Stockbroker and financier Dowgate Capital intends to lift its game after increasing annual pre-tax profits 24.7 per cent to £1 million.

The AIM-quoted company owns Ellis Stockbrokers and the CFA corporate finance operation and grew its revenues 72 per cent to £6.2 million last year, while profits before tax, share-based incentives and extraordinary items rose 42 per cent to £1.28 million. Fellow broker Seymour Pierce is a shareholder in smaller company-focused Dowgate, which says CFA completed 21 public deals in 2007. Ellis raised more than £15 million for its own corporate clients and £10 million in issues led by other brokers.

Chairman Tony Rawlinson argues this performance shows the resilience of CFA and last year’s acquisition, Ellis, in the face of ‘slowing’ financial markets. Dowgate received £1.55 million of retainer income from clients and in October repaid a £1 million loan taken out to provide part of the finance for the Ellis takeover. A high level of costs that were disallowable against corporation tax, such as share-based payments up from £85,000 to £198,000, meant that earnings fell nearly 29 per cent to 1.71p a share.

While conceding that current market conditions are ‘challenging’, with new issues and investment generally in smaller companies out of favour, Rawlinson suggests a migration of advisers away from ‘micro-cap’ companies provides opportunities for Dowgate to fill the gap. At the same time, Ellis has recruited City figures Dru Edmonstone (ex-Seymour Pierce) and Philip Dumas to ‘expand its client base, particularly institutional funds, and target larger fundraisings’.

Floated at 1p seven years ago, Dowgate shares hit 28.5p two years ago, but have eased back since then. Now 14p, up 0.5p this morning, they value the company at £5.1 million.

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Dowgate Capital	AIM	£2.17m	5.50p	0.00p
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