Half Yearly Report

RNS Number : 1305B

Mobile Streams plc

28 March 2013

 

Mobile Streams plc. Registered in England & Wales No. 03696108

28 March 2013

Mobile Streams plc

("Mobile Streams" or the "Group")

Unaudited Interim results for the 6 months ended 31 December 2012

Mobile Streams (AIM: MOS) is pleased to update its shareholders on its unaudited interim results for the six months ended 31 December 2012:

·      Revenue growth of 220% to £23.7m (6 months ended 31 December 2011: £7.4m). All revenue is from continuing operations.

·      Mobile Internet revenues grew 340% to £21.4m (6 months ended 31 December 2011: £4.9m)

·      EBITDA* of £1.9m (6 months ended 31 December 2011: £5k)

·      Post-tax profits of £1.1m (6 months to 31 December 2011: loss of £0.2m) 

·      Cash reserves of £2.0m at 31 December 2012 (31 December 2011: £0.7m), with no debt. £1.7m of the Company's cash (31 December 2011 £0.4m) was located in Argentina, where the Company recently relocated its finance function. Argentina imposed strict rules in January 2012 for companies with the purpose of greater control over the foreign exchange market. This ruling increases the difficulty of repatriation of funds from Argentina. 

Commenting, Simon Buckingham, CEO of Mobile Streams said:

"Mobile Streams continued to grow strongly in the first six months of the new financial year. The ongoing improvement in the Company's revenues, profits and cash generation was driven primarily by solid growth in the Company's Mobile Internet subscriber base in the Latin America region, primarily in Argentina, Mexico and Colombia. Active Subscribers** passed 2.7m at end of December 2012, compared to 1.25m at 31 December 2011.

We entered 2013 with strong foundations and momentum and we now have in excess of 3m Active Subscribers. We continue to add new markets such as Brazil to our Mobile Internet rollout. We look forward to making further updates to our shareholders as 2013 progresses."

* Earnings before interest, tax, depreciation, amortisation and share compensation
** Active Subscribers are defined as customers who have paid to use one of the Company's Mobile

Internet services in the past two months

An investor call, hosted by Simon Buckingham will be held at 9.30 BST on 3^rd April 2013. Those investors wishing to dial in are asked to register with Danielle Walsh at N+1 Singer ([e-mail]).

Enquires:

Mobile Streams                                                                         [phone]

Simon Buckingham, Chief Executive Officer

Nominated Adviser and Broker

N+1 Singer                                                                                [phone]

Jonny Franklin-Adams/ Matt Thomas

MOBILE STREAMS PLC

OPERATING REVIEW

Mobile Operators

The Operator segment benefited from the addition of apps and games to the Company's portfolio of available content services.  The Group was able to mitigate the impact of the trend of reducing visitor traffic to operator content portals caused by increased use of smartphone devices and the open mobile internet through increased effectiveness at converting visitors to its operator services into paying customers. As a result, revenues and gross margins from Operator channels were ahead of the Company's internal budget expectations, being largely unchanged year on year. 

Mobile Internet

Growth in the Mobile Internet segment has been rapid, especially in Latin America. As at 31 December 2012, Mobile Streams had more than 2.7 million Active Subscribers in Argentina, Mexico and Colombia.

At the end of the interim period, Mobile Streams was actively marketing its Mobile Internet services in the UK, Argentina, Colombia and Mexico markets.

MOBILE STREAMS PLC

FINANCIAL REVIEW

6 months ended 31 December 2012

Gross profit for the six month period ended 31 December 2012 was £7.5m (2011: £3.0m). Gross margin was 31.7%, down from 40.8% in 2011 as the Company expanded into new markets.

Mobile Internet revenue has increased by 340% to £21.4m (2011: £4.9m). The cost of sales on Mobile Internet revenue is much higher than on Operator revenue resulting in lower Gross profit margin.

The Group recorded a profit after tax of £1.1m for the 6 months ended 31 December 2012 (2011: £ (160,000)), generating increased earnings per share of 2.957 pence per share (2011: (0.439) pence per share).

Adjusted earnings per share (excluding depreciation, amortisation, impairments and share compensation expense) increased to 2.992 pence per share (2011: (0.250) pence per share).

Cash

Argentina, where the majority of the Group´s cash is held, has imposed strict rules for companies with the purpose of greater control over the foreign exchange market. This ruling increases the difficulty of repatriation of funds from Argentina.

