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Andrew Hore – Quoted Micro 17 February 2020
NEX EXCHANGE
NEX and AIM-quoted Arbuthnot Banking Group (ARBB) says that there has been an increase in the level of confidence in its markets since the General Election. That was too late to have much effect on the 2019 results, but full year pre-tax profit will be at the upper end of expectations. Last year, customer loan balances rose by 31% and deposits by 22%.
Sativa Group (SATI) says that it welcomes the guidance from the Food Standards Agency on the safe use of CBD products and the timetable for novel food authorisation. Management points out that Sativa’s products do not include THC. Sativa expects to report 2019 gross profit slightly higher than expectations on lower than marginally lower than expected. Goodbody Wellness has piloted three retail stores, but they did not perform as well as expected. PhytoVista Laboratories has completed more than 3,000 tests on cannabis-based products. That includes Sativa’s own products and a new sports range is near launch. Medicinal cannabis-based development is focused on veterinary treatments.
EPE Special Opportunities (ESO) has increased its NAV by 55% to 317.2p a share following a strong performance by Whittard of Chelsea and a recovery in the share price of fully listed Luceco. Pharmacy2U continues to grow strongly. Last year, 2.3% of the shares in issue were bought back by the company. New investments are being sought for available funds.
Ethical housing investor Walls and Futures REIT (WAFR) increased its NAV by 15% to 106p a share in the year to January 2020. Chief executive Joseph McTaggart bought 1,991 shares at 61.75p each.
Hellyer gold mine operator NQ Minerals (NQMI) has raised a further £210,000 at 7p a share.
Investment company Primorus Investments (PRIM) has benefitted from the sharp share price rise in Greatland Gold (GGP) and the stake is worth two-fifths of the company’s market value. The current profit is £1.25m. Investee company TruSpine is on course to float in London this year. The spine stabilisation devices developer has gained a new cornerstone investor. Primorus is debt free.
Trading in the shares of Altona Energy (ANR) has been suspended because it has not published its annual report for the year to June 2019. Cash needs to be raised to keep the company going and management says that shareholders will be invited to participate in a fundraising. The company says it expects to publish the report in the next two weeks and blames the delay on a change of auditor and a new accounting treatment for its exploration licences. Final terms for the acquisition of the previously announced new petroleum exploration licence application are being negotiated.
SG Recruitment Ltd (SGRL) majority shareholder and chief executive David Sumner has also taken on the role as chairman after the resignation of Alan Kitchin and Katie Hiess from the board.
AIM
Brickability (BRCK) has acquired McCann Roofing Products for £2.75m. Essex-based McCann imports roofing and building products from Europe and generated a 2019 pre-tax profit of £700,000 on revenues of £8.2m. This deal adds additional suppliers to the group and should be immediately earnings enhancing.
Nostra Terra Oil and Gas (NTOG) has convened the requisitioned general meeting on 3 March. Eridge Capital wants to remove Matt Lofgran and Ewen Ainsworth from the board and replace them with Andrew Morrison. Eridge was previously known as former AIM company New World Oil and Gas. Nostra Terra’s subsidiary has loans that have a key man clause which stipulate that Lofgran has to be president of the subsidiary unless it give consent or there will be a default.
Drug discovery platform developer e-Therapeutics (ETX) has overhauled its board and raised £1.6m at 3p a share. Former Silence Therapeutics boss Ali Mortazavi becomes executive chairman. Ian Ross is stepping down to concentrate his role at Silence Therapeutics. Chief executive Ray Barlow and finance director Steve Medlicott are also leaving. An additional independent non-executive director will be appointed.
Gemfields Group Ltd (GEM) joined AIM last Friday. The share price ended the day at 11.7p.
Bidstack (BIDS) expects to have generated £150,000 from programmatic advertising for video games. That is much lower than previously hoped because it is taking much longer to get advertising agencies to take in-game advertising seriously. There was cash of £3.14m at the end of 2019 following a loss of £5.3m. There was £6m in the bank at the end of June 2019. First half revenues will still be small.
Knights Group Holdings (KGH) has acquired Nottingham law firm Fraser Brown Solicitors for up to £8.28m in cash and shares. This follows the purchase of Croftons Solicitors, which is based in Manchester, for up to £2.8m. A new revolving credit facility of £40m has been agreed and it lasts until June 2023.
Octopus Investments has cut its stake in Staffware (STAF) from 13.2% to 0.53%. Gresham House Asset Management increased its stake from 6.7% to 10.6%.
Filta Holdings (FLTA) says it should make an EBITDA of £3.2m in 2019. Cost savings and investment software will help the fryer management services provider to produce a much better performance in 2020.
Keystone Law (KEYS) has traded in line with expectations. Pre-tax profit is forecast to increase from £5.1m to £5.7m.
Hormonal disease treatments developer Diurnal (DNL) says that the FDA has accepted the new drug application for Akindi Sprinkle as a treatment for infants and children. Approval could be gained by the autumn and it will be the only licenced treatment specifically for children. There was cash of £4.6m at the end of 2019.
MAIN MARKET
Automotive information publisher Haynes Publishing (HYNS) is recommending a 700p a share bid from Infopro Digital, valuing the company at £114.5m. The two companies fit well together and will have greater scale.
Finance provider S and U (SUS) says that its figures for the year to January 2020 will be in line with expectations and trading has been getting better in the past few weeks. The used car market has held up well even though the new car market is week. This is why second hand car finance provider Advance should produce another record performance in 2020-21. Property bridging finance provider Aspen has made the progress hoped because of delays in repayments and the loan book is lower than expected, but it is still a young business. A 2019-20 pre-tax profit of £35.5m is expected to increase to £39m this year. The latest total dividend will be raised by around 5% to 124p a share.
JLEN Environmental Assets (JLEN) is raising cash from the placing of up to 49.7 million shares. This will fund a pipeline of investments. The bookbuild will close on 26 February.
Ultimate Products (UPGS) says that sales growth is easing this year with first half revenues 3% ahead at £67.7m. There is also uncertainty about the supply of products from China. Even so, Shore is maintaining its full year pre-tax forecast of £8.77m, a small increase on last year. That could change.
Zenith Energy (ZEN) is widening the geographic scope of its activities by negotiating to acquire an oil production licence in West Africa. Zenith has raised £135,000 through a share issue at 1.5p a share. It has also entered into an equity sharing agreement with a consortium of institutional investors. The nominal amount raised is £810,000, but the ultimate amount will depend on the share price when each tranche is paid over the next 12 months. The benchmark price is NOK0.2231/share, equivalent to around 1.85p. The share price is 1.43p, so the first instalment is likely to be below the notional level if there is no share price recovery.
BATM Communications (BVC) has gained a $1.3m order from a Middle East-based poultry firm for its agri-waste treatment system.
Fasteners supplier Trifast (TRI) says market conditions are more challenging and there has been a slow start to the fourth quarter, which is normally the strongest. Margins have fallen and profit will be at the lower end of the range of forecasts. The Coronavirus has led to the extended closure of Chinese sites, but this is a small percentage of production.
Cathay International Holdings (CTI) says that production at its plants is on hold or preparing to gradual resume production because of the effects of the Coronavirus. The hotel business has been hit by a sharp reduction in occupancy rates.
Avation (AVAP) has made firm orders for two ATR 72-600 aircraft that will be leased to US-Bangla, the largest private airline in Bangladesh.
Predator Oil and Gas (PRD) is raising £3.56m at 4p a share. This will finance the drilling of the Moulouya well in Morocco and provide cash for further investment in Trinidad.
Andrew Hore
Andrew Hore – Quoted Micro 3 February 2020
NEX EXCHANGE
Zapp Electric Vehicles plans to join NEX in February. Zapp has developed an electric bike and it is being produced in Thailand. The first production series model was made in September. The flotation will raise cash for manufacturing and marketing the i300 in the European market where cities are promoting electric vehicles. Zapp Scooters Ltd (the previous name) had net assets of £487,000 at the end of September 2018 and most of that was accounted for by an investment in the Thailand-based subsidiary. VSA Capital is corporate adviser.
Hydro Hotel Eastbourne (HYDP) increased its full year pre-tax profit from £193,000 to £282,000. Revenues were 2% ahead at £3.73m, while the cost base was flat. There were lower repair costs and the capital investment of recent years is beginning to pay off. NAV was £3.49m, including cash of £1.11m.
Ananda Developments (ANA) says that investee company DJT Plants has been asked follow-up questions by the government as part of the application to grow more than 0.2% THC cannabis. Sales of hap devices and hapac sachets has recommenced in Italy. The executive chairman has loaned £30,000 to Ananda at an interest rate of 10% a year.
Sativa Group (SATI) has signed a deal with Alliance Healthcare for the distribution of Goodbody Botanicals cannabis-based products through its 10,000 UK high street clients.
Block Commodities (BLCC) has extended its option to acquire Greenbelt Company, which has access to 4,000 acres of farmland in Sierra Leone. Greenbelt also has a licence for medicinal cannabis production and processing. A premium of £10,000 is being paid for a 90-day exclusive option to acquire the company for £4m in shares at 0.1p each, a premium to the suspension price. The proposed acquisition was announced 10 months ago.
