report and financial statements year …...online merchandising and ecommerce personalization for...

REPORT AND FINANCIAL STATEMENTS

YEAR ENDED 31 DECEMBER 2017

COMPANY NUMBER: 8904529

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OVERVIEW STRATEGIC REPORT GOVERNANCE FINANCIAL STATEMENTS

A T A G L A N C E2 0 1 7 H I G H L I G H T S

£ 1 3 . 6 2 2 £ 6 2 K

REVENUE

(2016: £3.6M)

NEW LOGOS

(2016: 13)

AVERAGE SAAS

REVENUE PER LOGO

(2016: £41K)

OVERVIEW

AT A GLANCE

WHAT WE DO

ATTRAQT’S JOURNEY

STRATEGIC REPORT

INTERIM EXECUTIVE CHAIRMAN’S STATEMENT

BUSINESS MODEL

MARKET OVERVIEW

COMPETITIVE STRATEGY

GROWTH STRATEGY

KEY PERFORMANCE INDICATORS (KPIS)

RISK OVERVIEW

BOARD OF DIRECTORS

E X E C U T I V E T E A M

C H I E F F I N A N C I A L O F F I C E R ’ S S TAT E M E N T

G O V E R N A N C E

C O R P O R AT E G O V E R N A N C E R E P O R T

A U D I T C O M M I T T E E R E P O R T

R E M U N E R AT I O N C O M M I T T E E R E P O R T

D I R E C T O R S ’ R E P O R T

I N D E P E N D E N T A U D I T O R ' S R E P O R T

F I N A N C I A L S T A T E M E N T S

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O N S I T E S E A R C HUnderstanding customer search behavior is key to executing retail strategy. We have been an onsite search leader for more than 15 years, offering high relevance search results – including synonym translation, auto-correction and real-time suggestions as a customer types – and the ability to search in more than 40 languages.

O N L I N E M E R C H A N D I S I N GWhatever a retailer’s objective, ATTRAQT makes sure an online shop always shines. With the ability to adjust online merchandising to fulfil a targeted strategy or even create theme-based campaigns, through ATTRAQT’s automated or human-guided interface, we make sure products are displayed just how a retailer wants them.

E C O M M E R C E P E R S O N A L I Z A T I O NWhen you add that little extra touch, customers notice and respond. Through extras such as personalized adjustments and personalized recommendations, we enable retailers to take up-sell and cross-sell to whole new levels.

W H A T W E D O

ATTRAQT provides cloud-based SaaS solutions that maximize the conversion of browsers into buyers via onsite search, online merchandising and eCommerce personalization for online retailers. With easy-to-use interfaces and effective technology, ATTRAQT helps retailers make their online shop as attractive and successful as their brick-and-mortar stores.

ATTRAQT’s three core best of breed technologies are feature rich and are built in to both our Fredhopper and Freestyle Merchandising solutions:

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A T T R A Q T ’ S J O U R N E Y

H I S T O R Y

Our founders realized that the right onsite search technology was central to helping customers truly embrace online shopping, and so launched a new solution for the market. That technology was known as Locayta, and it remains integral to our solutions today.

With online shopping well established, customers began to demand uniqueness and value from their shopping experiences. Retailers were trying to replicate traditional merchandising techniques in an online environment, and also trying to encourage customers to respond as instinctively to special offers on line as they did in stores. And so, we turned our attention to these key areas where online retailing was failing to keep pace with the high street.

We launched Freestyle Merchandising, a sophisticated cloud-based SaaS solution that today powers onsite search, online merchandising and eCommerce personalization for many of the world’s leading brands.

ATTRAQT was born. This was an exciting year for us as we also listed on AlM.

ATTRAQT acquired Fredhopper, a company that has achieved impressive growth since 2000 by investing early in the untapped potential of onsite search. An integral part of our solution portfolio, combining unique search, merchandising and personalization technologies with an innovative, enterprise level interface.

As eCommerce continues to evolve, we’ll be innovating and introducing disruptive new technologies to drive online sales, increase conversion and enhance the shopping experience for retail customers.

‘ATTRAQT’ originates from the key ways a retailer can draw people to its products, particularly through onsite search, online merchandising and eCommerce personalization.

The ‘Q’ represents a color wheel, familiar in merchandising and retail, with the color of the Q-tail switched to represent the added control provided by our solutions.

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I N T E R I M E X E C U T I V E

C H A I R M A N S S T A T E M E N T

In what has been a milestone year, ATTRAQT’s vision and strategy remains the same, to become the eCommerce acceleration platform of choice for online retailers across the globe. We continue to service an enviable client list, providing support for a range of leading online retailers and household names including ASOS, House of Fraser and The North Face.

D R I V I N G B E S T O F B R E E D A C R O S S

A T T R A Q TThe acquisition of Fredhopper has been a great success and the team has worked hard to ensure that both the integration, and the period following, have gone smoothly with no disruption to customers. I would like to thank the team for their support during this period.

The technologies and competences of the two solutions are extremely complementary, and we have an opportunity to benefit further from the wider capabilities of these. As such, we have begun to converge some of the underlying technology, for example enhancing the Fredhopper reporting capability by utilising existing Freestyle Merchandising functionality and improving the Freestyle Merchandising data importing by employing the Fredhopper data services platform.

We also have initiatives to leverage best practice in terms of purchasing, operational management and client on-boarding across ATTRAQT.

M A N A G E M E N T C H A N G EPost period end, André Brown stepped down as Chief Executive Officer and I assumed the role of Interim Executive Chairman. André was an original founder of the business and led ATTRAQT for the past 15 years. The Board would like to take this opportunity to again thank André for his considerable contribution.

I am pleased to report that ATTRAQT benefits from a strong and experienced senior management team, supported by very capable middle managers, who have been encouraged to take greater ownership for the performance and results of the business as we grow.

I am leading a process to identify and appoint a new chief executive with the experience and capability to lead the enlarged company and the next phase of ATTRAQT’s evolution.

R E V I E W O F S A L E S & O P E R A T I O N SThe momentum of new wins has continued with 22 new logos in the year including Arc’teryx, Auchan, Beauty Bay, Hunter Boots and The White Company. The average SaaS revenue per logo has increased by 51% to £62k (2016: £41k), as ATTRAQT’s solutions are taken up by larger, enterprise-grade clients. The ability to attract this type of client was a key part of the rationale behind the Fredhopper acquisition and has been an important addition to our progress in 2017.

ATTRAQT has also seen a healthy increase in the value of extensions – for example rolling out into customers’ websites covering additional geographies, upgrades – offering incremental functionality and capability, and renewals over the period, demonstrating the importance of increased function capability to our clients.

ATTRAQT remains committed to the ongoing innovation of its products and services, ensuring that we continue to offer the most innovative and valuable solutions for our clients in the market. Our product

OVERVIEW GOVERNANCE FINANCIAL STATEMENTSSTRATEGIC REPORT

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roadmap is a key component in helping to minimise the risk of customer attrition and provides incremental revenue opportunities for the Company.

We have also increased focus on minimising attrition and improving customer service and satisfaction through the hiring of additional Customer Success Managers.

I am pleased to report that the performance of managed services through the high demand peak trading period was very good, with requests across our two solutions serving growth of 115% on Black Friday, when compared with the same holiday in 2016. My thanks to the Company’s Operation Team.

I N T E R N A T I O N A L G R O W T HOver the period ATTRAQT has contitinued to build its presence steadily in many of its key regions internationally, with significant new client wins globally. We believe that there is substantial untapped opportunity in Continental Europe where we have recently won an important new contract, which is forecast to go live in the first quarter 2018.

In North America we continue to focus on building and converting the new business pipeline. Although it has taken longer than expected to gain significant traction in this region, ATTRAQT recognizes that there is a sizeable long-term opportunity in North America and we remain committed to expanding our client base there.

M A R K E T D E V E L O P M E N T SOnline retail is a highly competitive industry that is constantly evolving as retailers continue to develop their eCommerce strategies, looking for new ways to drive conversion rates, increase average order values, raise retention rates and improve customer loyalty. These challenges are becoming ever more important as shoppers’ transition from brick and mortar stores and onto online.

ATTRAQT’s online merchandising solutions enable its clients to achieve success in these areas through its uniquely feature-rich and highly evolved tools. We continually monitor the market for trends and enhancements to incorporate into our platforms to ensure they meet all our clients’ current and future needs.

We recognise that, over time, some eCommerce

platform vendors may seek to grow their functionality. Whilst this represents a potential threat to “best of breed” technology vendors such as ATTRAQT we do not believe that any vendor is able to offer the functionality and expertise that matches the breadth, richness and practical application experience that we are able to offer. Our response to this potential threat is to maintain a close relationship with leading customers (large and small) and to ensure that we are constantly innovating and evolving our product offering to meet their demands and needs. Much of this innovation will derive from within ATTRAQT but we are also open to working and partnering with innovative third party technology vendors. We also believe that there are opportunities to develop mutually beneficial go-to-market partnerships with eCommerce platform vendors and system integrators and this is an area of investigation and focus in the coming months.

Within the market we are seeing evidence that some leading eCommerce retailers are exploring and adopting a “headless” architecture that allows them to create a unique solution by integrating a number of best of breed technologies. The different elements compromising their eCommerce solution are managed separately, and not impacted by a change elsewhere in the stack.

ATTRAQT’s solutions are well suited to this approach.We continue to strive to ensure that our product offerings are the best in the market and that our customers will continue to see the value in choosing ATTRAQT as a technology partner.

P L A T F O R M E N H A N C E M E N T S &

P R O D U C T D E V E L O P M E N TATTRAQT is committed to innovation and we are continually developing our product and service offering to ensure that we are offering our customers the most compelling solutions. During the period ATTRAQT made several advancements, including the launch of Fredhopper 8.2.

In the coming year, we expect to enhance our platform further with upgrades to our personalization and reporting capabilities, data services platform and global site management capability, plus the launch of visual recommendation. In addition, as part of ATTRAQT’s heightened focus on supporting and nurturing current clients we will be introducing premium support functions later in 2018.

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Following the acquisition of Fredhopper in March 2017, ATTRAQT has two product offerings: Freestyle Merchandising and Fredhopper, each of which addresses different segments within the eCommerce market. Going forward we anticipate that we will maintain these two market positions but will seek to converge and share underlying technologies and components across the two product offerings. This will deliver benefits in terms of the cost and quality of ongoing support and maintenance. This approach will provide

ATTRAQT’s customers with underlying technology modules which are best of breed, as well as a front-end user system which suits their particular needs and resources. As well as being positive for our customers, this convergence will allow ATTRAQT to accelerate the rate of innovation and new product introduction.

O U T L O O KeCommerce sales are set to increase both in the UK and globally over the years ahead. Our customers are well aware that our technology enables them to increase revenues, boost conversion rates, raise average order values and improve retention rates.

The period ahead will be focused on driving the underlying operational effectiveness and performance of the business. Whilst the fundamentals of the business are good and we have a solid platform to build upon, we will continue to focus on ensuring the business is fit and ready for its next phase of growth.

The key to success for 2018 will be new client wins and further upsell to current customers whilst minimising attrition. We have put in place the tools to enable this strategy and look forward to delivering on it in the period ahead.

N I C K H A B G O O D

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“ T H E M O M E N T U M O F N E W W I N S H A S C O N T I N U E D W I T H 2 2 N E W L O G O S I N T H E Y E A R I N C L U D I N G A R C ’ T E R Y X ,A U C H A N , B E A U T Y B A Y, H U N T E R B O O T S A N D T H E W H I T E C O M P A N Y.