CONSOLIDATED INCOME STATEMENT
			Unaudited		Unaudited		Audited
			6 months ended 31 December 2012		6 months ended 31 December 2011		12 months ended 30 June 2012
			£000's		£000's		£000's
Revenue			23,664		7,392		22,047
Cost of Sales			(16,146)		(4,377)		(13,212)
Gross Profit			7,518		3,015		8,835
Selling and Marketing Costs			(3,350)		(1,390)		(3,668)
Administrative Expenses **			(2,264)		(1,689)		(3,531)
Operating Profit/(Loss)			1,904		(64)		1,636
Finance income			-		-		2
Finance expense			(1)		-		(2)
Profit/(Loss) before tax			1,903		(64)		1,636
Tax expense			(825)		(96)		(863)
Profit/(Loss) for the period			1,078		(160)		773
Attributable to:
Attributable to equity shareholders of Mobile Streams Plc			1,078		(160)		773
Earning Per Share
			Pence per share		Pence per share		Pence per share
Basic earnings per share			2.957		(0.439)		2.120
Diluted earnings per share			2.851		(0.439)		2.037

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
			Unaudited		Unaudited		Audited
			6 months ended  31 December  2012		6 months ended 31 December  2011		12 months ended 30 June 2012
			£000's		£000's		£000's
Assets
Non- Current
Goodwill			714		714		714
Intangible assets			1		299		1
Property, plant and equipment			35		41		46
Deferred tax asset			680		-		454
			1,430		1,054		1,215
Current
Trade and other receivables			6,369		3,016		3,842
Cash and cash equivalents			2,016		746		1,763
			8,385		3,762		5,605
Total Assets			9,815		4,816		6,820
Equity
Equity attributable to equity holders of Mobile Streams Plc
Called up share capital			73		73		73
Share Premium			10,317		10,317		10,317
Translation reserve			(531)		(387)		(310)
Merger reserve			153		153		153
Retained earnings			(7,601)		(9,521)		(8,679)
Total equity			2,411		635		1,554
Liabilities
Non- Current
Deferred tax liabilities			-		13		-
			-		13		-
Current
Trade and other payables			5,001		3,810		3,774
Current tax liabilities			2,403		358		1,492
			7,404		4,168		5,266
Total liabilities			7,404		4,181		5,266
Total equity and liabilities			9,815		4,816		6,820

CONSOLIDATED CASH FLOW STATEMENT
	Unaudited		Unaudited		Audited
	6 months ended 31 December 2012		6 months ended 31 December 2011		12 months ended 30 June  2012
	£000's		£000's		£000's
Operating activities
Profit/loss before taxation	1,903		(64)		1,636
Adjustments:
Depreciation	13		10		22
Amortisation	-		59		187
(Loss) on disposal of fixed assets	-		-		169
Interest received	-		-		-
Interest paid	-		(1)		(2)
Changes in Trade and other receivables	(2,529)		(781)		(1,607)
Changes in Trade and other payables	1,226		703		667
Tax Paid	-		(87)		175
Total cash utilised in operating activities	613		(161)		1,247
Investing Activities
Additions to property, plant and equipment	(44)		5		(31)
Additions to other intangible assets	-		(24)		-
Interest paid	(1)		-		-
Interest received	-		1		2
Net Cash used in investing activities	(45)		(18)		(29)
Net change in cash and cash equivalents	568		(179)		1,218
Cash and cash equivalents at beginning of period	1,763		1,100		1,100
Exchange (loss) on cash and cash equivalents	(315)		(175)		(555)
Cash and cash equivalents, end of period	2,016		746		1,763

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
	Called up share capital	Share premium	Translation reserve	Merger reserve	Retained earnings	Total Equity
	£000's	£000's	£000's	£000's	£000's	£000's
Balance at 1 July 2011	73	10,317	(218)	153	(9,452)	873
Profit/(loss) for the 6 months ended 31 December 2011	-	-	-	-	(160)	(160)
Exchange differences on translating foreign operations	-	-	(169)	-		(169)
Total comprehensive income for the period	-	-	(169)	-	(160)	(329)
Balance at 31 December 2011	73	10,317	(387)	153	(9,612)	544
Balance at 1 January 2012	73	10,317	(387)	153	(9,612)	544
Profit/(loss) for the 6 months ended 30 June 2012	-	-	-	-	933	933
Exchange differences on translating foreign operations	-	-	77	-		77
Total comprehensive income for the period	-	-	77	-	933	1,010
Balance at 30 June 2012	73	10,317	(310)	153	(8,679)	1,554
Balance at 1 July 2012	73	10,317	(310)	153	(8,679)	1,554
Profit/(loss) for the 6 months ended 30 December 2012	-	-	-	-	1,078	1,078
Exchange differences on translating foreign operations	-	-	(221)	-		(221)
Total comprehensive income for the period	-	-	(221)	-	1,078	857
Balance at 31 December 2012	73	10,317	(531)	153	(7,601)	2,411

