Interim Results
Mobile Streams plc
18 September 2007
Mobile Streams Plc - Interim Results Announcement for the six months ending 30
June 2007
18 September 2007
Mobile Streams, the mobile content company, announced today its interim results
for the six months ending 30 June 2007.
Financial highlights:
- Revenue increased in the period by 29% to £4.3m (2006: £3.4m)
- Breakeven achieved at trading EBITDA* for the period (2006: loss £0.3m)
- Cash at 30 June 2007 was £2.5m (2006: £6.1m)
*Calculated as profit before tax, amortisation, depreciation, share compensation
expense and fund raising and floatation costs
Operational highlights:
During the first half of 2007, Mobile Streams continued to develop new revenue
sources from the mobile media market. The highlights included:
- Break-even at the EBITDA* level in the first half with net cash at
June 30th of £2.5m
- Continued investments in our platform and our consumer division. New
customer wins included Sony Pictures Digital, Twentieth Century Fox
International, Warner Music Group, Private Media Group and Zoombak -
a Liberty Media subsidiary.
- New channel management agreements hosted and powered by Vuesia signed
with major mobile network operators including Vodafone Australia (games
channel), Hutchison3G UK (comedy channel) and AIS Thailand (games
channel).
- Mobile search engine driven revenue growth delivered through Google,
Yahoo and Microsoft search engines.
- Establishment of new business region IMAP (India, Middle East,
Africa, Pakistan).
Commenting on today's interim results, Simon Buckingham, CEO, said:
'Mobile Streams has come a long way since its maiden interim announcement this
time last year. The market we operate in is undergoing very rapid change.; we
have modified our business model and organisational structure to reflect this.
We have encouraging results coming from our consumer division but our
longstanding operator business is growing more slowly than expected. The Board
believe the second half of the year will continue in much the same way as the
first half so anticipates breakeven at EBITDA* for the full year.'
Enquiries:
Mobile Streams 020 7395 2020
Simon Buckingham, Chief Executive
James Colquhoun, Finance Director
CHIEF EXECUTIVE'S REVIEW
Mobile Streams continued to strengthen its business foundations during the first
half of 2007. Revenue continued to grow and the Company moved from a sizeable
loss to break even compared to the first half of last year. The cash balance at
30 June 2007 was £2.5m, the fall in cash primarily being the result of continued
technology investment in the proprietary Vuesia platform that powers our
business.
Because of its flexibility in handling all mobile media types from text to video
to games to music, Vuesia is the single integrated technology platform that has
enabled Mobile Streams to win business across all of these product types and
retail content. This platform is used both internally by Mobile Streams to power
its global business as well as by numerous large media companies. This is
evidenced by the many new large operator and media company customers the Company
has won during the period.
The strategic investment in Mobile Streams by Liberty Media highlights the
importance of the mobile content sector for media companies. The Liberty
Media-owned mobile business Zoombak, with whom Mobile Streams has a strategic
management partnership, is preparing to launch its mobile location devices and
services in the US and the UK.
Mobile Streams' business has three main components: Operators, Platforms and
Consumers, all of which are powered by its proprietary technology platform,
Vuesia. The Company uses Vuesia to mobilise content through network operators or
mobile search engines. During the past six months, downloads from Vuesia have
more than quadrupled (compared with the previous six months)and Mobile Streams
has deployed additional IBM blade hardware servers to support this increased
traffic load. The continued investments in hardware and software have led to the
development of the recently announced Vuesia AI (Artificial Intelligence)
release of the platform, which is expected to power much of Mobile Streams'
continued growth in 2008.
Mobile Streams' traditional strength in working with mobile network operators
around the world has led to many new operator customers being added during the
period, especially in regions such as Asia and the Middle East. Vuesia is being
deployed to host and manage more and more sites and channels and to aggregate
content of all types on behalf of the mobile carriers. Network operators
continue to like Mobile Streams' partnership model of having a local presence
combined with global scale and expertise.
Content owners including major movie studios and music labels have selected
Vuesia to mobilise their content. Vuesia simplifies the process of mobilising
the myriad of audio and video content onto all the different mobile phone
handsets and networks around the world. Mobile Streams offers a proven single
global vendor solution for quickly realizing new global revenue streams from
mobile.
Mobile Streams buys select search engine traffic from search boxes placed on the
operator portals. It routes this traffic to our owned and operated branded
Mobile Internet sites such as Ringtones.com, MobileWallpapers.com,
MobileGamer.mobi and MobileAdults.com. The content on these sites is presented
in a personalized way based on the search term that was entered, allowing a very
efficient retailing operation with strong sales conversion rates from clicks
into purchases.
Due to its positioning in the market, Mobile Streams believes it is in a
position to monetise all types of mobile content sold through all distribution
channels, working with quality content and distribution partners.
Outlook
Trading in the second half is following a similar pattern to the first with
growth in 'direct to consumer' downloads and a decline in revenues from
existing network operator clients, which is balanced out by new operator
contracts. Investment in our Vuesia platform will continue but at present
revenues from platform sales are behind target.
The Board believes the second half of the year will continue in much the same
way as the first half, so anticipates breakeven at EBITDA* for the full year.
*Calculated as profit before tax, amortisation, depreciation, share compensation
expense and fund raising and flotation costs.
FINANCIAL REVIEW
Group turnover in the six months to 30 June 2007 was £4.3m, a 29% increase on
the same period in 2006 (£3.4m). Breakeven achieved at trading EBITDA* (2006:
£0.3m loss). Loss before tax was £0.5m including share compensation (same
period 2006: loss £1.79m including fund raising/flotation costs).
The Group has adopted International Financial Reporting Standards for the first
time. The principal impact of this change is the requirement to separately
identify intangible assets acquired in business combinations. The impact of
these changes are detailed in Note 6 of the accounts.
£772,000 was invested during the year on tangible and intangible fixed assets.
This was predominantly for further development of the Vuesia platform and
associated software. The group continues to invest in the development of the
Vuesia platform and content assets.
The Group incurred a net cash outflow from operations of £713,000 (2006 outflow
£1,328,000). The cash balance at 30 June 2007 was £2,530,000.
Basic earnings per share amounted to a loss of 1.467p per share (2006: loss of
5.832p per share).
Adjusted earnings per share (excluding flotation/fundraising costs and share
based compensation) amounts to a loss of 1.463p per share (2006: 5.783p per
share).
James Colquhoun
Finance Director
*Calculated as profit before tax, amortisation, depreciation, share compensation
expense and fund raising and flotation costs.
