TIDMATQT
RNS Number : 9543P
ATTRAQT Group PLC
14 February 2019
14 February 2019
Attraqt Group plc
("Attraqt", the "Group" or the "Company")
Full Year results
Breakeven reached at the adjusted EBITDA level
Attraqt Group plc (AIM: ATQT), a leading provider of online
merchandising, onsite search and eCommerce personalisation,
announces its final results for the twelve months ended 31 December
2018.
Financial Highlights:
-- Revenue increased 26% to GBP17.1m (2017: GBP13.6m)
o Like for like* revenue increased 10% to GBP17.1m (2017:
GBP15.6m)
-- Gross profit increased by 22% to GBP11.5m (2017: GBP9.4m)
o Comparable** gross profit increased 16% to GBP11.5m (2017:
GBP9.9m)
-- Comparable** gross margin increased by 3% points to 67% (2017: 64%)
o Comparable** SaaS gross margin increased by 2% points to 76%
(2017: 74%)
o Comparable** Services gross margin increased by 31% points to
-3% (2017: -34%)
-- Adjusted EBITDA breakeven; GBP0.03m (2017: loss of GBP0.2m)
-- Losses before tax were GBP2.7m (2017: GBP4.1m losses)
-- Basic EPS loss 2.6p per share (2017: 4.6p loss per share)
-- Cash at period end of GBP0.5m (2017: GBP1.6m), over GBP1m on 31st Jan.
*2017 like for like figures include pre-acquisition Fredhopper
contribution to make comparisons meaningful.
**2017 comparable figures include pre-acquisition Fredhopper
contribution and industry standard definitions to make comparisons
meaningful.
Operational highlights:
-- Average contract value per logo up 14% to GBP97k (2017: GBP85k)
-- Two-year renewal for the Group's largest customer
-- December 2018 Annual recurring revenue unchanged year on year at GBP16.0m
-- New branding, website and target account sales process now in place
-- Strategy review completed
Nick Habgood, Chairman, commented,
"2018 was an important year for Attraqt, as we continued to
progress the work begun last year to drive the underlying
operational effectiveness and performance of the business. Much
progress has been made and we will follow on this path.
"Alongside these efforts, Luke has led a discovery process
culminating in the launch of a refreshed vision, purpose, product
offering and strategy. This strategy focuses on leveraging the
Group's strengths, as well as driving a client centric-approach, a
culture of idea-sharing and innovation, and on building data into
everything we do. We work in a dynamic industry, and in order to
succeed Attraqt must continue strengthening its ability to address
the future needs of ecommerce.
"Ultimately, we have a first-class client base, robust products,
a growing market opportunity and a united team in place. Alongside
our experienced Board, I am confident that the business is in
strong and capable hands as we continue on our journey to become
the recognised market leader in our field."
For further information, please contact:
Attraqt Group plc Tel: 020 3675
7800
Luke McKeever, Chief Executive Officer
Eric Dodd, Chief Financial Officer
N+1 Singer Tel: 020 7496
3000
Shaun Dobson, Lauren Kettle
Alma PR Tel: 020 3405
0205
Rebecca Sanders-Hewett, Susie Hudson, Sam Modlin
About Attraqt
Attraqt enables many of the world's leading online retailers to
deliver highly relevant shopper experiences whilst also achieving
their critical business goals. It achieves this through the
provision of tried and tested cloud-based SaaS solutions, alongside
expert services, all underpinned by its state-of-the-art
technology.
The Group provides six core solutions which between them cater
for the shopping experience up to point of purchase: Search,
Navigation, Recommendations, Personalization, Merchandising and
Internationalization.
Attraqt partners with great brands and specialist retailers
across several sectors including fashion, footwear, homeware and
health & beauty. The Group's regional strength is currently
focused in the UK, Europe and ANZ. For more information, please
visit: www.attraqt.com.
Chairman's Statement
As has been the case for a number of years, the retail market is
undergoing a period of structural change, with an increasing
proportion of purchases completed online, in many cases via mobile
devices. Online has established itself as an important and growing
channel which is attracting an increasing proportion of retailers'
investments. Attraqt is very well positioned to support these
retailers and the growth of their online businesses as they look to
optimise the effectiveness of their online investment.
Attraqt's clients are some of the most innovative and
sophisticated players in the market; looking to use technology to
cultivate a differentiated, non-commoditised online approach to
provide both the inspiration and convenience that the end customer
is looking for; this enables them to achieve outstanding commercial
results and protect their margins.
The period in review saw the appointment of Luke McKeever as
Group CEO. The Board and I are very pleased to have Luke fully
immersed in the business and working with our team, customers and
partners to establish a clear path to realise Attraqt's full value
and potential. Over the past few months Luke has undertaken a
discovery process and following this evaluation we are very pleased
to have set out a newly defined vision, purpose and strategy, which
Luke will expand on further in his statement.
We have continued to progress the work we commenced last year to
drive the underlying operational effectiveness and performance of
the business. Much progress has been made and we will follow on
this path. This operational excellence forms the platform which
will allow us to focus our efforts on driving innovation and sales
and marketing execution in 2019.
Ultimately, we have a first-class client base, robust products,
a growing market opportunity and a united team in place. Alongside
our experienced Board, I am confident that the business is in
strong and capable hands as we continue on our journey to become
the recognised market leader in our field. Throughout this
financial year we have made great strides in integrating the two
original businesses; moving beyond operational and logistical
integration to the cultivation of a truly collaborative culture at
Attraqt. 2019 will be a year in which we focus our efforts on
driving product innovation and sales and marketing excellence. I
would like to thank Luke, the senior management team and all our
employees for their hard work and dedication in what has been an
intensive and exciting period for the Company.
Nick Habgood
Chairman
13(th) February 2019
Chief Executive's Review
Having been in the business for nearly nine months now, it is
clear that we have the foundations in place to enable us to achieve
our vision: to become integral to the world's best shopping
experiences. We have a great, aligned team, powerful technology,
fantastic customers and unrivalled industry experience to drive our
long-term success.
Having benefitted from teamwide research and customer, partner
and industry input, we have developed a refreshed strategy with a
clear series of actions that will drive our future growth. These
actions include aligning our teams to ensure that we can support
our customers along every aspect of their journey, new initiatives
focused on driving idea-sharing and innovation, and building data
into everything we do to provide new insights both internally and
for customers. But this is only the start of the journey.
Alongside the discovery work and refinement of our strategy
taken place over the period, the business has continued to deliver
value to clients and begun to incrementally improve its operational
delivery.
REVIEW OF SALES AND OPERATIONS
Attraqt grew revenues by 10% from GBP15.6m to GBP17.1m on a
comparable basis, (annualised results of the Fredhopper
acquisition) over the period, driven largely by the high levels of
recurring revenues in the business with 96% net revenue retention
during the year. Additionally GBP2.6m of Annual Recurring Revenue
(ARR) from new bookings was signed by 31 December 2018. Pleasingly,
reflecting our focus on prospective clients with ambition for
differentiation and margin protection, our Average Contract Value
also continued to increase, up 14% to GBP97k.
The Company continued to experience attrition levels similar to
the prior period. Whilst initiatives to mitigate client attrition
and to improve client on-boarding have been implemented and are
taking effect, some of the client attrition has occurred due to
external circumstances, including the challenges being faced by UK
high-street retailers. We expect that attrition will continue to
play a factor in the short term which, as a consequence, is likely
to impact revenue growth rates in the current financial year,
before accelerating in FY20 and beyond.
As an initial indicator of success of the Group's on-boarding
improvements all customers signed in earlier periods, bar one, are
now live and our data-led approach is resulting in new customers
going live on plan. Alongside this, our Customer Success Management
(CSM) and customer retention projects, initiated in 2018 have
outperformed our expectations and we now have access to much better
data to help us run the business with our customers at our
core.
At the end of the period we began to implement our newly defined
strategy, with two early achievements including the launch of our
new sales-driven website and collateral as well as the
re-positioning of both products sets under the single, "Fredhopper
Discovery Platform" banner.
MARKET DEVELOPMENTS
The challenges facing high street retailers have been well
documented, and in a time when margins are coming under increasing
pressure, retailers must focus more than ever on the incremental
gains they can achieve through a strong merchandising strategy,
both in store and online. The rise of online shopping has been
rapid in recent years, and it has never been more vital to stand
out from the crowd, as consumers expect their online shopping
experience to emulate or complement their bricks-and-mortar visits.
Retailers are looking for new ways to drive conversion rates,
increase customer loyalty, increase their flexibility and
continually improve the customer experience.
Over the last few years, the differentiating factors in
e-commerce success have changed with the evolution of Artificial
Intelligence (AI) and Machine Learning (ML). AI and ML techniques
are able to provide automation that is transforming how retailers
manage their shopper experiences. As these techniques have become
more accessible, more and more retailers are incorporating this
into their business operations, and its use is growing amongst
e-commerce software providers. Attraqt is differentiated from peers
in that it not only provides its customers with capabilities in
this arena, it also offers the ability to override automation with
human logic and creativity, alongside the provision of world-class
training, consultancy and optimization services. We have also begun
to explore relationships with complementary technology vendors to
drive even more value for our clients. This is significant as we
look to align our technology and partnership strategy with major
e-commerce trends in the market.
REFRESHED GROWTH STRATEGY
As mentioned previously, one of my main focuses in 2018 was to
gain a deep understanding of Attraqt, and to use that knowledge to
reconsider and refresh the strategy for the Group. Taking into
account the market developments laid out above, as well as
considering closely the needs of all of our stakeholders, it has
driven the strategy outlined below. This strategy leverages the
Group's strengths and leave us in a good position to address the
future needs of e-commerce.
We have a customer-centric approach and believe that by
continually improving our offering we can strengthen relationships
with current clients, win new clients, and increase efficiencies in
the business. By focusing on the six key strategic priorities
outlined below, we will ultimately create value for all our
stakeholders.
-- Evolving our data-led approach
-- Increasing the speed of our innovation
-- Driving customer success and optimising the customer experience
-- Enhancing our partnership strategy
-- Concentrating our effort on key verticals
-- Replicating our UK success in other geographies
PRODUCT DEVELOPMENT AND EXPANSION OF SERVICE OFFERING
Technology
Fredhopper (FHR) and Freestyle Merchandising (FSM) have now come
together as two products under the Fredhopper Discovery Platform
umbrella. The two products now share common capabilities including
a data services platform and a reporting suite. They have a single
roadmap, and the teams responsible for its development are
organised around value-enhancing micro-services, in place of
historical product sets. Common new feature innovation will
continue to drive our convergence strategy over this next
period.
