Unaudited Interim Results

blur Group plc

("blur Group", "blur", the "Group" or the "Company")

Unaudited Interim Results

blur Group, the world's leading enterprise services platform and marketplace, is pleased to present its unaudited interim results for 6 months ended 30 June 2015, a period of strategic and operational progress which has seen the transition to an Enterprise-focussed model producing higher quality revenue streams and subsequent conclusion of the Financial Reporting Council enquiry.

 Summary Financial Results

*before provision for share based payments

Operational and strategic highlights

· Transition to Enterprise-focussed model producing higher quality revenue streams;

· 24% improvement in EBITDA loss driven by 5.8% reduction in underlying administrative expenses (excl. bad debts and exchange gains/losses) vs. H1 2014. Continued focus on operational leverage in H2 2015;

· As of January 2015, blur no longer admitted contingent projects to the Marketplace.

· H1 saw blur increasingly charge smaller business users in advance of admission to the Marketplace - revenue has fallen by 9.3% as a result of this increased vetting and as blur transitions to more mature Enterprise customers;

· 92% increase in the average value of Completed Enterprise projects, 75% increase in the total value of Completed Enterprise Projects vs. H2 2014. These are both indicators of blur's shift to the Enterprise;

· Home Retail Group, Unilever and University of Greenwich among new Enterprise** customers; Number of projects from all repeat customers at project Kick off increased by 34% against H2 2014;

· New Technology Platform, blur 5.0, launched, increasing automation and leverage;

· Premium, high margin Services introduced - blur Manage Ultra, blur Advanced Protect, blur Express, blur Engage and blur Data. Revenue generating in H2 2015; and

· Enterprise Buyer and Service Provider Subscription Plans pre-launched in June 2015. Revenue generating in H2 2015. blur's Enterprise Solution Set launched in Q2.

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

Philip Letts, Chief Executive Officer, commented:

"While H1 2015 has been a challenging six months, it is also one in which significant obstacles have been overcome and material progress made.

"Our new revenue recognition policy is now fully in effect and I'm pleased to announce that the release of this report coincides with the conclusion of the Financial Reporting Council's enquiries into blur's annual report and accounts for the year ended 31 December 2013.

"We understand the amendments to our revenue recognition process have been painful for all our stakeholders, but now believe we have a robust, scalable policy in place that appropriately reflects our position as Principal (under accounting guidelines), with respect to our existing customers, and the progress of a project through our platform.

"At the same time we launched blur 5.0, which is a considerable upgrade to our platform and sets us on a firm path to establish blur as a leader in Services-based Enterprise Resource Planning systems.

"While our transition from a SME-focussed platform to an Enterprise-focussed solution provider has undoubtedly contributed to what we believe will be a temporary pause in blur's growth, our newly introduced Enterprise Solution set is resonating strongly in our buyer community, directly addressing today's key priorities seen by our customers.

"Most importantly, we are seeing Enterprise customers becoming repeat customers, with increasingly more strategic projects, which are completing successfully at a higher average value than we've seen before. With blur's platform and Service Provider community maturing, we can now concentrate on acquiring loyal accounts, as opposed to pursuing business on a project-by-project basis.

"As well as providing our Enterprise clients and prospects access to a large and diverse supplier base we are now able to offer those customers both a full Solution set as well as Premium Services suited to their specific needs.

"Whilst implementing these changes to blur's operating model focus has continued on reducing costs and improving our operational leverage resulting in a 5.8% reduction in underlying operating expenses compared to H1 2014. The Board anticipates the business continuing its take up of Enterprise customers whilst maintaining strict control of costs.

To help in this process we have announced the appointment to blur's board of Roger de Peyrecave, as Non-Executive director and Head of Audit Committee, Rob Wirszycz, as Non-Executive Director, and today David Sherriff as Non-Executive Chairman. These appointments strengthen blur's governance and bring a wealth of invaluable experience to the blur team. I welcome them to the board and look forward to working together to help realise the full potential of the Group."

