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Quoted Micro 3 May 2016
ISDX
Markets operator WMC Retail Partners (WMC) reported a sharp fall in revenues and profit in 2015. That was due to the loss of the Old Spitalfields Market contract in January 2015. Revenues were reduced from £6.08m to £4.31m, while pre-tax profit dived from £369,000 to £13,000. That profit was after fair value movements in asset values of £165,000, compared with £190,000 the year before. There was £196,000 in the bank at the end of 2015, although there are also borrowings. At 19.5p a share, WMC is valued at £1.2m, whereas the NAV was £3.58m at the end of 2015.
Brewer and pubs operator Adnams (ADP) says that first quarter operating profit was slightly ahead of expectations thanks to strong sales of own-brand beer and gin. Distillery capacity has been trebled and £7m is being invested to increase brewing capacity. A six year sponsorship of the University Boat Races has begun and increased marketing spending will hold back profit. At £99.50 a share, Adnams is valued at £28.4m. There have been deals at above this price in recent days.
Leni Gas Cuba (CUBA) is in talks to reverse into a TSX Venture market shell that until recently was going to buy Mongolian mining assets. Knowlton Capital Inc (TSX-V:KWC H) will provide access to North American investors but the enlarged group wants to retain the ISDX quotation. An all share bid by Knowlton, whose shares are currently suspended, for Leni Gas Cuba is anticipated but prior to this the Knowlton share capital will be consolidated which will give shareholders 0.7825 of a share for each share currently owned. One Knowlton share will be issued for every 2.5 Leni Gas Cuba shares. Leni Gas Cuba shareholders will own 84.4% of the enlarged group although they will be contributing a higher percentage of the group cash and assets. The Leni Gas Cuba share price is 1.15p, which is double the low in March but a fraction of the 5p a share flotation price, valuing the company at £5.7m, which is above pro forma NAV.
Ace Liberty & Stone (ALSP) has announced an interim dividend of 0.033p a share – an increase of 10% on the previous year. The ex-dividend date is 12 May. An additional 13.3 million shares have been issued at 3p each to pay for a property acquired from non-executive director Dr Anthony Ghorayeb. At 4p a share, which is the highest the share price has been, Ace is valued at £39.3m.
Investment company Gledhow Investments (GDH) reported a decline in NAV from £546,000 to £414,000 in the 12 months to March 2016 as the value of resources investments fell. During the period, a €40,000 investment was made in Dutch electric scooter developer Bolt Mobility BV. There was still £190,000 left in the bank at the end of March 2016. At 0.75p a share, Gledhow is valued at £368,000.
Valiant Investments (VALP) has set up a mobile app development business called Flamethrower and it retains an 83.33% interest. Valiant also has a portfolio of resources and green energy investments but it currently has a small net deficit.
Cyber security technology commercialisation Crossword Cybersecurity (CCS) reported initial revenues of £21,000 in 2015. The loss increased from £239,000 to £755,000. There was £1.23m in the bank at the end of 2015.
AIM
House broker Stockdale expects a slump in profit reported by smoke alarms supplier Sprue Aegis (SPRP) from £12.8m – before £5.5m battery warranty provision – to £2.1m in the year to December 2016. This is due to the revelation about unreliable batteries and poor trading in France and Germany. These are important potential markets. In Germany, 10 million homes will have to have a smoke alarm by the end of 2017. Despite being uncovered, the dividend is expected to be maintained at 8p a share. Net cash was £22.4m at the end of 2015.
Arian Silver Corp (AGQ) has raised £700,000 at 1p a unit – one share and 0.5 of a warrant to subscribe for a share at 1.5p (expiring on 28 April 2019). The current share price is 1.13p. The cash will be used to push ahead with the exploration of mining concessions in Mexico, particularly those relating to the Tierra Neuva Mineria option assets. Other projects are also being assessed.
Tekcapital (TEK) has acquired assets from Vortechs Group Inc, an executive search firm specialising in technology transfer professionals. This will add to the range of services that Tekcapital can offer. Tekcapital has paid $100,000 and 577,868 shares at 47.5p each. The current employees will be retained. The business made a small loss on revenues of $351,000 last year. In the year to November 2015, Tekcapital lost $1.46m.
MAIN MARKET
Highland Natural Resources (HNR) has raised £519,000 at 18p a share. This cash will be used to invest in oil and gas assets and technology and it should cover overheads until the end of 2017. Research into the company’s US oil and gas assets suggests that there could be uranium assets. The first commercial test of the DT Ultravert oilfield technology are set for June in Colorado.
Global Resources Investment Trust (GRIT) continues to trade at a substantial discount to NAV. The share price is 6.5p a share, whereas the NAV was 25.7p a share at the end of April. That figure is after writing down the value of a number of unquoted resources shares. GRIT recently sold its stake in NuLegacy Gold for £2.2m – more than double book value. The main concern is that the largest holder of the company’s cumulative unsecured loan stock has requested repayment because a covenant has been breached. The other two holders are supporting the company but GRIT does not have the cash to redeem the loan stock of the largest holder. Further disposals should enable this largest chunk of the loan stock to be repaid by the autumn.
Microbiological technologies supplier Bioquell (BQE) is returning £42.7m to shareholders via a tender offer for 50% of the share capital that is likely to be at 200p a share. The formal sale process for the business continues. There was £47.6m in the bank at the end of 2015, following the disposal of TRaC Global. Continuing operations reported flat revenues of £26.9m, while Bioquell swung from loss to profit.
North Midland Construction (NMD) has appointed SPARK as its financial adviser and Si Capital as its broker. This could mark a review of strategy or even a potential move to AIM.
Small Cap Awards 2016 nominations
IPO of the Year Bilby ; Curtis Banks; Gear4music; Premier Technical Services Group; Stride Gaming
Company of the Year Bioventix; Crawshaw; James Cropper; Trakm8
Impact Company of the Year Ashley House; Capital for Colleagues; Good Energy Group; Menhaden Capital; V22
Executive Director of the Year Nick Taylor – Waterman Group; John McArthur – Tracsis; David Cicurel – Judges Scientific; Stephen O’Hara – OptiBiotix Health
Transaction of the Year 1pm acquisition of Academy Leasing; AdEPT Telecom acquisition of Centrix; Scientific Digital Imaging acquisition of Sentek; Venn Life Sciences acquisition of Kinesis Pharma
Analyst of the Year Mike Allen – Zeus Capital; Charles Hall – Peel Hunt; Matt Butlin – Allenby Capital; Eric Burns – WH Ireland
Journalist of the Year Paul Scott – Stockopedia; Simon Thompson – Investors Chronicle; Smit Berry – The Small Company Sharewatch
Advisor of the Year FinnCap; Hybridan; Peterhouse; Zeus Capital
Fund Manager of the Year Conor McCarthy – MFM Techinvest Special Situations; Gervais Williams – Miton UK Smaller Companies; Ken Wotton – Wood Street Microcap Investment; Paul Spencer – Franklin UK Smaller Companies
Alternative Financing Deal of the Year Funding Circle SM Income Fund – IPO; Seedrs for Chapel Down – Curious Drinks; Capital For Colleagues – institutional and crowd placing; TRC Contracts by ArchOver – record working capital loan
ANDREW HORE
Quoted Micro 4 April 2016
ISDX
Hearing aids and mobility products retailer DHAIS (DHAP) fell into loss in the first half on slightly lower revenues. Costs increased in the mobility division and the focus will be on the hearing aids business. A store in Swindon was sold but DHAIS is still selling hearing aids from the site. In the six months to December 2015, revenues dipped from £5.13m to £5.07m, while a profit of £21,000 was turned into a loss of £86,000. At 24.5p (22p/27p) a share, DHAIS is valued at £15.3m.
Globe Capital Ltd (GCAP) has bought Globe Capital Administration, which was incorporated in January 2016, for £1,250 and paid £12,500 for a 25% stake in Sterling Craig, which was incorporated on 11 December 2015.
Welney (WENP) still has options over tyre recycling business Mitre Rubber and cleaning company Cleanbrite Facilitation and has not made a decision on whether to proceed with either deal. Neither company had a business at the time of their most recent accounts. Another investment is being negotiated. There was £59 in the bank plus a Nasdaq listed investment worth £2,675 at the end of 2015.
AIM
Ultrasound training simulators developer Medaphor (MED) has raised £3.2m at 45p a share in order to finance working capital for its latest contract. Earlier this year, Medaphor’s US subsidiary has signed a long-term agreement with the American Board of Obstetrics and Gynecology (ABOG) for the use of its ScanTrainer as the simulator for its obstetrics and gynecology certification exams. ABOG undertakes 2,000 examinations each year. The cash will also be used to develop the US sales team and the continued product development. Hopefully, this will be enough cash to get Medaphor to profitability. Last year, Medaphor lost £1.7m on revenues of £2.2m.
Fastnet Equity (FAST) has published the acquisition document for Amryt Pharmaceuticals. The deal is valued at £29.6m and Fastnet is raising £10m at 24p a share (post one-for-eight share consolidation). Amryt has, conditional on the deal going ahead, agreed to acquire Germany-based Birken, which has developed a recently approved drug for partial thickness wounds and a potential orphan drug for the skin disorder epidermolysis bullosa called Episalvan, and Switzerland-based SomPharmacuticals, which is focusing on treatments for acromegaly and Cushing’s disease. Some of the cash will be used to fund a phase III clinical trial of Episalvan.
