TIDMCBUY
RNS Number : 4300T
Cloudbuy PLC
20 March 2019
Correction: The announcement released at 7 a.m. today had a
typographical error in the title stating the year as 2019, this has
been corrected to 2018.
cloudBuy plc
("cloudBuy" or the "Company")
Final Results for the year ended 31 December 2018, Funding
Update, Share Incentives, Directorate Change and AGM date
1. Final results for the year ended 31 December 2018
-- Revenue for the year was GBP1,108,547, a reduction of 26% on
2017. This reduction was due to a number of existing customers not
renewing in 2017 and 2018. Project revenue continues to be earned
from contracts won in 2016 but at a lower level than in 2017 as the
projects are now live and operational. Revenue from Company
Formations reduced by 15% in the year.
-- Operating loss excluding share-based payments was
GBP1,645,323, a reduction of 25% on 2017, as a result of cost
reductions which have offset the reduction in revenue.
-- For 2019, the business will continue to focus on generating
revenue from existing customers with a particular focus on the
PHBChoices UK Care Marketplace.
-- Cash at 31 December 2018 was GBP790,989, a reduction of
GBP1,668,923 in the year. No funding was raised in the year.
2. Funding Update
In the Trading Update issued on 8 February 2019, we stated that
the Company is engaged in 2 opportunities which if won would enable
the Company to reach cash flow break even without further funding.
One of these opportunities is still viewed as having a good
likelihood of success, the other is now unlikely. As a consequence,
the company has agreed to drawdown GBP500,000 from the existing
facility with Roberto Sella, to be received in March 2019, with a
potential further drawdown of GBP250,000 if the current likely
opportunity does not materialise. The Board believe that this
should provide adequate financing to enable the Company to achieve
cash flow break even
3. Issue of Share Incentives
i. Share Options
-- An issue of share options has been approved by the
Remuneration Committee and with the agreement of Roberto Sella.
These are designed to act as a retention incentive. The details are
as follows.
-- David Gibbon will be awarded up to 3,406,927 options,
representing approximately 1% of the diluted share capital, subject
to the maximum exercise value being no more than GBP131,542, with
an exercise price set at the closing price on 20 March 2019.
-- Certain key technical staff will receive a total of 1,100,000
options, with an exercise price set at the closing price on 20
March 2019.
-- Vesting will be 33.3% after 1 year and then monthly in equal
amounts for the following 24 months.
ii. Incentive Shares
-- GBP1,000 of cloudBuy shares will be awarded to all UK
employees under the Group's HMRC approved scheme issued at the
closing price on 20 March 2019.
-- Vesting will be after 3 years.
-- The executive directors will decline this award.
4. Directorate Change
Patrick Broughton, Senior Non-Executive Director has given
notice that, due to personal commitments, he intends to resign from
the Board after the publication of the Annual Report and Accounts.
David Chellingsworth will take up the position as Senior
Non-Executive Director. A suitable replacement is currently being
sought.
5. Publication of Report and Accounts and AGM notice
The report and accounts for the year ended 31 December 2018 and
notice of Annual General Meeting ("AGM") will be distributed to
shareholders today and will also be available on the website:
investor.cloudbuy.com.
6. AGM Date
The Company's AGM will be held on 16 April 2019 at 11.00 am at
its registered office, 5 Jupiter House, Calleva Park, Aldermaston,
Berkshire RG7 8NN.
7. Extract from Annual Report and Accounts 2018
The information included below is an extract from the Report and
Accounts for 2018.
For further information, please contact:
cloudBuy plc Tel: 0118 963 7000
David Gibbon, CFO
Arden Partners plc - NOMAD and broker Tel: 020 7614 5900
Paul Shackleton/ Daniel Gee-Summons - Corporate
Finance
Simon Johnson - Corporate Broking
About cloudBuy plc
cloudBuy, (AIM: CBUY), provides cloud solutions for buyers and
sellers - and brings them together to trade securely and ethically
via an increasing number of public eMarketplaces and private
purchasing portals around the world, powered by cloudBuy
technology. cloudBuy solutions for buyers help B2B purchasers
understand and control their spend, to reduce costs and increase
value. Our cloudSell solutions enable sellers of all sizes, from
startups to corporates, reach new customers and grow their
business.
cloudBuy's technology platform powers web sites, public
marketplaces and private purchasing portals that enable all types
of online interactions and relationships including, citizen and
business to government; consumer to business; and business to
business.
For more information, visit: www.cloudbuy.com .
Extract from Annual Report and Accounts 2018
Chairman's Statement
During 2018 we have continued to focus on PHBChoices with some
additional development to meet the emerging needs of CCGs, as they
implemented PHBChoices for the management of their Personal Budget
Holders. We increased the number of CCGs contracting to use
PHBChoices, but their move to full roll out was slower than
anticipated as they had to deal with conflicting priorities.
Early 2019 has seen a significant change in engagement from
contracted and new CCGs, as they face the introduction of PHBs as
the default offer for all Continuing Healthcare (CHC) patients from
1st April 2019, the extension of PHBs into Mental Health and
Wheelchair provision and the requirement to cut their
administration budgets by 20%.
The NHS 10 Year Plan has confirmed that PHBs remain a key
strategic imperative for the NHS with up to 200,000 budget holders
anticipated by 2023/24.
This continuing emphasis on the importance of growth in Personal
Health Budgets within the NHS gives us confidence that strong
revenue growth for PHBChoices will be delivered in 2019.
Our existing ecommerce customers in the UK, Canada, Singapore
and Australia continued to produce revenue with which we expect
will continue at a similar level during 2019.
The move to profit and cash flow break even remains our
priority, we have continued to make cost and efficiency savings and
have reduced our operating loss by 27%. This lower cost base
ensures that the increasing revenues from PHBChoices will have a
greater impact on the bottom line during 2019.
We are delighted that Roberto Sella has committed to fund the
business for up to GBP750,000 with further drawdowns from the
December 2017 Convertible Loan Facility. Of this, GBP500,000 will
be received in March 2019 and a further up to GBP250,000 which will
be drawn if a specific alternative fund raising opportunity is not
successful.
Patrick Broughton, our Senior Non-Executive Director, will be
retiring after 5 years following the publication of these accounts.
I would like to take this opportunity to thank Patrick for all of
his input to the board and to wish him the very best of luck as he
competes in some of the World's most challenging sailing races over
the next six months. We are currently seeking a suitable
replacement. We are delighted that David Chellingsworth is
available to take on the role of Senior Non-Executive Director.
Strategic Report
Operational highlights
UK
PHBChoices
PHBChoices our solution for the management of Personal Health
Budgets (PHBs) remains our major focus for growth. Local NHS
bodies, the Clinical Commissioning Groups (CCGs) have continued to
contract with PHBChoices during 2018, however they have had
conflicting priorities and the implementation of PHBs has been
lower on their agenda than anticipated.
Many CCGs have had arrangements where they contracted management
of their PHBs to their Local Authority to manage and pay. Austerity
has been widely reported to have caused a crisis in Social Care and
with pressure on resources, the ability of Local Authorities to
manage and audit PHBs to the standard expected by the NHS has
diminished.
When a CCG uses a 3rd party such as a Local Authority to manage
their PHBs, the individuals receive a 'direct payment' into their
bank account each month. The average PHB budget on our system
remains constant at around GBP70k per annum. The budget holders are
responsible for managing these funds in line with their support
plan and, as the majority directly employ their own care staff,
they must also manage timesheets, rostering, payroll and payments
to HMRC and pension providers.
Auditing this spend is time consuming and onerous for the CCG as
it is predominantly paper based. The PHB holders produce receipts,
bank statements, timesheets and other documents which must be
physically audited by CCG staff. With pressure on resources these
audits can be very infrequent. CCGs are increasingly taking back
control of their PHBs and PHBChoices provides much greater
visibility of spend and activity in real time. Our live CCGs have
made significant savings following the implementation of
PHBChoices.
PHBChoices ensures that the funds remain in the NHS bank account
until they are paid over to the relevant suppliers and CCG staff
can check the conduct of the account at any time. This level of
visibility has helped both the CCG and the budget holders to manage
their money better and has highlighted where more care is required
and budgets need to be increased, as well as where surpluses are
building up and the care requirement has reduced.
These findings from our early adopters have been instrumental in
increasing interest in PHBChoices and along with greater pressure
from NHS England, are increasing uptake. Local Authorities have
also been contacting PHBChoices around integrated care and there is
renewed interest in using the entire system to help them to drive
cash and efficiency savings.