For further information, please contact:

blur Group plc [email protected]

Tim Allen, CFO Tel: +44 (0) 1392 927189

N+1 Singer

Shaun Dobson/Jen Boorer Tel: +44 (0) 20 7496 3000

Yellow Jersey PR

Dominic Barretto/Alistair de Kare-Silver Tel: +44 (0) 7768 537 739

About blur Group plc at blurgroup.com

blur Group operates the world's leading Enterprise Services Platform and Marketplace. To date over 65,000 businesses have adopted blur to buy or sell services online, including companies like, Tesco, GE, Danone, Daily Mail Group, Argos and PwC.

blur Group is a public company listed on the London Stock Exchange's AIM market (BLUR) and is headquartered in the UK with regional sales offices in the US and Europe.

Business Review

blur's business model

blur has a simple business model. The customer 'submits' their project online and, if they are a new customer, opens an account setting out details to start a contractual relationship with blur.

Following a process of honing the brief, collaborating with the customer on blur's Marketplace using our online 'Project Space', the customer is then invoiced for an access fee of 10% of the budgeted project value unless they are subscribed to one of blur's Buyer plans. Once the access fee is paid, or subscription validated, the project is 'listed' on blur's platform. This access fee is an upfront payment, as opposed to listing fees which historically have been raised on cancellation of a project. Access fees are included as part of Project revenue.

Upon listing, the brief is broadcasted to blur's Service Provider Community, who can pitch for the project ("Pitching on"), confident in the knowledge that the project is both real and live. blur manages this pitch process online and presents back to the customer a shortlist of the top pitches that best fit the brief. The customer chooses the best pitch for them and following final agreement on a 'Statement of Work', the project begins.

blur then provides project management, working with both the customer and Service Provider, to ensure that the project is delivered on-time and to the brief. blur provides an online tool called Project Space where blur, the customer and the Service Provider collaborate on the project objectives.

The customer is invoiced as the project progresses, in line with the agreed Statement of Work. In turn, blur makes payments to the assigned Service Provider in accordance with our agreed contract, until successful project completion.

How blur engages customers

blur's customer engagement strategy is about acquiring and retaining customers, ensuring we exceed their expectations and experience success with every transaction, so they become brand advocates for the blur Marketplace.

Following blur's transition to becoming an Enterprise-focussed organisation, the Group now concentrates on engaging customers at an account level rather than pursuing individual projects. This means blur can generate higher quality, repeating business whilst reducing the costs of acquiring new projects.

blur particularly focusses conversations with its customers around one or more of the 5 Enterprise Solutions it offers; Tail Spend Management, Supplier Diversity, Size Zero Enterprise, Ecosystem Management and The Digital Enterprise.

If a customer's problem is solved by blur simply, quickly and easily - a successful experience - the customer, with the larger Enterprise specifically targeted, will have clear business logic to use the Marketplace again.

During H1 2015 significant progress was made on a number of fronts:

Enterprise customers

In H1 2015, blur continued to focus its efforts on acquiring Enterprise customers. Emphasis has shifted from acquiring individual projects, to developing more mature accounts with a higher propensity for repeat business.

By focussing on the five solutions developed and launched in H1 2015, blur is addressing core business issues with its target customer base.

As a result, blur attracted several new Enterprise customers including Home Retail Group, Unilever and University of Greenwich. We also saw continuation of repeat business from existing Enterprise customers.

Also, as part of this shift, blur no longer admits purely contingent projects to the Marketplace. In addition blur increasingly charges smaller business users in advance of admission to the Marketplace.

With these key changes, blur saw increases in the value of Enterprise projects completing in H1 2015.

New Technology Platform, blur 5.0, launched, increasing automation and leverage

During the period, we launched blur 5.0, the next phase of evolution for our platform.

blur 5.0 enables greater automation of the pitch selection process shaving weeks off the time taken by businesses to find a solution that fits their exact requirements.

The release of blur 5.0 removes the need to filter through dozens of tender documents to shortlist the best supplier pitches. Instead, the shortlist is generated by the machine intelligence capabilities of blur Sense™ which uses a set of proprietary algorithms to automatically match suppliers and their pitches with the requirements of the brief.

As well as shortening the pitch process for clients, the new technology allows blur to scale more rapidly with fewer internal staff hours consumed shortlisting pitches. The new release also brought improved notification and messaging services, allowing customers and service providers to communicate better within the platform.

We also implemented on-platform messaging enabling both buyers and sellers to freely communicate with blur about their project without the need to use separate e-mail or instant messaging tools.

Premium, high margin Services introduced

blur launched a range of Premium Services in June 2015, specifically aimed at our Enterprise customer base:

· blur Manage Ultra - the assignment of a dedicated project manager improves the customer experience and provides the single point of contact our Enterprise customers appreciate.

