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Quoted Micro 5 September 2016
ISDX
Guild Acquisitions (GAQO) has invested £30,000 in NOMAN Ventures Ltd, which is seeking investments in areas such as block chain, artificial intelligence, drones and virtual reality. The cash is being invested in convertible loan notes that will either be convertible at a 40% discount to the share price of the next fundraising of at least £250,000 or after 12 months. Guild plans to ask its shareholders to vote to change its name to Kryptonite 1.
St Marks Homes (SMAP) increased its NAV to 137p a share by the end of June 2016. A Richmond development was completed in March and three sales have been completed since June. Sutton and St Margarets sites will be completed this month, with all of the Sutton residential units already sold and the commercial space under offer. The merger with St Marks Contracts Ltd happened after the period end. Carbury Property Holdings has increased its stake in St Marks to 19.1%.
Via Developments (VIA1) says that it expects to start generating revenues in the final quarter of 2016. Cash raised from debenture issues has been used to buy three development sites – two in Manchester and one in Luton – costing £4.1m and with a development value of £18.3m within 18 months. The marketing of the first development in Manchester has begun. The company says that it is seeing more interest from foreign investors since the EU referendum. Via Developments has issued more ordinary shares but Pyramid Court Investments Ltd, which is owned by John Kahn, still holds 100% of these unquoted shares.
Secured Property Developments (SPD) has agreed to lend £600,000 for development finance to Space Property, which is 29.15% owned by Secure Property Developments director R Shane. This means that shareholders have to agree to the deal. The cash will lent for 12 months at 10.2% a year and it will be secured on a freehold commercial property in York. Secured Property Developments had £760,000 in the bank following the sale of its property asset.
Black Sea Property (BSP) has joined ISDX and 50,000 shares were traded at 0.01p each on the first day of trading (31 August). The former AIM company has a new strategy, which is to build up a portfolio of Bulgarian property assets. This could be residential, commercial or hotel properties, or it could be investments in distressed companies that need to be restructured.
Diversified Oil & Gas (DOIL) has raised a further £715,000, taking the value of bonds in issue to more than £10.6m. That is after buying back £197,000 worth of 8.5% unsecured bonds from a bondholder fund.
Crossword Cybersecurity (CCS) has appointed former chief of the secret intelligence service Sir Richard Dearlove as non-executive chairman.
AIM
EMIS (EMIS) reported flat interim revenues but profit improved. The GP and pharmacy software operations grew their profit but the specialist operations produced disappointing results due to the extra costs for taking on additional contracts. There were cost savings in the first half and the benefits will start to come through in the second half. Full year profit is expected to improve from £36.1m to £39.3m even though revenue forecasts have been shaved.
Facilities management and security services provider Mortice (MORT) grew its revenues by 51% to $133.5m in the year to March 2016 and even if acquisitions are stripped out underlying growth is still 13%. There were initial contributions from the UK and Singapore businesses acquired during the year but they will make a much bigger contribution this year – particularly as the UK facilities management business has won a major contract. India remains the main revenue generator but further acquisitions are likely. There should be a large increase in pre-tax profit in 2016-17 – house broker finnCap forecasts $4.2m.
Surgical instruments developer and supplier Surgical Innovations (SUN) has returned to profit at the operating level and there is still scope to improve gross margin. A small pre-tax profit is expected for the full year as new product launches boost second half sales. A sharp fall in inventories and debtors has helped to cut net debt to around £700,000. The underlying business is back on a firmer footing and management can turn its attention to building up the group via acquisition.
Bond International Software (BDI) says that it has received a bid approach from ESW Capital but no figure has been put on the potential offer. The Bond board has advised shareholders not to accept the Constellation Software bid of 105p a share. The offer document has been sent to shareholders.
MAIN MARKET
Investment in new products is starting to pay off for BATM (BVC) but the real benefits are unlikely to show through until next year’s figures. BATM reduced its interim loss and it is on course to move back into profit this year. Revenues declined in the first half because of reducing sales of legacy products, particularly in the networking sector, but newer products will boost second half revenues. The diagnostics business grew its revenues and it has secured a partner in China. A pre-tax profit of $2.7m is forecast for 2016 and that profit should double in 2017 as the newer products build up sales.
Cathay International Holdings (CTI) has investments in China-based healthcare businesses and a hotel. Revenues dipped slightly to $61.1m but higher gross margins meant that the company swung from loss to profit in the six months to June 2016. The main improvement came from 50.5%-owned Lansen. Trading would have been even stronger but for the decline in the RMB.
