Interim Results
September 09 2003 - 3:01AM
UK Regulatory
RNS Number:5274P
Stream Group PLC
09 September 2003
Stream Group plc
Interim results
For the six months ended 30 June 2003
Stream provides consumer information and entertainment content and applications
via mobile and fixed line telephony channels.
Highlights
* Turnover increased by 49% to #5.7 million (2002: #3.8 million)
* Gross profit increased by 85% to #2.5 million (2002: #1.4 million)
* Profit before tax of #0.47 million (2002: loss of #0.21 million)
* Cash balance increased to #2.05 million at 30 June 2003 (2002: #1.24
million)
* Significant growth of mobile data services - now represent 37% of Group's
turnover.
* Excellent progress made in expanding services to Australia, Europe and
the Far East
* Board to outline future dividend policy at year end
Gordon Robson, Executive Chairman, said,
"In my interim statement this time last year I wrote "importantly, the Group is
now generating operating profits on a monthly basis .... and we expect to see
accelerated growth in both revenue and operating profit during the rest of this
year and into 2003". I am pleased to announce that this trend was maintained and
we expect profits to build as we progress through the second half of 2003.
Particularly pleasing is the strong growth in the Group's mobile content and
data services. We foresee further growth across the Group from both geographical
expansion and new mobile content and applications.
The Board continues to view prospects for future growth with
confidence."
Enquiries:
Stream Group plc Tel: 020 7725 0300
Gordon Robson, Executive Chairman
Paul Tuson, Finance Director
Biddicks Tel: 020 7448 1000
Katie Tzouliadis / Kathryn Burn
Chairman's Statement
Introduction
I am very pleased to report that the first six months of 2003 saw Stream build
on the profitable trend established during the second half of 2002. The Group
made a profit before tax of #0.47 million compared to a loss of #0.21 million in
the same period last year. The monthly profit trend at both Stream Live Services
(voice services) and Stream Media (mobile data services) has been growing and I
am particularly pleased to highlight strong growth in mobile data services. This
has been achieved from a standing start two years ago.
Interim results
During the period turnover increased by 49% to #5.7 million compared to #3.8
million in the corresponding period last year. The increase reflects the
successful implementation of the Group's strategy to expand its high margin
content services. As a result of this, gross profit increased by 85% to #2.5
million (2002: #1.4 million). This substantial increase reflects the on-going
successful development of both Stream Live Services and Stream Media, the
Group's core content areas, where revenues have increased by 44% to #3.3 million
(2002: #2.3 million) and 682% to #2.1 million (2002: #0.3 million) respectively.
The balance of revenues relates to third party telephony traffic carried by Talk
Telecom.
The profit for the period equates to 1.25p per share on a fully diluted basis
(2002: loss of 0.38p per share). Net assets as at 30 June 2003 have grown to
#3.2 million (2002: #2.0 million).
Operating Review
Having moved into profit during the second half of 2002, our focus in early 2003
was both to grow the direct marketing side of Stream Live Services and to build
market share in the mobile content sector with Stream Media's innovative
applications. In addition, the Group intended to act upon its plans for
international expansion. I am pleased to report that we achieved all three
objectives.
Stream Live Services
Stream Live Services' relationships with third party media groups, many of which
are exclusive, are a key strength of the business. However, we also wish to
develop further our direct marketing operations and during the first half of the
year, we achieved considerable success. We produce and mail out "The Circle"
magazine to in excess of 100,000 customers each month. The Circle contains
topical editorial content and is extremely responsive, generating significant
call volumes to our voice services. We have also seen strong growth in the use
of credit cards and believe that this additional payment option has helped to
grow our customer numbers.
The expansion of Stream Live Services overseas was marked by our launch in
Australia at the end of 2002. I am pleased to report that the Australian
business is growing strongly and moving into profit. We are now planning to move
into the lucrative US and German markets and aim to launch our services in the
final quarter of 2003.
Stream Media
Stream Media has now established itself as an innovative and market leading
developer and provider of mobile content applications. The business has grown
significantly over the past twelve months and is now making a significant
contribution to the Group's profits. I reported at the end of 2002 that we were
developing applications in areas such as video streaming on GPRS. Progress in
this area has exceeded expectations and we are now generating significant
revenue in GPRS video streaming applications.
On an international level Stream Media has now launched profitable services in
Germany and Spain with other European countries on schedule to follow during the
second half of 2003. During the period the Group formed a subsidiary company in
Hong Kong (Stream Asia Limited) to co-ordinate all of the Group's Asian based
activities. I am pleased to report that the Group has recently launched
activities in Asia and I expect to announce further positive developments in
Stream Media over the coming months.
