GeoSentric Oyj - Company Announcement

AGREEMENT TO CREATE A JOINT VENTURE IN CHINA SIGNED WITH MAJOR CHINESE MEDIA COMPANY

GEOSENTRIC OYJ      STOCK EXCHANGE RELEASE June 27, 2011 at 12:30





AGREEMENT TO CREATE A JOINT VENTURE IN CHINA SIGNED WITH MAJOR CHINESE MEDIA
COMPANY 



As previously reported on March 18, 2011 and as described in more detail in the
Q1 Interim Report released on May 26, 2011, the Company's wholly owned Chinese
subsidiary, GyPSii (Shanghai) Co. Ltd. (“GSSH”) has, on March 18, 2011 signed 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 this agreement, GSSH and Sina jointly developed
a new “Weilingdi” service and Sina have 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 a vital step forward in progressing discussions about
a deeper relationship between the two companies potentially resulting in a
joint venture agreement. The Company had concluded and still believes that, in
order to be able to exploit the potential of the Chinese market, it was
necessary to partner with an established local partner who can bring large
numbers of local users and also local marketing expertise and financing. 



The Company is today announcing that it has 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 GSSH and Sina HK. Once the
necessary preconditions for completion have been fulfilled (which could take up
to 90 days), including obtaining Chinese government and regulatory approval,
Sina HK will invest approximately EURO 4.5m into GSSH by way of newly created
share capital thereby obtaining a 60% controlling interest in GSSH. Sina is
then 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 then exclusively operate all of Sina's LBS and SNS services in China.
It will then continue to develop and progress the initiatives outlined by the
two companies in the March 18th, 2011 Cooperation Agreement, specifically the
delivery of the "Weilingdi" and “Tuding” products. GeoSentric is granting,
through its wholly owned Dutch subsidiary, GeoSolutions BV (“GSBV”), to GSSH an
exclusive royalty free license to use the GeoSentric IP within China and will
enjoy through GSBV 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 will represent 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. 



When completed, GeoSentric 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 as required by IFRS 11. This will have the effect of reducing its
reported consolidated revenues and costs in 2011. 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. It should be noted
that if the lead investor's funding proposal for the Company as outlined in
recent bulletins is implemented, then the Company will own a minority
percentage of GeoSolutions Holdings N.V., the parent company of GSSH, which in
turn will then own 40% of GSSH. 





GeoSentric Oyj





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



Distribution:

NASDAQ OMX Helsinki

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