REG-Mirada PLC: Final Results <Origin Href="QuoteRef">MIRA.L</Origin> - Part 1

MiradaAnnouncement

09/07/2015 07:00

9 July 2015

                                  mirada plc                                   

                                  (AIM: MIRA)                                  

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

                Final Results for the Year Ended 31 March 2015                 

mirada plc, the AIM quoted leading audiovisual content interaction specialist,
announces its final results for the year ended 31 March 2015.

Financial Highlights

  * Revenue increased 24% to £5.66 million (2014: £4.57 million)
  * Revenues earned from licences remained in line with last year to £1.73
    million (2014: £1.74 million)
  * Gross profit increased 23% to £5.42 million (2014: £4.39 million)
  * Gross profit margin remained stable at 96%
  * Adjusted EBITDA* increased 50% to £1.54 million (2014: £1.02 million)
  * Pre-tax loss reduced to £0.11 million (2014: loss of £0.39 million)

*Adjusted EBITDA is defined as earnings before interest, tax, depreciation,
amortisation and share-based payment charges

Operational Highlights

  * Commercialisation of first Tier One project for Televisa Group with
    Cablevisión Monterrey deployment commencing in February 2015
  * Oversubscribed placing to raise £3.5 million at a price of 12.5p, providing
    funds to strengthen the Group's position within the Over The Top ("OTT")
    market and Latin America
  * Inaugural OTT contract win
  * Successful launch of Telefónica's Movistar Go product
  * Appointments of José Gozalbo (Chief Technology Officer) as Executive
    Director, Matthew Earl as Non-Executive Director, and Gonzalo Babío as
    Chief Financial Officer (non Board appointment)

José Luis Vázquez, CEO of mirada, commented: "We have now entered a new stage
in which major players are showing increased interest in our capabilities.
Having proven our ability to win and deliver Tier One contracts, the Board is
encouraged by the prospects that might develop from the continuing discussions
with other potential Tier 1 and Tier 2 customers."

Enquiries:

mirada plc                                                +44 (0) 207 549 5678
José Luis Vázquez, Chief Executive Officer                                    
                                                                              
Walbrook PR                                               +44 (0) 207 933 8780
Nick Rome/Sam Allen                                                           
mirada@walbrookpr.com                                                         
                                                                              
Arden Partners plc (Nomad and Joint Broker)               +44 (0) 207 614 5900
Steve Douglas (Corporate Finance)                                             
James Felix (Corporate Finance)                                               
Kam Bansil (Corporate Broking)                                                

Overview

I am pleased to report the Group's financial results for the year ended 31
March 2015. This has been a critical period for the Company during which we
have secured and deployed our first Tier One contract. mirada has proven
capable of winning and delivering milestone deals competing with the largest
players in the Digital TV market. As such, it has established and strengthened
its network of relationships and successfully delivered its products in a
challenging environment, whilst creating a strong pipeline of potential
large-scale contracts.

The Company won its most important contract to date in May 2014 with Televisa
Group for its flagship product, iris, a unique TV-everywhere ecosystem
featuring the advanced inspire user-experience, which it launched for the first
time on Cablevisión Monterrey's cable network in February this year. Even with
a delay in commercial deployment beyond mirada's control, the Group achieved a
healthy growth in revenues of nearly 24% to £5.66 million (2014: £4.57
million). Most of this growth resulted from professional services related to
increased functionality and customisation of the Televisa Group deployments,
while licence fees remained in line with last year at £1.73 million. The growth
resulted in an improvement in adjusted EBITDA (defined as earnings before
interest, tax, depreciation, amortisation and share based payment charges) of £
1.54 million (2014: £1.02 million), increasing more than 50% from the previous
year. The Group was also able to raise operating profit for the year to £0.29
million (2014: £0.004 million). Losses Before Tax were reduced to -£0.11
million (2014: -£0.39 million), with a Net Loss of -£0.18 million (2014: £0.04
million profit) after taxes.

In addition to the Televisa iris contract, the Group also secured its first
significant OTT contract, also with Televisa. In addition, we deployed our iris
technology with the Telefónica Group in Peru. These milestones demonstrate the
competitiveness of mirada for next generation Digital TV products. The team
continues to be able to achieve its goal of being at the forefront of OTT
technologies, positioning us well to secure larger deals and these milestones
have translated into continuing discussions with other Tier One customers.

We have a strongly supportive shareholder base, as demonstrated by the
oversubscribed placing of £3.5 million (before expenses) in July 2014, which
allowed the Group to secure the OTT deals and substantially strengthen our
balance sheet. We remain grateful for their support.

