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Mobile Streams Plc RNS Release

Half Yearly Report


RNS Number : 4571T
Mobile Streams plc
30 March 2016
 

Mobile Streams plc

("Mobile Streams", the "Company" or the "Group")

(AIM: MOS)

 

Interim results - in line with management's revised expectations

 

Mobile Streams plc ("Mobile Streams" or the "Company") (AIM: MOS) updates its shareholders on its unaudited interim results for the six months ended 31 December 2015. These were in line with management's expectations as set out in the Company's trading update on 22 January:

 

·      Revenues of £8.0m (£18.5m for the 6 months ended 31 December 2014). All revenue is from continuing operations;

·      Mobile Internet revenues were £7.9m (6 months ended 31 December 2014: £18.1m);

·      EBITDA* loss of £104k  (6 months ended 31 December 2014: £313k profit);

·      Post-tax loss of £321k (6 months to 31 December 2014: £302k loss); and

·      £1.5m of cash and cash equivalents at 31 December 2015 (31 December 2014: £3.2m), with no debt. The company´s current cash balance is £ 1.4m.

 

* Earnings before interest, tax, depreciation, amortisation and share compensation ("EBITDA") is a non IFRS measure which the Group uses to assess its performance.  It is defined as earnings before interest, tax, depreciation, amortisation and share compensation.

 

Commenting, Simon Buckingham, CEO of Mobile Streams said: "The Company has been focused on stabilising its Latin American operations in Argentina, Mexico, Colombia and Brazil. Additionally, Mobile Streams has been working to launch and grow its operations in India. Whilst still at an early stage, operations in India are proceeding along the expected lines, and the Company remains excited about the potential for this market as well as its ad funded services."

 

During the period under review, and subsequently, the Company has continued to deliver its strategy of launching subscription based and ad-funded Mobile Internet services in emerging markets.

 

In India, the Company's local subsidiary, Mobile Streams India Private Limited, has launched subscription services with billing connectivity for the three largest local mobile phone operators, reaching a potential billable audience of approximately 600 million local mobile phone users. Discussions are under way to add additional mobile billing connections in India in order to maximize the potential number of subscribers accessible through the service. The Company has been implementing its usual launch related testing and optimisation processes to establish key metrics such as the marketing acquisition costs and lifetime subscriber values associated with the market. The Company offers daily, weekly and monthly subscriptions at various price points and has been learning which business models appeal most to local consumers.

 

The Company's ad-funded MobileGaming.com service has been expanded into several new markets beyond the initial launches in India, Argentina and the U.S. Following the Company's trading update on 22 January 2016, this service has since launched in the Company's second largest market, Mexico, and is scheduled to launch in Colombia and Brazil shortly.

 

As announced on 22 January 2016, the Company has continued to develop proprietary technology to power its ad-funded games store MobileGaming.com. This includes developing a Download Manager to help consumers complete their downloads in places where the cellular coverage is variable, building a low end version of the service for older Android devices, building an installable app version of the service to supplement the mobile internet service, and further enhancing our wrapper technology. The Company has localised the service into multiple languages. We have also added several new advertisement types and mobile advertising networks and continue to work to optimize the service and customer experience.

  

Enquires:

 

Mobile Streams   

Simon Buckingham, Chief Executive Officer                                               +1 646 812 4749

Enrique Benasso, Chief Financial Officer     

               

N+1 Singer (Nominated Adviser and Broker)               

Nic Hellyer                                                                                                            +44 20 7496 3000

Alex Price             

 

OPERATING REVIEW

Mobile internet

During the period, we continued to invest in our mobile internet subscription services, in particular in our core Latin American markets of Argentina, Mexico, Colombia and Brazil. Additionally, we started operating services in India. The internet business has been affected mainly by such economic factors as the devaluation and consumer spending in Argentina.

Mobile operators

The mobile operator segment continued its gradual decline in revenues over the period as the Company continued to execute its strategy of building services on the open mobile internet. Consumers tend to buy less content from operator managed content services as they upgrade from traditional mobile devices to smartphones and tablets.

FINANCIAL REVIEW

For the 6 months ended 31 December 2015.

Gross profit for the six month period ended 31 December 2015 was £2.1m (2014: £5.0m). Gross margin was 25.9%, down from 26.8% in 2014.

