Motive Television Plc Regulatory News (MTV)

7 April 2011

MOTIVE TELEVISION PLC

("MTV" or "Motive" or the "Group")

Preliminary results for the year ended 31 December 2010

Motive Television PLC, the digital television technology, software and services provider, announces its preliminary results for the year ended 31 December 2010.

Financial highlights

·; Group revenue increased by 30 per cent to £1,337,308 (2009: £1,030,180)

·; Gross profit increased by 302 per cent to £314,851 (2009: £78,294)

·; Loss for the year of £2,360,917, after £1,259,185 of re-Admission expenses, as foreseen in the re-Admission document (2009: loss £1,008,249)

·; Cash at bank and in hand at the year-end £1,338,628 (2009: £220,123)

Operational highlights

·; Acquisition of the IP assets of NXVision Limited in September 2010

·; Acquisition of 67.7 per cent of Adecq Digital S.L. in October 2010

·; Appointments of Paul Cuatrecasas, Professor Bryan Foss and Drew Kaza as non-executive directors

·; Pilot agreements for Television Anytime with TV Nova and Antenna Hungaria announced in August 2010

·; US$1.1 million contract for Television Anytime with major Western European technology company announced in October 2010

Post period end Highlights

·; Integration of Bestv® and NXVision technologies and subsequent launch of Television Anytime Anywhere platform

·; Graham Loader appointed as Finance Director, Chief Financial Officer and Company Secretary in February 2011

·; Successful deployment of 3VOD, a service enabling the broadcasting of 3D television content to a set-top box using the Group's Television Anytime software, with Mediaset in Italy in January 2011

·; MOU signed in February 2011 with CME Media Services for Television Anytime Anywhere following initial pilot programme

·; Formation of Motive Television Inc to address growing business in United States

Commenting on the results Michael Pilsworth, Chairman of Motive Television PLC, said: "2010 was a transformational year for the Group. Motive Television now owns, or controls, the intellectual property rights to two exciting new television technologies that, since the year-end, have been integrated into one platform called Television Anytime Anywhere.

"The market backdrop is positive with year-on-year growth of global television revenue of 7.1 per cent. in 2010, coupled with huge increases in time shifted television viewing by US audiences in the third and fourth quarters of 2010.

"With the new Television Anytime Anywhere platform in place, the Group is well positioned to benefit from the impending switchover from analogue to digital broadcasting, which most EU member states will have completed by the end of 2012."

Contact:

Notes to Editors

Motive Television provides digital television technology and services globally, enabling Television Anytime Anywhere. The market is driven by heightened consumer demand coupled with the mandatory switchover from analogue to digital broadcasting that, as mandated by the International Telecommunication Union, will come into full effect by 2015.

Motive Television provides broadcasters with new sources of income and business models and currently operates via three subsidiaries:

Motive Television was founded in London in 2005 and its shares are quoted on the London Stock Exchange (AIM).

http://www.motivetelevision.co.uk/ir/mtv/ir.jsp?page=home 

Chairman's statement

I am pleased to announce the financial results for Motive Television PLC for the year ended 31 December 2010.

A year of transition

During the period under review the Group successfully completed its transition from being a consolidator of television content production companies, to becoming a supplier of software and solutions to broadcasters globally. This resulted in the Group ending the year owning or controlling the intellectual property rights of two new television technologies: NXVision (patent applied for in the USA); and Bestv® (patented in Spain, and applied for in the EU).

NXVision

On 15 September 2010, the Group acquired the intellectual property assets of NX Vision Limited, a Dunfermline-based television technology company, and established a new subsidiary, NXV Limited ("NXV"), to exploit these assets, which were collectively called NXVision, now re-branded since the end of the period under review as "Television Anywhere". Television Anywhere is an advanced placeshifting television technology that allows a viewer to interact, control and watch their Internet-connected home television from a computer, mobile phone, iPad or any other Internet connected device. Television Anywhere is software only, it does not require an additional box, and can be updated automatically inside the set-top box or device via software upgrades.

