MIRA.L Regulatory News (MIRA)

MIRADA PLC - Final Results

PR Newswire

London, July 9

9 July 2015

mirada plc

(AIM: MIRA)

("mirada", “the Company” or "the Group")

Final Results for the Year Ended 31 March 2015

mirada plc, the AIM quoted leading audiovisual content interaction specialist, announces its final results for the year ended 31 March 2015.

Financial Highlights

*Adjusted EBITDA is defined as earnings before interest, tax, depreciation, amortisation and share-based payment charges

Operational Highlights

José Luis Vázquez, CEO of mirada, commented: “We have now entered a new stage in which major players are showing increased interest in our capabilities. Having proven our ability to win and deliver Tier One contracts, the Board is encouraged by the prospects that might develop from the continuing discussions with other potential Tier 1 and Tier 2 customers.”

Enquiries:

Overview

I am pleased to report the Group’s financial results for the year ended 31 March 2015. This has been a critical period for the Company during which we have secured and deployed our first Tier One contract. mirada has proven capable of winning and delivering milestone deals competing with the largest players in the Digital TV market. As such, it has established and strengthened its network of relationships and successfully delivered its products in a challenging environment, whilst creating a strong pipeline of potential large-scale contracts.

The Company won its most important contract to date in May 2014 with Televisa Group for its flagship product, iris, a unique TV-everywhere ecosystem featuring the advanced inspire user-experience, which it launched for the first time on Cablevisión Monterrey’s cable network in February this year. Even with a delay in commercial deployment beyond mirada’s control, the Group achieved a healthy growth in revenues of nearly 24% to £5.66 million (2014: £4.57 million). Most of this growth resulted from professional services related to increased functionality and customisation of the Televisa Group deployments, while licence fees remained in line with last year at £1.73 million. The growth resulted in an improvement in adjusted EBITDA (defined as earnings before interest, tax, depreciation, amortisation and share based payment charges) of £1.54 million (2014: £1.02 million), increasing more than 50% from the previous year. The Group was also able to raise operating profit for the year to £0.29 million (2014: £0.004 million). Losses Before Tax were reduced to -£0.11 million (2014: -£0.39 million), with a Net Loss of -£0.18 million (2014: £0.04 million profit) after taxes.

In addition to the Televisa iris contract, the Group also secured its first significant OTT contract, also with Televisa. In addition, we deployed our iris technology with the Telefónica Group in Peru. These milestones demonstrate the competitiveness of mirada for next generation Digital TV products. The team continues to be able to achieve its goal of being at the forefront of OTT technologies, positioning us well to secure larger deals and these milestones have translated into continuing discussions with other Tier One customers.

We have a strongly supportive shareholder base, as demonstrated by the oversubscribed placing of £3.5 million (before expenses) in July 2014, which allowed the Group to secure the OTT deals and substantially strengthen our balance sheet. We remain grateful for their support.

Trading review

First Tier One customer

The primary focus of the Group over the year was to secure the deployment of our inaugural Tier One contract, which was awarded to us by Televisa in May 2014. The first such commercial deployment commenced in February 2015 for Televisa’s regional network, Cablevisión Monterrey. The first months of the deployment have gone well, with technical and commercial performance surpassing expectations. As announced in December and January, issues beyond mirada's control have delayed commercial deployment in the other Televisa networks to the end of the current financial year. Following the acquisition of Cablecom and Telecable during the period under review, Televisa now owns five cable networks, all of which the Company expects to adopt the iris/inspire software.

During the period, there have been significant improvements to the software, and mirada has faced the additional challenge of integrating its product in a complex multi-network environment in the middle of a consolidation process. Substantial progress has been made and the Company is ready to launch the products across the rest of the cable networks as required by the customer.

Performance of Installed Base

The period under review generated licence fees from the following main sources: GVT in Brazil, and Cablecom, Axtel and the Televisa Group in Mexico.

During the year Telefónica acquired GVT, and has stated that it intends to merge GVT's activities with Telefónica Brazil. This merger generated around 190,000 new subscribers during the period, comprised of additional hybrid (IPTV) and satellite (DTH) operations, with GVT subscribers accounting for around 940,000 in total. However, GVT has reached relative maturity and, with its impending consolidation process, mirada is conservative about its growth and direction with respect to user-experience software.

Axtel in Mexico continues to grow, reaching nearly 100,000 subscribers for the Navi solution, a user-friendly tool for finding and purchasing programming on IPTV, at the end of the period. The Company continues invoicing new licence batches and earning managed service through our long established relationship with Ericsson Mexico.

