Cloudbuy : Audited Final Results for the 12 months ended 31 December 2013

RNS Number : 0667C
Cloudbuy PLC
12 March 2014

cloudBuy plc

("cloudBuy" or the "Company")

Audited Final Results for the 12 months ended 31 December 2013

cloudBuy plc (AIM:CBUY), the cloud eCommerce marketplace, today announces its audited final results for the 12 months ended 31 December 2013.

Key Points

Financial:

• Turnover increased by 35% to £3.004m (2012: £2.219m)
• Sales of web and eCommerce services increased by 73% to £2.044m (2012: £1.180m).
• Company formations declined by 12% to £773k (2012: £880k)
• Revenue from coding increased by 18% to £187k (2012: £158k) 
• Gross profit increased by 46% to £2.561m (2012: £1.750m)
• Gross margin increased to 85% (2012: 79%)
• Operating expenses before share based payments increased to £3.275m (2012: £2.528m) reflecting the increase in costs associated with activities in Asia Pacific.      
• Loss before tax increased by 10% to £936k (2012: £850k)
• Cash and cash equivalents of £4.157m (2012: overdraft £61k)

Operational:

• 3 year exclusive agreement signed with Visa Worldwide Pte. Limited (Asia Pacific)
• Global launch as cloudBuy
• Senior appointments to strengthen management and operational teams
• First Australian contract win
• Increased contract momentum in the UK, including wins with Invest Northern Ireland and Tungsten Corporation plc

Ronald Duncan, Executive Chairman of cloudBuy, commented:

"2013 was a remarkable year for cloudBuy, laying the foundations for future, profitable growth. We successfully launched in Asia Pacific with our partner Visa, completed an equity fundraising to provide us with the firepower to capitalise on our strong market position, to increase our investment in our people and technology and to ensure that we have the infrastructure to capitalise on the significant opportunity available to us.

"We are delighted with our progress both internationally and in the UK. We have made a considerable investment in both our technology and international expansion that resulted in a loss for the year.  The Board considered that this was justified on the expectation that the investment would result in significantly improved future results."

For further information, please contact:

About cloudBuy PLC

cloudBuy, formerly @UK, is the world's leading transactional Cloud Platform.

cloudBuy has used the platform to build the world leading B2B ecommerce and eprocurement applications which address the full range of buying and selling activities, in an easy to use web and mobile experience.  Along with other cloud based applications including Content Management, email and big data analysis.

The applications have already managed over $ 500 billion of spend and are being used by leading organisations around the world to deliver savings and improved services.

The applications are unique in delivering correct pricing in the complex world of B2B whilst being easy enough to use that the people with difficulties can use the system to buy their own social and health care.

For more information, visit www.cloudbuy.com

Chairman's Statement

2013 was a remarkable year for cloudBuy, laying the foundations for future, profitable growth. We successfully launched in Asia Pacific with Visa, completed an equity fundraising by way of a placing and open offer to provide us with the firepower to capitalise on our strong market position, to increase our investment in our people and technology and to ensure we have the infrastructure to capitalise on the significant opportunity available to us.

The partnership with Visa AP combines the strengths of Visa's payment technology with cloudBuy's experience in developing and running eCommerce and cloud computing solutions for Government and corporate clients, to provide buying and selling organisations with a complete cloud based procure-to-pay automation solution.

The Company enjoyed strong trading in the year, delivering good growth in web and eCommerce revenues of over 70% on the preceding year.  While the Company Formations division continued to see a small decline, overall revenues enjoyed strong growth.  As mentioned in past trading updates, this division of our business is becoming increasingly less significant.

Following our stated strategy we have invested in additional resources, in particular in sales and marketing, and technical support for an accelerated global roll-out. This has resulted in a slightly higher loss to that in the preceding year.  As a consequence of this activity we start the year with the best pipeline that the Company has ever had, with active prospects in Asia Pacific, India, Canada and the USA, as well as UK opportunities.

Following completion of the placing and open offer referred to above, the Company has significantly strengthened its executive management and delivery team, enabling the Company to make very good progress in Asia Pacific along with the transition to its new business model as was previously described in the Interim Report for the six months ended 30 June2013.

