus on a small number of key implementation projects that will move to pilot phase during the year ending 30 June 2019 ('FY19'). These projects are expected to provide material long-term subscriber revenues in the coming years. Subscriber revenues were a modest 5% (2017: 7%) of total revenue.

Operating expenses

Overall operating expenses declined in the financial year by 23% to £2.24 million as the company focused its resources on targeting and delivering for key enterprise clients. Staff costs were down 22% or £0.47 million to £1.63 million due to reduction in sales resources outside the Group's core markets and some unplanned attrition. As already mentioned, recruitment of key new technical and sales resources is well underway which will see higher staff costs in FY19.

Non-operating expenditure included £0.33 million for IPO costs charged to profit or loss in accordance with International Financial Reporting Standards as adopted by the European Union. An additional £0.6 million was charged against the proceeds of the IPO, directly to equity. Other non-operating expenditure included one-off costs relating the corporate restructure and the Enterprise Investment Scheme ('EIS') approval achieved in the UK in February 2018.

Underlying EBITDA improved 28% to a loss of £1.07 million due to the reduction in costs noted above.

As noted above the loss before income tax was impacted by the non-operating costs, primarily relating to the IPO.

Finance costs, attributable to the convertible notes, declined by £0.07 million during the year to £0.45 million. The convertible notes were converted into equity at the IPO in May 2018 and therefore the finance costs will not be incurred in FY 19.

Balance sheet, cash and working capital

The Group materially strengthened the balance sheet and cash resources through the raising of net £5.0 million new capital in the IPO. Further holders of convertible notes totalling A$4.0 million converted these loans into new shares at the IPO. As a result, the Group is debt free with £5.24 million of cash at 30 June 2018.

Working capital is tightly managed with receivables and payables within terms. Cash outflow from operations was £1.42 million broadly in line with EBITDA loss plus the non-recurring expenses. 

Underlying basis

The Group manages its operations by looking at the underlying EBITDA which excludes the impact of a number of one-off and non-cash items as this, in the Board's opinion, provides a more representative measure of the Group's performance. A reconciliation between the reported loss before tax and underlying EBITDA is included at note 7 to the financial statements.

____________________________

Craig Holden

Chief Financial Officer

30 October 2018

4. Principal risks and uncertainties

The management of the business and the execution of the Group's growth strategies are subject to a number of risks which could adversely affect the Group's future development. The following is not an exhaustive list or explanation of all risks and uncertainties associated with the Group, but those considered by management to be the principal risks:

Risks relating to the Group and the industry in which it operates

End user adoption

The Group is still at an early stage of customer roll outs, with a small number of end user clients having adopted the Maestrano platform. There is a risk that the level of end user adoption by the clients of the Group's enterprise customers is considered too low for the enterprise client to justify continuing with their contract with the Group. The Group is reliant, to some extent, on the enterprise client engaging in sufficient usage and uptake efforts to encourage end user adoption. The directors are confident this risk is mitigated by their value proposition with enterprise clients such that enterprise clients are incentivised to provide the Group's platform to their own clients free of charge and integrating it deeply with their own processes enough to incentivise adoption; however, if end user adoption is slower than anticipated, there is a risk that the future financial results of the Group could be negatively impacted.

Dependence on enterprise clients

The Group currently has limited revenues as a number of its master contracts with enterprise clients are not currently revenue generating and will require separate statement of works to be entered into before any revenue is generated. The Group's future growth relies heavily on a small number of enterprise clients and the decisions of customers of those enterprise clients to adopt the Maestrano platform. The Group has evolved its enterprise client strategy to focus on a smaller number of key enterprise clients and to target more carefully the personnel at those enterprises that they are engaging with, such that the directors are comfortable with the level of engagement and commitment of current key enterprise clients. However, if a material number of enterprise clients were to cease or reduce their use of the Group's products this would materially and adversely affect the business of the Group.

Business strategy

The value of the Group and shareholder returns is dependent, inter alia, upon the Group achieving its aims. Although the Group has a clearly defined strategy, there can be no guarantee that its objectives will be achieved or that the Group will achieve the level of success that the directors expect. Furthermore, management may decide to change aspects of its strategy. The Group's ability to implement its business strategy successfully may be adversely impacted by factors that the Group cannot currently foresee, such as unanticipated market forces, costs and expenses or technological factors. Should it be unsuccessful in implementing its strategy or should it take longer than expected to implement, the future financial results of the Group could be negatively impacted.

Exclusivity requirements

The Group's strategy is to focus on a number of key enterprise clients. In order to secure two previous enterprise clients, the Group was required to provide exclusivity by agreeing not to provide similar services and products to competing enterprises for a period of three years from contract commencement. There is a risk that, in order to secure other large enterprise clients in the future, the Group may be required to provide exclusivity to these clients in certain regions for certain periods of time. There is also an added risk that other potential global enterprise clients will not engage with the Group if they operate in regions in which the Group is restricted from servicing for a period which could materially and adversely affect the Group's business.

Termination provisions of contracts

A few of the Group's current material enterprise client contracts include the ability, as is common for such contracts, for the client to terminate its contract with the Group at any time with short notice and without penalty. As a result, this places a limitation on the Group's ability to predict its future revenue and if such enterprise clients were to cease their use of the Group's products at short notice this would materially and adversely affect the business of the Group.

Technological changes

Generally, the markets in which the Group operates are exposed to rapid technological change, changes in use, changes to customer requirements and preferences, services employing new technologies and the emergence of new industry standards and practices. As such, the Group operates in a market where such changes have the potential to render the Group's existing technology and products uncompetitive.

