blur Group plc - Amazon S3 · solution that includes sourcing, supplier shortlisting, contract and...

blur Group plc

The Enterprise Services Platform

Annual Report and Accounts

For the Year Ended 31 December 2016

Company number: 08188404

Contents

2016 HIGHLIGHTS 3

CHAIRMAN’S STATEMENT 4

GROUP STRATEGIC REPORT 5

BUSINESS OVERVIEW 6

CHIEF EXECUTIVE OFFICER’S REPORT 9

PRINCIPAL RISKS AND UNCERTAINTIES 11

2016 FINANCIAL REVIEW 13

BOARD OF DIRECTORS 15

DIRECTOR’S REPORT 16

STATEMENT OF DIRECTORS’ RESPONSIBILITIES 23

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BLUR GROUP PLC 24

CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME 26

CONSOLIDATED STATEMENT OF FINANCIAL POSITION 27

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 28

CONSOLIDATED STATEMENT OF CASH FLOWS 29

NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION 30

COMPANY STATEMENT OF FINANCIAL POSITION - BLUR GROUP PLC 60

COMPANY STATEMENT OF CHANGES IN EQUITY - BLUR GROUP PLC 61

COMPANY STATEMENT OF CASH FLOWS - BLUR GROUP PLC 62

NOTES TO THE COMPANY FINANCIAL STATEMENTS 63

COMPANY INFORMATION 70

1

Welcome to blur Groupblur Group operates an Enterprise Indirect Spend Management Platform that helps private and public sectororganizations eliminate the waste and inefficiency inherent in the ‘traditional’ purchasing of business goodsand services. blur provides both cloud-based software and managed services to create an end-to-endsolution that includes sourcing, supplier shortlisting, contract and project management through to paymentprocessing and reporting.

In 2010, we embarked on a plan to build a next generation solution for Enterprises to more effectively manage previously challenging areas of business services procurement, a key component of indirect spend. blurdefines the Enterprise as a business with 50 or more employees. We set out to build an end-to-end servicesprocure-to-pay platform that gives Enterprises the ability to outsource the purchasing, management, payment and delivery of the business services they require. The resulting platform solution combines goods(introduced in 2016) and managed services, cloud software and a global marketplace of suppliers that will,over time, be driven increasingly by machine intelligence and big data.

Between 2010 and 2014, blur both developed the platform and evolved the business support model. blurreleased four versions of the cloud software platform, one per year; blur 1.0, through 4.0, with each releaseincreasing functionality and providing greater customer and service provider automation. With blur 1.0 and blur 2.0 the majority of customers were small buyers and suppliers. Early revenues were generated throughthe spot purchasing of small projects with spend in the low $’000s. The release of blur 3.0 and 4.0 markedthe introduction of Enterprise features such as Project Space and blurSenseTM and we began to test the platform with medium and large Enterprises to better shape the solution. By the end of 2014 the platformand marketplace could be said to be proven as an Enterprise class solution.

2015 saw blur focus on the Enterprise buyer and supplier, with national and multi-national entities starting to trial the platform. blur also continued its work to increase the number and quality of its supplier base. While progress with targeted Enterprise customers was made, blur also recognized the long sales cycles inherentin the Enterprise procurement market.

In 2016, sequential, quarterly EBITDA and cash burn improvements have been made as the company’sinternal efficiency grows and our Sales and Marketing teams work with a number of large corporatecustomers. Revenues have declined as customer pipeline conversion was delayed and sales cyclesremained long. Until blur secures customers who will act as references for blur, it is expected that the salescycle will remain extended. However with the successful acquisition of Enterprise customers, that cycle isexpected to shorten.

In Q3 blur successfully added the supply of goods to its Marketplace making its platform a comprehensiveIndirect Spend Management tool. Q4 saw the first take up, by a Top 100 UK law firm, of a group buyer plansubscription along with the completion of blur 6.0, the latest iteration of blur’s online platform, bringing the enhanced functionality demanded by our Enterprise customers.

On 7 July 2017, blur announced the successful result of a proposed placing, via an accelerated book build,to raise net cash proceeds of £1.5 million. Whilst blur has made progress in engaging with and delivering projects for multinational blue chip organizations, converting customer engagement into significant revenueshas been slower than anticipated at the time of the Group’s admission to AIM in 2012.

The net proceeds of the Placing are intended to be used as general working capital to enable blur toimplement its revised growth plan, which is intended to result in the conversion of customer engagementsinto projects and revenue growth. A revised growth plan will aim to deliver significant progress in establishing relationships with blue chip multinational customers from a variety of sectors whilst minimizing the cash requirement of the business.

In addition, a number of changes have been made to blur’s board of Directors. David Rowe has beenappointed as chairman with Preeti Mardia, Richard Rae and Richard Croft being appointed to the board asnon-executive directors. Simultaneous with these new appointments, David Sherriff, Roger de PeyrecaveRob Wirszycz and Kara Cardinale stepped down from the board. Tim Allen, Chief Financial Officer, alsostepped down from the board and James Porter, blur’s existing group financial controller, will serve as interimfinance lead whilst a review is performed of a suitable replacement for Tim.

blur Group PLC Annual Report and Accounts for the Year Ended 31 December 2015blur Group PLC Annual Report and Accounts for the Year Ended 31 December 2016

Contents

2016 HIGHLIGHTS 3

CHAIRMAN’S STATEMENT 4

GROUP STRATEGIC REPORT 5

BUSINESS OVERVIEW 6

CHIEF EXECUTIVE OFFICER’S REPORT 9

PRINCIPAL RISKS AND UNCERTAINTIES 11

2016 FINANCIAL REVIEW 13

BOARD OF DIRECTORS 15

DIRECTOR’S REPORT 16

STATEMENT OF DIRECTORS’ RESPONSIBILITIES 23

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF BLUR GROUP PLC 24

CONSOLIDATED STATEMENT OF TOTAL COMPREHENSIVE INCOME 26

CONSOLIDATED STATEMENT OF FINANCIAL POSITION 27

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 28

CONSOLIDATED STATEMENT OF CASH FLOWS 29

NOTES TO THE CONSOLIDATED FINANCIAL INFORMATION 30

COMPANY STATEMENT OF FINANCIAL POSITION - BLUR GROUP PLC 60

COMPANY STATEMENT OF CHANGES IN EQUITY - BLUR GROUP PLC 61

COMPANY STATEMENT OF CASH FLOWS - BLUR GROUP PLC 62

NOTES TO THE COMPANY FINANCIAL STATEMENTS 63

COMPANY INFORMATION 70

1

Welcome to blur Groupblur Group operates an Enterprise Indirect Spend Management Platform that helps private and public sector organizations eliminate the waste and inefficiency inherent in the ‘traditional’ purchasing of business goods and services. blur provides both cloud-based software and managed services to create an end-to-end solution that includes sourcing, supplier shortlisting, contract and project management through to payment processing and reporting.

In 2010, we embarked on a plan to build a next generation solution for Enterprises to more effectively manage previously challenging areas of business services procurement, a key component of indirect spend. blur defines the Enterprise as a business with 50 or more employees. We set out to build an end-to-end services procure-to-pay platform that gives Enterprises the ability to outsource the purchasing, management, payment and delivery of the business services they require. The resulting platform solution combines goods (introduced in 2016) and managed services, cloud software and a global marketplace of suppliers that will, over time, be driven increasingly by machine intelligence and big data.

Between 2010 and 2014, blur both developed the platform and evolved the business support model. blurreleased four versions of the cloud software platform, one per year; blur 1.0, through 4.0, with each releaseincreasing functionality and providing greater customer and service provider automation. With blur 1.0 and blur 2.0 the majority of customers were small buyers and suppliers. Early revenues were generated through the spot purchasing of small projects with spend in the low $’000s. The release of blur 3.0 and 4.0 marked the introduction of Enterprise features such as Project Space and blurSenseTM and we began to test the platform with medium and large Enterprises to better shape the solution. By the end of 2014 the platform and marketplace could be said to be proven as an Enterprise class solution.

2015 saw blur focus on the Enterprise buyer and supplier, with national and multi-national entities starting to trial the platform. blur also continued its work to increase the number and quality of its supplier base. While progress with targeted Enterprise customers was made, blur also recognized the long sales cycles inherent in the Enterprise procurement market.

In 2016, sequential, quarterly EBITDA and cash burn improvements have been made as the company’s internal efficiency grows and our Sales and Marketing teams work with a number of large corporate customers. Revenues have declined as customer pipeline conversion was delayed and sales cycles remained long. Until blur secures customers who will act as references for blur, it is expected that the sales cycle will remain extended. However with the successful acquisition of Enterprise customers, that cycle is expected to shorten.

In Q3 blur successfully added the supply of goods to its Marketplace making its platform a comprehensive Indirect Spend Management tool. Q4 saw the first take up, by a Top 100 UK law firm, of a group buyer plan subscription along with the completion of blur 6.0, the latest iteration of blur’s online platform, bringing the enhanced functionality demanded by our Enterprise customers.

On 7 July 2017, blur announced the successful result of a proposed placing, via an accelerated book build, to raise net cash proceeds of £1.5 million. Whilst blur has made progress in engaging with and delivering projects for multinational blue chip organizations, converting customer engagement into significant revenues has been slower than anticipated at the time of the Group’s admission to AIM in 2012.

The net proceeds of the Placing are intended to be used as general working capital to enable blur to implement its revised growth plan, which is intended to result in the conversion of customer engagements into projects and revenue growth. A revised growth plan will aim to deliver significant progress in establishing relationships with blue chip multinational customers from a variety of sectors whilst minimizing the cash requirement of the business.

In addition, a number of changes have been made to blur’s board of Directors. David Rowe has beenappointed as chairman with Preeti Mardia, Richard Rae and Richard Croft being appointed to the board as non-executive directors. Simultaneous with these new appointments, David Sherriff, Roger de Peyrecave Rob Wirszycz and Kara Cardinale stepped down from the board. Tim Allen, Chief Financial Officer, also stepped down from the board and James Porter, blur’s existing group financial controller, will serve as interim finance lead whilst a review is performed of a suitable replacement for Tim.

blur Group PLC Annual Report and Accounts for the Year Ended 31 December 2015blur Group PLC Annual Report and Accounts for the Year Ended 31 December 2016 1

2

Over the last two years the group has been changing its business model to focus on large national and multi-national entities (“Enterprise”) rather than smaller customers. Q4 2016 saw the first Enterprise customer being won. As part of the change, and as expected, the long sales cycles inherent in entering the Enterprise procurement market contributed to a significant fall in turnover in the current period and continued significant cash burn. The group had cash of $2.5m as at 31 December 2016, which has reduced to $1.0m at 30 June2017. At the time of approving these financial statements the group has legally binding undertakings from investors to inject equity generating net cash proceeds of £1.5m, contingent only on the company’s being readmitted to AIM, without which the group could not have continued. There has also been a new leadership with new board members put in place, aligned with the potential new investment.

Although since the year end the group has entered final negotiations with another, particularly large Enterprise customer, the directors recognize that building the Enterprise business and making the group profitable and cash generative is a medium term goal. During that period further funding may be required depending on trading performance.

The group is evolving technology business, open to disruption, and is itself a disrupter, and its forecast contains assumptions including: significant growth in future revenue, both in project revenues and in premium services; the cost model; and margins. The directors are aware of the risks and uncertainties facing the business but the assumptions used are the directors’ best estimate of the future development of the business. If performance is not in line with forecasts then additional funding would or may need to be raised and the ability to raise it will depend on performance itself.

3

2016 Highlights2016 Operational Highlights

Top 5 Operational highlights:

1. Continued progress with targeted Enterprise* accounts including a global electronics company,large County Council and multi-national sportswear brand

2. First 12-month subscription to Group buyer plan taken up by a Top 100, UK-based law firm3. Goods added to the platform creating a comprehensive Indirect Spend Management Platform4. blur 6.0 completed - further functionality made to the Enterprise platform including multi-user

account management, additional machine intelligence and enhanced reporting5. 60% reduction in adjusted LBITDA compared to 2015. Quarterly, sequential improvements in costs

and cash burn** through 2016

2016 Financial Highlights

Measure 2016 2015

Yearon

YearProject revenue $0.72m $1.95m (63%)

Cancellation (previously listing fees) $0.01m $0.65m (99%)Other revenue $0.11m $0.09m 17%Revenue $0.83m $2.70m (69%)

Gross (loss)/profit $(0.08)m $0.29m (127%)Adjusted LBITDA1 $(3.56)m $(8.89)m 60%Loss for the year $(4.25)m $(10.09)m (58%)Cash balance $2.5m $7.1m (65%)

1 Adjusted LBITDA is loss before interest, tax, depreciation and amortization, foreign exchange movements and share option costs.

1. Revenues reduced as customer pipeline conversion delayed. Sales cycles remain long2. Adjusted LBITDA improved by 60% compared to 20153. Cash burn** reduced by 63% compared to 2015; administrative costs reduced by 55%4. First buyer subscription plan revenues booked in Q4 20165. Higher quality projects from Enterprise customers drives reduction in cancellation fees and

improved cash collection; project revenue down as SME revenues decline6. Investment in platform reduced as Enterprise-class functionality reaches maturity

* blur defines the Enterprise as a business with 50 or more employees.

**cash burn is defined net decrease in cash and cash equivalents before the effect of foreign exchange translation oncash and equivalents (see page 29)

blur Group PLC Annual Report and Accounts for the Year Ended 31 December 2016 2

2

Over the last two years the group has been changing its business model to focus on large national and multi-national entities (“Enterprise”) rather than smaller customers. Q4 2016 saw the first Enterprise customerbeing won. As part of the change, and as expected, the long sales cycles inherent in entering the Enterpriseprocurement market contributed to a significant fall in turnover in the current period and continued significantcash burn. The group had cash of $2.5m as at 31 December 2016, which has reduced to $1.0m at 30 June2017. At the time of approving these financial statements the group has legally binding undertakings frominvestors to inject equity generating net cash proceeds of £1.5m, contingent only on the company’s beingreadmitted to AIM, without which the group could not have continued. There has also been a new leadershipwith new board members put in place, aligned with the potential new investment.

Although since the year end the group has entered final negotiations with another, particularly largeEnterprise customer, the directors recognize that building the Enterprise business and making the group profitable and cash generative is a medium term goal. During that period further funding may be required depending on trading performance.

The group is evolving technology business, open to disruption, and is itself a disrupter, and its forecast contains assumptions including: significant growth in future revenue, both in project revenues and in premiumservices; the cost model; and margins. The directors are aware of the risks and uncertainties facing thebusiness but the assumptions used are the directors’ best estimate of the future development of the business. If performance is not in line with forecasts then additional funding would or may need to be raised and theability to raise it will depend on performance itself.

3

2016 Highlights2016 Operational Highlights

Top 5 Operational highlights:

1. Continued progress with targeted Enterprise* accounts including a global electronics company,large County Council and multi-national sportswear brand

2. First 12-month subscription to Group buyer plan taken up by a Top 100, UK-based law firm3. Goods added to the platform creating a comprehensive Indirect Spend Management Platform4. blur 6.0 completed - further functionality made to the Enterprise platform including multi-user

account management, additional machine intelligence and enhanced reporting5. 60% reduction in adjusted LBITDA compared to 2015. Quarterly, sequential improvements in costs

and cash burn** through 2016

2016 Financial Highlights

Measure 2016 2015

Yearon

YearProject revenue $0.72m $1.95m (63%)

Cancellation (previously listing fees) $0.01m $0.65m (99%)Other revenue $0.11m $0.09m 17%Revenue $0.83m $2.70m (69%)

Gross (loss)/profit $(0.08)m $0.29m (127%)Adjusted LBITDA1 $(3.56)m $(8.89)m 60%Loss for the year $(4.25)m $(10.09)m (58%)Cash balance $2.5m $7.1m (65%)

1 Adjusted LBITDA is loss before interest, tax, depreciation and amortization, foreign exchange movements and share option costs.

1. Revenues reduced as customer pipeline conversion delayed. Sales cycles remain long2. Adjusted LBITDA improved by 60% compared to 20153. Cash burn** reduced by 63% compared to 2015; administrative costs reduced by 55%4. First buyer subscription plan revenues booked in Q4 20165. Higher quality projects from Enterprise customers drives reduction in cancellation fees and

improved cash collection; project revenue down as SME revenues decline6. Investment in platform reduced as Enterprise-class functionality reaches maturity

* blur defines the Enterprise as a business with 50 or more employees.

**cash burn is defined net decrease in cash and cash equivalents before the effect of foreign exchange translation oncash and equivalents (see page 29)


Chairman’s StatementThe company made good progress during 2016 in laying the groundwork for blur to drive sales of its Enterprise procurement platform. The sales pipeline has grown strongly and there has been continued strong product innovation.

However, in the absence of positive cash flows, cash resources were depleting and, on 7 July 2017 blur announced the successful result of a proposed placing, via an accelerated book build, to raise net cash proceeds of £1.5 million. Whilst blur has made progress in engaging with and delivering projects for multinational blue chip organizations, converting customer engagement into significant revenues has been slower than anticipated at the time of the Group’s admission to AIM in 2012.

In addition, a number of changes were made to blur’s board of Directors. The new board is performing a strategic review of the business over the coming weeks and months and intends the net proceeds of the placing to be used as general working capital to enable blur to implement a revised growth plan; a product of that strategic review.

I joined the board as Chairman after the year end on 12 July 2017.

I believe that through the investment made in the development of the blur cloud procurement platform the company is well positioned to address the requirements of Enterprise customers in the area of indirect spend.

Progress has been significant in product development and in building the pipeline of opportunities, the task ahead is to convert the pipeline and create reference customers willing to attest to the benefits of the blur platform.

Further information is set out under Principal Risks and Uncertainties on page 11 and the Going Concern and Viability statement on page 19

In summary I expect the business to make significant progress over the next 12 months building on the efforts of the team during 2016. I would like to thank the team at blur for their commitment and efforts over the last year and for their support to the new board as we conduct our strategic review.

Finally, I would also like to thank blur’s shareholders and stakeholders for their continued support of the business.

David RoweChairman31 July 2017

5

Group Strategic ReportStrategic OutcomeThe new board of blur is currently undertaking a strategic review of the business following the announcement on 7 July 2017 of a successful placing for net cash proceeds of £1.5m. The aims of that review are to establisha growth plan that will ultimately drive blur to become a profitable and cash generative business thatEnterprise businesses worldwide trust as a complete platform for sourcing, managing and delivering businessgoods and services.

Strategic Assets and StakeholdersWe focus our resources on five strategic assets:

1. Our online platform2. Our suppliers3. Our insight into the market as an early pioneer4. Our proprietary data5. Our unique business model.

We serve five key stakeholders – our customers, our people, our investors, our suppliers and the market atlarge.

GrowthThe blur team is focused on increasing the adoption of blur’s model among Enterprise organizations. Webelieve that the more customer advocates we have in more Enterprise accounts, each achieving personal and business success from use of the blur platform, the more they will repeat buy, resulting in a lower costof sale and higher operating profitability.

We continue to closely monitor our overall progress by reference to revenue and gross margin, as well asmeasuring the quantity, value and quality of projects as they move through our platform from submission tocompletion. In addition, subscription to the company’s annual buyer plans is an indicator of broader adoptionof blur’s platform within an organization.

AutomationThe more we continue to automate our business model, the lower our cost to serve, and the greater ourcapacity to scale and produce high quality outcomes for our customers. We monitor our revenue peremployee as a key metric of increasing productivity.

Sales and Deliveryblur’s sales team aims to be familiar with our customers’ businesses, helping them understand the valueblur’s unique cloud software and managed services platform can bring to their organization. blur’s deliveryteams ensure that our customers’ project is delivered on time and on budget. Our delivery professionals workseamlessly with sales to ensure we consistently deliver the optimal user experience.

We help our customers make Enterprise-wide savings, build efficiency across their business services spendand deliver quality projects. Success comes from the partnership between blur’s sales and delivery teamsproviding a consistent level of service at each stage of the project.

Enterprises and Partnershipsblur believes that the Enterprise market is likely to adopt this new generation of purchasing behavior forbusiness services. We will reach these organizations directly and through partnerships with management consultancies and professional services organizations.

Growth Drivers blur has invested significantly in its technology and the development of the global supplier base. Ourinvestment in sales and marketing has led to Enterprises using blur’s platform to acquire business goods andservices. We will continue to focus on repeat projects from our Enterprise customers to provide our businesswith quality income streams. We continue to target productivity improvements through technology andprocess automation. Our user access fees, buyer plans, premium services and supplier subscriptions willprovide additional revenue streams and improve our project profitability.

Revenue growth will be driven by the broader adoption of blur’s platform by larger Enterprises, as they rolloutthe company’s solution as an Indirect Spend Management tool.


4

Chairman’s StatementThe company made good progress during 2016 in laying the groundwork for blur to drive sales of itsEnterprise procurement platform. The sales pipeline has grown strongly and there has been continued strong product innovation.

However, in the absence of positive cash flows, cash resources were depleting and, on 7 July 2017 blurannounced the successful result of a proposed placing, via an accelerated book build, to raise net cashproceeds of £1.5 million. Whilst blur has made progress in engaging with and delivering projects formultinational blue chip organizations, converting customer engagement into significant revenues has been slower than anticipated at the time of the Group’s admission to AIM in 2012.

In addition, a number of changes were made to blur’s board of Directors. The new board is performing astrategic review of the business over the coming weeks and months and intends the net proceeds of theplacing to be used as general working capital to enable blur to implement a revised growth plan; a productof that strategic review.

I joined the board as Chairman after the year end on 12 July 2017.

I believe that through the investment made in the development of the blur cloud procurement platform the company is well positioned to address the requirements of Enterprise customers in the area of indirect spend.

Progress has been significant in product development and in building the pipeline of opportunities, the taskahead is to convert the pipeline and create reference customers willing to attest to the benefits of the blurplatform.

Further information is set out under Principal Risks and Uncertainties on page 11 and the Going Concern and Viability statement on page 19

In summary I expect the business to make significant progress over the next 12 months building on the efforts of the team during 2016. I would like to thank the team at blur for their commitment and efforts over the lastyear and for their support to the new board as we conduct our strategic review.

Finally, I would also like to thank blur’s shareholders and stakeholders for their continued support of thebusiness.

David RoweChairman31 July 2017

5

Group Strategic ReportStrategic OutcomeThe new board of blur is currently undertaking a strategic review of the business following the announcement on 7 July 2017 of a successful placing for net cash proceeds of £1.5m. The aims of that review are to establish a growth plan that will ultimately drive blur to become a profitable and cash generative business that Enterprise businesses worldwide trust as a complete platform for sourcing, managing and delivering business goods and services.

Strategic Assets and StakeholdersWe focus our resources on five strategic assets:

1. Our online platform2. Our suppliers3. Our insight into the market as an early pioneer4. Our proprietary data5. Our unique business model.

We serve five key stakeholders – our customers, our people, our investors, our suppliers and the market at large.

GrowthThe blur team is focused on increasing the adoption of blur’s model among Enterprise organizations. We believe that the more customer advocates we have in more Enterprise accounts, each achieving personal and business success from use of the blur platform, the more they will repeat buy, resulting in a lower cost of sale and higher operating profitability.

We continue to closely monitor our overall progress by reference to revenue and gross margin, as well as measuring the quantity, value and quality of projects as they move through our platform from submission to completion. In addition, subscription to the company’s annual buyer plans is an indicator of broader adoption of blur’s platform within an organization.

AutomationThe more we continue to automate our business model, the lower our cost to serve, and the greater our capacity to scale and produce high quality outcomes for our customers. We monitor our revenue per employee as a key metric of increasing productivity.

Sales and Deliveryblur’s sales team aims to be familiar with our customers’ businesses, helping them understand the value blur’s unique cloud software and managed services platform can bring to their organization. blur’s delivery teams ensure that our customers’ project is delivered on time and on budget. Our delivery professionals work seamlessly with sales to ensure we consistently deliver the optimal user experience.

We help our customers make Enterprise-wide savings, build efficiency across their business services spend and deliver quality projects. Success comes from the partnership between blur’s sales and delivery teams providing a consistent level of service at each stage of the project.

Enterprises and Partnershipsblur believes that the Enterprise market is likely to adopt this new generation of purchasing behavior for business services. We will reach these organizations directly and through partnerships with management consultancies and professional services organizations.

