Mobestar Holdings Plc ("Mobestar" or the "Group")
Half yearly report to 30 June 2007 - correction
Correction to the announcement of the first half of 2007 financial results
released on 28 September 2007 at 11:11 a.m.
Mobestar's financial results for the six months ended 30 June 2007 were
announced on 28 September 2007. The weighted average number of shares as
disclosed in note 4 of the report was stated in error as 51,451,490. The
weighed average number of shares should have been stated as 38,826,490.
Accordingly, the basic and diluted earnings per share for the 6 months to 30
June 2007 is 1.48 pence per share (previously stated as 1.12 pence per share)
and the adjusted loss per share is 2.40 pence per share (previously stated as
1.81 pence per share.)
All other aspects of the original report remain the same. The full text of the
revised announcement is set out below.
Chairman's Statement
The board is pleased to report that the Group completed the development of its
mDate platform during the period under review.
Since mDate became fully operational in August 2007 Mobestar has contracted to
supply it to in excess of 15 million end customers.
In August 2007 Mobestar brought the GaydarMobile service live for QSoft
consulting in the UK and subsequently contracted to supply its platform to
Global Personals, the global leader in providing white label solutions to
dating businesses and to Nue.de one of Germany's largest agencies.
During the period the Group has also successfully integrated its first
acquisition - Mobile Life into its sales and development processes.
The Group has extended its license model to include an additional initial
license payment and an ongoing monthly maintenance fee. This change to the
model should bring forward the Group's revenues and increase its gross profit
margins.
The Group plans new products and further acquisitions and has processes and a
quality management team in place to allow it execute its plans and can look
forward to the next period with confidence.
Financial overview
During the period to 30 June 2007 the Group recorded revenues of �1k (30 June
2007: �20,000).
Administrative costs for the period amounted to �2,184k (30 June 2006: �
1,213k).
As a result of the accounting treatment of the acquisition of Mobile Life an
excess of �2,653k arose from the business combination, this is a non cash item.
As at 30 June 2007 Mobestar had cash and cash equivalents of �840k, (30 June
2006: �1,977k).
Paul Robinson
Chairman
CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT
6 months to 6 months to Year to 31
30 June 2007 30 June 2006 December
2006
(unaudited) (unaudited) (unaudited)
�'000 �'000 �'000
Revenue 1 20 18
Amortisation of intangible assets (316) (4) (20)
Impairment of intangible assets (758) - -
Other administrative costs (1,110) (1,209) (2,007)
Total administrative costs (2,184) (1,213) (2,027)
Excess arising from the business 2,653 - -
combination
Operating profit/(loss) 470 (1,193) (2,009)
Finance income 24 39 72
Finance costs (9) - -
Net finance income 15 39 72
Profit/(loss) before tax 485 (1,154) (1,937)
Income tax 89 - -
Profit/(loss)for the period attributable 574 (1,154) (1,937)
to equity shareholders of the parent
Earnings per sharefrom both
total and continuing operations:
Pence Pence Pence
Basic and diluted (note 4) 1.48 (3.14) (5.21)
All results for the Group are derived from continuing operations in both the
current and preceding periods
CONDENSED CONSOLIDATED INTERIM BALANCE SHEET
30 June 30 June 31 December
2007 2006 2006
(unaudited) (unaudited) (unaudited)
�'000 �'000 �'000
ASSETS
Non-current assets
Property, plant and equipment 48 53 40
Intangible assets (note 6) 4,426 247 595
4,474 300 635
Current assets
Trade and other receivables 135 164 65
Cash and cash equivalents (note 7) 840 1,977 1,239
975 2,141 1,304
Total assets 5,449 2,441 1,939
LIABILITIES
Current liabilities
Trade and other payables 643 322 456
Deferred consideration 777 - -
Financial liabilities - borrowings 162 79 2
1,582 401 458
Non-current liabilities
Financial liabilities - borrowings 125 - -
Deferred tax liabilities 1,240 - -
Total non-current liabilities 1,365 - -
Total liabilities 2,947 401 458
Net assets 2,502 2,040 1,481
EQUITY
Equity attributable to equity holders of
the parent
Share capital 665 380 380
Share premium account 451 451 451
Merger reserve 3,853 3,776 3,853
Share based payment reserve 357 48 195
