Mobile Streams Regulatory News (MOS)

22nd September 2011

Mobile Streams plc

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

 Results for the 18 months ended 30 June 2011

Mobile Streams Plc, the leader in premium apps and mobile content monetisation, (AIM: MOS) is pleased to update its shareholders on its financial and business performance for the 18 months ended 30 June 2011. The financial period of the Company changed from 31 December to 30 June.

Financial highlights

·; Revenues of £15.5m for the 18 months ended 30 June 2011 (12 months ended 31 December 2009: £7.1m)

·; Mobile Internet revenues of £7.5m for the 18 months ended 30 June 2011 (12 months ended 31 December 2009: £0.8m)

·; Positive EBITDA* of £0.5m for the 18 months ended 30 June 2011 (12 months ended 31 December 2009: £0.1m)

·; Revenue of £10.2m from Latin America for the 18 months ended 30 June 2011 (12 months ended 31 December 2009: £1.6m)

·; Loss after tax of £0.2m (12 months ended 31 December 2009: loss of £1.2m)

·; Cash of £1.1m as at 30 June 2011 with no debt

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

Operational highlights

·; Launch of Appitalism.com universal social app store in September 2010, now live in 51 countries with an unsurpassed content catalogue of more than 20 million titles.

·; Mobile Internet subscriber base grew from around 150,000 to over 750,000 active subscribers. Active subscribers are defined as customers who have paid to use one of the Company's mobile internet services in the past two month period.

·; A total of 17 Business To Business (B2B) customer contracts had been fully executed for the distribution and provision of the Company's apps, games and eBooks content and services as at 30 June 2011. These deals include new partnerships with several of the world's largest cellphone carrier groups and telecoms infrastructure suppliers including the previously announced partnerships with Huawei, Qualcomm and Infosys which will potentially drive significant revenue.

Commenting, Simon Buckingham, CEO of Mobile Streams said:

"The launch of Appitalism was timed to coincide with burgeoning interest in apps for smartphones and tablet devices from both consumers and companies. Appitalism has put Mobile Streams back on the map and allowed the Company to reposition and reinvent itself, leveraging its decade plus investment and experience in the mobile market. Appitalism also provides a strong growth platform for the future as the Group is now closely aligned to the fast-growing smartphone and tablet adoption trends currently being seen globally.

The momentum behind Appitalism has carried over into the new financial year, with a further 14 app distribution contracts already fully executed since the year-end, taking the total to over 30 contracts. Appitalism has formed strategic partnerships with, for example, mobile network operators and mobile handset and equipment companies. The strength of the Appitalism global app distribution network attracts quality app developers, which in turn generates more distribution opportunities, creating a virtuous cycle.

As a result of this overall activity and momentum in apps, Appitalism is not expected to require further material investment in the new financial year. With the Appitalism platform largely developed, and with many of the new material contracts at an early stage of deployment and revenue generation, the Board is confident that the Company has sufficient financial resources in place to fully fund its overall business plan and growth strategy.

Mobile Streams does plan to increase investment in marketing to build the Appitalism brand and user activity in the new financial year, however these marketing programs are predominantly planned on performance based advertising networks where Mobile Streams only pays for the advertising it has received when an actual revenue generating event such as a new subscriber signup occurs.

As a global leader in the monetisation of premium apps, games, eBooks and mobile content, we are excited about the continuing global growth opportunities for Mobile Streams in the new financial year as smartphones and other mobile devices continue to become ever more popular."

Enquiries:

chairman's statement

The past 18 months has seen the Company continue on its strategy to develop a content offer across a wide range of mobile devices direct to consumers and move yet further away from our original business of providing content to mobile network operators. 

Group revenue for the 18 months ended 30 June 2011 was £15.5m (12 months period ended December 2009: £7.1m). Trading EBITDA* was a profit of £0.5m for the financial period (12 months period ended December 2009: £0.1m). Profit before tax was £0.123m (12 months period ended December 2009 loss of £1.3m).

Our operations outside Europe are strong and represent 92% of the overall revenues for the period. Latin America is highly successful and represents 66% (see note 2) of the total revenues for the 18 month period. 

In September 2010 we announced the launch of the Appitalism.com service which combines a social community with an online store, enabling consumers to discover, discuss and download digital media from a catalogue of premium apps, songs, books, games and videos compatible with a broad range of digital devices. Appitalism is still at an early stage of development. It has a very large number of apps on offer and we are experimenting with various ways to generate revenue in a rapidly evolving market.

The Group has sought to align its resources with the areas of the business that have the greatest growth potential, particularly the sale of digital content through the Appitalism service and the mobile internet subscription services in Latin America. The Group Finance function has relocated to New York to be alongside the CEO's office and the financial year end of the Company changed from 31 December to 30 June. In December 2010 we announced the departure of Ian Brewer from the Board of Directors and in January 2011 welcomed Gabriel Margent as the new Chief Financial Officer. On behalf of the Board I would like to thank Ian for his valuable service.

Our global reach combined with our robust distribution platforms, significant content resource and experienced management team places us in a very strong position to take a key role in the expansion of the mobile internet going forward. Mobile Streams plc remains a young start up company in very fast growing sector. Making predictions of performance is therefore difficult but we continue to have a strong balance sheet and a clear focus on a strategy based on apps.

