Deal Group Media is the biggest and only true online advertiser on the whole of the London stock exchange. Its business is that of focussing on delivering high returns to its clients from online advertising through all differing sizes of web site and search engines. The massive increase in online advertising means it is at the very leading edge of the growth in the industry.

Just a few raw figures to look at in this industry.

*Internet advertising now accounts for around 4% of all company advertising and is growing as a % of all company advertising, we are only at the very beginning of a Mass market.

*The market is expected to break 500 million by the end of December.

*The market saw a 75% increase in revenues in the first 6 months of 2004, so you can see the growth is really staggering.

*Just take a look at this site and others and see all the adverts and pop ups plastered around, theres a good chance that DGM have a hand in many of these adverts.

*The biggest growth stimulant has to be the growth in online shopping and this should increase the market size for many years to come.


The last results reported were very encoraging indeed and 2005 shold be the year this one really breaks out and shines, here are the main points.

Deal Group Media plc, the online marketing group whose activities include
performance-based advertising and search engine marketing, today announces its
interim results for the six months ended 30 June 2004.

Highlights


Business transformed by merger of The Deal Group and IBNet plc


Combined operations turnover 6.55 million (878,000 by former IBNet plc)*


Pre-tax profit 619,000 (before amortisation of goodwill)


Pre-tax profit 45,000 (623,000 loss by former IBNet plc)*


New blue chip clients being won


Core business achieving record growth month on month


An increasingly positive online marketing outlook


Further progress anticipated in the second half of 2004.

The company as an impressive list of clients.......

: AOL, Autotrader, American Express, BT, B&Q, Cancer
Research, Comet, Coral, Dial-a-phone, easyjet, esure, Halifax, Interflora, John
Lewis, Littlewoods, Ladbrokes, Lloyds TSB, Match, MBNA, MoreThan, Nestle, phones
4U, Tiscali, Virgin Megastore, 888 and many more.


Key growth sectors are: mobile telecommunications, broadband, financial and
automotive, with further growth coming from gaming, travel and retail.


On results Adrian Moss, Chief Executive, said:

'We are delighted with the results now being delivered by the Group and our
promising potential. The foundations put in place following the merger, our
focus on delivering return on investment through measurable online marketing for
advertisers and our industry profile, are proving to be a combination that is
delivering value for clients, shareholders and other stakeholders alike. In a
marketplace that continues to grow and consolidate, we are seeking further
acquisitions to broaden the width of our offering and extend our geographic
reach. We look forward to continued growth.'

The company are making great strides to grow organically and are looking at the very large European market were acquisitions will be made.

Outlook

We anticipate that the second half of 2004 will continue to progress
successfully. Turnover exceeded the 1 million a month landmark for the first
time in 2004 and has consistently remained there. Month-on-month, the
Performance Network channel is enjoying record growth. The online advertising
channel is now establishing itself with regular repeat orders. Search remains a
strong growth opportunity and the newly launched affinity channel shows early
signs of success. Our key channels are growing and we anticipate they will
continue to do so.
With nine months of the new business operating and significantly outperforming
the previous entities, we have a solid base to continue delivering for our
clients and shareholders. We can only repeat the sentiments of our 2003 Annual
Report - we remain confident and excited about the Group's prospects.

Fundies.

Y/Ending 31-12-2004 EPS 0.50p P/E 25.00
Y/Ending 31-12-2005 EPS 0.80p P/E 8.5

So forward P/E of 8.5 is very cheap for an online growth stock.

Alpha/Beta

The beta is on the low side so it wont exactly fly, but all in all it looks a solid growth investment. Certainly not another 'As Seen On Screen' but as per this weeks Investors Chronicle, low beta stock have greatly outperformed high beta stock this past year.

Does it have any minuses, well although not a minus some from the old school would be looking at Intangible assets and amortisation of goodwill but as an healthy profit making company I see no reasons to be negative here.

It is a cyclical industry is advertising but lets face it we are now on the upcurve and more and more businesses are turning to the internet for cheaper advertising solutions.

Conclusion

This looks a solid sound investment and although I wont put a figure on the Sp with its ongoing fantastic growth I would be hoping for a very exciting performance during 2005.

DYOR

Cheers GF.

By the way the chart added as per Dils request.....................

Looking to a strong start tomorrow.

Same here Hlyeo98, fingers crossed.

cheers GF.

Quiet start for this one.

cheers GF.

Disappointed in DGM at the moment :(

Looked very positive a couple of weeks back and topped up but now thinking that the funds could be better invested elsewhere. For example, MMG in preparation for tomorrows presentations - don't think it can hurt to have more MMG tonight/tomorrow and they have moved off an earlier high to where I think they will finish the day.

Loathed to let go of DGM when I think there is so much potential.

Decisions, decisions ...

Stuart

MMG is a good one to get into stuart. However I would'nt dump DGM. Although it has gone quiet I would hang on in. Get into both if you can, patience will reward you.

LOL

MS

Patience is a virtue. LOL.

cheers GF.

Not normally as impatient but with limited funds and several stocks I'd really like to get into I'm having to consider trade-offs that I really don't want to :(

My main reason for considering reducing on DGM is that it is a while until any significant news is expected. MMG, for example, has potential for some short term action on the back of tomorrows presentation to brokers and over the coming weeks with increased press coverage - looks as though 150p is a cert.

Unless I have missed any news on DGM or have got the date for results wrong ??

I feel there is scope to jump out and back in before the action hots up.

Feel free to comment and tell me I'm insane ;)

Cheers,
Stuart

Right, although I really should be working (but that is just too boring!!), I have spent time manipulating my cash to allow me to get into MMG (in a small way) while retaining DGM. Have put DGM on a bit of a tight stop order with a view to get back in later as I totally expect it to be a huge performer this year.

Sorry for my on-the-board ramblings! Your comments were appreciated.

Cheers,
Stuart

Thats fine stuart. DGM is just marking time at the moment. Im sure we will hear something very soon with the new management team in place.

cheers GF

I agree with GF stuart. You made the right decision. The MM's are experts at getting us to sell that's their job after all. Patience is what it's all about.

LOL

MS

LOLOLOL

Might be of interest to you boys in DGM...

Internet Business Group has lived to fight another day

Published: February 2005
By Joanne Wallen, Associate Editor

Unlike most of the industry we never quite wrote off Internet Business Group; the business that has emerged in results today is both different and stronger than anyone might have guessed, and anyone that has backed Deal Group Media should take a look.

The one-time web designer, e-commerce software provider and new business incubator has, through necessity as much as design, transformed itself into two distinct businesses, one with particularly interesting growth potential.

Having seen a major decline in the number of businesses that wanted to buy its e-commerce software in 2001, Internet Business Group (IBG) decided to turn itself into a specialist web retailer, using its own IT skills and the retail skills of one of its incubator companies, to sell specialist sports gear and goods not otherwise easy to find on the high street.

The company has three major product groups, specialist tennis and squash equipment, table games such as football and pool, and unbranded MP3 players, in other words a Chinese-sourced alternative to the Apple iPod.

This business is now profitable, and contributed to the companys move to operational profitability in 2004. Turnover for the year to October grew to 2.9 million from 2.6 million, with profits before interest, tax, depreciation and amortisation of 58,000 against losses last time of 194,000 and pre-tax losses of just 23,000 against 333,000 last time.

More importantly, broker Hoodless Brennan has forecasts in the market today for the first time, and is looking for turnover to rise to 4.5 million in 2005 and 6.6 million in 2006, with profits of 191,000 and 729,000 respectively and earnings per share of 0.3p rising to 1.2p.

After an early surge the shares dipped a penny to 14p.

According to chief executive Maziar Darvish, IBGs competitive advantage in the retailing business lies in the strength of its back-end technology systems, which enable it to bring the cost per transaction right down by automating as much of the order to fulfilment process as possible. This enables the company either to sell at the same price as competitors but make better margins, or to pass on its savings to customers thereby undercutting the competition.

There are plans to grow this business by introducing new, complementary lines such as squash equipment.

However the real excitement is around IBGs performance-related advertising business, AffiliateFuture.com. This business is basically exactly the same in concept to that of publicly-listed Deal Group Media , a Citywire tip. Darvish says IBG had already got its affiliate network up and running before Deal Group entered the business through acquisition.

The company has a network of approaching 400 customers and several thousand internet-based publishers or owners of websites with advertising space to sell. IBG acts as the principal in a deal that sees the advertiser pay only on actual business booked online or leads generated via the IBG publisher. IBG takes a fixed margin fee on the deal and passes the rest on to the publisher. For example, Virgin Airlines is a customer.

Cheapflights is a publisher that directs customers through to the Virgin website to book flights. Virgin will pay, say 13 per customer generated, of which Cheapflights gets 10 and IBG gets 3. IBG can track each lead generated, and has a 30-day window, during which the customer, even if he or she does not book the flight immediately, is deemed to have come through the affiliate network. So if within 30 days the customer returns directly to Virgin to book the flight, having first done his research on Cheapflights, IBG can track this (provided the same computer is used both times) and charges Virgin on behalf of Cheapflights.

Darvish says the business is highly scalable and very automated. The growth potential is very large, he says, because firstly, online advertising growing strongly and yet still represents only around 3%-3.5% of the advertising cake. Secondly, performance-related advertising within that is probably outgrowing the market, and at some point could well become the de-facto standard for Internet advertising.

Maziar reckons there are strong barriers to entry not only because of the sophisticated technology, but also because of the chicken and egg situation in building both the customer and the publisher network. This business represented 60% of revenues last year and is likely to grow far faster than the e-commerce business over the next few years. Ultimately, the e-commerce business could be sold off, or the model changed to licensing the technology to other retailers, but for now Maziar is happy that it is generating profits.

As to the advertising business, Maziar accepts that the UK business cannot keep growing at the 200-300% a year level it has been doing so far, and for this reason he is making forays into Europe, specifically France and the Netherlands, as well as the US.

Having gone from a 20-man band in 1999 to a peak of around 76 people in 2000, IBG is now back to around 25 people, and Maziar reckons it does not need to grow this significantly to achieve his ambitious growth plans due to the amount of automation inherent in the business.

The company has cleaned up its balance sheet, has no debt and has been self-funding since it floated in 2000, raising 3.8 million net of costs.

Shares are currently down 1p at 14p, valuing the business at less than 10 million.

Citywire Verdict:
If Hoodless Brennan is to be believed, the price to earnings ratio on these shares drops to just 11.6 times 2006 earnings.

With a market cap of less than 1 million, it is clear that the City has written IBG off and forgotten it even still exists. But in April 2001, having exclusively revealed an internal email that showed just how bad things had got at the company, and with shares at just 4.5p, we did say: It is likely that in a reduced form, the company will manage to stay in business.

Well it is definitely still in business, and not in a reduced form but in a very different form, and it is all power to the tenacity and vision of the management.

It is by no means certain that the company will achieve its growth ambitions, but having overcome so much hardship to date, there is every reason to believe that it might.

Worth a punt for the high risk lover.http://www.citywire.co.uk/News/NewsArticlePrint.aspx?VersionID=72057

The problem with the above company is that it as to many fingers in too many pies. Its balance sheet aswell is no where near as strong as DGM who are going after growth acquisitions.

I beleive Internet busines Group is turning itself around, but the fact is its tiny compared to DGM on the actual online advertising front.

DGM by sticking to its core business will outstrip any competition.

cheers GF. Ps, that doesnt mean I wouldnt rule out investing in Internet Business Group.

Any pull backs give a chance to new investors or topper uppers of this stock, now on a P/E of 22.

cheers GF

goldfinger,

I agree that DGM certainly has the edge on IBG at the mo, been in and out of both shares over the last few months. Both sp has rocketed and news from either company can have an effect on each others sp, so might be one you wanna stick on your watch list. Also i believe IBG are looking to expand into other countries so plenty of scope for growth.

Good luck to all holders and thanks for the insightful posts

IBG on the watch list, but its seeing early profit taking and as moved down.

On the other hand DGM all buys so far, Nice.

cheers GF.

Watched this one for a number of months, nearly bought at 10p December time, but topped up on NLR instead. Now just taken some profit on NLR . Now thinking of taking a holding in DGM. Can someone help me, is all the price factored into this one or is there still significant upside here? I think March figures will be good, is this the next jump? Help appreciated.

Hi UGEZ,

I cant see the company having put a new team and high profile board members together not moving forward from here. The management have said that they are on the look out for highly rated acquisitions and wont just buy any mediocre outfits.

cheers GF.

Been a few people asking me if its time to take profits here and I have said no as for reasons I outline above and also we should have a good run up to the results that arent that far off now. If you must take profits why not just take a wedge of the top?. Dont forget it will cost you a lot to get back in.

cheers GF.

Well I dipped my toe in today. I will see where this goes over next 3 months before commiting more funds.