Final Results

RNS Number : 7264U

Messaging International Plc

30 June 2009

 



Messaging International Plc / Market: AIM / Epic: MES / Sector: Technology

30 June 2009

Messaging International Plc

('Messaging International' or 'the Company')

Final Results

Messaging International Plc, the AIM traded provider of innovative messaging services, announces its results for the year ended 31 December 2008.

Overview

• Strengthened position as leading provider of innovative messaging services especially in 'Text to Landline' and 'PC to Mobile' solutions

• Post-tax loss £367,267 (2007: loss £259,892)

• Total revenue increased by over 27% to £1,742,632 (2007: £1,367,235) - 2007 included £280,000 revenue from the sale of a patent

• Expansion into new geographic territories

Chairman's Statement

Messaging International Plc continues to focus on building its position as a leading provider of converged messaging services. During the year we made good progress in forging strategic relationships and signing new deals in order to expand the geographic reach and market presence of our wholly owned subsidiary, TeleMessage Ltd ('TeleMessage'). The board remains committed to advancing the Company's growth by providing effective marketing and sales strategies and continuing developments in product and service offerings by focussing on its differentiators of creativity, technological innovation and a sound understanding of the markets it operates in.

The significant advantages of converged communication media are increasingly being acknowledged by mobile users, and in turn, by the mobile operators that they subscribe to. This provides an exciting arena for us to work in with considerable opportunities. While our current relationships with key blue-chip operators such as Sprint Nextel, Rogers Wireless, Telus and Bell Canada remain of considerable importance we remain proactive in creating new alliances with other operators and further developing existing partnerships. 

In parallel to developing the reputation for delivering innovative proprietary messaging solutions in the telecommunications industry, TeleMessage has also managed to carve a position among the fastest growing technology companies by once again, for the second consecutive year, gaining a high ranking in the Deloitte Israel Technology Fast 50 (6th) and Deloitte Technology Fast 500 EMEA, (29th). Securing such positions in such influential awards is a substantial achievement for TeleMessage and illustrates the quality of our staff, our products and services and our ability to adapt to the fast growing and competitive messaging industry internationally.

Financial results

The results for the year ended 31 December 2008 show a loss of £367,267 (2007: loss of £259,892), on revenue of £1,742,632 (2007: £1,367,235).  

The Group's cash position at 31 December 2008 was £300,653 (2007: £355,780).  

In August 2008, the Company announced the agreement of a $750,000 venture loan from Mizrahi Tefahot Bank Ltd ('Mizrahi') to TeleMessage. Under the terms of the loan, the Company withdrew $400,000 of this debt facility by 31 December 2008 and the remaining $350,000 in January 2009.

Repayments are over 24 instalments from the date of each drawdown. Mizrahi has also approved an additional $50,000 credit facility should the Company require further funding to support TeleMessage's next growth phase.

In 2008, the Company received grants from the Israeli Office of the Chief Scientist. This support provides the Company with additional resources to invest in the development of new products and has recently approved further funding of $256,000 for 2009.

The board does not recommend the payment of a dividend.

Operations

The products and services developed by TeleMessage continue to provide new and more convenient forms of integration between mobile phones, the Internet, personal computers and landline phones. The agreements and partnerships that the Company has developed with telecom operators and enterprises provide two main revenue streams for TeleMessage:

• Software licensing - usually linked to the number of messages that can be sent through the system or the number of active users

• Hosted platform - hosted messaging services for a per message fee

North America

TeleMessage has expanded its Text to Landline coverage across major mobile carriers in the U.S and Canada. The agreement to launch the Text to Landline service with Bell Mobility marked a significant step and resulted in the company providing services to all the major mobile operators in Canada. Other major mobile operators in North America that chose to use our integrated Text to Landline service during the period included leading US based communications group Qwest and Alltel Wireless, one of America's largest networks. Subsequently Alltel Wireless was acquired by Verizon.  

We have also made significant strides in further developing existing relationships with our established customers such as Virgin Mobile U.S.A ('Virgin'). The size of the Spanish speaking population in the US has been recognised by Virgin for its potential, leading to several bilingual services being offered. TeleMessage has supported Virgin's efforts in this market niche by developing the Spanish language text to landline service launched successfully last year. Further functionality improvements have been made through our personalisation feature with Sprint Nextel, which enables customers to record their name at the beginning of their Text to Landline message. We have seen considerable interest in both of these features since launch and we will continue to be proactive in seeking out additional opportunities to extend our Text to Landline service with both new and existing customers.  

