RNS Number:0793M
GMO Limited
15 November 2006
Press Release 15 November 2006
GMO Limited
("GMO" or the "Group")
Update on the proposed acquisition of 20% equity interest in Wisdom Choice
Investments Ltd. ("WCI")
GMO Limited (AiM:GMO), a leading provider of wireless value-added services in
China, is pleased to announce the following update on the Group's proposed
acquisition, as announced on 29 September 2006, of a 20% equity interest in WCI
("Proposed Acquisition").
WCI is the exclusive service and technology provider of ColorComm Software
Technology Group ("ColorComm Group"). The Proposed Acquisition is conditional
upon, inter alia, WCI having achieved an aggregate EBITDA of at least US$8.2
million in respect of the two financial periods of six months ended 31 December
2005 and 30 June 2006.
Highlights
* WCI achieved audited EBITDA of US$11.9 million in respect of the two
financial periods of six months ended 31 December 2005 and 30 June 2006.
* Revised purchase consideration of US$23.6 million, reflecting the better
than expected performance achieved by WCI during the period.
* Acquisition of initial 20% equity interest in WCI to be partly funded
through the issue of 5 million New Ordinary Shares in GMO.
* Option to acquire the remaining shares in WCI for a consideration of up to
US$94.79 remains unchanged.
Commenting on the announcement, Eugene Goh, Chief Executive of GMO, said: "These
audited results for WCI demonstrate the business is continuing to grow strongly.
This better than expected performance is reflected in the increased
consideration that GMO will pay for the initial 20% equity interest in WCI.
"The combination of WCI and GMO will create one of the largest interactive media
and mobile messaging companies in China. We look to the future with
confidence."
For further information:
GMO Limited
Eugene Goh, Chief Executive Officer Tel: +65 969 000 99
eugene@gmoglobal.com www.gmoglobal.com
Corporate Synergy Plc
John Wakefield / Mike Coe, Corporate Finance Tel: +44 (0) 117 933 0020
Jwakefield@corporatesynergy.co.uk www.corporatesynergy.co.uk
Media enquiries:
Abchurch
Henry Harrison-Topham / Chris Lane Tel: +44 (0) 20 7398 7700
henry.ht@abchurch-group.com www.abchurch-group.com
GMO is pleased to announce the results of WCI, on a pro forma basis, for the two
financial periods of six months ended 31 December 2005 and 30 June 2006.
WCI'S 12 MONTHS ENDED 30 JUNE 2006 FINANCIAL RESULTS (PRO FORMA)
WCI Results Highlights(1) (on the basis of IFRS):
WCI pro forma results RmB ('000)
6 months to 6 months to 12 months to
31 Dec 2005 30 Jun 2006 30 Jun 2006
Revenue 78,420 117,399 195,819
EBITDA(2) 39,081 56,068 95,149
Operating income 38,647 55,545 94,192
Net income 35,506 51,366 86,872
WCI pro forma results US$(3) ('000)
6 months to 6 months to 12 months to
31 Dec 2005 30 Jun 2006 30 Jun 2006
Revenue 9,802 14,675 24,477
EBITDA(2) 4,885 7,008 11,893
Operating income 4,831 6,943 11,774
Net income 4,438 6,421 10,859
Note
1) Details of the WCI pro forma financial results are shown in Appendix I
2) EBITDA comprises operating income plus depreciation and amortization
3) RmB has been translated into US$ at an average exchange rate of RmB 8.00 to US$ 1.00
The pro forma information reflects WCI's ability to enjoy the entire economic
benefits of ColorComm Group plus certain pro forma adjustments as if the
transfer of the economic benefits had taken place at the beginning of the period
presented.
WCI has achieved an aggregate EBITDA of US$11.9 million over the two financial
periods. The results for the two financial periods have been audited by KPMG
Huazhen, China.
REVISED PURCHASE CONSIDERATION
Pursuant to the Share Sale Agreement entered into on 29 September 2006, as a
result of the better than expected aggregate EBITDA achieved by ColorComm over
the two financial periods, the purchase consideration for the Proposed
Acquisition has been revised to approximately US$23.8 million cash from the
initial indicated US$16.4 million cash.
GMO has paid an initial US$5.0 million deposit which will be utilised as part
payment towards the purchase consideration. The remaining US$18.8 million in
respect of the purchase consideration is payable before 31 December 2006,
subject to the fulfillment of all the conditions precedent of the Share Sale
Agreement.
As previously announced, the Company has been granted an option to acquire the
remaining shares in Wisdom Choice for a consideration of up to US$94.79 million,
to be satisfied in cash or by the issue of new ordinary shares in GMO. The
exercise period expires on 15 February 2007 and payment on exercise is dependent
on Wisdom Choice having achieved an audited EBITDA of US$9.5m for the year
ending 31 December 2006.
SOURCE OF FUNDS
It is intended that the US$18.8 million in respect of the Proposed Acquisition
shall be funded partly through the issue of 5.0 million new GMO shares with the
balance through debt financing.
