Half Yearly Report

RNS Number : 5696N

Messaging International Plc

10 September 2013

 



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 2013.

Highlights

·      Continued Revenue Growth - increased by 16% to £2,005,559 (6M 2012: £1,732,041)

·      Gross margins 61.3% (6M 2012: 65.6%)

·      Loss for the first six months - £(36,896) (6M 2012 profit: £79,160)

·      Strengthening offering and investing in new products to offer creative and user friendly messaging products and services to existing and new clients

·      Messaging Gateway gaining traction and being adopted by an increasing number of operators and enterprises

·      Healthy new business pipeline

Chairman's Statement

Trading has been solid for Messaging during the first six months of 2013, as we continue to focus on developing innovative 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 TeleMessage retains its place as a leading provider in this sector.

Our Vision is to become a leading provider of innovative messaging where people are free to use messaging services in the way that is most appropriate, effective and convenient. Our Mission is to provide Telecom Operators and Enterprises with solutions that enhance the messaging experience and which are flexible, secure, reliable, easy to implement and meet their current and future needs.

TeleMessage helps operators retain their subscriber base by enhancing the user experience and assists enterprises achieve greater efficiency by optimizing their communication capabilities, TeleMessage seamlessly handles text, voice, data, multimedia and IP messages over mobiles, tablets, the web, Office, APIs and IT infrastructure.

Our clients include, among others, companies such as Sprint in the USA, Rogers, Bell and Telus in Canada. 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 which include smartphones, tablets and new interfaces which consumers and enterprises use to send and receive messages. In order to demonstrate these new capabilities to our customers we have already soft launched our new Messenger apps on Google Play and on the Apple Store.

Sales of our 'Messaging Gateway' product to Mobile operators and directly to enterprises, offering a range of interfaces for content providers, enterprises and developers, continue to increase. The product enables enterprises to deliver messages for customers and employees on a wide scale and uptake is gaining momentum particularly as more clients understand its convenience and cost-saving benefits.  During the period, we added a few more carrier clients to these services. 

Based on the same technology platform, TeleMessage has developed a new product: "Mobile Emergency Alerts", which is an advanced messaging platform, triggering emergency alerts via a mobile phone application.

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

In May this year, the company acquired through a buy-back from shareholders 39,999,999 shares at 1 penny per share. Full details were provided in a circular to shareholders dated 17 May 2013 and results published June 3^rd.

Financial Results

As demonstrated by our financials, Messaging continues to demonstrate growth.

For the period ended 30 June 2013, we are reporting a loss of £36,896 on revenues of £2,005,559 (6 months to June 2012: £1,732,041). The fall in the level of operating profit is attributable to the increased costs of research and development.

Messaging's cash position at 30 June 2013 was £709,391 (December 2012: £1,423,623).  The bank loan from Mizrahi Tefahot Bank outstanding at 30 June 2013 was £425,056 (December 2012: £503,089). 

Outlook

The increased cost of research and development in the half year is expected to continue at a similar level for the remainder of 2012 to support our longer term growth projections albeit will affect the Company's financial performance for the year as a whole.

Our focus remains on increasing our presence within the telecom sector both geographically and technologically. We have 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

10 September 2013

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	Cantor Fitzgerald Europe	Tel: [phone]

Consolidated statement of comprehensive income for the six months ended 30 June 2013

	Notes		Unaudited six months ended 30 June 2013		Unaudited six months ended 30 June 2012		Audited year ended 31 December 2012
			£		£		£
Revenues	2		2,005,559		1,732,041		3,769,263
Cost of revenue			(776,113)		(596,008)		(1,332,419)
Gross profit			1,229,446		1,136,033		2,436,844
Operating expenses
Research and development			(636,407)		(456,524)		(918,078)
Sales and marketing			(387,624)		(328,320)		(643,539)
Administrative costs			(233,108)		(236,874)		(540,331)
Total operating expenses			(1,257,139)		(1,021,718)		(2,101,948)
Operating (loss)/profit			(27,693)		114,315		334,896
Finance costs			(9,203)		(35,155)		(44,558)
(Loss)/profit before taxation			(36,896)		79,160		290,338
Taxation	3		(11,668)		(7,682)		(17,740)
(Loss)/profit for the financial period			(48,564)		71,478		272,598
Other comprehensive profit/(loss)
Foreign exchange difference on translation of foreign operations			60,160		(18,577)		(35,204)
Foreign exchange difference arising from restating the carrying value of goodwill associated with foreign operations			-		-		(155,158)
			60,160		(18,577)		(190,362)
Total comprehensive profit			11,596		52,900		82,236
Earnings per share
Basic (loss)/earnings per share	4		(0.03)p		0.04p		0.16p
Diluted (loss)/earnings per share	4		(0.03)p		0.03p		0.15p

Consolidated statement of changes in equity for the six months ended 30 June 2013

