Last checked at 29 Mar 2012 07:00
29th March 2012
Mobile Streams plc
("Mobile Streams" or "the Group")
Unaudited Interim results for the 6 months ended 31 December 2011
London (AIM: MOS) Mobile Streams is pleased to update its shareholders on its unaudited interim results for the six months ending 31 December 2011:
·; Revenue growth of 40% for the period to £7.4m (6 months ended 31 December 2010: £5.3m)
·; Revenue growth of 51% when excluding the £403k in non-recurring amounts from Zoombak from the same period in prior year
·; Mobile Internet revenues grew 96% over the period to £4.9m
·; EBITDA* Profit of £5k (6 months ended 31 December 2010: £0.3m)
·; Net loss after tax of £160k (6 months ended 31 December 2010: net profit after tax of £125k)
·; Cash reserves of £0.7m at 31 December 2011, with no debt. Cash reserves have increased since the end of the 2011 calendar year to approximately £1.25m but shareholders should note the matter discussed below in relation to repatriating funds from Argentina
Commenting, Simon Buckingham, CEO of Mobile Streams said:
"Mobile Streams delivered record revenues and revenue growth during the 6 months ended 31 December 2011. Total monthly revenues surpassed a new threshold level of £1.5m in December 2011 with Mobile Internet revenues exceeding £1m for the first time that month.
The strong revenue growth was fueled by rapid growth in the Mobile Internet segment and the continuing shift in the product mix away from our traditional text and ringtones type services towards apps and games in both of the Company's two operating segments: Mobile Operators and Mobile Internet.
Growth in the Mobile Internet segment has been rapid, primarily in Latin America. During the period ended 31 December 2011 Mobile Internet revenues increased by 96% to £4.9m. At the end of the calendar year 2011, Mobile Streams had more than 1 million active subscribers in Argentina (defined as customers who have purchased content from the Company in the prior two month period).
In regards to Appitalism and apps services, by the end of calendar year 2011, a total of 37 Business To Business (B2B) customer contracts had been fully executed for the distribution and provision of the Company's apps, games and eBooks content and services. These deals include new partnerships with several of the world's largest mobile phone operators, mobile handset manufacturers and telecoms infrastructure companies in the U.S., Europe, Latin America and Asia Pacific.
The Company's profitability is yet to see the full impact of the top line revenue growth as a result primarily of marketing investments. Due to the subscription nature of the vast majority of the Mobile Internet revenues, the Company incurs upfront marketing and subscriber acquisition costs in return for a recurring revenue stream.
Trading in the 2012 calendar year has started solidly, with revenues of just over £1.5m achieved in both January and February 2012. The Mobile Internet segment continues to perform well. For example, since the end of 2011 the Company's subscriber base has in Mexico already more than doubled to over 100,000 active subscribers currently. The Company's flagship mobile internet service Appitalism.com has just been re-launched with a new website and mobile site design and carrier billing for purchasing apps is now live in many of the Company's core operating markets including Argentina, Australia, Colombia, Mexico, the U.K. and the U.S.
Since the end of the 2011 calendar year, the Group's cash reserves have increased from £0.7m to a current level of approximately £1.25m. Shareholders should however note that £0.98m- equivalent to approximately three quarters of the Group's cash- is located in Argentina, where market wide currency control rules have been implemented in 2012 to regulate the withdrawal of funds from the country. The Group is working with its advisers to establish procedures to comply with the new Argentina specific regulations and the Board has a reasonable expectation that it will be able to continue to repatriate cash from Argentina. Additionally, the Company is working to diversify its sources of cash generation. For example, the first receipts have been collected from Mexico where revenues have grown rapidly since the beginning of the new calendar year, and Mexico is already the Company's second largest revenue generating subsidiary after Argentina. Additionally, Mobile Internet services have also just been launched in Colombia. The cash repatriation issues experienced in Argentina have not affected any of the Company's other markets, with intercompany transfers taking place as usual so far during 2012.
