Tavistock Regulatory News (TAVI)

SocialGO plc (SocialGO or the "Company")

Preliminary Results

SocialGO today announces its preliminary results for the year ended 31 December 2011.

Highlights

The Group has made progress in a number of areas;

·; Soft launched SocialGO™ Version 2 in October 2011;

·; Continued to develop additional features for SocialGO™ Version 2;

·; In response to customer feedback, the Group has today issued a major update of SocialGO™ Version 2 called '2012';

·; Reduced the pro-rated loss from operations for the year to £1,180,000 against £1,079,000 for the prior nine month period;

·; Completed fundraisings totalling £1,635,500 during the period (gross of £82,000 related expenses); £300,000 from the issue of 10,909,091 new Ordinary 1p shares at 2.75p per share and £1,335,500 from the issue of 45,271,186 new Ordinary 1p shares at 2.95p per share;

·; Played a key role at the launch event of the British Government's major new initiative, East London Tech City;

·; Spoke at Variety's Venture Capital and New Media Summit in Los Angeles, attended by The Duke and Duchess of Cambridge;

·; The Group appointed First Columbus LLP as Broker;

·; The Group has today appointed Deloitte LLP as Nomad.

"2011 saw the Company complete an important milestone in its development with the soft launch of SocialGO™ Version 2, an amazingly powerful and flexible foundation for our service. I am excited about the accelerated commercialisation of our technology through marketing and fine tuning of our retail product and further distribution partnerships in 2012 to materially move the business forward. To coincide with these results I am pleased to also announce the release of SocialGO™ '2012' an update of our SocialGO™ Version 2 platform."

Alex Halliday, CEO

Shareholders wishing to try the new SocialGO™ '2012' should visit http://www.socialgo.com/signup/comp and enter the code "SGOAIM" for a 60 day free trial.

For further information, please contact:

About SocialGO

SocialGO Plc is a developer and provider of software and related services that allows customers to build their own online social presence, SocialGO™. SocialGO's platform allows customers to quickly and easily create, manage and control their social media presence and provides the members of these websites with the ability to communicate and share with like minded people in a controlled and secure environment. SocialGO derives its revenues from subscription premiums paid by website owners and from selling value added services which allows website owners to maximise the social media experience and the revenues that can derive from creating and managing a social media presence. SocialGO is part of the burgeoning Silicon Roundabout in London, UK.

www.sgv2.com

Chairman's statement

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The Company continues to make good progress with the introduction of Version 2 of SocialGO™. Sales of Version 2 are increasing monthly and we are now working on improving usability and adding new features.

During the year ended 31 December 2011 the company focused on development; in 2012 we are focusing on sales and marketing. We know that there is a wide market for our product because of the diverse nature of current users. Our business model and back end operations are now well tuned. We have strong scalability and the new platform is solid. It remains to drive more traffic to our site and increase the number of customers using SocialGO™. We are planning to do this through on and offline marketing to reach individual customers and also to secure distribution deals with trade partners who can take SocialGO™ to their customer bases.

The use of social media continues to expand and flourish, with increasing usage across the globe. In fact, we are still in the early days of this phenomenon and SocialGO™ is well placed to meet the increasing demand for socially enabled websites. We have a new sales site which I urge shareholders to visit at www.socialgo.com which fully explains what our product does and demonstrates live examples of customers using it.

One important aspect of the new V2 SocialGO™ is that we are about to introduce deeper integration with Facebook. All new members of SocialGO™ networks will be encouraged to sign up using a simple one click Facebook link, which embeds their profile photo and details automatically, and links their activity on the SocialGO™ site to their Facebook page. This is designed to help build traffic to the network owners SocialGO™ sites. It also allows for users to create a more custom designed and better featured version of a Facebook Group. This is particularly appropriate for SMEs and professional organisations.

The next 12 months will be about building sales. There are always challenges ahead, but the team is becoming more experienced and the product is now developed, so we're confident we can be successful.

As always, my thanks go to the dedicated staff at SocialGO plc, all of whom have a stake in the success of the Company.

Dominic Wheatley

Chairman

13 March 2012

CEO's statement

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Overview

The period has seen the soft launch of SocialGO™ Version 2, which has been received well by both new and existing customers. Version 2 represents a big leap forward in our offering, giving the Company enormous flexibility in its product development allowing us to progress our product, platform and service very rapidly as we respond to customer feedback and continue to take advantage of the growing interest in social media. The company has now left the product development period and we are now moving to a much faster iteration cycle with code deployments going out daily.

