(MES.L) Messaging International PLC Buy/Sell

Chairman's Statement

Trading during the first half of 2009 has been steady, having agreed new partnerships, strengthened existing alliances and generated a strong pipeline of new business opportunities. Our existing relationships with major international mobile operators, including the likes of Sprint Nextel, Rogers Wireless, Telus and Bell Canada, also continue to bear fruit as they adopt new add-ons to existing products and expand into new territories.

Financial Results

The results for the six months ended 30 June 2009 show a pre-tax loss of £173,224 (2008: loss £199,028) on turnover of £1,122,326, which is a 54.2 per cent. increase on last year (2008: £727,697).

The Company's cash position as at 30 June 2009 was £297,669 (2008: £210,383).

The board does not recommend the payment of an interim dividend.

Operations Review

Our blue-chip client base is undoubtedly impressive, however it is always difficult to gauge how much exact turnover each client will generate. Our relationship with Sprint Nextel ('Sprint'), for example, is very strong, with considerable revenue generated from this affiliation. Due to the popularity of our Text-to-Landline service with Sprint customers, we have launched various additional applications and features exclusively for these users such as the 'Record Your Name' personalisation feature and most recently, a celebrity voices feature whereby personalised messages can be delivered using top voice impersonators of Hollywood stars, which have proved very popular.

We have made good progress branching out into new geographic territories and signing up additional corporate entities and telecom operators. Early in the year we launched our Text-to-Landline service with Uralsviazinform, considered as one of the four leading mobile operators in Russia. We also signed up various new enterprise customers including Zim, one of the largest global shipping companies, Ramada Hotels and a number of Israeli high schools.

Our pipeline of new opportunities is strong. During the period we answered many requests for proposals in Europe and hope to convert several of these into new contracts having received positive feedback. We also conducted several trials with major Western European and South American operators, which we are particularly pleased about as they give us direct access into two of the largest mobile markets, where until now, we have only had a limited presence.

We are constantly evolving and looking for new revenue streams to meet demand. Our research and development division therefore forms a major part of the business as we look to build and sustain competitive advantages. Importantly, to help us in this respect, in June 2009 the Company was approved for a further research project of approximately $250,000 from the Israeli Office of the Chief Scientist to mainly enhance our video streaming and download solutions.

Prospects

With more than half of the world now using mobile phones, mobile messaging is growing at a staggering rate and our Company is at the forefront of the industry. Importantly, we are increasingly being recognised by global mobile operators as a company which can deliver innovative, cost effective solutions to satisfy the needs of their customers. Looking forward, we are confident that this trend will carry on and that the numbers of users will continue to rise throughout the remainder of the year and beyond.

H Furman

Chairman

29 September 2009

For further information visit www.telemessage.com or contact:
Guy Levit Messaging International Plc Tel: + 972 3 9225252
Mark Percy Seymour Pierce Limited Tel: +44 (0) 20 7107 8000
Catherine Leftley Seymour Pierce Limited Tel: +44 (0) 20 7107 8000
Susie Callear St Brides Media & Finance Ltd Tel: +44 (0) 20 7236 1177

Consolidated income statement for the six months ended 30 June 2009

Unaudited Unaudited Audited
Notes six months six months year ended
ended ended 31 December
30 June 2009 30 June 2008 2008
£ £ £

Revenues 2 1,122,326 727,697 1,742,632
Cost of revenue (581,425) (361,980) (822,712)

Gross profit 540,901 365,717 919,920

Operating expenses
Research and development (182,266) (204,180) (293,333)
Sales and marketing (296,251) (132,992) (542,283)
Administrative and general (216,124) (227,573) (418,210)

costs
Total operating expenses (694,641) (564,745) (1,253,826)

Operating loss (153,740) (199,028) (333,906)
Finance income - - 69
Finance cost (19,484) - (33,430)

Loss before taxation (173,224) (199,028) (367,267)

Taxation 3 - - -

Loss for the financial period (173,224) (199,028) (367,267)

Loss per share
Basic and diluted loss per (0.07)p (0.08)p (0.15)p
share 4

Consolidated statement of comprehensive income for the six months ended 30 June 2009

Unaudited Unaudited Audited
Notes six months six months year ended
ended ended 31 December
30 June 2009 30 June 2008 2008
£ £ £

Exchange difference on 39,609 (378) 74,438

translation of foreign operations
Foreign exchange difference - - 669,645

arising from restating the carrying value of goodwill associated with foreign operations
(173,224) (199,028) (367,267)

Loss for the period/year
Total recognised income and (133,615) (199,406) 376,816

expense for the period/year

Consolidated Statement of financial position as at 30 June 2009

Unaudited Unaudited Audited
Notes as at as at as at
30 June 30 June 31 December

£ £ £

Non current assets
Goodwill 3,906,262 3,236,617 3,906,262
Tangible assets 48,313 27,210 52,744
Other investments 118,927 107,500 135,330
4,073,502 3,371,327 4,094,336

Current assets
Cash and cash equivalents 297,669 210,383 300,653
Trade and other receivables 484,791 428,617 576,907
782,460 639,000 877,560

Total assets 4,855,962 4,010,327 4,971,896

Current liabilities
Trade and other payables (288,235) (307,088) (382,856)
Borrowings (165,830) - (109,282)
(454,065) (307,088) (492,138)

