MIRA.L Regulatory News (MIRA)

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR"). With the publication of this announcement via a Regulatory Information Service, this inside information is now considered to be in the public domain.

29 September 2017

Mirada plc

("Mirada", the "Company" or the "Group")

Final Results for the Year Ended 31 March 2017

Mirada plc (AIM: MIRA), the leading audio-visual content interaction specialist, announces its final results for the year ended 31 March 2017.

Financial Highlights

· Revenue increased 9.1% to £6.57 million (2016: £6.02 million)

· Gross profit increased 5.0% to £6.09 million (2016: £5.80 million)

· Adjusted EBITDA* decreased to £0.04 million (2016: £1.50 million)

· Operating loss of £5.10 million (2016: profit of £0.36 million)

*Adjusted EBITDA (see note 7) is defined as earnings before interest, taxation, depreciation, amortisation, share-based payment charges, goodwill impairment and irrecoverable sales tax.

Operational Highlights

· Commercial roll-out of the Iris multiscreen solution across izzi Telecom (part of Televisa Group) networks

· Increased pipeline, boosted by the reference provided by the successful izzi Telecom roll-out

· Improved sales reach, with local representatives now in Latin America, India, South-East Asia and Eastern Europe

· New Software as a Service (SaaS) business model providing recurrent monthly revenues

· Increased operational capabilities to provide product improvements and successful deployments for new customers under the new business model

· Significant SaaS based contract win post year-end with US-based ATNi for its Caribbean operations

Jose Luis Vazquez, CEO of Mirada, commented: "Mirada participated in a number of deals during the year and is seen as increasingly relevant within the market. As such, we are being invited to bid on a greater proportion of new contracts as they arise, and I am glad to say that we currently have our strongest pipeline ever in terms of the number of opportunities that we are participating in. This has resulted in the recently announced contract win with ATNi, and our increasing number of successful references is helping us in securing further opportunities. With this extensive and maturing pipeline, we are confident of announcing new relevant contract wins in the near future."

Annual Report and Accounts

The Company's Annual Report and Accounts will be available on the Company's website, www.mirada.tv, later today and posted to shareholders next week.

Enquiries:

About Mirada

Mirada creates and manages products and services for digital TV operators and broadcasters. With over 15 years of experience, the Company focuses on the future of Digital TV - Multiscreen cross-platform navigation - anytime, anywhere. It offers a complete suite of end-to-end modular products for STBs, PC, smartphones and tablets, all with innovative state-of-the-art UI designs.

Mirada's products and solutions have been deployed by some of the biggest names in digital media and broadcasting including Televisa, Telefonica, Sky, Virgin Media, BBC, ITV and France Telecom. Headquartered in London, Mirada has commercial offices across Europe and Latin America and operates development centres in the UK and Spain. For more information, visit www.mirada.tv.

CEO Statement

Overview

I am pleased to present the Group's audited financial results for the year ended 31 March 2017. This was a year in which the Company focused on three areas: the successful deployment and support for the commercial roll-out of our largest customer, izzi Telecom (part of Televisa Group) in Mexico; the reinforcement of our Sales and Marketing activities to harvest opportunities from the key reference that this customer provides Mirada; and the scaling and training of our technical team in anticipation of new contract wins that we foresee from the significant improvement to our pipeline.

Trading review

Our solution is being successfully rolled-out across five izzi Telecom networks in Mexico and, according to their customers' feedback, is the best TV proposition in the region in terms of content and product features. The strength of our solution, combined with a large marketing investment from the Televisa Group, resulted in the solution being deployed across more than 670,000 set-top boxes by the end of March 2017. With a customer base of over four million households in the cable market, and several set-top boxes per subscriber, we believe that we have only started scratching the surface of the potential value for this contract.

Despite this, the deployment was not exempt from issues, which were principally due to the need to ensure the proper stability of the global solution which involved many parties, and the negative effects of the US elections on the Mexican market at the end of 2016. However, the market is now recovering, with a stronger currency and a reinforced appetite for investment.

