Final Results

RNS Number : 7150N

Proxama PLC

20 May 2015

 



Proxama PLC

("Proxama" or the "Company")

Preliminary Results

For the Year Ended 31 December 2014

Highlights

2014

·     Revenue and Income of £0.8m

·     EBITDA loss of £5.6m driven by technology delivery acceleration and shift from small projects to longer term sustainable revenues

·     Cash balance at year end of £5.5m

·     Restructured Company under two divisions: Proximity Marketing Division and Digital Payments Division

·     In December 2014, acquired Aconite, an established card issuance and transaction processing software business

2015

·     Significant new International & UK long-term contract wins in 2015 H1 across both Digital Payments and Proximity Marketing:

o  Innovate UK £1m Grant - Proxama has been awarded £1m over two years, to support the extended roll-out of the Proxama-owned mobile application, Loka.

o  Eye Airports - A new two year contract for Proxama to deploy Proximity Marketing Services via the Proxama Network utilising Eye Airports physical assets. Eye Airports are the largest owner of airport advertising space in the UK, owning advertising signage in over 25 of the UK's airports.

o  Exterion Media - A new three year contract, for Proxama to deploy Proximity Marketing Services via the Proxama Network utilising Exterion Media physical assets. Exterion Media are one of the largest privately owned out-of-home media owners in Europe. They own media sites in numerous high footfall locations in London and are the sole providers of advertising space on Transport for London's bus and Underground services.  

o  Navy Federal Credit Union - A new five year contract with Navy Federal Credit Union ("Navy Federal"), the world's largest credit union, commencing on 13 May 2015. Proxama to supply their Payment Application Manager software solution to support the migration to EMV, the international standard for chip and PIN cards, and on-going lifecycle management of a substantial credit union portfolio including several million debit cards. Navy Federal is the world's largest credit union serving the United States military and their families across the world. It has more than US$65 billion in assets, and over 5 million members globally.

·     The company is in detailed negotiations with a number of further significant opportunities across both Divisions

·     Significant cost reduction and improved cost management

·     Expect to be cash positive on a monthly basis by year end

·     Strong progress towards our goal of becoming a leader in mobile proximity marketing and mobile payment solutions.

·     Neil Garner, the founder of Proxama, has indicated a desire to step aside from his CEO role, having led Proxama for almost 10 years. Neil who has been the technical inspiration behind the Company, supports the decision that the business requires new leadership to focus on commercialisation of the Group's technical expertise and IP. Neil will remain in the role until a new appointment is made, at which time, it is expected that he will continue to support the Company in a strategic role, developing new technologies, products and partnerships.

David Bailey, Chairman of Proxama, said, "In 2014 we restructured the business into two divisions and put in place a commercial strategy to realise the value of the Company's technical expertise and IP. I am glad to confirm that we are now seeing the benefit of our investment with a series of new business wins for both divisions. Our Proximity Marketing network is being rolled out across many advertising boards, digital screens and other physical media throughout the UK enabling a new highly effective advertising channel. We are very excited about the future."

Enquiries:

Proxama PLC

Neil Garner, Chief Executive                                      020 3668 2888

John Kennedy, Chief Commercial Officer

Peel Hunt LLP

(Nominated Adviser and Broker)              

Richard Kauffer                                                               020 7418 8900

Edward Fox

Novella PR

Tim Robertson                                                                  020 7630 3843

Ben Heath

About Proxama

·     Proxama is an internationalmobile commerce Company specialising in proximity marketing via mobile and providing end-to-end solutions for card issuers to migrate customers from magnetic stripe credit and debit cards to contactless mobile payments.

·     The technology to support mobile payments is now in place. 90% of the world's smartphones have technology to make mobile payments and in 2015 30 million contactless mobile payments are expected to be made compared to 3 million in 2014.

·     Proxama has been at the forefront of this market for the last 10 years. Today, Proxama's solutions are used by banks, financial institutions, loyalty companies, media owners, stadium owners, retailers and brands. Current clients include: Fiserv, Exterion Media, Harrods, Ubisoft, Gala, Purple Seven and Argos.

·     The proximity marketing division focuses on connecting consumers to brands and retailers via Bluetooth Low Energy (BLE) beacon technology and Near Field Communication (NFC). Proxama establishes and owns beacon networks in high footfall locations such as City Centres, transport networks, stadia, shopping malls, entertainment hubs and retail outlets, which are then able to communicate to consumers via messages to mobiles when the consumer is in close proximity to a beacon. The technology platform at the heart of this division is TapPoint®

·     The payments division manages end-to-end credit and debit cards solutions on behalf financial institutions in the United States, Europe and the Middle East and specialises in enabling the migration of cards from magnetic stripe cards, to chip and pin cards and from contactless chip cards to mobile devices. The technology behind this division isProxama's Digital Enablement Platform.

CHAIRMAN'S REPORT

FOR THE YEAR ENDED 31 DECEMBER 2014

The Board is pleased to report that in 2014 the Company made good progress towards our goal of becoming a leader in mobile proximity marketing and mobile payment solutions.

The mobile marketing and mobile payments markets have both seen significant growth in 2014. There is growing confidence amongst those in the industry, and increasingly amongst consumers too, that the mobile phone will be synonymous with proximity marketing and contactless payments.

The Company adapted its strategy following Weve (a joint venture across the three largest UK mobile operators) deciding their strategy did not require the mobile wallet product Proxama were delivering.   The Company moved away from providing mobile operator-led solutions into working with the Bank card issuers themselves.  This has led to an important acquisition and the restructuring of the business.

Today, Proxama is focused on two divisions. The first is our Proximity Marketing Division which connects consumers to retailers and brands via mobile proximity marketing using Bluetooth Beacon and NFC technology.  The Company has successfully deployed proximity services with many major brands, retailers and media owners in 2014, including Exterion Media, Harrods, William Hill, First Group, Coral, Kia Oval, Ubisoft, Gala, Purple Seven and Argos. In these deployments, Proxama's existing or newly-established proximity networks in high footfall locations such as city centres and retail outlets, communicate to consumers via messages to mobiles when the consumer is in close proximity.

Our second division is the Digital Payments Division which provides end-to-end software solutions for card issuers with the ability to migrate customers from magnetic stripe to chip-and-pin cards and from contactless cards to mobile devices.

