MobileWave Group Plc

("MobileWave" or the "Company")

 

Unaudited Interim Results

for the period ended 31 August 2012

 

Chairman's Statement

I am pleased to present the interim results for MobileWave Group plc for the period ended 31 August 2012.

The period under review has remained an extremely challenging one for the Company. We had, as previously reported to shareholders, signed a convertible preference share investment agreement with a Singapore based investor. While this investment contract contained no conditional clauses, the nature of the investors trading business required that in order for them to have sufficient funds to make the investment into the Company, they needed to complete a substantial transaction that they are involved in prior to making the investment into MobileWave. This transaction is, at the time of writing, still to complete. In late August, I temporarily relocated to Asia to work alongside the Singapore based investor in seeking to complete the transaction. This has been a positive move as the Board is now extremely well informed as to the status of the transaction and the resulting investment into the Company. The Board remains positive that a beneficial outcome for MobileWave Group plc is likely.

Review of Operations

The shortage of funding has been limiting in allowing the Company to move forward operationally. The company was unable to close the proposed acquisition of Ariose Software during the period under review and indeed, given the time that has elapsed since originally signing this agreement, will need to renegotiate this acquisition once the Company has received the contracted for funding. I have been in regular communication with Amit Goenke of Ariose Software throughout the period under review and a strong relationship exists between the parties who remain committed to working closely together.

People

At the beginning of April, Kurt Pakendorf left the company and I assumed full executive responsibility. While my time has by necessity been spent on fund raising and other financial issues, significant time and energy has been spent by the Board on continuing to analyse and update the strategy and business plan of the Company. The board are convinced that the strategy is appropriate and with further funding the strategy can be accelerated so as to share in the fantastic growth of the smart phone industry. Potential acquisition targets are often considered and discussed and shareholders will be informed about these at the appropriate time.

Litigation update

The company would not be in the difficult financial position that it is in, had Devin Narang fulfilled his commitment to pay the final tranche of the Freeplay Energy purchase price. We have aggressively pursued Mr Narang for payment of this debt both in the UK and Indian courts. As shareholders are aware, the Company obtained a High Court judgement against Mr Narang in the amount of £1,070,000. Application was made in the High Court of India for execution of the judgement in India, under the treaty that exists between the two countries. Separately but in parallel, the Company has applied to the UK courts for Mr Narang to be made bankrupt in the UK. A court date early in the newyear is expected. In tandem with aggressive legal action, the Company has always sought to find a negotiated settlement with Mr Narang. To this end, I met with Mr Narang in Kuala Lumpur, Malaysia on 24 November. The meeting, which was without prejudice on both sides, was cordial and constructive and the Board is hopeful that a realistic payment schedule will be received early in the new year and prior to the court date. Until an agreement is in place, legal action will proceed.

Financial Review

MobileWave Group PLC has not traded during the period to 31 August 2012, other than incurring expenditure in raising funds, maintaining the administrative functions of the company and considering investment opportunities .  We continue to drive cost out of the business during this difficult period and we have reduced administrative expenses to $523,000 for the period (period to August 31 2011 $953,000 year to 28 February 2012 $1,908,000). Cash flow is a significant issue for the Company whilst we await investor funding and the Narang settlement and the company was predominately financed via shareholder loans during the period.

Outlook

Shareholders have had to be very patient as the Company has continued to deal with significant funding related issues. The Board acknowledges this fact and reiterates its optimism that, upon receipt of fresh funding, the Company will be well placed to move decisively forward.

Rory Stear

Chairman 

30 November 2012

 

For further information, please contact:

      

MobileWave Group plc                                                                                 rstear@mobilewave.com

Rory Stear, Chairman

                                                                                                                                                          

Charles Stanley Securities                                                                           020 7149 6000                          

Nominated Adviser & Broker

Dugald J. Carlean / Carl Holmes 

 

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the period ended 31 August 2012

 

6 months ended  31 August 2012	6 months ended  31 August 2011	12 months ended 28 February 2012
(Unaudited)	(Unaudited)	(Audited)
US$000	US$000	US$000

 

	Notes
Revenue			-	-	-
Cost of sales			-	-	-
Gross profit			-	-	-
Administrative expenses (before separately identifiable costs)			(523)	(953)	(1,908)
Separately identifiable costs			-	-	(1,566)
Loss from operations			(523)	(953)	(3,474)
Finance expenses			(69)	(31)	(112)
Finance income			-	-	-
			---------------------------------------	---------------------------------------	---------------------------------------
Loss before taxation			(592)	(984)	(3,586)
			---------------------------------------	---------------------------------------	---------------------------------------
Taxation			-	-	-
			---------------------------------------	---------------------------------------	---------------------------------------
Loss for the period attributable to the equity holders of the parent			(592)	(984)	(3,586)
			=========================================	=========================================	=========================================
Other comprehensive income, net of tax
Currency translation difference			-	(11)	(20)
			---------------------------------------	---------------------------------------	---------------------------------------
Other comprehensive income			-	(11)	(20)
			---------------------------------------	---------------------------------------	---------------------------------------
Total comprehensive expense for the period attributable to the equity holders of the parent			(592)	(995)	(3,606)
			=========================================	=========================================	=========================================
			US$	US$	US$
Basic and fully diluted loss per share		1	(0.005)	(0.01)	(0.04)