In August 2014, the Televisa Group completed its acquisition of Cablecom. As the operational merger concludes, management expects that subscribers from the cable network will adopt the iris/inspire solution. In the meantime, mirada continues to offer managed services to Cablecom for their already deployed iris/origin solution. With respect to the commercial deployment of the iris/inspire solution, mirada was able to invoice one-off back-office licence fees and the first batch of subscriber-based licence fees at the end of the period as expected.

Digital TV and Broadcast unit financial performance

The Group has continued to concentrate on Digital TV & Broadcast business, which accounted for 92.5% of total turnover (2014: 90.7%) and 95.4% of gross margin (2014: 94%). Owing to the consolidation of the business and the successful transition of the Digital TV model, growing with our customers’ success based on a subscriber-based licence fees agreements, revenues from the unit reached £5.23 million (2014: £4.15 million), representing 26% growth year-on-year. Licence fees remained flat, mainly due to the delays in the Tier One commercial launch, while most of the growth came from professional services, with sales of £3.50 million (2014: £2.41 million), some of which derived from the Televisa contract. Segmental EBITDA also increased to £2.09 million (2014: £1.87 million).

The major source of revenues – mainly US dollar denominated – continued to be Latin America, which accounted for 72% of sales (2014: 69%), while the Company strengthened its pipeline elsewhere in the world. Turnover from the UK and Spain increased to £1.55 million (2014: £1.22 million), amounting to 27% of total turnover, in line with last year’s percentage.

Mobile unit financial performance

Revenues from the mobile unit remained stable at £0.43 million (2014: £0.42 million). The business, comprising mainly cashless parking, is active in the UK.

Appointments

During the year we were pleased to welcome Matthew Earl to the role of Non-Executive Director and José Gozalbo (CTO) to the role of Executive Director. Gonzalo Babío, an experienced professional formerly working for Electronic Arts and Disney, also joined as our new CFO (non board position) at the end of the financial year.

Financial overview

Revenue grew to £5.66 million (2014: £4.57 million), mainly from Digital TV & Broadcast activities. Gross profit margin remained stable at 96% and adjusted EBITDA for the year increased 50.7% to £1.54 million (as disclosed in note 6) compared to £1.02 million in the prior year. Amortisation charges increased to £1.19 million from £0.92 million as a result of increased investment in iris, especially in the inspire user-experience and the OTT features. Based on the Group’s improved performance and future projections, a deferred tax asset of £0.04 million was recognised during the year.

Adjusted EBITDA is a key performance indicator (“KPI”) used by management as it removes the impact of one-off and non-cash transactions. Other KPIs used by management include the following:

- Gross profit margin: the Group’s focus on Digital TV & Broadcast business, in which cost of sales are minimal, delivered a gross profit margin of 96%, in line with last year.

- Overseas activities (i.e. excluding UK and Spain): total revenues from Latin America increased to £4.06 million (2014: £3.14 million), representing 72% of our turnover, up from 69% last year. Overseas activities remained at 73% of total Group turnover, the same percentage as last year.

- Subscriber-based licence fee revenue included within the Digital TV & Broadcast segment: revenues from licence fees command higher margins and are key to our return on investment and overall profitability. Total licence fees for the year equalled £1.73 million, in line with £1.74 million in the prior period.

The Group posted a loss before tax for the year of £0.11 million compared to a loss of £0.39 million in the prior period. The Televisa contract-related professional services led to increased revenues, EBITDA and operational profit, although management expect subscriber-based licence fees to drive overall profitability of the contract, once the commercial launch takes place across the rest of the Customer’s cable networks.

Total borrowings remained at a similar level to last year totalling £2.81 million (2014: £2.64 million). Long term interest bearing loans and borrowings reduced 30% to £1.35million (2014: £1.91 million) and short term borrowings increased from £0.73 million to £1.47 million due to working capital needs related to delays on the Televisa commercial deployment, including factoring facilities at £0.44 million. Trade receivables were exceptionally high at the end of the period at £2.19 million (2014: £0.79 million) due to invoicing in March of licence fees related to the commercial launch of the contract. In July 2014, the Company completed the equity funding of £3.5 million (before expenses), which enabled successful OTT product development and improved the Net Asset position.

