Mobile Streams Regulatory News (MOS)

22 Sep 2009 07:00



Mobile Streams announces positive EBITDA* in First Half Trading

Interim Results Announcement for the six months ended 30th June 2009

22nd September 2009

Mobile Streams plc, the mobile content provider, announces its interim results for the six months ended 30th June 2009.

Financial highlights:

EBITDA* of £43,000 achieved for the period (2008: £35,000, +23%) 

Revenue in the period was £3.6m (2008: £4.6m, -22%)

Operating expenses* down 21% to £1.8m (2008: £2.2m)

Gross Margins 50% (2008: 49%) 

Significant reduction in net loss to £0.5m (2008: £1.3m)

Cash at 30 June 2009 of £2.1m (31 December 2008: £2.2m, -6%)

Operational highlights:

During the first half of 2009, Mobile Streams continued to focus on its core mobile content retailing business. The highlights included:

Successful launches of mobile games retailing stores on the Google Android and BlackBerry platforms on behalf of network operators

Carefully planned and measured investments in emerging smartphone platforms with opening of Smartphone R&D Centre, to develop Apple iPhone application services

Further launches and improved profitability from the Mobile Internet division, led by the www.Ringtones.com and www.MobileGaming.com mobile content retail stores.

Continued expansion of content portfolio with new licensing arrangements, including Warner Music Group, EMI, HBO and Jump Games.

Technology platform upgrades to improve the richness of the retailing experience with launch of Games Wrapper, IntelliProxy and Intelligent Purchase

Commenting on today's interim results, Simon Buckingham, CEO, said: 

"Mobile Streams is pleased to report a positive EBITDA* despite a changing and challenging mobile content marketplace. The Company has continued to focus on its core mobile content retailing business, launching services on the mobile internet as well as smartphone platforms to supplement its distribution through mobile operators.

We continue to provide quality mobile content retailing experiences to existing customers and improve our efficiency. This has enabled us to further increase our gross margins to 50%, whilst reducing our operating expenses and achieve a profitable trading result. 

Management expects the mobile content industry to continue to evolve over the coming years as business models and distribution channels change.  Mobile Streams plans to remain at the forefront of the mobile internet with carefully planned investments and innovations whilst prioritising profitability and preserving our cash balances.  Our experience in the mobile media space and strong partner relationships will help Mobile Streams remain a key player in the industry.

Second half trading has so far been consistent with the trading patterns experienced in the first half, consequently the Board expect full year EBITDA* to be around breakeven."

*Calculated as profit before tax, amortisation, depreciation, asset impairments/revaluations and share compensation expense. 

Enquiries:

Mobile Streams +44 20 7665 8240

Simon Buckingham, Chief Executive Officer

Victoria Taylor, Global Communications Manager

Nominated Adviser

Grant Thornton Corporate Finance +44 20 7383 5100

Philip Secrett

Broker

Singer Capital Markets Limited +44 20 3205 7500

Jeff Keating

CHIEF EXECUTIVE OFFICER'S Review

Mobile Streams made significant progress in launching Mobile Internet Services across the Group. Since launch, the results of these services in Argentina, whilst remaining on a small scale compared to the overall Group, have been encouraging. We now operate more than 12 content channels covering a wide range of genres with direct billing integration into the 3 largest mobile network operators. The launch of mobile internet services in the US under the www.ringtones.com brand has also been a significant step for the business though volumes remained relatively low during the period as we undertook billing certification and service optimisation.

Our core Mobile Operator Services continued to account for more than 75% of the Company's total revenues during the period as we continued to focus on building stronger relationships with our key operator customers. Revenue from our operator services declined in some markets as we transitioned operator agreements from the provision of content to the supply of higher margin technology platform solutions.  

Underpinning both the Mobile Internet Services and Mobile Operator Services has been the continued expansion of our content library and the investment in our market leading technology solutions. 

Mobile Streams' content library has been increased through extending existing licensing relationships both geographically and in our repertoire. We have also entered into a number of new licensing arrangements to distribute quality content and brands including Warner Music Group, EMI, HBO, Maxim and Jump Games.