Board appointments

We were delighted to welcome two additional Non-executive Directors to the Board of the Company in October 2013, bringing additional industry and financial expertise. Patrick (Paddy) Broughton, who is based in Australia, joins the Company as President of cloudBuy Asia Pacific. Paddy is a very experienced banker who from 1987 to 1995 worked at JP Morgan, rising to European Head of Foreign Exchange Sales, prior to joining SG Warburg in Sydney in 1997. From 1998 until 2009 he rose to Head of Equity Capital Markets at ABN AMRO Rothschild in Sydney before being appointed as Global Head of Equity Origination for RBS and Chief Executive of Hoare Govett in London, a position which he held until 2012. He is currently also Chairman of the Dixon Advisory Investment Committee.

David Chellingsworth is a qualified Chartered Accountant and was formerly the Finance Director of cloudBuy between 1999 and 2001, before its flotation on AIM. He spent the majority of his career at British Gas. Subsequently, he served as Finance Director of Advanced Medical Solutions from 1994 to 1999 where he oversaw its successful flotation on the Official List in 1996. Since leaving cloudBuy, David has acted as Finance Director of private companies, including Cyworks plc and Medtrade Limited and acted as financial consultant at UK Biobank Limited. David is the chairman of the Company's audit committee.

Dividend

The Board is not recommending the payment of a dividend for 2013. In the immediate future, the Board is committed to building the Group's business and accordingly all the Group's financial resources are being applied to this end. In the longer term, the Directors intend to adopt a progressive dividend policy appropriate to the Group's financial performance.

People

We have an exceptional group of employees and on behalf of the Board and shareholders, I would like to thank all our employees for their hard work and effort during the year, welcome our new team in Asia Pacific and look forward together to a successful year in 2014.

Outlook

We are delighted with our progress both internationally and in the UK. We have made a considerable investment in both our technology and international expansion and expect these to result in significantly improved future results.

Ronald Duncan

Executive Chairman, 12 March 2014

Strategic Report

Overview

In 2013 we were focused on creating our partnership with VISA in Asia Pacific and continuing the development of our products.  Success in these meant we were able to strengthen our financial position through a successful fundraising, and build our team at all levels. Our investment in people was essential to ensure that we have the capability and capacity to execute on contract wins globally and thus, the Board considered it was appropriate to make the investment in  2013  for future growth

Financial results

In the year ended 31 December 2013, the group's revenue increased by 35% to £3,004,102 (2012: £2,219,034) and the loss before taxation increased to £936,417 (2012: £849,502).

Sales of web and eCommerce services recorded an increase of 73% in the year to £2,044,458 (2012: £1,180,324).

Revenue from company formation services decreased by 12% to £773,137, (2012: £880,455) in the year reflecting Companies House's continued increase in market share in electronic formations.

Revenue from coding increased by 18% to £186,507 (2012: £158,255).

As a result mainly of the increase in web and eCommerce services, gross margin increased to 85% (2012: 79%).

Operating expenses before share based payments increased to £3,273,579 (2012: £2,527,671). The increase in large part reflects the increase in costs associated with the launch in Asia Pacific. In addition, capitalised development expenditure in the year reduced to £9,900 (2012: £179,985).  This reflects the fact that the expenditure was on the enhancement of, rather than the launch of, new products and did not qualify to be capitalised under the accounting standards.   £217,790 was charged as the "cost" of share options granted to employees and shares issued to them under the Share Incentive Plan (2012: charge £70,247).

At 31 December 2013 the Group had cash and cash equivalents of £4,157,347 (31 December 2012: overdraft of £60,763).

Operational and performance review

Strengthened management team

We have significantly strengthened the management team of the business with several high level appointments. These include Jonathan Holden from Visa as CEO for Europe, Middle East and Africa region, along with the global solution team of Russell Darling, Nilesh Gopali, Sharlene Jobson and Chris Hope.  The Asia Pacific team was set up in March 2013 with the appointment of Matthew Clyne as Commercial Director and was strengthened during the year with the appointment of Patrick Broughton as its President, Dale Stephens as CEO for the region and Jeff Corcoran joining as a Sales Executive.