To remain competitive, the Group must ensure continued product improvement, and the development of new markets and capabilities to maintain a pace congruent with changing technology. The cost of so doing may stretch the Group's capital resources which could adversely impact the revenues and profitability of the Group. The Group's success is dependent on the ability to effectively respond and adapt to technological changes and changes to customer preferences. There can be no assurance that the Group will be able to effectively anticipate future technological changes or changes in customer preferences. Furthermore, there is also no assurance that the Group will have sufficient financial resources to effectively respond in a timely manner if such a change is anticipated.

Continued development and maintenance of cloud applications by third parties

The delivery of the Group's products and services will depend on third party cloud application providers to continue to develop and maintain existing and complementary products catering to SMBs. The continuing availability of such products is out of the Group's control and the withdrawal of them could have a material adverse effect on the Group's prospects, business, financial condition or results of operations.

Competition from new entrants or current competitors

There is no guarantee against new entrants or current competitors providing superior technologies, products or services to the market nor any certainty that they will not provide equivalent products for a lower price. The Group may be forced to make changes to one or more of its products or to its pricing strategy to effectively respond to changes in customer preferences in response to competition in order to remain competitive. This may impact negatively on the Group's financial performance.

Maintaining competitive customer service levels

The Group's performance is dependent on maintaining competitive customer service levels. Failure to provide and maintain competitive customer service levels and operational and backoffice processes could result in customers moving to other providers, and this could have an adverse effect on the financial performance of the Group.

Non-favourable contract terms

The Group contracts with a wide variety of companies and partners, many of which are in strong negotiating positions and have greater financial resources than the Group. The Group therefore has had and may in the future have limited scope for negotiating the price or other contract terms with its some of its enterprise clients.

Software performance and risk of defects which could adversely affect customers

There is no guarantee that the Group's platform will perform as intended. Costs spent on developing the platform may therefore not be recouped and this may result in reduced profitability for the Group. As the Group's platform is complex, it may contain defects or vulnerabilities which may not be detected until after its deployment to end customers. These could result in the Group's customers being vulnerable to, among other things, security attacks or adverse performance. The Group moreover may not always be able to identify the cause of performance problems in its platform. The Group's business would be harmed if any of the events described above caused its customers or potential customers to believe the Group's platform is not reliable or secure.

Cloud applications restricting access to the Group's products

Some cloud applications ('apps') could see the Group's product offering as a threat to their own growth strategy and may, as a result, make it difficult to connect to their app through the Maestrano platform. The directors consider this risk to be low because it would be difficult to restrict access to Maestrano specifically and not restrict access to other parties, such as popular reporting applications, seeking to connect to their app.

Key system failure, disruption or interruption

The Group's reliance on technology exposes the Group to a significant risk in the event that such technology, or the Group's systems, experience damage, interruption or failure in some form. A malfunctioning of the Group's technology and systems, or those of key parties, could result in a diminished confidence in the Group's services, resulting in a consequential material adverse effect on the Group's operations and results.

Protection of intellectual property

The technology used by the Group includes both software and other code and content. This technology has been internally developed and is owned by the Group. Trademarks of the Group are registered.

The Group is dependent on proprietary rights in software and other technology, which relies on laws governing copyrights, trademarks and confidentiality. The Group is also dependent on contractual provisions regarding intellectual property ownership and licensing. These laws enable the Group to protect and/or enforce intellectual property rights in software, including the ability to restrict use of software to those who have obtained relevant authorisation. If the Group cannot successfully enforce its intellectual property rights, this could have a material adverse effect on the Group's business, financial condition and prospects.

Regulatory compliance

Changes in the legislative environment may occur in relation to document retention and privacy and confidentiality requirements including, but not limited to, changes under the General Data Protection Regulation ('GDPR'). Legislative changes may adversely affect the Group in the future regarding the regulation of document retention and privacy and confidentiality requirements. Legislative changes may set new standards in technology that may influence the current digital signature technology and other methods used by the Group.

Other risks relating to the Group

Exposure to credit, exchange rate, taxation, legal and insurance risk

Counterparty credit risk: there is a risk that parties with whom the Group trades or has other business relationships (including partners, customers, suppliers, subcontractors and other parties) may become insolvent. This may be as a result of general economic conditions or factors specific to that party. In the event that a party with whom the Group trades becomes insolvent, this could have an adverse impact on the revenues and profitability of the Group.

Exchange rate risk: while its reporting currency is Pounds Sterling, the Group currently records the majority of its transactions in United States dollars or Australian dollars. Exchange rate fluctuations could have a material adverse effect on the Group's profitability or the price competitiveness of its products and services. There can be no guarantee that the Group would be able to compensate for, or hedge against, such adverse exchange rate movements and therefore negative exchange rate movements could have a material adverse effect on the Group's business and prospects, and its financial performance.

Taxation risk: the Group is subject to taxation in multiple jurisdictions (including the USA, UK, UAE and Australia) and the application of such taxes may change over time due to changes in laws, regulations or interpretations by the relevant tax authorities. Whilst no material changes are anticipated in taxes, laws and regulations, any such changes may have a material adverse effect on the Group's financial condition and results of operations.

Legal risk: include litigation, the inability to enforce security arrangements, an absence of adequate protection for intellectual property rights, an inability to enforce foreign judgements relating to contracts entered into by the Group that are governed by law outside England and Wales, absence of a choice of law, and an inability to refer disputes to arbitration or to have a choice with regard to arbitration rules, venue and language. Mitigation measures for these risks may be limited.

