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Gana Media Group PLC — Earnings Release 2015
Oct 12, 2015
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Earnings Release
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RNS Number : 8874B
Mobile Streams plc
12 October 2015
12 October 2015
Mobile Streams plc ("Mobile Streams", the "Group" or the "Company")
Audited Final Results
The Company today announces its audited final results for the year ended 30 June 2015.
Financial highlights:
· Revenues of £29.1m (2014: £48.6m)
· EBITDA* of £1.1m (2014: 0.7m)
· Profit before tax £0.83m (2014: £0.15m)
· Profit after tax of £0.19m (2014: loss of £0.5m)
· Basic earnings per share of 0.908 per share (2014: loss of 1.479p per share)
· £2.9m in cash, with no debt (2014: £3.0m)
· Live mobile internet subscription services in Argentina, Colombia, Mexico and Brazil along with newly launched services in India and Nigeria
*Calculated as profit before tax, interest, amortisation, depreciation, share compensation expense and impairment of assets.
The final audited numbers reflect positive adjustments relating to tax provisions that the Company had previously made in Argentina and Europe.
The full report and accounts for the year ended 30 June 2015 will be sent to shareholders today.
Outlook
Mobile Streams continues with its strategy of diversifying its revenues into new markets beyond Argentina and Latin America, especially India and Nigeria. Any further devaluation of the Argentinian peso would have a negative impact on the Company's future performance. These diversification plans will require investment during the rest of the year which will be reflected in reduced short term profitability. Cash as at the beginning of October 2015 was at a level of around £1.7m, reflecting investments made in the development and launch of the new markets and services.
The Company's new Indian subsidiary Mobile Streams India Private Limited is being set up, and the Company has signed direct contracts for mobile internet billing with two of the three largest local Indian mobile operators, reaching approximately 350 million mobile customers. Once these contracts have been fully executed and implemented, the Company expects to launch its subscription services in India. In Nigeria, the Company has launched with mobile billing available with one of the four largest local mobile operators.
The Company has launched some new advertising funded mobile services. These services include its mobile social network http://www.terrenal.com in Latin America. Moreover, Mobile Streams has launched a mobile games store globally at http://www.mobilegaming.com that is entirely ad-supported and free to use for consumers. Consumers can play each and any game an unlimited number of times as long as they watch a pre-role ad each time they play a game. Mobile Streams developed a proprietary games wrapper that allows consumers to play games for free in this way. Mobile Streams has signed up several hundred games for the launch of the service.
Simon Buckingham, founder and CEO, said: "We feel that the Company is now well placed from a product and market perspective to embrace and extend its longstanding expertise in mobile internet services. We are therefore confident about the Company's future prospects."
Enquiries
| Mobile Streams | ||||||||
| Simon Buckingham, Chief Executive Officer | +1 646 812 4749 | |||||||
| Enrique Benasso - Chief Financial Officer | +54 11 4811 0213 | |||||||
| N+1 Singer (Nominated Adviser and Broker) | ||||||||
| Nic Hellyer | +44 20 7496 3000 | |||||||
| James Maxwell | ||||||||
About Mobile Streams
Mobile Streams licenses and distributes a wide range of mobile content including games and apps that are retailed around the world, primarily in emerging markets. The Company's main operations are in Latin America and in particular Argentina, with recent expansion into India and Nigeria. Its shares are traded on the AIM market of the London Stock Exchange under the symbol MOS LN.
Chairman's Statement:
The Board of Mobile Streams plc presents its audited accounts for the financial year ended 30 June 2015.
The past twelve months has seen Mobile Streams plc (the "Group" or the "Company") continue with its strategy to develop a content offering across a wide range of mobile devices in a number of large emerging markets direct to consumers. This is in addition to our original business of providing content to mobile network operators and other business partners. The operating performance of the business reflects our substantial positioning in Argentina and Latin America. It also reflects the cost of working with Argentinian currency control rules.
Group revenue for the year ended 30 June 2015 was £29.1m (2014: £48.6m). Trading EBITDA* was £1.1m for year (2014: £0.7m). Profit before tax was £0.8m (2014: £0.2m). Much of the reduction in revenues is attributable to Argentina. Revenue in Argentina (which equates to 87% of our revenue) on a constant currency basis decreased by 22% from AR$440m to AR$343m. Challenges in Argentina spurred the Company to develop new premium content products, and funded products, and to diversify into new emerging markets.
Our operations outside Europe represent more than 99% of the overall revenues for the period. Latin America represents 99% (see note 21) of the total revenues for the year. Of this some 87% was in Argentina.
During 2012, Argentina modified its regulations regarding the international transfer of funds which restricted the Group's ability to transfer cash out of the country. As of 30 June 2013, more than 73% of the Group's cash was in Argentina. Following a strategic decision to mitigate capital risk and diversify our sources of cash generation (principally to countries with more flexible capital controls such as Mexico and Colombia), Mobile Streams has reduced the proportion of its cash within Argentina to 4% as of 30 June 2015.
Mobile Streams enters the new financial year with a clear focus on continuing to expand its operating base in Latin America and in open mobile internet services for apps and games in new large emerging markets including India and Nigeria. The Directors do not propose a payment of a dividend (2014: £Nil). In the new financial year, the majority of revenues are once again expected to be generated in Latin America.
Despite the challenges in Argentina, the Board believes that the Group is well positioned to deliver growth in shareholder returns with established and newly developed ad funded and premium products and strong trading relationships, complemented by broader market growth in developing markets, which represent our key targets for future growth. We are long established experts in mobile content.
Roger Parry
Chairman
*Calculated as profit before tax, interest, amortisation, depreciation, share compensation expense and impairment of assets.
STRATEGIC REPORT
Mobile Streams PLC (AIM: MOS), the global mobile media company, is pleased to provide an update to its shareholders on its performance for the 12 months ended 30 June 2015.
BUSINESS REVIEW
Operating Review
Mobile Streams' performance during the financial year ended 30 June 2015 was driven primarily from Mobile Internet sales in Latin America.
Group revenue for the year ended 30 June 2015 was £29.1m. The gross profit was £7.7m and decreased by 46% during the year (year ended 30 June 2014: £14.2m). The gross profit margin decreased from 29.3% to 26.4% due to increased marketing (Direct to Consumer) costs related to Mobile Internet.
Selling, marketing and administrative expenses were £6.9m, a 51% decrease on the year ended 30 June 2014. Revenues are generated from two principal business activities: the sale of mobile content through mobile operators (Mobile Operator Sales) and the sale of mobile content over the internet (Mobile Internet Sales). Additionally, the Group is engaged in the provision of consulting and technical services (Other Service Fees).
During the period, both the Group's Mobile Internet revenues and its Mobile Operator revenues decreased. As consumers steadily update their phones from legacy feature and flip phone models to smartphones, they have generally used the operator content portals less. Consumers generally use independent portals, as well as the open mobile internet, more actively.
The Argentine peso suffered a modest devaluation against the British Pound during the year (3.66% for the 12 months ended on 30 June 2015). The financial results and balances of all group entities that have a functional currency different from the presentation currency are translated into the presentation currency, and these exchange differences are recognised as a separate component of equity (cumulative translation reserve). On disposal of a subsidiary the corresponding cumulative exchange differences will be charged or credited to the income statement as a separate component of equity (cumulative translation reserve).
Mobile Internet Sales
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.
The group had experienced growth and then stabilization in 2013-2014 in Mobile Internet sales as consumers used their mobile devices to purchase mobile content subscriptions. After that, the 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 devaluation of the Argentine peso during 2014 market in Argentina during the 2014 to 2015 financial year, resulting in a fall in sales.
Latin America, primarily Argentina, accounted for the majority of revenues.
STRATEGIC REPORT
Mobile Operator Sales
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 40% year on year partially due to 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
Group revenue for the year ended 30 June 2015 was £29.1m, a 40% decrease on the previous year (2014: £48.6m).
Gross profit was £7.7m, a decrease of 46% during the year (2014: £14.2m). The gross profit margin decreased from 29% to 26% due to increased marketing (Direct to Consumer) costs related to Mobile Internet.
Selling, marketing and administrative expenses were £6.9m, a 51% decrease on the year ended 30 June 2014 (2014: £14.2m).
The Group recorded a profit after tax of £337k for the year ended 30 June 2015 (2014: loss £0.5m). Basic earnings per share improved to a profit of 0.908 pence per share (2014: loss of 1.479 pence per share). Adjusted earnings per share (excluding interest, depreciation, amortisation, impairments and share compensation expense) increased to 1.560 pence per share (2014: 0.515 pence per share).
The Group had cash of £2.1m at 30 June 2015, with no debt (£3.0m of cash with no debt as at 30 June 2014). Argentina cash was £80k at 30 June 2015 (2014: £453k)
Financial performance
| Year to 30 June 2015 | Year to 30 June 2014 (re-stated) |
Year to 30 June 2013 | |
| £000's | £000's | £000's | |
| Revenue | 29,063 | 48,573 | 53,936 |
| Gross profit | 7,673 | 14,229 | 17,586 |
| Selling and Marketing Costs | (3,405) | (7,872) | (7,843) |
| Administrative Expenses | (3,215) | (5,617) | (4,565) |
| Trading EBITDA* | 1,053 | 740 | 5,178 |
| Depreciation and Amortisation | (59) | (36) | (25) |
| Impairments | - | (380) | (334) |
| Share Based Compensation | (219) | (328) | (18) |
| Operating profit | 775 | (4) | 4,801 |
| Finance Income | 65 | 170 | - |
| Finance Expense | (8) | (13) | (13) |
| Profit before tax | 832 | 153 | 4,788 |
| * Calculated as profit before tax, interest, amortisation, depreciation, share compensation expense and impairment of assets |
STRATEGIC REPORT
Key performance indicators ("KPI's")
The KPIs used by the Group are Trading EBITDA*, variance in revenue and gross profit. Management review these on a regular basis, largely by reference to budgets and reforecasts. Trading EBITDA was £1.1m for the year ended on June 2015, and it was £0.7m for the year ended in June 2014.
