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Andrew Hore – Quoted Micro 18 December 2017
NEX EXCHANGE
Wine and beer maker Chapel Down Group (CDGP) has raised £18.53m at 50p a share and could raise up to £1.47m more via a one-for-35 open offer at the same share price. The latest acceptance date is 5 January. Chapel Down will invest in an additional 500 acres of vineyard land and more money will be put into marketing. The family interests of Michael Spencer have invested in the fundraising. Nigel Wray has invested a further £500,000 but his stake has fallen to 16.5%, prior to the open offer. This year’s turnover is expected to be at least £11.6m and management expects growth to accelerate after the additional investment. New gin and vodka brands have been launched and the Ashford brewery should be up and running by the end of 2018.
Ashley House (ASH) has signed a joint venture with Morgan Sindall to develop extra care and supported living housing. This deal sparked a 55% increase in the share price to 14.75p. Morgan Sindall is paying £4m in total for the 50% stake in the joint venture, with £1.5m of this dependent on certain completion factors. It should all be paid by the end of 2018. The Ashley House housing division will complete two existing schemes and then own 50% of the joint venture, which will develop any further schemes. This additional cash will help to accelerate the growth of this part of the business. There is already a pipeline of potential developments. Ashley House will make an interim loss but expects to profitable for the full year.
e-commerce technology provider Netalogue Technologies (NTLP) reduced its interim loss as revenues grew from £317,000 to £479,000. There has been a lower number of larger projects, particularly in the food and drink sector, and Netalogue would have been profitable without the investment in the company’s technical team. A move towards a SaaS-based model could hold back short-term revenues.
AIM-quoted, spread betting business London Capital Group (LCG) has joined the NEX Exchange Growth Market on 15 December. Glio Holdings Ltd owns 78.1% of London Capital.
Early Equity (EEQP) has made two more investments. It has invested £60,000 in TruSpine Technologies Ltd, which plans to join AIM next year. TruSpine has developed the Faci-LOK and Cervi-FAS minimally invasive spine stabilisation devices and the VOSC catheter atherosclerosis treatment product. The plan is to gain FDA authorisation for Faci-LOK next year and then float. TruSpine is valued at £15m. A £35,000 investment in the profitable corporate finance and asset management business Farina Investments (UK) Ltd has been made ahead of a flotation. Early Equity raised £115,000 at 0.6p a share.
Hydro Hotel, Eastbourne (HYDP) has declared an unchanged total dividend of 21p a share for the year to October 2017.
Lombard Capital (LCAP) says that it is progressing towards the issue of an investment bond that will be quoted on a recognised bond market. There was nearly £60,000 in the bank at the end of September 2017.
Coinsilium Group Ltd (COIN) raised £720,000 at 9p a share and this will be used to invest in blockchain companies and expand the company’s own advisory business. Last June, £250,000 was raised at 2.2p a share. Coinsilium has been appointed as an adviser to token generation event of Hdac Technology AG, which is developing payment platforms for connected devices.
Equatorial Mining and Exploration (EM.P) has raised £5,000 at 0.01p a share and issued further shares for convertible loan notes and warrants at the same price. Valiant Investments (VALP) has raised £34,000 at 0.1p a share. Via Developments (VIA1) has issued a further £50,000 of debenture stock.
AIM
Satellites owner Avanti Communications Group (AVN) has revealed a financial restructuring that could put it on a firm footing. Certainly, without this restructuring the outlook would be bleak. The $557m of 2023 loan notes will be converted into two billion shares, while investors in the 2021 loan notes are being asked to accept and extension of the term and lower income. Annual interest charges would still be $36.6m
Best of the Best (BOTB) says that it expects to pay remote gaming duty and this will knock £300,000 from profit this year and £600,000 next year. This year’s pre-tax profit is forecast to decline from £1.5m to £1.4m, with a further fall to £1.2m in 2018-19. Net cash is expected to be £2.6m at the end of April 2018. The company is still claiming £4.5m of VAT so this could provide a cash boost in the future.
