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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Mobestar | LSE:MOBS | London | Ordinary Share | GB00B12B4Q16 | ORD 1P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 1.375 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
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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