The Fredhopper Discovery Platform is a robust, scalable and
secure cloud-enabled technology. It is capable of seamlessly
processing huge amounts of data, for example on Black Friday 2018
our platform supported several household name brands' major sales
processes, delivering 6,373 queries per second whilst offering
99.999% uptime over a 24 hour period.
Clients deliver exceptional search and merchandising strategies
via our Merchandising Studio and in line with our strategy the
Group is also creating an improved data tracking and assessment
capability into the platform to provide new insights and benefits
both internally and for our customers going forwards.
Services
We believe that automated technology works best when combined
with human ingenuity. This is because shoppers buy on the basis of
a combination of logical consideration and emotional connection, so
retailers must cater for both. Human Guided Automation is the way
to deliver optimal performance, and it is only through blending
state-of-the-art technology with merchandising creativity and
inspiration that one can enable a shopping experience which
provides clients with a competitive advantage. The team at Attraqt
has experience working with some of the world's biggest and most
forward-thinking online retailers and brands, and therefore has an
exceptional breadth of merchandising knowledge it can provide to
clients to help them achieve incremental gains. We now package
these insights as ongoing, short advisory engagements to cement the
value we provide via our technology solutions.
PEOPLE
One of Attraqt's key competitive advantages is its people. We
have an experienced executive team at the helm, working alongside a
very capable group of managers that are all passionate about our
offering. Over the period we have sought to empower our teams with
clear plans, new roles and training. We have also re-organised the
structure of our executive teams around the customer journey,
ensuring each team is putting the customer first. Attraqt's values
centre around the idea that by being better together, pioneering
and data-led, we will drive our shared success.
Once again, the hard work of our teams has underpinned the
ongoing progress and their commitment to delivering against our
vision and growth strategy is unwavering. We are very proud to have
a team of this calibre and thank them for their continued hard work
and drive.
OUTLOOK
The Board's focus is on putting the customer at the heart of
every decision we take. In order to do this, we will build on our
strong product set, with further product innovation a priority so
that we can continue to deliver for our clients in an evolving
retail environment. We will also drive the underlying operational
effectiveness and performance of the business through greater
utilisation of data and the successful implementation of our
strategy. We have made significant steps in the right direction,
but there is still work to be done and our teams are motivated to
do it.
There remain significant opportunities for the Group to grow:
both organically and through acquisition. We are well positioned to
drive organic growth by growing average revenue per account through
the addition of new targeted accounts, driving customer upsell and
of course, innovation. Alongside this organic growth, we have the
opportunity to replicate our successes in other key markets, with a
number of global accounts providing reference-ability. And at the
same, the Group continues to review M&A opportunities with the
potential to provide innovative new capabilities to our
customers.
Going into 2019 the business must tackle a number of challenges,
including, the demise of certain brands over the period having
impacted the Group's bookings for the year ahead, and the pervasive
threat of e-commerce software re-platforming. However, we are
confident that by executing on our strategy these challenges can be
mitigated, and that the benefits of establishing a clear path
forward will be felt in the mid to long term. We believe that we
are now utilising the Group's teams, platforms and capabilities to
their strengths and with a refined marketing and sales strategy,
enhanced product offering, vision and purpose, I am confident that
we are well positioned to take advantage of the markets where we
have reference-ability and deliver value for all of our
stakeholders over the long term.
Luke McKeever
Chief Executive
13 February 2019
CHIEF FINANCIAL OFFICER'S STATEMENT
Total revenue increased by 26% to GBP17.1m (2017: GBP13.6m)
reflecting the full period impact of the Fredhopper acquisition
completed in March 2017. If contribution from Fredhopper is
included, on a like-for-like basis, Group revenue increased by 10%
when compared to 2017.
On a similarly comparable basis (annualised results of the
Fredhopper acquisition, which was unaudited), SaaS revenues
increased by 8% to GBP15.2m (2017: GBP14.1m) and services revenue
increased by 25% to GBP1.9m (2017: GBP1.5m). Two important KPIs for
our business are the Annual Contract Value (ACV) because it is a
good indicator of future revenues and the Net Retention Rate
because it indicates how well we are serving our existing clients.
The ACV at the end of 2018 was GBP16.0m (2017: GBP16.0m) and the
NRR was 96%.
Gross margin increased by 22% to GBP11.5m (2017: GBP9.4m). On
the same comparable basis (annualised results of the Fredhopper
acquisition, which was unaudited), gross profit increased by 16% to
GBP11.5m (2017: GBP9.9m), a gross margin of 67%. The comparable
SaaS gross margin (annualised results of the Fredhopper
acquisition, which was unaudited) increased by 2% points to 76%
(2017: 74%) and the services gross margin (annualised results of
the Fredhopper acquisition, which was unaudited) increased by 31
points to -3% (2017: -34%) as legacy projects were completed.
Management expects that the services business will begin operating
on a profitable basis in the current financial year.
Comparable operating expenses (annualised results of the
Fredhopper acquisition, which was unaudited) increased by 14% to
GBP11.5m (2017: GBP10.1m) reflecting the hiring of 11 heads
including a Customer Success team.
Adjusted EBITDA (pre-exceptional)1 GBP0.03m (2017: GBP0.2m loss)
were in line with management expectations.
As per definition in KPI's
The exceptional costs of GBP0.6m in the period relate mainly to
the change in CEO.
Depreciation and amortisation totalled GBP1.6m (2017: GBP1.3m)
and increased due to the full period charge for the amortisation of
intangibles that were created on the Fredhopper acquisition. There
was a share-based payment charge of GBP0.4m (2017: GBP0.2m).
Loss before tax was GBP2.7m (2017: GBP4.1m loss), with the tax
charge in the period GBP0.1m (2017: GBP0.0m). Therefore, loss for
the year was GBP2.8m (2017: GBP4.1m loss).
The cash balance at the end of the period was GBP0.5m, which was
a reduction of GBP1.1m during the year. The reduction was driven by
exceptional costs of GBP0.6m and GBP0.3m net tax paid, due to
payments being made for two years in Fredhopper BV - neither of
these items are expected to recur in 2019. December is
traditionally a low point in the working capital cycle as a result
of cyclically low invoicing in October and November. By the end of
January, the cash balance had increased to GBP1.1m. In addition,
the company is looking to put in place a bank facility of at least
GBP1m by the end of the first quarter.
Eric Dodd
Chief Financial Officer
Consolidated Income Statement
For the year ended 31 December 2018
Note 2018 2017
GBP'000 GBP'000
Revenue 4 17,144 13,615
Cost of Sales 4 (5,614) (4,169)
----------------------------------- ---- -------- --------
Gross profit 11,530 9,446
Administration expenses (13,680) (11,116)
Exceptional administrative expense 5 (563) (2,382)
----------------------------------- ---- -------- --------
Total administrative expenses (14,243) (13,498)
Loss from operations 6 (2,713) (4,052)
Loss before tax (2,713) (4,052)
Taxation charge 8 (49) (18)
----------------------------------- ---- -------- --------
Loss for the year (2,762) (4,070)
Consolidated Statement of Comprehensive Income
For the year ended 31 December 2018
Note 2018 2017
GBP'000 GBP'000
------------------------------------------------------ ---- ------- -------
(Loss) for the year (2,762) (4,070)
------------------------------------------------------ ---- ------- -------
Foreign exchange translation differences (8) (239)
------------------------------------------------------ ---- ------- -------
Total comprehensive (loss) for the year, attributable
to shareholders of the parent (2,770) (4,309)
------------------------------------------------------ ---- ------- -------
Loss per share attributable to the ordinary
equity holders of the company
------------------------------------------------------ ---- ------- -------
Basic and diluted EPS 9 (2.6p) (4.4p)
------------------------------------------------------ ---- ------- -------
Consolidated Statement of Financial Position
For the year ended 31 December 2018
Notes 2018 2017
GBP'000 GBP'000
Non-current assets
Intangible assets 11 25,432 26,256
Plant and equipment 10 168 157
Total non-current assets 25,600 26,413
-------------------------------------------- ----- -------- -------
Current assets
Trade and other receivables 13 4,936 4,543
Cash and cash equivalents 14 509 1,636
Corporation tax recoverable - 9
-------------------------------------------- ----- -------- -------
Total current assets 5,445 6,188
-------------------------------------------- ----- -------- -------
Total assets 31,045 32,601
-------------------------------------------- ----- -------- -------
Current Liabilities
Trade and other payables 17 8,186 7,223
Corporation tax 24 -
Total current liabilities 8,210 7,223
-------------------------------------------- ----- -------- -------
Non-current liabilities
Deferred tax liability 8 1,254 1,462
Total non-current liabilities 1,254 1,462
-------------------------------------------- ----- -------- -------
Net Assets 21,581 23,916
Equity
Issued capital 15 1,063 1,063
Share premium 15 30,108 30,108
Merger reserve 1,457 1,457
Share based payment 16 1,238 803
Forex reserve (265) (257)
Retained earnings (12,020) (9,258)
-------------------------------------------- ----- -------- -------
Total equity attributable to equity holders
of the parent 21,581 23,916
Consolidated Statement of Changes in Equity
For the year ended 31 December 2018
Share Share Merger Share Foreign Retained Total
capital premium reserve based exchange earnings
payment reserve
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 January 2017 269 4,253 1,457 647 (18) (5,188) 1,420
Loss for the year - - - - - (4,070) (4,070)
Foreign currency translation
differences - - - - (239) - (239)
----------------------------------------- -------- -------- -------- -------- --------- --------- -------
Total comprehensive loss for
the year - - - - (239) (4,070) (4,309)
Contributions by and distributions
to owners
Share based payment charge - - - 156 - - 156
Shares issued 794 27,005 - - - - 27,799
Issue costs - (1,150) - - - - (1,150)
Total contributions by and distributions
to owners 794 25,855 - 156 - - 26,805
----------------------------------------- -------- -------- -------- -------- --------- --------- -------
Balance at 31 December 2017 1,063 30,108 1,457 803 (257) (9,258) 23,916
----------------------------------------- -------- -------- -------- -------- --------- --------- -------
Loss for the year - - - - - (2,762) (2,762)
Foreign currency translation
differences - - - - (8) - (8)
----------------------------------------- -------- -------- -------- -------- --------- --------- -------
Total comprehensive loss for
the year - - - - (8) (2,762) (2,770)
----------------------------------------- -------- -------- -------- -------- --------- --------- -------
Contributions by and distributions
to owners
Share based payment charge - - - 435 - - 435
----------------------------------------- -------- -------- -------- -------- --------- --------- -------
Total contributions by and distributions
to owners - - - 435 - - 435
----------------------------------------- -------- -------- -------- -------- --------- --------- -------
Balance at 31 December 2018 1,063 30,108 1,457 1,238 (265) (12,020) 21,581
----------------------------------------- -------- -------- -------- -------- --------- --------- -------
Consolidated Statement of Cash Flows
For the year ended 31 December 2018
Notes 2018 2017
GBP'000 GBP'000
Cash flows from operating activities
Loss for the year (2,762) (4,070)
Adjustments for:
Depreciation of property, plant and equipment 10 62 51
Amortisation of intangible fixed assets 11 1,586 1,227
Loss on disposals 10 - 10
Income tax charge 8 49 18
Share based payment expense 16 435 156
Foreign exchange differences 104 33
------------------------------------------------- ----- ------- --------
(526) (2,575)
Increase in trade and other receivables (384) (1,486)
Increase in trade and other payables 893 1,183
------------------------------------------------- ----- ------- --------
Cash used from operating activities before
interest and tax (17) (2,878)
Taxation (paid)/received (278) 8
Net cash used from operating activities (295) (2,870)
Cash flows used in investing activities
Acquisition of subsidiaries - (22,536)
Purchases of Property, plant and equipment 16 (70) (137)
Development of intangibles 11 (696) (672)
Net cash used in investing activities (766) (23,345)
Cash flows from financing activities
Issue of ordinary shares, net of issue costs - 26,649
Net cash (used) / generated from investing
and financing activities (766) 3,304
------------------------------------------------- ----- ------- --------
Net (decrease) / increase in cash and cash
equivalents (1,061) 434
------------------------------------------------- ----- ------- --------
Cash and cash equivalents at beginning of
year 1,636 1,157
Effect of foreign currency exchange rate changes (66) 45
Cash and cash equivalents at end of year 14 509 1,636
Notes to the Financial Statements
For the year ended 31 December 2018
1. GENERAL INFORMATION
Attraqt Group plc ("the Company") and its subsidiaries
(collectively, the 'Group') principal activity is the development
and provision of eCommerce site search, merchandising and product
recommendation technology.
