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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

kimoldfield - 03 Jan 2008 10:57 - 2698 of 2787

Still holding a few of these, working on the foolish principle that "no news is good news" rather than the more sensible "all that glistens is not gold", thus proving that "there's no fool like an old fool"!!

snakey - 04 Jan 2008 00:48 - 2699 of 2787

"Oh booger"....Ive been tempted to add me twopen`orth to the debate as not been on here, other than to spy what`s going on, since I lost me shirt, pants and socks on a gamble on Profile Media, but still hold a lump of these as always thought there was a light at the end of the tunnel !!! I`m still sure there is as they have carried out some good fee income work this year and there`s no telling how much Ellis side of the business has made. Am expecting another tiny dividend in March but also expect a bit of a flurry in them picking up their own stock over the next few monthjs whilst the price is low....very low to what it should be, so I am still holding mine until I`m proved wrong. Mind you...this is coming from a stoopid boy who sold his 1000 shares in QXL at 3.85 just to offload them a couple of years back, which some 4-6 months later suddenly became a value of 86,000 and rising from there !!! I still stick to the horses and still make more there than this share business, but it`s all about timing really....ain`t it and a bit of good fortune together with a never ending pocket !!! What was Richard Branson`s quote about how to become a millionaire in the Airline Industry ........ Start with a billion and watch it disappear from there !!! sumfink like that anyway. I know the feeling which is why I`m still working for a living.
bestest new year to you all, particularly those long serving members from the original days when ol` Bob Geldoff was supporting us. I wonder if he still has an investment here ??
snakey

stockdog - 04 Jan 2008 10:04 - 2700 of 2787

Even after the predations of TR and his friends' bonuses, this is still a great little earner of a company. As I've always maintained, with stock held quite tightly I suspect, we need to sit and wait for the trigger that revalues these to nearer 30p - a buy out? a massive deal which catches the public eye? who knows? After 3 years, I still hold all and sit at break even - so thanks for the tiny dividend to show me a small actual return on my investment. Let's hope TR develops an aggressive dividend policy as the cash balances continue to rise inexorably.

sd

stockdog - 08 Jan 2008 11:08 - 2701 of 2787

Further to above - I came across Equity Development's note from August last year which still makes interesting reading.

They estimate EPS of 2.56p and 3.2p for YE Dec 2007 and 2008 respectively - prior to IFRS2, share based earnings etc. This gives PE values of 5.76 and 4.61 and a 2008 PEG of 0.18. With a maiden full year dividend estimated to be 1p - a yield of 6.8% - the fundamentals look very solid indeed. Equity Development points out that a dividend yield greater that the PE ratio is an old-fashioned buy signal - not difficult to see why.

Results for 2005 were published on 1st March 2006 and for 2006 on 30th March 2007 - a little later to incorporate merger accounting of the Ellis Brokers acquisistion. I anticipate we will revert to earlier in March this year. I no longer track each deal as I used to, so I have no idea how we are doing. At the half way stage we had pre IFRS2 EPS of about 1.39 I estimate, so well on the way to ED's year end target.

At just about exactly half of March 2006's SP, we do seem to have bottomed out and are pretty much flat-lining on minimal volume, with 13, 25, 50 dma all coincident with the SP as the 200 dma continues to fall to the same point.

ED have a 21p target, still leaving fundamental values well intact and, even after a modest share buy-back programme of 400,000 at 14p = 56,000, an ever increasing cash pile which I estimate at about 2.7m at 31st December - equivalent to 7.4p per share, or exactly half the current SP. They will either have to acquire another business, or else could start to look vulnerable themselves to a bid from another profit-diminished financial services company looking to appease its shareholders by buying in a fresh revenue/profit stream.

At a jot better than breakeven from my initial purchases in 2005, I continue to hold until results.

All imho as ever dyor
sd

capper - 18 Jan 2008 23:11 - 2702 of 2787

Many cfa and Elilis transactions being hid/ difficult to find. I wonder why?

EWRobson - 10 Feb 2008 19:26 - 2703 of 2787

Just catching up on DGT: still have a small residual holding. Many thanks for your analysis, stockdog. The market is taking a pessimistic view but it is difficult to say whether this meaningfully reflects DGT's actual performance or general lassitude regarding the financial sector in general and the AIM market in particular.

With the results due in March it could be worthwhile to take a position at the current sp. You now have the underlying yield to underpin an investment. There must be a real possibility that 2007 has been misread by the market. Any chance, sd, of you doing a bit of research into actual business recorded?

Eric

canary9 - 11 Feb 2008 22:59 - 2704 of 2787

Eric, had a little gamble today ahead of results. AIM market is not so buoyant these days, but this policy has paid off in the past and, based on the first half performance and current low SP, it could do again.

EWRobson - 12 Feb 2008 12:49 - 2705 of 2787

Should be a good move, Canary. I am hoping that our good doggy friend, sd, will do some research on business won before strengthening my stake. by the way, how's the golf - sunny outside if not in the City!

Eric

canary9 - 12 Feb 2008 13:18 - 2706 of 2787

Had a good summer and got the handicap down to 18, but then drifted back up to 19. Hoping that the weather will last the week, as I am playing Pinner Hill tomorrow and Brocket Hall on Friday.
Rod

EWRobson - 12 Feb 2008 15:47 - 2707 of 2787

Hi Rod. Thoought Brocket Hall was great - played there with Hoodless Brennan. Lucky boy! Still at 20. Moving down to Dorset and joining Sherborne when house is sold; real retirement at last!

Checked up on CFA website. Clients last year were 11 in first half and 10 in second. That is against 16/11 in 2006 and 15/13 in 2005. So down somewhat but not drastically so. There is also Ellis to add to the mix which I would have thought was a bit of a cash cow. Cap. at takover was 7.24m with the cost 44% of the equity or about 3.2m. Cap now is 4.5m. That looks low even in today's harder times. If each were worth 3m then that would be 6m total. So it looks reasonable to expect a rise for the finals.

Eric

stockdog - 13 Feb 2008 02:30 - 2708 of 2787

Eric
I was born in Sherborne - whereabouts are you moving to?
Regret no analysis for DGT - full reporting of all transactions a little obscure these days, especially for SP side of business.
Forgive brief note - very late here in Berlin, after festival partying.
sd

EWRobson - 13 Feb 2008 18:08 - 2709 of 2787

Thanks, stockdog. Enjoying the german bones then - probably go down well with the Bier! Yes, it seems that they are wary about postuing the value of transactions. Can you read anything into the mix of business. Given that Ellis is fairly stable as its clients will go on needing investment advice, how would the outcome look if trading is, say, 25% down with CFA? I still believ e the cap. is far too low and should be more like 6.5M or up 50%.

Eric

EWRobson - 05 Mar 2008 16:39 - 2710 of 2787

Good to see some business development activity going on with a new Ellis corporate broking group based in the City; should think they will take on fundraising for CGT clients as well. Should be start of a run up through to the results.

Eric

stockdog - 05 Mar 2008 20:17 - 2711 of 2787

Nice 12% rise today (mind you cast into deep shadow by old favourite SEO''s 36% rise!) - within a whisker of my average buying price whilst I enjoy the 7.2% net of basic tax yield (assuming they pay out the balance up to 1p on the final - can't see why they wouldn't).

Intrigued as ever tio see the finals - last year they were published 30th March, my guess is earlier this year, but no sign yet. If we repeat the EPS of H1 of 1.12p to make 2.24p for the full year - a modest enough ambition - that gives an historic PE of 5.90 (even less enterprise PE, expecting net cash on the BS at 31 Dec) and a Price to Book ratio of 1 - i.e. nothing in for the business. I really have no idea what to expect for H2, except not less than H1. Could be a nice 20% increase, or more? We'll see.

Mind you, we still have not broken up throught he inexorable down trend since consolidation to 30p. I seem to have ever more perfect hindsight these days!

How's Sherborne?

EWRobson - 07 Mar 2008 22:27 - 2712 of 2787

Hi,stockdog Still not moved. The sale fell through but the decision is effectively taken to move to Sherborne or, perhaps more likely, Sturminster Newton.

My reading of the website is that H2 will do well to match H1 but it would be unusual if the dividend didn't match. The expansion of Ellis services is good; presumably it will add a fund-raising service to CFA clients. My holding is pretty small compared with earlier, exciting times; become a pretty drab share. But if it makes money and dividends that can't be bad. I still believe it will take off some time but we may have to wait for a healthier financial climate.

Marvellous meal tonight - just about the best Rib Eye Steak I can remember and the Rioja was superb. Sweet dreams!

Eric

Global Nomad - 11 Mar 2008 08:22 - 2713 of 2787

results out,
final dividend of .6p
good results I guess given the market conditions....
change of name

what chance of changing the down trend ...

Global Nomad - 11 Mar 2008 09:24 - 2714 of 2787

does anyone get the feeling that this share is now so far off investor's radar that with relatively good results there is absolutely no activity, either trading or posting, bar a single sell trade

how will this share recover any further ground if the results cannot lift it.

don't mean to be pessimistic and like them I do feel optimistic for the company, I would just like to see that reflected in the sp.

white westie - 11 Mar 2008 09:52 - 2715 of 2787

7 trades on both markets so far i make it,

buys 16,898
sells 146,232

I also cannot see how this share will recover lost ground as results only lifted it 0.5p bloody rubbish.
plus while they are paying these new bods with such a massive share option when they have yet to do anything.

ww

stockdog - 11 Mar 2008 12:33 - 2716 of 2787

The chasm between excellent revenues and the division of net spoils between shareholders and management is now beyond a joke. And now we learn we have given away 22% of our company to attract the 2 new Ellis directors! They'd better start earning their keep, and fast!

With a joke of a non-exec in the person of good ol' boy Ian Buckley, TR and friends are no longer making any pretence at fair play.

The dividend of 7.4% alone makes this worth holding, but I utterly despair of any prospect of a re-rating of the SP whilst the company is cynically bled dry of any potential accumulating value..

We need a remuneration committee which excludes TR and to split Chairman from CEO function. It's up to all of you to be heard at the AGM. Anyone know if there is a rule allowing PI's to enforce an agenda item for discussion?

white westie - 13 Mar 2008 13:55 - 2717 of 2787

not much comment about the results and the large payments to the new bods on this board, have most of the people who used to post on here given up in disgust and sold out?
only stockdog has offered his opinion so far and his first couple of lines just about sums up my feelings on the matter and the majority of feelings of other people on the other board as well i think.

The SP has already fallen 2p from when the results came out, (only 2 days) how much further is it going to fall? as i dont expect to hear anything of any interest from the company for another 6 months now until interims going on past experiences.

ww
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