Interim Results

RNS Number : 3767E

Synchronica PLC

26 September 2008

 



Synchronica PLC

("Synchronica" or "the Company")

Interim Results

26 September 2008 - Synchronica plc (AIM:SYNC), the mobile email and synchronisation specialist, reports interim results for the six months ended 30 June 2008.

Period and Post-Period Highlights

• AxisMobile acquisition removes a direct competitor from the market, increases competitive positioning with complimentary functionality and adds revenue streams with 8 live installations. 

• Organisational integration of AxisMobile completed.

• First integrated version of Mobile Gateway 4.0, incorporating AxisMobile technology scheduled for release by end of 2008.

• Key contract wins validate the strategy to focus on mobile email in emerging markets.

• Development of Mobile Gateway 3.2 has been completed, with improved functionality and an expanded addressable market.

• Fund-raising for £5.1m enables integration of AxisMobile and further expansion of sales and marketing activities.

Carsten Brinkschulte, CEO of Synchronica, commented, "In the first nine months of this year Synchronica has made significant progress towards becoming the leading provider of push mobile email in emerging markets. The acquisition of AxisMobile was a milestone in the development of the Company, improving our competitive positioning and accelerating our commercial growth with the addition of new sales teams targeting Eastern Europe and Russia/ CIS, enhanced product features for mass market mobile phones and eight live installations at mobile operators in the heart of our market. 

"We have seen a significant increase in business, and the recent contract wins combined with our enhanced market position and our strong pipeline of future business gives us confidence in a successful outcome for the year."

For further enquiries, please contact:

Synchronica plc	Tel.    [phone]
Carsten Brinkschulte, CEO
Angus Dent, CFO
Nicole Meissner, CMO
ICIS Limited	Tel.    [phone]
Christian Taylor Wilkinson
Caroline Evans-Jones
FinnCap	Tel. [phone]
Charles Cunningham
Geoff Nash

  About Synchronica

Synchronica plc develops and markets industry standard mobile email and synchronisation solutions for the vast majority of devices in the market today. Mobile operators, device manufacturers and service providers in emerging and developed markets use Synchronica products to offer mobile email and synchronisation services to their consumer and corporate customer base. Products include the push email and synchronization solution Mobile Gateway and the mass-market device backup solution Mobile Backup. Headquartered in the UK with a development centre in Germany and a presence in Hong Kong, Dubai and U.S. Synchronica plc is a public company traded on the AIM list of the London Stock Exchange (SYNC.LN). More information is available at www.synchronica.com.

Business Update

The acquisition of AxisMobile is completed and the integration on track and progressing well. The organisation has now been integrated within the Synchronica business and work has begun on the combined product offering, with the first integrated version of Mobile Gateway 4.0 planned for release at the end of 2008. We now have a focused team in place to drive the combined business forward, eight additional live operators, and a strengthened sales presence covering Eastern Europe, Russia and the CIS. We have already secured two new contracts involving the acquired products demonstrating the immediate commercial potential of the AxisMobile acquisition.

In line with our strategy, the Company is seeing a significant increase in the levels of interest from customers in emerging markets, such as China, India, Russia, Latin America, Africa and the Middle East. Some of the recent key developments have been:

• February 2008, two key agreements: a distribution contract with Brightstar, a global leader in distribution and supply chain solutions for the mobile industry; and a worldwide reseller agreement with one of the world's top five IT services companies for Mobile Gateway.

• June 2008: a landmark agreement with a leading Chinese handset manufacturer opening doors to China, the world's largest mobile market with more than 580 million subscribers. 

• August 2008: licensing of Mobile Gateway to Emircom, one of the top five UAE-headquartered IT/telecoms systems integrators - Synchronica's first ASP (Application Service Provider) win in the Middle East and Africa region. Also in August 2008, the Company signed an agreement with a subsidiary of a leading Asian-African mobile operator group for 250,000 licensees of Mobile Gateway with an upfront license fee of US$ 400,000. 

• August 2008: Sun Microsystems Inc ('Sun') applied all of the initial license fees from the acceptance of the first major version by electing a contractual option. Any future sale of Synchronica's mobile synchronisation technology as part of Sun Java Communications Suite will now result in additional annual licence fees for Synchronica. Sun has reported sales of more than 240 million licenses for the Java Communications Suite to service providers and enterprises worldwide.

