Company Profile

YooMedia plc is one of the fastest growing interactive entertainment companies in the UK.
Since 1997 we have been developing and launching leading B2C consumer brands in the gaming and community sectors. We also work in a B2B capacity with leading brand owners, agencies, content developers and broadcasters to design and develop their interactive content strategies.

Led by Executive Chairman Dr. Michael Sinclair and Group Managing Director Neil MacDonald, YooMedia has assembled a highly experienced management team that possesses a unique blend of skills and experience in the areas of Digital TV, Internet and mobile phone services and technology.

With main office locations in London, Exeter and Maidstone, YooMedia manages core assets including:

Over 30 office locations throughout the UK alone

State-of-the-art studio, production and post-production facilities at our Wapping location.

UK broadcast return path & bandwidth owner

Fully fledged UK Bookmaker License

Database with over 350K UK singles

SMS Engine access with international reach

Fully staffed 50 seat Customer Contact Centre in Maidstone, Kent

YooMedia Dating & Chat - Our dating subsidiary company manages the oldest and largest UK-owned dating brands including Dateline, Club Sirius and Avenues. YooMedia Dating has over 20 office locations throughout the UK and also manages YooChat, our world-leading interactive chat service found on UK digital cable on the Telewest platform (platform extensions planned for 2005).

YooMedia Gambling & Games - Combining the brands of Avago and Channel 425 (in partnership with William Hill) YooMedia is on the leading-edge of interactive fixed odds, casino and poker gambling services for digital TV, the web and 3G mobile phones. Our gaming business also manages YooPlay, the only interactive just for fun games channel found on all four Digital TV platforms in the United Kingdom.

YooMedia Enhanced Solutions (YES) - YES works with brand owners, agencies, content owners and broadcasters to clarify the options, define the strategies and deliver the interactive content that enhances consumer and audience experiences. YES customers include the BBC, Nestle, Celador, William Hill, Channel 4, ZipTV, The Cartoon Network and HR Owen.

EVO have a 2005 target price of 20p. Based on an assumption of PE 25 * EPS 0.8P.

EVO do not state a target for 2006, but they clearly forecast 2006 EPS of 2p. Therefore, using the same PE assumption of 25, EVO's 2006 target is 50p!

2006 EVO estimate means YOO are currnetly on a PE of 8. Clearly a huge rerating this year, providing the business plan is executed.

My personal target:

Sky are on a PE of 35. Business is 15 years old and listed for 10 years. It is therefore reasonable to assume an actual PE, when YOO 'bring home the bacon H2 2005' of 30 to 40. I will assume 30 for 2005 and 2006.

A PE of 30 * 2005 EPS of 0.8p = target price of 24p

A PE of 30 * 2006 EPS of 2p + target price of 60p.

Choose your PE.

You must contact your broker to obtain the research and please e.mail Nissi for his outstanding spreadsheet and forecast.

Yoomedia have 40m of tax losses to set off against profits, so yoo will probably be retired, before YOO pay any corporation tax!

House Broker Evolution, is forecasting 2006 Earnings Per Share of 2p, with an implied target price of 50p.

Current forward PE of 8.

City is looking at 2004 results only, yet big turn around occured Q4, 04 and particulary Q1, 05. The figures from now on will impress.

If a forward PE of 8, within a reasonable timeframe of one year does not excite yoo and an implied target price of 50p, then nothing will!

Are yoo excited by an implied 50p target price? Any input would be appreciated! All within a realistic time frame as well!

Yoo must concentrate your thoughts on the possibilty's for the share price, rising sharply. Do yoo realise, even if EVO's 2006 forecast is wrong by 50%, the SP will still be at least 25p in 18 months and 35p with a PE of 35.

How many broker forecasts do yoo read, where a 50% estimate miss for the following year, STILL provides a mimimum return of 50% on todays price???

If EVO are correct, then it's 50p+ next year, that is in a realistic timeframe, NOT 2007 & 2008, which they have gleefully applied to other company forecasts.

iPublic

Thanks for that...I think I've got the message. ;)

Regards Ruthie

No doubt in my mind, Yoomedia solutions is the core driver for the SP this year and next.

Gross margin is 100% and with no variable costs, a successful Solutions division is key.

In March, Solutions were estimated revenue of 1.18m with fixed costs of 0.9m

FY 2005 estimate is revenue 15.33m and fixed cost 10.6m. So revenue is expected to grow and fixed costs reduce slightly on an annulised basis.

With no variable costs to apply and fixed costs remaining the same, a greater than expected stream of business for Solutions over next 12 months, say 10%, will have a dramatic effect on FY EBITDA for Solutions.

My gut instinct is Solutions is the divisions that will shine the most.

EVO forecast 15.33m 2005 revenue. Lets assume say 16.8m, a 10% outperform for solutions.