Gulf Keystone Petroleum (GKP) has launched an open offer to raise £19.1m at 0.8314p a share as part of its restructuring. The open offer closes on 15 September.
Quoted Micro 20 June 2016
ISDX
Residential property developer St Mark Homes (SMAP) is bidding for related company St Marks Contracts Ltd. The recommended offer is a one-for-one share swap. That looks fair as the adjusted NAV of each of the companies is around 128.5p a share. That is after St Mark Homes pays its interim dividend of 5p a share. The directors that the two companies have in common were not involved in the negotiations. The idea behind the deal is that the enlarged group should be able to participate in larger projects.
Equatorial Mining & Exploration (EM.P) says that it has engaged a contract mining company to open up an access road into a planned mining lease in Nigeria in anticipation of its imminent grant, which is subject to a final fee of £15,000. Equatorial needs additional funding for exploration and working capital and it is talking to investors. The company’s activity has been limited in order for it to be able to keep going until finance can be obtained. A half year trading update will be published at the end of this month
Hellenic Capital (HECP) director Gavin Burnell has more than doubled his stake in the investment company, taking it to 29.9%. The recent purchase of 9.5 million shares was at 0.137p each. That is below the current bid price of 0.2p.
African Pioneer (APPP) is asking its shareholders to approve its withdrawal from ISDX. The vote will be held at the AGM on 30 June. If the resolution is passed then trading will end on 1 July.
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AIM
Wireless control technology developer Cyan Holdings (CYAN) is acquiring Connode, which supplies wireless-based technology for smart meters and the internet of things, for £6.8m – £4.3m in cash and £2.5m in shares. This deal provides a European customer base and an opportunity to generate revenues from the smart meter roll out in the UK. Cyan is raising £10.1m at 0.18p a share and this includes a £2m subscription by JS Technical Services, a Thailand-based distributor of Cyan products. The share capital will be doubled following these share issues. Directors and some of the senior management will take their income and bonuses in shares at the same price – expected to be equivalent to £730,000.
Seeing Machines (SEE) has supplied an initial 1,000 Guardian on-road driver fatigue units to a distributor set up by VSI Berhad, the Malaysian business that recently took a 12% stake in the company at 5.2p a share – a significant premium to the current market price. The units will be sold in Malaysia and Singapore. According to finnCap, Seeing Machines should have net cash of A$5m by the end of June 2017 and there are $10m worth of further payments to come from the Caterpillar deal.
Risk management and compliance software developer Lombard Risk Management (LRM) is raising up to £8.76m through a placing and one-for-35 open offer at 8.75p a share. The cash will be invested in developing existing and future software products. A trebled loss of £6.6m is forecast for this year but Lombard is expected to move into profit next year – after capitalised development spending.
Hydro International (HYD) has recommended a £28m bid from Ely Acquisitions. The Hanover Active Equity Fund-backed acquisition vehicle is offering 194p a share in cash for the stormwater and wastewater equipment supplier.
Dekeloil (DKL) is buying out most of the minority interests in the Ayenouan palm oil mill in the Ivory Coast. This will take the Dekeloil stake to 86% and it will be financed by a £12.75m placing at 1.325p a share. The purchase price effectively values the mill at €42.9m and the deal should be earnings enhancing. The rest of the minority interest will eventually be acquired. Cantor Fitzgerald forecasts a 2016 profit of €4.9m, rising to €7.5m next year.
MAIN MARKET
CML Microsystems (CML) is showing signs of benefiting from a recovery in demand thanks to new contracts. In the year to March 2016, revenues improved from £21.8m to £22.8m, while underlying pre-tax profit moved ahead from £3.17m to £3.44m. The dividend was increased from 6.9p a share to 7p a share. The recently announced Chinese acquisition will not be completed for around three months.
A pre-feasibility study for the Batangas gold project, where Bluebird Merchant Ventures (BMV) has an option to increase its 25% stake to 50.1%, shows that it could generate $34m of free cash during its first seven years of production (assuming a gold price of $1,250/ounce). The upfront capital costs are $16m. Estimated operating costs are $735/ounce of recovered gold. Recovered gold production is forecast at 116,000 ounces and there are an additional 320,000 ounces of inferred gold resources. A definitive feasibility study should be completed by the end of the year.
