MOBILE STREAMS PLC
FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2012
Company registration number: 03696108
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
Company registration number:
03696108
Registered office:
Directors:
Abacus House
33 Gutter Lane
London, EC2V 8AR
S D Buckingham
M Carleton
G Margent (resigned: 21 June 2012)
T Maunder
P Tomlinson
R G Parry
Chairman:
R G Parry
Secretary:
Pennsec Limited
Bankers:
Auditors:
National Westminster Bank plc
PO Box 13
30 Market Place
Newbury
RG14 1AS
Grant Thornton UK LLP
Chartered Accountants and Statutory Auditor
Grant Thornton House
Melton Street
Euston Square
London
NW1 2EP
Corporate web site:
www.mobilestreams.com
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
Contents
PAGE
Chairman’s statement
Operating review
Financial review
Directors’ report
Report of independent auditor
Accounting policies
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated cash flow statement
Notes to the consolidated financial statements
Report of independent auditor
Company accounting policies
Company balance sheet
Notes to the Company financial statements
1
2
3
4
12
14
22
23
24
25
26
27
47
49
52
53
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
CHAIRMAN’S STATEMENT
__________________________________________________________________________________
Mobile Streams is pleased to present its audited accounts for the financial year ended 30th June 2012. The financial
yearend of the Company changed from 31 December to 30 June at the beginning of this financial year- comparisons
are therefore made between 18 months to the end of June 2011 and the 12 months ended 30th June 2012.
The past 12 months has seen Mobile Streams plc (the “Group” or the “Company”) continue on its strategy to develop
a content offering across a wide range of mobile devices direct to consumers in addition to our original business of
providing content to mobile network operators and other business partners. The operating performance of the
business resulted from our presence and positioning in Latin America as well as our move away from mobile music
services towards apps and games oriented services.
Group revenue for the year ended 30 June 2012 was £22m(18 months period ended June 2011: £15.5m). Trading
EBITDA* was £2m for year (18 month period ended June 2011: £0.5m). Profit before tax was £1.6m (18 month
period ended June 2011 £0.1m).
Our operations outside Europe represent99% of the overall revenues for the period. Latin America represents 91%
(see note 21) of the total revenues for the year.
During the year ended 30 June 2012, Argentina modified its laws on cross border intercompany transfer of funds. As
at 30 June 2012, 94% of the Group’s cash balance of £1.8m was held in Argentina. Management is taking steps to
mitigate this risk by diversifying its sources of cash generation, in particular utilising the cash-flow from its
operations in markets such as Mexico and Colombia which do not face the same cash withdrawal restrictions as
Argentina. The Company is also moving its finance operations to Argentina to ensure stability and continuity. The
Company is in the process of appointing a suitable CFO in Argentina to lead the global and regional finance function
for the Group. Further details of the appointment will be made in due course.
Mobile Streams entered the new financial year on 1st July 2012 with a clear focus on expanding its presence in Latin
America and on open mobile Internet services including apps and games. Revenues are expected to be generated
primarily in Latin America in markets such as Argentina, Brazil, Colombia and Mexico. The new financial year has
started with trading ahead of management's expectations. Unaudited revenues were around £3.5m in each of the first
four months of the financial year, with EBITDA profits exceeding a total £1m during that same four month period.
The financial performance has been driven by continued growth in the Mobile Internet operating segment, where
active subscribers have now passed 2.5 million, up from 1.75 million at the end of the financial year.
Our content, distribution and marketing resources and experienced management team places us well as the Mobile
Internet expands.
Roger Parry
Chairman
*Calculated as profit before tax, interest, amortisation, depreciation, share compensation expense and impairment of assets.
Page 1
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
OPERATING REVIEW
Mobile Streams` performance during the financial year ended 30 June 2012 was driven by primarily from Mobile
Internet sales in Latin America.
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, the Group's Mobile Internet revenues grew, whilst its Mobile Operator revenues remained
relatively flat. As consumers steadily update their phones from legacy feature and flip phone models to smartphones,
they have generally used the operator content portals and application stores less, and used independent portals as well
as the open mobile internet more actively.
Mobile Internet Sales
The Group anticipated the shift to the open Mobile Internet several years ago and added new products at new price
points in new markets.
As a result, the Group experienced rapid growth in Mobile Internet sales, as consumers used their mobile devices to
purchase mobile content subscriptions.
Latin America- primarily Argentina- accounted for the majority of both revenues and growth.
Mobile Internet subscribers doubled to 1.75m active subscribers compared to 846,000 at end June 2011. Active
subscribers are defined as customers who have paid to use one of the Company's mobile internet products in the past
two month period.
Appitalism.com is our Mobile Internet servicefor smartphone and tablet users,through which they can acquire and
download applications (“apps”) and content for its devices. Appitalism continued to evolve during the periodand we
are continuing to add new content, features, marketing partnerships and billing options to further develop the product.
The launch of Appitalism.com was timed to coincide with burgeoning interest in apps for smartphones and tablet
devices from both consumers and companies.
Mobile Operator Sales
The Group has several contracts with mobile operators that allow the distribution of content through their mobile
portals.
Through active management of operator channels by the Group's channel management teams around the world, we
have beensuccessful in maintaining our mobile carrier revenue streams at relatively stable levels, despite generally
reduced consumer visitors to these portals, which has been a continuing trend for the past couple of years. Our teams
share and implement the best retailing practices in order to increase the conversion of visitors into customers to
maintain the overall revenue and margin levels at a relatively consistent level.
Mobile Streams maintains direct operator relationships in several markets around the world including Australia,
Singapore, Argentina, Mexico and Colombia, as well as partnerships with well-known telecoms companies around
the world.
Revenues continued to shift from music-oriented products to games and apps. More than 30 Business To Business
(B2B) customer contracts had been fully executed for the distribution and provision of the Company's apps, games
and eBooks content and services as at 30 June 2012.
Page 2
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
FINANCIAL REVIEW
Group revenue for the year ended 30 June 2012 was £22m, a 42%increase on the 18 months ended 30 June 2011
(£15.5m).
Gross margin decreased to 40.1% (18 months ended 30 June 2011: 49.7%) due to increased marketing (Direct to
Consumer) costs related to Mobile Internet cost of goods sold.
Selling, marketing and administrative expenses were £6.8m,a 5%decrease on the 18 months ended 30 June 2011
(£7.2m).
The Group recorded a profit after tax of £0.8m for the year ended 30 June 2012(18 months ended 30 June 2011: loss
of£0.2m)
Basic earnings per share increased to 2.120pence per share (18 months ended 30 June 2011: loss of 0.589 pence).
Adjusted earnings per share (excluding depreciation, amortisation, impairments and share compensation expense)
increased to3.157pence per share, (18 months ended 30 June 2011: profit of0.542 pence).
*Calculated as profit before tax, interest, amortisation, depreciation, share compensation expense and impairment of assets.
Page 3
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
DIRECTORS’ REPORT
The Directors of the Company (the “Directors”) present their report and the financial statements of the Group for the
year ended 30 June, 2012.
The principal activity of the Group is the provision of technology and services for the publication 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 2012 are shown in the attached
financial statements, and are discussed further in the Business Review below.
The Directors have not proposed a dividend for this year. (18 months ended30 June2011:Nil).
BUSINESS REVIEW
Financial overview
The Group’s cash balance was £1.8m (30 June 2011: £1.1m) at the year-end.The increase in cash was mainly due
toincreased revenues in Latin America, within the Mobile Internet segment, from increased subscriptions.
