LONDON (Alliance News) - Mobile Streams PLC Wednesday warned that profits were hit by the fall in the Argentine peso in the first half of its financial year as well as higher spending on marketing, and a further fall in the Argentine currency means it won't meet market expectations for its full-year results.
In a trading update, the mobile content retailer said revenues in the six months to end-December were about GBP27 million, up from GBP23.7 million a year earlier. The growth in sterling terms was 14%, but growth in peso terms was 28%.
The fall in the Argentine currency - it makes 85% of its revenues in the country - means it expects earnings before interest, tax, depreciation and amortisation for the first half of the year to be below the year-earlier period.
"Due to the recent devaluation of the Argentine Peso subsequent to the end of the reporting period, the company does not currently expect that it will meet market expectations for full year ending 30th June 2014. Once the currency situation has stabilized, the Company will provide further guidance to the market," Chief Executive Simon Buckingham said in a statement.
Mobile Streams said it had recently started to put in place accounts to buy dollar-linked investment funds so that it can invest the cash in dollar funds or contracts for difference in pesos and also enter non-deliverable forward futures contracts. This will allow it to hedge against peso volatility.
"Another alternative that the company is exploring to mitigate the effects of the Argentine Peso devaluation is the purchase of FX futures in the Argentine Futures Exchange - this implies margin calls that can be covered with dollar linked bonds," it said in a statement.
Revenue growth was driven by a further rise in the number of active subscribers it has. It said its mobile internet active subscriber base was up about 50% in the Latin America region to over 4 million.
The company retails a portfolio of content for mobiles devices including games, apps, eBooks, music, pictures and videos.
Its shares were down 32.8% at 43 pence early Wednesday, the biggest decline on AIM.
By Steve McGrath; stevemcgrath@alliancenews.com; @SteveMcGrath1
Copyright © 2014 Alliance News Limited. All Rights Reserved.
Mobile Streams (MOS)