Reports on Profit Forecast

RNS Number : 1963W

Synchronica PLC

25 January 2012

 

25 January 2012

Synchronica plc

("Synchronica" or "the Company")

Trading Update

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION

Reports on Profit Forecast

On 3 January 2012, the Board of Synchronica plc ("Synchronica" or the "Company")  (AIM: SYNC) (TSX Venture: SYN) announced that it received an approach from a competitor, Myriad Group AG ("Myriad"), regarding a possible offer by Myriad for the Company.

On 16 January 2012 Synchronica announced that, according to unaudited data from its internal management reports, the Company was profitable at the EBITDA level for the months of November and December 2011, subsequent to the significant cost-reduction initiatives recently implemented.

The statement regarding EBITDA levels for November and December 2011 is considered a profit forecast (the "Profit Forecast") under Rule 28 of the Takeover Code. 

The Profit Forecast has now been reported on by BDO LLP, as Synchronica's reporting accountant, and by BDO Corporate Finance, a division of BDO LLP, as Synchronica's financial adviser.  Copies of these reports are included in Parts B and C respectively of the Appendix to this announcement.

Enquiries:

Synchronica plc [phone]	Chief Executive Officer	Angus Dent
BDO Corporate Finance [phone]	Rule 3 Advisor	John Stephan; David Abbott; Susan Brice
Northland Capital Partners [phone]	Nominated Advisor Corporate Broker	Shane Gallwey; Rod Venables Katie Shelton
Walbrook PR Ltd [phone]	Media and Analyst Enquiries, UK	Paul McManus [e-mail]
TMX Equicom [phone] Ext 290	Media and Analyst Enquiries, North America	Craig MacPhail [e-mail]

BDO Corporate Finance, a division of BDO LLP, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting for Synchronica, as financial adviser in relation to the contents of this announcement, and is not acting for or advising any other person and accordingly will not be responsible to any other person other than Synchronica for providing the protections afforded to the clients of BDO LLP or for providing advice in relation to the contents of this announcement.  Neither BDO LLP nor any of its affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of BDO LLP in connection with this Announcement, any statement contained herein or otherwise.

BDO LLP and BDO Corporate Finance, a division of BDO LLP, have given and have not withdrawn their written consent to the issue of this announcement with the inclusion of their reports concerning the Profit Forecast in the form and context in which they are included.

This Announcement is not intended to and does not constitute or form part of an offer to sell or the solicitation of an offer to subscribe for or buy or an invitation to purchase or subscribe for any securities or the solicitation of any vote or approval in any jurisdiction.  This announcement does not constitute a prospectus or a prospectus equivalent document. 

This announcement contains certain forward-looking statements with respect to the financial condition, results of operations and business of Synchronica and certain plans and objectives of the board of Synchronica with respect thereto. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as 'anticipate', 'target', 'expect', 'estimate', 'intend', 'plan', 'goal', 'believe', 'will', 'may', 'should', 'would', 'could' or other words of similar meaning. These statements are based on assumptions and assessments made by the board of Synchronica in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe appropriate. By their nature, forward-looking statements involve risk and uncertainty, because they relate to events and depend on circumstances that will or may occur in the future and the factors described in the context of such forward-looking statements in this announcement could cause actual results and developments to differ materially from those expressed in or implied by such forward-looking statements. Although Synchronica and the persons who have accepted responsibility for the information contained in this announcement believe that the expectations reflected in their respective forward-looking statements are reasonable, they can give no assurance that such expectations will prove to have been correct and Synchronica and the persons who have accepted responsibility for the information contained in this announcement therefore caution you not to place undue reliance on these forward-looking statements which speak only as at the date of this announcement.

Overseas jurisdictions

The release, publication or distribution of this announcement in jurisdictions other than the United Kingdom may be affected by the laws of the relevant jurisdictions in which they are located or of which they are citizens. Such persons (including, without limitation, nominees, trustees and custodians) should inform themselves of, and observe, any applicable legal or regulatory requirements of their jurisdictions.

