For personal use only. Investor Presentation. March 2011

Transcription

1 Investor Presentation March 2011

2 Contents Section Page Digital Performance Group Overview 4 Industry Growth 5 DPG Transformation 6 Management & Board 7 Business Unit Information dgm & Empowered Revenue Model 9 dgm & Empowered Customers 10 Empowered Communications 11 Deal Group Media (dgm) 13 Vowcha.com.au 15 Financial Information Financial Statements 18 Listed Proxies 20 Conclusion Review of Key Initiatives 22 Summary 23 2

3 Digital Performance Group (ASX: DIG) 3

4 Overview Digital Performance Group operates online businesses that sell targeted and measureable online advertising Sells advertising Performance based digital marketing is a form of direct response advertising: Advertisers pay for a result Methods of pricing to deliver a result include: Pay per click (e.g. clicking on an advertisement) Pay per sale (e.g. purchasing a product) Pay per action (e.g. signing up for membership) Pay per lead (e.g. in store inquiry) Search engine marketing (e.g. Google adwords) Search engine optimisation The result is delivered through a variety of channels such as website banners, s, affiliated publishers and search engine marketing via Google, Yahoo and Bing Via 3 business units Through multiple online channels 4

5 Industry Growth Online advertising continues to grow faster than other advertising mediums in Australia Continued to grow throughout GFC Total online advertising as at December $2.3 billion* Internet advertising growth forecast to % per year** Forecast size of internet advertising industry - $3.8 billion Exceeding TV advertising spend ** DPG is exposed to growth across multiple internet advertising categories General Display Advertising Expenditure 2003 to 2010 IAB report December 2010 *IAB Online Advertising Expenditure Report December 2010 **Pricewaterhousecoopers Media and Entertainment Outlook report

6 DPG Transformation Strategy to become a leading digital performance marketing company in Australia 6

7 Management & Board Senior Management Chris Meehan Managing Director / CEO 10+ years digital experience, former COO/CEO travel.com.au during successful turnaround and sale to Wotif.com, former GM of domain.com.au Campbell Nicholas, Company Secretary / CFO 12+ years CFO experience, 19 years CPA, former roles at WorldxChange Comms, Personal Broadband Australia, Ernst & Young / Unilever Shaun McNamara GM of Empowered Foundation employee of Empowered since 2001, formerly other National Sales and Marketing roles with large FMCG multinationals Craig Ellis MD of dgm 13+ years digital experience, employee of dgm since 2004, formerly other digital roles within Fairfax Digital, Excite and Optus Interactive Board of Directors Phillip Pryke Non-Executive Chairman Director Co-Investor Capital Partners (cornerstone investor), currently Deputy Chairman Contact Energy & Director Goodman Group, former CEO EDS Asia Pacific David Sweet Non-Executive Director Former Managing Director, other executive roles including Director Vodafone Australia and itouch Australia / New Zealand Fionn Hyndman Non-Executive Director Online advertising sector veteran, formerly Managing Director of Deal Group Media Pty Limited (Australia) for 7 years Christin Burns Non-Executive Director Investment Manager at Co-Investor Capital Partners, holds Board positions at several Australian online businesses 7

8 Business Unit Information 8

9 dgm & Empowered Revenue Model DPG places advertising via multiple channels Consumers respond to online ads or s Results delivered to advertiser Affiliate network Hundreds of smaller sites Via Direct Advertiser or Media Buyer allocates part of overall advertising spend to online Search campaigns for online search engines websites, , phone, in store s sent to specialist database 9

10 dgm & Empowered Customers Group ad sales of $38 million in FY2010 dgm and Empowered have developed complimentary media buyer and corporate relationships Following the acquisition, dgm and Empowered are focusing on leveraging each other s key client relationships to maximise revenue opportunities 10

11 Empowered Communications (Overview) OVERVIEW OF COMTEL Empowered has a database of circa 500,000 members sourced via network of five loyalty websites Detailed demographic data collected from members enables DPG to conduct highly targeted advertising offers or research campaigns Key database member marketing initiatives: Launch of Facebook and iphone apps (increases member engagement) Optimising member loyalty rewards (increases member retention) Monthly member newsletter to (reinforces member benefits) 1HF11 EBITDA = $1.5m, FY10 EBITDA = $3.2m 500,000 member database MEDIA BUYER Member data sold by in-house sales force RESEARCH COMPANY CORPORATE 11

12 Empowered Communications (Technology Investment) OVERVIEW OF COMTEL Current major infrastructure projects underway include: Server Platform Upgrade Outsourcing infrastructure to the cloud (Macquarie Telecom Private Cloud) Ability to launch new websites (e.g. daily deals) at short notice Scalable for future growth 99.99% system availability to increase user experience Updated Software Platforms with CMS Upgrading proprietary membership, management and data management systems Improved usability, member retention and engagement across all proprietary websites Improved WDYT.com.au website for better social media integration and more relevant member rewards AD AGENCY RESEARCH DIRECT 12

13 Deal Group Media (Overview) dgm works across the following channels: Affiliate marketing - Australia s leading Affiliate Network* Search engine marketing (PPC): - paid search / e.g. Google adwords Search engine marketing (SEO): - optimise websites for search engines Campaign management for Affiliate and Search requires: specialist platforms and technology dedicated account management and consultancy teams dgm has established leading positions across all channels 1HF11 EBITDA = $0.9m, FY10 EBITDA = $1.8m * An affiliate network connects advertisers and publisher websites. Affiliate websites display advertiser ads and integrated content in an effort to drive consumer actions and acquisitions and are paid for results 13

14 Deal Group Media (Industry Recognition) First ever and only agency to win a regional award for affiliate marketing: Asia Digital Media Awards for Affiliate Marketing with St George Bank, 2009 Asia Digital Media Awards for Affiliate Marketing with Coles Source Mastercard, 2010 Most awarded agency in Search Engine Marketing: Finalist, IAB Search Marketing Award for Allianz, 2010 Winner, IAB Search Marketing Award for Woolworths Everyday Money, 2009 Silver Medal, Asia Digital Media Awards Search Award for St. George Bank, 2009 Winner, IAB Search Marketing award for Dell, 2008 Finalist, Digital Media Award for Agency of the Year, 2008 Winner, Digital Media Award for Search Marketing, 2008 Outstanding Advertiser Award, Yahoo HK for HKDL Campaign,

15 Vowcha.com.au (Overview) Daily deal sites (modelled on US pioneer Groupon) have recently become a prominent way for SME businesses to market products/services Australian daily deals market forecast to be worth $242 million over next 12 months, increasing to $500 million in 3 years* The size of the Empowered member database (500,000 members) and detailed demographic data collected places DPG in unique position to enter this market DPG has acquired daily deal technology through acquisition of Vowcha.com.au to gain an immediate presence in the daily deals segment * Telsyte Digital Research Program (14 th February 2011) 15

16 Vowcha.com.au (Revenue Model) Vowcha s sales force sign up SME s to provide discounted deals (mainly food, activities, health and beauty retailers) Daily deal sent to Vowcha &Empowered members in each city or town, and to followers on Facebook and Twitter Consumers buy deals from Vowcha.com.au website and coupon ed to the purchaser Vowcha retains a commission of 25-50% of the purchase price of the deal 16

17 Financial Information 17

18 Financial Statements (Group P&L) FY st Half Pro-forma FY st Half Pro-forma FY2010 Full Year Pro-forma Empowered 3,592 3,639 7,281 dgm 11,266 13,131 30,663 Total revenue 14,858 16,770 37,944 Empowered 1,472 1,651 3,178 dgm ,804 Corporate costs (922) (1,155) (1,711) Underlying EBITDA 1,478 1,354 3,271 Pro-forma results: Provide financial history of continuing businesses Assumes dgm had been part of the DPG group for full relevant reporting period (dgm acquired 22 October 2010) Excludes results of divested mobiles businesses Forecast pro-forma FY2011 EBITDA (before business acquisition and restructuring costs) in the range of $3.00 to $3.25 million DPG expects to achieve year-end annualised EBITDA run rate of $ $4.00 million (based on the final quarter of the 2011 financial year) Underlying EBITDA % 9.9% 8.1% 8.6% Business acquisition costs (566) - - Restructuring costs - (115) (195) Depreciation / amortisation (68) (1,235) (2,238) EBIT ,033 Finance costs (557) (513) (1,136) Tax expense (315) 160 (191) Net profit / (loss) after tax (28) (234) (294) 18

19 Financial Statements (Group Balance Sheet) $000 s December 2010 June 2010 Cash 1,107 2,126 Trade receivables 4,992 1,388 Vendor finance loan 2,778 - Other current assets Mobile assets 231 9,774 Total current assets 9,248 13,383 Goodwill & intangibles 22,902 15,025 Vendor finance loan relates to deferred consideration to be received by DPG from sale of post paid mobile business Mobile assets and liabilities relate to prepaid retail business held for sale. In the event of a sale it is likely these liabilities (Jan 2011 balance = $0.70m) would be taken on by a purchaser. Borrowings include $7.0m senior facility provided by Co- Investor Capital Partners Pty Limited (cornerstone shareholder) and receivables financing facility of $0.8m Proposed rights issue to strengthen balance sheet via repayment of senior facility Other non current assets 864 1,551 Total non current assets 23,766 16,576 Total assets 33,014 29,959 Trade and other payables 6,447 2,213 Borrowings 7,756 3,407 Other current liabilities 1, Mobile liabilities 1,100 6,906 Total current liabilities 16,380 13,104 Total non current liabilities 533 1,382 Total liabilities 16,913 14,486 Net assets 16,101 15,473 19

20 Listed Proxies Listed Online Advertising Proxies (US or EU) Company Business Model Market Cap EV/EBITDA Valueclick Inc Performance based online marketing $1,203m 6.8x Marchex Inc Performance based online marketing $305m 11.3x Tradedoubler Ab Performance based online marketing $275m 8.9x Hi-Media Diversified online (advertising / publisher) $243m 9.2x Sedo Holding AG Performance based online marketing $157m 12.1x AVERAGE: $437m 9.7x Listed Australian Media and Publishing* Business Model Market Cap EV/EBITDA Diversified publishing and media assets $16,447m 7.4x Listed Australian Online Businesses** Business Model Market Cap EV/EBITDA Online travel and classifieds $1,218m 12.8x Digital Performance Group Business Model Market Cap EV/EBITDA Performance based online marketing $9m 3.7x - 3.9x*** Source: Thomson One / All $ in AUD through xe.com * Includes Fairfax Media Limited, Salmat Limited and News Corporation ** Includes Seek Limited, REA Group Limited, Carsales.com Limited, Wotif.com Holdings Limited and Webjet Limited ***Based on year end EBITDA run rate of $3.75 $4.00 million, net debt and excess assets as at 31 Jan 2011 (including assets held for sale and deferred consideration) of $5.63 million, and share price of $0.02 (as at 28 Feb 2011) 20

21 Conclusion 21

22 Review of Key Initiatives Update website and technology with new brand Leverage Empowered 500,000 member database and resources into new daily deals offering Launch with BDM s in Sydney and Melbourne with other locations to follow Focus on social media strategy Focus on increased utilization of member database via further growth in research product offering Improve member retention through rebuild of technology platforms and new Vowcha offering dgm and Empowered focusing on leveraging each other s key media buyer relationships to maximise revenue opportunities Organic expansion of dgm s affiliate offering into the fast growing online retail sector 22

23 Summary DPG now repositioned and purely focussed on the fast growing online advertising industry Performance based pricing model across multiple online channels positions DPG as a leader in this segment Unique member database allows accelerated entry into new markets (e.g. daily deals segment, research) Year end EBITDA run-rate of $ $4.00 million Proposed rights issue to strengthen balance sheet and provide headroom for future growth opportunities 23