SOURCE: Phorm Corporation Limited

June 30, 2015 04:33 ET

Phorm Corporation Limited: Annual Financial Report

SINGAPORE--(Marketwired - Jun 30, 2015) - Phorm Corporation Limited (AIM: PHRM)

30 June 2015
Phorm Corporation Limited

("Phorm" or the "Company")

Final Results for the Year Ended 31 December 2014

Phorm (AIM: PHRM), a leading internet personalisation technology company, announces its audited final results for the year ended 31 December 2014. Copies of the Company's full Annual Report and Financial Statements are being posted to shareholders today and will also be made available to download from the Company's website at



  • Successful launch of the Company's machine-learning technology offering a solution which can function without the requirement for an Internet Service Provider ("ISP")
  •  Launched operations in the United States with initial test campaigns being converted into revenue generating commercial campaigns within a matter of weeks
  •  Shifted strategy in China to partnership model, reducing cost base by approximately $0.5 million per month
  •  Focused the Company's resources on its core markets; China, Russia and the US
  •  Global peak daily opted-in users achieved in 2014 of 148 million, including a peak figure of 109 million in China
  •  High calibre board appointments in Lex Fenwick, the former CEO of Dow Jones & Co. and Bloomberg L.P. and Johannes Minho Roth, a highly experienced and respected fund manager


  •  Total revenue of $351,054 (2013: $279,750)
  •  Operating loss of $37.9 million (excluding share based payment expense) (2013: $35.1 million)
  •  Equity placings of, in aggregate, £18.9 million (gross) successfully completed
  •  Overhead run-rate reduced from a high of approximately £2.9 million per month to approximately £1.5 million currently
  •  Exploring funding options with a view to securing additional working capital in the short
     term, with current cash balances expected to last
     until early August 2015

For further information please contact:

Phorm Corporation Limited
Andy Croxson (analysts and investors) +44 20 3397 6001

UK Investors
Strand Hanson Limited (Nominated Adviser) +44 20 7409 3494
James Harris
Matthew Chandler
James Dance
Mirabaud Securities LLP (Broker) +44 20 7321 2508
Jason Woollard
Peter Krens

US Investors
Lippert/Heilshorn and Associates (Investor Relations) +1 212 838 3777
John Heilshorn

About Phorm
Phorm is a global personalisation technology company that makes content and advertising more relevant to the consumer. Phorm's innovative platform preserves user privacy and delivers a more interesting online experience.

Phorm's industry leading technology enables its ISP partners to offer a new type of online advertising platform and a free consumer internet content feature, ensuring more relevant advertisements and personalised content for opted-in users.

Phorm's advertising platform revolutionises current standards of online privacy, fully protecting the identity of consumers. Phorm's solution is completely opt-in. Only those users consenting to the service are profiled and only ever on an anonymous basis.

Phorm's partners include leading ISPs, Publishers, Advertising Networks and Advertisers.

Phorm, under a predecessor holding company, was admitted to the AIM market of the London Stock Exchange in 2004.

For more information, please visit:

Chairman and chief executive officer's statement

Operational performance
2014 was an important year for Phorm with several significant developments. Historically, the Company has incurred substantial costs dealing with delays to deployment by our ISP partners. The requirement to work through the various regulatory and launch issues, together with the internal processes of our ISP partners, has limited the scale and affected the timing of deployments. In order to better address the fast moving online advertising space, where campaigns need to capable of being served at a national scale and with high performance, we developed a cookie-based solution, which leverages our existing technology but can also function with non-ISP data sets. This machine-learning technology is similar to that used by other specialised leading players in the internet personalisation industry but offers a full set of features, which unifies all of our specialised offerings into a full solution.

The key benefit of offering a solution which can function with non-ISP data sets is that Phorm is now able to offer increased national reach, by serving in areas where the ISP's deployment was not yet complete. The machine-learning technology was not originally intended to deliver a market-leading performance on its own, absent the contribution of the extraordinary ISP performance which we were witnessing. However, during the past few months there have been a number of developments, which have led to a substantial optimisation of the Group's business model. The launch of our machine-learning technology has been extremely successful and has had a broad impact across key elements of our business.

