Digital Animations (DAG)

Games Investor has terminated coverage of DAG

News
22/12/97 Interim Results

The Company has decided to recognise advance royalty payments as deferred income rather than sales. This means that the monies received from Eidos for Steel Legions have been stripped out of past profit and loss accounts (on whose figure they floated and their valuation based), placed into the balance sheet as deferred income and, should the game be launched, will be released as turnover at that point. Although this may seem (and be) a more prudent accounting policy, a cynic might argue that the past is the past and that the stock market might not notice this adjustment and adjust its historic valuation of the company accordingly. This capitalised revenue will then be available to boost profits at a later date.
With admin costs more than trebling to over £660,000 from £196,368 (the Company also announced an expansion of its artificial intelligence software team), with little revenue and questions still remaining about whether their game will be released, the Company's current valuation looks questionable.

20/03/98 Steel Legions rights bought back from Eidos
The Company has reached an agreement with Eidos to buy back the publishing rights to the Steel Legions game and are said to be in talks with another publisher to finally have the game released. The amount paid to Eidos was not disclosed but further development work is likely before the game is eventually published. The Company also announced that it has entered into a similarly early-stage publishing agreement with another publisher for another title in development. Upfront advances have been received to develop both games further although both publishers have the option to bow out at any stage.
The Company announced that its Digimania digital effects company beginning to build up orders with £150,000 expected to be realised by the end of the year (30/03/98) and a further £250,000 during the first quarter of FY99.

20/05/98 1998 Year end results
The Company's 1998 results show a considerable increase in turnover for the year to 31/03/98 whilst only a slight improvement in pre-tax losses (see table at top of page). However, it should be noted that a significant % of the 1998 turnover takes the form of deferred income released as a result of the publishing rights buy-back from Eidos - see 20/03/98 news. This appears to amount to around £0.5m whilst the cost of buying the rights back appears to come to around £0.1m. With these stripped from the accounts, the Company still appears to have made considerable progress with its Digimania division (revenues from which comprise the bulk of  remaining sales) but admin expenses have also increased, by over 95%. The Company, though, is expected to move into profit for FY99.

10/07/98 Digimania's continued growth
Digimania, the Company's digital effects division, continues to expand at a rapid rate. The Company revealed that first quarter sales for the division exceeded £.025m with a further £0.55m of orders booked. The growth was attributed to further work with games companies, Bullfrog, Eidos and Interplay and a second TV advert in the US.

27/11/98 Digital Animations announces strong interim results

The Company's interim results show a marked improvement in trading performance and reflect the strength of its Digimania business. Indeed, all the turnover for the interim period is attributable to the digital effects team and the vast majority of the company are now employed in that division. The Company continues to retain a healthy order book going forward and continues to expand into the US market.

26/05/99 Strong revenue growth reported at year-end
Although Digital Animations failed to break into profit for FY99 as expected, it achieved significant (86%) growth in its top line with sales of £1.15m. The continued expansion of the Digimania business remains at the heart of the company's growth and looks set to continue during FY00 as the Company are close to signing a high-value (£1m+) deal with an as-yet unnamed TV network  to produce a 26 part animated TV series. The Company continues to excel in the games FMV business having worked on Eidos titles Braveheart and Urban Chaos as well as VRally2 and Star Trek.

30/09/99 Shares suspended
The Company has asked for its shares to be suspended as it has run into cash-flow problems. The Company had attempted to raise new funds to finance the development of the animated TV series mentioned in earlier news but experienced difficulty in completing this. The Company are reportedly in talks with a third party but could also attempt a deep discounted fund raising. Should the latter option happen, as experienced by Inner Workings, then the Company would find it difficult to raise an additional tranche of funds if they then fail to turn the Company around.

08/11/99 DAG raises £0.65m via deep discounted placing
The Company has succeeded in digging itself out of its current cash-flow quagmire but at a price. The Company has issued around £0.7m of new shares at a massive 87% discount to the suspended market price and has awarded its new backers and its new management team with considerable equity and options. Net proceeds of the fund raising, headed up by New Media Spark, amount to £655,000 and will, at current cash-burn levels, see the Company through to Easter/the middle of next year and possibly beyond if it generates any new business during the period. The Company will continue to pursue animation and post-production work whilst expanding its work onto the internet via a partnership with an as yet unnamed media company.
The Company also revealed its interim results:

The Company's figures reveal the extent to which the Company's order book had dropped off in the period prior to the suspension of its shares. Losses have deepened considerably caused principally by the fact that the Company was expanding (overheads increased 24%, cost of sales increased 28%) at a time when sales were shrinking. The interim balance sheet also revealed the extent of DAG's indebtedness with £74k in overdrafts and £254k due to other creditors. On the asset side, the Company has no cash or stocks, £172k due from debtors and fixed assets of £161k.
Share trading in DAG is expected to resume before the end of the calendar year.

13/12/99 Deal with Press Association
Following the restoration of dealings in DAG on 02/12/99, the Company has been forced (following press leaks) to confirm that it has been approached by the Press Association to develop some internet-based animation technology. The Press Association is one of the most pervasive (and successful) companies on the internet, particularly in the UK, where it provides the majority of news services to portals, ISPs and hub sites. DAG has yet to reveal the business model, scope or nature of the project.

27/01/00 DAG reveals more details of PA deal
Digital Animations Group has revealed more details of its deal with the Press Association. DAG has been developing the technology behind PA's animated newscaster concept, Project Ananova (www.ananova.com). The PA intends for Ananova  to provide 24/7 newscasting capability not only on the internet but, in future, on next generation mobile phones and digital television services. DAG, which has already received funding to develop the technology from the PA, will receive a share of advertising revenue generated by Ananova and retains the rights to the technology behind the PA project. DAG intend to exploit this technology in other animated characted projects.

Following DAG increasing movement towards internet technologies and away from games, Games Investor has decided to terminate coverage of DAG.

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