Fundamental to the establishment of this division was the acquisition, in December 2014, of Aconite Technology Ltd, for the initial purchase price of £2.06m and further earn out payment of up to £1.75m in shares (or cash) to be paid subject to performance criteria.

The acquisition of Aconite brought a set of proven card issuer solutions with a strong customer presence in the USA, Europe and Middle East.  Critically, the combination of Aconite and Proxama technology provides a complete end-to-end solution for card issuers to migrate from magnetic stripe cards to chip cards, and from contactless chip cards to mobile devices. Aconite is expected to accelerate the financial performance of the payments business considerably both as a result of material cost synergies which can be achieved from putting the two companies together but also from clients having a much broader range of services and products available. 

In December 2014, the Company completed an equity fundraising for £4m before expenses, leaving a healthy cash balance at the year-end of £5.5m, allowing the business to focus on delivering the strategy in a market which is now ready.

In January 2015, we announced the appointment of John Kennedy as CFO and Mike Woods, the founder of Aconite to the board as CEO of the payments division. These appointments have significantly strengthened the commercial experience of the Board. Adrianus van Breda, the former CFO, and Miles Quitmann, the former CCO, left the business in January and March respectively.

Today, we would like to thank Neil Garner, the founder of Proxama, who has indicated a desire to step down from his CEO role, having led Proxama for almost 10 years. Neil who has been the technical inspiration behind the Company, supports the decision that the business requires new leadership to focus on commercialisation of the Group's technical expertise and IP. Neil will remain in the role until a new appointment is made, at which time, it is expected that he will continue to support the Company in a strategic role, developing new technologies, products and partnerships.

The acquisition of Aconite changed the shape of the business and this is further reflected in our decision to re-structure the company under the Digital Payments and Proximity Marketing divisions. Through Aconite we will have the benefit of a significant increase in revenues with contracted revenues of £7.3m and a further potential £17.5m over the next 5 years, providing the basis for Proxama becoming cash positive by the end of 2015. Our goal to become a leader in mobile proximity marketing and mobile contactless payments remains unchanged but our routes to getting there are now much clearer.

David J Bailey

Chairman

CHIEF EXECUTIVE OFFICER'S REPORT

FOR THE YEAR ENDED 31 DECEMBER 2014

Introduction

I am pleased to report on what has been an important year for our Company and one which we believe has set us up for a successful 2015.

Proxama provides the mobile technology hub that connects digital and physical commerce for mobile consumers in high footfall locations; from initial discovery of information, to issuance of promotions on mobile, to mobile contactless payment and redemption of loyalty vouchers at point of sale. All this can be achieved with Proxama's TapPoint® cloud platform for Proximity Marketing and loyalty, connected with our Digital Payment Enablement Solutions for issuing and managing cards.

We have never doubted our technology and expertise in these areas as we have proved by being employed to complete projects by many of the market leaders over the past 10 years. Our challenge is to fully commercialise the technology we have and in 2014 we have shifted our focus and re-structured our business onto much more clearly defined commercial lines.

We are already seeing the benefit of this with significant new contract wins in H1 of 2015:

·     Exterion Media - The three year contract, is for Proxama to deploy Proximity Marketing Services via the Proxama Network utilising Exterion physical assets. Exterion are one of the largest privately owned out-of-home media owner in Europe. They own media sites in numerous high footfall locations in London and are the sole providers of advertising space on Transport for London's bus and Underground services. The first phase will look to build on the successful trial conducted on buses in Norwich late last year, with a roll-out to UK major cities.

·     Eye Airports - The two year contract is for Proxama to deploy Proximity Marketing Services via the Proxama Network utilising Eye Airports physical assets. Eye Airports are the largest owner of airport advertising space in the UK, owning advertising signage in over 25 of the UK's airports, from the more traditional static billboards to a range of digital screens. Over 100 million passengers travel through these airports each year.

·     Innovate UK £1m Grant -Proxama has been awarded £1m over two years, to support the extended roll-out of the Proxama-owned mobile application, Loka. We are extremely excited about the prospect of rolling out Loka across the UK, an important stream of activity within our Proximity Marketing strategy.

·     Navy Federal Credit Union - A new five year contract with Navy Federal Credit Union ("Navy Federal"), the world's largest credit union, commencing on 13 May 2015. Proxama to supply their Payment Application Manager software solution to support the migration to EMV, the international standard for chip and PIN cards, and on-going lifecycle management of a substantial credit union portfolio including several million debit cards. Navy Federal is the world's largest credit union serving the United States military and their families across the world. It has more than US$65 billion in assets, and over 5 million members globally.

Financial results

Revenue, grant income and other operating income of £798,274 (2013: £831,085) was in line with expectations. Normal trading revenue was £650,978 (2013: £813,380), whilst government grant income totalled £104,926 (2013: £8,000). Aconite accounted for £88,085 of revenue in the period following the acquisition on 4 December 2014.

In the period under review, EBITDA loss before exceptional items were £5,723,065 (2013: £3,144,415 before exceptional items) and as at 31 December 2014, the Company had net cash of £5,503,567 (2013: £7,468,818). Loss for the financial year was £5,623,977 (2013: £5,239,789).

Operational Review

We now operate two distinct product divisions.

Proximity Marketing Division

Our Proximity Marketing Division focuses on connecting consumers to retailers and brands via mobile proximity marketing with increased emphasis on using Bluetooth Beacon technology.

A number of trial throughout 2014 proved the capabilities of our Proximity Marketing Services across a wide range of high footfall locations, including: Stores (Argos, Ubisoft, Gala Coral, William Hill); Malls (Westfield); Public events (Purple 7); Stadia (Kia Oval); Public transport (First Group); and entire cities (Norwich, Liverpool). Proximity marketing is growing rapidly around the world. In the US 57% of consumers are said to be more likely to engage with proximity-based advertising. Our objective now is to move these client relationships onto long term commercial contracts in 2015.

This Proximity Marketing service was extended through Proxama's development of the Loka consumer mobile application, which allows passengers to receive location-based messages while travelling on the buses and walking around the city centres. Through maximising the high passenger dwell time spent on buses, local brands saw an increase in loyalty, footfall and engagement. The Loka service in Norwich has now been deployed into Jersey and is sold as a subscription service.