The machine-learning technology has dramatically improved the already high levels of performance which we were achieving on advertising campaigns. Most importantly, it has impacted non-ISP performance to the point where it has become extremely competitive on a stand-alone basis. This, in turn, has had a profound impact on our strategy for gaining market entry. Instead of having to wait for the ISP to launch and then being constrained in terms of incurring the cost of supporting a large team whilst waiting for full ISP deployment, without the ability to generate revenue, we are now able to generate revenue almost immediately, in any country, on a reduced cost basis. Accordingly, this opens up the path to reaching agreement with key partners in local markets who already have the necessary sales and support infrastructure in place to deploy Phorm's machine-learning technology. Leading with the non-ISP model, whilst we continue to develop ISP relationships which provide a unique competitive advantage, together with partnering with key strategic players, allows us to accelerate along the path toward sustained profitability and minimise the trade off between cost and geographic scale.

We currently envisage these strategies playing out in two key markets:

In China, we have concluded that partnering with local players is the best way of simultaneously speeding up commercialisation whilst minimising our cost base. We have shifted from a strategy of supporting our own team in the market to one of forming partnerships. This has enabled us to radically reduce our cost base, by approximately US$0.5 million per month, and we are currently in advanced discussions with large, highly credible partners in China, such that we expect to be able to announce our first partnership agreement in the near future.

We have also been able to launch in the largest, most competitive market in the world: the United States of America (the "US"). Over the course of the past year, we have developed a very strong, seasoned team which, when combined with the launch of our machine-learning technology, has enabled us to offer a market leading solution that has been very well received by some of the most selective US partners. Commercial operations started in the US in late April 2015, with a series of test campaigns. The initial results from these campaigns have been most encouraging such that, within a matter of just a few weeks, the first test campaigns have been successfully converted to revenue generating commercial campaigns. These initial results strongly indicate that we should be able to comfortably meet the demands of the US market and we currently expect commercial revenues from the US to grow rapidly in 2015.

In light of the limited resources available, the Company has decided to focus on three core markets that are believed to have the greatest prospects for commercial success, due to their scale and the potential for rapid revenue growth, namely: Russia, China and the US. We have therefore ceased commercial operations in Turkey as the potential return on our investment is greater in each of the aforementioned three core markets. The cost savings arising from the closure of our Turkish operations, of approximately US$0.5 million per month, will be used primarily to support the growth of Phorm's business in the US.

Whilst the US is the newest of the Company's target markets, its potential for rapid growth, due to the size of the well established online advertising market and the sophisticated understanding of advertising technology, is by far the greatest. To support and reinforce our presence in this target market, Phorm has sought out and attracted increased levels of investment from US shareholders and, most importantly, made certain changes to the Board. The Company is delighted by the calibre of Non-Executive Directors that it has been able to appoint: Lex Fenwick, the former CEO of Dow Jones and Bloomberg and Johannes Minho Roth, a highly experienced and respected fund manager, and we currently anticipate announcing a further valuable Board appointment shortly. The new Board members have already had a considerable impact, helping to focus the growth strategy whilst maintaining control of costs.

There has been notable progress with respect to our four key business drivers, namely: users, publishers, advertisers and advertisement performance.

In last year's annual report, the Company stated that it expected to achieve in excess of 50 million opted-in daily users in China. The global peak figure achieved for 2014 was 148 million users, including a peak figure of 109 million users in China, substantially more than anticipated. In addition, the growth in user numbers in both Russia and the US, where we have already achieved peak user numbers of 40 million and 50 million respectively, is most encouraging.

There has been considerable advancement in the advertising technology space over the last 12 months. In particular, the growth of advertising exchanges and their use by publishers has become pervasive. As a result, the Company has worked hard to ensure that it can integrate with both publishers directly as well as with the programmatic platforms of the advertising exchanges. The Company has now successfully integrated with some of the world's largest advertising exchanges and has access to billions of advertising requests on a daily basis.

