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Andrew Hore Quoted Micro 15 April 2019
NEX EXCHANGE
High Growth Capital (HASH) is increasing its stake in Sentiance to 15% and is negotiating an option to acquire a majority stake in the artificial intelligence and machine learning business. The additional 5% stake will cost £7m in shares issued at 0.8p each. The option would enable an increase in the total stake to between 51% and 84.8%. The company would offer 100,000 of its own shares for each Sentiance share and the option is subject to High Growth Capital raising at least £25m. High Growth Capital has also acquired the intellectual property of Malta-based BDD, a company founded by Chris Akers, for £4m in shares at 1p each. The project involves an annual blockchain raffle that would raise money for social impact and environmental initiatives.
EPE Special Opportunities (ESO) had a net asset value of 205.2p a share at the end of January 2019, which was 12.5% lower than the year before. The stake in fully listed LED lighting products manufacturer Luceco (LUCE) is a significant part of the portfolio and its valuation fell by 27.7%. There has been a recovery in the Luceco share price since the end of January, even though there was a decline of three-quarters in 2018 pre-tax profit to £3m. The EPE NAV had risen to 232.8p a share on 9 April on the back of Luceco share price rise. The EPE share price is 180p.
Angelfish Investments (ANGP) is subscribing £150,000 for a 9.14% stake in Just Bee Drinks and is also providing a loan facility of up to £100,000 at a annual interest charge of 10%. Just Bee has developed a natural juicy water drink sweetened with honey. This means that there is no added sugar. More than one million bottles were sold last year, and revenues doubled. The drink is already sold in Waitrose and Boots. Just Bee had net assets of £83,000 at the end of March 2018. Angelfish has also provided a £100,000 debt facility at the same interest rate to Wallet Ads. The previous loan of £150,000 was converted into a 20% stake.
NQ Minerals (NQMI) nearly doubled zinc concentrate production at the Hellyer mine in Tasmania to 3,015 DMT in the first quarter of 2019, while lead concentrate production increased by 18% to 4,712 DMT. Pyrite concentrate production jumped by 331% to 18,488 DMT.
AIM
Video games developer and services provider Sumo (SUMO) reported better than expected 2018 revenues of £38.7m and pre-tax profit of £9m. Sumo has been acquiring businesses to give it extra capacity as well as opening new studios. There is plenty of demand for Sumo’s services so utilisation rates are high and there is further upside from performance-based royalties and its own IP.
Destiny Pharma (DEST) had £12.1m in the bank at the end of 2018 and this will last into 2020. That should be long enough for the phase IIb study of XF-73 for the prevention of post-surgery infections.
Maiden full year results from legal services and credit hire business Anexo (ANX) have led to an upgrade by its broker Arden. The 2019 pre-tax profit forecast has been edged up from £17.8m to £18.1m, up from £16.1m in 2018, and the 2020 figure is 4% higher at £20.1m. Net debt is expected to increase from £17.3m to £26.3m in order to finance the growth of its legal business.
RA International (RAI) continues to win contracts, but larger contracts are taking longer to secure. RA provides services to remote locations in nine countries in Africa and the Middle East. Having joined AIM last summer, RA has $27.8m in the bank and this is helping it to tender for and win larger contracts. The average contract term is 4.4 years. This makes revenues relatively predictable and they are expected to rise by 10% this year to more than £60m.
Property investor Safeland (SAF) intends to leave AIM and secure a matched bargain facility on Asset Match. It is tendering for shares at 42.5p each, which compares with an NAV of 140.2p a share at the end of September 2018.
Having sold the RTLS SmartSpace business, the continuing revenues of geospatial software and services provider IQGeo (IQG) fell from £16.5m to £9.98m, although recurring revenues were 22% higher, and gross margin improved. There were lower software revenues, but the main decline was in the sale of third party products. There is a significant market for the company’s products and new modules are being launched. However, the full benefits of changes being made by management will probably not show through until next year. There is £30.9m in the bank and some of this will be returned to shareholders after a capital reorganisation is completed.
Interim revenues generated by LightwaveRF (LWRF) have more than doubled to £2.5m which is nearly as much as the £2.8m generated in the previous 12 months. Direct sales, e-commerce and telesales have contributed to the growth, as has the development of retail clients.