Overall, the level of interest and activity from CCGs has
increased significantly in 2019 and we expect this will lead to
revenue growth in 2019 and beyond.
Other UK Customers
We have continued to experience reduced revenue from UK
ecommerce and legacy customers in 2018. However, we expect this to
be flat in 2019 as reductions in legacy customer revenue is offset
by increases from ecommerce customers.
The Company Formations business continued its downward trend in
revenue due to increasing competition from larger competitors.
Asia Pac
Our project with United Overseas Bank (UOB) in Singapore has
continued to progress with revenue from ongoing SaaS licence
hosting and support supplemented by development work for a number
of suppliers. This project continues to be profitable while we wait
for transaction revenue to materialise.
The New South Wales HealthShare project for spend analytics has
continued to supply meaningful spend date for their 33
hospitals.
North America
The project with York Schools is now generating some transaction
revenues to supplement recurring revenue. This customer is a strong
reference for cloudBuy in the Ontario Schools market.
We are delighted to have won our second contract in Ontario
Schools with Waterloo Catholic District Schools Board signing in
2019. The revenue model is similar to York Schools with software
licence, implementation and support supplemented by transaction
fees.
Cost and Operational Efficiencies
The business has been simplified in 2016 and 2017 and for 2018
only has sales and marketing costs in countries where there is
sufficient revenue to show a profit for the country before the
allocation of central overheads. Further cost reductions have
continued in the second half of 2018.
Funding
Roberto Sella has committed to fund the business for up to
GBP750,000 from the existing Convertible Loan Note facility. Of
this amount GBP500,000 will be received in March 2019.
Board Composition
As stated in the chairman's Statement, Patrick Broughton will
resign after publication of this report. The position of Senior
Non-Executive Director is being taken by David Chellingsworth and
we are seeking a suitable replacement Non-Executive Director.
Research and Development
Investment in the Group's products to enhance Intellectual
Property is a key foundation of future growth. Research and
Development principally represents the cost of employee time spent
on new products and features. Investment in Research and
Development increased slightly in the year to
GBP579,723 from GBP575,261 in 2017.
Financial Results
In the year ended 31 December 2018, the group's revenue
decreased by 26% to GBP1,108,547 (2017: GBP1,504,067) and the loss
before taxation reduced to GBP2,316,749 (2017: loss of
GBP2,747,599).
Sales of Web and ecommerce services decreased 30% to GBP750,794
(2017: GBP1,067,308).
Revenue from company formation services decreased by 16% to
GBP317,653 (2017: GBP376,818) in the year reflecting Companies
House's continued increase in market share in electronic
formations.
Revenue from coding customers decreased by 33% to GBP40,100
(2017: GBP59,941).
Gross margin for the year was 82% (2017: 85%), reflecting the
change in mix with a higher decrease in Web and ecommerce services
which have a higher gross margin.
Operating expenses before share based payments reduced to
GBP2,556,130 (2017: GBP3,462,787). The reduction is as a result of
management action to improve efficiency and reduce costs with staff
costs (excluding share based payments) reducing year on year by
GBP596,620 to GBP1,618,462. A total of GBP72,495 was charged as
share based payments, representing the calculated "cost" of share
options granted to employees and shares issued to them under the
Share Incentive Plan (2017: charge GBP164,352).
At 31 December 2018 the Group had cash and cash equivalents of
GBP790,989 (31 December 2017: GBP2,459,912).
Risks and Uncertainties facing the Business
Effectively managing risks is an integral part of cloudBuy's
business. The Group has identified its main risks and is taking
appropriate action to manage and mitigate these risks. The Group
now operates principally in the UK which has reduced risk when
compared to previous years. Business Risks that have been
identified and managed are detailed below. The Directors review and
agree policies for managing each of these risks. Risks relating to
Financial Instruments are detailed in note 20 to the accounts.
The Group operates secure systems where information security is
a key requirement
There is an ongoing risk of information security. We have well
established systems that have been operating successfully since
1999 to manage and mitigate this risk. A single incident could
result in severe reputational and monetary damage to the company
and its shareholder value and we continue our work to prevent this
from occurring using our internal processes and external audit to
ISO 9001 (business processes), ISO 27001(Information Security) and
PCI/DSS level 1 (highest level accreditation for Payment Card
Industry Data Security Standard). Our solutions are built with data
protection as a core tenant and are GDPR compliant.
There is a risk that there will be a lack of demand for the
Group's products and services
The Group has a diversified product suite which sells to a
number of different sectors which are well established, therefore
reducing risk. The number of products sold has been reduced in 2018
so allowing a greater focus on the remaining products, giving them
a greater chance of success. PHBChoices, the Group's main product
for growth is positioned in a market segment which is predicted to
show strong demand.
There is a risk that there will be a lack of adoption of
PHBChoices within the NHS
The PHBChoices product is continuingly being enhanced to ensure
that it has the features required to deliver the benefits required
to ensure wide scale adoption. Adoption to date has been low but
the increasing push from NHS England for the growth in PHBs should
increase the pace of adoption.
There is a risk that increasing competition will result in a
further decline in revenue.
The Group's long-standing ecommerce products operate in mature
markets and increasing competition in recent years has resulted in
a reduction in revenue, particularly from older legacy contracts
which have not been renewed. The Group's strategy of focusing on
existing customers and focusing efforts on PHBChoices for growth
means that competition in cloudBuy's traditional ecommerce markets
is less relevant. In addition, the number of products sold has been
reduced in 2018 so allowing a greater focus on the remaining
products, meaning existing customers are more likely to stay with
cloudBuy, rather than switching to a competitor.
The market for managing PHBs is new and growing. Before
PHBChoices was developed, CCGs typically contracted with a local
authority or private management agency to manage the provision of
care. This was done a significantly higher cost than the charge for
PHBChoices. PHBChoices gives the CCGs better control and visibility
than their traditional management methods. There are a number of
potential competitors who claim to have an integrated solution for
PHBs. However, cloudBuy believes that their solutions do not offer
the significant benefits that are delivered with PHBChoices. There
has been very little evidence of these competitors actively selling
to CCGs.
The Group has a risk that demand for products and services leads
to a surplus or shortfall of implementation and development
staff
This could lead to customer dissatisfaction because
implementations are delayed or higher costs for cloudBuy as a
result of having more capacity than is required. This is mitigated
due to cloudBuy's strategy of focussing on existing customers and
PHBChoices. For any expected increases in demand, sales cycles are
long, allowing cloudBuy to increase resources to fit with demand.
cloudBuy has demonstrated that it has been successful in reducing
costs when revue has been reduced, resulting in a reduction in
losses in the past 3 years despite a reduction in revenue.
The Group is loss making and may need further financing in the
future.
Following the funding commitment from Roberto Sella, outlined in
the Chairman's Statement, the business is funded for the
foreseeable future.
Outlook
The Strategy for 2019 remains consistent from the previous 2
years. We will optimise revenue from existing customers with a
strong focus on cost management with PHBChoices, our main growth
engine showing strong signs of growth so far in 2019.
Signed on behalf of the Board by:
Lyn Duncan
CEO
19(th) March 2019
Group Statement of Comprehensive Income
For the year ended 31 December 2018
31 Dec 2018 31 Dec 2017
Notes GBP GBP
-------------------------------------- ------ ------------------- -------------
Revenue 4 1,108,547 1,504,067
Cost of sales (197,740) (226,872)
-------------------------------------- ------ ------------------- -------------
Gross Profit 910,807 1,277,195
Administrative expenses (2,556,130) (3,462,787)
Share based payments 19 (72,495) (164,352)
-------------------------------------- ------ ------------------- -------------
Operating loss (1,717,818) (2,349,944)
Finance Income -interest received 1,690 -
Finance costs 8 (600,621) (397,655)
-------------------------------------- ------ ------------------- -------------
Loss on ordinary activity before
taxation (2,316,749) (2,747,599)
Income tax credit 9 124,103 136,226
-------------------------------------- ------ ------------------- -------------
Loss for the year attributable
to equity shareholder of parents (2,192,646) (2,611,373)
Other comprehensive income -
item which will or may
be reclassified to profit and
loss
Exchange gain arising on translation
of foreign operation 115,266 114,520
Total Comprehensive Income (2,077,380) (2,496,853)
-------------------------------------- ------ ------------------- -------------
Loss per share
basic and diluted 10 1.7 2.0
-------------------------------------- ------ ------------------- -------------
Revenue and operating loss for the year all derive from
continuing operations.