The success of Norwich and the insights we are gaining in terms of consumer take up and responses to promotions is proving invaluable in helping us articulate our proposition to potential clients and deciding on the best way to commercialise our services. Currently, we generate revenue from charging event fees per click or mobile interaction in response to signals from our beacon network or from taking a small share of the transactional fees relating to redeeming offers or promotions.

We have signed a number of recent long term strategic deals and have a healthy pipeline of potential partners such as shopping centres, sports stadia and retailers as well as advertising agencies and brands who will join and broaden this mobile advertising network. Our objective is to increase our beacon network up to 10,000 locations across the UK by the end of 2015.

Digital Payments Division

Our Digital Payments Division provides end-to-end software solutions for card issuers enabling them to migrate customers from magnetic stripe to chip-and-pin cards and from contactless cards to mobile devices.

Early in 2014, our payment activity was split between working with Mobile Operator Joint Ventures (Weve and ISIS) and exploring new Host Card Emulation (HCE) opportunities with Banks, as the major card schemes started to release specifications and support for the new technology. It became increasingly clear that the greater opportunity for Proxama was to focus all our attention on supporting Banks and Card issuers to migrate their existing solutions towards mobile payments.

Aconite is one of a very small number of independent global companies with software solutions for card issuers to manage EMV migration, chip card issuance management, tokenization and PIN management. The capabilities and customers of Aconite perfectly complement the mobile and NFC positioning of Proxama, creating a truly unique end-to-end solution for card issuers looking to better manage a portfolio of physical and digital cards.

In addition to the technology and platform capability resulting from the acquisition of Aconite, the acquisition has significantly enhanced the financial position of the business through:

§ New profitable revenue streams from existing customers migrating from mag-stripe cards in the United States of America, securely managing chip cards and reducing costs of managing card PINs.

§ Significant cost savings of no less than £1.5m.

§ Long standing and trusted bank relationships and credibility.

§ New channels to market for mobile contactless enablement products.

In the payment division we expect to grow revenues significantly as we increase marketing activities, launch new products and increase our sales force across the USA and Canada. These markets are critical as the US card market migrates from magnetic stripe to chip and pin with the liability shift targeted in October 2015 and expected to run over the next two to three years. Proxama is well placed to benefit from this enforced change.

Our focus on supporting Banks and Card issuers requires the migration of their customer's credit and debit cards to chip and PIN as well as digitisation and securing of other relevant processes. Proxama's PIN Manager offers electronic PIN delivery via SMS or web browser, and tokenisation secures distribution of customer card data, substituting card details with a token that has no exploitable meaning or value.

Outlook

We now have a clear commercial path to follow and the financial resources to achieve our plans, supplemented by a strong pipeline of good commercial opportunities. Our most recent announcements demonstrate our progress and potential for our services to become widespread.

Our longstanding vision of mass market proximity commerce is happening and we are very excited to be in prime position to be able to deliver highly scalable services for our customers and partners, and demonstrate significant returns to our shareholders.

Dr Neil Garner

CEO  & Founder

CHIEF FINANCIAL OFFICER'S REPORT

FOR THE YEAR ENDED 31 DECEMBER 2014

Revenue, grant income and other operating income of £798,274 (2013: £831,085) was in line with expectations. Normal trading revenue was £650,978 (2013: £813,380), whilst government grant income totalled £104,926 (2013: £8,000). Aconite accounted for £88,085 of revenue in the period following the acquisition on 4 December 2014.

The Company is concentrating on delivering long term, strategic contracts that deliver regular sustainable revenues and cash. Equally important, is the shift to a more focussed cash and cost management culture, with an explicit emphasis to drive investment into top line growth.

The geographic split of the revenue was 78% UK, 4% USA, and 18% from other countries compared to 49%, 8%, and 7% respectively for the 2013 period, with the remaining 36% coming from Canada.

The product revenue mix saw a reduction in wallet related business from 78% in 2013 to 70%, with an increase of loyalty and marketing related revenues from 22% for 2013 to 30% 2014.

The group total loss after taxation for 2014 was £5,623,977 and EBITDA loss before exceptional items was £5,613,690 in line with expectations and compares to the 2013 group loss of £5,239,789 and EBITDA loss of £3,144,415. The 2014 Group loss includes £135,703 of amortisation and depreciation compared to 2013's £160,690.

The pipeline is strong, through a combination of acquiring Aconite and the existing Proxama relationships. It is anticipated incremental revenues will flow during 2015 to drive significant growth of the Company.

Balance sheet

As at 31 December 2014 total equity was £8,509,625 (2013: £7,367,514) of which £5,503,567 (2013: £7,468,818) were cash and cash equivalents.

Net current assets are £4,572,313 (2013: £7,353,942) comprised of £5,503,567 (2013: £7,468,818) cash and cash equivalents, trade receivables of £453,963 (2013: £162,673), other receivables £211,855 (2013: £143,427), current tax receivable £649,087 (2013: £172,723), trade and other payables £1,976,627 (2013: £739,033) and current portion of long term borrowings £563,676 (2013: £16,838).

Details of the acquisition of Aconite for £1,613,667 are included on pages within these accounts.

John Kennedy

Chief Financial Officer

CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 31 DECEMBER 2014

	2014		2013
	£		£
Revenue	650,978		813,380
Cost of sales	(741,489)		(422,007)
Gross (loss)/profit	(90,511)		391,373
Grant income	104,926		8,000
Other income	42,370		9,705
Administrative expenses	(5,806,178)		(3,714,183)
Administrative expenses - exceptional item	(109,375)		(2,063,921)
Operating loss	(5,858,768)		(5,369,026)
Finance income	31,621		2,503
Finance expense	(72,121)		(45,989)
Loss on ordinary activities before taxation	(5,899,268)		(5,412,512)
Taxation	275,291		172,723
Loss for the year attributable to owners of the parent	(5,623,977)		(5,239,789)
Loss per share - basic	(0.68p)		(1.25p)
Loss per share - diluted	(0.68p)		(1.25p)

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2014

		2014		2013
		£		£
Loss for the year		(5,623,977)		(5,239,789)
Items that will be reclassified subsequently to profit and loss:
Foreign exchange difference arising on consolidation		8,162		-
Other comprehensive income		8,162		-
Total comprehensive loss for the financial year attributable to owners of the parent		(5,615,815)		(5,239,789)