· blur Protect Advanced - provides greater control and flexibility to the customer, specifically with respect to change requests and budgets

· blur Express - significantly shortens the process to engage a Service Provider if a project is on a tight deadline

· blur Engage - customers can engage with the blur team to provide bespoke procurement support over and above blur's standard support package

The Group also launched blur Data, a unique Subscription-based data tool that combines blur's experience of service provision with 3rd party data and analytics allowing our customers to:

· Predict project costings and duration

· Gain insights into services market trends

· Monitor Business Services stock indices

Finally, we pre-launched, to our existing Buyer and Service Provider base, Enterprise Buyer and Service Provider Subscription Plans. Our new Premium Services, the blur Data product and new subscription plans have all started to generate additional revenue in H2 2015.

Switch of emphasis to Solutions

blur has been working on its Enterprise strategy for 12 months. During that time, we have met with and listened to many senior leaders of Enterprises spanning various geographies and sectors. By listening to their concerns, we have devised five solutions, tailored to address key business issues today:

· Tail Spend Management - Get control of your unstructured purchasing to create better value within your delivery system

· Supplier Diversity - Ensure fair and equal opportunities throughout your supply chain

· Size Zero Enterprise - Doing more with less

· Ecosystem Management - Shift your established organizational focus from "company vs supply chain" to a blurred ecosystem where you "manage from the middle"

· Creating a Digital Enterprise - Digitally-driven business processes are now a mandatory success factor for any large enterprise

As we take these five solutions to our customers, we're finding that the solutions we've identified resonate across all of our Enterprise customer base and beyond into the wider business community.

Financial Review

As we transition to an Enterprise-based model, blur is applying stricter quality criteria to the projects and customers admitted to our Marketplace.

Two specific actions have been taken in H1 2015. As of January 2015, blur no longer admitted contingent projects to the Marketplace. H1 2015 also saw blur increasingly charge smaller business users in advance of admission to the Marketplace

This is particularly reflected in the decline in revenue reported under the Rest of World segment (down 24%). Historically, the projects originating from that region have had lower rates of completion and have led to complications with respect to cash collection.

The stricter criteria blur now applies, both to the credit worthiness and quality of project submission means that while revenue in the period showed a decline, we expect our cash collection metrics to improve.

This is also borne out by a reduction in listing fee revenue, indicating a reducing volume of cancelled projects.

In return, blur has prioritised its sales efforts in the US and UK markets. UK revenue has subsequently grown by 8% over H1 2014. The US has declined by 8% but we expect that trend to reverse in the second half as Enterprise traction improves in that geography.

We are seeing improvements in both the average value of Enterprise projects that completed (92%) and the total value of those Enterprises completing projects (75%). This gives us encouragement as we progress through H2 2015.

As a result of the stricter controls, the move to Enterprise and improved due diligence on the customers and projects admitted to the Marketplace H1 2015 revenues have reduced by 9.3% compared to H1 2014, this is seen as a temporary pause in growth whilst the transition to better quality and revenue and customers is underway

Revenue recognition changes

As reported in the 2014 annual report, following the appointment of KPMG as new auditors to the Group on 6 November 2014, and the enquiries made by the Financial Reporting Council into the annual report and accounts for the year ended 31 December 2013, blur amended its revenue recognition accounting policy resulting in a restatement of 2013 and H1 2014 comparatives, representing correction of an error.

Re-stating H1 2014 revenue and cost of sales

As a result of the updated Revenue Recognition policy and changes to recognition of revenue as set out in the full 2014 accounts, H1 2014 revenue and associated costs have been corrected to reflect the revised treatment. The impact on H1 2014 has been to reduce recognised revenue from $5.7m to $1.8m and EBITDA loss has been increased from $4.0M to $6.1M. The changes to our policies and processes have now been fully implemented into the Group's working practices and the results will be reflected in both this and upcoming announcements.

Gross profit

The H1 2015 figures of $0.3m represents 20.9% of blur's revenue.

A further correction of accounting practice on H1 2014 comparatives is the allocation of the cost of blur staff in its Global Customer Success and Projects and Delivery functions to Cost of Sales. This change reduces gross margin while also reducing Administrative expenses. Therefore this adjustment is neutral from the perspective of EBITDA.

