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Andrew Hore Quoted Micro 16 December 2019
NEX EXCHANGE
Capital for Colleagues (CFCP) is investing in new portfolio company The Security Awareness Group Ltd (TSAG), which was established to acquire an existing business that has been trading for more than two decades. It provides training to ensure than employees are aware of cyber security and potential for human error. The £405,000 investment in loans, preference and ordinary shares, will enable the acquisition to be completed and leave Capital for Colleagues with a 34% stake. Management will own 51% and an employee ownership trust the rest.
Fuel emulsifier technology developer SulNOx is joining NEX on 17 December and it will be valued at £42.3m at 50p a share. SulNOx originally said it planned to join NEX during the spring when it raised £550,000 in pre-IPO funds. It has developed a process that can emulsify hydrocarbon fuels, such as diesel and heavy oils. The products can reduce Nitrous Oxide, Carbon Dioxide and Sulphur Oxide gases and particulates, as well as making combustion more efficient. The emulsifier can be used in existing engines.
Health property developer Ashley House (ASH) is exploring opportunities for modular affordable housing. Overheads have been reduced but the company says that it retains its core team and has appointed Paul Williamson as head of the modular activities. Adrian Wright, who is the largest shareholder with a 13.4% stake, has been appointed to the board.
Primorus Investments (PRIM) has met with the management of AIM-quoted investee company Greatland Gold (GGP) and it says that it believes that the Havieron gold/copper deposit may host more than 20 million ounces. Further share acquisitions are possible. Primorus currently owns 37 million shares at an average cost of 1.71p each, which is slightly higher than the market price. Newcrest Mining is farming-in to Havieron. Six rigs will be working on the project over the coming months.
Gunsynd (GUN) had cash of £568,000 out of total net assets of £2.36m at the end of July 2019. Gunsynd did raise £498,000 from a share issue during the period. There was an unrealised loss on investments of £224,000 partly offset by a realised profit of £35,000. There was a £400,000 cash outflow from operations. The stake in Oyster Oil and Gas was valued at £350,000 and Gunsynd has subsequently agreed to sell the shares for a total of £260,000. Production sharing contracts for four blocks in Djibouti are not included in the transaction.
NQ Minerals (NQMI) is expanding the capacity of the Hellyer gold mine in Tasmania. A 100 tonne per hour mining dredge should be operational by the end of the year.
Hydro Hotel, Eastbourne (HYDP) is increasing its interim dividend from 7p a share to 9p a share and this goes ex-dividend on 19 December. The final dividend will be maintained at 14p a share.
Tectonic Gold (TTAU) has sold its stake in Tirupati Graphite for £86,844. The initial investment in 2016 was £40,000.
EPE Special Opportunities Ltd (ESO) had a net asset value of 261.97p a share at the end of November 2019.
The acquisition of Netalogue Technologies (NTLP) has been completed and trading on NEX will end on 10 January.
Jersey-based Zandra Holdings has increased its stake in Formation Group (FRM) from 74.62% to 89.99%.
AIM
Lawyer Gately (GTLY) is acquiring T-three Group, which offers human resources services for £3.4m. Pro forma sales from continuing operations were £4.2m and EBITDA was £700,000 and the deal should be immediately earnings enhancing. This business fits with Kiddy which was acquired last year.
Feed, fuel and food distributor NWF (NWF) has leased another warehouse on the back of a five-year contract with a food customer. This will add 37,000 pallet spaces in Crewe, which will be predominantly used up by this contract. There is a five-year break clause on the lease. There will be £500,000 of start-up costs this year. Two fuel distributors have been acquired for £5m in recent weeks. The contributions from these will offset the additional cost in the year to May 2020. The feed business has grown its volumes and market share. Interim profit should be better than the weak comparisons.
Pelatro (PTRO) has won another contract. This is for providing additional campaign management services to an existing telecoms client. The deal involves monthly revenues with a share of gains. It is worth $1m over three years.
Investment in connected devices technology is starting to pay off for Vianet (VNET) with the revenues and profit of the smart machines division growing strongly. Additional contracts have been won that provide additional business over the next five years. These contracts alone cover 20,000 units. Technology upgrades are helping the smart zones division to retain and generate more revenues from pub clients. The US smart zones business made its maiden profit in the period. The interim dividend is maintained at 1.7p a share.
Versarien (VRS) has enough cash for its current requirements. The graphene products developer had £2.64m in cash at the end of September 2019. There is an invoice discounting facility available to provide additional liquidity. There is £898,000 of borrowings which are being paid back at around £30,000/month. At the current rate of cash outflow, the cash should last around one year, although a company is not going to wait until it runs out to raise more cash. The hard wear components business is generating cash, but the plastics business has been a drain. There are still plenty of opportunities for Versarien, including in China.
Open Orphan (ORPH) is merging with hVIVO (HVO) via an offer for 2.47 shares for each hVIVO share. Both companies are clinical research organisations. There is limited overlap in the services offered.
Integumen (SKIN) has raised £1.37m at 1.5p a share. The company needs additional funds because a potential client is doing due diligence. Revenues are expected to quadruple to £4m in 2020. Capacity at the Labskin laboratory is being increased.
Audio equipment supplier Focusrite (TUNE) is holding a general meeting to increase the amount it is allowed to borrow from up to £15m to up to £60m. Net cash was £14.9m at the end of August 2019, but the company is keen to make acquisitions.
Digital chemistry analysis company Deepmatter (DMTR) says that AstraZeneca has agreed to use its DigitalGlassware technology in Sweden alongside its own automated compound synthesis platform. This is an initial trial to assess how the technologies can work together. Data capture by DigitalGlassware could reduce cost and time, as well as providing improved analysis.
Spitfire Oil Ltd (SRO) had cash of $2.1m at the end of June 2019. Spitfire has relinquished the Salmon Gums lignite licences. It is a shell and has to make an acquisition by 29 February or trading in the shares will be suspended. This seems likely. The there is six months to make an acquisition or lose the AIM quotation.
Coral Products (CRU) has gained approval to offset production from its plastics recycling plant against the plastic packaging waste levy. Production hours have been doubled and the equipment should be run 24 hours a day by the end of April.
FireAngel Safety Technology (FA.) expects to report a loss nearly double its previous expectations at between £2.6m and £2.9m. that is partly down to lower sales from higher margin products. The fire and smoke alarms company could still be profitable in 2020.
Packaging supplier Robinson (RBN) says that 2019 revenues are slightly lower than forecast but pre-tax profit will be better than expected at £2.2m.
Digital services provider The Panoply Holdings (TPX) reported a one-third increase in interim revenues to £13.4m and the public sector is becoming a greater percentage of revenues. The company is on course to move into profit this year. A pre-tax profit of £3m is forecast.
Wind sensor technology developer Windar Photonics (WPHO) is raising £1.41m at 27.5p a share. This follows the trading statement admitting that sales are disappointing.
India-focused online retailer Koov (KOOV) has been placed in administration because a funder failed to come up with the cash it promised.
MAIN MARKET
ASX-listed Adriatic Metals (ADT1) has joined the standard list. Adriatic has projects in Bosnia Herzegovina. The main focus is the Vares project, north of Sarajevo. There is lead, zinc, copper, silver, gold and barite.
Shefa Gems Ltd (SEFA) has announced a maiden resource for the Kishon Mid-Reach project. The contained revenues are $41/tonne, predominantly due to the Carmel Sapphire. The mining cost is estimated at $26/tonne and it could be reduced.
Zenith Energy (ZEN) has decided not to acquire Nordic Petroleum because of high costs. Work on the C-37 well in Azerbaijan should enable production of more than 250 barrels of oil a day.
Hadrian’s Wall Secured Investments Ltd (HWSL) says it should not continue in its current form due to the large discount to NAV. A review could end up with a decision to run down the company. Brett Miller has been appointed to the board. A new NAV figure has been delayed.
Ferro-Alloy Resources (FAR) says that a sharp fall in the vanadium price has hit short-term profitability and cash generation. It remains confident that the operations in southern Kazakhstan are still viable.
Andrew Hore
Andrew Hore – Quoted Micro 11 November 2019
NEX EXCHANGE
Ecommerce technology developer Netalogue Technologies (NTLP) is recommending a 11.2p a share cash offer from TrueCommerce, which values the company at £5.73m. That is nearly double the share price of the most recent share deal. Netalogue clients include Transport for London, Greene King and Bunzl. The deal will bring together ecommerce and supply chain software in one platform and provide cross-selling opportunities. US-based TrueCommerce is a global connectivity business, which also has a B2B client base. The UK part of the business has revenues of £13.8m, but it is losing money. The group as a whole has revenues of $95.2m and made a net loss of $157,000. In the year to March 2019, Netalogue made a pre-tax profit of £300,000 on revenues of £1.35m. There should be potential cos savings from duplication of development spending and overlapping roles.
AFH Financial (AFHP) is acquiring the client portfolios of Warwickshire-based Groom Associates from the two retiring advisers. The initial cost is £321,000 and a further £294,000 could be payable depending on the performance of the acquired assets over 26 months.
AfriAg Global (AFRI) is selling its African operations and consolidating 100 shares into one new share. It can then concentrate on cannabis business Apollon Formularies.
