Mobile Streams Regulatory News (MOS)

This announcement contains inside information for the purposes of Article 7 of Regulation 596/2014 (MAR)

10 November 2016

Mobile Streams plc

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

Final results for the year ended 30 June 2016 - in line with management's revised expectations

Mobile Streams (AIM:MOS), the emerging markets focused mobile media company, is pleased to announce its final results for the year ended 30 June 2016 which are in line with management's revised expectations.

Financial highlights:

· Decrease in revenues to £12.8m (2015: £29.1m) caused by ongoing challenges in the Company's core market of Argentina

· EBITDA* loss of £0.65m (2015 profit: 1.1m) attributable to investment in new products such as ad-funded services and in scaling new geographies, particularly India

· Loss before tax £0.74m (2015 profit: £0.83m)

· Loss after tax of £1.3m (2015 profit of £0.3m)

· Basic loss per share of 3.52p per share (2015: earnings of 0.908p per share)

· £1.4m in cash (2015: £2.1m), with no debt. Current cash is £1m.

*EBITDA is a non-IFRS measure and is calculated as profit before tax, interest, amortisation, depreciation, share compensation expense and impairment of assets.

Operational highlights:

· Focused on expansion into India

· Mobile Streams India Private Limited formed in October 2015

· Advertised Funded Mobilegaming.com service was launched in India during February 2016 with the top three Indian mobile operators

· More than 75,000 active subscribers in India currently with an addressable audience from the of c.700 million mobile users - expected to increase to c.900 million such users by the end of 2016

The full report and accounts for the year ended 30 June 2016 will be sent to shareholders today and will be uploaded to the Company's website, www.mobilestreams.com, in accordance with AIM Rule 20.

Simon Buckingham, CEO, said: "Operations in Argentina were extremely challenging in the year under review. However, this also presents us with an opportunity as we look to refocus our business and continue to develop our ad-funded games service and subscription services in India. These opportunities are potentially transformational and I am extremely pleased that our active subscriber numbers in India are growing steadily. We look forward to updating shareholders with our progress as and when we achieve incremental subscriber milestones and billing launches in the coming months."

Outlook

Mobile Streams has focused on three main objectives in its recent business trading: expansion into India; stabilisation of its Latin American business primarily in Argentina; and seeking to minimise net cash outflow. Generally, we have sought to invest the profits from our relatively mature Argentine operations into developing the fast growing India business. As previously announced, in Argentina revenues in the last financial year were in part adversely impacted by the devaluation of the Argentine peso in December 2015 as well as a wider slowdown in the mobile subscription business in the local market.

We formed Mobile Streams India Private Limited in October 2015 to enable Mobile Streams to sign agreements with Indian mobile network operators (MNOs), device manufacturers (OEM) and other third parties and this is already proving to be successful.

As per the strategy in Latin America, the focus in India is very much on the recurrent revenue generating subscription service in India, with daily and weekly packages both being trialled. Our ad-funded Mobilegaming.com service was launched in February 2016 with the top three Indian mobile operators with marketing campaigns coordinated by the same team responsible for the success we have had in the Latin American region over the past several years. Active subscriber numbers are steadily growing and now exceed 75,000 in India. Active subscribers are measured as consumers who have made a purchase from the Company in the country in the past 60 days. For like-for-like comparability, this is the same methodology the Company uses to measure active subscribers in its other markets such as Argentina.

Looking ahead to the remainder of 2016 and beyond, our primary objectives are to secure mobile billing with the leading seven or eight mobile operators in India, progressively increase marketing spend to grow the active subscriber base, enhance our content and service offer by partnering with local Indian companies and the launch of our browser based games service (utilising HTML5) to become the leading destination for games in India. Mobile Streams has recently launched with a fourth carrier billing connection in India, extending our addressable audience to around 700 million potential mobile users.

The Company sees potential for browser based gaming in both Latin America and India. Our newly developed HTML5 content works well across all devices including Android, Apple, Tizen and Windows Phone. Devices in emerging markets often have limited memory capable to store downloadable applications so browser based gaming is attractive. In addition, as browser based content is not available from Google Play and the App Store, this provides us with an important differentiation from these offerings.

The Indian mobile market is growing rapidly, the entrance of Reliance Jio 4G network into the market this year and the upcoming spectrum auction means the primary obstacle of poor data connectivity is being addressed. A report by Business Insider UK (The Smartphone Mark, by Country: Adoption, Platform and vendor trends in the US, China and India (1 April 2016)) found that, India has yet to fulfill its promise as the future engine of smartphone sales growth, but that could change soon. The report showed that Smartphones accounted for c.44% of mobile shipments in India in Q2 2016. We are therefore confident in the prospects that the opportunity in India affords us.