Legal firm Gordon Dadds (GOR) has acquired Gibraltar-based Rampart Corporate Advisers for up to £1.34m depending on performance. Rampart specialises in e-gaming, fintech and distributed ledger technology, and made a profit of £400,000 in the year to June 2018. Five former Ince network firms are joining Ince Gordon Dadds, although they remain independent. This would add £23m to existing group annual revenues of £77m. The firms are based in Hong Kong, Singapore, Dubai, Greece and Germany. This will boost profitability.
Strategic Minerals (SML) says the Cobre magnetite operations generated cash of $206,000 in the first quarter and the group cash balance was $1.24m at the end of March 2019. Volumes were lower because customers were undertaking plant maintenance and the continued suspension of a major client’s contract. There should be seven years of magnetite stockpile. The company expects to acquire the other 50% of the Redmoor tin/tungsten project by the end of May. This will cost £2.66m.
PhotonStar LED (PSL) says that it has enough cash for its immediate needs, but the blocking of the issuing of more shares by shareholders means that there is not enough cash to follow the strategy to find a reverse takeover target. The company may launch an open offer or ask shareholders for a second time for the authority to issue shares without offering them to existing shareholders a second time. Having become a cash shell, the company has been dropped from the FTSE AIM All Share index. It has six months to find an acquisition. A number of potential acquisition targets have been met by the board. Additional directors will be appointed.
Rose Petroleum (ROSE) has raised £275,000 at 1.1p a share in order to finance the appraisal of projects. The shares are being acquired by new executive chairman Robert Bensh, who has experience of the US oil and gas sector. Chief executive Matthew Idiens has more than doubled his stake to 2.52% by acquiring two million shares at 1.75p each. The finance director Chris Eadie has also more than doubled his stake to 1.2% at 1.67p a share. New non-executive director Tom Reynolds also bought shares.
Concepta (CPT) is raising £2.3m at 3p a share to finance marketing and further development of its myLotus fertility test.
MAIN MARKET
Cadmium-free quantum dots developer Nanoco (NANO) had £6.2m in cash at the end of January 2019. There was a total cash outflow of £4.57m in the latest six month period. The main capital investment at the Runcorn site is almost complete. Non-executive director Chris Batterham has bought 125,000 shares at 47.354p each. Miton has reduced its stake to 4.96%.
Bonmarche (BON) says the mandatory cash bid of 11.445p a share by Spectre undervalues the retailer. Bonmarche is reducing costs. Cavendish Asset Management has edged its stake up to 10%.
Standard list shell Contango Holdings (CGO) has entered into an agreement to acquire the Lubu coalfield project in Zimbabwe for £6.45m in shares at 5p each. Once regulatory approvals have been gained the acquisition should go ahead and trading in the shares can recommence. That should happen by the end of June. There will be a placing to raise cash to fund initial trial mining.
Telecom services provider Toople (TOOP) says that it had more than £1.1m in the bank at the end of March 2019. That is a £1m reduction on the level at the end of September 2018, when there was also a shareholder loan, which was assigned a value of £572,000 in the balance sheet but has a cash value of £607,000. There is no indication if this loan has gone down. Last year, admin expenses were £1.55m, net of other income, and that was more than revenues. Revenues have grown but even if gross margin were to improve there will still be a significant first half loss.
Nuformix (NFX) has signed an agreement for cannabinoid therapeutics development, licensing and commercialisation for an initial upfront payment and other research and development and milestone payments that could total up to £51m. Canada-based Ebers Tech Inc will use Nuformix technology to develop a range of consumer and pharma products.
Zegona Communications (ZEG) has increased its stake in Euskaltel to 21%.
European High Growth Opportunities Securitization Fund has transferred 35.4 million shares in WideCells (WDC) to David Sefton and Linton Capital, which has promised to hold them for 12 months. European High Growth Opportunities still owns 18.2% of WideCells.
Andrew Hore
Andrew Hore – Quoted Micro 5 November 2018
NEX EXCHANGE
Brewer Shepherd Neame (SHEP) has secured long-term facilities of £50m, which expires in 2023, and a £35m private placement of loan notes with BAE Systems Pensions Fund which lasts for 20 years. These replace existing loans. A revaluation of pub assets has delivered a £24m gain on book value.
Mechanical and electrical services provider Field Systems Designs Holdings (FSD) has benefitted from strong spending in the water sector as Asset Management Plan 6 reaches its mid-point, as well as demand from the energy from waste sector. However, the energy from waste customer’s tough stance has held back group gross margin. In the year to May 2018, revenues improved from £17.2m to £25.9m, but pre-tax profit fell from £839,000 to £625,000. If the defined benefit scheme settlement gain is stripped out, then there is an improvement in profit from £463,000 to £558,000. There is £3.97m in the bank. The current order book is worth £12m.