Fixed costs remain 10.6m, with no variable costs to worry about.

EBITDA for Solutions could be 6.2m and not 4,73m!, big jump is because fixed costs remain the same. The increase in revenue goes right to the bottom line.

Therefore a surge in business for Solutions, will offset any miss in estimates for the Gambling division.

Lets speculate the EVO analyst is correct and Sky's Vegas, inpacts on gambling revenues by 20%. Quite a dramtic shock, that would be! EBITDA for Gambling would be Revenue 95m - Gross margin 5.5m so Gross contibution - 5.22m - 4.4m fixed costs = EBITDA 0.8M. I'm assuming variable cost will reduce accordingly, as sales fall.

Solutions can easily offset this possible future problem, as it is already the most important contributor by far.

A small rise in actual Solutions revenue forecast, of say 10% above EVO's forecast of 15.33m, more than compensates for a 20% decline in gambling revenues.

EVO forecast 15.33m Solutions revenue. Possible outperform 10% = 16.8m Solutions revenue. This goes straight to bottom line EBITDA, as no variable costs, so 16.8m - 10.6, fixed costs = EBITDA 6.2m for Solutions.

If there is a weak link, it will be gambling, due to Sky. I have demonstrated a 20% gambling revenue miss, can be offset by only a small, realistic 10% rise in revenues for Solutions.

Gambling: YOO would be EBITDA 1.25m worse off if Sky force a 20% drop in forecast revenue. Broker forecast: 2.05m, actual 0.8m

Solutions: YOO would be EBITDA 1.5M better off, if division outperforms by 10%. Broker 4.73m, actual 6.2m

In summary, if forecast gambling revenues crashed 20% (not impossible) but forecast Solutions revenue increased just 10% (very likely, as Solutions include Mobile) then Yoomedia will be EBITDA better off by 0.25m!!!

A large portion of variable costs is made up of sales, so I assume this figure will decline in line with any falling revenue?

I do not consider the Dating divisions growth to be under any realistic threat, considering current plans for mobile video 3G dating and advanced plans to launch a dating channel in UK and America.

Does this make you feel more relaxed about risk. Please answer to carry on debate.

Am happy to be corrected of above is inaccurate.

Big issue is gaming division.

Using EVO March estimate, current EBITDA is -0.15p so the FY EBITDA for gaming is a -1.8m, assuming no change.

EVO forecast 2.05m EBITDA FY 2005. As Malkie suggests this is aggressive, but remember organic growth is planned very soon, so targets may well be reached. It may be possible, as in September EBITDA was -0.40m for gaming, now it's -0.15p, estimate. Gaming EBITDA trend is turning positve very soon.

However, if gaming EBITDA can reach just FY2005 EBITDA 0.8M, perhaps more realistic, then this can be offset by a 10% outperform in Solutions, see above post.

Also the Solutions 10% outperform hope is VERY realistic, as the current rate in March for Solutions was EBITDA 0.28P * 12 = 3.36p for year with no growth rate. We have that now, no questions asked!

We know current Solutions growth rate is 300%+ so even though that may well slow, we have an excellent chance of reaching Solutions EBITDA of 6.2m. Solutions growth could slow dramtically and we still arrive at EBITDA 6.2m.

So Solutions could easily cancel out an underperforming Gaming division.

Place my head on the chopping block and I say Gaming 0.8m EBITDA and Solutions 6.2m EBITDA leaving Yoomedia 0.25m EBITDA better off, for these two divisions.

Therefore the 2005 EPS of 0.8p and the 2006 EPS of 2p is still on course.

If Gaming + Dating perform as EVO predict and Solutions perform as I predict, then it's Whoosh!!!

Of course, if Gaming, Dating and Solutions all outperform, then the effect on bottom line EPS will be tremendous and we can all retire!

In September 04, Solutions revenue was 0.58m

In March, estimate 1.18m

EVO FY 2005, forecast Solutions revenue, 15.33m

Multiply the March estimate by 12 and you arrive at 14.16m.

On page 8, EVO state annualised revenue growth from Solutions is >300%. Margins are 100%

Why are EVO assuming a month on month, revenue increase for Solutions of less than 1%. They state on page 8, annualised Solutions revenue growth is >300%

I don't understand?? Please help?

Have you seen the incredible impact on Solutions EBITDA, if the revenue for 2005 is 20m and not the 15.33m EVO predict. Imagine the impact on EBITDA, if the Solutions revenue was 23m.

Gross margins are 100%

Would the fixed costs go up accordingly.

EVO have kept the fixed costs the same for FY2005, on an annualised basis compared with March, even though they forecast an amount of revenue growth.

Why is the Solutions revenue growth estimate so low, when the annualised growth rate is >300%, stated on page 8.

Am I correct in assuming this division is the most important, with 100% margins.

I am now assuming the current EPS forecasts for this year will be smaashed, if Solutions can bring home FY revenue of 20m+

The fixed costs could go up with the extra business, but not enough to stop run away EPS, due to 100% margin.

Feedback please.

Does the gull agree with that lot.

Just had some fun on the calculator.

If Solutions revenue was 20m (33% outperform) and Gaming and Dating revenues meet expectaions, then EPS this year would be 1.8p.

So on a reasonable PE of 30 the SP would be 54p by year end.

iPublic

I'm not quarreling with your figures and projections. However, the Evolution target sp is just 20p. If you then look at their commentary, it does seem a cautious view. They point out (copyright acknowledged) that they are highly operationally geared with c 80% of incremental growth dropping to the bottom line - this comment presumably applies to solutions and products such as gaming and chat, rathr than gambling, at elast if they are including gross gambling as revenue, rather than the 11% margin. The question is at what stage will the 2006 projections be reflected in the sp, I wonder how Evolution would answer that question. It says something about the market that it cannot look beyond this year's trading. I could make the same comment about SEO (sp could be 1) and ASC (down on a short-term blip in 70% growth trend). So much of the market now seems to be short term with 34%, I believe, in derivatives which will mostly be short-term positions - at least this would appear to be the case with AIM and small-cap shares, if not the BPs BTs and HSBCs of this world.

Tring to be objective for holders and bb visitors, I would say: follow Evolution forecast of 20p for short-term but take iPublic seriusly as an investor for a one or two year period. By this time next year with, lets say, 2005 in the bag at eps of 0.8p, then 2006 figure of 2.0p will be in the price. YOO might deserve a premium pe of 30 or 35 in line with Sky, but even if that hasn't worked through and pe is still ony 20, then the sp should be around 40p. This is cautious, in my view, and my conclusion is to hold my current exposure to 200K shares but not increase at the moment. Could the sp move ahead more quickly? yes, if (i) Evolution imrove their price projection; (ii) quarterly figures show them moving ahead of schedule; (iii) positive comment leads to a status review and brings in more institutional investment; (iv) we get one or two juicy acquisitions. So, best to buy an average to somewhat overweight stake and tuck them away. Downside risk must now be minimal.

Eric

EWROBSON

Not entirely true

EVO have a target price of 20p. PE 25 * 2005 EPS of 0.8 = 20p

EVO have published a 2006 EPS of 2p. Therefore the IMPLIED target price is 50p, using EVO's own PE assumption of 25.

The target of 50p is IMPLIED simply by stating 2006 EPS of 2p and using EVO's own assumption of a PE 25 for 2005.

Why have EVO neglected to venture beyond 9 months for YOO, when they are perfectly happy to waffle on about 2007 and 2008 with SEO. I'm not having a go at SEO, who are a great company.

EVO have their own agenda at the moment and while it may work for a while, yoo can't run forever.

Good post by the way.

I'm quite happy to sit here and wait 18 months for my mininum 40p. Suits me! 18 months will soon fly buy.

Trigger

edited . 2005 ok

Guidance notes section 2 Going Concern may have the answer to the reason they neglected to go further than 9 months.

Gull

Yes, fair point, yet it irritates me, when I see EVO making projections for SEO for 2007 and 2008, which is much further out than 2006. SEO have yet to 'bring home the bacon' either, so what's the difference?

Indeed SEO are on 2006 PE 21 NOW and YOO are on 2006 PE 8 NOW.

EVO ramp SEO but not YOO.

If EVO would employ me as analyst, I'm sure I could construct a 54p 2005 target price, using Solutions as the driver.

I understand. I have not looked at SEO, even after being tipped on it at 4.5p due to funds, day job, etc. But could this not be a joint decision by the Directors & EVO based on possible uncertainties that I am not fully aware of excl. the risks in the note? If all is as we know I think a good re-rating after half year results seems imminent & that in the bigger picture is not to far off. IMHO after the latest note & figures I will certainly be adding at theses prices as funds become available.

Yes, caution prevails, yet as I have demonstrated on the other BB, if Solutions revenue exceeds by 30% and EVO have underestimated (at first glance it appears they have) then if other divisions are in line, the price WILL be above 50p by December.

Plenty to look forward to and discuss. One thing is certain, the level of activity and interest for genuine investors, can only increase as the year progresses. We can see the rewards on paper and now wait for mangagement to deliver and execute business plan. Yoomedia are ahead of the game so far, since the merger.

Gull

In answer to your question on the other BB.

No, the charts remain. I like the charts copied as they are. The 6 month chart will look amazing, when the SP breaks 20, indicating new range. Then you will change your opinion. The charts stay.

I've made a decision, not to clutter up the thread with to much news, links, but I will consider adding when appropriate news, links are available. All will be considered in good time.

OK