TIDMMIRA
mirada plc
Preliminary Results for the 12 months ended 31 March 2009
mirada plc ("mirada" or "the Group"), the AIM-quoted audiovisual interaction
specialist with operations in London, Milan, Madrid and Uruguay, announces
preliminary results for the 12 months to 31 March 2009.
Highlights
* Successful integration of Fresh Interactive Technologies SA and YooMedia
plc
* Restructuring placed the Group on sound footing going forward
* Global operating expenses dramatically reduced
* Streamlining of operations; disposal of loss-making activities
* New product-led strategy a success
* Office openings in Milan and Uruguay; global presence extended and
strengthened
* New contract wins across all business divisions
* Increasing global demand for interactive services coupled with mirada's
leadership in innovative technologies has led to significant new business
development
Financial highlights
* Revenue: GBP10.5m (15 months ended 31 March 2008: GBP12.5m)
* EBITDA before restructuring costs improved from (GBP4.46m) to (GBP0.67m)
* Gross margin earned: 57% (2008: 34%)
* Other administrative expenses GBP7.1m down from GBP10m
Post-period end:
* Contract wins in new target markets
* Contracted by Uruguayan Government to provide interactive television
services to up to 400,000 households as part of its Plan Cardales
* Large scale agreement to provide interactive gaming products and
services to households in Eastern Europe
José-Luis Vázquez, CEO, Mirada, commented:
"Today's results indicate a clear turnaround and a return to more favourable
operational conditions. The Group ended the year with most of its objectives
achieved, namely an efficient operating cost structure, a strong international
sales and operational team and extensive overseas activities. Moreover after
reducing overheads further since the year end and having seen a return to
positive trading conditions we are moving towards a sustainable cash flow
positive position. Accordingly, we are grateful for the support of our team and
our partners during a lengthy transitional period in the face of a world
economic crisis and we reaffirm our commitment to long-term profitable
relationships within our marketplace."
29 September 2009
Enquiries:
mirada plc +44 (0) 207 942 7942
José Luis Vázquez, 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
Chris Howard/Mark Percy
mirada plc
Chief Executive Officer's Report
Overview
This is the first full financial year of trading since the Group's
transformation following the acquisition of Fresh Interactive Technologies SA
("Fresh"), a leading Spanish interactive television company, in February 2008.
The onset of the recession shortly after has presented the directors and
management with both challenges and rewards in that we are able to report on a
period of considerable, tangible progress for the Group.
On the whole, the Group is emerging with most of its objectives achieved namely
an efficient operating cost structure, a strong international sales and
operational team and extensive overseas activities.
We are grateful for the support of our team and our partners during this
transitional period in the face of a world economic crisis and we reaffirm our
commitment to long-term and mutually profitable relationships within our
marketplace.
Areas of business
Mirada is an audiovisual interaction technology company. We trade in
complementary areas, and have assets and interests across five operational
divisions:
Digital TV operators:
To date we have deployed over 200 interactive services with a wide range of
international customers and partners. Our core software for digital receivers
includes Electronic Programming Guides ("EPG"), Video on Demand ("VOD") and
Personal Video Recorders ("PVR") applications as well as Audience Measurement
systems, voting and polling, advertising and synchronisation services.
Broadcasters and content producers:
We work with the media value chain to create and support fully interactive
shows, in which our technology and skills play an important role to increase
investment returns and improve the users' engagement. Through the brand Wapping
Broadcast, mirada also provides quality broadcast and play out solutions.
Gaming brands:
We provide video rich gaming and gambling content for television, mobile and
the internet. Content includes our highly successful Roulette and Bingo
products which deliver multiplatform content and technology, using our
synchronised multiplatform interaction capabilities and our audiovisual
playout.
Interactive marketing:
Our customers are agencies, brand owners and media buyers, who utilise our
mobile marketing and interactive advertising tools. In a market where
references are key, we are pleased to say that our services have been deployed
by leading brands in the UK, Spain and Italy.
mirada connect:
As a subsidiary company, mirada connect provides our transactional technology
to parking platforms and services, working with major partners like NCP, APCOA
and Meteor, providing mobile cashless parking, permits management and Penalty
Charge Notice payment transactional technologies.