NOTES TO FINANCIAL STATEMENTS

1. BASIS OF PREPARATION

The interim results of Mobile Streams plc are prepared in accordance with the requirements of IAS 34 Interim Financial Reporting as adopted by the EU and prepared in accordance with the accounting policies set out in the last financial statements for the 12 months ended 30 June 2012.

The interim results, which are not audited, do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006.

The comparative financial information for the 12 months ended 30 June 2012 has been extracted from the statutory accounts for that period. In addition, the financial information for the 6 months ended 31 December 2011 has been extracted from the Interim results. The full audited accounts of the Group for the 12 months ended 30 June 2012 were prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and have been delivered to the Registrar of Companies.

The auditor's report on these financial statements was unqualified and did not contain statements under S498(2) or S498(3) of the Companies Act.

2. SEGMENT REPORTING

As at 31 December 2012, the Group was organized into 4 geographical segments: Europe, North America, Latin America, and Asia Pacific. Revenues were from external customers only and generated from three principal business activities: the sale of mobile content through MNO's (Mobile Operator sales), the sale of mobile content over the internet (Mobile Internet sales) and the provision of consulting and technical services (Other Service Fees).

All operations are continuing and all inter-segment transfers are priced and carried out at arm's length.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

The segmental results for the 6 months ended 31 December 2012 were as follows:
£000's	Europe	Asia	North America	Latin America	Group
Mobile Operator Sales	41	451	186	1,580	2,258
Mobile Internet Sales	23	-	-	21,348	21,371
Other Service fees	(1)	11	-	25	35
Total Revenue	63	462	186	22,953	23,664
Cost of sales	(2)	(325)	(92)	(15,727)	(16,146)
Gross profit	61	137	94	7,226	7,518
Operating Expenses	(9)	(186)	(115)	(5,291)	(5,601)
EBITDA*	52	(49)	(21)	1,935	1,917
Depreciation, amortisation	-	(1)	(5)	(7)	(13)
Finance expense	-	-	-	(1)	(1)
Profit/(Loss) before tax	52	(50)	(26)	1,927	1,903
Income tax expense	-	-	-	(825)	(825)
Profit/(Loss) after tax	52	(50)	(26)	1,102	1,078
*Calculated as profit before tax, interest, amortization, depreciation, share compensation expense and impairment of assets.

The segmental results for the year ended 30 June 2012 are as follows:
£000's	Europe	Asia Pacific	North America	Latin America	Group
Mobile Operator Sales	148	1,327	418	3,542	5,435
Mobile Internet Sales	80	-	1	16,425	16,506
Other Service fees	1	43	1	61	106
Total Revenue	229	1,370	420	20,028	22,047
Cost of sales	(21)	(957)	37	(12,271)	(13,212)
Gross profit	208	413	457	7,757	8,835
Operating Expenses	(682)	(300)	(575)	(5,264)	(6,821)
EBITDA*	(474)	113	(118)	2,493	2,014
Depreciation, amortisation	(75)	(2)	(290)	(11)	(378)
Finance income/(expense)	-	2	-	(2)	-
Loss before tax	(549)	113	(408)	2,480	1,636
Taxation	27	-	-	(890)	(863)
Profit/(loss) after tax	(522)	113	(408)	1,590	773
*Calculated as profit before tax, interest, amortization, depreciation, share compensation expense and impairment of assets.

