Mirada plc
Preliminary Results for the 15 Months to 31 March 2008
Mirada plc ("Mirada" or "the Group"), the interactive media and games group
with operations in London, Milan and Madrid, announces its Preliminary results
for the 15 months to 31 March 2008.
Highlights
* Acquisition of Fresh Interactive Technologies S.A., a Spanish-based company
+ Successful integration, combined Group now on track with new direction
* Fund raising completed on 25 February 2008 resulting in a cash injection of
�12.8 million into the Group
* Group restructured to
+ Better enable the Group to focus on B2B transactions with a product
based strategy
+ Identify and implement cost savings measures
+ Focus on operating only four business units: Gaming, Media, Touch and
Connect
* Strengthened balance sheet due to:
+ The cash from both the placing and that held by Fresh
+ The conversion of convertible loans totalling �5.21 million owed by the
Group into ordinary shares
+ Goodwill of �4.1 million arising from the acquisition of Fresh
* Disposal of two dating companies owned by the Group have resulted in a
profit of �576,000
* Retained loss for the period decreased to �20.56 million (2006: �26.63
million)
* Management has been successful in implementing cost control programmes and
operational changes that have strongly positioned the Group for the future
Jos�-Luis V�zquez, CEO, Mirada, commented:
"There has been a significant transformation over the last year in the Group's
shareholder structure. We have skilled core investors helping the management
team, both financially and commercially, and providing huge support to our
international expansion. Indeed trading over the past few months show clear
progress towards our financial objectives.
The Mirada brand is gaining recognition in the UK, Europe and further afield.
With a keen eye on margin growth and continued commitment to skilled personnel
in technology development, sales and operations, the Directors believe they can
profitably exploit the highly positive reception the Group has received from
existing and potential customers."
30 July 2008
Enquiries:
Mirada PLC +44 (0) 207 942 7942
Jose Luis Vazquez, CEO
Haggie Financial LLP +44 (0) 207 417 8989
Nicholas Nelson/Kathy Boate Nicholas.nelson@haggie.co.uk
Seymour Pierce Limited +44 (0) 207 107 8000
Mark Percy/Parimal Kumar
Chairman's Statement
The 15 month period under review was dominated by negotiations leading to the
restructuring of the Group. The conclusion was an important strategic
acquisition of Fresh Interactive Technologies S.A. ("Fresh") and a fund raising
of �12.8 million to strengthen the Group's balance sheet, to provide working
capital, to invest in new products and services as well as assist in financing
the proposed international expansion.
As part of the negotiation process, the Board prepared a detailed plan to
restructure and improve the method of trading. This plan included cost savings,
the improvement of the Group's sales structure, focusing activities on
business-to-business ("B2B") instead of business-to-consumer ("B2C")
transactions, implementing a successful transition to a product based strategy,
and expansion into the international market place. The plan has in the main
since been implemented and the Directors foresee the resulting benefits flowing
through to the income statement during the year ending 31 March 2009.
As part of the restructuring and following on from the valuation of the Group
arising from the refinancing, a review was made of the carrying values of the
goodwill held on the balance sheet. The result of the review was to impair the
goodwill by �12 million.
Financial Overview
For the 15 months ended 31 March 2008 the continuing operations of the Group
showed a loss before interest, tax, depreciation, amortisation, restructuring
and share-based payment charges of �4.46 million compared to a �0.54 million
loss in the year ended 31 December 2006. A significant part of this movement
relates to the fact that in 2006 there was a one-off credit to cost of sales of
�1.7 million in relation to a negotiated reduction in contractual liabilities
relating to bandwidth and transmission costs.
In addition, two major factors contributed to this deterioration. Firstly, the
management focus on the refinancing and restructuring of the Group, and
secondly the significant uncertainty which existed in our commercial sector
concerning the Group's financial viability. Consequently, it is only since the
completion of the acquisition of Fresh, the refinancing and the subsequent
restructuring of the management team, that significant commercial opportunities
that were in negotiation during the period under review were in fact
consummated.
Loss before interest, tax, depreciation, amortisation, restructuring and
share-based payment charges is a performance measure used internally by
management to manage the operations of the Group and removes the impact of one
off and non-cash items (see note 4 for a reconciliation of this measure to
statutory captions).
After deducting depreciation, amortisation, restructuring and share based
payment charges, the retained loss for the period equalled �20.56 million
(2006: loss of �26.63 million). Future results will no longer include such
large one-off and non-cash expenses, because the Directors consider that no
further impairment of goodwill will be necessary, the Group has repaid all
loans which incurred high financing fees and that as at 31 March 2008 the Group
had substantially completed its restructuring.
As outlined in the CEO's statement, the Group has structured itself into four
business units: Gaming, Media, Touch and Connect. As this change only occurred
after the February 2008 refinancing, the following reviews will cover the
divisions reviewed in previous annual reports.
Games & Gambling
The net profit for this division equalled �1.66 million compared to �2.01
million in 2006. The major reason for this decrease was the fall in the net
income recorded by the fixed odds gaming business from �2.46 million in 2006 to
�1.30 million. This decrease was largely offset by the improvement in the
profit recorded in the Group's B2B gaming business which was a result of the
Group's change in focus from its own brand to concentrating on becoming a
supplier to other brand owners. Management expect this improvement in the
Group's B2B gaming business to continue in the coming years.
Interactive Services
Gross profit has reduced to �3.1 million in the 15 months ended 31 March 2008
from �4.7 million in 2006. Taking into account the impact of the �1.7 million
reduction in contracted liabilities, the underlying trading has remained
constant.
Dating
In December 2007 the Group disposed of its 100% shareholding in Yoomedia Dating
Group Ltd for a cash consideration of �250,000. In September 2007 the Group
placed Finlaw 532 Ltd (which traded under the name Avenues) into receivership.
These two transactions have given rise to a profit on disposal/liquidation of �
576,000. The Group no longer operates in the dating sector.
