Half Yearly Report

RNS Number : 3823N

Messaging International Plc

28 September 2012

 



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

                                             Messaging International Plc

('Messaging International' or 'the Company')

Interim Results

Messaging International Plc, the AIM traded company and provider of converged messaging products and services, announces its results for the six months ended 30 June 2012.

Highlights

·      Continued Revenue Growth - increased by 3% to £1,732,041 (6M 2011: £1,684,354)

·      Gross margins improved to 65.6% (6M 2011: 58.5%)

·      Pre-tax profit for the first six months - £79,160 (6M 2011 profit: £170,401) with positive cash flow generated

·      Strengthening offering and investing in new products to offer ever more useful messaging products and services to existing and new clients

·      Investment made to increase R&D and Sales teams to support new products and expand sales efforts

·      Healthy new business pipeline including initial efforts in India

Chairman's Statement

Trading has been solid for Messaging during the first six months of 2012, as we continue to focus on developing converged messaging solutions, through our subsidiary TeleMessage, to improve the way users manage messages across various communication mediums. We maintain close relationships with our blue-chip client base, have a highly creative R&D team and innovative messaging solutions which ensure that the company retains its place as a leading provider in this sector.

As expressed in our new Vision and Mission statements:

'Our Vision is to become a leading provider of converged messaging where people are free to use messaging services in the way that is most appropriate, effective and convenient.'

'Our Mission isto provide Telecom Operators with solutions that enhance the messaging experience, which are flexible, reliable, easy to implement and meet their current & future needs.'

To be more specific, our converged messaging products and services are provided to carriers and enterprises to deliver text, voice, video and multimedia messages to and from any communication device. Users can send, receive, and manage SMS, MMS, IP, Voice, Fax and E-mail messages from the Internet, E-Mail clients, iOS/Android Smartphones and Tablets, Fixed or Mobile phones and APIs.

Our clients include, among others, companies such as Sprint in the USA; Rogers Wireless, Bell Mobility and Telus in Canada; USI in Russia and T-Mobile in Macedonia. We ensure stable revenues by either hosting messaging services for a per-message fee or by selling software licences, which are usually linked to the number of messages that can be sent through the system or to the number of active users.

As the messaging world is changing, from SMS/MMS to IP messaging, we have increased our R&D capacity to stay ahead in the market and to continue to seize opportunities in the messaging space.  Specifically, we are investing in the new emerging devices (e.g. smartphones, tablets etc) and interfaces used by consumers and enterprises   to send and receive messages. We have already soft launched our new Android Messenger on Google Play and our new iPad Messenger on the Apple Store to be able to demonstrate these new capabilities to our customers.

Sales of our 'Messaging Gateway' product to Mobile operators and directly to enterprises, offering a range of interfaces for content providers, enterprises and Facebook developers, continue to increase. The product, which enables enterprises to manage messages (mainly SMS/MMS, but also voice, fax and email) for customers and employees on a wide scale, is enjoying growing uptake and gaining momentum particularly as more clients understand its convenience and cost-saving benefits. 

In July 2012, we completed the delivery of a fairly large installation of the Messaging Gateway to Dhiraagu, a mobile carrier in The Maldives. 

During the year, the company has been developing partnerships and a pipeline of opportunities with a few leading players in India for its "Voice as SMS" solution, which enables subscribers to receive text messages as voice and reply with voice   messages. 

As stated in the 2011 Annual Report, in February 2012, the Company completed the buyback of 80,007,853 ordinary shares in the company from Pacific Continental Securities UK Limited  for £127,500. The acquired shares were cancelled leaving the Company with 155,872,147 ordinary shares of 0.5 pence each in issue.

As part of the agreement and following completion of the buyback, Pacific were granted options to subscribe for up to 10,000,000 new ordinary shares at 0.5 pence per share exercisable in whole or in part, which will lapse on the earlier of three years from the date of grant or the date on which Pacific is dissolved. Details of the capital cancellation can be found in the circular to shareholders dated 23 November 2011.

In June 2012, the Company's subsidiary, TeleMessage Ltd, signed an agreement for a venture loan of US$1,000,000 from Mizrahi Tefahot Bank Ltd. This loan will be used for the development of   innovative products and services as well as assisting the group's working capital requirements.

Under the terms of the agreement, repayments will be over 36 equal monthly instalments with an interest rate based on the London Interbank Offered Rate plus 5.5%.

In addition, as part of the agreement, the Company will grant to Mizrahi Tefahot Bank Ltd 3,896,804 warrants exercisable at any time from grant until 17 June 2017. The warrants are exercisable at a price of 0.63p per share, although in certain circumstances the exercise price might be subject to adjustment.

Financial Results

As demonstrated by our financials, Messaging continues to demonstrate growth and maintain profitability.  For the period ended 30 June 2012, we are reporting a profit before tax of £79,160 on the back of revenues of £1,732,041 (2011: £1,684,354). The fall in the level of operating profit is attributable to the increased costs of research and development.