Trading review
This year's primary aims were to consolidate the merger between Yoomedia and
Fresh, including the execution of an ambitious turnaround plan to dramatically
reduce the global operating overhead of the Group and a focus on profitable
business areas. This led to a reduction in non-core and loss making activities
with the objective of maximising the bottom line results. The result of these
exercises is a reported 89% reduction in Group losses compared to the 15 months
ended 31 March 2008 and a very promising trend towards profitability. It has to
be said that we had hoped at the outset for an even better performance but
economic recession meant the expiry of certain sales contracts and delays in
negotiations with new customers. These factors reduced the expected revenues of
the Group to a level that made it impossible to achieve positive operational
results for the full trading year. Management made a decision to implement
further cost reduction measures in order to improve our cash flow until market
conditions improved. Following the year end we can now say that the Group has
reduced its overheads and increased its margins to enable the Group to achieve
sustainable positive operating profits and cash flows.
Financial overview
For the year ended 31 March 2009 the Group recorded an operating loss before
interest, tax, restructuring, depreciation, amortisation and share based
payment charges of GBP0.67 million compared to a loss of GBP4.46 million in the 15
months ended 31 March 2008. It should also be noted that the equivalent result
reported in the interim statements for the 6 months ended 30 September 2008 was
a loss of GBP0.53 million which shows a promising trend towards profitability.
This improvement in performance is due to two main factors:
* An increase in the gross margin being earned: GBP5.97 million in the current
year with a gross margin percentage of 57% compared to GBP4.26 million and
34% in the 15 months ended 31 March 2008; and
* A reduction in overheads: other administrative expenses in the year
equalled GBP7.10 million, now including Fresh overheads, compared to GBP10.02
million in the 15 months ended 31 March 2008. I am confident that the
current year will see a further reduction in reported overheads.
Loss before interest, tax, restructuring, depreciation, amortisation and share
based payment charges is a key performance indicator ("KPI") used by management
to review the performance of the Group and removes the impact of one off and
non-cash items (see note 5). Other KPIs used by management are as follows:
* Gross Profit Margin. Historically the old Yoomedia business was engaged in
relatively low margin activities, but since the creation of mirada it has
been management's aim to focus mainly on activities which generate higher
margins. As outlined above the Group's gross margin increased to 57% in the
year ended 31 March 2009 compared to 34% in the prior period. This trend of
improved margins has continued and it is our target to further increase the
gross margin during the year ending 31 March 2010.
* Operating cash flows. Management monitors operating cash flow before
movements in working capital. This allows management to assess the cash
generated by the Group's ongoing trading activities before taking into
account its investment in tangible fixed assets and capitalised development
costs. It also eliminates the impact of the cash used in repaying the
large, historic Yoomedia creditors which existed at 31 March 2008. The net
operating cash outflow before movements in working capital for the year was
GBP0.14 million which shows a dramatic decrease in outflow reported in the 15
months ended 31 March 2008 of GBP5.64 million and illustrates that the Group
is getting closer to achieving the directors' aim of achieving sustainable
positive cash flows.
The retained loss for the year equalled GBP2.26 million (15 months ended 31 March
2008: GBP20.56 million loss), this result was adversely impacted by a large
foreign exchange loss of GBP0.75 million which was mainly incurred on the inter
company loan between Fresh and mirada. It needs to be noted that this foreign
exchange loss is on an inter company loan and has been offset in the balance
sheet by the foreign currency translation gain of GBP0.93 million which was taken
directly to reserves.
Operational Review:
Digital TV business
The past trading year has shown a large increase in the revenues coming from
our overseas Digital TV activities, due to the consolidation of a very skilled
international team. The Group generated an increasing number of opportunities,
some of them materialising in the present trading year due to delays in
customer decisions. Our main customer wins for the past trading year were:
* Ono: As Ono is the largest cable operator in Spain, mirada was proud to be
awarded with a contract for the development of both a new Motorola decoder
PVR and VOD technologies over MHP, and a new guide for the installed base
of old Motorola boxes. This contract has opened up new opportunities to
work on non-middleware based deployments and the potential to export our
technology to all the Motorola based platforms in North, Central and South
America.
