19 Jul 2011 10:05
19 July 2011FOR IMMEDIATE RELEASE GEONG International Limited ("Geong" or the "Company") Proposed acquisition and issue of new Ordinary Shares
GEONG International Limited (AIM:GNG), a leading internet software solutions provider and operator for large enterprises in China, is pleased to announce that it has on 18 July 2011 entered into an agreement with the shareholders of a Hong Kong based company, Adbeyond, to acquire the entire issued share capital of Adbeyond for a consideration of up to HK$120 million (£9.6 million), to be satisfied in two tranches (subject to certain conditions and adjustments set out in the SPA), as to 50 per cent. in new Ordinary Shares and 50 per cent. in cash.
In conjunction with the Acquisition, the Company is also pleased to announce that it has on 18 July 2011, entered into a non-binding term sheet with one of its major Chinese customers to raise a further US$8 million (c. £5 million) by way of an issuance of a two-year 7.5% convertible secured loan stock.
The Company is also exploring a potential listing of its shares on the HKSE as part of its continuous efforts to reflect the true value of the business. However, no final decision has been made by the Board on this matter and there is no certainty or assurance that a listing on the HKSE will take place.
Further announcements in relation to the convertible secured loan stock and possible admission to the HKSE will be made when appropriate.
Details of the Acquisition
* Adbeyond, trading as "Guru Online", is a Hong Kong based integrated online marketing company, with a focus on ad serving and social media marketing. It is in partnerships with over 200 digital media publishers to provide targeted marketing programmes that offer measurable impact on sales, to around 400 corporate customers and agencies across 13 business sectors. Approximately 90 per cent. of Adbeyond's customers are multinational companies. * Adbeyond revenue grew significantly from £0.5 million in FY09 to £3.1 million in FY11 as a result of the rapid growth in social media marketing sales following the increasing popularity of social media network such as Facebook and Twitter. * Adbeyond reported an audited revenue of HK$37.5 million (£3.1 million) (FY10: HK$21.1 million or £1.7 million) and gross profit of HK$19.8 million (£1.6 million) in FY11 (FY10: HK$9.7 million or £0.8 million). * Adbeyond meets Geong's strategic acquisition criteria of being profitable and cash generative, and in terms of geography, products and solutions, customer base, partnership network and management culture. Going forward, the Acquisition is expected to enable Geong to both broaden the bandwidth of its offering to its existing clients and secure new clients to whom it can market its current products. * The purchase consideration comprises :
(i) Initial Consideration of HK$60 million (£4.8 million), which will be satisfied as to HK$20 million (£1.6 million) by the issue of 4,001,000 new Ordinary Shares and as to HK$40 million (£3.2 million) in cash; and
(ii) Deferred Consideration of up to HK$60 million (£4.8 million), which will be calculated as the Aggregate Consideration, being a multiple of 8 times the adjusted post-tax profits of Adbeyond for FY12, less the Initial Consideration.
* The Deferred Consideration is expected to be satisfied by the issue of new Ordinary Shares and in cash in such proportions as is necessary such that the Total Consideration will be satisfied as to 50 per cent. in new Ordinary Shares and 50 per cent. in cash. The Company is entitled to vary the split of the Deferred Consideration between new Ordinary Shares and cash such that the Vendors shall not hold more than 24.99 per cent. of the issued share capital of Geong upon settlement of the Deferred Consideration. In the event Geong is admitted to the HKSE by the second anniversary of the Completion Date, it is anticipated that the Deferred Consideration will be paid on the later of (i) 14 Business Days upon Geong's receipt of Adbeyond's FY12 results or (ii) the HKSE admission date. * In the event that the admission to HKSE is not achieved by the second anniversary of the Completion Date, the Deferred Consideration shall be fully payable in cash no later than 28 calendar months following the date of the SPA. * The Acquisition does not constitute a reverse takeover under the AIM Rules and, accordingly, would not normally be conditional upon the approval of Shareholders by virtue of the size of the Acquisition. However, Shareholders' approval is required for the grant of additional authority to the Directors to issue and allot shares, or rights to convert into shares, and additional power to disapply the pre-emption rights attaching to such shares. Completion of the Acquisition is therefore conditional upon the passing of the respective necessary resolutions by the Shareholders at a general meeting to be held on or around 30 August 2011. * The Vendors have agreed not to sell or dispose of any of the Consideration Shares until the expiry of six calendar months after the allotment of such shares or, in the event that Geong is admitted to the HKSE, such time as imposed by any lock-in and/or orderly market arrangements to which the Vendors are subject.