Mobile Streams' investments in our proprietary technology have resulted in a number of innovations designed to improve the customer experience, notably: Games Wrapper technology, Intelligent Purchasing and IntelliProxy. The Games Wrapper technology enables the customisation of Java games allowing duration based billing, pay per play, game rental and try before you buy. Our Intelligent Purchasing technology recognises repeat customers so that they can be offered targeted content and an improved user experience. Lastly, our IntelliProxy combines advertising server and search engine technologies so that potential customers can be directed to the most suitable content offering and the best billing environment. This improves user experience and increases the opportunity to convert prospects to sales.

During the period and subsequently, we have increased our market expertise with the hiring of specialist smartphone programmers and digital marketing experts in preparation for the launch of our first services on smartphone platforms such as the Apple iPhone.

Outlook

Management expects the mobile content industry to continue to evolve over the coming years as business models and distribution channels change.  Mobile Streams plans to remain at the forefront of the mobile internet with carefully planned investments and innovations whilst prioritising profitability and preserving our cash balances.

Second half trading has so far been consistent with the trading patterns experienced in the first half, consequently the Board expect full year EBITDA* to be around breakeven.

*Calculated as profit before tax, amortisation, depreciation, asset impairments/revaluations and share compensation expense. 

FINANCIAL REVIEW

Group turnover for the six months to 30 June 2009 was £3.6m, a 22% decrease on the same period last year (2008: £4.6m). Cost of sales reduced by a similar ratio with gross margins increasing slightly to 50% (2008: 49%). 

During the second half of 2008 the Group undertook a restructuring of certain parts of the business in order to focus the Group on its core businesses, with a resultant reduction in operating expenses. This is evidenced by the 21% reduction in sales, marketing and administration expenses to £1.8m (2008: £2.2m).

Trading EBITDA* was a profit of £43,000 (2008: £37,000).

Loss before tax reduced significantly to £0.6m (2008: £1.3m).

The Group incurred a net cash outflow of £0.4m (2008: £nil) during the half-year predominantly due to the acquisition of fixed assets and payment of corporate income taxes. The investment in fixed assets consisted of further development of the Group's proprietary technology platform. The cash balance at 30 June 2009 was £2.1m (2008: £2.3m). 

Basic loss per share amounted to 1.38p per share (2008: 3.64p per share).

Adjusted earnings* per share amounted to 0.36p per share (2008: 0.28p per share). 

*Calculated as profit before tax, amortisation, depreciation, asset impairments/revaluations and share compensation expense. 

  consolidated interim income statement

Unaudited interim financial statements for the half year ended 30 June 2009

		6 months to 30 June 2009		6 months to 30 June 2008		Year ended 31 December 2008
		£'000's		£'000's		£'000's
Revenue		3,598		4,631		8,422
Cost of sales		(1,797)		(2,352)		(4,365)
Gross profit		1,801		2,279		4,057
Selling and marketing costs		(71)		(245)		(370)
Administration expenses		(1,687)		(1,994)		(3,478)
Other operating expenses		-		(5)		(6)
Depreciation, amortisation and impairment		(581)		(1,442)		(2,621)
Share compensation expense		(50)		36		48
Operating loss		(588)		(1,371)		(2,370)
Finance income		10		31		64
Loss before income tax		(578)		(1,340)		(2,306)
Income tax credit/(expense)		76		34		(203)
Loss for the period		(502)		(1,306)		(2,509)
Attributable to:
Attributable to equity shareholders of Mobile Streams Plc		(502)		(1,306)		(2,509)
Total and continuing loss per share		Pence per share		Pence per share		Pence per share
Basic and Diluted		(1.384)		(3.639)		(6.945)

consolidated statement of comprehensive iNcome

		6 months to 30 June 2009		6 months to 30 June 2008		Year ended 31 December 2008
		£'000's		£'000's		£'000's
Loss for the period		(502)		(1,306)		(2,509)
Exchange differences on translating foreign operations		219		(1)		(343)
Other recognised gains and losses		-		(2)		-
Total comprehensive income for the period		(283)		(1,309)		(2,852)
Attributable to:
Attributable to equity shareholders of Mobile Streams Plc		(283)		(1,309)		(2,852)

