News blog

SyQic

• BY: Andrew Hore |
• POSTED: 18/08/2014 |

SyQic is acquiring a business with Korean content, which will help to diversify the business, but cash generation is still poor. 

SyQic provides live and on-demand TV access for mobile internet-enabled electronic devices via a subscription service. SyQic is acquiring Maaduu, which provides online video on demand content and gets its revenues from advertising. The Korean content comes from two broadcasters and it would be difficult to secure Korean content without acquiring this business. SyQic plans to use some of the content to set up a premium subscription service as well as continuing with the advertising-funded service. The real benefits of this will not show through until next year.

Maaduu’s revenues have been erratic with a decline from a peak of RM1.3m in the year to March 2013 to RM830,000 in 2013-14, which is lower than 2011-12 revenues. Sales resource has been limited which has hampered the pursuit of advertising revenues and this will be boosted. Ongoing costs for the Maaduu business could be up to £28,000/month, which would not be covered by 2012-13 revenues so more will need to be generated to break even.

Maaduu has 85,000 registered users so there will be cross-selling opportunities with the Yoomob/Yoonics services. Investment will be needed to integrate the technology of the two businesses.

SyQic will pay up to RM5.5m (£1.03m) in cash plus £60,000 in shares for Maaduu. The initial payment will be RM3.1m (£578,000) and the rest is dependent on the achievement of revenue targets within 12 months of the acquisition.

A £1.85m placing at 50p a share will fund the initial acquisition cost with most of the cash left over to finance the rest of the cost and investment in the group. The rest of the cash will help to top up the cash in the bank for SyQic, which continues to decline.

In the first half of 2014, SyQic says that it made a profit of £970,000 on revenues of £4.6m. Yet, the cash in the bank has fallen from £1.08m to £417,000. SyQic raised £3.2m (£2.45m net) at 62p a share when it joined Aim on 4 December 2013.

Indonesian telecoms company PT Nextnation Prisma (PTNP) is continuing with its payment plan for past years and since June it has made a £350,000 payment relating to January 2014. Taking five or six months to pay revenues is unlikely to be unusual even if the 2014 payments continue. Management believes that PTNP is likely to continue to pay this year’s revenues.

The £350,000 has boosted the cash pile as will the remaining placing funds and this should mean that SyQic will have enough funds for the rest of the year and in to 2015.

At 53.5p a share, the enlarged share capital will be valued at £14.4m.

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