IMO.L Regulatory News (IMO)

9 December 2014

IMIMOBILE PLC

("IMI" or "the Company" or "the Group")

Unaudited Interim results for the

six months ended 30 September 2014

IMImobile plc, a London based global technology company which provides software and services to help businesses capitalise on the growth in mobile communication, today announces its consolidated interim results for the six months ended 30 September 2014.

Group key financial highlights

· Results in line with directors expectations.

· Revenue up 5% to £21.5m (2013: £20.5m).

· Gross profit up 7% to £13.5m (2013: £12.7m).

· EBITDA up 10% to £3.8m (2013: £3.4m).

· Adjusted profit after tax up 29% to £2.3m (2013: £1.7m).

· Share based payment charge of £4.5m relating to pre-IPO option grants

· Exceptional costs relating to IPO of £1.2m.

· Statutory accounting loss after tax of £3.5m (2013: £1.9m profit).

· Strong performance from Europe with Gross Profit up 18% to £6.3m.

· Net cash generated from operating activities of £1.7m (2013: £4.9m).

· Cash and cash equivalents at 30 September 2014 of £16.9m (2013: £9.3m).

Operational highlights

· New major operator clients in the UK, Nigeria and Costa Rica and initial progress into the Gambling and Retail sectors.

· Renewal of key contracts with BBC and leading UK motoring organisation.

· Recognised for mobile innovation awards for work with Mobile by Sainsbury's, Ikea and Universal Music.

· Successful listing on AIM on 27 June 2014 raising a total of £30m, net £7m for the Company.

· Completion of acquisition of TextLocal (TxtLocal Limited) on 13 October 2014 giving access to large SMB customer base via SaaS platform, and will be earnings enhancing during the current year.

Jay Patel, Chief Executive Officer of IMImobile PLC, commented:

"These six months were a strategically important period for the Group and we are pleased with the results which demonstrate a good overall performance. We are delighted to have successfully listed, made our first material acquisition and continued to deliver profitable growth.

We continue to see a very healthy pipeline of new business and believe the Group is well positioned to provide further growth for our shareholders in line with market expectations, both in the second half of this year and beyond."

Group performance at a glance

1 EBITDA is defined by the Group as loss/profit before tax, depreciation, amortisation, net finance costs, fees incurred in relation to IPO, share based payment charge and other exceptional items

2 Adjusted profit before tax is defined by the Group as loss/profit before tax, fees incurred in relation to IPO, share based payment charge and other exceptional items

3 EPS for the Group has not been presented in the consolidated interim Financial Statements . An EPS note will be included in the group's full consolidated Financial Statements in the next reporting period and will include the non-controlling interest outlined in note

4 Adjusted profit after tax is defined by the Group as loss/profit before fees incurred in relation to IPO, share based payment charge and other exceptional items

An analyst meeting will be held at 11.00am today at the offices of Buchanan, 107 Cheapside, London, EC2V 6DN. To attend please contact Buchanan.

For further information please contact:

About IMImobile PLC

IMImobile is a leading provider of software and services which help businesses capitalise on the growth in mobile communication. Its services, delivered in over 60 countries in Europe, the Americas, MEA and India, help its clients to engage and transact with their customers more efficiently through smarter mobile engagement. The Company's solutions allow customers to use mobile as a channel to create new revenue streams, as a CRM and customer engagement channel, and as a channel to improve business operations.

IMImobile's DaVinci suite of products is modular, scalable and delivered through cloud infrastructure which is integrated into mobile operator networks, internet services and social media platforms. The products and solutions have helped IMImobile establish a blue-chip client base of leading mobile operators and global enterprises. Key customers include Vodafone, O2, Telefonica, Aircel, Airtel, BSNL, AT&T, MTN, France Telecom, Centrica, Coca-Cola, Universal Music, Tata, the AA, the BBC and major financial institutions.

The Company is headquartered in London with offices in Hyderabad, Atlanta and Dubai and has approximately 690 employees worldwide. IMImobile is quoted on the London Stock Exchange's AIM market with the TIDM code IMO.

