Final Results

RNS Number : 5651O

Messaging International Plc

30 June 2010

 



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

30 June 2010

Messaging International Plc ('the Company')

Final Results

Messaging International Plc, ('Messaging') the AIM traded company and provider of innovative messaging services, announces its results for the year ended 31 December 2009.

Highlights

·    Strengthened position as leading provider of innovative messaging services especially in "Text to Landline" and "PC to Mobile" solutions

·    Maiden operating profit of £27,038 (2008: loss £333,906)

·    Post-tax loss £33,096 (2008: loss £367,267)

·    Total revenue increased by over 30% to £2,274,080 (2008: £1,742,632)

·    Expansion into new geographic territories

During 2009 our financial performance continued to improve and for the first time since inception, the company has achieved an operating profit.  This is as a result of continuing growth in revenues and a strong financial discipline on expenses.

During the period under review, Messaging successfully made strategic technological investments to ensure that we continually build upon our position as an innovative provider of converged messaging services.  Converged communication media is increasingly becoming a minimum expectation for mobile and fixed line carriers as technological progress is made in this sector and, with this in mind, we have increased our product offering through our wholly owned subsidiary, TeleMessage Ltd ('TeleMessage') and broadened the reach and functionality of our existing services.

Our current relationships with key blue-chip operators such as Sprint (US), the top three carriers in Canada - Rogers Wireless, Telus and Bell, T-Mobile (Macedonia) and many more, remain of considerable importance whilst we remain proactive in creating new alliances with other operators and further developing existing partnerships.

Advancing the company's growth through sales and marketing is key and we have redesigned our website over the period to mirror our offerings.  Our commitment to growth was recognised through our ranking 244th at the Deloitte Technology Fast 500 EMEA in 2009.  This programme acknowledges the 500 fastest growing technology companies in Europe, Middle East and Africa.

Financial results

The results for the year ended 31 December 2009 show a loss of £33,096 (2008: loss of £367,267), on revenue of £2,274,080 (2008: £1,742,632).

The group's cash position at 31 December 2009 was £202,691 (2008: £300,653).

The board does not recommend the payment of a dividend.

Operations

TeleMessage offers converged messaging products and services for carriers and enterprises that deliver Text, Voice, Video and Multimedia messages to and from any communication device. Users can send, receive, and manage SMS, MMS, Voice, Fax and E-mail messages from the Internet, E-Mail clients, Fixed or Mobile phones and APIs.

Our revenue is derived through two main streams:

·    Hosted platform - hosted messaging services for a per-message fee; or

·    Software licensing - usually linked to the number of messages that can be sent through the system or the number of active users.

The functionality of our "Text to Landline" application continues to relate and apply to a range of blue-chip providers.  At the beginning of the year, we signed an agreement with Uralsviazinform, considered to be one of the four leading mobile operators in Russia, to launch our "Text to Landline" service through TeleMessage.  This provided TeleMessage with entry into a new geographic market.

Strengthening relationships with our blue-chip customers is also an important part of our evolution.  The popularity of our "Text to Landline" service with Sprint customers led us to launch a "celebrity voices" feature which delivers a message, received via landline, using top voice impersonators of Hollywood stars. This has proved to be very popular.  Furthermore, we have also provided Sprint's US customers with the ability to send text messages to landlines in Mexico with no additional costs.

Post year end, a number of Tier 3 US mobile carriers have launched the "Text to Landline" application to their subscribers including Panhandle Telephone Cooperative Inc. and Golden State Cellular.  These contracts confirm that we have strengthening our position in the US market place.

TeleMessage continues to invest in its relationship with strategic partners. The relationship with Comverse led to the implementation of our a "PC to Mobile" application through a Tier 1 network provider in Australia giving our product a significant amount of traction in this market and helping us to strengthen relationships in this new geographic market.  The "PC to Mobile" applications allow users to send SMS and MMS from computer to a mobile device.

Innovation is pivotal to Messaging's success and we developed a number of new products during the year under review which were subsequently launched to the market post year end.  Furthermore, we have also adapted some of our existing solutions, including our "PC to Mobile" application suite.  Following the launch of Microsoft's Windows 7 we were quick to develop our "PC to Mobile" application suite for compatibility so that a wider range of prospective and current users can send SMS and MMS messages from their computers to mobile phones.

