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.

Willfagg

How much of the company did the directors own? What incentives did the directors have to strike a good deal? Ours own +30%.

The target had a market cap of 37m. What was the market cap of AMU at the time? Was the dilution 100%, 200% or more? The sector Yoo are involved in, promises so much in future revenue streams, I believe the positives are greater than the negatives. I expect a part share, part cash deal, involving the raising of capital. Also, ownership may be split, lessening any dilution for Yoomedia shareholders. All sorts of ways to spank the monkey!

Imagine if the aquisition was funded entirely via a bank loan!

I wonder how long the suspension will last! - days, weeks, months? Is this a "how long is a piece of string" type question?

Considering finance sources and dilution - remember that Sony are still in here, and have a presence on the board. They will hardly watch their investment diluted and devalued: and they could be interested in putting more cash in...
everything is speculation today...

Poverty

I would have thought a week at the most. Both parties will already have links for finance. I suspect that they will have the basics established this week, be sorting out the documentation over the weekend, dotting the i's, etc. on Monday so we could know on Tuesday; perhaps allow a couple of days leeway.

As to the price, willfagg, as mac says, it is in the interests of all parties that the market re-opens at a the price they would like to see and is orderly. I would expect, hopefully, that there will be sufficient information to be able to put a price on the new YOO. We will know the additional revenue, at least 50M from mac's posts, so hopefully it will be clear what the total revenue will be in a full year. Ideally, one would like to see an earning sprojection because only if the pe is projected will the city know how to set the price. If the share capital were to jump to 300M it would need an sp of 33p to give a new cap. of 100M. If the revenue projection were to be 100M then that would be a price to sales of 1.0 I would think that is the absolute base figure. All this is very ball-park but it does show the effect of the gearing from the inclusion of a decent figure of borrowings in the purchase price.

The only thing I really do have confidence about, beacause I have confidence in the YOO directors, is that it IS GOOD NEWS!

Eric

Following the last post, I am getting increasingly positive and excited about what is going to happen to the price of YOO when it is back from suspension. I have a strong feeling in the water that we will acheive the value that this bb's faithfuls know it should have. The argument, not at all precise, goes like this:

1. The directors of YOO, including Sony Leisure, will not want their holdings diluted too much The acquired company directors will want part of the action but, no doubt, will want the odd million, a good return from their bet on their company. mac's figure of a share capital of 240M shares appears reasonable.

2. mac's figures for cap. of 96m could well be indicated for the gaming part of YOO on its own. That could well be the level of revenues next year and, based on a price to sales ratio of 1, implies a price of 40p.

3. I believe that YOO will make clear that this is but one of 7 divisions. So, won't the analysts want to put a value on YOO without gaming. Certainly not less that 15p (36m cap.) and quite possibly 20p.

So we have a potential price of 60p. Well, that must be on the optimistic side (mustn't it?). Now, lets say that the quote opens at 35p. What do you do? Certainly not sell. The answer is BUY. YOO will get a lot of new buyers coming in. If not available at the RNS, Seymour Pierce will come out with new projections giving the 60p value. Lots of clever analysts will join in. The world and his dog will want a share of action. And, there will be a shortage of stock. The new holders will be embargoed from selling their stock, for a year (?). So, do not sell; rather ACCUMULATE.

So there you have it willfagg. YOO to win the ASOS challenge on that bb. I like it! I love it!

Eric

Eric
Hope your right cos heads i win (ASOS)tails i win (YOO)and if it lands on the edge (SPS)

Thanks Eric - I will keep my paws crossed! I think YOO are trying to build a massive company in record time - they could be absolutely huge in a years time, exponential growth etc etc. It all seems very exciting - must be a gas to work there...

While the Directors were no doubt acting correctly when the stock was suspended, it was hardly jumping about. Drifting if anything. Suspension conveniently underpins the value of the chips while they work out their sums. I suspect the deal will involve a massive share issue, with loan finance to bridge the difference in valuations. Impossible to say what the final figures will be, or the market reaction. Have to wait and see.

iturama

Agree impossible to judge the figures or the price. But, given that the YOO price is that of a much smaller, passive, unexciting company, then the market reaction cannot be so laid back. I'm going for 35p on reflection and then a decent, reasonably quick ramp up but time to build up a position. Low is 30p; best is 45p. Any other predictions? Might as well have a game while we twiddle our thumbs! The other question to answer is: when will an RNS be posted? I say, Tuesday (i.e. 16th Nov.).