Growth Drivers blur has invested significantly in its technology and the development of the global supplier base. Our investment in sales and marketing has led to Enterprises using blur’s platform to acquire business goods andservices. We will continue to focus on repeat projects from our Enterprise customers to provide our business with quality income streams. We continue to target productivity improvements through technology and process automation. Our user access fees, buyer plans, premium services and supplier subscriptions will provide additional revenue streams and improve our project profitability.

Revenue growth will be driven by the broader adoption of blur’s platform by larger Enterprises, as they rollout the company’s solution as an Indirect Spend Management tool.


Business Overviewblur’s Indirect Spend Management Platform blur Group operates an Indirect Spend Management Platform that helps private and public sector organizations eliminate the waste and inefficiency inherent in the purchasing of business goods and services. It combines cloud software and managed services which includes sourcing, supplier short listing, contract and project management with payment processing and reporting.

A Typical ProjectThe process starts with a customer submitting their requirements, timeline and budget range using blur's ‘Brief App’. The requirement is then ‘Listed’ on the marketplace and relevant suppliers are invited to pitch for the business. At this stage, we say a request has moved to ‘Pitching On’.

blur’s intelligent matching engine, blurSenseTM, efficiently identifies the best supplier pitches using references, ratings, credentials and credit scores. The shortlist is finalized by blur’s ‘Customer Success’ team.

Once an approved supplier has been chosen, blur’s platform produces a digital ‘Statement of Work’ (‘SOW’)that forms the contract for the work. At this stage, we determine the order to have ‘Kicked Off’.

During the delivery cycle, our project management team, the customer and supplier keep in touch through ‘Project Space’, our online project management and collaboration system. At agreed milestones, and on project completion, billing and payments are handled by ‘blurPayTM’, our secure payment gateway.

The Business Modelblur derives revenue in the following five ways:

1. Buyer Plans - customers pay for access to the global Marketplace of around 65,000 suppliers eitheron a one-time ‘Single Access’ basis or through an annual ‘Buyer Plan’. The annual plans wereintroduced in 2015 to better suit the repeat business expected from the Enterprise market. blur sawthe first subscription, by a customer, to a buyer plan in Q4 2016.

2. Buyer Premium Services - comprising additional wraparound support services:a. blur Manage Ultra – a dedicated project manager improves the customer experience and

provides the single point of contact our Enterprise customers appreciate;b. blur Protect Advanced – provides greater control and flexibility to the customer, specifically

with respect to change requests and budgets;c. blur Express – shortens the process and timeline to engage a supplier if a project is on a

tight deadline; andd. blur Engage – provides bespoke industry-specific expertise over and above blur’s standard

support package; this may be offered at any stage during the customer journey.3. Buyer Market Intelligence tools - blur sells subscriptions to our online tool, ‘blur Data’, which analyses

the indirect spend landscape including category trends, pricing and timeline forecasts.4. Supplier Subscriptions - suppliers can select from a tiered annual subscription model to gain access

to high value project opportunities and market insights.5. Project revenue - for each project that a supplier delivers blur charges the service provider a

percentage of the project value.

Market InsightThere continues to be a growing requirement in medium and large Enterprises for cloud-based procure-to-pay (‘P2P’) solutions to better manage indirect spend.

A number of vendors in adjacent areas of the procurement process are moving into the SOW services procurement field. Notably this includes Vendor Management Systems for contingent workforce management, as well as e-catalogue solution providers.

Notwithstanding this, there is a burgeoning trend among large Enterprises to look at work-stream specific, cloud-based solutions where there is little to no integration. These Enterprises are looking for solutions to address particular types of indirect spend that are less suitable for some of the broader P2P suites.

7

blur's cloud-based software and managed services offering has been selected by a number of globalEnterprises to specifically address indirect services procurement. Compared to some of the broader suiteson offer in the market where an annual spend area of less than $50m makes implementing them barelyviable, blur's offering with immediate integration lowers the barrier to adoption by Enterprises.

A further developing trend, that has become apparent within the target Enterprise market, is the recognitionthat some of the large monolithic outsourcing contracts, many of which have been placed with the samesupplier for many years, are not as efficient or cost effective as previously thought.

Enterprise organizations have approached blur to explore the alternative of adopting the platform as an efficient and agile approach to procuring business services in small packages, that were previously bundledinto multi-million-pound outsourcing contracts, renewed without necessarily improving cost efficiency orimproving delivery success.

In 2016, we met with many more business and procurement leaders to better understand their concerns andidentify emerging procurement trends. We consistently heard them express their need to reduce costs in indirect spending with the broader macro-economic environment serving to move those needs higher up theC-suite’s agenda. Business leaders are becoming more aware of unnecessary cost and risk in theirunmanaged spend. This area of indirect spend is resource heavy and can be better served by outsourcingand adopting solutions such as blur.

Enterprise Customersblur’s focus on Enterprises saw several large customers adopting the platform for the first time in 2016. Theseinclude:

Top 100 UK law firmMulti-national European small appliance manufacturer

blur also entered negotiations with:

Global electronics groupLarge UK county council

Sales and Marketing

The transition to ‘Enterprise-only’ has evolved our sales team toward more advanced account management for key customers.

Our sales teams focus their activities on targeting repeat business from our existing customer base, whilealso developing new sales opportunities for platform buyers and spot purchasers. blur’s marketing teamdirectly targets specific Enterprises, with an emphasis on identifying prospect customers who have alreadybegun to embrace indirect spend management as a cost reduction strategy and recognize the opportunity to create better efficiencies and control within their procurement process.

During our initial engagements with potential users of the platform, we help organizations quantify their cost of wasteful spending when purchasing business services. We aim to secure Enterprise customers whosubmit multiple projects annually on our platform. To on-board our customers, we take them through a three-phase process that firstly pilots the marketplace within a single department, then rolls out blur’s solutionacross multiple functions, and finally leads to the launch of a company-wide purchasing scheme for businessservices.

blur’s managed services team provides a quality outcome for all of our customers.

Technology DevelopmentsDuring the year, we launched blur 6.0 which built on the 2015, 5.0 release.

The ability to purchase goods through blur’s platform was added in Q4 2016, including approval workflowsand catalogue functionality. In addition, new multi-account management features were introduced, including company accounts, user management, user groups and permissions and approval workflows.


7

blur's cloud-based software and managed services offering has been selected by a number of global Enterprises to specifically address indirect services procurement. Compared to some of the broader suites on offer in the market where an annual spend area of less than $50m makes implementing them barely viable, blur's offering with immediate integration lowers the barrier to adoption by Enterprises.

A further developing trend, that has become apparent within the target Enterprise market, is the recognition that some of the large monolithic outsourcing contracts, many of which have been placed with the same supplier for many years, are not as efficient or cost effective as previously thought.

Enterprise organizations have approached blur to explore the alternative of adopting the platform as an efficient and agile approach to procuring business services in small packages, that were previously bundled into multi-million-pound outsourcing contracts, renewed without necessarily improving cost efficiency or improving delivery success.

In 2016, we met with many more business and procurement leaders to better understand their concerns and identify emerging procurement trends. We consistently heard them express their need to reduce costs in indirect spending with the broader macro-economic environment serving to move those needs higher up the C-suite’s agenda. Business leaders are becoming more aware of unnecessary cost and risk in theirunmanaged spend. This area of indirect spend is resource heavy and can be better served by outsourcingand adopting solutions such as blur.

Enterprise Customersblur’s focus on Enterprises saw several large customers adopting the platform for the first time in 2016. These include:

Top 100 UK law firmMulti-national European small appliance manufacturer

blur also entered negotiations with:

Global electronics groupLarge UK county council

Sales and Marketing

The transition to ‘Enterprise-only’ has evolved our sales team toward more advanced account management for key customers.

Our sales teams focus their activities on targeting repeat business from our existing customer base, while also developing new sales opportunities for platform buyers and spot purchasers. blur’s marketing team directly targets specific Enterprises, with an emphasis on identifying prospect customers who have already begun to embrace indirect spend management as a cost reduction strategy and recognize the opportunity to create better efficiencies and control within their procurement process.

During our initial engagements with potential users of the platform, we help organizations quantify their cost of wasteful spending when purchasing business services. We aim to secure Enterprise customers who submit multiple projects annually on our platform. To on-board our customers, we take them through a three-phase process that firstly pilots the marketplace within a single department, then rolls out blur’s solution across multiple functions, and finally leads to the launch of a company-wide purchasing scheme for business services.

blur’s managed services team provides a quality outcome for all of our customers.

Technology DevelopmentsDuring the year, we launched blur 6.0 which built on the 2015, 5.0 release.

The ability to purchase goods through blur’s platform was added in Q4 2016, including approval workflows and catalogue functionality. In addition, new multi-account management features were introduced, including company accounts, user management, user groups and permissions and approval workflows.


8

The platform’s management reporting capabilities were enhanced and a new universal dashboard was launched, allowing users to buy and sell goods and services as well as managing all projects through their accounts.

blur 6.0 has improved efficiency while providing an enhanced experience to our customers.

PeopleAt blur we recruit high performing dedicated teams and functional specialists from the Enterprise software industries. Our people work to give our customers and service providers the best possible experience whenever they use our platform. Everyone adds value.

Board AppointmentsOn 31 January 2017 Richard Bourne-Arton resigned as a Non-executive Director of blur Group and its subsidiaries. On 12 July 2017, David Rowe was been appointed as chairman with Preeti Mardia, Richard Rae and Richard Croft being appointed to the board as non-executive directors. Simultaneous with these new appointments, David Sherriff, Roger de Peyrecave Rob Wirszycz and Kara Cardinale stepped down from the board. Tim Allen, Chief Financial Officer, also stepped down from the board on 28 July 2017 and James Porter, blur’s existing group financial controller, is serving as interim finance lead whilst a review is performed of a suitable replacement for Tim.

blur’s board thanks the departed Directors for their contribution to blur over several years.

Philip LettsChief Executive Officer31 July 2017

9

Chief Executive Officer’s Report2016 has seen progress made in customer and pipeline development, technology and financial performance.

Indeed, it proved a key year for blur as we continued to implement our Enterprise strategy and worked closely with corporate customers thereby gaining a deep understanding of their indirect spend challenges. We aimedto cultivate our relationship with a targeted number of large businesses and are now running trial andonboarding phases with several of those customers which we expect to lead to wider roll outs later in 2017.

Following these initial customer relationships, and in line with the growing market interest in Indirect SpendManagement, we are increasingly engaging with more corporates. While sales cycles remain elongated, weare seeing signs that these may shorten as procurement functions innovate and focus more around theirindirect spend challenges.

Enterprises have increasingly recognized, in today’s economic environment, that improved management andcontrol of indirect spend, especially services, can deliver significant cost and cash improvements. They alsorecognize that digitization of the indirect procurement process, together with blur’s marketplace of vetted,global suppliers can deliver those improvements quickly, with low, scalable set up costs. Using blur’s platformincreases transparency, compliance and control for our customers.

In line with our Enterprise-focused strategy, completion of our blur 6.0 platform has delivered featuresspecifically designed to support large public and private sector organizations.

While blur remains highly tailored to delivering business services, in Q4 2016 we added the ability to sourcegoods through our cloud-based software, meaning we will have the ability to cover all categories of indirectspend for our customers. We also enhanced our multi-user account management functionality. Workflowapprovals, user management and permissions and budgetary control are all integral to blur 6.0.

We further enhanced our management reporting capabilities, allowing our customers to track spend at theproject, user, cost center and company levels. We also made significant moves toward a new, universal,dashboard which will bring greater efficiency by allowing our users to buy and sell through a single portalapproach.

blur Sense 3.0 was completed and released further improving automation of our supplier shortlist andselection process and pitch ratings. We expect the machine intelligence embedded within our platform to bring even greater efficiency and automation as blur scales and as we widen its use.

In 2017 we will be investing further in our technology, specifically concentrating on the next iteration of blurSense as well as developing our ability to interface and integrate with other business systems. On top of thiswe will be adding specific advanced functionality to support upgrade paths to our more valuable subscription-based Enterprise Buyer Plans.

blur’s focus on a smaller number of large customers, together with the additional automation delivered in blur6.0 has meant we’ve continued to improve our own internal efficiency during the year. The Enterprise-focusedstrategy provides blur with a lean, focused cost structure that allows us to concentrate on serving ourcustomers.

As a result, adjusted LBITDA has improved by 60% year on year, driven by a reduction in administration costs of 55%. And as a direct result of those reductions, blur’s cash burn has reduced by 63%.

In the same period we have seen a short hiatus in project revenues as blur exclusively targets the Enterprise buyer and engages with the anticipated longer sales cycles.

Revenues from SME organizations have declined as have the associated bad debt charges; the quality andcollectability of all revenue improving substantially, compared to previous periods, as a result of blur’sEnterprise focus.

We anticipate the trials and onboarding projects we’re currently running to lead to revenue growth going forward through 2017 and beyond.

However, in the absence of positive cash flows, our cash resources have been depleting and, on 7 July 2017blur announced the successful result of a proposed placing, via an accelerated book build, to raise net cash proceeds of £1.5 million. Whilst blur has made progress in engaging with and delivering projects formultinational blue chip organizations, converting customer engagement into significant revenues has been slower than anticipated at the time of the Group’s admission to AIM in 2012.


9

Chief Executive Officer’s Report2016 has seen progress made in customer and pipeline development, technology and financial performance.

Indeed, it proved a key year for blur as we continued to implement our Enterprise strategy and worked closely with corporate customers thereby gaining a deep understanding of their indirect spend challenges. We aimed to cultivate our relationship with a targeted number of large businesses and are now running trial and onboarding phases with several of those customers which we expect to lead to wider roll outs later in 2017.

Following these initial customer relationships, and in line with the growing market interest in Indirect Spend Management, we are increasingly engaging with more corporates. While sales cycles remain elongated, we are seeing signs that these may shorten as procurement functions innovate and focus more around their indirect spend challenges.

Enterprises have increasingly recognized, in today’s economic environment, that improved management and control of indirect spend, especially services, can deliver significant cost and cash improvements. They also recognize that digitization of the indirect procurement process, together with blur’s marketplace of vetted, global suppliers can deliver those improvements quickly, with low, scalable set up costs. Using blur’s platform increases transparency, compliance and control for our customers.

In line with our Enterprise-focused strategy, completion of our blur 6.0 platform has delivered features specifically designed to support large public and private sector organizations.

While blur remains highly tailored to delivering business services, in Q4 2016 we added the ability to source goods through our cloud-based software, meaning we will have the ability to cover all categories of indirect spend for our customers. We also enhanced our multi-user account management functionality. Workflow approvals, user management and permissions and budgetary control are all integral to blur 6.0.

We further enhanced our management reporting capabilities, allowing our customers to track spend at the project, user, cost center and company levels. We also made significant moves toward a new, universal, dashboard which will bring greater efficiency by allowing our users to buy and sell through a single portal approach.

blur Sense 3.0 was completed and released further improving automation of our supplier shortlist and selection process and pitch ratings. We expect the machine intelligence embedded within our platform to bring even greater efficiency and automation as blur scales and as we widen its use.

In 2017 we will be investing further in our technology, specifically concentrating on the next iteration of blur Sense as well as developing our ability to interface and integrate with other business systems. On top of this we will be adding specific advanced functionality to support upgrade paths to our more valuable subscription-based Enterprise Buyer Plans.

blur’s focus on a smaller number of large customers, together with the additional automation delivered in blur 6.0 has meant we’ve continued to improve our own internal efficiency during the year. The Enterprise-focused strategy provides blur with a lean, focused cost structure that allows us to concentrate on serving our customers.

As a result, adjusted LBITDA has improved by 60% year on year, driven by a reduction in administration costs of 55%. And as a direct result of those reductions, blur’s cash burn has reduced by 63%.

In the same period we have seen a short hiatus in project revenues as blur exclusively targets the Enterprise buyer and engages with the anticipated longer sales cycles.

Revenues from SME organizations have declined as have the associated bad debt charges; the quality and collectability of all revenue improving substantially, compared to previous periods, as a result of blur’s Enterprise focus.

We anticipate the trials and onboarding projects we’re currently running to lead to revenue growth going forward through 2017 and beyond.

However, in the absence of positive cash flows, our cash resources have been depleting and, on 7 July 2017 blur announced the successful result of a proposed placing, via an accelerated book build, to raise net cash proceeds of £1.5 million. Whilst blur has made progress in engaging with and delivering projects for multinational blue chip organizations, converting customer engagement into significant revenues has been slower than anticipated at the time of the Group’s admission to AIM in 2012.


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I welcome the new board members to blur and look forward to working with them. We are currently working to complete a strategic review of the business with the aim of producing a new plan for growth that will support blur’s journey to profitability and cash generation.

Outlook

In Q1 2017 we have seen further progress with our Enterprise customer base. Among other opportunities, we are working with a Top 100 law firm on their document management and digital archiving facility, a multi-brand, European household appliance company on their marketing needs and a global electronics brand.

We have continued to build our pipeline with large Enterprises and are working with the Chartered Institute of Procurement and Supply, leading research with procurement teams across many verticals.

In the first quarter we continued to develop blur’s platform, working towards the release of blur 7.0. That release will deliver more of the features and functionality blur’s customers and opportunities have identified as important to them. It will also enable us to continue our own drive to maximize internal efficiency and as a result H1 2017 has seen further improvements in adjusted LBITDA.

Finally, I would like to again thank all of our employees, former board members, our customers and our shareholders for their continued support.

Philip LettsChief Executive Officer31 July 2017

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Principal Risks and UncertaintiesThe key business risks affecting the Group are set out below:

Liquidity RiskThe group seeks to manage this risk by ensuring sufficient liquidity is available to meet foreseeable needsand to invest in cash assets safely and profitably. The Group had cash reserves of $2.5m as at the 31stDecember 2016. The cash burn in Q4 2016, excluding foreign exchange effects, was $0.9m. At the end ofQ2 2017 further reductions in quarterly cash burn have been put in place and longer-term financialcommitments reduced.

On 7 July 2017, blur announced the successful result of a proposed placing, via an accelerated book build,to raise net cash proceeds of £1.5 million. Whilst blur has made progress in engaging with and deliveringprojects for multinational blue chip organizations, converting customer engagement into significant revenueshas been slower than anticipated at the time of the Group’s admission to AIM in 2012.

The net proceeds of the Placing are intended to be used as general working capital to enable blur toimplement its revised growth plan, which is intended to result in the conversion of customer engagementsinto projects and revenue growth. A revised growth plan will aim to deliver significant progress in establishingrelationships with blue chip multinational customers from a variety of sectors whilst minimizing the cash requirement of the business.

In addition, a number of changes have been made to blur’s board of Directors. David Rowe has beenappointed as chairman with Preeti Mardia, Richard Rae and Richard Croft being appointed to the board asnon-executive directors. Simultaneous with these new appointments, David Sherriff, Roger de PeyrecaveRob Wirszycz and Kara Cardinale stepped down from the board. Tim Allen, Chief Financial Officer, alsostepped down from the board and James Porter, blur’s existing group financial controller, will serve as interimfinance lead whilst a review is performed of a suitable replacement for Tim.

The Directors have prepared a cash flow forecast covering a period extending 12 months from the date ofapproval of these financial statements which shows that the Group will have sufficient cash to meet its debtsas they fall due over that period.

However, blur is a disruptive and evolving technology company and uncertainties exist in the forecast as aresult. The forecast contains certain assumptions about the performance of the business including growth infuture revenue, both in project revenues and in premium services, the cost model and margins, and the level of cash recovery from trading. In the next 12 months, the most critical assumptions are those concerning thespeed of growth of revenues and the control of costs. The Directors are aware of the risks and uncertaintiesfacing the business as it builds on its Enterprise-only strategy but the assumptions used are the Directors’best estimate of the future development of the business. As with any disruptive, evolving technologycompany there is always an inherent risk over the viability of the group and company if forecasts are not metand cash resources are not adequate.

Operational RiskAs we acquire the trust and loyalty of larger Enterprise customers, the dynamics of projects that generaterevenue continue to evolve, with more complex and longer life cycle projects being submitted to the platform.In addition, the Enterprise customer requires an enhanced level of service and high-quality outcomes for theirprojects. Added complexity and enhanced service requires employees with requisite skills.

blur focuses on the customer experience with dedicated Customer Success and Projects teams making upour Delivery function. blur trains its Delivery teams to provide high levels of customer satisfaction. blur alsooffers a range of defined Premium Services to allow the Enterprise customer access to higher levels of projectsupport.

Credit RiskCredit risk is the risk that a counterparty fails to discharge an obligation to the Group. The Group is exposedto this risk for various financial instruments, for example by granting receivables to customers. The Group continuously monitors defaults of customers and other counterparties, identified either individually or bygroup, and incorporates this information into its credit risk controls.


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Principal Risks and UncertaintiesThe key business risks affecting the Group are set out below:

Liquidity RiskThe group seeks to manage this risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest in cash assets safely and profitably. The Group had cash reserves of $2.5m as at the 31st December 2016. The cash burn in Q4 2016, excluding foreign exchange effects, was $0.9m. At the end of Q2 2017 further reductions in quarterly cash burn have been put in place and longer-term financial commitments reduced.

On 7 July 2017, blur announced the successful result of a proposed placing, via an accelerated book build, to raise net cash proceeds of £1.5 million. Whilst blur has made progress in engaging with and delivering projects for multinational blue chip organizations, converting customer engagement into significant revenues has been slower than anticipated at the time of the Group’s admission to AIM in 2012.

The net proceeds of the Placing are intended to be used as general working capital to enable blur to implement its revised growth plan, which is intended to result in the conversion of customer engagements into projects and revenue growth. A revised growth plan will aim to deliver significant progress in establishing relationships with blue chip multinational customers from a variety of sectors whilst minimizing the cash requirement of the business.

In addition, a number of changes have been made to blur’s board of Directors. David Rowe has beenappointed as chairman with Preeti Mardia, Richard Rae and Richard Croft being appointed to the board as non-executive directors. Simultaneous with these new appointments, David Sherriff, Roger de Peyrecave Rob Wirszycz and Kara Cardinale stepped down from the board. Tim Allen, Chief Financial Officer, also stepped down from the board and James Porter, blur’s existing group financial controller, will serve as interim finance lead whilst a review is performed of a suitable replacement for Tim.

The Directors have prepared a cash flow forecast covering a period extending 12 months from the date ofapproval of these financial statements which shows that the Group will have sufficient cash to meet its debts as they fall due over that period.

However, blur is a disruptive and evolving technology company and uncertainties exist in the forecast as a result. The forecast contains certain assumptions about the performance of the business including growth in future revenue, both in project revenues and in premium services, the cost model and margins, and the level of cash recovery from trading. In the next 12 months, the most critical assumptions are those concerning the speed of growth of revenues and the control of costs. The Directors are aware of the risks and uncertainties facing the business as it builds on its Enterprise-only strategy but the assumptions used are the Directors’ best estimate of the future development of the business. As with any disruptive, evolving technology company there is always an inherent risk over the viability of the group and company if forecasts are not met and cash resources are not adequate.

Operational RiskAs we acquire the trust and loyalty of larger Enterprise customers, the dynamics of projects that generate revenue continue to evolve, with more complex and longer life cycle projects being submitted to the platform. In addition, the Enterprise customer requires an enhanced level of service and high-quality outcomes for their projects. Added complexity and enhanced service requires employees with requisite skills.

blur focuses on the customer experience with dedicated Customer Success and Projects teams making up our Delivery function. blur trains its Delivery teams to provide high levels of customer satisfaction. blur also offers a range of defined Premium Services to allow the Enterprise customer access to higher levels of project support.

Credit RiskCredit risk is the risk that a counterparty fails to discharge an obligation to the Group. The Group is exposed to this risk for various financial instruments, for example by granting receivables to customers. The Group continuously monitors defaults of customers and other counterparties, identified either individually or by group, and incorporates this information into its credit risk controls.


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blur’s focus on Enterprise customers reduces its exposure to credit risk and blur increasingly takes cash in advance of projects from smaller customers going onto the platform. Where available at reasonable cost, external credit ratings and/or reports on customers and other counterparties are also obtained and used.

The group's maximum exposure to credit risk is the carrying amount of financial assets at the reporting date excluding equities, as summarized in note 21.

Foreign Exchange RiskThe group is exposed to foreign exchange risk predominantly on its sales and purchases in the USA and the Euro zone. The group manages its foreign exchange exposure on a net basis. To reduce its exposure to movements in foreign exchange rates the group enters into forward currency contracts when appropriate. See note 21 to the consolidated financial statements for further information.