Coinsilium Group Ltd (COIN) is pushing ahead with Flowstone Capital Ltd, which is a private crypto fund and it has set up Flowstone Management Ltd to manage the fund. Coinsilium has also secured a strategic advisory partnership with LC LITE, which is planning a token generation event to finance the development of a digital letter of credit system for importers and exporters.
Startup Giants (SUG) still had £665,000 in the ban at the end of July 2018. Thee are plans to raise more cash via the event management services provider Exponential Events’ platform.
TechFinancials Inc (TECH) is in talks with blockchain-based sports ticketing platform Footies Tech to establish a new subsidiary to develop a blockchain-based venue management system. The idea is that TechFinancials will own 75% of the company and it would provide finance of up to $500,000 to develop a proof of concept. TechFinancials will licence its technology to the new company for free.
Formerly AIM-quoted Metminco (MNC) has withdrawn from the proposed acquisition of Gunsynd (GUN) investee company Sunshine Minerals after it failed to complete due diligence. Gunsynd says that there are other interested buyers even though the nickel price has fallen since the original announcement about the proposed acquisition.
The chairman and chief executive of DXS International (DXSP) have bought further shares last week. Chairman Bob Sutcliffe bought 18,857 shares at 10.5p each, while chief executive Bob Immelman acquired 19,802 shares at 10p a share which took his stake to 10.4%.
Ananda Investments (ANA) executive director Melissa Sturgess has bought another 500,000 shares at 0.4501p each.
AIM
Gordon Dadds (GOR) is acquiring Ince and Co International LLP and its associates, which will make it the largest quoted law firm. Annual revenues will be more than £110m. The estimated consideration will be £34m, depending on revenues generated in the three years after acquisition. The merged company will be called Ince Gordon Dadds. Share trading remains suspended until the full details of the deal are published.
Watkin Jones (WJG) says that its full year figures will be slightly better than expected. Good progress is being made with the build to rent operations, but the benefits will come in the future. The sale of a client portfolio of the student accommodation management division has led to a termination fee and a share in the profit of the disposal, which totals £4m.
Concepta (CPT) has obtained a CE Mark for its myLotus fertility testing technology. This enables women to test for their optimal level of fertility. The self-test platform has been launched at the Fertility Show in London. Initial sales will be via the company’s own website. It will take time to build up sales and it is likely to be next year when they become more significant. Concepta raised £2m in August so it is well-funded for its current requirements.
Goldplat (GDP) says that first quarter production fell to 6,100 ounces of gold because of problems sourcing raw materials in Ghana and South Africa, but there has been a recovery in the second quarter and it should be able to achieve full year production estimates of 39,5000 ounces of gold. The Kilpesa mine is being put on care and maintenance if a partner cannot be found and that could knock 3,700 ounces off the production figure.
Next Fifteen Communications (NFC) has raised £20m at 475p a share. The PR firm will use some of the cash to finance the acquisition of Activate Marketing Services for an initial $9m in cash. This technology-focused business is data-led and will continue to be operated separately. This is the latest example of Next Fifteen’s strategy of growing its digital marketing operations.
Gama Aviation (GMAA) says that growth has been slower than anticipated in the second half. The main culprits are the US air associate and slower than expected growth at the new Bournemouth ground services facility. This equates to a $3m cut in forecast operating profit for 2018 and the earnings per share forecast has been reduced by 19% to 21.3 cents.
The share price of floorcoverings manufacturer Victoria (VCP) slumped on the back of a warning that margins were coming under pressure. Like-for-like revenue growth was more than 3% in the six months to September 2019, but less profit is being made. Victoria is attempting to refinance its two-year bank facility through the issue of a five-year €450m bond, which has been given a BB minus credit rating by Standard & Poors.
Safestay (SSTY) has acquired a 20-year lease on a site in Vienna. This is currently a hotel and it will be converted into a 234 bed hostel at a cost of less than €300,000. Safestay will have 13 hostels.
Pires Investments (PIRI) had a NAV of £950,000 at its year end. The £200,000 increase was mainly due to investments in SalvaRx and Eco (Atlantic) Oil and Gas.
Imaginatik (IMTK) has launched its six-for-nine open offer to shareholders. This could raise up to £253,000 at 1.1p a share. The closing date is 26 November.
