Final Results
Synchronica PLC
28 July 2006
Strictly embargoed until 07.00, 28 July 2006
Synchronica plc
("Synchronica" or "the Company")
Interim Results for the Six Months to 30 June 2006
London, 28 July 2006 - Synchronica, an international developer and provider of
mobile device management and synchronisation solutions, is pleased to announce
its interim results for the six months to 30 June 2006.
Summary
o Significant customer and partner sales contracts signed, e.g. IXI Inc,
Netcom, Red Bend, Orange UK, T-Mobile.
o Continuing progress as a product based business building recurring
revenue streams.
o Project based contract discontinued and greater emphasis on down stream
recurring revenue leading to revised guidance given to analysts.
o Strong interest in core products from mobile operators, device
manufacturers and enterprises.
o Forging strategic partnerships to strengthen product portfolio and
broaden market reach.
David Wickham, Chairman, said, "I'm very pleased to be able to report further
progress towards our priority goal of delivering value to shareholders. Our
strategy to create a product driven business is beginning to bear fruit and I
expect the second half to produce additional revenue growth from the sales and
marketing effort of the last nine months."
Commenting, Carsten Brinkschulte, Chief Executive Officer, said, "Our open
standard synchronisation and device management products are helping
manufacturers, operators and enterprises to take full advantage of the
exponential growth in mobile messaging and personal information services. Our
contract win to supply our software to IXI Mobile's Ogo device - the first
affordable mass market mobile e-mail device - is a good illustration of how we
can enable providers to deliver the services demanded by the global market."
For more information please visit www.synchronica.com or contact:
Synchronica plc Tavistock Communications
Tel: +44 1580 830 033 Tel: +44 20 7920 3150 / +44 (0) 7966
477 256
Carsten Brinkschulte, Chief Executive Simon Hudson
Officer
Angus Dent, Chief Financial Officer Clemmie Carr
Nicole Meissner, Chief Marketing Officer
Synchronica plc - Interim Results for the Six Months Ended 30 June 2006
Chairman's Statement
In this, my first statement since I became Chairman on 1st June, I am pleased to
report that the progress begun in 2005 has continued.
Over the period we have maintained our focus on moving the business from a short
term project driven company to one centred on four key products which can
produce long term stable, high quality revenues from global markets. We have
made good progress during the first half on all four of our products and are
seeing increasing market traction.
o SyncML Gateway , the synchronisation product for industry standard
SyncML enabled phones, won 'Best of CeBIT Award 2006' in the mobile solutions
category at the CeBIT fair in Hanover in March. During the period 26 contracts
were won for SyncML Gateway - including a worldwide licensing agreement with IXI
Mobile Inc. for its Ogo(TM)family of mobile messaging solutions and an agreement
to provide NetCom, a Norwegian mobile operator, with the ability to back-up and
restore customers' personal data over-the-air ("OTA"). IXI is providing the
first mass market mobile e-mail device and has already launched in the US,
Germany, Switzerland, Uruguay and Turkey.
o SyncML DM Server enables OTA firmware updates and OTA diagnosis and
repair of SyncML enabled handsets. In April, we signed an OEM agreement with
integrated mobile software management developer Red Bend Software Inc. to
integrate SyncML DM Server with Red Bend's Firmware Management System to provide
mobile operators and device manufacturers with a comprehensive, SyncML-based
lifecycle management solution for handling OTA firmware updates.
o Mobile Manager, our product to enable enterprises to remotely configure
and control Smartphone fleets, saw 3 new resellers appointed and is now in use
with more than 50 customers worldwide, including a Tier 1 mobile operator in the
UK.
o ROM Builder, which significantly reduces the time-to-market of
Smartphones, saw its largest customer - a US Tier 1 handset manufacturer -
continuing to develop devices with ROM Builder.
The markets which we address with our products continue to grow quickly -
Datamonitor estimates that global mobile operator revenues from mobile e-mail
and personal information management will exceed US$600 million by 2009 with the
mobile device management market forecast to reach US$435 million at that time (
TelecomAsia: Ready for take-off, Feb. 2006).
As we advised when announcing the restructuring last year, our goal is to create
a stable product based business from which we can generate high quality, long
term income streams. This process is underway and we are encouraged by the
results to date. However in these early stages of the restructuring process
there will evidently be a reduction in reported turnover compared to the
revenues that were more immediately recognisable when the company was a project
focused business. This is largely due to the fact that our products are
increasingly sold under license fee arrangements providing regular recurring
revenues over time.
We have a healthy pipeline of opportunities with operators, manufacturers and
corporate customers around the world and are encouraged that we can close a
sufficient number of these to realise our revised objectives for the full year.
Particular emphasis will be placed on closing some of the larger opportunities
as early as possible in order that revenue can be maximised.
Investment in the development, marketing and sales for all four of our products
is continuing. We have recruited additional staff, and we will continue to seek
people of high calibre to strengthen our sales, marketing and development teams.
We are also exploring strategic partnerships with other mobile software vendors
in order to improve our product offering and market penetration.
Our costs in the first half have been carefully controlled and are less than
budgeted, allowing us to report a better than expected period end cash balance
of £4.9 million.
