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.

Website: www.cityfin.co.uk

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.

Perhaps I was overly prepared for the worst. Some modest buyers back in and SP moving back up, but I expect we shall continue to see some selling into strength (viz the 1m sell just now) over the next few weeks from those who feel they have made their money on this one and want to move onto some quicker bucks.

I'm not moved to top up, since holding sufficient weighting in my portfolio and no spare cash burning a hole at present. Very happy holding what I've got.

sd

SD

I think you will find the last 2 trades although showing as sells were in fact buys as they were delayed by an hour.

I am still holding all my shares and will be holding for a long while yet. I think we will se short term troughs and spikes but as long as the business keeps coming in I can't see a problem.

Remember this is now an AIM company that is actually making a profit which is quite a rarity.

All the best

Andy

Andy
Glad to hear you're still in (and some, if I remember correctly - eat your virile heart out Eric! lol) I agree, on closer inspection, both are almost certainly buys - good news.

Yes, there isn't much in my portfolio that can claim to be actually making money!

m0dulus, my advice could have been more succinct - follow arawli!

sd

Lot of reactionary dealing going on IMHO... Last chance saloon for small investors to at least retain some profit; and why not ?
Inclined to agree with pth (post 1363), 300K instead of 500K is still the right side of the line and company is profitable.
TR did not blow smoke up peoples proverbials, and has steered things pretty well considering the task in hand from last year.
Lets see what happens when the dust settles !

One of the new clients suspended for the following reason, although not quite clear why? Generally, shares are suspended to protect the SP. Hopefully more work for DGT.

pth




AIM
19 August 2005

NOTICE

(392)

19/08/2005 3:00 pm

TEMPORARY SUSPENSION OF TRADING ON AIM


CROATIA VENTURES PLC

At the request of the company trading on AIM for the under-mentioned securities
has been temporarily suspended from 19/08/2005 3:00 pm pending the publication
of an Admission Document.

Ordinary Shares of 0.5p each (B06C6B2)(GB00B06C6B29)
fully paid

Self-suspension good be either good or bad, Pete. I've experienced both scenarios over the years! Just got back home by the way to see a red screen. Not good. My thoughts go back to earlier GHW comments, remember?

Eric, any thoughts on post announcement happenings to the sp, sir? The Shark is sulking right now! :o(

Guys - on the 22nd July DGT took over the advisorship of Croatia ventures from Beaumont Cornish and at the same time it was revealed that because (amazingly for a company with that name) they couldn't find any decent Croatian ventures to acquire, they changed tack after discovering some interesting businesses in the engineering and manufacturing sectors in the UK and Europe.

The company will need to create a new admission document because its business modus operandi has radically changed and the company will also seek to change its name in a forthcoming EGM.

This is good evidence of work currently being carried out by DGT regarding the readmission for a company. In addition it is highly likely that the new company will be making sizeable placements in the near future to fund the recently discovered engineering/manufacturing acquisitions.

Thanks pth/og - a little new business will help add support to the SP post interims

Hi and special thanks to Snakey for his splendid Oirish joke (how did he know, I wonder?).
Thanks to BT, missed the numbers until now and then I'm at the local library; at least there is a convoy of BT vehicles outside the house!

So, do you want the bad news or the good news? The bad news is the charts: a bit difficult to see a support level above 0.4p. However, the fundamentals would appear to support an sp of around 0.9p on diluted earnings of 0.47p per share. It would be interesting to have sd's comments on whether turnover is somewhat down on expectations because of delays pending completion. I expect that more credence has been given to the projections on bb's than expected or professionals have been making their own calculations.

The good news is also in the figures. Whilst overheads are up, it is confirmed that the marginal overhead growth is relatively low against increased profits. So, at 2.5m turnover for the year, the pbt would probably be about 650K and on 3m about 1m (agree?). Given the confidence in current trading and the comment about the proportion of pre-determined revenue it seems reasonable to go for the continuation of the rising trend in revenue.

I suspect, like Andysmith, have taken some profits on the results - can't really put all blame on BT as I was out on the golf course for a marvellous day at Highwoods, Bexhill. A hold at current prices. Great if sd and pth could keep up their trading watch so that we can assess how H2 is going.