The H1 2015 gross margin of 20.9% is calculated on a consistent basis with H1 2014's restated gross margin of 21.7%.

Gross margin slightly reduced due to the leverage on staff costs included in cost of sales.

Operational expenses

Underlying operational costs (excluding exchange gains/losses and bad debts) reduced by 5.8% vs. H1 2014 and further reductions are expected in H2 2015.

Including exchange gains and losses and bad debt charges, H1 2015 Administrative expenses, following the reclassification of certain staff costs to costs of sales, are down 20.6% on H1 2014. We remain focussed on ensuring our expenses are aligned with the company's overall strategy and are appropriately sized.

Loss from operations

The Loss from Operations is $5.0m. It represents a reduction of loss of 21.2% over H1 2014. The EBITDA loss similarly reduced by 23.7% compared to H1 2014. As well as a reduction of 5.8% in underlying operational expenses (excl. bad debts and exchange gains/losses) vs. H1 2014, blur also recognised an exchange gain on cash deposits in the period.

Finance income

Finance income represents interest received on cash deposits. The H1 2014 total of $277,214 is higher than the 2014 total of $93,459 due to the interest on the deposit of cash received from fundraising in June 2014.

Investment in intangible assets - trading platform

During the period we continue to invest in our in our trading platform, and the increase of $848,913 in the trading platform intangible asset represents payments made to staff dedicated to the development of the trading platform and capitalised

Cash used in operations

Cash used in operations totalled $4,349,694 in the period, down 21.9% from H1 2014. Cash as at 30 June 2015 totalled $12.4m.

Growth of the Governance, Management and Corporate Sales teams

blur has always recognised that building a new business requires the right people and we continue to evolve our teams. Our new Chief Financial Officer, Tim Allen, joined us on 20 July 2015  from Cambium Networks. We have also recently announced two new additions and one change to blur's board of directors.

Roger de Peyrecave joined us on 2 September 2015 as a Non-Executive Director and Chair of the Audit Committee. Roger is currently a partner at PricewaterhouseCoopers LLP ("PwC"), where he qualified as a Chartered Accountant in 1983, and has held senior management positions within PwC UK, including office and regional leader. He is also a director of PwC's internal company running a service delivery centre in Poland. Roger has over 20 years' experience as a PwC Partner and auditor to FTSE100 and midcap Plcs.

Rob Wirsczyz joined blur's board on 15 September 2015 as a Non-Executive Director. Rob works as a Non-Executive Chairman, adviser and mentor for a range of quoted and private businesses including Innovation Group plc and iForce plc. He has extensive domain expertise in enterprise outsourcing, managed services, software products, and consumer electronics. Rob applies this experience and knowledge to the companies he works with, in the areas of strategy, sales, marketing and people development.

On 30 September 2015, we announced that Mr. David Sherriff has been appointed to the position of Non-Executive Chairman to the blur Group board with immediate effect.

Conclusion & Outlook

H1 2015 was a period of strategic and operational progress resulting in our EBITDA loss being reduced by 23.7% compared to H1 2014.

We made senior board appointments that reflect our ambition in the Enterprise space. We remain dedicated to that Enterprise-focussed strategy. We have released a suite of Solutions, Services and Products specifically targeted at the Enterprise customer. We have invested in our Enterprise sales team and our Marketing spend is now focussed on this target customer base. We have on boarded a number of new Enterprise customers and the number of repeat projects being processed through our platform is increasing.

In Q3 we have seen a positive reception for our five solutions. Through this approach blur has been able to significantly progress its engagement with increasingly significant Enterprises, including multi-national corporations.

This engagement has fed an increasing Enterprise sales pipeline in which we expect to see increasing conversion in Q4.

blur has made progress on its operating model, improving processes, controls and platform automation, which is leading to further progress on cost control and cash burn rates, particularly in Q4.

Consolidated statement of total comprehensive income blur Group plc

The results reflected above relate to continuing activities.

The notes on pages 11 to 25 form part of these financial statements

Consolidated statement of financial position blur Group plc

The notes on pages 11 to 25 form part of these financial statements

Consolidated statement of changes in equity blur Group plc

Consolidated cash flow statement blur Group plc

Notes to the consolidated financial information

1.  Accounting policies

Basis of preparation

The principal accounting policies adopted in the preparation of the financial statements are set out in the full accounts for 2014, with these results being prepared consistently. The policies have been consistently applied to all the periods presented, unless otherwise stated.