We are happy to say that our Iris product has exceeded our expectations in quality and stability, and the market reception has been very positive. We have a powerful and reliable multiscreen solution, which has proven to be impressively scalable over a short period of time, with consumers seamlessly purchasing and enjoying video across a plethora of different screens. In spite of being a small company, we have been able to beat much larger competitors and succeed in the delivery of such a complex solution that now successfully serves hundreds of thousands of households and over a million devices in Mexico alone.

Last year we also reached agreements to improve our sales presence in Eastern Europe, India and South-East Asia, establishing local representatives in Slovenia, Delhi and Singapore to cover these regions. These representatives have a success-fee component included in their remuneration and we are currently witnessing the positive results of their activities, with significant potential deals in our pipeline in each of the three key regions mentioned above. We are supporting our enhanced sales force with improved marketing activities that highlight our reference deployments and the key advantages of our superior product. We are also a regular presence at relevant trade shows around the globe, focussing mainly on the NAB Show for the American region, the IBC for Europe and Africa, and the Broadcast Asia Show for the Middle East and Asia. These activities, alongside the reference that izzi Telecom gives us, have substantially improved our pipeline, some of which has now matured into new contract wins, such as the recently announced contract with ATNi for the Caribbean region.

We have a strong technical team who have once again proved their quality and resilience. Furthermore, we have been able to deploy a world-class multiscreen TV product that compares well with our largest competitors in the market, and has been able to sustain the required growth in features and scalability. Our team is able to give continued support to the deployment of multi-million sized corporations, which rely on our capabilities and our future corporate success. This needs to be sustained, whilst we are also supporting our growing sales and pre-sales activities, as we need to be ready to deploy to new customers in an ever-changing world.

Customers of different sizes are now relying more and more on cloud-based services, and Mirada is working to be able to cover their needs. They look for flexible business models that align their growth and revenue flows with the investments and operational costs of their relevant suppliers. While this comes with the need to fund deployments, the guaranteed recurrent revenues more than justify us entering "Software as a Service" business models such as the project announced post year-end with ATNi. Set-up fees and other professional service related fees will continue to be a part of these new deals, but the most relevant change comes from sustained revenue flows over several years. This will give greater visibility of return on investment for new contracts of this kind.

We are also now able to provide more competitive global solutions to cost-sensitive customers as the result of agreements with key suppliers in the market. The integration of our solution with new chipset vendors such as ALi Corporation makes it possible for set-top box vendors to offer a very powerful solution with the benefits of reduced investment needs. While our software remains as powerful as ever, reducing the overall customer premises' investment requirement makes our solution even more attractive to the end-user customer.

Our sales cycles tend to last from six to eighteen months, from the start of negotiations to contract signature. Our recent deal with ATNi was one of the faster ones, while others in the pipeline are expected to take longer. Our pipeline started to reflect the impact of the Televisa roll-out at the end of calendar 2016, so we expect for some of the earliest prospects to make their decisions during the coming months.

Our mobile division, which is distinct from our Digital TV division, provides technology solutions to cashless parking providers and is organically growing its revenue at 5% per annum and generating profits of £0.12m (2016: £0.13m). The mobile division contributed 8% of total revenue in the current year (2016: 10%).

This promising stage in the life of our Company, now based on a solid base of products and customer references, can only flourish with the joint empowerment of our stakeholders: employees, customers, suppliers, partners and investors. I would like to thank all of them again for their continued efforts and support.

Financial overview

Revenue grew to £6.57 million (2016: £6.02 million), driven primarily by the significant product integration for the Televisa Group. In our mobile division, revenues continued to grow steadily to £0.56 million (2016: £0.54 million). Although gross profit grew to £6.09 million (2016: £5.80 million), there was a noted decrease of 3.6% in gross margin percentage, due to the additional costs associated with an increased number of sales representatives. Adjusted EBITDA for the year decreased to £0.04 million (2016: £1.50 million) resulting from the different revenue mix and investment in our digital TV and broadcast division. Amortisation charges increased to £2.09 million from £1.63 million, due to increased product investment.

The Group posted a net loss for the year of £5.51 million compared to a loss of £0.40 million in the prior year. One of the main reasons for this was a £2.0 million increase in amortisation and increased spending on sales, marketing and operational capabilities, which was required for the achievement and successful execution of new contract wins. 

