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Andrew Hore – Quoted Micro 21 September 2020
AQUIS STOCK EXCHANGE
Renewable energy supplier Good Energy (GOOD) improved interim revenues by 6% to £67.5m. Gross margins declined as Good Energy focused on business customers. There was a slump from profit to loss, partly down to expected credit losses. There is no interim dividend, but payments should resume next year.
Newbury Racecourse (NYR) reported a two-thirds slump in interim revenues to £2.43m. This meant that the loss jumped from £363,000 to £1.69m. There were six race days in the period. Catering, events and the hotel all fell into loss, although the Rocking Horse nursery made a reduced profit. Nine race days are planned for the second half. There will be a substantial loss for 2020.
S-Ventures (SVEN) raised £650,400 at 2.67p a share prior to flotation on 16 September. There have been no trades and the share price ended the week at 3p/5p.
Trading has resumed in Lombard Capital (LCAP) following the completion of disciplinary proceedings. A fine of £23,800 has been imposed on Lombard for the failure to provide timely information and a resulting sharp movement in the share price. Lombard also failed to notify changes in significant shareholdings.
Western Selection (WESP) says that its NAV has fallen by 29.7% to 45p a share over the 12 months to June 2020. The decline in the share prices of AIM-quoted investments is behind the decline. The lack of a dividend from Bilby (BILB) meant that income more than halved.
NQ Minerals (NQMI) has raised £275,000 at 7p a share. TruSpine Technologies (TSP) says that Evrensel Capital Partners is being given an extension for its subscription of £250,000 at 36p a share. Evrensel has until 11 November to complete the subscription and it has been taken on as an adviser by TruSpine.
Panmure Gordon has been approved as a corporate adviser for the Aquis Stock Exchange.
AIM
ThinkSmart (LON: TSL) has revalued its remaining 10% stake in buy now, pay later finance provider Clearpay. The Clearpay stake was valued at £53.7m at the end of June 2020. That is based on the Afterpay share price, which has risen since. Following the settlement of litigation with Dixons Carphone, which led to a payment of £1.45m after June, ThinkSmart has around £10m in the bank and generating cash.
Hanover Bidco has launched a 40p a share recommended bid for ClearStar (CLSU) and this values the employee checks company at £14.7m. ClearStar floated at 57p a share back in July 2014.
Parcel and freight delivery company DX (DX.) increased full year revenues by 2% to £329m and there was a move from loss to a pre-tax profit of £1.8m. The freight division loss was reduced. Net cash was £12.3m, although it is helped by delayed tax payments. The parcels market is growing, and DX continues to invest in new depots.
Keystone Law (KEYS) has resumed dividends following the interims. Revenues grew but the rate of growth slowed. Lawyer recruitment continues and Panmure Gordon has upgraded its 2020-21 earnings from 7.1p a share to 11.9p a share.
Billing and customer relationship management software provider Cerillion (CER) has gained its largest ever contract. This £11.2m contract underpins next year’s figures.
There was a small decline in interim revenues at freight management services provider Xpediator (XPD) and there are further cost saving benefits in the second half. Freight forwarding made a higher profit, although overall operating profit was flat. A 0.45p a share dividend was declared. NAV is 19.9p a share.
Filta Group Holdings (FLTA) has been hit by closures and weak trading in the catering sector. The commercial kitchen services franchise group says trading is recovering, but it is still down on previous levels. Revenues should be more than two-thirds of normal levels by the end of 2020.
Online security software provider Kape Technologies (KAPE) doubled revenues in the first half of 2020. Organic growth was 12% as more people working from home led to demand for Kape’s software products. There are still cost savings to come from the Private internet Access acquisition. Full year earnings per share are expected to increase from 6.5p to 13.3p.
Cloud-based payment services provider PCI Pal (PCIP) reported slightly higher than expected full year revenues of £4.4m, up from £2.8m the previous year. Total annual contract value is running at £6.7m and this underpins the current forecast for this year. PCI Pal will continue to lose money but the cash outflow will reduce.
Union Jack Oil (UJO) is raising £7m at 0.16p a share to cover the oil and gas company’s share of investment in the Wressle field and fund other work programmes and drilling.
Trading in Phimedix (PHM) shares has been suspended because the shell has not found a suitable acquisition. Prior to suspension, Steven Myers sold his 7.7% stake and Ali Mortazavi further reduced his stake from 8.15% to 7.7%.
MAIN MARKET
Tex Holdings (TXH) has decided to delist from the Main Market by 13 October. Trading has been suspended since 29 April 2019. Funding is required and the board believes it will be difficult to secure the cash as a listed company because of the requirement for a prospectus for a major share issue. Costs will also be reduced.
IMC Exploration (IMC) intends to accelerate its exploration programme at the North Wexford gold project. The drilling will be JORC compliant.
