Result of GM, Disposal of Dea

RNS Number : 1952U

Asia Digital Holdings PLC

11 October 2010

 



Press release

11 October 2010

Asia Digital Holdings Plc

("ADH" or the "Company")

Result of General Meeting

Disposal of Deal Group Media Pty Limited 

The Board of ADH announces that at a General Meeting of the Company held today the resolution seeking shareholder approval for the sale of the entire issued share capital of Deal Group Media Pty Limited ("DGM Australia") to Comtel Corporation Limited ("the Disposal") and the grant of a perpetual licence over all intellectual property owned by ADH used in the business and operations of DGM Australia was duly passed.

Following completion of the Disposal, ADH will have cash resources of approximately £1,900,000 (in addition to conditional deferred consideration of up to £607,000 which is expected to be paid within approximately thirteen months).

Out of the proceeds, and having received a repayment request from Mr John Porter post issue of the circular, the Company will, by 8 November 2010, repay the convertible loan of £500,000 along with accrued interest of approximately £100,000.

The Directors are excited by the opportunity to evolve the business with a pure Asian focus armed with a much stronger, debt free balance sheet.

It is notable that out of ADH's 450 current clients before the Disposal of the DGM Australia business, the majority of these clients are in Asia and remain with the Company post Disposal.

The revenues and profitability that will be lost as a result of the transaction will impact the Company's trading performance in the short term, but the Board believes that the more material growth opportunity lies within Asia.  Therefore, the post transaction Company has the potential to deliver more shareholder value than would otherwise have been the case.

Post Disposal growth is expected throughout the operation and in particular in China where an embryonic DGM business is servicing Dell, their first client, and where the AKTIV business has recently agreed an exclusive representation deal to sell the BBC's local digital advertising inventory.

Despite relatively low levels of digital advertising spend, ADH's operations in India and South East Asia ("SEA") have allowed the Company to "cut its teeth" in the region, building an international client base, brand recognition and generating positive profitable contribution, albeit at a low level.  These are considered vital building block for the future.

The Chinese market represents 30% of Asian ad spend, sixty times that of SEA and India where the Company has been operating to date. (Source: Zenith Optimedia December 2009 Adspend Report).

Based on past experiences in Asia, the Company is considering strategic changes to mould its offering around the perceived opportunity.  The core of the operation will remain the delivery of a demonstrable return from digital media advertising and this is considered highly relevant for China, a market where over 87 million online users shopped online in the first 6 months of 2009 with over 30% making between 5 and 10 purchases over the period (Source: ChinaInternetWatch).

China's online shopping market generated over £25 billion in 2009 representing 2% of all domestic retail sales (Source: ChinaInternetWatch).

In addition to focussing on headline growth, the Board is reviewing the cost base of the Company, specifically in the area of central / holding company costs, those costs not directly linked to revenue creation, and expects the resultant savings to expedite a return to profitability.

Adrian Moss, Chief Executive Officer of Asia Digital Holdings, said: "Though the disposal of the transaction sees a material reduction in our revenues and operational contribution, it puts our balance sheet in the strongest position that it has been in for several years and facilitates a focus on the largest digital advertising growth opportunity left globally.  With over ten years experience of operating in early stage evolution markets, we are better positioned to leverage the opportunity and deliver shareholder value.

"On a personal level, I am excited by the opportunity to return to front line operation in the post Disposal Company having spent a large amount of time in recent periods focused on maintaining solvency and supporting the business from behind the scenes." 

-Ends-

For further information, please contact:

Asia Digital Holdings plc
Adrian Moss, Chief Executive	Tel: [phone]
	www.adhplc.asia

Astaire Securities Plc
Gavin Burnell / Rod Venables	Tel:  [phone]
Katie Shelton (Corporate Broking)	www.astairesecurities.co.uk

Abchurch Communications
Heather Salmond / Nick Probert	Tel: [phone]
[e-mail]	www.abchurch-group.com

 

END

 

 

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