First two contract wins based on AxisMobile technology:

• September 2008: an expansion order, worth US$ 730,000, with Russia's largest mobile operator, MTS. The purchase order is for an initial expansion phase and is expected to be followed by a further, larger expansion order for a second phase. Phase one of the contract will provide mobile email for MTS subscribers in the Moscow area, while phase two rolls-out across the whole of Russia and the CIS making the service available to MTS's 84 million subscribers. Both phases are expected to be delivered in 2008.

• The most recent contract win with a mobile operator in Belgium, is also based on technology from AxisMobile. This is a further endorsement of the acquisition and demonstrates the contribution to Synchronica's revenue which will generate € 0.34 per subscriber per month and an additional € 200,000 in professional services.

Outlook

In the first nine months of this year Synchronica has made significant progress towards becoming the de facto standard for delivering push email to the mass mobile user market in developing nations. The acquisition of AxisMobile, the enhancement of our product range and the strengthening of our sales team means we are now extremely well positioned to become a central player in the growing mobile email market. This enhanced positioning has resulted in a significant increase in business in the start of the second half of this year, and these recent contract wins combined with our enhanced market position and our strong pipeline of future business gives us confidence in a successful outcome for the year.

Chairman's Statement

Synchronica provides the enabling technology that will bring mobile email to the developing world, where the mobile phone is becoming the primary device for accessing the Internet. Our software enables mobile operators and device manufacturers to provide Blackberry-like services to the vast majority of mobile handsets in the market today, including cheap mass-market mobile phones, which dominate the emerging markets.

Following the period end, a key development was the acquisition of AxisMobile Ltd. which was announced on 18 August 2008. This is an important milestone in the Company's development which will improve our competitive positioning and accelerate our commercial growth. The acquisition was well supported by existing and new institutional investors and is a validation of the management team and its strategy.

Alongside the acquisition Synchronica was able to raise £5.1m in two institutional placings, which were supported by a number of existing and new investors. The money raised will help integrate the products acquired from AxisMobile and accelerate the marketing and sales of the combined business.

Synchronica has a clear strategy of targeting emerging markets, where limited broadband infrastructure and relatively low PC penetration are encouraging the increased use of mobile phones to access the Internet. Forecasts point to these markets as a breakthrough area for mass-market mobile email. For example, Informa predicts that there will be 4.81 billion mobile phone subscribers by 2012, with the next billion subscribers coming from emerging regions.

It is particularly in emerging countries that Synchronica is attracting increasing interest from network operators who recognise the value to their subscribers, and the additional revenue and most importantly, the customer loyalty that they can generate for themselves, by offering subscribers access to their emails on their mobile phones. We are seeing a confirmation of our strategy in the increased level of interest from customers in emerging markets as well as a further validation from recent contract wins.

The strength of the Synchronica management team is a key asset of the Company and an important factor ensuring a successful integration of AxisMobile into Synchronica. This team has the breadth of experience required to handle the integration while at the same time ensuring continuous product development and execution in sales and marketing. I would like to thank them for their contribution to Synchronica's progress and their continual commitment to driving the Company's development.

David Mason

Chairman

September 25, 2008

Consolidated Income Statement for the six month period ended 30 June 2008

	Note	6 months to 30 June 2008 (unaudited)	6 months to 30 June 2007 (unaudited)	Year to    31 December 2007
		£'000	£'000	£'000
Revenue		190	762	2,285
Administrative costs
Reorganisation costs	2	-	-	(492)
Other administrative expenses		(2,906)	(2,338)	(4,951)
Total administrative costs		(2,906)	(2,338)	(5,443)
		________	________	________
Operating loss		(2,716)	(1,576)	(3,158)
Finance income		78	51	87
Finance costs		(177)	-	(12)
		________	________	________
Loss before taxation		(2,815)	(1,525)	(3,083)
Taxation	3	39	(5)	113
		________	________	________
Loss for the period after tax attributable to the equity holders of the parent company during the period		(2,776)	(1,530)	(2,970)
		________	________	________
Loss per ordinary share from continuing operations
Basic and diluted loss per ordinary share	4	( 2.0p )	( 2.8p )	( 4.4 p)
		________	________	________

Consolidated Statement of Recognised Income and Expense for the six month period ended 30 June 2008

	6 months to 30 June 2008 (unaudited)	6 months to 30 June 2007 (unaudited)	Year to    31 December 2007
	£'000	£'000	£'000
Exchange difference on translation of foreign operations	14	(2)	7
	________	________	________
Net income / (expense) recognised in equity	14	(2)	7
Loss for period	(2, 776)	(1,530)	(2,970)
	________	________	________
Total recognised expenses in the year attributable to equity holders of the parent	(2, 762)	(1,532)	(2,963)
	________	________	________

