Last checked at 30 Mar 2016 07:00
Mobile Streams plc
("Mobile Streams", the "Company" or the "Group")
(AIM: MOS)
Interim results - in line with management's revised expectations
Mobile Streams plc ("Mobile Streams" or the "Company") (AIM: MOS) updates its shareholders on its unaudited interim results for the six months ended 31 December 2015. These were in line with management's expectations as set out in the Company's trading update on 22 January:
· Revenues of £8.0m (£18.5m for the 6 months ended 31 December 2014). All revenue is from continuing operations;
· Mobile Internet revenues were £7.9m (6 months ended 31 December 2014: £18.1m);
· EBITDA* loss of £104k (6 months ended 31 December 2014: £313k profit);
· Post-tax loss of £321k (6 months to 31 December 2014: £302k loss); and
· £1.5m of cash and cash equivalents at 31 December 2015 (31 December 2014: £3.2m), with no debt. The company´s current cash balance is £ 1.4m.
* Earnings before interest, tax, depreciation, amortisation and share compensation ("EBITDA") is a non IFRS measure which the Group uses to assess its performance. It is defined as earnings before interest, tax, depreciation, amortisation and share compensation.
Commenting, Simon Buckingham, CEO of Mobile Streams said: "The Company has been focused on stabilising its Latin American operations in Argentina, Mexico, Colombia and Brazil. Additionally, Mobile Streams has been working to launch and grow its operations in India. Whilst still at an early stage, operations in India are proceeding along the expected lines, and the Company remains excited about the potential for this market as well as its ad funded services."
During the period under review, and subsequently, the Company has continued to deliver its strategy of launching subscription based and ad-funded Mobile Internet services in emerging markets.
In India, the Company's local subsidiary, Mobile Streams India Private Limited, has launched subscription services with billing connectivity for the three largest local mobile phone operators, reaching a potential billable audience of approximately 600 million local mobile phone users. Discussions are under way to add additional mobile billing connections in India in order to maximize the potential number of subscribers accessible through the service. The Company has been implementing its usual launch related testing and optimisation processes to establish key metrics such as the marketing acquisition costs and lifetime subscriber values associated with the market. The Company offers daily, weekly and monthly subscriptions at various price points and has been learning which business models appeal most to local consumers.
The Company's ad-funded MobileGaming.com service has been expanded into several new markets beyond the initial launches in India, Argentina and the U.S. Following the Company's trading update on 22 January 2016, this service has since launched in the Company's second largest market, Mexico, and is scheduled to launch in Colombia and Brazil shortly.
As announced on 22 January 2016, the Company has continued to develop proprietary technology to power its ad-funded games store MobileGaming.com. This includes developing a Download Manager to help consumers complete their downloads in places where the cellular coverage is variable, building a low end version of the service for older Android devices, building an installable app version of the service to supplement the mobile internet service, and further enhancing our wrapper technology. The Company has localised the service into multiple languages. We have also added several new advertisement types and mobile advertising networks and continue to work to optimize the service and customer experience.
Enquires:
Mobile Streams
Simon Buckingham, Chief Executive Officer +1 646 812 4749
Enrique Benasso, Chief Financial Officer
N+1 Singer (Nominated Adviser and Broker)
Nic Hellyer +44 20 7496 3000
Alex Price
OPERATING REVIEW
Mobile internet
During the period, we continued to invest in our mobile internet subscription services, in particular in our core Latin American markets of Argentina, Mexico, Colombia and Brazil. Additionally, we started operating services in India. The internet business has been affected mainly by such economic factors as the devaluation and consumer spending in Argentina.
Mobile operators
The mobile operator segment continued its gradual decline in revenues over the period as the Company continued to execute its strategy of building services on the open mobile internet. Consumers tend to buy less content from operator managed content services as they upgrade from traditional mobile devices to smartphones and tablets.
FINANCIAL REVIEW
For the 6 months ended 31 December 2015.
Gross profit for the six month period ended 31 December 2015 was £2.1m (2014: £5.0m). Gross margin was 25.9%, down from 26.8% in 2014.
Mobile Internet revenue has decreased by 56.2% to £7.9m (2014: £18.1m). The cost of sales on mobile internet revenue is much higher than on operator revenue because of marketing costs resulting in a lower overall gross profit margin.
