The information contained within this announcement is deemed by the Company to constitute inside information pursuant to Article 7 of EU Regulation 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018 as amended.

29 September 2021

Mirada plc

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

Final results for the year ended 31 March 2021

Progress in a challenging year and primed to take advantage of the recovery

Mirada (AIM: MIRA), a leading provider of integrated software solutions for digital TV operators and broadcasters, announces its audited final results for the year ended 31 March 2021.

Financial Highlights

Operational Highlights

Post-period Highlights

José-Luis Vázquez, CEO of Mirada, commented:

"The past year has been challenging in many ways, but we emerge from it a stronger business with a powerful product offering that puts us at the forefront of the latest market trends; impressive references; a leaner, more efficient sales strategy; and a growing proportion of recurring revenues. We have ambitious plans to drive the business forward in the coming months and I look forward to keeping shareholders updated."

Annual Report and Accounts

The Company's Annual Report and Accounts will shortly be made available on the Company's website www.mirada.tv and will be posted to shareholders tomorrow.

About Mirada 

Mirada is a leading provider of products and services for Digital TV Operators and Broadcasters. Founded in 2000 and led by CEO José Luis Vázquez, the Company prides itself on having spent over 20 years as a pioneer in the Digital TV market. Mirada's core focus is on the ever-growing demand for TV Everywhere for which it offers a complete suite of end-to-end modular products across multiple devices, all with innovative state-of-the-art UI designs. Mirada's products and solutions, acclaimed for unparalleled flexibility and optimal time to market, have been deployed by some of the biggest names in digital media and broadcasting including Televisa, ATN International, Telefonica, Sky, Virgin Media, BBC, ITV, Skytel and France Telecom Orange. Headquartered in London, Mirada has commercial representation across Europe, Latin America and Southeast Asia and operates technology centres in the UK, Spain and Mexico. For more information, visit www.mirada.tv.   

Chief Executive Officer's Report

Progress in a challenging year and primed to take advantage of the recovery

While we, like many in our space, were not immune to the effects of the COVID-19 pandemic over the past year, I am proud of how our teams have responded and what we have been able to achieve as a result.

 Post-period, as we progress through the new financial year, we do so with our strongest outlook to date and a genuine sense of excitement and optimism as to what can be achieved through strong references, the return of investment appetite among existing and prospective customers, increasingly favourable macrotrends, and a significantly improved product offering and commercial strategy.

Favourable market trends that support our ambitions

The rise of super-aggregation

In recent years, the TV market has been disrupted by over-the-top (OTT) operators such as Netflix and Amazon Prime Video who have transformed the user experience, initially impacting the business models of traditional Pay TV operators with a wave of "cord-cutters", costing billions a year in lost subscription cash flows. However, those Pay TV operators have not only invested in cloud TV to deliver anywhere, anytime, any device services but have responded to the increasingly fragmented and complex landscape by positioning themselves as "super-aggregators" - a model that has accelerated in the pandemic and as more content owners have launched direct-to-consumer (D2C) services.

Consumers increasingly value simplicity, so there is a need for platforms to deliver a fast, straightforward and high-quality user experience making content from various online video services available and searchable in one place and presenting the user with all their subscriptions under one bill. Importantly, to deliver these complex services, Pay TV operators need to work with innovative software partners like Mirada that have proven capability in delivering cloud solutions.

Android TV as the new gold standard operating system

Today, Android TV has emerged as the operating system (OS) roadmap of choice for most operators. Google TV launched in 2010 and ran on several high-end, early generation Smart TVs and streaming devices. However, it ultimately proved unpopular, largely because operators were concerned that Google was attempting to 'own' the subscriber. Google discontinued the software and replaced it with Android TV in 2014. Android TV is a far more open OS, enabling developers to build apps, viewers to access the Google Play Store and download apps such as YouTube and - most importantly - allowing operators to layer on their own user interfaces and branding. The relative ease of implementation (globally supported, large-scale platform with access to wide content) means the Android TV OS is increasingly being viewed by service providers as the OS of choice for their TV and video set-top-box software, capable of quickly delivering the premium content and multiscreen proposition that can reduce churn and increase premium subscriptions. Mirada's success and uncommon track-record in large scale Android TV deployments positions us to be a major beneficiary of this trend.