Market research firm System1 Group (SYS1) has declared a maintained interim dividend of 1.1p a share, but the final dividend may be reduced. Interim revenues declined by 5% and pre-tax profit was lower without the £250,000 exceptional credit. That is due to investment in the Ad Ratings business. There was £3.55m in the bank at the end of September 2018.
Mporium (MPM) has signed a deal with BPC Land and Sales Marketing, a services provider to property developers. BPC will use Mporium’s IMPACT technology for digital advertising campaigns. This is a new sector for Mporium.
Biome Technologies (BIOM) has increased nine months revenues by 59% to £7m, which is more than for the whole of 2017. Biome is profitable and it had £2.5m in the bank at the end of September 2018. The main growth has come in the RF Technologies division. The bioplastics business increased its third quarter revenues, but nine months revenues are still lower.
Parity (PTY) has warned that there will be a significant shortfall in profit in 2018 because of the continuing delay of a major contract. WH Ireland has slashed its pre-tax profit forecast from £1.9m to £850,000, suggesting limited profit in the second half.
Meat and delicatessen products retailer Crawshaw (CRAW) is appointing an administrator because it was unable to raise the cash it required.
Elektron Technology (EKT) has increased its nine months revenues from £22.1m to £25.8m and the full year outcome is set to be ahead of expectations. Sight screening technology developer Elektron Eye Technology is expected to move into profit. Net cash was £8.5m at the end of October 2018.
Transportation software and services provider Tracsis (TRCS) has received a renewal and extension of data hosting services and software with a rail client. The contract is worth more than £2m over two years.
More bad news from superyacht painting and maintenance services provider GYG (GYG) as 2018 figures are set to be well below expectations that have already been revised downwards. There will be a full year loss on revenues of €44m. There will be no dividend. Refit projects have been delayed and one shipyard undergoing maintenance. New build contracts have been won for 2019. The order book is worth €31.3m, of which €18.2m relates to 2019.
BlueRock Diamonds (BRD) has raised £626,000 at 0.3p a share with every two new shares coming with a warrant to subscribe for a share at 0.4p. The directors have invested £170,000. The cash will be used to open two of the five kimberlite pipes at the Kareevlei diamond mine in South Africa.
Tern (TERN) has invested a further £1.1m in in virtual reality training and data analysis technology platform developer FRVS.
PhotonStar LED Group (PSL) has appointed Menzies as administrator of its subsidiary PhotonStar LED Ltd. That business generated £1.15m of first half revenues of £1.33m. It also made most of the loss. More cash will be required for the remaining subsidiary.
TomCo Energy (TOM) has raised £100,000 at 8.5p and disposed of its stake in Red Leaf Resources for $133,333, which had no value in the balance sheet. This will take cash resources to £335,000. The field test on the Holliday block has been delayed due to a failure of couplings.
Ascent Resources (AST) is still finding it difficult to obtain the permits it is waiting for from the Slovenian authorities so that it can generate revenues from gas. Ascent is considering taking action in the European Court.
N4 Pharma (N4P) says clinical data suggests that its Nuvec technology is suitable for use with multiple antigens. It has delivered mRNA and pDNA in sufficient levels to generate the required immune response. The results of the next study should be available in the first half of 2019.
Wey Education (WEY) reported good results but WH Ireland has downgraded its forecasts for this year and next year. The broker is being more cautious about international growth prospects and cut the 2018-19 pre-tax profit forecast from £1.95m to £1.31m and the following year’s from £5.2m to £3.3m.
Frontier IP (FIPP) has made its second Portuguese investment. Des Solutio is developing greener versions of chemicals used to make beauty, pharma and personal care products. Frontier IP has taken a 25% stake.
Myanmar-focused social media platform operator MySQUAR Ltd (MYSQ) is raising £600,000 at 0.35p a share. Management is focusing on active users and in the first quarter of this financial year there were 412,338 active users of the mobile games offer and 426,750 media and mobile apps users. Last year’s revenues were $1.84m but they need to be much higher than that.
Property investor Safeland (SAF) has acquired North Downs golf club in Surrey for £1.07m and it will invest in the facilities.
Rose Petroleum (ROSE) says that the US Bureau of Land Management has approved the application for a permit to drill the GV 22-1 well on the Paradox acreage in Utah.
