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Quoted Micro 17 July 2017
NEX EXCHANGE
Renewable electricity supplier Good Energy (GOOD) says rival Ecotricity, which owns 25.3% of Good Energy, has requisitioned a general meeting to get two directors, Dale Vince and Simon Crowfoot, on the board. Ecotricity founder Dale Vince believes that because of the significant stake he deserves representation on the board but Good Energy argues that it would not be in its interest to have a rival on the board with access to group information. Vince has been critical of contracts between Good Energy and chief executive Juliet Davenport’s husband. Ecotricity also owns Forest Green Rovers which was promoted to League Two at the end of last season. Annual revenues £126.5m, including £1m from football club. In the year to April 2016, revenues were £126.5m, including £1m from the football club. In 2016, Good Energy generated revenues of £90.4m. Both companies are profitable. Ecotricity had net debt of £97m at the end of April 2016, while Good Energy had net debt of £55m at the end of 2016. Gary Peagram (former Good Energy finance director between 2010 and 2014) was appointed as Ecotricity finance director on 6 April 2017 but he left on 6 July.
MetalNRG (MNRG) has acquired 18.18% of US Cobalt and an option to purchase the rest. The main interest is the Columbia Pass high grade cobalt exploration and development project in Nevada. The initial stake will cost $200,000 (£118,000) and the option cost $50,000 (£30,000) in shares at 1.5p each. If it takes up the option, MetalNRG will pay £724,000 in shares at 1.5p a share. The vendors will also receive 40 million warrants exercisable at prices up to 10p a share. MetalNRG has also set up an Australian cobalt subsidiary. MetalNRG chief executive Paul Johnson has bought 300,000 shares at 1.5p each, taking his family’s stake to 11%.
Hydro Hotel, Eastbourne (HYDP) is starting to benefit from its new general manager’s strategic programme. Interim revenues grew from £1.33m to £1.52m but the loss increased because of repair costs. The second half generates all the profit.
Milamber Ventures (MLVP) has launched the Milamber Education Technology Fund in partnership with Innvotec. This is a hybrid EIS and SEIS fund. Milamber will help to identify potential education technology investments and Innvotec will raise funds and manage the fund.
Global Halal verification e-marketplace operator DagangHalal (DGHL) says it is taking longer than expected to penetrate markets. Management is considering widening the scope of the business. This could mean the acquisition of producers of Halal products.
Bulgaria-focused property company Black Sea Property (BSP) has gained the official approvals to acquire the UniCredit building and the purchase should be completed by the end of September. A deposit of €1.04m has been paid out of the total purchase price of €10.5m and Black Sea Property is raising the rest of the cash. If the cash is not raised then the deposit will be forfeited. Phoenix Capital Management is taking over from AG Asset Management as investment adviser but the same team will be handling the task. Phoenix owns Mamferay Holdings, which owns 28.65% of Black Sea Property and has lent it £100,000 in the form of a convertible which has to be repaid by 31 July.
AIM
Nostra Terra Oil & Gas (NTOG) has withdrawn its general meeting requisition at Magnolia Petroleum (MAGP) after it became clear that it had no chance of winning any of the votes.
Chisbridge Ltd has received acceptances totalling 49.6% for its 42p a share cash offer for InterQuest Group (ITQ) and the bid has been extended until 31 July. This means that independent shareholders owning 6.92% of the company have accepted the bid, which is up from just short of 3% previously.
First half trading at Pennant International (PEN) was strong and the order book was more than £42m at the end of June 2017. The order book stretches out into 2020 and there is a pipeline of other potential orders. Full year pre-tax profit is forecast to increase from £2.2m to £2.4m. There is a possibility of a return to paying dividends but that might have to wait until next year.
In the year to March 2017, AdEPT Telecom (ADT) reported a 19% increase in revenues to £34.4m, while underlying pre-tax profit improved from £5.5m to £6.9m. Net debt was £15.5m at the end of March 2017, following spending on acquisitions. The total dividend also rose by 19% to 7.75p a share. The growth in managed services is helping margins to improve. A profit of £7.4m is forecast for this year.
Premier Technical Services Group (PTSG) has increased its revolving credit facility from £10m to £12m and doubled the overdraft facility to £8m. This will provide additional working capital and funds for acquisitions following the recent purchase of Brooke Edge Industrial Chimneys Ltd for £14m.
Savannah Resources (SAV) has raised £1.3m at 5.25p a share and there is one warrant for every two shares issued exercisable at 6p. Two directors have subscribed for £500,000 worth of shares, including chief executive David Archer, and Al Marjan Ltd has subscribed £520,000 to take its stake to 29.3%. The money will be used on the lithium project in Portugal, the Mutamba heavy mineral sands project in Mozambique and the copper project in Oman.
The sale by Stanley Gibbons (SGI) of part of its interiors division to Millicent has been delayed. The buyer has not obtained the £2.25m initial payment because of a change in financial backers. Millicent has until the end of July to complete the acquisition.
Arian Silver Corp (AGQ) has raised £600,000 a 0.5p a unit, which is one share and one warrant exercisable at 0.6p. The cash will be spent on exploration of the three lithium projects where Arian has an option.
Botswana Diamonds (BOD) has discovered a group 2 kimberlite pipe on the Ontevreden licence held by Vutomi joint venture. A 1.5 hectares to 2.5 hectares area is thought to contain high levels of garnet. Drilling will help to better understand of the kimberlite and to find out if it is diamondiferous. A refined grade estimate has been published for the Frischgewaagt project in South Africa. This estimate has a range of 64cpht to 110cpht. The dyke system covers 7.5 kilometres.
Interim revenues will grow by two-fifths at cloud-based software provider Cloudcall Group (CALL) and recurring revenues will be 61% higher. The second quarter was the strongest quarter ever for new orders. Annualised revenues are £7m.
Camper & Nicholsons Marina Investments Ltd (CNMI) is raising £3.3m via a one-for-four open offer at 8p a share, a premium of 33% over the market price. The NAV was €0.154 a share at the end of 2016.
DX (Group) (DX.) has announced that its chief executive and finance director are leaving. The business is being reorganised into two divisions. Revenues are expected to be £292m in the year to June 2017. Net debt was £19.1m.
Sphere Medical (SPHR) is in discussions with potential investors in a share issue. A shortage of sensors has hampered first half sales of blood monitor Proxima 4.
Ramsdens Holdings (RFX) admits that there has been unauthorised access to its IT system but there should be minimal disruption to the pawnbroking business. Trading continues to be strong.
House broker Northland has increased its profit forecasts for online gaming marketing services provider Veltyco Group (VLTY) following its interim trading update. The 2017 pre-tax profit forecast has been upgraded from €4.62m to €5.82m, up from €1.74m in 2016. The 2018 profit forecast is €7.63m.
Rich Pro Investments Ltd has launched a 2.1p a share cash bid for ASA Resource Group (ASA) but the mining company has yet to recommend the offer. The bid values ASA at £35.5m. Rich Pro argues that the high level of creditors and other uncertainties makes its bid attractive.
Angling Direct (ANG) raised £9m at 64p a share when it joined AIM. The group has 15 stores and the retailer wants to be a consolidator in the fishing tackle market.
Venture Life Group (VLG) says that interim revenues will be 28% higher at £7.8m and like-for-like growth was 18%. New product listings will help further growth in the second half.
An interim trading statement by ClearStar Inc (CLSU) suggests that it should be able to meet expectations this year. The employee background checks provider says that the improving employment levels in the US and international growth are helping growth, as is the demand for medical testing. Interim revenues are expected to increase by 12% to $8.9m. A full year loss is still expected.
Sunrise Resources (SRES) is starting drilling at its CS pozzolan-perlite project and it should take around one week to complete. Eleven trenches have been excavated and ten of them contain pozzolan and/or perlite. Sample results will be available in fewer than ten weeks.
Housebuilding infrastructure services provider Nexus Infrastructure (NEXS) has joined AIM. Although £35m was raised by existing shareholders via a placing at 185p a share, the company, which was valued at £70.5m, is not raising any new money. There is already cash in the bank. The share price ended the first week at 188p. In the year to September 2016, revenues grew from £130.9m to £135.7m. That growth appears modest but a change in the mix of business helped underlying pre-tax profit improve from £9.4m to £11m. However, the latest interim profit was lower because of delays to contracts for earthworks business Tamdown. At the end of May 2017, the group order book was worth £187m.
Abzena (ABZA) has secured another licensing deal for its ThioBridge antibody drug conjugate linker technology with a Taiwan pharma company. The value of the deal could be up to £128m in development and commercial milestones.
House broker finnCap has upgraded its 2016-17 forecast for Mortice Ltd (MORT) after a positive trading statement by the security and facilities management services provider. The pre-tax profit forecast has been raised from $5m to $5.3m. Trading in the first quarter of the current financial year shows a 12% increase in revenues even though currencies have moved against Mortice and there were similar increases for each part of the group. Like-for-like growth was 5%.
MAIN MARKET
Standard list shell Rockpool Acquisitions (ROC) floated on 12 July and the share price ended the week at 10.5p. Rockpool is raising £1.085m at 10p a share, having previously issued 1.875 million shares at 8p each.
Fandango Holdings (FHP) also joined the standard list on 12 July. The shell raised £840,000 at 1p a share and is seeking to acquire a company valued at between £1m and £20m. The share price ended the week at 1.25p (1p/1.5p).
PV Crystalox Solar (PVCS) is closing its silicon ingot block manufacturing facility in the UK in the third quarter. The blocks will be sourced from an external supplier. The judgement relating to a customer which failed to buy the amount of wafers it was supposed to is expected by the end of September.
Andrew Hore
Quoted Micro 29 May 2017
NEX EXCHANGE
Crossword Cybersecurity (CCS) has taken advantage of the high profile of cyber security to raise cash at a premium to the market price. Crossword raised £145,000 at 230p a share. The current mid-price is 195p a share and the most recent trade was at 197p a share last September. Brenlen Jinkens took up 50% of the new shares and he has 5.13% of the company.
Wheelsure Holdings (WHLP) reported a dip in interim revenues due to the lack of funding so the planned £500,000 fundraising should enhance progress. In the six months to February 2017, the loss increased from £126,000 to £159,000 as revenues fell from £133,000 to £94,000.
