MOBILE STREAMS PLC
FINANCIAL STATEMENTS
FOR THE YEAR ENDED
30 JUNE 2014
Company registration number: 03696108
MOBILE STREAMS PLC
Financial Statements for the 12 months ended 30 June 2014
Company registration number:
03696108
Registered office:
Directors:
Abacus House
33 Gutter Lane
London, EC2V 8AR
E Benasso
S D Buckingham
M Carleton
T Maunder
R G Parry
P Tomlinson
Chairman:
R G Parry
Secretary:
Pennsec Limited
Bankers:
Auditor:
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
Nominated Adviser & Broker
N Plus 1 Singer Advisory LLP
One Bartholomew Lane
London
EC2N 2AX
Corporate web site:
www.mobilestreams.com
MOBILE STREAMS PLC
Financial Statements for the 18 month ended 30 June 2014
Contents
PAGE
Chairman‟s statement
Strategic Report
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
2
3
9
13
15
23
24
25
26
27
28
48
50
52
53
Page 1
MOBILE STREAMS PLC
Financial Statements for the 18 month ended 30 June 2014
Chairman’s Statement:
The Board of Mobile Streams plc presents its audited accounts for the financial year ended 30 June 2014.
The past 12 months has seen Mobile Streams plc (the "Group" or the "Company") continue with its strategy to
develop a content offering across a wide range of mobile devices in a number of markets direct to consumers. This is
in addition to our original business of providing content to mobile network operators and other business partners. The
operating performance of the business reflects our substantial positioning in Argentina and Latin America. It also
reflects the cost of working with Argentinean exchange control rules and the sudden and significant devaluation of
the Argentinean peso in January 2014.
Group revenue for the year ended 30 June 2014 was £48.6m (2013: £53.9m). Trading EBITDA* was £0.7m for year
(2013: £5.2m). Profit before tax was £0.2m (2013 £4.8m). Much of the reduction in revenues and profits are
attributable to the devaluation of the Argentinean peso. Revenue in Argentina (which equates to 83% of our revenue)
on a constant currency basis increased by 16% from AR$380m to AR$440m.
Our operations outside Europe represent more than 99% of the overall revenues for the period. Latin America
represents 98% (see note 22) of the total revenues for the year. Of this some 83% was in Argentina.
During 2012, Argentina modified its regulations regarding international transfer of funds which restricted the
Group‟s ability to transfer cash out of the country. As of 30 June 2013, more than 73% of the Group's cash was in
Argentina. Following a strategic decision to mitigate capital risk and diversify our sources of cash generation
(principally to states with more appropriate capital controls such as Mexico and Colombia), Mobile Streams has
reduced the proportion of its capital reserves within Argentina to 16% as of 30 June 2014.
Mobile Streams enters the new financial year with a clear focus on continuing to expand its operating base in Latin
America and in open mobile Internet services including Appitalism for apps and games in new developing markets
including in Africa. The Directors do not propose a payment of a dividend (2013: £Nil). In the new financial year,
revenue is once again expected to be largely generated in Latin America.
Despite the challenges in Argentina, the Board believes that the Company is well positioned to deliver growth in
shareholder returns with established products and strong trading relationships, complemented by broader market
growth in developing markets, which represent our key targets for future growth. We are long established experts in
mobile content.
Roger Parry
Chairman
*Calculated as profit before tax, interest, amortisation, depreciation, share compensation expense and impairment of assets.
Page 2
MOBILE STREAMS PLC
Financial Statements for the 18 month ended 30 June 2014
STRATEGIC REPORT
Mobile Streams PLC (AIM: MOS), the global mobile media company, is pleased to provide an update to its
shareholders on its performance for the 12 months ended 30 June 2014.
BUSINESS REVIEW
Operating Review
Mobile Streams‟ performance during the financial year ended 30 June 2014 was driven primarily from Mobile
Internet sales in Latin America.
Group revenue for the year ended 30 June 2014 was £48.6m. The gross profit was £14.2m and decreased by 19%
during the year (year ended 30 June 2013: £17.6m). The gross profit margin decreased from 33% to 29% due to
increased marketing (Direct to Consumer) costs related to Mobile Internet.
Selling, marketing and administrative expenses were £14.2m, an 11% increase on the year ended 30 June 2013.
Revenues are generated from two principal business activities: the sale of mobile content through mobile operators
(Mobile Operator Sales) and the sale of mobile content over the internet (Mobile Internet Sales). Additionally, the
Group is engaged in the provision of consulting and technical services (Other Service Fees).
During the period, both the Group's Mobile Internet revenues and its Mobile Operator revenues decreased. As
consumers steadily update their phones from legacy feature and flip phone models to smartphones, they have
generally used the operator content portals less. Consumers generally use independent portals, as well as the open
mobile internet, more actively.
The Argentine peso suffered a big devaluation against the British Pound during the year (23% during January 2014
and 67.6% for the 12 months ended on June 30 2014). The financial results and balances of all group entities that
have a functional currency different from the presentation currency, are translated into the presentation currency, and
these exchange differences are recognised in the income statement or as a separate component of equity (cumulative
translation reserve), which will be converted to results in the future.
Mobile Internet Sales
The Group anticipated the shift to the open Mobile Internet business model several years ago and added new
products at new price points in new markets.
As a result, the Group experienced rapid growth and a stabilization in 2013-2014 in Mobile Internet sales as
consumers used their mobile devices to purchase mobile content subscriptions. The decrease in revenue is due to the
big devaluation effect of the Argentine peso compared to the British pound.
Latin America, primarily Argentina, accounted for the majority of revenues.
Mobile Streams continued to show solid revenues for the most recent financial year, driven primarily by Argentina,
Mexico and Colombia. Whilst Latin America has remained stable, we are pleased that we have also successfully
leveraged our Appitalism (http://www.appitalism.com) expertise and market positioning and won new apps business
in Asia Pacific, with the announcement of Optus App Store deal.
Page 3
MOBILE STREAMS PLC
Financial Statements for the 18 month ended 30 June 2014
STRATEGIC REPORT
Mobile Operator Sales
The Group has several contracts with mobile operators that allow the distribution of content through their mobile
portals, although the revenue has been reduced by more than 50% year on year partially due to the devaluation of the
Argentinian peso in January 2014.
There was a reduction in the number of 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 mitigate the natural decline in this revenue stream as the market changes.
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.
Financial Review
Group revenue for the year ended 30 June 2014 was £48.6m, a 9.8% decrease on the previous year (2013: £53.9m).
Gross profit was £14.2m, a decrease of 19% during the year (2013: £17.6m). The gross profit margin decreased from
33% to 29% due to increased marketing (Direct to Consumer) costs related to Mobile Internet.
Selling, marketing and administrative expenses were £14.2m, an 11% increase on the year ended 30 June 2013
(2013: £12.8m).
The Group recorded a loss after tax of £0.6m for the year ended 30 June 2014 (2013: profit £2.6m). Basic earnings
per share decreased to a loss of 1.52 pence per share (2013: profit of 7.1 pence per share). Adjusted earnings per
share (excluding interest, depreciation, amortisation, impairments and share compensation expense) decreased to
0.499 pence per share .(2013: 8.1 pence per share).
The Group had cash of £3.0m at 30 June 2014, with no debt (£2.9m of cash with no debt as at 30 June 2013).
Financial performance
* Calculated as profit before tax, interest, amortization, depreciation, share compensation expense and impairment of assets.
Page 4
Year to 30 June 2014Year to 30 June 2013Year to 30 June 2012£000's£000's£000'sRevenue 48,573 53,936 22,047 Gross profit 14,229 17,586 8,835 Selling and Marketing Costs (7,872) (7,843) (3,668) Administrative Expenses (5,617) (4,565) (3,153) Trading EBITDA* 740 5,178 2,014 Depreciation and Amortisation (36) (25) (209) Impairments (380) (334) (169) Share Based Compensation (328) (18) - Operating profit (4) 4,801 1,636 Finance Income 170 - 2 Finance Expense (13) (13) (2) Profit before tax 153 4,788 1,636
MOBILE STREAMS PLC
Financial Statements for the 18 month ended 30 June 2014
STRATEGIC REPORT
Key performance indicators (“KPI’s”)
The KPIs used by the Group are trading EBITDA*, growth in revenue and gross profit. Management review these on
a regular basis, largely by reference to budgets and reforecasts. Trading EBITDA was £0.7m for the year ended on
June 2014, and it was £5.2m for the year ended in June 2013.
Earnings before tax, interest, amortisation, depreciation, share compensation expense and impairment of assets
(Trading 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 added back to
profit after tax in calculating this measure.
Growth in revenue is a measure of how we are building our business. Our goal is to achieve year-on-year growth.
Although revenue decreased 10% during the year, like for like revenue on a constant currency basis actually
increased by 16%. Revenues measured in local currency terms have increased, while measured in British pounds
have decreased, due to the local currencies devaluation to the British pound.