First time adoption of IFRS
These are the Group's first financial statements to be reported under
International Financial Reporting Standards ("IFRS"). As part of the transition
to IFRS the directors were required to restate the 31 December 2006 balance
sheet and income statement. During the work performed for the transition to
IFRS, the directors also conducted a review of the carrying values of major
assets and liabilities held in the balance sheet and identified any possible
adjustments which were needed to be made against these carrying values.
One of the major changes in presentation required under IFRS is that revenues
from fixed odds gaming must no longer be shown gross of customer winnings. The
result is that the revenue and cost of sales recognised in the income statement
for the 15 months ended 31 March 2008 and the year ended 31 December 2006 have
been reduced by �43.6 million and �43.5 million respectively.
February restructuring
On 25 February 2008, the Company announced that all the resolutions relating to
the restructuring had been passed. Full details of these resolutions are
included in the circular dated 31 January 2008 which is available on the Group
website www.mirada.tv.
The main resolutions included:
* the Company's name being changed to Mirada plc;
* �8.37 million raised via the placing of ordinary shares for cash;
* the acquisition of Fresh for shares. Immediately prior to the completion of
the acquisition, Fresh had received an equity cash investment of Euro6 million
from Barings Private Equity Partners Espana S.A.;
* convertible loans owed by the Group totalling �5.21 million being converted
into ordinary shares; and
* a share capital reorganisation.
The restructuring has resulted in the Group's net asset position being
substantially improved compared to the balance sheet reported in the 31
December 2007 interim statement. This improvement arose from:
* the Group receiving �12.8 million in cash from both the placing and the
cash held by Fresh;
* the conversion of the convertible loans; and
* goodwill arising from the acquisition of Fresh.
The Group now has a strong balance sheet and once again, management can focus
100% of their efforts on trading.
Board changes
As part of the restructuring, Jos� Luis V�zquez and Rafael Mart�n Sanz were
appointed to the Board on 25 February 2008. Jos� Luis V�zquez has taken the
position of Chief Executive Officer. On the same date Jeremy Fenn and John
Swingewood stepped down from the Board and I became part-time Executive
Chairman.
On 27 March 2008 it was announced that Neil MacDonald had resigned from the
Board and from his position as Chief Operating Officer.
Outlook
The constraints we had previously experienced in being able to leverage our
technical expertise and exploit opportunities in our market place have now been
removed. Subject to there being no major changes to market conditions there is
no reason why results in the future should not reflect this new reality.
Michael Sinclair
Chairman
29 July 2008
Chief Executive Officer's Report
The past five months, following the acquisition of Fresh, have been both
exciting and encouraging. The new management team has made excellent headway
with a changed strategic philosophy and a carefully designed turnaround plan
towards a healthier financial position. The people skills born from the
combination of YooMedia and Fresh, provided a foundation to enable the
emergence of Mirada as a future leader in its niche sector.
Management systems
An initial aim was to unify and maintain strict management reporting and
tracking controls thus enabling management to carefully track the profitability
of the different areas of the Group. Graham Duncan, Chief Financial Officer,
who joined the Group approximately 12 months ago, has been integral to this
process, coordinating his efforts with the business development managers and
the new Chief Technical Officer, Jos� Gozalbo.
The turnaround plan, created and carefully studied during the months prior to
the merger, and fully aligned with the objectives of both old and new
investors, has been pivotal to the first months' activity. Central costs have
been cut and a reshaping of certain activities has served to dramatically
improve the financial health of the Group. Every expense and investment made
has been subject to critical review to ensure that they are oriented towards a
clear objective of efficiency. The Board believes there is more that can be
done; further areas of cost reduction have been identified and will be
implemented without compromise to the goal of growing profitability. Indeed,
the Directors have been encouraged to see the different areas of the Group
evolving as a cohesive unit with the same vision shared by management and staff
alike.
The emergence of a skilled and motivated team requires further mention. The new
Vice President of Sales and Business Development, Aldo Campinos, has shown
great success in boosting sales potential with a focus on international
distribution capabilities, with new Gaming and Media Directors, Paul Marchong
and Antonio Rodr�guez, offering great expertise in their respective areas.
Additionally, the synergies between Mirada and Fresh have been clearly
demonstrated during the past months with the Group's operating centres in
Exeter, London, Madrid and Milan working closely on development and
distribution of products and services.
As part of the turnaround plan, the Group's London operations will move to a
single site in Wapping, which, from the end of July 2008, will become Mirada's
head office.
Following the review of the management systems, several Key Performance
Indicators ("KPIs") have been identified. These will be used in assessing the
financial performance of the Group and its four business units. The main KPIs
include:
* operational margins of the business units after the allocation of research
and development costs and central overheads;
* the return on investment of the internal development costs incurred in the
creation of its new product portfolio; and
* the increase in margins generated through product distribution and
international sales
These KPIs will enable the Group to understand on a timely basis areas where
the Group is surpassing expectations and, just as importantly, areas which may
be underperforming. This will allow the Group to focus its efforts on
maximising its earnings.
Strategic Vision
There are three key elements driving the future of Mirada:
* an aim to produce the best quality products for the interactive audiovisual
market, complemented with a high level of after market support;
* the creation of a strong sales and business development team to generate
global partnership agreements and to support the international product
distribution; and
* continued integration of the four business units (Media, Gaming, Touch and
Connect) over a common platform, capable of collecting interaction
experience, creating knowledge and improving the service experience on
offer to customers.
The Directors hold the view that the audiovisual and technology services
sector, suffers from a lack of differentiation and low barriers to entry.
Consequently, high competition, low margins and reduced overseas business
opportunities have become endemic amongst Mirada's competition.
The Directors' aim is the generation of products based on the valuable assets
and IP now owned by the Group and the identification of the market trends based
upon close relationships with some of the leading customer groups in Europe. As
already mentioned, the creation of an international business development team
demonstrates the Board's commitment to increasing sales into Europe and the
rest of the world. Our product-based strategy will give the Group an advantage
over many of its competitors due to the fact that, as the products have already
been developed, we can meet the customer needs on a more timely basis. This
will enable the Group to achieve its anticipated increase in revenues without
any compromise to the margins earned.