T H E A V E R A G E S A A S R E V E N U E P E R L O G O H A S I N C R E A S E D B Y 5 1 % T O £ 6 2 K ( 2 0 1 6 : £ 4 1 K ) , A S A T T R A Q T ’ S S O LT I O N S A R E T A K E N U P B Y L A R G E R , E N T E P R I S E - G R A D E C L E N T S .”

N I C K H A B G O O DI N T E R I M E X E C U T I V E C H A I R M A N

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B U S I N E S S M O D E L

ATTRAQT provides cloud-based SaaS solutions that maximize the conversion of shoppers into buyers via onsite search, online merchandising and eCommerce personalization for online retailers. With easy-to-use interfaces and effective technology, ATTRAQT helps retailers make their online shop as attractive and successful as their brick-and-mortar stores.

ATTRAQT provides the following benefits to retailers:

• Commercial gain from increased conversion rates and higher average order values. • Access to three technologies in one: onsite search, online merchandising and eCommerce personalization. • Advanced role and rights management system, ensuring all changes are approved by the right people • Controlled production environments with publishing management • Increased productivity across eCommerce team. • SaaS product deployed in scalable cloud solutions • Scalable server environments to meet different business loads • Independence for eCommerce team, removing the reliance on internal IT.

ATTRAQT’s three core best of breed technologies are feature rich and are built in to our solutions Fredhopper and Freestyle Merchandising:

O N S I T E S E A R C HUnderstanding customer search behavior is key to executing eCommerce strategy. ATTRAQT has been an onsite search leader for more than 15 years, offering retail customers high relevance eCommerce site search, including real-time feedback as they type and search in more than 40 languages.

ATTRAQT’s onsite search solutions cover all of the most common search challenges:

• Spelling errors • Language stemming • Singular/plural disagreement • Complex or compound word descriptions • Partial matches • Synonyms

ATTRAQT lets you rank products based on a mixture of parameters. You can combine page views, gross margin and stock levels to move a product or row up or down in the results, and use season, product type and user gender to push the right products forward.

In online shopping, every second counts. The faster and easier a retail customer’s onsite search efforts, the more they’ll stick around and buy. ATTRAQT utilizes targeted suggestion functionalities that steer customers to the right products and improve online experience.

O N L I N E M E R C H A N D I S I N GBrick-and-mortar stores use visual merchandising to catch shoppers’ eyes and encourage them to buy. With online merchandising, retailers can create a digital aisle as attractive and enticing as an in-store shelf.


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ATTRAQT offers maximum flexibility for retailers through the following:

• Display content and products based on marketing, business or merchandising strategies. • Implement automated merchandising strategies and let the system take control. • Manage an easy-to-use visual drag & drop tool that operates in real time, ensuring the ability to react quickly to trends. • Tailor different products, content and algorithms according to region or country. • Handpick products and content to be displayed on category and product detail pages. • Apply different merchandising and content strategies for mobile, tablet, and/or desktop.

E C O M M E R C E P E R S O N A L I Z A T I O NWhen a retailer adds that little extra touch, customers notice and respond. With ATTRAQT’s personalized adjustments and personalized product recommendations, retailers can take up-sell and cross-sell to whole new levels.

Personalization has been a buzzword in eCommerce for years. But what does it actually mean? The fact is, each type of retailer views personalization differently. Every eCommerce store - and every shopper - needs a particular solution that suits their specific needs. Therefore, each type of retailer needs a different eCommerce personalization solution. ATTRAQT offers outstanding website personalization options, based on three pillars:

P E R S O N A L I Z E D R E C O M M E N D A T I O N S

Tracking customer journey in real time, calculating preference scores and reacting on a case-by-case basis. Plus, the ability to provide recommendations for anonymous users.

P R E S C R I P T I V E P E R S O N A L I Z A T I O N

ATTRAQT empowers online retailers by enabling them to blend automation with their own creativity to create and implement unique merchandising strategies which deliver relevant experiences for their customers.

S E G M E N T A T I O N

Personalize for target segments with different offers in search, product rankings, online merchandising, facets, redirects and recommendations.

A T T R A Q T ’ S A R R M O D E L

A T T R A Q T ’ S R E V E N U E M O D E LATTRAQT’s revenue model is based on a recurring monthly service fee plus a one-off set-up fee and additional follow-on project fees. A client’s contract is for a minimum of 12 months, with larger clients signing up for a longer period of two years+.

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Online retail is a highly competitive industry that is constantly evolving as retailers continue to develop their eCommerce strategies, looking for new ways to drive conversion rates, increase average order values, raise retention rates and improve customer loyalty. These challenges are becoming ever more important as shopper’s transition, and / or combine shopping, across brick and mortar stores to online.

We continually monitor the market for trends and enhancements to incorporate into our solutions, and we recognise that over time, some retailers may seek to grow their eCommerce offering. This could be in the following ways:

• Channels – such as developing an eCommerce app • Countries – launching new international eCommerce sites • Functionality advancements – requiring “best of breed” technology

For these types of developments, the retailer requires trusted technology partners. ATTRAQT is formed in such a way to meet these requirements – shown through its Fredhopper and Freestyle Merchandising solutions.

ATTRAQT maintains a close relationship with its customers, ensuring that we are constantly innovating and evolving the product offering to meet demands and needs. This innovation is predominantly driven from within ATTRAQT, but also through working and partnering with innovative third parties. There are opportunities to develop mutually beneficial go-to-market partnerships with eCommerce platform vendors and this is an area of investigation and focus in the coming months.

ATTRAQT has seen evidence that the architecture landscape of the market is shifting, with retailers now exploring a “headless” approach. This allows a retailer to create a unique solution by integrating a number of best of breed technologies.

To best show this we can compare an example of a typical architecture stack, where ATTRAQT’s solutions require a feed directly from the retailers eCommerce platform provider:

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With an example of a “headless” architecture stack:

This “headless” approach allows the retailer to manage each area of its technology stack separately, therefore each element is not impacted by a change elsewhere in the stack. ATTRAQT’s solutions are well suited to this approach.

PIM: Product Information ManagementERP: Enterprise Resource PlanningCMS: Content Management System

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C O M P E T I T I V E S T R A T E G Y

ATTRAQT’s competitive strategy includes:

1 . T H R E E C O R E T E C H N O L O G I E S I N O N E S O L U T I O N

Onsite Search Online Merchandising eCommerce Personalization

2 . I N N O V A T I O N A N D P R O D U C T D E V E L O P M E N T

ATTRAQT continues to develop its capabilities and evolve through innovation and the introduction of disruptive new technologies. Therefore, keeping ahead of the competition and increasing the value ATTRAQT delivers to its customers, making its position within a retailer more secure.

3 . S P E C T R U M O F R E T A I L ( T Y P E )

ATTRAQT has clients across the spectrum of retail, from luxury department stores such as Harvey Nichols, to home improvements by the likes of Screwfix. ATTRAQT’s wide range of clients continues to grow and puts ATTRAQT in an experienced position when up against competition.

4 . S P E C T R U M O F R E T A I L ( S I Z E )

ATTRAQT has clients across both enterprise and mid-size retailers – for example online fashion retailers ASOS or PrettyLittleThing.com. We continue to see adoption of ATTRAQT solutions from all sizes of business. With the Fredhopper offering now forming a strong advantage in the enterprise scale market.

G R O W T H S T R A T E G Y

ATTRAQT’s objective is to become the eCommerce acceleration platform of choice for online retailers across the globe, and continues to execute against its scalable growth strategy, founded on four elements.

I N V E S T I N C U S T O M E R S U C C E S S , R E T E N T I O N A N D U P S E L L

To ensure that our customers make full use and derive full benefit from our platforms. ATTRAQT have hired additional account management resources and have invested in a new customer management system.

A F O C U S O N S A L E S A N D M A R K E T I N G

To grow the client base and volume of recurring revenue. ATTRAQT continues to develop the sales and marketing functions, with a 2018 bookings plan of 40% upsell and 60% new sales

I N V E S T M E N T I N P R O D U C T D E V E L O P M E N T To simplify, automate and reduce the time and cost of the on-boarding process.

E X T E N D T H E C A P A B I L I T I E S O F T H E A T T R A Q T S O L U T I O N SThrough continued investment in research and development, ATTRAQT are able to add new features and to initiate new revenue streams.

ATTRAQT has an exciting development roadmap for 2018, including the launches of Personalized Recommendations, Visual Recommendations, and Reporting & Insights. Plus, increased efficiencies for the Freestyle Merchandising solution due to an update of the Data Services Platform.


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K E Y P E R F O R M A N C E I N D I C A T O R S ( K P I s )

ATTRAQT uses KPIs to measure progress in the business. The KPIs were revisited following the acquisition of Fredhopper BV in March 2017, with the impact of this shown here:

R E V E N U E G R O W T H

Our goal is to deliver double digit organic revenue growth per year.

Year Revenue Growth %2017 £13.6m 278%*2016 £3.6m 24%2015 £2.9m 40%

*Post Fredhopper BV acquisition

A D J U S T E D E B I T D A

( P R E - E X C E P T I O N A L S )

Our goal is to have positive EBITDA.

Year Adjusted EBITDA1 2017 £(0.3)m2016 £(1.6)m 2015 £(0.2)m

1 Adjusted EBITDA refers to earnings before interest, tax, depreciation, amortization (see note 6) with exceptional items being those set out in note 5.

E X I T R A T E - D E C E M B E R S A A S R E V E N U E

( T O T A L R E V E N U E L E S S S E R V I C E S ) X 1 2

Year Exit Rate 2017* £15.1m2016 £3.2m

* Post Fredhopper BV acquisition

L O G O S ( A U N I Q U E T R A D I N G E N T I T Y )

Our goal is to increase logos year-on-year.

Year New Logos2017 222016 13

Closing Logos:

Year Logos2017* 1882016 78*126 added as a result of the Fredhopper BV acquisition

A V E R A G E S A A S R E V E N U E P E R L O G OOur goal is to win bigger logos and upsell to our existing logos.

Year Av SaaS revenue per logo2017 £62k2016 £41k

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R I S K O V E R V I E W

P R I N C I P A L R I S K S A N D U N C E R T A I N T I E S

C O M P E T I T I V E R I S K

The growth in eCommerce has resulted in a significant increase in software companies seeking to supply online retailers with enabling technology. ATTRAQT aims to mitigate this risk by maintaining a close relationship with leading customers, reinvesting in new product features and innovation, delivering best-in-class customer support, enhancing brand recognition and service delivery.

The loss of key clients is always a potential threat. However, the ATTRAQT seeks to mitigate this risk in several ways:

a. Working closely with clients on the product innovation roadmap to ensure ATTRAQT technology provides competitive advantage to them; b. Investment in extensive client support and training to ensure users are able to use the solutions effectively; c. Client contracts for a minimum of 12 months or longer with automatic annual renewals.

P L A T F O R M O U T A G E

As a provider of a SaaS service, ATTRAQT relies on its hosting partners to provide an uninterrupted service. This risk is mitigated by partnering with a best-of-breed cloud computing provider (Amazon Web Services), the architecture of which facilitates quick recovery in the event of a single data region failure.

R E C R U I T M E N T A N D R E T E N T I O N

As with any fast-growing software business, ATTRAQT’s growth strategy is predicated on hiring people who will be effective in realizing its growth ambitions. ATTRAQT is committed to the delivery of a comprehensive program of formal and informal learning and development opportunities aligned to the needs and goals of the business.

