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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 28 November 2016
ISDX
Property investment company Ace Liberty & Stone (ALSP) says that one of its shareholders, Daniel Waylett, agreed to acquire a subsidiary that owns Colebrook Court in 2016. There was no specific date given, although the property was bought for £1.5m in shares during April. The payment for the disposal was £1.553m. Ace has drawn down a secured loan of £13.75m from Lloyds Bank and this has been used to purchase the property acquired last month in Hanley, as well as other existing property investments.
FT8 (GFT) is acquiring 49% of Australian fintech company Billyst Holdings. FT8 is issuing 142.4 million shares at 1p each to Billyst for the 49% stake. This will give Billyst, which is developing debt collection systems, 16.2% of FT8. So far, Billyst, which has not been around long enough to produce figures, has invested £267,000 in its technology. Billyst has agreed to loan FT8 A$500,000 (£297,000), interest free, for 18 months, but it will need to raise more cash to do this. FT8 had less than £3,000 in the bank at the end of June 2016 so it needs more cash.
Wine maker Chapel Down (CDGP) says that it has had its highest quality harvest ever, although yields were slightly lower than expected. The 2016 harvest was the third largest in the company’s history. A good summer made up for some of the shortfall earlier in the year.
Energy efficiency and electronics products supplier Sandal (SAND) says that trading is in line with forecast. Sainsbury’s will be selling MiHome products in 100 stores prior to Christmas, while Argos will be including them in its catalogue from February. House broker Daniel Stewart expects Sandal to move into profit this year.
Imperial Minerals (IMPP) had £96,000 of cash and financial assets – including a stake in AIM-quoted North River Resources (NRR) – at the end of June 2016, following a £53,000 cash outflow in the previous year. Imperial tried to acquire a Welsh hydro-electric project but there was a problem with the complex ownership of the project. However, management believes that recovering commodity prices could provide potential resources investment opportunities.
South Africa-based social impact investor Inqo Investments (INQO) has been improving room rates and occupancy at the South Africa-based leisure resort Kuzuko Lodge and the second half should be much stronger as tourists benefit from the weak Rand. In the six months to August 2016, group revenues grew from R3.23m to R5.32m, which made an increased loss before an increase in other income from R2.06m to R14m is taken into account. The other income in the recent period was due to the negotiation of loan settlements leading to interest write-backs. Kuzuko Lodge made a reduced loss, while the first revenues from the Bee Sweet Honey investment will not show through until 2017-18.
AIM
The closure of GB Energy Supply could provide opportunities for AIM-quoted energy suppliers Flow (FLOW) and Good Energy (GOOD), which is also quoted on ISDX. GB Energy had revenues of £22.2m in 2015 and it is estimated to have around 160,000 customers. Regulator OFGEM is overseeing a transfer of customers to new suppliers but customers could then choose to change from the suppliers they have been allocated. In 2015, Good had energy supply revenues of £56.6m, while Flow’s were £40.1m.
Belvoir Lettings (BLV) says it is difficult to predict what impact the announcement that letting agents in England will not be allowed to charge fees to tenants. There will be consultation before this change is brought in. Belvoir says that less than 10% of the income of its franchisees is from fees paid by tenants but in terms of Belvoir it is less than 8%. There may be more pressure on smaller, independent letting agents and this may provide acquisition opportunities for franchisees or a chance to grow organically in their existing markets if independents leave the market.
Cough treatments developer Verona Pharma (VRP) plans to gain a US listing in the first half of 2017. The flotation is subject to regulatory approval and market conditions.
Music hardware and software developer Focusrite (TUNE) beat expectations in the year to August 2016. Revenues improved from £48m to £54.3m thanks to a strong fourth quarter with growth being enhanced by the launch of the second generation Scarlett product range (focused on the sub-$500 market). Underlying pre-tax profit rose from £7.2m to £7.7m. The US remains a major market but the company had to improve credit terms to its distributor which hampered cash generation. Even so, there was still £5.6m in the bank. Focusrite wants to grow in Asia where its market share lags the levels in North America and Europe. There are potential acquisitions that Focusrite is keeping its eye on but there is no certainty that there will be any deals in the short-term. A new chief executive has been identified but his appointment is still being finalised. A full year profit of £8m is forecast.