Earnings before tax, interest, amortisation, depreciation, share compensation expense and impairment of assets (Trading EBITDA*) measured exactly as stated. All tax, interest, amortisation, depreciation, share compensation expense and impairment of assets entries in the income statement are added back to profit after tax in calculating this measure.
Growth in revenue is a measure of how we are building our business. Our goal is to achieve year-on-year growth. Although revenue decreased 40% during the year, like for like revenue on a constant currency basis actually decreased by 22%.
Gross profit as a percentage of revenue is a measure of our profitability. Gross profit was £7.7m for the year ended in June 2015, a decrease of 46 %. (2014: £14.2m).
Strategy
Our business model is generating revenues though relationships with mobile operators and content aggregators and retailing directly to the consumer. Mobile Streams have developed expertise in selling content to consumers in developing markets. We enjoyed great success in gaining market share in Argentina but our results have suffered from the currency issues described.
In addition to expanding its mobile internet subscription services from Latin America into India and Nigeria, the Company has launched some ad funded mobile services. These services include its mobile social network http://www.terrenal.com in Latin America. Moreover, Mobile Streams has launched a mobile games store globally at http://www.mobilegaming.com that is entirely ad-supported and free to use for consumers. Consumers can play each and any game an unlimited number of times as long as they watch a pre-roll ad each time they play a game. Mobile Streams developed a proprietary games wrapper that allows consumers to play games for free in this way. Mobile Streams has signed up several hundred games for the launch of the service.
Principal risks and uncertainties
The nature of the Group's business and strategy makes it subject to a number of risks.
The Directors have set out below the principal risks facing the business.
Contracts with Mobile Network Operators (MNOs)
While Mobile Streams maintains relationships with numerous MNOs in the various territories, a small number of operators account for a high portion of the Group's business.
As the Group grows, management are using geographic and product diversity to counter this risk.
* Calculated as profit before tax, interest, amortisation, depreciation, share compensation expense and impairment of assets.
STRATEGIC REPORT
Contracts with rights holders
The majority of content provided by Mobile Streams is licensed from rights holders. While Mobile Streams is not dependent on any single rights holder for its entertainment content, termination, non-renewal or significant renegotiation of a contract could result in lower revenue.
The Group continues to enter into new content licensing arrangements to mitigate these risks.
Competition
Competition from alternative providers could adversely affect operating results through either price pressures, or lost custom. Products and pricing of competitors are continuously monitored to ensure the Group is able to react quickly to changes in the market.
Fluctuations in currency exchange rates
Approximately 99% of the Group's revenue relates to operations outside the UK. The Group is therefore exposed to foreign currency fluctuations and the financial condition of the Group may be adversely impacted by foreign currency fluctuations. See note on page 7 "Financial risk management objectives and policies".
The Group has operations in Europe, Asia Pacific, North America and Latin America and recently in Africa and India. As a result, it faces both translation and transaction currency risks.
Currency exposure is not currently hedged, though the Board continuously reviews its foreign currency risk exposure and potential means of combating this risk.
Dependencies on key executives and personnel
The success of the business is substantially dependent on the Executive Directors and senior management team.
The Group has incentivised all key and senior personnel with share options and has taken out a Key Man insurance policy on its Chief Executive Officer, Simon Buckingham.
Intellectual property rights
The protracted and costly nature of litigation may make it difficult to take a swift or decisive action to prevent infringement of the Group's intellectual property rights.
Although the Directors believe that the Group's content and technology platform and other intellectual property rights do not infringe the IP rights of others, third-parties may assert claims of infringement which could be expensive to defend or settle. The Group holds suitable insurance to reduce the risk and extent of financial loss.
Technology risk
A significant portion of the future revenues are dependent on the Group's technology platforms. Instability or interruption of availability for an extended period could have an adverse impact on the Group's financial position.
Mobile Streams has invested in resilient hardware architecture and continues to maintain software control processes to minimise this risk.
Management controls and reporting procedures and execution
The ability of the Group to implement its strategy in a competitive market requires effective planning and management control systems. The Group's future growth will depend upon its ability to expand whilst improving exposure to operational, financial and management risk.
STRATEGIC REPORT
Going concern risk
The current uncertain economic climate and changing market place may impact the Group's cash flows and thereby its ability to pay its creditors as they fall due.
A principal responsibility of management is to manage liquidity risk, as detailed in Note 25 to the financial statements. The Group uses annual budgeting, forecasting and regular performance reviews to assess the longer term profitability of the Group and make strategic and commercial changes as required ensuring cash resources are maintained.
Argentina's Government imposed currency controls at the beginning of 2012 which continue to inhibit the repatriation of funds to the parent company. Management made the appropriate actions to mitigate this risk and has moved its finance operations to Argentina to help ensure stability and continuity.
Financial risk management objectives and policies
The Group uses various financial instruments. These include cash and various items, such as trade receivables and trade payables that arise directly from its operations. The numerical disclosures relating to these policies are set out in notes to the financial statements.
The existence of these financial instruments exposes the Group to a number of financial risks, which are described in more detail below. The Group does not currently use derivative products to manage foreign currency or interest rate risks.
The main risks arising from the Group's financial instruments are market risk, currency risk, liquidity risk and credit risk. The Directors review and agree policies for managing each of these risks and they are summarised below. These policies have remained unchanged from previous periods.
Market risk
Market risk encompasses three types of risk, being currency risk, fair value interest rate risk and price risk. In this review interest rate and price risk have been ignored as they are not considered material risks to the business.
Liquidity risk
The Group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably.
The aforementioned capital flow restrictions imposed by the Argentinian government severely restrict the Argentina subsidiary from transferring funds to the Group´s parent company for the payment of dividends or for services rendered. This risk is being mitigated by the launch of similar businesses to Argentina in Colombia and Mexico where the cross border transfer of funds is not restricted. Vendor related payments can be made from Argentina on behalf of other subsidiaries.
The Group currently has no borrowing arrangements in place and prepares cash flow forecasts which are reviewed at Board meetings to monitor liquidity.
Credit risk
The Group's principal financial assets are bank deposits, cash and trade receivables. The credit risk associated with the bank deposits and cash is limited as the counterparties have high credit ratings assigned by international credit-rating agencies. The principal credit risk arises therefore from the Group's trade receivables. Most of the Group's trade receivables are large mobile network operators or media groups. Whilst historically credit risk has been low management continuously monitors its financial assets and performs credit checks on prospective partners.
| Argentina Division | ||||
| 12 months to 30 June | 2015 | 2014 | 2015 | 2014 |
| AR$'000 | AR$'000 | £'000 | £'000 | |
| Revenue | 342,846 | 440,435 | 25,293 | 40,500 |
The Argentina Division delivered a decreased revenue performance in line with the market expectations. The division represented 87% of the revenues of the Group.
Argentina revenue decreased 22% in Argentine Pesos terms; from AR$440 Million to AR$342 Million; but the reported British Pound figures shows a 38% decrease in revenue; from £40.5M to £25.3M.
Future Developments
In addition to expanding its mobile internet subscription services from Latin America into India and Nigeria, the Company has launched some ad funded mobile services. These services include its mobile social network http://www.terrenal.com in Latin America. Moreover, Mobile Streams has launched a mobile games store globally at http://www.mobilegaming.com that is entirely ad-supported and free to use for consumers. Consumers can play each and any game an unlimited number of times as long as they watch a pre-role ad each time they play a game. Mobile Streams developed a proprietary games wrapper that allows consumers to play games for free in this way. Mobile Streams has signed up several hundred games for the launch of the service.
The Strategic Report, encompassing pages 3 to 8, was approved by the Board and signed on its behalf by:
Enrique Benasso
Chief Financial Officer
09 October 2015
DIRECTORS' REPORT
The principal activity of the Group is the sale of content for distribution on mobile devices. The Company is registered in England and Wales under company number 03696108.
Results and dividends
The trading results and the Group's financial position for the year ended 30 June 2015 are shown in the attached financial statements, and are discussed further in the Strategic Report.
The Directors have not proposed a dividend for this year (2014: £nil).