In February 2008, TeleMessage signed a partnership agreement with Mobixell Networks, a U.S. based international provider of innovative mobile multimedia and advertising solutions, to provide an Internet- to- Mobile phone video streaming solution. This solution, which leverages TeleMessage's PC to Mobile product suite and Mobixell's mobile multimedia and video suite, will enable PC users to send video files taken from the internet to a mobile phone. This simple solution that we have pioneered allows mobile operators to offer converged fixed-mobile services and provides subscribers with user-friendly tools for self content generation.

Europe and other territories

Having seen the strong uptake of PC to SMS services, sending multi-media ('MMS') messages from a PC to a mobile seemed a natural evolution.  

A leading messaging technology provider that recognised the inherent value of our PC to Mobile application suite was Comverse, which integrated the service for global availability into its comprehensive messaging portfolio and was subsequently deployed by a leading tier-1 operator in Eastern Europe. This contract is particularly important for TeleMessage as it acts as a stamp of acceptance for our products from a worldwide leader in messaging, while providing potential to significantly expand our marketing reach.

Our Text to Landline service has also received considerable interest over the period with Claro Guatemala, the largest mobile carrier in Guatemala which has a circa 4 million mobile customer base, launching the service in August. Post year end Uralsviazinform, one of the four leading mobile operators in Russia, also signed an agreement to launch the service. Both these agreements provide TeleMessage with exposure to, and growth opportunities in markets in which it has little or no presence until now.

Prospects

We continue to strive for creative and technological excellence in order to maintain our position as industry leaders, strengthen current partnerships and customer relationships and forge new alliances with mobile operators. We are committed to extending our offering and expanding our geographic reach. 

Electronic Communications

The directors wish to utilise the new provisions of the Companies Act 2006 and to send documents and information electronically, thereby reducing printing and postage costs. Accordingly, Resolution 8 is being proposed as a special resolution at the annual general meeting, to make certain amendments to the Company's articles of association to authorise the Company to send documents and information to shareholders using electronic means which includes making them available on the Company's website.

I would like to take this opportunity to thank all those involved in the Group for their hard work and dedication over the past year.  

H Furman

Chairman

29 June 2009

**ENDS**

For further information visit www.telemessage.com or contact:

Guy Levit	Messaging International Plc	Tel: + 972 3 9225252
Mark Percy	Seymour Pierce Limited	Tel: [phone]
Susie Callear	St Brides Media & Finance Ltd	Tel: [phone]

Consolidated income statement

For the year ended 31 December 2008

				2008		2007
		Notes		£		£
Revenues				1,742,632		1,367,235
Cost of revenues				(822,712)		(536,697)
Gross profit				919,920		830,538
Operating expenses
Research and development				(293,333)		(333,668)
Selling and marketing				(542,283)		(368,481)
General and administrative				(418,210)		(368,158)
Total operating expenses				(1,253,826)		(1,070,307)
Operating loss				(333,906)		(239,769)
Financial income				69		2,319
Finance costs				(33,430)		(22,442)
Loss before taxation				(367,267)		(259,892)
Taxation		3		-		-
Loss for the year				(367,267)		(259,892)
Basic and diluted loss per share		4		(0.15)p		(0.12)p

Consolidated statement of recognised income and expense 

			2008		2007
			£		£
Foreign exchange difference on translation of foreign operations			74,438		(11,334)
Foreign exchange difference arising from restating the carrying value of goodwill associated with foreign operations			669,645		-
Loss for the year			(367,267)		(259,892)
Total recognised income and expense for the year			376,816		(271,226)

 Consolidated balance sheet

As at 31 December 2008

			Notes	2008		2007
				£		£
Non-current assets
Goodwill				3,906,262		3,236,617
Property, plant and equipment				52,744		25,047
Other investments				135,330		107,500
Total non-current assets				4,094,336		3,369,164
Current assets
Trade and other receivables				576,907		380,610
Cash and cash equivalents				300,653		355,780
Total current assets				877,560		736,390
Total assets				4,971,896		4,105,554
Current liabilities
Trade and other payables				(382,856)		(200,520)
Borrowings				(109,282)		-
Total current liabilities				(492,138)		(200,520)
Non-current liabilities
Borrowings				(42,174)		-
Provisions				(165,879)		(121,000)
Total non-current liabilities				(208,053)		(121,000)
Total liabilities				(700,191)		(321,520)
Net assets				4,271,705		3,784,034
Equity
Share capital				1,176,900		1,176,900
Share premium				4,266,227		4,266,227
Foreign currency translation reserve				709,704		(34,379)
Revenue reserves				(1,881,126)		(1,624,714)
Total Equity				4,271,705		3,784,034