Details of the CLS
* The CLS will be secured against, amongst other things, the entire issued
share capital of Adbeyond, personal undertakings and Ordinary Shares held
by two directors.
* The CLS holder will be entitled to convert their CLS into Ordinary Shares
anytime from the issue date up to the end of the two year tenure, at a
conversion price of 50p per share.
* All CLS not previously redeemed, purchased or converted will be repaid by
the Company by the end of the tenure at a premium to their nominal amount,
such that it provides an annual return of 25 per cent. (inclusive of 7.5
per cent annual interest) to the CLS holder.
* The Company and the potential CLS holder are in the process of finalising
the final details of the CLS. There is therefore no certainty that the CLS
will be issued. If CLS were to be issued, it will be conditional upon
receipt of the Shareholders' approval because, as described above, the
Directors do not have share sufficient authority.
* Having regard to the Group's strong cash position, it is also the Company's
intention to have CLS conditional upon the completion of Acquisition.
* The Board believes that such an investment by a major customer will be
beneficial to the Group both as regards that customer relationship and as a
signal of confidence to other customers.
A circular providing details of the Acquisition, and if relevant, the CLS, will be despatched to Shareholders in due course.
Weidong Wang, Chief Executive of Geong, commented: "We are excited about the opportunities that this acquisition will bring to the Group. Adbeyond is a complementary offering to our current business, particularly our Social Networking 2.0 SaaS, and we believe this will broaden the bandwidth of our offering in mainland China. We look forward to updating shareholders on the integration of the business and to realising the financial and strategic benefits that we anticipate."
Yip Shek Lun, CEO of Adbeyond, commented: "My board and I are delighted to be joining a high growth business. We believe the combined group will continue to grow and thrive in Asia. We look forward to continuing and accelerating our growth strategy in these exciting times."
For illustration purposes, amounts expressed in HK$ throughout this announcement have been translated into £ at a rate of £1.00 = HK$12.497, being the closing rate as at 18 July 2011.
For further information, please contact:
GEONG International Limited www.geong.com Tel: +86 10 5222 0999Henry Tse, ChairmanWeidong Wang, CEOAmit Thakar, CFOEvolution Securities Limited Tel: +44 20 7071 4300 (Nominated Adviser and Joint Broker) Jeremy Ellis Tim Worlledge Esther Lee Tim Redfern (Corporate broking)
About GEONG International Limited
Operational since 2000, Geong specialises in collaboration and content management software and services. Its products are specifically tailored for the Chinese market, where the Company is recognised by Government agencies and numerous blue chip clients as a leader in its field. Geong was named The Most Successful Enterprise in ECM Software in China 2007 to 2008 by China's Centre for Information Industry Development and CCID Consulting; and one of the fastest growing companies in Asia at the Deloitte Technology Fast 50 China and Deloitte Technology Fast 500 Asia Pacific awards. The Company has recently expanded into North America with operations in Canada.
Registered in Jersey, the Company's operations are headquartered in Beijing. The Company's shares were admitted to AIM in June 2006 and trade under the ticker GNG.L
For more information, please visit www.geong.com
19 July 2011FOR IMMEDIATE RELEASE GEONG International Limited ("Geong" or the "Company") Proposed acquisition and issue of new Ordinary Shares
1. Introduction
GEONG International Limited (AIM:GNG), a leading internet software solutions provider and operator for large enterprises in China, is pleased to announce that it has on 18 July 2011 entered into an agreement with the Vendors to acquire the entire issued share capital of Adbeyond for a consideration of up to HK$120 million (£9.6 million), to be satisfied in two tranches (subject to certain conditions and adjustments set out in the SPA) as to 50 per cent. in new Ordinary Shares and 50 per cent. in cash. The consideration comprises the Initial Consideration of HK$60 million (£4.8 million), which will be satisfied as to HK$20 million (£1.6 million) by the issue of 4,001,000 new Ordinary Shares and as to HK$40 million (£3.2 million) in cash, and the Deferred Consideration of up to HK$60 million (£4.8 million), which is expected to be satisfied by the issue of new Ordinary Shares and in cash in such proportions as is necessary such that the Total Consideration is expected to be satisfied as to 50 per cent. in new Ordinary Shares and 50 per cent. in cash. Further details of the Acquisition are set out in paragraph 5 below.