The financial statements for the year ended 31 December 2018
were authorised for issue by the Board of Directors of the Company
on 13 February 2019.
The Company is a public limited company which is quoted on the
Alternative Investment Market on the London Stock Exchange, and is
incorporated, registered and domiciled in England and Wales
(registered number: 08904529). The address of its registered office
is 3 Waterhouse Square, 138 Holborn, London, EC1N 2SW.
2. ACCOUNTING POLICIES
The principal accounting policies applied 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.
Basis of preparation
The financial statements have been prepared in accordance with
International Financial Reporting Standards ('IFRS') as adopted by
the European Union and on an historical cost basis. The Group
financial statements are presented in UK sterling and all values
are rounded to the nearest thousand pounds (GBP'000), except when
otherwise indicated.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates. It also
requires management to exercise its judgement in the process of
applying the Group's accounting policies. Further details on the
Group's critical judgements and estimates are included in note
3.
Going concern
The Directors have considered the Group's forecasts,
projections, and the risks associated with their delivery, and are
satisfied that the Group will be able to operate for at least 12
months from the date of approval of these financial statements. In
relation to available cash resources, the Directors have had regard
to both cash at bank and a GBP250,000 overdraft facility.
Accordingly, they have adopted the going concern basis in preparing
these financial statements.
Revenue
The Group's accounting policy for revenue is in line with IFRS
15, information regarding the considerations upon adoption are
disclosed in the new standards applied in the period section.
Revenue represents sales to external customers at invoiced
amounts less value added tax or local taxes on sales. Where work is
completed at the year-end but not invoiced, the Attraqt Group
accrues for this income. The Group derives the majority of its
revenue from the provision of e-commerce services via a license fee
to online retailers which includes site search, merchandising and
product recommendation technology. As a result of IFRS 15 the
following revenue streams have been determined:
SaaS license fee: In the case of SaaS Licence Fee only
contracts, revenue would be recognised over time as the customer
has access to the vendor's intellectual property as it exists at
any given time throughout the licence period.
Implementation fee: These contracts have defined performance
obligations set out, and upon satisfaction of the performance
obligation, i.e. hand over of the intellectual property, revenue
will be recognised. However, if granting the licence qualifies for
recognition over time then on that basis it provides access to the
IP at any given time throughout the licence period, the transaction
price is recognised over the related licence period. If there is no
defined performance obligation set out in the contract, the revenue
would be recognised at the end of the implementation phase when
control would be deemed to have transferred.
On-going services: Revenue in relation to Technical
Consulting/Business consulting contracts that have distinct
performance obligations I.e. the number of consulting days defined
in the contract, will be recognised at a point in time according to
time and materials used - therefore, once the customer consumes the
benefits from the service provided, the revenue is recognised.
Exceptional items
Exceptional items are those which, by virtue of their nature,
size or incidence, either individually or in aggregate, need to be
disclosed separately to allow full understanding of the underlying
performance of the Group.
Intangible assets
Externally acquired intangible assets are initially recognised
at cost and subsequently amortised on a straight-line basis over
their useful economic lives.
Externally acquired intangible assets are recognised on business
combinations
Intangible assets are recognised on business combinations if
they are separable from the acquired entity or give rise to other
contractual/legal rights. The amounts ascribed to such intangibles
are arrived at by using appropriate valuation technique.
The significant intangibles recognised by the Group, their
useful economic lives and the methods used to determine the cost of
intangibles acquired in a business combination are as follows:
Intangible Useful economic Valuation Method
Asset life
Customer 11 years Excess Earnings Method - the
Relationships value of the intangible asset
is the present value of the
after-tax cash flows potentially
attributable to it, net of the
return on fair value attributable
to tangible and other intangible
assets.
Existing 7 years Relief from Royalty Method -
Technology the value of intangible assets
are estimated by capitalising
the royalties saved because
the company owns the intangible
asset.
Trade Names 10 years Relief from Royalty Method -
the value of intangible assets
are estimated by capitalising
the royalties saved because
the company owns the intangible
asset.
Internally generated intangible assets (development costs)
Expenditure on internally developed products is capitalised if
it can be demonstrated that:
-- it is technically feasible to develop the product for it to be sold;
-- adequate resources are available to complete the development;
-- there is an intention to complete and sell the product;
-- the Group is able to sell the product;
-- sale of the product will generate future economic benefits; and
-- expenditure on the project can be measured reliably.
Capitalised development costs are amortised over three years.
The amortisation expense is included within administrative expenses
in the consolidated statement of comprehensive income.
Development expenditure not satisfying the above criteria and
expenditure on the research phase of internal projects are
recognised in the consolidated statement of comprehensive income as
incurred.
Where there is an event or change in circumstance in relation to
such judgement, the Group must make an estimate of the expected
future economic benefits to determine that assets are not
impaired.
Impairment of assets
Assets that are subject to depreciation or amortisation 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. The recoverable
amount is the higher of an asset's fair value less costs to sell
and value in use. For the purposes of assessing impairment, assets
are grouped at the lowest levels for which there are separately
identifiable cash flows.
Consolidation
The results of all subsidiary undertakings are included in the
consolidated financial statements. Assets, liabilities, income and
expenses of a subsidiary acquired or disposed of during the year
are included in the consolidated financial statements from the date
the Group gains control until the date the Group ceases to control
the subsidiary.
Control is achieved when the Group is exposed, or has rights, to
variable returns from its involvement with the investee and has the
ability to affect those returns through its power over the
investee. Specifically, the Group controls an investee if, and only
if, the Group has:
power over the investee (i.e., existing rights that give it the
current ability to direct the relevant activities of the
investee);
exposure, or rights, to variable returns from its involvement
with the investee; and
the ability to use its power over the investee to affect its
returns.
Business combinations
Business combinations are accounted for using the acquisition
method. The cost of an acquisition is measured as the aggregate of
the consideration transferred measured at acquisition date fair
value and the amount of any non-controlling interests in the
acquiree. For each business combination, the Group elects whether
to measure the non-controlling interests in the acquiree at fair
value or at the proportionate share of the acquiree's identifiable
net assets. Acquisition-related costs are expensed as incurred and
included in administrative expenses.
When the Group acquires a business, it assesses the financial
assets and liabilities assumed for appropriate classification and
designation in accordance with the contractual terms, economic
circumstances and pertinent conditions as at the acquisition
date.
Goodwill
Goodwill represents the excess of the cost of acquisition over
the fair value of the assets, liabilities and contingent
liabilities of acquired businesses at the date of acquisition.
Goodwill is stated at cost less accumulated impairment losses.
Goodwill is allocated to one cash-generating unit and is not
amortised but is tested annually for impairment, or more frequently
if there is an indication that the value of the goodwill may be
impaired.
Property, plant and equipment
Property, plant and equipment is initially recognised at cost
and is stated at cost less accumulated depreciation.
Property, plant and equipment is depreciated to reduce the
carrying amounts of the assets, less their estimated residual
values, over their expected useful lives, as follows:
Plant and machinery 4 years
Fixtures, fittings 4 years
and equipment
Leases
The determination of whether an arrangement is, or contains, a
lease is based on the substance of the arrangements at the
inception date: whether fulfilment of the arrangement is dependent
on the use of a specific asset or assets or the arrangement conveys
a right to use the asset.
Leasing arrangements which transfer to the Group substantially
all the risks and rewards of ownership of an asset are treated as
if the asset had been purchased outright. The assets are included
in tangible assets and depreciated over their estimated economic
lives or over the term of the lease, whichever is the shorter.
The capital element of the leasing commitments is included in
liabilities as obligations under finance leases. The lease rentals
are treated as consisting of capital and interest elements. The
capital element is applied to reduce the outstanding obligation and
the interest element is charged to the income statement in
proportion to the capital element outstanding.
Operating lease payments are recognised as an expense on a
straight-line basis over the lease term.