Company balance sheet

As at 31 December 2008

			Notes	2008		2007
				£		£
Non current assets
Investment in subsidiary undertakings				3,269,000		3,269,000
Total non-current assets				3,269,000		3,269,000
Current assets
Trade and other receivables				2,073,806		2,000,038
Cash and cash equivalents				59,952		160,011
Total current assets				2,133,758		2,160,049
Total assets				5,402,758		5,429,049
Current liabilities
Trade and other payables				(25,851)		(27,959)
Total liabilities				(25,851)		(27,959)
Net assets				5,376,907		5,401,090
Equity
Share capital				1,176,900		1,176,900
Share premium				4,266,227		4,266,227
Revenue reserves				(66,220)		(42,037)
Total equity				5,376,907		5,401,090

Consolidated cash flow statement

For the year ended 31 December 2008

		Notes		2008		2007
				£		£
Cash flow from operating activities
Operating loss				(333,906)		(239,769)
Adjustments for:
Share based payment charges				11,887		49,419
Amortised finance costs				4,790		-
Depreciation and amortisation				24,896		19,394
Foreign currency differences				43,287		(26,640)
				84,860		42,173
Operating cash flow before working capital movements				(249,046)		(197,596)
Increase in receivables				(196,297)		(189,264)
Increase/(decrease) in payables				182,336		(8,827)
(decrease)/increase in provisions				(1,018)		30,106
				(14,979)		(167,985)
Cash outflow from operating activities				(264,025)		(365,581)
Investing activities
Interest paid (net)				(5,234)		(3,945)
Investments				12,946		(53,571)
Purchase of tangible assets				(43,092)		(1,006)
Net cash absorbed by investing activities				(35,380)		(58,522)
Financing activities
Issue of equity capital				-		900,000
Share issue costs				-		(33,248)
Bank loan				244,278
Net cash from financing activities				244,278		866,752
Net change in cash and cash equivalents				(55,127)		442,649
Cash and cash equivalents and bank overdraft at the beginning of the year				355,780		(86,869)
Cash and cash equivalents and bank overdraft at the end of the year		6		300,653		355,780

Company cash flow statement

For the year ended 31 December 2008

		Notes		2008		2007
				£		£
Cash flow from operating activities
Operating loss				(52,260)		(32,586)
Operating cash flow before working capital movements				(52,260)		(32,586)
Increase in receivables				(73,768)		(723,445)
Decrease in payables				(2,108)		(5,834)
Cash flow from operating activities				(128,136)		(761,865)
Financial income				28,077		9,881
Net cash used in operating activities				(100,059)		(751,984)
Financing activities
Issue of equity capital				-		900,000
Share issue costs				-		(33,248)
Net cash from financing activities				-		866,752
Net change in cash and cash equivalents				(100,059)		114,768
Cash and cash equivalents and bank overdraft at the beginning of the year				160,011		45,243
Cash and cash equivalents and bank overdraft at the end of the year		6		59,952		160,011

Independent Auditors' Report

We have audited the Group and parent company financial statements ('the financial statements') of Messaging International Plc for the year ended 31 December 2008 which comprise the consolidated income statement, the consolidated statement of recognised income and expense, the consolidated and company balance sheets, the consolidated and company cash flow statements, and the related notes. These financial statements have been prepared under the accounting policies set out therein.

This report is made solely to the Company's members, as a body, in accordance with Section 235 of the Companies Act 1985. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the Company's members as a body, for our audit work, for this report, or the opinions we have formed.

Respective responsibilities of directors and auditors

The directors' responsibilities for preparing the annual report and the financial statements in accordance with applicable law and International Financial Reporting Standards ('IFRSs'), as adopted by the European Union are set out in the statement of directors' responsibilities.

Our responsibility is to audit the financial statements in accordance with relevant legal and regulatory requirements and International Standards on Auditing (UK and Ireland).

We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in accordance with the Companies Act 1985 and as regards to group financial statements Article 4 of the IAS Regulation. We also report to you whether in our opinion the information given in the Directors' Report is consistent with the financial statements. The information given in the Directors' Report includes the specific information presented in the Chairman's Statement that is cross referred from the business review section of the directors' report.  

In addition we report to you if, in our opinion, the Company has not kept proper accounting records, we have not received all the information and explanations we require for our audit, or if information specified by law regarding directors' remuneration and other transactions is not disclosed.

We read other information contained in the Annual Report and consider whether it is consistent with the audited financial statements. This other information comprises the Directors' Report, the Chairman's Statement, and the Corporate Governance Statement. We consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the financial statements. Our responsibilities do not extend to any other information.

Basis of audit opinion

We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial statements. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation of the financial statements, and of whether the accounting policies are appropriate to the Group's and parent company's circumstances, consistently applied and adequately disclosed.