MAIN MARKET
Zotefoams (ZTF) has improved revenues by 16% in the nine months to September 2018. Full year profit is expected to be slightly better than anticipated. HPP sales have nearly doubled due to demand from the footwear and aviation sectors. Capacity is being increased.
Books publisher Quarto Group (QRT) has extended its facilities to the end of August 2020. The bank facility has been reduced. Large shareholders have agreed to provide unsecured and subordinated loans of $13m, repayable on 31 August 2020.
Stem cell services provider WideCells Group (WDC) is restructuring its Wideacademy educational subsidiary and closed its London office. Annualised savings are worth £400,000. Alan Greenberg has stepped down from the board.
Social media investment company Sealand Capital (SCGL) has published its full year figures and subsequent interim results. Trading in the shares has recommenced. The SecureCom business has been sold. Sealand has subscribed for a 55% interest in Guangzhou Ruiyou Information Technologies Co, which is a mobile game distributor. It is also party to a licenced operator agreement of the WeChat advertisement product in the UK and UAE. There was £758,000 in the bank at the end of June 2018.
Gems explorer Shefa Yamim (SEFA) has raised £250,000 at 80p a share. The shares each come with one warrant exercisable at 100p a share.
Dukemount Capital (DKE) has gained planning permission for a minor extension on its second property in north west England.
Andrew Hore
Powerhouse Energy #PHE CEO Keith Allaun & Director David Ryan discuss progress with Justin Waite on the Vox Markets Podcast
Keith Allaun, CEO and David Ryan, Technical Director of Powerhouse Energy #PHE discuss progress at the company and why David purchased £30,000 of shares at a 40% premium to the current price…plus Alan Green CEO of Brand Communications discusses Catenae Innovation (CTEA) Crawshaw Group (CRAW) Gordon Dadds Group (GOR) Predator Oil & gas (PRD)
Buy Gordon Dadds Group Plc (GOR.L) says VectorVest. The company is listed at nearly 40% under valuation & has considerable growth potential.
Gordon Dadds Group Plc (GOR.L), formerly Work Group Plc, is an acquisitive legal and professional services business headquartered in London with a significant back office and technology platform based in Cardiff. The Group targets firms of all sizes and will merge the business into the Gordon Dadds brand or allow a firm to retain their identity and culture but benefit from the back-office technology platform used by Gordon Dadds, enabling the targeting of law firms seeking an alternative solution to the regulatory and investment requirements of the UK legal market. Gordon Dadds LLP has been operating in this way since 2013, successfully integrating firms into its cost efficient platform, and floated on AIM in 2017.
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On June 28th 2018, GOR published maiden final results for the year ending March 31st 2018, and announced a 23.3% hike in adjusted PBT to £2.96m on revenues 25.3% higher at £31.24m. GOR recommended a maiden dividend of 4.0p on the back of gross assets up to £55m (2017: £24.9m) and an end of year cash balance of £8.9m. CEO Adrian Biles called it a year of “great progress”, “exceeding the expectations that we set for ourselves and for our shareholders.” He added; “We expect to achieve significant further growth during the year from additional acquisitions, together with organic growth arising principally from the increasing cross-referral of clients between the Group’s businesses and as the more specialised businesses take advantage of the Group’s full service capabilities. We continuously examine expansion opportunities and are engaged in discussions with firms in a number of other international jurisdictions. In the UK, we have a good pipeline of potential acquisitions with which we are at various stages of discussion or negotiation.”
The impressive progress by GOR in it’s first year as a listed company did not go unnoticed by VectorVest. A Relative Value flag, (RV – indicator of long-term price appreciation) alerted members in early June, as the level moved above 1, and continued to rise, logging GOR today at 1.57, excellent on a scale of 0.0 – 2.0. Other leading metrics include a GRT (Earnings Growth Rate) of 37%, which also rates as excellent on the VectorVest stock and portfolio management system. Even so, trading today at 177p, GOR is still a long way below the current VectorVest valuation of 281p.
The chart of GOR.L is shown above in my normal format. The share is in a Buy recommendation and has charted a first rising low. The VectorVest revaluation in June and July 2018 is invariably a leading indicator of a high momentum move.
Summary: For a company to complete a listing on AIM and deliver such an impressive set of maiden results is a relative rarity in this day and age. GOR not only achieved that, but it paid a dividend and has ample cash resources on the balance sheet to complete the acquisitions currently under negotiation. Even at this early stage in its life as a listed company, VectorVest sees considerable growth potential, particularly with the stock trading at nearly 40% under valuation. Buy.
