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Synchronica - 'time to focus on organic growth'

By BFN News | 09:11 AM | Monday 17 October, 2011


Synchronica, the provider of next-generation mobile messaging solutions, has announced 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. The company estimates 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." At 9:11am: (LON:SYNC) share price was +0.76p at 9.38p Story provided by StockMarketWire.com

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