RNS Number:5301I
GMO Limited
06 September 2006
Press Release 6 September 2006
GMO Limited
("GMO" or "the Group")
GMO joins AiM
GMO Limited, a leading provider of wireless value-added services in China, today
announces the commencement of dealings of its Ordinary Shares on the AiM Market
of the London Stock Exchange. Corporate Synergy Plc is acting as both Nominated
Adviser and Broker to the Company. The stock market EPIC is GMO.L.
The GMO Group has been established by three MESDAQ listed companies to take
advantage of the business opportunities afforded by the forecast growth in the
WVAS sector in China. Providers of WVAS allow mobile phone users to receive and
transmit text, images and other forms of digital data via their mobile handsets.
The GMO Group's objective is to develop a leading WVAS Mobile Transaction
Network in China.
Placing and Admission Statistics
Placing Price 50p
Number of New Ordinary Shares to be issued pursuant to the Placing 10,000,000
Value of the New Ordinary Shares being issued at the Placing Price #5,000,000
Estimated net proceeds of the Placing receivable by the Company #3,800,000
Gross proceeds of the Placing receivable by the Company #5,000,000
Number of Ordinary Shares in issue immediately following Admission 40,000,000
Percentage of the Company's enlarged issued share capital being placed 25%
Market capitalisation of the Company at the Placing Price #20,000,000
Reasons for the Placing and Admission
The Directors believe the GMO Group will benefit from the increased
international visibility associated with a listing on AiM, which should enable
the GMO Group to attract, recruit and retain key employees who may be further
incentivised through share incentive arrangements, and position the GMO Group to
be able to take advantage of the opportunities for selective strategic
acquisitions of, and joint ventures with, complementary businesses in the WVAS
sector in China by increasing its strategic flexibility.
It is anticipated that the net proceeds of the Placing will be applied
predominantly towards funding the costs of acquisitions and providing working
capital for the GMO Group as enlarged by such acquisitions.
Eugene Goh, Chief Executive Officer of GMO Limited, said: "We are delighted that
the flotation of the Group has been completed successfully and we now look
forward to working with our new institutional shareholders.
"China is well recognised as the world's largest market for mobile phones and as
a provider of wireless value added services, the Group is well positioned to
benefit from the strong growth forecast in this market. This listing makes both
strategic and commercial sense as we take GMO to the next stage of its
development."
- Ends -
For further information:
GMO Limited
Eugene Goh, Chief Executive Officer Tel: +44 (0) 7786 787005
Eugene@mtouche.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
Chris Lane / Georgina Bonham Tel: +44 (0) 20 7398 7700
chris.lane@abchurch-group.com www.abchurch-group.com
INFORMATION ON THE GROUP
INTRODUCTION
The GMO Group has been established by three MESDAQ listed companies to take
advantage of the business opportunities afforded by the forecast growth in the
WVAS sector in China. Providers of WVAS allow mobile phone users to receive and
transmit text, images and other forms of digital data via their mobile handsets.
The GMO Group's objective is to develop a leading WVAS Mobile Transaction
Network in that region. In December 2005 the GMO Group acquired a technology
platform which it has subsequently refined and developed into the SonTouche
Platform, or STP. The STP enables mobile operators and content providers to
offer cross-network SMS-based value added services and applications such as
ringtones, games, logos, music, news and other information. The Directors
believe that the capability of the STP, together with HX Beijing's common
nationwide access code, gives it a competitive advantage in the Chinese market.
The Directors intend to grow and further develop the GMO Group's business
through the acquisitions of, and joint ventures with, complementary businesses
in the WVAS sector in China.
In June 2005 it was estimated that there were over 360 million mobile phone
users in China, more than in the United States, Japan and Germany combined. The
Directors believe that the WVAS market in China is set to deliver further
significant growth. In September 2005 it was forecast that WVAS revenue in
China could experience a CAGR in excess of 20 per cent. over the following three
years.
The Directors believe that there may be a slow down in the rate of growth in the
Chinese WVAS market following recent policy changes announced by the MNOs.
While it is too early to assess the effect of these changes on the GMO Group,
the Directors believe that, as they understand the changes are targeted on
subscription-based WVAS provided to end-users who have not confirmed at the
point of receipt that they wish to receive the relevant product or service, they
are unlikely to have a material negative impact on the Group in the long term,
because the Group's revenues derive from the provision of transaction-and
subscription-based WVAS in respect of which the end-users have confirmed at the
point of receipt that they wish to receive the relevant product or service.