NOTES TO FINANCIAL STATEMENTS (CONTINUED) The segmental results for the 6 months ended 31 December 2011 were as follows:
£000's	Europe	Asia Pacific	North America	Latin America	Group
Mobile Operator Sales	68	767	219	1,426	2,480
Mobile Internet Sales	51	-	-	4,810	4,861
Other Service fees	14	-	6	31	51
Total Revenue	133	767	225	6,267	7,392
Cost of sales	(72)	(544)	9	(3,770)	(4,377)
Gross profit	61	223	234	2,497	3,015
Operating Expenses	(233)	(281)	(156)	(2,340)	(3,010)
EBITDA*	(172)	(58)	78	157	5
Depreciation, amortisation	(3)	1	(60)	(7)	(69)
Loss before tax	(175)	(57)	18	150	(64)
Taxation	(5)	-	-	(91)	(96)
(Loss)/Profit after tax	(180)	(57)	18	59	(160)
*Calculated as profit before tax, interest, amortization, depreciation, share compensation expense and impairment of assets.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

The segmental assets for the 6 months ended 31 December 2012 were as follows:
£000's	Europe	Asia	North America	Latin America	Consol	Group
Fixed Assets
Property, plant and equipment	-	11	2	22	-	35
Intangible assets	-	-	1	-		1
Goodwill	-	-	-	-	714	714
Deferred Tax	-	-	-	680	-	680
Current Assets	106	162	252	7,865	-	8,385
Cash at Bank and in Hand	67	48	62	1,839	-	2,016
Accounts Receivable	(7)	31	89	2,612	-	2,725
Accrued Receivable	19	58	62	2,809	-	2,948
Prepayments	8	13	13	323	-	357
Minimum Guarantees and Advances	-	-	-	2	-	2
Other Assets	19	12	26	280	-	337
TOTAL ASSETS	106	173	255	8,567	714	9,815
Current Liabilities	(454)	(549)	(497)	(5,904)	-	(7,404)
Trade Creditors	74	(113)	(227)	(762)	-	(1,028)
Accrued content costs	(56)	(398)	(285)	(854)	-	(1,593)
Other Accrued liabilities	(276)	(47)	46	(1,696)	-	(1,973)
Other Creditors	(196)	9	(31)	(189)	-	(407)
Corporate Income tax payable	-	-	-	(2,403)	-	(2,403)
TOTAL LIABILITIES	(454)	(549)	(497)	(5,904)	-	(7,404)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

The segmental assets for the 6 months ended 30 June 2012 were as follows:
£000's	Europe	Asia	North America	Latin America	Consol	Total
Fixed Assets
Property, plant and equipment	-	16	3	27	-	46
Intangible assets	-	1	-	-	-	1
Goodwill	-	-	-	-	714	714
Deferred tax asset	-	-	-	454	-	454
Current Assets	137	106	301	5,061	-	5,605
Cash at Bank and in Hand	25	6	24	1,708	-	1,763
Accounts Receivable	54	38	232	358	-	682
Accrued Receivable	29	32	2	2,347	-	2,410
Prepayments	9	17	12	490	-	528
Minimum Guarantees and Advances	-	-	-	2	-	2
Other Assets	20	13	31	156	-	220
TOTAL ASSETS	137	123	304	5,542	714	6,820
Current Liabilities	(285)	(546)	(498)	(3,937)	-	(5,266)
Trade Creditors	(43)	(149)	(217)	(494)	-	(903)
Accrued content costs	(56)	(356)	(344)	(399)	-	(1,154)
Other Accrued liabilities	(178)	(51)	90	(1,461)	-	(1,599)
Other Creditors	(8)	10	(27)	(92)	-	(118)
Corporate Income tax payable	-	-	-	(1,492)	-	(1,492)
TOTAL LIABILITIES	(285)	(546)	(498)	(3,937)	-	(5,266)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

The segmental assets for the 6 months ended 31 December 2011 were as follows:
£000's	Europe	Asia	North America	Latin America	Consol	Total
Fixed Assets
Property, plant and equipment	-	22	3	16	-	41
Intangible assets	73	226	-	-	-	299
Goodwill	-	-	-	-	714	714
Current Assets	166	183	464	2,949	-	3,762
Cash at Bank and in Hand	37	52	125	532	-	746
Accounts Receivable	77	60	287	1,373	-	1,797
Accrued Receivable	19	41	8	715	-	783
Prepayments	13	17	13	204	-	247
Minimum Guarantees and Advances	-	-	-	2	-	2
Other Assets	20	13	31	123	-	187
TOTAL ASSETS	239	431	467	2,965	714	4,816
Current Liabilities	(220)	(626)	(787)	(2,547)	-	(4,181)
Trade Creditors	(26)	(127)	(245)	(684)	-	(1,082)
Accrued content costs	(99)	(440)	(448)	(367)	-	(1,354)
Other Accrued liabilities	(76)	(68)	(58)	(1,038)	-	(1,239)
Other Creditors	(7)	9	(36)	(100)	-	(134)
Corporate Income tax payable	-	-	-	(358)	-	(358)
Deferred tax	(13)	-	-	-	-	(13)
TOTAL LIABILITIES	(220)	(626)	(787)	(2,547)	-	(4,181)