Plant Impact (PIM) is suffering continued delays in demand for its Veritas product in Brazil. A new partnership with Albaugh Brazil will commercialise other Plant Impact products in Brazil. This has sparked the decision to consider putting the company up for sale. Cash is running out and a further £7m would need to be raised to keep the company going well into 2019.
Van Elle Holdings (VANL) has defeated the five resolutions proposed by former chairman Michael Ellis at last week’s general meeting.
Recruitment and outsourcing services provider Servoca (SVCA) reported better than expected full year figures. Pre-tax profit improved from £3.5m to £3.9m. Education and healthcare will be the main growth areas.
Evgen Pharma (EVG) is collaborating with King’s College London to examine the use of SFX-01 as a therapy against ischaemic stroke. Multiple doses will be assessed and this will take nine months. This could lead to a clinical trial that might be funded by a charity organisation associated with King’s College.
Range Resources Ltd (RRL) returned to AIM following the reverse takeover of producing oil and gas assets in Trinidad from Trinity Exploration and Production (TRIN).
Defence equipment and services supplier Cohort (CHRT) had a weak first half but it expects to more than make up for that in the second half. There was a mixed performance with some parts of the business finding trading conditions difficult. The order book is worth £132m. Full year pre-tax profit is forecast to improve from £14.5m to £15.4m.
Savannah Resources (SAV) says that it has discovered high-grades and large intercepts in the latest drilling at the Mina do Barroso lithium project. A maiden mineral resource estimated could be announced before the year end with potential for upgrades from further drilling.
Daniel Stewart expects China New Energy (CNEL) to report a jump in pre-tax profit from £400,000 to £2.6m in 2017. The shares are trading on less than four times fully-taxed 2017 prospective earnings. The company constructs bioenergy plants that convert feedstock into ethanol. The most recently reported order book was worth £28.7m with the orders due to be fulfilled in 2017 and 2018. Demand from China is strong and there is also international business.
Coal bed methane projects developer Tlou Energy Ltd (TLOU) has secured a listing on the Botswana Stock Exchange and trading commenced on 13 December. Tlou raised £2.4m at 11p a share.
Synairgen (SNG) has secured a £5m cash injection from a deal with Pharmaxis, which will take over the development of LOXL2 in fibrotic diseases. Synairgen will also receive 17% of any partnering revenues. This compares with £3m invested by Synairgen in LOXL2. The cash will enable Synairgen to fund the phase IIa study for SNG001 for COPD. The trial should be complete by the end of 2018.
New management has turned around the performance of contract disputes and expert witness services provider Driver (DRV) and it moved back into profit last year. Cost savings have been made and the focus is on profitable business rather than just growing revenues. Cash collection is improving with net debt down to £200,000 and there is likely to be net cash of £2m in one year’s time. This year’s revenues are likely to be flat at around £60m but pre-tax profit should improve from £2.5m to £2.7m.
One month after its previous trading statement IDOX (IDOX) says that an internal audit has found that it should not recognise all the revenues that it originally intended to. This will knock £3m off profit for 2016-17. The software company reported its full year figures in December but the attest full year figures have been delayed until February. Chief executive Andrew Riley is away ill and former boss Richard Kellett-Clarke has taken over on a temporary basis.
Abzena (ABZ) reported interims in line with expectations. Growth came from the chemistry and manufacturing businesses. This is a period of capital investment as various parts of the company move to new facilities. The ADC master services agreement with a US biotech will yield at least $5m in services revenues over the next 12 months. This deal is shared between chemistry and manufacturing divisions.
Surface coatings provider Hardide (HDD) is starting to improve its gross margin as demand improves. There is even some signs of improved demand from the oil and gas sector. Even so, Hardide remains loss-making but it still has not gained any orders from Airbus. It raised £2.5m for capital investment earlier this year. A new reactor will be installed in the US in this financial year and another next year.
