Preliminary Results

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 José-Luis Vázquez, CEO, Mirada, commented: "Today's results indicate a clear turnaround and a return to more favourable operational conditions. The Group ended the year with most of its objectives achieved, namely an efficient operating cost structure, a strong international sales and operational team and extensive overseas activities. Moreover after reducing overheads further since the year end and having seen a return to positive trading conditions we are moving towards a sustainable cash flow positive position. Accordingly, we are grateful for the support of our team and our partners during a lengthy transitional period in the face of a world economic crisis and we reaffirm our commitment to long-term profitable relationships within our marketplace." 29 September 2009 Enquiries: mirada plc +44 (0) 207 942 7942 José Luis Vázquez, 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's transformation 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 and management with both challenges and rewards in that we are able to report on a period 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 of international customers and partners. Our core software for digital receivers includes Electronic Programming Guides ("EPG"), Video on Demand ("VOD") and Personal Video Recorders ("PVR") applications as well as Audience Measurement systems, voting and polling, advertising and synchronisation services. Broadcasters and content producers: We work with the media value chain to create and support fully interactive shows, in which our technology and skills play an important role to increase investment returns and improve the users' engagement. Through the brand Wapping Broadcast, 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 technology to parking platforms and services, working with major partners like NCP, APCOA and Meteor, providing mobile cashless parking, permits management and Penalty Charge Notice payment transactional technologies. Trading review This year's primary aims were to consolidate the merger between Yoomedia and Fresh, including the execution of an ambitious turnaround plan to dramatically reduce the global operating overhead of the Group and a focus on profitable business areas. This led to a reduction in non-core and loss making activities with the objective of maximising the bottom line results. The result of these exercises is a reported 89% reduction in Group losses compared to the 15 months ended 31 March 2008 and a very promising trend towards profitability. It has to be said that we had hoped at the outset for an even better performance but economic recession meant the expiry of certain sales contracts and delays in negotiations with new customers. These factors reduced the expected revenues of the Group to a level that made it impossible to achieve positive operational results for the full trading year. Management made a decision to implement further cost reduction measures in order to improve our cash flow until market conditions improved. Following the year end we can now say that the Group has reduced its overheads and increased its margins to enable the Group to achieve sustainable positive operating profits and cash flows. Financial overview For the year ended 31 March 2009 the Group recorded an operating loss before interest, tax, restructuring, depreciation, amortisation and share based payment charges of £0.67 million compared to a loss of £4.46 million in the 15 months ended 31 March 2008. It should also be noted that the equivalent result reported in the interim statements for the 6 months ended 30 September 2008 was a 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 share based payment charges is a key performance indicator ("KPI") used by management to review the performance of the Group and removes the impact of one off and non-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 £0.14 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 March 2008: £20.56 million loss), this result was adversely impacted by a large foreign exchange loss of £0.75 million which was mainly incurred on the inter company loan between Fresh and mirada. It needs to be noted that this foreign exchange loss is on an inter company loan and has been offset in the balance sheet by the foreign currency translation gain of £0.93 million which was taken directly to reserves. Operational Review: Digital TV business The past trading year has shown a large increase in the revenues coming from our overseas Digital TV activities, due to the consolidation of a very skilled international team. The Group generated an increasing number of opportunities, some of them materialising in the present trading year due to delays in customer 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, mirada has recently announced a contract win in Uruguay and during the current year has 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 relationships with Conditional Access and Middleware providers as well as manufacturers, and we expect those partnerships and the global market growth to result in a sustained increase in the Digital TV business over the coming years. Broadcast business The past year has been unprecedented in the media business with broadcasters struggling with a huge decrease in advertising revenues. Our focus has been to protect our present business, and to provide a portfolio of assets which will help our partners be prepared for a global multimedia/multiplatform content distribution 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 key player in the new developments taking place in Spain with regards to the transition to Digital Terrestrial Television ("DTT"). The planned switch off date is 3 April 2010 and mirada has been working closely with the Spanish authorities during this process. Being a key partner for broadcasters in both freeview and Pay-TV technologies over DTT, mirada expects to benefit from its competitive advantage in this area in the near future. We anticipate further extending our broadcast business overseas and increasing our collaboration with both UK and foreign channels and content producers, through the generation of innovative 360º formats utilising our expertise in viewer interaction in a multi-platform environment. Gaming business The past financial year has seen a clear evolution of our Gaming business towards a pure B2B strategy, repositioning the company from being a low-tier competitor of our customers to becoming an audiovisual interaction technology partner for them. While Yoomedia was a leading player in the business of audiovisual gaming technology, it tried to compete in the B2C market - without the necessary resources or structure to succeed, instead of focusing on technology and expertise. Examples like Avago show that the Group had the capability to create innovative formats in the highly competitive gaming market, but in order to find a market these needed to be sold to a B2C player. mirada therefore decided to gradually switch off its B2C activities, concentrating instead on developing innovative audiovisual gaming products for customers such as Gala and ITV. It has also maintained a dialogue with international partners to prepare for the anticipated 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 successfully distributed to customers like Gala, SportsXchange and in the current period CCMedia. VDR has proven to be an attractive product for our international audience as well. We are pleased that during the current year we will be launching our first service in Eastern Europe which will allow consumers to play VDR live on a dedicated channel and simultaneously online. We expect to win more international distribution agreements with gaming platforms, digital television operators, broadcasters and content providers during the present year. Our gaming activity with broadcasters included the launch of Bingo Night Live on ITV which was so successful that it entered the Guinness Book of World Records as the largest online game of bingo with around 60,000 players playing simultaneously on 10 October 2008. We have been actively promoting our Bingo format internationally through agreements with Broadcasters and content producers, and we expect to reach significant agreements in the next financial year. 