Digital Barriers (DGB) is selling its services business to its management for a nominal sum and this should reduce costs by £1m a year. The focus will be surveillance, security and safety technology, where organic revenue growth was 50% in the year to March 2016. The underlying loss has been reduced.
MAIN MARKET
Investment company Athelney Trust (ATY) is seeking to raise additional funds. This will help to spread costs over a larger capital base. The plan is to increase the share capital by up to 9.9%, which should also help to make the shares more liquid.
Aseana Properties Ltd (ASPL) is selling the Aloft Kuala Lumpur Sentral Hotel for a gross value of $104.6m. That should generate a gain of $35.9m to project NAV. The hotel was developed by Aseana and opened in March 2013. The transaction should be completed in the third quarter and marks a significant step in the plan to realise the company’s assets. Net gearing will be reduced from 1.12 times to 0.48 times NAV. There are plans for a $10m capital distribution and then will be further distributions after that.
Civil engineer and building services provider North Midland Construction (NMD) returned to profit in 2015but there is still no dividend. The board hopes to start paying dividends in the near future. In 2015, revenues improved from £193.2m to £217.6m. The core building division returned to profit and the group pre-tax loss of £2.97m to £606,000. This was helped by a reduction in the costs of legacy contracts. Net cash was £2.4m at the end of 2015.
Cleantech-focused investment company Menhaden Capital (MHN) is traded on the Main Market on the Social Stock Exchange offshoot of ISDX and it raised £80m last July. At the end of 2015, the NAV was 83.9p a share – a 14.1% decline even after initial costs are excluded. Management remains optimistic, particularly concerning its investment in solar energy products developer X-Elio.
ANDREW HORE
Quoted Micro 22 February 2016
ISDX
Etaireia Investments (ETIP) has raised £10,000 at 0.25p a share following its announcement that it has bought a freehold property in Sunderland partly owned by Etaireia director Baron Bloom. The 11,000 square foot Ivy Leaf Club is generating income of £31,200 a year. Etaireia paid 210 million shares at 0.1p a share for the property. Baron Bloom and Oliver Fattal were issued 105 million shares each. There are plans to change the use of the property from a social club to residential/student accommodation. At 0.04p (0.3p/0.4p) a share, Etaireia is valued at £600,000.
Brewer Daniel Thwaites (THW) has bought back 1.26% of its share capital for £862,500 (115p a share). Two directors have acquired a total of 115,000 shares at 115p each. Directors own 42.1% of the company.
LED lighting supplier Gowin New Energy Group Ltd (GWIN) says that convertible loan note holders owning the £250,000 worth of convertibles in issue have converted them into shares at 0.02p a share. The 125 million new shares are equivalent to 21.9% of the enlarged share capital. Tsai Cheng-Feng and Chao Chih-Feng each own 8.76% of the company and Dai Ming-Hsuan holds 4.38%. They did not previously own any shares.
Oil and gas explorer Nordic Energy (NORP) will not be able to publish its results in the allotted timescale so trading in the shares has been suspended. At the suspension price of 0.9p, Nordic is valued at £900,000.
Equatorial Mining & Exploration (EM.P), which still has plans to move to the lightly regulated standard list, has raised £360,000 from the issue of 8% unsecured, irredeemable convertible loan notes, with one warrant exercisable at 0.01p a share, attached to each of the 0.1p loan notes. There are 1.5 billion warrants in issue. The cash will go towards covering the costs of exploration in Nigeria and the expenses of the move to the standard list.
AIM
Facilities management services provider Mortice Ltd (MORT) has won a major new contract with the University of Hertfordshire. Mortice’s recently acquired subsidiary already worked for this client but the new ten year deal is worth more than £55m. The previous contract was worth £1.8m a year. The new deal includes planned maintenance, grounds maintenance, pest control, cleaning and hygiene services. The deal followed a seven month tender process. The contract should be earnings enhancing, although Mortice will have to invest £1m over the length of the contract.
Yokogawa Electric Corporation has tabled a rival bid for KBC Advanced Technologies (KBC). The offer is 210p a share and values KBC at £180.3m. Yokogawa is involved in industrial automation and it believes that the consulting and software skills offered by KBC will fit with this business. Aspen Technology Inc says that it will not increase its 185p a share offer.
Health insurance products provider Personal Group (PGH) is losing Royal Mail as a client for its core business but it could gain additional business for its home technology salary sacrifice business Let’s Connect. Personal will not be selling any more medical insurance products to Royal Mail staff from March but existing clients will still be paying for insurance through payroll deduction until the end of March 2017. Payments will then move to direct debit, although clients could choose to stop paying. Let’s Connect is negotiating with Royal Mail. An initial contract is expected to last four years. Last year’s trading was in line with expectations helped by the full year contribution from 2014 acquisition Let’s Connect.
