Half-yearly Report

Share Name	Share Symbol	Market	Type	Share ISIN	Share Description
Dori Media	LSE:DMG	London	Ordinary Share	IL0010922388	ORD ILS0.10

Industry Sector	Turnover	Profit	EPS - Basic	PE Ratio	Market Cap
	0	0		N/A	0

 
TIDMDMG

INTERIM RESULTS FOR THE 6 MONTHS ENDED 30 JUNE 2010

Dori Media Group ("Dori Media", "DMG", the "Company" or the "Group"), the international media company active in the field of television and new media, with a focus on production, distribution, broadcasting and merchandising of Drama and Telenovela, today announces its interim results in accordance with International Financial Reporting Standards (IFRS) for the six months ending 30 June 2010.

Financial Highlights - First half 2010 results

 
 
    -- Group Revenue up 4% to US$26.3 million (US$25.4 million) 
 
    -- Gross Profit up 2% to US$8.3 million (US$8.2 million) 
 
    -- EBITDA up 17% to US$7.5 million (US$6.4 million) 
 
    -- Operating Profit of US$1.71 million (US$1.78 million) 
 
    -- Profit before tax of US$1.0 million (US$1.5 million) 
 
    -- Operating Cash flow up 209% to US$3.5 million (US$1.1 million) 
 
    -- Total Equity of US$46.5 million (US$44.2 million)

Operating Highlights

 
 
    -- 54% increase in Telenovela broadcasting and format rights to US$9.1

million (US$5.9 million) due to increased activity in the production

and selling of the Israeli daily dramas;

 
    -- 10% increase in revenues from TV channels (excluding revenue from

Israeli cable network 'HOT') to US$3.8 million (US$3.4 million);

 
    -- Sales of new Telenovela and Drama content including the sale of 'Split'

to over 45 countries since its launch; sales of popular new cross

platform 24/7 reality show 'uMan' to 15 countries including 11

territories in Western Europe following its instant success in Israel;

sale of 'Champs 12', to 31 countries in total, including

France, Spain, Portugal, Italy, Greece and Turkey and sale of cross

platform Telenovela 'Amanda O' to 36 countries since its launch;

 
    -- Novebox, an innovative platform for online video on demand ("VOD") in

Spanish reached 1.5 million unique users per month in July 2010 and

recorded 4 million page views;

 
    -- Novebox.com signed an agreement with MSN to create a

subscription/pay-on-demand based service for Spanish language MSN

portals in Latin America and the Hispanic market in the USA;

 
    -- In July 2010, Dori Media Spike (DMS) extended its agreement with 'HOT'

to operate the 'HOT' premium movie channels until 2014, generating

revenues of between US$45 million and US$48 million over 3 years for

DMG.

Chief Executive Officer's comments

Nadav Palti, President and CEO of Dori Media Group, commented: "While we are seeing clear indications of an improvement in market activity, the operating climate remains challenging with many programme buyers continuing to exercise caution. Keeping this in mind, we are happy to be reporting a solid set of results.

Our diverse library continues to sell very well to markets all over the world. Our investments in Dori New Media through projects such as Novebox.com, which we plan to develop into the leading online VOD library for Latin content, and in successful cross platform series such as 'Amanda O', 'Split' and 'uMan', are all paying off. We believe that this segment has enormous potential and the strengthening of our New Media platforms, supported by Dori Media's very large library, will enable us to capture this growth.

We are also delighted to have developed many long-term partnerships with leading global media companies providing excellent platforms for further growth. Novebox.com signed an agreement with MSN to create a service for Spanish language MSN portals in Latin America and the Hispanic market in the U.S.A. This is in addition to agreements we already have with Cellcom, the leading mobile operator in Israel, with 'HOT', the Israeli cable platform, with 'YES, the leading Direct Broadcast Satellite (DBS) television provider in Israel and with Televisa, the largest media company in the Spanish world.

Our flexible, diverse and innovative business puts Dori Media in a strong position to capture growth both in the developed and developing markets. In spite of the many exciting developments we are working on, tight cost controls continue to help our bottom line, our balance sheet is in good shape and we remain focused on generating maximum returns to all our shareholders."

Financial Summary (Unaudited)

 
                           HY 2010   HY 2009 
                           US$ '000  US$ '000  Y-o-Y % 
Revenues                   26,303    25,352    4% 
Gross profit               8,343     8,154     2% 
Total operating expenses   6,634     6,376     4% 
Operating profit           1,709     1,778     -4% 
EBITDA                     7,494     6,425     17% 
Profit before tax (*)      1,015     1,475     -31% 
Profit for the period      368       451       -18% 
Operating Cash Flow        3,512     1,135     209%

(*) Note: after deduction of Novebox.com expenses of US$1.3 million in 2010 and US$1.1 million in 2009.

