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Andrew Hore – Quoted Micro 15 January 2018
NEX EXCHANGE
Wines maker Chapel Down Group (CDGP) says that its open offer at 50p a share was oversubscribed. Excess applications will be scaled back. The additional £1.47m raised takes the total to £20m. BlackRock holds a 5.79% stake and Nigel Wray owns 16.2%.
Startup Giants (SUG) has made its first investment since floating. An undisclosed investment has been made in Go Show Ltd, which operates a brand marketplace designed to enable product placement deals (www.goshow.net), and it will be released when milestones have been achieved. Go Show initially applied for funding in 2015 and it has been mentored by Startup Giants. There is a target for revenue generation of up to £1m within 12 months. An accelerator round has also been launched by Startup Giants. It is aimed at early stage, UK-registered companies.
Coinsilium Group Ltd (COIN) has increased its shareholding in Indorse from 3% to 6.5% at cost of S$175,000. There is an option to acquire a further 3.5%, at the same cost, to take the stake to 10%. Indorse completed a token sales last September and those tokens are currently valued at $34m. The Indorse platform is designed to enable users to generate income from sharing their skills and validating the claims of others.
African Potash Ltd (AFPO) has entered into an agreement with Gibraltar-based TokenCommunities Ltd. This deal will help the blockchain joint venture that has also already been announced with FinComEco Ltd, which is developing platforms for agricultural markets in sub-Saharan Africa. TokenCommunities will advise on the deployment of tokens. The chain will link smallholder farmers, traders, brokers, storage, transportation and commodity buyers. There are plans for microloans to farmers at an annual interest rate of 12%, which is lower than existing rates. African Potash has completed the raising of £400,000 at 0.025p a share.
Black Sea Property (BSP) has completed the €2.76m purchase of four plots of land with permission to develop a camping complex. It has also invested €3.37 to help finance the development of the site, which could be completed by the middle of the year. Black Sea Property raised €3.53m at €0.01 a share late last year.
Lake Acquisitions (U.P) says that the contingent value rights holders will not get a distribution for 2017. The cumulative relevant revenues from the eligible nuclear power output was £41.1m. The cumulative base revenues were £41.9m.
UK Oil and Gas Investments (UKOG) has decided to drop its NEX Exchange quotation on 31 January. That is just over 27 months after it joined. The company says that there have been low levels of trading on NEX and it still has its primary quotation on AIM. Interestingly, oil and gas company UK Oil and Gas was formed many years ago out of the shell of a former technology equipment business, yet it is still classed under the technology hardware and equipment sub-sector of the technology sector in the AIM statistics.
Nexus Infrastructure (NEXS) reported maiden full year results as a quoted company that were slightly better than expected. The housebuilding infrastructure provider reported a dip in pre-tax profit from £10.8m to £9.1m on flat revenues of £135m. The total dividend is 6.3p a share. A 2017-18 pre-tax profit of £10.8m is forecast.
Ilika (IKA) reported a significant cash outflow in the first half but the outflow should be reduced in the second half. Interim revenues trebled to £1m and full year revenues of £2.9m are forecast. The loss is reducing. There are licensing proposals with a handful of potential customers and any one of these could transform the fortunes of Ilika.
EKF Diagnostics (EKF) has confirmed that trading was strong in 2017 and EBITDA will be much better than the £8.8m forecast. EKF plans to spin-off its sTNFR biomarker technology into a separate company. This technology has no value in the balance sheet.
Hormonal disease treatments developer Diurnal Group (DNL) says that its Akindi treatment has performed well in a food matrix study in the US and it will be able to move onto the next stage in the process of gaining US approval. European approval for Akindi is expected in a matter of weeks. There was £14m in the bank at the end of 2017. The interims will be published on 12 March.
Lombard Risk Management (LRM) is recommending a 13p a share cash bid, which was nearly double the market price. The bid from rival financial services technology supplier is valued at £52.1m.
Somero Enterprises (SOM) has sparked another forecast upgrade with the 2017 pre-tax profit forecast rising 8% to $25.9m. Net cash should be at least $18.5m and that could rise by around $10m by the end of 2018. That leaves room for another special dividend as well as growth in the ongoing dividend. The tax changes in the US had already led to a one-fifth increase in the 2018 earnings per share forecast to 34.4 cents, which has been raised again to 36.8 cents.
