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.

odd, someone has just paid over the Offer for 250,000 without a tick up, certainly seem to be holding it back and not encouraging any buying, although buys ticking through quite nicely

maybe they're holding it back for TR to top up after the close period (with his bonus as funds) -err, no, why would he do that,, whne he's probably granted himslef a load more sahre options anyway - lol!

Posted on the 3i website today

"Hi, Spoke to the company this morning, they are
expecting to anounce the results for the year end
in the next ten days. Thay wouldn't comment any
further when (very cheekily) asked about any possible
dividend payment. I was told to expect an anouncement
with the results!!. This could mean a "divi", but could also
be an announcment of "no divi".
Regards Col."

Dowgate Capital Plc / Ticker: DGT / Index: AIM / Sector: Finance

Dowgate Capital plc (`the Group' or 'Dowgate')

Preliminary Results

Dowgate Capital Plc, the AIM listed financial services group focused on small
companies, is pleased to announce its preliminary results for the year ended 31
December 2006.

Overview

* Turnover up 55% to 3,569,000 (2005: 2,310,000)

* Pre-tax profits up 55% to 815,000 (2005: 526,000)

* Corporate finance subsidiary, CFA, increased retained client base to 44
from 41 at the beginning of the year and increased transaction fee income
to 1.88 million (2005: 1.51 million)

* Acquired Ellis Stockbrokers Limited to complement CFA's services

* Healthy activity levels in both CFA and Ellis look set to continue

* Ellis started the year well on the corporate broking side and expects a
continuing positive contribution from private client stockbroking
activities

* Aim to develop Ellis's existing corporate broking business by working
towards building a small cap broking operation in London

* Continue to review other complementary acquisitions and strategic
partnerships

DOWGATE CAPITAL PLC

PRELIMINARY RESULTS

FOR THE YEAR ENDED 31 DECEMBER 2006

CHAIRMAN'S STATEMENT

Introduction

I am pleased to present my statement to you for 2006.

The good progress made in 2005 has continued with a further substantial
increase in profits in 2006 and the achievement of one of our main goals - the
acquisition of a stockbroker - Ellis Stockbrokers Limited - to complement CFA's
corporate finance services. The other goal mentioned in my 2005 statement was
the payment of a dividend. Along with the posting of the 2006 Accounts, we are
also convening an Extraordinary General Meeting to write off losses mainly
arising from the Company's ownership, until 2003, of Galleon Assets Management
Limited, to allow a dividend to be paid as and when resources are available. In
addition, a consolidation of the Company's share capital will be proposed.

Results

The Group's results benefited from owning Ellis Stockbrokers Limited ("Ellis")
from 24 October 2006. Turnover rose to 3,569,000 (2005: 2,310,000) an
increase of 55%. Profit before taxation was 815,000 (2005: 526,000) an
increase of 55%. These figures are after taking account of the cost of share
based payments, as a consequence of a new accounting standard effective for the
first time in 2006, of 85,000 (2005: 61,000). Before charging these costs,
which are added back to net assets in the Group's balance sheet, profits were
900,000 (2005: 587,000 being the profit reported in the 2005 accounts). The
tax charge for the year was 244,000 compared to NIL in 2005 as tax losses in
CFA have been utilised.

Despite the increase in pre-tax profit, earnings per share fell to 0.080p
(2005: 0.085p). The reduction was due to the group becoming tax paying in 2006.
Net assets as at 31 December 2006 were 5,040,000 (2005: 1,194,000) of which
cash totalled 2,651,000 (2005: 1,235,000). Both cash figures are before
payment of year end bonuses in CFA and Ellis. During 2006 the Company borrowed
1 million to partly finance the acquisition of Ellis. This loan is repayable
on or before 23 October 2007. As at the date of this report 340,000 has been
repaid. Net cash generated from operations totalled 726,000.

Key achievements in 2006

Key achievements in Dowgate and CFA in 2006 included:

* Further growth in CFA's retained client base to 44 clients at the end of
the year compared to 41 at the beginning.