The wide adoption of Facebook as the social networking 'standard' represents an enormous opportunity for our company, as we cater to those users who want to move beyond the functionality of a basic Facebook Group or Page. Our product perfectly suits larger, public groups who want to maintain a social media presence on Twitter and Facebook, but also want their own central destination with tools and features designed specifically for them. Facebook Groups allows users to "Create a private space" for a "small group of people", this is in contrast to our positioning as a platform for larger, public groups to thrive and grow. This positioning will be the driver for our marketing, product roadmap and user experience decisions going forward.

We are pleased to see the adoption of SocialGO™ continuing in key categories, including music with customers such as the band Kasabian and rap star and producer Soulja Boy. 

Results

The results disclosed in this report are for the year to 31 December 2011 and unless otherwise stated, the comparatives are for the nine month period to 31 December 2010.

The period has seen SocialGO plc focus on the development and launch of SocialGO™ Version 2, which was soft launched in October 2011, and the subsequent additional development and price experiments. This focus has seen revenue remain consistent compared to the prior 12 month period as a whole.

Revenue of £734,000 for the year to 31 December 2011 (period to 31 December 2010 - £574,000) consists of sales from SocialGO™, the internet based social networking service aimed at privately managed special interest groups and niche communities, and ancillary products, such as widgets and themes. The loss before and after tax for the year decreased for this 12 month period to £1,179,000 (9 month period to 31 December 2010 - £1,079,000).

All overhead expenditure continues to be closely monitored in order to ensure that cash resources are effectively and efficiently managed to maximise the benefit delivered to the business.

The Company believes research and development expenditure and product improvements are key to increasing sales and as such both expensed and capitalised research and development costs have remained a large portion of the expenditure in the year, this expense being mitigated by the recognition of R&D tax credits totalling £265,000. Amortisation of capitalised development for the year increased to £260,000 (period to 31 December 2010 - £88,000).

The Company has continued to optimise the efficiency of online advertising and reduces expenditure accordingly with PPC expenditure reducing to £121,000 (period to 31 December 2010 - £177,000); this and the reduction in the share based payment charge for the period of £143,000 (period to 31 December 2010 - £176,000) account for a large portion of the relative decrease reflected in the overheads.

Financing

On 12 January 2011 and 28 February 2011 the Company raised £300,000 from the issue of 10,909,091 new Ordinary 1p shares at 2.75p per share and £1,335,500 from the issue of 45,271,186 new Ordinary 1p shares at 2.95p per share, respectively.

On 28 February 2011 the Company issued 5,833,333 shares to the vendors of Get On With It Limited as part of the acquisition terms. 5,219,298 of these shares went to directors of SocialGO plc.

On 28 February 2011, the Company allotted 598,802 new Ordinary 1p shares at 3.34p per share and 550,000 warrants exercisable at 2.75p per share to First Columbus LLP as consideration for £20,000 brokers' fees.

On 11 July 2011 the Company issued 149,333 new Ordinary 1p shares at 1.25p per share following an exercise of employee share options.

SocialGO™

The Version 2 platform has delivered a big improvement in response times, uptime and scalability. The number of issues being reported by customers is 90% down on Version 1, a direct result of our investment in the new platform. The development team's improved engineering methodology is allowing us to deliver functionality and features faster than ever before.

Today, SocialGO launches '2012', a major update to our SocialGO™ Version 2 platform. We looked at how people have been using the service since October and resolved to make some strategic changes. First of all the update focuses the proposition from social website creation in on specifically larger, public groups. The offering gives groups a website and social network and the customer signup process aims to make customers more successful with less effort on their part. In addition to this we have reworked the Facebook and Twitter integration to make it work even better for groups; this further aligns the offering with the traffic SocialGO.com receives and also helps us tap into the growing number of groups frustrated when solely using Facebook and Twitter.

Prospects and Strategy

As announced on February 8 2012, alongside the existing on-line focused sales and marketing efforts, the Company has continued to develop strategies to promote the platform. One of these initiatives has resulted in a Memorandum of Understanding being entered into to form a joint venture with Muronia Ltd, a provider of online retail solutions to the music, entertainment and sports industries. The proposed joint venture will target high value clients seeking to directly exploit their commercial rights to their fan bases through their own dedicated social networks. The first site created under this agreement was for leading British band Kasabian whose network, www.kasabianlive.com, was launched in December 2011. Efforts are currently underway to continue to build on this success with initiatives in similar segments that will leverage the SocialGO™ product including promising discussions with a major US media group.

The Directors continually monitor the Company's financial position and have prepared the financial statements on a going concern basis having given consideration to forecast sales and the marketability of SocialGO™ for the foreseeable future.