These financial statements have been prepared in accordance with IAS34 "Interim financial statements".

The financial information for the year ended 31 December 2014 does not constitute the Group's statutory financial statements for that period. The comparative information for the full year ended 31 December 2014 has, however, been derived from audited statutory financial statements. A copy of the 31 December 2014 statutory financial statements have been delivered to the Registrar of Companies. The auditor's report on those statements was unqualified, did not include reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain a statement under section 498(2)-(3) of the Companies Act 2006.

The preparation of financial statements in compliance with adopted IFRS requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies. The accounting policies have been applied consistently throughout the group for the purposes of the preparation of the interim statements

The Group financial statements consolidate the financial statements of the Company and its subsidiaries (together referred to as "the Group").

Going concern

The Directors have prepared a cash flow forecast covering a period extending beyond 12 months from the date of these financial statements. blur is a disruptive and evolving technology company and there are the existence of uncertainties in the forecast as a result. The forecast contains certain assumptions about the performance of the business including growth in future revenue (a key assumption/sensitivity/risk in a rapidly evolving technology business); the cost model and margins; and importantly the level of cash recovery from trading. The directors are aware of the risks and uncertainties facing the business as it embarks on its new, Enterprise-focused strategy but the assumptions used are the Directors' best estimate of the future development of the business.

After considering the forecasts and the risks, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For these reasons, they continue to adopt the going concern basis of accounting in preparing the annual financial statements. As with any disruptive, evolving technology company there is always an inherent risk over the ability of the Group and Company to continue as a going concern if forecasts are not met and cash resources are not adequate. The financial statements do not include any adjustments that would result from the going concern basis of preparation being inappropriate.

Functional and presentation currency

The functional currency of the Company is Sterling (£). The presentational currency of the Company is the US Dollar ($).

Revenue Recognition

Revenue represents the gross value of services provided to customers in respect of revenue earned, net of discounts, sales taxes, accrued, and deferred amounts.

The Board have reviewed the company's position as principal in accounting for revenue and is satisfied, on the balance of argument, that this remains the appropriate treatment.

There are two principal sources of revenue:

Project revenue

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

Project revenue is recognised on either a timeline, or milestone basis. Timeline refers to the date the delivery of the service commences to the date it is completed. Milestone refers to specific performance targets within each project until completion. Under the project milestone method, the milestones inserted in the Statement of Work broadly are indicative of the stage of completion and reflect the value of work completed.

In the case of milestone projects, the service provider/customer confirms the proportion of costs incurred to date and the resulting cost to completion which gives the indication of the percentage of completion. This is done on the platform collaboration area that is updated by the service provider, supported at period end with additional electronic confirmation. The milestones represent invoicing points during the lifecycle of the project and the generation of an invoice will represent additional support that the milestone has been achieved.

Where a project has regular deliverables and is relatively short in duration, the project timeline is used to determine the stage of completion. Such timeline is from when a service provider has been appointed, to completion. The timeline basis is only used where the time taken is a reasonable indicator of the stage of completion. In addition, the flow of cash on the project is also used as an indicator of project progress.

Where any element of a project is contingent upon either completion or specific milestones or deliverables, the contingent element of the project is separately identified and revenue recognised only when the contingent element is completed. Where a project is delayed or suspended for whatever reason, the revenue recognised on a timeline basis is initially fixed to the date of suspension. Revenue will only be further recognised if the project is deemed to be commercially viable with an expectation that it will be realised in cash.

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

Listing Fee Revenue

Being revenue from customers where the project is cancelled after listing and there is an expectation of collection. The Listing fee is a mandatory charge when a customer listed a project and decided to close their trading account or not to select a service provider. The project is listed when the customer submits their project brief and opens a trading account. The listing fee covers the customer's use of their trading account and the cost of time spent developing pitches and running them through the marketplace process.

Prior to a project being formally cancelled, revenue recognised is reduced to the extent of costs incurred. An approximation of costs incurred is typically 10% of project value.

Foreign currency

The functional currency of blur Group plc and blur Ltd is Pound Sterling and blur Inc. is US Dollars.

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

The exchange rates used for translating the statement of financial position at 30 June 2015 was at closing rate of £1 = US$1.5719 (2014: US$1.7028) and the statement of comprehensive income at average rate of US$1.555 (2014: US$1.6686).