* Middle East: Our new partnership agreements led to sustained activities in
the Middle East region, where mirada deployed and maintains its VOD
technology for the largest cable company in the Middle East. We are very
proud of the high quality and efficiency of the deployments, which show our
international operational capabilities from our UK and Spanish technical
centres.
* Italy: mirada opened its first Italian office in Milan. In conjunction with
Virgilio and Mastercard we were able to offer innovative interactive
services which further extended our ambition for international expansion.
Our technical capabilities made us the preferred partner for interactive
advertising services and helped secure important relationships with the
leading satellite platform in Italy, Sky Italia. Following the year end
this crucial partnership saw mirada team up with Sky Italia to deliver
interactive advertising applications to allow consumers to access
additional associated content. This is a big milestone for us and indicates
the arrival of true interactive advertising applications.
Apart from our digital television activities in the UK, Spain and Italy, mirada
has recently announced a contract win in Uruguay and during the current year
has been involved in negotiations with customers in Germany, France,
Scandinavia, Austria, Greece, Portugal, UAE, India, Turkey, USA, Canada,
Mexico, Colombia, Argentina and Chile. We are strengthening our relationships
with Conditional Access and Middleware providers as well as manufacturers, and
we expect those partnerships and the global market growth to result in a
sustained increase in the Digital TV business over the coming years.
Broadcast business
The past year has been unprecedented in the media business with broadcasters
struggling with a huge decrease in advertising revenues. Our focus has been to
protect our present business, and to provide a portfolio of assets which will
help our partners be prepared for a global multimedia/multiplatform content
distribution and management network.
Our main areas of trading last year in the Broadcast business were as follows:
* Return path: mirada is licensed to operate the alternative return path for
interactive TV applications that run on the Sky platform in the UK. Our
long term customers include Gala, PlayJam and the BBC for whom we delivered
campaigns including Red Nose Day and Children in Need which required mirada
to handle millions of transactions.
* Studios and playout: mirada has been actively promoting its facilities in
Wapping under the "Wapping Broadcast" brand, which offers a true media
centre in the heart of London. During the year mirada provided broadcast
services to Gala, SportsXchange and Two Way Media (Challenge JackPot
channel).
* Synchronisation technologies: mirada is a leading reference in the UK for
the synchronisation of TV content and interactive applications. Partners
include RedBee and channels like the BBC, ITV, Channel 4 and UKTV.
Due to our dominant presence in the Spanish market, mirada has been a key
player in the new developments taking place in Spain with regards to the
transition to Digital Terrestrial Television ("DTT"). The planned switch off
date is 3 April 2010 and mirada has been working closely with the Spanish
authorities during this process. Being a key partner for broadcasters in both
freeview and Pay-TV technologies over DTT, mirada expects to benefit from its
competitive advantage in this area in the near future.
We anticipate further extending our broadcast business overseas and increasing
our collaboration with both UK and foreign channels and content producers,
through the generation of innovative 360º formats utilising our expertise in
viewer interaction in a multi-platform environment.
Gaming business
The past financial year has seen a clear evolution of our Gaming business
towards a pure B2B strategy, repositioning the company from being a low-tier
competitor of our customers to becoming an audiovisual interaction technology
partner for them.
While Yoomedia was a leading player in the business of audiovisual gaming
technology, it tried to compete in the B2C market - without the necessary
resources or structure to succeed, instead of focusing on technology and
expertise. Examples like Avago show that the Group had the capability to create
innovative formats in the highly competitive gaming market, but in order to
find a market these needed to be sold to a B2C player. mirada therefore decided
to gradually switch off its B2C activities, concentrating instead on developing
innovative audiovisual gaming products for customers such as Gala and ITV. It
has also maintained a dialogue with international partners to prepare for the
anticipated change in gaming regulations in Western Europe and other areas.