Statement of Financial Position
For the year ended 31 December 2018
Group Company
-------------------------------------- --------------------------------------
Notes 2018 GBP 2017 GBP 2018 GBP 2017 GBP
---------------------------- ------ ------------------ ------------------ ------------------ ------------------
Assets
Non current assets
Goodwill 11 - - - -
Other intangible assets 12 6,408 4,357 6,408 4,357
Property, plant and
equipment 13 34,126 64,216 26,371 53,729
Investment 14 - - - 40,000
---------------------------- ------------------
40,534 68,573 32,779 98,086
---------------------------- ------ ------------------ ------------------ ------------------ ------------------
Current Assets
Trade and other receivables 15 365,161 463,509 2,078,111 2,040,434
Taxes recoverable 124,103 - 124,103 -
Cash and cash equivalents 16 790,989 2,459,912 769,252 2,445,766
---------------------------- ------
1,280,253 2,923,421 2,971,467 4,486,201
---------------------------- ------ ------------------ ------------------ ------------------ ------------------
Total assets 1,320,787 2,991,994 3,004,246 4,584,286
---------------------------- ------ ------------------ ------------------ ------------------ ------------------
Liabilities
Current liabilities
Trade and other payables 17 (1,319,446) (1,163,932) (1,305,361) (1,056,233)
(1,319,446) (1,163,932) (1,305,361) (1,056,233)
---------------------------- ------ ------------------ ------------------ ------------------ ------------------
Non current liabilities
Financial liabilities
- borrowings 18 (5,833,545) (5,675,526) (5,833,545) (5,706,903)
---------------------------- ------ ------------------ ------------------ ------------------ ------------------
Total liabilities (7,152,991) (6,839,458) (7,138,906) (6,763,136)
---------------------------- ------ ------------------ ------------------ ------------------ ------------------
Total net
(liabilities)/assets (5,832,204) (3,847,464) (4,134,660) (2,178,850)
---------------------------- ------ ------------------ ------------------ ------------------ ------------------
Shareholder's equity
Called up share capital 19 1,304,327 1,304,327 1,304,327 1,304,327
Share premium account 19 5,534,165 5,534,165 5,534,165 5,534,165
Other reserve 2,234,585 2,214,441 1,605,150 1,585,010
Share based payment reserve 1,223,961 1,151,466 1,223,961 1,151,466
Currency translation (79,061) (194,328) - -
Accumulated losses (16,050,181) (13,857,534) (13,802,262) (11,753,817)
---------------------------- ------ ------------------ ------------------ ------------------
Total equity attributable
to equity shareholders
of the parent (5,832,204) (3,847,464) (4,134,659) (2,178,850)
---------------------------- ------ ------------------ ------------------ ------------------ ------------------
Company Registration Number 03732253
The financial statements on pages 26 to 52 were approved by the
Board of Directors on 19(th) March 2019 and authorised for issue on
20(th) March 2019 and signed on their behalf by:
Ronald Duncan, Executive Chairman
Statement of Cash Flows
For the year ended 31 December 2018
Group Company
----------------------------- ------------------------------
Notes 2018 GBP 2017 GBP 2018 GBP 2017 GBP
------------------------------------- ------ ---------------
Cash flow from operating activities
------------------------------------- ------ ------------ --------------- --------------- -------------
Loss before taxation (2,192,646) (2,749,734) (2,048,448) (2,867,344)
Adjustments for :
Finance income/cost 598,932 397,655 599,011 397,655
Depreciation of property, 30,326 108,880 27,593 55,310
Amortisation /Impairment 3,543 5,508 43,543 5,508
Share based payments 72,495 164,352 72,495 164,352
Changes in working capital:
Trade and other receivables (25,755) 58,835 (161,780) 343,099
Trade and other payables (265,336) 208,091 (203,098) 281,511
Currency translation 115,348 133,810 - -
------------------------------------- ------ ------------ --------------- --------------- -------------
Net cash used by operations (1,663,094) (1,672,603) (1,670,684) (1,619,909)
Tax (paid)/received - - - -
------------------------------------- ------ ------------ --------------- --------------- -------------
Net cash used in operating
activities (1,663,094) (1,672,603) (1,670,684) (1,619,909)
Cash flows from investing
activities
Interest paid (1,307) (713)
Purchase of other intangible
assets (5,595) - (5,595) -
Purchase of property, plant
and (235) (10,702) (235) (10,702)
equipment
------------------------------------- ------ ------------ --------------- --------------- -------------
Net cash used in investing
activities (5,830) (12,009) (5,830) (11,415)
Cash flows from financing
activities
Issue of ordinary shares - -
Issue of loan notes - 3,108,700 - 3,108,700
Interest received -
------------------------------------- ------
Net cash generated from financing - 3,108,700 - 3,108,700
------------------------------------- ------ ------------ --------------- --------------- -------------
Net increase/(decrease) in
cash and (1,668,923) 1,424,088 (1,676,513) 1,477,376
cash equivalents
Cash and cash equivalents
at 2,459,912 1,035,826 2,445,766 968,391
beginning of period
------------------------------------- ------ ------------ --------------- --------------- -------------
Cash and cash equivalents
at end of period 16 790,989 2,459,912 769,253 2,445,766
------------------------------------- ------ ------------ --------------- --------------- -------------
Statements of Changes in Shareholders' Equity
For the year ended 31 December 2018
Share
based payment Currency Accumulated Shareholder's
Share Capital Share premium Other reserve reserve translation losses equity
Group GBP GBP GBP GBP GBP GBP GBP
------------ ------------------ ----------------- ---------------------- ---------------------------- ------------------ ------------------------- -------------------------
At 01
January
2017 1,304,327 5,534,165 1,593,686 987,114 (308,847) (11,246,162) (2,135,717)
Share issued
in the year - - - - - - -
Convertible
loan notes
issued in
the year - - 620,755 - - - 620,755
Share based
payments - - - 164,352 - - 164,352
Exchange in
year - - - - 114,520 - 114,520
Retained
loss
for the
year - - - - - (2,611,373) (2,611,373)
At 31
December
2017 1,304,327 5,534,165 2,214,441 1,151,466 (194,328) (13,857,534) (3,847,464)
Share issued
in the year - - - - - - -
Convertible
loan notes
issued in
the year - - 20,144 - - - 20,144
Share based
payments - - - 72,495 - - 72,495
Exchange in
year - - - - 115,266 - 115,266
Retained
loss
for the
year - - - - - (2,192,646) (2,192,646)
------------ ---------------------- ---------------------------- ------------------ ------------------------- -------------------------
At 31
December
2018 1,304,327 5,534,165 2,235,185 1,223,961 (79,061) (16,050,181) (5,832,204)
============ ================== ================= ====================== ============================ ================== ========================= =========================
Statements of Changes in Shareholders' Equity
For the year ended 31 December 2018
Share Share Other Share based Accumulated Shareholder's
Capital premium reserve payment reserve losses equity
Company GBP GBP GBP GBP GBP GBP
------------- ------------------- ------------------ ------------------ ----------------------------- ----------------------- --------------------------
At 01
January
2017 1,304,327 5,534,165 964,251 987,114 (9,025,430) (235,570)
Share issued
in the year - - - - - -
Convertible
loan notes
issued in
the
year - - 620,755 - - 620,755
Share based
payments - - - 164,352 - 164,352
Retained
loss
for the
year - - - - (2,728,368) (2,728,368)
At 31
December
2017 1,304,327 5,534,165 1,585,006 1,151,466 (11,753,798) (2,178,850)
Share issued
in the year - - - - - -
Convertible
loan notes
issued in
the
year - - 20,144 - 20,144
Share based
payments - - 72,495 - 72,495
Retained
loss
for the
year - - - - (2,048,464) (2,048,464)
------------- ------------------- ------------------ ------------------ ----------------------------- -----------------------
At 31 Dec
2018 1,304,327 5,534,165 1,605,150 1,223,961 (13,802,262) (4,134,659)
============= =================== ================== ================== ============================= ======================= ==========================
Notes to the Financial Statements
For the year ended 31 December 2018
1. General information
cloudBuy plc ("the Company") and its subsidiaries (together "the
Group)" provides an integrated software platform for eprocurement
and ecommerce to facilitate the trading of goods and services
between purchasers such as public sector bodies and their
suppliers, along with the analysis and coding of spend and product
data. The Group also provides services to new businesses, including
incorporation, company secretary services and filing annual
returns, using its software platform. The Company is a public
limited company which is listed on the Alternative Investment
Market of the London Stock Exchange and is incorporated and is
headquartered in the UK.
The address of the registered office is:
5 Jupiter House,
Calleva Park,
Aldermaston,
Berkshire RG7 8NN.