MAIN MARKET
Titon Holdings (TON) continues to benefit from strong demand for its window ventilation components in South Korea. The majority of profit comes from South Korea and that is where all the growth came from last year as the contributions from the UK and North America fell. In the year to September 2017, revenues were one-fifth ahead at £28m, while pre-tax profit improved from £2.14m to £2.49m. The dividend growth of 20% to 4.2p a share is ahead of earnings per share growth. A pre-tax profit of £2.81m is forecast for this year.
Avation (AVAP) has secured an initial $100m revolving facility to finance the acquisition of aircraft.
Sealand Capital Galaxy Ltd (SCGL) has secured an agreement with AIM-quoted MySQUAR (MYSQ) for the distribution of its games on MySQUAR’s platform and MySQUAR’s games on the Huawei InTouch platform. This is initially a two year deal.
Standard list shell Stranger Holdings (STHP) says that it expects to complete the acquisition of biogas and renewable energy business Alchemy Utilities. A five-year £20m bond is being raised.
Andrew Hore
EIS Crowd January 2016
Cleantech Investor Events is holding a Tech Investor Evening on Wednesday 26 January at Smith & Williamson’s offices in Moorgate, London. The event is organised in partnership with Crowd Tech Funders. There are five companies that are due to present at the event.
Sensurity (www.sensurity.com)
Northern Ireland-based Sensurity is a developer of Perimeter Intrusion Detection Systems (PIDS) and it claims that its system offers maximum detection with a minimum of false alarms. Bombardier and Hong King Airport has trialled the system.
The HALO system combines digital microwave and IR detection technology. This enables it to adjust to environmental conditions, such as standing water, vegetation and weather conditions. There is a fixed two metre Active Alarm Zone that is triggered when the centre of the link is crossed and there is no blind spot as in other systems.
The technology was developed from research into high frequency electronics at Queen’s University Belfast and the company is a spin-off from specific research to commercialise advances in microwave intrusion detection. The university has a stake in Sensurity through Qubis. Invest NI is also a shareholder.
Andrew Fulton was appointed chief executive last November. He was previously an executive at security company Tyco working in the access and CCTV product areas. Previously he founded CEM Systems with Sensurity’s chief technology officer George Redpath.
MotionLED (www.motionledtechnology.com)
MotionLED Technology is developing technology that projects high definition outdoor digital advertising. This advertising can be changed in real-time so campaigns can be kept up to date.
MotionLED is based in Berkshire and it has a subsidiary in Hong Kong. There are four product ranges. TracLED is focused on in tunnel or outdoor advertising for train lines. The former beams adverts onto train windows as they go through tunnels. This has to work in a tight space and within the requirements of the signalling system. The outdoor version has to work in bright sunlight.
The BusLED technology provides high definition digital displays made up of individual LED tiles on the outside of buses. This enables new campaigns to be launched more quickly than in the past. The LiteCast product is a web application that manages the bus displays.
The fourth product is AutoLED, which provides in-wheel advertising for motor racing cars, where it can be updated during different parts of the race, and public transport vehicles, where location based advertising can be provided.
Executive chairman Des Althorp and chief executive Graham Skelton are joint founders of the company and they have worked together for three decades.
B2M Solutions (www.b2msolutions.com)
Abingdon-based B2M Solutions was founded in 2002 and it has developed a real-time mobile intelligence platform that assesses how mobile devices are used and enables improvements to efficiency and productivity. Partners include BT and Motorola.
Elemez is a cloud-based mobile device analytics service that monitors and measures mobile device behaviour and disruptions. There are alerts that let the user know when behaviour or performance changes from normal patterns. B2M collaborated with Zebra Solutions (prior to its acquisition by Motorola) and Zebra has stated that it will install Elemez on all of its new field devices. mProdigy monitors and analyses mission-critical, ruggedised mobile devices. It monitors such things as device usage, battery usage and WLAN performance.
