18th Apr 2008 07:00
Deal Group Media PLC18 April 2008 Press Release 18 April 2008 Deal Group Media plc ("DGM" or the "Group") Final Results Deal Group Media plc, the independent online marketing group, today announcesits final results for the year ended 31 December 2007. Highlights • First full year results reported under IFRS representing the Group's continuing business only. The residual holding in the UK business has been classified as an associated undertaking and treated as discontinued operations for both 2007 and 2006• Turnover for the continuing operations was £9.4 million an increase of 45% (2006: £6.5 million) • Gross Profit for the year of £2.9 million (2006: £2.3 million) • Post tax loss for the year from continuing operations was £6.9 million (2006: £3.8 million) after accounting for a loss on disposal of the UK of £4.8 million• Continued growth in our Australian operation with sales increasing by 49% to £8.5 million • Increased foothold in the evolving digital advertising sector in the Asia Pacific region with several key client wins and strategic relationships• Successful sale of 51% interest in the Group's UK operation raising cash of £1.5 million Commenting on the results, Adrian Moss, Chief Executive, said: "I am pleasedwith the progress of DGM's stated strategy to focus on the Asia Pacific region.This can be demonstrated by the continued growth and evolution of our Australianbusiness and in Singapore with winning of several important contracts in early2008. I expect our performance will continue to strengthen in 2008 following thesale of the controlling interest of the UK business and I am excited about ourprospects." For further information, please contact:Deal Group Media plcAdrian Moss, Chief Executive Tel: 00 65 6508 9202 www.dealgroupmediaplc.com Evolution Securities LimitedTom Price, Corporate Finance Tel: +44 (0) 20 7071 4300 www.uk.evosecurities.com Media enquiries:Abchurch CommunicationsAriane Comstive / Nick Probert Tel: +44 (0) 20 7398 [email protected] www.abchurch-group.com Chairman's Statement Having been involved with this Group for several years it gives me pleasure, asrecently appointed non-executive Chairman, to present the financial results for2007. These are the first full year results reported under International FinancialReporting Standards ("IFRS") and after our sale of a controlling interest in theUK operations on 12 December 2007 the Group's overseas operations now representour continuing business. As the residual holding in the UK business is 49%, this operation has beenclassified as an associated undertaking, with the results attributed to the UKtreated as discontinued operations for both 2007 and 2006. The Board is very encouraged with progress in the continuing operations, whichshowed a 45% increase in sales to £9.4 million (2006: £6.5 million) along with a30% increase in gross profit to £2.95 million (2006: £2.27 million). The loss on continuing operations after tax of £6.9 million (2006: £3.8 million)is stated after accounting for a loss on disposal of a controlling interest inthe UK business of £4.8 million (2006: Nil). This loss on disposal is after thewrite off of £6.0 million of associated goodwill remaining from the 2003purchase of the DGM UK business. This leaves the balance sheet with no goodwillmoving forward. The two key drivers of our 2007 business (continuing operations) were: Continued growth in our Australian operation The Australian operation saw continued growth with sales increasing by 49% to£8.5 million with a resultant improvement in contribution to central overheadsof 24% to £0.91 million. This operation was launched in the second half of 2003 and produced a positivecontribution for the first time in 2005 from sales of £1.5 million. Growth sincethen has been impressive and the team have developed a strong market presenceand a relevant market offering. The business model pursued has been further refined and stands as a solidblueprint for expansion of that business model elsewhere in the region, led bythe same proven management. The net impact of our Asia Pacific expansion strategy At the beginning of 2007 the Group embarked on