The Acquisition does not constitute a reverse takeover under the AIM Rules and accordingly, would not normally be conditional upon the approval of Shareholders by virtue of the size of the Acquisition. However, Shareholders' approval is required for the grant of additional authority to the Directors to issue and allot shares, or rights to convert into shares, and additional power to disapply the pre-emption rights attaching to such shares, because the authority granted to the Directors at the last annual general meeting held on 27 September 2010 is not sufficient to enable the issue and allotment of the aggregate number of new Ordinary Shares which would fall to be issued upon completion of the Acquisition. Completion of the Acquisition is therefore conditional upon the passing of the respective necessary resolutions by the Shareholders at the GM to be held on or around 30 August 2011.
In conjunction with the Acquisition, the Company is also pleased to announce that it has on 18 July 2011, entered into a non-binding term sheet with one of its major Chinese customers to raise a further US$8 million (c.£5 million) by way of an issuance of a two-year 7.5% convertible secured loan stock. The Board believes such an investment by a major customer will be beneficial to the Group both as regards that customer relationship and as a signal of confidence to other customers.
The CLS will be secured against, amongst other things, the entire issued share capital of Adbeyond, personal undertakings and Ordinary Shares held by two directors. The CLS holder will be entitled to convert their CLS into Ordinary Shares anytime from the issue date up to the end of the two year tenure, at a conversion price of 50p per share. All CLS not previously redeemed, purchased or converted will be repaid by the Company by the end of the tenure at a premium to their nominal amount, such that it provides an annual return of 25 per cent. (inclusive of 7.5 per cent. annual interest) to the CLS holder. The Company and the potential CLS holder are in the process of finalising the final details of the CLS. There is therefore no certainty that the CLS will be issued. If CLS were to be issued, it will be conditional upon receipt of the Shareholders' approval because, as described above, the Directors do not have sufficient share authority. In addition, having regard to the Group's strong cash position, it is also the Company's intention to have CLS conditional upon completion of the Acquisition. A further announcement will be made when appropriate.
The Company is also exploring a potential listing of its shares on the HKSE as part of its continuous efforts to reflect the true value of the business. However, no final decision has been made by the Board on this matter and there is no certainty or assurance that a listing on the HKSE will take place.
Further announcements in relation to the convertible secured loan stock and possible admission to the HKSE will be made when appropriate.
A circular providing details of the Acquisition, and if relevant, CLS, will be despatched to the Shareholders in due course.
2. Information on Geong
Geong designs, develops, delivers and operates internet software solutions and related services for large enterprises in China, particularly in the financial services, telecommunication, automotive, manufacturing and consumer sectors. Geong generates revenue from consultancy services, software licences, customisation of support and maintenance through IaaS model and revenue sharing through SaaS model. In strategic partnerships with IBM and Oracle, Geong has also successfully penetrated the South East Asia market.
Geong employs around 400 employees and is based in Beijing with offices in Shanghai, Guangdong and Vancouver. The Ordinary Shares are admitted to trading on AIM.
Further background on the Company can be found on the Company's website ( www.geong.com).
3. Information on Adbeyond3.1 History
Adbeyond was founded in March 2007 by four founding shareholders, Ng Chi Fung, Wan Wai Ting, Wang Lai Man Liza and Yip Shek Lun, as an online marketing provider in Hong Kong. The founding shareholders, who already had significant experience in marketing, identified a gap in promoting retail and consumer companies using online platforms. On 19 March 2008, Adbeyond appointed a new director, Yim Kai Ming. Mr. Yim has been the Chairman of the Hong Kong Institute of Marketing since 2005. Yim Kai Ming subsequently became a shareholder in 2008 holding 11.5 per cent. in Adbeyond.
The company focuses on the provision of integrated digital marketing programmes that offer accountable results and measurable impact on sales, which led to the development of Maximizer in 2009 : a system based offering which provides access to an advertising network consisting of interactive digital advertisers. With the increasing popularity of social media network such as Facebook and Twitter, Adbeyond began promoting social media marketing as an additional platform for its customers to reach its target market.
In August 2010, Adbeyond issued new shares to Wong Yuet Yeung Harry, who provided additional capital required to finance its expansion.
3.2 Business
Adbeyond, trading as "Guru Online", is a Hong Kong based integrated online marketing company, with a focus on ad serving and social media marketing. The company designs, implements and maintains digital marketing programmes for around 400 customers in Hong Kong. It is in partnerships with over 200 digital media publishers.
Adbeyond's principal activities are divided into 3 business units:
(a) Maximizer
Maximizer was developed by Adbeyond in 2009 as its ad serving marketing product. It is a system based offering which provides access to an advertising network consisting of interactive digital advertisers. The technology or remote ad server performs various other tasks such as counting the number of clicks for an advertisement and generates reports to assist in determining the return on investment for an advertisement on a particular website. As this is a relatively inexpensive marketing platform that allows advertisers to reach a certain target market and analyse its impact on sales, it has become increasingly popular amongst Adbeyond's existing customers. In FY11, Maximizer represented 38 per cent. of Adbeyond's total sales.
(b) Digital marketing
Digital marketing involves all forms of digital advertising channels to reach customers, including television, radio, internet, mobile, social medial marketing and any other form of digital media. It covers most, if not all, of the more traditional marketing platforms in addition to the use of internet. Typically, Adbeyond provides digital marketing services in five stages - research, building market awareness, idea buy-in, sales creation and loyalty building, and it is frequently seen as a more comprehensive consultancy service. Digital marketing contributed 32 per cent. of Adbeyond's total sales in FY11.
(c) Social media
Adbeyond designs, installs and maintains social media marketing programmes with content that attracts attention and encourages readers to share their experiences with their social networks. With the emergence of channels like Facebook and Twitter, social media marketing has become a popular additional platform for corporates to engage with their customers using, for example, a Facebook page. Social media marketing is now a popular viral marketing or word-of-mouth marketing for Adbeyond's retail and consumer customers. This business unit accounted for 30 per cent. of Adbeyond's total sales in FY11.
3.3 Customer base
Adbeyond sells to around 400 corporate customers and agencies across 13 business sectors in Hong Kong, of which over 90 per cent. are multinational companies. Most of the customers are large, multi-brand consumer oriented corporates such as Procter & Gamble, Citibank, Swatch, Olympus and Nike. The top 10 customers contributed approximately 28 per cent. of Adbeyond's total sales in FY11.
3.4 Market and growth strategy
Online advertising in Hong Kong is estimated to be a HK$700 million (£56 million) to HK$1 billion (£80 million) industry (source: Magna Global 2011 Advertising Forecast). Marketers are using the internet as a supplementary channel to traditional media to broaden their reach to potential customers who are increasingly internet-savvy and mobile. In addition, although not directly comparable, online marketing (cost per impression) in Hong Kong is also significantly cheaper than traditional media (cost per second) such as television and radio advertising, and capable of reaching an equivalent audience in a shorter time frame.
Despite the rapid growth in online marketing spend in Hong Kong, it only represented 8 per cent. of the total advertising spend in 2010, compared to 30 per cent. in, for example, the UK. Based on the current internet penetration rate of 65 per cent. in Hong Kong and 85 per cent in the UK, the theoretical online marketing spend in Hong Kong is 22 per cent., potentially offering room for the sector to treble in size.
Adbeyond's strategy is to promote targeted, cost competitive and effective marketing solutions to its existing customers and corporates which are either playing catch-up or new to online marketing. These will continue to be Adbeyond's growth drivers to further increase its market share in Hong Kong and enter the China and Asia markets following the Acquisition, particularly the Maximizer and social media businesses. Asia exhibits tremendous growth, reflected in a regional advertising economy which will expand by 10 per cent. in most years through 2016. China's growth warrants additional attention: by 2012 we expect that its advertising market will exceed the size of Japan's and will become the world's second largest. China will retain this position for many years, as by 2016 we expect its advertising market will be almost double the size of Japan's. As in other regions, Asian markets increasingly incorporate internet-based advertising into media budgets, and media owners' ad revenues for internet-based media are rising, up by 15.5 per cent. in 2011 and 13.9 per cent. each year through 2016 (source: Magna Global 2011 Advertising Forecast).