We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial statements.

Opinion

In our opinion:

• The Group financial statements give a true and fair view, in accordance with International Financial Reporting Standards (IFRS's) as adopted by the European Union, of the state of Group's affairs as at 31 December 2008 and of the Group's loss for the year then ended;

• The parent company financial statements give a true and fair view in accordance with IFRS's as adopted in the European Union as applied in accordance with the provisions of the Companies Act 1985 of the state of the parent company's affairs at 31 December 2008.

• The financial statements have been properly prepared in accordance with the Companies Act 1985; and as regards the group financial statements, Article 4 of the IAS Regulation;

• The information given in the Directors' Report is consistent with the financial statements.

Emphasis of matter: - Going concern and goodwill impairment

In forming our opinion on the financial statements, which is not qualified, we draw your attention to notes 5a and 15 of the financial statements which indicate the Group's ability to continue as a going concern and the basis on which the carrying value of goodwill has been determined respectively. The Group incurred a net loss of £367,267 for the year ended 31 December 2008. These conditions, along with the other matters explained in notes 5a and 15 of the financial statements in the Annual Report and Accounts, indicate the existence of material uncertainties which may cast significant doubt about the Group's ability to continue as a going concern and whether goodwill may become impaired. 

Jeffreys Henry LLP

Chartered Accountants and Registered Auditors

5-7 Cranwood Street

Finsgate

London EC1V 9EE

29 June 2009

Notes to the group and parent company financial statements

1.	General Information

Messaging International Plc is a company incorporated in the UK and its activities are as described in the chairman's statement and directors' report.

2.	Basis of Accounting

The consolidated financial statements of the Company for the year ended 31 December 2008 have been prepared on a historical cost basis and are in accordance with International Financial Reporting Standards ('IFRS') as adopted by the EU. These have been applied consistently except where otherwise stated. 

3.

Taxation

					2008		2007
					£		£
Current tax charge					-		-
Factors affecting the tax charge in the year
Loss on ordinary activities before taxation					(367,267)		(259,892)
Loss on ordinary activities before taxation at the standard rate of UK corporation tax 28% (2007: 30%)					(102,835)		(77,967)
Effects of:
Depreciation and amortisation					6,971		5,818
Non recognition of losses					95,864		72,149
Tax charge					-		-

In accordance with IAS12, the Company and the Group have not recognised deferred tax assets as they do not anticipate that profits generated in the short term will exceed accumulated losses generated by subsidiary undertakings.

In addition, TeleMessage Ltd in Israel was granted approved enterprise status for its investment programme. The main benefit arising from such status is the reduction in tax rates on income. The Company's income from the 'Approved Enterprises Scheme' is tax exempt for four years commencing with the year it first earns taxable income and then would be subject to a reduced tax rate of between 10% and 25% for a period of up to six years. Since the Company has incurred losses to date it has not utilised any of the aforementioned tax benefits.

4.	Basic and diluted loss per share

Basic loss per share has been calculated on the Group's loss attributable to equity holders of the parent company of £367,267 (2007: £259,892) and on the weighted average number of shares in issue during the year, which was 235,380,000 (2007: 217,498,000). 

In view of the Group loss for the year, 50 million share warrants, 100 million new warrants and 13.8 million options to subscribe for ordinary shares in the Company are anti-dilutive and therefore diluted earnings per share information is not presented.

5.	Statements on movement in equity

	2008		2007
	£		£
Group
Loss for the year	(367,267)		(259,892)
Equity-settled share based payments for employee share options	11,887		49,419
Equity-settled share based payments for warrants relating to borrowings	98,968		-
Foreign currency translation changes	744,083		(11,334)
Share issue net of costs	-		866,752
Equity at 1 January	3,784,034		3,139,089
Equity at 31 December	4,271,705		3,784,034
Company
Loss from continuing operations	(24,183)		(22,705)
Equity at 1 January	5,401,090		4,557,043
Share issue net of costs			866,752
Equity at 31 December	5,376,907		5,401,090

6.	Cash and cash equivalents and bank overdraft
		At 1 January  2008			Cash Flow		At  31 December  2008
		£			£		£
Group
Cash and cash equivalents		355,780			(55,127)		300,653
Company
Cash and cash equivalents		160,011			(100,059)		59,952

7.	Annual Report & Accounts

A copy of the Annual Report and Accounts for the year ended 31 December 2008 has been sent to shareholders today and copies are available from the Company's registered office at 58-60 Berners Street, London W1T3JS or by visiting the Company website at www.telemessage.com.

 

END

 

 

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