MPM.L Regulatory News (MPM)

MoPowered Group plc

("MoPowered Group" or the "Group")

Results for year ended 31 December 2014

MoPowered Group (AIM:MPOW) announces its final results for the year ended 31 December 2014.

Financial highlights

· Revenue of £1.1m (2013: £1.0m)

· Gross margin of 25.8% (2013: 58.6%)

· Operating loss of £5.5m (2013 loss: £3.6m)

· Loss after tax for the year of £5.2m (2013 loss: £3.6m)

· Cash and cash equivalents at 31 December 2014 of £1.3m (2013: 2.8m)

Operational highlights

· Processed 1,986,131 transactions in the period

· 54 new clients in the period

· Placing of 70,000,000 ordinary shares at 5p each to raise £3.5m (before expenses) in October 2014

· Cost reduction program implemented

· Re-engineering of the Groups SaaS platform

Extracts of the Company's annual report appear below and the full version of the Company's annual report and accounts for the year ended 31 December 2014 will be published on the Company's website, www.mopowered.co.uk, today.

Annual General Meeting

The Company's Annual General Meeting of shareholders will be held at the offices of N+1 Singer at One Bartholomew Lane, London, EC2N 2AX on 8 June 2015 at 9.30am.

For further information, please contact:

Strategic Report for the year ended 31 December 2014

Principal activities

MoPowered Group plc is a public company listed on the London Stock Exchange's AIM market and acts as a holding company for MoPowered Limited and its subsidiaries. This is the first year end for the reporting of MoPowered Group plc results. The group was trading prior to the creation of the parent company and consequently prior period comparisons are presented in the group accounts but not the company accounts.

MoPowered Group plc and its subsidiaries ("MoPowered" or the "Group") provide bespoke solutions to a variety of online retailers and e-commerce businesses to enable fully transactional mobile commerce (m-commerce). The majority of solutions are based on the MoPowered Platform, which is owned and operated by MoPowered and is being developed as a 'Software-as-a-Service' ('SaaS') platform.

The Group also has generated auxiliary revenues from providing outsourced customer services capabilities to other technology businesses.

Strategy

MoPowered enables its clients, retail merchants, to benefit from the attractive growth opportunities arising from the increasing levels of mobile commerce activity now that a significant proportion of internet traffic is driven through smartphone devices.

The MoPowered offering sits alongside a merchant's e-commerce solution, providing the merchant's clients with m-commerce browsing, checkout and payment functionality. The MoPowered offering is tailored primarily for smartphone users (and, to a lesser extent, tablet users) with the objective of significantly increasing mobile conversion rates and shopping basket sizes.

The Group is focusing its resources on its SaaS offering. This is a more generic solution which it is anticipated will be more suitable and cost effective for the vast majority of online retailers than the bespoke solutions that MoPowered has historically offered. The Group continues to position itself as a leading enablement platform for m-commerce and the Directors believe that, once mature, MoPowered's capabilities and customer base could produce significant shareholder value.

Business review

The vast majority of shoppers in the UK have powerful, well-networked smartphones with them at all times of day. In increasing numbers they are choosing to take advantage of the convenience and immediacy of the m-commerce medium to buy goods and services. There is increasing amount of evidence for eCommerce business owners that they need to adapt their offerings to satisfy these trends. Through developing a SaaS platform to enable online retailers to transform their websites into a format that is suitable for small touchscreen devices, MoPowered helps small and medium-sized businesses to become mobile-friendly.

The market conditions for vending mobile commerce solutions continued to mature throughout the year as merchant awareness of the need for mobile-friendly websites increased. However, with many prospective merchants choosing to build "responsive" websites, it became clear to the board that further product upgrades were necessary to ensure that mobile commerce services delivered in a SaaS format would be more widely seen as a preferential alternative. MoPowered relied heavily on telemarketing as the major source of lead generation in 2014, but in the second half of the year, as levels of merchant awareness improved, the board introduced a number of online marketing initiatives. The board expects that increasing the level of online marketing will result in a more cost effective way to acquire a new client in 2015.

The Group acquired 54 new clients in 2014. This number is lower than the previous year in spite of a significantly higher number of leads generated. This discrepancy is explained by the Group's policy of increasing fees and focusing on larger prospective clients than had previously been the case.

2014 was a difficult year for the Group. It became clear towards the end of the year that delivery of client solutions, even when based on the Group's SaaS platform, was proving to be uneconomic due to inefficiencies in the on-boarding process, resulting in considerably longer-than-anticipated payback periods. Consequently, in December, the board took the decision to cease all marketing and selling activity until the second quarter of 2015 and focus resources on the re-engineering of the SaaS platform to ensure substantially faster on-boarding and improved product features. The Group proposes to re-launch its trading brand with a re-invigorated proposition as "mporium" alongside the publication of this report.

The cash raised from the Initial Public Offering in 2013 proved insufficient to finance the Group's strategy and an additional £3.5m (before expenses) was raised in October 2014 in order to ensure that the Group had adequate financial resources to continue to operate for the remainder of the year. The fund-raising was achieved through a placing of 70,000,000 new ordinary shares at an issue price of 5p.

