DCD is ostensibly a small AIM listed loss-making jam tomorrow company which floated as Digital Classics at the height of the dot-com boom.
However, you might have watched one of their tv productions last night. 'Imagine: the Beatles in Love' on BBC1 or 'Abba: Thank you for the music on ITV1'.
If you missed these then you might want to catch 'The one and only Michael Jackson' which airs on ITV1 tomorrow at 9:00p.m. or a new lavish production of 'Wind in the Willows' which is a BBC1 highlight on New Year's Day at 6:20p.m.
I think you'll agree that this is an impressive raft of programming for a little known indie with a market cap. of circa £25m.
Essentially, DCD is a producer and distributor of high quality arts, entertainment, music and drama audiovisual programming for television DVD and new media.
The programmmes mentioned above were produced by Iambic and Box-tv. It could be argued that the jewel in the crown for the group is the production arm Done and Dusted. It produces a diverse range of programming including live shows for the likes of Robbie Williams, Coldplay, Madonna etc. On Christmas Eve alone you could have seen a repeat of T4:On the Beach on E4, Robbie Williams:A Close Encounter on Sky or Girls Aloud: Live and Lovely on Channel 4.
It is difficult to see how such a quality and popular producer could possibly be making losses each year. Herein lies the reason and the rationale for the SP doubling this year......
It is only since late 2005 and early 2006 that DCD (Digital Classics then) made three earnings enhancing acquistions in Box-tv, NBDtv(a distribution company) and Done and Dusted. Hence the end of year results (end June 2006) only show part year contributions from these acquisitions.
Current year forecast earnings are £3.2m which would put the shares on a multiple of just 8 (SP is 0.0087p) for 2006/2007.
From a personal perspective I intend to accumulate and hold the shares long term. They appear very cheap given the commissions they are achieving and the long term future for quality content producers.
Put another way - only a grossly incompetent management team could fail to eventually produce decent earnings. Given that David Elstein is the non-Executive Chairman I suspect that DCD will begin to deliver the goods sooner rather than later.
Hopefully this synopsis may form a basis for further investigation for those of you unfamiliar with the company.
N.B. EBITDA increased from £34,000 in 2005 to £2.2m in 2006.