Papillon (PPHP) says due diligence on its potential mining acquisitions has been completed. Kilmapesa has recommenced gold production.
Castillo Copper Ltd (CCZ) says that it has verified high-grade copper and identified gold mineralisation at the Big One deposit, on the Mt Oxide project. There are plans to commence drilling.
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 13 August 2018
NEX EXCHANGE
Brewer Adnams (ADB) grew its turnover by 7% to £35.5m in the first half of 2018 but there was an underlying operating loss and lower gains from asset disposals. The reported pre-tax loss increased from £284,000 to £840,000. The second half is always more profitable. Depreciation is higher due to investment in the brewery and the refurbishment of the Swan Hotel. Adnams own beer volumes increased by 4.8%, compared with the market growth of 1.3%. Carbon dioxide shortages have affected the second half. The interim dividend is unchanged at 78p/B share and 19.5p/A share.
KSE is offering £29,419.64 a share in cash for Arsenal Holdings (AFC) and that values the football club at £1.8bn. KSE already owns or has acceptances totalling more than 97% of the shares in the company.
Healthperm Resourcing Ltd (HPR) increased revenues by 184% to £293,000 in the first half of 2018 and 144 healthcare staff candidates were deployed in the period, which was nearly three times as many as in the first half of 2017. More students are being trained in the English language. Healthcare recruitment contracts have been signed in the UK and they cover nine hospitals. Contracts have also been signed outside the UK.
Angelfish Investments (ANGP) is subscribing for 0% secured convertible loan notes in Wallet Ads Ltd. The first drawdown is £50,000 and this will be followed by five monthly instalments of £20,000. On payment of the final instalment, or under certain other circumstances, the loan notes can be converted into 20% of the enlarged share capital of Wallet Ads, which has developed a mobile engagement platform combining mobile wallet passes, web and social media and this enables digital vouchers to be sent to smartphones. Angelfish non-exec Richard Walker will join the Wallet Ads board.
Pelican House Mining (PHM) is investing in battery minerals explorer Kalahari Key Mineral Exploration (KKME), which is exploring for nickel and platinum group metals in Botswana, near the South Africa border. AIM-quoted Two Shields Investments (TSI) is a co-investor in KKME and it increased its stake to 22.2%. Two Shields Investments also increased its stake in cobalt explorer Cobalt Blue Holdings to 49% before swapping it for a 11.26% stake in African Battery Materials (ABM), thereby gaining a wider exposure to technology metals licences.
Clean Invest Africa (CIA) raised an additional £50,000 at 1p a share when it floated last year. Geremy Thomas holds a 3.1% stake.
Shareholders in Welney (WENP) have voted against the appointment of Mark Jackson and Mark Chapman as directors.
AIM-quoted TechFinancials Inc (TECH) joined NEX on 8 August. Monreal has changed its name to Eight Capital Partners (ECP).
AIM
Fryer management and commercial kitchen services provider Filta (FLTA) says that interim figures are in line with expectations. There will be a full contribution from GMG, which was acquired last year, while the sale of the refrigeration division has helped to improve margins. Revenues are growing from newer franchisees and the UK-based seals business also grew its revenues. The interims will be published on 4 September.
Former boss Philip Swinstead has sold his 9.82% stake in Parity Group (PTY) and Helium Rising Stars has taken a 10.9% shareholding. Parity is on track to achieve double digit profit growth this year. The IT recruitment and consultancy services provider is modestly rated on a prospective multiple of less than nine, even though the share price has risen following the share dealing.
Pebble Beach Systems (PEB) expects revenues to fall from £4.6m to £3.9m but the broadcast software supplier believes that the second half should be better. A backlog of £4.7m should help full year revenues to be nearer to last year’s level.
Frontier IP (FIPP) has announced its first Portugal-based spin-out. It is taking a 31.8% stake in NTPE, which is developing Paper-E technology that can be used to print electronic circuits, sensors and semiconductors. This opportunity came through the relationship with Universidade Nova de Lisboa Faculty of Science and Technology. Another investee company, 27.5%-owned Fieldwork Robotics, has secured a deal with soft fruit grower Hall Hunter to prototype and test a raspberry harvesting robot system.
Phoenix Global Mining (PGM) has reported that the first drilling results from the Empire mine in Idaho have been encouraging. There was 68 metres at 0.57% copper from the surface. The current JORC resource is 0.52% copper so it would be good news if the current drilling provides higher levels of copper.
Mereo BioPharma (MPH) had net cash of £36.9m at the end of June 2018, but a R and D tax credit of £8.2m was received in August. An adult Phase 2b study for Osteogenesis Imperfecta (OI) is due to complete enrolment by the end of September. There will be initial six month data from the open-label high dose part of the study by the middle of next year. A flotation on Nasdaq is still a possibility.
