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.

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

Yoomedia Soulutions.

Core division - By far the biggest independent interactive solutions provider for digital television.

Soultions made a PROFIT in March, including depreciation, assuming the share of the 2.5m annual depreciation figure is one third. Obviously the actual share of the depreciation figure will not be exactly one third, but a good representation.

Revenue for March was estimated 1.18m and Fixed costs 0.90m. Gross margins are 100%, with no variable costs for this division. We must assume the share of the Central costs is 70k, one third of the total company figure.

The FY 2005 estimate for revenue is 15.33m. No variable costs, with 100% Gross Margin with the annual central costs remaining the same. SIGNIFICANTLY, broker estimates fixed costs remain the same, annualised 10.6m, while projecting a nine month, annualised growth rate over March revenue, of 8.5%.

Take the March revenue figure of 1.18m * 12 months and the number is 14.16m. The FY revenue estimate for Solutions is 15.33. This is a nine month growth rate of 8.5%. Page 8 of the reseerch document states Solutions revenue in Sept 04 was 0.58m and revenue for March 05 was 1.18m. This represents a 6 month growth rate for Solutions of over 100%.

The broker expects this dramatic growth to slow to 8.5% over the next 9 months. I don't understand or accept Solutions growth will slow to such an extent. I require an explanation and I urge you all to ask some searching questions. Nissi Beach, a qualified account, feels broker has taken a ultra cautious view. I do not doubt this for one moment.

I have previously demonstrated how the bottom line EPS for Solutions, dramatically increases, if the full year revenue is 20m and not 15.33m. I will explain why shortly. Such an outperformance, represents a 31% excess, over the broker FY estimate. Considering Solutions revenue grew over 100% for the previous 6 months, it is not unreasonable to hope revenue grows 39.5%, on an annualised basis for the next nine months.

Broker forecast for Solutions FY profit, after deducting 830k for depreciation (one third of annual bill) and 890k for Central costs (one third of annual bill) is 3m.

This is the clever part! If FY Solutions revenue is 20m (already demonstrated this is not unreasonable) then bottom line 2005 profit for this one division jumps to 7.68m. This large increase of 4.68m profit over market expectations, represents a >150% beating of the broker FY profit estimate of 3m.

So how is this possible. Why does a 31% increase in revenue over the next 9 months, over the broker estimate of 8.5% mature into >150% beating of market expectations for this division? 3m to 7.68m, all for a extra 31% increase in revenue.

Key points are:

Gross margin 100%.

Fixed costs remaining the same.

Depreciation and Central Costs remain the same.

I'm assuming Fixed costs would remain at 10.6m, even if revenue outperformed by 31%. In March the estimated Fixed costs for Solutions was 0.9m. Broker has forecast FY Fixed costs to be 10.6m. 0.9m * 12 = 10.6. Now remember broker has estimated 8.5% revenue growth for Solutions for the remaining 9 months of the year, yet the Fixed costs have NOT gone up accordingly. This indicates spare capacity. Therefore, I am also assuming Fixed costs remain at 10.6m, while revenues grows 31%, over broker estimate.

Crucially, the capacity must exist to support a 31% extra increase in revenue growth, otherwise Fixed costs will increase. An increase in Fixed costs, due to the need to expand capacity will not prevent a beating of the 3m profit figure. The result will be a lower number than the 7.68m profit, but STILL higher than the 3m.

Broker has demonstrated the Fixed costs will not increase, while revenue growth increases 8.5% over 9 months. So let's hope capacity will allow an extra 31% 9 months growth rate for revenue, allowing the Fixed costs to remain the same.

Yes, capacity limitations, may restrict Soultions growth, much beyond the brokers estimates. However, the management will be well aware of the 100% Gross Margins and the impact on bottom line profit. Therefore, capacity will be increased if required.

Fixed costs will not change within current capacity, even if revenue grows. In March Solutions was profitable, even after depreciation. Therefore, EVERY single piece of business it wins from this date forward, effectively dives straight into shareholders wallets! 100% Gross Margin, no variable costs, Fixed Costs, Central Costs, Depreciation already covered. Of course, in the real world, business gained in March could occasionally, be a one off, clients leave for pastures new (assuming they can find a suitable alternative), so perhaps not 100% of the March business can be banked on to repeat for the remainder of the year.

The principle remains. For the remainder of the year, all new business and revenue is PROFIT, pure GOLD!

If revenue for Soultions did hit 20m FY 2005, resulting in a 7.68m FY profit for the division, it matters not how Dating and Gaming perform. Here is the safety net for long term investors. If 20M was reached and management decided to close Gaming and Dating completely, ignoring the one off exceptional costs, written into the accounts (huge but a once only kitchen sink job) Yoomedia shares would STILL be worth over 42p.

Solutions revenue 20m. Profit 7.68m * CONSERVATIVE PE of 25 = 42p.

Don't even begin to speculate on the value of your shares, with a profitable Dating and Gaming division. We need to remain calm for the remainder of the year.

Is there a limit to the number of channels, the Sky platform will support? Apparently not! I've asked this question on specialist digital television forums.

I'm wondering if in say two years, all brand owners will demand a low maintenance, television channel, in the same way that, major businesses have websites. Obviously, not all business will have their own channels, due to the huge expense, but are we about to see a new trend?

I can forsee two years in the future, where a limited number of big brand names, like Tesco's as an example, will have thier own channel on Sky.

Benefits would be advertising, publicity and a home shopping ordering service, through the television. Imagine the publicity to Tesco's. On adverts and in-store "now find us on Sky, Channel 879"

Although the channel may not be economically viable in an accounting sense, the owner, say Tesco's, may be prepared to accept the loss, as the overall benefits in terms of reputation would minimise any loss to such a huge firm, which when set against thier billions profits, is a drop in the ocean.

I believe a tremendous opportunity exists for a company able to provide this service, specifically Yoomedia!

Tesco accept the loss, for the greater good of the business and Yoomedia recieved a fixed annual fee, for building and maintaining the portal.

Over several years, Yoomedia may end up with dozens of these portals, channels, earning fixed fees for the development, and maintenance, with the client involved, happy to soak up the expenses, for the greater good of thier business.

The above example, is only ONE way, the Solutions division may expand rapidly over the next two years. I do not believe Solutions revenue growth will slow to below 10%.

Is there any reason why this can't be a new trend?

A reply by Malkie. Full credit for content to Malkie.

interesting speculation re Tesco and the like Trig, But I dont see this potential development as a loss-making concept.
It would, presumably be categorised as advertising and promotions and I would have thought from this point of view it would actually be revenue enhancing.

Look at TV travelshop....get down to Tesco's Now for x,y,z.....lifestyle, recipes & Cooking progs, combined with targeted advertising and interactive home shopping.
No Trig, definitely not loss making....quiet the opposite....and no more than 2 years away as a realistic offering to go hand in hand with broadbandTV.....

now stay calm!

Malc

The channel could play a constant stream of adverts and trailers for Tesco. with limited other content. Tesco pay for this, so the content is Tesco's responsibilty.

At the top of the screen, viewers would be invited to press the red button, to enter the interactive, shopping and information portal.

Yoomedia receive a fixed fee, to maintain channel and portal.

Malkie, excellent points. The growth possibiltys in this one area, gives me a headache! Whether Tesco's ran the channel at a loss or profit, depends on the investment they are prepared to make in content. Yoomedia recieve a fixed fee, our costs + profit margin. Imagine 100 of such channels, portals!!!

2007 Solutions revenue, 45m! I won't annoy you by projecting EPS and SP. Lol!

If the capacity constraints are a problem, Yoomeda will make any the required investment. The EPS implications are obvious!

The question is not will it happen, but when? Viavision already manage, operate, 5 television channels and this appears to be the path, the Solutions division is taking. The only limit to future Solutions earnings is capacity.

Now do certain posters get it? Project the solutions business, two years into the future and the EPS explodes. Sky MUST give space on the EPG to anyone who wants it, with apparently a MASSIVE amount of spare capacity. How many investors, really understand this part of Yoomedia, bearing in mind Gross margin of 100%. Does the analyst unnderstand the potential? Has he thought about it? Do fund managers understand?

iPubic, will the EVO note be posted on the Money AM newsboard?

Chad

http://www.evbgresearch.com/

Ta.

From another BB. Full credit Nissi Beach

Nissi beach - 11 Apr'05 - 11:50 - 21 of 22

New thoughts

I have revised my spreadsheet with a lower figure for the gaming growth at around 100m from current march figure pa 78m (28% growth) v 35% for industry and margins are as EVO forecast

On the gaming there should be potential for upside on the 5.5% (i.e if 6% extra EBITA of 0.5m

The area that seems very strange is EVO deprecation of 2.5m. According to the balance sheet they only have 3m of fixed assets. Usual policies of 2-3 years write down would give a MAX charge of 1.5m adding 1m to EBITA

So even though I have slashed the forecast 20% I can still get an EPS HIGHER than EVOS at 0.9p

To make the growth required on gaming equal an EPS of 0.8p it only needs 91m of revenue or 7.5m pm

Trigger just for YOO if the 120m on gaming comes in EPS could be 1.2p



Comments on risk factors


1) Sky threat

Yes sky are upgrading their product but I dont see them as a big threat

a) There main focus is on getting more 30pm subscribers before the switch off and see freeview as major threat so focus not as high on gaming
b) If they succeed with a) they are just increasing the market potential for both Yoomedia and sky Vegas
c) Again if they are a success with Sky Vegas other operators (ITV/cable/Freeview) will want to exploit the revenue. Who can help them with text option and return path its YOO. Even if SKY stop all growth from gaming (unlikely since market is growing 40%+ one 1m contract for business services makes up for 20m shortfall
d) Sky make up only 50% of current market and we do have games on cable

2) Dating area

There is already a lot of competition. Dating direct already has 1m members some paying 4pm so if friends reunited start they would suffer more

3) People move away from iTV portal

YOO has a multiple platform portfolio, which is capable of reducing this risk

These factors have no doubt come from YOO management so they must be quite happy they are covered to allow them to be pubic ally displayed and it makes sense now the rapid are diversified growth they have done over the last 2 years to reduce the risk factors very substantiality.

We have deals with mobile phone operators
3 are increasing the 3G market ready for us to exploit (imagine gambling on the mobile phone.

The management have shown over the last 2 years they have the ability to deliver on forecasts because

1) They have grow the company from nothing
2) They have integrated buys (Whoosh paid higher bonuses recently)
3) Now EBITA +ve has promised in merger docs
4) Deliver above forecast savings


Conclusion

I am very confident (for an accountant) the management have positioned us in the right sectors at the right time and they have the rights skills to make us richer

Nissi Beach, a long term Shareholder and qualified account, has prepared a spreadsheet on YOO, which will be updated when appropriate. Nissi is pleased to provide the spreadsheet to all exisitng and potential investors.

nissi_beach@hotmail.com

Nice: 1 buy 1million 1 buy 988,000.

From another BB. Full credit to PaulSmith

psmith64 - 11 Apr'05 - 14:17 - 35 of 36

Ian West - I think you would have to be a brave person to put a value on Yoomedia in five years time - this is going to be a business that will grow quickly as DTV becomes the norm, not just here in the UK, but Worldwide.

To put guesswork into context in a fast growth area - who could have guessed the growth of eBay over a five year period - based on that - if Yoomedia could hit the same rate of growth, in a business that I believe has the chance to grow at the same pace as eBay - we could easily see a massive rise over a five year period.

There are a lot of similarities between the both business models:-

Ebay - started in its home country, the USA, but quickly spread across the world on the back of the growth of the internet

Yoomedia - started in its home country, the UK, and will have the ability to take advantage of the worldwide growth of DTV and iTV services, already, we are moving into Europe, the USA in my opinion, will not be far away.

Ebays growth

Year 2000 - Turnover $ 431 million - Profit $ 48 million

Year 2005 - Turnover $ 3271 million - Profit $ 778 million

A turnover growth of 759% , but a profit growth of 1620%

I believe we could see the same type of growth with Yoomedia

Incidentally - I have been a registered seller on eBay for six and a half years, was one of the first in the UK to use it, was used by them in early magazine features - as it gave me the ability then to leave full time employment just over 6 years ago - I started doing two days a week eBay, and three days a week consultancy work, in time, my eBay has dropped off a little, as my consultancy business grew very quickly - the moral of that story - is to sometimes put your money where your mouth is when you have a gut feeling about something - well, I missed the boat by not investing in eBay directly when I knew it was a good thing, the very business which gave me a little more freedom, - but failed to invest in it - well, I have the same feeling about Yoomedia, only this time, I have invested, and am prepared to sit tight for 5 years minimum.

Regards

Paul

Paul

I'm not going to speculate on EPS beyond 2006, but I can agree with your sentiment regarding Ebay. Paul is not making up story's, the key reason why Ebay was able to produce twice as much profit than revenue growth, was due to the very high Gross margin of the business, once a certain critical mass was achieved, all revenue is profit.

Yoomedia's Solutions division enjoys a 100% Gross Margin. The implications are once the Fixed costs, Central Costs, Depreciation are covered, ALL revenue from new business, dives straight to the bottom line Pre Tax Profit. In March, our Solutions division, exceeded this required critial mass. So broadly speaking, assuming the majority of the March revenue is repeated over the next 9 months, every single 1 of revenue earned is 100% pure profit gold!

Yes, capacity can stall revenue growth, but only in the short term. In addition, certain revenues may not repeat the next month, but people understand the general principle now?

The 100% Gross margins from Solutions, also reduces the risk of other divisions not performing.

"Ian West - I think you would have to be a brave person to put a value on Yoomedia in five years time - this is going to be a business that will grow quickly as DTV becomes the norm, not just here in the UK, but Worldwide."

This really is the whole point. Yoomedia can now provide a complete or partial solution to anyone who requires any type of digital presence on television. The amount of business available globally is sufficient to be shared by several major players, including YOO and still provide massive growth for the SP over 5 years. So you see, PaulSmith is not ramping or acting in an irresponsible maner, he really has sat down and thought about it.