Financial performance
Financial performance for the year has been analysed as follows
Year to 30
June 2012
? 00's
22,047
8,835
(3,668)
(3,153)
2,014
(209)
(169)
-
2
(2)
1,636
18 months
period to 30
June 2011
? 00's
Year to 31
December
2010
? 00's
15,491
7,703
(2,238)
(4,939)
526
(392)
-
(19)
8
-
123
9,622
4,943
(1,140)
(3,345)
458
(317)
-
-
6
-
147
Revenue
Gross profit
Selling and Marketing Costs
Administrative Expenses
Trading EBITDA*
Depreciation and Amortisation
Impairments
Share Based Compensation
Finance Income
Finance Expense
Profit before tax
* Calculated as profit before tax, interest, amortisation, depreciation, share compensation expense and impairment of assets
.
Page 4
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
DIRECTORS REPORT
Key performance indicators (“KPI’s”)
The KPI’s used by the Group are monthly trading EBITDA*, cash projections, growth in revenue and gross profit.
Management review these on a regular basis, largely by reference to budgets andreforecasts.
Earnings before tax, interest, amortisation, depreciation, share compensation expense and impairment of assets
(EBITDA*) is a non-GAAP metric that is measured exactly as stated. All tax, interest, amortisation, depreciation,
share compensation expense and impairment of assets entries in the income statement are reversed out from the
bottom-line net income.
The cash flow projection shows how cash is expected to flow in and out which is an important business decision-
making tool.
Growth in revenue is a measure of how we are growing our business. Our goal is to achieve year-on-year growth.
Gross profit as a percentage of revenue is a measure of our profitability.
Strategy
The Group’s revenues are generated though relationships with mobile operators and content aggregators and retailing
directly to the consumer.
Principal risks and uncertainties
The nature of the Group's business and strategy is subject to a number of risks.
The Directors have set out below the principal risks facing the business.
Contracts with Mobile Network Operators (MNO’s)
While Mobile Streams maintains relationships with numerous MNO’s 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.
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.
* Calculated as profit before tax, interest, amortisation, depreciation, share compensation expense and impairment of assets
Page 5
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
DIRECTORS’ REPORT
Evolution of mobile entertainment content
Mobile entertainment content is constantly evolving in terms of what is popular, how it is distributed and
business models.
Management continues to review changes in the market, explore new business models and form new
relationships with content partners.
Fluctuations in currency exchange rates
Approximately 99% of the Group’s revenue relates to overseas operations. 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 8 “Financial risk management objectives and policies”.
The Group has operations in Europe, Asia Pacific, North America and Latin America. As a result, it faces both
translation and transaction currency risks.
Currency exposure is not hedged.
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 Key Man insurance
policies on its Chief Executive Officer, Simon Buckingham.
Intellectual property rights
The protracted and costly nature of litigation, particularly in North America, 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.
Page 6
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
DIRECTORS’ 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 to ensure cash resources are
maintained.
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.
The Group's policies for currency risk are set out below.
Currency risk
The Group is exposed to translation and transaction foreign exchange risk. 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. Under this scenario, the
Argentine subsidiary is considering other alternatives to hedge a possible devaluation of local currency.
The Group will continue to review its currency risk position as the overall business profile changes.
Page 7
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
DIRECTORS’ REPORT
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.
During the year ended 30 June 2012, Argentina modified its country’s laws on cross border intercompany transfer
of funds. As at 30 June 2012, 94% of the Group’s cash is held in Argentina, which also accounted for 91% of the
Group’s revenues in the 12 months to 30 June 2012. Management is making changes to mitigate this risk and is
also moving its finance operations to Argentina to ensure stability and continuity.
The aforesaid modified laws, severely restrict the Argentina subsidiary fromtransferring funds to parent
companies for payment dividends or services rendered. This risk is being mitigated by the launch of similar
businesses to Argentina in Colombia and Mexicowhere the laws on cross border transfer of funds are not
restricted. Vendor related payments can be made out of Argentina on behalf of other subsidiaries.
The Group currently has no borrowing arrangements in place and prepares cashflow 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.
Policy on payment on trade payables
It is the Group’s policy to settle supplier accounts in accordance with individual terms of business.The number of
dayspurchases outstanding at the year-end in respect of the Group were 50 days (18 month 30 June, 2011: 50
days).
Directors and their interests
The present membership of the Directors of the Company (the “Board”), together with their beneficial interests in
the ordinary shares of the Group, is set out below. Except where indicated, all Directors served on the Board
throughout the year.
Shares held or controlled by Directors
S D Buckingham
M Carleton
P Tomlinson
R G Parry
T Maunder
G Margent (Resigned 21 June 2012)
Ordinary
shares of
£0.002 each
30 June 2012
Ordinary
shares of
£0.002 each
30 June 2011
18,257,500
-
40,000
181,183
5,000
-
18,257,500
-
40,000
181,183
-
-
Page 8
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
DIRECTORS’ REPORT
Options
The table below summarises the exercise terms of the various options over ordinary shares of £0.002 (18 months
30 June 2011: £0.002) each which have been granted and were still outstanding at30 June 2012.
Options
Held at
1 July
2011
Options
Granted
During the
period
Options
exercised
During the
period
Options
Held at
30 June
2012
Exercise
price
Earliest
date from
which
exercisable
Latest
expiry
date
Number
Number
Number
Number
£
R G Parry
R G Parry
689,655
250,000
-
-
-
-
689,655
250,000
0.87
15-Feb-07
14-Feb-16
0.343
23-Mar-12
22-Mar-21
*Gabriel Margentheld 250,000 share options which lapsed on resignation.
The remuneration of each of the Directors for the period ended 30 June 2012 is set out below:
Salary
£'000
Fees
£'000
Benefits
£'000
S D Buckingham
G Margent
T Maunder
R G Parry
P Tomlinson
Total
197
95
-
-
-
292
-
-
17
36
34
87
7
-
-
-
-
7
Year to 30
June 2012
Total
£'000
204
95
17
36
34
386
18 months
period to 30
June 2011
Total
£'000
234
88
9
45
30
406
Benefits comprise medical health insurance.
Post balance sheet events
Subsequent to the year end and as set out in note 23 the German subsidiary was subject to a tax audit for the years
2006 to 2010 and a claim was made by the German tax authorities in the sum of Euro 250,000. The company has
made a provision in the sum of £120,195 (Euro 150,000) in respect of this claim. As explained in the note the
company does not believe it is liable for the full sum and is working with its tax advisers in Germany to resolve
this position. The provision is the directors best estimate of the maximum amount due.
There have been no others significant post balance sheet events.
Page 9
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
DIRECTORS’ REPORT
Going Concern
The Group had cash balances of £1.8m at the year end (30 June 2011, £1.1m) and no borrowings. Having reviewed
cashflow 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 cross border intercompany transfer of funds. Management is making changes to
mitigate this risk and is also moving its finance operations to Argentina to ensure stability and continuity. As at 30
June 2012, 94% of the Group’s cash balance of £1.8m was held in Argentina. The risk is also mitigated by the launch
of similar businesses in Columbia and Mexico where the laws on cross border transfers of funds are not restricted.
For these reason, the Board consider Mobile Streams to be a going concern. No other material uncertainties related to
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 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 elected to prepare the financial statements in accordance with International Financial Reporting
Standards as adopted by the European Union (IFRSs). 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:
(cid:1)
select suitable accounting policies and then apply them consistently;
(cid:1) make judgments and accounting estimates that are reasonable and prudent;
(cid:1)
state whether applicable IFRSs 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.
