Final Results

RNS Number : 4349Y

Mirriad Advertising PLC

09 May 2019

 

Mirriad Advertising plc

PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2018

9 MAY 2019

Mirriad Advertising plc

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

Results for the year ended 31 December 2018

Mirriad Advertising plc, the established computer vision and AI platform company, announces its unaudited results for the year ended 31 December 2018.

Financial overview

·    2018 revenue of £416k (2017 £874k) in the context of the previously flagged challenges with the Group's go-to-market strategy. Trading improved in H2 with revenue of £296k (H1 £120k)

·    Net assets reduced 44% to £15.6m (2017: £27.9m) as a result of the losses in the period and a decision to take an impairment charge against internally generated software of £1.2m

·    Operating loss increased 27% to £14.4m (2016: £11.3m) including the £1.2m impairment noted above

·    Cash and cash equivalents at 31 December 2018 were £15.2m

Operational highlights

·    Appointment of new senior management team on 1^st October when Stephan Beringer joined as CEO and Jana Eisenstein as President

·    Signature of initial contract with Tencent in China

·    £2m equity investment by Jinhua Puhua Tianqin Equity Investment Fund Partnership ("Puhua")

·    Signature of contract with TF1 in France

·    Awarded the Best Video Marketing and Advertising Platform in the Digiday Technology Awards in September

Post period highlights

·    New strategy announced by Stephan Beringer in March 2019 to address the ineffectiveness of the Group's previous go-to-market strategy

·    Closure of the Group's operations in Brazil and withdrawal from commercial operations in India which are low per capita advertising spend markets

·    Appointment of new CTO, Niteen Prajapati, on 1^st April 2019

·    Roger Faxon stepped down as Chairman on 30^th April to be replaced by John Pearson

·    Trading in 2019 to date is in line with the Company's budget and Q1 2019 revenue surpassed H1 2018 revenue

·    The Company has sufficient cash to fund its activities throughout the current financial year however will need to raise additional funds in the next 12 months. Cash balances at 31 March 2019 were £12.3m

Stephan Beringer, Chief Executive Officer of Mirriad, commented:

"I was under no illusion about the scale of the task ahead when I joined Mirriad in 2018, and the challenge is reflected in these results. We have moved decisively to address the ineffectiveness of the company's previous strategy and to reset our cost base.

"The business is now getting into a far better position to use its award-winning technology to tap into the huge market opportunities we have identified and put the business on a path to growth, creating value for our investors. I am very encouraged by the progress to date and have confidence that our new strategy can and will deliver value for our shareholders."

For further information please visit www.mirriad.com or contact:

Mirriad Advertising plc Stephan Beringer, Chief Executive Officer David Dorans, Chief Financial Officer	Tel: [phone]
Numis Securities Limited (Nominated Adviser & Broker) Nick Westlake                   James Black Hugo Rubinstein	Tel: [phone]
Financial Communications: Charlotte Street Partners             Andrew Wilson Tom Gillingham	Tel: [phone] Tel: [phone]

Notes to Editors

About Mirriad

Mirriad is an established computer vision and AI-powered platform company, built on Academy-Award winning entertainment tech, with 29 patents and patents pending. Using sophisticated technologies, Mirriad connects people with brands, through seamless ad insertions in popular linear and digital content. Advertisers can now reach very large target audiences in a contextually relevant way without interrupting the viewing experience.

Research has consistently shown in-video advertising to be highly effective for the marketer and preferred by audiences on TV, online, and mobile.

Mirriad is headquartered in London, with offices in New York, Paris, Munich, Mumbai, and Shanghai. 

