Stream Reports Second Consecutive Quarter of Positive EBITDA for 2Q06

Stream Reports Second Consecutive Quarter of Positive EBITDA for 2Q06

WARSAW, Poland, Sept. 1 /PRNewswire-FirstCall/ -- Stream Communications Network & Media Inc. (OTC Bulletin Board: SCNWF & FSE: TPJ), the broadband cable company offering Cable TV, high-speed Internet and VoIP services in Poland, today announced unaudited results for the three- and six-month periods ending June 30, 2006.

Mr. Rynkiewicz, Stream President commented, "We are pleased with our progress, as we continue to grow revenues, while improving operating efficiency.

"This quarter we initiated an extensive cost control and corporate restructuring program to reduce expenses. In addition to improving operating efficiencies, the new management team in Poland is finalizing new initiatives in marketing strategies, daily operations and management systems to improve revenues and expand business. At the same time, we continue to move forward with our strategy of organic growth and acquisition of strategic networks to achieve our goal of becoming a leading supplier of video, data and voice products in our markets."

Financial and Operational Highlights(1)
(in million Canadian dollars)
2Q06 2Q05 % Chg. 1H06 1H05 % Chg.
Financial
Highlights
Net revenue 1,545,990 1,445,359 7.0% 3,113,819.0 2,883,031.0 8.0%
Operating profit
before
amortization 161,850 (943,803) n/a 250,599.0 (2,948,870.0) n/a
EBITDA(2) 229,691 (826,484) n/a 393,255.0 (2,753,538.0) n/a
Net loss (1,403,298) (1,517,202) n/a (1,911,212.0) (4,125,135.0) n/a
Operating profit
before amort.
margin 10.5% -65.3% +758 8.0% -102.3% +1103
bps bps
EBITDA
margin(2) 14.9% -57.2% +720 12.6% -95.5% +1081
bps bps
Net loss
margin -90.8% -105.0% +142 -61.4% -143.1% +817
bps bps
Operational
Highlights
Homes passed
Subscribers 62,000 62,000
Total RGUs 64,250 64,250
Cable
Television RGUs 58,600 58,600
Premium
Cable TV 600 600
High-speed
internet RGUs 5,000 5,000
IP Telephony RGUs

SECOND QUARTER 2006 CONSOLIDATED RESULTS

Revenues

Revenues for the quarter rose 7% to $1,545,990 from $1,445,359 in the second quarter of 2005, after adjusting for currency fluctuations from Polish Zlotych to Canadian dollars. In Polish Zlotych, revenues for the period rose 13.5%, to 4,330,516 PLN, up from 3,814,550 PLN in 2Q05.

Overall Expenses

Overall expenses for the quarter declined 42.1% to $1,384,140, or 89.5% of revenues, from $2,389,162, or 165.3% of revenues, for the year-ago quarter.

Administration and services expenses fell 47.5% YoY, to $214,618 from $408,547. As a percentage of revenues, administration and services expenses fell to 13.9% from 28.3% in the year-ago quarter.

Sales and marketing expenses declined 42.5% during the period to $5,397, or 0.3% of revenues, from $9,405, or 0.7% or revenues.

Table 1: Overall Expenses
For the three months For the three months
ended June 30, 2006 ended June 30, 2005
$ % of revenues $ % of revenues % Change
Expenses
Administration
and services 214,618 13.9% 408,547 28.3% -47.5%
Interest,
long-term 45,555 2.9% 51,777 3.6% -12.0%
Interest,
short-term 22,286 1.4% 65,542 4.5% -66.0%
Investor relations 13,623 0.9% 660,594 45.7% -97.9%
Legal and
accounting 48,960 3.2% 23,791 1.6% 105.8%
Occupancy costs 30,383 2.0% 127,791 8.8% -76.2%
Programming 430,021 27.8% 256,704 17.8% 67.5%
Sales and
marketing 5,397 0.3% 9,405 0.7% -42.6%
Stock-based
compensation - 0.0% 207,982 14.4% -100.0%
Travel and
automotive 73,626 4.8% 71,471 4.9% 3.0%
Wages for ongoing
operations 499,671 32.3% 505,558 35.0% -1.2%
1,384,140 89.5% 2,389,162 165.3% -42.1%

Profit from Operations (before amortization and other items) and EBITDA

Profit from operations (before amortization and other items) for 2Q06 was $161,850 compared to a loss of $943,803 for the same period of last year. Operating margin, in turn, improved to 10.5%, from negative 65.3% for 2Q05.

EBITDA for the quarter improved to $229,691, from negative $826,484 in 2Q05. EBITDA margin, in turn, rose to 14.6%, from negative 57.2% in the year-ago period.

Table 2: EBITDA*
For the three months For the three months
ended June 30, 2006 ended June 30, 2005

+ Revenues $1,545,990 100.0% $1,445,359 100.0%
- Expenses 1,384,140 89.5% 2,389,162 165.3%
- Interest, long-term 45,555 2.9% 51,777 3.6%
- Interest, short-term 22,286 1.4% 65,542 4.5%
EBITDA $229,691 14.9% $(826,484) -57.2%

* EBITDA does not include the following other items: interest income,
financing expenses, standby guarantee, restructuring costs, foreign
exchange gain/loss. See "Consolidated Statements of Operations and
Deficit" for more detail.

Net Loss

During the quarter the company recorded a net loss of $1,403,298, or negative $0.02 per share. This was a $113,904 improvement from the $1,517,202 loss, or negative $0.04 per share in 2Q05.

The net loss also reflects $1,340,164 in one-time charges, and a $118,384 provision for income taxes. One-time charges included $541,875 related to restructuring costs and $798,289 resulted from US$5,000,000 standby guarantee fees incurred in connection with any debt or equity financings Stream may undertake until March 1, 2007.

FIRST HALF 2006 CONSOLIDATED RESULTS

Revenues

Revenues for the period rose 8% to $3,113,819 from $2,883,031 in 1H05, after adjusting for currency fluctuation from Polish Zlotych to Canadian dollars. In Polish Zlotych, revenues for the period rose 16.7%, to 8,662,271 PLN, up from 7,420,260 PLN in 1H05.

Overall Expenses

Overall expenses for the quarter declined 50.9% YoY, to $2,863,220 from $5,831,901, or 92.0% of revenues, from $2,389,162, or 202.3% of revenues, for the year-ago period.

Administration and services expenses fell 32.3% YoY, to $485,338 from $717,009 in 1H05. As a percentage of revenues, administration and services expenses fell to 15.6% from 32.3% in 1H05.

Sales and marketing expenses declined 21.6% during the period to $55,886, or 1.8% of revenues, from $71,304, or 2.5% or revenues.

Table 3: Overall Expenses
For the six months For the six months
ended June 30, 2006 ended June 30, 2005
$ % of revenues $ % of revenues % Change
Expenses
Administration
and services 485,338 15.6% 717,009 24.9% -32.3%
Interest,
long-term 99,542 3.2% 106,493 3.7% -6.5%
Interest,
short-term 43,114 1.4% 88,839 3.1% -51.5%
Investor relations 25,912 0.8% 1,300,535 45.1% -98.0%
Legal and
accounting 132,748 4.3% 107,850 3.7% 23.1%
Occupancy costs 130,746 4.2% 250,413 8.7% -47.8%
Programming 771,064 24.8% 509,384 17.7% 51.4%
Sales and
marketing 55,886 1.8% 71,304 2.5% -21.6%
Stock-based
compensation - 0.0% 1,555,709 54.0% -100.0%
Travel and
automotive 126,645 4.1% 129,118 4.5% -1.9%
Wages for ongoing
operations 992,225 31.9% 995,247 34.5% -0.3%
2,863,220 92.0% 5,831,901 202.3% -50.9%

Profit from Operations (before amortization and other items) and EBITDA

Profit from operations (before amortization and other items) for 1H06 was $250,599 compared to a loss of $2,948,870 for 1H05. Operating margin, in turn, improved to 8.0%, from negative 102.3% for 1H05.

EBITDA for the period improved to $393,255, from negative $2,753,538 in 1H05. EBITDA margin, in turn, rose to 12.6%, from negative 95.5% in the year-ago period.

Table 4: EBITDA*
For the six months For the six months
ended June 30, 2006 ended June 30, 2005

+ Revenues $3,113,819 100.0% $2,883,031 100.0%
- Expenses 2,863,220 92.0% 5,831,901 202.3%
- Interest, long-term 99,542 3.2% 106,493 3.7%
- Interest, short-term 43,114 1.4% 88,839 3.1%
EBITDA $393,255 12.6% $(2,753,538) -95.5%

* EBITDA does not include the following other items: interest income,
financing expenses, standby guarantee, restructuring costs, foreign
exchange gain/loss. See "Consolidated Statements of Operations and
Deficit" for more detail.

Net Loss

During the period the company recorded a net loss of $1,911,212, or negative $0.03 per share. This was a $2,213,923 improvement from the $4,125,135 loss, or negative $0.11 per share in 1H05.

Excluding one time charge of restructuring costs and standby guarantee fees as described before, the expenses of head office in Vancouver excluding interest on long-term debt amounted to approximately $403,055. This includes $27,117 legal fees related to the settlement of the departure of former president of the Company. The Company will continue to reduce costs in Vancouver and Poland to increase the profitable of the Company. It is the Company's objective to significantly reduce Vancouver's office costs from the third quarter of 2006.

LIQUIDITY AND CAPITAL RESOURCES

At June 30, 2006, the company had a working capital deficiency of $1,810,233, an improvement of $741,941 as of December 31, 2005, when the company had a capital deficiency of $2,552,174. This improvement was a result of private placements and shares being issued for services. The company received $1,795,741 total proceeds from the placements done in the current quarter.

On May 8, June 15, and June 29, 2006 Stream completed private placements for the issuance of 2,400,000, 4,468,332, and 333,333 units, respectively. Each unit is comprised of one common share and a non-transferable share purchase warrant at a price of $0.15 USD per unit, where two warrants entitle the holder to purchase an additional common share of the Company at a purchase price of $0.225 USD each for a period of two years.

At June 30, 2006 the company had a bank credit facility in Poland of $500,000 USD.

KEY DEVELOPMENTS

Jan S. Rynkiewicz appointed new President & CEO of Stream

Effective June 12, 2006, Jan S. Rynkiewicz was promoted to President & CEO of the Company. Iwona Kozak will continue to serve on Stream's Board in the capacity of Executive Director & Corporate Secretary. The Board of Stream believes that the Company's President & CEO, along with other top executives, ideally should be located in the country of its operations where the crucial strategic decisions and negotiations take place. Iwona in her new role will have the authority to lead all aspects of the Company's public, corporate, IR and management of all North American interfaces.

Stream Moves Headquarters to Warsaw, Poland

As of July 1st the Company's head office was moved from Vancouver to Warsaw, Poland, in line with the objective of introducing various measures to bring efficiencies to its operations while building a strong Central European communications company. The head-office in Warsaw will bring together the company's top corporate, finance and marketing department's management. The Company has retained its corporate office in Vancouver with a significantly reduced number of employees to serve its North American shareholders.

Stream Receives a US$5M Standby Guarantee

On June 15, 2006, the company announced it had secured a standby guarantee for a combined amount of US$5,000,000 for a period ending March 1, 2007 in connection with any debt or equity financings Stream may undertake during that period. This financing guarantee allows the company to proceed with its acquisition plan. In consideration for providing the guarantee, Stream has agreed to pay the guarantors a fee in shares of the Company equal to 15% of the guaranteed amount resulting in the issuance of 3,807,107 shares at a price of US$0.19 per share.