Directors and their interests
The present membership of the Directors of the Company (the "Board" or the "Directors"), together with their beneficial interests in the ordinary shares of the Group, is set out below. All Directors served on the Board throughout the year.
| Shares held or controlled by Directors | ||
| Ordinary | Ordinary | |
| shares of | shares of | |
| £0.002 each | £0.002 each | |
| 30 June 2015 | 30 June 2014 | |
| S D Buckingham | 10,382,500 | 10,382,500 |
| M Carleton | - | - |
| P Tomlinson | 40,000 | 40,000 |
| R G Parry | 181,183 | 181,183 |
| T Maunder | 5,000 | 5,000 |
| E Benasso | - | - |
DIRECTORS' REPORT
Options
The table below summarises the exercise terms of the various options over ordinary shares of £0.002 (year ended 30 June 2014: £0.002) which have been granted and were still outstanding at 30 June 2015.
| Options Held at | Options Granted During the period | Options exercised During the period | Options Held at | Exercise price | Earliest date from which exercisable | Latest expiry | |
| 01 July 2014 | 30 June 2015 | date | |||||
| Number | Number | Number | Number | £ | |||
| R G Parry | 689,655 | - | - | 689,655 | 0.870 | 15 February 2007 | 14 February 2016 |
| R G Parry | 250,000 | - | - | 250,000 | 0.343 | 23 March 2012 | 22 March 2021 |
| E Benasso | 250,000 | - | - | 250,000 | 0.198 | 13 June 2015 | 12 June 2024 |
The remuneration of each of the Directors for the period ended 30 June 2015 is set out below:
| Year to 30 June 2015 | Year to 30 June 2014 | |||||
| Salary | Fees | Benefits | Total | Total | ||
| £'000 | £'000 | £'000 | £'000 | £'000 | ||
| S D Buckingham | 191 | - | 1 | 192 | 188 | |
| T Maunder | 20 | - | - | 20 | 20 | |
| R G Parry | 16 | 14 | - | 30 | 30 | |
| P Tomlinson | - | 20 | - | 20 | 20 | |
| G Cerf | - | - | - | - | 44 | |
| E Benasso | 67 | - | - | 67 | 5 | |
| Total | 294 | 34 | 1 | 329 | # | 307 |
Benefits comprise medical health insurance.
Post balance sheet events
There have been no significant post balance sheet events.
DIRECTORS' REPORT
Going Concern
The Group had cash balances of £2.1m at the year end (2014:£3.0m) and no borrowings. Having reviewed cash flow forecasts and budgets for the year ahead the Directors have a reasonable expectation that the Group has sufficient resources to continue in operational existence for the foreseeable future. During the year ended 30 June 2012, Argentina modified its laws on the cross border intercompany transfer of funds. Management have made the proper changes to mitigate this risk and have moved the finance operations to Argentina to help ensure stability and continuity. The risk is also mitigated by the launch of similar businesses in markets such as Colombia and Mexico where the cross border transfer of funds is not restricted. For these reasons, the Board consider Mobile Streams to be a going concern. No material uncertainties or events that may cast significant doubt about the ability of the Group to continue as a going concern have been identified by the Directors.
Directors' Responsibilities Statement
The Directors are responsible for preparing the Strategic Report, the Directors' Report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the group financial statements in accordance with International Financial Reporting Standards as adopted by the European Union (FRSs) and have elected to prepare the parent company financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (UK GAAP). Under Company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs and profit or loss of the Company and Group for that period. In preparing these financial statements, the Directors are required to:
§ select suitable accounting policies and then apply them consistently;
§ make judgements and accounting estimates that are reasonable and prudent;
§ state whether applicable International Financial Reporting Standards / UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
§ prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group's transactions and disclose with reasonable accuracy at any time the financial position of the Group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors confirm that:
§ in so far as each Director is aware, there is no relevant audit information of which the Company's auditor is unaware; and
§ each Director has taken all steps that he ought to have taken to make himself aware of any relevant audit information and to establish that the auditor is aware of that information.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Auditor
Grant Thornton UK LLP has indicated their willingness to continue in office, and a resolution that they be re-appointed will be proposed at the annual general meeting.
On behalf of the Board
Enrique Benasso
Chief Financial Officer
09 October 2015
REPORT OF THE INDEPENDENT AUDITOR TO THE MEMBERS OF MOBILE STREAMS PLC
We have audited the consolidated financial statements of Mobile Streams Plc for the year ended 30 June 2015 which comprise the accounting policies, the consolidated income statement, the consolidated statement of comprehensive income, the consolidated statement of financial position, the consolidated statement of changes in equity, the consolidated cash flow statement and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of Directors and auditor
As explained more fully in the Directors' Responsibilities Statement set out on page 11, the Directors are responsible for the preparation of the consolidated financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the consolidated financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the FRC's website at www.frc.org.uk/apb/scope/private.cfm.
Opinion on financial statements
In our opinion the consolidated financial statements:
§ give a true and fair view of the state of the group's affairs as at 30 June 2015 and of its profit for the year then ended;
§ have been properly prepared in accordance with IFRSs as adopted by the European Union; and
§ have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and the Directors' Report for the financial period for which the group financial statements are prepared is consistent with the group financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you if, in our opinion:
§ certain disclosures of Directors' remuneration specified by law are not made; or
§ we have not received all the information and explanations we require for our audit.
Other matter
We have reported separately on the parent company financial statements of Mobile Streams Plc for the year ended 30 June 2015.
Christopher Smith
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
London
09 October 2015
Consolidated STATEMENT OF COMPREHENSIVE INCOME
ACCOUNTING POLICIES
Summary of significant accounting policies
Basis of preparation
The Group financial statements consolidate those of the parent company and all of its subsidiary undertakings drawn up to 30 June 2015. They have been prepared in accordance with applicable International Financial Reporting Standards as adopted by the EU and with those parts of the Companies Act 2006 applicable to companies reporting under IFRS. All references to IFRS in these statements refer to IFRS as adopted by the EU.
The historical cost convention has been applied as set out in the accounting policies.
Disclosure of prior year restatement
The group's 2014 tax charge, tax payable and retained earnings have been restated to correct the overstatement of income tax payable in Argentina for 2014 and earlier periods. The restatement has resulted in a reduction of £14,000 in the group's tax charge for the year ended 30 June 2014, an increase of £783,000 in the group's retained earnings brought forward at 1 July 2013 and a reduction of £797,000 in the group's tax payable at 30 June 2014. As a consequence the group's loss per share and diluted loss per share for the year ended 30 June 2014 have both reduced by 0.038 pence per share and have been restated as 1.479 pence per share.
The basic and diluted earnings per share:
| 2015 | 2014 (re-stated) |
||
| £000's | £000's | ||
| Weighted average number of shares | |||
| Number of shares | Number of shares | ||
| For basic earnings per share | 37,100,536 | 36,908,888 | |
| Exercisable share options | 2,330,961 | 1,502,963 | |
| For diluted earnings per share | 39,431,497 | 38,411,851 | |
| Pence per share | Pence per share | ||
| Adjusted earnings per share | 0.345 | 2.620 | |
| Adjusted diluted earnings per share | 0.325 | 2.517 |
Consolidation
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.
Intercompany 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.
The separate financial statements and related notes of the Company are presented on pages 49-54, which are prepared in accordance with UK GAAP.
Foreign currency translation
(a) Presentational currency
The consolidated and parent company 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 the translation of monetary assets and liabilities at the balance sheet date are recognised in the income statement, except to the extent that a monetary asset or liability represents a net investment in a subsidiary when exchange differences arising on translation are recognised in equity within the translation reserve. Amount due from or to subsidiaries are treated as part of net investment in the subsidiary when settlement is neither planned nor likely to occur in the foreseeable future.
Foreign currency balances are translated at the year-end using exchange rate prevailing at the year-end.
ACCOUNTING POLICIES
(c) Group companies
The financial results and position of all group entities that have a functional currency different from the presentation currency of the Group 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 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 (cumulative translation reserve)
Property, plant and equipment
All property, plant and equipment (PPE) is 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 its estimated useful life. The following rates and methods have been applied:
| Plant and equipment | 33% straight line | ||
| Office furniture | Between 10% and 33% straight line |
Each asset's residual value and useful life is 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 recognised in the income statement.
ACCOUNTING POLICIES
Going Concern
The Group had cash balances of £2.1m at the year ended (2014: £3.0m) and no borrowings (2014: no borrowings). Having reviewed cash flow forecasts and budgets for the year ahead the Directors have a reasonable expectation that the Group has sufficient resources to continue its operations for the foreseeable future. During the year ended 30 June 2012 Argentina modified its laws on the cross border intercompany transfer of funds. Management have made changes to mitigate this risk including the launch of similar businesses in Colombia and Mexico where cross border transfers of funds are not restricted. For these reasons, the Board consider Mobile Streams to be a going concern. No material uncertainties or events that may cast significant doubt about the ability of the Group to continue as a going concern have been identified by the Directors.
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. 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) Assets acquired through business combinations
These consist of customer relationships, technology based assets and non-compete agreements acquired through business combinations. To meet this definition, the intangibles must be identifiable either by being separable, or by arising from contractual or other legal rights. Intangibles acquired through business combinations are recognised at fair value. Where a reliable estimate of useful life of the intangible can be obtained, the intangible asset is to be amortised using the straight line basis, over the useful life. Where there is an indication of impairment of intangibles, the intangible will be tested for impairment. The estimated useful lives of these assets are:
| Customer relationships | 3 years |
| Technology based assets | 3 years |
| Non-compete agreements | 3.5 years |
(c) Media content and Media platform development
Media content and Media platform development represent intangible assets that have been acquired from third parties and also that are internally generated, including capitalised direct staff costs. Content and platform expenditure is charged against income in the year in which it is incurred unless it meets the recognition criteria of IAS 38 Intangible Assets. To meet the criteria of an intangible asset the Group must demonstrate the following criteria:
- the technical feasibility of completing the asset so that it will be available for use,
- its intention to complete the intangible (or sell it),
- its ability to use or sell the intangible,
- that the intangible will generate future economic benefit,
- that adequate resources are available to complete the intangible, and
- the expenditure can be reliably measured.
Intangible assets, if capitalised, are amortised on a straight-line basis over the period of the expected benefit. Amortisation commences when the asset is ready for use.