UK Operations

In the UK, we continue to see growth with contract wins increasing.

Technology investment

The Company invested considerable resources in product enhancement in 2013, particularly in the area of content management. The Company has developed a sophisticated content management system (CMS) which can be independently deployed for any customer or used in an integrated manner to customise cloudBuy eCommerce marketplaces and eCommerce websites. 

 This enterprise technology allows cloudBuy to quickly customise eCommerce marketplaces to meet diverse customer needs, ranging from eProcurement and Social Care, through to citizen disbursements and insurance payments.  These new marketplaces have a highly intuitive consumer interface, which integrates seamlessly with the controlled back office workflow.  Customer feedback is very positive and the new suite of solutions moves cloudBuy substantially ahead of its competitors.

Social Care

The Company secured a number of significant contract wins in Social Care in the UK and has now established itself as a market leader in this rapidly growing segment, where over 80% of the available market has yet to choose a solution. Local government spend on social care is in excess of £20bn and the overall UK market is estimated at up to £100bn.

In tandem, the NHS in the UK is implementing personal health budgets from April 2014, where the 211 Clinical Commissioning Groups (CCGs) have to offer all qualifying personal budget holders a solution which allows them to choose and purchase their care.  We have good engagement in this area and are the only eMarketplace provider that is accredited by the NHS to hold patient data, giving us a distinct competitive advantage.

Spend Analysis

In the area of spend analysis,  the volume of spend analysed by our systems is now over $500 billion, and, as was demonstrated with the signing of the contract with Tungsten Corporation announced on 4 September 2013, there are substantial revenues available in this area.  It is important to emphasise that these revenues are a small fraction of the RECURRING revenues that the Company can generate from realising the saving with our eCommerce marketplace available under the new business model.

Company Formations

2013 has been a challenging year for Company Formations. Although around 17,000 new companies and limited liability partnerships were incorporated in the course of the year and the full suite of business services for new start ups and established companies continued to be offered at competitive and attractive prices, revenue declined by around 12% compared to 2012.

We have responded to the downturn by focusing on increasing our social media profile and internet advertising to generate greater brand recognition and loyalty and exploring the possibilities of linking with partners to offer a greater range of business services including accountancy.

International Operations

We were delighted to announce the launch of cloudBuy in Asia Pacific with Visa in October 2013, targeting Governments and enterprises. This builds upon the market development work that we have been undertaking in Asia Pacific over the course of the past 12 months, which also saw our first contract win in Australia.

We enter 2014 with a good pipeline of opportunities throughout the region, in Australia, New Zealand, Hong Kong, Singapore, China and India.

The Asia Pacific team have bedded in and are focused on converting this pipeline into paying clients.  The prospects cover a range of industries and opportunities, including government organisations, large corporates and outsourcers.

The rebranding of the business to cloudBuy and an active global digital media strategy has resulted in enquiries from the USA and Canada, where we have been asked to bid for a number of contracts.

Post period developments

We are pleased to have carried the positive momentum into the new financial year, announcing two important contract wins in the UK in February 2014. The first was for a consumer led Social Care marketplace with Northamptonshire County Council, in conjunction with The Grass Roots Group PLC.

The Social Care marketplace is planned to be live by 1 April 2014, initially focusing on Northamptonshire's managed social care provision, with plans to involve all of Northamptonshire's citizens in the selection and management of their care during the following 12 months.

The second was a contract with a major central Government Agency ("the Agency") to provide an Intranet system using cloudBuy's content management technology. The agreed revenue is £406k with approximately £200k of immediate potential, follow-on revenue, giving potential total revenue in year one of £600k, followed by recurring revenues. The cloudBuy content management system provides a sophisticated Intranet capability, which will significantly enhance the Agency's ability to manage internal processes and communications.

We have also improved our service to customers with full legal compliance for einvoicing in over 40 countries of the world.  Our new website is driving enquires from all over the world, and whilst we already have buyers in every country in the world it was important to put in place the legal and technical requirements to service all the major economies.