MoPowered undertook measures in the final quarter of 2014 to reduce significantly the fixed costs in the business to provide the basis for improved future profitability. Staff levels were reduced, particularly in the sales and operations teams. Reductions were made to the corporate costs of the business and the amount of office space was reduced. Consequently, the Group enters 2015 with a streamlined team of mobile commerce professionals, whose expertise and dedication remains the most important asset within MoPowered.

Key performance indicators ("KPIs")

The key metrics used by the Group during the year as indicators for business performance were considered to be:

· Number of leads that are generated;

· Number of merchants that are acquired;

· Number of transactions processed within the MoPowered Platform portfolio of merchants.

These metrics are indicators of the evolution of (i) the sales and marketing strategy for the MoPowered Platform, namely to grow the customer base; (ii) the ability of the Platform to deliver a SaaS m-commerce service at scale; and therefore (iii) the generation of recurring and repeating SaaS profits. These metrics are monitored consistently within the business

Following the re-launch of the business, the board will look to monitor a wider set of KPIs which measure the efficiency in acquiring, operating and monetising clients.

Financial Review

MoPowered's overall revenues increased to £1.1m in the period, 8.9% up on 2013. This growth was driven primarily by increasing licence, transaction fees and recurring revenues worth £0.8m, 69% of the total (2013: £0.6m, 58%) as well as higher than expected upsold project fees from existing clients, particularly to Next plc. Revenue from MoPowered's largest customer represent approximately 63% of the total.

Next has been a significant contributor to MoPowered's revenue for the past six years. However, they have decided to purchase a perpetual licence to use the MoPowered base system and transfer the hosting and ongoing incremental development of their mobile platform in-house. There will be some continuing revenue from Next in 2015 but this is likely to diminish towards the end of the year. Revenues associated with the purchase of the perpetual licence are being spread across the 2014 and 2015 financial statements due to the phased stages of the code handover.

Gross margins were down significantly in 2014 dropping from 58.6% in 2013 to 25.8% this year. This was due to longer-than-expected on-boarding times and an increase in selling costs. The actions taken in in the final quarter of 2014 were designed to address these issues with product development leading to radically reduced on-boarding times and a new client acquisition strategy with a greater emphasis on on-line marketing.

The cost base of the business increased substantially in the first half of 2014 versus that of 2013 as the business scaled up its operations. However, as mentioned above, the Directors undertook steps in the final quarter of the year to trim the Group's fixed costs (other than product development) once it was clear that revenues were not increasing at the rate that had been anticipated. Due to these factors, the Group recorded an operating loss of £5.5m in 2014 (2013: £3.6m). The Group has chosen to provide against doubtful debts for two clients, whose accounts were substantially overdue at the end of the year, having completed bespoke system development projects. The Group will continue to seek full payment from these two clients and may instruct legal advice to help it do so.

The 2014 accounts also reflect the write-down of intangible assets in relation to capitalised development expenditure on the SaaS platform. This results from an impairment review following the decision to change the Group's strategy and re-develop the Group's technology to significantly reduce on-boarding time and costs for new clients. Whist the Board are of the opinion that there remains value in the know-how built up by the business and in certain aspects of the technology, uncertainty with regards to future revenues specifically related to capitalised development costs mean that the Board concluded that the intangible asset is fully impaired and has therefore been fully written down in the year.

Outlook

Small and mid-sized ecommerce businesses are facing increasing pressures to improve the mobile shopping experiences of their customers. On one side, consumers are becoming increasingly comfortable to purchase goods and services using their smartphone devices whilst, on the other side, recent changes in Google's search algorithms have started to disadvantage websites that do not offer mobile-friendly shopping formats.

I am pleased to report that we have made considerable progress in strengthening our product offering with a new platform which is being designed to dramatically shorten our on-boarding times and reduce the cost of this process. We have also taken steps to reduce the fixed costs of the business. In addition, we intend to bring down the cost of new client acquisition by moving from an expensive direct selling model to a self-service approach based on online marketing and channel partnerships.

Currently we have 20 clients who have signed-up to the new platform and 10 are already live.

As announced today, we are proposing to raise a further £3.1m gross to fund further investment in the new platform and its commercialisation. At the same time, we have entered into a conditional agreement to acquire Fast Web Media Limited, a digital marketing consultancy, which will improve our product offering for small and mid-sized ecommerce businesses, and give us an online marketing capability. In addition, we are proposing to enter into a collaboration with Cxense ASA, a Norwegian-based and Oslo Stock Exchange quoted company, providing advertising, data-management, search, analytics and content personalisation services. These transactions and a proposed share swap agreement with Cxense are described in greater detail in Note 23 Events after the Reporting Date.

In addition the Company will enter into a short-term loan agreement with Robert Keith on 15 May 2015 whereby Robert Keith has agreed to lend to the Company £0.25m for working capital purposes ("the Loan"). The Loan is unsecured and interest shall be accumulated and charged at a rate of one per cent per calendar month. The Loan (including all accumulated interest) shall be repaid on 19 June 2015) or such later date as the parties may agree.

