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Andrew Hore – Quoted Micro 13 April 2020
AQUIS STOCK EXCHANGE
Suffolk-based brewer Adnams (ADB) returned to profit in 2019. Revenues fell from £78.9m to £74.7m, while a loss of £877,000 was turned into a pre-tax profit of £39,000. Stripping out one-off costs, there was an underlying decline in profit. Investment in the brewery and a new IT system have led to some disruption of the business. There will be no final dividend due to COVID-19 and the subsequent pub closures. There are tangible assets valued at £43.8m, much of which is freehold property and Adnams is in discussions about new lending facilities.
Directors’ pay has been halved and other costs reduced to a minimum.
Ananda Developments (ANA) is formulating responses to the latest questions from the Home Office. The MHRA has also requested a meeting to discuss the application to grow >0.2% THC cannabis. Ananda has a 50% interest in DJT Plants which plans to grow the cannabis in Lincolnshire.
World High Life (LIFE) has gained a quotation on the US OTC market. They started trading on 8 April.
NQ Minerals (NQMI) produced 8,127 tonnes of lead concentrate and 4,609 tonnes of zinc concentrate at the Hellyer mine in the first quarter of 2020. Further production increases are planned. Mining continues in Tasmania and the concentrate can still be shipped.
AIM
Replacement windows supplier Safestyle (SFE) has raised £8.5m at 17p a share and this will provide a strong cash buffer during the COVID-19 outbreak. Banking covenants will be waived for up to six months.
ReNeuron (RENE) has secured a collaboration with a major pharma company for the potential use of the company’s exosomes, derived from the CTX neural stem cell line.
D4T4 Solutions (D4T4) won additional SaaS-based business in the fourth quarter. That has delayed the recognition of revenues and led to a 14% fall in reported revenues to £21.7m. The forecast was for revenues of £26.7m. Pre-tax profit fell from £6m to £5m. There is £12.7m of cash in the bank.
Churchill China (CHH) has decided not to pay a final dividend even though net cash was £15.6m at the end of 2019. Underlying pre-tax profit improved from £9.4m to £11.2m in 2019. Manufacturing operations have been suspended and costs are being reduced. Capital investment in manufacturing and kiln capacity should be completed in the first half of 2020.
Real Estate Investors (REI) says that trading remains strong and it still intends to pay its dividend. Rental collection was good in the first quarter of 2020. Forecasts have been trimmed with nav expected to fall from 67.4p a share to 66.1p a share. That is still well above the share price.
Circassia Pharma (CIR) is transferring the US commercial rights to Tudorza and Duaklir to AstraZeneca. The $149.9m loan from AstraZeneca (and accrued interest) will be offset against the consideration for the transfer. AstraZeneca still owns 18.9% of Circassia. The focus of Circassia will be the Niox respiratory diagnostic platform.
Advanced Oncotherapy (AVO) has raised a further £14.9m at 25p a share. This will be spent on development and gaining approval for its LIGHT proton therapy system.
Cinema operator Everyman Media (EMAN) has raised £17.5m at 100p a share. This will help finance the business while the cinemas are closed.
Upheavals continue at Nostra Terra Oil and Gas (NTOG) with a further general meeting requisitioned and the resignation of chairman Andrew Morrison. A share issue raised £318,000 at 0.25p a share. Chief executive Matt Lofgran has agreed to a 60% reduction in salary until the next significant fundraising.
Trading in the shares of Bould Opportunities (BOU) has been cancelled but it continues to push ahead with a potential biotechnology acquisition.
MAIN MARKET
Aquila Services Group (AQSG) is aiming to at least break even in 2020-21 and maintain a positive cash balance. The figures for the year to March 2020 will not be as good as forecast, although it was profitable. Cost savings by the consultancy services provider include the chief executive standing down and there will be no final dividend.
Avation (AVAP) says that it has received bid interest, but progress has been hampered by COVID-19. The commercial aircraft lessor has $129m in cash and it is offering short-term financial relief to airlines. Management believes that ongoing income should be enough to cover costs for another 12 months.
Car and property bridging finance provider S and U (SUS) is paying a final dividend of 50p a share. That is lower than the previous year’s final of 51p a share, but it means the total dividend for 2019-20 is 2% higher. There are signs of reduction in lending in the early weeks of the new financial year.
