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easyJet Blames Brexit For Weak Customer Demand And Soft Yield – Ian Pollard
easyJet plc EZY is not really looking forward with enthusiasm to its results for the six months which ended on the 31st March. Even for its winter period things look to have been difficult. Whilst revenue is expected to have grown by 7.3%, that was from seat capacity which was up by 14.5%, Revenue per seat is expected to have declined by about 7.4% Total headline costs in the first half are expected to increase by circa 18.8% due to increased capacity, higher fuel unit costs and a modest increase in cost per seat excluding fuel. easyJet is not backward in calling on Brexit to share the blame for its performance. Weaker customer demand which is being experience is blamed directly on macroeconomic uncertainty and “many unanswered questions surrounding Brexit”. Ticket yields in the UK and across Europe are also showing increasing signs of softness. All this uncertainty makes the company cautious about the future.Good to see that only external causes are to blame for the problems and they are nothing to do with management.
Sports Direct Intl plc SPD Mike Ashley has become so concerned for the future of other shareholders of Debenhams that he has written to the Debenhams Board in the hope that he can help it by demanding that it takes immediate steps to install him as CEO, The reason behind his thinking is that there is clearly no time to wait for a General Meeting to be called in order for this to be effected by shareholders. Giving shareholders their democratic rights, is it seems to be carefully avoided in some circumstances.
Codemaster Group Holdings CDM updates that trading through the second half of the year has continued to be strong. The Company anticipates reporting FY19 revenues of c.£71 million for the year to the end of March and adjusted EBITDA ,ahead of market expectations at .£18.5 million.
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Ian Pollard – Sports Direct #SPD splashing the cash
Sports Direct Intl. plc SPD has confirmed that it is considering making a firm offer to Debenhams of 5p in cash per ordinary share valuing Debenhams current issued share capital at approximately £61.4 million. This would represent a premium of approximately 127 % to the closing price of Debenhams shares on 26 March.
Imperial Brands plc IMB updates that it is on track to meet constant currency net revenue and earnings expectations for the full year. Group net revenue growth is at, or above, the upper end of its 1-4% revenue growth range and earnings per share growth is within its 4-8% guidance range. Even tobacco is on track to deliver modest revenue growth.
Bellway plc BWY claims a robust performance for the six months to the 31st January with revenue rising by 12.4%, profit before tax by 8.7% and earnings per share by 8.3%. The interim dividend is to be raised by 5% but even more important than that is a sign which makes it appear that old fashioned boom times may be returning. The average selling price during the half year has risen by 6.5% which makes a number of the other housebuilders look quite pedestrian by comparison, unless they are about to play catch up when they release their latest figures. No wonder the much subsidised industry remains the governmments friend.
Hilton Food Group plc HFG saw revenue on a constant currency basis rise by 21.9% during the year to the end of December, whilst volume was up by 13.5%. After rises of 23.3% in adjusted profit before tax and 14.3% in adjusted basic earnings per share of 14.3%, the increase in the final dividend brings the total increases for the year to 12.6%.
Goals Soccer Centres GOAL has requested that its shares be suspended from trading on AIM. after announcing that there has been a substantial misdeclaration of VAT, going back over several years. The value currently stands at approximately £12.0 m.but the final figure has still to be established. Future profitability may be impacted by the accounting policies which the company intends to adopt and it remains in discussions with its lenders about new facilities.These may lead to a material change in the overall financial position of the company and it is currently unable to provide clarity as to the extent of that impact without the receipt of further information.
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Andrew Hore – Quoted Micro 25 March 2019
NEX EXCHANGE
Good Energy (GOOD) increased full year revenues from continuing operations from £104.5m to £116.9m, helped by last winter’s cold weather and a price increase, and pre-tax profit recovered from £700,000 to £1.7m. The renewable electricity supplier and generator has increased its dividend from 3.3p a share to 3.5p a share. Net debt was £40.1m at the end of 2018. Energy supply volumes increased by 3%, but domestic volumes were 1.2% lower in an increasingly competitive market. The growth came in the business side, which increased volumes by 23%. Good Energy generates energy from six solar sites and two wind farms. The company expects to continue to grow business volumes and invest in digital technology. Non-executive director Nemone Wynn-Evans has bought 9,500 shares at 105p each.
Trading in PCG Entertainment (PCGE) shares has been suspended because it is in talks to acquire VOX Markets and Align Research.
