Trading Update

RNS Number : 2586Q

Synchronica PLC

17 October 2011

 



Synchronica Plc

Trading Update

Synchronica plc implements corporate reorganization program
with focus on generating profitable growth

Synchronica plc ("Synchronica" or "the Company") (AIM: SYNC; TSX VENTURE: SYN), the international provider of next-generation mobile messaging solutions, announces initiatives that will reduce its operating costs and better capitalise on organic sales growth via its contracted network of 93 mobile carrier and 10 device manufacturer customers. Synchronica is also providing initial estimates of its third quarter 2011 revenue.

We estimate revenue for the three months ended 30 September 2011 to be approximately US$6.6 million, an increase of 742 percent over US$0.7 million realized in the same period in 2010. This significant increase reflects the contributions of the recently acquired Operator Branded Messaging business from Nokia. Approximately 90 percent of revenue was recurring, compared to 70 percent recurring in the third quarter of 2010. Margins are in line with management expectations. Full Q3 2011 results will be released by the filing deadline of 29 November 2011.

"The strong revenue growth we realized last quarter demonstrates the effectiveness of our strategy to build critical mass in the mobile messaging market through acquisitions," said Angus Dent, Synchronica's CEO. "As we move forward, our focus will be on optimizing our business to achieve cash flow generation and profitability through cost efficiencies.  We plan to continue to invest in the development of our technology and winning new customers, financed through the cash generated from the business."

Having made five acquisitions over the past three years, the Company has put a reorganization program in place to realize synergies through a more complete integration of the combined operations. The reorganization, which is expected to be completed at the end of the current quarter, is estimated to give rise to a one-time cost of approximately US$2.0 million and savings of at least US$12 million per year. This brings the Company's costs in line with its current recurring revenue stream, and enables margins on non-recurring revenues to fall straight through to profit. Synchronica will achieve these savings by primarily closing several satellite offices, and through a business-wide reduction in headcount of approximately 22 percent. 

Synchronica has addressed short term cash flow challenges through accelerated payments agreed with key customers. The Company has also been offered a factoring facility on its accounts receivable and a debt finance facility, both of which could be pursued if required.

"Our goal of being the global leader in advanced mobile messaging remains unchanged. However, following five acquisitions in three years, the Board believes it is time to focus on organic growth, profitability and cash generation," stated David Mason, Synchronica's Executive Chairman. "We now have an enviable global customer base of 93 mobile carriers and 10 handset manufacturers and we will focus on developing our relationship and revenues with these customers."

For more information, please contact:

Synchronica plc	David Mason, Executive Chairman	[phone]
	Angus Dent, CEO	[phone]
Walbrook PR		[phone]
Media Enquiries	Paul McManus	[e-mail]
Investor Enquiries	Paul Cornelius	[e-mail]
TMX " valign="top"> Craig MacPhail	[e-mail] [phone] Ext 290
Northland Capital Partners		[phone]
(Nominated Adviser)	Shane Gallwey/Rod Venables
(Corporate Broker)	Katie Shelton

About Synchronica

Synchronica plc is a leading developer of standards-based, next-generation mobile messaging solutions for mobile operators and device manufacturers. The Company's flagship product Synchronica Mobile Gateway provides pre-RCS push email, synchronization, instant messaging (IM), and social networking services to any mobile phone currently in use. Synchronica's patented transcoding technology uses advanced streaming to download email attachments and dramatically reduces the consumption of wholesale network bandwidth by as much as 90 percent.

Synchronica's white-labeled products are licensed by more than 90 mobile operators and eight device manufacturers from emerging and developed markets, delivering mass market messaging services across the entire customer base, providing competitive advantage, diversifying revenues, and reducing churn.

Synchronica is headquartered in the United Kingdom and has a regional presence in Canada, as well as the USA, Hong Kong, Spain, and Dubai. Synchronica also operates dedicated development centers in Germany and the Philippines. A public company, Synchronica is traded on the AIM list of the London Stock Exchange (SYNC) and the Venture Exchange of the Toronto Stock Exchange (SYN). For further information, please visit www.synchronica.com

Cautionary Statements

The foregoing information may contain forward-looking statements relating to the future performance of Synchronica plc and estimates and expectations regarding financial and other performance for recently completed fiscal periods. Terms such as "estimated", "expected", "plan" and "focus", as well as similar terms and phrases, are intended to identify these forward-looking statements.  Forward-looking statements are subject to certain risks and uncertainties and are based on estimates and assumptions made by Synchronica in light of its experience and its perception of current conditions, trends and future developments, as well as other factors believed to be appropriate in the circumstances.  Actual results may differ materially from Synchronica's estimates, plans and expectations. These estimates, plans, expectations, risks and uncertainties are detailed herein and from time to time in the public filings and announcements made by Synchronica, including those made with AIM, a market of the London Stock Exchange, with the TSX Venture Exchange or with securities regulators.  Readers should not place undue reliance on Synchronica's forward-looking statements, and Synchronica does not assume any obligation to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.   No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein.

 

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