* Substantial growth in CFA's transaction fee income to 1.88 million in 2006
from 1.51 million in 2005;

* CFA's overheads (pre profit related staff bonuses, cost of share based
payments and group management charges) were 1.11 million compared to 0.97
million in 2005, a modest increase compared to the increased turnover;

* Total staff costs including bonuses represented 48.8% of turnover, reduced
from 52% in 2005;

* Acquisition of Ellis (formerly Seymour Pierce Ellis Limited) for 5.19
million (including costs) including approximately 2.18 million of net
assets.

Ellis Stockbrokers Limited

Ellis was acquired on 24 October 2006 for a total consideration of 5.19
million including net assets (mainly cash) of approximately 2.18 million. The
acquisition was funded through a mix of the Group's existing cash resources, a
loan of 1 million from Barclays Bank plc, a placing of new ordinary shares

and the issue of consideration shares to the vendor. Good progress has already
been made in repaying the loan as stated above.

Ellis has been Dowgate's broker since inception, and the CFA and Ellis teams
know each other well. Ellis is currently broker to 54 quoted companies of which
CFA is Nominated Adviser/Corporate Adviser to 19.

In just over 2 months that Ellis was owned prior to the year end it contributed
152,000 towards Group pre tax profit. Since the year end Ellis has continued
to perform well.

Current trading and outlook for 2007

In common with other AIM advisers and brokers, trading in the first half of the
year in CFA and Ellis was somewhat stronger than in the second half of 2006.
However, as far as we can tell at this stage in the year, activity levels in
the second half of 2006 both in CFA and Ellis looks set to continue in the
first half of 2007. CFA currently has a good pipeline of transactions which
should result in a satisfactory level of income compared to the second half of
last year. Ellis has started the year well on the corporate broking side and
expects a continuing positive contribution from its private client stockbroking
activities.

Ellis and CFA are already working well together maximising group revenues.
During 2007 we intend to develop Ellis's existing corporate broking business by
working towards building a small cap broking operation in London to assist with
client fundraisings. Each firm will also seek to work with other houses to
maintain a broad spread of work.

With the growth in our business a larger City office (approximately 2,900
square feet compared to CFA's present 1,500 square feet office) has been
identified with an expected occupancy date around the beginning of May.

In addition to the Group's existing corporate finance and broking businesses,
Dowgate will continue to review the possibility of acquiring other
complementary businesses and working with strategic partners where possible.

Websites are now operational for Dowgate Capital plc
www.dowgatecapital.co.uk,

Had a quick glance at the prelims, most striking aspect is the continuing growth in turnover allied with a similar continuing growth in costs, presumably due to payment of bonuses. TR continues to build the business and comparable to a few years ago the expansion is quite impressive; however, the issue of bonuses is a contentious one and I believe shareholder value is being sacrificed in order for TR and his team to line their pockets. I sold my remaining holding last week having a sneaky suspicion that the turnover would be good, but the costs not.

I can't complain, I have done quite well out of DGT over the last three years. Good luck to those who continue to hold, but I believe there is much better value elsewhere in the medium term.

Hi, Pete. Understand your reasoning. AFX puts easing of price down to profit-taking; price beginning to come back with some new buying. I think we are moving into a new stage with DGT based on two statements. First the proposal for a consolidation of shares: by moving it out of penny share category, DGT will come onto the radar of institutions. Second, a dividend has been sign-posted for current year by proposal for write-offs and the forthcoming EGM.

So, what about the current value. I actually don't see the bonuses as a problem as it is a key way to retain staff (including TR himself with whom I am very impressed). Diluted earnings are 0.06p per share which gives a pe of about 11 This must be low given the 55% growth in turnover and pbt, together with statement on current trading. I will be interested to see our residential dog's projections! Equivalent of 1p after the consolidation? We may also move into a new phase with more frequent news as the company matures. The policy of acquisition-led growth together with development of small cap broking operation to support client fundraising should give greater gearing of professional staff and also encourage them to be somewhat freer with news.