ACCOUNTING POLICIES
(d) Appitalism
Appitalism development represents intangible assets that have been internally generated, including capitalised direct staff costs. To meet the intangible asset criteria the group must demonstrate the technical feasibility of completing the asset so that it will be available for use, its intention to complete the intangible (or sell it), its ability to use or sell the intangible, that the intangible will generate future economic benefit, adequate resources to complete the intangible and the expenditure can be reliably measured. Intangible assets, if capitalised, are amortised on a straight line basis, and reviewed annually for indicators of impairment.
(e) Software
Software represents assets that have been acquired from third parties. To meet the criteria for recognition the intangible asset must be both identifiable and either separable, or arise from contractual or other legal rights. Intangible assets acquired from third parties are stated at cost less accumulated amortisation and impairment losses. Where a reliable estimate of useful life of the intangible can be obtained, the intangible asset is to be amortised using the straight line basis, over the useful life. Where there is an indication of impairment of intangible assets with a definite life, the intangible will be tested for impairment. The estimated useful life of acquired software is 2 years.
Amortisation is included in "Administrative expenses" in the income statement.
Impairment of assets
Assets that have an indefinite useful life, such as goodwill, are not subject to amortisation, but are instead tested annually for impairment and also tested whenever an event or change in situation indicates 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).
Impairment charges are included in the "Administrative expenses" in the income statement.
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 the initial recognition of goodwill, nor on the initial recognition of an asset or liability unless the related transaction is a business combination or affects tax or accounting profit. Deferred tax on temporary differences associated with shares in subsidiaries is not provided if reversal of these temporary differences can be controlled by the Group and it is probable that reversal will not occur in the foreseeable future.
Deferred income tax is determined using tax rates known by the balance sheet date and that 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. There is no discounting of assets or liabilities.
Changes in deferred tax assets or liabilities are recognised as a component of the tax expense in the income statements, except where they relate to items that are charged or credited directly to equity or other comprehensive income, in which case the related deferred tax is also charged or credited directly to equity or other comprehensive income.
ACCOUNTING POLICIES
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 can be reliably estimated.
Provisions are measured at the present value of management's 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 risks specific to the liability.
Financial Assets
a) Cash and cash equivalents
Cash and cash equivalents include cash on hand, demand deposits held with financial institutions and other short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
b) Trade and other receivables
Trade receivables are included in trade and other receivables in the balance sheet. Trade receivables are recognised initially at fair value and later measured at amortised cost using the effective interest method, less any provision for impairment. An impairment provision for trade receivables is established when there is objective evidence that 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 original effective interest rate.
The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is recognised in the income statement. Subsequent recoveries of amounts previously written off are credited in the income statement
Financial Liabilities
Financial liabilities are obligations to pay cash or deliver other financial assets and are recognised when the Group becomes a party to the contractual provisions of the instrument. All financial liabilities are recorded initially at fair value, net of direct issue costs.
A financial liability is derecognised only when the obligation is extinguished, that is, when the obligation is discharged or cancelled or expires.
The Group's financial liabilities consist of trade and other payables, which are measured subsequent to initial recognition at amortised cost using the effective interest rate method.
All interest-related charges are reported in the income statement as finance costs.
Revenue recognition
As at 30 June 2015, the Group was organised into four geographical segments: Europe, North America, Latin America, and Asia Pacific. Revenues are from external customers only and are generated from three principal business activities: the sale of mobile content through Mobile Operator Services (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).
ACCOUNTING POLICIES
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) Mobile Operator Sales & Mobile Internet Sales
Revenue from the sale of goods is recognised when a Group entity has delivered media content to the end consumer, who has accepted the product and collectability of the related receivable is reasonably assured from the customer.
b) Other Service Fees
Revenue is recognised in the accounting period in which the services are rendered, by reference to the stage of 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 using the effective interest method. If the collection of interest is considered doubtful, it is deferred and excluded from interest income in the income statement.
d) Deferred Income
Revenue that has been collected from customers but where the above conditions are not met is recorded in the Statement of Financial Position under accruals and deferred income and released to the income statement when the conditions are met.
Share based payments
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').
The Group has applied the requirements of IFRS 2 (Amended) 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 model.
The cost of equity-settled transactions is recognised in the income statement, together with a corresponding increase in retained earnings, 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. Market conditions are taken into account in determining the fair value of the options granted, at grant date, and are subsequently not adjusted for. 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.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are charged to the share premium account.
ACCOUNTING POLICIES
Leased assets
In accordance with IAS 17, all the Group's leases are determined to be operating leases and the payments made under them are charged to the income statement on a straight line basis over the lease term. Lease incentives are spread over the term of the lease.
Operating leases are leases in which the risks and rewards of ownership are not transferred to the lessee.
Equity balances
a) Called up share capital
Called up share capital represents the aggregate nominal value of ordinary shares in issue.
b) Share premium
The share premium account represents the incremental paid up capital above the nominal value of ordinary shares issued.
c) Translation Reserve
The translation reserve represents the cumulative translation adjustments on translation of foreign operations.
Standards and Interpretations
There are no new standards or interpretations which have been adopted by the European Union that have a material impact on the current period or are expected to have a material impact on future periods.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
| CONSOLIDATED INCOME STATEMENT | |||||||
| Year ended 30 June 2015 |
Year ended 30 June 2014 (re-stated) |
||||||
| £000's | £000's | ||||||
| Revenue | 21 | 29,063 | 48,573 | ||||
| Cost of sales | 21 | (21,390) | (34,344) | ||||
| Gross profit | 21 | 7,673 | 14,229 | ||||
| Selling and marketing costs | 21 | (3,405) | (7,872) | ||||
| Administrative expenses * | 21 | (3,493) | (6,361) | ||||
| Operating Profit (Loss) | 775 | (4) | |||||
| Finance income | 5 | 65 | 170 | ||||
| Finance expense | 6 | (8) | (13) | ||||
| Profit before tax | 832 | 153 | |||||
| Tax expense | 10 | (495) | (699) | ||||
| Profit/(Loss) for the year | 337 | (546) | |||||
| Attributable to: | |||||||
| Attributable to equity shareholders of Mobile Streams plc | 337 | (546) | |||||
| Earnings/ (loss) per share | |||||||
| Pence per share | Pence per share (re-stated) | ||||||
| Basic earnings/ (loss) per share | 9 | 0.908 | (1.479) | ||||
| Diluted earnings/ (loss) per share | 9 | 0.855 | (1.479) | ||||
| * Administrative expenses include Depreciation, Amortisation and Impairment £59k (ended 30 June 2014:£416k); Share Based Compensation £219k (ended 30 June 2014: £327k). Other administrative expenses £3.2m (ended 30 June 2014: £5.2m). | |||||||
| Year ended 30 June 2015 |
Year ended 30 June 2014 (re-stated) |
||||||
| £000's | £000's | ||||||
| Profit/(Loss) for the year | 337 | (546) | |||||
| Amounts which may be reclassified to profit & loss | |||||||
| Exchange differences on translating foreign operations | (773) | (1,347) | |||||
| Total comprehensive (loss) for the year | (436) | (1,893) | |||||
| Total comprehensive loss for the year attributable to: | |||||||
| Equity shareholders of Mobile Streams plc | (436) | (1,893) | |||||
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| 2015 | 2014 | 2013 | |||||
| (re-stated) | (re-stated) | ||||||
| £000's | £000's | £000's | |||||
| Assets | |||||||
| Non- Current | |||||||
| Goodwill | 13 | - | - | 380 | |||
| Intangible assets | 13 | - | - | - | |||
| Property, plant and equipment | 12 | 94 | 107 | 30 | |||
| Deferred tax asset | 17 | 285 | 260 | 194 | |||
| 379 | 367 | 604 | |||||
| Current | |||||||
| Trade and other receivables | 14 | 4,016 | 6,494 | 8,420 | |||
| Cash and cash equivalents | 15 | 2,098 | 2,964 | 2,851 | |||
| 6,114 | 9,458 | 11,271 | |||||
| Total assets | 6,493 | 9,825 | 11,875 | ||||
| Equity | |||||||
| Equity attributable to equity holders of Mobile Streams plc | |||||||
| Called up share capital | 18 | 74 | 74 | 73 | |||
| Share premium | 10,579 | 10,579 | 10,357 | ||||
| Translation reserve | (2,814) | (2,041) | (695) | ||||
| Merger reserve | - | - | 153 | ||||
| Retained earnings | (4,101) | (5,338) | (5,272) | ||||
| Total equity | 3,738 | 3,274 | 4,616 | ||||
| Current | |||||||
| Trade and other payables | 16 | 2,090 | 5,340 | 5,390 | |||