R E T A I L S E C T O R E X P O S U R E

Due to the nature of the technology ATTRAQT offers, our customers are predominantly in the retail sector.A widespread downturn in the economy could put pressure on capital expenditure budgets for software spending if overall retail volumes dropped, which could result in early termination of customer contracts and deter new customers from using ATTRAQT’s services.

ATTRAQT seeks to mitigate such risks by:

a. Signing clients on 12-month contracts, and b. Continually considering new market opportunities.

T E C H N O L O G I C A L R I S K

ATTRAQT operates in an industry where competitive advantage is heavily dependent on technology. It is possible that technological development may reduce the importance of ATTRAQT’s function in the market. To remain competitive, we continue to enhance and improve the responsiveness, functionality, accessibility and other features of our solutions, services and technologies.

D A T A P R I V A C Y

ATTRAQT handles the personal data of its customers and prospective customers, suppliers, contractors, partners and employees. ATTRAQT is therefore affected by the General Data Protection Regulation (“GDPR”), a new for European law with direct effect across the European Union, including the UK. GDPR builds upon, extends, and enhances the existing data protection laws. GDPR comes into force at the end of May 2018.


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ATTRAQT is committed to complying with all of its data protection obligations and has a compliance program underway for GDPR. All areas of the company that handle personal data have been identified and reviewed. Where necessary ATTRAQT will be upgrading security measures, improving processes and disclosures, plus putting in place new contracts.

Other proposed legislation could impose additional requirements and prohibit the use of certain technologies, such as those that track individuals’ activities on web pages or record when individuals click on an in-email link. Such laws and regulations could restrict customers’ ability to collect and use email addresses, web browsing data and personal information, which may reduce demand for its products.

F O R E I G N E X C H A N G E R I S K

ATTRAQT has exposure to foreign exchange rate risk due to the nature of its operations and cost base. ATTRAQT constantly monitors the currency market and adjusts forecasts based on expected rates.

I N T E L L E C T U A L P R O P E R T Y

ATTRAQT’s intellectual property rights are important assets, of which rely on a combination of copyright, registered and unregistered trademarks, registered domain names, database rights and the law protecting confidential information to define and protect its rights to brands, technologies and databases that are critical to its ability to compete in the online comparison market.

ATTRAQT discloses proprietary knowledge, information and technology to third parties under licensing or other agreements. There is always a possibility that such a party may misappropriate or challenge ATTRAQT’s right to such knowledge, information and technology.

To the extent that ATTRAQT’s brands, technologies and databases are not protected by intellectual property rights, third parties, including competitors, may be able to commercialize or otherwise use ATTRAQT’s brand, technologies and/or databases without compensating.

ATTRAQT also seeks to maintain certain intellectual property as trade secrets. The security of its trade secrets could be compromised by contractors or outside parties, or intentionally or accidentally by its employees, which would cause ATTRAQT to lose part of its competitive advantage. Any misappropriation of intellectual property could have a materially adverse effect on business, financial condition or operating results.

Furthermore, legal action may need to be taken to enforce intellectual property or to protect trade secrets. Defending such claims may result in substantial costs and the diversion of resources and management attention and there can be no guarantees as to the outcome of any such litigation, or that it can be effectively used to enforce the ATTRAQT’s rights.

E R I C D O D D

C H I E F F I N A N C I A L O F F I C E R

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B O A R D O F D I R E C T O R S



Nick joined ATTRAQT in 2015 as a Non- Executive Director, and became Chairman the following year. In January 2018 Nick became Interim Executive Chairman while ATTRAQT undertakes the search for a new Chief Executive Officer.

Following a successful executive career with GKN, Mars Corporation and MasterCard, Nick moved into private equity and is the Founder and Managing Partner of Azini Capital Partners LLP, a London based private equity firm with a track-record of successful investments in growth stage private and public technology companies.

Nick has a Masters Degree in Mechanical Engineering (M.Eng) from the University of Bristol.


E R I C D O D D

Eric Dodd has over ten years of experience in a CFO role and joined ATTRAQT in 2017 from lptor Supply Chain Systems UK Limited, a private equity-backed software and services business.

Eric has extensive public company experience, having been CFO at KBC Advanced Technology plc, an oil-focused technology services business, from 2015 until its successful sale to Yokogawa Electric Corporation in April 2016.

Eric qualified as a Chartered Accountant with Deloitte, has an MBA from London Business School and a BEng from Loughborough University.

N O N - E X E C U T I V E D E P U T Y C H A I R M A N

I V O R D U N B A R

Ivor is an extremely experienced and proficient investment banker, having spent most of his professional career in the City including 13 years with Barclays de Zoete Wedd, followed by 16 years at Deutsche Bank. At Deutsche Bank Ivor was Head of Global Capital Markets, Co-Head of Investment Banking and a member of the Executive Committee of Deutsche Bank's corporate and investment banking division. Ivor is a capital markets specialist and has had experience advising top Government figures including the UK Treasury.

Ivor also holds roles as Chairman of Project Trust (an educational charity) and non-executive board member of Amara Living Ltd (an online retailer).


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I N D E P E N D E N T N O N - E X E C U T I V E D I R E C T O R

E D W A R D E W I N G

In a career spanning three decades, Edward has worked extensively as a senior executive in the technology, media and telecommunications sectors across management, sales and product/service development roles.

Edward’s previous roles include working for Apple in Europe and the US, as Strategic Planning and Programme Director for Scoot.com plc; and managing sales and marketing in Northern Europe for Quark Inc. In addition, he was responsible for establishing the digital division for global publisher Boat International Media, including successfully building and launching boatinternational.com establishing it as a leading online market place for superyachts.

Along with advising a number of clients on strategy and business development, Edward has a portfolio of companies based in North Norfolk.

N O N - E X E C U T I V E D I R E C T O R

R O B E R T F E N N E R

Robert has been a partner in the international law firm Taylor Wessing LLP since 2005, and a solicitor for 28 years. He is a corporate lawyer specializing in advising companies on all aspects of corporate law including listings and mergers & acquisitions.

Robert advises companies at all stages of their development whether they be large multinationals or younger growing businesses and has many years of experience advising on listed company transactions.

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T H E E X E C T E A M



Nick joined ATTRAQT in 2015 as a Non- Executive Director, and became Chairman the following year. In January 2018 Nick became Interim Executive Chairman while ATTRAQT undertakes the search for a new Chief Executive Officer.

Following a successful executive career with GKN, Mars Corporation and MasterCard, Nick moved into private equity and is the Founder and Managing Partner of Azini Capital Partners LLP, a London based private equity firm with a track-record of successful investments in growth stage private and public technology companies.

Nick has a Masters Degree in Mechanical Engineering (M.Eng) from the University of Bristol.


E R I C D O D D

Eric Dodd has over ten years of experience in a CFO role and joined ATTRAQT in 2017 from lptor Supply Chain Systems UK Limited, a private equity-backed software and services business.

Eric has extensive public company experience, having been CFO at KBC Advanced Technology plc, an oil-focused technology services business, from 2015 until its successful sale to Yokogawa Electric Corporation in April 2016.

Eric qualified as a Chartered Accountant with Deloitte, has an MBA from London Business School and a BEng from Loughborough University.

C H I E F C O M M E R C I A L O F F I C E R

J O H N R A A P

In early 2016, John joined Fredhopper as Managing Director. His major focus was building the Marketing & Sales presence and actively supporting the Fredhopper sales process. Following ATTRAQT’s acquisition of Fredhopper in March 2017 John became CCO of ATTRAQT.

John’s career includes more than 18 years’ experience in the European eCommerce and digital marketing industry.

Prior to joining Fredhopper, John successfully established & managed various pan-European & regional sales organizations at companies such as lntershop, Scene 7, Adobe, Jive and SDL.


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V P N O R T H A M E R I C A

B E R N A D I N E B R E N A U LT

Bernadine joined ATTRAQT in 2008, before the launch of the Freestyle Merchandising platform and was previously Chief Operating Officer of ATTRAQT. During her time at ATTRAQT she has gathered experience with sales support, on-boarding, client support and product management and in 2017 Bernadine moved in to the role of VP North America, based in Chicago, to oversee ATTRAQT’s expansion in the US.

Bernadine has worked to design, deliver and support technology solutions for the past 14 years since getting her BSc degree with majors in Computer Science and Computational Applied Mathematics.

C H I E F T E C H N O L O G Y O F F I C E R

P E T E R T H O M A S

Peter has more than 30 years’ experience in the software technology sector, with over two decades spent delivering scalable online software and services, including time at Oracle.

Peter joined Fredhopper in 2016 as CTO. Following ATTRAQT’s acquisition of Fredhopper in March 2017 Peter remained CTO, where his main responsibilities include product development and client delivery services.

Peter has a wealth of experience in business across public and private companies. Previously he was CTO of the cloud division for IRIS Software and Director of Development at Betfair across UK, Romania and Portugal.

C H I E F I N F O R M A T I O N O F F I C E R

D A V I D P H I L L I P S

David, has more than 25 years’ experience in the software sector, including almost 10 years within eCommerce software.

David joined ATTRAQT in 2013 as CTO. Following ATTRAQT’s acquisition of Fredhopper in 2017, he became CIO. His main responsibilities lie in Cloud Engineering and Operations, Change Management and Internal Systems.

David’s extensive business experience includes having founded several of his own companies, including M486 Ltd and Cogenta Ltd, as well as holding senior roles within established public companies.

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S T A T E M E N T

Total revenue increased by £10.0m to £13.6m (2016: £3.6m) reflecting the acquisition of Fredhopper, the addition of new clients, and service upgrades and renewals from existing ones.

Revenue comprised of £12.3m SaaS revenue, which is largely of a recurring nature and £1.3m of services revenue.

Gross profit was £9.4m an increase of £6.3m. ATTRAQT’s gross margin decreased to 69 per cent (2016: 86 per cent), due to the mix with Fredhopper’s lower historic gross margin of 59 per cent.

Operating costs were £9.7m (2016: £4.6m) reflecting the increase in size ATTRAQT following the acquisition. Adjusted EBITDA (pre-exceptional) losses at £0.2m (2016: £1.6m) were in line with management expectations. ATTRAQT was adjusted EBITDA (pre-exceptional) positive in the second half of the year.

Depreciation and amortisation totalled £1.3m (2016: £0.2m) and primarily related to the amortisation of intangibles assets relating to the acquisition of Fredhopper BV. There was a shared-based payment charge of £0.2m (2016: £0.2m).

Loss before tax was £4.1m (2016: £1.9m loss), with the tax charge in the period £0.02m (2016: £0.2m credit).

Therefore, loss for the year was £4.1m (2016: £1.8m loss).

The cash balance at the end of the period was £1.6m. The cash balance as of 28th February 2018 was £2.0m.

E R I C D O D D


7 M A R C H 2 0 1 8

“ T O T A L R E V E N U E I N C R E A S E D B Y £ 1 0 . 0 M T O £ 1 3 . 6 M ( 2 0 1 6 : £ 3 . 6 M ) R E F L E C T I N G T H E A C Q U I S I T I O N O F F R E D H O P P E R , T H E A D D I T I O N O F N E W C L I E N T S , A N D S E R V I C E U P G R A D E S A N D R E N E W A L S F R O M E X I S T I N G O N E S .”

E R I C D O D DC H I E F F I N A N C I A L O F F I C E R

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The board has reviewed the requirements of the UK Corporate Governance Code and although it is not statutorily mandatory to comply with the code ATTRAQT continues to work to implement it to the extent that it considers it appropriate to a company of its size and nature. The remuneration and audit committees were established following the ATTRAQT’s admission to AIM on 19 August 2014.

