Consolidated results for the first half-year 2009The Dada Group recorded consolidated
Revenues of Euro 76.3 million in the first six months of the year compared to Euro 81.3 million in the same period of the previous year.
International operations accounted for 57% of Group revenues compared to 45% in the first half of 2008. International expansion continued thanks to, besides the change in the consolidation scope commented upon below, the growth of the Business and Consumer sector client bases in the various international markets.
The
Dada.net division contributed Euro 35.5 million to consolidated sales (45% of Group sales) compared to Euro 48.2 million in the first half of 2008 (59% of consolidated sales), a drop on the previous year following also the continued re-focalisation of the product portfolio in some geographic areas, particularly of the traditional VAS services in Italy - only partially offset by the development of new products in the start-up phase. On July 23, 2009, Massimiliano Pellegrini was appointed head of the Dada.net division, previously held ad interim by the CEO Barbara Poggiali.
In the Consumer sector, in the first six months of the year, Dada decided to concentrate its activities on the innovation and development of new products, in particular the new "The Music Movement" product, which during the half-year incurred significant charges against which no significant revenues were recorded. In June 2009, as part of increased integration with the main web communities, Dada launched the application "Dada Music Player" which allows listening, on the most popular social networks, of all music tracks listed on the Dada catalogue which presently consists of over 2.6 million licensed and downloadable DRM-free MP3 tracks, confirming the product, although still in the development phase, as one of the most innovative and competitive within the digital music scene.
In the value added services sector, Dada initiated and concluded in the first half year a brand focalisation process related to the VAS services, and also extended its offer of community and entertainment products and services via web and mobile to the Argentinian market.
The
Dada.pro division's contribution to the consolidated sales amounted to Euro 43.7 million (55% of Group revenues) compared to Euro 35.4 million in the first half of 2008 (41% of consolidated revenues).
Within the Business sector, in the first half of 2009, after the integration of the Amen Group and the international reorganisation of the division which enjoys a leadership position in Europe with a base of 450 thousand business clients and 1.4 million domains managed, Dada.pro specialised its offer to professional clients with a bouquet of integrated services from the registration of domains to the management of online presence and identity, to the visibility improvement on the Internet through simple, efficient and measurable marketing instruments. Simply was launched to this end in April (www.simply.com), the new Dada initiative for third generation web advertising, entirely developed in-house and available on the internet worldwide, which allows small to medium-sized businesses to efficiently plan their advertising campaigns and website owners to increase advertising revenue. In July, the strategic agreement with Google providing the AdWordsTM program as part of the Simply platform was developed further: the new multi-network offer "Simply Keywords" will expand the client base of Simply allowing the planning of advertising campaigns both through the search engine and on the networks of Google's partners - the world's leading advertising network. Thanks to this agreement, Simply was accredited as a reseller of Google AdWordsTM also in the UK and in Spain - strategic countries for the division - joining Italy where Dada.pro has been a recognised reseller since 2008.
Consolidated
EBITDA in the first half-year amounted to Euro 10.7 million (Euro 14.4 million in the same period of 2008), with a revenue margin of 14.1%. The Ebitda was affected by the above-mentioned contraction of revenues and the focus of the Dada.net division on the launch and development of the new features of "Dada - The Music Movement" which incurred charges of Euro 3.2 million.
The Ebitda was also affected by exchange rate movements, in particular Sterling, for a total amount of Euro 0.5 million.
The Group
Ebit amounted to Euro 4.0 million in the period, 5.2% of consolidated revenues (Euro 10.4 million in 1H2008). Amortisation and depreciation in the period amounted to Euro 5.3 million (Euro 3.5 million in 1H2008) with write-downs and non-recurring charges amounting to Euro 1.5 million (Euro 0.5 million in 1H2008): the increase in amortisation is mainly due to investments in technology made for the development of new products and proprietary platforms necessary for the provision of the new services, "The Music Movement" in the Dada.net division and Simply in the Dada.pro division, and to a lesser extent to the changes in the consolidation scope, while write-downs and non-recurring charges were affected by charges related to improving the efficiency of the organisational structure.
The tax charge in the half year, amounting to Euro 1.3 million and principally comprising of IRAP relating to the Italian companies and of the income taxes of the foreign companies, is principally affected by lower deferred tax income compared to that utilised in the period and by higher non-deductible charges compared to the same period of the previous year and reporting therefore a tax rate on theoretical assessable income (gross of write-downs and other non-deductible charges) of approximately 30%.
The consolidated
Net Profit, after the minority interest share, amounted to Euro 1.1 million compared to Euro 8.0 million in the first half of 2008.
Group financial position at June 30, 2009
The
debt position at June 30, 2009 was Euro 33.1 million compared to Euro 31.4 million at December 31, 2008 (Euro 35.2 million at March 31, 2009). The investment expenditure by the Group on tangible and intangible assets for a total of Euro 5.8 million affected the Net Financial Position in the half-year; the charges related to the financing of servers, supporting technology and the development of products and processes, while the completion of the extraordinary operation with Sony Music Entertainment will not incur any financial charge. The effect on the net financial position of the consolidation of Dada Entertainment from June 1, 2009 was negative for approx. Euro 1 million.
Operating activities in the half-year generated cash flows of Euro 8.0 million.
Consolidation scope
The following changes in the consolidation scope on the same period of the previous year are noted:
- in the first half of 2009, the Amen Group and E-Box, purchased in July 2008 and therefore not included in the consolidation scope in the first half of the previous year, were fully consolidated;
- from July 1, 2008, due to the effect of the contractual agreements related to the acquisition of a 10% stake on July 9, together with put/call options to increase the shareholding up to 100% within two years from the closing date at the sole discretion of Dada, and in accordance with IAS/IFRS, the Giglio Group, owner of the Music Box channel, was fully consolidated;
- from June 1, 2009, based on the change in governance terms, the company Dada Entertainment was fully consolidated, whose revenues contribute to consolidated turnover net of the intercompany items relating to the provision of some technological and advertising services by the Group. The holding in the company, jointly established by the Dada Group and Sony Music in July 2007, for the first 5 months of the year was included in the consolidated financial statements under the equity method.
The total effect in the half-year of the above reported changes in the consolidation scope of the Dada Group compared to the same period of 2008 was Euro 12.4 million on consolidated revenues and Euro 2.2 million on the EBITDA of the Group.
Significant events in the first half-year 2009
On January 9, 2009, the Shareholders' Meeting approved in ordinary session the stock option incentive plan for the period 2009-2011 (the "2009-2011 Top Manager Plan" or the "Plan") proposed by the Board of Directors for directors holding particular positions, as well as general managers and/or executives and/or Division managers of Dada and/or or its Subsidiary Companies, whether employees or professional consultants. The Shareholders' Meeting, in extraordinary session, then approved the delegation of the powers to the Board of Directors, in accordance with article 2443 of the civil code - to be exercised within 5 years from the date of the shareholders' meeting resolution - to implement a paid-in share capital increase with the exclusion of the rights option, under article 2441, paragraphs 5 and 6 of the civil code - including in several tranches - to service the 2009-2011 Top Manager Plan, for a maximum nominal amount of Euro 85,000.00, through the issue of a maximum of 500,000 ordinary shares of Dada of a nominal value of Euro 0.17 each.
The Dada S.p.A. Board meeting of February 24, 2009, on the proposal of the Remuneration Committee of the Company and in accordance with the delegated powers received, approved the regulations of the Plan and assigned 410,000 options to five Top Managers of the Dada Group for the subscription of the same number of Dada ordinary shares to be subscribed during predetermined periods of the year, subsequent to the approval of the annual accounts for the year ended December 31, 2011 by the Shareholders' Meeting, and not beyond November 11, 2015, and thus approved a share capital increase for a maximum nominal amount of Euro 69,700.00 to service the above-mentioned options at the subscription price of Euro 6.05 per share.
On June 24, 2009, furthering the development of a more extensive partnership, Dada and Sony Music signed a strategic agreement including the acquisition by Sony Music of a 13% stake in Dada.net against the conferment of its holding in the Joint Venture Dada Entertainment, together with the signing of put and call options in Dada S.p.A. and agreements relating to the governance of Dada.net (thus consolidating the company from June 2009). The operation will allow Dada to fully integrate the operations of the JV in the US, extending the consolidation scope of the Group and also creating potential cost structure, technological and distribution synergies. Together with the strengthening of the partnership, an international content distribution agreement was also signed which allows Dada to access the digital catalogue of Sony Music through its own web and mobile channels at a global level.
On June 26, 2009, Dada signed preliminary agreements for the acquisition of 51% of Fueps S.p.A., a company operating in the creation, management and development of online gaming channels.
Significant events after the end of the first half year 2009 On July 15, 2009, the director of Dada S.p.A. Mr. Paolo Aurelio Gatti resigned with immediate effect, due to personal reasons (Mr. Gatti was not a member of any internal committees and as far as the Company is aware does not hold Dada shares).
Given the withdrawal of the only candidate not elected on the original slate containing Mr. Gatti, the Board appointed Mr. Claudio Cappon to the Board of Directors of the Company from today's date for the years 2009 - 2011 and therefore until the approval of the annual accounts for the year 2011. The new Director declared his independence in accordance with article 148, paragraph 3 of Legislative Decree No.58/1998 (Consolidated Finance Act) and with the Self-Governance Code of listed companies, also in regard to the regulations for companies listed on the STAR segment.
Outlook In light of the current economic situation and the currently predictable sector trend, the forecast announced for the Group on June 24 - also in consideration of the above-reported extraordinary operation with Sony Music Entertainment and the redefinition of the asset portfolio in course - which projected for 2009 consolidated revenues of approx. Euro 160 million is confirmed. In consolidating Dada Entertainment from January 1, 2009, the consolidated revenues for 2009 would amount to approx. Euro 175 million.
Declaration of the executive responsible for the preparation of the accounting documents
The executive responsible for the preparation of the corporate accounting documents of Dada S.p.A., Mr. Federico Bronzi, declares, in accordance with article 154 bis, paragraph 2, of the Consolidated Finance Act, that the accounting information contained in the present press release correspond to the underlying accounting documents, records and accounting entries.
The curriculum vitae of the new director is available at the Company and on the
company's website.
* EBITDA: before write-downs and extraordinary items