Insurance risk; there can be no certainty that the Group's insurance cover is adequate to protect against every eventuality. The occurrence of an event for which the Group did not have adequate insurance cover could have a materially adverse effect on the Group's business, revenue, financial condition, profitability, results, prospects and/or future operations.

Dependence on key executives and personnel

The Group is dependent on a small number of key executives. In addition, the future performance of the Group will, to some extent, be dependent on its ability to retain the services and personal connections or contacts of key executives and to attract, recruit, motivate and retain other suitably skilled, qualified and industry experienced personnel to form a high calibre management team. Such key executives are expected to play an important role in the development and growth of the Group, in particular by maintaining good business relationships with regulatory and governmental departments and essential partners, contractors and suppliers. The failure to appoint or retain such people could adversely affect the Group.

Ability to recruit and retain skilled personnel

The Group believes that has the appropriate incentive structures to attract and retain the calibre of employees necessary to ensure the efficient management and development of the Group. However, any difficulties encountered in hiring appropriate employees and the failure to do so, or a change in market conditions that renders current incentive structures ineffective, may have a detrimental effect upon the trading performance of the Group. The ability to attract new employees with the appropriate expertise and skills cannot be guaranteed.

Financial controls and internal reporting procedures

The Group's future growth and prospects will depend on its ability to manage growth and to continue to maintain, expand and improve operational, financial and management information systems on a timely basis, whilst at the same time maintaining effective cost controls. Any damage to, failure of or inability to maintain, expand and upgrade effective operational, financial and management information systems and internal controls in line with the Group's growth could have a material adverse effect on the Group's business, financial condition and results of operations.

Economic uncertainty

Any economic downturn either globally or locally in any area in which the Group operates may have an adverse effect on demand for the Group's products. A more prolonged downturn may lead to an overall decline in sales. Economic uncertainty might have an adverse impact on the Group's operations and business results

5. People

Equal opportunity

The Group is committed to an active equal opportunities policy. It is the Group's policy to promote an environment free from discrimination, harassment and victimisation, where everyone receives equal treatment regardless of gender, colour, ethnic or national origin, disability, age, marital status, sexual orientation or religion. Employment practices are applied which are fair, equitable and consistent with the skills and abilities of the employees and the needs of the Group.

Disabled employees

Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment with the Group continues and that appropriate re-training is arranged. It is the policy of the Group that the training, career development and promotion of disabled persons should, as far as possible, be identical with that of other employees.

This report is made in accordance with a resolution of directors.

On behalf of the directors

The directors acknowledge the importance of high standards of corporate governance and intend, given the Group's size and the constitution of the Board, to comply with the principles set out in the QCA Corporate Governance Code published by the Quoted Companies Alliance in April 2018 (the 'QCA Code') and, where it does not comply with any of its recommendations, to explain the reasons therefor.

In the Board's opinion, the Group currently complies with the ten principles of the QCA Code which, together, are designed to deliver growth, maintain a dynamic management framework and build trust. As the Group expands, the Board will review its corporate governance framework and will consider adoption of additional principles and practices including from the UK Corporate Governance Code 2016 published by the Financial Reporting Council (the 'UK Corporate Governance Code').

Read more in our Corporate Governance Statement of Compliance with the QCA Corporate Governance Code at the following website link: https://maestrano.com/wp-content/uploads/2018/09/Maestrano-Statement-of-QCA-compliance.pdf

On behalf of the directors

The directors present their report, together with the financial statements, on the consolidated entity (referred to hereafter as the 'Group') consisting of Maestrano Group plc (referred to hereafter as the 'Company' or 'parent entity') and the entities it controlled at the end of, or during, the year ended 30 June 2018.

Directors

The following persons were directors of Maestrano Group plc since incorporation on 6 December 2017 and up to the date of this report, unless otherwise stated:

Ian Buddery, aged 61 - Non-Executive Chairman

Ian has extensive public company experience and a long background in the telecommunications and financial services industries in both international and local markets. Ian has founded multiple companies; obtained venture capital and angel funding, performed two IPOs, six acquisitions and two significant trade sales. Ian was the founder, CEO and Executive Chair of eServGlobal, founded in 1991 and listed on the Australian Securities Exchange ('ASX') in 2000 and the AIM in 2004. (LSE: ESG).

Ian was appointed a Director of Maestrano Pty Ltd in October 2013.

John Davis, aged 48 - Independent Non-Executive Director

John has been working with banks and SMBs for nearly 20 years. Based in London, John was the Marketing and Product Director for Barclays Business from 2005-2010 before setting out on an entrepreneurial career as the co-owner and Managing Director of Business Centric Services Group Limited, an award winning, high growth business, helping banks and telecommunication companies to enhance their digital engagement with and propositions for small and medium sized businesses. He also acted as Chair and coowner of two other London based FinTech start-ups. John completed the sales of all three of these companies during 2016 and 2017.

Jonathan Macleod, aged 60 - Independent Non-Executive Director

Jonathan is a practising Chartered Accountant and Financial Adviser with over 30 years of experience in the Financial Services and Software industries in both NZ and Australia. He has held senior executive positions within the National Bank of NZ and Rabobank Australia/NZ. Jonathan was the Chief Financial Officer of ASX listed company eServGlobal from 2008 to 2010.

Stephane Ibos, aged 33 - Executive Director and Chief Executive Officer

Stephane is qualified in Engineering, Programs and Business Management. Previously a Business Unit manager for Thales Australia, Stephane has had full responsibility for a business division and large program teams, with large scale projects and budgets in the government and defence sectors. Stephane has a Master's degree in Engineering from the Grande Ecole Telecom ParisTech.