ESTIMATED TIME FRAME FOR COMPLETION
GMO is in the final stages of completing its due diligence in respect of the
Proposed Acquisition. The Proposed Acquisition is envisaged to complete by
December 2006.
FINANCIAL EFFECTS OF THE PROPOSED ACQUISITION
Based on GMO's pro forma interim results for the six months ended 30 June 2006
as announced on 29 September 2006 and WCI's pro forma financial results for six
months ended 30 June 2006 as highlighted above, the pro forma financial effects
of the Proposed Acquisition on GMO are illustrated below.
Financial Effects Highlights:
GMO pro forma results As at After acquisition
30 Jun 2006 of 20% equity
(announced) in WCI
Earnings per share 1.51 pence 2.60 pence
attributable to ordinary equity holders
Net assets per share 17.6 pence 38.5 pence
attributable to ordinary equity holders
Note
1) Details of the GMO pro forma financial effects after the Proposed Acquisition are shown in Appendix II
2) RmB has been translated into US$ at an average exchange rate of RmB 8.00 to US$ 1.00
3) US$ has been translated into # at an average exchange rate of US$ 1.00 to # 0.56
The pro forma information reflects the combined business plus certain pro forma
adjustments, including the public issue pursuant to the listing of GMO, as if
the Proposed Acquisition had taken place at the beginning of the period
presented.
APPENDIX I - WCI PRO FORMA FINANCIAL RESULTS FOR THE TWO FINANCIAL PERIODS OF
SIX MONTHS ENDED 31 DECEMBER 2005 AND 30 JUNE 2006
1) WCI pro forma consolidated income statement
In US$ 6 months to 6 months to 12 months to
31 Dec 2005 30 Jun 2006 30 Jun 2006
Revenue 9,802,556 14,674,816 24,477,373
Business tax and surcharge (302,942) (424,218) (727,160)
Net revenue 9,499,614 14,250,599 23,750,213
Advertisement costs (4,217,136) (6,701,161) (10,918,298)
Gross profit 5,282,478 7,549,437 12,831,915
Admin (397,339) (540,996) (938,335)
EBITDA 4,885,139 7,008,442 11,893,581
Depreciation and amortisation (54,260) (65,372) (119,632)
Operating income 4,830,879 6,943,070 11,773,949
Interest income 11,024 14,586 25,610
Profit before taxation 4,841,903 6,957,656 11,799,559
Taxation (403,594) (536,879) (940,472)
Profit after taxation 4,438,310 6,420,777 10,859,087
Note
1) RmB has been translated into US$ at an average exchange rate of RmB 8.00 to US$ 1.00.
2) The information provided assumes that WCI has been able to enjoy the economic benefits of ColorComm
Group since the beginning of the period presented.
2) WCI pro forma consolidated balance sheet
In US$ As at As at
31 Dec 2006 30 Jun 2006
Non-current assets
Property, plant and equipment 291,376 332,123
Intangible assets 7,500 13,125
Interest in subsidiary 47,546 61,746
Interest in an associates 537,500 537,500
883,922 944,494
Current assets
Trade receivables 2,486,480 4,171,941
Other receivables 490,981 225,020
Amount owing by shareholders 1,434,793 693,000
Cash and cash equivalents 4,138,307 4,578,106
8,550,561 9,668,067
Current liabilities
Trade payables 73,880 71,595
Other payables 201,340 127,136
Salary and welfare payables 80,333 50,698
Income tax payable 459,909 543,334
815,462 792,763
Net current assets 7,735,099 8,875,304
Total assets less current liabilities 8,619,021 9,819,798
Equity attributable to shareholders
Paid in capital 1,687,500 1,765,000
Reserves 890,996 890,996
Retained earnings 6,040,525 7,163,802
8,619,021 9,819,798
3) WCI pro forma consolidated cash flows statement
In US$ 6 months to 6 months to 12 months to
31 Dec 2005 30 Jun 2006 30 Jun 2006
Profit before taxation 4,925,487 7,092,159 12,017,646
Adjustment: -
Share of profit from associates (96,560) (147,139) (243,699)
costs from subsidiary 12,977 12,635 25,612
Profit before taxation 4,841,903 6,957,656 11,799,559
Amortisation 625 6,875 7,500
Depreciation 38,841 45,560 84,400
Interest income (13,876) (16,595) (30,470)
4,867,493 6,993,495 11,860,989
Increase in trade and other receivables (20,280) (1,418,473) (1,438,752)
Decrease in salary and welfare payables (50,138) (9,170) (59,308)
Decrease in trade and other payables 112,480 (35,560) 76,920
4,909,556 5,530,293 10,439,849
Income tax paid (49,063) (454,390) (503,452)
Net cash flow from operating activities 4,860,493 5,075,903 9,936,397
Acquisition of property, plant & (22,380) (84,492) (106,872)
equipment
Acquisition of intangible assets - (12,500) (12,500)
Interest received 13,876 16,595 30,470
Repayment from shareholders (764,343) 741,793 (22,550)
Investment in associate and subsidiary (551,700) (551,700)