Healthcare properties developer Ashley House (ASH) continues to build a pipeline of affordable housing schemes and it has completed six homes for Corby Borough Council. A loss will be reported for the 18 months to October 2019. More cash is still required.
Rutherford Health (RUTH) has given notice to Woodford Investment Management that it expects it to subscribe £7.5m at 176p a share. This will take the LF Equity Income Fund stake to 26.8%. More cash will be required so that a fourth proton therapy centre can be opened in Liverpool. This cash will be spent later this year.
Formation Group (FRM) reported a return to profit in the year to August 2019, although it was down to one-off gains. A loss of £284,000 was turned into a pre-tax profit of £1.27m. There was still an underlying loss. The NAV is £20.9m, including cash of £16.2m. The focus was completing existing property development projects. At the end of 2019, the cash was invested in Irish development projects. Sean O’Brien and Andrew Bennett, who is a director of Rutherford Health, have become directors of Formation.
Gunsynd (GUN) has rolled over its loan notes to Human Brands Inc into one loan note with a repayment date of 20 January 2021. Human Brands’ Japanese whisky called Shinju is being sold by a major US liquor retailer. The plan is to raise more cash and Gunsynd would receive a fee in shares.
Coinsilium Group (COIN) says that IOV Labs Ltd, which owns smart contract platform developer RSK, has subscribed £250,000 at 2.65p a share and the two firms have signed a memorandum of understanding to launch a joint venture in Singapore. This will commercialise RSK’s products in Asia and to promote RIF tokens which power RSK’s platforms. Gibraltar-based IOV owns 6.94% of Coinsilium, while Coinsilium owns 1.95 million RIF tokens. Almon I Holding has increased its stake in Coinsilium to 3.68%.
Black Sea Property (BSP) is acquiring two subsidiaries of European Convergence Development Company (ECDC) plus outstanding debt of €119.2m. Black Sea Property is paying €3.3m. There will also be the purchase of between 28.6% to 29.9%. This adds two development plots.
Lombard Capital (LCAP) made a loss of £131,000 in the last quarter of 2019. It is still attempting to raise cash via a bond issue.
Ganapati (GANP) says that additional regulations in Malta have required additional time for the registration as a Virtual Financial Asset licence. The application will be filed in the first quarter and a systems audit is being carried out. There are plans to apply for software gaming licence in the UK Gambling Commission and for certificates in Sweden, Denmark, Spain and Columbia.
Slater Investments has increased its stake in IFA group AFH Financial (AFHP) from 10.65% to 12.2%.
Early Equity (EEQP) has raised £113,000 at 0.65p a share. There was £174,000 in the bank at the end of August 2019. Management has informed NEX that the company should be classed as an operating company, rather than an investment company with the remaining investments classed as non-core assets. There are still plans to move to the standard list.
AIM
Computer vision technology developer Seeing Machines (SEE) increased first half sales from A$13.5m to A$15.8m. The automotive division has nine ongoing programmes with six automotive manufacturers. Demand for driver monitoring systems will be driven by regulation. The cost of the Guardian fleet equipment has been cut by 21%. Seeing Machines has launched a crew training system for the aviation sector.
Best of the Best (BOTB) has sparked another profit upgrade, following the one in November. The online competitions organiser reported better than expected interim figures and this led to a 18% increase in the 2019-20 pre-tax profit forecast to £2.6m, compared with £2.1m last year, and a 25% jump to £3m in 2020-21. There is currently £4.3m of cash in the bank and a 14p a share special dividend is proposed. That is the eighth since 2014.
Minds + Machines (MMX) is on course to announce a maiden dividend with its 2019 figures. The onerous contract has been sorted out Net cash was $6.6m at the end of 2019.
Cloverleaf 374 has increased its stake in Urban Exposure (UEX) from 9.1% to 12.2%. Invesco trimmed its stake from 15.5% to 14.1%. The ultimate owner is Wellesley Group Investors. The board is still reviewing proposals for the future of the property finance provider.
Open Orphan (ORPH) is raising at least £5m via a placing and subscription at 6.1p a share.
MAIN MARKET
Trading in the shares of Baskerville Capital (BASK) on the standard list has been suspended following the announcement of the proposed acquisition of Oberon Investments, which owns smaller company investor MD Barnard. The plan is to move to NEX. An initial 7.83% stake has been acquired for £851,000 with a commitment to subscribe a further £351,000 by the end of April. The acquisition of the rest of Oberon will be paid in Baskerville shares. The deal could be completed by the summer.
Smaller company-focused telecoms services provider Toople (TOOP) has increased its full year loss from £1.4m to £1.67m. In order to build scale, Toople plans to acquire DMS Holding for £1.56m, including £460,000 in cash and 1.05 billion shares. This is a cash generative business and there are potential cost savings. That should offset some of the enormous cash outflow from the existing Toople business. A placing at 0.1p a share will raise £1.2m gross.
Hemogenyx Pharma (HEMO) is raising £650,000 at 1.8p each. This cash will finance further development of the company’s therapies and treatments for blood diseases.
Haynes Publishing (HYNS) increased interim revenues by 4% to £19m with the growth coming from digital. The publisher’s pre-tax profit was 500% ahead at £1.2m. The formal sale process continues.
Standard list shell Bermele (BERM) is raising £200,000 at 1p a share in order to provide further cash to assess potential acquisitions in the pharma sector.
Andrew Hore
Andrew Hore Quoted Micro 9 December 2019
NEX EXCHANGE
GP clinical software supplier DXS International (DXSP) broadly maintained its interim revenues at £1.66m. Admin costs were lower so DXS returned to profit. There was also a higher tax credit. It made a pre-tax profit of £90,000 in the six months to October 2019, while the post-tax figure was £202,000. The final accreditation for the NHS Digital Care Services (GP IT Futures) contract is due this month. This will provide a positive outlook for the rest of this year and next year.
Formation Group (FRM) is investing £10m in Irish property development sites in Dublin, Limerick and Kildare. These sites were owned by major Formation shareholder Zandra Holdings, which also shares directors with Formation. Market Equities is buying the sites and it will be 45%-owned by Formation and 55% by Zandra.
Eight Capital Partners (ECP) has bought a 59.9% stake in Financial Innovations Team, which provides corporate finance services. Eight Capital also owns 40% of Finance Partners Group, which owns the rest of Financial Innovations Team. The strategy is to eventually become the single direct owner of the business.
Hellyer generated record profit for NQ Minerals (NQMI) in November. The gold mine has provisionally reported net profit before tax of A$2.44m on revenues of A$5.64m.
Belvedere Leisure Resorts has obtained a NEX quotation for its 6.25% secured bonds. Up to £25m of bonds can be issued. The company is a subsidiary of Belvedere Leisure Park, which owns a site in Dumfries & Galloway with planning permission for a lodge park resort of 444 holiday lodges.
SAPO (SAPO) has joined the NEX Growth Market and set its sights on gaining some of the £200m that the government has set aside to make sure that rural people can have fast broadband.
Gunsynd (GUN) has bought a 7.67% stake in Kolosori Nickel, which owns 80% of the Kolorosi prospect in the Solomon Islands. Gunsynd has a 90-day option to purchase a further 22.33%. Gunsynd’s stake in Sunshine Minerals will be diluted to 15.5%, if Malachite Resources earns a 15% stake by financing geological data and technical work.
TechFinancials (TECH) is dropping its AIM quotation and concentrating on the NEX-quotation. The company is reviewing the future of its original financial trading software operations and closing its loss-making business-to-consumer operations. There will be a $2.6m write-off. Blockchain-based ticketing business Footies has still not signed up a client. The first version of the platform is being tested with clubs and the feedback is helping to focus development. The focus is mid-sized clubs. Diamond platform developer Cedex is still commercialising its technology and TechFinancials may consider selling its stake.
Block Commodities (BLCC) has sent a circular to shareholders to convene a general meeting to expand the investment strategy in terms of cultivation of medicinal cannabis, as well as to gain approval for issuing more shares.
Trading in Welney (WENP) shares has been suspended because it has not published its accounts for the year to June 2019.
AIM
A large contract has been won by telecoms marketing technology provider Pelatro (PTRO) has been won in the form of a recurring revenue deal rather than a one-off licence. This has led to short-term downgrades, but the longer-term prospects are better. The contract is worth up to $12m over five years, with $10m fixed and the other $2m coming from gain share with the global telecoms client. Pelatro has 50% of next year’s forecast revenues of $8m in the form of recurring revenues. That would generate pre-tax profit of $2.2m.
Shareholders have voted in favour of the DBAY rescue proposal for Eddie Stobart Logistics (ESL) and will acquire a 51% stake in the main operating subsidiary of the transport business.
Summit Therapeutics (SUMM) is raising £38.7m at 22.1p a share with most of the shares being acquired by Robert W Duggan who will own 72.8% of the antibiotics developer. He will also become a non-executive director. Summit will leave AIM and retain its Nasdaq listing.
ReNeuron (RENE) is expanding the scope of the phase IIa study of its hRPC stem cell therapy treatment in order to speed up the process towards a phase III study. Further data will be published next year. Patient recruitment for a treatment for stroke disability is being accelerated. The main data will be published in the middle of 2021. There was £21.3m in the bank at the end of September 2019.