The Group's cash position at 30 June 2012 was £1,423,623 (December 2011: £393,311).  The cash position includes the loan from Mizrahi Tefahot Bank referred to above. 

Outlook

Our focus remains on increasing our presence within the telecom sector both geographically and technologically.  We are a profitable company with an expert technical team that has again proven its ability to provide innovative messaging services that add value to our blue chip customers, thus positioning the Company for continued growth.

I would like to thank our team for their hard work and dedication, and our shareholders for their continued support.  I look forward to reporting another successful period of trading for the year in our next annual report.

H Furman

Chairman

27 September 2012

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

Guy Levit	Messaging International Plc	Tel: + 972 3 9225252
Horacio Furman	Messaging International Plc	Tel: + 972 3 6964420
Mark Percy/ Catherine Leftley	Seymour Pierce Limited	Tel: [phone]

Consolidated statement of comprehensive income for the six months ended 30 June 2012

	Notes		Unaudited six months ended 30 June 2012		Unaudited six months ended 30 June 2011		Audited year ended 31 December 2011
			£		£		£
Revenues	2		1,732,041		1.684,354		3,673,747
Cost of revenue			(596,008)		(699,148)		(1,507,492)
Gross profit			1,136,033		985,206		2,166,255
Operating expenses
Research and development			(456,524)		(297,583)		(676,923)
Sales and marketing			(328,320)		(287,316)		(606,382)
Administrative costs			(236,874)		(218,403)		(480,264)
Total operating expenses			(1,021,718)		(803,302)		(1,763,569)
Operating profit			114,315		181,904		402,686
Finance costs			(35,155)		(11,503)		(41,460)
Profit before taxation			79,160		170,401		361,226
Taxation	3		(7,682)		-		(36,850)
Profit for the financial period			71,478		170,401		324,376
Other comprehensive loss
Foreign exchange difference on translation of foreign operations			(18,577)		(27,761)		3,009
Foreign exchange difference arising from restating the carrying value of goodwill associated with foreign operations			-				4,538
			(18,577)		(27,761)		7,547
Total comprehensive profit			52,900		142,640		331,923
Earnings per share
Basic  earnings per share	4		0.04p		0.07p		0.14p
Diluted  earnings per share	4		0.03p		0.06p		0.12p

Consolidated statement of changes in equity for the six months ended 30 June 2012

	Share	Share	Translation	Revenue
	capital	premium	reserve	reserves		Total
	£	£	£	£		£
As at 1 January 2012	1,179,400	4,298,727	398,108	(1,194,726)		4,681,509
Capital reorganisation	(400,039)	(4,298,727)	-	4,698,766		-
Re purchase of shares				(127,500)		(127,500)
Profit for the period				71,478		71,478
Share based payments				25,431		25,431
Foreign currency translation changes			(18,577)			(18,577)
As at 30 June 2012	779,361	-	379,531	3,473,449		4,632,341
As at 1 January 2011	1,179,400	4,298,727	390,561	(1,520,598)		4,348,090
Profit for the period				170,401		170,401
Share based payments				4,563		4,563
Foreign currency translation changes			(27,761)			(27,761)
As at 30 June 2011	1,179,400	4,298,727	362,800	(1,345,634)		4,495,293
As at 1 January  2011	1,179,400	4,298,727	390,561	(1,520,598)		4,348,090
Profit for the year				324,376		324,376
Share based payments				1,496		1,496
Foreign currency translation changes for goodwill			4,538			4,538
Other foreign currency translation changes			3,009			3,009
As at 31 December 2011	1,179,400	4,298,727	398,108	(1,194,726)		4,681,509

Consolidated Statement of financial position as at 30 June 2012

			Unaudited as at 30 June 2012		Unaudited as at 30 June 2011		Audited as at 31 December 2011
			£		£		£
Non current assets
Goodwill			3,673,203		3,668,665		3,673,203
Property, plant and equipment			147,402		59,267		118,807
Other investments			249,100		199,126		238,230
			4,069,705		3,927,058		4,030,240
Current assets
Trade and other receivables			797,283		1,030,883		1,144,714
Cash and cash equivalents			1,423,623		393,311		543,684
			2,220,906		1,424,194		1,688,398
Total assets			6,290,611		5,351,252		5,718,638
Current liabilities
Trade and other payables			(719,044)		(586,745)		(706,348)
			(719,044)		(586,745)		(706,348)
Non current liabilities
Borrowings			(641,026)		-		-
Other payables			(34,110)		(39,693)		(58,100)
Employee provisions			(264,090)		(229,521)		(272,681)
			(939,226)		(269,214)		(330,781)
Total liabilities			(1,658,270)		(855,959)		(1,037,129)
Net assets			4,632,341		4,495,293		4,681,509
Equity
Share capital			779,361		1,179,400		1,179,400
Share premium account			-		4,298,727		4,298,727
Foreign currency translation reserve			379,531		362,800		398,108
Revenue reserves			3,473,449		(1,345,634)		(1,194,726)
Shareholders' equity			4,632,341		4,495,293		4,681,509