The Group recorded a loss after tax of £321k for the 6 months ended 31 December 2015 (2014: loss £302k), generating a loss per share of 0.865 pence per share (2014: 0.814 pence loss per share).
Adjusted loss per share (excluding depreciation, amortisation, impairments and share compensation expense) was 0.674 pence per share (2014: 0.461 pence adjusted loss per share).
Cash and cash equivalents
The Argentine peso devalued by around 20% during December 2015, caused by the release of currency restrictions, meaning that currency can now flow freely in and out of Argentina. This policy was adopted by the country's new elected president in November 2015. Current cash balances are £ 1.4m.
The impact of the devaluation in the income statement was £ 0.1m reduction in revenue. The effect of on the balance sheet was £0.8m loss recognized in the currency translation reserve account. For the remainder of the year, the revenues in GBP will be reduced by about 20% due to the peso devaluation effect.
CONSOLIDATED INCOME STATEMENT | ||||||||||||
Unaudited | Unaudited | Audited | ||||||||||
6 months ended 31 December 2015 | 6 months ended 31 December 2014 | 12 months ended 30 June 2015 | ||||||||||
£000's | £000's | £000's | ||||||||||
Revenue | 8,033 | 18,488 | 29,063 | |||||||||
Cost of sales | (5,948) | (13,519) | (21,390) | |||||||||
Gross profit | 2,085 | 4,969 | 7,673 | |||||||||
Selling and marketing costs | (771) | (2,884) | (3,405) | |||||||||
Administrative expenses ** | (1,489) | (1,903) | (3,493) | |||||||||
Operating (Loss)/ profit | (175) | 182 | 775 | |||||||||
Finance income | 47 | 26 | 65 | |||||||||
Finance expense | (13) | - | (8) | |||||||||
(Loss)/Profit before tax | (141) | 208 | 832 | |||||||||
Tax expense | (180) | (510) | (495) | |||||||||
(Loss)/Profit for the period | (321) | (302) | 337 | |||||||||
Attributable to: | ||||||||||||
Attributable to equity shareholders of Mobile Streams Plc | (321) | (302) | 337 | |||||||||
Earning Per Share | ||||||||||||
Pence per share | Pence per share | Pence per share | ||||||||||
Basic (loss)/earnings per share | (0.865) | (0.814) | 0.908 |
| ||||||||
Diluted (loss)/earnings per share | (0.865) | (0.814) | 0.855 |
| ||||||||
* *Administrative expenses include depreciation, amortisation, impairment and share based compensation | ||||||||||||
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME | |||||||
Unaudited | Unaudited | Audited | |||||
6 months ended 31 December 2015 | 6 months ended 31 December 2014 | 12 months ended 30 June 2015 | |||||
£000's | £000's | £000's | |||||
(Loss)/profit for the period | (321) | (302) | 337 | ||||
Exchange differences on translating foreign operations | (822) | 70 | (92) | ||||
Total comprehensive (loss)/income for the period | (1,143) | (232) | 245 | ||||
Total comprehensive (loss)/income for the period attributable to: | |||||||
Equity shareholders of Mobile Streams plc | (1,143) | (232) | 245 | ||||
CONSOLIDATED STATEMENT OF FINANCIAL POSITION | ||||||||
Unaudited | Unaudited | Audited | ||||||
6 months ended 31 December 2015 | 6 months ended 31 December 2014 | 12 months ended 30 June 2015 | ||||||
£000's | £000's | £000's | ||||||
Assets | ||||||||
Non- Current | ||||||||
Intangible assets | 1 | 1 | - | |||||
Property, plant and equipment | 52 | 127 | 94 | |||||
Deferred tax asset | - | - | 285 | |||||
53 | 128 | 379 | ||||||
Current | ||||||||
Trade and other receivables | 3,307 | 5,188 | 4,016 | |||||
Cash and cash equivalents | 1,512 | 3,238 | 2,098 | |||||
4,819 | 8,426 | 6,114 | ||||||
Total assets | 4,872 | 8,554 | 6,493 | |||||
Equity | ||||||||
Equity attributable to equity holders of Mobile Streams Plc | ||||||||
Called up share capital | 74 | 74 | 74 | |||||
Share Premium | 10,579 | 10,579 | 10,579 | |||||
