GeoSentric Oyj - Company Announcement

JOINT VENTURE IN CHINA COMPLETED BETWEEN PREVIOUSLY WHOLLY OWNED SUBSIDIARY (NOW ASSOCIATE COMPANY) AND MAJOR CHINESE MEDIA COMPANY

GEOSENTRIC OYJ    STOCK EXCHANGE RELEASE September 19, 2011 at 13:40





JOINT VENTURE IN CHINA COMPLETED BETWEEN PREVIOUSLY WHOLLY OWNED SUBSIDIARY
(NOW ASSOCIATE COMPANY) AND MAJOR CHINESE MEDIA COMPANY 



As previously reported on June 26, 2011, the Company's then wholly owned
Chinese subsidiary, GyPSii (Shanghai) Co. Ltd. (“GSSH”) in March, 2011 entered
into a Cooperation Agreement with Sina (Beijing) Information Technology Co.,
Ltd., whose parent company, Sina Corp. is listed on the US NASDAQ market under
the symbol (SINA). The Cooperation Agreement provided for development,
marketing and distribution cooperation between the two companies for a newly
launched "Weilingdi" Location Based Services (“LBS”) and Social Networking
Services (“SNS”) service in China. Under the agreement, GSSH and Sina jointly
developed a new “Weilingdi” service and Sina has been actively marketing it to
its 100m+ "Weibo" application users. The "Weilingdi" service combines Sina's
exclusive content such as entertainment, lifestyle information and VIP assets
built on top of the existing "Lingdi" service launched by GSSH last year. The
Cooperation Agreement was seen as a vital step forward in progressing
discussions about a deeper relationship between the two companies potentially
resulting in a joint venture agreement. 



In June 2011, the Company announced that its then wholly owned subsidiary (now
associate company), GeoSolutions Holdings NV (“GHNV”), had signed an agreement
with Sina Hong Kong Ltd (“Sina HK”) for both companies to take the necessary
next steps towards establishing a Joint Venture (“JV”) between GHNV and Sina
HK. The Company has now been informed by GHNV that the necessary preconditions
for completion of the JV have been fulfilled, including obtaining Chinese
government and regulatory approval. As a result Sina HK has invested
approximately EURO 4.5m, including the advance funding received earlier in
June, into GSSH by way of newly created share capital thereby obtaining a 60%
controlling interest in GSSH. This investment will secure JV's operations until
the end of 2012 and beyond. 



Under the JV agreement, Sina is contributing to the JV its 100M+ "Weibo" user
base, marketing resources and distribution channels to promote the new products
and data center services. GSSH will exclusively operate all of Sina's LBS and
SNS services in China. It will continue to develop and progress the initiatives
outlined by the two companies in the Cooperation Agreement, specifically the
delivery of the "Weilingdi" and “Tuding” products. GHNV has granted, through
its wholly owned Dutch subsidiary, GeoSolutions BV, to GSSH an exclusive
royalty free license to use the GyPSii IP within China and will enjoy joint IP
ownership rights to all new or enhanced IP created by GSSH plus exclusive
royalty free rights to use such IP outside of China. The JV represents the
largest social network of mobile consumers and merchants in China and will be
focused on providing merchants with a robust set of tools to improve customer
loyalty and relationship management and consumers with financially incentive
driven mobile applications. 



It should be noted that, as a result of the Company's previously announced
funding program, the Company is now a minority holder in GHNV, which in turn is
now a 40% holder in GSSH. GHNV will not be consolidating the results of the JV
in its group accounts but will apply the equity method of accounting to its 40%
investment. This will have the effect of reducing its reported consolidated
revenues and costs in 2011 and beyond. Current projections indicate that the JV
will not be profitable in its initial phase and it may be several years before
there may be dividends flowing from the JV to GHNV and further on to the
Company. 





GeoSentric Oyj



For more information, please contact: investors@gypsii.com



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