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Dowgate Capital - Capitalising on the booming AIM market (DGT)     

overgrowth - 09 Feb 2005 20:52

Dowgate Capital (DGT) are sitting in the middle of a goldmine!

This company through their sole trading arm City Financial Associates are looking to take full advantage of the "booming" AIM market this year. Dowgate provide NOMAD (NOMinated ADvisor) services to AIM companies and also have full Corporate Broker status which means that they can fund placements on behalf of the companies they represent.

On first sight, the fact that Dowgate exist in the often veiled financial services sector makes you think twice about investing in company such as this because it would be impossible to understand what they were doing - however, think again!

DGT bring new companies to the AIM (Alternative Investment Market). For each new company "floated" on AIM, they take arrangement fees when acting as NOMAD. After the company is launched then for a nice steady earner DGT get another healthy chunk of cash every year for looking after them (note that all AIM companies must have a nominated adviser - thereby securing a ready source of recurring income).

Because DGT also act as a Corporate broker they can get a very healthy percentage for arranging placement of shares with insititutions before a new company floats. In addition, because placements come outside the sphere of yearly NOMAD work, they can also gain healthy percentages of placements which companies may need to make throughout the year when they need a quick injection of cash to speed growth.

Current NOMADships: 28 companies represented (gives recurring income of approx 480,000 per year)

Current on-going Brokerage agreements: 19 companies (income depends on placements)

For flotations, depending on the size of a company, fees charged will be anything from 50,000 to 100,000+ For placements (the real earner), DGT get anything from 3% to around 12% of the TOTAL AMOUNT RAISED - For example a new company raising 3M though a placement will earn DGT anything from 90,000 to 360,000 ! These figures are indicative as actual deals all differ due to circumstances and DGT sometimes take payment in shares - they still have a tasty chunk of Setstone shares and when this Russian exploration company comes back to AIM, predictions are that the share price will rocket. Note that the amount that this little company can earn in fees is huge and every new deal that comes through we know will contribute another healthy chunk into the bottom line. The good news with every new floatation means that it's another chunk of recurring revenue which could go on for years, with DGT having to do very little. New clients gained in 2005 are:

Mediazest (NOMAD & broker) Elite Strategies (NOMAD) Process Handling (NOMAD) Poland Investment Fund (NOMAD) Nanotech Energy (NOMAD & broker) Archimedia Ventures (NOMAD & broker) Red Leopard Holdings (NOMAD) Alba Mineral Resources (NOMAD & broker) Intandem Films (NOMAD & broker) Motive Television (NOMAD) IncaGold (NOMAD) Sportswinbet (NOMAD & Broker) Infoscreen Networks (NOMAD & Broker) Mark Kingsley (NOMAD & Broker) Croatia Ventures (NOMAD & Broker) Pantheon Leisure (NOMAD) Firenze Ventures (Ofex Advisor) FlightStore Group (NOMAD & Broker) Euro Capital Projects (NOMAD) Pearl Street Holdings (NOMAD) Worldwide Natural Resources (Ofex Advisor) Dovedale Ventures (Ofex Advisor) Other 2005 work completed:Neptune-Calculus VCT offer for subs of up to 12 million Advisory work for TGM on London Bus disposal for 20.4M Advisory work for Creightons on property disposal Advisory work for Hampton Trust on company restructuring Advisory work for Interbulk Investments on acquisition of Inbulk Advisory work for Fundamental-e Investments on two disposals Advisory work for Designer Vision re: Design Rights against Centurion Electronics

Click Here for fundamentals and profit projections.
Chart.aspx?Provider=Intra&Code=DGT&Size=Chart.aspx?Provider=EODIntra&Code=DGT&Si

markusantonius - 07 Jul 2005 13:56 - 1078 of 2787

GHW will sell as close as they can without jeopordising the system. Some of you may recall my posts in April/May? The GHW factor has always been my #1 concern regarding this company. The sooner they "get out" the better for everyone else who play by the rules.....

ptholden - 07 Jul 2005 14:01 - 1079 of 2787

L2 would not indicate that they are flush with stock 2v1 with KBC on the Offer, supports the 'treeshake' theory, but only an unedecuated guess some might say.