Translation reserve | (2,955) | (1,971) | (2,133) | |||||
Retained earnings | (5,059) | (6,334) | (4,782) | |||||
Total equity | 2,639 | 2,348 | 3,738 | |||||
Liabilities | ||||||||
Current | ||||||||
Trade and other payables | 1,607 | 4,299 | 2,090 | |||||
Current tax liabilities | 626 | 1,907 | 665 | |||||
2,233 | 6,206 | 2,755 | ||||||
Total liabilities | 2,233 | 6,206 | 2,755 | |||||
Total equity and liabilities | 4,872 | 8,554 | 6,493 | |||||
CONSOLIDATED CASH FLOW STATEMENT | |||||
Unaudited | Unaudited | Audited | |||
6 months ended 31 December 2015 | 6 months ended 31 December 2014 | 12 months ended 30 June 2015 | |||
£000's | £000's | £000's | |||
Operating activities | |||||
Profit before taxation | (141) | 208 | 832 | ||
Adjustments: | |||||
Shared based payments | 44 | 103 | 219 | ||
Depreciation | 27 | 28 | 59 | ||
Interest received | (47) | - | (65) | ||
Changes in Trade and other receivables | 709 | 1,305 | 1,983 | ||
Changes in Trade and other payables | (483) | (1,381) | (3,250) | ||
Movement in provisions | - | - | (340) | ||
Tax Paid | (219) | (271) | - | ||
Interest paid | (13) | - | - | ||
Total cash utilised in operating activities | (123) | (8) | (562) | ||
Investing Activities | |||||
Additions to property, plant and equipment | (1) | - | (49) | ||
Interest received | 47 | 26 | 65 | ||
Net Cash generated from investing activities | 46 | 26 | 16 | ||
Issue of share capital (net of expenses paid) | - | - | 39 | ||
Net Cash generated from financing activities | - | - | 39 | ||
Net change in cash and cash equivalents | (77) | 18 | (507) | ||
Cash and cash equivalents at beginning of period | 2,098 | 2,964 | 2,964 | ||
Exchange (loss)/ gain on cash and cash equivalents | (509) | 256 | (359) | ||
Cash and cash equivalents, end of period | 1,512 | 3,238 | 2,098 | ||
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | |||||
Called up share capital | Share premium | Translation reserve | Retained earnings | Total Equity | |
£000's | £000's | £000's | £000's | £000's | |
Balance at 1 July 2014 | 74 | 10,579 | (2,041) | (5,338) | 3,274 |
Credit for share based payments | - | - | - | 130 | 130 |
Transactions with owners | - | - | - | 130 | 130 |
Profit/(loss) for the 6 months ended 31 December 2014 | - | - | - | (302) | (302) |
Exchange differences on translating foreign operations | - | - | 70 | (824) | (754) |
Total comprehensive income for the period | - | - | 70 | (1,126) | (1,056) |
Balance at 31 December 2014 | 74 | 10,579 | (1,971) | (6,334) | 2,348 |
Balance at 1 January 2015 | 74 | 10,579 | (1,971) | (6,334) | 2,348 |
Credit for share based payments | - | - | - | 115 | 115 |
Transactions with owners | - | - | - | 115 | 115 |
Profit for the 6 months ended 30 June 2015 | - | - | - | 1,437 | 1,437 |
Exchange differences on translating foreign operations | - | - | (162) | - | (162) |
Total comprehensive income for the period | - | - | (162) | - | (162) |
Balance at 30 June 2015 | 74 | 10,579 | (2,133) | (4,782) | 3,738 |
Balance at 1 July 2015 | 74 | 10,579 | (2,133) | (4,782) | 3,738 |
Credit for share based payments | - | - | - | 44 | 44 |
Transactions with owners | - | - | - | 44 | 44 |
Loss for the 6 months ended 31 December 2015 | - | - | - | (321) | (321) |
Exchange differences on translating foreign operations | - | - | (822) | - | (822) |
Total comprehensive income for the period | - | - | (822) | (321) | (1,143) |
Balance at 31 December 2015 | 74 | 10,579 | (2,955) | (5,059) | 2,639 |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PREPARATION
The interim results of Mobile Streams PLC are prepared in accordance with the requirements of IAS 34 Interim Financial Reporting as adopted by the EU and prepared in accordance with the accounting policies set out in the last financial statements for the 12 months ended 30 June 2015.