* Earnings before interest, tax, depreciation, amortisation and share compensation
Enquires:
Mobile Streams +1 877 428 0448
Simon Buckingham, Chief Executive Officer
Gabriel Margent, Chief Financial Officer
Nominated Adviser and Broker +44 (0)20 3205 7500
Singer Capital Markets Limited
Jonathan Marren
OPERATING REVIEW
Mobile Streams delivered record revenues and revenue growth during the 6 months ended 31 December 2011. Total monthly revenues surpassed a new threshold level of £1.5m in December 2011 with Mobile Internet revenues exceeding £1m for the first time that month.
The strong revenue growth was fueled by rapid growth in the Mobile Internet segment and the continuing shift in the product mix away from our traditional text and ringtones type services towards apps and games in both of the Company's two operating segments: Mobile Operators and Mobile Internet.
Growth in the Mobile Internet segment has been rapid, primarily in Latin America. During the period ended 31 December 2011 Mobile Internet revenues increased by 96% to £4.9m. At the end of the calendar year 2011, Mobile Streams had more than 1 million active subscribers in Argentina (defined as customers who have purchased content from the Company in the prior two month period).
In regards to Appitalism and apps services, by the end of calendar year 2011, a total of 37 Business To Business (B2B) customer contracts had been fully executed for the distribution and provision of the Company's apps, games and eBooks content and services. These deals include new partnerships with several of the world's largest mobile phone operators, mobile handset manufacturers and telecoms infrastructure companies in the U.S., Europe, Latin America and Asia Pacific.
The Company's profitability is yet to see the full impact of the top line revenue growth as a result primarily of marketing investments. Due to the subscription nature of the vast majority of the Mobile Internet revenues, the Company incurs upfront marketing and subscriber acquisition costs in return for a recurring revenue stream.
Trading in the 2012 calendar year has started solidly, with revenues of just over £1.5m achieved in both January and February 2012. The Mobile Internet segment continues to perform well. For example, since the end of 2011 the Company's subscriber base has in Mexico already more than doubled to over 100,000 active subscribers currently. The Company's flagship mobile internet service Appitalism.com has just been re-launched with a new website and mobile site design and carrier billing for purchasing apps is now live in many of the Company's core operating markets including Argentina, Australia, Colombia, Mexico, the U.K. and the U.S.
Since the end of the 2011 calendar year, the Group's cash reserves have increased from £0.7m to a current level of approximately £1.25m. Shareholders should however note that £0.98m- equivalent to approximately three quarters of the Group's cash- is located in Argentina, where market wide currency control rules have been implemented in 2012 to regulate the withdrawal of funds from the country. The Group is working with its advisers to establish procedures to comply with the new Argentina specific regulations and the Board has a reasonable expectation that it will be able to continue to repatriate cash from Argentina. Additionally, the Company is working to diversify its sources of cash generation. For example, the first receipts have been collected from Mexico where revenues have grown rapidly since the beginning of the new calendar year, and Mexico is already the Company's second largest revenue generating subsidiary after Argentina. Additionally, Mobile Internet services have also just been launched in Colombia. The cash repatriation issues experienced in Argentina have not affected any of the Company's other markets, with intercompany transfers taking place as usual so far during 2012.
FINANCIAL REVIEW
6 months ended 31 December 2011
Gross profits for the period ended 31 December 2011 were £3.0m, in line with the same period last year despite revenues increasing 40% to £7.4m. Gross margin was 40.8%, down from 54.3% the same period last year.
During the period ended 31 December 2011 the Mobile Internet revenue has increased by 96%. The Cost of sales on Mobile Internet revenue is much higher than on Operator revenue resulting in lower Gross profit margin.
The Group recorded a net loss after tax of £160k 0.2m for the 6 months ended 31 December 2011, generating basic loss of 0.439 pence per share.
Adjusted loss per share (excluding depreciation, amortisation, impairments and share compensation expense) was 0.250 pence per share.
6 months ended 31 December 2010
Gross profits for the 6 months ended 31 December 2010 were £2.9m as revenues rose to £5.3m. Gross margin was 54.3%.
The Group recorded a profit after tax of £0.125km for the 6 months ended 30 December 2010, generating basic gain of 0.345 pence per share.
Adjusted earnings per share (excluding depreciation, amortisation, impairments and share compensation expense) was 0.753 pence per share.
18 months ended 30 June 2011
Group revenue for the 18 months ended 30 June 2011 was £15.5m.