 

 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as at 31 August 2012

 

6 months ended  31 August 2012	6 months ended  31 August 2011	12 months ended 28 February 2012
(Unaudited)	(Unaudited)	(Audited)
US$000	US$000	US$000

 

Assets
Non-current assets
Intangible assets			59	1,647	59
Property, plant and equipment			4	16	6
			63	1,663	65
Current assets
Trade and other receivables			53	96	42
Cash and cash equivalents			2	30	104
Total current assets			55	126	146
Total assets			118	1,789	211
Equity
Share capital			15,110	15,426	15,101
Share premium			29,333	28,761	29,289
Preference shares			129		129
Merger reserve			(1,047)	(1,047)	(1,047)
Other reserves			60	60	60
Foreign currency translation reserve			(23)	(14)	(23)
Share based payment reserve			351	1,278	351
Retained losses			(46,832)	(44,568)	(46,240)
Total equity attributable to the owners of the parent company			(2,919)	(104)	(2,380)
Current liabilities
Trade and other payables			2,730	1,893	2,284
			2,730	1,893	2,284
Non-current liabilities
Debt element of preference shares			271	-	271
Accrued preference share interest			36	-	36
			------------------	------------------	------------------
			307	-	307
					------------------
TOTAL EQUITY AND LIABILITIES			118	1,789	211

 

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the period ended 31 August 2012

 

	Share Capital	Share Premium Account	Preference Shares	Merger Reserve	Share Warrant Reserve	Share based payment reserve	Foreign currency translation reserve	Retained Deficit	Total
	US$000	US$000	US$000	US$000	US$000	US$000	US$000	US$000	US$000
At 28 February 2011	15,051	28,761	-	(1,047)	60	1,278	(3)	(43,584)	516
Loss for the period	-	-		-	-	-		(984)	(984)
Other comprehensive income:
Currency translation  difference	-	-	-	-	-	-	(11)	-	(11)
	----------------	--------------	---------------	-----------	--------------	--------------	-----------------	--------------	-------------
Total comprehensive expense for the period	-	-	-	-	-	-	(11)	(984)	(995)
Issue of shares	375	-	-	-	-	-		-	375
	-----------------	--------------	--------------	------------	--------------	----------------	------------------	-----------------	----------------
At 31 August 2011	15,426	28,761	-	(1,047)	60	1,278	(14)	(44,568)	(104)
Loss for the period	-	-	-	-	-	-	-	(2,602)	(2,602)
Other comprehensive income:
Currency translation  difference	-	-	-	-	-	-	(9)	-	(9)
	----------------	--------------	---------------	------------	--------------	-----------------	-----------------	-----------------	----------------
Total comprehensive expense for the period	-	-	-	-	-	-	(9)	(2,602)	(2,611)
Issue of ordinary shares incl prior period correction	(325)	528	-	-	-	-	-	-	203
Issue of preference shares	-	-	129	-	-	-	-	-	129
Share based compensation	-	-	-	-	-	3	-	-	3
Transfer due to lapsed options	-	-	-	-	-	(930)	-	930	-
	-----------------	--------------	---------------	------------	--------------	----------------	-----------------	----------------	----------------
At 28 February 2012	15,101	29,289	129	(1,047)	60	351	(23)	(46,240)	(2,380)
Loss for the period								(592)	(592)
	----------------	----------------	----------------	--------------	----------------	-----------------	-----------------	-----------------	---------------
Total comprehensive expense for the period								(592)	(592)
Issue of ordinary shares	9	44							53
	----------------	----------------	----------------	--------------	----------------	-----------------	-----------------	-----------------	----------------
At 31 August 2012	15,110	29,333	129	(1,047)	60	351	(23)	(46,832)	(2,919)
	============	============	============	============	============	============	============	============	===========

 

 

 

 

 

CONSOLIDATED CASH FLOW STATEMENT

For the period ended 31 August 2012

 

6 months ended  31 August 2012	6 months ended  31 August 2011	12 months ended 28 February 2012
(Unaudited)	(Unaudited)	(Audited)
US$000	US$000	US$000

 

Cash flow from operating activities
Loss for period before tax	(592)	(984)	(3,586)

Adjustments for:

Finance cost	47	31	112
Share based payment expense	-	-	3
Depreciation	2	5	37
Impairment	-	-	1,566
Changes in working capital
(Increase)/decrease in inventory, accrued income, trade and other receivables	(11)	(30)	24
Increase  in trade and other payables	225	338	508
	------------------------	------------------------	------------------------
Cash used in operating activities	(329)	(640)	(1,336)
Income taxes credit received	-	-	-
	------------------------	------------------------	------------------------
Net cash used in operating activities	(329)	(640)	(1,336)
	------------------------	------------------------	------------------------

 

 

 

Cash flows from financing activities

 

Issue of preference share capital	-	375	400
Proceeds from the issue of shares	53	-	578
Increase in shareholder loans	174	301	477
	------------------------	------------------------	------------------------
Net cash outflow from financing activities	227	676	1,445
	------------------------	------------------------	------------------------

 

Net decrease in cash and cash equivalents

(102)

36

119

 

Cash & cash equivalents at the beginning of the financial period	104	5	5
Effect of foreign exchange rate changes		(11)	(20)
	------------------------	------------------------	------------------------
Cash & cash equivalents at the end of the financial period	2	30	104
	================	================	================

 

NOTES TO THE FINANCIAL STATEMENTS

For the period ended 31 August 2012

 

GENERAL INFORMATION

 

The Group's results are made up to 31 August 2012.

 

The interim financial information for MobileWave Group plc is presented in US Dollars and all values are rounded to the nearest thousands of dollars (US$000) except when otherwise indicated.

 

The company is a limited liability company incorporated in England & Wales whose shares are listed on the London AIM Stock Exchange.

 

The interim report was approved for issue by the Board of Directors on 29 November 2012.

 

BASIS OF PREPARATION

 

The financial information contained in this interim report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. It does not therefore include all the information and disclosures required in the annual financial statements and should be read in conjunction with the Group's financial statements for the period ended 28 February 2012.

 

The financial information for the 6 months ended 31 August 2011 is also unaudited.

 

The Group's statutory accounts for the period ended 28 February 2012 have been delivered to the Registrar of Companies. The report of the auditors on these accounts contained a matter of emphasis in respect of going concern basis of preparation.

 

GOING CONCERN

The Directors of MobileWave Group plc have prepared these interim results on a going concern basis, which assumes the Group will continue in operational existence for the foreseeable future. The Group's ability to meet its future funding and working capital requirements, and therefore continue as a going concern, is dependent upon being able to generate further investment funding, additional shareholder loans and continuing agreement from its major creditors to defer payment of their debt. The Directors have prepared projected cash flow information for the period ending 12 months from the date of approval of these interim results.

 

On the basis of these projections, the Directors have identified the requirement to obtain further shareholder funding and it was announced on 31 July 2012 that Rory Stear, Executive Chairman and major shareholder had agreed further funding of US$ 150,000.00 and negotiations have also been commenced with other major shareholders. Current indications are that these will come to a satisfactory conclusion. Agreement of further investment would, based upon projections prepared by the Group, enable it to continue to meet its debts as they fall due for at least the next 12 months.   As at the date of these interim results, however, there remains material uncertainty over the timing and success of these matters.

 

Should further investment not be secured or trading activities not meet anticipated targets, then the Group may be unable to realise its assets and discharge its liabilities in the normal course of business.  Whilst there is a material uncertainty in relation to the timing and completion of the above matters, the Directors are continuing their negotiations with various parties and, based on indications so far, anticipate a positive outcome and consider that it is appropriate that the financial statements be prepared on a going concern basis. 

 

SIGNIFICANT ACCOUNTING POLICIES

 

In accordance with AIM Rules, the interim report has been prepared using accounting policies consistent with those followed in the preparation of the Group's financial statements for the period ended 28 February 2012.

 

1           LOSS PER SHARE

 

	6 months ended  31 August 2012	6 months ended  31 August 2011	12 months ended 28 February 2012
	(Unaudited)	(Unaudited)	(Audited)
	US$000	US$000	US$000
Loss for period	(592)	(984)	(3,586)
Average number of ordinary shares in issue	112,411	79,113	82,209
	US$	US$	US$
Loss Per Share:
Basic loss per 5p ordinary share (in US$)	(0.005)	(0.01)	(0.04)
Diluted loss per 5p ordinary share (in US$)	(0.005)	(0.01)	(0.04)

 

 

 

The calculation of the basic and diluted loss per ordinary share of 0.5 cents (period to 28 February 2012: 4 cents) each has been based on the loss for the relevant financial period and on 112,410,855 shares (period to 28 February 2012: 82,209,000 shares).  This represents the weighted average number of ordinary shares in issue.  The loss for the year from continuing operations and the weighted average number of ordinary shares for the purposes of calculating the diluted loss per share from continuing operations are the same as for the basic loss per share calculation. This is because the outstanding share options and convertible preference shares would have the effect of reducing the loss per ordinary share and are therefore not dilutive.