The Directors are pleased to see an out performance on internal targets and
recently a new office in Milan was opened providing the means for further
international growth. The Group has opened doors into a range of potential
customer groups throughout the world but notably the Middle East, South East
Asia, Latin America and Western and Eastern Europe.
As mentioned above, the Group has now structured itself into 4 business units:
Mirada Gaming
Our gaming business unit is dedicated to the provision of products and services
for the gaming market, with special focus on the creation of multichannel
content and technology for the major on-line gaming players in the market.
The Group's product development team is working on the development of a new
generation of gaming products for the Group's key customers. These products are
being designed to enable the user to access games via the most relevant
devices, PCs with broadband internet access, mobile phones and via digital TV
set-top-boxes. Our aim is sell these products across the global market. These
products will be show cased on Mirada's on interactive gaming channel, Monte
Carlo Roulette, which is broadcast on Sky channel 863. This channel will enable
the Group to test new products and demonstrate the capabilities of these
products to potential customers.
Mirada Media
The Media division addresses the needs of the different players in the
audiovisual value-chain, digital TV providers, broadcasters and content
producers. Our main products are oriented to the navigation and
commercialisation of content on the pay TV platforms, and to providing
interactive products and services for customers have their own channels and
content, for example NHS or ITV.
For the Media business unit, customers have been providing encouraging feedback
about the Group's enhanced Video-on-Demand products. The revitalisation of the
Group's studios at Wapping has served to generate new profitable agreements,
based on the usage of our facilities and technical support for customers using
the production capabilities. This is only one example of newly identified
revenue streams from the appropriate monetisation of the valuable resources
within the Group.
Mirada Touch
Mirada's Touch business unit provides products and services for the interactive
advertising market. Touch's customers are brands and interactive agencies. As
the business unit's current activities are the provision of mobile phone
marketing services in the highly competitive UK market, it is the objective of
the management to expand into the overseas market and focus on new
product-based strategy.
Mirada Connect
The Connect business unit comprises the Group's transactional activities
including agreements with APCOA, NCP and Meteor, the 3 largest parking services
providers in the UK. Having solved the required technical integration steps,
early revenues coming from the cashless mobile parking technologies used trials
taking place in two of Meteor's London Midland train station car parks are
surpassing our initial expectations. Going forward, management believe that the
Group's international focus could lead to the Connect business expanding into
other countries, especially as existing customers do have a presence in the
overseas market place.
Outlook
There has been a significant transformation over the last year in the Group's
shareholder structure. We have skilled core investors helping the management
team, both financially and commercially, and providing huge support to our
international expansion. Indeed trading over the past few months show clear
progress towards our financial objectives.
The Mirada brand is gaining recognition in the UK, Europe and further afield.
With a keen eye on margin growth and continued commitment to skilled personnel
in technology development, sales and operations, the Directors believe they can
profitably exploit the highly positive reception the Group has received from
existing and potential customers.
Jos�-Luis V�zquez
Chief Executive Officer
29 July 2008
Consolidated Income Statement
15 months ended 31 March 2008
15 months ended 31 March 2008 Year ended 31 December 2006
Continuing Discontinued Total Continuing Discontinued Total
operations operations operations operations
Note �000 �000 �000 �000 �000 �000
Revenue 3 12,504 1,049 13,553 13,859 2,918 16,778
Cost of sales (8,242) (485) (8,727) (9,131) (1,495) (10,626)
Gross profit 4,262 564 4,826 4,728 1,423 6,152
Net gaming income 1,304 - 1,304 2,459 - 2,459
Other income - profit on 6 - 576 576 - - -
disposal
Depreciation (1,486) (5) (1,491) (1,178) (98) (1,276)
Amortisation of deferred (10) - (10) (2,535) (95) (2,630)
development costs
Impairment of goodwill (12,000) - (12,000) (16,427) - (16,427)
Restructuring costs (960) (76) (1,036) (2,107) (881) (2,988)
Share based payment charge (205) - (205) (488) - (488)
Other administrative expenses (10,024) (906) (10,930) (7,731) (2,163) (9,895)
Total administrative costs (24,685) (987) (25,672) (30,466) (3,237) (33,704)
Operating (loss)/profit 4 (19,119) 153 (18,966) (23,279) (1,814) (25,093)
Finance income 2 - 2 3 - 3
Finance expense (1,575) (24) (1,599) (1,507) (36) (1,543)
Loss before taxation (20,692) 129 (20,563) (24,783) (1,850) (26,633)
Taxation - - - - - -
Loss for the financial period (20,692) 129 (20,563) (24,783) (1,850) (26,633)
Loss per share 15 months ended Year ended
31 March 2008 31 December 2006
� �
From continuing operations
- basic & diluted 7 9.02 42.64
From continuing and
discontinued operations
- basic & diluted 7 8.96 45.82
The above amounts are attributable to the equity holders of the parent.
Consolidated Statement of Recognised Income and Expense
15 months ended 31 March 2008
15 months ended Year ended
31 March 2008 31 December 2006
�000 �000
Loss for the period (20,563) (26,633)
Currency translation differences 260 -
Total recognised income and expense (20,303) (26,633)
for the period
Attributable to equity holders of the (20,303) (26,633)
parent
Consolidated Balance Sheet
As at 31 March 2008
Note 31 March 31 December
2008 2006
�000 �000
Property, plant and equipment 822 2,123
Goodwill 8 17,574 25,521
Intangible assets 8 557 -
Investments - 18
Non-current assets 18,953 27,662
Trade & other receivables 3,149 4,437
Cash and cash equivalents 7,154 139
Current assets 10,303 4,576
Total assets 29,256 32,238
Loans and borrowings (234) -
Trade and other payables (8,776) (9,559)
Current liabilities (9,010) (9,559)
Net current assets/ 1,293 (4,983)
(liabilities)
Total assets less current 20,246 22,679
liabilities
Interest bearing loans and borrowings (19) (5,229)
Provisions (8) (81)
Other non-current payables (450) -
Deferred income - (2,271)
Non-current liabilities (477) (7,581)
Total liabilities (9,487) (17,140)
Net assets 19,769 15,098
Equity attributable to equity holders of
the company
Share capital 9 34,923 13,878
Shares to be issued 281 281
Share premium 79,731 78,479
Other reserves 5,036 2,574
Retained earnings (100,202) (80,114)
Equity 19,769 15,098
These financial statements were approved and authorised for issue on 29 July
2008.