During the financial year, Mirada experienced two major events which have led to the goodwill impairment of £3.0 million (2016: £0.0 million). First, on the back of the Mexican Peso devaluation, post US elections, our major customer Televisa reduced their number of purchase orders in the financial year. This resulted in lower licence revenues and forecast cash inflows.

Second, although the ATNi project should result in material monthly ongoing revenues, the lower upfront receipts associated with the OPEX model (meaning lower set-up fees and subscriber-based licenses provided on a 'SaaS' - software as a service model) has led the Board to seek financing facilities to provide working capital for the Company's various projects over the medium-term, including ATNi and other prospective projects. Discussions regarding additional financing facilities are advanced and further announcements in this regard will be made in due course. Both factors have led to the emphasis of matter related to going concern, as noted in Note 3.

Furthermore, there has been a significant reduction in the market capitalisation of the group, and consequently the company has processed an impairment to its investment, in its Company Balance sheet, which has no impact on the consolidated results of the Group.

Net Debt rose to £4.21 million (2016: £3.48 million) as a result of increased product investment and delays in the full Televisa commercial roll-out. Long term interest-bearing loans and borrowings increased by 30% to £2.30 million (2016: £1.77 million) and short term borrowings decreased to £2.13 million (2016: £2.42 million). Trade receivables decreased from £1.44 million to £0.80 million as invoices related to the Monterrey deployment, which were raised in the 2016 financial year, were collected in the 2017 financial year. 

Other intangible assets have increased from £3.89m to £4.75m, mainly due to the increased valuation of the Euro against the Sterling.

The deferred income increase of £1.19m largely relates to cash collections from Televisa received in the current financial period for services to be delivered in fiscal year 2018, due to the negotiation of more favourable payment terms.

Cash at bank decreased to £0.22 million from £0.71 million, with additional invoice discounting facilities of £2.40 million and unused short-term credit lines of £0.77 million available.

Current Trading and Outlook

Mirada participated in a number of projects during the year and is seen as increasingly relevant within the market. As such, we are being invited to bid on a greater proportion of new contracts as they arise, and I am glad to say we currently have our strongest pipeline ever in terms of the number of opportunities that we are participating in. This has resulted in the recently announced contract win with ATNi, and our increasing number of successful reference projects is helping us secure further opportunities. With this extensive and maturing pipeline, we are confident of announcing new relevant contract wins in the near future.

José Luis Vázquez

CEO

28 September 2017

Consolidated Statement of Comprehensive Income

Consolidated statement of financial position

Consolidated statement of cash flows

Consolidated statement of changes in equity

Notes

1. General information

Mirada plc is a company incorporated in the United Kingdom. The address of the registered office is 68 Lombard Street, London, EC3V 9LJ. 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 for the year ended 31 March 2017 and the year ended 31 March 2016 contained in these preliminary results does not constitute the company's statutory accounts for those years.

The auditors' reports on the accounts for 31 March 2017 and the year ended 31 March 2016 were unqualified, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006. However, while the year ended 31 March 2016 did not draw attention to any matters by way of emphasis, the audit report for the ended 31st March 2017 contained a statement in respect of uncertainly over going concern, further details are included in Note 3 below.

The financial information contained in these preliminary results has been prepared using the recognition and measurement requirements of International Financial Reporting Standards (IFRSs) as adopted by the EU. 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 financial statements for the year ended 31 March 2016. New standards, amendments and interpretations to existing standards, which have been adopted by the Group for the year ended 31 March 2017, have not been listed since they have no material impact on the financial information.

3. Liquidity and Going concern

These financial statements have been prepared on the going concern basis. The Directors have reviewed the Company and Group's going concern position taking account of its current business activities, budgeted performance and the factors likely to affect its future development, which are set out in the Annual report, and include the Group's objectives, policies and processes for managing its capital, its financial risk management objectives and its exposure to credit and liquidity risks.