(cid:1)
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.
In so far as each of the Directors is aware:
(cid:1)
(cid:1)
there is no relevant audit information of which the Company’s auditors are unaware; and
the Directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit
information and to establish that the auditors are 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.
Auditors
Grant Thornton UK LLP have indicated their willingness to continue in office, and a resolution that they be re-
appointed will be proposed at the annual general meeting.
During the period ended30 June 2012 the Board and the Audit Committee approved an extension to the engagement
term of the Senior Statutory Auditor responsible for the audit opinion in relation to Mobile Streams plc. The term
Page 10
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
was extended from 6 to 7 years. The Audit Committee is satisfied that this extension does not in any way prejudice
the objectivity and independence of the auditor. The approved extension during the period ended 30 June 2012 was
to provide stability and continuity following the departure of the CFO at the year end.
On behalf of the Board
Simon Buckingham
Director
7 December 2012
Page 11
MOBILE STREAMS PLC
REPORT OF THE INDEPENDENT AUDITOR TO THE MEMBERS OF MOBILE STREAMS PLC
We have audited the group financial statements of Mobile Streams Plc for the year ended 30 June 2012 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 group 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 group 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 APB's website at
www.frc.org.uk/apb/scope/private.cfm.
Opinion on financial statements
In our opinion the group financial statements:
(cid:1)
(cid:1)
(cid:1)
give a true and fair view of the state of the group's affairs as at 30 June 2012 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 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:
(cid:1)
(cid:1)
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.
Page 12
MOBILE STREAMS PLC
REPORT OF THE INDEPENDENT AUDITOR TO THE MEMBERS OF MOBILE STREAMS PLC
Other matter
We have reported separately on the parent company financial statements of Mobile Streams Plc for the year ended 30
June 2012.
Mark Henshaw
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
London
7 December 2012
Page 13
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
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 2012. 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, as modified by the revaluation
of assets and liabilities held at fair value.
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.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of a
business combination is measured as the fair value of assets given, equity instruments issued and liabilities incurred
or assumed at the date of exchange, in line with IFRS 3, Business Combinations. Any assets acquired and liabilities
and contingent liabilities assumed that are identifiable are measured initially at their fair values at the acquisition date.
Goodwill is stated after separating out identifiable intangible assets. The excess of the cost of a business
combination over the fair value of the identifiable net assets acquired is recorded as goodwill. If the cost of a
business combination is less than the fair value, the difference is recognised directly in the income statement.
Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated
in full. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset
transferred. Subsidiaries' accounting policies have been changed where necessary to ensure consistency with the
policies adopted by the Group.
The separate financial statements and notes of the Company are presented on pages 47-57, 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.
Page 14
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
ACCOUNTING POLICIES
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
date the transaction occurs. Any exchange gains or losses resulting from these transactions and from the translation
of monetary assets and liabilities at the balance sheet date are recognised in the income statement.
Foreign currency balances are translated at the year-end using exchange rates prevailing at the year-end.
(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
ii
iii
assets and liabilities for each balance sheet are translated at the closing exchange rate at the date of the
balance sheet
income and expenses for each income statement are translated at averageexchange rates (unless it is not a
reasonable approximation to the exchange rate at the date of transaction )
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) are stated at cost, less accumulated depreciation and impairment losses.
Cost includes expenditure that is directly attributable to the purchase of the items.
Depreciation is calculated to write off the cost of property, plant and equipment less estimated residual value on a
straight line basis over their estimated useful life. The following rates and methods have been applied:
Plant and equipment
Office furniture
33% straight line
Between 10% and 33% straight line
The 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.
Page 15
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
Going Concern
The Group had cash balances of £1.8m at the year end (30 June 2011, £1.1m) and no borrowings. Having reviewed
cashflow 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 cross border intercompany transfer of funds. Management is making changes to
mitigate this risk and is also moving its finance operations to Argentina to ensure stability and continuity. As at 30
June 2012, 94% of the Group’s cash balance of £1.8m was held in Argentina. The risk is also mitigated by the launch
of similar businesses in Columbia and Mexico where the laws on cross border transfers of funds are not restricted.
For these reason, the Board consider Mobile Streams to be a going concern. No other material uncertainties related to
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.
ACCOUNTING POLICIES
(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
beamortised 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
Technology based assets
Non-compete agreements
3 years
3 years
3.5 years
(c) Media content and Media platform development
Media content and Media platform developments 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 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 completethe intangible (or sell it),
its ability to use or sell the intangible,
that the intangible will generate future economicbenefit,
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.
(d) Appitalism
Page 16
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
Appitalism developments represent intangible assets that have been internally generated, including capitalized 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 capitalized, are amortised on a straight
line basis.
(e) Software
Software represents assets that have been acquired from third parties. To meet the criteria for recognition the
intangibleasset 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 Intangibleassets with a
definite life, the intangible will be tested for impairment. The estimated useful life of acquired software is 2 years.
Amortisation is shown in “depreciation, amortisation and impairment” in the income statement.
Page 17
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
ACCOUNTING POLICIES
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 is shown in “depreciation, amortisation and impairment” 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 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 extentthat it is probable that future taxable profit will be available against which the temporary
differences can be utilised. Deferred tax liabilities are provided in full, with no discounting.
Changes in deferred tax assets or liabilities are recognised as a component of tax expense in the income statements,
except where they relate to items that are charged or credited directly to equity, in which case the related deferred tax
is also charged or credited directly to equity.
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 increasedrisks 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.
Page 18
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
ACCOUNTING POLICIES
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 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 2012, the Group is organised into four geographical segments: Europe, North America, Latin America,
and Asia Pacific. Revenues are from external customers only and generated from three principal business activities:
the sale of mobile content through Mobile Operator Services (Mobile Operator Sales), the sale of mobile content
over the internet (Mobile InternetSales) and the provision of consulting and technical services (Other Service Fees).
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 InternetSales
Sales of goods are 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
Rendering of services are 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.
Page 19
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
ACCOUNTING POLICIES
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 other creditors 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 method.
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 the options granted,
atgrant 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.
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 theaggregate 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.
Page 20
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
ACCOUNTING POLICIES
c) Translation Reserve
The translation reserve represents the cumulative translation adjustments on translation of foreign operations.
d)Merger Reserve
The merger reserve represents the excess over nominal value of the fair value of consideration received for equity
shares issued directly to acquire another entity meeting the specific requirements of section 612 of the Companies
Act 2006.
Standards and interpretations not yet applied
The following new Standards and Interpretations, which have been adopted by the European Union and are yet to
become mandatory, have not been applied in the 2012 group financial statements.
Standard or Interpretation Effective for periods beginning on or after
IAS19Employee Benefits (revised June 2011)
Amendments to IAS 1 Presentation
1 January 2013
Effective 1 January 2014
Page 21
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
CONSOLIDATED INCOME STATEMENT
Revenue
Other income *
Cost of sales
Gross profit
Selling and marketing costs
Administrative expenses **
Operating Profit
Finance income
Finance expense
Profit before tax
Tax expense
Profit/ (loss) for the period
Attributable to:
Attributable to equity shareholders of Mobile Streams plc
Earnings/ (loss) per share
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
* Other income includes the sale of the ringtones.com domain.