Enquires:

Mobile Streams

+1 347 669 9068

Simon Buckingham, Chief Executive Officer

Enrique Benasso, Chief Financial Officer

N+1 Singer (Nominated Adviser and Broker)

+44 (0)20 7496 3000

Alex Laughton-Scott

Alex Price

About Mobile Streams:

Mobile Streams licenses and distributes a wide range of mobile content including games and apps that are retailed around the world, primarily in emerging markets. The Company's main operations are in Latin America and in particular Argentina, with recent expansion into India and Nigeria. Its shares are traded on the AIM market of the London Stock Exchange under the symbol MOS LN.

Chairman's Statement:

The Board of Mobile Streams plc ("Mobile streams" or "the company" or "the group") is pleased to present its audited accounts for the financial year ended 30 June 2016.

The past twelve months has seen Mobile Streams continue with its strategy to develop a content offering direct to consumers across a wide range of mobile devices in a number of large emerging markets. This is in addition to our original business of providing content to mobile network operators and other business partners. The operating performance of the business reflects our substantial position in Argentina which has been a challenging market and the cost of working with Argentinian currency control rules combined with a significant devaluation in the Argentinian peso.

Group revenue for the year ended 30 June 2016 was £12.8m (2015: £29.1m). Trading EBITDA (calculated as profit before tax, interest, amortisation, depreciation, share compensation expense and impairment of assets) was negative £0.6m for year (2015: positive £1.1m). Loss before tax was £0.7m (2014: £0.8m profit). Much of the reduction in revenues is attributable to Argentina. Revenue in Argentina (which equates to 88% of our revenue) on a constant currency basis decreased by 45% from AR$343m to AR$188m. The challenges in Argentina spurred the Company to develop new premium content products, advertising funded products, and to seek to diversify into new emerging markets, specifically India. Mexico is our second largest market and accounted for around 10.3% of our revenues during the period.

The Directors do not propose a payment of a dividend (2015: £Nil). In the new financial year, the majority of revenues are once again expected to be generated in Latin America and the majority of the investment will be in India. The Group ended the year with a net cash balance of £1.4m at 30 June 2016 (2015: £2.1m).

The team at Mobile Streams are long established experts in mobile content and have good contacts with the leading mobile operators around the world. Despite the challenges in Argentina, the Board believes that the Group has the potential to deliver growth in shareholder returns with established and newly developed advertising funded and premium products using our strong trading relationships in developing markets. If we feel we need to accelerate our growth in India this is likely to require additional investment from a joint venture partner or from shareholders.

Roger ParryChairman

STRATEGIC REPORT

Mobile Streams PLC (AIM: MOS), the global mobile media company, is pleased to provide an update to its shareholders on its performance for the 12 months ended 30 June 2016.

BUSINESS REVIEW

Operating review

Mobile Streams' performance during the financial year ended 30 June 2016 was driven primarily from its Mobile Internet sales in Latin America.

Group revenue for the year ended 30 June 2016 was £12.8m. The gross profit was £3.5m and decreased by 54% during the year (year ended 30 June 2015: £7.7m). The gross profit margin increased from 26.4% to 27.6% as a result of decreased marketing (direct to consumer) costs related to its Mobile Internet division.

Selling and marketing expenses were £1.3m, a 61% decrease on the year ended 30 June 2015. Revenues are generated from two principal business activities: the sale of mobile content through mobile operators (Mobile Operator Sales); and the sale of mobile content over the internet (Mobile Internet Sales). Additionally, the Group is engaged in the provision of consulting and technical services (Other Service Fees).

During the period, both the Group's Mobile Internet revenues and its Mobile Operator revenues decreased. As consumers steadily update their phones from legacy feature and flip phone models to smartphones, they have generally used the operator content portals less. Consumers generally use independent portals, as well as the open mobile internet, more actively.

The Argentine peso suffered a devaluation against the British Pound during the year (28% for the 12 months ended on 30 June 2016). The financial results and balances of all group entities that have a functional currency different from the presentation currency are translated into the presentation currency, and these exchange differences are recognised as a separate component of equity (cumulative translation reserve). The devaluation of the Argentine Peso has a direct impact in the revenue and the gross profit of the subsidiary, either through the translation to British pounds and by the impact that the currency level has on local inflation and consumers spending level.

Mobile Internet sales

The Group anticipated the shift to the open Mobile Internet business model several years ago and added new products at new price points in new markets.

