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Quoted Micro 17 June 2024
AQUIS STOCK EXCHANGE
Samarkand (SMK) has sold its probiotic brand of Probio7 for £1.3m with an initial cash payment of £1.1m. This will provide working capital for the company’s other healthcare brands. Unsecured loans made by the directors to finance the acquisition of Optimised Energetics will be repaid.
Skin treatments developer Incanthera (INC) has moved up to the Apex segment following its recent rise in valuation. The appointment of John Howes as an additional independent non-executive director has also enabled the switch.
OTAQ (OTAQ) has won a contract with Ireland’s Seafood Development Agency for two Live Plankton Analysis System (LPAS) units to be installed and generate rental income until the end of 2024. One will be deployed with a seafood producer that has encountered Harmful Algae Bloom events. The system can identify the algae.
Oberon Investment (OBE) improved revenues by more than 50% in the year to March 2024 with strong financial planning income. The capital markets division had a tougher time, but activity levels are improving. Additional teams were added to the business, and they will generate additional revenues in 2024-25. Like-for-like growth could be more than 30% this year. There could be potential to spin-off fintech software business Logic.
Metals recycling company Majestic Corporation (MCJ) increased 2023 revenues by one-quarter to $29.4m. Pre-tax profit is 149% higher at $1m. There was cash of $653,000 at the end of 2023. The company is expanding into solar and battery materials.
Global Connectivity (GCON) 15%-owned associate Rural Broadband Solutions increased its stake in Voneus from 38% to 41% following the latest capital injection of £18m. The book value of the original 25% stake had been valued at 1.8p/share, so it is much higher now.
Kasei Digital Assets (KASH) has invested $100,000 into Rule 110 Inc for its seed and strategic funding round for the launch of the RealityNet protocol. This protocol enables users to rent out unused computing resources on their devices to the rest of the network.
Phoenix Digital Assets (PNIX) says 662.5 million shares were tendered by the close of the offer, but 625 million shares were accepted at a cost of £33.7m (5.39p each).
Tunch Kashif has reduced his stake in ChallengerX (CXS) from 17.9% to 6.9%. Flash Corp Technologies sold nearly all its 6.82% shareholding. Kenneth Jolly has taken a 4.73% stake. Geoffrey Miller has reduced his stake in TruSpine Technologies (TSP) from 9.03% to 8.24%. AIM-quoted Vela Technologies (VELA) has reduced its stake from 4.3% to 3.92%. Kevin Hastings has a 3.08% stake in Marula Mining (MARU). James and Alexandra Pace have a 3.01% stake in brewer Shepherd Neame (SHEP).
AIM
Linear generator technology developer Libertine Holdings (LIB) has terminated the formal sales process because it does not believe that there will be an offer by mid-June. There is still the prospect of a £2m cash injection at 2.1p/share from two Middle East investors. One of the investments would last the company until September and the full amount of money should last until June next year. There are still conditions that need to be satisfied and if it does not happen in the next couple of weeks then the quotation may be cancelled, and the business wound down.
R&Q Insurance Holdings (RQIH) is still trying to complete the sale of its Accredited business. Costs are mounting up as talks continue with regulator and other parties and it is hampering the overall business. This has hit the financial stability of the business. There could be an alternative to the original Accredited deal, but that involves the liquidation of the holding company. Slater Investments has reduced its stake from 11.7% to 10.3%.
NWF (NWF) says that 2023-24 trading is in line with expectations. Fuels volumes improved even though there was a mild winter. Margins did fall back. Food distribution was the strongest performer even though opening costs for the new facility held back the profit contribution. Feed volumes fell. Net cash was £10m at the end of May 2024.
Insurance businesses investor BP Marsh (BPM) has launched a new share buyback programme of up to £1m following annual results. In the year to January 2024, pre-tax profit improved from £27.6m to £43.6m. This was predominantly due to disposals of stakes in Kentro Capital and Paladin Holdings. There was £40.4m in cash, plus £49.5m of assets that were sold after the year-end, at the end of January 2024. NAV increased by 102.8p/share to 629p/share.
Landore Resources (LND) has raised £3.68m at 2.4p/share with strategic investor Luso Global Mining, a subsidiary of Mota-Engil, subscribing £1m. Alexander Shaw, who is the boss of the new investor will become chief executive of Landore Resources. The cash will fund drilling at the BAM gold project at Junior Lake in northwestern Ontario.
Helium One Global (HE1) has raised £8m at 0.5p/share. This will finance the deepening of Itumbula West-1well and the extended well test, as well as the development of the helium project in Tanzania. The extended well test should start in the third quarter.
Deltic Energy (DELT) has been unable to find a partner for the Pensacola project in the North Sea. This means that Deltic Energy cannot finance its share of the development costs and it is withdrawing from the licence and transferring its 30% share to Shell and ONE-Dyas. Canaccord Genuity has reduced its NPV10 target price to 100p.
The latest drilling results for the Basin lithium project means that Bradda Head Lithium (BHL) is nearer to receiving a significant royalty payment from the LRC. The latest mineral resource estimate is being calculated and it should be much higher than the current figure of 1.08MT of LCE. The figure could be tripled in the next few weeks.
Kibo Energy (KIBO) is not going ahead with last week’s planned restructuring and new strategy after consultation with shareholders. Not all the board changes will be made, and Kibo Energy is likely to focus more on oil and gas.
MAIN MARKET
The current board of Tirupati Graphite (TGR) managed to see off the requisitioners at the general meeting. It won all the resolutions by gaining around 48 million votes compared with around 38 million for its opponents. Michael Lynch-Bell has been appointed as chairman. This does not change the company’s financial predicament, which will have to be addressed before the company focuses on its “long-term ambition of providing 8% of the world’s global flake graphite demand by 2030”.
Castings (CGS) will not be able to maintain the strong performance of last year. In the year to March 2024, underlying pre-tax profit improved from £16.7m to £21.3m. Demand for heavy trucks has passed its peak and that will hit volumes. There can be a cyclicality to the demand and Castings will continue to be a strong cash generator. There will be a 7p/share special dividend and the shares go ex-dividend on 20 June. The normal final dividend of 14.19p/share will be paid one month later.
Palace Capital (PCA) is launching a tender offer for shares at 250p each. It will spend up to £21.7m.