Bestv®

On 5 October 2010, the Group announced the acquisition of approximately 67.7 per cent of Adecq Digital S.L.("Adecq"), funded by a subscription for £4,750,000 9 per cent convertible loan notes and 71,250,000 warrants to subscribe for ordinary shares of 0.1p each in the Group ("Ordinary Shares").

Adecq is a Barcelona-based digital television software and technology company whose main product was branded Bestv®, now re-branded by the Group "Television Anytime". Television Anytime is a patented broadcast services platform that enables terrestrial broadcasters and pay television operators to offer to their audience and subscribers features that enhance their revenues. Among the features and services that Television Anytime offers are:

·; Push video on demand ("VOD") and subscription video on demand ("SVOD")

·; Catch-up TV

·; Plus One Channels

·; 3D TV (branded "3VOD")

·; Virtual Channels from archival and existing content

·; Personalized content and advertising (Personal TV)

·; Targeted Advertising

Television Anytime accomplishes this through the Enhanced Broadcast System ("EBS"), a comprehensive, broadcast solution for non-linear TV and value added services. The EBS enables broadcasters and operators to extract additional value from their existing content assets, delivery network and their brand. The EBS is a solution for the management and delivery of non-linear television services without requiring costly changes to the existing Automation System or Broadcast Head-end.

The Group's Television Anytime technology offers viewers a significantly improved content and user experience compared with ordinary (linear) broadcast television.

Both of the Group's technologies have been integrated into one platform, branded "Television Anytime Anywhere", and the Group itself has undergone a significant management reorganisation in order to provide one coordinated sales approach to the market, and to ensure engineering efficiencies.

The Group's Television Anytime Anywhere technology has been presented to, and is being evaluated by, broadcasters worldwide.

Business environment

Overall, there was a significant improvement in the financial performance of the international television industry during the year, with year-on-year growth in global television revenue of 7.1 per cent. In the UK, ITV reported a 16 per cent increase in advertising revenues in 2010, whilst across Europe the increase in 2010 was 6.6 per cent (source: IDATE). Television broadcasters began to invest again, in both programming and in technology, and this trend is expected to continue, albeit at a slighter slower pace, in 2011. This is expected to benefit both the Group's main television technology, software and services business, as well as the Group's Dublin-based content production subsidiary, Motive Television Limited ("Motive Dublin").

The latest quarterly TV trends analysis by Nielsen has revealed huge uptakes in time shifting by US TV audiences in the third and fourth quarters of 2010. The survey showed that the average American watched nearly 10.5 hours of time shifted TV per month at the end of 2010. The biggest year-over-year increase came in the third quarter, when the year-on-year growth increased by 17.9 per cent over the same period in 2009, compared to the fourth quarter when the increase was 13.4 per cent. During the same periods, traditional TV viewing grew 1.1 per cent and 0.2 per cent respectively, although total viewing time was 145 and 154 hours respectively.

Nielsen believes that the overall increases in time shifting are driven by more homes using digital video recorders ("DVRs") and not, as some suggest, by more DVR viewing per home. It says the data showed that during the fourth quarter, the average person in a DVR home watched nearly 26 hours of time shifted television per month, a year-on-year increase of 19 minutes.

In all, Nielsen calculated that the average American watched more than 154 hours of television per month in Q4 2010, partially as a consequence of higher DVR usage. Not surprisingly, the data revealed that the biggest impact of DVR viewing is felt among 25 to 64 year-old viewers, who watch more than 30 hours a week of DVR playback. By way of comparison, in Q3 2010, the average viewer watched 145 hours of television, an hour and a half more than the year before.

