Mirada Plc Annual Report 2016

Plain-text annual report

AUDIOVISUAL INTER ACTION MADE EASY Products Industry Clients PB / Our products A N N U A L R E P O R T A N D A C C O U N T S 2016 OUR YEAR Executive Management About Mirada Our products 2 3 4 REVIEW OF THE YEAR CEO Report 12 Strategic Report 16 CORPORATE GOVERNANCE Directors� report 18 Directors� Remuneration Report 20 FINANCIAL STATEMENTS Statement of Directors� Responsibilities 21 Independent Auditors� Report 22 Consolidated income statement 23 Consolidated statement of comprehensive income 24 Consolidated statement of changes in equity 24 Consolidated statement of financial position 25 Consolidated statement of cash flows 26 Notes to the consolidated financial statements 27 Company statement of financial position 51 Company statement of changes in equity 52 Company statement of cash flows 53 Notes to company financial statements 54 Our year / 1 EXECUTIVE MANAGEMENT JOSÉ LUIS VÁZQUEZ CEO Founder and CEO of Mirada PLC, and the Chairman of Spanish Association of Interactive Technology Companies (AEDETI). He holds a degree in Advanced Telecommunications Engineering and an MBA from IESE Business School. JOSÉ GOZALBO CTO José has been CTO of Mirada since its creation. He holds a degree in Computer Science and he has in depth experience in Software Development and Digital TV markets. NURIA LAHUERTA HEAD OF HUMAN RESOURCES In Mirada since 2011, Nuria has been recently appointed Head of Human Resources. She is a double graduate in Human Resources Management and History of Art and a skilled professional. GONZALO BABÍO CFO Prior to joining Mirada in 2015 as the CFO, he worked as Finance Director for both The Walt Disney Company (10 years) and Electronic Arts (10 years). He holds an EMBA from IESE Business School, among other titles. ANTONIO RODRÍGUEZ VP OF BUSINESS DEVELOPMENT He joined Mirada from Jazztel PLC, where he held the roles of Network Engineering Manager and Telco Platforms and OSS Manager. He holds a BSc in Telecommunications Engineering and an MBA from IE Business School. JAVIER PAÑIN VP SALES His previous experience includes working at AUNA during the launch of Spain’s ﬁrst digital cable TV platform. He also worked as Senior Sales Manager in Telefonica and as Global Sales Manager at ADB. BSc in Telecoms Engineering and BMD from IESE. 1 2 / E xecut iv e Ma nage me nt ABOUT MIRADA Mirada PLC is an AIM-quoted leading provider of products and services for global Digital TV Operators and Broadcasters. Founded in 2000 and led by Executive Chairman Javier Casanueva and Group CEO José Luis Vázquez, Mirada's core focus is on the ever-growing demand for 'TV Everywhere' for which it oﬀers a range of products, notably the 'Iris' multiscreen software platform, acclaimed by clients for its incomparable ﬂexibility and optimal time to market. Mirada prides itself on being a pioneer in the future of Digital TV Since its establishment sixteen years ago, Mirada's products In the wake of the ground-breaking deployment of its entire and solutions have been deployed by some of the biggest software solution for izzi Telecom, Mirada has exceeded the names in broadcasting including Telefonica, Sky, Virgin industry's expectations and has been invited to participate Media, BBC, ITV and most recently with Televisa, the largest in a number of bids for further Tier One projects. The media company in the Spanish-speaking world. Mirada has Company prides itself on being a pioneer in the future of also established partnerships with key players in the Digital Digital TV and is currently competing for most of the major TV world such as Conax and Ericsson. live projects in Latin America, while also building a pipeline in other promising regions including Asia-Paciﬁc and Eastern Europe. M I R A D A O F F I C E S A R O U N D T H E W O R L D S L O V E N I A U K U S A M E X I C O S P A I N U R U G U A Y I N D I A S I N G A P O R E 2 / E xecutive Management 2 About Mirada / 3 OUR PRODUCTS IRIS END-TO-END SOLUTION Mirada's seamless multiscreen solution for content consumption Mirada's Iris software solution provides clients' subscribers with a seamless and easy-to-use platform to discover and consume both traditional broadcast and internet-based content anytime, anywhere. The multiscreen software suite enables content consumption across TVs, tablets, smartphones and laptops, in addition to the provision of essential tools for clients such as audience measurement and content management. Incomparable ﬂexibility of product and optimal time to market. IRIS SERVICE DELIVERY PLATFORM (SDP) Powerful tool for both TV Operators and subscribers This extensive back-end product - the brain of our Iris ecosystem - is an accessible platform providing Operators with advanced tools to access conﬁguration settings, statistics, content management and many other essential features to suit their speciﬁc marketing needs. Our SDP also provides users with features such as content suggestions and smart search throughout the catalogue. Providing clients with desirable software management tools to suit their speciﬁc marketing needs. 4 / Our products INSPIRE UI Our state-of-the-art user experience Inspire is Mirada's exclusive user interface which enables a seamless content consumption experience across all platforms including smartphones, tablets and PCs. Developed with real-user live testing, our team of experts designed our user-centric Inspire UI to be both rich in high-end features and extraordinarily intuitive. Suitability and satisfaction even with the most demanding users, both on the level of usability and visual attractiveness. OVER THE TOP PLATFORM Advanced platform to enjoy content anytime, anywhere Over The Top refers to the ever-growing demand for content delivery on viewers' terms at the time, place and on the device of their choice…and this product does exactly that! Mirada's OTT platform enables viewers to enjoy their favourite content at any time on their preferred device (TVs, smartphones, tablets or laptops) and can work independently to the TV Operator's cable/DTH digital TV service. Providing a future-proof solution independent from traditional broadcasting. 4 / Our products Our products Our products / 5 xPLAYER Managing synchronised interactive content One of Mirada's ﬂagship products which manages red and green button interactivity on behalf of a channel. xPlayer allows viewers to interact eﬃciently with on-screen content (red button) in addition to scheduling recordings or reminders (green button). Managing essential viewer interactivity within multiple TV devices. OUR CLIENTS 6 / Our products 6 / Our prod uc ts Review of the year Corporate governance Financial statements HIGHLIGHTS OF THE YEAR PROJECTS Commercial launch of Movistar+ UI by Mirada Telefonica Group's Movistar, the biggest Pay TV operator in Spain, launched their new Pay TV oﬀering Movistar+ with an adapted version of Mirada's ﬂagship product - Inspire UI. This isn't the ﬁrst time that Telefonica has beneﬁtted from Mirada's solutions: in 2014, Telefonica Peru deployed Mirada's web and back-end products. Monterrey Iris platform performing above expectations in Monterrey, Mexico Mirada's solution deployed in February 2015 by Cablevision Monterrey (now fully owned by Televisa Group) has been installed to over 240,000 set-top boxes by the end of the FY 2016, performing above expectations of both the Board and the Client. Even though it wasn't until February 2015 that the full OTT solution was deployed inin Monterrey, the Video on Demand consumption was also above expectation, exceeding previous Operator's milestones. First commercial launch of Mirada’s Over-the-top platform In February 2016, Mirada celebrated the commercial launch of the over-the-top solution for Televisa Group in Mexico. It was the ﬁrst commercial launch of the Company’s OTT platform, which replaced an existing izzi product with software toenable customers to interact with live TV and catch-up TV content available on-the-go from smartphones, tablets and computers. This rollout not only provided an important reference point for Mirada, but is also expected to generate a signiﬁcant incremental revenue stream for the Company. 6 / Our products 6 / Our products Highlights of the year / 7 Contents / 7 Televisa Deal Post year end Mirada successfully embarked upon the full commercial rollout of its Iris Multiscreen software solution across ﬁve cable networks in Mexico for izzi Telecom, a commercial brand of Televisa, the world’s largest Spanish speaking TV network. This was the largest deployment in Mirada’s history, and in the history of the industry itself within Mexico. It was also The largest deployment in Mirada’s history and one of the biggest ever in the region an undertaking of huge complexity, the success of which with their initial supplier for the roll out of any future pays testament to Mirada’s considerable delivery updates, new components, new features and so on. For capabilities. Mirada was appointed by Televisa to act as the example, Mirada continues to deploy new services for its system integrator; co-ordinating multiple hardware and client Euskaltel, with which it has worked since 2003. software partners and managing a workforce of hundreds. The result is that izzi Telecom now oﬀers a The scale and complexity of the deployment combined with multiscreen platform with OTT capabilities which positions it Televisa’s high proﬁle both in the Latin America region and ﬁrmly ahead of its competitors within the Mexican market. internationally, provides a ﬁrst-class reference for Mirada. The deployment was accompanied by an extensive awareness in Latin America and is receiving numerous marketing campaign by Televisa, which is accelerating the proposals from potential partners wishing to integrate their acquisition of new subscribers and ultimately new license oﬀerings. These partnerships, along with the Company's fees to Mirada. In addition to the increased license fees salesforce, are proving to be the best way in which to resulting directly from the current deployment, Mirada generate new leads and Mirada is witnessing a growing Mirada has already built an excellent level of brand expects its relationship with Televisa to lead to further new pipeline of opportunities. business over the longer term. Typically clients remain 8 / Highli ghts of th e ye ar 8 / Our prod uc ts Review of the year Corporate governance Financial statements HIGHLIGHTS OF THE YEAR FINANCE CFO Gonzalo Babío appointed to the Board After spending the last 10 years as Finance Director at Walt Disney Company in Madrid, Gonzalo Babío joined Mirada at the end of FY15. In November 2015 he was appointed to the Board of Directors, to which he brings his broad expertise in addition to his valuable experience managing corporate ﬁnance. FINANCIAL FO REC A ST F Y16-1 9* *Equity R es e arch , Ju ly 2016. Al len b y Ca pit al Ltd . Re ve nu e Improved proﬁtability Revenue grew to £6.02 million (2015: £5.66 million), driven primarily by the signiﬁcant integration of Mirada’s product for the Televisa Group. Gross proﬁt margin also grew to £5.80 million (2015: £5.42 million) while adjusted EBITDA E BITDA Net Income remained predominantly consistent throughout the year at £1.50 million (2015: £1.54 million) resulting from a larger professional services component within the revenue mix. The Company generated £0.55 million (2015: -£1.12 million) in operating cash ﬂow. (£’00 0) 1 2, 00 0 1 0, 00 0 8,000 6,000 4,000 2,000 0 2016 201 7(e) 201 8(e) 201 9(e) HIGHLIGHTS OF THE YEAR STRATEGY AND PROSPECTS Positioning brand awareness Reinforced Sales Team The Televisa project has had an incredible eﬀect on Mirada's Mirada's sales force doubled in size and restructured brand awareness in terms of the Company's name becoming according to the functional strategy, organising the team widely recognised with positive associations in Latin not only by geographical regions but also by activity. Mirada America. It has also reinforced the brand across other currently counts with sales managers and local sales regions as a result of marketing activities including Mirada's representatives, the latter being external agents with participation in the most prestigious trade shows in the extensive networks of contacts within the region's industry industry in addition to targeted content strategy. These in which they operate. Contracts with our sales activities are potentiated by Mirada's regional sales force representatives are based heavily on commission, with the and worldwide network of partners. Brand awareness is main focus on bringing in new accounts. crucial to Mirada's expansion strategy as bidding opportunities tend to be announced ﬁrst and foremost to the companies that the Operator takes into consideration. 8 / Our products Highlights of the year / 9 MIRADA IN THE MARKET Pay TV Overview The pay TV industry is one of the fastest-growing sectors in the world. According to Business Wire (2015), the worldwide industry is expected to reach 1.1 billion subscribers and generate US$307.5 billion in service revenue by 2020. As a result of such high growth expectations in the pay TV sector, particularly across the emerging markets of Latin America and Asia Paciﬁc, Operators are facing tough competition both regionally and globally. In addition, increasingly demanding subscribers are putting pressure on Operators to make platforms more ﬂexible while remaining one step ahead with service delivery capabilities. Mirada is fully poised to provide Operators with a future-proof solution to such pressures, not only with the constant innovations and updates to its services but also with the unparalleled ﬂexibility of its products and optimal time to market. LATIN AMERICA In response to the rising standard of living for lower-income households fueling the demand for Pay TV, along with the adoption of technologies and infrastructure improvements across the continent, the signiﬁcant opportunity for growth within the LatAm market is sparking excitement amongst Pay TV Operators. Following the impressive deployment of its ﬂagship ‘Iris’ product across the Mexican territory for Televisa Group’s izzi Telecom, Mirada has exceeded the industry’s expectations of its capability and technology and is currently competing for most of the major live projects across Latin America. Growth of LATAM Pay TV subscribers @Di gital T V Re s ea rch , 2 016. +20% 69m 2015 84m 2021 10 / Highli gh ts of the y e ar Review of the year Corporate governance Financial statements Worldwide industry expected to reach 1.1 billion subscribers and generate US$307.5 billion in service revenue by 2020 3m+ 2015 19m+ 2021 SVoD subscribers in Eastern Europe @Digital T V Research, 2016. EASTERN EUROPE While the Pay TV market continues to grow across Asia-Paciﬁc and LatAm, Operators are also turning their attention to the highly immature OTT TV and video market of Eastern Europe. The region, within which the digitalisation of cable infrastructure and service bundling are well and truly underway, presents the OTT market with exceptional room for growth over the coming years. This suggests an important and equally promising opportunity for Mirada and its state-of-the-art OTT platform. El Economista (2016) recognised that Televisa's deployment of Mirada's software solution in Mexico has been 'forcing competitors to start designing other innovate proposals' in response, portraying how Mirada is perfectly positioned and prepared to serve the Eastern European market with its unrivalled OTT platform. 