Andrew Hore
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SMALL CAP AWARDS 2024
Company of the year
IQGeo (IQG)
Aquis company of the year
Equipmake
IPO of the year
Onward Opportunities (ONWD)
ESG of the year
Eden Research (EDEN)
Transaction of the year
Journeo (JNEO) – MultiQ acquisition
Technology company of the year
Kooth (KOO)
Dividend hero/ Investor relations success
Cohort (CHRT)
Diversity, inclusivity and engagement
TPXimpact (TPX)
Executive director of the year
Chris Smith – McBride
Analyst of the year
Charles Hall – Peel Hunt
Broker of the year
Cavendish Capital Markets
Lifetime achievement
David Stirling
Quoted Micro 23 October 2017
NEX EXCHANGE
Supported housing developer Walls and Futures REIT (WAFR) has improved its net asset value by 4.4% to 94p a share in the six months to September 2017. Interim figures should be published within a fortnight.
African Potash Ltd (AFPO) has decided not to acquire investment company Onshore Energy Ltd and concentrate on its fertiliser business instead. Progress has been delayed but fertiliser trading has started in Zambia and a 21% stake was acquired in Advanced Agricultural Holdings, which is focused on South Africa. There were no revenues in the year to June 2017, although there was trading income of $9,000, and the loss was $2.27m. There was £11,000 in the bank at the end of June 2017. African Agronomix is earning a stake in the company’s potash interests. Trading will recommence in the shares on 23 October.
Black Sea Property (BSP) has €7m of debt, in the form of a mortgage, from UniCredit Bulbank. This will be used to complete the planned acquisition of the office building in Sofia. The loan lasts for three years from completion of the documentation.
Via Developments (VIA1) has completed the purchase of the development site in Latimer Road, Luton.
AIM
Belvoir Lettings (BLV) has approached The Property Franchising Group (TPFG) about a merger between the letting agents but the reaction has been negative. Belvoir believes that the market is consolidating and it makes sense for two of the major players to come together. The indicative offer is 0.715 of a Belvoir share and 52.2p a share in cash for each TPFG, although the amount of cash could be varied. This values each TPFG share at 130.5p.
eServGlobal Ltd (ESG) is raising £24m at 9p a share with existing retail investors given the chance to clawback £3.4m of the shares. Cash is required to be injected into the HomeSend joint venture so that the 35% stake can be maintained. There will also be costs to rationalising the core business in order to help move it into profit.
Overseas growth dominated the Tristel (TSTL) where full year revenues were one-fifth higher, or 7% excluding the acquisition of the Australian distributor. Tristel has already warned that regulatory approval has been delayed in the US but it can still continue to grow its infection control sales. Animal health and contamination control revenues fell but margins improved. House broker finnCap forecasts an improvement in profit from £4m to £4.4m this year.
Secure payments and contact centre technology provider Eckoh (ECK) continues to add contracts in the US while UK revenues are steady. Seven US contracts worth $5.1m have been won. Eckoh has moved into a net cash position of £1.7m. Interim figures will be reported on 22 November.
Telecoms software supplier Artilium (ARTA) has formed an alliance with NYSE-listed Pareteum Corporation, which involves the sharing of distribution, products and technology. The focus will be Latin America and Asia. A share exchange will mean that Pareteum will own 8.8% of Artilium, which will own 19.9% of Pareteum. Artilium is opening a new office in Germany.
Cloud-based communications software provider Cloudcall Group (CALL) is raising £5.7m at 143.5p a share and the cash will help to finance further growth. Cloudcall wants to take advantage of its partnerships with Microsoft Dynamics and Bullhorn and attract new partners.
Proteome Sciences (PRM) says that its deal pipeline is improving but the adoption of its proteomic services has been slower than hoped. This year the loss will be reduced but it will be higher than previously expected. Proteome has gained Good Clinical Laboratory Practice accreditation which will enable it to take on larger clinical projects.
Sula Iron and Gold (SULA) is evaluating the best way to develop the Ferensola gold asset as well as seeking to bring other assets into the group. There could be a joint venture or farm out at Ferensola and Sula intends to solicit interests from potential partners.
Hornby (HRN) is ending the discounting of its stock but it will still hit the figures for this financial year. New chief executive Lyndon Davies continues to review the business strategy and more will be revealed with the interim figures. The interim chairman is leaving the board.
BP Marsh (BPM) has increased its NAV from 273p a share to 304p a share in the six months to July 2017. Disposals brought in significant amounts of cash and this is being reinvested. One of the main focuses of the investment is the North American market.
Infinity Energy S.A. (INFT) is in talks to acquire Transgas Ltd from its own chief executive and its family. Transgas owns petroleum exploration licences in south west England. Infinity will issue shares for the purchase if it is agreed and it intends to change domicile from Luxembourg to Guernsey.
Molecular diagnostics firm Genedrive (GDR) has signed a distribution agreement with Sysmex Europe for the supply of the Genedrive hepatitis C (HCV) ID kit, which is designed to be used in a decentralised environment and produce results within 90 minutes. This is the first commercial partner and Sysmex will be responsible for marketing and distribution in the EMEA region. The initial focus will be African companies.
RNA therapeutics technology developer Silence Therapeutics (SLN) is claiming money in the High Court for income it believes it is owed on products sold by Alnylam. The High Court has to determine whether Silence is entitled to supplementary protection certificates, which can give up to five years of exclusivity after a patent expires
Seeing Machines (SEE) believes that it could treble its revenues this year to between A$38m to $A43m and revenues could double again next year. However, cash is in short supply so investment has been curtailed. New investment is being sought. Interest is building in the automotive sector for the FOVIO driver monitoring technology.
Jim Meredith has become executive chairman of Augean (AUG), following the resignation of Stewart Davies as chief executive, and Christopher Mills and Roger McDowell, who stepped down in June 2015, have joined the board as non-executives. Augean continues to have problems with the HMRC regarding its landfill tax assessment and profit will be lower this year and in 2018. A further £1.7m is being cut from annual overheads.
Futura Medical (FUM) has received positive market research from fellow AIM company Cello (CLL) for its MED2002 gel for erectile dysfunction. More than three-fifths of physicians canvassed in the US thought that MED2002 was better than existing treatments. The equivalent figures in Germany and France were 60% and 54% respectively.