Highlands Natural Resources (HNR) is reversing its recently acquired helium prospects in Montana into fellow standard list shell Opera Investments (OPRA), which previously had a reversal deal that fell through. The purchase price is £4m in Opera shares valued at 15p each. Opera plans to raise at least $750,000 to finance investment in the assets. Highlands will be the majority shareholder in the company.
ANDREW HORE
Quoted Micro 23 May 2016
ISDX
IMC Exploration (IMCP) has published its prospectus for the proposed switch to the standard list. The prospectus has been approved by the Central Bank of Ireland. The switch should happen by the end of May. At 1.5p (1p/2p) a share, IMC is valued at £1.6m.
St Mark Homes (SMAP) is trading at a discount of one-fifth to its NAV at the end of 2015. At 105p (90p/120p) a share, St Marks is valued at £3.1m, compared with the latest NAV of £3.95m. In 2015, pre-tax profit dipped from £579,000 to £549,000. The regional house builder has three projects in Surrey which will contribute to profit in 2016 and 2017, while the final two sales at Cheltenham were made earlier this year and there have been initial sales in Richmond. St Mark has already paid a dividend of 4.5p a share. Obtaining sufficient capital is difficult and it is holding back progress.
FT8 (GFT) has raised £173,000 at 0.7p a share in order to provide working capital following the news that a $1.5m finance package that was revealed last year has not become available. At 0.65p (0.6p/0.7p) a share, FT8, which was formerly Ezybonds, is valued at £4.8m. Last week, 65,000 shares were traded at 0.6p each – the first deal since March.
AIM
Seeing Machines (SEE) has signed a term sheet with a US investment fund which should mark the start of the process of spinning off the automotive technology operations of the company into a separate company, which will focus on the development of this technology. Seeing Machines will retain a significant stake. A product has already been provided to a customer and it will be in cars launched in 2018 – slightly later than hoped.
Greka Engineering & Technology Ltd (GEL), one of the spin offs from China-focused coal mine methane producer Golden Dragon Gas, plans to leave AIM. Trading in the shares of the s-making gas engineering and technology business has been limited since the spin off in September 2013. The board already has the backing of the owners of more than 75% of the shares so this will go ahead. Charles Stanley has been given the job of acquiring shares in the market at 0.8p each up until the quotation is cancelled.
Storm and waste water treatment equipment manufacturer Hydro International (HYD) has received a bid approach from major shareholder Hanover Investors. Hanover took a 17.5% stake in the middle of January and the share price has risen by one-third since then. The order book continued to grow in the first quarter, with orders in the North American wastewater market recovering. However, the orders will not contribute significantly until the second half of 2016.
HML Holdings (HML) has acquired Essex-based residential property lettings firm Homes & Watson Partnership for £360,000. The deal adds 1,400 units taking the group total to around 60,000. Trading is in line with expectations so pre-tax profit for the year to March 2016 should be £1.6m.
Karelian Diamond Resources (KDR) has raised £250,000 at 0.8p a share and this will help to fund development of the Lahtojoki diamond project. Each new share has a warrant attached that provides the opportunity to subscribe for another share at 1.6p each. They have to be exercised if the share price is at or above 5p for at least ten days.
TV and digital publishing company Ten Alps (TAL) has warned that recovery is taking much longer than expected. The television programme production business is doing well despite commissioning delays but publishing remains a problem area and it continues to lose money. The group loss for the year to June 2016 is likely to be lower than last year. Parts of the publishing division will be sold and the rest restructured.
Residential property developer Formation Group (FRM) fell into loss at the interim stage but there should be significant profits in the second half. There is £3.9m of profit share to come from the Norwich House development and there will be profit from the Iverson Road development. An interim profit was reported due to the writing back of a loan previously provided for but higher admin expenses meant that there was an operating loss. NAV rose from £7.6m to nearly £10m.
Latest edition of AIM Journal available here.
MAIN MARKET
North Midland Construction (NMD) continued to be profitable in the first quarter of this year having returned to profit in 2015. The order book for 2016 is around £200m with more to come from framework contracts. Only one costly legacy contract remains to be sorted out. The utilities division remains loss-making and existing contracts being reviewed. Civil engineering made a small first quarter profit. The main improvement came in the water-infrastructure business even though the latest AMP6 capital spending regulatory cycle is still building up. The main focus of the group is improving margins plus better cash collection.
ANDREW HORE