Forward looking statements

Certain information contained in this announcement, including any information as to the Group's strategy, plans or future financial or operating performance, constitutes "forward-looking statements". These forward-looking statements may be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "anticipates", "projects", "expects", "intends", "aims", "plans", "predicts", "may", "will", "seeks" "could" "targets" "assumes" "positioned" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this announcement and include statements regarding the intentions, beliefs or current expectations of the Directors concerning, among other things, the Group's results of operations, financial condition, prospects, growth, strategies and the industries in which the Group operates. The directors of the Company believe that the expectations reflected in these statements are reasonable, but may be affected by a number of variables which could cause actual results or trends to differ materially. Each forward-looking statement speaks only as of the date of the particular statement.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future or are beyond the Group's control. Forward-looking statements are not guarantees of future performance. Even if the Group's actual results of operations, financial condition and the development of the industries in which the Group operates are consistent with the forward-looking statements contained in this document, those results or developments may not be indicative of results or developments in subsequent periods.

Chairman's statement

I am delighted to present Mirriad's Annual Report for the year ended 31^st December 2018 following my recent appointment to the role of Chairman.

Looking back

2018 was a year of transition for Mirriad. Although there were operational and technological achievements to be proud of, the financial results were not what the Board had expected. Businesses such as Mirriad that are looking to disrupt established business models require the ability to pivot their strategies to break through. The Board deemed this necessary in 2018 both in leadership and strategy. 

Mirriad's DNA is based on Academy Award-winning computer vision and image mapping technology. The Company has developed and evolved this technology to become a solution for advertisers by allowing the insertion of branding, messaging and products at an unprecedented level of quality and speed. Mirriad is currently the only solution in the market that can deliver high impact experiences with 100% realism across linear TV and digital video. It is a technology that has huge potential as a new solution to create inventory and add revenue for broadcasters and digital publishers.

However, the company had consistently been unable to grow revenues at the pace that reflected its potential. The Board therefore decided that a new perspective and market experience was needed to drive the business forward. As a consequence at the beginning of the fourth quarter we changed senior management bringing in Stephan Beringer as CEO to review the company, its technology and its go-to-market strategy.

Stephan quickly and decisively reset the company's Strategy, repositioned its presence in the market, reviewed its cost base and refocused its technology road map to better serve its customers. The Board fully endorses Stephan's new strategy and believes strongly that while there is much to do, the business is now on the right track to deliver on its promise.   Mirriad has never had difficulty getting potential customers excited about its technology.  Now we firmly believe we have a team and go-to-market strategy that will deliver on the financial potential brought by those customers.  We look forward to the impact of the new strategy on the company's results during 2019.

Corporate governance

Shareholders will be aware that during 2018, companies were required to formally adopt a corporate governance code. The Board have chosen to fully adopt the Quoted Companies Alliance Corporate Governance Code.

Board

In October 2018 we made a significant change in the leadership of the organisation, appointing Stephan Beringer as Chief Executive Officer and subsequently appointing Jana Eisenstein as President. Stephan joined the Board on appointment and Mark Popkiewicz stepped down. I would like to thank Mark for all his work in the evolution of the company.

Shortly before the publication of this report in May 2019 we also announced that Roger Faxon had decided to step down as Chairman having steered the business through its IPO and subsequent management changes.  The rest of the Board and I are very grateful for his hard work, passion and dedication in getting Mirriad to its current stage.

Culture

The new management team, with support from the Board, is renewing the cultural and skill mix of the organisation. The organisation is being re-focused, and the markets it operates in are changing. Mirriad needs to hire the best senior talent, with the right skills, that it can economically justify. It needs to fill in advertising industry knowledge skill gaps - which is why we have brought Stephan and Jana into the organisation. I also want to see the business develop and retain its top talent in the extremely competitive markets in which it operates.

Engaging with our stakeholders

The Board and I take our responsibilities to shareholders and other stakeholders seriously. Each of the Board members brings a different set of skills to the business, along with a different network of contacts, and so has something different to offer stakeholders. Shortly after Stephan's appointment, he met with a range of major shareholders to understand their perceptions of the company, their expectations and their concerns. These meetings were followed up in late March with presentations, including a webinar open to investors and analysts, setting out the Company's new strategy and giving an overview of performance since Stephan joined.  The Company intends to engage more frequently with shareholders now that the management transition is complete. The Company itself continues to engage actively with its employees via regular biannual staff surveys and bimonthly Town Hall meetings. The management team is also well advanced in a programme to meet with key customers to discuss how the business can better address their needs.