Concepta (CPT) has signed up two distributors in China for its MyLotus fertility product. This takes the number of distributors to three and more will be signed up in the coming months. The product is being evaluated for use after a woman has got pregnant.
Sunrise Resources (SRES) has discovered a new deposit at the CS Pozzolan-Perlite project in Nevada. There have also been positive drilling results in the existing deposit areas.
Omega Diagnostics Group (ODX) has signed a three year agreement to supply food intolerance product FoodPrint to a US laboratory testing services provider.
Thor Mining (THR) is moving to a phase of progressing the commercialisation of its exploration interests. There has been a resource upgraded at Pilot Mountain and there will soon be a resource estimate at Kapunda. The options for progressing with the development of the Pilot Mountain and Molyhil projects are being considered. A placing will raise £565,000 at 0.8p a share. There is a warrant with each share which enables the holder to subscribe for a new share at 1.2p.
Strategic Minerals (SML) has entered into a binding term sheet to acquire the owner of the Leigh Creek copper mine project, which is the northern Flinders Ranges in South Australia. It will cost A$1.8m to restart production at the mine. Strategic has to inject A$1m into the holding company, pay A$250,000 in cash and A$750,000 in shares to the current owner and agree a royalty agreement with them which will be capped at A$3.65m. The Cobre magnetite ore operation in New Mexico had a record quarter to September 2017. Revenues were $2.04m, which was more than the first six months of 2017 and for 2016 as a whole. Annual sales should exceed $5m and this provides cash flow for other projects. Strategic had $1.63m in the bank at the end of September 2017. Shareholders have agreed to a new option programme for management.
MAIN MARKET
Sportech (SPO) has put itself up for sale, although the strategic review continues. There have already been four preliminary proposals but no detailed discussions have commenced.
InnovaDerma (IDP) has been criticised by the Advertising Standards Authority for some of its online advertising for Skinny Tan. Trading is in line with expectations.
Andrew Hore
Quoted Micro 10 April 2017
NEX EXCHANGE
Social impact investment company Inqo Investments Ltd (INQO) has taken a stake in Uganda-based Four-One Financial Services Ltd, which manages the Mazima Voluntary Individual Retirement Benefits Scheme. The pension scheme is aimed a low income earners and Four-One provides marketing and administration services.
NQ Minerals (NQMI) has been regularly raising funds in the past few weeks. The latest placing raised nearly £126,000 at 7.3p a share. So far this year, NQ has raised nearly £900,000.
Malcolm Burne has increased his stake in Coinsilium Group Ltd (COIN) by 500,000 shares, taking his shareholding to 6.19%.
Kryptonite 1 (KR1) consolidated every 19 shares into one new share on 4 April.
AIM
StatPro (SOG) is acquiring UBS Delta, which provides risk and performance analysis services, for €13m (£11.1m) over three years. UBS Delta has 115 clients with 100 of these being new to StatPro. This provides a ready made customer base for the StatPro Revolution product. UBS Delta has annualised recurring revenues of £14.5m and the combined group will have £53m. This is a highly earnings enhancing deal. A full contribution in 2018 leads to an improvement in forecast earnings per share from 4.5p to 7.4p. Net debt will double to £20.2m by the end of 2017 and then start to come down through cash generated from operations.
Bushveld Minerals Ltd (BMN) has completed the purchase of a 78.8% stake in Strategic Minerals Corporation, which owns 75% of the company that owns Vametco Alloys in South Africa. Bushveld says that the $16.5m it has paid is less than the cost of setting up a greenfield mining operation. The deal is part of the strategy to develop a vertically integrated vanadium operation. Bushveld is acquiring a low cost, open pit mine and plant with an existing customer base. There are enough ore reserves to last for 24 years at current production levels, plus scope to increase these reserves. Vametco is also near to Bushveld’s Brits vanadium project. Bushveld has also agreed to work with Sinohydro Corporation on developing a 60MW coal powered plant and related transmission infrastructure in southern Madagascar. Sinohydro will pay for the bankable feasibility study and project implementation proposal in the next 12 months. Bushveld is also moving ahead with the acquisition of an interest in the Uis tin project in Namibia.
AdEPT Telecom (ADT) says that its figures for the year to March 2017 will be ahead of expectations. Revenues are expected to be 16% higher and EBITDA 26% ahead. Net debt of £15.8m is £1.3m lower than forecast. The total dividend will be increased by 19% to 7.75p a share.
Belvoir Lettings (BLV) grew its 2016 revenues by 43% to £9.94m, while pre-tax profit improved from £2.2m to £2.5m. Contributions from acquired letting networks helped the growth. Demand remains strong for rented property. The estate agency business continues to grow from a low base and there are plans to increase revenues from other services. The final dividend is unchanged at 3.4p a share.
Gatemore Capital Management has withdrawn its requisition for a general meeting to change the board at DX (Group) (DX.) following the announcement of the discussions for the merger with Menzies Distribution.
Staunton failed to secure 50% acceptances for its 300p a share bid for FIH Group (FIH). The level of acceptances was 34.74% but nearly two-thirds of those were related parties to Staunton, which itself already owned 2.34%. The bid has lapsed. Dolphin Fund Ltd is still waiting in the wings but has not made a firm offer.
TechFinancials Inc (TECH) returned to profit in 2016 but there remains uncertainty due to the loss of the company’s major customer. There are plans to widen the range of products offered in order to offset the loss and the impact of regulatory changes. There was $7.7m in the bank at the end of 2016 and since then a $3m dividend has been received from the DragonFinancials joint venture.
Gresham House Strategic (GHS) has revealed plans to pay a maiden dividend. The 15p a share final dividend will be combined with a share buy back programme. At the end of March 2017, there were £1.7m of realised gains and 50% of that is available for dividends and buy backs. The company has already bought 500 shares at 831p each.
BP Marsh (BPM) is selling its 29.9% stake in Trireme for £2.96m, compared with a book value of £2.53m. Trireme will also repay a loan of £2.16m.
Revenue recognition changes mean that Styles & Wood (STY) will report lower revenues for 2016 but pre-tax profit will be in line with expectations.