2. Summary of significant accounting policies
The principal accounting policies applied in the preparation of
these financial statements are set out below. These policies have
been applied consistently to all the years presented, unless
otherwise stated.
2.1 Basis of accounting
These financial statements have been prepared in accordance with
IFRS as adopted by the European Union, and with those parts of the
Companies Act 2006 applicable to companies reporting under IFRS.
The financial statements have been prepared under the historical
cost convention.
The preparation of financial statements in conformity with IFRS
requires management to make judgements, estimates and assumptions
that affect the application of policies and reported amounts in the
financial statements. The areas involving a higher degree of
judgement or complexity, or areas where assumptions or estimates
are significant to the financial statements are disclosed in note
3.
As permitted under Section 408 of the Companies Act 2006 a
separate statement of comprehensive income for the parent company
has not been presented.
2.2 Going concern
The Group had a loss attributable to shareholders for the year
of GBP2,192,646 and at the year-end had cash balances of
GBP790,989. The Group has also had commitment to fund from Roberto
Sella for up to GBP750,000. The directors of the Group have
prepared detailed projections and cash flow forecasts through to 31
December 2020. In considering these cash flow forecasts and
commitment to funding, the directors have carefully considered the
assumptions and sensitivities and have concluded that the Group
will be able to continue trading within its current working capital
position and they have a reasonable expectation that the Group has
adequate resources to continue in operational existence for a
period of 12 months from the date the accounts were signed and as
such have prepared the accounts on the going concern basis.
2.3 Consolidation
Subsidiary undertakings are all entities over which the Group
has the power to govern the financial and operating policies so as
to obtain benefit from their activities. Subsidiaries are fully
consolidated from the date on which control is transferred until
the date control ceases.
The purchase method of accounting is used to account for the
acquisition of subsidiaries by the Group. The investment in
subsidiaries in the Company's statement of financial position is
shown at cost less provision for diminution in value.
Inter-company transactions, balances and unrealised gains and
losses on transactions between Group companies are eliminated.
2.4 Goodwill
Goodwill arising on acquisitions represents the excess of the
consideration given plus any associated costs for investments in
subsidiary undertakings over the fair value of the identifiable
assets and liabilities acquired. Adjustments are made to fair
values to bring the accounting policies of acquired businesses into
alignment with those of the Group. Provision is made for any
impairment in the value of goodwill. The costs of integrating and
reorganising acquired businesses are charged to the post
acquisition statement of comprehensive income.
In accordance with IFRS1, the Group has applied the exemption
from retrospectively recalculating goodwill which arose on
acquisitions prior to 1 January 2006. This goodwill is included at
its deemed cost, being the amount recorded under UK GAAP as at 1
January 2006. Goodwill is carried at cost less accumulated
impairment losses. Any impairment is recognised immediately in the
statement of comprehensive income and is not subsequently reversed.
Goodwill is allocated to cash generating units for the purpose of
impairment testing. Each of these cash generating units represents
the group's investment in each country of operation by primary
reporting segment.
Goodwill is tested for impairment annually. Gains and losses on
the disposal of an entity include the carrying amount of goodwill
relating to the entity sold.
2.5 Other intangible assets
Other intangible assets are shown at historical cost less
accumulated amortisation and impairment losses.
The costs directly associated with the development of
identifiable and unique software products controlled by the Group
and that will probably generate economic benefits exceeding costs
beyond one year are recognised as intangible assets and amortised
over their estimated useful lives. Other research and development
expenditure is written-off to the statement of comprehensive income
in the year in which it is incurred.
Amortisation is charged to administrative expense in the
statement of comprehensive income on a straight-line basis over the
estimated useful lives of the intangible asset unless such lives
are indefinite. Intangible assets with an indefinite useful life
are tested for impairment at each balance sheet date. Other
intangible assets are amortised from the date they are available
for use. The useful lives are as follows:
-- Software - 3 years
-- Development expenditure - 3 years
Amortisation periods and methods are reviewed annually and
adjusted if appropriate.
2.6 Property, plant and equipment
All are stated at cost less accumulated depreciation.
Depreciation of property, plant and equipment is provided to
write each asset down to its estimated residual value on a
straight-line basis over its estimated useful life, as follows:
-- Computer equipment - 3 years
-- Fixtures, fittings and equipment - 3 to 5 years
Residual values, remaining useful lives and depreciation methods
are reviewed annually and adjusted if appropriate.
Gains or losses on disposal are included in the statement of
comprehensive income.
2.7 Impairment of assets
The Group assess at each statement of financial position date
whether there is any indication that any of its assets have been
impaired. If such indication exists, the asset's recoverable amount
is estimated and compared to its carrying value.
For goodwill and intangible assets that have an indefinite life
and intangible assets not yet available for use, the recoverable
amount is estimated at each statement of financial position date
and whenever there is an indication of impairment.
An impairment loss is recognised for the amount by which the
asset's carrying amount exceeds its recoverable amount. Impairment
losses are recognised in the statement of comprehensive income.
2.8 Financial instruments
Financial assets and financial liabilities are recognised on the
group's statement of financial position when the group has become a
party to the contractual provisions of the instrument.
2.8.1 Trade receivables
Trade receivables are initially recognised at fair value and
then subsequently measured at amortised cost using the effective
interest rate method. Trade receivables do not carry any interest
and are stated at their nominal value as reduced by appropriate
allowances for estimated irrecoverable amounts.
2.8.2 Trade payables
Trade payables are initially recognised at fair value and then
subsequently measured at amortised cost using the effective
interest rate method. Trade payables are not interest bearing and
are stated at their nominal value.
2.8.3 Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair
value less attributable transaction costs. Subsequent to initial
recognition, interest-bearing borrowings are stated at amortised
cost with any difference between cost and redemption value being
recognised in the statement of comprehensive income over the period
of the borrowings on an effective interest rate basis.
2.8.4 Convertible and non-convertible loan notes
Convertible loan notes are separated into the equity and
liability components at the date of issue. The liability component
is recognised initially at its fair value. Subsequent to initial
recognition, it is carried at amortised carrying value using the
effective interest method until the liability is extinguished on
conversion or redemption of the loan notes. The equity component is
the residual amount of the convertible bond after deducting the
fair value of the liability component. This is recognised and
included in equity, net of deferred tax effect, and is not
subsequently remeasured.
Loan notes with no option to be converted to share capital and
that will be repaid in cash, are recognised in liabilities.
2.8.5 Equity Instruments
Equity instruments are recorded at the proceeds received, net of
direct issue costs.
2.9 Share based payments
The group has applied the requirements of IFRS 2: Share-based
Payments.
The group issues equity-settled share-based payments to its
employees. Equity-settled share-based payments are measured at fair
value at the date of grant. The fair value determined at the grant
date of equity-settled share-based payments is expensed on a
straight-line basis over the vesting period, based on the group's
estimate of shares that will eventually vest.
Fair value is measured by use of a Black Scholes model. The
expected life used in the model has been adjusted, based on
management's best estimate, for the effect of non-transferability,
exercise restrictions, and behavioural considerations.
2.10 Pensions
All pension schemes operated by the Group are defined
contribution schemes. The costs are charged to the statement of
comprehensive income in the year in which they are incurred.
2.11 Revenue
Revenue is measured at fair value of consideration received or
receivable for goods sold and services provided to customers
outside the Group, net of Value Added Tax and any discounts.
Where invoices are raised in advance of the income being earned
through the performance of the service, the unearned portion is
included in the accounts as deferred income and released to the
Statement of Comprehensive Income as earned.
2.12 Leases
Rentals payable under operating leases are charged against
income on a straight line basis over the lease term. The Group does
not hold any assets under hire purchase contracts or finance leases
and has not received any benefits as an incentive to sign a lease
of whatever type.
2.13 Current and deferred taxation
The tax expense represents the sum of the tax currently payable
and deferred tax.
The current tax is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the statement of
comprehensive income because it excludes items of income or expense
that are taxable or deductible in other years and it further
excludes items that are never taxable or deductible. The Group's
liability for current tax is calculated by using tax rates that
have been enacted or substantively enacted by the statement of
financial position date.
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amount of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit, and is accounted for using the
balance sheet liability method.
Deferred tax liabilities are recognised for all taxable
temporary differences and deferred tax assets are recognised to the
extent that it is probable that taxable profits will be available
against which deductible temporary differences can be utilised.