Roger Parry

Chairman

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

FINANCIAL REVIEW

During the 18 month period, the Group's Mobile Internet revenues grew rapidly, whilst its Mobile Operator revenues remained relatively flat. As consumers steadily update their phones from legacy feature and flip phone models to smartphones, they have generally used the operator content portals and app stores less, and used independent portals as well as the open mobile internet more actively.

Management reviews the Group on a geographical basis which is organised into four geographical segments: Europe, North America, Latin America, and Asia Pacific. Revenues in these geographical segments 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).

Revenue from Europe was £1.2m for the 18 months ended 30 June 2011 (12 months period ended December 2009 £1.1m); Asia Pacific was £2.6m for the 18 months ended 30 June 2011 (12 months period ended December 2009 £2.7m); North America was £1.4m for the 18 months ended 30 June 2011 (12 months period ended December 2009 £1.7m) and Latin America was £10.2m for the 18 months ended 30 June 2011 (12 months period ended December 2009 £1.6m). See Note 2.

Mobile Operators

Through active management of operator channels by the Group's channel management teams around the world, we were successful in maintaining our mobile carrier revenue streams at relatively stable levels, despite generally reduced consumer visitors to these portals, which has been a continuing trend for the past couple of years. Our teams shared and implemented the best retailing practices in order to increase the conversion of visitors into customers to maintain the overall revenue and margin levels at a relatively consistent level.

Mobile Streams maintains strong direct operator relationships in several markets around the world including Australia, Singapore, Argentina, Mexico and Colombia, as well as partnerships with well known telecoms companies such as Infosys, Qualcomm and Huawei.

Mobile Internet

During 2010, the Group continued to grow its mobile retailing business primarily by launching additional services. In September 2010 we launched our new flagship portal Appitalism.com, and in December 2010 we sold our legacy "Ringtones.com" domain name for US$750,000, shown as Other income in the income statement.

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, led by our Appitalism.com service which was developed and launched during the financial year.

In August 2009, we reported on the launch of a portfolio of subscription-based content clubs in Argentina, which give subscribers access to content channels. We have continued to steadily add new content clubs and offerings as well as increasing the marketing support behind these services. The Group generated Mobile Internet revenues of £7.5m for the 18 months ended 30 June 2011 (12 months ended 31 December 2009: £0.8m). Mobile Internet revenues more than doubled in the 6 months ended 30 June 2011 to £3.4m compared to the 6 months ended 30 June 2010 of £1.6m.

The Group has an active subscriber base of more than 750,000 customers for its mobile internet subscription services (defined as someone who has purchased a content service in the previous 2 month period). Last year the subscriber numbers only reached 150,000.

Outlook

The current year has begun well and the Board expects the industry trends of 2010-2011 to carry over into 2011-2012 with steady operator revenues boosted by app distribution deals coupled with continuing growth in mobile internet services. The Board looks forward to updating the market on further developments of the business in the coming months.

18 months ended 30 June 2011

Group revenue for the 18 months ended June 30, 2011 was £15.5m. Gross margin was 49.7% slightly reduced from 50.5%.

Selling, marketing and administrative expenses were £7.6m. This included the investment in the new Appitalism business (other than capitalised development costs) as well as marketing costs incurred in acquiring Mobile Internet subscribers mainly in Latin America and market research cost associated with the Appitalism business.

The Group had net cash outflows from operations of £0.2m. During December 2010 the ringtones.com domain was sold for US$750,000, shown as Other Income in the income statement. The disposal of ringtones.com boosted cash and more than offset the capitalised development costs incurred in building the Appitalism.com site. The Group retained the Latin America sub-domains under a lease back arrangement for a period of 12 months. The lease cost is being amortised over the 12 month period.

The Group recorded a loss after tax of £0.2m for the 18 months ended 30 June 2011, generating basic loss of 0.589 pence per share.

Adjusted earnings per share (excluding depreciation, amortisation, impairments and share compensation expense) was 0.542 pence per share.

12 months ended 31 December 2009

Group revenue in 2009 was £7.1m. The Group generated a profit of £0.1m at trading EBITDA* level. Loss before tax was £1.3m.

Gross margin was 50.5% reflecting the proportionate shift in business toward higher margin mobile internet revenues.

Selling, marketing and administrative expenses reduced by £1.6m from 2008 to £4.9m 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 of non-cash impairment charges relating the write down of intangible assets and investments acquired in a prior year.

The Group had net cash outflows from operations of £0.5m due mainly to the settlement of prior year tax liabilities and movements in working capital. Capital expenditure was £0.1m.

Basic loss per share was 3.320 pence per share.

Adjusted profit per share (excluding depreciation, amortisation, impairments and share compensation expense) increased to 0.502 pence per share.

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

Financial Statements for the 18 months ended 30 June 2011

Consolidated INCOME STATEMENT

Consolidated STATEMENT OF COMPREHENSIVE INCOME

Consolidated STATEMENT OF FINANCIAL POSITION

Consolidated STATEMENT OF CHANGES IN EQUITY

Consolidated cash flow statement

Notes to THE GROUPfinancial statements

1. BASIS OF PREPARATION

The Group financial statements consolidate those of the parent company and all of its subsidiary undertakings drawn up to 30 June 2011. They have been prepared in accordance with applicable International Financial Reporting Standards as adopted by the EU. All references to IFRS in these statements refer to IFRS as adopted by the EU.

The historical cost convention has been applied as set out in the accounting policies.

2. Segment reporting

As at 30 June 2011, the Group is organised into four geographical segments: Europe, North America, Latin America, 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.

3. EARNINGS/(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.

Adjusted earnings per share