Diginfraconacc Discussion Threads

[hastings] 15/9/2010 12:33

Decent jump today!!

[glasshalfull] 13/8/2010 16:56

Beat me to it UKI.... whae-hae, another 220k shares issued and yet further dilution.

....and the board have the audacity to question an apparent undervaluation in the share price !


Regards
GHF

[ukinvestor220] 13/8/2010 16:40

more equity issued for further "employee" (director) share options

[glasshalfull] 30/7/2010 21:15

I agree with the consensus of comments following the results.

Digital is the niche to be in for a marketing agency these days and I expected better results & cash generation, possibly due to the significant reduction in their data services business. I always believe that results do the talking rather than management talking up their own book throughout the statement;

" Despite our under-performing and significantly undervalued stock.."

" Critically, we believe that the market should recognise this re-balancing of our company's proposition and enable us to benefit from the valuation levels enjoyed by businesses less robust and less digitally and technologically skilled than ours."

I won't be investing here but wish any holders best fortune. They are the largest digital agency (lest we forget) and as I've said it's the niche to be in, IMHO.

FWIW in the marketing arena I retain a holding in CLL which is finally moving off lows and in my search for a pure digital play I came across

Chemistry Communications (CHCP) which is a PLUS stock that performed fantastic in 2009 - £4m market cap that produced fantastic cash generation and knocked down debt of £3.1m to £1.7m, all organic growth that produced PBT of £1.4m with addition of Orange, Kraft, Emirates, Tesco accounts, etc. Illiquid stock but given their momentum reckon they will appeal to larger player given that net debt will be negligible at year end. Currently on historic PER 4 which will probably be down to 3. Recent interims showed EPS up a further 10.7% on top of 150% growth at interim stage last year. They've also just taken on Baileys global digital advertising.

Thread below






Regards,
GHF

[tom111] 30/7/2010 16:42

Neither is the share price

[agreeable] 27/7/2010 14:40

moving from Cenkos to FinnCap is definitely not a move in the right direction

[tom111] 17/7/2010 15:58

The charts a shocker cant see this improving any time soon

[tom111] 17/7/2010 07:13

The share chart tells its own story

[agreeable] 15/7/2010 11:39

vain attempt to prop up the price by Director purchase. This company needs to demonstrate it is being run for benefit of the shareholders and the price will recover.
I note that two directors (non executive) were involved with London Town which went into Administration in February, rather curious that under AIM rules there is required to be an announcement if any Directors other interests change. They clearly accept the need to do this because they made an announcement about another director in November 2009
Andrew Wilson (representing Lord Ashcroft) has had a string of other problems, Watford Football Club and Mavinwood included, none of which seem to have been disclosed to shareholders and do not bode well for shareholders in DMG
I am suprised the Nomad is not more on top of this

[volvo] 04/7/2010 11:32

I know 2 directors here and I can confirm the company is being run for their benfit NOT the shareholders. This has all the signs of attempting to achieve their massive share options, while only only 2 parts of the company are generating any profit at all. Agree best avoided.

[ukinvestor220] 02/7/2010 11:43

A review of the carrying value of our intangible assets and goodwill was carried out at the year end and using a conservative weighted average cost of capital of 12.9% the Board has decided to impair the carrying value by £3.8million.The reported loss before tax for the year of £1.4 million (2009: profit £3.1 million) is therefore explained by share based payment charges of £2.9 million (2009: £3.0 million), amortisation of £1.9 million (2009: £1.9 million) and an impairment charge against the carrying value of intangibles and goodwill of £3.8 million (2009: £nil).

[ukinvestor220] 02/7/2010 11:40

Last year they said debt would be reduced to £2m by yr end, even chronic investors (nov 09) forecast debt down to £3.8m
From july:
'We had an excellent year, actually,' recalls Langdon. 'Our gross profits, which show that each of our businesses are growing, were up 26 per cent to £41.6 million. And we were doubly pleased, because the last three months of the year were not the easiest and delaying has continued into the first quarter of 2009/10.'

'We generate £5 million to £6 million of cash ever year,' says Langdon, 'and we are paying off the debt as we go through. We are looking at £2 million [debt] by March next year.'

Yet net debt at year end was: Net debt £7.3m (2009: £5.9m)

edit: so the £2m they 'paid' for 20:20 and other share based payments account for this. But there is little talk of cash generation and debt reduction in the finals ....

[agreeable] 02/7/2010 08:49

I cannot believe about their plea in todays results to have the shares rerated because they are in the growth part of the market (no doubt an attempt to get their free share options granted).
Unless my eyes deceive me they are going backwards are existing on overdrafts rather than properly structured debt and they have overpaid for past acquisitions thus the impairment charge.
As someone who called the demise of VTS nearly two years ago (to be proven right last week) this smells like another problem in the offing. As Glasshalffull commented in common with many advertising companies this is being run for the benefit of employees. AVOID

[golla] 02/7/2010 08:15

results out looks good.

[tom111] 31/5/2010 12:27

Glasshalfull i agree about the dilution, note my post 5th feb bringing it to attention

[glasshalfull] 30/5/2010 19:38

DIGI is on my watchlist and I await the full year results with interest....possibly released early July?

I've also wondered about the "flat-lining" of the share price.

Couple of thoughts.

They issued a trading update relating to full year results on the 7th April 2009, a week after year end. Fast forward a year and we instead find a RNS issued on 14th April which relates to consolidation/ reorganisation of their businesses. No mention of trading. Nothing sinister I'm sure, but I happen to believe that the market would have appreciated a steer. I certainly would and as time went on without an update - while the share price travelled south. tom111's last post also questions the low price. Could there be hefty exceptional costs relating to the reorganisation?

DIGI are the UK's biggest digital marketing agency with market cap of £22.24m at 30p mid. If we presume that trading is in line then we have 2 x brokers who are forecasting median of £6.79 PTP and 6.18 EPS, therefore PER 4.85. Their median forecasts for 2011 suggest 17% growth in EPS, which leave DIGI on a forward PER of 4.15. Cheap in anyones book.
However, net debt of approx £6m should also be taken into account.

I note the last few posts have indicated the strength in Dirctor Buying.

Cue RNS from last month:-



5 x Directors purchasing 382,450 shares between them (£115k worth).
I agree that this would "normally" propel the share price higher given such confidence by those in the know.
However, the next paragraph in the RNS tells us that the CEO sold 1 million shares....a point I haven't read in any of the posts above. This is the same CEO who in Dec 2009 was awarded 4.8 million shares relating to performance linked options(over 7% of the issued share capital at the time) and duly sold 2.3 million of them.

Anyway, back to the April RNS which indicates that 2 x institutional holders used the 1 million sale to increase their stake. I haven't looked at trades since so unsure if any overhang exists from either of CEO share sales but would suggest that 3.3 million shares may have created some indigestion.

Lastly, the amount of "issue of equity/ options and additional listing" RNS's has caught my eye. 7 x in total since the interims:-

Dec 2009 - 4.8 million shares issued & awared to CEO, per above comment.
Feb 2010 - 788k shares issued to employees - performance linked options.
Feb 2010 - 1.7 million nil cost options to CEO & CFO if 50% share price increase achieved in next 3 years. Given low point in the advertising cycle I don't believe this a difficult target over a 3 year timeline. I'd have thought 100% or greater target eminently achievable.
Feb 2010 - 235k shares issued - exercise of employee share options
Mar 2010 - 768k shares issued - yep....exercise of employee share options
May 2010 - 250...yes, 250 shares issued - exercise of employee share options
May 2010 - 15k shares issued - exercise of employee share options

So, since interims the number of shares in issue has increased by a whopping 10.03% through the issue of shares to satisfy employee performance linked options.The increase in share capital of 6.7 million shares may go some way to explaining the weakness in the share price. Is the company being run exclusively for the employees?

My musings FWIW.

Regards
GHF

[tom111] 30/5/2010 17:10

But the shares have gone down 6p since the purchase by the directors,so how do you account for that.Dont get me wrong i want the shares to go back up again but i am mythed why they have dropped like a stone.Could be exceptional charges loom re consolidation

[apsis2] 30/5/2010 16:20

tom111
Agree - but when the directors buy in at these levels it is encouraging.

'But the fact is that no one understands a company better than its directors.

They know exactly how the company is trading, are keenly aware of the main drivers of the business and are totally up to speed with the contracts that are being won and lost.

That's why smart investors keep an eagle eye out for all director deals as they can provide the first sign to a change in a company's fortunes. '

[tom111] 30/5/2010 10:43

Yes they were tipped some mouths ago around 76p since then their down about 40% which goes to show

[apsis2] 27/5/2010 23:56

Seems to be plenty of upside at these levels -

The 2 analysts offering 12 month price targets for Digital Marketing Group Plc (DIGI:LSE) have a median target of 76.00, with a high estimate of 90.00 and a low estimate of 62.00. The median estimate represents a 153.33% increase from the last price of 30.00p

The directors piled in a few weeks ago - hope to see some rises from here.

[spoodle] 16/5/2010 20:32

Let's hope for some upwards movement soon, Directors have shown their vote of confidence here.