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2014

	2014		2013
	£		£
Assets
Non-current Assets
Intangible assets Property, plant and equipment	4,921,777 199,729		420,655 102,621
	5,121,506		523,276
Current Assets
Trade and other receivables	959,962		468,272
Current tax asset	649,087		172,723
Cash and cash equivalents	5,503,567		7,468,818
	7,112,616		8,109,813
Current Liabilities
Trade and other payables	(1,976,627)		(739,033)
Current portion of borrowings	(563,676)		(16,838)
	(2,540,303)		(755,871)
Net Current Assets	4,572,313		7,353,942
	9,693,819		7,877,218
Non-current liabilities
Non-current borrowings	(560,194)		(509,704)
Deferred tax liabilities	(624,000)		-
Net Assets	8,509,625		7,367,514
Equity
Share capital	10,187,672		7,724,336
Share premium account	8,703,332		5,811,795
Share based payment reserve	599,449		332,323
Merger relief reserve	11,605,556		10,960,607
Translation reserve	8,162		-
Capital reserve	209,791		209,791
Equity reserve	546,178		55,200
Other reserve	(9,225,108)		(9,225,108)
Retained earnings	(14,125,407)		(8,501,430)
Total Equity	8,509,625		7,367,514

The financial statements were authorised for issue by the board of directors on and were signed on its behalf by:

John Kennedy

Director

Registered number - 06458458

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2014

		2014		2013
Cash flows from operating activities		£		£
Loss before taxation		(5,899,268)		(5,412,512)
Adjustments for:
Depreciation of property, plant and equipment		93,183		56,562
Amortisation of intangible assets		42,520		104,128
Profit on disposal of assets		(5,129)		-
Loss on disposal of intangibles		53,361		-
Financial income		(31,621)		(2,503)
Financial expense		72,121		45,989
Share-based payments		267,126		258,564
Deemed cost of listing arising on reverse acquisition		-		2,063,921
		(5,407,707)		(2,885,851)
(Increase) in trade and other receivables		(168,180)		(98,472)
(Decrease)/Increase in trade and other payables		(207,902)		419,080
Cash used in operations		(5,783,789)		(2,565,243)
Income taxes received		-		214,352
Net cash used in operating activities		(5,783,789)		(2,350,891)
Cash flows from investing activities
Interest received		31,621		2,503
Additions to intangible assets		(817,715)		(517,296)
Purchase of property, plant and equipment		(196,863)		(30,316)
Proceeds on disposal of property, plant and equipment		12,627		-
Acquisition of subsidiaries net of cash acquired		18,178		1,791,572
Net cash (used in)/from investing activities		(952,152)		1,246,463
Cash flows from financing activities
Interest paid		(6,976)		(7,486)
Issue of share capital		4,937,596		8,210,000
Share issue costs		(60,463)		(475,773)
Proceeds from issue of convertible notes		-		500,000
Repayment of borrowings		(107,629)		(14,874)
Net cash from financing activities		4,762,528		8,211,867
Net (decrease)/increase in cash and cash equivalents		(1,973,413)		7,107,439
Cash and cash equivalents at beginning of year		7,468,818		361,379
Exchange differences on cash and cash equivalents		8,162		-
Cash and cash equivalents at end of year		5,503,567		7,468,818

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 DECEMBER 2014

1.    GENERAL INFORMATION

Proxama PLC ("the Company") and its subsidiaries (together 'the Group') specialise in next generation proximity marketing, loyalty, contactless payment solutions and card issuing. The TapPoint® platform delivers proximity engagement and loyalty solutions for retailers, media owners and brands by utilising technologies such as NFC, Bluetooth LE (beacons), geo-fencing and QR codes. CardGateway® is the mobile contactless (NFC) payment platform that enables banks to transition their card portfolio onto mobile for mobile contactless payments. Proxama's TapPoint® and CardGateway® platforms connect existing retail loyalty and payment infrastructure onto mobile. Our partners are retail loyalty providers, point of sale vendors, payment security software specialists, integrators and card schemes.

Card issuers are provided with a suite of end-to-end integrated solutions for EMV enablement, electronic PIN delivery, tokenisation and NFC mobile payments, including HCE. The focus is on simplifying the adoption of NFC payments for card issuers by providing a single platform capable of supporting multiple technologies, such as Secure Elements and HCE, and new solutions such as Apple Pay as standards emerge.

The Company is a public limited company which is listed on the Alternative Investment Market of the London Stock Exchange and is incorporate and domiciled in the United Kingdom. The address of its registered office is given on the Company Information page.

2.    ACCOUNTING POLICIES

Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") and IFRIC interpretations as adopted by the European Union, and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

The consolidated financial statements have been prepared under the historical cost convention basis as discussed in the accounting policies below.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries). The Company beneficially owns 100% of the voting rights in all of its subsidiaries. Control is achieved when the Company is exposed, or has rights, to variable returns from its involvement with the investee and has ability to affect those returns through its power over the investee.

Subsidiaries are fully consolidated from that date on which control is transferred to the Group. They are de-consolidated from the date that control ceases.

The acquisition method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The excess of the cost of acquisition over the fair value of the Group's share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement. Acquisition costs are expensed as incurred.

Consideration where payment is contingent on future employment is excluded from the acquisition accounting and is recognised as a post acquisition expense charged to the income statement.

Going Concern

The Directors have a reasonable expectation that the Company has adequate resources to continue its operational existence for the foreseeable future based on future projections and cash flow forecasts. The acquisition of the Aconite group of companies in December 2014 along with further share issues at the end of 2014 has raised £4m and cash and cash equivalents at the year-end are £5.5m. Forecasts show that the group will become profitable from December 2015 onwards as significant opportunities remain within the market. The Board considers it appropriate to use the going concern basis of preparation for the Group's financial statements for the year ended 31 December 2014.

Adoption of new accounting standards

For the purposes of the preparation of these consolidated financial statements, the Group has applied all standards and interpretations that are effective for accounting periods beginning on or after 1 January 2014. The adoption of new standards and interpretations in the year has not had a material impact on the Group's financial statements.

No new standards, amendments or interpretations to existing standards that have been published and that are mandatory for the Group's accounting periods beginning on or after 1 January 2015, or later periods, have been adopted early. The directors do not consider that the adoption of the following standards and interpretations will have a material impact on the Group's financial statements;

IFRS 9 Financial Instruments (effective 1 January 2018)

IFRS11 Joint Arrangements - amended (effective 1 January 2016)

IFRS15 Revenue from contracts with customers (effective 1 January 2017).