The results for the first half are broadly in line with our expectations. Having
re-organised the company's product portfolio in October 2005, we planned for a
six to nine months sales cycle with operators and manufacturers. The first
contracts have been won and we expect to see revenue from these contracts in the
second half of the current year. While deal values from corporate customers are
relatively low, the sales cycle can be much shorter and we have seen good
revenue from this source in the period.
Our overall expectations for the year have been revised due to a discontinued
project contract and greater emphasis on downstream recurring revenues.
We are pleased with the progress we have made to date on our strategy to
transform Synchronica into a product driven business capable of generating long
term revenues. Our products are beginning to gain acceptance in global markets
and have been validated by important partnering agreements and customer and
contract wins. Entering the second half of 2006, we are encouraged that we can
continue to make progress towards our priority goal of delivering value to
shareholders.
David Wickham
27 July 2006
Consolidated Profit and Loss Account
Note 6 Months to 6 Months to Year to
30 Jun '06 30 Jun '05 31 Dec '05
(Unaudited) (Unaudited & restated) (Restated)
£'000 £'000 £'000
Turnover 1 623 1,784 3,078
======= ======= =======
Operating (2,486) (1,206) (2,983)
loss Interest
receivable
less interest
payable 122 82 166
------- ------- -------
Loss on
ordinary
activities
before tax (2,364) (1,124) (2,817)
Tax on loss
on
ordinary
activities 2 296 (4) 4
------- ------- -------
Loss on
ordinary
activities
after tax (2,068) (1,128) (2,813)
======= ======= =======
Basic and
diluted loss
per ordinary
share 3 (5.7p) (6.0p) (12.9p)
======= ======= =======
Statement of Total Recognised Gains and Losses
Note 6 Months to 6 Months to Year to
30 Jun '06 30 Jun '05 31 Dec '05
(Unaudited) (Unaudited (Restated)
& Restated)
£'000 £'000 £'000
Loss on ordinary activities
after tax (2,068) (1,128) (2,813)
------- ======= =======
Total recognised gains and
losses (2,068) (1,128) (2,813)
related to the period
Prior period adjustment 8 (86)
-------
Total gains and losses since
the annual report (2,154)
=======
Consolidated Balance Sheet
Note As at As at As at
30 Jun '06 30 Jun '05 31 Dec '05
(Unaudited) (Unaudited
& restated)
£'000 £'000 £'000
Intangible assets and goodwill 793 847 862
Tangible assets 120 215 100
-------- -------- --------
Fixed Assets 913 1,062 962
-------- -------- --------
Stocks 16 108 19
Debtors due after one year - 11 -
Debtors due within one year 669 1,348 888
Cash at bank and in hand 4,900 2,568 6,615
-------- -------- --------
Current Assets 5,585 4,035 7,522
Creditors: Amounts falling due
within one year (979) (904) (902)
-------- -------- --------
Net current assets 4,606 3,131 6,620
-------- -------- --------
Total assets less current
liabilities 5,519 4,193 7,582
-------- -------- --------
Net assets 5,519 4,193 7,582
======== ======== ========
Capital and reserves 7 5,519 4,193 7,582
======== ======== ========
Consolidated Cash Flow Statement
Note 6 Months to 6 Months to Year to
30 Jun '06 30 Jun '05 31 Dec '05
(Unaudited) (Unaudited & restated) (Restated)
£'000 £'000 £'000
Net cash flow from
operating
activities 4 (2,064) (2,529) (3,518)
Returns on
investment and
servicing of
finance 122 82 149
Taxation (paid) and
received 296 (6) (6)
Capital expenditure
and financial
investment (69) (156) (178)
Acquisitions and
disposals - (349) (349)
------- ------- -------
Net cash flow
before financing (1,715) (2,958) (3,902)
Financing - 13 5,005
------- ------- -------
(Decrease) /
increase in cash (1,715) (2,945) 1,103
======= ======= =======
Notes to the Interim Financial Information
1. Turnover
6 Months to 6 Months to Year to
30 Jun '06 30 Jun '05 31 Dec '05
(Unaudited) (Unaudited)
£'000 £'000 £'000
United Kingdom 40 225 341
European and other foreign markets 317 126 628
North America 266 1,433 2,109
-------- -------- --------
Total 623 1,784 3,078
======== ======== ========
2. Tax
6 Months to 6 Months to Year to
30 Jun '06 30 Jun '05 31 Dec '05
(Unaudited) (Unaudited)
£'000 £'000 £'000
UK research & development tax credit 300 - -
Overseas corporation tax (charge) /
credit (4) (4) 4
-------- -------- --------
Current taxation 296 (4) 4
======== ======== ========
The UK research and development tax credit received represents the refund of tax
due from research carried out in the years ended 31 December 2003 and 31
December 2004.
3. Loss Per Share
6 Months to 6 Months to Year to
30 Jun '06 30 Jun '05 31 Dec '05
(Unaudited) (Unaudited (Restated)
& restated)
£'000 £'000 £'000
These have been calculated on losses
of: (2,068) (1,128) (2,813)
======== ======== ========
The weighted average number of shares
used was: 36,365,675 18,665,000 21,777,390
======== ======== ========
Basic and diluted loss per ordinary
share (5.7p) (6.0p) (12.9p)
======== ======== ========
4. Reconciliation of Operating Loss to Net Cash Outflow from Operating
Activities.
6 Months to 6 Months to Year to
30 Jun '06 30 Jun '05 31 Dec '05
(Unaudited) (Unaudited (Restated)
& restated)
£'000 £'000 £'000
Operating loss (2,486) (1,206) (2,983)
Amortisation of intangible assets 69 37 114
Depreciation of tangible assets 49 55 98
Profit on sale of tangible fixed
assets - - 5
Share based transactions 5 22 83
Change in stocks 3 (80) 10
Change in debtors 219 (808) (194)
Change in creditors 77 (549) (651)
-------- -------- --------
Net cash flow from operating
activities (2,064) (2,529) (3,518)
======== ======== ========
5. Reconciliation of net cash flow to movement in net funds
6 Months to 6 Months to Year to
30 Jun '06 30 Jun '05 31 Dec '05
(Unaudited) (Unaudited (Restated)
& restated)
£'000 £'000 £'000
Increase / (Decrease) in cash (1,715) (2,925) 1,103
Cash outflow from decrease in lease
finance 14 20 41
-------- -------- --------
Movement in net funds (1,701) (2,905) 1,144
Net funds at 1 January 6,599 5,455 5,455
-------- -------- --------
Net funds at period end 4,898 2,550 6,599
======== ======== ========
6. Reconciliation of Movement in Shareholder's Funds
£'000
At 31 December 2005 7,582
Retained loss for the period (2,068)
Prior period adjustment for share based payments (86)
Adjustment for share based payments - prior years 86
Adjustment for share based payments - current period 5
New Ordinary shares allotted 173
Capital to be issued released (173)
--------
At 30 June 2006 5,519
========
7. Capital and reserves
Share P&L Capital to Share Total
capital be issued premium
(£000s) (£000s) (£000s) (£000s) (£000s)
At 1 January 2006 364 (2,848) 173 9,893 7,582
Retained loss
for the period - (2,068) - - (2,068)
Prior period
adjustment for
share based
payments - (86) - - (86)
Adjustment for
share based
payments -
prior years - 86 - - 86
Adjustment for
share based
payments -
current period - 5 - - 5
New Ordinary
shares
allotted - - - 173 173
Capital to be
issued
released - - (173) - (173)
------ ------ ------- ------- -------
At 30 June 364 (4,911) - 10,066 5,519
2006 ====== ====== ======= ======= =======
8. Interim Report
This interim report was approved by the Board on 27 July 2006. It is not the
company's statutory accounts. It has been prepared using accounting policies
that are consistent with those adopted in the statutory accounts for the year
ended 31 December 2005 with the exception of the policy on share based payments.
Under FRS 20, which applies with effect from 1 January 2006, the fair value of
employee share options are recognised in the profit and loss account with the
corresponding entry increasing equity. The fair value is recognised over the
period during which the employees become unconditionally entitled to the
options.
The effect in the 6 months to June 2006 was to increase the loss before tax by
£5,482. The transitional arrangements under FRS20 require a prior period
adjustment to be made in respect of the years ended 31 December 2005, £83,140,
and 2004, £2,819 for the share options in issue that had not vested by 1 January
2006.
The figures for the period to 30 June 2005 have been restated to reflect the
purchase of intangible assets acquired previously included in goodwill. The
effect on the 6 months June 2005 was to reduce intangible assets and goodwill by
£123,230, increase creditors by £27,249 and increase the loss for the period by
£150,479.
The figures for the year to 31 December 2005 were derived from the statutory
accounts for that year as restated for the recognition of the fair value of
employee share option scheme. The statutory accounts for the year ended 31
December 2005 have been delivered to the Registrar of Companies and received an
audit report which was unqualified and did not contain statements under s237(2)
ors237(3) of the Companies Act 1985. The restatement for the year ended 31
December 2005 is unaudited. The six months results for both years are unaudited.
Independent Review Report to Synchronica PLC
Introduction
We have been instructed by the company to review the financial information for
the six months ended 30 June 2006 which comprises consolidated profit and loss
account, consolidated balance sheet, consolidated statement of total recognised
gains and losses, consolidated cash flow statement and related notes. We have
read the other information contained in the interim report and considered
whether it contains any apparent misstatements or material inconsistencies with
the financial information. This report is made solely to the company having
regard to guidance contained in Bulletin 1999/4 'Review of interim financial
information' issued by the Auditing Practices Board. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than
the company, for our work, for this report, or for the conclusions we have
formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the AIM
Rules. The directors are also responsible for ensuring that the accounting
policies and presentation applied to the interim figures are consistent with
those applied in preparing the preceding annual accounts except where any
changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review having regard to guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the accounting policies and presentation
have been consistently applied, unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with International Standards on Auditing (UK and
Ireland) and therefore provides a lower level of assurance than an audit.
Accordingly we do not express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2006.
RSM Robson Rhodes LLP
Chartered Accountants
London, England
27 July 2006
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