This announcement has been prepared for the purposes of complying with English law and the Code and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws of jurisdictions outside the United Kingdom.

Dealing disclosure requirements

Under Rule 8.3(a) of the Code any person who is interested in 1 per cent. or more of any class of relevant securities of Synchronica or of any paper offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or is likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any paper offeror is first identified.  An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) Synchronica and (ii) any paper offeror(s).  An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 pm (London time) on the 10th Business Day following the commencement of the offer period and, if appropriate, by no later than 3.30 pm (London time) on the 10th Business Day following the announcement in which any paper offeror is first identified.  Relevant persons who deal in the relevant securities of the offeree company or of a paper offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1 per cent. or more of any class of relevant securities of Synchronica or of any paper offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any paper offeror.  A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) Synchronica and (ii) any paper offeror, save to the extent that these details have previously been disclosed under Rule 8.  A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 pm (London time) on the Business Day following the date of the relevant dealing.

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire or control an interest in relevant securities of Synchronica or a paper offeror, they will be deemed to be a single person for the purpose of Rule 8.3.

Opening Position Disclosures must also be made by Synchronica and by any offeror and Dealing Disclosures must also be made by Synchronica, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

Details of the offeree and offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified.  If you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure, you should contact the Panel's Market Surveillance Unit on [phone].

Appendix

Part A - Profit Forecast including basis on which it was prepared

Synchronica released the following announcement on 16 January 2012:

"Synchronica plc("Synchronica" or "the Company") (AIM: SYNC) (TSX Venture: SYN), announced on 13 January 2012 that it expects to report full year revenues of approximately US$23 million for the year ended 31 December 2011. 

Synchronica also announces today that, according to unaudited data from its internal management reports, the Company was profitable at the EBITDA level for the months of November and December 2011, subsequent to the significant cost-reduction initiatives recently implemented."

The statement above regarding EBITDA levels for November and December 2011 is considered a profit forecast under Rule 28 of the Takeover Code.

The Profit Forecast has been prepared on a basis consistent with that adopted by Synchronica in the preparation of its interim financial statements for the six months ended 30 June 2011 and the nine months ended 30 September 2011 and that expected to be adopted in its financial statements for the year ended 31 December 2011. The annual financial statements of Synchronica are prepared in accordance with IFRSs adopted by the European Union. Attention is drawn to previous disclosures by the Company in relation to the appropriateness of preparing the Group's financial statements on the going concern basis.

The Profit Forecast was based on the unaudited management accounts for the two months ended 31 December 2011.

There are no principal assumptions which could have a material effect on the achievement of the Profit Forecast.

Reports relating to the Profit Forecast

The Directors of Synchronica, who are solely responsible for the Profit Forecast, have received the following reports from BDO LLP and BDO Corporate Finance, a division of BDO LLP, relating to the Profit Forecast.

 

Part B - Report of Reporting Accountant

The Directors

Synchronica plc

Mount Pleasant House

Lonsdale Gardens

Royal Tunbridge Wells

Kent  TN1 1NY

BDO Corporate Finance

BDO LLP

125 Colmore Row

Birmingham  B3 3SD

25 January 2012

Synchronica plc

Dear Sirs

We report on the estimate comprising earnings before interest, taxation, depreciation and amortisation ("EBITDA") of Synchronica plc (the "Company") and its subsidiaries (together "the Group") for the months of November and December 2011 (the "EBITDA Estimate").  The EBITDA Estimate and the basis on which it is prepared is set out in the announcement issued by the Company dated 25 January 2011 (the "Announcement").

This report is required by Rule 28.3(b) of the City Code on Takeovers and Mergers (the "City Code") and is given for the purpose of complying with that rule and for no other purpose. Accordingly, we assume no responsibility in respect of this report to Myriad Group AG (the "Offeror") or to any person connected to, or acting in concert with, the Offeror or to any other person who is seeking or may in future seek to acquire control of the Company (an "Alternative Offeror") or to any other person connected to, or acting in concert with, an Alternative Offeror.