Content providers moving into D2C TV services

One of the most exciting, emerging trends in our space is with content providers (companies like Netflix, HBO and Disney etc.) that are looking to capitalise on their substantial content libraries by offering new direct-to-consumer TV services. Our domain knowledge and software expertise mean we are just as well-positioned to support these content providers, as they look to build their apps, as we are in helping traditional operators roll-out aggregated anywhere, anytime, any device TV services. Although lead times are lengthy, we are beginning to see opportunities emerge and are confident we have the technology and resources to meet the requirements of these players.

Significant customer rollouts and growing references

One of the key achievements in the period was the fourth quarter deployment of our Android TV Operator Tier offering with izzi Telecom, in close collaboration with Google, to help the Mexican telecommunications company deliver its ambitious super-aggregation strategy. The Android TV Operator Tier, so called because it allows operators to customise the look, feel and functionality of the platform, is emerging as the OS of choice for many companies who value the control it grants them over the user experience.

Since the deployment began in October 2020, izzi's new set-top-boxes using our technology have been rolled out at a rate of almost 100,000 per month. As of 31 March 2021, there were more than 450,000 in circulation with the rate of deployment accelerating post-period (in total, izzi has 3.1 million set-top-boxes with Mirada including those running the legacy Linux system). With most new prospects being Android TV and our flagship Iris solution now boasting Disney+, Amazon Prime Video, Netflix, HBO, Fox and Blim TV integrations among others, this is a potentially game-changing reference and leaves us well-placed to win further significant business.

In September 2020, we completed our largest European launch of our Iris solution with 'Zapi', a new OTT-based Pay TV platform developed by Plataforma Multimedia de Operadores (PMO), a conglomerate of local Spanish telecommunications services looking to establish Zapi as one of the leading Pay TV platforms in the country. Zapi allows subscribers to watch content across devices including Android TV-powered set-top boxes. Over time, the service is expected to grow beyond 600,000 subscribers.

Elsewhere, we have continued to make encouraging progress. In August 2020, our Iris technology powered the launch of ATN international-owned 'Viya TV+' offering in the US Virgin Islands. Customer satisfaction in the first months since going live and the rate of uptake by consumers has been high. Viya is the second reference in the Caribbean, after OneComm in Bermuda which launched in 2019.

While the pandemic has impacted the pace of subscriptions for SkyTel in Mongolia and Digital TV in Bolivia, the slowdown is expected to be temporary as conditions normalise.

Operational improvements that stand us in good stead

We successfully managed our finances through the pandemic, with an efficient debt structure and shareholder support, which leaves us well-positioned and gives us optionality as we look to return to growth.

At the same time, we continue to grow our recurring software revenues, which provide us with greater visibility of earnings and enable us to continue to invest in the business. We expect our SaaS revenue model to grow in our sales mix as we adapt our commercial offering and as we target smaller operators where it is an economically attractive model.

Another major development in the period was the restructuring of our sales function from a direct country-based model to building a reseller channel. The early signs are encouraging, with a significant increase in the size of our pipeline. We believe this shift in strategy will have a positive, long-term impact on the scalability of our business model.

The travel restrictions also demonstrated our full capability to showcase our products and implement and upgrade our customers' infrastructure and their subscribers' set-top boxes remotely. We expect this to have a positive, long-term impact on our delivery model, margins and levels of customer satisfaction, even as travel restrictions begin to ease.

Financial overview

Revenue decreased to $11.13 million (2020: $13.16 million) because of the delaying effect of COVID-19 on customer and prospect investment decisions. Development revenue decreased to $5.61 million (2020: $7.98 million). Licence revenues remained strong at $3.57 million (2020: $3.77 million).

Gross profit decreased to $10.84 million (2020: $12.48 million) and operating losses increased to $2.59 million (2020: $1.36 million). Staff costs increased to $7.10 million (2020: $6.79 million), mainly due to the majority of our costs being incurred in Euros and the depreciation of the US dollar. Other administrative expenses decreased to $2.05 million (2020: $3.20 million).