The year ahead

The Company is changing its market focus as we believe it had stretched across too many geographies. The emphasis now is on the US, Germany, France, the UK and China, which the Company considers to be the highest value media markets. The Company is also changing its go-to-market strategy to enable it to scale more quickly and aligning its product with industry nomenclature and metrics. At heart, Mirriad is a technology company, and it will continue to invest in automation and further develop its artificial intelligence capability. I, along with the rest of the Board, believe that the development of these foundations in 2019 will set the business up for growth in 2020.

John Pearson

Non-executive chairman

9 May 2019

CEO's statement

Mirriad has many strengths and areas of competitive advantage and I believe that Mirriad's core proposition is more powerful than ever.  Mirriad is the only cross-platform solution that offers a true in-video format which looks as real as the content it integrates with.  However, the business had been taken on a path to market that was not ideal, it stretched across too many geographies, it had been relying on too few market opportunities, the strategy was not followed through and foremost the Company was significantly out of touch with its content and distribution partners as well as advertisers and their agencies. A reset was clearly needed.

I came to Mirriad with a plan to assess the business within my first 100 days.  Revenues were significantly below expectations due to sporadic campaign work.  I wanted to assess where the business had come from and what I saw it needed to be in the future.  I also wanted the entire team to own that plan so that it was not just my vision of where we need to go but the whole Company's.  We have actively involved all departments in looking at how they work, what their issues are, how they can better address our customers, what potentially blocks them from delivering excellence and what ideas they have to make a leap forward from a technology and solution standpoint. 

At the same time we have been very actively engaged with the external market and stakeholders.  We have talked to many C-level executives at brands, media agencies and broadcasters/distributors to get their view on our product, the opportunities it opens and how we change the way we engage with the market.  I have also met and talked to many of our key shareholders to get their perspective on the business.

2018 highlights

There have been a number of successes in 2018.

Research studies have proved two things: viewers like the Mirriad format, they think it makes content richer and better, they regard it as innovative and prefer it over other forms of advertising;  secondly, presence in content makes brands more desirable and increases brand consideration.  Our product really is unique in the entertainment space as we are the only company that we know of that embeds images into any content our partners supply.  This is a key distinction as our advertising looks like it has always been part of the programme and not overlaid afterwards. 

The company has continued to develop its core video technology such as that for delivering machine learning solutions to compute proximity and prominence values.  The company also continued to develop the platform we use to manage and automate the different processes and workflows introducing new automated "Buy Orders" so that we make the solution work better for all our customers.   

We have signed or renewed deals with key distribution partners such as Tencent, Univision, TF1 and RTL and we have had a range of new engagements with the demand side of the market, particularly the media agencies.

Changes in the market

Audiences are shifting and moving across platforms, devices and applications, and they are increasingly rejecting intrusive advertising.  At the same time, engagement with consumers is being controlled and dominated more and more by the major platforms and developments such as GDPR and e-privacy regulations are adding to advertisers' constraints in terms of differentiation, ownership and growth.  Brands need to be hyper-relevant to everybody, deliver fully connected experiences, engage at scale and ensure their messages are high quality and do all of this with maximum efficiency. I believe that this is where Mirriad can make a difference and support advertisers, agencies and media partners. We offer a desirable format which becomes part of the entertainment content that people are most passionate about. We can leverage this passion for the benefit of any brand.  We can travel with the content wherever it goes, whether in linear, digital, mobile or on demand.  We are safe in terms of the content we use for the inventory we create. This means that we can address many of the challenges that the content industry is facing in terms of the experience it offers and the way it generates revenue as well as offering a product which is future proof.