Trading review

First Tier One customer

The primary focus of the Group over the year was to secure the deployment of
our inaugural Tier One contract, which was awarded to us by Televisa in May
2014. The first such commercial deployment commenced in February 2015 for
Televisa's regional network, Cablevisión Monterrey. The first months of the
deployment have gone well, with technical and commercial performance surpassing
expectations. As announced in December and January, issues beyond mirada's
control have delayed commercial deployment in the other Televisa networks to
the end of the current financial year. Following the acquisition of Cablecom
and Telecable during the period under review, Televisa now owns five cable
networks, all of which the Company expects to adopt the iris/inspire software.

During the period, there have been significant improvements to the software,
and mirada has faced the additional challenge of integrating its product in a
complex multi-network environment in the middle of a consolidation process.
Substantial progress has been made and the Company is ready to launch the
products across the rest of the cable networks as required by the customer.

Performance of Installed Base

The period under review generated licence fees from the following main sources:
GVT in Brazil, and Cablecom, Axtel and the Televisa Group in Mexico.

During the year Telefónica acquired GVT, and has stated that it intends to
merge GVT's activities with Telefónica Brazil. This merger generated around
190,000 new subscribers during the period, comprised of additional hybrid
(IPTV) and satellite (DTH) operations, with GVT subscribers accounting for
around 940,000 in total. However, GVT has reached relative maturity and, with
its impending consolidation process, mirada is conservative about its growth
and direction with respect to user-experience software.

Axtel in Mexico continues to grow, reaching nearly 100,000 subscribers for the
Navi solution, a user-friendly tool for finding and purchasing programming on
IPTV, at the end of the period. The Company continues invoicing new licence
batches and earning managed service through our long established relationship
with Ericsson Mexico.

In August 2014, the Televisa Group completed its acquisition of Cablecom. As
the operational merger concludes, management expects that subscribers from the
cable network will adopt the iris/inspire solution. In the meantime, mirada
continues to offer managed services to Cablecom for their already deployed iris
/origin solution. With respect to the commercial deployment of the iris/inspire
solution, mirada was able to invoice one-off back-office licence fees and the
first batch of subscriber-based licence fees at the end of the period as
expected.

Digital TV and Broadcast unit financial performance

The Group has continued to concentrate on Digital TV & Broadcast business,
which accounted for 92.5% of total turnover (2014: 90.7%) and 95.4% of gross
margin (2014: 94%). Owing to the consolidation of the business and the
successful transition of the Digital TV model, growing with our customers'
success based on a subscriber-based licence fees agreements, revenues from the
unit reached £5.23 million (2014: £4.15 million), representing 26% growth
year-on-year. Licence fees remained flat, mainly due to the delays in the Tier
One commercial launch, while most of the growth came from professional
services, with sales of £3.50 million (2014: £2.41 million), some of which
derived from the Televisa contract. Segmental EBITDA also increased to £2.09
million (2014: £1.87 million).

The major source of revenues - mainly US dollar denominated - continued to be
Latin America, which accounted for 72% of sales (2014: 69%), while the Company
strengthened its pipeline elsewhere in the world. Turnover from the UK and
Spain increased to £1.55 million (2014: £1.22 million), amounting to 27% of
total turnover, in line with last year's percentage.

Mobile unit financial performance

Revenues from the mobile unit remained stable at £0.43 million (2014: £0.42
million). The business, comprising mainly cashless parking, is active in the
UK.

Appointments

During the year we were pleased to welcome Matthew Earl to the role of
Non-Executive Director and José Gozalbo (CTO) to the role of Executive
Director. Gonzalo Babío, an experienced professional formerly working for
Electronic Arts and Disney, also joined as our new CFO (non board position) at
the end of the financial year.

Financial overview

Revenue grew to £5.66 million (2014: £4.57 million), mainly from Digital TV &
Broadcast activities. Gross profit margin remained stable at 96% and adjusted
EBITDA for the year increased 50.7% to £1.54 million (as disclosed in note 6)
compared to £1.02 million in the prior year. Amortisation charges increased to
£1.19 million from £0.92 million as a result of increased investment in iris,
especially in the inspire user-experience and the OTT features. Based on the
Group's improved performance and future projections, a deferred tax asset of £
0.04 million was recognised during the year.

Adjusted EBITDA is a key performance indicator ("KPI") used by management as it
removes the impact of one-off and non-cash transactions. Other KPIs used by
management include the following:

- Gross profit margin: the Group's focus on Digital TV & Broadcast business, in
which cost of sales are minimal, delivered a gross profit margin of 96%, in
line with last year.

- Overseas activities (i.e. excluding UK and Spain): total revenues from Latin
America increased to £4.06 million (2014: £3.14 million), representing 72% of
our turnover, up from 69% last year. Overseas activities remained at 73% of
total Group turnover, the same percentage as last year.

