Final Results

RNS Number : 0657J

Mobile Streams plc

24 March 2010

 



24^th March 2010

Mobile Streams plc

("Mobile Streams" the "Group")

Final results for the year ended 31 December 2009

Mobile Streams Plc (AIM: MOS), a leading global distributor of mobile content, is pleased to report another year of positive EBITDA*.

Financial highlights

·      Positive EBITDA* of £0.1m (2008: £0.2m) despite operator market decline

·      Full year revenues of £7.1m (-16% compared to 2008), H2 09 revenues were £3.5m (-8% from 2008)

·      Gross margin improvement to 50.5% (2008: 48.2%)

·      Selling, marketing and administrative expenses decreased by £0.4m

·      Significant reduction in operating losses to £1.3m (2008: £2.4m)

·      Cash reserves of £1.7m (2008: £2.3m) and no debt

Operational highlights

·      Expansion of mobile internet business

·      Launch of dedicated mobile apps development centre in Hong Kong

·      Increase in library of mobile content and distribution partners

·      Completion of enhancements to content delivery platform

Simon Buckingham, CEO of Mobile Streams, commented: "Despite a year dominated by the severe global recession and a sea change in the mobile content market, Mobile Streams has delivered a strong set of results. 

During 2009 we continued to drive our traditional services to mobile operators, whilst also refocusing our growing mobile internet retailing efforts.  We concentrated on achieving low customer acquisition costs and repeat subscription business whilst expanding these services into our other primary geographic regions.  These efforts have resulted in our reporting of consistent gross profit earnings for three consecutive half year periods.

The current year has begun well and the Board expects the industry trends of 2009 to carry over into 2010.  We anticipate further declines in high-volume/low margin operator services will be offset by growth in higher margin mobile internet and mobile applications services. We look forward to updating the market as we further develop the business in the coming months."

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

For further enquiries, please contact

Enquires:

Mobile Streams                                                                    [phone]

Simon Buckingham, Chief Executive Officer

Ian Brewer, Chief Financial Officer

Nominated Adviser

Grant Thornton Corporate Finance                                   [phone]

Philip Secrett

Broker

Singer Capital Markets Limited                                          [phone]

Jeff Keating

OPERATING REVIEW

In 2009, the Group made significant progress replacing mobile operator margin by developing its mobile internet business and repositioning resources across the Group to support that development.

Mobile operator

The combination of growth in the mobile internet market and tighter legislation again impacted our mobile operator business in 2009 as we had expected.  Revenue in Europe decreased substantially, however our USA and Latin America regions saw a much smaller decline, while Asia saw an increase in revenues. 

During 2009 we enhanced our content delivery platform, MultiMobi (formerly Vuesia), by adding new services like Intelli-proxy and Wrapper technology. The platform improvements have enabled us to deliver content in more ways and with more flexibility to meet operator demands. 

Mobile internet

During 2009 the Group continued to grow its mobile retailing business by launching additional services and expanding geographically.  

In May we announced the launch of our flagship mobile internet store, ringtones.com, in the US. This service has allowed customers in the US to have access to our extensive library of content, delivered via the MultiMobi platform.

In August we reported on the launch of a portfolio of subscription-based content clubs in Argentina which give subscribers access to a number of content channels.  This initiative has proven highly successful with subscriber levels having grown substantially month on month.

Our Hong Kong-based Smartphone R&D Centre was established in August 2009.  The division is responsible for the development of apps for Apple iPhone and Google Android as well as feature phones.  These include apps developed for customers as well as proprietary apps.  In addition we provide distribution services for network operators, such as the two Google Android game storefronts we launched for partners in Singapore and Australia.

The proliferation of app creators, developers, marketers and stores has made the monetisation of apps through efficient promotion and distribution across multiple platforms essential.  With its global reach, content depth, technical expertise and strong partnerships, Mobile Streams is in a unique position to generate revenues from providing a number of services in this area. 