Signed on behalf of the Board of Directors
Michael Sinclair Jos�-Luis V�zquez
Chairman Chief Executive Office
Consolidated Cash Flow Statement
15 months ended 31 March 2008
15 months Year ended
ended
31 March 31 December
2008 2006
Note �000 �000
Cash flows from operating activities
Loss for the period (20,563) (26,633)
Adjustments for:
Depreciation of property, plant and 1,491 1,276
equipment
Amortisation and impairment of goodwill and 12,010 19,057
intangible assets
Impairment of investments (18) -
Foreign exchange 225 -
Profit on sale of discontinued operations (576) -
Profit on disposal of property, plant and (7) -
equipment
Share-based payment charges 205 488
Finance income (2) (3)
Finance expense 1,599 1,543
Cash flow relating to restructuring - 2,988
provisions
Operating cash flows before movements in (5,636) (1,284)
working capital
Decrease in trade and other receivables 1,609 1,202
Decrease in trade and other payables (2,611) (569)
Cash used in operations (6,638) (651)
Interest and similar expenses paid (303) (1,004)
Net cash used in operating activities (6,941) (1,655)
Cash flows from investing activities
Interest and similar income received 2 3
Costs of acquisition of subsidiary (442) -
Net cash acquired with subsidiary 4,330 -
Disposal of subsidiary, net of overdrafts 253 -
disposed
Purchases of property, plant and equipment (96) (1,024)
Proceeds from disposal of property, plant 8 -
and equipment
Purchases of other intangible assets - (705)
Net cash generated from/(used in) investing 4,055 (1,726)
activities
Cash flows from financing activities
Issue of ordinary share capital 10,009 2,008
Costs of issue of ordinary share capital (61) -
Issue of convertible loans 650 6,000
Repayment of loans (664) (1,000)
Repayment of capital element of finance (267) (117)
leases
Net cash generated from financing activities 9,667 6,891
Net increase in cash and cash equivalents 6,781 3,510
Cash and cash equivalents at the beginning 139 (3,371)
of the period
Cash and cash equivalents at the end of the 10 6,920 139
period
Cash and cash equivalents (which are presented as a single class of assets on
the face of the balance sheet) comprise cash at bank and other short-term
highly liquid investments with a maturity of three months or less.
Notes to the Accounts
1. General information
Mirada plc is a company incorporated in the United Kingdom under the Companies
Act 1985. The address of the registered office is 6 & 7 Princes Court, Wapping
Lane, London, E1W 2DA.
The Group's financial statements for the 15 months ended 31 March 2008, from
which this financial information has been extracted, and for the comparative
year ended 31 December 2006 are prepared in accordance with International
Financial Reporting Standards ('IFRS').
The financial information shown in the announcement for the 15 months ended 31
March 2008 and the year ended 31 December 2006 set out above does not
constitute statutory accounts but is derived from those accounts. The results
have been prepared using accounting policies consistent with those used in the
preparation of the statutory accounts. The financial information contained in
this announcement does not constitute statutory accounts within the meaning of
Section 240 of the Companies Act 1985. Statutory accounts for the year ended 31
December 2006 have been delivered to the registrar of companies and those for
the 15 months ended 31 March 2008 will be delivered shortly. The auditors have
reported on the accounts for the 15 months ended 31 March 2008; their reports
were unqualified, did not contain statements under s 237(2) or (3) of the
companies act 1985, and did not contain any matters to which the auditors drew
attention without qualifying their report.
Copies of this announcement are available at the registered offices of the
Company for a period of 14 days from the date hereof.
2. Significant accounting policies
-Basis of accounting
The principal accounting policies adopted in the preparation of this
preliminary announcement are set out below.
While the financial information included in this preliminary announcement has
been prepared in accordance with the recognition and measurement criteria of
International Financial Reporting Standards (IFRSs), this announcement does not
itself contain sufficient information to comply with IFRSs. The Group expects
to publish full financial statements that comply with IFRSs on 30 July 2008.
This is the first year in which group is preparing its financial information in
accordance with Adopted IFRSs, having previously used UK accounting standards.
The date of transition to IFRS is 1 January 2006. In addition to the previous
transitional adjustments that were disclosed in the interim report for the 6
months to 30 June 2007 which was published on 28 September 2007, the Group has
identified further adjustments that have reduced net assets at 1 January 2006
and 31 December 2006 by an additional �2.35 million and �3.53 million
respectively, and increased the loss for the financial year ended 31 December
2006 by an additional �1.18 million. Further details of these adjustments can
be found in the annual financial statements for the 15 months ended 31 March
2008 which are expected to be published on 30 July 2008.
-Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company (its subsidiaries) made up
to 31 March 2008 and 31 December 2006. Control is achieved where the Company
has the power to govern the financial and operating policies of an investee
entity so as to obtain benefits from its activities. The Group income statement
includes the results of subsidiaries acquired or disposed of during the period
from the effective date of acquisition or up to the effective date of disposal,
as appropriate.
Where necessary, adjustments are made to the financial statements of
subsidiaries to bring the accounting policies used into line with those used by
the group.
All intra-group transactions, balances, income and expenses are eliminated on
consolidation.