Richard Ames is stepping down as chief executive of hobbies and toys company Hornby (HRN) following its profit warning in the previous week. In the UK, a strong Christmas was followed by subsequent weak sales. International sales are starting to improve following a period disrupted by the reorganisation of management in Europe. Even so, this year’s loss will be worse than forecast and there will be a £1m write-off. The underlying loss will be up to £6m. There is a danger that banking covenants could be breached. Roger Canham will become executive chairman.
Scientific instruments supplier Judges Scientific (JDG) is acquiring Hampshire-based CoolLED, which supplies illumination systems for fluorescence microscopy, for £3.5m plus up to £1m more dependent on performance. Operating profit has to be £1m in the year to June 2016 for the full earn out to be paid. In the 12 months to September 2015, the underlying operating profit was £750,000. Judges already owns one of CoolLED’s main customers.
Coal and transport services provider Hargreaves Services (HSP) reported halved revenues from continuing operations in the six months to November 2015. Underlying pre-tax profit slumped from £20.3m to £3.2m and this led to the interim dividend being slashed from 10p a share to 1.7p a share. Net debt was £30.8m at the end of November 2015. Hargreaves is reducing its dependence on coal, although all divisions reported lower profit. Coal production lost money and stocks have increased. There is potential to generate cash from the property portfolio.
Transport optimisation software and services provider Tracsis (TRCS) says that its revenues for the six months to January 2016 were more than £14m, up from £12m but profit will be lower due to acquisition costs and the disposal of the Australian traffic data operations. The seasonality of the acquisitions means that they will make a larger second half contribution. There was £8m in the bank at the end of January 2016.
MAIN MARKET
Standard-listed cash shell daVictus (DVT) is seeking to acquire a restaurant or bar franchise business that is operating in south east Asia. Trading started on 29 January and the share price has settled down at 11.25p. Jersey-based daVictus raised £1m at 10p a share but £335,000 of that went on expenses. Prior to the flotation, chief executive Richard Pincock owned 1.25 million shares which was then the whole of the share capital. Non-executive director Malcolm Groat is an ex-director of London Mining, which is a former AIM-quoted company that was placed in administration.
Construction services provider North Midland Construction (NMD) says that it will still make a profit this year despite one-off losses. It has sorted out most of its problem contracts and this will lead to an additional loss of £3.1m in 2015. That means the profit will be lower than originally envisaged. There is one more problem contract to sort out. North Midland Construction has an order book for 2016 that is worth £195m, which is similar to 2014 revenues.
Creightons (CRL) has acquired equipment, stock and manufacturing IP of Broad Oak Toiletries from its administrator for £600,000. Broad Oak was also involved in toiletries contract manufacture and the deal could add up to £3.2m to revenues in a full year – the business had previously generated annual revenues of more than £19m. The product range will be expanded.
World Trade Systems (WTS), which has been a fully listed shell for well over a decade, has sourced a potential deal with Suzhou Weibao Investment Co Ltd, which is a supplier of biotech and healthcare products. Suzhou Weibao will transfer its business activities to a subsidiary of WTS and its founder Dr Shao Chen will join the WTS board. The business activities will commence on 1 March. Suzhou Weibao will loan WTS £1m, which will pay off other loans, including those from current WTS majority shareholder Kudrow Finance. Avalon Enterprises and JH Global are injecting £50,000 into WTS at 2p a share.
Passenger aircraft leasing company Avation (AVAP) increased its revenues by 14% to $31.5m in the six months to December 2015. However, pre-tax profit fell from $6.98m to $5.57m, even though this includes a $305,000 gain on an aircraft disposal, due to higher interest costs. The financial benefits of the new aircraft added to the fleet have yet to show through.
TRADING FACILITIES
Folk2Folk, which is a lender focused on rural businesses, is planning to raise £1.5m through the issue of EIS eligible shares via Asset Match. Existing shareholders are raising £2m from selling existing shares. The offer price is £263 a share. This is a combined offer so investors will receive 57% existing shares and 43% new shares, which are eligible for EIS relief. The existing share capital is valued at £16m. Folk2Folk (www.Folk2Folk.com) has committed to make its shares tradable on Asset Match but this could take 12 months. Folk2Folk is a peer to peer finance business but it is an arranger and does not take the loans onto its balance sheet. Jane Dumeresque, is chief executive of Folk2Folk. She is a former finance director of fuel cells company AFC Energy and financial services firm Syndicate Asset Management, both quoted on AIM at the time. Minimum investment is £20,000.
ANDREW HORE