Engineer Avingtrans (AVG) says that trading is on track and the integration of Hayward Tyler continues. A pre-tax profit of £2.2m is forecast for the year to May 2018 and this should generate nearly enough earnings to cover the forecast dividend of 3.6p a share.
Tough market conditions and adverse currency movements have not stopped motor dealer Marshall Motor Holdings (MMH) trading ahead of expectations. Forecasts had already been upgraded and the 2017 pre-tax profit estimate has been raised a further 2% to £28.8m. However, a decline in pre-tax profit to £23.5m is forecast for 2018.
Smart meter communications technology provider CyanConnode (CYAN) continues to progress but the timing of orders has been delayed. The order book is worth $100m but 2017 revenues were £1.2m and the loss more than £10m. This year’s revenues are forecast to be £10m and the loss £7m. There should be enough cash to last the whole of 2018.
Strategic Minerals (SML) generated fourth quarter revenues of $2.14m from magnetite ore sales at Cobre. The 2017 total revenues of $5.64m were quadruple the previous year. Strategic had $3.8m in the bank at the end of 2017.
Online Blockchain (OBC) has taken advantage of its rising share price to raise £1m at 100p a share.
Fashion retailer Footasylum (FOOT) increased revenues by one-third to £89.8m in the 18 weeks to 30 December 2017. The fastest growth came from e-commerce. The revenues for the 44 weeks to 30 December 2017 also improved by one-third to £173m. These are not like-for-like increases and six stores were opened in the past 18 weeks.
There was a small decline in the full year revenues of Shoe Zone (SHOE) from £159.8m to £157.8m. The shoes retailer did improve its gross margin from 62% to 63.2% but higher admin and distribution costs offset this and pre-tax profit fell from £10.3m to £9.5m. The total dividend was edged up from 10.1p a share to 10.2p a share. Net cash was £11.8m at the end of September 2017. The pension fund liability has fallen from £13.1m to £7.1m. Consumer demand and currency movements remain the main challenges.
BNN Technology (BNN) directors Harry Keiley and Lord Mancroft are following the nominated adviser out of the door. Mark Hanson becomes non-executive chairman.
Film completion contracts provider FFI Holdings (FFI) has acquired the motorsports entertainment insurance book of business from All Risks for $1.825m. The acquisition has been made by Reel Media, which itself was acquired before Christmas for $7.25m in total.
Background checking services provider ClearStar (CLSU) traded in line with expectations in 2017. Revenues were 11% higher at $17.8m and the loss was reduced. There was net cash of $1m. The loss should be further reduced in 2018.
Masawara (MASA) and Kimberly Enterprises (KBE) both plan to leave AIM. Two shareholders own 90% of Masawara. Minority shareholders are being offered 25p a share or the chance to convert the shares into preference shares. Eastern European property investor Kimberly has net liabilities of €24.1m and sold most of its property assets. The lease agreement for the Marina Dorcol project has been terminated.
Allergy Therapeutics (AGY) has completed the enrolment of its 560 plus patient phase III trial for a treatment for patients with allergic rhino conjunctivitis due to birch pollen. The results of the trial should be available before the end of this year. The potential market is worth around £3bn.
Two large clinical trial contracts have been delayed and this means that Cambridge Cognition (COG) 2017 revenues will be 18% lower than expected. This means that there will be a loss for the year.
Telematics equipment and services provider Quartix (QTX) pleased the market by growing its 2017 revenues by 5% to £24.4m. This means that earnings per share forecasts have been raised from 11.8p to 12.3p.
Geospatial software company 1Spatial (SPA) has won a five-year contract from the state of Michigan in the US worth $766,000. Liontrust has sold all its 9.35% stake.
Xeros Technology Group (XSG) has launched its domestic washing machine that can cut the use of water, detergent and energy by up to 50%. A second development agreement has been signed with a commercial washing machines manufacturer.
Oracle Power (ORCP) is acquiring the minority stake in coal mining lease owner Sindh Carbon Energy for up to £3.6m in shares.
APC Technology Group (APC) has acquired electronic components distributor First Byte Micro for £1.2m. In 2016, First Byte made a pre-tax profit of £194,000 on revenues of £1.3m.