Cautionary statement

This announcement contains forward-looking statements that are based on current expectations or beliefs, as well as assumptions about future events. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as anticipate, target, expect, estimate, intend, plan, goal, believe, will, may, should, would, could, is confident, or other words of similar meaning. Undue reliance should not be placed on any such statements because they speak only as at the date of this document and, by their very nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results, and IMImobile's plans and objectives, to differ materially from those expressed or implied in the forward-looking statements.

There are a number of factors which could cause actual results to differ materially from those expressed or implied in forward-looking statements. Among the factors that could cause actual results to differ materially from those described in the forward-looking statements are; increased competition, the loss of or damage to one or more key customer relationships, the outcome of business or industry restructuring, changes in economic conditions, currency fluctuations, changes in laws, regulations or regulatory policies, developments in legal or public policy doctrines, technological developments, the failure to retain key management, or the key timing and success of future acquisition opportunities or major investment projects8.

IMImobile undertakes no obligation to revise or update any forward-looking statement contained within this announcement, regardless of whether those statements are affected as a result of new information, future events or otherwise, save as required by law and regulations.

Chief Executive's Report

In the six months to 30 September 2014 the Group has performed strongly and in line with the Board's expectations, a pleasing result considering the significant time and focus required by senior management to complete the IPO and acquisition of TextLocal. We have seen strong Gross Profit growth in Europe and the MEA more than offsetting the continuing weakness in the Indian business, which accounts for only approximately twenty per cent of Group revenues. Progress continues to be made within the Americas with new contract wins and a growing pipeline of opportunities.

Our core products and services

Our market offerings, based on our own intellectual property, consist of a mobile service delivery platform, the DaVinci ESP, a suite of software applications and a set of technical, analytical and creative professional services. The products and services enable our customers to use mobile technologies to drive incremental revenue, enhance customer engagement and improve business productivity.

Revenue generation products and services

These are designed to deliver incremental revenue for clients through mobile and social channels, including digital and mobile content storefronts, mobile payments and caller ring back tone solutions.

Customer engagement products and services

Use of these solutions enables clients to acquire, service, engage and retain customers using mobile and digital channels and includes multichannel customer communication, marketing automation, social self-care and audience engagement solutions.

Business productivity products and services

These services enable our clients to mobilise certain business processes and improve employee productivity through mobile technologies. These include field force management and customer care solutions.

Our revenue models

We deliver our core products and services using different revenue models that are based on the requirements of our customers. The products are bespoke and are tailored to meet with our clients' requirements and can be delivered via our cloud infrastructure either as a managed service or self-service or can be licensed for on-premise deployment.

Managed Solutions

A combination of software and professional services where we work closely with our clients to deliver software using our cloud infrastructure and assume the day to day management responsibilities of the service as well as technical delivery and platform maintenance. Managed Solution contracts tend to be long-term and recurring.

Software as a Service (SaaS)

A provision of software or API connectivity which is used directly by the client; this is supported and hosted using our infrastructure in the cloud. The commercial model tends to be a mix of recurring licence and support fees plus transactional revenues. The on-going operational support requirements tend to be lower, with variable third-party costs incurred, for example, in wholesale SMS messaging or email costs. For blue-chip clients the services often require deep integration into their own work-flows and processes and consequently are long-term relationships.

Licence Fees

Software provided under a licence fee model is deployed in the client's own network environment and sometimes sold in conjunction with third-party hardware. The licence fee is typically paid up front with an annual maintenance charge for ongoing support.

Performance by geographical breakdown

The Group is managed commercially on a regional basis with centralised resources for software development, finance and general management. A key operating metric for each region is Gross Profit as there are considerable differences in gross margins across regions, product lines and revenue models. Gross Profit also measures most directly the value of the software and solutions delivered by the Group which excludes the impact of network infrastructure, third party hardware and content costs.

Europe

Gross Profit from Europe approximate to half of that generated by the Group. The Europe region delivered Gross Profit growth of 18% when compared to the first six months of the previous year. The margins for SaaS and Managed Solutions grew as expected due to further reductions in the cost of network infrastructure, a trend we expect will continue.