an Asia Pacific expansion, on theback of its success in Australia, and the net cost of that investment in 2007was £0.71 million, 30% less than anticipated. This involved the launch of satellite operations in India and Singapore, alongwith the relocation of much of the holding company team. The Group is pursuing three business models there, all of which are focused ondifferent aspects of digital advertising and all are expected to show positivecontribution within less than twelve months of their respective launches. Capital raising Within the year, trading in the UK combined with the funding requirements of theAsia Pacific business expansion led to a need to raise capital. In January andSeptember 2007 the Group completed two separate fundraisings totalling £1.9million. Sale of a controlling 51% interest in the UK business A continued decline in the performance of the UK operation in 2007 led the Boardto consider the divestment of the UK operations to facilitate cash generationand strategic focus. The overall trading performance in the UK operation showedsales falling 28% to £11.6 million and a loss of £0.27m for the year compared toa contribution to central overheads of £0.66m in 2006. In the second half of 2007, the managing director of that business along withour then Chairman, John Porter, tabled an offer for a controlling interest inthe UK operation. This was accepted and the transaction was completed at the endof the year. The sale of a 51% interest in the Group's UK operation to a management team hasbeen positive for the residual business: • Cash raised of £1.5 million• Undiluted focus in the Asia Pacific region• Retained 49% interest in the UK operation with upside exposure and mitigated risk• Immediate material reduction in the Group's technical and central cost base The Group has an ongoing relationship with the UK operation with the Groupproviding accounting services to the UK business and the UK business supplyingtechnology maintenance services under contract for the Group's core technologyproducts. Board changes Following the sale of the majority stake in the UK business, it was decided thatthe requirement for UK based Board Directors was reduced. Accordingly, John Porter, Lord Stone of Blackheath, Paul Alexander and MartinChalmers stepped down from the Board. The Group now has a Board that is moreappropriate to the size, nature and location of the continuing business. Since the year end, the non-executive Directors agreed to forego part of theirsalary in return for options in order to align the board with the Group'sstrategy and objectives to deliver long-term growth. Outlook The Group is encouraged by the trading in the first quarter of 2008. Asiarepresents 39% of global Internet usage or approximately 511 million users outof a 1.4 billion worldwide Internet population (Source: Internetworldstats.com).Despite the early stage of evolution for online advertising the Board feels thatthe opportunities in the Asia Pacific region are considerable. As a result, in the last year the Group has forged relationships with keypartners and has won contracts with significant brand names such as Barclays,Deutsche bank, Citibank, Travel Guru, Jetstar, Panasonic, Dulux and Dyson. Thishas led the business to create satellite operations in regions where there is animmediate demand for our services. This, combined with the Group's lower cost base following the transactionreferred to above, provides an efficient platform for future growth in the AsiaPacific region. David LeesChairman17 April 2008 Consolidated income statement for the year ended 31 December 2007 Note 2007 2006 £'000 £'000Continuing operations REVENUE 2 9,432 6,508Cost of sales (6,487) (4,242) GROSS PROFIT 2,945 2,266 ADMINISTRATIVE EXPENSES - Amortisation (293) (202) - Depreciation (23) (53) - Share based payments (177) (298) - Other administrative expenses (4,598) (3,728) (5,091) (4,281) LOSS FROM OPERATIONS 3 (2,146) (2,015) Interest received 16 8Interest payable (4) (2)Share of (loss) of associates (10) -Loss on disposal of subsidiary 5 (4,804) - LOSS BEFORE TAX (6,948) (2,009) Income tax 81 (1,806) TOTAL LOSS AFTER TAXATION FROM CONTINUING