While the performance of Phorm's advertising platform has been excellent, it has taken the Company longer than anticipated to access large-scale advertising budgets. Many of the leading agencies' advertising budgets are directed towards more established market participants and Phorm has focussed its efforts on seeking to break into these accounts and demonstrate its ability to deliver the high levels of performance required at significant scale.

In Russia, in particular, the Company has now been requested by some of the largest agencies to integrate with their sales desks and, as a result, it is currently expected that both the number and value of campaigns in this country shall increase significantly over the coming months.

In the US, the Company has been most pleased with the speed at which test campaigns have converted to commercial campaigns and is very optimistic about the potential for achieving rapid revenue growth in this market.

Advertisement performance
The development of Phorm's machine-learning technology has resulted in a further step-change in performance. This is on top of the already excellent performance that the Company was achieving with its ISP product and has transformed its cookie-based product offering. Phorm is now able to deliver market-leading performance without the requirement for an ISP. This affords the Company the ability to more rapidly launch in new markets and enabled it to generate revenue whilst it builds its relationships in parallel. In addition, it has also opened up a series of potential licensing opportunities.

Funding and going concern
In 2014, the Company completed fundraisings of, in aggregate, approximately £18.9 million gross, which enabled the business to launch its commercial operations in Russia and to continue to develop opportunities in China, the US and elsewhere.

In March 2014, following the announcement of the Memorandum of Understanding signed with China Telecom, the Company announced that it had successfully completed a placing of £10.0 million gross.

The Company raised a further £2.38 million gross in August 2014 and £4.47 million gross in October 2014, from a combination of existing and new UK and US based investors, including from the Company's Non-Executive Director, Johannes Minho Roth, through his investment fund FiveT Investment Management Limited. This increased exposure to a US investor base is something that the Company predicted in its Annual Report last year and signifies the ongoing confidence of its core investor base in the business.

In April 2015, the Company raised £6.00 million gross, via a placing and subscription, to fund the Group's general working capital requirements. As at 30 June 2015, the Company had a net cash position of £0.9 million, which, at the current over-head run rate, taking account of additional funds due and our ability to manage our working capital, is expected to last until early August 2015. The Company is urgently exploring funding options with a view to securing additional working capital in the short term.

In addition, the Company has made substantial progress in relation to its cost cutting initiatives. The monthly overhead run-rate has been reduced from a high of approximately £2.9 million per month to approximately £1.5 million currently. These cost savings have arisen as a result of the reduction in our operations in Turkey, our move to a partnering model in China and the associated rationalisation of our technical and operating teams.

Nevertheless, the Company's share price performance has suffered, albeit on thinly traded volumes, and is hopeful of a recovery in line with the Group's growing revenues from Russia, the US and China.

The Company is very encouraged by the progress it has made; however, further funds will be required in the near term. The latest business plan, approved by the Board, forecasts the need for such further funding and access to sufficient working capital to enable the Group's operating businesses to reach their full commercial scale. This is the principal risk that the business faces at the current time.

At the date of approval of these financial statements, the Group has yet to secure the additional funding requirements set out in the business plan and is, therefore, not fully-funded at the current time. However, given the success of its recent fund raising activities and the operational progress that has been achieved in 2014 and to date, the Board is confident that this further funding will be achieved, as required.

In preparing these financial statements, the Board has therefore assumed that sufficient further funding will be made available to the Group to enable it to execute its business plan and realise the forecast inflows from its operations in Russia, the US, China and elsewhere.

In common with similar businesses at this stage of their development, and in light of the Group's dependence on further financing being made available to it, either from its existing and potential new shareholders or other providers of finance, the Board considers that the combination of these circumstances represent a material uncertainty that may cast significant doubt upon the Group's ability to continue as a going concern such that it may be unable to realise its assets and discharge its liabilities in the normal course of business.

However, after making due enquiries, and considering the uncertainties described above, the Board has a reasonable expectation that the Group will have access to adequate resources to continue in operational existence for the foreseeable future. Accordingly, the Board continues to adopt the going concern basis in preparing the Group's financial statements.

Further information in respect of the Board's assessment of going concern, including the material uncertainties identified, is set out in the notes to the financial statements and below

Financial report

Results for the year
The Company is pleased to be able to report that it started generating revenue in both Russia and China in 2014. Revenue growth has unfortunately been slower than originally anticipated and the challenges facing Phorm as a foreign company operating in China has resulted in the Company adopting the partnering approach described above.