The growing appetite of large enterprises and operators to invest in marketing programmes that engage with their customers through a mobile device continues to be a strong source of growth, with new client wins and additional sales to and volume from existing customers contributing to the performance of the region. In addition service delivery through mobile and direct carrier billing solutions have also contributed to growth in the region.

Our ability to innovate creates thought leadership which is an important element in developing new client relationships. A good example of this has been 'Tweet to Donate' enabling the Post Office to become the first UK organisation to process donations via Twitter for its partnership with BBC Children in Need.

Middle East and Africa

Gross Profit grew by 8% in the MEA region, where a combination of both Managed Solutions and Licence Revenues are sold. A number of new operator contracts were won during the first six months of the year with mobile network operator clients, and deployments are scheduled throughout the second half of the year.

Although deployments can be lengthy and local network infrastructure and connectivity unstable, the Group has demonstrated an ability to deliver revenue generating services successfully in challenging circumstances and as a result is well placed to benefit from the predicted growth across Africa. In addition the Group has built relationships throughout the Middle East which position it for further growth across the region.

India and SE Asia

Gross Profit in the India and South East Asia region continued to decline, for the six months ended 30 September 2014 Gross Profit decreased by 19% compared with the same period a year earlier. This is principally an ongoing consequence of the implementation of consumer protection regulation that has impacted our customers, chiefly the mobile network operators. In India our main activity is managing certain content and value added telecom services for mobile operators and tighter regulation requiring operators to seek additional consents to sign customers up to these services and to implement new third party consent gateways has impacted the whole market for these services.

As a Group we have welcomed the changes as overly aggressive marketing and over-charging had damaged consumer perception of mobile services and we believe that in the long term the changes will benefit the overall market and are confident of our return to growth in this region. In the future we expect to benefit from our long-term operator relationships and investments that they make. We have successfully launched in new territories (Myanmar) and are effectively entering new sectors (public sector).

Strategic Initiatives

We remain focused on our long-term objective of building a global business and further progress has been made during the first six months of the financial year to develop and grow our business in the Americas. Additional commercial success in the region validates our belief that the US carriers, in response to intensifying competition, need to increase customer retention and loyalty. Our customer engagement solutions are particularly well positioned to help deliver long-term growth in this market.

On 13 October 2014, after the period end, we announced the successful acquisition of TextLocal, an award winning self-service, cloud based, mobile messaging business predominantly targeting small and medium sized businesses in the UK. The acquisition will further enhance IMI's product suite of smarter mobile engagement software and strengthens the Company's position as a leading provider of mobile communications solutions. The acquisition will be earnings enhancing with effect from the second half of this financial year.

Outlook

The Group remains on track to achieve market expectations for the full year. TextLocal is currently being integrated into the Group and is trading well since acquisition. We continue to see good levels of interest from our large blue chip customers in all our operating regions and as a result the Board are confident of the Group's future prospects.

Jay Patel

CEO

The accompanying notes are an integral part of the Consolidated Financial Statements and are all attributable to continuing operations.

The accompanying notes are an integral part of the Consolidated Financial Statements.

The accompanying notes are an integral part of the Consolidated Financial Statements.

The capital restructuring reserve arose during the six months ended 30 September 2014 in respect of the acquisition by IMImobile PLC of IMI Mobile Private Limited. The acquisition is accounted for as though there is a continuation of IMI Mobile Private Limited's Financial Statements. The capital restructuring reserve is created to maintain the equity structure of IMImobile PLC in compliance with UK law.

The accompanying notes are an integral part of the Consolidated Financial Statements.

The accompanying notes are an integral part of the Consolidated Financial Statements.

1. Basis of preparation

The condensed consolidated interim Financial Statements for the six month period ended 30 September 2014 have been prepared under the measurement principles of IFRS, using accounting policies and methods of computation consistent with those set out in the Company's 2014 Annual Report and accounts. As permitted by AIM rules the Group has not applied IAS 34 'Interim reporting' in preparing interim reports

IMImobile PLC (the "Company") is a company domiciled in the UK. The consolidated interim Financial Statements of the Company for the six month period ended 30 September 2014 comprise of the Company and its subsidiaries (together referred to as "the Group").