The Group experienced growth and then stabilisation in 2013 to 2014 in Mobile Internet sales as consumers used their mobile devices to purchase mobile content subscriptions. After that, the business model (based on Mobile Internet) shifted to a model based on the operator platforms and the revenue based on internet decreased. This was mostly the result of the devaluation of the Argentine peso during the 2014 to 2016 financial years, resulting in a fall in sales.

 Latin America, primarily Argentina, accounted for the majority of revenues.

STRATEGIC REPORT

Mobile Operator sales

The Group has several contracts with mobile operators that allow the distribution of content through their mobile portals, although the revenue has been reduced by more than 56% year on year partially because of the fact that consumers prefer to use the open mobile internet services on their smartphones and partly because of our own increased focus on Mobile Internet services.

There was a reduction in the number of consumer visitors to these portals, which has been a continuing trend for several years. Our teams share and implement the best retailing practices in order to increase the conversion of visitors into customers to mitigate the natural decline in this revenue stream as the market changes.

Financial review

Group revenue for the year ended 30 June 2016 was £12.8m, a 56% decrease on the previous year (2015: £29.1m).

Gross profit was £3.5m, a decrease of 54% during the year (2015: £7.7m). The gross profit margin increased from 26.4% to 27.6% due to decreased marketing (Direct to Consumer) costs related to Mobile Internet.

Selling, marketing and administrative expenses were £4.2m, a 37% decrease on the year ended 30 June 2015 (2015: £6.6m).

The Group recorded a loss after tax of £1.3m. for the year ended 30 June 2016 (2015 profit: £337k). Basic earnings per share decreased to a loss of 3.52 pence per share (2015: earnings of 0.908 pence per share). Adjusted earnings per share (excluding interest, depreciation, amortisation, impairments and share compensation expense) decreased to a loss of 2.97 pence per share (2015: earnings of 1.56 pence per share).

The Group had cash of £1.4m at 30 June 2016, with no debt (£2.1m of cash with no debt as at 30 June 2015). Argentina cash was £1.2m at 30 June 2016 (2015: £80k).

Financial performance

STRATEGIC REPORT

Key performance indicators ("KPI's")

Gross profit as a percentage of revenue is a measure of our profitability. Gross profit was £3.5m. for the year ended on 30 June 2016. The KPIs used by the Group are Trading EBITDA, variance in revenue and gross profit. Management review these on a regular basis, largely by reference to budgets and reforecasts. Trading EBITDA was a loss of £0.6m for the year ended on June 2016, and it was a profit of £1.1m for the year ended in June 2015.

Earnings before tax, interest, amortisation, depreciation, share compensation expense and impairment of assets (Trading EBITDA) measured exactly as stated. All tax, interest, amortisation, depreciation, share compensation expense and impairment of assets entries in the income statement are added back to profit after tax in calculating this measure.

Growth in revenue is a measure of how we are building our business. Our goal is to achieve year-on-year growth. Although revenue decreased 56% during the year, like-for-like revenue on a constant currency basis actually decreased by 45%.

Gross profit as a percentage of revenue is a measure of our profitability. Gross profit was 27.6% for the year ended in June 2016, an increase of 1.2% (2015: 26.4%).

Strategy

Our business model is generating revenues though relationships with mobile operators and content aggregators and retailing directly to the consumer. Mobile Streams have developed expertise in selling content to consumers in developing markets. Our results have suffered from the currency issues described.

Mobile Streams has focused on three main objectives in its recent business trading: expansion into India; stabilisation of its Latin American business primarily in Argentina; and seeking to minimise net cash outflow. Generally, we have sought to invest the gross profits from our Argentine operations into developing the India business whilst seeking to maintain cash balances around the current levels. As previously announced, in Argentina revenues in the last financial year were in part adversely impacted by the devaluation of the Argentine peso in December 2015 as well as a wider slowdown in the mobile subscription business in the local market.

In India, we formed Mobile Streams India Private Limited in October 2015 to enable Mobile Streams to sign agreements with Indian mobile network operators (MNOs), device manufacturers (OEM) and other third parties. As per the strategy in Latin America, the focus is very much on the recurrent revenue generating subscription service in India, with daily and weekly packages both being trialed. Our Mobilegaming.com service was launched in February 2016 with the top three Indian mobile operators with marketing campaigns coordinated by the same team responsible for the success we have had in the Latin America region over the past several years. Active subscriber numbers are steadily growing and now exceed 75,000 in India. Active subscribers are measured as consumers who have made a purchase from the Company in the country in the past 60 days. For like-for-like comparability, this is the same methodology the Group uses to measure subscribers in its other markets such as Argentina.

Principal risks and uncertainties

The nature of the Group's business and strategy makes it subject to a number of risks.

The Directors have set out below the principal risks facing the business.