Proton beam therapy firm Rutherford Health (RUTH) grew interim revenues from £197,000 to £2.5m, but the loss increased from £9.17m to £14.9m as the initial proton beam therapy centres get up and running. Since August, a further £12.5m has been raised and a £20m debt facility agreed. The focus is building up patient numbers for the three fully operational cancer centres. At the end of October, 412 shares were traded at 245p each. There is still the Woodford share overhang.
Two months after floating World High Life intends to consolidate every ten shares into one new share. The investment company plans to acquire businesses involved in medicinal cannabis and related products, including nutraceuticals and cosmetics. World High Life has announced plans to acquire Love Hemp in return for £4m in cash and the issue of 30 million (existing) shares. A further £2m could become payable in the next three years depending on the achievement of turnover targets.
Trading in Black Sea Property (BSP) shares has recommenced following its interim results announcement. Interim revenues improved from €272,000 to €312,000, but there was a €1.9m write-down on investment properties. The overall loss was €2.58m. NAV has fallen from 0.95 cents a share to 0.75 cents a share over a six months period.
Eight Capital Partners (ECP) has converted the €2m it is owed by Finance Partners Group into shares that take its stake in the investment company, which has an investment in Italy-based Avantgarde Group, to 40%. Avantgarde owns inventory finance fintech company Supply Me (www.supplyme.tech), which may list on the London market. Eight Capital Partners has paid £1,500 to John Treacy, one of its directors, for a further 30% of Epsion Capital, giving it 100% ownership. It has also invested a further £95,000 in the company, which is applying to the FCA for full regulatory status.
VI Mining (VIM) says that talks with the vendors of the Minaspampa and Rosario de Belen projects are likely to end with them taking back the projects because there is still $42.4m of the payment outstanding. VI will focus on generating cash from tolling operations. David Sumner is waiving the $1.61m of salary owed to him. Sumner, who already provides loans to the company, is raising money via a security token offering and cash raised will be used to finance VI.
Former NEX-quoted company MESH Holdings (MESH) is proposing to gain admission to the standard list. There is a timing extension to the acquisition of AI business Sentiance and the acquisition of additional shares and the exercising of an option has taken the Sentiance stake to 16.8%. The acquisition of a majority stake is dependent on ZASAi and related interests not having to make a bid for MESH after they receive shares in return for the Sentiance stake. MESH will then own 80.1% of Sentiance and be able to issue a prospectus for the listing.
AIM
In the year to June2019, Frontier IP (FIPP) made an unrealised profit of £3.85m on its investee company portfolio, up from £2.06m last year. NAV was £17.6m at the end of the year. A placing has raised £3.8m at 50p a share. This will help to develop and commercialise investee companies.
Rose Petroleum (ROSE) is acquiring a 10% of Captiva Energy Holdings II (CEH) Inc’s 89.5% net working interest in the 317-acre McCoy lease in Colorado. It will also have an option to acquire up to a further 80% of that net working interest. CEH is owned by the chairman and chief executive of Rose. Drilling should happen within one year and there are discussions about a funding partner. Rosehas raised£1.25m at 1.1p a share to provide finance to develop assets. This is expected to be the first in a series of deals. The Morton family trust has taken a 3.84% stake in Rose.
Zoo Digital (ZOO) was hit by a faster than expected decline in Blu Ray and DVD business, but the core localisation and dubbing business did grow its revenues. A stronger second half is expected, and Zoo should return to profit this year. New streaming services from Apple and Disney provide a strong back drop for demand.
Shares (SHRE) subsidiary The Share Centre won two awards at the Shares Awards 2019. They were best stocks and shares ISA provider and best customer service.
Competitions organiser Best of the Best (BOTB) is trading ahead of market expectations. This has sparked a 2019-20 profit forecast upgrade of 16% to £2.2m. The interims will be published on 30 January.
Faron Pharma (FARN) has raised £7.48m at 190p a share. This will finance the clinical programme for potential cancer treatment Clevegen.
Defenx (DFX) is seeking to cancel its AIM quotation. Strand Hanson will continue as nominated adviser until the cancellation. BV Tech, which owns 67.1% of Defenx, will vote for the cancellation.
LIDAR wine sensor technology developer Windar Photonics (WPHO) has been hit by the slow conversion of interest into orders. Revenues in the ten months to October 2019 were €1.2m. Full year revenues will be below expectations. There is limited working capital available. BDO resigned as auditor during October. A share swap has left the interests of Windar director Jorgen Jensen with a 11.2% stake and O-Net Communications with 4.5%.
MAIN MARKET
Nanoco (NANO) has entered into early discussions with potential buyers of the company. This has sparked a review of strategic options for the business. That includes potential additional funding. There are also talks with potential customers in the displays and infra-red sensing markets.
InnovaDerma (IDP) executive chairman Haris Chaudry has stepped down the day after the beauty products supplier’s AGM. He has reduced his stake from 28.6% to 0.2%. The shares were sold at 52.4p each. Edale Capital has taken a 9.11% stake. Revenues have grown by 38% in the first four months of the financial year. A new skincare product will be launched in 2020.
Robbie Rayne does not want Gresham House Asset Management to be reappointed as external manager of LMS Capital (LMS) and he and his family intend to vote their 42% shareholding against the reappointment at a general meeting. He wants a return to internal management of the portfolio of assets and a £7.5m distribution to shareholders.
Standard list shell Contango Holdings (CGO) intends to try to raise £1m at 5p a share in order to help finance the acquisition of the Lubu coalfield project in Zimbabwe. Contango has advanced $310,000 to the project. If the acquisition does not go ahead by Christmas Eve, then the money should be returned.
Zenith Energy (ZEN) is planning an all share offer for Nordic Petroleum. One Zenith shares will be offered for every 100 Nordic shares. This will require the issue of up to 9.1 million shares. Nordic is involved in heavy oils in Canada. It has tax credits in Norway and a legal claim against a UK party, the rights to which will be retained by Nordic shareholders. A prospectus has been approved for an issue of up to €25m of Euro Medium Term notes at par.
Andrew Hore
Andrew Hore – Quoted Micro 5 August 2019
NEX EXCHANGE
Netalogue Technologies (NTLP) increased its revenues by 26% to £1.35m in the year to March 2019. Pre-tax profit jumped from £82,000 to £300,000 thanks to the ecommerce technology provider keeping overheads flat. There is £770,000 in the bank. Netalogue will consider paying a dividend when it reports its interim results. Netalogue focuses on the B2B market and it continues to win new customers.
European Lithium Ltd (EUR) has secured a A$10m finance facility in the form of convertibles from Winance Investment, which replaces the existing facility. The company is still seeking a strategic investor to help finance the development of the Wolfsburg lithium project.
None of the three Morgan Ashley extra care schemes that Ashley House (ASH) was expecting have closed. They could close over the next couple of months, but Ashley House was hoping to get the cash and it is investigating additional funding.
Trading in the shares of Equatorial Mining and Exploration (EM.P) was restored after the annual report was published. There was a £221,000 loss in 2018 but the business is very different now. A placing has raised £400,000 at 0.01p a share. The date for completing the acquisition of tantalum business Eastinco has been extended until the end of September. This is a part of the strategy to consolidate mining operations in Rwanda. Align Research believes that Equatorial could generate revenues of £1.19m this year, rising to £9.19m in 2020, which would enable it to make a pre-tax profit of £1.77m.
Social impact company Inqo Investments Ltd (INQO) increased its revenues from R23m to R23.8m in the year to February 2019, while additional finance income and fair value adjustments meant that the loss was cut from R5.99m to R2.5m. There was also an increased share of revenue from Bee Sweet Honey in Zambia. Trading is improving at Kuzuko Lodge with room rates and occupancy rising thanks to the weak Rand.
Coinsilium Group (COIN) says that its Gibraltar-based blockchain consultancy has signed a new advisory agreement with IOV Labs Ltd. This involves supporting the RSK Smart Contract Network and RSK Infrastructure Framework blockchain services. These are focused on Asia.
Eight Capital Partners (ECP) has launched a bond to raise up to €5m and it will be traded on the Vienna Stock Exchange. The interest rate is 7% and the redemption date is 26 July 2022.
AIM
Transport services provider Xpediator (XPT) has not performed as well as hoped this year and earnings estimates have been cut by one-quarter. There has also been some additional investment in the business, which will double central costs.
Information management software provider IDOX (IDOX) has raised £7m via a placing at 28.5p a share, which will be used to finance the acquisition of Northern Ireland-based Tascomi for up to £7.15m. Tascomi is a cloud-based software supplier to local authorities.
Beximco Pharmaceuticals (BXP) has launched a fifth product in the US. Blood pressure drug Nadolol is the generic equivalent of Corgard tablets. The market is worth $63m.
Elektron Technology (EKT) is selling its original Bulgin electricals business for £105m, £94m after costs, and intends to return a substantial amount of the cash to shareholders. Net cash will be £95m after the transaction. The company will change its name to Checkit and become a Software-as-a-Service business.
The Property Franchise Group (TPFG) says that its lettings brands grew revenues by 3% in the first half. Online estate agency EweMove increased revenues by 11%. Group revenues were £5.5m in the first half. Net cash was £2.8m at the end of June 2019. Ian Wilson will step down as chief executive at the end of 2020.