-Business combinations
The acquisition of subsidiaries or trade and assets, is accounted for using the
purchase method. The cost of the acquisition is measured at the aggregate of
the fair values, at the date of exchange, of assets given, liabilities incurred
or assumed, and equity instruments issued or to be issued, by the Group in
exchange for control of the acquiree, plus any costs directly attributable to
the business combination. The acquiree's identifiable assets, liabilities and
contingent liabilities that meet the conditions for recognition under IFRS 3
are recognised at their fair value at the acquisition date.
Goodwill arising on acquisition is recognised as an asset and initially
measured at cost and is accounted for according to the policy below.
The Group has taken the exemption conferred in IFRS 1, "First-time Adoption of
International Financial Reporting Standards", not to restate business
combinations prior to the transition date of 1 January 2006 under IFRS 3.
-Goodwill
Goodwill represents the excess of the cost of acquisition over the Group's
interest in the fair value of the identifiable assets, intangible fixed assets
and liabilities of a subsidiary, or acquired sole trade business at the date of
acquisition. Goodwill is initially recognised as an asset at cost and is
subsequently measured at cost less any accumulated impairment losses. Goodwill
which is recognised as an asset is reviewed for impairment at least annually.
Any impairment is recognised immediately in the Group income statement and is
not subsequently reversed.
For the purpose of impairment testing, goodwill is allocated to each of the
Group's cash-generating units expected to benefit from the synergies of the
combination. Cash-generating units to which goodwill has been allocated are
tested for impairment annually, or more frequently when there is an indication
that the unit may be impaired. If the recoverable amount of the cash-generating
unit is less than the carrying amount of the unit, the impairment loss is
allocated first to reduce the carrying amount of any goodwill allocated to the
unit and then to the other assets of the unit pro-rata on the basis of the
carrying amount of each asset in the unit.
On disposal of a subsidiary the attributable amount of goodwill is included in
the determination of the profit or loss on disposal.
Goodwill arising on acquisitions before the date of transition to IFRS has been
retained at the previous UK GAAP amounts subject to being tested for impairment
at that date and subsequently as required by the provisions of IAS 36
"Impairment of Assets".
-Intangible assets
Intangible assets with a finite useful life represent items which have been
separately identified under IFRS 3 arising in business combinations, or meet
the recognition criteria of IAS 38, "Intangible Assets". Intangible assets
acquired as part of a business combination are initially recognised at their
fair value less amortisation and any impairment losses. Intangible assets that
meet the recognition criteria of IAS 38, "Intangible Assets" are carried at
cost less amortisation and any impairment losses. Intangible assets comprise of
completed technology and acquired software.
Amortisation:
Amortisation of intangible assets acquired in a business combination is
calculated over the following periods on a straight line basis:
Completed technology - over a useful life of 4 years
Amortisation of other intangible assets (computer software) is calculated using
the straight-line method to allocate the cost of the asset over its estimated
useful life, which equates to 25% to 50% per annum.
Internally-generated intangible assets - research and development expenditure:
Expenditure on research activities is recognised as an expense in the period in
which it is incurred.
Any internally-generated intangible asset arising from the Group's development
projects are recognised only if all of the following conditions are met:
- The technical feasibility of completing the intangible asset so that it will
be available for use or sale.
- The intention to complete the intangible asset and use or sell it.
- The ability to use or sell the intangible asset.
- How the intangible asset will generate probable future economic benefits.
Among other things, the Group can demonstrate the existence of a market for the
output of the intangible asset or the intangible asset itself or, if it is to
be used internally, the usefulness of the intangible asset.
- The availability of adequate technical, financial and other resources to
complete the development and to use or sell the intangible asset.
- Its ability to measure reliably the expenditure attributable to the
intangible asset during its development.
Internally-generated intangible assets are amortised on a straight-line basis
over their useful lives of four years. Where no internally-generated intangible
asset can be recognised, development expenditure is recognised as an expense in
the period in which it is incurred.
-Impairment of tangible and intangible assets excluding goodwill
At each balance sheet date, the Group reviews the carrying amounts of its
tangible and intangible assets to determine whether there is any indication
that those assets have suffered an impairment loss. If any such indication
exists, the recoverable amount of the asset is estimated in order to determine
the extent of the impairment loss (if any).
Recoverable amount is the higher of fair value less costs to sell and value in
use. 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 for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to
be less than its carrying amount, the carrying amount of the asset
(cash-generating unit) is reduced to its recoverable amount. An impairment loss
is recognised in the income statement as an expense immediately, unless the
relevant asset is carried at a revalued amount, in which case the impairment
loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the
asset (cash-generating unit) is increased to the revised estimate of its
recoverable amount, but so that the increased carrying amount does not exceed
the carrying amount that would have been determined had no impairment loss been
recognised for the asset (cash-generating unit) in prior periods. A reversal of
an impairment loss is recognised as income immediately, unless the relevant
asset is carried at a revalued amount, in which case the reversal of the
impairment loss is treated as a revaluation increase.
-Revenue recognition
Interactive service revenues:
Interactive service revenues are divided into 3 types, fixed-priced contracts,
self-billing revenues and development contracts including the sale of licences.
Fixed-price contract revenues are recognised as these services are provided or
in accordance with the contract. Revenue is recognised when the significant
risks and rewards of products and services have been passed to the buyer and
can be measured reliably.
In respect of self-billing revenues, the Group are informed by the customer of
the amount of revenue to invoice and the revenues are recognised in the period
these services are provided.
Where the revenue relates to the sale of a licence, the licence element of the
sale is recognised as income when the following conditions have been satisfied:
- the software has been provided to the customer in a form that enables the
customer to utilise it;
- the ongoing obligations of the Group to the customer, aside from the
maintenance, are minimal; and
- the amount payable by the customer is determinable and there is a reasonable
expectation of payment.
Net gaming revenues:
Revenue is recognised to the extent that it is probable that economic benefits
will flow to the Group and the revenue can be reliably measured. Revenue is
recognised in the accounting periods in which the gaming transactions occurred.
