My review of Global Voice is as follows:-

1. Management, in their press release, has highlighted EBITDA repeatedly and emphasized that they are EBITDA profitable at Euro 7 million. The reality is that depreciation and interest costs are dragging the P&L into the red and the net loss is at Euro 3.99 million. I have a feeling Management is not being very candid about the loss as the press release does not delve much into the numbers and segmental breakdown, but instead tends to over-focus on their ?achievements? during FY 2006.

2. Finance costs increased by a huge amount and this is reflected in the cash flow statement in which most of the cash generated is through financing activities. If one looks closely, operating cash flows are negative for FY 2006 as compared to FY 2005 and this is a bad sign. A lot of cash was also ploughed into the acquisition of fixed assets (presumably Viatel) and the result was a marginal increase in cash and bank balances for the year to Euro 8.2 million.

3. A study of the balance sheet reveals that total current assets are Euro 12.7 million, while current liabilities stand at Euro 13.6 million ! This would indicate that GV is technically insolvent ! Also, most of their non-current assets is locked up in property, plant and equipment which may or may not generate sufficient revenues to raise retained earnings for GV. Non-current liabilities, on the other hand, comprise about Euro 29.4 million worth of interest-bearing borrowings (the convertible bonds) which have a CASH obligation every April and October. There is also a possibility of massive dilution should the loan be converted to shares as soon as the share price rises above S$0.20 (see conditions of the convertible loan).

4. A look at item 15 in the financial statements reveals that most of the revenue (Euro 13.1 million for FY 2006 compared to Euro 5.7 million for FY 2005) came from the sale of fixed assets. In fact, it is very worrying that only Euro 6.8 million of revenue came from the rental of fibres and ducts while another Euro 1.8 million came from co-location. The total makes up Euro 8.4 million and this is only marginally higher (18.3% higher) than the Euro 7.1 million from both rental of ducts and co-location for FY 2005. If you take into account the fact that so many contracts were secured in FY 2006, yet recurring revenues only increased by 18% then I think it?s something worth thinking about !

5. Transparency of management is not evident as most of the announced deals do not indicate the contract value and the period. Also, there is no mention of revenue recognition policies or allocation of revenue over appropriate periods. This makes it hard for investors to accurately forecast revenues and thus obtain an intrinsic value for the company. Instead, most of the press releases contain technical information about how the deal is structured, which may appeal to ?techies? but are of not much use to serious investors.

6. GV has no real strategic plan on how to grow revenues and more importantly, gross profits. Item 10 is very lengthy as it talks about the prospects of data bandwidth requirements and the changing landscape and how GVG will benefit but there is no concrete plan for making this work. I feel that Management should have a clearer strategy to segment the market, identify potential customers (and state this clearly to shareholders) and position themselves as a premium service provider. There is also no mention of risks or competition and it can be misleading for the reader as well.

7. Item 8 mentions (under ?Operating Profit?) that administrative expenses increased 23% period on period, and this was due to the increase in the provision for the legal case with Standard Chartered. Why wasn?t this disclosed to shareholders ? This is the first time I am hearing of a ?legal case? and the ramifications are severe. GV did not disclose the nature, extent and financial impact of this legal case and this is irresponsible to shareholders.

With regards to the above points brought up by me, I believe my decision to buy a part of GV has been a mistake, and I admit that candidly and openly. As such, compelling factors have arisen which have led me to believe that Management is not candid and open about the affairs of the company, and that the financial situation of GV may not improve significantly in future periods.

Thus, I will endeavour to divest myself of this investment. Please note that this is a personal decision and it NOT an inducement to buy or sell.

Disclaimer: Please review the merits of my argument on your own basis before acting upon it. I do not take responsibility for any gains/losses incurred if my recommendations are taken up.