Pilat Media Global PLC

("Pilat Media", the "Group" or the "Company")

Results for the nine months ended 30 September 2011

Pilat Media Global plc (AIM:PGB), the London-based supplier of business management software to the media industry around the world, today announces its results for the nine months ended 30 September 2011 and the three months to 30 September 2011 ("Q3").

Highlights:

Commenting on the results, Michael Rosenberg, Chairman of Pilat Media Global plc, said:

"We are pleased to have announced the settlement of our dispute with Fox Television Stations Inc with the result that the Company will now be receiving a payment from them.  Our Q3 revenues continued to grow on the back of increased demand from our existing client base, bringing the growth over the last nine months to over 4%.  We continue to make significant investment in improving and expanding our products and this in part has enabled revenues from our existing clients to increase.  We are also engaged with a number of new potential projects but these are moving forward at a slower pace than we had envisaged and this will inevitably restrict growth for this year."

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Chairman and CEO's Statement

Pilat Media Global plc is pleased to announce its results for the nine months and three months ended 30 September 2011.

The Company's focus in the third quarter was on delivery as a record number of projects entered the critical pre-go-live phases and progressed with work being carried out simultaneously in all territories - Australia, North America and Europe.  This enabled Company to increase revenues in the quarter ahead of our forecast.  The Board expects some of these projects to go-live in Q4 this year with others reaching this stage in the first half of 2012.  These clients will then add to the growing maintenance and support revenue stream (which grew by 7.5% in Q3) as well as to additional services which many of these clients typically require once they are live and using Pilat Media's systems. Amongst the projects approaching their go-live dates there are three implementations of the new IBMS-Rights designed as the foundation for multi-platform TV and "Over the Top" (OTT) applications. The Company has made significant efforts in this emerging area and hope to the see a return in the near future through more projects like these.   

During the quarter the Company has also had to focus on the unexpected litigation with Fox Television Stations Inc ("FTS"). As previously announced the Board is pleased that a settlement agreement has been amicably negotiated with FTS without the need to go to court.  In this settlement agreement both parties have agreed to withdraw all allegations and claims.  Under the settlement, Pilat Media will receive payments from FTS and from the Company's insurers which total US$850,000 (approximately £544,000).  This amount has been credited against the impairment of receivables made in Q2 2011.  This is the only lawsuit Pilat Media has ever had with any of its sixty clients in the Company's ten year history and the Board is pleased that this chapter is closed and Pilat Media can now fully focus on its business.

Results

Q3 2011 revenues of £5,514,000 were 5.1% higher than the equivalent quarter in 2010 (Q3 2010: £5,247,000).  These Q3 revenues included £3,541,000 (Q3 2010: £3,040,000) for implementation services (customisation, integration, training and consulting fees), £498,000 (Q3 2010: £835,000) for the proportion of IBMS licences recognised during Q3 and £1,475,000 (Q3 20010: £1,372,000) of recurring maintenance and support fees from "live" clients.

Gross profit in Q3 2011 was £2,725,000 (Q3 2010: £2,766,000), which represents a gross margin of 49.42% compared to 52.72% in the equivalent period last year.  The decline in gross margin is a result of the change in revenue mix as explained above with a lower proportion of the high margin licence fee revenue and a higher proportion of revenue from services that have a lower gross margin.  The Board expects the annual average gross margin for the full year to reach the 2010 average.

The Group continued its investment in research and development with a spend in the quarter of £700,000 (Q3 2010: £602,000) which, whilst significantly above the amount spent in the equivalent period last year, was 12% down on the amount spent last quarter.  Sales and marketing costs in Q3 2011 were 17% higher at £395,000 compared to those in the equivalent quarter for 2010 (Q3 2010: £338,000) as the Company was involved in a number of proof of concepts which incurred travel costs.

General and administrative costs of £1,231,000 were higher than the equivalent quarter last year (Q3 2010: £1,085,000).  This was mainly due to one-off costs related to the recruitment and training of UK graduates as Implementation Consultants, the change of the Sydney office and additional legal costs.

The foreign currency loans that the Company put in place at the end of 2010 have had the required impact of significantly moderating the fluctuations caused by exchange rate movements.  As a result of having the currency loans in place, there is a reduced requirement for large forward contract hedges so the fair value adjustments are moderated (Q3 2011 a loss of £37,000; Q3 2010 a gain of £415,000) and foreign exchange movements on derivative financial instruments in Q3 2011 are much lower than in Q3 2010 (Q3 2011 a gain of £51,000; Q3 2010 a loss of £197,000).

Excluding the one-off exceptional item (the write back of the impairment of the receivable), the small loss before tax of £40,000 in Q3 2011 was similar with the profit for the equivalent period last year (Q3 2010: £48,000).

The tax credit for the nine months and three months to September 2011 is a result of the loss caused by the impairment of the receivable and is based on the same average tax rate as for the full year 2010.

Statement of Financial Position

There has been no capitalisation of development costs in the nine months to 30 September 2011.

Trade receivables at the end of Q3 2011 were £6.2 million having increased from the 2010 year end balance of £4.9 million as a result of higher invoicing at the end of the quarter as certain projects meet billing milestones.  The other receivables which included the accrued income balances were significantly lower as the amounts relating to FTS have been impaired.

The increase in trade and other payables from £3.09 million at Q3 2010 to £3.37 million at the end of Q3 2011 is a result of increased invoicing in advance of revenue recognition on maintenance charges.

Cash flow

In the quarter US$500,000 of the US loan was repaid as the Company's exposure to US Dollars decreased due to the impairment of the Fox receivable.  The Company's net cash balances (cash and cash equivalents net of the fixed term loan) decreased to £3.8 million at the end of Q3 2011 from the 2010 year end balance of £4.0 million.  However as the higher trade receivable balance converts to cash the cash balance is expected to increase.  Cash balances will also increase due to the US$850,000 to be received from Fox and the Company's insurers.

Outlook

The Board expects the continued improvement the Company has seen to date over the previous year to continue for the rest of this year though overall growth may be below the Board's internal expectations but in line with market expectations due to delays in new project signings.  Pilat Media continues to see strong demand from its existing customers and the Company is engaged in a number of bids for high potential new business some of which the Board is hopeful will convert in the coming months and provide a solid base for 2012 revenues.

CONSOLIDATED INCOME STATEMENT

Note:  The (loss)/profit from operations for the period arises from the Group's continuing operations.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME