Mirada Plc Annual Report 2019

Plain-text annual report

THE ULTIMATE VIEWING EXPERIENCE Products Industry Clients 2019 PB / Our produ cts ANNUAL REPORTAND ACCOUNTSOUR YEAR Executive Management About Mirada Our Products Investor Insights 2 3 4 8 REVIEW OF THE YEAR Highlights of the Year 11 CEO Statement 14 Strategic Report 18 CORPORATE GOVERNANCE Directors´� Report 20 Audit Committee Report 26 Nominations and Remunerations Committee Report 27 FINANCIAL STATEMENTS Statement of Directors´� Responsibilities 28 Independent Auditors´� Report 29 Consolidated Statement of Comprehensive Income 35 Consolidated Statement of Financial Position 36 Consolidated Statement of Changes in Equity 37 Consolidated Statement of Cash Flows 38 Notes to the Consolidated Financial Statements 39 Company Statement of Financial Position 68 Company Statement of Changes in Equity 69 Notes to the Company Financial Statements 70 Officers and Professional Advisers 76 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. 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. NURIA LAHUERTA VP HUMAN RESOURCES Nuria joined Mirada in 2011 as Oﬃce Manager until ﬁnally becoming VP Human Resources and the ﬁrst female to join Executive Management. She studied History of Art at Zaragoza University and a Masters in Innovative HR Management. ANTONIO RODRÍGUEZ VP 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. 2 / Executive Ma nageme nt 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. JAVIER PEÑÍN 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. ROSZANA DALATI VP MARKETING Roszana joined Mirada as Marketing Manager before forming part of Executive Management in 2017. She holds a degree in International Relations and a Masters in Strategic Management of Sales & Marketing from IE Business School. 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 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 software products, notably the Iris multiscreen platform, acclaimed by clients for its incomparable ﬂexibility and optimal time to market. Mirada prides itself on being a global pioneer in Digital TV technology Since its establishment nineteen years ago, Mirada's The Company prides itself on being a pioneer in Digital TV products and solutions have been deployed by some of technology, and following the success of izzi's platform the biggest names in broadcasting including Telefonica, powered by Iris which is currently considered to be the Sky, Virgin Media, BBC, ITV and Televisa, the largest media most advanced in the entire region, Mirada's growing company in the Spanish-speaking world. Mirada has also pipeline of opportunities is currently the greatest the established partnerships with key players in the Digital TV company has ever seen. world such as Conax and Ericsson. PRESENCE AROUND THE WORLD UK SLOVENIA MEXICO CHILE SPAIN SINGAPORE OFFICES REPRESENTATIVES 2 / Executive Management Ab out 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-delivered, on-demand content anytime and anywhere. The multiscreen software suite enables content consumption across smartphones, tablets, laptops, set-top boxes, smart TVs, media streaming devices and more, 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 IRIS FOR ANDROID TV Custom launcher for Operator Tier Our brand new custom launcher replicates the entire Iris experience onto Android-powered set-top boxes. An essential solution for operators looking to launch with Google’s Android TV Operator Tier, in order for them to have more control of the look and feel of their platform while enjoying the beneﬁts of the Android environment, such as easy access to third-party apps in Google’s Play Store. Replicating the entire Iris experience that viewers love for Android TV. OVER-THE-TOP PLATFORM Advanced platform to enjoy content anytime, anywhere Over-the-top (OTT) 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/IPTV digital TV service. Providing a future-proof solution independent from traditional broadcasting. 4 / Our Produ ct s Ou r Products / 5 IRIS CONTENT MANAGEMENT SYSTEM (CMS) Extensive tool for managing all content Iris CMS is a web-based, intuitive and scalable tool which acquires, manages, editorialises and commercialises content with a high degree of automation. This tool is perfect for operators looking for new ways to promote their content catalogue to boost consumption and maximise return on content investment. Manage, curate and promote content intuitively, attractively and eﬀectively. LOGIQ Data intelligence platform LogIQ is Mirada’s new data analytics platform which uses holistic data retrieved from clients’ operations to enable them to make better, data-driven decisions. With LogIQ, operators are ﬁnally armed with valuable insights about their platform, subscribers and consumption, empowering them to provide the most advanced and appealing oﬀering in an increasingly competitive industry. Empowering operators to make intelligent, data-driven decisions. 6 / Our Products 6 / Our products DIRECTORS‘ REPORT +50 SATISFIED CLIENTS IRIS CONTENT MANAGEMENT SYSTEM (CMS) Extensive tool for managing all content Iris CMS is a web-based, intuitive and scalable tool which acquires, manages, editorialises and commercialises content with a high degree of automation. This tool is perfect for operators looking for new ways to promote their content catalogue to boost consumption and maximise return on content investment. Manage, curate and promote content intuitively, attractively and eﬀectively. Data intelligence platform LOGIQ LogIQ is Mirada’s new data analytics platform which uses holistic data retrieved from clients’ operations to enable them to make better, data-driven decisions. With LogIQ, operators are ﬁnally armed with valuable insights about their platform, subscribers and consumption, empowering them to provide the most advanced and appealing oﬀering in an increasingly competitive industry. Empowering operators to make intelligent, data-driven decisions. “The most beautiful, smooth and user-friendly TV interface I have ever interacted with” “The technology that powers izzi’s multiscreen platform is the most advanced in the entire region” Carlos Soares Project Manager Guillermo Salcedo VP Marketing 6 / Our Produ ct s 6 / Our produ ct s Ou r Products / 7 INVESTOR INSIGHTS MIRADA IN THE MARKET Pay TV Market Overview The global pay TV market is one of the largest industries in the world with subscribers expected to grow by 8% between 2018 and 2024 to reach 1.10 billion. However, due to the huge advancements in technology, changing consumer lifestyles and the arrival of OTT competitors, pay TV revenues are set to peak. As a result, traditional operators are being forced to look for new ways to enhance their existing TV proposition to keep their subscribers engaged while in turn boosting their platform’s revenues and protecting their market position. With OTT revenues set to exceed $1 billion in 18 countries by 2024, and IPTV set to add 100 million pay TV subscribers between 2018 and 2024, many traditional operators are turning their attention towards IPTV delivery or enhancing their existing TV proposition with OTT features. These platforms allow operators to deliver content anytime and anywhere across increasingly popular connected devices such as smart TVs, media streaming devices and game consoles. Other operators are also turning towards Android TV Operator Tier to oﬀer their viewers a next generation TV service along with all the beneﬁts of the Android environment and access to third-party content. Mirada focuses particularly on the markets of Latin America, Eastern Europe and Asia Paciﬁc. @ D i g i t a l T V R e s e a r c h , 2 0 1 9 . The global pay TV market is one of the largest industries in the world with subscribers expected to grow by 8% between 2018 and 2024 to reach 1.10 billion. OTT revenues set to double in Latin America Latin America is expected to add around ﬁve million pay TV subscribers between 2018 and 2024, bringing the total to 77 million, however pay TV penetration will not climb beyond the current 44% of TV households. This means that operators in Latin America must look for a new source of revenue for their traditional business. OTT TV and video revenues for the majority of Latin American countries are expected to more than double from $3.33 billion in 2018 to $8.25 billion in 2024, which suggests great potential for traditional operators looking for new revenue streams. Mirada’s acclaimed OTT platform is perfectly suited to serve all types of operators looking to future-proof their pay TV business thanks to its seamless integration with existing IPTV/OTT/DVB technologies. OTT TV and video revenue growth in LATAM @ D i g i t a l T V R e s e a r c h , 2 0 1 9 . +140% $3.33bn 2018 $8.25bn 2024 8 / Our product s 8 / Investor In sights 10.02m 2018 26.19m 2024 Growth of SVOD subscriptions in Eastern Europe @ D i g i t a l T V R e s e a r c h , 2 0 1 9 . OTT in Eastern Europe expected to soar Over the past few years, online video services in Europe have experienced rapid growth, particularly those that follow the subscription revenue model. Speciﬁcally in Eastern Europe, OTT TV and video will have 26.19 million SVOD subscriptions by 2024, up from the 10.02 million in 2018. Increasing access to broadband, the popularity of connected devices, competition from other content providers and increasingly tech-savvy consumers have resulted in many pay TV operators looking to position themselves as the content aggregator. Mirada’s ﬂexible multiscreen technology can be easily integrated with popular third-party content aggregators such as Netﬂix, and access to Google’s Play Store through Mirada’s custom launcher for Android TV helps operators to provide their subscribers with the broadest oﬀer to watch in the most convenient way. 2024 2018 $48bn $21bn Growth of APAC online video market revenues @ D i g i t a l T V R e s e a r c h , 2 0 1 9 . APAC to see growth of online video market Asia Paciﬁc’s pay TV market is forecast to add 78 million subscribers and see revenues increase by $2.73 billion between 2017 and 2023. Growth will also be seen in the region’s online video market, which is expected to double in size over the next ﬁve years as a result of the proliferation of smart TVs and connected devices across the region. Online video in Asia Paciﬁc is forecast to take a 25% share of the entire region’s video market by 2024, with OTT TV episode and movie revenues in the region expected to reach $48 billion in 2024, up from the $21 billion in 2018. With Mirada’s advanced Iris multiscreen technology, operators in the region can reap the rewards of delivering content to subscribers across all major platforms including smartphones, smart TVs and media streaming devices such as Roku, Apple TV and Android TV. The global pay TV market is one of the largest industries in the world with subscribers expected to grow by 8% between 2018 and 2024 to reach 1.10 billion. 10.02m 2018 26.19m 2024 Growth of SVOD subscriptions in Eastern Europe @ D i g i t a l T V R e s e a r c h , 2 0 1 9 . OTT in Eastern Europe expected to soar Over the past few years, online video services in Europe have experienced rapid growth, particularly those that follow the subscription revenue model. Speciﬁcally in Eastern Europe, OTT TV and video will have 26.19 million SVOD subscriptions by 2024, up from the 10.02 million in 2018. Increasing access to broadband, the popularity of connected devices, competition from other content providers and increasingly tech-savvy consumers have resulted in many pay TV operators looking to position themselves as the content aggregator. Mirada’s ﬂexible multiscreen technology can be easily integrated with popular third-party content aggregators such as Netﬂix, and access to Google’s Play Store through Mirada’s custom launcher for Android TV helps operators to provide their subscribers with the broadest oﬀer to watch in the most convenient way. 8 / Our products Investor Insights / 9 2024 2018 $48bn $21bn Growth of APAC online video market revenues @ D i g i t a l T V R e s e a r c h , 2 0 1 9 . APAC to see growth of online video market Asia Paciﬁc’s pay TV market is forecast to add 78 million subscribers and see revenues increase by $2.73 billion between 2017 and 2023. Growth will also be seen in the region’s online video market, which is expected to double in size over the next ﬁve years as a result of the proliferation of smart TVs and connected devices across the region. Online video in Asia Paciﬁc is forecast to take a 25% share of the entire region’s video market by 2024, with OTT TV episode and movie revenues in the region expected to reach $48 billion in 2024, up from the $21 billion in 2018. With Mirada’s advanced Iris multiscreen technology, operators in the region can reap the rewards of delivering content to subscribers across all major platforms including smartphones, smart TVs and media streaming devices such as Roku, Apple TV and Android TV. MIRADA IN NUMBERS Facts about our company: ESTABLISHED BUSINESS SOLID EXPERIENCE EXCEPTIONAL CLIENT LIST EXTENSIVE PARTNER NETWORK Founded 19 years ago +60 projects developed 58 clients served globally 29 trusted partnerships MARKET LEADING PRODUCT GLOBAL REACH Cutting edge technology 85% engineering experts Operating across Asia, Europe and the Americas Over +10M people using our technology MIRADA’S STRATEGY Our strategy focuses on four key areas: Market Strategy Product Strategy Mirada has identiﬁed a number of target geographies Our market leading digital TV products have been where it is fully focused on developing its presence. These designed to future-proof the platforms of operators and markets display promising characteristics such as high pay broadcasters worldwide, by dramatically improving their TV penetration rates, increasing popularity of multiscreen user experience with cutting-edge features for content viewing and high annual growth rates of on-demand video discovery and compatibility across all platforms and services, along with burgeoning middle classes providing devices. This enables us to fully satisfy the increasing rapid growth in consumer spending. number of operators with a bring-your-own-device strategy, while also providing them with a roadmap and vision for the future. Sales Strategy Business Model Strategy We have recently boosted our sales and marketing Our business model has been developed to meet the resources to take full advantage of the augmented interest needs of all operators, providing a choice between a in our oﬀerings following the successful high-proﬁle CAPEX model where they will have higher set-up fees and deployment of our ﬂagship product with Tier 1 operator izzi one-oﬀ subscriber licence fees, or an OPEX model which Telecom. We oﬀer our products worldwide and we beneﬁt means lower set-up fees but recurring monthly subscriber from an increased pipeline of opportunities through a direct fees. relationship with customers, for whom we are a partner for growth. 10 / Investor Insi ghts MIRADA IN NUMBERS Facts about our company: ESTABLISHED BUSINESS SOLID EXPERIENCE EXCEPTIONAL CLIENT LIST EXTENSIVE PARTNER NETWORK Founded 19 years ago +60 projects developed 58 clients served globally 29 trusted partnerships MARKET LEADING PRODUCT GLOBAL REACH Cutting edge technology 85% engineering experts Operating across Asia, Europe and the Americas Over +10M people using our technology Review of the Year Corporate Governance Financial Statements DIRECTORS‘ REPORT HIGHLIGHTS OF THE YEAR Iris launches in Bermuda and Bolivia Mirada saw two commercial launches of its Iris multiscreen The second launch took place in April and saw Iris solution in the second half of the year, both based on the deployed across Digital TV Cable’s network in Bolivia, Software as a Service model. allowing their customers to watch content across OTT set-top boxes, smartphones, tablets, computers and smart The ﬁrst took place in January with One Communications in TVs. With the number of digital TV subscribers in Bolivia Bermuda, a territory that beneﬁts from a TV penetration expected to grow at a compound annual growth rate of rate of 98% and one of the highest levels of GDP per capita 19.9% between 2018 and 2021, Mirada expects decent in the world. Thanks to Mirada’s technology, subscribers of recurring revenues from subscriber-based license fees. One Communications’ FibreWire TV service can now watch Both projects are progressing well with the adoption of the live and cloud DVR content across hybrid set-top boxes, technology on track with our expectations. Mirada expects smartphones, tablets and laptops. more commercial launches in the upcoming year. MIRADA’S STRATEGY Our strategy focuses on four key areas: Launch of Android TV product In the streaming market, Android TV is quickly becoming one of the most popular devices on which to provide a pay TV service. Google’s Android TV Operator Tier provides operators with much greater control over their platform’s experience, in addition to the beneﬁts that come with the Android environment, such as being able to oﬀer their viewers easy access to third-party apps via Google’s Play Store. This year, Mirada has developed its own Iris-based launcher for Android TV Operator Tier, to allow operators to replicate the intuitive and engaging Iris experience across set-top boxes running on Android P. The Iris launcher has been showcased at trade shows including NAB Show in Las Vegas and Broadcast Asia in Singapore, and Mirada is delighted with the reception it has received from operators so far. Hi ghlig hts of the Year / 11 Market Strategy Product Strategy Mirada has identiﬁed a number of target geographies Our market leading digital TV products have been where it is fully focused on developing its presence. These designed to future-proof the platforms of operators and markets display promising characteristics such as high pay broadcasters worldwide, by dramatically improving their TV penetration rates, increasing popularity of multiscreen user experience with cutting-edge features for content viewing and high annual growth rates of on-demand video discovery and compatibility across all platforms and services, along with burgeoning middle classes providing devices. This enables us to fully satisfy the increasing rapid growth in consumer spending. number of operators with a bring-your-own-device strategy, while also providing them with a roadmap and vision for the future. Sales Strategy Business Model Strategy We have recently boosted our sales and marketing Our business model has been developed to meet the resources to take full advantage of the augmented interest needs of all operators, providing a choice between a in our oﬀerings following the successful high-proﬁle CAPEX model where they will have higher set-up fees and deployment of our ﬂagship product with Tier 1 operator izzi one-oﬀ subscriber licence fees, or an OPEX model which Telecom. We oﬀer our products worldwide and we beneﬁt means lower set-up fees but recurring monthly subscriber from an increased pipeline of opportunities through a direct fees. relationship with customers, for whom we are a partner for growth. 10 / Investor Insig hts DIRECTORS‘ REPORT Update on izzi At the start of last year, Mirada extended its Iris multiscreen technology to the entire subscriber base of its largest client, izzi Telecom, in preparation for the 2018 FIFA World Cup. The project was a huge success and resulted in greatly increased usage of izzi’s OTT technology, much of which has continued following the tournament’s completion. izzi has since decided to extend the usage of Mirada’s technology to its middle tier subscribers, which has contributed to improve Mirada’s subscriber-based license fee revenues over the year. In March 2019, izzi surpassed the 2 million set-top box milestone, and it is expected that it will continue to extend Mirada’s technology to its other subscriber tiers in the future. New devices for BYOD strategy In line with the Company’s bring-your-own-device strategy, Mirada has launched brand new applications for operators looking to provide the same seamless and intuitive experience that Iris oﬀers on popular connected devices such as Smart TVs (Sony, Samsung, LG etc.), game consoles, and media streaming devices including Roku and Chromecast. The video market is faced with an ever-growing number of devices and options for watching content. Mirada’s ability to provide a cutting-edge experience across such a large range of popular platforms will be highly beneﬁcial in terms of satisfying current and future client needs. 