Consolidated interim STATEMENT OF FINANCIAL POSITION

	Notes		30 June 2009		30 June 2008		31 December 2008
			£'000's		£'000's		£'000's
Assets
Non-current
Goodwill			1,132		945		977
Other intangible assets			569		1,920		910
Property, plant and equipment			126		348		203
			1,827		3,213		2,090
Current
Trade and other receivables			1,499		2,557		2,153
Cash and cash equivalents			2,119		2,300		2,260
			3,618		4,857		4,413
Total assets			5,445		8,070		6,503
Equity
Equity attributable to shareholders of Mobile Streams plc
Called up share capital	7		73		73		73
Share premium			10,310		10,944		10,310
Translation reserve			(151)		(183)		(525)
Retained earnings			(9,010)		(7,345)		(8,558)
Merger reserve			635		-		635
Total equity			1,857		3,489		1,935
Liabilities
Non-current
Deferred tax liabilities			50		245		63
			50		245		63
Current
Trade and other payables			3,166		3,629		3,827
Provisions			163		681		287
Current tax liabilities			209		26		391
			3,538		4,336		4,505
Total liabilities			3,588		4,581		4,568
Total equity and liabilities			5,445		8,070		6,503

Consolidated interim statement of changes in equity

(all amounts presented in £000's)
	Called up share capital	Share premium	Shares to be issued	Trans- lation reserve	Retained earnings	Merger Reserve	Total Equity
Balance at 1 January 2008	71	10,468	479	(182)	(6,001)	-	4,835
Employee share based compensation	-	-	-	-	(36)	-	(36)
Shares issued	2	476		-	-	-	478
Shares to be issued	-	-	(479)	-	-	-	(479)
Transactions with owners	2	476	(479)	-	(36)	-	(37)
Loss for the 6 months period to 30 June 2008	-	-	-	-	(1,306)	-	(1,306)
Exchange differences on translation of foreign operations	-	-	-	(1)	-	-	(1)
Other recognised gains and losses	-	-	-	-	(2)	-	(2)
Total comprehensive income for the period	-	-	-	(1)	(1,308)	-	(1,309)
Balance at 30 June 2008	73	10,944	-	(183)	(7,345)	-	3,489
Balance at 1 July 2008	73	10,944	-	(183)	(7,345)	-	3,489
Employee share based compensation	-	-	-	-	(12)	-	(12)
Shares issued	-	-	-	-	-	1	1
Transfer to Merger Reserve	-	(634)	-	-	-	634	-
Transactions with owners	-	(634)	-	-	(12)	635	(11)
Loss for the 6 months period to 31 December 2008	-	-	-	-	(1,203)	-	(1,203)
Exchange differences on translation of foreign operations	-	-	-	(342)	-	-	(342)
Other recognised gains and losses	-	-	-	-	2	-	2
Total comprehensive income for the period	-	-	-	(342)	(1,201)	-	(1,543)
Balance at 31 December 2008	73	10,310	-	(525)	(8,558)	635	1,935
Balance at 1 January 2009	73	10,310	-	(525)	(8,558)	635	1,935
Employee share based compensation	-	-	-	-	50	-	50
Transactions with owners	-	-	-	-	50	-	50
Loss for the 6 months period to 30 June 2009	-	-	-	-	(502)	-	(502)
Exchange differences on translation of foreign operations	-	-	-	374	-	-	374
Total comprehensive income for the period	-	-	-	374	(502)	-	(128)
Balance at 30 June 2009	73	10,310	-	(151)	(9,010)	635	1,857