The Directors believe that the GMO Group will benefit from the increased
international visibility associated with a listing on AiM. In addition, it is
anticipated that, by increasing its strategic flexibility, Admission will enable
the GMO Group to take advantage of the opportunities for selective strategic
acquisitions of, and joint ventures with, complementary businesses in the WVAS
sectors in China. It should also enable the GMO Group to attract, recruit and
retain key employees who may be further incentivised through share incentive
arrangements.
HISTORY AND DEVELOPMENT
GMO is the sole shareholder of GMO Global which was established, after
significant market and industry research, as a joint venture vehicle in December
2005, by three companies (Green Packet Berhad, mTouche Technology Berhad and OSK
Ventures International Berhad), each listed on MESDAQ. These three companies
had an aggregate market capitalisation of approximately US$671.1 million as of
25 August 2006.
Green Packet Berhad
GPB specialises in providing wireless networking and telecommunications products
and solutions. It trades across the Asia Pacific Region, including China,
Taiwan and South East Asia. GPB is the only company approved by China Telecom
to provide it with software to integrate its fixed line and mobile phone
networks. GPB has a presence in the major Chinese provinces of Guangdong,
Jiangsu, Zhejiang and Sichuan. GPB is listed on MESDAQ and as at 25 August 2006
it had a market capitalisation of approximately US$446.6 million.
mTouche Technology Berhad
MTB is a provider of mobile messaging technologies, mobile content and
interactive media applications in South East Asia, with offices in Malaysia,
Singapore, Thailand, Indonesia and Hong Kong. MTB has recently added
telecommunication switches, high value added solutions and mobile payment
products as part of its product and services range and has expanded both
geographically and through the introduction of new products and services. MTB
is listed on MESDAQ and as at 25 August 2006 it had a market capitalisation of
approximately US$100.3 million.
OSK Ventures International Berhad
OSKVI is a venture capital and private equity company in Malaysia which has been
instrumental in the flotation of 11 investee companies on the Bursa Malaysia.
Its investment portfolio primarily comprises businesses operating in the Asia
Pacific Region including Malaysia, Singapore, Australia and China. OSKVI is,
through its wholly owned subsidiaries, a shareholder in both GPB and MTB. OSKVI
is listed on MESDAQ and as at 25 August 2006 it had a market capitalisation of
approximately US$124.2 million.
Given the nature of the businesses of GPB and MTB, each of them have entered
into noncompete arrangements with GMO.
Relationship with HX Beijing
In December 2005, GMO Global entered into a 70/30 joint venture agreement with
HX BVI to engage in the research and development, and provision, of WVAS in
China. This has been implemented by the creation of a joint venture company, MH
Capital, whose wholly owned Chinese subsidiary, MH Technology, has concluded a
series of contractual relationships with HX Beijing, an established WVAS
provider based in Beijing. HX Beijing is one of a limited number of providers
("SPs") in China to have been granted a common nationwide access shortcode, and
has developed relationships with MNOs and content providers ("CPs") throughout
China.
HX Beijing, which was founded in 2004 by Mr Zhou Hai Feng and Mr Shun Hong Sen,
developed a software operating platform to facilitate the provision by CPs of
WVAS to end users in China. This platform was transferred in December 2005 to
MH Capital. Using the expertise and knowhow of GPB and MTB, MH Capital refined
and developed the platform to better suit the requirements of the Chinese
market.
This customised proprietary platform, known as the SonTouche platform, or STP,
was subsequently licensed by MH Capital to MH Technology, and in turn by MH
Technology to HX Beijing, on a non-exclusive basis. In addition, MH Technology
has agreed to provide technical and consulting services in relation to the WVAS
business of HX Beijing for an initial period of 10 years.
Under these arrangements, MH Technology provides technical consulting and other
services to HX Beijing in return for a monthly services fee equivalent to
substantially all of the revenue received by HX Beijing from the provision of
services and products by CPs, after deduction of the payments due to such CPs
and the licence fee paid to MH Technology.
The effect of this structure is to enable MH Technology to enjoy the economic
benefits generated by HX Beijing's use of the STP platform. This structure has
been adopted in order to comply with domestic ownership requirements of PRC law
which restricts foreign or foreign-owned companies from a 100 per cent. direct
ownership of companies participating in certain communication services.
THE MARKET
China is currently the world's largest mobile phone market with approximately
360 million mobile users in June 2005.
China's Ministry of Information Industry ("MII") released its 2005 China telecom
industry development statistics report on February 9 2006. According to the
report, revenues from the communication industry in 2005 were RMB 637.37
billion, up 11.3 per cent. on the previous year, including RMB 579.9 billion in
revenue from the telecoms industry, up 11.7 per cent. on the previous year.
