MAISTRO PLC blur Group Plc
The Enterprise Services Platform
Sourcing Purchasing Management Delivery Marketplace
blurgroup.com © 2015 blur Group PLC
AGENDA
Investor Presentations - 13th/14th October
H1 2015 Operational and Financial highlights
Financial Reporting Council conclusion
Revenue recognition recap
H1 2015 Financial results incl. H1 2014 restatement
H2 2015 Finance progress
Board additions and changes
2015 : Enterprise focus
Core Enterprise Value Proposition - The Five Solutions
Enterprise Customer Roll Out Program
Strategic Outlook
Appendices
H1 2015 Highlights
H1 2015 Operational Highlights
Resources re-focussed on acquisition and servicing of Enterprise accounts
Suite of higher margin Enterprise-targeted products launched, Premium Services, Subscriptions, blur data. Revenue generating in H2 2015
Increased vetting of new potential customers - contingent projects no longer admitted to Marketplace - Q1 2015; Smaller customers charged up front Access Fee - Q2 2015
Home Retail Group, Unilever and University of Greenwich among new Enterprise customers added
48% of Kicked off Projects were by repeat customers - up ⅓ YoY
Average value of Completed Enterprise projects increased
blur 5.0 launched - Enterprise ready; more automation
H1 2015 Financial Highlights
Financial Reporting Council enquiry into 2013 annual report concluded 30 September 2015
LBITDA reduced by 23.7% to $4.17m ($5.46m in H1 2014)
Revenue decreased by 9.3% to $1.67m ($1.85m in H1 2014); increased project vetting, business transitioned to Enterprise only
Gross profit decreased by 12.9% to $0.35m ($0.40m in H1 2014); relevant staff costs included
Underlying expenses (excl. bad debts & exchange gains/losses) fell by 5.8% to $5.42m ($5.58m in H1 2014)
Cash balance as at 30 June 2015 of $12.40m (June 2014 $24.43m)
Losses peaked in the 6 months to 30 June 2014
Financial Reporting Council
Enquiries into Year ended 31 December 2013 concluded
KPMG appointed as auditors in 2014
2014 audit process identified legacy contract issues from 2013
Contract book reviewed and scrubbed
2013 & H1 2014 revenues restated
Financial Reporting Council enquiries (FRC) into 2013 results received 18 March 2015
Strategic review of revenue recognition policy completed pre-release of 2014 annual results
New policy fully implemented and controls in place to align revenue with contract performance
FRC press release confirmed conclusion of enquiries on 30 September 2015
blur's position as Principal confirmed. High revenue recognition focus to continue
blur's Revenue Recognition Policy - update 2015
blur recognises revenue on a gross basis - the gross value of services provided to customers in respect of revenue earned, net of discounts, sales taxes, accrued, and deferred amounts
This includes gross project and retained outsourced services revenue, depending on the substance and legal form of the contract with its customers. Revenue is recognised once a legally binding contract between blur and its customers has been established and the delivery of the service has commenced.
Project Status
% revenue recognised
Invoice Status
Project Submitted
0%
0%
Project Listed
0%
Single User Access Fee - 10% of project value
(license for single user/single project, unless buyer subscription purchased. Increased vetting)
Project Kick Off
0%
Typically 10-50% of project value dependent on nature of project
Project Progress
% progress normally based on timelines, milestones or deliverables
Milestone or recognised stages of completion invoiced up to 100% at completion
Project Completed
100%
Final invoice issued and due
H1 2014 Restatement
$ 000
H1 2014
Change
H1 2014
restated
Total Revenue
5,694
(3,847)
1,847
Cost of Sales
4,179
(2,734)
1,445
Gross Margin
1,515
(1,114)
401
Gross margin %
26.6%
28.9%
21.7%
Administration Expenses
6,359
359
6,718
Profit/(Loss) before tax
(4,832)
(1,476)
(6,308)
$ 000
H1 2014
Change
H1 2014
restated
Trade and Other Receivables
4,169
(2,583)
1,584
Accrued Revenues
3,039
(2,997)
42
Total current assets
33,307
(5,581)
27,726
Current liabilities
6,957
(4,132)
2,825
Net assets
28,257
(1,449)
26,808
Revenue adjusted to reflect change in revenue recognition policy (net reduction $0.448m); and change in assessment of 2013 & 2014 projects (reduction $3.400m)
Cost of Sales adjusted to reflect change in revenue recognition policy (reduction $0.376m); change in assessments of 2013 & 2014 projects (reduction $2.832m); and additional internal staff costs relevant to the delivery of projects (increase $0.474m)
Administration costs decreased due to transfer of staff costs to cost of sales (reduction $0.474m), and exchange adjustment following restatement of balance sheet (increase $0.833m)
