RNS Number : 6209E
Deal Group Media PLC
30 September 2008
Press Release 30 September 2008
Deal Group Media plc
(The "Group")
Interim Results for the six months ended 30 June 2008
Deal Group Media plc (AIM:DGM), the independent online marketing group, today announces its unaudited interim results for the six months
ended 30 June 2008.
Financial Highlights
* Revenue increased by 72% to �6.69 million (H1 2007: �3.90 million)
* Gross Profits up by 54% to �2.06 million (H1 2007: �1.34 million)
* EBITDA* from continued operations showed a 39% reduction in loss to �0.34
million (H1 2007 �0.55 million) after a net investment in Asia Pacific
expansion of �0.20 million (H1 2007 �0.16 million)
*Calculated as profit before interest, tax, amortisation, depreciation, share based payments and share of associated company loss
Operational Highlights
* Continued growth in revenue and gross profits from our core Australia
operation
* First material revenues from the new satellite operations in India and
Singapore
These operations have delivered:
* 16% of total revenue for H1 2008 (H1 2007: � NIL) and 39% of revenue
growth
* 18% of total gross profit for H1 2008 (H1 2007: � NIL) and 51% of gross
profit growth
* Operating expenses increased predominantly through investment in the Asia
Pacific operations and also through staff cost increases in the
Australian operations
* Central costs reduced by 30% following the UK disposal and strong cost
control
* Material working capital improvements achieved through improved focus on
cash collection and associated processes
* Further evolution of the Singapore-based hub which services multiple
operating businesses and centralises finance and human resources
functions
Commenting on the results, Adrian Moss, Chief Executive Officer, said: "We are delighted with our achievements in Asia, to date. The
growth and traction we have attained are a key and an exciting step in achieving growth and a return to profitability. We look forward to
the future with confidence."
For further information, please contact:
Deal Group Media plc
Adrian Moss, Chief Executive Tel: 00 65 6508 9202
www.dealgroupmediaplc.com
Daniel Stewart & Company plc
Lindsay Mair / Stewart Dick Tel: +44 (0) 20 7776 6550
www.danielstewart.co.uk
Abchurch Communications
Ariane Comstive / Nick Probert Tel: +44 (0) 20 7398 7705
ariane.comstive@abchurch-group.com www.abchurch-group.com
Chief Executives Statement
Trading Results
The disposal of a majority share in the UK business at the end of H2 2008 and the refocus of the Group on the Asia Pacific region entail
reporting on a very different operation for the first half of our trading year to 30 June 2008 as compared to the prior year interim
report.
We are pleased to report
* Revenue increased by 72% to �6.69 million (H1 2007: �3.90 million)
* Gross Profits up by 54% to �2.06 million (H1 2007: �1.34 million)
* EBITDA* from continued operations showed a 39% reduction in loss to �0.34
million (H1 2007: �0.55 million) after a net investment in Asia Pacific
expansion of �0.20 million (H1 2007: �0.16 million)
*Calculated as profit before interest, tax, amortisation, depreciation, share based payments and share of associated company loss
Our well established Australian operations represent 57% of our revenue growth and 43% of our growth in Gross Profit. It is encouraging
to see such strong growth from a relatively mature market place.
The strong performance from Australia in particular helped drive the Group into positive EBITDA* for the last two months of the second
quarter.
It is notable and very pleasing that the new Asia Pacific businesses, with satellite operations in Singapore and India, accounted for
39% of revenue growth and 51% of our growth in Gross Profit over the period.
The Asia Pacific region represented 16% of total revenues for H1 2008, (H1 2007: � NIL) and 18% of total gross profit for H1 2008 (H1
2007: � NIL).
Although the new operations are yet to deliver consistent positive contribution it should be noted that the Indian operations, launched
in the second quarter of 2007, has produced consistently positive contribution since the end of the first quarter 2008.
As we progress through the remainder of this year and 2009 we expect the new Asia Pacific businesses to account for the majority of
trading performance.
Continued investment in the Asia Pacific region in the first half of 2008 has been the main driver of a 65% increase in business unit
operating costs to �1.6 million (H1 2007: �1.0 million). A secondary driver of operating cost increases has been pressure on staff costs in
the more mature and competitive Australian operation.
However, the benefits of the UK disposal combined with strong cost control have facilitated a 30% reduction in our central cost base to
�0.8 million (H1 2007: �1.1 million (of which �0.2 million of technology development costs were capitalised)).
The Group is currently trading slightly below EBITDA positive.
