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Dowgate Capital - Capitalising on the booming AIM market (DGT)
overgrowth
- 09 Feb 2005 20:52
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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 |
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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. |
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stockdog
- 06 Apr 2006 13:32
- 2304 of 2787
Well, DGT has no gearing and plenty of net cash and its return on average capital employed for 2005 (the average of the net assets at Dec 04 and Dec 05) was 63% incl. disposal of investments and 43% without. Slater thinks anywhere over 20% is in the right area.
As for 2006, my figures suggest a ROCE of 46%. Net Profit margin is 17% last year (excl. disposal) and 22% projected in my figures for 2006. Slater aims for 10-20%.
Given that this is a no-plant service company, you'd expect the figures to be better than for a heavy industrial, but even so they are spectacular by all normal measure.
In full, Slater's 11 criteria are:
1. Positive 5 year record - well, we don't have that - yet
2. Low PE to Growth (PEG) - we certainly have that
3. Optimistic Chairman's statement - tick
4. Strong liquidity - tick
5. Competitive Advantage - not sure what this is, perhpas that DGT can deal under the radar of bigger fish
6. Something new - new management, evidently working
7. Small market cap, i.e. overlooked by institutions - you could say that!
8. High relative strength - certainly well- ahead of FTSE AIM All Share and Financials Sector over the last year, albeit a tad more volatile en route
9. Dividend yield - not yet, but very likely to commence this year with a debut final pay out
10. Reasonable Asset Position - net asset per share of 0.1755p = 22% of SP - not too bad. Could be 0.2867p per share or 35% of SP by end of 2006. OK for a growth share.
11. Management shareholding - TR holds 25m shares 4.04% of total plus options on 32m shares with an exercise price of 0.285 - 0.74p and finally warrants to subscribe for 2.3% of the company's capital.
The perfect share - all they have to do is continue to bring in the business!
Good luck all holders.
sd
kimoldfield
- 06 Apr 2006 13:53
- 2305 of 2787
kim
EWRobson
- 06 Apr 2006 21:26
- 2306 of 2787
I think a re-rating will happen quite suddenly. This could happen at the interims when we should have the third successive period of signifant growth in revenue, profits and cash. I feel the stake of RIL is very positive as they will not want management to rest on their laurels. Do we feel that they have built up their stake as far as they might want? If they did want to grow the stake, then I think they would do this in a quiet period because any buying could drive the price up prematurely (from their viewpoint). But I do agree with Kim that this is a share to gradually stack away.
Eric
stockdog
- 06 Apr 2006 22:00
- 2307 of 2787
I am not so worried about succession yet, since TR is a fit, middle aged man but, if something befell him, they would almost certainly need to look outside for a new team leader. I wonder if they have key man insurance - they should have.
The key risk, I believe, is the AIM market and apetite for new issues of low caps. This could fade quite rapidly overnight and I do not know what DGT has in its armoury to remain favourite in a reduced market - maybe simple, old-fashioned integrity is their USP. As TR said to me at the AGM, he is not complacent about this risk. Would diversification into fuller scale brokerage be a protection or a liability in a dwindling market?
Will TR's plans for growth benefit the company and lead to increased margin and ROCE - or as so often happens with mergers and acquisitions, will these statistics decline after the event - starting off the cycle of demergers once again. Who remembers the old conglomerates of the 80's - Hanson, Tomkins, etc - where are they now?
One thing we haven't really examined is the likelihood of DGT itself becoming a target - but I'm never sure what you buy when you buy a service company. More likely the key team would be simply poached, leaving a dead husk behind. TR would probably lose his share options were he to leave - not inconsiderable, currently all exercise prices below the share price, but nothing a golden handshake could not remedy.
Costs are not a risk - they are controllable - no fees, no bonuses and the rent is fixed.
Debt is not a risk - there is none.
Currency rates and the risks of foreign settlement are beyond our cares.
Basically we are fortunate, but exposed, in having a 7-man profit machine, led by an exceptional man, making an extraordinary amount of money from advising a diverse range of companies that I certainly would not want to invest in - would you? Perhaps, there is the reputational risk of being associated with too many shady AIM shells that could be the root of our undoing.
No, it certainly is no blue chip yet. But whilst they toil away assiduously for our benefit, why not take advantage of it whilst margins, profits and ROCE last!
sd
EWRobson
- 07 Apr 2006 17:38
- 2308 of 2787
Eric
stockdog
- 07 Apr 2006 21:46
- 2309 of 2787
Paulo2
- 10 Apr 2006 09:40
- 2310 of 2787
Holding in Company
Pursuant to section 198 of the Companies Act 1985, the Company received
notification on 7 April 2006 that Mr Neville Groom has a beneficial interest in
18,600,000 ordinary shares in Dowgate, representing approximately 3% of
Dowgate's issued share capital.
This is one of the PIs over on the ADVFN board.
stockdog
- 10 Apr 2006 11:12
- 2311 of 2787
Paulo2
- 11 Apr 2006 10:20
- 2312 of 2787
Strontium Plc (the "Company")
Acquisition / Issue of Equity
The board of the Company announce that on 10 April 2006 it acquired an existing
business from Link Up Mitaka Limited (which trades as "The Big Word"). The
business recruits multilingual speakers for a variety of projects and includes
a database of potential temporary staff and an existing client base.
The business has an existing trading relationship with Aspect Information
Management Limited, a subsidiary of the Company.
The consideration for the acquisition is 75,000 payable in cash and the issue
of 205,000 new ordinary shares in the Company to Link Up Mitaka Limited.
The new ordinary shares will rank pari passu with the existing ordinary shares.
Application has been made for the new ordinary shares to be admitted to AIM.
Dealings in the new ordinary shares are expected to commence on 18 April 2006.
Following the issue of equity referred to above the enlarged share capital of
the Company will be 6,816,353
Paulo2
- 11 Apr 2006 10:20
- 2313 of 2787
stockdog
- 11 Apr 2006 12:12
- 2314 of 2787
Global Nomad - 11 Apr 2006 17:03 - 2315 of 2787
11/4/06
Restructuring Investors Limited has a beneficial
interest in 66,250,000 ordinary shares in Dowgate, representing approximately
10.70% of Dowgate's issued share capital.
23/2/06
Restructuring Investors Limited has a beneficial
interest in 57,000,000 ordinary shares in Dowgate, representing approximately
9.21% of Dowgate's issued share capital.
30/11/05
Restructuring Investors Limited has a
beneficial interest in 50,000,000 ordinary shares in Dowgate, representing
approximately 8.08% of Dowgate's issued share capital.
15/11/05
Restructuring Investors Limited has a beneficial
interest in 38,500,000 ordinary shares in Dowgate, representing approximately
6.22% of Dowgate's issued share capital.
27/10/05
Restructuring Investors Limited has a beneficial
interest in 32,500,000 ordinary shares in Dowgate, representing approximately
5.25% of the Dowgate's issued share capital.
13/10/05
Restructuring Investors Limited has a beneficial
interest in 25,000,000 ordinary shares in Dowgate, representing approximately
4.0% of the Dowgate's issued share capital.
6/10/05
Restructuring Investors Limited has a beneficial
interest in 20,000,000 ordinary shares in Dowgate, representing approximately
3.2% of the Dowgate's issued share capital.
capper - 11 Apr 2006 17:15 - 2316 of 2787
In October 2005 the sp was 0.45 it is now 0.8.
stockdog
- 11 Apr 2006 18:30
- 2317 of 2787
They must have been holding it back to fill the order at a limited price since results were published. RIL must think 0.80p is a good price to buy at and they are probably right. Hopefully, now that this order has been filled the MMs can let the SP loose to find its true level.
sd
nevgroom - 11 Apr 2006 20:05 - 2318 of 2787
nevgroom - 11 Apr 2006 20:07 - 2319 of 2787
nevgroom - 11 Apr 2006 20:26 - 2320 of 2787
Paulo2
- 11 Apr 2006 21:45
- 2321 of 2787
Global Nomad - 11 Apr 2006 22:24 - 2322 of 2787
excuse my ignorance but what might the significance of 30% be.
Paulo2
- 12 Apr 2006 07:28
- 2323 of 2787
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