Reconstruction Capital II (RC2) has acquired stakes in two funds that own 60% of Romanian paints and coatings supplier Policolor. This will mean that Reconstruction Capital II has an effective stake of 55.36% in Policolor and make it easier to liquidate the investment.
BOS Global (BOS) wants to raise £1.2m at 1.25p a share to settle debts and provide working capital. The software company says the directors will not be paid until April and one of them, William Giles, will subscribe up to £300,000 in the placing and open offer.
Connemara Mining (CON) has announced drilling results from the Mine River gold project in Wicklow and Wexford. Most of the intersections contained gold at grades of less than 1g/t but two were more positive with 4.53g/t over eight metres and 16.1g/t over two metres.
Versarien (VRS) is collaborating with an Asia-based global textiles manufacturer on incorporating graphene into fabrics via yarns and finishes.
MAIN MARKET
E-commerce-focused cash shell AIQ Ltd (AIQ) soared as trading commenced on the standard list and trading in the shares had to be suspended after three days. There appear to have been nearly 1.4 million shares traded over three days, which is 2.8% of the shares in issue. Cayman Islands-based AIQ, raised £3.6m after expenses, at 8p a share. The suspension price is 125p. That means that the quotation and £3.6m in cash are valued at £62.5m. The plan is to seek an e-commerce acquisition, which has a strong management and is near to cash generation.
Bio-decontamination products supplier Bioquell (BQE) has completed the £122,000 disposal of the UK AirFlow parts and manufacturing business and received the final £70,000 for the sale of the service business. There was already net cash of £14.5m at the end of 2017. Full year revenues were better than expected at £29.3m, up from £26.8m and pre-exceptional profit will be much better, even before the £250,000 gain on the Airflow disposals. The 2017 figures will be published on 7 March.
Software supplier Gresham Technologies (GHT) says 2017 revenues were 24% ahead to £21.3m and more of these revenues are coming from Clareti enterprise data integrity software. There is £8.5m in the bank. Kestrel has trimmed its stake from 14.9% to 12.5%.
BATM Advanced Communications (BVC) has won a cyber communication technology contract with a government worth $4m over 12 months. Delivery will start in the second quarter of 2018.
Thomas Charlton has further increased his stake in North Midland Construction (NMD) from 7.24% to 8.2%. This appears to have sparked a recovery in the share price.
Avocet Mining (AVM) has deferred the completion the sale of its Burkina Faso assets for $5m. The buyer, the Balaji group of companies, wants more time to settle a claim from International Royalty Corporation, a creditor of the holding company of the assets. Avocet has received a deposit of $500,000.
Bluebird Merchant Ventures Ltd (BMV) has announced the results of preliminary grab samples from the Gubong gold mine. The majority of samples had gold grades of more than 1g/t and silver grades of 10g/t or more.
Zenith Energy Ltd (ZEN) has entered an exclusivity agreement for the acquisition of production and exploration licences in a Central Asian country. Azerbaijan-focused Zenith would be acquiring assets in a proven petroleum system and they produce 250 barrels of oil per day.
Rainbow Rare Earths (RBW) has started drilling at the Gakara project in Burundi. Gakara has an estimated in situ-grade of 47%-67% total rare earth oxide. The drilling is focused on the production area at Gasagwe and anomalies that have been identified. The first results will be in April. A second phase of drilling is planned later in the year and this could produce a JORC-compliant resource before the end of 2018. Production is building up and the run rate target for the end of 2018 is 5,000tpa. In December, Rainbow raised £2.8m at 14p a share in an oversubscribed placing. The cash will be used to acquire capital equipment.
Quoted Micro 30 October 2017
NEX EXCHANGE
The government proposal to drop plans to cap housing benefit in the supported living sector to Local Housing Allowance rates is good news for Ashley House (ASH) because the rates would not have been viable. Ashley House has development schemes that could go-ahead following the change of government plans. There could still be other proposals that hamper development in the government paper on funding supported housing that is due to be published on Tuesday but if there are not then Ashley House is in a good position.
Belvedere Capital has subscribed for £31,500 of convertible loan notes in Forbes Ventures (FOR) and the investment is expected to increase to up to £100,000. The initial cash will pay creditors and enable Forbes to issue its interim figures. That is required for trading in the shares to recommence. The interest rate is 1% per month and the conversion price is 0.1p a share. A representative of Belvedere, which is focused on technology investments in northern England, will join the Forbes board as an executive director.