Stephane is the co-founder of Maestrano and has been a Director of Maestrano Pty Ltd since August 2011.

Craig Holden, aged 54 - Executive Director, Chief Financial Officer and Company Secretary

Craig is an experienced Chief Financial Officer, with over 20 years' experience in rapidly growing, technology businesses that address global markets. These businesses cover a number of industry sectors including mining, communications, enterprise software, wholesale distribution and industrial systems and services.

Craig joined Maestrano as Chief Financial Officer in July 2016.

Principal activities

Information on the Group's principal activities are disclosed in the strategic report.

Results and dividends

The loss for the Group after providing for income tax and non-controlling interest amounted to £1,948,703 (30 June 2017: £2,028,013).

No dividend has been paid during the financial year and the directors do not recommend a final dividend in respect of the year ended 30 June 2018 (30 June 2017: £nil).

Further commentary on the financial results are disclosed in the financial review by the chief financial officer within the strategic report.

Going concern

The Group's business activities, together with the factors likely to affect its future development, performance and financial position are given in the strategic review and this directors' report. In addition, the notes to the financial statements include details on the Group's borrowing facilities and its objectives, policies and processes for managing its capital; its financial risk management objectives; and its exposures to credit risk and liquidity risk. 

The Group has considerable financial resources together with a member base split across different geographic areas. The Group's forecasts and projections, taking into account reasonably possible changes in trading performance, show that the Group should be able to operate with the current working capital. As a consequence, the directors believe that the Group is well placed to manage its business risks successfully. 

The directors have, at the time of approving the financial statements, a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the financial statements. 

Matters subsequent to the end of the financial year

No matter or circumstance has arisen since 30 June 2018 that has significantly affected, or may significantly affect the Group's operations, the results of those operations, or the Group's state of affairs in future financial years.

Likely future developments

Information on likely future developments of the Group are disclosed in the strategic report.

Financial instruments

Information on the Group's financial instruments are disclosed in the strategic report and note 23 to the financial statements.

Charitable and political donations

No charitable or political donations were made during the financial year.

Disabled employees

Due to the size of the Group, no formal policy for the employment of disabled persons has been established. However the Group gives full consideration to employment applications from disabled persons where the candidate's particular aptitudes and abilities are consistent with adequately meeting the requirements of the job.

Indemnity of directors

The Company has indemnified the directors of the Company for costs incurred, in their capacity as a director, for which they may be held personally liable, except where there is a lack of good faith.

Substantial shareholdings

There were no substantial shareholders in the Company as at 30 June 2018.

Disclosure of information to the auditors

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information, being information needed by the auditor in connection with preparing its report, of which the auditor is unaware. Having made enquiries of fellow directors and the Group's auditor, each director has taken all the steps that they are obliged to take as a director in order to made themselves aware of any relevant audit information and to establish that the auditor is aware of that information.

Auditor

Ernst & Young LLP was appointed auditor during the financial year and pursuant to section 487 of the Companies Act 2006 will be deemed to be re-appointed and therefore continue in office.

This report is made in accordance with a resolution of directors.

On behalf of the directors

The directors are responsible for preparing the strategic report, directors' report and the financial statements in accordance with applicable law and regulation.

UK Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the Group financial statements in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union and financial statements of the Company in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law) including FRS 101 'Reduced Disclosure Framework'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and Company and the profit or loss of the Group for that year.

In preparing these financial statements, the directors are required to:

The directors confirm they have complied with all the above requirements in preparing the financial statements.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's and Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and Company and enable them to ensure that the financial statements comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Group and Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Group

Company

Consolidated statement of profit or loss and other comprehensive income for the year ended 30 June 2018

Company balance sheet as at 30 June 2018

Consolidated balance sheet as at 30 June 2018

Company statement of changes in equity for the period then ended

Consolidated statement of changes in equity for the year then ended

Related notes 1 to 17 to the financial statements including a summary of significant accounting policies

Consolidated statement of cash flows for the year then ended

Related notes 1 to 33 to the financial statements, including a summary of significant accounting policies

Key audit matters

· Revenue recognition arising as a result of inappropriate cut off via manipulation of deferred revenue.

Audit scope

· We performed an audit of the complete financial information of all four components.

· The components where we performed full or specific audit procedures accounted for 100% of loss before tax, 100% of revenue and 100% of total assets.

Materiality

· Overall Group materiality of £48,000, which represents 22% of operating expenses.

Refer to note 2 for explanation on comparatives.

The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes

Refer to note 2 for explanation on comparatives.

The financial statements of Maestrano Group plc (company number 11098701 (England and Wales)) were approved by the Board of Directors and authorised for issue on 30 October 2018. They were signed on its behalf by:

Refer to note 2 for explanation on comparatives.

Refer to note 2 for explanation on comparatives.

Note 1. General information

The financial statements covers Maestrano Group plc ('Company') and the entities it controlled at the end of, or during, the financial year (referred to as the 'Group'). The financial statements are presented in Pound Sterling, which is Maestrano Group plc's functional and presentation currency.

The Company was incorporated on 6 December 2017 as a private company, Maestrano Group Limited. On 11 May 2018, the Company converted to a public company, Maestrano Group plc and on 30 May 2018 was admitted onto the Alternative Investment Market ('AIM'). On 19 April 2018, as part of a group reorganisation, the Company acquired 100% of the ordinary shares of Maestrano Pty Ltd from the existing shareholders and became the immediate and ultimate parent of the Group.