Responsibilities

It is the responsibility of the directors of the Company (the "Directors") to prepare the EBITDA Estimate in accordance with the requirements of the City Code.  In preparing the EBITDA Estimate the Directors are responsible for correcting errors that they have identified which may have arisen in unaudited management accounts used as the basis of preparation for the EBITDA Estimate.

It is our responsibility to form an opinion as required by Rule 28.3(b) of the City Code as to the proper compilation of the EBITDA Estimate and to report that opinion to you.

Save for any responsibility arising under Rule 28.3(b) of the City Code to any person as and to the extent there provided, to the fullest extent permitted by the law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such other person as a result of, arising out of, or in connection with this report or our statement, required by and given solely for the purposes of complying with Rule 28.4 of the City Code consenting to the issue of the Announcement.

Basis of preparation of the EBITDA Estimate

The EBITDA Estimate has been prepared on the basis stated in the Announcement and is based on the unaudited management accounts for the months of November and December 2011.  The EBITDA Estimate is required to be presented on a basis consistent with the accounting policies of the Group.

Basis of opinion

We conducted our work in accordance with the Standards for Investment Reporting issued by the Auditing Practices Board in the United Kingdom. Our work included evaluating the basis on which the historical financial information for the months of November and December 2011 included in the EBITDA Estimate has been prepared and considering whether the EBITDA Estimate has been accurately computed using that information and whether the basis of accounting used is consistent with the accounting policies of the Group.

We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with reasonable assurance that the EBITDA Estimate has been properly compiled on the basis stated.

However, the EBITDA Estimate has not been audited.  The actual results reported, therefore, may be affected by revisions required to accounting estimates due to changes in circumstances, the impact of unforeseen events and the correction of errors in the management accounts. Consequently, we can express no opinion as to whether the actual results achieved will correspond to those shown in the EBITDA Estimate and the difference may be material.

Our work has not been carried out in accordance with auditing or other standards and practices generally accepted in the United States of America or other jurisdictions outside the United Kingdom and accordingly should not be relied upon as if it had been carried out in accordance with those standards and practices.

Opinion

In our opinion, the EBITDA Estimate has been properly compiled on the basis stated and the basis of accounting used is consistent with the accounting policies of the Group.

Yours faithfully

BDO LLP

Chartered Accountants

Part C - Report by BDO Corporate Finance, a division of BDO LLP, to Synchronica

BDO Corporate Finance

BDO LLP

125 Colmore Row

Birmingham  B3 3SD

To:

The Directors

Synchronica plc

Mount Pleasant House

Lonsdale Gardens

Royal Tunbridge Wells

Kent  TN1 1NY

25 January 2012

Dear Sirs,

Report on profit forecast by Synchronica plc

We refer to the profit forecast of Synchronica plc ("Synchronica" or the "Company") announced on 16 January 2012 for the months of November and December 2011 (the 'Profit Forecast').

We have discussed the Profit Forecast, together with the basis on which it has been prepared with the Directors of Synchronica ("Directors") and with BDO LLP.  Synchronica has confirmed to us that all information relevant to the Profit Forecast has been disclosed to us.   We have relied upon the accuracy and completeness of all such information and have assumed such accuracy and completeness for the purposes of providing this letter.

We have also discussed the accounting policies and basis of calculation adopted in arriving at the Profit Forecast with the Directors and BDO LLP ("BDO"), and we have considered the letter from BDO LLP dated 25 January 2012 addressed to yourselves and ourselves on this matter.

This letter is provided to you solely in connection with Rule 28.3(b) of the City Code on Takeovers and Mergers and for no other purpose. Accordingly, save for any responsibility which we may have to those persons to whom this letter is expressly addressed, to the fullest extent permitted by law we do not assume any responsibility and will not accept any liability to any other person for any loss suffered by any such other person as a result of, or in connection with this letter.

On the basis of all of the foregoing, we consider that the Profit Forecast, for which you in your capacity as Directors of Synchronica are solely responsible, for the purposes of the City Code on Takeovers and Mergers, has been prepared with due care and consideration.

Yours faithfully

BDO LLP

 

END

 

 

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