Despite having the largest mobile user base, China's mobile penetration rate
remains relatively low as compared to many other countries. The Directors
believe there are consequently significant opportunities for the mobile user
base to increase in the future. In September 2005, it was forecast that the
total number of mobile phone subscribers would increase from 424 million in 2006
to 535 million in 2007.
The WVAS sector represents a small share of China's overall telecommunication
services market, but has experienced significant recent growth. The Directors
believe that increased competition among mobile operators in the value added
sector of this market is a key driver of growth in wireless services. Though
voice revenue currently accounts for most of MNO revenue, a continuous decline
in voice average revenue per user has resulted in MNOs providing more non-voice
data services in order to boost their revenue.
Providers of WVAS allow mobile phone users to receive and transmit text, images
and other forms of digital data via their mobile handsets. The Chinese WVAS
market has developed rapidly since 2002 and is forecast to experience continued
growth.
Data messaging based applications have now become increasingly popular with
Chinese mobile subscribers. The development of mobile handsets has driven an
evolution in the WVAS market, from simple point-to-point SMS to more advanced
services that allow users to access higher quality graphics and richer content
and interactivity, such as WAP-based mobile games and media, MMS-based content
and JAVATM-based mobile games.
According to data released by the MII, the volume of SMS traffic was 114.78
billion messages in the first five months of 2005, an increase of approximately
39.6 per cent. from the previous year. In September 2005, it was forecast that
WVAS revenue in China would achieve a CAGR in excess of 20 per cent. for the
following three years, with new services, such as those using the 2.5G protocol,
growing at around 40 per cent. CAGR over the same period.
In addition, the Directors believe the convergence of WVAS technologies with
traditional media channels, such as press, TV and radio, generates new and
further opportunities to add to the GMO Group's range of products and services.
China is expected to award licences and commence the roll out of 3G, which is
compatible with the STP platform, in late 2006.
COMPETITION
The market place in which the GMO Group and HX Beijing compete may be
characterised as being driven by two specific areas of expertise: technology and
consumer marketing. The Directors believe that the GMO Group is strongly
positioned relative to its competitors because of the expertise of its senior
management and that of its two principal shareholders, GPB and MTB, in the
creation and development of the STP, and HX Beijing's significant experience in
marketing mobile content, its profile with the MNOs and its common nationwide
access shortcode.
Participants in the WVAS market are broadly divided into four categories:
* Portal provider: these companies tend to own little of their own content,
instead acting as gateways for mobile users into content areas. They act
as entry points, directing users to the media content they are specifically
seeking. Examples of such companies include Sina Corporation, Tom Online
and Sohu.com.
* Content aggregator / provider: these are typically organisations that have
access to content, either through creating it themselves or more usually
through licensing arrangements. Examples include Linktone and Stream.
* Platform / applications provider: these companies tend to be
technology-rich, offering specific parts of technology solutions, such as
billing engines, messaging applications or network connection software.
Examples include Wireless Information Network, 2Ergo, and Bango.
* Mobile Transaction Network Provider: these are companies providing hardware
and software systems solutions to facilitate mobile transactions. As
content, application and technological complexity increase in the WVAS
sector the Directors believe that fewer companies will be positioned to
cope with the requirements, standards and protocols, as well as having the
necessary management skills involved in identifying, developing and
maximising revenue from WVAS opportunities. The Directors believe that HX
Beijing currently operates in this sector.
THE SON TOUCHE PLATFORM
The STP is a proprietary technology platform owned by MH Capital which
transforms content received from CPs into a format capable of being delivered to
the mobile device of the MNO subscriber, irrespective of the MNO's network type
or operating standards, or the format of the content itself.
Accordingly, the STP enables MNOs and CPs to offer cross-network SMS-based
services and applications across an integrated hybrid network. Such services
and applications include interactive voting, gaming, entertainment, information
and transaction-based services. The technology is highly scaleable in that it
is capable of being accessed by and can deliver content generated from a large
number of CPs simultaneously. HX Beijing currently has relationships with
approximately 120 CPs.
It is the capability of the STP to deliver content created by different CPs,
together with HX Beijing's common nationwide access shortcode, which the
Directors believe gives the GMO Group a competitive advantage in the Chinese
market. By way of contrast, the Directors believe the other service providers
who have been granted a common nationwide access shortcode currently offer only
their own content to end users.
The STP is compatible with 3G and upgradeable to new technologies.
