Mobile Streams Regulatory News (MOS)

31 March 2017

Mobile Streams plc ("Mobile Streams" or the "Company") (AIM: MOS)

Half yearly report

Mobile Streams is pleased to announce its unaudited interim results for the six months ended 31 December 2016.

Highlights

· Subscriber numbers in India increased to over 175,000 active subscribers* (up from 100,000 at the period end)

· Successful fundraising of £2.2m (before expenses) to fund growth in India

· £2.8m of cash and cash equivalents at 31 December 2016 (31 December 2015: £1.5m), with no debt. The Company´s current cash balance is £2.6m

· Revenues of £3.6m (H1 2015: £8m). All revenue is from continuing operations

· Mobile Internet revenues were £3.58m (6 months ended 31 December 2015: £7.9m)

· EBITDA** loss of £712k in line with management expectations (6 months ended 31 December 2015: £104k loss)

· Post-tax loss of £879k in line with management expectations (6 months to 31 December 2015: £321k loss)

· Launch of HTML5 browser based games service to complement its app download service in India (post-period end)

* 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 subscribers in its other markets such as Argentina

** 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 successful fundraising of £2.2 million (before expenses) completed at the end of the period is enabling us to accelerate our strategy of building subscribers and revenues in the Indian market during calendar year 2017. Whilst Argentina remains a challenging place to do business, we expect India to continue to grow steadily throughout 2017 as we focus on and invest in the market. It is particularly pleasing that we have surpassed the 175,000 subscriber mark so quickly and we look forward to updating shareholders on our progress at the appropriate time."

Enquires:

Mobile Streams

Simon Buckingham, Chief Executive Officer +1 347 669 9068

Enrique Benasso, Chief Financial Officer

N+1 Singer (Nominated Adviser and Broker)

Alex Price +44 20 7496 3000

Alex Laughton Scott

India

Mobile Streams India Private Limited exceeded the important milestone of reaching 100,000 active subscribers to its MobileGaming.com games subscription service by 31 December 2016, a figure which has subsequently grown to over 175,000 active subscribers.

In India, most of the growth in active subscribers to date has been driven by subscription growth enabled by its direct billing connections with two of the three largest local mobile phone operators. The Company is working to add additional direct billing connections for the one remaining local top three network operator as well as to two additional local Indian mobile network operators, each with approximately 100 million subscribers.

Post-period end the Company launched its browser based games service to compliment its app download service in India. This HTML5 based service has gone live with billing connectivity from its largest partner, with another large partner scheduled to launch before the end of the current financial year.

Argentina

As previously announced, trading in Argentina continued to be challenging throughout the first half of the current financial year as a result of general market conditions and regulation in the local market for mobile content subscriptions. These conditions are expected to remain in place during the remainder of the financial year and beyond.

OPERATING REVIEW

Mobile internet

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, which includes basically the start-up in India during the last fiscal year.

The mobile internet 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 economic conditions in Argentina which includes the devaluation of the Argentine peso during the last 2 years, resulting in a fall in sales.

During the first half of the year, Latin America, primarily Argentina, accounted for the majority of revenues, as during the last years.

Mobile operators

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

For the 6 months ended 31 December 2016.

Gross profit for the six month period ended 31 December 2016 was £1.1m (2015: £2.1m). Gross margin was 29.6%, up from 25.9% in 2015.

Mobile Internet revenue has decreased by 54.7% to £3.58m (2015: £7.9m). 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 £879k for the 6 months ended 31 December 2016 (2015: loss £321k), generating a loss per share of 2.175 pence per share (2015: 0.865 pence loss per share).

Adjusted loss per share (excluding depreciation, amortisation, impairments and share compensation expense) was 1.9 pence per share (2015: 0.674 pence adjusted loss per share).

Cash and cash equivalents

The Argentine peso remained stable during the semester, 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 £2.8m.

Capital fundraising

The fundraising of £2.2 million gross proceeds (£2 million net proceeds) completed at the end of December 2016 is enabling us to both continue and also accelerate our strategy of building subscribers and revenues in the Indian market during calendar year 2017.

Outlook

Whilst Argentina remains a challenging place to do business, the Directors expect subscriber numbers in India to continue to grow steadily throughout 2017 as the Group focuses on and invests in that market.

Marketing investment in India, funded by the recent issue of shares for cash, has been growing during the past half year and is expected to continue growing. The Company looks forward to updating shareholders on its progress at the appropriate time.

Argentina remains a difficult market but with more focus on a key local mobile operator and with market knowledge acquired during past few years, the Directors are optimistic about being able to stabilise the position in that region.

Overall the Board expects the rest of 2017 to see continued investment as the Company looks to build a strong position in India.

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 2016.

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 2016 has been extracted from the statutory accounts for that period. In addition, the financial information for the 6 months ended 31 December 2016 has been extracted from the unaudited Interim results. The full audited accounts of the Group for the 12 months ended 30 June 2016 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 2016, 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.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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 £2.8m at 31 December 2016 (30 June 2016: £1.4m) 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 2016, £0.7m (including short-term investments of £0.6m) of the Group's cash balance was held in Argentina. The Argentine Government has released the currency restrictions in December 2015. 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.