Post Balance Sheet Events

On 17 January 2012 the Company received £119,000 of HMRC R&D credits relating to the nine months to 31 December 2010.

In February 2012 Hill+Knowlton was appointed as the PR agency for the Company.

Deloitte LLP was today appointed as the Company's nominated adviser.

We are very pleased to be working with Lord William Astor who joined SocialGO plc as a non-executive director in February 2012. His experience across a number of industries in all aspects of growing a business is already proving beneficial and we welcome him to the team.

The Company also announced on 8 February 2012 that, as a result of his growing commitment to his external interests, Mr. Vikrant Bhargava has resigned from the Board of SocialGO plc. The holdings of Veddis Ventures remain unchanged and Mr. Bhargava will continue to take an active interest in the Company.

I would like to thank Vikrant for all the advice and support he has given since joining the Board two years ago.

Summary

SocialGO plc has focused on the development and launch of SocialGO™ Version 2 over the past year and then experimented with the offering and its price point to gauge customer reaction. We must now refocus our efforts to grow and develop the market for social website products and tools, as we strive to deliver profitable results for the business along with cash positive operations.

The Board remain excited about the prospects offered by SocialGO™. The recent interest in the IPOs of similar types of products is encouraging and the Board considers the product to be well positioned to take a stake in this market.

I join the Chairman in thanking the staff at SocialGO plc for all their efforts over the year.

Alex Halliday

CEO

13 March 2012

Operational and financial review

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2011 financial year product portfolio

SocialGO plc soft launched SocialGO™ Version 2 in October 2011.

SocialGO '2012' a major update of the SocialGO™ Version 2 platform is launching today.

Strategy for the future

We continue to retain the core management and technical skills in house.

At period end 31 December 2010, we described our resource focus as being on further development and additional marketing. We have found that development has been the main focus in the period to 31 December 2011 with Version 2 being responsible for this and that marketing expenditure has reduced.

As described in the CEO's statement, the Company has now soft launched SocialGO™ Version 2 and is focusing its resources on further development of more features for SocialGO™ and expanding the customer base through additional marketing with the aim of increasing sales.

Please refer to the CEO's statement for more details on Version 2.

Results from operations

The Group made a loss from operations for the year of £1,180,000 (period to 31 December 2010 - £1,079,000).

Other administrative expenses were the main component of the loss on ordinary activities during the year ended 31 December 2011. 

Revenue, £734,000 (period to 31 December 2010 - £574,000) and cost of sales, £466,000 (period to 31 December 2010 - £336,000)

Revenue for the year consists of sales of SocialGO™ and ancillary products, such as widgets and themes and has increased by £160,000 over the period.

Cost of sales comprises £186,000 SocialGO™ server costs, £195,000 SocialGO™ sales and support staff, £44,000 payment processor fees (the cost of collecting subscription payments) and £41,000 third party revenue share costs.

Administrative expenses

Administrative expenses for the year ended 31 December 2011 are the main component of the loss on ordinary activities during the period. Administrative expenses are in line with expectation and are divided into two categories:

Research and Development, £165,000 expenditure and £265,000 credit (period to 31 December 2010 - £103,000 expenditure)

The Group received £234,000 R&D credits from HMRC during the year, following the submission of claims for year ended 31 March 2009 and year ended 31 March 2010. The claim for period ended 31 December 2010 was submitted in December 2011 and £119,000 was received post year end in January 2012. To match the receipts with the expense to which they relate £265,000 of these credits have been recognised in the year. The balance of £88,000 is within the current and non-current liabilities shown on the face of the statement of financial position.

£125,000 (period to 31 December 2010 - £73,000) of the Group's research and development expense is employee cost with the remaining £40,000 (period to 31 December 2010 - £30,000) relating to contractors. All research and development expenditure has been charged to the statement of comprehensive income as incurred unless the required criteria for capitalisation are met in which case they are included within intangible fixed assets as capitalised development.

Group forecasts show how the capitalised development will generate future economic benefit and support this treatment allowing the cost of new development to be amortised over its expected useful life.

Other administrative expenses, £1,548,000 (period to 31 December 2010 - £1,214,000)

Other administrative expenses comprise all the costs of running the Group's operating and corporate functions. This includes the staff, contractors and agencies together with associated costs employed in sales, marketing, PR, design, project management, production, IT, quality assurance, finance and legal.

The main component of administrative expenditure in the period relates to human resource costs, totalling £461,000 (period to 31 December 2010 - £482,000) including a share based payment charge of £143,000 (period to 31 December 2010 - £176,000). Share options are used to incentivise and reward certain employees to ensure SocialGO plc retains key staff.