Gross profit as a percentage of revenue is a measure of our profitability. Gross profit was £14.2m for the period
ended in June 2014, a decrease from the £17.6m booked in 2013.
Strategy
Our business model is generating revenues though relationships with mobile operators and content aggregators and
retailing directly to the consumer. Mobile Streams have developed expertise in selling content to consumers in
developing markets. We enjoyed great success in gaining market share in Argentina but out results have suffered
from the currency issues described. We now plan to seek new market opportunities in Latin America and in Africa
which will enable us to use our existing content assets, or technical expertise and our relationships with mobile
operators to develop new, profitable streams of revenues.
Principal risks and uncertainties
The nature of the Group's business and strategy makes it subject to a number of risks.
The Directors have set out below the principal risks facing the business.
Contracts with Mobile Network Operators (MNOs)
While Mobile Streams maintains relationships with numerous MNOs in the various territories, a small number of
operators account for a high portion of the Group‟s business.
As the Group grows, management are using geographic and product diversity to counter this risk.
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 18 month ended 30 June 2014
STRATEGIC REPORT
Fluctuations in currency exchange rates
Approximately 99% of the Group‟s revenue relates to operations outside the UK. The Group is therefore exposed
to foreign currency fluctuations and the financial condition of the Group may be adversely impacted by foreign
currency fluctuations. See note on page 6 - 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 currently hedged, though the Board is taking steps to review its foreign currency risk
exposure and potential means of combating this risk.
Dependencies on key executives and personnel
The success of the business is substantially dependent on the Executive Directors and senior management team.
The Group has incentivised all key and senior personnel with share options and has taken out a Key Man insurance
policy on its Chief Executive Officer, Simon Buckingham.
Intellectual property rights
The protracted and costly nature of litigation, 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 18 month ended 30 June 2014
STRATEGIC REPORT
Going concern risk
The current uncertain economic climate and changing market place may impact the Group‟s cash flows and
thereby its ability to pay its creditors as they fall due.
A principal responsibility of management is to manage liquidity risk, as detailed in Note 26 to the financial
statements. The Group uses annual budgeting, forecasting and regular performance reviews to assess the longer
term profitability of the Group and make strategic and commercial changes as required ensuring cash resources are
maintained.
Argentina's Government imposed currency controls at the beginning of 2012 which continue to inhibit the
repatriation of funds to the parent company. Management made the appropriate actions to mitigate this risk and
has moved its finance operations to Argentina to help ensure stability and continuity.
Financial risk management objectives and policies
The Group uses various financial instruments. These include cash and various items, such as trade receivables and
trade payables that arise directly from its operations. The numerical disclosures relating to these policies are set
out in notes to the financial statements.
The existence of these financial instruments exposes the Group to a number of financial risks, which are described
in more detail below. The Group does not currently use derivative products to manage foreign currency or interest
rate risks.
The main risks arising from the Group's financial instruments are market risk, currency risk, liquidity risk and
credit risk. The Directors review and agree policies for managing each of these risks and they are summarised
below. These policies have remained unchanged from previous periods.
Market risk
Market risk encompasses three types of risk, being currency risk, fair value interest rate risk and price risk. In this
review interest rate and price risk have been ignored as they are not considered material risks to the business.
The Group's policies for currency risk are set out below.
Liquidity risk
The Group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs
and to invest cash assets safely and profitably.
The aforementioned capital flow restrictions imposed by the Argentinian government severely restrict the
Argentina subsidiary from transferring funds to the Group´s parent company for the payment of dividends or for
services rendered. This risk is being mitigated by the launch of similar businesses to Argentina in Colombia and
Mexico where the cross border transfer of funds is not restricted. Vendor related payments can be made from
Argentina on behalf of other subsidiaries.
The Group currently has no borrowing arrangements in place and prepares cash flow forecasts which are
reviewed at Board meetings to monitor liquidity.
Credit risk
The Group's principal financial assets are bank deposits, cash and trade receivables. The credit risk associated
with the bank deposits and cash is limited as the counterparties have high credit ratings assigned by international
credit-rating agencies. The principal credit risk arises therefore from the Group's trade receivables. Most of the
Group‟s trade receivables are large mobile network operators or media groups. Whilst historically credit risk has
been low management continuously monitors its financial assets and performs credit checks on prospective
partners.
Page 7
MOBILE STREAMS PLC
Financial Statements for the 18 month ended 30 June 2014
Argentina Division
12 months to 30 June
2014
2013
AR$'000
AR$'000
2014
£'000
2013
£'000
Revenue
440,435
379,511 40,500
49,077
The Argentina Division delivered a solid revenue performance in line with expectations. The division represented
83% of the revenues of the Group.
Argentina revenue rose 16% in Argentine Pesos terms; from AR$379 Million to AR$440 Million; but the reported
British Pound figures show a 17% decrease in revenue; from £49M to £40.5M. The actual increase in underlying
AR$ revenues reflects the revenue growth measured in local currency. The decrease in British pounds is due to the
big devaluation of the argentine peso through the Sterling Pound (67% in a year).
Future Developments
The Company is continuing to further develop its mobile content and mobile Internet services in the markets that it
has launched in such as Brazil and Mexico. The Company is also exploring the launch of its services in new
emerging markets, focusing in particular on Asia, Africa and India.
The Strategic Report, encompassing pages 2 to 7, was approved by the Board and signed on its behalf by:
Enrique Benasso
Chief Financial Officer
8 October 2014
Page 8
Financial Statements for the year ended 30 June 2014
DIRECTORS‟ REPORT
The principal activity of the Group is the sale of content for distribution on mobile devices. The Company is
registered in England and Wales under company number 03696108.
Results and dividends
The trading results and the Group's financial position for the year ended 30 June 2014 are shown in the attached
financial statements, and are discussed further in the Strategic Report.
The Directors have not proposed a dividend for this year (2013: £nil).
Directors and their interests
The present membership of the Directors of the Company (the “Board” or the “Directors”), together with their
beneficial interests in the ordinary shares of the Group, is set out below. 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
E Benasso
Ordinary
shares of
£0.002 each
30 June 2014
Ordinary
shares of
£0.002 each
30 June 2013
10,382,500
-
40,000
181,183
5,000
-
17,012,500
-
40,000
181,183
5,000
-
Page 9
Financial Statements for the year ended 30 June 2014
DIRECTORS‟ REPORT
Options
The table below summarises the exercise terms of the various options over ordinary shares of £0.002 (year ended
30 June 2013: £0.002) which have been granted and were still outstanding at 30 June 2014.
The remuneration of each of the Directors for the period ended 30 June 2014 is set out below:
Fees
£'000
Benefits
£'000
-
-
14
20
-
-
34
5
-
-
-
-
-
5
Year to 30
June 2014
Total
£'000
Year to 30
June 2013
Total
£'000
188
302
20
30
20
44
5
17
28
17
13
-
307
377
Salary
£'000
183
20
16
-
44
5
268
S D Buckingham
T Maunder
R G Parry
P Tomlinson
G Cerf
E Benasso
Total
Benefits comprise medical health insurance.
Post balance sheet events
There have been no significant post balance sheet events.
Page 10
Options Held at Options Held at Latest expiry 1 July 201330 June 2014dateNumberNumberNumberNumber£R G Parry689,655 --689,655 0.870 15-feb-0714-feb-16R G Parry250,000 --250,000 0.343 23-mar-1222-mar-21E Benasso-250,000 - 250,000 0.198 13-jun-1512-jun-24Options Granted During the periodOptions exercised During the periodExercise priceEarliest date from which exercisable
Financial Statements for the year ended 30 June 2014
DIRECTORS‟ REPORT
Going Concern
The Group had cash balances of £3.0m at the year end (2013:£2.9m) and no borrowings. Having reviewed cash flow
forecasts and budgets for the year ahead the Directors have a reasonable expectation that the Group has sufficient
resources to continue in operational existence for the foreseeable future. During the year ended 30 June 2012,
Argentina modified its laws on the cross border intercompany transfer of funds. Management have made the proper
changes to mitigate this risk and have moved the finance operations to Argentina to help ensure stability and
continuity. The risk is also mitigated by the launch of similar businesses in markets such as Colombia and Mexico
where the cross border transfer of funds is not restricted. For these reasons, the Board consider Mobile Streams to be
a going concern. No material uncertainties or events that may cast significant doubt about the ability of the Group to
continue as a going concern have been identified by the Directors.
Directors’ Responsibilities Statement
The Directors are responsible for preparing the Strategic Report, the Directors‟ Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the
directors have prepared the group financial statements in accordance with International Financial Reporting
Standards as adopted by the European Union (IFRSs) and have elected to prepare the parent company financial
statements in accordance with United Kingdom Generally Accepted Accounting Practice (UK GAAP). Under
Company law the Directors must not approve the financial statements unless they are satisfied that they give a true
and fair view of the state of affairs and profit or loss of the Company and Group for that period. In preparing these
financial statements, the Directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable International Financial Reporting Standards / UK Accounting Standards have been
followed, subject to any material departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group
will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the
Group‟s transactions and disclose with reasonable accuracy at any time the financial position of the Group and
enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible
for safeguarding the assets of the Group and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
The Directors confirm that:
in so far as each Director is aware, there is no relevant audit information of which the Company‟s auditor is
unaware; and
each Director has taken all steps that he ought to have taken to make himself aware of any relevant audit
information and to establish that the auditor is aware of that information.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included
on the Company‟s website. Legislation in the United Kingdom governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
Auditors
Grant Thornton UK LLP has indicated their willingness to continue in office, and a resolution that they be re-
appointed will be proposed at the annual general meeting.
