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Quoted Micro 31 October 2016
ISDX
Via Developments (VIA1) says the Canal Street project in Manchester should be completed next March, while another Manchester site is attempting to gain enhanced planning permission that would enable 71 apartments to be built. Via expects deposits of 15% of the purchase price of the eight flats in Canal Street before the end of 2016 and this should generate £329,000. The Napier House project in Luton has been granted permitted development for 26 one-bedroom apartments. Additional planning permissions for an extra floor and a change to the facade of the building have been submitted. Via has received firm commitments for £1m of additional 7% debenture stock. This will take the debentures in issue to £4.5m.
Ganapati (GANP), the developer of apps for social media and games, reported an increase in its interim loss from £7.47m to £8.41m following the opening of a London office. Revenues fell from £2.3m to £1.34m. A unrealised foreign exchange loss of £5.71m on Yen borrowings. Management hopes that the Yen bonds in issue will be extended when they come up for repayment. There was £1.5m in the bank at the end of July 2016 but Ganapati wants to raise more money via a share issue to invest in further research and development. .
Ashford Borough Council has granted planning permission for the new Curious Brewery on a 1.6 acre site in the town centre. The Chapel Down Group (CDGP) brewing subsidiary raised money to build the brewery through crowd funding.
Miton Asset Management has increased its stake in rail safety products developer Wheelsure Holdings (WHLP) to 10.2% following the latest share subscription. WB Nominees has increased its stare to 9.2%, while JM Finn Nominees has raised its holding to 8.5%. Chief executive Gerhard Dodl increased his shareholding by 500,000 to 4.215 million shares, giving him 2.4% of Wheelsure.
AIM
Symphony Technology increased its offer for the remaining subsidiaries of Bond International Software (BDI) and the 121p a share bid by Constellation Software Inc has lapsed after gaining total acceptances of 47.4%. Constellation says that it will vote in favour of the disposal to Symphony for £22.8m. The proceeds and the other cash held by Bond will be distributed to shareholders as part of a liquidation process. Between 127p a share and 129.5p a share should be distributed with an initial distribution of at least 126p a share. Constellation originally bid 105p a share and it had acquired the majority of its 29.9% stake in Bond at 75p a share back in 2010.
Cyprotex (CRX) is recommending a bid from German drug discovery firm Evotec AG. The 160p a share cash bid values the contract pharma research services business at £41.7m. The share price has not been at the level of the bid since 2014. Cyprotex believes that it needs a partner to help it grow its operations further and Evotec will help it to grow in Europe.
Sunrise Resources (SRES) has revealed details of the results for the phase 2 drilling at the Bay Street silver project in Nevada. There was no positive news from this drilling and further exploration and drilling is required.
Eastern Europe-focused oil and gas explorer Ascent Resources (AST) has raised £3.5m via a placing at 1p a share and a further £1m via a loan note issue. Some of the cash will be used to repay a £871,510 loan facility from Henderson, which has also deferred the redemption of £8.2m of loan notes to 19 November 2019. The rest of the cash will complete the drilling of two wells and connect them with a refurbished central treatment station. This should enable Ascent to commence gas production by next spring and the gas will be initially be sold to Croatia.
South Africa focused miner Ironveld (IRON) is raising £1.8 at 4.5p a share with some of the cash going towards the development of the 15MW DC smelter for the iron, vanadium and titanium project in the Bushveld complex. The cash should last until next June and the shares come with a warrant to subscribe for another share at 6.75p for 12 months after the shares are issued. The Industrial Development Corporation has approved facilities of R244m for the project and negotiations continue for the remaining debt requirements. The total finance required is R841m. An offtake agreement has been finalised for the high purity iron powder that will be produced over a five year period from the commencement of production. Offtake agreements were already secured for titanium and vanadium.
Workforce optimisation software provider eg solutions (EGS) has won its first direct contract in Asia. The £500,000 contract is with a Singapore-based financial business and 50% of this will be recognised in the year to January 2017. This underpins the current expectations.
There has been further good drilling news concerning the Hot Maden project in Turkey, including some improvements in grade, and Mariana Resources (MARL) expects to report the preliminary economic assessment in late November. This assessment will provide the first guidance about the economics of the project.
Futura Medical (FUM) has raised £12m at 57p a share in order to fund the development of its portfolio of products. This includes the commercialisation of erectile dysfunction treatment MED2002 and trials for pain relief products TPR100 and TIB200. There was £2.9min the bank at the end of June 2016. Henderson will maintain its stake in Futura at just below 20%. The CSD500 condom has received European approvals for an extended shelf life of 18 months for the products manufactured in India. The European supplier has applied for the same shelf life extension.