Alternative Networks (AN.) is recommending a bid from former AIM company and rival telecoms and managed services provider Daisy, which is a consolidator in the sector. The bid of 335p a share values Alternative Networks at £165.3m. The company’s directors mention the uncertainty in the telecoms market as part of their reason for recommending the bid.
BP Marsh (BPM) has invested £75,000 in The Fiducia MGA Company, in the form of a 25% stake in the company’s cumulative preferred ordinary shares. On top of this, BP Marsh is lending up to £1.725m to the UK marine cargo underwriting agency. An initial £350,000 will be drawn down and further draw downs are dependent on Fiducia meeting conditions outlined in an agreed business plan. Fiducia founder Gerry Sheehy has more than three decades of experience in the insurance industry. BP Marsh is also keen to expand in the managing general agency business in North America
Jonas Computing (UK) has decided not to make an offer for ServicePower Technologies (SVR) but Diversis Capital may be willing to offer 6p a share.
MAIN MARKET
Standard list cash shell Senterra Energy (SEN) is no longer acquiring sim-card technology business Oasis Smart Sim PTE. The deal was first announced six months ago. The seller has withdrawn from negotiations. The Singapore-based company had 2015 revenues of $13m. Senterra was going to provide a £500,000 loan to the acquisition target but it never lent any money. Senterra continues to seek a technology acquisition rather than the oil and gas acquisition it originally focused on. The share price slumped to 2.5p when it returned from suspension. The flotation price was 5p. There was £1m in the bank at the end of June 2016 – equivalent to 3.7p a share – but that is likely to be lower now.
A winding up order has been issued against Worthington (WRN) following the Pension Protection Fund’s (PPF) rejection of a proposed company voluntary arrangement (CVA). Worthington is seeking a Judicial Review of the PPF decision.
Upland Resources Ltd (UPL) is buying a 10% stake in UK onshore licences, in which the Wressle field is sited, from AIM-quoted Europa Oil & Gas (EOG) for £1.6m in cash and shares plus a further £250,000 in contingent consideration based on the level of production from the Wressle field. Initial commercial oil flows of 500 barrels a day are expected from the North Lincolnshire field early next year. Europa retains a 20% stake. A £2.2m placing at 1.3p a share by Upland will finance the cash consideration and fund some exploration spending. When Upland joined the standard list one year ago it raised £1.3m at 1p a share. There was just over £1m in the balance sheet at the end of June 2016.
Andrew Hore
Quoted Micro 31 May 2016
ISDX
Transport safety technology developer Wheelsure Holdings (WHLP) increased its revenues by 47% to £133,000 in the six months to February 2016. However, the operating loss edged up to £120,000. Orders are still being received from London Underground but at a slower rate than expected. There are more tube lines that can order the Tracksure range of fasteners. Orders are also coming in from other European countries. Royalty income from the US remains modest. Tax losses almost total £4.5m. Daniel Stewart is hopeful that Wheelsure could break even this year.
Crossword Security (CCS) has won a contract with the Ministry of Defence that will lead to the development of blockchain enabled smart documents. The contract was won with the University of Warwick. Hybridan has been appointed as broker.
V22 (V22O) has made £225,000 from selling half of its option interest in a company that owns the freehold to a building in South Bermondsey. V2 has already received £150,000 with £75,000 payable by the end of June. V22 retains an option over 15% of the holding company that owns the building. At 0.9p a share, V22 is valued at £300,000.
The acquisition of the Akoko prospecting licence by Goldcrest Resources (GCRP) has been terminated because Goldcrest had not been able to join AIM by the end of May. A revised sale and purchase agreement may be possible.