Property adviser Fletcher King (FLK) reported an improvement in full year pre-tax profit from £274,000 to £282,000 on slightly lower revenues. Management says that market conditions will make it difficult to maintain profitability, although there are substantial funds available for investment when the uncertainty ends. The total dividend is maintained at 1.75p a share. There is £2m in the bank.
Digitalbox (DBOX) subsidiary Daily Mash will publish video content from NextUp on its site. This will enable the company to generate advertising on the back of the videos.
MAIN MARKET
A US customer has released Nanoco (NANO) from the obligation to pay back £4.25m of capital funding. This relates to the investment in the Runcorn facility where demand for nanomaterials has not come through from the customer. The book value of the facility, after depreciation, is £3.7m and may be written down further, along with the value of some materials. The facility is available if Nanoco can secure demand from customers.
BATM (BVC) has completed the sale of its stake in a new fibre optic network being developed in Israel. This should generate cash of $3.4m and add $3m to profit. Net cash could be $38m bythe end of 2019.
Oil and gas company Zenith Energy (ZEN) has secured the financing it requires for its drilling programme. A placing in Canada has raised the equivalent of £1.2m at C0.04 a share.
Trading in the shares of Associated British Engineering (ASBE) has been suspended because it has not published its accounts. This should happen this week.
Standard list shell Landscape Acquisition Holdings (LAHL) still has more than $496m in cash and it has done well to preserve the cash it raised when it floated at the end of 2017. There is a broad remit, but the main focus is a property-related/backed business in Europe or North America.
Stranger Holdings (STHP) is still seeking to close a reverse takeover after its first deal fell through. The shell is in talks to acquire local government supplier HCS. There is no cash in the bank and Stranger has net liabilities.
Andrew Hore
Andrew Hore – Quoted Micro 17 December 2018
NEX EXCHANGE
Ecommerce software provider Netalogue Technologies (NTLP) moved into profit in the first half and had £648,000 in the bank at the end of September 2018. Revenues increased by £168,000 to £647,000, even though subscription-based pricing is reducing the initial revenues from B2B clients. A loss of £60,000 became a pre-tax profit of £142,000, helped by lower operating expenses.
Veni Vidi Vici Ltd (VVV) is acquiring a 51% stake in a licence in the Shangri La gold, silver and copper project in Western Australia for A$220,000, which is payable to Goldfields Consolidated in the form of 190,000 shares and A$20,000 in cash. The shares cannot be sold for three months. VVV will spend an initial A$300,000 over three years and Goldfields will receive a 10% management fee.
Coinsilium Group Ltd (COIN) has raised £367,000 at 4p a share and each new share comes with a two-year warrant exercisable at 7.5p a share. If the share price averages more than 15p for five consecutive days, then the company can require the warrants to be exercised.
Gastropubs operator Barkby Group (BARK) has signed heads of terms to acquire Northamptonshire-based upmarket car dealer Centurian Automotive Ltd. The most recent accounts were for a dormant company and shows £200 in the bank.
Quetzal Securities Ltd sold 6.75 million shares in Pelican House Mining (PHM) for 0.5p each and Eight Capital Partners (ECP) acquired 8.25 million shares at 0.491p each. Quetzal subsequently sold a further 6.75 million shares in Pelican shares, leaving a 13.2% stake, to Eight Capital at 0.5p a share, taking its stake to 15.3%.
Hydro Hotel, Eastbourne (HYDP) has declared an unchanged total dividend of 21p a share for the year to October 2018. An interim of 7p a share will be paid in January (ex-dividend 20 December) and a final dividend of 14p a share paid in May (ex-dividend 18 April).
Ace Liberty and Stone (ALSP) has appointed Northland as broker.
EPE Special Opportunities Ltd (EL.P) had a NAV of 200.95p a share at the end of November 2018. The shares are trading at 160p.
Construction consultancy Driver Group (DRV) reported a 2017-18 pre-tax profit of £3.8m, up from £2.5m, and it is returning to paying dividends with a 0.5p a share payment. Net cash is £6.9m, helped by a property disposal, and this could reach more than £10m by September 2019 even after dividend payments. The Diales expert witness business is becoming an increasingly important revenue generator and overall utilisation levels have improved. There has also been a focus on better margin work in the Middle East.
SigmaRoc (SRC) is in the process of acquiring precast concrete products supplier CPP Building Products for £15.2m, although the deal requires shareholder approval for share issues, so it will not happen until early January. CPP is based in north west England and fits well with the existing precast concrete business. In the year to August 2018, revenues were £20.9m and EBITDA was £2.6m. This year’s trading is in line with expectations. There are plans to refinance the convertible loan notes.
Nexus Infrastructure (NEXS) had already warned about delays to its utility connection contracts with housebuilders and the 2017-18 figures were slightly better than expected with flat pre-tax profit of £9.2m. Nexus has a strong order book and could increase its 2018-19 pre-tax profit to £10.4m. The new electric vehicle charging points division will take time to build up.
Advanced coatings provider Hardide (HDD) has benefited from an upturn in demand from the oil and gas sector. It is also getting nearer to obtaining its first aerospace orders. Hardide remains loss-making and this will still be the case next year as it continues to invest in increasing capacity in the UK and US as demand grows.
Curtis Banks (CBP) has purchased around 600 SIPPS with assets of £180m from Hargreaves Hale, which will continue to manage the assets. Curtis Banks will launch a new SIPP product in January.
Clinical trials manager Venn Life Sciences (VENN) is collaborating with Open Orphan DAC. The two firms will share resources in the orphan drugs market. Venn is raising £1m from a two-year loan note issue.
WH Ireland has upgraded its forecast for banknote authentication and brand protection technology business Spectra Systems (SPSY) for the second time. The underlying pre-tax profit forecast has been raised by 10% to $4.5m. The 2019 forecast, which had previously been upgrade by 16%, is maintained for the time being.
Kibo Energy (KIBO) says that its 60%-owned subsidiary MAST Energy Developments has an exclusive option to undertake due diligence and acquire three peaking power sites totalling 31.3MW. This would provide initial revenues for Kibo later next year. Kibo has renewed its memorandum of understanding with Mozambique-based electric utility Electricidade de Mocambique for the financing and operation of the Benga independent power project.
eServGlobal Ltd (ESG) says that 2018 revenues will be lower than expected due to weak trading at the PayMobile business and the failure to close orders. The PayMobile business may be sold and the focus will be the HomeSend remittances business.
NWF (NWF) says feeds demand was strong in the summer because of a lack of natural grazing. In contrast, the hot weather held back demand for fuels. A Solihull-based fuel distributor has been acquired. The food distribution business continues to trade at around capacity because of contract wins. The interims will be published on 29 January.
ReNeuron (RENE) has important clinical trial results coming up in the next 18 months. A retinitis pigmentosa treatment is in phase I/II trials and there should be data in mid-2019. A phase IIb trial for a CTX cell therapy-based treatment for chronic stroke is due to report by early 2020. There was £30.7m in the bank at the end of September 2018. Management is seeking partners to help it to make the most of its technology.
PhotonStar LED Group (PSL) has raised £100,000 at 0.02p a share and this will enable the board to assess new business opportunities.
Property adviser Fletcher King (FLK) is maintaining its interim dividend at 1p a share even though pre-tax profit has dipped from £148,000 to £132,000. Ratings appeals revenues were lower. There is £2.28m of cash in the balance sheet.
Kromek (KMK) has secured an initial contract with the US Department of Defense worth $2m over 12 months. The plan is to develop a proof-of-concept device for a vehicle-mounted biological threat identifier.
Crossword Cybersecurity (CCS) started trading on AIM on Friday and the share price ended the day at 272.5p. Crossword raised £2m at 290p a share.
Volex (VLX) is buying cable assemblies and connectors manufacturer GTK for £14.3m in cash and shares. in the year to July 2018, GTK generated a pre-exceptional operating profit of £1.7m. There was £1.3m in the bank. The deal is earnings enhancing.
African Battery Metals (ABM) has found it difficult to raise the cash it requires and trading in the shares has been suspended. The company wants to come to a settlement with creditors so that it could continue to trade.
Smaller company mergers and acquisitions business K3 Capital Group (K3C) is cautiously optimistic but the full year outcome will depend on the timing of deals. There could be a small dip in pre-tax profit to £7m this year and there could be a corresponding dip in dividend from 11.2p a share to 10.8p a share.
Telit Communications (TCM) says that it will not complete the sale of its automotive business until next year. Telit is expected to make a 2018 loss. Further cost savings are being made in the Internet of Things operations.
More bad news from Filtronic (FTC) with sales of Massive MIMO antennas lower than expected. The main customer has reduced its forecast demand. The capitalised development costs of £500,000 will be written off and options are being reviewed. The rest of the business is trading in line with expectations. Filtronic will be loss-making this year. Net cash was £2.3m at the end of November 2018.
Science Group (SAG) has ended its formal sale process because of stockmarket and exchange rate uncertainty. The strategic review continues. Trading is in line with expectations and the company will recommence the share buy back programme. Net cash was £6.4m at the end of November 2018.
Like-for-like sales growth has been slowing at DP Poland (DPP) and this means that progress in 2019 is unlikely to be as good as expected. This means that it will take longer to reach profitability. Rivals have been spending money on marketing and warm weather has also held DP Poland back. A full year trading update will be published on 29 January.