MAIN MARKET
Engineering and construction company North Midland Construction (NMD) increased its interim revenues from £135.1m to £160.9m and more than doubled pre-tax profit from £1.23m to £2.51m. The interim dividend has been doubled to 6p a share. Cash in the bank was 138% higher than 12 months before are £18.9m, although there are also finance leases of £4.5m. The order book is worth £320m. The telecoms-related part of the business is still losing money. There were much better profit contributions from the water and construction divisions.
Argo Blockchain (ARB) is developing a global datacentre management business facilitating cryptocurrency Mining-as-a-Service and has signed a deal that will provide 9.5MW of clean energy for two datacentres in Quebec (Argo already has one datacentre in Quebec). That provides the capacity for more than 150,000 subscribers and the centres will be operational in September and October. Argo joined the standard list on 3 August after raising £25m at 16p a share, which valued the company at £47m. However, the share price has fallen back to 11.13p.
Beauty and personal care products supplier InnovaDerma (IDP) has appointed Kieran Callan, who was a non-executive director, as chief executive with Haris Chaudhry moving to executive chairman. Callan used to work at PZ Cussons. This appointment follows poor trading and disappointing pre-tax profit in the year to Last October, InnovaDerma raised £4.4m at 276p a share and, having fallen by two-thirds at one point since then, the share price has recovered to 148.5p. Haircare brand Roots will be sold in Tesco.
Telecoms services provider Toople (TOOP) is holding a general meeting on 30 August in order to get shareholder approval to enable it to issue more shares to raise cash to keep the business going.
Andrew Hore
Andrew Hore – Quoted Micro 16 July 2018
NEX EXCHANGE
Hotel operator Hydro Hotel, Eastbourne (HYDP) reported flat interim revenues of £1.51m in the six months to April 2018, during a period where building repairs were undertaken. Higher overheads and maintenance costs meant that the loss increased from £153,000 to £200,000. There is £635,000 in the bank.
AfriAg Global (AFRI) has raised £300,000 at 0.1p a share in order to finance its new investing strategy of investing in medicinal cannabis businesses.
Panther Metals (PALM) has signed an option agreement to acquire gold exploration properties in Ontario. The total potential consideration is C$133,000 (£77,000) in cash and the issue of 19.15 million shares at 0.3p each, locked-in for six weeks. A non-refundable payment of C$30,000, one-half cash and one-half shares, has been paid. Due diligence needs to be completed within eight weeks.
NQ Minerals (NQMI) has entered into two marketing and off-take agreements, combined with a $10m secured prepayment facility with Traxys Europe. The off-take agreements relate to all lead and zinc concentrates from the Hellyer project in Tasmania in the first five years of production.
Pelican House Mining (PHM) had nearly £49,000 in the bank at the end of June 2018. The former Hellenic Capital acquired a 15% stake in Might Oak Explorations last month.
Melissa Sturgess and Michael Langoulant have been appointed as directors of Imperial Minerals (IMPP) and James Hamilton and Russell Hardwick have resigned.
Wheelsure Holdings (WHLP) has received approval for the Tracksure locking device from the Italian State Railway.
Clean Invest Africa (CIA) plans to buy out the other shareholders in CoalTech LLC. Due diligence has commenced prior to making an offer for the 97.5% of CoalTech not owned by the clean technology investment company. The initial investment was $500,000.
AIM
Frontier IP (FIPP) investee company Pulsiv Solar has won a UK government grant worth £130,00, which will be put towards a £289,000 project to compete the development of its solar micro-inverter by next April. Frontier IP owns 18.9% of the University of Plymouth spin-out.
Kestrel Partners continues to build up its stake in broadcast software provider Pebble Beach Systems (PEB) and it has taken it from 16.6% to 17.4%. Continuing operations moved back into operating profit in 2017, even though revenues fell from £10.9m to £10.3, but the £500,000 was not enough to cover interest charges and rationalisation costs. Net debt was still £10.3m after getting some proceeds from the sale of the Vislink hardware business. The revolving credit facility is £15m.
Medical imaging technology developer Polarean Imaging (POLX) has raised £800,000 at 16p a share, following last month’s investor symposium. This provides additional cash to support phase III clinical trials in the US and invest in further development.
Veltyco (VLTY) has decided not to go ahead with the potential acquisition of sportsbook operator Ruleo Alpenland.
Telit Communications (TCM) has agreed to sell its automotive division to TUS International for $105m and the deal should be completed by the end of 2018. In 2017, this business made a $10.1m contribution to EBITDA before group overheads. This deal will more than wipe out the current net debt of $25m. The focus will be the Internet of Things operations.
Online women’s fashion retailer Sosandar (SOS) continues to build up its sales. The reported interim revenues were £1.35m. Like-for-like interim revenues grew by 268%. The company remains loss-making but the gross margin improved from 37.8% to 49.4%. There was £4.6m in the bank at the end of March 2018 and this will help to finance further increase in the product range as well as continued losses. There is a database of more than 54,000 customers and 11,407 of those were repeat customers in the period.