Share capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares are deducted from
share premium.
Foreign currency translation
The functional and presentation currency of Attraqt Group plc is
GBP. Transactions in foreign currencies are translated into the
functional currency using exchange rates prevailing at the date of
the transaction. Monetary assets and liabilities denominated in
foreign currencies are retranslated at the rate of exchange ruling
at the balance sheet date. Exchange differences arising on the
settlement of monetary items and on the retranslation of monetary
items are taken to the consolidated income statement.
For the purposes of preparing consolidated financial statements,
the assets and liabilities of foreign subsidiary undertakings are
translated at the exchange rates ruling at statement of financial
position date. Profit and loss items are translated at the exchange
rate ruling at the date of the transaction. Exchange differences
arising are taken to the Group's foreign currency translation
reserve.
Share based payments
The Group has issued share options to certain employees, in
return for which the Group receives services from employees. The
fair value of the employee services received in exchange for the
grant of the options is recognised as an expense, the Group fair
values the options at the grant date using the Black Scholes
valuation model to establish the relevant fair values.
The total amount to be expensed is determined by reference to
the fair value of the options granted including any market
performance conditions (for example the Group's share price) but
excluding the impact of any service or non-market performance
vesting conditions (for example the requirement of the grantee to
remain an employee of the Group).
Non-market vesting conditions are included in the assumptions
regarding the number of options that are expected to vest. The
total expense is recognised over the vesting period. At the end of
each period the Group revises its estimates of the number of
options expected to vest based on the non-market vesting
conditions. It recognises the impact of any revision in the income
statement with a corresponding adjustment to equity.
Taxation including deferred taxation
Total income tax on the result for the year comprises current
and deferred tax. Income tax is recognised in the income statement
except to the extent that it relates to items recognised directly
in equity and other comprehensive income, in which case it is
recognised directly in equity and other comprehensive income.
Current tax is the expected tax payable on the taxable result
for the year, using tax rates enacted, or substantively enacted, at
the balance sheet date, and any adjustments to tax payable in
respect of previous years.
Current income tax assets and liabilities comprise those
obligations to fiscal authorities in the countries in which the
Group carries out its operations. They are calculated according to
the tax rates and tax laws applicable to the fiscal period and the
country to which they relate. All changes to current tax
liabilities are recognised as a component of tax expense in the
income statement unless the tax relates to an item taken directly
to equity in which case the tax is also taken directly to equity.
Tax relating to items recognised in other comprehensive income is
recognised in other comprehensive income.
Deferred tax is provided on all temporary differences between
the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes,
except for:
-- goodwill not deductible for tax purposes;
-- the initial recognition of an asset or liability in a
transaction that is not a business combination and which, at the
time of the transaction, affects neither the accounting profit nor
the taxable profit or loss; and
-- investments in subsidiary companies where the timing of the
reversal of the temporary difference is controlled by the Group and
it is probable that the temporary difference will not reverse in
the foreseeable future.
The amount of deferred tax recognised is based on the expected
manner of realisation or settlement of the carrying amounts of
assets and liabilities, using tax rates enacted, or substantively
enacted, at the balance sheet date. A deferred tax asset is only
recognised to the extent that it is probable that future taxable
profits will be available against which the asset can be used.
Financial instruments
The Group has implemented IFRS 9, which has resulted in the
following accounting policy changes, there has been no impact on
the classification of Financial Instruments it is purely a change
in terminology.
Recognition, derecognition and measurement of financial
instruments
Financial assets and financial liabilities are recognised when
Attraqt Group becomes party to the contractual provisions of the
financial instrument. Financial assets are derecognised when the
contractual rights to the cash flows from the financial asset
expire, or when the financial asset and all substantial risks and
rewards are transferred. A financial liability is derecognised when
the related contractual obligation is extinguished, discharged or
cancelled, or when it expires. Financial instruments are recognised
and derecognised using settlement date accounting. On initial
recognition, financial instruments are measured at fair value. Fair
value on initial recognition includes transaction costs directly
attributable to the acquisition or issue of financial instruments,
except for financial instruments carried at fair value through
profit or loss, for which transaction costs are recognised in the
Consolidated statement of Comprehensive income in the period when
they are incurred.
Classification of financial instruments
Financial assets
On initial recognition, a financial asset is classified and
subsequently measured at:
-- amortised cost
-- fair value through profit or loss (FVTPL); or
-- fair value through other comprehensive income (FVOCI)
Business model assessment
The classification depends on Attraqt Group's business model for
managing these financial assets and the contractual terms of the
financial asset's cash flows. The business models objectives are
broken down into three categories:
-- Financial assets held solely to collect contractual cash flows
-- Financial assets held both to collect contractual cash flows and selling the assets
-- Financial assets that are managed on a fair value basis
A financial asset is measured at amortised cost if it meets both
of the following conditions and is not designated as FVTPL:
-- The asset is held within a business model whose objective is
to hold assets to collect contractual cash flows.
-- The contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments of principal
and interest on the principal outstanding.
A financial asset is measured at FVOCI only if it meets both of
the following conditions and is not designated as FVTPL:
-- The asset is held within a business model whose objective is
achieved by both collecting contractual cash flows and selling
financial assets.
-- The contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments of principal
and interest on the principal outstanding.
All other financial assets are classified as measured at
FVTPL.
Impairment of financial assets measured at amortised cost
The Group assesses on a forward looking basis expected credit
losses associated with its debt instruments carried at amortised
cost. The impairment methodology applied for trade receivables is
the simplified approach, which requires expected lifetime losses to
be recognised from initial recognition of the receivables.
Write-off policy
Financial assets are written-off after the Group has exhausted
all possible avenues of recovery from the customer and there is no
realistic prospect of recovering the amounts owed.
Financial liabilities
The Attraqt Group classifies its financial liabilities at
amortised cost unless it has designated liabilities at FVTPL or is
required to measure liabilities at FVTPL, these include trade
payables and short-term monetary liabilities. The Attraqt Group
designates a financial liability as measured at FVTPL on initial
recognition when it eliminates an accounting mismatch that would
otherwise arise from measuring assets or liabilities on a different
basis. A description of the basis for each designation is set out
in the major types of financial instruments section of this
note.
Subsequent measurement of financial instruments
Financial instruments are measured in subsequent periods either
at fair value or at amortised cost depending on the financial
instrument classification.
Financial instruments classified as at amortised cost
Subsequent to initial recognition, financial assets and
liabilities classified in this category are recognized at amortised
cost using the effective interest method. The effective interest
rate is the rate that exactly discounts the estimated future cash
payments and receipts through the expected life of the financial
asset or liability to its carrying amount. When calculating the
effective interest rate, Attraqt Limited estimates future cash
flows, considering all contractual terms of the financial
instrument. Interest income, interest expense and the amortisation
of loans fees are presented in the Consolidated Statement of
Income.
Financial instruments classified as at fair value through profit
or loss
Subsequent to initial recognition, gains and losses upon the
sale, disposal or write-off of these financial instruments are
included directly in the Consolidated Statement of Comprehensive
Income and are reported within administrative expenses.
Equity Instruments
The Attraqt Group measures equity instruments at FVTPL, changes
in the fair value would be recognised in Statement of Comprehensive
Income.
Changes in accounting policy
New standards, interpretations and amendments applied
The following amendments to existing standards were effective
for the Group from 1 January 2018, but either they were not
applicable to or did not have a material impact on the Group:
-- IFRS 9 Financial Instruments
-- IFRS 15 Revenue from contracts with customers
-- Interpretation 22 Foreign Currency transactions and advance consideration
The Group's assessment of the impact of applying IFRS 9 and IFRS
15 are discussed below.
IFRS 15 Revenue from Contracts with customers
IFRS 15 replaces IAS 18 Revenue effective 1 January 2018, the EU
has approved the standard. IFRS 15 provides a five step revenue
recognition model:
-- Identify the contract
-- Identify separate performance obligations
-- Determine the transaction price
-- Allocate the transaction price to separate performance obligations
-- Recognise revenue when the performance obligation is satisfied
Attraqt Group has three contract types; SaaS licence revenue,
Implementation fees and on-going services revenue, which form two
revenue streams; SaaS revenue and Services revenue. The contract
types can be on a standalone contract where a single performance
obligation (step 2) can easily be identified, or a contract can
have both SaaS license and services which would include more than
one stream within the contract resulting in more than one distinct
performance obligations.
Once the performance obligation(s) is established and the
transaction price is allocated, revenue is recognised when (or as)
goods or services are transferred to a customer, this being
represented by transfer of control. Control in the context of IFRS
15 is the ability to direct the use of, and obtain substantially
all of the remaining benefits from, an asset. Indicators of such
include:
-- A present obligation to pay
-- Physical possession of the assets
-- Legal title
-- Risks and rewards ownership
-- Acceptance of the asset(s)
A vendor satisfies a performance obligation and recognises
revenue over time when one or more of the following three criteria
is met:
-- The customer simultaneously receives and consumes economy
benefits provided by the vendor's performance
-- The vendor creates or enhances an asset controlled by the customer
-- The vendor's performance does not create an asset for which
the vendor has an alternative use and the vendor has an enforceable
right to payment for performance completed to date.
It is important to note that the recognition of revenue on an
over time percentage of completion basis does not necessarily
require that revenue be recognised evenly over the licence period.
The principle is that revenue should be recognised to depict
satisfaction of the performance obligation. This can however, lead
to a mismatch between cost and revenue, as IFRS 15 requires that
costs incurred in fulfilling a contract are expensed unless certain
criteria are met or the treatment of them is mandated by another
accounting standard (such as inventory or intangible assets). Costs
to fulfil a contract are expensed, which are in relation to
commissions which are prepaid that until after the start of the
license agreement post development stage.
Attraqt Group has adopted IFRS 15 using the full retrospective
method, there was no adjustment required to either period presented
on transition. Practical expedients used were as follows:
-- Attraqt has not disclosed the allocation of the transaction
price to the remaining performance obligations to either reporting
period or disclosed when the revenue is expected to be recognised;
and
-- Contracts that started and ended within the same reporting period have not been restated
IFRS 9 Financial Instruments
IFRS 9 replaces IAS 39 Financial Instruments: Recognition and
Measurement bringing all three aspects of the accounting together
for financial instruments: classification and measurements;
impairment; and hedge accounting. The only change that impacts the
Attraqt Group is the change in calculation of the expected credit
loss allowance and considerations are discussed below.