TechnologyThe group’s performance is dependent on its technology keeping pace with developments in cloud and mobile technology, including volumes of data and growth in applications. The group manages this risk by a commitment to research and development combined with ongoing dialogue with trading partners and sector specialists to ensure that market developments are understood and updates to the platform are made.

Competitionblur believes it continues to hold ‘first mover’ advantage. As sourcing of indirect spend through an online platform grows and becomes more widely known among Enterprise customers we recognize that this may attract a competitor who has greater financial resources. blur continues to invest in expanding our lead in technology, expertise, and service delivery and believes it has a level of knowledge, expertise and established supplier base of over 65,000 which would take several years for a competitor to replicate.

StaffCapitalizing on the opportunity blur faces will also require blur to industrialize our business processes and expand our skill sets within short time frames. This may require us to recruit, train and develop a larger employee base. blur believes that the skills required are available, either in the locations where its offices are located or in the wider workforce.

To ensure efficiency, the business is investing in its technology to allow for future scaling and growth without a concomitant rise in staff numbers.

SuppliersMaintenance and addition of high-quality suppliers able to deliver high value projects over all indirect spendcategories is key to growth particularly as Enterprise customers submit larger and more complex projects. blur attracts suppliers by maintaining leading-edge technology and by the quality and volume of potential projects on offer on its platform.

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2016 Financial ReviewRevenueRevenue for the year decreased by 69% to $0.83m (2015: $2.70m) within which Project fee revenue declined by 63% to $0.72m (2015: $1.95m). As the Group transitioned to an Enterprise-only strategy, it removed access to all contingent projects in the marketplace and ceased direct marketing activities aimed at the SMEmarket. 2016 saw the continued decline of SME-generated revenues while the longer sales cycles in the more mature Enterprise market meant that revenues from this market grew only slowly.

blur sees Enterprises initially trialing its platform to assess its suitability to address their indirect spend problems. The cycle between this initial trial and broader adoption of the platform is long.

As in 2015, the overall quality and collectability of blur’s project revenues improved during the year.

Cancellation fee income (previously Listing fees) declined by 99% to $0.01m (2015: $0.65m). The improving quality of projects during the year, from Enterprise customers, drove this decline. Income from Subscriptions& License fees totaled $0.11m (2015: $0.08m). This increase was partially driven by the subscription to a buyer plan by a Top-100 UK law firm.

Gross Marginblur includes the cost of blur staff directly involved in the delivery of projects from listing to completion, in costof sales.

Gross loss was $(0.08)m in 2016 (2015: profit $0.29m). The reduction has been driven by the reduction inCancellation fee (previously Listing fee) income and by lower revenue volumes as blur engages with the long Enterprise sales cycle. The staff costs charged to cost of sales reduced by 61% to $0.33m (2015: $0.84m).

Adjusted LBITDAThe adjusted LBITDA (‘Loss before Interest, Tax, Depreciation and Amortization, Foreign Exchange movements and Share Option costs’) for the year reduced by 60% to $3.56m (2015: $8.89m) despite thereduction in gross profit. This was driven by an overall reduction in headcount and other costs, enabled by the focus on targeted large corporate customers, higher quality transactions and increased automation in blur’s platform.

CostsAdministrative costs decreased by 59% to $4.50m (2015: $11.03m) due to blur’s increasing ability to improve efficiency with the launch of blur 6.0. During 2016 the average number of full-time employees reduced from62 to 31 with a consequent reduction in staff costs. Share-based payments resulted in a credit of $0.21m(2015: charge of $0.53m) and hence reduced accordingly.

The credit risk associated with the customers using the marketplace in 2016 resulted in a $(0.05)m (2015: $0.85m) bad debt provision included in administrative costs. The credit balance was, in part, driven byrecovery of previously provided for debts.

Loss after TaxThe loss after tax for the year reduced to $4.3m (2015: $10.1m).

Finance income of $0.03m (2015: $0.2m) reflects lower cash balances held on deposit. Taxation includes$0.3m (2015: $0.45m) of R&D tax credit.

Tax LossesTax losses for the Group up to the end of December 2016 amount to a total of $25.8m (2015: $22.50m),none of which are recognized as a deferred tax asset.

CashThe cash balance at year end was $2.5m (31 December 2015: $7.1m).

Operating cash outflow from operating activities was $2.6m (2015: $7.8m) and working capital increased by$0.38m (2015: decrease $0.8m). Investments in intangible technology assets totaled $0.9m (2015: $1.5m),primarily reflecting the capitalization of internal technology development.


13

2016 Financial ReviewRevenueRevenue for the year decreased by 69% to $0.83m (2015: $2.70m) within which Project fee revenue declined by 63% to $0.72m (2015: $1.95m). As the Group transitioned to an Enterprise-only strategy, it removed access to all contingent projects in the marketplace and ceased direct marketing activities aimed at the SME market. 2016 saw the continued decline of SME-generated revenues while the longer sales cycles in the more mature Enterprise market meant that revenues from this market grew only slowly.

blur sees Enterprises initially trialing its platform to assess its suitability to address their indirect spend problems. The cycle between this initial trial and broader adoption of the platform is long.

As in 2015, the overall quality and collectability of blur’s project revenues improved during the year.

Cancellation fee income (previously Listing fees) declined by 99% to $0.01m (2015: $0.65m). The improving quality of projects during the year, from Enterprise customers, drove this decline. Income from Subscriptions& License fees totaled $0.11m (2015: $0.08m). This increase was partially driven by the subscription to a buyer plan by a Top-100 UK law firm.

Gross Marginblur includes the cost of blur staff directly involved in the delivery of projects from listing to completion, in cost of sales.

Gross loss was $(0.08)m in 2016 (2015: profit $0.29m). The reduction has been driven by the reduction in Cancellation fee (previously Listing fee) income and by lower revenue volumes as blur engages with the long Enterprise sales cycle. The staff costs charged to cost of sales reduced by 61% to $0.33m (2015: $0.84m).

Adjusted LBITDAThe adjusted LBITDA (‘Loss before Interest, Tax, Depreciation and Amortization, Foreign Exchange movements and Share Option costs’) for the year reduced by 60% to $3.56m (2015: $8.89m) despite the reduction in gross profit. This was driven by an overall reduction in headcount and other costs, enabled by the focus on targeted large corporate customers, higher quality transactions and increased automation in blur’s platform.

CostsAdministrative costs decreased by 59% to $4.50m (2015: $11.03m) due to blur’s increasing ability to improve efficiency with the launch of blur 6.0. During 2016 the average number of full-time employees reduced from 62 to 31 with a consequent reduction in staff costs. Share-based payments resulted in a credit of $0.21m(2015: charge of $0.53m) and hence reduced accordingly.

The credit risk associated with the customers using the marketplace in 2016 resulted in a $(0.05)m (2015: $0.85m) bad debt provision included in administrative costs. The credit balance was, in part, driven byrecovery of previously provided for debts.

Loss after TaxThe loss after tax for the year reduced to $4.3m (2015: $10.1m).

Finance income of $0.03m (2015: $0.2m) reflects lower cash balances held on deposit. Taxation includes $0.3m (2015: $0.45m) of R&D tax credit.

Tax LossesTax losses for the Group up to the end of December 2016 amount to a total of $25.8m (2015: $22.50m),none of which are recognized as a deferred tax asset.

CashThe cash balance at year end was $2.5m (31 December 2015: $7.1m).

Operating cash outflow from operating activities was $2.6m (2015: $7.8m) and working capital increased by$0.38m (2015: decrease $0.8m). Investments in intangible technology assets totaled $0.9m (2015: $1.5m), primarily reflecting the capitalization of internal technology development.


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Trade Receivables Historically, blur had a diverse list of customers, with differing levels of credit risk. There were significant levels of bad debts in respect of small- and medium-sized businesses as blur tested the marketplace.

The transition to an Enterprise-only strategy, the denial of access to the marketplace to all contingent projects and an increased focus on collections has served to mitigate this credit risk in 2016. This resulted in a release of prior period provisions to Administrative expenses of $0.05m.

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GOVERNANCEBoard of Directors

David Rowe – Chairman. Appointed 12 July 2017

David Rowe is the CEO of Black Green Capital, a Venture Capital investment company based in London specializing in disruptive digital transformation. Companies in the portfolio include http://levelupmedia.tv/, hydro66.com, sendwyre.com, and message.io. David was CEO and founder of Easynet Group, a UK listedglobal Enterprise Cloud services business sold to BSkyB in 2006. David subsequently headed up B2B atBSkyB.

Philip Letts – Chief Executive Officer. Appointed 23 August 2012

Philip has run a string of high-profile web ventures operating across the US and Europe including anestablished Silicon Valley venture. Philip co-founded Beenz.com in 1998, an internet currency program. Bymid-2000, the business was valued at $300m in a transaction led by Philip just prior to him being recruitedto run Tradaq Inc. Beenz.com was sold privately in 2001 to a US corporation. In 2000, he became CEO ofTradaq, formerly Internet Barter Inc., which became a part of a public company post-merger. Following thishe was CEO of Surfkitchen which was later sold to SymphonyTeleca. Philip then decided to focus on a newenterprise, wanting to embrace cloud software whilst creating a game-changing procurement marketplace –this became blur Group.

Richard Croft - Non-executive Director. Appointed 12 July 2017

Richard Croft is a solicitor with more than 20 years' experience of corporate and commercial law. Richard'scurrent directorships include Croft Legal Services Limited, Black Green Capital Limited and Hydro66 UKLimited. His initial career was at GEC and as general counsel for Easynet Group. Richard specializes in TMTand new media commercial law.

Richard Rae - Non-executive Director. Appointed 12 July 2017

Richard Rae qualified as a chartered accountant with KPMG and joined Hoare Govett as an investmentanalyst in 1987. He spent 22 years working in investment research and equities management, latterly as a Managing Director, responsible for smaller companies, in the Global Equities division of ABN AMRO. Since2009, he has established himself as an independent management consultant providing corporate advice to both listed and unlisted companies. He is also a director of Aberforth Smaller Companies Trust plc, andChaarat Gold Holdings Limited.

Preeti Mardia - Non-executive Director. Appointed 12 July 2017

Preeti Mardia has diverse end-to-end operations management and commercial expertise across Electronics,Telecoms, Aerospace and FMCG sectors. Preeti is currently Senior Vice President Operations at IDEX ASA, a leading fingerprint imaging and recognition technology company publicly listed in Norway and Board Director with ThinFilm Electronics ASA a global leader in NFC mobile marketing and smart-packagingsolutions using printed electronics technology. Prior to IDEX she was Vice President Operations for Axxcss Wireless UK and Operations Director at Filtronic Plc. She also gained extensive FMCG experience inmanufacturing, product development and quality assurance with Cadbury Schweppes Plc. Preeti hasMasters degree in Management from Ashridge.


15

GOVERNANCEBoard of Directors

David Rowe – Chairman. Appointed 12 July 2017

David Rowe is the CEO of Black Green Capital, a Venture Capital investment company based in London specializing in disruptive digital transformation. Companies in the portfolio include http://levelupmedia.tv/, hydro66.com, sendwyre.com, and message.io. David was CEO and founder of Easynet Group, a UK listed global Enterprise Cloud services business sold to BSkyB in 2006. David subsequently headed up B2B at BSkyB.

Philip Letts – Chief Executive Officer. Appointed 23 August 2012

Philip has run a string of high-profile web ventures operating across the US and Europe including an established Silicon Valley venture. Philip co-founded Beenz.com in 1998, an internet currency program. By mid-2000, the business was valued at $300m in a transaction led by Philip just prior to him being recruited to run Tradaq Inc. Beenz.com was sold privately in 2001 to a US corporation. In 2000, he became CEO of Tradaq, formerly Internet Barter Inc., which became a part of a public company post-merger. Following this he was CEO of Surfkitchen which was later sold to SymphonyTeleca. Philip then decided to focus on a new enterprise, wanting to embrace cloud software whilst creating a game-changing procurement marketplace –this became blur Group.

Richard Croft - Non-executive Director. Appointed 12 July 2017

Richard Croft is a solicitor with more than 20 years' experience of corporate and commercial law. Richard's current directorships include Croft Legal Services Limited, Black Green Capital Limited and Hydro66 UK Limited. His initial career was at GEC and as general counsel for Easynet Group. Richard specializes in TMT and new media commercial law.

Richard Rae - Non-executive Director. Appointed 12 July 2017

Richard Rae qualified as a chartered accountant with KPMG and joined Hoare Govett as an investment analyst in 1987. He spent 22 years working in investment research and equities management, latterly as a Managing Director, responsible for smaller companies, in the Global Equities division of ABN AMRO. Since 2009, he has established himself as an independent management consultant providing corporate advice to both listed and unlisted companies. He is also a director of Aberforth Smaller Companies Trust plc, and Chaarat Gold Holdings Limited.

Preeti Mardia - Non-executive Director. Appointed 12 July 2017

Preeti Mardia has diverse end-to-end operations management and commercial expertise across Electronics, Telecoms, Aerospace and FMCG sectors. Preeti is currently Senior Vice President Operations at IDEX ASA, a leading fingerprint imaging and recognition technology company publicly listed in Norway and Board Director with ThinFilm Electronics ASA a global leader in NFC mobile marketing and smart-packaging solutions using printed electronics technology. Prior to IDEX she was Vice President Operations for Axxcss Wireless UK and Operations Director at Filtronic Plc. She also gained extensive FMCG experience in manufacturing, product development and quality assurance with Cadbury Schweppes Plc. Preeti has Masters degree in Management from Ashridge.


16

Directors’ ReportThe Directors present their report and the audited financial statements for the year ended 31 December 2016.

blur Group plc was incorporated on 22 August 2012. These financial statements are prepared in compliance with IFRS as adopted by the European Union. The Group financial statements consolidate the financial statements of the company and its subsidiaries. The parent company financial statements present information about the company as a separate entity and not about its Group.

Dividend

The group’s current policy is not to pay dividends. There can be no assurance as to the level of future dividends (if any) that may be paid by the group.

The board intends to adopt a dividend policy appropriate to the company’s financial performance. This will take into account its ability to operate and grow and the need to retain a prudent level of cash resources. Any profits are likely to be retained and used towards the development of the group’s activities and business for the foreseeable future.

Directors and Directors’ InterestsThe Directors who held office during the financial year are set out below, together with their interests in the Ordinary shares of the company according to the register of Directors’ interests:

Interest at 31 December, 2016

Interest at 31 December, 2015

Philip Letts 14,179,840 14,179,840

Kara Cardinale 3 - -

Tim Allen 4 - -

Richard Bourne-Arton 1, 2 432,381 432,381

David John Sherriff 1, 3 72,600 72,600Roger de Peyrecave 1, 3 - -Robert Wirszycz 1, 3 47,700 47,700

1 Non-executive Director.

2 Resigned 31 January 2017.

3 Resigned 12 July 2017

4 Resigned 28 July 2017

17

The Directors interests in share options of the company were:

Optionsat 1

January2016 Granted Surrendered

Options at 31

December2016

Date of Grant

ExercisePrice

Earliest Date of

ExerciseLatest Dateof Exercise

Philip Letts 30,000 - - 30,000 1/23/2013 £1.45 1/23/2017 1/22/2023

500,000 - - 500,000 12/31/2014 £0.66 12/31/2018 12/30/2024

Kara Cardinale 3 375,000 - - 375,000 04/09/2012 £0.32 09/03/2013 04/08/2022

25,000 - - 25,000 01/12/2013 £1.45 01/23/2017 01/11/2023

125,000 - - 125,000 12/31/2014 £0.66 12/31/2018 12/30/2024

Timothy Allen 4 400,000 - - 400,000 07/20/2015 £0.27 07/20/2019 07/19/2025

- 200,000 - 200,000 12/20/2016 £0.15 12/20/2019 12/19/2026

Richard Bourne-Arton1,2 45,000 - - 45,000 04/09/2012 £0.32 04/09/2016 04/08/2022

15,000 - - 15,000 12/31/2014 £0.66 12/31/2018 12/31/2024David Sherriff 1,

3 15,000 - - 15,000 10/16/2013 £4.25 10/16/2017 10/15/2023

15,000 - - 15,000 12/31/2014 £0.66 12/31/2018 12/30/2024Roger dePeyrecave 1, 3 30,000 - - 30,000 10/15/2015 £0.30 10/15/2019 10/14/2025

Robert Wirszycz1, 3 30,000 - - 30,000 10/15/2015 £0.30 10/15/2019 10/14/2025

1,605,000 200,000 - 1,805,000



3 Resigned 12 July 20174 Resigned 28 July 2017

During the year the Directors were awarded a total of 200,000 share options (2015: 460,000) at a weighted average exercise price of £0.15 (2015: £0.2739). These options are long-term in nature. No share optionswere received or receivable in respect of qualifying services under a formal long-term incentive scheme.

No share options were exercised during the year.


17

The Directors interests in share options of the company were:

Optionsat 1

January 2016 Granted Surrendered

Options at 31

December 2016

Date of Grant

Exercise Price

Earliest Date of

ExerciseLatest Date of Exercise

Philip Letts 30,000 - - 30,000 1/23/2013 £1.45 1/23/2017 1/22/2023

500,000 - - 500,000 12/31/2014 £0.66 12/31/2018 12/30/2024

Kara Cardinale 3 375,000 - - 375,000 04/09/2012 £0.32 09/03/2013 04/08/2022

25,000 - - 25,000 01/12/2013 £1.45 01/23/2017 01/11/2023

125,000 - - 125,000 12/31/2014 £0.66 12/31/2018 12/30/2024

Timothy Allen 4 400,000 - - 400,000 07/20/2015 £0.27 07/20/2019 07/19/2025

- 200,000 - 200,000 12/20/2016 £0.15 12/20/2019 12/19/2026

Richard Bourne-Arton1,2 45,000 - - 45,000 04/09/2012 £0.32 04/09/2016 04/08/2022

15,000 - - 15,000 12/31/2014 £0.66 12/31/2018 12/31/2024David Sherriff 1,

3 15,000 - - 15,000 10/16/2013 £4.25 10/16/2017 10/15/2023

15,000 - - 15,000 12/31/2014 £0.66 12/31/2018 12/30/2024Roger de Peyrecave 1, 3 30,000 - - 30,000 10/15/2015 £0.30 10/15/2019 10/14/2025

Robert Wirszycz1, 3 30,000 - - 30,000 10/15/2015 £0.30 10/15/2019 10/14/2025

1,605,000 200,000 - 1,805,000



3 Resigned 12 July 20174 Resigned 28 July 2017

During the year the Directors were awarded a total of 200,000 share options (2015: 460,000) at a weighted average exercise price of £0.15 (2015: £0.2739). These options are long-term in nature. No share options were received or receivable in respect of qualifying services under a formal long-term incentive scheme.

No share options were exercised during the year.


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Emoluments and compensations in relation to Directors for the period of their office:

Salary/Fees

Share-based

Payments Bonus Benefits 2016 2015US$ US$ US$ US$ US$ US$

Philip Letts 223,182 108,578 - 461 332,221 437,394Kara Cardinale (resigned 12 July 2017) 1 85,625 30,812 - - 116,437 229,443

Timothy Allen (resigned 28 July 2017) 136,389 22,985 - 461 159,835 8,195

Barbara Spurrier (resigned 10December 2015) 24,798 - - - 24,798 119,054Richard Bourne-Arton (resigned 31 January 2017) 22,318 3,069 - - 25,387 41,403

Robert Brooksbank (resigned 30 June 2015) - - - - - 15,210

David Sherriff (resigned 12 July 2017) 50,216 6,212 - - 56,428 71,473Roger de Peyrecave (resigned 12 July 2017) 33,477 1,920 - - 35,397 15,504Robert Wirszycz (resigned 12 July 2017) 33,477 1,920 - - 35,397 13,925

609,482 175,496 - 922 785,900 951,601

1 These fees were paid to Revviva LLC, a company in which Kara Cardinale has an interest, in relation to her services as a Director.

The number of Directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2015: nil).

The year on year reduction in emoluments and compensations seen in 2016 was partly driven by a 10% reduction in base salary implemented on 1 January 2016.

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Substantial ShareholdingsThe company has been advised of the following interests in more than 3% of its Ordinary share capital as at31 December 2016:

%Philip Letts 30.1Robert Keith 14.5J O Hambro Capital Management Ltd 11.7River and Mercantile Asset Management 6.6

Hargreaves Lansdown 5.0

TD Waterhouse 3.7

Interactive Investor 3.5

Research and DevelopmentThe group undertakes development activities which involve enhancement of its trading platform.Development expenditure is capitalized as an intangible asset, only if the development costs can bemeasured reliably and the platform being built will be completed and will generate future economic benefitsin the form of cash flows to the group. Expenditure being capitalized includes internal staff time and costspent directly on developing the trading platform.

Going Concern and ViabilityOver the last two years the group has been changing its business model to focus on large national and multi-national entities (“Enterprise”) rather than smaller customers. Q4 2016 saw the first Enterprise customerbeing won. As part of the change, and as expected, the long sales cycles inherent in entering the Enterprise procurement market contributed to a significant fall in turnover in the current period and continued significantcash burn. The group had cash of $2.5m as at 31 December 2016, which has reduced to $1.0m at 30 June 2017. At the time of approving these financial statements the group has legally binding undertakings frominvestors to inject equity generating net cash proceeds of £1.5m, contingent only on the company’s beingreadmitted to AIM, without which the group could not have continued. There has also been a new leadershipwith new board members put in place, aligned with the potential new investment.

Although since the year end the group has entered final negotiations with another, particularly largeEnterprise customer, the directors recognize that building the Enterprise business and making the group profitable and cash generative is a medium term goal. During that period further funding may be requireddepending on trading performance.

Cash forecasts through to 31 December 2018 are based on the £1.5m cash injection, anticipated new keycontract wins, with revenues rising to $1.5m in 2017 and then to $6.4m in 2018, and reduced costs throughheadcount reductions and overhead savings implemented from the end of Q2 2017. Cash burn for 2017 isforecast to be $2.4m (2016: $4.6m) and $0.3m in 2018, and hence cash at the end of 2017 and 2018 of$2.0m and $1.7m respectively. Although an overall cash burn is forecast for 2018, the group is forecast to turn cash generative during 2019.

As at the date of approval of these financial statements, based on the £1.5m cash injection and the forecastscovering a period extending beyond 12 months from the date of approval of these financial statements, thegroup will be able to continue operating for at least 12 months.

However, the group is evolving technology business, open to disruption, and is itself a disrupter, and theforecast contains assumptions including: significant growth in future revenue, both in project revenues andin premium services; the cost model; and margins. The directors are aware of the risks and uncertaintiesfacing the business but the assumptions used are the directors’ estimate of the future development of thebusiness. If performance is not in line with forecasts then additional funding would or may need to be raised, and the ability to raise it will depend on performance itself. In the next 12 months, the most criticalassumptions are those concerning the speed of growth in revenues and the control of costs.


19

Substantial ShareholdingsThe company has been advised of the following interests in more than 3% of its Ordinary share capital as at 31 December 2016:

%Philip Letts 30.1Robert Keith 14.5J O Hambro Capital Management Ltd 11.7River and Mercantile Asset Management 6.6

Hargreaves Lansdown 5.0

TD Waterhouse 3.7

Interactive Investor 3.5

Research and DevelopmentThe group undertakes development activities which involve enhancement of its trading platform.Development expenditure is capitalized as an intangible asset, only if the development costs can be measured reliably and the platform being built will be completed and will generate future economic benefits in the form of cash flows to the group. Expenditure being capitalized includes internal staff time and cost spent directly on developing the trading platform.

Going Concern and ViabilityOver the last two years the group has been changing its business model to focus on large national and multi-national entities (“Enterprise”) rather than smaller customers. Q4 2016 saw the first Enterprise customer being won. As part of the change, and as expected, the long sales cycles inherent in entering the Enterprise procurement market contributed to a significant fall in turnover in the current period and continued significant cash burn. The group had cash of $2.5m as at 31 December 2016, which has reduced to $1.0m at 30 June 2017. At the time of approving these financial statements the group has legally binding undertakings from investors to inject equity generating net cash proceeds of £1.5m, contingent only on the company’s being readmitted to AIM, without which the group could not have continued. There has also been a new leadership with new board members put in place, aligned with the potential new investment.