Given our new approach to the market, our proposed acquisition of Fast Web Media Limited and our proposed collaboration with Cxense ASA, we are proposing to re-name the Group as "mporium Group plc". A circular regarding the proposed acquisition of Fast Web Media, the arrangements with Cxense, the proposed placing and the proposed name change will be posted to shareholders in due course. We believe that mporium will be able to deliver a truly competitively differentiated offering to online retailers encompassing capabilities for mobile traffic generation and high performance mobile conversion.

On behalf of the Board

Richard Gordon

Director

14 May 2015

Consolidated financial statements MoPowered Group plc

Consolidated statement of total comprehensive income for

the year ended 31 December 2014

MoPowered Group plc ("the company") has taken advantage of the exemption allowed under sections 408 of the Companies Act 2006 and has not presented its own profit and loss account in the financial statements. The company loss after tax for the period ended December 31st 2014 is £6,649,087.

The results reflected above relate to continuing activities.

Consolidated financial statements MoPowered Group plc

Consolidated statement of financial position as at 31 December 2014

The financial statements were approved and authorised for issue by the Board of directors on 14 May 2015 and were signed on its behalf by

Richard Gordon

Director

Company Registration Number: 8696120

MoPowered Group plc

Company statement of financial position as at 31 December 2014

The financial statements were approved and authorised for issue by the Board of directors on 14 May 2015 and were signed on its behalf by

Richard Gordon

Director

Company Registration Number: 8696120

Consolidated financial statements MoPowered Group plc

Consolidated statement of changes in equity for the year ended 31 December 2014

MoPowered Group plc

Company statement of changes in equity for the period ended 31 December 2014

Consolidated financial statements MoPowered Group plc

Consolidated statement of cash flows for the year ended 31 December 2014

MoPowered Group plc

Company statement of cash flows for the period ended 31 December 2014

1 General information

MoPowered Group plc ('the Company'), and its subsidiaries (together 'the Group'), is a Software-as-a-Service ('SaaS') platform which works with online retailers and e-commerce businesses to enable fully transactional m-commerce. The Group is headquartered in the UK and operates in the UK, Europe and the United States of America, and continues to expand internationally. 

MoPowered Group plc which was incorporated on 18 September 2013 and whose first financial year end is 31 December 2014. MoPowered Group plc is a public limited company incorporated and domiciled in England and Wales whose shares are publicly traded on the Alternative Investment Market ('AIM') of the London Stock Exchange following its listing on 18 December 2013.

2 Accounting policies

Statement of Compliance

The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated. These financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union ('IFRS'). These financial statements have also been prepared in accordance with the Companies Act 2006 as applicable to companies reporting under IFRS.

Basis of preparation

MoPowered Group plc was incorporated on 18 September 2013 and on 18 December 2013 acquired 100% of

the share capital of MoPowered Limited. The consolidated MoPowered Limited accounts for the period ending 31 December 2013 have been prepared and published. They are available on the company website. MoPowered Group plc's first full year accounts will be prepared for the period ending 31 December 2014.

As this transaction is outside the scope of IFRS 3 Business Combination and in the absence of any relevant guidance under International Financial Reporting Standards, the acquisition was accounted for as a Group reconstruction as the accounting policy was created on the basis of UK Financial Reporting Standards. Under merger accounting the acquisition has been accounted for as though the Group, as currently constituted, has been in place for the whole of the period covered by these financial statements. In the group financial statements, merged subsidiary undertakings are treated as if they had always been a member of the group. The results of such a subsidiary are included for the whole period in the year it joins the group. The corresponding figures for the previous year include its results for that period, the assets and liabilities at the previous statement of financial position date and the shares issued by the company in consideration as if they had always been in issue. Any difference between the nominal value of the shares acquired by the company and those issued by the company to acquire them is taken to reserves. In order to assist readers of this report understand the trading performance of the Group, the assets, liabilities and losses of the underlying business have been consolidated to present the combined results and balances that would have been shown had the Group been under the control of a single common parent legal entity for the entire review period.

The financial statements are prepared under the historical cost convention and presented in Pounds Sterling, the Group's presentational currency and the company's functional currency. The accounting policies have been applied consistently by the Group to all periods presented in these financial statements.

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 3.

The Group financial statements consolidate the financial statements of the Company and its subsidiaries. The parent company financial statements present information about the Company as a separate entity and not about its group.

Basis of consolidation

The financial information consolidates the financial statements of the Company and its subsidiary undertakings. The results of subsidiaries acquired are consolidated for the period from the date on which control passes. Control as defined under IFRS 10 is when the Group obtains the power over the investee, exposure or rights to variable returns from involvement in the investee and the ability to use its power to affect the amount of the investee's returns.

Business combinations are consolidated under the acquisition method of accounting from the date on which the Group obtains control. The cost of a business combination is measured at the fair value of the consideration given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date irrespective of the extent of any non-controlling interest. The excess of the fair value of consideration transferred over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. If the costs of the acquisition are less than the fair value of the net assets acquired the difference is recognised directly in the income statement.

Inter-company transactions, balances and unrealised gains and losses on transactions between Group companies are eliminated in full. The accounting policies which follow set out the policies applied in preparing the Group and company financial information.