The new strategy

Our new strategy can be summarised in 4 key points:

·    Align with the market, don't re-invent it: We have to become part of the media buying ecosystem, not expect the ecosystem to adapt to us. We have to speak the same language, use the same metrics, integrate with the same systems as the media world in which we operate in order to achieve scale and give both the demand and supply side an easy path to the solution's benefits.

·    Build scale: Mirriad is not a niche tool, our technology can deliver the widest possible reach.

We must continue developing our core computer vision and AI technology to, ultimately, allow total automation, further build our content partnerships across platforms, and offer inventory at scale to the agencies and the advertisers they're in charge of.

·    Focus on core markets: To live up to our ambition and to deliver growth for all stakeholders, we must allocate resources to activities and geographies that are most central to our development.

·    The right kind of revenue: Revenue is a key focus for Mirriad, but not at the expense of the long-term size and health of the business. Our leading position in the ecosystem will in part be determined by the partnerships, deals and integrations we do today, so all of them must reflect the company we want to be in the future.

Cultural change

One of my key tasks has been to start a process of cultural change to foster agility, speed, innovation and the passion to succeed in all staff.  We have a great starting point as we have many staff who have served the business loyally and diligently over the last years.  We are tapping into that talent pool and making sure that that pride in the "brilliance" of what we deliver as a product is fully aligned with our new pace and strategy. 

That means open and frank communication across the business so we can learn from the past while preparing for the future.  We want staff to have the freedom to innovate, get on with what they are doing without interference, feel free to speak out and who aren't afraid to fail. This is how we win.

Outlook for 2019

We are accelerating across all areas of activity with a focus on scale and impact.  This means an acceleration in development of our technology and platform.  Also we need to apply ourselves to the development of our go-to-market strategy and that means adding more supply partners, delivering research cases that prove superior results and ultimately building up the business to become a "line item" in clients' media plans in 2020. 

We are ensuring that the organisation has the right skills, in the right places.  We have taken some tough decisions and exited the market in Brazil and commercially in India which are low per capita advertising markets so that we can put our efforts into the markets which have the highest sophistication and investment levels. These are the USA, Germany, France, the UK and China. We are extremely ambitious for this business: it has the capability to build on its artificial intelligence skills to connect brands and people in a wholly new way.

Stephan Beringer

Chief Executive Officer

9 May 2019

Financial review

Introduction

2018 was a challenging year for the Company as the Board concluded that the Company's go-to-market strategy was not going to deliver the revenue growth the Board and shareholders expected.  The Board took the decision to change senior management during the second half of the year.  From October onwards the Group's senior management team was engaged in a process to review and refresh the strategy.  The new strategy was shared with investors in March 2019.   The second half of 2018 showed an improvement on revenue compared to the first half of 2018.  Of the Company's KPIs, customers under contract showed an improvement year on year while both revenue and cash consumption weakened.

FY 2018 Results

Revenue for the year was £415,886 (2017: £874,191) following lower than anticipated results in all of the Group's markets as commercialisation lagged behind what was originally expected. 

During the year the Group continued to focus on developing its operations and delivered its first substantive campaign in the USA in Q4 for T-Mobile on Univision.  The USA was the market which saw the largest year on year increase in revenues. 

While 2018 revenue reduced in most markets there were particular reductions in India and China. 

In India, although the Group renewed its deal with Star, this renewal did not include a revenue guarantee as in the prior year.  Regrettably, campaigns did not scale as anticipated and post year end the Group has exited the Indian commercial market as management elected to focus on markets with higher per capita advertising spend. 

In China the Group announced the signing of a key new deal with Tencent.  We did not expect this to generate meaningful revenue during 2018 as its implementation is reliant on the development of a more video specific technology allowing a segmented delivery of programme elements to Tencent rather than the entire programme as is done with other clients.  At the time of this report that technology was in final testing.  The introduction of this innovative technology should allow revenues to scale. 

