29 Sep 2009 07:00
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: 10.5m (15 months ended 31 March 2008: 12.5m) * EBITDA before restructuring costs improved from ( 4.46m) to ( 0.67m) * Gross margin earned: 57% (2008: 34%) * Other administrative expenses 7.1m down from 10m
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
Jose-Luis Vazquez, CEO, Mirada, commented:
"Today's results indicate a clear turnaround and a return to more favourableoperational conditions. The Group ended the year with most of its objectivesachieved, namely an efficient operating cost structure, a strong internationalsales and operational team and extensive overseas activities. Moreover afterreducing overheads further since the year end and having seen a return topositive trading conditions we are moving towards a sustainable cash flowpositive position. Accordingly, we are grateful for the support of our team andour partners during a lengthy transitional period in the face of a worldeconomic crisis and we reaffirm our commitment to long-term profitablerelationships within our marketplace." 29 September 2009Enquiries:mirada plc +44 (0) 207 942 7942 Jose Luis Vazquez, CEO Haggie Financial LLP +44 (0) 207 417 8989 Nicholas Nelson/Kathy Boate Nicholas.nelson@haggie.co.uk Seymour Pierce Limited +44 (0) 207 107 8000 Chris Howard/Mark Percy mirada plc
Chief Executive Officer's Report
Overview
This is the first full financial year of trading since the Group'stransformation 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 andmanagement with both challenges and rewards in that we are able to report on aperiod 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 ofinternational customers and partners. Our core software for digital receiversincludes Electronic Programming Guides ("EPG"), Video on Demand ("VOD") andPersonal Video Recorders ("PVR") applications as well as Audience Measurementsystems, voting and polling, advertising and synchronisation services.
Broadcasters and content producers:
We work with the media value chain to create and support fully interactiveshows, in which our technology and skills play an important role to increaseinvestment returns and improve the users' engagement. Through the brand WappingBroadcast, 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 technologyto parking platforms and services, working with major partners like NCP, APCOAand Meteor, providing mobile cashless parking, permits management and PenaltyCharge Notice payment transactional technologies.
Trading review
This year's primary aims were to consolidate the merger between Yoomedia andFresh, including the execution of an ambitious turnaround plan to dramaticallyreduce the global operating overhead of the Group and a focus on profitablebusiness areas. This led to a reduction in non-core and loss making activitieswith the objective of maximising the bottom line results. The result of theseexercises is a reported 89% reduction in Group losses compared to the 15 monthsended 31 March 2008 and a very promising trend towards profitability. It has tobe said that we had hoped at the outset for an even better performance buteconomic recession meant the expiry of certain sales contracts and delays innegotiations with new customers. These factors reduced the expected revenues ofthe Group to a level that made it impossible to achieve positive operationalresults for the full trading year. Management made a decision to implementfurther cost reduction measures in order to improve our cash flow until marketconditions improved. Following the year end we can now say that the Group hasreduced its overheads and increased its margins to enable the Group to achievesustainable positive operating profits and cash flows.
Financial overview
For the year ended 31 March 2009 the Group recorded an operating loss beforeinterest, tax, restructuring, depreciation, amortisation and share basedpayment charges of 0.67 million compared to a loss of 4.46 million in the 15months ended 31 March 2008. It should also be noted that the equivalent resultreported in the interim statements for the 6 months ended 30 September 2008 wasa loss of 0.53 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: 5.97 million in the current
year with a gross margin percentage of 57% compared to 4.26 million and
34% in the 15 months ended 31 March 2008; and
* A reduction in overheads: other administrative expenses in the year
equalled 7.10 million, now including Fresh overheads, compared to 10.02
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 sharebased payment charges is a key performance indicator ("KPI") used by managementto review the performance of the Group and removes the impact of one off andnon-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 5.64 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 2.26 million (15 months ended 31 March2008: 20.56 million loss), this result was adversely impacted by a largeforeign exchange loss of 0.75 million which was mainly incurred on the intercompany loan between Fresh and mirada. It needs to be noted that this foreignexchange loss is on an inter company loan and has been offset in the balancesheet by the foreign currency translation gain of 0.93 million which was
takendirectly to reserves.Operational Review:Digital TV businessThe past trading year has shown a large increase in the revenues coming fromour overseas Digital TV activities, due to the consolidation of a very skilledinternational team. The Group generated an increasing number of opportunities,some of them materialising in the present trading year due to delays incustomer 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, miradahas recently announced a contract win in Uruguay and during the current yearhas 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 relationshipswith Conditional Access and Middleware providers as well as manufacturers, andwe expect those partnerships and the global market growth to result in asustained increase in the Digital TV business over the coming years.