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 with neither the intention nor the necessity of liquidation, ceasing trading or seeking protection from creditors pursuant to laws or regulations. In assessing whether the going concern assumption is appropriate, management has considered the Group's existing working capital position and the proposed £3.1m fund raising. Management are of the opinion that subject to the proposed fund raising the Group has adequate resources to continue as a going concern. The directors believe that the fund raising has a high likelihood of success but should it not be successful then the group is likely to require alternative funding before the end of June 2015. If alternative funding is not available then the group would be unlikely to be able to continue as a going concern. These circumstances indicate the existence of a material uncertainty which may cast significant doubt about the Group's ability to continue as a going concern and therefore it may be unable to realise its assets and discharge its liabilities in the normal course of business.

Changes in accounting policies

Certain new standards, amendments to standards and interpretations to existing standards have been published that are not mandatory for the Group's accounting periods beginning after 1st January 2013, or later periods, to which the Group has decided not to adopt early when early adoption is available for those adopted by the EU. These are

The Directors do not anticipate that the adoption of these standards and interpretations will have a material impact on the financial statements in the year of initial application. The Directors do not consider application of any of the amendments made to existing standards as a result of the 2011 - 2013 annual improvements project, and IAS 1 and IAS 19, will have a material effect on the financial statements of the Group.

Revenue

Revenue comprise of services and software licences provided to external customers (excluding VAT and other sales taxes).

Consideration received from customers in respect of services is only recorded as revenue to the extent that the Group has performed its contractual obligations in respect of that consideration, and therefore it is expected that economic benefits will flow to the Group. Management assess the performance of the Group's contractual obligations against project milestones and work performed to date.

Revenue from software licences and hosting fees sold in conjunction with services is invoiced separately from those services and recognised over the period of the licence in order to reflect the on-going obligations of the Group. These service revenue are recorded under upsold project fees to existing customers and new installation for new clients per note 5 of the accounts.

Revenue from software licences for the use of the technology platform is recognised over the period of the licence in order to reflect the on-going obligations of the Group. These revenues are recorded under license, transaction and other recurring revenue per note 5 of the accounts.

Revenue from customer services delivered to external customers is recognised in the period that the services were delivered. These revenues are recorded under license, transaction and other recurring revenue per note 5 of the accounts.

Revenue relating to perpetual licence fees are recognised over the different stages of transferring the code onto the customer's own systems. These revenues are recorded under license, transaction and other recurring revenue per note 5 of the accounts.

Property, plant and equipment and intangible assets

Property, plant and equipment is stated at cost, or deemed cost less accumulated depreciation, and any recognised impairment loss.

Depreciation is charged so as to write off the cost or valuation of assets less any residual value over their estimated useful lives on the following bases:

Office equipment 33% straight line

Furniture and Fixtures  33% straight line

Intangible assets, representing amounts paid to third parties and internal resources for development of the MoPowered SaaS Platform, are stated at cost, or deemed cost less accumulated amortisation, and any recognised impairment loss. Further information on the accounting policy for Research and development activities is provided below.

Amortisation is charged to as to write off the cost of an asset less any residual value over their estimated useful lives and on the following basis:

Development platform 33-50% straight line

Depreciation and amortisation charges are included within Administrative Expenses in the Statement of Comprehensive Income.

Investments

Investments held by the Company in its subsidiary undertakings are stated at cost less provision for any impairment in value.

Impairment of property, plant and equipment and intangible assets

At each statement of financial position date, the Group reviews the carrying amounts of its property, plant and equipment and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss.

If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

The recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects the current market assessments of the time value of money and the risks specific to the asset. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the income statement and is included in the administrative expense.

Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in income statement.

Conversion of foreign currency

Monetary assets and liabilities in foreign currencies are translated into sterling at rates of exchange ruling at the statement of financial position date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of the transaction. Non-monetary assets having been translated are carried at their historical cost.

Exchange differences are recognised in statement of total comprehensive income for the year.

Financial instruments

Financial assets and financial liabilities are recognised on the Group's statement of financial position when the Group becomes a party to the contractual provisions of the instrument.

Trade and other receivables

Trade and other receivables are initially measured at fair value and subsequently carried at amortised cost less impairment. At the end of each accounting period they are assessed for impairment.

Cash and cash equivalents

Cash and cash equivalents comprise cash in hand that is readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

Financial liabilities and equity

Financial liabilities and equity instruments issued by the Group are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. The accounting policies adopted for specific financial liabilities and equity instruments are set out below.

Trade payables

Trade payables are initially measured at fair value and are subsequently measured at amortised cost, using the effective interest rate method.

Interest-bearing borrowings

Interest-bearing borrowings are stated at amortised cost using the effective interest method. The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability.

Convertible loan notes

Convertible loan notes issued by the Group are regarded as compound financial instruments, consisting of liability and equity components. At the date of issue, the fair value of the liability component is estimated using the prevailing market interest rate for similar non-convertible debt. The difference between the proceeds of issue of the convertible loan notes and the fair value assigned to the liability component, representing the embedded option to convert the liability into equity of the Group, is included in equity.