CONSOLIDATED INTERIM INCOME STATEMENT
Notes 6 months to 30 6 months to 30 12 months to 31
June 2007 June 2006 December 2006
£000's £000's £000's
Sales Revenue 4,336 3,353 8,223
Cost of sales (1,719) (1,329) (3,402)
-----------------------------------------------------------------------------------------------------
Gross profit 2,617 2,024 4,821
Selling and marketing costs (177) (115) (251)
Administration expenses (3,033) (2,511) (5,360)
Other operating expenses (67) (1,337) (1,402)
-----------------------------------------------------------------------------------------------------
Operating loss (660) (1,939) (2,192)
Finance costs - (1) (14)
Finance income 114 122 237
Loss before income tax (546) (1,818) (1,969)
Income tax expense (1) 28 (176)
-----------------------------------------------------------------------------------------------------
Loss for period (547) (1,790) (2,145)
=====================================================================================================
Total and continuing earnings per share Price per share Pence per share Pence per share
Basic and Diluted 9 (1,467) (5,832) (6,438)
CONSOLIDATED INTERIM BALANCE SHEET
Notes 6 months to 30 6 months to 30 12 months to 31
June 2007 June 2006 December 2006
£000's £000's £000's
Assets
Non-current
Goodwill 2,292 1,165 2,371
Other intangible assets 3,120 1,952 2,861
Property, plant and equipment 522 418 468
Available for sale assets 466 165 382
------------------------------------------------------------------------------------------------------
6,400 3,700 6,082
Current
Trade and other receivables 3,126 1,691 2,742
Cash and cash equivalents 2,530 6,143 4,073
------------------------------------------------------------------------------------------------------
5,656 7,834 6,815
------------------------------------------------------------------------------------------------------
Total assets 12,056 11,534 12,897
======================================================================================================
Equity
Equity attributable to shareholders
of Mobile Streams
Called up share capital 8 71 65 69
Share Premium 10,465 9,593 10,290
Shares to be used 477 637 637
Translation reserve (244) (80) (178)
Retained earnings (2,508) (1,883) (2,110)
------------------------------------------------------------------------------------------------------
Total equity 8,261 8,332 8,708
------------------------------------------------------------------------------------------------------
Liabilities
Non-current
Deferred tax liabilities 576 528 735
------------------------------------------------------------------------------------------------------
Current
Trade and other payables 3,045 2,649 3,341
Current tax liabilities 174 25 113
------------------------------------------------------------------------------------------------------
3,219 2,674 3,454
Total liabilities 3,795 3,202 4,189
------------------------------------------------------------------------------------------------------
Total equity and liabilities 12,056 11,534 12,897
======================================================================================================
CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY
Called Share Shares to Translation Retained Total
up share premium be issued reserve earnings Equity
capital
£000's £000's £000's £000's £000's £000's
Balance at 1 January 2006 1 165 - - (315) (149)
Exchange differences on
translation of foreign
operations - - - (80) 25 (55)
--------------------------------------------------------------------------------------------
Net income recognised
directly in equity - - - (80) 25 (55)
Profit for the 6 months
period to 30 June 2006 - - - - (1,790) (1,790)
--------------------------------------------------------------------------------------------
Total recognised income
and expense for the period - - - (80) (1,765) (1,845)
Employee share based
compensation - - - - 197 197
Shares issued 64 9,428 - - - 9,492
Shares to be issued - - 637 - - 637
--------------------------------------------------------------------------------------------
Balance at 30 June 2006 65 9,593 637 (80) (1,883) 8,332
--------------------------------------------------------------------------------------------
Balance at 1 July 2006 65 9,593 637 (80) (1,883) 8,332
Exchange differences on
translation of foreign
operations - - - (98) - (98)
--------------------------------------------------------------------------------------------
Net income recognised
directly in equity - - - (98) - (98)
Profit for the 6 months
period to 31 December 2006 - - - - (355) (355)
--------------------------------------------------------------------------------------------
Total recognised income
and expense for the period - - - (98) (355) (453)
Employee share based
compensation - - - - 128 128
Shares issued 4 697 - - - 701
--------------------------------------------------------------------------------------------
Balance at 31 December
2006 69 10,290 637 (178) (2,110) 8,708
--------------------------------------------------------------------------------------------
Balance at 1 January 2007 69 10,290 637 (178) (2,110) 8,708
Exchange differences on
translation of foreign
operations - - - (66) - (66)
--------------------------------------------------------------------------------------------
Net income recognised
directly in equity - - - (66) - (66)
Profit for the 6 months
period to 30 June 2007 - - - - (547) (547)
--------------------------------------------------------------------------------------------
Total recognised income
and expense for the period - - - (66) (547) (613)
Employee share based
compensation - - - - 144 144
Shares issued 2 175 - - - 177
Shares to be issued - - (160) - - (160)
Other recognised gains and
losses - - - - 5 5
--------------------------------------------------------------------------------------------
Balance at 30 June 2007 71 10,465 477 (244) (2,508) 8,261
--------------------------------------------------------------------------------------------
CONSOLIDATED INTERIM CASH FLOW STATEMENT
Notes 6 months to 6 months to 12 months to
30 June 2007 30 June 2006 31 December
2006
£000's £000's £000's
Cash flows from operating activities
Result for the period before tax (546) (1,818) (1,969)
Adjustments 10 552 231 641
Changes in trade and other receivables (341) (167) (571)
Changes in trade and other payables (296) 550 370
Income tax paid (82) (124) (192)
---------------------------------------------------------------------------------------------------------
Total cash flows from operating activities (713) (1,328) (1,721)
Cash flows from investing activities
Additions to property, plant and equipment (115) (458) (454)
Additions to other intangible assets (657) (355) (802)
Acquisitions of subsidiaries (net of cash acquired) - (1,375) (2,379)
Trade investments (124) (165) (382)
Interest received 114 122 216
Interest paid - (1) (14)
---------------------------------------------------------------------------------------------------------
Total cash flows from investing activates (782) (2,232) (3,815)
Cash flows from financing activities
Issue of share capital (net of expenses paid) 18 9,492 9,494
---------------------------------------------------------------------------------------------------------
Total cash flow from financing activities 18 9,492 9,494
Net change in cash and cash equivalents (1,477) 5,932 3,958
Cash and cash equivalents at beginning of period 4,073 268 268
Exchange (losses) on case and cash equivalents (66) (57) (153)
---------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period 2,530 6,143 4,073
=========================================================================================================
1. General information
Mobile Streams PLC (the Company) and its subsidiaries (together 'the Group')
deliver mobile media solutions via distribution, content and an integrated
technology platform, Vuesia. The Group has subsidiaries based around the world
in Europe, Asia, North America and Latin America. The Group has made various
strategic acquisitions to build its market share in these regions.
The Company is a public limited company incorporated in the United Kingdom. The
address of its registered office is Medius House, 63-69 New Oxford Street,
London, WC1A 1DG.
The Company is listed on the London Stock Exchange's Alternative Investment
Market.
The financial information set out in this interim report does not constitute
statutory accounts as defined in Section 240 of the Companies Act 1985. The
Group's statutory financial statements for the year ended 31 December 2006,
prepared under UK GAAP, have been filed with the Registrar of Companies. The
auditor's report on those financial statements was unqualified and did not
contain statements under Section 237(2) of the Companies Act 1985.