Consolidated cash flow statement for the six months ended 30 June 2012

		Unaudited six months ended 30 June 2012		Unaudited six months ended 30 June 2011		Audited year ended 31 December 2011
		£		£		£
Cash flow from operating activities
profit before taxation		114,315		181,904		402,686
Adjustments for:
Share based payments		25,431		4,563		12,056
Depreciation and amortisation		31,899		13,484		36,803
Foreign currency translation adjustments		(17,816)		(26,862)		(29,152)
		39,514		(8,815)		19,707
Operating cash flow before working capital movements		153,829		173,089		422,393
Decrease/(increase) in receivables		347,431		(185,658)		(299,489)
(Decrease)/increase in payables		(11,295)		122,407		235,679
(Decrease)/Increase in provisions		(8,591)		-		34,820
		327,545		(63,251)		(28,990)
Cash inflow from operating activities		481,374		109,838		393,403
Investing activities
Net finance costs		(35,155)		(11,503)		(9,075)
Investments		(10,870)		-		(31,868)
Purchase of property, plant and equipment		(61,255)		(17,606)		(98,686)
Net cash used in investing activities		(107,280)		(29,109)		(139,629)
Taxation		(7,681)		-		(12,112)
Financing activities
Borrowings/(repayments)		641,026		-		-
Bank loan repayments		-		(44,737)		(55,297)
Re-purchase of ordinary shares		(127,500)		-		-
Net cash used from financing activities		513,526		(44,737)		(55,297)
Net increase in cash and cash equivalents		879,939		35,992		186,365
Cash and cash equivalents at the beginning of the period/year		543,684		357,319		357,319
Cash and cash equivalents at the end of the period/year		1,423,623		393,311		543,684

Notes to the interim report

For the six months ended 30 June 2012

1.       Basis of preparation and consolidation

The financial information contained in the interim results has been prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union. It has been prepared in accordance with IAS 34 - Interim Financial Reporting and does not include all of the information required for full annual financial statements.

The financial information contained in these interim results for the six months ended 30th June 2012 and 30th June 2011 are un-audited. The comparative figures for the year ended 31st December 2011 do not constitute statutory financial statements of the group within the definition of S434 of the Companies Act 2006. Full audited accounts of the group in respect of that financial period prepared in accordance with IFRS, which we received an unqualified audit opinion have been delivered to Registrar of Companies.

The accounting policies and methods of computation used in the interim statement are consistent with those used in the financial statements for the year ended 31 December 2011 and are in accordance with International Financial Reporting Standards.

The statement of comprehensive income, statement of changes in equity and financial position include the financial statements of the company and its subsidiary undertakings up to 30 June 2012.

The consolidated interim financial statements do not include all the information required for full annual financial statements and therefore cannot be construed to be in full compliance with IFRS.

The consolidated interim financial statements were approved by the board and authorised for issue on 27 September 2012.

2.       Turnover

		Unaudited six months ended 30 June 2011		Unaudited six months ended 30 June 2012		Audited year ended 31 December 2011
		£		£		£
North America		1,519,731		1,370,917		2,988,368
Europe and Middle East		205,727		287,815		639,183
Rest of the World		6,583		25,622		46,196
		1,732,041		1,684,354		3,673,747

3.       Taxation

The tax charge for the year represents amounts due for US State tax in relation to the profits of Telemessage Inc. based in the USA. U.S. operating losses from previous years are subject to annual limitations due to the "change in ownership" provisions of the Internal Revenue Code of 1986 and similar state provisions.

No further provision has been made for taxation as the group has losses available to carry forward against future trading profits.  No deferred tax asset has been recognised in accordance with International Accounting Standard 12.

Notes to the interim report

For the six months ended 30 June 2012 (continued)

4.       Basic and diluted loss per share

For the six months ended 30 June 2012, basic earnings per share has been calculated on the group's profit attributable to owners the company of £71,478 and on the weighted average number of shares in issue during the year, which was 175,200,000.

Diluted earnings per share has been calculated on the group's profit of £71,478 which in addition to 156 million ordinary shares in issue, takes into account 52 million warrants and  options to subscribe for ordinary shares.

For the six months ended 30 June 2011, basic earnings per share has been calculated on the group's profit attributable to owners the company of £170,401 and on the weighted average number of shares in issue during the year, which was 235,880,000.

Diluted earnings per share has been calculated on the group's profit of £170,401 which in addition to 235 million ordinary shares in issue, takes into account £100,000 worth of warrants and 23 million options to subscribe for ordinary shares.

For the year ended 31 December 2011, basic earnings per share has been calculated on the group's profit attributable to equity holders of the parent company of £324,376 and on the weighted average number of shares in issue during the year, which was 235,880,000.

Diluted earnings per share has been calculated on the group's profit of £324,376 (2010: £357,245) which in addition to 235 million ordinary shares in issue, takes into account 52 million warrants and  options to subscribe for ordinary shares.

 

END

 

 

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