Marketing costs total £209,000 (period to 31 December 2010 - £270,000). These costs primarily relate to PPC spend for SocialGO™ and the reduction of cost in the year is the continuing optimisation of the campaigns to achieve a better return on expenditure. External agencies and contractors have been used to assist in marketing and PR roles.

Also included in other administrative expenses is depreciation and amortisation of £405,000 (period to 31 December 2010 - £157,000), of this £128,000 (period to 31 December 2010 - £62,000) related to the amortisation of IP and £260,000 (period to 31 December 2010 - £88,000) related to the amortisation of capitalised development costs. The remainder related to depreciation of tangible fixed assets.

Taxation

No tax charge arises on the loss for the financial period (period to 31 December 2010 - £nil). At 31 December 2011 the Group has approximately £14 million (period to 31 December 2010 - £16.2 million) of losses available to carry forward to set against future taxable profits, subject to agreement with the UK and USA tax authorities. The Group does not recognise a deferred tax asset in respect of these losses.

Loss per share

Basic and diluted loss per share for the year of 0.27p (period to 31 December 2010 - 0.30p) has decreased compared to the period ended 31 December 2010 principally due to a 23% increase in the weighted average number of shares following the issue of new shares in the year.

Risks and uncertainties

The principal risks to the business and its ability to grow its customer base in order to generate future profits are:

·; The Group's ability to market and sell SocialGO™ in order to increase income.

·; Ensuring that products keep abreast of technological developments to retain current and gain new customers.

·; Ensuring the Group has adequate cash resources to enable it to build the SocialGO™ brand.

·; The retention of key staff members.

These risks are addressed by:

·; The Group has retained a new PR agency and is planning to recruit sales and marketing staff with the aim of increasing awareness of and maximise opportunities for SocialGO™.

·; The Group has soft launched Version 2 of SocialGO™ to enhance the current offering in addition to monitoring comparable products and attending conferences and workshops applicable to the sector to keep abreast of technological developments.

·; The Group has prepared and stress tested cash flow forecasts with a number of scenarios in order to plan for the next 12 months and beyond. The going concern basis of preparation has been applied in preparing these financial statements.

·; The Group offers share options to ensure that key staff members are suitably incentivised, in addition to this the Group has joined the Cycle to Work scheme which has proved very popular with employees.

Details of the Group's exposure to financial risk and its associated risk management policies are contained in this operational and financial review.

Key performance indicators

As in previous years, the key current issue and key performance indicators for the continuing success of the development of the business revolve around the funding of the Company.

That is:

·; The adequacy and availability of cash resources to fund the sales and marketing of SocialGO™ Version 2 along with future development.

Key financial performance indicators are:

·; Sales revenue growth.

·; Cash levels.

·; Net working capital, which is the Group's current assets less liabilities (measured against forecast).

Working Capital

The Group's operational cash position has been increased by fundraisings in the year. At 31 December 2011, the Group had cash of £347,000 (period to 31 December 2010 - £26,000). At the end of the financial period the group had net current assets of £190,000 (31 December 2010 net current liabilities of £318,000). This is in line with Group forecasts.

Details of funds raised during the financial period are provided in the CEO's statement.

The board continues to closely monitor the organisation's general overheads making savings and seeking cost efficiencies as appropriate.

Dominic Wheatley

Chairman

13 March 2012

SocialGO plc

Consolidated statement of comprehensive income for the year ended 31 December 2011

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All amounts relate to continuing activities.

 Consolidated statement of changes in equity

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Consolidated statement of financial position at 31 December 2011

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Consolidated statement of cash flows for the year ended 31 December 2011

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1 Basis of preparation

The preliminary financial information, which comprises the Consolidated Statement of Comprehensive Income, the Consolidated Statements of Changes in Equity, the Consolidated Statement of Financial Position and the Consolidated Statement of Cash Flows has been prepared on the basis of the accounting policies set out in the audited financial statements for the period ended 31 December 2010 and year ended 31 December 2011 and International Financial Reporting Standards and interpretations issued by the International Accounting Standards Board as adopted for use in the EU ("IFRS").

The financial information set out above does not constitute the Company's statutory accounts for the year ended 31 December 2011 or for the period ended 31 December 2010 but is derived from those accounts. Statutory accounts for 2010 have been delivered to the registrar of companies, and those for 2011 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

2 Annual Report

A copy of the report and accounts for the year ended 31 December 2011 together with a notice of AGM and proxy will be sent to shareholders in due course. A further announcement will be made at that time.