Dr David Paul
August 8th 2018
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Andrew Hore -Quoted Micro 2 July 2018
NEX EXCHANGE
Medicinal cannabis business investor Sativa Investments (SATI) has raised £500,000 from Miton Investment Management at 4p a share. Demand for the shares remains strong. Executive director Mark Blower has sold one million shares at 4p a share, having exercised options for the same number at 0.5p each, and Non-executive Noel Lyons has sold 500,000 at 4.25p each, having exercised 500,000 options at 0.5p each. Sativa joined NEX on 29 March after raising £1.1m at 1p a share. The share price had already reached 3.125p by the end of the first week. Sativa has founded the Sativa Foundation to fund academic research into medicinal cannabis.
AfriAg Global (AFRI) intends to change its investing policy so that it includes medicinal cannabis opportunities. A medical advisory board will be appointed and they will carry out due diligence on the opportunities. AfriAg (Pty) Ltd previously had the right to take a 60% stake in House of Hemp but this deal was terminated when the South African government delayed setting up the legal framework for medicinal cannabis.
High Growth Capital (HASH) joined NEX on 25 June and it plans to become a UK, Canada and Australia-focused medicinal cannabis products index tracker and investor. This will be achieved by giving direct exposure to medicinal cannabis-related companies. The strategy is to acquire up to 10% of an individual company or £150,000 in value, depending on which is the lower amount.
Tectonic Gold (TTAU), which was quoted on AIM as Stratmin until August 2017, also joined NEX on 25 June. Tectonic has gold exploration interests in Queensland, Australia. Tectonic raised £530,000 at 2p a share and then issued another 30.8 million shares to the one of the shareholders in the exploration assets that have been acquired and to advisers.
Capital for Colleagues (CFCP) had a NAV of 41.73p a share at the end of May 2018. There are 18 investments in unquoted employee-owned businesses valued at £5.82m. The most recent was a £600,000 loan to Poole-based aerospace components manufacturer TG Engineering.
Clean Invest Africa (CIA) still had £501,000 in cash at the end of March 2018, following its maiden £372,000 investment in CoalTech, which is involved in cleaning up the waste from coal mining. The technology that has been developed enables coal fines that have little or no worth to be converted into pellets, using a binding technique, to make them a commercial product.
There was a £93,000 cash outflow from the operating activities of investment company Startup Giants (SUG) in the year to January 2018. There was £686,000 in cash and £40,000 worth of investments on the balance sheet. There are plans to add up to 25 more investments.
VI Mining (VIM) says that the seller of the Ximenita de Casma project has cancelled the option over the three mining concessions and it has also exercised its charge over the company that owns the processing plant. VI Mining had held back payment of consideration because of claims for breach of warranty. Legal proceedings will be initiated.
AIM
Legal firms consolidator Gordon Dadds (GOR) grew revenues by one-quarter to £31.2m last year even though there were minimal contributions from some of the legal firms it acquired. Pre-tax profit was 23% higher at £2.96m. This is a highly cash generative business. The dividend of 4p a share reflects that the company was not quoted for a full 12 months.
IMImobile (IMO) continues to grow organically as well as by acquisition. Full year revenues were 46% higher at £111.4m and that includes organic growth of 7%. Pre-tax profit improved from £9m to £10.1m. The communications connections technology provider has 85% recurring revenues. The main markets are growing well but progress was held back in South Africa by the political situation and since this has been sorted out that market has returned to growth.
Following a cautious AGM statement by Dillistone (DSG), WH Ireland has trimmed its forecasts and that means that the recruitment software provider is expected to breakeven this year, while the 2019 pre-tax profit has been cut from £540,000 to £200,000. Software revenues have been hit by the loss of a major client and the GatedTalent product is taking longer to build up revenues.
SaaS-based app distribution platform developer appScatter (APPS) has revised the terms for its acquisition of Priori Data. The company is still paying £13.5m in cash and shares for data analysis business but more will be funded by shares. This means that only £1.6m has to be raised in a placing at 70p a share.
Transport group Eddie Stobart (ESL) is acquiring The Pallet Network Group for £52.8m, which will be partly financed by a £30m placing at 140p a share. The network comprises 106 regional transport companies and three central hubs.
Action Hotels (AHCG) has agreed a possible cash offer of 24p a share from its major shareholder. Due diligence is being undertaken. After the company was floated by Sanlam Securities at 64p a share in December 2013, there have been four changes of nominated adviser and broker.
