DealGroupMedia - General Discussion

**newark** · 23-09-05

Anyone know which client is this? Haven't heard of any changes in terms of major clients, but maybe I missed something....

Trading Statement

RNS Number:6957R
Deal Group Media PLC
23 September 2005

Press Release 23 September 2005

Deal Group Media plc

("dgm" or "the Company")

Trading statement

The Company expects that its profit before tax for the year to 31 December 2005
will show no increase on the same period last year and will therefore fall
significantly short of market expectations.

The primary reason for this is that there has been a fundamental change in the
terms of trade with a major long-standing client in response to external factors
within its own industry. This particular client accounted for some 30% of high
margin gross profit. The Company was informed of this change of terms at a
meeting yesterday afternoon, 22 September 2005. The impact is exacerbated by
the seasonality of the client's business which is weighted towards Christmas
sales.

The key change in terms of trade relates to the methodology that the client uses
to recognise a sale introduced by dgm's affiliate network. dgm continues to
trade with the client, albeit on a much reduced basis, and will be less reliant
on any single client for revenues or profit going forward.

Two other issues contributed marginally to the shortfall indicated above. A
supplier of advertising space has decided to market directly to advertisers and,
secondly, the conversion time of new leads to sales across the Company is
slightly behind expectations.

Adrian Moss, Chief Executive, said: "It is very disappointing to lose revenue
and contribution to profit, but the cause is client specific rather than a flaw
in the overall business model, which remains robust and cash generative.
Excluding this specific revenue loss, sales continue to grow.

"The Company has augmented the management team recently with additional high
calibre executives and the business continues to be driven forward. The
implementation of dgmPro, the Company's new proprietary tracking technology,
remains on target and is an extremely important step forward for the Company.

"We are confident of maintaining our position as the UK's leading online
marketing group in a marketplace that is seeing year-on-year growth."

- Ends -

**OLBG** · 23-09-05

I thought BT was there biggest but maybe wrong

From the xmas effect they mention it would seem more likley to be Comet who are another big one, and also exclusive to DGM

**Matthew Wood** · 23-09-05

For those who are interested, DGM shares nosedived this afternoon.

"The primary reason for this is that there has been a fundamental change in the terms of trade with a major long-standing client in response to external factors within its own industry,"

The client accounted for some 30% of high margin gross profit and the impact is exacerbated by the seasonality of the client's business, which is weighted towards Christmas sales.

"It is very disappointing to lose revenue and contribution to profit, but the cause is client specific rather than a flaw in the overall business model, which remains robust and cash generative. Excluding this specific revenue loss, sales continue to grow," said ceo Adrian Moss.

Currently down 33% on the day.

For more inforamtion:

http://uk.finance.yahoo.com/q?s=DGM.L

All very very interesting, i'm sure lots of debate will follow.

Matthew.

**Matthew Wood** · 23-09-05

Merged threads - though order is slightly wrong!

**Rich** · 23-09-05

Some one suggested dialaphone to me and looking at the first sentence of this thread it seems to add up, though are phone sales still seasonal? I wonder what they learnt yesterday that will affect their income so much and, as their income is generally proportional to affiliates, when it will be announced.

**Fraser** · 23-09-05

Interesting advice in a post further down that thread from angelabx

http://www.a4uforum.co.uk/showpost.p...78&postcount=9

Like you say Rich it does add up.

**Rich** · 23-09-05

A search for dialaphone in this forum shows up a lot of similar posts. It's seems like a lot have had 80%+ deletions after the switch from paying per sale to paying per application after credit check (which I never quite understood the difference) and generally were frustrated with how it was handled. And now there could be new terms again.

**cyberbird1** · 23-09-05

Doubt it's dialaphone as I don't think they're seasonal. DGM said it had lost a high margin client, that is their profit margin. The post from Chris Garner talks about high revenue.

I'm with OLBG, my money's on Comet.

**jezzamck** · 23-09-05

It is Dialaphone I believe

**eliteshops** · 23-09-05

"It is very disappointing to lose revenue and contribution to profit, but the cause is client specific rather than a flaw in the overall business model, which remains robust and cash generative. Excluding this specific revenue loss, sales continue to grow," said ceo Adrian Moss.

I would disagree

I think the writing has been on the wall for some time now

Possibly first starting when the company axed smaller merchants to concentrate on the big boys.

Include this with the instability of the new DGM Pro system and the fact the original DGM system never worked the lack of confidence in the company is spreading from the affiliates to the merchants and also now reflecting in the shares.

**ethical** · 23-09-05

I would say the part about how the client recognises the sale points towards a mobile phone retailer such as dialaphone.

Mobile merchants are always changing the terms of what is actually a sale.

I wish Comet would go with another network I'm sure if they were with someone decent they'd do well

ethical

**eliteshops** · 23-09-05

Originally Posted by ethical

I wish Comet would go with another network I'm sure if they were with someone decent they'd do well

ethical

Agree wholeheartedly!! along with Screwfix and Machine Mart

**OLBG** · 23-09-05

I always thought BT was 5x the size of anything else so Im stunned that something else could be so much

BT doesnt seem especially seasonal to me though

Dialaphone would be seasonal I expect and makes a bit more sense of the phrase "fundamental change in the terms of trade" which in the context of a pay per sale merchant like Comet is hard to imagine, but I certainly am stunned that its so big

**Jon** · 23-09-05

A potentially significant further factor that isn't mentioned in the piece is affiliates themselves.

Following the introduction of DGMPro, I got the distinct impression from the forum that many affiliates had switched merchant links to other networks, wherever alternatives were available. (I've personally switched a number of links for other reasons, but that's another story).

I wonder to what extent such switching is playing its part in impacting results?