10 / Highlights of the year Highlights of the year / 11 ASIA-PACIFIC As broadband infrastructure development continues to soar across the Asia-Paciﬁc region, key players in the Pay TV industry are setting their sights on the increasingly promising APAC market which is expected to be the fastest growing Pay TV market in the years to come. In response to the ground-breaking deployment of Mirada’s Iris software solution in Mexico, Proactive Investors (2016) considers Mirada to be ‘well-positioned to build a pipeline’ across the APAC region. With the recent openings of our sales oﬃces in India and Singapore, Mirada stands in a very promising position to win bids for future Tier 1 and Tier 2 clients across the APAC market. @ABI Re search , 2 015. CEO REPORT JOSÉ LUIS VÁZQUEZ This year saw the consolidation of our ﬂagship product, Iris, across one of the largest Digital TV deployments that has taken place in Latin America within recent years Overview I am pleased to present the Group’s ﬁnancial results for the percentage of our turnover in the present ﬁnancial year year ended 31 March 2016. This year saw the consolidation (FY2017), leading to an expected increase in margins and of our ﬂagship product, Iris, across one of the largest improved cash ﬂows. Digital TV deployments that has taken place in Latin America within recent years. We were able to integrate our Mirada was also able to increase its capabilities in three technology across all of the Televisa cable networks, now main areas during the year: (i) operationally, through operating under the Izzi brand, thereby greatly reinforcing improved processes and technology, enabling us to cope our relationship with our largest customer. Mirada was with highly complex projects; (ii) commercially, with an also able to demonstrate the eﬀectiveness of its technology extended network of partners and local resellers expanding through its ﬁrst Iris Inspire deployment in Monterrey. No our sales reach beyond Latin America and Western Europe; technical issues have been experienced with the Monterrey and (iii) in our marketing activities, with our ﬂagship deployment and its performance is ahead of the Board’s product Iris commanding a greater presence at important expectations. trade events. The Group slightly increased revenues for the year, which Once again, I would like to thank all our stakeholders for were concentrated around the provision of professional their eﬀorts and support; our team, who were resilient services relating to the conclusion of the Televisa project. throughout all of the challenges on our largest deployment While the key performance indicators for the year under to date; our shareholders, who have continuously review were comparable to the previous year, we expect to demonstrated their support for our vision; and our see an improvement in our revenue mix going forward, customers and partners, who inspire us to continue growing given that the full commercial rollout across the Televisa as a leading player in the Digital TV market. cable networks commenced post year end. Professional services should remain strong due to the extended functionalities and customisation required by our customers, but subscriber-based licence fees should represent a higher 12 / CEO R epor t Review of the year Corporate governance Financial statements Trading review The priorities for the Company over the year were to ensure the successful deployment of our products over the global Izzi Telecom network, to support operating needs of prior deployments and to achieve new references in the market. As system integrators for the full Izzi TV project we are proud to have led a very complex project involving hundreds of people and a large number of partners; including software vendors, set-top box manufacturers and content providers among others. The roll out at Monterrey used the R4 version of our Iris service delivery platform (SDP) We are proud to have led a very complex project involving hundreds of people and a large number of partners product, only deployed initially on set-top boxes. The full roll Since ﬁrst deploying its technology in Cablevision Monterrey out, extended across ﬁve diﬀerent cable networks, used the in February 2015, Mirada had by 31 March 2016 installed its newer R6 version of our Iris SDP product. This version solutions into more than 240,000 set-top-boxes, includes Over the Top (OTT) functionalities, which allow representing 150,000 subscribers. This cable network, content to be seamlessly delivered to tablets, computers totalling nearly 500,000 subscribers (and now fully and smartphones, and allows handheld devices to be used as controlled by the Televisa Group) served as a good test-bed remote controls for the TV. In addition, it provides links to for the performance of our user interface, even without the major content providers such as Fox and HBO. This was a full OTT capabilities available with the latest version of our signiﬁcant technological achievement, and has been solution. Video On Demand consumption was also ahead of praised by our partners. Following this successful expectations, as a result of easier content discovery and deployment, Izzi tv is ahead of any of the competitors in the our improved service experience. Mexican market in terms of user experience and multiscreen integration. A main focus for Mirada’s management team has been to develop a healthy pipeline from diﬀerent parts of the world. In September, the Company announced the launch of the new Movistar+ user interface designed by Mirada. This was an early success with the Telefónica Group in Spain, which enhanced our reputation with this customer. Mirada was also invited to participate in bids for other signiﬁcant Tier One projects during the period. In addition, Mirada has been able to demonstrate its capabilities at a larger number of events during the year. These include the IBC show in Europe, NAB in the United States and more recently the Broadcast Asia show. Our partners, including manufacturers, conditional access providers and content delivery network providers, now have our Iris technology fully integrated into their products (partially as a result of the work on the Televisa project). As a result, they are showcasing our user experience to their customers all over the world and are generating new leads. This network, alongside our recent agreements with local resellers and our increased sales and marketing presence, give us conﬁdence that we will deliver new contract wins during the year. 12 / CEO Report CEO Report / 13 Appointments We were delighted that our CFO, Gonzalo Babío, joined our Board of Directors during the period. Gonzalo is an experienced professional and is proving to be an excellent addition to our Board. In October, Rafael Martín sadly decided to step down after a long period serving as a Non-Executive Director to pursue other business interests. The Board is grateful for his valuable contribution over the years. During the period Newgate Communications was appointed as our new Financial PR advisor and post year-end, Allenby Capital was appointed as our new Nominated Adviser and Broker. Financial overview Revenue grew to £6.02 million (2015: £5.66 million), driven primarily by the signiﬁcant product integration for the Televisa Group. In our mobile cashless parking payment division, revenues continued to grow steadily to £0.54 million (2015: £0.43 million). Gross proﬁt margin also grew to £5.80 million (2015: £5.42 million). Adjusted EBITDA for the year remained broadly constant at £1.50 million (2015: We are currently competing for most of the major live projects in the Latin America region £1.54 million) resulting from the diﬀerent revenue mix with as a result of increased amortisation and provisions. Net a larger professional services component. The Company also Debt (see note 17) rose to £3.48 million (2015: £2.61 million) booked a potentially irrecoverable sales tax charge on its as a result of increased product investment, delays in the Wapping lease of £150,000. Amortisation charges increased full Televisa commercial roll out and currency exchange to £1.63 million from £1.19 million, due to increased product factors. Long term interest-bearing loans and borrowings investment. increased 32% to £1.77 million (2015: £1.35 million) and short term borrowings increased to £2.42 million (2015: The Group posted a net loss for the year of £0.40 million £1.47 million). Trade receivables decreased from £2.19 compared to a loss of £0.18 million in the prior year, mainly million to £1.43 million as invoices related to the Monterrey deployment raised at the end of the previous ﬁnancial year matured. Cash at bank increased to £0.71 million from £0.21 million, with additional invoice discounting facilities of £2.28 million available and unused short-term credit lines of £0.88 million available at the end of March 2016. In November 2015, the Company completed an equity fundraising of £1.5 million (before expenses), which provided then working capital required for the ﬁnal stage of the Televisa deployments and strengthened the balance sheet. Revenue 2016 6.02 (£m) Revenue 2015 5.66 (£m) 14 / CEO R epor t Current Trading and Outlook The Company continues to be a successful contender in the market for advanced digital television user experience propositions, especially in Latin America. We are competing for most of the major live projects in the region, and are conﬁdent that our product quality and proven expertise will be key strengths in the decision-making process. The reference provided by our major project with Televisa, with its demonstrable eﬃciency ratios and higher rates of consumption of Video-ondemand, should make a positive impact on our negotiations with new customers. Mirada had been fully prepared for the Televisa roll out since the deployment of the solution in Monterrey in February 2015. However, delays resulting from the integration of the Televisa ﬁve cable networks under the Izzi brand shifted the balance of the Company revenue mix for the full year towards professional services associated with additional change requests from the customer. Review of the year Corporate governance Financial statements We are extremely well-positioned within the markets to convert our growing pipeline into concrete deals cutting-edge functionalities as the market demands. As of today, we consider Iris Inspire to be a leading proposition, at least as strong as any major competitor, and the Board believes that Iris Inspire’s development was achieved at a fraction of the cost that our competitors have spent on their oﬀerings. We therefore believe that we are extremely well positioned within the markets in which we operate, and are conﬁdent that we will increasingly be able to convert our growing pipeline into concrete deals. I would like to thank all of our stakeholders who have helped us build Mirada to its present position, in which it has proven its ability to deliver on a major deal. We now need to replicate this with new business opportunities, and this will be our top priority for the foreseeable future. José Luis Vázquez Chief Executive Oﬃcer 15 July 2016 Now we are at a new stage in our relationship with Televisa and the Board believes that we will increasingly beneﬁt from subscriber-based license fees as our product is rolled out across their networks. In addition, Televisa will continue to require support, maintenance and additional professional services. Meanwhile, our partners and local representatives are building the pipeline in other regions, especially South East Asia and Eastern Europe. In addition, we continue to open new reseller agreements in unexplored areas, recognising that on-the-ground representation is essential in most of our new target markets. The Company now has a complete and exceptional suite of multiscreen products, which we will continue to develop, introducing new 14 / CEO Report CEO Report / 15 Eastern Europe and South East Asia market. The aim is to increase the number of customers being charged subscriber- based licence fees, as these revenues command higher margins and, as long as the customer’s subscriber base is growing, Mirada will continue to earn licence fees even from projects which were completed several years previously. The main key performance indicator (“KPI”) used by management in assessing the success of this strategy is the growth in Mirada’s licence revenues, which will be led by the progress of our recent rollouts and any potential new licence-based contract wins. Reference deployments are very important in this market, and winning reference contracts has been and is an integral part of our strategy. The Group will need to continue investing in research and development in order to provide the required functionalities in our products to satisfy the cutting-edge demands from our customers, while maintaining a fair balance between potential growth and profitability. Our continued investment in Iris is essential in ensuring a proper implementation of this strategy. STRATEGIC REPORT Business model The Company’s main activity is the provision of software for the Digital TV market. Our major customers are Digital TV platforms, mostly Pay TV service providers. We provide the technology needed to facilitate the final user’s interaction with the devices they provide, including digital TV decoders (set-top boxes), tablets, smartphones and computers. Our major products are our navigational software proposition, Iris, including our Inspire user interface, and xplayer, our broadcasting synchronisation technology. Our customers need the services of a User Interface (“UI”) provider such as Mirada when creating a new Digital TV service or