| Current tax liabilities | 665 | 871 | 1,749 | ||||
| Provisions | 23 | - | 340 | 120 | |||
| 2,755 | 6,551 | 7,259 | |||||
| Total liabilities | 2,755 | 6,551 | 7,259 | ||||
| Total equity and liabilities | 6,493 | 9,825 | 11,875 | ||||
The financial statements were approved by the Board of Directors and are signed on its behalf by:
Enrique Benasso
Chief Financial Officer
| Company registration number: 03696108 09 October 2015 |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
| Equity attributable to equity holders of Mobile Streams Plc | ||||||
| Called up share capital | Share premium | Translation reserve | Retained earnings | Merger reserve | Total Equity | |
| (re-stated) | (re-stated) | (re-stated) | ||||
| £000's | £000's | £000's | £000's | £000's | £000's | |
| Balance at 30 June 2013 | 73 | 10,357 | (695) | (5,272) | 153 | 4,616 |
| Balance at 1 July 2013 | 73 | 10,357 | (695) | (5,272) | 153 | 4,616 |
| Exercise of share options | 1 | 222 | - | - | - | 223 |
| Credit for share based payments | - | - | - | 328 | - | 328 |
| Disposal of subsidiary | - | - | - | 153 | (153) | - |
| Transactions with owners | 1 | 222 | - | 481 | (153) | 551 |
| Disposal of subsidiary | - | - | 1 | (1) | - | - |
| Loss for the 12 months ended 30 June 2014 | - | - | - | (560) | - | (560) |
| Restatement prior year | - | - | - | 14 | - | 14 |
| Exchange differences on translating foreign operations | - | - | (1,347) | - | - | (1,347) |
| Total comprehensive loss for the year | - | - | (1,346) | (547) | - | (1,893) |
| Balance at 30 June 2014 | 74 | 10,579 | (2,041) | (5,338) | - | 3,274 |
| Balance at 1 July 2014 | 74 | 10,579 | (2,041) | (5,338) | - | 3,274 |
| Credit for share based payments | - | - | - | 219 | - | 219 |
| Transactions with owners | - | - | - | 219 | - | 219 |
| Profit for the 12 months ended 30 June 2015 | - | - | - | 337 | - | 337 |
| Exchange differences on translating foreign operations | - | - | (92) | - | - | (92) |
| Total comprehensive loss for the year | - | - | (92) | 337 | - | 245 |
| Balance at 30 June 2015 | 74 | 10,579 | (2,133) | (4,782) | - | 3,738 |
CONSOLIDATED CASH FLOW STATEMENT
| Year ended 30 June 2015 |
Year ended 30 June 2014 (re-stated) |
|||
| £000's | £000's | |||
| Operating activities | ||||
| Profit before taxation | 832 | 153 | ||
| Adjustments: | ||||
| Share based payments | 219 | 327 | ||
| Depreciation | 4 | 59 | 36 | |
| Impairments | 4 | - | 380 | |
| Interest received | 5 | (65) | (170) | |
| Changes in trade and other receivables | 1,983 | 1,926 | ||
| Changes in trade and other payables | (3,250) | (50) | ||
| Disposal of subsidiary | - | (15) | ||
| Provision | (340) | - | ||
| Tax paid | - | (479) | ||
| Total cash generated in operating activities | (562) | 2,108 | ||
| Investing activities | ||||
| Additions to property, plant and equipment | 12 | (49) | (118) | |
| Interest received | 5 | 65 | 170 | |
| Net Cash used in investing activities | 16 | 52 | ||
| Financing activities | ||||
| Issue of share capital (net of expenses paid) | 39 | 110 | ||
| Net Cash used in investing activities | 39 | 110 | ||
| Net change in cash and cash equivalents | (507) | 2,271 | ||
| Cash and cash equivalents at beginning of year | 2,964 | 2,851 | ||
| Exchange (losses) on cash and cash equivalents | (359) | (2,158) | ||
| Cash and cash equivalents, end of year | 15 | 2,098 | 2,964 |
1. General information
Mobile Streams Plc (the Company) and its subsidiaries (together 'the Group') sell digital content, primarily for distribution on wireless devices. The Group has subsidiaries in Europe, Asia, North America and Latin America. The Group has made various strategic acquisitions to build its market share in these regions.
The Company is a public limited company incorporated and domiciled in the United Kingdom. The address of its registered office is 125 Wood Street, London, EC2V 7AW.
The Company is listed on the London Stock Exchange's Alternative Investment Market.
These consolidated financial statements have been approved for issue by the Board of Directors on October 09, 2015.
2. 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.
2.1 Critical accounting estimates, judgements 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.
Estimates
(a) Accrued revenue and accrued content costs
Estimation is required by management to determine the value of accrued revenue and accrued content cost liability which is based on the content delivery to its customers. Due to the timing of confirmation of delivery of content to its customers from the service providers, management estimation is applied to determine the level of accrued revenue and accrued content liability to be recognised within the financial statements until confirmation is received.
Judgement
(b) Risk of currency
As mentioned before, the Argentinian government has imposed restrictions on certain cross border transactions, including the remitting of cash back to the Group's parent company in the UK. While the Argentinian subsidiary is currently unable to freely transfer cash back to its parent company, there are mechanisms by which cash can be transferred indirectly, albeit at a discount on the official exchange rate. Restrictions on currency controls haven't changed during the year, although the Government has allowed some derivative transactions that can be used to remit cash out of the country.
The results and financial position of the Argentinian subsidiary are translated into Sterling at official exchange rates for inclusion in the Group's consolidated financial statements. The directors have considered whether dual exchange rates might exist, with a second 'effective' exchange rate arising from the mechanism through which cash can be remitted, and whether the results and position of the Argentinian subsidiary should be translated at this second rate on consolidation. The directors are of the opinion that using the official exchange rate is most appropriate because:
• the Group has no requirement to transfer cash from Argentina to the UK and is not projected to have any such requirement for the foreseeable future;
• the directors do not expect the currency restrictions to remain in place indefinitely and it is unlikely that the Group would remit cash to its parent unless this could be achieved at the official exchange rate; and
• the Group is currently able to utilise the cash held in Argentina to support the trading activities of certain other companies within the Group without restriction (see note 15).
(c) 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.
(d) Deferred taxation
Judgement is required by management in determining whether the Group should recognise a deferred tax asset. Management consider whether there is sufficient certainty its tax losses available to carry forward will ultimately be offset against future earnings, this judgement impacts on the degree to which deferred tax assets are recognised (see note 17).
3. Services provided by the group's auditor and network firms
During the year ended 30 June 2015 the Group (including its overseas subsidiaries) obtained the following services from the Group's auditor and network firms:
| Year ended 2015 |
Year ended 2014 |
|||
| £000's | £000's | |||
| Fees payable to the Company's auditor and its associates for the audit of the parent company and consolidated accounts | 56 | 53 | ||
| Non-Audit services: | ||||
| Fees payable to the Company's auditor and its associates for other services: | ||||
| Interim statement review | 10 | 10 | ||
| Tax compliance and advisory services | 18 | 9 | ||
| 84 | 72 |
4. Operating profit
| Operating profit is stated after charging the following items: | ||||
| Year ended 2015 |
Year ended 2014 |
|||
| Notes | £000's | £000's | ||
| Depreciation | 12 | 59 | 36 | |
| Impairment of goodwill | 13 | - | 380 | |
| Loss on foreign currency | 38 | 989 | ||
| 97 | 1,405 | |||
5. Finance income
| 2015 | 2014 | |||
| £000's | £000's | |||
| Interest receivable | 65 | 170 | ||
6. Finance EXPENSE
| 2015 | 2014 | |||
| £000's | £000's | |||
| Interest expense | (8) | (13) | ||
7. Directors' and Officers' remuneration
The Directors are regarded as the key management personnel of Mobile Streams Plc.
Charges in relation to remuneration received by key management personnel for services in all capacities during the Year ended 30 June 2015 are as follows:
| KEY MANAGEMENT REMUNERATION | ||||
| 2015 | 2014 | |||
| £000's | £000's | |||
| Short- term employee benefits | ||||
| - benefits | 1 | 5 | ||
| - salaries/remuneration | 328 | 302 | ||
| 329 | 307 |
8. Directors and employees
Staff costs during the year were as follows:
| 2015 | 2014 | |||
| £000's | £000's | |||
| Wages and salaries | 2,107 | 2,363 | ||
| Social security costs | 260 | 249 | ||
| 2,367 | 2,612 | |||
| CURRENT YEAR | |||||
| BENEFITS | |||||
| Europe | Asia Pacific | North America | Latin America | Group | |
| Benefits | (3) | (23) | (1) | (42) | (69) |
| (3) | (23) | (1) | (42) | (69) | |
| PRIOR YEAR | |||||
| BENEFITS | |||||
| Europe | Asia Pacific | North America | Latin America | Group | |
| Benefits | (172) | (22) | (1) | (42) | (237) |
| 156 | (22) | (1) | (42) | (237) | |
The average number of employees during the year to June 2015 was as follows:
| Year ended 2015 |
Year ended 2014 |
|||
| Number | Number | |||
| Management | 7 | 7 | ||
| Administration | 48 | 48 | ||
| 55 | 55 | |||
9. EARNINGS/ (LOSS) PER SHARE
Basic earnings per share is calculated by dividing the (loss) or profit attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the period.
| Year ended 2015 |
Year ended 2014 (re-stated) |
||
| Pence per share | Pence per share | ||
| Basic earnings/ (loss) per share | 0.908 | (1.479) | |
| Diluted earnings/ (loss) per share | 0.855 | (1.479) | |
Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below.
| 2015 | 2014 (re-stated) |
||
| £000's | £000's | ||
| Profit/ (loss) for the year | 337 | (546) | |
| For adjusted earnings per share | £000's | £000's | |
| Profit/(loss) for the year | 337 | (546) | |
| Add back: share compensation expense | 219 | 328 | |
| Add back: depreciation and amortisation | 59 | 36 | |
| Add back: impairment | - | 380 | |
| Adjusted profit for the year | 615 | 198 | |
| Weighted average number of shares | |||
| Number of shares | Number of shares | ||
| For basic earnings per share | 37,100,536 | 36,908,888 | |
| Exercisable share options | 2,330,961 | 1,502,963 | |
| For diluted earnings per share | 39,431,497 | 38,411,851 | |
| Pence per share | Pence per share | ||
| (re-stated) | |||
| Adjusted earnings per share | 1.658 | 0.536 | |
| Adjusted diluted earnings per share | 1.560 | 0.515 |
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.
