Mirriad Advertising Regulatory News (MIRI)

UNAUDITED INTERIM RESULTS

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This has been an important period for Mirriad. Following lower-than-expected revenues in 2018 the Board acted decisively in Q4 2018 and brought in a new management team to lead the business. As well as bringing in Stephan Beringer as CEO, Stephan has built an impressive and experienced senior management team.

Under Stephan's leadership, a new strategy was presented to shareholders in March 2019, and we have started to see positive outcomes from this refreshed approach.

We also made significant changes in the composition of the Board. I assumed the role of Chairman on 30 April 2019 and we subsequently strengthened the Board with the addition of Bob Head as Non-executive Director and Chairman of our Remuneration and Audit Committees on 13 June 2019. Bob brings a wealth of experience in financial management and technology to the business.

Much of the work of the Board in the first six months of the year has been focused on ensuring that Mirriad has the resources and financial stability it needs to successfully implement the new go-to-market strategy. I am pleased that our ability to address these strategic imperatives has been enabled by Mirriad's successful fundraise of £16.2m through the issue of additional shares. This will provide general working capital and help the company continue the implementation of its new market strategy.

The support from existing and new investors is a vote of confidence in the Company's direction of travel, which is best illustrated by the two year Tencent contract that was announced in June.

This is a significant piece of news for the company, both in terms of the innovative nature of the partnership, and also the immediate boost it will deliver to 2019/20 revenues. China is a key growth area for advertisers and this partnership offers a clear route to this important market.

The international advertising industry faces clear headwinds in the shape of rising ad-blocker use and changing consumer behaviours. Alongside shifting viewer preferences, streaming services are now challenged with raising additional revenue as the number of services proliferate, and users are faced with increased costs to access the content they want to watch.

Against these challenges, it is clear audiences have a high preference for the non-disruptive advertising experience that Mirriad's technology delivers, and this significant market opportunity is something the Company will be looking to capitalise on in the coming months.

John Pearson

Non-executive Chairman

Three key elements are at the heart of our new strategic approach: a renewed focus on the developed advertising markets in the USA, France, Germany, UK and China; a new go-to-market strategy designed to accelerate sales by seeking to build partnerships with agencies and brands as well as broadcasters and digital publishers; and a focus on developing technology that's built for scale. Automation and integration will be key in the scalability of the Mirriad platform, and the company is working towards this with a reshaped team under the leadership of our new CTO, Niteen Prajapati.

Stephan Beringer

Chief Executive

David Dorans

Chief Financial Officer

12 September 2019

Our key performance indicators

Company Information

Consolidated statement of profit or loss and statement of comprehensive income for the six months ended 30 June 2019

All activities are classified as continuing.

Consolidated balance sheet

At 30 June 2019

Consolidated statement of changes in equity

For the six months ended 30 June 2019

1 Basis of preparation

The condensed and consolidated interim financial statements of Mirriad Advertising plc for the period ended 30 June 2019 have been prepared in accordance with Accounting Standard IAS 34 Interim Financial Reporting ("IAS 34").

These condensed interim consolidated financial statements for the six months ended 30 June 2019 and for the six months ended 30 June 2018 do not constitute statutory accounts as defined in Section 434 of the Companies Act and are unaudited. The financial information for the six months ended 30 June 2019 presents financial information for the consolidated Group, including the financial results of the Company's wholly owned subsidiaries Mirriad Advertising Private Limited, Mirriad Inc, Mirriad (Singapore) Pte. Ltd, Mirriad Software Science and Technology (Shanghai) Co. Ltd, Mirriad Brasil Tecnologias Para Midia Ltda, and Mirriad Limited (dormant). Comparative figures in the condensed interim financial statements for the year ending 31 December 2018 have been taken from the Group's audited financial statements on which the Group's auditors, Pricewaterhouse Coopers LLP, expressed an unqualified opinion. 

The Board approved these interim financial statements on 12 September 2019.