	Share	Share	Capital redemption	Translation	Revenue
	capital	premium	reserve	reserve	reserves	Total
	£	£	£	£	£	£
As at 1 January 2013	779,361	-	400,039	207,746	3,340,006	4,727,152
Capital reorganisation	(200,000))		200,000			-
Re purchase of shares					(400,000)	(400,000)
(Loss) for the period					(48,564)	(48,564)
Share based payments
Foreign currency translation changes				60,160		60,160
As at 30 June 2013	579,361		600,039	267,906	2,891,442	4,338,748
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))	400,039		4,298,727	-
Purchase of share					(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		400,039	379,531	3,073,410	4,632,341
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)	400,039		4,298,727	-
Purchase of share					(127,500)	(127,500)
Profit for the year					272,598	272,598
Share based payments					90,907	90,907
Foreign currency translation changes for goodwill				(155,158)		(155,158)
Other foreign currency translation changes				(35,204)		(35,204)
As at 31 December 2012	779,361	-	400,039	207,746	3,340,006	4,727,152

Consolidated Statement of financial position as at 30 June 2013

			Unaudited as at 30 June 2013		Unaudited as at 30 June 2012		Audited as at 31 December 2012
			£		£		£
Non current assets
Goodwill			3,518,045		3,673,203		3,518,045
Property, plant and equipment			184,345		147,402		179,125
Other investments			309,970		249,100		275,692
			4,012,360		4,069,705		3,972,862
Current assets
Trade and other receivables			994,389		797,283		1,086,271
Cash and cash equivalents			709,391		1,423,623		1,069,661
			1,703,780		2,220,906		2,155,932
Total assets			5,716,140		6,290,611		6,128,794
Current liabilities
Trade and other payables			(561,682)		(719,044)		(520,142)
Borrowings			(191,985)		-		(191,985)
			(753,667)		(719,044)		(712,127)
Non current liabilities
Borrowings			(233,071)		(641,026)		(311,104)
Other payables			(39,443)		(34,110)		(48,554)
Employee provisions			(351,211)		(264,090)		(329,857)
			(623,725)		(939,226)		(689,515)
Total liabilities			(1,377,392)		(1,658,270)		(1,401,642)
Net assets			4,338,748		4,632,341		4,727,152
Equity
Share capital			579,361		779,361		779,361
Capital redemption reserve			600,039		400,039		400,039
Foreign currency translation reserve			267,906		379,531		207,746
Revenue reserves			2,891,442		3,073,410		3,340,006
Shareholders' equity			4,338,748		4,632,341		4,727,152

Consolidated cash flow statement for the six months ended 30 June 2013

		Unaudited six months ended 30 June 2013		Unaudited six months ended 30 June 2012		Audited year ended 31 December 2012
		£		£		£
Cash flow from operating activities
(Loss)/profit before taxation		(27,693)		114,315		334,896
Adjustments for:
Share based payments		26,100		25,431		90,907
Depreciation and amortisation		42,809		31,899		66,245
Foreign currency translation adjustments		44,105		(17,816)		(53,186)
		113,014		39,514		103,966
Operating cash flow before working capital movements		85,321		153,829		438,862
Decrease in receivables		91,882		347,431		58,443
(Decrease)/increase in payables		32,429		(11,295)		(195,752)
(Decrease)/Increase in provisions		21,354		(8,591)		57,176
		145,665		327,545		(80,133)
Cash inflow from operating activities		230,986		481,374		358,729
Investing activities
Net finance costs		(9,203)		(35,155)		(22,149)
Investments		(34,278)		(10,870)		(37,462)
Repurchase of shares		(400,000)		(127,500)		(127,500)
Purchase of property, plant and equipment		(37,423)		(61,255)		(130,990)
Net cash used in investing activities		(480,904)		(234,780)		(318,101)
Taxation		(11,668)		(7,681)		(17,740)
Financing activities
Borrowings		-		641,026		621,118
Bank loan repayments		(98,684)		-		(118,029)
Net cash (used)/from financing activities		(98,684)		641,026		503,089
Net (Decrease)/ increase in cash and cash equivalents		(360,270)		879,939		525,977
Cash and cash equivalents at the beginning of the period/year		1,069,661		543,684		543,684
Cash and cash equivalents at the end of the period/year		709,391		1,423,623		1,069,661

Notes to the interim report

For the six months ended 30 June 2013

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 2013 and 30th June 2012 are un-audited. The comparative figures for the year ended 31st December 2012 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 2012 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 2013.

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 10 September 2013.

2.       Turnover

		Unaudited six months ended 30 June 2013		Unaudited six months ended 30 June 2012		Audited year ended 31 December 2012
		£		£		£
North America		1,797,054		1,519,731		3,178,734
Europe and Middle East		173,587		205,727		307,920
Rest of the World		34,918		6,583		282,609
		2,005,559		1,732,041		3,769,263

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 there are losses available to carry forward against future trading profits.  No deferred tax asset has been recognised in accordance with International Accounting Standard 12.

4.       Basic and diluted loss per share

For the six months ended 30 June 2013, basic earnings per share has been calculated on the group's loss attributable to owners the company of £48,564 and on the weighted average number of shares in issue during the year, which was 141,319,485.

For the six month period ended 30 June 2013, share options and warrants to subscribe for shares in the company are anti-dilutive and therefore diluted earnings per share information is the same as the basic 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 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 2012, basic earnings per share has been calculated on the group's profit of £272,598 and on the weighted average number of shares in issue during the year of 166,832,000.

Diluted earnings per share has been calculated on the group's profit of £272,598 and 179,784,836 shares which includes a further 12,952,836 shares arising from the exercise of future warrants and share options.

 

END

 

 

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