Duke Royalty Ltd (DUKE) is raising £44m at 44p a share to fund the pipeline of royalty financing opportunities. There are already four new potential royalty partners requiring £27.5m. These include healthcare, foods and media businesses. Within 12 months, Duke expects to increase its dividend yield. Last December Duke raised £20m at 40p a share.
Itaconix (ITX) is raising £3.4m at 2p a share, which was a 70% discount to the suspension price. Trading in the shares will start again on Monday 16 July. The speciality polymers designer will have enough cash for 12 months, assuming shareholders vote in favour of the share issue. Revenues have been building up slowly and last year they nearly doubled to £553,000. The loss was £11.9m.
One year after it joined AIM, superyacht painting and maintenance services provider GYG (GYG) says that first half trading was weaker than expected. There were delays in refits and fewer new build projects were won. First half revenues of around €25.1m are lower than the two previous first half outcomes. It appears that the interim loss will be more than €1m. There are €12.1m of orders expected to be completed in the second half with a further €25m of “high probability prospects”. The 2017 revenues were €62.6m.
Marlowe (MRL) is raising £20m at 475p a share in order to finance further acquisitions in the critical asset management services sector.
Tristel (TSTL) says that its full year pre-tax profit should be at least in line with the £4.4m forecast, up 8%. Higher investment in gaining US approvals for disinfection products has held back profit growth, but it is expected to accelerate in 2018-19 when a pre-tax profit of £5.2m is forecast.
ReNeuron (RENE) has signed a three-month exclusivity agreement with a major pharma company to potentially out-licence the global rights, excluding China, of its hRPC retinal stem cell technology platform. A non-refundable payment of $2.5m will be received with a further $2.5m due if the deal goes ahead. There was £34.7m in the bank at the end of March 2018 and this should last well into 2020 even though there will be significant spending on trials, including the phase III trial of the CTX cell treatment for stroke disability.
Xpediator (XPD) has acquired Import Services Ltd, which operates a logistics and warehousing business at the Port of Southampton, for up to £12m. The business, which made a 2017 profit of £1.7m, fits well with Xpediator’s existing business in the port and has a good management team that can help the enlarged operations to grow. It should be earnings enhancing in the first full year. A placing raised £7m at 70p a share.
Fifteen-month figures from healthcare services provider Totally (TLY) include five months from the Vocare acquisition but that was still enough to generate revenues of £42.5m. A full 12 months of Vocare should increase revenues to £85m but Totally would still be loss-making. There is further restructuring and integration required. Cost savings should help Totally move into profit in 2019-20. Net cash was £10.2m at the end of March 2018.
Collagen Solutions (COS) improved its revenues in the second half, compared with the first half, but full year revenues were still 6% lower at £3.83m. There is still £5.02m in the bank. There was growth in EMEA. The eight year clinical study for cartilage repair product ChondroMimetic was successful.
Full year figures from managed communications services provider AdEPT Telecom (ADT) were better than expected. Managed services were more than two-thirds of revenues, which were 35% ahead at £46.4m. Underlying pre-tax profit was one-third higher at £7.7m. Net debt was £17.6m at the end of March 2018.
Strategic Minerals (SML) generated sales of $696,000 from the Cobre magnetite operations in the three months to June 2018, but the suspension of a major contract will hit the current quarter. There was $2.09m in the bank at the end of June 2018 and a payment of $375,000 has subsequently been received.
ECR Minerals (ECR) has raised £650,000 at 0.7p a share and that provides enough cash until the third quarter of 2019. The development programme at the Blue Moon target in Victoria, Australia will be accelerated.
An international mining company has agreed to subscribe $250,000 for shares in Orosur Mining Inc (OMI) and that will help to finance further exploration at the Anza project in Colombia. The subscription is at 5.2p a share, double the market price at the time of the agreement.
Fishing tackle retailer Fishing Republic (FISH) expects interim revenues to decline from £4.1m to £3.4m following the closure of five underperforming stores. Like-for-like store sales were 22% lower and online sales also fell. Inventory levels have fallen.
Clear Leisure (CLP) has started operations at its crypto currencies mining data centre in Serbia.
Battery technology and advanced materials developer Ilika (ILK) has raised £4m at 20p a share and an open offer could raise up to £1m more. The cash will finance the costs of developing battery technology for the automotive market. There was £2.8m in the bank at the end of April 2018.
N4 Pharma (N4P) reported disappointing results from the pharmacokinetic data for the clinical trial for reformulated sildenafil, which is better known as Viagra. The plan is to improve the speed at which the drug takes effect but the formulation has not meet the targets set.