Retained earnings (2,824) (2,615) (3,398)
Total equity 2,502 2,040 1,481
CONDENSED CONSOLIDATED INTERIM STATEMENT OF RECOGNISED INCOME AND EXPENSE
6 months to 6 months to Year to 31
30 June 2007 30 June 2006 December 2006
(unaudited) (unaudited) (unaudited)
�'000 �'000 �'000
Net income recognised directly in equity - - -
Profit/(loss) for the period 574 (1,154) (1,937)
Total recognised income and expense for 574 (1,154) (1,937)
the period
Attributable to:
Equity holders of the parent 574 (1,154) (1,937)
CONDENSED CONSOLIDATED INTERIM CASH FLOW STATEMENT
6 monthsto30 6 months to Year to 31
June 2007 December
30 June 2006
2006
(unaudited) (unaudited) (unaudited)
�'000 �'000 �'000
Cash flows from operating activities
Profit/(loss) after taxation 574 (1,154) (1,937)
Adjustments for:
Finance income (24) (39) (72)
Finance costs 9 - -
Depreciation of property, plant, & 14 15 25
equipment
Amortisation of intangible assets 316 4 20
Impairment of intangible assets 758 - -
Income tax expense (89) - -
Share based payment charge 162 48 195
Excess arising from the business (2,653) - -
combination
(Increase)/decrease in trade and other (70) 105 7
receivables
Increase/(decrease) in trade and other 188 (30) 27
payables
Net cashused inoperatingactivities (815) (1,051) (1,735)
Cash flows from investing activities
Purchase of intangible assets (163) (150) (321)
Purchase of property, plant and equipment (15) (35) (37)
Interest received 24 39 72
Net cash used in investing activities (154) (146) (286)
Cash flows from financing activities
Proceeds from issue of ordinary share 285 1,402 1,575
capital
Expenses paid in respect of share issues - (81) (91)
Proceeds from issue of new loan 250 - -
Net cash from financing activities 535 1,321 1,484
Net (decrease)/increase in cash and cash (434) 124 (537)
equivalents
Cash and cash equivalents at beginning of 1,237 1,774 1,774
period
Cash and cash equivalents at end of 803 1,898 1,237
period(note 7)
NOTES TO THE CONDENSED CONSOLIDATED INTERIM REPORT
1. Nature of operations and general information
Mobestar Holdings plc and its subsidiaries' ("the Group") principal activity is
the provision of 3G wireless application services.
Mobestar Holdings plc ("Mobestar") is the Group's ultimate parent company.
Mobestar is incorporated and domiciled in Great Britain. The shares of Mobestar
are listed on the London Stock Exchange Alternative Investment Market. The
Group's registered address is Unit 39 Surrey Technology Centre, 40 Occam Road,
Surrey Research Park, Guildford, Surrey GU2 7YG.
The Group's condensed consolidated interim report has been approved for issue
by the Board of Directors on 27 September 2007.
The financial information set out in this interim report does not constitute
statutory accounts as defined in Section 240 of the Companies Act 1985. The
Group's statutory financial statements for the year ended 31 December 2006,
prepared under UK GAAP, have been filed with the Registrar of Companies. The
auditor's report on those financial statements was unqualified and did not
contain a statements under Section 237(2) of the Companies Act 1985.
2. Basis of preparation
This condensed consolidated interim report is for the six months ended 30 June
2007. It has been prepared in accordance with the requirements of IFRS 1
"First-time Adoption of International Financial Reporting Standards" relevant
to interim reports, because it is part of the period covered by the Group's
first IFRS financial statements for the year ended 31 December 2007. It does
not include all of the information required for full annual financial
statements, and should be read in conjunction with the consolidated financial
statements of the Group for the year ended 31 December 2006.
This report has been prepared under the historical cost convention.
The condensed consolidated interim report is presented in Pounds Sterling (�),
which is also the functional currency of the parent company.
This condensed consolidated interim report has been prepared in accordance with
the accounting policies set out below which are based on the recognition and
measurement principles of IFRS in issue as adopted by the European Union (EU)
and are effective at 31 December 2007 or are expected to be adopted and
effective at 31 December 2007, our first annual reporting date at which we are
required to use IFRS accounting standards adopted by the EU.