Subsea cable protection services provider Tekmar (TGP) continues to benefit from increasing investment in offshore wind. Interim revenues were 140% higher at £17.1m and the business moved from loss to profit. Acquisitions boosted organic growth. The order book was at a record level of £15.9m at the end of September 2019.
Renalytix AI (RENX) will receive $950 per KidneyIntelX test used in the US from 1 January. This price lasts for three years and is set by the US authorities. Insurance companies are likely to pay a similar amount. Initial revenues have been generated by a pharma testing programme.
Fashion retailer Quiz (QUIZ) is still finding trading conditions tough with like-for-like store sales 10% lower so far this year. Costs have been reduced, but a pre-tax loss of £3.3m is forecast for this year.
Medical grade collagen components supplier Collagen Solutions (COS) is building up sales of tissue and starting to benefit from the collaboration with its major US shareholder. Investment in the Glasgow facility will increase collagen supply.
Antibody discovery company Fusion Antibodies (FAB) improved interim revenues from £660,000 to £1.75m. There was still £1.31m left in the bank at the end of September 2019. Belfast-based Fusion has launched its RAMP service, which helps clients to optimise the performance of an antibody. The Mammalian Antibody library should be launched by next September.
MAIN MARKET
Standard list shell National World (NWOR) has asked for trading in the shares to be suspended as it negotiates the potential acquisition of regional titles from JPI. There are also other acquisitions being assessed.
Zenith Energy (ZEN) has acquired the Italian gas production and exploration assets of Coro Energy (CORO) for an initial £402,000 in shares at 6p each. Up to £3.5m in also payable in shares if gas production averages 100,000 scm/day over a period of four successive months. Production is expected to reach 113,000 scm/day following developments planned over the next 6-9 months. The Italian authorities have to agree to the deal, which adds to Zenith’s existing assets in Italy.
Haynes Publishing (HYNS) says that interim pre-tax profit will be 37% higher than in the corresponding period last year. This is all organic growth. The interims will be announced on 30 January.
Digital inkjet technology developer Xaar (XAR) says that Stratasys has completed its increased investment in Xaar 3D and it has an option to acquire the rest of Xaar 3D within three years. Xaar sold 20% of the 3D printing business for $10m and Stratasys can buy the 55% it does not won for at least $33m.
Nanoco (NANO) says that interested parties have been asked to submit acquisition proposals by mid-December. The majority of contracted revenues of £3.5m will be delivered in the first half. Progress with new customers has been hampered by the formal sale process.
IMC Exploration (IMC) says that the exploration programme in the Goldmines River licence in Wicklow has confirmed gold values ranging up to 0.4g/t. Drilling results are still being analysed.
Pembridge Resources (PERE) says that its Minto mine in Canada has received £3.7m in payment for copper concentrate. Sumitomo makes a 90% advanced payment for the concentrate. The rest is paid on delivery. Pembridge is on a roadshow to raise between £3m-£5m.
BATM (BVC) has gained a $4m contract in Asia for its agri-waste business. Three units will be supplied to two poultry processing facilities.
MATCHED BARGAINS
MESH Holdings, which recently left NEX will have its shares dealt on the JP Jenkins dealing platform. The acquisition option for AI company Sentiance has lapsed but management is in talks to agree a new option, which would require MESH to invest more cash in Sentiance, where it has a 16.8% stake.
Andrew Hore
Andrew Hore Quoted Micro 18 November 2019
NEX EXCHANGE
Trading in the shares of Barkby Group (BARK) has been suspended ahead of further information about a proposed reverse takeover. The acquisition of a group of companies referred to as the Dickson controlled entities is expected to cost £30m, predominantly paid in shares. There will also be a share placing to provide working capital for the enlarged group. Charles Dickson would become executive chairman if the deal goes ahead. The businesses include Workshop Coffee, which operates four coffee shops and is a wholesaler of speciality coffee, a commercial property developer. Barkby will also acquire the right to invest in two private companies: Transcend Packaging, which won a contract to supply McDonalds with paper straws, and VivoPlex, which has developed a medical device for fertility monitoring.
Brewer and pubs operator Daniel Thwaites (THW) says fears that interest rates will fall has required a £4m increase in the provision for its interest rate swaps. That is a non-cash item and underlying pre-tax profit increased from £5.6m to £6.2m in the six months to September 2019. That figure also excludes a quadrupling of property disposal profit to £800,000. Interim revenues improved 7% to £53.4m. The new brewery is operating at full capacity, while there was a small increase in like-for-like pub revenues. The contribution from hotels improved. Net debt was reduced by £8.6m to £61.6m compared with 12 months before, although £22.5m has been reclassified as due within one year. The interim dividend is unchanged at 1.1p a share.
NEX and AIM-quoted AFH Financial (AFHP) says it is trading in line with forecasts. The wealth manager will report underlying EBITDA of more than £17m, up from £10.4m, in the year to October 2019. Funds under management were £6bn. The contribution from acquisitions has been earnings enhancing. The total dividend is expected to be 8p a share and this is expected to rise by one-quarter to 10p a share in 2019-20. There was still £11.9m in the bank at the end of October 2019, although there is estimated to be £32.2m of contingent consideration and a £15m convertible loan in the balance sheet. The current focus is on organic growth and there should be enough cash generated, along with the current balance, to pay the deferred consideration over the next two years.
Ashley House (LSE: ASH) has published a trading statement and it is changing its year end from April to October following the disposal of the Morgan Ashley joint venture. In the 12 months to April 2019, revenues fell from £18.5m to £11.9m and a pre-tax profit of £805,000 was turned into a £2.95m loss. There was a loss contributed by joint ventures. Net debt was £1.8m.
Clinical support systems supplier DXS International (DXSP) is considering a move to AIM. This would be part of a potential fundraising to enable further investment in the business. DXS has already announced that it has been awarded a place on the NHS GPIT Futures framework from the beginning of 2020. This replaces the GPSoC2 framework and means that systems and services will be able to be bought centrally rather than with GP funds. The focus will be on the existing core product DXS Point of Care, analytics and reporting service CompleteCare, digital medicines service ExpertCare and condition management platform MyVytalCare. The first is already on sale and the rest will be launched in early 2020. DXS is gaining final approvals for its four solutions to be listed in the NHS catalogue.
AfriAg Global (AFRI) has raised £160,000 at 0.1p a share. This cash will be invested in additional shares in Apollon Formularies, which will take the company’s stake to 2.68%.
Primorus Investments (PRIM) believes that the lack of flotations is providing it with more opportunities. Primorus has received the £275,000 it was owed by Zuuse and still owns 57,205 shares and holds options over one million shares at A$0.50 (26p) each. The latest fundraising by Zuuse is at A$1 a share. There is a potential market to sell the shares even before a flotation.
Rutherford Health (RUTH) shareholder Formation Group has appointed Andrew Bennett as a non-executive director of the proton beam therapy firm.
David Lenigas has been appointed chairman of NQ Minerals (NQMI) and the board is in talks to replace existing debt with lower-cost debt. First Sentinel, which is run by former NQ Minerals director, has been appointed as corporate adviser.
Block Commodities (BLCC) has raised £388,000 from an issue of convertible loan notes and shares. This is less than the company wanted to raise more than six months ago. The share issue raised £133,000 at 0.02p a share, with a warrant exercisable at the same price, and the conversion of the loan notes will also be at the same price. The cash will be used to move into the medicinal cannabis sector. Additional shares are being issued to pay creditors.
EPE Special Opportunities Ltd (ESO) had net assets of 246.47p a share at the end of October 2019.
One hundred shares in Equatorial Mining and Exploration (EM.P) will be consolidated into one new share on 18 November.
Karoo Energy has changed its name to IamFire (FIRE).
Queros Capital Partners (QCP) will leave NEX on 28 November.
AIM
DBAY Advisors does not intend to bid for Eddie Stobart Logistics (ESL) and instead will acquire 51% of the underlying subsidiary that owns the transport operations. The poor financial situation of the business led to the change of strategy and Eddie Stobart Logistics has recommended the deal, which involves the injection of £55m of additional finance through a PIK Facility. This will pay off a £35m loan and provide working capital. The deal requires the extension of other existing debt facilities. The interim results to May 2019 are still being compiled. An operating loss of at least £12m is expected, but the underlying business could make a full year operating profit of up to £2m. There could be a goodwill write-down of £50m. Net debt will be around £200m. Wincanton (WIN) is still considering a rival deal.
ECO Animal Health (EAH) is still suffering the after effects of the African Swine Flu outbreak in China and the US/China trade war hitting imports from the US. First half revenues from China fell by three-fifths. Restocking will take time to flow through in terms of FCO’s results. There will be a sharp fall in full year profit. The interims could also be affected by accounting policy changes.
Advanced surface coatings provider Hardide (HDD) has been selected to coat parts for the new F-35 Lightning II Joint Strike Fighter. This is an important step in building up business in the aerospace sector. The Hardide-A coating will replace HVOF thermal spray coatings. HVOF is one of the most widely used coatings in aerospace and Hardide-A is said to be technically superior. Hardide has also been awarded a patent for a water droplet erosion resistant coating for blades and vanes, including those used on steam and gas turbines for power generation. A field test is planned.