Chief Executive Officer's Review

Operating Update

Excluding the impact of the 'HOT' movie and general entertainment channels agreement on local revenues in Israel, international sales accounted for 58% of total sales during the first half of 2010, compared to a 47% contribution towards total revenues during the first half of 2009. TV channel revenues, excluding 'HOT' increased by 10% to US$3.8 million for the period, reflecting the strong performance of the Group's operated TV channels in Indonesia and Turkey. The breakdown of international sales for the period is as follows:

 
 
    -- 44% (27% in HY 2009) generated in Europe, representing 26% of global

sales excluding 'HOT' movie and general entertainment channels;

 
    -- 21% (23% in HY 2009) generated in the Americas, representing 13% of

global sales excluding 'HOT' movie and general entertainment channels;

 
    -- 35% generated in other territories mainly Asia (50% in HY 2009 -

mainly from Asia) representing 19% of global sales excluding 'HOT'

movie and general entertainment channels.

A growing library of quality programming

Dori Media continues to invest in new TV series and the Company now has a library of approximately 5,130 TV hours, more than 5,000 clips of 3 minutes on average, 120 - 9 minute webisodes and around 556 1-5 minute cellular episodes of Telenovelas and daily series.

Dori Media launched many new shows during the latter stages of 2009 and the beginning of 2010. One of the most successful of these new shows has been 'Amanda O', the first global cross platform Telenovela available for Internet, TV and mobile. This unique show allows fans to view the series simultaneously across three different platforms. Figures released by Novebox.com, the world's first social community website dedicated to Telenovelas, indicate that the internet version of 'Amanda O' has been viewed over 800,000 times by users from Argentina, Uruguay and Paraguay alone since its launch. The show has been sold to 36 countries from Latin America to the Far East, receiving an Accolade award and being nominated for two awards at the 2009 Martin Fierro Awards in Argentina.

'uMan', a unique and innovative 24/7 cross-platform control game, developed by Dori New Media and Cellcom Israel, for mobile phones, internet and TV has now been sold to a total of 15 countries in 12 months. 'uMan' is a reality show where every move of 8 contestants is filmed 24 hours a day for 21 days and all decisions regarding the lives of the contestants are voted for by viewers. At its launch in July 2009, 'uMan' became an instant success in Israel, with more than 7 million viewer votes being registered in 21 days to determine the fate of its contestants. During this period, out of Israel's total population of 7 million people (600,000 of whom are teenagers), the show had 700,000 unique users. 'uMan' was recently sold to 'Mega', the number one free-to-air TV channel in Greece and the channel even plans to extend the format's length so that it follows the show's participants for a longer period of time with viewers also able to catch up on the day's action on a daily TV show dedicated to 'uMan' on the "Mega" channel.

'Split', a teenage show that revolves around the lives of humans and vampires, has been sold to over 45 countries in only 12 months. 'Split' was sold to the Philippines during the first half of 2010, the first country in Asia to acquire the daily drama. The move into Asia comes as 'Split' continues its success in Europe, having also been sold to Russia and Spain. The original TV series will be aired on free-to-air channels in all territories. The second season has been shot in Israel.

'Split' was originally produced for Israeli cable platform HOT's VOD (Video on Demand) service. After only 3 months on-air, 'Split' episodes on HOT VOD generated a total of approximately 7,000,000 viewings. Approximately 90% of viewers watched all available episodes, reaching a record loyalty level. 'Split' was shown on www.ynet.co.il, Israel's leading internet portal and achieved an unprecedented number of viewings in Israel. Following the show's huge success on HOT VOD and on-line, both HOT and "The Children Channel" (Israel's leading channel for children and teenagers) have invested in producing a second season of 'Split'.

'Champs 12', which was sold to Caracol Television S.A. in Colombia even before its debut on Canal America in Argentina, has now been sold to 31 countries in total, including France, Spain, Portugal, Italy, Greece and Turkey. Exhibitions of 'Champs 12' in Italy already began to show new revenues from Ancillary business.

Dori Media's hit comedy show 'Lalola', continues to perform well and has now been sold to more than 120 countries since its debut and is also locally produced in India, Turkey, Greece, Belgium, Spain, Portugal, Philippines, Chile, Vietnam, and Russia.