Despite the temporary revenue reduction, the reduction in costs helped support an adjusted EBITDA (as defined in Note 7) of $1.70 million (2020: $2.50 million). A tax credit was recognised in the period of $0.17 million (2020: $0.31 million) from Mirada Iberia's research and innovation tax deductions. As a result, the Company recorded a net loss for continued activities of the year of $2.99 million (2020: loss of $1.11 million). The Board expects that the maturity of present contracts through increased subscriber-based licence fees, plus the addition of new customers as a result of the implementation of our sales strategy, will increase the global turnover as the mix of licence revenues increases with a limited corresponding development investment, resulting in better margins and an improved profit level.

Net Debt increased to $7.07 million (2020: $5.05 million). Long-term interest-bearing loans and borrowings increased to $5.40 million (2020: $2.40 million) and short-term borrowings and related party loans and interest decreased to $1.78 million (2020: $2.85 million) - see note 9 for further details. Trade receivables decreased from $1.99 million to $1.83 million.

Post period end, the €1.30 million credit facility granted by Leasa Spain, S.L.U., owned by Mr. Ernesto Luis Tinajero Flores, who also owns 87.21% of the voting rights of Mirada, was extended to a total of €3.0 million, expiring November 2022.

Other intangible assets have increased by $0.68 million, mainly due to the development of our custom launcher for Android TV.

The Group generated $3.15 million of cash in operating activities in the year (2020: $1.80 million), an increase mainly driven by working capital differences, and spent a further $4.17 million (2020: $4.38 million) in investing activities. The operating and investing cash flows were funded by the movement in net debt explained above. This resulted in a decrease in cash and cash equivalents of $0.07 million.

The Company has adopted the following new accounting standards with effect from 1 April 2020:

·    Amendments to IAS 1 and IAS 8

·    Amendments to IFRS 3 - business combinations

See Note 3 for further information on the new IFRS standards.

Our strongest outlook to date as trading conditions normalise

Mirada's primary target market is a group of around 350-400 telecommunications and broadcast operators globally. Each year, we typically see around one in ten reach a point in their cycle where they choose to review their integrated software provider. For most of the year, however, this fell to almost zero as those operators chose to postpone their decision-making processes until there was greater clarity around the future of the pandemic. New business activity across the industry - particularly in the first half - effectively ground to a halt.

Similarly, we saw a temporary slowdown in professional services revenue from our existing customers as their immediate priorities shifted away from areas like optional functionality upgrades.

Encouragingly, as we moved through the second half of the financial year, with viewing trends being relatively predictable, we began to see growing indications of a gradual reversion to pre-pandemic levels of appetite for investment from both existing and prospective customers.

With the widespread deferral we saw during the year, we are expecting to see significant pent-up demand and considerably more new business opportunities emerge in the coming months alongside a growing pipeline of opportunities with existing customers as they look to enhance their user experiences. Lead times in our industry can be lengthy so it is difficult to forecast exactly when new deals will materialise, but the outlook is positive - particularly in Asia - and with our new reseller model now in place we are confident of a return to the commercial momentum that was building before the pandemic took hold.

The past year has been challenging in many ways, but we emerge from it a stronger business with a powerful product offering that puts us at the forefront of the latest market trends; impressive references; a leaner, more efficient sales strategy; and a growing proportion of recurring revenues. We have ambitious plans to drive the business forward in the coming months and I look forward to keeping shareholders updated.

José-Luis Vázquez
Chief Executive Officer
29 September 2021

Consolidated Statement of Comprehensive Income for the year ended 31 March 2021

Consolidated Statement of Financial Position as at 31 March 2021

Consolidated Statement of changes in equity for the year ended 31 March 2021

Consolidated Statement of Cash Flows for the year ended 31 March 2021

Selected notes to financial statements year ended 31 March 2021

1.        General information

Mirada plc is a company incorporated in the United Kingdom. The address of the registered office is 3rd Floor Chancery House, St Nicholas Way Sutton, Surrey SM1 1JB.  The nature of the Group's operations and its principal activities are the provision and support of products and services in the Digital TV and Broadcast markets.