Broadcast business
The past year has been unprecedented in the media business with broadcastersstruggling with a huge decrease in advertising revenues. Our focus has been toprotect our present business, and to provide a portfolio of assets which willhelp our partners be prepared for a global multimedia/multiplatform contentdistribution 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 keyplayer in the new developments taking place in Spain with regards to thetransition to Digital Terrestrial Television ("DTT"). The planned switch offdate is 3 April 2010 and mirada has been working closely with the Spanishauthorities during this process. Being a key partner for broadcasters in bothfreeview and Pay-TV technologies over DTT, mirada expects to benefit from itscompetitive advantage in this area in the near future.We anticipate further extending our broadcast business overseas and increasingour collaboration with both UK and foreign channels and content producers,through the generation of innovative 360 formats utilising our expertise inviewer interaction in a multi-platform environment.
Gaming business
The past financial year has seen a clear evolution of our Gaming businesstowards a pure B2B strategy, repositioning the company from being a low-tiercompetitor of our customers to becoming an audiovisual interaction technologypartner for them.While Yoomedia was a leading player in the business of audiovisual gamingtechnology, it tried to compete in the B2C market - without the necessaryresources or structure to succeed, instead of focusing on technology andexpertise. Examples like Avago show that the Group had the capability to createinnovative formats in the highly competitive gaming market, but in order tofind a market these needed to be sold to a B2C player. mirada therefore decidedto gradually switch off its B2C activities, concentrating instead on developinginnovative audiovisual gaming products for customers such as Gala and ITV. Ithas also maintained a dialogue with international partners to prepare for theanticipated 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 successfullydistributed to customers like Gala, SportsXchange and in the current periodCCMedia. VDR has proven to be an attractive product for our internationalaudience as well. We are pleased that during the current year we will belaunching our first service in Eastern Europe which will allow consumers toplay VDR live on a dedicated channel and simultaneously online. We expect towin more international distribution agreements with gaming platforms, digitaltelevision operators, broadcasters and content providers during the presentyear.Our gaming activity with broadcasters included the launch of Bingo Night Liveon ITV which was so successful that it entered the Guinness Book of WorldRecords as the largest online game of bingo with around 60,000 players playingsimultaneously on 10 October 2008. We have been actively promoting our Bingoformat internationally through agreements with Broadcasters and contentproducers, and we expect to reach significant agreements in the next financialyear.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 marketingskills with our audiovisual and synchronisation technologies. In this field, weare progressing very well and we strongly believe that we now have a compellingproposition for agencies, advertisers, media buyers and broadcasters in theadvertising market.During the year mirada became the technology partner to Britvic and deliveredcampaigns for Britvic brands which include Tango, Robinsons and Pepsi. Duringthe Twenty20 Cricket World Cup in June 2009 mirada launched Pepsi's mobilecampaign which gave away a total of 1 million in prize money, managing theconsumer interaction and tracking consumer responses for three Pepsi brands.In addition, we opened our first Italian office in Milan. Partnerships to dateinclude Telecom Italia Group, Mastercard and Sky Italia and we consider theseto be significant landmarks in the evolution of our product. This is anothershowcase of our capability to expand the different skills of the business unitsoverseas. Business lines like Interactive Marketing, which were traditionallyconstrained to UK activities, are expected to show a sustained growth duringthe following years due to our expansion into new revenue generating markets.
mirada connect
Connect is an independent business unit, operating in a significantly differentmarket sector from the rest of the Group. Indeed since the year end a newentity was formed; Mirada Connect Limited, which will focus solely on thecommercialisation of our transactional skills for the parking business. Thissubsidiary will continue contracting mirada's core technical technology andservices, as well as benefitting from our increasing international salespresence.
