Mirriad Advertising Regulatory News (MIRI)

RNS Number : 0795C

Mirriad Advertising PLC

27 September 2018

 

UNAUDITED INTERIM RESULTS

 

27 September 2018

 

("Mirriad" or the "Group")

 

Mirriad builds foundations for long-term revenue growth

 

Mirriad, a video technology company delivering in-video advertising announces unaudited half-year results for the six months ended 30 June 2018 

 

Highlights

 

Operational

· The Group continues to focus on large scale distribution partners

· New media owner contracts signed with NBCU in the US and El Cartel Media (RTL II) in Germany, with further contracts in some of the world's leading advertising markets currently under development

· Contract renewed with Youku/Alibaba on non-exclusive basis

· Contract renewed with Star India, part of the Fox group, in March 2018 as part of a significant new initiative in India

· Launch of the new strategic In-Video Ad Unit and release of white paper citing validation by comScore US and Miaozhen Systems China

· Delivery of proprietary Marketplace technology and deployed for successful campaigns with key customers such as Globosat, Star and Youku

· Tencent contract announced shortly after period end on 26 July

· Stephan Beringer appointed new Chief Executive Officer (see separate announcement issued 27 September 2018), post period-end

 

 

Financial

· Revenue £120k (30 June 2017 £352k) as the Group focuses on development of technology and building long term Marketplace partnerships

· Cash and cash equivalents £22.1m (30 June 2017 £5.8m)

· Cash consumption £6,222k (30 June 2017 £4,551k) as the Group built out operations in its five target markets

· Operating loss of £6,652k (30 June 2017 £4,905k) in line with management expectations

· Loss per share 6p (30 June 2017 9p)

· An additional c£2m in new capital was raised from Puhua at 62p per share in April 2018

 

Commenting on the results, Roger Faxon, Chairman of Mirriad said:

 

 

ABOUT MIRRIAD

Mirriad is a video technology company delivering in-video advertising by naturally blending brand advertising into popular entertainment content.

Mirriad creates advertising opportunities within existing video content across multiple shows. Advertisers can reach target audiences in a contextually relevant way without interrupting the viewing experience. The new ad format can be used alone or combined with other media and is aligned with existing media trading.

Mirriad is headquartered in London, with offices in the leading advertising markets in the world: New York, Mumbai, Shanghai and São Paulo.

 

Chairman's Statement

27 September 2018

Chief Executive's Statement 

The first half of the year has seen us place significant focus on strategizing and building the systems and processes that will enable our key distribution partners to launch our advertising products at scale in the world's leading advertising markets. This has required a shift away from short-term revenue opportunities in order that we put all of our attention on building a sustainable model that can grow for the long-term. This strategic decision is reflected in our revenue numbers for the first six months of the year. However, now that those foundations have largely been built, Mirriad is in a strong position to switch resources to accelerating demand from this pioneering technology and driving sales and revenue for the long-term.

The company has made strong operational progress in the first half of the year, having delivered the Marketplace technology that will enable us to monetize content and audiences. The platform is an industry first, which will have a significant impact on our ability to deliver our advertising solutions at scale.

Also critical to the growth of our product is the development of the In-Video Ad Unit that enables customers, media buyers and advertisers to buy Mirriad-powered advertising in the same way that they buy spot advertising or pre/mid-roll advertising today. Using advanced AI technology to analyse video content, Mirriad's Ad Units are delivered at a consistent level of viewability and effectively create a new advertising currency, essential for transactions at scale. The data behind the Ad Unit is auditable by third parties and designed to comply with advertiser demands for value for money, brand safety, reliability, transparency and provision of meaningful insights and effectiveness. This is a major industry achievement, and Mirriad will continue to enhance this by working with additional credible partners going forward.

For the second half of the year, we are focusing on increasing inventory levels to the demand side of the industry with an end-to-end platform. This will bring together a broad range of technologies into a combined experience essential to drive adoption and scalability. As we continue to drive towards meaningful revenue growth, we have initiated demand creation programs in all of our key markets, with a view to boosting awareness and adoption amongst advertisers.

Around the world, we are already seeing significant progress as we move into deployment. In Brazil, we have significantly increased the inventory levels, and while we are at an early stage to see significant revenue, brand demand has been strong and we are seeing repeat business in this market with clients such as Ford. The USA and Europe (revenues shown as UK in the segmental analysis) are at earlier stages of development, in part due to Europe's late entry into the brand integration market following deregulation only in the last few years as compared to the rest of the world which has been integrating brands into content for many decades. In the USA we have appointed a new Executive Vice President and have our first signed order with Univision. In Europe we have announced a new contract with RTL II in Germany and are currently in discussion with a major European commercial broadcaster about a potential partnership.