replacing/upgrading an existing one. The UI provider interacts with the device vendor (in the case of set- top boxes), the encryption technology vendor (Conditional Access (“CA”) vendor) for the protection of content, and the customer systems (billing and provisioning systems). For the larger customers, this is usually a capital expenditure model per final subscriber or household, where the set-top box vendor represents the most significant investment, and licence fees are paid to the software providers for the use of CA licences and UI licences. The Group tends to interact with the customer in the early stages of their decision-making process, and help in the selection of the proper ecosystem. Our expertise is widely recognised in the industry, and we provide a value that goes beyond our actual UI proposition. Our business model is to charge a one-off subscriber or device related fee, where the Pay TV platform pays the Group for any new deployment of our products. As a result of this Mirada’s licence fees increase as our clients’ subscribers increase. Additionally, the customer pays for the set-up fees (adaptation and integration of our technology) and for any additional bespoke developments (on a professional services basis) or product enhancements (on a subscriber or device basis). For small customers, Mirada can also provide a financed model with recurrent monthly subscriber-based revenues. A customer using Mirada’s technology would also pay annual support and maintenance fees. Strategy The Group’s strategy is to extend its presence in the Digital TV markets, focusing on those markets with higher potential growth rates, for example the Latin American, 16 / Strateg ic Re po rt Review of the year Corporate governance Financial statements Development, performance and position of business Development, performance and position of business have been discussed in the CEO report, with key items on page 12. Principal risks and uncertainties Information technology Data security and business continuity pose inherent risks for the Group. The Group invests in, and keeps under review, formal data security and business continuity policies. Intellectual property There are certain markets in which there are instances of disputes regarding intellectual property involving technology The key business risks affecting the Group are set out below. companies, including the Digital TV market. While the Group Dependence on people The Group recognises the value of the commitment of its key management personnel and is conscious that it must keep appropriate reward systems, both financial and motivational, in place to minimise this area of risk. Our share option scheme internally generates its products and software and strongly believes that it has not infringed any third party intellectual property, management do recognise that due to the nature of the technology market there will always be a risk of other corporations potentially making claims regarding intellectual property/patent infringements. and investment in training are examples of this. There have been no changes in the key executive management team in Approval the last five years, excepting the Finance Director. This strategic report was approved in behalf of the Board on 15 July 2016 and signed on its behalf. José-Luis Vázquez Chief Executive Officer 15 July 2016 Digital TV and Broadcast markets The sectors in which the Group operates may undergo rapid and unexpected changes. It is possible, therefore, that competitors will develop products that are similar to those of the Group, or its technology may become obsolete or less effective. The Group’s success depends upon its ability to enhance its products and technologies and develop and introduce new products and features that meet changing customer requirements and incorporate technological advances on a timely and cost effective basis. As a result, the Group continues to invest significantly in research and development. 16 / Strategic Report Strategic Report / 17 DIRECTORS‘ REPORT Review of business and future developments to continue investing in its product base and to continue in Reviews of the business, its results, future direction and key performance indicators are included in the Chief Executive Officer’s Report and Strategic Report on pages 12 to 16. operational existence for the foreseeable future. For this reason, the directors continue to prepare the consolidated financial statements on the going concern basis. Dividends No dividend is declared in respect of the year (2015: £nil). Financial risk management objectives and policies The Group’s activities expose it to a number of financial risks including capital risk, credit risk, foreign currency exchange risk, interest rate risk and liquidity risk. The management of financial risk is governed by the Group’s policies approved by the board of directors, which provide written principles to manage these risks. See note 19 for further details on the Group’s financial instruments. Credit risk The Group has some exposure to credit risk from credit sales. It is the Group’s policy to assess the credit risk of new customers before entering into contracts. Historically, as Mirada’s customers are mainly broadcasters and medium/ large telecommunication companies, bad debts across the Group have been low. Directors’ and officers’ indemnity insurance The Group has taken out an insurance policy to indemnify the directors and officers of the company and its subsidiaries in respect of certain liabilities which may attach to them in their capacity as directors or officers of the Group, so far as permitted by law. This policy remained in force throughout the year and remains in place at the date of this report. Directors The directors who held office during the year are given below: Executive directors Mr José-Luis Vázquez Chief Executive Officer Mr Jose Gozalbo Mr Gonzalo Babío Appointed 24 November 2015 Non-executive directors Mr Javier Casanueva Non- Executive Chairman Mr Rafael Martín Sanz Resigned 14 October 2015 Foreign currency exchange risk The majority of cash at bank is held in Sterling and Euro accounts. There are also trade balances in these currencies. As these currencies are now the Group’s functional Mr Francis Coles Mr Matthew Earl Significant shareholdings currencies, the Group has not entered into any forward At 31 March 2016 the following shareholders held, directly exchange contracts in relation to these currencies. The or indirectly, two per cent or more interests in the issued Group is increasing signing more sales contracts in US dollars share capital of the Company: and is currently investigating ways of reducing the risk on any potential future fluctuations in the US dollar exchange rate. Any foreign exchange gains or losses on trading activities are recognised in the consolidated income statement. The company is aware that the UK decision to leave the Kaptungs Ltd Chase Nominees Ltd Number of ordinary £1 shares 30,782,837 10,639,183 European Union may affect the intercompany trading Hargreave Hale Nominees Ltd 27,394,560 between the different subsidiaries. We will adapt our internal Danehill Corporate Ltd policies accordingly if required. In the short term, exchange Commerz Nominees Ltd rates are likely to increase the GBP denominated revenues, as the primary cash inflows for the Group are based in US Charles Stanley Amati dollars. Capital risk The directors believe that the Group has both enough resources and access to equity funding and bank lending Barclayshare Nominees Ltd Nomura Holdings PLC 6,000,000 4,840,647 4,661,744 5,733,137 6,395,505 4,068,316 Percentage of issued ordinary share capital 22.14% 7.65% 19.70% 4.31% 3.48% 3.35% 4.12% 4.60% 2.93% 18 / Di rect or s‘ Re por t Review of the year Corporate governance Financial statements Related Party transactions Auditors On 24 November 2015, the Company completed a placing Each of the persons who are directors at the date of approval which raised gross proceeds of £1.47 million. Pursuant of this report confirms that: to the AIM Rules for Companies, certain related parties participated in that fundraising as set out below, which were 1. so far as the directors are aware, there is no relevant deemed related party transactions under the AIM Rules for audit information of which the auditors are unaware; and Companies: Name of director/shareholder José Luis Vázquez Francis Coles José Gozalbo Sidro Antonio Rodríguez Javier Peñín Matthew Earl Chase Nominees Hargreave Hale Participation in the placing £20,000 £10,000 £10,000 £10,000 £10,000 £10,000 £302,582 £379,416 2. the directors have taken all the steps that they ought to have taken as directors in order to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information. This confirmation is given and should be interpreted in accordance with the provisions of s418 of the Companies Act 2006. BDO LLP have expressed their willingness to continue in office as auditors and a resolution to reappoint them will be proposed at the forthcoming Annual General Meeting. Events since the reporting date Approved by the Board of Directors and signed on behalf of No significant events have occurred since the reporting date. the Board: José-Luis Vázquez Chief Executive Officer 15 July 2016 Directors‘ Report / 19 DIRECTORS‘ REMUNERATION REPORT The Remuneration Committee decides the remuneration policy that applies to executive directors and senior management. The Remuneration Committee meets as necessary in order to consider and set the annual remuneration for executive directors and senior managers, having regard to personal performance and industry remuneration rates. In determining that policy, it considers a number of factors including: • • • the basic salaries and benefits available to executive directors and senior management of comparable companies; the need to attract and retain directors and others of an appropriate calibre; and the need to ensure all executives’ commitment to the success of the Group. Non-executive directors are appointed on contracts with a three-month notice period and may be awarded fees as determined by the Board. Executive directors are appointed on contracts with a 12-month notice period. Directors’ Remuneration The following table summarises the remuneration receivable by the directors for the year ended 31 March 2016. Salary & fees £’000 Benefits £’000 Share-based payment £’000 Year ended 31 March 2016 £’000 Year ended 31 March 2015 £’000 209 126 83 16 30 30 30 524 2 8 3 — — — — 13 8 12 — 2 3 — 2 27 219 146 86 18 33 30 32 564 285 117 — — 30 14 30 476 Executive José-Luis Vázquez Jose Gozalbo Gonzalo Babío (i) Non-executive Rafael Martín Sanz (ii) Javier Casanueva Mathew Earl Francis Coles (i) (ii) appointed on 24 November 2015 resigned on 14 October 2015 The directors participation in the company’s share option plan is detailed in Note 22, page 49 and, as confirmed on Note 7, page 36, there were no contributions paid into a pension scheme for any director. 20 / Dire ctors‘ R em un e rati on Re po rt STATEMENT OF DIRECTORS’ RESPONSIBILITIES Directors’ responsibilities The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the group and company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the directors must not The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the requirements of the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. Website publication approve the financial statements unless they are satisfied The directors are responsible for ensuring the annual report that they give a true and fair view of the state of affairs of and the financial statements are made available on a website. the group and company and of the profit or loss of the Group Financial statements are published on the company’s for that year. The directors are also required to prepare website in accordance with legislation in the United financial statements in accordance with the rules of the Kingdom governing the preparation and dissemination of London Stock Exchange for companies trading securities on financial statements, which may vary from legislation in the Alternative Investment Market. other jurisdictions. The maintenance and integrity of the In preparing these financial statements, the directors are directors’ responsibility also extends to the ongoing integrity required to: of the financial statements contained therein. company’s website is the responsibility of the directors. The • select suitable account ing policies and then apply them consistently; • make judgements and accounting estimates that are reasonable and prudent; • state whether they have been prepared in accordance with IFRSs as adopted by the European Union, subject to any material departures disclosed and explained in the financial statements; • prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business. Statement of Directors‘ Responsibilities / 21 Review of the year Corporate governance Financial statements INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF MIRADA PLC We have audited the financial statements of mirada • the group financial statements have been properly plc for the year ended 31 March 2016 which comprise prepared in accordance with IFRSs as adopted by the consolidated income statement, consolidated statement European Union; of comprehensive income, consolidated statement of changes in equity, consolidated statement of financial • the parent company’s financial statements have been position, consolidated statement of cash flows, the company properly prepared in accordance with IFRS as adopted by statement of financial position, the company statement of the European Union and as applied in accordance with changes in equity, the company statement of cash flows the provisions of the Companies Act 2006; and and the related notes. The financial reporting framework that has been applied in their preparation is applicable • the financial statements have been prepared in law, International Financial Reporting Standards (IFRSs) as accordance with the requirements of the Companies adopted by the European Union and, as regards the parent Act 2006. company financial statements, as applied in accordance with the provisions of the Companies Act 2006. Opinion on other matters prescribed by the This report is made solely to the company’s members, as a body, in accordance with sections Chapter 3 of Part 16 of the Companies Act 2006. 