By the end of 2012, most EU member states will have switched over from analogue to digital broadcasting. Other member countries of the International Telecommunication Union ("ITU") aim to switch to digital by 2015. There are currently approximately 1.2 billion television sets globally. 500 million of these have already switched to DTT and the remaining 700 million will have to comply with the 2015 deadline. The USA has already fully converted to digital terrestrial technology. DTT is important to the Group as it is the prerequisite to the use of its Television Anytime technology by terrestrial broadcasters (satellite broadcasters and cable operators already employ digital distribution).

Business review

In last year's results I stated that the focus in 2010 would be to work to ensure the success of the Group's collaboration with Adecq, whilst seeking further opportunities to invest in new technologies that the Board believes will generate shareholder value, as the broadcasting industry adapts to new competitive challenges.

In June 2009, Adecq signed a software licensing agreement with Nagravision to supply services in conjunction with it to Mediaset in Italy. Mediaset is the biggest national commercial TV company in Italy. The Mediaset product is now in operation and revenues are being generated from this collaboration with Nagravision.

As announced in July 2009, the Group signed a collaboration agreement with Adecq to distribute its Bestv® digital terrestrial technology to broadcasters throughout the world (excluding Spain and Italy). The Group has had some success with this collaboration and announced the launch of two pilot schemes in August 2010. The first pilot was with TV Nova, the Prague (Czech Republic) television station owned by Central European Media Enterprises Limited ("CME") and the second was with Antenna Hungaria ZRT, a fully owned subsidiary of Groupe TDF. These have since been completed, and CME has now signed an agreement with the Group governing ongoing technology collaboration with a view to a commercial implementation.

The Group also announced on 18 October 2010 that Adecq had signed a contract with a major Western European technology company worth U.S.$1.1million to provide Bestv® auto-recording functionality to a European direct to home ("DTH") satellite broadcaster. The server-side implementation for this has been completed on time and on budget and we will be able to announce more details when the DTH operator announces its commercial services.

Financial highlights

·; Group revenue increased by 30 per cent to £1,337,308 (2009: £1,030,180)

·; Gross profit increased by 302 per cent to £314,851 (2009: £78,294)

·; The loss for the year was £2,360,917, after £1,259,185 of re-Admission expenses, as foreseen in the re-Admission document (2009 loss: £1,008,249)

·; Cash at bank and in hand at the year-end was £1,338,628 (2009: £220,123)

Detailed operational review

Business locations

·; The Group's headquarters is located in London, England

·; NXV is based in Dunfermline, Scotland

·; Adecq is based in Barcelona, Spain

·; Casablanca TV Labs S.A.R.L, (the engineering subsidiary of Adecq) is based in Casablanca, Morocco

·; Motive Dublin is based in Dublin, Republic of Ireland

·; Motive Television Inc. is based in New York, U.S.A

TV Anytime Anywhere

The Group anticipates multiple sources of revenues from the rollout of its technology:

1) Platform licences from the broadcaster resulting in a one-off fee or a recurring fee per month, per subscriber/broadcaster;

2) Platform planning and integration fees from the broadcaster for the provision of engineers and consultants by the Group;

3) One off set-top-box licence fees payable by the box manufacturer per set-top-box;

4) Set-top-box integration fees payable by the box manufacturer for the provision of engineers and consultants by the Group;

5) One off set-top-box certification fees payable by the box manufacturer; and

6) Platform management fees from the broadcaster resulting in a recurring fee per broadcaster, per month or per subscriber, per month.

The Directors believe that in the future the majority of income will be derived from licences, platform planning and integration fees and platform management fees.

Owing to the fact that both Adecq and NXV were acquired towards the end of 2010, the amount of revenue received by the Group during 2010 from its new activities was limited to revenue from two clients for a two-month period.

Motive Dublin

The Group's remaining content production business in Dublin was profitable during the year with turnover of €1.377 million, an increase of 19 per cent over the turnover recorded in 2009 (€1.158 million).

Motive Dublin produced 39 live UEFA Champions League soccer games and 10 live Gaelic Athletics Association ("GAA") games. These programmes were co-produced with Asgard Media for Irish commercial broadcaster TV3.

