Re-positioning away from its UK operations to focus on the faster-growing Asia Pacific markets Deal Group Media has meant fundamental and expensive reorganisation for the company.

The group recorded a post-tax loss of £6.9m in 2007 after selling 51% of its UK operations to management for £1.5m cash leaving it with an ‘undiluted focus’ on Asia-Pacific through its Australian business. This arm is profitable and hoisted sales 49% to £8.5m during the year, also launching satellite operations in India and Singapore.

DGM provides search engine and affiliate marketing services for advertisers, and sells advertising on behalf of a network of media owners. It is exporting this business model throughout the Asia Pacific region and has now relocated the UK team to Australia. The region offers a lower cost base than the UK and comparatively less competitive and complicated markets.

Chairman David Lees points to Asia’s 39% of global internet usage and says the market is still ‘early stage’ in terms of the penetration of digital advertising. He believes this will allow the company to quickly create substantial market presences in 2008 with new regional offices planned for Hong Kong, the Philippines and Malaysia.

With the new positioning offering positive results and 49%-owned UK operations now regarded as ‘discontinued’, DGM is in a good place to use its expertise to create a market-leading role in its new market space. The share price has suffered over the past year and sits at 1p, down from a 2007 high of 3.75p. The future looks brighter down under and if you held on so far we recommend keeping watch for a little while longer at least. Hold.

Deal Group Media	AIM	£3.64m	0.80p	0.00p
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