First Sentinel (FSEN) has made a £625,000 investment in standard-listed Curzon Energy (CZN). The shares in the oil and gas company were acquired at the flotation price of 10p each but the share price has fallen back to 8.38p. Curzon has a coal bed methane asset in Oregon.
Middle East-focused investment company Indigo Holdings (INGO) has made four investments, although one of these was earlier this month so it is not included in the balance sheet to the end of June 2017. There was still nearly £241,000 in the bank, prior to investing £10,000 in 3sootjobs, a job search platform in Iran.
Supported housing developer Walls and Futures REIT (WAFR) has been granted membership of the Social Stock Exchange. Management hopes that this will help the company attract investors seeking investments with a positive social impact.
Black Sea Property (BSP) has completed the €10.5m purchase of the UniCredit Bulbank office building in Sofia.
AIM
A management review at Real Good Food (RGD) has uncovered further disappointment and there will be a loss this year. All three divisions are growing their sales with overall like-for-like sales 13% ahead but this is not translating into higher profit. A combination of higher commodity prices and disruption from capital investment. Overheads are being reviewed and Real Good Food is also racking up costs relating to its corporate governance problems. The head office is being moved from London to Liverpool. New banking covenants have been agreed but the further downgrades could mean they come under pressure but the food company has the backing of its three main shareholders.
Investment in European distribution centres and a new UK head office held back the first half progress of musical instruments retailer Gear4Music (G4M) but the benefits will start to show through in the second half. There was a small loss in the first half but a full year pre-tax profit of £2.4m is forecast as European sales build up and margins start to recover.
Stratex International (STI) is holding a general meeting requisitioned by shareholders, including AnglGold Ashanti and Teck Resources, on 1 November. The requistioners, which own 24% of Stratex, want to remove the current chairman and chief executive and block the proposed reverse takeover of Brazil-focused Crusader Resources, which was announced in May. They want former Stratex directors David Hall and Paul Foord to return to the board. The two men run Thani Stratex Resources Ltd, which is 30%-owned by Stratex. Institutional Shareholder Services Inc advises voting against the resolutions. Stratex has the backing of shareholders owning 12.1% of the share capital. Earlier this month, Stratex sold its 13.7% stake in Goldstone Resources for £550,000 (1.6p a share).This was valued in the latest accounts at £950,000.
Datatec (DTC) is dropping its AIM quotation and concentrating on the JSE listing. There has been a lack of interest in the shares in London with non-South African investors trading through the JSE. The cancellation becomes effective on 8 December.
It appears easier to push a piano up a steep flight of stairs than for TLA Worldwide (TLA) to bring out its 2016 accounts. The latest management estimate for publication is before the end of November. Former CFO Don Malter is said to have misappropriated $800,000 of funds over three years. It is unclear if any of this is included in the $6.8m EBITDA adjustment for 2016 that was revealed in June. TLA remains best known for publishing a profit warning at 6.26pm on 23 December 2016. It will be interesting to see whether the accounts are published before this date and time in 2017.
Lombard Risk Management (LRM) had a tough first half but it expects to do much better in the second half and move back into profit. Interim revenues fell by 16% as risk management software sales fell. Regulatory reporting software sales improved. A full year profit of £1.8m is forecast.
Zinc Media (ZIN) has acquired Tern Television Productions for up to £5.45m, with up to £2.35m deferred. Tern made a pre-tax profit of £300,000 on revenues of £5.3m in the year to March 2017. Tern specialises in factual programming. A placing at 0.9p a share raised £3.5m.
Systems1 Group (SYS1) had a poor first half with revenues falling and costs increasing. The market research firm reported a 10% decline in interim revenues to £13.8m and a 70% slump in pre-tax profit to £540,000. There was still £3.5m in the bank at the end of September 2017. Rebranding and reorganisation hampered the business at a time when clients were also holding back spending.
Fox Marble (FOX) has sold the first polished marble slabs from its factory in Kosovo. This sale was part of the agreement to supply Marble Dino. Fox recently signed a three year agreement to supply OM Enterprises in India. An advance payment of $500,000 has been received.