Consolidated Balance Sheet at 30 June 2008

	6 months to 30 June 2008 (unaudited)	6 months to 30 June 2007 (unaudited)	Year to    31 December 2007
	£'000	£'000	£'000
Intangible assets	473	143	579
Property plant and equipment	174	66	133
Receivables	296	-	-
	________	________	________
Non current assets	943	209	712
	________	________	________
Trade and other receivables	1,478	1,054	1,517
Corporation tax	50	-	107
Cash and cash equivalents	612	2,322	757
	________	________	________
Current assets	2,140	3,376	2,381
	________	________	________
TOTAL ASSETS	3,083	3,585	3,093
	________	________	________
Trade and other payables	737	772	1,006
Provisions	161	93	187
	________	________	________
Total current liabilities	898	865	1,193
	________	________	________
Non current liabilities
Provisions	350	16	349
	________	________	________
Total non current liabilities	350	16	349
	________	________	________
Total liabilities	1,248	881	1,542
	________	________	________
Ordinary share capital	1,471	801	840
Share premium account	15,529	12,906	13,167
Retained earnings / (accumulated losses)	(15,186)	(11,001)	(12,463)
Translation reserve	21	(2)	7
	________	________	________
Equity attributable to shareholders of the parent entity	1,835	2,704	1,551
	________	________	________
TOTAL EQUITY AND LIABILITIES	3,083	3,585	3,093
	________	________	________

Consolidated Cash Flow Statement for the six month period ended 30 June 2008

		6 months to 30 June 2008 (unaudited)	6 months to 30 June 2007 (unaudited)	Year to    31 December 2007
		£'000	£'000	£'000
Cash flow from operating activities
Loss before taxation		(2,815)	(1,525)	(3,083)
Adjusted for:
Depreciation		57	28	62
Amortisation of intangibles		114	53	160
(Profit) / loss on disposal of property plant		-	-	(5)
Finance income		(78)	(51)	(87)
Finance costs		177	-	-
Foreign exchange losses / (gains) on operating activities		(2)	(2)	12
Equity settled share based payment (credit) / expense		53	(18)	(40)
		_______	_______	_______
Cash flows from operating activities before changes in working capital provisions		(2,494)	(1,515)	(2,981)
(Increase) / decrease in trade and other receivables		(365)	(553)	(1,016)
(Decrease) / increase in provisions		(51)	(110)	317
(Decrease) / increase in payables		(269)	(907)	(659)
		_______	_______	_______
Cash utilised from operations		(3,179)	(3,085)	(4,339)
Taxation (paid) and received		121	(5)	-
		_______	_______	_______
Net cash used in operating activities		(3,058)	(3,090)	(4,339)
		_______	_______	_______
Cash flow from investing activities
Interest received		18	51	87
Finance costs paid		(8)
Proceeds from sale of property plant and equipment		-	-	4
Purchase of intangible assets		(8)	-	(243)
Purchase of property plant and equipment		(98)	-	(103)
		_______	_______	_______
Net cash from investing activities		(96)	51	(255)
		_______	_______	_______
Cash flow from financing activities
Net proceeds from issue of ordinary share capital		2,993	3,277	3,277
		_______	_______	_______
Net cash generated from financing activities		2,993	3,277	3,277
		_______	_______	_______
Net decrease in cash and cash equivalents		(161)	238	(1,317)
Cash and cash equivalents at 1 January		757	2,086	2,086
Effects of exchange rate changes on cash and cash equivalents		16	(2)	(12)
		_______	_______	_______
Cash and cash equivalents at period end		612	2,322	757
		_______	_______	_______

Notes to the Financial Statements

1. Accounting Policies

This financial information has been prepared using recognition and measurement principles consistent with IFRS, and applying the policies as set out below which are consistent with those expected to be applied in the company's next annual financial statements. 

Interim Report

This interim report was approved by the Board on 25 September 2008 prepared in accordance with EU-endorsed International Financial Reporting Standards (IFRS), International Financial Reporting Interpretations Committee (IFRIC) interpretations and those parts of the Companies Act 1985 applicable to companies reporting under IFRS.

This interim report does not constitute the company's statutory accounts. The information presented for the year to 31 December 2007 is extracted from the company's statutory accounts for the year then ended. The audit report on those statutory accounts was unqualified, but did contain references to going concern to which the auditors drew attention by way of emphasis without qualifying their reports. The six months results for both years are unaudited.

Basis of Consolidation

The consolidated financial statements incorporate the results, assets, liabilities and cash flows of the company and each of its subsidiaries for the financial year ended 31 December 2007.

Subsidiaries are entities controlled by the Group. Control is deemed to exist when the Group has the power, directly or indirectly to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The results, assets, liabilities and cash flows of subsidiaries are included in the consolidated financial statements from the date control commences until the date that control ceases.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group.

Intra-group balances and transactions are eliminated on consolidation.

Foreign Currencies

Items included in the financial statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the 'functional currency'). The consolidated financial statements are presented in sterling, which is the Company's functional and presentation currency.

Transactions entered into by Group entities in a currency other than the currency of the primary economic environment in which it operates (the "functional currency") are recorded at the rates ruling when the transactions occur. Foreign currency monetary assets and liabilities are translated at rates ruling at the Balance Sheet date. Exchange differences arising on the retranslation of unsettled monetary assets and liabilities are recognised immediately in the Income Statement.    

On consolidation, the balance sheet of the overseas subsidiary undertaking is translated at the rate of exchange ruling at the balance sheet date. The exchange differences arising on the retranslation of opening net assets, together with the year-end adjustment to closing rates of income statements translated at average rates, are taken directly to reserves. The income statement of the overseas subsidiary undertaking is translated at average exchange rates (unless this average is not a reasonable approximation of the effect of the rates prevailing on the transaction dates, in which case the income and expenses are translated at the rate on the dates of the transactions). All other translation differences are taken to the income statement. Tax charges and credits attributable to exchange differences on those borrowings are also dealt with in reserves.

Leases

Where substantially all of the risks and rewards incidental to ownership are not transferred to the group (an "operating lease"), the total rentals payable under the lease are charged to the consolidated income statement on a straight-line basis over the lease term. The aggregate benefit of lease incentives is recognised as a reduction of the rental expense over the lease term on a straight-line basis.

Revenue

Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for licences granted and services provided in the normal course of business, net of discounts, any refunds due, and VAT.

The Group derives revenue from one trade in software licences and providing customer support and other services in relation to those licences. Customer support includes telephone support and maintenance updates. Other services include the sale of professional services to install and maintain software and to train licensees in the maintenance and use of the software.

Revenue allocable to software licences is recognised when all of the following conditions are met:

• The Group has transferred to the buyer the significant risks and rewards of ownership;
  The Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

• The amount of revenue can be measured reliably;

• It is probable that the economic benefit associated with the transaction will flow; and

• The costs incurred or to be incurred in respect of the transaction can be measured reliably.

Revenue allocable to customer support and maintenance is recognised on a straight line basis over the term of the contract, usually one year. Revenue not recognised in the income statement under this policy is classified as deferred income in the balance sheet.

Revenue allocable to other services is recognised when the service has been rendered to the customer, and the value can be measured reliably with reference to the stage of completion of the project.

Share-based Payments

The group operates an employee share option scheme. The fair value of options or shares granted under the scheme is recognised in the income statement as an expense over the period in which any performance conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award, based on management's best estimate of the number of awards that will ultimately vest. A corresponding amount is credited to equity. No expense is recognised for awards that do not ultimately vest, except for those where the vesting depends on a market condition. Whether or not the market condition is satisfied, these are treated as vesting as long as all other performance conditions are satisfied.

The fair values of the awards are measured at the date at which they are granted using a Black Scholes Merton option-pricing model. 

Intangible Assets 

Intellectual Property Rights

Intellectual property rights acquired as part of a business acquisition are capitalised separately from goodwill if their value can be measured reliably on initial recognition and they are controlled through custody or legal rights. These rights are initially recorded at fair value which is based on replacement cost and are amortised over four years which is their estimated useful economic life. Provision is made for any impairment. Intellectual property rights purchased separately from a business are capitalised at cost and are amortised over four years which is their estimated useful economic life. Provision is made for any impairment.

Research and Development

An intangible asset arising from development (or from the development phase of an internal project) shall be recognised if, and only if, an entity can demonstrate that all of the following conditions are met:

• It is probable that the asset will create future economic benefits;

• The development costs can be measured reliably;

• Technical feasibility of completing the intangible asset can be demonstrated;

• There is the intention to complete the asset and use or sell it;

• There is the ability to use or sell the asset; and

• Adequate technical, financial and other resources to complete the development and to use the asset are available.

Subsequent to initial recognition, internally generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses on the same basis as intangible assets acquired separately.

Amortisation

Intangible assets, other than goodwill, are amortised on a straight line basis, to reduce their carrying value to their residual value, over their estimated useful lives. The following useful lives were applied during the year:

Computer software	up to 2 years
Intellectual property	up to 4 years
Research and development	up to 4 years

Methods of amortisation, residual values and useful lives are reviewed, and if necessary adjusted, at each balance sheet date.

Property, Plant and Equipment 

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses, if applicable. Depreciation on property, plant and equipment is charged on an asset's residual value over its useful economic life as follows:

Office equipment	up to 2 years
Fixtures and fittings	up to 4 years
Motor vehicles	up to 4 years

Residual values and useful lives are reviewed and adjusted, if appropriate, at each balance sheet date.

Share Capital

Financial instruments issued by the Group are treated as equity only to the extent that they do not meet the definition of a financial liability. The Group's ordinary shares are classified as equity instruments. The Group considers its capital to comprise its ordinary share capital, share premium and accumulated retained earnings. There have been no changes in what the Group considers to be capital since the previous period. 

The Group is not subject to any externally imposed capital requirements.

Cash and Cash Equivalents

For the purpose of preparation of the cash flow statement, cash and cash equivalents include cash at bank and in hand and short-term deposits with an original maturity period of three months or less. Bank overdrafts that are an integral part of a subsidiary's cash management are included in cash and cash equivalents where they have a legal right of set-off and there is an intention to settle net, against positive cash balances, otherwise bank overdrafts are classified as borrowings.

Taxation

The charge for current income tax is based on the results for the year as adjusted for items which are not taxed or disallowed. It is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred income tax is accounted for using the liability method in respect of temporary differences arising from differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements.

Deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference is due to goodwill arising on a business combination or from an asset or liability, the initial recognition of which does not affect either taxable or accounting income.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax is measured at the tax rates that are expected to apply in the periods when the timing differences are expected to reverse, based on tax rates and law enacted or substantively enacted at the balance sheet date. Deferred tax is charged or credited in the income statement, except when it relates to items credited or charged directly to shareholders' equity, in which case the deferred tax is also dealt with in shareholders' equity.

Provisions

Provisions are recognised when the Group has a present obligation in respect of a past event, where it is more likely than not that an outflow of resources will be required to settle the obligation, and where the amount can be reliably estimated.

Financial Instruments

The Group classifies financial instruments, or their component parts, on initial recognition as a financial asset, a financial liability or an equity instrument in accordance with the substance of the contractual arrangement.

Financial assets and financial liabilities are recognised on the Group's balance sheet when the Group becomes party to the contractual provisions of the instrument.

The particular recognition and measurement methods adopted for the Group's financial instruments are disclosed below:

Derivatives

In the normal course of its business, the Group is exposed to currency risk. Forward foreign exchange contracts are derivative instruments and are used by the Group to manage its currency risks.

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are also subsequently carried at fair value. The method of recognising the resulting gain or loss depends on whether the derivative is designated as an effective hedging instrument and the nature of the item being hedged.

Embedded Derivatives 

Some hybrid contracts contain both a derivative and a non-derivative component. In such cases, the derivative component is termed an embedded derivative. Where the economic characteristics and risks of the embedded derivatives are not closely related to those of the host contract, and the host contract itself is not carried at fair value through profit or loss, the embedded derivative is bifurcated and reported at fair value with gains and losses being recognised in the income statement. 

Profits or losses cannot be recognised on the initial recognition of embedded derivatives unless the host contract is also carried at fair value.

Fair Value Determination

Whenever available, the fair value of a financial instrument is derived from quoted prices in an active market. For assets held, fair value is the bid price and for liabilities held it is the asking price. If there is no active market, fair value is established by using a valuation technique. Valuation techniques include the use of information from recent arm's length market transactions between knowledgeable, willing parties, if available, reference to the current fair value of similar instruments and discounted cash flow analysis. The valuation technique used incorporates all factors that market participants would consider in setting a price and is consistent with accepted economic methodologies for pricing financial instruments.

Equity Instruments

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all its liabilities. Equity instruments issued by the company are recorded at the proceeds received, net of directly attributable issue costs.

Trade and Other Receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation and default or delinquency in payments are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset'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 within administrative expenses. When a trade receivable is uncollectible, it is written-off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written-off are credited against administrative costs in the income statement.

Trade and Other Payables

Trade and other payables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method.

Dividends

Final dividends are recognised as a liability in the period in which they are approved by the company's shareholders. Interim dividends are recognised when they are paid.

2. Reorganisation costs

	6 months to 30 June 2008 (unaudited)	6 months to 30 June 2007 (unaudited)	Year to    31 December 2007
	£'000	£'000	£'000
Provision for onerous contracts	-	-	(492)
	_______	_______	_______
Exceptional restructuring costs	-	-	(492)
	_______	_______	_______

3. Tax

	6 months to 30 June 2008 (unaudited)	6 months to 30 June 2007 (unaudited)	Year to    31 December 2007
	£'000	£'000	£'000
UK research & development tax credit	50	-	121
Overseas corporation tax (charge)	(11)	(5)	(8)
	_______	_______	_______
Current taxation	39	(5)	113
	_______	_______	_______

The UK research and development tax credit received represents a refund of tax due from research carried out in the year ended 31 December 2006. 

A potential deferred tax asset of £4,852,000 (December 2007 - £4,136,000, June 2007 - £3,735,000) in relation to unrelieved trading losses of £17,328,000 (December 2007 -£14,774,000, June 2007 - £12,852,000) has not been recognised due to the uncertainty of the recovery of this amount. 

4. Loss per share

	6 months to 30 June 2008 (unaudited)	6 months to 30 June 2007 (unaudited)	Year to    31 December 2007
	£'000	£'000	£'000
These have been calculated on losses of:	(2,776)	(1,530)	(2,970)
	_______	_______	_______
The weighted average number of shares:	135,838,946	54,045,109	68,197,584
Basic and diluted loss per ordinary share	( 2.0 p)	( 2.8 p)	( 4.4 p)
	_______	_______	_______

11,959,620 (June 2007: 3,017,371, December 2007: 4,959,075) potential ordinary shares have been excluded from the calculation of diluted loss per share because they would reduce loss per share.

5. Movements in Equity 

	Share capital	Share premium	Retained earnings (Accumulated loss)	Translation reserve	Total attributable to equity shareholders of the parent
	£'000	£'000	£'000	£'000	£'000
At 1 January 2007	364	10,066	(9,453)	-	977
Retained loss for the period	-	-	(1,530)	-	(1,530)
Currency translation difference	-	-	-	(2)	(2)
Adjustment for share based payments	-	-	(18)	-	(18)
Proceeds from placing	437	2,840	-	-	3,277
	____	_______	_______	_______	_______
At 30 June 2007	801	12,906	(11,001)	(2)	2,704
Retained loss for the period	-	-	(1,440)	-	(1440)
Adjusted Adjustment for share based payments	-	-	(22)	-	(22)
Currency translation difference	-	-	-	9	9
Acquisition of Assets	39	261	-	-	300
	____	_______	_______	_______	_______
At 31 December 2007	840	13,167	(12,463)	7	1,551
Retained loss for the period	-	-	(2,776)	-	(2,776)
Adjustment for share based payments	-	-	53	-	53
Proceeds from placing	631	2,362	-	-	2,993
Cumulative translation differences	-	-	-	14	14
	____	_______	_______	_______	_______
At 30 June 2008	1,471	15,529	(15,186)	21	1,835

6. Subsequent Events

On 10 September 2008 the company acquired the entire share capital of Axis Mobile Limited. AxisMobile Limited is the operating subsidiary of AxisMobile plc (AIM:AXIS). The acquisition was satisfied by the issue of 85,102,041 new ordinary shares of 1p each. In order to fund the combined business, 169,466,399 new ordinary 1p shares were placed at 3p per share raising £5.1m before expenses in two tranches. The first tranche of 30,000,000 shares was issued on 19 August 2008 with the second tranche of 139,466,399 being issued on 10 September 2008. 

In January 2008 the company issued 30,000,000 ordinary shares. Synchronica plc entered into an equity based swap to be settled over 24 months by reference to the Synchronica plc share price. The equity settlement conditions of this swap were postponed by 12 months as part of the 10 September fund raising. 

Synchronica has, since the balance sheet date, entered into a second equity based swap that retains much of the economic value of the shares issued. The company placed 21,666,666 shares to be settled over 12 months by reference to the Synchronica plc share price as part of the 10 September 2008 placing. A change in share price of 0.1p from the base level of 4p per share will lead to a change in receipts of £1,354 per month. In addition, the company issued 3,875,000 shares in lieu of fees for setting up the equity swap. 

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IR LAMPTMMATBIP