Issue costs are apportioned between the debt and equity components of the convertible loan notes based on their relative carrying amounts at the date of issue. The portion relating to the equity component is charged directly against equity.

The interest expense on the liability component is calculated by applying the effective interest rate for similar non-convertible debt to the liability component of the instrument. The difference between this amount and the interest paid is added to the carrying amount of the convertible loan note.

Convertible loan notes are classified as Level 2 financial instruments for the purposes of Group's fair value measurement policy.

Equity instruments

Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.

Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the statement of comprehensive income net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as a finance expense.

Commitments and contingencies

Commitments and contingent liabilities are disclosed in the financial statements unless the possibility of an outflow of resources embodying economic benefits is remote. A contingent asset is not recognised in the financial statements but disclosed when an inflow of economic benefits is probable.

Events after the statement of financial position date

Post year-end events that provide additional information about the Group's position at the statement of financial position date and are adjusting events are reflected in the financial statements. Post year-end events that are not adjusting events are disclosed in the notes when material.

Research and development activities

Expenditure on research or on the research phase of an internal project is recognised as an expense when incurred. The intangible assets arising from the development phase of an internal project are recognised if, and only if, the following conditions apply:

· it is technically feasible to complete the asset for use by the Group;

· the Group has the intention of completing the asset for either use or resale;

· the Group has the ability to either use or sell the asset;

· it is possible to estimate how the asset will generate income;

· the Group has adequate financial, technical and other resources to develop and use the asset; and

· the expenditure incurred to develop the asset is measurable.

If no intangible asset can be recognised based on the above, then development costs are recognised in profit and loss in the period in which they are incurred.

Taxation

Current taxation

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the tax authorities. The tax rates and the tax laws used to compute the amount are those that are enacted, or substantively enacted, by the statement of financial position date.

Deferred taxation

Deferred tax is provided in full using the balance sheet liability method for all taxable temporary timing differences arising between the tax bases of assets and liabilities and their carrying values for financial reporting purposes. Deferred tax is measured using currently enacted or substantially enacted tax rates. Deferred tax assets are recognised to the extent the temporary difference will reverse in the foreseeable future and it is probable that future taxable profit will be available against which the asset can be utilised.

Government grants

Grants receivable are accounted for where the conditions for receipt have been fulfilled and recoverability is assured. Grant receipts are set off against the expense incurred in the profit and loss.

Leases

Operating lease payments are recognised as an expense on a straight-line basis over the lease term, except if another systematic basis is more representative of the time pattern in which economic benefits will flow to the Group.

Contingent rentals arising under operating leases are recognised in the period in which they are incurred.

Lease incentives and similar arrangements of incentives are taken into account when calculating the straight-lined expense.

Share-based payments

The Group operates equity-settled share-based remuneration plans for its employees. None of the Group's plans are cash-settled. Where employees are rewarded using share-based payments, the fair value of employees' services is determined indirectly by reference to the fair value of the equity instruments granted.

This fair value is appraised at the grant date and excludes the impact of non-market vesting conditions (for example profitability and sales growth targets and performance conditions).

All share-based remuneration is ultimately recognised as an expense in profit or loss with a corresponding credit to shareholders equity. If vesting periods or other vesting conditions apply, the expense is allocated over the vesting period, based on the best available estimate of the number of share options expected to vest.

Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. Estimates are subsequently revised if there is any indication that the number of share options expected to vest differs from previous estimates.

Any cumulative adjustment prior to vesting is recognised in the current period. No adjustment is made to any expense recognised in prior periods if share options ultimately exercised are different to that estimated on vesting. Upon exercise of share options, the proceeds received net of any directly attributable transaction costs up to the nominal value of the shares issued are allocated to share capital with any excess being recorded as share premium.

As part of the process surrounding the acquisition of MoPowered Limited by MoPowered Group Plc, the holders of all outstanding options under the MoPowered Limited Share Scheme surrendered those entitlements in exchange for the grant, by MoPowered Group plc, of Replacement Options that were on equivalent terms.

The profit and loss impact of share options issued by MoPowered Group plc is recognised in the company which receives the benefits from those employees who hold the share options.

Shareholder's Equity

Equity comprises:

Share capital- the nominal value of ordinary shares is classified as equity.

Share premium reserve - represents the excess over nominal value of the fair value of consideration received for equity shares, net of expenses of the share issue.

Share option reserve - represents equity settled share-based employee remuneration.

Merger reserve- arising from the application of merger accounting following the principles of FRS 6.

Retained earnings - includes all current and prior period retained profits/(losses).

Other reserve - reserve created on the application of merger relief accounting.

Employee benefits

The Group has agreed to make pension contributions to third party insurance companies in respect of certain employees at rates agreed with the individuals concerned. Such contributions are accounted for as they fall due on a defined contribution basis.

3 Critical accounting judgements and key estimation of uncertainty

Accounting estimates and judgements

The preparation of financial statements in accordance with IFRSs requires the use of certain critical accounting estimates. It also requires management to exercise judgments in the process of applying the Group's accounting policies. Estimates and judgements are continually evaluated and are based on historical experience and reasonable expectations of future events. Actual results may differ from those estimates.