Botswana Diamonds (BOD) has discovered two kimberlite blows at the Frischgewaagt project in South Africa. This could mean that the kimberlite dyke system could widen, thereby providing higher volumes of kimberlite.
Tracsis (TRCS) is investing up to £1.3m in Vivacity Labs Ltd, which has developed machine learning software to help solve traffic and transport problems. Tracsis could use the technology to reduce the costs of processing video for its traffic and data services division. Tracsis will invest £1m to take a 23.3% stake and it has an option to acquire a further 4.8% for £300,000.
MAIN MARKET
IT firm Triad Group (TRD) says that its full year pre-tax profit will increase from £863,000 to around £1.5m. The majority of that improvement came in the first half but there was also profit growth in the second half.
World Trade Systems (WTS) says that its health foods subsidiary is planning to enter cooperation agreements with two companies that will help it to diversify its product range and extend its market in China. CHelac and WTS plan to collaborate on R&D to develop cosmetic products using the former’s collagen stimulating technology. Fine Japan is linking up with WTS as a way of increasing its business in China. WTS is heading towards the first decade of the suspension of trading in its shares.
SMALLCAP AWARDS 2017 NOMINATIONS
IPO of the Year
Accrol Holdings; Blue Prism Group; Franchise Brands; InnovaDerma
Company of the Year
DP Poland; Fulcrum Utility Services; Gear4Music; Harvest Minerals
Nex Exchange Company of the Year
Adnams plc; Capital for Colleagues plc; Chapeldown; Crossword Cybersecurity plc; Sandal plc
Social Stock Exchange Impact Company of the Year
Capital for Colleagues; Caretech; Impax Asset Management; Obtala
Executive Director of the Year
Stephen Moon, CEO, Science in Sports; Andrew Jacobs, CEO, Lok’nStore; Nick Jarmany, CEO, Quixant; Tim Mitchell, CEO, Sareum
Transaction of the Year
Amino Technologies; Keyword Studios (Synthesis Group); Marlowe ; SCISYS (Annova)
Analyst of the Year
Mike Allen – Zeus; Andrew Blain – Cenkos Securities; Eric Burns – WH Ireland; Simon Strong – Cenkos Securities
Journalist of the Year
Paul Scott – Stockopedia; Jamie Nimmo – Evening Standard; Simon Thompson – Investors Chronicle
Advisor of the Year
Cenkos Securities; FinnCap; Panmure Gordon; Shore Capital; Stockdale Securities; Zeus Capital
Fund Manager of the Year
Paul Jourdan – Amati Global; Simon Knott – MI Discretionary Trust; Paul Mumford – Cavendish; Giles Hargreave and Guy Feld – Marlborough Fund
Andrew Hore
Quoted Micro 6 February 2017
NEX EXCHANGE
Bondholders in US-focused oil and gas company Diversified Gas & Oil (DOIL) have overwhelmingly opted to take the cash alternative ahead of the flotation of the ordinary shares on AIM on 3 February. A total of £10.35m worth of bonds (97.1% of bonds in issue) are taking cash, while £198,000 of bonds will be swapped for 380,769 ordinary shares. There will be £106,640 worth of bonds remaining in issue but there will be no trading facility. The ordinary shares of Diversified Oil & Gas (DGOC) raised £39.7m at 65p a share, valuing the company at £68.6m. The share price slipped to 56.25p at the end of the first day’s trading.
Property investor Ace Liberty & Stone (ALSP) had a property portfolio worth £28.5m at the end of October 2016 and this generates annual rental income of £2.31m. The NAV was £18.25m at the end of October 2016 with a £500,000 revaluation gain partly offset by the final dividend payment.Net debt was £6.7m, down from £7.7m at the year end and there are assets held for sale worth £6.3m. Since October, a property was acquired at Hanley for £9m. The deal was financed by a £13.75m loan facility from Lloyds Bank with the rest of the cash used to refinance debt relating to five other properties.
DagangHalal (DGHL), which operates an e-marketplace for Halal verification, has parted company with its chief executive and trading in the shares has recommenced. Mohamed Hussain was paid the compensation that he was entitled to in his contract but he is claiming for twice his annual salary – equivalent to £195,000. Ali Sabri Sani Abdullah has stepped up from finance director to chief executive, while Jeff Teo and Derek Marsh have been appointed to the board. Cairn has replaced Arden as corporate adviser. The share price has not changed since trading recommenced.
AIM-quoted Metal Tiger (MTR) has sold its 28.2% in MetalNRG (MNRG) to Value Generation Ltd, a business associated with MetalNRG director Paul Johnson, and Gervaise Heddle, which each own 14.1% of the resources shell. The sales price was 0.26271p a share, whereas Metal Tiger had paid 0.2628p a share nearly one year ago.
BWA Group (BWAP) says it has been in talks with three potential acquisitions but none of the potential deals progressed. There was a £16,276 cash outflow from operations in the six months to October 2016, which was partially offset by the sale of an investment. BWA had a NAV of £562,000, with £41,593 in the bank, at the end of October 2016.
Botswana-focused oil and gas explorer Karoo Energy (KEP) says that exploration work on its two licences has confirmed the company’s geological model which predicts a deep sedimentary basin that could contain shale gas. In the six months to October 2016, there was a £326,000 cash outflow including capitalised exploration spending. Karoo had £168,000 in the bank at the end of October 2016, and £11,000 has subsequently been raised.
Property development and management services provider Formation Group (FRM) plans to consolidate its shares and shareholders will get to vote on the proposal at the AGM on 27 February. If the five-for-one consolidation is approved it will take place on 28 February.
Valiant Investments (VALP) has raised a further £34,000 at 0.1p a share. Valiant’s 84.7%-owned subsidiary Flamethrower has set up a new company called Slot Right In, which will be the social casino division and Flamethrower plans to acquire and trade domain names. Flamethrower continues to add to its portfolio of apps.
Property investor Ecovista (EVTP) says it is looking at investments in London, Essex and Hertfordshire. An offer of £275,000 has been accepted for a cottage owned by the company, while a house in Bishop Stortford, acquired for £665,000 last year, has been demolished and construction of a new building with a gross value of £1.35m will start in the spring. A planning appeal has been lodged for the development of car park site near Stansted Airport.