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 for the opinions we have formed. Respective responsibilities of directors and auditors As explained more fully in the statement of directors’ responsibilities, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Financial Reporting Council’s (FRC’s) Ethical Standards for Auditors. Scope of the audit of the financial statements A description of the scope of an audit of financial statements is provided on the FRC’s website at www.frc.org.uk/ auditscopeukprivate. Opinion on financial statements In our opinion: Companies Act 2006 In our opinion the information given in the strategic report and directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements. Matters on which we are required to report by exception We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: • adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or • the parent company financial statements are not in agreement with the accounting records and returns; or • certain disclosures of directors’ remuneration specified by law are not made; or • we have not received all the information and explanations we require for our audit. Iain Henderson (senior statutory auditor) For and on behalf of BDO LLP, statutory auditor London United Kingdom 15 July 2015 • the financial statements give a true and fair view of the BDO LLP is a limited liability partnership registered in England state of the group’s and the parent company’s affairs as and Wales (with registered number OC305127). at 31 March 2016 and of the group’s loss for the year then ended; 22 / Ind ep enden t Au di to rs ‘ R ep o rt CONSOLIDATED INCOME STATEMENT Year ended 31 March 2016 Revenue Cost of sales Gross profit Depreciation Amortisation Share-based payment charge Other administrative expenses Total administrative expenses Operating (loss)/profit Finance income Finance expense Loss before taxation Taxation Loss for year Loss per share Loss per share for the year – basic & diluted The notes on pages 27 to 50 form part of these financial statements Notes 5 13 12 22 6 8 9 10 Year ended 31 March 2016 £’000 Year ended 31 March 2015 £’000 6,019 (221) 5,798 (19) (1,635) (54) (4,449) (6,157) (359) 5 (475) (829) 425 (404) 5,657 (234) 5,423 (21) (1,187) (61) (3,869) (5,138) 285 38 (436) (113) (62) (175) Notes Year ended 31 March 2016 £’000 Year ended 31 March 2015 £’000 11 (0.003) (0.002) Consolidated Income Statement / 23 Review of the year Corporate governance Financial statements CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Year ended 31 March 2016 Loss for the year Other comprehensive loss: Currency translation differences Total other comprehensive profit/(loss) Total comprehensive loss for the year Year ended 31 March 2016 £’000 Year ended 31 March 2015 £’000 (404) 303 303 (101) (175) (225) (225) (400) CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Year ended 31 March 2016 Balance at 1 April 2015 Loss for the year Movement in foreign exchange Total comprehensive loss for the year Share based payment Issue of shares Share issue costs Balance at 31 March 2016 Balance at 1 April 2014 Loss for the year Movement in foreign exchange Total comprehensive loss for the year Share based payment Issue of shares Share issue costs Balance at 31 March 2015 Share capital £’000 1,141 Share premium account £’000 8,748 – – – – 250 – 1,391 Share capital £’000 861 – – – – – – – – 1,250 (139) 9,859 Share premium account £’000 5,776 – – – – 280 – 1,141 3,220 (248) 8,748 Foreign exchange reserve £’000 258 – 303 303 – – – Merger reserves £’000 Retained earnings £’000 Total £’000 2,472 (3,643) 8,976 – – – – – – (404) – (404) 54 – – (404) 303 (101) 54 1,500 (139) 561 2,472 (3,993) 10,290 Foreign exchange reserve £’000 483 – (225) (225) – – – Merger reserves £’000 Retained earnings £’000 Total £’000 2,472 (3,529) 6,063 – – – – – – (175) – (175) 61 – – (175) (225) (400) 61 3,500 (248) 258 2,472 (3,643) 8,976 The notes on pages 27 to 50 form part of these financial statements. 24 / Consol idated State me n t o f C o mp reh en siv e I n c o me CONSOLIDATED STATEMENT OF FINANCIAL POSITION 31 March 2016 Review of the year Corporate governance Financial statements Goodwill Other Intangible assets Property, plant and equipment Deferred Tax Assets Other Receivables Non-current assets Trade & other receivables Cash and cash equivalents Current assets Total assets Loans and borrowings Trade and other payables Provisions Current liabilities Net current assets Total assets less current liabilities Interest bearing loans and borrowings Other non-current liabilities Non-current liabilities Total liabilities Net assets Issued share capital and reserves attributable to equity holders of the company Share capital Share premium Other reserves Retained losses Equity Notes 12 12 13 10 14 14 24 16 15 17 17 17 20 21 21 21 31 March 2016 £’000 6,946 3,890 94 395 191 11,516 3,839 714 4,553 16,069 (2,419) (1,570) – (3,989) 564 12,080 (1,772) (18) (1,790) (5,779) 10,290 1,391 9,859 3,033 (3,993) 10,290 31 March 2015 £’000 6,946 2,843 41 543 — 10,373 3,565 206 3,771 14,144 (1,467) (1,790) (500) (3,757) 14 10,387 (1,345) (66) (1,411) (5,168) 8,976 1,141 8,748 2,730 (3,643) 8,976 These financial statements were approved and authorised for issue on 15 July 2016. Signed on behalf of the Board of Directors José-Luis Vázquez Chief Executive Officer The notes on pages 27 to 50 form part of these financial statements. Consolidated Statement of Fina ncial Position / 25 CONSOLIDATED STATEMENT OF CASH FLOWS Year ended 31 March 2016 Cash flows from operating activities Loss after tax Adjustments for: Depreciation of property, plant and equipment Amortisation of intangible assets Share-based payment charge Profit on disposal of fixed assets Finance income Finance expense Taxation Operating cash flows before movements in working capital Increase in trade and other receivables Decrease in trade and other payables Decrease in defered tax asset Decrease in provisions Net cash (used in)/generated from operating activities Cash flows from investing activities Interest and similar income received Cash payments receipts for financial investment assets Receipts for financial investment assets Proceeds from disposal of property, plant and equipment Purchases of property, plant and equipment Purchases of other intangible assets Net cash used in investing activities Cash flows from financing activities Net payment to settle derivative Interest and similar expenses paid Issue of share capital Costs of share issue Loans received Repayment of loans Net cash from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Exchange losses on cash and cash equivalents Cash and cash equivalents at the end of the year Cash and cash equivalents comprise cash at bank less bank overdraft The notes on pages 27 to 50 form part of these financial statements. Notes 13 12 13 12 24 24 Year ended 31 March 2016 £’000 Year ended 31 March 2015 £’000 (404) (175) 19 1,635 54 (1) (5) 475 (425) 1,348 (464) (27) 191 (500) 548 5 – – 1 (73) (2,343) (2,410) – (475) 1,500 (139) 2,525 (962) 2,449 587 206 (79) 714 21 1,187 61 (11) (38) 436 62 1,543 (2,144) (444) – (76) (1,121) 8 (132) 23 11 (29) (1,795) (1,914) (121) (420) 3,500 (248) 1,254 (570) 3,395 360 (150) (4) 206 26 / Consol idated State me n t o f C ash Fl o ws NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2016 Review of the year Corporate governance Financial statements 1. General information Mirada plc is a company incorporated in the United Kingdom. The address of the registered office is 68 Lombard Street, London, EC3V 9LJ. The nature of the Group’s operations and its principal activities are the provision and support method of accounting. When the purchase method of accounting is used the results of subsidiary undertakings are included from the date of acquisition. Business combinations of products and services in the Digital TV and Broadcast The acquisition of subsidiaries or trade and assets, is markets. 2. Significant accounting policies Basis of accounting These Group financial statements have been prepared in accordance with International Financial Reporting Standards, International Accounting Standards and Interpretations issued by the International Accounting Standards Board as adopted by European Union (“IFRSs”) and with those parts of the Companies Act 2006 applicable to companies preparing their accounts under IFRSs. Going concern policy The directors have prepared a cash flow forecast covering a period extending beyond 12 months from the date of these financial statements. The forecast contains certain assumptions about the performance of the business. These assumptions are the directors’ best estimate of the future development of the business, including consideration of cash reserves required to support working capital and its new growth initiatives. Based on this cash flow forecasts, directors continue to adopt the going concern basis of accounting in preparing the annual financial statements. Basis of consolidation accounted for using the purchase method. The cost of the acquisition is measured at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity instruments issued or to be issued, by the Group in exchange for control of the acquiree, plus any costs directly attributable to the business combination. The acquiree’s identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 are recognised at their fair value at the acquisition date. There have been no business combinations since the introduction of IFRS3(R). Goodwill arising on acquisition is recognised as an asset and initially measured at cost and is accounted for according to the policy below. Goodwill Goodwill represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets, intangible fixed assets and liabilities of a subsidiary, or acquired sole trade business at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. On disposal of a subsidiary the attributable amount of The consolidated financial statements incorporate the goodwill is included in the determination of the profit or loss financial statements of the Company and entities controlled on disposal. by the Company (its subsidiaries) made up to 31 March 2016. For the purpose of impairment testing, goodwill is allocated Where the company has control over an investee, it is to each of the Group’s cash-generating units expected classified as a subsidiary. The company controls an investee if to benefit from the synergies of the combination. Cash- all three of the following elements are present: power over generating units to which goodwill has been allocated are the investee, exposure to variable returns from the investee, tested for impairment annually, or more frequently when and the ability of the investor to use its power to affect those there is an indication that the unit may be impaired. If the variable returns. Control is reassessed whenever facts and recoverable amount of the cash-generating unit is less than circumstances indicate that there may be a change in any of the carrying amount of the unit, the impairment loss is these elements of control. allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit Other than detailed below, the financial statements pro-rata on the basis of the carrying amount of each asset incorporate the results of Mirada Plc and all its subsidiary in the unit. Goodwill is allocated to cash generating units or undertakings as at 31 March 2016 using the purchase groups of cash generating units. Notes to the Group Financial Statements / 27 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2016 – continued 2. Significant accounting policies – continued • The availability of adequate technical, financial and other Other intangible assets Intangible assets with a finite useful life represent items which have been separately identified under IFRS 3 arising in business combinations, or meet the recognition criteria of IAS 38, “Intangible Assets”. Intangible assets acquired as part of a business combination are initially recognised at their fair value and subsequently amortised on a straight line basis over their useful economic lives. Intangible assets that meet the recognition criteria of IAS 38, “Intangible Assets” are carried at cost less amortisation and any impairment losses. Intangible assets comprise of completed technology, acquired software, capitalised development costs and goodwill. Amortisation of other intangible assets is calculated over the following periods on a straight line basis: Completed technology – over a useful life of 4 years Deferred development costs – over a useful life of 3 to 4 years The amortisation is charged to administrative expenses in the consolidated income statement. Completed technology relates to software and other technology related intangible assets acquired by the Group from a third party. Deferrred development costs are internally-generated intangible assets arising from work completed by the Group’s product development team. Internally-generated intangible assets – research and development expenditure resources to complete the development and to use or sell the intangible asset. • Its ability to measure reliably the expenditure attributable to the intangible asset during its development. If a development project has been abandoned, then any unamortised balance is immediately written off to the income statement. Where no internally-generated intangible asset can be recognised, development expenditure is recognised as an expense in the period in which it is incurred. The amortisation is charged to administrative expenses in the consolidated income statement. Impairment of non current assets excluding deferred tax assets At each reporting date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating Any internally-generated intangible asset arising from the unit) is estimated to be less than its carrying amount, the Group’s development projects are recognised only if all of carrying amount of the asset (cash-generating unit) is the following conditions are met: reduced to its recoverable amount. An impairment loss is recognised in the impairment of intangible assets line in the • The technical feasibility of completing the intangible consolidated income statement as an expense immediately. asset so that it will be available for use or sale. • The intention to complete the intangible asset and use or carrying amount of the asset (cash-generating unit) is Where an impairment loss subsequently reverses, the sell it. • The ability to use or sell the intangible asset. increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash- • How the intangible asset will generate probable future generating unit) in prior periods. A reversal of an impairment economic benefits. Among other things, the Group can loss is recognised as income immediately. demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or, if it Goodwill impairments are not reversed. is to be used internally, the usefulness of the intangible asset. 