During the year mirada developed web video streaming and synchronisation
technologies to address the increasing demand for video content by internet
users. While mirada ceased its own loss making B2C satellite operations to
concentrate on B2B activities, it has however retained its own Internet
streaming gaming line (www.montecarloroulette.tv) to use as a live "shop
window" for potential customers.
In line with our new product strategy, mirada launched Virtual Dealer Roulette
("VDR") in October 2008. This innovative format has been successfully
distributed to customers like Gala, SportsXchange and in the current period
CCMedia. VDR has proven to be an attractive product for our international
audience as well. We are pleased that during the current year we will be
launching our first service in Eastern Europe which will allow consumers to
play VDR live on a dedicated channel and simultaneously online. We expect to
win more international distribution agreements with gaming platforms, digital
television operators, broadcasters and content providers during the present
year.
Our gaming activity with broadcasters included the launch of Bingo Night Live
on ITV which was so successful that it entered the Guinness Book of World
Records as the largest online game of bingo with around 60,000 players playing
simultaneously on 10 October 2008. We have been actively promoting our Bingo
format internationally through agreements with Broadcasters and content
producers, and we expect to reach significant agreements in the next financial
year.
Interactive marketing
mirada's activity in interactive advertising and marketing campaigns
concentrated on maintaining a reference point in a severely depressed sector.
Without a clear focus on product the reduction in marketing budgets and the
high level of competition in the UK market resulted in a decrease in the
division's revenues.
The decision of the management was to reduce the overheads in the division,
retain key talent, and to invest in combining our interactive mobile marketing
skills with our audiovisual and synchronisation technologies. In this field, we
are progressing very well and we strongly believe that we now have a compelling
proposition for agencies, advertisers, media buyers and broadcasters in the
advertising market.
During the year mirada became the technology partner to Britvic and delivered
campaigns for Britvic brands which include Tango, Robinsons and Pepsi. During
the Twenty20 Cricket World Cup in June 2009 mirada launched Pepsi's mobile
campaign which gave away a total of GBP1 million in prize money, managing the
consumer interaction and tracking consumer responses for three Pepsi brands.
In addition, we opened our first Italian office in Milan. Partnerships to date
include Telecom Italia Group, Mastercard and Sky Italia and we consider these
to be significant landmarks in the evolution of our product. This is another
showcase of our capability to expand the different skills of the business units
overseas. Business lines like Interactive Marketing, which were traditionally
constrained to UK activities, are expected to show a sustained growth during
the following years due to our expansion into new revenue generating markets.
mirada connect
Connect is an independent business unit, operating in a significantly different
market sector from the rest of the Group. Indeed since the year end a new
entity was formed; Mirada Connect Limited, which will focus solely on the
commercialisation of our transactional skills for the parking business. This
subsidiary will continue contracting mirada's core technical technology and
services, as well as benefitting from our increasing international sales
presence.
We have been investing in products which can be distributed to a wider market
and are adaptable for different international partners, drawing on our
experience in collaborating with major partners in the UK.
We expect that our product development programme, relationships with customers
like Meteor, APCOA, NCP and Vinci Park, and our international sales efforts
will lead to an increasing number of agreements, both in the UK and overseas,
during the forthcoming financial year.
Outlook
Today's results indicate a clear turnaround and a return to more favourable
operation conditions. The Group ended the year with most of its objectives
achieved, namely an efficient operating cost structure, a strong international
sales and operational team and extensive overseas activities. Moreover after
reducing overheads further since the year end and having seen a return to
positive trading conditions we are moving towards a sustainable cash flow
positive position. Accordingly, we are grateful for the support of our team and
our partners during a lengthy transitional period in the face of a world
economic crisis and we reaffirm our commitment to long-term profitable
relationships within our marketplace.
