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.....................

Given the positive tone of the update towards the end of January I can't believe that the results will contain anything other than good news. I expect any surprises to be on the upside.

Press Release 14 March 2005




Deal Group Media plc


Preliminary Results - Tuesday 29 March 2004

Deal Group Media plc, the full service online marketing group, will announce its
Preliminary Results for the year ended 31 December 2004 on Tuesday 29 March
2005.


An analyst meeting will be held at Abchurch Communications Limited, 5th Floor,
100 Cannon Street, EC4N 6EU at 9:30 am on 29 March 2005.



- Ends -


cheers GF.

we may start to see some buying now, on the run in to the results.

good volume building and lots of buys

Yes its nice to see these getting strength back Jim.

cheers GF.

Surprised not to see anymore action on this one as results are out on tuesday, any thoughts/expectations on these GF?

I sold yesterday and got into MMG. What a good move that was.

MS

Press Release 29 March 2005


Deal Group Media plc

('Deal Group Media' or 'the Group')

Final Results

Deal Group Media plc, the online marketing group whose activities include
performance-based advertising and search engine marketing, today announces its
Final Results for the year ended 31 December 2004.

Highlights

Turnover increased to 14,802,000 (9 months in 2003: 2,965,000)
EBITDA increased to 1,652,000 (9 months in 2003: Loss 926,000)
Pre-tax profit up to 219,000 (9 months in 2003: Loss 1,832,000)
Diluted earnings per share up to 0.50p (9 months in 2003: Diluted loss per
share of 1.15p)
300,000 invested in reporting systems and technology in last quarter of
2004 in anticipation of future growth

Commenting on the results, Adrian Moss, Chief Executive, said: 'The Group
underwent a complete transformation from 2003 to 2004, from being loss making to
a profitable Group with three distinct products sold through the UK trading name
'dgm'. Our expansion has been fuelled by significant growth in the online
marketing sector, that in turn has been driven by broadband penetration and an
increased consumers' propensity to spend online. The outlook for the Group
continues to be extremely positive.'

From the following, the overall results hide the degree of profitability within the company!

On an EBITDA basis, the Group generated 1,652,000 in 2004 (9 months in 2003:
Loss 926,000). The Group generated operating cash flow of 1,450,000 which led
to an overall increase in cash during the year of 1,376,000.

Performance in the final quarter of 2004 when compared to that of 2003 on a like
for like basis shows that turnover has increased 170% and the Group has moved
from an operating loss of 662,000 to an operating profit of 965,000 for that
period.

Excelent results. Looking forward to Broker upgrades.

cheers GF.

Broker upgrades should be very positive given the growth in all areas, especially the cash flow figures and the fact that the company is net cash positive. I wonder what the forward profit expectations will be given the results. Does anyone know if there are any broker presentations today?

Not sure LO, might be worth a look on their site.

cheers GF.

According to DGM's "notice of results" issued on 14 March there was an analysts meeting held this morning at 0930. I am sure we'll see some very positive comment during the next few weeks.

Can't really believe that given the results that DGM stayed neutral, until you look at the indices, AIM down nearly 1.7%! This is starting to hurt even the best companies and it's painful!

Recommended in Citywire today.

Cheers Madison

DURLACHER LIMITED
Moorgate Hall, 155 Moorgate
London EC2M 6XB

DEAL GROUP MEDIA DGM
MARKET AIM
52-WEEK HIGH/LOW 24.75p/6.0p
MARKET CAPITALISATION 81.0m
SHARES IN ISSUE 372.5m
NET DEBT / CASH 2.7m
GEARING n/a
INTEREST COVER n/a
ROCE 36%

ANALYST
Nick Ward 020 7458 5504 nick.ward@durlacher.com
Miranda Carr 020 7459 3675 miranda.carr@durlacher.com
SALES 020 7458 5537


Deal Group Media
Final Results
KEY DATA
Year End Dec (000) 12/03A 12/04A 12/05E 12/06E
Turnover 2,965 14,884 25,580 38,370
Gross Profit 927 5,757 8,546 12,819
EBITDA (926) 1,652 3,436 7,457
Operating profit (1,045) 1,369 3,136 7,144
Adjusted PBT (1,067) 1,368 3,134 7,144
Taxation 0 (547)* (940) (2,143)
EPS (p) (0.7) 0.2 0.6 1.3
PER (x) n/a 94.9 36.9 16.2
EV/EBITDA (x) n/a 45.0 21.6 10.0
Yield (%)
Durlacher is nominated adviser and broker to Deal Group Media
*Notional tax charge of 30% applied – the P&L shows a deferred tax credit of 1.7m
Expectations met, further high growth to
come…
„ DGM’s final results show a pre-tax figure of 1.37m and earnings of
0.2p on a normalised tax charge of 30%, ahead of our April 2004
pre-tax estimate of 1.34m.
„ Our original estimates do not reflect a 300K investment in staff
and software in Q4 2004.
„ Internet advertising grew 76% H1 2004 and, according to
ZenithOptimedia estimates, 84% for the full year. DGM’s core
business more than matched this with 117% growth in gross profit
at its dgmPerformance division.
„ UK internet adspend has, according to ZenithOptimedia, more than
doubled from 2.2% to around 5% since the note we published in
April 2004. This remains well behind average weekly media time of
around 12% devoted to the internet in connected homes.
„ DGM has beefed up its management team with the appointment of
Andrew Dickson as Finance Director and Andrew Stone as non-exec
chairman.
„ The sales team was expanded as part of the Q4 2004 investment
which we expect to benefit 2005.
„ We expect DGM to continue to reflect the high growth of the online
marketing space.
„ The management has made clear its intention to seek earnings
enhancing acquisitions in Europe.
„ On 16X prospective 2006 profits and with, according to our
estimates, the business more than doubling at the EBITDA and PTP
level in 2005 and 2006, DGM remains undervalued.


Citywire

Tip Update: Deal Group set for a sparkling year

Published: March 2005
By Joanne Wallen, Associate Editor

Citywire tip Deal Group Media could have done even better last year were it not gearing up for substantial growth this year.

The performance-related internet advertising group beat upwardly-revised forecasts for the year to December even after expensing some 300,000 of IT investment in the fourth quarter, which chief executive Adrian Moss said was ‘to prepare for growth in 2005’.

Shares are up 0.5p at 22.25p, valuing the business at 82.5 million. We tipped them in December 2003 at just 3.625p.

Figures for last year reflect a very different company to the one reporting in 2003 (prior to the reverse takeover of The Deal Group by IBNet), so comparisons are not particularly helpful. Nevertheless turnover for the year to December was 14.8 million up from 2.9 million for nine months in 2003. Ebitda (earnings before interest, tax, depreciation and amortisation) was 1.7 million against losses of 926,000 in the previous nine months and pre-tax profit was 219,000 against losses of 1.8 million. Earnings per share were 0.5p.

Moss told Citywire that the company has ‘done lots of work for 05/06’, including putting in a new senior management team. This includes the appointment of Lord Stone of Blackheath (Andrew Stone), a former joint managing director of Marks & Spencer as chairman, Andrew Dickson as finance director, Mark Hopwood as chief technical officer, and Jonathan Lines as chief marketing officer.

The company has also increased its sales force three-fold, led by the former head of agency sales at Yahoo.

Around 90% of Deal Group’s business currently comes from its dgmperformance service, which enables advertisers to pay only on results. Deal Group has a network of several thousand small online media owners and entrepreneurs, and its technology enables the tracking of exactly where an online purchase, or other predetermined action such as requesting a quotation or brochure, has come from. Advertisers pay only on results, and Deal Group receives a revenue share from the advertisers for every action that is taken.

However the company also offers two other services, which is what Moss claims makes it unique, and it hopes to drive growth by cross-selling these other services to advertisers as well as from the generally increasing spend on internet advertising.

The other two services are dgmAdNetwork and dgmSearchLab. AdNetwork offers low cost advertising on a variety of large portals and content websites. dgm acquires inventory at a low cost from various media owners which is bundled and sold to advertisers at a discounted rate. Although most of these larger portals require money up front, Deal Group can still track actions taken and therefore help customers work out where they are getting their best return on advertising investment.

SearchLab, focuses on two areas of search engine marketing. The first is the fine tuning of clients' websites to allow superior listings on search engines. Revenues are based on fixed fees and on improved listings on search engines.

The second area involves the management of clients 'pay for performance' search
engine campaigns. Deal Group bids on behalf of advertisers for listings on specific 'keyword' search terms. The advertiser is listed as a 'Sponsored Link'. Deal Group gets its revenue from fees for the management of campaigns and commission from the search engines on the media spend.

Customers such as Amex, Dialaphone and Comet already take all three services, and the aim is to entice customers in with the performance service and then cross sell the two additional services.

The online advertising market has been very strong in the past year and now accounts of 2.4% of total advertising spend. The company says this is fuelled by the increase in online consumer spending (forecast by IMRG and Forrester to grow from 28 billion in 2004 to 72 billion in 2007) and the penetration of broadband.

Moss believes that performance-based advertising offering the greatest return on investment for advertisers, is the way forward for all internet advertising, which lends itself so well to the tracking of actual results.

House broker Durlacher said today that with the shares on a prospective price to earnings ratio of 16 times 2006 profits ‘and with, according to our estimates, the business more than doubling at the ebitda and ptp [pre-tax profit] level in 2005 and 2006, DGM remains undervalued.’

Citywire Verdict:

The company has the bit between its teeth now and seems set for a strong few years ahead.

Internet advertising is the ideal medium for offering advertisers fees based on results, and this form of payment is likely to become ever more popular, particularly for smaller web sites with lower traffic or no track record. Deal Group is very well placed to benefit from the general growth expected in online advertising. Worth continuing to accumulate.

A red day in general, but a horrible day today for DGM. -7% as I write this.

Can anyone suggest a reason that it is taken such a hit today?

Cheers,
Stuart

People are selling their stock to pile into diamond miners, NML and CDG

I think smallcaps are taking a battering today Stuart. I'm in DGM and the future is rosey, however for the immediate time being it'll probably yoyo the 19-25p level in psynch with the market.

Agree that the future seems rosy - information posted above provides encouragement each time I read it!

Just wondered though if I was missing some news item or some rumour as although small caps are getting it today, 8% seems significant.

Cheers for response.