Adamas Finance Asia (ADAM) says that a test production run is planned later this month by 85%-owned Future Metal at its quarry in China. The plan is to restart production by the end of the year. This will help to underpin the Adamas NAV and provide potential upside. At the end of September 2019, NAV was 84p a share, which is more than three times the share price. Future Metal is 45.2% of that NAV and when the quarry is up and running then Adamas could raise cash by selling some of its stake. Cash is required to invest in new opportunities that are being presented to the company. Adamas issued 16.18 million shares at 34.8p each for its equity investment in Infinity TNP.
Safestay (SSTY) has bought the Hotel Auberge in Berlin, which is near to Berlin zoo, and intends to turn it into a 150-bed hostel. The site has an eleven year lease. This is the latest acquisition this year and it takes the total number of hostel sites to 18. The plan is to have 20 hostels by 2020.
MAIN MARKET
PureCircle Ltd (PURE) chief executive Magomet Malsagov has stood aside temporarily pending further investigation of the classification of the stevia sweeteners supplier’s inventory and other transactions. The investigations have identified that inventory was $23m too high. Other transactions could lead to additional valuation changes. There could be write downs of intangibles and inventories. There should not be any increase in net debt, although the figures are still not fully audited. Bank covenants may need to be waived. Finance director Rakesh Sinha had previously resigned, although he remains with the company until the end of January.
Automotive information publisher Haynes Publishing (HYNS) is seeking a buyer. Management believes the company needs to be part of a larger group with greater financial resources.
Andrew Hore
Andrew Hore – Quoted Micro 10 June 2019
NEX EXCHANGE
Proton Partners International Ltd (PPI) has asked Woodford Investment Management to subscribe for £25m worth of shares at 176p a share. This is part of an agreement with Woodford that was outlined in the prospectus and it comes at a time when the fund manager is coming under pressure for poor performance and it has closed redemptions from one of its funds. The cash will pay off a loan and provide working capital.
NQ Minerals (NQMI) is making a £155,000 investment in Tasmania Energy Metals and the two companies will evaluate whether they should develop an integrated facility for the treatment of metal concentrate. NQ also has an exclusivity period until the end of July during which to decide whether to acquire Tasmania’s assets.
Sativa Investments (SATI) has signed an offtake agreement with a Swiss supplier of cannabis oil. This will be used to manufacture cannabidiol products.
AfriAg Global (AFRI) has invested £300,000 in Apollon Formularies for a 0.71% stake. Apollon plans to open a licenced retail medicinal cannabis dispensary and processing facility in Jamaica by the end of the month.
Newbury Racecourse (NYR) says that it is unlikely to return to paying dividends or return capital to shareholders before 2022 at the earliest. There is uncertainty about future revenue streams from fixed-odds betting terminals and how this could impact UK betting. It could reduce prize money levels. The onsite hotel has increased revenues by 15% so far this year.
Trading in shares of Equatorial Mining (EM.P) has been suspended ahead of publishing accounts. They should be published at the time of the general meeting to gain approval of the acquisition of Rwanda-based miner and explorer Eastinco. A £1.2m fundraising is also planned.
Altona Energy (ANR) has signed a memorandum of understanding with Shaanxi Qianyan Vanadium and Magnesium Mining, which owns a vanadium mine in China. The plan is to forma joint venture where Altona will be the controlling shareholder. Due diligence will take up to six months and there will be a JORC-compliant mineral resource classification report. The estimated reserve is 190,000 tonnes of vanadium.
Formation Group (FRM) has secured a £10m subscription at 7.71p a share through the acquisition of Zandra Holdings, whose asset is £10m in cash. This takes the Kennedy Private Trust stake in Formation to 89.99%. A £10m loan facility ahs also been secured.
The Little Bear mine area has been transferred to Panther Metals (PALM) and the Little Bear vein is a high priority drill target in order to see if the bonanza grade gold mineralisation still exists at depth. Panther has also applied for a licence over the Annaburroo gold project in Northern Territory, Australia.
Walls and Futures REIT (WAFR) has secured a £600,000 secured revolving credit facility and spent £465,000 on a bungalow in Didcot to be redeveloped into a home providing specialist support for four adults.
Valiant Investments (VALP) is raising £263,000 at 1.5p a share and it is changing its name to Eurocann International as an indication of the change in strategy to investment in the medicinal cannabis sector. Jeremy Rose will become chief executive and he has a number of directorships including of Speakeasy Cannabis. Burns Singh Tennent-Bhohi will become a non-executive.
EcoVista (EVTP) had £419,000 in cash at the end of February 2019 and it is seeking further investment. The interim loss declined from £238,000 to £202,000. Net assets were £1.19m at the end of February 2019.
Share trading in Wishbone Gold (WSBN) has been suspended because it has not published its 2018 accounts.
AIM
The smart machines division of Vianet (VNET) is going to be the source of profit growth for the coming years. Profit can be improved by converting the vending machines that came with the Vendman acquisition to Vianet’s contactless technology, as well as winning new business. The smart zones pub dispensing technology division should be able to maintain its contribution with lower UK profit due to pub closures being offset by an improved performance in the US. Pre-tax profit is expected to improve from £2.7m to £2.9m, although earnings per share will be hit by a higher tax charge.
Interim revenues at smart home devices supplier LightwaveRF (LWRF) increased 120% to £2.5m, although there was still a pre-tax loss of £1.35m. New distribution channels are helping to accelerate growth in revenues. The company could move into profit next year
Bad weather in the US has hampered the progress of Somero Enterprises (SOM) and led to forecast downgrades. Demand for concrete levelling equipment is normally stronger in the spring. This year’s earnings have been cut by 12% and next year by 11%. This will also reduce the potential dividend. The forecast 2019 normal dividend plus payout of surplus cash has been cut from 27.8 cents a share to 19.8 cents a share.
Waste-to-energy technology developer EQTEC (EQT) is acquiring a 19.99% stake in North Fork Community Power, a biomass gasification power project in California. EQTEC will supply $2.5m worth of equipment from its Newry site in return for the stake. It also expects to generate €2.2m from selling additional equipment.
Microsaic Systems (MSYS) has signed a distribution agreement for the Microsaic 4500 MID MS detector with CM Corporation for the South Korean market.
A shareholder owning a 17.2% stake in Rurelec (RUR) intends to propose an AGM resolution for the appointment of Gordon Fisher as a director. He is a former boss of a freight forwarding and customs brokerage. The electricity generator reduced its pre-tax loss from £5.8m to £600,000 in 2018, mainly due to lower overheads, exchange gains and a disposal gain. NAV is 4.4p a share, which is more than four times the share price.
Driver (DRV) had already said that its interims would be disappointing and pre-tax profit slumped from £2.11m to £762,000. The Middle East and Asia Pacific were tough markets with lower contributions. The expert witness operations made a reduced contribution. A 0.5p a share interim dividend was announced, and the ex-dividend date is 19 September. The company is also buying back shares in order to put a floor under the share price.
Chemicals-focused shell Wilmcote Holdings (WCH) is in exclusive discussions with Arclin Inc for a potential acquisition. Trading in the shares has been suspended.
Acquisitions consultancy K3 Capital (K3C) has confirmed that trading is in line with previous guidance and EBITDA is at the upper end of the range of £4.5m to £5m. An 80% payout would mean a reduction in dividend from 11.2p a share to 7.2p a share.
Osirium Technologies (OSI) has won a contract with a European telecoms services provider. The three year contract covers cyber security software and services.
MAIN MARKET
A strong first half has continued into the second half trading for automotive information publisher Haynes Publishing (HYNS) and pre-tax profit for the year to May 2019 is expected to exceed expectations by 10%. This suggests pre-tax profit of around £2m. The results will be announced on 12 September.
Caffyns (CFYN) reported a small improvement in underlying pre-tax profit to £1.45m in the year to March 2019. New car sales were 10% lower, which is more than three times the market decline. However, there was growth in used car sales and aftersales revenues.
Positive news from Argo Blockchain (ARB) where results for May were well ahead of the company’s budgets. New cryptomining hardware has started contributing faster than expected and rising cryptocurrency prices have improved mining yields. A further £2.85m is being invested in equipment. There was £685,000 generated in May, based on a bitcoin price of $8,575, while cash operating costs were £280,000. Second quarter figures will be better than expected. If the bitcoin price is maintained, then there will be £2.85m of crypto assets at the end of the second quarter.
BigDish (DISH) has raised £2.1m at 7.2p a share and this should be enough cash for the restaurant platform until 2021. The UK rollout will be accelerated.
Pembridge Resources (PERE) is acquiring the Minto mine from Capstone Mining. Pembridge will pay up to $20m out of future cash flows. Commercial production could recommence before the end of the year. A $10m loan has been secured.
Symphony International Holdings (SIHL) has made an investment in Soothe Healthcare, which manufactures feminine hygiene products under the Paree and Pariz brands.
Andrew Hore
Andrew Hore – Quoted Micro 28 January 2019
NEX EXCHANGE
Full year figures from AFH Financial Group (AFHP) show how successful its acquisition strategy is with revenues 51% higher at £50.7m and pre-tax profit that nearly doubled to £6m. Despite the additional shares issued to part-finance these acquisitions, underlying earnings per share were one-third higher. The dividend is 50% higher at 6p a share. Acquisitions have continued since the year end. Management believes that it can double funds under management to £10bn in three to five years.