Consolidated interim cash flow statement

		6 months to 30 June 2009		6 months to 30 June 2008		Year ended 31 December 2008
		£'000's		£'000's		£'000's
Cash flows from operating activities
Result for the period after tax		(502)		(1,306)		(2,509)
Adjustments:
Share based payments		50		(36)		(48)
Depreciation		138		54		252
Amortisation		443		869		1,559
Impairment of assets held for sale, intangibles and goodwill		-		519		810
Tax (credit)/expense		(76)		(34)		203
Interest received		(10)		(31)		(64)
Changes in trade and other receivables		654		499		1,095
Changes in trade and other payables		(785)		(414)		(456)
Cash generated from operations		(88)		120		842
Income tax paid		(119)		(53)		(108)
Net cash from operating activities		(207)		67		734
Cash flows from investing activities
(Additions)/disposals to tangible fixed assets		(61)		8		(58)
Additions to other intangible assets		(102)		(133)		(307)
Available for sale financial assets		-		-
Interest received		10		31		64
Total cash flows from investing activities		(153)		(94)		(301)
Cash flows from financing activities
Issue of share capital (net of expenses paid)		-		1		-
Total cash flow from financing activities		-		1		-
Net change in cash and cash equivalents		(360)		(26)		433
Cash and cash equivalents at beginning of period		2,260		2,530		2,301
Exchange gains/(losses) on cash and cash equivalents		219		(204)		(474)
Cash and cash equivalents at end of period		2,119		2,300		2,260

Notes to the consolidated interim financial statements

1. General information

Mobile Streams plc ('the Company') and its subsidiaries (together 'the Group') provide technology and services for the aggregation and distribution of content, primarily to wireless devices via its integrated technology platform, MultiMobi (formerly Vuesia). The Group has subsidiaries based around the world in Europe, Asia, North America and Latin America. 

The Company is a public limited company incorporated in the United Kingdom. The address of its registered office is The Media Centre, 19 Bolsover Street, London W1W 5NA.

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

The financial information set out in this interim report does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The Group's statutory financial statements for the year ended 31 December 2008, prepared under IFRS, have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain statements under Section 237(2) of the Companies Act 1985.

These consolidated interim financial statements have been approved for issue by the Board of Directors on 22 September 2009.

2. Summary of significant accounting policies

2.1 Basis of preparation

The interim consolidated financial statements of Mobile Streams are for the six months ended 30 June 2009. All references to IFRS in these statements refer to IFRS as adopted by the EU. These interim statements have been prepared using the recognition and measurement principles of IFRS standards and IFRIC interpretations issued and effective as at the time of preparing these statements. The IFRS standards and IFRIC interpretations that will be applicable at 31 December 2009, including those that will be applicable on an optional basis, are not known with certainty at the time of preparing these interim financial statements. The policies set out below have been consistently applied to all years presented and comparative information has been represented under IFRS.

Preparation of interim financial statements in accordance with IAS 34 requires the use of some critical accounting estimates. It requires management of Mobile Streams to exercise judgement when applying the Company's accounting policies. The specific areas involving a higher degree of judgement and/or complexity and areas where assumptions/estimates are significant to the financial statements are disclosed in Note 3. The historical cost measurement basis has been used in preparation of these interim statements, with the exception of certain financial instruments which are measured at fair value. 

These condensed consolidated interim financial statements (the interim financial statements) have been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year to 31 December 2008 except for the adoption of IAS 1 Presentation of Financial Statements (Revised 2007) and IFRS 8 Operating Segments.

The adoption of IAS 1 (Revised 2007) does not affect the financial position or profits of the Group, but gives rise to additional disclosures. The measurement and recognition of the Group's assets, liabilities, income and expenses is unchanged, however some items that were recognised directly in equity are now recognised in other comprehensive income, for example revaluation of property, plant and equipment. IAS 1 (Revised 2007) affects the presentation of owner changes in equity and introduces a 'Statement of comprehensive income'. In accordance with the new standard the entity does not present a 'Statement of recognised income and expenses (SORIE)'. Further, a 'Statement of changes in equity' is presented.