Maestrano Group plc is a listed public company limited by shares, incorporated and domiciled in England and Wales. Its registered office and principal place of business are:

A description of the nature of the Group's operations and its principal activities are included in the strategic report, which is not part of the financial statements.

The financial statements were authorised for issue, in accordance with a resolution of directors, on 30 October 2018. The directors have the power to amend and reissue the financial statements.

Note 2. Significant accounting policies

The principal accounting policies adopted in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Adoption of IFRS 1 'First-time adoption of EU IFRS Accounting Standards'

The Group historically prepared 'Special Purpose Financial Statements', acceptable under Australian Accounting Standards, for the purposes of satisfying the directors' reporting requirements under the Australian Corporations Act 2001. These financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union for the first-time. In accordance with IFRS 1, the Group has adopted all relevant IFRS standards with effect from the beginning of the earliest comparative period, 1 July 2016.

The adoption of IFRS 1 has not resulted in any changes in recognition or measurement of amounts in these financial statements, that is, there are no reconciling differences. As there are no reconciling differences, the Group has elected not to include the IFRS transition balance sheet as at 1 July 2016.

Going concern

The financial statements have been prepared assuming the Group will continue as a going concern. Under the going concern assumption, an entity is ordinarily viewed as continuing in business for the foreseeable future. In assessing whether the going concern assumption is appropriate, the directors have considered the Group's existing working capital and are of the opinion that the Group has adequate resources to undertake its planned programme of activities for the 12 months from the date of approval of these financial statements. Further details of the directors' considerations in relation to going concern are included in the directors' report.

Basis of preparation

The consolidated financial statements are prepared in accordance with International Financial Reporting Standards ('IFRS' or 'IFRSs') as adopted for use in the European Union (the 'EU') and IFRS Interpretations Committee interpretations (together 'EU IFRS') and the UK Companies Act 2006.

Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

Note 2. Significant accounting policies (continued)

Historical cost convention

The consolidated financial statements are prepared under the historical cost convention.

Critical accounting estimates

The preparation of the consolidated financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's and Company's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in note 3.

Group reorganisation and comparative information

Maestrano Group plc (previously known as Maestrano Group Limited) was incorporated on 6 December 2017. Shareholders of the former parent company Maestrano Pty Ltd (the 'legal subsidiary'), approved a formal business entity reorganisation, whereby Maestrano Group plc ('the legal parent') became the parent of the Group, effective 19 April 2018, by acquiring all the outstanding shares of the Group's previous ultimate holding company Maestrano Pty Ltd in exchange for the issue of its own shares. This share for share transaction is not a business combination and does not result in any economic substance from the perspective of the Group. The substance of the group reorganisation is a continuation of the existing group, as a result the financial statements reflect that fact. This share for share transaction is hereafter referred to as the group reorganisation and accounted for as follows:

Therefore, the consolidated financial statements are presented as if Maestrano Group plc had been the parent company of the existing group throughout the periods presented. No reclassifications or adjustments to previously reported figures and no changes in the operations of the group resulted from this change.

Principles of consolidation

The consolidated financial statements incorporates the assets and liabilities of all subsidiaries of Maestrano Group plc as at the balance sheet dates presented and the results of all subsidiaries for the year then ended.

Subsidiaries are all those entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

Intercompany transactions, balances and unrealised gains on transactions between entities in the Group are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group.

The acquisition of common control subsidiaries is accounted for at book value. The acquisition of other subsidiaries is accounted for using the acquisition method of accounting. A change in ownership interest, without the loss of control, is accounted for as an equity transaction, where the difference between the consideration transferred and the book value of the share of the non-controlling interest acquired is recognised directly in equity attributable to the parent.

The non-controlling interest in the results and equity of subsidiaries are shown separately in the statement of profit or loss and other comprehensive income, balance sheet and statement of changes in equity of the Group. Losses incurred by the Group are attributed to the non-controlling interest in full, even if that results in a deficit balance.

Where the Group loses control over a subsidiary, it derecognises the assets including goodwill, liabilities and non-controlling interest in the subsidiary together with any cumulative translation differences recognised in equity. The Group recognises the fair value of the consideration received and the fair value of any investment retained together with any gain or loss in profit or loss.

Operating segments

Operating segments are presented using the 'management approach', where the information presented is on the same basis as the internal reports provided to the Chief Operating Decision Makers ('CODM'). The CODM is responsible for the allocation of resources to operating segments and assessing their performance.

Foreign currency translation

The consolidated financial statements are presented in Pound Sterling, which is Maestrano Group plc's presentation currency.

Foreign currency transactions

Foreign currency transactions are translated into Pound Sterling 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 financial year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

Foreign operations

The assets and liabilities of foreign operations are translated into Pound Sterling using the exchange rates at the reporting date. The revenues and expenses of foreign operations are translated into Pound Sterling using the average exchange rates, which approximate the rates at the dates of the transactions, for the period. All resulting foreign exchange differences are recognised in other comprehensive income through the foreign currency reserve in equity.

The foreign currency reserve is recognised in profit or loss when the foreign operation or net investment is disposed of.

Revenue recognition

Revenue is recognised when it is probable that the economic benefit will flow to the Group and the revenue can be reliably measured. Revenue is measured at the fair value of the consideration received or receivable.

Enterprise implementation consists of (i) licensing and support and (ii) consulting and other professional services.

Licensing and support

Licensing and support revenue is recognised on a straight-line basis over the period of the contract.

