Blur revenues "substantially lower" as FRC probes accounts

10th Apr 2015 08:30

Blur Group, the provider of an online exchange where business can buy and sell services, has warned its revenues will be substantially worse than expected due to accounting issues that are being investigated by regulators.The Financial Reporting Council (FRC) is investigating the way in which AIM-listed company recognised revenues on a number of projects between late 2013 and early 2014, which looks likely to delay the reporting of results.Following a review of projects under the old revenue recognition policy, the company and its auditor, KPMG, have identified significant elements that will now be excluded from reported 2014 revenue, meaning losses are now likely to be larger than expected, although the final accounting treatment has not yet been determined.Blur, which appointed a new chief financial officer in September, said its new revenue recognition policy has been "rigorously applied from mid 2014".Deputy chairman David Sherriff said: "This process will draw a line under certain older projects and completes Blur's transition which started with the updated revenue recognition approach announced in Q2 2014.He said the business was benefiting from better project completion, tighter invoicing to cash and higher repeat business due to increasing the mix of enterprise customers over recent quarters.Chairman and chief executive Philip Letts attempted to stress that the issue was being put behind the company."Last year was a year of transition for Blur Group in which we increased our investment in key resources to accelerate revenue growth," he said. "Our focus during 2015 remains on growing the business to reach profitability in early 2016." Analysts at Northland Capital lamented a further setback for Blur and noted that the the company is still burning cash, with around $7m consumed in the last six-month period."Although the metrics associated with the total value of projects submitted to the exchange and the profile and number of clients has been heading in the right direction, the company has struggled to drive this through the P&L. Blur has enjoyed some first mover advantage but without a rapid build up in participants, the barriers to entry for larger and better capitalised entrants look low."