Transactions entered into by a group company in a currency other than the functional currency of that entity are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at the rates at the reporting date.

Translation gains/losses arising on consolidation on monetary assets and liabilities denominated in a currency other than the financial currency of the company holding them are recognized in other comprehensive income. Translation gains/losses in accounts of an individual company are taken into the statement of comprehensive income.

2. Critical accounting estimates and judgements

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

Judgements and accounting estimates and assumptions

(a) Revenue Recognition

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

• blur has the latitude to agree the fee for each project;

• blur has primary responsibility providing the services to a customer.

• blur is responsible for the quality of the service delivery, delivered on time, budget and to a sufficiently high standard. This includes the management of the service delivery of the expert; and

• blur facilitates both commercial terms and the project management for each project

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

Revenue from projects is assessed on an individual project by project basis with revenue earned being ascertained based on the stage of completion of the project which is estimated using a combination of milestones in the contract and a proportion of total time expected to be required to undertake the contract which has been performed. Estimates of the total time expected to undertake the contracts are made on a regular basis and subject to management review.

The amounts by which revenue exceeds billing is shown as part of prepayments and accrued income in note 12 and the amount by which progress billing exceeds revenue is shown as deferred revenue in note 13.

Revenue represents the gross value of services provided to customers in respect of revenue earned, net of discounts, sales taxes, accrued, and deferred amounts.

Revenues are recognised when it has been determined that the economic benefit associated with the transaction will flow, received or receivable by the respective entity on its own account. Therefore amounts collected on behalf of third parties, such as the revenue authority for sales or Value Added Taxes, are not included as economic benefits which flow to blur.

Revenue at blur is measured at the fair value of the consideration received or receivable, once it can be accurately established that a valid contract has come into existence between blur and customer, as evidenced with reference to the Terms and Conditions in issue at the time of the transaction. Such evidence will take the form of a Statement of Works, blur Terms, Project Terms, the Project Pitch, notes and comments in the Project collaboration area or direct correspondence between blur and the Customer and / or Expert.

The contract value of each project of a customer is usually determined by agreement between blur and its customer. This total contract value is measured at fair value of the consideration received or receivable taking into account any trade discounts or other adjustments allowed by blur.

The total amount and value of revenue to recognise in each reporting period, for each revenue stream blur classifies is detailed in note 4.

blur recognises revenue when the following criteria are satisfied:

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

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

c. The stage of completion of the transaction at the end of the reporting period can be measured reliably, as set out in the detailed measurement guidance in section 5 of this policy

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

Revenue is only recognised when the company has determined that it is probable that economic benefits associated with the transaction will flow to the company.

(b) Restatement of the prior year

The Board, at the time, considered that the Revenue Recognition policy, as revised and applied to the 2014 interim results, reflected an appropriate revenue recognition methodology. However, as a growing business, the dynamics of projects forming the revenue of the company continues to evolve with more complex and longer life cycle projects, including contingent fee arrangements, being submitted to the platform since mid 2013. The way that these projects flow through the platform, and the associated complications with projects of this increasingly complex nature, has been better understood since several projects have progressed through to completion.

Following the commencement of the Financial Reporting Council enquiry, the Board, prior to the approval of the 2014 financial statements made changes in relation to the timeline to commence recognising revenue which previously started when a binding contract with the customer was created. This is at the point of listing the project and irrespective of whether the project progressed or not, the customer would be committed to pay a minimum of 10% of the project fee. However, the Board concluded that it is correct to start recognising revenue when commercial contracts are agreed and a project expert has been appointed (commonly referred to as'' kick-off''). blur consider that this method ensures that blur aligns its revenue recognition with the full delivery of the project from when the combined work of blur and the service provider have commenced and that, compared to the previous method of recognising 10% on kick-off, a delay in recognising revenue on projects to start from 0% at kick-off reflects a correct revenue recognition approach.The prior year adjustment to reflect the changes to revenue and cost of sales recognised in the H1 2014 results is set out below.