The directors have prepared cash flow forecasts covering a period of at least 12 months from the date of approval of the financial statements. If the forecast is achieved, the Group will be able to operate within its existing facilities. However, the time to close new customers and the value of each customer, which are deemed high volume and low value in nature are factors which constrain the ability to accurately predict revenue performance. Furthermore, investment in winning customers, via marketing expenditure, and servicing and delivering to new customers remains an important function of the forecasts too. As such, there is a risk that the group's working capital may prove insufficient to cover both operating activities and the repayment of its debt facilities. In such circumstances, the group would be obliged to seek additional funding though a placement of shares or source other funding. The directors have had a history of raising financing from similar transactions.

The directors have concluded that the circumstances set forth above represent a material uncertainty, which may cast significant doubt about the Company and Group's ability to continue as going concerns. However, they believe that taken, as a whole, the factors described above enable the Company and Group to continue as a going concern for the foreseeable future. The financial statements do not include the adjustments that would be required if the Company and the Group were unable to continue as a going concern.

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. The segment headed other relates to corporate overheads, assets and liabilities.

Segmental results for the year ended 31 March 2017 are as follows:

£1,034,000 (2016: £898,000) disclosed as "Other" comprises employment, legal, accounting and other central administrative costs from Mirada Plc.

The segmental results for the year ended 31 March 2016, presented on the revised basis, are as follows:

There is no material inter-segment revenue.

The Group has a major customer in the Digital TV and Broadcast segment that generates revenues amounting to 10% or more of total revenue that account for £5.5 million (2016: £4.5 million) of the total Group revenues. The segment assets and liabilities at 31 March 2017 are as follows:

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

The segment assets and liabilities at 31 March 2016, 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. Taxation

The tax assessed on the loss on ordinary activities for the period differs from the standard rate of tax of 20% (2016-20%). The differences are reconciled below:

Deferred Taxation

Deferred tax assets were recognised in prior years in respect of tax losses for Mirada Connect Limited, tax losses for Mirada Iberia S.A. and research and development investment for Mirada Iberia S.A and other temporary differences giving rise to deferred tax assets. Deferred tax assets related to tax losses have been reduced by £397,000 during FY17 in Mirada Iberia S.A.

Foreign exchange differences of £2,000 arising on consolidation of the deferred tax asset are recognised in other comprehensive income.

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 2017 equals £58.5 million (2016: £56.0 million).

The deferred tax asset for the company has not been recognised on the grounds that there is insufficient evidence at the balance sheet date that it will be recoverable. The asset would start to become potentially recoverable if, and to the extent that, the company were to generate taxable income in the future.

6. Operating loss

This has been arrived at after charging:

Analysis of auditors' remuneration is as follows:

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

7. Earnings per Share

Adjusted EBITDA per share

The Company has 4,697,166 (2016: 4,697,166) potentially dilutive ordinary shares arising from share options issued to staff. However, in 2017 and 2016 the loss attributable to ordinary shareholders and weighted average number of ordinary shares for the purpose of calculating the diluted earnings per ordinary share are identical to those used for basic earnings per ordinary share. This is because the exercise of share options would have the effect of reducing the loss per ordinary share and is therefore anti-dilutive.

8. Share capital

A breakdown of the authorised and issued share capital in place as at 31 March 2017 is as follows:

9. Events after the reporting date

On 29 August 2017 the Company announced a contract win with ATN International, Inc. ("ATNi"), a NASDAQ-listed company, which operates in several US and Caribbean locations under various trade names. Under the contract, Mirada will provide products and services to four different Caribbean operators owned by ATNi located in the U.S. Virgin Islands, Bermuda, the Cayman Islands and French Guyana. Mirada will deploy its complete suite of Iris multiscreen products, including its over-the-top ("OTT") solution and back-end platform, Iris SDP, across these networks. The commercial launch and subsequent commercial deployment is expected to occur towards the end of Mirada's current financial year.

10. Cautionary Statement

Mirada plc has made forward-looking statements in this press release, including statements about the market for and benefits of its products and services; financial results; product development plans; the potential benefits of business relationships with third parties and business strategies. These statements about future events are subject to risks and uncertainties that could cause Mirada plc's actual results to differ materially from those that might be inferred from the forward-looking statements, Mirada plc can make no assurance that any forward-looking statements will prove correct.

-ENDS-