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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

stockdog - 09 Feb 2006 13:13 - 2013 of 2787

Nah! That was broken by the 0.85p peak!

Paulo2 - 09 Feb 2006 16:29 - 2014 of 2787

Has anyone actually asked TR about the bonus situation? I was looking in the interim results the other day and noticed a line which said that only a proportion of the bonuses had been paid.

Does that mean that they were paid as a direct per centage of the profit made in H1 and will be done in the same way for H2 -- dependant on any profit?

Or could it mean that only, let's say, 50% of the bounuses were paid out in H1 and the other 50% would be paid in H2 no matter if a profit was recorded for the six months or not?

EWRobson - 09 Feb 2006 18:20 - 2015 of 2787

Paulo: wondered similar things. Must be quite substantial % to make a significant difference, which was implied. I suspect its pay as you go. Bonuses would likely to have a major element for the contract, a sort of commission, and a secondary element on overall performance which might be held over to year end. But perhaps not a matter to worry about over much - they have to have the business to be paying bonuses.

Eric

stockdog - 09 Feb 2006 19:12 - 2016 of 2787

Even if they held back part of the bonus payment till end of H2, they would surely have to book it as a creditor/expense in H1. So it's only a cashflow issue not a P/L one.

sd

EWRobson - 09 Feb 2006 22:28 - 2017 of 2787

Clever dog! You could say 'too clever by half'. I would say: 'not half clever'; not sure about the other half!

Eric

stockdog - 09 Feb 2006 22:34 - 2018 of 2787

A wide range, it seems, between less than 50% clever and 150% clever. Talk about volatile!

sd

Paulo2 - 10 Feb 2006 13:00 - 2019 of 2787

.

EWRobson - 10 Feb 2006 18:52 - 2020 of 2787

Paulo, you mustn't do these full-stops; dried up trading for the week. All a bit quiet after last week's excitement, in which I was somewhat caught up. Not sure who posted a view that we might have results by the end of Feb. It would be good to have some warning this time.

Eric

Paulo2 - 11 Feb 2006 08:26 - 2021 of 2787

Dear Mr *****

Thank you for your note. We too are pleased with the way the business developed in 2005 and is continuing to develop this year. We plan to issue our results around the end of February. We have been publishing news on developments in the business all of which have been good.

Kind regards
Tony Rawlinson

stockdog - 11 Feb 2006 09:49 - 2022 of 2787

Early results doesn't mean bad news - old Chinese proverb!

EWRobson - 11 Feb 2006 21:16 - 2023 of 2787

Thanks Paulo. Really encouraging sentiments. Not long to wait. Please ask your friend not to push them out on a golfing day becuae there could be good trading opportunities. Prepared to take some profits; how much depends on the numbers and what is said. Thanks to sd and og we have a good idea what to expect so we have a benchmark for the reality.

Eric

capper - 12 Feb 2006 09:55 - 2024 of 2787

Looking at the chart at the top the golden cross could coinside with the results.

stockdog - 12 Feb 2006 11:11 - 2025 of 2787

Capper - I don't think the 50 and 200 dma are converging fast enough to cross within 2 weeks - even if the SP shoots up in anticipation to the 0.85p I think it deserves over the next week or so.

It's a fine balance as to whether 2005 results are in the price already, or the extent to which better than anticipated results will allow the SP to rise to nearer its true level. The crucial factor I believe is the extent to which TR can convey prospects for 2006 in a positive light in the 2005 report.

Looking forward with enormous interest to the announcement. Meanwhile, let's have a few more juicy deals announced.

PS - by all means let them come out on a golfing day - since I don't play, I could pick up a few more at a good price whilst that old vulture Eric is craning his neck at the 19th - lol!

sd

EWRobson - 12 Feb 2006 22:08 - 2026 of 2787

I don't know, sd but I think 4 days over 0.8p would bring about golden cross. Self-fulfilling in that good results get we performance guys drooling at the mouth, then the chartists start drooling at the mouth and all benefit. Not too happy with the vulture comments. I remember doing one of these pyscho. courses (psychosynthesis) when I discovered that I did have a vulture - it sat on my shoulder criticising my every move; probably could have done with it when doing my impulsive trades last year! But where is your loyalty; I had classed you with Honey as loyal to his mistress and friends. Mind, having said that she (Honey not your mistress) doesn't share her food or bone with anyone.

Eric

Paulo2 - 13 Feb 2006 08:41 - 2027 of 2787

sd, you're suggesting we'll have to wait until August before we see any real movement in the SP?

stockdog - 13 Feb 2006 09:56 - 2028 of 2787

Paulo2 - no, or at least I didn't mean to. Can't see where I mentioned August. Could be anytime leading up to or on results or thereafter. IKN!

Eric, sorry about the vulture bit - I meant it in a positive light as in spotting interesting scraps of apparently dead but nutritious stock from a far distance and swooping on it (called value or "vulture" investing!).

When I did my psychosynthesis test, there was this strangled, disembodied voice kept saying, "Oi, gerroff!" Turns out I was sitting on the shoulder of a vulture and couldn't hear a word it said! Apparently I have enough self-doubt not to need extra-corporeal criticism.

sd

Paulo2 - 13 Feb 2006 10:05 - 2029 of 2787

sd, I was referring to the your reference about the results possibly being factored in to the SP already.

Paulo2 - 13 Feb 2006 10:52 - 2030 of 2787

I appreciate there is a good order book, but if the results are factored in then we are bound to see a drop as the impatient people, who can't wait until the interims, will sell up and move on.

capper - 13 Feb 2006 13:30 - 2031 of 2787

I believe that the results are not as important as the statement which will come with them as to the projections for the comming year. If these are positive then movement to the north should be seen. I hope that TR will be on adrenaline when he pens this message as it could set the sp up for the next 6 months.

EWRobson - 13 Feb 2006 14:33 - 2032 of 2787

Paulo. Can't see the results as factored into the sp unless these are at the low end of the range that has been quoted on this bb. Current cap is 3.6m so 360 PBT would imply pe of 10 at 0.6p. First half was pbt of 284k so looking for pbt of 500k to 600k for year which would mean sp of 0.8p to 0.98p to give pe of 10. If words confirm consistent growth then pe should be higher - at a level dependent on what the analysts project for 2006, in particular. So the risk of a fall in sp is small; the 'risk' of a jump to around 1.5p is at least as great, IMO. But we need to keep bearing in mind that the sp could drift again when the stock is out of the general eye. Mind it may be that the reputation of sd is burgeoning and he becomes an APE (analyst par excellence - own back?)

Eric

Eric
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