Conclusion - good medium-term Buy. What else would you expect me to say?

Eric

50 mil trade gone through at 0.65 today. Will be interesting to see the RNS and determine whether Buy or Sell.

Reckon its employee/director(s) cashing in their well-gotten gains! Represents over 1/4 of the newly issued warrants and options. Taken up by the market quite readily, supporting my view that another push will come, though at a different timing to previous years.

Eric

Eric
Thought I'd find you here.

50m - largest trade I've seen in this share - 4.48% of issued capital. Doubt the MMs have taken it on unhedged or un-destined. TR selling out? Nev, own up. lol!

Having been disappointed in results this morning, I've spent a little time reviewing the accounts and making some modest projections for 2007.

Juggling between the lines the bonus salaries for CFA work out at 62.5% of turnover less overhead (excl. central costs, interest, profit on disposal etc)same as last time (at least as a workable model for projections, if not 100% accurate). Nice work if you can get it! Ellis does not seem to have this structure, but it's overheads including salaries are a stonking 77% of turnover already! Ever see a broker looking gloomy? No, thought not.

Looking ahead at next year I made some simple low-high assumptions:-
CFA transactions increase by 10% or 15%
CFA clients (at 23k a pop on average)increase by 2 or 3
CFA overhead increases by 10% (NB new offices to be occupied in May)
Bonuses are 62.5% of above net
Ellis turnover (pro rata'd for full 12 months) increases by 10% or 15%
Overhead increases by 10% (NB new offices to be occupied in May)
Interest paid (33k) received (150k) and share based payments (100k) net out at plus 17k for the year either case
Tax at 30% on above profits
The above yields net profits after tax of 1,214k or 1,387k - surprisingly insensitive to variance in turnover versus fixed overhead and variable CFA bonuses.
With 1,114,310,000 shares issued at 31st December and assuming no new issue, we get undiluted EPS of 0.1089p or 0.1244p
for yr-on-yr growth of 36% or 55%
forward PE of 6.24 or 5.46 and PEG of 0.17 or 0.098
Operating Margin of 22.7% or 25%
ROCE of 28% or 31.5%

If turnover does not increase much and costs rise a little less than 10%, then EPS (albeit on larger (+57%!) number of average shares in issue, don't forget) stays flat for PE of 8.5 - still nowhere near demanding, but zero growth is less than inspiring.

Now, I have to say those are not bad numbers based on assumptions of quite modest growth. We've failed to stimulate the re-rating trigger this time (so far?), but the fundamental values do seem to make these a pretty good hold, in light of quite moderate synergy required to increase both subsidiaries' revenue, some substantial deals (Interbulk and the other McColl entity reverse takeovers, e.g.) and a steady stream of lesser ones announced so far. Then there's the promise of seeking out further acquisitions to grow the business.

So there is a reasonable expectation that the interims could confirm something like the above numbers for this year at about the time an EGM was held (at the same time as the AGM to save costs?) to consolidate the shares on a 1 for 100 basis (no premium, I doubt), eliminate the historical losses out of the share premium account and announce a debut dividend out of cash generated this year. Now that could be the re-rating trigger we're looking for.

I rest my case. Draw your own conclusions. I haven't sold any. I believe these have yet to have their day. All counter arguments welcome.

WDIK
DYOR
HAGW

sd Thanks for a great effort. DBAW!

Not sure you are really reflecting the client fundraising aspect which was part of teh reason for acquiring SPE, in other words, the synergy between the companies. But I do agree your logic of a rerating linked with consolidation and maiden dividend.

Eric

Eric, not trying to predict the most likely outcome, just looking at very modest growth to see where it gets us, and it seems to get us far enough. If the true synergy values are realised we could do even better.

Quite a few PI's selling out today ~4.5m, not enough to be worried by. Someone took the op. to buy in 500k at 0.64p.

Patience wearing thin, but what can yo do. Come on TR put yourself in the PI without a bonus's position.

Still going to stick with these !

Guys, you have huge patience!! I am sure that the SP will eventually reflect the prospects of the company, assuming that TR et al stop stripping the profits in bonuses. I can only think that it is the bonus / trust element that is now holding the SP back, because the turnover / profitability is quite impressive for a small company. Personally, I am quite happy to have eventually closed out at a reasonable profit. I stuck the proceeds into LNG for a week and realised a 35% return on my investment, reflecting roughly 50% increase on my capital had I stuck with DGT.

HI, Peter. How's the golf? I suspect you are like me in that you stock with some, lose patience with others - either taking profits or cutting losses. But my general experience is that you tend to do better sticking with those that you have got to know really well. With DGT, you can certainly argue that bonuses are very high in relation to earnings but a counter-argument is that they are retaining the excellent team that they have because of the bonuses. There will gradually be increased margins as they add in the fundraising aspect. They are not completely disregarding their investers with their plans for consolidation and dividends. Short-term weakness quite likely to continue as existing holders lose patience, to be replaced, quite likely, by longer term funds. TBIYTC, in my view!

Eric

3 Trades of 2,275,000 at 0.62p, 0.58p and 0.67p each categorise as X - 'cross at same price'. Perhaps someone can enlighten me; if they are matching trades then the prices are every different.

Not matching - by the way there are now 4 of them - since they are each a buy and a sell between two parties who've agreed to trade at one price without an intervening MM taking any risk. Are they all coming from the same source or all going to the same destination?

It is a riddle, wrapped in a mystery, inside an enigma. WSC

Are we allowed to breath a sigh of relief now?:-

The Board of Dowgate Capital plc ("Dowgate" or the "Company") is pleased to
announce that it is today posting a circular to Dowgate shareholders convening
an Extraordinary General Meeting of shareholders ("EGM") at which it will be
proposed that the Company's share premium account be reduced to eliminate
accumulated losses on the Company's reserves which existed at the end of 2006
so that the Directors will be in a position to consider the payment of
dividends out of future distributable profits generated after the effective
date of the reduction.

In addition, the Board is proposing a consolidation of the Company's existing
ordinary shares on the basis of 1 new ordinary share of 7.5 pence each for
every 30 existing ordinary shares of 0.25 pence each. This share capital
reorganisation requires a very slight increase in the authorised share capital
of the Company to arrive at a figure that is exactly divisible by 30.

The Board is also proposing that the Company be authorised to purchase in the
market up to 10 per cent of the Company's issued share capital.

Damn - I lose half a new share on consolidation!

This is great news, imho, still can't find an RNS but I've seen the AFX report.

Anyone know a quick way to value the dilution or concentration in terms of SP re the buy back - once we know the price being offered? At least it will reduce the capital base in terms of PE and PEG, but also removes cash from the BS. Does this mean another acquisition is not in the immediate offing?

The elimination of accumulated losses paves the way for a dividend which must put us on the radar of serious investors who've so far spurned DGT. Since it has virtually zero capital requirements outside acquisitions, its net profits are almost entirely available to pay dividends. With cover of say 3 X, and a PE of 7.5, we could have a dividend of 4.4% quite easily, falling to 2.7% as the SP rises to a more realistic PE of about 12.

Keep the faith. DGT is just about to turn from ugly caterpillar to beautiful butterfly (ephemeral as that image may be!)

Maybe there is a chance that the butterfly will be eaten by a predator SD!
Although it seems a little complicated I like DGT's proposals and unless I am not understanding the proposals, small shareholders are not going to be shafted, a promise that TR seems keen to keep.

Pleased to see the share consolidation so soon after the results - which were met with profit-taking and a danger of buyers losing interest for six months. So we are immediately talking about an sp of 19p which LOOKS more attractive and loses the stigma of being a penny share. The buy back would seem to make that 21p - I assume that buying in the market is just the same as any other buyer and investors may hold on to get a higher price. Add the attraction of a dividend to many fund managers and we appear to have a much more attractive scenario. I suspect we may have a positive response in the market and for the next week or so. May even get a mention in Shares - chance would be a fine thing!

Eric