During the year to March 2015, it was concluded that Mirada should have raised a provision for dilapidations on a long-term lease. As a result the consolidated balance sheets as at 31 March 2013 and 31 March 2014 have been restated to reflect the liability of a £500k lease provision. The restatement does not affect the Income Statement or the Statement of Cashflows.

Operational Review

Areas of business

mirada is an audiovisual interaction technology company providing both interactive products and software development services. We trade in complementary areas around the media business, with some smaller stand-alone activities in certain other markets:

Digital TV & Broadcast:

We have more than 15 years’ experience in technologies from interactive TV to advanced navigational services and synchronisation technologies and have a solid network of partners and we are internationally recognised for our skill base. Our products comprise user interfaces for content navigation and consumption over Digital TV receivers (TV and set-top boxes), personal computers and companion devices (tablets and smartphones). Our major products are our navigational software propositions: iris (with our origin and inspire user interfaces), navi (in partnership with Ericsson) and xplayer for Broadcasters.

Other areas:

mirada has experience and business activities in other areas, principally broadcast and cashless payment solutions for the car parking market via mirada connect. mirada connect will remain independent from the rest of the business. Although non-core, it makes a positive contribution to Group EBITDA.

Current Trading and Outlook

This year has seen the consolidation of the Company as a significant contender in the Digital TV world, winning contracts generally only awarded to much larger players. The contract awarded in May 2014 and the later deployment at the first cable network, Cablevisión Monterrey, further confirmed mirada's capability to deliver complex projects on a multi-network Tier One scale.

The Group suffered from third-party related delays that postponed the receipt of further subscriber-based licence fees in the year under review, although Professional Services at normal market rates increased Revenues more than 25% on a year-to-year basis. Subscriber-based licence fees will further improve the profitability from contracts already won, as our return on investment benefits from the growth of our Customers’ installed subscriber bases.

This has been the first commercial launch for our iris-inspire user experience, and we are glad to confirm that the deployment of the solution went smoothly, without noticeable technical problems, and the commercial rollout at Monterrey is progressing ahead of expectations. The Company continues integrating the solution with additional features at two additional cable networks in the customer, including the new OTT solution, with an expectation to start the commercial roll-out in those areas during the coming months. While the final date for the delivery will rely on the progress of the customer’s technical team, I am very satisfied with the performance of our engineers, who continue to enhance the solution, thereby generating increased revenues from professional services.

The Company secured the funds and other resources to accelerate the availability its OTT full product proposition, securing a large contract with one of the largest players in the market. This reference, for both the DVB technologies and OTT propositions, has delivered new leads and translated into continuing discussions with other Tier One customers..

I would like to thank all our stakeholders, who have demonstrated their belief in our capabilities and have contributed so much to the transformation of our business .We look forward with great optimism.

José-Luis VázquezChief Executive Officer8 July 2015

Consolidated income statement

Year ended 31 March 2015

Consolidated statement of comprehensive income

Year ended 31 March 2015

Consolidated statements of changes in equity

Year ended 31 March 2015

Consolidated statement of financial position

As at 31 March 2015

Consolidated statement of cash flows

Year ended 31 March 2015

Cash and cash equivalents comprise cash at bank less bank overdrafts.

mirada plc

Notes to consolidated financial statements

Year ended 31 March 2015

1. General information

mirada plc is a company incorporated in the United Kingdom. The address of the registered office is 69 Old Street, London, EC1V 9HX. The nature of the Group’s operations and its principal activities are the provision and support of products and services in the Digital TV and Broadcast markets.

2. Basis of preparation

The financial information set out in this document does not constitute the Company's statutory accounts for year to 31 March 2014 and 2015. Statutory accounts for the years ended 31 March 2014 and 31 March 2015 have been reported on by the Independent Auditors. The Independent Auditor’s Reports on the Annual Report and Financial Statements for each of 2014 and 2015 were unmodified and did not contain statements under sections 498(2) or 498(3) of the Companies Act 2006.

Statutory accounts for the year ended 31 March 2014 have been filed with the Registrar of Companies. The statutory accounts for the year ended 31 March 2015 will be delivered to the Registrar in due course, and will be available from the Company's registered office at 69 Old Street, London, EC1V 9HX and from the Company's website www.mirada.tv/corporate.