Such assets and liabilities are not recognised if the temporary
difference arises from the initial recognition of goodwill or from
the initial recognition (other than in a business combination) of
other assets and liabilities in a transaction which affects neither
the tax profit nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries and associates,
and interests in jointly controlled entities, except where the
group is able to control the reversal of the temporary difference
and it is probable that the temporary difference will not reverse
in the foreseeable future.
Deferred tax is calculated at the tax rates (and tax laws) that
have been enacted or substantively enacted by the statement of
financial position date. Deferred tax is charged or credited in the
statement of comprehensive income, except when it relates to items
credited or charged directly to equity, in which case the deferred
tax is also dealt with in equity.
2.14 Provisions
Provisions are recognised in the statement of financial position
when there is a present legal or constructive obligation as a
result of a past event, and it is probable that an outflow of
economic benefits will be required to settle the obligation.
2.15 Adoption of new or amended IFRSs
(a) The Company has adopted the following revisions and
amendments to IFRS issued by the International Accounting Standards
Board, which are relevant to and effective for the Company's
financial statements for the year beginning 1 January 2018.
IFRS 15 Revenue from Contracts with Customers (effective 1
January 2018)
(b) At that date of authorisation of these Financial Statements,
the following Standards and Interpretations (International
Financial Reporting Interpretation Committee - IFRIC), which have
not been applied in these Financial Statements, were in issue but
not yet effective:
IFRS 16 Leases (effective 1 January 2019)
The Directors have considered the above new standards,
interpretations and amendments to published standards that are not
yet effective The implementation of IFRS 16 has been evaluated, it
is not expected to have a material impact on the profit or loss of
the business. Therefore, IFRS 16 will be adopted for the 2019
report and accounts and not adopted before the effective date.
3. Accounting estimates and judgements
Estimates and judgments are continually evaluated and are based
on historical experience and other factors, including expectations
of future events that are believed to be reasonable under the
circumstances.
3.1. Critical accounting estimates and judgments
The Group makes estimates and assumptions concerning the future.
The resulting accounting estimates will, by definition, seldom
equal the related actual results. The estimates and assumptions
that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next
financial year are discussed below:
-- Goodwill has been tested for impairment by comparing the
amount of goodwill against future forecast results including cash
flows expected to be generated in the future by the appropriate
asset, cash-generating unit, or business segment.
-- The fair value of share-based payments is measured using a
binomial model which inherently makes use of significant estimates
and assumptions concerning the future applied by the directors.
-- Capitalised development expenditure is reviewed for
compliance with IAS 38 on an ongoing basis. The technical
feasibility and commerciality of development expenditure is
considered prior to capitalisation and the carrying values are
compared against future forecast results including cash flows
expected to be generated in the future for any indication of
potential impairment.
-- The convertible loan notes are apportioned between an equity
element and a liability element. This apportionment is calculated
applying judgements covering interest rates and discounts.
4. Revenue- Segmental Analysis
The Group's operating segments under IFRS have been determined
with reference to the information presented in the management
accounts reviewed by the Board of Directors.
The Group's main reportable segments are Company Formation and
web and ecommerce services. These are managed from one operating
platform and cannot be readily separated, so all management
decisions in connection with these segments are taken to ensure the
relevant skill sets are in place to maximise the return from these
resources.
The Chief Operating Decision Maker, which is taken to be the
Board of Directors, evaluates the performance and resource
requirements of these segments in unison to ensure maximum
efficiencies within the business. Resources are shared; in
particular, technical support and research and development advances
are shared between the two in the form of improvements and
refinements being made to the underlying platform that hosts
them.
The Directors consider the most beneficial method of splitting
these segments to provide useful information to users of the
accounts is to provide details down to the Gross Profit level
only.
From then on, any further detail would necessitate arbitrary
cost allocation that they do not use in managing the business and
is not considered meaningful in terms of how resources are actually
utilised. Similarly, any split of the statement of financial
position assets would involve arbitrary allocation.
The revenue recognised and gross profit attributable between
reportable segments is shown below:
31 Dec 2018
Company Formation Web and ecommerce Coding Customer Total
services Services services
--------------- ------------------ ------------------ ---------------- -----------------------------
GBP GBP GBP GBP
--------------- ------------------ ------------------ ---------------- -----------------------------
Revenue 317,653 750,794 40,100 1,108,547
Cost of sales (138,901) (58,839) - (197,740)
Gross Profit 178,752 691,955 40,100 910,807
=============== ================== ================== ================ =============================
31 Dec 2017
--------------- ------------------ ------------------ ---------------- -----------------------------
Company Formation Web and ecommerce Coding Customer Total
services Services services
--------------- ------------------ ------------------ ---------------- -----------------------------
GBP GBP GBP GBP
--------------- ------------------ ------------------ ---------------- -----------------------------
Revenue 376,818 1,067,308 59,941 1,504,0667
Cost of sales (158,066) (68,806) - (226,872)
Gross Profit 218,752 998,502 59,941 1,277,195
=============== ================== ================== ================ =============================
5. Operating loss
2018 2017
GBP GBP
This is stated after the following:
Staff costs (see note 7) 1,618,462 2,215,082
Depreciation of property, plant and equipment
(see note 13) 30,325 114,507
Amortisation of other intangible assets (see
note 12) - 5,508
Research and development costs recognised as
an expense 579,723 575,261
----------------------------------------------- ---------- ----------
6. Auditor's remuneration
Amounts payable to James Cowper Kreston in respect of audit and
non-audit services
2018 2017
GBP GBP
Audit of company and consolidated
accounts 15,860 15,399
Other Services relating to:
Taxation 3,289 3,193
------------------------------------ ------------------- -------------------
7. Employees
2018 2017
GBP GBP
----------------------- ------------ -------- -------- ------------ -------- ----------
Staff costs including
directors comprised
:
Wages and salaries 1,381,577 1,867,631
Pension 17,095 8,822
Social security
costs 147,295 174,277
Share based payments 72,495 164,352
------------------------ ------------ -------- -------- ------------ --------
1,618,462 2,215,082
----------------------- ------------ -------- -------- ------------ -------- ----------
.
----------------------- ------------ -------- -------- ------------ -------- ----------
The average monthly number of persons (including Directors) No No
employed by the Group during the year was:
Management and administration 7 7
Technical and delivery 31 49
Sales and marketing 1 7
------------------------ ------------ -------- -------- -------- ----------
39 63
----------------------- ------------ -------- -------- ------------ -------- ----------
Directors remuneration:
2018 2018 2018 2017 2017 2017
Emoluments for
qualifying services: Salary/fees Pension Total Salary/fees Pension Total
GBP GBP GBP GBP GBP GBP
----------------------- ------------ -------- -------- ------------ -------- ----------
P Broughton - - - - - -
D Chellingsworth 15,000 - 15,000 14,167 - 14,167
RJ Duncan 120,000 - 120,000 120,000 - 120,000
HL Duncan 120,000 703 120,703 120,000 386 120,386
DKC Gibbon 160,000 1,708 161,708 139,614 773 140,387
JR Holden - - - 91,749 - 91,749
M Pasternak - - - - - -
415,000 2,410 417,410 485,529 1,159 486,689
----------------------- ------------ -------- -------- ------------ -------- ----------
None of the Directors exercised share options in the year.
8. Finance costs
31 December
31 December 2018 2017
GBP GBP
------------------ -------------------- --------------------
Interest on loan
notes 600,621 397,655
9. Taxation
2018 2017
GBP GBP
R&D tax credit 90,000 90,000
Adjustment in respect of prior years 34,103 48,226
------------------------------------------------- ------------ ------------
Tax credit for the year 124,103 138,226
------------------------------------------------- ------------ ------------
Factors affecting tax charge for the year
Loss on ordinary activities before taxation (2,316,749) (2,747,597)
------------------------------------------------- ------------ ------------
Loss on ordinary activities before taxation
multiplied by Standard rate of UK corporation
tax of 20% (2018: 20%) (463,350) (549,519)
Effects of:
Expenses not deductible for tax purposes 2,000 2,000
Share based payments 72,495 64,397
Capital allowances less than depreciation
and amortisation 3,995 7,884
R&D tax credit claim in respect of current
year (90,000) (18,854)
Prior year (34,103) (48,226)
Carry forward of tax losses 384,860 404,092
Total tax credit (124,103) (138,226)
------------------------------------------------- ------------ ------------
No deferred tax asset has been recognised in respect of the
losses given the uncertainty regarding available future taxable
profits.