2.        Change in consolidation scope

Main changes for the year ended as at 31 March 2021:

On 5 July 2019, the Group announced the sale of the wholly owned subsidiary Mirada Connect Ltd. to PayByPhone UK Limited (subsidiary of Volkswagen Financial Services, AG), for a consideration of $2.61 million (£2.12 million). As a result, last year the Group  recognised a gain of $1.70 million as shown in the Consolidated Income Statement for the year ended 31 March 2020. As a consequence, of said disposal, the results of Mirada Connect Ltd are included as part of the consolidation scope from 1 April 2019 to the effective date of disposal. For the purpose of IFRS 5, this was not a discontinued operation.

3.        Changes in accounting policies

a.         Adoption of new and revised standards effective from 1 April 2020

Amendments to IAS 1 and IAS 8

Definition of materiality or with relative importance. This amendment clarifies the definition of materiality or relative importance and how it should be applied by introduction in the definition of guides that until now have been addressed in other parts of the IFRS Standards; improving the explanations that accompany the definition and ensuring that the definition of materiality or with relative importance is consistent throughout all IFRS Standards. The Group will consider the new definition of materiality and do not foresee significant impact in the preparation of the consolidated financial statement.

Amendments to IFRS 3 - Business combinations

At the date of authorisation for issue of these consolidated financial statements, the amendments to IFRS 3 - Business combinations have been approved by the International Accounting Standards Board (IASB).

Amendments to IFRS 3 - Business combinations. IFRS 3 is amended to limit and clarify the definition of a business, and to enable a simplified evaluation of whether a set of activities and assets acquired is a group of assets instead of a business.

COVID-19-Related Rent Concessions (Amendments to IFRS 16)

Effective 1 June 2020, IFRS 16 was amended to provide a practical expedient for lessees accounting for rent concessions that arise as a direct consequence of the COVID-19 pandemic and satisfy the following criteria:

(a)         The change in lease payments results in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change;

(b)         The reduction is lease payments affects only payments originally due on or before 30 June 2021; and

(c)          There are no substantive change to other terms and conditions of the lease.

Rent concessions that satisfy these criteria may be accounted for in accordance with the practical expedient, which means the lessee does not assess whether the rent concession meets the definition of a lease modification. Lessees apply other requirements in IFRS 16 in accounting for the concession.

Adoption of the above standards did not have a material impact on the consolidated financial statements

b.         New Standards, interpretations and amendments not yet effective

There are a number of standards, amendments to standards, and interpretations which have been issued by the IASB that are effective in future accounting periods that the group has decided not to adopt early.

The following amendments are effective for the period beginning 1 January 2022:

o  Onerous Contracts - Cost of Fulfilling a Contract (Amendments to IAS 37);

o  Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16);

o  Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41); and

o  References to Conceptual Framework (Amendments to IFRS 3).

In January 2020, the IASB issued amendments to IAS 1, which clarify the criteria used to determine whether liabilities are classified as current or non-current. These amendments clarify that current or non-current classification is based on whether an entity has a right at the end of the reporting period to defer settlement of the liability for at least twelve months after the reporting period. The amendments also clarify that 'settlement' includes the transfer of cash, goods, services, or equity instruments unless the obligation to transfer equity instruments arises from a conversion feature classified as an equity instrument separately from the liability component of a compound financial instrument. The amendments were originally effective for annual reporting periods beginning on or after 1 January 2022. However, in May 2020, the effective date was deferred to annual reporting periods beginning on or after 1 January 2023.

Mirada Group is currently assessing the impact of these new accounting standards and amendments. The Group does not believe that the amendments to IAS 1 will have a significant impact on the classification of its liabilities, as the conversion feature in its convertible debt instruments is classified as an equity instrument and therefore, does not affect the classification of its convertible debt as a non-current liability.

Interest Rate Benchmark Reform - IBOR 'phase 2' (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) 

These amendments to various IFRS standards are mandatorily effective for reporting periods beginning on or after 1 January 2021. The amendments provide relief to Group in respect of certain loans whose contractual terms are affected by interest benchmark reform.

The Group has not early adopted any of the above standards and the directors are assessing the impact on future financial statements. There are no other IFRS or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the Group.