3.5 Current trading
The board of Adbeyond believes that it has made a good start for the FY12 and that trading for the first three months has been in line with management expectations, with the rate of new customer acquisitions and sales orders greater than in the corresponding period last year. The company has won HK$20.8 million (£1.7 million) of contracts up to 30 June 2011, of which 95 per cent. will represent revenues in the current financial year. Adbeyond achieved gross margin in the region of 59 per cent on the contracts in the first two months of FY12 and anticipates to achieve an overall full year gross margin of not less than 50 per cent.
The cash position of Adbeyond remains strong in the region of HK$3.5 million (£ 0.3 million) as at the date of this announcement.
3.6 Key historical financial information
Set out below is a summary of Adbeyond's summary financial information for thethree years ended 31 March 2011. The financial information has been extractedfrom the audited accounts for the year ended 31 March 2011, prepared inaccordance with HKFRS. The audited accounts for the financial year ended 31March 2009 were prepared in accordance with Small and Medium-sized EntityFinancial Reporting Standard. Financial year ended 31 March 2011 2010 2009 £'000 £'000 £'000 Turnover(1) 3,098 1,711 535 Gross profit(1) 1,637 783 274 Profit before taxation(1) 605 308 117 Profit after taxation(1) 507 243 107
Cash and cash equivalents as at 521 520 120 year end(2)
Net assets as at year end(2) 1,410 995 56
(1) For illustration purposes, the amounts were translated into £ at the average rates of each of the financial years
(2) For illustration purposes, the amounts were translated into £ at the closing rates of each of the financial years
4. Background to and reasons for the Acquisition
As announced in its previous announcements, Geong continues to seek to grow its revenue both organically and by complementary bolt-on acquisitions, which will enable it to both broaden the bandwidth of its offering to its existing clients and secure new clients to whom it can market its current products and services. The Board believes that Adbeyond satisfies these criteria and that it represents an attractive opportunity for Geong to increase both the scale and breadth of its business. In particular, the Board believes that the Acquisition will:
* create an enlarged group with an enhanced "one stop" proposition for online integrated business platforms offering operational solutions and communication with customers using social media networks; * enable Geong to cultivate existing large enterprise clients by selling more online marketing and social media solutions and services to them, consistent with its "go broad" strategy; * complement the Company's strength in technology and industry know how by offering a broader range of related services and advice; * improve margins and cash flows by increasing the proportion of high margin and SaaS-like sales as most of Adbeyond's sales are of a similar nature; * de-risk the Company's existing business by opening up a new market both in terms of services (which are capable of standing alone) and geography by giving Geong a Hong Kong presence; and * enable Geong to offer internet operational services with social media platforms for large enterprises utilising cloud computing technologies in China and Asia.
5. Details of the Acquisition
The Company, on 18 July 2011, entered into a SPA with the Vendors to acquire the entire issued share capital of Adbeyond for a consideration of up to HK$120 million (£9.6 million) which will be satisfied in two tranches, the Initial Consideration and the Deferred Consideration.
The Initial Consideration of HK$60 million (£4.8 million) comprises HK$40 million (£3.2 million) in cash plus HK$20 million (£1.6 million) satisfied by the issue of 4,001,000 new Ordinary Shares.
The Deferred Consideration, of up to HK$60 million (£4.8 million), will be calculated by reference to the adjusted post-tax profits of Adbeyond for the year ending 30 March 2012, such that the Aggregate Consideration, being the Initial Consideration plus the Deferred Consideration, will represent a multiple of 8 times the adjusted post-tax profits of Adbeyond for the year ending 30 March 2012, subject to the Aggregate Consideration amounting to no less than HK$80 million (£6.4 million) and no more than HK$120 million (£9.6 million). The Deferred Consideration will comprise such number of new Ordinary Shares and cash as will result in the Aggregate Consideration being satisfied as to 50 per cent. in new Ordinary Shares and 50 per cent. in cash, save for the following:
* if the Ordinary Share price in the 30 day period prior to the allotment of the Deferred Consideration Shares is such that the Vendors would receive Consideration Shares representing more than 24.999 per cent. of the Company's issued share capital, the Company is entitled to vary the split of the Deferred Consideration between new Ordinary Shares and cash so that the aggregate number of new Ordinary Shares allotted to the Vendors following the settlement of Deferred Consideration shall not represent more than 24.999 per cent. of the issued share capital of Geong at that time; or * if the Company is not admitted to the HKSE by the second anniversary of the Completion Date, the Deferred Consideration shall be fully payable in cash.