Taptica International Ltd (TAP) plans to spend up to $10m on buying back shares and it has already spent nearly £110,000. There was net cash of $42.1m at the end of June 2018.
Tristel (TSTL) says that the US regulatory process for its disinfection products is on track and interim pre-tax profit should be £2.2m.
TomCo Energy (TOM) has managed to secure £550,000 at 2p a share. The previous £532,000 placing at 8.5p a share was pulled. Laurence Read has become a non-executive director.
RA International (RAI) has won a five year contract worth up to $5.6m from a US corporate client in Central Africa.
MAIN MARKET
Circassia Pharmaceuticals (CIR) is moving to AIM and it has decided to exercise its option to acquire US rights to COPD treatment Tudorza from AstraZeneca. This deal should complete by the end of the year and it will trigger a payment of $5m. A further $20m is payable upon approval of Duaklir and then there is further deferred consideration of $100m.
Tex Holdings (TXH) has warned that second half earnings will be lower than anticipated due to delayed deliveries and reorganisation costs.
Cadmium-free quantum dots developer Nanoco (NANO) is on course to complete the expansion of its Runcorn facility by the end of 2018 with commercial volume manufacturing by the middle of 2019.
Lb-shell (LBP) is being wound-up because of potential litigation relating to before it became a shell. There is unlikely to be anything left for shareholders.
Giant Saint Technologies Ltd (GST) is installing a $1m data centre in Singapore.
Andrew Hore
Andrew Hore – Quoted Micro 23 July 2018
NEX EXCHANGE
Netalogue Technologies (NTLP) moved back into profit in the year to March 2018 and it is paying a dividend of 0.4p a share. The e-commerce technology company edged up revenues from £1.04m to £1.07m, while a loss of £46,000 was turned into a profit of £82,000, even after amortisation of £70,000, up from £20,000 in the previous year. Net assets of £770,000 include £502,000 of cash. There are a growing number of opportunities for this financial year.
Sativa Investments (SATI) has signed an IP sharing agreement with Canada-based Veritas Pharma. This could help with Sativa’s plans to grow medicinal cannabis and also help to choose a particular strain.
Equatorial Mining and Exploration (EM.P) has completed its investment agreement with ARQ Minerals and this formalises the commitment to work together in Nigeria. The St Leonard’s mine is supplying trial amounts of coal. ARQ helps to manage the mine and it is subscribing £50,000 each for two tranches of shares in the operating company, which will take is stake to 50%. ARQ will also own 1,000 million warrants exercisable at 0.02p a share. ARQ has committed to producing a minimum of 40,000 tonnes of coal and every 1,000 tonnes produced above this level will earn an additional 0.625% stake in the operating company, which can take the stake up to a maximum level of 75%. ARQ and Equatorial will be paid 10% of gross profit each month with the rest of the profit shared in line with their equity interests.
Welney (WENP) has announced a general meeting to vote on the appointment of Mark Jackson and Mark Chapman as directors.
Secured Property Developments (SPD) still had £627,000 in the bank at the end of June 2018 because it has not been able to find an investment at a realistic price.
Blockchain investment company Coinsilium Group (COIN) says that Malcolm Burne has been appointed as project adviser to the company’s blockchain platform development company TerraStream.
New director Melissa Sturgess has bought 9.23 million shares in Imperial Minerals (IMPP) at 1p each. That is a 29% stake.
Medicinal cannabis sector investment company High Growth Capital Ltd (HASH) had £522,000 in the bank at the end of March 2018 and it has raised £250,000 at 0.4p a share.
AIM
Parity (PTY) is still on track to achieve double digit profit growth this year. The IT recruitment and consultancy services provider remains modestly rated even though the share price has risen substantially this year.
Yu Group (YU.) says interim revenues increased by 69% to £35m. The energy supplier expects full year revenues to be at least £82m, which means that operating profit should rise by three-quarters. There is £18.2m in the bank.
Frontier IP Group (FIPP) says that portfolio company Tarsis Technology has entered into a collaboration with a major crop protection products company. The company will provide the funds to further develop the Tarsis technology to deliver chemical pesticides and fungicides in a more controlled way. In return the company gets exclusive rights to particular agrochemicals usage and Tarsis would get royalties from commercial products. Frontier IP is lending Tarsis £150,000 in return for share options.
Consumer healthcare business Venture Life Group (VLG) is raising £18.75m at 40p a share to help finance the acquisition of Dentyl Dual action mouthwash and BB Mints for £4.2m and repay £3.7m of convertible loan notes. The remaining cash will be used for further acquisitions. The share issue more than doubles the number of shares in issue.
Odey has withdrawn its general meeting requisition at Tungsten Corporation (TUNG) following the appointment of Anthony Bromovsky and Duncan Goldie-Morrison to the board.
600 Group (SIXH) has offloaded its pension scheme to specialist insurer Pension Insurance Corporation. The scheme will be wound up and surplus funds after tax will be returned to the machine tools supplier. That could be up to £4m. Full year revenues grew from $58.8m to $66m, while underlying pre-tax profit improved from $2.65m to $3.05m. That excludes the gain on the sale of ProPhotonix (PPTX) shares.
Integumen (SKIN) is raising £700,000 at 0.65p a share and renegotiated the deal with food supplements supplier Cellulac so that it will acquire a 9.35% stake. Cellulac’s chief executive and chief operations officer will join Integumen in those roles. Cellulac will grant Integumen a licence to sell its products in certain territories.
A positive trading statement from audio visual equipment distributor Midwich Group (MIDW) has led to a forecast upgrade. Earnings per share forecasts have been raised by 3% for each of the next three years. The 2018 profit is expected to be £28.3m and earnings per share 27.6p. The interims will be published on 11 September.
EKF Diagnostics (EKF) has signed a manufacturing agreement with Oragenics Inc. EKF will supply drug substances for the customer and this will boost next year’s profit by 5%.
LiDCO (LID) has signed a distribution deal with a Chinese supplier of blood monitoring cuffs and this will help to replace the lost income from the Argon distribution contract. It may take time to build up sales, though.
Woodford Investment has increased its stake in superyacht painting and maintenance services provider GYG (GYG) to 21.5%. This comes at a time that Old Mutual has been selling down its stake after the recent profit warning.
Corporation tax software supplier Tax Systems (TAX) has grown its recurring and non-recurring revenues in the first half of 2018 and total revenues were 14% higher, which includes 9% organic growth. Net debt is down to £17.5m.
Synectics (SNX) had net cash of £9.1m at the end of May 2018. The surveillance technology company increased interim revenues by 3% to £34.7m thanks to strong demand from the gaming sector. Underlying profit improved from £1.3m to £1.5m. Stockdale has maintained its full year profit forecast at £3.1m.
EMIS (EMIS) says that its primary care business is sorting out its problems and the net cash grew to £32.3m at the end of June 2018. The health IT technology supplier says that the business has grown in the first half and still expects an improvement in full year profit. The share price has recovered since the disappointing trading statement earlier this year.
Ken Kroeger has become permanent chief executive of driver monitoring systems technology developer Seeing Machines (SEE) and he will had over the chairmanship to Jack Boyer at the beginning of 2019.
MAIN MARKET
Investment company Athelney Trust (ATY) says that its NAV dipped to 264.2p a share at the end of June 2018, although this was partly due to the payment of the final dividend of 8.9p a share. Excluding that, there was a 4% decline. There was an improvement on the net return on ordinary activities from £110,000 to £125,000, but the loss in the capital part of the income statement was slightly higher than that revenue gain. The total value of investments was £5.61m and NAV was £5.7m. During the first half, shareholdings in Countrywide, Debenhams, DX, Juridica Investments, HC Slingsby and Sprue Aegis were sold.
Avation (AVAP) has acquired a second new Airbus A220-300 aircraft and leased it to airBaltic.
Flying Brands Ltd (FBDU) is raising £500,000 at 2.5p a share in order to help finance obtaining FDA clearance for StoneChecker software and design a cloud-based interface, as well as boost commercial operations. Subsidiary Imaging Biometrics is involved with a phase II trial that will use its IB Rad Tech technology to process data from 20 sites to determine how well dynamic susceptibility contrast magnetic resonance imaging in measuring the effectiveness of brain tumour treatment.
Andrew Hore
Andrew Hore – Quoted Micro 18 December 2017
NEX EXCHANGE
Wine and beer maker Chapel Down Group (CDGP) has raised £18.53m at 50p a share and could raise up to £1.47m more via a one-for-35 open offer at the same share price. The latest acceptance date is 5 January. Chapel Down will invest in an additional 500 acres of vineyard land and more money will be put into marketing. The family interests of Michael Spencer have invested in the fundraising. Nigel Wray has invested a further £500,000 but his stake has fallen to 16.5%, prior to the open offer. This year’s turnover is expected to be at least £11.6m and management expects growth to accelerate after the additional investment. New gin and vodka brands have been launched and the Ashford brewery should be up and running by the end of 2018.
