Mobile Streams announces a trading update for the year ended 30 June 2019 prior to the release of its final results scheduled to be released in December 2019.
· Unaudited revenues were £1.3m (June 2018: £3.1m). All revenue is from continuing operations.
· £0.13m of cash and cash equivalents at 30 June 2019 (£1.0m as at 30 June 2018), with no debt.
· EBITDA loss of £1.0m (June 2018: £1.2m loss).
Trading in India has been impacted by the consolidation of the mobile telecoms operators within the region. Furthermore, a number of Mobiles Streams’ partners have generated lower revenues during the year following the Vodafone-Idea merger. Vodafone and Idea remain as individual entities with regards to the Company’s relationship with them, this development has prevented Mobile Streams from increasing its business with these parties.
Following the announcement on 29 March, the relationship with Airtel has been terminated. Airtel was usurped as the largest network within the region by Vodafone-Idea.
The board of Directors (the “Board”) plan to increase the marketing activities in India as soon as the working capital profile of the Group is improved.
Revenue in Argentina declined significantly during Q4 primarily due to the devaluation of the Argentine Peso (13% in the last quarter), performance was also impacted by the limited funds available for working capital purposes.
Additionally, the Managing Director of Argentina was dismissed in April 2019 and the Board are now looking to renew commercial activities with previous customers.
As announced on 12 April 2019, the board of Directors (the “Board”) have undertaken a comprehensive cost-cutting plan during the financial year in response to the significant reductions in revenue. This has resulted in a significant reduction in headcount, rationalisation of the Company’s main operating centre in Argentina as well as reducing operating expenditure in the UK, US and India. The Company’s CEO and both Non-Executive Directors have volunteered a partial salary deferral of 50% of their respective remuneration.
The rationalisation and cost-cutting exercise has resulted in sizable one-off redundancy costs and severance payments. As a result of the dismissal of the Managing Director of Argentina Since the announcement on 12 April 2019, and as a result of the dismissal of the Managing Director of Argentina, a further £110k of restructuring and redundancy costs have been incurred, bringing the total to approximately £400k. The level of expenditure is primarily due to the long service of employees and the severance terms in Argentina.
The expenses related to the rationalisation have had a significant impact on the Company’s cash balances and, as a result, the Board is considering a number of financing options to ensure that the Company has sufficient working capital.
Management are pursuing a number of commercial initiatives which consist of the recovery of an important customer in Argentina. In Mexico, actions have been taken in order to re-launch the commercial operation with Telcel, the largest carrier in Mexico. These initiatives are in a pre-launch status and the Board has to analyse the profitability of them.
Commenting, Simon Buckingham CEO said: “Despite the falling revenue and the cost reduction actions implemented, the Company continues to focus on potential business development opportunities and financing initiatives in order to ensure that the Company has sufficient working capital to support its commercial activities for the foreseeable future”