José-Luis Vázquez
Chief Executive Officer
mirada plc
Consolidated Income Statement
Year ended 31 March 2009
Year ended 15 months ended
31 March 2009 31 March 2008
Note GBP000 GBP000
Continuing operations:
Revenue 4 10,465 12,504
Cost of sales (4,492) (8,242)
Gross profit 5,973 4,262
Net gaming income 462 1,304
Depreciation (349) (1,486)
Amortisation of deferred development costs (251) (10)
Impairment of goodwill - (12,000)
Restructuring costs (117) (960)
Share based payment charge (165) (205)
Other administrative expenses (7,100) (10,024)
Total administrative expenses (7,982) (24,685)
Operating loss 5 (1,547) (19,119)
Finance income 6 117 2
Finance expense 7 (825) (1,575)
Loss before taxation (2,255) (20,692)
Taxation - -
Loss for the period from continuing (2,255) (20,692)
operations
Profit for the period from discontinued - 129
operations
Loss for the financial period (2,255) (20,563)
Loss per share Year ended 15 months ended
31 March 2009 31 March 2008
GBP GBP
From continuing operations 8 0.11 9.02
- basic & diluted
From continuing and discontinued operations 8 0.11 8.96
- basic & diluted
The above amounts are attributable to the equity holders of the parent.
mirada plc
Consolidated Statement of Recognised Income and Expense
Year ended 31 March 2009
Year ended 15 months ended
31 March 2009 31 March 2008
GBP000 GBP000
Currency translation differences 941 260
Net income recognised directly in equity 941 260
Loss for the period (2,255) (20,563)
Total recognised income and expense for (1,314) (20,303)
the period
Attributable to equity holders of the (1,314) (20,303)
parent
mirada plc
Consolidated Balance Sheet
31 March 2009
Notes 31 March 31 March
2009 2008
GBP000 GBP000
Property, plant and equipment 990 822
Goodwill 9 17,574 17,574
Intangible assets 9 1,096 557
Non-current assets 19,660 18,953
Trade & other receivables 2,833 3,149
Cash and cash equivalents 11 1,508 7,154
Current assets 4,341 10,303
Total assets 24,001 29,256
Loans and borrowings (371) (234)
Trade and other payables (4,089) (8,776)
Current liabilities (4,460) (9,010)
Net current (liabilities)/assets (119) 1,293
Total assets less current liabilities 19,541 20,246
Interest bearing loans and borrowings (39) (19)
Provisions - (8)
Other non-current payables (882) (450)
Non-current liabilities (921) (477)
Total liabilities (5,381) (9,487)
Net assets 18,620 19,769
Equity attributable to equity holders
of the company
Share capital 10 34,923 34,923
Shares to be issued 281 281
Share premium - 79,731
Other reserves 5,687 5,036
Retained earnings (22,271) (100,202)
Equity 18,620 19,769
These financial statements were approved and authorised for issue on 28
September 2009.
Signed on behalf of the Board of Directors.
José-Luis Vázquez
Chief Executive Officer
mirada plc
Consolidated Cash Flow Statement
Year ended 31 March 2009
Year 15 months
ended ended
31-Mar-09 31-Mar-08
Note GBP000 GBP000
Cash flows from operating activities
Loss for the period (2,255) (20,563)
Adjustments for:
Depreciation of property, plant and equipment 349 1,491
Amortisation and impairment of goodwill and 251 12,010
intangible assets
Impairment of investments - (18)
Foreign exchange 1,392 225
Profit on sale of discontinued operations - (576)
Profit on disposal of property, plant and - (7)
equipment
Share-based payment charges 165 205
Finance income (117) (2)
Finance expense 72 1,599
Operating cash flows before movements in (143) (5,636)
working capital
Decrease in trade and other receivables 369 1,609
Decrease in trade and other payables (4,388) (2,611)
Cash used in operations (4,162) (6,638)
Interest and similar expenses paid (72) (303)
Net cash used in operating activities (4,234) (6,941)
Cash flows from investing activities
Interest and similar income received 117 2
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 (435) (96)
Proceeds from disposal of property, plant and - 8
equipment
Purchases of other intangible assets (719) -
Net cash generated from/(used in) investing (1,037) 4,055
activities
Cash flows from financing activities
Issue of ordinary share capital - 10,009
Costs of issue of ordinary share capital - (61)
Issue of convertible loans - 650
Repayment of loans (300) (664)
Repayment of capital element of finance leases (212) (267)
Net cash (used in)/generated from financing (512) 9,667
activities
Net (decrease)/increase in cash and cash 11 (5,783) 6,781
equivalents
Cash and cash equivalents at the beginning of 6,920 139
the period
Cash and cash equivalents at the end of the 1,137 6,920
period
mirada plc
Notes to consolidated accounts
Year ended 31 March 2009
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 financial information shown in the announcement for the year ended 31 March
2009 and the 15 months ended 31 March 2008 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 15 months
ended 31 March 2008 have been delivered to the registrar of companies and those
for the year ended 31 March 2009 will be delivered shortly. The auditors have
reported on the accounts for the year ended 31 March 2009; 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.