Ariana Resources (AAU) says that the Kiziltepe mine produced 7,171 ounces of gold in the second quarter of 2019 and it is still on course to produce 20,000 ounces of gold for the whole year.
Trading remains tough at replacement windows supplier Safestyle UK (SFE) although order intake has firmed in recent weeks. This follows the loss of staff to a competitor that is being sued by Safestyle. It will take until next year to rebuild the team. Thee will be a loss this year even before £6m of restructuring costs. This will use up the cash in the bank.
Next Fifteen Communications (NFC) is paying an initial £2.2m for Technical Associates Group, which is a technical content and digital marketing business. This deal increases the group’s exposure to the industrial engineering sector.
MAIN MARKET
More director changes at Quarto Group Inc (QRT) with Andy Cumming appointed as senior independent non-executive chairman. Major shareholder Laurence Orbach has stepped down as executive chairman and will become a non-executive director. Chief operating officer Ken Fund has joined the board.
Nicholas Lyth has resigned from the board of Sealand Capital Galaxy Ltd (SCGL) having been a director for 17 months.
China-focused healthcare investor Cathay International Holdings (CTI) says that the first half sales and profit will be lower than expected but it hopes to make up the shortfall in the second half. Healthcare subsidiary Lansen has appointed a new chief executive and there have been operational changes, while regulation changes also continue to hit sales in the first quarter. The company’s hotel operations are trading ahead of expectations. The interim will be published in late August.
Andrew Hore
Andrew Hore – Quoted Micro 25 June 2018
NEX EXCHANGE
Shareholders have agreed to the proposed broadening of investing policy for Sativa Investments (SATI) and the first acquisition under the new policy is George Botanicals. Sativa paid £415,000 in cash and shares for the UK-based wholesaler and distributor of cannaboid medicinal products, including CBD oil. The company is being acquired from the interests of Sativa chief executive Geremy Thomas.
Gas and electricity supplier Good Energy (GOOD) says that this year’s results will be weighted towards the first half because of the cold weather earlier in 2018. There will also be increased investment in the sales team and a digital app in the second half. Good supplies more than 70,000 homes and less than 1% of the business market.
Wishbone Gold (WSBN) nearly doubled its revenues to $8.2m in 2017. There is $257,000 in the bank.
Pelican House Mining (PHM) has bought a 15% stake Mighty Oak Explorations, which has three licences to explore for cobalt and two to explore for lithium in Uganda.
NQ Minerals (NQMI) says the commissioning of plant for the Hellyer project is on course for August. The mine is a few months away from production.
Block Commodities (BLOC) has raised £165,000 at 0.035p a share. The cash will help to finance the launch of a pilot blockchain project in Uganda.
AIM
Alliance Pharma (APH) is acquiring the marketing rights to Nizoral, an anti-dandruff shampoo brand in Asia Pacific, for £60m. Alliance raised £34m at 91p a share. The rights being acquired, which cover 15 countries, generated net sales of £18.5m in 2017. They would have generated pro forma EBITDA of £7.1m.
Shoe retailer Footasylum (FOOT) has followed up the announcement of its exit from the FTSE AIM 100 index with a set of results that mean it is likely to be a long time before it gets back in the AIM 100. Peel Hunt has reduced its 2018-19 pre-tax profit forecast by one-quarter to £5.3m. Footasylum has been hit by discounting and the weak consumer market. Rental costs are higher than expected.
Social housing software and services provider Castleton Technology (CTP) continues to grow sales to new and existing customers. Two-fifths of customers take more than one product. Full year revenues were 15% ahead at £23.3m with organic growth of 13%. Net debt was 30% lower at £6.3m. There is a contracted backlog of £26.8m.
Frontier IP (FIPP) has taken a 24% stake in Cambridge Material Testing, which is developing software and hardware to measure material characteristics of metal components. The non-destructive tests are quick and require small samples.
Northbridge Industrial Services (NBI) has raised £2.5m at 125p a share. Northbridge will use £1.05m to pay the deferred consideration for the Tasman acquisition. This was originally due in January 2016 and has been incurring an annual interest charge of 8%. The rest of the cash will be invested in rental equipment as demand recovers. Gearing will fall below 20%
Rose Petroleum (ROSE) has published a maiden contingent resource for its interests in the Paradox Basin, Utah. The competent persons report shows a net 2C contingent resources of 12.3mmboe with gas accounting for nearly one-quarter of that resource. A post-tax NPV of $86.9m has been estimated. This assumes a 75% success rate for wells drilled and a recovery of up to 550,000 barrels per well. Each horizontal well is expected to cost $7m. These estimates are based on less than one-quarter of Rose’s acreage.
Myanmar-focused social media platform operator MySQUAR Ltd (MYSQ) is acquiring MyPay Myanmar for £1m in cash and 72.5 million shares issued at 1.38p each. An issue of unsecured convertible bonds has raised £2.22m. Bid talks have been terminated.