The interim results, which are not audited, do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006.
The comparative financial information for the 12 months ended 30 June 2015 has been extracted from the statutory accounts for that period. In addition, the financial information for the 6 months ended 31 December 2015 has been extracted from the unaudited Interim results. The full audited accounts of the Group for the 12 months ended 30 June 2015 were prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted by the European Union and have been delivered to the Registrar of Companies.
The auditor's report on these financial statements was unqualified and did not contain statements under S498(2) or S498(3) of the Companies Act 2006.
2. SEGMENT REPORTING
As at 31 December 2015, the Group was organised into 4 geographical segments: Europe, North America, Latin America, and Asia Pacific. Revenues were from external customers only and generated from three principal business activities: the sale of mobile content through MNO s (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).
All operations are continuing and all inter-segment transfers are priced and carried out at arm's length.
The segmental results for the 6 months ended 31 December 2015 were as follows: | |||||
£000's | Europe | Asia | North America | Latin America | Group |
Mobile operator sales | 8 | 5 | 19 | 80 | 112 |
Mobile internet sales | - | - | 4 | 7,901 | 7,905 |
Other service fees | 15 | - | - | 1 | 16 |
Total Revenue | 23 | 5 | 23 | 7,982 | 8,033 |
Cost of sales | (40) | (14) | (10) | (5,884) | (5,948) |
Gross profit | (17) | (9) | 13 | 2,098 | 2,085 |
Operating expenses | (291) | (86) | (70) | (1,742) | (2,189) |
EBITDA* | (308) | (95) | (57) | 356 | (104) |
Depreciation, amortisation | - | - | - | (27) | (27) |
Share based compensation | (44) | - | - | - | (44) |
Revenue/expense intercompany | 238 | - | - | (238) | - |
Finance income | - | - | 1 | 33 | 34 |
Profit/(Loss) before tax | (114) | (95) | (56) | 124 | (141) |
Income tax expense | - | - | - | (180) | (180) |
Loss after tax | (114) | (95) | (56) | (56) | (321) |
*Calculated as profit before tax, interest, amortization, depreciation, share compensation expense and impairment of assets. | |||||
The segmental results for the 6 months ended 31 December 2014 were as follows: | |||||
£000's | Europe | Asia | North America | Latin America | Group |
Mobile operator sales | 9 | 92 | 18 | 284 | 403 |
Mobile internet sales | - | - | 26 | 18,035 | 18,061 |
Other service fees | 15 | - | 1 | 8 | 24 |
Total Revenue | 24 | 92 | 45 | 18,327 | 18,488 |
Cost of sales | (11) | (65) | (26) | (13,417) | (13,519) |
Gross profit | 13 | 27 | 19 | 4,910 | 4,969 |
Operating expenses | (277) | (130) | (90) | (4,159) | (4,656) |
EBITDA* | (264) | (103) | (71) | 751 | 313 |
Depreciation, amortisation | - | - | (1) | (27) | (28) |
Share based compensation | (103) | - | - | - | (103) |
Revenue/expense intercompany | 619 | - | - | (619) | - |
Finance income | 2 | - | 1 | 23 | 26 |
Profit/(Loss) before tax | 254 | (103) | (71) | 128 | 209 |
Income tax expense | - | - | (7) | (503) | (510) |
Profit/(Loss) after tax | 254 | (103) | (78) | (375) | (302) |
*Calculated as profit before tax, interest, amortization, depreciation, share compensation expense and impairment of assets. | |||||
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) | |||||
The segmental results for the year ended 30 June 2015 were as follows: | |||||
£000's | Europe | Asia Pacific | North America | Latin America | Group |
Mobile operator sales | 10 | 151 | 29 | 440 | 630 |
Mobile internet sales | - | - | 28 | 28,379 | 28,407 |
Other service fees | 10 | - | 2 | 14 | 26 |
Total revenue | 20 | 151 | 59 | 28,833 | 29,063 |
