H1 2007 Revenues (AcT)

DreamNex, the French leader in Adult E-commerce, has reported half-year revenues of €18 million for the period ending 30 June 2007, up 8% compared with 2006:

* 2007 pro forma revenues include revenues for DreamNex as well as Think Multimedia and Open Axe for the entire period. The two companies will be merged into DreamNex during the fourth quarter of 2007.
** Revenues excluding the acquisitions of Think Multimedia and Open Axe.

Acceleration in growth in product sales: up 50% in the second quarter

SexyAvenue.com product sales saw strong year-on-year organic growth in the second quarter of 2007 of 49.7% following an increase of 25% in the first quarter. Sales totalled €4.083 million in the first half of 2007.
This solid performance relates primarily to the launch of the new easier to use version of the website in March, as well as the increase in traffic generated, with a total of 23 million visits in July, up 28% in the first half of the year (source: Médiamétrie).

Stable subscription sales

Pro forma subscription sales for the first half of the year came to €13.5 million, in line with the level achieved in the first half of 2006 on an organic basis. Subscription activities include distribution of photo and video content, as well as the new dating service. On an organic basis over both years, sales fell by 12.4%. This break in growth relates to two non-recurring factors:

• To counter bank card fraud, which dented margins in 2006, more rigorous filters were introduced at the beginning of the year, resulting in a decline in conversion rates. This factor has been gradually offset by the ongoing rise in traffic and the relaxation of filters, which are now more effective.
• To attain the necessary critical mass required in terms of members within a short space of time, a large proportion of traffic usually directed towards the content service was allocated to the dating service. Recruitment of new members was at first focused primarily on offering free membership to women and promotions to attract male users. On the basis of equivalent traffic, revenues declined over the first few months. Having now achieved a sufficient subscriber base, the company has cut back on free membership and now applies normal membership charges, heralding a return to growth in subscription activities in the second half of the year.

Strong earnings growth expected for the first half of the year

The two newly acquired companies make a moderate contribution to pro forma revenues, as they generate the majority of their revenues through DreamNex. However, they should have a significant impact on earnings. In 2006, the two companies generated net income of nearly €2 million and this level should be maintained in the first half of 2007. In parallel, the sharp fall in bank card costs as a result of fraud controls has also had a favourable impact on earnings. Thanks to these two positive factors, strong earnings growth is expected for the first half of the year.

Patrice Macar, Chairman and CEO and founder of DreamNex, comments: “We successfully faced a number of challenges in the first half of 2007: the IPO, the acquisition of two companies, the launch of our dating service and improving profitability. We will continue to diversify our activities with the launch of a mobile phone content service in the second half of the year, another complementary business line offering considerable potential. In addition, our strategy of market consolidation is still one of our priorities. DreamNex is on track for facing its greatest challenge yet: establishing itself as market leader in adult web services within a short space of time.”

DreamNex: French leader in Adult E-commerce

In February 2000, the current Chairman and CEO of DreamNex launched SexyAvenue.com, the first website with a sleek, up-market positioning dedicated to the sale of adult products and distribution of adult content. The website provides an online store selling lingerie and adult toys, a photo and video distribution service and a dating service.

DreamNex has rapidly established itself as market leader in France. The SexyAvenue.com website attracts over 23 million visits each month. In 2006, DreamNex generated €34 million in revenues and €5 million in operating income.

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

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