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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

EWRobson - 27 Nov 2006 20:05 - 2547 of 2787

Hmm! Broken the support level although we need to give it a couple fo days - this could attract buyers in who didn't fill their boots at placing price. Needing some sd 'dog'matism.

Eric

markusantonius - 27 Nov 2006 21:47 - 2548 of 2787

So maybe a further retrace towards 0.50p (....even down to 0.40p!) in January then? As things stand ATM I tend to think 0.40p has low downside risk. But, with better short term opportunities around, I am trying to learn lessons from previous c*ck-ups and go for more liquid stocks on the market.

EWRobson - 27 Nov 2006 23:49 - 2549 of 2787

DGT is now relatively liquid with a decent daily turnover and most trades within a reasonable range. You tend to wonder whether someone knows something that yours truly doesn't. However, TR plays his cards close to his chest and it strikes me that they are a very ethical company. So most likely a share recipient from the placing or offer divesting himself of holding - quite a fair volume of shares involved.

Global Nomad - 28 Nov 2006 00:25 - 2550 of 2787

whatever the reason it is giving cause for concern to the pessimist in me and the optomist would like to second guess where the bottom or turn might be in order to top up/average down.....

nothing odd in that if perhaps extremely obvious and usual.

Agree with the ethical company observation and the good record - need some reassurance that there is still space to fill my boots - but perhaps this time come out on the right side of my average....

stockdog - 28 Nov 2006 00:41 - 2551 of 2787

eric - disagree about liquidity. the sell of 2m was down at 0.50p when the bid/offer was nominally .59/.60. don't call that liquid - for a measly 10k's worth.

Other than that observation I am lying what you might call doggo, with tail firmly between legs wondering why nobody throws sticks anymore. Hate the SP falling through support - just above my average buy price of 0.577.

markusantonius - 28 Nov 2006 00:59 - 2552 of 2787

Stockdog, I think I know what Eric means by liquidity (in this context) with a narrowing spread of 1.67%. So do you know what the nominal market volume/min. guaranteed online trade is (I never checked)? Plenty of volume going through but the actual exchanged is not huge, in relative terms. Has anybody asked the company directly if/what problems there are ATM? Pity that PTH is not on British Shores these days as I'm sure he would ask TR himself!

Still continue to monitor with interest though.....

nevgroom - 28 Nov 2006 11:11 - 2553 of 2787

I mailed TR a few weeks back - The response I got gives me the impression he has a sound strategic (long-term) plan upon which he is directing all resources to achieve. He is not interested in fluctuations in price (whether up or down) in the short-term (though finds it difficult to understand the drop given the recent merger/takeover). In terms of the full year, he said "the next 6 weeks were critical" - Whether that is because they are short of plan or have agressive targets, I don't know.

Nev

EWRobson - 28 Nov 2006 12:06 - 2554 of 2787

sd What are things coming to when our resident analyst, tail-wagger and barker/bouncer takes to his basket with his tail between his legs. 'Dog'gone it, boy, up and at 'em, I say.

Interesting post, nev. Makes sense. TR clearly does have a sound long-term plan and previous evidence shows a lack of interest in short-term price movements. On one hand he is puzzled by short-term price movements given a takeover that fell right into his plans, on the other it is interesting that he used such a term as 'critical'. It would not be surprising if there was a lull in new business given the general conditions surrounding the AIM market. But that is very short-term thinking. The current sp appears to assume that results will be fairly static. We know that Seymour Pearce prospects are down although still a positive contribution. But further downside does not make sense given the strategic position of the company.

Eric

white westie - 28 Nov 2006 20:00 - 2555 of 2787

We have lost another one, we cannot afford to keep losing clients at present seeing the work is very thin on the ground and almost nothing between Aug and Nov although we have had 2 in Nov.

London Town plc
('London Town' or 'the Company')

Change of Broker

London Town is pleased to announce that Strand Partners Limited has been
appointed as broker to the Company with immediate effect.





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


I did e-mail; TR yesterday about the current situation with the SP but he has not replied so far.