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 customerslike Meteor, APCOA, NCP and Vinci Park, and our international sales effortswill 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 favourableoperation conditions. The Group ended the year with most of its objectivesachieved, namely an efficient operating cost structure, a strong internationalsales and operational team and extensive overseas activities. Moreover afterreducing overheads further since the year end and having seen a return topositive trading conditions we are moving towards a sustainable cash flowpositive position. Accordingly, we are grateful for the support of our team andour partners during a lengthy transitional period in the face of a worldeconomic crisis and we reaffirm our commitment to long-term profitablerelationships within our marketplace.Jose-Luis VazquezChief Executive Officermirada plcConsolidated Income StatementYear 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 -
129operations 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 plcConsolidated Balance Sheet31 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.
Jose-Luis VazquezChief Executive Officermirada 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 12,010intangible 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 -
253disposed
Purchases of property, plant and equipment (435)
(96)
Proceeds from disposal of property, plant and -
8equipment
Purchases of other intangible assets (719)
-
Net cash generated from/(used in) investing (1,037) 4,055activities
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) 9,667activities Net (decrease)/increase in cash and cash 11 (5,783) 6,781equivalents
Cash and cash equivalents at the beginning of 6,920
139the period Cash and cash equivalents at the end of the 1,137 6,920period 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 CompaniesAct 1985. The address of the registered office is 6 & 7 Princes Court, WappingLane, London, E1W 2DA.The financial information shown in the announcement for the year ended 31 March2009 and the 15 months ended 31 March 2008 set out above does not constitutestatutory accounts but is derived from those accounts. The results have beenprepared using accounting policies consistent with those used in thepreparation of the statutory accounts. The financial information contained inthis announcement does not constitute statutory accounts within the meaning ofSection 240 of the Companies Act 1985. Statutory accounts for the 15 monthsended 31 March 2008 have been delivered to the registrar of companies and thosefor the year ended 31 March 2009 will be delivered shortly. The auditors havereported on the accounts for the year ended 31 March 2009; their reports wereunqualified, did not contain statements under s 237(2) or (3) of the companiesact 1985, and did not contain any matters to which the auditors drew attentionwithout 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 hasbeen prepared in accordance with the recognition and measurement criteria ofInternational Financial Reporting Standards (IFRSs), this announcement does notitself 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 paymentcharges of 665,000 and a loss after taxation of 2,255,000. At 31 March 2009the Group had total net assets of 18,620,000 and net current liabilities of 119,000, and during the year ended 31 March 2009 had an operating cash outflowbefore movements in working capital of 143,000.In assessing the going concern of the Group, the directors have preparedforecast information for the period ending twelve months from their approval ofthese financial statements. As part of producing these forecasts directors haveconsidered the recent contract wins and the likely cash inflows to be derivedfrom the Group's forecasted trading activities. The directors have alsoconsidered the impact of the cost reductions which have been achieved from itslatest cost reduction programme which was implemented in June 2009, and theimpact of the cessation on 31 July 2009 of its loss making B2C gaming businesson the Sky platform. On the basis of these forecasts and the underlyingassumptions, the directors believe that the Group will have sufficient funding,through its overdraft facilities and the receipt of committed developmentfunding from the Spanish Government, to continue in operational existence forat least twelve months from the date of approval of these financial statements.On this basis, the directors consider that it is appropriate to prepare thefinancial 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 ofthe Company and entities controlled by the Company (its subsidiaries) made upto 31 March 2009. Control is achieved where the Company has the power to governthe financial and operating policies of an investee entity so as to obtainbenefits 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.