These consolidated interim financial statements have been approved for issue by
the Board of Directors on 17 September 2007.
2. Summary of significant accounting policies
2.1 Basis of preparation
These June 2007 interim consolidated financial statements of Mobile Streams are
for the six months ended 30 June 2007. They have been prepared in accordance
with IAS 34, Interim Financial Reporting, and are covered by EU adopted IFRS 1,
First-time Adoption of IFRS, because they represent part of the period covered
by the Group's first IFRS financial statements for the year ended 31 December
2007. All references to IFRS in these statements refers to IFRS as adopted by
the EU. These interim statements have been prepared using the recognition and
measurement principles of IFRS standards and IFRIC interpretations issued and
effective as at the time of preparing these statements. The IFRS standards and
IFRIC interpretations that will be applicable at 31 December 2007, including
those that will be applicable on an optional basis, are not known with certainty
at the time of preparing these interim financial statements. The policies set
out below have been consistently applied to all years presented and comparative
information has been restated and represented under IFRS.
Mobile Streams' consolidated financial statements have been previously prepared
in accordance with UK's Generally Accepted Accounting Principles (GAAP) until 31
December 2006. The UK GAAP differs in some areas to IFRS. In preparing the 2007
consolidated interim financial statements certain accounting, valuation and
consolidation methods have been adjusted to comply with IFRS. The comparative
figures for 2006 have been restated to reflect these adjustments, unless
otherwise described in the accounting policies.
A conversion statement explaining reconciliations and descriptions of the effect
of the transition from UK GAAP to IFRS on equity, net income and cash flows has
been provided in Note 6.
Preparation of interim financial statements in accordance with IAS 34 requires
the use of some critical accounting estimates. It requires management of Mobile
Streams to exercise judgement when applying the Company's accounting policies.
The specific areas involving a higher degree of judgement and/or complexity and
areas where assumptions/estimates are significant to the financial statements
are disclosed in Note 3. The historical cost measurement basis has been used in
preparation of these interim statements, with the exception of certain financial
instruments which are measured at fair value.
2.2 Consolidation - subsidiaries
Subsidiaries are all entities over which the Group has the power to govern the
operating and financial policies generally accompanying a shareholding of more
than half of the voting rights. Subsidiaries are fully consolidated from the
date on which control is transferred to the Group. They are de-consolidated from
the date on which control is lost.
The purchase method of accounting is used to account for the acquisition of
subsidiaries by the Group. The cost of a business combination is measured as the
fair value of assets given, equity instruments issued and liabilities incurred
or assumed at the date of exchange, plus costs directly attributable to the
acquisition, in line with IFRS 3, Business Combinations. Any assets acquired and
liabilities and contingent liabilities assumed that are identifiable are
measured initially at their fair values at the acquisition date. The excess of
the cost of a business combination over the fair value of the identifiable net
assets acquired is recorded as goodwill. If the cost of a business combination
is less than the fair value, the difference is recognised directly in the income
statement.
Inter-company transactions, balances and unrealised gains on transactions
between group companies are eliminated in full. Unrealised losses are also
eliminated unless the transaction provides evidence of an impairment of the
asset transferred. Subsidiaries' accounting policies have been changed where
necessary to ensure consistency with the policies adopted by the Group.
2.3 Foreign currency translation
(a) Functional and presentation currency
The financial statements of each of the Group's entities are measured using the
currency of the primary economic environment in which the entity operates
('functional currency'). The consolidated financial statements are presented in
British pounds, which is the Company's functional and presentation currency.
(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 balance date are recognised in the income
statement. Any translation gains or losses on non-monetary items are recognised
in equity to the extent that they relate to gains and losses on non-monetary
items which are recorded in equity. Otherwise, these translation gains or losses
are recognised in the income statement.
(c) Group companies
The financial results and position of all group entities that have a functional
currency different from the presentation currency are translated into the
presentation currency as follows:
i assets and liabilities for each balance sheet are translated at the
closing exchange rate at the date of balance sheet
ii income and expenses for each income statement are translated at average
exchange rates (unless it is not a reasonable approximation, in which
case translated at dates of transactions)
iii all resulting exchange differences are recognised as a separate
component of equity (cumulative translation reserve)
2.4 Property, plant and equipment (tangible assets)
All property, plant and equipment (PPE) are stated at cost less accumulated
depreciation and impairment losses. Cost includes expenditure that is directly
attributable to the purchase of the items.
Depreciation is calculated to write off the cost of property, plant and
equipment less estimated residual value on a straight line basis over their
estimated useful lives. The following rates and methods have been applied:
Leasehold improvements Over the life of the lease
Plant and equipment 33% straight line
Office furniture Between 10% and 33% straight line
The asset's residual values and useful lives are reviewed, and adjusted if
required, at each balance sheet date. The carrying amount of an asset is written
down immediately to its recoverable amount if the carrying amount is greater
than its estimated recoverable amount.
Gains/losses on disposal of assets are determined by comparing proceeds received
to the carrying amount. Any gain/loss is included in the income statement.
2.5 Intangible assets
(a) Goodwill
Goodwill represents the excess of the cost of a business combination over the
fair value of net identifiable assets of the acquired entity at the date of
acquisition. This goodwill for subsidiaries is included in intangible assets
(the purchase method). Intangibles acquired in a business combination are
acquired at fair value. Goodwill is tested annually for impairment and carried
at cost less accumulated impairment losses. Goodwill is allocated to
cash-generating units for impairment testing.
(b) Other intangible assets
Other intangible assets represent intangible items that have been acquired
through business combinations and through separate acquisition. To meet this
definition, the intangibles must be both identifiable and separable, or arise
from contractual or other legal rights. Intangibles acquired through business
combinations are recognised at fair value and separately acquired intangibles
are recognised at cost. Where a reliable estimate of useful life of the
intangible can be obtained, the intangible asset is to be amortised over the
useful life. When an indefinite life exists for an intangible asset, the
intangible will not be amortised, but must be tested annually for impairment.
The useful lives of finite life intangible assets is as follows:
Media content 2 years
Media platform developments 3 years
Customer relationships 5 years
Technology based assets 5 years
Non compete agreement 3.5 years
2.6 Impairment of assets
Assets that have an indefinite useful life, such as goodwill and indefinite life
intangibles, are not subject to amortisation, but are instead tested annually
for impairment and also tested whenever an event or change in situation indicate
that the carrying amount may not be recoverable. Assets that are subject to
amortisation are also tested for impairment whenever an event or change in
situation indicate that the carrying amount may not be recoverable. An
impairment loss is recognised in the income statement as the amount by which the
carrying amount of an asset exceeds its recoverable amount. The recoverable
amount is determined by the higher of the fair value of an asset less costs to
sell and the value in use. In order to assess impairment, assets are grouped at
the lowest levels for which separate cash flows can be identified
(cash-generating units).
2.7 Cash and cash equivalents
Cash and cash equivalents includes cash on hand, deposits held with financial
institutions, other short-term highly liquid investments with original
maturities of three months or less and bank overdrafts. Bank overdrafts are
classified within borrowings in current liabilities on the balance sheet.
