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Dowgate Capital - Capitalising on the booming AIM market (DGT)
overgrowth
- 09 Feb 2005 20:52
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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 |
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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. |
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stockdog
- 24 May 2005 18:14
- 604 of 2787
sd
arawli
- 24 May 2005 18:21
- 605 of 2787
35 Vine Street
London
EC3N 2AA
Wednesday 25 May at 11am
overgrowth
- 24 May 2005 18:40
- 606 of 2787
Ted1 - 24 May 2005 18:51 - 607 of 2787
stockdog
- 24 May 2005 19:07
- 608 of 2787
sd
ptholden
- 24 May 2005 19:27
- 609 of 2787
Informer / Pro / MRSMoneypenny / Wa157te all the same person, generally ramps on the AXM thread and bashes KMR. Very uninfored posts, (as you can tell!) AXM has gone from 39p to 21p since he started the thread, says it all really. Objected to my thoughts and started 'following' me around this morning and appeared on this thread. Oh, to be a teen again. Anyway, enough of that.
Looking forward to the news from the AGM tomorrow, hopefully TR will be in a bullish mood. I think he has every reason to be, although I am sure any information he divulges will be tinged with caution.
Somebody was asking either on this thread, or perhaps on the other side, what interests CFA have in the companies they have floated this year. Have trawled through the CFA website and have come up with the following:
Archimedia: Subscribed to 166,666 shares at 3.0p (Incidentally the NOMAD fee for Archimedia increases to 20k from 15k on completion of their first acquisition).
Red Leopard: Option over 1% of the issued ordinary share capital (1,898,300 share - I think)
Mediazest: Warrants over 50,000 shares at an exercise price of 50p.
Alba: Warrants over 500,00 shares at an exercise price of 5.25p
Intradem: Warrants over 2,000,000 shares at an exercise price of 5p
Although not included in the 2004 accounts, I think that CFA also have an option over 4% of the issued share capital of the Telephone Maintenance group.
I am also curious to know if CFA were able to include the fees from their two December AIM admissions into last years accounts or were they carried over to 2005? Perhaps that is a wuestio you could ask tomorrow Andy.
I wonder who is mopping up the stock? One thought that dis occur to me is that with their small market cap, but growing client list, CFA might appear as a quite healthy target for a bigger competitor. Although having said that the size of the sales thus far would not indicate that to be the case.
PTH
stockdog
- 25 May 2005 09:37
- 610 of 2787
just off to AGM - will they let me if I hold through CREST a/c? we'll see
sd
butane
- 25 May 2005 13:34
- 611 of 2787
stockdog
- 25 May 2005 13:36
- 612 of 2787
There were the 3 group directors on the platform and 11 others present including at least one director of the trading subsidiary.
All resolutions, both ordinary and special, were passed nem con, except for about 10,000 proxy votes con (v. about 30m pro) the new group name Dowgate - I also dissented, on the grounds that the connotations for Americans are less than favourable.
One shareholder (I assume) quizzed TR about where the company was going, in the light of the unexciting SP. TR replied that he could not control the shareprice, but was concentrating on buillding a profiitable business, prioritising retainer fees and corporate finance fees, before turning his attention to enhancing their broking activities. TR said they were getting their fair share of their price level in the market during this bull period for new issues.
TR also offered thgat they might in future look at altering the capital structure of the group to the benefit of shareholders, although currently he did not want to expand the overhead on costs associated with such a course of events.
Talking to one of the subsidiary directors afterwards, he was unable (under the rules) to answer my questions on level of overhead and likely profit for the year (although he said he new the answers very well). However, in response to my suggestion that my model suggested they were within 24k of break even for the year, I thought I detected a broad, enigmatic smile of non-denial, or maybe he thought it was simply funny, who knows.
In repsonse to my questions about how they would go about building the broking side, this same director suggested that they would probably look to import a broking team, either as employees or by acquisition - hence perhaps the 4th special resolution empowering the directors to allot 500k = 200m shares of share capital free from pre-emption rights.
This director also confirmed that they attached nil value to their holdings of warrants and options in their clients, since probably 9 months out of 12 would be deemed a close period for them to realise their investment which, in any event, would have a negative effect on their client's SP. So they are really of library value which might one day be realised upon capital re-organisation or disposal/acquisition of their clients.
On discussion of the SP, it seemed probable that the MMs were probably hardly aware of this share and therefore not wholly responsible for its current langour.
I left at after 20 minutes, as it concluded, with the feeling that I was invested in a very simple business that was very simply doing its job. If they continue to build the profitabliity of the core operation, then they SP will follow one day. I can't see any reason not to buy more at this current level as funds become available.
I see that I have stupidly been using the wrong number of shares in issue for my model which should be 65m higher at 619m total. Assuming my current P&L predictions this indicates a PE of 3.69. If this shoudol be nearer 12, then the SP mid should be 1.30p and SP bid (allowing 20% spread) about 1.17p.
So my target price of at least 1p+ by Xmas holds good.
NB. There are a number of options exercisable by TR (29.7m at 0.285p and 0.74p), the two ex-directors (17.7m exercisable at 1.25p), the Chairman Ian Buckley (1.5m ex. at 1.25p) and the staff (24m ex. at ??). In addition there are warrants exercisable over 15% of the issued capital from time to time at 1p any time up to 12th June 2006., held as to SJ Barclay 61%, JR Shaw 30.5%, IC Buckley 6.0%, AP Rawlinson 2.5%. These may all have an unpredictable, dilutive effect as the SP rises anywhere near/in excess of 1p.
DYOR
sd
butane
- 25 May 2005 13:40
- 613 of 2787
overgrowth
- 25 May 2005 13:44
- 614 of 2787
I take it that "altering the capital structure of the group" means that it in the future they may be looking at a share consolidation ?
You probably got that broad enigmatic smile because the 24K is spot on lol!
white westie - 25 May 2005 13:50 - 615 of 2787
i have pasted your post on the other site i hope you do not mind, as it looks like we shall not get any announcements from the company and without your take on proceedings we would know nothing as usual.
ww
butane
- 25 May 2005 16:12
- 616 of 2787
Went to the AGM this morning. Was interesting and most of the staff were there.
They have a bullish demeanour and I am very confident that they can deliver exellent results. They are very busy and equally seem to have a grip on expenses
All resolutions were passed without fuss
Met a guy who posts on ADVFN under name of Dr Jeckyll. Very nice man, would definitely listen to him when he posts. Didn't meet many others so it does scare the hell out of me when you get people who don't even attend meetings but will make all sorts of claims...
Not much else, directors are very aware that they have delivered nothing to existing shareholders and can confirm that they intend to change this!!
Bring on the change!! Best of luck to the board. Nice meeting you Dr Jeckyl
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ptholden
- 25 May 2005 18:03
- 617 of 2787
Good post and many thanks for taking the trouble to attend. However, I just wish CFA would take these opportunities to give the company a more positive nudge.
PTH
stockdog
- 25 May 2005 18:53
- 618 of 2787
Why do you want the price of something you are considering buying more of to rise in the immediate future?
I think I met Dr Jeckyll, but not Jedd Clampitt, although I think I may have heard him talking.
sd
ptholden
- 25 May 2005 18:56
- 619 of 2787
If I buy any more I'll have a seat on the board!!
Well, just a few more!!!!!!!!!
PTH
EWRobson
- 25 May 2005 21:11
- 620 of 2787
Having said that, I feel strongly that the company are paying scant attention to their shareholders. So what is the performance of the company year-to-date? Nothing said! They change the name of the holding company but our investments are in the subsiduary company. If the holding company acquires another company where do the shareholders in CFP stand? I put forward that we should, morally if not legally, know the answers to these questions. Butane, I beleive you have a good line into the company. I don't mind writing myself. It may be OK by the company to play these issues long but the interests of shareholders are to see the market value of the company increase sooner rather than later. I suspect we should take a more aggressive stance. Do others agree?
Eric
Sequestor
- 25 May 2005 21:30
- 621 of 2787
ROFLMFAO!!!!!!!!!!
stockdog
- 25 May 2005 22:10
- 622 of 2787
Our shares are in the parent company changing its name to Dowgate plc, not in the subsidiary which keeps its name City Financial Asocaites Ltd. So Dowgate acquiring more subsidiaries will benefit us too. CFP epic will change now that the AGM has approved the name change to, who knows, DOG??!!
My impression of TR is that he is just rather unaware of shareholders needs, not dismissive of them. Comments and responses today did start to get through to him I think. The Chairman I would say was not much more than chairing meetings, not totally representing shareholders' interests to the 3 man board. Perhaps he needs to focus a little more on this issue, but he only gets paid 15k per annum. Do you want to spend the companies money on a share-ramping chairman? It won't help the profitability and growth of the business.
But let's not overburden them. They are a 5 executive plus 2 assistants company with a miniscule turnover of 1.8m p.a. which may make a 33% net profit - not bad. Why do we need to realise SP value now, except to generate a warm fuzzy feeling when we look at our portfolios. I agree with TR, let him get the business onto a sound footing with solid earnnings, then we will develop our other main strand, broking, then we will start turning a reliably profitable business into shareholder value - a 2-3 year strategy.
From a disastrous first couple of years setting off on the wrong foot, TR has managed to increase net asset value per share from 0.096p to 0.098p a 1.7% increase from December 2003 to December 2004 - nothing, you say, except it could so easily have been a big write down in value. Assuming all this year's profits (671k, I estimate) are retained at December 2005, net asset value per share will increase to 0.21p, a 110% increase over this year. Assuming 750k (??) profits in 2006, this becomes 0.33p per share, a further 58% increase in net asset per share, of which 94% is CASH.
If this cash can be put to good use - e.g. acquire a broking division - then profits can increase exponentially.
At the very least they become a dangerously attractive profitable cash shell which could be a takeover target.
I don't think chastisement at this stage is constructive to our mid to long term benefit. A trading statement/half year results are going to look pretty damn good, I suspect. Then we'll see. Until then I advocate patient support for a man who is doing what he does best.
IMHO DYOR BSM (buy some more!)
sd
EWRobson
- 25 May 2005 22:16
- 623 of 2787
Eric
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