The consolidated interim Financial Statements are prepared under the historical cost convention. A presentational currency of UK Pounds Sterling has been used and accounts have been translated from other functional currencies into UK Pounds Sterling.

The preparation of the consolidated interim Financial Statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies.

The preparation of the consolidated interim Financial Statements in conformity with International Financial Reporting Standards requires management to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated interim Financial Statements and the reported amounts of revenue and expenses during the year. Actual results could differ from the estimates.

2. Basis of consolidation

The consolidated interim Financial Statements incorporates the consolidated financial information of the Company and its subsidiaries. Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

Where necessary, adjustments are made to the financial information of subsidiaries to bring the accounting policies into line with those used by the Group. Inter-company balances and transactions, including inter-company profits and unrealised profits and losses are eliminated on consolidation.

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair values of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interests issued by the Group.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis. When the Group ceases to have control, any retained interest in the entity is remeasured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss.

3. Business combinations and capital restructuring

On 27 June 2014 the Company was successfully admitted to trading on AIM, a market operated by the London Stock Exchange. The initial placing, which comprised of 25,000,000 Ordinary shares at £1.20 per Ordinary Share, raised gross proceeds of £30,000,000. £19,868,014 of the proceeds raised was used by the Company to satisfy its obligations to pay the cash consideration for the acquisition of IMI Mobile Private Limited, and its subsidiaries. Further details on these obligations can be found within the Pro-forma Financial Information presented within the year ended 31 March 2014 Financial Statements.

On 18 August 2014 the Company was able to secure 76% of the issued share capital of IMI Mobile Private Limited. As the Company was AIM listed with no assets other than cash on its Statement of Financial Position at the date of acquisition, under IFRS rules the acquisition constitutes a capital restructuring of IMI Mobile Private Limited by the Company. In line with the Group's accounting policies it would normally be necessary for the Group's consolidated Financial Statements to follow the legal form of the business combination with IMI Mobile Private's results from the acquisition date of 18 June 2014 consolidated into the Group's results. In this case, the consolidated interim Financial Statements have been treated as being a continuation of the Financial Statements of IMI Mobile Private Limited with the Company being treated for accounting purposes as the acquired entity.

As the consolidated Group results represent a continuation of the Financial Statements of the legal subsidiary, the assets and liabilities of IMI Mobile Private Limited have been recognised and measured in the consolidated results at theirpre-combination carrying amounts. The retained earnings and other equity balances recognised are the retained earnings and other equity balances of IMI Mobile Private immediately before the business combination. To comply with UK company law adjustments have been made to the consolidated reserves to reflect the equity structure of the legal parent company, resulting in the creation of a capital restructuring reserve.

4. Non-controlling interest

Tarimela Business Ventures Private Limited, a Company incorporated in India owns two B shares in the capital of IMI Mobile Private Limited, a subsidiary of IMImobile PLC. One B share is held as a nominee for Viswanatha Alluri and one B share as a nominee for Shyamprasad Bhat. Each B share allows the holder to exercise voting rights in respect of such shares equal to the number of Ordinary shares each of its nominees would own if each of the nominees and each of their associates exchanged each of their IMI Mobile Private Limited shares for three Ordinary shares in IMImobile PLC. Accordingly immediately following the admission to AIM, Tarimela Business Ventures Private Limited will hold and option to exercise voting rights equal to 19.3 per cent of IMI Mobile Private Limited's total voting rights on behalf of its nominees. This shareholding represents 24 per cent of the voting rights in IMImobile PLC and has been treated as a non-controlling interest in the consolidated interim Financial Statements.

5. Accounting policies

The principal accounting policies adopted are consistent with those of the Pro-forma consolidated Financial Information for the year ended 31 March 2014.

The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these condensed consolidated interim Financial Statements.

6. Business and geographical segments

Management considers the business from both a geographical and product perspective. Geographically, management considers the performance in Europe (substantially all to the UK), India and South East Asia (SEA), Middle East and Africa (MEA) and the rest of the world. From a product perspective management considers the performance within Managed solutions, Software as a service (SaaS) and Licence and professional fees.