Net Gaming Revenue is defined as being the difference between bets placed by
members less amounts won by members. All gaming revenue is generated in the
United Kingdom.
-Foreign exchange
The individual financial statements of each group company are presented in the
currency of the primary economic environment in which it operates (its
functional currency). For the purpose of the consolidated financial statements,
the result and the financial position of each group company are expressed in
pounds sterling, which is the functional currency of the Company, and the
presentation currency for the consolidated financial statements.
On translation of balances into the functional currency of the entity in which
they are held, exchange differences arising on the settlement of monetary
items, and on the retranslation of monetary items, are included in profit or
loss for the period. For such non-monetary items, any exchange component of
that gain or loss is also recognised directly in equity.
For the purpose of presenting consolidated financial statements, the assets and
liabilities of the group's foreign operations are transitioned at exchange
rates prevailing on the balance sheet date. Income and expense items are
translated at the average exchange relates for the period, unless exchange
rates fluctuate significantly during that period, in which case the exchange
rates at the date of transactions are used. Exchange differences arising, if
any, are classified as equity and transferred to the group's foreign exchange
reserve. Such translation differences are recognised as income or an expenses
in the period in which the operations is disposed of.
Goodwill and fair value adjustments arising on the acquisition of a foreign
entity are treated as assets and liabilities of the foreign entity and
translated at the closing rate. The group has elected to treat goodwill and
fair value adjustments arising on acquisitions before the date of transition to
IFRS as sterling denominated assets and liabilities.
3. Segmental reporting
A segment is a distinguishable component of the Group that is engaged in
providing products or services within a particular economic environment. The
principal activities of the Group are divided into the following business
segments; games and gambling, interactive services and dating. These segments
are the basis on which the management analyses Group's performance.
15 months ended Year ended
31 March 31 December
2008 2006
�'000 �'000
Segment Revenue
Games and gambling 3,922 4,864
Interactive services 8,582 8,996
Dating* 1,049 2,918
Consolidated revenue 13,553 16,778
Gross profit
Games and gambling 1,192 44
Interactive services 3,070 4,685
Dating* 564 1,423
Consolidated 4,826 6,152
Net fixed odds gaming income 1,304 2,459
Segment result for period
Games and gambling 1,657 2,097
Interactive services 845 870
Dating* (447) (1,850)
Unallocated central costs (22,618) (27,750)
Consolidated loss for the period (20,563) (26,633)
*The Group ceased all its operations in the dating sector during the period.
There is no significant inter-segment revenue included in the segments which is
required to be eliminated.
Up until 25 February 2008 on the acquisition of Fresh, a business located in
Spain with the Euro as its functional currency, the operations of the Group
were based in the UK and as a consequence, for the 15 months ended 31 March
2008 the directors consider that the Group operated in only one geographical
segment but in three business segments.
In the opinion of the directors, the results for one month of trade of Fresh
included within the consolidated income statement are not significant enough to
warrant separate segmental disclosure within the 2008 Report and Financial
Statements.
As at 31 March 2008 Fresh had net assets of �5.3 million including cash of �
4.76 million.
4. Operating loss
Reconciliation of operating loss for continuing operations to loss before
interest, taxation, depreciation, amortisation, restructuring and share-based
payment charges:
15 months Year ended
ended 31 December
31 March
2008 2006
�000 �000
Operating loss (19,119) (23,279)
Depreciation 1,486 1,178
Amortisation of deferred development costs 10 2,535
Impairment of goodwill 12,000 16,427
Restructuring costs 960 2,107
Share based payment charge 205 488
Loss before interest, taxation, depreciation, (4,458) (544)
restructuring, and share-based payment charges
Adjusted loss before interest, taxation, depreciation, amortisation,
restructuring and share-based payment charges has been presented to provide
additional information to the reader.
5. Restructuring costs
The restructuring costs, included within administrative expenses, are detailed
below:
15 months ended Year ended
31 March 31 December
2008 2006
�000 �000
Recognised in arriving at operating loss:
Restructuring costs 1,036 2,988
During the 15 months ended 31 March 2008 the Group incurred restructuring costs
in relation to the refinancing and restructuring which was completed on 25
February 2008. The main elements of which contributed to the restructuring
costs consisted of professional fees in relation to the placing, the conversion
of convertible loans and the share consolidation, and redundancy costs in
relation to the reorganisation of senior management team.
During the period the Group also incurred redundancy costs relating to the
discontinuation of the Group's dating activities.
The restructuring costs of �2,988,000 recorded for the year ended 31 December
2006 include costs incurred in the restructuring of the Group's dating business
and the loss on closure of YooPlay Ltd and MMTV Ltd, and the associated
redundancy costs and legal fees.
6. Discontinued operations
The discontinued columns in the income statement reflect the fact that the
Group has ceased all its operations in the dating sector which had previously
traded through its subsidiaries Yoomedia Dating Group Ltd and Finlaw 532 Ltd.
On 13 December 2007 the Group sold its 100% shareholding in Yoomedia Dating
Group Limited for a cash consideration of �250,000. On 15 October 2007 the
Group placed Finlaw 532 Ltd (which traded under the name Avenues) into
liquidation.