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 marketing skills with our audiovisual and synchronisation technologies. In this field, we are progressing very well and we strongly believe that we now have a compelling proposition for agencies, advertisers, media buyers and broadcasters in the advertising market. During the year mirada became the technology partner to Britvic and delivered campaigns for Britvic brands which include Tango, Robinsons and Pepsi. During the Twenty20 Cricket World Cup in June 2009 mirada launched Pepsi's mobile campaign which gave away a total of £1 million in prize money, managing the consumer interaction and tracking consumer responses for three Pepsi brands. In addition, we opened our first Italian office in Milan. Partnerships to date include Telecom Italia Group, Mastercard and Sky Italia and we consider these to be significant landmarks in the evolution of our product. This is another showcase of our capability to expand the different skills of the business units overseas. Business lines like Interactive Marketing, which were traditionally constrained to UK activities, are expected to show a sustained growth during the following years due to our expansion into new revenue generating markets. mirada connect Connect is an independent business unit, operating in a significantly different market sector from the rest of the Group. Indeed since the year end a new entity was formed; Mirada Connect Limited, which will focus solely on the commercialisation of our transactional skills for the parking business. This subsidiary will continue contracting mirada's core technical technology and services, as well as benefitting from our increasing international sales presence. 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 customers like Meteor, APCOA, NCP and Vinci Park, and our international sales efforts will 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 favourable operation conditions. The Group ended the year with most of its objectives achieved, namely an efficient operating cost structure, a strong international sales and operational team and extensive overseas activities. Moreover after reducing overheads further since the year end and having seen a return to positive trading conditions we are moving towards a sustainable cash flow positive position. Accordingly, we are grateful for the support of our team and our partners during a lengthy transitional period in the face of a world economic crisis and we reaffirm our commitment to long-term profitable relationships within our marketplace. José-Luis Vázquez Chief Executive Officer mirada plc Consolidated Income Statement Year ended 31 March 2009 Year ended 15 months ended 31 March 2009 31 March 2008 Note £000 £000 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 - 129 operations Loss for the financial period (2,255) (20,563) Loss per share Year ended 15 months ended 31 March 2009 31 March 2008 £ £ 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 £000 £000 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 plc Consolidated Balance Sheet 31 March 2009 Notes 31 March 31 March 2009 2008 £000 £000 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. José-Luis Vázquez Chief Executive Officer mirada plc Consolidated Cash Flow Statement Year ended 31 March 2009 Year 15 months ended ended 31-Mar-09 31-Mar-08 Note £000 £000 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 12,010 intangible 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 - 253 disposed Purchases of property, plant and equipment (435) (96) Proceeds from disposal of property, plant and - 8 equipment Purchases of other intangible assets (719) - Net cash generated from/(used in) investing (1,037) 4,055 activities 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) 9,667 activities Net (decrease)/increase in cash and cash 11 (5,783) 6,781 equivalents Cash and cash equivalents at the beginning of 6,920 139 the period Cash and cash equivalents at the end of the 1,137 6,920 period 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 Companies Act 1985. The address of the registered office is 6 & 7 Princes Court, Wapping Lane, London, E1W 2DA. The financial information shown in the announcement for the year ended 31 March 2009 and the 15 months ended 31 March 2008 set out above does not constitute statutory accounts but is derived from those accounts. The results have been prepared using accounting policies consistent with those used in the preparation of the statutory accounts. The financial information contained in this announcement does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. Statutory accounts for the 15 months ended 31 March 2008 have been delivered to the registrar of companies and those for the year ended 31 March 2009 will be delivered shortly. The auditors have reported on the accounts for the year ended 31 March 2009; their reports were unqualified, did not contain statements under s 237(2) or (3) of the companies act 1985, and did not contain any matters to which the auditors drew attention without 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 has been prepared in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRSs), this announcement does not itself 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 payment charges of £665,000 and a loss after taxation of £2,255,000. At 31 March 2009 the 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 outflow before movements in working capital of £143,000. In assessing the going concern of the Group, the directors have prepared forecast information for the period ending twelve months from their approval of these financial statements. As part of producing these forecasts directors have considered the recent contract wins and the likely cash inflows to be derived from the Group's forecasted trading activities. The directors have also considered the impact of the cost reductions which have been achieved from its latest cost reduction programme which was implemented in June 2009, and the impact of the cessation on 31 July 2009 of its loss making B2C gaming business on the Sky platform. On the basis of these forecasts and the underlying assumptions, the directors believe that the Group will have sufficient funding, through its overdraft facilities and the receipt of committed development funding from the Spanish Government, to continue in operational existence for at least twelve months