Cash forecasts through to 31 December 2018 are based on the £1.5m cash injection, anticipated new key contract wins, with revenues rising to $1.5m in 2017 and then to $6.4m in 2018, and reduced costs through headcount reductions and overhead savings implemented from the end of Q2 2017. Cash burn for 2017 isforecast to be $2.4m (2016: $4.6m) and $0.3m in 2018, and hence cash at the end of 2017 and 2018 of $2.0m and $1.7m respectively. Although an overall cash burn is forecast for 2018, the group is forecast to turn cash generative during 2019.

As at the date of approval of these financial statements, based on the £1.5m cash injection and the forecasts covering a period extending beyond 12 months from the date of approval of these financial statements, the group will be able to continue operating for at least 12 months.

However, the group is evolving technology business, open to disruption, and is itself a disrupter, and the forecast contains assumptions including: significant growth in future revenue, both in project revenues and in premium services; the cost model; and margins. The directors are aware of the risks and uncertainties facing the business but the assumptions used are the directors’ estimate of the future development of the business. If performance is not in line with forecasts then additional funding would or may need to be raised, and the ability to raise it will depend on performance itself. In the next 12 months, the most critical assumptions are those concerning the speed of growth in revenues and the control of costs.


Going Concern and Viability (continued)The directors have concluded that the combination of these circumstances represents a material uncertainty that casts significant doubt upon the group and company’s ability to continue as a going concern and that, therefore the company and the group may be unable to continue realizing their assets and discharging their liabilities in the normal course of business. Nevertheless the directors have a reasonable expectation that the company and the group have adequate resources to continue for at least 12 months from the date of approval of these financial statements. For these reasons, they continue to adopt the going concern basis in preparing the annual financial statements.

Political ContributionsThe group made no political donations or incurred any political expenditure during the year.

The UK Corporate Governance Code Whilst the company is listed on AIM, it is not required to adopt the provisions of the UK Corporate Governance Code (“the Code”). The board, however, is committed to the maintenance of high standards of corporate governance and after due consideration it has adopted many, although not all, aspects of the Code as described below. During 2016 the board of directors comprised three Executive and three Non-executive members. This ensured compliance with the Code, which states that a smaller company should have at least two independent Directors. On 30 September 2015 the roles of Chairman and Chief Executive were split and David Sherriff, an independent Non-executive Director, assumed the role of Chairman of the board.

The board normally meets at least six times per year, with ad hoc meetings also being held. The role of the board is to provide leadership of the group and to set strategic aims but within a framework of prudent and effective controls which enable risk to be managed. The board has agreed the schedule of matters reserved for its decision that includes ensuring that the necessary financial and human resources are in place to meet its obligations to its shareholders and others. It also approves acquisitions and disposals of businesses, major capital expenditure and annual financial budgets and recommends interim and final dividends. It receives recommendations from the Audit Committee in relation to the appointment of the auditor, its remuneration and the policy relating to non-audit services. The board agrees the framework for Executive Directors’ remuneration with the Remuneration Committee and determines fees paid to Non-executive Directors.

Recommendations for the appointment of new Directors are received from the Nomination Committee. Board papers are circulated before board meetings in sufficient time to be meaningful. The performance of the board is evaluated informally on an on-going basis with reference to all aspects of its operation including, but not limited to: the appropriateness of its skill level; the way its meetings are conducted and administered (including the content of those meetings); the effectiveness of the various Committees; whether corporate governance issues are handled in a satisfactory manner; and whether there is a clear strategy and objectives. A new Director, on appointment, is briefed on the activities of the group. Professional induction training is also given as appropriate.

Directors are updated on a frequent and regular basis on the group’s business and on issues covering employment, social, ethical, environmental and health and safety matters by means of board presentations. In the furtherance of his duties or in relation to acts carried out by the board or the company, each Director has been informed that he is entitled to seek independent professional advice at the expense of the company. The company maintains appropriate cover under a Directors’ and Officers’ insurance policy in the event of legal action being taken against any Director. Each Director has access to the services of the Company Secretary if required. The Non-executive Directors are considered by the Board to be independent of management and are free to exercise independence of judgement. They have never been employees of the company nor do they participate in the company’s bonus arrangements.

21

The Audit CommitteeThe Audit Committee (‘the Committee’) is established by and is responsible to the board. It has written terms of reference which are available at www.blurgroup.com. Its main responsibilities are:

to consider and be satisfied with the truth and fairness of the group’s financial statements beforesubmission to the board for approval, ensuring their compliance with the appropriate accountingstandards, the law and the Listing Rules of the Financial Conduct Authority;to monitor and review the effectiveness of the group’s system of internal control;to consider areas of accounting judgement;to make recommendations to the board in relation to the appointment of the external auditor and itsremuneration, following appointment by the shareholders in general meeting, and to review and besatisfied with the auditor’s independence, objectivity and effectiveness on an ongoing basis; andto implement the policy relating to any non-audit services performed by the external auditor.

Richard Rae is the Chairman of the Committee. The other members of the Committee throughout the yearwere Richard Bourne-Arton and David Sherriff. In April 2017, following the resignation of Richard Bourne-Arton, Rob Wirszycz joined the Committee. In July 2017, following the resignations of Roger de Peyrecave,David Sherriff and Rob Wirszycz Richard Rae, Preeti Mardia and Richard Croft joined the committee.

The board considers Richard Rae to have relevant and recent financial experience. The Committee meets with the external auditors, without the Executive Directors being present, at least once a year.

The Committee is authorized by the board to seek and obtain any information it requires from any officer oremployee of the group and to obtain external legal or other independent professional advice as is deemed necessary by it. Meetings of the Committee are held at least three times per year to coincide with the reviewof the scope and plans for the external audit and the publication of the interim and full year financialstatements. The external auditor is invited to attend these meetings to present the results of their workincluding their views on significant accounting policies and judgements. During the year the Committeeconsidered in particular the judgements relating to going concern, the carrying value of the intangible assets,the investment in and receivable from the subsidiary and, particularly in respect of the introduction of goodsto the platform, the appropriateness and application of the revenue recognition policy.

The Committee receives reports from management on the effectiveness of the system of internal controls. Italso receives from the external auditor a report of matters arising during the course of the audit that the auditor deems to be of significance for the Committee’s attention. The external auditor is required to give theCommittee information about policies and processes for maintaining its independence and complianceregarding the rotation of audit partners and staff.

The Committee considers all relationships between the external auditor and the company to ensure that theydo not compromise the auditor’s judgement or independence particularly with the provision of non-auditservices. The performance of the external auditor is reviewed at least annually, normally in the spring.

The Nomination CommitteeThe Nomination Committee was chaired by Richard Bourne-Arton during the year and the other members of the Committee are David Sherriff and Rob Wirszycz. In 2017, following Richard Bourne-Arton’s resignation, David Sheriff became Chairman. Following David Sherriff’s resignation David Rowe became Chairman. Following the resignation of Rob Wirszycz Preeti Maadia and Richard Croft joined the committee. The Nomination Committee meets at least once a year, with the Chief Executive Officer in attendance as appropriate. The Nomination Committee considers appointments to the board.

The Remuneration CommitteeThe Remuneration Committee is chaired by Preeti Mardia and the other members of the Committee duringthe year were Richard Bourne-Arton, Roger de Peyrecave and David Sherriff. Following the resignation of Richard Bourne-Arton, no replacement was appointed. Following the resignation of Roger de Peyrecave andDavid Sherriff, Preeti Mardia, David Rower and Richard Rae joined the committee. The RemunerationCommittee meets at least two times a year, with the other board members in attendance as appropriate. It has written terms of reference. The Remuneration Committee agrees the framework for Executive Directors’remuneration with the board.


21

The Audit CommitteeThe Audit Committee (‘the Committee’) is established by and is responsible to the board. It has written terms of reference which are available at www.blurgroup.com. Its main responsibilities are:

to consider and be satisfied with the truth and fairness of the group’s financial statements before submission to the board for approval, ensuring their compliance with the appropriate accounting standards, the law and the Listing Rules of the Financial Conduct Authority;to monitor and review the effectiveness of the group’s system of internal control;to consider areas of accounting judgement;to make recommendations to the board in relation to the appointment of the external auditor and its remuneration, following appointment by the shareholders in general meeting, and to review and be satisfied with the auditor’s independence, objectivity and effectiveness on an ongoing basis; andto implement the policy relating to any non-audit services performed by the external auditor.

Richard Rae is the Chairman of the Committee. The other members of the Committee throughout the year were Richard Bourne-Arton and David Sherriff. In April 2017, following the resignation of Richard Bourne-Arton, Rob Wirszycz joined the Committee. In July 2017, following the resignations of Roger de Peyrecave, David Sherriff and Rob Wirszycz Richard Rae, Preeti Mardia and Richard Croft joined the committee.

The board considers Richard Rae to have relevant and recent financial experience. The Committee meets with the external auditors, without the Executive Directors being present, at least once a year.

The Committee is authorized by the board to seek and obtain any information it requires from any officer or employee of the group and to obtain external legal or other independent professional advice as is deemed necessary by it. Meetings of the Committee are held at least three times per year to coincide with the review of the scope and plans for the external audit and the publication of the interim and full year financial statements. The external auditor is invited to attend these meetings to present the results of their work including their views on significant accounting policies and judgements. During the year the Committee considered in particular the judgements relating to going concern, the carrying value of the intangible assets, the investment in and receivable from the subsidiary and, particularly in respect of the introduction of goods to the platform, the appropriateness and application of the revenue recognition policy.

The Committee receives reports from management on the effectiveness of the system of internal controls. It also receives from the external auditor a report of matters arising during the course of the audit that the auditor deems to be of significance for the Committee’s attention. The external auditor is required to give the Committee information about policies and processes for maintaining its independence and compliance regarding the rotation of audit partners and staff.

The Committee considers all relationships between the external auditor and the company to ensure that they do not compromise the auditor’s judgement or independence particularly with the provision of non-audit services. The performance of the external auditor is reviewed at least annually, normally in the spring.

The Nomination CommitteeThe Nomination Committee was chaired by Richard Bourne-Arton during the year and the other members of the Committee are David Sherriff and Rob Wirszycz. In 2017, following Richard Bourne-Arton’s resignation, David Sheriff became Chairman. Following David Sherriff’s resignation David Rowe became Chairman. Following the resignation of Rob Wirszycz Preeti Maadia and Richard Croft joined the committee. The Nomination Committee meets at least once a year, with the Chief Executive Officer in attendance as appropriate. The Nomination Committee considers appointments to the board.

The Remuneration CommitteeThe Remuneration Committee is chaired by Preeti Mardia and the other members of the Committee during the year were Richard Bourne-Arton, Roger de Peyrecave and David Sherriff. Following the resignation of Richard Bourne-Arton, no replacement was appointed. Following the resignation of Roger de Peyrecave and David Sherriff, Preeti Mardia, David Rower and Richard Rae joined the committee. The Remuneration Committee meets at least two times a year, with the other board members in attendance as appropriate. It has written terms of reference. The Remuneration Committee agrees the framework for Executive Directors’ remuneration with the board.


22

Directors are subject to re-election at the Annual General Meeting following their appointment. In addition, at each Annual General Meeting one-third (or the whole number nearest to one-third) of the Directors will retire by rotation.

Internal Controls and Risk ManagementThe board is responsible for the group’s system of internal controls and for reviewing its effectiveness. Such a system is designed to manage rather than eliminate the risk of failure to achieve business objectives and can only provide reasonable and not absolute assurance against material misstatement or loss. Since Tim Allen took on the role of Chief Financial Officer he has overseen a thorough review of internal processes and controls, reporting his findings and recommendations to the board.

Statement of Disclosure to the AuditorsAll of the current Directors have taken all the steps that they ought to have taken to make themselves aware of any information needed by the Group's auditors for the purposes of their audit and to establish that the auditor is aware of that information. The Directors are not aware of any relevant audit information of which the auditor is unaware.

Auditors In accordance with section 485 of the Companies Act 2006, a resolution to reappoint KPMG LLP as auditor will be put to the forthcoming Annual General Meeting.

David RoweChairmanblur Group plc Eagle House, 1 Babbage Way, Science Park, Exeter EX5 2FN

31 July 2017

23

Statement of Directors’ Responsibilities in Respect of the Annual Report and the FinancialStatements

The Directors are responsible for preparing the Annual Report and the group and parent company financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare group and parent company financial statements for each financial year. Under that law they are required to prepare the group financial statements in accordance withIFRSs as adopted by the EU and applicable law and have elected to prepare the parent company financial statements on the same basis.

Under company law the Directors must not approve the financial statements unless they are satisfied thatthey give a true and fair view of the state of affairs of the group and parent company and of their profit or lossfor that period. In preparing each of the group and parent company financial statements, the Directors are required to:

select suitable accounting policies and then apply them consistently;

make judgements and estimates that are reasonable and prudent;

state whether they have been prepared in accordance with IFRSs as adopted by the EU; and

prepare the financial statements on the going concern basis unless it is inappropriate to presumethat the group and the parent company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show andexplain the parent company’s transactions and disclose with reasonable accuracy at any time the financialposition of the parent company and enable them to ensure that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to themto safeguard the assets of the group and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report,Directors’ Report, Directors’ Remuneration Report and Corporate Governance Statement that complies with that law and those regulations.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the company’s website. Legislation in the UK governing the preparation and dissemination offinancial statements may differ from legislation in other jurisdictions.

Responsibility Statement of the Directors in Respect of the Annual Financial Report

We confirm that to the best of our knowledge:

the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the companyand the undertakings included in the consolidation taken as a whole; and

the Strategic Report/Directors' Report includes a fair review of the development and performance of the business and the position of the issuer and the undertakings included in the consolidationtaken as a whole, together with a description of the principal risks and uncertainties that they face.

We consider the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable andprovides the information necessary for shareholders to assess the group’s position and performance, business model and strategy.


23

Statement of Directors’ Responsibilities in Respect of the Annual Report and the Financial Statements

The Directors are responsible for preparing the Annual Report and the group and parent company financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare group and parent company financial statements for each financial year. Under that law they are required to prepare the group financial statements in accordance with IFRSs as adopted by the EU and applicable law and have elected to prepare the parent company financial statements on the same basis.

Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and parent company and of their profit or loss for that period. In preparing each of the group and parent company financial statements, the Directors are required to:

select suitable accounting policies and then apply them consistently;

make judgements and estimates that are reasonable and prudent;

state whether they have been prepared in accordance with IFRSs as adopted by the EU; and

prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group and the parent company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent company’s transactions and disclose with reasonable accuracy at any time the financial position of the parent company and enable them to ensure that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the group and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors’ Report, Directors’ Remuneration Report and Corporate Governance Statement that complies with that law and those regulations.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the company’s website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Responsibility Statement of the Directors in Respect of the Annual Financial Report

We confirm that to the best of our knowledge:

the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the company and the undertakings included in the consolidation taken as a whole; and

the Strategic Report/Directors' Report includes a fair review of the development and performance of the business and the position of the issuer and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

We consider the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the group’s position and performance, business model and strategy.


24

Independent auditor’s report to the members of blur Group plcWe have audited the financial statements of blur Group plc for the year ended 31 December 2016 set out on pages 26 to 70. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the EU and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members, as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditor

As explained more fully in the Directors’ Responsibilities Statement set out on page 23 the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit, and express an opinion on, the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.

Scope of the audit of the financial statements

A description of the scope of an audit of financial statements is provided on the Financial Reporting Council’s website at www.frc.org.uk/auditscopeukprivate.

Opinion on financial statements

In our opinion:

The financial statements give a true and fair view of the state of the group’s and of the parent company’s affairs as at 31 December 2016 and of the group’s loss for the year then ended;

The group financial statements have been properly prepared in accordance with IFRSs as adopted by the EU;

The parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the EU and as applied in accordance with the provisions of the Companies Act 2006; and

The financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

Emphasis of matter – Going concern

In forming our opinion on the financial statements, which is not modified, we have considered the adequacy of the disclosure made in note 1 to the financial statements concerning the group’s and the parent company’s ability to continue as a going concern. Following the commitment of a £1.5m cash injection for equity contingent only on the re-admission of the company to AIM, the group and parent company are dependent on significant increases in the volume and value of business done, control of the cost base and the ability to raise any additional finance required. These conditions, along with the other matters explained in note 1 to the financial statements, indicate the existence of a material uncertainty which may cast significant doubt on the group’s and the parent company’s ability to continue as a going concern. The financial statements do not include the adjustments that would result if the group and the parent company were unable to continue as a going concern.

25

Independent auditor’s report to the members of blur Group plc (continued)

Opinion on other matters prescribed by the Companies Act 2006

In our opinion the information given in the Strategic Report and the Directors’ Report for the financial year forwhich the financial statements are prepared is consistent with the financial statements.

Based solely on the work required to be undertaken in the course of the audit of the financial statements andfrom reading the Strategic report and the Directors’ report:

we have not identified material misstatements in those reports; and

in our opinion, those reports have been prepared in accordance with the Companies Act 2006.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us toreport to you if, in our opinion:

adequate accounting records have not been kept by the parent company, or returns adequate for ouraudit have not been received from branches not visited by us; or

the financial statements are not in agreement with the accounting records and returns; or

certain disclosures of directors’ remuneration specified by law are not made; or

we have not received all the information and explanations we require for our audit.

Ian Brokenshire (Senior Statutory Auditor)

for and on behalf of KPMG LLP, Statutory Auditor

Chartered AccountantsPlym House3 Longbridge RoadPlymouthDevonPL6 8LT

31 July 2017


25

Independent auditor’s report to the members of blur Group plc (continued)

Opinion on other matters prescribed by the Companies Act 2006

In our opinion the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements are prepared is consistent with the financial statements.

Based solely on the work required to be undertaken in the course of the audit of the financial statements and from reading the Strategic report and the Directors’ report:

we have not identified material misstatements in those reports; and

in our opinion, those reports have been prepared in accordance with the Companies Act 2006.

Matters on which we are required to report by exception

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

the financial statements are not in agreement with the accounting records and returns; or

certain disclosures of directors’ remuneration specified by law are not made; or

we have not received all the information and explanations we require for our audit.

Ian Brokenshire (Senior Statutory Auditor)

for and on behalf of KPMG LLP, Statutory Auditor

Chartered Accountants Plym House3 Longbridge RoadPlymouthDevonPL6 8LT

31 July 2017


26

Consolidated Statement of Total Comprehensive Incomefor the year ended 31 December 2016

The results reflected above relate to continuing activities.

The accompanying notes are an integral part of these financial statements.

2016 2015Note US$ US$

Revenue 3 834,176 2,695,970Cost of sales (911,093) (2,408,162)

Gross (loss)/profit (76,917) 287,808

Total administrative expenses 4 (4,498,873) (11,028,740)

Loss from operations (4,575,790) (10,740,932)

Finance income 7 27,183 221,509Finance expense 7 (914) (726)

Loss before tax (4,549,521) (10,520,149)

Tax credit 8 298,479 430,973

Loss for the year attributable to equity holders of the parent Company (4,251,042) (10,089,176)

Consolidated Statement of Total Other ComprehensiveIncome for the year ended 31 December 2016 2016

US$2015US$

(Loss) for the year (4,251,042) (10,089,176)

Other comprehensive incomeExchange gains/(losses) arising on the translation of foreign subsidiaries (could subsequently be reclassified to profit and loss) (1,147,048) (740,778)Total comprehensive losses attributable to equity holders of the parent company (5,398,090) (10,829,954)

Basic and diluted loss per share for losses attributable to the owners of the parent during the year 9 (0.09) (0.21)

27

Consolidated Statement of Financial PositionAt 31 December 2016

Note2016US$

2015US$

Non-current assetsProperty, plant and equipment 10 11,699 63,819Intangible assets 11 2,116,680 2,715,680Total non-current assets 2,128,379 2,779,499

Current assetsTrade and other receivables 12 266,746 840,857Tax receivable 253,036 955,772Cash and cash equivalents 2,506,292 7,144,877Total current assets 3,026,074 8,941,506

Total assets 5,154,453 11,721,005

Current liabilitiesTrade and other payables (including derivatives) 13 660,698 1,478,137Social security and other taxes 132,389 263,137Loans and borrowings 14 12,341 14,804Total current liabilities 805,428 1,756,078

Total liabilities 805,428 1,756,078

Net assets 4,349,025 9,964,927

Issued capital and reserves attributable to owners of parentsCalled up share capital 15 769,179 769,179Share premium 15 37,425,856 37,425,856Equity conversion reserve 8,967 8,967Merger reserve 1,712,666 1,712,666Share-based payment reserve 15 1,267,067 1,484,879Foreign exchange reserve (3,118,132) (1,971,084)Retained losses (33,716,578) (29,465,536)

4,349,025 9,964,927

The financial statements were approved and authorized for issue by the board of Directors on 31 July 2017and were signed on its behalf by:

David RoweChairman

Company Registration Number: 08188404



27

Consolidated Statement of Financial PositionAt 31 December 2016

Note2016US$

2015US$

Non-current assetsProperty, plant and equipment 10 11,699 63,819Intangible assets 11 2,116,680 2,715,680Total non-current assets 2,128,379 2,779,499

Current assetsTrade and other receivables 12 266,746 840,857Tax receivable 253,036 955,772Cash and cash equivalents 2,506,292 7,144,877Total current assets 3,026,074 8,941,506

Total assets 5,154,453 11,721,005

Current liabilitiesTrade and other payables (including derivatives) 13 660,698 1,478,137Social security and other taxes 132,389 263,137Loans and borrowings 14 12,341 14,804Total current liabilities 805,428 1,756,078

Total liabilities 805,428 1,756,078

Net assets 4,349,025 9,964,927

Issued capital and reserves attributable to owners of parentsCalled up share capital 15 769,179 769,179Share premium 15 37,425,856 37,425,856Equity conversion reserve 8,967 8,967Merger reserve 1,712,666 1,712,666Share-based payment reserve 15 1,267,067 1,484,879Foreign exchange reserve (3,118,132) (1,971,084)Retained losses (33,716,578) (29,465,536)

4,349,025 9,964,927

The financial statements were approved and authorized for issue by the board of Directors on 31 July 2017and were signed on its behalf by:

David RoweChairman




28

Consolidated Statement of Changes in Equityfor the year ended 31 December 2016

Called Up

Share Capital

Share Premium

Equity Conversion

ReserveMerger

Reserve

Share-based

Payment Reserve

Foreign Exchange

ReserveRetained Loss Total

US$ US$ US$ US$ US$ US$ US$ US$Equity as at 1 January 2015 769,179 37,425,856 8,967 1,712,666 1,074,046 (1,230,306) (19,489,346) 20,271,062

Loss for the period - - - - - - (10,089,176) (10,089,176)

Share-based payments - - - - 410,833 - 112,986 523,819Conversion of convertible debt - - - - - - - -

Other comprehensive loss for the year - - - - - (740,778) - (740,778)

Equity as at 31 December 2015

769,179 37,425,856 8,967 1,712,666 1,484,879 (1,971,084) (29,465,536) 9,964,927

Loss for the period - - - - - - (4,251,042) (4,251,042)Other comprehensive loss for the year - - - - - (1,147,048) - (1,147,048)

Total comprehensive income/(loss) - - - - - (1,147,048) (4,251,042) (5,398,090)

Share-based payments - - - - (217,812) - - (217,812)Equity as at 31 December 2016 769,179 37,425,856 8,967 1,712,666 1,267,067 (3,118,132) (33,716,578) 4,349,025

29

Consolidated Statement of Cash flowsfor the year ended 31 December 2016


Note2016US$

2015US$

Loss after taxation (4,251,042) (10,089,176)Interest (income)/expense (net) 7 (26,269) (220,783)Income tax credit (298,479) (430,973)Fair value movement and unrealized FX 561,965 170,130Depreciation of property, plant and equipment 10 47,055 75,494Amortization of intangible assets 11 1,146,377 979,637Share-based payments charge 5 (208,838) 525,876

(Profit)/loss on disposal of property, plant and equipment 4 (244) 6,185

Cash outflows from operating activities beforechanges in working capital (3,029,475) (8,983,610)(Increase)/decrease in trade and other receivables 574,111 900,028Increase/(decrease) in trade and other payables (950,650) (144,780)Cash used in operations (3,406,014) (8,228,362)

Interest received 27,183 221,509Interest paid (914) (726)Income tax R&D credit received 812,332 203,590Net cash used in operations (2,567,413) (7,803,989)

Purchase of property, plant and equipment - (20,413)Proceeds on disposal of property, plant and equipment - -Investment in intangible assets 11 (882,451) (1,510,754)Net cash used in investing activities (882,451) (1,531,167)

Net cash generated in financing activities - -

Net (decrease)/increase in cash and cash equivalents (3,449,864) (9,335,156)Cash and cash equivalents at beginning of period 7,144,877 17,401,774

Effect of foreign exchange translation on cash and equivalents (1,188,721) (921,741)Cash and cash equivalents at end of period 2,506,292 7,144,877



29

Consolidated Statement of Cash flowsfor the year ended 31 December 2016


Note2016US$

2015US$

Loss after taxation (4,251,042) (10,089,176)Interest (income)/expense (net) 7 (26,269) (220,783)Income tax credit (298,479) (430,973)Fair value movement and unrealized FX 561,965 170,130Depreciation of property, plant and equipment 10 47,055 75,494Amortization of intangible assets 11 1,146,377 979,637Share-based payments charge 5 (208,838) 525,876

(Profit)/loss on disposal of property, plant and equipment 4 (244) 6,185

Cash outflows from operating activities before changes in working capital (3,029,475) (8,983,610)(Increase)/decrease in trade and other receivables 574,111 900,028Increase/(decrease) in trade and other payables (950,650) (144,780)Cash used in operations (3,406,014) (8,228,362)

Interest received 27,183 221,509Interest paid (914) (726)Income tax R&D credit received 812,332 203,590Net cash used in operations (2,567,413) (7,803,989)

Purchase of property, plant and equipment - (20,413)Proceeds on disposal of property, plant and equipment - -Investment in intangible assets 11 (882,451) (1,510,754)Net cash used in investing activities (882,451) (1,531,167)

Net cash generated in financing activities - -

Net (decrease)/increase in cash and cash equivalents (3,449,864) (9,335,156)Cash and cash equivalents at beginning of period 7,144,877 17,401,774

Effect of foreign exchange translation on cash and equivalents (1,188,721) (921,741)Cash and cash equivalents at end of period 2,506,292 7,144,877



30

Notes to the Consolidated Financial Information

1. Accounting Policies

Basis of PreparationThe principal accounting policies adopted in the preparation of the financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated. These financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations (collectively IFRSs) issued by the International Accounting Standards Board (‘IASB’) as adopted by the European Union (adopted IFRSs).