Gross margin was 49.7%. The change in revenue mix, with a higher proportion of revenue coming from Operator Services, reduced the overall gross margin slightly from 50.5%.
Selling, marketing and administrative expenses were £7.6m. This included the investment in the new Appitalism business (other than capitalised development costs) as well as marketing costs incurred in acquiring Mobile Internet subscribers mainly in Latin America and market research cost associated with the Appitalism business.
The Group had net cash outflows from operations of £0.2m. The disposal of ringtones.com boosted cash and more than offset the capitalised development costs incurred in building the Appitalism.com site. During December 2010 the ringtones.com domain was sold for a net consideration of US$750,000, shown as Other Income in the income statement.
The Group recorded a loss after tax of £0.2m for the 18 months ended 30 June 2011, generating basic loss of 0.589 pence per share. Adjusted earnings per share (excluding depreciation, amortisation, impairments and share compensation expense) was 0.542 pence per share.
consolidated Income statement
| ||||||
Audited | ||||||
6 months ended 31 December 2011 | 6 months ended 31 December 2010 | 18 months ended 30 June 2011 | ||||
£000's | £000's | £000's | ||||
Revenue | 7,392 | 5,312 | 15,491 | |||
Other income * | - | 484 | 484 | |||
Cost of sales | (4,377) | (2,914) | (8,272) | |||
Gross profit | 3,015 | 2,882 | 7,703 | |||
Selling and marketing costs | (1,390) | (755) | (2,238) | |||
Administrative expenses ** | (1,689) | (1,970) | (5,350) | |||
Operating (loss)/profit | (64) | 157 | 115 | |||
Finance income | - | 2 | 8 | |||
(Loss)/profit before tax | (64) | 159 | 123 | |||
Tax expense | (96) | (34) | (337) | |||
(Loss)/profit for the period | (160) | 125 | (214) | |||
Attributable to: | ||||||
Equity shareholders of Mobile Streams plc | (160) | 125 | (214) | |||
(Loss) /earnings per share | ||||||
Pence per share | Pence per share | Pence per share | ||||
Basic (loss)/earnings per share | (0.439) | 0.345 | (0.589) | |||
Diluted (loss)/earnings per share | (0.439) | 0.334 | (0.572) | |||
* Other income includes the sale of the ringtones.com domain.
** Administrative expenses include depreciation, amortisation and impairment.
consolidated STATEment of COMPREHENSIVE income
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
consolidated STATEment of financial position
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
consolidated STATEment of changes in equity
| ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CONSOLIDATED CASH FLOW STATEMENT
|
NOTES TO COMPANY 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 18 months ended 30 June 2011.
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 18 months ended 30 June 2011 has been extracted from the statutory accounts for that period. In addition, the financial information for the 6 months ended 31 December 2010 has been extracted from the Interim results. The full audited accounts of the Group for the 18 months ended 30 June 2011 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.
2. SEGMENT REPORTING
As at 31 December 2011, the Group is organised into 4 geographical segments: Europe, North America, Latin America, 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 6 months ended 31 December 2011 were as follows:
| |||||
£000's | Europe | Asia Pacific | North America | Latin America | Group |
Mobile operator services | 68 | 767 | 219 | 1,426 | 2,480 |
Mobile internet services | 51 | - | - | 4,810 | 4,861 |
Other service fees | 14 | - | 6 | 31 | 51 |
Total revenue | 133 | 767 | 225 | 6,267 | 7,392 |
Cost of sales | (72) | (544) | 9 | (3,770) | (4,377) |
Gross profit | 61 | 223 | 234 | 2,497 | 3,015 |
Selling and marketing costs | (13) | - | (51) | (1,326) | (1,390) |
Administration expenses | (220) | (281) | (105) | (1,014) | (1,620) |
EBITDA* | (172) | (58) | 78 | 157 | 5 |