- Subscriber-based licence fee revenue included within the Digital TV &
Broadcast segment: revenues from licence fees command higher margins and are
key to our return on investment and overall profitability. Total licence fees
for the year equalled £1.73 million, in line with £1.74 million in the prior
period.

The Group posted a loss before tax for the year of £0.11 million compared to a
loss of £0.39 million in the prior period. The Televisa contract-related
professional services led to increased revenues, EBITDA and operational profit,
although management expect subscriber-based licence fees to drive overall
profitability of the contract, once the commercial launch takes place across
the rest of the Customer's cable networks.

Total borrowings remained at a similar level to last year totalling £2.81
million (2014: £2.64 million). Long term interest bearing loans and borrowings
reduced 30% to £1.35million (2014: £1.91 million) and short term borrowings
increased from £0.73 million to £1.47 million due to working capital needs
related to delays on the Televisa commercial deployment, including factoring
facilities at £0.44 million. Trade receivables were exceptionally high at the
end of the period at £2.19 million (2014: £0.79 million) due to invoicing in
March of licence fees related to the commercial launch of the contract. In July
2014, the Company completed the equity funding of £3.5 million (before
expenses), which enabled successful OTT product development and improved the
Net Asset position.

During the year to March 2015, it was concluded that Mirada should have raised
a provision for dilapidations on a long-term lease. As a result the
consolidated balance sheets as at 31 March 2013 and 31 March 2014 have been
restated to reflect the liability of a £500k lease provision. The restatement
does not affect the Income Statement or the Statement of Cashflows.

Operational Review

Areas of business

mirada is an audiovisual interaction technology company providing both
interactive products and software development services. We trade in
complementary areas around the media business, with some smaller stand-alone
activities in certain other markets:

Digital TV & Broadcast:

We have more than 15 years' experience in technologies from interactive TV to
advanced navigational services and synchronisation technologies and have a
solid network of partners and we are internationally recognised for our skill
base. Our products comprise user interfaces for content navigation and
consumption over Digital TV receivers (TV and set-top boxes), personal
computers and companion devices (tablets and smartphones). Our major products
are our navigational software propositions: iris (with our origin and inspire
user interfaces), navi (in partnership with Ericsson) and xplayer for
Broadcasters.

Other areas:

mirada has experience and business activities in other areas, principally
broadcast and cashless payment solutions for the car parking market via mirada
connect. mirada connect will remain independent from the rest of the business.
Although non-core, it makes a positive contribution to Group EBITDA.

Current Trading and Outlook

This year has seen the consolidation of the Company as a significant contender
in the Digital TV world, winning contracts generally only awarded to much
larger players. The contract awarded in May 2014 and the later deployment at
the first cable network, Cablevisión Monterrey, further confirmed mirada's
capability to deliver complex projects on a multi-network Tier One scale.

The Group suffered from third-party related delays that postponed the receipt
of further subscriber-based licence fees in the year under review, although
Professional Services at normal market rates increased Revenues more than 25%
on a year-to-year basis. Subscriber-based licence fees will further improve the
profitability from contracts already won, as our return on investment benefits
from the growth of our Customers' installed subscriber bases.

This has been the first commercial launch for our iris-inspire user experience,
and we are glad to confirm that the deployment of the solution went smoothly,
without noticeable technical problems, and the commercial rollout at Monterrey
is progressing ahead of expectations. The Company continues integrating the
solution with additional features at two additional cable networks in the
customer, including the new OTT solution, with an expectation to start the
commercial roll-out in those areas during the coming months. While the final
date for the delivery will rely on the progress of the customer's technical
team, I am very satisfied with the performance of our engineers, who continue
to enhance the solution, thereby generating increased revenues from
professional services.

The Company secured the funds and other resources to accelerate the
availability its OTT full product proposition, securing a large contract with
one of the largest players in the market. This reference, for both the DVB
technologies and OTT propositions, has delivered new leads and translated into
continuing discussions with other Tier One customers..

I would like to thank all our stakeholders, who have demonstrated their belief
in our capabilities and have contributed so much to the transformation of our
business .We look forward with great optimism.

José-Luis Vázquez
Chief Executive Officer
8 July 2015


 

Consolidated income statement

Year ended 31 March 2015

                                                    Note          Year ended                    Year ended
                                                               31 March 2015                 31 March 2014
                                                                        £000                          £000
                                                                                                          
Revenue                                         4                      5,657                         4,572
                                                                                                          
Cost of sales                                                          (234)                         (182)
                                                                                                          
Gross profit                                                           5,423                         4,390
                                                                                                          
Depreciation                                                            (21)                          (43)
                                                                                                          
Amortisation                                                         (1,187)                         (924)
                                                                                                          
Share-based payment charge                                              (61)                          (53)
                                                                                                          
Other administrative expenses                                        (3,869)                       (3,366)