The preparation of financial statements in compliance with adopted IFRSs requires the use of certain critical accounting estimates. It also requires group management to exercise judgement in applying the group’saccounting policies. The areas where significant judgements and estimates have been made in preparing the financial statements and their effect are disclosed in note 2.

The group financial statements consolidate the financial statements of the company and its subsidiaries (together referred to as the group). The parent company financial statements present information about the company as a separate entity and not about its group.

Over the last two years the group has been changing its business model to focus on large national and multi-national entities (“Enterprise”) rather than smaller customers. Q4 2016 saw the first Enterprise customer being won. As part of the change, and as expected, the long sales cycles inherent in entering the Enterprise procurement market contributed to a significant fall in turnover in the current period and continued significant cash burn. The group had cash of $2.5m as at 31 December 2016, which has reduced to $1.0m at 30 June 2017. At the time of approving these financial statements the group has legally binding undertakings from investors to inject equity generating net cash proceeds of £1.5m, contingent only on the company’s being readmitted to AIM, without which the group could not have continued. There has also been a new leadership with new board members put in place, aligned with the potential new investment.


Cash forecasts through to 31 December 2018 are based on the £1.5m cash injection, anticipated new key contract wins, with revenues rising to $1.5m in 2017 and then to $6.4m in 2018, and reduced costs through headcount reductions and overhead savings implemented from the end of Q2 2017. Cash burn for 2017 is forecast to be $2.4m (2016: $4.6m) and $0.3m in 2018, and hence cash at the end of 2017 and 2018 of $2.0m and $1.7m respectively. Although an overall cash burn is forecast for 2018, the group is forecast to turn cash generative during 2019.



31

Notes to the Consolidated Financial Information cont’dBasis of Preparation (continued)The directors have concluded that the combination of these circumstances represents a material uncertaintythat casts significant doubt upon the group and company’s ability to continue as a going concern and that, therefore the company and the group may be unable to continue realizing their assets and discharging theirliabilities in the normal course of business. Nevertheless the directors have a reasonable expectation thatthe company and the group have adequate resources to continue for at least 12 months from the date ofapproval of these financial statements. For these reasons, they continue to adopt the going concern basisin preparing the annual financial statements.

Basis of consolidationWhere the company has the power, either directly or indirectly, to govern the financial and operating policiesof another entity or business so as to obtain benefits from its activities, it is classified as a subsidiary. Theconsolidated financial statements present the results of the company and its subsidiaries (the group) as ifthey formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.

The consolidated financial statements incorporate the results of business combinations using the purchasemethod. In the consolidated statement of financial position, the acquirees’ identifiable assets, liabilities, and contingent liabilities are initially recognized at their fair values at the acquisition date. The results of acquiredoperations are included in the consolidated income statement from the date on which control is obtained.

Inter-company transactions, balances and unrealized gains and losses (where they do not provide evidence of impairment of the asset transferred) on transactions between group companies are eliminated.

Functional and Presentation CurrencyThe functional currency of the company is Sterling (£). The presentational currency of the Company is theUS Dollar ($). The Directors consider the US Dollar is the most appropriate presentational currency.

Changes in Accounting Policies and Disclosures(a) New and amended standards adopted by the groupThe group has applied any applicable new standards, amendments to standards and interpretations that aremandatory for the financial year beginning on or after 1 January 2016. However, none of them has a materialimpact on the group’s consolidated financial statements.

(b) New, amended standards, interpretations not adopted by the group

The following Adopted IFRSs have been issued but have not been applied by the group in these financial statements. Their adoption is not expected to have a material effect on the financial statements unlessotherwise indicated:

IFRS 9 Financial Instruments (effective date 1 January 2018). IFRS 15 Revenue from Contract with Customers (effective date 1 January 2018).IFRS 16 Leases (effective date to be confirmed).Amendments to IAS 12: Recognition of Deferred Tax Assets for Unrealised Losses (effective date tobe confirmed).Amendments to IAS 7: Disclosure Initiative (effective date to be confirmed).Amendments to IFRS 2: Classification and Measurement of Share-based Payment Transactions(effective date to be confirmed). Amendments to IFRS 4: Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts(effective date to be confirmed).


31

Notes to the Consolidated Financial Information cont’dBasis of Preparation (continued)The directors have concluded that the combination of these circumstances represents a material uncertainty that casts significant doubt upon the group and company’s ability to continue as a going concern and that, therefore the company and the group may be unable to continue realizing their assets and discharging their liabilities in the normal course of business. Nevertheless the directors have a reasonable expectation that the company and the group have adequate resources to continue for at least 12 months from the date of approval of these financial statements. For these reasons, they continue to adopt the going concern basis in preparing the annual financial statements.

Basis of consolidationWhere the company has the power, either directly or indirectly, to govern the financial and operating policies of another entity or business so as to obtain benefits from its activities, it is classified as a subsidiary. The consolidated financial statements present the results of the company and its subsidiaries (the group) as if they formed a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.

The consolidated financial statements incorporate the results of business combinations using the purchase method. In the consolidated statement of financial position, the acquirees’ identifiable assets, liabilities, and contingent liabilities are initially recognized at their fair values at the acquisition date. The results of acquired operations are included in the consolidated income statement from the date on which control is obtained.

Inter-company transactions, balances and unrealized gains and losses (where they do not provide evidence of impairment of the asset transferred) on transactions between group companies are eliminated.

Functional and Presentation CurrencyThe functional currency of the company is Sterling (£). The presentational currency of the Company is the US Dollar ($). The Directors consider the US Dollar is the most appropriate presentational currency.

Changes in Accounting Policies and Disclosures(a) New and amended standards adopted by the groupThe group has applied any applicable new standards, amendments to standards and interpretations that aremandatory for the financial year beginning on or after 1 January 2016. However, none of them has a materialimpact on the group’s consolidated financial statements.

(b) New, amended standards, interpretations not adopted by the group

The following Adopted IFRSs have been issued but have not been applied by the group in these financial statements. Their adoption is not expected to have a material effect on the financial statements unless otherwise indicated:

IFRS 9 Financial Instruments (effective date 1 January 2018). IFRS 15 Revenue from Contract with Customers (effective date 1 January 2018). IFRS 16 Leases (effective date to be confirmed). Amendments to IAS 12: Recognition of Deferred Tax Assets for Unrealised Losses (effective date to be confirmed). Amendments to IAS 7: Disclosure Initiative (effective date to be confirmed). Amendments to IFRS 2: Classification and Measurement of Share-based Payment Transactions (effective date to be confirmed). Amendments to IFRS 4: Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts (effective date to be confirmed).


32

Notes to the Consolidated Financial Information cont’dRevenue RecognitionRevenue represents the gross value of services provided to customers in respect of revenue earned, net of discounts and sales taxes.

There are four principal sources of revenue:

Project RevenueBeing revenue from projects that list on blur’s marketplace, where the customer, in conjunction with blur, selects the service provider and a legally binding contract between blur and its customers is established (referred to as ’kick-off’). At this stage blur has assumed the principal contractual responsibility to deliver the agreed services, the delivery of the service has commenced, and project revenue recognition commences.

Project revenue is recognized on either a timeline, or milestone basis. Timeline refers to the date the delivery of the service commences to the date it is completed. Milestone refers to specific performance targets within each project until completion.

Under the project milestone method, the milestones inserted in the Statement of Work are broadly indicative of the stage of completion and reflect the value of work completed.

In the case of milestone projects, the service provider and customer confirms the proportion of costs incurred to date and the resulting cost to completion which gives the indication of the percentage of completion. This is done on the platform collaboration area, Project Space, which is updated by the service provider, supported at period end with additional electronic confirmation.

Where a project has regular deliverables and is relatively short in duration, the project timeline is used to determine the stage of completion.

Where any element of a project is contingent upon either completion or specific milestones or deliverables, the contingent element of the project is separately identified and revenue recognized only when the contingent element is completed.

Where a project is delayed or suspended for whatever reason, the revenue recognized on a timeline basis is initially fixed to the date of suspension. Revenue will only be further recognized if the project is deemed to be commercially viable with an expectation that it will be realized in cash.

Where the project is delayed and a new completion date established, the revenue is recognized over the longer period associated with the revised completion date. Where the project is suspended, no revenue is recognized during the period of suspension. Where a project is cancelled, the project is assessed as to the stage of completion. blur will specifically reference the cancelled projects’ Statement of Works, surveys of work performed, and the proportion of costs incurred in order to assess the amount of revenue to recognize.

Cancellation (Previously Listing Fee) RevenueBeing revenue from customers where a commenced project is cancelled and there is an expectation of collection of the Cancellation fee. The Cancellation fee is a contractual charge when a customer lists a project that subsequently cancels.

Premium ServicesBeing revenue for the provision of wraparound support services for projects, including blur Manage Ultra, blur Protect Advanced, blur Express, and blur Engage. Revenue is recognized in alignment with the parent project on either a timeline or milestone basis.

33

Notes to the Consolidated Financial Information cont’dSubscriptions and LicencesBeing revenue for the provision of:

Tiered annual subscriptions to service providers to gain access to high value project opportunities and market insights. Revenue is recognized on a timeline basis over the life of the subscription.Customer access to blur’s software Platform, whereby the customer pays a licence fee for the useof the software Platform. Revenue is recognized at the time of customer acceptance of terms priorto listing a project on the marketplace.Annual subscriptions of blur Data, which analyses the business services landscape, including category trends, pricing, and timeline forecasts. Revenue is recognized on a timeline basis over the life of the subscription.

Foreign CurrencyThe functional currency of blur Group plc and blur Ltd is Pound Sterling, whereas of blur Inc., it is US Dollars.

The presentational currency is US Dollars ($), as the group’s management believe that in the future the majority of revenues and activity will be generated in US Dollars. This is consistent with prior years.

The exchange rates used for translating the statement of financial position at 31 December 2016 was at aclosing rate of £1 = US$1.23 (2015: US$1.48) and the statement of comprehensive income at an averagerate of US$1.24 (2015: US$1.48).

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of suchtransactions and from the translation at the reporting period end exchange rates of monetary assets andliabilities denominated in foreign currencies are recognized in the income statement in either cost of sales oradministrative expenses as appropriate.

On consolidation, exchange differences arising from the translation of the net investment in foreign entitiesare recognized in other comprehensive income and accumulated in a separate component of equity.Exchange differences are recycled to profit or loss as a reclassification adjustment upon disposal of theforeign operation.

Derivative InstrumentsThe group uses forward exchange contracts to mitigate exposure to foreign currency risks. Gains or lossesfrom utilizing these instruments are recognized in the income statement in the period in which they occur.

Fair Value HierarchyAll financial instruments measured at fair value must be classified into the levels below:

Level 1: Quoted prices, in active markets.Level 2: Fair Inputs other than quoted market prices included within Level 1 that are observable for theasset or liability, either directly or indirectly.Level 3: Inputs that are not based on observable market data.


33

Notes to the Consolidated Financial Information cont’dSubscriptions and LicencesBeing revenue for the provision of:

Tiered annual subscriptions to service providers to gain access to high value project opportunities and market insights. Revenue is recognized on a timeline basis over the life of the subscription.Customer access to blur’s software Platform, whereby the customer pays a licence fee for the use of the software Platform. Revenue is recognized at the time of customer acceptance of terms prior to listing a project on the marketplace.Annual subscriptions of blur Data, which analyses the business services landscape, including category trends, pricing, and timeline forecasts. Revenue is recognized on a timeline basis over the life of the subscription.

Foreign CurrencyThe functional currency of blur Group plc and blur Ltd is Pound Sterling, whereas of blur Inc., it is US Dollars.

The presentational currency is US Dollars ($), as the group’s management believe that in the future the majority of revenues and activity will be generated in US Dollars. This is consistent with prior years.

The exchange rates used for translating the statement of financial position at 31 December 2016 was at aclosing rate of £1 = US$1.23 (2015: US$1.48) and the statement of comprehensive income at an average rate of US$1.24 (2015: US$1.48).

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at the reporting period end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement in either cost of sales or administrative expenses as appropriate.

On consolidation, exchange differences arising from the translation of the net investment in foreign entities are recognized in other comprehensive income and accumulated in a separate component of equity.Exchange differences are recycled to profit or loss as a reclassification adjustment upon disposal of theforeign operation.

Derivative InstrumentsThe group uses forward exchange contracts to mitigate exposure to foreign currency risks. Gains or losses from utilizing these instruments are recognized in the income statement in the period in which they occur.

Fair Value HierarchyAll financial instruments measured at fair value must be classified into the levels below:

Level 1: Quoted prices, in active markets.Level 2: Fair Inputs other than quoted market prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.Level 3: Inputs that are not based on observable market data.


34

Notes to the Consolidated Financial Information cont’dTrade ReceivablesTrade receivables are amounts due from customers for services provided in the ordinary course of business and are stated net of any provision for impairment. Impairment provisions are recognized when there is objective evidence (such as significant financial difficulties on the part of the counterparty or default or significant delay in payment) that the Group will be unable to collect all of the amounts due under the terms receivable, the amount of such a provision being the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable. For trade receivables, which are reported net of bad debt provision, such provisions are recorded in a separate allowance account with the loss being recognized within administrative expenses in the statement of comprehensive income. On confirmation that the trade receivable will not be collectable, the gross carrying value of the asset is written-off against the associated provision.

Cash and Cash EquivalentsCash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and for the purpose of the statement of cash flows – bank overdrafts or outstanding credit card balances.

Convertible DebtThe proceeds received on issue of the group’s convertible debt are allocated into their liability and equity components. The amount initially recognized and attributed to the debt component equals the discounted redemption value of the financial instrument, discounted at a deemed market rate of interest (the effective interest rate) and not the financial instrument’s coupon rate. The deemed rate of interest utilized in the estimation was compared to the rate of interest that was payable on similar debt instruments that do not include an option to convert.

Subsequently, the debt component is accounted for as a financial liability measured at amortized cost until extinguished on conversion or maturity of the convertible loan. The remainder of the proceeds are allocated to the equity reserve within shareholders’ equity, net of income tax effects.

Share CapitalFinancial instruments issued by the company are classified as equity only to the extent that they do not meet the definition of a financial liability or financial asset.

The group only has one class of Ordinary shares, denominated as £0.01 (2016: £0.01) Ordinary shares, as set out in note 15. The company’s Ordinary shares are classified as equity instruments.

LeasesLeases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Rent paid on operating leases is charged to the statement of comprehensive income on a straight-line basis over the term of the lease.

35

Notes to the Consolidated Financial Information cont’dProperty, Plant and EquipmentItems of property, plant and equipment are initially recognized at cost.Depreciation is provided on all items of property, plant and equipment so as to write-off their carrying valueover their expected useful economic lives. It is provided at the following rates:

Furniture, fixtures and fittings - 33% per annum straight lineComputer equipment - 33% per annum straight lineExternal software - 33% per annum straight line

Intangible AssetsThe development of the trading platform is capitalized as an intangible asset. Development activities involvea planned investment in the development and enhancement of the trading platform. The developmentexpenditure of the platform is recognized as intangible assets when the following criteria are met:

1. It is technically feasible to complete the development of the platform so that it will be available foruse.

2. Management intends to complete and use or sell the platform.3. There is an ability to use or sell the platform.4. It can be demonstrated how the platform will generate future economic benefits.5. Adequate technical, financial and other resources to complete the development of the platform and

to use or sell the use of the platform are available.6. The expenditure attributable to development of the platform can be measured reliably.

Expenditure being capitalized includes internal staff time and cost spent directly on developing the tradingplatform. Capitalized development expenditure is measured at cost less accumulated amortization andaccumulated impairment costs. The amortization period is over 48 months on a straight-line basis.

Each version released has built incrementally on the prior release (as opposed to being a completely new platform) so no prior costs have been written-off.

TaxationIncome tax expense represents the sum of the current tax and deferred tax charge for the year.

Current taxes are based on the results shown in the financial statements and are calculated according tolocal tax rules, using tax rates enacted or substantively enacted by the reporting date. During the year, the current tax charge is nil as there are tax losses for the year. R&D credits are recognized as and when eligible,within the tax charge/credit in the financial statements in accordance with IAS 12.

Deferred tax is recognized in respect of relevant temporary differences that have originated but not reversedat the balance sheet date. A deferred tax asset is recognized to the extent that it is probable that futuretaxable profits will be available against which temporary differences can be utilized. Management has electednot to recognize the deferred tax asset due to the lack of certainty of future profitability as the group is still inits early stage of maturity.

The deferred tax asset on shares and share option charges is affected by the difference between the grantprice of the shares and share options and the market price of the company’s shares at the accounting yearend. If the market value of the shares at the date of exercise were to be lower than the market value at the account year end the amount of tax relief obtained would be less than anticipated in the deferred taxcalculations.


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Notes to the Consolidated Financial Information cont’dProperty, Plant and EquipmentItems of property, plant and equipment are initially recognized at cost.Depreciation is provided on all items of property, plant and equipment so as to write-off their carrying value over their expected useful economic lives. It is provided at the following rates:

Furniture, fixtures and fittings - 33% per annum straight lineComputer equipment - 33% per annum straight lineExternal software - 33% per annum straight line

Intangible AssetsThe development of the trading platform is capitalized as an intangible asset. Development activities involve a planned investment in the development and enhancement of the trading platform. The development expenditure of the platform is recognized as intangible assets when the following criteria are met:

1. It is technically feasible to complete the development of the platform so that it will be available foruse.

2. Management intends to complete and use or sell the platform.3. There is an ability to use or sell the platform.4. It can be demonstrated how the platform will generate future economic benefits.5. Adequate technical, financial and other resources to complete the development of the platform and

to use or sell the use of the platform are available.6. The expenditure attributable to development of the platform can be measured reliably.

Expenditure being capitalized includes internal staff time and cost spent directly on developing the trading platform. Capitalized development expenditure is measured at cost less accumulated amortization andaccumulated impairment costs. The amortization period is over 48 months on a straight-line basis.

Each version released has built incrementally on the prior release (as opposed to being a completely new platform) so no prior costs have been written-off.

TaxationIncome tax expense represents the sum of the current tax and deferred tax charge for the year.

Current taxes are based on the results shown in the financial statements and are calculated according to local tax rules, using tax rates enacted or substantively enacted by the reporting date. During the year, the current tax charge is nil as there are tax losses for the year. R&D credits are recognized as and when eligible,within the tax charge/credit in the financial statements in accordance with IAS 12.

Deferred tax is recognized in respect of relevant temporary differences that have originated but not reversed at the balance sheet date. A deferred tax asset is recognized to the extent that it is probable that future taxable profits will be available against which temporary differences can be utilized. Management has elected not to recognize the deferred tax asset due to the lack of certainty of future profitability as the group is still in its early stage of maturity.

The deferred tax asset on shares and share option charges is affected by the difference between the grant price of the shares and share options and the market price of the company’s shares at the accounting year end. If the market value of the shares at the date of exercise were to be lower than the market value at the account year end the amount of tax relief obtained would be less than anticipated in the deferred tax calculations.


Notes to the Consolidated Financial Information cont’dShare-based PaymentsIn accordance with IFRS 2 ‘Share-based payments’, the group reflects the economic cost of awarding shares and share options to employees and Directors by recording an expense in the statement of comprehensive income equal to the fair value of the benefit awarded. The expense is recognized in the statement of comprehensive income over the vesting period of the award.

Fair value is measured by the use of a Black-Scholes model, which takes into account conditions attached to the vesting and exercise of the equity instruments. The expected life used in the model is adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioralconsiderations.

2. Critical Accounting Estimates and JudgementsIn preparing the financial statements, the Directors make certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including the expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the financial year are discussed below.

Judgements and Accounting Estimates and Assumptions(a) Going concernAs set out in note 1 the Directors have prepared a cash flow forecast covering a period extending 12 monthsfrom the date of approval of these financial statements which shows that the group will have sufficient cashto meet its debts as they fall due.

blur is a disruptive and evolving technology company and uncertainties exist in the forecast as a result. The forecast contains certain assumptions about the performance of the business including growth in future revenue, both in project revenues and in premium services, the cost model and margins, and the level of cash recovery from trading. In the next 12 months, the most critical assumptions are those concerning the speed of growth in revenues and the control of costs.

(b) Revenue recognitionRevenue is recognized on a gross basis, as our evaluation and assessment of the indicators under IAS 18supports the fact that blur is acting as principal for the majority of projects. The factors that are consideredand prove decisive in the conclusion of this assessment include the following:

blur has the latitude to agree the fee for each project;blur has primary responsibility for providing the services to a customer;blur is responsible for the quality of the service delivery, delivered on time, budget and to a sufficientlyhigh standard. This includes the management of the service delivery of the supplier; andblur facilitates both commercial terms and the project management for each project.

Although blur passes on some of the credit risk to the supplier it engages to deliver the services to its customers, blur does not consider this is sufficiently persuasive in light of the other factors noted above to suggest that accounting for the transaction as principal is not appropriate.

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Notes to the Consolidated Financial Information cont’dblur recognizes revenue when the following criteria are satisfied:

I. The amount or value of the revenue recognized can be reliably measured, which occurs when the Customer Success team, customer and service provider have agreed the contract value upon appointment of the service provider. The measurement date for revenue recognition is from the date a service provider is appointed to the point that the performance has been completed.

II. It is probable that the economic benefits associated with the transaction will flow to blur, when the performance obligation is confirmed in the Statement of Works or project brief confirmed between the contracting parties and to the extent that there exists a track record of successful progress ofsimilar projects. The transfer of economic benefits to blur must be fixed, determinable and reasonably assured.

III. The stage of completion of the transaction at the end of the reporting period can be measured reliably.

IV. The costs incurred for the transaction and the costs to complete the transaction can be measured reliably, with reference to the individual contract terms, Statement of Works and project revenuemeasurement guidance.

Project RevenueProject revenue is recognized on either a timeline, or milestone basis. Timeline refers to the date the deliveryof the service commences to the date it is completed. Milestone refers to specific performance targets withineach project until completion. There can be judgement required in estimating the stage of completion of aproject and hence the value of the revenue to be recognized at a point in time.

