Share Offer of 91 Million Shares At Between HK$1.66 and HK$2.38 Per Share
HONG KONG, May 29 /Xinhua-PRNewswire/ -- A8 Digital Music Holdings Limited
(''A8 Digital Music'' or the ''Group''), an integrated digital music company in
China, today announced the details of its proposed listing on the Main Board
of The Stock Exchange of Hong Kong Limited.
A8 Digital Music proposes to offer 91,000,000 shares at between HK$1.66
and HK$2.38 per share (the ''Share Offer''). Of the Share Offer, 81,900,000
shares will be offered under placing (the ''Placing'') and the remaining
9,100,000 shares will be offered for subscription by the Hong Kong public. For
the Placing, 70,900,000 shares are new shares and 11,000,000 shares are sale
shares. Assuming the over-allotment option is not exercised and the offer
price is fixed at HK$2.02 per share (being the mid-point of the proposed price
range), the net proceeds from the Share Offer are estimated at approximately
HK$132.6 million after deducting underwriting commission and other estimated
listing expenses.
The proceeds will be used mainly for acquiring potential music content
providers, enhancing the music download software A8Box, integrating business
with the latest 3G mobile technology, upgrading and promoting UGC platform,
and the remaining as additional working capital.
The public offer will begin on 28 May 2008 (Wednesday) and close at noon
on 2 June 2008 (Monday). The final offer price is expected to be determined
on 4 June 2008 (Wednesday). The allotment result will be announced on 10 June
2008 (Tuesday). Trading of the shares of A8 Digital Music will begin on 12
June 2008 (Thursday) in board lots of 2,000 shares under the stock code of
00800.HK.
SBI E2-Capital (HK) Limited is the Sponsor and SBI E2-Capital Securities
Limited is the Sole Bookrunner and Lead Manager.
Mr. Liu Xiaosong, Chairman and Chief Executive Officer of A8 Digital Music,
said, ''We are very pleased to see A8 Digital Music has reached a very
important milestone since its inception in year 2000. We have built a solid
foundation and established a firm foothold in digital music in China. As a
first mover in digital music, we have been collecting over 50,000 songs from
our User Generated Content (''UGC'') platform at http://www.a8.com . More
importantly, we are able to monetize our content (our own songs with
copyrights) through handsets. We provide songs uploaded by original
independent artists and supported by a revolutionary integrated marketing and
sales model that boasts high operational efficiency and enhanced sales
opportunities. It is our hope to ride on our unique business model to realize
our mission of 'My music everywhere!' as I believe digital music is the future
of music industry!''
Unlike the traditional music industry, the Group adopted a revolutionary
and scalable songs collection model from its UGC platform --
http://www.a8.com . It is one of the largest collection platforms for
original and independent artists in China. It is a self-service facility
enjoying growing popularity among song writers and consumers craving new
experiences and speedy and quality services. Currently, the platform holds a
collection of over 50,000 music content and songs from more than 10,000
artists. The Group also actively promotes the development of original music
content through activities such as song competitions and campaigns, for
example, the annual Yuansheng Feiyang Top Ten Gold Songs to boost its
collection. The platform is in strategic alliance with more than 1,000 other
internet websites to promote its music.
A8 Digital Music owns a repertoire of more than 50,000 original works of
music, one of the largest in China, including popular songs like
''Buxiangrangniku'' and ''Wobuku'' etc. There were approximately 7.8 million
wireless downloads and approximately RMB16.1 million revenue recorded for the
song ''Buxiangrangniku'', while that for ''Wobuku'' was 5.9 million wireless
downloads and about RMB11.1 million revenue for the year of 2007. The success
of the original independently produced songs proves the Group's influences in
China's music market and its ability to identify and promotes music content
with potential for popularity. Likewise, the Group's music catalogue also
contains other music content types from local and foreign record companies.
The Group has strong sales and marketing efforts through a nation-wide
network of 21 sales offices, covering more than 30 provinces and
municipalities in China. It has close relationship with major telecom
operators at national and regional levels. Local presence has also allowed
the Group to fully grasp local music preferences and access resources of local
operators.
The Group's proprietary A8Box download software works like a ''jukebox''
that supports access and download of music directly via the mobile phone. It
is compatible with most of the popular mobile platforms including MTK (a
software platform created by MediaTek Inc.), Windows Mobile and SmartNX (a
smartphone platform created by Chipnuts Technology Inc.) platforms and it also
supports Microsoft Windows. The introduction of A8Box has facilitated the
offer of personalized service by the Group, helping to boost direct sales as
well as the A8 Digital Music brand. The recent soft launch of 3G mobile
services in China represents enormous business opportunities for the Group as
the new technology supports faster and direct sales to mobile phone
subscribers via the 3G compatible A8Box.
Apart from using the most advanced technology to grow its business, the
Group also employs proven traditional promotion means including music
companies and the media. It advertises via the printed and broadcast media as
well as through participating in music events, putting its name in the company
of famous brands and artists for added exposure.
Over the years, A8 Digital Music has gained recognition in the industry.
