Pilat Media Global PLC

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

Results for the nine months ended 30 September 2012

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 2012 and the three months to 30 September 2012 ("Q3").

Highlights:

Commenting on the results, Michael Rosenberg, Chairman of Pilat Media Global plc, said: "The revenues for the first nine months are in line with our expectations.  The recent signing of the contract with the global media and entertainment company is a further endorsement of our IBMS software and this important contract is already contributing to revenues and its impact should increase in future quarters. The strong backlog of orders from existing clients also continues.

"Good progress is being made in developing our new OTT platform under the OTTilus joint venture announced in June and the initial response from existing clients and prospects has been very positive.  This new venture is enhancing our existing offering as well as opening up a new market opportunity.  The Group continued to generate cash and we continue to review the various alternative uses that could be made with the cash surplus that we are generating."

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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 2012.

The Company's main focus in Q3 continued to be the progression of several implementation projects and the supply of software upgrades, enhancements and related services against a strong backlog of orders.  As explained in the Group's interim report this work includes the more resource hungry task of converting the last clients that were still on IBMS V4 to IBMS V6.  Two of the last three large IBMS V4 clients have now been upgraded to V6; only one large client is still to be upgraded.  The Company has also now reached the key milestone of first Go-Live also with two large and multi-year implementation clients in the USA - Showtime Networks Inc. and Screenvision.  The two to three months immediately following all these important upgrades and go-lives will continue to require a considerable amount of our focus but after this time much of our delivery capacity will be released to more profitable projects meeting the demands of existing clients and working on the new projects Pilat Media hopes to win.

In October 2012 the Company announced the signing of a multi-year contract with a prominent global media and entertainment company for the licensing, implementation and long term maintenance of IBMS.  Pilat Media's flagship product will serve as the central rights management, content scheduling and media trafficking system for this large organisation and will be rolled out gradually to support the client's linear channels and on-demand and new media services across Europe, Middle East and Africa.  IBMS will replace several dispersed systems to bring about improved efficiency through centralisation, standardisation and workflow automation.  The value of the licenses and implementation services contracted for is approximately £3.2 million, to be recognised gradually throughout the implementation project currently planned to be completed by early 2014.  Work on the project had commenced in the months prior to contract signing and so some revenue has been included in Q3 and previous quarters.  Maintenance and support fees will be earned annually in addition and are contracted for a five year term.

Another example of a project already in progress that is and will be making an increasing contribution to revenues this year and next year is the project with FOXTEL in Australia.  The Company is pleased that the first analysis and design phase of this contract signed and announced back in February 2012 has been completed and the Statement of Work (SOW) for the next implementation phase, covering the Non-Linear scheduling and Rights Management, has now been signed.  The value of licenses and services contracted for under this SOW is expected to be AU$1.7 million which will be earned over the coming months.

Q3 was the first quarter for OTTilus, the joint venture Pilat Media established in the summer to expand its offering into the emerging internet based OTT ("Over The Top") TV service delivery market.  The OTTilus platform vision was well received by and stimulated interest from existing clients and prospects alike.  Work enhancing the SimpleStream platform to meet the higher set of OTTilus specifications contracted for between the Company and the joint venture partner SimpleStream has commenced and is planned to take till Q1 2013.  This will include integration with IBMS to enable the OTTilus platform to utilise the rich multi-platform rights management, scheduling and media preparation functionality of IBMS.  The financial impact of OTTilus will only start to show in Q4 when the cost incurred by the Company and SimpleStream in relation to the OTTilus product and its development will start to be charged to OTTilus.

In Q3, continuing into Q4, the Company has further expanded its range of products by investing in creating "IBMS-Express", a de-featured scoped-down derivative of the full IBMS product to enable faster and lower budget IBMS deployments, "Out-of-the-box". IBMS-Express will have a SAAS ("Software As A Service") pricing and hosting options, whereby IBMS will be installed and operated on "the Cloud" (e.g. using Amazon) to facilitate quicker decision making and to meet demands for lower capital investment.  The Company is pleased to announce that the first IBMS Express contract is now already signed with a playout centre in Singapore, to initially support ten channels.

Results

Overall Q3 2012 revenues of £5,315,000 were 3.6% lower than the equivalent quarter in 2011 (Q3 2011: £5,514,000).  This small decline is in line with the Board's expectations and is due to the fact that much capacity was used for the low income IBMS V6 upgrade support activities as explained above.