Risks and Uncertainties facing the Business

We started the year with a weak capital position and a dependence on a narrow market.  We have addressed these risks by significantly increasing our market and our capital base.

Our rapid growth required a strengthened management team to reduce the risks and so we have addressed this risk with our strengthened global management team.

Summary

2013 was a very satisfactory year and has left us well placed to take advantage of the significant opportunities available to the Company.  The positive start to 2014 leaves us confident we can deliver on our objectives.

Signed on behalf of the Board by:

Lyn Duncan

Chief Executive Officer

12 March 2014

Group Statement of Comprehensive Income

For the year ended 31 December 2013

Revenue and operating loss for the year all derive from continuing operations.

The loss attributable to the owners of the parent company is £852,158 (2012 - loss of £796,242). Total comprehensive income attributable to owners of the parent company is £852,158 (2012 - (£796,242)). 

Statements of Financial Position

31 December 2013

Statements of Cash Flows

For the year ended 31 December 2013

Statements of Changes In Shareholder's Equity

For the year ended 31 December 2013

The other reserve arises because shares issued on the acquisition of subsidiaries have been recorded at par value and no share premium recognised.

Notes to the Financial Statements

1.General information

cloudBuy plc ("the Company") and its subsidiaries (together "the Group)" provides an integrated software platform for eProcurement and eCommerce 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 operates 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 £876,057 and at the year-end had cash balances of £4,157,347.  The directors of the Group have prepared detailed projections and cash flow forecasts through to 31 December 2014. In considering these cash flow forecasts, 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 ar 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 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 Profit and Loss Account 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 2013.

(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:

The Directors have considered the above new standards, interpretations and amendments to published standards that are not yet effective and concluded that they are either not relevant to the Group or that they would not have a material impact on the Group's financial statements.

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.

4 Revenue- Segmental Analysis

The Groups 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.

Coding International is the Company's 100% trading subsidiary and so these results are extracted from that company's own accounts that are published separately and consolidated into these results in accordance with statutory requirements. Details of the statement of financial position for Coding International Limited can be obtained from those accounts.

The revenue recognised and gross profit attributable between reportable segments is shown below:

All of the revenue derives from services provided in the United Kingdom.  During 2013 one customer for web and eCommerce services was responsible for revenue of £450,000 (2012: one customer, £374,216) otherwise no single customer was responsible for greater than 10% of the Group's revenues.

5 Operating loss

6 Auditors remuneration

Amounts payable to James Cowper LLP in respect of audit and non-audit services

7 Employees

Directors remuneration

All of the payments above relate to salary or fees.  None of the Directors receives any benefits or is accruing benefits under a Company pension scheme nor exercised share options in the year.  90,909 shares were issued to PH Broughton in lieu of remuneration and calculated at 33p per share and are released to him in equal quarterly portions over 3 years. 

8. Finance costs

9. Taxation

The Group has estimated tax losses of £12,692,000 (2012: £11,400,000) available for carry forward against future trading profit. 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 90,201,736 (2012: 78,641,679) and the following losses:

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 one category of dilutive potential ordinary shares: share options.  The company has made a loss and the potential share options are therefore anti-dilutive.

The basic and diluted loss per share calculated on the adjusted earnings is 0.7p (2012: 0.9p).

11. Goodwill

12. Other intangible assets

The remaining amortisation period for development expenditure is up to 3 years.

13. Property, plant and equipment

14. Investments

Subsidiary undertakings (at cost):

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).  As Coding International Limited's balance sheet showed net liabilities full provision was made for impairment in the value of the investment in 2008.  The Company also has an investment in @India eCommerce Pvt. Ltd, incorporated in India, which will provide ecommerce solutions to Indian companies and Cloudbuy Pty Limited, incorporated in Australia, which will provide ecommerce solutions in the Asia Pacific region.

15. Trade and other receivables

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.

A provision of £466,804 (2012:£ 220,778) is included within amounts owed by related undertakings above.

Included in the Group's trade and other receivables balances are debtors with a carrying value of £54,201 which have been due for a period greater than three months against which a provision of £4,644 has been made.