Outlook

The current year has begun well and the Board expects the industry trends of 2009 to carry over into 2010.  It is anticipated that further declines in high-volume/low margin operator services will be offset by growth in higher margin mobile internet and mobile applications services. The Board looks forward to updating the market on further developments of the business in the coming months.

FINANCIAL REVIEW

6 months ended 31 December 2009

Gross profits for the second half of 2009 were £1.8m, in line with the same period last year despite revenues declining 8% to £3.5m.  Gross margin was 51%, up from 47% last year.

Year ended 31 December 2009

Group revenue in 2009 was £7.1m, a 16% decrease on 2008 (£8.4m). The Group generated a profit of £0.1m (2008: £0.2m) at trading EBITDA* level.  Loss before tax was £1.3m (2008: £2.3m).

Gross margin improved to 50.5% (2008: 48.2%) reflecting the proportionate shift in business toward higher margin mobile internet revenues.

Selling, marketing and administrative expenses reduced by £0.4m to £3.5m (2008: £3.9m) as a result of further cost reduction initiatives during the year and a reduction in mobile internet content marketing spend.

Loss before taxation included £0.5m (2008: £0.8m) of non-cash impairment charges relating the write down of intangible assets. 

The Group had net cash outflows from operations of £0.5m (2008: inflow £0.5m) due mainly to the settlement of prior year tax liabilities and movements in working capital.  Capital expenditure of £0.1m was significantly less than 2008 (£0.4m) as the development of the MultiMobi platform reached conclusion.

Basic loss per share more than halved to 3.320 pence per share (2008: 6.945 pence) due to the reduction in losses.

Adjusted profit per share (excluding depreciation, amortisation, impairments and share compensation expense) improved to 0.502p (2008: profit of 0.177p).

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

Financial Statements for the year ended 31 December 2009

 

 

Consolidated INCOME STATEMENT

 

	Notes	2009	2008
		£000's	£000's
Revenue		7,112	8,422
Cost of sales		(3,521)	(4,365)
Gross profit		3,591	4,057
Selling and marketing costs		(197)	(370)
Administrative expenses		(3,281)	(3,484)
Depreciation, amortisation and impairment		(1,344)	(2,621)
Share based compensation		(42)	48
Operating loss		(1,273)	(2,370)
Finance income		15	64
Loss before income tax		(1,258)	(2,306)
Income tax credit/(expense)		54	(203)
Loss for the year		(1,204)	(2,509)
Attributable to:
Attributable to equity shareholders of Mobile Streams Plc		(1,204)	(2,509)
Total and continuing (loss)/earnings per share		Pence per share	Pence per share
Basic and diluted loss per share	3	(3.320)	(6.945)
Adjusted earnings per share	3	0.502	0.177

Consolidated STATEMENT OF COMPREHENSIVE INCOME

 

		2009	2008
		£000's	£000's
Loss for the year		(1,204)	(2,509)
Exchange differences on translating foreign operations		292	(343)
Other recognised gains and losses		-	-
Total comprehensive income for the year		(912)	(2,852)
Attributable to equity shareholders of Mobile Streams plc		(912)	(2,852)

 

 

                         CONSOLIDATED STATEMENT OF FINANCIAL POSITION

			2009	2008
			£000's	£000's
Assets
Non-current
Goodwill			714	977
Intangible assets			331	910
Property,  plant and equipment			79	203
			1,124	2,090
Current
Trade and other receivables			1,725	2,153
Cash and cash equivalents			1,659	2,260
			3,384	4,413
Total assets			4,508	6,503
Equity
Equity attributable to equity holders of  Mobile Streams Plc
Called up share capital			73	73
Share Premium			10,310	10,310
Translation reserve			(233)	(525)
Merger Reserve			153	635
Retained earnings			(9,238)	(8,558)
Total equity			1,065	1,935
Liabilities
Non-current
Deferred tax liabilities			38	63
Current
Trade and other payables			3,239	3,827
Provisions			82	287
Current tax liabilities			84	391
			3,405	4,505
Total liabilities			3,443	4,568
Total equity and liabilities			4,508	6,503