Touchstone Exploration Inc (TXP) has extended its credit facility for a further year. The $15m facility lasts until November 2022. The existing oil and gas assets in Trinidad are generating cash and this is also helping to fund the drilling of 12 wells this year. Next year, an exploration well will be drilled on the Ortoire block.
Michael Rowan is switching from chairman to chief executive at Active Energy Group (AEG) and the previous chief executive will focus on developing the forest management operations in North America and CoalSwitch in Poland.
Trading in the shares of URA Holdings (URA) has been suspended because it has not completed a reverse takeover. URA has signed heads of agreement to acquire Entertainment AI Ltd, which has developed tagging technology that enables viewers of video clips to purchase items in the video. It also owns the GTChannel, which runs automotive-related channels across YouTube generating revenues from advertising.
Project management services provider Progility (PGY) plans to cancel its AIM quotation. Praxis, which owns 64.75% of the company is backing the move. There is total support from shareholders owning more than 81% of the company so the cancellation is a foregone conclusion. Praxis is offering 55p a share for shares it does not own.
N4 Pharma (N4P) is making good progress with its therapeutic nanoparticle platform Nuvec. There should be results from studies in he fourth quarter. N4 is conducting studies to identify human cell types that are most responsive to Nuvec. The Sildenafil MR Viagra reformulation commenced a proof-of-concept trial in April and the results are expected in August.
Uvenco UK (UVEN) continues to hold discussions with its main creditor following the placing of its vending machine subsidiaries in administration. Those assets were sold for £1.8m and Uvenco is left with net debt of £1.6m.
Industrial equipment distributor Slingsby (HC) (SLNG) says that a stronger April and May means that sales are 1%lower in the first five months of the year. Compared to a 6% shortfall in the first quarter. Pre-tax profit is also slightly lower. Net debt was £1.4m at the end of May 2018.
Duke Royalty Ltd (DUKE) has increased its interim dividend by 17% to 0.7p a share. The dividend will be paid on 12 July.
RA International Group Ltd provides services to remote locations and it wants to raise £18.8m when it joins AIM. In 2017, RA generated revenues of $53.3m and profit of $13.7m, up from $5m the previous year.
MAIN MARKET
Oil and gas explorer Upland Resources Ltd (UPL) has completed a placing raising £3m at 2.5p a share. The cash will help to fund the drilling of a well at Wick in the UK and finance potential ventures in Sarawak and North Africa.
Beauty and personal care products supplier InnovaDerma (IDP) continues to find trading tough and it will report a full year pre-tax profit that is £650,000 lower than expected. Revenues will increase from £8.9m to £11m. finnCap had forecast a 2017-18 pre-tax profit of £2.4m on revenues of £13.8m following the 2016-17 full year figures. Last October, InnovaDerma raised £4.4m at 276p a share and that has helped to shore up the balance sheet.
Stewart and Wright (STE) is offering to buy 21.5% of its share capital at 590p a share as part of the cancellation of its listing. That is a 7% discount to NAV. There has been one trade in the shares so far this year. The property investor has been hit by the downturn in the high street.
Pembridge Resources (PERE) is trying to raise $40m and prior to that there will be a ten-for-one share consolidation. The cash will finance the acquisition of Minto Explorations from Capstone Mining, which will cost $37.5m in cash plus shares that would give Capstone 9.9% of Pembridge. Minto is a copper producer in the Yukon. The deal could be completed by the end of July.
Tom Charlton has increased his stake in North Midland Construction (NMD) from 8.4% to 9.4%.
Andrew Hore
Quoted Micro 18 June 2018
Small cap award winners 2018
Company of the year
ZOO Digital (ZOO)
The ZOO Digital share price is ten times the level it was one year ago. ZOO localises film and television content and it has been investing in upgrading its technology and services over the past few years. This investment is paying off and the ability to offer cloud-based services is helping the business to grow and move into profit. Hollywood studios have been customers for many years and ZOO is winning market share. Newer entrants to the market such as Netflix have grown the demand for localisation of content. ZOO is expected to report an underlying pre-tax profit of £500,000 for the year to March 2018.
NEX company of the year
Crossword Cybersecurity (CCS)
Cyber security technology developer Crossword Cybersecurity originally floated on GXG and then switched to NEX. It was one of the youngest companies that was on the shortlist for this award. Crossword is generating modest revenues and it is developing cyber security products with partners. The real potential for the business will not be realised for a few years.
Impact company of the year
Walls and Futures REIT (WAFR)
Walls & Futures REIT is an ethical housing REIT that develops new housing for people with learning and physical disabilities or requiring extra care. In 2017, Walls and Futures achieved a total return on its portfolio of 11.5%, ahead of its benchmark total return of 7%.