Karoo Energy (KEP) has been told by its potential nominated adviser does not believe its is suitable for an AIM quotation. This also means that the planned fundraising cannot go ahead. A refinancing is required. There are trade creditors of around £300,000. Trading in the shares has been suspended.
Primorus Investments (PRIM) has maintained its 3.4% stake in Fresho by participating in its latest fundraising, which was at a 76% premium to the price paid for the initial investment. The investment is worth A$673,000.
Dana Group International Investments Ltd (DANA) reported swing from loss of $129,000 to a profit of $95,000 in the six months to December 2018, due to other income of $276,000.
Tectonic Gold (TAU) says that roc chip samples from the Clermont project in Queensland show up to 8.01g/t gold, 140g/t silver and 6.32% copper.
Panther Metals (PALM) has completed the acquisition of Parthian Resources and its former shareholders own 16.1% of Panther.
Inqo Investments Ltd (INQO) has raised a further £225,000 at 90p a share.
Imperial X (IMPP) has changed its focus to medicinal cannabis. There was a small cash outflow in the six months to the end of December 2018. There was nearly £70,000 in the bank with net cash of £19,000. There are net liabilities and more cash will be required later this year.
Steve Howson is stepping down as chief executive of SG Recruitment Ltd (SGRL) and he will become a non-executive director. Majority shareholder David Sumner will be interim chief executive.
AIM
Footasylum (FOOT) has recommended a 82.5p a share bid from JD Sports Fashion (SPD) which values the footwear retailer at £90.1m. JD Sports was buying shares between 50p and 75p and built up a 18.7% stake. The bidder promises to maintain the separate commercial identity. Footasylum floated in November 2017 at 164p a share.
Diaceutics (DXRX) ended the week at 97.5p, having floated at 72p. The company provides data analysis and advisory services to pharma companies seeking to develop and commercialise diagnostic tests. There were £15.2m of placing proceeds net of expenses and £5.5m will be spent on the acquisition of data, while the rest will be used to pay off debt and develop AI analysis technology. There is limited liquidity in the shares because they are tightly held.
Wynnstay Group (WYN) warns that trading in the second quarter is weak because of the warmer winter weather. There has also been a weakening in farmgate prices. Interim figures will be well below the first half of last year and the full year will be below forecast. Peel Hunt argues that it has already factored these elements into its forecast for rival feed supplier NWF (NWF) and it is not changing its forecasts.
Pelatro (PTRO) has launched a data monetisation platform with a revenue share contract with an existing client, which is worth $500,000 in the first year. This is a product that can be sold to other customers.
Financial trading platform Aquis Exchange (AQX) reported 2018 revenues ahead of expectations and it doubled its market share during the year. The subscription-based model means that higher trading levels by a trader lead to subscription income levels going up. Aquis will continue to be loss-making this year, but the relatively fixed cost base means that once this is covered the profit should grow significantly as revenues grow.
Scientific instruments supplier Judges Scientific (JDG) increased is cash generation from operations from £10.9m to £15.7m in 2018. There was 5.5% organic growth in revenues and underlying operating profit rose by just over one-third to £14.7m. The cash balance has increased to £15.7m, which provides firepower for acquisitions. Shore Capital has edged up its earnings per share forecast from 188.8p to 190p.
Volvere (VLE) says full year revenues from continuing operations will rise from £16.2m to £18.6m. There was a £23.1m gain on the sale of Impetus Automotive. There was an underlying loss on continuing activities, but the frozen pie maker Shire Foods improved its profit contribution. There is £34.1m of cash in the Volvere balance sheet.
Frontier IP (FIPP) says that the outcome for the year to June 2019 is likely to be ahead of management expectations. A deal by investee company Exscientia, which is involved in AI-based drug discovery, with Celgene Corporation should result in a substantial uplift in its valuation.
Science in Sport (SIS) had a 25-day contribution from the profitable PhD Nutrition business in 2018. The group’s underlying loss increased last year, but PhD will help to reduce the loss and the cash outflow from operations, which was £6.42m last year. There is £8m in the bank and even with capital investment requirements that should be enough to cover requirements this year.
Ceramic products supplier Portmeirion Group (PMP) increased its 2018 pre-tax profit by 10% to £9.7m and a further rise to £10.3m is forecast for this year. Online sales are growing rapidly from a relatively low base. The home fragrance business is doing well, and capacity is being added. The total dividend is 8% higher at 35.7p a share.