Segmental reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker for the use in strategic decision making and monitoring of performance. The group considers the chief operating decision maker to be the executive board.

Revenue Recognition

Revenue represents the invoice value of services and software licences provided to external customers in the period, stated exclusive of value added tax.

Consideration received from customers in respect of services is only recorded as revenue to the extent that the company has performed its contractual obligations in respect of that consideration. Management assess the performance of the company's contractual obligations against project milestones and work performed to date.

Revenue from software licenses sold in conjunction with services is invoiced separately from those services and recognised over the period of the licence.

Revenue from software licences for the use of the technology platform is recognised over the period of the licence.

Revenue from software development is recognised to the extent that the group has obtained the right to consideration through its performance.

Foreign currencies

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ("the functional currency"). The consolidated financial statements are presented in sterling, which is the Parent's functional and Group's presentational currency.

Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the balance sheet date.

The results and financial position of all Group entities that have a functional currency different from the presentational currency of the group are translated into sterling as follows:

·     Assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;

·     Income and expenses for each income statement are translated at the average exchange rate for the month where these approximate the exchange rate at the date of the transaction; and

·     All resulting exchange differences are recognised within other comprehensive income and taken to the foreign exchange reserve.

Financial instruments

Loans and receivables are recognised initially at fair value and subsequently held at amortised cost using the effective interest rate method, less provision for impairment. Discounting is omitted where the effect of discounting is immaterial. The group's cash and cash equivalents, trade and most other receivables fall within this class.

Trade receivables are first assessed individually for impairment, or collectively where the receivables are not individually significant. Where there is no objective evidence of impairment for an individual receivable, it is included in a group of receivables with similar credit risk characteristics and these are collectively assessed for impairment. Movements in the provision for doubtful debts are recorded in the income statement within operating expenses.

The group's financial liabilities include trade and other payables, accruals and borrowings.

Trade and other payables are recognised initially at fair value and subsequently held at amortised cost.

Trade payables are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.

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

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

Convertible loan notes are also stated at amortised cost using the effective interest method.

Property, plant and equipment

Property, plant and equipment are stated at cost, net of depreciation and any provision for impairment in value. Depreciation is provided on all property, plant and equipment, at rates calculated to write off the cost, less estimated residual value, of each asset on a straight-line basis over its expected useful economic life. Depreciation is recognised within administrative expenses within the consolidated income statement.

The principal annual rates used for this purpose are:

Computer and office equipment              33.33% per annum

Motor Vehicles                                                 25% per annum

Goodwill

Goodwill represents the excess of the cost of acquisition over the fair value of the identifiable net assets acquired and is capitalised.

Goodwill is subject to annual impairment testing. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). Goodwill is allocated to those cash-generating units that are expected to benefit from the synergies of the related business combination and represent the lowest level within the group at which management monitors the related cash flows. The recoverable amount is tested annually or when events or changes in circumstances indicate that it may be impaired. The recoverable amount is the higher of the fair value less costs and the value in use in the group. An impairment loss is recognised to the extent that the carrying value exceeds the recoverable amount. In determining a value in use, estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the cash generating unit that have not already been included in the estimate of future cash flows.

Internally developed software

Development costs are capitalised when certain criteria are met. The product must be technically feasible, sale is intended, a market exists, expenditure can be measured reliably, and sufficient resources are available to complete the project. The extent of capitalisation is limited to the amount which, taken together with further related costs, will be recovered from the future economic benefits related to the asset. When the board is sufficiently confident that all of the criteria for capitalisation are met, development costs are capitalised and amortised over the expected useful life, currently 5 years, from the date that the asset is available for use. Development costs that have been capitalised, but where amortisation has not yet commenced are reviewed annually for impairment. If no intangible asset can be recognised based on the above then development costs are recognised within administrative expenses in the consolidated income statement in the period in which they are incurred.

Other intangibles

Acquired trademarks and intellectual property rights are recognised as an asset at cost, or deemed cost less accumulated amortisation, and any recognised impairment loss.

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

Trademarks and intellectual property rights       10% straight line

Impairment of property, plant and equipment and intangible assets

At each balance sheet date, the Group performs an impairment review in respect of goodwill and any intangible assets not yet ready for use and reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered any impairment. If any such indication exists, the recoverable amount of the asset (being the higher of fair value less costs to sell and value in use) is estimated in order to determine the extent of any impairment. Any impairment loss is recognised as an expense in the income statement in the period in which it was identified.

Cash and cash equivalents

Cash and cash equivalents are defined as cash in hand, demand deposits and short-term, highly liquid investments which are readily convertible to known amounts of cash, subject to insignificant risk of changes in value, and have a maturity of less than 3 months from the date of acquisition.

For the purposes of the statement of cash flows, cash and cash equivalents consist of cash in hand and bank deposits.

Current taxation

The tax currently receivable is based on the taxable loss for the period and relates to R & D tax credits. Taxable loss differs from net loss as reported in the consolidated income  statement because it excludes items of income or expense that are taxable or deductible in other periods and it further excludes items that are never taxable or deductible. This is calculated using rates and laws enacted or substantively enacted at the reporting date.

Deferred taxation

Deferred tax is provided for using the liability method on temporary differences at the balance sheet date between tax basis of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax liabilities are recognised in full for all temporary differences other than those relating to goodwill on investments in subsidiaries. Deferred tax assets are recognised for all deductible temporary differences carried forward of unused tax credits and unused tax losses to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and carry-forward of unused tax credits and unused losses can be utilised.

The carrying amount of deferred tax assets is assessed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each balance sheet date and are recognised to the extent that it is probable that future taxable profits will allow the deferred tax asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date.

Employee benefits

Share-based compensation

The Group operates an equity-settled, share-based compensation plan. Equity-settled share -based payments are measured at fair value at date of grant. The fair value determined at the grant date of the 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 the Black Scholes or a binomial options valuation model as appropriate depending on the terms of the options.

Grants

Grants receivable are recognised on a work done basis to match the related expenditure to the extent that the conditions for receipt have been substantially fulfilled and recoverability is expected.