On behalf of the Board
Page 11
Financial Statements for the year ended 30 June 2014
Enrique Benasso
Chief Financial Officer
8 October 2014
Page 12
REPORT OF THE INDEPENDENT AUDITOR TO THE MEMBERS OF MOBILE STREAMS PLC
We have audited the consolidated financial statements of Mobile Streams Plc for the year ended 30 June 2014 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 10, the Directors are responsible
for the preparation of the consolidated financial statements and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the consolidated financial statements in accordance with
applicable law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with
the Auditing Practices Board‟s (APB‟s) Ethical Standards for Auditors.
Scope of the audit of the financial statements
A description of the scope of an audit of financial statements is provided on the APB's website at
www.frc.org.uk/apb/scope/private.cfm.
Opinion on financial statements
In our opinion the consolidated financial statements:
give a true and fair view of the state of the group's affairs as at 30 June 2014 and of its loss for the year then
ended;
have been properly prepared in accordance with IFRSs as adopted by the European Union; and
have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Strategic Report and the Directors' Report for the financial period for
which the group financial statements are prepared is consistent with the group financial statements.
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the Companies Act 2006 we are required to report to you if, in our opinion:
certain disclosures of Directors‟ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Page 13
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 2014.
Christopher Smith
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
London
8 October 2014
Page 14
MOBILE STREAMS PLC
Financial Statements for the year ended 30 June 2014
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 2014. 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.
Consolidation
Subsidiaries are all entities over which the Group has the power to govern the operating and financial policies
generally accompanying a shareholding of more than half of the voting rights. Subsidiaries are fully consolidated
from the date on which control is transferred to the Group. They are de-consolidated from the date on which control
is lost.
Intercompany transactions, balances and unrealised gains on transactions between group companies are eliminated in
full. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset
transferred. Subsidiaries' accounting policies have been changed where necessary to ensure consistency with the
policies adopted by the Group.
The separate financial statements and notes of the Company are presented on pages 48-53, which are prepared in
accordance with UK GAAP.
Foreign currency translation
(a) Presentational currency
The consolidated and parent company financial statements are presented in British pounds. The functional currency
of the parent entity is also British pounds.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the
date the transaction occurs. Any exchange gains or losses resulting from these transactions and 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.
Page 15
MOBILE STREAMS PLC
Financial Statements for the year ended 30 June 2014
ACCOUNTING POLICIES
(c) Group companies
The financial results and position of all group entities that have a functional currency different from the presentation
currency of the Group are translated into the presentation currency as follows:
i
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 average exchange 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) is stated at cost, less accumulated depreciation and impairment losses. Cost
includes expenditure that is directly attributable to the purchase of the items.
Depreciation is calculated to write off the cost of property, plant and equipment less estimated residual value on a
straight line basis over its estimated useful life. The following rates and methods have been applied:
Plant and equipment
Office furniture
33% straight line
Between 10% and 33% straight line
Each asset's residual value and useful life is reviewed, and adjusted if required, at each balance sheet date. The
carrying amount of an asset is written down immediately to its recoverable amount if the carrying amount is greater
than its estimated recoverable amount.
Gains/losses on disposal of assets are determined by comparing proceeds received to the carrying amount. Any
gain/loss is recognised in the income statement.
Page 16
MOBILE STREAMS PLC
Financial Statements for the year ended 30 June 2014
ACCOUNTING POLICIES
Going Concern
The Group had cash balances of £3.0m at the year ended (2013: £2.9m) and no borrowings (2013: no borrowings).
Having reviewed cash flow forecasts and budgets for the year ahead the Directors have a reasonable expectation that
the Group has sufficient resources to continue its operations for the foreseeable future. During the year ended 30
June 2012 Argentina modified its laws on the cross border intercompany transfer of funds. Management have made
changes to mitigate this risk including the launch of similar businesses in Colombia and Mexico where cross border
transfers of funds are not restricted. For these reasons, the Board consider Mobile Streams to be a going concern. No
material uncertainties or events that may cast significant doubt about the ability of the Group to continue as a going
concern have been identified by the Directors.
Intangible assets
(a) Goodwill
Goodwill represents the excess of the cost of a business combination over the fair value of net identifiable assets of
the acquired entity at the date of acquisition. This goodwill for subsidiaries is included in intangible assets. Goodwill
is tested annually for impairment and carried at cost less accumulated impairment losses. Goodwill is allocated to
cash-generating units for impairment testing.
(b) Assets acquired through business combinations
These consist of customer relationships, technology based assets and non-compete agreements acquired through
business combinations. To meet this definition, the intangibles must be identifiable either by being separable, or by
arising from contractual or other legal rights. Intangibles acquired through business combinations are recognised at
fair value. Where a reliable estimate of useful life of the intangible can be obtained, the intangible asset is to be
amortised using the straight line basis, over the useful life. Where there is an indication of impairment of intangibles,
the intangible will be tested for impairment. The estimated useful lives of these assets are:
Customer relationships
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 development represent intangible assets that have been acquired from third
parties and also that are internally generated, including capitalised direct staff costs. Content and platform
expenditure is charged against income in the year in which it is incurred unless it meets the recognition criteria of
IAS 38 Intangible Assets. To meet the criteria of an intangible asset the Group must demonstrate the following
criteria:
-
-
-
-
-
-
the technical feasibility of completing the asset so that it will be available for use,
its intention to complete the intangible (or sell it),
its ability to use or sell the intangible,
that the intangible will generate future economic benefit,
that adequate resources are available to complete the intangible, and
the expenditure can be reliably measured.
Intangible assets, if capitalised, are amortised on a straight-line basis over the period of the expected benefit.
Amortization commences when the asset is ready for use.
Page 17
MOBILE STREAMS PLC
Financial Statements for the year ended 30 June 2014
ACCOUNTING POLICIES
(d) Appitalism
Appitalism development represents intangible assets that have been internally generated, including capitalised direct
staff costs. To meet the intangible asset criteria the group must demonstrate the technical feasibility of completing
the asset so that it will be available for use, its intention to complete the intangible (or sell it), its ability to use or sell
the intangible, that the intangible will generate future economic benefit, adequate resources to complete the
intangible and the expenditure can be reliably measured. Intangible assets, if capitalised, are amortised on a straight
line basis, and renewed annually for indicators of impairment.
(e) Software
Software represents assets that have been acquired from third parties. To meet the criteria for recognition the
intangible asset must be both identifiable and either separable, or arise from contractual or other legal rights.
Intangible assets acquired from third parties are stated at cost less accumulated amortisation and impairment losses.
Where a reliable estimate of useful life of the intangible can be obtained, the intangible asset is to be amortised using
the straight line basis, over the useful life. Where there is an indication of impairment of intangible assets with a
definite life, the intangible will be tested for impairment. The estimated useful life of acquired software is 2 years.
Amortisation is included in “Administrative expenses” in the income statement.
Impairment of assets
Assets that have an indefinite useful life, such as goodwill, are not subject to amortisation, but are instead tested
annually for impairment and also tested whenever an event or change in situation indicates that the carrying amount
may not be recoverable. Assets that are subject to amortisation are also tested for impairment whenever an event or
change in situation indicates that the carrying amount may not be recoverable. An impairment loss is recognised in
the income statement as the amount by which the carrying amount of an asset exceeds its recoverable amount. The
recoverable amount is determined by the higher of the fair value of an asset less costs to sell and the value in use. In
order to assess impairment, assets are grouped at the lowest levels for which separate cash flows can be identified
(cash-generating units).
Impairment charges are included in the “Administrative expenses” in the income statement.
Taxation
Current tax is the tax currently payable based on taxable profit for the year.
Deferred income tax is provided, using the liability method, on temporary differences arising between the tax base of
assets and liabilities and their carrying amounts in the consolidated financial statements. However, deferred tax is not
provided on the initial recognition of goodwill, nor on the initial recognition of an asset or liability unless the related
transaction is a business combination or affects tax or accounting profit. Deferred tax on temporary differences
associated with shares in subsidiaries is not provided if reversal of these temporary differences can be controlled by
the Group and it is probable that reversal will not occur in the foreseeable future.
Deferred income tax is determined using tax rates known by the balance sheet date and that are expected to apply
when the deferred income tax asset is realised or the deferred income tax liability is settled. Deferred income tax
assets are recognised only to the extent that it is probable that future taxable profit will be available against which the
temporary differences can be utilised. Deferred tax liabilities are provided in full, with no discounting of assets or
liabilities.
