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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

snakey - 08 Apr 2005 16:47 - 308 of 2787

PTH, nice to see your handle again. how was the golf at Sandy Lane then ?? or were you away workin` ??

ptholden - 08 Apr 2005 17:40 - 309 of 2787

Snakey

Unfortunately away working, this time on the other side of the world to Sandy Lane. Only managed five games of golf the whole time I was away. However, back for six months now, so looking forward to hammering the Handicap! And of course, seeing the best of CFA (and perhaps a few others).

Regards

PTH

stockdog - 08 Apr 2005 18:07 - 310 of 2787

My model (which is far from sophisticated, but being a plan, is probably better than no plan) suggests:-

Earnings this year from 23 previous year repeat clients 400k

Earnings from 12 new 2005 clients and new transactions for old clients 666k

Earnings for Apr-Dec based on new 6 NOMAD only and 7 NOMAD
& Broker, assuming 3.5% commission on 1m average placing, but
no more transactions form exisitng clients 772.5k

Gross revenues 2005 1838.5k
Overheads 1400.0k
Operating Profit 438.5k
Tax net of b/f losses of 2.19m NEW ASSUMPTION zero
Market Cap today @ mid price 0.0042p 2,329.32k
PE 2005 5.31
PE should/could be 18.00
So SP bid should/could be 0.0037 X 18 / 5.31 = 1.25

EDIT: 9/4/05 - allowing for the preposterous spread to narrow from 24% to about 18% (cf COH), then bid SP could be nearer 1.30 on above assumptions.

Caveat - will the remainder of the year hold up to produce the above estimated revenues??

All IMHO, DYOR

SD


overgrowth - 08 Apr 2005 18:23 - 311 of 2787

SD - I reckon the figures look good.

I believe that what is more likely to happen is that there will be fewer floats during the rest of the year (say one per month on average), but the placements made will be much more substantial.



stockdog - 08 Apr 2005 18:35 - 312 of 2787

OG - prefer fewer better floats, less volatile, less work, less overhead cost, more substantial for future additional placings and advisory work - less is more.

1.25p by end of year would be good!

SD

snakey - 08 Apr 2005 18:41 - 313 of 2787

I personally believe that 3p is achievable by the end of the year and think that we would be near that now if it hadn`t been for the SB debacle, which is all I can describe it as, being an outsider !!

stevieweebie - 08 Apr 2005 19:05 - 314 of 2787

SD
Good assesment and we can of course monitor progress ourselves thanks to various posters obtaining the info when released.
I think that the intandem float will raise CFP profile as it seems to be a high interest IPO.
Often, perception carries a lot more weight than people think,some good solid press coupled with a proven track record(2005 being the proving ground)and we have a DAN for our company.
Very interesting to be in this company at this time, Would be a great endorsment for a Director to buy after results announced.mmmmmmmmmmm
Steve

snip25 - 11 Apr 2005 12:45 - 315 of 2787

Get ready its gonna blow maybe not today but very soon :o)

arawli - 11 Apr 2005 13:02 - 316 of 2787

Just added another 500k at 0.43p

My last lot before results

All the best

Andy

ranoszek - 11 Apr 2005 16:34 - 317 of 2787

Something afoot in terms of finals i think. CFP have their transactions page updated all the way to April. Now that is unusual - they have been months behind for months

bosley - 11 Apr 2005 18:39 - 318 of 2787

i may have been a little hasty in dropping cfp and calling it a dog. i have been following events and would like to know how much of the new business generated recently is going to be included in these results? is the year end dec 31st? i think i should have given TR and the new team more time as they seem to have been very successful in bringing in loads of new business . the lack of new business was my main gripe.

ptholden - 11 Apr 2005 18:51 - 319 of 2787

Bos

I may be wrong, but I believe a significant proportion of the new business will not be included in the results. Year ends 31 Dec, so would espect to see the finals announced fairly soon. However, the Trading Statement released 20/12/04 stated that turnover would be significantly lower than anticpated, a statement that precipitated the collapse of the SP. Theoretically the bad news is already in the SP, so whenever the results are announced, it should not have to much of an impact on the SP. Hoever, the City does not always think like that. Maybe there will be some good news to ameliorate the bad? Perhaps a hard one to call when to step back in? As a long term holder and enthusiastic supporter of CFA, I hope they are now back on track, it certainly would appear so. It may be sometime before they reach the giddy heights of 1.5p though!

Regards

PTH

ranoszek - 11 Apr 2005 19:22 - 320 of 2787

there are also fees to add which were not included in last result because the deals just missed the date.

overgrowth - 11 Apr 2005 19:27 - 321 of 2787

PTH and Bos,

Expect to see a loss in the full year results for 2004. My estimate is probably around 300K-400K with a fair proportion of that being a one-off cost thanks to Stephen Barclay "retiring" and his associated pay off. The market knows this and as you say this is priced in.

CFP had a few deals which failed to materialise in late 2004, e.g. Intandem films decided not to float because they received a lottery grant (though they have again recently - and still used CFP). This was the reason for the trading update in December.

Since the end of last year, CFP has been turned around by a new dynamic management team and the 2005 work completed so far gives proof of this leap in performance.

I believe that all followers of CFP know that 2004 results are going to be poor, however what everyone is waiting eagerly for is the trading statement from Tony Rawlinson on business prospects for the rest of the year and a bullish statement concerning current work is also expected.

The MMs know what to look for in the results and if the statement is sufficiently bullish they'll mark the price up to at least 0.5p-0.6p straight off, so worth getting in earlier rather than later IMHO.

butane - 11 Apr 2005 19:30 - 322 of 2787

Nice one bosley, all we need now is for df to also 'see the light' and all will be well. (-:

ptholden - 11 Apr 2005 20:15 - 323 of 2787

OG

Nicely summed up and my sentiments entirely, I did top up a small amount last week, but already have a significant holding and will probably hold on for now. A bullish statement to go along with the finals will hopefully see a continued recovery, evident since the beginning of the year.

Ranoszek: Don't read too much into fees that missed the previous results. Same thing happened at the Interims and we all thought gravy tomorrow, which clearly has not happened. However, the figures will eventually catch up, you just may have to wait a little longer!

Regards

PTH

snakey - 11 Apr 2005 22:57 - 324 of 2787

If results are not coming until end of month, which I know is not far away, I think there may be another buy opportunity around or just below the 0.4p level.
maybe that`s just wishful thinking `cose I want some more !!
there are worse bets and I`ve had a few of those, but this horse is going to start cantering soon and clear all the hurdles.

EWRobson - 11 Apr 2005 23:08 - 325 of 2787

bos

Good to see you back here. Hopefully my comments helped because I owe you one (or two, or three or more) on account of SEO. CFP is my second largest holding and I am just as comfortable with it as SEO. As you know, I have a 3 target on SEO within a couple of years which is a 12-bagger from here. A 12-bagger for CFP is just 5p and it could just as easily be 10p. I wouldn't wait for the results, or rather the trading statement. It may, of course, be played low key because they have no reason to want to blow up the sp and will be happy to let it take its course. But there could well be an evens bet that they do give a positive update and the sp recovers to the 0.7p or 0.8p level; or it could return to the much more positive 1.5p level. Probably best to get a decent foot in the door, being poised to act quickly if the news is good. SEO is again a parallel as, even with the bullish news this morning, the sp came back through profit taking giving a buying opportunity without a great penalty.

Eric

stockdog - 12 Apr 2005 15:53 - 326 of 2787

Dog Thoughts For A Pure Red Day

I've been printing out charts today, trying to divine a more objective, longer-term view of the world.

CFP has a nice steady upward channel forming from its lows of December in a range width of about 0.125p. We've bounced off top and bottom of this range 5 times in a row over quite regular intervals during the last 3 months or so. This seems to give underlying support defined by the lower channel line.

The last 3 weeks or so we have been in a tight horizontal range bounded by support at 0.4p and resistance at 0.43p. From here we could go either way in the next phase, depending on the quality of results and outlook news contained in the prelims due very soon.

A loss in line with expectations and believable promises of sustained new business for the balance of 2005 will lead us to break up, probably through the upper long-term trend line to a new level in the 0.475-0.60p range (??)., giving recent buyers a bit of a protective profit cushion to rest upon. From there, I have previously predicted an end of year SP of 1.3p

On the other hand, worse than expected figures to December 2004 and/or weak prospects for the remainder of 2005 will allow the SP to fall below its 0.4p support down to the lower uptrend line at about 0.35p. Should this be broken it would normally be taken as an immediate sell signal. However, I shall probably ignore classic advice and hold what may, since I do not think we are in a business that could go belly up and would be very near its de minimis level with probably the outside hope of an opportunistic takeover in an industry that must be looking to consolidate over the next year or so (in fact it's already started). We would just have to live with restricted profitability for another 12 months, during which time either faith would be restored, or we would each find the right moment to make our excuses and leave.

The list of new business for 2005 has remained slightly too static for my taste and I crave news of another new client or a further transaction from an existing client. I am feeling patient to the point of inertia, but no news in this case is bad news.

Perhaps they are in an effective close period prior to the prelims at which point they will announce a brand new list of enticing introductions to AIM. However, I would have thought RNS news about prospective IPO's would take precedence over any close period protocol.

I remain overweight, highly optimisitic, but somewhat equivocal.

SD




ptholden - 12 Apr 2005 16:47 - 327 of 2787

SD

CFA have never been particularly good when it comes to letting the world know what they are up to. More often than not, investors have unearthed their activities by researching their clients and other avenues rather than information from the company directly. Personally, I maintain a watchlist of their clients to try and keep track, although obvioulsy this doesn't help with new business. I enquired of Tony Rawlinson last year why they were so poor at investor relations. His answer was rather sensible, 'we would prefer to spend our time servicing our clients and maintaining limited overheads, than have a spare body posting RNSs,' or words to that effect. The cynical may say that they didn't (as it transpired) have much to say towards the end of last year! As to the short term SP I think you are spot on with your TA, much will ride on any bullish comment in the prelims. However, long term will be quite interesting.

Regards

PTH
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