Outlook
Stream Group's strategy is now firmly in place and working. The Group has moved
from a loss in 2001 to profit at the end of 2002 and is now showing continuing
growth in profits as we move through 2003. This has been achieved through
organic growth, although we continue to look for appropriate acquisitions. The
Group's cash balance has strengthened from #1.62m at the end of 2002 to #2.05m
at 30 June 2003, and we enjoy a high conversion ratio of profits into cash,
which we expect to continue. As our international expansion is carried out on a
low risk, non capital intensive basis, the Board believes that the Group has
sufficient funds for anticipated business progression. The Board expects to
outline its future dividend policy to shareholders within the next annual
report.
We are pleased to have recently welcomed Graham Stevens to the Board as a
non-executive director, and I would like to take this opportunity to thank my
fellow directors and staff for their valued contributions to the Company's
growth during the period.
The Board remains committed to the Company's AIM listing and will continue to
strive to maximise value to shareholders. We remain extremely optimistic about
the Group's future growth.
Gordon Robson
Executive Chairman
Consolidated profit and loss account
for the six months ended 30 June 2003
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2003 2002 2002
Notes (Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Turnover 5,723 3,845 8,518
Cost of revenue (3,216) (2,492) (5,116)
--------- --------- ----------
Gross profit 2,507 1,353 3,402
Administrative
expenses (2,067) (1,592) (3,303)
--------- --------- ----------
Operating profit/
(loss) 440 (239) 99
Interest receivable 26 29 53
Interest payable - (3) -
--------- --------- ----------
Profit/(loss) on
ordinary activities
before taxation 466 (213) 152
Tax on profit on
ordinary activities 2 298 - -
--------- --------- ----------
Profit/(loss) for the
period retained for
equity shareholders 764 (213) 152
--------- --------- ----------
Profit/(loss) per 4
share
Basic 1.35p (0.38p) 0.27p
Diluted 1.25p (0.38p) 0.25p
--------- --------- ----------
All activities relate to continuing operations.
Consolidated balance sheet
as at 30 June 2003
As at As at As at
30 June 30 June 31 December
Notes 2003 2002 2002
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Fixed assets
Intangible assets 15 - 20
Tangible assets 479 653 605
----------- ----------- -----------
494 653 625
----------- ----------- -----------
Current assets
Debtors 2,355 1,345 1,972
Cash at bank and in
hand 2,046 1,237 1,620
----------- ----------- -----------
4,401 2,582 3,592
----------- ----------- -----------
Creditors: amounts
falling due within
one year (1,703) (1,196) (1,792)
----------- ----------- -----------
Net current assets 2,698 1,386 1,800
----------- ----------- -----------
Net assets 3,192 2,039 2,425
----------- ----------- -----------
Capital and
reserves
Called up share
capital 5 2,840 2,840 2,840
Share premium
account 5 2,689 2,689 2,689
Profit and loss
account (1,180) (2,309) (1,944)
Merger reserve 5 (1,154) (1,154) (1,154)
Other reserve 5 (3) (27) (6)
----------- ----------- -----------
Shareholders'
funds 3,192 2,039 2,425
----------- ----------- -----------
Consolidated cash flow statement
for the six months ended 30 June 2003
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2003 2002 2002
Notes (Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Net cash inflow/
(outflow) from
operating
activities 6 403 (413) 93
Returns on
investments and
servicing of
finance 6 26 26 53
---------- ---------- ---------
Capital expenditure
and financial
investment 6 (3) (64) (214)
---------- ---------- ---------
Increase/(decrease) in 426 (451) (68)
cash in the period ---------- ---------- ---------
Reconciliation of
net cash to movement
in net funds
Movement in net funds in
the period 426 (451) (68)
Net funds at the start
of the period 1,620 1,688 1,688
---------- ---------- ---------
Net funds at the end of
the period 2,046 1,237 1,620
---------- ---------- ---------
Reconciliation of movements in shareholders' funds
For the six months ended 30 June 2003
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2003 2002 2002
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Profit/(loss) for financial
period 764 (213) 152
Shares issued to AESOP - 5 6
Movement in other reserve 3 3 24
----------- ---------- ---------
Net addition/(reduction) to
shareholders' funds 767 (205) 182
Opening shareholders' funds 2,425 2,244 2,243
----------- ---------- ---------
Closing shareholders' funds 3,192 2,039 2,425
----------- ---------- ---------
Notes to the interim report
1. *Basis of preparation
The Board approved the accounts of the Group for the six months ended 30 June
2003 on 8 September 2003. They have been prepared in accordance with the
accounting policies adopted in preparing the financial statements for the year
ended 31 December 2002.