Premium ServicesPremium services revenue is recognized in alignment with the level of completion of the parent project oneither a timeline, or milestone basis. There can be judgement required in estimating the stage of completionof a project and hence the value of the associated premium service revenue to be recognized at a point intime.

(c) Intangible assetsIntangible assets include the capitalized development costs of the trading platform. These costs are assessedbased on management’s view of the technology team’s time spent on projects that enhance the trading platform, supported by internal time recording and considering the requirements of IAS 38 ‘Intangible assets’.The development cost of the platform is amortized over the useful life of the asset. The useful life is basedon the management’s estimate of the period that the asset will generate revenue, which is reviewed on a project by project basis for continued appropriateness and is one of the key assumptions involved indetermining the value of these assets. The carrying value is tested for impairment when there is an indicationthat the value of the assets might be impaired. The impairment tests also require assumptions about future events which require management judgement. Changes in those assumptions could result in a materiallydifferent amortization charge, or an impairment, in future years depending on the circumstances prevailingat that time.

(d) Trade receivables – provision for impairmentManagement has provided for all debts, individually, which are deemed doubtful at their estimated irrecoverable amount. Management apply their judgement on whether there is objective evidence that tradereceivables should be impaired. The quality of creditworthy customers has improved over the period being a reflection of both improved credit control process and the transition to Enterprise customers.

(e) Share-based paymentsThe fair value of the share options utilizing the Black-Scholes valuation model, which takes into accountconditions attached to the vesting and exercise of the equity instruments. The expected life used in the model is adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictionsand behavioral considerations.


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Notes to the Consolidated Financial Information cont’dblur recognizes revenue when the following criteria are satisfied:

I. The amount or value of the revenue recognized can be reliably measured, which occurs when theCustomer Success team, customer and service provider have agreed the contract value uponappointment of the service provider. The measurement date for revenue recognition is from thedate a service provider is appointed to the point that the performance has been completed.

II. It is probable that the economic benefits associated with the transaction will flow to blur, when theperformance obligation is confirmed in the Statement of Works or project brief confirmed betweenthe contracting parties and to the extent that there exists a track record of successful progress ofsimilar projects. The transfer of economic benefits to blur must be fixed, determinable andreasonably assured.

III. The stage of completion of the transaction at the end of the reporting period can be measuredreliably.

IV. The costs incurred for the transaction and the costs to complete the transaction can be measuredreliably, with reference to the individual contract terms, Statement of Works and project revenuemeasurement guidance.

Project RevenueProject revenue is recognized on either a timeline, or milestone basis. Timeline refers to the date the delivery of the service commences to the date it is completed. Milestone refers to specific performance targets within each project until completion. There can be judgement required in estimating the stage of completion of a project and hence the value of the revenue to be recognized at a point in time.

Premium ServicesPremium services revenue is recognized in alignment with the level of completion of the parent project on either a timeline, or milestone basis. There can be judgement required in estimating the stage of completion of a project and hence the value of the associated premium service revenue to be recognized at a point in time.

(c) Intangible assetsIntangible assets include the capitalized development costs of the trading platform. These costs are assessedbased on management’s view of the technology team’s time spent on projects that enhance the tradingplatform, supported by internal time recording and considering the requirements of IAS 38 ‘Intangible assets’.The development cost of the platform is amortized over the useful life of the asset. The useful life is basedon the management’s estimate of the period that the asset will generate revenue, which is reviewed on aproject by project basis for continued appropriateness and is one of the key assumptions involved indetermining the value of these assets. The carrying value is tested for impairment when there is an indicationthat the value of the assets might be impaired. The impairment tests also require assumptions about futureevents which require management judgement. Changes in those assumptions could result in a materiallydifferent amortization charge, or an impairment, in future years depending on the circumstances prevailingat that time.

(d) Trade receivables – provision for impairmentManagement has provided for all debts, individually, which are deemed doubtful at their estimatedirrecoverable amount. Management apply their judgement on whether there is objective evidence that tradereceivables should be impaired. The quality of creditworthy customers has improved over the period beinga reflection of both improved credit control process and the transition to Enterprise customers.

(e) Share-based paymentsThe fair value of the share options utilizing the Black-Scholes valuation model, which takes into accountconditions attached to the vesting and exercise of the equity instruments. The expected life used in the modelis adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictionsand behavioral considerations.


Notes to the Consolidated Financial Information cont’d3. Segmental Analysis

The group currently has one reportable segment, provision of services, and categorizes all revenue from operations to this segment.

The group currently has four reportable categories which are:

1. Project revenues - for the provision of services from projects that list on blurs’ marketplace, wherethe customer accepts the bid from the service provider and a legally binding contract between blurand its customers is established;

2. Cancellation fees (formerly Listing fees) - where the project is cancelled after listing and there is anexpectation of collection. The Cancellation fee is a mandatory charge when a customer listed aproject and decided to close their trading account or not to select a service provider;

3. Premium services – comprising wraparound support services for projects, including blur ManageUltra, blur Protect Advanced, blur Express, and blur Engage; and

4. Subscriptions and licences – for the provision of tiered annual subscriptions to service providers togain access to high value project opportunities and market insights; the provision of access to blur’ssoftware Platform and for the provision of subscriptions of blur Data, which analyses the businessservices landscape including category trends, pricing and timeline forecasts.

Project RevenueCancellation (formerly

Listing Fees) Premium ServicesSubscriptions and

Licenses2016 2015 2016 2015 2016 2015 2016 2015US$ US$ US$ US$ US$ US$ US$ US$

UK 376,609 805,798 112 20,589 - - 60,501 15,538

USA 276,999 854,289 8,678 259,390 2,213 12,913 27,332 52,964

Rest of World 62,169 291,195 - 371,337 1,775 4,500 17,788 7,457

Total 715,777 1,951,282 8,790 651,316 3,988 17,413 105,621 75,959

The Group operates in three main geographic areas: UK, USA and Rest of the World. Revenue and non-current assets by origin of geographical segment for all entities in the group is as follows:

Revenue

Non-currentassets

2016 2015 2016 2015

US$ US$ US$ US$

UK 437,222 841,925 2,128,379 2,778,440USA 315,222 1,179,556 - 1,059

Rest of World 81,732 674,489 - -

Total 834,176 2,695,970 2,128,379 2,779,499

The total loss from operations of $4.6m predominantly relates to project revenue/cancellation fees which make up 87% of revenue. The vast majority of the costs of sales and overheads for 2016 relate to the head office in the UK. Given this, the Directors consider the split of costs across geographical segments would be arbitrary and judgmental. Therefore, they consider reporting the loss by geographical segment could be mis-leading in this early phase of blur’s development.

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Notes to the Consolidated Financial Information cont’d

4. Loss from Operations

The operating loss as at 31 December 2016 is stated after charging:

2016 2015US$ US$

Amortization of intangibles 1,146,376 979,637Auditor’s remuneration:Audit fees – Subsidiaries - -

– Company 55,535 88,000Non-audit fees – taxation advisory and compliance services

– other assurance services - interim review21,474

-64,1598,000

Bad debt provision (50,038) 850,680Depreciation of property, plant and equipment 47,055 75,494(Profit)/loss on disposal of property, plant and equipment (244) 6,185Staff costs (note 6) 1,766,533 4,106,832Operating lease expense – buildings 225,603 445,447Foreign exchange losses 31,732 265,345Other administrative expenses 1,254,847 4,138,961Total administrative and other expenses 4,498,873 11,028,740

5. Adjusted LBITDA

Loss before interest, tax, depreciation and amortisation is calculated as follows:

2016 2015US$ US$

Loss from operations (4,575,790) (10,740,932)Amortization of intangibles 1,146,376 979,637Depreciation of property, plant and equipment 47,055 75,494Loss on disposal of property, plant and equipment (244) 6,185Foreign exchange losses 31,732 265,345Share-based payments (208,838) 525,876Adjusted LBITDA (3,559,709) (8,888,395)



4. Loss from Operations

The operating loss as at 31 December 2016 is stated after charging:

2016 2015US$ US$

Amortization of intangibles 1,146,376 979,637Auditor’s remuneration:Audit fees – Subsidiaries - -

– Company 55,535 88,000Non-audit fees – taxation advisory and compliance services

– other assurance services - interim review 21,474

-64,1598,000

Bad debt provision (50,038) 850,680Depreciation of property, plant and equipment 47,055 75,494(Profit)/loss on disposal of property, plant and equipment (244) 6,185Staff costs (note 6) 1,766,533 4,106,832Operating lease expense – buildings 225,603 445,447Foreign exchange losses 31,732 265,345Other administrative expenses 1,254,847 4,138,961Total administrative and other expenses 4,498,873 11,028,740

5. Adjusted LBITDA

Loss before interest, tax, depreciation and amortisation is calculated as follows:

2016 2015US$ US$

Loss from operations (4,575,790) (10,740,932)Amortization of intangibles 1,146,376 979,637Depreciation of property, plant and equipment 47,055 75,494Loss on disposal of property, plant and equipment (244) 6,185Foreign exchange losses 31,732 265,345Share-based payments (208,838) 525,876Adjusted LBITDA (3,559,709) (8,888,395)



6. Staff Costs

Staff costs (including Directors emoluments) incurred in the year were as follows:

2016US$

2015US$

Wages and salaries 2,719,475 5,175,051Social security costs 296,354 736,187Share-based payments (208,835) 525,876Gross staff costs 2,806,994 6,437,114

Less: Amounts capitalized: Wages and salaries (636,311) (1,351,391) Social security costs (74,614) (139,354)

(710,925) (1,490,745)Less: Amounts attributable to costs ofsale

Wages and salaries (299,656) (746,746) Social security costs (29,877) (92,791)

(329,533) (839,537)1,766,536 4,106,832

Wages and salaries 1,783,508 3,076,914Social security costs 191,863 504,042Share-based payments (208,835) 525,876Net staff costs 1,766,536 4,106,832

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Notes to the Consolidated Financial Information cont’d6. Staff Costs cont’d

The average monthly number of permanent employees during the period was as follows:

2016 2015Number Number

Directors 5 5StaffAdministration 3 6Customer Services 5 12Marketing 3 5Sales 5 11Technology 10 23

31 62

2016US$

2015US$

Key management personnelEmoluments and compensation 609,482 963,396Employers social security 62,576 95,909

672,058 1,059,305Share-based payments 175,496 237,505Company pension contributions to defined contribution schemes 922 -

848,476 1,296,810

Key management personnel comprise of the board of Directors, as detailed in the table on page 16. Detailsabout the composition of the Directors’ emoluments and the Directors’ interest in share options of thecompany are set out on pages 18 and 17, respectively. The information on these pages forms part of thisnote to the financial statements.

During the year the Directors were awarded a total of 200,000 share options (2015: 460,000) at a weighted average exercise price of £0.15 (2015: £0.2739).

No share options were exercised during the year. Remuneration disclosed above includes the followingamounts paid to the highest paid Director:

2016 2015US$ US$

Highest paid DirectorEmoluments and compensation 223,182 304,200

223,182 304,200Share-based payments 108,578 133,194Company pension contributions to definedcontribution schemes 461 -

332,221 437,394

In the year ended 31 December 2016 the highest paid Director received nil share options (2015: nil). No share options were exercised by this Director in the current financial year (2015: nil).


Notes to the Consolidated Financial Information cont’d6. Staff Costs cont’d

The average monthly number of permanent employees during the period was as follows:

2016 2015Number Number

Directors 5 5StaffAdministration 3 6Customer Services 5 12Marketing 3 5Sales 5 11Technology 10 23

31 62

2016US$

2015US$

Key management personnelEmoluments and compensation 609,482 963,396Employers social security 62,576 95,909

672,058 1,059,305Share-based payments 175,496 237,505Company pension contributions to defined contribution schemes 922 -

848,476 1,296,810

Key management personnel comprise of the board of Directors, as detailed in the table on page 16. Details about the composition of the Directors’ emoluments and the Directors’ interest in share options of the company are set out on pages 18 and 17, respectively. The information on these pages forms part of this note to the financial statements.

During the year the Directors were awarded a total of 200,000 share options (2015: 460,000) at a weighted average exercise price of £0.15 (2015: £0.2739).

No share options were exercised during the year. Remuneration disclosed above includes the following amounts paid to the highest paid Director:

2016 2015US$ US$

Highest paid DirectorEmoluments and compensation 223,182 304,200

223,182 304,200Share-based payments 108,578 133,194Company pension contributions to defined contribution schemes 461 -

332,221 437,394

In the year ended 31 December 2016 the highest paid Director received nil share options (2015: nil). No share options were exercised by this Director in the current financial year (2015: nil).


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7. Finance Income and Expenses

2016 2015US$ US$

Finance income

Interest from bank 27,183 221,048

Interest from customers - 461

27,183 221,509

Finance expense

Interest payable (914) (726)

(914) (726)

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Notes to the Consolidated Financial Information cont’d8. Income Tax

Analysis of the Tax Credit

No liability to UK corporation tax arose on ordinary activities for the year ended 31 December 2016 nor forthe year ended 31 December 2015. However, a receivable cash tax credit in respect of the UK R&D activityhas been recognized.

The R&D Tax Credit receipt from HMRC is likely to be received within a few months of the submission of thecorporate tax return for blur Limited.

A liability for overseas tax has been recognized on ordinary activities for the year ended 31 December 2016in respect of blur Inc.

2016 2015US$ US$

Tax credit - current year 288,762 500,491- prior year 8,546 (49,751)

Overseas tax 1,171 (19,767)298,479 430,973

Factors Affecting the Tax ChargeThe reasons for the difference between the actual tax charge for the year and the standard rate of corporationtax in the United Kingdom applied to the result for the year are as follows:

2016 2015US$ US$

Loss before tax (4,549,521) (10,520,149)

Tax credit at 20% (2015: 20.25%) 909,904 2,130,330Non-deductible expenses (3,816) (107,780)

Accelerated (depreciation)/capital allowance (8,734) (14,623)Other overseas taxes 6,184 -Higher tax rates on overseas earnings (2,096) (9,759)Losses carried forward (900,271) (2,017,935)Prior year R&D tax credit 8,546 (49,751)Current year R&D tax credit 288,762 500,491Income tax credit 298,479 430,973

The group has carried forward losses and accelerated temporary differences amounting to US$25,761,578as of 31 December 2016 (2015: $22,479,579). As the timing and extent of taxable profits are uncertain, the deferred tax asset of US$4,637,084 (2015: $4,046,324) arising on these losses (at 18% future tax rate) and accelerated timing differences has not been recognized in the financial statements.


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Notes to the Consolidated Financial Information cont’d8. Income Tax

Analysis of the Tax Credit

No liability to UK corporation tax arose on ordinary activities for the year ended 31 December 2016 nor forthe year ended 31 December 2015. However, a receivable cash tax credit in respect of the UK R&D activity has been recognized.

The R&D Tax Credit receipt from HMRC is likely to be received within a few months of the submission of the corporate tax return for blur Limited.

A liability for overseas tax has been recognized on ordinary activities for the year ended 31 December 2016in respect of blur Inc.

2016 2015US$ US$

Tax credit - current year 288,762 500,491- prior year 8,546 (49,751)

Overseas tax 1,171 (19,767)298,479 430,973

Factors Affecting the Tax ChargeThe reasons for the difference between the actual tax charge for the year and the standard rate of corporation tax in the United Kingdom applied to the result for the year are as follows:

2016 2015US$ US$

Loss before tax (4,549,521) (10,520,149)

Tax credit at 20% (2015: 20.25%) 909,904 2,130,330Non-deductible expenses (3,816) (107,780)

Accelerated (depreciation)/capital allowance (8,734) (14,623)Other overseas taxes 6,184 -Higher tax rates on overseas earnings (2,096) (9,759)Losses carried forward (900,271) (2,017,935)Prior year R&D tax credit 8,546 (49,751)Current year R&D tax credit 288,762 500,491Income tax credit 298,479 430,973

The group has carried forward losses and accelerated temporary differences amounting to US$25,761,578as of 31 December 2016 (2015: $22,479,579). As the timing and extent of taxable profits are uncertain, the deferred tax asset of US$4,637,084 (2015: $4,046,324) arising on these losses (at 18% future tax rate) and accelerated timing differences has not been recognized in the financial statements.


44


9. Loss Per Share

Loss per Ordinary share has been calculated using the weighted average number of shares in issue during the relevant financial periods. The basis for calculating the basic loss per share is as follows:

Due to the loss in the period the effect of the share options was considered anti-dilutive and hence no diluted loss per share information has been provided.

2016 2015US$ US$

Weighted average number of shares for the purpose of earnings per share 47,092,851 47,092,851Loss after tax (4,251,042) (10,089,176)Loss per share (0.09) (0.21)

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Notes to the Consolidated Financial Information cont’d10. Property, Plant and Equipment

ComputerEquipment

Furniture,Fixtures and

Fittings TotalUS$ US$ US$

COST

At 1 January 2015 134,609 100,815 235,424

Additions 15,786 4,627 20,413

Disposals (40,104) (11,320) (51,424)

Exchange adjustment (6,775) (5,176) (11,951)

At 31 December 2015 103,516 88,946 192,462

Additions - - -

Disposals (1,295) - (1,295)


At 31 December 2016 86,112 74,446 160,558

DEPRECIATION

At 1 January 2015 65,895 40,165 106,060

Charge for period 43,553 31,941 75,494

Disposals (35,788) (9,451) (45,239)


At 31 December 2015 69,057 59,586 128,643


Disposals (1,295) - (1,295)


At 31 December 2016 78,555 70,304 148,859

NET BOOK VALUE

At 31 December 2016 7,557 4,142 11,699

At 31 December 2015 34,459 29,360 63,819


45

Notes to the Consolidated Financial Information cont’d10. Property, Plant and Equipment

Computer Equipment

Furniture, Fixtures and

Fittings TotalUS$ US$ US$

COST

At 1 January 2015 134,609 100,815 235,424

Additions 15,786 4,627 20,413

Disposals (40,104) (11,320) (51,424)


At 31 December 2015 103,516 88,946 192,462

Additions - - -

Disposals (1,295) - (1,295)


At 31 December 2016 86,112 74,446 160,558

DEPRECIATION

At 1 January 2015 65,895 40,165 106,060


Disposals (35,788) (9,451) (45,239)


At 31 December 2015 69,057 59,586 128,643


Disposals (1,295) - (1,295)


At 31 December 2016 78,555 70,304 148,859

NET BOOK VALUE

At 31 December 2016 7,557 4,142 11,699

At 31 December 2015 34,459 29,360 63,819


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11. Intangible Assets

Trading Platform

Software Development

Total

US$ US$ US$

COSTAt 1 January 2015 2,718,226 271,596 2,989,822Additions – Internal Development 1,461,605 - 1,461,605Additions – External Costs - 49,149 49,149Disposals - - -Exchange adjustment (143,981) (14,386) (158,367)

At 31 December 2015 4,035,850 306,359 4,342,209

Additions – Internal Development 882,451 - 882,451Additions – External Costs - - -Disposals (8,359) (617) (8,976)Exchange adjustment (671,460) (50,970) (722,430)At 31 December 2016 4,238,482 254,772 4,493,254

AMORTISATIONAt 1 January 2015 682,697 37,841 720,538Charge for period 878,241 101,396 979,637Exchange adjustment (67,969) (5,677) (73,646)

At 31 December 2015 1,492,969 133,560 1,626,529

Charge for period 1,052,025 94,352 1,146,377Disposals (8,359) (206) (8,565)Exchange adjustment (355,948) (31,819) (387,767)

At 31 December 2016 2,180,687 195,887 2,376,574

NET BOOK VALUEAt 31 December 2016 2,057,795 58,885 2,116,680At 31 December 2015 2,542,881 172,799 2,715,680

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12. Trade and Other Receivables

2016 2015US$ US$

Trade receivables – gross 30,047 1,261,447Provision for impairment (16,093) (1,002,723)Trade receivables – net 13,954 258,724Prepayments 153,395 231,045Accrued income 61,920 303,343Other receivables 37,477 47,745

266,746 840,857

As at 31 December 2016 trade receivables of US$8,975 (2015: US$160,192) were past due but not impaired,see note 21 for the group’s assessment of the exposure to credit risk.

All amounts shown under receivables are due within one year.

13. Trade and Other Payables (Including Derivatives)

2016 2015US$ US$

CurrentTrade payables - Service Providers 22,814 188,753Trade payables - Overheads 287,162 471,916Other payables 80,466 (8,012)Deferred revenue 27,112 364,167Director’s current account (note 19) 15,721 19,603Accruals – Service Providers 84,267 140,115Accruals - Overheads 143,156 301,595

660,698 1,478,137


47



2016 2015US$ US$

Trade receivables – gross 30,047 1,261,447Provision for impairment (16,093) (1,002,723)Trade receivables – net 13,954 258,724Prepayments 153,395 231,045Accrued income 61,920 303,343Other receivables 37,477 47,745

266,746 840,857

As at 31 December 2016 trade receivables of US$8,975 (2015: US$160,192) were past due but not impaired,see note 21 for the group’s assessment of the exposure to credit risk.

All amounts shown under receivables are due within one year.

13. Trade and Other Payables (Including Derivatives)

2016 2015US$ US$

CurrentTrade payables - Service Providers 22,814 188,753Trade payables - Overheads 287,162 471,916Other payables 80,466 (8,012)Deferred revenue 27,112 364,167Director’s current account (note 19) 15,721 19,603Accruals – Service Providers 84,267 140,115Accruals - Overheads 143,156 301,595

660,698 1,478,137


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Notes to the Consolidated Financial Information cont’d14. Loans and Borrowings

2016 2015

US$ US$Unsecured convertible loan noteCurrent 12,341 14,804

Total loans and borrowings 12,341 14,804

Book value approximate to fair value for the convertible debt and is stated at fair value at initial recognition and at amortized cost subsequently.

The convertible loan notes (referred to as convertible debt II) were issued in 2011 with a coupon rate of 15% at a total face value of US$78,010. The loan notes are either repayable in four years from the issue date at its total face value, with interest accrued and payable as ordinary shares issued in the company or can be converted at any time within two years into shares at the holder's option. The value of the liability component and the equity conversion component were determined at the date the instrument was issued.

During the period to 31 December 2012 loan note holders converted their loan notes into Ordinary shares of the company. Only one convertible loan note remains outstanding relating to Peter Tahany. There is an ongoing claim relating to the provision of Mr Tahany’s consultancy services from September 2009 to early 2010, but the board considers any risk of incurring costs relating to this claim remote.

Face value Equity conversion reserve

Fair value of liability

US$ US$ US$As at 1 January 2016 14,804 8,967 23,771Exchange adjustments (2,463) - (2,463)As at 31 December 2016 12,341 8,967 21,308

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Notes to the Consolidated Financial Information cont’d15. Share CapitalShare Capital Allotted and Fully Paid Up

Ordinary shares of £0.01 carry the right to one vote per share at general meetings of the company and the rights to share in any distribution of profits or returns of capital and to share in any residual assets available for distribution in the event of a winding up. The shares are denominated in Pounds Sterling and translatedat the historic rate.

The table below shows the movements in share capital for the year:

Number of shares Share Capital $ Share Premium $Movement in Ordinaryshare capital 2016 2015 2016 2015 2016 2015

Balance at 1 January 47,092,851 47,092,851 769,179 769,179 37,425,856 37,425,856Issue of new shares - - - - - -Share issue costs - - - - - -Balance at 31 December 47,092,851 47,092,851 769,179 769,179 37,425,856 37,425,856

The group has not issued any partly paid shares nor any convertible securities, exchangeable securities orsecurities with warrants. The group does not hold any treasury shares.

16. SubsidiariesThe subsidiaries of the company, all of which have been included in the consolidated financial information, are as follows:

Name Principal Activity Ownership Registered office addressblur Inc. Provision of marketing services 100%* 1201 Orange St, STE 600, One

Commerce Center, Wilmington, DE 19801, USA

blur Limited Provision of services 100% Eagle House, Exeter Science Park, 1 Babbage Way, Exeter, EX5 2FN

blur Exchange Limited Dormant company 100%* Eagle House, Exeter Science Park, 1 Babbage Way, Exeter, EX5 2FN

blur Technology Limited Dormant company 100%* Eagle House, Exeter SciencePark, 1 Babbage Way, Exeter,EX5 2FN

blur Services Limited Dormant company 100%* Eagle House, Exeter Science Park, 1 Babbage Way, Exeter, EX5 2FN

* These investments are held by blur Limited.