Mobile Internet revenue has decreased by 56.2% to £7.9m (2014: £18.1m). The cost of sales on mobile internet revenue is much higher than on operator revenue because of marketing costs resulting in a lower overall gross profit margin.

The Group recorded a loss after tax of £321k for the 6 months ended 31 December 2015 (2014: loss £302k), generating a loss per share of 0.865 pence per share (2014: 0.814 pence loss per share).

Adjusted loss per share (excluding depreciation, amortisation, impairments and share compensation expense) was 0.674 pence per share (2014: 0.461 pence adjusted loss per share).

Cash and cash equivalents

The Argentine peso devalued by around 20% during December 2015, caused by the release of currency restrictions, meaning that currency can now flow freely in and out of Argentina. This policy was adopted by the country's new elected president in November 2015. Current cash balances are £ 1.4m.

The impact of the devaluation in the income statement was £ 0.1m reduction in revenue. The effect of on the balance sheet was £0.8m loss recognized in the currency translation reserve account. For the remainder of the year, the revenues in GBP will be reduced by about 20% due to the peso devaluation effect.

 

 

 



 

CONSOLIDATED INCOME STATEMENT

















 Unaudited


 Unaudited


 Audited




 6 months ended 31 December 2015


 6 months ended 31 December 2014


 12 months ended 30 June      2015




 £000's


 £000's


 £000's









Revenue



              8,033


             18,488


         29,063

Cost of sales



             (5,948)


             (13,519)


         (21,390)

Gross profit



               2,085


                 4,969


            7,673

Selling and marketing costs


                (771)


               (2,884)


           (3,405)

Administrative expenses **


             (1,489)


               (1,903)


           (3,493)

Operating (Loss)/ profit



                (175)


                    182


               775









Finance income



                    47


                      26


                 65

Finance expense



                  (13)


                         -


                  (8)

(Loss)/Profit before tax



                (141)


                    208


               832









Tax expense



                (180)


                  (510)


              (495)

(Loss)/Profit for the period


                (321)


                  (302)


               337









Attributable to:








Attributable to equity shareholders of Mobile Streams Plc

                (321)


                  (302)


               337

















Earning Per Share











Pence per share


Pence per share


Pence per share

Basic (loss)/earnings per share


            (0.865)


              (0.814)


           0.908

 

Diluted (loss)/earnings per share


            (0.865)


              (0.814)


           0.855

 









* *Administrative expenses include depreciation, amortisation, impairment and share based compensation

 



 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

















 Unaudited


 Unaudited


 Audited




 6 months ended 31 December 2015


 6 months ended 31 December 2014


 12 months ended 30 June      2015




 £000's


 £000's


 £000's








(Loss)/profit for the period

              (321)


         (302)


               337









Exchange differences on translating foreign operations

              (822)


             70


              (92)

Total comprehensive (loss)/income for the period

           (1,143)


         (232)


               245









Total comprehensive (loss)/income for the period attributable to:














Equity shareholders of Mobile Streams plc

           (1,143)


         (232)


               245



 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
















 Unaudited


 Unaudited


 Audited





 6 months ended 31 December 2015


 6 months ended 31 December 2014


 12 months ended 30 June 2015





 £000's


 £000's


 £000's


Assets









Non- Current









Intangible assets


1


1


-


Property, plant and equipment

52


127


94


Deferred tax asset


-


-


285





53


128


379


Current









Trade and other receivables

3,307


5,188


4,016


Cash and cash equivalents

1,512


3,238


2,098





4,819


8,426


6,114











Total assets



4,872


8,554


6,493











Equity









Equity attributable to equity holders of Mobile Streams Plc







Called up share capital

74


74


74


Share Premium


10,579


10,579


10,579


Translation reserve


(2,955)


(1,971)


(2,133)


Retained earnings


(5,059)


(6,334)


(4,782)


Total equity



2,639


2,348


3,738











Liabilities









Current









Trade and other payables

1,607


4,299


2,090


Current tax liabilities


626


1,907


665





2,233


6,206


2,755











Total liabilities


2,233


6,206


2,755











Total equity and liabilities

4,872


8,554


6,493


 



 

CONSOLIDATED CASH FLOW STATEMENT








 Unaudited


 Unaudited


 Audited


 6 months ended 31 December 2015


 6 months ended 31 December 2014


 12 months ended 30 June       2015


 £000's


 £000's


 £000's

Operating activities






Profit before taxation

             (141)