Motive Dublin also produced a one-off documentary, "Pilgrims", on the Irish at the Cheltenham racing festival, for Setanta Sports.

In addition, Motive Dublin diversified into the area of advertiser-funded programming with the production of "On Hallowed Ground", a documentary celebrating the opening of the new Aviva Stadium in Dublin, produced for RTÉ and funded by Aviva. Diageo funded a second advertiser-funded series, "Area 22", a recorded weekly rugby chat show presented by Matt Cooper, for TV3 (also co-produced with Asgard Media). Motive Dublin also produced a number of non-broadcast productions for Aviva during the year and produced a DVD tie-in for The Irish Mail on Sunday featuring the company's 4-hour history of the GAA, "Part of What We Are".

Since the year-end Motive Dublin has received funding commitments from the Broadcasting Authority of Ireland for the production of two programmes: a one-off documentary, "Man on a Mission", for Setanta Sports; and a documentary entitled "The Irish of 9/11", to be produced for TV3 in Ireland. This programme will be available for worldwide broadcast to coincide with the 10th anniversary of 9/11 in September 2011.

The outlook for the television production sector in Ireland is reasonably positive, with a projected upturn in television advertising revenue for 2011 expected to lead to more original programming commissions. Motive Dublin is also intending to continue its move into advertiser-funded programming.

Events since the year-end

Since the year-end, the Group's chief executive officer, Leonard M. Fertig, has carried out a Group-wide management review and is in the process of reorganising operations in order to present one company and one platform to the market. A major re-branding exercise is also under way in order to focus and align the Group's communications and messages to the market.

There is now a single structure to merge Intellectual Property and services into a common offering from a single go-to-market structure under Motive Television Services Ltd. There is also a clear allocation of responsibilities from CEO downwards through the allocation of defined key management roles.

In January 2011, the Group announced that it had successfully enabled the broadcasting of 3D television content to a set-top box using its Television Anytime software over the DTT transmission system. The service, called "3VOD", has been successfully deployed by Italian broadcaster (and client) Mediaset in Italy, demonstrating the versatility and utility of the Television Anytime software for DTT broadcasters.

So far, 3D broadcasting has only been available in high-bandwidth Pay-TV environments on satellite and cable platforms. Now, using Television Anytime, terrestrial broadcasters can make the jump to value-added premium services at a fraction of the normal cost.

Mediaset, Italy's largest commercial broadcaster, already employs the Group's Television Anytime software in its Premium On Demand service, launched nationally in Italy at the end of 2009.

On 18 February 2011, the Group announced that its wholly-owned subsidiary Motive Television Services Limited, ("MTS"), had signed a Memorandum of Understanding ("MOU") with CME Media Services Limited, a wholly owned subsidiary of Central European Media Enterprises Limited ("CME"). The MOU outlines the next phase in CME's evaluation of Motive's Television Anytime Anywhere technologies following an initial Pilot Test Program with the CME group in Prague, Czech Republic.

As part of the management restructuring, the Group announced on 1 March 2011 the appointment of Tony Combe as Chief Technology Officer and Vice President of Engineering of the Group, and Dr. Glenn Craib as Managing Director of NXV. Mr Combe and Dr. Glenn Craib are seasoned executives who co-founded NX Vision Limited and were jointly responsible for the initial design and development of the Company's Television Anywhere technology.

On 3 March 2011, the Group announced the establishment of Motive Television Inc, a Delaware company, as its newest fully-owned subsidiary to address its growing business in the United States. The new subsidiary will be headquartered in New York with operational activities at client locations.

In conjunction with this expansion, the Group also appointed Brainerd Communicators, a New York-based strategic communications agency, to advise and assist Motive in communicating to its potential audiences in the U.S.A.