STRATEGIC REPORT

Contracts with Mobile Network Operators (MNOs)

While Mobile Streams maintains relationships with numerous MNOs in the various territories, a small number of operators account for a high portion of the Group's business.

Contracts with rights holders

The majority of content provided by Mobile Streams is licensed from rights holders. While Mobile Streams is not dependent on any single rights holder for its entertainment content, termination, non-renewal or significant renegotiation of a contract could result in lower revenue.

The Group continues to enter into new content licensing arrangements to mitigate these risks.

Competition

Competition from alternative providers could adversely affect operating results through either price pressures, or lost custom. Products and pricing of competitors are continuously monitored to ensure the Group is able to react quickly to changes in the market.

Fluctuations in currency exchange rates

Approximately 99% of the Group's revenue relates to operations outside the UK. The Group is therefore exposed to foreign currency fluctuations and the financial condition of the Group may be adversely impacted by foreign currency fluctuations. See note on page 9 "Financial risk management objectives and policies".

The Group has operations in Europe, Asia Pacific, North America and Latin America and recently in India. As a result, it faces both translation and transaction currency risks.

Currency exposure is not currently hedged, though the Board continuously reviews its foreign currency risk exposure and potential means of combating this risk.

Dependencies on key executives and personnel

The success of the business is substantially dependent on the Executive Directors and senior management team.

The Group has incentivised all key and senior personnel with share options and has taken out a Key Man insurance policy on its Chief Executive Officer, Simon Buckingham.

Intellectual property rights

The protracted and costly nature of litigation may make it difficult to take a swift or decisive action to prevent infringement of the Group's intellectual property rights.

Although the Directors believe that the Group's content and technology platform and other intellectual property rights do not infringe the IP rights of others, third-parties may assert claims of infringement which could be expensive to defend or settle. The Group holds suitable insurance to reduce the risk and extent of financial loss.

Technology risk

A significant portion of the future revenues are dependent on the Group's technology platforms. Instability or interruption of availability for an extended period could have an adverse impact on the Group's financial position.

Mobile Streams has invested in resilient hardware architecture and continues to maintain software control processes to minimise this risk.

STRATEGIC REPORT

Management controls and reporting procedures and execution

The ability of the Group to implement its strategy in a competitive market requires effective planning and management control systems. The Group's future growth will depend upon its ability to expand whilst improving exposure to operational, financial and management risk.

Going concern risk

The current uncertain economic climate and changing market place may impact the Group's cash flows and thereby its ability to pay its creditors as they fall due.

A principal responsibility of management is to manage liquidity risk, as detailed in note 24 to the financial statements. The Group uses annual budgeting, forecasting and regular performance reviews to assess the longer term profitability of the Group and make strategic and commercial changes as required ensuring cash resources are maintained. Although there was a significant fall in revenues and a loss for the year ending 30 June 2016, having initiated significant cost saving actions after the end of the reporting period (see note 25) and reviewed the resulting cash flow forecasts for the 12-month period from date of approval of these Financial Statements, the Directors have a reasonable expectation that the Group has sufficient resources to continue in operational existence for the foreseeable future.

Financial risk management objectives and policies

The Group uses various financial instruments. These include cash and various items, such as trade receivables and trade payables that arise directly from its operations. The numerical disclosures relating to these policies are set out in notes to the financial statements.

The existence of these financial instruments exposes the Group to a number of financial risks, which are described in more detail below. The Group does not currently use derivative products to manage foreign currency or interest rate risks.

The main risks arising from the Group's financial instruments are market risk, currency risk, liquidity risk and credit risk. The Directors review and agree policies for managing each of these risks and they are summarised below. These policies have remained unchanged from previous periods.

Market risk

Market risk encompasses three types of risk, being currency risk, fair value interest rate risk and price risk. In this review interest rate and price risk have been ignored as they are not considered material risks to the business.

Liquidity risk

The Group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably.

The Group currently has no borrowing arrangements in place and prepares cash flow forecasts which are reviewed at Board meetings to monitor liquidity.

STRATEGIC REPORT

Credit risk

The Group's principal financial assets are bank deposits, cash and trade receivables. The credit risk associated with the bank deposits and cash is limited as the counterparties have high credit ratings assigned by international credit-rating agencies. The principal credit risk arises therefore from the Group's trade receivables. Most of the Group's trade receivables are large mobile network operators or media groups. Whilst historically credit risk has been low management continuously monitors its financial assets and performs credit checks on prospective partners.

The Argentina Division delivered a decreased revenue performance according to the projections. The division represented 88% of the revenues of the Group.