10. Loss per share
The calculations for loss per share are based on the weighted
average number of shares in issue during the year 130,432,664
(2017:130,432,664) and the following losses:
2018 2017
GBP GBP
------------------------------------ --------------- -------------
Earnings:
Loss for the year attributable to
equity shareholders of the parent (2,192,646) (2,611,373)
--------------------------------------- --------------- -------------
Diluted earnings per share is calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all dilutive potential ordinary shares. The company
has two categories of dilutive potential ordinary shares: share
options and convertible loan note. The company has made a loss and
these are therefore anti-dilutive and so ignored in the
calculation.
The basic and diluted loss per share calculated earnings is 1.7p
(2017:2.0p).
11. Goodwill
Cost Provision Carrying
for impairment Value
Carrying Value GBP GBP GBP
Group
---------------------------------- ------- ---------------- ---------
1 January 2017, 31 December 2017
and 2018 96,274 (96,274) -
------------------------------------ ------- ---------------- ---------
12. Other intangible assets
Computer Development
Software Expenditure Total
Group and Company GBP GBP GBP
------------------------------- ------------------- ------------- -------------------------
Cost:
01 January 2017 156,172 455,995 612,167
Additions - - -
------------------------------- ------------------- ------------- -------------------------
01 January 2018 156,172 455,995 612,167
Additions 5,595 - 5,595
----------------------------------- ------------------- ------------- -------------------------
31 December 2018 161,767 455,995 617,762
=================================== =================== ============= =========================
Amortisation :
01 January 2017 151,816 455,995 607,810
Charges for the year - - -
------------------------------- ------------------- ------------- -------------------------
01 January 2018 151,816 455,995 607,810
Charges for the year 3,543 - 3,543
----------------------------------- ------------------- ------------- -------------------------
31 December 2018 155,359 455,995 611,353
=================================== =================== ============= =========================
Carrying value at 1 January
2017 4,357 - 4,357
----------------------------------- ------------------- ------------- -------------------------
Carrying value at 1 January
2018 4,357 - 4,357
----------------------------------- ------------------- ------------- -------------------------
Carrying value at 31 December
2018 6,408 - 6,408
----------------------------------- ------------------- ------------- -------------------------
13. Property, plant and equipment
Fixture, fittings Computer equipment Total
and equipment
Group GBP GBP GBP
------------------------------- ------------------ ------------------- ---------------
Cost :
01 January 2017 333,888 1,157,108 1,490,996
Additions - 10,702 10,702
Exchange (1,742) (11,919) (13,661)
------------------------------- ------------------ ------------------- ---------------
01 January 2018 332,146 1,155,891 1,488,037
Additions 235 235
Disposals (70,050) (19,942) (89,992)
Exchange - - -
------------------------------- ------------------ ------------------- ---------------
31 December 2018 262,096 1,136,184 1,398,280
------------------------------- ------------------ ------------------- ---------------
Depreciation:
01 January 2017 268,795 1,040,518 1,309,313
Charges for the year 57,520 56,988 114,508
Exchange - - -
------------------------------- ------------------ ------------------- ---------------
01 January 2018 326,315 1,097,506 1,423,821
Disposals (70,050) (19,942) (89,992)
Charges for the year 1,147 29,179 30,325
Exchange - - -
------------------------------- ------------------ ------------------- ---------------
31 December 2018 257,412 1,106,743 1,364,154
------------------------------- ------------------ ------------------- ---------------
Carrying value at 1 January
2017 65,093 116,590 181,683
------------------------------- ------------------ ------------------- ---------------
Carrying value at 1 January
2018 5,831 58,385 64,216
------------------------------- ------------------ ------------------- ---------------
Carrying value at 31 December
2018 4,684 29,441 34,126
------------------------------- ------------------ ------------------- ---------------
13. Property, plant and equipment (continued)
Fixture, Total
fittings Computer
and equipment equipment
Company GBP GBP GBP
------------------------------- --------------- ----------- ----------
Cost :
01 January 2017 256,255 1,120,585 1,376,840
Additions - 10,702 10,702
Exchange - - -
------------------------------- --------------- ----------- ----------
01 January 2018 256,255 1,131,287 1,387,542
Additions - 235 235
Exchange - - -
------------------------------- --------------- ----------- ----------
31 December 2018 256,255 1,131,523 1,387,777
---------------------------------- --------------- ----------- ----------
Depreciation:
01 January 2017 256,227 1,022,277 1,333,504
Charges for the year 28 55,282 55,310
Exchange - - -
------------------------------- --------------- ----------- ----------
01 January 2018 256,255 1,077,559 1,333,814
Charges for the year - 27,598 27,598
Exchange - - -
------------------------------- --------------- ----------- ----------
31 December 2018 256,255 1,105,157 1,361,412
---------------------------------- --------------- ----------- ----------
Carrying value at 1 January
2017 28 98,308 98,336
---------------------------------- --------------- ----------- ----------
Carrying value at 1 January
2018 - 53,729 53,729
---------------------------------- --------------- ----------- ----------
Carrying value at 31 December
2018 - 26,371 26,371
---------------------------------- --------------- ----------- ----------
14. Investments
Company GBP
---- -----------------------------------
Subsidiary undertakings:
Cost at 1 January 2017 and at December
2018 70,394
------------------------------------------ --- -----------------------------------
Provision for impairment:
----------------------------------------- ---- -----------------------------------
1 January 2017 to 31 December 2017 30,394
----------------------------------------------- -----------------------------------
1 January 2018 to 31 December 2018 40,000
----------------------------------------------- -----------------------------------
Carrying value at 31 December 2018 -
----------------------------------------------- -----------------------------------
The investments shown above represents the Company's 100%
holding in the ordinary shares of @Software PLC and its wholly
owned subsidiary Software Limited (incorporated in the United
Kingdom; non-trading) and Coding International Limited
(incorporated in the United Kingdom; provides coding services for
use in procurement). The business of Coding International Limited
was transferred to CloudBuy UK Plc as on 31(st) December 2017. The
business of @software Plc has no value and therefore the carrying
value has been fully impaired at 31 December 2018
The Company also has 100% investments in cloudBuy India Private
Limited, incorporated in India, which provides eCommerce solutions
to Indian companies and cloudBuy Pty Limited, incorporated in
Australia, which provides eCommerce solutions in the Asia Pacific
region.
15. Trade and other receivables
Group Company
-------------------------------- ----------------------
2018 2017 2018 2017
GBP GBP GBP GBP
------------------------- ---------------------- -------- ---------- ----------
Prepayments and accrued
income 128,150 58,338 128,150 58,338
Amounts owed by related
undertakings - - 1,714,246 1,583,658
Other receivables 189,142 72,029 189,142 68,479
Trade receivables 171,973 333,142 170,676 329,959
-------------------------- --------
489,264 463,509 2,202,214 2,040,434
------------------------- ---------------------- -------- ---------- ----------
2018 2017
GBP GBP
Ageing of trade receivables
Not yet due 35,667 20,440
Up to 1 month 9,778 119,017
2 to 3 months 11,486 63,540
Over 3 months 115,042 130,145
---------------------------------- -------- --------
Total 171,973 333,142
---------------------------------- -------- --------
The Group's financial assets are fairly short term in nature.
The directors consider that the carrying value of trade and other
receivables approximates to the fair value.
16. Notes to the cash flow statement
Analysis of net funds/debt
Group Company
-------------------------- --------------------------
31 December 31 December 31 December 31 December
2018 2017 2018 2017
Cash at bank and
in hand 790,989 2,459,912 769,253 2,445,766
790,989 2,459,912 769,253 2,445,766
------------------ ------------ ------------ ------------ ------------
Cash and cash equivalents (which are presented as a single class
of asset on the face of the statement of financial position)
comprise cash at bank and other short term highly liquid
investments with a maturity of three months or less.
17. Trade and other payables
Group Company
---------------------- ----------------------
2018 2017 2018 2017
GBP GBP GBP GBP
----------------------------- ---------- ---------- ---------- ----------
Trade creditors 86,814 110,271 74,261 111,282
Other taxation and social
security 61.587 88,549 61,587 77,564
Other creditors 889 9,246 889 9,423
Accrual and deferred income 1,170,155 955,865 1,168,624 857,964
------------------------------- ----------
1,319,446 1,163,931 1,305,361 1,056,233
----------------------------- ---------- ---------- ---------- ----------
The Group's financial liabilities are fairly short term in
nature and due for payment in a period of less than 6 months. In
the opinion of the directors the book values equate to their fair
value.