During the year ended 31 March 2009 the Group recorded a loss before interest,
taxation, depreciation, amortisation, restructuring and share-based payment
charges of GBP665,000 and a loss after taxation of GBP2,255,000. At 31 March 2009
the Group had total net assets of GBP18,620,000 and net current liabilities of GBP
119,000, and during the year ended 31 March 2009 had an operating cash outflow
before movements in working capital of GBP143,000.
In assessing the going concern of the Group, the directors have prepared
forecast information for the period ending twelve months from their approval of
these financial statements. As part of producing these forecasts directors have
considered the recent contract wins and the likely cash inflows to be derived
from the Group's forecasted trading activities. The directors have also
considered the impact of the cost reductions which have been achieved from its
latest cost reduction programme which was implemented in June 2009, and the
impact of the cessation on 31 July 2009 of its loss making B2C gaming business
on the Sky platform. On the basis of these forecasts and the underlying
assumptions, the directors believe that the Group will have sufficient funding,
through its overdraft facilities and the receipt of committed development
funding from the Spanish Government, to continue in operational existence for
at least twelve months from the date of approval of these financial statements.
On this basis, the directors consider that it is appropriate to prepare the
financial statements on a going concern basis.
The principal accounting policies adopted are set out below.
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 2009. 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.
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.
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.
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 and subsequently amortised on a straight line basis over their
useful economic lives. 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.
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 three to 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.
3. Critical accounting judgements and key sources of estimation uncertainty
Critical judgements in applying the Group's accounting policies
In the application of the Group's accounting policies the directors are
required to make judgements, estimates and assumptions about the carrying
amounts of assets and liabilities that are not readily apparent from other
sources. The estimates and associated assumptions are based on historical
experience and other factors that are considered to be relevant. Actual results
may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Key sources of estimation uncertainty
The following is the critical judgement that the directors have made in the
process of applying the Group's accounting policies that has the most
significant effect on the amounts recognised in the financial statements.
Impairment of goodwill and intangibles
Determining whether goodwill is impaired requires an estimation of the value in
use of the cash-generating units to which goodwill has been allocated. The
value in use calculation requires the Group to estimate the future cash flows
expected to arise from the cash-generating units and 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 cash-generating unit. This includes the directors' best
estimate on the likelihood of current deals in negotiation not yet concluded.
Actual events may vary materially from management expectation.
Useful economic life of intangibles
Intangible assets are amortised over their useful lives. Useful lives are based
on management's estimates of the period that the assets will generate revenue,
which are periodically reviewed for continued appropriateness.
Capitalised development costs
The amortisation period of capitalised development costs is determined by
reference to the expected flow of revenues from the product based on historical
experience. Furthermore, the Group reviews at the end of each financial year
the capitalised development costs for each product for any loss of value
compared to net book value at that time, based on expected future contribution
less the total expected costs.
4. Segmental reporting
Based on risks and returns the directors consider that the primary reporting
format is by business segment and that the secondary reporting format is by
geographical segments.
Primary reporting format - business segments
For management purposes the Group is currently organised into three operating
divisions - Gaming, Media (which includes Digital TV and Broadcast and Content)
and Mobile (which includes Interactive Marketing and Mirada Connect). The
unallocated segment relates to corporate overheads, assets and liabilities.