B2M founder Julie Purves is chief executive. Chief finance officer Warren Price is also a director of major shareholder Dolphin Head Group Holdings, a commercial property letting company.
The directors include Bill Flind who was previously finance director of BIW Technologies Ltd, which was acquired by Germany-based Conject in 2010. BIW’s project control and management software is used on large construction projects or for refurbishment and maintenance of existing sites.
Horowitz Biometrics (www.horowitzbiometrics.com/)
Horowitz Biometrics is developing voice recognition technology, although it is still at proof of concept stage. It was founded by Dr David Horowitz and has received grant funding from the EU’s Horizon 2020 programme. The London-based company is seeking additional finance for further development.
The technology is based on the way ears identify a voice and recognise who it is. Human auditory based voice identification is combined with multi-channel biometrics, which may include iris identification and facebiometrics among other things. Horowitz claims that its universal domain solution means that it is easier to deploy voice biometrics because less specialist development and tuning are required.
Dr Horowitz started researching in voice recognition at the Massachusetts Institute of Technology and he worked there for a decade. He is technical director of the SpeechXRays project, which also has funding from the EU’s Horizon 2020 programme and combines voice and face recognition. The €5.3m (€4.1m from the EU) project is led by Oberthur Technologies and Horowitz Biometrics is one of the participants. Terry Marler, who is a former chief executive of Synergy Medical, is chief executive of Horowitz Biometrics.
Ancon Technologies (www.ancontechnologies.com/)
Canterbury-based Ancon Technologies has developed a drugs, chemicals and explosives detection technology. The system can detect a single molecule of these materials in the air, which makes it superior to competitive technologies. This will enable faster detection at airports and other border areas.
The company’s Nanoparticle Molecular Tagging (NMT) technology is able to count individual ions and it has been developed over a decade. There are UK and US patents. The way it works is that the sample chemicals are ionised and target ions passed through an electric field selector module. The ions are tagged with nano-objects and detected optically by laser and then individually counted. This means that the number of molecules can be measured in order to produce a value for concentration of the substance in the air.
A separate company called Ancon Research provides IP under licence to Ancon Technologies. Like Ancon Technologies, Dr Boris Gorbunov and Dr Robert Muir are the shareholders.
Chapel Down subsidiary Curious Drinks has raised the minimum £1m from a placing and crowdfunding offer and the maximum target is £3.65m. Curious Drinks is issuing A voting shares at 200p each. There was a £495,000 raised through a placing and, so far, a further £919,000 via the Seedrs crowdfunding site. The offer is open until 29 February. There are a number of incentives for subscribers to the offer depending on the level of investment. Stewart Gilliland, a former boss of the UK operations of Interbrew, will become chairman of Curious Drinks in March.
Kent-based Curious Drinks produces Curious Brew lager, Curious IPA, Curious Porter and Curious Apple cider. The cash will be used to build and equip a brewery near to the Eurostar station in Ashford and boost sales and marketing. Chapel Down will buy the brewery site and lease it to Curious Drinks. Chapel Down will end up with just under 50% of the A voting shares plus all of the B non-voting shares in order for Curious Drinks to be eligible for EIS relief and qualify for VCT investment.
The brewer’s revenues have grown from £182,000 in 2011 to £1.75m in 2014 and it has gone from loss to a profit of £86,000 over the same period. Sales in Waitrose more than doubled last year. Even so, in common with many other breweries raising cash via crowdfunding, Curious Drinks has a high valuation at the offer price. Curious Drinks was valued at £16m prior to any new shares being issued.
It is unlikely that Curious Drinks will require the maximum subscription level in order to carry out its strategy but it is unclear how much it could do with the current level of cash subscribed. The complicated share structure does not help – other than to ensure EIS compliance.
The ISDX-quoted English wine maker Chapel Down raised £3.95m in 2014 through a crowdfunding offer via Seedrs.
ANDREW HORE