10th Sep 2007 07:02
Synchronica PLC10 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, announcesits 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 transformedfrom top to bottom, has now begun to pay off. Our improved financial performanceas well as the major licensing deals we recently signed with Sun Microsystemsand SmartTrust are further evidence that our products are well-respected and ourstrategy is correct. The Company is making significant progress, and we areconfident that this will continue in the second half and beyond." The Company is in the early stages of negotiating further OEM contracts withsignificant and well known device manufacturers that would, should they come tofruition, have a material positive impact on the prospects of the Company. Enquiries: Synchronica plcCarsten Brinkschulte, CEO +44 (0) 1892 552 799 +44 (0) 7977 256 406Angus Dent, CFO +44 (0) 1892 552 760 +44 (0) 7977 256 347 Corfin CommunicationsBen Hunt, Harry Chathli +44 (0) 20 7977 0020 Seymour Pierce LimitedDavid Newton +44 (0) 20 7107 8000 Chairman's Statement During the first six months of 2007, Synchronica began to see the hard work ofthe past 18 months, in which the Company has been transformed into a wirelesssoftware 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 softwarebusiness. 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 onindustry standards, and Synchronica Mobile Manager, a device management suitefeaturing over-the-air configuration, update and security, has never beenhigher. New business leads from device manufacturers, network operators and othercorporate customers have increased significantly as the commercial viability andstrength 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 solutionslicensed a key component of our Mobile Manager Suite for a license fee of EUR800,000 and entered a professional services contract with a value of up to EUR200,000 per annum. In August, Sun Microsystems, one of the largest infrastructure suppliers to thetelecoms industry, licensed key elements of our Mobile Gateway product andintends to integrate our technology into multiple products. Synchronica willreceive an initial license fee of US $1.8m upon acceptance of the first majorversion plus basic and per-incident support fees. Potentially even morevaluable, Sun can purchase additional per-user licenses of up to US $2.40 peruser per annum. The Sun Java Communications Suite, one of the products which isscheduled to use our technology, provides over 240 million mailboxes to leadingservice providers and large enterprises worldwide. Sun claims to be the marketleader in the service provider segment with 36% revenue share and 14% installedbase share. These two deals are the largest and highest profile in the short history ofSynchronica as a software products company. Aside from their financial impact,these deals are a ringing endorsement of our technology and validate thepositive competitive positioning of our products in the market. Outstanding Product: Mobile Gateway Synchronica is gaining traction in two particular areas with its Mobile Gatewaysoftware: OEM agreements with both service providers and device manufacturersand with network operators particularly in emerging markets. In both of these areas, potential customers are attracted to Synchronica by itsunique combination of SyncML (OMA DS), which allows the synchronisation ofcontacts and calendars, and the Push-IMAP functionality which facilitates mobilee-mail. This combination of industry standards enables Mobile Gateway to support emailand synchronisation on a wide range of devices that extends beyond Smartphonesto mass market Feature phones. Synchronica's competitive advantage is that as weuse open industry standards and do not require the installation of software onthe device we are not limited to the relatively small smart phone section of themarket but can address the whole market; including mass market feature phones. Emerging Markets Prospects Support for mass-market feature phones however, is a particularly importantdriver of business prospects in emerging markets, where Synchronica believes itis now well-positioned for success. Typically these markets are characterised bya lack of wireline infrastructure to consumers and the low penetration of PCs.Synchronica offer a mobile, and cost effective from both the users and operatorsperspectives, alternative to accessing e-mail in internet cafes. Particularly in emerging countries mobile phone penetration tends to be higherthan PC penetration and is growing quickly; Synchronica is attracting increasinginterest from network operators who recognise the value to their subscribers,and the additional revenue they can generate for themselves, by offeringsubscribers access to their e-mails on their mobile phones removing the need togo to an internet cafe. We have received a substantial number of requests bothfor information (RFI) for quotations (RFQ) from emerging market operators duringthe period and this continues. Mobile Gateway Trial We now offer a free 60-day trail of our Mobile Gateway, atwww.trymobilegateway.com. The level of take up has been higher than we expectedand we have received many favourable comments from users, particularly fromusers of the much publicised Apple iPhone. This trial is an important element ofour marketing and PR strategy and has raised the visibility of the company inthe general media. Changes to the Board This is my first statement as Chairman; it was a pleasure to join the Board ofSynchronica in April and to be elected Chairman in August 2007. My appointmentfollowed the resignation of John Gunn, a longstanding member of the Board andformer Chairman. My election as Chairman followed David Wickham's resignation asChairman. Both resignations resulted from the pressure of other businesscommitments and I would like to take this opportunity to thank both for theircontribution to Synchronica. The involvement of both John and David withSynchronica continues; John and his family remain significant shareholders inSynchronica and David continues as a Non-Executive Director. Financial Review These interim results are Synchronica's first results based on InternationalAccounting Standards ("IFRS"). The Company will make its first full disclosureunder IFRS when it reports its results to 31st December 2007. Previously wereported 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 sameperiod in 2006 and this coupled with our reduced cost base has allowed us tonarrow 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 ourrate of cash burn has declined. Outlook The recent licensing deals the Company has signed with SmartTrust and SunMicrosystems offer significant validation of the strength of our products andthat our strategy for growth is correct. The upturn in interest in our productsfrom network operators, service providers and device manufacturers that weexperienced in the first half acts as further evidence of this, and we areoptimistic that this interest in our products can be converted into furthercontract wins and that the Company will meet market expectations for the fullyear. 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 196Property plant and equipment 66 69 94 Non current assets 209 949 290 Trade and other receivables 1,054 685 501Cash 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 571Accruals and deferred income 454 695 898Other current liabilities 70 97 212Provisions 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 364Share premium account 12,906 10,066 10,066Retained 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 GenerallyAccepted Accounting Principles ('UK GAAP'). In common with other AIM traded CompaniesSynchronica is required, from 1st January 2007, to prepare its consolidatedfinancial statements in accordance with International Financial ReportingStandards ('IFRS'). Accordingly, this interim financial report has been preparedusing accounting policies consistent with those which management expects toapply in the Group's first IFRS Annual Report and Accounts for the year ending31 December 2007. IFRS currently in issue are subject to ongoing review and endorsement by theEuropean Commission, or possible amendment by the IASB, and are thereforesubject to possible change. Further standards or interpretations may also beissued that could be applicable for the full year consolidated financialstatements. These potential changes could result in the need to change the basisof accounting or presentation of certain financial information from thatpresented in this document. The disclosures required by IFRS 1, First Time Adoption of InternationalFinancial Reporting Standards, are set out below. First-time adoption The general principle that should be applied on first-time adoption of IFRS isthat standards are applied with full retrospective effect. IFRS 1 First-timeAdoption of International Financial Reporting Standards, sets out certainmandatory exceptions to retrospective application and certain optionalexemptions. The optional exemptions adopted by the Group are set out below; (i) not to restate its business combinations made prior to 1 January 2006 tocomply with IFRS 3 Business Combinations; (ii) to apply IFRS 2 Share-based Payments only to awards granted after 7November 2002 and not vested by 1 January 2006; and (iii) to deem cumulative translation differences for all foreign operations tobe £nil at 1 January 2006. Impact of transition The application of IFRS has a broadly neutral impact on profit before tax andearnings (Notes 7 - 11). The principal differences for the Group betweenreporting on the basis of UK GAAP and IFRS are as follows: (i) ceasing to amortise goodwill but instead testing for impairment at leastannually; for the year ended 31 December 2006 amortisation of £62,540 under UKGAAP has been added back. As at 31 December 2006 goodwill was fully impaired. Asa result under IFRS the increase in the value of goodwill added back is writtenoff as impairment. The effect on the year to 2006 is nil and reduces the lossfor the six months to 30 June 2006 by £31,270. (ii) recognising the full annual leave liability on the balance sheet, themovement in the accrual to the income statement; the initial recognition of theliability as at 1 January 2006 is £36,000. In the six months to 30 June 2007 theliability increased by £21,000 (£5,000 in the six months to 30 June 2006). Theyear 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 theparent company and its subsidiary undertakings (defined as where the Group hascontrol). Control is where the company has the power to govern the financial andoperating policies of an entity so as to obtain the benefits from itsactivities. The financial statements of subsidiaries are prepared as of the samereporting date as the parent company, using consistent accounting policies. The results of subsidiaries are consolidated, using the purchase method ofaccounting, from the date on which control of the net assets and operations ofthe acquired company are effectively transferred to the Group. Similarly, theresults of subsidiaries divested cease to be consolidated from the date on whichcontrol 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 aremeasured using the currency of the primary economic environment in which theentity operates (the 'functional currency'). The consolidated financialstatements are presented in sterling, which is the Company's functional andpresentation currency. Notes to the Interim Financial Information 1. Accounting Policies (continued) The balance sheet of the overseas subsidiary undertaking is translated at therate of exchange ruling at the balance sheet date. The exchange differencesarising on the retranslation of opening net assets, together with the year-endadjustment to closing rates of income statements translated at average rates,are taken directly to reserves, the difference between average rate and closingrate is not materially significant. All other translation differences are takento the income statement with the exception of differences on foreign currencyborrowings to the extent that they are used to finance or provide a hedgeagainst Group equity investments in foreign enterprises, which are takendirectly to reserves together with the exchange difference on the net investmentin these enterprises. Tax charges and credits attributable to exchangedifferences on those borrowings are also dealt with in reserves. Leases Assets held under finance leases, which are leases where substantially all therisks and rewards of ownership of the asset have passed to the group, arecapitalised in the balance sheet at the lower of fair value at the inception ofthe lease and the present value of the minimum lease payments. They aredepreciated over the shorter of their useful economic lives or lease term. Thecapital elements of future obligations under leases are included as liabilitiesin the balance sheet. The interest elements of the rental obligations arecharged to the income statement over the period of the leases and represent aconstant proportion of the balance of capital repayments outstanding. Rentals paid under operating leases are charged to income on a straight linebasis over the term of the lease. Revenue Revenue is measured at the fair value of the consideration received orreceivable and represents amounts receivable for licences granted and servicesprovided in the normal course of business, net of discounts, any refunds dueand, VAT. The Group derives revenue form software licences, customer support and otherservices. Customer support includes telephone support and maintenance updates.Other services include the sale of professional services to install and maintainsoftware and to train licensees in the maintenance and use of the software. Revenue allocable to software licences is recognised when all of the followingconditions 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 astraight fine basis over the term of the contract, usually one year. Revenue notrecognised in the income statement under this policy is classified as deferredincome in the balance sheet. Revenue allocable to other services is recognised when the service has beenrendered to the customer and the value can be measured reliably with referenceto the stage of completion of the project. Share-based payments The group operates an employee share option scheme. The fair value of options orshares granted under the scheme is recognised in the income statement as anexpense over the period in which any performance conditions are fulfilled endingon 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 willultimately vest. A corresponding amount is credited to equity. No expense isrecognised for awards that do not ultimately vest, except for those where thevesting depends on a market condition. Whether or not the market condition issatisfied, these are treated as vesting as long as all other performanceconditions are satisfied. The fair value of the awards are measured at the date at which they are grantedusing a trinomial model except in the case of options with a market basedcondition, 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 thefair value of the identifiable assets and liabilities acquired is capitalisedand provision is made for any impairment. Goodwill is allocated to cash generating units for the purpose of impairmenttesting. The recoverable amount of the cash-generating unit to which thegoodwill relates is tested annually for impairment or when events or changes incircumstances indicate that it might be impaired. In an impairment test, the recoverable amount of the cash-generating unit orasset is estimated to determine the extent of any impairment loss. Therecoverable amount is the higher of the fair value less costs to sell and thevalue in use in the Group. An impairment loss is recognised to the extent thatthe carrying value exceeds the recoverable amount. In determining a cash-generating unit's value in use, estimated future cashflows are discounted to their present value using a pre-tax discount rate thatreflects current market assessments of the time value of money and risksspecific to the cash-generating unit or asset that have not already beenincluded in the estimate of future cash flows. Intangible assets - intellectual property rights Intellectual property rights acquired as part of a business acquisition arecapitalised separately from goodwill if their value can be measured reliably oninitial recognition and they are controlled through custody or legal rights.These rights are initially recorded at fair value which is based on replacementcost and are amortised over four years which is their estimated useful economiclife. Provision is made for any impairment. Intellectual property rights purchased separately from a business arecapitalised at cost and are amortised over four years which is their estimateduseful economic life. Provision is made for any impairment. Research and development In common with most businesses at a similar stage of their evolution expenditureon research and development activities continues to be recognised as an expensein the income statement in the period in which it is incurred. An internallygenerated intangible asset arsing from the development of software is recognisedonly 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 arereported at cost less accumulated amortisation and accumulated impairment losseson the same basis as intangible assets acquired separately. Property, plant and equipment Property, plant and equipment are stated at cost less accumulated depreciationand impairment losses if applicable. Depreciation on property, plant andequipment is provided down to an asset's residual value over its useful economiclife as follows: Fixtures, fittings and equipment 4 yearsOffice equipment 2 yearsMotor vehicles 4 years Residual values end useful lives are reviewed and adjusted, if appropriate, ateach 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 cashequivalents include cash at bank and in hand and short-term deposits with anoriginal maturity period of three months or less. Bank overdrafts that are anintegral part of a subsidiary's cash management are included in cash and cashequivalents where they have a legal right of set-off and there is an intentionto settle net, against positive cash balances, otherwise bank overdrafts areclassified as borrowings. Trade receivables and trade payables Trade receivables are recognised initially at fair value and subsequentlymeasured at amortised cost using the effective interest method, less provisionfor impairment. A provision for impairment of trade receivables is establishedwhen there is objective evidence that the Group will not be able to collect allamounts due according to the original terms of the receivables. Significantfinancial difficulties of the debtor, probability that the debtor will enterbankruptcy or financial reorganisation and default or delinquency in paymentsare considered indicators that the trade receivable is impaired. The amount ofthe provision is the difference between the asset's carrying amount and thepresent value of estimated future cash flows, discounted at the originaleffective interest rate. The carrying amount of the asset is reduced through theuse of an allowance account and the amount of the loss is recognised in theincome statement within selling and administrative expenses. When a tradereceivable is uncollectible, it is written-off against the allowance account fortrade receivables. Subsequent recoveries of amounts previously written-off arecredited against administrative costs in the income statement. Trade payables are recognised initially at fair value and subsequently measuredat amortised cost using the effective interest method. Taxation The charge for current income tax is based on the results for the year asadjusted for items which are not taxed or disallowed. It is calculated using taxrates that have been enacted or substantively enacted by the balance sheet date. Deferred income tax is accounted for using the liability method in respect oftemporary differences arising from differences between the tax bases of assetsand liabilities and their carrying amounts in the financial statements. Deferred tax liabilities are recognised for all taxable temporary differencesand deferred tax assets are recognised to the extent that it is probable thattaxable profits will be available against which deductible temporary differencescan be utilised. Such assets and liabilities are not recognised if the temporarydifference is due to goodwill arising on a business combination or from an assetor liability, the initial recognition of which does not affect either taxable oraccounting income. Deferred tax liabilities are recognised for taxable temporary differencesarising on investments in subsidiaries except where the Group is able to controlthe reversal of the temporary difference and it is probable that the temporarydifference will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to apply in theperiods when the timing differences are expected to reverse, based on tax ratesand law enacted or substantively enacted at the balance sheet date. Deferred taxis charged or credited in the income statement, except when it relates to itemscredited or charged directly to shareholders' equity, in which case the deferredtax is also dealt with in shareholders' equity. Provisions Provisions are recognised when the Group has a present obligation in respect ofa past event, where it is more likely than not that an outflow of resources willbe required to settle the obligation, and where the amount can be reliablyestimated. Analysis of the provisions is provided in note 2 below. 2. Exceptional items The exceptional administrative expenses represents £300,000 (2005:nil) cost ofredundancy; £229,000 (2005:nil) cost of onerous contracts resulting from thecompany 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 taxdue from research carried out in the years ended 31 December 2003 and 31December 2004. A potential deferred tax asset of £3,972,000 (December 2006: 3,677,000, June2006:2,304,000) 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 tothe 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 timingdifferences 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 potentialordinary shares is not dilutive. The dilutive securities are employee shareoptions and share warrants. 5. Reconciliation of Operating Loss to Net Cash Outflow from OperatingActivities. 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 69Profit on disposal of property plant & equipment - - 1Impairment of goodwill - - 603Impairment of intangibles - - 58Amortisation of intangibles 53 44 120Interest income (51) (122) (189)Share based transactions (18) 5 86Effects of exchange rate changes (2) - -Change in debtors (553) 222 406Change in creditors (908) 78 749Change in provisions (110) - 219Cash 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 - 7,546Retained loss for the period - (2,041) - - (2,041)Exchange differences arising on translation offoreign operations - - - 4 4Total of recognised income and expense for the period - (2,041) - 4 (2,037)Adjustment for share based payments / total changesin equity in the period - 5 - - 5At 30 June 2006 364 (4,920) 10,066 4 5,514Retained loss for the period - (4,614) - - (4,614)Exchange differences arising on translation offoreign operations - - - (4) (4)Total of recognised income 364 (9,534) 10,066 - (4,618)and expense for the periodAdjustment for share based payments / total changesin equity in the period - 81 - - 81At 31 December 2006 364 (9,453) 10,066 - 977Retained loss for the period - (1,530) - - (1,530)Exchange differences arising on translation offoreign 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 - 3,277Total 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 - 578Intangible assets a 284 13 293Property 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) 7,546shareholders 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 31Amortisation of intangibles (6)Depreciation 7Provision 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 62Additional impairment of goodwill (62)Amortisation of intangibles (37)Depreciation 37Provision 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 fromproperty, plant and equipment to intangible assets. b. Provision for holiday pay c. Goodwill amortisation of £31,270 is added back. In addition the translationadjustment 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 onInternational Financial Reporting Standards. It is not the company's statutoryaccounts. It has been prepared using accounting policies as set out above. The statutory accounts for the year ended 31 December 2006, prepared under UKGAAP, have been delivered to the Registrar of Companies and received an auditreport which was unqualified and did not contain statements under s237(2) ors237(3) of the Companies Act 1985 and did not include references to any mattersto which the auditors drew attention by way of emphasis without qualifying theirreports. 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 forthe six months ended 30 June 2007 set out on pages 4 to 17. We have read theother information contained in the interim report and considered whether itcontains any apparent misstatements or material inconsistencies with thefinancial information. Our report has been prepared in accordance with the terms of our engagement toassist the company in meeting the requirements of the rules of the London StockExchange for companies trading securities on the Alternative Investment Marketand for no other purpose. No person is entitled to rely on this report unlesssuch a person is a person entitled to rely upon this report by virtue of and forthe purpose of our terms of engagement or has been expressly authorised to do soby our prior written consent. Save as above, we do not accept responsibility forthis report to any other person or for any other purpose and we hereby expresslydisclaim any and all such liability. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directors areresponsible for preparing the interim report in accordance with the rules of theLondon Stock Exchange for companies trading securities on the AlternativeInvestment Market which require that the half-yearly report be presented in aform consistent with that which will be adopted in the company's annual accountshaving regard to the accounting standards applicable to such annual accounts. This interim report has been prepared in accordance with the basis set out innote 1. The accounting policies are consistent with those that the Directorsintend to use in the next annual financial statements. Review work performed We conducted our review in accordance with 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 United Kingdom Auditing Standards and thereforeprovides a lower level of assurance than an audit. Accordingly we do not expressan 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 2007. BDO Stoy Hayward LLP Chartered Accountants Gatwick Date This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Syncona