UK Operations
The residual holding in the UK is accounted for as an associated undertaking and is represented as one line in the consolidated income
statement beneath the operational results. As they are currently trading slightly below breakeven we recognise in our interim results a
share of their losses for the same period.
The UK business provides the Group's technology platform under a contract that runs through to the end of June 2009, whilst the Group
provides the UK business with accounting services under a contract that runs through to the end of the current calendar year.
Board Changes
As announced on 23 September 2008 the Board has appointed Tang Mei Lin Zoe ("Zoe Tang") as Financial Director. Her significant
experience in the Asia Pacific region will be invaluable as the Group continues its growth strategy.
At the same time the Group announced that Dominic Trigg was stepping down from the Board as Non-Executive Director to pursue other
business opportunities.
The current offering of the Group consists of three distinct operations all servicing different segments of the digital advertising
space. Although the DGM business currently dominates the sales mix it is expected that new offerings will account for increased revenues in
the future. In particular, these are:
* Deploy, a digital media strategy and execution service covering both brand and direct response campaigns, and;
* AKTIV, an advertising network aggregating and selling digital advertising space on behalf of web sites
There has been considerable focus on building a solid route to market both client direct and through strategic alliances with relevant
third parties that have our target customers as their existing clients. This is showing signs of success with much ongoing dialogue between
different business units within the Group and large international advertising groups that wish to supply their client base with elements of
our product mix.
Additionally, we have also evolved a Singapore based hub providing finance, accounting and human resource functions to other businesses
within the Group. By centralising these functions and creating a more structured management reporting systems, the Group has seen a material
improvement in working capital during the period.
There is a great sense of excitement about the possibilities of a Group seasoned by over nine years of operation, with many lessons
learned, and operating in the relatively under-developed digital marketplace of the Asia Pacific region.
In addition, it should be noted that our offering is dominated by the delivery of a demonstrable and trackable return to advertisers
from their digital advertising budget. This is of key importance in an economic climate that leads to global brands and advertisers
demanding improved returns on investment.
These factors, combined with the Group's financial performance in the six months to 30 June 2008, encourage us to look to the future
with confidence.
Adrian Moss
Chief Executive Officer
29 September 2008
Independent review report to Deal Group Media PLC
Introduction
We have been engaged by the Company to review the financial information in the half-yearly financial report for the six months ended 30
June 2008 which comprises the consolidated income statement, consolidated balance sheet, consolidated interim statement of changes in
equity, consolidated cash flow statement and the related explanatory notes that have been reviewed. We have read the other information
contained in the half yearly financial report which comprises only the chief executive's statement and considered whether it contains any
apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with guidance contained in International Standard on Review Engagements (UK and
Ireland) 2410, 'Review of Interim Financial Information performed by the Independent Auditor of the Entity'. Our review work has been
undertaken so that we might state to the company those matters we are required to state to them in a review report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for
this report, or for the conclusion we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by the directors.
As disclosed in Note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European
Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with
International Accounting Standard 34, 'Interim Financial Reporting,' as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the financial information in the half-yearly financial report based on
our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim
Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United
Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in
accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the
half-yearly financial report for the six months ended 30 June 2008 is not prepared, in all material respects, in accordance with
International Accounting Standard 34 as adopted by the European Union.
GRANT THORNTON UK LLP
AUDITOR
London
29 September 2008
Consolidated interim income statement for the six months ended 30 June 2008
6 months 6 months Year
to 30 Jun 2008 to 30 Jun 2007 to 31 Dec 2007
Restated Restated
�'000 �'000 �'000
Continuing operations
Revenue 6,694 3,904 9,432
Cost of sales (4,635) (2,563) (6,487)
GROSS PROFIT 2,059 1,341 2,945
ADMINISTRATIVE EXPENSES
- Amortisation (137) (103) (293)
- Depreciation (61) (10) (23)
- Share based payment (160) (150) (177)
- Other administrative (2,400) (1,896) (4,598)
expenses
LOSS FROM OPERATIONS (699) (818) (2,146)
Interest received 6 8 16
Interest payable (1) - (4)
Share of (loss) of associates (49) - (10)
LOSS BEFORE TAX (743) (810) (2,144)
Taxation - - 81
TOTAL LOSS AFTER TAXATION
FOR PERIOD FROM CONTINUING (743) (810) (2,063)
OPERATIONS
Discontinued operations
LOSS AFTER TAX FROM (76) (120) (5,072)
DISCONTINUED OPERATIONS
TOTAL LOSS (819) (930) (7,135)
Loss per share
BASIC AND DILUTED LOSS PER (0.18p) (0.23p) (1.69p)
SHARE
BASIC AND DILUTED LOSS PER (0.16p) (0.20p) (0.49p)
SHARE
FROM CONTINUING OPERATIONS
BASIC AND DILUTED LOSS PER (0.02p) (0.03p) (1.20p)
SHARE FROM
DISCONTINUED OPERATIONS
Consolidated interim balance sheet as at 30 June 2008
As at As at As at
30 Jun
2007
Restated
30 Jun 2008 31 Dec 2007
�'000 �'000 �'000
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment 212 352 234
Intangible assets 579 6,717 678
Investment in associates 428 - 478
Available for sale financial assets - 256 -
Deferred tax 10 - 3
1,229 7,325 1,393
CURRENT ASSETS
Trade and other receivables 3,811 4,905 3,163
Cash and cash equivalents 873 (77) 670
4,684 4,828 3,833
TOTAL ASSETS 5,913 12,153 5,226
EQUITY AND LIABILITIES
EQUITY
Called up share capital 4,537 4,107 4,537
Capital redemption reserve 13,188 13,188 13,188
Share based payment reserve 864 677 704
Share premium account 22,683 22,014 22,683
Translation reserve (105) (20) 54
Retained earnings (39,642) (32,618) (38,823)
TOTAL EQUITY 1,525 7,348 2,343
CURRENT LIABILITIES
Trade and other payables 4,388 4,805 2,883
TOTAL LIABILITIES 4,388 4,805 2,883
TOTAL EQUITY AND LIABILITIES 5,913 12,153 5,226
The consolidated interim financial statements were approved by the board of directors and signed on their behalf on 29 September 2008
Consolidated interim statement of changes in equity for the six months ended 30 June 2008
Share capital Share premium Capital redemption Share based payment Translation reserve Retained
earnings Total equity
reserve reserve
�'000
�'000
�'000 �'000 �'000
�'000 �'000
As at 1 January 2007 3,816 21,505 13,188 527 (18)
(31,688) 7,330
Changes in equity
Exchange difference on - - - - (2)
- (2)
translation of foreign
operations
Net income recognised directly - - - - (2)
- (2)
in equity
Retained loss for the period - - - - -
(930) (930)
Total recognised income and - - - - (2)
(930) (932)
expense for the period
Share option grants - - - 150 -
- 150
Shares issued in the period 291 509 - - -
- 800
As at 30 June 2007 4,107 22,014 13,188 677 (20)
(32,618) 7,348
Changes in equity
Exchange difference on - - - - 74
- 74
translation of foreign
operations
Net income recognised directly - - - - 74
- 74
in equity
Retained profit for period - - - - -
(6,205) (6,205)
Total recognised income and - - - - 74
(6,205) (6,131)
expense for the period
Share option grants - - - 27 -
- 27
Shares issued in the period 430 669 - - -
- 1,099
As at 31 December 2007 4,537 22,683 13,188 704 54
(38,823) 2,343
Changes in equity
Exchange difference on - - - - (159)
- (159)
translation of foreign
operations
Net income recognised directly - - - - (159)
- (159)
in equity
Retained profit for period - - - - -
(819) (819)
Total recognised income and - - - - (159)
(819) (978)
expense for the period
Share option grants - - - 160 -
- 160
Shares issued in the period - - - - -
- -
As at 30 June 2008 4,537 22,683 13,188 864 (105)
(39,642) 1,525
Consolidated interim cash flow statement for the six months ended 30 June 2008
6 months 6 months Year to
to 30 Jun 2008 to 30 Jun 2007 31 Dec 2007
Restated
�'000 �'000 �'000
Operating activities
Loss after tax (819) (930) (7,135)
Depreciation 61 166 320
Amortisation 137 136 293
Share based payment 160 150 177
Decrease/(increase) in (656) (243) 32
receivables
(Decrease)/increase in 1,469 (374) (938)
payables
Foreign exchange differences (159) - 72
Finance income (5) (12) (7)
Share of loss from associated 49 - 10
undertakings
Loss on disposal of subsidiary - - 4,804
Tax credit - - (81)
Net cash inflow/(outflow) from 237 (1,107) (2,453)
operations
Investing activities
Purchase of property, plant (39) (66) (118)
and equipment
Purchase of shares in - (76) (42)
associated undertakings
Consideration for disposal of - - 924
subsidiary (net of cash
disposed)
Disposal of subsidiary net - - 268
assets
Purchase of intangible assets - (201) (399)
Interest received 6 14 21
Net cash used in investing (33) (329) 654
activities
Net cash inflow/(outflow) 204 (1,436) (1,799)
before financing activities
Financing activities
Issue of ordinary share - 800 1,899
capital
Interest paid (1) (3) (14)
Repayment of loan notes - (22)
Net cash used/generated from (1) 775 1,885
financing activities
Net increase/(decrease) in 203 (661) 86
cash and cash equivalents
Cash and cash equivalents at 670 584 584
start of period
Cash and cash equivalents at 873 (77) 670
end of period
Notes to the financial statements
1 GENERAL INFORMATION
The condensed interim Financial Statements for the six months ended 30 June 2008 were authorised for issue in accordance with a
resolution of the Board of Directors on 30 September 2008.
The Company is a public limited company incorporated in the United Kingdom. The address of its registered office is 19 Cavendish Square,
London, W1A 2AW
The Company is listed on the London Stock Exchange's Alternative Investment Market.
These condensed interim Financial Statements do not comprise statutory accounts within the meaning of Section 240 of the companies Act
1985. Statutory accounts for the year ended 31 December 2007 were approved by the Board of the Directors on 17 April 2008 which received an
unqualified auditors report and have been delivered to the Registrar of Companies.
The financial information contained in this report is unaudited. The Consolidated Income Statement, Consolidated statement of changes in
equity and Cash Flow Statement for the interim period to 30 June 2008, and the Balance Sheet as at 30 June 2008 and related notes have been
reviewed by the auditors.
2 BASIS OF PREPARATION
These condensed interim Financial Statements for the six months ended 30 June 2008 have been prepared in accordance with IAS 34, Interim
Financial Reporting, as adopted by the European Union. These condensed interim Financial Statements should be read in conjunction with the
annual Financial Statements for the year ended 31 December 2007, which have been prepared in accordance with International Financial
Reporting Standards as adopted by the European Union.
3 ACCOUNTING POLICIES
The accounting policies applied in these condensed interim Financial Statement are consistent with those of the annual Financial
Statements for the year ended 31 December 2007, as described in the annual Financial Statements.
A prior year adjustment was made during the year ended 31 December 2007, due to an error in the sales cut off process in 2006 resulting
in �300,000 of revenue being recognised early. A media cost accrual deficit of �162,000 was also discovered during the year which
represented costs that should have been accounted for during 2006.
The loss on disposal of the UK operation in the year to 31 December 2007 has been restated as discontinued operations.
4 SEGMENTAL INFORMATION
Revenue is attributable to the principal activity, which is mainly carried out in Australia, Asia Pacific and Rest of World.
An analysis of revenue and segment result by geographical market is given below:
Six months to 30 June 2008 Australia Asia Pacific Rest of Central Total
World and plc
�'000 �'000 �'000 �'000 �'000
Revenue 5,426 1,083 185 - 6,694
Segment result 633 (205) 12 (781) (341)
Amortisation (137)
Depreciation (61)
Share based payment (160)
Interest 5
Share of loss of associates (49)
Tax -
Loss on tax on continuing
operations
(743)
Six months to 30 June 2007 Australia Asia Pacific Rest of Central Total
World and plc
�'000 �'000 �'000 �'000 �'000
Revenue 3,827 - 77 - 3,904
Segment result 559 (160) (41) *(913) (555)
Amortisation (103)
Depreciation (10)
Share based payment (150)
Interest 8
Tax -
Loss on tax on continuing
operations (810)
* Central and plc costs are stated net of �200,000 of development costs, capitalised under IFRS.
5 SEASONAL FLUCTUATIONS
The business of Deal Group Media plc is subject to seasonal fluctuations, with stronger demand for services in the second half of the
year as a result of clients marketing budgets weighted towards the latter part of the year.
6 LOSS PER SHARE
The calculation for the basic loss per share is based upon the loss attributable to ordinary shareholders divided by the weighted
average number of shares in issue during the period.
Reconciliation of the loss and weighted average number of shares used in the calculations are set out below:
6 months 6 months Year to
to 30 Jun 08 to 30 Jun 07 to 31 Dec 07
Loss on ordinary activities after (819) (930) (7,135)
tax (�'000)
Weighted average number of shares 453,768,684 405,695,354 422,111,897
Amount of loss per share in pence (0.18p) (0.23p) (1.69p)
In view of the loss for the period, options have no dilutive effect.
7 A copy of the Interim Results will be available on the Group's website at www.dealgroupmediaplc.com.
- Ends -
This information is provided by RNS
The company news service from the London Stock Exchange
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