12 / Hi ghlights of t he Y ear Review of the Year Corporate Governance Financial Statements Update on izzi At the start of last year, Mirada extended its Iris multiscreen technology to the entire subscriber base of its largest client, izzi Telecom, in preparation for the 2018 FIFA World Cup. The project was a huge success and resulted in greatly increased usage of izzi’s OTT technology, much of which has continued following the tournament’s completion. izzi has since decided to extend the usage of Mirada’s technology to its middle tier subscribers, which has contributed to improve Mirada’s subscriber-based license fee revenues over the year. In March 2019, izzi surpassed the 2 million set-top box milestone, and it is expected that it will continue to extend Mirada’s technology to its other subscriber tiers in the future. First contract win for Iris in Asia Paciﬁc In December, Mirada won its ﬁrst client in Asia Paciﬁc with SkyMedia, a leading communications service provider in Mongolia. SkyMedia chose Mirada’s Iris multiscreen solution for the ﬁrst phase of its next generation pay TV service. This contract will see Mirada deploy an advanced OTT TV solution for watching live, catch-up and on-demand content on smartphones, tablets and computers. This is the ﬁrst commercial deployment of Iris in Asia, establishing a valuable product reference in the region and further demonstrating Mirada’s ability to deliver a complex solution across a leading IPTV provider’s network. Following this ﬁrst phase, Skytel plans to expand its oﬀering of Iris to Smart TVs and OTT set-top boxes in a second phase. New devices for BYOD strategy POST YEAR-END Sale of Mirada Connect Mirada’s cashless payment parking division, Mirada Financial Services group, for £2.1 million. Mirada intends to Connect, was set aside from the Company’s core pay TV use the net proceeds of the sale of Connect for general activities two years ago and had been gaining a powerful working capital purposes. In the year ended 31 March presence in its market. Over the last year, Mirada had 2019, Connect recorded revenue of £633,000 and a proﬁt received oﬀers for the divestment of this unit, and on 5 July before tax of £122,000 and was valued at £556,000 on the 2019, the Company conﬁrmed the sale of this division to Company’s balance sheet at that date. PayByPhone, a competitor owned by the Volkswagen In line with the Company’s bring-your-own-device strategy, Mirada has launched brand new applications for operators looking to provide the same seamless and intuitive experience that Iris oﬀers on popular connected devices such as Smart TVs (Sony, Samsung, LG etc.), game consoles, and media streaming devices including Roku and Chromecast. The video market is faced with an ever-growing number of devices and options for watching content. Mirada’s ability to provide a cutting-edge experience across such a large range of popular platforms will be highly beneﬁcial in terms of satisfying current and future client needs. 12 / Highlights of the Y ear Hi ghlig hts of the Year / 13 CEO STATEMENT JOSÉ LUIS VÁZQUEZ The Company is experiencing a substantial increase in both support and subscriber-based licence revenues Overview I am pleased to present the Group’s ﬁnancial results for the Trading review year ended 31 March 2019. This was a transformational period for the Company, during which Mirada The Group operates two segments, being Digital TV and demonstrated its capabilities through the successful Broadcast (“Digital TV”) and Mobile. mass-market deployment of its Iris multiscreen technology in Mexico during the 2018 FIFA World Cup. The Company is advancing its operational and commercial capabilities, demonstrated by Mirada’s involvement in three Mirada also continued its expansion with multiple new simultaneous, signiﬁcant deployments in the year. From an commercial deployments during the year, including two operational point of view, it has been the ﬁrst time that new Software as a Service (SaaS) customers, ATN Mirada has been involved in the roll-out of three international in Bermuda and Digital TV Cable Edmund in simultaneous signiﬁcant deployments. Bolivia. The Company also secured its ﬁrst Iris customer in the Asian market with Skytel in Mongolia. Izzi Telecom in Mexico extended the Mirada Iris multiscreen technology to all its subscriber base during the 2018 World Mirada simultaneous coordination of multiple new Cup, allowing them to watch the football matches over deployments, while supporting a marked increase in their mobile phones at times where they would not usually growth within its existing customer based, demonstrated be at home. Mirada successfully responded to the the signiﬁcant advancement in the operational capabilities challenge and it proved to be a great success, aided by of the Group. Additionally, thanks to its improved sales and Mexico’s long run in the tournament. This has resulted in an marketing teams, and due to the relevant references the ongoing increased usage of Mirada’s OTT technology in Group has been able to secure, there has been a signiﬁcant Mexico. Additionally, Izzi Telecom chose to extend Mirada’s improvement in the sales pipeline anticipating a potential technology to its middle tier subscribers, resulting in an increase in the pace of new customer acquisition. increased rate of installation of Mirada licences, and With the accumulation of successful deployments, the revenues for Mirada during the year. In March 2019, Izzi Company is also experiencing a substantial increase in both Telecom surpassed the milestone of having 2 million support and subscriber-based licence revenues, with a set-top boxes installed with Mirada’s technology. It is greater percentage of recurrent income providing much expected that Izzi will expand Mirada’s technology to its higher revenue visibility. remaining tiers in the future. therefore, improved subscriber-based licence fee 14 / CEO Statement CEO STATEMENT JOSÉ LUIS VÁZQUEZ The Company is experiencing a substantial increase in both support and subscriber-based licence revenues Overview I am pleased to present the Group’s ﬁnancial results for the Trading review year ended 31 March 2019. This was a transformational period for the Company, during which Mirada The Group operates two segments, being Digital TV and demonstrated its capabilities through the successful Broadcast (“Digital TV”) and Mobile. mass-market deployment of its Iris multiscreen technology in Mexico during the 2018 FIFA World Cup. The Company is advancing its operational and commercial capabilities, demonstrated by Mirada’s involvement in three Mirada also continued its expansion with multiple new simultaneous, signiﬁcant deployments in the year. From an commercial deployments during the year, including two operational point of view, it has been the ﬁrst time that new Software as a Service (SaaS) customers, ATN Mirada has been involved in the roll-out of three international in Bermuda and Digital TV Cable Edmund in simultaneous signiﬁcant deployments. Bolivia. The Company also secured its ﬁrst Iris customer in the Asian market with Skytel in Mongolia. Izzi Telecom in Mexico extended the Mirada Iris multiscreen technology to all its subscriber base during the 2018 World Mirada simultaneous coordination of multiple new Cup, allowing them to watch the football matches over deployments, while supporting a marked increase in their mobile phones at times where they would not usually growth within its existing customer based, demonstrated be at home. Mirada successfully responded to the the signiﬁcant advancement in the operational capabilities challenge and it proved to be a great success, aided by of the Group. Additionally, thanks to its improved sales and Mexico’s long run in the tournament. This has resulted in an marketing teams, and due to the relevant references the ongoing increased usage of Mirada’s OTT technology in Group has been able to secure, there has been a signiﬁcant Mexico. Additionally, Izzi Telecom chose to extend Mirada’s improvement in the sales pipeline anticipating a potential technology to its middle tier subscribers, resulting in an increase in the pace of new customer acquisition. increased rate of installation of Mirada licences, and With the accumulation of successful deployments, the revenues for Mirada during the year. In March 2019, Izzi Company is also experiencing a substantial increase in both Telecom surpassed the milestone of having 2 million support and subscriber-based licence revenues, with a set-top boxes installed with Mirada’s technology. It is greater percentage of recurrent income providing much expected that Izzi will expand Mirada’s technology to its higher revenue visibility. remaining tiers in the future. therefore, improved subscriber-based licence fee Review of the Year Corporate Governance Financial Statements ATN International started deploying Mirada technology we are now able to provide our services over the latest over its assets in the Caribbean and Bermuda during the version of the Android TV operator tier, with an advanced year. The commercial phase began in January 2019, and Custom Launcher that perfectly matches our Inspire user the pace of adoption of the technology in the region is on experience over these new devices. track with Mirada’s expectations. This is Mirada’s ﬁrst SaaS model deployment, and recurrent revenues from this On the commercial side, the Group has continued to customer will start to have a ﬁnancial impact during the improve its marketing and sales eﬀorts, with the successful present ﬁscal year. The third signiﬁcant deployment during the year under review was with Digital TV Edmund in Bolivia. This is also a SaaS model deployment with the commercial phase starting in late March 2019. Long term recurring revenues from this contract are also expected to impact our ﬁnancial performance in the coming year and there is potential for ongoing deployment of new features and services. A gradual roll out is planned over ﬁve years, with a target of up to nearly one million devices. Mirada continued its expansion with multiple new commercial deployments during the year extension of our customer reach to the Asian market. The contract win in December 2018 with Skytel in Mongolia marks the ﬁrst deployment of our Iris technology in the Asian market, and we expect to follow this announcement with other deals in the future. The pipeline has substantially increased, with the number of deals in which we are participating nearly doubling during the year. It is the ﬁrst time that Mirada has been involved in the roll-out of three simultaneous deployments This increase in the pipeline can in part be attributed to the many successful deployments of our technology, which demonstrate the quality of our oﬀering and ability to manage substantial projects. This is especially evident of our successful deployment with Televisa Group across Mexico. Our product range Mirada has also been able to extend its product reach to comprises the vast majority of the needs of our potential accommodate the demands of the market. The customers, and their feedback is that we match other “Bring-Your-Own-Device” (BYOD) market trend is top-range solutions in the market. increasingly being adopted by our customers, meaning that the consumption of the audiovisual content is being Regarding our non-core cashless payment parking extended to other devices like mobile phones, tablets, division, Mirada Connect, we are happy to have been able gaming consoles and smart TVs. Mirada anticipated this to nurture a successful company, which has been able to trend with the launch of its OTT product in 2015 and is now gain a powerful presence in its market. On 31 March 2019 able to provide its services over all these devices, with the the audited accounts showed a turnover for the year of recent announcement of our software for Roku and Xbox. £0.63 million (2018: £0.66 million), net proﬁts of £0.12 million The set-top box market is also evolving with the extended (2018: £0.12 million) and was valued at £0.56 million on the adoption of Android TV technology over traditional pure Company’s balance sheet at that date. The Connect Linux-based middleware. We are happy to announce that division was clearly not related to our core activities, and we 14 / CEO Statement CEO Statement / 15 were happy to receive oﬀers for the divestment of this unit. into new customer tiers at Izzi Telecom. Post year-end, on 5th July 2019, we announced the sale of this division to PayByPhone, a competitor owned by the Gross proﬁt grew to $11.47 million (2018: $7.94 million), Volkswagen Financial Services group, for a consideration of leading to an operating loss of $2.91 million (2018: $4.62 £2.12 million in cash. This generated a proﬁt on disposal of million). Amortisation charges increased to $3.58 million $1.75 million. We believe this transaction is very beneﬁcial from $3.35 million, in line with prior years’ increase in for all parties involved, and we wish the Connect team the product investment. Staﬀ Costs increased by $1.65 million best for the future. to $ 7.25 million (2018: $5.6 million). This is due to the growth of the development team during the year. As a Looking ahead to Brexit and considering mitigation plans in result, the net impact was a reduction of the net loss for the order to reduce the potential negative impact on the year to $3.11 million (2018: loss of $4.87 million). The Company’s operational activity and Financial Statements, improvement of revenues led to an Adjusted EBITDA (as the Board has decided to close its Exeter oﬃce. This deﬁned in Note 7) proﬁt of $0.81 million (2018: loss of $1.12 closure may result in redundancies and a process is million), mainly driven by the licence revenue increase. underway at the current time. The closure of the There is a tax credit recognised in the current period of Company’s Exeter oﬃce is expected to take eﬀect in $0.18 million (2018: $0.30) as a result of Mirada Iberia’s September 2019. research and innovation tax deductions. The growth experienced this year at all levels results from Net Debt was reduced to $4.86 million (2018: $11.70 million). the continued deployment of a business plan based on Long term interest-bearing loans and borrowings securing proﬁtable deals with an increased focus on decreased by 31% to $1.72 million (2018: $2.48 million) and recurrent revenues and a belief that a superior product and short term borrowings and related party loans and interest customer service is the cornerstone of every successful decreased to $3.26 million (2018: $11.16 million). See note 18 company. The Board believes that the Company is rapidly for further details. Trade receivables increased from $1.38 approaching a point of sustained proﬁtability. We are million to $1.89 million, due to increased revenues and committed to this plan, and we couldn’t make it possible activity at the end of the ﬁscal year. The Company settled a without the continued support of our employees, related party debt facility of £1.7 million in August 2018, and customers, suppliers, partners and investors, to whom we another related party facility of £3.0 million in October 2018, express our gratitude. Financial overview which were converted into capital on 29 August 2018 and 4 October 2018 respectively, alongside an additional capital injection of £3.0 million. Both the facilities and the capital injection were subject to shareholder approval in August 2018 and October 2018. Other intangible assets have decreased by $1.22 million mainly due to the decreased valuation of the Euro against the US Dollar and due to the diﬀerence between amortisation and addition of intangible assets. The Group used $1.24 million of cash in operating activities in the year (2018: cash used in operating activities of $1.7 million) and spent a further $3.1 million (2018: $3.9 million) in investing activities, mainly due to variations in the working capital position at the end of the period and investment in Revenue grew to $12.32 million (2018: $8.82 million), a 40% development costs. year-on-year increase. Growth in revenues on development was $2.1 million to reach $6.51 million for the The operating and investing cash ﬂows were partially year, driven by the new projects won. Subscriber-based funded by the movement in net debt explained above. licence fees grew by $1.5 million to reach $4.05 million for Therefore, resulting in a fall in cash and cash equivalents of the year, mainly due to the introduction of our Iris product $1.82 million. 16 / CEO Stateme nt Review of the Year Corporate Governance Financial Statements The Company has adopted the new accounting standards with eﬀect from 1 April 2018: Current Trading and Outlook Mirada is focused on the Digital TV segment and is increasing its market reach, with a growing healthy pipeline of opportunities as a result of the successful deployment and a wide appraisal of its Iris multi- platform product. The Company is now considered to be a top-end solution for potential customers, with a ﬂexible model that allows audiovisual companies of any size to provide a competitive oﬀering for their subscribers. Mirada’s ﬁnancial position is continuously improving, reinforced by the support of its largest shareholder. Together, these factors have led to an improved commercial performance, with participation in multiple deals and, combined with the growing pipeline, provide conﬁdence in the Company’s ability to secure more contract wins in the current year. José-Luis Vázquez Chief Executive Oﬃcer 10th July 2019 IFRS 9- Financial instruments IFRS 15- Revenue from contracts with customers IFRS 9 – Financial instruments has replaced IAS 39 Financial Instruments: Recognition and Measurement and has not had a material eﬀect on the Company. Therefore, impairment provision on ﬁnancial assets measured at amortised cost (such as trade and other receivables) has been calculated in accordance with IFRS 9’s expected credit loss model. The Group did not identify signiﬁcant changes in its consolidated ﬁnancial statements due to applying the classiﬁcation and measurement requirements of IFRS 9, because the Group only has assets that are categorised as amortised cost and the application of expected credit loss has not had a material impact to the impairment provision because all trade receivables balances have been collected before 9 July 2019. Since the impact on the Group was immaterial, the Group has chosen not to restate prior year comparatives on adoption of IFRS 9. IFRS 15 – Revenue from customer contracts has replaced IAS 18 Revenue and IAS 11 Construction Contracts as well as various interpretations previously issued by the IFRS Interpretations Committee. The Company adopted IFRS 15 using the cumulative eﬀect method applied to those contracts which were not completed as of 1 April 2018. The impact of the new standard was a $0.38 million positive adjustment as shown in the Consolidated Statement of Changes in Equity. See note 3 to the ﬁnancial statements for further information on the new IFRS standards. Enclosed with this annual report and accounts is the notice of Annual General Meeting for 2019. As part of the special business at such meeting, the Directors propose resolutions to consolidate the ordinary share capital of the Company into ordinary shares of £1 each, and to authorise the Company to use electronic communications to communicate with its shareholders. Explanatory notes as regards these resolutions are set out in the notice of Annual General Meeting. 16 / CEO Statement CEO Statement / 17 Contents / 17 STRATEGIC REPORT Business model The Company’s main activities are the provision of software for the Digital TV market (“Digital TV” segment), which this year represents 93% of revenues, and mobile telecoms operators (“Mobile” segment), which represented 7% of revenue. Our major customers are Digital TV platforms, composed mainly of 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, computers and smart TVs. Our major products are our navigational software proposition, Iris, including our Inspire user interface, and X-player, 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). 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 for their Digital TV solution. Our expertise is widely recognised in the industry, and we provide a value that goes beyond our actual UI proposition. Aside from the professional services related to deployment, support and maintenance, our licencing model varies depending on the size of the customer, from one-off fees per household for the product as it is, to recurrent revenues for a Software as a Service (“SaaS”) model. The Group also historically provided cashless and, as long as the customer’s subscriber base keeps growing, Mirada will continue to earn licence fees even from projects which were completed several years previously. Reference deployments (defined as key deployments used as a reference to attract potential customers) are very important in this market, and winning reference contracts has been and remains 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. These include costs incurred towards developing new functionality such as an increased presence in the Cloud, enhanced search, recommendation and personalisation functionalities, integration with more content providers, chipsets and device manufacturers. Our continued investment in Iris is essential in ensuring a proper implementation of this strategy. 