28 / Note s to the Gro u p Fi na nc ial Sta te me n ts NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2016 – continued Review of the year Corporate governance Financial statements Property, plant and equipment Property, plant and equipment is stated at cost less accumulated depreciation and any impairment in value. Depreciation Depreciation is provided on all property, plant and equipment, other than freehold land, at rates calculated to write off the cost, less estimated residual value based on current prices, of each asset evenly over its expected useful life, as follows: Financial instruments issued by the Group are treated as equity only to the extent that they do not meet the definition of a financial liability. The Group’s ordinary shares are classified as equity. When new shares are issued, they are recorded in share capital at their par value. The excess of the issue price over the par value is recorded in the share premium reserve. Incremental external costs directly attributable to the issue of new shares (other than in connection with a business combination) are recorded in equity as a deduction, net of – Office & computer equipment 33.3% per annum tax, to the share premium reserve. – Short-leasehold improvements 10% per annum Bank Borrowings The carrying values of property, plant and equipment are reviewed for impairment if events or changes in circumstances indicate the carrying value may not be recoverable. The asset’s residual values, useful lives and methods are reviewed, and adjusted if appropriate, at each financial period end. Financial instruments Interest-bearing bank loans and overdrafts are initially recorded at fair value less direct issue costs. Finance charges are accounted for on an accruals basis in the income statement using the effective interest rate method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise. Trade payables Financial assets and financial liabilities are recognised on the Group’s balance sheet at fair value when the Group becomes a party to the contractual provisions of the instrument. Trade payables are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method. Trade receivables Forward Contracts Trade receivables represent amounts due from customers in the normal course of business. All amounts are initially stated at their fair value and are subsequently carried at amortised cost, less provision for impairment which is calculated on an Forward contracts are accounted for as fair value through profit and loss. They are carried in the statement of financial position at fair value with changes in fair value recognised in the consolidated statement of comprehensive income in the individual customer basis, where there is objective evidence. finance income or expense line. Cash and cash equivalents Employee share incentive plans Cash and cash equivalents include cash at hand and deposits The Group issues equity-settled share-based payments to held at call with banks with original maturities of three certain employees (including directors). These payments months or less. are measured at fair value at the date of grant by use of the Black-Scholes pricing model. This fair value cost of equity- Financial liabilities and equity instruments settled awards is recognised on a straight-line basis over the Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs. vesting period, based on the Group’s estimate of shares that will eventually vest and adjusted for the effect of any non market-based vesting conditions. The expected life used in the model has been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations. A corresponding credit is recorded in equity in the retained earnings. Notes to the Group Financial Statements / 29 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2016 – continued 2. Significant accounting policies – continued Deferred tax is calculated at the tax rates that are expected Leases Leases taken by the Group are assessed individually as to whether they are finance leases or operating leases. Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Operating lease rental payments are recognised as an expense in the income statement on a straight-line basis over the lease term. The benefit of lease incentives is spread over the term of the lease. Taxation The tax expense represents the sum of the current tax and deferred tax charges. The tax currently payable is based on taxable profit for the period. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. Revenue recognition Interactive service revenues are divided into 4 types development fees, self-billing revenues, the sale of licences and managed services. Revenues from development fees (which include set-up fees): these are recognised according to management’s estimation of the stage of completion of the project. This is measured by reference to the amount of development time spent on a project compared to the most up to date calculation of the total time estimated to complete the project in full. Self-billing revenues: These are earned through a revenue- share agreement between Mirada and the customer which is presented in the Mobile segments. The Group are informed by the customer of the amount of revenue to invoice and the revenues are recognised in the period these services are provided. Sale of license: Revenue from licenses are earned from two specific and separate streams. 1) Where the revenue relates to the sale of a one off licence, the licence element of the sale is recognised as income when the following conditions have been satisfied: • The software has been provided to the customer in a form that enables the customer to utilise it; • The ongoing obligations of the Group to the customer are minimal; and • The amount payable by the customer is determinable and there is a reasonable expectation of payment. 30 / Note s to the Gro u p Fi na nc ial Sta te me n ts NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2016 – continued Review of the year Corporate governance Financial statements 2) Contracts licence fees payable by customers are operations are translated at exchange rates prevailing on the dependent upon the number of end user subscribers reporting date. Income and expense items are translated at signing up to the customer’s digital television service. the average exchange rates for the period, unless exchange For this type of contract revenues are recognised by rates fluctuate significantly during that period, in which case multiplying the individual licence fee by the net increase the exchange rates at the date of transactions are used. in the customer’s subscriber base. Managed services – revenue is measured on a straight line statement of financial position and the current year income basis over the length of the contract. Where agreements statements are classified as equity and transferred to involve multiple elements, the entire fee from such the Group’s foreign exchange reserve. Such translation arrangements is allocated to each of the individual elements differences are recognised as income or an expenses in the based on each element’s fair value. The revenue in respect period in which the operations is disposed of. Exchange differences arising on translating the opening of each element is recognised in accordance with the above policies. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the Certain revenues earned by the Group are invoiced in foreign entity and translated at the closing rate. The Group advance. As outlined in the revenue recognition policy above, has elected to treat goodwill and fair value adjustments revenues are recognised in the period in which the Group arising on acquisitions before the date of transition to IFRS provides the services to the customer, revenues relating to as sterling denominated assets and liabilities. services which have yet to be provided to the customer are deferred. Research and development tax credit Retirement benefit costs Companies within the group may be entitled to claim special tax allowances in relation to qualifying research and The Group operates defined contribution pension schemes. development expenditure (e.g. R&D tax credits). The group The amount charged to the income statement in respect accounts for such allowances as tax credits, which means that of pension costs and other post-retirement benefits is the they are recognized when it is probable that the benefit will contributions payable in the period. flow to the group and that benefit can be reliably measured. Differences between contributions payable in the period extent the amounts due in respect of them are not settled and contributions actually paid are shown as either accruals by the balance sheet date, reduce current tax payable. A or prepayments in the statement of financial position. deferred tax asset is recognised for unclaimed tax credits R&D tax credits reduce current tax expense and, to the that are carried forward as deferred tax assets. Foreign exchange The individual financial statements of each group company 3. Standards not yet effective to the Group are presented in the currency of the primary economic Standards, amendments and interpretations to published environment in which it operates (its functional currency). standards not yet effective For the purpose of the consolidated financial statements, the result and the financial position of each group company are expressed in pounds sterling, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements. Certain new standards, amendments and interpretations to existing standards have been published that are mandatory for the Group’s accounting periods beginning after 1 April 2016 or later periods and which the Group has decided not to adopt early. On translation of balances into the functional currency of the entity in which they are held, exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in profit or loss for the period. Other than noted below, none of the newly issued standards, amendments and interpretations have, or are expected to have a material effect on the financial statements. IFRS 15 – Revenue from contracts with customers (Issued 28 May 2014, applicable from January 2018 subject to For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign adoption by the EU). Notes to the Group Financial Statements / 31 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2016 – continued 3. Standards not yet effective to the Group – present value using a pre-tax discount rate that reflects continued The standard specifies how and when to recognize revenue as well as requiring relevant disclosures. The standard requires an entity recognises revenue for transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services, with associated disclosures. The group has started the process of evaluating the effect of the standard on the Group. current market assessments of the time value of money and the risks specific to the cash-generating unit. This includes the directors’ best estimate on the likelihood of current deals in negotiation not yet concluded. Consequently, the outcome of negotiations may vary materially from management expectation. See note 12 for details of key assumptions and confirmation that no reasonably possible change in any of the assumptions or variables used in impairment testing would result in an 4. Critical accounting judgements and key sources impairment. Useful economic life of intangibles Intangible assets are amortised over their useful lives. Useful lives are based on management’s estimates of the period that the assets will generate revenue, which are periodically reviewed for continued appropriateness. Capitalised development costs Any internally generated intangible asset arising from the Group’s development projects are recognised only once all the conditions set out in the accounting policy Internally Generated Intangible Assets are met. The amortisation period of capitalised development costs is determined by reference to the expected flow of revenues from the product based on historical experience. Furthermore, the Group reviews, at the end of each financial year, the capitalised development costs for each product for indications of any loss of value compared to net book value at that time. This review is based on expected future contribution less the total expected costs. of estimation uncertainty Critical judgements in applying the Group’s accounting policies In the application of the Group’s accounting policies, which are described in note 2, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Key sources of estimation uncertainty The following are the critical judgements that the directors have made in the process of applying the Group’s accounting policies that has the most significant effect on the amounts recognised in the financial statements. Impairment of goodwill and intangibles Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The value in use calculation requires the Group to estimate the future cash flows expected to arise from the cash-generating units and the estimated future cash flows are discounted to their 32 / Note s to the Gro u p Fi na nc ial Sta te me n ts NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2016 – continued Review of the year Corporate governance Financial statements 5. 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 Group – Digital TV & Broadcast and Mobile. 