RNS Number : 8642B
GMO Limited
22 August 2008
Press Release 22 August 2008
GMO Limited
("GMO" or the "Group")
Unaudited 2008 Interim Results
GMO Limited (AIM:GMO), an AIM-listed leading provider of wireless value-added services ('WVAS') currently focused on the Chinese market
today announces its unaudited Interim Results, for the six months ended 30th June 2008.
Highlights
* Revenue amounting to USD1.8 million (2007: USD5.4 million)
* Loss for the period USD1.6 million (2007: Profit of USD0.6 million)
Commenting on the results, Tan Sri Datuk Dr Omar Rahman, Chairman of GMO, said: "Our revenue is considerably lower in the first half of
this year due to the challenging operating environment for wireless service providers in China. Nonetheless, our businesses have gradually
stabilized during the second quarter. We remain committed to seeking the best possible opportunities and outcomes for the benefit of our
shareholders, including the pursuit of potential strategic investments and synergistic collaborations."
Eugene Goh, Chief Executive Officer of GMO, added: "Like most wireless service providers in China, we continued to face a challenging
regulatory environment for our wireless value-added services business. We remain confident in the development and potential of our core
wireless services in China as fundamentals remain strong, and we forecast that our wireless business can grow from the levels reported in
this most recent half."
For further information:
GMO Limited
Eugene Goh, Chief Executive Officer Tel: + 65 9690 0099
eugene@gmoglobal.com www.gmoglobal.com
Blue Oar Securities
Justin Lewis Tel: +61 (0) 3 8637 1540
jlewis@blueoarsecurities.co.uk
John Wakefield Tel: +44 (0) 117 933 0020
jwakefield@blueoarsecurities.co.uk www.blueoarsecurities.co.uk
Chairman's Statement
Overview
The GMO Group was established to take advantage of opportunities in the wireless value-added services ("WVAS") sector in China. GMO was
listed on the AIM market of the London Stock Exchange in September 2006 and is seeking to become a leading cellular communication and WVAS
company in China. Working closely with the mobile network operators in China, GMO offers a variety of wireless services, content and
applications to mobile users in China.
For the 6 months ended 30 June 2008, GMO made a loss before tax of USD 1.7 million, after taking into account financing costs associated
with the Murabahah Loan Notes of USD840K, and share of loss of USD23K (2007: profit of USD489K) from an associated company. Higher
administrative and other expenses during the period of USD538K (2007: USD440K) were due to the share-base payment of USD95K upon
cancellation of share options granted to directors.
Operational Review
The operating environment within the WVAS industry in the first half 2008 has been very difficult due to the implementation of various
new regulations imposed by the Ministry of Information Industry of China. This has resulted in content providers spending considerably less
on product development than before the regulations and also in less advertising, which had a knock-on effect on the WVAS industry.
Consequently, revenues and gross profit for the 6 months ended 2008 have been considerably lower than the Company anticipated. In addition,
the adoption of 3G has been delayed in China. This was to be a significant factor to boost the already exponential growth of the
telecommunications sector in China. GMO will continue to invest in research and development to roll-out new products and services in
anticipation of the 3G rollout in China and the Company is well positioned to exploit opportunities in this new market as it develops.
Loan Notes
There are currently US$19,713,519 Murabahah Loan Notes outstanding. As announced on 18 July 2008 the Company has agreed with the holders
of the loan notes that they may be redeemed for an issue of shares at 7p per share. At the recent EGM the shareholders of the Company
approved the change in the terms of the loan notes and the Company anticipates that the loan notes will be converted shortly, subject to the
holders of the loan notes obtaining their respective approvals. An announcement will be made in due course regarding the conversion that
will significantly strengthen the balance sheet of the Company.
Current trading and prospects
GMO, in its quest to become a leading WVAS and Media Company in China, is constantly evaluating its business and other potential
opportunities. The Group continues to explore various acquisition opportunities in order to strengthen their businesses. The Group's
investment strategy will be to acquire profitable trading businesses which are cash generative and capable of organic growth or growth by
acquisition. In the meantime, GMO will continue to expand its range of products and services to increase its revenue base and to improve its
profitability.