GoodwillGoodwill represents the excess of the cost of acquisition over the Group'sinterest in the fair value of the identifiable assets, intangible fixed assetsand liabilities of a subsidiary, or acquired sole trade business at the date ofacquisition. Goodwill is initially recognised as an asset at cost and issubsequently measured at cost less any accumulated impairment losses. Goodwillwhich is recognised as an asset is reviewed for impairment at least annually.Any impairment is recognised immediately in the Group income statement and isnot subsequently reversed.For the purpose of impairment testing, goodwill is allocated to each of theGroup's cash-generating units expected to benefit from the synergies of thecombination. Cash-generating units to which goodwill has been allocated aretested for impairment annually, or more frequently when there is an indicationthat the unit may be impaired. If the recoverable amount of the cash-generatingunit is less than the carrying amount of the unit, the impairment loss isallocated first to reduce the carrying amount of any goodwill allocated to theunit and then to the other assets of the unit pro-rata on the basis of thecarrying 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 beenseparately identified under IFRS 3 arising in business combinations, or meetthe recognition criteria of IAS 38, "Intangible Assets". Intangible assetsacquired as part of a business combination are initially recognised at theirfair value and subsequently amortised on a straight line basis over theiruseful economic lives. Intangible assets that meet the recognition criteria ofIAS 38, "Intangible Assets" are carried at cost less amortisation and anyimpairment losses. Intangible assets comprise of completed technology andacquired 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 theoutput of the intangible asset or the intangible asset itself or, if it is tobe 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 basisover their useful lives of three to four years. Where no internally-generatedintangible asset can be recognised, development expenditure is recognised as anexpense 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 inuse of the cash-generating units to which goodwill has been allocated. Thevalue in use calculation requires the Group to estimate the future cash flowsexpected to arise from the cash-generating units and the estimated future cashflows are discounted to their present value using a pre-tax discount rate thatreflects current market assessments of the time value of money and the risksspecific to the cash-generating unit. This includes the directors' bestestimate 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 basedon 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 byreference to the expected flow of revenues from the product based on historicalexperience. Furthermore, the Group reviews at the end of each financial yearthe capitalised development costs for each product for any loss of valuecompared to net book value at that time, based on expected future contributionless 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 operatingdivisions - Gaming, Media (which includes Digital TV and Broadcast and Content)and Mobile (which includes Interactive Marketing and Mirada Connect). Theunallocated 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 129discontinued 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 9,487Segment assets and liabilities are reconciled to the Group's assets andliabilities 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 5,784liabilities Total unallocated 2,777 2,582 8,325 5,784 Total Group assets and 24,001 5,381 29,256 9,487liabilities
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 isgeographical segments. The Group's operations are based in UK and continentalEurope. 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 550Europe Middle East 223 - - - - - 10,465 12,504 24,001 29,256 1,228 635 5. Operating lossReconciliation of operating loss for continuing operations to loss beforeinterest, taxation, depreciation, amortisation, restructuring and share-basedpayment 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 661overdrafts 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 ( 2,255,000) ( 20,692,000) GBP129,000 ( 20,563,000) Weighted average number of 19,807,185 2,295,329 2,295,329 2,295,329shares
Basic & diluted (loss)/earnings ( 0.11) ( 9.02) GBP0.06
( 8.96)per share The weighted average number of shares in issue in the 15 months ended 31 March2008 have been adjusted to reflect the share consolidation which took place on25 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 dilutedearnings per share. These shares have no voting rights and are non-convertibleand therefore do not form part of the ordinary share capital used for the lossper 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 usecalculations. The key assumptions for the value in use calculations are thoseregarding the discount rates, growth rates and expected changes to sellingprices and direct costs during the period. Management estimates discount ratesusing pre-tax rates that reflect current market assessments of the time valueof money and the risks specific to the CGUs. The growth rates are based onindustry growth forecasts. Changes in selling prices and direct costs are basedon past practices and expectations of future changes in the market.The Group prepares cash flow forecasts derived from the most recent financialbudgets approved by management for the next five years and extrapolates cashflows 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 therelevant markets. The rate used to discount the forecast pre-tax cash flows is20% (2008: 20%).In addition to the growth rate, the cash flow projections also include certainincome from large contracts currently in the process of being negotiated. Thesensitivity of the value in use to the income from these contracts has beentested - in order for the value in use to be below the carrying value theincome 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 12,000,000 in the 15 months ended 31 March 2008.This consisted of impairments of the carrying value of goodwill for DITG of
12,000,000.10. Share capitalA breakdown of the authorised and issued share capital in place as at 31 March2009 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 1 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 8,210each 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 1 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 8,210each 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) 6,781equivalents
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 bankdeposits with an original maturity of three months or less. The carrying amountof 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.
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