IPO of the year
K3 Capital (K3C)
Business sales and corporate finance company K3 Capital Group joined AIM at 95p a share in April 2017 and the share price has more than trebled. Bolton-based K3 helps owners to sell their businesses and it gains clients through a direct marketing strategy. The AIM quotation and the related higher profile appears to have helped to accelerate growth. A move up the Thomson Reuters deal rankings is also helping. Last year, revenues rose by 26% to £10.8m, while pre-tax profit improved 18% to £3.6m. In the six months to November 2017, revenues were 34% ahead at £7.5m and pre-tax profit moved from £2.48m to £3.21m.
Fintech company of the year
FAIRFX Group (FFX)
Foreign exchange and e-banking services provider FAIRFX has a low cost model while offering an improved experience to the more established rivals. Turnover was £1.1bn last year, while revenues were £15.5m and this enable the company to move into profit. Corporate turnover was 52.3% of the total, up from 45.5%. The company recently moved its international payments book onto the City Forex platform following its acquisition. The focus is increasing scale to improve efficiency combined with the rolling out of new products.
Transaction of the year
Proactis (PHD) – merger with Perfect Commerce
Spend control software provider Proactis merged with Perfect Commerce in August 2017. The deal significantly increased the scope of the business and added to the management team. The integration of the businesses appears to be going well but the loss of a couple of large customers has held back progress in the year to July 2018. Even so, annualised contracted revenues are still £45.5m. Progressive Equity Research still expects a near-doubling of this year’s pre-tax profit to £10.2m, rising to £13.2m next year. That means that earnings per share growth is modest this year because of the additional shares in issue.
Executive director of the year
Bobby Kalar – Yu Group (YU.)
Electricity and gas supplier Yu Group floated on AIM in March 2016 at 185p a share. The current share price is more than four times that level. The focus is on commercial customers. Yu increased its revenues from £16.3m to £47m last year and annualised bookings continue to grow. Underlying pre-tax profit jumped from £195,000 to £3.08m. The dividend was increased from 2.25p to 3p a share. Trading continues to be strong and average annualised bookings per month were £6.6m. The cash pile has increased to £18.6m at the end of April 2018. Yu has obtained a licence to supply water.
Journalist of the year
Paul Scott – Stockopedia
Fund manager of the year
Nick Williamson – Old Mutual
Microcap fund manager of the year
Guy Feld – Canaccord Genuity
Analyst of the year
Kevin Ashton – Cantor Fitzgerald
Lifetime achievement award
Katie Potts – Herald Investment Management
Special services to small caps
John Jenkins (Founder of Ofex/NEX)
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NEX EXCHANGE
Daniel Thwaites (THW) increased its 2017-18 by 9% to £92.2m, while operating profit improved by 7% to £12.9m. There was a 79% increase in earnings per share to 13.8p, mainly due to a swing from a loss on interest swaps to a profit. The total dividend is unchanged at 4.46p a share. Investment in the pubs and hotels operations and in the new craft brewery at Mellor Brook has led to a rise in net debt from £47.6m to £63.7m. The old brewery will be demolished and the land will eventually be sold or developed. Poor weather means that the new financial year has started more slowly than last year.
Hellenic Capital has changed its name to Pelican House Mining (PHM) and is focusing on investing in early-stage resources projects in Africa. The focus is making capital gains on the investments. Pelican is trying to supplement its cash resources by selling a commercial property in Leeds, but the buyer withdrew. Pelican has retained the deposit. The investment property in Leeds is in the books at £204,000. Two directors, Simon Grant-Rennick and Mark Jackson, have been granted options over a total of seven million shares exercisable at 0.55p each.
Newbury Racecourse (NYR) says that its conference and events division is 22% ahead of the same time last year and the revenues of the hotel have risen by the same percentage. There has been a 17% rise in revenues for the nursery business on the back of occupancy rates rising by six percentage points. There are longer-term worries about the financial ability of bookies to provide sponsorship and other revenues. Management says it will not be paying any dividends until 2022 at the earliest after the current development projects are completed.
PCG Entertainment (PCGE) has raised £303,000 at 0.15p a share and around £119,000 will go towards paying the £119,000 settlement with D-Beta, which provided an equity sharing facility. D-Beta has sold its existing stake. PCG is talking to Cavitation Solutions Ltd about distributing cavitation technology, which deals with oil and other water pollutants, in China. It is also talking to ChainZy about distributing its blockchain-based technology in Asia. There is interest from third parties concerning the use of PCG’s media and gambling licences in China.
IMC Exploration (IMCP) has raised £250,000 at 0.7p a share and the cash will be used to develop the company’s three main gold and zinc projects.
South Africa-focused investment company Inqo Investments Ltd (INQO) has made a second investment in Uganda-based Four-One Financial Services, which manages the Mazima micro-pension scheme. This is the second tranche of the original investment and is in the form of a $100,000 convertible loan.