10. income tax expense
The tax charge is based on the loss for the year and represents:
| 2015 | 2014 | |||
| (re-stated) | ||||
| £'000 | £'000 | |||
| Foreign tax on profits of the period | 521 | 779 | ||
| Total current tax | 521 | 779 | ||
| Deferred tax: | ||||
| Origination & reversal of timing differences: (Deferred tax charge/(credit) (Note 17) | (26) | (80) | ||
| Tax on profit on ordinary activities | 495 | 699 | ||
| Factors affecting the tax charge for the period | ||||
| Profit on ordinary activities before tax | 495 | 153 | ||
| Profit multiplied by standard rate | ||||
| of corporation tax in the United Kingdom of 20.75%/24% | 103 | 37 | ||
| Effects of: | ||||
| Adjustment for tax-rate differences | 207 | 172 | ||
| Expenses not deductible for tax purposes | 350 | 325 | ||
| Expenses not deductible others subsidiaries | 19 | 175 | ||
| Tax losses utilised | - | - | ||
| Prior year tax adjustments | - | - | ||
| Other | (158) | 70 | ||
| Current tax charge for the period | 521 | 779 | ||
| Comprising | ||||
| Current tax expense | 521 | 779 | ||
| Deferred tax (expense), income, resulting from the origination and reversal of temporary differences | (26) | (80) | ||
| 495 | 699 | |||
| Provision for deferred tax (Deferred tax asset) | ||||
| Provision brought forward | 260 | 194 | ||
| Current Year | 26 | 66 | ||
| Traslation adjustment | (1) | - | ||
| Deferred tax provision/(asset) carried forward | 285 | 260 | ||
| Relating to | ||||
| Expenses deducted in Argentina on a paid basis | 285 | 260 | ||
| Provision for deferred tax | 285 | 260 | ||
11. DIVIDENDS
No dividends were paid or proposed during the current year or prior year.
12. PROPERTY, PLANT AND EQUIPMENT
| Office furniture, plant and equipment | |||
| £000's | |||
| Cost | |||
| At 1 July 2014 | 517 | ||
| Additions | 49 | ||
| Translation adjustments | 2 | ||
| At 30 June 2015 | 568 | ||
| Depreciation | |||
| At 1 July 2014 | 410 | ||
| Provided in the year | 59 | ||
| Translation adjustments | 5 | ||
| At 30 June 2015 | 474 | ||
| Net book value at 30 June 2015 | 94 |
| Office furniture, plant and equipment | ||
| £000's | ||
| Cost | ||
| At 1 July 2013 | 439 | |
| Additions | 118 | |
| Translation adjustments | (40) | |
| At 30 June 2014 | 517 | |
| Depreciation | ||
| At 1 July 2013 | 409 | |
| Provided in the year | 36 | |
| Translation adjustments | (35) | |
| At 30 June 2014 | 410 | |
| Net book value at 30 June 2014 | 107 |
13. Goodwill AND INTANGIBLE ASSETS
The Group impaired in full the remaining value of goodwill attributable to Mobile Streams (Hong Kong) Limited and its subsidiaries in Singapore and Australia which make up the Asia Pacific operating segment at June 2014.
| Media platform development and software | Media content | Appitalism | Other intangibles | Subtotal | Goodwill | Total | |
| £000's | £000's | £000's | £000's | £000's | £000's | £000's | |
| Cost | |||||||
| At 1 July 2014 | 2,348 | 332 | 337 | 2,364 | 5,381 | 2,670 | 8,051 |
| At 30 June 2015 | 2,348 | 332 | 337 | 2,364 | 5,381 | 2,670 | 8,051 |
| Accumulated amortisation and impairment | |||||||
| At 1 July 2014 | 2,348 | 332 | 337 | 2,364 | 5,381 | 2,670 | 8,051 |
| At 30 June 2015 | 2,348 | 332 | 337 | 2,364 | 5,381 | 2,670 | 8,051 |
| Net book value at 30 June 2015 | - | - | - | - | - | - | - |
| Media platform development and software | Media content | Appitalism | Other intangibles | Subtotal | Goodwill | Total | |
| £000's | £000's | £000's | £000's | £000's | £000's | £000's | |
| Cost | |||||||
| At 1 July 2013 | 2,348 | 332 | 337 | 2,364 | 5,381 | 2,670 | 8,051 |
| At 30 June 2014 | 2,348 | 332 | 337 | 2,364 | 5,381 | 2,670 | 8,051 |
| Accumulated amortisation and impairment | |||||||
| At 1 July 2013 | 2,348 | 332 | 337 | 2,364 | 5,381 | 2,290 | 7,671 |
| Impairment | - | - | - | - | - | 380 | 380 |
| At 30 June 2014 | 2,348 | 332 | 337 | 2,364 | 5,381 | 2,670 | 8,051 |
| Net book value at 30 June 2014 | - | - | - | - | - | - | - |
Other intangible assets
Mobile Streams' other intangible assets comprised acquired customer relationships, technology based assets and non-compete agreements. These assets are fully amortised.
14. Trade and other receivables
| 2015 | 2014 | |||
| £000's | £000's | |||
| Trade receivables | 1,010 | 4,341 | ||
| Accrued receivables | 758 | 1,223 | ||
| Other debtors | 2,248 | 930 | ||
| 4,016 | 6,494 | |||
The carrying value of receivables is considered a reasonable approximation of fair value.
In addition, some of the unimpaired trade receivables are past due as at the reporting date. The age profile of trade receivables is as follows:
| 2015 | 2014 | |||
| £000's | £000's | |||
| Within terms | ||||
| Not more than 30 days | 308 | 3,824 | ||
| Overdue | ||||
| Not more than 3 months | 365 | 668 | ||
| More than 3 months but not more than 6 months | 361 | 3 | ||
| More than 6 months but not more than 1 year | 149 | 23 | ||
| Provision for doubtful debts | (173) | (177) | ||
| 1,010 | 4,341 |
Provision for doubtful debts reconciliation
| 2015 | 2014 | |||
| £000's | £000's | |||
| Opening provision for doubtful debts | 177 | 136 | ||
| Change in provision during the year | (4) | 41 | ||
| Closing provision for doubtful debts | 173 | 177 | ||
Trade and other receivables that are not past due or impaired are considered to be collectible within the Group's normal payment terms.
15. Cash and cash equivalents
Cash and cash equivalents include the following components:
| 2015 | 2014 | |||
| £000's | £000's | |||
| Argentina´s cash at bank and in hand | 80 | 453 | ||
| Other companies | 2,018 | 2,511 | ||
| Cash at bank and in hand | 2,098 | 2,964 | ||
16. Trade and other payables
| 2015 | 2014 | |||
| £000's | £000's | |||
| Trade payables | 1,001 | 2,059 | ||
| Other payables | 74 | 452 | ||
| Accruals and deferred income | 1,015 | 2,829 | ||
| 2,090 | 5,340 | |||
All amounts are current. The carrying values are considered to be a reasonable approximation of fair value.
17. Deferred TAX ASSETS AND liabilities
| Balance 30 Jun 2013 | Recognised in income statement | Balance 30 June 2014 | Recognised in income statement | Traslation Adjustment | Balance 30 June 2015 | |
| £000's | £000's | £000's | £000's | £000's | £000's | |
| Deferred tax asset: | ||||||
| - Expenses accrued | 221 | (170) | 51 | 7 | - | 58 |
| - Royalties | 28 | 48 | 76 | 13 | - | 89 |
| - Bonus provisions | - | - | - | - | - | - |
| - Others | (55) | 188 | 133 | 6 | (1) | 138 |
| Deferred tax asset | 194 | 66 | 260 | 26 | (1) | 285 |
| Deferred tax liability: | ||||||
| - On intangible assets | - | - | - | - | - | - |
18. SHARE CAPITAL
The Company only has one class of share. The total number of shares in issue as at 30 June 2015 is 37,114,283 (30 June 2014: 37,075,083) with a par value of £0.002 per share. All issued shares are fully paid.
The Group's main source of capital is the parent company's equity shares. The policy which is met by the Group is to retain sufficient authorised share capital so as to be able to issue further shares to fund acquisitions, settle share based transactions and raise new funds. Share based payments relate to employee share options schemes. The schemes have restrictions on headroom so as not to dilute the value of issued shares of the Company. The Group has not raised debt financing in the past and expects not to do so in the future.
| 2015 | 2014 | |||
| £000's | £000's | |||
| Authorised | ||||
| 69,150,000 ordinary shares of £0.002 each (30 June 2014: 69,150,000) | 138 | 138 | ||
| Allotted, called up and fully paid: | 74 | 74 | ||
| 37,114,283 ordinary shares of £0.002 each (30 June 2014: 37,075,083) | ||||
Allotted, called up and fully paid
| Year ended 2015 |
Year ended 2014 |
||
| In issue at 1 July 2014 | 37,075,083 | 36,632,292 | |
| Issued | 39,200 | 442,791 |
Other Reserves
Share Premium Account
The balance in the share premium account represents the proceeds received above the nominal value on the issue of the Company's equity share capital.
Translation Reserve
The Translation reserve contains the exchange differences arising on translating foreign operations.
19. Share based payments
The Group operates three share option incentive plans - an Enterprise Management Incentive Scheme, a Global Share Option Plan and an ISO Sub Plan - in order to attract and retain key staff. The remuneration committee can grant options over shares in the Company to employees of the Group. Options are granted with a fixed exercise price equal to the market price of the shares under option at the date of grant and are equity settled, the contractual life of an option is 10 years. Exercise of an option is subject to continued employment. Options are valued at date of grant using the Black-Scholes option pricing model.
On 12 July 2013, 2,383,594 options were granted to Company personnel. Strike value was 0.70 per option.