The accounting policies cover areas that are considered by the Directors to require estimates and assumptions which have significant risk of causing a material adjustment to the carrying amounts of assets & liabilities within the next financial year. The policies and the related notes to the financial statements are found below:

Recoverability of receivables (note 15)

The recoverability of the receivables is determined by the Group. Management monitors the circumstances relating to the payments due from third parties, together with the recoverability of the amounts due. Any indication of non-recoverability and change in fair value is adjusted for accordingly.

Impairment of Intangible assets (note 13)

Intangible assets include the capitalised development costs of the MoPowered Platform. These costs are assessed based on management's view of the internal and external development costs relating to time spent on projects that enhance the MoPowered 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 annually 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 judgment. Future events could cause the assumptions to change; which could have an adverse effect on the future results of the Group.

Share-based payments (note 22)

Share options are measured at their fair value using the Black-Scholes valuation 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.

Going concern (note 2)

The directors have prepared and reviewed a business plan and cashflow forecast. The forecast contains certain assumptions about the level of future sales and gross margin achievable. These assumptions are the Directors' best estimate of the future development of the business.

Deferred taxation - potential asset in relation to tax losses carried forward (note 10)

The recoverability of the tax losses carried forward to future accounting periods is determined by the Group. Management monitors the circumstances relating to the future profitability of the Group, together with the anticipated utilisation of the amounts carried forward. Any indication of non-recoverability and change in fair value is adjusted for accordingly.

4 Financial instruments and treasury risk management

General objectives, policies and processes

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

The overall objective of the Board is to set policies that seek to reduce risk as far as possible without unduly affecting the Group's competitiveness and flexibility. All funding requirements and financial risks are managed based on policies and procedures adopted by the Board of directors. The Group does not use derivative financial instruments such as forward currency contracts, interest rate swaps or similar instruments.

The Group does not issue or use financial instruments of a speculative nature.

Principal financial instruments

The principal financial instruments used by the Group, from which financial instrument risk arises, are as follows:

· Trade receivables;

· Cash and cash equivalents;

· Trade and other payables; and

· Borrowings and convertible loan notes

Financial Assets

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

Trade receivables principally comprise amounts outstanding for services provided to customers. Average credit terms were 30 days and average debtor days outstanding were 158 days during 2014 (2013: 112 days). An impairment review of outstanding trade receivables is carried out at the period end and a specific amount provided for.

Financial Liabilities

Trade, other payables, loans with MoPowered Group plc and other borrowings are measured at amortised cost. Convertible loan notes are measured at fair value.

Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The Group targets the payments of trade payables between 30 to 90 days of receipt of the invoice.

Treasury risk management

The Group manages a variety of market risks, including the effects of changes in foreign exchange rates, liquidity and counterparty risks.

Credit risk

The Group's principal financial assets are cash, trade and other receivables.

The credit risk on liquid funds is limited because the counterparties are UK banks with high credit ratings assigned by international credit rating agencies.

The Group currently operates with positive cash and cash equivalents as a result of issuing share capital in anticipation of future funding requirements. The Group's investment policy is therefore one of achieving high returns with minimal risks.

The maximum exposure due to credit risk for the Group on trade and other receivables during 2014 was £235,980 (2013: £163,398). No collateral is held in respect of these amounts.

As at the year-end trade receivables of £11,238 were past due but not impaired (2013: £137,087).

Currency risks

The Group's operations are located in the United Kingdom. The Group's transactions are primarily denominated in sterling with little exposure to foreign currency risks. Due to the limited risks to the Group, forward exchange contracts are not considered necessary and are not used. The Group does not operate foreign currency bank accounts.

The translation risk on the Group's foreign exchange payables and receivables is considered to be immaterial due to their short-term nature

 Liquidity risk

Operational cash flow represents on going trading revenue and costs, administrative costs and research and development activities. The Group manages its liquidity requirements by the use of both short-term and long-term cash flow forecasts. The Group's policy to ensure facilities are available as required is to issue equity share capital and loan notes in accordance with long-term cash flow forecasts.

The financial market turbulence and associated illiquidity in credit markets during the year has had no impact on the Group's ability to meet its financing requirements.

The Group actively manages its working finance to ensure it has sufficient funds for operations and planned research and development activities.

The Group's main financial liabilities are trade and other payables and borrowings. All amounts are due for payment in accordance with agreed settlement terms with suppliers or statutory deadlines.

At 31 December 2012, the Group had limited long term financial liabilities in the way of two loans. The loan was bearing interest at a rate of 10 per cent. The loan notes were settled on 23rd December 2013.

The Group does not currently use derivative financial instruments as hedging is not considered necessary. Should the Group identify a requirement for the future use of such financial instruments, a comprehensive set of policies and systems as approved by the directors will be implemented.

In accordance with IAS 39, "Financial instruments: recognition and measurement", the Group has reviewed all contracts for embedded derivatives that are required to be separately accounted for if they do not meet specific requirements set out in the standard. Other than the convertible loan note no other material embedded derivatives have been identified.

Capital management

The Group's activities are of a type and stage of development where the most suitable capital structure to continue as a going concern is that of entirely financed by equities and loan notes. The directors will reassess the future capital structure when projects under development are sufficiently advanced. The Group considers its capital to consist of share capital and loan notes only.