The revenue performance that the Company has seen in Russia, combined with the excellent start that has been made in the US, provides Phorm and its Board with considerable grounds for optimism in relation to the generation of more significant revenue in 2015.

Total revenue of US$0.4 million was generated for the year ended 31 December 2014 (2013: US$0.3 million). Revenue derived from China, has been accounted for on the basis of cash actually received by the business. The Company has taken this conservative approach for formal reporting of revenues as it minimises any potential issues associated with cash collection.

Operating losses for the year were US$40.2 million (2013: US$45.9 million). The non-cash share-based payment charges for the year were US$2.3 million (2013: US$10.7 million).

Losses after taxation were US$47.9 million (2013: US$46.6 million). Loss per share was US$0.08 (2013: US$0.16).

The Group used US$40.2 million (2013: US$33.1 million) in funding its operating activities.

Financial position
The Group's statement of financial position as at 31 December 2014 showed net liabilities of US$7.5 million (2013: net assets of US$8.4 million) with cash and cash equivalents of US$0.6 million (2013: US$9.7 million). The year on year movement of US$15.9 million is attributable to the loss for the year of US$47.9 million, offset by foreign exchange gains on translation of overseas subsidiaries of US$0.2 million, new share subscriptions of US$29.5 million and a share-based payment of US$2.3 million.

In March 2014, the Company successfully completed a placing of £10.00 million gross. Further share placings and subscriptions were completed in August, October and December for gross amounts of £2.38 million, £4.47 million and £2.04 million respectively.

The net proceeds from our fund raising activities were used for business expansion, capital expenditures, marketing and general working capital purposes.

 Kent Ertugrul

Chief Executive Officer
29 June 2015

Consolidated statement of profit or loss
Year ended 31 December 2014

      Year ended 31 December 2014     Year ended 31 December 2013  
  Note   Before share based payment expense     Share based payment expense     After share based payment expense     Before share based payment expense     Share based payment expense     After share based payment expense  
      $     $     $     $     $     $  
Revenue     351,054     -     351,054     279,750     -     279,750  
Cost of sales     (5,708,984 )   -     (5,708,984 )   (4,066,477 )   -     (4,066,477 )
Gross loss     (5,357,930 )   -     (5,357,930 )   (3,786,727 )   -     (3,786,727 )
Other operating expenses - research and development     (7,004,973 )   (491,676 )   (7,496,649 )   (6,934,168 )   (1,481,076 )   (8,415,244 )
Administrative expenses     (25,517,555 )   (1,806,451 )   (27,324,006 )   (24,427,137 )   (9,232,345 )   (33,659,482 )
Operating loss     (37,880,458 )   (2,298,127 )   (40,178,585 )   (35,148,032 )   (10,713,421 )   (45,861,453 )
Investment income                 11,967                 5,795  
Financing expense                 (320,798 )               (748,008 )
Loss before tax                 (40,487,416 )               (46,603,666 )
Income tax                 -                 -  
Loss for the year                 (40,487,416 )               (46,603,666 )
Loss for the year from Discontinued Operations 3               (7,412,563 )                  
Attributable to equity holders of the Company                 (47,899,979 )               (46,603,666 )
Basic and diluted loss per share ($)                 (0.08 )               (0.16 )

Consolidated statement of profit or loss and other comprehensive income
Year ended 31 December 2014

    Year ended
31 December
    Year ended
31 December
Loss for the year   (47,899,979 )   (46,603,666 )
Other comprehensive income            
Items that may be reclassified subsequently to profit or loss            
Exchange (loss)/gain on translation of foreign operations, net of tax   220,015     (317,902 )
Total comprehensive loss for the year   (47,679,964 )   (46,921,568 )
Attributable to equity holders of the Company   (47,679,964 )   (46,921,568 )