Cost of sales | (27) | 95 | (11) | (21,447) | (21,390) |
Gross profit | (7) | 246 | 48 | 7,386 | 7,673 |
Operating expenses | 397 | (249) | 42 | (6,810) | (6,620) |
EBITDA* | 390 | (3) | 90 | 576 | 1,053 |
Depreciation, amortisation | - | (1) | (1) | (57) | (59) |
Share compensation expense | (219) | - | - | - | (219) |
Finance income | 3 | - | 1 | 53 | 57 |
Profit/(loss) before tax | 174 | (4) | 90 | 572 | 832 |
Taxation | - | - | (7) | (488) | (495) |
Profit/(Loss) after tax | 174 | (4) | 83 | 84 | 337 |
*Calculated as profit before tax, interest, amortization, depreciation, share compensation expense and impairment of assets. | |||||
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The segmental assets at 31 December 2015 were as follows: | ||||||
£000's | Europe | Asia | North America | Latin America | Consol | Group |
Non current fixed assets | ||||||
Property, plant & equipment | - | - | - | 52 | - | 52 |
Intangible assets | - | - | 1 | - | - | 1 |
Current assets | 183 | 218 | 347 | 4,071 | - | 4,819 |
Cash and cash equivalents | 108 | 35 | 254 | 1,115 | - | 1,512 |
Accounts receivable | 14 | 54 | 13 | 590 | - | 671 |
Accrued receivables | 8 | 104 | 40 | 471 | - | 623 |
Prepayments | 25 | 10 | 10 | 1,678 | - | 1,723 |
Minimum guarantees and advances | - | - | - | 13 | - | 13 |
Other assets | 28 | 15 | 30 | 204 | - | 277 |
TOTAL ASSETS | 183 | 218 | 348 | 4,123 | - | 4,872 |
Current liabilities | (167) | (68) | (275) | (1,723) | - | (2,233) |
Trade Payables | (72) | (37) | (30) | (168) | - | (307) |
Accrued content costs | (30) | (17) | (230) | (447) | - | (724) |
Other accrued liabilities | (43) | (1) | (15) | (302) | - | (361) |
Other payables | (22) | (13) | - | (180) | - | (215) |
Corporate income tax payable | - | - | - | (626) | - | (626) |
TOTAL LIABILITIES | (167) | (68) | (275) | (1,723) | - | (2,233) |
The segmental assets at 31 December 2014 were as follows: | ||||||
£000's | Europe | Asia | North America | Latin America | Consol | Group |
Non current fixed assets | ||||||
Property, plant & equipment | - | - | 1 | 126 | - | 127 |
Intangible assets | - | - | 1 | - | - | 1 |
Current assets | 1,397 | 98 | 638 | 6,293 | - | 8,426 |
Cash and cash equivalents | 1,317 | 12 | 560 | 1,349 | - | 3,238 |
Accounts receivable | 18 | 49 | 8 | 988 | - | 1,063 |
Accrued receivables | 17 | 4 | 43 | 1,391 | - | 1,455 |
Prepayments | 4 | 11 | 10 | 1,636 | - | 1,661 |
Minimum guarantees and advances | - | - | - | 14 | - | 14 |
Other assets | 41 | 22 | 17 | 915 | - | 995 |
TOTAL ASSETS | 1,397 | 98 | 640 | 6,419 | - | 8,554 |
Current liabilities | (437) | (193) | (296) | (5,280) | - | (6,206) |
Trade Payables | (36) | (59) | (46) | (1,428) | - | (1,569) |
Accrued content costs | (30) | (222) | (245) | (690) | - | (1,187) |
Other accrued liabilities | (378) | 105 | (15) | (1,016) | - | (1,304) |
Other payables | 7 | (17) | 10 | (239) | - | (239) |
Corporate income tax payable | - | - | - | (1,907) | - | (1,907) |
TOTAL LIABILITIES | (437) | (193) | (296) | (5,280) | - | (6,206) |
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The segmental assets at 30 June 2015 were as follows: | ||||||
£000's | Europe | Asia | North America | Latin America | Consol | Total |
Non current fixed assets | ||||||
Property, plant & equipment | - | 1 | - | 93 | - | 94 |
Deferred tax | - | - | - | 285 | - | 285 |
Current assets | 846 | 101 | 452 | 4,715 | - | 6,114 |
Cash and cash equivalents | 795 | 13 | 380 | 910 | - | 2,098 |
Accounts receivable | 6 | 50 | 11 | 943 | - | 1,010 |
Accrued receivables | 9 | 5 | 32 | 711 | - | 757 |
Prepayments | 30 | 9 | 10 | 2,011 | - | 2,060 |
Minimum guarantees and advances | - | - | - | 13 | - | 13 |
Other assets | 6 | 24 | 19 | 127 | - | 176 |