Consulting and other professional services

Consulting and other professional services revenue is recognised on a time and material basis. In the case of fixed agreements and where the contract outcome can be reliably measured, revenue is recognised by reference to the stage of completion of the contract at the reporting date.

Stage of completion is measured by reference to costs incurred to date as a percentage of total estimated costs for each contract. Where the contract outcome cannot be reliably estimated, revenue is only recognised to the extent of the recoverable costs incurred to date.

Enterprise subscriber

Enterprise subscriber revenue is recognised on a monthly basis as the service is provided.

Grants from government

Grants from government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions. Government grants which represent compensation for expenses or losses already incurred are included in other income in profit or loss when they become receivable.

Interest income

Interest income is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset.

Other income

Other income is recognised when it is received or when the right to receive payment is established.

Income tax

The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the applicable income tax rate for each jurisdiction, adjusted by the changes in deferred tax assets and liabilities attributable to temporary differences, unused tax losses and the adjustment recognised for prior periods, where applicable.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to be applied when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively enacted, except for:

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

The carrying amount of recognised and unrecognised deferred tax assets is reviewed at each reporting date. Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised to the extent that it is probable that there are future taxable profits available to recover the asset.

Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax assets against current tax liabilities and deferred tax assets against deferred tax liabilities; and they relate to the same taxable authority on either the same taxable entity or different taxable entities which intend to settle simultaneously.

Current and non-current classification

Assets and liabilities are presented in the balance sheet based on current and non-current classification.

An asset is classified as current when: it is either expected to be realised or intended to be sold or consumed in the Group's normal operating cycle; it is held primarily for the purpose of trading; it is expected to be realised within 12 months after the reporting period; or the asset is cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least 12 months after the reporting period. All other assets are classified as non-current.

A liability is classified as current when: it is either expected to be settled in the Group's normal operating cycle; it is held primarily for the purpose of trading; it is due to be settled within 12 months after the reporting period; or there is no unconditional right to defer the settlement of the liability for at least 12 months after the reporting period. All other liabilities are classified as non-current.

Deferred tax assets and liabilities are always classified as non-current.

Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

Trade and other receivables

Trade receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment. Trade receivables are generally due for settlement within 30 days.

Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectable are written off by reducing the carrying amount directly. A provision for impairment of trade receivables is raised when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation and default or delinquency in payments (more than 60 days overdue) are considered indicators that the trade receivable may be impaired. The amount of the impairment allowance is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial.

Other receivables are recognised at amortised cost, less any provision for impairment.

Plant and equipment

Equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost includes expenditure that is directly attributable to the acquisition of the items.

Depreciation is calculated on a straight-line basis to write off the depreciable amount of each item of equipment over their expected useful lives as follows:

The residual values, useful lives and depreciation methods are reviewed, and adjusted if appropriate, at each reporting date.

Equipment under lease are depreciated over the unexpired period of the lease or the estimated useful life of the assets, whichever is shorter.

An item of equipment is derecognised upon disposal or when there is no future economic benefit to the Group. Gains and losses between the carrying amount and the disposal proceeds are taken to profit or loss.

Intangible assets

Intangible assets acquired as part of a business combination, are initially measured at their fair value at the date of the acquisition. Intangible assets acquired separately are initially recognised at cost. Finite life intangible assets are subsequently measured at cost less amortisation and any impairment. The gains or losses recognised in profit or loss arising from the derecognition of intangible assets are measured as the difference between net disposal proceeds and the carrying amount of the intangible asset. The amortisation method and useful lives of finite life intangible assets are reviewed annually. Changes in the expected pattern of consumption or useful life are accounted for prospectively by changing the amortisation method or period.

Software

Significant costs associated with purchased software are deferred and amortised on a reducing balance basis over the period of their expected benefit, being their finite useful life of two years.

Research and development

Research costs are expensed in the period in which they are incurred. Development costs are capitalised when it is probable that the project will be a success considering its commercial and technical feasibility; the Group is able to use or sell the asset; the Group has sufficient resources; and intent to complete the development and its costs can be measured reliably. Capitalised development costs are amortised on a straight-line basis over the period of their expected benefit. Amortisation commences when the asset is available for use, i.e. when it is in the location and condition necessary for it to be capable of operating in the manner intended by management.

Impairment of non-financial assets

Non-financial assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount.

Recoverable amount is the higher of an asset's fair value less costs of disposal and value-in-use. The value-in-use is the present value of the estimated future cash flows relating to the asset using a pre-tax discount rate specific to the asset or cash-generating unit to which the asset belongs. Assets that do not have independent cash flows are grouped together to form a cash-generating unit.

Trade and other payables

These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year and which are unpaid. Due to their short-term nature they are measured at amortised cost and are not discounted. The amounts are unsecured and are usually paid within 30 days of recognition.

Borrowings

Loans and borrowings are initially recognised at the fair value of the consideration received, net of directly attributable transaction costs. They are subsequently measured at amortised cost using the effective interest method. The effective interest rate is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the effective interest rate. The effective interest rate amortisation is included as finance costs in profit or loss.

Deferred revenue

Deferred revenue consists of funds which have been received but revenue recognition has been deferred to future periods. The liability is released to profit or loss when the revenue is earned.

Employee benefits

Short-term employee benefits

Liabilities for wages and salaries, including non-monetary benefits, annual leave and long service leave expected to be settled wholly within 12 months of the reporting date are measured at the amounts expected to be paid when the liabilities are settled.

Share-based payments

Equity-settled share-based compensation benefits are provided to employees.

