28th Jul 2006 07:02
Synchronica PLC28 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 ofmobile device management and synchronisation solutions, is pleased to announceits 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 furtherprogress towards our priority goal of delivering value to shareholders. Ourstrategy to create a product driven business is beginning to bear fruit and Iexpect the second half to produce additional revenue growth from the sales andmarketing effort of the last nine months." Commenting, Carsten Brinkschulte, Chief Executive Officer, said, "Our openstandard synchronisation and device management products are helpingmanufacturers, operators and enterprises to take full advantage of theexponential growth in mobile messaging and personal information services. Ourcontract win to supply our software to IXI Mobile's Ogo device - the firstaffordable mass market mobile e-mail device - is a good illustration of how wecan enable providers to deliver the services demanded by the global market." For more information please visit www.synchronica.com or contact: Synchronica plc Tavistock CommunicationsTel: +44 1580 830 033 Tel: +44 20 7920 3150 / +44 (0) 7966 477 256Carsten Brinkschulte, Chief Executive Simon HudsonOfficerAngus Dent, Chief Financial Officer Clemmie CarrNicole 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 toreport that the progress begun in 2005 has continued. Over the period we have maintained our focus on moving the business from a shortterm project driven company to one centred on four key products which canproduce long term stable, high quality revenues from global markets. We havemade good progress during the first half on all four of our products and areseeing increasing market traction. o SyncML Gateway , the synchronisation product for industry standardSyncML enabled phones, won 'Best of CeBIT Award 2006' in the mobile solutionscategory at the CeBIT fair in Hanover in March. During the period 26 contractswere won for SyncML Gateway - including a worldwide licensing agreement with IXIMobile Inc. for its Ogo(TM)family of mobile messaging solutions and an agreementto provide NetCom, a Norwegian mobile operator, with the ability to back-up andrestore customers' personal data over-the-air ("OTA"). IXI is providing thefirst 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 andrepair of SyncML enabled handsets. In April, we signed an OEM agreement withintegrated mobile software management developer Red Bend Software Inc. tointegrate SyncML DM Server with Red Bend's Firmware Management System to providemobile operators and device manufacturers with a comprehensive, SyncML-basedlifecycle management solution for handling OTA firmware updates. o Mobile Manager, our product to enable enterprises to remotely configureand control Smartphone fleets, saw 3 new resellers appointed and is now in usewith more than 50 customers worldwide, including a Tier 1 mobile operator in theUK. o ROM Builder, which significantly reduces the time-to-market ofSmartphones, 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-mailand personal information management will exceed US$600 million by 2009 with themobile 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 createa stable product based business from which we can generate high quality, longterm income streams. This process is underway and we are encouraged by theresults to date. However in these early stages of the restructuring processthere will evidently be a reduction in reported turnover compared to therevenues that were more immediately recognisable when the company was a projectfocused business. This is largely due to the fact that our products areincreasingly sold under license fee arrangements providing regular recurringrevenues over time. We have a healthy pipeline of opportunities with operators, manufacturers andcorporate customers around the world and are encouraged that we can close asufficient number of these to realise our revised objectives for the full year.Particular emphasis will be placed on closing some of the larger opportunitiesas early as possible in order that revenue can be maximised. Investment in the development, marketing and sales for all four of our productsis continuing. We have recruited additional staff, and we will continue to seekpeople of high calibre to strengthen our sales, marketing and development teams.We are also exploring strategic partnerships with other mobile software vendorsin order to improve our product offering and market penetration. Our costs in the first half have been carefully controlled and are less thanbudgeted, allowing us to report a better than expected period end cash balanceof £4.9 million. The results for the first half are broadly in line with our expectations. Havingre-organised the company's product portfolio in October 2005, we planned for asix to nine months sales cycle with operators and manufacturers. The firstcontracts have been won and we expect to see revenue from these contracts in thesecond half of the current year. While deal values from corporate customers arerelatively low, the sales cycle can be much shorter and we have seen goodrevenue from this source in the period. Our overall expectations for the year have been revised due to a discontinuedproject contract and greater emphasis on downstream recurring revenues. We are pleased with the progress we have made to date on our strategy totransform Synchronica into a product driven business capable of generating longterm revenues. Our products are beginning to gain acceptance in global marketsand have been validated by important partnering agreements and customer andcontract wins. Entering the second half of 2006, we are encouraged that we cancontinue to make progress towards our priority goal of delivering value toshareholders. 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 £'000Turnover 1 623 1,784 3,078 ======= ======= =======Operating (2,486) (1,206) (2,983)loss Interestreceivableless interestpayable 122 82 166 ------- ------- -------Loss onordinaryactivitiesbefore tax (2,364) (1,124) (2,817)Tax on lossonordinary activities 2 296 (4) 4 ------- ------- -------Loss onordinaryactivitiesafter tax (2,068) (1,128) (2,813) ======= ======= ======= Basic and diluted lossper ordinaryshare 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 £'000Loss on ordinary activitiesafter tax (2,068) (1,128) (2,813) ------- ======= =======Total recognised gains andlosses (2,068) (1,128) (2,813)related to the periodPrior period adjustment 8 (86) -------Total gains and losses sincethe 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 862Tangible assets 120 215 100 -------- -------- -------- Fixed Assets 913 1,062 962 -------- -------- -------- Stocks 16 108 19Debtors due after one year - 11 -Debtors due within one year 669 1,348 888Cash at bank and in hand 4,900 2,568 6,615 -------- -------- -------- Current Assets 5,585 4,035 7,522Creditors: Amounts falling duewithin one year (979) (904) (902) -------- -------- -------- Net current assets 4,606 3,131 6,620 -------- -------- -------- Total assets less currentliabilities 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 fromoperatingactivities 4 (2,064) (2,529) (3,518)Returns oninvestment andservicing offinance 122 82 149Taxation (paid) andreceived 296 (6) (6)Capital expenditureand financialinvestment (69) (156) (178)Acquisitions anddisposals - (349) (349) ------- ------- -------Net cash flowbefore 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 341European and other foreign markets 317 126 628North 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 taxdue from research carried out in the years ended 31 December 2003 and 31December 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 lossesof: (2,068) (1,128) (2,813) ======== ======== ======== The weighted average number of sharesused was: 36,365,675 18,665,000 21,777,390 ======== ======== ======== Basic and diluted loss per ordinaryshare (5.7p) (6.0p) (12.9p) ======== ======== ======== 4. Reconciliation of Operating Loss to Net Cash Outflow from OperatingActivities. 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 114Depreciation of tangible assets 49 55 98Profit on sale of tangible fixedassets - - 5Share based transactions 5 22 83Change in stocks 3 (80) 10Change 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) 1,103Cash outflow from decrease in leasefinance 14 20 41 -------- -------- --------Movement in net funds (1,701) (2,905) 1,144Net 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 £'000At 31 December 2005 7,582Retained loss for the period (2,068)Prior period adjustment for share based payments (86)Adjustment for share based payments - prior years 86Adjustment for share based payments - current period 5New Ordinary shares allotted 173Capital 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 lossfor the period - (2,068) - - (2,068)Prior periodadjustment forshare basedpayments - (86) - - (86)Adjustment forshare basedpayments -prior years - 86 - - 86Adjustment forshare basedpayments -current period - 5 - - 5New Ordinarysharesallotted - - - 173 173Capital to beissuedreleased - - (173) - (173) ------ ------ ------- ------- -------At 30 June 364 (4,911) - 10,066 5,5192006 ====== ====== ======= ======= ======= 8. Interim Report This interim report was approved by the Board on 27 July 2006. It is not thecompany's statutory accounts. It has been prepared using accounting policiesthat are consistent with those adopted in the statutory accounts for the yearended 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 ofemployee share options are recognised in the profit and loss account with thecorresponding entry increasing equity. The fair value is recognised over theperiod during which the employees become unconditionally entitled to theoptions. 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 periodadjustment 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 January2006. The figures for the period to 30 June 2005 have been restated to reflect thepurchase of intangible assets acquired previously included in goodwill. Theeffect 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 statutoryaccounts for that year as restated for the recognition of the fair value ofemployee share option scheme. The statutory accounts for the year ended 31December 2005 have been delivered to the Registrar of Companies and received anaudit 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 31December 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 forthe six months ended 30 June 2006 which comprises consolidated profit and lossaccount, consolidated balance sheet, consolidated statement of total recognisedgains and losses, consolidated cash flow statement and related notes. We haveread the other information contained in the interim report and consideredwhether it contains any apparent misstatements or material inconsistencies withthe financial information. This report is made solely to the company havingregard to guidance contained in Bulletin 1999/4 'Review of interim financialinformation' issued by the Auditing Practices Board. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone other thanthe company, for our work, for this report, or for the conclusions we haveformed. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report in accordance with the AIMRules. The directors are also responsible for ensuring that the accountingpolicies and presentation applied to the interim figures are consistent withthose applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Review work performed We conducted our review having regard to guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom. A reviewconsists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the accounting policies and presentationhave been consistently applied, unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with International Standards on Auditing (UK andIreland) 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 thatshould be made to the financial information as presented for the six monthsended 30 June 2006. RSM Robson Rhodes LLP Chartered Accountants London, England 27 July 2006 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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