Last checked at 24 Mar 2010 07:00
24th March 2010
Mobile Streams plc
("Mobile Streams" the "Group")
Final results for the year ended 31 December 2009
Mobile Streams Plc (AIM: MOS), a leading global distributor of mobile content, is pleased to report another year of positive EBITDA*.
Financial highlights
·; Positive EBITDA* of £0.1m (2008: £0.2m) despite operator market decline
·; Full year revenues of £7.1m (-16% compared to 2008), H2 09 revenues were £3.5m (-8% from 2008)
·; Gross margin improvement to 50.5% (2008: 48.2%)
·; Selling, marketing and administrative expenses decreased by £0.4m
·; Significant reduction in operating losses to £1.3m (2008: £2.4m)
·; Cash reserves of £1.7m (2008: £2.3m) and no debt
Operational highlights
·; Expansion of mobile internet business
·; Launch of dedicated mobile apps development centre in Hong Kong
·; Increase in library of mobile content and distribution partners
·; Completion of enhancements to content delivery platform
Simon Buckingham, CEO of Mobile Streams, commented: "Despite a year dominated by the severe global recession and a sea change in the mobile content market, Mobile Streams has delivered a strong set of results.
During 2009 we continued to drive our traditional services to mobile operators, whilst also refocusing our growing mobile internet retailing efforts. We concentrated on achieving low customer acquisition costs and repeat subscription business whilst expanding these services into our other primary geographic regions. These efforts have resulted in our reporting of consistent gross profit earnings for three consecutive half year periods.
The current year has begun well and the Board expects the industry trends of 2009 to carry over into 2010. We anticipate further declines in high-volume/low margin operator services will be offset by growth in higher margin mobile internet and mobile applications services. We look forward to updating the market as we further develop the business in the coming months."
*Calculated as profit before tax, interest, amortisation, depreciation, share compensation expense and impairment of assets.
For further enquiries, please contact
Enquires:
Mobile Streams +44 (0)1442 560029
Simon Buckingham, Chief Executive Officer
Ian Brewer, Chief Financial Officer
Nominated Adviser
Grant Thornton Corporate Finance +44 (0)20 7383 5100
Philip Secrett
Broker
Singer Capital Markets Limited +44 (0)20 3205 7500
Jeff Keating
OPERATING REVIEW
In 2009, the Group made significant progress replacing mobile operator margin by developing its mobile internet business and repositioning resources across the Group to support that development.
Mobile operator
The combination of growth in the mobile internet market and tighter legislation again impacted our mobile operator business in 2009 as we had expected. Revenue in Europe decreased substantially, however our USA and Latin America regions saw a much smaller decline, while Asia saw an increase in revenues.
During 2009 we enhanced our content delivery platform, MultiMobi (formerly Vuesia), by adding new services like Intelli-proxy and Wrapper technology. The platform improvements have enabled us to deliver content in more ways and with more flexibility to meet operator demands.
Mobile internet
During 2009 the Group continued to grow its mobile retailing business by launching additional services and expanding geographically.
In May we announced the launch of our flagship mobile internet store, ringtones.com, in the US. This service has allowed customers in the US to have access to our extensive library of content, delivered via the MultiMobi platform.
In August we reported on the launch of a portfolio of subscription-based content clubs in Argentina which give subscribers access to a number of content channels. This initiative has proven highly successful with subscriber levels having grown substantially month on month.
Our Hong Kong-based Smartphone R&D Centre was established in August 2009. The division is responsible for the development of apps for Apple iPhone and Google Android as well as feature phones. These include apps developed for customers as well as proprietary apps. In addition we provide distribution services for network operators, such as the two Google Android game storefronts we launched for partners in Singapore and Australia.
The proliferation of app creators, developers, marketers and stores has made the monetisation of apps through efficient promotion and distribution across multiple platforms essential. With its global reach, content depth, technical expertise and strong partnerships, Mobile Streams is in a unique position to generate revenues from providing a number of services in this area.
Outlook
The current year has begun well and the Board expects the industry trends of 2009 to carry over into 2010. It is anticipated that further declines in high-volume/low margin operator services will be offset by growth in higher margin mobile internet and mobile applications services. The Board looks forward to updating the market on further developments of the business in the coming months.
FINANCIAL REVIEW
6 months ended 31 December 2009
Gross profits for the second half of 2009 were £1.8m, in line with the same period last year despite revenues declining 8% to £3.5m. Gross margin was 51%, up from 47% last year.
Year ended 31 December 2009
Group revenue in 2009 was £7.1m, a 16% decrease on 2008 (£8.4m). The Group generated a profit of £0.1m (2008: £0.2m) at trading EBITDA* level. Loss before tax was £1.3m (2008: £2.3m).