The gain on the disposal of Yoomedia Dating Group Ltd and liquidation of Finlaw
532 Ltd was determined as follows:
Yoomedia Dating Finlaw 532 Ltd
Group Ltd
�000 �000 �000 �000
Consideration - cash 250 -
Net liabilities disposed of:
Goodwill - 15
Property, plant and equipment 20 -
Trade and other receivables 37 42
Bank loan and overdraft (3) (2)
Trade and other payables (142) (293)
(88) (238)
Gain on disposal 338 238
The net cash flow comprises:
Cash received 250 -
Bank overdraft disposed of 3 2
253 2
The cash flow statement includes the following amounts relating to discontinued
operations:
2008 2006
�000 �000
Operating activities (42) 41
Investing activities (8) (17)
Net (decrease)/increase in cash and cash (50) 24
equivalents
7. Loss per share
15 months ended 31 March 2008 Year ended 31 December 2006
Continuing Discontinued Continuing & Continuing Discontinued Continuing &
operations operations discontinued operations operations discontinued
operations operations
(Loss)/profit
for period (�20,692,000) �129,000 (�20,563,000) (�24,783,000) (�1,850,000) (�26,633,000)
Weighted 2,295,329 2,295,329 2,295,329 581,251 581,251 581,251
average number
of shares
Basic & diluted (�9.02) �0.06 (�8.96) (�42.64) (�3.18) (�45.82)
EPS
The weighted average number of shares in issue in both the current and
comparative periods have been adjusted to reflect the share consolidation which
took place on 25 February 2008, further details on the share consolidation are
given in note 9.
The Company has 391,258 (2006: 102,124) potentially dilutive ordinary shares
being share options issued to staff, share warrants and shares contracted to be
issued. These have not been included in calculating the diluted earnings per
share as the effect is anti-dilutive.
The deferred shares are not included in the earnings per share or diluted
earnings per share. These shares have no voting rights and are non-convertible
and therefore do not form part of the ordinary share capital used for the loss
per share calculation.
8. Intangible assets
Deferred Completed Total Goodwill
development
costs Technology Intangible
assets
�000 �000 �000 �000
Cost
At 1 January 2007 4,481 - 4,481 41,475
Acquired with subsidiary undertaking - 539 539 -
Additions - - - 4,068
Disposed with discontinued operation - - - (15)
Foreign exchange - 28 28 -
At 31 March 2008 4,481 567 5,048 45,528
Accumulated amortisation
At 1 January 2007 4,481 - 4,481 15,954
Provided during the period - 10 10 -
Provision for impairment - - - 12,000
Foreign exchange - - - -
At 31 March 2008 4,481 10 4,491 27,954
Net book value
At 31 March 2008 - 557 557 17,574
At 31 December 2006 - - - 25,521
Goodwill acquired in a business combination is allocated, at acquisition, to
the cash generating units (CGUs) that are expected to benefit from that
business combination. After recognition of impairment losses, the carrying
amount of goodwill had been allocated as follows:
2008 2006
�000 �000
The Gaming Channel Ltd ("TGC") 5,251 5,251
Digital Interactive Television Group Ltd ("DITG") 8,255 20,255
Fresh Interactive Technologies S.A. ("Fresh") 4,068 -
Yoomedia Dating Group Ltd ("YMDG") - 15
17,574 25,521
The Group tests goodwill annually for impairment, or more frequently if there
are indications that goodwill might be impaired.
The recoverable amounts of the CGUs are determined from value in use
calculations. The key assumptions for the value in use calculations are those
regarding the discount rates, growth rates and expected changes to selling
prices and direct costs during the period. Management estimates discount rates
using pre-tax rates that reflect current market assessments of the time value
of money and the risks specific to the CGUs. The growth rates are based on
industry growth forecasts. Changes in selling prices and direct costs are based
on past practices and expectations of future changes in the market.
The Group prepares cash flow forecasts derived from the most recent financial
budgets approved by management for the next four years and extrapolates cash
flows for the following five years based on an estimated growth rate of 2.5%.
This rate does not exceed the average long-term growth rate for the relevant
markets. The rate used to discount the forecast pre-tax cash flows is 20%.
Following the impairment review the carrying value of goodwill for DITG was
impaired by �12,000,000. No other impairment was considered to be appropriate.
There was an impairment of �16,427,000 in the year ended 31 December 2006. This
consisted of impairments of the carrying value of goodwill for TGC and DITG of
�9.55 million and �1.22 million respectively and full impairments in relation
to YMDG, MMTV Ltd, Viavision Ltd and GoPlay Ltd.
The goodwill held by Yoomedia Dating Group Ltd was disposed of with the sale of
the company on 13 December 2007.
Details on the calculation of the carrying value of the goodwill for Fresh
Interactive Technologies S.A. are included in note 11.
9. Share capital
In order for the refinancing to take place, on 25 February 2008 Mirada
completed a reorganisation of its capital structure. This reorganisation
consisted of two stages:
First, each issued 1p Ordinary Share was subdivided into one Ordinary Share of
0.1p each and nine A Deferred Shares of 0.1p each. The A Deferred Shares have
the same rights as the existing 1p Deferred Shares, that is no right to vote,
only limited rights to participate in dividends and only limited deferred
rights on any return of capital.
Second, every 1,000 0.1p Ordinary Shares were consolidated into 1 Ordinary
Share of �1.00 each. Authorised but unissued Ordinary Shares of 1p each were
also consolidated, every 100 unissued Ordinary Shares of 1p were consolidated
into 1 Ordinary Share of �1.00 each.
Immediately before the capital reorganisation took place there were 912,242,053
1p Ordinary Shares in issue. Immediately after the capital reorganisation there
were 912,242 �1.00 Ordinary Shares and 8,210,178,477 0.1p A Deferred Shares in
issue.