The Group's consolidated financial statements were prepared in accordance with
United Kingdom Accounting Standards (United Kingdom Generally Accepted
Accounting Practice) until 31 December 2006. The date of transition to IFRS was
1 January 2006. The comparative figures in respect of 2006 have been restated
to reflect changes in accounting policies as a result of adoption of IFRS. The
disclosures required by IFRS 1 concerning the transition from UK GAAP to IFRS
are given in the reconciliation schedules, presented and explained in note 8.
The accounting policies have been applied consistently throughout the Group for
the purposes of preparation of this condensed consolidated interim report.
3. Summary of significant accounting policies
Basis of consolidation
The Group's interim report consolidates those of the company and all of its
subsidiary undertakings drawn up to 30 June 2007. Subsidiaries are entities
over which the Group has the power to control the financial and operating
policies so as to obtain benefits from its activities. The Group obtains and
exercises control through voting rights.
Amounts reported in the financial statements of subsidiaries have been adjusted
where necessary to ensure consistency with the accounting policies adopted by
the Group.
On 12 April 2006 the shareholders of Mobestar Limited transferred their entire
share holdings to Mobestar Holdings plc as part of a share exchange in
consideration for the entire share capital of Mobestar Limited. This resulted
in Mobestar Limited becoming a wholly owned subsidiary of Mobestar Holdings
plc. The Directors consider that this is a business combination involving
entities under common control and therefore falls outside the scope of IFRS 3.
In accordance with IAS 8 the Directors have selected a suitable accounting
policy which reflects the substance of this transaction. The Directors consider
that the most appropriate guidance can be found within FRS 6 under UK GAAP.
This standard states that the results and cash flows of all the combining
entities are brought into the financial statements of the combined entity from
the beginning of the financial year in which the combination occurred, adjusted
so as to achieve uniformity of accounting policies. The difference, if any,
between the nominal value of the shares issued plus the fair value of any other
consideration given, and the nominal value of the shares received in exchange
is recognised under the heading "merger reserve" within equity.
Acquisitions of subsidiaries are dealt with by the purchase method. The
purchase method involves the recognition at fair value of all identifiable
assets and liabilities, including contingent liabilities of the subsidiary, at
the acquisition date, regardless of whether or not they were recorded in the
financial statements of the subsidiary prior to acquisition. On initial
recognition, the assets and liabilities of the subsidiary are included in the
consolidated balance sheet at their fair values, which are also used as the
bases for subsequent measurement in accordance with the Group's accounting
policies. Goodwill is stated after separating out identifiable intangible
assets. Goodwill represents the excess of acquisition cost over the fair value
of the Group's share of the identifiable net assets of the acquired subsidiary
at the date of acquisition.
Going concern
The condensed consolidated interim report has been prepared on a going concern
basis. The ability of the Group to continue as a going concern is dependent
upon the successful trading of the Group over the next twelve months and the
availability of further equity or debt funding.
The directors have prepared detailed cash flow projections for the Group for
the period ended 30 June 2008 which support the decision to prepare the interim
report on a going concern basis. The projections assume that revenue streams
from the new mDate technology commence in August 2007 when the product went
live and will increase rapidly during the course of the calendar year. Despite
initial positive signs, the extent of take-up for the mDate product is
uncertain and hence the levels of revenue included in the projections is
subject to change. If the projected levels of revenue are not achieved the
Group may be required to arrange further external finance in the short term.
The availability of such financing to the Group is also considered uncertain.
The cash flow projections show that the Group will begin to generate cash in
November 2007. If this is achieved it is unlikely that the Group would require
further external funding in the short term.
Revenue
Revenue is measured by reference to the fair value of consideration received or
receivable by the Group for mobile content downloads, and is stated net of
Value Added Tax. The business solely provides 3G wireless application services.
All turnover arises in the United Kingdom. Revenue is recognised upon the
performance of services or transfer of risk to the customer.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, together
with other short-term, highly liquid investments that are readily convertible
into known amounts of cash and which are subject to an insignificant risk of
changes in value. Bank overdrafts that are repayable on demand and form an
integral part of the Group's cash management are included as a component of
cash and cash equivalents. Bank overdrafts are included within the balance
sheet in current financial liabilities - borrowings.