Non current liabilities
Borrowings (96,879) (42,174)
Provisions (145,772) (121,000) (165,879)
(242,651) (121,000) (208,053)

Total liabilities (696,716) (428,088)) (700,191)

Net assets 4,159,246 3,582,239 4,271,705

Share capital 1,176,900 1,176,900 1,176,900
Share premium account 4,266,227 4,266,227 4,266,227
Revenue reserves (2,033,194) (1,826,131) (1,881,126)
Foreign exchange reserves 749,313 (34,757) 709,704

Shareholders' equity 5 4,159,246 3,582,239 4,271,705

Consolidated cash flow statement for the six months ended 30 June 2009
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 December
30 June 2009 30 June 2008 2008
£ £ £

Cash flow from operating activities
Loss before taxation (153,740) (199,028) (333,906)

Adjustments for:
Share based payments 21,156 (2,389) 11,887
Depreciation and amortisation 12,234 6,784 24,896
Amortised finance costs 19,201 - 4,790
Foreign currency translation 23,938 (378) 43,287

adjustments
76,529 4,017 84,860
(77,211) (195,011) (249,046)

Operating cash flow before working capital movements
Decrease/(increase) in 92,116 (48,007) (196,297)

receivables
(Decrease)/increase in (94,621) 106,568 182,336

payables
(Decrease)/increase in - - (1,018)

provisions
(2,505) 58,561 (14,979)

Cash outflow from operating (79,716) (136,450) (264,025)

activities Investing activities
Interest paid (19,484) - (5,234)
Purchase of tangible assets (14,195) (8,947) (43,092)
Investment - - 12,946
Net cash used in investing (33,679) (8,947) (35,380)

activities Financing activities
Net borrowings 110,411 - 244,278
Net cash from financing 110,411 - 244,278

activities
Net decrease in cash and cash (2,984) (145,397) (55,127)

equivalents
Cash and cash equivalents at 300,653 355,780 355,780

the beginning of the period/year
Cash and cash equivalents at 297,669 210,383 300,653

the end of the period/year

Notes to the interim report

For the six months ended 30 June 2009

1. Basis of preparation and consolidation

The financial information contained in the interim results has been prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union. It has been prepared in accordance with IAS 34 - Interim Financial Reporting and does not include all of the information required for full annual financial statements.

The financial information contained in these interim results for the six months ended 30th June 2009 and 30th June 2008 are un-audited. The comparative figures for the year ended 31st December 2008 do not constitute statutory financial statements of the group within the definition of S434 of the Companies Act 2006. Full audited accounts of the group in respect of that financial period prepared in accordance with IFRS, which we received an unqualified audit opinion have been delivered to Registrar of Companies.

The interim results have been drawn up using accounting policies and presentation consistent with those disclosed and applied in the annual report and accounts for the year ended 31 December 2008 except for the adoption of the following new and amended reporting standards, which are effective for periods commencing on or after 1 January 2009:

A new primary statement, "Consolidated Statement of Changes in Equity" is required containing information previously disclosed in the notes to the accounts. In addition, the Consolidated Statement of Recognised Income and Expense is replaced with the Consolidated Statement of Comprehensive Income, which may be shown separately or combined with the Income Statement.

This standard replaces IAS14 - "Segment Reporting" which required operating segments to be analysed into Primary (business) and Secondary (geographical) segments. IFRS8 requires that operating segments should be aligned with those reviewed by the "Chief Operating Decision Maker" which is considered to be the Board of Directors.

Various other amendments to standards and interpretations of standards are effective for periods commencing on or after 1 January 2009 as detailed in the 2008 Annual Report, none of which have any impact on reported results.

The accounting policies used in the interim statement are consistent with those used in the financial statements for the year ended 31 December 2008 and are in accordance with International Financial Reporting Standards.

The consolidated income statement and balance sheet include the financial statements of the Company and its subsidiary undertakings up to 30 June 2009.

2. Turnover
Unaudited Unaudited Audited
six months six months year ended
ended ended 31 December
30 June 2009 30 June 2008 2008
£ £ £

North America 980,939 528,410 1,246,099
Rest of the World 141,387 199,287 496,533
1,122,326 727,697 1,742,632

3 No provision has been made for taxation as the group has losses available to carry forward against future trading profits. No deferred tax asset has been recognised in accordance with International Accounting Standard 12.

4. Basic and diluted loss per share
The calculation of the loss per ordinary share is based on the loss after taxation for the six month period to 30 June 2008 of £173,224 (2008: £199,028) and 235,380,000 ordinary shares being the weighted verage number of shares in the period. (2008: 235,380,000).

5. Movement to shareholders' equity
Unaudited Unaudited Audited
six months six months Year ended
ended ended 31 December 2008
30 June 2009 30 June 2008
£ £ £

Loss for the period (173,224) (199,028) (367,267)
Foreign Exchange reserves 39,609 (378) 744,083

movements
Equity settled share based 21,156 (2,389) 110,855

payments
(112,469) (201,795) 487,671
Equity at the beginning of the 4,271,705 3,784,034 3,784,034

period
Equity at the end of the 4,159,246 3,582,239 4,271,705

period

This information is provided by RNS The company news service from the London Stock Exchange

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