Arian Solver Corporation (ACQ) has extended the exclusivity period for the Notche Buena gold silver tailings project in Mexico until 27 December. Recovery levels have been poor even though gold grades have been commercial so more tests are required. Arian is assessing an advanced silver exploration project in the US.
Share (SHRE) has made another add-on acquisition of customer accounts and the existing business is trading in line with expectations. The purchase of a book of 8,000 customer accounts with £200m under administration should be completed in April 2017. The Share Centre has maintained its market share of a peer group of brokers revenues, excluding interest, at more than 10%. In the third quarter, revenues were 7% ahead, while customer assets have increased by one-third to £3.6bn. Dealing commission and fee income have both grown but interest income fell by more than one-third. Share is still expected to make a small underlying loss this year.
MAIN MARKET
Nasdaq OMX-quoted AB Traction has increased its stake in engineering and environmental consultancy Waterman Group (WTM) to 14.3%. AB Traction went above 3% in April 2013 and has been building up the stake since then. AB Traction (www.traction.se) is an active long-term investor which does not focus on any particular sector. The strategy is to grow NAV.
Andrew Hore
Quoted Micro 5 September 2016
ISDX
Guild Acquisitions (GAQO) has invested £30,000 in NOMAN Ventures Ltd, which is seeking investments in areas such as block chain, artificial intelligence, drones and virtual reality. The cash is being invested in convertible loan notes that will either be convertible at a 40% discount to the share price of the next fundraising of at least £250,000 or after 12 months. Guild plans to ask its shareholders to vote to change its name to Kryptonite 1.
St Marks Homes (SMAP) increased its NAV to 137p a share by the end of June 2016. A Richmond development was completed in March and three sales have been completed since June. Sutton and St Margarets sites will be completed this month, with all of the Sutton residential units already sold and the commercial space under offer. The merger with St Marks Contracts Ltd happened after the period end. Carbury Property Holdings has increased its stake in St Marks to 19.1%.
Via Developments (VIA1) says that it expects to start generating revenues in the final quarter of 2016. Cash raised from debenture issues has been used to buy three development sites – two in Manchester and one in Luton – costing £4.1m and with a development value of £18.3m within 18 months. The marketing of the first development in Manchester has begun. The company says that it is seeing more interest from foreign investors since the EU referendum. Via Developments has issued more ordinary shares but Pyramid Court Investments Ltd, which is owned by John Kahn, still holds 100% of these unquoted shares.
Secured Property Developments (SPD) has agreed to lend £600,000 for development finance to Space Property, which is 29.15% owned by Secure Property Developments director R Shane. This means that shareholders have to agree to the deal. The cash will lent for 12 months at 10.2% a year and it will be secured on a freehold commercial property in York. Secured Property Developments had £760,000 in the bank following the sale of its property asset.
Black Sea Property (BSP) has joined ISDX and 50,000 shares were traded at 0.01p each on the first day of trading (31 August). The former AIM company has a new strategy, which is to build up a portfolio of Bulgarian property assets. This could be residential, commercial or hotel properties, or it could be investments in distressed companies that need to be restructured.
Diversified Oil & Gas (DOIL) has raised a further £715,000, taking the value of bonds in issue to more than £10.6m. That is after buying back £197,000 worth of 8.5% unsecured bonds from a bondholder fund.
Crossword Cybersecurity (CCS) has appointed former chief of the secret intelligence service Sir Richard Dearlove as non-executive chairman.
AIM
EMIS (EMIS) reported flat interim revenues but profit improved. The GP and pharmacy software operations grew their profit but the specialist operations produced disappointing results due to the extra costs for taking on additional contracts. There were cost savings in the first half and the benefits will start to come through in the second half. Full year profit is expected to improve from £36.1m to £39.3m even though revenue forecasts have been shaved.
Facilities management and security services provider Mortice (MORT) grew its revenues by 51% to $133.5m in the year to March 2016 and even if acquisitions are stripped out underlying growth is still 13%. There were initial contributions from the UK and Singapore businesses acquired during the year but they will make a much bigger contribution this year – particularly as the UK facilities management business has won a major contract. India remains the main revenue generator but further acquisitions are likely. There should be a large increase in pre-tax profit in 2016-17 – house broker finnCap forecasts $4.2m.
Surgical instruments developer and supplier Surgical Innovations (SUN) has returned to profit at the operating level and there is still scope to improve gross margin. A small pre-tax profit is expected for the full year as new product launches boost second half sales. A sharp fall in inventories and debtors has helped to cut net debt to around £700,000. The underlying business is back on a firmer footing and management can turn its attention to building up the group via acquisition.