Board changes

During 2010 Michael O'Rourke and Leonard Ryan resigned as Non-Executive Directors. Russell Pullen, the Group's Company Secretary, retired at the end of the year, having been with the Group since 2005. In addition, on 3 February 2010, Alistair King resigned as part-time Finance Director and as a Director. The Board would like to thank them for their significant contribution to the Group since the formation of the company in 2004.

Graham Loader was appointed to the Board as full-time Finance Director, Chief Financial Officer and Company Secretary after the year-end.

The Board welcomed three new independent Non-Executive Directors, Paul Cuatrecasas, Professor Bryan Foss and Drew Kaza, who have already been of significant assistance to the Group.

Professor Bryan Foss was appointed as the senior Non-Executive Director and Chairman of the Audit Committee; Paul Cuatrecasas was appointed Chairman of the Remuneration Committee; and Drew Kaza was appointed Chairman of the Nominations Committee.

On the acquisition of the Group's controlling interest in Adecq, one of its co-founders, Giuseppe Flores d'Arcais, also joined the Board as an Executive Director.

With the completion of these board changes the Group has fulfilled all of the corporate governance commitments it entered into on re-admission in October 2010.

Key Performance Indicators ("KPIs")

The Group has established the following KPIs going forward:

·; Increase turnover and profit year-on-year

·; Protection of Intellectual Property

·; Deliver "Television Anytime Anywhere" as a unified platform offer

·; Create a unified and efficient engineering function

·; Ensure quality product delivery on time to customers

·; Be aware of competitive threats, market opportunities and possible acquisition targets

The Group has made progress in all of these areas.

Outlook

Trading to date has been broadly in line with the Board's expectations.

The consumer DTT market is expected to continue to expand prior to the global digital switchover mandated before the end of 2015. Over half of the world's 1.2 billion television sets will be able to receive digital signals by the end of 2011 (Futuresource Consulting).

The Group's Television Anytime Anywhere platform is well positioned to leverage this worldwide digital switchover, especially in emerging markets such as Latin America, where 20 per cent annual growth in digital televisions is projected. The market opportunity is not confined to DTT services, as the Group's technologies may be applied by DTT services, direct to home DTH satellite services, as well as by cable television services.

The Group's offerings are proving to excite TV companies at this stage of market development, but the opportunity window is short and Motive aims to accelerate adoption to achieve early impact and market share, ahead of potential competition/alternatives, and to protect IP.

In addition, the Board is confident that by combining its technologies under the "Television Anytime Anywhere" offering, the Group's market share will increase.

The Group remains focused on tight management of costs whilst developing the opportunities for its technology. The Board is optimistic that the Group's technology will continue to find an increasing number of applications in the global market for timeshifting and placeshifting of television content.

Michael Pilsworth

Chairman

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 December 2010

STATEMENT OF FINANCIAL POSITION

as at 31 December 2010

STATEMENT OF CASH FLOWS

for the year ended 31 December 2010

STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2010

1 GENERAL INFORMATION

Motive Television plc and its subsidiaries provide services to the television industry.

This preliminary announcement is authorised for issue by the Board on 6 April 2010. The financial information has been prepared in accordance with International Financial Reporting Standards adopted by the European Union and applying the same accounting policies and bases of calculation and estimation as applied in previous annual financial statements.

Going concern assumption

Subsequent to the acquisition of Adecq and the successful integration of Adecq with NXV the Group has enjoyed significant interest in its technology. It also started discussions with a number of parties in the USA. In order to take advantage of these opportunities the directors have decided to increase both the speed of, and level of investment in order to take full advantage of the opportunities arising.

In order to provide ongoing working capital, and ensure sufficient funds are available for the Group to undertake the required level of development (including covering the increased level of overhead and expenditure that this would necessitate), the Group requires a further injection of funds within the next 12 months. The directors are confident that such an injection can be secured and have therefore continued to prepare the financial statements on a going concern basis.