Ashley House (ASH) has signed a joint venture with Morgan Sindall to develop extra care and supported living housing. This deal sparked a 55% increase in the share price to 14.75p. Morgan Sindall is paying £4m in total for the 50% stake in the joint venture, with £1.5m of this dependent on certain completion factors. It should all be paid by the end of 2018. The Ashley House housing division will complete two existing schemes and then own 50% of the joint venture, which will develop any further schemes. This additional cash will help to accelerate the growth of this part of the business. There is already a pipeline of potential developments. Ashley House will make an interim loss but expects to profitable for the full year.
e-commerce technology provider Netalogue Technologies (NTLP) reduced its interim loss as revenues grew from £317,000 to £479,000. There has been a lower number of larger projects, particularly in the food and drink sector, and Netalogue would have been profitable without the investment in the company’s technical team. A move towards a SaaS-based model could hold back short-term revenues.
AIM-quoted, spread betting business London Capital Group (LCG) has joined the NEX Exchange Growth Market on 15 December. Glio Holdings Ltd owns 78.1% of London Capital.
Early Equity (EEQP) has made two more investments. It has invested £60,000 in TruSpine Technologies Ltd, which plans to join AIM next year. TruSpine has developed the Faci-LOK and Cervi-FAS minimally invasive spine stabilisation devices and the VOSC catheter atherosclerosis treatment product. The plan is to gain FDA authorisation for Faci-LOK next year and then float. TruSpine is valued at £15m. A £35,000 investment in the profitable corporate finance and asset management business Farina Investments (UK) Ltd has been made ahead of a flotation. Early Equity raised £115,000 at 0.6p a share.
Hydro Hotel, Eastbourne (HYDP) has declared an unchanged total dividend of 21p a share for the year to October 2017.
Lombard Capital (LCAP) says that it is progressing towards the issue of an investment bond that will be quoted on a recognised bond market. There was nearly £60,000 in the bank at the end of September 2017.
Coinsilium Group Ltd (COIN) raised £720,000 at 9p a share and this will be used to invest in blockchain companies and expand the company’s own advisory business. Last June, £250,000 was raised at 2.2p a share. Coinsilium has been appointed as an adviser to token generation event of Hdac Technology AG, which is developing payment platforms for connected devices.
Equatorial Mining and Exploration (EM.P) has raised £5,000 at 0.01p a share and issued further shares for convertible loan notes and warrants at the same price. Valiant Investments (VALP) has raised £34,000 at 0.1p a share. Via Developments (VIA1) has issued a further £50,000 of debenture stock.
AIM
Satellites owner Avanti Communications Group (AVN) has revealed a financial restructuring that could put it on a firm footing. Certainly, without this restructuring the outlook would be bleak. The $557m of 2023 loan notes will be converted into two billion shares, while investors in the 2021 loan notes are being asked to accept and extension of the term and lower income. Annual interest charges would still be $36.6m
Best of the Best (BOTB) says that it expects to pay remote gaming duty and this will knock £300,000 from profit this year and £600,000 next year. This year’s pre-tax profit is forecast to decline from £1.5m to £1.4m, with a further fall to £1.2m in 2018-19. Net cash is expected to be £2.6m at the end of April 2018. The company is still claiming £4.5m of VAT so this could provide a cash boost in the future.
Plant Impact (PIM) is suffering continued delays in demand for its Veritas product in Brazil. A new partnership with Albaugh Brazil will commercialise other Plant Impact products in Brazil. This has sparked the decision to consider putting the company up for sale. Cash is running out and a further £7m would need to be raised to keep the company going well into 2019.
Van Elle Holdings (VANL) has defeated the five resolutions proposed by former chairman Michael Ellis at last week’s general meeting.
Recruitment and outsourcing services provider Servoca (SVCA) reported better than expected full year figures. Pre-tax profit improved from £3.5m to £3.9m. Education and healthcare will be the main growth areas.
Evgen Pharma (EVG) is collaborating with King’s College London to examine the use of SFX-01 as a therapy against ischaemic stroke. Multiple doses will be assessed and this will take nine months. This could lead to a clinical trial that might be funded by a charity organisation associated with King’s College.
Range Resources Ltd (RRL) returned to AIM following the reverse takeover of producing oil and gas assets in Trinidad from Trinity Exploration and Production (TRIN).
Defence equipment and services supplier Cohort (CHRT) had a weak first half but it expects to more than make up for that in the second half. There was a mixed performance with some parts of the business finding trading conditions difficult. The order book is worth £132m. Full year pre-tax profit is forecast to improve from £14.5m to £15.4m.
Savannah Resources (SAV) says that it has discovered high-grades and large intercepts in the latest drilling at the Mina do Barroso lithium project. A maiden mineral resource estimated could be announced before the year end with potential for upgrades from further drilling.
Daniel Stewart expects China New Energy (CNEL) to report a jump in pre-tax profit from £400,000 to £2.6m in 2017. The shares are trading on less than four times fully-taxed 2017 prospective earnings. The company constructs bioenergy plants that convert feedstock into ethanol. The most recently reported order book was worth £28.7m with the orders due to be fulfilled in 2017 and 2018. Demand from China is strong and there is also international business.
Coal bed methane projects developer Tlou Energy Ltd (TLOU) has secured a listing on the Botswana Stock Exchange and trading commenced on 13 December. Tlou raised £2.4m at 11p a share.
Synairgen (SNG) has secured a £5m cash injection from a deal with Pharmaxis, which will take over the development of LOXL2 in fibrotic diseases. Synairgen will also receive 17% of any partnering revenues. This compares with £3m invested by Synairgen in LOXL2. The cash will enable Synairgen to fund the phase IIa study for SNG001 for COPD. The trial should be complete by the end of 2018.
New management has turned around the performance of contract disputes and expert witness services provider Driver (DRV) and it moved back into profit last year. Cost savings have been made and the focus is on profitable business rather than just growing revenues. Cash collection is improving with net debt down to £200,000 and there is likely to be net cash of £2m in one year’s time. This year’s revenues are likely to be flat at around £60m but pre-tax profit should improve from £2.5m to £2.7m.
One month after its previous trading statement IDOX (IDOX) says that an internal audit has found that it should not recognise all the revenues that it originally intended to. This will knock £3m off profit for 2016-17. The software company reported its full year figures in December but the attest full year figures have been delayed until February. Chief executive Andrew Riley is away ill and former boss Richard Kellett-Clarke has taken over on a temporary basis.
Abzena (ABZ) reported interims in line with expectations. Growth came from the chemistry and manufacturing businesses. This is a period of capital investment as various parts of the company move to new facilities. The ADC master services agreement with a US biotech will yield at least $5m in services revenues over the next 12 months. This deal is shared between chemistry and manufacturing divisions.
Surface coatings provider Hardide (HDD) is starting to improve its gross margin as demand improves. There is even some signs of improved demand from the oil and gas sector. Even so, Hardide remains loss-making but it still has not gained any orders from Airbus. It raised £2.5m for capital investment earlier this year. A new reactor will be installed in the US in this financial year and another next year.
MAIN MARKET
Titon Holdings (TON) continues to benefit from strong demand for its window ventilation components in South Korea. The majority of profit comes from South Korea and that is where all the growth came from last year as the contributions from the UK and North America fell. In the year to September 2017, revenues were one-fifth ahead at £28m, while pre-tax profit improved from £2.14m to £2.49m. The dividend growth of 20% to 4.2p a share is ahead of earnings per share growth. A pre-tax profit of £2.81m is forecast for this year.
Avation (AVAP) has secured an initial $100m revolving facility to finance the acquisition of aircraft.
Sealand Capital Galaxy Ltd (SCGL) has secured an agreement with AIM-quoted MySQUAR (MYSQ) for the distribution of its games on MySQUAR’s platform and MySQUAR’s games on the Huawei InTouch platform. This is initially a two year deal.
Standard list shell Stranger Holdings (STHP) says that it expects to complete the acquisition of biogas and renewable energy business Alchemy Utilities. A five-year £20m bond is being raised.
Andrew Hore
Quoted Micro 31 July 2017
NEX EXCHANGE
Kryptonite 1 (KR1) has invested $100,000 in the initial coin offering of the Omisego project, which is being developed to enable decentralised payments and remittances, acquiring 365,199 tokens. A further $200,000 has been invested in a similar offering by the Insurex platform, a marketplace for insurance products, and $100,000 invested in tokens in the Agrello project, which is building an artificial intelligence-based interface for smart contracts.
Good Energy (GOOD) has agreed with Ecotricity that there should be a short deferral of the latter’s general meeting requisition. Good Energy still believes that “any nominee remunerated by Ecotricity” that joined the board would not act independently because of a conflict of interest. An appeal for planning permission for the Big Field onshore wind farm in Cornwall. Good Energy has switched its nominated adviser and broker from Arden to Investec.
e-commerce technology provider Netalogue Technologies (NTLP) says that strong second half trading made up for a weak first half. In the year to March 2017, revenues slipped from £1.12m to £1.04m and made a loss before restructuring coats of £11,000 compared with a pre-tax profit of £70,000 the previous year. This does mean that the second half profit was £221,000. Cash in the bank increased from £549,000 to £614,000, mainly due to lower debtors. There was a net increase in intangible assets of £67,000. New clients include AIM-quoted Conviviality, Enterprise Inns and Marstons. The full benefits of management changes and improved marketing are still to show through in the figures.
Ecovista (EVTP) has sold its subsidiary that owns 2 Willow Cottage and adjoining land near to Stanstead Airport for its book value of £400,000. However, the original cost of the investment was £500,000 and management was hoping to gain planning permission for car storage. It is unclear whether the former subsidiary still owns the same assets or whether any have been transferred elsewhere. The cash will be reinvested in other property.
V22 (V22O) has received planning permission for Silvertown Studios at the Royal Docks in London. V22 owns 51% of the company developing the studios, along with the landowners the Greater London Authority and The Silvertown Partnership, and a private investor owns the rest. There will be up to 200 workspaces and exhibition spaces. This development is part of £3.5bn Silvertown regeneration project.
Online games company Ganapati (GANP) has agreed a debt for equity swap with major Japanese shareholders. Shares will be issued at 52p each and £610,000 of debt will be capitalised. The current share price is 55p (45p/65p).
AIM
Morning sickness treatment Diclectin has not gained marketing authorisation from the Medicines and Healthcare products Regulatory Authority in the UK, which is a blow to the strategy of Alliance Pharma (APH). The effectiveness of Diclectin is being questioned in Canada, where around 50% of pregnant women are prescribed the drug, and it is claimed that there are flaws in the original study of the treatment from four decades ago. In 2015, Alliance in-licenced Diclectin for the UK, and subsequently nine other countries, for £1.5m. Alliance hoped to begin sales in the UK by the end of the year and it was estimated that the potential annual revenues in all the in-licenced markets were £40m.
Fiserv has postponed the court meeting for its 2.9p a share bid for mobile banking technology developer Monitise (MONI) because some substantial shareholders have been unhappy about the level of the bid. The Monitise board still recommends the bid, which values the company at £70m. Full year revenues have fallen from £67.6m to £50.9m and the trend is set to continue. The new FINkit platform has yet to secure a contract.
Mortice Ltd (MORT) reported full year revenues 37% higher at $181m and more than trebled pre-tax profit of $5.35m. Net debt was $13.5m at the end of March 2017. Facilities management services grew revenues the fastest and it moved into profit but security revenues also grew strongly. Around three-fifths of the growth in revenues came through acquisitions but there was significant organic growth particularly in the core Indian business.
Minds + Machines Group (MMX) says that renewal rates for .vip have been 75%. There were 317,000 renewals and new registrations have risen by 49% since the beginning of the year. The .vip suffix accounted for 59% of 2016 gross billings and finnCap estimates that renewal revenues could be $6.1m this year. There will be more news about the strategic review with the interims in September.
ANGLE (AGL) says that there were positive results from a 400 patient ovarian cancer study using the Parsortix liquid biopsy technology and a breast cancer clinical study should report in the first half of next year. There are also pilot studies for other cancers. Any single cancer could provide a significant market for the Parsortix diagnostic technology. Sales for research use are taking time to build up but revenues did improve from £361,000 to £398,000. At the end of April 2017, there was £5.5m in the bank with more than £1m of R&D tax credits due to be received. That cash could last one year but this will depend on how quickly the research revenues grow and if there are any potential deals.
Crop enhancement technology developer Plant Impact (PIM) is raising £4m at 31p a share, which was a 6% premium to the market price. This will more than double the existing cash balance of £3.2m. The cash will be spent on R&D and product development.
Gear4music (G4M) says trading is in line with expectations. The musical instruments retailer expects second half weighted revenues this year. First half revenue growth will be modest but full revenue growth of 42% is anticipated. Investment in new European distribution centres will increase costs, including depreciation, and this is forecast to lead to a decline in full year pre-tax profit from £2.7m to £2.4m this year, before increasing to £3.3m the following year.
Quartix Holdings (QTX) reported flat interim revenues of £11.5m and pre-tax profit of £3.4m. The interim dividend of the telematics business has been increased by 9% to 2.4p a share and a special dividend is expected later in the year. Insurance business has recovered so full year revenues could be slightly higher, while pre-tax profit could be flat at £6.7m.
Conroy Gold & Natural Resources (CGNR) is holding a requisitioned general meeting in Dublin on 4 August. Patrick O’Sullivan, who owns 28% of Conroy, wants to remove six directors: Seamus FitzPatrick, James Jones, Dr Sorca Conroy, Louis Maguire, Michael Power and David Wathen and replace them with Patrick O’Sullivan, Paul Johnson and Gervaise Heddle. The three directors not affected by the requisition are Professor Richard Conroy, Maureen Jones and Professor Garth Earls. The indicated resources at Clontibret in Monaghan have been increased by 23% to 310,000 ounces of gold.
Interactive entertainment company Tencent has taken invested £17.7m in Frontier Developments (FDEV) and it is expected to promote games developed by the AIM company. The 9% stake was acquired at 523.2p a share.
MAIN MARKET
Specialist smaller companies-focused investment trust Athelney Trust (ATY) increased its NAV by 7% to 268.7p a share by the end of the first half of 2017. This is after the payment of a final dividend of 8.6p a share. Athelney nearly doubled its money on Lavendon when it was taken over and it has also sold its stakes in Beazley, Hiscox and Novae. New investments include The PRS REIT, Murgitroyd, Safecharge, Hostelworld, Ibstock, Crest Nicholson and Debenhams. According to the company the uncertainty in the country and the economy means that: “A sensible aim would be to try to hang onto the gains made in the first half”.
Senterra Energy (SEN) is being readmitted to the standard list on 31 July as United Oil & Gas (UOG) following the acquisition of UOG Holdings.
Biodecontamination services provider Bioquell (BQE) says that its full year profit will be better than expectations. Bioquell increased its interim revenues by 19% to £14.3m and pre-tax profit more than trebled to £1.4m. Net cash was £11.8m at the end of June 2017, compared with a market value of just over £46m at 199.5p a share.
Sealand Capital Galaxy Ltd (SCGL) has signed a memorandum of understanding to acquire at least 51% of China-based mobile games developer Rightyoo. The acquisition discussions are still at an early stage and the deal has to be approved by the Chinese authorities. Rightyoo has an agreement with communications technology firm Huawei to help it to distribute its games. Management believes that the deal will help to add traffic to Sealand’s social networking platforms.
Andrew Hore
Quoted Micro 27 March 2017
NEX EXCHANGE
Brewer Adnams (ADB), which sponsored last year’s Tour of Britain cycling event, continues to invest in its brewery with beer sales moving above 100,000 barrels in 2016. More of that beer is being sold in kegs. The decline in sterling increased the price of hops and wine, which hit the retail operations. In 2016, revenues improved from £65.7m to £70.3m, while pre-tax profit increased from £4.07m to £5.02m, predominantly down to a rise in asset disposal gains from £625,000 to £1.43m. Adnams sold the UK distribution rights to Lagunitas beer. The NAV has fallen to £27.5m because of an increase in the pension liability. There is a dividend of 150p per B share and 37.5p per A share. This year there will be the first beer duty tax increase in four years.
Investment company First Sentinel (FSEN) joined the NEX Exchange growth market on 24 March and pre-IPO £633,000 was raised at 10p a share. That is before costs of £130,000. The founding shareholders own 99.2% of the company with 50,000 shares issued to the market maker. The company’s strategy is to provide investments to small companies with an opportunity covering more than 1,000 quoted companies identified in the UK, Europe, Asia and Australia. First Sentinel is run by former Rangers International Football Club director Brian Stockbridge and the main shareholders are two other former directors of Rangers or its subsidiaries, James Easdale and Sandy Easdale. The company is employing Stockbridge’s corporate finance business First Sentinel Corporate Finance, which will receive an annual fee of 1% of First Sentinel’s assets under management (payable at 0.25% each quarter) plus performance fees based on 20% of pre-tax profit each year when the gross return on capital is less than 20% or 40% of pre-tax profit if the gross return is more than 20%. First Sentinel will be paid 50% of deal fees generated by First Sentinel Corporate Finance from any investment transactions involving the NEX-quoted company. Stockbridge and his partner Aimee Freeding each receive £2,000 a month from First Sentinal. The whole board will be paid £72,000 a year in fees. There are currently 6.36 million shares in issue, with nearly as many shareholder warrants, but the company intends to issue up to 100 million more shares. Stockridge and Freeding have director warrants that enables each of them to receive 10% of the enlarged share capital at the time they are exercised – they each currently own 8.1%. Fellow director Tom Dignall has directors warrants over 5% of the enlarged capital at the time of exercise. The warrants are exercisable over five years. Matthew Rice is the independent director and he has no interest in the present or future share capital. First Sentinel is an investment for fans of Stockbridge.
Angus Energy (ANGS) expects to issue a first tranche of bonds on or around 27 April. Angus plans to issue up to £3.5m secured bonds maturing on 30 June 2022 and these will be quoted on NEX.
A rise in the zinc price has provided further impetus for IMC Exploration (IMCP). A comprehensive zinc works programme on its licences that are between the existing Tynagh and Silvermines deposits in Ireland.
Imperial Minerals (IMPP) is more optimistic about the prospects of the resources sector than one year ago. There was £66,000 in the bank at the end of 2016 and since then Imperial has sold its remaining shares in North River Resources for £30,000.