Property, plant and equipment
Property, plant and equipment is stated at cost or valuation, net of
depreciation and any provisions for impairment.
Depreciation is calculated to write down the cost less estimated residual value
of all property, plant and equipment by annual instalments over their expected
useful lives. The rates generally applicable are:
Office furniture and 33% straight line
equipment
Leasehold improvements over the term of the
lease
Impairment of assets
For the purposes of assessing impairment, assets are grouped at the lowest
levels for which there are separately identifiable cash flows (cash-generating
units). As a result, some assets are tested individually for impairment and
some are tested at the cash-generating unit level. Goodwill is allocated to
those cash-generating units that have arisen from business combinations and
represent the lowest level within the Group at which management monitors the
related cash flows.
Goodwill, other individual assets or cash-generating units that include
goodwill, other intangible assets with an indefinite useful life, and those
intangible assets not yet available for use are tested for impairment at least
annually. All other individual assets or cash-generating units are tested for
impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset's or
cash-generating unit's carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of fair value, reflecting market conditions
less costs to sell, and value in use based on an internal discounted cash flow
evaluation. Impairment losses recognised for cash-generating units, to which
goodwill has been allocated, are credited initially to the carrying amount of
goodwill. Any remaining impairment loss is charged pro rata to the other assets
in the cash generating unit. With the exception of goodwill, all assets are
subsequently reassessed for indications that an impairment loss previously
recognised may no longer exist.
Leases
In accordance with IAS 17, the economic ownership of a leased asset is
transferred to the lessee if the lessee bears substantially all the risks and
rewards related to the ownership of the leased asset. The related asset is
recognised at the time of inception of the lease at the fair value of the
leased asset or, if lower, the present value of the minimum lease payments plus
incidental payments, if any, to be borne by the lessee. A corresponding amount
is recognised as a finance leasing liability. The interest element of leasing
payments represents a constant proportion of the capital balance outstanding
and is charged to the income statement over the period of the lease.
All other leases are regarded as operating leases and the payments made under
them are charged to the income statement on a straight line basis over the
lease term. Lease incentives are spread over the term of the lease.
Intangible assets
Goodwill
Goodwill representing the excess of the cost of acquisition over the fair value
of the Group's share of the identifiable net assets acquired, is capitalised
and reviewed annually for impairment. Goodwill is carried at cost less
accumulated impairment losses.
Where the fair value of the Group's share of the identifiable net assets
acquired is in excess of the cost of acquisition, this excess is recognised
immediately in the income statement.
Other intangible assets
An intangible asset, which is an identifiable non-monetary asset without
physical substance, is recognised to the extent that it is probable that the
expected future economic benefits attributable to the asset will flow to the
Group and that its cost can be measured reliably. The asset is deemed to be
identifiable when it is separable or when it arises from contractual or other
legal rights.
Computer software, acquired as part of a business combination is capitalised
separately from goodwill and is carried at cost (fair value at the date of
acquisition) less accumulated amortisation and accumulated impairment losses.
Amortisation is calculated using the straight line method over a period of five
years.
Intangible assets (continued)
Licences
Licences are stated at cost less accumulated amortisation. Amortisation is
calculated using the straight line method over the period of the licence
agreement.
Research and development
Expenditure on research is recognised as an expense in the period in which it
is incurred. Development costs incurred are capitalised when all the following
conditions are satisfied:
* completion of the intangible asset is technically feasible so that it will
be available for use or sale;
* the Group intends to complete the intangible asset and use or sell it;
* the Group has the ability to use or sell the intangible asset;
* the intangible asset will generate probable future economic benefits. Among
other things, this requires that there is a market for the output from the
intangible asset or for the intangible asset itself, or, if it is to be
used internally, the asset will be used in generating such benefits;
* there are adequate technical, financial and other resources to complete the
development and to use or sell the intangible asset; and
* the expenditure attributable to the intangible asset during its development
can be measured reliably
Development costs not meeting the criteria for capitalisation are expensed as
incurred.
The cost of an internally generated intangible asset comprises all directly
attributable costs necessary to create, produce, and prepare the asset to be
capable of operating in the manner intended by management. Directly
attributable costs include employee (other than directors) costs incurred on
software development along with an appropriate portion of relevant overheads.