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. This licence revenue has increased in the current year from $2.58 million to $4.05 millon, as a result of the increased usage of our technology from our main customer as noted in the CEO’s report. Development, performance and position of business Development, performance and position of our business have been discussed in the CEO’s report, with key items payment solutions to car park operators through a revenue- on page 14. share agreement (Mobile segment) but, as set out above, this division was divested post period end. Mobile segment revenue is earned when services are provided. Managed services such as quality assurance on functionality add- ons to platforms are also provided to customers. Principal risks and uncertainties The key business risks affecting the Group are set out below. All these risks are consistent and stable compared Strategy with the prior year. Dependence on people 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, Eastern Europe and South East Asia markets. The aim is to increase the number of customers being charged subscriber-based licence fees, as these revenues command higher margins 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 and investment in training are examples of 18 / Strategic Report Review of the Year Corporate Governance Financial Statements this. Rotation of key management, considered to be the that the Group is able to meet its liabilities as they fall due. main measure of risk, is very low as there have been no Where a shortfall in funding is identified the Company changes in the key executive management team in the last will look to meet this shortfall through a variety of funding five years, except for a change in the Finance Director in options including but not limited to the issuing of new equity. November 2015. This area is considered further in the report of the directors and the accounting policies under ‘Going concern’. Digital TV and Broadcast markets The sectors in which the Group operates may undergo Brexit rapid and unexpected changes. It is possible, therefore, that The continued delay in agreeing the nature and timing of the competitors will develop products that are similar to those UK’s exit from the European Union (EU) creates uncertainty of the Group, or its technology may become obsolete or that may impact the performance of our business. less effective. The Group’s success depends upon its ability to enhance its products and technologies and develop and The potential impact includes: introduce new products and features that meet changing customer requirements and incorporate technological • A continued deterioration in customer sentiment. advances on a timely and cost-effective basis. As a result, the Group continues to invest significantly in research and development. Information technology • Operational complexity and cost due to restrictions on the movement of goods and stricter border controls. • Costs passed through from our suppliers. Data security, loss or corruption of data, and business continuity pose inherent risks for the Group leading to a • Continuity of supply and supplier viability. loss of customer confidence in the Group being able to deliver their requirements. To mitigate this risk, the Group • Import and export duties. invests in, and keeps under review, formal data security and business continuity policies. The Group maintain both • Additional regulatory responsibilities and costs. local and cloud-based backups and regularly review plans on how to improve data management. • Increased complexity and cost in our international Intellectual property operations. There are certain markets in which there could be instances of disputes regarding intellectual property involving technology companies, including the Digital TV market. So far no disputes have been raised and the Company does not envisage any risks to its own intellectual property. While the Group internally generates its products and software and strongly believes that it has not infringed any third-party intellectual property, management do recognise that due Specific mitigation plans have been developed by Mirada in order to reduce the potential negative impact on its operational activity and Financial Statements. In particular, the Company considered the reduction of its payroll based in the UK through the divestment of Mirada Connect Ltd, on 4th July 2019, the closure of its Exeter office, and potential resulting redundancies at this office, with plans under way at the present time. The closure of the Company’s Exeter to the nature of the technology market there will always office is expected to take effect in September 2019. be a risk of other corporations potentially making claims regarding intellectual property/patent infringements. Approval Liquidity Risk This strategic report was approved in behalf of the Board Liquidity risk is managed through the assessment of short, on 10th July 2019 and signed on its behalf. medium and long term cashflow forecasts to ensure the adequacy of funding in order to meet the Group’s working capital requirements. Cash and cash flow forecasts are regularly reviewed by the Executive Directors and the Group constantly monitors these to ensure, among other scenarios, José-Luis Vázquez Chief Executive Officer 10 July 2019 18 / Strategic R ep ort St rateg ic Report / 19 DIRECTORS’ REPORT Review of business, future developments and key Directors’ and officers’ indemnity insurance performance indicators The Group has taken out an insurance policy to indemnify Reviews of the business, its results, future direction and key the Directors and officers of the company and its subsidiaries performance indicators are included in the Chief Executive in respect of certain liabilities which may attach to them in Officer’s Report and Strategic Report on pages 14 to 19. their capacity as directors or officers of the Group, so far as Dividends No dividend is declared in respect of the year (2018: $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 20 for further details on the Group’s financial instruments. Going concern These financial statements have been prepared on the going concern basis. The Directors have reviewed the Company and Group’s going concern position taking account of its current business activities, budgeted performance and the factors likely to affect its future development, are set out in its Annual report, and include the Group’s objectives, policies and processes for managing its capital, its financial risk management objectives and its exposure to credit and liquidity risks. The directors have prepared cash flow forecasts covering a period of at least 12 months from the date of approval permitted by law. This policy remained in force throughout the year and remains in place at the date of this report. Research and Development activities The Group continues its development program of software for the Digital TV market including the research and development of new products and enhancements to existing products. The Directors consider the investment in research and development to be fundamental to the success of the business in the future. Corporate Governance The Board decided to update its current Corporate Governance code and adopt the QCA Corporate Governance Code (April 2018) from 26 September 2018, and there have not been any changes since then. It is available in the Mirada website: https://www.mirada.tv/ investors/corporate-governance/. Compliance with the Quoted Companies Alliance Corporate Governance Code The Quoted Companies Alliance has published a corporate governance code which includes a standard of minimum best practice for AIM companies, and recommendations for reporting corporate governance matters. of the financial statements. If the forecast is achieved, the Chairman’s Governance Statement Group will be able to operate within its existing facilities. As a Chairman, my role is to manage the Board in the However, the time to close new customers and the value best interests of our stakeholders, to ensure that our of each customer, which are high volume and low value in shareholders’ views are communicated to the Board and nature are factors which constrain the ability to accurately to be responsible for ensuring the Board’s integrity and predict revenue performance. Furthermore, investment in effectiveness. I recognise that my role also involves my winning customers, via market expenditure, and servicing responsibility over the correct implementation of the QCA and delivering to new customers remains an important Code into Mirada’s Corporate Governance practices. function of the forecasts too. As such, there is a risk that the Group’s working capital may prove insufficient to cover both operating activities and the repayment of its debt facilities. In such circumstances, the Group would be obliged to seek additional funding though a placement of shares, or source other funding. The Directors have had a history of raising The Company is managed by the Board of Directors, and it is the Board’s job to ensure that the Mirada Group is managed for the long-term benefit of all shareholders, with effective and efficient decision-making. Corporate governance is an important part of that job, reducing risk and adding value to financing from similar transactions. our business. See note 3 to the financial statements for further information on going concern. In addition to each of the 10 principles listed further below, the following provides an overview of how the Company 20 / Directors’ Repo rt Review of the Year Corporate Governance Financial Statements applies the QCA Code, in order to support the Company’s a separate Company Secretary appointed. This decision is medium to long-term success. motivated by the size of the Company and the Board itself, and currently all the functions of a Company Secretary are The Board comprises three Executive and two independent being shared between the three Executive Directors: José non-Executive Directors. The Board considers, after Luis Vázquez, Gonzalo Babío and José Gozalbo. careful review, that the non-Executive Directors bring an independent judgement to bear notwithstanding their length of service and are therefore both considered independent. The Board has decided to adopt voluntarily the practice that one third of the Directors stand for re- election on an annual basis. Francis Coles, the non-Executive Chairman, is responsible for the running of the Board and corporate governance. José Luis Vázquez, the Chief Executive, has executive responsibility for running the Group’s business and implementing Group strategy. The Board meets at least four times per year and has a formal schedule of matters reserved to it. It is responsible for overall Group strategy, approval of major capital expenditure projects, approval of the annual and interim results, annual budgets and Board structure. It monitors the exposure to key business risks and reviews the strategic direction of all trading subsidiaries, their annual budgets, their performance in relation to those budgets and their capital expenditure. The Board delegates day-to-day responsibility for managing the business to the Executive Directors and the senior management team. The Board believes that, given its size, there is sufficient opportunity for shareholders to raise any concerns they may have with the non-Executive Chairman, the Chief Executive, the Group Finance Director and the other Directors. Francis Coles, Chairman The QCA Code sets out ten principles which should be applied. These are listed below together with a short explanation of how the Group applies each of the principles: 1. Establish a strategy and business model which promote long-term value for shareholders: The Mirada Group strategy is focused around four key areas: market, product, sales, and business model, as explained fully within the Strategic Report section of our Report and Annual Accounts. The Group’s strategy is to extend its presence in the Digital TV markets, focusing on those with high potential growth rates, for example the Latin American, Eastern Europe and South East Asian markets. 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 completed several years previously. The key challenges to the business and how these are mitigated are detailed in the Strategic Report. 2. Seek to understand and meet shareholder needs and Our values are based on two cornerstones: our customers expectations: and our employees. The Board believes this is vital for The Mirada Group encourages two-way communication creating a sustainable, growing business and is a key with both its institutional and private investors and responds responsibility of the Group. This culture supports the quickly to all queries received. The CEO talks regularly Company’s objectives to grow the business through with the Group’s major shareholders and ensures that their acquiring and retaining customers by attending to their views are communicated fully to the Board. needs from the very beginning of the sales process until successful delivery and during ongoing services provision The Board recognises the AGM and the GMs as important and support. The Company recognises its employees as a opportunities to meet private shareholders. The Directors key driver of success and considers it crucial to recruit and are available to listen to the views of shareholders informally retain the right people with the appropriate set of skills and immediately following these meetings. The Group has set values. Corporate Governance is an important part of that up a dedicated email address for all investor queries. job, reducing risk and adding value to our business. Even though the Company’s goal is to meet all the expectations, the Board will engage with those shareholders expectations set by the QCA Code, there is not currently to understand and address any issues. Where voting decisions are not in line with the Company’s 20 / Directors’ Repo rt Dir ectors‹ Report / 21 3. Take into account wider stakeholder and social Board to gain assurance that the risk management and responsibilities and their implications for long-term related control systems in place are effective. success: The Mirada Group has identified the following key 5. Maintain the board as a well-functioning, balanced stakeholders and decided on implementing the following team led by the chair: actions to cover their needs, interests and expectations: The Company is controlled by the Board of Directors. • Employees – company meetings, CEO letters, work for the running of the Board and José Luis Vázquez, the Francis Coles, the Non-executive Chairman, is responsible council Chief Executive, has executive responsibility for running the Group’s business and implementing Group strategy. • Customers – corporate website, social media, Directors attend one Board Meeting per quarter. international trade fairs, personal meetings, high- and low-level bilateral meetings A summary of Board meetings attended by current Directors in the twelve months to 31 March 2019 is set out • Sales Partners – internal blog, weekly industry press below: reviews, weekly follow-up conferences, marketing material • Shareholders – see principle 2 • Technological Partners – corporate website, social media, international trade fairs, personal meetings, high- and low-level bilateral meetings • Compliance advisors – periodic conference calls, advice request when applicable • Banks – periodic meetings Mirada identifies its employees as its key asset and puts a considerable amount of effort into ensuring employee satisfaction by such measures as improving work-life balance, providing fringe benefits, team building activities and many more. 4 Embed effective risk management, considering both opportunities and threats, throughout the organisation: The Board considers risk to the business at every Board meeting (at least one meeting is held per quarter) and the risk register is updated at each meeting. The Company formally reviews and documents the principal risks to the business at least annually. Both the Board and senior managers are responsible for reviewing and evaluating risk and the Executive Directors meet at least monthly to review ongoing trading performance, discuss budgets and forecasts and new risks associated with ongoing trading. This process allows the Francis Coles Jose Luis Vazquez Matthew Peter Earl Jose Francisco Gozalbo Gonzalo Babío 25 Apr 2018 16 May 2018 8 Aug 2018 14 Sep 2018 4 Oct 2018 13 Dec 2018 12 Mar 2019                                    All Directors receive regular and timely information about the Group’s operational and financial performance. Relevant information is circulated to the Directors in advance of meetings. In addition, minutes of the meetings of the Directors are circulated to the Group Board of Directors. All Directors are able to take independent professional advice in the furtherance of their duties, if necessary, at the Company’s expense. The Board comprises three Executive Directors and two Non-Executive Directors. All Executives Directors work on a full-time basis and the Non-Executive Director’s service agreements set out expected time commitments. All Directors recognise that a certain time of increased activity, the preparation and attendance at meetings will increase. The Board considers that all Non- executive Directors bring an independent judgement to bear notwithstanding the varying lengths of service. The Directors of Mirada (the “Directors”) have the following experience and skills: 22 / Directors‹ Report Francis Coles Non-Executive Chairman Frances Coles has nearly 40 years of experience in corporate finance. He was a founder director of corporate finance advisory boutique New Boathouse Capital and Fresh Interactive Technologies where he managed the deployment of products and services worldwide, working with some of the key partners in the Pay TV market. Matthew Peter Earl later served as a director of AIM listed merchant bank Non-Executive Director Quayle Munro following its aquisition of New Boathouse Matthew has spent over 12 years working in the financial Capital in 2007. Prior to that, Francis was a director of Baring services sector primarily in Equity Capital Markets. Matthew Brothers and subsequently Santander Investment where started his career with Royal Bank of Scotland plc as an his responsibilities included debt and equity fundraisings economist before working at Investec plc. Matthew then and merger and acquisition activities in the European and joined Charles Stanley Securities as an equity analyst in Latin American markets. José Luis Vázquez Chief Executive Officer José L. Vázquez is CEO and Co-Founder of Fresh, a leading interactive TV player in the Spanish market. He holds a degree in Advanced Telecommunication Engineering (UPM) and an MBA (IESE). He has more than 15 years of experience in Telecommunication and Interactivity markets, where he is an skilled professional. He founded Fresh in year 2000 being the CTO and became the CEO of the company in 2004. José is one of the leading figures in the Hispanic Digital TV platforms markets. Gonzalo Babío Chief Financial Officer Gonzalo Babío has a broad experience in media and technology sectors. His professional career includes three years working at Arthur Andersen as an auditor, ten years at Electronic Arts as Finance Director working in Madrid, Lisbon, Sao Paulo, Lyon and London, and ten years as Finance Director for The Walt Disney Company Iberia in Madrid. He has a degree in Business Administration from the Universidad de Deusto in Bilbao, an EMBA from IESE Business School in Madrid and a PED from IMD in Lausanne. José Francisco Gozalbo Sidro Chief Technology Officer José joined Mirada as Chief Technology Officer in March 2008, bringing over 18 years of experience in software development companies. In this role he has been responsible for software development, quality assurance, R&D and presales departments. He has a special focus on the Latin America region and has helped to build relationships with big telecoms partners that have led to multiple deployments of Mirada’s products. Prior to joining Mirada, José was Chief Technology Officer at the support services sector, until he moved to head up the business services research team at Matrix Group Limited in 2010. More recently he has become an active investor in small and medium sized businesses. The Audit Committee and the Remuneration and Nomination Committee meet formally at least twice a year. In the year ended 31 March 2019, Francis Coles and Mathew Earl attended all meetings of the Audit, Remuneration and Nomination Committees. 