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

3.  EARNINGS PER SHARE
Earnings/(loss) per share
Earnings/(loss) per share is calculated by dividing the profit/(loss) attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period.
	Unaudited	Unaudited	Audited
	6 months ended 31 December 2012	6 months ended 31 December 2011	12 months ended 30  June 2012
Profit/(loss) for the period (£000's)	1,078	(160)	773
Earnings/(loss) per share (pence):
Basic	2.957	(0.439)	2.120
Diluted	2.841	(0.439)	2.037
Adjusted earnings per share
Adjusted earnings per share is calculated to reflect the underlying profitability of the business by excluding non-cash charges for depreciation, amortization, impairments and share compensation charges.
	6 months  ended 31 December  2012	6 months ended 31 December 2011	12 months ended 30  June 2012
	£000's	£000's	£000's
Profit/(loss) for the period	1,078	(160)	773
Add back: impairment of intangibles and goodwill	-	-	169
Add back: depreciation and amortisation	13	69	209
Adjusted profit/(loss) for the period	1,091	(91)	1151
	Pence per  Share	Pence per share	Pence per  Share
Adjusted earnings per share	2.992	(0.250)	3.157
Adjusted diluted earnings per share	2.875	(0.250)	3.033

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Weighted average number of shares
	6 months ended 31 December 2012	6 months ended 31 December 2011	12 months ended 30  June  2012
Basic	36,457,692	36,457,692	36,457,692
Exercisable share options	1,488,563	1,130,230	1,488,563
Diluted	37,946,255	37,587,922	37,946,255

Diluted earnings/(loss) per share is calculated adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has only one category of ordinary shares.

The adjusted EPS has been calculated to reflect the underlying profitability of the business by excluding non-cash charges for depreciation, amortisation, impairments and share compensation charges.

4. CONTINGENT LIABILITIES

The German subsidiary was subject to a tax audit for the years 2006 to 2010. As a result of the audit findings, the German fiscal authority, the Tax and Revenue Office of Hanover-North, is claiming a tax payment of about £200,000 (€250,000).

A provision of £120,195 (€150,000) has been booked (period ended June 2012), because the group does not believe it is liable for the full sum and was working with its tax advisers in Germany to resolve this position. The provision is the director's best estimate of the maximum amount due.

This situation has been appealed and currently a response from the Tax authorities is still pending.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5. GOING CONCERN

The Group had cash balances of £2.0m at 31 December 2012 (30 June 2012, £1.8m) and no borrowings. Having reviewed cash flow forecasts and budgets for a year ahead the Directors have a reasonable expectation that the Group has sufficient resources to continue in operational existence for the foreseeable future.

During the first half of the current year, Argentina continued with its restrictions on cross border intercompany transfers of funds. The Group was able to transfer funds from Argentina by means of the purchase and subsequent sale of securities in Argentina.

As part of the changes Management introduced in the previous year to mitigate this risk, finance operations have been moved to Argentina to ensure stability and continuity.

The risk is also mitigated by the launch of similar businesses in Columbia, Mexico and Brazil where cross border transfers of funds are not restricted. As at 31 December 2012, 88% of the Group's cash balance of £2.0m was held in Argentina.

6. FOREIGN CURRENCY TRANSLATION

(a) Presentational currency

The consolidated and parent company financial statements are presented in British pounds: the functional currency of the parent entity is also British pounds.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date the transaction occurs. Any exchange gains or losses resulting from these transactions and from the translation of monetary assets and liabilities at the balance sheet date are recognized in the income statement.

Foreign currency balances are translated at the balance sheet using exchange rates prevailing at the period end.

(c) Group companies

The financial results and position of all group entities that have a functional currency different from the presentational currency of the Group are translated into the presentational currency as follows:

i assets and liabilities for each balance sheet are translated at the closing exchange rate at the date of the balance sheet

ii income and expenses for each income statement are translated at average exchange rates (unless it is not a reasonable approximation to the exchange rate at the date of transaction)

iii all resulting exchange differences are recognized as a separate component of equity (cumulative translation reserve)

The exchange rates used in respect of Argentinean pesos are the official published exchange rates.

 

END

 

 

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