                 208


               832

Adjustments:






Shared based payments

                44


                 103


               219

Depreciation

                27


                   28


                 59

Interest received

               (47)


                   -  


               (65)

Changes in Trade and other receivables

              709


              1,305


            1,983

Changes in Trade and other payables

             (483)


            (1,381)


          (3,250)

Movement in provisions

                 -  


                   -  


             (340)

Tax Paid

             (219)


               (271)


                 -  

Interest paid

               (13)


                   -  


                 -  

Total cash utilised in operating activities

             (123)


                   (8)


             (562)







Investing Activities






Additions to property, plant and equipment

                 (1)


                   -  


               (49)

Interest received

                47


                   26


                 65

Net Cash generated  from investing activities

                46


                   26


                 16







Issue of share capital (net of expenses paid)

                 -  


                   -  


                 39

Net Cash generated from financing activities

                 -  


                   -  


                 39







Net change in cash and cash equivalents

               (77)


                   18


             (507)

Cash and cash equivalents at beginning of period

           2,098


              2,964


            2,964

Exchange (loss)/ gain on cash and cash equivalents

             (509)


                 256


             (359)

Cash and cash equivalents, end of period

           1,512


              3,238


            2,098

 

 



 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


Called up share capital

Share premium

Translation reserve

Retained earnings      

Total Equity








£000's

£000's

£000's

£000's

£000's







Balance at 1 July 2014

              74

         10,579

            (2,041)

       (5,338)

       3,274

Credit for share based payments

                 -

                    -

                      -

             130

           130

Transactions with owners

                 -

                    -

                      -

            130

          130

Profit/(loss) for the 6 months ended 31 December 2014

                 -

                    -

                      -

            (302)

         (302)

Exchange differences on translating foreign operations

                 -

                    -

                    70

            (824)

         (754)

Total comprehensive income for the period

                 -

                    -

                   70

       (1,126)

     (1,056)

Balance at 31 December 2014

              74

         10,579

            (1,971)

       (6,334)

       2,348

Balance at 1 January 2015

              74

           10,579

             (1,971)

         (6,334)

        2,348

Credit for share based payments

                 -

                    -

                      -

             115

           115

Transactions with owners

                 -

                    -

                      -

            115

          115

Profit for the 6 months ended 30 June 2015

                 -

                    -

                      -

          1,437

        1,437

Exchange differences on translating foreign operations

                 -

                    -

                (162)

                  -

         (162)

Total comprehensive income for the period

                 -

                    -

               (162)

                  -

        (162)

Balance at 30 June 2015

              74

         10,579

            (2,133)

       (4,782)

       3,738

Balance at 1 July 2015

              74

           10,579

             (2,133)

         (4,782)

        3,738

Credit for share based payments

                 -

                    -

                      -

               44

             44

Transactions with owners

                 -

                    -

                      -

               44

            44

Loss for the 6 months ended 31 December 2015

                 -

                    -

                      -

            (321)

         (321)

Exchange differences on translating foreign operations

                 -

                    -

                (822)

                  -

         (822)

Total comprehensive income for the period

                 -

                    -

               (822)

           (321)

     (1,143)

Balance at 31 December 2015

              74

         10,579

            (2,955)

       (5,059)

       2,639

 



NOTES TO CONSOLIDATED 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 2015.

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 2015 has been extracted from the statutory accounts for that period. In addition, the financial information for the 6 months ended 31 December 2015 has been extracted from the unaudited Interim results. The full audited accounts of the Group for the 12 months ended 30 June 2015 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 2006.

 

2. SEGMENT REPORTING

 

As at 31 December 2015, the Group was organised 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.



 

The segmental results for the 6 months ended 31 December 2015 were as follows:

£000's

Europe

Asia

North America

Latin America

Group

Mobile operator sales

8

5

19

80

                112

Mobile internet sales

-

-

4

7,901

             7,905

Other service fees

15

-

-

1

                  16

Total Revenue

23

5

23

7,982

             8,033

Cost of sales

(40)

(14)

(10)

(5,884)

(5,948)

Gross profit

(17)

(9)

13

2,098

             2,085

Operating expenses

(291)

(86)

(70)

(1,742)

(2,189)

EBITDA*

(308)

(95)

(57)

356

(104)

Depreciation, amortisation

-

-

-

(27)

(27)

Share based compensation

(44)

-

-

-

(44)

Revenue/expense intercompany

238

-

-

(238)

                    -  

Finance income

-

-

1

33

                  34

Profit/(Loss) before tax

(114)

(95)

(56)

124

(141)

Income tax expense

-

-

-

(180)

              (180)

Loss after tax

(114)

(95)

(56)

(56)

(321)







*Calculated as profit before tax, interest, amortization, depreciation, share compensation expense and impairment of assets.