Share (SHRE) improved its significantly improved its profitability in the second half of 2018, although trading levels weakened towards the end of the year. That weakness has continued into the early months of this year. Evan so, Cenkos forecasts a rise in pre-tax profit from £700,000 to £1.3m, upgraded from £1.1m, in 2019.
Clear Leisure (CLP) has placed its 50%-owned data mining operation in Serbia on a care and maintenance basis. This is due to the fall in the price of cryptocurrency. Legal actions and negotiations continue concerning a number of past investments. Clear has paid £76,000 for a 10% stake in PBV, which provides data services for the Italian legal sector. At the end of 2018, there were €2.1m of bonds converted into shares.
Andrew Perloff has increased his stake in 600 Group (SIXH) from 6.19% to 8.85%.
Midatech Pharma (MTPH) has changed the ratio of its ADRs from two shares for each ADR to 20 shares for each ADR. This is a way of getting the trading price of the ADRs on NASDAQ back above $1.
EQTEC (EQT) could be a beneficiary of the deal done by its largest shareholder EBIOSS with Urbaser for the collection, treatment and possible conversion of waste to energy. Urbaser is conducting due diligence on EQTEC’s gasification technology and this could be used for any waste to energy plant if all three parties come to an agreement on a specific opportunity. Projects could be in Bulgaria, Greece, Macedonia and Romania.
A local authority report has placed a five year reserve status on the Plymouth Airport site where Sutton Harbour (SUH) has a 135 year lease. The local authorities are keen that the site should be used for general aviation, but a viable business plan needs to be put together. Sutton Harbour would like to develop the site.
Tau Capital (TAU) has sent a circular to shareholders concerning a capital return of $1.19m or 2.42 cents a share, raise $150,000 via a placing at 0.1 cents a share and change its name to UK Onshore. Reverse takeover candidates are being assessed. Gerwyn Williams and Nigel Burton will join the board.
Synectics (SNX) has won a £1m order from the oil and gas sector. This is the largest order for its surveillance systems from this sector for a number of years. Synectics reported a rise in full year revenues from £70.1m to £71.2m and pre-tax profit slipped from £3.02m to £2.86m. The full year dividend is increased from 4p a share to 4.7p a share.
MAIN MARKET
Athelney Trust (ATY) has responded to the letter from former director Dr Pohl, who wants to regain his place on the board along with Simon Moore and remove David Lawman. Dr Pohl has acquired more than 100,000 shares in the past month, and this means that five shareholders own more than 50% of the investment company putting its investment trust status at risk. As long as there is more than 35% of the company held by the public this is not a problem, but it would be if Dr Pohl joined the board. There have been £90,000 of extra costs because of disputes between the two major shareholders. The plan remains to bring Gresham House on board as fund manager
WideCells Group (WDC) is changing its name to Iconic Labs and moving into digital marketing and technology. The management of this business previously built up social publisher Unilad. In the first 12 months, an agency consulting division will be launched to assists clients to develop brands. There are plans to build up a distribution and publishing division through acquisitions and launch content licensing and e-commerce divisions. There is little indication of what will happen to the stem cell operations, although management appears to believe that the insurance business could be worth pursuing. Historic liabilities are being resolved. The convertible loan note holder continues to convert a proportion of the loan note that is below 30% and then sell the shares. There are 785.6 million shares in issue with more to come.
Bluebird Merchant Ventures (BMV) has raised £436,500 at 2.25p a share. The cash will be used for the pre-construction phase of the South Korean gold projects. An agreement has been made with a local landowner for the use of land outside the main entrance of the Kochang mine.
Highlands Natural Resources (HNR) has raised £1.56m at 8.5p a share via an offer through PrimaryBid.com. This cash will fund a move by the natural resources company into the organic cannabidiol market. It has established Zoetic Organics in the US and it believes that hydrogen produced by Highland in Kansas can be used as a fertiliser with potential to increase the size of the plant. First revenues could be achieved in the summer.
Standard list shell Stranger Holdings (STHP) claims that Alchemy Utilities Ltd has sabotaged the proposed reverse takeover by refusing to provide audited accounts. Stranger is trying to get back the £300,000 it lent to Alchemy as well as its reverse takeover costs of £450,000. Stranger believes that the Alchemy management team may have misrepresented its financial status. An alternative acquisition is being lined up, but Stranger had negative net assets at the end of September 2018 and there are additional costs since then.