Grant Thornton will step down as corporate adviser to Chinese medical products and services provider MiLOC Group (ML.P) on 6 March.
AIM
AdEPT Telecom (ADT) is acquiring Our IT Department, an IT services provider in London and the South East, for an initial £4.75m with up to £3.75m more payable depending on performance. This is a profitable business that brings additional IT skills to the telecoms business. AdEPT has secured a £30m, five-year bank facility from Barclays and RBS, which will help to finance further acquisitions.
Everpower International is acquiring a 9.9% stake in Haydale Graphene Industries (HAYD) in return for a £3.26m cash payment – equivalent to 170p a share. This is part of an agreement that will enable Haydale products to be manufactured for the Chinese market. Commercial revenues from the Huntsman agreement are not likely to come through until 2017-18 and with other strategy changes this means that the revenues for the year to June 2017 will be lower than expected.
Automotive acoustics and thermal insulation designer Autins (AUTG) has shocked the market with a profit warning less than six months after joining AIM and the chief executive has resigned. First quarter sales have been in line with expectations but a major customer has reduced orders. The share price has fallen from the August placing price of 168p to 145p – but it had been as high as 240p. Miton had added to its stake in January.
Ascent Resources (AST) says the flow test at the Pg-10 well was better than expected. The maximum stabilised flow rate was 8.8 million cubic feet of gas per day.
LED lighting technology developer PhotonStar LED (PSL) says that its 2016 revenues will be slightly lower than expected and the loss will be higher because of a challenging second half. Revenues were around £5.4m and the pre-tax loss was £1.3m. There was £230,000 in the bank at the end of 2016 with £830,000 of invoice financing. Cost savings have been made and this helps to improve the outlook for 2017, although the poor second half trading has continued into January.
Eagle Eye Solutions (EYE) says that interim revenues have grown 72% to £5.1m, which is better than expected. The nationwide roll-out of the Asda contract has increased coupon redemption numbers. Cavendish Asset Management has increased its stake to 8.26%.
ECR Minerals (ECR) says that the Australian government has given consent to for drilling at the Byron target in the Bailieston project area. ECR has applied for two more licences and is awaiting news of the renewal of the Avoca licence.
Tissue Regenix Group (TRX) says that dermal allograft product DermaPure, which includes the company’s dCELL technology, has been included in the US Department of Veteran Affairs Federal Supply Schedule. This covers 152 hospitals and 800 outpatient units. This will boost the commercial prospects of the wound care product.
Prospex Oil & Gas (PXOG) is raising £850,000 at 0.5p a share and this will help to finance the evaluation of potential projects. The share price has slumped since the beginning of the year because of a disappointing result from a well on its Kolo licence area in Poland. The placing price is about one-fifth of the share price prior to the drilling news.
New management at Quantum Pharma (QP.) says trading is in line. This suggests that the pre-tax profit for the year to January 2017 will be £6.7m, down from £10m in the previous year, although there will be exceptional reorganisation charges. The loss-making NuPharm business has been closed. Net debt was £13.5m – after most of the reorganisation costs have been paid. The share price is less than one-third of its peak less than two years ago but it is higher than the 34p a share placing price in October.
Vela Technologies (VELA) is raising up to £550,000 from a bond issue via the UK Bond Network. There is already interest for £250,000 of bonds and the other £300,000 have been underwritten. The interest rate is 10% and the bonds can be repaid after one year, including interest. If they are repaid earlier than one year’s interest has to be paid. Vela will use £150,000 to increase its investment in Portr, the airline passenger facilitation and baggage transport service.
BP Marsh (BPM) has subscribed for a 30% cumulative preferred ordinary shareholding in Stewart Speciality Risk Underwriting Ltd, a Toronto-based start-up headed by a boss with 25 years of experience. Stewart specialises in insurance for the construction, manufacturing, onshore energy, transport and public sectors. A £480,000 loan facility is also being provided.
Reconstruction Capital (RC2) is returning €17m of cash to shareholders. This equates to €0.115 a share.
MAIN MARKET
Engineering and environmental consultancy Waterman Group (WTM) says that its interim revenues and profit will be in line with last year. Net cash was £6.7m at the end of 2016. This will enable Waterman to continue to increase its dividend.
Publisher Quarto (QRT) is on course to increase its pre-tax profit from $14.1m to $15.5m. Net debt was $62.2m at the end of 2016. A buyer has been identified for the Australian distributor Books and Gifts Direct. This will raise $1m in cash with the other $4.75m of the disposal price in loan notes. Even after a 46% increase in the share price, the 2016 multiple is less than eight. There are plans to change the way that the backlist of titles is valued.
Rainbow Rare Earths (RBW) commenced trading on the standard list and the share price ended the week at 12p, compared with the placing price of 10p. Rainbow has issued £260,000 worth of shares at the placing price to cover a majority of the costs of its flotation.
Challenger Acquisitions Ltd (CHAL) has sold Starneth less than two years after buying the designer and engineer of giant observation wheels. Challenger completed the acquisition of Starneth in July 2015 when an initial €1.25m was paid in cash and €825,000 in shares at 75p each. The second cash payment of €1.25m was delayed. Challenger will receive $6m in fees when the Jakarta wheel’s funding arrangements are finalised and the €1.25m payment will be taken out of that. There had been a third payment due but that does not appear likely to happen. This is a complicated deal but it is difficult to see this as a positive deal for Challenger but it will continue to work with Starneth and it will have a stake in the New York wheel. Acquisitions of businesses in the leisure and entertainment sectors that are close to revenues are likely.
Andrew Hore
Quoted Micro 28 November 2016
ISDX
Property investment company Ace Liberty & Stone (ALSP) says that one of its shareholders, Daniel Waylett, agreed to acquire a subsidiary that owns Colebrook Court in 2016. There was no specific date given, although the property was bought for £1.5m in shares during April. The payment for the disposal was £1.553m. Ace has drawn down a secured loan of £13.75m from Lloyds Bank and this has been used to purchase the property acquired last month in Hanley, as well as other existing property investments.