In 2007, A8 Digital Music has been awarded as the ''Top 100 Private Companies
of 2007'' by Red Herring and ''Gold Olive Award for the Best Mobile Music
Operator'' by Shoujiquan, laying a solid foundation for the Group to become
the leading digital music provider.
The Group has been profitable since 2002, two years after it began
business, and has grown substantially since then. In 2007, it made turnover
of RMB286 million, 6.5% more than that in 2006, and its net profit increased
by 38.7% to RMB55.3 million.
According to the data published by the Ministry of Information of the PRC,
there were over 574 million mobile subscribers in China as at the end of March
2008 and according to In-Stat, which estimates revenue of the PRC mobile music
market will increase from approximately RMB5,046.2 million in 2006 to
approximately RMB7,773.0 million in 2011. In China Mobile's 2007 Annual Report,
the revenue from one single mobile music product -- RBT, has already reached
RMB 11,794 million in 2007. Taking into account its strong track record and
the exponential market growth, A8 Digital Music is very optimistic about the
prospects of its business.
Mr. Liu concluded, ''Looking forward, we will keep upgrading our UCG
platform to make sure customers have the most satisfactory experience using it
and, at the same time, strengthen all sales and marketing channels to
facilitate capture of the immense opportunities in the thriving wireless music
service market in China. A8 Digital Music is one of the earliest and largest
E-labels for independently produced original music content in China.''
About A8 Digital Music Holdings Limited
A8 Digital Music is an integrated digital music company that sells
original music content sourced from its highly successful interactive UGC
platform http://www.a8.com , as well as from international and domestic record
labels, through the wireless network on mobile phones. Led by a team of
experienced top executives with foresight and vision, the Group is able to
capitalize on its integrated marketing and sales multi-channel network to
acquire insights into consumer preferences in different regions and thus
customize its marketing strategies, and to promote its products through new
media on Internet and wirelessly.
Listing Particulars
Number of Offer Shares 91,000,000 Shares
-- Placing - 81,900,000 Shares (90%)
-- Public Offer - 9,100,000 Shares (10%)
Offer Price HK$1.66 - HK$2.38 per share
Use of Proceeds
Assuming the Over-allotment Option is not exercised and the offer price
is HK$2.02 per share, being the mid-point of proposed offer price range,
the net proceeds of the Share Offer (after deduction of underwriting
fees and related expenses, are estimated at about HK$132.6 million and
will be applied as follows:
-- To fund any potential acquisitions Approx. HK$48.5 million
-- To further develop A8Box Approx. HK$27.6 million
-- To integrate business with 3G technology
introduction Approx. HK$20.8 million
-- To upgrade the interactive UGC platform
( http://www.a8.com ) Approx. HK$12.6 million
-- To promote the UGC platformApprox. HK$11.1 million
-- To promote the original independently
produced music content Approx. HK$11.1 million
-- General working capitalApprox. HK$0.9 million
Financial Highlights
For the year ended 31 December
RMB('000) 2005 2006 2007
Turnover 233,233268,438 285,964
Gross Profit 124,960132,275 128,729
Profit attributable to shareholders 41,842 39,86355,274
Gross profit margin 53.58% 49.28%45.02%
Net profit margin 17.94% 14.85%19.33%
Awards and Achievements
Year Award Awarding Organization
2007 China Creative Industry Annual Awards Organizing Committee
-- Among the Top 100 Enterprises in for the China Creative
China Creative Industry Industry Annual Awards
-- Leading Enterprises Award in China
Creative Industry
Gold Olive Award for the Best Mobile Shoujiquan
Music Operator
Zero2IPO -- Venture 50 Zero2IPO
Among the Top 100 Private CompaniesRed Herring
2006 Best Mobile Music Operator Award The First Mobile
Multimedia Applications
Competition
China Wireless Entertainment Music China Center of
Platform Contribution AwardInformation Industry
Development
The Best Music Operator Award Discovering Value and
The Economic Observer
Among the China High-tech, High-growth Deloitte
Top 50 Enterprises
Among the Emerging Companies with the Stars of the Future
Greatest Growth Potential
China 3G Innovative SP Content Award Analysys International
Making Better Business
Decisions
2005 Comprehensive Music No.1 and China Internet Society of
Internet Industry Brand 50 Winner China
Deloitte Technology Fast 500 Asia Deloitte
Pacific Winner
Ranked 6th in China High-tech, Deloitte
High-growth Top 50 Enterprises
For press enquiries, please contact:
Strategic Financial Relations (China) Limited
Ms. Anita Cheung
Tel: +852-2864-4827
Email: anita.cheung@sprg.com.hk
Ms. Esther lau
Tel: +852-2864-4845
Email: esther.lau@sprg.com.hk
Mr. Marcus Keung
Tel: +852-2114-4967
Email: marcus.keung@sprg.com.hk
Ms. Janice Au
Tel: +852-2864-4874
Email: janice.au@sprg.com.hk
Ms. Annie Choi
Tel: +852-2864-4837
Email: annie.choi@sprg.com.hk
SOURCE A8 Digital Music Holdings Limited