The Group has an obligation under a Put and Call Option Agreement with Ccan, minority shareholder of Adecq. Under the terms of this agreement it is possible that Ccan can require the Group to acquire its minority holding in Adecq. In the event that this option is exercised the Group is liable to pay Ccan the sum of €2.1 million. Should the Group exercise its option to acquire Ccan's interest in Adecq the Group maximum liability would be €4 million. The earliest date that Ccan can exercise this option is 15 April 2012. At this time the directors cannot be certain that in the event that Ccan decide to exercise their option at the earliest opportunity the Group will have sufficient funds to meet this obligation. The directors will maintain their close relationship with Ccan to ensure that they are aware of Ccan's intentions and carefully monitor the position with a view to ensuring sufficient funds are in place should Ccan decide to exercise their option.

2 CASH GENERATED FROM OPERATIONS

3 LOSS PER SHARE

The loss per share is based on a loss for the year attributable to equity holders of the Parent Company of £2,360,917 (2009: £1,008,249) and the weighted average number of ordinary shares in issue for the year of 636,719,275 (2009: 342,499,463).

The exercise of the outstanding options and warrants would reduce the loss per share and hence have an anti-dilutive effect.

There are 486,462,223 (2009: 111,262,379) shares that could potentially be issued under the terms of options and warrants as that will potentially reduce future earnings per share.

4 STATUS OF THIS ANNOUNCEMENT

The financial information is unaudited and does not constitute statutory accounts, but has been extracted there from. The financial statements for the year ended 31 December 2010, on which the auditors gave an unqualified opinion, have not been filed with the Registrar of Companies. The auditors have reported their opinion on the financial statements for the year ended 31 December 2010 on 6 April 2011. The auditors gave an unqualified opinion. Their report did not contain a statement under Section 498(2) (accounting records or returns inadequate or accounts or directors' remuneration report not agreeing with records and returns), or Section 498(3) (failure to obtain necessary information and explanations). The auditors report included the following two paragraphs by way of emphasis of matter -

"Emphasis of matter - going concern

In forming our opinion on the financial statements we have considered the adequacy of the disclosures made in note 3 to the financial statements concerning the Group's liquidity. The ability of the Group to meet its working capital requirements for the next 12 months and accelerate its development plans is dependent upon further funding being secured. If such funding is not received the Group may not have sufficient funds to enable it to cover its forecast expenditure for the next 12 months, and would have to reduce its costs in order to continue trading. Furthermore, there is possible uncertainty about the ability of the Group to meet its potential obligation to acquire the minority holding in its subsidiary company Adecq Digital SA for €2,100,000, as a consequence of a put option exercisable by the minority shareholder of Adecq Digital S.L. on or after 15 April 2012 in the event that this option is exercised. These conditions, as described in note 3 to the financial statements, indicate the existence of material uncertainties which may cast doubt over the Group's ability to continue as a going concern. The financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern.

Emphasis of matter - goodwill

In forming our opinion on the financial statements we have considered the adequacy of the disclosures made in note 4 and note 15 to the financial statements concerning the carrying value of goodwill at the balance sheet date. The major component of this goodwill balance relates to a business only recently acquired by the Group, which is still in early stages of development in a rapidly developing market, and for which the directors believe there is significant growth potential. The directors have prepared cash flow forecasts for the acquired business that necessarily include significant assumptions regarding the potential revenue growth of the acquired business over the next five years. These assumptions are considered to reflect the inherent potential of the business taken into account by the directors when the acquisition was made. The significance of these assumptions, and uncertainty regarding the future revenues to be generated by the acquired business, represent material uncertainties which impact the fair value of goodwill. The financial statements do not include any adjustments that would result if these assumptions proved to be incorrect and an impairment provision was required against the carrying value of goodwill."

5 DIVIDEND NOTE

The Directors will not be recommending the payment of a dividend.

6 COPIES OF THE DOCUMENT

Copies of the Annual Report and Accounts will be available from the Company's registered office, Windsor House, Barnett Way, Barnwood, Gloucester GL4 3RT and the Company's website http://www.motivetelevision.co.uk.