The adoption of IFRS 8 has changed the segments that are disclosed in the interim financial statements. In the previous annual and interim 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 chief operating decision maker.

2.2 Consolidation - subsidiaries

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.

The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of a business combination is measured as the fair value of assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition, in line with IFRS 3, Business Combinations. Any assets acquired and liabilities and contingent liabilities assumed that are identifiable are measured initially at their fair values at the acquisition date. The excess of the cost of a business combination over the fair value of the identifiable net assets acquired is recorded as goodwill. If the cost of a business combination is less than the fair value, the difference is recognised directly in the income statement.

Inter-company 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.

2.3 Foreign currency translation

(a) Functional and presentation currency

The financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates ('functional currency'). The consolidated financial statements are presented in British pounds, which is the Company's functional and presentation currency.

(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 balance date are recognised in the income statement. Any translation gains or losses on non-monetary items are recognised in equity to the extent that they relate to gains and losses on non-monetary items which are recorded in equity. Otherwise, these translation gains or losses are recognised in the income statement.

(c) Group companies

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

ii. income and expenses for each income statement are translated at average exchange rates (unless it is not a reasonable approximation, in which case translated at dates of transactions) 

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

2.4 Property, plant and equipment (tangible assets)

All property, plant and equipment (PPE) are 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 their estimated useful lives. The following rates and methods have been applied:

Leasehold improvements	Over the life of the lease
Plant and equipment	33% straight line
Office furniture	Between 10% and 33% straight line

The asset's residual values and useful lives are 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 included in the income statement.

2.5 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 (the purchase method). Intangibles acquired in a business combination are acquired at fair value. 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) Other intangible assets

Other intangible assets represent intangible items that have been acquired through business combinations and through separate acquisition. To meet this definition, the intangibles must be both identifiable and separable, or arise from contractual or other legal rights. Intangibles acquired through business combinations are recognised at fair value and separately acquired intangibles are recognised at cost. Where a reliable estimate of useful life of the intangible can be obtained, the intangible asset is to be amortised over the useful life. When an indefinite life exists for an intangible asset, the intangible will not be amortised, but must be tested annually for impairment. The useful lives of finite life intangible assets are as follows:

Media content  2 years Media platform developments 2 - 3 years Customer relationships 2 - 5 years Technology based assets 2 - 5 years Non-compete agreement 3.5 years

2.6 Impairment of assets

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

2.7 Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held with financial institutions, other short-term highly liquid investments with original maturities of three months or less and bank overdrafts. Bank overdrafts are classified within borrowings in current liabilities on the balance sheet.

2.8 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 initial recognition of goodwill or on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Deferred income tax is determined using tax rates known by the balance sheet date and 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, with no discounting.

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

2.9 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 has been reliably estimated. 

Provisions are measured at the present value of 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 increases specific to the liability, including risks specific to the liability.

2.10 Financial Assets & Financial Liabilities

The group can classify its investments into the below categories depending on the purpose for which the investments were acquired. The classification is determined at initial recognition and is re-evaluated at every reporting date.

a) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and where there is no intention of trading. They are included as current assets, unless maturity is greater than 12 months after balance sheet date. Loans and receivables are included in trade and other receivables in the balance sheet.

b) Trade receivables

Trade receivables are recognised initially at fair value and later measured at amortised cost using the effective interest method, less provision for impairment. An impairment provision for trade receivables is established when there is evidence 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 effective interest rate. The provision is recognised in the income statement.

c) Interest paid

Interest payable is recognised in the income statement on an accruals basis. 

d) Available-for-sale financial assets

Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any of the other categories. They form part of non-current assets unless management intends to dispose of the investment within 12 months of balance sheet date.

Purchases and sales of investments are recognised on trade date, being the date on which the Group commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for financial assets not carried at fair value through the profit and loss. They are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and risks and rewards of ownership have been transferred. Financial assets at fair value through profit or loss and available for sale assets are subsequently carried at fair value. Loans and receivables and held to maturity investments are carried at amortised cost using the effective interest method. Any realised and unrealised gains and losses arising from changes in fair value of the financial assets at fair value through profit or loss are included in the income statement in the period they arise. Unrealised gains/losses arising from changes in fair value of non-monetary securities (available for sale) are recognised in equity. When available for sale assets are sold or impaired the accumulated fair value adjustments are included in the income statement.

