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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

Global Nomad - 13 May 2006 20:11 - 2360 of 2787

can't see any sign of rambling SD....all very thorough and informative...

I guess I hope the re rating happens before the turn in the market has any effects on the sp

as usual its about wait and see...

success for liverpool, lets hope arsenal follow their lead not middlesboro' snd DGT likewise

stockdog - 13 May 2006 20:40 - 2361 of 2787

Eric, my figures are based on the DGT library of deals and announcements provided by the many sharp-eyed fellow posters on here. As you say the carry forward position is probably neutral overall. I'm pretty sure I have not counted any deals booked last year and I have not yet started discounting deals announced which may not conclude in time to be booked this half. My point was really that TR may decide which way to push deals at this stage in order to stage manage the result. From his perspective (which would certinaly be mine in his position) he may well be happy not to overstuff H1, so as to get H2 off to a solid start and thus demonstrate a smooth ever upward graph of revenues/earnings half on half as well as year on year.

(On the other hand, if he thought H2 was likely to dive below any bonus threshold, he would be closing deals as fast as possible so as to boost H12 bonuses and not sink the deals into a black hole of zero bonus for H2! Sorry, did you think that accounting was an objective science?)

Happy rioja - I'm off to the Groucho Club for a drink with some mates (although why they'd want to belong to a club that would have them as members, I've no idea!)

sd

EWRobson - 14 May 2006 21:40 - 2362 of 2787

Even more perspicacity - you have put your finger on the problem with our Golf Club members: we only have the people that applied and they only applied because they couldn't get in anywhere else; nor did they have the sense (including me) to realise they wouldn't be able to tolerate the club because they were in it and people like them! Solved the problem: sorry, defined it as it may be insoluble! Drench them all in water would at least test their solubility!

Having been involved in running a consultancy, I agree your comments - end of year is always a matter of balancing the need to optimise bonuses with not raising too high a threshhold for the following year. In our case the bonus was based on several bands so you would just achieve the bottom of a band and keep the next business for the following year. Not a problem really because I reckon what is good for operating team is good for the shareholders. TR is both anyway and i expect the others are: in that way they participate in the wealth creation of the company in addition to their own income.

My point remains that there will be business carried forward so that your figures will probably be an understatement. It also seems to me that it is in the interests of the City for the AIM market to continue to be successful and, in particular, draw in international business. So our company could have a certain amount of built-in recession-probity (is that in the canine dogtionary?)

Eric

Global Nomad - 15 May 2006 10:22 - 2363 of 2787

I know we discussed potential scenarios over the w/e but i didn't think it would have this effect!!

thinking if I can top up...

Kivver - 15 May 2006 11:03 - 2364 of 2787

Your beung positive then GN, i wish i had more money to invest. There are now some great bargains, I like AZM, KMR, BLT, CPW and of course DGT.

markusantonius - 15 May 2006 13:43 - 2365 of 2787

Guys, I should've posted last week - yours truly is now totally out of Dowgate (with nice little profit!). IMHO: the sp will stabilise/stay flat-ish over the next 3 to 4 months or so. But I think the short term growth (and widening spread) will probably mean there are better investment ooportunities out there ATM. Long term, I agree with Eric: holding offers huge upside potential.

So thanks again to Eric, PTH and Preadteur for re-guiding back into this splendid little company. I made a few quid yet again, albeit it took a while! Anyway wish you all well...

Markus.

EWRobson - 15 May 2006 17:55 - 2366 of 2787

By gum! What a blood-bath. Red everywhere. DGT pretty well in line. But AIM market got good write-up(s) in Times today, including the fact that it was becoming the favourite market for the Chinese. Could be a nice defensive stock.

Eric

nevgroom - 16 May 2006 11:08 - 2367 of 2787

CFA Website updated this morning - Another transaction for May (Ashford International Hotel plc - Can't find details of fees but looking at the sums involved could be a very good fee for CFA)

Along with these other moves by existing clients posted in the last 24hours, I would think we've made considerable contributions towards a very healthy H1

overgrowth - 20 May 2006 00:10 - 2368 of 2787

Hi Guys,

It's been a long time since I've had to endure Chelworth et al on advfn, and great to see that moneyam is still coming up with the goods providing excellent informative threads.

Can someone give me a list of the deals which are missing from the header and I'll update the thread ?

Apologies for being so remiss, I've been 100% involved in Forex for the past 6 months or so, but it's great to drop back in and see solid long termers like DGT bucking the trend !

Cheers

OG

EWRobson - 20 May 2006 13:04 - 2369 of 2787

Welcome back, overgrowth. You've been missed. Hope Forex was positive - a diferent league. DGT has held up well in recent blood-bath. Lots of good news re AIM market expansion and DGT are clearly getting their share. Very undervalued, particularly bearing in mind the proportion of cap. that is represented by cash. sd has been doing very good job keeping projections going and several posters keep their eyes skinned for new deals. An interesting question that cropped up recently is whether we know which 2005 deals were carried over to the new year. Clearly the same will happen each half year but there may be a tnedency to under-estimate.

Eric

overgrowth - 20 May 2006 15:29 - 2370 of 2787

Hi Eric,

Forex is much more stable than shares - no MM games to worry about, no problem with lack of liquidity, 95% of the time the news is known about in advance etc. etc. If you're trading currencies (only the banks are longer term investors), then you need to know price action and TA inside out - the market moves very quickly and it's 24 hour trading throughout the week, giving you more than enough opportunities to trade. A totally different ball game as you say - but one which I'm sticking with now.

I've still got a good stake in my 4 pet long-term shares: DGT, RTD, MDW and COH, it seems as though RTD is getting close to fruition given the recent takeover talks, and the other 3 AIM companies are storming ahead in poor market conditions which is a very positive sign - lots more fuel in the tank for all of those 3 Co's.

I see that SD's done some great work on estimating revenue for DGT again - looking good !

OG

EWRobson - 21 May 2006 14:00 - 2371 of 2787

OG Interesting to hear about your strategy. I think there is something to be said for leaving your investments to mature, going away or concentrating elsewhere. If you are looking every day you get caught up with short-term issues and movements in the sp and can easily be seduced into investments that you do not know as well. But do keep a close eye on us so that we can have the benefit of your appraisal on events. The positive background to DGT is the growth of the AIM Market and the attraction to overseas companies, including the US and China. Some would take the potential development of a similar market in Singapore as a threat: I see it as acknowledgement that the approach works and the development of such a market is not achieved overnight.

Eric

corehard - 31 May 2006 09:42 - 2372 of 2787

Tumbleweed again !

Kivver - 31 May 2006 10:03 - 2373 of 2787

I went to the ''master investors'' show, with lots of presentations from people who run tipsheets (Tom Winnifrith, David Linton etc). They were very reluctant to expand and give too much away but they all gave one tip they were very conifident and positive about. The main ones I noted were Centamin Eygpt, Daniel Stewart, Access Intelligence and Dowgate. These nearly all have massive spreads and i did invest in ACC and DGT. In this current market i am well down. I know its early days but any slight inkling I may have had of investing in one of these tip-sheets is right out of the window. If this is thier very best tips. Appreciate i have to give more time though.

markusantonius - 31 May 2006 13:29 - 2374 of 2787

If the offer price gets back down towards 0.60p (which it might, at this rate!) then The Shark may jump back into these dodgy waters once more? AIM/FTSE is all red this week and I see no signs of a widespread upturn just yet. There could be more red still to come unfortunately. Under current conditions, Kivver is right to forget the tip-sheets. But long term, I do expect Dowgate to deliver.....

EWRobson - 31 May 2006 18:56 - 2375 of 2787

kivver Welcome to an 'old' sparring partner. Like a lot of the smaller caps DGT tends to drift between statements. Because the CEO is a worker, there is no publicity between twice yearly results so we are now awaiting the interims which were on 21st August last year. If you compare profile with last year the sp then eased back far more (after the interims although they were good). So there is an argument for taking profits around the results and coming back in lower down. If you haven't done so you should read stockdog's analysis which indicate that the interims should be very good indeed for reasons that he elucidates. I suspect there may be a run up to test a 1p resistance level before the results with a breakthrough when they occur. markus may be right that the sp will come back further but he's been known to miss the market before! lol!

Eric

petermoran - 31 May 2006 22:06 - 2376 of 2787

website updated. 75000 + 20000 nomad fees

Global Nomad - 31 May 2006 22:14 - 2377 of 2787

thanks golfer

ptholden - 31 May 2006 22:56 - 2378 of 2787

I don't think there is much doubt now that TR and his team are building a small growing business. I haven't been following the growing list of clients very closely, but I would guess that DGT must be close to achieving sufficient recurring income to cover the operating overheads; then all new clients income go straight to the bottom line and I would expect to see significant expansion in order to generate further revenues. All we need is evidence of six monthly growth via the results and the SP will take care of itself.

pth

ptholden - 01 Jun 2006 23:31 - 2379 of 2787

Interesting volumes over the last few days, can't think of any paticular reason other than that a largish order has been placed, either to sell or buy. Personally I would go for the Buy option, don't believe that what you see as buys and sells in the trade columns reflect the true story.

pth
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