Leases

Leases in which a significant portion of the risks and rewards are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight line basis over the period of the lease.

Assets held under finance leases are recognised as assets of the group at the fair value at the inception of the lease or if lower, at the present value of the minimum lease payments. The related liability to the lessor is included in the statement of financial position as a finance lease obligation. Lease payments are apportioned between interest expenses and capital redemption of the liability. Interest is recognised immediately in profit or loss, unless attributable to qualifying assets, in which case they are capitalised to the cost of those assets.

Equity

Equity comprises:

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

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

Capital reserve - represents a capital contribution to the company.

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

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

Equity reserve - represents the equity element of the convertible loan note and the fair value of shares to be issued under deferred consideration arrangements.

Merger relief reserve - the difference between cost or fair value and the nominal value of shares issued on the exchange of shares with Proxama Solutions Ltd and on acquisition of subsidiaries where shares are issued as part of the consideration.

Other reserve - the balance of the amount recognised as issued equity instruments arising on restatement of Proxama Solutions Ltd to reflect the parent equity structure, further to the reverse acquisition basis of accounting adopted in 2013 on the share exchange by Proxama Plc. for 100% of the shares of Proxama Solutions Limited.

Translation reserve - the foreign exchange difference arising on consolidation.

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

Critical accounting estimates and judgements

The preparation of financial information in conformity with IFRS requires the directors to make critical accounting estimates and judgements that affect the application of policies and reported amounts of assets and liabilities, income and expenses. An assessment of the impact of these estimates and judgements on the financial statements is set out below.

Estimates and judgements 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. Actual results could differ from these estimates and any subsequent changes are accounted for with an effect on income at the time such updated information is available.

Estimates in applying the Group's accounting policies:

Business combinations

Management uses valuation techniques when determining the fair values of assets transferred, liabilities incurred and the equity interests issued by the Group, which includes the fair value of any asset arising from a deferred consideration arrangement. Where future payments are dependent on performance, a probability is applied when recognising the liability. This probability is based on management estimate discounted at an appropriate discount rate to reflect the timing of payment.

Fair values for employee share schemes

The establishment of fair values in respect of employee services received in exchange for share options require the exercise of judgement and estimation in respect of the life of the option, the expected dividend yield and, in particular, the expected volatility of the underlying shares. A calculated value for the latter may not accurately reflect the future share price movements given the Group's stage of development.

Critical judgements in applying the Group's accounting policies:

Assessing whether development costs meet the criteria for capitalisation

The point at which development costs meet the criteria for capitalisation is critically dependent on management's judgement of the point at which technical feasibility is demonstrable.

Impairment of goodwill and other intangible assets

There are a number of assumptions management have considered in performing impairment reviews of goodwill and intangible assets, as determining whether such assets are impaired requires an estimation of the value in use of the cash generating units to which goodwill and other intangible assets have been allocated. The value in use calculation requires the directors to estimate the future cash flows expected to arise from the cash generating unit and a suitable discount rate in order to calculate the present value.

Earn-out consideration

There are a number of conditions associated with the deferred and contingent elements of the consideration payable under the terms of the Sale and Purchase Agreement (SPA) for the Acquisition of the Aconite group of companies. In order to incentivise the former owners to remain with the business as employees following the transaction, an element of consideration is contingent on them remaining employed for a certain period of time post-acquisition. Management have assessed, based on the terms on the SPA, whether these arrangements may be accounted for as consideration in the business combination, and concluded they are required to be accounted for as employee remuneration which should be recognised as a post-acquisition expense.

3.    SEGMENTAL ANALYSIS

Operating segments are based on internal reports about components of the company, which are regularly reviewed and used by the Board of Directors being the Chief Operating Decision Maker ("CODM") for strategic decision making and resource allocation, in order to allocate resources to the segment and to assess its performance.

The group's operations were centred on providing bespoke near field communication solutions to its customers, primarily mobile wallet functionality during 2014. The group issues licences as part of the overall service package provided to its customers. The trading business is now structured as four trading companies and its financial reporting is set to report to the CODM information on two segments: payments and marketing from 2015 onwards. Of these, payments and marketing are considered to be operating segments. For 2014 management considers there to be only a single operating segment covering the entire group although revenue analysis is provided below. Therefore additional analysis of the figures reported in these financial statements is neither appropriate nor necessary to enable users of the financial statements to evaluate the nature and financial effects of the business activities.

An analysis of revenue is as follows:

	2014		2013
	£		£
Payments	455,501		637,113
Marketing	195,477		176,267
Total revenue	650,978		813,380

The geographical analysis of revenue is as follows:

	2014		2013
	£		£
United Kingdom	507,280		400,695
United States of America	27,528		67,000
Canada	-		292,583
Other	116,170		53,102
Total revenue	650,978		813,380

For this disclosure revenue is determined by the location of the customer.

A summary of the group's significant (defined as accounting for more than 10% of revenue in the year) customers is as follows:

	2014		2013
	£		£
United Kingdom customer 1	192,006		-
Canada customer 1	-		162,595
United Kingdom customer 2	-		160,236
Canada customer 2	-		129,978

4.    FINANCE INCOME

	2014		2013
	£		£
Income from cash and cash equivalents	31,621		2,503

5.    FINANCE EXPENSE

	2014		2013
	£		£
Bank interest	371		463
Finance lease interest Interest payable on convertible loan note	2,828 65,145		2,894 38,503
Other loan interest	3,777		4,129
	72,121		45,989

6.    LOSS BEFORE TAXATION

	2014		2013
	£		£
The loss before taxation is stated after charging:-
Depreciation of property, plant and equipment -      Owned -      Held under hire purchase agreements	81,649 11,534		42,195 14,367
Profit on disposal of tangible assets	(5,129)		-
Amortisation of intangible assets	42,520		104,128
Elimination of intangible assets	53,361		-
Research and development expense (excluding amortisation)	817,715		580,277
Operating lease rentals
-      Land and buildings	247,575		168,648
-      Plant and machinery	616		2,663
Share based payments	267,126		258,564
Net foreign exchange losses	1,307		113
Auditors remuneration:
For audit services
-      Company audit	14,000		12,000
-      Subsidiary audits	22,000		10,000
For other non-audit services
-      Interim review	3,800		2,000
-      Tax compliance services	5,450		3,500
-      Tax advisory services	13,050		7,000
-      Advisory services on reverse acquisition	-		120,903
-      Advisory services on acquisitions	34,605		-
-      Nomad services	26,821		36,103
-      Reporting accountant services	-		50,000
Exceptional item	109,375		2,063,921

The exceptional item in 2014 is the earn-out consideration accounted for as contingent post acquisition remuneration on the acquisition of Aconite which can be settled by either cash or shares and is due on 31 March 2016.

