Annual Report 30 June 2007 - One Horizon Group

30
NOTES TO THE FINANCIAL STATEMENTS (continued)
25. Reserves
Profit and loss
Share premium Merger reserve account
Group $000’s $000’s $000’s
Balance brought forward 723 (10,884) 6,256
Profit for the year – – 2,959
Equity dividends paid – – (235)
Arising on share issue 4,223 – –
Issue costs (101) – –
Balance carried forward 4,845 (10,884) 8,980
The acquisition by the Company of SatCom Distribution Limited and its subsidiaries in May 2004 was accounted for as a
merger. Accordingly a debit merger reserve has been recognised in the consolidated balance sheet representing the difference
between the consideration paid to acquire the Group and its net assets at the date of the transaction.
Profit and loss
Share premium account
Company $000’s $000’s
Balance brought forward 723 3,375
Profit for the year – (427)
Equity dividends paid – (235)
Arising on share issue 4,223 –
Issue costs (101) –
Balance carried forward 4,845 2,713
26. Contingent share capital
Under the terms of the acquisition of Horizon Mobile Communications Group (“HMC”), SatCom have deferred consideration
to pay, based on the gross profit achieved by HMC in the two years ended 31 December 2006. The deferred consideration is
payable 50% in cash and subject to SatCom’s share price at the time of issue, 50% by the issue of new ordinary shares in
SatCom at a 5% discount to the average closing mid-price over the previous month. Based on the forecast results, SatCom
expects to have an obligation in deferred consideration of $1,000,000 of which 50% will be settled in new shares with a
value of $500,000.
On 26 September 2006, the Company paid $608,000 of this deferred consideration of which $304,000 was settled in shares
and a provision for contingent shares brought forward of $214,000 was released. The remaining balance is expected to be
paid by 31 October 2007, based on HMC’s 2006 results.