Startup Giants (SUG) has commenced a programme to raise up to £3m. There will be an initial share placing to raise £200,000. The company has launched its 2019 accelerator round for pre-seed capital tech entrepreneurs. Funding of up to £100,000 can be received by successful applications.
KR1 (KR1) has invested $200,000 in Rlay, a data collaboration framework for crowdsourcing. KR1 will receive an undetermined number of discounted tokens. This will be a discount to the lowest price paid by any investor in the tokens. KR1 has spent £50,000 in 50,000 Nash tokens. These are the first tokens issued out of Liechtenstein.
MiLOC Group Ltd (ML.P) has signed a deal with Master Kingdom Ltd in order to create a range of body care and body wash products, which will be sold under the Artist’s brand name.
MetalNRG (MNRG) says that the Kyrgyzstan authorities have granted the application for a mining licence for the company’s uranium project in the country. The in-situ value of the uranium reserves is $253m and there is potential exploration upside.
Johnny Martin Smith is joining the board of VI Mining (VIM) and trading in the shares has resumed. Smith is a former mining analyst.
NQ Minerals (NQMI) has raised a further £142,000 at 11p a share. Bryan Smart has resigned from the board.
BWA Group (BWAP) had nearly £45,000 left in the bank at the end of October 2018. Elections have delayed progress with the potential licence acquisitions for rutile sands deposits in Cameroon. Investee company Prego International is moving from Guernsey to Norway and it may merge with another business.
Milamber Ventures (MLVP) is seeking a replacement for First Sentinel Corporate Finance as its corporate adviser.
AIM
Mporium (MPM) has signed a partnership deal with claims management firm Allay, which will use the company’s technology to generate leads for its business. Allay will be issued a 25% stake in Mporium in return for the revenuesthat will be generated, which could be worth millions of pounds. The stake could be increased to 29.9% if Mporium is successful in winning leads for Allay.
Mastercard has launched a rival bid for Earthport (EPO) and Visa is considering its position. The new bid is 33p a share and this values the company at £233m. That is a 10% premium to the Visa bid.
Aquaculture business Benchmark (BMK) has expanded its production capacity and is launching new products. Revenues were 8% higher at £151.5m and it would have been higher at constant exchange rates. It made an underlying pre-tax profit of £5.6m last year, up from £4.7m, and that could nearly double this year. Net debt was £55.7m.
Sureserve (SUR) has been restructured and non-core businesses sold. This enables it to concentrate on compliance and energy support services. Full year revenues from the continuing operations were 5% higher at £191m and underlying pre-tax profit improved from £5.4m to £6.6m. This was better than expected and net debt was £11.4m. The dividend has been halved to 0.25p a share.
K3 Capital (K3C) was expected to report lower figures in the first half due to the timing of larger corporate finance deals and the mergers and acquisitions achieved interim revenues 4% lower at £7.2m and an even larger decline in profit. The second half should be better and revenues could be slightly higher than last year at £16.6m, but full year pre-tax profit is forecast to fall from £7.3m to £7m.
Wynnstay Group (WYN) reported record full year results. The higher milk price has led to increased demand for dairy feed. Revenues grew from £390.7m to £462.7m and pre-tax profit moved from £7.9m to £9.5m. The agriculture and retail divisions both improved their profit and the latter added additional sites in the second half that were not profitable in the period. There was the normal second half cash inflow but it was not as great as in the past, so net debt was nearly £1m. The dividend has been raised 6% to 13.4p a share.
InfraStrata (INFA) has raised £1.5m at 1.2p a share. This will boost its balance sheet while it negotiates with investors in the Islandmagee gas storage project. One equity investor has appointed advisers to do due diligence work. The project will continue to progress as these negotiations continue and the cash will make sure that progress is made while the final funding package is secured.
Lighthouse Group (LGT) has secured a deal to transfer the members and assets of its pension trust to Smart Pensions Ltd. The IFA will protect itself from the rising cost of the administration and capital requirements of pension trusts.
Audioboom (BOOM) grew last year’s revenues by 92% to $11.7m, although this was a 13 month period, and it says that there was no cash outflow from operations in the final three months. That meant that there was $1.6m in the bank at the end of 2018.
Robinson (RBN) traded in line with expectations last year. The packaging manufacturer expects revenues of £32.8m, which is a 10% improvement. The fastest growth was in Poland. Even so, pre-tax profit will be lower, but it should bounce back in 2019.
A large localisation project has been cancelled and this will hamper the progress of Zoo Digital (ZOO) in the second half of its financial year. The legacy DVD business is also declining faster than anticipated. This means that ZOO will not be profitable in the year to March 2019.
Velocity Composites (VEL) increased its full year revenues by 15% to £24.5m, and there was a small loss, but business wins are slower than previously hoped. Revenues could be flat this year.
Another upgrade for audio visual products distributor Midwich Group (MIDW) following its latest trading statement. Pre-tax profit is expected to rise from £24.3m to £29.1m and then a further increase to £31.7m in 2019.
MAIN MARKET
Robin Boyle has failed to get back on the board of Athelney Trust (ATY) but he was successful in removing the existing directors. David Lawman and Paul Coffin were appointed although the latter resigned at the end of the week and he was replaced by Frank Ashton. The proposed tender offer and placing was also passed.
Dev Clever Holdings (DEV) is the latest company to float on the standard list. A share issue has raised £898,000 at 1p a share, including £220,000 due to the conversion of debt. The software development company was valued at £3.73m. The share price ended the week a 7.75p.
Nanoco (NANO) has signed a contract extension with a US company and this lasts until the end of 2019. This underpins the current year forecast.
Ross Group (RGP) has issued the final 21.3 million shares for the acquisition of Archipelago Aquaculture, which plans to start producing Chitin to help to produce quality shrimp. The deal was announced last September, and 17.9 million shares were issued at 1p a share. Global Blue Technologies Inc owns 19.9% of Ross.
Interim figures from Haynes Publishing (HYNS) show a 23% increase in underlying pre-tax profit to £1.6m on a 7% rise in revenues to £18.3m. Digital revenues were 23% higher at £9.7m. The growth in revenues and profit was in the UK and Europe. The interim dividend is unchanged at 3.5p a share. Net cash was £2.6m.
Andrew Hore
Andrew Hore – Quoted Micro 10 September 2018
NEX EXCHANGE
Ananda Developments (ANA) is acquiring 15% of UK-based Liberty Herbal Technologies Ltd, which is the owner and developer of hapac, a technology for vaping cannabis. The investment cost £460,000 and Ananda has the right of first refusal for any further fundraisings in the next two years. The technology can be used to provide a measured medicinal dose. A commercial launch is planned in Italy before the end of the year and in Canada next year. Ananda is holding a general meeting to extend its geographical focus to the UK and Italy.
Chapel Down Group (CDGP) is leasing 388 acres of land adjoining its existing vineyards on the North Downs. This site will be vined between 2019 and 2021 and with the rest of the land that has already been planted it will be the largest vineyard in England.
DagangHalal (DGHL) intends to leave NEX after less than three years on the market. Trading in the shares has been limited but this is not surprising given the problems the company has had. Shareholders owning 84.7% of the company are in favour of the withdrawal from NEX and this will happen on 1 October.
Trading in Etaireia (ETIP) shares was suspended because the annual report for the year to March 2018 was not published by the end of August. The results were released on 5 September and trading was restored. The loss was increased from £622,000 to £857,000, following a £434,000 write down on the value of land at Dalry. The NAV was £1.81m at the end of March 2018.
Milamber Ventures (MLVP) remains suspended with full year results due to be published by the middle of September. The audit of Essential Learning still needs to be completed.
Hot Rocks Investments (HRIP) had nearly £17,000 in the bank at the end of March 2018. The NAV was £722,000. The majority of the loss of £219,000 in the year was due to share-based payments. Hot Rocks has a stake in Minergy Ltd, which has floated on the Botswana Stock Exchange and has been granted a mining licence for the Masama coal project. Production could start by next February. Another investee company, Block Energy (BLOK) has floated on AIM and more than two million shares have been acquired in standard list flotation Predator Oil and Gas.
Ecovista (EVTP) has raised £550,000 from a convertible loan note issue, which has to be repaid or converted (at 0.0005p a share) by the end of August 2019.
AIM
Bilby (BILB) founder Phil Copolo and his son Leigh have left the board of the building and gas maintenance services provider and sold more than 31% of the company to institutional investors at a discount of around 6% to the then market price. Janet Copolo still owns 7.2% of Bilby and cannot sell until 3 September 2019, according to an agreement with Stanford Capital Partners, which was sole book runner of the placing. Miton has increased its stake from 15.1% to 19.8%, while MI Discretionary Fund has bought 8.19% and Ruffer has acquired 8%.
TLA Worldwide (TLA) published its latest profit warning at 10.35am on 4 September. At least it was while the markets were still trading rather than after they had closed for Christmas. Numis has had enough and resigned as nominated adviser. Trading is weak and TLA is set to breach banking covenants. TLA needs to raise cash.