Impairment
The adoption of IFRS 9 Financial Instruments from 1 January
2018, resulted in a change of accounting policy however there were
no adjustments required through opening retained earnings.
The Group applies the IFRS 9 simplified approach to measuring
expected credit losses which uses a lifetime expected loss
allowance for all trade receivables. To measure the expected credit
losses, trade receivables have been grouped based on the days past
due. The Group has concluded that the expected loss rates for trade
receivables, are a reasonable approximation of the loss rates for
each ageing category and customer based on historical debt trends
for the last 2 years.
The loss allowance as at 1 January 2018 was determined as
follows for trade receivables:
2018 2017
GBP'000 GBP'000
As at 1 January 112 174
Provision for expected credit losses - -
Written off (41) (62)
Released (40) -
As at 31 December 31 112
There was no material difference in applying IFRS 9 from the
effective date.
Directors have applied the simplified approach to recognise
lifetime ECLs for the Group's trade receivables. This has not
resulted in a increase to the impairment provision upon adoption of
IFRS9. The majority of the invoices are raised in advance and are
subsequently paid within credit terms agreed and going forward
greater judgement is required to factor in forward looking
information when estimating the appropriate amount of provision. In
applying IFRS 9 the Group must consider the probability of default
occurring over the contractual life of its trade receivables.
New standards, interpretations and amendments not applied
As at date of approval of the Group financial statements, the
following new and amended standards, interpretations and amendments
in issue are applicable to the Group but not yet effective and
thus, have not been applied by the Group:
Effective date*
Annual Improvements 2015--2017 Cycle 1 January 2019
IFRS 16 Leases 1 January 2019
Amendments to References to the Conceptual Framework 1 January 2020
in IFRS Standards
Amendments to IFRS 3: Business combinations 1 January 2020
* The effective dates stated above are those given in the
original IASB/IFRIC standards and interpretations. As the Group
prepares its financial statements in accordance with IFRS as
adopted by the European Union (EU), the application of new
standards and interpretations will be subject to their having been
endorsed for use in the EU via the EU Endorsement mechanism. In the
majority of cases this will result in an effective date consistent
with that given in the original standard or interpretation but the
need for endorsement restricts the Group's discretion to early
adopt standards.
(At the date of authorisation of these financial statements,
these standards and interpretation have not yet been endorsed or
adopted by the EU.)
The Directors do not expect the adoption of these standards,
interpretations and amendments to have a material impact on the
Consolidated or Parent Company financial statements in the period
of initial application, except for IFRS 16 Leases.
IFRS 16 Leases
Adoption of IFRS 16 will result in the group recognising right
of use assets and lease liabilities for all contracts that are, or
contain, a lease. For leases currently classified as operating
leases, under current accounting requirements the group does not
recognise related assets or liabilities, and instead spreads the
lease payments on a straight-line basis over the lease term,
disclosing in its annual financial statements the total
commitment.
The group is not advanced in its implementation of IFRS 16, and
therefore, will only recognise leases on balance sheet as at 1
January 2019. In addition, it has decided to measure right-of-use
assets by reference to the measurement of the lease liability on
that date. This will ensure there is no immediate impact to net
assets on that date. At 31 December 2018 operating lease
commitments amounted to GBP538,000. However, further work still
needs to be carried out to determine whether and when extension and
termination options are likely to be exercised, which will result
in the actual liability recognised being higher than this.
Instead of recognising an operating expense for its operating
lease payments, the group will instead recognise interest on its
lease liabilities and amortisation on its right -of-use assets.
This will increase reported EBITDA by the amount of its current
operating lease cost.
3. CRITICAL ACCOUNTING JUDGEMENTS AND ESTIMATES
In the application of the Group's accounting policies, the
Directors are required to make judgements and estimates about the
carrying amounts of assets and liabilities that are not readily
apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors
that are considered to be relevant. Actual results may differ from
these estimates. There were no material judgements or estimates
used on application of IFRS 9 Financial Instruments or IFRS 15
Revenue from contracts with customers, there were no contracts that
straddled year end which required any judgement. The following
accounting policies have been identified as involving particularly
complex judgements or subjective estimates:
Judgements
-- Exceptional items
Judgements are required as to whether items that are material in
size, unusual or infrequent in nature should be disclosed as
exceptional and other material items. Deciding which items meet the
respective definitions requires the Group to exercise its
judgement. Details of these items categorised as exceptional items
are outlined in note 5.
Estimates
-- Share based payments
Share options are recognised as an expense based on their fair
value at date of grant. The fair value of the options is estimated
through the use of a valuation model - which require inputs such as
the risk-free interest rate, expected dividends, expected
volatility and the expected option life - and is expensed over the
vesting period. Some of the inputs used to calculate the fair value
are not market observable and are based on estimates derived from
available data, such as employee exercise behaviour and employee
turnover.
-- Goodwill
Goodwill is tested for impairment annually and whenever events
or changes in circumstances indicate that the carrying amount of
goodwill has been impaired. In order to determine if the value of
goodwill has been impaired, the cash-generating unit to which
goodwill has been allocated must be valued using present value
techniques. When applying this valuation technique, the Company
relies on a number of factors, including historical results,
business plans, forecasts and market data. This is further
described in note 11. As can be deduced from this description,
changes in the conditions for these judgments and estimates can
significantly affect the assessed value of goodwill.
-- Valuation of acquired intangible assets
Intangible assets acquired in a business combination are
required to be recognised separately from goodwill and amortised
over their useful life if they are subject to contractual or legal
rights or are separately transferable and their fair value can be
reliably estimated. The Group has separately recognised the
intangible assets acquired during the acquisition (see note
11).
The fair value of these acquired intangible assets is based on
valuation techniques. The valuation models require input based on
assumptions about the future. The management uses its best
knowledge to estimate fair value of acquired intangible assets as
of the acquisition date. The value of intangible assets is tested
for impairment when there is an indication that they might be
impaired (see below). The management must also make assumptions
about the useful life of the acquired intangible assets which might
be affected by external factors.
-- Capitalisation and impairment of development costs
It is a requirement under IFRS that development costs that meet
the criteria prescribed in the standard are capitalised. The
assessment of each project requires that a judgement is made as to
the commercial viability and the ability of the Group to bring the
product to market. Where there is an event or change in
circumstance in relation to such judgement, the Group must make an
estimate of the expected future economic benefits to determine that
assets are not impaired.
4. SEGMENTAL REPORTING
For the purpose of IFRS 8, the chief operating decision maker
takes the form of the Board of Directors. The Directors' opinion is
that the business of the group is to provide cloud-based e-commerce
solutions. Based on this, there is one reportable segment. The
internal and external reporting is on a consolidated basis with
transactions between group companies eliminated on
consolidation.
2018 2017
GBP'000 GBP'000
Revenue by type
SaaS 15,241 12,307
Services 1,903 1,308
Total Revenue 17,144 13,615
Cost of Sales by type
SaaS 3,660 3,441
Services 1,954 728
Total Cost of Sales 5,614 4,169
---------------------- ------- -------
Gross profit 11,530 9,446
---------------------- ------- -------
There is one customer which contributes more that 10% which is
GBP2.4m of the Groups revenues (2017: 1 customer - contributing
GBP1.9m).
The table below provides an analysis of the Group's revenue by
geographical market where the customer is based.
2018 2017
GBP'000 GBP'000
Geographical split of revenue
UK 9,840 8,702
Europe 6,317 4,093
Rest of the World 987 820
Total Revenue 17,144 13,615
Management have altered the analysis of geographical split of
revenue to bring this in line with internal reporting, in the prior
year the Group reported revenue on geographical location of the
relevant statutory billing entity, the prior year has been restated
.
5. EXCEPTIONAL ITEMS
During 2018, total exceptional costs incurred GBP563,000 (2017:
GBP2,382,000) of which GBP448,000 relates to the change in CEO. The
exceptional costs for 2017 consist of GBP1,655,000 relating to the
legal and professional advisor's fees in respect of acquisition
costs and GBP440,000 of post-acquisition integration
activities.
6. LOSS FROM OPERATIONS
2018 2017
GBP'000 GBP'000
Loss from operations is taken after taking account
of the following items:
Staff costs (see note 7) 9,905 6,630
Depreciation of property, plant and equipment
(see note 10) 62 51
Amortisation of intangible assets (see note 11) 1,586 1,227
Loss on Disposal of fixed assets (see note 10) - 10
Operating lease expense 716 638
Research and Development costs 762 777
Foreign exchange loss 104 33
Audit and non-audit services:
Fees payable to the company's auditors for the
audit of the Group annual accounts:
Group annual accounts 112 150
Fees payable to the company's auditor and its
associates for other services:
Tax services 22 15
Other services 12 295
7. STAFF COSTS
The average number of persons employed by the Group (including
directors) during the year, analysed by category was as
follows:
(No.) 2018 2017
Sales 16 16
Technical 82 78
Management (including directors) 11 13
Administration 24 15
133 122
The average number of full-time equivalent persons employed by
the Group during the year, analysed by category, was as
follows:
(No.) 2018 2017
Sales 16 16
Technical 82 78
Management (including directors) 8 10
Administration 24 15
130 119
The aggregate payroll costs of these persons were as
follows:
2018 2017
GBP'000 GBP'000
Staff costs (including directors) comprise:
Wages and salaries 8,096 5,629
Social security contributions and similar taxes 1,119 736
Pension 255 109
Share Based Payment 435 156
------------------------------------------------ ------- -------
9,905 6,630
Pension costs are in respect of the defined contribution scheme;
unpaid contributions at 31 December 2018 were GBP30,000 (2017:
GBP22,000).
8. TAXATION
2018 2017
GBP'000 GBP'000
Current income tax
Current tax on loss for the year 290 215
Deferred Tax for the year (241) (197)
--------------------------------- ------- -------
49 18
The effective tax assessed for the year, all of which arises in
the UK, differs from the standard weighted rate of corporation tax
in the UK.