Changes in deferred tax assets or liabilities are recognised as a component of the tax expense in the income
statements, except where they relate to items that are charged or credited directly to equity or other comprehensive
income, in which case the related deferred tax is also charged or credited directly to equity or other comprehensive
income.
Page 18
MOBILE STREAMS PLC
Financial Statements for the year ended 30 June 2014
ACCOUNTING POLICIES
Provisions
Provisions, including those for legal claims, are recognised when the Group has a present legal or constructive
obligation as a result of past events, it is probable that an outflow of economic benefits will be required to settle the
obligation and the amount can be reliably estimated.
Provisions are measured at the present value of management‟s best estimate of the expenditure required to settle the
present obligation at the balance sheet date. The discount rate used to determine the present value reflects current
market assessments of the time value of money and the risks specific to the liability.
Financial Assets
a) Cash and cash equivalents
Cash and cash equivalents include cash on hand, demand deposits held with financial institutions and other short-
term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value.
b) Trade and other receivables
Trade receivables are included in trade and other receivables in the balance sheet. Trade receivables are recognised
initially at fair value and later measured at amortised cost using the effective interest method, less any provision for
impairment. An impairment provision for trade receivables is established when there is objective evidence that the
Group will not be able to collect all amounts due according to the terms of the receivables. The provision is
calculated as the difference between the receivable's carrying amount and the present value of estimated future cash
flows, discounted at the original effective interest rate.
The carrying amount of the asset is reduced through the use of an allowance account and the amount of the loss is
recognised in the income statement. Subsequent recoveries of amounts previously written off are credited in the
income statement
Financial Liabilities
Financial liabilities are obligations to pay cash or 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 2014, the Group is organised into four geographical segments: Europe, North America, Latin America,
and Asia Pacific. Revenues are from external customers only and are generated from three principal business
activities: the sale of mobile content through Mobile Operator Services (Mobile Operator Sales), the sale of mobile
content over the internet (Mobile Internet Sales) and the provision of consulting and technical services (Other
Service Fees).
Page 19
MOBILE STREAMS PLC
Financial Statements for the year ended 30 June 2014
ACCOUNTING POLICIES
Revenue includes the fair value of sale of goods and services, net of value added tax, rebates and discounts and after
eliminating intercompany sales within the Group. Revenue is recognised as follows:
a) Mobile Operator Sales & Mobile Internet Sales
Revenue from the sale of goods is recognised when a Group entity has delivered media content to the end consumer,
who has accepted the product and collectability of the related receivable is reasonably assured from the customer.
b) Other Service Fees
Revenue is recognised in the accounting period in which the services are rendered, by reference to the stage of
completion of the specific transaction, on the basis of the actual service provided as a proportion of the total services
to be provided.
c) Interest Income
Interest receivable is recognised in the income statement using the effective interest method. If the collection of
interest is considered doubtful, it is deferred and excluded from interest income in the income statement.
d) Deferred Income
Revenue that has been collected from customers but where the above conditions are not met is recorded in the
Statement of Financial Position under accruals and deferred income and released to the income statement when the
conditions are met.
Share based payments
Employees (including Directors) of the Group receive remuneration in the form of share-based payment transactions,
whereby employees render services in exchange for shares or rights over shares („equity-settled transactions‟).
The Group has applied the requirements of IFRS 2 (Amended) Share-based Payments to all grants of equity
instruments.
The cost of equity settled transactions with employees is measured by reference to the fair value at the grant date of
the equity instruments granted. The fair value is determined by using the Black-Scholes model.
The cost of equity-settled transactions is recognised in the income statement, together with a corresponding increase
in retained earnings, over the periods in which the performance conditions are fulfilled, ending on the date on which
the relevant employees become fully entitled to the award („vesting date‟). At each balance sheet date before vesting
the cumulative expense is calculated, representing the extent to which the vesting period has expired and
management‟s best estimate of the achievement or otherwise of non-market conditions and of the number of equity
instruments that will ultimately vest. Market conditions are taken into account in determining the fair value of the
options granted, at grant date, and are subsequently not adjusted for. The movement in cumulative expense since the
previous balance sheet date is recognised in the income statement, with a corresponding entry in equity.
No expense or increase in equity is recognised for awards that do not ultimately vest. Awards where vesting is
conditional upon a market condition are treated as vesting irrespective of whether or not the market condition is
satisfied, provided that all other performance conditions are satisfied.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or
options are charged to the share premium account.
Page 20
MOBILE STREAMS PLC
Financial Statements for the year ended 30 June 2014
ACCOUNTING POLICIES
Leased assets
In accordance with IAS 17, all the Group‟s leases are determined to be operating leases and the payments made
under them are charged to the income statement on a straight line basis over the lease term. Lease incentives are
spread over the term of the lease.
Operating leases are leases in which the risks and rewards of ownership are not transferred to the lessee.
Equity balances
a) Called up share capital
Called up share capital represents the aggregate nominal value of ordinary shares in issue.
b) Share premium
The share premium account represents the incremental paid up capital above the nominal value of ordinary shares
issued.
c) Translation Reserve
The translation reserve represents the cumulative translation adjustments on translation of foreign operations.
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 were yet to
become mandatory, have not been applied in the 2014 group financial statements.
IFRS 10 Consolidated Financial Statements
IFRS 11 Joint Arrangements
IFRS 12 Disclosure of Involvement with Other Entities
Amendments to IFRS 10, IFRS 11 and IFRS 12 Transition Guidance
Amendments to IFRS 10, IFRS 12 and IAS 27 Investment Entities
IAS 27 (Revised) Separate Financial Statements
IAS 28 (Revised) Investments in Associates and Joint Ventures
Mandatory for periods
starting on or after
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2014
1 January 2014
IAS 32 (Amendments) Offsetting Financial Assets and Financial Liabilities
1 January 2014
IAS 36 (Amendments) Recoverable Amount Disclosure for Non-Financial Assets
1 January 2014
Page 21
MOBILE STREAMS PLC
Financial Statements for the year ended 30 June 2014
ACCOUNTING POLICIES
IAS 39 (Amendments) Novation of Derivatives and Continuation of Hedge Accounting
1 January 2014
IFRIC 21 Levies
1 January 2014
Page 22
MOBILE STREAMS PLC
Financial Statements for the year ended 30 June 2014
CONSOLIDATED INCOME STATEMENT
Revenue
Cost of sales
Gross profit
Selling and marketing costs
Administrative expenses *
Operating Profit (Loss)
Finance income
Finance expense
Profit before tax
Tax expense
Year ended
30 June 2014
£000’s
Year ended
30 June 2013
£000’s
22
22
22
22
22
5
6
48,573
53,936
(34,344)
(36,350)
14,229
17,586
(7,872)
(7,843)
(6,361)
(4,942)
(4)
4,801
170
-
(13)
(13)
153
4,788
10
(713)
(2,177)
Profit (Loss) for the period
(560)
2,611
Attributable to:
Attributable to equity shareholders of Mobile Streams plc
(560)
2,611
Earnings/ (loss) per
share
Basic earnings per share
Diluted earnings per share
Pence per
share
Pence per
share
9
9
(1.517)
(1.517)
7.128
6.832
* Administrative expenses include Depreciation, Amortization and Impairment £0.41 m (2013: £0.36m); Share Based Compensation £ 328k
(2013: £13k).