As at 31 December 2014 the Group managed capital of £7,176,725 (2013: £9,691,896).

The Group's financial strategy is to utilise its resources and current trading revenue streams to further appraise and test the Group's research and development projects. MoPowered Group plc keeps investors informed of its progress with its projects through regular announcements and raises additional equity finance at appropriate times.  

5 Operating segments

The Group's operations are centred on providing software as service and supporting services. Management therefore considers there to be one reporting segment covering the Group.

A supplementary analysis of revenue is as follows:

The geographical split of revenue is as follows:

The largest single customer contributed 63% (2013:33%) of total revenues.

6 Operating Loss

The operating loss is stated after charging the following amounts:

Grant receipts to the extent of £0 (2013: £53,846) are set off against Administrative expenses. 

Administrative expense includes the following services obtained from the Group's auditor, Grant Thornton UK LLP.

7 Staff costs and numbers

Staff cost (including directors' emoluments) incurred in the year were as follow:

The average number of persons employed by the Group during the year including executive directors is analysed below:

Directors' emoluments

The Directors and Executive Committee are the key management personnel of the company. The remuneration for the periods was:

Notes

1 Engaged by the Group on 11th of December 2013 and appointed as CFO/Commercial Director. Mr Carswell resigned on 2nd of July 2014.

2 Mr R Gordon was appointed as Finance Director and Company secretary on the 3rd of November 2014. Company secretary on 20th of November 2014.

3 Mrs Griffin was appointed to the Board on 11th of December 2013 and resigned on the 3rd of September 2014

No share options were exercised by Directors during the year ended 31 December 2014 (2013: nil). During the year a non interest bearing loan of £56,922 was repaid by D Keen which was offset against the back payment of salary relating to prior periods.

8 Financial income

9 Financial expense

10 Taxation

Reconciliation of the tax credit

The tax credit for the year is lower (2013: lower) than the tax credit on ordinary activities at the standard rate of corporation tax in the UK (2014: 21% and 2013: 23%) for the reasons set out in the following reconciliation.

As at 31 December 2014 MoPowered Group plc has trading tax losses available to be carried forward totalling £12,663,116 (2013:£8,178,145). Given the current position of the Group it is considered that there is not sufficient certainty over the utilisation of tax losses carried forward in order to recognise a deferred tax asset in the financial statements.

Diluted loss per share is calculated after showing the effect of outstanding options in issue. As the effect of the options would be to reduce the loss per share, the diluted loss per share is the same as the basic loss per share.

Calculation of loss per share is based on the following loss and numbers of shares:

12 Property, plant and equipment

13 Intangible assets

Intangible assets mainly relates to development cost incurred for continues development work carried out on the Group's SAAS platform. The majority of the cost incurred relates to the Group's in-house development department.

The Group recognised an impairment loss due to rapid changes within the technology developed and the uncertainty of the future cash generation that the SAAS platform could deliver. The impairment charge of £612,142 has been recognised within administrative expenses in the statement of other comprehensive income.

14 Investments in subsidiaries

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

15 Trade and other receivables

Trade and receivables have been reviewed for impairment at the statement of financial position date and an impairment of £188,207 (2013: £153,524) has been recognised in these accounts. Due to an uncertainty of when MoPowered Ltd would be able to settle the intercompany loan an amount of £6,652,035 was impaired in the Company accounts.

Aged analysis of Trade receivables 

16 Cash and cash equivalents

Cash and cash equivalents comprise balances on bank accounts, cash in transit and cash floats held in the business. Finance charges are accounted for on an accruals basis and charged to the statement of comprehensive income when payable.

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

17 Trade and other payables

Aged analysis of trade payable

18 Loans and borrowings

A secured convertible loan note facility to issue up to £1,000,000 of convertible loan notes was entered into in September 2012 with Imperialise Limited (shareholder in the Parent Company). The interest rate for loan notes issued under the facility was 10%. The loan notes are convertible into ordinary shares of the Parent Company at any time between the date of the issue of the notes and the final redemption date of the respective loan note, which is one year after the respective loan note was issued. The loan notes are convertible at the lower of £20 per share and the price paid per share in the most recent non-qualifying or qualifying fund raising. The loan note holders have agreed that the interest charged will be rolled up into the principal amount.

On 22 March 2013, the Group signed an amendment to the loan note instrument where the facility was extended to £1,500,000.

The secured convertible loan note facility balance as at 31 December 2012 includes rolled up interest of £16,666.

The loan notes were settled on 23rd December 2013.

Following the completion of the IPO of MoPowered Group plc in December 2013, MoPowered Limited entered into an interest free loan of £1,307,828 on 18th December 2013 to settle the convertible loan notes and meet working capital requirements. MoPowered Group plc has committed not to call on MoPowered Limited for the loans to be repaid before June 2015. The loan was impaired at year end.