T H E B O A R D O F D I R E C T O R S

The details of ATTRAQT’s board, together with the audit and remuneration committees, are set out on pages 17, 23 and 24. The board meets monthly and is responsible for the overall management of the ATTRAQT’s long-term strategy and objectives and the monitoring of performance. It oversees operations and ensures the maintenance of sound internal controls and risk management systems. Certain matters are specifically reserved for the approval of the board, including approval of significant capital expenditure, material business contracts and corporate transactions.

To enable the board to discharge its duties all directors receive appropriate and timely information.

At 31 December 2017 the board consisted of two executive directors, a non-executive chairman and three independent non-executive directors. With the departure of the chief executive officer in early January, the current board structure is interim executive chairman, chief financial officer and three non-executive directors.

D I R E C T O R S ’ R E M U N E R A T I O N

As set out on pages 24 and 25 the remuneration of the executive directors is determined by the remuneration committee. The remuneration of the non-executive directors is determined by the chairman and the executive directors. The directors recognize the importance of performance related incentives and executive directors are paid bonuses as deemed appropriate by the remuneration committee.

R E L A T I O N S W I T H S H A R E H O L D E R S

ATTRAQT recognizes the value of communications with its shareholders. As well as the statutorily required news releases via the Stock Exchange, ATTRAQT issues updates on matters that it considers of interest to shareholders and the wider investing public. It responds quickly to enquiries and requests from shareholders subject to the limitations of providing price sensitive information. All shareholders receive at least 21 days’ notice of the annual general meeting at which all the directors and the chairman are normally available to answer from shareholders attending the meeting.

A C C O U N T A B I L I T Y & A U D I T

F I N A N C I A L R E P O R T I N G

The interim chief executive and chief financial officer statements contain detailed reviews of the performance and financial position of the company. ATTRAQT uses these statements and the directors’ report on pages 26-28 to present and explain the company’s financial position and performance. The directors’ responsibility for the financial statements is described on pages 26-27.

I N T E R N A L C O N T R O L

The board confirms that it has established the procedures necessary to implement the guidance set out in the Financial Reporting Council’s “Guidance on risk management, internal control and related financial and business reporting”. The identification, evaluation and management of risk has been considered by the board. It is intended that this will continue to be kept under constant review and will be considered at each board meeting. The board continues to take steps to embed internal control and risk management further into the operations of the business and to deal with areas of improvement which come to management and board attention.

C O R P O R A T E G O V E R N A N C ER E P O R T

OVERVIEW FINANCIAL STATEMENTSGOVERNANCESTRATEGIC REPORT

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The directors acknowledge their responsibilities for ATTRAQT’s system of internal control. Such a system can provide reasonable but not absolute assurance against material misstatement or loss. The board has considered the major business risks and the control environment. Important control procedures, in addition to the day to day supervision of the business, include comparison of monthly management accounts to the budget.

A U D I T C O M M I T T E E & A U D I T O R S

The audit committee comprises Ivor Dunbar and Edward Ewing, both non-executive directors. The auditors of ATTRAQT may also attend part or all of each meeting and they have direct access to the committee for independent discussions, without the presence of an executive director, if required. The audit committee may examine any matters relating to the financial affairs of ATTRAQT and the audit. This includes reviews of the annual accounts and announcements, accounting policies, compliance with accounting standards, the appointment of auditors and their fees and other such related functions as the board may require.

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A U D I T C O M I T T E E R E P O R T

C O M P O S I T I O N A N D T E R M S O F R E F E R E N C E

The audit committee is chaired by Ivor Dunbar and its other member is Edward Ewing. The board has considered the independence of these directors and although Ivor Dunbar has a holding of 1.14% of ATTRAQT it considers him, and Edward Ewing (who has a holding of 0.09%), to be independent non-executive directors.

The audit committee meets as required and specifically to review the interim report and annual report and to consider the stability and effectiveness of the internal control processes. The audit committee reviews the findings of the external auditor and reviews accounting policies and material accounting judgements.

The independence and effectiveness of the external auditor is reviewed annually. The audit committee is able to meet separately with the external auditor without any executive director present to discuss their independence and objectivity, the annual report, any audit issues arising, internal control processes, appointment and fee levels and any other appropriate matters. As well as providing audit related services the auditors also provide taxation advice. Fees in respect of audit and tax service are disclosed in note 6. Fees for non-audit services paid to the auditors are not deemed to be of such significance as to impair their independence and therefore the audit committee considers that the objectivity and independence of the auditors is safeguarded.

I N T E R N A L C O N T R O L

The board is responsible for establishing and maintaining ATTRAQT’s system of internal control and for reviewing its effectiveness. The system of internal control is designed to manage, rather than eliminate, the risk of failure of the achievement of business objectives and can only provide reasonable but not absolute assurance against material misstatement or loss.

The audit committee monitors and reviews the effectiveness of the system of internal control and reports to the board when appropriate with recommendations.

The main features of the system of internal control are:

• A control environment exists through the close management of the business by the executive directors. ATTRAQT has a defined organization structure with delineated approval limits. Controls are implemented and monitored by the executive directors. • The board has a schedule of matters expressly reserved for its consideration and this schedule includes acquisitions and disposals, major capital projects, treasury and risk management policies and approval of budgets. • ATTRAQT uses a detailed budgeting and forecasting process. Budgets are prepared annually by the executive directors and submitted to the board for approval. Forecasts, including cash flow projections, are updated at least quarterly to reflect changes in the business and are monitored by the board. Actual results are monitored against the budget on a monthly basis, with variances highlighted to the board. • Financial risks are identified and evaluated for any major transactions for consideration by the board and senior management. • Standard financial control procedures are operated throughout ATTRAQT to ensure that the assets are safeguarded and that proper accounting records are maintained.


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I N T R O D U C T I O N

ATTRAQT presents its remuneration committee report for the 2017 financial year, which sets outs the remuneration framework for the executive chairman, our executives and our non-executive directors. The remuneration committee report is designed to provide shareholders with a clear and detailed understanding of ATTRAQT’ s remuneration framework.

C O M P O S I T I O N A N D T E R M S O F R E F E R E N C E

The remuneration committee is chaired by Edward Ewing and its other member is Ivor Dunbar, both of whom are independent non-executive directors. ATTRAQT’s chairman may attend committee meetings as an observer. The remuneration committee is expected to meet not less than once a year and at such other times as required.

The remuneration committee has responsibility for determining, within the agreed terms of reference, the ATTRAQT’s policy on the remuneration packages of the chief executive officer, chairman, and the executive directors, the group secretary, senior managers and such other members of the executive management as it is designated to consider.

The remuneration committee also has responsibility for determining (within the terms of ATTRAQT’s policy and in consultation with the chairman of the board and/or the chief executive officer) the total individual remuneration package for each executive director, the group secretary and other designated senior executives (including bonuses, incentive payments and share options or other share awards).

The remuneration of non-executive directors is a matter for the chairman and executive directors of the board. No director or manager is allowed to partake in any discussions as to their own remuneration. In addition, the remuneration committee has the responsibility for reviewing the structure, size and composition (including the skills, knowledge and experience) of the board and giving full consideration to succession planning. It also has responsibility for recommending new appointments to the board.

P O L I C Y O N E X E C U T I V E D I R E C T O R S ’ R E M U N E R A T I O N

Executive remuneration packages are designed to attract and retain executives with the qualities and skills responsible for delivering the long-term growth of ATTRAQT. The remuneration committee recommends to the board remuneration packages by reference to individual performance and uses the knowledge and experience of the committee members, published surveys relating to AIM companies and data on companies of similar size and in similar industries.

There are three main elements of the remuneration package for executive directors and staff:

B A S I C S A L A R I E S A N D B E N E F I T S I N K I N D

Basic salaries are recommended to the board by the remuneration committee, taking into account the performance of the individual and the rates for similar positions in comparable companies. Benefits in kind comprising death in service, private medical insurance and statutory pension are available to all staff and executive directors.

S H A R E O P T I O N S

ATTRAQT operates a share option scheme for the executive directors and other employees to motivate those individuals through equity participation. Exercise of share options under the scheme is subject to specified exercise periods and compliance with the AIM Rules. The scheme is overseen by the remuneration committee which recommends to the board all grants of share options based on the remuneration committee’s assessment of personal performance and specifying the terms under which eligible individuals may be invited to participate.

R E M U N E R A T I O N C O M M I T T E ER E P O R T

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B O N U S S C H E M E

ATTRAQT has a discretionary bonus scheme for staff and executive directors.

S E R V I C E C O N T R A C T S

The executive directors are employed under service contracts requiring six months’ notice by either party. Non-executive directors and the chairman receive payments under appointment letters which are terminable by two months’ notice by either party. The service contracts of the non-executive directors are made available for inspection at the AGM.

P O L I C Y O N N O N - E X E C U T I V E D I R E C T O R ’ S R E M U N E R A T I O N

Non-executive directors are paid a fee for services as a director. The fee, which is approved by the board, mindful of the time commitment and responsibilities of the role and of current market rates for comparable organizations and appointments. All non-executive directors and the chairman are reimbursed for travelling and other incidental expenses incurred on company business.

I. Appointed on 15 November 2017II. Resigned 12 January 2018, during the year was given a discretionary bonus of £75,000 (2016 - £25,000).Ill. Resigned 15 November 2017, during the year was given a discretionary bonus of £75,000 (2016 - nil).IV. Given a discretionary bonus of £75,000 (2016 - nil). Is a partner in Azini Capital Partners, the fee for Nick’s services is paid to Azini Capital Partners, see note 20.V. A partner in Taylor Wessing, the fee for his services is paid to Taylor Wessing, see note 20.


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On the 15 December the following share options were issued to the executive directors, details are shown in Note 18.

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D I R E C T O R S R E P O R T

The directors present their report with the financial statements of ATTRAQT for the year ended 31 December 2017.

R E S U LT S

The Group made a loss after tax in 2017 of £4,070,000 (2016 - £1,791,000) on turnover of £13,615,000 (2016 - £3,569,000) representing a loss of £0.04 per share (2015: £0.06). The net cash used in operating activities was £2,878,000 (2016 - £1,524,000).

D I V I D E N D S

The board do not propose the payment of a dividend for the year.

D I R E C T O R S

The directors shown below either held office during the reporting period or to the date of this report: • Nick Habgood • Eric Dodd (joined 15 November 2017) • Ivor Dunbar • Edward Ewing • Robert Fenner • André Brown (resigned 15 January 2018) • Mark Johnson (resigned 15 November 2017)

Q U A L I F Y I N G T H I R D P A R T Y I N D E M N I T Y P R O V I S I O N S

ATTRAQT purchases directors and officer’s insurance against their cost in defending themselves in legal proceedings taken against them in that capacity, and in respect of damages resulting from the unsuccessful defense of any proceedings.

F I N A N C I A L I N S T R U M E N T S

Details of ATTRAQT’s risk management objectives and policies together with its exposure to financial risk are set out in note 2 to the financial statements.

G O I N G C O N C E R N

After making appropriate enquiries, the directors consider that ATTRAQT has adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements.

K E Y F U T U R E D E V E L O P M E N T SATTRAQT will continue the research and development of new products and product enhancements using its internal expertise and jointly with technology partners. The selection of developments to be undertaken is based on feedback from existing and prospective clients and prioritised according to the return they can be expected to generate. ATTRAQT will continue to invest in research and development at the same rate as the current year, to ensure the technological risk as set out in the strategic report is mitigated.

R I S K A R E A S

Risk is referenced in the strategic report.