The reconciliation of the actual tax charge to that at the
domestic corporation tax rate is as follows:
2018 2017
GBP'000 GBP'000
Loss for the year (2,713) (4,052)
Expected tax charge based on the standard rate
of United Kingdom corporation tax at the domestic
rate of 19.00% (2017 - 19.25%) (515) (780)
Expenses not deductible for tax purposes 261 537
Prior year adjustment (16) -
Fixed asset differences 37 (53)
Unrelieved losses arising in the period 503 639
Additional deduction for R&D expenditure (87) (109)
Surrender of tax losses for R&D tax credit refund 36 48
Utilisation of prior year losses - (133)
Adjustment for different rates of corporation
taxation in overseas jurisdictions 71 66
--------------------------------------------------- ------- -------
Total tax charge 290 215
At 31 December 2018, tax losses estimated at GBP5.3m (2017:
GBP4.1m) were available to carry forward by the Attraqt group,
arising from historic losses incurred. Management believe it is
prudent not to recognise the deferred tax asset until they can be
utilised against future profits.
DEFERRED TAX
GBP'000
At 1 January 2017 -
Acquired through business combinations 1,879
Recognised in profit or loss (197)
-------
At 31 December 2017 1,682
FX movement 16
Recognised in profit or loss (222)
At 31 December 2018 1,476
Categorised as: 2018 2017
GBP'000 GBP'000
Current 222 220
Non-current 1,254 1,462
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply in the period when the asset is
realised or the liability settled, based on tax rates that have
been enacted, or substantively enacted, at the balance sheet
date.
9. LOSS PER SHARE
2018 2017
GBP'000 GBP'000
Numerator
Loss for the year and loss used in basic and diluted
EPS (2,762) (4,070)
Denominator
Weighted average number of shares used in basic
and diluted EPS 106,368,589 92,006,582
Loss per share - basic and diluted (2.6p) (4.4p)
10. PROPERTY, PLANT AND EQUIPMENT
Plant and Fixtures Total
Machinery and Fittings
GBP'000 GBP'000 GBP'000
Cost
At 1 January 2017 230 4 234
Additions 137 - 137
Acquired through business combinations 42 - 42
Disposals (10) - (10)
At 31 December 2017 399 4 403
Additions 70 - 70
Disposals (207) (2) (209)
At 31 December 2018 262 2 264
Depreciation
At 1 January 2017 193 2 195
Charge for the year 51 - 51
At 31 December 2017 244 2 246
Charge for the year 62 - 62
Foreign exchange (4) - (4)
Disposals (207) (1) (208)
At 31 December 2018 95 1 96
Net Book Value
At 1 January 2017 37 2 39
At 31 December 2017 155 2 157
At 31 December 2018 167 1 168
11. INTANGIBLE ASSETS
Customer Existing Software
Goodwill Relationships Technology Trademark Development Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Cost
At 1 January 2017 - - - - 1,249 1,249
Additions - internally developed - - - - 672 672
Acquired through business
combinations 16,582 4,414 4,805 788 - 26,589
Foreign Exchange - (20) (2) - - (22)
---------- -------------- ----------- ----------- ------------ -------
At 31 December 2017 16,582 4,394 4,803 788 1,921 28,488
Additions - internally developed - - - - 696 696
Foreign Exchange 3 45 1 - 16 65
---------- -------------- ----------- ----------- ------------ -------
At 31 December 2018 16,585 4,439 4,804 788 2,633 29,249
Amortisation
At 1 January 2017 - - - - 1,002 1,002
Charge for the period - 421 559 64 183 1,227
Foreign Exchange 3 - - - 3
---------- -------------- ----------- ----------- ------------ -------
At 31 December 2017 - 424 559 64 1,185 2,232
Charge for the period - 318 686 79 503 1,586
Foreign Exchange - (10) - - 9 (1)
---------- -------------- ----------- ----------- ------------ -------
At 31 December 2018 - 732 1,245 143 1,697 3,817
Net Book Value
At 1 January 2017 - - - - 247 247
At 31 December 2017 16,582 3,970 4,244 724 736 26,256
At 31 December 2018 16,585 3,707 3,559 645 936 25,432
The Group is required to test, on an annual basis, whether
goodwill has suffered any impairment. There is only one CGU as
services are tied to SaaS revenue. The recoverable amount is
determined based on value in use calculations. The use of this
method requires the estimation of future cash flows and the
determination of a discount rate in order to calculate the present
value of the cash flows. The (pre-tax) discount rate used to
measure the CGU's value in use was 20.9%.
The carrying amount of goodwill is allocated to the cash
generating units (CGUs) as follows:
2018 2017
GBP'000 GBP'000
Attraqt Group plc 16,585 16,582
The key assumptions used in the estimation of the recoverable
amounts are set out below. The values assigned to the key
assumptions represent management's assessment of future trends in
the relevant industries and have been based on historical internal
data:
2018 2017
Discount rate 20.9% 20.9%
Revenue growth rate 12% 18%
Budgeted EBITDA margin (average of next 5 years) 11% 21%
Terminal growth rate 1.5% 1.5%
The cash flow projections include specific estimates for 5 years
and a terminal growth rate thereafter. The terminal growth rate was
determined based on long term inflation growth rate due to the
expectations of the market in which Attraqt Group plc operates.
The discount rate was a pre-tax measure based on weighted
average cost of capital, with no debt leveraging.
Budgeted EBITDA is estimated by taking into account past
practice as follows:
o Revenue is assumed to grow at 12% based on historical growth
and management's expectations of future trends.
o The cost base is assumed to grow in 2019 with investment in
the Sales function and will then grow on average at 8% over the
next three years.
o The estimated recoverable amount of the CGU exceeds its
carrying amount.
Management has identified that a reasonably possible change in
the following key assumptions could cause the carrying amount to
exceed the recoverable amount. The following table shows the amount
by which the these assumptions would need to change individually
for the estimated recoverable amount to be equal to the carrying
amount.
In percent 2018 2017
Discount rate 26.7 28.3
Revenue growth rate (5.0) 8.5
12. SUBSIDIARY UNDERTAKINGS
As at 31 December 2018, the subsidiaries of Attraqt Group plc,
all of which have been included in these consolidated financial
statements, are as follows:
Proportion Country of
of ownership Incorporation
Name Interest and principal Registered Office
place of business
Attraqt Limited 100% UK 3 Waterhouse Square, 138 Holborn,
London, EC1N 2SW
Attraqt Inc. (1) 100% USA 125 S Clark Street, Chicago,
IL, 60603, USA
Fredhopper BV 100% Netherlands Wework Metropool, Weesperstraat,
61-105 Amsterdam 1018VN
Fredhopper Limited(2) 100% UK 3 Waterhouse Square, 138 Holborn,
London, EC1N 2SW
Spring Technologies 100% Bulgaria Sredets, 1124, 47A, Tsarigradskok
EOOD(2) shosse blvd, bl. B, fl. 2,
apt. 201A
Fredhopper SARL(2) 100% France RCS Paris27 Avenue de l'Opéra,
75001, Paris, France
Fredhopper GmbH(2) 100% Germany Neuer Wall 63, 20354 Hamburg,
Germany
Fredhopper (Australia) 100% Australia Level 19, 207 Kent St, Sydney
Pty Limited(2) NSW 2000
1 - Held through Attraqt Limited
2 - Held through Fredhopper BV
13. TRADE AND OTHER RECEIVABLES
2018 2017
GBP'000 GBP'000
Trade receivables 4,131 4,014
Less: expected credit losses (31) (112)
------- -------
Trade receivables - net 4,100 3,902
Prepayments and accrued income 687 515
Other receivables 149 126
---------------------------------- ------- -------
Total trade and other receivables 4,936 4,543
Trade receivables comprise amounts due from customers for goods
sold or services performed in the ordinary course of business.
Invoices to customers are settled within 45 days of the date of
issue. The ageing of trade receivables is shown below and shows
amounts that are past due at the reporting date. A provision for
expected credit losses has been recognised at the reporting date
through consideration of the ageing profile of the Group's
receivables and the perceived credit quality of its customers.
The Group applies the IFRS 9 simplified approach to measuring
expected credit losses using lifetime expected loss rates, these
have been derived from historical default rates or the Group,
adjusted for credit quality of each customer and forward looking
estimates where applicable.
Financial Assets held at amortised cost
2018 2017
GBP'000 GBP'000
As at 1 January 112 174
Write off (41) (62)
Released (40) -
As at 31 December 31 112
14. CASH AND CASH EQUIVALENTS
2018 2017
GBP'000 GBP'000
Cash at bank 509 1,636
------- -------
15. SHARE CAPITAL AND RESERVES
Allocated, called up and fully paid
2018 2018 2018 2017 2017 2017
GBP'000 GBP'000 GBP'000 GBP'000
Number Share capital Share Premium Number Share capital Share Premium
of Shares of Shares
Ordinary shares of GBP0.01
each
At 1 January 106,368,589 1,063 30,108 26,942,340 269 4,253
Shares issued for cash
during the year - - - 79,426,249 794 25,855
----------- ------------- ------------- ----------- ------------- -------------
At 31 December 106,368,589 1,063 30,108 106,368,589 1,063 30,108
=========== ============= ============= =========== ============= =============
In 2017, the Company raised GBP27,799,000, before expenses, by a
private placing of 78,572,000 1p Ordinary shares at 35p, and a
further 854,249 1p Ordinary shares by an open offer to qualifying
shareholders at 35p on 8 March 2017.
16. SHARE BASED PAYMENTS
The company operates two equity-settled share based remuneration
schemes for employees: a United Kingdom tax authority approved
scheme and an unapproved scheme for executive directors and certain
senior management. Both options are valid for 10 years from the
date of grant. After satisfaction of any performance condition
included in the award the options will become exercisable on the
earlier of any of the following events:
-- The third anniversary of the date of grant;
-- On a change of Control of the Company as defined in the Plan rules;
-- On a Sale or Disposal of the Company as defined in the Plan rules; or
-- Following the exercise of discretion by the Board.