In the event Geong is admitted to the HKSE by the second anniversary of the Completion Date, it is anticipated that the Deferred Consideration will be paid on the later of (i) 14 Business Days upon Geong's receipt of Adbeyond's FY12 results or (ii) the HKSE admission date. In the event that the HKSE admission is not achieved, the Deferred Consideration shall be fully payable in cash no later than 28 calendar months following the date of the SPA.
The number of Initial Consideration Shares has been calculated by reference to the average middle market price of the Ordinary Shares during the 30 day period prior to 18 July 2011. The number of Deferred Consideration Shares will similarly be calculated by reference to the average middle market price of the Ordinary Shares during the 30 day period prior to their allotment.
Under the SPA, the Vendors will give representations and warranties of a nature consistent with those commonly given in such transactions. Completion of the Acquisition is conditional on the passing of relevant resolutions by the Shareholders at the GM which is expected to occur on or around 30 August 2011.
The cash consideration will be financed out of the Company's existing cash resources and the net proceeds of CULS I. As at 31 March 2011, the Company had a cash balance of approximately £5.4 million.
6. Lock-in
Upon settlement of the Initial Consideration, the Vendors will hold, in aggregate, 12,003,000 Ordinary Shares, representing 24.08 per cent. of Geong's issued share capital. The Vendors have agreed not to sell or dispose of any of the Consideration Shares until the expiry of six calendar months after the allotment of such shares or, in the event that Geong is listed on the HKSE, such time as imposed by any lock-in and/or orderly market arrangements to which the Vendors are subject to.
7. New Ordinary Shares
The new Ordinary Shares will be issued as fully paid, and on identical terms to and will rank pari passu in all respects with the existing Ordinary Shares, including the right to receive and retain all dividends and other distributions received, paid or made on Ordinary Shares after the relevant date of allotment.
The 4,001,000 Initial Consideration Shares will, on the date of allotment, represent approximately 9.56 per cent. of the issued share capital of Geong as enlarged by such shares (assuming no conversion of CULS I before the completion of the Acquisition).
Upon issuance of the Deferred Consideration Shares, they would, on the date of allotment, represent approximately 24.08 per cent. of the issued share capital of Geong as enlarged by the Acquisition (assuming the Deferred Shares were to be issued at the same price as the Initial Consideration Shares (which may not necessarily be the case) and no conversion of CULS I before the completion of the Acquisition).
8. Current trading and prospects
On 20 May 2011, the Company announced a post year end trading update for the financial year ended 31 March 2011, stating that the Board expects to report a net profit after tax, subject to audit, ahead of market expectations in the full year results. Geong's total revenues for the financial year to 31 March 2011 are expected to be around £11 million including SaaS revenue of approximately £3 million. Gross margin has increased and is currently above 50 per cent., compared to 46 per cent. a year ago and 40 per cent. two years ago, as the proportion of higher margin SaaS 2.0 business continues to grow strongly. SaaS now forms 27 per cent. of the revenues compared to 14 per cent. a year ago. It is likely that the Group's tax rate for the year will be similar to last year's.
The order book as at 31 March 2011 had increased to £15 million compared to £14 million a year ago. Moreover, the current year has started strongly with RMB36 million (£3.5 million) of contracts won up to June 2011.
The Company operates with a strong balance sheet with net cash, at 31 March 2011, in the region of £5.4 million after £0.4 million of capital expenditure and research and development spend on the Social Networking 2.0 solution offering, which is increasingly relevant given the strong growth in internet usage in China. The Company subsequently issued CULS I and raised a net proceeds of approximately £2.4 million.
As the Company continues to deliver its long-term IaaS contracts, accrued income has increased to £10.4 million, compared to £8.4 million last year, although the Board believes that will now decrease gradually as IaaS becomes a reducing percentage of its business. Trade receivables remained approximately at last year's level.
The Board believes that the complementary skills and experience of Geong and Adbeyond will enable the enlarged group to serve a more diverse client base, in Mainland China, Hong Kong and South East Asia. The Board believes the prospects for the enlarged group are positive and view the future with confidence.