6. Ensure that between them the directors have the necessary up-to-date experience, skills and capabilities: The Nomination Committee of the Board oversees the hiring process and makes recommendations to the Board on all new Board appointments. Where new Board appointments are considered the search for candidates is conducted, and appointments are made, on merit, against objective criteria. Whilst there is not currently a balance of genders on the Board, the Company’s Directors look to appoint individuals with complementary skills and experience to fulfil the Company’s strategy, regardless of gender. The Nomination Committee also considers succession planning. The skills and experience of the Board are set out in their biographical details against principle 5 above. The Directors bring a mixture of relevant sector, public company and financial experience to the Board such that it has the capabilities to deliver the Company’s strategy. The directors keep their skillsets up to date by attending industry and qualification relevant seminars and training sessions. The directors seek advice from their corporate advisers (including the Company’s nominated adviser, lawyers and accountants) as necessary. Dir ectors‹ Report / 23 Review of the Year Corporate Governance Financial Statements7. Evaluate board performance based on clear and 10. Communicate how the Company is governed relevant objectives, seeking continuous improvement: and is performing by maintaining a dialogue with The Board carries out an evaluation of its performance shareholders and other relevant stakeholders: annually, taking into account the Financial reporting The Company encourages two-way communication with Council’s Guidance on Board Effectiveness. The company both its institutional and private investors and responds has performed regular reviews of its Board composition, quickly to all queries received. The CEO talks regularly considering whether each Director has the appropriate with the Group’s major shareholders and ensures that their skills for the proper performance of their duties. The views are communicated fully to the Board. Board is satisfied that each individual has the right balance of financial and market knowledge to understand the The Board recognizes the AGM and other GMs as performance and prospects of the business for the proper important opportunities to meet private shareholders. The development of the Group. Directors are available to listen to the views of shareholders informally, immediately following any General Meeting. All Directors undergo a performance evaluation before being proposed for re-election to ensure that their Directors performance is and continues to be effective, that where appropriate they maintain their independence and that they are demonstrating continued commitment to the role. Appraisals are carried out each year with all Executive Directors. All continuing Directors stand for re-election every three years. 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 Non-executive directors 8. Promote a corporate culture that is based on ethical Mr Javier Casanueva Non- Executive Chairman values and behaviours: Ethical values and behaviours are one of the key elements of Board members’ appraisals. It also forms an important part of every employee’s appraisal process, with a special focus on employees with direct contact with customers Mr Francis Coles New Chairman from May 17th, 2018 (passed away on May 12th, 2018) Mr Matthew Earl Events since the reporting date and vendors. Company values are also included in the On June 4, 2019, Mirada Iberia, S.A.U., entered into a new welcome package that every new employee receives upon revolving credit facility for up to €1.3million (the “Facility”). joining the company, which is also available for everyone The proceeds from the Facility are to be used alongside on the Intranet. 9. Maintain governance structures and processes that are fit for purpose and support good decision-making by the board: Our corporate governance statement on structure and processes is available on our corporate website, AIM Rule 26, Corporate Governance section. Direct link available here: https://www.mirada.tv/investors/aim-rule-26/ Mirada’s existing debt financing facilities for general working capital purposes and capex of the Company, including the implementation of customer contracts announced and in prospect. The Directors believe that monies drawn down from the Facility will strengthen the Company’s balance sheet whilst giving the Company the opportunity to secure new customer contracts and negotiate and renew other debt financing facilities, such as invoice discounting facilities. 24 / Di rectors‹ Report The Directors believe that the Facility represents the best financing option currently available to allow the Company to satisfy its short to medium-term working capital requirements and to convert its pipeline of new business opportunities into new customer contracts. The Facility comprises an immediate drawdown of €500,000 and thereafter up to a further €800,000 can be drawn in minimum tranches of €200,000 up to a maximum of five tranches including initial drawdown On 4 July 2019, Mirada plc signed a Sales and Purchase Agreement to divest its subsidiary Mirada Connect Ltd to Pay By Phone Ltd (subsidiary of Volkswagen Financial Services, AG) for £2.1 million in cash. Auditors Each of the persons who are directors at the date of approval of this report confirms that: 1. so far as the directors are aware, there is no relevant audit information of which the auditors are unaware; and 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. Approved by the Board of Directors and signed on behalf of the Board: José-Luis Vázquez Chief Executive Officer 10 July 2019 Dir ec tors‹ Report / 25 Review of the Year Corporate Governance Financial StatementsAUDIT COMMITTEE REPORT I am pleased to present the report on behalf of the Audit IFRS 9 Financial Instruments Committee. IFRS 9 has replaced IAS 39 Financial Instruments: Recognition and Measurement with impact in the following The Committee is responsible for challenging the quality areas: of internal and external control and for ensuring that the financial performance of the Group is properly reported and reviewed. The Board considers that the Company is not currently of a size to warrant the need for an internal audit function although the Board has put in place internal financial procedures to ensure close internal controls. • No impairment provision was needed, as the Group collected all Trade Receivables before 9 July 2019. • The Group has chosen not to restate comparatives on adoption of IFRS 9 and, therefore, any changes have been processed at the date of initial application Committee Composition (1 April 2018). The members of the Audit Committee are myself, Francis Coles, as Chair, and Matthew P. Earl both independent IFRS 15 Revenue from contracts with customers non-executive directors. The Board is of the view that we have recent and relevant experience. Meetings are held on average twice a year. José Luis Vázquez (CEO), and Gonzalo Babío (Finance Director), attend by invitation. I report to the Board following an Audit Committee meeting and minutes IFRS 15 has replaced IAS 18 Revenue and IAS 11 Construction Contracts as well as various interpretations previously issued by the IFRS Interpretations Committee. The impact of the new standard was $0.38 million additional equity as shown in the Consolidated Statement of Changes in Equity. External auditor BDO was reappointed as the Group’s auditor at the Annual General Meeting held on the 23th October 2018. The Committee considers that its relationship with the auditor is working well and is satisfied with their effectiveness. Francis Coles Chair of the Audit Committee are available to the Board. Committee Duties The main duties of the Committee are set out below: • Reviewing and recommending to the Board in relation to the appointment and removal of the external auditor. • Recomending the external auditor’s remuneration and terms of engagement. • Reviewing the independence of the external auditors, the objectivity and the effectiveness of the audit process, taking into account relevant professional and regulatory requirements. • Reviewing and monitoring the extent of the non-audit work undertaken by the Group’s external auditor. • Reviewing a wide range of financial matters including the annual and half year results. • Monitoring the controls which ensure the integrity of the financial information reported to the shareholders. In the financial year commencing on 1 April 2018, the Group applied two new accounting standards: 26 / Audit Commi tt ee Rep ort NOMINATIONS AND REMUNERATIONS COMMITTEE REPORT I am pleased to present the report on behalf of the Remuneration Committee. The 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. The members of the Audit Committee are myself, Francis Coles, as Chair, and Matthew P. Earl both independent non- executive directors. The Board is of the view that we have recent and relevant experience. Meetings are held on average twice a year. José Luis Vázquez (CEO), and Gonzalo Babío (Finance Director), attend by invitation. I report to the Board following a Nomination and Remuneration Committee meeting and minutes are available to the Board. 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 2019. Executive José-Luis Vázquez Jose Gozalbo Gonzalo Babío Non-executive Javier Casanueva Mathew Earl Francis Coles Salary & fees $000 Benefits $000 Share-based payment $000 261 199 163 5 39 56 723 3 11 9 - - - 23 9 14 - 4 - 3 30 2019 Total $000 273 224 172 9 39 59 776 2018 Total $000 279 226 175 46 42 45 813 The directors’ participation in the company’s share option plan is detailed in Note 23 and, as confirmed in Note 8, there were no contributions paid into a pension scheme for any director. Javier Casanueva sadly passed away on 12 May 2018. I, Francis Coles, a long-standing non-executive Director, took the role of non-executive Chairman on May 17th, 2018. Chair of the Nominations and Remuneration Committee Francis Coles Dir ec tors’ Remuneratio n Report / 27 Review of the Year Corporate Governance Financial StatementsSTATEMENT 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 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 not approve the financial statements unless they are The directors are responsible for ensuring the annual satisfied that they give a true and fair view of the state of report and the financial statements are made available on affairs of the group and company and of the profit or loss the Company’s website. Financial statements are published of the Group for that year. The directors are also required on the company’s website in accordance with legislation to prepare financial statements in accordance with the in the United Kingdom governing the preparation and rules of the London Stock Exchange for companies trading dissemination of financial statements, which may vary securities on AIM. from legislation in other jurisdictions. The maintenance and integrity of the company’s website is the responsibility In preparing these financial statements, the directors are of the directors. The directors’ responsibility also extends required to: to the ongoing integrity of the financial statements contained therein. • select suitable accounting 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. 28 / Statement of Di re ctors‘ Re s p on s i b i l i t i e s INDEPENDENT AUDITOR‘S REPORT TO THE MEMBERS OF MIRADA PLC Opinion We have audited the financial statements of Mirada Plc (the ‘Parent Company’) and its subsidiaries (the ‘Group’) for the year ended 31 March 2019 which comprise the consolidated statement of comprehensive income, the consolidated and company statements of changes in equity, the consolidated and company statements of financial position, the consolidated statement of cash flows and notes to the financial statements, including a summary of significant accounting policies. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. The financial reporting framework that has been applied in the preparation of the Group financial statements is Conclusions relating to going concern applicable law and International Financial Reporting We have nothing to report in respect of the following Standards (IFRSs) as adopted by the European Union. The matters in relation to which the ISAs (UK) require us to financial reporting framework that has been applied in the report to you where: preparation of the Parent Company financial statements is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 101 Reduced • the Directors’ use of the going concern basis of accounting in the preparation of the financial statements Disclosure Framework (United Kingdom Generally is not appropriate; or Accepted Accounting Practice). In our opinion: • the Directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Group’s or the • the financial statements give a true and fair view of the Parent Company’s ability to continue to adopt the state of the Group’s and of the Parent Company’s affairs going concern basis of accounting for a period of at as at 31 March 2019 and of the Group’s loss for the year least twelve months from the date when the financial then ended; statements are authorised for issue. • the Group financial statements have been properly Key audit matters prepared in accordance with IFRSs as adopted by the European Union; • the Parent Company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and • the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Independent Au di tors‘ Report / 2 9 Review of the Year Corporate Governance Financial StatementsINDEPENDENT AUDITOR‘S REPORT TO THE MEMBERS OF MIRADA PLC continued Matter How we addressed the matter in our audit Goodwill and Intangible asset impairment assessment Refer to note 13, note 3 and 4. Our audit procedures involved: Determining if an impairment charge is required for Goodwill • We checked management’s impairment assessment and Intangible assets involves significant judgements about for each cash generating unit (CGU), including the the future results and cash flows of the business, including discounted cash flow analysis. As part of this, we forecast growth in future revenues and operating profit challenged the key assumptions, including the margins, as well as determining an appropriate discount growth rate and discount rates applied. This included factor and long term growth rate. consultation with valuations experts on the appropriate We therefore focused on these areas and the judgements use of key assumptions. applied to future forecasts. • Based on external evidence examined i.e. industry growth rates, inflation and UK GDP growth rates, we performed sensitivity testing on revenue growth and discount rates used in the impairment assessment. • Compared the discounted cash flow analysis to the historical performance and the actual post year-end results of each CGU. We found that the assumptions used were reasonable. No impairment was identified from the work performed. Capitalised development costs As described in notes 3 and 4, the group capitalises costs Our procedures included considering whether the incurred on product development relating to the design development costs capitalised met the criteria for and development of new or enhanced products. capitalisation under IAS 38. This included: Recognition of internally developed intangible assets was • Checking consistency of the capitalisation policy with considered to be a key audit matter, given the involvement prior year and noted that the policy remains unchanged of significant judgement, including assessing the and in line with IAS 38. technological and commercial feasibility of the projects.. • Reviewing a sample of project summary reports for ongoing and completed projects during the year for which costs were capitalised to confirm that costs incurred are development in nature and not research costs. • For a sample of capitalised payroll costs, obtained and reviewed employment contracts and timecards to confirm that salary costs capitalised relates to development related activity and therefore appropriately capitalised. • Considering management’s assessment of technical feasibility through discussions with project developers. We noted no exceptions through performing these procedures. 30 / Independent Audi tors‘ Re p or t INDEPENDENT AUDITOR‘S REPORT TO THE MEMBERS OF MIRADA PLC continued Review of the Year Corporate Governance Financial Statements Matter How we addressed the matter in our audit Revenue recognition and adoption of IFRS 15 The group’s revenue recognition policy can be found in We performed testing including: note 3 and adoption of IFRS 15 in note 2 to the financial statements. We consider a significant risk of material misstatement to arise from the incentive to overstate revenue for the current period due to market expectations and the loss generated in the current period. Further, since growth in license revenue is management’s main key performance indicator (“KPI”) this increases the incentive to overstate revenue. Therefore, the key audit matter is the existence of revenue throughout the financial year. In addition, this is the first year that IFRS 15 – Revenue from Contracts with Customers is applicable for Mirada Plc. There are key judgments involved in determining performance obligations within a contract, allocating transaction price to each performance obligation and determining whether to recognise revenue at a point in time or over time. This also relates to key disclosures to be made in the Financial statements. • Tested a sample of transactions from the revenue listing by allocating transaction price to each performance obligation and checked whether revenue was correctly recognised at a point in time or over time. • Reviewed a sample of sales transactions before and after year end to ensure that accounted for in the correct period and accrued for appropriately by agreeing to supporting evidence. • A sample of accrued revenue balances as at year end has also been agreed to post year end invoices issued up to 30 April 2019. To ensure IFRS 15 has been adopted appropriately, our testing included: • A review of the revenue recognition policy for the Group in light of the requirements of IFRS 15. • A review of the requirements of the IFRS 15 transition and the assessment of expected impacts against the disclosure adjustments proposed by the group. As a result of the procedures above we did not find any material errors in relation to the recognition of revenue. Our application of materiality We apply the concept of materiality in performing our audit and evaluating the effect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements. In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole. Independent Au ditors‘ Report / 31 INDEPENDENT AUDITOR‘S REPORT TO THE MEMBERS OF MIRADA PLC continued We agreed with the audit committee that we would report to the committee all individual audit differences identified during the course of our audit in excess of £7,100 (2018: £7,000). We also agreed to report differences below these thresholds that, in our view, warranted reporting on qualitative grounds. Group Overall materiality $186,000 (2018: $132,000) Group Performance materiality (75% of Overall materiality) $139,500 (2018: $99,000) Basis for determining (Group and Parent) Group – 1.5% of revenue (2018: 1.5% of revenue); and Parent – 1% of total assets (2018 – 1% of total assets) Rationale for benchmark applied (Group and Parent) Group – Revenue provides a consistent year on year basis for determining materiality, is a main KPI and is also a significant driver of profit/loss for the year. Parent – Total assets has been used to calculate the basis of materiality on the basis that the parent company is the holding company for the group. Parent company Overall materiality $113,000 (2018: $99,000) Parent company Performance Materiality $84,500 (2018: $74,000) Component materiality Each significant component of the group was audited to of our audit and the extent of sample sizes used during a lower level of materiality which is used to determine the the audit. financial statement areas that are included within the scope We determined component materiality as follows: Range of component materiality 71% to 91% of group materiality Performance materiality was set at 75% (2018 – 75%) of the above materiality figures. An overview of the scope of our audit Our group audit was scoped by obtaining an understanding of the group and its environment, including the group’s system of internal control, and assessing the risks of material misstatement in the financial statements at the group level. In determining the scope of our audit, we considered the level of work to be performed at each component in order to ensure sufficient assurance was gained to allow us to express an opinion on the financial statements of the Group as a whole. We tailored the extent of the work to be performed at each component, either by us, as the group audit team or component auditors within the BDO International network, based on our assessment of the risk of material misstatement at each component. We identified four centrally controlled components, one of which is based in Madrid, Spain, as significant, and have audited these for group reporting purposes. Detailed instructions were issued and discussed with the component auditor, and these covered the significant risks to be addressed. The Group audit team was actively involved in directing the audit strategy of the component audit, reviewed in detail the findings and considered the impact of these upon the Group audit opinion. For one of the components not considered significant, we performed analytical review procedures together with substantive testing on group audit risk areas applicable to that component based on its relative size, risks in the business and our knowledge of the entity appropriate to respond to the risk of material misstatement. Review procedures were performed by the group audit team on the remaining one reporting component not considered significant to the group. 