Details of the number of share options and the weighted average
exercise price outstanding during the year are as follows:
2018 WAEP 2017 WAEP
Number Price (pence) Number Price (pence)
Outstanding at the beginning of the year 6,794,897 36.97 2,702,569 40.86
Granted during the year 4,254,743 32.00 4,254,740 35.00
Forfeited during the year (618,524) 43.15 (162,412) 50.00
Outstanding at the end of the year 10,431,116 34.80 6,794,897 36.97
---------- ------------- --------- -------------
Exercisable at the year end 2,361,472 39.54 1,341,680 31.59
The options outstanding at the year-end are set out below:
2018 2017
Share options Remaining Share options Remaining
life life
Date of Grant Expiry Date Exercise Price (Number) (Years) (Number) (Years)
(p)
24-Jul-13 24-Jul-23 31.59 986,500 5 986,500 6
29-May-14 29-May-24 31.59 177,590 6 177,590 7
19-Aug-14 19-Aug-24 31.59 177,590 6 177,590 7
25-Sep-15 25-Sep-25 50.00 1,019,792 7 1,198,477 8
15-Dec-17 15-Dec-27 35.00 3,722,898 9 4,254,740 10
25-May-18 25-May-28 31.50 3,191,058 10 - -
06-Aug-18 06-Aug-28 33.50 1,063,685 10 - -
The company uses a Black Scholes model to estimate the fair
value of share options.
The following information is relevant in the determination of
the fair value of options granted. The assumptions inherent in the
use of this model are as follows:
-- The option life is the estimated average period over which the options will be exercised.
-- There are no vesting conditions remaining which apply to the
share options other than that they vest at the earlier of 3 years'
continued service with the Group.
-- No variables change during the life of the option (e.g. dividend yield remains zero).
-- Volatility has been calculated over a 3 year period prior to the grant date.
-- Expectations of staff retention over the vesting period have
been calculated by reference to the three year period prior to the
grant date.
Details of the share options granted as follows:
Grant date 06-Aug-18 22-May-18 15-Dec-17
Option pricing model Black Scholes Black Scholes Black Scholes
Number of shares 1,063,685 3,191,058 4,254,740
Fair Value per share at grant date 15.1p 17.5p 14.1p
Share price on grant date 33.5p 36.0p 33.5p
Exercise price (GBP) 33.5p 31.5p 35.0p
Weighted average contractual life 3 years 3 years 3 years
Staff retention rate - - 95%
Risk-free interest rate 0.810% 0.611% 0.516%
Volatility 68% 68% 65%
Total Fair Value (GBP) 160,648 558,627 566,739
The total expense recognised during the year by the Group, for
all schemes, was GBP435,000 (2017: GBP156,000). The weighted
average remaining life of the options outstanding at the end of the
year was 8.4 years (2017: 7.8 years). No options were exercised
during the year.
17. TRADE AND OTHER PAYABLES
2018 2017
GBP'000 GBP'000
Trade payables 775 399
Accrued and other payables 649 557
Other taxes 490 289
Deferred tax 222 283
Deferred income 5,196 4,848
Employee benefits and taxes 854 847
------------------------------- ------- -------
Total Trade and other payables 8,186 7,223
18. COMMITMENTS
The total future value of minimum lease payments is due as
follows:
2018 2017
GBP'000 GBP'000
Not later than one year 418 479
Later than one year and not later than five years 120 -
Later than five years - -
-------------------------------------------------- ------- -------
538 479
19. FINANCIAL RISK MANAGEMENT AND IMPAIRMENT OF FINANCIAL ASSETS
The Group is exposed through its operations to the following
financial risks:
-- Credit risk
-- Foreign exchange risk
-- Liquidity risk
In common with all other businesses, the Group is exposed to
risks that arise from its use of financial instruments. This note
describes the Group's objectives, policies and processes for
managing those risks and the methods used to measure them. Further
quantitative information in respect of these risks is presented
throughout these financial statements.
There have been no substantive changes in the Group's exposure
to financial instrument risks, its objectives, policies and
processes for managing those risks or the methods used to measure
them from previous periods unless otherwise stated in this
note.
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
A summary of the financial instruments held by category is
provided below.
Financial assets at amortised cost 2018 2017
Current GBP'000 GBP'000
Trade receivables 4,100 3,902
Other receivables 149 235
4,249 4,137
----------------------------------- ------- -------
Cash and cash equivalents 509 1,636
All financial assets held by the Group at 31 December 2018 are
classified as cash and cash equivalents or loans and receivables
and there is no difference between the carrying amount and the fair
value.
Financial liabilities at amortised cost 2018 2017
Current GBP'000 GBP'000
Trade payables 775 399
Other payables 649 557
1,424 956
---------------------------------------- ------- -------
All financial liabilities held by the Group at 31 December 2018
are classified as held at amortised cost.
General objectives, policies and processes
The Board has overall responsibility for the determination of
the Group's risk management objectives and policies and, whilst
retaining ultimate responsibility for them, it has delegated the
authority for designing and operating processes that ensure the
effective implementation of the objectives and policies to the
Company's Chief Executive Officer. The Board receives reports from
the Company Chief Financial Officer through which reviews the
effectiveness of the processes put in place and the appropriateness
of the objectives and policies it sets.
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:
Credit risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations. The Group is mainly exposed to credit
risk from credit sales. It is Group policy, implemented locally, to
assess the credit risk of new customers before entering contracts.
Such credit ratings take into account local business practices. The
carrying amount of financial assets represents the maximum
exposure. The credit quality of all financial assets that are
neither past due nor impaired is high. In accordance with internal
policy, Attraqt promptly identifies the deterioration of the
financial condition for our customer base by monitoring the credit
ratings and publicly available information. The risk is not
expected to be material as payment is generally received in advance
of services and good provided.
If credit risk has increased since initial recognition, then the
loss allowance would be adjusted for the expected credit loss over
the lifetime. If there are significant changes in economic or other
conditions, the expected loss rates would be adjusted for the
forecast of present and future economic situations.
Credit risk also arises from cash and cash equivalents and
deposits with banks and financial institutions. For banks and
financial institutions, only independently rated parties with
minimum rating "A" are accepted.
Further disclosures regarding trade and other receivables are
provided in note 13.
Foreign exchange risk
Foreign exchange risk arises when the group entities enter into
transactions denominated in a currency other than the functional
currency. The Group's policy is, where possible, to allow entities
to settle liabilities denominated in their functional currency with
the cash generated from their own operations in that currency.
In order to monitor the continuing effectiveness of this policy,
the CFO reviews a monthly forecast, analysed by the major
currencies held by the Group, of liabilities due for settlement and
expected cash reserves.
Transaction risk
The Group's material transaction exposure arises on costs
denominated in currencies other than the functional currency of the
Group, including salaries and our hosting platform. This is managed
by selling and buying Euro's and US dollars as and when required by
the Group throughout the year. Foreign currencies are not
hedged.
Translation risk
Changes in exchange rates also affect the Group's income in
connection with the translation of income statements of foreign
subsidiaries into GBP. Attraqt Group does not hedge this
exposure.
Liquidity risk
Liquidity risk arises from the Group's management of working
capital. The Group manages the risk that it will encounter
difficulty in meeting its financial obligations as they fall due by
forecasting its short-term cash position on a regular basis.
The Group's policy is to ensure that it will always have
sufficient cash to allow it to meet its liabilities when they
become due. To achieve this aim, it seeks to maintain cash balances
(or agreed facilities) to meet expected requirements for a period
of at least 30 days.
The Board receives rolling 12-month cash flow projections on a
quarterly basis as well as information regarding cash balances. At
the end of the financial year, these projections indicated that the
Group expected to have sufficient liquid resources to meet its
obligations under all reasonably expected circumstances.
In the management of liquidity risk, the group monitors and
tries to maintain a level of cash and cash equivalents deemed
adequate by management to finance the Group's operations and
mitigate the effects of fluctuations in cash flows.
The following table sets out the contractual maturities
(representing undiscounted contractual cash-flows) of financial
liabilities:
2018 GBP'000 Up to 3 3 - 12 1 - 2 years 2 - 5 years Over 5
months months years
Trade and other payables 1,424 - - - -
1,424 - - - -
------------------------- ------- ------- ----------- ----------- ------
2017 GBP'000 Up to 3 3 - 12 1 - 2 years 2 - 5 years Over 5
months months years
Trade and other payables 930 26 - - -
930 26 - - -
------------------------- ------- ------- ----------- ----------- ------
20. RELATED PARTY TRANSACTIONS
During the year Group companies entered into the following
transactions with related parties who are not members of the
Group.
Purchase of services Amounts owed to
related parties
2018 2017 2018 2017
GBP'000 GBP'000 GBP'000 GBP'000
Azini Capital Partners(1) 103 40 - -
Azini Capital Partners(2) 29 8 - -
Azini Capital Partners(3) - 75 - -
Director's spouse(4) - 8 - -
Taylor Wessing(5) 40 40 12 -
Taylor Wessing(6) 55 462 12 -
-------------------------- ---------- ---------- -------- --------
1. Azini Capital Partners - Nick Habgood is a partner in Azini
Capital Partners, and his Directors fees were paid to Azini
Capital.
2. Azini Capital Partners - Nick Habgood's daughter is employed
by the Group and was paid a salary as an Account Manager.
3. Azini Capital Partners - Nick Habgood was paid a fee for his
contribution during the Fredhopper transaction.
4. Andre Brown's spouse was paid a salary as Event Co-ordinator,
but left the company in June 2017.
5. Robert Fenner is a partner in Taylor Wessing LLP, and his
Directors fees were paid to Taylor Wessing LLP.
6. During the current year Taylor Wessing provided various legal
and professional fees, in the prior period, the fees were in
relation to the Fund raising and acquisition of Fredhopper BV.
Details of the directors' emoluments, together with the other
related information, are set out in the Report of the Remuneration
Committee.
Key Management personnel
Key management personnel are those persons having authority and
responsibility for planning, directing and controlling activities
of the Group, which comprises only the directors of the
company.
2018 2017
GBP'000 GBP'000
Salary, Director fees, bonus and benefits in kind 828 819
Share based payments 257 4
1,085 823
The Employer's National Insurance contributions expensed in the
period relevant to the Key management personnel compensation was
GBP88,000 (2017: GBP86,000).
21. EVENTS AFTER THE REPORTING PERIOD
There are no events arising after the reporting date that
require recognition or disclosure in the financial statements for
the year ended 31 December 2018.