MetalNRG (MNRG) has raised £295,000 at 0.5p a share – every two shares have a warrant to subscribe for one share at 1p – and directors have exercised options at the same price that provide a further £47,500 – every option exercised sparks the issue of a bonus option exercisable at 0.75p a share. This takes the cash in the bank to £480,000, which will be used as working capital as the company seeks suitable investments. Gervaise Heddle has become a non-executive director. Heddle already owns 9.51 million shares in MetalNRG and he will not receive any pay until the company’s NAV is more than £1.5m but he has been issued 3 million options at 0.5p each.
Ecommerce technology provider Netalogue Technologies (NTLP) has signed an agreement with Sage. Netalogue’s ecommerce platform complements Sage’s X3 ERP technology and the deal could help Netalogue to access new customers.
NQ Minerals (NQMI) has raised a further £32,000 at 8p a share.
AIM
Gatemore Capital Management has requisitioned a general meeting at DX (Group) in order to remove Bob Holt and Paul Murray from the board. The plan is to replace them with Ron Series (as chairman), Paul Goodson, Russell Black and Lloyd Dunn. Gatemore is an activist investor that has been involved with French Connection and Gym Group in recent months. Gatemore’s stake in the parcel deiivery company rose above 3% six months ago and the stake has been built up to 11.3%.Furious 7 live streaming film
Pebble Beach Systems (PEB) formerly Vislink, has taken a reduced payment for its broadcast technology division. Former AIM company xG Technology Inc, which has spent more than a decade failing to develop its own business into a profitable operation, is paying $2m of the $4.9m it still owed in the agreement. Net debt has been reduced from £17m to £12m via the disposal and there is potential to obtain $2m from a creditor. The problem is that the remaining software business is too small to prosper with that level of debt.
SalvaRx Group (SALV) is investing in Rift Biotherapeutics Inc, which is developing antibodies for use in oncology. An initial investment of $1m will give SalvaRx a 30% stake in Rift. If the company achieves milestones then SalvaRx could invest a further $1.5m at the same valuation and swap its shares for the shares in Rift held by the other shareholders.
Tracsis (TRCS) had already warned that its interims would be weak. In the end, revenues were one-fifth higher at £15.6m and underlying profit was 11% higher at £3.1m.The cash balance improved to £12.7m. The interim dividend was raised by one-fifth to 0.6p a share. Management is still confident that the second half will be significantly stronger.
Caledonia Mining (CMCL) increased its production, cut costs and received a higher gold price in 2016. The Blanket mine increased gold production from 42,804 ounces to 50,351 ounces and all in sustaining costs fell from $1,037/ounce to $912/ounce. The gold price achieved rose from $1,139/ounce to $1,232/ounce. Production and costs are set to continue to improve. There was $23m generated from operations last year, more than enough to cover capital expenditure and dividends. The annualised dividend is running at 5.5 cents.
Starcom (STAR) continues to be accident prone. Last year, it could not satisfy demand for Watchlock Pro because parts were not delivered. This meant that full year revenues were flat at $5.13m although the post-tax loss fell from $1.76m to $1.36m. There was $35,000 in the bank at the end of 2016.
MAIN MARKET
Falcon Acquisitions Ltd (FAL) is acquiring two businesses involved in technology, distribution and content operations in the Over The Top television sector. Falcon has raised £4m at 25p a share to provide finance for the enlarged business. The plan is to offer a platform to customers as well as its own content via its own channels. The shares should be readmitted on 27 March. The company will be renamed Falcon Media House Ltd.
Telecoms company Toople (TOOP) is finding it difficult to win business. Apparently, Toople’s main offering to small businesses is not as competitive as it thought so it is focusing on its cloud-based telephony service, which is building up its revenues. The share price has slumped from 8p to 3.25p in less than one year. According to last year’s prospectus, chief executive Andrew Hollingworth gets £120,000 per year (as well as 35 days holiday plus bank holidays) while he acquired his 26 million shares in Toople at 0.0667p each. Finance director Neil Taylor gets £60,000 a year for a two day week. In 2015-16, gross profit was £78,000 while the cash outflow from operations was £1.42m. It appears that the outflow should slow in the first half of this financial year but it will still be significant. There was £744,000 in the bank at the end of September 2016 but there was also debt of £469,000. Given the vast overheads for a company of this size it is no surprise that Toople needs to raise working capital. The trading statement also says that the board “continues to focus on tight cost control” and hopefully they will be able to think of some excess costs that could be reduced.
Books publisher Quarto Group (QRT) has sold its 75% stake in Hong Kong-based Regent Publishing Services for $7m – a gain of $3.3m on book value.
Andrew Hore
Quoted Micro 16 January 2017
NEX / ISDX
Ecommerce technology provider Netalogue Technologies (NTLP) has secured three contracts in the drinks sector. Brewer Marston’s, pubs operator Enterprise Inns and drinks wholesaler Matthew Clark have bought ecommerce portals. They all used the iTradeNetwork online ordering system previously but this will no longer be available from August so this provides a significant opportunity for Netalogue.
Goldcrest Resources (GCRP) has raised £217,000 at 0.25p a share to provide working capital so that it can execute its plans. Further shares are being issued to Pelamis Investments Ltd for the conversion of a £70,000 convertible loan note at 0.25p a share and from issuing 48.52 million shares at the same price to settle £121,000 of liabilities. Goldcrest plans to seek further gold projects. Peterhouse has been appointed as corporate adviser and broker.
NQ Minerals (NQMI) has secured funding of A$4m and raised £400,000 at 8p a share. The loan is secured on the assets of a subsidiary and has an annual interest charge of 12%, payable quarterly. There is a fee of A$35,000. Greg Lane, who has experience in mine development, has joined the board. He has four million options exercisable at 7p a share.
AIM
This year will be an important one for battery technology developer Ilika (IKA). There are discussions with potential licensees for solid state battery technology and there should be deals during 2017. Stereax M250 batteries are being assessed by a number of potential customers. In the six months to October 2016, revenues improved from £254,000 to £329,000 but the operating loss edged up to £2.2m. Full year revenues should grow from £600,000 to £2.5m, which is partly underpinned by recent grant wins. Losses are expected to continue for the time being. The balance sheet is strong and there should be £6.7m in cash at the end of April thanks to cash raised late in 2016.
Packaging supplier Robinson (RBN) says that trading is still tough but it has gained planning permission on part of its surplus property portfolio. The outline planning permission covers 23 acres on two sites. House broker finnCap believes that this could double the value of the land from £5m to £10m – equivalent to 60p a share. The disappointing trading and investment in sales and marketing has led to a 12.5% downgrade in the 2016 pre-tax profit forecast to £2m, and the 2017 forecast has been cut to £2.1m.
Somero Enterprises Inc (SOM) has sparked another forecast upgrade with its latest trading statement. A strong finish to the year means that the earnings per share for 2016 have been upgraded from 22.7 cents to 24.4 cents. There was good demand for newer products and larger concrete levelling machines. Net cash is expected to be $18.7m and the dividend payout ration has been increased from 30% to 40% of net adjusted income. There is even potential for a special dividend.
Cloud-based telecom services provider Cloudcall (CALL) increased its full year revenues by 50% to £4.9m with a large chunk of this growth coming from existing customers. Around 400 customers were added each month last year. There is cash of £3.2m. The expected 2016 loss of £3.5m is similar to the year before but it is expected to be reduced in 2017. Around 85% of revenues are recurring or repeating.
Focusrite (TUNE) says trading continues to be strong and cash is building up. Foreign exchange movements have been favourable. Timothy Carroll has taken over as chief executive.
Tertiary Minerals (TYM) is evaluating acquisitions so that it can generate revenues and profit earlier than would be the case with its current fluorspar interests. Legal changes in Sweden and poor market conditions for fluorspar has delayed progress with the existing assets.
Caledonia Mining Corporation (CMCL) says that its Blanket mine beat production expectations for 2016. There was an 18% increase in fourth quarter gold production (year-on-year) and 2016 gold production was 18% higher at 50,351 ounces. Caledonia owns 49% of Blanket mine. In 2017, production of 60,000 ounces is expected and the mine cost is estimated to be lower than in 2016 at $600-$630/ounce. Investment in infrastructure are improving production but there is a lot more to come and annual production of 80,000 ounces of gold is anticipated in 2021.
Evgen Pharma (EVG) has received a positive interim safety review from the Data Safety Monitoring Board for the use of SFX-01 to treat subarachnoid haemorrhage. This means that the phase II trial will proceed and results should be available in the first half of 2018. So far, 26 patients have enrolled out of a total of 90 people.
Pensions services provider Mattioli Woods (MTW) says that revenues are growing faster than expected. Profit growth has been held back by investment in the business but finnCap has raised its earnings per share estimate from 30.5p to 32.5p. The interim figures are due to be published on 7 February.
Edenville Energy (EDL) has started trial mining at its Rukwa coal project in Tanzania and commercial mining should begin by the end of the first quarter of 2017. The trail mining is generating revenues.
The old guard continues to depart from 1Spatial (SPA) with the latest being Marcus Yeoman.
MAIN MARKET
Canadian oil and gas explorer and producer Zenith Energy Ltd (ZEN) joined the standard list on 11 January. The company, which operates onshore oil and gas fields in Azerbaijan, Argentina and Italy, is already listed on the TSX Venture Exchange. Zenith also produces electricity in Italy. AIM-quoted and NEX-quoted Gunsynd (GUN) has invested £524,000 in Zenith.