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Notes to the Consolidated Financial Information cont’d15. Share CapitalShare Capital Allotted and Fully Paid Up

Ordinary shares of £0.01 carry the right to one vote per share at general meetings of the company and the rights to share in any distribution of profits or returns of capital and to share in any residual assets available for distribution in the event of a winding up. The shares are denominated in Pounds Sterling and translated at the historic rate.

The table below shows the movements in share capital for the year:

Number of shares Share Capital $ Share Premium $Movement in Ordinary share capital 2016 2015 2016 2015 2016 2015

Balance at 1 January 47,092,851 47,092,851 769,179 769,179 37,425,856 37,425,856Issue of new shares - - - - - -Share issue costs - - - - - -Balance at 31 December 47,092,851 47,092,851 769,179 769,179 37,425,856 37,425,856

The group has not issued any partly paid shares nor any convertible securities, exchangeable securities or securities with warrants. The group does not hold any treasury shares.

16. SubsidiariesThe subsidiaries of the company, all of which have been included in the consolidated financial information, are as follows:

Name Principal Activity Ownership Registered office addressblur Inc. Provision of marketing services 100%* 1201 Orange St, STE 600, One

Commerce Center, Wilmington, DE 19801, USA

blur Limited Provision of services 100% Eagle House, Exeter Science Park, 1 Babbage Way, Exeter, EX5 2FN

blur Exchange Limited Dormant company 100%* Eagle House, Exeter Science Park, 1 Babbage Way, Exeter, EX5 2FN

blur Technology Limited Dormant company 100%* Eagle House, Exeter Science Park, 1 Babbage Way, Exeter, EX5 2FN

blur Services Limited Dormant company 100%* Eagle House, Exeter Science Park, 1 Babbage Way, Exeter, EX5 2FN

* These investments are held by blur Limited.


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17. ReservesThe following describes the nature and purpose of each reserve within equity:

Share premium The amount of capital contributed in excess of the nominal value of each Ordinary share

Equity conversion reserve The amount of proceeds on issue of convertible loan notes relating to the equity component

Share-based payment reserve Reserve for share-based payments on options granted during the period not yet exercised

Foreign currency reserve Foreign exchange translation gains and losses arising on the translation of the financial statements from the functional to the presentation currency

Retained earnings All other net gains and losses and transactions with owners (e.g. dividends) not recognized elsewhere

Merger reserve Amount subscribed for share capital in excess of nominal value when shares are issued in exchange for at least a 90% interest in the shares of another company.

18. LeasesThe group’s leases consist only of operating leases for office space. Non-cancellable operating lease rentals are payable as follows:

2016 2015

US$ US$Not later than one year 113,699 117,975Above one year but not later thanfive years - 120,159

113,699 238,134

At 31 December 2016, the group had no capital commitments in respect of property, plant and equipment.

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19. Related Party Transactions

2016 2015US$ US$

Consultancy fees1 85,625 191,646Service fees 2 3,482 68,822Other consultancy fees3 - 25,137Licence fees4 - 5,325

89,107 290,930

Out of above balances outstanding at year end in trade payables and accruals are $533 (2015: $16,390).

1 Consultancy fees of $85,625 (2015: $191,646) were paid to Revviva LLC, a company in which KCardinale has an interest. These were paid for K Cardinale’s Director services.

2 Service fees of $3,482 (2015: $68,822) were paid to CFPro Limited and Cambridge Financial Partners LLP for accounting and consultancy support, companies in which Barbara Spurrier has an interest.

3 Other consultancy fees of $nil (2015: $25,137) were paid to Meguro LLP, a company in which Robert Wirszycz has an interest prior to him becoming a Director.

4 Licence fees of $nil (2015: $5,325) were payable to Philip Letts for the use of blur logo artwork.

Related party transactions are not included in compensation costs to key personnel as set out in note 6, with the exception of payments to Revviva LLC in respect of K Cardinale’s Director services.Revenue or other related receipts from key management personnel (including Directors):

2016 2015US$ US$

Project revenue1,2 24,807 1,52124,807 1,521

1 Project revenue includes $23,749 (2015: $1,521) in revenue recognized for projects carried out on behalf of Letts Estates Limited, a company in which Philip Letts has an interest. The projects were carried out on an arms-length basis. There are no amounts outstanding to or from the company at the period end.

2 Project revenue includes $1,058 (2015: $nil) in revenue recognized for projects carried out on behalf of Tanfield Limited, a company in which Richard Bourne-Arton has an interest. The projectswere carried out on an arms-length basis. The amount outstanding from Tanfield Limited at the period end was $7,405.


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19. Related Party Transactions

2016 2015US$ US$

Consultancy fees1 85,625 191,646Service fees 2 3,482 68,822Other consultancy fees3 - 25,137Licence fees4 - 5,325

89,107 290,930

Out of above balances outstanding at year end in trade payables and accruals are $533 (2015: $16,390).

1 Consultancy fees of $85,625 (2015: $191,646) were paid to Revviva LLC, a company in which K Cardinale has an interest. These were paid for K Cardinale’s Director services.

2 Service fees of $3,482 (2015: $68,822) were paid to CFPro Limited and Cambridge Financial Partners LLP for accounting and consultancy support, companies in which Barbara Spurrier has an interest.

3 Other consultancy fees of $nil (2015: $25,137) were paid to Meguro LLP, a company in which Robert Wirszycz has an interest prior to him becoming a Director.

4 Licence fees of $nil (2015: $5,325) were payable to Philip Letts for the use of blur logo artwork.

Related party transactions are not included in compensation costs to key personnel as set out in note 6, with the exception of payments to Revviva LLC in respect of K Cardinale’s Director services.Revenue or other related receipts from key management personnel (including Directors):

2016 2015US$ US$

Project revenue1,2 24,807 1,52124,807 1,521

1 Project revenue includes $23,749 (2015: $1,521) in revenue recognized for projects carried out on behalf of Letts Estates Limited, a company in which Philip Letts has an interest. The projects were carried out on an arms-length basis. There are no amounts outstanding to or from the company at the period end.

2 Project revenue includes $1,058 (2015: $nil) in revenue recognized for projects carried out on behalf of Tanfield Limited, a company in which Richard Bourne-Arton has an interest. The projects were carried out on an arms-length basis. The amount outstanding from Tanfield Limited at the period end was $7,405.


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Notes to the Consolidated Financial Information cont’d19. Related Party Transactions cont’dThe following loans are due (to)/from Directors:

2016 2015US$ US$

P Letts:

Opening balance (19,603) (15,228)Expenses incurred on behalf of the group (624) (5,181)Exchange adjustments 4,506 806Closing balance (15,721) (19,603)

The loans are interest free and repayable on demand.

20. Share-based PaymentsThe company operates two option schemes, namely an unapproved option scheme and an Enterprise Management Incentive (‘EMI’) scheme. The share capital of the company is denominated in Pounds Sterling. Therefore, disclosures are presented in Sterling.

At 31 December 2016, the following share options have been granted and are outstanding in respect of the Ordinary shares:

Exercise Price Range

As at1 January

2016 Granted Cancelled

As at31

December 2016

Finalexercisable

date Contractual life

£0.0388-£0.15 - 2,669,500 102,000 2,567,5006/2026-12/2026 9.5-10.0 years

£0.18-£2.40 4,041,995 - 1,599,695 2,442,3004/2022-12/2025 5.3-9.0 years

£4.25-£4.60 26,000 - 11,000 15,0009/2019-12/2023 6.7-7.0 years

£5.74-£7.93 11,500 - 4,000 7,500 1/2024 7.0-7.1 years

4,079,495 2,669,500 1,716,695 5,032,300

Weighted averageexercise price £0.49 £0.07 £0.45 £0.28

At the 31 December 2016, 5,032,300 (2015: 4,079,495) options were in existence, 3,449,500 (2015:2,087,000) under EMI scheme and 1,582,800 (2015: 1,992,495) under unapproved scheme. The options exercisable as at 31 December 2016 were 538,500 (2015: NIL). The contractual life is ten years and there is no cash settlement of the options. The options vest provided the employees remain in the service of the blur Limited for a period of between two and four years from the grant date.

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The fair values of the options are calculated using the Black-Scholes method. Assumptions used in this modelfor the year ended 31 December were:

EMI Scheme 2016-02 2016-01 2015

Fair value at measurement date £0.079 £0.054 £0.14Exercise price £0.0388-£0.15 £0.0388-£0.075 £0.18-£0.77Expected volatility 121% 121% 29%-600%Expected life 3.00 Years 4.00 Years 4.00 YearsWeighted Average Share Price at grant £0.079 £0.054 £0.24Risk-free rate 1.49% 1.49% 1.65%-1.831%

Unapproved Scheme 2016 2016 2015

Fair value at measurement date £0.0388 £0.075 £0.10Exercise price £0.0388 £0.075 £0.18-£0.30Expected volatility 121% 121% 29%-99%Expected life 3.00 years 4.00 Years 4.00 yearsWeighted Average Share Price at grant £0.0388 £0.075 £0.22Risk-free rate 1.49% 1.49% 1.65%-1.831%

The expected volatility of 121% was used for options granted during the year which has been based on thehistorical volatility of blur’s share price.

21. Financial Instruments – Risk ManagementGeneral Objectives, Policies and ProcessesThe overall objective of the board is to set policies that seek to reduce risk as far as possible without unduly affecting the group’s competitiveness and flexibility. Further details regarding these policies are set out below.

The board reviews its monthly reports through which it assesses the effectiveness of the processes put inplace and the appropriateness of the objectives and policies it sets.

The group reports in US Dollars. All funding requirements and financial risks are managed based on policiesand procedures adopted by the board of Directors.

Forward contracts are used to control foreign exchange risk. The group’s criteria for entering into a forwardcurrency contract would require that the instrument must:

be related to anticipated foreign currency receipt;involve the same currency as the foreign currency receipt; andreduce the risk of foreign currency exchange movements on the group’s operations.


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The fair values of the options are calculated using the Black-Scholes method. Assumptions used in this model for the year ended 31 December were:

EMI Scheme 2016-02 2016-01 2015

Fair value at measurement date £0.079 £0.054 £0.14Exercise price £0.0388-£0.15 £0.0388-£0.075 £0.18-£0.77Expected volatility 121% 121% 29%-600%Expected life 3.00 Years 4.00 Years 4.00 YearsWeighted Average Share Price at grant £0.079 £0.054 £0.24Risk-free rate 1.49% 1.49% 1.65%-1.831%

Unapproved Scheme 2016 2016 2015

Fair value at measurement date £0.0388 £0.075 £0.10Exercise price £0.0388 £0.075 £0.18-£0.30Expected volatility 121% 121% 29%-99%Expected life 3.00 years 4.00 Years 4.00 yearsWeighted Average Share Price at grant £0.0388 £0.075 £0.22Risk-free rate 1.49% 1.49% 1.65%-1.831%

The expected volatility of 121% was used for options granted during the year which has been based on the historical volatility of blur’s share price.

21. Financial Instruments – Risk ManagementGeneral Objectives, Policies and ProcessesThe overall objective of the board is to set policies that seek to reduce risk as far as possible without undulyaffecting the group’s competitiveness and flexibility. Further details regarding these policies are set out below.

The board reviews its monthly reports through which it assesses the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets.

The group reports in US Dollars. All funding requirements and financial risks are managed based on policies and procedures adopted by the board of Directors.

Forward contracts are used to control foreign exchange risk. The group’s criteria for entering into a forward currency contract would require that the instrument must:



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Notes to the Consolidated Financial Information cont’di) Categories of financial assets and liabilities

The principal financial instruments used by the group, from which financial instrument risk arises, are as follows:

Trade receivables.Cash and cash equivalents.Trade and other payables.Borrowings and convertible loan notes.

Trade and other receivables are initially measured at fair value and subsequently at amortized cost. Book values and expected cash flows are reviewed by the board and any impairment charged to the consolidated statement of comprehensive income in the relevant period.

Trade and other payables are measured at book value. The book value of financial assets and liabilities equates to their fair value.

A summary of the financial instruments held by category is provided below:

Financial assets2016 2015US$ US$

Cash and cash equivalents 2,506,292 7,144,877

Trade receivables – due at reporting date 30,047 1,261,447

Gross trade receivables 30,047 1,261,447

Less: Provision for impairment (16,093) (1,002,723)

Trade receivables – net of provision 13,954 258,724

Accrued income – not due at reporting date 61,920 303,343

R&D Tax Credit – due at reporting date 253,036 955,772

Other receivables 37,477 47,745

Total 366,387 1,565,584

Trade receivables principally comprise amounts outstanding for sales to customers and are net of provision for doubtful recoverability. An impairment review of outstanding trade receivables is carried out at the period end and a specific amount provided for. The average debtor days to settle invoices are 13 days (2015: 171days).

Trade receivables that are due at the reporting date and have been reviewed and impaired when the collectability is considered unlikely.

R&D Tax Credit relating to 2014 of $402,565 was received in January 2016. R&D Tax Credit relating to 2015 of $409,767 was received in September 2016.

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Financial liabilities2016 2015US$ US$

Trade payables 309,976 660,669Service provider costs accrual 84,267 140,115Other accruals 371,733 576,323Convertible loan notes 12,341 14,804Total trade and other payables 778,317 1,391,911

Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoingcosts. The average credit period taken for trade purchases is 53 days (2015 : 38 days).

Cash and cash equivalentsCash and cash equivalents are held in Sterling, Euros and US Dollars and placed on deposit in UK banksand US banks.

ii) Credit riskCredit risk is the risk of financial loss to the group if a customer or counterparty to a financial instrument failsto meet its contractual obligations. The Group is mainly exposed to credit risk from credit sales. At 31 December 2016 the group has net trade receivables of US$13,954 (2015: US$258,724).

The group is exposed to credit risk in respect of these balances such that, if one or more customers encounterfinancial difficulties, this could materially and adversely affect the group’s financial results. The group attempts to mitigate credit risk by assessing the credit rating of new customers prior to entering into contractsand by entering contracts with customers with agreed credit terms. The group also mitigates the credit riskwhen the customer for a project has not paid for the outstanding debt by withholding payment to the service provider associated with the project where possible.

At 31 December 2016, the group had no customers (2015: no customers) that owed the group more than$100,000 each and accounted for 0% (2015: 0%) of all the net receivables outstanding.


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Financial liabilities2016 2015US$ US$

Trade payables 309,976 660,669Service provider costs accrual 84,267 140,115Other accruals 371,733 576,323Convertible loan notes 12,341 14,804Total trade and other payables 778,317 1,391,911

Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period taken for trade purchases is 53 days (2015 : 38 days).

Cash and cash equivalentsCash and cash equivalents are held in Sterling, Euros and US Dollars and placed on deposit in UK banks and US banks.

ii) Credit riskCredit risk is the risk of financial loss to the group if a customer or counterparty to a financial instrument failsto meet its contractual obligations. The Group is mainly exposed to credit risk from credit sales. At 31December 2016 the group has net trade receivables of US$13,954 (2015: US$258,724).

The group is exposed to credit risk in respect of these balances such that, if one or more customers encounter financial difficulties, this could materially and adversely affect the group’s financial results. The group attempts to mitigate credit risk by assessing the credit rating of new customers prior to entering into contracts and by entering contracts with customers with agreed credit terms. The group also mitigates the credit risk when the customer for a project has not paid for the outstanding debt by withholding payment to the service provider associated with the project where possible.

At 31 December 2016, the group had no customers (2015: no customers) that owed the group more than $100,000 each and accounted for 0% (2015: 0%) of all the net receivables outstanding.


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Notes to the Consolidated Financial Information cont’dThe analysis below shows the ageing of trade and other receivables and the movement in bad debt provision in the year:

2016 2015US$ US$

Up to 3 months 455,135 2,318,0933 to 6 months 12,834 96,455Above 6 months 2,315 153,759Gross 470,284 2,568,307Less: allowance for impairment (103,897) (1,002,723)Net 366,387 1,565,584

Allowance for impairment: 2016 2015US$ US$

Opening balance 1,002,723 620,002Utilized during the year (913,188) (435,439)Increase during the year 14,362 818,160Closing balance 103,897 1,002,723

The provision for bad debts decreased during the year as the group’s policy is to provide fully againstreceivables due for more than 150 days. A corresponding provision is made against the service provider invoice or accrual to reflect the reduced associated liability.

iii) Liquidity riskShort-term liquidity risk arises from the group’s management of working capital. It is the risk that the groupwill encounter difficulty in meeting its financial obligations as they fall due. The group’s policy is to ensurethat it will always have sufficient cash to allow it to meet its liabilities when they become due. To achieve thisaim, it seeks to maintain cash balances to meet expected requirements for a period of at least 30 days. Thetable below analyses the group’s financial liabilities by contractual maturities. All amounts disclosed in thetable are the contractual undiscounted cash flows.

2016 2015US$ US$

Ageing of trade and other payables:Up to 3 months 669,814 1,183,2453 to 6 months 28,986 157,203Above 6 months 67,174 36,659Gross 765,974 1,377,107

Longer-term liquidity risk is the ability of the group to continue as a going concern. This risk is managed by the preparation by the Directors of cash flow forecasts and the close management of expenditure.

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Notes to the Consolidated Financial Information cont’d(iv) Foreign exchange riskFunctional and presentational currencyItems included in the financial statements are measured using the currency of the primary economicenvironment in which the company operates (the functional currency) which is considered by the Directorsto be Pounds Sterling (£). The financial statements have been presented in US Dollars. The effectiveexchange rate at 31 December 2016 was £1 = US$1.2341 (2015: £1 = US$1.4804).

Foreign exchange risk arises when group entities enter into transactions denominated in a currency otherthan their functional currency. The group’s policy is, where possible, to allow customers to settle liabilitiesdenominated in the customer’s functional currency, being primarily Dollar or Pound Sterling.

The group is predominantly exposed to currency risk on sales and purchases made from customers andservice providers based in the USA and the Eurozone. Sales and purchases from customers, service providers and suppliers are made on a central basis and the risk is monitored centrally. Apart from theseparticular cash flows the group aims to fund expenses and investments in the respective currency and to manage foreign exchange risk at a local level by matching the currency in which revenue is generated andexpenses are incurred.

Forward contracts are used to control foreign exchange risk. Hedge accounting is not applied in respect ofthese derivatives.

The group’s criteria for entering into a forward currency contract would require that the instrument must:


At 31 December 2016 the group had no commitments under forward foreign exchange contracts.


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Notes to the Consolidated Financial Information cont’d(iv) Foreign exchange riskFunctional and presentational currencyItems included in the financial statements are measured using the currency of the primary economicenvironment in which the company operates (the functional currency) which is considered by the Directorsto be Pounds Sterling (£). The financial statements have been presented in US Dollars. The effectiveexchange rate at 31 December 2016 was £1 = US$1.2341 (2015: £1 = US$1.4804).

Foreign exchange risk arises when group entities enter into transactions denominated in a currency other than their functional currency. The group’s policy is, where possible, to allow customers to settle liabilities denominated in the customer’s functional currency, being primarily Dollar or Pound Sterling.

The group is predominantly exposed to currency risk on sales and purchases made from customers and service providers based in the USA and the Eurozone. Sales and purchases from customers, service providers and suppliers are made on a central basis and the risk is monitored centrally. Apart from these particular cash flows the group aims to fund expenses and investments in the respective currency and to manage foreign exchange risk at a local level by matching the currency in which revenue is generated and expenses are incurred.

Forward contracts are used to control foreign exchange risk. Hedge accounting is not applied in respect of these derivatives.

The group’s criteria for entering into a forward currency contract would require that the instrument must:


At 31 December 2016 the group had no commitments under forward foreign exchange contracts.


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Notes to the Consolidated Financial Information cont’dAs at 31 December 2016, the group’s net exposure to foreign exchange risk was as follows for those entities with Pound Sterling functional currencies:

US Dollar Euro TotalUS$ US$ US$

As at 31 December 2016Trade and other receivables 23,270 6,468 29,738Cash and cash equivalents (503) 19,366 18,863Trade and other payables (188,142) (13,847) (201,989)Net assets (165,375) 11,987 (153,388)As at 31 December 2015Trade and other receivables 303,337 30,850 334,187Cash and cash equivalents 4,490 101,540 106,030Trade and other payables (465,754) (54,273) (520,027)Net assets (157,927) 78,117 (79,810)

The impact of 10% movement in foreign exchange rate of US$ will result in an increase/decrease of net assets by $16,538 for 2016 (2015: $15,793). The average US$ exchange rate used for 2016 is 1.2399 (2015: 1.521), with a closing rate of 1.2341 (2015: 1.4804).

(v) Capital managementThe group’s capital is made up of share capital, share premium, equity conversion reserve, mergerreserve, foreign currency reserve, share-based payment reserve and retained losses totaling at 31December 2016 US$4,349,025 (2015: US$9,964,927).

The group’s objectives when maintaining capital are:

To safeguard the entity’s ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders.To provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.

To meet these objectives, the group reviews the budgets and forecasts on at least a quarterly basis to ensure there is sufficient capital to meet the needs of the group through to profitability and positive cash flow.

The capital structure of the group consists of shareholders’ equity as set out in the consolidated statement of changes in equity. All working capital requirements are financed from existing cash resources.

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Notes to the Consolidated Financial Information cont’d(vi) Capital risk managementThe group’s objectives when managing capital are to safeguard the group’s ability to continue as a going concern in a volatile and tight credit economy.

The group will also seek to minimize the cost of capital and attempt to optimize the capital structure, whichcurrently means maintaining equity funding and keeping debt levels to insignificant amounts of lease funding. Share capital and premium together amount to $38,195,035 (see note 15).

Whilst the group does not currently pay dividends it is part of the capital strategy to provide returns forshareholders and benefits for other members in the future. However, the group is planning growth and it willcontinue to be important to maintain the group’s credit rating and ability to borrow should acquisition targetsbecome appropriate and available.

Capital for further development of the group’s activities will, where possible, be achieved by share issues orother finance as appropriate.

22. Events After the Reporting DateRichard Bourne-Arton resigned as Non-executive Director on 31 January 2017.

On 7 July 2017, blur announced the successful result of a proposed placing, via an accelerated book build,to raise net cash proceeds of £1.5 million. Whilst blur has made progress in engaging with and delivering projects for multinational blue chip organisations, converting customer engagement into significant revenueshas been slower than anticipated at the time of the Group’s admission to AIM in 2012.

The net proceeds of the Placing are intended to be used as general working capital to enable blur toimplement its revised growth plan, which is intended to result in the conversion of customer engagementsinto projects and revenue growth. A revised growth plan will aim to deliver significant progress in establishing relationships with blue chip multinational customers from a variety of sectors whilst minimising the cash requirement of the business.

In addition, a number of changes have been made to blur’s board of Directors. David Rowe was appointedas chairman with Preeti Mardia, Richard Rae and Richard Croft being appointed to the board as non-executive directors on 12 July 2017. Simultaneous with these new appointments, David Sherriff, Roger de Peyrecave Rob Wirszycz and Kara Cardinale stepped down from the board. Tim Allen, Chief FinancialOfficer, also stepped down from the board on 28 July 2017 and James Porter, blur’s existing group financialcontroller, will serve as interim finance lead whilst a review is performed of a suitable replacement for Tim.

23. ControlThere is no ultimate controlling party.


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Notes to the Consolidated Financial Information cont’d(vi) Capital risk managementThe group’s objectives when managing capital are to safeguard the group’s ability to continue as a goingconcern in a volatile and tight credit economy.

The group will also seek to minimize the cost of capital and attempt to optimize the capital structure, which currently means maintaining equity funding and keeping debt levels to insignificant amounts of lease funding. Share capital and premium together amount to $38,195,035 (see note 15).

Whilst the group does not currently pay dividends it is part of the capital strategy to provide returns for shareholders and benefits for other members in the future. However, the group is planning growth and it will continue to be important to maintain the group’s credit rating and ability to borrow should acquisition targets become appropriate and available.

Capital for further development of the group’s activities will, where possible, be achieved by share issues or other finance as appropriate.


On 7 July 2017, blur announced the successful result of a proposed placing, via an accelerated book build, to raise net cash proceeds of £1.5 million. Whilst blur has made progress in engaging with and delivering projects for multinational blue chip organisations, converting customer engagement into significant revenues has been slower than anticipated at the time of the Group’s admission to AIM in 2012.