Statements of financial position
31 December 2014

    Group     Company  
Non-current assets                        
Investment in subsidiary         -     13,066,279     16,963,152  
Plant and equipment   677,846     1,211,291     3,356     -  
Total non-current assets   677,846     1,211,291     13,069,635     16,963,152  
Current assets                        
Amounts due from subsidiary undertakings   -     -     64,408,232     36,925,520  
Trade and other receivables   1,857,578     6,181,141     483,893     3,260,657  
Cash and cash equivalents   562,190     9,662,828     10,863     413,393  
Total current assets   2,419,768     15,843,969     64,902,988     40,599,570  
Total assets   3,097,614     17,055,260     77,972,623     57,562,722  
Current liabilities                        
Trade payables   (3,591,617 )   (2,916,160 )   (1,566,978 )   (1,193,223 )
Other payables   (3,457,167 )   (2,104,455 )   (362,316 )   (259,035 )
Provisions   -     (164,864 )   -     (164,864 )
Convertible loan notes   (3,533,766 )   -     (3,533,766 )   -  
Amounts due to subsidiary undertakings         -     (472,183 )   (382,245 )
Total current liabilities   (10,582,550 )   (5,185,479 )   (5,935,243 )   (1,999,367 )
Non-current liabilities                        
Convertible loan notes   -     (3,425,673 )   -     (3,425,673 )
Total liabilities   (10,582,550 )   (8,611,152 )   (5,935,243 )   (5,425,040 )
Net assets/ (liabilities)   (7,484,936 )   8,444,108     72,037,380     52,137,682  
Share capital   307,443,719     277,744,986     224,838,991     195,140,258  
Warrants   623,490     869,430     623,490     869,430  
Translation reserve   (13,287,203 )   (13,507,218 )   143,131     4,621,646  
Accumulated deficit   (302,264,942 )   (256, 663,090 )   (153,568,232 )   (148,493,652 )
Total shareholders' equity   (7,484,936 )   8,444,108     72,037,380     52,137,682  

Statements of changes in equity
Year ended 31 December 2014

Group   Share
    Translation reserve
At 1 January 2014   277,744,986   869,430     (13,507,218 )   (256,663,090 )   8,444,108  
Total comprehensive loss for the year   -   -     220,015     (47,899,979 )   (47,679,964 )
Share-based payment charge   -   -     -     2,298,127     2,298,127  
Issue of new stock   29,698,583   25,268                 29,723,851  
Exercise of warrants   150   (271,208 )   -     -     (271,058 )
At 31 December 2014   307,443,719   623,490     (13,287,203 )   (302,264,942 )   (7,484,936 )
Group   Share
    Translation reserve
At 1 January 2013   239,507,089   659,766     (13,189,316 )   (220,607,981 )   6,369,558  
Total comprehensive loss for the year   -   -     (317,902 )   (46,603,666 )   (46,921,568 )
Share-based payment charge   -   -     -     10,713,421     10,713,421  
Issue of new stock   38,237,897   122,351     -     -     38,360,248  
Charge for warrants   -   87,313     -     -     87,313  
Provision for unsettled equity   -  
    -     (164,864 )   (164,864 )
At 31 December 2013   277,744,986   869,430     (13,507,218 )   (256,663,090 )   8,444,108  
Company   Share
    Translation reserve
At 1 January 2014   195,140,258   869,430     4,621,646     (148,493,652 )   52,137,682  
Loss for the year   -   -     -     (5,074,580 )   (5,074,580 )
Other comprehensive income for the year   -   -     (4,478,515 )   -     (4,478,515 )
Issue of new stock   29,698,583   25,268                 29,723,851  
Exercise of warrants   150   (271,208 )   -     -     (271,058 )
Balance at 31 December 2014   224,838,991   623,490     143,131     (153,568,232 )   72,037,380  
Company   Share
    Translation reserve
At 1 January 2013   156,902,361   659,766     1,536,343     (88,541,906 )   70,556,564  
Loss for the period   -   -     -     (59,786,882 )   (59,786,882 )
Other comprehensive income for the period   -   -     3,085,303     -     3,085,303  
Issue of new stock   38,237,897   122,351     -     -     38,360,248  
Charge of Warrants   -   87,313     -     -     87,313  
Provision for unsettled equity   -   -     -     (164,864 )   (164,864 )
Balance at 31 December 2013   195,140,258   869,430     4,621,646     (148,493,652 )   52,137,682  