Year ended
30 June 2012
? 00
18 month
ended 30
June 2011
? 00
22,047
-
(13,212)
8,835
(3,668)
(3,531)
1,636
2
(2)
1,636
(863)
773
15,491
484
(8,272)
7,703
(2,238)
(5,350)
115
8
-
123
(337)
(214)
773
(214)
Pence per
share
2.120
2.037
Pence per
share
(0.589)
(0.572)
21
21
21
9
7
7
** Administrative expenses include Depreciation, Amortisation and Impairment £0.38 m (18 months ended 30 June 2011: £0.41m); Share Based
Compensation £ Nil (18 months ended 30 June 2011: £7k). Administrative expenses£3.5m (18 months ended 30 June 2011: £4.9m).
Page 22
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Profit/ (loss) for the period
Exchange differences on translating foreign operations
Total comprehensive income/(loss) for the period
Total comprehensive income/(loss) for the period attributable to:
Year ended
30 June
2012
? 00
18 month
ended 30
June 2011
? 00
773
(92)
681
(214)
15
(199)
Equity shareholders of Mobile Streams plc
681
(199)
Page 23
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Assets
Non- Current
Goodwill
Intangible assets
Property, plant and equipment
Deferred tax asset
Current
Trade and other receivables
Cash and cash equivalents
Total assets
Equity
Equity attributable to equity holders of Mobile Streams plc
Called up share capital
Share premium
Translation reserve
Merger reserve
Retained earnings
Total equity
Liabilities
Non- Current
Deferred tax liabilities
Current
Trade and other payables
Current tax liabilities
Total liabilities
Total equity and liabilities
30 June 2012
? 00
30 June 2011
? 00
12
12
11
16
13
14
17
19
16
15
714
1
46
454
1,215
3,842
1,763
5,605
6,820
73
10,317
(310)
153
(8,679)
1,554
714
348
37
-
1,099
2,235
1,100
3,335
4,434
73
10,317
(218)
153
(9,452)
873
-
13
3,774
1,492
5,266
5,266
6,820
3,107
441
3,548
3,561
4,434
The financial statements were authorised by the Board of Directors and were signed on its behalf by:
Simon Buckingham
Director
7December 2012
Company number: 03696108
Page 24
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
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
? 00 ? 00 ? 00 ? 00 ? 00 ? 00
Balance at 1 January 2010
Employee share based compensation
(Loss) for the 18 months ended 30 June 2011
Exchange differences on translating foreign operations
Total comprehensive income for the period
Balance at 30 June 2011
Balance at 1 July 2011
Profit for the 12 months ended 30 June 2012
Exchange differences on translating foreign operations
Total comprehensive income for the period
73
10,310
(233)
(9,238)
153
1,065
-
-
-
-
7
-
-
7
-
-
15
15
-
(214)
-
(214)
73
73
10,317
10,317
(218)
(9,452)
(218)
(9,452)
-
-
-
-
-
-
-
(92)
(92)
773
-
773
-
-
-
-
153
153
-
-
-
7
(214)
15
(192)
873
873
773
(92)
681
Balance at 30 June 2012
73
10,317
(310)
(8,679)
153
1,554
Page 25
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
CONSOLIDATED CASH FLOW STATEMENT
Operating activities
Profit before taxation
Adjustments:
Share based payments
Depreciation
Amortisation
Impairments
Interest received
Changes in trade and other receivables
Changes in trade and other payables
Tax paid
Total cash generated /(utilised) in operating activities
Investing activities
Additions to property, plant and equipment
Additions to other intangible assets
Interest received
Net Cash used in investing activities
Financing activities
Issue of share capital (net of expenses paid)
Net Cash used in investing activities
Net change in cash and cash equivalents
Cash and cash equivalents at beginning of period
Exchange (losses) on cash and cash equivalents
Cash and cash equivalents, end of period
Year ended
30 June
2012
? 00
18 months
ended 30 June
2011
? 00
1,636
-
22
187
169
(2)
(1,607)
667
175
1,247
(31)
-
2
(29)
-
-
1,218
1,100
(555)
1,763
5
5
5
6
11
6
14
123
19
83
309
-
(8)
(450)
(214)
(64)
(202)
(43)
(317)
8
(352)
7
7
(547)
1,659
(12)
1,100
Page 26
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
1. GENERAL INFORMATION
Mobile Streams Plc (the Company) and its subsidiaries (together 'the Group') provide technology and services for the
publication of 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 Abacus House, 33 Gutter Lane. London, EC2V 8AR.
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 7th.December
2012.
2. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates 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.
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) Goodwill
The Group tests annually whether goodwill has suffered any impairment, in accordance with the accounting policy.
The recoverable amount of cash-generating units has been determined based on value-in-use calculations. These
calculations require estimates to be made. Refer to note 12.
(b) Accrued revenue and accrued content costs
Judgement 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, judgement 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
(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.
Page 27
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(d) Intangible assets
The Group is required to identify and assess the useful life of intangible assets and determine if there is a finite or
indefinite life. Judgement is required in determining if an intangible asset has a finite life and the extent of this finite
life in order to calculate the amortisation charge on the asset. The Group tests annually whether intangible assets with
an indefinite life have suffered any impairment, in accordance with the accounting policy. The recoverable amount
of cash-generating units has been determined based on value-in-use calculations. These calculations require estimates
to be made. Where there is no observable market value for an intangible asset, management will make use of a
valuation technique to determine the value of an intangible. In doing so, certain assumptions and estimates will be
made. Refer to note 12.
e) Share based payments
The Group is required to measure the fair value of equity settled transactions with employees at the grant date of the
equity instruments. The fair value is determined by using the Black-Scholes method. This requires assumptions
regarding interest free rates, share price volatility and expected life of an employee share option. The volatility of
the Company's share price on each date of grant was calculated as the average of volatilities of share prices of
companies in our Peer Group on the corresponding dates. The Peer Group is a group of companies in the same
industry providing similar services. 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.
f) 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 degrees to which deferred tax assets are recognised (see
note 16).
3. 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 2012 are as follows:
Short- term employee benefits
- salaries/remuneration
S D Buckingham
G Margent
T Maunder
R G Parry
P Tomlinson
Total
Salary
£'000
197
95
-
-
-
292
Fees
£'000
Benefits
£'000
-
-
17
36
34
87
7
-
-
-
-
7
2012
£000’s
2011
£000’s
386
406
Year to 30
June 2012
Total
£'000
204
95
17
36
34
386
18 months
period to 30
June 2011
Total
£'000
234
88
9
45
30
406
Page 28
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
4. SERVICES PROVIDED BY THE GROUP'S AUDITOR AND NETWORK FIRMS
During the year ended 30 June 2012the Group (including its overseas subsidiaries) obtained the following
services from the Group's auditor and network firms:
Fees payable to the Company’s auditor and its associates for the audit of the
parent company and consolidated accounts
Non-Audit services:
Fees payable to the Company's auditor and its associates for other services:
The audit of the Company's subsidiaries pursuant to legislation
Interim procedures
Tax compliance and advisory services
5. DEPRECIATION, AMORTISATION AND IMPAIRMENT
2012
£000's
44
6
15
65
18 months
2011
£000's
54
6
30
90
Notes
11
12
12
Year ended
2012
? 00's
18 months
30 June 2011
? 00's
22
187
169
378
84
308
-
392
Year ended
2012
? 00's
18 months
30 June 2011
? 00's
2
8
Depreciation
Amortisation
Impairment
6. FINANCE INCOME
Interest receivable
7. EARNINGS/(LOSS) PER SHARE
Basic earnings /(loss) per share is calculated by dividing the profit/loss attributable to equity holders of the Company
by the weighted average number of ordinary shares in issue during the period.
Year ended
2012
Pence per
share
18 months
30 June 2011
Pence per
share
Basic earnings/ (loss) per share
2.120
Diluted earnings /(loss) per share 2.037
(0.589)
(0.572)
Page 29
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below.