32 / Indepe nde nt Audi to rs‘ Re p or t INDEPENDENT AUDITOR‘S REPORT TO THE MEMBERS OF MIRADA PLC continued Review of the Year Corporate Governance Financial Statements Other information The Directors are responsible for the other information. The other information comprises the information included in the Report and Financial Statements, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially We have nothing to report in respect of the following matters in relation to which 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 misstated. If we identify such material inconsistencies • we have not received all the information and or apparent material misstatements, we are required to explanations we require for our audit. determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Opinions on other matters prescribed by the Companies Act 2006 Responsibilities of directors As explained more fully in the Statement of directors’ responsibilities set out on page 28, the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to In our opinion, based on the work undertaken in the course fraud or error. of the audit: • the information given in the Strategic report and the Directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and • the Strategic report and the Directors’ report have been prepared in accordance with applicable legal requirements. Matters on which we are required to report by exception In the light of the knowledge and understanding of the Group and the Parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the Directors’ report. In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Parent Company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Independent Au ditors‘ Report / 33 INDEPENDENT AUDITOR‘S REPORT TO THE MEMBERS OF MIRADA PLC continued Misstatements can arise from fraud or error and are so that we might state to the Parent Company’s members considered material if, individually or in the aggregate, they those matters we are required to state to them in an auditor’s could reasonably be expected to influence the economic report and for no other purpose. To the fullest extent decisions of users taken on the basis of these financial permitted by law, we do not accept or assume responsibility statements. to anyone other than the Parent Company and the Parent Company’s members as a body, for our audit work, for this A further description of our responsibilities for the audit report, or for the opinions we have formed. of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/ auditorsresponsibilities. This description forms part of our David Butcher (senior statutory auditor) For and on behalf of BDO LLP, statutory auditor auditor’s report. Use of our report London United Kingdom 10 July 2019 This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the BDO LLP is a limited liability partnership registered in England Companies Act 2006. Our audit work has been undertaken and Wales (with registered number OC305127). 34 / Our products CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Year ended 31 March 2019 Revenue Cost of sales Gross profit Depreciation Amortisation Share-based payment charge Staff costs Other administrative expenses Total administrative expenses Operating loss Finance income Finance expense Loss before taxation Taxation Loss for year Other comprehensive income for the period Amounts that will or may be reclassified to the profit or loss Forex on translation of foreign operations Total comprehensive loss for the period Loss per share Loss per share for the year – basic & diluted The notes on pages 39 to 67 form part of these financial statements Notes 5 14 13 23 8 7 9 10 11 2019 $000 12,322 (857) 11,465 (80) (3,578) (70) (7,249) (3,402) (14,379) (2,914) 141 (523) (3,296) 184 (3,112) 2018 $000 8,816 (874) 7,942 (73) (3,352) (72) (5,599) (3,464) (12,560) (4,618) 84 (634) (5,168) 298 (4,870) (565) (3,677) 999 (3,871) Notes Year ended 31 March 2019 $ Year ended 31 March 2018 $ 12 (0.006) (0.035) Consoli dated Statem ent of Co mp rehensi ve Income / 35 Review of the Year Corporate Governance Financial Statements CONSOLIDATED STATEMENT OF FINANCIAL POSITION At 31 March 2019 Goodwill Other Intangible assets Property, plant and equipment Other Receivables Non-current assets Trade & other receivables Cash and cash equivalents Current assets Total assets Loans and borrowings Related parties loans and interests Trade and other payables Contract liabilities Current liabilities Net current liabilities Total assets less current liabilities Interest bearing loans and borrowings 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 Accumulated loss Equity Notes 13 13 14 15 15 25 17 17 16 16 18 21 2019 $000 5,924 5,855 222 398 12,399 5,421 117 5,538 17,937 (3,257) - (1,958) (1,019) (6,234) (696) 11,703 (1,721) (1,721) (7,955) 9,982 12,015 15,995 15,398 (33,426) 9,982 2018 $000 6,492 7,072 247 308 14,119 4,484 1,937 6,421 20,540 (4,246) (6,917) (2,320) (1,360) (14,843) (8,422) 5,697 (2,477) (2,477) (17,320) 3,220 2,261 15,760 15,985 (30,786) 3,220 These financial statements were approved and authorised for issue on July 10th 2019 Signed on behalf of the Board of Directors José Luis Vázquez Chief Executive Officer The notes on pages 39 to 67 form part of these financial statements 36 / Consoli date d Stat eme nt of Fi n a n c i a l Pos i t i o n CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Year ended 31 March 2019 Review of the Year Corporate Governance Financial Statements Balance at 1 April 2018 2,261 15,760 11,122 4,863 (30,786) 3,220 Share capital $000 Share premium $000 Foreign exchange reserve $000 Merger reserves $000 Accumulated losses $000 Total $000 Prior Year Adjustment-IFRS 15 (Note 2) Loss for the year Other comprehensive income Movement in foreign exchange - - - - - - - - (587) - - - 380 380 (3,112) (3,112) 22 Total comprehensive loss for the year 2,261 15,760 10,535 4,863 (33,496) Transactions with owners Share-based payment Conversion of convertible loans into shares Issue of shares - 5,858 - 235 3,896 - - - - - - - 70 - - (565) (77) 70 6,093 3,896 Balance at 31 Mar 2019 12,015 15,995 10,535 4,863 (33,426) 9,982 Share capital $000 Share premium $000 Foreign exchange reserve $000 Merger reserves $000 Accumulated losses $000 Total $000 Balance at 1 April 2017 2,261 15,760 10,134 4,863 (25,930) 7,088 Loss for the year Other comprehensive income Movement in foreign exchange - - - - - 988 - - (4,870) (4,870) 11 999 Total comprehensive loss for the year 2,261 15,760 11,122 4,863 (30,789) 3,217 Transactions with owners Share-based payment - - - - 3 3 Balance at 31 March 2018 2,261 15,760 11,122 4,863 (30,786) 3,220 The notes on pages 39 to 67 form part of these financial statements Consolid ate d Statem ent of Ch ang es In Equity / 37 CONSOLIDATED STATEMENT OF CASH FLOWS Year ended 31 March 2019 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 Taxation Operating cash flows before movements in working capital Increase in trade and other receivables (Decrease)/Increase in trade and other payables Taxation received Net cash used in operating activities Cash flows from investing activities Interest and similar income received Purchases of property, plant and equipment Purchases of other intangible assets Net cash used in investing activities Cash flows from financing activities Interest and similar expenses paid Conversion of convertible loans into shares Loans received Related parties 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 period Exchange losses on cash and cash equivalents Cash and cash equivalents at the end of the year The notes on pages 39 to 67 form part of these financial statements Notes 2019 $000 2018 $000 (3,112) (4,870) 14 13 14 13 25 25 80 3,578 70 (141) 523 (184) 814 (1,654) (703) 307 (1,236) 141 (80) (3,127) (3,066) (523) 3,896 1,201 - (2,150) 2,424 (1,878) 1,937 58 117 73 3,352 72 (84) 634 (298) (1,121) (1,608) 453 540 (1,736) 84 (161) (3,780) (3,857) (634) - 3,020 6,588 (1,827) 7,147 1,554 277 106 1,937 38 / Consolidated Statement of Ca s h F lows NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2019 Review of the Year Corporate Governance Financial Statements Adoption of new and revised standards effective from 1 Retained earnings 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 of products and services in the Digital TV and Broadcast markets. 2. Changes in accounting policies April 2018 IFRS 9 – Financial Instruments IFRS 9 – Financial instruments has replaced IAS 39 Financial Instruments: Recognition and Measurement and has not had a material effect on the Company: The impairment provision on financial assets measured at amortised cost (such as trade and other receivables) has been calculated in accordance with IFRS 9’s expected credit loss model. The Group did not identify significant changes in its consolidated financial statements due to applying the classification and measurement requirements of IFRS 9. The Group has set up an analysis regarding expected credit losses. Since all Trade Receivables balances have been collected before 9 July 2019, it has been concluded that the impact of the new standard on the Group was immaterial. The Group has chosen not to restate comparatives on adoption of IFRS 9. IFRS 15 – Revenue from Contracts with Customers IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is The impact of the new standard was $0.38 million as shown in the Consolidated Statement of Changes in Equity. The following table summarises the impact, net of tax, of transition to IFRS 15 on retained earnings at 1 April 2018: Assets Total Assets Equity Total Equity Liabilities Contract liabilities Total Liabilities Total equity and liabilities 1 April 2018 – 380 380 (380) (380) – The impact of adoption on the main revenue streams is: • Contracts with customers in respect of Development: The Group has determined the incurred works are specific to the customer and cannot be used on alternative contracts. In addition, Mirada has the right to payment for all incurred works. Accordingly, the revenue is recognised over the time of the contract. • Contracts with customers in respect of the parking transactions: Under IFRS 15, revenue is recognised in the same month as the end user has used the cashless parking services. Since there are not differences between the revenue recognition in accordance with IFRS 15 and IAS 18, there has not been any impact of IFRS 15 application on this revenue stream. • Contracts with customers in respect of licences are recognised as per the number of STBs or Households (depending on contracts) where the Mirada Software is installed. Licences cover the right of use of the software recognised. It replaced IAS 18 Revenue, IAS 11 Construction in the initial conditions without any right to modify it. Contracts and related interpretations. Under IFRS 15, None of the contracts have an end or termination date. revenue is recognised when a customer obtains control Typically, once you sign a contract, you keep using of the goods or services. Determining the timing of the the software for many years. Revenue is recognised transfer of control – at a point in time or over time – requires at a point in time. The impact of the new standard was judgement. The Group has applied IFRS 15 using the cumulative effect method to those contracts which are not completed as of 1 April 2018, with the effect of initially applying this standard recognized at the date of initial application. Accordingly, the comparative information is not restated. $0.38 million as shown in the Consolidated Statement of Changes in Equity. • Contracts with customers in respect of managed services continue to be recognised monthly along the duration of the contracts. Therefore IFRS 15 has not had any impact on this revenue stream. In some cases, these outsourcing services can be carried out by a different company. Notes to the Fi nanci al Statements / 39 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2019 – continued 2. Changes in accounting policies – continued • lease contracts with a duration of less than 12 months, Invoices are due within 30 days, according to contractual terms. Sometimes the payments received from customers at each balance sheet date do not necessarily coincide with the amount of revenue recognised under the contracts. The assets and liabilities of the contracts are included in Accrued Income and Deferred Income, respectively (see note 5). The Company has applied the practical expedient. Therefore, no information is provided about remaining performance obligation at 31 March 2019 as Mirada has a right to payments for all incurred works. and/or leases for which the underlining asset is of low value, will continue to be expensed to the income statement on a straight-line basis over the lease term; • the lease term has been determined with the use of hindsight where the contract contains options to extend the lease. The adoption of the standard will result in replacing the existing operating lease expenses, within administrative expenses, with interest and depreciation expenses. Therefore, it is likely to result in an increase in EBITDA. The Group is in the early stages of assessing the potential New Standards, interpretations and amendments not yet impact of adopting this standard. The new accounting effective The following standard has been issued by the IASB and policies are subject to change until the Group presents its first financial statements in fiscal year 2020 that include the has been adopted by the EU: date of initial application. IFRS 16- Leases (Applicable from 1 April 2019) The Group is required to adopt IFRS 16 Leases from 1 April 2019. IFRS 16 replaces existing leases guidance, including IAS 17 Leases. The Group has assessed the estimated impact that initial application of IFRS 16 will have on its consolidated financial statements, as described below. IFRS 16 introduces a single, on-balance sheet lease accounting model for lessees. A lessee recognizes a right- of-use asset representing its right to use the underlying asset and a lease liability representing its obligation to make lease payments. The adoption of other amendments and interpretations are likely to not have a material impact on the financial statements of the Group and Company. 3. 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. In this respect, the Group will recognise new assets and liabilities for its operating leases. The nature of expenses Going concern related to those leases will now change because the Group These financial statements have been prepared on the going will recognise a depreciation charge for right-of-use assets concern basis. The Directors have reviewed the Company and interest expense on lease liabilities. and Group’s going concern position taking account of its current business activities, budgeted performance and Previously, the Group recognised operating lease expense the factors likely to affect its future development, which on a straight-line basis over the term of the lease, and are set out in this Annual report, and include the Group’s recognised assets and liabilities only to the extent that there objectives, policies and processes for managing its capital, was a timing difference between actual lease payments its financial risk management objectives and its exposure to and the expense recognised. credit and liquidity risks. The Group is applying the modified retrospective transition As at 31 March 2019, the Group had cash and cash method under which comparative information will not be equivalents of $0.12m (2018: $1.94m), net cash used in restated and has elected to use the following practical operating activities of $1.24m (2018: net cash used in expedients permitted by the standard: operating activities $1.74m), realised a loss for the year of $3.07m, (2018: a loss of $4.87m), net current liabilities of • on initial application, IFRS 16 will be only been applied to contracts that were previously classified as leases; $0.66m (2018: net current liabilities of $8.42m) and had net assets of $10.02m (2018: $3.22m). 40 / Notes to the Finan ci al Stat em ent s NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2019 – continued Review of the Year Corporate Governance Financial Statements The directors have prepared cash flow forecasts covering a 1) Revenues from development fees (which include set-up period of at least 12 months from the date of approval of the fees): these are recognised according to management’s financial statements. If the forecast is achieved, the Group estimation of the stage of completion of the project. will be able to operate within its existing facilities. However, This is measured by reference to the amount of the time to close new customers and the value of each development time spent on a project compared to the customer, which are deemed high volume and low value in most up to date calculation of the total time estimated nature are factors which constrain the ability to accurately to complete the project in full. predict revenue performance. Furthermore, investment in winning customers, via marketing expenditure, and Since the Group has determinate the works incurred servicing and delivering to new customers remains an are specific to the customer and cannot be used on important function of the forecasts too. As such, there is a alternative contracts and Mirada has right to payment risk that the group’s working capital may prove insufficient for all incurred works, the revenue is recognised over to cover both operating activities and the repayment of its the time. debt facilities. In such circumstances, the group would be obliged to seek additional funding though a placement of 2) Sale of licence: Revenue from licences are earned from shares or source other funding. The directors have had a two specific and separate streams. history of raising financing from similar transactions. The directors have concluded that the circumstances set forth above enable the Company and Group to continue i) 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 as a going concern for the foreseeable future. The financial satisfied: statements do not include the adjustments that would be required if the Company and the Group were unable to continue as a going concern. • The software has been provided to the customer in a form that enables the customer to utilise it; Basis of consolidation • The ongoing obligations of the Group to the The consolidated financial statements incorporate the customer are minimal; and financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 March • The amount payable by the customer is 2019. determinable and there is a reasonable expectation of payment. Where the company has control over an investee, it is classified as a subsidiary. The company controls an The performance obligation included in this type investee if all three of the following elements are present: of contract is to provide initially licence and key power over the investee, exposure to variable returns from to access. the investee, and the ability of the investor to use its power to affect those variable returns. Control is reassessed ii) Contract licence fees payable by customers are whenever facts and circumstances indicate that there may dependent upon the number of end user subscribers be a change in any of these elements of control. signing up to the customer’s digital television service, purchased Set Top Boxes or active devices. All intra-group transactions, balances, income and Licences cover the right of use of the software in expenses are eliminated on consolidation. Revenue recognition The Group has applied IFRS 15 from 1 April 2018. For further information about the application of this standard see Note 2. Interactive service revenues are divided into 5 types: development fees, the sale of licences, SaaS, managed services and self-billing revenues. the initial conditions without any right to modify it. None of the contracts have an end or termination date. Typically, once you sign a contract, you keep using the software for many years. For this type of contract, revenues are recognised by multiplying the individual licence fee by the net increase in the customer’s subscriber base, purchased Set Top Boxes or active devices. Notes to the Financia l Statements / 41 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2018 – continued 3. Significant accounting policies – continued Goodwill arising on acquisition is recognised as an asset and The Group promises to grant a licence that provides a customer with a right to use and obtain substantially all the benefits from the licence. As a consequence of this, the recognition of the revenue is at a point in time at which the licence is granted. 