Microsaic Systems (MSYS) is still building he base from which it can grow over the next few years. The interim figures do not reflect the progress that is being made. Revenues doubled from a low base, but higher costs meant that there was a flat loss of £1.5m. There is £6.96m in the bank at the end of June 2018 so the mass spectrometry technology developer has plenty of time to build up its revenues. The venture with a global bioprocessing partner is progressing and is in an integration phase. Commercialisation should be completed by early 2020. New agreements with two manufacturers and four distributors augur well for growth over the next 18 months. The target is revenues of more than £17m in 2022.
A full first half contribution from the Carlton acquisition helped Michelmersh Brick (MBH) to increase interim revenues by 43% to £23.1m and underlying pre-tax profit by 57% to £3.8m. The interim dividend has been raised by 51% to 1.06p a share. Demand for bricks remains strong and there is limited production capacity.
Tax Systems (TAX) continues to reduce its net debt, putting it in a good position to make further acquisitions. Net debt was reduced by 15% to £17.5m over a six month period. Interim revenues grew by 14% to £8m and order intake is 22% higher. The corporation tax software provider is broadening its range of software in order to make the most of the move to a digital tax system in the UK.
Filtration systems supplier Amiad Water Systems (AFS) grew its interim profit even though growth in revenues was modest. Stifel Nicolaus expects a stronger second half with full year revenues improving from $112.3m to $116.8m and then a further acceleration in growth to $123.4m. Although underlying pre-tax profit is expected to be flat at $5.1m, it is forecast to jump to $6.8m in 2019. A jump in 2018 dividend to 6.5p a share is forecast, despite relatively flat earnings per share. The dividend would still be more than twice covered.
Performance-based mobile marketing services provider Taptica International Ltd (TAP) continues to grow internationally and, via a combination of acquisitions and organic growth, interim revenues were 119% higher at $144m. Underlying pre-tax profit improved from $12.3m to $18m. An interim dividend of 3.98 cents a share is being paid. Net cash was $42.1m at the end of June 2018.
Mobile location data services provider Location Sciences (LSAI) increased revenues from £49,000 to £234,000 in the first half of 2018 but there is a lot more to come. New products have been launched and it will take time for them to make a significant contribution. Even so, 2018 revenues of £702,000 are forecast, rising to £2.2m in 2019. The loss will reduce but a profit is not forecast until 2020. There was £720,000 in the bank at the end of June 2018 and more funding will be required to achieve the expected growth in sales.
Finsbury Food (FIF) is acquiring Free From bakery manufacturer Ultrapharm for an initial £17m with more dependent on performance. The business made a pre-tax profit of £800,000 in 2017. The acquisition is earnings enhancing.
Safestyle UK (SFE) has settled litigation with former employees who set up in competition. They will change their brand name from SafeGlaze and promise not to use confidential information.
IFA Lighthouse (LGT) continues to prosper. Interim revenues were 5% ahead at £26.9m and pre-tax profit 12% higher at £1.26m. Net cash was £9.6m. and the interim dividend is two-thirds higher at 0.2p a share. Growth has been coming from the affinity business.
MAIN MARKET
Commercial aircraft lessor Avation (AVAP) reported a 16% increase in revenues to $109.1m in the year to June 2018. However, pre-tax profit dipped by 6% due to a gain on aircraft sales in the corresponding period. The dividend was increased by one-fifth to 7.25 cents a share. The NAV was equivalent to 283p a share. Cannacord Genuity forecasts a rise in pre-tax profit from $18.9m to $23.8m this year.
Dukemount Capital (DKE) has entered into a 50/50 joint venture with Rascasse Developments in order to expand into the Midlands.
Kavango Resources (KAV) has received a permit for an airborne electromagnetic geophysical survey of the Kalahari Suture Zone area, which covers 12 prospecting licences.
Haynes Publishing (HYNS) increased full year revenues by 13% to £33.8m and underlying pre-tax profit by a similar percentage to £2.9m. The total dividend is unchanged at 7.5p a share. Net cash was £2.5m at the end of May 2018. Growth in the sales of digital products is faster than the decline in other revenues.
Andrew Hore
Andrew Hore: Quoted Micro 4th June 2018
NEX EXCHANGE
Stratmin Global Resources which was quoted AIM until August 2017, is expected to join NEX on 6 June. Stratmin lost the AIM quotation because it failed to complete a reverse takeover, partly due to the fact that it was waiting for a promised investment. Stratmin is still in the process of completing the acquisition of Australian gold explorer Signature Gold, which would be paid for by the issue of 450 million shares at 2p each. After the deal, the company will change its name to Tectonic Gold.
Ananda Investments is the latest cannabis-focused investment vehicle to be joining NEX. The pre-money valuation is £500,000 and the minimum fundraising is £750,000. Ananda is willing to raise up to £4m. There are already potential investments being assessed. A reverse takeover valued at up to £10m appears most likely.
AfriAg Global (AFRI) says that 40%-owned AfriAg (Pty) Ltd increased its net profit from £104,000 to £179,000. This was equity accounted by AfriAg Global and the £72,000, up from £42,000, contribution helped offset the operating loss from the agricultural logistics group’s operations. The overall loss increased from £9,000 to £38,000. AfriAg (Pty) Ltd 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. Focus has turned to other countries.
KR1 (KR1) generated gains of £4.3m on its trading in digital coins and tokens during 2017. There was also a total unrealised gain of £10.8m on these investments and a £1.18m foreign exchange gain. The total pre-tax profit was £14.5m, with a tax charge of £2.87m. That tax charge is included in trade creditors due within one year of £4.21m. There is cash in the bank, but total current assets were £3.5m. A creditor has subsequently been paid with £79,000 of shares, issued at 10p each. The KR1 share price has more than quadrupled over the past year and there is regular daily trading in the shares.
Workspace provider and art collector V22 (V22) reported a 2017 pre-tax profit of £175,000, down from £1.01m the previous year. The profit included a gain on the sale of an option to acquire one of the company’s buildings. The NAV is £1.34m, equivalent to 4.26p a share. That increases to 8.68p a share if the company’s art collection is revalued. The shares are trading at 2.95p (2.7p/3.2p).
Housebuilder St Mark Homes (SMAP) reported a reduction in pre-tax profit from £652,000 to £384,000 in 2017. There was a reduction in revenues from £1.34m to £120,000 and the share of operating profit from a joint venture was more than halved. There was cash in the bank of £514,000 at the end of 2017. St Mark has raised £3.47m from a 6% bond. This cash will be invested in new projects. The NAV is 134p a share, compared with a share price of 95p (90p/100p).
Peru-based gold and silver producer VI Mining (VIM) reported a tripled loss of $6.33m for 2017. No revenues were generated and the NAV was $2.56m. That was before VIM acquired two projects for $51.3m and raised £5.35m at 500p a share.
Georgia-focused oil and gas company Block Energy withdrew from NEX on 23 March and it is set to join AIM on 11 June. It will be valued at £10.3m at 4p a share.
MetalNRG (MNRG) has identified an acquisition that could provide the opportunity to move to the standard list.
Iran-focused investment company Indigo Holdings (INGO) is reviewing its strategic options. Hamish Harris and Nicholas Harwood are stepping down from the board.
First Sentinel (FSBN) generated initial revenues of £156,000 but, even excluding admission expenses of £65,000, it lost £117,000 in the 15 months to December 2017. The NAV of the small company adviser and investor was £1.26m at the end of the year. Since then, a further £1.5m has been raised via a convertible bond.
Formation Group (FRM) fell back into loss in the six months to February 2018. Revenues fell by 15% to £17.2m and there was s wing from a pre-tax profit of £15,000 to a loss of £277,000. The loss was greater than the second half loss last year. The NAV is £9.95m, including £3.2m in cash.
Secured Property Developments (SPD) has received repayment of the loan it made to a developer of a retail scheme in York. This cash will be used to finance any property deals that management feel are good value, thanks to more realistic pricing.
Trading in the shares of DagangHalal (DGHL) and Equatorial Mining and Exploration (EM.P) have been suspended. DagangHal has failed to publish its 2017 accounts. Equatorial is in negotiations with South African mining company ARQ Minerals, which intends to invest £50,000 for 500 million shares. This has led to a delay in the publication of accounts.
Walls and Futures REIT (WAFR) has appointed Allenby to replace City and Merchant as its corporate adviser.
AIM
Nexus Infrastructure (NEXS) had already warned that its TriConnex utility connections business was suffering from delays and even so interim figures showed a 4% rise in revenues to £62.9m and a 15% increase in pre-tax profit to £3.4m. The interim dividend was raised by 5% to 2.2p a share. Delays to the commencement of projects continue but the group order book has increased to more than £234m.
RedstoneConnect (REDS) is selling its systems integration and managed services businesses for £21.6m, so that it can concentrate on its software for smart buildings. The cash raised will pay off existing debt. Last year, the software division had revenues of £5.3m and made an operating profit of £1.4m.
Maritime monitoring equipment supplier SRT Marine Systems (SRT) has raised £3m at 25p a share and it is swapping £1.15m of short term loan notes for new three year loan notes. The cash will finance systems projects and product development. SRT is working on projects worth £30.5m.