2.8 Taxation
Current tax is the tax currently payable based on taxable profit for the year.
Deferred income tax is provided, using the liability method, on temporary
differences arising between the tax base of assets and liabilities and their
carrying amounts in the consolidated financial statements. However, deferred tax
is not provided on initial recognition of goodwill, nor on the initial
recognition of an asset or liability unless the related transaction is a
business combination or affects tax or accounting profit. Deferred income tax is
determined using tax rates known by the balance sheet date and are expected to
apply when the deferred income tax asset is realised or the deferred income tax
liability is settled. Deferred income tax assets are recognised only to the
extent that it is probable that future taxable profit will be available against
which the temporary differences can be utilised. Deferred tax liabilities are
provided in full, with no discounting.
Changes in deferred tax assets or liabilities are recognised as a component of
tax expense in the income statements, except where they relate to items that are
charged or credited directly to equity, in which case the related deferred tax
is also charged or credited directly to equity.
2.9 Provisions
Provisions, including those for legal claims, are recognised when the Group has
a present legal or constructive obligation as a result of past events, it is
probable that an outflow of economic benefits will be required to settle the
obligation and the amount has been reliably estimated.
Provisions are measured at the present value of best estimate of the expenditure
required to settle the present obligation at the balance sheet date. The
discount rate used to determine the present value reflects current market
assessments of the time value of money and the increases specific to the
liability, including risks specific to the liability.
2.10 Financial Assets & Financial Liabilities
The group can classify its investments into the below categories depending on
the purpose for which the investments were acquired. The classification is
determined at initial recognition and is re-evaluated at every reporting date.
a) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market and where there is
no intention of trading. They are included as current assets, unless maturity is
greater than 12 months after balance sheet date. Loans and receivables are
included in trade and other receivables in the balance sheet.
b) Trade receivables
Trade receivables are recognised initially at fair value and later measured at
amortised cost using the effective interest method, less provision for
impairment. An impairment provision for trade receivables is established when
there is evidence the Group will not be able to collect all amounts due
according to the terms of the receivables. The provision is calculated as the
difference between the receivable's carrying amount and the present value of
estimated future cash flows, discounted at the effective interest rate. The
provision is recognised in the income statement.
c) Interest paid
Interest payable is recognised in the income statement on an accruals basis.
d) Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either
designated in this category or not classified in any of the other categories.
They form part of non-current assets unless management intends to dispose of the
investment within 12 months of balance sheet date.
Purchases and sales of investments are recognised on trade date, being the date
on which the Group commits to purchase or sell the asset. Investments are
initially recognised at fair value plus transaction costs for financial assets
not carried at fair value through the profit and loss. They are derecognised
when the rights to receive cash flows from the investments have expired or have
been transferred and risks and rewards of ownership have been transferred.
Financial assets at fair value through profit or loss and available for sale
assets are subsequently carried at fair value. Loans and receivables and held to
maturity investments are carried at amortised cost using the effective interest
method. Any realised and unrealised gains and losses arising from changes in
fair value of the financial assets at fair value through profit or loss are
included in the income statement in the period they arise. Unrealised gains/
losses arising from changes in fair value of non-monetary securities (available
for sale) are recognised in equity. When available for sale assets are sold or
impaired the accumulated fair value adjustments are included in the income
statement.
Fair value of investments are based on current bid prices. If the market is not
active or securities are unlisted, fair value can be determined via valuation
techniques such as use of recent arm's length transactions, reference to similar
instruments and discounted cashflow analysis.
The Group assesses at each balance sheet date whether there is evidence that
financial assets are impaired.
The Group does not have any financial liabilities as at the balance sheet date.
2.11 Revenue recognition
Revenue includes the fair value of sale of goods and services, net of
value-added tax, rebates and discounts and after eliminating intercompany sales
within the Group. Revenue is recognised as follows:
a) Sales of goods
Sales of goods are recognised when a Group entity has delivered products to the
customer, who has accepted the product and collectibility of the related
receivable is reasonably assured.
b) Rendering of services
Rendering of services are recognised in the accounting period in which the
services are rendered, by reference to completion of the specific transaction,
on the basis of the actual service provided as a proportion of the total
services to be provided.
c) Interest income
Interest receivable is recognised in the income statement on an accruals basis.
If the collection of interest is considered doubtful, it is suspended and
excluded from interest income in the income statement.
2.12 Share based payments
Employees (including directors) of the group receive remuneration in the form of
share-based payment transactions, whereby employees render services in exchange
for shares or rights over shares ('equity-settled transactions').
a) Equity settled transactions
The group has applied the requirements of IFRS 2 Share-based Payments to all
grants of equity instruments.
The cost of equity settled transactions with employees is measured by reference
to the fair value at the grant date of the equity instruments granted. The fair
value is determined by using the Black-Scholes method.
The cost of equity-settled transactions is recognised, together with a
corresponding increase in equity, over the periods in which the performance
conditions are fulfilled, ending on the date on which the relevant employees
become fully entitled to the award ('vesting date'). At each balance sheet date
before vesting, the cumulative expense is calculated, representing the extent to
which the vesting period has expired and management's best estimate of the
achievement or otherwise of non-market conditions and of the number of equity
instruments that will ultimately vest or, in the case of an instrument subject
to a market condition, be treated as vesting as described above. The movement in
cumulative expense since the previous balance sheet date is recognised in the
income statement, with a corresponding entry in equity.
No expense or increase in equity is recognised for awards that do not ultimately
vest. Awards where vesting is conditional upon a market condition are treated as
vesting irrespective of whether or not the market condition is satisfied,
provided that all other performance conditions are satisfied.
The dilutive effect of outstanding options is reflected as additional share
dilution in the computation of diluted earnings per share.
2.13 Share capital
Ordinary shares are classified as equity.
Incremental costs directly attributable to the issue of new shares or options
are booked to the share premium account.
3. Critical accounting estimates and judgements
Estimates and judgements are evaluated on a regular basis and are based on
historical experience and other factors, such as expectations of future events
that are believed to be reasonable under the circumstances.
3.1 Critical accounting estimates and assumptions
The Group makes estimates and assumptions concerning the future. These
estimates, by definition, will rarely equal the related actual results. The
estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next
financial year are discussed below.
(a) Goodwill
The Group will test annually whether goodwill has suffered any impairment, in
accordance with the accounting policy stated in Note 2.6. The recoverable amount
of cash-generating units have been determined based on value-in-use
calculations. These calculations require estimates to be made.
(b) Income taxes
The Group is subject to income taxes in various jurisdictions. Judgement is
required in determining the worldwide provision for income taxes. There are many
transactions/calculations for which the ultimate tax determination is uncertain
during the ordinary course of business. Where the final tax outcome is different
to what is initially recorded, such differences will impact the income tax and
deferred tax provisions.