Gross margin improved to 50.5% (2008: 48.2%) reflecting the proportionate shift in business toward higher margin mobile internet revenues.
Selling, marketing and administrative expenses reduced by £0.4m to £3.5m (2008: £3.9m) as a result of further cost reduction initiatives during the year and a reduction in mobile internet content marketing spend.
Loss before taxation included £0.5m (2008: £0.8m) of non-cash impairment charges relating the write down of intangible assets.
The Group had net cash outflows from operations of £0.5m (2008: inflow £0.5m) due mainly to the settlement of prior year tax liabilities and movements in working capital. Capital expenditure of £0.1m was significantly less than 2008 (£0.4m) as the development of the MultiMobi platform reached conclusion.
Basic loss per share more than halved to 3.320 pence per share (2008: 6.945 pence) due to the reduction in losses.
Adjusted profit per share (excluding depreciation, amortisation, impairments and share compensation expense) improved to 0.502p (2008: profit of 0.177p).
*Calculated as profit before tax, interest, amortisation, depreciation, share compensation expense and impairment of assets.
Financial Statements for the year ended 31 December 2009
Consolidated INCOME STATEMENT
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| Notes | 2009 | 2008 |
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| £000's | £000's |
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| Revenue |
| 7,112 | 8,422 |
| Cost of sales |
| (3,521) | (4,365) |
| Gross profit |
| 3,591 | 4,057 |
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| Selling and marketing costs |
| (197) | (370) |
| Administrative expenses |
| (3,281) | (3,484) |
| Depreciation, amortisation and impairment |
| (1,344) | (2,621) |
| Share based compensation |
| (42) | 48 |
| Operating loss |
| (1,273) | (2,370) |
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| Finance income |
| 15 | 64 |
| Loss before income tax |
| (1,258) | (2,306) |
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| Income tax credit/(expense) |
| 54 | (203) |
| Loss for the year |
| (1,204) | (2,509) |
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Attributable to: |
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| Attributable to equity shareholders of Mobile Streams Plc | (1,204) | (2,509) | |
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| Total and continuing (loss)/earnings per share
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| Pence per share | Pence per share |
| Basic and diluted loss per share | 3 | (3.320) | (6.945) |
| Adjusted earnings per share | 3 | 0.502 | 0.177 |
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Consolidated STATEMENT OF COMPREHENSIVE INCOME
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| 2009 | 2008 |
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| £000's | £000's |
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| Loss for the year |
| (1,204) | (2,509) |
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| Exchange differences on translating foreign operations |
| 292 | (343) |
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| Other recognised gains and losses |
| - | - |
| Total comprehensive income for the year |
| (912) | (2,852) |
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| Attributable to equity shareholders of Mobile Streams plc |
| (912) | (2,852) |
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
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| 2009 | 2008 |
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| £000's | £000's |
| Assets |
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| Non-current |
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| Goodwill |
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| 714 | 977 |
| Intangible assets |
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| 331 | 910 |
| Property, plant and equipment |
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| 79 | 203 |
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| 1,124 | 2,090 |
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| Current |
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| Trade and other receivables |
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| 1,725 | 2,153 |
| Cash and cash equivalents |
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| 1,659 | 2,260 |
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| 3,384 | 4,413 |
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| Total assets |
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| 4,508 | 6,503 |
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| Equity |
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| Equity attributable to equity holders of Mobile Streams Plc |
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| Called up share capital |
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| 73 | 73 |
| Share Premium |
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| 10,310 | 10,310 |
| Translation reserve |
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| (233) | (525) |
| Merger Reserve |
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| 153 | 635 |
| Retained earnings |
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| (9,238) | (8,558) |
| Total equity | 1,065 | 1,935 | ||
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| Liabilities |
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| Non-current |
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| Deferred tax liabilities |
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| 38 | 63 |
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| Current |
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| Trade and other payables |
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| 3,239 | 3,827 |
| Provisions |
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| 82 | 287 |
| Current tax liabilities |
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| 84 | 391 |
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| 3,405 | 4,505 |
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| Total liabilities |