OPERATIONS (6,867) (3,815) Discontinued operations (LOSS)/PROFIT AFTER TAX FROM DISCONTINUED OPERATIONS (268) 658 TOTAL LOSS (7,135) (3,157) Earnings per share BASIC AND DILUTED LOSS PER SHARE (1.69p) (0.83p) BASIC AND DILUTED LOSS PER SHARE FROM CONTINUINGOPERATIONS (1.63p) (1.00p) BASIC AND DILUTED (LOSS)/PROFIT PER SHARE FROM DISCONTINUED OPERATIONS (0.06p) 0.17p Consolidated balance sheet as at 31 December 2007 2007 2006 £'000 £'000 ASSETSNON-CURRENT ASSETSProperty, plant and equipment 234 503Goodwill - 6,003Other intangible assets 678 627Investment in associates 478 -Deferred tax 3 -Available for sale financial assets - 152 1,393 7,285 CURRENT ASSETSTrade and other receivables 3,163 4,962Cash and cash equivalents 670 584 3,833 5,546 TOTAL ASSETS 5,226 12,831 EQUITY AND LIABILITIES EQUITYCalled up share capital 4,537 3,816Capital redemption reserve 13,188 13,188Share based payment reserve 704 527Share premium account 22,683 21,505Translation reserve 54 (18)Retained earnings (38,823) (31,688)TOTAL EQUITY 2,343 7,330 CURRENT LIABILITIESTrade and other payables 2,883 5,419Corporation tax - 82 TOTAL LIABILITIES 2,883 5,501 TOTAL EQUITY AND LIABILITIES 5,226 12,831 Consolidated cash flow statement for the year ended 31 December 2007 2007 2006 £'000 £'000OPERATING ACTIVITIES Loss after tax (7,135) (3,157) Depreciation 320 344Amortisation 293 145Share based payment 177 298Loss on sale of property plant and equipment - 44Decrease/(increase) in receivables 32 (538)(Decrease)/increase in payables (938) 973Foreign exchange differences 72 -Finance income (7) (16)Share of loss from associated undertakings 10 -Loss on disposal of subsidiary 4,804 -Tax (credit)/charge (81) 1,803 Net cash outflow from operations (2,453) (104) INVESTING ACTIVITIES Purchase of property, plant and equipment (118) (396)Purchase of shares in associated undertakings (42) (119)Sale of current asset investment - 32Consideration for disposal of subsidiary (net of cash disposed) 924 -Disposal of subsidiary net assets 268 -Purchase of intangible assets (399) (642)Interest received 21 27 Net cash generated / (used) in investing activities 654 (1,098) Net cash outflow before financing activities (1,799) (1,202) FINANCING ACTIVITIES Issue of ordinary share capital 1,899 203Interest paid (14) (11)Capital element of finance lease payments - (43)Repayment of loan notes - (45) Net cash generated from financing activities 1,885 104 Net increase /(decrease) in cash and cash equivalents 86 (1,098) Cash and cash equivalents at start of period 584 1,682 Cash and cash equivalents at end of period 670 584 Consolidated statement of changes in equity for the year ended 31 December 2007 Share Share Capital Share based Translation Retained Total capital premium redemption payment reserve earnings equity reserve reserve £'000 £'000 £'000 £'000 £'000 £'000 £'000 As at 1 January 2006 3,798 21,458 13,188 229 - (28,531) 10,142 Exchange difference ontranslation of foreignoperations - - - - (18) - (18) Net income recogniseddirectly in equity - - - - (18) - (18) Retained loss for theyear - - - - - (3,157) (3,157) Total recognised(expense)/income for theyear - - - - (18) (3,157) (3,175) Share option grants - - - 298 - - 298 Shares issued in the year 18 47 - - - - 65 As at 31 December 2006 3,816 21,505 13,188 527 (18) (31,688) 7,330 Exchange difference on translation of foreignoperations - - - - 72 - 72 Net income recogniseddirectly in equity - - - - 72 - 72 Retained loss for year - - - - - (7,135) (7,135) Total recognised(expense)/income for theyear - - - - 72 (7,135) (7,063) Share option grants - - - 177 - - 177 Shares issued in the year 721 1,178 - - - - 1,899 As at 31 December 2007 4,537 22,683 13,188 704 54 (38,823) 2,343 Notes to the financial information 1 Publication of non-statutory accounts The financial information set out in this announcement does not constitutestatutory accounts as defined in Section 240 of the Companies Act 1985. The financial information for the year ended 31 December 2007 has been extractedfrom the group's financial statements to that date which have been prepared inaccordance with IFRS as adopted in the EU and which have received an unmodifiedauditor's report but have not yet been delivered to the Registrar of Companies. The financial information for the year ended 31 December 2006 (the comparativefinancial information) is extracted from the same accounts and differs from theinformation reported in the 2006 financial statements as the comparativefinancial information has been restated in respect of conversion to IFRS and inrespect of a prior period adjustment. 2 REVENUE AND SEGMENTAL INFORMATION All revenue relates to the supply of online marketing services. The directorsregard this as a single class of business. Geographical segments have been identified as UK, Australia, Asia Pacific andrest of the world. Central and plc segment is not allocated to geographical segments as it isrepresented by the costs of the plc and central overheads. This cannot bespecifically allocated to provide meaningful comparison so is deemed bydirectors to constitute a separate segment for reporting purposes. Year to 31 December Australia Asia Rest of Central Total UK UK2007 Pacific World & Plc (Discontinued) Associates £'000 £'000 £'000 £'000 £'000 £'000 External sales 8,489 139 804 - 9,432 11,639 336 Segment result * 914 (709) (90) (6,982) (6,867) (268) (96) Segment assets 2,615 393 385 1,833 5,226 2,281 196 Segment liabilities 1,677 211 588 407 2,883 1,757 147 Capital expenditure 25 70 - - 95 23 30 Additions to otherintangibles - - - 399 399 - - Depreciation andamortisation 27 7 45 237 316 297 10 * Included in Central and Plc is for the year ended 31 December 2007, is theloss on sale of the UK business of £4,804,000. Year to 31 Australia Asia Rest of Central Total UK (Discontinued) UKDecember 2006 Pacific World & Plc Associates £'000 £'000 £'000 £'000 £'000 £'000 External sales 5,741 - 767 - 6,508 16,159 - Segment result 735 - 48 (4,598) (3,815) 658 - Segment assets 2,006 - 723 6,678 9,407 3,424 - Segment liabilities 1,622 - 765 719 3,106 2,395 - Capital expenditure 63 - - - 63 374 - Additions to other intangibles - - - 505 505 - - Depreciation and amortisation 8 - 45 436 489 274 - 3 LOSS FROM OPERATIONS Loss from operations is stated after charging: 2007 2006 £'000 £'000 Foreign exchange gains and losses 5 1Amortisation of intangible assets 293 145Depreciation of property, plant and equipment 320 344Auditor's remuneration for audit services 40 30Auditor's remuneration for non-audit services 61 50Operating lease rentals 249 258Share based payment costs 177 298 Auditor's remuneration for non-audit services comprised other assurance services£43,000 (2006: £33,000), compliance work for corporation tax of £8,000 (2006:£9,000) and tax advisory work of £10,000 (2006: £8,000). 4 DISCONTINUED OPERATIONS 2007 2006 £'000 £'000 Revenue 11,639 16,159Cost of sales 9,279 11,750Administrative expenses 2,628 3,751 Pre-tax profit / (loss) (268) 658 Loss on disposal (4,804) - Discontinued operations relate to the part disposal of dealgroupmedia (UK)Limited. Cash flows from discontinued operations included in the Consolidated Cash FlowStatement are as follows: 2007 2006 £'000 £'000 Net cash flows from operating activities (2,053) 20 Net cash flows from investing activities (374) (275) Net cash flows from financing activities - - (2,427) (255) 5 DISPOSAL OF SUBSIDIARY On 12 December 2007 a 51% share of dealgroupmedia (UK) Limited was sold to ISCOTechnical Services Limited. The calculation of loss on disposal is detailed below: £'000 Non-current assets 154Current assets 1,652Current liabilities (1,281) Fair value and book value of net assets disposed 525 Share of net assets disposed (51%) (268) Consideration 1,500Legal fees (33) 1,199Allocation of goodwill (6,003)Loss on disposal (4,804) Of the consideration of £1.5m, £1m was received on the 21 December 2007 and theremaining £0.5m is included in other receivables. Of this amount, £0.3m wasreceived on 31 January and £0.2m remains receivable. Copies of the financial statements will be sent to shareholders and areavailable from the Company's registered office at 19 Cavendish Square, London,W1A 2AW. -Ends- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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