Third quarter trading at broking business Share (SHRE) continued to be strong and revenues were 29% higher compared with the third quarter of 2016. Market share jumped to 13.9%.
A new finance director has reviewed the forecasts for Attraqt Group (ATQT) and problems in timing of contracts have been identified. This means that revenues will be 10% lower than expected in 2017, although there will be organic growth. There was £2.3m in the bank at the end of September.
Hardide (HDD) has raised £2.54m at 1.7p a share in order to fund an increase in reactor capacity. Two additional reactors will be installed in the US and other equipment will be installed in the UK and US. The surface coatings business has signed a framework agreement with a North American oil and gas business. Full year figures will be published on 11 December.
Botswana Diamonds (BOD) expects major developments over the coming months. There is enough cash to last into 2018. An inferred resource is expected to be reported for the Thorny River project before the end of the year. Eight kimberlites have been discovered at the Free State project.
Ascent Resources (AST) is raising a further £1.5m via PrimaryBid.com. Ascent is a regular user of the crowdfunding site. The shares will be issued at 1.66p each. Ascent is awaiting a signature on a government document that will enable it to export gas from Croatia.
Internet gaming software-as-a-service provider GAN (GAN) will benefit from the final approval of a bill in Pennsylvania that legalises real money online gaming. The regulated gaming is expected to start early in 2018.
Cenkos has lowered its revenue expectations for Collagen Solutions (COS) following a trading statement. It has knocked £400,000 off its 2017-18 revenues forecast and trimmed forecasts for later years. A profit is not anticipated until 2019-20. First half revenues of the collagen products supplier were flat.
K&C REIT (KCR) is raising £150m at 100p a share, following a ten-for-one share consolidation. The name is being changed to KCR Residential REIT and a move to a premium listing is planned.
The Ottoman Fund Ltd (OTM) has repatriated cash from Turkey and shut three Turkish subsidiaries. This is an important step in winding up the company returning cash to shareholders. The final distribution will be in the range of 1.36p a share to 1.53p a share.
Stellar Diamonds (STEL) has been granted an environmental licence for the Tongo project in Sierra Leone.
MAIN MARKET
Fuel cell technology developer Intelligent Energy Holdings (IEH) is selling its business and being wound up. Convertible loan note holders are likely to get 65% of the principal of the loan notes prior to their cancellation but ordinary shareholders will get nothing. Cash is likely to run out in November. Meditor Energy is paying £19.5m for the remaining business and this will be used to pay the 65% of principal of the loan notes. A Meditor fund owns 85.5% of these loan notes.
Orient Telecoms (ORNT) is a new standard list company that wants to start a telecoms business in Singapore from scratch. The share price ended the first day at 11p (10p/12p) and it remains unchanged since then. The shares are tightly held so any trading activity could push up the share price, so beware of this lack of liquidity. There does not appear to have been any trading activity, as yet.
Aquila Services Group (AQSG) is acquiring development consultancy and financial modelling services business pod. The business made an operating profit of £162,000 on annual revenues of £1.09m. This fits with the group’s affordable housing services operations.
Andrew Hore
Quoted Micro 29 May 2017
NEX EXCHANGE
Crossword Cybersecurity (CCS) has taken advantage of the high profile of cyber security to raise cash at a premium to the market price. Crossword raised £145,000 at 230p a share. The current mid-price is 195p a share and the most recent trade was at 197p a share last September. Brenlen Jinkens took up 50% of the new shares and he has 5.13% of the company.
Wheelsure Holdings (WHLP) reported a dip in interim revenues due to the lack of funding so the planned £500,000 fundraising should enhance progress. In the six months to February 2017, the loss increased from £126,000 to £159,000 as revenues fell from £133,000 to £94,000.
Mechan Controls (MECP) improved its underlying 2016 operating profit from £518,000 to £594,000 on revenues that were 5% ahead at £4m but there have been significant changes since last year. Nirvana is the only subsidiary left. At the end of 2016, there was £829,000 in the bank and the NAV was £2.41m. Mechan is paying a final dividend of 2.27p a share and the shares go ex-dividend on 1 June. Once all the operations are sold money will be returned to shareholders.
Secured Property Developments (SPD) had cash in the bank of £341,000 and an NAV of £689,000 at the end of 2016. The company is valued at a 47% discount to NAV.