Nothing in this announcement is intended to be a profit forecast and the statements in this announcement should not be interpreted to mean that the earnings per share for the current or future financial periods will necessarily be greater than those for the relevant preceding financial periods.
As announced on 8 July 2011, the Company will announce the preliminary results for the FY 2011 in mid August 2011.
9. Working capital
The Directors are of the opinion, having made due and careful enquiry, that the enlarged group will have sufficient working capital for its present requirements, that is for at least the next 12 months from the date of completion of the Acquisition.
10. Irrevocable undertakings
Geong has received irrevocable undertakings from the following directors to vote (or procure the voting) in favour of all of the resolutions to be proposed at the General Meeting in respect of 9,498,206 Ordinary Shares, representing in aggregate approximately 25.11 per cent. of the existing issued share capital, all of which are beneficially held by the Directors:
Name Number of Ordinary Shares Percentage of entire committed existing issued share capital Henry Hak-Yan Tse 3,703,673 9.79 Weidong Wang 4,749,620 12.55 Minren Guan 1,027,413 2.72 Amit Thakar 17,500 0.05 11. General Meeting
A GM will be held at on or around 30 August 2011 at the offices of Geong at Building 6, Area 8, Advanced Business Park, No. 188 South 4th Ring Road West, Fengtai District, Beijing, P.R.C. 100070, at which the relevant resolutions will be proposed for the purposes of implementing the Acquisition, and if relevant, the CLS.
Further announcements in relation to the details of GM and despatch of circulars will be made in due course.
12. Recommendation
The Directors consider the Acquisition to be fair and reasonable and in the best interests of the Company and its Shareholders. Accordingly, the Directors unanimously recommend that the Shareholders vote in favour of the Resolutions as they have irrevocably undertaken to do in respect of their own beneficial holdings of Ordinary Shares amounting, in aggregate, to 9,498,206 Ordinary Shares, representing approximately 25.11 per cent. of the existing issued ordinary share capital of the Company.
SHARE ISSUE STATISTICS Issue Price 40p Number of Ordinary Shares in issue as at the date of this 37,834,622announcement Number of Initial Consideration Shares 4,001,000 Maximum number of Deferred Consideration Shares(1) 8,002,000 Maximum number of Ordinary Shares in issue following the 49,837,622Acquisition(2)
Maximum number of Ordinary Shares arising from conversion of 5,000,000 CULS I
Maximum number of Ordinary Shares in issue following the 54,837,622Acquisition and full conversion of CULS I(1)
Number of Consideration Shares as a percentage of the 24.08 per cent. enlarged issued ordinary share capital of the Company
following the Acquisition(2)
Number of new Ordinary Shares as a percentage of the enlarged 21.89 per cent. issued ordinary share capital of the Company following the
Acquisition and the full conversion of CULS I
(1) Assuming Deferred Shares were to be issued at the same price as the Initial Consideration Shares (which may not necessarily be the case)
(2) Assuming no conversion of CULS I before the completion of the Acquisition
EXPECTED TIMETABLE OF PRINCIPAL EVENTS General Meeting 30 August 2011 The results of General Meeting announced through 30 August 2011a Regulatory Information Service
Admission and dealings in the new Ordinary Shares 8.00 a.m. on 31 August 2011 expected to commence on AIM
Each of the times and dates in the above timetable is subject to change. If any of the above times and/or dates change, the revised times and/or dates will be notified to Shareholders by announcement through a Regulatory Information Service. References to time in this announcement are to London time unless otherwise stated.