 The balance and all other balances have been due for less than three months and are considered to be recoverable.

16. Notes to the cash flow statement

Analysis of changes in net funds/debt

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

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

The bank overdraft was secured by a fixed and floating charge over the Company's assets.  The amount owed to Group undertakings has no fixed repayment schedule.

19. Share capital and share premium

The total authorised number of ordinary shares is 250 million (2011: 250 million) with a par value of 1p each.

In October 2013 16,054,500 ordinary shares were issued at 33p under the fund-raising announced by the Board on 25 September 2013.  This took the form of a firm placing of 10,000,000 shares £3.3 million and an open offer of 6,064,500 shares to raise £2.0 million on the basis of 1 Open Offer Share for every 14 Existing Ordinary Shares.

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 are exercisable up to five years after issue.  On 15 October 2013 500,000 ordinary shares were issued at 2p and on 19 December 2013 1,500,000 ordinary shares were issued at 2p following the exercise of warrants, leaving warrants to subscribe for 4,287,476 shares outstanding.

During 2013 1,742,832 ordinary shares were issued at 1.75p and 2,500,000 ordinary shares were issued at 3.5p following the exercise of share options.

During October 2013 790,909 ordinary shares were issued at 33p for the provision of services.  These were issued subject to restrictions.  Included was 90,909 shares issued to PH Broughton in lieu of director's remuneration and that are released to him in equal quarterly portions over 3 years.  A further 183,636 ordinary shares were issued during October 2013 for IPR amongst other reasons.

During 2013 the number of options granted under the cloudBuy plc Share Option Scheme to subscribe for ordinary shares in the Company changed as follows:

The options at 31 December 2013 are as follows:

Share based payments

The Group has a share option scheme under which the Remuneration Committee can grant options over shares 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 the assumptions used in the calculations are as follows:

† Vest in equal parts between 2nd and 3rd anniversary

†† Vest in equal parts between 3rd and 5th anniversary

No dividends were assumed.  The expected volatility is based on the historical volatility of the Company's shares to the extent information was available and of the shares of similar entities.  In addition to the grant above on 8 December 2005, options over 500,000 shares were also granted to former directors of the Company at an exercise price of 45p per share.  As part of the terms of their compensation for loss of office in 2006 they were allowed to retain those options.  These were valued at the date on which the directors ceased to be employees and the value written off as it was in respect of past services.

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 three 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.

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

Cash is held in current or short term deposit account. 

All other finance assets are non-interest bearing.

Financial liabilities

There is no material difference between the book value of financial assets and liabilities noted above, and the fair value.

The main objective of the Groups treasury policy is to protect post-tax cash flows of the business from the adverse effects of financial risks.

The Groups financial assets and liabilities comprise cash and liquid resources, and various items, such as trade receivables and trade payables that arise directly from its operations. The Group has no undrawn borrowing facilities. 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's exposure to bad debts is reduced as its major customers tend to be public sector bodies.  

The Group finances its operations through funds raised from share issues.

Sensitivity analysis has not been performed as any impact is considered immaterial.

21. Financial commitments

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 £24,000 (2012: £24,000). 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 £24,000 (2012: £24,000).  The leases on both properties are due for renewal in August 2014.

The Company acts as guarantor under the lease for the property occupied by its subsidiary Coding International Limited.  The annual rent under the lease which runs for 15 years from March 2011 is £12,550. 

There is no party which has Ultimate control of the Group.

Key management compensation

Share based payment remuneration represents the value of options granted to key management valued as described in note 19.

NOTE TO THE ANNOUNCEMENT

The 2013 Annual Report and Accounts will be sent to shareholders shortly and will be available from the company's website http://investor.cloudbuy.com/ along with the latest research.

The extracts set out above do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006.   Statutory accounts for the year ended 31 December 2012 which contained an unqualified audit report and which did not make any statements under Section 498 of the Companies Act 2006 have been, and accounts for the year ended 31 December 2013 will be, delivered to the Registrar of Companies.

This information is provided by RNS

The company news service from the London Stock Exchange

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