We have continued to make progress in China in the first half of the year and saw very positive marketing effectiveness research following the successful Tangeche campaign which was fully delivered by the end of January 2018. While subsequent growth has been slower than planned, the medium-term outlook has improved dramatically with our deal with video distribution partner Tencent, our second large partner in the territory with whom we announced a deal in July this year. Tencent is a giant in the entertainment space, and leads the market in music, film, video and gaming. We are now implementing a dynamic In-Video ad serving capability together with Tencent R&D, with a view to enabling maximum possible scale and ease of operation. In the medium term we believe that the introduction of competition into our development of the Chinese market will accelerate the development of this key region for our product.

In India, we signed a contract with Star (a Fox company) as part of a wider initiative to connect broadcaster inventory to demand side buyers. We are now at advanced stages of developing a more integrated model for business in India, with the active involvement of advertising and media buying agencies as well as content owners. This is a substantial initiative which has taken time to implement but promises to become a strong reference for the In-Video advertising model, with the Mirriad platform taking centre stage in one of the world's fastest growing markets.

Outlook

With the launch and roll out of Marketplace and the development of a meaningful currency in the form of a configurable, verifiable Ad Unit, the company is in a strong position to drive revenues. Driving acceptance of, and demand for, the product takes some time, and the buying patterns of the advertising industry through mechanisms such as upfronts means that there will be a staged ramping-up in revenue generation over a period of time. Nevertheless, we remain convinced of the demand for our product, which enables advertisers to reach their target audiences in a contextually relevant way without interrupting the viewing experience. Our technical and operational capabilities are in place, the content supply chain is secured, advertisers are able to access Mirriad's premium inventory, and we have consistently proven the effectiveness of our advertising approach. The completion of our end-to-end platform coupled with the demand creation activity currently underway will create new levels of liquidity in inventory, and a reliable growing revenue stream from each of our key markets as a result. The market potential is significant and our technology will allow the Group to scale revenue over time. We expect to see the first fruits of that strategy building in late 2018 and into early 2019.

 

 

 

 

 

Consolidated statement of profit or loss and statement of comprehensive income for the six months ended 30 June 2018

 

All activities are classified as continuing.

 

   

 

Consolidated balance sheet

At 30 June 2018

 

   

 

Consolidated statement of changes in equity

For the six months ended 30 June 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated statement of cash flows for the six months ended 30 June 2018

 

 

 

1 Basis of preparation

The condensed and consolidated interim financial statements of Mirriad Advertising plc for the period ended 30 June 2018 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 2018 and for the six months ended 30 June 2017 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 2018 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 2017 have been taken from the Group's audited financial statements on which the Group's auditors, Pricewaterhouse Coopers LLP, expressed an unqualified opinion.

 

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 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 2017, as described in those financial statements other than standards, amendments and interpretations which became effective after 1 January 2018 and were adopted by the Group. These have had no significant impact on the Group's loss for the period or equity. The Board approved these interim financial statements on 27 September 2018.

 

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

 

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 2017, summarized in 2017 annual report and accounts. There have been no significant changes in any risk management policies since 31 December 2017.

 

 

 

 

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. 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 6p (six months to 30 June 2017: 9p; year ended 31 December 2017: 19p).

 

No dividends were paid during the period (six months to 30 June 2017: £nil; year ended 31 December 2017: £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

 

 

On 24 April 2018, 3,225,806 ordinary shares were issued for 62p per share as part of a £2m fund raise from new investors.

 

 

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 27% of the share capital of the Company. All of the related parties listed below, with which the Company had transactions during the period share the same parent company as IP2IPO Portfolio (GP) Limited, IP Group plc.

 

IP2IPO Limited : (1) Charged Mirriad Advertising plc £6,390.06 for Company Secretarial Fees and expenses for the period from 19th December 2017 to 30th June 2018. Of this amount £3,074.20 was unpaid at the period end; (2) Charged Mirriad Advertising plc £717.82 for meeting venue hire and refreshments in January 2018; (3) Charged Mirriad Advertising plc £10,000 for the services of Mark Reilly as a Non-Executive Director for the period to 30th June 2018. Invoices for these fees have not yet been received by the Company and so are accrued and unpaid at the period end.

Top Technology Ventures Limited - Charged Mirriad Advertising Plc £2,600 in May 2018 for data room charges related to fundraising activity.

 

Parkwalk Advisors Limited - Charged Mirriad Advertising plc £10,000 for the services of Alastair Kilgour as a Non-Executive Director for the period to 30th June 2018. Invoices for the June fees totaling £1,667 were not received by the Company by the end of the period and so are accrued and unpaid at the period end.

 

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

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