HX BEIJING
HX Beijing was incorporated on 27 August 2004 and is now an established WVAS
company in China focused on Mobile Transaction Networks hosting a range of
products and services, including SMS, MMS, WAP, IVR and RBT to mobile users. It
is one of a limited number of more than 2800 service providers in China to have
been granted a common nationwide access shortcode. This code can be accessed
throughout China by the four MNOs, China Mobile, China Unicom, China Telecom and
China Netcom, with each of which HX Beijing has established commercial
relationships.
HX Beijing derives its revenues by making WVAS products and services available
to mobile subscribers. Typically, a mobile user wanting to download content or
services onto his or her mobile phone will connect to the relevant MNO, making a
selection of the content or services required by keying in the designated access
number. The MNO will route the code for the selected content or services to HX
Beijing's server as a request for the particular content or services. On
receiving the request, HX Beijing will download the requested content from the
CP's server in a suitable format to be routed to the subscriber's mobile phone.
The MNO will charge the subscriber a messaging fee from which it will deduct its
share of that fee before remitting the balance to HX Beijing, which will then
deduct its share before remitting the balance due to the CP.
Accordingly, HX Beijing's revenue represents its share of the messaging fee
charged by and paid to the MNO by the subscriber.
For the year ended 31 December 2005 and as extracted from its audited report and
accounts, HX Beijing made profits of RMB18,562,081 (US$2,320,260) on turnover of
RMB101,726,902 (US$12,715,863).
HX Beijing currently qualifies as a 'new or high technology enterprise' of the
Beijing Zhongguancun Science Park - Fengtai District, which entitles the company
to enjoy a lower corporate tax rate of 15 per cent., instead of 33 per cent.
subject to annual approval by the relevant tax authority. HX Beijing will be
exempt from tax at this lower rate on income generated in the first three years
of incorporation and will benefit from a 50 per cent. exemption for a subsequent
three year period. MH Technology is applying for such incentives.
STRATEGY
GMO's objective is to develop a leading WVAS Mobile Transaction Network in
China.
The Directors believe that this will be achieved by a combination of the organic
growth of HX Beijing and the selective strategic acquisition of, or joint
ventures with, complementary businesses in the Chinese WVAS sectors. Potential
investments will be assessed on their profitability, scaleability and their
ability to achieve specified commercial objectives such as achieving vertical
integration within the WVAS value chain, for example, by the acquisition of CPs
and SPs which would diversify revenue streams.
The Directors believe the GMO Group, through its relationship with HX Beijing,
is well placed to achieve significant growth as the WVAS sector in China
continues to grow and consolidate. The Directors believe this is likely to
require smaller CPs to enter into commercial arrangements with more established
market participants in order to access their proprietary infrastructure to be
able to sell their content, services and applications to achieve a fast channel
to market.
The GMO Group intends to develop or acquire and bring to market an expanding
suite of mobile applications targeted at different mobile user groups, including
mobile gaming, location-based services, secure messaging solutions and mobile
payment services.
The Directors anticipate that future acquisitions and joint ventures will be
made through GMO or GMO Global, as opposed to MH Capital or its subsidiaries.
DIRECTORS AND SENIOR MANAGEMENT
Tan Sri Datuk Dr. Omar A. Rahman
Chairman
Dr Omar, aged 74, is currently the chairman and non-executive director of GPB
and a non-executive director of OSKVI. He is a founder of the Malaysian
Technology Development Corporation and Technology Park Malaysia Corporation. He
has served on the United Nations' Council for Science and Technology for
Development and a number of UNESCO's committees, as well as on the OIC Standing
Committee on Science and Technology Cooperation. Dr Omar graduated with a
Bachelor's degree in Veterinary Science from Sydney University, Australia and
has a certificate in Pathology from the University of Queensland, Australia and
a PhD from Cambridge University.
Eugene Goh
Chief Executive Officer
Eugene Goh, aged 31, is the Company's chief executive. He is currently the
executive chairman and chief executive of MTB and is responsible for taking MTB
into other South East Asia markets to become an established mobile messaging
provider with offices in Singapore, Malaysia, Indonesia, Thailand and Hong Kong.
Mr Goh has a Bachelor's degree in business from the National University of
Singapore.
Keith Mayes
Independent Non-Executive Director
Dr Mayes, aged 45, is currently the managing director of IWICS Europe Limited
and also the founder and managing director of Crisp Telecom Limited. Previously
he worked for the Vodafone Group as the Vodafone Global SIM Manager responsible
for SIM card harmonization for the Group. Dr Mayes has a Bachelor of Science
degree in Electronic Engineering and a PhD in Digital Image Processing from the
University of Bath. He is a Chartered Engineer and Member of the Institute of
Engineering and Technology. He is also a Member of the Licensing Executives
Society and a Founder Associate Member of the Institute of Information Security
Professionals. He is also the director of the ISG Smart Card Centre at the
Royal Holloway University of London.
