4th Dec 2006 16:03
Synchronica PLC04 December 2006 4th December 2006 Synchronica plc ("Synchronica" or the "Company) Trading Update, Focusing Business Strategy and Cost Reduction Tunbridge Wells, UK - 4th December 2006 - Synchronica, an international providerof mobile device management and synchronisation solutions based on openstandards has today noted the adverse movement in its share price and wishes toupdate the market as follows: 1. The company has been in discussion for some months and is now at an advanced stage with a major international hardware manufacturer to provide Synchronica's SyncML Gateway under an OEM licence. This substantial contract is expected to be concluded in 2006. However, recent discussions have indicated that the initial revenue from this contract is now likely to be deferred until early 2007. As a consequence the directors now believe that the company will not meet current analysts' expectations for 2006. However this contract, once signed, will make a significant contribution to the Company's revenue for the next three years. In addition to this contract, the Company is at an advanced stage of discussion for a number of contracts which add to the revenue of £1.1m the company has so far recognised in 2006; on the basis of these contracts the directors expect to recognise revenue in a range from £1.1m to £2.0m for 2006. The Company will update analysts later today. 2. Also the Company's financial performance in 2006 has been adversely affected by the following: a. The insolvency of BenQ Mobile, the Company's largest user of Synchronica's SyncML DM Server; b. Limitations in the Mobile Manager product, which addresses mainly the Windows Smartphone market and is dependent upon the Windows Server Operating system, while Mobile Operators generally prefer Unix based solutions; and c. ROM Builder has only been licensed to one customer and interest from potential customers has been lower than expected. The directors have determined that the Company should refine its productstrategy and focus more of the Company's resources on Synchronica's awardwinning SyncML Gateway where there has been the highest level of customeracceptance and where there is the largest addressable market. Thus in the shortterm the Company will focus on the product with which it has achieved the mostsales in 2006. Synchronica intends to re-implement Mobile Manager using the Java programminglanguage on Synchronica's SyncML DM Server during 2007, which will allowSynchronica to support the Unix Operating System and address the entireSmartphone market as well as mass market Feature Phones. The Company has alreadyentered discussions with a number of interested parties to provide, for asubstantial fee, an exclusive licence for the existing Windows based MobileManager source-code. The above will allow the Company to focus its development on one softwareplatform, Java increasing the synergies between the products and removingduplication of effort and expense. The directors estimate that this strategicre-focusing will allow a cost saving of £1.1m in 2007 and will make a provisionof £300k in the Company's 2006 accounts to meet restructuring costs. Synchronica has gained substantial traction particularly with SyncML Gateway,for example in the previously announced contract with iXi Mobile SyncML Gatewayis a fundamental component of iXi's Ogo device, which aims to deliver a mobilee-mail device to the mass market. This traction in conjunction with the OEMagreement currently under negotiation as described above, should lead to agrowing, predictable and recurring revenue stream for the Company. Theserevenues combined with the lower cost base noted above and the current cashbalance of £2.6m should, according to the Company's current forecasts, makeSynchronica fully funded. Contacts at Synchronica: Carsten Brinkschulte, CEO +44 (0) 1892 552 799, Mobile +44 (0) 7977 256 406 Angus Dent, CFO, +44 (0) 1892 552 760, Mobile +44 (0) 7977 256 347 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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