(c) Intangible assets
The Group is required to identify and assess the useful life of intangible
assets and determine if there is a finite or indefinite life. Judgement is
required in determining if an intangible asset has a finite life and the extent
of this finite life in order to calculate the amortisation charge on the asset.
Intangible assets that are identified to have an indefinite useful life will be
tested annually for any impairment in accordance with the accounting policy
stated in Note 2.6. The recoverable amount of cash-generating units have been
determined based on value-in-use calculations. These calculations require
estimates to be made.
4. Seasonal/cyclical trends
The scale of mobile media content is subject to seasonal fluctuations with peak
demand falling in the second half of each year, particularly around the
Christmas period. Revenues are also subject to cyclical fluctuation due to
Mobile Network Operator upgrades/development of their infrastructure; this
typically follows their peak season 'technical freezes'.
For the six months ended 30 June 2006, sales revenue represented 41% of the
annual sales revenue for the year ended 31 December 2006. This is representative
of a general trend that second half revenues were 40% - 50% higher than first
half.
5. Related party transactions
During period the Group entered in to a trading relationship Zoombak LLC, with a
related party by virtue of shared directors. During the period revenue of
£200,000 was earned, all of which remained outstanding at the balance sheet
date.
6. Transition to IFRS
6.1 Basis of transition to IFRS
The Group's financial statements for the year ended 31 December 2007 will be the
first annual financial statements that comply with IFRS. These interim financial
statements have been prepared as described in Note 2.1. The Group has applied
IFRS 1 in preparing these consolidated interim financial statements.
Mobile Streams' transition date is 1 January 2006. The Group prepared its
opening IFRS balance sheet at that date. The reporting date of these interim
consolidated financial statements is 30 June 2007.
In preparing these interim consolidated financial statements in accordance with
IFRS 1, the Group has applied mandatory exceptions and certain optional
exemptions from full retrospective application of IFRS.
6.1.1 Exemptions from full retrospective application elected by the Group
a) Cumulative translation differences exemption
The Group has elected to set the previously accumulated cumulative translation
to zero at 1 January 2006. As this had previously been included with retained
earnings in the UK GAAP financial statements, no adjustment is shown on the
transition to IFRS reconciliations.
6.1.2 Exceptions from full retrospective application followed by the Group
a) Estimates exception
Estimates under IFRS at 1 January 2006 should be consistent with estimates made
for the same date under previous UK GAAP, unless there is evidence that those
estimates were in error.
6.2 Reconciliations between IFRS and UK GAAP
The following reconciliations provide a quantification of the effect of
transition to IFRS from UK GAAP. The following reconciliations provide details
of the impact of transition on
- equity at 1 January 2006
- equity at 30 June 2006
- equity at 31 December 2006
- net income 30 June 2006
- net income 31 December 2006
There has been no cash flow effect as a result of the transition to IFRS,
therefore no reconciliation is required.
6.2.1 Reconciliation of equity at 1 January 2006
Notes UK GAAP Effect of IFRS
transition to IFRS
£000's £000's £000's
Assets
Non-Current
Other intangible assets a - 176 176
Property, plant and equipment b 247 (176) 71
-------- -------- --------
247 - 247
Current
Trade and other receivables 1,524 - 1,524
Cash and cash equivalents 268 - 268
-------- -------- --------
1,792 - 1,792
-------- -------- --------
Total assets 2,039 - 2,039
-------- -------- --------
Equity
Equity attributable to shareholders of
mobile streams
Called up share capital 1 - 1
Share premium 165 - 165
Translation reserve c 25 (25) -
Retained earnings d (340) 25 (315)
-------- -------- --------
(149) - (149)
-------- -------- --------
Total equity (149) - (149)
-------- -------- --------
Liabilities
Current
Provisions 18 - 18
Trade and other payable 2,170 - 2,170
-------- -------- --------
2,188 - 2,188
-------- -------- --------
Total Liabilities 2,188 - 2,188
-------- -------- --------
Total equity and liabilities 2,039 - 2,039
-------- -------- --------
Explanation of the effect of the transition to IFRS as at 1 January 2006
(a) Other intangible assets
Reallocation of media platform development from Property, Plant & Equipment 176
Reverse accumulated depreciation on media platform development from prior periods 79
Take up accumulated amortisation charge on media platform development for prior periods (79)
--------
Total impact - increase intangibles 176
--------
(b) Property, Plant & Equipment
Reallocation of media platform development to Intangibles (176)
--------
Total impact - decrease Property, Plant & Equipment (176)
--------
(c) Translation reserve
Reset translation reserve to nil per IFRS exemption adopted (25)
--------
Total impact - decrease translation reserve (25)
--------
(d) Retained earnings
Reverse accumulated depreciation on media platform development from prior periods (79)
Take up accumulated amortisation charge on media platform development for prior periods 79
Reset translation reserve to nil per IFRS exemption adopted 25
--------
Total impact - increase retained earnings 25
--------
Detailed explanatory notes:
(i) Media platform development
Media platform development costs were previously capitalised as tangible assets
as allowed under UK GAAP. Under IFRS, software components are recognised as
intangibles assets unless they form an integral part of computer hardware. The
media platform development costs do not form an integral part of computer
hardware and have therefore been re-classified as intangible assets.
Accumulated depreciation in relation to the media platform development costs has
been reversed and replaced by amortisation in accordance with the Group's
policies as shown in note 2.5. As the same useful life applies the net effect of
reversing depreciation and accounting for amortisation is nil.
(ii) Translation reserve
The Group has decided to apply the IFRS exemption allowed under IAS 21 to reset
the translation reserve to nil at opening balance sheet date. The previously
accumulated translation reserve is set to nil and applied against retained
earnings at that date. The gain or loss on future disposals of the relevant
foreign entities will be adjusted only by the accumulated translation
adjustments arising after the opening IFRS balance sheet date.