Depreciation, amortisation and impairment | (3) | 1 | (60) | (7) | (69) |
(Loss)/profit before tax | (175) | (57) | 18 | 150 | (64) |
Taxation | (5) | - | - | (91) | (96) |
(Loss)/profit after tax | (180) | (57) | 18 | 59 | (160) |
* Earnings before interest, tax, depreciation, amortisation and share compensation
The segmental results for the 6 months ended 31 December 2010 were as follows:
|
| ||||
£000's | Europe | Asia Pacific | North America | Latin America | Group |
Mobile operator services | 81 | 783 | 399 | 1,049 | 2,312 |
Mobile internet services | 97 | - | 58 | 2,354 | 2,509 |
Other service fees | 415 | 49 | 11 | 16 | 491 |
Total revenue | 593 | 832 | 468 | 3,419 | 5,312 |
Other income | 484 | - | - | - | 484 |
Cost of sales | (46) | (574) | (201) | (2,093) | (2,914) |
Gross profit | 1,031 | 258 | 267 | 1,326 | 2,882 |
Selling, marketing and administration expenses | (782) | (223) | (577) | (995) | (2,577) |
EBITDA* | 249 | 35 | (310) | 331 | 305 |
Depreciation, amortisation and impairment | (102) | (3) | (26) | (16) | (147) |
Finance income/(expense) | 1 | - | - | - | 1 |
Profit/(loss) before tax | 148 | 32 | (336) | 315 | 159 |
Taxation | 62 | - | - | (96) | (34) |
Profit/(loss) after tax | 210 | 32 | (336) | 219 | 125 |
* Earnings before interest, tax, depreciation, amortisation and share compensation
The segmental results for the 18 months ended 30 June 2011 are as follows: | |||||
£000's | Europe | Asia Pacific | North America | Latin America | Group |
Mobile operator services | 290 | 2,535 | 1,191 | 3,143 | 7,159 |
Mobile internet services | 279 | - | 175 | 7,016 | 7,470 |
Other service fees | 668 | 108 | 44 | 42 | 862 |
Total revenue | 1,237 | 2,643 | 1,410 | 10,201 | 15,491 |
Other income | 484 | - | - | - | 484 |
Cost of sales | (194) | (1,775) | (236) | (6,067) | (8,272) |
Gross profit | 1,527 | 868 | 1,174 | 4,134 | 7,703 |
Selling, marketing and administration expenses | (1,467) | (664) | (1,647) | (3,399) | (7,177) |
EBITDA* | 60 | 204 | (473) | 735 | 526 |
Depreciation, amortisation and impairment | (275) | (5) | (73) | (39) | (392) |
Share based compensation | (19) | - | - | - | (19) |
Finance income/(expense) | 4 | 4 | - | - | 8 |
(Loss)/profit before tax | (230) | 203 | (546) | 696 | 123 |
Taxation | 80 | - | - | (417) | (337) |
(Loss)/profit after tax | (150) | 203 | (546) | 279 | (214) |
* Earnings before interest, tax, depreciation, amortisation and share compensation
3. EARNINGS PER SHARE | |||||
Earnings/(loss) per share | |||||
Earnings/(loss) per share is calculated by dividing the profit/(loss) attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period. | |||||
Audited | |||||
6 months ended 31 December 2011 | 6 months ended 31 December 2010 | 18 months ended 30 June 2011 | |||
125 | |||||
(Loss)/profit for the period (£000's) | (160) | (214) | |||
(Loss)/earnings per share (pence): | |||||
Basic | (0.439) | 0.345 | (0.589) | ||
Diluted | (0.439) | 0.334 | (0.572) | ||
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 2011 | 6 months ended 31 December 2010 | 18 months ended 30 June 2011 | |
£000's | £000's | £000's | |
(Loss)/profit for the period | (160) | 125 | (214) |
Add back: share compensation expense/(credit) | - | 1 | 19 |
Add back: depreciation and amortisation | 69 | 147 | 392 |
Adjusted profit for the period | (91) | 273 | 197 |
| |||
Pence per share | Pence per share | Pence per share | |
Adjusted (loss)/earnings per share | (0.250) | 0.753 | 0.542 |
Adjusted diluted (loss)/earnings per share | (0.250) | 0.730 | 0.527 |
Weighted average number of shares | |||
6 months ended 31 December 2011 | 6 months ended 31 December 2010 | 18 months ended 30 June 2011 | |
Basic | 36,457,692 | 36,278,265 | 36,313,610 |
Exercisable share options | 1,130,230 | 1,174,484 | 1,077,661 |
Diluted | 37,587,922 | 37,452,749 | 37,391,271 |
Diluted earnings/(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.