The exceptional item in 2013 is the deemed cost of listing arising on the reverse acquisition being the difference between the consideration exchanged for the share capital of Longships Plc. and the net assets of Longships Plc. immediately prior to the reverse acquisition.

7.    STAFF COSTS

The average number of persons employed by the group during the year including executive directors was:

	2014		2013
	Number		Number
Management	12		9
Research and development	31		24
Commercial and client services	30		24
	73		57

Their aggregate remuneration comprised:

	2014		2013
	£		£
Wages and salaries	3,458,353		2,546,676
Social security costs	410,572		290,252
Expense of share based payments	267,126		236,976
	4,136,051		3,073,904

8.    KEY MANAGEMENT COMPENSATION

Details of aggregate key management emoluments for the year are as follows:

	2014		2013
	£		£
Salaries and other short term employee benefits	566,927		478,416
Expense of share based payments	186,308		193,055
	753,235		671,471

The directors are of the opinion that the key management of the Group comprises the executive and non-executive directors of Proxama Plc. These persons have authority and responsibility for planning, directing, and controlling the activities of the entity, directly or indirectly. At 31 December 2014, key management comprised six people.

The remuneration of the highest paid director is £152,809 (2013: £152,965).

Directors' remuneration is disclosed in the directors' remuneration report.

9.    EARNINGS PER SHARE

The calculation of earnings per share is based on the loss of £5,623,977 (2013: £5,239,789) and on the number of shares in issue, being the weighted average number of equity shares in issue during the period of 825,290,390 (2013: 419,904,967) ordinary 1p shares. A separate adjusted earnings per share calculation has been prepared related to the loss before exceptional items.

Dilutive instruments

Instruments that could potentially dilute basic earnings per share in the future but are not included in the calculation of diluted earnings per share because they are anti-dilutive in the period related to share options and deferred consideration.

	2014		2013
Loss for the year	(5,623,977)		(5,239,789)
Add back:
Exceptional items	109,375		2,063,921
Adjusted loss	(5,514,602)		(3,175,868)
Loss per share - basic and diluted	(0.68p)		(1.25p)
Adjusted loss per share - basic and diluted	(0.67p)		(0.76p)

10.  INTANGIBLE ASSETS

	Trademarks	Goodwill	Customer relationships	Intellectual Property Rights	Development costs	Total
	£	£	£	£	£	£
Cost
At 1 January 2013	3,064	-	-	6,001	-	9,065
Additions	2,038	-	-	-	515,258	517,296
At 31 December 2013	5,102	-	-	6,001	515,258	526,361
Additions, internally developed	-	-	-	-	817,715	817,715
On acquisition	-	659,288	1,000,000	-	2,120,000	3,779,288
Disposals	-	-	-	-	(66,702)	(66,702)
At 31 December 2014	5,102	659,288	1,000,000	6,001	3,386,271	5,056,662
Amortisation and impairment
At 1 January 2013	378	-	-	1,200	-	1,578
Charge for the year	476	-	-	600	103,052	104,128
At 31 December 2013	854	-	-	1,800	103,052	105,706
Charge for the year	510	-	20,000	600	21,410	42,520
Disposals	-	-	-	-	(13,341)	(13,341)
At 31 December 2014	1,364	-	20,000	2,400	111,121	134,885
Net book amount
At 31 December 2014	3,738	659,288	980,000	3,601	3,275,150	4,921,777
At 31 December 2013	4,248	-	-	4,201	412,206	420,655

Internal development represents the costs incurred in developing the company's TapPoint® platform. These internal costs have been capitalised in accordance with the company's accounting policies where all of the conditions for capitalisation have been met.

The directors have identified two R & D projects which have become impaired due to the fact that the market has moved on and therefore this R & D work has become obsolete, and the assets have been retired. If no future economic benefit is expected assets are derecognised. Impairment of research and development is considered within the conditions of capitalisation. Amortisation charges are included in administrative expenses in profit and loss.

Other intangible assets represent amounts paid to third parties for acquiring trademarks and intellectual property rights and the goodwill and separable intangible assets on the acquisition of the Aconite group of companies. The valuation and the recoverable amounts were determined based on management's estimates of future revenue and profits for a period of 3 years. The discount rate applied was 25% given the small size and high risk nature of the business.

Formal impairment testing will be undertaken for goodwill in future accounting periods. The management of the Group is not currently aware of any reasons that would create an impairment charge.

11.  TRADE AND OTHER RECEIVABLES

	2014		2013
	£		£
Trade receivables	453,963		162,673
Prepayments and accrued income	294,144		162,172
Other receivables	211,855		143,427
	959,962		468,272

Trade receivables comprise amounts due from customers for services provided. All amounts are short term. The net carrying amount of trade receivables is considered a reasonable approximation of fair value. An impairment adjustment of £3,050 has been considered necessary. Average credit terms were 30 days (2013: 30) and average debtor days outstanding were 70 (2013: 20).

An aged analysis of trade receivables that were past due at the year-end but not impaired is presented below:

	2014		2013
	£		£
Outstanding between one and two months	37,585		24,101
Outstanding between two and three months	274,483		11,053
Outstanding over three months	21,600		-
	333,668		35,154

The increase in past due trade receivables is primarily due to Aconite invoicing for 2015 annual support fees of £269,573 in October for one customer. These were paid in January 2015.

12.  CASH AND CASH EQUIVALENTS

	2014		2013
	£		£
Bank balances	5,503,567		7,468,818

13.  TRADE AND OTHER PAYABLES

	2014		2013
	£		£
Trade payables	408,281		248,159
Taxation and social security	383,119		114,051
Accruals	300,633		293,660
Deferred income	720,723		65,473
Contingent consideration	109,375		-
Other payables	54,496		17,690
	1,976,627		739,033

Trade payables and accruals principally comprise amounts outstanding for on-going costs.