Segmental results for the year ended 31 March 2009 are as follows:
Gaming Media Mobile Unallocated Group
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 2,829 7,252 384 - 10,465
-
Gross profit 1,379 4,343 251 - 5,973
Net gaming income 462 - - - 462
Operating profit/(loss) 1,352 1,209 (39) (4,069) (1,547)
Finance income - - - 117 117
Finance expense - - - (825) (825)
Profit/(loss) for the 1,352 1,209 (39) (4,777) (2,255)
period
Capital expenditure - 687 - 541 1,228
Depreciation - 53 - 296 349
Amortisation - 239 - 12 251
Capital expenditure comprises additions to property, plant and equipment and
intangible assets.
The segmental results for the 15 months ended 31 March 2008 are as follows:
Gaming Media Mobile Unallocated Group
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Revenue 3,922 8,314 268 - 12,504
Gross profit 1,192 2,984 86 - 4,262
Net gaming income 1,304 - - - 1,304
Operating profit/(loss) 1,657 1,166 (321) (21,621) (19,119)
Finance income - - - 2 2
Finance expense - - - (1,575) (1,575)
Profit for period from - - - 129 129
discontinued operations
Profit/(loss) for the 1,657 1,166 (321) (23,065) (20,563)
period
Capital expenditure - 550 - 85 635
Depreciation - 4 - 1,487 1,491
Amortisation - 10 - - 10
The Group ceased all its operations in the dating sector during the 15 months
ended 31 March 2008.
There is no significant inter-segment revenue included in the segments which is
required to be eliminated.
The segment assets and liabilities at 31 March 2009 are as follows:
Gaming Media Mobile Unallocated Group
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Total assets 5,543 15,681 57 2,777 24,001
Total liabilities 577 2,222 20 2,582 5,381
The segment assets and liabilities at 31 March 2008 are as follows:
Gaming Media Mobile Unallocated Group
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Total assets 5,618 15,313 166 8,325 29,256
Total liabilities 1,391 2,312 113 5,784 9,487
Segment assets and liabilities are reconciled to the Group's assets and
liabilities as follows:
Assets Liabilities Assets Liabilities
31 March 31 March 31 March 31 March
2009 2009 2008 2008
GBP'000 GBP'000 GBP'000 GBP'000
Segment assets and liabilities 21,224 2,799 20,931 3,703
Unallocated:
Intangible assets 99 - - -
Property, plant & equipment 838 - 708 -
Other financial assets & 1,840 2,582 7,617 5,784
liabilities
Total unallocated 2,777 2,582 8,325 5,784
Total Group assets and 24,001 5,381 29,256 9,487
liabilities
Assets allocated to a segment consist primarily of operating assets such as
property, plant and equipment, intangible assets, goodwill and receivables.
Liabilities allocated to a segment comprise primarily trade payables and other
operating liabilities.
Secondary reporting format - geographical segments
The Group's secondary reporting format for reporting segment information is
geographical segments. The Group's operations are based in UK and continental
Europe.
External revenue by Total assets by Capital expenditure
location of customer location of assets by location of assets
31 March 31 March 31 March 31 March 31 March 31 March
2009 2008 2009 2008 2009 2008
UK 8,249 12,430 15,795 23,473 541 85
Continental 1,993 74 8,206 5,783 687 550
Europe
Middle East 223 - - - - -
10,465 12,504 24,001 29,256 1,228 635
5. Operating loss
Reconciliation of operating loss for continuing operations to loss before
interest, taxation, depreciation, amortisation, restructuring and share-based
payment charges:
Year 15 months
ended ended
31 March 31 March
2009 2008
GBP000 GBP000
Operating loss (1,547) (19,119)
Depreciation 349 1,486
Amortisation of deferred development costs 251 10
Impairment of goodwill - 12,000
Restructuring costs 117 960
Share based payment charge 165 205
Loss before interest, taxation, (665) (4,458)
depreciation, 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.
6. Finance income
Year 15 months
ended ended
31 March 31 March
2009 2008
GBP000 GBP000
Bank interest receivable 117 2
7. Finance expense
Year 15 months
ended ended
31 March 31 March
2009 2008
GBP000 GBP000
Interest and finance charges on bank loans and 47 661
overdrafts
Convertible loan interest - 843
Finance leases 2 67
Other interest payable 23 28
Net foreign exchange loss 753 -
825 1,599
Finance charges include all fees directly incurred to facilitate borrowing.