TOTAL ASSETS | 846 | 102 | 452 | 5,093 | - | 6,493 |
Current liabilities | (162) | 20 | (249) | (2,364) | - | (2,755) |
Trade Payables | (60) | (46) | (29) | (865) | - | (1,000) |
Accrued content costs | (31) | (20) | (215) | (411) | - | (677) |
Other accrued liabilities | (64) | 95 | (14) | (354) | - | (337) |
Other payables | (7) | (9) | 9 | (69) | - | (76) |
Corporate income tax payable | - | - | - | (665) | - | (665) |
TOTAL LIABILITIES | (162) | 20 | (249) | (2,364) | - | (2,755) |
3. EARNINGS PER SHARE | ||||
Earnings per share | ||||
Earnings per share is calculated by dividing the(loss)/profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period. | ||||
Unaudited | Unaudited | Audited | ||
6 months ended 31 December 2015 | 6 months ended 31 December 2014 | 12 months ended 30 June 2015 | ||
(Loss)/profit for the period (£000's) | (321) | (302) | 337 | |
Loss earnings per share (pence): | ||||
Basic | (0.865) | (0.814) | 0.908 | |
Diluted | (0.865) | (0.814) | 0.855 | |
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. | ||||
6 months ended 31 December 2015 | 6 months ended 31 December 2014 | 12 months ended 30 June 2015 | ||
£000's | £000's | £000's | ||
(Loss)/profit for the period | (321) | (302) | 337 | |
Add back: share compensation expense | 44 | 103 | 219 | |
Add back: depreciation and amortisation | 27 | 28 | 59 | |
Adjusted (Loss)/profit for the period | (250) | (171) | 615 | |
Pence per share | Pence per share | Pence per share | ||
Adjusted (loss)/earnings per share | (0.674) | (0.461) | 1.659 | |
Adjusted diluted (loss)/earnings per share | (0.674) | (0.461) | 1.596 | |
Weighted average number of shares | ||||
| ||||
6 months ended 31 December 2015 | 6 months ended 31 December 2014 | 12 months ended 30 June 2015 | ||
Basic | 37,100,536 | 37,075,083 | 37,100,536 | |
Exercisable share options | 2,330,960 | 1,463,763 | 2,330,960 | |
Diluted | 39,431,496 | 38,538,846 | 39,431,497 | |
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Diluted (loss)/earnings per share is calculated adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company has only one category of ordinary shares.
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.
4. GOING CONCERN
The Group had cash balances of £1.5m at 31 December 2015 (30 June 2015: £2.1m) and no borrowings. Having reviewed cash flow forecasts and budgets for a year ahead the Directors have a reasonable expectation that the Group has sufficient resources to continue in operational existence for the foreseeable future.
As at 31 December 2015, £0.8m (including short-term investments of £0.1m) of the Group's cash balance was held in Argentina. The Argentine Peso devalued by 20% during December 2015, after the new Government was elected in Argentina. Since then, the Peso has remained relatively stable, although we cannot predict future movements in the currency and the impact on our financial performance.
5. FOREIGN CURRENCY TRANSLATION (a) Presentational currency
The consolidated 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 from the translation of monetary assets and liabilities at the balance sheet date are reported in the income statement except when these represent a net investment in a subsidiary when they are charged or credited to equity .
Foreign currency balances are translated at the balance sheet date using exchange rates prevailing at the period end.(c) Group companies
The financial results and position of all group entities that have a functional currency different from the presentational currency of the Group are translated into the presentational 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 (translation reserve)
The exchange rates used in respect of Argentinean pesos are the official published exchange rates.