A breakdown of the authorised and issued share capital in place as at 31 March
2008 is as follows:
2008 2008 2006 2006
No. �'000 No. �'000
Authorised
Ordinary shares of �1 each 25,789,822 25,790 1,200,000,000 12,000
(2006: 1p)
A Deferred shares of 0.1p 8,210,178,477 8,210 - -
each
Deferred shares of 1p each 900,000,000 9,000 900,000,000 9,000
9,135,968,299 43,000 2,100,000,000 21,000
Allotted, called up and
fully paid
Ordinary shares of �1 each 19,805,485 19,805 696,964,276 6,970
(2006: 1p)
A Deferred shares of 0.1p 8,210,178,477 8,210 - -
each
Deferred shares of 1p each 690,822,639 6,908 690,822,639 6,908
8,920,806,601 34,923 1,387,786,915 13,878
During the period and prior to the capital reorganisation the following share
issues took place:
Date of Notice Total Shares Nominal Share
Issued Value Premium
i. Placings:
21 February 2007 �762,500 67,777,777 �677,778 �84,722
26 July 2007 �375,000 37,500,000 �375,000 -
8 August 2007 �500,000 50,000,000 �500,000 -
�1,637,500 155,277,777 �1,552,778 �84,722
ii. Debt conversion
9 May 2007 �250,000 25,000,000 �250,000 -
9 May 2007 �250,000 25,000,000 �250,000 -
16 May 2007 �100,000 10,000,000 �100,000 -
�600,000 60,000,000 �600,000 -
Following the capital reorganisation on 25 February 2008, the following share
issues took place:
Description Total Shares Nominal Share
Issued Value Premium
i. Capitalisation of
directors fees:
- M Sinclair �250,000 228,061 �228,061 �21,939
- N MacDonald �22,500 20,525 �20,525 �1,975
- J Swingewood �50,000 45,612 �45,612 �4,388
- J Fenn �15,000 13,684 �13,684 �1,316
�337,500 307,882 �307,882 �29,618
ii. Debt conversion �5,211,403 4,754,063 �4,754,063 �457,340
iii. Placing �8,371,875 7,637,178 �7,637,178 �734,697
iv. Acquistion of Fresh �6,180,436 6,180,436 �6,180,436 -
IT*
v. Capitalisation of �15,000 13,684 �13,684 �1,316
creditor
*Acquisition of Fresh IT
Under the provisions of s131 of the Companies Act 1985, the premium that arose
on the shares issued as consideration in the acquisition of Fresh Interactive
Technologies S.A. has been taken to the merger reserve in the consolidated
balance sheet. No premium has been recognised in the company balance sheet as
the shares have been recorded at nominal value.
The mid-market price of Mirada's shares on 25 February 2008 equalled �1.40
meaning that the premium equalled �0.40 per share. Therefore �2,472,174 has
been taken to the merger reserve (�0.40 multiplied by the consideration of
6,180,436 ordinary shares).
Further details on the acquisition of Fresh are provided in note 11.
Below is a reconciliation of the movements in the ordinary share capital and
share premium balances during the 15 months ending 31 March 2008:
Description Number of Nominal Share
shares Value Premium
�000 �000
Balance at 1 January 2007 696,964,276 6,970 78,479
Movements prior to capital
reorganisation:
i. Placings less share issue 155,277,777 1,553 24
costs
ii. Debt conversion 60,000,000 600 -
Balance at date of capital 912,242,053 9,123 78,503
reorganisation
Balance on completion of share 912,242 912 78,503
reorganisation
Movements post capital reorganis
ation:
i. Capitalisation of directors 307,882 308 30
fees
ii. Debt conversion 4,754,063 4,754 457
iii. Placing 7,637,178 7,637 735
iv. Acquisition of Fresh IT 6,180,436 6,180 -
v. Capitalisation of creditor 13,684 14 1
Other:
Reserves movement on conversion - - 5
of loans
Balance at 31 March 2008 19,805,485 19,805 79,731
10. Notes supporting cash flow statement
Cash and cash equivalents comprise:
2008 2006
�000 �000
Cash available on demand 7,154 139
Overdrafts (234) -
6,920 139
Net cash increase in cash and cash equivalents 6,781 3,510
Cash and cash equivalents at beginning of 139 (3,371)
period
Cash and cash equivalents at end of period 6,920 139
Significant non-cash transactions are follows:
2008 2006
�000 �000
Investing activities:
Equity consideration for business combination 8,653 1,250
Financing activities:
Convertible loans converted into equity 5,811 1,101
Debt converted to equity 338 500
6,149 1,601
-Cash and cash equivalents
Cash and cash equivalents are held in the following currencies:
2008 2006
�000 �000
Sterling 2,352 139
Euro 4,802 -
Total 7,154 139
Cash and cash equivalents comprise cash held by the Group and short-term bank
deposits with an original maturity of three months or less. The carrying amount
of these assets approximates their fair value.
11. Acquisitions during the period
On 25 February 2008 the Group acquired 100% of the voting equity instruments of
Fresh Interactive Technologies S.A. which is a leading provider of interactive
digital television solutions to the Spanish and Hispanic markets.
Details of the fair value of identifiable assets and liabilities acquired,
purchase consideration and goodwill are as follows:
Book Fair value Fair
value adjustments value to
Group
�000 �000 �000
Provisional value of fair assets
acquired:
Property, plant and equipment 102 - 102
Completed technology 324 215 539
Receivables 381 - 381
Cash 4,555 - 4,330
Bank overdrafts (225)
Payables (325) - (325)
4,812 215 5,027
Consideration paid:
6,180,436 Ordinary Shares of �1 each 8,653
Costs of acquisition 442
9,095
Goodwill (note 8) 4,068
The fair value of the shares issued was determined by reference to their quoted
market price of �1.40 at the date of acquisition. The fair values of
receivables and payables are the same as the IFRS carrying amounts immediately
prior to the acquisition.
One category of intangible assets was identified in relation to completed
technology which consisted of capitalised internal development costs in
relation to Fresh's interactive television software. The fair value of the
intangible was valued at the estimated cost of replacing Fresh's internally
generated software and IP.
The main factors leading to a recognition of goodwill are, the presence of
certain intangible assets such as the assembled workforce of the acquired
entity which do not qualify for separate recognition, synergistic cost savings
and the opportunity for the group to market its variety of products in the
Spanish and Hispanic markets.
Had the acquisition of Fresh taken place on 1 January 2007 rather than 25
February 2008 the Group would have recorded extra revenue of �1.6 million and
an increase in the loss for the financial period of �160,000.
12. Events after the balance sheet date
On 23 April 2008, as confirmed by an Order of the High Courts of Justice,
Mirada plc cancelled its share premium account and its capital redemption
reserves against its profit and loss reserve.
END
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