EWRobson - 28 Nov 2006 21:46 - 2556 of 2787

The takeover taking too much of TR time? Possibly, though it is a going concern and clearly a separate profit centre. Its actually fallen into DGT hands because of the market prospects I reckon. The indication is that they may be on the acquisition trail again. Broadening the base at little cost, improving the offering to clients and the prospective average return per client. But you have got to win them and keep them. However it seems to me that the present price isn't expecting anything much from the results. The cap. seems far too low given their ability to generate cash. Needing some 'dog'put' sd!

Eric

stockdog - 28 Nov 2006 21:59 - 2557 of 2787

I can't remember if I've posted here or elsewhere, I am looking for pro forma 1,250,000 net profits after tax from the combined duo - a PE of 5.4. Even if as low as another poster suggests 1m, this is a PE of 6.8. Neither of them reflect the current or future prospects. Reduce either of these by 25% for the enterprise PE if you subtract the EOY cash from the BS.

What a sub-penny share being used as a private bonus bank by a single, albeit talented, director and no dividend lacks is any perceivable means of achieving a re-rating. That is what the long-term means here - waiting for the tide in a currently land-locked sea. We need that key event that opens us up to the wider ocean, to allow the SP to find a newer level. Meanwhile, be happy we're growingly profitable.

PS. Still can't explain or feel comfortable with the last few days' drop in SP. MM manipulation, or what. The apparent volume hardly justifies the move down. Must be a seller of volume off-loading. There are consistently more on offer than bid on Level 2. So MMs trying to sell, not buy, any stock. Are we waiting for an overhang to work through - whose? - the new holders on the takeover of SPE - surely locked in for at least 12 months? What about the placees? could they be selling off at any price above 0.65p placing price? But today we're below that.

Hang out the banners on the outward walls. The cry is still they come!

PPS. Nev, please use your muscle to find out wtf's happening and put me out of my misery. TIA.

stockdog - 28 Nov 2006 22:38 - 2558 of 2787

Looking at today's trades is pitiful - 2 X 2m sold respectively at .55p this morning and 0.45p at luch time. NMS is sooo small. I did ast TR about this 2 AGMs ago, but he said it was nothing to do with the company.

So 10k's worth is almost impossible to shift at a reasonable price relative to quoted spread.

Real problem is we are devoid of meaningful buyers. Anyone got the latest on the free float of shares out there? The institutions have not come anywhere near this one yet - I believe bulk of recent placees could have been CFA and SPE private clients.

Nothing to do but wait - don't look at the SP, only read the RNS and news about the company operation for 6 months. The SP is irrellevant until the wider market picks up on this. Come to think of it, the most likely "wider market" is a bid approach. As we move further into the end of cycle ability of larger operators' ability to grow organically, they will turn cannibal in a last attempt to demonstrate value to their shareholders (or more commonly their remuneration committee!). Could be worse. Take out PE must be minimum 10 which gives an exit price of 10-12.5m = .90-1.125p per share. That's about double my 0.577 average purchase price and no broker's commission or MM's niggardly sub-bid discount.

Someone tell me I'm preaching to the converted of a flawed religion.

markusantonius - 28 Nov 2006 22:53 - 2559 of 2787

Stockdog, If I may..... IMHO: Unless TR and co. are planning some major diversification then I think Dowgate will struggle such is the sign of the times they are in ATM. AIM is not the flavour these days, is it? Continue to monitor anyway and wish you all well!

nevgroom - 29 Nov 2006 10:10 - 2560 of 2787

SD - I will try to articulate a note to TR over the weekend (my time is a little short at the moment) on behalf of the concerned.

Personally, I feel no discomfort at the moment - You hit the nail on the head - "we are devoid of meaningful buyers". No buyers means MMs have little motivation (they do after all work with dozens of other shares which make them plenty of cash for little graft!). As has been said on numerous occasion, 2 things will move this up significantly - Positive news (regularly to sustain the move up) or institutional interest (after consolidation when the number of holders is more manageable). If TR wants investors he can get them (he raised the takeover capital without breaking sweat). I really don't believe he has any qualms about seeing the short-term price dip - In fact, I think it is serving another aim in so far as they will be consolidating the number of holders.

Apologies for the disjointed post - Just a quick thought dump

Nev

markusantonius - 29 Nov 2006 15:20 - 2561 of 2787

Not being a TA expert, what do you think the support level is looking like ATM, anybody.....?

EWRobson - 29 Nov 2006 20:15 - 2562 of 2787

Helpful comments. Re point of Markus, TR's strategy is clear if you read the reports: expansion via acquisition. Seymour Pearce was a reverse takeover so they are quite happy to consume larger somnulant animals. It seems to me that a scrip issue would help considerably. It seems that institutions do not like penny shares. 50 or 100 for 1 could make a world of difference. I suspect though that the sp will meander on until the new year when some speculation will start on annual results - its happened before.

Eric

Paulo2 - 04 Dec 2006 19:35 - 2563 of 2787

RNS Number:2020N Dowgate Capital PLC 04 December 2006


Dowgate Capital Plc / Ticker: DGT / Index: AIM / Sector: Finance
Dowgate Capital plc (the "Company" or "Dowgate")
Grant of options


The Board of Dowgate announces that, for unforeseen technical reasons and with the exception of options granted to Anthony Rawlinson and Ian Buckley, being Directors of Dowgate, and options granted to associates of Seymour Pierce Ellis Limited ("SPE"), it has decided to cancel a total of 133,475,008 share options (representing approximately 11.98% of the issued share capital of the Company) granted by the Company to directors and staff of City Financial Associates Limited and SPE following the announcement of the acquisition of SPE on 28 September 2006, and, with effect on 1 December 2006, the Board has resolved to grant new options on identical terms to the original grants, except that the date of new grants will be Friday 1 December 2006 and the period during which the options will be exercisable will be 30 November 2009 to 30 November 2016. For the avoidance of doubt, and as previously disclosed, all of the new options have an exercise price of 0.65p per Dowgate ordinary share and all performance conditions attaching to the earlier grants will attach to the new option grants.

Included in the new grants are 22,286,154 options granted to Neil Badger, a Director of the Company, and 55,715,385 options granted to Clive Mattock, a director of SPE. Clive Mattock is a related party for the purposes of AIM Rule 13.

The Directors, who have consulted with Grant Thornton Corporate Finance, consider that the terms of the options granted to Mr Mattock to be fair and reasonable insofar as Dowgate shareholders are concerned.

Enquiries:

Dowgate Capital plc
Tony Rawlinson 0207 090 7801


Grant Thornton Corporate Finance
Graeme Thom 0870 9912790
This information is provided by RNS
The company news service from the London Stock Exchange


markusantonius - 07 Dec 2006 19:48 - 2564 of 2787

0.60p in Dec. 2006 was not quite The Spring forecast, was it, Eric? :o(

Has SD, yourself or anyone else done a recalc. of the figures lately - just wondering how they stack up as we approach 2007?

EWRobson - 07 Dec 2006 20:08 - 2565 of 2787

Hi Markus. sd gave his forcast a few days ago of 1.25 pbt and a pe of 5.4. Low estimate could be 1m and a pe of 6.8. He also commented that an exit pe on takeover would be not less than 10. Indeed you could argue that the pe should be not less than 10 implying an sp of around 1.1p.

Despite the takeover of Seymour Pearce, the share is still under the radar of the institutions. The interest generated by the takeover has long since expired. So unlikely to move significantly ahead until we approach the finals; possibly starting to move January for March results. This is the pattern of the last couple of years. There is also some concern about the AIM market. However the interim pbt was 485K and that was without an SP contribution. The current price is below the acquisition price. This suggests that the price is unlikely to fall further, or, if it does, it will attract buying. Looking to go back in myself on the arrival of funds.

Eric

markusantonius - 07 Dec 2006 20:22 - 2566 of 2787

Thanks, ERW. Will continue to monitor.....
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