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L I S T I N G

ATTRAQT’s ordinary shares have been traded on the AIM Market of the London Stock Exchange since 19 August 2014. N+1 Singer is ATTRAQT’s nominated advisor and broker. The closing mid- market share price at 29 December 2017 was 33.5p.

S T A T E M E N T O F D I R E C T O R S ’ R E S P O N S I B I L I T I E S

The directors are responsible for preparing the strategic report, the directors’ report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare the financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. 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 and of the profit or loss for that period. The directors are also required to prepare financial statements in accordance with the rules of the London Stock Exchange for companies trading securities on the Alternative Investment Market.

In preparing these financial statements, the directors are required to:

• Select suitable accounting policies and then apply them consistently; • Make judgements and accounting estimates that are reasonable and prudent; • State whether they have been prepared in accordance with IFRSs as adopted by the European Union, subject any material departures disclosed and explained in the financial statements; • Prepare the financial statements on the going concern basis unless it is inappropriate to presume that ATTRAQT will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group’s transactions and disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

W E B S I T E P U B L I C A T I O N

The directors are responsible for ensuring the annual report and the financial statements are made available on a website. Financial statements are published on ATTRAQT’s website in accordance with legislation in the United Kingdom governing the preparation and dissemination of financial statements, which may vary from legislation in their jurisdictions. The maintenance and integrity of the website is the responsibility of the directors. The directors’ responsibility also extends to the ongoing integrity of the financial statements contained therein.

K E Y F U T U R E D E V E L O P M E N T S

The period ahead will be focused on driving the underlying operational effectiveness and performance of the business. Whilst the fundamentals of the business are good and we have a solid platform to build upon, we will continue to focus on ensuring the business is fit and ready for its next phase of growth.

The key to success for 2018 will be new client wins, further upsell to current customers and minimising attrition. We have put in place the tools to enable this strategy and look forward to delivering on it in the period ahead.

S T A T E M E N T A S T O D I S C L O S U R E O F I N F O R M A T I O N T O A U D I T O R S

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the ATTRAQT’s auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the ATTRAQT’s auditors are aware of that information.

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A U D I T O R S

The auditors, BDO LLP, will be proposed for re-appointment at the forthcoming Annual General Meeting.

E R I C D O D D

C H E I F F I N A N C I A L O F F I C E R

7 M A R C H 2 0 1 8

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O P I N I O N

We have audited the financial statements of ATTRAQT Group plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended 31 December 2017 which comprise the consolidated statement of comprehensive income, the consolidated and company statements of financial position, the consolidated and company statements of changes in equity, the consolidated statement of cashflows and notes to the financial statements, including a summary of significant accounting policies.

The financial reporting framework that has been applied in the preparation of the financial statements is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company financial statements, as applied in accordance with the provisions of the Companies Act 2006.

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 2017 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 European Union; • the parent company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union 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.

B A S I S F O R O P I N I O N

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the group and the parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

U S E O F O U R R E P O R T

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.

C O N C L U S I O N S R E L A T I N G T O G O I N G C O N C E R N

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where: • the directors’ use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

I N D E P E N D E N T A U D I T O R ’ S R E P O R T


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• the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the group’s or the parent company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised forissue.

K E Y A U D I T M A T T E R S

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

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K E Y A U D I T M A T T E R C O N T I N U E D


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O U R A P P L I C A T I O N O F M A T E R I A L I T Y

We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. For planning, we consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements. In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.

M A T E R I A L I T Y

Materiality for the group as a whole was set at £170,000 (2016: £53,000), which represents 1.25% (2016: 1.5%) of group revenue. Revenue provides a consistent year on year basis for determining materiality and has been concluded as the most relevant performance measure to the stakeholders of the group. The decrease in percentage from 1.5% to 1.25% used to generate the group materiality is a consequence of the group making a significant acquisition in the year.

P E R F O R M A N C E M A T E R I A L I T Y

In considering individual account balances and classes of transactions we apply a lower level of materiality (performance materiality) in order reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.Based upon our assessment of the risks within the group and the group’s control environment, performance materiality for the financial statements was set at £127,500 (2016: £39,750), being 75% (2016: 75%) of materiality.Performance materiality levels used for the key component identified within the group were based upon the same benchmarks and percentages detailed for the group, due to each component being consistent in both nature, audit risks identified and control environment to the group as a whole. In the current year, the performance materiality applied to components was £95,625 (2016: N/A due to the group restructuring).

R E P O R T I N G T H R E S H O L D

The reporting threshold is the amount below which identified misstatements are considered as being clearly trivial.We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £8,500 (2016: £2,650), which is 5% (2016: 5%) of materiality, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds.

We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other relevant qualitative considerations in forming our opinion.

A N O V E R V I E W O F T H E S C O P E O F O U R A U D I TOur group audit was scoped by obtaining an understanding of the group and its environment, including the group’s system of internal control, and assessing the risks of material misstatement in the financial statements at the group level.

In determining the scope of our audit we considered the size and nature of each component within the group to determine the level of work to be performed at each in order to ensure sufficient assurance was gained to allow us to express an opinion on the financial statements of the group as a whole.

We obtained an understanding of the internal control environment related to the financial reporting process and assessed the appropriateness, completeness and accuracy of group journals and other adjustments performed on consolidation.

The group consists of seven entities based in Europe, with the majority of trade arising within the UK and Netherlands entities. There are three entities based in the UK, one being the Holding company. Further to this there are trading entities within the Netherlands, US, Germany, France, Bulgaria and Australia.

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C L A S S I F I C A T I O N O F C O M P O N E N T

Two components were identified as significant and have been audited for group reporting purposes by the group engagement team. The two significant components audited for group reporting purposes accounted for 98% (2016: 92%) of the group’s revenue.

We also tested the consolidation process including consolidation adjustment and journals, performed our work on all key judgements areas and carried out analytical procedures to confirm our conclusion that there were no significant risks of material misstatement of the aggregated financial information arising in the remaining components not subject to audit. Our scoping assessment across the overall Group has been outlined below which analyses the component testing performed.

O T H E R I N F O R M A T I O NThe directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

O P I N I O N S O N O T H E R M A T T E R S P R E S C R I B E D B Y T H E C O M P A N I E S A C T 2 0 0 6In our opinion, based on the work undertaken in the course of the audit:

• 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; and • the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.

M A T T E R S O N W H I C H W E A R E R E Q U I R E D T O R E P O R T B Y E X C E P T I O N

In the light of the knowledge and understanding of the group and the parent company and its environment obtained in


39

the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report.We have nothing to report in respect of the following matters in relation to which 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 parent company 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.

R E S P O N S I B I L I T I E S O F D I R E C T O R SAs explained more fully in the directors’ responsibilities statement set out on page 27, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the group’s and the parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.

A U D I T O R ’ S R E S P O N S I B I L I T I E S F O R T H E A U D I T O F T H E F I N A N C I A L S T A T E M E N T SOur objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

A N D R E W V I N E R ( S E N I O R S T A T U T O R Y A U D I T O R )

F O R A N D O N B E H A L F O F B D O L L P, S T A T U T O R Y A U D I T O R L O N D O N

7 M A R C H 2 0 1 8

B D O L L P I S A L I M I T E D L I A B I L I T Y P A R T N E R S H I P R E G I S T E R E D I N E N G L A N D A N D W A L E S

( W I T H R E G I S T E R E D N U M B E R O C 3 0 5 1 2 7 ) .

F I N A N C I A L S T A T E M E N T S


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C O N S O L I D A T E D S T A T E M E N T O F C O M P R E H E N S I V E I N C O M E

The notes on pages 45 to 69 form part of these financial statements.

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C O N S O L I D A T E D S T A T E M E N T O F F I N A N C I A L P O S I T I O N

The financial statements were authorised for issue by the Board of Directors on 7 March 2018 and were signed on its behalf by:

E R I C D O D D

D I R E C T O R

C O M P A N Y N U M B E R 8 9 0 4 5 2 9



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C O N S O L I D A T E D S T A T E M E N T O F C A S H F L O W S


44

C O N S O L I D A T E D S T A T E M E N T O F C H A N G E S I N E Q U I T Y


R E S E R V E S

The following describes the nature and purpose of each reserve within equity:

Reserve Description and purpose

Share premium Amount subscribed for share capital in excess of nominal value.

Merger reserve The merger reserve results from the application of merger accountingon the merger of ATTRAQT Inc. and

ATTRAQT Limited.

Share based payment The share based payment reserve represents equity settled share based employee remuneration until such

reserve share options are exercised.

Foreign exchange The difference arising on the translation of the assets and liabilities of the overseas subsidiaries into the

reserve presentational currency of the Group.

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


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Notes forming part of the consolidated financial statement

1 . A C C O U N T I N G P O L I C I E S

1 . 1 . C O R P O R A T E I N F O R M A T I O N

The consolidated financial statements of ATTRAQT Group PLC (“the Company”) and its subsidiaries (together “the Group”) for the year ended 31 December 2017 were authorised for issue in accordance with a resolution of the directors on 7th March 2018.

The Company is a public limited company which is quoted on the Alternative Investment Market of the London Stock Exchange and is incorporated and domiciled in the UK. The address of the registered office is 3 Waterhouse Square, 138 Holborn, London, EC1N 2SW. The registered number of the company is 8904529.

The principal activity of ATTRAQT Group PLC (“the Company”) and its subsidiaries (together “the Group”) is the development and provision of eCommerce site search, merchandising and product recommendation technology. Information on the Group’s structure is provided in Note 12 Information on other related party relationships of the Group is provided in Note 20.

1 . 2 . B A S I S O F P R E P A R A T I O N

The consolidated financial statements are for the year ended 31 December 2017. They have been prepared in compliance with International Financial Reporting Standards (IFRSs) and IFRS Interpretations Committee (IFRIC) interpretations as adopted by the European Union as at 31 December 2017 and those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The consolidated financial statements have been prepared under the historical cost convention and are presented in Sterling rounded to the nearest thousand except where indicated otherwise.

The consolidated financial statements provide comparative information in respect of the previous period. In addition, the Group presents an additional statement of financial position at the beginning of the preceding period when there is a retrospective application of an accounting policy, a retrospective restatement, or a reclassification of items in financial statements.

1 . 3 . A P P L I C A T I O N O F N E W A N D R E V I S E D I N T E R N A T I O N A L F I N A N C I A L R E P O R T I N G

S T A N D A R D S ( I F R S )

(i) New standards, interpretations and amendments effective from 1 January 2017. There were no new standards or interpretations effective for the first time for periods beginning on or after 1 January 2017 that had a significant effect on the Group’s financial statements.

A M E N D M E N T S T O I A S 1 2 R E C O G N I T I O N O F D E F E R R E D T A X A S S E T S F O R U N R E A L I S E D

L O S S E S

The amendments clarify that an entity needs to consider whether tax law restricts the sources of taxable profits against which it may make deductions on the reversal of deductible temporary difference related to unrealised losses. Furthermore, the amendments provide guidance on how an entity should determine future taxable profits and explain the circumstances in which taxable profit may include the recovery of some assets for more than their carrying amount.

The application has no effect on the Group’s financial position and performance as the Group has no deductible temporary differences or assets that are in the scope of the amendments.

(ii) New standards, interpretations and amendments not yet effective. There are a number of standards and interpretations, along with the mandatory periods that they need to begin, have been issued by the International Accounting Standards Board that are effective in future accounting periods that the group has decided not to adopt early:

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Mandatory for periods beginning on or after 1 January 2018 IFRS 9 Financial Instruments; and IFRS 15 Revenue from Contracts with Customers.

Mandatorily for periods beginning on or after 1 January 2019 IFRS 16 Leases.

