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Managing the Transition to Clean Energy – Q&A with James Parsons
Managing the Transition to Clean Energy – Q&A with James Parsons
Q So much seems to be happening globally around the energy transition at the moment, from big companies such as the oil majors to the micro cap space. How do you see the transition at the moment?
It has been an exciting time to be involved in the industry! I think we shall look back at this period at some point in the future and realise we were living through a rather unique part of our history, especially in terms of the energy space.
There is undoubtedly growing momentum in the transition/clean tech/renewable arena this year already, and increasing investor interest, too. Just as two examples which I am close to… we raised £4.5m last week in Coro Energy as we deepened our renewables footprint through a second SE Asia-focused clean tech developer acquisition. At Corcel we also recently raised funds to help progress our Burwell Energy Storage project in the UK, one of our key battery storage assets supporting the UK’s push for electrification.
So whilst you inevitably see rather aggressive “greenwashing” by the bigger players, attempting to cover the fact that they inevitably still have their roots firmly in fossil fuels, the smaller, more nimble players are able to adapt much quicker (and follow the money!).
My sense is this is an irreversible trend with companies looking to future-proof themselves and increase their relevance to increasingly ESG focused investors.
Q You were one of the early adopters in transitioning micro caps over to the clean energy space. It looks like this started with your role at Corcel plc, a Battery Metal explorer and developer, in 2019 and has been further re-inforced with Coro Energy initiating a pivot to renewables last year and Ascent plc recently announcing an ESG Metals strategy. I guess this all reflects your own personal belief in the carbon transition. But do you see any future for Oil and Gas?
There is, to my mind, no doubting the remaining importance of hydrocarbons to the energy mix, and their necessity for some time to come, especially existing developments or producing assets where the hard work to find them has been done, and their deployment provides time for other energy technologies to mature. This is particularly true for gas, which remain an obvious bridging fuel for near term gains in low carbon energy, and as a back up for intermittent solar and wind power.
I am however personally very clear that oil and gas now have a finite place in the forward provision of energy, and we must all engage in the progression of alternatives as practically, economically and quickly as possible if we are to deliver on targets to ameliorate the impact on the climate.
Q How quickly can you build scale with firms like Corcel, which clearly have an interesting platform on which to grow?
Corcel is, in my view, one of the “yet to be recognised” early leaders of the energy transition in the micro cap space. We operate at the intersection of battery metals mining and its end use in energy storage with a portfolio focused on first acquiring battery metal resources prior to the widely expected structural price hike and secondly generating low risk cash flow from energy storage and trading via batteries.
If we were directing a movie of the 2020/21 energy landscape, I would suggest a suitable working title to be “The Rise of Batteries”. Corcel is right in the middle of that space and looking forward to playing its part! Since 2019 we have focused on sorting out the inherited legacy issues, and then turned our attention to building the strategic foundations for the future – this is swan paddling stuff, with lots of work going on unseen but we are really making progress now. The focus at the moment is on achieving shovel ready status at Burwell, the battery storage site in Cambridgeshire, on securing a Mining Lease at Mambare, our first PNG Nickel deposit, and on unlocking Wo Wo Gap in conjunction with RMI (an ASX listed company where Corcel has a significant debt position).
So, scaling up is critical and that will come as we both broaden and deepen the portfolio – however, I really want to see some of the inherent NAV we have already created reflected in our valuation before we make the next big move. I don’t expect that to be too long!
Q Tell us about your views on mining. Following the pivot of Ascent to ESG Metals, it seems to play an increasingly important and strategic part in your work, doesn’t it?
It absolutely does and mining was a relatively new space for me, so it has been hugely interesting to get up to speed on the industry and particularly to dovetail it with my own ESG agenda. At Ascent, we have now formalised our ESG Metals strategy as one of the emerging “special situations”. We see huge opportunities in reclassifying, through highly efficient recovery techniques, stockpiled surface mining waste (previously viewed as a liability for mining companies) as a valuable asset for reprocessing and commercial sale. The larger producers have historically seen tailings as sub-commercial so our opportunity here is to provide strong cash returns without exploration risk and with only a modest upfront capital outlay, all whilst supporting a key ESG objective of materially lowering global waste.
Q It is fascinating to watch both the companies you are involved with – and you personally – plot the course through the energy transition. Do you think investors can still expect to see the “multi bagger” type returns in the ESG energy space?
The beauty of the extractive industries has always been the binary nature of the outcomes and the resulting risk / reward balance (ie if you “strike it big” investors can see immediate significant returns). It is absolutely true that clean energy technology normally has a much lower risk and more modest return profile. However there are still ways to secure the upside exposure, such as being a first mover (eg as Ascent is in ESG Metals) or taking strategic bets on the macro fundamentals and forecast supply crunches (eg Corcel’s positioning with significant Nickel deposits in PNG). I’m very pleased with the ESG portfolio I am involved with and excited about where these micro caps will be a few years from now.
Andrew Hore – Quoted Micro 31 August 2020
AQUIS STOCK EXCHANGE
KR1 (KR1) has made two more investments. There is a further investment of $100,000 in the cross-chain finance hub Acala Network in return for 153,846.15 ACA tokens at 65 cents each. KR1 now holds 1.02 million ACA tokens. That stake is valued at $663,000. There is also a new investment in MetaCartel Ventures Decentralised Autonomous Organisation. KR1 received 4,938 MCV shares for its $199,000 investment.
Imperial X (IMPP) plans to buy mineral assets and investments and a placing is raising £750,000 at 2.5p a share. The purchases involve the issue of more than 245 million shares plus 8.71 million warrants exercisable at 5p a share. Trading in the shares has been suspended until the acquisitions are completed. Imperial X is buying Howson Ventures Inc, plus assets from Anglo African Minerals, Cloudbreak Discovery and Cabox Gold. Howson owns the Rupert Minerals property in British Columbia and an investment in Anglo African Minerals, which holds licences in bauxite projects in Guinea.
Gunsynd (GUN) says that its investment in ASX-listed Eagle Mountain is “well in the money” and it has the cash it requires for its immediate needs even though the disposal of the stake in Oyster Oil and Gas has still not been completed. Gunsynd invested £110,000 in copper/gold explorer Eagle Mountain at A$0.13 a share and the price has risen to A$0.24. Rincon Resources has appointed stockbrokers for its proposed listing on ASX. Gunsynd has invested £138,000 in Rincon and has a 28% stake. Spirits company Human Brands also still hopes to float. Nickel project developer Sunshine Minerals is being acquired by Malachite Resources. Gunsynd will receive 1.26 million shares in Malachite with further deferred consideration of 1.64 million shares.
IamFire (FIRE) is raising £5.5m gross through a discounted capital bond and it is participating in a fundraising for social commerce platform WeShop ahead of a future listing. The bond is being issued at a discount of 78.73% and net proceeds of £4.4m have been received. IamFire is providing £4.5m of a £9m convertible loan to WeShop. This has an interest rate of 8% and lasts for 36 months. A flotation is one of the conversion events and the conversion would be at a 20% discount to the flotation share price. There is also an exclusive option to subscribe for a 10% stake in WeShop at a pre-money valuation of £25m. This would involve an investment of £2.78m.
Primorus investments (PRIM) has invested £875,000 in WeShop. Primorus has made realised and unrealised gains £3.55m in the six months to June 2020. Greatland Gold (GGP) is the main reason for this. The NAV increased to £8.1m compared with a £4.3m market capitalisation.
BWA Group (BWAP) has agreed to sell its investment in Kings of the North Corp to St George’s Eco-Mining Corp, which sold it for £4.66m. The convertibles issued to St George’s will be cancelled and they amount to £4.3m. St George’s will issue 1.5 million shares and transfer 2.5 million warrants to BWA. St George’s is keeping its 21% stake in BWA.
There was a £673,000 cash outflow at Cadence Minerals (KDNC) in the six months to June 2020. A cash raising means that there was £2.38m in cash at the end of the period.
NQ Minerals (NQMI) plans to undertake exploration work at the Hellyer mine, possibly as early as October/November this year.
Inqo Investments (INQO) increased annual revenues from R23.8m to R24.4m, but the loss increased from R2.5m to R6.1m. That was partly down to an inventory write-down of R1.44m and higher depreciation. Last year’s Bee Sweet honey harvest was one of the largest ever. The lodge at the Kuzuko Private Game Reserve had high occupancy rates before COVID-19. All the other activities have also been hit since the end of February.
Eurocann International (BUD) intends to amend its investing strategy and change its name just over one year since it changed it from Valiant Investments.
SulNOx Group (SNOX) has appointed Allenby as corporate adviser.
AIM
Vianet (VNET) says that customer pub sites that have resumed operations have increased from 56% to 80% over the past six years. Vianet continues to offer reduced recurring charges to both closed and reopened customers. Customer demand for data analytics is recovering. The smart machines division says two-thirds of customer vending machines are in operation and generating normal levels of revenue. There have been orders for more than 1,9000 new orders for telemetry and contactless units during lockdown.
Hostels operator Safestay (SSTY) is taking additional cost saving measures due to the continued uncertainty. Occupancy rates are running at around one-quarter and it is higher in those hostels opened earlier. Safestay has available overdraft facilities but these could run out by early next year if all hostels are not reopened by October and occupancy levels fall below 20% later this year. An occupancy rate of 57% is required for a hostel to breakeven. Sales of freeholds or terminating loss-making leases are being considered. Interim results will be published on 24 September.
Integumen (SKIN) is making an all-share offer for Modern Water (MWG) that values the latter at £21.25m. Integumen plans a ten-for-one share consolidation and it is offering one of these new shares for every ten Modern Water shares. Integumen produces test kits for Modern Water.
Drug discovery company C4X Discovery (C4XD) says that Indivior has started a phase I clinical trial for C4X_3256 for the treatment of opioid dependence. The trial will last until the end of the year, but there will be no data until 2021. C4X is making progress in identifying a candidate for the treatment of IBD and it has reached the lead optimisation stage for the treatment of Psoriasis. A collaboration with the GEN-COVID consortium, which will use C4X’s Taxonomy3 mathematical analysis technology to assess the role of genetics in disease susceptibility.
Dekel Agri-Vision (DKL) says that milling equipment has been delivered to the raw cashew nut processing project in Cote d’Ivoire. The mill should be commissioned in the second quarter of next year.
Grant Thornton has managed to persuade the courts to reduce the damages owed to AssetCo (AST) from £29.8m to £20.8m. Including interest and costs the payment should be £25m.
President Energy (PPC) has formed a renewables division. There are opportunities in wind, solar, hydro and biomass in Argentina. President has commenced a workover programme on oil wells and there are plans to drill two new wells.
MAIN MARKET
Packaging supplier Macfarlane (MACF) reported a 2% decline in interim revenues to £105.6m. The second quarter decline was much lower than for the UK economy, helped by increasing exposure to ecommerce. Increased bad debts led to a 5.5% fall in pre-tax profit to £3.62m. An interim dividend of 0.7p a share is proposed. There could be a greater decline in full year profit, although the business will still be cash generative. Arden forecasts a fall in pre-tax profit from £14.4m to £11.1m.
BATM (BVC) has signed up its first tier 1 NFVTime virtual networking customer. The Asia-based telecoms company has signed up for an initial three years will provide a reference site for the technology. This contract could be a significant revenue generator in the years to come and follows the recent proof of concept trial with ARM and Vodafone.
Anglesey Mining (AYM) has raised £200,000 at 1.6p a share. The cash will be invested in studies for the development of the Parys Mountain zinc, copper, lead, silver and gold mine. Management is also assessing other projects.
Andrew Hore
Andrew Hore – Quoted Micro 21 January 2019
NEX EXCHANGE
Sport Capital Group (SCG) is acquiring Italian football club Palermo for a nominal sum. The deal also includes the project for a new stadium for the Serie B team, which is currently five points clear at the top of the table. Promotion back to Serie A would boost revenue generation and it would also trigger an earn-out payment. There is also potential for more sponsorship and match revenues. There is a plan to raise up to £10m from a bond issue that would be traded on NEX.
Clinical decision support technology provider DXS International (DXSP) reported a lower interim loss in the six months to October 2018. Revenues edged up from £1.61m to £1.69m and the loss declined from £92,000 to £35,000. Tax credits meant that there was a post-tax profit of £70,000, up from £28,000. The GPSoC tender has been delayed but it is expected to be completed this year.
Coinsilium Group Ltd (COIN) says that its priorities for 2019 are to demonstrate the potential of the blockchain investments that it has and to take advantage of the growing sector. There were record levels of investment in the blockchain sector last year. Management wants movements in the share price to reflect progress rather than the movement of the price of bitcoin, as has been the case in the past year.
KR1 (KR1) has set up a subsidiary in Gibraltar. KRX Ltd will sponsor token-based projects that will list on the Gibraltar Stock Exchange, which operates the first regulated blockchain exchange. The subsidiary will generate fees from clients and there are a limited number of sponsors.
AFH Financial Group (AFHP) has acquired fellow wealth management firm Hayburn Rock for up to £3.5m. The initial payment is £900,000. In 2017, the firm made a profit of £400,000.
TechFinancials (TECH) is selling its stake in MarketFinancials, which no longer trades, for €100,000. The investment had no value on the balance sheet.
Smaller company investor Gledhow Investments (GDH) had £167,000 in the bank at the end of September 2018, having made a small profit in the period. The NAV is £793,000.
Ashley House (ASH) is changing its year from April to June. This is the end of the first six months period for joint venture Morgan Ashley Care Developments LLP. There will be interim results for the six months to October 2018 reported at the end of January.
NQ Minerals (NQMI) has commissioned the Hellyer processing plant and in the fourth quarter generated £3.2m of revenues from lead, zinc and pyrite.
Ascent Resources (AST) is attempting to raise cash at 0.3p a share, which is a 20% discount to the market price, via PrimaryBid.com. Ascent has successfully raised cash via the platform in the past. The broker handling the deal is Stanford Capital Partners. Ascent, which has €400,000 in the bank plus a deposit for a bank guarantee of €200,000, is refocusing its expansion outside of Slovenia because of regulatory hold ups in the country. Revenues from the export of gas from Slovenia totalled €2.1m in 2018 but gaining permission to process the gas and sell it to the national grid has proved difficult.
Knights Group Holdings (KGH) has acquired Leicester-based legal services business Cummins for £1.57m in cash and shares. This fits well with the existing east Midlands operations. In the six months to October 2018, group revenues were 37% ahead at £23.9m and organic growth was 10%. Underlying pre-tax profit doubled to £4.4m. The maiden interim dividend is 0.6p a share. Net debt was £9.5m at the end of October 2018. Average fees per fee earner was one-quarter higher at £66,000.
Concrete levelling equipment supplier Somero Enterprises Inc (SOM) did better than expected last year. The 2018 pre-tax profit forecast has been raised by 5% to $29m. Net cash is $25m and 50% of the excess over $15m will be paid in a special dividend on top of the ordinary dividend. Somero has also paid $2m for concrete pouring and line dragging company Line Dragon and this broadens the product range.
Student accommodation activities fuelled the growth of Watkin Jones (WJG) last year but private rental will become increasingly important from this year onwards. Richard Simpson has taken over as chief executive.
Kromek (KMK) is making progress towards breakeven and it has plenty of cash in the bank to take it there. The imaging and radiation detection technology developer has a strong order book. There was a dip in first half revenues because of the transfer of production to a new site in Pittsburgh. Even so, full year revenues are forecast to increase from £11.8m to £15m and the loss should reduce from £2.5m to £1.9m.
Tri-Star Resources (TSTR) is selling its antinomy exploration interests in Turkey. The company’s main asset is the 40% shareholding in the Sohar antinomy and gold production facility in northern Oman. Some engineering problems have to be sorted out before the plant is fully up and running. More cash will be required. The venture has requested $10.5m from its shareholders.
The market was disappointed by news from Verona Pharma (VRP) about the clinical trial results for COPD treatment Ensifentrine (RPL554). Two different does were used in combination with Stiolto Respimat. The treatment did work better than the placebo, but the improvement in breathing was not statistically significant. The share price slumped by more than one-third, although there was a small subsequent recovery.
CH Bailey (BLEY) has decided to cancel its AIM quotation and it is asking for shareholder approval. The company is offering to buy back shares at 100p each via a tender offer.
Ariana Resources (AAU) says that its 50%-owned Kiziltepe mine produced 27,110ounces of gold in 2018. Ariana expects its $33m development loan to be fully repaid during 2019.
Tax Systems (TAX) had reduced net debt from £20.5m to £13.9m by the end of 2018. Pre-tax profit of £5.8m is forecast for 2018.
Ideagen (IDEA) is acquiring Cork-based Scannell Solutions, which provides environmental health and safety software, for £3.5m. Annualised revenues are around €1m, of which, two-thirds is recurring.
Consumer engagement technology provider Pelatro (PTRO) has confirmed that 2018 figures are in line with expectations and there was improved cash generation in the second half. Net cash was $1.8m at the end of 2018. finnCap expects 2019 pre-tax profit to double from $2.9m to $6m.
Plexus Holdings (POS) plans to buy back 4.95 million shares owned by LLC Gusar. The price will be 50.5p a share. Gusar will use the cash to buy two POS-GRIP wellhead systems, which it announced it was going to buy one year ago.
Midwich Group (MIDW) has acquired MobilePro AG, which expands the audio visual products distributor into Switzerland. The business has annual revenues of CHF25m.
Pharmaxis has completed a toxicity study for two LOXL2 inhibitors in which Synairgen (SNG) has a 17%carried financial interest. Pharmaxis can brief potential licensing partners with the information gained.
Tracsis (TRCS) is acquiring Compass Informatics, which is a data analytics and systems development business. Tracsis is paying up to €5.15m for the Dublin-based company, which made a pre-tax profit of £600,000 last year.
Portmeirion Group (PMP) has achieved record sales in 2018 and beat the profit forecast of £9.5m. The fastest growth came in the home fragrance division.
Iofina (IOF) achieved record iodine production levels in the second half of 2018. Full year production was 17% higher at 588.8 million tonnes. There should be a further rise in production this year and that could move Iofina into profit.
Brandon Hill has initiated coverage of Karelian Diamond Resources (KDR) and it has valued the company’s Lahtojoki diamond project in Finland at $32.9m, based on an average diamond price of $100/carat.
The People’s Operator (TPOP) has postponed the appointment of an administrator as negotiations with interested parties continue.
Kestrel Opportunities has increased its stake in Pebble Beach Systems (PEB) from 22.2% to 23.1%. Little more than one year ago the stake was below 15%.
Caledonia Mining Corporation (CMCL) has cut 2019 gold production guidance for its Blanket Mine and WH Ireland has downgraded its forecast from 61,200 ounces to 55,500 ounces, which is at the higher end of the guidance. There was 54,5000 ounces of gold produced in 2018.
MAIN MARKET
Athelney Trust (ATY) is holding the requisitioned general meeting on Tuesday 22 January. Robin Boyle has requisitioned a general meeting in order to get himself reappointed. He left the board last year after a disagreement over the future of the investment company. He wanted to stay on as a non-executive director to shepherd the change in investment management for the trust. The plan is to get Gresham House involved in the investment management. Boyle also wants David Lawman and Paul Coffin to be appointed and the three existing directors, Dr Emmanuel Pohl, Simon Moore and Jemma Jackson, to be removed.
Path Investments (PATH) has signed heads of agreement with ARC Marlborough. The plan is to acquire ARC, which has a nickel and cobalt project in Queensland, via a share issue. Path had £31,000 in the bank at the end of June 2018.
Challenger Acquisitions Ltd (CHAL) has agreed to sell its $300,000 investment in the Dallas Wheel project back to the developers. Challenger has received $27,000 in interest and will receive $50,000 a month, plus interest, for six months.
Gresham Technologies (GHT) has sold its VME mainframe software business for £2m.
Shefa Yamim (SEFA) has sufficient cash to finance continued exploration in the first quarter of 2019. By the middle of the year the gems explorer will be able to estimate how much cash it requires to start trial mining.
Andrew Hore
Andrew Hore – Quoted Micro 5 November 2018
NEX EXCHANGE
Brewer Shepherd Neame (SHEP) has secured long-term facilities of £50m, which expires in 2023, and a £35m private placement of loan notes with BAE Systems Pensions Fund which lasts for 20 years. These replace existing loans. A revaluation of pub assets has delivered a £24m gain on book value.
Mechanical and electrical services provider Field Systems Designs Holdings (FSD) has benefitted from strong spending in the water sector as Asset Management Plan 6 reaches its mid-point, as well as demand from the energy from waste sector. However, the energy from waste customer’s tough stance has held back group gross margin. In the year to May 2018, revenues improved from £17.2m to £25.9m, but pre-tax profit fell from £839,000 to £625,000. If the defined benefit scheme settlement gain is stripped out, then there is an improvement in profit from £463,000 to £558,000. There is £3.97m in the bank. The current order book is worth £12m.
Coinsilium Group Ltd (COIN) is pushing ahead with Flowstone Capital Ltd, which is a private crypto fund and it has set up Flowstone Management Ltd to manage the fund. Coinsilium has also secured a strategic advisory partnership with LC LITE, which is planning a token generation event to finance the development of a digital letter of credit system for importers and exporters.
Startup Giants (SUG) still had £665,000 in the ban at the end of July 2018. Thee are plans to raise more cash via the event management services provider Exponential Events’ platform.
TechFinancials Inc (TECH) is in talks with blockchain-based sports ticketing platform Footies Tech to establish a new subsidiary to develop a blockchain-based venue management system. The idea is that TechFinancials will own 75% of the company and it would provide finance of up to $500,000 to develop a proof of concept. TechFinancials will licence its technology to the new company for free.
Formerly AIM-quoted Metminco (MNC) has withdrawn from the proposed acquisition of Gunsynd (GUN) investee company Sunshine Minerals after it failed to complete due diligence. Gunsynd says that there are other interested buyers even though the nickel price has fallen since the original announcement about the proposed acquisition.
The chairman and chief executive of DXS International (DXSP) have bought further shares last week. Chairman Bob Sutcliffe bought 18,857 shares at 10.5p each, while chief executive Bob Immelman acquired 19,802 shares at 10p a share which took his stake to 10.4%.
Ananda Investments (ANA) executive director Melissa Sturgess has bought another 500,000 shares at 0.4501p each.
AIM
Gordon Dadds (GOR) is acquiring Ince and Co International LLP and its associates, which will make it the largest quoted law firm. Annual revenues will be more than £110m. The estimated consideration will be £34m, depending on revenues generated in the three years after acquisition. The merged company will be called Ince Gordon Dadds. Share trading remains suspended until the full details of the deal are published.
Watkin Jones (WJG) says that its full year figures will be slightly better than expected. Good progress is being made with the build to rent operations, but the benefits will come in the future. The sale of a client portfolio of the student accommodation management division has led to a termination fee and a share in the profit of the disposal, which totals £4m.
Concepta (CPT) has obtained a CE Mark for its myLotus fertility testing technology. This enables women to test for their optimal level of fertility. The self-test platform has been launched at the Fertility Show in London. Initial sales will be via the company’s own website. It will take time to build up sales and it is likely to be next year when they become more significant. Concepta raised £2m in August so it is well-funded for its current requirements.
Goldplat (GDP) says that first quarter production fell to 6,100 ounces of gold because of problems sourcing raw materials in Ghana and South Africa, but there has been a recovery in the second quarter and it should be able to achieve full year production estimates of 39,5000 ounces of gold. The Kilpesa mine is being put on care and maintenance if a partner cannot be found and that could knock 3,700 ounces off the production figure.
Next Fifteen Communications (NFC) has raised £20m at 475p a share. The PR firm will use some of the cash to finance the acquisition of Activate Marketing Services for an initial $9m in cash. This technology-focused business is data-led and will continue to be operated separately. This is the latest example of Next Fifteen’s strategy of growing its digital marketing operations.
Gama Aviation (GMAA) says that growth has been slower than anticipated in the second half. The main culprits are the US air associate and slower than expected growth at the new Bournemouth ground services facility. This equates to a $3m cut in forecast operating profit for 2018 and the earnings per share forecast has been reduced by 19% to 21.3 cents.
The share price of floorcoverings manufacturer Victoria (VCP) slumped on the back of a warning that margins were coming under pressure. Like-for-like revenue growth was more than 3% in the six months to September 2019, but less profit is being made. Victoria is attempting to refinance its two-year bank facility through the issue of a five-year €450m bond, which has been given a BB minus credit rating by Standard & Poors.
Safestay (SSTY) has acquired a 20-year lease on a site in Vienna. This is currently a hotel and it will be converted into a 234 bed hostel at a cost of less than €300,000. Safestay will have 13 hostels.
Pires Investments (PIRI) had a NAV of £950,000 at its year end. The £200,000 increase was mainly due to investments in SalvaRx and Eco (Atlantic) Oil and Gas.
Imaginatik (IMTK) has launched its six-for-nine open offer to shareholders. This could raise up to £253,000 at 1.1p a share. The closing date is 26 November.
Market research firm System1 Group (SYS1) has declared a maintained interim dividend of 1.1p a share, but the final dividend may be reduced. Interim revenues declined by 5% and pre-tax profit was lower without the £250,000 exceptional credit. That is due to investment in the Ad Ratings business. There was £3.55m in the bank at the end of September 2018.
Mporium (MPM) has signed a deal with BPC Land and Sales Marketing, a services provider to property developers. BPC will use Mporium’s IMPACT technology for digital advertising campaigns. This is a new sector for Mporium.
Biome Technologies (BIOM) has increased nine months revenues by 59% to £7m, which is more than for the whole of 2017. Biome is profitable and it had £2.5m in the bank at the end of September 2018. The main growth has come in the RF Technologies division. The bioplastics business increased its third quarter revenues, but nine months revenues are still lower.
Parity (PTY) has warned that there will be a significant shortfall in profit in 2018 because of the continuing delay of a major contract. WH Ireland has slashed its pre-tax profit forecast from £1.9m to £850,000, suggesting limited profit in the second half.
Meat and delicatessen products retailer Crawshaw (CRAW) is appointing an administrator because it was unable to raise the cash it required.
Elektron Technology (EKT) has increased its nine months revenues from £22.1m to £25.8m and the full year outcome is set to be ahead of expectations. Sight screening technology developer Elektron Eye Technology is expected to move into profit. Net cash was £8.5m at the end of October 2018.
Transportation software and services provider Tracsis (TRCS) has received a renewal and extension of data hosting services and software with a rail client. The contract is worth more than £2m over two years.
More bad news from superyacht painting and maintenance services provider GYG (GYG) as 2018 figures are set to be well below expectations that have already been revised downwards. There will be a full year loss on revenues of €44m. There will be no dividend. Refit projects have been delayed and one shipyard undergoing maintenance. New build contracts have been won for 2019. The order book is worth €31.3m, of which €18.2m relates to 2019.
BlueRock Diamonds (BRD) has raised £626,000 at 0.3p a share with every two new shares coming with a warrant to subscribe for a share at 0.4p. The directors have invested £170,000. The cash will be used to open two of the five kimberlite pipes at the Kareevlei diamond mine in South Africa.
Tern (TERN) has invested a further £1.1m in in virtual reality training and data analysis technology platform developer FRVS.
PhotonStar LED Group (PSL) has appointed Menzies as administrator of its subsidiary PhotonStar LED Ltd. That business generated £1.15m of first half revenues of £1.33m. It also made most of the loss. More cash will be required for the remaining subsidiary.
TomCo Energy (TOM) has raised £100,000 at 8.5p and disposed of its stake in Red Leaf Resources for $133,333, which had no value in the balance sheet. This will take cash resources to £335,000. The field test on the Holliday block has been delayed due to a failure of couplings.
Ascent Resources (AST) is still finding it difficult to obtain the permits it is waiting for from the Slovenian authorities so that it can generate revenues from gas. Ascent is considering taking action in the European Court.
N4 Pharma (N4P) says clinical data suggests that its Nuvec technology is suitable for use with multiple antigens. It has delivered mRNA and pDNA in sufficient levels to generate the required immune response. The results of the next study should be available in the first half of 2019.
Wey Education (WEY) reported good results but WH Ireland has downgraded its forecasts for this year and next year. The broker is being more cautious about international growth prospects and cut the 2018-19 pre-tax profit forecast from £1.95m to £1.31m and the following year’s from £5.2m to £3.3m.
Frontier IP (FIPP) has made its second Portuguese investment. Des Solutio is developing greener versions of chemicals used to make beauty, pharma and personal care products. Frontier IP has taken a 25% stake.
Myanmar-focused social media platform operator MySQUAR Ltd (MYSQ) is raising £600,000 at 0.35p a share. Management is focusing on active users and in the first quarter of this financial year there were 412,338 active users of the mobile games offer and 426,750 media and mobile apps users. Last year’s revenues were $1.84m but they need to be much higher than that.
Property investor Safeland (SAF) has acquired North Downs golf club in Surrey for £1.07m and it will invest in the facilities.
Rose Petroleum (ROSE) says that the US Bureau of Land Management has approved the application for a permit to drill the GV 22-1 well on the Paradox acreage in Utah.
MAIN MARKET
Zotefoams (ZTF) has improved revenues by 16% in the nine months to September 2018. Full year profit is expected to be slightly better than anticipated. HPP sales have nearly doubled due to demand from the footwear and aviation sectors. Capacity is being increased.
Books publisher Quarto Group (QRT) has extended its facilities to the end of August 2020. The bank facility has been reduced. Large shareholders have agreed to provide unsecured and subordinated loans of $13m, repayable on 31 August 2020.
Stem cell services provider WideCells Group (WDC) is restructuring its Wideacademy educational subsidiary and closed its London office. Annualised savings are worth £400,000. Alan Greenberg has stepped down from the board.
Social media investment company Sealand Capital (SCGL) has published its full year figures and subsequent interim results. Trading in the shares has recommenced. The SecureCom business has been sold. Sealand has subscribed for a 55% interest in Guangzhou Ruiyou Information Technologies Co, which is a mobile game distributor. It is also party to a licenced operator agreement of the WeChat advertisement product in the UK and UAE. There was £758,000 in the bank at the end of June 2018.
Gems explorer Shefa Yamim (SEFA) has raised £250,000 at 80p a share. The shares each come with one warrant exercisable at 100p a share.
Dukemount Capital (DKE) has gained planning permission for a minor extension on its second property in north west England.
Andrew Hore
Quoted Micro 30 October 2017
NEX EXCHANGE
The government proposal to drop plans to cap housing benefit in the supported living sector to Local Housing Allowance rates is good news for Ashley House (ASH) because the rates would not have been viable. Ashley House has development schemes that could go-ahead following the change of government plans. There could still be other proposals that hamper development in the government paper on funding supported housing that is due to be published on Tuesday but if there are not then Ashley House is in a good position.
Belvedere Capital has subscribed for £31,500 of convertible loan notes in Forbes Ventures (FOR) and the investment is expected to increase to up to £100,000. The initial cash will pay creditors and enable Forbes to issue its interim figures. That is required for trading in the shares to recommence. The interest rate is 1% per month and the conversion price is 0.1p a share. A representative of Belvedere, which is focused on technology investments in northern England, will join the Forbes board as an executive director.
First Sentinel (FSEN) has made a £625,000 investment in standard-listed Curzon Energy (CZN). The shares in the oil and gas company were acquired at the flotation price of 10p each but the share price has fallen back to 8.38p. Curzon has a coal bed methane asset in Oregon.
Middle East-focused investment company Indigo Holdings (INGO) has made four investments, although one of these was earlier this month so it is not included in the balance sheet to the end of June 2017. There was still nearly £241,000 in the bank, prior to investing £10,000 in 3sootjobs, a job search platform in Iran.
Supported housing developer Walls and Futures REIT (WAFR) has been granted membership of the Social Stock Exchange. Management hopes that this will help the company attract investors seeking investments with a positive social impact.
Black Sea Property (BSP) has completed the €10.5m purchase of the UniCredit Bulbank office building in Sofia.
AIM
A management review at Real Good Food (RGD) has uncovered further disappointment and there will be a loss this year. All three divisions are growing their sales with overall like-for-like sales 13% ahead but this is not translating into higher profit. A combination of higher commodity prices and disruption from capital investment. Overheads are being reviewed and Real Good Food is also racking up costs relating to its corporate governance problems. The head office is being moved from London to Liverpool. New banking covenants have been agreed but the further downgrades could mean they come under pressure but the food company has the backing of its three main shareholders.
Investment in European distribution centres and a new UK head office held back the first half progress of musical instruments retailer Gear4Music (G4M) but the benefits will start to show through in the second half. There was a small loss in the first half but a full year pre-tax profit of £2.4m is forecast as European sales build up and margins start to recover.
Stratex International (STI) is holding a general meeting requisitioned by shareholders, including AnglGold Ashanti and Teck Resources, on 1 November. The requistioners, which own 24% of Stratex, want to remove the current chairman and chief executive and block the proposed reverse takeover of Brazil-focused Crusader Resources, which was announced in May. They want former Stratex directors David Hall and Paul Foord to return to the board. The two men run Thani Stratex Resources Ltd, which is 30%-owned by Stratex. Institutional Shareholder Services Inc advises voting against the resolutions. Stratex has the backing of shareholders owning 12.1% of the share capital. Earlier this month, Stratex sold its 13.7% stake in Goldstone Resources for £550,000 (1.6p a share).This was valued in the latest accounts at £950,000.
Datatec (DTC) is dropping its AIM quotation and concentrating on the JSE listing. There has been a lack of interest in the shares in London with non-South African investors trading through the JSE. The cancellation becomes effective on 8 December.
It appears easier to push a piano up a steep flight of stairs than for TLA Worldwide (TLA) to bring out its 2016 accounts. The latest management estimate for publication is before the end of November. Former CFO Don Malter is said to have misappropriated $800,000 of funds over three years. It is unclear if any of this is included in the $6.8m EBITDA adjustment for 2016 that was revealed in June. TLA remains best known for publishing a profit warning at 6.26pm on 23 December 2016. It will be interesting to see whether the accounts are published before this date and time in 2017.
Lombard Risk Management (LRM) had a tough first half but it expects to do much better in the second half and move back into profit. Interim revenues fell by 16% as risk management software sales fell. Regulatory reporting software sales improved. A full year profit of £1.8m is forecast.
Zinc Media (ZIN) has acquired Tern Television Productions for up to £5.45m, with up to £2.35m deferred. Tern made a pre-tax profit of £300,000 on revenues of £5.3m in the year to March 2017. Tern specialises in factual programming. A placing at 0.9p a share raised £3.5m.
Systems1 Group (SYS1) had a poor first half with revenues falling and costs increasing. The market research firm reported a 10% decline in interim revenues to £13.8m and a 70% slump in pre-tax profit to £540,000. There was still £3.5m in the bank at the end of September 2017. Rebranding and reorganisation hampered the business at a time when clients were also holding back spending.
Fox Marble (FOX) has sold the first polished marble slabs from its factory in Kosovo. This sale was part of the agreement to supply Marble Dino. Fox recently signed a three year agreement to supply OM Enterprises in India. An advance payment of $500,000 has been received.
Third quarter trading at broking business Share (SHRE) continued to be strong and revenues were 29% higher compared with the third quarter of 2016. Market share jumped to 13.9%.
A new finance director has reviewed the forecasts for Attraqt Group (ATQT) and problems in timing of contracts have been identified. This means that revenues will be 10% lower than expected in 2017, although there will be organic growth. There was £2.3m in the bank at the end of September.
Hardide (HDD) has raised £2.54m at 1.7p a share in order to fund an increase in reactor capacity. Two additional reactors will be installed in the US and other equipment will be installed in the UK and US. The surface coatings business has signed a framework agreement with a North American oil and gas business. Full year figures will be published on 11 December.
Botswana Diamonds (BOD) expects major developments over the coming months. There is enough cash to last into 2018. An inferred resource is expected to be reported for the Thorny River project before the end of the year. Eight kimberlites have been discovered at the Free State project.
Ascent Resources (AST) is raising a further £1.5m via PrimaryBid.com. Ascent is a regular user of the crowdfunding site. The shares will be issued at 1.66p each. Ascent is awaiting a signature on a government document that will enable it to export gas from Croatia.
Internet gaming software-as-a-service provider GAN (GAN) will benefit from the final approval of a bill in Pennsylvania that legalises real money online gaming. The regulated gaming is expected to start early in 2018.
Cenkos has lowered its revenue expectations for Collagen Solutions (COS) following a trading statement. It has knocked £400,000 off its 2017-18 revenues forecast and trimmed forecasts for later years. A profit is not anticipated until 2019-20. First half revenues of the collagen products supplier were flat.
K&C REIT (KCR) is raising £150m at 100p a share, following a ten-for-one share consolidation. The name is being changed to KCR Residential REIT and a move to a premium listing is planned.
The Ottoman Fund Ltd (OTM) has repatriated cash from Turkey and shut three Turkish subsidiaries. This is an important step in winding up the company returning cash to shareholders. The final distribution will be in the range of 1.36p a share to 1.53p a share.
Stellar Diamonds (STEL) has been granted an environmental licence for the Tongo project in Sierra Leone.
MAIN MARKET
Fuel cell technology developer Intelligent Energy Holdings (IEH) is selling its business and being wound up. Convertible loan note holders are likely to get 65% of the principal of the loan notes prior to their cancellation but ordinary shareholders will get nothing. Cash is likely to run out in November. Meditor Energy is paying £19.5m for the remaining business and this will be used to pay the 65% of principal of the loan notes. A Meditor fund owns 85.5% of these loan notes.
Orient Telecoms (ORNT) is a new standard list company that wants to start a telecoms business in Singapore from scratch. The share price ended the first day at 11p (10p/12p) and it remains unchanged since then. The shares are tightly held so any trading activity could push up the share price, so beware of this lack of liquidity. There does not appear to have been any trading activity, as yet.
Aquila Services Group (AQSG) is acquiring development consultancy and financial modelling services business pod. The business made an operating profit of £162,000 on annual revenues of £1.09m. This fits with the group’s affordable housing services operations.
Andrew Hore
Intercontinental Hotels – Strong On Jargon, Rev Par And Growing Rooms
Intercontinental Hotel Grp. IHG delivers a jargon laden third quarter update indicating that it is very pleased with itself. Net rooms grew at 4.1%, the strongest since 2010 and it is accelerating brand growth around the world. Rev Par 2.3% in the quarter and 2.2% for the year to date.Europe was particularly strong with rises of 7.1% and 6.6% respectively, slightly behind Greater China which led the way, whilst for once the US lagged. The financial position of the company is robust.
DX (Group) plc DX admits it has gone through a particularly challenging time and turned last years profit of £11.5m into a reported loss before tax of of £82.3m. for the year to the 30th June. Exceptional items of £80.7m. included everything but the kitchen sink, from goodwill impairment of £72.4m to provisions for property delapidations, professional costs and senior management departures. Adjusted earnings per share or the year collapsed to 0.1p from last years 4.9p. Now the company is focused on its operational and financial under performance, new business has risen by 20%, major new contracts have been signed and a new leadership team has been appointed. So investors who believe in bottom fishing, get your hook, line and sinkers out and see what you can catch.
Octagonal plc OCT is extremely pleased with its record revenue and profits for the six months to the 30th September, during which revenue grew by 17.5% and net profit by 40%. The pleasure is added to by the fact that the second quarter is usually impacted by reduced summer trading and revenue negative currency movements had an impact on revenue.
Ascent Resources AST expects that the long awaited process of the re certification by the Croation authorities of the export pipeline, which will allow export production to commence, is now awaited. An exchange of signatures can now be expected within a short time frame.
Beachfront villas & houses for sale in Greece http://www.hiddengreece.net
Corporate news review Thursday 28th September 2017
Air Partner AIP reports gross profit up 12.2% at £18.1m, with underlying PBT up 34.4% at £4.1m. AIP says it enters the next six months with optimism that FY expectations will be met.
Ascent Resources AST interims – recompletion and flow testing of well Pg-10. Construction of the new pipeline connection at MRS Lendava required to export gas production to Croatia. Refurbishment of separation equipment at the existing CPP (a gas separation facility) owned and operated by partner Petrol Geoterm. Raised £2.9m through PrimaryBid and reduced debt by almost £6m through loan note conversions. Post Period Highlights: Now selling gas, with reported revenues for the first time since 2013 and are now virtually debt free. The Company is now in a strong position to look to expand our operations into new territories and face the future with increased optimism.”
Chapel Down Group CDGP interim year on year sales up 22% to £4.977m and EBITDA up to £235k (H1 2016: £93k). CEO Frazer Thompsonsays the group has a fantastic team of people, and are excited about the prospects for the future.
Clinigen Group CLIN reports FY adjusted gross profit up 22%, adjusted EPS up 25% to 41.8p and strong cash flow with cash generated from operations of £54.7m (2016: £49.4m). Net debt substantially decreased by £33.1m to £35.0m, and the FY divi is up 25% to 5.0p.
CMC Markets CMC pre-close trading update – profitability in H1 2018 is significantly higher than the same period in 2017 with both net operating income and revenue per client higher (and marginally higher than H2 2017), driven by increased client volumes. Regulation remains a key focus, and despite profitability in H1 2018 being significantly higher than the same period in 2017, CMC remains cautious about the future outlook.
Euromoney Institutional Investor ERM pre-close trading update ahead of FY results. Since issuing its trading update on July 21, 2017, overall trading has continued in line with the board’s expectations for the financial year.
Telit Comms TCM updates on trading and narrows its financial guidance such that it expects revenues of $390m-$400m for the financial year to 31 Dec 2017 (2016: $370.3m) and adjusted EBITDA is expected to be $44m-$48m (2016: $54.4m) before one-off restructuring costs which are expected to be incurred as the review is implemented. Telit expects to see, as normal, significant cash generation during H2 and expects to satisfy all financial covenants which are imposed upon it when tested as at 30 September 2017.
NWF Group NWF AGM statement: “Trading has been ahead of the same period last year and in line with the Board’s expectations, with net debt reflecting the normal seasonal fluctuations. “The Board’s outlook for the financial year remains in line with its expectations and we continue to focus on development opportunities, both organic and through targeted acquisitions.
Quoted Micro 7 August 2017
NEX EXCHANGE
Valiant Investments (VALP) has raised a further £52,500 at 0.1p a share and its 84.7%-owned subsidiary Flamethrower has acquired FootballTipsFC.com for £40,000. Subscriptions generate £50,000 a year in revenues for the website which provides football betting tips.
Asia Wealth Group Holdings (AWLP) reported a lower loss in the year to February 2017. Revenues improved from $1.2m to $1.53m, while the loss reduced from $150,000 to $110,000. The main business, Meyer Asset Management, made an improved contribution. The auditor has highlighted that no impairment assessment has been made on the investment in Ray Alliance. There is still $869,000 in the bank, following the acquisition of an investment property for $388,000. Management is assessing acquisitions in the fintech sector.
Block Energy (BLOK) has acquired a producing oil field in Georgia. The 90% working interest in the Satskhenisi production sharing agreement will be acquired for 70 million shares (14.35% of Block), which will be owned by Iksander . The field is near the Norio field where Block already has an interest. The permit runs until 2025 with a potential five year extension. Operating costs are up to $25/barrel and the current production from three wells is 10 barrels a day. The sale price is Brent minus $9/barrel. Block will retain 75% of revenues until more than $10m of capital costs are recovered. The purchase includes $500,000 worth of equipment, which can be used in other fields where Block has an interest.
Via Developments (VIA1) has raised a further £100,000 from a placing of 7% debenture stock 2020. Via has completed the Canal Street development in Manchester and the realised gross development value is £2.28m.
Hellenic Capital (HECP) has acquired an office premises in Leeds for £200,000. This was after the latest interims to June 2017. This is part of the new investing strategy. Net assets fell from £81,000 to £59,000 at the end of June 2017, including cash of £28,000.
Capital for Colleagues (CFCP) has invested an additional £150,000 in portfolio company Computer Application Services. Capital for Colleagues initially invested £150,000 in the Edinburgh-based software company at the beginning of 2016 and the latest investment will double the number of A shares it owns to 300,000.
Ecovista (EVTP) has raised £350,000 at 0.035p a share. This takes the stake owned by Hubwise to 12.45% and Elite CAM Balanced Discretionary Fund to 9.34%
AIM
Asset management performance software provider StatPro (SOG) reported a 23% rise in interim revenues to £21.6m, while underlying earnings per share improved from 1.1p to 1.8p. The interim dividend is unchanged at 0.85p a share. There was an initial two month contribution from the UBS Delta business and the annualised recurring revenues are running at £53.2m, which is before the latest three year contract in Australia. The acquired technology will be integrated with StatPro Revolution.
Telecoms infrastructure equipment supplier Filtronic (FTC) reported a jump in full year revenues from £13.6m to £35.4m thanks to a large order for antennas. There was a swing from a £7m loss to a £2.2m profit. The balance sheet is strong with net cash of £2.6m. Future investment in 5G telecoms infrastructure augurs well for Filtronic. Hargreave Hale has increased its stake from £6.16% to 11.3%.
Real Good Food (RGD) says that its forecast for the year to March 2017 was wrong because two anticipated claims have not materialised and it had incorrectly capitalised certain costs. This will knock £2m off expected profit. This revelation comes a few weeks after Downing invested £2.75m at 35p a share and the share price has subsequently slumped to 20.75p. Payments to Pieter Totte and Peter Salter over a three year period were not separately disclosed. Salter has left the Real Good Food board but Totte continues to survive as executive chairman.
Fairpoint Group (FRP) says it intends to appoint an administrator because of the cost of the lease on its head office costing £1m a year for four years. The IVA and related businesses are still being sold.
AdEPT Telecom (ADT) has acquired IT services provider Atomwide, which provides services to schools and local authorities, for an initial £12m. This adds 4% to this year’s earnings and 9% to next year’s. It was partly funded by £7.3m convertible loan from Business Growth Fund, which is convertible at 393p a share.
GetBusy (GETB) joined AIM last week and the share price rose to 34.5p. Cloud-based document management software provider GetBusy was spun out of ASX-listed software company Reckon and raised £3m from a rights issue. The two existing software products, SmartVault and Virtual Cabinet, generated revenues of £8m in 2016 – 82% of which is recurring – up from £6.8m the previous year. Accounting firms generate the majority of revenues and GetBusy is trying to expand in other sectors. Next generation software SCIM is being developed in order to make it easier for businesses to interact with customers and become more organised and productive.
Botswana Diamonds (BOD) has raised £543,000 at 1.25p a share and warrants have been exercised at 0.85p a share raising a further £265,000. The cash will finance exploration in Botswana and to assess an inferred resource for Frischgewaagt.
Ascent Resources (AST) has installed the infrastructure at the Petisovci project in Slovenia to enable the gas to be exported.
TechFinancials Inc (TECH) says that 51%-owned DragonFinancials is paying a dividend of $2m and TechFinancials will receive £1.02m. The payment date is 20 August.
Kestrel Partners has slashed its stake in home improvement products supplier entu (UK) (ENTU) from 21.1% to 7.33%. This investment appears a rare mistake for Kestrel which has a good record of building up stakes in technology businesses. Kestrel was still building up its entu stake in the first quarter of this year. The entu share price is around its all-time low so Kestrel will have made a significant loss on this investment. Meanwhile, entu is trying to secure a refinancing but this is likely to mean that the existing shareholders will be left with little in terms of value. The group continues to lose money.
Thor Mining (THR) is acquiring an interest in Kapunda copper deposit in South Australia. Thor is investing up to A$1.8m in convertible loan notes in a company earning a 75% stake in Kapunda. The initial investment is A$200,000. Conversion of the loan notes could give Thor up to 60% of this company. Due diligence on the US lithium assets has gone well and additional mineralisation has been identified. Director Paul Johnson acquired 500,000 Thor shares at 085p each.
A disposal deal for the interiors division of Stanley Gibbons (SGI) has fallen through because the buyer could not come up with the money. There is a termination fee payable and Stanley Gibbons believes that there are other buyers.
MayAir Group (MAYA) has won a $13.6m order to supply filtration and clean room equipment to a Chinese LCD panel manufacturer and most of the revenue will be recognised in 2017.
Empyrean Energy (EME) has raised £1m at 8.5p a share. Drilling has commenced on the Dempsey 1-15 onshore well in California.
Billington Holdings (BILN) says that its structural steel business has won two contracts worth £14m. One is for a London university and the other is for a distribution warehouse in south west England and some of the work will carry over into 2018.
MAIN MARKET
Diesel engines and parts supplier Associated British Engineering (ABSE) reported a higher loss in 2016-17 and there was also a sharp drop in NAV. The weak oil and gas market continues to hold back the group and revenues fell from £1.77m to £1.04m. The loss increased from £621,000 to £962,000, after a large increase in pension costs. The total cash outflow was just over £1mm similar to the previous year. Cash and financial assets total £968,000. There is a 2.3% stake in AIM-quoted SalvaRx. The initial stake was taken when the company was 3legs Resources. The NAV fell from 73p a share to 50p a share. This is despite a decrease in the pension deficit from £1.93m to £1.38m. There are £3.1m of trading losses and £8.5m of capital losses available but there is no deferred tax asset in the balance sheet.
Andrew Hore
Corporate news review Friday 4th August 2017
Ascent Resources AST updates on progress with its Petišovci project in Slovenia, and says the installation of the necessary infrastructure to accommodate export production has now been completed. As a result, recertification on the Croatian side of the border is moving towards a positive conclusion.
Pearson PSON reports a 1% increase in half-year sales to £2,047m, with a statutory operating profit of £16m (H1 2016: £286m loss. The group declared an interim dividend of 5p (2016: 18p) and plans a share buyback of £300m following the announced reduction and recapitalisation of the stake in PRH.
Royal Bank of Scotland RBS reports H1 operating profit before tax of £1,951m. Adjusted return on equity across PBB, CPB and NatWest Markets was 14.1% compared with 10.9% in H1 2016. Common Equity Tier 1 ratio increased by 70 basis points in the quarter to 14.8%, and remains ahead of the stated RBS target of 13%. RBS retains 2017 FY financial guidance and medium term financial outlook as provided in 2016 Annual Results document.
S & U SUS says trading at motor finance subsidiary Advantage continues at record levels, while Aspen Bridging is proceeding cautiously and gradually establishing itself in the bridging market.
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YouGov YOU says trading for the year ended 31 July 2017 is now expected to be ahead of the Board’s previous expectations. YouGov reports another year of revenue growth well ahead of the global market research sector and has maintained the performance trends reported in the first half of the current financial year.
Quoted Micro 8 May 2017
NEX EXCHANGE
Mechan Controls (MECP) is selling its main subsidiary to its technical director and intends to sell its other business and return cash to shareholders. The core business is being sold for up to £2m, with a minimum of £1.64m, including £1.24m initially, payable. The final £360,000 is dependent on the buyers selling the 142,300 shares they own in Mechan Controls. This leaves the group with Nirvana Engineering, which made a pre-tax profit of £352,000 last year. The company is changing its name to Mandicon.
Wine maker Chapel Down Group (CDGP) is putting a brave face on the frosts at the end of April. These were the worst frosts in April for two decades. There was a patchy impact with some vineyards impacted and some not. The company says that it mitigates risk by sourcing fruit from a wider area. The potential crop will become clearer in June. A further 129 acres of vineyard will be planted in the rest of this year.
Bulgaria property investment company Black Sea Property (BSP) is still negotiating a loan from UniCredit Bulbank to finance the acquisition of the UniCredit Building. Black Sea Property is paying €10.52m for the building – a deposit of €1.04m has been paid – and €7.6m of this will come from a loan. Once this loan is secured then a share issue can be undertaken. It appears that the deal may not be completed in May as originally envisaged. Unicredit can remain in the building for six months after completion and does not have to pay rent. The deposit will be forfeited if the deal does not go ahead. Black Sea Property has extended the repayment date of £100,000 of the unsecured loan facility from Phoenix Capital to the end of July. Discussions continue about the assignment to Phoenix of the investment advisory agreement from AG Asset Management. Anthony Gardner-Hillman is stepping down from the board and a replacement should be appointed in the near future.
Ace Liberty and Stone (ALSP) has acquired the Grosvenor Casino site in George Street, Manchester for £4m. The annual rental is £300,000. Ace has also bought the company that owns Willow House in Aldershot for £1.05m.
Angelfish Investments (ANGP) says that the loan of £497,500 has been repaid with interest by 4 Navitas. The talks about a joint venture have ended and Angelfish is trying to recover professional fees and expenses. This means that Angelfish has £1.1m in the bank and a loan to One Media Enterprises of $425,500 and it is seeking pre-IPO investments. It should be remembered that Angelfish has £2.3m of preference shares in issue.
Early stage investor Primorus Investments (PRIM) says that cloud-based food service business Fresho has announced that annualised revenues through its platform is nearly A$100m. The platform connects wholesalers and suppliers to restaurants, hotels, independent supermarkets, hospitals, pubs and other retailers. Additional automation will help to boost margins. Primorus, which is also quoted on AIM, invested £175,000 in Fresho in September 2016. Another round of funding is expected early next year. That will provide an opportunity to revalue the existing investment.
Etaireia Investments (ETIP) is buying two office buildings at Whitehouse Office Park in Peterlee, County Durham, with 113 out of the 125 year lease left unexpired. The purchase price of £1.125m will be paid through a combination of 600 million shares at 0.1p a share, giving Taxspecialefx (Peterlee) LLP a 24.3% stake, and cash payment of £525,000 deferred for 12 months. Completion is expected within three months. The annual rental income is £99,500. The seller is entitled to 75% of rental income until the deferred payment is made.
Adnams (ADB) non-executive director Guy Heald has sold 310 B shares at £114 each, raising £35,340. He retains 15.9% of the B shares.
All Star Minerals (ASMO) has raised £40,500 at 0.075p a share. Equatorial Mining & Exploration (EM.P) has raised £14,000 via the exercising of warrants at 0.01p each and it has also issued 110 million irredeemable 0.01p convertible loan notes.
AIM
The new management team has spent 2016 restructuring Quantum Pharma (QP.). One part of the business has been closed and another may be divested. The focus is niche pharmaceuticals and specials. In the year to January 2017, pre-tax profit dropped from £10.1m £6.2m. There will be a recovery in profit this year but it will take another year for profit to get back to £10m.
Podcasts supplier Audioboom (BOOM) has increased its revenues from £192,000 to £1.31m although it continues to lose money. There is already more than £3m of recognised or pre-booked advertising for 2017. Audioboom has built up its user base and it has started to generate revenues on the back of that. The acquisition of advertising technology firm SONR should help to further target advertising. Audioboom will make a further loss this year and, even after raising around £5m, the net cash is expected to be less than £1m at the end of 2017.
Management spent a significant amount of time last year sorting out the operations that Inspiration Healthcare (IHC) inherited when it reversed into the AIM-quoted business. This meant that underlying profit was flat at £1.1m. Demand for pre-natal care equipment and services is rising. There is scope for further organic growth and for acquisitions.
Pennant International Group (PEN) says that Lockheed Martin has increased the size of a contract from £200,000 to £2.2m, with potential for me. The total order book is worth more than £35m.
A concept study for the CS pozzolan-perlite project has persuaded Sunrise Resources (SRES) to focus on the project. It is thought that the 100%-owned project should have low caped and operating expenses thanks to surface mining and simple production processes. The pozzolan mined can be used as a greener alternative to Portland cement. There are no defined resources yet.
Onshore oil and gas explorer Egdon Resources (EDR) has submitted a new planning application for the Wressle field development. This follows the rejection of the previous planning application by North Lincolnshire Council. Egdon is also appealing the original decision.
Verona Pharma (VRP) raised $80m at the time of its flotation on Nasdaq. The shares were issued at 132p each and the ADSs issued in the US at $13.50 each – one ADS represents eight shares. The ADSs are trading on the Nasdaq Global Market. Last month, respiratory disease treatment developer has received authorisation from the FDA to proceed with a clinical trial for RPL554.
Manufacturer of professional audio equipment Focusrite (TUNE) produced good interim figures thanks to strong sales in North America. Interim revenues were 24% higher at £32m with pre-tax profit 89% ahead at £4.6m. Net cash is £9.4m and the interim dividend was raised by 15% to 0.75p a share. . Edison has upgraded its 2016-17 pre-tax profit forecast from £8m to £8.5m.
The Article 6 Marital Trust has become the largest shareholder in FIH Group (FIH), with 28.9%, following the sale of shares by Blackfish Capital Alpha Fund and former bidder Staunton Holdings at 300p each. Edmund Rowland has stepped down as chairman.
PowerHouse Energy (PHE) has moved its ultra high temperature gasification waste to energy G3-UHt unit to the Thornton Science Park, operated by the University of Cheshire. This will enable further development and opportunities for demonstrating the technology.
LED lighting products developer Photonstar LED (PSL) has taken advantage of a sharp share price recovery to raise £465,000 at 1.25p. The cash will be used to roll-out new product ranges.
Sanderson Group (SND) says that interim figures are in line with expectations. The retail and manufacturing software provider increased interim revenues from £9.86m to £10.9m – just under 50% is recurring revenues. Digital retail revenues were one-fifth higher. Net cash was £4.51m at the end of March 2017. Full year pre-tax profit is expected to rise from £3.44m to £3.72m. The interims will be published on 24 May.
Strategic Minerals (SML) is acquiring its joint venture partner’s stake in Central Australia Rare Earths for £522,500. Larger amounts of funding will be required to explore the resource than originally thought. Cash generated from Cobre in New Mexico will be used to finance this investment.
Digital audio technology developer Frontier Smart Technologies (FST) says that its first half revenues is significantly ahead of last year and full year EBITDA is set to be well ahead of expectations with margins higher than anticipated. Analogue radio has been switched off in Norway and there is strong demand for digital radio across Europe. Smart audio contracts have been won and there will be a better indication of progress in the second half.
Gas producer Ascent Resources (AST) has re-entered the second well at the Petisovci gas field in Slovenia. The well is being prepared for production, which should take four weeks. There has been a further objection to the Integrated Pollution Prevention and Control permit, which it requires to build a gas processing plant so more gas can be produced.
DP Poland (DPP) says that system sales grew by 21% in the first quarter of 2017. There have been eight stores added this year and a new commissary is under construction.
Accident prone Redcentric (RCN) appears to be sorting itself out but it is not out of the woods yet. Net debt is estimated at £39.5m at the end of March 2017 and the bank appears to support the company. Waivers have been received for covenant breaches and there were large exceptional charges. The underlying pre-tax profit is forecast to rise from £6.3m to £9.1m.
MAIN MARKET
Personal care products supplier InnovaDerma (IDP) has acquired the owner of the IP for Prolong, the only FDA-approved medical device for the treatment of premature ejaculation, a market valued at more than $1bn a year. This is part of a strategy to build up a life sciences division. Prolong is a non-prescription, vibrating medical device that is used in training in order to increase time between arousal and ejaculation. The device could cost between £250 and £300. InnovaDerma is paying £1m in shares, issued at a 25% discount to the market price minus the settlement of current liabilities at the current share price – estimated at £323,600. On top of this, a royalty of £11 per unit sold will be paid until the patent runs out in 2031 and if Prolong generates an operating margin of 20% in any year a bonus of £150,000 is payable. Prolong will be launched in North America in the second half of 2017 and Europe and Australia next year. InnovaDerma also announced that its self-tanning Skinny Tan products will be available on the ASOS website.
Opera Investments (OPRA) is going ahead with its acquisition of Kibo Gold from AIM-quoted Kibo Mining (KIBO) for £3.66m in shares at 6p each and moving from the standard list to AIM. The acquisition has the Imweru and Lubando gold projects in Tanzania. Opera is also raising £1.5m at 6p a share – it already had £486,000 in the bank. The Imweru project could be producing 50,000 ounces of gold a year within two years. Opera is changing its name to Katoro Gold.
Andrew Hore