Strong long-term partnerships

Dori Media is very proud to have long-term partnerships with many leading global media companies. A summary of the main partnership agreements is provided below.

In June 2009, Dori Media Darset reached an agreement with Cellcom, the leading cellular operator in Israel, to produce 'uMan' (named locally 'Megudalim' in Israel) a unique and innovative 24/7 cross-platform control game for mobile phones, internet and TV. 'uMan' has become an instant success in Israel reflecting the potential of this innovative partnership.

Novebox signed an agreement with MSN to create a subscription/pay-on-demand based service for Spanish language MSN portals in Latin America and the Hispanic market in the U.S.A. The service is scheduled to be launched progressively over the next 6 months, and will feature rich content related to Latin series. The deal reflects the emphasis that Dori Media places on its New Media strategy having anticipated changes to content distribution with the rapid development of the internet.

In July 2010, Dori Media Spike (DMS) extended its agreement with Israeli cable platform 'HOT' to operate the 'HOT' premium movie channels for another 3 years from 1st January 2011 until 2014, generating revenues of between US$45 million and US$48 million over 3 years for DMG. DMS's original agreement with 'HOT' was initiated in 2007. 'HOT' boasts subscriptions with the majority of Israeli households and under the agreement DMS retains the rights to produce and operate the existing 'HOT' premium movie channels and services.

Financial Performance

Revenue

Dori Media recorded sales of US$26.3 million for the six months ended 30 June 2010, up 4% from US$25.4 million for the same period last year.

Broadcasting and format rights sales for the first half of 2010 were up 54% to US$9.1 million, compared to US$5.9 million in the same period last year with revenues from broadcasting rights alone up 48% from US$5.1 million to US$7.5 million in the first half of 2010. This significant increase reflects renewed interest from buyers in the first half of 2010 encouraged by improving economic conditions. Broadcasting and format rights sales represented 34% of total revenues in the period, compared with 23% in the first half of 2009, demonstrating the global appeal of DMG's series and formats.

DMG's TV channel businesses generated revenues of US$16.7 million for the first half of 2010 compared to US$18.8 million in the same period last year. The fall in revenue was as a result of a one off venture with 'HOT' in 2009 which was not repeated this year. The TV channels in Indonesia (Vision 2, Baby TV Vision 3 and Ginx), in Turkey (Ginx) and in Israel (Viva and Viva Platina) performed very well and recorded a 10% growth in sales from US$3.4 million in the first half of last year to US$3.8 million in the first six months of 2010.

Other income (including TV and internet advertising) contributed 2% of total sales at US$0.4 million for the first six months of 2010, which is more than twice the other income sales generated in the first six months of 2009.

Revenues from the ancillary business (merchandising & publishing, music, DVDs, CDs, videos and Live shows) was down from US$0.6 million in the first half of 2009 to US$0.15 million in the first half of 2010. This decrease is in-line with expectations as some major localisations of Dori Media content no longer generate royalties after a decrease in the number of exhibition appearances for certain shows. Exhibitions of new formats have however begun and include exhibitions and Licensing of shows including 'Champs 12' in Europe and Split in Europe and Latin America.

Gross Margin

The Company recorded a gross profit of US$8.3 million for the six months ended 30 June 2010, up from US$8.2 million in the same period last year, which was achieved despite an increase in amortization and continued investments relating to Novebox.com and the development of more content.

Gross margin for the current reporting period remains unchanged from the same period last year at 32%.

The cost of goods sold in the six months ended 30 June 2010 increased to US$18.0 million compared to US$17.2 million in the first half of 2009. This increase can be mainly attributed to higher amortization charges relating to DMG's growing library.

Operating Expenses

Total operating expenses amounted to US$6.6 million for the first half of 2010, compared to US$6.4 million a year earlier. Total sales and marketing expenses were down 8% from US$1.7 million in the first half of 2009 to US$1.6 million for 2010 due to lower advertising & marketing expenses and lower merchandising commissions. While the overall cost of advertising and marketing decreased, Dori Media did not decrease its overall advertising and marketing activity during the period.

Administration & general expenses and salaries were up 8% from US$4.7 million for the six months ended 30 June 2009 to US$5.1 million for the six months ended 30 June 2010 due mainly to one-off options and equity provisions. Professional expenses including lawyers, auditors and other consultants were reduced by 7% to US$0.56 million in the first half of 2010.

EBITDA

In the first six months of 2010, the Company recorded EBITDA of US$7.5 million, up 17% from US$6.4 million in the first half of 2009, representing EBITDA margin of 28%, which is higher than the EBITDA margin of 25% in the first half of 2009.

This is in spite of expenses relating to the development and operating of Novebox.com, which amounted to approximately US$1.3 million and includes one-off provisions set aside for share options and equity for Executive involved in the project.

Income Tax

Total tax expenses of US$0.6 million is reported for the period. This represents a tax rate of 64% from DMG's Profit Before Tax, down from 69% in the first half of 2009. This high tax rate is due to a unique situation that has caused DMG's tax expenses to be disproportionately high compared to the profit generated by the Group. This is because consolidated Group profit cannot be used as a base for calculating tax liabilities as tax charges for each of DMG's subsidiaries are calculated individually. Consequently, a loss result by one subsidiary cannot be offset by a profit from another for tax purposes. The Company is addressing this issue and does not expect the current tax rate level to continue to be charged. DMG will provide the market with an update on this issue at a later date.

Discontinued Operation

As a result of the sale of Dori Media Central Studios (DMCS), DMG's TV production studios in Argentina, as announced in January 2010, the net result generated by the operation has been stated in the "discontinued operation" line in Dori Media's first half 2009 financial statements.

Cash Flow

Dori Media's cash flow remained positive during the first half of 2010, facilitating strong cash generation and the financing of new productions and ventures. Operating cash inflow was up 209% to US$3.5 million compared to US$1.1 million in the same period last year. The operating cash flow is a result of DMG's healthy growth and is also due to cash profits earned on historical investments. This cash flow combined with bank facilities available to it enables the Group to continue to invest in new productions and grow its inventory of new content.

Outlook

 
 
    -- The Board expects DMG to remain profitable and soundly funded during

2010. Dori Media generates revenues from a number of operational

streams and territories which position the Company well to pursue its

strategy.

 
    -- Demand for Telenovela and Drama programming remains high both in new

and existing markets around the world, as it presents broadcasters and

producers with cost effective yet highly popular content. Demand for

such content is expected to grow, particularly for new media

platforms, such as the internet and mobile phones. As a result of

this, DMG, together with Dori Media Darset, formed a new subsidiary

called Dori New Media during 2009. Dori New Media is successfully

closing deals with global mobile and internet platforms, such as

Cellcom, the biggest mobile operator in Israel, for content from Dori

Media's existing library and new productions. Such productions are

being aired on DMG's growing on-line platforms Novebox,

Youtube.com/telenovela.

 
    -- DMG expects shows including 'Lalola', and new shows, such as 'Amanda

O', 'Champs 12', 'Ladronas', 'Cupido: El Negocio

Del Amor', 'Date Blind', 'La Maga', 'Split'

and the new reality show 'uMan' to contribute strong sales

revenue during the remainder of 2010.

***

For further information on Dori Media Group, please visit our website on www.dorimedia.com or contact:

 
Dori Media Group Ltd.          Shared Value Limited 
Nadav Palti, CEO & President   Nicolas Duperrier/Mark Walter 
Tel: +972 3 7684000            Investor & Media relations 
info@dorimedia.com             Tel. +44 (0) 20 7321 5010 
                               dmg@sharedvalue.net 
Daniel Stewart & Company 
Paul Shackleton/Oliver Rigby 
Tel. +44 (0) 20 7776 6550

Dori Media Group is an international group of media companies, located in Israel, Switzerland, Argentina and the US. The group produces and distributes TV and New Media content, broadcasts various TV channels and operates video-content internet sites. The group owns approximately 5,130 TV hours, more than 5,000 clips of 3 minutes on average, 120 - 9 minute webisodes and around 556 1-5 minute cellular episodes of Telenovelas and daily series that it sells to a wide variety of audiences in more than 80 countries. It owns and operates two telenovela channels, Viva and Viva Platinum broadcasted on all Israeli multi-channel platforms and via the co-branded internet site offering telenovelas to Israeli surfers through Walla.com. Dori Media Paran and Dori Media Darset produce top-end series as well as daily dramas for the Israeli and international markets. Dori New Media develops and produces formats specially tailored for the internet and cellular platforms, and realizes new opportunities enabled by the new technologies. Dori Media Spike packages, produces and operates the main movie channels on the Israeli cable TV platform and general entertainment channels on all Israeli TV multi-channel platforms. In Indonesia and Malaysia, the company operates the Televiva Vision 2 channel that is devoted to telenovelas and Baby TV Vision 3 for toddlers, in addition to the Ginx gamers' channel. Ginx is localized and broadcasted to Turkey as well. Novebox operates an ad-based VOD and SVOD commercial internet site targeted at the Hispanic and Latin American audience offering a variety of shows and movies. The group is traded on the London Stock Exchange where its symbol is DMG. For more information on Dori Media, visit our corporate website at http://www.dorimedia.com/.

***

 
CONSOLIDATED STATEMENTS OF 
COMPREHENSIVE INCOME 
=------------------------------------------------------------------------ 
=------------------------------------------------------------------------ 
                                 Six months ended            Year ended 
                                 30 June                     31 December 
=------------------------------------------------------------------------ 
                                 2010          2009          2009 
=------------------------------------------------------------------------ 
                                 US$ '000 *)   US$ '000 *)   US$ '000 *) 
=------------------------------------------------------------------------ 
                                 Unaudited                   Audited 
=------------------------------------------------------------------------ 
=------------------------------------------------------------------------ 
Revenues                         26,303        25,352        48,716 
=------------------------------------------------------------------------ 
Cost of revenues                 17,960        17,198        33,348 
=------------------------------------------------------------------------ 
=------------------------------------------------------------------------ 
Gross profit                     8,343         8,154         15,368 
=------------------------------------------------------------------------ 
=------------------------------------------------------------------------ 
Selling and marketing expenses   1,560         1,698         3,323 
=------------------------------------------------------------------------ 
General and administrative       5,074         4,678         10,401 
expenses 
=------------------------------------------------------------------------ 
=------------------------------------------------------------------------ 
Total operating expenses         6,634         6,376         13,724 
=------------------------------------------------------------------------ 
=------------------------------------------------------------------------ 
Operating profit                 1,709         1,778         1,644 
=------------------------------------------------------------------------ 
Financial expenses, net          694           303           638 
=------------------------------------------------------------------------ 
=------------------------------------------------------------------------ 
Profit before tax                1,015         1,475         1,006 
=------------------------------------------------------------------------ 
Taxes on income                  647           1,024         1,669 
=------------------------------------------------------------------------ 
=------------------------------------------------------------------------ 
Profit (loss) for the period     368           451           (663   ) 
from continuing operations 
=------------------------------------------------------------------------ 
Loss for the period from         -             (50    )      (784   ) 
discontinued operations 
=------------------------------------------------------------------------ 
=------------------------------------------------------------------------ 
Profit (loss) for the period     368           401           (1,447 ) 
=------------------------------------------------------------------------ 
=------------------------------------------------------------------------ 
Other comprehensive 
income (loss): 
=------------------------------------------------------------------------ 
=------------------------------------------------------------------------ 
Currency translation             (116   )      (222   )      (466   ) 
adjustments 
of foreign operations 
=------------------------------------------------------------------------ 
=------------------------------------------------------------------------ 
Total comprehensive              252           179           (1,913 ) 
income (loss) 
=------------------------------------------------------------------------ 
=------------------------------------------------------------------------ 
Profit (loss) attributable to: 
=------------------------------------------------------------------------ 
Equity holders of the parent     (27    )      (194   )      (2,593 ) 
=------------------------------------------------------------------------ 
Non-controlling interests        395           595           1,146 
=------------------------------------------------------------------------ 
=------------------------------------------------------------------------ 
                                 368           401           (1,447 ) 
=------------------------------------------------------------------------ 
Total comprehensive income 
(loss) attributable to: 
=------------------------------------------------------------------------ 
Equity holders of the parent     (73    )      (419   )      (3,173 ) 
=------------------------------------------------------------------------ 
Non-controlling interests        325           598           1,260 
=------------------------------------------------------------------------ 
=------------------------------------------------------------------------ 
                                 252           179           (1,913 ) 
=------------------------------------------------------------------------ 
Basic and Diluted                **) -         **) -         (0.07  ) 
profit (loss) 
per share from continuing 
operations  attributable 
to equity 
holders of the parent 
=------------------------------------------------------------------------ 
=------------------------------------------------------------------------ 
Basic and Diluted                **) -         **) -         (0.03  ) 
profit (loss) 
per share from discontinued 
operations attributable 
to equity 
holders of the parent 
=------------------------------------------------------------------------ 
Basic and Diluted                **) -         **) -         (0.10  ) 
profit (loss) 
per share attributable 
to equity  holders 
of the parent 
=------------------------------------------------------------------------

*) Except per share amounts.

**) Amount lower than 0.01