I F R S 9 F I N A N C I A L I N S T R U M E N T S

In July 2014, the IASB issued the final version of IFRS 9 Financial Instruments that replaces IAS 39 Financial Instruments: Recognition and Measurement and all previous versions of IFRS9. IFRS 9 brings together all three aspects of the accounting for financial instruments project: classification and measurement, impairment and hedge accounting. IFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted. Except for hedge accounting, retrospective application is required but providing comparative information is not compulsory. For hedge accounting, the requirements are generally applied prospectively, with some limited exceptions.

The Group plans to adopt the new standard on the required effective date and will not restate comparative information. The Group has performed an initial assessment of all three aspects of IFRS 9. This assessment is based on currently available information and may be subject to changes arising from further reasonable and supportable information being made available to the Group in 2018 when the Group will adopt IFRS 9. Overall, the Group expects no significant impact on its statement of financial position and equity except for the effect of applying the impairment requirements of IFRS 9. The Group expects an increase in the loss allowance resulting in a negative impact on equity as discussed below.

IFRS 9 requires the Group to record expected credit losses on all of its trade receivables, either on a 12-month or lifetime basis. The Group is required to apply the simplified approach and record lifetime expected losses on all trade receivables. In applying IFRS 9 the group must consider the probability of a default occurring over the contractual life of its trade receivables and contracts asset balances on initial recognition of those assets. Under the existing incurred loss model, this has typically been 5% of the gross carrying amount of receivables over the last 3 years, and at 31 December 2017 and 2016 amounted to GBP 112,000 and GBP 174,000 respectively (see note 13). ATTRAQT believe there will be no effect as trade receivables are less than 12 months.

I F R S 1 5 R E V E N U E F R O M C O N T R A C T S W I T H C U S T O M E R S

IFRS 15 was issued in May 2014, and amended in April 2016, and establishes a five-step model to account for revenue arising from contracts with customers. Under IFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e. when ’control’ of the goods or services underlying the particular performance obligation is transferred to the customer.

The new revenue standard will supersede all current revenue recognition requirements under IFRS. Either a full retrospective application or a modified retrospective application is required for annual periods beginning on or after 1 January 2018. Early adoption is permitted.

The Group has carried out a technical exercise regarding the following revenue sources:

• SaaS revenues - a monthly subscription fee is earned from customers to the software as a service platform. Operation of the service is provided for a fixed term. The view is that the customer simultaneously receives and consumes all of the benefits provided by the entity as the entity performs; • Services - Revenue from Consulting services and implementation fees. The view is that revenue is recognised when control is passed at a certain point in time and is based on a daily rate

Apart from providing extensive disclosures on the Group’s revenue transactions, the directors do not anticipate that the application of IFRS 15 will have a significant impact on the financial positions and /or financial performance of the Group. ATTRAQT will complete a cumulative adjustment on adoption and are not expecting 2017 to change.


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I F R S 1 6 L E A S E S

Adoption of IFRS 16 will result in the group recognising right of use assets and lease liabilities for all contracts that are, or contain, a lease. For leases currently classified as operating leases, under current accounting requirements the group does not recognise related assets or liabilities, and instead spreads the lease payments on a straight-line basis over the lease term, disclosing in its annual financial statements the total commitment.

The group is not as advanced in its implementation of IFRS 16 as it is for IFRS 15. and therefore will only recognise leases on balance sheet as at 1 January 2019. In addition, it has decided to measure right-of-use assets by reference to the measurement of the lease liability on that date. This will ensure there is no immediate impact to net assets on that date. At 31 December 2017 operating lease commitments amounted to 469,000, which is not expected to be materially different to the anticipated position on 31 December 2018. However, further work still needs to be carried out to determine whether and when extension and termination options are likely to be exercised, which will result in the actual liability recognised being higher than this.

Instead of recognising an operating expense for its operating lease payments, the group will instead recognise interest on its lease liabilities and amortisation on its right -of-use assets. This will increase reported EBITDA by the amount of its current operating lease cost.

O T H E RThe Group does not expect any other standards issued by the IASB, but not yet effective, to have a material impact on the group.

1 . 4 . B A S I S O F C O N S O L I D A T I O N

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at 31 December 2017. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:

• Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee) • Exposure, or rights, to variable returns from its involvement with the investee • The ability to use its power over the investee to affect its returns

Generally, there is a presumption that a majority of voting rights results in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

• The contractual arrangement(s) with the other vote holders of the investee • Rights arising from other contractual arrangements • The Group’s voting rights and potential voting rights

The Group re-assesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

Profit or loss and each component of Other Comprehensive Income are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

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A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction.

If the Group loses control over a subsidiary, it derecognises the related assets (including goodwill), liabilities, non-controlling interest and other components of equity, while any resultant gain or loss is recognised in profit or loss. Any investment retained is recognised at fair value.

1 . 5 . S U M M A R Y O F S I G N I F I C A N T A C C O U N T I N G P O L I C I E S

1.5.1. Business combinations and goodwillBusiness combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, which is measured at acquisition date fair value, and the amount of any non-controlling interests in the acquiree. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition- related costs are expensed as incurred and included in administrative expenses.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree.

Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date.. Contingent consideration classified as an asset or liability that is a financial instrument and within the scope of IAS 39 Financial Instruments: Recognition and Measurement, is measured at fair value with the changes in fair value recognised in the statement of comprehensive income in accordance with IAS 39.

Goodwill is initially measured at cost (being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests and any previous interest held over the net identifiable assets acquired and liabilities assumed). If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in profit or loss.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units.

ATTRAQT assesses, at each reporting date, whether there is an indication that an asset may be impaired. If any indication exists, or when annual impairment testing for an asset is required, the Group estimates the asset’s recoverable amount. An asset’s recoverable amount is the higher of an asset’s or CGU’s fair value less costs of disposal and its value in use. The recoverable amount is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets. When the carrying amount of an asset or CGU exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. The fair value less costs of disposal calculation is based on available data from binding sales transactions, conducted at arm’s length, for similar assets or observable market prices less incremental costs for disposing of the asset. In determining fair value less costs of disposal, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used.

These calculations are corroborated by valuation multiples, quoted share prices for publicly traded companies or other available fair value indicators. The value in use calculation is based on a DCF model. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. The cash flows are derived from the


49

forecast for the next five years. The recoverable amount is sensitive to the discount rate used for the DCF model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes. These estimates are most relevant to goodwill and other intangibles with indefinite useful lives recognised by the Group.

Where goodwill has been allocated to a cash-generating unit (CGU) and part of the operation within that unit is disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation and the portion of the cash-generating unit retained.

1.5.2. RevenueRevenue represents sales to external customers at invoiced amounts less value added tax or local taxes on sales. Where work is completed at the year-end but not invoiced, the ATTRAQT Group accrues for this income. The Group derives the majority of its revenue from the provision of eCommerce services to online retailers which includes site search, merchandising and product recommendation technology. These are recurring revenues that are recognised on a monthly basis.

Revenue from services provided by the ATTRAQT Group is recognised when the ATTRAQT Group has performed its obligations and in exchange obtained the right to consideration which can be reliably measured and it is probable economic benefits will flow to the entity. If amounts have been invoiced in advance for services, these amounts are deferred until the service has been provided to the client at which point the income is recognised. Within the ATTRAQT Group income is recognised across three streams:

• SaaS revenues – a monthly subscription fee is earned from customers to the software as a service platform. Operation of the service is provided for a fixed term. • Services revenue – Revenue from consultancy services rendered is recognised in income based on work completed at the balance sheet date. No revenue is recognised if there are significant uncertainties regarding recovery of the consideration due or associated costs.

1.5.3. Foreign currencyTransactions entered into by Group entities in a currency other than the currency of the primary economic environment in which it operates (the “functional currency”) 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 recognised immediately in profit or loss.

On consolidation, the results of overseas operations are translated into Pounds Sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations, including goodwill arising on the acquisitions of those operations, are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income and accumulated in the foreign exchange reserve.

Exchange differences recognised in profit or loss in Group entities separate financial statements on the translation of long-term monetary items forming part of the Group’s net investment in the overseas operation concerned are reclassified to other comprehensive income and accumulated in the foreign exchange reserve on consolidation.

1.5.4. Financial assets and liabilitiesF I N A N C I A L A S S E T S

L O A N S A N D R E C E I VA B L E S

These assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of services to customers (e.g. trade receivables), but also incorporate other types of contractual monetary asset. They are initially recognised at fair value plus transaction costs

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that are directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.

Impairment provisions are recognised 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, such provisions are recorded in a separate allowance account with the loss being recognised within administrative expenses in the consolidated 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.

From time to time, the Group elects to renegotiate the terms of trade receivables due from customers with which it has previously had a good trading history. Such renegotiations will lead to changes in the timing of payments rather than changes to the amounts owed and, in consequence, the new expected cash flows are discounted at the original effective interest rate and any resulting difference to the carrying value is recognised in the consolidated statement of comprehensive income (operating profit).

The Group’s loans and receivables comprise trade and other receivables and cash and cash equivalents in the consolidated statement of financial position. Their carrying value approximates fair value at both reporting dates.

C A S H A N D C A S H E Q U I VA L E N T S

Cash 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.

F I N A N C I A L L I A B I L I T I E S

Other financial liabilities Other financial liabilities include the following items:

• Trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method. • Bank overdrafts are shown within loans and borrowings in current liabilities on the consolidated statement of financial position.

1.5.5. LeasesPayments under operating leases are charged to the statement of comprehensive income on a straight line basis over the lease term.

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

The Group’s ordinary shares are classified as equity instruments.

1.5.7. Income taxesCurrent income tax assets and liabilities comprise those obligations to fiscal authorities in the countries in which the Group carries out its operations. They are calculated according to the tax rates and tax laws applicable to the fiscal period and the country to which they relate. All changes to current tax liabilities are recognised as a component of tax expense in the income statement unless the tax relates to an item taken directly to equity in which case the tax


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is also taken directly to equity. Tax relating to items recognised in other comprehensive income is recognised in other comprehensive income.

1.5.8. Deferred taxationDeferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the consolidated statement of financial position differs from its tax base, except for differences arising on:

• the initial recognition of goodwill; • the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting or taxable profit; and • investments in subsidiaries and jointly controlled entities where the Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised.

The amount of the asset or liability is determined using tax rates that have been enacted or substantively enacted by the reporting date and are expected to apply when the deferred tax liabilities/(assets) are settled/(recovered).

Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:

• the same taxable Company; or • different Company entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be settled or recovered.

1.5.9. Segmental reportingFor the purpose of IFRS 8, the chief operating decision maker takes the form of the Board of Directors. The Directors’ opinion is that the business of the group is to provide cloud based E-commerce solutions. Based on this, there is considered to be one reportable segment. The internal and external reporting is on a consolidated basis with transactions between group companies eliminated on consolidation. Therefore, the financial information of the single segment is the same as that set out in the consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated statement of financial position and statement of cash flows.

1.5.10. Intangible assets (Internally developed - development costs)Expenditure on internally developed products is capitalised if it can be demonstrated that:

• it is technically feasible to develop the product for it to be sold; • adequate resources are available to complete the development; • there is an intention to complete and sell the product; • the Group is able to sell the product; • sale of the product will generate future economic benefits; and • expenditure on the project can be measured reliably.

Capitalised development costs are amortised over three years. The amortisation expense is included within administrative expenses in the consolidated statement of comprehensive income.

Development expenditure not satisfying the above criteria and expenditure on the research phase of internal projects are recognised in the consolidated statement of comprehensive income as incurred.