Statements of cash flows
Year ended 31 December 2014

  Group   Company  
Year ended 31 December 2014 $
  Year ended 31 December 2013 $   Year ended 31 December 2014 $   Year ended 31 December 2013 $  
Operating loss (40,178,585 ) (45,861,453 ) (4,753,782 ) (59,086,764 )
Depreciation charges 1,230,590   1,157,272   3,014   -  
Loss/(gain) on disposal of plant and equipment 9,058   2,453   -   -  
Allowance for intercompany receivables -   -   -   9,619,249  
Reversal of allowance for intercompany receivables -   -   (9,268,123 ) (8,697,200 )
Impairment of investment in subsidiary -   -   2,913,294   55,092,715  
Impairment of discontinuing operations (7,412,563 ) -   -   -  
Share-based payment expense 2,298,127   10,713,421   -   -  
Increase in trade and other receivables 1,996,139   (1,483,015 ) 614,294   (462,840 )
Increase in trade and other payables 1,863,305   2,360,125   585,129   934,185  
Increase in intercompany payable     -   9,790,780   382,216  
Net cash used in operating activities (40,193,929 ) (33,111,197 ) (115,394 ) (2,218,439 )
Investing activities                
Interest received 11,967   5,795   -   -  
Repayment on settlement of warrants -   -   -   -  
Proceeds on disposal of plant and equipment -   -   -   -  
Purchase of plant and equipment (723,533 ) (1,598,054 ) (6,196 ) -  
Net cash used in investing activities (711,566 ) (1,592,259 ) (6,196 ) -  
Financing activities                
Finance lease interest paid -   -   -   -  
Repayment of obligations under finance leases -   -   -   -  
Proceeds from issue of ordinary shares 31,613,779   35,878,102   31,613,779   35,878,102  
Increase in intercompany loan receivable -   -   (31,613,779 ) (38,342,707 )
Proceeds from issue of secured convertible loan notes -   5,263,605   -   5,263,605  
Secured convertible loan note interest paid     -   -   -  
Repayment of secured convertible loan note -   (2,799,000 ) -   (2,799,000 )
Net cash generated from financing activities 31,613,779   38,342,707   -   -  
Net increase/(decrease) in cash and cash equivalents (9,291,716 ) 3,639,251   (121,590 ) (2,218,439 )
Cash and cash equivalents brought forward 9,662,828   5,877,075   413,393   -  
Effect of foreign exchange changes 191,078   146,502   (280,940 ) 2,631,832  
Cash and cash equivalents carried forward 562,190   9,662,828   10,863   413,393  

Notes to the Financial Statements
Year Ended December 2014

1. Basis of preparation

The financial statements have been prepared in accordance with the historical cost basis except as disclosed in the accounting policies below, and are drawn up in accordance with the provisions of the International Financial Reporting Standards ("IFRS"), International Accounting Standards ("IAS") and Interpretations issued by the International Accounting Standards Board ("Interpretations"), as adopted by the EU.

Adoption of new standards and interpretations

On 1 January 2014, the Group adopted all the new and revised IFRS, IAS and Interpretations, as adopted by the EU that are relevant to its operations and effective from that date. The adoption of these new IFRS, IAS and Interpretations, as adopted by the EU does not result in changes in the Group's accounting policies and has no material effect on the amounts reported for the current and prior years, except as mentioned below.

At the date of authorisation of these financial statements, the following new standard and interpretation has been applied in these financial statements

IFRS 13 Fair Value Measurement
The Group has applied IFRS 13 for the first time in the current year. IFRS 13 establishes a single source of guidance for fair value measurements and disclosures about fair value measurements. The scope of IFRS 13 is broad; the fair value measurement requirements of IFRS 13 apply to both financial instrument items and non-financial instrument items for which other IFRSs require or permit fair value measurements and disclosures about fair value measurements, except for share-based payment transactions that are within the scope of IFRS 2 Share-based Payment, leasing transactions that are within the scope of IAS 17 Leases, and measurements that have some similarities to fair value but are not fair value (e.g. net realisable value for the purposes of measuring inventories or value in use for impairment assessment purposes).

