GEOSENTRIC OYJ STOCK EXCHANGE RELEASE March 18, 2011 at 17.15
UPDATE ON FUTURE OUTLOOK: Q1 2011 GYPSII REVENUE LIKELY TO BE LESS THAN IN Q4 2010, FUTURE DEVELOPMENT DEPENDENT ON SUCCESS OF BUSINESS IN CHINA AND OUTCOME OF FINANCING NEGOTIATIONS
The Company reported in its Q3 2010 interim report released on November 18, 2010 that GyPSii revenues have started to be generated on an accelerating basis and the Company expects to see further positive development in GyPSii revenues during Q4 2010 and into 2011. The Company now cancels this previous guidance as it now seems likely that GyPSii revenue in Q1 2011 will be less than in Q4 2010.
The Company has not before reported GyPSii revenues separately from its other business as the Company considered the divested TWIG business and remaining GyPSii business to form a single business segment. However, as a result of divesting the TWIG business all revenues starting from Q1 2011 will be from GyPSii business. Therefore, to give the markets better possibilities to assess the current business, the Company has decided to release its isolated GyPSii revenue numbers for Q3 2010 and Q4 2010 as a reference data to the markets already before the release of Q1 2011 interim report. The GyPSii revenue in Q3 2010 was approximately 12t€ and in Q4 2010 approximately 39t€, showing an increasing trend. This development has now however temporarily stopped due to reasons explained below.
As the Company has recently announced to the markets it has engaged in a co-operation agreement in China with a major media company, Sina, resulting in the launch of Sina’s new Weilingdi product to markets in March 2011. To support the successful and timely launch of this new product to the Chinese market, the Company has focused all its available resources in this co-operation project. The consequence of this has been decline in the short-term revenue from Company’s own GyPSii products in China. According to the latest estimate it seems probable that the total GyPSii revenue in Q1 2011 will therefore be clearly below the revenue from GyPSii business in Q4 2010.
Based on the above-described reasons the Company cancels its previous future revenue forecast outlook. In the current situation the Company is not able to estimate the future development of revenues from its current GyPSii based business. As announced the co-operation with Sina may lead to establishing a joint venture in China to operate the local business, which on the one hand would accelerate the generation of revenue from the GyPSii business but on the other hand at the same time may delay the timing or reduce the amount of revenue that the Company is able to recognize.
As the Company has confirmed to the markets on March 14, 2011, it does not have sufficient working capital to finance its operations after Q1 2011 and it is engaged in intensive negotiations with its lead investor to find a long-term financing solution. The outcome from these negotiations may also have further significant impact on Company’s ability to recognize the GyPSii revenues if it lost majority control over GeoSolutions Holdings N.V., holder of all GyPSii related assets.
The Company will continue to keep the markets updated of any significant developments in the situation.
GeoSentric Oyj
For more information, please contact: investors@gypsii.com
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