Profit/(Loss) for the period
2012
? 00's
18 months
2011
? 00's
773
(214)
For adjusted earnings per share
? 00's
? 00's
Profit/(Loss) for the period
Add back: share compensation expense
Add back: depreciation and amortisation
Add back: impairment
Adjusted profit for the period
Weighted average number of shares
For basic earnings per share
Exercisable share options
For diluted earnings per share
Adjusted earnings per share
Adjusted diluted earnings per share
773
-
209
169
1,151
(214)
19
392
-
197
Number of
shares
Number of
shares
36,457,692
36,313,610
1,488,563
1,085,000
37,946,255
37,398,610
Pence per
share
Pence per
share
3.157
3.033
0.542
0.527
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
8. DIRECTORS AND EMPLOYEES
Staff costs during the year were as follows:
Page 30
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Wages and salaries
Social security costs
The average number of employees during the year was:
Management
Administration
9. INCOME TAX EXPENSE
The tax charge is based on the loss for the year and represents:
Current tax:
UK corporation tax on profits of the period
Foreign tax on profits of the period
Total current tax
Deferred tax:
Origination & reversal of timing differences: (Deferred tax
charge/(credit) (note 16)
Tax on profit on ordinary activities
Factors affecting the tax charge for the period
Profit on ordinary activities before tax
Profit multiplied by standard rate
of corporation tax in the United Kingdom of 24%/28%
Effects of:
Adjustment for tax-rate differences
Expenses not deductible for tax purposes in current year
Tax losses carried forward
Tax losses utilised
Prior year tax adjustments
Other
Year ended
2012
? 00's
1,792
148
1,940
18 months
30 June 2011
? 00's
2,503
232
2,735
Year ended
2012
Number
18 months
30 June 2011
Number
5
41
46
5
42
47
2012
£'000
2011
£'000
-
1,355
1,355
(492)
863
1,636
393
266
11
230
(27)
(10)
-
-
337
337
-
337
123
34
76
198
31
-
2
Page 31
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Current tax charge for the period
863
337
Comprising
Current tax expense
Deferred tax (expense), income, resulting from the origination and
reversal of temporary differences
Provision for deferred tax (Deferred tax asset)
Provision at brought forward
Current Year
Deferred tax provision/(asset) carried forward
Relating to
Expenses deducted in Argentina on a paid basis
Other
Provision for deferred tax
Unprovided Deferred tax
Losses
10. DIVIDENDS
No dividends were paid or proposed during the year (18 months ended 30 June 2011: Nil).
874
(11)
863
(38)
492
454
454
-
454
374
(37)
337
(38)
-
(38)
-
(38)
(38)
203
177
Page 32
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. PROPERTY, PLANT AND EQUIPMENT
Cost
At 1 uly? 011
Additions
Disposals
Translation adjustments
At 30 June 2012
Depreciation
At 1 uly? 011
Provided in the year
Disposals
Translation adjustments
At 30 June 2012
Net book value at 30 June 2012
Cost
At 1 January 2010
Additions
Disposals
Translation adjustments
At 30 June 2011
Depreciation
At 1 January 2010
Provided in the year
At 30 June 2011
Net book value at 30 June 2011
Office
furniture,
plant and
equipment
? 00
421
31
(23)
4
433
384
22
(23)
4
387
46
Office
furniture,
plant and
equipment
£000’s
379
44
(2)
-
421
300
84
384
37
12. GOODWILL AND INTANGIBLE ASSETS
The carrying amount of goodwill is entirely attributable to Mobile Streams (Hong Kong) Limited and its subsidiaries
in Singapore and Australia which make up the Asia Pacific reportable segment. Following an impairment review at
the balance sheet date the fair value was higher than the carrying value and therefore no impairment was required
(2011: No impairment charge). The recoverable amount was determined based on value-in-use calculations, covering
a twenty years forecast assuming continued profits from the existing customer relationships and content repertoire
offering. The valuation is wholly based on budgets which have been prepared by senior management. Growth of
2.5%based on historical information and the discount rate of 13.7%,based on WACC of the entity, are used in the
Page 33
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
valuation of cash-generating units. These rates are used to extrapolate cash flows beyond the forecast period. There
was no change in the method of estimation during the year.
On to a different matter, the intangible asset of Appitalism has been assessed to review the need of impairment. As a
result, the net book value at the balance sheet date was higher than its fair valueso an impairment charge of ₤169,000
has been booked. (2011:No impairment charge)
Page 34
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Media
platform
development
and software
Media
? 00 ? 00's
content Appitalism
? 00's
Other
intangibles
? 00 ? 00's
Subtotal Goodwill
? 00's
Total
? 00's
Cost
At 1 July 2011
Additions - externally
acquired
Disposals
Translation adjustments
At 30 June 2012
Accumulated amortisation
and impairment
At 1 July 2011
Amortisation
Impairment
Depreciation on Disposal
Translation adjustments
At 30 June 2012
Net book value at 30 June
2012
Cost
At 1 January 2010
Additions - internally
generated
Additions - externally
acquired
Disposals
Translation adjustments
At 30 June 2011
Accumulated amortisation
and impairment
At 1 January 2010
Amortisation
Impairment
Depreciation on Disposal
Translation adjustments
At 30 June 2011
Net book value at 30 June
2011
2,349
332
326
2,364
5,371
2,670
8,041
1
-
(2)
-
-
-
2
-
9
-
-
-
3
-
7
-
-
-
3
-
7
2,348
332
337
2,364
5,381
2,670
8,051
2,344
332
3
-
-
-
-
-
-
-
54
112
169
-
2
2,292
72
-
-
-
5,022
187
169
-
2
1,956
6,978
187
169
-
2
-
-
2,347
332
337
2,364
5,380
1,956
7,336
1
-
-
-
1
714
715
Media
platform
development
and software
£000’s
Media
content Appitalism
£000's
£000's
Other
intangibles
£000’s
Subtotal Goodwill
£000's
£000's
Total
£000's
2,349
332
-
2,364
5,045
2,670
7,715
-
-
-
-
-
-
-
-
326
-
-
-
-
-
-
-
326
-
-
-
-
-
-
-
326
-
-
-
2,349
332
326
2,364
5,371
2,670
8,041
2,229
115
-
-
-
331
1
-
-
-
-
54
-
-
-
2,154
138
4,714
308
-
-
-
-
-
-
1,956
-
-
-
-
6,670
308
-
-
-
2,344
332
54
2,292
5,022
1,956
6,978
5
-
272
72
349
714
1,063
Page 35
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Other intangible assets
Mobile Streams’ other intangible assets comprised acquired customer relationships, technology based assets and non-
compete agreements. These assets were fully amortised in the year.
13. TRADE AND OTHER RECEIVABLES
Trade receivables
Accrued receivables
Prepayments
2012
? 00's
684
2,410
748
3,842
2011
? 00's
673
1,090
472
2,235
The carrying value of trade receivables is considered a reasonable approximation of fair value.