DEFINITIONS
The following definitions apply throughout this announcement unless the contextotherwise requires:"Acquisition" the proposed acquisition of the entire issued share capital of Adbeyond by the Company "Admission" admission of the new Ordinary Shares to trading on AIM becoming effective in accordance with Rule 6 of the AIM Rules "Adbeyond" Adbeyond (Group) Limited, which trades as Guru Online "Aggregate the total consideration for the entire issued share Consideration" capital of Adbeyond and comprising the Initial Consideration and the Deferred Consideration "AIM" a market operated by the London Stock Exchange "AIM Rules" the rules for companies with a class of securities admitted to AIM and their nominated advisers governing the admission to and operation of AIM as published by the London Stock Exchange from time to time "Business Day" a day other than a Saturday or Sunday or public holiday in Hong Kong, the People's Republic of China, England and Jersey "CLS" the possible issue of US$8 million (c.£5 million) nominal value of 7.5% convertible secured loan stock 2013 "Company" or "Geong" GEONG International Ltd "Completion Date" the third Business Day after that on which the SPA becomes unconditional or such other date as shall be mutually agreed by the Company and the Vendors "Consideration Shares" the Initial Consideration Shares and the Deferred Consideration Shares "CREST" the Relevant System (as defined by the CREST Regulations) for the paperless settlement of share transfers and the holding of shares in uncertificated form in respect of which Euroclear is the Operator (as defined by the CREST Regulations) "CREST Regulations" the Uncertificated Securities Regulations 2001 (as amended) (SI 2001/3755) "CULS I" the £2.5 million nominal value of 7.5% convertible unsecured loan stock 2014 issued by the Company on 31 May 2011 "Deferred Cash the cash element of the Deferred Consideration Consideration"
"Deferred Consideration" deferred consideration of an amount equal to the
Aggregate Consideration less the Initial Consideration
"Deferred Consideration the new Ordinary Shares to be issued to the Vendors as Shares"
part of the Deferred Consideration
"Directors" or "Board" the directors of the Company or any duly authorised
committee thereof "FY09" the financial year ended 31 March 2009 "FY10" the financial year ended 31 March 2010 "FY11" the financial year ended 31 March 2011 "FY 12" the financial year ending 31 March 2012 "GM" or "General the general meeting of the Company to be held on or Meeting" around 30 August 2011 "Group" the Company, its subsidiaries and its subsidiary undertakings "HKFRS" Hong Kong Financial Reporting Standards "HKSE" Hong Kong Stock Exchange "Initial Cash the cash element of the Initial Consideration, being Consideration" HK$40 million
"Initial Consideration" the initial consideration of HK$60 million (£4.8
million) payable by Geong to the Vendors and to be satisfied by the Initial Cash Consideration and the Initial Consideration Shares "Initial Consideration the 4,001,000 new Ordinary Shares to be issued to the Shares" Vendors as part of the Initial Consideration "Issue Price" 40p, being the average trading price of Ordinary Shares over the period of 30 calendar days ending on 18 July 2011, a converted price of HK$4.99875 equivalent
"London Stock Exchange" London Stock Exchange plc, its subsidiaries and its
subsidiary undertakings "new Ordinary Shares" new Ordinary Shares proposed to be issued upon completion of the Acquisition "Ordinary Shares" ordinary shares of 1 pence each in the capital of the Company "Shareholders" holders of Ordinary Shares "SPA" the conditional sale and purchase agreement entered into between Geong and the Vendors in connection with the Acquisition
"UK" or "United Kingdom" the United Kingdom of Great Britain and Northern
Ireland "Vendors" the shareholders of Adbeyond, namely Yip Shek Lun, Ng Chi Fung, Yim Kai Ming, Wang Lai Man Liza, Wan Wai Ting and Wong Yuet Yeung Harry, who as at the date of this announcement, collectively hold 100 per cent. of the issued shares of Adbeyond "£" and "p" respectively pounds and pence sterling, the lawful currency of the United Kingdom "HK$" and "cents" respectively Hong Kong dollars and cents, the lawful currency of Hong Kong GLOSSARY The following terms apply throughout this announcement unless the contextotherwise requires:ad serving technology and service that places advertisements on websites. Ad serving technology companies provide software to websites and advertisers to serve ads, count them, choose the ads that will make the website or advertiser most money, and monitor progress of different advertising campaigns digital marketing promoting of brands using all forms of digital advertising channels to reach consumers, including television, radio, internet, mobile, social media marketing and any other form of digital media IaaS infrastructure as a service, a provision model in which an organisation supplies the equipment used to support operations including storage, hardware, servers and networking components SaaS software as a service, a software distribution model in which applications are hosted by a vendor or service provider and made available to customers over a network, typically the internet social media marketing an integrated marketing communication plan that coordinates promotional elements - advertising, personal selling, public relations, publicity, direct marketing and sales promotion, to connect with the target markets viral marketing a marketing technique that uses pre-existing social networks to produce increases in brand awareness or to achieve other marketing objectives through self-replicating viral processes, analogous to the spread of viruses or computer viruses word-of-mouth marketing an unpaid form of promotion, oral or written, in which satisfied customers tell other people how much they like a business, product, service or event
XLON