Equity-settled transactions are awards of shares, or options over shares, that are provided to employees in exchange for the rendering of services.

The cost of equity-settled transactions are measured at fair value on grant date. Fair value is independently determined using either the Binomial or Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk free interest rate for the term of the option, together with non-vesting conditions that do not determine whether the Group receives the services that entitle the employees to receive payment. No account is taken of any other vesting conditions.

The cost of equity-settled transactions are recognised as an expense with a corresponding increase in equity over the vesting period. The cumulative charge to profit or loss is calculated based on the grant date fair value of the award, the best estimate of the number of awards that are likely to vest and the expired portion of the vesting period. The amount recognised in profit or loss for the period is the cumulative amount calculated at each reporting date less amounts already recognised in previous periods.

Market conditions are taken into consideration in determining fair value. Therefore any awards subject to market conditions are considered to vest irrespective of whether or not that market condition has been met, provided all other conditions are satisfied.

If equity-settled awards are modified, as a minimum an expense is recognised as if the modification has not been made. An additional expense is recognised, over the remaining vesting period, for any modification that increases the total fair value of the share-based compensation benefit as at the date of modification.

If the non-vesting condition is within the control of the Group or employee, the failure to satisfy the condition is treated as a cancellation. If the condition is not within the control of the Group or employee and is not satisfied during the vesting period, any remaining expense for the award is recognised over the remaining vesting period, unless the award is forfeited.

If equity-settled awards are cancelled, it is treated as if it has vested on the date of cancellation, and any remaining expense is recognised immediately. If a new replacement award is substituted for the cancelled award, the cancelled and new award is treated as if they were a modification.

Fair value measurement

When an asset or liability, financial or non-financial, is measured at fair value for recognition or disclosure purposes, the fair value is based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; and assumes that the transaction will take place either: in the principal market; or in the absence of a principal market, in the most advantageous market.

Fair value is measured using the assumptions that market participants would use when pricing the asset or liability, assuming they act in their economic best interests. For non-financial assets, the fair value measurement is based on its highest and best use. Valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, are used, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

Assets and liabilities measured at fair value are classified into three levels, using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. Classifications are reviewed at each reporting date and transfers between levels are determined based on a reassessment of the lowest level of input that is significant to the fair value measurement.

For recurring and non-recurring fair value measurements, external valuers may be used when internal expertise is either not available or when the valuation is deemed to be significant. External valuers are selected based on market knowledge and reputation. Where there is a significant change in fair value of an asset or liability from one period to another, an analysis is undertaken, which includes a verification of the major inputs applied in the latest valuation and a comparison, where applicable, with external sources of data.

Share capital

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Dividends

Dividends are recognised when declared during the financial year and no longer at the discretion of the Company.

Earnings per share

Basic earnings per share

Basic earnings per share is calculated by dividing the profit attributable to the owners of Maestrano Group plc, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the financial year.

Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect of interest and other financing costs associated with dilutive potential ordinary shares and the weighted average number of shares assumed to have been issued for no consideration in relation to dilutive potential ordinary shares.

Value-Added Tax ('VAT')/Goods and Services Tax ('GST') and other similar taxes

Revenues, expenses and assets are recognised net of the amount of associated VAT/GST, unless the VAT/GST incurred is not recoverable from the tax authority. In this case it is recognised as part of the cost of the acquisition of the asset or as part of the expense.

Receivables and payables are stated inclusive of the amount of VAT/GST receivable or payable. The net amount of VAT/GST recoverable from, or payable to, the tax authority is included in other receivables or other payables in the balance sheet.

Cash flows are presented on a gross basis. The VAT/GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to the tax authority, are presented as operating cash flows.

Commitments and contingencies are disclosed net of the amount of VAT/GST recoverable from, or payable to, the tax authority.

New Accounting Standards and Interpretations not yet mandatory or early adopted

Accounting Standards that have recently been issued or amended but are not yet mandatory, have not been early adopted by the Group for the annual reporting period ended 30 June 2018. The Group's assessment of the impact of these new or amended Accounting Standards and Interpretations, most relevant to the Group, are set out below.

IFRS 9 Financial Instruments

This standard is applicable to annual reporting periods beginning on or after 1 January 2018 and introduces new classification and measurement models for financial assets with no significant change for financial liabilities. There are new simpler hedge accounting requirements and an 'expected credit loss' model to recognise impairment allowance. The Group will adopt this standard from 1 July 2018 and the impact on adoption is expected to be minimal.

IFRS 15 Revenue from Contracts with Customers

This standard is applicable to annual reporting periods beginning on or after 1 January 2018. It provides a single standard for revenue recognition. The core principle of the standard is that an entity will recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard will require: contracts (either written, verbal or implied) to be identified, together with the separate performance obligations within the contract; determination of the transaction price, adjusted for the time value of money excluding credit risk; allocation of the transaction price to the separate performance obligations on a basis of relative stand-alone selling price of each distinct good or service, or estimation approach if no distinct observable prices exist; and recognition of revenue when each performance obligation is satisfied. Credit risk will be presented separately as an expense rather than adjusted to revenue. For goods, the performance obligation would be satisfied when the customer obtains control of the goods. For services, the performance obligation is satisfied when the service has been provided, typically for promises to transfer services to customers. For performance obligations satisfied over time, an entity would select an appropriate measure of progress to determine how much revenue should be recognised as the performance obligation is satisfied. Contracts with customers will be presented in an entity's balance sheet as a contract liability, a contract asset, or a receivable, depending on the relationship between the entity's performance and the customer's payment. Sufficient quantitative and qualitative disclosure is required to enable users to understand the contracts with customers; the significant judgements made in applying the guidance to those contracts; and any assets recognised from the costs to obtain or fulfil a contract with a customer.