1.1 Going concern

These condensed interim financial statements have been prepared on the going concern basis, which assumes that the Group will continue in operational existence for the foreseeable future.

After making appropriate enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future and for at least one year from the date of approval of these condensed interim financial statements. For these reasons they continue to adopt the going concern basis in preparing the Group's condensed interim financial statements.

The cash flow projections are the sole responsibility of the directors based upon their present plans, expectations and intentions. In this context, the directors have prepared and considered cash flow projections for the Group for a period extending one year from the date of approval of these financial statements. Based on these cash flows the directors are satisfied that the Group are able to meet their liabilities as and when they fall due for the foreseeable future and for a minimum period of twelve months from the date of these condensed interim financial statements.

2 Accounting Policies

The accounting policies applied are consistent with those of the annual report and accounts for the year ended 31 December 2018, as described in those financial statements other than standards, amendments and interpretations which became effective after 1 January 2019 and were adopted by the Group. The only new standard which had a material impact on the Group and required a change in accounting policy and a retrospective adjustment is IFRS 16 "Leases". The impact of the new leasing standard and the new accounting policies are disclosed in note 2.1 below.

The Group's activities and results are not exposed to any seasonality.

2.1 Impact of IFRS 16 adoption

This note explains the impact of the adoption of IFRS 16 "Leases" on the Group's financial statements and discloses the new accounting policies that have been applied from 1 January 2019 in note 2.1(b) below.

(a) Adjustments recognised on adoption of IFRS 16

The Group has adopted IFRS 16 retrospectively from 1 January 2019, but has not restated comparatives for the 2018 reporting period, as permitted under the specific transitional provisions in the standard. The reclassifications and the adjustments arising from the new leasing rules are therefore recognised in the opening balance sheet on 1 January 2019.

On adoption of IFRS 16, the Group recognised lease liabilities in relation to leases which had previously been classified as 'operating leases' under the principles of IAS 17 Leases. These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee's incremental borrowing rate as of 1 January 2019. The weighted average lessee's incremental borrowing rate applied to the lease liabilities on 1 January 2019 was 4% for a UK property lease and 10% for an Indian property lease. The value of the lease liability recognised as at 1 January 2019 was £1,044,601.

The associated right-of-use assets for property leases were measured on a retrospective basis as if the new rules had always been applied. There were no onerous lease contracts that would have required an adjustment to the right-of-use assets at the date of initial application. 

All right-of-use assets recognised relate to property leases as follows and have been included within property, plant and equipment on the balance sheet.

The change in accounting policy affected the following items in the balance sheet on 1 January 2019:

·; Property, plant and equipment (right-of-use assets) - increase by £820,612

·; Lease liabilities - increase by £1,044,601

·; Trade and other payables (rent-free period accrual) - decrease by £167,404

The net impact on retained earnings on 1 January 2019 was a decrease of £56,585.

(i) Impact on segment disclosures and earnings per share

EBITDA, segment assets and segment liabilities for 30 June 2019 all increased as a result of the change in accounting policies. The following segments were affected by the change in policy.

(ii) Practical expedients applied

In applying IFRS 16 for the first time, the Group has used the following practical expedients permitted by the standard:

·; the accounting for operating leases with a remaining lease term of less than 12 months as at 1 January 2019 as short-term leases

·; the exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial application, and

·; the use of hindsight in determining the lease term where the contract contains options to extend or terminate the lease.

The Group has also elected not to reassess whether a contract is, or contains a lease at the date of initial application. Instead, for contracts entered into before the transition date the Group relied on its assessment made applying IAS 17 and IFRIC 4 "Determining whether an Arrangement contains a Lease".

(b) The group's leasing activities and how these are accounted for.

From 1 January 2019, leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

·; fixed payments (including in-substance fixed payments), less any lease incentives receivable

·; variable lease payment that are based on an index or a rate

·; amounts expected to be payable by the lessee under residual value guarantees

·; the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and

·; payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.

The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the lessee's incremental borrowing rate is used, being the rate that the lessee would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions.

