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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 - 08 Apr 2008 08:19 - 2734 of 2787

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kimoldfield - 08 Apr 2008 10:20 - 2735 of 2787

DGT really should have got this right the first time! My opinion remains unchanged, although I am a little happier following this:-

CORRECTION - ISSUE OF EQUITY AND PDMR SHAREHOLDING

This announcement corrects that made on 7 April 2008 at 12 noon. The 1,958,333
new ordinary shares of 7.5p each were issued at a price of 12p per share and
not 10.25p per share as previously stated. All other information set out in the
original announcement remains unchanged.

stockdog - 08 Apr 2008 23:32 - 2736 of 2787

Actually it should be 12.5p - if you read the RNS's carefully they agreed an amount of money (golden hello) to be settled in free issue shares at closing mid-price March 14 = 12.5p each over time. Still wrong IMHO. Perhaps that's what you get when one man is Exec Chairman, CEO, FD and Co Sec - busy old life to get the details right all the time!

stockdog - 09 Apr 2008 00:11 - 2737 of 2787

I just noticed 2 trades from Friday of 1m shares each at 9.50 and 9.51 - looks like a bed and spouse to me, or bed and SIPP to crystalise a tax loss (hardly a gain) for tax year.

Then there is today's buy of 50,000 at 10.80p - director? share buy back? PI?



stockdog - 03 May 2008 11:24 - 2738 of 2787

Rawli from the other board has posted the following link to Equity Development's March note.

http://www.cityfin.co.uk/IM/dowgate-research08.pdf

Here are donaferente's comments, reprinted with permission, also from the same place.

More comforting than revelatory. Eq Dev are paid by companies they write about I believe, and some phraseology seems to fall rather to undigested from TR's lips - e.g. "very selective" recruitment.

They put a fine gloss on "exceptional items" included in ordinary costs and admit that 2008 is anybody's guess.

They markedly do not repeat their August '07 21p SP target - merely refer to it - a subtle sleight of pen I feel.

The one underlying positive is their quite strong statement that the dividend will be comfortably capable of increase, even at low end of forecasts. And the yield is higher than the PE. So we have a value business going forward, if not a value share just yet - time to buy more? Assuming dividend increase of about 10% to 1.1p, that's a forward yield of 10% on a business unlikely to go bust with good management (operationally, even though one might argue with their allocation of profts!) with a decent interest in the SP. That's almost double what you can get in a bank with your money and tax free in a SIPP. Who knows - one day the SP might rise to fair value too. So content to hold for another year.

kimoldfield - 03 May 2008 23:43 - 2739 of 2787

Cheers SD: buttocks clenched accordingly! ;o)

snakey - 04 May 2008 21:05 - 2740 of 2787

with the number od new clients they have attracted, which isn`t easily discernible from their website plus potenytial rights issues from a numbe rof these plus new business, I really do believe that a divi of 1.5p for the next full year is likely, which will, not only supplement the main guys` bonuses, as they all hold a lot of shares but keep us minions attracted without too many others having bought into the share. My result was 1200 at year end which I am more than happy with even if the s/p don`t go higher, as they are all tucked away for the eventual realisation of Dowgate and I am sure that these will attain a level of 40 - 50p over next couple of years unless there is a buy out, which has been one of my concerns for awhile.
There is little to worry about by putting a few k into this one, I`m positively sure.
good luck whichever ways you guys go
snakey

snakey - 04 May 2008 21:07 - 2741 of 2787

p.s.
I am also into IMG at present which I think has some good news and good performance to report soon.

EWRobson - 05 May 2008 21:26 - 2742 of 2787

sd I don't think they would bother with 10%; they might as well do 1.5p as snakey suggests. That should bring the sp to 15p even if just to maintain the yield at 10%. Pretty well a one-way bet.
Eric

snakey - 13 May 2008 22:06 - 2743 of 2787

Noticeable that no trades at all in this today but rises nearly 7%. How come, after only a net 100k diff in buy / sell yesterday and I have bought 100k in a day several times earlier this year with no movement at all ??? where`s the logic ??

stockdog - 14 May 2008 16:06 - 2744 of 2787

snakey - the logic is not to expect any!