Fair values of investments are based on current bid prices. If the market is not active or securities are unlisted, fair value can be determined via valuation techniques such as use of recent arm's length transactions, reference to similar instruments and discounted cash flow analysis.

The Group assesses at each balance sheet date whether there is evidence that financial assets are impaired. 

The Group does not have any financial liabilities as at the balance sheet date.

2.11 Revenue recognition

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) Sales of goods

Sales of goods are recognised when a Group entity has delivered products to the customer, who has accepted the product and collectability of the related receivable is reasonably assured.

b) Rendering of services

Rendering of services are recognised in the accounting period in which the services are rendered, by reference to 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 on an accruals basis. If the collection of interest is considered doubtful, it is suspended and excluded from interest income in the income statement.

2.12 Share based compensation

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').

a) 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 method.

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, 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 or, in the case of an instrument subject to a market condition, be treated as vesting as described above. 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.

The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share.

2.13 Share capital

Ordinary shares are classified as equity.

Incremental costs directly attributable to the issue of new shares or options are booked to the share premium account.

3. 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.

3.1 Critical accounting estimates 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.

(a) Goodwill

The Group will test annually whether goodwill has suffered any impairment, in accordance with the accounting policy stated in Note 2.6. The recoverable amount of cash-generating units has been determined based on value-in-use calculations. These calculations require estimates to be made.

(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) Intangible assets

The Group is required to identify and assess the useful life of intangible assets and determine if there is a finite or indefinite life. Judgement is required in determining if an intangible asset has a finite life and the extent of this finite life in order to calculate the amortisation charge on the asset. Intangible assets that are identified to have an indefinite useful life will be tested annually for any impairment in accordance with the accounting policy stated in Note 2.6. The recoverable amount of cash-generating units has been determined based on value-in-use calculations. These calculations require estimates to be made.

4. Seasonal/cyclical trends

Whilst there are some seasonal and cyclical trends in the industry, the Company's revenue come from a diverse product and geographical balancing out fluctuations across the Group.

5. Related party transactions

There were no related party transactions during the 6 months ended 30 June 2009. 

6. Segmental reporting

Primary reporting format - geographical segments

As at 30 June 2009, the Group is organised into four geographical segments: Europe, North America, Latin America and Asia. All operations are continuing. Revenues are from external customers only and generated from three business activities: the sale of mobile content though mobile network operators (Mobile Operator Services), the sale of mobile content over the mobile internet (Mobile Internet Services) and the provision of consulting and technical services (Other Service Fees).

There have been no changes to segments during the periods.

  

The segment results for the 6 months ended 30 June 2009 are as follows:
£000's		Europe	Asia	North America	Latin America	Group
Mobile Operator Services		178	1,335	659	689	2,861
Mobile Internet Services		150	-	121	37	308
Other Service fees		279	33	91	26	429
Total Revenue		607	1,368	871	752	3,598
Cost of sales		(140)	(875)	(371)	(411)	(1,797)
Gross profit		467	493	500	341	1,801
Selling, marketing and administration expenses		(372)	(442)	(504)	(440)	(1,758)
EBITDA*		95	51	(4)	(99)	43
Depreciation, amortisation & impairment		(436)	(39)	(86)	(20)	(581)
Share compensation expense		(50)	-	-	-	(50)
Finance income/(expense)		53	1	(44)	-	10
(Loss)/profit before tax		(338)	13	(134)	(119)	(578)

* Earnings before interest, tax, depreciation, amortisation and share compensation expense

  