Argentina revenue decreased 45% in Argentine Pesos terms; from AR$343 Million to AR$188 Million; but the reported British Pound figures shows a 56% decrease in revenue; from £25.3m to £11.2m.

Future developments

Looking ahead to the remainder of 2016 and beyond, our primary objectives are to secure mobile billing with the leading seven or eight mobile operators in India, progressively increase marketing spend to grow the subscriber base, enhance our content and service offer by partnering with local Indian companies and launching our browser based (utilising HTML5) games service to become the leading destination for games in India. Mobile Streams has recently gone live with a fourth carrier billing connection in India, extending our addressable audience to around 700 million potential mobile users. The Indian mobile market is growing rapidly, the entrance of Reliance Jio 4G network into the market this year and the upcoming spectrum auction means the primary obstacle of poor data connectivity is being addressed.

The Company sees potential for browser based gaming in both Latin America and India. This HTML5 content works well across all devices including Android, Apple, Tizen and Windows Phone. Devices in emerging markets often have limited memory capable to store downloadable applications so browser based gaming is attractive in the region. Browser based content is not available from Google Play and the App Store, providing differentiation from these competing offerings.

The Strategic Report, encompassing pages 4 to 10, was approved by the Board and signed on its behalf by:

STRATEGIC REPORT

Enrique Benasso

Chief Financial Officer

DIRECTORS' REPORT

The principal activity of the Group is the sale of content for distribution on mobile devices. The Company is registered in England and Wales under company number 03696108.

Results and dividends

The trading results and the Group's financial position for the year ended 30 June 2016 are shown in the attached financial statements, and are discussed further in the Strategic Report.

The Directors have not proposed a dividend for this year (2015: £nil).

Directors and their interests

The present membership of the Directors of the Company (the "Board" or the "Directors"), together with their beneficial interests in the ordinary shares of the Group, is set out below. All Directors served on the Board throughout the year.

DIRECTORS' REPORT

Options

The table below summarises the exercise terms of the various options over ordinary shares of £0.002 (year ended 30 June 2015: £0.002) which have been granted and were still outstanding at 30 June 2016.

The remuneration of each of the Directors for the period ended 30 June 2015 is set out below:

Benefits comprise medical health insurance.

Events after the reporting period

Subsequent to the end of the reporting period, in response to the fall in revenues and the loss incurred for the year ending 30 June 2016, the group initiated a significant restructuring and cost cutting exercise to bring running costs in line with current levels of revenue. These actions include bringing staff numbers down to 14 from 23 in Argentina, closing the Hong Kong office and reducing office space, server and fees for professional services. The cost of implementing these changes is expected to be approximately £0.27m.

DIRECTORS' REPORT

Going Concern

The Group had cash balances of £1.4m at the year-end (2015: £2.1m) and no borrowings. Although there was a significant fall in revenues and a loss for the year ending 30 June 2016, having initiated significant cost saving actions after the end of the reporting period (see note 25) and reviewed the resulting cash flow forecasts for the 12-month period from date of approval of these Financial Statements, the Directors have a reasonable expectation that the Group has sufficient resources to continue in operational existence for the foreseeable future. The Board consider Mobile Streams to be a going concern. No material uncertainties or events that may cast significant doubt about the ability of the Group to continue as a going concern have been identified by the Directors.

Directors' responsibilities statement

The Directors are responsible for preparing the Strategic Report, the Director's Report and the Financial Statements in accordance with applicable laws and regulations.

Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare the parent company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable laws) including FRS 101 Reduced disclosure Framework, and the consolidated accounts in accordance with International Financial Reporting Standards as adopted by the European Union (IFRS). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs and profit or loss of the Company and Group for that period. In preparing these financial Statements, the Directors are required to:

· Select suitable accounting policies and then apply them consistently.

· Make judgments and estimates that are reasonable and prudent.

· State whether applicable UK Accounting Standards and lFRSs have been followed. subject to any

material departures disclosed and explained in the financial statements, and

· Prepare the financial statements on the going concern basis unless it is inappropriate to presume that

the Group and the parent Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and parent Company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and the parent Company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of both the Group and the parent Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors confirm that

· So far as each Director is aware, there is no relevant audit information of which the Company's auditor

is unaware, and

· The Directors have taken all steps that they ought to have taken to make themselves aware of any

relevant audit information and to establish that the auditor is aware of that information.

This confirmation is given pursuant to section 418 of the Companies Act 2006 and should be interpreted in accordance with and subject to those provisions.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Group's website Legislation in the United Kingdom governing the preparation and Dissemination of financial statements may differ from legislation in other jurisdictions.

