Trading Statement

RNS Number : 7364Y

Mobile Streams plc

29 January 2014

 



Trading Statement

29^th January 2014

Mobile Streams plc ("Mobile Streams" or the "Company") (AIM: MOS)

Mobile Streams updates its shareholders on its unaudited interim results for the six months ended 31 December 2013:

Revenues were approximately £27m (compared to £23.7m for 6 months ended 31 December 2012).  Revenue growth during the period was 14% in GBP and 28% in Argentine Pesos compared to the same period in the previous year. The difference in revenue growth was caused primarily by the devaluation in the Argentine Peso during the period.

All revenue is from continuing operations. More than 95% of the revenue was derived from the Mobile Internet segment with the sales of content directly to consumers. Argentina generated 85% of the revenues during the period (compared to 92% in the prior year period), followed by Mexico at 12% (compared to 3% in the prior year period).

EBITDA is estimated to have reduced year on year in the 6-month period as a result primarily of higher marketing expenditures and adverse currency movements. (6 months ended 31 December 2012: £1.9m).

Cash more than doubled to £4.6m at 31 December 2012 (31 December 2012: £2m), with no debt. £1.3m or 29% of the Company's cash was located outside of Argentina (compared to £0.3m or 15% of cash outside Argentina at 31^st December 2012). As of 24^th January 2014, the Company's cash in bank was £4.1m at current exchange rates reflecting the recent Argentine Peso devaluation.

Two years ago, Argentina imposed strict rules for companies with the purpose of greater control over the foreign exchange market. This ruling increased the difficulty of repatriation of funds from Argentina to related companies. The Company continues to look at the most effective way of moving cash out of Argentina.

Active Subscribers** passed 4 million at the end of December 2013, compared to 2.7m at end of December 2012. The vast majority of these subscribers are located in Argentina, whilst subscribers in Mexico, our second largest market, exceeded 300,000 (compared to 118,000 subscribers at the end of the prior year period). Subscribers in Colombia exceeded 75,000, compared to 92,000 at the end of the prior year period. The contribution from Brazil was immaterial during the period although we expect this new large market to start contributing materially to revenues and growth in 2014 as we continue to optimize the local services, marketing and billing.

Since the end of the period, the Argentine Peso has continued to depreciate and this is expected to have a negative impact on the Company's financial results as expressed in GBP in 2014.

In order to hedge against the Argentine Peso devaluation, the Company has recently begun to put in place the accounts needed to buy dollar linked investment funds to invest the cash in dollar funds or CDs in Argentina pesos and enter into Non Deliverable Forward futures contracts. Another alternative that the Company is exploring to mitigate the effects of the Argentine Peso devaluation is the purchase of FX futures in the Argentine Futures Exchange (Rofex)- this implies margin calls that can be covered with dollar linked bonds.

Operationally during the period, Mobile Streams licensed and deployed a new Real Time Bidding (RTB) Demand Side Platform (DSP) advertising platform. This enables us to more efficiently manage the returns on our marketing expenditure by monitoring and optimizing marketing campaigns on a more frequent basis, helping us to run more marketing campaigns more cost effectively. We are utilizing this advertising bid management platform technology to manage our own Content Marketing as well as potentially to assist with the acceleration of our PublicAd mobile advertising subsidiary in due course. We also continued to build our Knowledge Base, which now captures more than 250 million transaction records from our customers every single month.

From a business perspective, we have improved with product and commercial progress.  In December 2013, we launched our subscription services in Uruguay, expanding into another Latin American country. We recently announced deals with MEEP! to supply apps and games content for a children's tablet computer and with IMImobile targeting Africa. Additionally, we launched our first eBook Store with Optus in Australia and a partnership with a major U.S. carrier for Appitalism.

Commenting, Simon Buckingham, CEO of Mobile Streams said:

"The performance of Mobile Streams once again continued to improve with growth in revenues and cash. This was driven primarily by solid growth of around 50% in the Company's Mobile Internet active subscriber** base in the Latin America region, which surpassed 4 million.

However, due to the recent devaluation of the Argentine Peso subsequent to the end of the reporting period, the Company does not currently expect that it will meet market expectations for full year ending 30^th June 2014. Once the currency situation has stabilized, the Company will provide further guidance to the market."

* 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.

Enquiries:

Mobile Streams                                                                         [phone]

Simon Buckingham, Chief Executive Officer

Nominated Adviser and Broker

N+1 Singer                                                                                [phone]

Jonny Franklin-Adams/ Matt Thomas

 

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