Direct Line Insurance Share Discussion Threads

[james t kirk] 02/10/2008 09:39

If you look at assets to liabilities, the debtors is higher than the creditors by @ £2m, so the balance sheet looks very iffy. Only £9.5m of intangable assets (whatever they are) is helping, but it looks like they are struggling to pay their suppliers.

[james t kirk] 20/8/2008 16:14

Looks like RAB have sold 6m shares..

[jimcar] 13/8/2008 16:15

Sp

Thanks

[spaceparallax] 13/8/2008 13:32

Jim,

Here goes:-

"Delling Group plc, the only Scandinavian marketing support services group listed on AIM, told shareholders at its AGM on August 5th 2008 that it had just delivered its second consecutive quarter of EBITDA profitability, that revenues were growing and that costs have been reduced by £1.9 million on an annualized basis. Despite this, and the prospect that an imminent dual listing in Scandinavia might generate a new source of investor demand, the shares have slumped to an all-time low. We consider that this presents a real opportunity for investors to acquire stock ahead of a dual listing and we rate the shares as a buy at 1.75p with a price target of 10.5p.

Serving as its main markets the Scandinavian countries but to a less extent Eastern Europe and the UK, Delling provides graphic production services for corporate clients both as part of long term advertising campaigns as well as for one off projects. The company is a leading supplier of expo services, producing exhibition stands, planning events, creating showrooms and organising museum exhibits and road shows. Delling also provides digital media to companies in the form of SMS offers, electronic coupons and shop displays.

The group has offices in Stockholm, Gothenburg, Linkoping, Oslo, Scavenger and London with Stockholm, Oslo and Linkoping being the largest centres of activity. Although the focus has been concentrated in the Norwegian and Swedish markets, Delling is expanding into other Nordic areas and now has customers and production facilities throughout Europe. In order to boost its margins the company has increasingly sourced production from Eastern Europe and, in more recent times, from China and Thailand.

Many Western economies have seen economic growth slow during 2008 but, to date, the Scandinavian region has bucked that trend. Delling's management takes the view that the Scandinavian economies are at a different stage in the business cycle to the Anglo-Saxon economies, however the management believes that if world markets should enter into a strong downturn or recession the larger Scandinavian companies will be negatively affected. The risks to Delling's business if the macro-economic view of its directors is shown to be overly optimistic must be all too apparent as corporate marketing expenditure would clearly fall. However, assisting Delling's growth prospects is the growing trend among corporates to outsource entire marketing campaigns from creation to delivery and Delling claims that it now has the capacity to handle such contracts which could plausibly be worth £5-10 million per year. The company believes that its recovery story is not fully appreciated by British investors and that a dual Scandinavian listing would attract fresh interest and this is therefore now under consideration.

The three years following Delling's AIM float in October 2004 were marked by the completion of a string of acquisitions. However a number of deals did not perform as expected causing both profits warnings and investor concerns about the ability of the group to support its borrowings. As a result Delling has spent the past year bedding down its component companies and cutting costs and the two consecutive quarters of EBITDA profitability indicate to us that it has now moved firmly onto a path of delivering sustainable organic growth.

The current rating and level of borrowings means that Delling is not able to consider any further paper or debt funded acquisitions, even if it wished to contemplate further corporate deals. Accordingly, and also to reflect the effect on sales of reducing staff numbers, we have reduced our 2008 and 2009 sales forecasts and – for such an operationally geared company - that also means that we have had to reduce profits and earnings forecasts. We now expect sales growth of 13% in both calendar 2008 and in 2009 and on that basis forecast revenues of £22 million in 2008 rising to £25 million in 2009 – we had forecast £24.5 million and £35 million respectively (the £35 million included acquisitions). On the basis of Delling's reduced cost base (which will only be fully reflected in 2009) that should lead to pre-tax profits of £200,000 being recorded for the current year and £2.1 million being achieved in 2009 which, on the basis of a zero tax charge, equates to earnings of 0.099p in 2008 and 1.04p in 2009. With debt now at levels which are not only manageable but could also be cleared from free operational cashflow within 18 months we value Delling on 10 times forecast calendar 2009 earnings. This gives us a target price of 10.4p and thus with the shares at 1.75p we rate Delling as a "strong buy" ahead of any dual listing in Scandinavia. "

[jimcar] 13/8/2008 13:18

Spacep

Would be interested to see the article if you put it up here

Thanks

[argy2] 13/8/2008 12:23

They've never got this one right in the past and are paid by the company to do write-ups.

[spaceparallax] 13/8/2008 12:08

This morning's UK Analyst tips DLG as a Strong Buy. A quite detailed article, which I can post if anyone wants. Interestingly, they feel that indebtedness could potentially be cleared within 18mths.

[ph1ts] 06/8/2008 14:21

Hopefully The GCI mention will not affect us too much. It certainly didn't when they had us as a buy!!

[jimcar] 06/8/2008 13:20

It is mentioned in the Times

[spaceparallax] 06/8/2008 12:41

Unfortunately the current GCI offers an AVOID rating to DLG.

[spaceparallax] 05/8/2008 15:06

A pleasingly positive AGM statement - it would have been useful if they had been able to clarify their cash position. Obviously, from previous info, we know that it is tight and the EBITDA profitability suggests that they continue to expend cash albeit at an improving rate.

[ph1ts] 21/7/2008 11:11

Yes, Onward and downward!!

[orado] 18/7/2008 18:03

Not much further to go?
Thi is now true penny share.

[deanforester] 30/6/2008 10:47

Today was the last day for them to publish their final accounts. Just made it by the skin of their teeth.

[loganair] 30/6/2008 10:05

As a long, I have to try and look at the positive points in the report, such as:

"With a prestigious customer base and an excellent and skilled workforce, Delling Group is well-placed to continue to grow organically and be solidly profitable within the short term."

[spaceparallax] 30/6/2008 09:54

Not all bleak, but cashflow sounds to be the big problem. Much seems to depend upon whether they can secure new orders to suit their newfound critical mass and somehow manage the cashflow over the next year.

Market reaction suggests a pessimistic outlook.

[james t kirk] 30/6/2008 07:41

I'm not sure why they should batter the share again pre-market, all this news was already announced?

[orado] 30/6/2008 07:36

Lets be honest, this is a very badly run company, with a totally uninspiring chairman and greatly over-hyped by a certain tipster.
End of story.

[keifer derrin] 30/6/2008 07:35

I noticed that they are going to be doing a listing in scandinvia - is this not going to reduce our holdings?

[james t kirk] 30/6/2008 07:17

Results out and as previously announced not very inspiring. The forward looking statement is equally as bland as before and there's no mention of what activity was like in the 2nd quarter. They may well have turned the business around but marketing is a tricky business to make profitable in a general downturn.

[orado] 25/6/2008 18:47

Dong Dong Dong !!!!!!!!!!

[keifer derrin] 25/6/2008 16:55

so they have three trading days to release there figures according to them. Just wondering if I should hold my breath :-)