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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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ptholden
- 10 Jun 2005 20:02
- 725 of 2787
85k fee plus 18k NOMAD fee
TGM disposal also on the website, but no fees disclosure.
Nice to see these deals completed and the money in the bank.
pth
ptholden
- 10 Jun 2005 20:04
- 726 of 2787
DGT have now completed more deals fOR 2005 (14) than for the WHOLE of 2004(13).
Oh, and it's only the second week of June!!
pth
stockdog
- 10 Jun 2005 20:12
- 727 of 2787
I have only 32,500 for Incagold - you sure it's 103,000. If so better and better.
Pretty sure they have more than covered their annual operating costs with repeat retainers from 2004 plus new 2005 business to date by - as you say - only hlaf way through the year.
sd
ptholden
- 10 Jun 2005 20:21
- 728 of 2787
Just reading from the placing document. Looks like Keynes capital placed the shares for which they get 3%. Exact fees for DGT not detailed. However I would estimate 85k for the transaction fee, 18k for the retainer and about 5k for the brokership
Inca fees correct, straight from the document.
Looks like down on one side but up on the other sd? A net gain of 26k for the model.
pth
snakey
- 10 Jun 2005 20:23
- 729 of 2787
how about we all estimate profit and I am quite happy to offer (only one place)
a free round of golf at Northwood to he/she who is nearest to the actual profit figure, when announced. I ain`t any good at spreadsheets and records but if you want to speculate, and Northwood is accessible to you, then I can write it down in the ol` fashioned way. 3 decimal places and me own decision will be final in the event of a tie etc. any takers ??
overgrowth
- 10 Jun 2005 20:33
- 730 of 2787
It does look as though Keynes Capital are raising the money because of the connection with the Sportswinbet director - but because they're an Australian based firm I would guess that they're not allowed to act as official broker to an AIM company.
It looks as though Keynes raise the money and DGT arrange transfer through the exchange systems to buy the shares.
So...I'd expect DGT to get around 25k NOMAD fees and around 70k for arranging the float documentation etc. and coordinating the placement with the market. pth is probably pretty close with his 100K.
Incagold is 103k so we need to add 80.5k to the model for them and reduce the Sportswinbet by approx. 52.5 - still has the net effect of being another 28k to add to the projections.
overgrowth
- 10 Jun 2005 20:40
- 731 of 2787
snakey - Above or below, this is the question...I'll go for 1.05m (though I'm useless at golf so if I win I'll have to exchange my prize for some DGT shares with pth lol!).
Good to hear the craic is still mighty in the old Celtic tiger.
ptholden
- 10 Jun 2005 20:49
- 732 of 2787
welcome back, must get over to the Isle one day to have a round or two myself. Talking of which there are still places available for June 27 if you are able to make, though, I think I did ask you before. Late bookings still being taken!!
My own guess is 1.354m
I was cogitating about turnover the other day, can't remember if I mentioned it, but....all we have calcualated so far are fees generated, the actual turnover will be a different matter. Clearly all the expenses of these deals will be included in the turnover, which the City seem to view as a measure of success in a similar way to profitability. If fees for the first half will be in the region of 1m ish, we probably need to add another 20%? for expenses alone. All adds some grist to the mill!
pth
overgrowth
- 10 Jun 2005 21:00
- 733 of 2787
snakey
- 10 Jun 2005 21:00
- 734 of 2787
again, apologies that I can`t make golf day but I now have to keep working `til the next vacation.
p.s. I arrange golf trips to Ireland so if you guys, or your companies, are interested, let me know and I can quote a serious deal. sorry for the advert !!!
snakey
- 10 Jun 2005 21:04
- 735 of 2787
ptholden
- 12 Jun 2005 12:26
- 736 of 2787
pth
EWRobson
- 12 Jun 2005 13:26
- 737 of 2787
Suggestion for sd: TEF. No, not another fake share recommendation. No, not a new brand of meaty doggy biscuits. Yes: Transparently Evident Fundamentals! Should make it into the Oxford Dictionery of Abbreviations!
An interesting thought about DGT. I'm pretty certain this wouldn't be a quoted company if had not been that it suited them as their business is raising funds for AIM newcomers. The logical time for flotation would have been when they had made some money on their NOMAD business and were seeking to diversify, quite likely early next year.
Its to be hoped that TR gives a first half trading statement with the results. There were no Q1 figures which I can understand but we did have first half figures last year, I think, rather than wait for the interims. With respect to profits for the year, I expect recruitment to build up the team in Q3 on the back of a good first half performance. So my figure, snakey, is 750K - always was a cautious fellow! lol!
Eric
stockdog
- 12 Jun 2005 16:33
- 738 of 2787
Retainers repeated from 2004 315,000 (from 2004 accounts)
New Revenues H1 1,110,625 (5 new NOMAD only and 7 new NOM/Broker clients, plus sundry advice/transactions)
Allowing approx 5/6 of H1 business in H2 (i.e. 4 new NOMAD only and 6 new NOM/Broker) plus 5/6 sundry advice fees)
New Revenues H2 746,875 (bear in mind new client 1/4ly retainers are spread more into next year)
Total revenues 2005 2,172,500
Operating costs 2005 1,300,000 (per Eric, added 100k for additional staff member, since last time)
Profit before/after tax 872,500
At mid price SP 0.45p gives current PE of 3.19. If this should be nearer 12, gives SP mid of 1.69, SP bid of 1.52 after 20% spread.
Now for a bit of sensitivity testing . . .
If I reduce my unsubstantiated fee estimates by 50% I get profit of 644,000 with a 12 month bid SP target of 1.12.
If I allow same level of new business in H2 as H1 I get profit of 1,014,500 with a 12 month bid SP target of 1.77
Taking the arithmetic mean of the above 3 estimates, I'm now setting my 12 month SP bid target at 1.47p - hopefully 1p+ by end of 2005 - which fits very nicely with my (slightly sub-virile) holding at an average purchase price of 0.417p. BTW, this is 0.02p or about 5% per week increase for those who are obsessed with short term performance.
For Snakey's challenge, I'm going for 843,666 net profit for 2005 (for once slightly less cautious than Eric!).
As to next year - what are they going to do with all that cash?
All contrary (or supportive) views welcome.
DYOR.
sd
PS. I wholeheartedly echo Eric's sentiments re quality of thread - DGT is good shmutter!
ptholden
- 12 Jun 2005 21:10
- 739 of 2787
Dear Editor
Please see below a few comments referring to Dowgate for possible inclusion in the Shares Magazine.
Within the Director's Dealings section of Shares Magazine dated 28 April 05, John Marshall stated that the 1.5million share purchase by CFA (renamed Dowgate) CEO, Mr Tony Rawlisnon 'fails to convince'. He went onto say that 'while Tony Rawlinson does believe he and his colleagues 'can create a profitable business', othes may remain rather cynical as the group has yet to turn in a profit'.
At the time of publication I found it hard to accept that John Marshall's comments had a great deal of credibilty and less than two months later, even less so. By March this year DGT had already completed seven deals (nine, if you include April), and were clearly in significantly better shape than at the same time last year. The position today, less than half way through the DGT financial year, sees fourteen deals completed, one more than the whole of the previous year. When taking into account, fees, recurring income from NOMAD and Broker agreements and the projected administration costs for 2005, it is evident that the company has already broken even and that any fees generated from the remainder of the year will go straight to the bottom line.
Most of this information would have been available to John Marshall when he wrote his poorly researched article. Perhaps an update would be appropriate? Incidentally, Tony Rawlinson has purchased two further tranches of shares since 21 April 05, this fact appears not to be worth a mention.
pth
EWRobson
- 12 Jun 2005 21:47
- 740 of 2787
I am taking it that we all now have our 1 million or 2 million stached away and are happy to see a bit of ramping! sd will not be far out in his one year target of 1.47p - mark my words! A nice little 3-bagger from here!
Eric
Eric
snakey
- 12 Jun 2005 22:44
- 741 of 2787
happy days fellahs and fingers crossed for the future.
EWRobson
- 12 Jun 2005 22:54
- 742 of 2787
Eric
ptholden
- 12 Jun 2005 22:55
- 743 of 2787
Have followed your lead and created my own model, which gives a H1 income of 1,102,750 with a further 312,500 income for H2 from recurring income.
A few caveats. Some of the fees are not readily available, so educated (or not so) required. I haven't gone so far as to spread some of the recurring income into 2006, but perhaps I will make a few modifications.
As you can see, we appear to be singing from the same hymn sheet, which is reassuring. Assuming the administration costs are in the 1M ballpark, DGT will definately be in profit at year end and should be reporting a turnover in the region of 1.1 - 1.3M for H1 with approx 600k profit, which equates to a re-rated mid SP of 1.10p.
pth
ptholden
- 12 Jun 2005 23:01
- 744 of 2787
Too late I am afraid, the email had already gone, but as usual, no doubt good advice from yourself. I do feel however, that on this occassion JM fired from the hip and did not do his research. Easy to look at a company's history, bang off a few lines with an attention grabbing headline rather than do some proper work. Financial Journos do have a deserved reputation on the whole for being hacks and no more. Mind you, that probably applies to the whole species!!
Told you we would be having some fun with this share.
pth
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