Interim Results
Synchronica PLC
10 September 2007
Synchronica plc
("Synchronica" or "the Company")
Interim results for the six months to 30 June 2007
Synchronica, the mobile synchronisation and device management company, announces
its Interim results for the six months to 30 June 2007.
Highlights
• OEM contracts with SmartTrust and Sun Microsystems validate the business
model.
• Successful fund-raising of £3.5m.
• Increased revenue by 22% £0.8m (2006; £0.6m).
• Decreased loss by 25% £1.5m (2006: £2.0m).
• Mobile Gateway 3.0 wins Mobile Service award at the eco Internet awards
2007.
Commenting on progress in 2007, Carsten Brinkschulte, CEO of Synchronica, said:
"The hard work of the last 18 months, in which Synchronica has been transformed
from top to bottom, has now begun to pay off. Our improved financial performance
as well as the major licensing deals we recently signed with Sun Microsystems
and SmartTrust are further evidence that our products are well-respected and our
strategy is correct. The Company is making significant progress, and we are
confident that this will continue in the second half and beyond."
The Company is in the early stages of negotiating further OEM contracts with
significant and well known device manufacturers that would, should they come to
fruition, have a material positive impact on the prospects of the Company.
Enquiries:
Synchronica plc
Carsten Brinkschulte, CEO +44 (0) 1892 552 799
+44 (0) 7977 256 406
Angus Dent, CFO +44 (0) 1892 552 760
+44 (0) 7977 256 347
Corfin Communications
Ben Hunt, Harry Chathli +44 (0) 20 7977 0020
Seymour Pierce Limited
David Newton +44 (0) 20 7107 8000
Chairman's Statement
During the first six months of 2007, Synchronica began to see the hard work of
the past 18 months, in which the Company has been transformed into a wireless
software products provider, bear fruit.
In March, Synchronica successfully completed the placing of 43.5m new shares,
raising £3.5m before expenses for use in accelerating the growth of our software
business.
Review of Operations
Commercial interest in the Company's two products, Synchronica Mobile Gateway,
which offers push e-mail and synchronisation for the mass market based on
industry standards, and Synchronica Mobile Manager, a device management suite
featuring over-the-air configuration, update and security, has never been
higher.
New business leads from device manufacturers, network operators and other
corporate customers have increased significantly as the commercial viability and
strength of our offering has been recognised by the industry.
Contract Success
Evidence of this progress came, both in the period under review and soon after,
with the announcement of two major OEM agreements.
In the period, SmartTrust, a leader in mobile device management solutions
licensed a key component of our Mobile Manager Suite for a license fee of EUR
800,000 and entered a professional services contract with a value of up to EUR
200,000 per annum.
In August, Sun Microsystems, one of the largest infrastructure suppliers to the
telecoms industry, licensed key elements of our Mobile Gateway product and
intends to integrate our technology into multiple products. Synchronica will
receive an initial license fee of US $1.8m upon acceptance of the first major
version plus basic and per-incident support fees. Potentially even more
valuable, Sun can purchase additional per-user licenses of up to US $2.40 per
user per annum. The Sun Java Communications Suite, one of the products which is
scheduled to use our technology, provides over 240 million mailboxes to leading
service providers and large enterprises worldwide. Sun claims to be the market
leader in the service provider segment with 36% revenue share and 14% installed
base share.
These two deals are the largest and highest profile in the short history of
Synchronica as a software products company. Aside from their financial impact,
these deals are a ringing endorsement of our technology and validate the
positive competitive positioning of our products in the market.
Outstanding Product: Mobile Gateway
Synchronica is gaining traction in two particular areas with its Mobile Gateway
software: OEM agreements with both service providers and device manufacturers
and with network operators particularly in emerging markets.
In both of these areas, potential customers are attracted to Synchronica by its
unique combination of SyncML (OMA DS), which allows the synchronisation of
contacts and calendars, and the Push-IMAP functionality which facilitates mobile
e-mail.
This combination of industry standards enables Mobile Gateway to support email
and synchronisation on a wide range of devices that extends beyond Smartphones
to mass market Feature phones. Synchronica's competitive advantage is that as we
use open industry standards and do not require the installation of software on
the device we are not limited to the relatively small smart phone section of the
market but can address the whole market; including mass market feature phones.
Emerging Markets Prospects
Support for mass-market feature phones however, is a particularly important
driver of business prospects in emerging markets, where Synchronica believes it
is now well-positioned for success. Typically these markets are characterised by
a lack of wireline infrastructure to consumers and the low penetration of PCs.
Synchronica offer a mobile, and cost effective from both the users and operators
perspectives, alternative to accessing e-mail in internet cafes.
Particularly in emerging countries mobile phone penetration tends to be higher
than PC penetration and is growing quickly; Synchronica is attracting increasing
interest from network operators who recognise the value to their subscribers,
and the additional revenue they can generate for themselves, by offering
subscribers access to their e-mails on their mobile phones removing the need to
go to an internet cafe. We have received a substantial number of requests both
for information (RFI) for quotations (RFQ) from emerging market operators during
the period and this continues.
Mobile Gateway Trial
We now offer a free 60-day trail of our Mobile Gateway, at
www.trymobilegateway.com. The level of take up has been higher than we expected
and we have received many favourable comments from users, particularly from
users of the much publicised Apple iPhone. This trial is an important element of
our marketing and PR strategy and has raised the visibility of the company in
the general media.
Changes to the Board
This is my first statement as Chairman; it was a pleasure to join the Board of
Synchronica in April and to be elected Chairman in August 2007. My appointment
followed the resignation of John Gunn, a longstanding member of the Board and
former Chairman. My election as Chairman followed David Wickham's resignation as
Chairman. Both resignations resulted from the pressure of other business
commitments and I would like to take this opportunity to thank both for their
contribution to Synchronica. The involvement of both John and David with
Synchronica continues; John and his family remain significant shareholders in
Synchronica and David continues as a Non-Executive Director.
Financial Review
These interim results are Synchronica's first results based on International
Accounting Standards ("IFRS"). The Company will make its first full disclosure
under IFRS when it reports its results to 31st December 2007. Previously we
reported in accordance with UK GAAP. The impact of this change, which is small,
is explained in the notes to the financial statements.
I am pleased to say that revenue has increased by 22% compared with the same
period in 2006 and this coupled with our reduced cost base has allowed us to
narrow our losses by 25%, again when compared with the same period in 2006.
Our cash position was much improved by the fund raising in March 2007 and our
rate of cash burn has declined.
Outlook
The recent licensing deals the Company has signed with SmartTrust and Sun
Microsystems offer significant validation of the strength of our products and
that our strategy for growth is correct. The upturn in interest in our products
from network operators, service providers and device manufacturers that we
experienced in the first half acts as further evidence of this, and we are
optimistic that this interest in our products can be converted into further
contract wins and that the Company will meet market expectations for the full
year.
David Mason
Chairman
September 10, 2007
Consolidated Income Statement
Note 6 Months to 6 Months to Year to
30 Jun '07 30 Jun '06 31 Dec '06
(Unaudited) (Restated & (Restated &
unaudited) unaudited)
£'000 £'000 £'000
Revenue 1 762 623 1,068
Administrative costs (2,338) (3,082) (6,969)
Exceptional restructuring
costs 2 - - (529)
Exceptional Impairment of
goodwill 2 - - (661)
Operating loss (1,576) (2,459) (7,091)
Net interest receivable 51 122 140
Loss before tax (1,525) (2,337) (6,951)
Taxation 3 (5) 296 296
Loss after tax attributable to
holders of the parent (1,530) (2,041) (6,655)
Basic and diluted loss per
ordinary share from continuing
operations 4 (2.8)p (5.6)p (18.3)p
Consolidated Balance Sheet
Note As at As at As at
30 Jun '07 30 Jun '06 31 Dec '06
(Unaudited) (Restated & (Restated &
unaudited) unaudited)
£'000 £'000 £'000
Goodwill - 583 -
Other intangible assets 143 297 196
Property plant and equipment 66 69 94
Non current assets 209 949 290
Trade and other receivables 1,054 685 501
Cash and cash equivalents 2,322 4,900 2,086
Current assets 3,376 5,585 2,587
TOTAL ASSETS 3,585 6,534 2,877
Trade payables 248 228 571
Accruals and deferred income 454 695 898
Other current liabilities 70 97 212
Provisions due within one year 93 - 155
Current liabilities 865 1,020 1,836
Provisions due after more than one year 16 - 64
Total Liabilities 881 1,020 1,900
Ordinary share capital 801 364 364
Share premium account 12,906 10,066 10,066
Retained earnings (11,001) (4,920) (9,453)
Cumulative translation differences (2) 4 -
Equity attributable to shareholders 6
of parent entity 2,704 5,514 977
TOTAL EQUITY AND LIABILITIES 3,585 6,534 2,877
Consolidated Cash Flow Statement
6 Months to 6 Months to Year to
Note 30 Jun '07 30 Jun '06 31 Dec '06
(Unaudited) (Restated & (Restated &
unaudited) unaudited)
£'000 £'000 £'000
Cash flow from operating
activities
Cash generated from operations 5 (3,084) (2,068) (4,780)
Interest received 51 122 195
Taxation (paid) and received (5) 300 300
Net cash from operating (3,038) (1,646) (4,285)
activities
Cash flow from investing
activities
Acquisition of subsidiaries net
of cash acquired - - (25)
Proceeds from sale of property
plant and equipment - - 6|
Purchase of intangible assets - (45) (77)
Purchase of property plant and
equipment - (24) (82)
Net cash from investing
activities - (69) (178)
Cash flow from financing
activities
Net proceeds from issue of
ordinary share capital 3,277 - -
Finance lease principle
payments (1) - (17)
Net cash from financing
activities 3,276 - (17)
Effects of exchange rate (2) (49)
changes on cash balances
Net decrease/increase in cash
and cash equivalents 236 (1,715) (4,529)
Cash and cash equivalents at 1
January 2,086 6,615 6,615
Cash and cash equivalents at
period end 2,322 4,900 2,086
Notes to the Interim Financial Information
1. Accounting Policies
Basis of preparation
Synchronica has previously prepared its financial statements under UK Generally
Accepted
Accounting Principles ('UK GAAP'). In common with other AIM traded Companies
Synchronica is required, from 1st January 2007, to prepare its consolidated
financial statements in accordance with International Financial Reporting
Standards ('IFRS'). Accordingly, this interim financial report has been prepared
using accounting policies consistent with those which management expects to
apply in the Group's first IFRS Annual Report and Accounts for the year ending
31 December 2007.
IFRS currently in issue are subject to ongoing review and endorsement by the
European Commission, or possible amendment by the IASB, and are therefore
subject to possible change. Further standards or interpretations may also be
issued that could be applicable for the full year consolidated financial
statements. These potential changes could result in the need to change the basis
of accounting or presentation of certain financial information from that
presented in this document.
The disclosures required by IFRS 1, First Time Adoption of International
Financial Reporting Standards, are set out below.
First-time adoption
The general principle that should be applied on first-time adoption of IFRS is
that standards are applied with full retrospective effect. IFRS 1 First-time
Adoption of International Financial Reporting Standards, sets out certain
mandatory exceptions to retrospective application and certain optional
exemptions. The optional exemptions adopted by the Group are set out below;
(i) not to restate its business combinations made prior to 1 January 2006 to
comply with IFRS 3 Business Combinations;
(ii) to apply IFRS 2 Share-based Payments only to awards granted after 7
November 2002 and not vested by 1 January 2006; and
(iii) to deem cumulative translation differences for all foreign operations to
be £nil at 1 January 2006.
Impact of transition
The application of IFRS has a broadly neutral impact on profit before tax and
earnings (Notes 7 - 11). The principal differences for the Group between
reporting on the basis of UK GAAP and IFRS are as follows:
(i) ceasing to amortise goodwill but instead testing for impairment at least
annually; for the year ended 31 December 2006 amortisation of £62,540 under UK
GAAP has been added back. As at 31 December 2006 goodwill was fully impaired. As
a result under IFRS the increase in the value of goodwill added back is written
off as impairment. The effect on the year to 2006 is nil and reduces the loss
for the six months to 30 June 2006 by £31,270.
(ii) recognising the full annual leave liability on the balance sheet, the
movement in the accrual to the income statement; the initial recognition of the
liability as at 1 January 2006 is £36,000. In the six months to 30 June 2007 the
liability increased by £21,000 (£5,000 in the six months to 30 June 2006). The
year to 31 December 2006 there was no movement from the initial recognition,
leaving no effect on the loss for the year.
Basis of consolidation
The consolidated financial statements comprise the financial statements of the
parent company and its subsidiary undertakings (defined as where the Group has
control). Control is where the company has the power to govern the financial and
operating policies of an entity so as to obtain the benefits from its
activities. The financial statements of subsidiaries are prepared as of the same
reporting date as the parent company, using consistent accounting policies.
The results of subsidiaries are consolidated, using the purchase method of
accounting, from the date on which control of the net assets and operations of
the acquired company are effectively transferred to the Group. Similarly, the
results of subsidiaries divested cease to be consolidated from the date on which
control of the net assets and operations are transferred out of the Group.
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.
Notes to the Interim Financial Information
1. Accounting Policies (continued)
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 difference between average rate and closing
rate is not materially significant. All other translation differences are taken
to the income statement with the exception of differences on foreign currency
borrowings to the extent that they are used to finance or provide a hedge
against Group equity investments in foreign enterprises, which are taken
directly to reserves together with the exchange difference on the net investment
in these enterprises. Tax charges and credits attributable to exchange
differences on those borrowings are also dealt with in reserves.
Leases
Assets held under finance leases, which are leases where substantially all the
risks and rewards of ownership of the asset have passed to the group, are
capitalised in the balance sheet at the lower of fair value at the inception of
the lease and the present value of the minimum lease payments. They are
depreciated over the shorter of their useful economic lives or lease term. The
capital elements of future obligations under leases are included as liabilities
in the balance sheet. The interest elements of the rental obligations are
charged to the income statement over the period of the leases and represent a
constant proportion of the balance of capital repayments outstanding.
Rentals paid under operating leases are charged to income on a straight line
basis over the term of the lease.
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 form software licences, customer support and other
services. 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 fine 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 the 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 value of the awards are measured at the date at which they are granted
using a trinomial model except in the case of options with a market based
condition, which are valued using a Monte-Carlo simulation option-pricing model.
Notes to the Interim Financial Information
1. Accounting Policies (continued)
Intangible assets - goodwill
Goodwill arising on the acquisition of subsidiary undertakings and businesses,
representing any excess of the fair value of the consideration given over the
fair value of the identifiable assets and liabilities acquired is capitalised
and provision is made for any impairment.
Goodwill is allocated to cash generating units for the purpose of impairment
testing. The recoverable amount of the cash-generating unit to which the
goodwill relates is tested annually for impairment or when events or changes in
circumstances indicate that it might be impaired.
In an impairment test, the recoverable amount of the cash-generating unit or
asset is estimated to determine the extent of any impairment loss. The
recoverable amount is the higher of the fair value less costs to sell and the
value in use in the Group. An impairment loss is recognised to the extent that
the carrying value exceeds the recoverable amount.
In determining a cash-generating unit's value in use, estimated future cash
flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and risks
specific to the cash-generating unit or asset that have not already been
included in the estimate of future cash flows.
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
In common with most businesses at a similar stage of their evolution expenditure
on research and development activities continues to be recognised as an expense
in the income statement in the period in which it is incurred. An internally
generated intangible asset arsing from the development of software is recognised
only when 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.
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 provided down to an asset's residual value over its useful economic
life as follows:
Fixtures, fittings and equipment 4 years
Office equipment 2 years
Motor vehicles 4 years
Residual values end useful lives are reviewed and adjusted, if appropriate, at
each balance sheet date.
Notes to the Interim Financial Information
1. Accounting Policies (continued)
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.
Trade receivables and trade payables
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 selling and 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 payables are recognised initially at fair value and subsequently measured
at amortised cost using the effective interest method.
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. Analysis of the provisions is provided in note 2 below.
2. Exceptional items
The exceptional administrative expenses represents £300,000 (2005:nil) cost of
redundancy; £229,000 (2005:nil) cost of onerous contracts resulting from the
company restructuring in December 2006 including the closure of one site; and
£599,000 (2005:nil) of impairment losses deducted from intangible assets.
3. Tax
6 Months 6 Months Year
to to to
30 Jun '07 30 Jun '06 31 Dec '06
(Unaudited) (Restated & (Restated &
unaudited) unaudited)
£'000 £'000 £'000
UK research & development tax credit - 300 300
Overseas corporation tax (charge)/ credit (5) (4) (4)
Current taxation (5) 296 296
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.
A potential deferred tax asset of £3,972,000 (December 2006: 3,677,000, June
2006:2,304,000) in relation to unrelieved trading losses of £13,698,000
(December 2006: 12,269,000, June 2006:7,681,000 ) has not been recognised due to
the uncertainty of the recovery of this amount. A deferred tax asset of £23,000
(December 2006: 25,000, June 2006:28,000) in respect of fixed asset timing
differences has also not been recognised.
4. Loss Per Share
6 Months 6 Months Year
to to to
30 Jun '07 30 Jun '06 31 Dec '06
(Unaudited) (Restated & (Restated &
unaudited) unaudited)
£'000 £'000 £'000
These have been calculated on
losses of: (1,530) (2,041) (6,655)
The weighted average number of
shares: 54,045,109 36,365,890 36,383,126
Basic & diluted loss per ordinary
share ( 2.8 p) ( 5.6 p) ( 18.3 p)
Weighted average dilutive
securities 3,564,799 3,017,371 2,899,442
The weighted average number of
diluted securities 57,609,908 39,383,261 39,282,568
Basic and diluted loss per share are the same, as the effect of all potential
ordinary shares is not dilutive. The dilutive securities are employee share
options and share warrants.
5. Reconciliation of Operating Loss to Net Cash Outflow from Operating
Activities.
6 Months 6 Months Year
to to to
30 Jun '07 30 Jun '06 31 Dec '06
(Unaudited) (Restated & (Restated &
unaudited) unaudited)
£'000 £'000 £'000
Loss after tax (1,530) (2,041) (6,655)
Adjustments for:
Tax 5 (296) (296)
Depreciation 28 42 69
Profit on disposal of property
plant & equipment - - 1
Impairment of goodwill - - 603
Impairment of intangibles - - 58
Amortisation of intangibles 53 44 120
Interest income (51) (122) (189)
Share based transactions (18) 5 86
Effects of exchange rate changes (2) - -
Change in debtors (553) 222 406
Change in creditors (908) 78 749
Change in provisions (110) - 219
Cash generated from operations (3,084) (2,068) (4,780)
6. Statement of Changes in Equity (Restated and unaudited)
Share Retained Share Cumulative Total
capital earnings premium Translation attributable
Difference to equity
shareholders
of the
parent
(£000s) (£000s) (£000s) (£000s) (£000s)
At 1 January 2006 364 (2,884) 10,066 - 7,546
Retained loss for the
period - (2,041) - - (2,041)
Exchange differences
arising on translation of
foreign operations - - - 4 4
Total of recognised income
and expense for the period - (2,041) - 4 (2,037)
Adjustment for share based
payments / total changes
in equity in the period - 5 - - 5
At 30 June 2006 364 (4,920) 10,066 4 5,514
Retained loss for the
period - (4,614) - - (4,614)
Exchange differences
arising on translation of
foreign operations - - - (4) (4)
Total of recognised income 364 (9,534) 10,066 - (4,618)
and expense for the period
Adjustment for share based
payments / total changes
in equity in the period - 81 - - 81
At 31 December 2006 364 (9,453) 10,066 - 977
Retained loss for the
period - (1,530) - - (1,530)
Exchange differences
arising on translation of
foreign operations - - - (2) (2)
Total of recognised income
and expense for the period - (1,530) - (2) (1,532)
Adjustment for share based
payments - (18) - - (18)
New ordinary shares
allotted 437 - 2,840 - 3,277
Total changes in equity in
the period 437 (18) 2,840 - 3,259
At 30 June 2007 801 (11,001) 12,906 (2) 2,704
7. Reconciliation of equity at 1 January 2006 (Date of Transition to IFRS)
Note As at 01 Effect of As at '06
Jan '06 transition 01 Jan
UK GAAP to IFRS IFRS
£'000 £'000 £'000
Goodwill 578 - 578
Intangible assets a 284 13 293
Property plant and equipment a 100 (13) 91
Non current assets 962 - 962
Trade and other receivables 907 - 907
Cash and cash equivalents 6,615 - 6,615
Current assets 7,522 - 7,522
TOTAL ASSETS 8,484 - 8,484
Trade payables 254 - 254
Accruals and deferred income b 509 36 545
Other current liabilities 139 - 139
Current liabilities 902 36 938
Provisions - - -
Total liabilities 902 36 938
Equity attributable to 7,582 (36) 7,546
shareholders of parent entity
TOTAL EQUITY AND LIABILITIES 8,484 - 8,484
8. Reconciliation of profit for the six months to 30 June 2006
£'000
Loss retained under UK GAAP (2,068)
Amortisation of goodwill 31
Amortisation of intangibles (6)
Depreciation 7
Provision for holiday pay (5)
Retained loss reported under IFRS (2,041)
9. Reconciliation of equity at 30 June 2006
Note As at Effect of As at
30 Jun '06 transition 30 Jun'06
UK GAAP to IFRS IFRS
£'000 £'000 £'000
Goodwill c 547 36 583
Intangible assets a 246 51 297
Property plant and equipment a 120 (51) 69
Non current assets 913 36 949
Trade and other receivables 685 - 685
Cash and cash equivalents 4,900 - 4,900
Current assets 5,585 - 5,585
TOTAL ASSSETS 6,498 36 6,534
Trade payables 228 - 228
Accruals and deferred income b 654 41 695
Other current liabilities 97 - 97
Current liabilities 979 41 1,020
Provisions - - -
Total liabilities 979 41 1,020
Equity attributable to
shareholders of parent entity 5,519 (5) 5,514
TOTAL EQUITY AND LIABILITIES 6,498 36 6,534
10. Reconciliation of profit for the year to 31 December 2006
£'000
Retained loss reported under UK GAAP (6,951)
Amortisation of goodwill 62
Additional impairment of goodwill (62)
Amortisation of intangibles (37)
Depreciation 37
Provision for holiday pay -
Retained loss reported under IFRS (6,951)
11. Reconciliation of equity at 31 December 2006
Note As at Effect of As at
31 Dec '06 transition 31 Dec '06
UK GAAP to IFRS IFRS
£'000 £'000 £'000
Goodwill - - -
Intangible assets a 143 53 196
Property plant and equipment a 147 (53) 94
Non current assets 290 - 290
Trade and other receivables 501 - 501
Cash and cash equivalents 2,086 - 2,086
Current assets 2,587 - 2,587
TOTAL ASSETS 2,877 - 2,877
Trade payables 571 - 571
Accruals and deferred income b 862 36 898
Other current liabilities 212 - 212
Current liabilities 1,645 36 1,681
Provisions 219 - 219
Total liabilities 1,864 36 1,900
Equity attributable to
shareholders of parent entity 1,013 (36) 977
TOTAL EQUITY AND LIABILITIES 2,877 - 2,877
a. Denotes the cumulative net book value of software to be transferred from
property, plant and equipment to intangible assets.
b. Provision for holiday pay
c. Goodwill amortisation of £31,270 is added back. In addition the translation
adjustment of goodwill on the acquisition of Synchronica Software GmbH is
£5,000.
12. Interim Report
This interim report was approved by the Board on 7 September 2007 based on
International Financial Reporting Standards. It is not the company's statutory
accounts. It has been prepared using accounting policies as set out above.
The statutory accounts for the year ended 31 December 2006, prepared under UK
GAAP, have been delivered to the Registrar of Companies and received an audit
report which was unqualified and did not contain statements under s237(2) or
s237(3) of the Companies Act 1985 and did not include references to any matters
to which the auditors drew attention by way of emphasis without qualifying their
reports. The IFRS restatement for the year ended 31 December 2006 is unaudited.
The six months results for both years are unaudited.
Independent Review Report to Synchronica PLC
Report of the independent auditors
Introduction
We have been instructed by the company to review the financial information for
the six months ended 30 June 2007 set out on pages 4 to 17. 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.
Our report has been prepared in accordance with the terms of our engagement to
assist the company in meeting the requirements of the rules of the London Stock
Exchange for companies trading securities on the Alternative Investment Market
and for no other purpose. No person is entitled to rely on this report unless
such a person is a person entitled to rely upon this report by virtue of and for
the purpose of our terms of engagement or has been expressly authorised to do so
by our prior written consent. Save as above, we do not accept responsibility for
this report to any other person or for any other purpose and we hereby expressly
disclaim any and all such liability.
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 rules of the
London Stock Exchange for companies trading securities on the Alternative
Investment Market which require that the half-yearly report be presented in a
form consistent with that which will be adopted in the company's annual accounts
having regard to the accounting standards applicable to such annual accounts.
This interim report has been prepared in accordance with the basis set out in
note 1. The accounting policies are consistent with those that the Directors
intend to use in the next annual financial statements.
Review work performed
We conducted our review in accordance with 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 United Kingdom Auditing Standards 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 2007.
BDO Stoy Hayward LLP
Chartered Accountants
Gatwick
Date
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