As a result of the reduced volume of campaigns gross margin reduced to £272,338 (2017: £693,604).  A significant part of the Company's cost of sales relates to staff who, along with the Company's technology, are responsible for analysing content and producing the advertising imagery which is ultimately inserted into that content.  The staff element of this work is largely fixed and since activity did not scale as anticipated margin deteriorated.  Management are confident that the business can handle a significantly greater volume of campaigns than were actually delivered during 2018 and that future margins will improve. 

The Group's principal cost is staff and its Administrative expenses increased to £14,872,725 (2017: £12,067,393) as the Group's average headcount expanded compared to the prior year. The income statement includes £1,461,112 (2017: £1,179,148) related to research and development (R&D) activity. In total gross expenditure on the company's technology team (including the capitalised element, see below) increased by £318,454. 

Administrative expenses include an impairment charge of £1,230,275 relating to internally generated software that was previously capitalised in accordance with International Financial Reporting Standards ("IFRS").  While management believe that this software remains critical to the future success of the business and the software continues to be used with the Group's clients, the slower than anticipated pace of revenue growth means that we believe it appropriate to take an impairment charge against the asset.  Accordingly we have written the carrying value down to zero. We will continue to monitor this area of the business and ensure that we fully comply with the accounting standard in future periods.

EBITDA loss increased to £11,930,715 (2017: £10,359,484).  This measure does not include the impairment charge and therefore we believe gives a truer picture of the Group's current cost base.

The loss for the year before tax increased to £14,370,986 (2017: £11,271,298) as a result of this expansion in headcount and the impairment charge noted above. 

Tax

The Group has not recognised any tax assets in respect of trading losses arising in the current financial year or accumulated losses in previous financial years. The tax credit recognised in the current and previous financial years arises from the receipt of R&D tax credits.

Earnings per share

Loss per share was 14 pence per share (2017: loss of 19 pence per share) as a result of increased staff costs over the period balanced by the increase in the Company's issued share capital. This calculation is based on the weighted average number of shares in issue during the financial year.

Dividend

No dividend has been proposed for the year ended 31 December 2018 (2017: £nil).

Cash flow

Net cash used in operations was £11,921,131 (2017: £7,524,445) as average headcount increased over the year. During the year £878,500 (2017: £842,010) of development costs were capitalised as required under IFRS.  As noted above the Group has taken an impairment against the whole of this capitalised cost due to the slower pace of revenue growth. The Group also incurred £137,386 (2017: £466,627) of capital expenditure on tangible assets. Net proceeds from the issue of shares in May 2018 totaled £1,925,834 (2017: £25,068,671) relating to an investment from Puhua.

Balance sheet

Net Assets decreased to £15.6m (2017: £27.9m) as a result of the losses for the year net of the proceeds from the issue of shares and after taking into account the impairment of software assets. Cash and cash equivalents at 31 December 2018 was £15.2m (2017: £26.4m).

Accounting policies

The Group's consolidated financial information has been prepared in accordance with International Financial Reporting Standards as adopted in the EU.

Going concern

The financial statements have been prepared on a going concern basis. After making enquiries and producing cash flow forecasts, the Directors have reasonable expectations, as at the date of approving the financial statements, that the Company and the Group will have adequate resources to fund the activities of the Company and the Group for the next nine months from the date of the financial statements. Albeit that the financial statements are prepared on a going concern basis, there is a material uncertainty in relation to going concern as this is dependent on raising additional external funds from new or existing shareholders within 12 months of the date of this report.

Events after the balance sheet date

The Company presented its revised strategy to shareholders in March 2019.  The strategy recommended exiting the market in Brazil and exiting India commercially (the Group's production operation remains in Mumbai).  In anticipation of changes to the operating model in China the Group also reduced staff in its Shanghai office.  A number of staff were also made redundant from the London office. The costs for these changes will be taken in 2019 as the decision to enact changes was made after the year end. The changes resulting from the strategy review will be neutral to the Company's cost base in 2019.

The Company has reviewed its cost base following the strategy reset and believes that this review together with the one-off costs of change dropping out of the cost base (c£0.5m in 2019) will result in a reduction in administrative expenses in 2020.     

David Dorans

Chief Financial Officer

9 May 2019

Consolidated statement of profit or loss

For the year ended 31 December 2018

				Year ended	Year ended
				31 December	31 December
		2018			2017
	Note	£			£
Revenue	3	415,886			874,191
Cost of sales		(143,548)			(180,587)
Gross profit		272,338			693,604
Administrative expenses		(14,872,725)			(12,067,393)
Other operating income		171,433			101,715
Operating loss	4	(14,428,954)			(11,272,074)
Finance income		57,968			776
Loss before income tax		(14,370,986)			(11,271,298)
Income tax credit		42,217			208,849
Loss for the year		(14,328,769)			(11,062,449)
Loss per Ordinary Share - basic	5	(14p)			(19p)

All activities are classified as continuing.

Consolidated statement of comprehensive income

For the year ended 31 December 2018

	Year ended	Year ended
	31 December	31 December
	2018	2017
	£	£
Loss for the financial year	(14,328,769)	(11,062,449)
Other comprehensive expense
Items that may be reclassified to profit or loss:
Currency translation differences	(88,346)	(14,088)
Total comprehensive expense for the year	(14,417,115)	(11,076,537)

Items in the statement above are disclosed net of tax.

 

Consolidated balance sheet

At 31 December 2018

		Group
		As at	As at
		31 December	31 December
		2018	2017
		£	£
Assets
Non-current assets
Property, plant and equipment		414,062	425,874
Intangible assets		170,053	1,640,690
Investments		-	-
Trade and other receivables		186,321	212,960
		770,436	2,279,524
Current assets
Trade and other receivables		973,750	1,074,274
Other current assets		288,009	208,840
Cash and cash equivalents		15,203,920	26,383,690
		14,465,679	27,666,804
Total assets		17,236,115	29,946,328
Current liabilities
Trade and other payables		1,622,460	2,054,603
Current tax liabilities		36,952
Total liabilities		1,659,412	2,054,603
Net assets		15,576,703	27,891,725
Equity and liabilities
Equity attributable to owners of the parent
Share capital		50,949	50,917
Share premium		25,643,192	23,717,390
Share-based payment reserve		2,141,094	1,964,835
Retranslation reserve		(278,831)	(190,485)
(Accumulated losses) / retained earnings		(11,979,701)	2,349,068
Total equity		15,576,703	27,891,725

 

Consolidated statement of changes in equity

For the year ended 31 December 2018

		Year ended 31 December 2017
						(Accumulated
				Share-based	Retranslation	losses)/retained
		Share capital	Share premium	payment reserve	reserve	earnings	Total equity
		£	£	£	£	£	£
Balance at 1 January 2017		556	22,401,586	289,564	(176,397)	(10,343,533)	12,171,776
Loss for the financial year		-	-	-	-	(11,062,449)	(11,062,449)
Other comprehensive loss for the year		-	-	-	(14,088)	-	(14,088)
Total comprehensive loss for the year		-	-	-	(14,088)	(11,062,449)	(11,076,537)
Shares issued in lieu of consideration		1	52,543	-	-	-	52,544
Proceeds from shares issued		462	27,541,844	-	-	-	27,542,306
Share issue costs		-	(2,473,635)	-	-	-	(2,473,635)
Issue of deferred shares		49,898	(49,898)	-	-	-	-
Capital restructuring		-	(23,755,050)	-	-	23,755,050	-
Share-based payments recognised as expense		-	-	1,675,271	-	-	1,675,271
Total transactions with shareholders recognised directly in equity		50,361	1,315,804	1,675,271	-	23,755,050	26,796,486
Balance at 31 December 2017		50,917	23,717,390	1,964,835	(190,485)	2,349,068	27,891,725