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 2016 are as follows: Revenue - external Segmental profit/(loss) (Adjusted EBITDA, see note 6) Finance income Finance expense Depreciation Amortisation Profit on sale Share-based payment charge Irrecoverable sales tax expense Profit/(Loss) before taxation Digital TV & Broadcast £›000 5,482 2,242 — — (19) (1,612) 1 — (150) 462 Mobile £›000 537 154 — — — (23) — — — Other £›000 — (898) 5 (475) — — — (54) — 131 (1,422) The segmental results for the year ended 31 March 2015, presented on the revised basis, are as follows: Revenue Segmental profit/(loss) (Adjusted EBITDA, see note 6) Finance income Finance expense Depreciation Amortisation Profit on sale Share-based payment charge Profit/(Loss) before taxation There is no material inter-segment revenue. Digital TV & Broadcast £’000 Mobile £’000 5,232 2,086 — — (17) (1,162) — — 907 425 91 — — (1) (25) — — 65 Other £’000 — (634) 38 (436) (3) — 11 (61) Group £›000 6,019 1,498 5 (475) (19) (1,635) 1 (54) (150) (829) Group £’000 5,657 1,543 38 (436) (21) (1,187) 11 (61) (1,085) (113) The Group has two major customers in the Digital TV and Broadcast segment (a major customer being one that generates revenues amounting to 10% or more of total revenue) that account for £3.6 million (2015: £2.16 million) and £0.94 million (2015: £0.84 million) of the total Group revenues respectively. Notes to the Group Financial Statements / 33 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2016 – continued 5. Segmental reporting – continued The segment assets and liabilities at 31 March 2016 are as follows: Additions to non-current assets Total assets Total liabilities Digital TV – Broadcast £’000 2,416 11,108 (5,016) Mobile £’000 — 139 (79) Other £’000 — 4,822 (684) Group £’000 2,416 16,069 (5,779) Capital expenditure comprises additions to property, plant and equipment and intangible assets. The segment assets and liabilities at 31 March 2015, presented on a revised basis, are as follows: Additions to non-current assets Total assets Total liabilities Digital TV – Broadcast £’000 1,887 13,210 (4,029) Mobile £’000 — 714 Other £’000 1 220 Group £’000 1,888 14,144 (134) (1,005) (5,168) Segment assets and liabilities are reconciled to the Group’s assets and liabilities as follows: Digital TV – Broadcast & Mobile Other: Intangible assets Property, plant & equipment Other financial assets & liabilities Total other Total Group assets and liabilities Assets 31 March 2016 £’000 11,247 3,890 — 932 4,822 16,069 Liabilities 31 March 2016 £’000 5,095 Assets 31 March 2015 £’000 13,924 Liabilities 31 March 2015 £’000 4,163 — — 684 684 — 2 218 220 5,779 14,144 — — 1,005 1,005 5,168 Assets allocated to a segment consist primarily of operating assets such as property, plant and equipment, intangible assets, goodwill and receivables. Liabilities allocated to a segment comprise primarily trade payables and other operating liabilities. Geographical disclosures: UK Spain Rest of Continental Europe Latin America 34 / Note s to the Gro u p Fi na nc ial Sta te me n ts External revenue by location of customer Total assets by location of assets 31 March 2016 £’000 31 March 2015 £’000 31 March 2016 £’000 31 March 2015 £’000 609 540 — 4,870 6,019 593 953 52 4,059 5,657 5,230 10,839 3,323 10,821 — — — — 16,069 14,144 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2016 – continued Review of the year Corporate governance Financial statements 5. Segmental reporting – continued Revenues by Products: Development Self Billing Licenses Managed Services 31 March 2016 Digital TV & Broadcast £’000 31 March 2016 Mobile £’000 31 March 2015 Digital TV & Broadcast £’000 31 March 2015 Mobile £’000 3,639 — 1,260 583 5,482 — 537 — — 537 2,949 — 1,730 552 5,231 — 410 20 (4) 426 6. Operating profit The operating profit is stated after charging/(crediting) the following: Depreciation of owned assets Amortisation of intangible assets Operating lease charges Analysis of auditors’ remuneration is as follows: Year ended 31 March 2016 £’000 Year ended 31 March 2015 £’000 19 1,635 265 21 1,187 250 Year ended 31 March 2016 £’000 Year ended 31 March 2015 £’000 Remuneration receivable by the Company’s auditor or an associate of the Company’s auditor for the auditing of these accounts 53 51 Reconciliation of operating profit for continuing operations to adjusted earnings before interest, taxation, depreciation and amortisation: Operating (loss)/profit Depreciation Amortisation Profit on disposal Operating profit before interest, taxation, depreciation, amortisation (EBITDA) Share-based payment charge Irrecoverable sales tax expense Year ended 31 March 2016 £’000 Year ended 31 March 2015 £’000 (359) 19 1,635 (1) 1,294 54 150 285 21 1,187 (11) 1,482 61 — Operating profit before interest, taxation, depreciation, amortisation and share-based 1,498 1,543 payment charge (Adjusted EBITDA) Notes to the Group Financial Statements / 35 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2016 – continued 7. Staff costs and employee information Staff costs (including directors) comprise: Wages and salaries Social security costs Other pension costs Share based payments Staff costs Year ended 31 March 2016 £’000 Year ended 31 March 2015 £’000 4,177 765 13 54 3,582 714 12 61 5,009 4,369 Contained within staff costs are amounts capitalised as intangible assets totalling £2,363,151 (2015: £2,134,600). The Group operates a defined contribution pension scheme for certain employees. No directors are members of this scheme in both the current year and the previous year. The average number of persons, including executive directors, employed by the Group during the year was: By activity Office and management Platform and development Sales and marketing Year ended 31 March 2016 £’000 Year ended 31 March 2015 £’000 8 107 6 121 8 80 6 94 Directors and key management personnel remuneration Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group, including the directors of the company listed on page 59, the Director of Business Development and the Sales Director. Salaries and fees Social Security costs Defined contribution pension cost Other benefits Share-based payments The directors’ remuneration is disclosed in the Directors’ Remuneration Report on page 20. 8. Finance income Interest received on bank deposits Other financial income 36 / Note s to the Gro u p Fi na nc ial Sta te me n ts Year ended 31 March 2016 £’000 Year ended 31 March 2015 £’000 758 814 33 — 16 46 42 — 26 43 853 925 Year ended 31 March 2016 £’000 Year ended 31 March 2015 £’000 5 — 5 6 32 38 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2016 – continued Review of the year Corporate governance Financial statements 9. Finance expense Interest and finance charges on bank loans and overdrafts Other interest payable Movement in Fair Value of derivative Year ended 31 March 2016 £’000 Year ended 31 March 2015 £’000 471 4 — 475 287 28 121 436 Finance charges include all fees directly incurred to facilitate borrowing. These include professional fees paid to accounting practices, bank arrangement fees and fees to secure required guarantees. 10. Taxation The tax assessed on the loss on ordinary activities for the period differs from the standard rate of tax of 20%. The differences are reconciled below: Loss before taxation Loss on ordinary activities multiplied by 20% (2015: 21%) Effect of expenses not deductible for tax purposes Losses carried forward Witholding Taxes Total current tax Origination and reversal of temporary differences (Increase)/decrease of deferred tax assets Total deferred tax Subtotal R&D Total tax (credit)/expense Deferred Taxation Year ended 31 March 2016 £’000 Year ended 31 March 2015 £’000 (829) (166) 13 153 — — — 191 191 191 (616) (425) (113) (24) 21 3 159 159 31 (128) (97) 62 — 62 Deferred tax assets have been recognised in respect of tax losses for Mirada Connect Limited, research and development investment for Mirada Iberia S.A and other temporary differences giving rise to deferred tax assets where the directors believe it is probable that these assets will be recovered. The Directors believe that the deferred tax assets are recoverable given the increasing profitability of Mirada Iberia S.A and Mirada Connect Limited over recent years, combined with the forecasts for future periods. However, following a prudent approach deferred tax assets have been reduced by £191,000 during FY16 The movements in deferred tax assets and liabilities during the period are shown below: Group Tax credit for losses Other temporary deductible differences Tax asset Asset 31 March 2016 £’000 Asset 31 March 2015 £’000 (Charged)/ credited to profit & loss 31 March 2016 £’000 387 8 395 536 7 543 (191) — (191) Foreign exchange differences of £42,000 arising on consolidation of the deferred tax asset are recognised in other comprehensive income. Notes to the Group Financial Statements / 37 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2016 – continued 10. Taxation – continued Reconciliation of deferred tax asset and liabilities: Balance at 1 April Other tax credit Reversal of Deferred tax asset Other Temporary Deductible differences Forex Balance at the end of year Deferred taxation amounts not recognised are as follows: Group Depreciation in excess of capital allowance Losses Research & Development Tax Credits, useable against future profits Year ended 31 March 2016 Asset £’000 Year ended 31 March 2015 Asset £’000 543 — (191) — 43 395 508 128 — (31) (62) 543 Year ended 31 March 2016 £’000 Year ended 31 March 2015 £’000 429 9,668 2,199 429 9,515 2,199 12,296 12,143 The gross value of tax losses carried forward at 31 March 2016 equals £58.0 million (2015: £57.8 million). 11. Earnings per share Loss for year Weighted average number of shares Basic loss per share Diluted loss per share Adjusted EBITDA per share Year ended 31 March 2016 Total Year ended 31 March 2015 Total £(404,647) £(175,078) 122,345,366 104,315,229 £(0.003) £(0.002) £(0.003) £(0.002) Adjusted EBITDA per share is calculated by reference to the operating margin from continuing activities before profit on disposal, share-based payment charges, depreciation, amortisation and irrecoverable sales tax (see note 6). Adjusted EBITDA Weighted average number of shares Basic adjusted EBITDA per share Diluted adjusted EBITDA per share Year ended 31 March 2016 Total Year ended 31 March 2015 Total £1,497,955 £1,543,178 122,345,366 104,315,229 £0.012 £0.012 £0.014 £0.014 The Company has 4,697,166 (2015: 5,602,238) potentially dilutive ordinary shares arising from share options issued to staff. Share options have been included in calculating the diluted earnings. 38 / Note s to the Gro u p Fi na nc ial Sta te me n ts NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2016 – continued Review of the year Corporate governance Financial statements 12. Intangible assets Cost At 1 April 2015 Additions Foreign exchange At 31 March 2016 Accumulated amortisation At 1 April 2015 Provided during the year Foreign exchange At 31 March 2016 Net book value At 31 March 2016 At 31 March 2015 Cost At 1 April 2014 Transfer Additions Foreign exchange At 31 March 2015 Accumulated amortisation At 1 April 2014 Transfer Provided during the year Foreign exchange At 31 March 2015 Net book value At 31 March 2015 At 31 March 2014 Deferred development costs £’000 Completed Technology £’000 Total Intangible assets £’000 7,526 2,257 870 1,032 86 18 8,558 2,343 888 Goodwill £’000 29,083 — — 10,653 1,136 11,789 29,083 4,735 1,595 532 6,862 3,791 2,791 980 40 17 1,037 99 52 5,715 1,635 549 7,899 3,890 2,843 22,137 — — 22,137 6,946 6,946 Deferred development costs £’000 Completed Technology £’000 Total Intangible assets £’000 Goodwill £’000 6,974 (466) 1,795 (777) 7,526 4,530 (404) 1,179 (570) 4,735 2,791 2,444 593 466 — (27) 1,032 593 404 8 (25) 980 52 — 7,567 29,083 — 1,795 (804) 8,558 — — — 29,083 5,123 22,137 — 1,187 (595) 5,715 2,843 2,444 — — — 22,137 6,946 6,946 The key assumptions for the value in use calculations are those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the period. Management estimates discount rates using pre-tax rates that reflect current market assessments of the time value of money and the risks specific to the CGUs. The growth rates are based on industry growth forecasts. Changes in selling prices and direct costs are based on past practices and expectations of future changes in the market. Notes to the Group Financial Statements / 39 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2016 – continued 12. Intangible assets – continued The Group prepares cash flow forecasts derived from the most recent financial budgets approved by management for the next five years. The forecasts are based on current contracts and management’s estimate of revenues relating to opportunities that are currently being pursued. The cash flow forecasts are extrapolated for the balance of 20 years based on an estimated growth rate of 2.5% (2015: 5%) for Digital TV & Broadcast and Connect. This rate does not exceed the average long-term growth rate for the relevant markets. The rate used to discount the forecast pre-tax cash flows for all CGUs is 15.1% (2015: 15.3%). No reasonably possible change in any of the assumptions or variables used in the impairment test of goodwill would result in an impairment. Following the impairment review of the carrying value of goodwill, no impairments were considered to be appropriate. Digital TV- Broadcast £’000 6,390 Connect £’000 556 Total £’000 6,946 Office & computer equipment £’000 Short-leasehold improvements £’000 1,315 73 (702) 26 712 1,274 19 (701) 26 618 94 41 49 — (3) — 46 49 — (3) — 46 — — Total £’000 1,364 73 (705) 26 758 1,323 19 (704) 26 664 94 41 Carrying value at 1 April 15 and 31 March 16 13. Property, plant and equipment Cost At 1 April 2015 Additions Disposals Foreign exchange At 31 March 2016 Depreciation At 1 April 2015 Provided during the year Disposals Foreign exchange At 31 March 2016 Net book value At 31 March 2016 At 31 March 2015 40 / Note s to the Gro u p Fi na nc ial Sta te me n ts Review of the year Corporate governance Financial statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2016 – continued 13. Property, plant and equipment – continued Cost At 1 April 2014 Additions Disposals Foreign exchange At 31 March 2015 Depreciation At 1 April 2014 Provided during the year Disposals Foreign exchange At 31 March 2015 Net book value At 31 March 2015 At 31 March 2014 14. Trade & other receivables Trade receivables Allowance for bad debts Other receivables R&D tax credit Prepayments and accrued income Non current other receivables R&D tax credit Office & computer equipment £’000 Short-leasehold improvements £’000 1,341 28 (17) (37) 1,315 1,305 20 (17) (34) 1,274 41 36 49 — — — 49 48 1 — — 49 — 1 Total £’000 1,390 28 (17) (37) 1,364 1,353 21 (17) (34) 1,323 41 37 31 March 2016 £’000 31 March 2015 £’000 1,449 (23) 1,426 421 425 1,567 3,839 191 191 2,217 (28) 2,189 372 1,004 3,565 — — Additionally, both Mirada Iberia and Digital Impact have prepared the legal documentation to apply for R&D tax credit. The total amount of these tax credit represents £616,000. This amount is expected to be collected before March 2017, excepting £191,000 for the FY16 R&D tax credit in Mirada Iberia that will be collected after March 2017. Trade receivables Trade receivables net of allowances are held in the following currencies: Sterling US Dollars Euro Total 31 March 2016 £’000 31 March 2015 £’000 59 1,171 196 1,426 89 1,549 551 2,189 Notes to the Group Financial Statements / 41 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2016 – continued 14. Trade & other receivables – continued The fair values of trade and other receivables are the same as book values as credit risk has been addressed as part of impairment provisioning and, due to the short term nature of the amounts receivable, they are not subject to other ongoing fluctuations in market rates. Before accepting any new customer, the Group uses a credit approval process to assess the potential customer’s credit quality and defines credit limits by customer. Included in the Group’s trade receivable balance are debtors with a carrying amount of £546,000 (2015: £34,000) which are past due at the reporting date. The Group does not hold any collateral over these balances. The average age of these receivables is 77 days (2015: 80 days). Ageing of past due but not impaired trade receivables: 30-60 days 60-90 days 90+ days Total Movement in allowance for doubtful debts: Balance at beginning of year Utilised in year Forex 31 March 2016 £’000 31 March 2015 £’000 282 224 40 546 13 20 1 34 31 March 2016 £’000 31 March 2015 £’000 28 — (5) 31 — (3) In determining the recoverability of a trade receivable the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. Ageing of impaired receivables: +120 days 31 March 2016 £’000 31 March 2015 £’000 23 28 The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable set out above. 