Puan Chan Cheong
Non-Executive Director
Puan Chan Cheong, aged 38, is currently the managing director and chief
executive of GPB and has overseen the development of GPB to a position where it
is currently the largest company on MESDAQ. Mr Cheong graduated with a Bachelor
of Science degree in Business Administration and also has a Bachelor's degree in
Management Information Systems and Finance from the University of Nebraska-
Lincoln, USA.
Eddie Yuh Foh Yap
Non-Executive Director
Mr Yap, aged 37, is the chief operating officer of OSKVI, responsible for
managing investments covering a wide range of industrial and high technology
companies. He is a committee member of the Malaysian Venture Capital
Association and graduated with distinction in Accountancy and Economics and
Finance from the Royal Melbourne Institute of Technology University, Australia.
He is also a non executive director of GPB.
Senior management of MH Technology
The GMO Group is currently entirely dependent on the senior management and
personnel of MH Technology, some of whom are currently employed by MTB, for the
day-to-day operation of the HX Beijing business.
Wee Meng Tan
Executive Director and Chief Operating Officer
Wee Meng Tan, aged 31, is also the executive director and chief operating
officer of MTB. Mr Tan has several years of experience working in the mobile
computing and telecommunications industry. Previously, Mr Tan served as a
senior account manager with MobileOne Ltd. Mr Tan has a degree in Accountancy
from Nanyang Technological University, Singapore.
Zhou Hai Feng
Executive Director and General Manager
Zhou Hai Feng, aged 40, is the founder and chief executive of HX Beijing. Mr
Zhou has more than 12 years of experience in the mobile telecommunication
industry and is also a co-founder of Beijing Hui Sen Science & Technology Co,
Beijing Golden Net Hongxun Wireless Data Communication Co, Hongxun Telecom
(Tianjin) Co. and Hongxun Telecom (Taiyuan) Co, whose business activities
include ERP software, system integration and networking solutions. Mr Zhou has
a degree in Thermal Energy Engineering from Qinghua University, Beijing, China.
Kay Yen Tan
Non-Executive Director
Kay Yen Tan, aged 35, is also the director of corporate development of GPB. His
responsibilities in GPB include corporate communications, strategic planning,
corporate finance and mergers and acquisitions for the GPB Group. He started his
career in banking with the Arab Malaysian Group in 1994. He was with the IBI
Group of companies in 1996 as the operations manager responsible for the day to
day operations and the setting up of retail branches throughout Malaysia. In
2001 he became the general manager in Adkey Sdn Bnd involved in the digital
print industry prior to joining GPB. He holds a Bachelor of Science degree in
Business Administration, majoring in Finance and Management Information Systems
from the University of Nebraska-Lincoln, USA.
Dr Choong Leong Tan
Chief Technology Officer
Dr Choong Leong Tan, aged 32, is also the chief technology officer of MTB.
Previously, he was the technical manager of the company and is responsible for
leading the company's R&D team which includes the architectural design of its
mobile messaging platform. Dr Tan was a research fellow with the BioInformatics
Research Centre of Nanyang Technological University, Singapore. Dr Tan
graduated with a Bachelor's degree in Applied Science (Computer Engineering)
with Honours through the 'Accelerated Honours" programme and has a PhD from
Nanyang Technological University, Singapore.
Shun Hong Sen
Deputy Chief Technology Officer
Shun Hong Sen, aged 35, was previously the chief technology officer of HX
Beijing, who led the software development and research activities for mobile
technology in the company. He leads the team in developing the design and
architecture of various mobile messaging platform. He has over 10 years of
experience in software development for the mobile industry. Mr Shun graduated
with a Bachelor's degree in Management Information Systems from the Science and
Technology University, Beijing, China.
Mavis Mo Kee
Finance Manager
Mavis Mo Kee, aged 31, is also the finance manager of MTB. Previously, she
worked for the Inland Revenue Department of the Hong Kong Government of Special
Administrative Region. She has over six years' professional and commercial
experience in commercial accounting, corporate/individual tax planning and
statutory auditing services to clients in Hong Kong as well as their China
subsidiaries. Mavis graduated with a Bachelor's Degree in Accountancy from
Napier University, Scotland.
- Ends -
This information is provided by RNS
The company news service from the London Stock Exchange
END
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