The interim financial information is unaudited and does not comprise statutory
accounts for the purposes of Section 240 of the Companies Act 1985. Comparative
information is provided for the six months to 30 June 2002. The abridged
information for the year to 31 December 2002 has been extracted from the Group's
statutory accounts for that period that have been filed with the Registrar of
Companies. The auditors' report on the statutory accounts of the Group was
unqualified and did not contain a statement under either Section 237(2) or
Section 237(3) of the Companies Act 1985.
2 Taxation
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2003 2002 2002
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Current taxation 54 - -
Deferred tax credit (352) - -
---------- --------- ---------
(298) - -
---------- --------- ---------
The tax assessed in the period is lower (2002: lower) than the standard rate of
corporation tax in the UK of 30% (2002:30%) primarily due to the utilisation of
tax losses. The expected effective tax rate for the consolidated company for the
year ending 31 December 2003 is 12%.
A deferred tax asset estimated as #352,000 arising from unrelieved losses has
been recognised. The directors consider that there is sufficient certainty
regarding the timing of suitable future taxable profits against which the losses
will be offset.
3. *Dividend
No dividend is to be paid.
4. *Earnings per share
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2003 2002 2002
(Unaudited) (Unaudited) (Audited)
#'000 #'000 #'000
Profit/(loss)
attributable to
shareholders 764 (213) 152
---------- --------- ---------
Number Number Number
Weighted average number
of shares in issue 56,486,857 56,011,750 56,765,095
Dilution effects of
share options 4,294,271 5,643,015 4,054,271
Dilution effects of
employee share
schemes 311,520 746,872 399,864
---------- --------- ---------
Diluted weighted
average number of
shares in issue 61,092,648 62,401,637 61,219,230
---------- --------- ---------
Basic profit/(loss) per
share 1.35p (0.38p) 0.27p
Diluted profit/(loss)
per share 1.25p (0.38p) 0.25p
---------- --------- ---------
Basic profit/(loss) per share is calculated on the results attributable to
ordinary shares divided by the weighted average number of shares in issue
during the period excluding those held by Stream Trustees Limited which are
treated as cancelled.
Diluted profit per share calculations include additional shares to reflect
the dilutive effect of employee share schemes and share option schemes.
Diluted loss per share is equivalent to basic loss per share since the
effect of including potential shares within the calculation of diluted
weighted average number of ordinary shares would be anti-dilutive.
5. *Share capital and reserves
Share
Share premium Merger Other
capital account reserve reserve
#'000 #'000 #'000 #'000
At 31 December 2002 2,840 2,689 (1,154) (6)
--------- --------- -------- --------
Write off of free issue
to profit and loss
account over the vesting
period of 3 years - - - 3
--------- --------- -------- --------
As at 30 June 2003 2,840 2,689 (1,154) (3)
--------- --------- -------- --------
6. *Cash flows
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2003 2002 2002
(Unaudited) (Audited) (Unaudited)
#'000 #'000 #'000
Net cash flow from operating
activities
Operating profit/(loss) 440 (231) 99
Depreciation of tangible
fixed assets 129 123 247
Loss on sale of fixed asset - - 44
Share compensation expense 8 - 39
Increase in debtors (31) (150) (776)
(Decrease)/increase in
creditors (143) (155) 440
---------- ---------- ----------
403 (413) 93
---------- ---------- ----------
Returns on investments and
servicing of finance
Interest received 26 29 53
Interest paid - (3) -
---------- ---------- ----------
26 26 53
---------- ---------- ----------
Capital expenditure and
financial investment
Purchase of tangible fixed
assets (3) (64) (189)
---------- ---------- ----------
Proceeds from disposal of
fixed assets - - 5
Purchase of own shares by
AESOP - - (30)
---------- ---------- ----------
(3) (64) (214)
7. *Analysis of net funds
Cash at bank
and in hand
#'000
At 31 December 2002 1,620
Cash flow: 2003 426
---------
At 30 June 2003 2,046
---------
8. *Copies of statement
A copy of this report will be sent to shareholders. Additional copies are
available on request from the Company's registered office, 130 Wigmore Street,
London, W1U 3SB.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR UWABROURKRAR