IFRS 13 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions. Fair value under IFRS 13 is an exit price regardless of whether that price is directly observable or estimated using another valuation technique. Also, IFRS 13 includes extensive disclosure requirements.IFRS 13 requires prospective application from 1 January 2013. In addition, specific transitional provisions were given to entities such that they need not apply the disclosure requirements set out in the Standard in comparative information provided for periods before the initial application of the Standard. In accordance with these transitional provisions, the Group has not made any new disclosures required by IFRS 13 for the 2012 comparative period. Other than the additional disclosures, the application of IFRS 13 has not had any material impact on the amounts recognised in the consolidated financial statements.

In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirety, which are described as follows:

- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date;

- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly; and

- Level 3 inputs are unobservable inputs for the asset or liability.

At the date of authorisation of these financial statements, the following new standards and interpretations which have not been applied in these financial statements were in issue but not yet effective (and in some cases, had not yet been adopted by the EU):

IFRS/Amendment Application Date of Standard Application Date for Group
IAS 32 amendment: Offsetting Financial Assets and Financial Liabilities 1 January 2014 1 January 2014
IAS 36 amendment: Recoverable Amount Disclosures for Non-Financial Assets 1 January 2014 1 January 2014
IFRS 10 Consolidated financial statements 1 January 2014 1 January 2014
IFRS 11 Joint arrangements 1 January 2014 1 January 2014
IFRS 12 Disclosure of interest in other entities 1 January 2014 1 January 2014

The Directors do not anticipate that the adoption of those new standards and interpretations effective for 2014 will have a material impact on the Group's financial statements in the period of initial application when the relevant standards come into effect.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries.

Subsidiaries are all entities over which the Company has the power to govern their financial and operating policies, generally accompanying a shareholding of more than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisable are considered when assessing whether the Group controls another entity.

The financial statements of the subsidiaries are prepared for the same reporting period as the Company using consistent accounting policies. In preparing the consolidated financial statements, all inter-Company balances and transactions, income and expenses and profit and losses resulting from intra-group transactions have been eliminated in full.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group.

In the Company's financial statements, investments in subsidiaries are carried at cost less any impairment in net recoverable value that has been recognised in profit or loss.

2. Going concern

In accordance with their responsibilities, the directors have considered the appropriateness of the going concern basis, which has been used in the preparation of these financial statements.

In making this going concern assessment, the Directors have had regard to the following matters:

- the Group's track record of successful fund raising from shareholders and other investors, as evidenced in the period 2008-2014;

- the potential opportunity to raise further finance in local markets; and

- the commercial progress being made internationally.

During the course of 2015 to date, we have started to introduce the Company to the US capital markets. Response to our progress has been strong as demonstrated by the participation of several US investors in the £6.25 million (US$9.58 million) funding announced in January 2015 and the £6.0 million (US$8.9 million) funding announced in April 2015. We expect this exposure to the US investor base to increase significantly during the course of this year.

As a result of the extended delays involved in reaching the current operational stage, the Company has seen a substantial decrease in its stock price. It has nevertheless retained the support of its two largest shareholders who currently account for more than 50% of the Company's shareholding.

3. Loss for the year from Discontinued Operations

In 2015, the Group undertook a major cost reduction programme that resulted in the prioritisation of those markets where commercial traction is being achieved. As a result, the Group scaled back its operations in Turkey significantly and has moved it towards a remote cookie based platform.

Pursuant to the provisions of IFRS 5 the Turkey operations have been classified as discontinued.


Discontinued operations      
Revenue   725,173  
Cost of sales   (4,290,536 )
Gross Loss   (3,565,363 )
Administrative expenses   (3,847,200 )
Operating Loss from discontinued operations   (7,412,563 )
Finance Costs   -  
Loss before tax from discontinued operations   (7,412,563 )
Income Tax   -  
Loss for the year from discontinued operations   (7,412,563 )

This is arrived at after charging:

Depreciation   20,306
Impairment of Assets   1,981,173

Contact Information