18. Borrowings
Group Company
--------------------------------------- -----------------------------
2018 2017 2018 2017
GBP GBP GBP GBP
---------------------------- --------------------------- ---------- ---------- -----------------
Non current:
Convertible loan notes 4,070,981 4,001,101 4,070,981 4,001,101
Non-convertible loan notes 1,762,564 1,674,424 1,762,564 1,674,424
Amounts owed to Group
undertakings - - 31,377
---------------------------
5,833,545 5,675,525 5,833,545 5,706,902
---------------------------- --------------------------- ---------- ---------- -----------------
The amount owed to Group undertakings has no fixed repayment
schedule.
The principal terms of the loan instruments are as follows:
For the April 2016 Loan Notes, all of which have been issued
Instrument (the Interest bearing loan note instrument constituting 4,172,562
"Instrument") GBP1.00 secured convertible loan notes and 1,577,438 GBP1.00
secured non-convertible loan notes
-------------------- ---------------------------------------------------------------
Amount Up to GBP5,750,000 which is fully drawn
-------------------- ---------------------------------------------------------------
Term 10 year term with an early repayment option on 5th anniversary
-------------------- ---------------------------------------------------------------
Drawdown Minimum of GBP3,274,300 in first draw down then in increments
of a minimum of GBP1 million in size
-------------------- ---------------------------------------------------------------
Interest 2.33%
-------------------- ---------------------------------------------------------------
Borrower Covenants cloudBuy plc cannot issue any instrument that is pari passu
or senior to the Instrument and/or the Loan Notes without
the consent of the holder of the Loan Notes
-------------------- ---------------------------------------------------------------
Lender Covenants None
-------------------- ---------------------------------------------------------------
Conversion price 6.5 pence (conversion at any time in full or in part at
the election of loan note holder) or 1 penny (in the event
that the outstanding amount of the Convertible Loan Notes
(including principal and interest) has not been repaid
or converted by the Final Redemption Date)
-------------------- ---------------------------------------------------------------
Security The Loan Notes will be secured, by way of a secondary charge
over the Company's assets, with the charge ranking behind
the Company's clearing bank facility provider from time
to time where the priority charge over the Company assets
will be limited to GBP300,000 in value
-------------------- ---------------------------------------------------------------
Future Investment Mr. Roberto Sella to have the right, but not the obligation,
to participate in future equity fundraising by the Company
at 80% of the price of other investors up to the end of
the Term
-------------------- ---------------------------------------------------------------
For the December 2017 Loan Notes
Instrument (the Interest bearing loan note instrument constituting 3,400,000
"Instrument") GBP1.00 secured convertible loan notes
-------------------- ---------------------------------------------------------------
Amount Up to GBP3,400,000
-------------------- ---------------------------------------------------------------
Term 10 year term with an early repayment option on 5th anniversary
-------------------- ---------------------------------------------------------------
Drawdown Initial drawdown of GBP1,700,000, further drawdowns can
be requested by the Group in minimum amounts of GBP500,000
-------------------- ---------------------------------------------------------------
Interest 2.33%
-------------------- ---------------------------------------------------------------
Borrower Covenants cloudBuy plc cannot issue any instrument that is pari passu
or senior to the Instrument and/or the Loan Notes without
the consent of the holder of the Loan Notes
-------------------- ---------------------------------------------------------------
Lender Covenants None
-------------------- ---------------------------------------------------------------
Conversion price 2.0 pence (conversion at any time in full or in part at
the election of loan note holder) or 1 penny (in the event
that the outstanding amount of the Convertible Loan Notes
(including principal and interest) has not been repaid
or converted by the Final Redemption Date)
-------------------- ---------------------------------------------------------------
Security The Loan Notes will be secured, by way of a secondary charge
over the Company's assets, with the charge ranking behind
the Company's clearing bank facility provider from time
to time where the priority charge over the Company assets
will be limited to GBP300,000 in value
-------------------- ---------------------------------------------------------------
19. Share capital and share premium
Number of shares Ordinary shares Share premium
GBP GBP GBP
------------------- ----------------- ---------------- --------------
At 1 January 2017 130,432,664 1,304,327 5,534,164
At 31 December
2017 130,432,664 1,304,327 5,534,164
At 31 December
2018 130,432,664 1,304,327 5,534,164
==================== ================= ================ ==============
The total authorised number of ordinary shares is 250 million
(2017: 250 million) with a par value of 1p each.
Subscribers to the share issues in August 2009 were granted
warrants to subscribe for a total of 10 million new ordinary shares
at 2p per share. The warrants were exercisable up to five years
after issue. At the AGM in 2014 the extension of the exercise
period by another five years was approved. There are warrants to
subscribe for 2,053,836 shares outstanding.
During 2017 & 2018 the number of options granted under the
cloudBuy plc Share Option Scheme to subscribe for ordinary shares
in the Company changed as follows:
2018 2017
----------------- -----------------
Number Weighted average Number Weighted average
exercise price exercise price
------------------------ ---- ---- ------------ ----------------- ------------- -----------------
At 1 January 11,512,859 8.9p 14,292,632 9.1p
Options granted during
the year - - -
Options lapsed during
the year (2,317,920) 9.1p (2,779,773) 9.9p
Cancelled - - -
Reissued - - -
Exercised in the
year - -
-------------------------- --- ---- ------------ ----------------- ------------- -----------------
At 31 December 9,194,939 8.8p 11,512,859 8.9p
-------------------------- ---- --- ------------ ----------------- ------------- -----------------
Exercisable at the
year end 4,748,833 8.4p 3,831,685 7.7p
------------------------------- ---- ------------ ----------------- ------------- -----------------
The options at 31 December 2018 are as follows:
Number of options under Subscription price
grant per share Exercise period
613,750 1.75p August 2012 to August 2019
October 2013 to October
400,000 3.5p 2020
December 2015 to December
1,091,235 11.625p 2022
5,664,954 10p March 2017 to March 2026
January 2017 to December
1,425,000 6.5p 2026
------------------------ -------------------- ---------------------------
Share based payments
The Group has a share option scheme under which the Remuneration
Committee can grant options over share in the Company to employees
of the Group. Options are granted with a fixed option price equal,
normally, to the market price of the shares under option at the
date of grant. The contractual life of an option is normally 10
years. The scheme allows for performance criteria or market
conditions to be attached to the options, but this has not
generally been done. Options are valued using the Black Scholes
option pricing model. The fair value of options granted and which
remain open and the assumptions used in the calculations are as
follows:
Grant Date 28 Aug 24 Oct 10 24 Dec 12 24 Mar 16 21 Dec 2016
09
------------------------- ---------- ---------- ---------- ----------- ------------
Share price at grant
date 1.6p 3.5p 11.625p 6.25p 3.45p
Exercise price 1.75p 3.5p 11.625p 10p 6.5p
Number of employees 37 31 9 4 11
Shares originally
under option 2,930,795 3,150,000 2,303,604 2,000,000 2,155,000
Vesting period (years) 3 3 3
Expected volatility 90% 90% 65% 225% 225%
Expected life (years) 4 4 4 4 4
Risk free rate 2.45% 1.75% 0.9% 1.4% 1.4%
Rate ceasing employment
before vesting (total) 25% 25% 25% 0% 10%
Fair value per option GBP0.003 GBP0.015 GBP0.04 GBP0.04 to GBP0.02 to
GBP0.05 GBP0.03
========================= ========== ========== ========== =========== ============
Vest in equal parts between 1(st) and 4(th) anniversary
1,475,000 vest in equal parts between 1(st) and 24(th) month
after issue; the balance vest in equal parts between 1(st) and
4(th) anniversary
No dividends were assumed. The expected volatility is based on
the historical volatility of the Company's shares.
Share incentive plan
The Group has a share incentive plan under which shares can be
awarded to all employees. The shares are held separately by the
plan's Trustees. To date there have been five issues:
On 5 April 2012 1,878,288 ordinary shares were issued at 11.5p
per share;
On 24 December 2012 1,703,229 ordinary shares were issued at
11.65p per share, and
On 15 October 2013 745,462 ordinary shares were issued at 33p
per share.
On 12 June 2015 2,172,520 ordinary shares were issued at 24p per
share.
On 23 March 2017 540,000 ordinary shares were issued at 2.25p
per share.
Cost of the shares issued is charged to the profit and loss
account over three years, the period for which the shares must be
held by the trustees before becoming available to the relevant
employee.
20. Financial instruments
The Group's financial assets and liabilities comprise cash and
borrowings, and various items, such as trade receivables and trade
payables that arise directly from its operations. The Group is not
exposed to significant foreign exchange risk.
The Group does not enter into instruments for speculative
purposes. The Group is exposed to credit risk predominantly from
trade receivables and cash and cash equivalents held with
banks.
The Group finances its operations through funds raised from the
issue of Loan Notes, Convertible Loan Notes and share issues.