FT8 (GFT) is acquiring 49% of Australian fintech company Billyst Holdings. FT8 is issuing 142.4 million shares at 1p each to Billyst for the 49% stake. This will give Billyst, which is developing debt collection systems, 16.2% of FT8. So far, Billyst, which has not been around long enough to produce figures, has invested £267,000 in its technology. Billyst has agreed to loan FT8 A$500,000 (£297,000), interest free, for 18 months, but it will need to raise more cash to do this. FT8 had less than £3,000 in the bank at the end of June 2016 so it needs more cash.
Wine maker Chapel Down (CDGP) says that it has had its highest quality harvest ever, although yields were slightly lower than expected. The 2016 harvest was the third largest in the company’s history. A good summer made up for some of the shortfall earlier in the year.
Energy efficiency and electronics products supplier Sandal (SAND) says that trading is in line with forecast. Sainsbury’s will be selling MiHome products in 100 stores prior to Christmas, while Argos will be including them in its catalogue from February. House broker Daniel Stewart expects Sandal to move into profit this year.
Imperial Minerals (IMPP) had £96,000 of cash and financial assets – including a stake in AIM-quoted North River Resources (NRR) – at the end of June 2016, following a £53,000 cash outflow in the previous year. Imperial tried to acquire a Welsh hydro-electric project but there was a problem with the complex ownership of the project. However, management believes that recovering commodity prices could provide potential resources investment opportunities.
South Africa-based social impact investor Inqo Investments (INQO) has been improving room rates and occupancy at the South Africa-based leisure resort Kuzuko Lodge and the second half should be much stronger as tourists benefit from the weak Rand. In the six months to August 2016, group revenues grew from R3.23m to R5.32m, which made an increased loss before an increase in other income from R2.06m to R14m is taken into account. The other income in the recent period was due to the negotiation of loan settlements leading to interest write-backs. Kuzuko Lodge made a reduced loss, while the first revenues from the Bee Sweet Honey investment will not show through until 2017-18.
AIM
The closure of GB Energy Supply could provide opportunities for AIM-quoted energy suppliers Flow (FLOW) and Good Energy (GOOD), which is also quoted on ISDX. GB Energy had revenues of £22.2m in 2015 and it is estimated to have around 160,000 customers. Regulator OFGEM is overseeing a transfer of customers to new suppliers but customers could then choose to change from the suppliers they have been allocated. In 2015, Good had energy supply revenues of £56.6m, while Flow’s were £40.1m.
Belvoir Lettings (BLV) says it is difficult to predict what impact the announcement that letting agents in England will not be allowed to charge fees to tenants. There will be consultation before this change is brought in. Belvoir says that less than 10% of the income of its franchisees is from fees paid by tenants but in terms of Belvoir it is less than 8%. There may be more pressure on smaller, independent letting agents and this may provide acquisition opportunities for franchisees or a chance to grow organically in their existing markets if independents leave the market.
Cough treatments developer Verona Pharma (VRP) plans to gain a US listing in the first half of 2017. The flotation is subject to regulatory approval and market conditions.
Music hardware and software developer Focusrite (TUNE) beat expectations in the year to August 2016. Revenues improved from £48m to £54.3m thanks to a strong fourth quarter with growth being enhanced by the launch of the second generation Scarlett product range (focused on the sub-$500 market). Underlying pre-tax profit rose from £7.2m to £7.7m. The US remains a major market but the company had to improve credit terms to its distributor which hampered cash generation. Even so, there was still £5.6m in the bank. Focusrite wants to grow in Asia where its market share lags the levels in North America and Europe. There are potential acquisitions that Focusrite is keeping its eye on but there is no certainty that there will be any deals in the short-term. A new chief executive has been identified but his appointment is still being finalised. A full year profit of £8m is forecast.
Alternative Networks (AN.) is recommending a bid from former AIM company and rival telecoms and managed services provider Daisy, which is a consolidator in the sector. The bid of 335p a share values Alternative Networks at £165.3m. The company’s directors mention the uncertainty in the telecoms market as part of their reason for recommending the bid.
BP Marsh (BPM) has invested £75,000 in The Fiducia MGA Company, in the form of a 25% stake in the company’s cumulative preferred ordinary shares. On top of this, BP Marsh is lending up to £1.725m to the UK marine cargo underwriting agency. An initial £350,000 will be drawn down and further draw downs are dependent on Fiducia meeting conditions outlined in an agreed business plan. Fiducia founder Gerry Sheehy has more than three decades of experience in the insurance industry. BP Marsh is also keen to expand in the managing general agency business in North America
Jonas Computing (UK) has decided not to make an offer for ServicePower Technologies (SVR) but Diversis Capital may be willing to offer 6p a share.
MAIN MARKET
Standard list cash shell Senterra Energy (SEN) is no longer acquiring sim-card technology business Oasis Smart Sim PTE. The deal was first announced six months ago. The seller has withdrawn from negotiations. The Singapore-based company had 2015 revenues of $13m. Senterra was going to provide a £500,000 loan to the acquisition target but it never lent any money. Senterra continues to seek a technology acquisition rather than the oil and gas acquisition it originally focused on. The share price slumped to 2.5p when it returned from suspension. The flotation price was 5p. There was £1m in the bank at the end of June 2016 – equivalent to 3.7p a share – but that is likely to be lower now.
A winding up order has been issued against Worthington (WRN) following the Pension Protection Fund’s (PPF) rejection of a proposed company voluntary arrangement (CVA). Worthington is seeking a Judicial Review of the PPF decision.
Upland Resources Ltd (UPL) is buying a 10% stake in UK onshore licences, in which the Wressle field is sited, from AIM-quoted Europa Oil & Gas (EOG) for £1.6m in cash and shares plus a further £250,000 in contingent consideration based on the level of production from the Wressle field. Initial commercial oil flows of 500 barrels a day are expected from the North Lincolnshire field early next year. Europa retains a 20% stake. A £2.2m placing at 1.3p a share by Upland will finance the cash consideration and fund some exploration spending. When Upland joined the standard list one year ago it raised £1.3m at 1p a share. There was just over £1m in the balance sheet at the end of June 2016.
Andrew Hore
Quoted Micro 24 October 2016
ISDX
House broker Daniel Stewart expects energy efficiency and home automation products supplier Sandal (SAND) to move into profit this year. In the year to May 2016, Sandal made a loss of £268,000 on revenues of £3.3m and this year the profit is forecast to be £105,000. The Energenie energy efficiency and home control products are expected to nearly double their sales to £1.4m this year and then double them again next year. The revenues of connectors business PowerConnections are expected to be flat.