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| 3,443 | 4,568 |
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| Total equity and liabilities |
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| 4,508 | 6,503 |
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
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| Equity attributable to equity holders of Mobile Streams Plc | ||||||
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| Called up share capital | Share premium | Shares to be issued | Trans-lation reserve | Retained earnings | Merger reserve | Total Equity |
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| £000's | £000's | £000's | £000's | £000's | £000's | £000's |
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| Balance at 1 January 2008 | 71 | 10,468 | 479 | (182) | (6,001) | - | 4,835 |
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Employee share based compensation | - | - | - | - | (48) | - | (48) |
| Shares issued | 2 | - | (479) | - | - | 477 | - |
| Transfer to Merger Reserve | - | (158) | - | - | - | 158 | - |
| Transactions with owners | 2 | (158) | (479) | - | (48) | 635 | (48) |
| Loss for the year | - | - | - | - | (2,509) | - | (2,509) |
| Exchange differences on translation of foreign operations | - | - | - | (343) | - | - | (343) |
| Total comprehensive income for the year | - | - | - | (343) | (2,509) | - | (2,852) |
| Balance at 31 December 2008 | 73 | 10,310 | - | (525) | (8,558) | 635 | 1,935 |
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| Balance at 1 January 2009 | 73 | 10,310 | - | (525) | (8,558) | 635 | 1,935 |
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| Employee share based compensation | - | - | - | - | 42 | - | 42 |
| Transfer to Retained Earnings | - | - | - | - | 482 | (482) | - |
| Transactions with owners | - | - | - | - | 524 | (482) | 42 |
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| Loss for the year | - | - | - | - | (1,204) | - | (1,204) |
| Exchange differences on translation of foreign operations | - | - | - | 292 | - | - | 292 |
| Total comprehensive income for the year | - | - | - | 292 | (1,204) | - | (912) |
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| Balance at 31 December 2009 | 73 | 10,310 | - | (233) | (9,238) | 153 | 1,065 |
CONSOLIDATED CASH FLOW STATEMENT
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| 2009 | 2008 |
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| £000's | £000's |
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| Cash flows from operating activities |
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| Loss before taxation |
| (1,258) | (2,509) |
| Adjustments : |
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| Share based payments |
| 42 | (48) |
| Depreciation |
| 162 | 252 |
| Amortisation |
| 722 | 1,559 |
| Impairment of intangibles and goodwill |
| 460 | 291 |
| Impairment of assets held for sale |
| - | 519 |
| Loss on disposal of fixed assets and intangible assets |
| 18 | - |
| Interest received |
| (15) | (64) |
| Changes in trade and other receivables |
| 404 | 1,095 |
| Changes in trade and other payables |
| (793) | (456) |
| Total cash (utilised in)/generated by operating activities |
| (258) | 639 |
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| Income tax paid |
| (254) | (108) |
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| Net cash from operating activities |
| (512) | 531 |
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| Cash flows from investing activities |
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| Additions to property, plant and equipment |
| (5) | (58) |
| Additions to other intangible assets |
| (103) | (307) |
| Interest received |
| 15 | 64 |
| Total cash flows from investing activities |
| (93) | (301) |
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| Net change in cash and cash equivalents |
| (605) | 230 |
| Cash and cash equivalents at beginning of year |
| 2,260 | 2,301 |
| Exchange gains/(losses) on cash and cash equivalents |
| 4 | (271) |
| Cash and cash equivalents at end of year |
| 1,659 | 2,260 |
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Notes to company financial statements
1. BASIS OF PREPARATION
The final results of Mobile Streams plc have been prepared in accordance with the recognition and measurement principals of International Financial Reporting Standards ("IFRS") in issue as adopted by the European Union and effective at 31 December 2009. These statements do not constitute the group's statutory financial statements for the years ended 31 December 2009 or 2008. The financial information for the year ended 31 December 2008 is derived from the statutory accounts for that year which have been delivered to the Registrar of Companies. The auditors reported on those accounts; their report was not qualified and did not include a statement under section 237(2) or (3) of the Companies Act 1985. The statutory accounts for the year ended 31 December 2009 will be finalised on the basis of the financial information presented by the directors in this announcement and will be delivered to the Registrar of Companies.
2. Segment reporting
The Group adopted IFRS 8 Operating Segments during the year. This has changed the segments disclosed in the financial statements. In the previous annual financial statements, segments were identified by reference to the dominant source and nature of the Group's risks and returns. Under IFRS 8 the accounting policy for identifying segments is now based on the internal management reporting information that is regularly reviewed by the senior management team.
As at 31 December 2009, the Group is organised into 4 geographical segments, being the primary reporting format: Europe, North America, Latin American, and Asia Pacific. Revenues are from external customers only and generated from three principal business activities: the sale of mobile content through MNO's (Mobile Operator Services), the sale of mobile content over the internet (Mobile Internet Services) and the provision of consulting and technical services (Other Service Fees).
All operations are continuing and all inter-segment transfers are priced and carried out at arm's length.