Right-of-use assets are measured at cost comprising the following:

·; the amount of the initial measurement of lease liability

·; any lease payments made at or before the commencement date less any lease incentives received

·; any initial direct costs, and

·; restoration costs

Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT-equipment.

3 Group financial risk factors

The condensed interim financial statements do not contain all financial risk management information and disclosures required in annual financial statements; the information should be read in conjunction with the financial information, as at 31 December 2018, summarized in the 2018 annual report and accounts. There have been no significant changes in any risk management policies since 31 December 2018. 

4 Segment information

Management mainly considers the business from a geographic perspective since the same services are effectively being sold in every Group entity. Therefore regions considered for segmental reporting are where the Company and subsidiaries are based, namely the UK, the USA, India, Brazil, China and Singapore. The revenue is classified by where the sales were booked not by the geographic location of the customer. For this reporting purpose the Singapore and China entities are considered together.

The only income outside of the primary business activity relates to income received from grants which is recognised in other operating income.

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the steering committee that makes strategic decisions. The steering committee is made up of the board of directors and the President. There are no sales between segments. The revenue from external parties reported to the strategic steering committee is measured in a manner consistent with that in the income statement.

The Parent company is domiciled in the United Kingdom. The amount of revenue from external customers by location of the Group billing entity is shown in the tables below.

Revenue

Loss before tax

The EBITDA is the loss for the year before depreciation, amortisation, interest and tax. The loss before tax is broken down by segment as follows:

5 Earnings per share

(a) Basic

Basic earnings per share is calculated by dividing the loss for the period / year by the weighted average number of ordinary shares in issue during the year. Potential ordinary shares are not treated as dilutive as the Group is loss making and such shares would be anti-dilutive.

The loss per share for the period was 7p (six months to 30 June 2018: 6p; year ended 31 December 2018: 14p).

No dividends were paid during the period (six months to 30 June 2018: £nil; year ended 31 December 2018: £nil).

(b) Diluted

Potential ordinary shares are not treated as dilutive as the Group is loss making and such shares would be anti-dilutive.

6 Share capital

Ordinary shares of £0.00001 each

No shares were issued during the period.

7 Net cash flows used in operating activities

8 Related party transactions

The Group is owned by a number of investors the largest being IP2IPO Portfolio (GP) Limited (as general partner for IP2IPO Portfolio L.P) who owns approximately 26% of the share capital of the Company. Accordingly there is no ultimate controlling party. 

During the period the Company had the following related party transactions which were carried out at arm's length. No guarantees were given or received for any of these transactions.

IP2IPO Limited - a company which shares a parent company with IP2IPO Portfolio (GP) Limited, the largest shareholder in the Group, and which also appoints a Director of the Group charged Mirriad Advertising plc for the following transactions during the period: (1) £10,000 for the services of Dr. Mark Reilly as a Director during the period. Of this amount, £1,667 was invoiced and unpaid at the period end, and was subsequently paid on 11 July 2019. A further £1,667 was accrued and unpaid at the period end. This outstanding amount was paid on 26 July 2019; (2) £6,000 for the services of the Company Secretary during the period. £3,000 of this amount was accrued and unpaid as at 30 June 2019. This outstanding amount was paid on 26 July 2019; and (3) £756.89 for event hire and refreshments. £82 of this amount was invoiced and unpaid as at 30 June 2019 and was subsequently paid on 11 July 2019.

Parkwalk Advisors Limited - a company which shares a parent company with IP2IPO Portfolio (GP) Limited, the largest shareholder in the Group, and which also appoints a Director of the Group charged Mirriad Advertising plc for the following transactions during the period: (1) £10,000 for the services of Alastair Kilgour as a Director during the period. £1,667 of this amount was accrued and unpaid as at 30 June 2019 but was subsequently paid on 16 July 2019.

9 Availability of Interim Report

Electronic copies of this interim financial report will be available on the Company's website at www.mirriadplc.com/investor-relations.