Auditor

Grant Thornton UK LLP has indicated their willingness to continue in office, and a resolution that they be re-appointed will be proposed at the annual general meeting.

On behalf of the Board

Enrique Benasso

Chief Financial Officer

We have audited the consolidated financial statements of Mobile Streams Plc for the year ended 30 June 2016 which comprise the accounting policies, the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of changes in equity, the consolidated cash flow statement and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.

Respective responsibilities of Directors and auditor

As explained more fully in the Directors' Responsibilities Statement, the Directors are responsible for the preparation of the consolidated financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the consolidated financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.

Scope of the audit of the financial statements

A description of the scope of an audit of financial statements is provided on the FRC's website at https://www.frc.org.uk/auditscopeukprivate

Opinion on financial statements

In our opinion the consolidated financial statements:

give a true and fair view of the state of the group's affairs as at 30 June 2016 and of its loss for the year then ended;

have been properly prepared in accordance with IFRSs as adopted by the European Union; and

have been prepared in accordance with the requirements of the Companies Act 2006.

Opinion on other matter prescribed by the Companies Act 2006

In our opinion the information given in the Strategic Report and the Directors' Report for the financial period for which the group financial statements are prepared is consistent with the group financial statements.

Matters on which we are required to report by exception

We have nothing to report in respect of the following:

Under the Companies Act 2006 we are required to report to you if, in our opinion:

certain disclosures of Directors' remuneration specified by law are not made; or

we have not received all the information and explanations we require for our audit.

Other matters

We have reported separately on the parent company financial statements of Mobile Streams Plc for the year ended 30 June 2016

.

Christopher Smith

Senior Statutory Auditor

for and on behalf of Grant Thornton UK LLP

Statutory Auditor, Chartered Accountants

London

ACCOUNTING POLICIES

Summary of significant accounting policies

Basis of preparation

The Group financial statements consolidate those of the parent company and all of its subsidiary undertakings drawn up to 30 June 2016. They have been prepared in accordance with applicable International Financial Reporting Standards as adopted by the EU and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. 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.

Consolidation

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.

Intercompany 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.

The separate financial statements and related notes of the Company are presented on pages 50-56, which are prepared in accordance with FRS 101.

Foreign currency translation

(a) Presentational currency

The consolidated and parent company financial statements are presented in British pounds. The functional currency of the parent entity is also British pounds.

(b) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the date the transaction occurs. Any exchange gains or losses resulting from these transactions and the translation of monetary assets and liabilities at the balance sheet date are recognised in the income statement, except to the extent that a monetary asset or liability represents a net investment in a subsidiary when exchange differences arising on translation are recognised in equity within the translation reserve. Amount due from or to subsidiaries are treated as part of net investment in the subsidiary when settlement is neither planned nor likely to occur in the foreseeable future.

Foreign currency balances are translated at the year-end using exchange rate prevailing at the year-end.

ACCOUNTING POLICIES

(c) Group companies

The financial results and position of all group entities that have a functional currency different from the presentation currency of the Group 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 the balance sheet

ii income and expenses for each income statement are translated at average exchange rates (unless it is not a reasonable approximation to the exchange rate at the date of transaction)

iii all resulting exchange differences are recognised as a separate component of equity (cumulative translation reserve)

Property, plant and equipment

All property, plant and equipment (PPE) is 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 its estimated useful life. The following rates and methods have been applied:

Each asset's residual value and useful life is 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 recognised in the income statement.

ACCOUNTING POLICIES

Going Concern

The Group had cash balances of £1.4m at the year-end (2015: £2.1m) and no borrowings. Although there was a significant fall in revenues and a loss for the year ending 30 June 2016, having initiated significant cost saving actions after the end of the reporting period (see note 25) and reviewed the resulting cash flow forecasts for the 12-month period from date of approval of these Financial Statements, the Directors have a reasonable expectation that the Group has sufficient resources to continue in operational existence for the foreseeable future. The Board consider Mobile Streams to be a going concern. No material uncertainties or events that may cast significant doubt about the ability of the Group to continue as a going concern have been identified by the Directors.