Andrew Hore
Quoted Micro 26 December 2016
ISDX / NEX
Diversified Gas & Oil (DOIL) has offered to repurchase its bonds for 105p each or, if the bondholders are outside of the US, they can receive ordinary shares at a discount of 20% to the AIM placing price. The AIM flotation has been delayed until late January and Diversified Gas & Oil plans to raise $40m – it had previously been $40m. The closing date for the offers is 13 January. This means that bondholders will receive interest until the end of 2016. So far, holders of 74% of the bonds have opted for the cash alternative and 1% the share alternative.
Western Selection (WESP) has increased its stake in AIM-quoted Bilby, following a profit warning and accounting adjustment announcement by the gas and electrical installation services provider. Western Selection bought 62,192 shares at 51.18p each, taking the stake to 6.04%. There is still £451,000 in the bank
Netalogue Technologies (NTLP) slipped into loss in the six months to September 2016. Revenues slumped from £552,000 to £317,000 and the ecommerce technology developer swung from a profit of £38,000 to a loss of £232,000. There is still £451,000 in the bank despite a cash outflow. Andrew Robathan has been appointed as chief executive. Deal activity has picked up but markets’ are still uncertain and business may take longer to come through than in the past.
Chinese medicines supplier MiLOC Group Ltd (ML.P) has extended its agreement with its skincare products distributor in Taiwan. The agreement will continue until the end of March 2017. The launch of a range of hair care products. Has been delayed until April. MiLOC has paid the first instalment of £320,513 as part of the endorsement agreement with BrandKing, while the same amount is payable by April.
Forbes Ventures (FOR) has taken an option over a potential investment in Primus Care (www.primuscareplc.com), which manages residential care services for children and the elderly. Forbes has the right to acquire £500,000 of convertible loan notes with a conversion price of 0.3p a share, lasting 18 months. The option expires on 30 December 2016.
CyberOwl, a spin-off from Crossword Cybersecurity (CCS), has raised an additional £510,000. The cash will fund further development of an early warning system for network security for uses such as the internet of things.
AIM
The award for the latest pre-Christmas warning announcement goes to TLA Worldwide (TLA). The sports agent and marketing business sneakily put out its announcement at 6.26pm on 23 December, having sadly been denied the chance to put it out on Christmas Eve because that is a Saturday. Poor ticket sales for the Australian 2016 International Champions Cup football tournament in July means that the agreement to promote the tournament has been ended. There is talk of another football event to replace this. Second half trading in the US sports management business was not as good as expected. This means that EBITDA will be 15% below previous expectations. That appears to mean that it will be lower than last year. The fact that, in September, the bid from AAPC fell through because it found it difficult to raise money, is less surprising given the trading. That bid cost the company $1m.
Kuala Lumpur Kepong has allowed its bid for MP Evans (MPE) to lapse after it receives acceptances equivalent to 13.2% of the oil palm plantations operator.
Price volatility in the energy trading market has made the autumn a tough trading period for Good Energy (GOOD) and it means that 2016 figures will be at the bottom end of market expectations. Trading has been more favourable in the past couple of weeks. Good Energy is recycling the investment in its 5MW solar site in Dorset, which is being sold to Eneco UK for £5.78m, while retaining an option over the power generated. There will be a disposal gain of more than £340,000, which will be recognised in 2017. The cash will fund further solar sites prior to the end of March, after which the current renewable obligation certificate subsidy will no longer be available.
Facilities management and security services provider Mortice Ltd (MORT) is raising £2.3m at 75p a share to help it to reduce dependence on working capital facilities. Some of these facilities have an annual interest rate of more than 9%. Mortice intends to spend more on the marketing of its Soteria remote surveillance services. First half revenues of $80m have been generated, with more than doubled facilities management revenues thanks to the UK business.
Italy-based PR firm SEC Group (SECG) is acquiring 60% of Martis Consulting for around €1m. Poland-based Martis provides public and corporate affairs services and the latest annual revenues were €1.69m and a pre-tax profit of €286,000. SEC is only acquiring the relevant assets and management will own the other 40%, while having the option to exchange these shares for shares in SEC.
Biopharmaceutical products and services developer and provider Abzena (ABZA) has signed a licence agreement with start-up immunomodulatory oncolytic viruses treatments developer Trieza Therapeutics Inc. The exclusive worldwide licence is for an undisclosed antibody sequence that Trieza wants to use with its own viral vector technology to develop oncology treatments. If the development is successful then up to $35m of milestone payments could be generated on top of any royalties from commercial sales. Abzena made an interim loss of £4.27m. Net debt was £9.38m at the end of September 2016.
Share (SHRE) has sold a further 40,000 shares in the London Stock Exchange and raised £1.12m. This takes the money raised from disposals in recent weeks to £1.66m. Share retains 60,000 shares in London Stock Exchange. Share has taken on up to 8,700 customer with more than £200m under management from Invesco Perpetual – which had not previously been named when the deal was announced. These are mainly ISA accounts.
Simon Fry, Jean-Pascal Tranie and Felipe Simonsen have joined the board of investment company Mercom Capital (MCC) and John Zorbas, Patrick Cross and Kyle Appleby have sold their shares and stepped down from the board. The exiting directors sold their shares at 20p each and returned 2p a share to the company. There are plans for Mercom to raise £3m at 30p a share and issue a warrant with each share that is exercisable at 80p a share for 180 days after issue. Existing shareholders will be issued one warrant, on the same terms, for every four shares they own. The placing price is much higher than that suggested in the initial proposals. This depends on resolutions being passed at the AGM in early January. The new investing strategy is to invest in established technology and media businesses. The name will be changed to Monchhichi.
Learning management systems provider NetDimensions (Holdings) Ltd (NETD) says that 2016 revenues will be at least $26m, up from $25.4m, and EBITDA will be $2m, compared with a loss of $500,000 in 2015. Bid discussions are continuing.
Redcentric (RCN) has reported interim figures which should show a real picture of the company‘s position. Internal systems are being improved and this will continue well into 2017. In the six months to September 2016, revenues edged up 2% to £53m, while there was a turnaround from a loss of £2.5m to a profit of £300,000. There was £7.29m generated from operations during the period and £5m came from the disposal of network assets. Net debt was £34.4m at the end of September 2016. Richard Griffiths and Kestrel have been picking up shares in the market.
NWF (NWF) has warned that a weak first quarter means that the interim figures will be lower than the same time last year but the full year outcome is still expected to be in line with expectations. Demand for feed has weakened at a time when ingredient costs have increased, while the fuel division has been hit by warm weather. The food distribution activities The interim figures will be published on 31 January.
Vislink (VLK) will seek shareholder approval for the disposal of its hardware division on 9 January. The acquirer xG Technology Inc will then seek to finalise the funding of the $16m (£13m) acquisition. If the disposal is completed early in 2017, then the forecast earnings per share will reduce from 1.3p a share to 1.2p a share. Trading in the fourth quarter of 2016 has benefited from the normal seasonal uplift but a £1.2m full year underlying loss is still expected. An additional £5.3m write-down will be required to bring down the book valuation of the hardware division. This appears to indicate a group NAV of around £16m., while net debt will be more than £10m
Diversis has posted the offer document for ServicePower Technologies (SVR). Diversis is offering 6p a share, which values ServicePower at £13.7m.
Collagen Solutions (COS) grew its interim revenues by 30% to £1.89m, but the loss quintupled to £418,000. Additional staff have been taken on and more spent on marketing and R&D. There was still £1.66m in the bank at the end of September 2016. House broker Cenkos expects net cash of £230,000 at the end of March 2017, while net debt is forecast at £3m one year later.
MAIN MARKET
Standard list shell Papillon Holdings (PPHP) has come to an agreement with main shareholders and directors to acquire Myclubbetting.com Ltd, where golfer Lee Westwood is a shareholder and ex-England manager Sam Allardyce was a shareholder – he said in August that he was giving up his shares (https://www.thesun.co.uk/sport/1611113/sam-allardyce-drops-footie-betting-job-and-ditches-shares-after-sun-probe-finds-boss-lost-investors-4m/). The target is run by Neil Riches who used to run Worldlink, which was introduced to the standard list on 24 November 2011 at a notional valuation of £55m (at 250p a share), although it never got near that valuation when trading commenced. Worldlink was a mobile applications developer that had a similar business to Myclubbetting.com but fewer than two years later it was in liquidation. In August, The Sun said that Neil Riches claimed Myclubbetting.com would float on the Scandinavian First North market at a valuation of £75m. There is still due diligence and other matters to complete before the deal goes ahead. Papillon floated on 24 June and raised £824,000 at 1p a share.
World Trade Systems (WTS) is aiming to relist on the standard list in the first quarter of 2017 and additional funds will be raised at that time. This follows the establishment of Shimao (Suzhou) Biotechnology, which plans to sell healthcare products to consumers. Net liabilities were £1.12m at the end of June 2016. The loans from Kudrow totalling £800,000 are repayable by the end of July 2017 or when trading in the shares recommences and have a 5% interest charge. Trading in the shares has been suspended for more than eight years.
Aircraft leasing company Avation (AVAP) has acquired and delivered a new Airbus A321-200 to Vietjet, taking the number delivered to six. Avation has also sold its remaining five Fokker aircraft. WH Ireland forecasts a full year profit of $21.5m.
Andrew Hore