Page 23
MOBILE STREAMS PLC
Financial Statements for the year ended 30 June 2014
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Total comprehensive (loss) / income for the period
Year ended
30 June
2014
£000’s
Year ended
30 June 2013
£000’s
(Loss) Profit for the period
(560)
2,611
Amounts which may be reclassified to profit & loss:
Exchange differences on translating foreign operations
(1,347)
(385)
Total comprehensive (loss) income for the period
(1,907)
2,226
Total comprehensive (loss) for the period attributable to:
Equity shareholders of Mobile Streams plc
(1,907)
2,226
Page 24
MOBILE STREAMS PLC
Financial Statements for the year ended 30 June 2014
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
2014
£000’s
2013
£000’s
13
13
12
17
-
-
107
260
367
380
-
30
194
604
14
15
6,494
2,964
9,458
8,420
2,851
11,271
Total assets
9,825
11,875
Equity
Equity attributable to equity holders of Mobile Streams plc
Called up share capital
Share premium
Translation reserve
Merger reserve
Retained earnings
Total equity
Current
Trade and other payables
Current tax liabilities
Provisions
18
20
74
10,579
(2,041)
-
(6,135)
2,477
73
10,357
(695)
153
(6,055)
3,833
16
24
5,340
1,668
340
7,348
5,390
2,532
120
8,042
Total liabilities
7,348
8,042
Total equity and liabilities
9,825
11,875
The financial statements were authorised by the Board of Directors and were signed on its behalf by:
Enrique Benasso
Chief Financial Officer
8 October 2014
Company number: 03696108
Page 25
MOBILE STREAMS PLC
Financial Statements for the year ended 30 June 2014
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
£000‟s
£000‟s
£000‟s
£000‟s
£000‟s
£000’s
73 10,317 (310)
(8,679)
153
1,554
- 40 -
-
-
-
-
-
-
-
40
13
53
2,611
(385)
2,226
-
-
223
328
Balance at 1 July 2012
Exercise of share options
Credit for share based payments
- - - 13
Transactions with owners
- 40 - 13
Profit for the year ended 30 June 2013
- - - 2,611
Exchange differences on translating foreign operations
- - (385)
-
Total comprehensive income for the period
- - (385) 2,611
Balance at 30 June 2013
Balance at 1 July 2013
Exercise of share options
73
10,357
(695)
(6,055) 153 3,833
73
10,357
(695)
(6,055) 153 3,833
1 222 -
-
Credit for share based payments
- - - 328
Disposal of subsidiary
- - - 153
(153)
-
Transactions with owners
1
222
- 481
(153) 551
Disposal of subsidiary
- - 1
(1)
Loss for the 12 months ended 30 June 2014
- - -
(560)
Exchange differences on translating foreign operations
- - (1,347)
-
Total comprehensive income for the period
- - (1,346)
(561)
-
-
-
-
-
(560)
(1,347)
(1,907)
Balance at 30 June 2014
74
10,579
(2,041)
(6,135)
- 2,477
Page 26
MOBILE STREAMS PLC
Financial Statements for the year ended 30 June 2014
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
Disposal of subsidiary
Tax paid
Total cash generated in operating activities
Investing activities
Additions to property, plant and equipment
Interest received
Net Cash used in investing activities
Financing activities
Issue of share capital (net of expenses paid)
Net Cash used in investing activities
Year ended
30 June
2014
£000’s
Year ended
30 June
2013
£000’s
153
4,788
327
18
36
-
25
-
334
380
-
(170)
1,926 (4,578)
4
4
5
1,616
(50)
-
(15)
(493) (1,017)
2,094
1,186
12
5
(118) (11)
170
-
52
(11)
110
110
-
-
Net change in cash and cash equivalents
2,257
1,175
Cash and cash equivalents at beginning of period
Exchange gains/(losses) on cash and cash equivalents
Cash and cash equivalents, end of period
2,851
1,763
(2,144) (87)
2,964
2,851
15
Page 27
1. GENERAL INFORMATION
Mobile Streams Plc (the Company) and its subsidiaries (together 'the Group') sell digital content, primarily for
distribution on wireless devices. The Group has subsidiaries in Europe, Asia, North America and Latin America. The
Group has made various strategic acquisitions to build its market share in these regions.
The Company is a public limited company incorporated and domiciled in the United Kingdom. The address of its
registered office is Abacus House, 33 Gutter Lane, London, EC2V 8AR.
The Company is listed on the London Stock Exchange's Alternative Investment Market.
In the current year, the Germany subsidiary was dissolved, so it is no longer included in the consolidated financial
statement, with effect from the date of liquidation.
These consolidated financial statements have been approved for issue by the Board of Directors on October 8, 2014.
2. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS
Estimates and judgements are evaluated on a regular basis and are based on historical experience and other factors,
such as expectations of future events that are believed to be reasonable under the circumstances.
2.1 CRITICAL ACCOUNTING ESTIMATES, JUDGEMENTS AND ASSUMPTIONS
The Group makes estimates and assumptions concerning the future. These estimates, by definition, will rarely equal
the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities within the next financial year are discussed below.
Estimates
(a) 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 13.
(b) Accrued revenue and accrued content costs
Estimation is required by management to determine the value of accrued revenue and accrued content cost liability
which is based on the content delivery to its customers. Due to the timing of confirmation of delivery of content to its
customers from the service providers, management estimation is applied to determine the level of accrued revenue
and accrued content liability to be recognised within the financial statements until confirmation is received.
Judgement
(c) Risk of currency
As mentioned before, the Argentinian government has imposed restrictions on certain cross border transactions,
including the remitting of cash back to the Group‟s parent company in the UK. While the Argentinian subsidiary is
currently unable to freely transfer cash back to its parent company, there are mechanisms by which cash can be
transferred indirectly, albeit at a discount on the official exchange rate. Restrictions on currency controls haven‟t
changed along the year, although the Government has allowed some derivative transactions that can be used to remit
cash out of the country.
The results and financial position of the Argentinian subsidiary are translated into Sterling at official exchange rates
for inclusion in the Group‟s consolidated financial statements. The directors have considered whether dual exchange
rates might exist, with a second „effective‟ exchange rate arising from the mechanism through which cash can be
remitted, and whether the results and position of the Argentinian subsidiary should be translated at this second rate
on consolidation. The directors are of the opinion that using the official exchange rate is most appropriate because:
• the Group has no requirement to transfer cash from Argentina to the UK and is not projected to have any
such requirement for the foreseeable future;
Page 28
• the directors do not expect the currency restrictions to remain in place indefinitely and it is unlikely that the
Group would remit cash to its parent unless this could be achieved at the official exchange rate; and
• the Group is currently able to utilise the cash held in Argentina to support the trading activities of certain
other companies within the Group without restriction.
(d) 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.
e) 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 17).
3. SERVICES PROVIDED BY THE GROUP'S AUDITOR AND NETWORK FIRMS
During the year ended 30 June 2014 the 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:
Interim statement review
Tax compliance and advisory services
4. DEPRECIATION, AMORTISATION AND IMPAIRMENT
Year ended
2014
Year ended
2013
£000's
£000's
53
68
10
9
72
8
11
87
Depreciation
Impairment
Year ended
2014
Year ended
2013
Notes
£000's
£000's
12
13
36
380
25
334
416
359
Page 29
5. FINANCE INCOME
Year ended
2014
Year ended
2013
£000's
£000's
Interest receivable
170
-
6. FINANCE EXPENSE
Year ended
2014
Year ended
2013
£000's
£000's
Interest expense
(13) (13)
7. DIRECTORS’ AND OFFICERS’ REMUNERATION
The Directors are regarded as the key management personnel of Mobile Streams Plc.
Charges in relation to remuneration received by key management personnel for services in all capacities during the
Year ended 30 June 2014 are as follows:
Short- term employee benefits
- benefits
- salaries/remuneration
2014
£000’s
2013
£000’s
5
2
302
375
307 377
Page 30
8. DIRECTORS AND EMPLOYEES
Staff costs during the year were as follows:
Wages and salaries
Social security costs
The average number of employees during the year to June 2014 was as follows:
Management
Administration
Year ended
2014
£000's
Year ended
2013
£000's
2,363
1,948
249
166
2,612
2,114
Year ended
2014
Year ended
2013
Number
Number
7
48
55
7
47
54
Page 31
9. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the (loss) or profit attributable to equity holders of the Company by
the weighted average number of ordinary shares in issue during the period.
Year ended
2014
Pence per
share
Year ended
2013
Pence per
share
Basic earnings per share
(1.517)
Diluted earnings per share
(1.517)
7.128
6.832
Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below.
(Loss) /Profit for the period
(560)
2,611
For adjusted earnings per share
£000's
£000's
(Loss) /Profit for the period
(560)
2,611
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
328
36
380
18
25
334
184
2,988
Number of
shares
Number of
shares
36,908,888
36,632,292
1,502,963
1,587,421
38,411,851
38,219,713
Pence per
share
Pence per
share
0.499
0.479
8.157
7.818
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.
Page 32
10. INCOME TAX EXPENSE
The tax charge is based on the loss for the year and represents:
Foreign tax on profits of the period
Total current tax
Deferred tax:
Origination & reversal of temporary 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
Expenses not deductible others subsidiaries
Tax losses utilised
Prior year tax adjustments
Other
Total tax charge for the period
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 brought forward
Current Year
Deferred tax asset carried forward
Relating to
Expenses deducted in Argentina on a paid basis
Other
Deferred Tax asset
Unprovided Deferred tax
Losses
11. DIVIDENDS
No dividends were paid or proposed during the current year or prior year.
2014
£'000
779
779
2013
£'000
1,917
1,917
(66)
260
713
2,177
153
4,788
37
1,149
172
325
175
-
-
4
713
579
229
-
(76)
290
6
2,177
779
1,917
(66)
713
260
2,177
194
66
260
454
(260)
194
260
-
260
194
-
194
0
0
Page 33
12. PROPERTY, PLANT AND EQUIPMENT
Cost
At 1 July 2013
Additions
Translation adjustments
At 30 June 2014
Depreciation
At 1 July 2013
Provided in the year
Translation adjustments
At 30 June 2014
Net book value at 30 June 2014
Cost
At 1 July 2012
Additions
Translation adjustments
At 30 June 2013
Depreciation
At 1 July 2012
Provided in the year
Translation adjustments
At 30 June 2013
Net book value at 30 June 2013
Office
furniture, plant
and equipment
£000’s
439
118
(40)
517
409
36
(35)
410
107
Office
furniture, plant
and equipment
£000’s
433
11
(5)
439
387
25
(3)
409
30
Page 34
13. GOODWILL AND INTANGIBLE ASSETS
The Group has impaired in full the remaining value of goodwill attributable to Mobile Streams (Hong Kong) Limited
and its subsidiaries in Singapore and Australia which make up the Asia Pacific operating segment. Following an
impairment review at the balance sheet date the recoverable amount of this cash generating unit was found to be
negligible so an impairment of ₤380k has been charged. The current business projection cannot support the value of
the goodwill recorded. The recoverable amount was determined based on value-in-use calculations, based on budgets
for the next seven years prepared by senior management. These budgets are for longer than the standard five year
period suggested by IFRS because new contracts have been signed by existing customers extending over this period.