The net proceeds of the Placing are intended to be used as general working capital to enable blur to implement its revised growth plan, which is intended to result in the conversion of customer engagements into projects and revenue growth. A revised growth plan will aim to deliver significant progress in establishing relationships with blue chip multinational customers from a variety of sectors whilst minimising the cash requirement of the business.

In addition, a number of changes have been made to blur’s board of Directors. David Rowe was appointed as chairman with Preeti Mardia, Richard Rae and Richard Croft being appointed to the board as non-executive directors on 12 July 2017. Simultaneous with these new appointments, David Sherriff, Roger de Peyrecave Rob Wirszycz and Kara Cardinale stepped down from the board. Tim Allen, Chief Financial Officer, also stepped down from the board on 28 July 2017 and James Porter, blur’s existing group financial controller, will serve as interim finance lead whilst a review is performed of a suitable replacement for Tim.



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Company Statement of Financial Position - blur Group plcAt 31 December 2016

2016 2015Note US$ US$

Non-current assets

Investment in subsidiary company 6 1,267,067 1,484,879Total non-current assets 1,267,067 1,484,879

Current assetsTrade and other receivables 7 4,074,665 5,136,662Cash and cash equivalents 2,418,348 6,804,438Total current assets 6,493,013 11,941,100

Total assets 7,760,080 13,425,979

Current liabilitiesTrade and other payables 8 34,830 47,262Total current liabilities 34,830 47,262

Net assets 7,725,250 13,378,717

Equity attributable to equity holders of the companyCalled up share capital 9 769,179 769,179Share premium 37,425,856 37,425,856Share-based payment reserve 6 1,267,067 1,484,879Merger reserve (317,393) (317,393)Foreign exchange reserve (4,936,804) (2,974,317)Retained losses (26,482,655) (23,009,487)Total equity 7,725,250 13,378,717

The financial statements were approved and authorized for issue by the board of Directors on 31 July 2017 and were signed on its behalf by:

David Rowe

Chairman



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Company Statement of Changes in Equity – blur Group plcFor the year ended 31 December 2016

CalledUp

ShareCapital

SharePremium

Foreign Exchange

Reserve

Share-based Payment Reserve Merger

Reserve

RetainedEarnings/

(losses)Total

US$ US$ US$ US$ US$ US$ US$Equity as at31 December 2014 769,179 37,425,856 (1,679,467) 1,074,046 (317,393) (316,376) 36,955,845Loss for the period - - - - - (22,693,111) (22,693,111)Other comprehensive loss - - (1,294,850) - - - (1,294,850)Total comprehensiveincome/(loss) - - (1,294,850) - - (22,693,111) (23,987,961)Issue of Ordinary shares - - - - - - -Issue costs recognized in equity - - - - - - -Share-based payments - - - 410,833 - - 410,833Equity as at31 December 2015 769,179 37,425,856 (2,974,317) 1,484,879 (317,393) (23,009,487) 13,378,717Loss for the period (3,473,168) (3,473,168)Other comprehensive loss - - (1,962,487) - - - (1,962,487)Total comprehensiveincome/(loss) - - (1,962,487) - - (3,473,168) (5,435,655)Issue of Ordinary shares - - - - - - -Issue costs recognized in equity - - - - - - -Share-based payments - - - (217,812) - - (217,812)Equity as at31 December 2016 769,179 37,425,856 (4,936,804) 1,267,067 (317,393) (26,482,655) 7,725,250



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Company Statement of Changes in Equity – blur Group plcFor the year ended 31 December 2016

Called Up

ShareCapital

SharePremium

Foreign Exchange

Reserve

Share-based Payment Reserve Merger

Reserve

RetainedEarnings/

(losses)Total

US$ US$ US$ US$ US$ US$ US$Equity as at 31 December 2014 769,179 37,425,856 (1,679,467) 1,074,046 (317,393) (316,376) 36,955,845Loss for the period - - - - - (22,693,111) (22,693,111)Other comprehensive loss - - (1,294,850) - - - (1,294,850)Total comprehensive income/(loss) - - (1,294,850) - - (22,693,111) (23,987,961)Issue of Ordinary shares - - - - - - -Issue costs recognized in equity - - - - - - -Share-based payments - - - 410,833 - - 410,833Equity as at 31 December 2015 769,179 37,425,856 (2,974,317) 1,484,879 (317,393) (23,009,487) 13,378,717Loss for the period (3,473,168) (3,473,168)Other comprehensive loss - - (1,962,487) - - - (1,962,487)Total comprehensive income/(loss) - - (1,962,487) - - (3,473,168) (5,435,655)Issue of Ordinary shares - - - - - - -Issue costs recognized in equity - - - - - - -Share-based payments - - - (217,812) - - (217,812)Equity as at 31 December 2016 769,179 37,425,856 (4,936,804) 1,267,067 (317,393) (26,482,655) 7,725,250



62

Company Statement of Cash flows - blur Group plcFor the year ended 31 December 2016

2016 2015US$ US$

Operating activitiesProfit/(loss) before interest and taxation (3,473,168) (22,693,111)Interest income (23,701) (196,477)Fair value movement and unrealized FX (830,406) (522,546)

Cash outflows from operating activities before changes in working capital (4,327,275) (23,412,134)(Increase)/decrease in trade and other receivables 4,263,048 22,914,361Increase in trade and other payables (12,432) 1,190Cash used in operations (76,659) (496,583)

Interest received 23,701 196,477Interest paid - -Net cash generated from operating activities (52,958) (300,106)

Investing activitiesIntercompany – blur Limited and blur Inc. (3,201,051) (9,135,542)Net cash used in investing activities (3,201,051) (9,135,542)

Net increase in cash and cash equivalents (3,254,009) (9,435,648)Cash and cash equivalents at beginning of period 6,804,438 17,148,407Effect of foreign exchange rate changes (1,132,081) (908,321)Cash and cash equivalents at end of period 2,418,348 6,804,438


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Notes to the Company Financial StatementsAt 31 December 2016

1. Company Statement of Total Comprehensive Income - blur Group plcThe company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and hasnot presented its own profit and loss account in the financial statements. The loss for the period ended 31 December2016 is US$3,473,168 (2015: US$22,693,111).

2. Description of Businessblur Group plc is a public limited company domiciled in the United Kingdom. This company is incorporated to act as parent company for the group. This principal activity of the company is to control the subsidiaries and other entitiesin the group. The company was incorporated on 22 August 2012.

3. Accounting PoliciesThe company applies the same accounting policies as the group in note 1 of the consolidated financial information except for the following:

Basis of preparationThe principal accounting policies adopted in the preparation of the financial statements are set out below. These financial statements have been prepared on a going concern basis and in accordance with International FinancialReporting Standards (‘IFRS’), International Accounting Standards (‘IAS’) and Interpretations (‘collectively IFRSs’)issued by the International Accounting Standards Board (‘IASB’) as adopted by the European Union in accordancewith the Companies Act 2006.

Over the last two years the group has been changing its business model to focus on large national and multi-nationalentities (“Enterprise”) rather than smaller customers. Q4 2016 saw the first Enterprise customer being won. As partof the change, and as expected, the long sales cycles inherent in entering the Enterprise procurement marketcontributed to a significant fall in turnover in the current period and continued significant cash burn. The group hadcash of $2.5m as at 31 December 2016, which has reduced to $1.0m at 30 June 2017. At the time of approving these financial statements the group has legally binding undertakings from investors to inject equity generating netcash proceeds of £1.5m, contingent only on the company’s being readmitted to AIM, without which the group couldnot have continued. There has also been a new leadership with new board members put in place, aligned with thepotential new investment.

Although since the year end the group has entered final negotiations with another, particularly large Enterprisecustomer, the directors recognize that building the Enterprise business and making the group profitable and cashgenerative is a medium term goal. During that period further funding may be required depending on tradingperformance.

Group cash forecasts through to 31 December 2018 are based on the £1.5m cash injection, anticipated new keycontract wins, with revenues rising to $1.5m in 2017 and then to $6.4m in 2018, and reduced costs through headcount reductions and overhead savings implemented from the end of Q2 2017. Cash burn for 2017 is forecast to be $2.4m(2016: $4.6m) and $0.3m in 2018, and hence cash at the end of 2017 and 2018 of $2.0m and $1.7m respectively.Although an overall cash burn is forecast for 2018, the group is forecast to turn cash generative during 2019.

As at the date of approval of these financial statements, based on the £1.5m cash injection and the forecasts coveringa period extending beyond 12 months from the date of approval of these financial statements, the group will be ableto continue operating for at least 12 months.

However, the group is evolving technology business, open to disruption, and is itself a disrupter, and the forecastcontains assumptions including: significant growth in future revenue, both in project revenues and in premiumservices; the cost model; and margins. The directors are aware of the risks and uncertainties facing the business but the assumptions used are the directors’ estimate of the future development of the business. If performance is not inline with forecasts then additional funding would or may need to be raised, and the ability to raise it will depend onperformance itself. In the next 12 months, the most critical assumptions are those concerning the speed of growth inrevenues and the control of costs.


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Notes to the Company Financial StatementsAt 31 December 2016

1. Company Statement of Total Comprehensive Income - blur Group plcThe company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own profit and loss account in the financial statements. The loss for the period ended 31 December 2016 is US$3,473,168 (2015: US$22,693,111).

2. Description of Businessblur Group plc is a public limited company domiciled in the United Kingdom. This company is incorporated to act as parent company for the group. This principal activity of the company is to control the subsidiaries and other entities in the group. The company was incorporated on 22 August 2012.

3. Accounting PoliciesThe company applies the same accounting policies as the group in note 1 of the consolidated financial information except for the following:

Basis of preparationThe principal accounting policies adopted in the preparation of the financial statements are set out below. These financial statements have been prepared on a going concern basis and in accordance with International Financial Reporting Standards (‘IFRS’), International Accounting Standards (‘IAS’) and Interpretations (‘collectively IFRSs’)issued by the International Accounting Standards Board (‘IASB’) as adopted by the European Union in accordance with the Companies Act 2006.

Over the last two years the group has been changing its business model to focus on large national and multi-national entities (“Enterprise”) rather than smaller customers. Q4 2016 saw the first Enterprise customer being won. As part of the change, and as expected, the long sales cycles inherent in entering the Enterprise procurement market contributed to a significant fall in turnover in the current period and continued significant cash burn. The group had cash of $2.5m as at 31 December 2016, which has reduced to $1.0m at 30 June 2017. At the time of approving these financial statements the group has legally binding undertakings from investors to inject equity generating net cash proceeds of £1.5m, contingent only on the company’s being readmitted to AIM, without which the group could not have continued. There has also been a new leadership with new board members put in place, aligned with the potential new investment.


Group cash forecasts through to 31 December 2018 are based on the £1.5m cash injection, anticipated new key contract wins, with revenues rising to $1.5m in 2017 and then to $6.4m in 2018, and reduced costs through headcount reductions and overhead savings implemented from the end of Q2 2017. Cash burn for 2017 is forecast to be $2.4m (2016: $4.6m) and $0.3m in 2018, and hence cash at the end of 2017 and 2018 of $2.0m and $1.7m respectively. Although an overall cash burn is forecast for 2018, the group is forecast to turn cash generative during 2019.




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Notes to the Consolidated Financial Information cont’dBasis of Preparation (continued)The directors have concluded that the combination of these circumstances represents a material uncertainty that casts significant doubt upon the company’s ability to continue as a going concern and that, therefore the company may be unable to continue realizing its assets and discharging its liabilities in the normal course of business. Nevertheless the directors have a reasonable expectation that the company has adequate resources to continue for at least 12 months from the date of approval of these financial statements. For these reasons, they continue to adopt the going concern basis in preparing the annual financial statements.

Foreign currenciesThe company’s functional currency is Pound Sterling. The presentational currency is US Dollars. Transactions entered into by blur Group plc in a currency other than the functional currency of the company are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates ruling at the reporting date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognized immediately in the income statement. Exchange differences arising on the translation of the financial statements into the presentational currency of the entity are recognized in other comprehensive income.

Share capitalFinancial instruments issued by the company are classified as equity only to the extent that they do not meet the definition of a financial liability. The company only has one class of Ordinary shares, denominated as £0.01 Ordinary shares.

Investments in subsidiariesThe company’s investment in its subsidiaries is carried at cost less provision for any impairment.

4. Critical Accounting Estimates and JudgementsThe company makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including the expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the financial year are discussed below.

InvestmentsCarrying value of investments in subsidiaries is judged to be at cost plus the value of the share-based payments, as assessed by the Black-Scholes calculation, less any provision for impairment. The carrying value is tested for impairment when there is an indication that the value of the investment might be impaired. When carrying out impairment tests these are based upon future cash flow forecasts and these forecasts require management judgement. The board reviews the subsidiary forecasts to determine whether any provision impairment is required and where the forecasts indicate future profitability, no impairment provision is made.

The board has considered the investment and the receivable due from subsidiaries and concludes that the main asset of the company is blur Limited. The market capitalization of the group at 31 December 2016 was $7.8m of which $2.5m is represented by the company’s cash balance. The investment in and receivable due from blur Limited has therefore been provided against leaving a net balance of $5.3m.

Share-based paymentsThe fair value of the share options utilizing the Black-Scholes valuation model, which takes into account conditions attached to the vesting and exercise of the equity instruments. The expected life used in the model is adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions and behavioralconsiderations.

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Notes to the Company Financial Information cont’d5. Financial Instruments – Risk ManagementCapital ManagementThe company’s capital is made up of share capital, share premium, foreign exchange reserve, merger reserve andretained losses totaling US$9,384,079 at 31 December 2016.

The company’s objectives when maintaining capital are:

to safeguard the entity’s ability to continue as a going concern, so that it can continue to provide returns forshareholders and benefits for other stakeholders; andto provide an adequate return to shareholders by pricing products and services commensurately with thelevel of risk.

The capital structure of the company consists of shareholders’ equity as set out in the statement of changes in equity.All working capital requirements are financed from existing cash resources.

Principal financial instrumentsThe principal financial instruments used by the company, from which financial instrument risk arises, are as follows:

Trade and other receivables.Cash and cash equivalents.Trade and other payables.

To the extent financial instruments are not carried at fair value in the company statement of financial position, bookvalue approximates to fair value as at 31 December 2016. Trade and other receivables are initially measured at fairvalue and subsequently at amortized cost. Book values and expected cash flows are reviewed by the board. Tradeand other payables are measured at book value.

Cash and cash equivalentsCash and cash equivalents comprise balances on bank accounts, cash in transit and cash floats held in the business.Finance charges are accounted for on an accruals basis and charged to the statement of comprehensive income when payable. Cash and cash equivalents are held in Sterling and placed on deposit in UK banks.

2016 2015Financial assets US$ US$

Cash and cash equivalents 2,418,348 6,804,438Other receivables 4,074,665 5,136,662

6,493,013 11,941,100

2016 2015Financial liabilities US$ US$

Trade payables 32,078 43,954Accruals 2,752 3,308

34,830 47,262


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Notes to the Company Financial Information cont’d5. Financial Instruments – Risk ManagementCapital ManagementThe company’s capital is made up of share capital, share premium, foreign exchange reserve, merger reserve andretained losses totaling US$9,384,079 at 31 December 2016.

The company’s objectives when maintaining capital are:

to safeguard the entity’s ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders; andto provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.

The capital structure of the company consists of shareholders’ equity as set out in the statement of changes in equity. All working capital requirements are financed from existing cash resources.

Principal financial instrumentsThe principal financial instruments used by the company, from which financial instrument risk arises, are as follows:

Trade and other receivables.Cash and cash equivalents.Trade and other payables.

To the extent financial instruments are not carried at fair value in the company statement of financial position, book value approximates to fair value as at 31 December 2016. Trade and other receivables are initially measured at fair value and subsequently at amortized cost. Book values and expected cash flows are reviewed by the board. Trade and other payables are measured at book value.

Cash and cash equivalentsCash and cash equivalents comprise balances on bank accounts, cash in transit and cash floats held in the business. Finance charges are accounted for on an accruals basis and charged to the statement of comprehensive income when payable. Cash and cash equivalents are held in Sterling and placed on deposit in UK banks.

2016 2015Financial assets US$ US$

Cash and cash equivalents 2,418,348 6,804,438Other receivables 4,074,665 5,136,662

6,493,013 11,941,100

2016 2015Financial liabilities US$ US$

Trade payables 32,078 43,954Accruals 2,752 3,308

34,830 47,262


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Notes to the Company Financial Information cont’d

6. Investments in Subsidiary

Equity interestin subsidiaries

US$CostAt 1 January 2016 1,484,879

Investment in 100% owned subsidiary (217,812)

At 31 December 2016 1,267,067

The investment in subsidiary is recognized at the carrying amount of blur Group plc’s share of the equity items shown in the separate financial statements of blur Ltd at the date of investment. However, no investment has been recognized as the subsidiary is in a net liability position. The above investment of $1,267,067 relates to the share-based payment reserve.

The share-based payment reserve relates to share options issued to blur Limited's staff. As the shares under option pertain to blur Group plc any expense in the year is recognized as an investment in the subsidiary. This has been included in the investment impairment testing.


2016 2015US$ US$

Amounts falling due within one year

VAT receivable 189 293Prepayments 2,504 2,832Amounts owed by subsidiary undertakings 4,071,972 5,133,537

4,074,665 5,136,662

8. Trade and Other Payables

2016 2015US$ US$

Amounts falling due within one yearTrade payables 32,078 43,954Accruals 2,752 3,308

34,830 47,262

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9. Share Capital

2016 2015US$ US$

Share capital issued and fully paidAt 1 January 769,179 769,179Issued in the year - -

At 31 December 769,179 769,179

Number of £0.01 Ordinary shares in issue at period end 47,092,851 47,092,851

Ordinary shares carry the right to one vote per share at general meetings of the company and the rights to share inany distribution of profits or returns of capital and to share in any residual assets available for distribution in the event of a winding up.

The group has not issued any partly paid shares nor any convertible securities, exchangeable securities or securitieswith warrants. The group does not hold any treasury shares.

The shares are denominated in Pounds Sterling and translated at the historic rate.

10. Share-based PaymentsThe company operates the same options scheme as set out in note 20 of the notes to consolidated financialinformation.

11. Foreign Exchange RiskForeign exchange risk arises when the company enters into transactions denominated in a currency other than theirfunctional currency. The group’s policy including the company is, where possible, to allow customers to settle liabilitiesdenominated in the customer’s functional currency, being primarily US Dollar or Pound Sterling.

To monitor the continuing effectiveness of this policy, the board receives a monthly forecast, analyzed by the majorcurrencies held by the group, including the company, of liabilities due for settlement and expected cash reserves.


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9. Share Capital

2016 2015US$ US$

Share capital issued and fully paidAt 1 January 769,179 769,179Issued in the year - -

At 31 December 769,179 769,179

Number of £0.01 Ordinary shares in issue at period end 47,092,851 47,092,851

Ordinary shares carry the right to one vote per share at general meetings of the company and the rights to share in any distribution of profits or returns of capital and to share in any residual assets available for distribution in the event of a winding up.

The group has not issued any partly paid shares nor any convertible securities, exchangeable securities or securities with warrants. The group does not hold any treasury shares.

The shares are denominated in Pounds Sterling and translated at the historic rate.

10. Share-based PaymentsThe company operates the same options scheme as set out in note 20 of the notes to consolidated financial information.

11. Foreign Exchange RiskForeign exchange risk arises when the company enters into transactions denominated in a currency other than their functional currency. The group’s policy including the company is, where possible, to allow customers to settle liabilities denominated in the customer’s functional currency, being primarily US Dollar or Pound Sterling.

To monitor the continuing effectiveness of this policy, the board receives a monthly forecast, analyzed by the major currencies held by the group, including the company, of liabilities due for settlement and expected cash reserves.


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12. ReservesThe following describes the nature and purpose of each reserve within equity:

Share premium The amount of capital contributed in excess of the nominal value of each Ordinary share

Foreign exchange reserve

Foreign exchange translation reserve resulting in the translation of the financial statements from the functional to the presentation currency

Retained losses All other net gains and losses and transactions with owners (e.g. dividends) not recognized elsewhere

Share-based payment reserve

Reserve for share-based payments on options granted during the period not yet exercised

Merger reserve Amount subscribed for share capital in excess of nominal value when shares are issued in exchange for at least a 90% interest in the shares of another company.

13. Related Party TransactionsAt the reporting date the following related party loan balances were:

2016 2015 2016 2015US$ US$ US$ US$

blur Ltd blur Inc.At 1 January 4,441,200 18,638,894 692,337 220,634

Provision for impairment (2,692,005) (22,462,158) (716,525) -

Loans made in the year 3,061,675 9,251,733 139,374 483,390

FX movement (738,899) (987,269) (115,186) (11,687)

At 31 December 4,071,971 4,441,200 - 692,337

During the period a provision for impairment was made against the loan to blur Ltd (per note 4).

14. LeasesThe company has no operating lease commitments.

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On 7 July 2017, blur announced the successful result of a proposed placing, via an accelerated book build, to raisenet cash proceeds of £1.5 million. Whilst blur has made progress in engaging with and delivering projects for multinational blue chip organisations, converting customer engagement into significant revenues has been slowerthan anticipated at the time of the Group’s admission to AIM in 2012.

The net proceeds of the Placing are intended to be used as general working capital to enable blur to implement itsrevised growth plan, which is intended to result in the conversion of customer engagements into projects and revenuegrowth. A revised growth plan will aim to deliver significant progress in establishing relationships with blue chipmultinational customers from a variety of sectors whilst minimising the cash requirement of the business.

In addition, a number of changes have been made to blur’s board of Directors. David Rowe was appointed aschairman with Preeti Mardia, Richard Rae and Richard Croft being appointed to the board as non-executive directorson 12 July 2017. Simultaneous with these new appointments, David Sherriff, Roger de Peyrecave Rob Wirszycz andKara Cardinale stepped down from the board. Tim Allen, Chief Financial Officer, also stepped down from the boardon 28 July 2017 and James Porter, blur’s existing group financial controller, will serve as interim finance lead whilsta review is performed of a suitable replacement for Tim.



69



On 7 July 2017, blur announced the successful result of a proposed placing, via an accelerated book build, to raise net cash proceeds of £1.5 million. Whilst blur has made progress in engaging with and delivering projects for multinational blue chip organisations, converting customer engagement into significant revenues has been slower than anticipated at the time of the Group’s admission to AIM in 2012.

The net proceeds of the Placing are intended to be used as general working capital to enable blur to implement its revised growth plan, which is intended to result in the conversion of customer engagements into projects and revenue growth. A revised growth plan will aim to deliver significant progress in establishing relationships with blue chip multinational customers from a variety of sectors whilst minimising the cash requirement of the business.

In addition, a number of changes have been made to blur’s board of Directors. David Rowe was appointed aschairman with Preeti Mardia, Richard Rae and Richard Croft being appointed to the board as non-executive directorson 12 July 2017. Simultaneous with these new appointments, David Sherriff, Roger de Peyrecave Rob Wirszycz and Kara Cardinale stepped down from the board. Tim Allen, Chief Financial Officer, also stepped down from the boardon 28 July 2017 and James Porter, blur’s existing group financial controller, will serve as interim finance lead whilst a review is performed of a suitable replacement for Tim.



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Company Information

Directors and Officers

Philip Letts - Chief Executive OfficerDavid Rowe - Chairman

Richard Croft - Non-executive DirectorRichard Rae - Non-executive DirectorPreeti Mardia - Non-executive DirectorAntonia Power - Company Secretary

Office Locations

United KingdomGlobal HQEagle HouseExeter Science Park1 Babbage WayExeterEX5 2FNTel: +44 (0) 800 756 1037

Advisers

Nomad and brokerN+1 SingerOne Bartholomew LaneLondonEC2N 2AX, UK+44 (0) 20 7496 3000

SolicitorsTaylor Wessing5 New Street SquareLondonEC4A 3TW, UK+44 (0) 20 7300 7000

AuditorKPMG LLP3 Longbridge RoadPlymouthPL6 8LT+44 (0) 1752 632100

RegistrarsComputershareThe PavillionsBridgwater RoadBristolBS13 8AE, UK+44 (0) 870 702 0003


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© 2017 blurGroup PLC

blurgroup.com

US 1 (855) 702-8794

INT +44 (0) 800 048 8664

[email protected]

blur Group PLC Annual Report and Accounts for the Year Ended 31 December 2015

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