The volatility of the Company's share price on the date of grant was calculated as the average of volatilities of share prices of companies in the Peer Group on the corresponding date. The volatility of share price of each company in the Peer Group was calculated as the average of annualised standard deviations of daily continuously compounded returns on the Company's stock, calculated over 1, 2, 3, 4 and 5 years back from the date of grant, where applicable. The risk-free rate is the yield to maturity on the date of grant of a UK Gilt Strip, with term to maturity equal to the life of the option. The expected life of an employee share option is 5 years.
Share options in issue at the year-end under the various schemes are:
1. Personal to the Option Holder and are not transferable, or assignable.
2. Shall not be exercisable on or after the tenth anniversary of the grant date.
3. Subject to the rules of the Plans, the Options shall Vest as follows - Options vest at 33.3% per year:
l 33.3% vest on the First Anniversary of the grant of option;
l A second 33.3% vest on the Second Anniversary of the grant of option; and
l The last 33.33% vest on the Third Anniversary of the grant of option.
| 2015 | 2014 | ||||||
| Number (000's) | Weighted average exercise price | Number (000's) | Weighted average exercise price | ||||
| Outstanding at 1 July | 4,105 | £0.62 | 2,196 | £0.50 | |||
| Granted | - | - | 2,634 | £0.65 | |||
| Exercised | (39) | £0.03 | (443) | £0.25 | |||
| Forfeited | - | - | (282) | £0.70 | |||
| Outstanding at 30 June | 4,066 | £0.62 | 4,105 | £0.62 | |||
| Exercisable at 30 June | 2,331 | £0.36 | 1,503 | £0.56 |
| 2015 | 2014 | ||||||
| Range of exercise prices | Weighted average exercise price (£) | Number of Shares (000's) | Weighted average remaining life (years): | Weighted average exercise price (£) | Number of Shares (000's) | Weighted average remaining life (years): | |
| Contractual | Contractual | ||||||
| £0 - £0.50 | 0.282 | 1,014 | 1.6 | 0.272 | 1,054 | 7.0 | |
| £0.51 - £1.00 | 0.739 | 3,004 | 4.7 | 0.739 | 3,051 | 7.4 |
Share options exercised during the year ended 30 June 2015 were 39,200 (2014: 442,791).
The total charge for the year relating to employee share based payment plans was £219k (2014: £328k), all of which related to equity-settled share based payment transactions.
20. OPERATING LEASES
The Group has commitments under operating leases for land and buildings to pay the following amounts. The reduction is due to the reduction of the remaining period of the contract, by one year.
| Land and Buildings | ||||
| 2015 | 2014 | |||
| £000's | £000's | |||
| Future minumum lease payments uncer non-cancelabble operating leases | ||||
| Within one year | 75 | 154 | ||
| In two-five years | - | 59 | ||
| In more than five years | - | - | ||
| 75 | 213 |
Lease payments recognised as an expense during the period amount to £199k (2014: £180k).
21. Segment reporting
As at 30 June 2015, the Group was organised into 4 geographical segments: Europe, North America, Latin American, and Asia Pacific. The operating segments are organised, managed and reported to the Chief Operating Decision Maker based on their geographical location. Revenues are from external customers only and generated from three principal business activities: the sale of mobile content through Multi-National Organisation'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 transactions are priced and carried out at arm's length.
The segmental results for the year ended 30 June 2015 are as follows:
| £000's | Europe | Asia Pacific | North America | Latin America | Group |
| Mobile Operator Services | 10 | 151 | 29 | 440 | 630 |
| Mobile Internet Services | - | - | 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 |
| Selling, marketing and administration expenses | 397 | (249) | 42 | (6,810) | (6,620) |
| Trading EBITDA* | 390 | (3) | 90 | 576 | 1,053 |
| Depreciation, amortisation and impairment | - | (1) | (1) | (57) | (59) |
| Share based compensation | (219) | - | - | - | (219) |
| Finance income/expense | 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 |
| Segmental assets | 866 | 101 | 475 | 5,094 | 6,494 |
| Segmental liabilities | 163 | (20) | 249 | 2,365 | 2,756 |
The segmental results for the year ended 30 June 2014 are as follows:
| £000's | Europe | Asia Pacific | North America | Latin America | Group | |
| (re-stated) | ||||||
| Mobile Operator Services | 66 | 368 | 230 | 1,258 | 1,922 | |
| Mobile Internet Services | 5 | - | 250 | 46,353 | 46,608 | |
| Other Service fees | 30 | 3 | 3 | 7 | 43 | |
| Total Revenue | 101 | 371 | 483 | 47,618 | 48,573 | |
| Cost of sales | (28) | (223) | (236) | (33,857) | (34,344) | |
| Gross profit | 73 | 148 | 247 | 13,761 | 14,229 | |
| Selling, marketing and administration expenses | (513) | (303) | 2 | (13,003) | (13,817) | |
| Trading EBITDA* | (440) | (155) | 249 | 758 | 412 | |
| Depreciation, amortisation and impairment | (380) | (1) | (6) | (29) | (416) | |
| Finance income | - | - | - | 157 | 157 | |
| Profit/(Loss) before tax | (820) | (156) | 243 | 886 | 153 | |
| Taxation | - | - | - | (699) | (699) | |
| Profit/(loss) after tax | (820) | (156) | 243 | 187 | (546) | |
| Segmental assets | 820 | 123 | 280 | 8,643 | 9,825 | |
| Segmental liabilities | 474 | 266 | 331 | 5,480 | 6,551 |
* Earnings before interest, tax, depreciation, amortization, impaiments of assets and share compensation
The totals presented in the Group's operating region segments reconcile to the Group's key financial figures as presented in its financial statements as follows:
| 2015 | 2014 | ||
| (re-stated) | |||
| £000's | £000's | ||
| Segment revenues | |||
| Total segment revenues | 29,063 | 48,573 | |
| Group's revenues | 29,063 | 48,573 | |
| Segment results | |||
| Total segment Profit after tax | 337 | (546) | |
| Group's Profit after tax | 337 | (546) | |
| Segment assets | |||
| Total segment assets | (4,934) | 9,865 | |
| Consolidation eliminations | - | (40) | |
| Group's assets | (4,934) | 9,825 | |
| Segment liabilities | |||
| Total segment liabilities | 2,755 | 6,551 | |
| Consolidation eliminations | - | - | |
| Groups's liabilities | 2,755 | 6,551 | |
Revenue in Argentina represents 87% of the total revenue of the Group; then Mexico 10%, and finally the rest of the companies 3%.
INTEREST REVENUE
Interest Revenue for the year ended 30 June 2015 was £64k (2014: £170k)
DEFERRED TAX
| Year ended 30 June 2015 | |||||
| DEFERRED TAX | Europe | Asia Pacific | North America | Latin America | Group |
| Deferred Tax | - | - | - | 285 | 285 |
| - | - | - | 285 | 285 |
| Year ended 30 June 2014 | |||||
| DEFERRED TAX | Europe | Asia Pacific | North America | Latin America | Group |
| Deferred Tax | - | - | - | 260 | 260 |
| 260 | 260 | ||||
22. Capital commitments
The Group has no capital commitments as at 30 June 2015 (30 June 2014: £Nil).
23. PROVISIONs
| 2015 | ||
| £000's | ||
| Carrying amount at July 2014 | 340 | |
| Reversal of provision | (340) | |
| Carrying amount at end of June 2015 | - |
The company's German subsidiary was placed into liquidation during 2013 and a potential claim against the Group exists in the sum of £340,000.
The group is advised by its lawyers that this amount is now unlikely to be payable and so the provision of £340,000 has been released.
24. Related party transactions
Key Management
The only related party transactions that occurred during the year were the remuneration of senior management disclosed in note 7.
25. RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group is exposed to currency and liquidity risk, which result from both its operating and investing activities. The Group's risk management is coordinated in close co-operation with the Board and focuses on actively securing the Group's short to medium term cash flows by minimising the exposure to financial markets. The most significant financial risks to which the Group is exposed are described below. Also refer to the accounting policies.
Foreign currency risk
The Group is exposed to transaction foreign exchange risk. The currencies where the Group is most exposed to volatility are US Dollars, Australian Dollars, Argentine Peso, Mexican Peso and Colombian Peso.
Currently, there is generally an alignment of assets and liabilities in a particular market and no hedging instruments are used. In Latin American markets cash in excess of working capital is converted into a hard currency such as US Dollars, except in Argentina, where domestic regulations prevent companies from acquiring US Dollars. Given this situation, the Argentine subsidiary is considering other alternatives to hedge a possible devaluation of local currency. The Company will continue to review its currency risk position as the overall business profile changes.
Foreign currency denominated financial assets and liabilities, which are all short-term in nature and translated into local currency at the closing rate, are as follows.
| 2015 | 2014 | ||||||||
| 000's | 000's | ||||||||
| USD | AUS | ARS | Other | USD | AUS | ARS | Other | ||
| Nominal amounts | £ | £ | £ | £ | £ | £ | £ | £ | |
| Financial assets | 428 | 71 | 3,963 | 1,092 | 236 | 93 | 6,286 | 2,302 | |
| Financial liabilities | (247) | (62) | (1,681) | (305) | (330) | (307) | (5,594) | (642) | |
| Short-term exposure | 181 | 9 | 2,282 | 787 | (94) | (214) | 692 | 1,660 | |
Percentage movements for the period in regards to the British Pound to US Dollar, Australian Dollar and Argentine Peso exchange rates are as follows. These percentages have been determined based on the average market volatility in exchange rates during the period.
| 2015 | 2014 | |||
| US Dollar | -8% | 12% | ||
| Australian Dollar | 14% | 8% | ||
| Argentine Peso | 4% | 68% |
| Foreign exchange currency Gain/ (loss) charged to the income statement | ||||||
| Year ended 2015 |
Year ended 2014 |
|||||
| £000's | £000's | |||||
| Foreign currency | (38) | (989) | ||||
Liquidity risk
The Group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs. Management prepares cash flow forecasts which are reviewed at Board meetings to ensure liquidity. The Group has no borrowing arrangements.