Mechan Controls (MECP) improved its underlying 2016 operating profit from £518,000 to £594,000 on revenues that were 5% ahead at £4m but there have been significant changes since last year. Nirvana is the only subsidiary left. At the end of 2016, there was £829,000 in the bank and the NAV was £2.41m. Mechan is paying a final dividend of 2.27p a share and the shares go ex-dividend on 1 June. Once all the operations are sold money will be returned to shareholders.
Secured Property Developments (SPD) had cash in the bank of £341,000 and an NAV of £689,000 at the end of 2016. The company is valued at a 47% discount to NAV.
Social housing finance provider Queros Capital Partners (QCP) has raised an additional £875,000 by issuing 8% unsecured bonds 2025. That takes the bonds in issue to £3.5m – from 19 separate placings. So far, short-term bridging loans have generated income to fund the interest payments on the bonds. Longer-term, there are plans to acquire social housing properties.
Blockchain technology company investor Coinsilium Group Ltd (COIN) says that investee company RSK Labs has raised $3.5m. Coinsilium retains the right to 1% of RSK via a convertible. RSK has developed a sidechain to the Bitcoin that enables smart contracts. There could eventually be scope to handle more than 20,000 transactions per second but that requires the additional investment.
NQ Minerals (NQMI) has raised £751,000 at 0.3p a share. Colin Sutherland has been appointed as finance director.
AIM
Enterprise software provider Sanderson (SND) is growing strongly but the cost of investment in the business will hold back short-term profit. The digital retail division is growing fastest but its operating profit was flat as management investors in order to maintain the strong growth rate. In the six months to March 2017, revenues were 10% higher at £10.9m and operating profit was 5% ahead at £1.55m. There was net cash of £4.51m and the dividend was increased by 10% to 1.1p a share.
Software supplier Cerillion (CER) continues to grow its revenues as it starts to build its customer base outside the mobile sector. In the six months to January 2017, revenues were 10% ahead at £7.5m and underlying profit was nearly one-third higher at £900,000. Orders worth £9.4m were won during the period. The interim dividend was 8% higher at 1.4p a share. Directors’ sold 4.2 million shares at 120p each, which could help to improve the liquidity in the shares.
Redx Pharma (REDX) has failed in its attempt to juggle its cash requirements and its debt and administrators have been appointed. Liverpool City Council has previously extended the maturity date of its £2m loan but Redx did not repay the debt when it became due at the end of March. There is also interest due and that could total more than £1m. Redx nominally raised £12m in February – an equity swap agreement meant that not all of this was raised immediately – but does not appear to have raised enough to pay the loan. That is blatant bad management which has ended up destroying the investments of shareholders. Iain Ross recently took up the role of chairman so it would be unfair to blame him but the other directors, including those that have recently departed, were responsible for running the business properly and they knew when this money had to be repaid. The directors are Dr Neil Murray, Norman Molyneux, Dr Bernhard Kirschbaum and David Lawrence, while Dr Frank Armstrong, Peter McPartland, Dr Peter Jackson, Philip Tottey and Dr Derek Lindsay have resigned since Redx joined AIM. Investors’ should be aware of these people if they are or become involved in any other companies.
Lombard Risk Management (LRM) increased its revenues from £23.7m to £34.3m in the year to March 2017. The pre-tax loss was reduced from £2.2m to £1.6m. The year-end order book was worth £10.1m. Management expects the company to be cash profitable this year. Legislation continues to drive demand for reporting and risk software.
Flowgroup (FLOW) could not find a buyer for its energy supply business at an appropriate valuation so it is raising up to £29m in shares (at 1p each) and bonds, including more than £600,000 raised at 1p a share via PrimaryBid, to finance its development. This is highly dilutive even before any conversion of the bonds at the conversion price of 0.95p a share. Flowgroup also requires £1m to market its Flow boiler in Europe and £4m to end the manufacturing contract with Jabil. In 2016, there was a loss of £23.7m on revenues of £99m. Net cash was £3.7m at the end of 2016. An increasing number of smaller competitors are entering the energy supply market and this led to a reduction in customers. The funding will help Flowgroup to compete and build up its customer numbers.
Big data software supplier Fusionex International (FXI) plans to leave AIM and it already has the backing of shareholders owning 41.9% of the company for the general meeting vote on 15 June. Management blames the lack of liquidity in the shares and paucity of independent research. The also blame political uncertainty in Europe. Fusionex had a gravity defying rating in the first year or so of trading on AIM but the share price is currently less than one-fifth of the peak at the beginning of 2014. The company’s growth strategy will remain unchanged. There are plans to arrange a trading facility in the shares.
Safestay (SSTY) has paid €3m in cash for U Hostels, which operates a 226 bed hostel in Madrid. U Hostels also owns an apartment block near the hostel, where managed apartments are expected to be completed during 2018, and a building in Paris that is being converted into a 260 bed hostel, which has a 12 year lease that can be extended by a further 12 years. Safestay will have to invest up to €2.3m in the Paris development, which should be completed in early 2019. In total, including development spending, the acquisition cost will be up to €6.5m. The original Madrid hostel made a small loss on revenues of €1.3m. Earlier this year, Safestay raised £12.6m from the sale and leaseback of the Edinburgh and Elephant & Castle hostels – the leases are for 150 years.