A positive AGM statement from Parity (PTY) confirms that the trading of the consultancy and staffing divisions is going well. Parity should be cash positive by the end of the year and there is a strong pipeline of potential business.
Fishing tackle retailer Fishing Republic (FISH) increased revenues by 58% to £9.15m, but it slumped into loss. Trading was weaker than expected, particularly in the fourth quarter, and gross margin fell sharply even before stock write-offs. Fishing Republic has relaunched its website and the review of operations is ongoing. Five stores have been closed, reducing the total number to 14.
Share (SHRE) increased its revenues by one-fifth in the first quarter as the services provided for Computershare make a contribution in the full quarter. Broker commissions increased by 27% on the back of a 5% increase in trading volumes. First quarter market share dipped from 3.66% to 3.54%. An upgrade to the website has been completed.
Itaconix (ITX) is restructuring its UK operations in order to focus on core products. The main focus will be the US polymer operations. The annual fixed cost base will fall to less than £3.5m in 2019.
IDOX (IDOX) has appointed David Meaden as chief executive. He has experience of the public sector and software development. The information management software and services provider has closed its loss-making digital division. Underlying EBITDA is likely to be in the range of £13m-£15m for the full year, compared with previous expectations of £22.8m. Excluding digital, the EBITDA will be between £18m and £20m.
Immupharma (IMM) has further analysed the results of the phase III lupus treatment trial for Lupuzor. There were different results in the European and US parts of the trial with antibody positive patients in Europe showed a statistically significant improvement.
MAIN MARKET
Haynes Publishing (HYNS) expects to report a better than expected full year profit. Underlying pre-tax profit will be 10% ahead at around £2.9m. Earnings per share will be hit by US tax changes.
Falcon Media House (FAL) has decided to leave the standard list. The digital media group says that the share price fall has hampered its ability to raise more cash to develop its Q-Flow technology. Revenues have not come through as quickly as expected. If cash were raised, it could reduce the free float so the shares would be suspended.
Andrew Hore
Quoted Micro 9 October 2017
NEX EXCHANGE
National Milk Records (NMRP) has changed its year end to June and its latest figures are for the 15 months to June 2017. This is a period when the dairy information and data services provider sorted out its pension deficit problem and this removed significant, and volatile, liabilities from the balance sheet. The market has been tough for at least two years because of the weak milk price but it is starting to recover. In the 15 month period, revenues were £25.3m and operating profit before pension and one-off charges was £1.1m. The total loss before tax is £11.9m, which is after a pension related charge of £12.5m. Trading is improving.
WH Ireland believes that Ashley House (ASH) could report a pre-tax profit of £1.8m for the year to April 2018, although it is likely to be second half weighted. This follows a decline in underlying pre-tax profit to £53,000 last year because of uncertainty about government policy. The community care properties provider has a strong pipeline of potential developments. The acquisition of an off-site manufacturing business will help the group to win modular buildings business.
Energy efficiency products supplier Sandal (SAND) reported a 14% rise in full year revenues to £3.75m. The Energie MiHome range grew by 154%, albeit from a low base. The loss was halved to £135,000 but refunded tax reduced the cash outflow from operations. Development expenditure will broaden the product range in the smart home sector.
Ace Liberty & Stone (ALSP) reported a jump in pre-tax profit from £612,000 to £1.12m in the year to April 2017 and this is prior to the disposal of all the residential properties. The property investor made a £1.02m gain on disposals but this was offset by a £391,000 unrealised reduction in property values, compared with a £283,000 unrealised gain in the corresponding period. NAV was £18.1m at the end of April 2017.
Capital for Colleagues (CFCP) had a net asset value of 42.58p a share at the end of August 2017. Recent investment include £400,000 in timber frame buildings company Employee Owners Group and £150,000 follow-on investment in Computer Application Services.
London Nusantara Plantations (PALM) has £129,000 in the bank following the disposal of its initial land investment. There was a small gain on disposal but it was not enough to wipe out the interim loss. Management is assessing acquisition opportunities of plantations and mill capacity in Sumatra and Kalimantan, Indonesia. This will require additional funding.
Black Sea Property (BSP) has completed the €5.4m fundraising, at €0.01 a share, which it requires to progress the acquisition of the office building in Ivan Vazov Street in Sofia from UniCredit Bulbank. Debt funding of €7m still has to be secured from UniCredit Bulbank. Black Sea Property has paid a deposit of €1.04m out of the purchase price of €10.5m.
AIM
Bushveld Minerals Ltd (BMN) has published the circular for the demerger of its tin interests. Shareholders will receive one share in Afritin Mining Ltd, which will own the company’s Greenhills business, for each Bushveld share. Afritin will own the Mokopane tin project and Zaaiplaat tin tailings project in South Africa plus an interest in the Uis tin project in Namibia. Bushveld will still have coal assets but the main focus will be the vanadium assets and the potential value adding battery-related products.
Toilet tissue supplier Accrol Group Holdings (ACRL) has asked for trading in its shares to be suspended because of uncertainty about its financial position. It has been difficult to pass on extra raw materials costs and operational problems have also increased costs. There is also going to be a large fine relating to a health and safety incident.
Earthport (EPO) has raised £25m at 20p a share. This cash will be used to expand the corss-border payment services company’s market and global presence, develop further products and invest in the operating platform.
The requisitioner of the general meeting at Conroy Gold and Natural Resources (CGNR) failed to get any of its resolutions passed so there are no more changes to the board. Conroy raised €240,000 at €0.30 a share. The exercising of warrants raised €167,000. The cash will be used to develop the Clontibret deposit and pay for additional exploration at the Slieve Glah gold prospect.
Reabold Resources (RBD) is raising £1.76m at 0.5p a share. This follows a £3.96m subscription at the same share price. Reabold intends to change its focus to European oil and gas projects. Two former M&G analysts have joined the board.
City of London Group (CIN) has completed the reverse takeover of Milton Homes, which provides equity release products for residential property owners.
Stanley Gibbons (SGI) has found a new buyer for its interiors division. Gurr Johns is paying £1.25m with up to £400,000 deferred consideration. Stanley Gibbons is retaining £300,000 of inventory and the Mallett premises in New York. It has also retained the Mallett and Made by Meta brands. Millicent had agreed to pay £2.4m for the assets and brands and it has to pay a termination fee. Stanley Gibbons reported a £30.2m loss for the year to March 2017. Even taking out exceptionals the underlying loss was £11.1m. The NAV is £18m.
Kin Group (KIN) has raised £1m at 0.001p a share and every four shares come with a warrant to subscribe for a new share at 0.004p each. A CVA is proposed where unsecured creditors will swap their money owed of £2.27m for shares at 0.01p each. A capital reorganisation is required to reduce the nominal value of a share to below the placing price. John Taylor, who has been involved in the aerospace and military sectors, and Lindsay Mair, a corporate financier at SP Angel, are joining the board.
Redcentric (RCN) has appointed Chris Jagusz as chief executive. Net debt is falling but it is still £33.3m. Working capital management has improved. Profit should start to recover this year.
Orosur Mining Inc (OMI) has announced a drilling programme for the Anza gold project in Colombia. There will be 15,000 metres of diamond core drilling and the first results should be available by next February. The plan is to define a maiden resource and the potential for further mineralisation.
Avacta (AVCT) has announced a research collaboration with FIT Biotech in order to assess the effectiveness of is Affimer technology with FIT’s vector technology for delivering a gene.
The Environmental Protection Agency in the US has asked Tristel (TSTL) to resubmit its application for its Duo surface cleaner. This means that approval could be five months later than planned.
Northland has initiated coverage of Venture Life (VLG) and it expects the consumer healthcare firm to move into profit in 2018. Northland believes that Venture Life will benefit from growth in demand for self-care products because of the ageing global population. Venture Life already sells its products in more than 40 countries.
Angling Direct (ANG) is acquiring Fosters Fishing for £3m in cash. Fosters have a 17,000 square feet store in Birmingham and made an operating profit of £460,000 last year. When a new store in Slough opens Angling Direct will have 18 outlets.
SkinBioTherapeutics (SBTX) says that its technology has passed third party cytotoxicity tests. Phototoxicity and in vitro ocular toxicity tests are underway.
AdEPT Telecom (ADT) has declared a 13% increase in interim dividend to 4.25p a share. Recent acquisitions are performing well and are helping to focus the group on managed services.
Redhall Group (RHL) says delays on nuclear and infrastructure will hit its figures for the year to September 2017. The Hinckley Point C contract is expected to start in October 2017. The Chieftain facility is being closed. The 2016-17 profit forecast has been halved to £500,000. The 2017-18 profit forecast has been trimmed by £200,000 to £3.4m.
Adams (ADA) has taken its cash pile to £660,000 following the sale of £584,000 worth of shares in GVC.
Former AIM company Clinical Computing has sold its trading subsidiaries to TSX-listed Constellation Software.
MAIN MARKET
InnovaDerma (IDP) is raising £4.4m at 276p a share. The Skinny Tan brand owner needs the cash for working capital. Despite declaring a profit of more than £1m in the year to June 2017 there was a £607,000 cash outflow from operations as inventory levels soared.
Curzon Energy (CZN) raised £2.33m at 10p a share but the share price has declined to 9.25p. Curzon has acquired coalbed methane licences in Oregon. Curzon believes that gas could be produced before the end of the year.