Przemyslaw Aussenberg Appointed to Stream Board of Directors

On June 26, 2006, the Company announced the appointment of Mr. Przemyslaw Aussenberg to the Board of Directors. Mr. Aussenberg brings over 15 years of experience in business management and has held a number of executive management positions, including Financial Director for ITI Group, and Chief Financial Officer and a Board member with TVN, a leading commercial television company in Poland. He also served as Chief Financial Officer of Elektrim S.A., an energy and telecom conglomerate which indirectly controlled 25% of PTC, the largest mobile telephone operator in Poland. Since 2004, Mr. Aussenberg has been a Board member of Kouri Capital, responsible for business development and restructuring.

About Stream Communications

Stream is a broadband cable company and offers Cable TV, high-speed Internet and VoIP services in Poland. Stream is the 7th largest Cable TV operator in Poland, focusing on the densely populated markets of Southern Poland.

Safe Harbour for Forward-Looking Statement

Except for statements of historical fact, the information presented herein constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include general economic and business conditions, the ability to acquire and develop specific projects, the ability to fund operations and changes in consumer and business consumption habits and other factors over which Stream Communications Network and Media Inc. has little or no control.

Stream Communications and Network & Media Inc.

Consolidated Balance Sheets
Unaudited
(In Canadian Dollars)

June 30, 2006 December 31, 2005
ASSETS
Current Assets
Cash and cash equivalents $343,379 $439,937
Accounts receivable - net 314,391 293,898
Inventory 11,691 8,459
Prepaid expenses and advances 75,305 75,035
744,766 817,329
Property, plant and equipment 9,113,189 9,367,012
Intangibles 2,293,501 2,927,767

$12,151,456 $13,112,108
LIABILITIES
Current Liabilities
Trade accounts payable
and accrued liabilities $1,720,286 $2,565,017
Accounts payable pertaining
to financing costs 430,473 477,113
Corporation income taxes payable 14,965 11,577
Deferred revenue 29,087 15,430
Loans payable and leasing contracts
- current portion 375,511 300,366
2,570,322 3,369,503
Long-term Liabilities
Loans payable and leasing contracts 4,731,732 4,873,760
7,302,054 8,243,263
Non-controlling interest 718,788 690,678
8,020,842 8,933,941
SHAREHOLDERS' EQUITY
Capital stock -
Authorized
150,000,000 common shares of
no par value
Issued and fully paid 43,309,671 41,129,499
Contributed surplus 2,877,474 2,877,474
Private placement subscriptions - 291,455
Warrants 3,652,832 2,439,684
Cumulative translation account (1,397,065) (158,859)
Deficit (44,312,298) (42,401,086)
4,130,614 4,178,167
$12,151,456 $13,112,108

Stream Communications and Network & Media Inc.

Consolidated Statements of Operations and Deficit
Unaudited
(In Canadian Dollars)

For the three For the three For the six For the six
months ended months ended months ended months ended
June 30, 2006 June 30, 2005 June 30, 2006 June 30, 2005

Revenues $1,545,990 $1,445,359 $3,113,819 $2,883,031
Expenses
Administration
and services 214,618 408,547 485,338 717,009
Interest, long-term 45,555 51,777 99,542 106,493
Interest, short-term 22,286 65,542 43,114 88,839
Investor relations 13,623 660,594 25,912 1,300,535
Legal and accounting 48,960 23,791 132,748 107,850
Occupancy costs 30,383 127,791 130,746 250,413
Programming 430,021 256,704 771,064 509,384
Sales and marketing 5,397 9,405 55,886 71,304
Stock-based
compensation - 207,982 - 1,555,709
Travel and automotive 73,626 71,471 126,645 129,118
Wages for ongoing
operations 499,671 505,558 992,225 995,247
1,384,140 2,389,162 2,863,220 5,831,901
Profit (loss) before
undernoted items 161,850 (943,803) 250,599 (2,948,870)

Amortization of
property, plant and
equipment 220,554 239,517 446,452 465,188
Amortization of
intangibles 246,080 233,913 589,083 480,420
466,634 473,430 1,035,535 945,608

Loss before other
items (304,784) (1,417,233) (784,936) (3,894,478)
Other items
Interest income 4,430 5,644 8,038 10,370
Financing expenses (237) (86,656) (9,820) (170,429)
Standby guarantee (798,289) - (798,289) -

Restructuring costs (541,875) - (541,875) -
Foreign exchange
gain (loss) 155,414 (15,277) 149,340 (50,034)
(1,180,557) (96,289) (1,192,606) (210,093)
Loss before non-
controlling
interest (1,485,341) (1,513,522) (1,977,542) (4,104,571)
Non-controlling
interest (36,341) (3,680) (52,054) (20,564)
(1,521,682) (1,517,202) (2,029,596) (4,125,135)
Provision for
income taxes 118,384 - 118,384 -
Net loss for the
period (1,403,298) (1,517,202) (1,911,212) (4,125,135)

Deficit, beginning
of year (42,909,000) (39,197,660) (42,401,086) (36,589,727)

Deficit, end of
period $(44,312,298) $(40,714,862) $(44,312,298) $(40,714,862)

Loss per share,
basic and diluted
Loss per share $(0.02) $(0.04) $(0.03) $(0.11)

Weighted average
number of shares
Basic and
diluted 65,381,491 38,268,002 65,381,491 38,268,002

Stream Communications and Network & Media Inc.

Consolidated Statements of Cash Flows
Unaudited
(In Canadian Dollars)

For the three For the three For the six For the six
months ended months ended months ended months ended
June 30, 2006 June 30, 2005 June 30, 2006 June 30, 2005
Operating
Activities
Net loss for
the period $(1,403,298) $(1,517,202) $(1,911,212) $(4,125,135)
Items not
involving cash 466,634 473,430 1,035,535 945,608
Amortization - 207,982 - 1,555,709
Stock-based
compensation 39,250 1,067,881 90,960 1,487,754
Issuance of
shares for debt - -
Issuance of shares
for services 416,875 - 416,875 -
Issuance of share
for restructuring
costs 798,290 - 798,290 -
Issuance of shares
for standby
guarantee 36,341 54,029 52,054 70,226
Non-controlling
interest (27,789) 105,047 (29,943) (76,710)
Change in non-cash
working capital
Accounts receivable (1,699) 8,146 (3,533) (8,120)
Inventory 4,727 2,422 (2,887) (12,478)
Prepaid expenses
and advances (353,420) (520,121) (843,941) (620,859)
Accounts payable
and accrued
liabilities (1,925) - 3,799 -
Corporation income
taxes (50,716) - 3,530 -
Deferred revenue (76,730) (118,386) (390,473) (784,005)

Financing Activities
Issuance of shares
and warrants for
cash 1,199,481 110,410 1,795,741 110,410
Subscriptions
received for
private placements
to be issued - 484,775 - 1,313,078
Proceeds (repayment)
of loans and
leasing contracts (108,238) 69,256 (66,883) 38,912
Net cash provided
by financing
activities 1,091,243 664,441 1,728,858 1,462,400

Investing Activities
Purchase of
property, plant
and equipment (256,955) (622,817) (540,757) (1,263,432)
Net cash used in
investing
activities (256,955) (622,817) (540,757) (1,263,432)

Foreign exchange
effect on cash and
cash equivalents
(note 6) (653,048) 60,602 (894,186) 113,549

Change in cash and
cash equivalents 104,510 (16,160) (96,558) (471,488)

Cash and cash
equivalents at
beginning of period 238,869 184,980 439,937 640,308

Cash and cash
equivalents at end
of period $343,379 $168,820 $343,379 $168,820

(1) Unless otherwise stated, all financial figures discussed in this
announcement are unaudited, prepared in accordance with Canadian
generally accepted accounting principles, and expressed in Canadian
dollars.

(2) See EBITDA calculations on tables 2 and 4.

Source: Stream Communications Network & Media Inc.

CONTACT: Iwona Kozak of Stream Communications, +1-604-669-2826,
1-800-704-9649, iwona.kozak@streamcn.com; or Barbara Cano of Breakstone Group,
+1-646-452-2334, bcano@breakstone-group.com

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