4.        Significant accounting policies

a.         Basis of accounting

The consolidated financial statements have been prepared in accordance with international accounting standards in conformity with the Companies Act 2006 and international financial reporting standards adopted pursuant to Regulation (EC) No.1606/2002 as it applies in the European Union.

The consolidated financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities (including derivative instruments) at fair value through profit or loss, assets held for sale measured at fair value less costs to sell; and defined benefit pension plans for which the plan assets are measured at fair value.

All amounts disclosed in the consolidated financial statements and notes have been rounded off to the nearest thousand currency units, unless otherwise stated.

The preparation of consolidated financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the group's accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements, are disclosed in Note 5.

b.         Going concern

These financial statements have been prepared on the going concern basis. The Directors have reviewed the Company and Group's going concern position taking account of its current business activities, budgeted performance and the factors likely to affect its future development, which are set out in this Annual report, and include the Group's objectives, policies and processes for managing its capital, its financial risk management objectives, its exposure to credit and liquidity risks and the impact of the COVID-19 pandemic.

As at 31 March 2021, the Group had cash and cash equivalents of $0.11m (2020: $0.19m), had net current liabilities of $0.23m (2020: net current assets of $0.29m) and net assets of $7.90m (2020: $10.55m.). In the year ended 31 March 2021, the Group generated net cash from operating activities of $3.15m (2020: $1.80m), realised a loss for the year of $2.99m (2020: a profit of $0.59m). During the year, the Group had secured the following funding for the business:

o  €1.6m of new loans obtained between April 2020 and June 2020 from banks with 80% of these loans guaranteed by the Spanish government under the COVID-19 relief scheme.

o  An extension to the term of its €1.30 million credit facility has been granted by Leasa Spain, S.L.U. The term of the Facility has been extended by 12 months and now expires on 30 November 2022.

The Directors have prepared detailed cash flow forecasts for the period to at least 30 September 2022 and extended it for further 4 years.  The Directors regularly review the detailed forecasts of sales, costs and cash flows. The assumptions underlying the forecasts are challenged, varied and tested to establish the likelihood of a range of possible outcomes, including reasonable cash flow sensitivities. The expected figures are carefully monitored against actual outcomes each month and variances are highlighted and discussed at Board level.  However, the uncertain impact of COVID-19 has increased risks and uncertainty into this year's review. The Group has seen limited impact of COVID-19 on the operational capability of the business.  From a technology point of view, the Group is also offering and developing the most advanced features in the market, providing services to a growing subscriber base in our core markets.  To this end a base case cash flow forecast has been prepared which takes into account the following key assumptions:

•      The continued availability of the Group's invoice discounting facility throughout the foreseeable future.

•      An average revenue growth of 13% in the foreseeable future, which Directors believe, comprise of revenue that is substantially already secured under-signed contracts.  

•      Additional net funding of US$1.4m from lenders

•      An expected receipt of US$0.3m of Research and Development tax credit in March 2021 from Spanish tax authorities.

The Directors have also considered a number of downside scenarios, including a scenario where all revenue growth from new customers is removed, a scenario where no further funding is obtained in the period and a reverse stress test.  The purpose of the reverse stress test for the Group is to test at what point the cash facilities would be fully utilised if the assumptions in the Director's base case forecasts are altered.  This reverse stress test includes both a removal of all revenue growth from new customers and a reduction of contracted revenue from existing customers for the forecast period, resulting in an overall reduction of revenue of c.20%, as well as the removal of any potential future funding and the receipt of the US$0.3m Research and Development tax credits anticipated.  In the event that the performance of the Group is not in line with the projections, and more akin to one of our downside scenarios, including the worst case scenario, action will be taken by management immediately to address any potential cash shortfall for the foreseeable future.  The actions that could be taken by the Directors include both a review and restructuring of employment related costs, including the deferral of any potential bonuses due to employees.  These measures alone could save at least $1.0m in operating costs and therefore cash flows.  Further, the Directors could also negotiate access to other sources of finances from our lenders.  Given the Director's current relationship with lenders and their recent success in negotiations with these financial institutions, whilst there are no binding agreements currently in place, negotiations are in very advanced stages for additional funding.   Therefore, they Directors are confident that any additional funding required would be obtained. 