Haynes Publishing (HYNS) has completed the acquisition of E3 Technical from Solera UK for £4.72m. This will expand the data-related operations of Haynes, as well as providing cross-selling opportunities. E3 provides repair and maintenance information and vehicle registration look-up services.
Andrew Hore
Quoted Micro 5 June 2017
NEX EXCHANGE
National Milk Records (NMRP) is raising £7.33m at 65p a share in order to help finance the withdrawal from the Milk Pension Fund. Like Genus, National Milk Records was part of the Milk Marketing Board and that is why it has part responsibility for the Milk Pension Fund. There will be a one-off contribution of £10.1m to the fund and £4.68m will be paid in cash and shares to Genus. National Milk Records is also selling its loss-making generic products reseller Inimex to Genus for a nominal amount and entering a collaboration agreement with the animal genetics company. There would be a requirement to finance the fund up until 2076 if the deal does not go ahead. A New Zealand-based farmer cooperative and Singapore-based fund manager Working Capital Management are among the investors subscribing for the shares.
Contemporary art collector and workspace provider V22 (V22O) moved into profit in 2016. The £1m profit was helped by a £225,000 gain on the sale of half of the option to acquire part of the freehold of its Peckham building and a £225,000 notional gain on the remaining option. There was also other operating income of £621,000. Stripping these items out, there would have been a slightly higher loss. Revenues grew from £822,000 to £1.24m. There was £64,000 in the bank at the end of 2016. NAV, including a valuation of the art portfolio, is 7.31p a share. Demand for studio space is strong at a time when it is become less affordable. This puts V22 in a strong position. V22 has agreed a ten year lease on premises in Shoreditch and is the preferred bidder for a 125 year lease on The Priory in Orpington.
Blockchain-focused investment company Coinsilium Group Ltd (COIN) has raised £250,000 at 2.2p a share to finance further investments. In 2016, Coinsilium increased revenues from £12,000 to £209,000. There was a total loss of £738,000, including a £317,000 loss on disposals and investment impairments of £160,000 – admittedly down from £1.31m the previous year. The NAV was £1.43m at the end of 2016.
Kryptonite 1 (KR1) is also seeking blockchain investments. This includes subscribing for shares in Satoshipay. It has also invested in five initial token offerings and three of them are already being traded and have performed well.
London Nusantara Plantations (PALM) is selling its stake in Next Oasis for £124,000. This was in the 2016 balance sheet at a valuation of £112,000 and the proceeds will boost the 2016 cash pile from £83,000. London Nusantara has been quoted for three years and it is still seeking to acquire plantation assets and it has widened its geographic search to Indonesia, as well as considering the palm oil mill sector and generating income from oil palm waste.
Early Equity (EEQP) has signed a memorandum of understanding with Malaysian multi-level marketing business Early Infinity, which has a distribution agreement with healthcare products supplier Yicom, where Early Equity owns 32.1%. The plan is for Early Equity to buy up to 30% of Early Infinity. Trading in Early Equity shares has been suspended.
Ganapati (GANP) has obtained a class 4 gaming licence in Malta and this should widen the potential market for its games. A tech office has been set up in Romania.
Halal services provider DagangHalal (DGHL) has raised £3.1m at 26.5p a share and this will leave managing director Francis Chong with a 29.9% stake. Revenues fell last year and there were significant asset write downs.
Middle East-focused investment company Indigo Holdings (INGO) had £906,000 in the bank at the end of 2016 and it raised £818,000 in February. Around £650,000 of that cash has been invested in three companies.
Restructuring and slow LED product sales meant that Gowin New Energy Group Ltd (GWIN) reported a slump in revenues from RMB652,000 to RMB28,000, while the loss was RMB6.94m. There is RMB2.08m of cash in the bank but there is more than that figure in shareholder loans because of the significant cash outflow during the year.
MiLOC Group Ltd (ML.P) increased its revenues from HK$8.31m to HK$10.9m in 2016 and the loss fell from HK$17.1m to HK$11.5m. The company’s clinics and traditional Chinese medicines generate the revenues and the TCM PLUS skincare products are expected to make a substantial contribution in the future. Last year, there was a large one-off cost relating to TCM PLUS. A hair care range is planned.
Equatorial Mining & Exploration (EM.P) intends to apply for a small scale mining lease for a coal mining prospect in Nigeria. Equatorial lost £1.55m in 2016 but £1.24m of this was a non-cash share-based payment charge. The cash outflow from operations was £383,000. Brett Clark has stepped down from the board following the failure to secure the acquisition of a Mexican gold project.
Healthcare staff provider Healthperm Resourcing Ltd (HPR) reported a £3.1m loss on revenues of £2,000 for 2016 but the business should generate more significant revenues this year. Steve Howson has become chief executive, while the former incumbent David Sumner became non-executive co-chairman. Two groups of overseas recruits have started work in the UK.
Ecovista (EVTP) has raised £470,000 via an issue of convertible loan notes. The conversion price is 0.05p a share. Any loan notes not converted will be repayable on 30 May 2018. Ace Liberty and Stone (ALSP) has raised £64,500 from a placing at 75p a share with most of the shares bought by Bijan Daneshmand, thereby taking his stake to 5.16%.
NQ Minerals (NQMI) lost £2.39m in 2016 but this was before the acquisition of the Hellyer gold mine in Tasmania. The main asset of All Star Minerals (ASMO) is its stake in NQ Minerals. This stake was valued at £414,000 at the end of 2016. The 2016 loss was £187,000, including a £28,000 write down in the NQ Minerals stake.
AIM
Touchstone Innovations (IVO), the former Imperial Innovations, has rejected the bid from rival University-focused technology businesses developer IP Group. The initial approach was made in April and some major shareholders were keen to pursue the merger. The main problems concerned valuation and corporate governance.
It does not appear that Tanfield Group (TAN) is going to be able to sell its 49% stake in access platforms manufacturer Snorkel in the near future because it continues to lose money. The value of the stake in the books is £36.3m – equivalent to 23.2p a share. This value can be achieved if Snorkel makes an annualised trailing EBITDA of $25m in any 12 month period up until September 2018. However, Snorkel is losing money and after September 2018 there is no fixed amount that Tanfield would receive if it sold its stake. Jon Pither has stepped down from the Tanfield board.
Acoustic insulation manufacturer Autins Group (AUTG) has appointed Michael Jennings as chief executive. He has been interim chief executive since February. Interim figures will be published on 13 June.
Draganfly Investments (DRG) has appointed mining engineer Luke Bryan as executive chairman. Edward Bayman will step down as chairman but continue on the board.
Hostels operator Safestay (SSTY) is planning to buy three hostels from Equity Point. The hostels are in Barcelona, Prague and Lisbon and they generate revenues of €1.6m. Safestay is loaning €3.6m to Equity Point and the plan is to swap the hostels for this debt.
Stanley Gibbons Ltd (SGI) has sold its 25% stake in Masterpiece London for £1.4m. The stake was valued in the books at £6,000. This is part of the strategy to focus on stamps and coins.
A general meeting has been requisitioned at Magnolia Petroleum (MAGP) in order to make changes to the board. At the end of May, Nostra Terra Oil & Gas (NTOG) acquired a 10.9% stake in Magnolia from former chief executive Steven Snead but the requisitioner has not been named.
Adams (ADA) has launched an underwritten one-for-one open offer to raise £1.03m at 2.5p a share. The investment focus is the technology and life sciences sectors. Richard Griffiths, who owns 29.9% of Adams, is underwriting the open offer. The announcement says that Adams has four AIM-quoted investments but only one of the companies mentioned, Oxford Pharmascience, is on AIM the others are fully listed.
TLA Worldwide (TLA), which published a profit warning at 6.26pm on 23 December 2016, thinks that it will be able to report its 2016 figures on 30 June. It will need to do this or trading in the shares will be suspended. TLA has warned that it will have to write-off some of the money owed to it.
Pembridge Resources (PERE) plans to move from AIM to the more lightly regulated standard listing. This will enable it to be more flexible in what it invests in and the level of stakes that it acquires. The main hurdle for a standard listing is getting the prospectus approved by the UKLA. Once that is done companies do not have the level of regulation they would if they were on AIM.
MAIN MARKET
Second half trading has been strong for car manuals publisher Haynes Publishing (HYNS). Pre-tax profit is expected to be two-fifths higher than last year. Haynes has benefited from lowering its costs and positive exchange rate movements. The new Haynes OnDemand video service will be launched this year but there will be a write down of the costs of the previous platform in the 2016-17 figures. The full year figures will be published on 13 September.
Telecoms services provider Toople (TOOP) is trying to raise up to £2m because it is running short of cash. Members of the PrimaryBid crowdfunding platform have been offered the chance to subscribe for shares at 2p each. A minimum of £1m needs to be raised. Even if the maximum is raised then the cash is unlikely to last long unless the cash outflow is stemmed in the near future.
Acorn Growth has changed its name to Vordere (VOR). This follows the proposed acquisition of German properties, which will be paid for by a share issue at 17p each. The shell company was originally known as Acorn Minerals when it joined the standard list at a placing price of 20p a share in October 2012.
Andrew Hore