Risk Management
General objectives, policies and processes
The overall objective of the Board is to set policies that seek
to reduce risk as far as possible without unduly affecting the
Group's competitiveness and flexibility. Further details regarding
these policies are set out below.
The Board receives monthly financial reports from the CFO
through which it reviews the effectiveness of the processes put in
place and the appropriateness of the objectives and policies it
sets.
The Group reports in Pound Sterling. All funding requirements
and financial risks are managed based on policies and procedures
adopted by the Board of directors. The Group does not use
derivative financial instruments such as forward currency
contracts, interest rate swaps or similar instruments. The Group
does not issue or use financial instruments of a speculative
nature.
Principal financial instruments
The principal financial instruments used by the Group, from
which financial instrument risk arises, are as follows:
-- Trade receivables;
-- Cash and cash equivalents;
-- Trade and other payables
-- Loan notes and convertible loan notes;
Trade and other receivables are measured at face value and
subsequently at net realisable amount. Book values and expected
cash flows are reviewed by the Board and any impairment charged to
the consolidated statement of comprehensive income in the relevant
period.
Trade and other payables are measured at book value. The book
value of financial assets and liabilities equates to their fair
value.
A summary of the financial instruments held by category is
provided below:
2018 2017
GBP GBP
Cash and cash equivalents 790,989 2,459,912
------------------------------------------- ---------- ----------
Trade receivables - due at reporting
date 153,305 323,702
Trade receivables - not due
at reporting date 35,667 20,440
Gross trade receivables 188,973 344,142
Less: Provision for impairment 17,000 11,000
Net trade receivables 171,973 333,142
Other receivables 181,142 68,479
Total Receivables 361,114 401,621
------------------------------------------- ---------- ----------
Total Financial Assets 1,152,103 2,861,533
------------------------------------------- ---------- ----------
Trade receivables principally comprise amounts outstanding for
sales to customers and are payable within a range of 30 to 45 days
after invoice date. The average debtor days to settle invoices are
30-60 days (2017: 30-60 days). An impairment review of outstanding
trade receivables is carried out at the period end and a specific
amount provided for.
A summary of Financial Liabilities is as follows:
2018 2017
GBP GBP
Trade Creditors 86,814 110,271
Loan Notes 5,833,545 5,675,526
---------------------- ---------- ----------
5,920,359 5,785,797
----------------- ---------- ----------
Trade payables principally comprise amounts outstanding for
trade purchases and ongoing costs and are usually payable within 30
days of invoice date. The average credit period taken for trade
purchases is 30 days (2017:30 days).
Cash and cash equivalents
Cash and cash equivalents comprise balances on bank accounts in
the business.
Finance charges are accounted for on an accruals basis and
charged to the statement of comprehensive income when payable.
Most cash and cash equivalents are held in Pound Sterling with
97% at 31 December 2018 being in Pounds Sterling
Risks Arising from Financial Instruments
The main risks arising from the Group's financial instruments
are as follows:
-- Credit Risk;
-- Liquidity Risk; and
-- Foreign Exchange Risk;
Credit risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations. The Group is mainly exposed to credit
risk from credit sales. At 31 December 2018 the Group has net trade
receivables of GBP171,973 (2016: GBP333,142).
The Group is exposed to credit risk in respect of these balances
such that, if one or more customers encounter financial
difficulties, this could materially and adversely affect the
Group's financial results. The Group's customers are largely public
sector bodies in developed countries or part of large private
sector companies. In addition, the Group attempts to mitigate
credit risk by assessing the credit position of any new customers.
and by entering contracts with customers with agreed credit terms.
During the year the Group held bank accounts at Barclays and HSBC
in the UK and ANZ bank in Australia
The ageing of Trade Debtors and provision for bad debts is shown
in note 15.
Liquidity risk
Liquidity risk arises from the Group's management of working
capital. It is the risk that the Group will encounter difficulty in
meeting its financial obligations as they fall due. The Group's
policy is to ensure that it will always have sufficient cash to
allow it to meet its liabilities when they become due. To achieve
this aim, the Group has the ambition to maintain cash balances to
meet expected requirements for a period of at least 45 days.
The tables below analyse the Group's financial liabilities by
contractual maturities. All amounts disclosed in the table are the
contractual undiscounted cash flows.
Trade Creditors 2018 2017
GBP GBP
Ageing of trade creditors
Not yet due 78,895 86,640
Up to 1 month 2,189 -
2 to 3 months - -
Over 3 months 5,730 21,631
-------------------------------- ------- --------
Total 86,814 110,271
-------------------------------- ------- --------
Loan Notes 2018 2017
GBP GBP
More than 5 years 5,833,545 5,675,526
Foreign exchange risk
Foreign exchange risk arises when Group entities enter into
transactions denominated in a currency other than their functional
currency. Revenue not denominated in Pounds sterling was GBP85,780
in the year. Where different, the Group's policy is, where possible
and as is expected by major organisations, to allow customers to
settle liabilities denominated in the customer's functional
currency. These non-Pounds Sterling currencies are Canadian Dollar,
Singapore Dollar and Australian Dollar.
There are no significant purchases made in foreign
currencies.
Net currents assets denominated in foreign currencies at 31
December 2018 were GBP94,960 and therefore the risk is considered
immaterial and further analysis is therefore not disclosed.
Interest Rate Risk
The Group has no borrowing except the Loan Notes and Convertible
Loan Notes with Roberto Sella. The Loan Notes have a fixed interest
for their term of 2.33% and therefore, there is no cashflow
interest rate risk.
Capital risk management
The Group's capital is made up of share capital, share premium,
other reserve, other, share based payment reserve, currency
translation and accumulated losses totalling GBP5,832,204 at 31
December 2018 (2017: GBP3,847,464).
The Group's objectives when maintaining capital are:
To safeguard the entity's ability to continue as a going
concern, so that it can continue to provide returns for
shareholders and benefits for other stakeholders; and
To provide an adequate return to shareholders by pricing
products and services commensurately with the level of risk.
The capital structure of the Group consists of shareholders
equity as set out in the consolidated statement of changes in
equity. All working capital requirements are financed from existing
cash resources and loan notes.
Sensitivity analysis has not been performed as any impact is
considered immaterial.
21. Leasing commitments
2018 2017
Present value of future commitments under non-cancellable GBP GBP
operating leases:
----------------------------------------------------------- ------- --------
Group
Land and buildings, falling due
- within 1 year 38,682 51,409
- within 2 to 5 years 36,165 63,294
- over 5 years 14,988 20,710
-----------------------------------------------------------
89,835 135,413
----------------------------------------------------------- ------- --------
Company
Land and buildings, falling due
- within 1 year 38,682 40,000
- within 2 to 5 years 36,165 27,129
- over 5 years 14,988
-----------------------------------------------------------
89,835 67,129
----------------------------------------------------------- ------- --------
22. Related party transactions
Mr RJ Duncan and Mrs HL Duncan are the landlords of a property
which is occupied by the Group. The annual rent is currently
GBP24,000 (2017: GBP24,000). Isabella M Deas Limited, a company
owned by Mr Duncan's parents and in which he has a minority
interest, is the landlord of a second property which is occupied by
the Group. The annual rent is currently GBP24,000 (2017:
GBP24,000). The leases on both properties are due for renewal in
August 2019.
There is no party which has ultimate control of the Group.
Key management compensation
2018 2017
GBP GBP
---------------------------------- -------- --------------------------------
Short term employee benefits 469,925 659,055
Share based payment remuneration - -
469,925 659,055
---------------------------------- -------- --------------------------------
Share based payment remuneration represents the value of options
granted to key management valued as described in note 19.
23. Non-trading subsidiaries
The company has incorporated a number of subsidiaries for the
purpose of name preservation. These are non-trading, wholly owned
and are incorporated in the United Kingdom unless otherwise
specified:
cloudSell Limited, cloudBuy (HK) Ltd, cloudBuy Pty Ltd, cloudBuy
Group Ltd, cloudBuy Holdings Ltd, cloudBuy Services Ltd, cloudBuy
& Co Ltd, cloudBuy India Private Ltd, cloudBuy UK Ltd, cloudBuy
International Ltd, cloudSell & Co Ltd, cloudSell Pty Ltd,
cloudSell Group Ltd, cloudSell Services Ltd, cloudSell
International Ltd, cloudSell UK Ltd, cloudSell Holdings Ltd, Cloud
Incorporations Limited
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 MMGZFLGDGLZG
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March 20, 2019 05:36 ET (09:36 GMT)
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