Trade and other receivables have been reviewed for indicators of impairment. Certain trade receivables, on the basis
of age and collectability, were found to be impaired and a provision for doubtful debts of £91,000 (18 months ended
30 June 2011: £68,000) has been recorded.
In addition, some of the unimpaired trade receivables are past due as at the reporting date. The profile of financial
assets past due but not impaired is as follows:
Not mo re than 3 mon th s
M ore than 3 mo nths bu t n ot mo re than 6 mon th s
M ore than 6 mo nths bu t n ot mo re than 1 year
20 12
? 0 0
2011
? 00
36
1 74
7
20
84
-
Page 36
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Provision for doubtful debts reconciliation
Op en in g p ro v is io n fo r d o u b tfu l d eb ts
Ch an g e in p ro v is io n d u rin g th e y ear
Clo s in g p ro v is io n fo r d o u b tfu l d eb ts
2 0 1 2
? 0 0
2011
? 00
6 8
2 3
9 1
60
8
68
Trade and other receivables that are not past due or impaired are considered to be collectible within the Group’s
normal payment terms.
14. CASH AND CASH EQUIVALENTS
Cash and cash equivalents include the following components:
Cash at bank and in hand
15. TRADE AND OTHER PAYABLES
Trade payables
Other payables
Accruals and deferred income
2012
? 00
2011
? 00
1,763
1,100
2012
? 00
2011
? 00
903
118
2,753
3,774
578
93
2,436
3,107
All amounts are short term. The carrying values are considered to be a reasonable approximation of fair value.
16. DEFERRED TAX ASSETS AND LIABILITIES
Deferred tax asset:
- Tax losses
- Fixed assets
- Pension provisions
- Others
Deferred tax asset
Balance 1
Jan 2010
? 00
Recognised in
income
? 00
Balance 30
Jun 2011
? 00
Recognised in
income
? 00
Balance 30
June 2012
? 00
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
8
446
454
8
446
454
Page 37
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Deferred tax liability:
- On intangible assets
38
(25)
13
(13)
-
Deferred tax liability on intangible assets has decreased as a result of impairment and amortisation.
17. SHARE CAPITAL
The Company only has one class of shares. The total number of shares issued is 36,457,692 (30 June 2011:
36,457,692) 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 haverestrictions 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.
Authorised
69,150,000 ordinary shares of £0.002 each (30 June 2011: 69,150,000)
2012
£000's
138
2011
£000's
138
Allotted, called up and fully paid:
36,457,692 ordinary shares of £0.002 each (30 June 2011: 36,457,692)
73
73
18. 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.
There were no options granted to Directors during the year ended 30 June 2012.
The fair value per option of options granted during the 18 monthsperiod to 30 June 2011and the assumptions used in
the calculation are shown below:
Date of grant
Share price at grant (£)
Exercise price (£)
Shares under option
Vesting period (years)
Expected volatility
Option Life (years)
Expected life (years)
Risk-free rate
Dividend yield
Fair value per option (£)
0.3025
0.3025
275,000
1
44.72%
10
5
0.8981%
0.00%
0.055
17 March 2011
0.3025
0.3025
275,000
2
44.72%
10
5
0.8981%
0.00%
0.077
0.3025
0.3025
275,000
3
44.72%
10
5
0.8981%
0.00%
0.094
0.3430
0.3430
166,667 *
1
23 March 2011
0.3430
0.3430
166,667 *
2
44.64%
10
5
0.9435%
0.00%
0.061
44.64%
10
5
0.9435%
0.00%
0.087
0.3430
0.3430
166,667 *
3
44.64%
10
5
0.9435%
0.00%
0.106
* A total of 250,000 shares, 83,500 shares per vesting period, have been forfeited in 2012.
Page 38
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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.
2.
3.
Personal to the Option Holder and are not transferable, or assignable.
Shall not be exercisable on or after the tenth anniversary of the grant date.
Subject to the rules of the Plans, the Options shall Vest as follows – Options vest at 33.3% per year:
(cid:2)
(cid:2)
(cid:2)
33.3% vest on the First Anniversary of the grant of option
A second 33.3% vest on the Second Anniversary of the grant of option
The first 33.33% vest on the Third Anniversary of the grant of option
2012
2011
Number (000's)
exercise price Number (000's)
Weighted
average
Weighted
average exercise
price
Outstanding at 1 July
Granted
Exercised
Forfeited
Outstanding at 30 June
2,500
-
-
(300)
2,200
£0.44
-
-
£0.35
£0.46
1,582
1,375
(165)
(292)
2,500
Exercisable at 30 June
1,489
£0.52
1,085
£0.47
£0.31
£0.04
£0.26
£0.44
£0.62
2012
2011
Range of
exercise
prices
Weighted
average
exercise
price (£)
Number of
Shares
(000's)
Weighted
average
remaining life
(years):
Contractual
Weighted
average
exercise
price (£)
Number of
Shares
(000's)
Weighted average
remaining life
(years):
Contractual
£0 - £0.50
0.264
1,501
£0.51 - £1.00
0.869
699
7.6
3.6
0.276
1,801
0.869
699
8.8
4.6
Noshare options were exercised during the year ended 30 June 2012 (18 months ended 30 June 2011:165,000 at a
weighted average price of £0.3130).
The total charge for the year relating to employee share based payment plans was £ Nil (18 months ended 30 June
2011: £7,000), all of which related to equity-settled share based payment transactions.
Page 39
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
19. MERGER RESERVE
Balance 1 July 2011 & 30 June 2012
£000's
153
The merger reserve was created on the issue of shares in consideration for the acquisition of Mobile Streams Europe
GmbH.
20. OPERATING LEASES
The Group has commitments under operating leases for land and buildings to pay the following amounts in the
next twelve months.
Annual commitments under non-cancellable operating
leases expiring:
Within one year
Within two to five years
After five years
Land and Buildings
2012
? 00's
2011
? 00's
64
215
-
279
111
72
-
183
There are no other operating leases. Lease payments recognised as an expense during the period amount to
£46,260(2011: £210,000).
21. SEGMENT REPORTING
As at 30 June 2012, the Group is organised into 4 geographical segments: Europe, North America, Latin American,
and Asia Pacific. Revenues are from external customers only and generated from three principal business activities:
the sale of mobile content through MNO’s (Mobile Operator Services), the sale of mobile content over the internet
(Mobile Internet Services) and the provision of consulting and technical services (Other Service Fees).
All operations are continuing and all inter-segment transfers are priced and carried out at arm’s length.
91% of revenue in Latin America is derived from 2 major customers and 97% of revenue in Asia Pacific is derived
from 3 major customers.
Page 40
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The segmental results for the year ended 30 June 2012 are as follows:
Europe Asia Pacific
The segmental results for the 18 months enden 30 June 2011 are as follows:
Eu rope Asia Pacific
N orth
Am e rica
Lati n
Am e rica
C on s ol
Grou p
? 00's
M obile Op erator Services
M obile Internet Services
Other Service fees
Total Revenue
Cost of sales
Gross profit
Selling, marketing and administration exp enses
EBITDA*
Dep reciation, amortisation and imp airment
Share based comp ensation
Finance income/(exp ense)
Profit/(Loss) before tax
Taxation
Profit/(loss) after tax
Segmental assets
Segmental liabilities
? 00's
M obile O p erator Services
M obile Internet Services
O t her Service fees
Total Re ve n u e
O t her Income
C ost of sal e s
Gross profi t
148
80
1
229
(21)
208
(682)
(474)
(75)
-
-
(549)
27
(523)
490
286
290
279
668
1,237
484
(194)
1,527
Selling, marketing and administration exp enses
(1,467)
EBITD A*
D ep reciat ion, amortisat ion and imp airment
Share based comp ensation
F inance income
Profi t/(Loss) be fore tax
T axat ion
P rofit/(loss) aft er tax
Segment al as sets
Segment al liabilit ies
60
(275)
(19)
4
(230)
80
(150)
254
246
* Earnings before interest, tax, depreciation, amortisation and share compensation.