 

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Equity attributable to equity holders of Mobile Streams Plc
	Called up share capital	Share premium	Shares to be issued	Trans-lation reserve	Retained earnings	Merger reserve	Total Equity
	£000's	£000's	£000's	£000's	£000's	£000's	£000's
Balance at 1 January 2008	71	10,468	479	(182)	(6,001)	-	4,835
Employee share based compensation	-	-	-	-	(48)	-	(48)
Shares issued	2	-	(479)	-	-	477	-
Transfer to Merger Reserve	-	(158)	-	-	-	158	-
Transactions with owners	2	(158)	(479)	-	(48)	635	(48)
Loss for the year	-	-	-	-	(2,509)	-	(2,509)
Exchange differences on translation of foreign operations	-	-	-	(343)	-	-	(343)
Total comprehensive income for the year	-	-	-	(343)	(2,509)	-	(2,852)
Balance at 31 December 2008	73	10,310	-	(525)	(8,558)	635	1,935
Balance at 1 January 2009	73	10,310	-	(525)	(8,558)	635	1,935
Employee share based compensation	-	-	-	-	42	-	42
Transfer to Retained Earnings	-	-	-	-	482	(482)	-
Transactions with owners	-	-	-	-	524	(482)	42
Loss for the year	-	-	-	-	(1,204)	-	(1,204)
Exchange differences on translation of foreign operations	-	-	-	292	-	-	292
Total comprehensive income for the year	-	-	-	292	(1,204)	-	(912)
Balance at 31 December 2009	73	10,310	-	(233)	(9,238)	153	1,065

CONSOLIDATED CASH FLOW STATEMENT 

		2009	2008
		£000's	£000's
Cash flows from operating activities
Loss before taxation		(1,258)	(2,509)
Adjustments :
Share based payments		42	(48)
Depreciation		162	252
Amortisation		722	1,559
Impairment of intangibles and goodwill		460	291
Impairment of assets held for sale		-	519
Loss on disposal of fixed assets and intangible assets		18	-
Interest received		(15)	(64)
Changes in trade and other receivables		404	1,095
Changes in trade and other payables		(793)	(456)
Total cash (utilised in)/generated by operating activities		(258)	639
Income tax paid		(254)	(108)
Net cash from operating activities		(512)	531
Cash flows from investing activities
Additions to property, plant and equipment		(5)	(58)
Additions to other intangible assets		(103)	(307)
Interest received		15	64
Total cash flows from investing activities		(93)	(301)
Net change in cash and cash equivalents		(605)	230
Cash and cash equivalents at beginning of year		2,260	2,301
Exchange gains/(losses) on cash and cash equivalents		4	(271)
Cash and cash equivalents at end of year		1,659	2,260

 

Notes to company financial statements

 

1. BASIS OF PREPARATION

The final results of Mobile Streams plc have been prepared in accordance with the recognition and measurement principals of International Financial Reporting Standards ("IFRS") in issue as adopted by the European Union and effective at 31 December 2009.  These statements do not constitute the group's statutory financial statements for the years ended 31 December 2009 or 2008. The financial information for the year ended 31 December 2008 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies.  The auditors reported on those accounts; their report was not qualified and did not include a statement under section 237(2) or (3) of the Companies Act 1985.  The statutory accounts for the year ended 31 December 2009 will be finalised on the basis of the financial information presented by the directors in this announcement and will be delivered to the Registrar of Companies. 

2. Segment reporting

The Group adopted IFRS 8 Operating Segments during the year. This has changed the segments disclosed in the financial statements.  In the previous annual financial statements, segments were identified by reference to the dominant source and nature of the Group's risks and returns. Under IFRS 8 the accounting policy for identifying segments is now based on the internal management reporting information that is regularly reviewed by the senior management team.