Standards and Amendments to existing standards effective 1 July 2015

In issue but not effective for periods commencing on 1 July 2015

New standards and interpretations currently in issue (as at 11 August 2016) but not effective, based on EU mandatory effective dates, for accounting periods commencing on 1 July 2015 are:

New standards and interpretations currently in issue (as at 11 Aug 2016) but not effective, based on EU mandatory effective dates, for accounting periods commencing on 1 July 2015 are: 

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. 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) Assets acquired through business combinations

These consist of customer relationships, technology based assets and non-compete agreements acquired through business combinations. To meet this definition, the intangibles must be identifiable either by being separable, or by arising from contractual or other legal rights. Intangibles acquired through business combinations are recognised at fair value. Where a reliable estimate of useful life of the intangible can be obtained, the intangible asset is to be amortised using the straight line basis, over the useful life. Where there is an indication of impairment of intangibles, the intangible will be tested for impairment. The estimated useful lives of these assets are:

 (c) Media content and Media platform development

Media content and Media platform development represent intangible assets that have been acquired from third parties and also that are internally generated, including capitalised direct staff costs. Content and platform expenditure is charged against income in the year in which it is incurred unless it meets the recognition criteria of IAS 38 Intangible Assets. To meet the criteria of an intangible asset the Group must demonstrate the following criteria:

- the technical feasibility of completing the asset so that it will be available for use,

- its intention to complete the intangible (or sell it),

- its ability to use or sell the intangible,

- that the intangible will generate future economic benefit,

- that adequate resources are available to complete the intangible, and

- the expenditure can be reliably measured.

Intangible assets, if capitalised, are amortised on a straight-line basis over the period of the expected benefit. Amortisation commences when the asset is ready for use.

ACCOUNTING POLICIES

(d) Appitalism

Appitalism development represents intangible assets that have been internally generated, including capitalised direct staff costs. To meet the intangible asset criteria the group must demonstrate the technical feasibility of completing the asset so that it will be available for use, its intention to complete the intangible (or sell it), its ability to use or sell the intangible, that the intangible will generate future economic benefit, adequate resources to complete the intangible and the expenditure can be reliably measured. Intangible assets, if capitalised, are amortised on a straight line basis, and reviewed annually for indicators of impairment.

 (e) Software

Software represents assets that have been acquired from third parties. To meet the criteria for recognition the intangible asset must be both identifiable and either separable, or arise from contractual or other legal rights. Intangible assets acquired from third parties are stated at cost less accumulated amortisation and impairment losses. Where a reliable estimate of useful life of the intangible can be obtained, the intangible asset is to be amortised using the straight line basis, over the useful life. Where there is an indication of impairment of intangible assets with a definite life, the intangible will be tested for impairment. The estimated useful life of acquired software is 2 years.

Amortisation is included in "Administrative expenses" in the income statement.

Impairment of assets

Assets that have an indefinite useful life, such as goodwill, are not subject to amortisation, but are instead tested annually for impairment and also tested whenever an event or change in situation indicates 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 indicates 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).

Impairment charges are included in the "Administrative expenses" in the income statement.

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 the 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 tax on temporary differences associated with shares in subsidiaries is not provided if reversal of these temporary differences can be controlled by the Group and it is probable that reversal will not occur in the foreseeable future.

Deferred income tax is determined using tax rates known by the balance sheet date and that 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. There is no discounting of assets or liabilities.

Changes in deferred tax assets or liabilities are recognised as a component of the tax expense in the income statements, except where they relate to items that are charged or credited directly to equity or other comprehensive income, in which case the related deferred tax is also charged or credited directly to equity or other comprehensive income.

ACCOUNTING POLICIES

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 can be reliably estimated.

Provisions are measured at the present value of management's 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 risks specific to the liability.

Financial Assets

a) Cash and cash equivalents

Cash and cash equivalents include cash on hand, demand deposits held with financial institutions and other short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

b) Trade and other receivables

Trade receivables are included in trade and other receivables in the balance sheet. Trade receivables are recognised initially at fair value and later measured at amortised cost using the effective interest method, less any provision for impairment. An impairment provision for trade receivables is established when there is objective evidence that 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 original effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the income statement. Subsequent recoveries of amounts previously written off are credited in the income statement

Financial Liabilities

Financial liabilities are obligations to pay cash or deliver other financial assets and are recognised when the Group becomes a party to the contractual provisions of the instrument. All financial liabilities are recorded initially at fair value, net of direct issue costs.

A financial liability is derecognised only when the obligation is extinguished, that is, when the obligation is discharged or cancelled or expires.

The Group's financial liabilities consist of trade and other payables, which are measured subsequent to initial recognition at amortised cost using the effective interest rate method. 

All interest-related charges are reported in the income statement as finance costs.

Revenue recognition

As at 30 June 2016, the Group was organised into four geographical segments: Europe, North America, Latin America, and Asia Pacific. Revenues are from external customers only and are generated from three principal business activities: the sale of mobile content through Mobile Operator Services (Mobile Operator Sales), the sale of mobile content over the internet (Mobile Internet Sales) and the provision of consulting and technical services (Other Service Fees).