Tan Sri Datuk Dr. Omar A. Rahman
Chairman
22 August 2008
CONDENSED CONSOLIDATED INCOME STATEMENT (UNAUDITED)
(UNAUDITED) (UNAUDITED) (AUDITED)
6 MONTHS 6 MONTHS YEAR
ENDED ENDED ENDED
30.6.08 30.6.07 31.12.2007
Notes USD'000 USD'000 USD'000
Revenue 1,812 5,396 7,616
Cost of sales (1,688) (3,220) (5,012)
* * *
Gross Profit 123 2,176 2,604
Administrative and other (538) (440) (1,014)
expenses
* * *
EBITDA* (414) 1,736 1,590
Other income 14 48 139
Finance costs (840) (762) (1,638)
Amortisation and depreciation (454) (453) (907)
* * *
(Loss) / Profit from (1,694) 569 (816)
operations
Share of (loss) / profit after (23) 489 372
tax
of associate
* * *
(Loss) / Profit before (1,717) 1,058 (444)
taxation
Taxation - - -
* * *
(Loss) / Profit after taxation (1,717) 1,058 (444)
Minority interest 124 (486) (487)
(Loss) / Profit for the period (1,593) 572 (931)
/ year
(Loss) / Earnings per share
attributable
to equity holders of the
parent
- Basic (cents) ^ 5 (3.97) 1.43 (2)
- Diluted (cents) NA NA NA
*EBITDA - denotes "(Loss) / Earnings Before Interest, Taxation, Depreciation and Amortisation."
This is the unaudited interim report on the consolidated results for the financial period ended 30 June 2008 announced by the Company in
compliance with AIM requirements.
The unaudited consolidated income statement should be read in conjunction with the audited financial statements for the financial year
ended 31 December 2007 and the accompanying explanatory notes attached to the financial statements.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(UNAUDITED) (UNAUDITED) (AUDITED)
AT AT AT
30.6.2008 30.6.2007 31.12.2007
Notes USD'000 USD'000 USD'000
ASSETS
NON-CURRENT ASSETS
Plant and equipment 4 1 *
Intellectual 11,283 12,190 11,736
property
Investment in 24,537 24,645 24,560
associate
35,824 36,836 36,296
CURRENT ASSETS
Amount owing by a 274 1,830 47
related party
Other receivables, 66 22 34
deposits and
prepayments
Cash and bank 493 1,936 1,561
balances
833 3,788 1,642
TOTAL ASSETS 36,657 40,624 37,938
EQUITY AND LIABILITIES
EQUITY
Share capital 7 7,542 7,542 7,542
Share premium 9,810 9,810 9,810
Other reserve - 161 253
Exchange fluctuation 4 37 22
reserve
(Accumulated losses) (1,568) 1,180 (323)
/ Retained earnings
TOTAL SHAREHOLDERS' 15,788 18,730 17,304
EQUITY
MINIORITY INTEREST 1,584 1,724 1,711
TOTAL EQUITY 17,372 20,454 19,015
NON-CURRENT - -
LIABILITY
Murabahah Loan Notes - 16,816 16,816
CURRENT LIABILITIES
Other payables and 101 150 290
accruals
Murabahah Loan Notes 6, 7 18,771 760 1,638
Amount owing to 413 2,444 179
related parties
19,285 3,354 2,107
TOTAL LIABILITIES 19,285 20,170 18,923
TOTAL EQUITY AND LIABILITIES 36,657 40,624 37,938
- - -
Net assets per share attributable to ordinary
equity
holders of the parent (cents) 40 50 47
* - Below USD1,000
This is the unaudited interim report on the consolidated balance sheets for the financial period ended 31 June 2008 announced by the
Company in compliance with AIM requirements.
The unaudited consolidated balance sheets should be read in conjunction with the audited financial statements for the financial year
ended 31 December 2007 and the accompanying explanatory notes attached to the financial statements.
CONDENSED CONSOLIDATE STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)
Non-Distributable Distributable
Retained
Exchange Earnings /
Share Share Fluctuation Other (Accumulated Minority Total
Capital Premium Reserve Reserve Losses) Interest Equity
USD'000 USD'000 USD'000 USD'000 USD'000 USD'000 USD'000
At 1 January 2008 7,542 9,810 22 253 (323) 1,711 19,015
Exchange difference (18) (3) (21)
Share-based payment 95 95
(1,593) (124) (1,717)
Loss for the financial
period
(348) 348 -
Cancellation of share
options granted
At 30 June 2008 7,542 9,810 4 - (1,568) 1,584 17,372
At 1 January 2007 7,542 9,810 72 161 608 1,207 19,400
Exchange difference (35) - (35)
572 517 1,089
Profit for the financial
period
* * * * * * *
At 30 June 2007 7,542 9,810 37 161 1,180 1,724 20,454
7,542 9,810 72 161 608 1,207 19,400
(AUDITED)
At 1 January 2007
Exchange difference (50) 17 (33)
Share-based payment 92 92
(931) 487 (444)
Loss for the financial
year
7,542 9,810 22 253 (323) 1,711 19,015
(AUDITED)
At 31 December 2007
This is the unaudited interim report on the consolidated statements of changes in equity for the financial period ended 31 June 2008
announced by the Company in compliance with AIM requirements.