As at 31 December 2009, the Group is organised into 4 geographical segments, being the primary reporting format: Europe, North America, Latin American, and Asia Pacific. Revenues are from external customers only and generated from three principal business activities: the sale of mobile content through MNO's (Mobile Operator Services), the sale of mobile content over the internet (Mobile Internet Services) 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 year ended 31 December 2009 are as follows:

£000's	Europe	Asia	North America	Latin America	Group
Mobile Operator Services	315	2,604	1,263	1,330	5,512
Mobile Internet Services	291	-	234	265	790
Other Service fees	525	80	157	48	810
Total Revenue	1,131	2,684	1,654	1,643	7,112
Cost of sales	(225)	(1,762)	(694)	(840)	(3,521)
Gross profit	906	922	960	803	3,591
Selling, marketing and administration expenses	(507)	(781)	(1,343)	(847)	(3,478)
EBITDA*	399	141	(383)	(44)	113
Depreciation, amortisation & impairment	(700)	(43)	(107)	(34)	(884)
Goodwill impairment	-	(460)	-	-	(460)
Share compensation expense	(42)	-	-	-	(42)
Finance income	12	3	-	-	15
Loss before tax	(331)	(359)	(490)	(78)	(1,258)
Taxation	(45)	-	-	99	54
(Loss)/profit after tax	(376)	(359)	(490)	21	(1,204)
Segment assets	4,905	790	1,854	1,250	8,799
Segment liabilities	(1,081)	(1,376)	(4,854)	(2,260)	(9,571)
Capital expenditure	62	2	1	43	108

The segmental results for the year ended 31 December 2008 were as follows:

£000's	Europe	Asia	North America	Latin America	Group
Mobile Operator Services	767	2,491	1,628	1,714	6,600
Mobile Internet Services	620	-	545	25	1,190
Other Service fees	600	2	1	29	632
Total Revenue	1,987	2,493	2,174	1,768	8,422
Cost of sales	(725)	(1,802)	(901)	(937)	(4,365)
Gross profit	1,262	691	1,273	831	4,057
Selling, marketing and administration expenses	(1,146)	(737)	(1,061)	(910)	(3,854)
EBITDA*	116	(46)	212	(79)	203
Depreciation, amortisation & impairment	(1,893)	(72)	(620)	(36)	(2,621)
Share compensation credit	48	-	-	-	48
Finance income	48	10	2	4	64
Loss before tax	(1,681)	(108)	(406)	(111)	(2,306)
Taxation	(46)	5	(7)	(155)	(203)
Loss after tax	(1,727)	(103)	(413)	(266)	(2,509)
Segment assets	10,537	1,001	2,878	1,276	15,692
Segment liabilities	(1,198)	(1,693)	(4,869)	(2,270)	(10,030)
Capital expenditure	157	-	195	-	352

* Earnings before interest, tax, depreciation, amortisation and share compensation

3.  LOSS PER SHARE

Basic loss per share

Basic loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period.

	31 December 2009		31 December 2008
	Pence per share		Pence per share
Basic and diluted loss per share	(3.320)		(6.945)
Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below.
	£000's		£000's
Loss for the year	(1,204)		(2,509)
Weighted average number of shares in issue for the year	36,268,192		36,125,445

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. 

	31 December 2009		31 December 2008
	£000's		£000's
Loss for the year	(1,204)		(2,509)
Add back: share compensation expense/(credit)	42		(48)
Add back: impairment of intangibles and goodwill	460		291
Add back: depreciation and amortisation	884		1,811
Add back: impairment of assets held for sale	-		519
Adjusted profit for the year	182		64
Weighted average number of shares	Number of shares		Number of shares
For adjusted earnings per share	36,268,192		36,125,445
Exercisable share options	958,652		771,297
For diluted adjusted earnings per share	37,226,844		36,896,742
	Pence per share		Pence per share
Adjusted earnings per share	0.502		0.177
Adjusted diluted earnings per share	0.489		0.173

 

END

 

 

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