The costs of internally generated software developments are recognised as
intangible assets and are subsequently measured in the same way as externally
acquired licences. However, until completion of the development project, the
assets are subject to annual impairment testing only. Capitalised costs are
amortised over the expected product or system life commencing upon completion
of the asset, and is shown within amortisation of intangible assets in the
income statement.
Assets acquired as part of a business combination
In accordance with IFRS 3 'Business Combinations', an intangible asset acquired
in a business combination is deemed to have a cost to the Group of its fair
value at the acquisition date. The fair value of the intangible asset reflects
market expectations about the probability that the future economic benefits
embodied in the asset will flow to the Group. Where an intangible asset might
be separable, but only together with a related tangible or intangible asset,
the group of assets is recognised as a single asset separately from goodwill
where the individual fair values of the assets in the group are not reliably
measurable. Where the individual fair value of the complimentary assets are
reliably measurable, the Group recognises them as a single asset provided the
individual assets have similar useful lives.
Current and deferred tax
Current tax is the tax currently payable based on taxable profit for the year.
Deferred income taxes are calculated using the liability method on temporary
differences. Deferred tax is generally provided on the difference between the
carrying amounts of assets and liabilities and their tax bases. However,
deferred tax is not provided on the initial recognition of an asset or
liability unless the related transaction is a business combination or affects
tax or accounting profit. In addition, tax losses available to be carried
forward as well as other income tax credits to the Group are assessed for
recognition as deferred tax assets.
Deferred tax liabilities are provided in full, with no discounting. Deferred
tax assets are recognised to the extent that it is probable that the underlying
deductible temporary differences will be able to be offset against future
taxable income. Current and deferred tax assets and liabilities are calculated
at tax rates that are expected to apply to their respective period of
realisation, provided they are enacted or substantively enacted at the balance
sheet date.
Changes in deferred tax assets or liabilities are recognised as a component of
tax expense in the income statement, except where they relate to items that are
charged or credited directly to equity in which case the related deferred tax
is also charged or credited directly to equity.
Foreign currencies
Transactions in foreign currencies are translated at the exchange rate ruling
at the date of the transaction. Monetary assets and liabilities in foreign
currencies are translated at the rates of exchange ruling at the balance sheet
date. Non-monetary items that are measured at historical cost in a foreign
currency are translated at the exchange rate at the date of the transaction.
Any exchange differences arising on the settlement of monetary items or on
translating monetary items at rates different from those at which they were
initially recorded are recognised in the profit or loss in the period in which
they arise.
Financial instruments
Financial assets and liabilities are recognised on the Group's balance sheet
when the Group becomes a party to the contractual provisions of the instrument.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. An equity instrument is
any contract that evidences a residual interest in the assets of the Group
after deducting all of its liabilities.
Trade receivables and trade payables
Trade receivables and payables are initially recognised at fair value and
thereafter at amortised cost using the effective interest rate method.
Bank borrowings
Interest-bearing bank loans and overdrafts are recorded at fair value, net of
direct issue costs. Finance charges, including premiums payable on settlement
or redemption and direct issue costs, are accounted for on an effective
interest method and are added to the carrying amount of the instrument to the
extent that they are not settled in the period in which they relate.
Share-based payment
Equity settled share-based payment
All share-based payment arrangements granted after 7 November 2002 that had not
vested prior to 1 January 2005 are recognised in the interim report.
All goods and services received in exchange for the grant of any share-based
payment are measured at their fair values. Where employees are rewarded using
share-based payments, the fair values of employees' services are determined
indirectly by reference to the fair value of the instrument granted to the
employee. This fair value is appraised at the grant date and excludes the
impact of non-market vesting conditions.
All equity-settled share-based payments are ultimately recognised as an expense
in the income statement with a corresponding credit to "share based payment
reserve".
If vesting periods or other non-market vesting conditions apply, the expense is
allocated over the vesting period, based on the best available estimate of the
number of share options expected to vest. Estimates are subsequently revised if
there is any indication that the number of share options expected to vest
differs from previous estimates. Any cumulative adjustment prior to vesting is
recognised in the current period. No adjustment is made to any expense
recognised in prior periods if share options ultimately exercised are different
to that estimated on vesting.