3) SaaS: Some of the licence software are under Software as a Service model (SaaS). Under this model, lower integration set up fees than in other agreements are offset by recurrent monthly licence fee revenues. Revenue for SaaS arrengements are recognised over the period of the arrangement to reflect the ongoing service provider. 4) Managed services – revenue is measured on a straight line basis over the length of the contract. 5) Transactions revenues: These are earned through a revenue-share agreement between Mirada and the customers which is presented in the Mobile segment. The Group are informed by the customer of the amount of revenue to invoice and the revenues are recognised at a point in time in the period these services are provided. 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 and liabilities of the acquired 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 goodwill is included in the determination of the profit or loss on disposal. For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to benefit from the synergies of the combination. Cash- generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of Where agreements involve multiple obligations, the entire fee from such arrangements is allocated to each of the each asset in the unit. individual obligations based on each obligation’s fair value. Other intangible assets The revenue in respect of each element is recognised in accordance with the above policies. Certain revenues earned by the Group are invoiced in advance. As outlined in the revenue recognition policy above, revenues are recognised in the period in which the Group provides the services to the customer, revenues relating to services which have yet to be provided to the customer are deferred. Business combinations Acquisitions of businesses are 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. 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 capitalised and 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. Deferred development costs are internally-generated intangible 42 / Notes to the F inan ci al Stat em ent s NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2018 – continued Review of the Year Corporate Governance Financial Statements assets arising from work completed by the Group’s product Recoverable amount is the higher of fair value less costs development team. to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present Internally-generated intangible assets – research and value using a pre-tax discount rate that reflects current development expenditure Any internally-generated intangible asset arising from the Group’s development projects are recognised only if all of the following conditions are met: • The technical feasibility of completing the intangible asset so that it will be available for use or sale. • The intention to complete the intangible asset and use or sell it. • The ability to use or sell the intangible asset. • How the intangible asset will generate probable future economic benefits. Among other things, the Group can demonstrate the existence of a market for the output of the intangible asset or the intangible asset itself or, if it is to be used internally, the usefulness of the intangible asset. 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 unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised in the impairment of intangible assets line in the consolidated statement of comprehensive income as an expense immediately. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is 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- generating unit) in prior periods. A reversal of an impairment loss is recognised as income immediately. • The availability of adequate technical, financial and Goodwill impairments are not reversed. other resources to complete the development and to use or sell the intangible asset. Property, plant and equipment • Its ability to measure reliably the expenditure attributable accumulated depreciation and any impairment in value. Property, plant and equipment is stated at cost less to the intangible asset during its development. If a development project has been abandoned, then equipment, other than freehold land, at rates calculated any unamortised balance is immediately written off to to write off the cost, less estimated residual value based the income statement. Where no internally-generated on current prices, of each asset evenly over its expected Depreciation is provided on all property, plant and intangible asset can be recognised, development useful life, as follows: expenditure is recognised as an expense in the period in which it is incurred. The amortisation is charged to – Office & computer equipment 33.3% per annum administrative expenses in the consolidated statement of comprehensive income. – Short-leasehold improvements 10% per annum 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). 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. Notes to the Financia l Statements / 43 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2018 – continued 3. Significant accounting policies – continued of the issue price over the par value is recorded in the share Financial instruments premium reserve. Financial assets and financial liabilities are recognised on the Group’s statement of financial position at fair value when the Group becomes a party to the contractual provisions of the instrument. Trade receivables Trade receivables represent amounts due from customers in the normal course of business. The group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected credit loss allowance for all trade receivables and contract assets. During this process the probability of non- payment of a trade receivable balance is assessed and multiplied by an expected amount of credit loss as a result of the likely credit default. The group has set up a matrix using the age a debtor is overdue and any likely events as a criteria to determine the default probability. This uses 5 categories ranging from 0% to 90% probability. 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 tax, to the share premium reserve. Bank Borrowings Interest-bearing bank loans 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. Invoice discounting The Group has an invoice discounting facility secured on the trade debtors as specified in note 17. Liabilities under this arrangement are shown in borrowings. Trade payables The Group only have assets that are categorised as Trade payables are initially measured at fair value, and amortised cost and the application of ECL has not had a are subsequently measured at amortised cost, using the material impact to the impairment provision because all effective interest rate method. trade receivables balances have been collected before the reporting date. As a conclusion, the impact of the IFRS 9 on Employee share incentive plans the Group was immaterial. Cash and cash equivalents The Group issues equity-settled share-based payments to certain employees (including directors). These payments are measured at fair value at the date of grant by use Cash and cash equivalents include cash at hand and of the Black-Scholes pricing model. This fair value cost deposits held at call with banks with original maturities of of equity-settled awards is recognised on a straight- three months or less, net of bank overdrafts. line basis over the vesting period, based on the Group’s Financial liabilities and equity instruments 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. 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. Equity instruments issued by the Company are recorded at Leases the proceeds received, net of direct issue costs. Leases taken by the Group are assessed individually as to whether they are finance leases or operating leases. Financial instruments issued by the Group are treated Leases are classified as finance leases whenever the terms as equity only to the extent that they do not meet the of the lease transfer substantially all the risks and rewards definition of a financial liability. The Group’s ordinary shares of ownership to the lessee. All other leases are classified as are classified as equity. When new shares are issued, they operating leases. are recorded in share capital at their par value. The excess 44 / Notes to th e F in anc i al State ments NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2018 – continued Review of the Year Corporate Governance Financial Statements Operating lease rental payments are recognised as an levied by the same taxation authority and the Group intends expense in the statement of comprehensive income on a to settle its current tax assets and liabilities on a net basis. straight-line basis over the lease term. The benefit of lease incentives is spread over the term of the lease. Research and development tax credit Taxation Companies within the group may be entitled to claim special tax allowances in relation to qualifying research and The tax expense represents the sum of the current tax and development expenditure (e.g. R&D tax credits). The group deferred tax charges. accounts for such allowances as tax credits and recognise them when it is probable that the benefit will flow to the The tax currently payable is based on taxable profit for the group and that benefit can be reliably measured. R&D tax period. Taxable profit differs from net profit as reported credits reduce current tax expense and, to the extent the in the income statement because it excludes items of amounts due in respect of them are not settled by the income or expense that are taxable or deductible in other balance sheet date, reduce current tax payable. years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated Retirement benefit costs using tax rates that have been enacted or substantively enacted by the reporting date. Deferred tax is the tax expected to be payable or The Group operates defined contribution pension schemes. The amount charged to the statement of comprehensive income in respect of pension costs and other post-retirement benefits is the contributions payable recoverable on differences between the carrying amounts in the period. 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. Deferred tax is calculated at the tax rates that are expected 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 Differences between contributions payable in the period and contributions actually paid are shown as either accruals or prepayments in the statement of financial position. Foreign exchange The individual financial statements of each group company are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purpose of the consolidated financial statements, the result and the financial position of each group company are expressed in US Dollars, which is the presentational currency for the consolidated financial statements. 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. For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign operations are translated at exchange rates prevailing on the reporting date. Income and expense items are translated at the average exchange rates for the period, unless exchange rates fluctuate significantly during that period, in which case the exchange rates at the date of transactions are used. Notes to the Financia l Statements / 45 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2018 – continued 3. Significant accounting policies – continued Impairment of goodwill and intangibles Exchange differences arising on translating the opening Determining whether goodwill is impaired requires an statement of financial position and the current year income estimation of the value in use of the cash-generating units statements are classified as equity and transferred to to which goodwill has been allocated. The value in use the Group’s foreign exchange reserve. Such translation calculation requires the Group to estimate the future cash differences are recognised as income or an expense in the flows expected to arise from the cash-generating units and period in which the operations is disposed of. the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects Goodwill and fair value adjustments arising on the acquisition current market assessments of the time value of money and of a foreign entity are treated as assets and liabilities of the the risks specific to the cash-generating unit. This includes foreign entity and translated at the closing rate. The Group the directors’ best estimate on the likelihood of current has elected to treat goodwill and fair value adjustments deals in negotiation not yet concluded. Consequently, arising on acquisitions before the date of transition to IFRS the outcome of negotiations may vary materially from as sterling denominated assets and liabilities. management expectation. See note 13 for more details. 4. Critical accounting judgements and key Capitalised development costs sources 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 notes 2 and 3, 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. 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 (refer to note 2) 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. The estimates and underlying assumptions are reviewed on an ongoing basis. Key sources of estimation uncertainty and judgements The Group capitalises spend on development of new software and the delivery of innovative software. Management exercises judgement in establishing both the technical feasibility of completing an intangible asset The following are the critical judgements and estimates which can be sold, and the degree of certainty that a that the directors have made in the process of applying market exists for the asset, or its output, based on feedback the Group’s accounting policies that has the most from existing and potential customers, for the generation significant effect on the amounts recognised in the financial of future economic benefits. In addition, amortisation rates statements. are based on estimates of the useful economic lives and residual values of the assets involved. Presenting financial information in USD The reporting currency is US Dollar due to the growing exposure to the US Dollar, as all major contracts and most of the new potential deals for the Company are denominated in this currency. The board therefore believes that USD financial reporting provides the best presentation of the group’s financial position, funding and treasury functions, financial performance and its cash flows. Coupled with the evolution of the business, the group’s shareholder base is now largely comprised of investors to whom financial reporting in GBP is of limited relevance. Internally, the board also bases its performance evaluation and many investment decisions on USD financial information. 46 / Notes to the Fin anc i al State me nts Review of the Year Corporate Governance Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2018 – continued 5. Revenue from contracts with customers Dissagregation of revenue Year to 31 March 2019 Mexico Europe Other Americas Asia Revenue recognised over a period Revenue recognised at a point in time Year to 31 March 2018 Mexico Europe Other Americas Asia Revenue recognised over a period Revenue recognised at a point in time Contract balances Development $000 Transactions $000 5,065 381 913 148 6,507 6,182 325 6,507 — 832 — — 832 — 832 832 Development $000 Transactions $000 2,131 892 1,267 73 4,363 4,243 120 4,363 — 878 — — 878 — 878 878 Licenses $000 3,964 73 17 — 4,054 — 4,054 4,054 Licenses $000 2,542 39 — — 2,581 — 2,581 2,581 Managed services $000 769 159 — — 928 928 — 928 Managed services $000 793 201 — — 994 994 — 994 Total $000 9,798 1,445 930 148 12,322 7,110 5,212 12,322 Total $000 5,466 2,010 1,267 73 8,816 5,237 3,579 8,816 The following table provides information about contract assets (included as accrued income) and contract liabilities (included as deferred income) from contracts with customers: Contract assets (accrued income) Contracts liabilities (deferred income) The movement in the contract assets and liabilities during the year is set out below: At 1 April Transfers in the period from contract assets to trade receivables Excess of revenue recognised over cash (or rights to cash) recognised during the period At 31 March 31 March 2019 $000 1,891 1,019 2,910 31 March 2018 $000 989 1,360 2,349 Contract assets 31 March 2019 $000 31 March 2018 $000 989 (989) 1,891 1,891 446 (446) 989 989 Notes to the Fi nanci al Statement s / 47 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2018 – continued 5. Revenue from contracts with customers – continued At 1 April Amounts included in contract liabilities recognised as revenue in the period Cash received in advance of performance and not recognised as revenue during the period At 31 March Contract liabilities 31 March 2019 $000 1,360 (1,360) 1,019 1,019 31 March 2018 $000 — — 1,360 1,360 Contract assets (‘accrued income’) and contract liabilities (‘deferred income’) are included within ‘Trade and other receivables’ and ‘deferred income’ respectively on the face of the Statement of Financial Position. They arise from the Group’s revenue contracts, where work has been performed in advance of invoicing customers, and where revenue is received in advance of work performed. Cumulatively, payments received from customers at each balance sheet date do not necessarily equate to the amount of revenue recognised on the contracts. 6. Segmental reporting Reportable segments The chief operating decision maker for the Group is ultimately the board of directors. For financial and operational management, the board considers the Group to be organised into two operating divisions based upon the varying products and services provided by the 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 2019 are as follows: Revenue Segmental profit/(loss) (Adjusted EBITDA, see note 7) Finance income Finance expense Depreciation Amortisation Share-based payment charge Profit/(Loss) before taxation Digital TV & Broadcast $000 11,490 1,905 — — (70) (3,578) — Mobile $000 832 171 — — (10) — — Other $000 — (1,262) 141 (523) — — (70) Group $000 12,322 814 141 (523) (80) (3,578) (70) (1,743) 161 (1,714) (3,296) $1.262 million (2018: $1.228 million) disclosed as “Other” comprises employment, legal, accounting and other central administrative costs incurred at a Mirada Plc level. 48 / Notes to the F inan ci al Stat eme nt s Review of the Year Corporate Governance Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2018 – continued 6. Segmental reporting – continued The segmental results for the year ended 31 March 2018 are as follows: Revenue – Segmental profit/(loss) (Adjusted EBITDA, see note 7) Finance income Finance expense Depreciation Amortisation Share-based payment charge Profit/(Loss) before taxation There is no material inter-segment revenue. Digital TV & Broadcast $000 Mobile $000 7,938 (102) — — (63) (3,352) — 878 209 — — (10) — — Other $000 — Group $000 8,816 (1,228) (1,121) 84 (634) — — (72) 84 (634) (73) (3,352) (72) (3,517) 199 (1,850) (5,168) The Group has a major customer in the Digital TV and Broadcast segment that generates revenues amounting to 10% or more of total revenue that account for $9.7 million of $12.4m total revenue. This is approximately 78% of all revenue (2018: $5.2 million, out of $8.8m) of the total Group revenues. Segment assets and liabilities are reconciled to the Group’s assets and liabilities as follows: Digital TV – Broadcast & Mobile Other: Goodwill Other financial assets & liabilities Total other Total Group assets and liabilities Assets 2019 $000 Liabilities 2019 $000 Assets 2018 $000 11,360 7,675 13,807 Liabilities 2018 $000 9,664 5,924 653 6,577 — 279 279 6,492 241 6,733 — 7,656 7,656 17,937 7,954 20,540 17,320 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 Mexico Europe Other Americas Asia External revenue by location of customer Total assets by location of assets 2019 $000 9,799 1,445 930 148 2018 $000 5,466 2,010 1,267 73 2019 $000 23 2018 $000 6 17,915 20,534 — — — — 12,322 8,816 17,937 20,540 Notes to the Fi nanci al Statements / 4 9 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2018 – continued 6. Segmental reporting – continued Revenue by Products: Development Transactions Licenses Managed Services 7. Operating loss This has been arrived at after charging: Depreciation of owned assets (note 14) Amortisation of intangible assets (note 13) Operating lease charges Analysis of auditors’ remuneration is as follows: Digital TV & Broadcast 2019 $000 6,508 — 4,054 928 11,490 Mobile 2019 $000 — 832 — — 832 Digital TV & Broadcast 2018 $000 4,363 — 2,581 994 7,938 Mobile 2018 $000 — 878 — — 878 2018 $000 73 3,352 473 2018 $000 87 34 2019 $000 80 3,578 596 2019 $000 119 36 Fees payable to the company’s auditor for the audit of the company’s annual accounts Audit of the account of subsidiaries Reconciliation of operating profit for continuing operations to adjusted earnings before interest, taxation, depreciation and amortisation: Operating loss Depreciation Amortisation Operating profit/loss before interest, taxation, depreciation and amortisation (EBITDA) Share-based payment charge Adjusted EBITDA 2019 $000 2018 $000 (2,914) (4,618) 80 3,578 744 70 814 73 3,352 (1,193) 72 (1,121) 50 / Notes to the Fin anc i al State ments Review of the Year Corporate Governance Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2018 – continued 8. Staff costs and employee information Staff costs (including directors) comprise: Wages and salaries Social security costs Other pension costs Share based payments Staff costs Group 2019 $000 8,577 1,796 33 70 Group 2018 $000 7,394 1,670 24 72 10,476 9,160 Contained within staff costs are amounts capitalised as intangible assets totalling $3.1m (2018: $3.4m), with $7.2m (2018: $5.6m) charged to administrative expenses. 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 2019 2018 12 142 9 163 11 132 6 149 The average number of persons, including executive directors, employed by the Company during the year was 8 (2018: 7) within the office and management team. 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 27, the Director of Business Development and the Sales Director. Salaries and fees Social Security costs Other benefits Share-based payments 2019 $000 1,037 65 44 52 2018 $000 1,171 69 28 56 1,198 1,324 Notes to the Financia l Statements / 51 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2018 – continued 8. Staff costs and employee information – continued 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 The directors’ remuneration is disclosed in the Nominations and Remuneration Report on page 27. Emoluments payable to the highest paid director are as follows: Aggregate emoluments 2019 $000 2018 $000 669 680 107 776 133 813 2019 $000 273 2018 $000 279 There were no Company contributions to the pension scheme or benefits on behalf of the highest paid director. 9. Finance income Interest received on bank deposits 10. Finance expense 2019 $000 141 141 2018 $000 84 84 Finance expenses 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. Bank interest payable Interest on loans from related parties 2019 $000 221 302 523 2018 $000 243 391 634 52 / Notes to th e F in anc i al State ments NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2018 – continued Review of the Year Corporate Governance Financial Statements 11. Taxation Analysis of tax credit for the year Current tax UK tax for the current financial year Adjustments in respect of previous years Foreign tax on income for the year Total current tax (credit) Deferred tax Origination and reversal of timing differences Adjustment in respect of prior periods Total deferred tax (credit) Total tax (credit) for the year 2019 $000 2018 $000 (113) — (71) (184) — — (111) — (157) (268) (30) (30) (184) (298) The tax assessed on the loss on ordinary activities for the period differs from the standard rate of tax of 19% (2018-19%). The differences are reconciled below: Loss before taxation Loss on ordinary activities multiplied by 19% (2018: 19%) Losses carried forward Witholding Taxes Total current tax Decrease of deferred tax assets Subtotal Tax benefit from research and development expenditure Foreign exchange Total tax credit Deferred Taxation 2019 $000 2018 $000 (3,296) (5,168) (626) (982) 626 321 321 — 321 (462) (43) (184) 982 125 125 39 164 (497) 35 (298) Deferred tax assets related to tax losses were reduced by $30,000 during FY18 in Mirada Connect. Foreign exchange differences of $8,000 arising on consolidation of the deferred tax asset were recognised in other comprehensive income. At the balance sheet date, the UK government has substantively enacted a 2% reduction in the main rate of UK corporation tax from 19% to 17% effective from 1 April 2020. Notes to the Fi nanci al Statements / 53 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2018 – continued 11. Taxation – continued Reconciliation of deferred tax asset and liabilities: Balance at 1 April Reversal of Deferred tax asset Foreign exchange Balance at the end of year Deferred taxation amounts not recognised are as follows: Losses Research & Development Tax Credits, useable against future profits Balance at the end of the year 2019 Asset $000 — — — — 2018 Asset $000 30 (39) 9 — Group 2019 $000 Group 2018 $000 16,880 16,272 2,868 3,082 19,748 19,354 The gross value of tax losses carried forward at 31 March 2019 equals $78.7 million (2018: $78.0 million). 12. Loss per share Loss for year Weighted average number of shares Basic loss per share Diluted loss per share Year ended 31 March 2019 Total Year ended 31 March 2018 Total $(3,111,688) $(4,870,019) 520,652,606 139,057,695 $(0.006) $(0.035) $(0.006) $(0.035) The Company has 4,697,166 (2018: 4,697,166) potentially dilutive ordinary shares arising from share options issued to staff. However, in 2019 and 2018 the loss attributable to ordinary shareholders and weighted average number of ordinary shares for the purpose of calculating the diluted earnings per ordinary share are identical to those used for basic earnings per ordinary share. This is because the exercise of share options would have the effect of reducing the loss per ordinary share and is therefore anti-dilutive. 54 / Notes to th e Fin an c ial Statem ents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2018 – continued Review of the Year Corporate Governance Financial Statements 13. Intangible assets Cost At 1 April 2017 Additions Foreign exchange At 31 March 2018 At 1 April 2018 Additions Foreign exchange At 31 March 2019 Accumulated amortisation and impairment At 1 April 2017 Provided during the year Foreign exchange At 31 March 2018 At 1 April 2018 Provided during the year Foreign exchange At 31 March 2019 Net book value At 31 March 2019 At 31 March 2018 At 31 March 2017 Deferred development costs $000 Completed Technology $000 Total Intangible assets $000 Goodwill $000 17,623 1,628 19,251 37,073 3,732 2,818 24,173 24,173 3,115 (2,253) 25,035 48 221 1,897 1,897 11 3,780 3,039 26,070 26,070 3,127 — 4,904 41,977 41,977 — (147) (2,399) (3,128) 1,761 26,798 38,849 11,949 1,366 13,315 31,430 3,234 2,143 118 188 3,352 2,331 — 4,055 17,326 1,672 18,998 35,485 17,326 3,455 (1,502) 19,279 5,756 6,847 5,674 1,672 18,998 35,485 123 (131) 3,578 — (1,633) (2,560) 1,664 20,943 32,925 97 225 262 5,855 7,072 5,936 5,924 6,492 5,643 The key assumptions for the value in use calculations are those regarding the discount rate applied, and the forecast sales growth in a five years budget period approved by management. 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 cash flow forecast has been prepared with revenue being forecast per customer based on historical performance of the business. There are 2 CGUs that have been assessed for impairment are Digital TV – Broadcast and Connect. The sales growth forecasts are based on current contracts and management’s estimate of revenues relating to opportunities that are currently being pursued for the two different CGUs. CGUs defined are: “Digital TV – Broadcast” which refers to the provision of software for the Digital TV market. Major customers are Digital TV platforms, mostly Pay TV service providers and the Group provide the technology needed to facilitate the final user’s interaction with the devices they provide; and “Connect” (Mobile segment) refers to Mirada Connect providing cashless payment solutions to car park operators through a revenue- share agreement This rate does not exceed the average long-term growth rate for the relevant markets. The rate used to discount the forecast post-tax cash flows for both CGUs is 10.0% (2018: 10%). A 2% increase/decrease to the discount rate does not result in an impairment. A 10% decrease in the five year cash flow and terminal value forecast for both CGUs does not result in an impairment. A perpetual rate of 1.5% (2018: 2%) has been used in the impairment assessment. Notes to the Financia l Statements / 55 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2018 – continued 13. Intangible assets – continued During the current and last financial periods, no impairment has been recognised. The split of goodwill by CGU is as follows: Digital TV – Broadcast Connect Group 2019 $000 5,199 725 5,924 Group 2018 $000 5,521 971 6,492 On 4th July 2019, Mirada Plc signed a Sales and Purchase Agreement to divest its subsidiary Mirada Connect, Ltd to Pay By Phone Ltd (subsidiary of Volkswagen Financial Services, AG) for £2.1 million in cash. 14. Property, plant and equipment Office and computer equipment $000 Short-leasehold improvements $000 976 91 138 1,205 1,205 80 (98) 1,187 844 62 121 1,027 1,027 64 (78) 1,013 174 178 132 67 70 9 146 146 — (10) 136 58 11 8 77 77 16 (5) 88 48 69 9 Total $000 1,043 161 147 1,351 1,351 80 (108) 1,323 902 73 129 1,104 1,104 80 (83) 1,101 222 247 141 Cost At 1 April 2017 Additions Foreign exchange At 31 March 2018 At 1 April 2018 Additions Foreign exchange At 31 March 2019 Amortisation At 1 April 2017 Provided during the year Foreign exchange At 31 March 2018 At 1 April 2018 Provided during the year Foreign exchange At 31 March 2019 Net book value At 31 March 2019 At 31 March 2018 At 31 March 2017 56 / Notes to the Finan ci al Stat em ent s NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2018 – continued Review of the Year Corporate Governance Financial Statements 15. Trade & other receivables Trade receivables Other receivables R&D tax credit Contract assets Prepayments Non current R&D tax credit Trade receivables Trade receivables net of allowances are held in the following currencies: Sterling US Dollars Euro Total Group 2019 $000 1,889 1,183 281 1,891 177 5,421 398 398 2019 $000 105 1,691 93 1,889 Group 2018 $000 1,384 1,388 489 989 234 4,484 308 308 2018 $000 239 1,016 129 1,384 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. There are no credit loss provisions. All Trade Receivables balances have been collected before 9 July 2019. Movement in allowance for doubtful debts: Balance at beginning of year Utilised in year Balance at the end of the year 2019 $000 — — — 2018 $000 — — — 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. The maximum exposure to credit risk at the reporting date is the fair value of each class of receivable set out above. Trade receivables have all been collected post year end. Notes to the Fi nanci al Statements / 57 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2018 – continued 16. 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 37 days (2018: 56 days). Trade payables Other payables Other taxation and social security taxes Accruals Contract liabilities 2019 $000 253 903 335 468 1,019 2,977 2018 $000 327 976 488 529 1,360 3,680 Maturity analysis of the group 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 17. Loans and borrowings Advances Drawn on invoice discounting facilities Bank loans Other Loans Related parties loans The borrowings are repayable as follows: Up to 3 months 3 to 6 months 6 to 12 months On demand or within one year Group 2019 $000 444 1,055 125 1,624 2019 $000 882 2,134 241 — Group 2018 $000 1,271 84 477 1,832 2018 $000 985 3,083 178 6,917 3,257 11,163 2,289 10,473 248 720 198 492 3,257 11,163 At 31 March 2019, the Group had $0.33 million in available credit lines not used and $2.37 million in available invoice discounting facilities not used, with a 3% interest rate in average. The above bank loans are denominated in Euros and are unsecured. Interest-bearing bank loans are initially recorded at fair value less direct issue costs. Directors estimate the fair value of the Group’s borrowing to be consistent with its carrying value. There is no material difference between the value of the gross undiscounted cash flows and carrying amounts in the statement of financial position. 58 / Notes to the Finan c ial Statem ents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2018 – continued Review of the Year Corporate Governance Financial Statements 18. Non-current liabilities Interest bearing loans and borrowings: Bank loans Other loans 2019 $000 2018 $000 494 1,227 1,721 863 1,614 2,477 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 20) 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 2019 $000 3,257 1,721 2018 $000 11,163 2,477 (117) (1,937) 4,861 11,703 Notes to the Fi nanci al Statement s / 59 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2018 – continued 18. 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 More than 5 years Related parties loans On demand or within one year Advances drawn on invoice discounting On demand or within one year Total borrowings On demand or within one year Between one and two years Between two and five years More than 5 years 2019 $000 2018 $000 1,062 1,871 272 239 618 293 1,573 2,782 1,346 247 674 318 2,585 — — 882 882 2,004 268 1,181 175 3,628 6,917 6,917 985 985 3,290 11,777 519 914 318 886 1,474 175 5,041 14,312 19. Retirement benefit schemes 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 $33,196 (2018: $23,626). At 31 March 2019, contributions amounting to $7,440 (2018: $5,432) were payable and included in other payables. 20. 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 17 and 18, 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 21. Externally imposed capital requirement The Group is not subject to externally imposed capital requirements. 60 / Notes to the Fin anc i al Stat eme nt s Review of the Year Corporate Governance Financial Statements NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2018 – continued 20. Financial instruments – continued Categories of financial instruments Financial assets Amortised cost: – Trade and other receivables – Cash and cash equivalents Financial liabilities Amortised cost: – Trade and other payables* – Loans and borrowings due within one year – Interest bearing loans and borrowings due after one year * Excluding other taxation, social security and contract liabilities. Financial risk management objectives 2019 $000 2018 $000 3,072 117 3,189 1,624 3,257 1,721 6,602 2,772 1,937 4,709 1,832 11,163 2,477 15,472 The Group monitors and manages the risks relating to the financial instruments held. 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 majority of cash at bank is held in Sterling and Euro accounts. There are also trade balances in these currencies. The Group is increasingly signing more sales contracts in US dollars 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’s decision to leave the European Union may affect the intercompany trading between the different subsidiaries. We will adapt our internal policies accordingly if required. In the short term, exchange rates are likely to increase the GBP denominated revenues, as the primary cash inflows for the Group are based in US dollars. Brexit has not been considered to be as a principal risk due to the non-EU focussed customer base. 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 Euro denominated assets and liabilities Liabilities Assets 2019 $000 — 2018 $000 — 7,487 9,512 2019 $000 1,691 5,184 2018 $000 1,017 5,747 Entities from United Kingdom have no balances denominated in Euro/USD. Notes to the Financia l Statements / 61 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2018 – continued 20. Financial instruments – continued Foreign currency sensitivity analysis In fiscal years 2018 and 2019, the Company has used US Dollar as presentational currency. The following table details the Group’s sensitivity to a 20% increase and decrease in USD against the Euro and to a 20% increase and decrease in USD against Sterling. The sensitivity analysis includes Euro and Sterling denominated monetary items and adjusts their translation at the period end for a 20% change in the Euro/USD rate and for a 20% change in the Sterling/USD rate at March 31, 2018 and March 31, 2019. A positive number below indicates an increase in profit and other equity where US Dollar strengthens against the relevant currency. For a weakening of US Dollar 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 US Dollar. In fiscal year 2018, contained within Sterling were the related party loans (one of £1.7 million in November 2017 which was converted post year end (August 29th, 2018) into equity, and a £3.0 million facility), totalling $3.3m. Without taking into account these two loans, the total would be $1.5m. Euro Sterling Interest rate risk management Profit and loss impact 2019 $000 (553) (772) 2018 $000 (941) (1,530) At 31 March 2019, 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 $118,783. The remaining bank loans totalling $2,880,594 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 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. 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 15 for further details on trade receivables, including analyses of bad debts, ageing and profile by currency. 62 / Notes to the F inan ci al Stat em ent s NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2018 – continued Review of the Year Corporate Governance Financial Statements 20. Financial instruments – continued 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. 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 Santander La Caixa BBVA Barclays Bankinter Ibercaja A BBB+ A– A BBB+ BB+ Liquidity risk management 2019 % of overall cash & cash equivalents 4.9% 0.1% 25.8% 62.5% — 3.0% Carrying amount $000 6 — 30 73 — 4 2018 % of overall cash & cash equivalents — 91.9% 1.1% 6.7% 0.1% — Carrying amount $000 — 1,780 21 130 2 — 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 16, 17 and 18. 21. Share capital A breakdown of the authorised and issued share capital in place as at 31 March 2019 is as follows: Allotted, called up and fully paid Ordinary shares of £0.01 each 2019 Number 2019 $000 2018 Number 2018 $000 890,843,408 12,015 139,057,695 2,261 On 28 November 2017, the Company announced it had entered into agreements for the provision to the Company of unsecured one-year loan facilities of up to an aggregate amount of $2.4 million. The facility had certain conditional subscription rights in respect of new ordinary shares of 1p each in the capital of the Company. The facility was provided by Kaptungs Limited, Kronck Business S.A. and Minles Corporation Inc. This facility was converted into share capital as announced on 29 August 2018, through the issue of 151,785,713 ordinary shares. On 7 March 2018, the Company announced it had entered into a secured one-year loan facility for up to $4.2 million. This facility was provided by Kaptungs Limited. This facility was converted into capital as announced on 4 October 2018 through the issue of 300 million ordinary shares. On 5 October 2018, the Company announced it had raised £3 million before expenses, by way of a subscription of 300 million new Ordinary Shares at 1p per share by a substantial shareholder of the Company, Kaptungs Limited. Kaptungs Limited is an investment company which is beneficially owned by Mr Ernesto Luis Tinajero Flores and has a total beneficial interest of 776,879,163 Ordinary Shares in Mirada, which represents 87.21 per cent of the voting rights in the Company. Notes to the Fi nanci al Statements / 63 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2018 – continued 22. Reserves Share premium The amount subscribed for share capital in excess of nominal value. Other Reserves – 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. Other Reserves- 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. 23. 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: José Gozalbo Sidro José Luis Vázquez Javier Casanueva Francis Coles Javier Casanueva passed away on 12th May 2018. No. of share options 938,728 631,464 247,850 185,888 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 12 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. 64 / Notes to the Fin anc i al State me nts NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2018 – continued Review of the Year Corporate Governance Financial Statements 23. Share based payments – continued Details of the share options outstanding during the period for options issued since 22 June 2007 are as follows: Outstanding at the beginning of period Outstanding at the end of the period Exercisable at the end of the period 2019 2018 Number of share options Weighted average exercise price (£) Number of share options Weighted average exercise price (£) 4,697,166 4,697,166 4,697,166 0.10 0.10 0.10 4,697,166 4,697,166 4,697,166 0.10 0.10 0.10 The options outstanding at 31 March 2019 and at 31 March 2018 had a range of exercise prices from £0.10 to £1.85 The options outstanding at 31 March 2019 had a weighted average remaining contractual life of 2.4 years (2018: 3.4 years). For the year ended 31 March 2019, the Group has recognised a total expense of $70,000 (2018: $72,000) 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. 24. 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 After 5 years 2019 $000 489 696 173 1,358 2018 $000 498 596 1,360 2,454 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. 25. Notes supporting cash flow statement Cash and cash equivalents comprise: Cash available on demand Net cash (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 2019 $000 117 (1,820) 1,937 117 2018 $000 1,937 1,660 277 1,937 Notes to the Financia l Statements / 65 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2018 – continued 25. Notes supporting cash flow statement – continued Cash and cash equivalents Cash and cash equivalents are held in the following currencies: Sterling Mexican Peso Euro Total Reconciliation of liabilities from financing activities: Company Bank loans Other loans Related party loans Advances drawn on invoice discounting 2018 $000 3,946 1,792 6,917 985 Cash outflows (1,985) (150) (306) (15) Cash inflows 1,201 — — 2019 $000 74 — 43 117 Non-cash changes Other non-cash movement Foreign exchange movement — (6,129) (534) (174) (482) (88) 2018 $000 130 2 1,805 1,937 2019 $000 2,628 1,468 — 882 Total liabilities from financing activities 13,640 (2,456) 1,201 (6,129) (1,278) 4,978 Significant non-cash transactions are as follows: Financing activities Conversion of related party loans 26. Related party transactions 2019 $000 2018 $000 6,093 — On 28 November 2017, the Company announced it had entered into agreements for the provision to the Company of unsecured one-year loan facilities of up to an aggregate amount of $2.4 million. The facility had certain conditional subscription rights in respect of new ordinary shares of 1p each in the capital of the Company. The facility was provided by Kaptungs Limited, Kronck Business S.A. and Minles Corporation Inc. This facility was converted into capital as announced on 29 August 2018. On 7 March 2018, the Company announced it had entered into a secured one-year loan facility for up to $4.2 million. This facility was provided by Kaptungs Limited. This facility was converted into capital as announced on 4 October 2018. On 5 October 2018, the Company announced it had raised £3 million before expenses, by way of a subscription of 300 million new Ordinary Shares at 1p per share by a substantial shareholder of the Company, Kaptungs Limited. Kaptungs Limited is an investment company which is beneficially owned by Mr Ernesto Luis Tinajero Flores and has a total beneficial interest of 776,879,163 Ordinary Shares in Mirada, which represents 87.21 per cent of the voting rights in the Company. 66 / Notes to th e Fin an c ial Statem ents NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Year ended 31 March 2018 – continued Review of the Year Corporate Governance Financial Statements 27. Events after the reporting date On 4 June 2019, the Company announced that Mirada Iberia, S.A.U., had entered into a new revolving credit facility for up to €1.3 million (the “Facility”). The Facility is being provided by Leasa Spain, S.L.U. owned by Mr Ernesto Luis Tinajero Flores. The proceeds from the Facility are to be used alongside Mirada’s existing debt financing facilities for general working capital purposes and capex of the Company, including the implementation of customer contracts announced and in prospect. The Directors of Mirada believe that monies drawn down from the Facility will strengthen the Company’s balance sheet whilst giving the Company the opportunity to secure new customer contracts and negotiate and renew other debt financing facilities, such as invoice discounting facilities. The Directors believe that the Facility represents the best financing option currently available to allow the Company to satisfy its short to medium-term working capital requirements and to convert its pipeline of new business opportunities into new customer contracts. The Facility comprises an immediate drawdown of €500,000 and thereafter up to a further €800,000 can be drawn in minimum tranches of €200,000 up to a maximum of five tranches including initial drawdown. On 4 July 2019, Mirada Plc signed a Sales and Purchase Agreement to divest its subsidiary Mirada Connect, Ltd to Pay By Phone Ltd (subsidiary of Volkswagen Financial Services, AG) for £2.1 million in cash. Mirada Connect recorded revenue of £0.63 million and a profit before tax of £0.12 million in the year ended 31 March 2019 and was valued at £0.56 million on the Group’s balance sheet at that date. This generated a profit on disposal of $1.75 million which will be recognised in the year ended 31 March 2020. Notes to the Fi nanci al Statements / 6 7 COMPANY STATEMENT OF FINANCIAL POSITION At 31 March 2019 Investments Non—current assets Trade and other receivables Cash and cash equivalents Current assets Total assets Loans and borrowings Related parties loans and interests Trade and other payables Current liabilities Net current liabilities Total assets less current liabilities Total liabilities Net assets Issued share capital and reserves attributable to equity holders of the company Share capital Share premium Other reserves Accumulated losses Equity Notes iv v vii vii vi ix 2019 $000 10,991 10,991 649 4 653 11,644 — — (3,161) (3,161) (2,508) 8,483 (3,161) 8,483 12,015 15,995 (1,630) (17,897) 8,483 2018 (Restated) $000 11,814 11,814 617 101 718 12,532 (277) (6,732) (6,346) (13,355) (12,637) (823) (13,355) (823) 2,261 15,760 (1,609) (17,235) (823) As permitted by section 408 of the Companies Act 2006, the Parent company’s statement of Comprehensive Income has not been included in these financial statements. The loss for the financial year for the parent company was $732,000 (2018 – loss of $1,226,000). These financial statements were approved and authorised for issue on 10 July 2019. Signed on behalf of the Board of Directors José Luis Vázquez Chief Executive Officer The notes on pages 70 to 75 form part of these financial statements 68 / Company Statem ent of F i n an c i al Posi t io n COMPANY STATEMENT OF CHANGES IN EQUITY Year ended 31 March 2019 Review of the Year Corporate Governance Financial Statements Share capital $000 2,261 Share premium $000 Foreign exchange reserves $000 Accumulated losses $000 Total $000 15,760 (1,609) (17,420) (1,008) Balance at 31 March 2018 – as previously restated Prior year adjustment (Note i) — — — 185 Balance at 1 April 2018 – as restated 2,261 15,760 (1,609) (17,235) Loss for the year Other comprehensive income Movement in foreign exchange reserve Total comprehensive loss for the year Transactions with owners Share-based payment Issue of shares Conversion of convertible loans into shares — — — — 3,896 5,858 — — — — — 235 — (732) (21) (21) — — — — (732) 70 — — Balance at 31 March 2019 12,015 15,995 (1,630) (17,897) Balance at 1 April 2017 Loss for the year – Restated (Note i) Other comprehensive income Movement in foreign exchange reserve Total comprehensive loss for the year Transactions with owners Share-based payment Share capital $000 2,261 Share premium $000 Foreign exchange reserves $000 Accumulated losses $000 15,760 (1,684) (16,012) — — — — — — — — — (1,226) (1,226) 75 75 — — 75 (1,226) (1,151) 3 3 (823) Balance at 31 March 2018 — Restated 2,261 15,760 (1,609) (17,235) The notes on pages 70 to 75 form part of these financial statements 185 (823) (732) (21) (753) 70 3,896 6,093 8,483 Total $000 325 Company Statem ent of C hange s i n Equity / 69 NOTES TO THE COMPANY FINANCIAL STATEMENTS Year ended 31 March 2019 i. Accounting policies Basis of accounting The separate financial statements of the Company have been prepared in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework. Principal accounting policies for the company are consistent of those for the group company which are disclosed in note 3 of the group accounts, page 40. Further polices considered in the company financial statements are listed below. Disclosure exemptions adopted In the current year the company has adopted FRS 100 and FRS 101. In previous years the financial statements were prepared in accordance with International Financial Reporting Standards (IFRSs) as endorsed for use in the European Union. This change in the basis of preparation has not materially altered the recognition and measurement requirements previously applied in accordance with EU endorsed IFRS. Consequently, the principal accounting policies are unchanged from the prior year. The change in basis of preparation has enabled the company to take advantage of all of the available disclosure exemptions permitted by FRS 101 in the financial statements, the most significant of which are summarised below. There have been no other material amendments to the disclosure requirements previously applied in accordance with EU endorsed IFRS. In preparing these financial statements the company has taken advantage of certain disclosure exemptions conferred by FRS 101. Therefore, these financial statements do not include: • certain comparative information as otherwise required by EU endorsed IFRS; • certain disclosures regarding the company’s capital; • a statement of cash flows; • • the effect of future accounting standards not yet adopted; the disclosure of the remuneration of key management personnel; and • disclosure of related party transactions with other wholly owned members of the group. In addition, and in accordance with FRS 101 further disclosure exemptions have been adopted because equivalent disclosures are included in the consolidated financial statements of Mirada plc. These financial statements do not include certain disclosures in respect of: • Financial Instruments (other than certain disclosures required as a result of recording financial instruments at fair value); and • Fair value measurement (other than certain disclosures required as a result of recording financial instruments at fair value). New standards, amendments and IFRIC interpretations • IFRS 9 has replaced IAS 39 Financial Instruments: Recognition and Measurement and has not had a material effect on the Company. An updated accounting policy has been set out in the Debtors policy below. • IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaced IAS 18 Revenue, IAS 11 Construction Contracts and related interpretations. Under IFRS 15, revenue is recognised when a customer obtains control of the goods or services. Determining the timing of the transfer of control – at a point in time or over time – requires judgement. The Company has applied IFRS 15 using the cumulative effect method to those contracts which are not completed as of 1 April 2018, with the effect of initially applying this standard recognized at the date of initial application. Accordingly, the comparative information is not restated. The impact of the new standard on opening balances was immaterial. See Note 2 in the Consolidated Financial Statements for more details. 70 / Notes to the Com pany F in a n c i al State me nt s NOTES TO THE COMPANY FINANCIAL STATEMENTS Year ended 31 March 2019 – continued i. Accounting policies – continued New Standards, interpretations and amendments not yet effective • IFRS 16 “Leases” – (effective for 2019 financial report). Adoption of IFRS 16 Leases will result for the Company recognising right of use assets and lease liabilities for all contracts that are, or contain, a lease. For leases currently classified as operating leases, under current accounting requirements the Company does not recognize related assets or liabilities, and instead spreads the lease payments on a straight-line basis over the lease term, disclosing in its annual financial statements the total commitment. The Company will only recognize such leases on its balance sheet as at 1 April 2019. In addition, it will measure right-of-use assets by reference to the measurement of the lease liability on that date. This will ensure there is no immediate impact to net assets on that date. The Company is in the early stages of assessing the potential impact of adopating this standard. See Note 2 in the Consolidated Financial Statements for more details. Going concern As disclosed in Note 3 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 accumulated impairment losses. Debtors Debtors 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 individual customer basis, where there is objective evidence.The company applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected credit loss allowance for all trade receivables and contract assets. During this process the probability of non-payment of a trade receivable balance is assessed and multiplied by an expected amount of credit loss as a result of the likely credit default. The Company has set up a matrix using the age a debtor is overdue and any likely events as a criteria to determine the default probability. This uses 5 categories ranging from 0% to 90% probability. The impact of the new standard on the Company was immaterial. Impairment provision for receivables from related parties and loans to related parties are recognised based on a forward- looking expected credit loss model. The methodology used to determine the amount of the provision is based on whether there has been a significant increase in credit risk since initial recognition of the financial asset. For those where the credit risk has not increased significantly since initial recognition of the financial asset, twelve month expected credit losses along with gross interest income are recognised. For those for which credit risk has increased significantly, lifetime expected credit losses along with the gross interest income are recognised. For those that are determined to be credit impaired, lifetime expected credit losses along with interest income on a net basis are recognised. Prior year adjustment The Company identified certain accounting errors which have been adjusted as a prior year restatement in the parent company financial statements. These adjustments related to interest expenses and arrangement fees related to certain related parties loans. There was no impact on the consolidated financial statements. As a result, in the prior year, the company loss for the year and related parties loans were overstated by $185k. This adjustment has been made to reflect the appropriate interest expense and related arrangement fees as an expense in the company’s income statement over the life of the related loan instrument. Notes to the Company Financ ial Statements / 71 Review of the Year Corporate Governance Financial StatementsNOTES TO THE COMPANY FINANCIAL STATEMENTS Year ended 31 March 2019 – continued ii. Deferred taxation Deferred taxation provided in the financial statements is $nil (2018: $nil) and the amounts not recognised are as follows: Losses Balance at the end of the year 2019 $000 25,239 25,239 2018 $000 23,870 23,870 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. iii. Intangible assets Cost At 1 April 2018 Foreign exchange At 31 March 2019 Depreciation At 1 April 2018 Foreign exchange At 31 March 2019 Net book value At 31 March 2019 At 31 March 2018 iv. Investments Cost At 1 April 2018 Additions Foreign exchange At 31 March 2019 Amounts provided At 1 April 2018 Foreign exchange At 31 March 2019 Net book value At 31 March 2019 At 31 March 2018 The Company increased its investment in Mirada Iberia, SA by $6.2 million on March 12th, 2018. 72 / Notes to th e Company F i n an c i al Stat em ent s Deferred development costs $000 195 (59) 136 195 (59) 136 — — $000 20,648 — (1,438) 19,210 8,834 (615) 8,219 10,991 11,814 NOTES TO THE COMPANY FINANCIAL STATEMENTS Year ended 31 March 2019 – continued iv. 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 Registered address Nature of business Digital Interactive Television Ordinary 100% Group Limited shares Digital Impact (UK) Limited* Ordinary 100% shares Mirada Connect Ltd** Ordinary 100% shares UK UK UK 68 Lombard Street Dormant London EC3V 9LJ 68 Lombard Street Interactive TV Services London EC3V 9LJ 68 Lombard Street Payment solutions London EC3V 9LJ provider Mirada Iberia, S.A. Ordinary 100% Spain Avda. de las Águilas 2B Interactive TV services shares 28044 Madrid Mirada Mexico, S.A.* Ordinary 100% Mexico Montes Urales 505—2º Interactive TV services shares 11000 México DF * Held indirectly in Mirada Iberia S.A. ** On 5 July 2019, the Company announced the sale of Mirada Connect Ltd to PayByPhone UK Limited (part of Volkswagen Financial Services). v. Trade and other receivables Trade receivables Amounts owed by group undertakings Other receivables Prepayments vi. Trade and other payables Trade payables Amount owed to group undertakings Other payables Other taxation and social security taxes Accruals Contract liabilities 2019 $000 — 605 8 36 649 2019 $000 81 2018 $000 95 476 7 39 617 2018 $000 118 2,882 5,903 67 40 91 — 71 54 117 83 3,161 6,346 Notes to the Company Fin an ci al St atements / 73 Review of the Year Corporate Governance Financial StatementsNOTES TO THE COMPANY FINANCIAL STATEMENTS Year ended 31 March 2019 – continued vi. Trade and other payables – continued Maturity analysis of the company 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 vii. Loans and borrowings Bank loans Related parties loans The borrowings are repayable as follows: 6 to 12 months On demand or within one year viii. Operating lease arrangements Within one year ix. Share capital 2019 $000 459 861 1,801 3,121 2019 $000 — — — — — 2019 $000 28 28 2018 $000 1,137 772 4,300 6,209 2018 Restated $000 277 6,732 7,009 7,009 7,009 2018 $000 29 29 A breakdown of the authorised and issued share capital in place as at 31 March 2019 is as follows: Allotted, called up and fully paid Ordinary shares of £0.01 each 2019 Number 2019 $000 2018 Number 2018 $000 890,843,408 12,015 139,057,695 2,261 On 28 November 2017, the Company announced it had entered into agreements for the provision to the Company of unsecured one-year loan facilities of up to an aggregate amount of $2.4 million. The facility had certain conditional subscription rights in respect of new ordinary shares of 1p each in the capital of the Company. The facility was provided by Kaptungs Limited, Kronck Business S.A. and Minles Corporation Inc. This facility was converted into share capital as announced on 29 August 2018, through the issue of 151,785,713 ordinary shares. On 7 March 2018, the Company announced it had entered into a secured one-year loan facility for up to $4.2 million. This facility was provided by Kaptungs Limited. This facility was converted into capital as announced on 4 October 2018 through the issue of 300 million ordinary shares. 74 / Notes to th e Company Fi na n c i al St ate ments NOTES TO THE COMPANY FINANCIAL STATEMENTS Year ended 31 March 2019 – continued ix. Share capital – continued On 5 October 2018, the Company announced it had raised £3 million before expenses, by way of a subscription of 300 million new Ordinary Shares at 1p per share by a substantial shareholder of the Company, Kaptungs Limited. Kaptungs Limited is an investment company which is beneficially owned by Mr Ernesto Luis Tinajero Flores and has a total beneficial interest of 776,879,163 Ordinary Shares in Mirada, which represents 87.21 per cent of the voting rights in the Company. x. Events after the reporting date See note 27 of the Group financial statements. Notes to the Company Fin an ci al St atements / 75 Review of the Year Corporate Governance Financial StatementsOFFICERS AND PROFESSIONAL ADVISERS Directors Mr Javier Casanueva Non-Executive Chairman (passed away on May 12th, 2018) Mr José-Luis Vázquez Chief Executive Officer Mr Francis Coles Non-Executive Director (new Chairman from May 17th, 2018) Mr Matthew Earl Mr Jose Gozalbo Sidro Mr Gonzalo Babío Non-Executive Director Executive Director Executive Director Company Secretary Filex Services Limited Nominated Adviser and Broker Allenby Capital Limited 5 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 Link Registrars Limited The Registry 34 Beckenham Road Kent BR3 4TU 76 / Officers and Profess i o nal Adv i se rs Printed by Rubicon Corporate Print UK SPAIN MEXICO SINGAPORE SLOVENIA CHILE 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 · investors@mirada.tv more info mirada.tv

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