AIM
NWF (NWF) says that last year’s trading was much better than expected and net debt is lower than forecast. The feeds business improved its performance and trading of the fuels division was strong. The food distribution operations wee hit by reorganisation requirements and did not perform as well as expected.
Diversified Gas and Oil (DGOC) has got another large deal on the blocks and trading in the shares has been suspended. The Appalachian Basin oil and gas producing assets will be acquired for $575m and it will more than double the group’s daily production. This should be an earnings enhancing deal. A $225m share placing is required to help finance the deal.
RedstoneConnect (REDS) chief executive Mark Braund intends to leave the smart buildings technology company. Frank Beechinor will move from chairman to chief executive. The disposal of the systems integration and managed services divisions has been completed and the group can focus on its software business.
Ilika (IKA) has gained government funding of £4.1m for two battery technology projects in the automotive sector. The PowerDriveLine project is developing a solid state battery for hybrid and electric vehicles. The other project is headed by McLaren Automotive and is developing a battery for performance cars.
Secure payment products provider Eckoh (ECK) increased its full year revenues by 3% to £30m but pre-tax profit was 61% higher at £2.4m thanks to an improvement in operating margin. Growth in the US made up for a weaker contribution in the UK.
Redhall Group (RHL) slumped back into loss in the first half due to a delayed contract. However, it is still on course to make an improved profit in the full year. Interim revenues were 22% lower at £14.7m. There is strong demand for the company’s specialist doors from the nuclear and transport sectors.
Evgen Pharma (EVG) has enough cash to get to the end of 2018. There should be further positive news about the two ongoing clinical trials prior to the end of the year. Interim analysis of phase II trial of SFX-01 as a treatment for breast cancer show that six out of 20 patients, who had tumours that had initially responded to treatment but had become resistant, saw some benefit from the treatment of their tumours. The treatment has also been shown to be safe. The final results of the trial should be published before the end of the year.
Life sciences company Abzena (ABZA) has decided to focus on monetising its technology rather than raising money via a share issue. A non-binding heads of agreement with a third party would involve the sale of an interest in future royalties. If this deal is completed there would be enough working capital for the short-term.
Active Energy Group (AEG) has signed a memorandum of understanding with Young Living Farms for the sale of a PeatSwitch plant, which makes environmentally friendly peat replacements. The first plant is in Mona, Utah and the client is paying $3.4m in cash. There could subsequently be other plants at the client’s other sites.
Trading has resumed in the shares of Audioboom (BOOM) following publication of its accounts. The share price fell from 3.6p to 2.18p. The podcasts publisher has raised £4.5m from a placing at 3p a share.
MAIN MARKET
WideCells Group (WDC) managed to raise £513,000 at 3p a share via a bookbuild on the Teathers app. That includes £183,000 from directors. The total amount raised by the stem cell services provider is £2.04m, including conversion of debt of £165,000. Shareholder approval is required for the share issue.Trading in the shares has resumed and the share price has fallen below the placing price. WideCells is using £615,000 of its £624,500 overdraft, which will be reviewed at the end of June. Shareholders have loaned £120,000.
China-based Gamfook Jewellery is planning to join the standard list. The online retailer customised jewellery wants to raise £5m in order to invest in retail sites. Gamfook has managed to generate cash from operating activities in the past few years, although next year there will be a significant working capital outflow according to forecasts. Gamfook is offering an 8.5% yield on its potential placing price of 15p a share and that would rise to 12.5% in 2019.
Air Partner (AIR) has completed its accounting review and the net assets overstatement of £4m net of tax is in line with indications. There were accounting errors and subsequent attempts to cover up the problems going back to 2010. The review has cost £1.3m. Air Partner still intends to pay a final dividend of 3.8p a share.
BATM (BVC) has won a $3m follow-on cyber security for a government department. The total contract value will be $7m.
Falcon Media House (FAL) has raised £500,000 via a convertible loan note issue. The conversion price is 1.5p a share.
Cash shell AIQ Ltd (AIQ) has raised £250,000 from an oversubscribed open offer at 20p a share but there was a delay of one day before the shares were admitted to trading on 14 June. The share price has slumped from a high of 160p to 24.5p over the past month.
Dukemount Capital (DKE) has agreed a 30-year lease on a second property in north west England. Housing association Inclusion Housing is paying £168,740 a year for the lease subject to planning permission for extra rooms. The property needs to be refurbished.
Bluebird Merchant Ventures Ltd (BMV) has executed the 50/50 joint venture agreement with Southern Gold for the Kochang mine and the feasibility report is expected before the end of September. The required $500,000 investment has nearly been completed by Bluebird and it is on course to invest the required $250,000 in Southern Gold. First gold is expected before the end of 2019.
Andrew Hore