DREAMNEX : 2007 Full-year results : net income up 124%


DreamNex, the European leader in on-line adult services, has reported its full-year audited results for 2007:

¤ millions 2007* 2006 Change
Revenue 38,981 33,997 + 14.7%
Operating income
% of revenue
+ 49.3%
Income before tax
% of revenue
+ 75.6%
Net income
% revenue
+ 124%

* The 2007 figures include DreamNex together with Think Multimedia and Open Axe for the entire period. These two companies were merged into DreamNex on 21 December 2007.

Strong growth in 2007 results

Operating income amounted to ¤7.5 million in 2007, an increase of 49.3% over the previous year. The operating margin came to 19.3%, an improvement of more than 4 percentage points over the previous year, driven by two key positive factors:

  • A sharp drop in payment processing costs, which fell from 10.6% of revenue in 2006 to 4.8% in 2007 due to tight control over bank card fraud and the introduction of direct payment processing contracts with the French banks.
  • A decrease in payments to affiliates, following the vertical integration of the two major partners, Think MultiMedia and Open Axe, acquired in May 2007 and merged into DreamNex on 21 December 2007 with retrospective effect from 1 January 2007.

Income before tax rose by 75.6% to ¤7.9 million. Net financial income totalled ¤432 thousand in 2007 compared with net financial expense of ¤511 thousand in 2006. This swing was driven by strong cash generation and the reversal of provisions for payment processing by foreign banks. This financial gain partly offset a ¤859 thousand exceptional loss due to litigation provisions (mainly the dispute with Carpe Diem in Belgium).

Net income grew faster than either operating income or income before tax, rising by 124% to ¤4.7 million.

The Enjoy Group, consolidated as of 1 January 2008, posted net income of ¤4.3 million in 2007. The aggregate net income of Enjoy and DreamNex for 2007 therefore totalled ¤9 million.

These figures confirm the Group's ability to generate high margins in fast-growing markets.

A strengthened financial structure

Balance sheet trends reflect an improvement in the group's financial structure. Trade receivables were halved as a result of the direct payment processing contracts. DreamNex still has no bank debt and its structurally negative working capital requirement improved substantially from ¤(1.2) million to ¤(5.9) million. Cash stood at ¤20.5 million at 31 December 2007.

Dividend distribution: ¤1.092 per share

The dividend distribution to be recommended at the annual general meeting on 25 April 2008 is 66% of 2007 earnings, or ¤1.092 per share (taking account of the 399,034 new shares issued on 25 April 2008 for the acquisition of Enjoy). This represents a yield of 3% based on the closing price of ¤35.30 on 25 March 2008.
The yield is expected to rise substantially in 2009 following the consolidation of the Enjoy Group in 2008.

Despite recent acquisitions and its high dividend payout policy, DreamNex still has a comfortable cash position, mainly due to the deferral of cash acquisition payments over three years coupled with the strong cash flow generated by the companies acquired.

Growth strategy in 2008

DreamNex intends to capitalise on the strong growth in sex toy sales in many European countries to boost its international e-store business in 2008, mainly through the launch of a Dutch version which will benefit from Enjoy's strong traffic in Holland and Belgium.

The initial cross-selling initiatives with Enjoy introduced during February with the launch of the webcam business on the SexyAvenue site have produced promising initial results and will be rolled out further during the year. The photo/video content business will also benefit from its forthcoming launch on Enjoy's sites.

After the successful launch of its online dating business in 2007, DreamNex intends to focus its efforts on optimising the new EdenFlirt site and to strengthen its marketing investment in this new strategic business.

The first mobile services were introduced in late 2007, comprising photo/video content and online dating. The mobile offering will be rounded out in 2008 with new innovative services, which should enable this new high-potential medium to produce its first profits for DreamNex.

The DreamNex Group therefore has a number of growth drivers in its four businesses and intends in parallel to pursue its sector consolidation strategy to strengthen its position as European leader in adult e-commerce.

DreamNex: The European leader in on-line adult services

In February 2000, Patrice Macar, Chairman and CEO of DreamNex, created SexyAvenue.com, the first adult site with an up-market, sober and high-quality positioning. The site provided an on-line store for lingerie and sex toys, a photo and video service and a dating service. DreamNex rapidly established itself as the sector leader in France.
In January 2008, DreamNex acquired Belgian company Enjoy, Europe's largest network of erotic webcams, and thus became European leader in on-line adult services, with combined revenue of ¤80 million in 2007.

ISIN CODE: FR0010436584

Corporate website: www.dreamnex.com
E-commerce website: www.sexyavenue.com


Patrice Macar - Chairman and CEO
Maxence Bessonnaud - CFO
Tel.: +33 (0) 4 42 53 83 83 / corporate@dreamnex.com
Corinne Haury-Investor relations/ chaury@actus.fr
Coralie Vogt - Press relations/ cvogt@actus.fr
Tel.: +33 (0) 1 53 67 35 79

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