Strategic Minerals (SML) made a maiden pre-tax profit in 2016. The $351,000 profit was after $691,000 of other income – predominantly the settlement of a rail dispute. The Cobre tailings business continues to generate profit and cash.
Thor Mining (THR) says that the Pilot Mountain tungsten resource inventory has risen to 11.73 million tonnes at 0.28% WO3. This does not include the GunMetal and Good Hope deposits.
Greatland Gold (GGP) has granted access to Newmont to the Ernest Giles tenements for a period of six months and it will have first right of refusal for a disposal or joint venture. An airborne survey has identified new structural targets suitable for gold mineralisation. Metal Tiger (MTR) has exercised 15 million warrants at 0.2p a share.
LED lighting systems developer PhotonStar LED (PSL) cut its full year loss from £3.03m to £1.43m on lower revenues. The first quarter of 2017 was tough but there have been orders for its Halcyon devices. R&D has been reduced.
Fairpoint (FRP) has delayed its full year figures yet again. They are promised at some point in June. If they do not come out then then trading in the shares will be suspended.
Arian Silver Corporation (AGQ) has raised £600,000 has raised at 0.5p a share. The cash will be used for exploration of silver and lithium projects.
Mortice (MORT) has won UK contracts worth £2.25m via its Elite subsidiary that take it into new sectors. Elite has won a three year cleaning and waste contract with Surrey and Sussex police and after securing a place on BMW’s approved supplier list a two year contract with the car maker.
Orogen (ORE) intends to acquire Thread 35, which owns e-commerce womenswear brand Sosandar. Orogen is lending up to £250,000 to Thread 35. Sosandar is targeted at 35-55 year old women. Trading in the shares has been suspended.
Active Energy Group (AEG) has entered into an agreement in principle with the Province of Newfoundland and Labrador which will provide a timber licence and a forest management agreement covering 1.2 million hectares. The licence would enable the harvesting of up to 140,000 cubic metres of wood annually.
MAIN MARKET
Thomas Charlton has further increased his stake in North Midland Construction (NMD) taking it to 7.24%. Finance director Daniel Taylor recently acquired 23,321 shares at 305p each. North Midland says that its first quarter profit has increased from £237,000 to £580,000 on a 5% rise in revenues to £62.2m. The main reason behind the improvement was a swing from loss to profit by the telecoms infrastructure division but the construction and water divisions generated a lower profit. Management still believes that margins can be improved. The order book is worth £254m helped by the AMP6 water investment cycle getting going. There is the promise of growing dividends.
Shareholders have agreed to the proposed bonus issue by Sealand Capital Galaxy Ltd (SCGL). On 1 June, existing shareholders will receive nine bonus shares for each one they own, leaving them with ten times the number of shares and the share price would be adjusted from 28.5p to 2.85p. The November 2015 flotation price was 10p (1p adjusted) and earlier this year a further £1.4m was raised at 20p (2p adjusted) a share.
Dukemount Capital (DKE) has signed a binding letter of intent for its first deal with a housing association to develop supported living accommodation. The plan is identify properties worth up to £5m which will be leased to Larch Housing Association on a 50 year lease at 6.5% a year plus inflation. Dukemount floated on 29 March.
Health food products supplier World Trade Systems (WTS) has entered into memoranda of understanding with Germany-based Naturemed and Germany-based Biestmilch, which will help it to widen its product range. Naturemed is a new company but Biestmilch was formed in 1999. Trading in the shares has been suspended for years and it is approaching ten years since there was a trade in WTS shares.
CIC Gold Group Ltd (CICG) left the standard list on 25 May. Management believes it will get a better valuation on another designated exchange.
Andrew Hore
Quoted Micro 15 May 2017
NEX EXCHANGE
Newbury Racecourse (NYR) increased its revenues by 4% to £16.9m in 2016. Underlying trading profit was 8% ahead at £740,000 but there was also a £19.4m gain on the sale of land for housebuilding partly offset by £3.45m impairment charge. The NAV was £44.4m, which is around double the company’s market value. Net cash is £5.4m. The redevelopment of the racecourse continues with the latest phase due to be completed next year.
Good Energy Group (GOOD) has launched a corporate bond. It wants to raise £10m but could raise the subscription level to £20m. Existing bond holders can roll over some or all of their investment into the new bonds. The bonds have a coupon of 4.75% or 5% for customers.
Via Developments (VIA1) has sold all 26 apartments in Napier House in Luton. Deposits of £394,000 and £52,000 of non-refundable reservations have been received. The project should be completed in the first quarter of 2018.
AfriAg Global (AFRI) continues to seek acquisitions in the agricultural logistics sector. In 2016, revenues grew from £1.98m to £3.04m and the loss fell from £96,000 to £9,000. Directors’ fees were reduced from £108,000 to £19,000. The 40%-owned AfriAg (Pty) increased its revenues by 91% to £11.7m but its reported profit dipped from £359,000 to £104,000.
Walls & Futures REIT (WAFR) has completed its first supported housing sector investment. It has bought a grade two listed building in Stroud for £475,000. There will be further investment in improving the property over the next four months. The property will then be let on a 25 year lease to a UK care provider with rents adjusted each year by inflation.
Capital for Colleagues (CFCP) has invested a further £100,000 in space software and hardware developer Bright Ascension. The initial investment was £150,000 and Capital for Colleagues holds 250,000 A shares. The cash will be used for product development and building up the company’s sales infrastructure.
Anna Halpern-Lande, a cleantech sector expert, has joined the board of Milamber Ventures (MLVP). Two new partners have been appointed. Executive chairman Andy Hasoon has converted £50,000 of his director loan into 312,500 shares at 16p each. Two other individuals have taken shares for fees.
Coinsilium Group Ltd (COIN) has invested $75,000 (£60,000) in Coin-Dash, which is developing a social trading platform for cryptocurrency investors. Coinsilium also has an entitlement to an undisclosed number of Coindash crypto tokens.
MiLOC Group Ltd (ML.P) has raised £276,000 at 28.5p a share from four investors. NQ Minerals (NQMI) has raised a further £230,000 for working capital. Valiant Investments (VALP) has raised £22,000 at 0.1p a share, while 84.7%-owned apps developer Flamethrower has paid $25,000 for advertising revenues generating Minecraft Command website.
AIM
TyraTech Inc (TYR/TYRU) is splitting itself into two businesses so that they can each raise finance to accelerate growth. The separation should be complete by the end of the year. TyraTech used up $2.2m of cash in 2016 leaving it with $1.8m, thanks to cash management in the second half. Allenby expects cash to fall to $700,000 by the end of 2017 but in reality management would hope to have raised money for the two businesses before that time. Marketing spending is required to grow the human health business while further product development investment is required by the animal health business.
Musical instruments retailer Gear4Music (G4M) is increasing its market share in Europe. In the year to February 2017, revenues grew from £35.5m to £56.1m and pre-tax profit jumped from £600,000 to £2.7m. A new head office has been acquired for £5.3m and a German distribution centre is being opened.
Cosmetics supplier Warpaint London (W7L) has done particularly well since it joined AIM and its figures were better than expected leading to an upgrade for this year. In 2016, Warpaint made a pre-tax profit of £6.7m on revenues of £27m. A 2017 profit of £7.6m is forecast. Growth is coming from the UK and internationally with US revenues starting to build up.
RedstoneConnect (REDS) has raised £6.5m at 1.5p a share and £1.4m of this will be spent on systems integrator acquiring Anders + Kern. This will help the group to sell its OneSpace smart buildings software. A one-for-100 share consolidation is planned.
Motor dealer Vertu Motors (VTU) improved its full year pre-tax profit from £26m to £29.8m and its NAV is 62.3p a share. The share price is trading at a discount to NAV of one-fifth. Aftersales revenues continue to grow and used vehicle sales were strong. The new car market has declined but trading in March and April is in line with expectations.
Cambria Automotive (CAMB) has also performed well even though new and used vehicle volumes declined. Acquisitions helped its revenues to grow by 11% while its pre-tax profit was more than one-fifth higher at £5.6m. The full year profit forecast has been edged up to £11.2m.
The proposed energy price cap has hampered Flowgroup (FLOW) in its attempt to sell its energy business. It is still in talks but appears more likely to require to raise an additional £20m. This would be highly dilutive because it would be at 1.5p a share plus convertible securities. Losses will continue for the next couple of years and Flow is reducing its exposure to the microCHP business.
Arian Silver Corporation (AGQ) has completed initial sampling at its Mexican Salar project and this confirms the presence of lithium. Further tests are required to fully assess the mineralisation.
Savannah Resources (SAV) has lodged the Environmental Impact Assessment for the Mahab 4 copper mine development, having already done this for the Maqail South deposit. Savannah owns 65% of the company that has the licence for the block that includes Mahab 4. The approval process is expected to take three months. An economic study should be completed by July.
Active Energy (AEG) is reducing its exposure to Ukraine and dividing its operations into Advanced Biomass Solutions, which will own the CoalSwitch technology, and Timberlands International for the timber asset management operations. Supplying woodchip from Ukraine to Turkish fibreboard manufacturers is the main revenue generator but exposure to Ukraine has held back the share price. The company’s former chief operating officer may make an offer for the Ukrainian operations.
Draganfly Investments (DRG) has raised £500,000 at 0.5p a share. Pelamis Investments Ltd owns 11.26%.
MAIN MARKET
Waterman Group (WTM) has recommended a 140p a share bid from CTI Technology, which has already acquired 30%. This means that the £43m bid is mandatory. CTI is one of the largest consulting engineers in Japan.
A strong performance in South Korea has fuelled a strong performance from window components manufacturer Titon (TON). In the six months to March 2017, revenues were 29% higher at £14m, while pre-tax profit was 61% higher at £1.18m. The dividend was increased by 20% to 1.5p a share. Net cash is £2.71m.
Storage and wireless semiconductors developer CML Microsystems (CML) says full year trading was ahead of expectations. Revenues grew by one-fifth to £27.6m – organic growth is estimated to be 16%. Pre-tax profit was £4.2m – 5% higher than forecast. There was £12.4m in the bank t the end of the financial year.
World Trade Systems (WTS) has appointed John Hoskinson as a non-executive director. He has experience of mining, energy, property and services sectors. Clio Lee has stepped down from the board. Trading in WTS shares continues to be suspended.
UNQUOTED
Richard Griffiths and Blake Holdings have acquired 11.2% of former AIM-quoted investment company Sarossa for £519,500 (1p a share). This takes the concert party’s stake to 51.9% so it has to make a mandatory bid at 1p a share but that is well below the most recent asset value. At the end of 2016, the NAV was £11.3m or 2.4p a share. That included £3.73m of cash.
Andrew Hore
Quoted Micro 17 April 2017
NEX EXCHANGE
Capital for Colleagues (CFCP) is raising £2.02m via a one-for-two open offer to existing shareholders at 42p a share and there are already commitments for 57% of this investment. The closing date is 27 April. The NAV was 43.5p a share at the end of February, which was hit by a write-off of a major investment. There are new investors will to take up shares worth £819,000 of they are not taken up in the open offer, or if there are not enough shares available additional shares will be issued.
Coinsilium Group Ltd (COIN) is joining forces with Oraclise to develop a smart contract system that can be used for the next generation of blockchain applications. The system will manage token issuance. There are already funds that trade in these tokens, which can be swapped for ownership rights in assets. Specific markets have been identified. The full details will be announced on Thursday.
Goldcrest Resources (GCRP) is acquiring a 100% interest in the Norio onshore production sharing agreement and has an option for a farm-in agreement to acquire 70% of Block VIII, which includes the East Khavtiskhevi onshore field. These assets are in Georgia and the current production at Norio is 25 barrels of oil per day. There are plans to increase production at Norio to 250 barrels of oil per day, which will enable Goldcrest to start generating cash during this year. Goldcrest has paid $380,000 and will issue $300,000 of shares at 0.5p each for 38% of Norio and then has the option to pay $620,000 plus $250,000 for the other 62%. Money will be raised by selling the existing gold exploration assets in Ghana.
Gunsynd (GUN) has received £3,000 in cash and 300,000 shares in Integumen in final consideration for the original skin treatment assets that Gunsynd, then known as Evocutis, sold in 2015.
Valiant Investments (VALP) has raised £47,750 at 0.1p a share.
AIM
Carpets manufacturer Victoria (VCP) says trading is ahead of expectations for the year to 1 April 2017. The performance has been helped by the integration of acquisitions in the UK and Australia. The new chief executive arrived too late in the financial year to have an impact.
MayAir Group (MAYA) improved full year revenues by 3% to $65.6m but pre-tax profit slumped from $7.5m to $5.9m because of a delayed contract. This contract has been completed and there should be a partial recovery in profit this year. The air filtration equipment supplier is on course to open its new facility.
D4T4 Solutions (D4T4) says that its earnings will be slightly ahead of expectations as higher margin software sales more than made up for lower project revenues. The 2016-17 pre-tax profit forecast has been edged up to £4.1m. There was £5.1m in the bank at the end of March 2017. There is still uncertainty about potential demand from a Japanese customer.
Arian Silver Corp (AGQ) has signed an option to acquire three lithium exploration projects in Mexico for up to $200,000 payable over 12 months.
Strategic Minerals (SML) has secured a deal to supply 400,000 tons of magnetite a year at a market based price over several years – depending on Strategic continuing to have access to the Cobre magnetite stockpile. This should double annual sales with a maintained margin.
More good news from software provider Cerillion (CER). Interim revenues have grown from £6.9m to £7.5m and EBITDA moved ahead from £1.1m to £1.5m. The interim figures will be announced in the middle of June.
Full year contributions from all its hostels meant that 2016 revenues generated by Safestay (SSTY) rose from £4m to £7.4m but it remained loss-making. NAV is 58p a share and the company is trading at a small discount to this figure. There has been a subsequent £12.6m sale and leaseback of the Elephant & Castle and Edinburgh hostels and a new £18.4m, five year secured debt facility provided by HSBC. This will reduce the cost of borrowings.
First Property Group (FPO) had funds under management of £475m at the end of March 2017, up from £353m a year earlier. Profit is expected to be in line with expectations before the recently announced sale of a property in Romania. The full year figures will be published on 8 June.
EMIS Group (EMIS) has appointed Andy Thorburn as its new chief executive. In the past four years, Thorburn has been chief operating officer of Caribbean-focused communications group Digicel. Prior to this has worked for a number of software companies and BT.
Dolphin Fund has decided not to proceed with a bid for FIH Group (FIH) because of the uncertainty caused by the attitude of the Falkland Islands government. Dolphin cannot make a bid for six months unless there is a rival bid announced.
Hague and London Oil (HNL) plans to acquire the Netherlands-based assets of Tullow Oil for an initial €9.75m with the potential to pay a further €20m. There are capital spending requirements for these assets which are generating revenues. Operating spending is estimated to be $21/barrel in 2017. The finance for the deal is being negotiated.
Gas and electrical services provider Bilby (BILB) is beginning to win work from the framework contracts it has been appointed to and this will boost the 2017-18 financial year. Northland has been appointed nominated adviser and broker.
Franchised property services provider Hunters Property (HUNT) grew its pre-tax profit from £1.42m to £1.85m in 2016. The dividend was increased from 1.5p a share to 1.9p a share. The subsequent acquisition of Besley Hill takes the group into south west England and the number of outlets has risen past 200. House broker Dowgate Capital forecasts a 2017 underlying pre-tax profit of £1.91m earnings per share may be slightly lower.
A reduction in admin expenses helped APC Technology (APC) to return to profit in the first half. Revenues declined from £9.5m to £8.3m but this was due to a large Morrison contract in the corresponding period. The core electronic components distribution business grew revenues by one-fifth. The underlying pre-tax profit was £200,000.
The second largest shareholder in Hornby (HRN) is requisitioning a general meeting to remove Roger Canham as chairman and from the board and replace him with Ian Anton.
MAIN MARKET
WideCells (WDC) has raised an additional £649,000 at 12p a share in order to accelerate the growth of its three divisions and develop a client relationship management system. Last July’s placing raised £2m at 11p a share. The CellPlan stem cell insurance product is selling better than expected. The stem cell storage facility will be operational in the second quarter and the company has applied for a research licence. The additional funds will help to finance additional appointments for its WideAcademy education and training business.
Andrew Hore
Quoted Micro 3 May 2016
ISDX
Markets operator WMC Retail Partners (WMC) reported a sharp fall in revenues and profit in 2015. That was due to the loss of the Old Spitalfields Market contract in January 2015. Revenues were reduced from £6.08m to £4.31m, while pre-tax profit dived from £369,000 to £13,000. That profit was after fair value movements in asset values of £165,000, compared with £190,000 the year before. There was £196,000 in the bank at the end of 2015, although there are also borrowings. At 19.5p a share, WMC is valued at £1.2m, whereas the NAV was £3.58m at the end of 2015.
Brewer and pubs operator Adnams (ADP) says that first quarter operating profit was slightly ahead of expectations thanks to strong sales of own-brand beer and gin. Distillery capacity has been trebled and £7m is being invested to increase brewing capacity. A six year sponsorship of the University Boat Races has begun and increased marketing spending will hold back profit. At £99.50 a share, Adnams is valued at £28.4m. There have been deals at above this price in recent days.
Leni Gas Cuba (CUBA) is in talks to reverse into a TSX Venture market shell that until recently was going to buy Mongolian mining assets. Knowlton Capital Inc (TSX-V:KWC H) will provide access to North American investors but the enlarged group wants to retain the ISDX quotation. An all share bid by Knowlton, whose shares are currently suspended, for Leni Gas Cuba is anticipated but prior to this the Knowlton share capital will be consolidated which will give shareholders 0.7825 of a share for each share currently owned. One Knowlton share will be issued for every 2.5 Leni Gas Cuba shares. Leni Gas Cuba shareholders will own 84.4% of the enlarged group although they will be contributing a higher percentage of the group cash and assets. The Leni Gas Cuba share price is 1.15p, which is double the low in March but a fraction of the 5p a share flotation price, valuing the company at £5.7m, which is above pro forma NAV.
Ace Liberty & Stone (ALSP) has announced an interim dividend of 0.033p a share – an increase of 10% on the previous year. The ex-dividend date is 12 May. An additional 13.3 million shares have been issued at 3p each to pay for a property acquired from non-executive director Dr Anthony Ghorayeb. At 4p a share, which is the highest the share price has been, Ace is valued at £39.3m.
Investment company Gledhow Investments (GDH) reported a decline in NAV from £546,000 to £414,000 in the 12 months to March 2016 as the value of resources investments fell. During the period, a €40,000 investment was made in Dutch electric scooter developer Bolt Mobility BV. There was still £190,000 left in the bank at the end of March 2016. At 0.75p a share, Gledhow is valued at £368,000.
Valiant Investments (VALP) has set up a mobile app development business called Flamethrower and it retains an 83.33% interest. Valiant also has a portfolio of resources and green energy investments but it currently has a small net deficit.
Cyber security technology commercialisation Crossword Cybersecurity (CCS) reported initial revenues of £21,000 in 2015. The loss increased from £239,000 to £755,000. There was £1.23m in the bank at the end of 2015.
AIM
House broker Stockdale expects a slump in profit reported by smoke alarms supplier Sprue Aegis (SPRP) from £12.8m – before £5.5m battery warranty provision – to £2.1m in the year to December 2016. This is due to the revelation about unreliable batteries and poor trading in France and Germany. These are important potential markets. In Germany, 10 million homes will have to have a smoke alarm by the end of 2017. Despite being uncovered, the dividend is expected to be maintained at 8p a share. Net cash was £22.4m at the end of 2015.
Arian Silver Corp (AGQ) has raised £700,000 at 1p a unit – one share and 0.5 of a warrant to subscribe for a share at 1.5p (expiring on 28 April 2019). The current share price is 1.13p. The cash will be used to push ahead with the exploration of mining concessions in Mexico, particularly those relating to the Tierra Neuva Mineria option assets. Other projects are also being assessed.
Tekcapital (TEK) has acquired assets from Vortechs Group Inc, an executive search firm specialising in technology transfer professionals. This will add to the range of services that Tekcapital can offer. Tekcapital has paid $100,000 and 577,868 shares at 47.5p each. The current employees will be retained. The business made a small loss on revenues of $351,000 last year. In the year to November 2015, Tekcapital lost $1.46m.
MAIN MARKET
Highland Natural Resources (HNR) has raised £519,000 at 18p a share. This cash will be used to invest in oil and gas assets and technology and it should cover overheads until the end of 2017. Research into the company’s US oil and gas assets suggests that there could be uranium assets. The first commercial test of the DT Ultravert oilfield technology are set for June in Colorado.
Global Resources Investment Trust (GRIT) continues to trade at a substantial discount to NAV. The share price is 6.5p a share, whereas the NAV was 25.7p a share at the end of April. That figure is after writing down the value of a number of unquoted resources shares. GRIT recently sold its stake in NuLegacy Gold for £2.2m – more than double book value. The main concern is that the largest holder of the company’s cumulative unsecured loan stock has requested repayment because a covenant has been breached. The other two holders are supporting the company but GRIT does not have the cash to redeem the loan stock of the largest holder. Further disposals should enable this largest chunk of the loan stock to be repaid by the autumn.
Microbiological technologies supplier Bioquell (BQE) is returning £42.7m to shareholders via a tender offer for 50% of the share capital that is likely to be at 200p a share. The formal sale process for the business continues. There was £47.6m in the bank at the end of 2015, following the disposal of TRaC Global. Continuing operations reported flat revenues of £26.9m, while Bioquell swung from loss to profit.
North Midland Construction (NMD) has appointed SPARK as its financial adviser and Si Capital as its broker. This could mark a review of strategy or even a potential move to AIM.
Small Cap Awards 2016 nominations
IPO of the Year Bilby ; Curtis Banks; Gear4music; Premier Technical Services Group; Stride Gaming
Company of the Year Bioventix; Crawshaw; James Cropper; Trakm8
Impact Company of the Year Ashley House; Capital for Colleagues; Good Energy Group; Menhaden Capital; V22
Executive Director of the Year Nick Taylor – Waterman Group; John McArthur – Tracsis; David Cicurel – Judges Scientific; Stephen O’Hara – OptiBiotix Health
Transaction of the Year 1pm acquisition of Academy Leasing; AdEPT Telecom acquisition of Centrix; Scientific Digital Imaging acquisition of Sentek; Venn Life Sciences acquisition of Kinesis Pharma
Analyst of the Year Mike Allen – Zeus Capital; Charles Hall – Peel Hunt; Matt Butlin – Allenby Capital; Eric Burns – WH Ireland
Journalist of the Year Paul Scott – Stockopedia; Simon Thompson – Investors Chronicle; Smit Berry – The Small Company Sharewatch
Advisor of the Year FinnCap; Hybridan; Peterhouse; Zeus Capital
Fund Manager of the Year Conor McCarthy – MFM Techinvest Special Situations; Gervais Williams – Miton UK Smaller Companies; Ken Wotton – Wood Street Microcap Investment; Paul Spencer – Franklin UK Smaller Companies
Alternative Financing Deal of the Year Funding Circle SM Income Fund – IPO; Seedrs for Chapel Down – Curious Drinks; Capital For Colleagues – institutional and crowd placing; TRC Contracts by ArchOver – record working capital loan
ANDREW HORE
Daily Actions – UK Main & AIM markets 14042016
Daily Actions is a daily summary analysis of changes in short term actions from our Daily Recs – AIM and Daily Recs Main markets reports. This report is typically distributed before the open of trading in London
AIM Market
| ST Rec. changed | ||
| From | To | |
| Banks & Investment Banks | ||
| London Capital Group Holding | Neutral | Sell |
| Basic Resources | ||
| Altona Energy | Neutral | Buy |
| Arian Silver | Neutral | Buy |
| Centamin | Sell | Neutral |
| Churchill Mining | Buy | Neutral |
| MX Oil | Buy | Neutral |
| Financial Services | ||
| Conygar Investment Company | Buy | Neutral |
| LMS Capital | Buy | Neutral |
| Health Care | ||
| Proteome Sciences | Buy | Neutral |
| Industrial Good & Services | ||
| Accsys Technologies | Neutral | Buy |
| TP Group | Buy | Neutral |
| Elektron Technology | Neutral | Buy |
| Falkland Islands Holdings | Buy | Neutral |
| Maintel Holdings | Sell | Neutral |
| RWS Holdings | Sell | Neutral |
| Tanfield Group | Neutral | Buy |
| Tricorn Group | Neutral | Sell |
| Oil & Gas – Explorers | ||
| Serica Energy | Neutral | Buy |
| Technology | ||
| Toumaz | Buy | Neutral |
| Travel & Leisure | ||
| Tasty | Neutral | Buy |
Main Market
| ST Rec. changed | ||
| From | To | |
| Aerospace & Defence | ||
| Cobham | Buy | Neutral |
| Banks | ||
| HSBC | Buy | Neutral |
| Royal Bank of Scotland | Buy | Neutral |
| Standard Chartered | Neutral | Sell |
| Building Materials & Fittings | ||
| Titon Holdings | Neutral | Sell |
| Heavy Construction | ||
| Galliford Try | Buy | Neutral |
| House Construction | ||
| Redrow | Buy | Neutral |
| Household Goods & Textiles | ||
| Games Workshop | Neutral | Buy |
| Real Estate – REIT | ||
| Land Securities Group | Neutral | Sell |
| Speciality & Other Finance | ||
| Intermediate Capital Group | Neutral | Sell |
| Rathbone Brothers | Buy | Neutral |
| Support Services | ||
| VP | Sell | Neutral |
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