The directors consider that the carrying amount of trade and other payables approximated their fair value.

Trade payables are paid between 30 and 60 days of receipt of the invoice.

14.  BORROWINGS

	2014		2013
	£		£
Non-current borrowings
Bank loans	8,999		10,290
Finance lease agreements	2,747		16,111
Convertible loan notes	548,448		483,303
	560,194		509,704
Current portion of borrowings
Bank loans	1,250		1,885
Finance lease agreements	6,014		14,953
Other loans	556,412		-
	563,676		16,838

Bank loans	2014		2013
	£		£
Non-current borrowings	8,999		10,290
Current portion of borrowings	1,250		1,885
	10,249		12,175
Amounts included in non-current borrowings
falling due later than five years	425		2,725

The bank loan is secured by way of a debenture over the assets of the Group. Interest on the bank loan is payable at 3% above the National Westminster Bank Plc's base rate. The loan is repayable by monthly instalments over ten years.

Details of the other loans are as follows:

·     Thin Cats Loans - 3 loans totalling £472,967 secured by way of a debenture with a corporate guarantee and a personal guarantee by the directors of Aconite Technology Limited. Interest is payable at 10.75%. The loans are repayable by monthly instalments until May 2016.

·     Funding Circle Loan - £18,445 outstanding, secured by way of a personal guarantee from the directors of Aconite Technology Limited. Interest is payable at 10%. The loan is repayable by monthly instalments until May 2015.

·     Shareholders loan - £65,000 outstanding, no security provided on this loan. Interest is accruing at 10% and the loan is repayable in December 2015.

Convertible loans

Interest is accruing on the loan notes at 10% per annum (non-compound). Both the interest and the loan notes are repayable on the third anniversary of the issue of the loan note instrument, being March 2016, if not earlier converted to equity.

Finance lease agreements	2014		2013
	£		£
Gross finance lease liabilities - minimum lease payments:
Within one year	6,618		17,046
Later than one year and no later than five years	2,909		17,100
Less: Future finance charges on finance leases	(766)		(3,082)
Present value of finance lease liabilities	8,761		31,064

The present value of finance lease liabilities is analysed as follows:

	2014		2013
	£		£
Within one year	6,014		14,953
Later than one year and no later than five years	2,747		16,111
	8,761		31,064

Finance lease agreements are secured on the assets concerned.

Interest rates are fixed for the term of the agreements which are payable by equal fixed monthly amounts.

15.  DEFERRED TAX LIABILITIES

The group has recognised a deferred tax liability on the fair value of the intangible assets acquired through the acquisition of Aconite as follows:

	£
At 1 January 2014	-
Additions in the year	624,000
At 31 December 2014	624,000

16.  CAPITAL COMMITMENTS

No capital expenditure was committed to as at 31 December 2014 (2013: £nil).

17.  BUSINESS COMBINATIONS

In July 2014 a subsidiary in the USA, Proxama Inc. was incorporated to provide a presence for sales in the USA.

On 4 December 2014, the Group acquired 100% of the share capital of Aconite Technology Limited, a UK based business, which in turn owns 100% of the share capital of Aconite Consulting Limited and Aconite Solutions Limited, thereby gaining control. The acquisition combines technologies to provide a complete end-to-end solution for card issuers and is expected to accelerate the financial performance of the payments business.

Details of the business combination are as follows:

Fair value of consideration transferred			£
Amount settled in shares			1,122,689
Fair value of deferred consideration			490,978
Total			1,613,667
	Book value	Fair value adjustment	Fair value
Recognised amounts of identifiable net assets	£	£	£
Property, plant and equipment	926	-	926
Intangible assets	-	3,120,000	3,120,000
Total non-current assets	926	3,120,000	3,120,926
Trade and other receivables	524,583	-	524,583
Cash and cash equivalents	18,178	-	18,178
Total current assets	542,761	-	542,761
Borrowings	(500,257)	-	(500,257)
Deferred tax liabilities	-	(624,000)	(624,000)
Total non-current liabilities	(500,257)	(624,000)	(1,124,257)
Trade and other payables	(163,225)	-	(163,225)
Other liabilities	(1,421,826)	-	(1,421,826)
Total current liabilities	(1,585,051)	-	(1,585,051)
Identifiable net assets	(1,541,621)	2,496,000	954,379
Goodwill on acquisition			659,288
Acquisition costs charged to expenses			56,988

Consideration transferred

The acquisition of Aconite Technology Limited was settled by the issue of 47,773,998 ordinary 1p shares at a premium of 1.35p per share. Deferred base consideration of an additional 20,892,669 ordinary 1p shares is issuable on 31 March 2016. The consideration based on a share price of 3p amounts to £2,060,000. The fair value of the consideration amounts to £1,613,667. The deferred consideration shares can be withheld if there is a claim against the sellers under warranties but is fully expected to be settled. The purchase agreement included an additional 'earn-out consideration' relating to contingent post acquisition payments of up to £1,750,000 which is stepped based upon turnover between £3,000,000 and £4,500,000. The additional consideration can be settled by either cash or shares and is due on 31 March 2016. As at 31 December 2014, a liability of £109,375 for this earn-out consideration has been included. This earn out consideration is dependent on employment continuing throughout the earn-out period, subject to good leaver provisions. Further to IFRIC guidance, since the earn-out element is forfeited if employment terminates it is required to be accounted for as a post combination service and will be expensed to the consolidated income statement.

Acquisition costs amounting to £56,988 are not included as part of the consideration transferred and have been recognised as an expense in the consolidated income statement, as part of other expenses.

Identifiable net assets

The fair value of the trade and other receivables acquired as part of the business combination amounted to £524,583, the gross contractual amount receivable is £527,633.

Goodwill

Goodwill of £659,288 is related to expected cost synergies and growth expectations related to the combining of the technologies of Aconite and Proxama, as well as the value of the Aconite workforce acquired.

Aconite's contribution to the Group results

The Aconite Group incurred a loss of £78,979 for the period 4 December 2014 to 31 December 2014 and revenues were £88,085.

If Aconite had been acquired on 1 January 2014, revenue of the Group for 2014 would have been £1,536,060, and the loss for the year would have increased by £230,529.

18.  POST BALANCE SHEET EVENTS

There are no post balance sheet events requiring disclosure for the year ending 31 December 2014.

 

END

 

 

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