Upon exercise of share options the proceeds received net of attributable
transaction costs are credited to share capital, and where appropriate share
premium.
Equity
Equity comprises the following:
* "Share capital" represents the nominal value of equity shares in issue.
* "Share premium" represents the excess over nominal value of the fair value
of consideration received for equity shares, net of expenses of the share
issue.
* "Merger reserve" represents the difference between the nominal value of the
shares issued plus the fair value of any other consideration given, and the
nominal value of the shares received in exchange.
* "Share based payment reserve" represents equity-settled share-based
employee remuneration until such share options are exercised.
* "Retained earnings" represents retained profits.
Provisions, contingent liabilities and contingent assets
Provisions for dilapidations, onerous leases and deemed employment exposures
are recognised when there is a legal or constructive obligation as a result of
past events, where it is more likely than not that an outflow of resources will
be required to settle the obligation and the amount has been reliably
estimated.
Significant judgements and estimates
The preparation of the condensed consolidated interim report under IFRS
requires the Group to make estimates and assumptions that affect the
application of policies and reported amounts. Estimates and judgements are
continually evaluated and are based on historical experience and other factors
including expectations of future events that are believed to be reasonable
under the circumstances. Actual results may differ from these estimates. The
estimates and assumptions which have a significant risk of causing a material
adjustment to the carrying amount of assets and liabilities are discussed
below.
Intangible assets
The Group recognises intangible assets acquired as part of business
combinations at fair value at the date of acquisition. The determination of
these fair values is based upon management's judgement and includes assumptions
on the timing and amount of future incremental cash flows generated by the
assets and selection of an appropriate cost of capital. Furthermore, management
must estimate the expected useful lives of intangible assets and charge
amortisation on these assets accordingly.
Impairment of property, plant and equipment and intangible assets
Property, plant and equipment and intangible assets are reviewed for impairment
if events or changes in circumstances indicate that the carrying amount may not
be recoverable. When a review for impairment is conducted, the recoverable
amount is determined based on value in use calculations prepared on the basis
of management's assumptions and estimates.
Depreciation of property, plant and equipment
Depreciation is provided so as to write down the assets to their residual
values over their estimated useful lives as set out above. The selection of
these estimated lives requires the exercise of management judgement.
Deferred consideration
Where deferred consideration is payable in cash, the liability is discounted to
its present value. Where the deferred consideration is contingent and dependent
upon future trading performance, an estimate of the present value of the likely
consideration payable is made. Where a business combination agreement provides
for an adjustment to the cost that is contingent on future events, contingent
consideration is included in the cost of an acquisition if the adjustment is
probable (that is, more likely than not) and can be measured reliably. The
difference between the costs of acquisition and the net assets acquired is
capitalised as goodwill.
Going concern
The decision to prepare the interim report on a going concern basis has in part
been based upon the cash flow projections of the Group. The cash flow
projections are subject to a number of judgements and estimates regarding the
levels of future revenues.
4. Earnings per share
The calculation of the basic earnings per share is based on the earnings
attributable to ordinary shareholders divided by the average number of shares
in issue during the year. Share options granted to employees are considered
anti-dilutive.
Reconciliations of the earnings and weighted average number of shares used in
the calculations are set out below.
6 months to 6 months to Year to 31
December
30 June 2007 30 June 2006 2006
(unaudited) (unaudited) (unaudited)
Profit/(loss) after tax (�'000) 574 (1,154) (1,937)
Weighted average number of shares 38,826,490 36,805,616 37,197,307
Basic and diluted earnings per share 1.48 (3.14) (5.21)
(pence)
Adjusted earnings per share
6 months to 6 months to Year to 31
30 June 2007 30 June 2006 December
2006
(unaudited) (unaudited) (unaudited)
�'000 �'000 �'000
Profit/(loss) after tax 574 (1,154) (1,937)
Income tax (89) - -
Add back:
Amortisation of intangible assets 316 4 20
Impairment of intangible assets 758 - -
Excess arising on the business (2,653) - -
combination
Share based payments 162 48 195
Adjusted profit (932) (1,102) (1,722)
Adjusted earnings per share (pence) (2.40) (2.99) (4.63)
5. Dividends
The directors do not propose the payment of a dividend for the period.