The segmental results for the year ended 31 December 2009 are as follows:
| £000's | Europe | Asia | North America | Latin America | Group |
| Mobile Operator Services | 315 | 2,604 | 1,263 | 1,330 | 5,512 |
| Mobile Internet Services | 291 | - | 234 | 265 | 790 |
| Other Service fees | 525 | 80 | 157 | 48 | 810 |
| Total Revenue | 1,131 | 2,684 | 1,654 | 1,643 | 7,112 |
| Cost of sales | (225) | (1,762) | (694) | (840) | (3,521) |
| Gross profit | 906 | 922 | 960 | 803 | 3,591 |
| Selling, marketing and administration expenses | (507) | (781) | (1,343) | (847) | (3,478) |
| EBITDA* | 399 | 141 | (383) | (44) | 113 |
| Depreciation, amortisation & impairment | (700) | (43) | (107) | (34) | (884) |
| Goodwill impairment | - | (460) | - | - | (460) |
| Share compensation expense | (42) | - | - | - | (42) |
| Finance income | 12 | 3 | - | - | 15 |
| Loss before tax | (331) | (359) | (490) | (78) | (1,258) |
| Taxation | (45) | - | - | 99 | 54 |
| (Loss)/profit after tax | (376) | (359) | (490) | 21 | (1,204) |
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| Segment assets | 4,905 | 790 | 1,854 | 1,250 | 8,799 |
| Segment liabilities | (1,081) | (1,376) | (4,854) | (2,260) | (9,571) |
| Capital expenditure | 62 | 2 | 1 | 43 | 108 |
The segmental results for the year ended 31 December 2008 were as follows:
| £000's | Europe | Asia | North America | Latin America | Group |
| Mobile Operator Services | 767 | 2,491 | 1,628 | 1,714 | 6,600 |
| Mobile Internet Services | 620 | - | 545 | 25 | 1,190 |
| Other Service fees | 600 | 2 | 1 | 29 | 632 |
| Total Revenue | 1,987 | 2,493 | 2,174 | 1,768 | 8,422 |
| Cost of sales | (725) | (1,802) | (901) | (937) | (4,365) |
| Gross profit | 1,262 | 691 | 1,273 | 831 | 4,057 |
| Selling, marketing and administration expenses | (1,146) | (737) | (1,061) | (910) | (3,854) |
| EBITDA* | 116 | (46) | 212 | (79) | 203 |
| Depreciation, amortisation & impairment | (1,893) | (72) | (620) | (36) | (2,621) |
| Share compensation credit | 48 | - | - | - | 48 |
| Finance income | 48 | 10 | 2 | 4 | 64 |
| Loss before tax | (1,681) | (108) | (406) | (111) | (2,306) |
| Taxation | (46) | 5 | (7) | (155) | (203) |
| Loss after tax | (1,727) | (103) | (413) | (266) | (2,509) |
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| Segment assets | 10,537 | 1,001 | 2,878 | 1,276 | 15,692 |
| Segment liabilities | (1,198) | (1,693) | (4,869) | (2,270) | (10,030) |
| Capital expenditure | 157 | - | 195 | - | 352 |
* Earnings before interest, tax, depreciation, amortisation and share compensation
3. LOSS PER SHARE Basic loss per share
Basic loss per share is calculated by dividing the loss attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period.
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| 31 December 2009 |
| 31 December 2008 |
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| Pence per share |
| Pence per share |
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| Basic and diluted loss per share | (3.320) |
| (6.945) |
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Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below. | |||
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| £000's |
| £000's |
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Loss for the year | (1,204) |
| (2,509) |
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| Weighted average number of shares in issue for the year | 36,268,192 |
| 36,125,445 |
Adjusted earnings per share
Adjusted earnings per share is calculated to reflect the underlying profitability of the business by excluding non-cash charges for depreciation, amortisation, impairments and share compensation charges.
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| 31 December 2009 |
| 31 December 2008 |
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| £000's |
| £000's |
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| Loss for the year | (1,204) |
| (2,509) |
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| Add back: share compensation expense/(credit) | 42 |
| (48) |
| Add back: impairment of intangibles and goodwill | 460 |
| 291 |
| Add back: depreciation and amortisation | 884 |
| 1,811 |
| Add back: impairment of assets held for sale | - |
| 519 |
| Adjusted profit for the year | 182 |
| 64 |
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| Weighted average number of shares | Number of shares |
| Number of shares |
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| For adjusted earnings per share | 36,268,192 |
| 36,125,445 |
| Exercisable share options | 958,652 |
| 771,297 |
| For diluted adjusted earnings per share | 37,226,844 |
| 36,896,742 |
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| Pence per share |
| Pence per share |
| Adjusted earnings per share | 0.502 |
| 0.177 |
| Adjusted diluted earnings per share | 0.489 |
| 0.173 |
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