Mobile phones are increasingly expected to perform a wider range of services beyond simply making calls and SMS functions and many of our new products fulfil these criteria, allowing users to extend the use of their device for entertainment and functionality purposes.  We have enhanced our current video solutions and created an application which allows users to download and stream videos to their mobile phones through our Internet Video Download application.  We have also developed two additional applications, a "File to Mobile", application which enables users to store files in their device in a similar way as a portable disk for PC content, and a full Telco grade "Messaging Gateway".

Outlook

Our new products provide TeleMessage with yet another string to our bow as we maintain our focus on technological quality and development and we are confident that they will appeal to many of our blue-chip clients.  We have won a number of contracts which have strengthened our position in the US and forged relationships in new and growing territories such as Australia and look forward to doing the same in the future.

As the converged messaging and mobile communications markets continue to progress at a phenomenal pace, we are committed to the quality and advancement of our products to further take advantage of this trend.

I would like to take this opportunity to thank all those involved in the group for their hard work and dedication over the past year. 

H Furman

Chairman

30 June 2010

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

Guy Levit	Messaging International Plc	Tel: + 972 3 9225252
Mark Percy	Seymour Pierce Limited	Tel: [phone]
Isabel Crossley	St Brides Media & Finance Ltd	Tel: [phone]
Elisabeth Cowell	St Brides Media & Finance Ltd	Tel: [phone]

Consolidated statement of comprehensive income

For the year ended 31 December 2009

				2009		2008
				£		£
Revenues				2,274,080		1,742,632
Cost of revenues				(980,879)		(822,712)
Gross profit				1,293,201		919,920
Operating expenses
Research and development				(366,762)		(293,333)
Selling and marketing				(508,716)		(542,283)
General and administrative				(390,415)		(418,210)
Total operating expenses				(1,265,893)		(1,253,826)
Operating profit/(loss)				27,308		(333,906)
Finance income				-		69
Finance costs				(60,404)		(33,430)
Loss before taxation				(33,096)		(367,267)
Taxation				-		-
Comprehensive loss for the year				(33,096)		(367,267)
Other comprehensive loss
Foreign exchange difference on translation of foreign operations				(29,029)		74,438
Foreign exchange difference arising from restating the carrying value of goodwill associated with foreign operations				(343,945)		669,645
				(372,974)		744,083
Total comprehensive (loss)/profit				(406,070)		376,816

Loss per share (basic and diluted)
Loss from operations				(0.01)p		(0.15)p

Statements of changes in equity

For the year ended 31 December 2009

The group

	Share           capital	Share premium	Foreign exchange reserve	Revenue reserves	Total
As at 1 January 2008	1,176,900	4,266,227	(34,379)	(1,624,714)	3,784,034
Loss for the year				(367,267)	(367,267)
Foreign currency translation changes for goodwill			669,645		669,645
Other foreign currency translation changes			74,438		74,438
Share based payments for employee share options				11,887	11,887
Share based payments for warrants relating to borrowings				98,968	98,968
At 31 December 2008	1,176,900	4,266,227	709,704	(1,881,126)	4,271,705
Loss for the year				(33,096)	(33,096)
Foreign currency translation changes for goodwill			(343,945)		(343,945)
Other foreign currency translation changes			(29,029)		(29,029)
Share based payments for employee share options				32,548	32,548
Issue of shares in lieu of professional fees	2,500	32,500			35,000
At 31 December 2009	1,179,400	4,298,727	336,730	(1,881,674)	3,933,183

The company

	Share           capital	Share premium	Revenue reserves	Total
As at 1 January 2008	1,176,900	4,266,227	(42,037)	5,401,090
Loss for the year			(24,183)	(24,183)
At 31 December 2008	1,176,900	4,266,227	(66,220)	5,376,907
Loss for the year			(1,211)	(1,211)
Issue of shares in lieu of professional fees	2,500	32,500		35,000
At 31 December 2009	1,179,400	4,298,727	(67,431)	5,410,696

The following describes the nature and purpose of each reserve within owners' equity.

Share capital: The amount subscribed for shares at nominal value.

Share premium: The amount subscribed for share capital in excess of nominal value.

Foreign exchange reserve: The effect of changes in exchange rates arising from translating the financial statements of subsidiary undertakings into the company's reporting currency. 

Revenue reserves: Cumulative realised profits less losses and distributions attributable to equity holders of the group.

Consolidated statement of financial position

At 31 December 2009

				2009		2008
				£		£
Non-current assets
Goodwill				3,562,317		3,906,262
Property, plant and equipment				56,067		52,744
Other investments				157,562		135,330
Total non-current assets				3,775,946		4,094,336
Current assets
Trade and other receivables				626,106		576,907
Cash and cash equivalents				202,691		300,653
Total current assets				828,797		877,560
Total assets				4,604,743		4,971,896
Current liabilities
Trade and other payables				(292,418)		(382,856)
Borrowings				(169,679)		(109,282)
Total current liabilities				(462,097)		(492,138)
Non-current liabilities
Borrowings				(8,466)		(42,174)
Other payables				(20,764)		-
Provisions				(180,233)		(165,879)
Total non-current liabilities				(209,463)		(208,053)
Total liabilities				(671,560)		(700,191)
Net assets				3,933,183		4,271,705
Equity
Share capital				1,179,400		1,176,900
Share premium				4,298,727		4,266,227
Foreign currency translation reserve				336,730		709,704
Revenue reserves				(1,881,674)		(1,881,126)
Total Equity				3,933,183		4,271,705

Company statement of financial position

At 31 December 2009

				2009		2008
				£		£
Non current assets
Investment in subsidiary undertakings				3,269,000		3,269,000
Total non-current assets				3,269,000		3,269,000
Current assets
Receivables due after one year				2,111,173		2,064,518
Trade and other receivables				43,731		9,288
Cash and cash equivalents				14,042		59,952
Total current assets				2,168,946		2,133,758
Total assets				5,437,946		5,402,758
Current liabilities
Trade and other payables				(27,250)		(25,851)
Total liabilities				(27,250)		(25,851)
Net assets				5,410,696		5,376,907
Equity
Share capital				1,179,400		1,176,900
Share premium				4,298,727		4,266,227
Revenue reserves				(67,431)		(66,220)
Total equity				5,410,696		5,376,907

Consolidated statement of cash flows

For the year ended 31 December 2009

				2009		2008
				£		£
Cash flow from operating activities
Operating profit/(loss)				27,308		(333,906)
Adjustments for:
Share based payments				33,798		11,887
Amortised finance costs				-		4,790
Depreciation and amortisation				25,677		24,896
Foreign currency differences				(39,440)		43,287
				20,035		84,860
Operating cash flow before working capital movements				47,343		(249,046)
Increase in receivables				(15,449)		(196,297)
(Decrease)/increase in payables				(69,673)		182,336
Increase/(decrease) in provisions				28,960		(1,018)
				(56,162)		(14,979)
Cash out flow from operating activities				(8,819)		(264,025)
Investing activities
Interest paid				(19,122)		(5,234)
Investments				(34,148)		12,946
Purchase of tangible assets				(33,645)		(43,092)
Net cash used in investing activities				(86,915)		(35,380)
Financing activities
Bank loan				220,126		244,278
Bank loan repayments				(222,354)		-
Net cash from financing activities				(2,228)		244,278
Net change in cash and cash equivalents				(97,962)		(55,127)
Cash and cash equivalents and bank overdraft at the beginning of the year				300,653		355,780
Cash and cash equivalents and bank overdraft at the end of the year				202,691		300,653

Company statement of cash flows

For the year ended 31 December 2009

				2009		2008
				£		£
Cash flow from operating activities
Operating loss				(30,577)		(52,260)
Share based payments				1,250		-
Operating cash flow before working capital movements				(29,327)		(52,260)
Increase in receivables				(47,353)		(73,768)
Increase/(decrease) in payables				1,399		(2,108)
Cash flow from operating activities				(75,281)		(128,136)
Finance income				29,371		28,077
Net cash used in operating activities				(45,910)		(100,059)
Net cash from financing activities				-		-
Net change in cash and cash equivalents				(45,910)		(100,059)
Cash and cash equivalents and bank overdraft at the beginning of the year				59,952		160,011
Cash and cash equivalents and bank overdraft at the end of the year				14,042		59,952

1. General information

Messaging International Plc is a company incorporated in the UK and its activities are as described in the chairman's statement and directors' report.

The preliminary announcement of results is not the company's statutory accounts. Statutory accounts for the year ended 31 December 2009 have not been delivered to the Registrar of Companies. The auditors have reported on the statutory accounts for the year ended 31 December 2009 on 30 June 2010 and their report was unqualified and did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying the report; neither did it contain a statement under section 498 (2) (accounting records or returns inadequate or accounts or directors' remuneration report not agreeing with records and returns), or Section 498 (3) (failure to obtain necessary information and explanations)

2. Basis of Accounting

The consolidated financial statements of the company for the year ended 31 December 2009 have been prepared on a historical cost basis and are in accordance with International Financial Reporting Standards ('IFRS') as adopted by the EU.  These have been applied consistently except where otherwise stated.

Going concern

These financial statements have been prepared on the assumption that the group is a going concern.

When assessing the foreseeable future, the directors have looked at a period of twelve months from the date of approval of this report. The forecast cash-flow requirements of the business are contingent upon the ability of the group to retain revenues from existing contracts and generate future revenues from future business.

After making enquiries, the directors have reasonable expectations that the group has adequate resources to continue trading for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements.

The directors have taken several steps to secure the position of the group which include renegotiating the terms of its bank loan with Mizrahi Tefahot Ltd in February 2010 and the approval of a further grant from the Israeli Office of the Chief Scientist for 2010.

Were the group unable to continue as a going concern, adjustments would have to be made to the statement of financial position of the group to reduce the value of assets to their recoverable amounts, to provide for future liabilities that might arise and to reclassify non-current assets and long-term liabilities as current assets and liabilities.

Investment in subsidiary undertakings

The investment in subsidiary undertakings is stated in the balance sheet at cost less any provision for impairment. Impairment is recognised immediately in the income statement and is not subsequently reversed.

Goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cash generating units to which the goodwill has been allocated. The value in use calculation requires the entity to estimate the future cash flows expected to arise from the cash generating unit and a suitable discount rate in order to calculate present value.

The carrying amount of goodwill at 31 December 2009 has not required impairment. However after taking into account exchange rate fluctuations, the carrying value at 31 December 2009 was 3,562,317,(2008:£3,906,262).

3. Taxation

					2009		2008
					£		£
Current tax charge					-		-

Factors affecting the tax charge in the year

Loss on ordinary activities before taxation					(33,096)		(367,267)
Loss on ordinary activities before taxation at the standard rate of UK corporation tax 28% (2008: 28%)					(9,267)		(102,835)
Effects of:
Depreciation and amortisation					7,190		6,971
Non recognition of losses					2,077		95,864
Tax charge					-		-

The group's accumulated trading losses to date are approximately £9.5 million which may be carried forward and offset against future trading income.

In accordance with IAS12, the company and the group have not recognised deferred tax assets as they do not anticipate that profits generated in the short term will exceed accumulated losses generated by subsidiary undertakings.

TeleMessage Ltd in Israel was granted approved enterprise status for its investment programme.  The main benefit arising from such status is the reduction in tax rates on income.  The company's income from the "Approved Enterprises Scheme" is tax exempt for four years commencing with the year it first earns taxable income and then would be subject to a reduced tax rate of between 10% and 25% for a period of up to six years. Since the company has incurred losses to date it has not utilised any of the aforementioned tax benefits.

4. Basic and diluted loss per share

Basic loss per share has been calculated on the group's loss attributable to equity holders of the parent company of £33,096 (2008: £367,267) and on the weighted average number of shares in issue during the year, which was 235,463,334 (2008: 235,380,000).

In view of the group loss for the year, 50 million share warrants, 100 million new warrants and 24.8 million options to subscribe for ordinary shares in the company are anti-dilutive and therefore diluted earnings per share information is not presented. 

5. Cash and cash equivalents and bank overdraft

	At 1 January 2009		Cash Flow		At 31 December 2009
	£		£		£
Group
Cash and cash equivalents	300,653		(97,962)		202,691
Company
Cash and cash equivalents	59,952		(45,910)		14,042

6. Annual Report & Accounts

A copy of the Annual Report and Accounts for the year ended 31 December 2009 has been sent to shareholders today and copies are available from the Company's registered office at 58-60 Berners Street, London W1T3JS or by visiting the Company website at www.telemessage.com.

 

END

 

 

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