Standard list shell Hertsford Capital (HERT) still had £2.88m in cash at the end of 2018.
Telecoms services provider Toople (TOOP) is growing its gross profit but EBITDA is similar to the same period last year, which was around £650,000.
PV Crystalox Solar (PVCS) has ended its wafer production activities in Germany and it intends to apply its wire sawing expertise to cutting non-silicon materials. There are plans to return £38.5m to shareholders, which is equivalent to 24p a share and that is not far short of the current market price. That could still leave more than €10m of cash. Management is considering whether to maintain a listing.
Sure Ventures (SURE) says 23%-owned Suir Valley Ventures has maintained its 10% stake in WarDucks, which is developing an AR game, by participating in a €3.3m fundraising.
Andrew Hore
Andrew Hore – Quoted Micro 11 February 2019
NEX EXCHANGE
Primorus Investments (PRIM) says that investee company Sport:80 has delayed its flotation because it has been tidying up its shareholder register. Fintech company Engage Technology is also seeking to float later in 2019 following new product launches. Engage raised £2.6m at £22 a share at the end of 2018, whereas the average buying price by Primorus was £20.03 a share. Investee company, AIM-quoted Greatland Gold (GGP) has published results from the second drilling campaign at Havieron in Western Australia. Every drill hole intersected mineralisation and they extend the overall mineralisation. Drilling will recommence in March. Primorus has raised cash by selling most of the stake in UK Oil and Gas (UKOG) and Primorus was debt free at the end of 2018.
NEX has decided not to suspend trading in the shares of VI Mining (VIM) even though its corporate adviser Daniel Stewart is no longer a member of NEX. VI Mining had little or no notice of its adviser’s withdrawal. A new corporate adviser is being sought.
Milamber Ventures (MLVP) has acquired apprenticeship training provider Astara Training for £16,666 in shares at 9p each. Milamber lost £179,000 in the third quarter and there was £30,000 in the bank at the end of 2018.
Panther Metals (PALM) has announced the initial results of exploration activity at the Bear Lake project in Ontario. There was gold in soil anomalies at four of the five areas tested. Four areas have quartz vein sample assays above 5g/t gold. Two samples had large grade samples. The next phase of exploration is being planned and could start in the second quarter of 2019.
Auxico Resources Canada Inc (AUAG) has signed a deal that could enable it to earn a 70% interest in a joint venture that owns the Palha tantalum property in northern Brazil.
AIM (February 2019 AIM Journal available here)
DP Poland (DPP) is running short of cash and is more than doubling its share capital through a heavily discounted placing raising £5.3m at 6p a share, with the possibility of an additional £500,000. The Domino’s Pizza franchisee for Poland has found competition is getting tougher and growth has slowed. The cash is required to cover losses and open more outlets. Peter Shaw is stepping down as chief executive at the end of June, nearly a decade after founding the business.
Ticketing and queueing technology provider Accesso Technology (ACSO) is reviewing its investment priorities although it says that 2018 figures should be broadly in line with expectations. These will be published on 27 March. A deal fell through and this cost $1.7m. Tom Burnet is moving from executive chairman to a non-exec role. The share price is less than one-third of last year’s high. BlackRock has cut its stake below 5%.
Midatech Pharma (MTPH) has launched a placing and 0.318-for-one open offer to raise up to £4.75m at 3.85p a share on top of the £8m subscription by former AIM company China Medical System Holdings, which will licence products for the Chinese market. The clinical trial for cancer treatment MTD201 will cost up to £7m.
Duke Royalty (DUKE) is acquiring its UK rival Capital Step and this will double the size of the portfolio to eleven investments and diversify it in terms of sectors. There is an initial £10m cash payment and the assumption of debt of £11.65m. There is performance related consideration of up to £1.5m. The deal is immediately earnings enhancing.
Visa has increased its bid for Earthport (EPO) from 30p a share to 37p a share, which beats the Mastercard offer of 33p a share. The latest bid values Earthport at £247m.
Taptica (TAP) has launched a recommended bid for RhythmOne (RTHM) and this will create one of the largest video advertising companies in the US. The offer is 28 Taptica shares for every 33 RhythmOne shares. Taptica shareholders will own 50.1% of the enlarged group. A $15m share buyback programme is planned after the merger. Ofer Druker will become chief executive.