6.2.2 Reconciliation of equity at 30 June 2006
Notes UK GAAP Effect of IFRS
transition to IFRS
£000's £000's £000's
Assets
Non-Current
Goodwill a 1,931 (766) 1,165
Other intangible assets b 55 1,897 1,952
Property, plant and equipment c 907 (489) 418
Available-for-sale asset 165 - 165
-------- -------- --------
3,058 642 3,700
Current
Trade and other receivables 1,691 - 1,691
Cash and cash equivalents 6,143 - 6,143
-------- -------- --------
7,834 - 7,834
-------- -------- --------
Total assets 10,892 642 11,534
-------- -------- --------
Equity
Equity attributable to shareholders of
Mobile Streams
Called up share capital 65 - 65
Share premium 9,593 - 9,593
Shares to be issued d 496 141 637
Translation reserve e (55) (25) (80)
Retained earnings f (1,868) (15) (1,883)
-------- -------- --------
8,231 101 8,332
-------- -------- --------
Total equity 8,231 101 8,332
-------- -------- --------
Liabilities
Non-Current
Deferred tax liabilities g - 528 528
-------- -------- --------
- 528 528
Current
Trade and other payables h 2,636 13 2,649
Current tax liabilities 25 - 25
-------- -------- --------
2,661 13 2,674
-------- -------- --------
Total Liabilities 2,661 541 3,202
-------- -------- --------
Total equity and liabilities 10,892 642 11,534
-------- -------- --------
Explanation of the effect of the transition to IFRS as at 30 June 2006
£000's
(a) Goodwill
Reverse accumulated amortisation of goodwill for period to 30/06/06 17
Re-calculation of goodwill on business combinations (1,324)
Account for deferred tax liability on intangibles under business combinations 549
Offset deferred tax asset on amortisation of intangibles under business combinations (21)
Accrue expenses relating to business combinations - invoices received after reporting date 13
--------
Total impact - decrease goodwill (766)
--------
(b) Other intangible assets
Recognise intangible assets on business combinations 1,465
Take up amortisation of intangibles on business combinations for period to 30/06/06 (57)
Reallocation of media platform development from Property, Plant & Equipment 489
Reverse accumulated depreciation on media platform development from prior periods 141
Take up accumulated amortisation charge on media platform development for prior periods (141)
--------
Total impact - increase other intangible assets 1,897
--------
(c) Property, Plant & Equipment
Reallocation of media platform development to Intangibles (489)
--------
Total impact - decrease Property, Plant & Equipment (489)
--------
(d) Shares to be issued
Re-calculate cost of shares to be issued on business combinations 141
--------
Total impact - increase shares to be issued 141
--------
(e) Translation reserve
Reset translation reserve to nil per IFRS exemption adopted (25)
--------
Total impact - decrease translation reserve (25)
--------
(f) Retained earnings
Reverse amortisation of goodwill for period to 30/06/06 17
Take up amortisation of intangibles on business combinations for period to 30/06/06 (57)
Reverse depreciation on media platform development from prior periods (141)
Take up amortisation charge on media platform development for prior periods 141
Reset translation reserve to nil per IFRS exemption adopted 25
--------
Total impact - decrease retained earnings (15)
--------
(g) Deferred tax liabilities
Account for deferred tax liability on intangibles under business combinations 549
Offset deferred tax asset on amortisation of intangibles under business combinations (21)
--------
Total impact - increase deferred tax liability 528
--------
(h) Trade and other payables
Accrue expenses relating to business combinations - invoices received after reporting date 13
--------
Total impact - increase trade and other payables 13
Detailed explanatory notes:
(i) Business combinations - Goodwill & Intangibles
In accordance with the Group's accounting policies regarding the recognition of
intangible assets and goodwill (note 2.5) and in accordance with IFRS 3 Business
Combinations, certain amounts previously classified as goodwill under UK GAAP
have been re-classified as intangibles under IFRS. Identifiable intangible
assets on business combinations (acquisitions) have been recorded at fair value
and have therefore increased intangible assets. This has in turn reduced the
amount of goodwill recorded on business combinations.
Under IFRS goodwill cannot be amortised, but instead must be tested annually for
impairment. Previously accumulated amortisation on goodwill has been reversed
against retained profits. Intangible assets with a finite useful life are
amortised over their useful life.
The recognition of intangible assets on business combinations results in a
deferred tax liability based on the company tax rate in the region the
intangible assets belong, hence increasing goodwill on business combinations. As
the intangible assets are amortised over the useful life, the deferred tax
liability and corresponding goodwill is reduced.
In determining cost of business combinations, shares to be issued are to be
valued at the date of acquisition. Previously reported figures included the cost
of shares to be issued based on the share price at reporting date. This has been
amended to show the cost of shares at date of acquisition. An amendment has also
been posted for costs relating to acquisition that were incurred after the
balance sheet date, but are known with certainty. These costs have been shown as
accrued liabilities.
(ii) Media platform development
As per explanatory notes in 6.2.1 above.
(iii) Translation reserve
As per explanatory notes in 6.2.1 above
6.2.3 Reconciliation of equity at 31 December 2006
Notes UK GAAP Effect of IFRS
transition to IFRS
£000's £000's £000's
Assets
Non-Current
Goodwill a 3,565 (1,194) 2,371
Other intangible assets b 136 2,725 2,861
Property, plant and equipment c 1,112 (644) 468
Available-for-sale asset 382 - 382
-------- -------- --------
5,195 887 6,082
Current
Trade and other receivables 2,742 - 2,742
Cash and cash equivalents 4,073 - 4,073
-------- -------- --------
6,815 - 6,815
-------- -------- --------
Total assets 12,010 887 12,897
-------- -------- --------
Equity
Equity attributable to shareholders of
Mobile Streams
Called up share capital 69 - 69
Share premium 10,290 - 10,290
Shares to be issued d 294 343 637
Translation reserve e (153) (25) (178)
Retained earnings f (1,974) (136) (2,110)
-------- -------- --------
Total equity 8,526 182 8,708
-------- -------- --------
Liabilities
Non-Current
Deferred tax liabilities g 85 650 735
-------- -------- --------
85 650 735
Current
Trade and other payables h 3,286 55 3,341
Current tax liabilities 113 - 113
-------- -------- --------
3,399 55 3,454
-------- -------- --------
Total Liabilities 3,484 705 4,189
-------- -------- --------
Total equity and liabilities 12,010 887 12,897
-------- -------- --------
Explanation of the effect of the transition to IFRS as at 31 December 2006
£000's
(a) Goodwill
Reverse accumulated amortisation of goodwill for period to 31/12/06 123
Re-calculation of goodwill on business combinations (2,022)
Account for deferred tax liability on intangibles under business combinations 743
Offset deferred tax asset on amortisation of intangibles under business combinations (93)
Accrue expenses relating to business combinations - invoices received after reporting date 23
Account for changes to opening balance sheet of acquired entities on business combinations 32
-------
Total impact - decrease goodwill (1,194)
-------
(b) Other intangible assets
Recognise intangible assets on business combinations 2,365
Take up amortisation of intangibles on business combinations for period to 30/12/06 (284)
Reallocation of media platform development from Property, Plant & Equipment 644
Reverse accumulated depreciation on media platform development from prior periods 262
Take up accumulated amortisation charge on media platform development for prior periods (262)
-------
Total impact - increase other intangible assets 2,725
-------
(c) Property, Plant & Equipment
Reallocation of media platform development to Intangibles (644)
-------
Total impact - decrease Property, Plant & Equipment (644)
-------
(d) Shares to be issued
Re-calculate cost of shares to be issued on business combinations 343
-------
Total impact - increase shares to be issued 343
-------
(e) Translation reserve
Reset translation reserve to nil per IFRS exemption adopted (25)
-------
Total impact - decrease translation reserve (25)
-------
(f) Retained earnings
Reverse amortisation of goodwill for period to 31/12/06 123
Take up amortisation of intangibles on business combinations for period to 31/12/06 (284)
Reverse depreciation on media platform development from prior periods (262)
Take up amortisation charge on media platform development for prior periods 262
Reset translation reserve to nil per IFRS exemption adopted 25
-------
Total impact - decrease retained earnings (136)
-------
(g) Deferred tax liabilities
Account for deferred tax liability on intangibles under business combinations 743
Offset deferred tax asset on amortisation of intangibles under business combinations (93)
-------
Total impact - increase deferred tax liability 650
-------
(h) Trade and other payables
Accrue expenses relating to business combinations - invoices received after reporting date 23
Account for changes to opening balance sheet of acquired entities on business combinations 32
-------
Total impact - increase trade and other payables 55
-------
Detailed explanatory notes:
(i) Business combinations - Goodwill & Intangibles
In accordance with the Group's accounting policies regarding the recognition of
intangible assets and goodwill (note 2.5) and in accordance with IFRS 3 Business
Combinations, certain amounts previously classified as goodwill under UK GAAP
following acquisitions made in the period have been re-classified as intangibles
under IFRS. Identifiable intangible assets on business combinations
(acquisitions) have been recorded at fair value and have therefore increased
intangible assets. This has in turn reduced the amount of goodwill recorded on
business combinations.