North
America
Latin
America
418
1
1
3,542
16,425
61
1,327
-
43
1,370
420
20,028
(957)
413
(300)
113
(2)
-
2
113
-
113
303
498
37
457
(575)
(118)
(290)
-
-
(408)
-
(408)
144
546
(12,271)
7,757
(5,264)
2,493
(11)
-
(2)
2,480
(890)
1,591
5,542
3,937
Consol
Group
-
-
-
-
-
-
-
-
-
-
-
-
-
340
0
5,435
16,505
106
22,047
(13,211)
8,835
(6,821)
2,013
(378)
-
(0)
1,636
(863)
773
6,819
5,267
2,535
-
108
2,643
1,191
175
44
1,410
3,143
7,016
42
10,201
-
-
-
(1,775)
868
(664)
(236)
1,174
(1,647)
(6,069)
4,132
(3,397)
204
(5)
-
4
203
-
203
583
825
(473)
(73)
-
-
(546)
-
(546)
553
735
735
(39)
-
-
696
(417)
279
2,257
1,742
7,159
7,470
862
15,491
484
(8,274)
7,701
(7,175)
526
(392)
(19)
8
123
(337)
(214)
4,434
3,561
-
-
-
-
-
-
-
-
-
-
-
-
-
-
787
13
Page 41
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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:
2
007 2006
Segment revenues
Total segment revenues
Group revenues
Segment results
Total segment Profit/ (loss) after tax
Group Profit/ (loss) after tax
Segment assets
Total segment assets
Consolidation
Group assets
Segment liabilities
Total segment liabilities
Consolidation
Groups
liabilities
INTEREST REVENUE
2012
? 00
22,047
22,047
773
773
14,034
(7,214)
6,820
12,815
(7,549)
5,266
2011
? 00
15,491
15,491
(214)
(214)
12,719
(8,285)
4,434
11,171
(7,610)
3,561
Interest Revenue for the year ended 30 June 2012was£2k derived entirely from Latin America (Argentina)(18
months ended 30 June 2011: £8k)
DEFERRED TAX
Deferred Tax
Deferred Tax
BENEFITS
Benefits
Europe
Asia
Pacific
North
America
Latin
America
Other
Group
-
-
-
-
454
454
-
-
-
-
454
454
Europe
Asia
Pacific
North
America
Latin
America
Other
Group
-
-
(25)
(25)
(30)
(30)
(1)
(1)
-
-
(56)
(56)
Page 42
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
18 months ended 30 June 2011
DEFERRED TAX
Europe
Asia
Pacific
North
America
Latin
America
Other
Group
Deferred Tax
BENEFITS
Benefits
-
-
-
-
-
-
-
-
(13)
(13)
(13)
(13)
Europe
Asia
Pacific
North
America
Latin
America
Other
Group
-
-
(38)
(38)
(70)
(70)
(2)
(2)
-
-
(110)
(110)
22. CAPITAL COMMITMENTS
The Group has no capital commitments as at 30 June 2012 (30 June 2011: £Nil).
23. CONTINGENT LIABILITIES
The German subsidiary was subject to a tax audit for the years 2006 to 2010. As a result of the audit findings, the
German fiscal authority, the Tax and Revenue Office of Hanover-North, is claiming a tax payment of about £200,325
(€250,000).
A provision of £120,195 (€150,000) has been booked (2011: no provision charge), because the company does not
believe it is liable for the full sum and is working with its tax advisers in Germany to resolve this position. The
provision is the director’s best estimate of the maximum amount due.
The Group has no other contingent liabilities as at 30 June 2011.
Page 43
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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 3.
Other Related Parties
Although not a related party under IFRS, the Group has received management fee income from Zoombak Inc, a
subsidiary of TruePosition Inc who are a minority shareholder in the Company. Furthermore as announced on 28
September 2010, Mobile Streams’ agreement to provide management services to Zoombak, LLC, the location based
devices and services subsidiary of TruePosition, Inc. ended in early January 2011. In addition to the fixed
management fee that was paid by TruePosition to the Company, the Zoombak management services agreement
included certain performance related provisions whereby bonus sums would become payable to Mobile Streams
depending on the financial performance of Zoombak. The Company had raised invoices amounting to its calculation
of these bonuses in prior years, however, TruePosition disputed these invoices.
The Company and TruePosition have now negotiated and executed a settlement agreement that amicably resolves the
outstanding matters relating to the Zoombak management services agreement. Furthermore, Zoombak made a one-
time payment of $250,000 (£155,000) to the Company, shown as revenue in the income statement for the period 30
June 2011.This contract has been terminated during the 18 month period ended 30 June 2011.
Page 44
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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 and Argentine 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. 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, are translated into
local currency at the closing rate are as follows.
Nominal amounts
Financial assets
Financial liabilities
Short-term exposure
2012
000
2011
000
US
$
AUS
$
ARS
$
Other
US
$
AUS
$
ARS
$
Other
105
(546)
(441)
262
(567)
(305)
5,298
(3,829)
1,469
287
(58)
229
292
(738)
(446)
486
(739)
(253)
2,051
(1,646)
405
290
(196)
94
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.
US Dollar
Australian Dollar
Argentine Peso
2012
3%
4%
5%
18%
2011
8%
24%
Page 45
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Liquidity risk
The Group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs.
Management prepares cashflow forecasts which are reviewed at Board meetings to ensure liquidity. The Group
has no borrowing arrangements.
As at 30June 2012, the Group’s liabilities were all current and have contractual maturities as follows:
30 June 2012
Within 6 months
? 00
6 to 12 months
? 00
Trade and other payables
3,774
-
The maturity of the Group’s financial liabilities, which were all current at the previous year end, were as follows:
30 June 2011
Within 6 months
? 00
6 to 12 months
? 00
Trade and other payables
3,107
-
Capital Management Disclosures
Management assesses the Group’s capital requirements in order to maintain an efficient overall financing
structure while avoiding excessive leverage. This takes into account the subordination levels of the Group’s
various classes of debt. 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 may adjust the amount of dividends paid to shareholders, return capital to
shareholders, issue new shares, or sell assets to reduce debt.
Page 46
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
REPORT OF THE INDEPENDENT AUDITOR TO THE MEMBERS OF MOBILE STREAMS
PLC
We have audited the parent company financial statements ofMobile Streams Plc for the year ended 30 June
2012which comprise 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 (UnitedKingdom
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 Statementset 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 APB's website at
www.frc.org.uk/apb/scope/private.cfm.
OPINION ON FINANCIAL STATEMENTS
In our opinion the parent company financial statements:
(cid:1)
(cid:1)
(cid:1)
give a true and fair view of the state of the Company's affairs as at 30 June 2012;
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 MATTER PRESCRIBED BY THE COMPANIES ACT 2006
In our opinion the information given in the 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:
(cid:1)
(cid:1)
(cid:1)
(cid:1)
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.
Page 47
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
OTHER MATTER
We have reported separately on the group financial statements of Mobile Streams Plc for the period ended 30 June
2012.
Mark Henshaw
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
London
7 December 2012
Page 48
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
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 income statement in the financial statements. The loss for the parent company for the year
ended 30 June 2012 was £3,117,000(18 months period ended 30June2011: profit £134,000).
The following paragraphs describe the main accounting policies. The policies have been consistently applied to
all periods presented.
Revenue recognition
As at 30 June 2012, the Group is organised into four geographical segments: Europe, North America, Latin America,
and Asia Pacific. Revenues are from external customers only and generated from three principal business activities:
the sale of mobile content through mobile network operators (Mobile Operator Sales), the sale of mobile content over
the internet (Mobile InternetSales) and the provision of consulting and technical services (Other Service Fees).