from the date of approval of these financial statements. On this basis, the directors consider that it is appropriate to prepare the financial 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 of the Company and entities controlled by the Company (its subsidiaries) made up to 31 March 2009. Control is achieved where the Company has the power to govern the financial and operating policies of an investee entity so as to obtain benefits 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. Goodwill Goodwill represents the excess of the cost of acquisition over the Group's interest in the fair value of the identifiable assets, intangible fixed assets and liabilities of a subsidiary, or acquired sole trade business at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill which is recognised as an asset is reviewed for impairment at least annually. Any impairment is recognised immediately in the Group income statement and is not subsequently reversed. For the purpose of impairment testing, goodwill is allocated to each of the Group's cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying 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 been separately identified under IFRS 3 arising in business combinations, or meet the recognition criteria of IAS 38, "Intangible Assets". Intangible assets acquired as part of a business combination are initially recognised at their fair value and subsequently amortised on a straight line basis over their useful economic lives. Intangible assets that meet the recognition criteria of IAS 38, "Intangible Assets" are carried at cost less amortisation and any impairment losses. Intangible assets comprise of completed technology and acquired 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 the output of the intangible asset or the intangible asset itself or, if it is to be 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 basis over their useful lives of three to four years. Where no internally-generated intangible asset can be recognised, development expenditure is recognised as an expense 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 in use of the cash-generating units to which goodwill has been allocated. The value in use calculation requires the Group to estimate the future cash flows expected to arise from the cash-generating units and the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the cash-generating unit. This includes the directors' best estimate 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 based on 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 by reference to the expected flow of revenues from the product based on historical experience. Furthermore, the Group reviews at the end of each financial year the capitalised development costs for each product for any loss of value compared to net book value at that time, based on expected future contribution less 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 operating divisions - Gaming, Media (which includes Digital TV and Broadcast and Content) and Mobile (which includes Interactive Marketing and Mirada Connect). The unallocated 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 £'000 £'000 £'000 £'000 £'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 £'000 £'000 £'000 £'000 £'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 - - - 129 129 discontinued 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 £'000 £'000 £'000 £'000 £'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 £'000 £'000 £'000 £'000 £'000 Total assets 5,618 15,313 166 8,325 29,256 Total liabilities 1,391 2,312 113 5,784 9,487 Segment assets and liabilities are reconciled to the Group's assets and liabilities as follows: Assets Liabilities Assets Liabilities 31 March 31 March 31 March 31 March 2009 2009 2008 2008 £'000 £'000 £'000 £'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 5,784 liabilities Total unallocated 2,777 2,582 8,325 5,784 Total Group assets and 24,001 5,381 29,256 9,487 liabilities 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 is geographical segments. The Group's operations are based in UK and continental Europe. 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 5,783 687 550 Europe Middle East 223 - - - - - 10,465 12,504 24,001 29,256 1,228 635 5. Operating loss Reconciliation of operating loss for continuing operations to loss before interest, taxation, depreciation, amortisation, restructuring and share-based payment charges: Year 15 months ended ended 31 March 31 March 2009 2008 £000 £000 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 £000 £000 Bank interest receivable 117 2 7. Finance expense Year 15 months ended ended 31 March 31 March 2009 2008 £000 £000 Interest and finance charges on bank loans and 47 661 overdrafts 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) £129,000 (£20,563,000) Weighted average number of 19,807,185 2,295,329 2,295,329 2,295,329 shares Basic & diluted (loss)/earnings (£0.11) (£9.02) £0.06 (£8.96) per share The weighted average number of shares in issue in the 15 months ended 31 March 2008 have been adjusted to reflect the share consolidation which took place on 25 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 diluted earnings per share. These shares have no voting rights and are non-convertible and therefore do not form part of the ordinary share capital used for the loss per share calculation. 9. Intangible assets Deferred Completed Total Goodwill development Technology Intangible costs assets £000 £000 £000 £000 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 £000 £000 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 use calculations. The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the period. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGUs. The growth rates are based on industry growth forecasts. Changes in selling prices and direct costs are based on past practices and expectations of future changes in the market. The Group prepares cash flow forecasts derived from the most recent financial budgets approved by management for the next five years and extrapolates cash flows 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 the relevant markets. The rate used to discount the forecast pre-tax cash flows is 20% (2008: 20%). In addition to the growth rate, the cash flow projections also include certain income from large contracts currently in the process of being negotiated. The sensitivity of the value in use to the income from these contracts has been tested - in order for the value in use to be below the carrying value the income 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 capital A breakdown of the authorised and issued share capital in place as at 31 March 2009 is as follows: 31 March 31 March 31 March 31 March 2009 2009 2008 2008 Number £'000 Number £'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 8,210 each 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 8,210 each 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 £000 £000 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) 6,781 equivalents 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 £000 £000 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 bank deposits with an original maturity of three months or less. The carrying amount of 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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