Under IFRS goodwill cannot be amortised, but instead must be tested annually for
impairment. Previously accumulated amortisation on goodwill has been reversed
against retained profits. Intangible assets with a finite useful life are
amortised over their useful life.
The recognition of intangible assets on business combinations results in a
deferred tax liability based on the company tax rate in the region the
intangible assets belong, hence increasing goodwill on business combinations. As
the intangible assets are amortised over the useful life, the deferred tax
liability and corresponding goodwill is reduced.
In determining cost of business combinations, shares to be issued are to be
valued at the date of acquisition. Previously reported figures included the cost
of shares to be issued based on the share price at reporting date. This has been
amended to show the cost of shares at date of acquisition. An amendment has also
been posted for costs relating to acquisition that were incurred after the
balance sheet date, but are known with certainty. These costs have been shown as
accrued liabilities.
(ii) Media platform development
As per explanatory notes in 6.2.1 above.
(iii) Translation reserve
As per explanatory notes in 6.2.1 above.
6.2.4 Reconciliation of net income for six months ended June 2006
Notes UK GAAP Re-classification Effect of IFRS
transition to
IFRS
£000's £000's £000's £000's
Sales Revenue 3,353 - - 3,353
Cost of Sales (1,329) - - (1,329)
-------- -------- -------- --------
Gross Profit 2,024 - - 2,024
Selling and marketing costs - (115) - (115)
Administration expenses a (2,631) 160 (40) (2,511)
Other operating expenses (1,292) (45) - (1,337)
-------- -------- -------- --------
Operating loss (1,899) - (40) (1,939)
Finance costs (1) - - (1)
Finance income 122 - - 122
-------- -------- -------- --------
Loss before income tax (1,778) - (40) (1.818)
Income tax expense 28 28
-------- -------- -------- --------
Loss for period (1750) - (40) (1790)
-------- -------- -------- --------
Explanation of the effect of the transition to IFRS as at 30 June 2006 £000's
(a) Administration costs
Reverse amortisation of goodwill for period to 30/06/06 17
Take up amortisation on business combinations for period to 30/06/06 (57)
Reverse depreciation of media platform development for period to 30/06/06 62
Take up amortisation of media platform development for period to 30/06/06 (62)
--------
Total impact - increase administration costs (40)
--------
Detailed explanatory notes:
(i) Business combinations - Goodwill & Intangibles
As per explanatory notes in 6.2.2 above.
(ii) Media platform development
As per explanatory notes in 6.2.1 above.
6.2.5 Reconciliation of act income for the year ended 31 December 2006
Notes UK GAAP Re-classifications Effect of IFRS
transition to
IFRS
£000's £000's £000's £000's
Sales Revenue 8,223 - - 8,223
Cost of Sales (3,402) - - (3,402)
-------- ------- -------- -------
Gross Profit 4,821 - - 4,821
Selling and marketing costs - (251) - (251)
Administration expenses a (5,556) 357 (161) (5,360)
Other operating expenses (1,296) (106) - (1,402)
-------- ------- -------- -------
Operating Profit (2,031) - (161) (2,192)
Finance costs (14) - - (14)
Finance income 237 - - 237
-------- ------- -------- -------
Loss before income tax (1,808) - (161) (1.969)
Income tax expense (176) (176)
-------- ------- -------- -------
Loss for period (1,894) - (161) (2,145)
-------- ------- -------- -------
Explanation of the effect of the transition to IFRS as at 31 December 2006 £000's
(a) Administration costs
Reverse amortisation of goodwill for period to 31/12/06 123
Take up amortisation on intangibles on business combinations for period to 31/12/06 (284)
Reverse depreciation of media platform development for period to 31/12/06 121
Take up amortisation of media platform development for period to 31/12/06 (121)
--------
Total impact - increase administration costs (161)
--------
Detailed explanatory notes:
(i) Business combinations - Goodwill & Intangibles
As per explanatory notes in 6.2.2 above.
(ii) Media platform development
As per explanatory notes in 6.2.1 above.
7. Segmental reporting
Primary reporting format - geographical segments
As at 30 June 2007, the Group is organised into 4 geographical segments: Europe,
North America, Latin American, and Asia. All operations are continuing.
The segment results for the 6 months ended 30 June 2007 are as follows:
£000's Europe North Latin Asia Group
America America
Total gross segment sales 1,402 1,228 1,092 614 4,336
----------------------------------------------------------------
Operating loss (40) (84) (413) (123) (660)
Finance costs - net 114
Flotation/fundraising costs -
--------
Loss before income tax (546)
Income tax expense (1)
--------
Profit for the period (547)
--------
The segment results for the 6 months ended 30 June 2006 are as follows:
£000's Europe North Latin Asia Group
America America
Total gross segment sales 1,475 1,004 855 19 3,353
----------------------------------------------------------------
Operating profit/(loss) (648) 118 6 (123) (647)
Finance costs - net 121
Flotation/fundraising costs (1,292)
--------
Loss before income tax (1,818)
Income tax expense 28
--------
Loss for the period (1,790)
--------
The segment results for the 6 months ended 31 December 2006 are as follows:
£000's Europe North Latin Asia Group
America America
Total gross segment sales 2,064 878 1,469 459 4,870
----------------------------------------------------------------
Operating loss 652 (323) (431) (147) (249)
Finance costs - net 102
Flotation/fundraising costs (4)
--------
Loss before income tax (151)
Income tax expense (204)
--------
Loss for the period (355)
--------
8. Share capital
Number of shares Ordinary shares Treasury Shares Total
(000's) (000's) (000's) (000's)
At 1 January 2006 502 502 - 502
New share issues 78 78 - 78
Forfeiture (63) (63) - (63)
----------------------------------------------------------------------
517 517 - 517
Bonus issue 24,840 24,840 - 24,840
New share issues 7,562 7,562 - 7,562
----------------------------------------------------------------------
Balance at 30 June 2006 32,919 32,919 - 32,919
----------------------------------------------------------------------
New share issues 1,721 1,721 - 1,721
----------------------------------------------------------------------
Balance at 31 December 2006 34,640 34,640 - 34,640
----------------------------------------------------------------------
New share issues 915 915 - 915
----------------------------------------------------------------------
Balance at 30 June 2007 35,555 35,555 - 35,555
----------------------------------------------------------------------
The total number of shares issued is 35,555,224 (December 2006: 34,640,000) with
a par value of £0.002 per share. All issued shares are fully paid.