ACCOUNTING POLICIES

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) Mobile Operator Sales & Mobile Internet Sales

Revenue from the sale of goods is recognised when a Group entity has delivered media content to the end consumer, who has accepted the product and collectability of the related receivable is reasonably assured from the customer.

b) Other Service Fees

Revenue is recognised in the accounting period in which the services are rendered, by reference to the stage of 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 using the effective interest method. If the collection of interest is considered doubtful, it is deferred and excluded from interest income in the income statement.

d) Deferred Income

Revenue that has been collected from customers but where the above conditions are not met is recorded in the Statement of Financial Position under accruals and deferred income and released to the income statement when the conditions are met.

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').

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 model.

The cost of equity-settled transactions is recognised in the income statement, together with a corresponding increase in retained earnings, 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. Market conditions are taken into account in determining the fair value of the options granted, at grant date, and are subsequently not adjusted for. 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.

Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are charged to the share premium account.

ACCOUNTING POLICIES

Leased assets

In accordance with IAS 17, all the Group's leases are determined to be operating leases and the payments made under them are charged to the income statement on a straight line basis over the lease term. Lease incentives are spread over the term of the lease.

Operating leases are leases in which the risks and rewards of ownership are not transferred to the lessee.

a) Called up share capital

Called up share capital represents the aggregate nominal value of ordinary shares in issue.

b) Share premium

The share premium account represents the incremental paid up capital above the nominal value of ordinary shares issued.

c) Translation Reserve

The translation reserve represents the cumulative translation adjustments on translation of foreign operations. Please refer to the page 30 for the judgment and estimates disclosure.

The financial statements were approved by the Board of Directors on 9 November 2016 and are signed on its behalf by:

Enrique Benasso

Chief Financial Officer

1. General information

Mobile Streams Plc (the Company) and its subsidiaries (together 'the Group') sell digital content, primarily for distribution on wireless devices. The Group has subsidiaries 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 and domiciled in the United Kingdom. The address of its registered office is 125 Wood Street, London, EC2V 7AW.

The Company is listed on the London Stock Exchange's Alternative Investment Market.

These consolidated financial statements have been approved for issue by the Board of Directors on 9 November 2016.

2. 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.

2.1 Critical accounting estimates, judgements 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.

Estimates

 (a) Accrued revenue and accrued content costs

Estimation is required by management to determine the value of accrued revenue and accrued content cost liability which is based on the content delivery to its customers. Due to the timing of confirmation of delivery of content to its customers from the service providers, management estimation is applied to determine the level of accrued revenue and accrued content liability to be recognised within the financial statements until confirmation is received.

Judgement

(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) Deferred taxation

Judgement is required by management in determining whether the Group should recognise a deferred tax asset. Management consider whether there is sufficient certainty its tax losses available to carry forward will ultimately be offset against future earnings, this judgement impacts on the degree to which deferred tax assets are recognised (see note 17).

3. Services provided by the group's auditor and network firms

4. Operating (loss)/profit

5. Finance income

6. Finance EXPENSE

7. Directors' and Officers' remuneration

The Directors are regarded as the key management personnel of Mobile Streams Plc.

Charges in relation to remuneration received by key management personnel for services in all capacities during the Year ended 30 June 2016 are as follows:

8. Directors and employees

Staff costs during the year were as follows:

The average number of employees during the year to June 2016 was as follows:

9. (LOSS)/EARNINGS PER SHAREBasic (loss)/earnings per share is calculated by dividing the (loss) or profit attributable to equity holders of the company by the weighted average number of ordinary shares in issue during the period. The options this year are not-dilutive as loss-making.

Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below.

For year ended 30 June 2016, 3.17m (2015: 2.33m) potential ordinary shares has been excluded from the calculations of earnings per share as they are anti-dilutive.

The adjusted EPS has been calculated to reflect the underlying profitability of the business by excluding non-cash charges for depreciation, amortisation, impairments and share compensation charges.

10. income tax expense

The tax charge is based on the profit before tax for the year and represents:

11. DIVIDENDS

No dividends were paid or proposed during the current year or prior year.

12. PROPERTY, PLANT AND EQUIPMENT

13. Goodwill AND INTANGIBLE ASSETS

The Group impaired in full the remaining value of goodwill attributable to Mobile Streams (Hong Kong) Limited and its subsidiaries in Singapore and Australia which make up the Asia Pacific operating segment at June 2014.

Other intangible assets

Mobile Streams' other intangible assets comprised acquired customer relationships, technology based assets and non-compete agreements. These assets are fully amortised.

14. Trade and other receivables

The carrying value of receivables is considered a reasonable approximation of fair value.

In addition, some of the unimpaired trade receivables are past due as at the reporting date. The age profile of trade receivables is as follows: