Final Results

Media Corporation PLC MEDIA CORPORATION PLC ('Media Corp' or 'the Group') Preliminary audited results for the year ended 30 September 2007 Financial Highlights -- Pre-tax profit increased 20% to £3.0m (2006: £2.5m) -- Exceptional gain of £2.5m on the sale of www.casino.co.uk -- Cash balances at the year end £6.3m (2006: £5.3m) -- Consolidated net assets of £19.5m (2006: £17.1m) -- Earnings per share of 0.97p (2006: 0.88p) Other Highlights -- Successful re-positioning of the Group to focus on two main divisions: Internet Publishing and Advertising Sales network. -- Strengthened senior management team with significant industry experience during the second half of the financial year Publishing Highlights -- Acquisition of Result Online Limited, the owner of www.creditcardexpert.co.uk -- Acquisition of Flight Comparison Limited, the owner of www.flightcomparison.com -- Successful re-launch of market leading websites www.onthebox.com and www.gambling.com Advertising Network Highlights -- Expansion of advertising network business Eyeconomy with new Manchester office and significantly expanded sales team -- Acquisition after the financial year end of Nash Digital, a profitable digital advertising business Justin Drummond, Chief Executive of Media Corp, said: 'I am pleased to announce Media Corp's preliminary results showing an exceptional outcome after a challenging year. 'Profit before tax has increased to £3 million during the year and the Group now has in excess of £6 million of cash to invest in growth and further acquisitions. Our publishing and advertising businesses have performed very strongly during 2007 and the Board believes there is significant value in excess of the Group's market capitalisation in these Internet assets. The Group is well placed to deliver significant shareholder value as we pursue our growth strategy in the forthcoming year.' -0- *T For further information please contact: Media Corporation plc Justin Drummond, Chief Executive +44 (0)20 7618 9000 Buchanan Communications Charles Ryland/Suzanne Brocks/Susanna Gale +44 (0)20 7466 5000 Canaccord Adams Limited Mark Ashurst, Managing Director +44 (0)20 7050 6500 *T Notes to editors: Listed on the AIM market of the London Stock Exchange, Media Corp is a leading internet media and advertising group focused on website publishing and online advertising. The Group has two principal divisions: Website Publishing - Media Corp has a diverse publishing division specializing in online media. Our impressive portfolio of websites includes a number of market leading sites including www.gambling.com, www.creditcardexpert.co.uk, www.onthebox.com and www.flightcomparison.co.uk. Online Advertising - Formed in 1996, Eyeconomy specialises in mass reach campaigns to over 30 Million unique consumers per month via its own proprietary ad-serving and tracking technology for clients including AOL, Dell and AmericanExpress. www.eyeconomy.co.uk www.mediacorpplc.com Chairman's Statement I am pleased to report significant progress for Media Corporation during the 2007 financial year. Following a challenging start to the financial year, the Board acted quickly to diversify the business and to reduce the Group's reliance on advertising revenue from the online gaming industry. This goal was achieved in a number of ways. In the Internet Publishing division we acquired two businesses at the beginning of the financial year, the first in the personal finance sector (www.creditcardexpert.co.uk) and the second in the travel market (www.flightcomparison.com). In August 2007, we successfully completed the sale of www.casino.co.uk to Cryptologic for a cash consideration of up to £3.625 million. During the second half of the financial year, the Board rapidly expanded the Group's advertising network business with a new Manchester office and through the recruitment of senior management and sales people. In addition, this division has been enhanced by the acquisition of Nash Digital after the year end. The acquisition brings further managerial and sales experience to the Group. As the Group has in excess of £6m cash, the Board is seeking to invest in the Group's existing publishing assets as well as proactively sourcing strategic, value-enhancing opportunities to develop the media businesses further. The value of the Group's publishing assets was highlighted by the sale of www.casino.co.uk. In the view of the Board, the publishing assets have a significantly higher value than the Group's current market capitalisation. To address this gap in value, the Group will be seeking shareholder approval at the Annual General Meeting (AGM) to authorise a share buyback which will commence following the AGM if approval is granted. The Group is well positioned to expand its online media businesses, and the Board is optimistic of generating further strong growth in the coming financial year. Consequently, we continue to view the future with confidence. -0- *T Jason Drummond Chairman *T Business Review Media Corporation has made excellent progress during 2007 whilst formulating and consolidating its ongoing strategy. The Group has undergone a transformation during the financial year and has reduced its reliance on advertising revenue from the online gaming sector. The Group has two principal divisions, Internet Publishing and Advertising Network: Internet Publishing Media Corporation has a diverse publishing division specialising in premium destinations and portals. Our impressive portfolio of websites includes a number of market-leading sites including www.gambling.com (a comprehensive gambling and sports portal providing industry news, tips and strategies), www.creditcardexpert.co.uk (a credit card comparison website), www.onthebox.com (the UK's definitive TV listings and entertainment guide) and www.flightcomparison.co.uk (a leading flight booking portal). The Group has in depth expertise in developing and monetising online brands and has significant value in its publishing division. This was clearly illustrated in the value achieved by the sale of www.casino.co.uk in August 2007. Highlights -- Significant investment in senior management, technical infrastructure and internet publishing assets completed during the second half of the 2007 financial year -- Recruitment of a team of highly experienced internet publishing specialists during the second half in Technical, Search Engine Optimisation and Copywriters/Content writers -- Successful re-launch of market leading web-sites: www.onthebox.com and www.gambling.com during the second half of 2007 -- Ongoing premium domain name acquisitions and new websites under development Advertising Network The Advertising Network business Eyeconomy was established in 1996 and is a separate operating division of Media Corporation. Eyeconomy specialises in online media planning as well as buying and managing online media campaigns for clients including AOL, Dell and American Express. The business currently specialises in: -- producing dynamic and engaging online advertising solutions including exit traffic (Subsites), rich-media floating toolbar (SubLines) and has recently launched a new online advertising division -- offering a total reach of 30 million unique users every month, from over 750 quality host sites in all major channels including Finance, Travel, Motors, Sport, Male/Female, Student/Youth, Property, Entertainment, Film, Music and TV, Mobile/Gadget and Recruitment -- producing in-house creative media -- a wealth of new products on traditional display advertising following acquisition of Nash Digital -- transition from TV budgets to online, driven by penetration of internet access to a majority of the UK population as more time is spent online than watching TV in many homes Eyeconomy: -- provides very large scale media spaces with reach comparable to TV but traceable and online, and currently reaches over 30 million people in the UK each month -- is working with American Express, Sky, AOL, World Wildlife Fund and Dating Direct, and there are major new client pitches underway -- is working on a high proportion of long term (over three month) campaigns -- is expanding - the sales team has more than doubled in size during the second half of the financial year -- is securing rights to broad traffic sites, representing over 750 websites -- is working on geographical expansion -- is seeing return value on significant presence at trade shows and in trade PR Financial Overview The audited results for the year ended 30 September 2007 show significant profit growth despite turnover having decreased by 30% to £8.3m (2006: £11.9m). Profit before interest and tax increased by 22% to £2.8m (2006: £2.3m). These results highlight the continuing shift of the Group towards high margin Advertising Network and Internet Publishing businesses and away from its gaming operations. At the end of the period, consolidated net assets were £19.4 million (2006: £17.1million) and the net cash balance was £6.3 million (2006: £5.3 million). Segmental Analyses -0- *T Turnover Turnover Profit Profit before tax (loss) and before tax interest and interest 2007 2006 2007 2006 £000 £000 £000 £000 Advertising Network 1,752 1,529 89 15 Internet Publishing 6,557 10,372 2,714 2,285 8,309 11,901 2,803 2,300 *T Key Policies Dividend policy No dividend has been declared for the year. It is the opinion of the Board that shareholders will be best served by utilising the Group's cash to fund growth, both organic and by acquisition. Goodwill and other intangibles Goodwill and other intangibles on all acquisitions since incorporation is capitalised and, under UK GAAP, is subject to annual reviews to test impairment. Treasury, foreign exchange and financial instruments The aim of Treasury is to ensure a robust and prudent financial profile while driving value throughout the Group to attain the businesses' full potential. The Group partially hedges against foreign currency exposure by matching, where possible, costs in the same currency as its foreign denominated revenues. In addition, the Board considers the implications of foreign currency exchange movements and determines the costs against the benefits of buying financial hedging instruments. See notes 1 and 18 to the financial statements. Furthermore, the Board is proactively seeking acquisition targets valued in the currency of its foreign income. Taxation The fundamental tenets of Media Corporation's approach to taxation are to enhance the Group's competitive position while engaging with tax authorities on a basis of full disclosure, full co-operation and full legal compliance. The Board considers and approves the management of the Group's tax affairs in the context of the Group's commercial objectives. The Board seeks to bring about timely agreement of tax affairs and to remove uncertainty on business transactions. The Group's taxation strategy is to mitigate the burden of taxation in a responsible manner for competitive advantage, and so enhance long-term shareholder value. Financial controls The Board understands the need for robust financial controls and a high quality, but effective, internal control environment. Corporate Responsibility General The Group Chief Executive has direct responsibility at Board level for leading the Group's initiatives on all corporate responsibility related matters, with the relevant senior managers reporting to him. Environmental Notwithstanding its low overall environmental impact, Media Corporation recognises the need to manage the impact of its activities on the environment in such areas as internal processes, recycling, energy use and encouraging its suppliers to act responsibly regarding environmental impacts and risk. Employees and equal rights Media Corporation is committed to achieving equality of opportunity for all its employees and recognises the legal requirements under relevant Acts and Codes of Practice. The Group aims to ensure that all actual or potential employees are treated equally regardless of age, disability, family responsibility, marital status, race, colour, ethnicity, nationality, religion or belief, gender, sexual orientation, social class, trade union activity and unrelated criminal conviction. The Group's employment policies are designed to attract, retain, train and motivate the very best people, recognising that this can be achieved only through offering equal opportunities. To ensure employees can share in our success, the Group offers competitive pay packages and, wherever possible, links rewards to individual and team performance. The Group is committed to providing an environment that encourages the continuous development of all its employees Risk management In most of the areas commonly associated with corporate responsibility, other than the Group's role as an employer and in its non-core business as an online and mobile gaming operator, the Board considers that the social impact of the Group's activities is relatively low. Nonetheless, as part of the Group's general risk management review processes, the significant risks to the Group's short and long term value arising from social, environmental and ethical matters, and the opportunities to enhance value from an appropriate response, are incorporated as a specific consideration. This review has identified no specific risks in this area other than a low probability of incidence or low potential financial impact on the Group, and with respect to gaming, Media Corporation Plc is committed to encouraging responsible gaming. Current trading and prospects incorporating principal risks and uncertainties The Board is aiming for continued growth during 2008 as we seek to maximise the potential of the Group's internet publishing assets and media businesses. The Group clearly owns very valuable internet assets, as was demonstrated by the recent sale of the Casino.co.uk business for up to £3.625 million. This business only accounted for a small proportion of the Group's existing Internet asset portfolio. With an existing significant web site portfolio still owned by the Group, the Board will continue to develop rapidly and enhance the value of its core Internet assets, and maximise their value for the benefit of shareholders. Board changes Nilesh Jagatia was appointed as Group Finance Director during the year. Paul Tuson stepped down from the Board, and the Directors would like to thank him for his significant contribution to the Group. In addition, Michael Hawkes was appointed as a Non-executive Director of the Group on 20th November 2006. -0- *T Justin Drummond Nilesh Jagatia Chief Executive Group Finance Director *T Group Profit and Loss Account For the year ended 30 September 2007 -0- *T Notes Total Total 2007 2006 £000 £000 Turnover 2 8,309 11,901 Cost of sales (5,799) (7,140) Gross profit 2,510 4,761 Selling and distribution costs (281) (467) Administrative expenses: (1,941) (1,994) Group operating profit before exceptional items 288 2,300 Exceptional one-off gain on asset disposal 2,513 - Group operating profit after exceptional items 2,801 2,300 Interest receivable and similar income 213 154 Profit on ordinary activities before taxation 3,014 2,454 Taxation 3 (184) - Profit on ordinary activities for the year 2,830 2,454 Minority interest (3) (3) Profit for the year attributable to members of the parent company 2,827 2,451 Earnings per share - basic 4 0.97p 0.88p Earnings per share - diluted 4 0.91p 0.87p *T Statement of total recognised gains and losses -0- *T 2007 2006 £000 £000 Profit for financial year 2,827 2,451 Prior year adjustment - (154) Currency translation differences (471) (311) Total recognised gains 2,356 1,986 *T Balance sheets As at 30 September 2007 -0- *T Consolidated Consolidated Company Company Notes 2007 2006 2007 2006 £000 £000 £000 £000 Fixed assets Intangible assets 12,467 11,422 0 235 Tangible assets 806 381 409 59 Investments - - 15,268 12,769 13,273 11,803 15,677 13,063 Current assets Debtors 955 808 1,056 2,355 Cash at bank and in hand 6,253 5,253 4,202 867 7,208 6,061 5,257 3,222 Creditors: amounts falling due within one year (997) (752) (2,474) (355) Net current assets 6,211 5,309 2,783 2,867 Net assets 19,484 17,112 18,460 15,930 Capital and reserves Called up share capital 5 4,764 4,764 4,764 4,764 Share premium account 5 12,917 12,917 12,917 12,917 Other reserve 6 1,422 1,422 1,422 1,422 Profit and loss account 6 377 (1,992) (643) (3,173) Shareholders' funds 19,480 17,111 18,460 15,930 Minority interests 4 1 - - 19,484 17,112 18,462 15,930 *T The financial statements were approved by the board of directors on 26 November 2007 and signed on his behalf by: -0- *T J Drummond (Chief Executive) N Jagatia (Finance Director) *T Consolidated statement of cash flows For the year ended 30 September 2007 -0- *T Notes 2007 2006 £000 £000 Net cash (outflow)/inflow from operating activities 7 (227) 2,214 Returns on investments and servicing of finance Interest received 213 154 Taxation Corporation tax - - Capital expenditure Payments to acquire tangible fixed assets (647) (246) Proceeds from disposal of intangible fixed assets 2,748 - 2,101 (246) Acquisitions and disposals Acquisition of subsidiary undertakings (net of cash acquired) (1,087) (6) Net cash inflow before management of liquid resources and financing (1000) 2,116 Management of liquid resources Bank deposits 4,000 - Financing Issue of ordinary share capital - 328 (Decrease)/increase in cash (3,000) 2,444 *T Consolidated statement of cash flows For the year ended 30 September 2007 Reconciliation of net cash flow to movement in net funds -0- *T 2007 2006 £000 £000 (Decrease)/increase in cash (3,000) 2,444 Movement in liquid resources 4,000 - Movement in net funds 1,000 2,444 Net funds at 1 October 2006 5,253 2,809 Net funds at 30 September 2007 6,253 5,253 *T Notes to the accounts As at 30 September 2007 1. Accounting policies Fundamental accounting concept - going concern The accounts have been prepared on the assumption that the group is a going concern. The accounts of the group for the year ended 30 September 2007 show a profit for the year of £2,830 million. At the date of these financial statements the Group's ability to continue as a going concern reflects the net funds available to the Group at the year end and the forecasts for the Group for the current financial year. On this basis, in the opinion of the Directors, the accounts have been properly prepared on the assumption that the group is a going concern. Basis of preparation The financial information has been prepared under the historical cost convention and in accordance with applicable United Kingdom accounting standards. Basis of consolidation The group accounts consolidate the results of Media Corporation plc and its subsidiary undertakings from their respective dates of acquisition. No profit and loss account is presented for Media Corporation plc as permitted by section 230 of the Companies Act 1985. Goodwill The directors have undertaken an impairment review of goodwill at 30 September 2007 in accordance with the provisions of Financial Reporting Standard ('FRS') 10, which shows that the capitalised value of the cash flows derived from future income streams is greater than the carrying value shown in the Group's consolidated balance sheet at 30 September 2007. Impairment reviews will continue to be carried out at the end of each reporting period. Other intangible fixed assets Amortisation is provided on the following intangible fixed assets at rates calculated to write off the cost or valuation, less estimated residual value based on prices prevailing at the date of acquisition or revaluation, of each asset evenly over its expected useful life as follows: -0- *T Trademarks 10% per annum Domain names 0% per annum *T The carrying values of intangible fixed assets are reviewed for impairment in years if events or changes in circumstances indicate the carrying value may not be recoverable. Depreciation on tangible fixed assets Depreciation is provided on the following tangible fixed assets at rates calculated to write off the cost or valuation, less estimated residual value based on prices prevailing at the date of acquisition or revaluation, of each asset evenly over its expected useful life as follows: -0- *T Fixtures and fittings 25% reducing balance Office equipment 25% reducing balance Computer equipment 33.3% per annum Websites 33.3% per annum Software licence 20% per annum Software development 33.3% per annum *T The carrying values of tangible fixed assets are reviewed for impairment in periods if events or changes in circumstances indicate the carrying value may not be recoverable. Fixed asset investments Fixed asset investments are carried at cost. The carrying values of fixed asset investments are reviewed for impairment in periods if events or changes in circumstances indicate the carrying value may not be recoverable. Deferred taxation Deferred tax is provided in full in respect of taxation deferred by timing differences between the treatment of certain items for taxation and accounting purposes. Deferred tax assets are only recognised when they are regarded as recoverable. The Group has not adopted a policy of discounting deferred tax assets and liabilities. Foreign currencies The trading results of overseas subsidiary undertakings are translated into sterling using average rates of exchange ruling during the relevant financial period. The balance sheets of overseas subsidiary undertakings are translated into sterling at the rates of exchange ruling at 30 September. Exchange differences arising between the translation into sterling of the net assets of these subsidiary undertakings at rates ruling at the beginning and end of the year are dealt with through reserves as are exchange differences on foreign currency borrowings raised to finance overseas assets. Exchange differences on financial instruments entered into for foreign currency net assets hedging purposes are dealt with through reserves. The cost of the Group's investments in overseas subsidiary undertakings is translated into sterling at the rate ruling at the date of investment. All other foreign currency assets and liabilities of the Group and its United Kingdom subsidiary undertakings are translated into sterling at the rate ruling at 30 September except if forward cover has been arranged, in which case this forward rate is used. Foreign currency transactions during the year are translated into sterling at the rate of exchange ruling on the date of the transaction except when forward exchange contracts are in place, when the forward contract rate is used. Any exchange differences are dealt with through the profit and loss account. Leasing Rentals payable under operating leases are charged in the profit and loss account on a straight-line basis over the lease term. Capital instruments Shares are included in shareholders' funds. Other instruments are classified as liabilities if they contain an obligation to transfer economic benefit and if not they are included in shareholders' funds. 2. Turnover The Group accounts for revenue as goods and services are delivered. Cash received for services yet to be delivered are classified as deferred income and credited to the profit and loss account in the year in which delivery takes place. -0- *T 2007 2006 ---------------------------------------------------------------------------------------------- Turnover Operating Net Assets Turnover Operating Net Assets Results Results ---------------------------------------------------------------------------------------------- £000 £000 £000 £000 £000 £000 ---------------------------------------------------------------------------------------------- Continuing operations ---------------------------------------------------------------------------------------------- Advertising Network 1,752 127 673 1,529 32 181 ---------------------------------------------------------------------------------------------- Internet Publishing 2,193 166 18,798 4,188 2,228 16,908 ---------------------------------------------------------------------------------------------- 3,945 293 19,471 5,717 2,288 17,089 ---------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- Discontinued operations 4,364 (5) 13 6,184 12 ---------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- 8,309 19,484 11,901 17,112 ---------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- Operating profit before exceptional items 288 2,300 ---------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- Exceptional gain on sale of intangible asset 2,513 ---------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- Interest Receivable 213 154 ---------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- Profit before taxation 3,014 2,454 ---------------------------------------------------------------------------------------------- *T 3. Taxation The taxation charge for the year comprises: -0- *T Group Group 2007 2006 £000 £000 Corporation tax 14 - Deferred tax charge 170 - Total tax charge 184 - *T Factors affecting the tax charge for the year: The tax assessed for the year is lower (2006: lower) than the standard rate of corporation tax in the UK of 30% (2006:30%). The differences are explained below: Reconciliation of tax charge (credit) -0- *T Group Group 2007 2006 £000 £000 Profit on ordinary activities before taxation 3,009 2,454 Tax charge on profit on ordinary activities before taxation at standard rate of 28% (2006:30%) 844 736 Factors affecting tax charge: Expenses not deductible for tax purposes 14 6 Depreciation of tangible assets 64 18 Exercise of warrants - (406) Capital allowances (70) (15) Tax losses carried forward - 354 Utilisation of tax losses (129) (51) Rollover relief (632) Profits not taxable in year (77) (642) Current tax charge 14 - Factors that may affect future tax charges Group Group 2007 2006 £000 £000 Deferred tax assets provided for: Losses carried forward 78 217 Depreciation over capital allowances (25) 10 Share based payments 4 - 57 227 Deferred tax assets not provided for: Losses carried forward 660 660 Depreciation over capital allowances 3 4 663 664 Movement in deferred tax balances: Brought forward 227 227 Charge to the profit and loss account (170) - Carried forward 57 227 *T 4. Earnings per share -0- *T 2007 2006 £000 £000 Profit attributable to shareholders 2,827 2,451 Weighted average number of shares in issue 291,027,298 280,054,421 Dilution effects of share warrants 20,400,000 1,900,000 Diluted weighted average number of shares in issue 311,427,298 281,954,541 Basic earnings per share 0.97 0.88 Diluted earnings per share 0.91 0.87 *T Basic earnings per share are calculated on the results attributable to ordinary shares divided by the weighted average number of shares in issue during the year. Diluted earnings per share calculations adjust the weighted average number of ordinary shares in issue to include all dilutive potential ordinary shares. These consist of warrants currently granted at an exercise price lower than the average market price of Media Corporation's shares during the year. 5 Consolidated Reserves -0- *T Group Share Other Profit and premium reserve loss account account £000 £000 £000 At 1 October 2006 12,917 1,422 (1,992) Retained profit for the period - - 2,827 Share based payment - - 13 Currency fluctuations - - (471) At 30 September 2007 12,917 1,422 377 *T 6 Reconciliation of movements in shareholders' funds -0- *T Group Group 2007 2006 £000 £000 Profit for the financial year 2,830 2,454 Other recognised gains and losses (471) (311) 2,359 2,143 Proceeds from issue of shares - 328 Share based payment 13 - Net Addition to shareholders' funds 2,372 2,471 Opening shareholders' funds 17,112 14,641 At 30 September 2007 19,484 17,112 *T 7. Notes to the statement of cash flows Reconciliation of operating profit to net cash (outflow) inflow from operating activities -0- *T 2007 2006 £000 £000 Operating profit 2,801 2,300 Depreciation 228 118 Share based payment 13 - Profit on disposal of intangible assets (2,513) - (Increase)/ decrease in debtors (198) 193 (Decrease) in creditors (288) (227) Net exchange currency differences (270) (170) (227) 2,214 *T Analysis of changes in net funds -0- *T 1 October Cash flow 30 September 2006 2007 £000 £000 £000 Net cash - Cash at bank and in hand 5,253 (3,000) 2,253 Liquid resources - bank deposits - 4,000 4,000 Net funds 5,253 1,000 6,253 *T Ends

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