Bond International Software (BDI) says that it has received a bid approach from ESW Capital but no figure has been put on the potential offer. The Bond board has advised shareholders not to accept the Constellation Software bid of 105p a share. The offer document has been sent to shareholders.
MAIN MARKET
Investment in new products is starting to pay off for BATM (BVC) but the real benefits are unlikely to show through until next year’s figures. BATM reduced its interim loss and it is on course to move back into profit this year. Revenues declined in the first half because of reducing sales of legacy products, particularly in the networking sector, but newer products will boost second half revenues. The diagnostics business grew its revenues and it has secured a partner in China. A pre-tax profit of $2.7m is forecast for 2016 and that profit should double in 2017 as the newer products build up sales.
Cathay International Holdings (CTI) has investments in China-based healthcare businesses and a hotel. Revenues dipped slightly to $61.1m but higher gross margins meant that the company swung from loss to profit in the six months to June 2016. The main improvement came from 50.5%-owned Lansen. Trading would have been even stronger but for the decline in the RMB.
Gulf Keystone Petroleum (GKP) has launched an open offer to raise £19.1m at 0.8314p a share as part of its restructuring. The open offer closes on 15 September.
Quoted Micro 6 June 2016
ISDX
Capital for Colleagues (CFCP) has invested £770,000 in employee owned businesses in the six months to February 2016. Interim revenues grew from £257,000 to £364,000 but admin costs increased significantly so, excluding unrealised gains, the pre-tax profit dipped from £41,000 to £34,000. Unrealised gains slumped from £47,000 to £6,000. At 62.5p (60p/65p) a share, Capital for Colleagues is valued at £6m. The net asset value was £4.2m at the end of February 2016 and £1.15m has been raised since then. There are still plenty of opportunities for new investments as well as additional investment in existing investee companies.
Blockchain technology investor Coinsilium Group Ltd (COIN) reported a loss of £2.42m in the first 15 months of its existence to December 2015. That includes an investment impairment of £1.31m for an investment in Hive Labs. The investments are all early-stage so it will take time for them to bear fruit. More recently the company has branched out into providing training. The NAV was £2.33m at the end of 2015. At 4.1p (3.6p/4.6p) a share, Coinsilium is valued at £2.9m. There were seven trades in Coinsilium shares last week at prices between 3.2p and 4.25p. Five of these trades were the day before the results were announced. The most recent trade was 100,000 shares at 3.2p each. Coinsillium is one of the more frequently traded ISDX companies and there were seven trades in the previous week.
Contemporary art collector and trader V22 (V22O) says an independent valuation of its collection at the end of 2015 said that it was worth £1.67m, which is triple the amount invested in the collection. V22 also has a property portfolio and in May it paid £250,000 for a 125 year licence on a Grade II listed building in Forest Hill, which will provide exhibition and event space. In 2015, revenues grew from £568,000 to £822,000 and the loss declined from £78,000 to £34,000. Since then, V22 has raised £225,000 from selling half of its option interest in a company that owns the freehold to a building in South Bermondsey. V2 has already received £150,000 with £75,000 payable by the end of June. V22 retains an option over 15% of the holding company that owns the building. At 0.9p (0.85p/0.95p) a share, V22 is valued at £300,000. The NAV including the valuation of the art portfolio is 4.49p a share.
Cairn has resigned as the corporate adviser to Nordic Energy (NORP), whose shares are already suspended because it is unable to bring out its interim figures within the required time. At the end of 2015, Nordic relinquished its Danish oil and gas exploration licence because it was unable to fund the required work programme. Nordic had £42,551 in the bank at the end of May 2015. Former director Rudolf Kleiber has been awarded £14,210 for unfair dismissal and disability discrimination.
Carbon credits adviser China CDM Exchange Centre Ltd (CCEP) reported flat revenues of £1m in 2015 but profit dipped from £29,000 to £6,000. There was a cash inflow of £575,000, taking cash in the bank to £1.59m. The NAV is £46.1m, which is mainly based on carbon-related investments. At 0.25p (0.2p/0.3p) a share, China CDM is valued at £300,000, which is a large discount to the cash pile. There was a small trade of 936 shares at 0.2p each the day after the results were announced.
China-based LED products supplier Gowin New Energy Group Ltd (GWIN) reported a large loss for 2015 because of write-offs relating to the termination of contracts with its former manufacturing partner. The plan is to keep design and sales in-house but outsource production. There may also be opportunities for joint production development with other companies. This will reduce the company’s working capital requirements. There was cash of RMB1.3m in the bank at the end of 2015 but there are also shareholder loans of RMB12.6m.