Flavourings and fragrances supplier Treatt (TET) says interim revenues were 5% lower due to a fall in the price of citrus raw materials. There was growth in other areas with tea revenues 48% higher. There has been strong growth in recent orders because of the use of ingredients in soaps and sanitisers. The factory relocation in the UK will not happen until 2021. Net cash was £6.5m at the end of March 2020. The interims will be published on 12 May.
Argo Blockchain (ARB) generated revenues of £6m in the first quarter of 2020. There was £1.8m generated in March, down from £2.5m in February. The decline was due to lower bitcoin prices and more difficult cryptocurrency mining conditions.
Spinnaker Opportunities (SOP) has raised £40,000 from a loan note issue to two investors. The conversion price is 5p a share. There will be a warrant for every two shares that is exercisable at 5p a share.
Andrew Hore
Andrew Hore – Quoted Micro 23 March 2020
AQUIS STOCK EXCHANGE
Gin and spirits supplier British Honey Company (BHC) is using spare capacity in its distillery to produce # alcohol sanitisers. There is a shortage of sanitisers due to the coronavirus and HMRC has given permission for British Honey to produce denatured alcohol. The sanitisers are made with 70% alcohol and extracts of honey and green tea. Longer-term, the strategy is to buy other spirits brands to use spare capacity. British Honey started off as a honey producer and moved into craft spirits infused with honey in 2017. It has a computer-controlled, 1,000-litre capacity still and bottling facility with a capacity of 1.5 million bottles a year. Ingredients can be tracked. There has been £4m invested in this infrastructure. The existing products use a small proportion of this capacity. The company also produces spirits on behalf of third parties. Discussions have begun with some potential acquisitions. British Honey joined Aquis Stock Exchange at the beginning of the week and raised £4.25m (£3.88m after expenses) at 110p a share. Advanced assurance of eligibility for the Enterprise Investment Scheme has been obtained. The initial market capitalisation was £10m. Cairn is corporate adviser and Stanford Capital Partners is broker.
Sativa (SATI) is launching a cannabigerol (CBG) and alcohol-based hand sanitiser. CBG is thought to be effective as an antibacterial product and could combat superbugs.
Energy supplier Good Energy (GOOD) reported better than expected 2019 pre-tax profit. Underlying pre-tax profit still dipped from £2.3m to £2.1m due to lower gross margins. Profit is expected to bounce back to £3.1m in 2020. Both business and domestic customers were higher last year. The total dividend has been increased from 3.5p a share to 3.7p a share. Net debt was £39.2m at the end of 2019.
Brewer Shepherd Neame (SHEP) has decided not to pay the interim dividend of 6p a share announced the week before. The sharp downturn in trading and subsequent closure of pubs due to COVID-19 means that Shepherd Neame is also cutting capital investment and the board is taking a one-fifth cut in pay. Rent receipts from tenants were suspended from 16 March.
KR1 (KR1) has generated $168,000 from selling ATOM, taking the total raised from disposals to $290,000. It still holds nearly 17,000 ATOM.
Sheltered housing developer Walls and Futures REIT (WAFR) has outperformed its benchmark for a third year in a row. The MSCI UK Residential index increased by 4.4% in 2019, while Walls portfolio increased by 23%.
BWA Group (BWAP) says that its subsidiary has been awarded an exploration licence for an area known as Dehane in central Cameroon. The focus is rutile sands and other minerals. The permit is for three years and the financial commitment in year one is £275,000, followed by £207,000 in each of the next two years. Tri Castle Investments is subscribing £100,000 at 0.5p a share.
First Sentinel (FSEN) has raised £389,000 at 20p a share for working capital. VI Mining (VIM) raised £56,000 via a placing at 15p a share that was curtailed because of COVID-19. Further cash will be raised in the future.
Eastinco Mining and Exploration (EM.P) has secured a $200,000 facility from Augustin Corp, which is owned by a trust related to Eastinco executive chairman Charles Bray. The annual interest rate is 6 percentage points above commercial lending rates and the facility lasts for up to 18 months.
SAPO (SAPO) is holding a general meeting on 14 April to gain shareholder approval for increasing the share capital. Executive chairman Dr Keith Harris has been issued 20 million shares at 1p a share. The consideration will be paid by the end of 2024.
Belvedere Leisure Resorts (BELV) believes that once normality is resumed it can accelerate its resort development and deliver phase one on time.
Dozens Savings (DS07) says that 795 investors have subscribed for company bonds.
Trading in Dana International (DANA) shares remains suspended. The property investor is still trying to gain full information about share transfers.
Christian Taylor-Wilkinson has become interim chief executive of Altona Energy (ANR) following the resignation of executive chairman Qinfu Zhang.