Prior to the approval of the 2014 financial statements, in conjunction with our auditors KPMG, the directors reconsidered the application of their accounting policy to 2013 projects and concluded that it was not appropriate to recognise revenue on this type of project until there exists better evidence that the amount of revenue can be measured reliably and that economic benefits will be received. As mentioned previously, the dynamics of projects forming the revenue of the company continues to evolve with more complex and longer life cycle projects being submitted to the platform. Therefore a correction was required to 2013 and half year 2014 revenues where projects have subsequently been suspended as a

prior year adjustment to correct a material error. The same issue was present with respect to the recognition of revenue when the 2014 half year accounts were originally prepared and as a consequence a similar prior year adjustment to correct a material error has been recognised in the 2014 comparative numbers in these accounts.

The cost of blur staff within its Customer Success function, who are directly involved with the delivery, management and completion of projects, has been reallocated from overheads to cost of sales to reflect internal staff costs that are directly relevant to the delivery of projects. This reallocation has increased cost of sales in H1 2014 by $474,403 with a corresponding decrease in administration costs.

As a result, the 2015 interim financial statements include revised 2014 comparatives: i) to reflect the change in revenue recognition from kick-off onwards by recognising zero at kick off instead of 10%, which has reduced revenue for the 6 months to 30 June 2014 by $(447,512); and ii) to project revenue to reflect a change in the assessment of projects that were not based on a fully understood project delivery track record, which has reduced revenue for the 6 months to 30 June 2014 by a further $(3,400,257); iii) to reduce the expert cost of sale for the project revenue reversed, reducing cost of sales by $(375,693): to reduce the expert cost of sale for the adjustment in revenue recognition at kick off to zero, reducing cost of sales by $(2,832,280) and iv) to cost of sales to reflect internal staff costs relevant to the delivery of projects, which has increased cost of sales for the 6 months ended 30 June 2014 by $474,403.

The net impact of the prior year comparative on results before tax and net assets has been $(1,473,222) and $(1,448,929).

The restatement of the six months to 30 June 2014 comprises the following

Statement of Comprehensive Income

Statement of Financial Position

3. Segmental analysis

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

The Group currently has two reportable categories which are:

1. project revenues - for the provision of services from projects that list on blur's marketplace, where the customer accepts the bid from the expert supplier and a legally binding contract between blur and its customers is established

2. listing fee revenues - where the project is cancelled after listing and there is an expectation of collection. The Listing fee is a mandatory charge when a customer listed a project and decided to close their trading account or not to select an expert.

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

4. Loss from operations

The operating loss as at 30 June 2015 includes the following: 

Removing Bad debt provision and Foreign exchange (gains)/losses from the administrative expenses total gives underlying operating expenses of $5,423,406 in H1 2015 which is down 5.8% compared to H1 2014 ($5,576,416).

5. Earnings before Interest, Tax, Depreciation and Amortisation

Earnings before Interest, Tax, Depreciation and Amortisation is calculated as follows:

6. Loss per share

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

 Due to the loss in the period the effect of the share options were considered anti-dilutive.

7. Intangible Assets

8. Cash and cash equivalents

Cash and cash equivalents comprise balances on bank accounts, cash in transit and cash floats held in the business. Finance charges are accounted for on an accruals basis and charged to the statement of comprehensive income when payable.

Cash and cash equivalents are held in Pound Sterling & US dollars and placed on deposit in UK & US banks.

9. Trade & other receivables

All amounts shown under trade and other receivables are due within one year. Trade receivables principally comprise amounts outstanding for sales to customers and are net of provision for doubtful recoverability. An impairment review of outstanding trade receivables is carried out at the period end and a specific amount provided for.

10. Loans and borrowings

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

11. Share capital 

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

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

12. Share based payments

In compliance with the requirements of IFRS 2 on share-based payments, the fair value of options granted during the period or which were granted in previous periods but had an extended period before vesting is calculated either using the Black Scholes option pricing model or on the basis of the fair value of remuneration waived in consideration for the grant.

13. Related party transactions

Compensation and other related payment to key management personnel (including directors):

(1) The consultancy fees were paid to Reviva LLC, a company in which K Cardinale has an interest. These were paid for K Cardinale's director services.

(2) The service fees were paid to CFPro Limited & Cambridge Financial Partners LLP for accounting and consulting services. Barbara Spurrier has an interest in this entity. 

(3) Other consultancy fees paid to Stephen Harvey during the year prior to his employment with the Company.

14. Control

There is no ultimate controlling party. 

15. Events after the reporting date

In March 2015, the Financial Reporting Council informed the Group of an enquiry into the annual report for year ended 31 December 2013. This enquiry concluded on 30th September 2015.