42 / Note s to the Gro u p Fi na nc ial Sta te me n ts NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2016 – continued Review of the year Corporate governance Financial statements 15. Trade and other payables The fair values of trade and other payables are the same as book values as due to the short term nature of the amounts payable, they are not subject to other ongoing fluctuations in market rates. Trade payables and accruals principally comprise amounts outstanding for trade purchases and ongoing costs. The average credit period taken for trade purchases is 76 days (2015: 69 days). Trade payables Other payables Other taxation and social security taxes Accruals and deferred income 31 March 2016 £’000 31 March 2015 £’000 553 456 — 561 456 438 445 451 1,570 1,790 Maturity analysis of the financial liabilities, excluding other taxation and social security and deferred income, is as follows: Up to 3 months 3 to 6 months 6 to 12 months 16. Loans and borrowings Advances Drawn on invoice discounting facilities Bank loans Other Loans The borrowings are repayable as follows: On demand or within one year The above bank loans are denominated in Euros and are unsecured. The weighted average interest rates paid were as follows: Invoice discounting facilities Bank loans The directors estimate the fair value of the Group’s borrowings as follows: Invoice discounting facilities Bank loans Other Loans Interest-bearing bank loans are initially recorded at fair value less direct issue costs. 31 March 2016 £’000 31 March 2015 £’000 845 148 311 465 179 395 1,304 1,039 31 March 2016 £’000 31 March 2015 £’000 822 1,354 243 2,419 441 852 174 1,467 2,419 1,467 31 March 2016 % 31 March 2015 % 2.0 3.2 822 1,354 243 2,419 3.0 4.1 441 852 174 1,467 Notes to the Group Financial Statements / 43 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2016 – continued 17. Non-current liabilities Interest bearing loans and borrowings: Bank loans Other loans Other non-current payables: Other taxation and social security taxes 31 March 2016 £’000 31 March 2015 £’000 1,298 474 1,772 18 1,790 686 659 1,345 66 1,411 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. Capital risks have been analysed in the Director’s report (page 18) Net Debt Net Debt is calculated based on short term loans, long terms loans and cash and cash equivalents: Loans and borrowings – Current Loans and borrowings – Non Current Cash Net Debt Provisions 31 March 2016 £’000 31 March 2015 £’000 2,419 1,772 (714) 3,477 1,467 1,345 (206) 2,606 Provisions relate to a liability arising from an onerous lease and dilapidation obligation. A settlement agreement was signed and paid on December 1, 2015. The movement in provisions is as follows: Balance at the beginning of the year Utilised in the year Balance at the end of the year Provisions are allocated as follows: Provisions due within one year Provisions due between 2 and 5 years Dilapidation Provision £’000 31 March 2016 £’000 31 March 2015 £’000 500 (500) 500 (500) — — — — — — — — 576 (76) 500 500 — 500 44 / Note s to the Gro u p Fi na nc ial Sta te me n ts Review of the year Corporate governance Financial statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2016 – continued 17. Non-current liabilities – continued Borrowings, including interest, are repayable as follows: Bank loans On demand or within one year Between one and two years Between two and five years Other loans On demand or within one year Between one and two years Between two and five years Advances drawn on invoice discounting On demand or within one year Total borrowings including finance leases On demand or within one year Between one and two years Between two and five years 18. Retirement benefit schemes 31 March 2016 £’000 31 March 2015 £’000 1,437 646 758 933 352 320 2,841 1,605 247 113 364 724 821 821 2,505 759 1,122 4,386 183 228 439 850 441 441 1,557 580 759 2,896 The Group operates defined contribution pension schemes. The pension charge for the period represents contributions payable by the Group to the schemes and amounted to £11,855 (2015: £12,000). At 31 March 2016, contributions amounting to £3,555 (2015: £3,000) were payable and included in other payables. 19. Financial instruments Capital risk management The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance. The capital structure of the Group consists of debt, which includes the borrowings disclosed in note 16 and 17, and equity attributable to equity holders of the parent, comprising issued capital, reserves and retained earnings as disclosed in the Consolidated Statement of Changes in Equity and note 20. Externally imposed capital requirement The Group is not subject to externally imposed capital requirements. Notes to the Group Financial Statements / 45 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2016 – continued 19. Financial instruments – continued Categories of financial instruments Financial assets Loans and receivables: - Trade and other receivables, excluding prepayments - Cash and cash equivalents Financial liabilities Financial liabilities at amortised cost: - Trade and other payables* - Loans and borrowings due within one year - Interest bearing loans and borrowings due after one year - Other payables due after one year * Excluding other taxation and social security and deferred income. Financial risk management objectives Carrying value 31 March 2016 £’000 31 March 2015 £’000 3,622 714 4,336 1,304 2,419 1,772 18 5,513 3,443 206 3,649 1,038 1,467 1,345 66 3,916 The Group monitors and manages the risks relating to the financial instruments held. The principal risks include currency risk (on financial assets and trade payables), credit risk (on financial assets) and interest rate risk (on financial assets and borrowings). These risks are discussed in further detail below. Market risk The Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The Group does not use forward foreign exchange contracts to hedge exchange rate risk. Foreign currency risk management The Group has undertaken certain transactions denominated in foreign currencies. Hence, exposures to exchange rate fluctuations arise. The carrying amounts of the Group’s material foreign currency denominated monetary assets and monetary liabilities at the reporting date are as follows: US Dollar denominated assets and liabilities — — 1,197 2,250 Liabilities Assets 31 March 2016 £’000 31 March 2015 £’000 31 March 2016 £’000 31 March 2015 £’000 Entities from United Kingdom have no balance Euro/USD. 46 / Note s to the Gro u p Fi na nc ial Sta te me n ts NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2016 – continued Review of the year Corporate governance Financial statements 19. Financial instruments – continued Foreign currency sensitivity analysis The following table details the Group’s sensitivity to a 10% increase and decrease in Sterling against the Euro. The sensitivity analysis includes only outstanding Euro denominated monetary items and adjusts their translation at the period end for a 10% change in the Euro/Sterling rate at March 31, 2015. Due to the Brexit, the Company has used a 20% change in the Euro/Sterling rate at March 31, 2016. A positive number below indicates an increase in profit and other equity where Sterling strengthens against the relevant currency. For a weakening of Sterling against the relevant currency, there would be an equal and opposite impact on the profit and other equity, and the balances below would be negative. The sensitivities below are based on the exchange rates at the balance sheet used to convert the asset or liability to sterling. Euro Interest rate risk management Profit and loss impact 2016 £’000 225 2015 £’000 42 At 31 March 2016 the Group was exposed to interest rate risk as the interest payable on some of the Group’s loans and borrowings are linked to Euribor. The Group’s loans and borrowings where interest payable is linked to Euribor include bank loans and development loans totalling £1,356,000. The remaining bank loans totalling £2,835,000 pay fixed rates of interest. Neither interest rate swaps contracts nor forward interest rate contracts are used to hedge any risks arising. If interest rates changed by 1% (100 basis points) the profit and loss impact would not be material to the Group’s results. Credit risk management Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group faces exposure to credit risk on its trade receivables and cash equivalents. The risk of financial loss arising from defaults on trade receivables is mitigated by the Group using a credit approval process to assess the potential customers’ credit quality and also establishes credit limits by customer. The limits and credit scores attributed to customers is reviewed bi-annually however, the sales ledger is reviewed at least monthly to ensure all receivables are recoverable. Please refer to note 14 for further details on trade receivables, including analyses of bad debts, ageing and profile by currency. The Group believes the credit risk on liquid funds, being cash and cash equivalents, to be limited because the counterparties are banks with high-credit ratings assigned by international credit-rating agencies. However, the concentration of credit risk by counterparty does exceed 10% of the overall cash and cash equivalents balance (being £470,000 at 31 March 2016 and £21,000 at 31 March 2015) in some cases. The table below shows the balance of counterparties at the reporting date in excess of 10% of the overall balance, together with the Standard and Poor’s credit rating symbols. Counterparty Rating BancSabadell Santander LiberBank BBVA Barclays BB+ A- N/A BBB+ A- 31 March 2016 31 March 2015 % of overall cash & cash equivalents — — 7.4% 65.8% 5.9% Carrying amount £’000 — — 53 470 42 % of overall cash & cash equivalents 10.0% 74.3% — 7.8% — Carrying amount £’000 21 153 — 16 — Notes to the Group Financial Statements / 47 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2016 – continued 19. Financial instruments – continued Liquidity risk management Liquidity risk arises from the Group’s management of working capital and the finance charges and principal repayments on its debt instruments. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. As part of this monitoring the Group ensures that the financial liabilities due to be paid can be met by existing cash and cash equivalents, forecasted receipts from customers and borrowing facilities. Tables showing the maturity profile of the Group’s financial liabilities are included in notes 15, 16 and 17. 20. Share capital A breakdown of the authorised and issued share capital in place as at 31 March 2016 is as follows: Allotted, called up and fully paid Ordinary shares of £0.01 each 139,057,695 1,391 114,057,695 1,141 31 March 2016 Number 31 March 2016 £’000 31 March 2015 Number 31 March 2015 £’000 Share issues During the year the following share issues took place: – On 1 December 2015 the Company completed a placing for cash raising gross proceeds of £1,500,000 via the issue of 25,000,000 £0.01 ordinary shares at a price of £0.06 each. 21. Reserves Share premium The amount subscribed for share capital in excess of nominal value. Foreign exchange reserve This reserve relates to exchange differences arising on the translation of the balance sheet of the Group’s foreign operations at the closing rate and the translation of the income statement of those operations at the average rate. Merger reserve Under the provisions of s612 of the Companies Act 2006, the premium that arose on the shares issued as consideration in the acquisition of Mirada Iberia S.A, formally known as Fresh Interactive Technologies S.A, has been taken to the merger reserve. 48 / Note s to the Gro u p Fi na nc ial Sta te me n ts NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2016 – continued Review of the year Corporate governance Financial statements 22. Share based payments Equity settled share option scheme On 20 December 2013 the Company granted a total of 5,301,238 share options to certain employees and directors through approved and unapproved share option schemes. The exercise price for these options is £0.10. The exercise of these options is not subject to any performance criterion and they vest in three equal instalments on 1 January 2015, 1 February 2015 and 1 March 2016. If the options remain unexercised after a period of ten years from the date of grant the options expire. The options are forfeited if the employee leaves before the options vest. The directors granted options under this scheme are as follows: Jose Gozalbo Sidro Jose-Luis Vazquez Javier Casanueva Francis Coles Rafael Martin Sanz No. of share options 938,728 631,464 247,850 185,888 185,888 In prior periods the Company has granted share options to employees and directors through approved and unapproved share option schemes. The exercise of options for all options granted during the 15 months ended 31 March 2008 is subject to a performance criterion being satisfied. The exercise of options granted prior to 1 January 2007 is not subject to any performance criterion. If the options remain unexercised after a period of ten years from the date of grant the options expire. The options are forfeited if the employee leaves before the options vest. In accordance with IFRS 2 the Group has elected not to apply IFRS 2 to options granted on or before 7 November 2002 or to options which had vested by 1 January 2006. Details of the share options outstanding during the period for options issued since 22 June 2007 are as follows: Outstanding at the beginning of the period Granted during period Lapsed during period Exercised during period Outstanding at the end of the period Exercisable at the end of the period Year ended 31 March 2016 Year ended 31 March 2015 No. of share options 5,602,238 — (905,072) — 4,697,166 4,697,166 Weighted average exercise price (£) 0.10 — 0.10 — 0.10 0.10 No. of share options 5,602,555 — (317) 5,602,238 3,835,158 Weighted average exercise price (£) 0.10 — 0.10 0.10 0.12 The options outstanding at 31 March 2016 and at 31 March 2015 had a range of exercise prices from £0.10 to £1.85 The options outstanding at 31 March 2016 had a weighted average remaining contractual life of 5.4 years (2015: 6.4 years). For the year ended 31 March 2016, the Group has recognised a total expense of £54,000 (2015: £61,000) related to equity-settled share-based payment transactions. The estimated fair values for determining this charge were calculated using the Black-Scholes option pricing model. This produces a fair value for each grant of options made and the fair value is then charged over the vesting period, which is three years. Notes to the Group Financial Statements / 49 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2016 – continued 23. Operating lease arrangements At the reporting date, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows: Within one year In second to fifth years inclusive 31 March 2016 £’000 31 March 2015 £’000 232 331 563 207 324 531 Operating lease payments represent rentals payable by the Group for its office properties. Leases of buildings are subject to rent reviews at specified intervals and provide for the leasee to pay all insurance, maintenance and repair costs. 