DM warns of ‘reduced’ results pending OFT appeal

HEREFORDSHIRE direct marketing and home gaming company DM is warning shareholders its financial results will be “greatly reduced” due to a pending court appeal.

Earlier this year, the Office of Fair Trading undertook an investigation into a group of its companies which promote scratch cards.

In March, DM announced that the court had accepted undertakings from it in relation to certain changes required to the design and content of promotions.

These undertakings took effect in respect of new promotions carried out by the group after March 17.

A trading update from DM today said it was not possible at that time to estimate what the medium or long-term effect these changes would have on the business models of the companies.

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It was expected however there would be an adverse effect on the financial performance of those group companies, it said.

The court granted the group’s executives leave to appeal to the Court of Appeal in respect of the judgment and a new appeal date has been set for June 20 and 21.

“Due to the uncertainty over current promotion design, group activities and financial results for the first part of 2011 have been greatly reduced and results for the year, both at a turnover and profitability level, are running significantly behind the equivalent trading period during 2010,” the trading update said.

“Until the group is able to complete the appeal process and design and test new promotions, it is expected that the ongoing level of trading will be at a much reduced level than historically achieved.

“The group currently remains profitable, though at a much reduced level, and has a robust financial position, with no net debt.”