EQTEC (EQT) is on course to raise £2m in cash to pay off the unpopular financing package it previously secured. That deal has hit the share price but EQTEC is making progress with potential projects for its gasification technology. At least one project should reach the construction stage before the end of year to June 2019. That could either be a project in the UK or a 12MWe power plant in Vietnam, which could utilise equipment that was going to be used on the project in Newry, which is no longer going ahead. This will mean that milestone payments will be received throughout the construction.
Omega Diagnostics (ODX) has sold its infectious diseases assets to Novacyt (NCYT) although it is retaining the Visitect CD4 test. The disposal will raise up to £2.175m and these assets generated a profit before overheads of £300,000 in the past financial year. The book value was £600,000. Omega will provide manufacturing and storage services for 12 months. The cash will be invested in the Visitect CD4 test, Allersys and realising the value of the food intolerance business.
TechFinancials Inc (TECH) reported a 37% reduction in revenues in 2017 to $13.4m with software licensing revenues more than halving. Overheads were reduced but pre-tax profit still slumped from $4.05m to $116,000, although that was partly due to a $1.5m asset impairment charge. There was $3.5m in the bank.
Windar Photonics (WPHO) has signed a global distribution agreement with Vestas Wind Systems, which will sell the two beam light detection and ranging LiDAR system as a retro-fit product. The deal could provide access to around 14% of global installed capacity. This should help Windar to move into profit this year and make a significant profit in 2019.
CEPS (CEPS) has raised £1.33m at 35p a share and this will finance the repayment of a £1m loan plus interest. Sunline Direct Mail, which is 80%-owned, has been placed in administration and CEPS is unlikely to receive anything. Group trading is also slightly below expectations.
MAIN MARKET
Standard list shell Chesterfield Resources (CHF) has agreed to acquire Cyprus-registered HKP Exploration Ltd, which has seven prospecting permits covering three project areas on the island. The focus is copper and gold. At least £1.1m will be spent on exploration and drilling. A placing and subscription at 7.5p a share will raise £2m and each share comes with a warrant exercisable at 15p each. HKP is being acquired for 6.67 million shares at the same price. The original placing price last August was 5p a share.
Highland Natural Resources (HNR) has applied to acquire leases over 46,000 acres in Arizona, which management believes could produce commercial volumes of carbon dioxide.
Andrew Hore
Quoted Micro 6 November 2017
NEX EXCHANGE
Chapel Down Group (CDGP) says that the 2017 harvest was second best in the company’s history. There was a 10% volume increase on the previous year. The quality was also good. There had been fears for the harvest because of the frost in April but Chapel Down sources from a wide range of vineyards. Chapel Down has completed the acquisition of the 1.6 acre site in Ashford where the Curious Brewery will be developed.
Capital for Colleagues (CFCP) is setting up a joint venture to focus on consultancy and advisory operations so that the core business is purely involved in investment in employee owned businesses. Capital for Colleagues will own 34% of Castlefield Corporate Advisory Partners, with 51% owned by Castlefield Partners and the rest by executives of the joint venture.
Supported housing developer Walls and Futures REIT (WAFR) has delivered its first project and has a pipeline of other projects. The NAV is 94p a share. In the six months to September 2017, there was a £203,000 uplift in property values and that is why there was an interim profit of £127,000. There is £237,000 in the bank.
Mechanical and engineering installation work provider Field Systems Designs Holdings (FSD) reported a 19% increase in full year revenues to £17.2m. The main growth came from the water and sewerage operations and the AMP6 regulatory period is just getting going. Pre-tax profit more than doubled from £308,000 to £672,000.
South Africa-focused investment company Inqo Investments Ltd (INQO) still has R756,000 in the bank following further investments. Kuzuko Lodge continues to lose money but its occupancy and room rates are improving. Investee company Bee Sweet Honey harvest 133 metric tonnes of honey in May and this has generated revenues for Inqo.
Ganapati (GANP) reported a reduced interim loss of £4.54m, down from £8.75m. The online casino software and apps supplier increased revenues from £1.34m to £2.19m. A mobile operating system update has held back revenue generation from the company’s apps.
IMC Exploration (IMCP) has raised £75,000 at 1p a share and issued warrants that could raise a further £150,000 at 2p each. The cash will finance a feasibility study on the licence in Avoca in County Wicklow.
MiLOC Group Ltd (ML.P) has raised £540,000 at 28.5p a share and issued further shares as payments to consultants at 30p a share.