24. Notes supporting cash flow statement Cash and cash equivalents comprise: Cash available on demand Net cash increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year Cash and cash equivalents Cash and cash equivalents are held in the following currencies: Sterling Euro Total 25. Related party transactions 31 March 2016 £’000 31 March 2015 £’000 714 508 206 714 206 356 (150) 206 31 March 2016 £’000 31 March 2015 £’000 41 673 714 9 197 206 On 7 January 2016, Matthew Earl, Non-Executive Director of the Company, on the same day transferred 166,667 ordinary shares from a nominee account into a personal SIPP at a price of 5.125p per ordinary share. As part of the £1.5m placing on 24th November 2016, key management personal participated in the placing and acquired £70,000 of shares on the same terms as other participants. Outstanding at the year end was an amount payable to José Luis Vázquez, a director of Mirada plc, of £1,068 (2015: £1,273). 26. Events after the reporting date There are no material reportable post balance sheet events. 50 / Note s to the Gro u p Fi na nc ial Sta te me n ts COMPANY STATEMENT OF FINANCIAL POSITION 31 March 2016 Review of the year Corporate governance Financial statements Intangible assets Property, plant and equipment Investments Non-current assets Trade and other receivables Cash and cash equivalents Current assets Total assets Current liabilities Net current (liabilities)/assests Total assets less current liabilities Provisions for liabilities Total liabilities Net assets Issued share capital and reserves attributable to equity holders of the company Share capital Share premium Retain (losses)/Earnings Equity Notes iv v vi vii viii x xii 31 March 2016 £’000 2 — 11,437 11,439 268 45 313 31 March 2015 £’000 28 — 10,591 10,619 793 5 798 31 March 2014 £’000 56 2 9,407 9,465 571 3 574 11,752 11,417 10,039 (808) (495) 10,944 — (808) 10,944 1,391 9,859 (306) 10,944 (645) 152 10,772 (500) (1,146) 10,271 1,141 8,748 382 10,271 (2,099) (1,525) 7,940 (576) (2,676) 7,364 861 5,776 727 7,364 These financial statements were approved and authorised for issue on 15 July 2016. Signed on behalf of the Board of Directors José-Luis Vázquez Chief Executive Officer The notes on pages 54 to 58 form part of these financial statements Company Statement of financial position / 51 COMPANY STATEMENT OF CHANGES IN EQUITY 31 March 2016 Share capital £’000 Share premium account £’000 Retained earnings £’000 Balance at 1 April 2015 Loss for the financial year Share based payment Issue of shares Share issue costs Balance at 31 March 2016 Balance at 1 April 2014 Loss for the financial year Share based payment Issue of shares Share issue costs Balance at 31 March 2015 1,141 8,748 — — 250 — 1,391 — — 1,250 (139) 9,859 Total £’000 10,272 (743) 54 1,500 (139) 383 (743) 54 — — (306) 10,944 Share capital £’000 Share premium account £’000 Retained earnings £’000 861 — — 280 — 1,141 5,776 — — 3,220 (248) 8,748 728 (406) 61 — — 383 Total £’000 7,365 (406) 61 3,500 (248) 10,272 The notes on pages 54 to 58 form part of these financial statements. 52 / Compa ny State me n t o f c han g es in eq u it y COMPANY STATEMENT OF CASH FLOWS 31 March 2016 Review of the year Corporate governance Financial statements Cash flows from operating activities Loss after tax Adjustments for: Depreciation of property, plant and equipment Amortisation of intangible assets Share-based payment charge Finance income Finance expense Operating cash flows before movements in working capital Increase/(decrease) in trade and other receivables (Decrease)/increase in trade and other payables (Decrease)/increase in provisions Net cash (used in)/generated from operating activities Cash flows from investing activities Investment in Mirada Iberia Net cash used in investing activities Cash flows from financing activities Interests and similar expenses paid Issue of share capital Cost of share issue Loans received Net cash from financing activities Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year The notes on pages 54 to 58 form part of these financial statements. Year ended 31 March 2016 £’000 Year ended 31 March 2015 £’000 (743) (406) — 26 54 — (1) (664) 525 80 (500) (559) (846) (846) 1 1,500 (139) 85 1,447 42 5 47 3 28 61 (24) 21 (316) (222) (1,648) (76) (2,263) (1,184) (1,184) 2 3,500 (248) 195 3,449 2 3 5 Company Statement of cash fl ows / 53 NOTES TO COMPANY FINANCIAL STATEMENTS Year ended 31 March 2016 i. Accounting policies Basis of accounting The separate financial statements of the Company are presented as required by the Companies Act 2006. They have been prepared under the historical cost convention and in accordance with applicable International Financial Reporting Standards and law. Principal accounting policies for the company are consistent of those for the group company which are disclosed in note 2 of the group accounts, page 27. Further polices considered in the company financial statements are listed below Going concern policy As disclosed in Note 2 from the consolidated financial statement, Directors have prepared a cash flow forecast covering a period extending beyond 12 months from the date of these financial statements. The forecast contains certain assumptions about the performance of the business. These assumptions are the directors’ best estimate of the future development of the business, including consideration of cash reserves required to support working capital and its new growth initiatives. Based on this cash flow forecasts, directors continue to adopt the going concern basis of accounting in preparing the annual financial statements. Investments in subsidiaries Investments in subsidiaries are held at cost less any provision for impairment. ii. Directors’ remuneration The emoluments received by the directors who served during the year were as follows: Executive directors: Aggregate emoluments Non-executive directors: Aggregate emoluments Emoluments payable to the highest paid director are as follows: Aggregate emoluments Year ended 31 March 2016 £’000 Year ended 31 March 2015 £’000 451 113 564 402 74 476 Year ended 31 March 2016 £’000 Year ended 31 March 2015 £’000 219 285 There were no Company contributions to the pension scheme or benefits on behalf of the highest paid director. iii. Company income statement As permitted by Section 408 of the Companies Act 2006 the Company has elected not to present its own statement of comprehensive income for the year. The Company reported a loss after tax for the financial year ended 31 March 2016 of £0.73 million (2015: loss after tax £0.41 million). 54 / Note s to com pa ny fin an c ial st at em en t s NOTES TO COMPANY FINANCIAL STATEMENTS Year ended 31 March 2016 – continued Review of the year Corporate governance Financial statements iv. Intangible assets Cost At 1 April 2015 and 31 March 2016 Depreciation At 1 April 2015 Provided during the year At 31 March 2016 Net book value At 31 March 2016 At 31 March 2015 v. Property, plant and equipment Cost At 1 April 2015 Write off fixed assets At 31 March 2016 Depreciation At 1 April 2015 Write off fixed assets At 31 March 2016 Net book value At 31 March 2016 At 31 March 2015 vi. Investments Cost At 1 April 2015 Additions Write off investment At 31 March 2016 Amounts provided At 1 April 2015 Write off investments At 31 March 2016 Net book value At 31 March 2016 At 31 March 2015 Deferred development costs £’000 139 111 26 137 2 28 Office & computer equipment £’000 704 (704) — 704 (704) — — — Cost £’000 23,476 846 (6,583) 17,739 12,885 (6,583) 6,302 11,437 10,591 The write off of investments relates to the subsidiaries previously impaired which have been struck off in the year. The Company increased its participation in Mirada Iberia, SA by £0.85 million for the financial year ended 31 March 2016. Notes to company financia l statements / 55 NOTES TO COMPANY FINANCIAL STATEMENTS Year ended 31 March 2016 – continued vi. Investments – continued Details of the investments in which the Company holds 20% or more of the nominal value of any class of share capital are as follows: Name of company Holding % Voting rights Country of incorporation Nature of business Digital Interactive Television Group Limited Ordinary shares Digital Impact (UK) Limited* Ordinary shares Mirada Connect Ltd Mirada Iberia, S.A. Ordinary shares Ordinary shares Mirada Mexico, S.A.* Ordinary shares 100% 100% 100% 100% 100% * Held indirectly in Mirada Iberia S.A. vii. Trade and other receivables UK UK UK Spain Mexico Dormant Interactive TV Services Payment solutions provider Interactive TV services Dormant Trade receivables Amounts owed by group undertakings Other receivables Prepayments viii Trade and other payables Bank loans Trade payables Amounts owed to group undertakings Accruals and deferred income Other taxation and social security Other payables All amounts fall due within one year. ix. Operating lease arrangements 31 March 2016 £’000 31 March 2015 £’000 1 235 4 28 268 9 744 10 30 793 31 March 2016 £’000 31 March 2015 £’000 279 67 189 193 28 51 808 195 65 163 64 51 108 645 Operating lease payments represent rentals payable by the Company for its office properties. Leases of buildings are subject to rent reviews at specified intervals and provide for the leasee to pay all insurance, maintenance and repair costs. On 31 October 2015, the Company moved its offices to 68 Lombard Street EC3V 9LJ, London Within one year Leases expiring between one and five years 56 / Note s to com pa ny fin an c ial st at em en t s 31 March 2016 £’000 31 March 2015 £’000 23 4 16 12 NOTES TO COMPANY FINANCIAL STATEMENTS Year ended 31 March 2016 – continued Review of the year Corporate governance Financial statements x. Provisions Movement in provisions: Balance at the beginning of the year Utilised in the year Balance at the end of the year Dilapidation provision £’000 31 March 2016 £’000 31 March 2015 £’000 500 (500) — 500 (500) — 576 (76) 500 Provisions relate to a liability arising from an onerous lease and dilapidation obligation. A settlement agreement was signed and paid on December 1, 2015. xi. Deferred taxation Deferred taxation provided in the financial statements is £nil (2014: £nil) and the amounts not recognised are as follows: Accelerated capital allowances Losses 31 March 2016 £’000 402 7.297 7.699 31 March 2015 £’000 402 6.555 6.957 The deferred tax asset has not been recognised on the grounds that there is insufficient evidence at the balance sheet date that it will be recoverable. The asset would start to become potentially recoverable if, and to the extent that, the company were to generate taxable income in the future. xii. Share capital A breakdown of the authorised and issued share capital in place as at 31 March 2016 is as follows: Allotted, called up and fully paid Ordinary shares of £0.01 each Share issues During the year the following share issues took place: 31 March 2016 Number 31 March 2016 £’000 31 March 2016 Number 31 March 2016 £’000 139,057,695 1,391 114,057,695 1,141 – On 1 December 2015 the Company completed a placing for cash raising gross proceeds of £1,500,000 via the issue of 25,000,000 £0.01 ordinary shares at a price of £0.06 each. Notes to company financia l statements / 57 NOTES TO COMPANY FINANCIAL STATEMENTS Year ended 31 March 2016 – continued xiv. Related parties Details of balances and transactions with related parties: Mirada Iberia Digital Impact Mirada Connect Digital Interactive TV Group Year ended 31 March 2016 Year ended 31 March 2015 Balance £’000 Transactions £’000 Balance £’000 Transactions £’000 (189) 483 269 — 187 16 — 377 517 367 (163) (163) 47 20 — — Details of all other related parties are included within Note 25 of the Consolidated Financial Statements. xv. Transition to IFRS No changes to previously reported profits or equity were indentified as at the transition date of 1 April 2014. 58 / Note s to com pa ny fin an c ial st at em en t s OFFICERS AND PROFESSIONAL ADVISERS Review of the year Corporate governance Financial statements Directors Mr Javier Casanueva Non-Executive Chairman Mr José-Luis Vázquez Chief Executive Officer Mr Francis Coles Non-Executive Director Mr Matthew Earl Non-Executive Director Mr Jose Gozalbo Executive Director Mr Gonzalo Babío Executive Director Company Secretary Miss Kathy Claydon Nominated Adviser and Broker Allenby Capital Limited 3 St Helen’s Place London EC3A 6AB Bankers Barclays Bank plc 1 Churchill Place London E14 5HP Lawyers Howard Kennedy LLP No 1. London Bridge London W1W 5LS Registered Office 68 Lombard Street London EC3V 9LJ Auditors BDO LLP 55 Baker Street London W1U 7EU Company Registrars Capita Registrars Limited Bourne House 34 Beckenham Road Kent BR3 4TU Officers and Professional Advisers L O N D O N H E A D Q U A R T E R S 68 Lombard Street, London - EC 3V 9LJ +44 (0)207 868 2104 · info@mirada.tv mirada. tv

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