Eric

Some of you need to realise, the suspension may last into the New Year. I contacted Yoomedia today and was informed the suspension is expected to last, at least two or three weeks

Assuming the deal does not fall through, once the announcement is made to shareholders with full details, I expect the shares to remain suspended, right through to the EGM, for shareholder approval. This may be as late as January.

The advantage of this, is it will allow shareholders, big funds and large retail investors, to assess the terms of the 'reverse takeover' with asscoiated letter from Mr Sinclair and Mr Docherty. If it's not absoulutely clear, that the deal will be benificial to the SP, long term prospects of Yoomedia, then it won't go through.

If the suspension is lifted after the terms are released, but before the EGM, in my opinion, it will be because the board are very confident, of a positive market reaction.

I personally feel, shareholders should be given the opportunity to vote, before the suspension is lifted, which means the suspension staying, until the New Year.

An advantage of lifting the suspension once a note has been released is that the market will tell you very quickly what it thinks of the deal. I assume the majority shareholders will already be on side.
I agree with the vote principle even if it does not change matters. How many times have we seen the claim that the deal was too pressing to consult shareholders. Baloney.

The matter MUST be voted on, Yoomedia have already stated such. It requires shareholder approval.

It's not for the market to place an opinion on the deal, before us, the shareholders. I'd rather vote, before the suspension is lifted. That way, if we vote Yes and the share price falls sharply, we only have ourselves to blame.

Otherwise, if the suspension is lifted, before the EGM, the market COULD drop the market cap significantly, BEFORE shareholders have their say. Even if we then have a no vote, the market cap may take time to recover.

On the other hand, if the shares double on lifting of the supension, upon publication of the terms, but before the EGM, I won't be complaining. Pro's and con's to each option. Incidently, I expect the shares to rise sharply, just my opinion.

My prefered option is suspension until EGM, just for extra insurance. If the terms are good, fund mangers will be buying on the first click, the SP will open significantly higher. A close of 30p to 35p is possible.

iturama, iPublic

Thanks for taking the initiative with YOO. It appears that it may not be that straightforward. I am just taking as an example, Sterling Energy (SEY) who recently raised wome 100M in about a week for the Mauretania deal. Any change in shareholding deal requires shareholder ratification which may be sought at an EGM with a pre-determined notice period. Just off to see an old friend who is top class in such matters and will post his opinion. I am pressed to think of a parallel: there are many matters which require shareholder approval whcih are annouinced, affect the price, and shareholder approval is taken for granted. No doubt YOO will take legal advice and that could well depend on whether the issue is contentious; I somehow doubt it will be, i.e. a win/win/win situation.

Eric

EWRobson

Are you sure SEY only took a week? I'm sure the funding rounds progressed for several weeks at least!

As regards funding the deal, I still prefer straight dilution, even if it means a further 300m shares, at the moment we have around 165m. I'm not keen on debt, as it has to be repaid with the interest, which will slice down 2005 profit. Also, even with 200% dliution, it makes the EPS calculation a simple one, for the likes of me.

Revenue of 50m, so let's assume they are projected to make a FY post tax profit of 3m. Again pure guesswork. In this example, it may be reasonable to pay 12* profit, so the business will cost us 36m . They may want 15* profit or more. The FY profit may be 5m on 50M revenue. Then we may pay 12* 5m, so 60m for the business. Until we know the FY profit of the business, a fair price could be anywhere between 20m and 80m. I'm assuming the businesss is a profitable one, on that kind of revenue.

Example: We pay 60m. Meaning additional shares of 260m. 260m shares * 0.23p = 60m. The FY profits are projected to be 4m. So we pay a PE of 15. Here is why the deal will create short term upside for Yoomedia shareholders.

Our own broker forecast 2005 profits of 1.7m, so this can be added to the 2005 pot. Assume a growth in the other sides profits (now ours) in 2005) say 5.5m. Add the two together and round down to 2005 FY profit of 7m.

450m shares in issue. I've added 25m for options etc:

7m 2005 profit/450 shares = 2005 FY EPS of 1.55p.