These include professional fees paid to accounting practices, bank arrangement
fees and fees to secure required guarantees.
8. Loss per share
Year ended 15 months ended 31 March 2008
31 March
2009
Total Continuing Discontinued Continuing &
operations operations discontinued
operations
(Loss)/profit for period (GBP2,255,000) (GBP20,692,000) GBP129,000 (GBP20,563,000)
Weighted average number of 19,807,185 2,295,329 2,295,329 2,295,329
shares
Basic & diluted (loss)/earnings (GBP0.11) (GBP9.02) GBP0.06 (GBP8.96)
per share
The weighted average number of shares in issue in the 15 months ended 31 March
2008 have been adjusted to reflect the share consolidation which took place on
25 February 2008.
The Company has 370,900 (2008: 391,258) potentially dilutive ordinary shares
being share options issued to staff and share warrants. 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.
9. Intangible assets
Deferred Completed Total Goodwill
development Technology Intangible
costs assets
GBP000 GBP000 GBP000 GBP000
Cost
At 1 April 2008 4,481 567 5,048 45,528
Additions 720 - 720 -
Foreign exchange - 98 98 -
At 31 March 2009 5,201 665 5,866 45,528
Accumulated amortisation
At 1 April 2008 4,481 10 4,491 27,954
Provided during the year 101 150 251 -
Foreign exchange 10 18 28 -
At 31 March 2009 4,592 178 4,770 27,954
Net book value
At 31 March 2009 609 487 1,096 17,574
At 31 March 2008 - 557 557 17,574
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:
31 March 31 March
2009 2008
GBP000 GBP000
The Gaming Channel Ltd ("TGC") 5,251 5,251
Digital Interactive Television Group Ltd 8,255 8,255
("DITG")
Fresh Interactive Technologies S.A. ("Fresh") 4,068 4,068
-------- --------
17,574 17,574
======== ========
The Group tests goodwill annually for impairment, or more frequently if thereare 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 five years and extrapolates cash
flows for the following years based on an estimated growth rate of 2.5% (2008:
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% (2008: 20%).
In addition to the growth rate, the cash flow projections also include certain
income from large contracts currently in the process of being negotiated. The
sensitivity of the value in use to the income from these contracts has been
tested - in order for the value in use to be below the carrying value the
income from these contracts would have to fall to 20% of the forecast amount.
Following the impairment review the carrying value of goodwill no impairment
was considered to be appropriate.
There was an impairment of GBP12,000,000 in the 15 months ended 31 March 2008.
This consisted of impairments of the carrying value of goodwill for DITG of GBP
12,000,000.
10. Share capital
A breakdown of the authorised and issued share capital in place as at 31 March
2009 is as follows:
31 March 31 March 31 March 31 March
2009 2009 2008 2008
Number GBP'000 Number GBP'000
Authorised
Ordinary shares of GBP1 each 25,789,822 25,790 25,789,822 25,790
A Deferred shares of 0.1p 8,210,178,477 8,210 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 9,135,968,299 43,000
Allotted, called up and
fully paid
Ordinary shares of GBP1 each 19,805,485 19,805 19,805,485 19,805
A Deferred shares of 0.1p 8,210,178,477 8,210 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 8,920,806,601 34,923
During the year no share issues took place.
11. Notes supporting cash flow statement
Cash and cash equivalents comprise:
31 March 31 March
2009 2008
GBP000 GBP000
Cash available on demand 1,508 7,154
Overdrafts (371) (234)
1,137 6,920
Net cash (decrease)/increase in cash and cash (5,783) 6,781
equivalents
Cash and cash equivalents at beginning of year 6,920 139
Cash and cash equivalents at end of year 1,137 6,920
Cash and cash equivalents
Cash and cash equivalents are held in the following currencies:
31 March 31 March
2009 2008
GBP000 GBP000
Sterling 1,103 2,352
Euro 405 4,802
Total 1,508 7,154
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.
12. Events after the balance sheet date
No significant change or events have occurred since the balance sheet date.
END
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