When this standard is first adopted, from 1 July 2018, it is expected that there will be no material impact on the transactions and balances recognised in the financial statements. However deferred revenue will be reclassified as contract liabilities and there are potentially additional disclosures.

IFRS 16 Leases

This standard is applicable to annual reporting periods beginning on or after 1 January 2019. The standard replaces IAS 17 'Leases' and for lessees will eliminate the classifications of operating leases and finance leases. Subject to exceptions, a 'right-of-use' asset will be capitalised in the balance sheet, measured at the present value of the unavoidable future lease payments to be made over the lease term. The exceptions relate to short-term leases of 12 months or less and leases of low-value assets (such as personal computers and small office furniture) where an accounting policy choice exists whereby either a 'right-of-use' asset is recognised or lease payments are expensed to profit or loss as incurred. A liability corresponding to the capitalised lease will also be recognised, adjusted for lease prepayments, lease incentives received, initial direct costs incurred and an estimate of any future restoration, removal or dismantling costs. Straight-line operating lease expense recognition will be replaced with a depreciation charge for the leased asset (included in operating costs) and an interest expense on the recognised lease liability (included in finance costs). In the earlier periods of the lease, the expenses associated with the lease under IFRS 16 will be higher when compared to lease expenses under IAS 17. However EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) results will be improved as the operating expense is replaced by interest expense and depreciation in profit or loss under IFRS 16. For classification within the statement of cash flows, the lease payments will be separated into both a principal (financing activities) and interest (either operating or financing activities) component. For lessor accounting, the standard does not substantially change how a lessor accounts for leases. Had the standard been adopted from 1 July 2018, and using the transitional rules available, the Group would have recognised a lease liability of the remaining lease payments as disclosed in note 28, discounted using the lessee's incremental borrowing rate, with a corresponding increase in plant and equipment. However, the Group will adopt this standard from 1 July 2019 and the actual impact will depend on the operating lease assets held by the Group as at 1 July 2019 and the transitional elections made at that time.

IASB revised Conceptual Framework for Financial Reporting

The revised framework is applicable for annual reporting periods beginning on or after 1 January 2020 and the application of the new definition and recognition criteria may result in future amendments to several accounting standards. Furthermore, entities who rely on the conceptual framework in determining their accounting policies for transactions, events or conditions that are not otherwise dealt with under IFRS may need to revisit such policies. The Group will apply the revised conceptual framework from 1 July 2020 and is yet to assess its impact.

Other standards and interpretations

The directors have also reviewed all other new Standards and Interpretations that have been issued but are not yet effective for the year ended 30 June 2018. As a result of this review the directors have determined that there is no impact, material or otherwise, of the new and revised Standards and Interpretations on the Group and, therefore, no change is necessary to the Group's accounting policies. These accounting policies are consistent with IFRS.

Note 3. Critical accounting judgements, estimates and assumptions

The preparation of the financial statements requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial statements. Management continually evaluates its judgements and estimates in relation to assets, liabilities, contingent liabilities, revenue and expenses. Management bases its judgements, estimates and assumptions on historical experience and on other various factors, including expectations of future events, management believes to be reasonable under the circumstances. The resulting accounting judgements and estimates will seldom equal the related actual results. The judgements, estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities (refer to the respective notes) within the next financial year are discussed below.

Revenue recognition where contracts are in progress

In accordance with the revenue recognition policy detailed in note 2, in measuring revenue relating to fixed agreements the Group measures the stage of completion with reference to costs incurred and the total costs estimated for each contract. The total estimated costs for each contract is reviewed monthly to ascertain the current stage of completion and requires reasonable judgments to be made. Refer to note 16 for the accrued revenue asset and the balance sheet for the deferred revenue liability.

Share-based payment transactions

The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by using either the Binomial or Black-Scholes model taking into account the terms and conditions upon which the instruments were granted. The accounting estimates and assumptions relating to equity-settled share-based payments would have no impact on the carrying amounts of assets and liabilities within the next annual reporting period but may impact profit or loss and equity. Refer to note 32 for valuation model inputs.

Note 4. Operating segments

Identification of reportable operating segments

The Group operates in one segment being provision of data integration and analytic services. This operating segment is based on the internal reports that are reviewed and used by the Board of Directors (who are identified as the Chief Operating Decision Makers ('CODM')) in assessing performance and in determining the allocation of resources.

The operating segment information is the same information as provided throughout the consolidated financial statements and are therefore not duplicated.

Major customers

There are 3 (2017: 3) customers contributing external revenue of more than 10% amounting to £402,383, £281,970 and £124,121 respectively (2017: 3 customers amounting to £257,174, £147,847 and £133,694 respectively).

Revenue by geographical area

Revenue from the principal activities of the Group is attributable to the following geographical areas:

Note 5. Revenue

Note 6. Other income

Government grants and rebates predominately relates to research and development rebates.

Note 7. EBITDA reconciliation (earnings before interest expense, taxation, depreciation and amortisation)

Underlying EBITDA represents EBITDA adjusted for significant, unusual and other one-off items.

The financial statements include both the statutory financial statements and additional performance measures of EBITDA and Underlying EBITDA. The directors believe these additional measures provide useful information on the underlying trend in operational performance going forward without these unusual and other one-off items.

Note 8. Expenses

Note 9. Staff costs

The average number of employees during the year was as follows: