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Andrew Hore – Quoted Micro 16 November 2020
AQUIS STOCK EXCHANGE
Robert Labrum is executive chairman of Primorus Investments (PRIM) following the resignation of Jeremy Taylor Firth and fellow director Alastair Clayton. Primorus is undertaking a strategic review of the business, following the sale of its stake in Greatland Gold (GGP). Other investments include TruSpine Technologies (TSP). Primorus does not have any debt and it has decided not to go ahead with a share buy back.
EPE Special Opportunities (ESO) had a net asset value of 345.7p a share at the end of August 2020. Since then, the investment company has made a $2.5m investment in a segregated account of Prelude Structured Alternative Masters Fund, which invests in distressed credit opportunities.
Youth training services provider Harrogate Group joined the Aquis Stock Exchange on 9 November. The current share price is 3p (2p/4p).
Gunsynd (GUN) is raising £1.13m at 1p a share. This cash will be used to make further investments.
Evrima (EVA) has exercised its option agreement to increase its stake in KKME from 2.4% to 19.6%. This cost £138,000 and this was paid in the form of 2.3 million shares plus the award of 2.3 million warrants at an exercise price of 12 pa share, lasting three years. KKME’s main project is Molopo Farms Complex, which could be a nickel sulphide project. There is an earn-in agreement with AIM-quoted Power Metals (POW) and four holes have been drilled.
KR1 (KR1) has earned 40,270.1 tokens in Kusama, which is described as an incentivised canary network for the Polkadot blockchain project. This stake did not cost anything.
Lombard Capital (LCAP) says progress with the development of a recycling business has been held back by the suspension of trading in the shares. The main asset is a freehold waste recycling site. There was £3,630 in cash in the bank on 30 June 2020. There are net liabilities of £100,000.
Sumner Group Mining has left the Aquis Stock Exchange.
AIM
Digital brand protection services provider Brandshield is reversing into Two Shield Investments (TSI) in an all share deal that values the 80% not already owned by Two Shields at £13.2m. A placing will raise £3.2m at 20p a share, following a 200-for-one share consolidation. Brandshield has developed technology that can be used to protect the brands of clients and get illegal sites and information taken down. Revenues of $1.51m in the first half of 2020 were nearly as much as for the whole of 2019. Two Shields has mining investments that could provide further funds for the core business in the future.
Insolvency litigation finance provider Manolete Partners (MANO) generated cash before new investments in the six months to September 2020. One major case has extended payment term s so there was a working capital outflow during the period. After the announcement of the interims another case was completed, and this will realise £2.8m in cash out of the total settlement of £7.5m. That will be paid over a two year period. Net debt was £5.4m and there are additional facilities that can be sued to finance additional cases.
Zoo Digital (ZOO) generated additional revenues from localisation services on past films and TV programmes in the first half, while production of new programming was delayed by the problems relating to Covid-19. Back catalogue work and higher dubbing revenues more than offset the reduction subtitling revenues. Interim revenues were 15% ahead at $16.4m. Forecasts have been upgraded and a $1.4m pre-tax profit is expected for the full year.
Three directors in Anexo (ANX) are selling a combined 29% of the credit hire and legal services firm to institutional investor DBAY at 150p a share, which is a premium to the market price. DBAY has the finance to provide backing to Anexo in order to expand its business.
Healthcare services provider Totally (TLY) moved into profit in the first half even though revenues were hit by the lack of elective surgeries in the period. Revenues increased by 9% to £54.1m, helped by a full contribution from urgent care business Greenbrook. Net cash is £12.3m and there is an unchanged interim dividend of 0.25p a share. Activity levels have been improving although there is still uncertainty due to lockdowns and restrictions around the UK and Ireland.
One Media IP (OMIP) increased revenues by 14% to £4m on the back of the strong music streaming market in the recent financial year. A 2019-20 pre-tax profit of £600,000 is forecast. That is slightly better than forecast. There is £6.7m in cash and there should be news of acquisitions and partnerships with artists over the coming months. The TCAT anti-piracy software service will be managed as a separate business. Dr Ed Vernon will head up the new Belfast-based venture and take a 8% stake.
MAIN MARKET
OTAQ (OTAQ) is acquiring the assets of ROS Technology for up to £300,000. ROS is a developer of electronic and mechanical products in sectors including aquaculture and offshore. The former owner Dr Peter Robinson was the designer of OTAQ’s SealFence product. He is an important addition to the development team. ROS made a pre-tax profit on full year revenues of £312,000.
Auctus Growth (AUCT) has agreed the acquisition of HeiQ Materials AG, which is a materials innovation company focusing on the apparel, medical and home textile markets, for £119.6m via a share issue at 112p a share post one-for-three share consolidation. A placing and subscription will raise £20m at the same price, while the vendors of the business will sell £40m of the shares they are issued. The company’s name will be changed to HeiQ.
Matomy Media (MTMY) has agreed to merge with Global Auto Max in an all share deal. Global Auto Max imports vehicles made by Toyota, Jeep, Chrysler, Fiat, Mercedes-Benz, Hyundai, VW, Volvo and Ford. Turnover was ILS355m.
Conduit Holdings plans to join the standard list in December. An offer could raise up to $1.1bn in order to finance the newly established reinsurance underwriting business. The focus is property, casualty and speciality insurance. There are no legacy losses to hamper the business.
Andrew Hore
Andrew Hore – Quoted Micro 28 September 2020
AQUIS STOCK EXCHANGE
SAPO (SAPO) has agreed to acquire Secure Web Services (SWS) and it will change its name to Rural Broadband Solutions. SAPO is paying £1.6m in cash and shares and £236,500 of the cash paid will be used to subscribe to a fundraising. SAPO wants to raise £2.5m. SWS is based in Shropshire and had revenues of £730,000. There are 2,300 customers and this could be doubled in three years. A buy and build strategy will expand the group across the UK.
Specialist social housing developer Walls and Futures REIT (WAFR) swung from loss to profit in the year to March 2020. The pre-tax profit of £626,000 includes a gain on revaluation of £798,000. The underlying loss was similar to the year before. Net assets increased from £3.3m to £4m, equivalent to 107p a share. There are plans to dispose of the remaining London residential units and reinvest in specialist supported housing. The Wimbledon Park property was sold for £656,000 in June, which was a 3% discount to book value.
S-Ventures (SVEN) has made an investment in vitamin fortified, smoothies and juices provider Coldpress Foods. It has taken an initial 3.3% plus an investment in a convertible that could take the stake to 6.2%. The total investment is £60,000. Coldpress has revenues of more than £1.6m.
Oncology treatments developer Incanthera (INC) says that skin cancer technology Sol has exceeded expectations in a recent study. Sol has been shown to be effective in penetrating the skin barrier.
A requisition for a general meeting at Primorus Investments (PRIM) has been withdrawn following the proposed board appointments of Rupert Labrum, Hedley Clark and Matthew Beardmore. Donald Strang will leave the board.
SulNOx Group (SNOX) says Nicholas Nelson has resigned from the board but remains as chief executive. Shareholders had requisitioned a general meeting to remove him from the board, but there is no need for this to happen. Nouryon has agreed to manufacture SulNOx’s HFO emulsifier and a diesel conditioner, which will be sold under the brand SulNOxEco diesel conditioner.
Altona Energy (ANR) is seeking to raise up to £500,000 at 6.5p a share. Existing and new investors can subscribe for shares via www.nrprivatemarket.com. The offer is set to last until 15 October. The cash will go towards financing the two rare earth element projects in Malawi and Uganda.
Belvedere Leisure Resorts (BELV) has signed an agreement with Landal GreenParks UK for an exclusive partnership for the leisure park at the Barncosh site until the end of the year. Belvedere will deliver the first 50 units and then the 20-year arrangement will take effect. Belvedere has agreed to acquire the land for the 50 units at a cost of £500,000. Belvedere continues to seek new funds.
Gunsynd (GUN) has invested a further £75,000 in copper/gold explorer Eagle Mountain Mining. Gunsynd owns 1.54% of the ASX-listed company.
AfriAg Global (AFRI) believes that the FCA guidance has given it confidence that its deal with medicinal cannabis company Apollon Formularies will go ahead.
European Lithium (EUR) has raised A$2.1m at 4.5 cents a share and this will be spent on metallurgical test work at the Wolfsberg lithium project. Early Equity (EEQP) has raised £193,000 at 0.5p a share.
Sativa Wellness Group Inc expects to gain admission to the Aquis Stock Exchange on 30 September.
Newbury Racecourse (NYR) non-executive director Dominic Burke has bought 20,000 shares at 700p each. He owns 127,365 shares.
AIM
Gold production in Azerbaijan fell in the first half but Anglo Asian Mining (AAZ) is confident it can still hit its full year target of 75,000-80,000 ounces of gold equivalent, which would be slightly lower than the previous year. The higher gold price offset the decline in production from 39,905 ounces to 32,501 ounces. Even though the cost of production increased because of lower volumes and the reduction in grades at the Ugur open pit, pre-tax profit improved from $10.3m to $11.8m. There was $21.4m of cash generated from operations. There is plenty of cash to invest in Azerbaijan and the new venture in Ireland with Conroy Gold and Natural Resources (CGNR). The interim dividend was increased by 29% to 4.5 cents a share and the possibility of a special dividend next year. There was cash of $29.2m at the end of June 2020.
Specialist IFA Frenkel Topping (FEN) has made an indicative all-share offer for personal injury claims generator NAHL (NAH). Frenkel Topping has already acquired 6.11% of NAHL. finnCap forecasts an improvement in Frenkel Topping pre-tax profit from £1.8m to £2.3m in 2020.
NWF (NWF) says that trading is in line with expectations. Fuel volumes are lower than the same time last year because of reduced economic activity, but they are as anticipated. The food distribution trading has been hit by volatility in demand and lower demand from the catering sector. The feeds division has benefited from a stable dairy market.
Spinger-Verlag has increased its stake in DeepMatter (DMTR) from 2.9% to 7.4% following the issue of deferred consideration.
Cyber security services provider ECSC (ECSC) grew managed services and consultancy revenues in the first half, although there was lower utilisation in consulting during lockdown. Consultancy revenues are improving in the second half. There was cash of £1.6m in the middle of September.
Battery technology developer Ilika (IKA) has signed a framework agreement with the UK Battery industrialisation Centre for the production of Goliath solid state pouch cells. This will help with the scale up of production for the batteries aimed at domestic appliances and electric vehicles.
MAIN MARKET
Critical Metals (CRTM) is raising £800,000 at 5p a share. That will more than double the number of shares in issue. Critical wants to buy or acquire stakes in natural resources assets in Africa. The focus will be near-term brownfield projects that can be brought into production. Chief executive Russell Fryer is a former investment adviser in the natural resources sector and founder of Western Uranium Corporation.
Gulf Marine Services (GMS) has received another general meeting requisition letter from Seafox. The removal from the board of Mike Turner, David Blewden, Mo Bississo and Dr Shona Grant is Seafox’s wish. It wants Rasid Al Jarwan, Mansour Al alami and Saeed Mer Abdulla Khoory to replace them.
Auctus Growth (AUCT) is in discussions to acquire HeiQ Materials AG, which is a materials innovation company focusing on the apparel, medical and home textile markets. Trading in the shares has been suspended.
Hawkwing (HNG) is switching from AIM to the standard list on 30 September and raising £1.2m after expenses at 3p a share. That values the shell, which has failed to secure a technology acquisition in the time required by AIM, at £1.5m.
Digital Landscape Group (DLGI) is cancelling its standard listing on 2 October. Trading will begin on the Nasdaq Global Market on 5 October.
Challenger Acquisitions Ltd (CHAL) has received 73.94% acceptances from shareholders in Cindrigo Energy. When other conditions are satisfied the remaining shares will be mopped up and a prospectus prepared for a reintroduction to the standard list.
Andrew Hore
Andrew Hore – Quoted Micro 27 July 2020
AQUIS STOCK EXCHANGE
Healthcare IT provider DXS International (DXSP) moved from loss to profit in the year to April 2020. Revenues were slightly lower at £3.28m, while a loss of £200,000 was turned into a pre-tax profit of £239,000. There was £1m in the bank at the end of April 2020, following the recent fundraising. There has only been a marginal drop in revenues due to COVID-19 and growth should return later in the year. Chairman Bob Sutcliffe has bought 46,153 shares at 6.5p each.
KR1 (KR1) has raised $493,000 from the sale of Nexus Mutual tokens. They cost $79,000. KR1 still owns three-quarters of the tokens it originally acquired in the blockchain-based mutual insurance company.
Gunsynd (GUN) has bought a stake in Eagle Mountain Mining at A$0.13 a share. The £110,000 investment in the ASX-listed company provides exposure to copper exploration. The cash will finance exploration at the Oracle Ridge copper mine project.
Clean Invest Africa (CIA) has raised £150,000 at 1p a share. The new shares come with warrants exercisable at 2.75p each.
The Tasmanian government has transferred the mining lease to the Beaconsfield gold mine to NQ Minerals (NQMI).
AfriAg Global (AFRI) had £76,000 in cash at the end of June 2020. There are also £1.16m of investments available for sale.
Eurocann International (BUD) has yet to identify a medicinal cannabis business that fits its acquisition criteria and price expectations, although it has made some short-term investments.
Trading in the shares of Lombard Capital (LCAP) has been suspended following a sharp rise in the share price.
AIM
Tungsten Corporation (TUNG) is benefiting from its focus on building up recurring revenues from its e-invoicing platform. Additional products and services are being added to help accelerate growth. As revenues grow they will cover overheads and profit could increase rapidly after this point has been reached.
Frontier IP (FIPP) has raised £2.33m at 55p a share. This will enable the IP investment company to provide bridge finance and invest directly in funding rounds. Frontier also wants to take on more people to help advise and develop investee companies.
In the year to March 2020, Mercia Asset Management (MERC) generated enough income to cover its overheads for the first time. That was with a part-year contribution from Northern Ventures. However, there were fair value write downs of assets of £15.8m. The NAV is 32.1p a share. Funds under management are £658m. Since the year end there was a gain on the disposal of the stake in Native Antigen.
Oil and gas producer Touchstone Exploration Inc (TXP) has confirmed the major potential of the Cascadura discovery in Trinidad. The estimate for 2P reserves is 45 mmboe of gas/condensate. Touchstone’s production could be multiplied by ten. finnCap has set a risked-NAV of 91p a share.
Scientific instruments manufacturer Judges Scientific (JDG) says that first half order intake was 17% lower. North American orders were one-third lower. Like-for-like interim sales were 12% lower. Cash was generated from operations.
Disinfection products supplier Tristel (TSTL) says that full year revenues were one-fifth ahead helped by an additional £1.5m due to COVID-19. Net cash was £6.2m at the end of June 2020.
Synairgen (SNG) says that its phase II trial of SNG001 in hospitalised COVID-19 patient shows a 79% reduction in the development of severe disease and death. Discussions have started with regulators.
Conroy Gold and Natural Resources (CGNR) has secured a joint venture with Anglo Asian Mining (AAZ) to develop a gold mine in Ireland. Anglo Asian is committing to spend €2m for an initial 17.5% stake with an option to spend the same amount to take the stake to 25%. The maximum stake that can be earned is 55%, which would take the Clontibret gold deposit to the point where the mine is ready for construction. Anglo Asian has been issued with 325,000 Conroy warrants exercisable at 16p a share. Sanderson Capital Partners has cut its stake to below 3%.
Bidstack (BIDS) generated revenues of £275,000 in the first half, but the second half is more important. The in-game advertising company is winning business around the world.
Mattress retailer eve Sleep (EVE) generated slightly lower revenues of £12.2m in the first half of 2020, but the loss will be much lower due to cost savings. Cash was generated in the first half and there is net cash of £9.1m. Some competitors are withdrawing from the European market.
MAIN MARKET
Retailer French Connection (FCCN) has reduced costs during a tough trading period. Websites sales were 24% higher in the past 15 weeks. Stores started to reopen on 15 June, but the recovery is gradual.
Standard list shell Auctus Growth (AUCT) had £780,000 in the bank at the end of June 2020.
Bermele (BERM) intends to acquire Singapore-based East Imperial, which sells premium mixers and New Zealand spring water. There is a nine month exclusivity agreement. Trading in Bermele shares is suspended.
Andrew Hore
Andrew Hore Quoted Micro 14 October 2019
NEX EXCHANGENational Milk Records (NMRP) increased its pre-tax profit by one-fifth to £2.4m in the year to June 2018. Revenues improved from £21.4m to £22.8m. The farm-based milk recording business grew, but the main growth came from the much smaller traceability and reproductive businesses. These figures are for the period before the recent virus attack. The dividend has been halved from 2.5p a share to 1.25p a share because management wants to invest in laboratories and IT. Net debt was £1.7m.
Good Energy (GOOD) has clarified its interim figures. The renewable energy supplier says that there was a misclassification of £4.9m relating to cash and current assets and current liabilities. The problem was the timing of payments. This does not change NAV and profit. There was a £20m in the bank at the end of September 2019. Good Energy has signed a technology platform agreement with Octopus Group, which could involve investment of £4m in order to improve efficiency. The existing technology will be written down over the 12 months to June 2019. Operating cost savings should cover the investment in 18 months of full implementation.
Vox has ended merger discussions with PCG Entertainment (PCGE) and Align Research saying that it is difficult to raise money for any business involving Align Research. Vox is concerned that this will hamper fundraisings for future deals, and it believes it could have a negative effect on its main business.
VI Mining (VIM) has acquired rights to near-surface oxide gold at the Aripuana project in Brazil. The company’s other assets are in Peru.
Reyker Securities has been suspended as a broker on NEX Exchange.
AIM
PCI-compliant payment services provider PCI PAL (PCIP) is making progress in winning new contracts in North America. Recurring annual contract value is £1.9m, compared with forecast revenues of £4.8m in the year to June 2020, up from £2.8m. PCI Pal will continue to lose money as it builds up revenues. Net cash was £1.5m at the end of June 2019. A new £2.75m facility will provide the working capital required to cover losses until the company starts to generate cash. Net debt of £1.5m is forecast at the end of June 2021, so this is well within the funding available.
Uhuru Corporation is a Japanese Internet of Things technology company planning to join AIM this month. Tokyo-based Uhuru (www.uhuru.co.jp/en) is involved in consultancy and engineering, as well as providing creative content and data analysis. Customers include NEC, Dentsu, Honda, Komatsu, Yamaha and Mitsubishi Heavy Industries.
Duke Royalty (DUKE) raised £461,500 at 44p a share via PrimaryBid.com, which takes the total raised to £16.55m. A two-for-51 open offer has been launched to raise a further £3.45m.
AIM shell Wilmcote Holdings (WCH) had discussions about the participation in the purchase of US-based speciality chemicals company Arclin Inc, but these have ended. The costs of the work done on this potential transaction have reduced the cash pile to £900,000. Wilmcote is holding talks with investors about how to fund expenses while it seeks another speciality chemicals acquisition. Trading in the shares has recommenced and the share price slumped from 97p to 65p.
Oil and gas producer Amerisur Resources (AMER) has issued revised bidding instructions to the potential acquirers that were provided data as part of the strategic review and formal sale process. The process will hopefully conclude before the end of the year.
Applied Graphene Materials (AGM) is focusing on the customers that are utilising its dispersion know-how and provide the best near-term revenue potential. That will enable the graphene producer to cut its operating costs and make the cash in the bank last at least another two years. Net cash was £6.1m at the end of July 2019 and a tax credit of £600,000 has since been received. Manufacturing will be streamlined, and the annual cost base could fall from £4.3m to £3.2m. Revenues remain modest.
Pawnbroker Ramsdens Holdings (RFX) will make a one-off gross profit of £600,000 from scrapping slow moving jewellery in order to take advantage of the rise in the gold price. Trading is in line with expectations. The interims will be published on 3 December.
United Oil and Gas (UOG) is on course to acquire Rockhopper Egypt for $16m before the end of 2019. A share issue is required in order to fund the initial cash payment of at least $11m. The rest of the payment will be in shares issued at the placing price. The main asset being acquired is a 22% interest in the Abu Sennan concession.
Time Out Group (TMO) has raised £17.1m at 127p a share. The June 2016 flotation price was 150p. The cash will be used to cut debt and roll-out more Time Out Market sites, with Chicago and Montreal due to open later this year and more contracted sites for the future. Net debt was £34.4m at the end of June 2019.
Investors give no quarter when it comes to profit warnings these days. Public housing software provider Castleton Technology (CTP) says recurring revenues are still going well, but there is a shortage of one-off revenues. This has led to a 15% cut in forecast revenues for the year to March 2020. That leads to a cut in pre-tax profit forecast from £6.4m to £5.3m. A similar reduction has been made in the forecast for 2020-21, which is £5.8m. The share price fell by more than one-third to 57p, which is less than ten times prospective earnings.
Trading in the shares of Solo Energy (SOLO) has been suspended ahead of a proposed acquisition of assets from ONE-Dyas for an initial €30.1m. That will be funded by debt and a share issue raising £20m, which will involve an open offer. The 14 gas fields are in the Dutch sector of the North Sea. Tom Reynolds is moving from non-executive to chief executive. The admission document should be published in November and the name will be changed to Scirocco Energy.
Dekeloil (DKL) is still being hampered by a low crude palm oil price but it is optimistic that the price will improve. There was a 11% decrease in third quarter crude palm oil production to 4,803 tonnes. However, there was a 30% increase in sales to 7,138 tonnes. The average price achieved was 16% lower at €456/tonne. The cashew processing project is on course for first production in 2020. The company is changing its name to Dekel Agri-Vision Ltd.
Managed services provider Redcentric (RCN) says that first half trading was on track. It is on course to improve pre-tax profit from £7.2m to £9.8m.
MAIN MARKET
Nottinghamshire-based nmcn (NMCN) is acquiring Lintott Control Systems (LCS), which designs and manufactures water and wastewater treatment systems and process software. The total cost of LCS could be as high as £3.76m. The initial payment is £1, plus up to £676,000 dependent on the receipt of payment for certain invoices. The rest is dependent on profit levels over the three years to the end of 2021.
Argo Blockchain (ARB) has increased third quarter revenues by 75%, compared with the second quarter. Revenues were £3.63m and the cryptocurrency mining margin is 73%, even though the bitcoin price has dropped. The number o machines in production should double to 12,000 by the end of the year.
Rainbow Rare Earths (RBW) used cash of £2.31m in operations in the year to June 2019. Rainbow generated revenues of £1.54m from trial rare earths mining at Gakara in Burundi, but production costs were double that level. Write downs mean that net assets were £3.37m at the end of June 2019. More exploration activity is required before production levels are increased.
Stranger Holdings (STHP) has agreed terms to acquire two mineral companies. One has assets in Cameroon and the other is in Idaho. Minerals include cobalt and nickel. Previous potential transactions have been terminated.
Standard list shell Auctus Growth (AUCT) is still seeking an acquisition. There is still £912,000 in the bank.
Andrew Hore
Andrew Hore – Quoted Micro 6 May 2019
NEX EXCHANGE
In 2018, Newbury Racecourse (NYR) increased revenues by 8% to £19.3m. This was despite lower race course attendances because of two abandoned days of racing. Underlying pre-tax profit jumped from £188,000 to £568,000. The NAV was £50.7m at the end of 2018. There was a further £3.25m payment from David Wilson Homes, which helped to finance capital investment.
MetalNRG (MNRG) has entered into heads of terms with AIM-quoted Mkango Resources so that it can earn up to 75% of the Thambi licence in Southern Malawi. The licence allows exploration for uranium, tantalum and niobium. MetalNRG has to spend $500,000 in the first 12 months and then a further $700,000 in the next 12 months. A further $800,000 has to be spent in the third year to earn the full 75%. The Kyrgyz Republic has banned uranium exploration and mining and the farm-in agreement for the Kamushanovskoye uranium deposit has been suspended.
Secured Property Developments (SPD) had a NAV of £554,000 at the end of 2018. There is £584,000 in cash on the balance sheet.
High Growth Capital (HASH) has raised £4.99m after expenses via a placing at 1.75p a share with Mirador FZE, which also has warrants to subscribe for 300 million shares at 2.5p each until the end of 2019. If the High Growth Capital share price closes above 4p for five consecutive days, the warrants have to exercised or they will lapse. Mirador has a 14.2% stake. Mike Power has been appointed as a non-executive director.
Sativa Investments (SATI) has opened the first Goodbody and Blunt centre in Bath. The centre will sell cannabidiol products and have a café area.
V22 (V22O) is asking shareholders to approve the cancellation of the NEX quotation 31 May, after nearly 13 years on the market. The art investor and studio space provider plans to sell assets and distribute the cash to shareholders. A matched bargains quotation via JP Jenkins is planned for six months after leaving NEX.
Trading in Valiant Investments (VALP) shares has been suspended because it has not produced its annual report.
Queros Capital Partners (BFD) has raised £205,000 in the past two weeks from the issue of 8% unsecured bonds 2025.
The shortlist for the NEX share of the year at the Small Cap Awards 2019 has been announced. The companies are National Milk Records (NMR), Sativa Investments (SATI), NQ Minerals (NQMI), Chapel Down (CDGP), DXS International (DXSP) and Walls and Futures REIT (WAFR) ,which is also on the shortlist for impact company of the year.
AIM
Capital equipment manufacturer Mpac Group (MPAC) is acquiring Lambert Automation for an initial £15m. UK-based Lambert provides automation equipment to the medical and healthcare markets. Revenues and profit have been declining, but there was an order intake of £24.5m in 2018 and that should help revenues to recover. Revenues were £17.9m in 2018. There is potential earn out consideration of up to £2.5m. Mpac’s own trading is in line with expectations.
Park Group (PARK) says that trading was better than expected in the second half of its financial year, but there were additional costs and the effects of accounting changes. Edison has reduced its 2018-19 pre-tax profit by 3% to £12.5m. Additional costs next year mean that the profit forecast has been cut from £14.3m to £11.7m.
Tracsis (TRCS) has acquired timetable optimisation software developer Bellvedi for an initial £4m with up to £7.9m more payable over four years depending on performance. Bellvedi made a pre-tax profit of £700,000 on revenues of £1.6m last year. Acquiring the ATTUne software means that less needs to spend on the development of existing Tracsis software. The deal adds 2% to this year’s earnings per share, moving it to 27.3p. Next year’s is enhanced by 7% to 32.3p.
Competitions organiser Best of the Best (BOTB) has published a fourth positive trading update in a year. This prompted finnCap to increase its earnings forecast from 15.4p a share to 18.6p a share. The previous upgrade was in January. The switch to a predominantly online model is paying off. Any upgrades to the forecasts for the year to April 2020 will happen after the 2018-19 figures are published on 20 June.
Allergy Therapeutics (AGY) says that the PQ Grass allergy phase III study will start a year later than expected. It should commence by June 2020. This follows an end of phase II study meeting with the FDA. This means that this year and next year the reported loss will be lower because of deferred spending on the study.
Eight Peaks Group (8PG) plans to cancel its AIM quotation because of limited liquidity. This will save £80,000 a year.
Trading in the shares of property investor Safeland (SAF) will end on 10 May.
MAIN MARKET
Motor dealer Pendragon (PDG) is selling two Jaguar Land Rover dealerships in California. This is expected to generate around £60m of cash, although £6.9m of profit contribution before central costs will be lost. However, Jaguar Land Rover has right of first refusal.
Papillon Holdings (PPHP) has appointed Novum as broker and it has committed to invest £300,000 in convertible loan notes. The planned purchase of a 50% stake in used car market focused fintech company Pace Cloud.
Ross Group (RGP) has reported its 2018 results, but these are before the completion of the Archipelago Aquaculture which happened early in 2019. Revenues fell from £335,000 to £60,000 and a profit of £57,000 was turned into a loss of £250,000. That is partly down to costs relating to the acquisition of Archipelago Aquaculture.
Thalassa (THAL) received acceptances of 18.5% of the share capital in its bid for Local Shopping REIT (LSR) and this offer has lapsed. Thalassa owned or had acceptances of 39.3%.
Standard list shell Bermerle (BERM) went to a 50% premium on the first day of trading. However, the bid/offer spread of 1p/2p means that investors could only sell at the 1p a share placing price. The company is seeking a pharma acquisition. The areas that Bermele is assessing include diabetes, cancer and mental health. It is also looking at personalised medicine.
Standard list shell Auctus Growth (AUCT) had £920,000 in the bank at the end of 2018. Fellow shell daVictus (DVT) had £355,000 in the bank at the end of 2018 and it has agreed to buy the rights to a restaurant concept from Typical Dutch NV for £100,000. The Havana Rolled Cigar Music Café concept has been developed at a site in Aruba. Spinnaker Opportunities (SOP) has also secured a possible acquisition in the form of Kanabo Research, which is a medicinal cannabis oil company. Kanabo is developing over the counter products and has distribution rights to a vaporiser. Spinnaker had £1.04m in the bank at the end of 2018.
Trading in the shares of Tex Holdings (TXH) and Avocet Mining (AVM) has been suspended because they have not published 2018 accounts.
Andrew Hore
Andrew Hore: Quoted Micro 17 September 2018
NEX EXCHANGE
Renewable energy supplier Good Energy (GOOD) reported a 19% increase in interim revenues to £61.8m. Pre-tax profit has more than trebled to £2.4m, if discontinued activities, including the investment in the proposed Swansea Bay Tidal Lagoon, are excluded. The interim dividend is unchanged at 1p a share. A brand relaunch is planned for the second half.
Eight Capital Partners (MORE) has made its first investment in the financial services sector. It is acquiring €111,100 worth of 8% corporate bonds 2020 in Italian financial services company Finance Partners Group. Management believes the link up with the Italian company will fit well with other potential investments.
EPE Special Opportunities (ESO) has completed its migration from the Isle of Man to Bermuda. Trading in the shares has been suspended. Trading should be restored by 21 September.
KR1 (KR1) continues to invest in new token issues. A $200,000 investment has been made in Foamspace Corp for 3.63 million FOAM tokens. This business intends to develop a protocol for a network of beacons providing location services. A further $100,000 has been invested in the Althea Mesh project tokens. This enables decentralised internet service providers to be set up. There has been $100,000 invested in Etherisc tokens. Etherisc is developing a blockchain service for the insurance sector.
Sandal (SAND) has launched an installer service for its MiHome smart home range. The service will be provided by Icon Heating Solutions.
Tectonic Gold (TTAU) has initiated a ten hole drilling campaign at the Specimen Hill discovery in Queensland. Four holes have been completed. The drilling should be complete in four weeks.
Panther Metals (PALM) has acquired the Bear Lake project, which is a package of gold and base metal prospects in north wester Ontario. The consideration is C$133,000 (£77,000) in cash and shares.
AIM
Manx Telecom (MANX) reported relatively flat interim figures but a deal by one of its developing investments could mean that the business could become significant in a couple of years time. The interim dividend was raised by 5% to 4.1p a share. Full year pre-tax profit is expected to edge up to £15.2m with a similar increase in the final dividend. Investee company Goshawk has developed a hearing loss product and signed up BT’s mobile subsidiary EE, which could provide a potential market of 3 million people.
Property Franchise Group (TPFG) grew all its letting brands in the first half of 2018 and its online estate agency eweMove went from loss to profit in the period. Full year profit is expected to increase from £4.3m to £4.6m.
Anexo Group (ANX) has reported growth in interim revenues and profit although the cash raised in the recent flotation has yet to be put to use. The legal services and credit hire provider is expected to increase full year pre-tax profit from £13.8m to £14.7m in 2018, and then to £16.4m in 2019.
STM Group (STM) increased interim revenues by 6% to £10.8m and pre-tax profit by 11% to £2.1m. The interim dividend was increased by 17% to 0.7p a share. The main growth has come from the pensions business.
K3 Capital Group (K3C) continues to go from strength to strength. The mergers and acquisition adviser increased revenues by 53% to £16.5m and net cash more than doubled to £7.5m by the end of May 2018. Pre-tax profit could dip from £7.3m to £7m, which would lead to a small reduction in dividend from 11.2p a share, but there is scope for upgrades in expectations.
Gatemore continues to build up its stake in TLA Worldwide (TLA) by taking advantage of the share price decline following TLA’s latest profit warning, which was released in the morning for a change, but there is no news about a replacement nominated adviser. The shareholding has been increased from 12.2% to 13.7%. No news about a new nominated adviser.
Audio visual equipment distributor Midwich Group (MIDW) increased its interim, constant currency, revenues by 24% to £264.1m. Organic growth was around 9%. Underlying pre-tax profit was 22% higher at £9.78m. A full year pre-tax profit of £28.4m is forecast.
Potatoes producer Produce Investments (PIL) is recommending a 193p a share cash bid by Promethean Investments. This values the company at £53m.
Orosur Mining (OMI) has secured a $2m investment from Newmont Mining at more than treble the pre-deal market share price. This will provide investment for the Anza project in Colombia. Orosur had been profitable and cash generative but it fell into loss in the year to May 2018 as gold production costs were in excess of the selling price.
Education services provider Malvern International (MLVN) made a small first half loss but it is on course to move into profit in the full year. The number of students signing up for courses means that enough revenues should have been secured for a full year pre-tax profit of £300,000. There will also be a second half contribution from the recent Manchester acquisition.
MAIN MARKET
Photovoltaic silicon wafers supplier PV Crystalox Solar (PVCS) had net cash of €39.6m at the end of June 2018. This could be returned to shareholders or used to finance an acquisition. The decision will be made before the end of this year. Multicrystalline silicon wafer production ceased in April 2018 and the focus is cutting of quartz and glass. Interim revenues more than halved to €6.2m.
Toople (TOOP) is raising £2.2m at 0.3p a share, following its recent contract news. This is no surprise, but the share price has fallen back from just over 0.9p near the end of August.
Contango Holdings (CGO) continues to undertake due diligence on a near-term producing asset in Zimbabwe. This potential deal was announced last December. There was nearly £638,000 in the bank at the end of May 2018.
Standard list cash shell Auctus Growth (AUCT) had £962,000 in the bank at the end of June 2018. The NAV is 35.5p a share.
Andrew Hore
Quoted Micro 1 May 2017
NEX EXCHANGE
Cyber security technology developer and consultancy Crossword Cybersecurity (CCS) continues to scale up its business and there is a product launch planned for this summer. In 2016, revenues jumped from £21,000 to £345,000 but the loss increased from £755,000 to £950,000 – even after £78,000 of R&D tax credits. There was £1.55m in the bank at the end of 2016. AIM-quoted Iomart is cooperating with Crossword on launching the Nixer machine learning DDoS platform on the market.
Brewer Adnams (ADB) says sales of beers and spirits continue to grow and its pubs are trading well, although the sale of smaller pubs will reduce the profitability of this part of the group. Currency movements, the sale of the UK distribution rights for Lagunitas beers and the renovation of the Swan Hotel will hamper overall progress in the first half. The £7m investment in the brewery is almost complete.
Sandal (SAND) has signed an agreement with Spanish smart home technology business Momit, which will redesign its smart thermostat so that it is compatible with the Energenie MiHome platform. This is part of Momit’s strategy to enter the UK market. The redesigned product should be launched in September and, along with related radiator valve sales, could add £500,000 to the annual revenues of Sandal.
Healthcare staff provider Healthperm Resourcing Ltd (HPR) has revised its strategy and candidates need to have passed the International English Language Testing System, which is required for a visa anyway. Healthperm has opened its own IELTS training facility in the UAE and this is focused on nurses. Healthperm has won two new mandates and there are three other potential mandates on the cards. Chief executive David Sumner has agreed to increase the maximum amount of loan notes he will subscribe for from £1m to £1.8m. The loan notes have a 10% interest charge.
Capital for Colleagues (CFCP) has raised £1.44m at 42p a share from its open offer and a further £980,000 in a placing at the same price. Coinsilium Group (COIN) has raised £118,000 at 2p a share and it will use £60,000 to finance the development of a blockchain-based management system. Goldcrest Resources (GCRP) is raising £380,000 at 0.5p a share. The cash will help to finance the competent persons report on the Norio block, which the company is in the process of acquiring.
NQ Minerals (NQMI) has entered into a A$6.5m loan facility to help finance the acquisition of the Hellyer gold mine in Tasmania. This means that NQ has A$15m of the A$20m in cash it requires to make the purchase.
Indigo Holdings (INGO) is investing £200,000 in Iranian Fast Moving Consumer Goods Ltd, an online retail delivery business associated with a convenience store chain.
Ashley House (ASH) has secured a £500,000 loan facility from its non-executive deputy chairman Stephen Minion. The secured facility lasts for 12 months.
Housebuilder St Mark Homes (SMAP) has appointed Alfred Henry Corporate Finance as its corporate broker. Merchant Place had performed this role for 18 years.
AIM
Mortice (MORT) has made a second UK acquisition. The facilities management services provider is paying up to £4.5m for Elite Cleaning and Environmental Services – £3.5m in cash and shares plus a 12-month earn-out of up to £1m in cash and shares. Elite provides cleaning services and clients include ITV and BMW. Elite made EBITDA of £1m on revenues of £12.3m. finnCap has increased its earnings forecast by 5% to 7.8 cents a share.
Internet domain registry company Minds + Machines (MMX) moved into profit in 2016. Revenues grew from $5.5m to $13.5m, while a loss was turned into an underlying pre-tax profit of $3.5m. This follows a restructuring of the business and the sale of non-core operations. Sales of the .vip domain in China were the major factor in the growth in revenues and .boston should be launched later this year. Cash conversion was poor due to restructuring costs and increased working capital.
Directa Plus (DCTA) had technological problems which held back the progress of the graphene producer last year. In 2016, revenues fell from €1.7m to €0.8m and the loss more than doubled to €4.1m. The reason behind the fall in revenues was the lack of sales of mobile decontamination units with sales of G+ graphene nearly doubling. The focus is textiles and environmental uses of the company’s graphene. Directa Plus has net cash of €6.8m and this will be enough to absorb the expected cash outflows for the next couple of years.
Diagnostic tests supplier Omega Diagnostics (ODX) says that its underlying pre-tax profit will fall from £1.3m to £1.1m in 2016-17. All divisions increased their revenues, helped by currency movements. Field trials are planned for the VISITECT CD4 test and the CE mark could be obtained by the end of the year.
TLA Worldwide (TLA) continues to embarrass itself with disastrous trading statements. Having issued a trading statement at 6.26pm on 23 December 2016, it has released its latest profit warning at 4pm – management probably thinks that is a big improvement because it was before the market closed. It turns out that four months after the end of the financial year TLA’s 2016 figures will be even worse than expected. Changes to revenue recognition and provisions for money that TLA thought it was owed but has not been paid are the reason. There is also money that TLA believed it was owed in financial periods prior to 2016 but has not been paid. That will lead to write-downs and the current estimate is between $1.5m and $2.5m. The 2016 figures may eventually be released in late May, according to the company.
Imaginatik (IMTK) says its revenues for the year to March 2017 will be flat at £3.9m but the loss should still be reduced. Bookings for the innovation software were lower at £3.5m but new clients were won in the second half. Imaginatik could be on course to breakeven in the current financial year.
AstraZeneca has returned the rights to AZD9412 to Synairgen (SNG) following a phase IIa study. The inhaled interferon beta did have a beneficial impact on lung function but the positives were not enough to continue with trials. The data will be returned to Synairgen for it to analyse. Synairgen has £4m in the bank.
Avacta (AVCT) has signed its first non-therapeutics licence for its affimers. The licensee is a major global diagnostics companies. The upfront payment is probably small but this is a significant deal.
Radiation detection technology company Kromek (KMK) is trading in line with expectations and it expects to continue to win new contracts.
Property management services provider HML Holdings (HML) has confirmed that its 2016-17 profit will be in line with expectations of £1.8m. There were six acquisitions during the year. A 2017-18 profit of £2.2m is forecast.
Instant communication mobile services provider Mobile Tornado (MBT) has raised £1.1m at 5p a share and the cash will be used for further development of its technology and support the launch of the Dispatch Console service. Last year, revenues fell 10% to £2.02m but recurring revenues increased to more than 90% of the total. The loss increased from £2.03m to £3.73m. Net debt was £9.06m at the end of 2016.
MAIN MARKET
Sealand Capital Galaxy Ltd (SCGL) has completed the acquisition of social media business SecureCom and Sealand hopes that a share split/bonus issue will improve liquidity. 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 25p to 2.5p. The November 2015 flotation price was 10p and earlier this year a further £1.4m was raised at 20p a share. Pro forma cash was £3.26m at the time of the acquisition.
A number of standard list shells have reported their annual figures so that they beat the deadline of the end of April. Financial services-focused shell Vertu Capital Ltd (VCBC) is still discussing the potential acquisition of VCB Malaysia but there is still some way to go before a deal is secured. There was £553,000 in the bank at the end of 2016. Auctus Growth (AUCT) still had £1m in the bank at the end of 2016 and it continues to assess potential acquisitions.
Papillon Holdings (PPHP) is still proceeding with the long drawn out acquisition of Myclubbetting.com and it is near to lodging a readmission document with the UKLA. The publishing of the accounts of Papillon has been delayed because of difficulties concerning quantifying the costs of the acquisition.
Andrew Hore
Quoted Micro 3 October 2016
ISDX
Newbury Racecourse (NYR) reported flat interim revenues of £5.56m and a higher underlying loss because of the loss of three race days to bad weather. There was a cash outflow from operations of £1.51m. The sale of a final tranche of land to David Wilson Homes has generated a disposal profit of £20.1m but the cash has not been received yet. There is £7.56m of cash in the balance sheet but the disposal proceeds will be received as homes are sold. The current market capitalisation is £17.6m, whereas shareholders funds are £44.9m.
Chapel Down Group (CDGP) says that interim revenues were 26% higher at £4.09m with the fastest growth coming in the Curious Drinks business, although the wine operations increased revenues by 14% and still remain the core activities. Curious Drinks raised £1.74m during the period and that led to a notional gain on disposal of £467,000. The cash outflow from group operations reduced from £713,000 to £441,000.
Halal verification business DagangHalal (DGHL) reported higher revenues in the six months to June 2016 but the costs of raising £3.6m and joining ISDX helped push the company into loss. Revenues grew from MYR2.96m to MYR3.34m but MYR3.54m of flotation costs and nearly trebled overheads meant that a pre-tax profit of MYR1.18m was turned into a loss of MYR4.49m. DagangHalal has not had time to invest the funds it raised, there was MYR14.9m in the bank at the end of June 2016, so this should help revenues to grow to offset he higher overheads. Management was also distracted by the flotation in the first half. The company has developed a global e-marketplace and two more certification bodies have signed up for the Halal verification engine, taking the total to 40, and two say that they will sign up for the Halal certificate management system, which has eight users. The number of merchants using the system has also increased.
In the six months to June 2016, WMC Retail Partners (WELL) reduced its loss helped by the release of £42,000 of past provisions. Revenues dipped from £2.15m to £2.05m but the loss fell from £226,000 to £78,000. No interim dividend has been declared. Management expects to make an announcement about loss-making Cornish Market World in the near future.
Diversified Oil & Gas (DOIL) has almost trebled its first half revenues from $2.9m to $7.6m. One-off books gains meant that the reported pre-tax profit was $36.5m but in reality there was an underlying loss. There was a $381,000 cash outflow from operations. The company continues to make acquisitions.
Mechan Controls (MECP) is holding a general meeting to gain shareholder approval to buy back up to 200,000 shares – equivalent to 10% of the shares in issue. This is part of the board’s plan to enable shareholders to realise part of their investment following the termination of bid talk earlier in the year.
Ecovista (EVTP) says that planning permission has been granted by East Herts Council for 100 Rye Street.The building will be demolished and a six bedroom home will be built on the site. In the six months to June 2016, the loss increased from £92,000 to £168,000. Ecovista is seeking additional finance in order to acquire the 85% of Cingella Srl it does not already own. The company has until the end of 2017 to pay €4m for this stake. Ecovista’s interim loss increased from £36,000 to £168,000.
AIM
Conference call technology and services provider LoopUp (LOOP) has reported its interims one month after joining AIM. In the six months to June 2016, revenues grew from £4.81m to £6.38m. That includes revenues from a BT contract which is almost at an end and underlying growth was 38%. There was a pre-tax profit of £72,000, compared with a £619,000 loss. The cash raised in the flotation and the conversion of debt into shares means that pro forma net cash is £3.16m.The US is the biggest generator of revenues with the UK not far behind. The cash will be invested in further development spending and marketing. Non-executive chairman Lady Judge bought 15,754 shares at 126p each, compared with the flotation price of 100p. This is her total shareholding.
Gold recovery firm Goldplat (GDP) moved back into profit in the year to June 2016 as the performance of the gold recovery activities in South Africa and Ghana improved with more to come from capital investment in these operations. Revenues grew from £16.6m to £20.2m with a loss of £796,000 turning into a profit of £1.94m. Strong cash generation meant that there was net cash of £2.06m. There was a 23% increase in gold production, which included a toll processing contract with Rand Refinery. In contrast to the growth in output from the recovery operations, there was less produced by the Kilimapesa mine in Kenya . A new processing plant should come into action by the end of this year which will increase capacity; at Kilimepesa. There is scope to expand recovered gold production by sourcing material from South America.
Training systems supplier Pennant International (PEN) returned to profit in the first half of 2016 even though a number of major orders have not yet made a significant contribution. Revenues grew from £5.78m to £6.65m, while a loss of £755,000 was turned into a profit of £11,000. Four new contracts have been secured, including one with new client Lockheed Martin. Net cash was £2.6m at the end of the period, with £3.56m raised at 55p a share since June, but there is no dividend. The order book is worth £46m. There are tax losses of £4.7m so there should be no significant tax charge for up to three years depending on how fast profitability improves. A full year profit of £2.2m is forecast. Management wants to supplement organic growth with acquisitions, which are most likely to be in the core defence sector.
Shares in Sareum (SAR) doubled on the back of a licence agreement for its Chk1 inhibitor CCT245737 with ProNAi Therapeutics. Sareum and co-investment partner CRT Pioneer Fund will receive an initial payment of $7m with up to $2m payable on the successful transfer of two ongoing phase I clinical trials for the cancer drug. Sareum will receive 27.5% of these payments and it will have £300,000 of funding commitment returned. There could be additional payments totalling up to $319.5m depending on the achievement of milestones. There could be low single digit or high double digit royalties on a commercial product.
Savannah Resources (SAV) has raised £1.42m at 3.5p a share and directors and related investors have agreed to provide a further £830,000 at the same share price. The rest of the cash will come in after the closed period has ended. The funds will be used to develop copper projects in Oman and finance other projects in Mozambique and Finland. Joint venture partner Rio Tinto has extended the long stop date for the agreement over the combined Mutamba/Jangamo project in Mozambique until 10 October or a later agreed date. The interim loss was reduced from £1m to £800,000.
Premier African Minerals (PREM) made an increased interim loss because of operational issues at the RHA tungsten mine. The plant has been upgraded so these problems should be at an end and processing rates should improve. A further expansion to 16,000t a year is planned for next year and that investment could have an impact on production levels. Net debt was $3.8m at the end of June 2016.
Thor Mining (THR) is awaiting confirmation of assay results for its Molyhill tungsten project in Australia. The initial indications are that there is anomalous tungsten. Thor may start more closely spaced drilling after the results are received. A £1m impairment on the disposal of the Spring Hill project in February meant that the interim loss before tax increased from £880,000 to £1.75m. The initial proceeds of the disposal helped to reduce net debt to £445,000.
ValiRx (VAL) is on course to start dosing patients with lung cancer with its VAL401 treatment in the phase IIb trial. Higher R&D spending meant that the interim loss increased from £1.37m to £2.12m. There was £569,000 left in the bank at the end of June 2016 and since then £1.2m has been raised and a convertible loan facility of up to $3.75m has been agreed with Yorkville.
Cloud services provider Nasstar (NASA) increased its monthy recurring revenues to £1.23m even before the recent acquisition of Modrus which took the figure to £1.7m. In the first half of 2016, revenues were 14% higher at £8.1m. Underlying pre-tax profit improved from £860,000 to £981,000. Pro forma net debt is £3.5m and cash flow should be strong enough to wipe this out by the end of 2017. Full year profit is expected to rise from £1.6m to £2m. The benefits of the Modrus acquisition should help the profit to rise to £3.5m in 2017.
Digital audio visual agency MediaZest (MDZ) has won £250,000 of contracts in the past six weeks. The company has also said that the previously announced project with Rockar is for Jaguar Land Rover at Westfield Stratford.
MAIN MARKET
Standard list shell Auctus Growth (AUCT) is still seeking an acquisition and it has just over £1m left in the bank. The directors’ are not taking any salaries yet and costs are running at £35,000 a year.
Andrew Hore