Rail safety products developer Wheelsure Holdings (WHLP) plans to raise £106,000 at 1p a share and chief executive Gerhard Dodl says he will acquire some of the shares. The cash will be used for working capital.
Mechan Controls (MECP) says that it is still investigating the possible disposal of some of its business and it has received further approaches from potential buyers, including approaches from management teams of some of the subsidiaries. The offers do not appear to be high enough to provide the exit price wanted by the Mechan board. Mechan has gained shareholder approval to buy back up to 10% of its share capital.
Wealth management adviser Asia Wealth Group Holdings (AWLP) is talking to a number of potential acquisitions. In the six months to August 2016, revenues improved from $578,000 to $601,000 and the loss was halved to $11,000, helped by lower expenses. There was a $91,000 cash inflow in the six month period. There is nearly $1.4m in the bank.
EPE Special Opportunities (ESO/EO.P) will be left with a 24.3% stake in LED lighting products and wiring accessories supplier Luceco following its flotation on the Main Market. EPE sold shares worth £38m and had £10m of loans repaid. The cash will be The share price has risen from 130p to 148p. The stake is valued at £57.8m and this is still more than two-fifths of EPE‘s gross asset value.
AIM
Vislink (VLK) is selling its original core business to a former AIM-quoted company with an even worse track record. Vislink hopes to complete the $16m sale of the loss-making broadcast and surveillance hardware business to xG Technology Inc by the end of the year. It appears that xG Technology will have to raise cash in order to fund the acquisition. xG Technology left AIM at the end of 2013 after seven years on the junior market when it failed to build up significant revenues from the technology it had developed. The buyer has recently bought another business, which is much smaller than the Vislink business but the acquisition will undoubtedly form the core of the enlarged business. The Vislink hardware business was in the books at £22.7m, before central net liabilities, at the end of June 2016 – nearly £30m lower than six months before thanks to losses and write-downs. That is still well below the stated disposal price. Vislink had net assets of £22.9m at the end of June 2016. Executive chairman John Hawkins was appointed to the board on 1 April 2011 and net assets were £47m at the end of June 2011. There have been further share issues since then. If the disposal does go ahead then Vislink will be left with its profitable broadcast software business and have minimal debt.
Lok’nStore (LOK) has grown its underlying NAV by 28% to 386p a share thanks to the continued investment in the portfolio of self storage sites and strong trading. This year the valuer was changed to Jones Lang LaSalle. Supply is limited compared with the demand for self storage. Occupancy rates increased by 2% last year and prices also increased. There are plans for a further four sites – two managed stores and two owned in Gillingham and Wellingborough – over the next year or so, at a cost of £10m, while the recently opened Chichester, Bristol and Southampton sites are still building up their occupancy. There was also a much better contribution from document storage after a few years of flat performances.
Trading continues to improve at security and facilities management services provider Mortice (MORT). Interim revenues are expected to be 57% ahead at around $80m through a combination of acquisitive and organic growth. The fastest growth has been in facilities management where revenues have more than doubled thanks to the UK business with more to come due to recent contract wins. The Indian operations also continue to grow. This means that Mortice is on course to grow full year revenues from $133.5m to $170m, which should enable pre-tax profit to rise from $2.4m to $4.2m.
Core infection control products have grown fast enough to more than offset a continued decline in older product sales by Tristel (TSTL). In the year to June 2016, revenues grew 12% to £17.1m. Overseas revenues grew by more than one-fifth and they account for nearly two-fifths of group revenues. North America remains a major potential market and the first FDA approvals for products should be next year. There will be additional regulatory costs this year. House broker finnCap forecasts a rise in pre-tax profit from £3.3m to £3.6m.
BP Marsh & Partners (BPM) increased its NAV from 243p a share to 253p a share in the six months to July 2016. There is £7.9m of cash available for new investments after taking account of commitments to existing investee companies. The investment company has plenty of opportunities in the insurance broking and related markets but it is very careful when making a new investment.
Gold producer Orosur Mining Inc (OMI) has reduced its cash operating costs to $693/ounce in the three months to August 2016, which is well below expectations and the figure of $954/ounce in the corresponding period in the previous financial year. This cost reduction was helped by the mining of higher grades and costs will rise in the second quarter. The price received for gold sold was also higher but year-on-year production fell from 12,471 ounces to 9,950 ounces so revenues fell from $14.5m to $12.7m. Even so, Orosur moved from a loss to a profit of $2.76m and there was a $4.8m cash inflow from operations. Net cash was $4.7m at the end of August 2016. Orosur expects to produce between 35,000 and 40,000 ounces of gold and cash operating costs are expected to be between $800/ounce and $900/ounce. Orosur is capitalised at less than £19m.
Kyrgyz Republic-focused Chaarat Gold Holdings Ltd (CGH) has rejected a bid approach, which was at a 30% premium to the then market price. That suggests a bid of 11p a share or more. The bankable feasibility study for the Tulkubash heap leach project.
Prospex Oil and Gas (PXOG) has received government approval to drill the Boleslaw-1 well in the Kolo licence area in Poland and this should happen before the end of the year. The final application for the drilling permit has to be submitted. Well pad construction should begin early in November. The intial target has been identified as having potential for near-term production. Prospex owns 49% of the company that owns the Kolo licence.
Premier African Minerals (PREM) has bought a 4.5% stake in Casa Mining, which in turn owns 71.25% of the Misisi gold project in the Democratic Republic of Congo. For $250,000. This was funded by a £300,000 placing at 0.32p a share. Premier could add a further 30% stake. Premier also owns 2% of Circum Minerals, which expects to be awarded a mining licence for its Danakil potash project in Ethiopia by the end of this year. Morgan Stanley is assessing ways of moving the project forward, including a strategic partner or flotation.
More good news for Thor Mining (THOR) about the Molyhil project. The assay results have confirmed elevated levels of tungsten. More drilling is planned on the three targets that have been identified.