6. Intangible assets
The following table show the significant movements in intangible assets.
Computer Software Licences Total
Software development
(unaudited) (unaudited) (unaudited) (unaudited)
�'000 �'000 �'000 �'000
Carrying amount at 1 January - 81 20 101
2006
Additions - 150 - 150
Amortisation - - (4) (4)
Carrying amount at 30 June 2006 - 231 16 247
Carrying amount at 1 July 2006 - 231 16 247
Additions - 364 - 364
Amortisation - - (16) (16)
Carrying amount at 31 December - 595 - 595
2006
- 595 - 595
Carrying amount at 1 January
2007
Additions 4,742 163 - 4,905
Amortisation (316) - - (316)
Impairment - (758) - (758)
Carrying amount at 30 June 2007 4,426 - - 4,426
A third party company was engaged to provide product development services which
were capitalised under the heading 'software development'. Following an
impairment review at 30 June 2007 this work was found to be not fit for purpose
and therefore the software development costs previously capitalised were
impaired.
Computer software was acquired as part of a business combination during the
period. Fair values have been assess on a provisional basis pending
finalisation of a comprehensive valuation. On acquisition, the fair value of
the computer software acquired has been provisionally assessed as being �4.74m.
This has resulted in the provisional recognition of negative goodwill in the
income statement of �0.27m
7. Cash and cash equivalents
31 December
30 June 2007 30 June 2006
2006
(unaudited) (unaudited) (unaudited)
�'000 �'000 �'000
Cash at bank and in hand 840 1,977 1,239
Bank overdrafts (37) (79) (2)
803 1,898 1,237
8. Explanation of transition to IFRS
As stated in the Basis of Preparation, this is the Group's first condensed
consolidated interim report for part of the period covered by the first IFRS
annual consolidated financial statements which will be prepared in accordance
with IFRS as adopted by the EU.
An explanation of how the transition from UK GAAP to IFRS has affected the
Group's financial position, financial performance and cash flows is set out
below.
IFRS 1 permits companies adopting IFRS for the first time to take certain
exemptions from the full requirements of IFRS in the transition period. This
condensed consolidated interim report has been prepared on the basis that the
Group has not adopted any of the exemptions available.
Reconciliation of equity 1 January 30 June2006 31 December
2006
2006
(unaudited) (unaudited) (unaudited)
Note �'000 �'000 �'000
Net assets and equity under UK GAAP 1,825 2,051 1,481
Adjustments (after taxation)
IAS 19 - `Employee Benefits' a - (11) -
Net assets and equity under IFRS 1,825 2,040 1,481
Reconciliation of profit
6 months Year ended
ended 30
June 2006 31 December
2006
(unaudited) (unaudited)
Note �'000 �'000
Lossunder UK GAAP (1,143) (1,937)
Adjustments (before taxation)
IAS 19 - `Employee Benefits' a (11) -
Lossunder IFRS (1,154) (1,937)
Notes to the reconciliations
a. Previously, no provision was made for holiday pay. Under IAS 19 - 'Employee
Benefits' the expected cost of compensated short-term absences (e.g.
holidays) should be recognised when employees render the service that
increases their entitlement. As a result, an accrual has been made for
holidays earned but not taken.
Notes to the reconciliations (continued)
Application of IFRS has resulted in reclassification of certain items in the
cash flow statement as follows:
(i) under UK GAAP, payments to acquire property, plant and equipment and
intangible assets were classified as part of 'Capital expenditure'. Under IFRS,
payments to acquire property, plant and equipment have been classified as part
of 'Investing activities'.
(ii) under UK GAAP interest received was classified as part of 'Returns on
investments'. Under IFRS, interest received has been classified as part of
'Investing activities'.
There are no other material differences between the cash flow statement
presented under IFRS and the cash flow statement presented under UK GAAP.
Contact:-
Peter Richards, Chief Executive Officer
Mobestar Holdings Plc
Tel:- 08454 900 565
Alex Walters, Director
Pelham PR
Tel 020 3170 7435
Liam Murray, Nominated Adviser
City Financial Associates Limited
Tel 020 7492 4777
END
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