Net cash flow from financing activities (1,324,547) 661,396 (663,151)
Dividend paid to shareholders (478,903) (5,297,500) (5,776,403)
Net increase 3,057,043 439,799 3,496,842
Cash and bank balances at beginning 1,081,264 4,138,307 1,081,264
- - -
Cash and bank balances at end 4,138,307 4,578,106 4,578,106
APPENDIX II - GMO PRO FORMA FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 30 JUNE
2006 ADJUSTED FOR THE PROPOSED ACQUISITION
1) GMO's pro forma consolidated income statement
In # 6 months to After acquisition
30 Jun 2006 of 20% equity
(announced) in WCI
Revenue 905,918 905,918
Cost of sales (5,625) (5,625)
Gross Profit 900,293 900,293
Administrative expenses (3,571) (3,571)
Share of EBITDA of the associate - 777,977
EBITDA 896,722 1,674,699
Share of interest income of the associate - 1,634
Depreciation and amortisation (253,332) (253,332)
Profit before taxation 643,390 1,423,001
Share of taxation of the associate - (60,226)
Profit after taxation 643,390 1,362,775
Minority interest (191,570) (191,570)
Profit for the period 451,820 1,171,205
Earnings per share attributable to 1.51 pence 2.60 pence
ordinary equity holders
Note
1) RmB has been translated into US$ at an average exchange rate of RmB 8.00 to US$ 1.00.
2) US$ has been translated into # at an average exchange rate of US$ 1.00 to # 0.56.
3) The information provided assumes that the Proposed Acquisition of WCI occurred at the beginning of the
period presented. WCI is included on a pro forma basis assuming that WCI has been able to enjoy the
economic benefits of ColorComm Group since the beginning of the period presented.
2) GMO's pro forma consolidated balance sheet
In # As at After After acquisition of
20% equity
30 Jun 2006 Public in WCI
(announced) Issue
Non - current assets
Intellectual property 7,083,855 7,083,855 7,083,855
Interest in an associate - - 14,040,385
7,083,855 7,083,855 21,124,240
Current assets
Trade and other receivables 1,056,848 1,056,848 1,056,848
Cash and bank balances 360,968 4,160,968 360,968
1,417,816 5,217,816 1,417,816
Current liabilities
Accruals 108 108 108
Amount owing to related parties 173,344 173,344 173,344
Provision 2,488,094 2,488,094 2,488,094
2,661,546 2,661,546 2,661,546
Net current liabilities (1,243,730) 2,556,270 (1,243,730)
5,840,125 9,640,125 19,880,510
Financed by:
Capital and reserves
Equity attributable to equity holders of
the parent
Share capital 3,000,000 4,000,000 4,500,000
Share premium 1,256,056 4,056,056 11,056,056
Foreign exchange reserve (241,082) (241,082) (241,082)
Retained profits 1,276,075 1,276,075 1,995,460
5,291,049 9,091,049 17,310,434
Minority Interest 549,076 549,076 549,076
Total equity 5,840,125 9,640,125 17,859,510
Non-current liability
Bank borrowings - - 2,021,000
5,840,125 9,640,125 19,880,510
Net assets per share attributable to 17.6 pence 22.7 pence 38.5 pence
ordinary equity holders
Note
GMO's balance sheet has been adjusted to show the effect of the Placing of 10m
new Ordinary shares on Admission to AIM on 6 September 2006.
3) GMO's pro forma consolidated cash flows statement
In # As at After After acquisition of
20% equity
30 Jun 2006 Public in WCI
(announced) Issue
Cash flows from operating activities
Profit before taxation 643,390 643,390 1,423,001
Adjustments for non-cash item:
Amortisation of intellectual property 253,332 253,332 253,332
Other non-cash items (13,326) (13,326) (13,326)
Share of results of associate - - (779,611)
Profit before working capital changes 883,396 883,396 883,396
Changes in working capital:
Increase in trade and other (1,056,848) (1,056,848) (1,056,848)
receivables
Increase in accruals 108 108 108
Increase in amount owing by related 173,344 173,344 173,344
parties
Net cash generated from operating - - -
activities
Cash flows from investing activities
Acquisition of subsidiary 360,968 360,968 360,968
Investment in associate - - (13,321,000)
Net cash generated from in investing 360,968 360,968 (12,960,032)
activities
Cash flows from financing activity
Proceeds from issuance of shares - 3,800,000 11,300,000
Drawdown of bank loan - - 2,021,000
Net cash used in financing activity - 3,800,000 13,321,000
Net decrease in cash and cash 360,968 4,160,968 360,968
equivalents
Cash and cash equivalents at 1 January - - -
Cash and cash equivalents at end of 360,968 4,160,968 360,968
period
- Ends -
This information is provided by RNS
The company news service from the London Stock Exchange
END
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