Social housing finance provider Queros Capital Partners (QCP) has raised an additional £875,000 by issuing 8% unsecured bonds 2025. That takes the bonds in issue to £3.5m – from 19 separate placings. So far, short-term bridging loans have generated income to fund the interest payments on the bonds. Longer-term, there are plans to acquire social housing properties.
Blockchain technology company investor Coinsilium Group Ltd (COIN) says that investee company RSK Labs has raised $3.5m. Coinsilium retains the right to 1% of RSK via a convertible. RSK has developed a sidechain to the Bitcoin that enables smart contracts. There could eventually be scope to handle more than 20,000 transactions per second but that requires the additional investment.
NQ Minerals (NQMI) has raised £751,000 at 0.3p a share. Colin Sutherland has been appointed as finance director.
AIM
Enterprise software provider Sanderson (SND) is growing strongly but the cost of investment in the business will hold back short-term profit. The digital retail division is growing fastest but its operating profit was flat as management investors in order to maintain the strong growth rate. In the six months to March 2017, revenues were 10% higher at £10.9m and operating profit was 5% ahead at £1.55m. There was net cash of £4.51m and the dividend was increased by 10% to 1.1p a share.
Software supplier Cerillion (CER) continues to grow its revenues as it starts to build its customer base outside the mobile sector. In the six months to January 2017, revenues were 10% ahead at £7.5m and underlying profit was nearly one-third higher at £900,000. Orders worth £9.4m were won during the period. The interim dividend was 8% higher at 1.4p a share. Directors’ sold 4.2 million shares at 120p each, which could help to improve the liquidity in the shares.
Redx Pharma (REDX) has failed in its attempt to juggle its cash requirements and its debt and administrators have been appointed. Liverpool City Council has previously extended the maturity date of its £2m loan but Redx did not repay the debt when it became due at the end of March. There is also interest due and that could total more than £1m. Redx nominally raised £12m in February – an equity swap agreement meant that not all of this was raised immediately – but does not appear to have raised enough to pay the loan. That is blatant bad management which has ended up destroying the investments of shareholders. Iain Ross recently took up the role of chairman so it would be unfair to blame him but the other directors, including those that have recently departed, were responsible for running the business properly and they knew when this money had to be repaid. The directors are Dr Neil Murray, Norman Molyneux, Dr Bernhard Kirschbaum and David Lawrence, while Dr Frank Armstrong, Peter McPartland, Dr Peter Jackson, Philip Tottey and Dr Derek Lindsay have resigned since Redx joined AIM. Investors’ should be aware of these people if they are or become involved in any other companies.
Lombard Risk Management (LRM) increased its revenues from £23.7m to £34.3m in the year to March 2017. The pre-tax loss was reduced from £2.2m to £1.6m. The year-end order book was worth £10.1m. Management expects the company to be cash profitable this year. Legislation continues to drive demand for reporting and risk software.
Flowgroup (FLOW) could not find a buyer for its energy supply business at an appropriate valuation so it is raising up to £29m in shares (at 1p each) and bonds, including more than £600,000 raised at 1p a share via PrimaryBid, to finance its development. This is highly dilutive even before any conversion of the bonds at the conversion price of 0.95p a share. Flowgroup also requires £1m to market its Flow boiler in Europe and £4m to end the manufacturing contract with Jabil. In 2016, there was a loss of £23.7m on revenues of £99m. Net cash was £3.7m at the end of 2016. An increasing number of smaller competitors are entering the energy supply market and this led to a reduction in customers. The funding will help Flowgroup to compete and build up its customer numbers.
Big data software supplier Fusionex International (FXI) plans to leave AIM and it already has the backing of shareholders owning 41.9% of the company for the general meeting vote on 15 June. Management blames the lack of liquidity in the shares and paucity of independent research. The also blame political uncertainty in Europe. Fusionex had a gravity defying rating in the first year or so of trading on AIM but the share price is currently less than one-fifth of the peak at the beginning of 2014. The company’s growth strategy will remain unchanged. There are plans to arrange a trading facility in the shares.