Eric

Croatia Ventures are quoted in Mail today as suspended pending a reverse takeover of Towerinput, who seemingly import welding and fastening products to UK. Eric, I don`t know any Croatian jokes I`m afraid and let`s hope this isn`t !!

Eric - sorry to hear about your BT problems, but better not get get me started on Telewest!

I agree with you about the chart looking pretty unsupported above .4p (brief toehold at .51p), however I am still awaiting a challenge to my theory that SP's were marked down across a number of trading stocks at the end of this week as a defence against T20 merchants by the MMs. This, with the usual sell on fact brigade, prevented us holding the 0.69p support level of the recent downward triangle. Ending the week above Friday's intraday lows gives some small comfort for next week. But we should probably be prepared for some volatility to the down side over the next few weeks.


I have looked briefly at why turnover at 1,179,000 was so much lower than my own estimates of 1,276,625. There are four separate elements to consider:-

1) I have assumed arbitrarily that there were 150,000 of rechargeable expenses contained in the turnover - which they included on both sides and I excluded on both sides - so their turnover in my terms would have been only 1,029,000 - a difference of 247,625 to explain.

2) Retainers - my figures are taken from last year's accounts and the library of transactions for the most part with estimates of 17.5k pa for NOMAD and 22.5k pa for NOMAD/Broker where not explicitly stated. If these latter were overstated by average 2.5k each unrevealed new client, then that would account for only 1,250 of the difference.

3) Transaction fees for IPO's/placings were taken from the library where available or otherwise estimated. These latter totalled 160,000 and could have been overstated by, say, 31,375.

4) Fees for other advice in connection with disposals or acquisitions. The biggest estimated fee was 225,000 for TGM's disposal - a subject of much discussion at the time - perhaps this was a low as 50,000. Other estimates totalled 100,000 over 4 equal deals - maybe another 40,000 adrift. Total 215,000.

This is pretty much guess work to fit the facts which, if accurate, continue to surprise me except for TGM which we may all have been too optimtistic about (I myself started with a 50k fee until persuaded otherwise).

Perhaps rechargeables were lower and thus the true difference in earnings was less. If this was the case then bonus salaries were almost certainly higher than my guess of 148,000 by the same amount. I am still surprised (and not a little disappointed) by the size of the overhead after being promised last year that it would be substantially restrained - I did not take that to mean merely non-repeat of large pay-offs to departing management.

Perhaps one element of explanation I am missing is, as Eric mentions, timing of fees being booked. I was careful to accurately phase retainers over 4 quarters, but some of the larger transaction fees may not be booked until H2 (TGM??). This was certainly reported as a factor in last year's H2 rolling over into this year's H1.

Anyway, fees income about 250k less and overheads (net of recharges) nearly 150k more led to net profit 400k less than I estimated - only a 140% error. I guess I could get a well-paid job at Evolution if I played my cards right - lol! Small comfort is the fact that our future predictions should be rather more realistic.

So far for H2, I have recorded 245,250 of retainers for clients gained up to end of H1, together with 77,500 for two new NOMAD/Broker clients and FIE's 800k fund-raising - perhaps a little generous in light of history - almost a third of our target to repeat H1. I will continue to add new deals as they become known, in respect of which I would be very grateful for everyone posting any news on this thread.

Eric - I think you mean EPS of 0.047p for H1. Cautiously adding another 200k for H2 gives full year EPS of 0.079p which I think supports an SP of 0.95p at a modest PE of 12. If we achieve the same again for H2, perhaps we can expect an SP nearer 1.12p, so we might get our 1p party after all (where should it be - the best restaurant in Dowgate? is there one?).

As pth/og(?) has pointed out, we now have a rarity on our hands - a profitable and seemingly stable AIM company. The risk factor usually associated with companies of this size has been enormously reduced to a low risk category IMHO - so perhaps the rewards will commensurately be justifiably not quite so exciting as might have been hoped. However, no reason not to expect good steady above average returns over the next year or so.

Eric, what would your criteria be for accumulating more stock in this one currently?

sd

Eric, `ere`s another Oirish one. last one, as we must concentrate on pushing DGT up the ladder of success !!
Two Irishmen in the Wild West who, on arrived in Dodge City, noticed a sign in shop window, declaring " Indian scalps - $10 each". They call into the shop and are given rifles, knives and ammunition and told that for every Red Indian scalp they bring back, they will be paid $10 each. So, off to the desert, where they find an oasis and hide behind a rock, laying in waiting until a Red Indian comes along. Sure enough, 10 minutes later an Indian brave approaches on his horse and dismounts to drink at the oasis. Paddy shoots the Indian brave and Murphy goes to take his scalp. Just as Murphy has his knife at the ready, he hears lou whelping and Paddy looks up to see Chief Geronimo and some 100,000 braves on the ridge beyond. Paddy declares,
"Don`t look now, Murphy, but I think we are just about to become millionaires" !!! Mind you, that`s what we all think with DGT ??
good luck and bestest

Good Afternoon campers.
Back from hols at last.
Well I would be lying if I said that I am not disapointed, I am however prepared to hold.
This is a company in profit and with money in the bank.
I am sick of losing money on impulse selling on sentiment.
This company now has a solid foundation upon which to build.
TR has done much is 6 months, I'll still be here for the finals in March, until than here's to one or two pleasent suprises on the way.
Regards
Stevie

Well done sd and snakey - serious and light-hearted stuff, respectively.

The query re the future of sp. The correction is due to, firstly, profit-taking and, secondly, some disappointment that results were lower than expected. If the expectation had not been higher then, as sd says, the results would have been applauded and the sp would have risen although from a lower base. Now, DGT is too small to interest the Evolution's of this world - Hemscott still show the sp as 0.4p. Lets look at the figures:

Turnover for last three six month periods: 510K, 815K, 1179K. Rising trend slightly better than a straight line. Suggests second half of 1500K making 2680k for year.

Operating costs for same periods: 609K, 1105K, 898K. Second half of last year swollen with pay-offs. Comparing first half figures suggests that revenue is increasing twice as fast as overheads. Assuming twice would make overheads for second half of 1100k and pbt of 400K making 690K for year.

This is about 1.1p per share. sd suggests projected pe of 12 but lets say 10 which gives an sp of 1.1p. If these figures are approximately right then the pe should move to say 15 and the sp to 1.65p.

The difficulty with DGT, of course, is to be convinced that the sp will find an appropriate level in the short term. Even if the second half only matched the first half then the share would be ridiculously cheap. The cap at 0.625p is merely 4m. I think it would have moved to 6m on the interims if the expectations had not been built-up, leading to some selling pressure. The problem is that the share is unlikely to attract the institutions, even the small-cap funds. If you are prepared to buy now and hold until march then you should, I believe, double your money. Most of us who contribute to this bb are medium term holders so that there should be an on-going commentary on business won. Another pointers is whether any new fee-earners are recruited because fees per professional should be a consistent measure. My view is that this is a little gem. I find Rawlinson, as a working CEO, very impressive and professional. Buy management is a sensible principle. I would also be confident that he will make good decisions on the expansion of the company so that the longer term growth potential is also attractive.

Eric

Pleased to see you all still enthusiatic about DGT and it will remain on my watchlist and I will probably buy back in later. I have my eye on a few others so took my profit to fund my next buys rather than have a 3rd marginal or paper-loss stock waiting for the next 3-6months. I just think that 500k was in the sp and thats why it dropped but you should see 1p+ in run up to full year results in March.
Good Luck folks.

andysmith: You could be right. However, I think the sp can rise on one or some fo the following: publicity through Shares (that I may initiate myself, depending on whether there is a report on Thursday; on-going analysis here and elsewhere; news re additional staff caused by demand; possible acquisition - more likely next year but, if an opportunity presented itself, they would need the sp higher to fund it probably and that would mean updated figures. The cap is far too low at present price (my argument above) but I accept it does probably need some external to move the sp.

Eric

Also we need to move from the dog (!) days of August back into full business mode for the rest of the year, both in terms of investor sentiment and attention and in terms of DGT showing us a bit more new business confirmed.

I will research suitable hostelries in the ward of Dowgate to pass the time until September 5!

sd

Will hold out on my holding for 2 years... shame it did not hip .9-1p level (as desired) however a 290k is very sound considering they were at a loss last year!

Lets see them do some business now and help us build our pension funds :)

sidtrix - the profit was 290K, rather than 250K - even more sound :-)

Sorry was just putting in the approx amount... edited now!