pth

cowpull - 07 Jul 2005 14:37 - 1080 of 2787

Is that you DEAD FRED, reovergrowth .

overgrowth - 07 Jul 2005 14:53 - 1081 of 2787

eh ?

ptholden - 07 Jul 2005 15:04 - 1082 of 2787

Fairly sure that there will certainly be some late reported sells, although if this is a treeshake it certainly isn't working. A steady flow of peeps taking the opportunity to top up or dip a toe in. The fundamnetals haven't changed, just the disposition of the stock.

pth

stockdog - 07 Jul 2005 16:17 - 1083 of 2787

I've just been through Saddam Bin Laden's (unfortunately named poster today of all days!) link at the bottom of the green header - not sure who he is or from which BB.

His projections arrive at as close a match to mine as any two sets probably could, using largely identical assumptions, although attaching different valuations to them here and there.

For example, my model takes account of the contractual situation whereby retainer fees are payable (thus bookable) quarterly in advance - SBL treats them as booked annually in advance. The two most significant differences cancel each other out - I've got TGM disposal fees in at 225k v. his 100k, but I also have overheads at 600k (H1) v. his 500k).

He also uses PE of 12 as a guide for SP prospective valuation. Interesting to note that Colin Stewart whom he cites have a fully taxed PE of 15. His projection of 1.5p soon and 2p by year end are broadly similar to my 1p with/by interims [1.5p by Xmas] and 2p within 12 months, mine being conservatively a liitle slower to achieve.

I always take comfort from such similar results arrived at quite independently - also ptholden says his are very similar. So there we have it - definite 5 bagger in site within 12 months (for those like me who have bought in at .41p average - whoops nearly forgot I tucked a few more away today at 0.74p - not quite the best price, but happy enough - makes my average buy price just shy of 0.45p)

Hold tight - today's blip will resolve, I'm quite sure - SP already back up to 67/75 as I write.

Kind thoughts for all those caught up in today's troubles in London.

sd

ptholden - 07 Jul 2005 16:23 - 1084 of 2787

sd

SBL generally posts on ADVFN and has been following DGT for a considerable period of time. We are all singing off the same hymn sheet with regard to the Interims, which as you say is reassuring. Not concerned about today's SP movements, but will feel happier when and if GHW dump their remaining shares, if indeed, they have any left to dump.

pth

ptholden - 07 Jul 2005 17:22 - 1085 of 2787

There would not appear to be any delayed T sells in the system, so the only other explanation for today's fall in the SP, bearing in mind that there have been significantly more buys than sells, is that the MMs have used today's events as an excuse for a tree shake. For significant periods L2 was 2v1, not a situation indicating that the MMs were particularly blessed with any sizeable quantities of stock. Perhpas GHW have finished for the time being or have finished, period.

pth

taylormade - 08 Jul 2005 08:12 - 1086 of 2787

Lets start the day with a prayer for those caught up in yesterdays cowardly attacks.

stockdog - 08 Jul 2005 10:40 - 1087 of 2787

Amen to that.

sd

stockdog - 08 Jul 2005 10:58 - 1088 of 2787

Looks like GHW are continuing to sell their remaining holding into strength today.

ptholden - 08 Jul 2005 11:04 - 1089 of 2787

Who knows sd, who knows? I do think they have some stock left and will probably dispose of it at some stage. After the recent rises, we need to pause for breath, otherwise we will end up with a huge spike and a huge fall and scare any new potential investors away, so quite happy to have a few quiet days.

arf, arf!!

pth

stockdog - 08 Jul 2005 11:24 - 1090 of 2787

Yeah - slow and steady with plenty of new buyers coming in to support the old stalwarts as we go is always better. We'll still get to the same place in the end, but with more chance, as you say, of staying there.

ptholden - 08 Jul 2005 13:28 - 1091 of 2787

Incagold, one of DGT's recent placements is having a storming day, up 34% at the time of posting.

pth

white westie - 08 Jul 2005 19:28 - 1092 of 2787

A post from Ponty on the BB you call the zoo.

I am not sure how much we would be involved in this if any or for what fee but i expect you brainy peeps on here can enlighten me, ptholden, stockdog or anyone any ideas?

ww

08 July 2005 is this more work

Dunn-Line Plc

Option Agreement



The Board of the Company announces that it has entered in to an option agreement
with a third party that allows the third party to acquire a significant portion
of its head office site at Basford, Nottingham.

The Company has received a sum of 200,000 in consideration for the option,
which gives the third party the right to acquire the portion of the site for a
further 1,440,000. The net book value of the portion of the site is 1,000,000.

The option may be exercised until 14 November 2005. If the option is exercised
the Company may remain on the site, as a tenant of the third party, at a market
rate until 1 June 2006.



End


This information is provided by RNS
The company news service from the London Stock Exchange



stockdog - 08 Jul 2005 19:43 - 1093 of 2787

Thanks WW - needs bigger brains than mine to answer - pth, og??

sd

ptholden - 08 Jul 2005 19:54 - 1094 of 2787

Have to be honest chaps and say I don't really know. However, I would hazard a guess at between 5-10k for the 200k sum and if the option is fully exercised, perahps a further 15k. Probably miles off the mark, but certainly additional revenue of some value to the balance sheet. It just goes to show the financial benefit of their client base, which will continue to add revenues to the overall figures without actually having to bring new companies to the AIM.

pth

stockdog - 09 Jul 2005 12:28 - 1095 of 2787

I think it may depend upon whether it is classed as a disposal of a significant part of the business (and not in the course of ordinary business - cf. TGM 20m disposal) in which case an EGM is required, in which case the NOMAD would almost certainly need to be consulted for orderly market purposes etc, etc.

1,640,000 is 79% of its market cap, only 18% of its tangible assets, although a massive 2050% of its net asset value. Its book value of 1m is correspondingly a lower proportion of each.

Since they are leasing the property back for a few years to come, the essential nature or trading results of their business is not being altered.

However, they felt compelled to issue an RNS, so maybe they had to consult DGT about that.

Are we any nearer an answer as to whether DGT earned anything from the deal? Anyway, if anything, it's something small as pth suggests.

sd

Saddam Bin Laden - 09 Jul 2005 14:15 - 1096 of 2787

The following is a link on current fundamental analysis of DGT. It's encouraging to hear that several posters have obtained similar level of figures.

Numbers Thread

One point that may be missed by many. DGT had around 600k of cash at the end of the financial year. I would guess this might be now up to 1 million in cash. If that is the case we could have at a price of 0.71p:

For H1, without cash if profit is 600k then current P/E ratio becomes only 7.32 if you take out 1 million of cash this drops the P/E ratio to a tiny 5.66

For full year a conservative target of 1 million profits then current P/E ratio is only 4.39 but if you take out 1 million cash again this drops the P/E ratio to an incredible 3.39. Scary or what!

stockdog - 09 Jul 2005 16:55 - 1097 of 2787

SBL - using figures from my own model, following your arguments above:-

At 1/1/05 they had 495k cash on the BS. Add to that 1,031k net profit (my latest estimate) before/after tax (assume new fixed asets purchased = approx. depreciation charge for year = cash neutral) you get 1,526k cash at 31/12/05.

At .73 mid SP with 619m shares in issue, less 1,526k cash, you get enterprise value of 2,992,700. This gives a 2005 enterprise PE of 2.90!!!!!! . . . or what, I should say.

I have previously speculated what they will do with their growing cash hillock (not quite a mountain yet!). My guess is it will lead to a purchase of a small but perfectly formed broking division, as per their declared aim to expand back into this area.

The only mildest of nerves I have is TR's reticence (how else could it be?) on any but the most confirmed of news. So news of prospective new deals/clients are all but completely absent until done. I have recently been watching the regular stream of IPO's announced by the LSE and have looked in vain for those involving DGT as NOMAD and/or Broker. The assumption that they can perform in H2 nearly as well as in H1 is a natural assumption, but far from proven in a market possibly about to revert to the bear strengths of a couple of years ago.

Roll on late August for H1 results to give the SP a lift to 1p+. Roll on much more so news of new transactions for H2 to take us to the next level.

BTW, I vote blue for Monday.

sd
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