19 Share capital

 Ordinary shares of £0.005 carry the right to 1 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 order to satisfy certain requirements in connection with the AIM admission MoPowered Group plc was inserted as a new holding company of MoPowered Limited and its subsidiaries on 18 November 2013. This was effected by way of an offer made by MoPowered Group plc to all the existing shareholders of MoPowered Limited to acquire all the issued share capital of MoPowered Limited in consideration for MoPowered Group plc allotting and issuing ordinary shares of £0.10 each to all the existing shareholders of MoPowered Limited. Before the 18 December 2013 MoPowered Group plc under gone a share split of 20-for-1.

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

As this transaction is outside the scope of IFRS 3 Business Combination and in the absence of any relevant guidance under International Financial Reporting Standards, the acquisition was accounted for as a Group reconstruction as the accounting policy was created on the basis of UK Financial Reporting Standards. Under merger accounting the acquisition has been accounted for as though the Group, as currently constituted, has been in place for the whole of the period covered by these financial statements. In the group financial statements, merged subsidiary undertakings are treated as if they had always been a member of the group. The results of such a subsidiary are included for the whole period in the year it joins the group. The corresponding figures for the previous year include its results for that period, the assets and liabilities at the previous statement of financial position date and the shares issued by the company in consideration as if they had always been in issue. Any difference between the nominal value of the shares acquired by the company and those issued by the company to acquire them is taken to reserves. In order to assist readers of this report understand the trading performance of the Group, the assets, liabilities and losses of the underlying business have been consolidated to present the combined results and balances that would have been shown had the Group been under the control of a single common parent legal entity for the entire review period.

20 Financial commitments

The Group leases all of its properties. The terms of property leases vary between properties, although they all tend to be tenant-repairing with periodic rent reviews and break clauses.

The total future minimum lease payments which exclude services are due as follows:

21 Related party transactions

The Group's related parties are its directors and Executive Committee members. Compensation paid to the Group's Board and members of the Executive Committee is disclosed in note 7.

The following net amounts were owed by executive directors as at the current and prior year end:

The following amounts were paid to Imperialise Limited for Non-Executive services provided by Nigel Keen during the current and prior period:

The following loans were provided by Imperialise Limited to the company:

For further disclosure on the loans facility provided by Imperialise Limited see Note 18

Placing and Subscription

Twocan Limited a company owned by a trust of which Nigel Keen, who retired as a director of the Company in December 2013, and Dominic Keen, the chief executive officer of the Company are both beneficiaries agreed to subscribe for 10,000,000 Placing Shares at the Issue Price pursuant to the Placing on 13 October 2014. Twocan Limited's participation in the Placing constituted a related party transaction for the purposes of Rule 13 of the AIM Rules for Companies. Accordingly, the Independent Directors considered, having consulted with the Company's nominated adviser, N+1 Singer, that the terms of Twocan Limited's participation in the Placing to be fair and reasonable insofar as Shareholders are concerned. In providing advice to the Independent Directors, N+1 Singer has taken into account the commercial assessment of the Directors.

22 Share-based payments

The first share option scheme was adopted by the parent company, MoPowered Limited, on 17 October 2008. A second scheme was adopted on 24 April 2013. The schemes were established to attract and retain the best available personnel for positions of responsibility, to provide additional incentive to employees, officers or consultants of the Company and to promote the success of the Company's business.

As part of the process surrounding the acquisition of MoPowered Limited by MoPowered Group plc, the holders of all outstanding options under the MoPowered Limited Share Scheme surrendered their entitlements in exchange for the grant, by MoPowered Group plc, of Replacement Options that were on equivalent terms. All share options are valued on the same basis as before.

The share option schemes are administered by the directors of MoPowered Group plc.

Share options are issued as part of a long term incentive scheme ("LTIS") or in lieu of salary or bonus due. LTIS options typically vest 3 years from the date of issue, contingent upon the option-holder being an employee of the company at the vesting date. The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

The options outstanding at the end of the year have a weighted average remaining contractual life of 9.3 years.

These fair values were calculated using the Black-Scholes option pricing model. The inputs into the model were as follows:

The expected life used in the model has been adjusted, based on management's best estimate, for the effects of non-transferability, exercise restrictions and behavioural considerations.

The Group recognised total expenses of £367,950 related to equity-settled, share-based payment transactions during 2014 (2013: £464,201).

The weighted average exercise price of share options issued during the year was £0.35 (2013:£0.485) per share and the weighted average exercise price per share options surrendered during the year was £0.525 (2013: £0).

23 Events after the Reporting Date

On 15 May 2015 MoPowered Group plc will announce the following propose transactions;

Acquisition of Fast Web Media Limited

MoPowered Group plc is proposing to acquire 100% of Fast Web Media Limited and 50.001% of InTELEgentsia Limited for a total consideration of approx. £1.56m. The consideration for the acquisition will be satisfied by the issue of 89,046,800 new Ordinary Shares at a price of 1.75 pence per new Ordinary Share to the existing shareholders of Fast Web Media Limited.

Fast Web Media Limited is a digital marketing consultancy that offers a wide variety of services including Search Marketing Consultancy and Strategy, Technical Development and Strategy, Data Analysis Consultancy and Digital Innovation products. It has recently shifted its focus from being a pure consultancy business towards being a product developer through its wholly owned subsidiary InTELEgentsia Limited.