Within this total revenue figure for Q3 2012 there is an increase in the license revenue, to £568,000 (Q3 2011: £498,000), in part due to the signing of the new contract referred to above and also from the sales of additional licences for the new Advanced Rights and On Demand modules recently developed by the Group.  Q3 revenues also included £3,398,000 (Q3 2011: £3,541,000) for implementation services (customisation, integration, training and consulting fees) slightly lower than the equivalent period last year due the use of the capacity for other purposes as explained above.  Recurring maintenance and support fees from "live" clients of £1,349,000 were slightly lower than in Q3 2011 (£1,475,000) and is primarily due to the termination of the contract with FOX Television Stations Inc. last year.

Gross profit in Q3 2012 was £2,603,000 (Q3 2011: £2,766,000), which represents a gross margin of 48.97% compared to 49.42% in the equivalent period last year.  The small decline in gross margin is mainly due to the increased effort invested in the various go-live processes referred to above.  The Board expects the annual average gross margin for the full year to reach the 2011 average thanks to improvement in the revenue mix expected in Q4.

The Group continued its investment in research and development with a spend in the quarter of £1,013,000 (Q3 2011: £700,000), significantly above the amount spent in the equivalent period last year as the Group continued its investment into the new IBMS:Rights and IBMS:Adapt modules.  Sales and marketing costs in Q3 2012 were slightly lower at £369,000 compared to those in the equivalent quarter for 2011 (Q3 2011: £395,000) as the Company's sales activities this quarter were more focused in Europe with reduced travel costs.

General and administrative costs of £1,062,000 were lower than the equivalent quarter last year (Q3 2011: £1,230,000) but very similar to those of the previous quarter (Q2 2012: £1,087,000).  The lower costs compared to the equivalent period reflect the Group's continuing efforts to reduce administrative overheads despite increasing the numbers of development and revenue generating staff.

Whilst there was a small increase in the volatility of exchange rates in Q3 compared with Q2 2012, the currency loss was contained at £69,000 (Q2: 2011 £156,000) as the foreign currency loans that the Company put in place have had the desired impact of significantly moderating the fluctuations caused by exchange rate movements.  The loans also reduced the requirement for large forward contract hedges and consequently the fair value adjustments and foreign exchange movements on derivative financial instruments at Q3 2012 was a gain of £52,000 (Q3 2011: loss of £25,000) reflecting lower impact compared with previous years.

As a consequence of the lower revenues in the quarter the Q3 2012 operating profit (before impairment of trade receivable and before amortisation of intangible assets) was marginally lower at £0.09 million (Q3: 2011 £0.24 million).  The tax charge in the quarter reflects the likely year end charge as all companies in the Group are expected to be profitable and the full year tax charge is expected to be in line with previous years.

Statement of Financial Position

There has been no capitalisation of development costs in Q3 2012.

Trade receivables at the end of Q3 2012 were higher as a result of increased invoicing as certain implementation projects reached significant billing milestones which generated additional invoicing with a corresponding reduction in accrued income balances.

The initial investment of £250,000 in the OTTilus joint venture remains in prepayments until all the investment conditions have been met and the joint venture partner, SimpleStream Limited, has delivered the enhanced intellectual property to the joint venture.  Development of the enhanced system continues and final delivery is expected in Q1 2013.

Cash flow

Net cash inflows in the quarter continued to be strong as a result of project milestones being reached on a number of long term contracts.  As a result, cash, net of the currency loans, increased to £7.8 million at the end of Q3 2012.

Outlook

The Company continues to see a strong demand for its software and services.  In the next few weeks it expects to complete the licence renewal negotiations with a number of its existing clients which will generate license fees in Q4 making it a strong and profitable quarter.  The pipeline of new sales opportunities continues to include significant prospects that can convert in the next few months.  The Board hopes the increased investment in expanding Pilat Media's offering, with the Rights and Adapt modules, IBMS-Express and OTTilus will help in generating additional prospects and revenues in the Group's existing market and in new ones the Company can now approach, leveraging its strong position.  As the cash balance continues to increase the Company will intensify its search for ways to utilise cash to build value for the shareholders.

CONSOLIDATED INCOME STATEMENT

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

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENT OF FINANCIAL POSITION