		Year ended 31 December 2018
						(Accumulated
				Share-based	Retranslation	losses)/retained
		Share capital	Share premium	payment reserve	reserve	earnings	Total equity
	Note	£	£	£	£	£	£
Balance at 1 January 2018		50,917	23,717,390	1,964,835	(190,485)	2,349,068	27,891,725
Loss for the financial year		-	-	-	-	(14,328,769)	(14,328,769)
Other comprehensive loss for the year		-	-	-	(88,346)	-	(88,346)
Total comprehensive loss for the year		-	-	-	(88,346)	(14,328,769)	14,417,115
Proceeds from shares issued		32	1,999,968	-	-	-	2,000,000
Share issue costs		-	(74,166)	-	-	-	(74,166)
Share-based payments recognised as expense		-	-	176,259	-	-	176,259
Total transactions with shareholders recognised directly in equity		32	1,925,802	176,259	-	-	2,102,093
Balance at 31 December 2018		50,949	25,643,192	2,141,094	(278,831)	(11,979,701)	15,576,703

 

Consolidated statement of cash flows

For the year ended 31 December 2018

		Group
		2018	2017
		£	£
Net cash used in operating activities		(11,972,408)	(7,709,471)
Tax credit received		-	184,250
Taxation paid		(6,691)	-
Interest received		57,968	776
Net cash used in operating activities		(11,921,131)	(7,524,445)
Cash flow from investing activities
Investment in subsidiaries		(168,587)	(201,953)
Capitalisation of development costs		(878,500)	(842,010)
Purchase of tangible assets		(137,386)	(466,627)
Proceeds from disposal of tangible assets		-	2,660
Net cash used in investing activities		(1,184,473)	(1,507,930)
Cash flow from financing activities
Proceeds from issue of Ordinary Share capital (net of costs of issue)		1,925,834	25,068,671
Net cash generated from financing activities		1,925,834	25,068,671
Net (decrease) / increase in cash and cash equivalents		(11,179,770)	16,036,296
Cash and cash equivalents at the beginning of the year		26,383,690	10,347,394
Cash and cash equivalents at the end of the year		15,203,920	26,383,690
Cash and cash equivalents consists of
Cash at bank and in hand		15,203,920	26,383,690
Cash and cash equivalents		15,203,920	26,383,690

Notes to the consolidated financial statements

For the year ended 31 December 2018

1. Corporate Information

Mirriad Advertising plc is a public limited company incorporated and domiciled in the UK and registered in England with company registration number 09550311.  The Company's registered office is 6th Floor, One London Wall, London, EC2Y 5EB. 

The Company is listed on AIM

2. Basis of preparation

The financial information set out above does not constitute the Group's statutory accounts for the years ended 31 December 2018 or 2017 but is derived from those accounts. The balances as at 31 December 2018 are unaudited. Statutory accounts for 2017 have been delivered to the registrar of companies, and those for 2018 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

The consolidated financial information has been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union, IFRIC interpretations and the Companies Act 2006. The financial information contained in these financial statements have been prepared under the historical cost convention, and on a going concern basis.

The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 December 2017.

New Standards, amendments and interpretations not yet adopted

The Group has applied the following standards and amendments for the first time for their annual reporting period commencing 1 January 2018:

·      IFRS 9 - Financial Instruments

·      IFRS 15 - Revenue from Contracts with Customers

The new standards listed above did not have any material impact on the amounts recognised in the current period and are not expected to significantly affect future periods.

New standards, amendments and interpretations not yet adopted

A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2018, and have not been applied in preparing these financial statements. With the exception of IFRS 16, none of these are expected to have a significant effect on the financial statements of the Group or parent company, as set out below:

·    IFRS 16 "Leases" addresses the definition of a lease, recognition and measurement of leases and establishes principles for reporting useful information to users of historical financial information about the leasing activities of both lessees and lessors. A key change arising from IFRS 16 is that most operating leases will be accounted for on the balance sheet for lessees. The standard replaces IAS 17 "Leases" and related interpretations. The standard is effective for annual periods beginning on or after 2019 and earlier adoption is permitted, subject to EU endorsement and the entity adoption of IFRS 15 "Revenue from contracts with customers" at the same time. The impact of IFRS 16 at 1 January 2019 is expected to lead to the creation of lease asset of £820,612, a new lease liability value of £1,044,600 which is offset by a £167,403 write back of a rent-free period accrual. The cumulative impact on retained earnings is expected to be a reduction of £56,585.