As at 30 June 2015, the Group's financial liabilities were all current and have contractual maturities as follows:
| 30 June 2015 | Within 6 months | 6 to 12 months | ||||||
| £000's | £000's | |||||||
| Trade and other payables | 1,075 | - | ||||||
The maturity of the Group's financial liabilities, which were all current at the previous year end, was as follows:
| 30 June 2014 | Within 6 months | 6 to 12 months | ||||||
| £000's | £000's | |||||||
| Trade and other payables | 2,511 | - | ||||||
Capital Management Disclosures
Management assesses the Group's capital requirements in order to maintain an efficient overall financing structure while avoiding excessive leverage. The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group could return capital to shareholders or issue new shares.
The Group considers its capital to comprise the following:
| 2015 | 2014 | ||
| £000's | £000's | ||
| Ordiary Share capital | 74 | 74 | |
| Share premium | 10,579 | 10,579 | |
| Traslation reserve | (2,814) | (2,041) | |
| Retained earnings | (4,101) | (5,338) | |
| 3,738 | 3,274 |
Report of the independent auditor to the members of Mobile Streams Plc
We have audited the parent company financial statements of Mobile Streams Plc for the year ended 30 June 2015 which comprise the parent company accounting policies, the parent company balance sheet and the related notes. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditor
As explained more fully in the Directors' Responsibilities Statement set out on page 11, the Directors are responsible for the preparation of the parent company financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the parent company financial statements in accordance with applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board's (APB's) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the FRC's website at www.frc.org.uk/apb/scope/private.cfm.
Opinion on financial statements
In our opinion the parent company financial statements:
§ give a true and fair view of the state of the Company's affairs as at 30 June 2015
§ have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
§ have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matterS prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and Directors' Report for the financial period for which the financial statements are prepared is consistent with the parent company financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
§ adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
§ the parent company financial statements are not in agreement with the accounting records and returns; or
§ certain disclosures of Directors' remuneration specified by law are not made; or
§ we have not received all the information and explanations we require for our audit.
Other matter
We have reported separately on the consolidated financial statements of Mobile Streams Plc for the period ended 30 June 2015
Christopher Smith
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
London
09 October 2015
PARENT company accounting policies
summary of significant accounting policies
Basis of preparation
As used in the financial statements and related notes, the term 'Company' refers to Mobile Streams Plc. The separate financial statements of the Company are presented as required by the Companies Act 2006. As permitted by the Act, the separate financial statements have been prepared in accordance with the UK Generally Accepted Accounting Principles ("UK GAAP").
The financial statements have been prepared on the historical cost basis. The principal accounting policies are set out below. The company has applied the exemption under section 408 of the Companies Act 2006 and has not included the individual profit and loss account statement in the financial statements. The profit for the parent company for the year ended 30 June 2015 was £299,000 (year ended 30 June 2014 a loss of £450,000).
The following paragraphs describe the main accounting policies. The policies have been consistently applied to all periods presented.
Revenue recognition
Revenues are from external customers only and generated from three principal business activities: the sale of mobile content through mobile network operators (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).
Revenue includes the fair value of goods and services sold, net of value-added tax, rebates and discounts. Revenue is recognised as follows:
a) Mobile Operator Sales & Mobile Internet Sales
Sales of goods are recognised when the Company has delivered media content to the end consumer, who has accepted the product and collectability of the related receivable is reasonably assured from the customer.
b) Other services
Revenue is recognised in the accounting period in which the services are rendered, by reference to the stage of 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 using the effective interest method. If the collection of interest is considered doubtful, it is suspended and excluded from interest income in the income statement.
d) Deferred income
Revenue that has been collected from customers but where the above conditions are not met is recorded in the balance sheet under accruals and deferred income and released to the income statement when the conditions are met.
Investments IN SUBSIDIARIES
Investments in subsidiaries are stated in the Company's balance sheet at cost less provisions for impairment.
Deferred taxation
Deferred tax is recognised on all timing differences where the transactions or events that give the Company an obligation to pay more tax in the future, or a right to pay less tax in the future, have occurred by the balance sheet date. Deferred tax assets are recognised when it is more likely than not that they will be recovered.
Deferred tax is measured using rates of tax that have been enacted or substantively enacted by the balance sheet date. Deferred tax assets and liabilities are not discounted.
FOREIGN CURRENCIES
Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction. Monetary assets and liabilities in foreign currencies are translated at the rates of exchange ruling at the balance sheet date. All exchange differences are dealt with through the profit and loss account.
OPERATING LEASES
Rentals in respect of leases are charged to the profit and loss account in equal amounts over the lease term.
Share based payments
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').
Equity settled transactions
The Group has applied the requirements of Financial Reporting Standard 20 "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 model.
The cost of equity-settled transactions is recognised, together with a corresponding increase in retained earnings, 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. Market conditions are taken into account in determining the fair value of options granted, at grant date, and are not subsequently adjusted for. 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.
COMPANY BALANCE SHEET
| 30 June 2015 | 30 June 2014 | |||||
| £000's | £000's | |||||
| Fixed assets | ||||||
| Investments in subsidiaries | 1 | 20 | 20 | |||
| Total fixed assets | 20 | 20 | ||||
| Current assets | ||||||
| Debtors | 2 | 1,175 | 903 | |||
| Cash and cash equivalents | 795 | 698 | ||||
| Others assets | 6 | 46 | ||||
| Total current assets | 1,976 | 1,647 | ||||
| Creditors: amounts falling due within one year | 3 | (163) | (473) | |||
| Net current assets | 1,813 | 1,174 | ||||
| Net assets | 1,833 | 1,194 | ||||
| Capital and reserves | ||||||
| Called up share capital | 4 | 74 | 74 | |||
| Share premium | 5 | 10,579 | 10,579 | |||
| Profit and loss account | 5 | (8,819) | (9,459) | |||
| Shareholders funds | 1,834 | 1,194 | ||||
The financial statements were approved by the Board of Directors on 09 October 2015.
Enrique Benasso
Chief Financial Officer
| Company registration number: 03696108 09 October 2015 |
Notes to company financial statements
1. Investment in subsidiary companies
| 30 June 2015 | 30 June 2014 | |||
| £000's | £000's | |||
| Cost | 3,636 | 3,636 | ||
| Accumulated impairment | (3,616) | (3,616) | ||
| Net Book Value after impairment | 20 | 20 | ||
Investments in subsidiaries are reviewed for impairment when events indicate the carrying amount may not be recoverable and are accounted for in the Company's financial statements at cost less accumulated impairment losses.
| Investments in Subsidiary undertakings comprise: |
| Proportion held | |||||
| Directly by Mobile Streams Plc | By other Group companies | Total held by Group | Country of incorporation | ||
| Mobile Streams Inc. | 100% | - | 100% | USA | |
| Appitalism, Inc. | 100% | - | 100% | USA | |
| Mobile Streams de Argentina SRL | 50% | 50% | 100% | Argentina | |
| Mobile Streams Chile Ltda. | 50% | 50% | 100% | Chile | |
| Mobile Streams de Colombia Ltda. | 50% | 50% | 100% | Colombia | |
| Mobile Streams of Mexico S De RL De CV | 50% | 50% | 100% | Mexico | |
| The Nickels Group Inc. | - | 100% | 100% | USA | |
| Mobile Streams Venezuela SA | 100% | - | 100% | Venzuela | |
| Mobile Streams Australia Pty Limited | - | 100% | 100% | Australia | |
| Mobile Streams (Hong Kong) Limited | 100% | - | 100% | Hong Kong | |
| Mobile Streams Singapore Limited | - | 100% | 100% | Singapore | |
All the subsidiaries' issued shares were ordinary shares and their principal activities were the distribution of licensed mobile phone content.
2. Debtors
| 2015 | 2014 | |||
| £000's | £000's | |||
| Trade debtors | 45 | 56 | ||
| Amounts owed by Group undertaking | 1,130 | 847 | ||
| 1,175 | 903 |
3. Creditors: amounts falling due within one year
| 2015 | 2014 | |||
| £000's | £000's | |||
| Trade creditors | 61 | 26 | ||
| Accruals and deferred income | 102 | 447 | ||
| 163 | 473 | |||
4. SHARE CAPITAL
For details of share capital refer to note 18 to the Group financial statements.
5. RESERVES
| Share Premium | Profit and loss Account | |||
| £000's | £000's | |||
| At 1 July 2014 | 10,579 | (9,459) | ||
| Premium on shares issued in year | - | - | ||
| Profit for the year | - | 640 | ||
| At 30 June 2015 | 10,579 | (8,819) |
6. Capital commitments
The Company has no capital commitments at 30 June 2015 (2014: Nil).
7. Contingent liabilities
As at 30 June 2015 there were no contingent liabilities (2014: Nil).
8. Related party transactions
During the year the Company remunerated senior management personnel as disclosed in note 7 in the consolidated financial statements.
The company is taking advantage of the exemption per FRS 8 which does not require disclosure of transactions entered into between members of a group when one of the transacting parties is a wholly owned subsidiary.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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