The segment results for the 6 months ended 30 June 2008 were as follows:
£000's		Europe	Asia	North America	Latin America	Group
Mobile Operator Services		498	1,311	897	882	3,588
Mobile Internet Services		407	-	333	14	754
Other Service fees		274	-	1	14	289
Total Revenue		1,179	1,311	1,231	910	4,631
Cost of sales		(490)	(934)	(482)	(446)	(2,352)
Gross profit		689	377	749	464	2,279
Selling, marketing and administration expenses		(832)	(403)	(538)	(471)	(2,244)
EBITDA*		(143)	(26)	211	(7)	35
Depreciation, amortisation & impairment		(895)	(34)	(495)	(18)	(1,442)
Share compensation expense		36	-	-	-	36
Finance income/(expense)		71	6	(50)	4	31
Loss before tax		(931)	(54)	(334)	(21)	(1,340)
* Earnings before interest, tax, depreciation, amortisation and share compensation

  

 

The segment results for the year ended 31 December 2008 were as follows:
£000's		Europe	Asia	North America	Latin America	Group
Mobile Operator Services		768	2,491	1,628	1,714	6,600
Mobile Internet Services		620	-	545	25	1,190
Other Service fees		600	1	1	29	631
Total Revenue		1,988	2,492	2,174	1,768	8,422
Cost of sales		(725)	(1,802)	(901)	(937)	(4,365)
Gross profit		1,263	690	1,273	831	4,057
Selling, marketing and administration expenses		(1,146)	(737)	(1,061)	(910)	(3,854)
EBITDA*		117	(47)	212	(79)	203
Depreciation, amortisation & impairment		(1,893)	(72)	(620)	(36)	(2,621)
Share compensation expense		48				48
Finance income/(expense)		143	10	(93)	4	64
Loss before tax		(1,585)	(109)	(501)	(111)	(2,306)
* Earnings before interest, tax, depreciation, amortisation and share compensation

 

7. Share capital

	Ordinary shares
	(000's)
Balance at 1 January 2008	35,648
New share issues	620
Balance at 30 June 2008	36,268
New share issues	-
Balance at 31 December 2008	36,268
New share issues	-
Balance at 30 June 2009	36,268

The total number of shares in issue at 30 June 2009, 30 June 2008 and 31 December 2008 were 36,268,192 with a par value of £0.002 per share. All issued shares are fully paid.

  

8. LOSs per share

Basic

Basic loss per share is calculated by dividing the profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period, excluding ordinary shares purchased by the Company and held as treasury shares.

		6 months ended 30 June 2009		6 months ended 30 June 2008		Year ended 31 December 2008
Loss attributable to equity holders of the Company (£000's)		(502)		(1,306)		(2,509)
Weighted average number of ordinary shares in issue (000's)		36,268		35,891		36,125
Basic loss per share (£ per thousand share)		(1.384)		(3.639)		(6.945)

Adjusted

Adjusted earnings per share is calculated on the loss attributable to equity shareholders before depreciation and amortisation, share compensation charges or credits and impairment of assets held for sale, intangibles and goodwill.

		6 months ended 30 June 2009		6 months ended 30 June 2008		Year ended 31 December 2008
Loss attributable to equity holders of the Company (£000's)		(502)		(1,306)		(2,509)
Add back:
Share compensation expense/(credit)		50		(36)		(48)
Impairment of assets held for sale, intangibles and goodwill		-		519		810
Depreciation and amortisation		581		923		1,811
Adjusted earnings		129		100		64
Weighted average number of ordinary shares in issue (000's)		36,268		35,891		36,125
Adjusted earnings per share (£ per thousand share)		0.356		0.279		0.177

Diluted

Diluted loss 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 dilutive ordinary shares: share options.

The calculation is performed for the share options to determine the number of shares that could have been acquired at fair value (determined as the average annual market share price of the Company's shares) based on the monetary value of the subscription rights attached to outstanding share options and the yet to be recognised expenses in terms of the option. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options. Where there is a loss for the period in question, there is no dilution applied.

As the Group is showing a loss for all periods being reported, no dilution is applicable, hence diluted loss per share is the same as basic loss per share.

ENDIR SEEFMFSUSEIU