The unaudited consolidated statements of changes in equity should be read in conjunction with the audited financial statements for the
financial year ended 31 December 2007 and the accompanying explanatory notes attached to the financial statements.
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS (UNAUDITED)
(UNAUDITED) (UNAUDITED) (AUDITED)
6 MONTHS 6 MONTHS YEAR
ENDED ENDED ENDED
30.6.08 30.6.07 31.12.2007
Notes USD'000 USD'000 USD'000
Cash flows for operating activities
(Loss) / Profit before taxation (1,717) 1,058 (441)
Adjustments for:
Amortisation of Intellectual property and 454 453 907
depreciation
Share option granted to directors 95 - 92
Cost on Murabahah Loan Notes 840 762 1,638
Interest income (6) (48) (64)
Unrealised gain on foreign exchange - 0 (75)
Share of results of associate 23 (489) (375)
* * *
Operating (loss) / profit before working (311) 1,736 1,682
capital changes
Changes in working capital:
Increase in amount (227) (446) (963)
owing to a related
party
(Increase) / Decrease (32) 192 180
in other receivables
Decrease in accruals (190) (4,296) (1,855)
and provisions
Cash for operations (760) (2,814) (956)
Net cash for operating activities (760) (2,814) (956)
Cash flows from / (for) investing activities
Acquisition of plant and equipment (3) (1) -
Acquisition of an associate - (19,156) (19,188)
Interest received 6 48 64
Net cash from / (for) investing activities 3 (19,109) (19,124)
Cash flows (for) / from financing activities
(Repayment of) / Proceeds from Murabahah 6 (522) 16,815 16,816
Loan Notes
Advances from / (Repayment to) related 232 725 (1,540)
parties
Net cash (for) / from financing activities (290) 17,540 15,276
Net decrease in cash and cash equivalents (1,047) (4,383) (4,804)
Cash and cash equivalents at the beginning of the period 1,561 6,323 6,323
/ year
Effect of foreign exchange rate changes on (21) (4) 42
cash and cash equivalents
Cash and cash equivalents at end of period / year (i) 493 1,936 1,561
i) Cash and cash equivalents
Cash and cash equivalents included in the unaudited cash flow
statements comprise the following balance sheet amounts:
Cash and bank balances 493 1,936 1,561
493 1,936 1,561
This is the unaudited interim report on the consolidated cash flow statements for the financial period ended 30 June 2008 announced by
the Company in compliance with AIM requirements.
The unaudited consolidated cash flow statements should be read in conjunction with the audited financial statements for the financial
year ended 31 December 2007 and the accompanying explanatory notes attached to the financial statements.
NOTES TO THE INTERIM FINANCIAL REPORT
1. Basis of Preparation
The interim financial statements are unaudited and have been presented in accordance to International Financial Reporting Standards and
the requirements of AIM rules for the financial period from 1 January 2008 to 30 June 2008.
2. Qualification of Financial Statements
The auditor's report on the latest audited financial statements for the financial year ended 31 December 2007 was not subject to any
audit qualification.
3. Accounting Convention
The financial statements are prepared under the historical cost convention and on the going concern basis.
4. Basis of Consolidation
a. Subsidiaries
The consolidated financial statements include the financial statement of the Company and its subsidiary as at the balance sheet date.
A subsidiary is defined as a company in which the Group has the power, directly or indirectly, to exercise control over the financial
and operating policies so as to obtain benefits from its activities.
All subsidiaries are consolidated using the acquisition method of accounting. Under the acquisition method of accounting, the results of
subsidiaries acquired or disposed of are included from the date of acquisition or up to the date of disposal. At the date of acquisition,
the fair values of the subsidiaries' net assets are determined and these values are reflected in the consolidated financial statements.
Intra-group transactions, balances and unrealized gains on transactions are eliminated; unrealized losses are also eliminated unless
cost cannot be recovered. Where necessary, adjustments are made to the financial statements of subsidiaries to ensure consistency of
accounting policies with those of the Group.