Diversified Gas & Oil (DOIL) has raised a further £420,000, which is part of the additional £3.5m it wants to raise from the issue of 8.5% unsecured bonds. In 2015, revenues fell from $7.36m to $6.3m due to the lower oil price and there was a cash outflow from operations of $3.93m. The company continues to acquire oil and gas assets.
AIM
Constellation Software Inc has made a bid approach to Bond International Software (BDI) following the ending of a standstill agreement late last year. The potential offer price is 105p a share and Bond is still considering its options. Last month, Bond sold Strictly Education for £11.3m – £7m paid immediately and £4.3m to be paid within six months. The cash will be used to pay off borrowings, which were £5.9m. Bond had cash in the bank so this will have gone up following the transaction and there were plans to distribute some of the cash to shareholders. It was after this disposal was announced that Constellation converted non-voting shares and this gave it 29.9% of Bond. Constellation appears to have made the bid approach at this time so that it can retain the cash.
Air filtration and clean air equipment supplier MayAir (MAYA) has secured new contracts worth a total of $22.8m. The majority of this work will come from the installation of clean room equipment for two customers. There is also a contract to supply air filtration equipment for office buildings. The majority of these revenues will be generated this year. This is good news because a large contract was coming to an end. In 2015, MayAir’s revenues were $63.6m. Former broker Mirabaud forecast 2016 revenues of $75.5m. Cantor Fitzgerald has been appointed broker to the company.
Life sciences software provider Instem (INS) has acquired regulatory information management systems supplier Samarind for up to £2.5m and this has led to a profit upgrade. House broker N+1 Singer has increased its 2016 earnings per share forecast by 5% to 10.4p and the 2017 figure by 14% to 13p. Samarind adds post-marketing services to Instem’s existing regulatory reporting software. Two-thirds of Samarind’s revenues of £1.2m are recurring and most of the customer base is new to Instem.
Daily Internet (DAIP) moved into profit in the year to March 2016. Revenues grew by 22% to £4.76m and a loss of £140,000 was turned into a profit of £250,000. The managed hosting and internet services provider has been reducing its cost base and the benefits are yet to show through. There was £650,000 generated from operating activities and net cash was £206,000, although there is still potential contingent consideration of £435,000.
Building services provider Northern Bear (NTBR) says its net debt fell in the year to March 2016 and it intends to increase its dividend. Last year, net debt was £4.5m and the dividend was 1.5p a share, which was well covered by earnings of 8.5p a share. Earnings are set to be flat this year despite problematic weather conditions but the increased dividend should still be well covered. Reduced finance costs offset the effect of lower revenues.
Kefi Minerals (KEFI) says that it has reduced the funding requirements for the Tulu Kapi gold project from $145m to $130m following further refinements to the project and reductions in interest costs. At a gold price of $1,250/ounce, Kefi expects to generate $173m of cash in the first three years of production. All-in sustaining costs are $746/ounce. This is based on contract open pit mining and total production of 980,000 ounces of gold over ten years.
MAIN MARKET
Specialist electronics supplier Acal (ACL) reported underlying revenue growth of 3% in the year to March 2016. Including acquisitions, revenues rose from £271.1m to £297.2m – it would have been higher at constant exchange rates – and improved margins meant that pre-tax profit jumped from £11.8m to £14.4m. Trading conditions are not easy and this is likely to continue to be true for the rest of the first half although an improvement is expected later in the year.
ANDREW HORE
Quoted Micro 9 May 2016
ISDX
Newbury Racecourse (NYR) generated a much higher profit from its core operations in 2015. There was a swing from an overall loss of £1.54m to a profit of £1.61m, on revenues up from £12.4m to £14.3m. This includes a profit on fixed asset sale of £722,000, up from £365,000 in 2014.Net cash was £1.69m at the end of 2015. The profit from the nursery business was flat. The number of racing days increased from 28 to 30 and attendances improved by 7% to 210,000. There was an increased contribution from conferences and events. Further redevelopment of the racecourse will be underway this summer. At 500p (475p/525p) a share, Newbury is valued at £16.7m.
Diversified Gas & Oil (DOIL) is raising a further £3.5m from the issue of 8.5% unsecured bonds. This means that Diversified Gas & Oil will have raised more than £10m. The oil and gas producer has entered into a letter of intent to acquire assets in Ohio for $5.2m – a 50% discount to future cash flows. This deal will take the number of operating wells to more than 7,300, producing 510 barrels of oil per day and 23,500 mcf per day of natural gas.