These budgets have been extrapolated over a ten year forecast using a growth rate of 2.5%. A discount rate of 13.7%
(2013: 13.7%), based on WACC of the group, is used in the valuation of cash-generating units. There was no change
in the method of estimation during the year.
Media
platform
development
and software
Media
content Appitalism
£000’s
£000's
£000's
Other
intangibles
£000’s
Subtotal Goodwill
£000's
£000's
Total
£000's
Cost
At 1 July 2013
Translation
adjustments
2,348 332
337 2,364 5,381 2,670 8,051
-
-
-
- -
-
-
At 30 June 2014
2,348 332
337 2,364 5,381 2,670 8,051
Accumulated
amortisation and
impairment
At 1 July 2013
Impairment
Translation
adjustments
2,348 332 337 2,364 5,381 2,290 7,671
- -
380
- - 380
-
-
- -
-
-
-
-
At 30 June 2014
2,348 332
337 2,364 5,381 2,670 8,051
Net book value at 30
June 2014
-
- -
-
-
-
-
Page 35
Media
platform
development
and software
Media
content Appitalism
£000‟s
£000's
£000's
Other
intangibles
£000‟s
Subtotal Goodwill
£000's
£000's
Total
£000's
2,348 332
337 2,364 5,381 2,670 8,051
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Cost
At 1 January 2012
Additions - externally
acquired
Translation adjustments
At 30 June 2013
2,348 332 337 2,364 5,381 2,670 8,051
Accumulated
amortisation and
impairment
At 1 January 2012
2,348
332
337 2,364 5,381 1,956 7,337
Impairment
- -
-
- - 334
334
At 30 June 2013
2,348 332 337 2,364 5,381 2,290 7,671
Net book value at 30
June 2013
-
-
-
-
-
380
380
Other intangible assets
Mobile Streams‟ other intangible assets comprised acquired customer relationships, technology based assets and non-
compete agreements. These assets are fully amortised.
14. TRADE AND OTHER RECEIVABLES
Trade receivables
Accrued receivables
Prepayments
2014
£000's
2013
£000's
4,341
4,574
1,223
3,242
930
604
6,494
8,420
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 £177,000 (year ended 30
June 2013: £136,000) 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:
Page 36
On Due
Not more than 30 days
Overdue
Not more than 3 months
More than 3 months but not more than 6 months
More than 6 months but not more than 1 year
Provision for doubtful debts
Provision for doubtful debts reconciliation
Opening provision for doubtful debts
Change in provision during the year
Closing provision for doubtful debts
2014
£000’s
2013
£000’s
3824
714
668
3
23
3,926
12
58
(177) (136)
4,341
4,574
2014
£000’s
2013
£000’s
136
41
177
91
45
136
Trade and other receivables that are not past due or impaired are considered to be collectible within the Group‟s
normal payment terms.
15. CASH AND CASH EQUIVALENTS
Cash and cash equivalents include the following components:
Cash at bank and in hand*
2014
£000’s
2013
£000’s
2,964
2,851
*See note 2.1(c) for details of restrictions. The amount restricted is £453k (2013: £2,084k)
16. TRADE AND OTHER PAYABLES
Trade payables
Other payables
Accruals and deferred income
2014
£000’s
2013
£000’s
2,059
452
991
396
2,829
5,340
4,003
5,390
All amounts are current. The carrying values are considered to be a reasonable approximation of fair value.
Page 37
17. DEFERRED TAX ASSETS AND LIABILITIES
Balance 1
July 2012
£000’s
Recognised
in income
statement
£000’s
Balance 30
Jun 2013
£000’s
Recognised
in income
statement
£000’s
Traslation
Adjustment
Balance 30
June 2014
£000’s
£000’s
Deferred tax asset:
- Expenses accrued
369 (148)
221 (81) (89)
- Royalties
- Bonus provisions
- Others
22
7
56
6
(7)
(111)
Deferred tax asset
454
(260)
28
-
(55)
194
59
-
166
144
51
76
(11)
-
-
22
(78)
133
260
Deferred tax liability:
- On intangible assets
-
-
-
-
-
-
18. SHARE CAPITAL
The Company only has one class of share. The total number of shares in issue as at 30 June 2014 is 37,075,083 (30
June 2013: 36,632,292) with a par value of £0.002 per share. All issued shares are fully paid.
The Group‟s main source of capital is the parent company‟s equity shares. The policy which is met by the Group is
to retain sufficient authorised share capital so as to be able to issue further shares to fund acquisitions, settle share
based transactions and raise new funds. Share based payments relate to employee share options schemes. The
schemes have restrictions on headroom so as not to dilute the value of issued shares of the Company. The Group has
not raised debt financing in the past and expects not to do so in the future.
Authorised
69,150,000 ordinary shares of £0.002 each (30 June 2013: 69,150,000)
2014
£000's
2013
£000's
138
138
Allotted, called up and fully paid:
37,075,083 ordinary shares of £0.002 each (30 June 2013: 36,632,292)
74
73
Allotted, called up and fully paid
Outstanding at 1 July
Exercised
Outstanding at 30 June
Year ended
2014
Year ended
2013
36,632,292
442,791
37,075,083
36,457,692
174,600
36,632,292
Page 38
Other Reserves
Share Premium Account
The balance in the share premium account represents the proceeds received above the nominal value on the issue of
the Company's equity share capital.
Translation Reserve
The Translation reserve contains the exchange differences arising on translating foreign operations.
19. SHARE BASED PAYMENTS
The Group operates three share option incentive plans – an Enterprise Management Incentive Scheme, a Global
Share Option Plan and an ISO Sub Plan - in order to attract and retain key staff. The remuneration committee can
grant options over shares in the Company to employees of the Group. Options are granted with a fixed exercise price
equal to the market price of the shares under option at the date of grant and are equity settled, the contractual life of
an option is 10 years. Exercise of an option is subject to continued employment. Options are valued at date of grant
using the Black-Scholes option pricing model.
On 12 July 2013, 2.383.594 options were granted to Company personnel. Strike value was 0.70 per option.
The fair value per option of options granted during the year 2014 and 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 (£) 07/30/2013
Fair value per option (£) 06/12/2014
0.6500
0.1975
13 June 2014
0.6500
0.1975
877,865
877,865
1
86.66%
10
5
1.9934%
0.00%
0.253
0.071
2
86.66%
10
5
1.9934%
0.00%
0.345
0.097
0.6500
0.1975
877,865
3
86.66%
10
5
1.9934%
0.00%
0.410
0.115
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:
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; and
The last 33.33% vest on the Third Anniversary of the grant of option.
Page 39
2014
2013
Number (000's)
exercise price Number (000's)
Weighted
average
Weighted
average exercise
price
2,196
2,634
(443)
£0.50
£0.65
£0.25
- -
2,200
250
(175)
(79)
0.70 - -
£0.46
£0.61
£0.20
£0.16
£0.62
2,196
£0.50
(282)
4,105
Outstanding at 1 July
Granted
Exercised
Forfeited
Other leavers on vesting period
Outstanding at 30 June
Exercisable at 30 June
1,503
£0.56
1,587
£0.53
2014
2013
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
0.272
1,054
£0.51 - £1.00
0.739
3,051
7.0
7.4
0.279 1,246
0.801
949
6.8
3.5
Share options exercised during the year ended 30 June 2014 were 442,791 (2013: 174,600).
The total charge for the year relating to employee share based payment plans was £328k (2013: £13k), all of which
related to equity-settled share based payment transactions.
20. MERGER RESERVE
2014
£000's
2013
£000's
Balance at 1 July 2013 and 30 June 2014
-
153
The merger reserve was created on the issue of shares in consideration for the acquisition of Mobile Streams Europe
GmbH. During the period, the entity was dissolved and so the merger reserve was reduced to Nil via a transfer to
retained earnings.
Page 40
21. OPERATING LEASES
The Group has commitments under operating leases for land and buildings to pay the following amounts. The
reduction is due to the reduction of the remaining period of the contract, by one year.
Annual commitments under non-cancellable operating
leases expiring:
Within one year
Within two to five years
Land and Buildings
2014
£000's
2013
£000's
154
59
266
284
213 550
Lease payments recognised as an expense during the period amount to £180k (2013: £127k).