Minority interest is measured at the minorities' share of the fair values of the identifiable assets and liabilities of the acquired.
4. Basis of Consolidation (Continued)
b. Associates
Associates are entities in which the Group has significant influence and that is neither a subsidiary nor an interest in a joint
venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but not in
control or joint control over those policies. Investments in associates are accounted for in the consolidated financial statements using the
equity method of accounting. Under the equity method, the investment in associate is carried in the consolidated balance sheet at cost
adjusted for post-acquisition changes in the Group's share of net assets of the associate. The Group's share of the net profit or loss of
the associate is recognised in the consolidated profit or loss. Where there has been a change recognised directly in the equity of the
associate, the Group recognises its share of such changes. In applying the equity method, unrealised gains and losses on transactions
between the Group and the associate are eliminated to the extent of the Group's interest in the associate. After application of the equity method, the Group determines whether it is necessary to recognise any
additional impairment loss with respect to the Group's net investment in the associate. The associate is equity accounted for from the date
the Group obtains significant influence until the date the Group ceases to have significant influence over the associate.
Goodwill relating to an associate is included in the carrying amount of the investment and is not amortised. Any excess of the Group's
share of the net fair value of the associate's identifiable assets, liabilities and contingent liabilities over the cost of the investment
is excluded from the carrying amount of the investment and is instead included as income in the determination of the Group's share of the
associate's profit or loss in the period in which the investment is acquired. When the Group's share of losses in an associate equals or
exceeds its interest in the associate, including any long-term interests that, in substance, form part of the Group's net investment in the
associates, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate. The
most recent available audited financial statements of the associates are used by the Group in applying the equity method. Where the dates of
the audited financial statements used are not coterminous with those of the Group, the share of results is arrived at from the last audited financial statements available and management
financial statements to the end of the accounting period. Uniform accounting polices are adopted for like transactions and events in similar
circumstances. In the Company's separate financial statements, investments in associates are stated at cost less impairment losses.
On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.
5. (Loss) / Earnings per share
Basic (loss) / earnings per share is calculated by dividing the net (loss) / profit for the period / year by the weighted average number
of ordinary shares in issue during the financial period / year.
(UNAUDITED) (UNAUDITED) (AUDITED)
6 MONTHS 6 MONTHS YEAR
ENDED ENDED ENDED
30.6.2008 30.6.2007 31.12.2007
Net (loss) / earnings for the
period / year (USD'000) (1,593) 572 (931)
Weighted average number of ordinary
shares in Issue 40,100,000 40,100,000 40,100,000
(Loss) / Earnings per share (cents) (3.97) 1.43 (2)
6. Murabahah Loan Notes
The Company negotiated the repayment term of the redemption price of Murabahah Loan Notes of USD1,738,600, with the subscribers which is
due on 21 January 2008.
The subscriber has extended the partial repayment of USD521,581 to 1 April 2008 and USD 1,217,019 will be repayable on 21 January 2009
at non-interest bearing.
7. Material Events subsequent to the Financial Period Ended 30 June 2008
on 18 July 2008 the Company has announced that:
(i) it has entered into agreements with each of the holders of the Murabahah Loan Notes issued by the Company in January 2007
("Loan Notes") to vary the terms of the Loan Notes to allow their redemption by way of an issue of ordinary shares in the Company at 7 pence
per share;
(ii) upon the conversions, the Company will issue an aggregate of up to 143,289,763 new ordinary shares of no par value, representing
358.22 per cent of the current issued share capital;
(iii) the conversions and issue of new ordinary shares, which are subject to certain conditions, are expected to take place in mid
August; and
(iv) a capital reorganisation, pursuant to which the companies existing ordinary shares of 10p will be converted to new ordinary shares
of no par value.
On 24 July 2008, the Company has announced that it posted a circular to all shareholders containing a notice of Extraordinary General
Meeting ("EGM") to be held at 5.00p.m. (Malaysian time) on 15 August 2008.
The following resolutions have been approved in the EGM held on 15 August 2008:
(i) Convert all the Existing Ordinary Shares into "No Par Value" ordinary shares;
(ii) Increase to unlimited authorized share capital;
(iii) Amend the Memorandum of Association;
(iv) Amend the Article of Association;
(v) Specific approval for Directors to issue ordinary shares pursuant to the Conversions of Loan Notes without pre-emption rights;
(vi) General approval for Directors to issue ordinary share for cash without pre-emption rights.
- Ends -
This information is provided by RNS
The company news service from the London Stock Exchange
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