Company Statement of Financial Position
For the year ended 31 December 2018
Notes 2018 2017
GBP'000 GBP'000
Non-current assets
Investments 2 24,405 23,970
Total non-current assets 24,405 23,970
---------------------------- ----- ------- -------
Current assets
Trade and other receivables 3 4,660 4,978
Total current assets 4,660 4,978
---------------------------- ----- ------- -------
Total assets 29,065 28,948
---------------------------- ----- ------- -------
Current Liabilities
Trade and other payables 4 126 100
Total current liabilities 126 100
---------------------------- ----- ------- -------
Net Assets 28,939 28,848
Equity
Share capital 5 1,064 1,064
Share premium 5 30,108 30,108
Share based payment 6 1,238 803
Retained earnings (3,471) (3,127)
---------------------------- ----- ------- -------
Total equity 28,939 28,848
The information contained this preliminary results announcement
has been prepared on the basis of the accounting policies which
have been set out in the Group's financial statements for the year
ended 31 December 2018 and do not constitute statutory financial
statements within the meaning of section 434 of the Companies Act
2006.
The financial statements for the year ended 31 December 2017
which were prepared in accordance with International Financial
reporting Standards (IFRS) as adopted by the EU have been reporting
on by the Group's auditors and delivered to the Registrar of
Companies. The report of the auditors was unqualified and did not
draw attention to any matters by what of emphasis and did not
contact statements under Section 498 (2) or (3) of the Companies
Act 2006. The statutory financial statements for the year ended 31
December 2018 have been finalised on the basis of the financial
information presented by the directors in this preliminary
announcement. The auditors have issued an unmodified opinion in
respect of the year ended 31 December 2018.
Company income statement
As permitted by Section 408 of the Companies Act 2006, the
income statement of the parent company is not presented as part of
these financial statements. The parent company's result after
taxation for the financial year was a loss of GBP344,000 (2017:
loss GBP2,330,000).
The accompanying accounting policies and notes form an integral
part of these financial statements.
Eric Dodd
Director
Date: 13 February 2019
Company Statement of Changes in Equity
For the year ended 31 December 2018
Share Share Share Retained Total
Capital premium based earnings
payment
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 January 2017 269 4,253 647 (797) 4,372
Loss for the year - - - (2,330) (2,330)
Total comprehensive loss for the year - - - (2,330) (2,330)
Contributions by and distributions
to owners
Share based payment charge - - 156 - 156
Shares issued 795 27,005 - - 27,800
Issue costs - (1,150) - - (1,150)
Total contributions by and distributions
to owners 795 25,855 156 - 26,805
----------------------------------------- -------- -------- -------- --------- -------
Balance at 31 December 2017 1,064 30,108 803 (3,127) 28,848
----------------------------------------- -------- -------- -------- --------- -------
Loss for the year - - - (344) (344)
Total comprehensive loss for the year - - - (344) (344)
----------------------------------------- -------- -------- -------- --------- -------
Contributions by and distributions
to owners
Share based payment charge - - 435 - 435
----------------------------------------- -------- -------- -------- --------- -------
Total contributions by and distributions
to owners - - 435 - 435
----------------------------------------- -------- -------- -------- --------- -------
Balance at 31 December 2018 1,064 30,108 1,238 (3,471) 28,939
----------------------------------------- -------- -------- -------- --------- -------
Notes to the Company Financial Statements
For the year ended 31 December 2018
1. ACCOUNTING POLICIES
Basis of preparation
The company financial statements have been prepared in
accordance with Financial Reporting Standard 100 Application of
Financial Reporting Requirements and Financial Reporting Standard
101 Reduced Disclosure Framework.
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.
The financial statements have been prepared under the historical
cost convention and are in accordance with applicable accounting
standards. The following principal accounting policies have been
applied.
Expense recognition
Expenditure is reported on an accruals basis. Operating expenses
are recognised in the income statement upon utilisation of the
service or at the date of their origin.
Financial Instruments
The Company has implemented IFRS 9, which has resulted in the
following accounting policy changes, there has been no impact on
the classification of Financial Instruments it is purely a change
in terminology.
Financial assets
Debt instruments at amortised cost - loans and receivables
The Company's other receivables comprise of loans and other
receivables in the statement of financial position. These are
measured at amortised cost.
Impairment
The Company assess all other current receivables on a forward
looking basis, with expected credit losses associated with debt
instruments measured at amortised cost. These are deemed short term
(i.e., less than 12 months) and apply the Group policy for credit
rating and risk management policies in place.
The impairment stages are defined as:
Stage 1 - When a receivable is recognised, ECLs resulting from
default events that are possible within the next 12 months are
expensed to the statement of comprehensive income (12-month ECL)
and a loss allowance is established. On subsequent reporting dates,
12-month ECL also applies to existing receivables with no
significant increase in credit risk since their initial
recognition. In determining whether a significant increase in
credit risk has occurred since initial recognition, the Company
assesses the change, if any, in the risk of default over the
expected life of the receivable (that is, the change in the
probability of default, as opposed to the amount of ECLs).
Stage 2 - If the receivables credit risk has increased
significantly since initial recognition and is not considered low,
lifetime ECLs are recognised.
Stage 3 - If the receivables credit risk increases to the point
where it is considered credit-impaired, lifetime ECLs are
recognised, as in Stage 2.
The impairment methodology applied for the Company is stage 1,
which require 12 month expected credit losses to be recognised
until a change in credit risk occurs in which case stage 2 would
apply.
Financial liabilities
Other financial liabilities
Other financial liabilities include trade payables and other
short-term monetary liabilities, which are initially recognised at
fair value and subsequently carried at amortised cost using the
effective interest method.
Disclosure exemptions adopted
In preparing these financial statements the company has taken
advantage of all disclosure exemptions conferred by FRS 101.
Therefore, these financial statements do not include:
-- certain comparative information as otherwise required by EU endorsed IFRS;
-- certain disclosures regarding the company's capital;
-- a statement of cash flows;
-- the effect of future accounting standards not yet adopted;
-- the disclosure of the remuneration of key management personnel; and
-- disclosure of related party transactions with other wholly
owned members of the group headed by Attraqt Group plc.
ACCOUNTING JUDGEMENTS AND ESTIMATES
In the application of the Company's accounting policies, the
Directors are required to make judgements and estimates about the
carrying amounts of assets and liabilities that are not readily
apparent from other sources. The estimates and associated
assumptions are based on historical experience and other factors
that are considered to be relevant. Actual results may differ from
these estimates. There were no material judgements or estimates
used on application of IFRS 9 Financial Instruments or IFRS 15
Revenue from contracts with customers, there were no contracts that
straddled year end which required any judgement. The following
accounting policies have been identified as involving particularly
complex judgements or subjective estimates:
Estimates
-- Share based payments
Share options are recognised as an expense based on their fair
value at date of grant. The fair value of the options is estimated
through the use of a valuation model - which require inputs such as
the risk-free interest rate, expected dividends, expected
volatility and the expected option life - and is expensed over the
vesting period. Some of the inputs used to calculate the fair value
are not market observable and are based on estimates derived from
available data, such as employee exercise behaviour and employee
turnover.
-- Investments
The Company's investments in subsidiaries are carried at cost
less provisions resulting from impairment. In testing for
impairment, the carrying value of the investment is compared to its
recoverable amount, being its value-in-use.
2. INVESTMENTS
2018 2017
GBP'000 GBP'000
As at 1 January 23,970 808
Additions 435 23,162
As at 31 December 24,405 23,970
On 8 March 2017, the Company acquired 100% of the issued equity
instruments of Fredhopper BV from SDL Netherlands BV a subsidiary
of SDL plc. Initial investment was GBP23,005,000.
As at 31 December 2018, the subsidiaries of Attraqt Group plc,
all of which have been included in these consolidated financial
statements, are as follows:
Proportion Country of
of ownership Incorporation
Name Interest and principal Registered Office
place of business
Attraqt Limited 100% UK 3 Waterhouse Square, 138 Holborn,
London, EC1N 2SW
Attraqt Inc. (1) 100% USA 125 S Clark Street, Chicago,
IL, 60603, USA
Fredhopper BV 100% Netherlands Wework Metropool, Weesperstraat,
61-105 Amsterdam 1018VN
Fredhopper Limited(2) 100% UK 3 Waterhouse Square, 138 Holborn,
London, EC1N 2SW
Spring Technologies 100% Bulgaria Sredets, 1124, 47A, Tsarigradskok
EOOD(2) shosse blvd, bl. B, fl. 2,
apt. 201A
Fredhopper SARL(2) 100% France RCS Paris27 Avenue de l'Opéra,
75001, Paris, France
Fredhopper GmbH(2) 100% Germany Neuer Wall 63, 20354 Hamburg,
Germany
Fredhopper (Australia) 100% Australia Level 19, 207 Kent St, Sydney
Pty Limited(2) NSW 2000
1 - Held through Attraqt Limited
2 - Held through Fredhopper BV
3. OTHER RECEIVABLES
2018 2017
GBP'000 GBP'000
Amounts owed by group undertakings 4,530 4,915
Prepayments 24 47
Other receivables 106 15
4,660 4,977
The fair values of other receivables are not materially
different to their carrying values.
4. TRADE AND OTHER PAYABLES
2018 2017
GBP'000 GBP'000
Trade payables 30 39
Other payables 96 61
126 100
All financial liabilities held by the Company at the end of the
reporting period are classified as held at amortised cost.
5. SHARE CAPITAL
Allocated, called up and fully paid
2018 2018 2018 2017 2017 2017
GBP'000 GBP'000 GBP'000 GBP'000
Number Share capital Share Premium Number Share capital Share Premium
of Shares of Shares
Ordinary shares of GBP0.01
each
At 1 January 106,368,589 1,064 30,108 26,942,340 269 4,253
Shares issued for cash
during the year - - - 79,426,249 795 25,855
----------- ------------- ------------- ----------- ------------- -------------
At 31 December 106,368,589 1,064 30,108 106,368,589 1,064 30,108
=========== ============= ============= =========== ============= =============
In 2017, the Company raised GBP27,799,000, before expenses, by a
private placing of 78,572,000 1p Ordinary shares at 35p, and a
further 854,249 1p Ordinary shares by an open offer to qualifying
shareholders at 35p on 8 March 2017.
6. SHARE BASED PAYMENTS
For details of the share based payments please refer to the
Group note 16.
7. FINANCIAL INSTRUMENTS
2018 2017
GBP'000 GBP'000
Current
Other receivables 4,530 4,915
------------------------------- ------- -------
Total loans and receivables 4,530 4,915
Other payables 126 100
Total trade and other payables 126 100
8. EMPLOYEES
The company had no employees during the period (2017: none).
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR LFFSLFFIVLIA
(END) Dow Jones Newswires
February 14, 2019 02:00 ET (07:00 GMT)
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