9. Earnings per share
Basic
Basic earnings per share is calculated by dividing the profit attributable to
equity holders of the Company by the weighted average number of ordinary shares
in issue during the period, excluding ordinary shares purchased by the Company
and held as treasury shares.
30 June 2007 30 June 2006 31 December 2006
Profit attributable to equity holders of the Company (£000's) (547) (1,790) (2,145)
-----------------------------------------------
Weighted average number of ordinary shares in issue (000's) 34,416 30,452 32,465
-----------------------------------------------
Basic earnings per share (£ per thousand share) (15.89) (58.78) (66.07)
-----------------------------------------------
Diluted
Diluted 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 dilutive ordinary shares:
share options.
The calculation is performed for the share options to determine the number of
shares that could have been acquired at fair value (determined as the average
annual market share price of the Company's shares) based on the monetary value
of the subscription rights attached to outstanding share options and the yet to
be recognised expenses in terms of the option. The number of shares calculated
as above is compared with the number of shares that would have been issued
assuming the exercise of the share options. Where there is a loss for the period
in question, there is no dilution applied.
As the Group is showing a loss for all periods being reported, no dilution is
applicable, hence diluted earnings per share is the same as basic earnings per
share.
10. Cash flow statement
The following non-cash flow adjustments have been made to the pre-tax result for
the year to arrive at operating cash flow:
30 June 2007 30 June 2006 31 December 2006
£000's £000's £000's
Adjustments for:
- depreciation, amortisation and impairment losses 522 155 539
- share option issued 144 197 325
- interest income (114) (122) (237)
- interest expense - 1 14
---------------------------------------------------
Total 552 231 641
---------------------------------------------------
11. Business combinations
On 19 April 2006, the Group acquired 100% of the share capital of Mobile Streams
Europe GmbH (formerly Cyoshi Mobile GmbH).
Details of net assets acquired and goodwill are as follows:
Purchase consideration £000's
- cash paid 1,388
- shares issued 159
- shares to be issued 478
- direct costs relating to the acquisition 96
Net assets acquired (19)
--------
Cost of business combination 2,102
Identifiable intangible assets:
- customer relationships 1,252
- technology based assets 213
--------
Goodwill 637
========
The goodwill is attributable to the significant future benefits expected to
arise from Cyoshi's position of leading independent producer and distributor of
mobile media across Europe. This acquisition strengthens the Group's reach in
Europe.
The assets and liabilities arising from the acquisition are as follows:
Fair value Acquiree's carrying
£000's amount
£000's
Cash and cash equivalents 11 11
Receivables 113 113
Payables (105) (105)
-------- --------
No assets required 19 19
-------- --------
Purchase consideration settled in cash 1,389
Cash and cash equivalents in subsidiary acquired (11)
--------
Cash outflow on acquisitions 1,378
--------
Part of the purchase consideration for the acquisition is in the form of shares
issued and shares to be issued. The fair value of shares issued was determined
based on 206,756 shares issued at the share price at the date of acquisition,
being £0.77 per share, giving a total fair value of £159,202. Fair value of
shares to be issued was determined based on 620,268 shares to be issued at the
share price at the date of acquisition, being £0.77 per share, giving a total
fair value of £477,606.
Since acquisition Mobile Streams Europe GmbH has generated a profit of £3,000.
Had the acquisition taken place on 1 January 2006 it would have contributed
£441,000 revenue and a loss of £6,000 to the Group in the year to 31 December
2006.
On 4 August 2006, the Group acquired 100% of the share capital of The Nickels
Group.
Details of net assets acquired and goodwill are as follows:
Purchase consideration £'000
- cash paid 230
- deferred cash 123
- direct costs relating to the acquisition 15
Net assets acquired 79
--------
Total purchase consideration 477
Identifiable intangible assets:
- customer relationships (210)
--------
Goodwill 237
========
The goodwill is attributable to the strengthening of the Groups' content
generation and distribution business as well as providing a strategic foothold
into the west coast of the US and access to unique music content in high
performing and unique genres, including mobile rights to one of the world's best
selling artists.
The assets and liabilities arising from the acquisition are as follows:
Fair value Acquiree's carrying
£000's amount
£000's
Payables (79) (79)
-------- ---------
Net liabilities acquired (79) (79)
-------- ---------
Purchase consideration settled in cash 230
Cash and cash equivalents in subsidiary acquired -
---------
Cash outflow on acquisitions 230
---------
Since acquisition The Nickels Group Inc has generated a profit of £15,000. Had
the acquisition taken place on 1 January 2006 it would have contributed £497,000
of revenue and £98,000 of profit for the Group in the year to 31 December 2006.
On 8 August 2006, the Group acquired 100% of the share capital of Mobile Streams
(Hong Kong) Limited (formerly Mobilemode Limited).
Details of net assets acquired and goodwill are as follows:
Purchase consideration £000's
- cash paid 685
- shares issued 700
- direct costs relating to the acquisition 162
Net liabilities acquired (8)
--------
Total purchase consideration 1,539
Identifiable intangible assets: (690)
--------
- customer relationships 35
- technology based assets 638
- Non compete agreements 17
--------
Goodwill 849
========
The goodwill is attributable to the increased distribution and relationships in
the Asia Pacific region, with a number of network operators. The acquisition
provides the Group with a comprehensive position in Asia Pacific and the
immediate benefit of a strong management team with strong relationships with
network operators.
The assets and liabilities arising from the acquisition are as follows:
Fair value Acquiree's carrying
£000's amount
£000's
Cash and cash equivalents 163 163
Receivables 221 221
Fixed assets 2 2
Payables (363) (363)
Income tax (15) (15)
-------- --------
Net assets acquired 8 8
-------- --------
Purchase consideration settled in cash 685
Cash and cash equivalents in subsidiary acquired (163)
--------
Cash outflow on acquisition 522
--------
Part of the purchase consideration for the acquisition is in the form of shares
issued. The fair value of shares issued was determined based on 1,537,736 shares
issued at the share price at the date of acquisition, being £0.455 per share,
giving a total fair value of £699,670.
Since acquisition Mobile Streams (Hong Kong) Limited and its subsidiaries has
generated a loss £138,000. Had the acquisition taken place on 1 January 2006 it
would have contributed £1,184,000 revenue and a loss of £188,000 for the Group
in the year to 31 December 2006.
This information is provided by RNS
The company news service from the London Stock Exchange