The financial information set out in these preliminary results has been prepared using the recognition and measurement principles of International Accounting Standards, International Financial Reporting Standards and Interpretations adopted for use in the European Union (collectively Adopted IFRSs). The accounting policies adopted in these preliminary results have been consistently applied to all the years presented and are consistent with the policies used in the preparation of the statutory accounts for the period ended 31 March 2015. The principal accounting policies adopted are unchanged from those used in the preparation of the statutory accounts for the period ended 31 March 2014. New standards, amendments and interpretations to existing standards, which have been adopted by the Group have not been listed, since they have no material impact on the financial statements

3. Significant accounting policies

Going concern policy

The directors have prepared a cash flow forecast covering a period extending beyond 12 months from the date of these financial statements. The forecast contains certain assumptions about the performance of the business. These assumptions are the directors’ best estimate of the future development of the business, including consideration of cash reserves required to support working capital and its new growth initiatives. Based on this cash flow forecasts, directors continue to adopt the going concern basis of accounting in preparing the annual financial statements.

Prior year restatement

As disclosed in the overview section, during the year to March 2015, Mirada received a dilapidation claim.

It was concluded that Mirada should have raised a dilapidation provision for the Wapping offices totalling £500k. As a result the consolidated balance sheet as at 31 March 2014 has been restated to reflect the post balance sheet liability of the lease provision. This restatement was also required for the balance sheet as at 31 March 2013. The restatement does not affect the Income Statement or the Statement of Cashflows.

4. Segmental reporting

Reportable segments

The chief operating decision maker for the Group is ultimately the board of directors. For financial and operational management the board considers the Group to be organised into two operating divisions based upon the varying products and services provided by the Group – Digital TV & Broadcast and Mobile. The products and services provided by each of these divisions are described in the Strategic Report on page 6. The segment headed other relates to corporate overheads, assets and liabilities.

Segmental results for the year ended 31 March 2015 are as follows:

The segmental results for the year ended 31 March 2014, presented on the revised basis, are as follows:

There is no material inter-segment revenue included in the segments which is required to be eliminated.

The Group has two major customers in the Digital TV and Broadcast segment (a major customer being one that generates revenues amounting to 10% or more of total revenue) that account for £2.16 million (2014: £0.83 million) and £0.84 million (2014: £ Nil) of the total Group revenues respectively.

The segment assets and liabilities at 31 March 2015 are as follows:

Capital expenditure comprises additions to property, plant and equipment and intangible assets.

The segment assets and liabilities at 31 March 2014, presented on a revised basis, are as follows:

Segment assets and liabilities are reconciled to the Group’s assets and liabilities as follows:

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.

Geographical disclosures

5. Operating profit

The operating profit is stated after charging the following:

Reconciliation of operating profit for continuing operations to adjusted earnings before interest, taxation, depreciation and amortisation:

6. Taxation

The tax assessed on the loss on ordinary activities for the period differs from the standard rate of tax of 21%. The differences are reconciled below:

Deferred taxation

Deferred tax assets have been recognised in respect of tax losses for Mirada Connect Limited, research and development investment for Fresh Interactive Technologies S.A and other temporary differences giving rise to deferred tax assets where the directors believe it is probable that these assets will be recovered. The Directors believe that the deferred tax assets are recoverable given the increasing profitability of Fresh Interactive Technologies S.A and Mirada Connect Limited over recent years, combined with the forecasts for future periods.

The movements in deferred tax assets and liabilities during the period are shown below.

Reconciliation of deferred tax asset and liabilities:

Deferred taxation amounts not recognised are as follows:

The gross value of tax losses carried forward at 31 March 2015 equals £57.8 million (2014: £57.6 million).

7. Earnings per share

Adjusted (loss)/earnings per share

Adjusted loss per share is calculated by reference to the loss from continuing activities before interest, taxation, share-based payment charges, depreciation and amortisation (see note 6).

The Company has 5,602,238 (2014: 5,602,555) potentially dilutive ordinary shares arising from share options issued to staff. Share options have been included in calculating the diluted earnings.

8. Share capital

A breakdown of the authorised and issued share capital in place as at 31 March 2015 is as follows:

Share issues

During the year the following share issues took place:

- On 5 August 2014 the Company completed a placing for cash raising gross proceeds of £3,500,000 via the issue of 28,000,000 £0.01 ordinary shares at a price of £0.125 each.

9. Notes supporting cash flow statement

Cash and cash equivalents comprise:

Cash and cash equivalents

Cash and cash equivalents are held in the following currencies:

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.

Significant non-cash transactions are as follows:

10. Events after the reporting date

There are no material reportable post balance sheet.

11. Availability of report and accounts

Copies of the report and accounts for the year ended 31 March 2015 are being posted to shareholders and will be available on the Company’s website www.mirada.tv.