3. Segment information

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

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

The amount of revenue from external customers by location of the Group billing entity is shown in the tables below.

	2018	2017
Revenue	£	£
Turnover by geography
China and Singapore	177,395	450,864
USA	109,541	43,733
Brazil	74,082	29,744
UK	40,062	101,494
India	14,806	248,356
Total	415,886	874,191

	2018	2017
	£	£
Turnover by category
Rendering of services	415,886	874,191
Total	415,886	874,191

	2018	2017
Revenues from external customers by country, based on the destination of the customer	£	£
China	198,863	455,962
USA	109,541	57,831
Brazil	74,083	29,744
India	14,806	251,023
Ireland	7,750	11,050
Germany	6,570	23,444
Other	4,273	12,101
Italy	-	33,036
Total	415,886	874,191

4. Operating loss

The Group operating loss is stated after charging/(crediting):

		2018	2017
		£	£
Employee benefits		6,879,256	6,905,025
Depreciation of property, plant and equipment		149,102	89,770
Amortisation and impairment of intangible assets		2,349,137	822,820
Foreign exchange movements		(41,341)	166,523
Other general and administrative costs		5,680,119	4,263,842
Other operating income		(171,433)	(101,715)
Total cost of sales, administrative expenses and other operating income		14,844,840	12,146,265

Other operating income includes income received from government grants. The Group has complied with all the conditions attached to these grant awards.

Included within Employee benefits cost are share based payments for the year ended 31 December 2018 of £0.2m (2017: £1.7m)

5. Earnings per share

(a) Basic

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

Group	2018	2017
Loss attributable to owners of the parent (£)	(14,328,769)	(11,062,449)
Weighted average number of Ordinary Shares in issue Number	104,124,043	58,030,338

The loss per share for the year was 14p (2017: 19p).

No dividends were paid during the year (2017: £nil).

(b) Diluted

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

6. Related party transactions

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

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

IP2IPO Limited - a company which shares a parent company with IP2IPO Portfolio (GP) Limited, the largest shareholder in the Group, and who also appoints a Director of the Group charged Mirriad Advertising plc for the following transactions during the year:  (1) £20,000 for the services of Mark Reilly as a Director during the year. £1,667 of this amount was accrued and unpaid as at 31 December 2018. This outstanding amount was paid on 1 February 2019; (2) £12,390 for the services of Company Secretary during the year. £3,000 of this amount was accrued and unpaid as at 31 December 2018. This outstanding amount was paid on 1 February 2019; and (3) £986 for event hire and refreshments.

Top Technology Ventures Limited - a company which shares a parent company with IP2IPO Portfolio (GP) Limited, the largest shareholder in the Group, charged Mirriad Advertising plc for the following transactions during the year:  (1) £1,383 travel costs for two employees attendance at IP Group events in China. This amount was unpaid at 31 December 2018, but was subsequently paid on 1 February 2019.

Parkwalk Advisors Limited - a company which shares a parent company with IP2IPO Portfolio (GP) Limited, the largest shareholder in the Group, charged Mirriad Advertising plc for the following transactions during the year:  (1) £20,000 for the services of Alastair Kilgour as a Director during the year. £1,667 of this amount was accrued and unpaid as at 31 December 2018, but was subsequently paid on 1 February 2019.

All the related party transactions disclosed above were settled by 31 December 2018 except where stated.

During the year ended 31 December 2018, the Company entered into transactions with its subsidiary companies for working capital purposes, which net off on consolidation - these have not been shown above.

The Directors have authority and responsibility for planning, directing and controlling the activities of the Group and they therefore comprise key management personnel as defined by IAS 24, "Related party disclosures". Remuneration of Directors and senior management is disclosed in the Remuneration Report.

 

END

 

 

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