Safestay (SSTY) has paid €3m in cash for U Hostels, which operates a 226 bed hostel in Madrid. U Hostels also owns an apartment block near the hostel, where managed apartments are expected to be completed during 2018, and a building in Paris that is being converted into a 260 bed hostel, which has a 12 year lease that can be extended by a further 12 years. Safestay will have to invest up to €2.3m in the Paris development, which should be completed in early 2019. In total, including development spending, the acquisition cost will be up to €6.5m. The original Madrid hostel made a small loss on revenues of €1.3m. Earlier this year, Safestay raised £12.6m from the sale and leaseback of the Edinburgh and Elephant & Castle hostels – the leases are for 150 years.
Strategic Minerals (SML) made a maiden pre-tax profit in 2016. The $351,000 profit was after $691,000 of other income – predominantly the settlement of a rail dispute. The Cobre tailings business continues to generate profit and cash.
Thor Mining (THR) says that the Pilot Mountain tungsten resource inventory has risen to 11.73 million tonnes at 0.28% WO3. This does not include the GunMetal and Good Hope deposits.
Greatland Gold (GGP) has granted access to Newmont to the Ernest Giles tenements for a period of six months and it will have first right of refusal for a disposal or joint venture. An airborne survey has identified new structural targets suitable for gold mineralisation. Metal Tiger (MTR) has exercised 15 million warrants at 0.2p a share.
LED lighting systems developer PhotonStar LED (PSL) cut its full year loss from £3.03m to £1.43m on lower revenues. The first quarter of 2017 was tough but there have been orders for its Halcyon devices. R&D has been reduced.
Fairpoint (FRP) has delayed its full year figures yet again. They are promised at some point in June. If they do not come out then then trading in the shares will be suspended.
Arian Silver Corporation (AGQ) has raised £600,000 has raised at 0.5p a share. The cash will be used for exploration of silver and lithium projects.
Mortice (MORT) has won UK contracts worth £2.25m via its Elite subsidiary that take it into new sectors. Elite has won a three year cleaning and waste contract with Surrey and Sussex police and after securing a place on BMW’s approved supplier list a two year contract with the car maker.
Orogen (ORE) intends to acquire Thread 35, which owns e-commerce womenswear brand Sosandar. Orogen is lending up to £250,000 to Thread 35. Sosandar is targeted at 35-55 year old women. Trading in the shares has been suspended.
Active Energy Group (AEG) has entered into an agreement in principle with the Province of Newfoundland and Labrador which will provide a timber licence and a forest management agreement covering 1.2 million hectares. The licence would enable the harvesting of up to 140,000 cubic metres of wood annually.
MAIN MARKET
Thomas Charlton has further increased his stake in North Midland Construction (NMD) taking it to 7.24%. Finance director Daniel Taylor recently acquired 23,321 shares at 305p each. North Midland says that its first quarter profit has increased from £237,000 to £580,000 on a 5% rise in revenues to £62.2m. The main reason behind the improvement was a swing from loss to profit by the telecoms infrastructure division but the construction and water divisions generated a lower profit. Management still believes that margins can be improved. The order book is worth £254m helped by the AMP6 water investment cycle getting going. There is the promise of growing dividends.
Shareholders have agreed to the proposed bonus issue by Sealand Capital Galaxy Ltd (SCGL). On 1 June, existing shareholders will receive nine bonus shares for each one they own, leaving them with ten times the number of shares and the share price would be adjusted from 28.5p to 2.85p. The November 2015 flotation price was 10p (1p adjusted) and earlier this year a further £1.4m was raised at 20p (2p adjusted) a share.
Dukemount Capital (DKE) has signed a binding letter of intent for its first deal with a housing association to develop supported living accommodation. The plan is identify properties worth up to £5m which will be leased to Larch Housing Association on a 50 year lease at 6.5% a year plus inflation. Dukemount floated on 29 March.
Health food products supplier World Trade Systems (WTS) has entered into memoranda of understanding with Germany-based Naturemed and Germany-based Biestmilch, which will help it to widen its product range. Naturemed is a new company but Biestmilch was formed in 1999. Trading in the shares has been suspended for years and it is approaching ten years since there was a trade in WTS shares.
CIC Gold Group Ltd (CICG) left the standard list on 25 May. Management believes it will get a better valuation on another designated exchange.