The performance of the operating segments is assessed based on a measure of Revenue and Gross Profit. Any sales between related parties are carried out at arm's length. The Group does not regularly provide information in relation to the assets or liabilities of operating segments to management.

Segment Revenue and ResultsThe following is an analysis of the Group's Revenue and Results by delivery model.

During the period revenues from Customer A and Customer B accounted for 15% (2013: 11%) and 16% (2013: 16%) of the Group's Revenue. 

Geographical Revenue and Results

The following is an analysis of the Group's Revenue and Results by geographical segment:

Sales between segments are carried out at arm's length. The revenue from external parties reported is measured in a manner consistent with that in the Consolidated Income Statement. Revenues are attributed to countries on the basis of the customer's location. The accounting policies of the reportable segments are the same as the Group's accounting policies. The Group does not allocate general administration, marketing and sales expenses to reported segments.

7. Share Capital and Share Premium

The Group's capital is denominated in pounds Sterling.

On 26 June 2014 the Company was successful admitted to the London Stock Exchange Alternative Investment Market and 25,000,000 ordinary shares, with an aggregate nominal value of £2,500,000, were issued at £1.20 each as part of the initial placing.

Immediately following admission ordinary shares, with an aggregate nominal value of £223,710 were issued at £1.20.

On 18 June 2014 the Company entered into an agreement with the Mauritian shareholders pursuant to which the Company agreed to acquire 6,682,400 IMI Mobile Private Limited shares from the Mauritian shareholders in consideration of the allotment of 20,046,200 Ordinary shares. This transaction was completed immediately following admission.

On 16 June 2014 ordinary B shares, with an aggregate nominal value of £0.20, were issued at £50.00 each.

The Group's capital consists of two classes of equity share.

Ordinary shares

The amount classified as equity share capital represents the nominal value of allotted, called up and fully paid ordinary shares at a par value of £0.10. Each holder of ordinary shares is entitled to one vote per share.

Ordinary B shares

The amount classified as equity share capital represents the nominal value of allotted, called up and fully paid ordinary shares at a par value of £0.10. Each holder of ordinary B shares is able to exercise voting rights in respect of such shares equal to the number of Ordinary Shares each of its nominees would receive if they exchanged their holding in IMI Mobile Private Limited, a subsidiary of the Company, for three ordinary shares in the Company.

8. Notes Consolidated Cash Flow Statement

9. Share based payment charge

The charge booked in the six months to 30 September 2014 relates entirely to share option incentives granted prior to the IPO.

There are two elements which make up the share based payment charge

a. Prior to the IPO options were issued to the Directors and key employees, the details of which were disclosed in the Admission Document (part I, section 15 and part IV, sections 9 and 10). The fair value of options granted is recognised as an employee expense in the income statement with a corresponding increase in equity. The fair value is measured at the grant date and spread over the period during which the employees become unconditionally entitled to the options. The fair value of the options is measured using the "Black-Scholes" option valuation model, taking into account the terms and conditions upon which the options were granted. The amount recognised in the income statement is adjusted at each balance sheet date to reflect the number of share options that are expected to vest revised for expected leavers and estimated achievement for non-market based vesting conditions.

b. One of the use of proceeds from the IPO related to the surrender of options over shares in IMI Mobile Private Limited, referenced in the Admission Document (part I, section 12). Compensation payments were paid to participants within the option scheme in lieu of options already vested totalling £2,697,000 (2013: £nil). In accordance with IFRS 2 the Group has accelerated the charge relating to the cancelled schemes through the income statement in the period.

The Group recognised total expenses in relation to share based payments as follows:

10. Dividends per share

Dividends paid on the Group's shares in the six months to 30 September 2014 totalled £nil (2013: £414,629 (3.9 pence per share - INR 3.57 per share)).

11. Contingent liabilities

There were no contingent liabilities as at 30 September 2014 or 30 September 2013.

12. Subsequent events

On 13 October 2014 the Company acquired 100% of the share capital of TxtLocal Limited. The initial consideration comprised £10m in cash and £1m as shares in the Company. A potential £2.15m of deferred consideration is contingent on key employees remaining within the business for a period of time.