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1.5.11. Intangible assets (Externally acquired)Externally acquired intangible assets are initially recognised at cost and subsequently amortised on a straight-line basis over their useful economic lives. Intangible assets are recognised on business combinations if they are separable from the acquired entity or give rise to other contractual/legal rights. The amounts ascribed to such intangibles are arrived at by using appropriate valuation technique.

The significant intangibles recognised by the Group, their useful economic lives and the methods used to determine the cost of intangibles acquired in a business combination are as follows:

Intangible Asset Useful economic life Valuation Method

Customer Relationships 11 years Excess Earnings Method - the value of the intangible asset is the present value of the after-tax cash flows potentially attributable to it, net of the return on fair value attributable to tangible and other intangible assets.

Existing Technology 7 years Relief from Royalty Method – the value of intangible assets are estimated by capitalising the royalties saved because the company owns the intangible asset.

Trade Names 10 years Relief from Royalty Method - the value of intangible assets are estimated by capitalising the royalties saved because

1.5.12. Impairment of assetsAssets that are subject to depreciation or amortisation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows.

1.5.13. Property, plant and equipmentItems of property, plant and equipment are initially recognised at cost. As well as the purchase price, cost includes directly attributable costs and the estimated present value of any future unavoidable costs of dismantling and removing items. The corresponding liability is recognised within provisions.

Property plant and equipment is depreciated over its estimated useful economic life taking into account their residual values. The estimated useful economic life of these assets is:

Plant and machinery 4 yearsFixtures and fittings 4 years

1.5.14. Share based paymentsThe Group has issued share options to certain employees, in return for which the Group receives services from those employees. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense.


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The total amount to be expensed is determined by reference to the fair value of the options granted including any market performance conditions (for example the Group’s share price) but excluding the impact of any service or non-market performance vesting conditions (for example the requirement of the grantee to remain an employee of the Group).

Non-market vesting conditions are included in the assumptions regarding the number of options that are expected to vest. The total expense is recognised over the vesting period. At the end of each period the Group revises its estimates of the number of options expected to vest based on the non-market vesting conditions. It recognises the impact of any revision in the income statement with a corresponding adjustment to equity.

S I G N I F I C A N T A C C O U N T I N G J U D G E M E N T S A N D E S T I M A T E S

The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience and other factors, including 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 reported results or the carrying amounts of assets and liabilities within the next financial year are discussed below.

S H A R E B A S E D P A Y M E N T S

Share options are recognised as an expense based on their fair value at date of grant. The fair value of the options is estimated through the use of a valuation model – which require inputs such as the risk-free interest rate, expected dividends, expected volatility and the expected option life – and is expensed over the vesting period. Some of the inputs used to calculate the fair value are not market observable and are based on estimates derived from available data, such as employee exercise behaviour and employee turnover.

G O O D W I L L

Goodwill is tested for impairment annually and whenever events or changes in circumstances indicate that the carrying amount of goodwill has been impaired. In order to determine if the value of goodwill has been impaired, the cash-generating unit to which goodwill has been allocated must be valued using present value techniques. When applying this valuation technique, the Company relies on a number of factors, including historical results, business plans, forecasts and market data. This is further described in note 9. As can be deduced from this description, changes in the conditions for these judgments and estimates can significantly affect the assessed value of goodwill.

VA L U A T I O N O F A C Q U I R E D I N T A N G I B L E A S S E T S

Intangible assets acquired in a business combination are required to be recognised separately from goodwill and amortised over their useful life if they are subject to contractual or legal rights or are separately transferable and their fair value can be reliably estimated. The Group has separately recognised the intangible assets acquired during the acquisition (see note 9).

The fair value of these acquired intangible assets is based on valuation techniques. The valuation models require input based on assumptions about the future. The management uses its best knowledge to estimate fair value of acquired intangible assets as of the acquisition date. The value of intangible assets is tested for impairment when there is an indication that they might be impaired (see below). The management must also make assumptions about the useful life of the acquired intangible assets which might be affected by external factors.

C A P I T A L I S A T I O N A N D I M P A I R M E N T O F D E V E L O P M E N T C O S T S

It is a requirement under IFRS that development costs that meet the criteria prescribed in the standard are capitalised. The assessment of each project requires that a judgement is made as to the commercial viability and the ability of the Group to bring the product to market. Where there is an event or change in circumstance in relation to such

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judgement, the Group must make an estimate of the expected future economic benefits to determine that assets are not impaired.

2 . F I N A N C I A L I N S T R U M E N T S - R I S K M A N A G E M E N T

The Group is exposed through its operations to the following financial risks:

• Credit risk • Foreign exchange risk • Liquidity risk

In common with all other businesses, the Group is exposed to risks that arise from its use of financial instruments. This note describes the Group’s objectives, policies and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these financial statements.

There have been no substantive changes in the Group’s exposure to financial instrument risks, its objectives, policies and processes for managing those risks or the methods used to measure them from previous periods unless otherwise stated in this note.

P R I N C I P A L F I N A N C I A L I N S T R U M E N T S

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

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

All financial assets held by the Group at 31 December 2017 are classified as cash and cash equivalents or loans and receivables and there is no difference between the carrying amount and the fair value.


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All financial liabilities held by the Group at 31 December 2017 are classified as held at amortised cost.

G E N E R A L O B J E C T I V E S , P O L I C I E S A N D P R O C E S S E S

The Board has overall responsibility for the determination of the Group’s risk management objectives and policies and, whilst retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Company’s Interim Executive Chairman. The Board receives quarterly reports from the Company Chief Financial Officer through which it reviews the effectiveness of the processes put in place and the appropriateness of the objectives and policies it sets.The 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:

C R E D I T R I S K

Credit risk is the risk of financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group is mainly exposed to credit risk from credit sales. It is Group policy, implemented locally, to assess the credit risk of new customers before entering contracts. Such credit ratings take into account local business practices. The carrying amount of financial assets represents the maximum exposure. The credit quality of all financial assets that are neither past due nor impaired is high.

Credit risk also arises from cash and cash equivalents and deposits with banks and financial institutions. For banks and financial institutions, only independently rated parties with minimum rating “A” are accepted.

Further disclosures regarding trade and other receivables are provided in note 14.

F O R E I G N E X C H A N G E R I S K

Foreign exchange risk arises when the group entities enter into transactions denominated in a currency other than the functional currency. The Group’s policy is, where possible, to allow entities to settle liabilities denominated in their functional currency with the cash generated from their own operations in that currency.

In order to monitor the continuing effectiveness of this policy, the CFO reviews a monthly forecast, analysed by the major currencies held by the Group, of liabilities due for settlement and expected cash reserves.

L I Q U I D I T Y R I S K

Liquidity risk arises from the Group’s management of working capital. The Group manages the risk that it will encounter difficulty in meeting its financial obligations as they fall due by forecasting its short-term cash position on a regular basis.

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The Group’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. To achieve this aim, it seeks to maintain cash balances (or agreed facilities) to meet expected requirements for a period of at least 30 days.

The Board receives rolling 12-month cash flow projections on a quarterly basis as well as information regarding cash balances. At the end of the financial year, these projections indicated that the Group expected to have sufficient liquid resources to meet its obligations under all reasonably expected circumstances.

In the management of liquidity risk, the group monitors and tries to maintain a level of cash and cash equivalents deemed adequate by management to finance the Group’s operations and mitigate the effects of fluctuations in cash flows.

The following table sets out the contractual maturities (representing undiscounted contractual cash-flows) of financial liabilities:

3 . R E V E N U E

There is one customer which contributes more than 10% (£1.9m) of the Groups revenues (2016: 1 customer – contributing £0.4m).


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The Group reports geographical revenue based on the revenue of the relevant statutory billing entity.

4 . E X C E P T I O N A L A D M I N I S T R A T I V E E X P E N S E S

The exceptional cost consists of £2,382,000 (2016: £ Nil) relating to the legal and professional advisors and post-integration activities.

5 . L O S S F R O M O P E R A T I O N S

6 . E M P L O Y E E B E N E F I T E X P E N S E S

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K E Y M A N A G E M E N T P E R S O N N E L C O M P E N S A T I O N

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group, which comprises only the directors of thecompany.

The Employer’s National Insurance contributions expensed in the period relevant to the Key management personnel compensation was £86,000 (2016: £52,000).

Details of the Directors’ salaries, share based payments and the highest paid director are shown in the Remuneration Committee report.

S T A F F N U M B E R S

The average monthly number of employees, including Directors and individuals employed by the Group are as follows:

7 . I N C O M E T A X


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The 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 profits for the year are as follows:

At 31 December 2017, tax losses estimated at £4.1m (2016: £1.2m) were available to carry forward by the ATTRAQT group, arising from historic losses incurred.

8 . L O S S P E R S H A R E

9 . A C Q U I S I T I O N O F S U B S I D I A R Y

On 8 March 2017, the Company acquired 100% of the issued equity instruments of Fredhopper BV from SDL Netherlands BV a subsidiary of SDL plc. Fredhopper BV is a company whose principal activity is to provide site search and merchandising software to online retailers. The principal reason for this acquisition was to secure the Company’s primary competitor and become the ‘go to’ provider of online visual merchandising for retailers. The acquisition increased the existing client base and provides a strong presence in the US, UK and Continental European markets.

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Details of the fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill are as follows:

There is no contingent consideration on the Fredhopper acquisition.

Acquisition costs of £2,805,000 arose as a result of the transaction. Acquisition costs of £1,655,000 attributable to the integration of Fredhopper BV have been recognised as part of administrative expenses in the statement of comprehensive income. The main factors leading to the recognition of goodwill are:

• Future customer relationships • Future technology • Assembled workforce of the acquired business, which do not qualify for separate recognition.

The goodwill recognised will not be deductible for tax purposes.


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Since the acquisition date, Fredhopper BV has contributed £10,040,000 to group revenues and£2,194,000 to group profit. If the acquisition had occurred on 1 January 2017, group revenue would have been £12,086,000 and group profit for the period would have been £2,600,000

1 0 . I N T A N G I B L E A S S E T S

The Group is required to test, on an annual basis, whether goodwill has suffered any impairment. There is only one CGU as services are tied to SaaS revenue. The recoverable amount is determined based on value in use calculations.

The use of this method requires the estimation of future cash flows and the determination of a discount rate in order to calculate the present value of the cash flows.

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The (pre-tax) discount rate used to measure the CGU’s value in use was 20.9%. The carrying amount of goodwill is allocated to the cash generating units (CGUs) as follows:

The key assumptions used in the estimation of the recoverable amounts are set out below. The values assigned to the key assumptions represent management’s assessment of future trends in the relevant industries and have been based on historical internal data:

The cash flow projections include specific estimates for 5 years and a terminal growth rate thereafter. The terminal growth rate was determined based on long term inflation growth rate due to the expectations of the market in which ATTRAQT Group plc operates.

The discount rate was a pre-tax measure based on weighted average cost of capital, with no debt leveraging.

Budgeted EBITDA is estimated by taking into account past practice as follows:Revenue is assumed to grow at 18% based on historical growth and management’s expectations of future trends.

The cost base is assumed to grow in 2018 with investment in the Sales function and will then grow 5% thereafter.

The estimated recoverable amount of the CGU exceeds its carrying amount.

Management has identified that a reasonably possible change in the following key assumptions could cause the carrying amount to exceed the recoverable amount. The following table shows the amount by which the these assumptions would need to change individually for the estimated recoverable amount to be equal to the carrying amount.