Certain classes of Other Current Assets are excluded from the above analysis compared to the Consolidated Statement of Financial Position in the Unaudited Interim Results
blurgroup.com © 2015 blur Group PLC 6
H1 2015 Key Financial Statements
$ 000 | H1 2015 | H1 2014 |
Total Revenue | 1,674 | 1,846 |
Cost of Sales | 1,325 | 1,445 |
Gross Profit | 349 | 401 |
Gross margin % | 20.9% | 21.7% |
Administration Expenses | (5,329) | (6,718) |
LBITDA (before provision of share based payments)
$ 000 | H1 2015 | H1 2014 |
Intangible assets (NBV) | 2,679 | 1,720 |
Cash | 12,401 | 24,432 |
Trade and other receivables | 2,935 | 2,840 |
Total Current Assets | 16,192 | 27,726 |
Total assets | 18,969 | 29,634 |
Current liabilities | 2,765 | 2,826 |
Net assets | 16,204 | 26,808 |
(4,165) (5,462)
Revenue decreased by 9.3% on H1 2014 with increased vetting of customer
Gross margin at 20.9% - slightly reduced leverage on staff costs
Underlying Administrative expenses (excl. bad debts and exchange gains/losses) down 5.8% as cost control actions take hold
Intangible assets increase reflects continued investment in our platform - Enterprise ready
Cash balance $12.4M at 30 June 2015
blurgroup.com © 2015 blur Group PLC 7
Closing cash balance - $12.4m
Cash burn continuing to reduce in H2 2015 as further cost reduction actions take effect
H1 2015 Cash Flow
$ 000
H1 2015
H1 2014
Loss After Tax
(4,462)
(6,141)
Net Cash used in Operations
(4,350)
(5,573)
Net Cash used in Investing Activities
(857)
(1,026)
Net Cash raised from financing activities
-
20,984
Opening cash balance
17,402
9,561
Net (decrease)/increase in cash
(5,051)
14,394
Effect of unrealised forex movement on cash
50
476
Closing cash balance
12,401
24,431
H2 2015 : Finance progress
New CFO in post 3 months
Interim reporting completed, FRC enquiry closed, prior year 2013 & 6 months to 30 June 2014 restatements completed
Internal reporting & forecasting reviewed
Key metric reporting under review. Focus on Kick off/Complete vs. Submitted
Cash and collections focus
Cost control focus:
Pay Per Click costs reducing (now US only) - new Marketing resources aligned to Enterprise customers
Permanent headcount reduced to 65 by end of 2014
Several cost initiatives under consideration
All functional areas continue to be challenged to do more with less
2016 zero-based budgeting process to validate all 2016 resource requirements
H2 2015 : Board additions and changes
20 years' experience as PWC partner and auditor to FTSE 100 and mid -cap plc's
Significant strengthening of Finance governance
Rob Wirszycz appointed Non-Executive Director - 15 Sep 2015Non-Executive Chairman, adviser and mentor for a range of quoted and private businesses
Chartered status as an IT Professional and Marketer; fellow of the RSA, IoD, ISSM and BCS; Liveryman of the IT Livery Company (Chair of Entrepreneur Panel); Visiting Senior Fellow at Cass Business School
David Sherriff appointed Non-Executive Chairman - 30 Sep 2015Non-Executive Director of the Company since 1 Oct 2013
Appointed to the position of Deputy Chairman and Lead Independent Director in February this year.
Separation of Chief Executive and Chairman roles complete
2015: Enterprise Focus
SALES
Regional leads assigned
Pivoted sales teams from inbound to outbound focus
Multiple engagements with identified targets in progress
MARKETING
Pay Per Click costs reducing
Focussed allocation of resources, fully targeted at the Enterprise Market
Identified Key events, partnerships, Account targets
DELIVERY
Through pilot processes, identified Enterprise-class delivery requirements
Improved automation, standardised processes including revisions to contracts, SOW production, use of Project Space to match Enterprise expectations
Trustpilot rating 8.9/10 - 'Great'
TECHNOLOGY
blur 5.0 launched in H1 2015
More automation, new products (Premium Services, Subscriptions, blur data)
Optimised to drive repeat business - more intuitive process flows
Core Enterprise Value Proposition The Five Solutions
Tail Spend Management
Supplier Diversity
Size Zero Enterprise
Ecosystem Management
Creating a Digital Enterprise
Avoid one of the most
expensive oversights in business - unmanaged Tail Spend
Track, monitor and report
on a full spectrum of suppliers who can pitch on a fair and equal basis
Re-engineer your
business to drive and measure results using fewer resources
Tear apart your traditional
organizational chart and blur the lines between you and your supply chain
Conduct a company wide digital health check for your business
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