22. SEGMENT REPORTING
As at 30 June 2014, the Group was organised into 4 geographical segments: Europe, North America, Latin
American, and Asia Pacific. The operating segments are organised, managed and reported to the Chief Operating
Decision Maker based on their geographical location. Revenues are from external customers only and generated from
three principal business activities: the sale of mobile content through Multi-National Organisation‟s (Mobile
Operator Services), the sale of mobile content over the internet (Mobile Internet Services) and the provision of
consulting and technical services (Other Service Fees).
All operations are continuing and all inter-segment transactions are priced and carried out at arm‟s length.
The segmental results for the year ended 30 June 2014 are as follows:
£000's
Europe
Asia
Mobile Operator Services
Mobile Internet Services
Other Service fees
Total Revenue
Cost of sales
Gross profit
Operating Expenses
66
5
30
101
(28)
73
(513)
368
-
3
371
(223)
148
(303)
North
America
Latin
America
230
250
3
483
1,258
46,353
6
47,617
Group
1,922
46,608
42
48,572
(236)
247
(33,857)
13,760
(34,344)
14,228
3
(12,675)
(13,488)
EBITDA
(440)
(155)
250
1,085
740
Depreciation, amortisation and
impairment
Share based compensation
Finance income/(expense)
(380)
-
-
(1)
-
-
Profit/(Loss) before tax
(820)
(156)
Income tax expense
Profit/(Loss)
-
(820)
-
(156)
(6)
-
-
244
-
244
(29)
(328)
157
885
(713)
172
(416)
(328)
157
153
(713)
(560)
Page 41
The segmental results for the year ended 30 June 2013 are as follows:
£000's
Europe
Asia
Mobile Operator Services
Mobile Internet Services
Other Service fees
Sales Revenue
Cost of sales
Gross profit
Operating Expenses
EBITDA
Depreciation, amortisation and
impairment
Share based compensation
Finance income/(expense)
Profit/(Loss) before tax
Income tax expense
Profit/(Loss)
73
40
2
115
(43)
72
(202)
(130)
(334)
-
-
(464)
(34)
(498)
789
-
35
824
(595)
229
(312)
(83)
(1)
-
-
(84)
-
(83)
North
America
Latin
America
477
4
-
481
2,886
49,581
49
52,516
Group
4,225
49,625
86
53,936
(173)
308
(35,539)
16,977
(36,350)
17,586
513
821
(11)
-
-
810
-
810
(12,408)
(12,409)
4,569
5,177
(13)
(18)
(12)
(359)
(18)
(12)
4,526
4,788
(2,143)
2,383
(2,177)
2,611
* Earnings before interest, tax, depreciation, amortisation and share compensation.
The totals presented in the Group‟s operating region segments reconcile to the Group's key financial figures as
presented in its financial statements as follows:
2
2006
Segment revenues
Total segment revenues
Group’s revenues
Segment results
Total segment Profit after tax
Group’s Profit after tax
Segment assets
Total segment assets
Consolidation elimantions
Group’s assets
Segment liabilities
Total segment liabilities
Consolidation elimantions
Groups’s liabilities
2014
£000’s
2013
£000’s
48,573
53,936
48,573
53,936
(560)
2,611
(560)
2,611
9,865
(40)
11,865
10
9,825
11,875
7,348
-
8,042
-
7,348
8,042
Page 42
INTEREST REVENUE
Interest Revenue for the year ended 30 June 2014 was £170k (2013: Nil)
DEFERRED TAX
Year ended 30 June 2014
DEFERRED TAX
Deferred Tax
BENEFITS
Employee Benefits
Year ended 30 June 2013
DEFERRED TAX
Deferred Tax
BENEFITS
Employee Benefits
Europe
Asia
Pacific
North
America
Latin
America
Consol
Group
- - 260 -
260 -
-
-
- 260
- 260
Europe
Asia
Pacific
North
America
Latin
America
Consol
Group
-
-
(22) (42)
(1)
(22) (42) (1)
- (65)
(65)
-
Europe
Asia
Pacific
North
America
Latin
America
Consol
Group
-
- - 194 - -
- 194
194
- 194
-
Europe
Asia
Pacific
North
America
Latin
America
Other
Group
- (23) (51) (1)
(1)
- (23) (51)
- (75)
(75)
-
23. CAPITAL COMMITMENTS
The Group has no capital commitments as at 30 June 2014 (30 June 2013: £Nil).
Page 43
24. PROVISIONS
Carrying amount at 1 July 2013
Additional provisions made in period
Amounts used in period
Unusued amounts reversed in period
Carrying amount at end of 30 June 2014
2014
£000's
120
220
-
-
340
The company‟s German subsidiary was placed into liquidation during 2013. The German subsidiary is the subject of
a local tax enquiry and an amount of £200,000 is claimed by the German tax authorities.
The company‟s liquidator has lodged a separate claim against the Group in the sum of €425,000 and the group is
advised by its lawyers that this amount is likely to be payable. A provision of £340,000 (2013: £120,195) has been
made as the Directors‟ best estimate of the amount that will be payable by the Group.
25. RELATED PARTY TRANSACTIONS
Key Management
The only related party transactions that occurred during the year were the remuneration of senior management
disclosed in note 7.
26. RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group is exposed to currency and liquidity risk, which result from both its operating and investing activities. The
Group's risk management is coordinated in close co-operation with the Board and focuses on actively securing the
Group's short to medium term cash flows by minimising the exposure to financial markets. The most significant
financial risks to which the Group is exposed are described below. Also refer to the accounting policies.
Foreign currency risk
The Group is exposed to transaction foreign exchange risk. The currencies where the Group is most exposed to
volatility are US Dollars, Australian Dollars, Argentine Peso, Mexican Paso and Colombian Peso.
Currently, there is generally an alignment of assets and liabilities in a particular market and no hedging
instruments are used. In Latin American markets cash in excess of working capital is converted into a hard
currency such as US Dollars, except in Argentina, where domestic regulations prevent companies from acquiring
US Dollars. Given this situation, the Argentine subsidiary is considering other alternatives to hedge a possible
devaluation of local currency. The Company will continue to review its currency risk position as the overall
business profile changes.
Foreign currency denominated financial assets and liabilities, which are all short-term in nature and translated into
local currency at the closing rate, are as follows.
Page 44
2014
000’s
2013
000’s
USD
£
AUS
£
AR$
£
Other
£
USD
£
AUS
£
AR$
£
Other
£
236 93 6,286 2,302 227
148
9,867
892
(330) (307) (5,594) (642) (472) (554)
(6,180)
(597)
(94) (214) 692 1,660 (245) (406)
3,687
295
Nominal amounts
Financial assets
Financial liabilities
Short-term exposure
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
2014
12%
8%
68%
2013
-2%
8%
18%
Foreign exchange currency Gain/ (loss)
Year
ended
2014
£000's
Year
ended
2013
£000's
Foreign currency
(989)
(350)
Liquidity risk
The Group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs.
Management prepares cash flow forecasts which are reviewed at Board meetings to ensure liquidity. The Group
has no borrowing arrangements.
As at 30 June 2014, the Group‟s financial liabilities were all current and have contractual maturities as follows:
30 June 2014
Within 6 months
6 to 12 months
£000’s
£000’s
Trade and other payables
2,511
-
The maturity of the Group‟s financial liabilities, which were all current at the previous year end, was as follows:
Page 45
Trade and other payables30 June 2013£000’s£000’s1,387-6 to 12 monthsWithin 6 months
Capital Management Disclosures
Management assesses the Group‟s capital requirements in order to maintain an efficient overall financing
structure while avoiding excessive leverage. The Group manages the capital structure and makes adjustments to it
in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to
maintain or adjust the capital structure, the Group could return capital to shareholders or issue new shares.
The Group considers its capital to comprise the following:
Capital
Ordinary share capital
Share premium
Translation reserve
Merger reserve
Retained earnings
27. BUSINESS DISPOSAL
2014
74
10,579
(2,041)
-
(6,135)
2,477
2013
73
10,357
(695)
153
(6,055)
3,833
In the year, the Group completed the liquidation of its wholly owned subsidiary, Mobile Streams Europe GmbH, The
loss on disposal was determined as follows:
Cash disposed of
Net assets disposed (other than cash)
Property, plant and equipment
Deferred tax asset
Trade and other receivables
Trade and other payables
Reclassification of merger reserve on disposal
Loss on disposal
£000
15
-
-
461
(148)
(153)
(175)
Page 46
Financial Statements for the year ended 30 June 2014
REPORT OF THE INDEPENDENT AUDITOR TO THE MEMBERS OF MOBILE STREAMS PLC
We have audited the parent company financial statements of Mobile Streams Plc for the year ended 30 June 2014
which comprise the parent company accounting policies, the parent company balance sheet and the related notes. The
financial reporting framework that has been applied in their preparation is applicable law and United Kingdom
Accounting Standards (United Kingdom Generally Accepted Accounting Practice).
This report is made solely to the Company‟s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the Company‟s members those
matters we are required to state to them in an auditor‟s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company‟s
members as a body, for our audit work, for this report, or for the opinions we have formed.