Social impact investor Inqo Investments (INQO) has taken a stake in a Zambia-based organic honey producer. Bee Sweet Honey uses a network of small farmers in northern Zambia with each farmer having an average of ten beehives. The honey is exported to the US and EU.
AIM
TSX-listed WSP Group Inc has launched an agreed bid for rival professional services provider Sweett Group (CSG). The offer is 35p a share in cash, which values Sweett at £24m. The combined business will be a stronger competitor in global markets and Sweett will enhance WSP’s project and cost management services. There will also be cross-selling opportunities
Graphene supplier Directa Plus (DCTA) got off to a strong start on its first day of trading. A placing had raised £12.8m at 75p a share for the Italy-based company and they ended the first day at 105.5p. Unusually for a graphene producer, Directa Plus already has significant sales of product although it still loses money. The company has been trading for more than one decade and there are a wide range of potential uses for its graphene products, which it manufactures itself. In recent times, the graphene (in various forms) has been used for bicycle tyres, ski-wear and environmental remediation.
TechFinancials Inc (TECH) grew its revenues from trading platform software licensing in 2015 but problems with regulation hit the revenues of the company’s own trading platforms. This meant that TechFinancials slumped from profit into loss. New joint ventures will help to boost revenues but they will take time to make a significant contribution. There is $3.4m in the bank and first quarter trading is in line with expectations.
Regenerative medical devices developer Tissue Regenix (TRX) says that the sales of wound care product DermaPure have exceeded expectations. Sales are building up in the US but the cost of the sales infrastructure and EU clinical trials mean that the group loss increased from £7.6m to £9.5m in the year to January 2016. Tissue Regenix has a strong balance sheet with £19.9m in the bank at the end of January 2016, thanks to the £19m placing at 19p a share, which was completed at the beginning of last year. Sales may begin in the EU could commence in this financial year.
Redx Pharma (REDX) continues to build a commercially-focused pipeline in oncology, anti-infectives and immunology. A development candidate has been selected for the potential treatment of pancreatic, head and neck and triple negative breast cancer. Human studies of RDX004 are set to start in early 2017. The pipeline continues to expand with plans to identify another development content by the end of 2016. There is pro forma cash of £14.4m.
Telecoms billing and CRM software supplier Cerillion (CER) increased its recurring revenues by 22% to £2.2m in the six months to March 2016. That is nearly one-third of total revenues of £6.85m, while underlying pre-tax profit improved by one-fifth to £703,000. The move into cloud-based services should enhance recurring revenues. There is also potential for acquisitions. Even though Cerillion has only been quoted for a few weeks it is paying a dividend of 1.3p a share.
MAIN MARKET
Standard listed CML Microsystems (CML) is acquiring China-based fabless semiconductor company Wuxi Sicomm Technologies for $11m in cash and shares. The wireless semiconductors supplier has around £11m in the bank so it can afford the acquisition. The deal will enable CML to address higher volume markets. Joint broker SP Angel has not updated its forecast yet. The 2015-16 figures should will be published on 14 June.
Illustrated book publisher Quarto (QTR) says that first quarter revenues have increased from $28.4m to $33.3m. This is a quieter period for the group and this year will be even more second half weighted. Net debt has fallen to $67.6m, compared with $77.6m 12 months earlier.
Standard list cash shell Senterra Energy (SEN) has secured a deal to acquire a sim-card technology business rather than an oil and gas business as originally envisaged. Singapore-based Oasis Smart Sim PTE had 2015 revenues of $13m with most of the revenues generated from 2G, 3G and 4G SIM cards. Senterra is providing a £500,000 loan to the acquisition target. The deal requires shareholder approval because it is outside of the company’s investing strategy. Trading in the shares has been suspended. Existing Senterra shareholders will end up with 15% of the group before any fundraising.
ANDREW HORE