Andrew Hore
Quoted Micro 20 June 2016
ISDX
Residential property developer St Mark Homes (SMAP) is bidding for related company St Marks Contracts Ltd. The recommended offer is a one-for-one share swap. That looks fair as the adjusted NAV of each of the companies is around 128.5p a share. That is after St Mark Homes pays its interim dividend of 5p a share. The directors that the two companies have in common were not involved in the negotiations. The idea behind the deal is that the enlarged group should be able to participate in larger projects.
Equatorial Mining & Exploration (EM.P) says that it has engaged a contract mining company to open up an access road into a planned mining lease in Nigeria in anticipation of its imminent grant, which is subject to a final fee of £15,000. Equatorial needs additional funding for exploration and working capital and it is talking to investors. The company’s activity has been limited in order for it to be able to keep going until finance can be obtained. A half year trading update will be published at the end of this month
Hellenic Capital (HECP) director Gavin Burnell has more than doubled his stake in the investment company, taking it to 29.9%. The recent purchase of 9.5 million shares was at 0.137p each. That is below the current bid price of 0.2p.
African Pioneer (APPP) is asking its shareholders to approve its withdrawal from ISDX. The vote will be held at the AGM on 30 June. If the resolution is passed then trading will end on 1 July.
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AIM
Wireless control technology developer Cyan Holdings (CYAN) is acquiring Connode, which supplies wireless-based technology for smart meters and the internet of things, for £6.8m – £4.3m in cash and £2.5m in shares. This deal provides a European customer base and an opportunity to generate revenues from the smart meter roll out in the UK. Cyan is raising £10.1m at 0.18p a share and this includes a £2m subscription by JS Technical Services, a Thailand-based distributor of Cyan products. The share capital will be doubled following these share issues. Directors and some of the senior management will take their income and bonuses in shares at the same price – expected to be equivalent to £730,000.
Seeing Machines (SEE) has supplied an initial 1,000 Guardian on-road driver fatigue units to a distributor set up by VSI Berhad, the Malaysian business that recently took a 12% stake in the company at 5.2p a share – a significant premium to the current market price. The units will be sold in Malaysia and Singapore. According to finnCap, Seeing Machines should have net cash of A$5m by the end of June 2017 and there are $10m worth of further payments to come from the Caterpillar deal.
Risk management and compliance software developer Lombard Risk Management (LRM) is raising up to £8.76m through a placing and one-for-35 open offer at 8.75p a share. The cash will be invested in developing existing and future software products. A trebled loss of £6.6m is forecast for this year but Lombard is expected to move into profit next year – after capitalised development spending.
Hydro International (HYD) has recommended a £28m bid from Ely Acquisitions. The Hanover Active Equity Fund-backed acquisition vehicle is offering 194p a share in cash for the stormwater and wastewater equipment supplier.
Dekeloil (DKL) is buying out most of the minority interests in the Ayenouan palm oil mill in the Ivory Coast. This will take the Dekeloil stake to 86% and it will be financed by a £12.75m placing at 1.325p a share. The purchase price effectively values the mill at €42.9m and the deal should be earnings enhancing. The rest of the minority interest will eventually be acquired. Cantor Fitzgerald forecasts a 2016 profit of €4.9m, rising to €7.5m next year.
MAIN MARKET
CML Microsystems (CML) is showing signs of benefiting from a recovery in demand thanks to new contracts. In the year to March 2016, revenues improved from £21.8m to £22.8m, while underlying pre-tax profit moved ahead from £3.17m to £3.44m. The dividend was increased from 6.9p a share to 7p a share. The recently announced Chinese acquisition will not be completed for around three months.
A pre-feasibility study for the Batangas gold project, where Bluebird Merchant Ventures (BMV) has an option to increase its 25% stake to 50.1%, shows that it could generate $34m of free cash during its first seven years of production (assuming a gold price of $1,250/ounce). The upfront capital costs are $16m. Estimated operating costs are $735/ounce of recovered gold. Recovered gold production is forecast at 116,000 ounces and there are an additional 320,000 ounces of inferred gold resources. A definitive feasibility study should be completed by the end of the year.
Highlands Natural Resources (HNR) is reversing its recently acquired helium prospects in Montana into fellow standard list shell Opera Investments (OPRA), which previously had a reversal deal that fell through. The purchase price is £4m in Opera shares valued at 15p each. Opera plans to raise at least $750,000 to finance investment in the assets. Highlands will be the majority shareholder in the company.
ANDREW HORE