Starcom (STAR) has raised £300,000 for working capital after a $100,000 loan facility failed to be secured. The share placing was at 2.5p a share. The previous placing in March raised £450,000 at 1.5p a share. The cash is needed because some payments will not be received until early next year. There was recently a judgement against a subsidiary and two of the Starcom directors in the ongoing litigation brought by Top-Alpha Capital, although Starcom believes this could be overturned by a higher court. Starcom should at least meet the expectation of improved revenues in 2016.
Investment company Mercom Capital (MCC) is pending £600,000 on a 16% stake in Mexican fintech company Mobile Wireless and Satellite SAPI (MOWISAT). The strategy is to offer lending, payments and e-commerce services to unbanked people as a mobile virtual network operator. There are 109 million mobile users in Mexico and the vast majority are on prepay packages. Meanwhile, Mercom’s 10.2% shareholder Calvet International plans to requisition a general meeting at Mercom to propose board changes and a change in strategy.
MAIN MARKET
Standard list shell Mila Resources (MILA) is seeking to acquire an interest in a resources project, most likely in emerging markets. The ideal target would involve a project that is already well down the line and would benefit from a cash injection to move it towards production. Mila has around £1m in the bank after the costs of the flotation. The share price has risen from 5p to 8.25p in the fortnight since it floated.
Andrew Hore
Quoted Micro 25 April 2016
ISDX
Wine and beer maker Chapel Down (CDGP) reported a one-third increase in 2015 revenues but a smaller increase in profit. The investment in an additional 90 acres of vineyards should provide further impetus in the coming years. Wine sales were 27% higher last year. Revenues increased from £6.11m to £8.18m and underlying profit improved from £133,000 to £141,000. Brewing subsidiary Curious Drinks has raised £1.71m to invest in a new brewery and last year its sales rose by 50%. At 33.5p (32p/35p) a share, Chapel Down is valued at £33.8m.
Electronics and engineering group Mechan Controls (MECP) failed to find a bidder that was willing to meet its board’s valuation for the business. Bids for parts of the group were also too low but there is still potential to sell individual subsidiaries. This means that the formal sales process has ended. At 248p (243p/253p) a share, Mechan is valued at £5m.
Diversified Gas & Oil Corp (DOIL) has completed the purchase of assets in Ohio for $4.8m. These assets are producing 250 barrels of oil per day and 3,000 mcf of gas a day. Diversified operates more than 5,000 producing wells in Ohio, West Virginia and Pennsylvania producing 450 barrels of per day and 13,000 mcf gas a day. So far £6.9m has been raised from bond issues. There are further acquisition opportunities.
Queros Capital Partners (QCP) has issued a further £390,000 of 8% unsecured bonds. The company’s focus is investment in social housing portfolios and property asset-backed lending in the UK and Europe. Queros originally raised £500,000 last July and the latest issue takes the bonds in issue to £972,000.
AIM
Electrical testing and oil and gas equipment rental and sales company Northbridge Industrial Services (NBI) is raising £5.5m through a placing and open offer at 75p a share and management will contribute around one-fifth of this cash. Northbridge fell into loss last year as demand from the oil sector weakened. Costs have been reduced but Northbridge is not expected to return to profit until 2017. Debt covenants have been a concern and the additional cash will help net debt to fall from £14.3m, while capex should be lower than depreciation this year.
SalvaRx Group (SALV) has made its first investment since it reversed into 3Legs Resources. A $2m investment will give SavaRx a 9.2% interest in Intensity Therapeutics, which is developing a treatment for solid tumours. Intensity has a platform called DfuseRx that can identify formulations based on existing treatments that could be injected into solid tumours. The lead treatment is INT230-6, which could enter human trials by the end of this year. SalvaRx chief executive Dr Ian Walters has been working with Intensity for nearly two years so he knows about the technology. Jim Mellon and a fellow SalvaRx non-exec are subscribing for $1m of convertible loan notes in SalvaRx. The conversion price is 35.5p a share.
Healthcare services provider Totally (TLY) has been adding new clients to its services, including new prison contracts. The nine new contracts cover 21 locations and are worth £300,000 a year over the five years of the contracts. The services provided include physiotherapy. Totally is also integrating health education services and products provided by US business Healthwise into its self-care services. Totally has a three year agreement with Healthwise.
Investment company BP Marsh (BPM) has sold its 49% stake in small business sales adviser Broucour Group to its founder for up to £341,000. A £330,000 loan will also be repaid. BP Marsh has also invested S$2.4m for a 20% stake in Asia Reinsurance Brokers. An additional investment of S$500,000 could increase the stake to 25%. The Singapore-based reinsurance and insurance risk services provider is well-established and profitable.
CEII Roma is investing £10.45m in copper and gold miner Rambler Metals & Mining (RMM) at 4p a share – a small discount to the market price. Canada-based Rambler has also issued 200 million warrants with an exercise price of 5p a share. The initial cash should enable production at the Ming copper-gold mine to increase to 1,250 metric tonnes per day over the next few years. Rambler will assess the potential for further investment in the mine. Last month, Rambler said that it is exploring the potential for toll mining gold concentrate from the Cap Ray deposit at its Nugget Pond mill.
MAIN MARKET
Standard list cash shell Vertu Capital Ltd (VCBC) has identified a potential acquisition. The financial services-focused investment company intends to acquire corporate finance consultancy VCB Malaysia for £350,000. VCB is profitable and offers capital market, investor relations, fundraising and wealth management services. Vertu believes that VCB can be used as a base to grow a consultancy and wealth management business. Due diligence is still being undertaken. The deal will require a document for the readmission of the company to the standard list because it is a reverse takeover but it does not require shareholder approval because the company is on the standard list.
Standard list cash shell Falcon Acquisitions (FAL) has raised £2m at 20p a share to add to its cash pile. Falcon, which is seeking online television and broadcasting businesses to acquire, previously raised £1.73m, mainly at 10p a share when Falcon floated in January. At the time of flotation, Falcon said that it wanted to raise additional funds of up to £2m at a share price to be set between 10p and 30p.
Investment company Athelney Trust (ATY) has raised £390,000 after expenses at 233.2p a share, the NAV at the end of March, and the shares were admitted to the market on 21 April. The placing price was at a premium to the market price. Managing director Robin Boyle believes that there are a number of mis-priced shares that the cash can be used to buy.
ANDREW HORE