AIM
Sanderson Group (SND) expects its full year revenues to be slightly higher at £21.5m but underlying operating profit is anticipated to rise from £3.69m to £3.9m. That excludes £500,000 of reorganisation and acquisition costs. The digital retail software divisions continues to be the main growth area. The order book of £5.8m at the end of September is much higher than the same time one year earlier. It does include a large order that will be delivered over two financial years. There is more than £6m in the bank.
At last week’s general meeting of Stratex International (STI) the requisitioners were successful with their first and fifth resolutions but not the second. The third and fourth resolutions were conditional on the passing of the first two so they did not go to a vote. Marcus Engelbrecht has left the board and the acquisition of Crusader Resources appears unlikely to go ahead. The requisitioners want to inject joint venture Thani Stratex into the quoted company.
Diversified Gas and Oil (DGOC) completed the acquisition of the Titan oil and gas assets at the end of September. Operating costs have been reduced by 8% to $7.14/barrel of oil equivalent since the first half of 2017, which has helped margins to improve. Trading is in line with expectations.
Billing and charging software provider Cerillion (CER) says that its full year revenues increased 8% to £16.2m. Mobile telecoms operators continue to dominate the business but the customer base is set to broaden.
Sapphire producer Richland Resources (RLD) produced 1.06 million carats from its Capricorn mine in the third quarter of 2017 but this was lower than the 1.2 million carats that was expected because of mine disruption and rehabilitation. Production and operating costs were $0.75/carat. The next sapphire sales are this month. Illegally mined sapphires are holding back prices so only $245,000 was generated from sales in the third quarter as Richland held on to sapphires in order to sell them in the fourth quarter.
Redx Pharma (REDX) has come out of administration. The board will be writing to shareholders laying out its strategy and the suspension of trading in Redx shares could be lifted later this year.
Versarien (VRS) is trying to raise £1.2m via institutions and PrimaryBid.com at 18p a share. Back in March, £1.5m was raised at 15p a share in the same way. The advanced materials company will use the cash to buy capital equipment in order to fulfil the requirements for graphene-related collaborations. There are negotiations with two of the largest consumer goods companies in the world. An order is expected shortly and there are many other discussions ongoing. The Total Carbide business is winning aerospace work to offset the shortfall in demand from the oil and gas sector.
Proxama (PROX) has sold its loss-making digital payments division in order to concentrate on its location sciences technology business. The deal will raise £1m with potential deferred consideration of up to £1m over 18 months. The company will change its name to Location Sciences.
Starcom (STAR) has raised £475,000 at 1.3p a share. The cash will provide working capital for recently announced large orders and to repay $100,000 owed to YA II and $115,000 owed to other creditors.
INEOS has acquired an interest in shale gas licences where Egdon Resources (EDR) is also involved. Egdon plans to increase its onshore UK production this year. INEOS has taken on the obligations of Total to carry Egdon in the PEDL 139 and 140 areas. Egdon owns 14.5% of each of these licences. Egdon also has a £4.85m carry on PEDL209, where Egdon has a 36% interest.
Pakistan-focused coal mine developer Oracle Power (ORCP) says a memorandum of understanding should be signed this month. Oracle will retain a 12.1% stake in the block VI project. Sichuan Provincial Investment Group will take a 78% interest in the project and the other 9.9% will be owned by PowerChina International Group. The gross cost of the project is estimated to be $1.6bn and the debt/equity ratio will be 75/25.
Gordon Dadds (GOR) has made its first acquisition since reversing into Work Group. The lawyer will pay £4m over a five year period for CW Energy. There could be additional payments dependent on performance. CWE is a corporate tax adviser and prior to distributions to partners it made EBITDA of £1.3m last year.
MAIN MARKET
WideCells Group (WDC) has signed a five–year agreement with White Apex General Trading, which will provide the companies stem cell services. WideCells immediately receives £255,000. The agreement covers the stem cell insurance product, stem cell storage and the educational platform Wideacademy. A further £1.5m could be payable if the Wideacademy platform is adapted for Middle East, North Africa and Asia. There could be £250,000 of this paid by the end of this year.
OTHER MARKETS / UNQUOTED
Fashion On Screen continues to progress towards a floatation on Nasdaq First North in the first quarter of next year. It is also raising money for its first film, Will, which is based on the life of William Shakespeare, via the SyndicateRoom crowdfunding platform. There are at least two other films in development.
Andrew Hore