Whilst the cash flow forecasts prepared have been sensitised to consider a number of downside scenarios, including the reverse stress test, the Directors are pleased to note that the post year end performance of the Group has exceeded the original forecast for April and May 2021.  Therefore demonstrating that the Group has not suffered negatively from the impact of COVID-19 and is in a strong place to meet the base case forecasts.  

Overall, the sensitised cash flow forecasts demonstrate that the Group will be able to pay its debts as they fall due for the period to at least 31 December 2021. The Directors are, therefore, satisfied that the financial statements should be prepared on the going concern basis.

5.        Revenue from contracts with customers

Licenses revenue are including both contract licenses and SaaS revenue.

Contract balances

The following table provides information about contract assets (included as accrued income) and contract liabilities (included as deferred income) from contracts with customers:

The movement in the contract assets and liabilities during the year is set out below:

Contract assets ('accrued income') and contract liabilities ('deferred income') are included within 'Trade and other receivables' and 'deferred income' respectively on the face of the Statement of Financial Position.  They arise from the Group's revenue contracts, where work has been performed in advance of invoicing customers, and where revenue is received in advance of work performed.  Cumulatively, payments received from customers at each balance sheet date do not necessarily equate to the amount of revenue recognised on the contracts.

6.        Segmental reporting

Reportable segments

The chief operating decision maker for the Group is ultimately the board of directors. For financial and operational management, the board considers the Group to be organised into two operating divisions based upon the varying products and services provided by the Digital TV & Broadcast. The products and services provided by each of these divisions are described in the Strategic Report. The segment headed other relates to corporate overheads, assets and liabilities.

Segmental results for the year ended 31 March 2021 are as follows:

$0.744 million (2020: $0.087 million) disclosed as "Other" comprises employment, legal, accounting and other central administrative costs incurred at a Mirada Plc level.

On July 2019 Mirada Connect Ltd, which represented the mobile segment, was sold to PaybyPhone Ltd, a subsidiary of the Volkswagen Group.

The segmental results for the year ended 31 March 2020 are as follows:

There is no material inter-segment revenue.

The Group has a major customer in the Digital TV and Broadcast segment that generates revenues amounting to 10% or more of total revenue that account for $7.9 million of $11.03m total revenue. This is approximately 72% of all revenue (2020: $9.5 million, out of $13.16m) of the total Group revenues.

Segment assets and liabilities are reconciled to the Group's assets and liabilities as follows:

Assets allocated to a segment consist primarily of operating assets such as property, plant and equipment, intangible assets, goodwill and receivables.

On July 2019 Mirada Connect Ltd, which represented the mobile segment, was sold to PaybyPhone Ltd, a subsidiary of the Volkswagen Group.

Liabilities allocated to a segment comprise primarily trade payables and other operating liabilities. 

7.        Expenses by nature

This has been arrived at after charging:

Total R&D expenditure capitalised as intangible assets amounts to $4.12m (2020: $4.35m).

The total lease expense not subject to IFRS 16 for short-term as well as low-value leases amounts to $0.253 (2020: $0.339).

Analysis of auditors' remuneration is as follows:

Reconciliation of operating profit for continuing operations to adjusted earnings before interest, taxation, depreciation and amortisation:

8.        Earnings per share

After the cancellation of share premium approved by the General Meeting on 10 September 2019, the Company has 41,483 (2020: 41,483) potentially dilutive ordinary shares arising from share options issued to staff. However, in 2021 and 2020 the (loss)/profit attributable to ordinary shareholders and weighted average number of ordinary shares for the purpose of calculating the diluted earnings per ordinary share are identical to those used for basic earnings per ordinary share.  This is because the exercise of share options would have the effect of reducing the earning per ordinary share and is therefore anti-dilutive.

9.        Non-current liabilities

Other loans relate to loans received by the Group's Spanish operation to assist in funding the continued development of the Group's Digital TV products.

Net Debt

Net Debt is calculated based on short term loans, long terms loans and cash and cash equivalents: