Final Results

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

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