 

The segmental results for the 6 months ended 31 December 2014 were as follows:

£000's

Europe

Asia

North America

Latin America

Group

Mobile operator sales

9

92

18

284

403

Mobile internet sales

-

-

26

18,035

18,061

Other service fees

15

-

1

8

24

Total Revenue

24

92

45

18,327

18,488

Cost of sales

(11)

(65)

(26)

(13,417)

(13,519)

Gross profit

13

27

19

4,910

4,969

Operating expenses

(277)

(130)

(90)

(4,159)

(4,656)

EBITDA*

(264)

(103)

(71)

751

313

Depreciation, amortisation

-

-

(1)

(27)

(28)

Share based compensation

(103)

-

-

-

(103)

Revenue/expense intercompany

619

-

-

(619)

-

Finance income

2

-

1

23

26

Profit/(Loss) before tax

254

(103)

(71)

128

209

Income tax expense

-

-

(7)

(503)

(510)

Profit/(Loss) after tax

254

(103)

(78)

(375)

(302)







*Calculated as profit before tax, interest, amortization, depreciation, share compensation expense and impairment of assets.

 



 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The segmental results for the year ended 30 June 2015 were as follows:

£000's

Europe

Asia Pacific

North America

Latin America

Group

Mobile operator sales

10

151

29

440

630

Mobile internet sales

-

-

28

28,379

28,407

Other service fees

10

2

14

26

Total revenue

20

151

59

28,833

29,063

Cost of sales

(27)

(11)

(21,447)

(21,390)

Gross profit

(7)

246

48

7,386

7,673

Operating expenses

397

42

(6,810)

(6,620)

EBITDA*

390

90

576

1,053

Depreciation, amortisation

-

(1)

(1)

(57)

(59)

Share compensation expense

(219)

-

-

-

(219)

Finance income

3

1

53

57

Profit/(loss) before tax

174

(4)

90

572

832

Taxation

-

(7)

(488)

(495)

Profit/(Loss) after tax

174

(4)

83

84

337







*Calculated as profit before tax, interest, amortization, depreciation, share compensation expense and impairment of assets.

 

 

 



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The segmental assets at 31 December 2015 were as follows:

£000's

Europe

Asia

North America

Latin America

Consol

Group








Non current fixed assets







Property, plant & equipment

-

-

-

52

-

52

Intangible assets

-

-

1

-

-

1

Current assets

183

218

347

4,071

-

4,819

Cash and cash equivalents

108

35

254

1,115

-

1,512

Accounts receivable

14

54

13

590

-

671

Accrued receivables

8

104

40

471

-

623

Prepayments

25

10

10

1,678

-

1,723

Minimum guarantees and advances

-

-

-

13

-

13

Other assets

28

15

30

204

-

277

TOTAL ASSETS

183

218

348

4,123

-

4,872

Current liabilities

(167)

(68)

(275)

(1,723)

-

(2,233)

Trade Payables

(72)

(37)

(30)

(168)

-

(307)

Accrued content costs

(30)

(17)

(230)

(447)

-

(724)

Other accrued liabilities

(43)

(1)

(15)

(302)

-

(361)

Other payables

(22)

(13)

-

(180)

-

(215)

Corporate income tax payable

-

-

-

(626)

-

(626)

TOTAL LIABILITIES

(167)

(68)

(275)

(1,723)

-

(2,233)

 

 

The segmental assets at 31 December 2014 were as follows:


£000's

Europe

Asia

North America

Latin America

Consol

Group








Non current fixed assets







Property, plant & equipment

-

-

1

126

-

127

Intangible assets

-

-

1

-

-

1

Current assets

1,397

98

638

6,293

-

8,426

Cash and cash equivalents

1,317

12

560

1,349

-

3,238

Accounts receivable

18

49

8

988

-

1,063

Accrued receivables

17

4

43

1,391

-

1,455

Prepayments

4

11

10

1,636

-

1,661

Minimum guarantees and advances

-

-

-

14

-

14

Other assets

41

22

17

915

-

995

TOTAL ASSETS

1,397

98

640

6,419

-

8,554

Current liabilities

(437)

(193)

(296)

(5,280)

-

(6,206)

Trade Payables

(36)

(59)

(46)

(1,428)

-

(1,569)

Accrued content costs

(30)

(222)

(245)

(690)

-

(1,187)

Other accrued liabilities

(378)

105

(15)

(1,016)

-

(1,304)

Other payables

7

(17)

10

(239)

-

(239)

Corporate income tax payable

-

-

-

(1,907)

-

(1,907)

TOTAL LIABILITIES

(437)

(193)

(296)

(5,280)

-

(6,206)



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The segmental assets at 30 June 2015 were as follows:


£000's

Europe

Asia

North America

Latin America

Consol

Total

Non current fixed assets







Property, plant & equipment

-

1

-

93

-

94

Deferred tax

-

-

-

285

-

285

Current assets

846

101

452

4,715

-

6,114

Cash and cash equivalents

795

13

380

910

-

2,098

Accounts receivable

6

50

11

943

-

1,010

Accrued receivables

9

5

32

711

-

757

Prepayments

30

9

10

2,011

-

2,060

Minimum guarantees and advances

-

-

-

13

-

13

Other assets

6

24

19

127

-

176

TOTAL ASSETS

846

102

452

5,093

-

6,493

Current liabilities

(162)

20

(249)

(2,364)

-

(2,755)

Trade Payables

(60)

(46)

(29)

(865)

-

(1,000)

Accrued content costs

(31)

(20)

(215)

(411)

-

(677)

Other accrued liabilities

(64)

95

(14)

(354)

-

(337)

Other payables

(7)

(9)

9

(69)

-

(76)

Corporate income tax payable

-

-

-

(665)

-

(665)

TOTAL LIABILITIES

(162)

20

(249)

(2,364)

-

(2,755)

 



 

3.  EARNINGS PER SHARE








Earnings per share








Earnings per share is calculated by dividing the(loss)/profit 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 2015

 6 months ended 31 December 2014

 12 months ended 30 June 2015





(Loss)/profit for the period (£000's)

(321)

(302)

337





Loss earnings per share (pence):




Basic

(0.865)

(0.814)

0.908

Diluted

(0.865)

(0.814)

0.855









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, amortisation, impairments and share compensation charges. 






 6 months ended 31 December 2015

 6 months ended 31 December 2014

 12 months ended 30 June 2015


£000's

£000's

£000's





(Loss)/profit for the period

(321)

(302)

337

Add back: share compensation expense

44

103

219

Add back: depreciation and amortisation

27

28

59

Adjusted (Loss)/profit for the period

(250)

(171)

615






Pence per share

Pence per share

Pence per share

Adjusted (loss)/earnings per share

(0.674)

(0.461)

                   1.659

Adjusted diluted (loss)/earnings per share

(0.674)

(0.461)

                   1.596









Weighted average number of shares




                                                                 





 6 months ended 31 December 2015

 6 months ended 31 December 2014

 12 months ended 30 June 2015





Basic

 37,100,536

 37,075,083

        37,100,536

Exercisable share options

 2,330,960

 1,463,763

           2,330,960

Diluted

39,431,496

38,538,846

39,431,497

 

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

 

 

Diluted (loss)/earnings 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. GOING CONCERN

 

The Group had cash balances of £1.5m at 31 December 2015 (30 June 2015: £2.1m) 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.

As at 31 December 2015, £0.8m (including short-term investments of £0.1m) of the Group's cash balance was held in Argentina. The Argentine Peso devalued by 20% during December 2015, after the new Government was elected in Argentina. Since then, the Peso has remained relatively stable, although we cannot predict future movements in the currency and the impact on our financial performance.

 

5. FOREIGN CURRENCY TRANSLATION

(a) Presentational currency

The consolidated 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 reported in the income statement except when these represent a net investment in a subsidiary when they are charged or credited to equity             .

Foreign currency balances are translated at the balance sheet date 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 recognised as a separate component of equity (translation reserve)

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


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