snakey - 19 Jul 2008 00:35 - 2745 of 2787

Stockdog and EWR,
Just been on a celebratory dinner for another one of the brood gaining their Masters and thought ( after a few glasses of Guiness ) that about time somebody put something on the DGT thread.
SD....I think you`re right about the logic thing, which is why I didn`t continue with any comment ( depressing eh !! ). Results due soon....next week methinks ??? but am sure that results will please even though there aren`t many deals listed on DGT website. They have picked up a number of new Clients and money raising side of the business has done pretty good this year, as have advising arm with some sizeable fees for relatively small amount of deals. Minimum 0.5p divi to look forward to, although I have a feeling that 0.7p is nearer the mark, but they have bought back some 300k shares so cash may be depleted a bit. They still hold an awful lot of money in the bank though, for such a lowly share price ( still equiv to 0.3p share in old money, which is ridiculous ). Hopefully you both agree, as we have always seen eye to eye, generally and me in for 500k at present, which I think is still a massive bargain. Welcome your thoughts, as little else to read with interest around this site. What`s your feelings about us ( Joe Public ) being conned in this financial melee of recent months ?? as I work in the leisure and construction industry and I have never seen either sooooo busy for the future !!!
best regards to you both and trust all is well in your worlds
snakey

snakey - 19 Jul 2008 00:43 - 2746 of 2787

P.S.
Correction on share buy back, as cica 500k in last month alone, which may be reflected in divi in all fairness and 0.5p is probably more realistic.

snakey - 30 Jul 2008 00:25 - 2747 of 2787

Must be due some good news shortly. some good deals gone through and big stock sell in Hollywood Media must have subsidised either large bonuses or big part of share buy backs, another of which went through yesterday ( some 700k buy backs in recent 6 weeks or so ?? )
me thinking results up on Friday ?? and still looking for 0.5p per share minimum which can`t be bad for it`s `donkey` price throughout the year. I wish the shops had bargains like DGT in the window

Global Nomad - 30 Jul 2008 07:58 - 2748 of 2787

snakey,

thanks for keeping the board going and congrats to the masters achiever...

there was news on 16th of month which noted date of interims in october so a bit of a wait yet

"Dowgate Capital Plc (the "Company") announces that it has entered into irrevocable and non-discretionary arrangements with First Equity Limited to repurchase ordinary shares in the Company on its behalf and within certain pre-set parameters, during the period commencing 16 July 2008 and ending on the earlier of the date of the Company's Interim Announcement for the six months ended 30 June 2008 (which will not be before 16 September 2008) or 30 September 2008. The shares acquired will be held in Treasury. This arrangement is in accordance with the Company's general authority to repurchase shares."

As i understand it the shares remain on the register so no added value for us in terms of reduced share numbers and DGT in theory pay themselves a dividend.

snakey - 30 Jul 2008 22:29 - 2749 of 2787

GN,
ta for that and glad to see somebody else is still about. I must admit, I wondered if that is what was meant by treasury shares and appears obvious that, maybe, the income from Hollywood Media is going towards bonuses ??? or carrots ??
keeping me chin up anyway and good luck

stockdog - 30 Jul 2008 23:48 - 2750 of 2787

No dividend is payable on shares in Treasury, it's like they are cancelled, except it saves having to pay stamp duty to reissue new shares if they ever need to raise more capital, 's why they do not cancel them.

Global Nomad - 31 Jul 2008 07:43 - 2751 of 2787

thanks stockdog for clarifying that...

snakey - 19 Sep 2008 00:37 - 2752 of 2787

Hi all,
Respectable report issued this morning but I was not expecting a loss for first half, but obviously due to `new` team construct and bodes well for future as pretty positive statements and outlook, particularly in current climate. No doubt will stay off the radar for most institutions in the current climate, but interestingly net assets are at a 15p per share value......more than the earnings ratio and they do hold some millions in stock of one of companies they brought to the market. Me sticking for long term still but don`t expect any price increase in short term, nor decrease either as divi is only 0.2p per share.....maybe year end upturn or next year...still good though.
best of luck and keep smiling, especially as we have the Ryder Cup treat for 3 days and will be flogging a ball or two meself around the course over the weekend

stockdog - 19 Sep 2008 08:37 - 2753 of 2787

From Donaferentes on the other channel - answering the what if they had not set up the new brokers' division.

They'd have shown an improvement of 740k on the PL, less 73k tax (30% of the 244 - I've assumed the share based payment is excluded for tax, is this correct?) showing as an increased creditor, a reduction of 496k on issued equity/premium and an improvement of 244k cash. So at least bring us back to positive territory.

EPS would have been 667k/39m shares = 1.7p better to make a total EPS of 0.6p for H1. Let's double that for a flat full year to 1.2p (1.7p 2007), for a PE of 8.5 - not so bad in current trading conditions, but hardly cheap as chips compared to the rest of the market's quality earners at 2-3 these days.

IMHO, DYOR etc.



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