Place a PE of 30 on the new business and the new SP is 46.5p

Place a PE of 40 on the new business and the new SP is 62p.

A lowly PE of 15, which would not happen as the sector is very high growth for the next 5 years, would see the SP at 23P, equal to todays price.

If the other side is profitable and Yoomedia can barter less than 15* annual profits, then the resulting rise in the SP will benefit existing Yoomedia shareholders and the new holders. Infact, it may be advantageous to all concerned, for the other party, to accept say 10* profits for the business. They will benefit from the resulting hike in the SP of the newly enlarged company.

I do not know what mght be considered a good yardstick, regarding the number of years profit, one pays for a business, which is unquoted. It must depend on many variables.

Damian Cope
Managing Director
The Gaming Channel


Interactive Television Gaming
The new age of the TV gambler

The revolution of our daily lives brought about by the digital age has also spawned countless new business opportunities and delivery channels. Nowhere is this more evident than in the betting and gaming industry, whose traditional image of smoky betting shops and men-only punters has been transformed by the arrival of the internet and interactive television (iTV).

In context
The first iTV gambling service was Blue Squares sports betting service, launched on Open, the iTV pioneer, in 2000. In the same year, Ladbrokes introduced pools betting on a cable platform, and a number of bookmakers recognising that they could not afford to be left behind - added an iTV sports betting facility to their offerings.

At the same time, Playjam launched pay to play games on TV which, with its emphasis on gaming, as opposed to gambling (risking money to gain money), was hugely popular. As the Sky platform increased its dominance in homes across the UK, more iTV services were launched by major operators, including Littlewoods, Ladbrokes and Rank.

Early days of iTV gambling saw in-running sportsbetting as the holy grail for example, placing bets during a game on David Beckham scoring from a free-kick but although this raised the profile of the medium, it was not (and probably never will be) the biggest revenue generator. Increasingly, fixed odds games, rather than sportsbetting, have been responsible for the growth in this sector. This has coincided with the introduction of fixed odds betting terminals in high street betting shops, and an explosive growth in online casino gaming.

A changing perspective
This expansion was therefore driven by the huge changes in the distribution of gambling products, primarily the Internet. Initially the Internet was the domain of traditional sportsbetting gamblers but an increasing number of new punters were also attracted by the ease and simplicity of the medium.

Similarly, successful iTV services were driven by the viewers desire to be entertained again the gambling element took a back seat. This called for a hugely different approach, not least because sportsbetting as a standalone service on TV (the original favourite) was not a major crowd-puller. In recent months Sky has tried to overcome this problem with its own Skybet service.

Most television viewers/punters want, and expect, entertainment truly interactive (ideally presenter-led) games with a variety of different formats, all of which allow them to feel part of the show, with the additional incentive that they could win a cash prize. Most would not, however, think of themselves as traditional gamblers.

The obstacles
Digital technology has therefore opened up huge possibilities, both for existing gaming operators and potential new players. However, there is a danger in assuming that one size fits all when it comes to content and format whereas in reality, gaming online and gaming on television are completely different propositions.

One of the key differentials in adapting gaming for TV is that set top boxes (STB) are less sophisticated than the PC iTV applications therefore need to be more primitive, without losing any of their audience appeal. An added complication is that over 40 different types of STB are available for digital satellite TV. Every content provider must ensure that their applications run across all of these boxes, regardless of how old they are.

Setting up and running truly interactive gaming channels is a hugely complex project. Together with the technical considerations above, it requires knowledge of both the broadcast and gambling industries, as well as a significant financial investment.

As a result of these barriers, the number of truly interactive gambling operators on TV is small, with Sky and The Gaming Channel currently the only major players; but the market is also still in its relative infancy, with vast opportunity for growth.

Legislation
Importantly, this potential also needs to be viewed through the eyes of its detractors. The controversial nature of gambling, combined with the huge revenue-generating opportunities that digital delivery offers, has led to significant legislative review. Existing legislation and guidelines simply focus on the marketing of betting services guidelines from the UK's Independent Television Commission (ITC) for example suggest that betting services must be kept two clicks away from the main channel. Television advertisements for any gambling thing other than Bingo are not allowed, although it is likely that this will change in the proposed Gambling Bill. This Bill, likely to come into effect in 2006, will include legislation dedicated to the licensing and operation of all types of remote gambling.

There is also a view held that many people playing at home (e.g. via the Internet or iTV), may not have a gambling background, and therefore be unaware of the potential dangers; but this is perhaps where digital betting comes into its own. Since online and iTV gamblers are visible as they play, behaviour can be tracked and any excessive activity identified and dealt with promptly. The major operators are themselves aware of this problem and most already have close links with charities such as GamCare, which is committed to promoting responsible attitudes towards gambling.

Where to from here?
These are exciting times for iTV gaming. Interactivity on television is still in its infancy but the next few years will see it evolve swiftly from its current state of simple SMS or red button voting for contestants on Big Brother and Pop Idol. As interactive digital television becomes ubiquitous in the 21st century home, and consumer awareness of the possibilities grows, demand will increasingly be for services such as live gaming within gameshows. The challenge for service providers will be to harness the power of emerging technologies with fresh formats that generate new revenues for broadcasters but dont compromise on entertainment.

Damian Cope
Managing Director
The Gaming Channel

The Gaming Channel is the industry-leading interactive television (iTV) gambling operator and service provider. It runs Avago, the world's first interactive betting television channel which, since its launch in July 2002, has attracted more than 100,000 registered Sky viewers and developed an annual turnover of over 50 million.

The Gaming Channel also runs iSports TV, launched in November 2003. The first sports channel in the world dedicated to providing interactive sports content and games for the television viewer, iSports TV also provides broadcasts such as coverage from The World Series of Racing, including exclusively 'live' coverage of the Japan Cup and Hong Kong Cup.

The Gaming Channel is headed by Damian Cope, who has worked in the interactive gambling industry since its inception and co-founded the UK's first Internet betting service, Blue Square. He was instrumental in developing Ladbrokes.com into a leading multi-lingual gambling portal, and set up The Rank Group's interactive gaming division, which included the launch of the UK's first fixed odds games site, Rank.com, the online casino HardRockCasino.com, and the interactive television joint venture with NDS Group Plc, Fancy a Flutter

Good news for Yoomedia. Far better to deal with one, larger, leaner cable company.

http://www.dtg.org.uk/news/news.php?class=countries&subclass=193&id=435

"Top city banks are wooing Telewest in expectation that the cable company will begin merger talks with its larger rival ntl early next year."

With our own 'Broadband TV' due to be launched next year, maybe cable can finally compete with SKY.

3 'Walkaways' tonight, on Who Wants To Be A Milionaire. Never seen 3 before, in one show. Questions appear more difficult this series. Perhaps a ploy by Celador to gain more revenue from the mobile game, but also to actively engage the viewer at home, on a more frequent basis. Therefore boosting viewing figures.

All good news for Yoomedia.

iPublic

Thanks for the posts which are very informative. Just back from a fascinating seminar in Oxford which is a long way from Rye so not really able to properly take in your calculations. I will revisit them tomorrow. Quick reaction on a favoured formula is to want to see a loan element as the servicing will be swallowed by growth and margins generated in the gambling field. Accept the SEY point - the market was alerted because they were doing the rounds of the institutions.

Discussed YOO with my old friend over an excellent Chinese meal. He is a shrewd investor and former Co. Sec of a household name firm. His first reaction was to query the rules of the market. However, given that there are unlikely to be rules to the contrary, the return from suspension is clearly a decision of the company as was the decision to suspend. As per normal, whatever one might think of the rights of the shareholder, the Directors do tend to treat the shareholders meeting as a rubber-stamping process. In reality they will vote their own shares in favour and they will have taken care to gain the support of outside major shareholders, no doubt a majority. So one would expect to see a well-worked argument to ensure that the initial quotation makes sense. The better argued the case, in terms of PE projections for instance, the more likely that such a valuation can be used in the terms of the shares allocated to the takeover target. It is good for us to form our own view. If the opening price is evidently too low then there is really a one-off opportunity for an additional buy-in which could disappear within minutes. Sounds as if this means a 7 o'clock alarm for a while!

Eric

iPublic.
Ref your post 215. Could you explain how YOO could maintain control in the event that it paid more than 100% of its current outstanding shares?