AIM
Recruitment software provider Bond International Software (BDI) has sold Strictly Education, which provides outsourced back office services to schools, for £7m in cash and a £4.3m loan note, which should be paid within six months. In 2014, the business made a profit of £1.8m on revenues of £10.2m. The initial proceeds will repay debt of £5.9m. This is the first disposal following the recent strategic review. Cash from this and other disposals will be returned to shareholders.
Pharma services provider Ergomed (ERGO) is acquiring Haemostatix, which is developing products to treat surgical bleeding, for an initial £8m. A placing will raise up to £13m at 140p a share. The total cost of the acquisition could rise to £28m depending on achievement of milestones. The additional cash raised in the placing will help to accelerate the development of two treatments. PeproStat, a topical liquid haemostat to control bleed during surgery is ready for phase IIb trials. ReadyFlow is a preclinical treatment that is a gel packaged in a pre-filled syringe for use with irregular bleeding sites.
Security and facilities management services provider Mortice Ltd (MORT) says that revenues will be at least 40% higher at $124m in the year to March 2016. The UK business acquired last September has performed strongly and will contribute one-quarter of the revenues. Singapore-based security business Frontline Security has also done well since acquisition. The full year figures will be published during August.
Nostra Terra Oil & Gas (NTOG) is seeking finance to complete the acquisition of assets in the Permian Basin, New Mexico from Alamo Resources. Nostra Terra has extended the closing date for the deal to 31 May. Kayne Anderson Energy Fund V has received 282.1 million shares at 0.1p each in return for the extension of the closing date. The purchase price of the 50% working interest in the assets will be reduced by $370,000 to $2.5m and debt funding is being negotiated.
Conroy Gold and Natural Resources (CGNR) has raised £1m at 18.5p a share and there are warrants attached to the ordinary shares exercisable at 37p a share. This will help to finance the development of the Clontibret resource in Ireland. There is a 600,000 ounce gold resource at Clontibret even though little of the site has been explored. A starter pit could have a net present value of $22m at a discount rate of 8% and using a gold price of $1,250 an ounce. The exploration target is 5 million ounces.
Online education provider Wey Education (WEY) plans to add a premium brand service next January. This will be a semi-selective service for students with top quality academic results. There is £1m in the bank to finance the development of the new service and marketing expenses. The main service, which offers GCSE and A level subjects, is not selective and it is also expanding the range of subjects on offer. In the six months to February 2016, revenues were £700,000 and the loss was £467,000. The underlying InterHIgh trading business is profitable and the overall group loss includes £328,000 of flotation and legal costs.
House broker Northland believes that security and tracking products developer Starcom (STAR) could breakeven this year. Starcom lost $1.8m in 2015 but new product launches should help it to do much better this year. The outcome may depend on the timing of the launch of the WatchLock Pro by its partner Assa Abloy, which has invested around $500,000 in upgrading the original product. Delays to the completion of the new product have held back Starcom but it should be on sale in the second half of 2016. Starcom raised £450,000 so it has cash to keep it going while it waits for sales to build up.
Mariana Resources (MARL) has raised £6m via a placing at 1.82p a share. TSX-listed Sandstorm Gold Ltd has taken a 7.56% stake. Northland has increased its share price target from 4.8p a share to 5.4p a share. This takes into account a further £2m fundraising at the current market price in 2017. Mariana has plans for a dual listing on the TSX Venture Exchange. This process should be completed in three months Mariana withdrew from the Nassau gold project so that it can concentrate on the 30%-owned Hot Maden gold copper project in north east Turkey, which has an indicated gold resource of more than two million ounces.
MAIN MARKET
Packaging and labels supplier Macfarlane Group (MACF) is acquiring Glasgow-based protective packaging distributor Edward McNeil for up to £1.8m. Edward McNeil generated revenues of £3.6m in 2015. The business is a good fit with Macfarlane’s Linwood business. This follows the acquisition of Colton Packaging Teesside last month.
Asia-focused consumer businesses investor Symphony International Holdings Ltd (SIHL) is, along with a partner, acquiring the holding company of luxury furniture brand Christian Liaigre. The brand has 26 showrooms in 11 countries. No purchase price was revealed. At the end of March 2016, Symphony’s NAV was $1.37 a share, helped by the strengthening of Asian currencies. That is nearly double the current share price.
Peterhouse has resigned as broker to analytics technology company Trendit (TRIT) following the revelation that it has received less than one-fifth of the £4m it thought it had raised when it joined the standard list at the beginning of 2016. Trendit was expecting to receive funds from the sale of shares by Amnon Freudman, Ben Raelbrook and David Cohen. The flotation price was 5.53p a share and it has fallen to 4p (2.5p/5.5p). Trendit had no revenues in 2015.
ANDREW HORE