RESPECTIVE RESPONSIBILITIES OF DIRECTORS AND AUDITOR
As explained more fully in the Directors‟ Responsibilities Statement set out on page 10, 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:
give a true and fair view of the state of the Company's affairs as at 30 June 2014;
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
have been prepared in accordance with the requirements of the Companies Act 2006.
OPINION ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006
In our opinion the information given in the Strategic Report and Directors' Report for the financial period for which
the financial statements are prepared is consistent with the parent company financial statements.
MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to
you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have
not been received from branches not visited by us; or
the parent company financial statements are not in agreement with the accounting records and returns; or
certain disclosures of Directors‟ remuneration specified by law are not made; or
we have not received all the information and explanations we require for our audit.
Page 47
Financial Statements for the year ended 30 June 2014
OTHER MATTER
We have reported separately on the consolidated financial statements of Mobile Streams Plc for the period ended 30
June 2014.
Christopher Smith
Senior Statutory Auditor
for and on behalf of Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
London
8 October 2014
Page 48
Financial Statements for the year ended 30 June 2014
PARENT COMPANY ACCOUNTING POLICIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of preparation
As used in the financial statements and related notes, the term „Company‟ refers to Mobile Streams Plc. The
separate financial statements of the Company are presented as required by the Companies Act 2006. As
permitted by the Act, the separate financial statements have been prepared in accordance with the UK Generally
Accepted Accounting Principles (“UK GAAP”).
The financial statements have been prepared on the historical cost basis. The principal accounting policies are set
out below. The company has applied the exemption under section 408 of the Companies Act 2006 and has not
included the individual profit and loss account statement in the financial statements. The loss for the parent company
for the year ended 30 June 2014 was £450,000 (year ended 30 June 2013:£972,000).
The following paragraphs describe the main accounting policies. The policies have been consistently applied to
all periods presented.
Revenue recognition
Revenues are from external customers only and generated from three principal business activities: the sale of mobile
content through mobile network operators (Mobile Operator Sales), the sale of mobile content over the internet
(Mobile Internet Sales) and the provision of consulting and technical services (Other Service Fees).
Revenue includes the fair value of goods and services sold, net of value-added tax, rebates and discounts. Revenue
is recognised as follows:
a) Mobile Operator Sales & Mobile Internet Sales
Sales of goods are recognised when the Company has delivered media content to the end consumer, who has
accepted the product and collectability of the related receivable is reasonably assured from the customer.
b) Other services
Revenue is recognised in the accounting period in which the services are rendered, by reference to the stage of
completion of the specific transaction, on the basis of the actual service provided as a proportion of the total services
to be provided.
c) Interest income
Interest receivable is recognised in the income statement using the effective interest method. If the collection of
interest is considered doubtful, it is suspended and excluded from interest income in the income statement.
d) Deferred income
Revenue that has been collected from customers but where the above conditions are not met is recorded in the
balance sheet under accruals and deferred income and released to the income statement when the conditions are met.
INVESTMENTS IN SUBSIDIARIES
Investments in subsidiaries are stated in the Company‟s balance sheet at cost less provisions for impairment.
DEFERRED TAXATION
Deferred tax is recognised on all timing differences where the transactions or events that give the Company an
obligation to pay more tax in the future, or a right to pay less tax in the future, have occurred by the balance sheet
date. Deferred tax assets are recognised when it is more likely than not that they will be recovered.
Page 49
Financial Statements for the year ended 30 June 2014
PARENT COMPANY ACCOUNTING POLICIES
Deferred tax is measured using rates of tax that have been enacted or substantively enacted by the balance sheet
date. Deferred tax assets and liabilities are not discounted.
FOREIGN CURRENCIES
Transactions in foreign currencies are translated at the exchange rate ruling at the date of the transaction.
Monetary assets and liabilities in foreign currencies are translated at the rates of exchange ruling at the balance
sheet date. All exchange differences are dealt with through the profit and loss account.
OPERATING LEASES
Rentals in respect of leases are charged to the profit and loss account in equal amounts over the lease term.
SHARE BASED PAYMENTS
Employees (including Directors) of the Group receive remuneration in the form of share-based payment transactions,
whereby employees render services in exchange for shares or rights over shares („equity-settled transactions‟).
Equity settled transactions
The Group has applied the requirements of Financial Reporting Standard 20 “Share Based Payments” to all grants of
equity instruments.
The cost of equity settled transactions with employees is measured by reference to the fair value at the grant date of
the equity instruments granted. The fair value is determined by using the Black-Scholes model.
The cost of equity-settled transactions is recognised, together with a corresponding increase in retained earnings,
over the periods in which the performance conditions are fulfilled, ending on the date on which the relevant
employees become fully entitled to the award („vesting date‟). At each balance sheet date before vesting, the
cumulative expense is calculated, representing the extent to which the vesting period has expired and management‟s
best estimate of the achievement or otherwise of non-market conditions and of the number of equity instruments that
will ultimately vest. Market conditions are taken into account in determining the fair value of options granted, at
grant date, and are not subsequently adjusted for. The movement in cumulative expense since the previous balance
sheet date is recognised in the income statement, with a corresponding entry in equity.
No expense or increase in equity is recognised for awards that do not ultimately vest. Awards where vesting is
conditional upon a market condition are treated as vesting irrespective of whether or not the market condition is
satisfied, provided that all other performance conditions are satisfied.
Page 50
Financial Statements for the year ended 30 June 2014
COMPANY BALANCE SHEET
30 June 2014
30 June 2013
£000’s
£000’s
Fixed assets
Investments in subsidiaries
1 20 347
Total fixed assets
Current assets
Debtors
Cash and cash equivalents
Others assets
Total current assets
Creditors: amounts falling due within one
year
Net current assets
20
347
2
903
698
1,548
256
46
4
1,647
1,808
3
(473)
1,174
(734)
1,074
Net assets
1,194
1,421
Capital and reserves
Called up share capital
Share premium
Profit and loss account
Shareholders funds
4 74 73
5 10,579
10,357
(9,459)
5
(9,009)
1,194
1,421
The financial statements were approved by the Board of Directors on 8 October 2014.
Enrique Benasso
Chief Financial Officer
Company registration number:
03696108
8 October 2014
Page 51
Financial Statements for the year ended 30 June 2014
NOTES TO COMPANY FINANCIAL STATEMENTS
1. INVESTMENT IN SUBSIDIARY COMPANIES
Cost
At July 2012 and 30 June 2014
30 June 2014
30 June 2013
£000’s
£000’s
3,636
3,636
Net Book Value after impairment
20
347
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,
Australia, Mexico and Colombia, their fair market value was less than their carrying value and therefore no
impairment charge needed to be recognised (2013: ₤7k).
Investments in Subsidiary undertakings comprise:
Mobile Streams Inc.
Appitalism, Inc.
Mobile Streams de Argentina SRL
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
Proportion held
Directly by
Mobile Streams
Plc
By other
Group
companies
Total held by
Group
Country of
incorporation
100%
-
100%
-
50%
50%
50%
50%
50%
50%
50%
50%
100%
100% USA
100% USA
100% Argentina
100% Chile
100% Colombia
100% Mexico
100% USA
100%
-
100% Venzuela
100%
-
100% UK
100%
100% Australia
100%
-
100% Hong Kong
100%
100% Singapore
-
-
-
All the subsidiaries‟ issued shares were ordinary shares and their principal activities were the distribution of licensed
mobile phone content.
Page 52
Financial Statements for the year ended 30 June 2014
NOTES TO COMPANY FINANCIAL STATEMENTS (CONTINUED)
2. Debtors
Trade debtors and receivables
Amounts owed by Group undertaking
3. Creditors: amounts falling due within one year
Trade creditors
Amounts owed to Group undertakings
Accruals and deferred income
2014
£000’s
2013
£000’s
56
71
847
1,477
903
1,548
2014
£000’s
2013
£000’s
26
86
-
494
447
154
473
734
4. SHARE CAPITAL
For details of share capital refer to note 18 to the Group financial statements.
5. RESERVES
At 1 July 2013
Premium on shares issued in year
Loss for the year
At 30 June 2014
6. CAPITAL COMMITMENTS
The Company has no capital commitments at 30 June 2014 (2013: Nil).
7. CONTINGENT LIABILITIES
As at 30 June 2014 there were no contingent liabilities (2013: Nil).
Share Premium
Profit and loss
Account
£000’s
£000’s
10,357
(9,009)
222
-
-
(450)
10,579
(9,459)
Page 53
Financial Statements for the year ended 30 June 2014
NOTES TO COMPANY FINANCIAL STATEMENTS
8. RELATED PARTY TRANSACTIONS
During the year the Company remunerated senior management personnel as disclosed in note 7 in the consolidated
financial statements.
The company is taking advantage of the exemption per FRS 8 which does not require disclosure of transactions
entered into between members of a group when one of the transacting parties is a wholly owned subsidiary.
Page 54