Revenue includes the fair value of sale of goods and services, net of value-added tax, rebates and discounts.
Revenue is recognised as follows:
a) Mobile Operator Sales &Mobile InternetSales
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
Rendering of services are 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
Statement of Financial Position under other creditors 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.
Page 49
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
COMPANY ACCOUNTING POLICIES
TANGIBLE FIXED ASSETS
Tangible fixed assets are stated at cost, net of depreciation and any provision for impairment.
Depreciation is calculated to write down the cost less estimated residual value of fixed assets over their estimated
useful lives. The following rates and methods have been applied:
Leasehold improvements
Plant and equipment
Media platform development
Office furniture
Over the life of the lease
33% straight line
33% - 50% straight line
Between 10% and 33% straight line
Media platform costs represent the cost of the initial development of websites and media platforms, which
support the Company’s core operations.
The Company continued to invest in expanding the capability of the media platform during 2011-2012 and has
capitalised the direct staff costs incurred during the creation of this asset. The expected useful economic life of
the platform is estimated to be 2 years and the asset is being depreciated on this basis.
INTANGIBLE ASSETS
The intangible assets represent the cost of creating original media content.Intangible assets are stated at cost, net
of amortisation and any provision for impairment.Amortisation is calculated to write down the cost of intangible
assets over their estimated useful lives. The following rates and methods have been applied:
Intangible assets
Between 2 and 4 years straight line
DEFERRED TAXATION
Deferred tax is recognised on all timing differences where the transactions or events that give the Group 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.
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. The exchange differences arising from the retranslation of the opening net investment in subsidiaries
are taken directly to reserves. All other 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’).
Page 50
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
COMPANY ACCOUNTING POLICIES
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 method.
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.
Page 51
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
COMPANY BALANCE SHEET
Fixed assets
Intangible assets
Investments in subsidiaries
Total fixed assets
Current assets
Debtors
Cash and cash equivalents
Deferred tax asset
Others assets
Total current assets
30 June
2012
£000’s
Restated
30 June
2011
£000’s
2
1
3
-
2
354
354
1,442
1,444
748
11
-
3
762
2687
83
-
2
2,772
Creditors: amounts falling due within one year
4
(707)
(690)
Net current assets
55
2,082
Net assets
Capital and reserves
Called up share capital
Share premium
Profit and loss account
Shareholders funds
409
3,526
5
6
6
73
73
10,317
10,317
(9,981)
(6,864)
409
3,526
The financial statements were approved by the Board of Directors on 7December 2012.
Simon Buckingham
Director
Company registration number:
03696108
Page 52
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
NOTES TO COMPANY FINANCIAL STATEMENTS
1. INVESTMENT IN SUBSIDIARY COMPANIES
Cost
At July 2011 and 30 june 2012
30 June 2012
30 June 2011
? 00
? 00
3,898
3,898
Net Book Amount after impairment
354
1,442
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.
At the year-end the Company’s investments were reviewed for impairment. A valuation of the Company’s
investments indicated that,in the case of the investments in the subsidiaries in Germany, USA, Hong Kong and
Colombia , their fair market value was less than their carrying value and therefore an impairment charge of ₤1,088m
needed to be recognized(2011:No impairment charge).
Investments in Subsidiary undertakings comprise:
Mobile Streams Inc.
Appitalism, Inc.
Mobile Streams De Argentina SRL
Mobile Streams De Brasil Midia Digital Para
Celulares Ltda
Mobile Streams Chile Ltda
Mobile Streams De Colombia Ltda
Mobile Streams of Mexico S De RL De CV
The Nickels Group Inc
Mobile Streams Venezuela SA
Mobile Streams Asia Limited
Mobile Streams Australia Pty Limited
Mobile Streams (Hong Kong) Limited
Mobile Streams Singapore Limited
Mobile Streams Europe GmbH
Proportion held
Directly by
Mobile Streams
Plc
100%
100%
50%
By other
Group
companies
-
-
50%
79%
50%
50%
50%
-
100%
100%
-
100%
-
100%
21%
50%
50%
50%
100%
-
-
100%
-
100%
-
Total
held by
Group
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
Country of
incorporation
USA
USA
Argentina
Brazil
Chile
Columbia
Mexico
USA
Venezuela
UK
Australia
Hong Kong
Singapore
Germany
All the subsidiaries’ issued shares were ordinary shares and their principal activities were the distribution of licensed
mobile phone content.
Page 53
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
NOTES TO COMPANY FINANCIAL STATEMENTS (CONTINUED)
2. FIXED ASSETS
Investment in
Subsidiaries
Tangible Assets
? 00
? 00
Total
? 00
1,442
1,442
-
(1,088)
(1,088)
354
1,442
2
2
(2)
-
(2)
-
2
1,444
1,444
(2)
(1,088)
(1,090)
354
1,444
Balance at 1 July 2011
At 30 June 2012
Depreciation provided for the year
Impairment
At 30 June 2012
Net book value at 30 June 2012
Net book value at 30 June 2011
3. DEBTORS
DEBTORS
Trade debtors and receivables
Amounts owed by Group undertaking
Restated
2011
£000’s
2012
£000’s
92
656
748
131
2,556
2,687
2012
? 00
2011
? 00
37
441
229
707
17
459
214
690
4. CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Trade creditors
Amounts owed to Group undertakings
Accruals and deferred income
5. SHARE CAPITAL
For details of share capital refer to note 17to the Group financial statements.
Page 54
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
NOTES TO COMPANY FINANCIAL STATEMENTS (CONTINUED)
6. RESERVES
At 1 July 2011
Loss for the year
At 30 June 2012
Restated
Profit and loss
Account
Share Premium
£000’s
£000’s
10,317
(6,864)
-
(3,117)
10,317
(9,981)
7. CAPITAL COMMITMENTS
The Company has no capital commitments at 30 June 2012 (30 June 2011: Nil).
8. CONTINGENT LIABILITIES
As at 30June 2012 there were no contingent liabilities (30 June 2011: Nil).
9. RELATED PARTY TRANSACTIONS
During the year the Company remunerated senior management personnel as disclosed in note 3 in the Group
financial statements.
There are no other related party transactions that require disclosing under Financial Reporting Standard 8.
10. CORRECTION OF PRIOR PERIOD ERROR
On April 2011, a dividend distribution took place in Argentinean subsidiary, generating an income for Mobile
Streams PLC of ₤77,188, for its 50% of participation in the capital of the subsidiary.
During the current year has been detected an error in prior year, due to the omission of the abovementioned
transaction between group companies.
As a result, the income of ₤77,188 and the related intercompany debtor haven’t been reported in the individual
financial statements of Mobile Streams PLC as of June 30, 2011. Therefore, the figures have been restated.
The reconciliation between the reported figures and the restated amounts is as follows:
Income Statement:
At 30 June 2011
Correction to prior year loss
At 1 July 2011
Profit and loss
Account
? 00
(6,941)
77
(6,864)
Page 55
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2012
NOTES TO COMPANY FINANCIAL STATEMENTS (CONTINUED)
Balance Sheet:
In addition, the balance sheet balances were understated as at 30 June 2011, so this error resulted in the restatement
of the following line items for the year ended 30 June 2011:
DEBTORS
Amounts owed by Group undertaking
At 30 June 2011
Correction to prior year balance
At 1 July 2011
? 00
2,479
77
2,556
Page 56