AIM
Sales of COVID-19 tests by Novacyt (NCYT) continue to accelerate. It has received orders worth more than £8.7m in a six-week period. Manufacturing capacity is being increased.
Synairgen (SNG) is about to start a phase II trial for SNG001 for the treatment of an initial 100 patients with mild-moderate COVID-19. Initial results should be available by the summer. SNG001 is inhaled interferon beta, which has shown benefits in the treatment of SARS. The existing COPD phase II trial has been paused, but initial results suggest that there is clinical benefit.
Best of the Best (BOTB) would have been in trouble a decade ago when it generated its competition entries from airports and other areas of high footfall. Having gone online, the competitions organiser has continued to prosper. Additional marketing investment has helped the 2019-20 performance to be above expectations. The pre-tax profit forecast for the year to April 2020 has been raised from £2.6m to £3m.
Payment systems provider PCI-Pal (PCIP) has won a contract for its Agent Assist product with a UK government organisation. The annual contract value is £565,500.
Manx Financial (MFX) is buying back the 12.94% shareholding owned by Aaron Banks. Manx intends to pay £1.61m for the shares and then cancel them. This cash will become a loan to Manx and an existing £483,500 convertible will be added to the sum. Banks has requisitioned a general meeting at iodine manufacturer Iofina (IOF) in order to remove Lance Baller from the board and become a director himself. Banks does not intend to make a bid for the company.
Mobile payment services provider Bango (BGO) is still set to move into profit in 2020. End user spend doubled last year.
Indigovision (IND) is recommending a 405p a share cash bid from Motorola Solutions. This values the video security technology company at £30.4m. In 2019, pre-tax profit was $1.3m.
MJ Hudson (MJH) grew organic revenues by 12.5% in the first half. The asset management services provider has net cash of £20.1m following last year’s flotation. The acquisition of Meyler will expand the range of services provided in the US. The customer base is predominantly long-term and closed ended funds. A full year pre-tax profit of £1.1m is forecast.
Big Sofa Technologies (BST) has put itself up for sale and trading in the shares is suspended. The video and data analytics technology developer needs additional cash and it is difficult to raise funds in the market when there is so much uncertainty. The company expects proposals by the end of April.
The Wressle oil field development in north Lincolnshire is set to commence production in the second half of 2020 and Egdon Resources (EDG) has a 30% stake and is operator. Europa Oil and Gas (EOG) and Union Jack Oil (UJO) also have interests. The breakeven oil is estimated at $18/barrel. Production could start at 500 barrels a day. An application has been allowed against North Lincolnshire council for costs relating to delays in gaining a permit.
Diagnostic and precision testing services provider Diaceutics (DXRX) boosted revenues by 30% last year following its flotation. Although gross margins improved, a significant increase in headcount meant that pre-tax profit dipped to £500,000. The initial benefits of the investment in the business are showing through growth in Asia and other regions.
Regional property investor Real Estate investors (REI) increased its dividend by 7% to 3.8p a share. Like-for-like rental income was slightly lower at £16.9m and the weak retail property market led to a 3% reduction in EPRA NAV to 67.4p a share. Loan to value is 46.7%. The Midlands property market is strengthening ahead of the Commonwealth Games in Birmingham. An improvement in NAV to near-69p a share is forecast for 2020.
Xeros (XSG) has signed a joint development agreement with a global commercial laundry business. XFiltra micro-particle filtration technology will be included in the partner’s commercial washing machines. The EU plans to have micro-particle filtration in use by 2026. Xeros is likely to need to raise more cash next year.
Oncimmune (ONC) says NICE has completed a positive review of EarlyCDT Lung and believes that it can help in the early diagnosis of lung cancer.
MAIN MARKET
Trading in the shares of Boston International Holdings (BIH) has been suspended ahead of the proposed acquisition of invoice factoring company Alexanders Discount Ltd, which is based in the South East. Alexanders Discount accounts for the year to November 2019 are for a dormant company and the assets were worth £4. The standard list shell floated in October 2016.
Telecoms services provider Toople (TOOP) says that the integration of DMSL is ahead of plan and it has won two new contracts.
BATM Advanced Communications (BVC) is partnering with Novamed for an at-home COVID-19 diagnostic kit. The kit should be completed within four months.
AIQ Ltd (AIQ) has signed a conditional share purchase agreement for Alchemist Codes, a Malaysian IT services developer. AIQ is paying £2.3m in shares.
Andrew Hore