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1 1 . P R O P E R T Y, P L A N T A N D E Q U I P M E N T

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1 2 . I N V E S T M E N T S I N S U B S I D I A R I E S

As at 31 December 2017, the subsidiaries of ATTRAQT Group plc, all of which have been included in these consolidated financial statements, are as follows:

Name Proportion of ownership Country of Incorporation Registered Interest at 31 December & principal place of business Office

Attraqt Limited 100% UK 3 Waterhouse Square, 138 Holborn, London, EC1N 2SW ATTRAQT Inc. 1 100% USA 125 S Clark Street, Chicago, IL, 60603, USA

Fredhopper BV 100% Netherlands Wework Metropool, Weesperstraat, 61-105 Amsterdam 1018VN

Fredhopper 100% UK 3 Waterhouse Square, 138 Limited2 Holborn, London, EC1N 2SW

Spring 100% Bulgaria Sredets, 1124, 47A, Technologies Tsarigradskok shosse blvd,EOOD 2 bl. B, fl. 2, apt. 201A

Fredhopper 100% France RCS Paris 27 Avenue de SARL2 l'Opéra, 7500, Paris, France

Fredhopper 100% Germany Neuer Wall 63, 20354 GmbH2 Hamburg, Germany

Fredhopper 100% Australia Level 19, 207 Kent St, Sydney(Australia) Pty NSW 2000Limited2

1 – Held through ATTRAQT Limited2 - Held through Fredhopper BV

1 3 . T R A D E A N D O T H E R R E C E I V A B L E S


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Invoices for services rendered are due in accordance with agreed terms, however the majority of customers settle debts within 45 days of the date of the invoice.

As at 31 December 2017 trade receivables of £1,015,000 (2016: £472,000) were past due of which £112,000 were provided against (2016: £174,000). Trade receivables of £2,999,000 are not due at balance sheet date.

Payment of the overdue receivables is expected in due course. The ageing analysis of these overdue receivables is as follows:

As at 31 December 2017 trade receivables of £112,000 (2016: £174,000) were considered bad or doubtful.If fully impaired the amount of the debt would be written off from the allowance account.Movements on the allowance account for bad and doubtful debts:

The movement on the provision for impaired receivables has been included in administrative expenses in the consolidated statement of comprehensive income.

Other classes of financial assets included within trade and other receivables do not contain impaired assets. 1 4 . T R A D E A N D O T H E R P A Y A B L E S

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The carrying value of traded and other payables classified as financial liabilities measured at amortised cost approximates fair value.

1 5 . E M P L O Y E E B E N E F I T S L I A B I L I T I E SLiabilities for employee benefits comprise of the following:

1 6 . D E F E R R E D T A X

The deferred tax liability arose following the acquisition of Fredhopper BV, details are shown in note 9.

1 7 . S H A R E C A P I T A L


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The company raised £27,799,000, before expenses, by a private placing of 78,572,000 1p Ordinary shares at 35p, and a further 854,249 1p Ordinary shares by an open offer to qualifying shareholders at 35p on 8 March 2017.

1 8 . S H A R E B A S E D P A Y M E N T

The company operates two equity-settled share based remuneration schemes for employees: a United Kingdom tax authority approved scheme and an unapproved scheme for executive directors and certain senior management. Both options are valid for 10 years from the date of grant. After satisfaction of any performance condition included in the award the options will become exercisable on the earlier of any of the following events:

• The third anniversary of the Date of Grant; • On a change of Control of the Company as defined in the Plan rules; • On a Sale or Disposal of the Company as defined in the Plan rules; or • Following the exercise of discretion by the Board.

Details of the number of share options and the weighted average exercise price (WAEP) outstanding during the year are as follows:

The options outstanding at the year-end are set out below:

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The company uses a Black Scholes model to estimate the cost of share options.

The following information is relevant in the determination of the fair value of options granted. The assumptions inherent in the use of this model are as follows:

• The option life is the estimated average period over which the options will be exercised. • There are no vesting conditions remaining which apply to the share options other than that they vest at the earlier of 3 years’ continued service with the Group. • No variables change during the life of the option (e.g. dividend yield remains zero). • Volatility has been calculated over a 3 year period prior to the grant date. • Expectations of staff retention over the vesting period have been calculated by reference to the three year period prior to the grant date.

No options were granted during the year or the comparative year The following options were granted during the year.

Date 15-Dec-17No. of shares 4,254,740Fair Value per Share (p) 14.1pShare Price on Grant Date (p) 33.5pExercise Price (p) 35.0pVestingPeriod 3 yearsStaff Retention Factor 95%3 YearVolatility 65%Risk FreeRate 0.516%Total Fair Value (£) 566,739

The total expense recognised during the year by the Group, for all schemes, was £156,000 (£170,000). The weighted average remaining life of the options outstanding at the end of the year was 7.8 years (2016: 8.8 years). No options were exercised during the year. 1 9 . L E A S E S

The total future value of minimum lease payments is due as follows:


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Azini Capital Partners 1 Nick Habgood is a partner in Azini Capital Partners, and his Directors fees were paid to Azini Capital.

Azini Capital Partners 2 Nick Habgood’s daughter is employed by the Group and was paid a salary as an Account Manager.

Azini Capital Partners 3 Nick Habgood was paid a fee for his contribution during the Fredhopper transaction.

Directors’ spouse 4 Andre Brown’s spouse was paid a salary as Event Co-ordinator, but left the company in June 2017.

Taylor Wessing 5 Robert Fenner is a partner in Taylor Wessing LLP, and his Directors fees were paid to Taylor Wessing LLP.

Taylor Wessing 6 During the year Taylor Wessing provided various legal and professional fees relating to the Fund raising and acquisition of Fredhopper BV.

Details of the directors’ emoluments, together with the other related information, are set out in the Report of the Remuneration Committee.There are no other related party transactions.

2 0 . R E L A T E D P A R T Y T R A N S A C T I O N S

During the year Group companies entered into the following transactions with related parties who are not members of the Group.

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C O M P A N Y S T A T E M E N T O F F I N A N C I A L P O S I T I O N

C O M P A N Y I N C O M E S T A T E M E N T

As permitted by Section 408 of the Companies Act 2006, the income statement of the parent company is not presented as part of these financial statements. The parent company’s result after taxation for the financial year was a loss of £2,330,000 (2016: £234,000).

The accompanying accounting policies and notes form an integral part of these financial statements.

E R I C D O D D

D I R E C T O R

D A T E : 7 M A R C H 2 0 1 8


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C O M P A N Y S T A T E M E N T O F C H A N G E S I N E Q U I T Y

The following describes the nature and purpose of each reserve within equity:

Reserve Description and purpose

Share premium Amount subscribed for share capital in excess of nominal value.

Share based payment reserve The share based payment reserve represents equity settled share based employee remuneration until such share options are exercised.

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

The accompanying accounting policies and notes form an integral part of these financial statements.

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N O T E S F O R M I N G P A R T O F T H E C O M P A N Y F I N A N C I A L S T A T E M E N T S

1 . A C C O U N T I N G P O L I C I E S

B A S I S O F P R E P A R A T I O N

The company financial statements have been prepared in accordance with Financial Reporting Standard 100 Application of Financial Reporting Requirements and Financial Reporting Standard 101 Reduced Disclosure Framework.

The 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.

The financial statements have been prepared under the historical cost convention, and are in accordance with applicable accounting standards. The following principal accounting policies have been applied.

E X P E N S E R E C O G N I T I O N

Expenditure is reported on an accruals basis. Operating expenses are recognised in the income statement upon utilisation of the service or at the date of their origin.

F I N A N C I A L A S S E T S

Loans and receivablesThe Company’s other receivables comprise of loans and other receivables in the statement of financial position. Their carrying value approximates fair value at both reporting dates.

F I N A N C I A L L I A B I L I T I E S

Other financial liabilitiesOther financial liabilities include the following items:

• trade payables and other short-term monetary liabilities, which are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method.

D I S C L O S U R E E X E M P T I O N S A D O P T E D

In preparing these financial statements the company has taken advantage of all disclosure exemptions conferred by FRS 101. Therefore, these financial statements do not include:

• certain comparative information as otherwise required by EU endorsed IFRS; • certain disclosures regarding the company’s capital; • a statement of cash flows; • the effect of future accounting standards not yet adopted; • the disclosure of the remuneration of key management personnel; and • disclosure of related party transactions with other wholly owned members of the group headed by ATTRAQT Group plc.


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2 . I N V E S T M E N T S

On 8 March 2017, the Company acquired 100% of the issued equity instruments of Fredhopper BV from SDL Netherlands BV a subsidiary of SDL plc. Initial investment was £23,005,000.

As at 31 December 2017, the subsidiaries of ATTRAQT Group plc, all of which have been included in these consolidated financial statements, are as follows:

Name Proportion of ownership Country of Incorporation Registered Interest at 31 December & principal place of business Office

Attraqt Limited 100% UK 3 Waterhouse Square, 138 Holborn, London, EC1N 2SW ATTRAQT Inc. 1 100% USA 125 S Clark Street, Chicago, IL, 60603, USA

Fredhopper BV 100% Netherlands Wework Metropool, Weesperstraat, 61-105 Amsterdam 1018VN

Fredhopper 100% UK 3 Waterhouse Square, 138 Limited2 Holborn, London, EC1N 2SW

Spring 100% Bulgaria Sredets, 1124, 47A, Technologies Tsarigradskok shosse blvd,EOOD 2 bl. B, fl. 2, apt. 201A

Fredhopper 100% France RCS Paris 27 Avenue de SARL2 l'Opéra, 7500, Paris, France

Fredhopper 100% Germany Neuer Wall 63, 20354 GmbH2 Hamburg, Germany

Fredhopper 100% Australia Level 19, 207 Kent St, Sydney(Australia) Pty NSW 2000Limited2

1 – Held through ATTRAQT Limited2 - Held through Fredhopper BV

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3 . O T H E R R E C E I V A B L E S

The fair values of other receivables are not materially different to their carrying values.

4 . T R A D E A N D O T H E R P A Y A B L E S

All financial liabilities held by the Company at 31 December 2017 are classified as held at amortised cost.

5 . S H A R E C A P I T A L


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The company raised £27,799,000, before expenses, by a private placing of 78,572,000 1p Ord shares at 35p, and a further 854,249 1p Ord shares by an open offer to qualifying shareholders at 35p on 8 March 2017.

6 . S H A R E B A S E D P A Y M E N T S

For details of the share based payments please refer to the Group note 18.

7 . F I N A N C I A L I N S T R U M E N T S

8 . C A S H B A L A N C E S

ATTRAQT Group plc does not hold bank accounts in its name. The Company’s cash flow movements have been disclosed as part of the group financial statements on page 38.

9 . E M P L O Y E E S

The company has no employees during the period (2016: none).

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C O M P A N Y I N F O R M A T I O N F O R Y E A R E N D E D 3 1 D E C E M B E R 2 0 1 7

C O U N T R Y O F I N C O R P O R A T I O N

United Kingdom

L E G A L F O R M

Public limited company

D I R E C T O R S

Nick Habgood, Ivor Dunbar, Edward Ewing, Robert Fenner, Eric Dodd

S E C R E T A R Y A N D R E G I S T E R E D O F F I C E

E Dodd3 Waterhouse Square138 Holborn London EC1N 2SW

C O M P A N Y N U M B E R

8904529

A U D I T O R S

BDO LLP, 55 Baker Street, London, W1U 7EU

B A N K E R S

Barclays Bank Plc, Barclays Business Centre, 27 Soho Square, London, W1D 3QR

L A W Y E R S

Taylor Wessing LLP, 5 New Street Square, London, EC4A 3TW

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