Polemos (PLMO) has finalised the details of its reverse takeover of Digitalbox Publishing for £10m in shares and it is also acquiring the owner of the Daily Mash satirical news website for up to £1.2m in cash and shares. The model for the Entertainment Daily website will be used to improve the performance of the Daily Mash. A placing will raise £1.02m at 14p a share. The company will change its name to Digitalbox.
Hardide (HDD) is raising £3.6m at 1.5p a share so that it can move to new premises in the UK and invest in additional equipment. The surface coatings company is experiencing increasing demand from the oil and gas sector and there is potential for orders from aerospace companies. It will take two years to fully equip and move into the new facility. Hardide also intends to consolidate 40 shares into one new share.
finnCap has raised its forecasts for Tracsis (TRCS) following recent acquisitions. There is a 3% increase in earnings per share for this year and an 11% rise to 30.5p next year.
Stride Gaming (STR) has traded in line with previously downgraded expectations. Cost cutting continues to cover higher regulatory and tax costs. The online gaming operator will report a lower profit in 2018 and it is set to fall again in 2019. Net cash was £22.1m at the end of 2018.
Bowmark Capital has offered 110p a share for Tax Systems (TAX) and discussions continue. Tax Systems reduced net debt from £20.5m to £13.9m by the end of 2018. Pre-tax profit of £5.8m is forecast for 2018.
Victoria (VCP) has sold surplus land in Kidderminster for £2m. The land was in the books for £100,000 but it has obtained planning consent for housing.
Starcom (STAR) has renegotiated its agreement with Xplosive in South Africa, having originally announced it in October 2017. Xplosive has signed a 36-month agreement to pay a monthly fee for each of the Kylos units supplied for the monitoring of cattle. The fees are higher in the first six months and then reduce. The agreement should be worth $500,000.
Strix Group (KETL) has offered to acquire most of the assets of HaloSource (HAL) for $1.3m. Strix has provided working capital of $100,000. Due diligence is being carried out on the water filtration technology and if the deal goes through the cash will pay creditors, but there will be nothing for shareholders.
Prospex Oil and Gas (PXOG) has announced that the Selva gas field in northern Italy has net 2P reserves of 13.3bcf and there are 2.26bcf attributable to Prospex, which has a 17% stake. Selva could start production in 2020 at a rate of up to 150,000 cubic metres/day.
Tau Capital (TAU) plans to raise cash via a placing through Peterhouse and then a capital distribution will be made to all shareholders. This will enable Tau to seek an acquisition. It has until 18 April to secure a deal or trading in the shares will be suspended. Armstrong Investments has increased its stake from 11.7% to 15.7%.
Evgen Pharma (EVG) says that the SFX-01 clinical trial for subarachnoid haemorrhage is on course having completed recruitment and the primary endpoints should be available in the second quarter. Partners Investment Company has acquired at 3.15% stake.
Sports Direct International (SPD) made a £15m offer to buy Patisserie Valerie from the administrator, but this was not deemed enough. Even a higher selling price won’t provide anything for Patisserie Holdings shareholders.
MAIN MARKET
Solicitor DWF plans to raise £75m via a March flotation an some of the cash will repay members’ capital contributions as well as invest in the business. Existing shareholders will also sell shares and partners’ remaining stakes will be locked up until April 2024.
Two former AIM-quoted companies are coming together to join the standard list. Daniel Stewart Securities, which is closing its broking business, is making an offer for Atlantic Carbon, which was previously known as Atlantic Coal, where Adam Wilson, who has had connections with Daniel Stewart, is executive chairman. Singapore-based backer Epsilon Investments refused to put more money into the broker and that is why it is closing. Epsilon holds a majority stake in Hyde Park Holdings, which owns broker Novum Securities. Last October, SeeThruEquity research suggested that Atlantic had an equity value of $86.8m and $68m of debt. In 2017, Atlantic was the largest producer of anthracite in the US with a market share of one-third based on 1.18 million tonnes produced. Atlantic is expected to have moved into profit in 2018, although it did generate cash from operations in 2017. The owners of more than 50% of Atlantic shares have agreed to accept the bid of 1.5587 shares for each Atlantic share.
Thalassa Holdings (THAL) is offering 14.64p a share in cash and 0.26 of a share for each share in The Local Shopping REIT. Thalassa already owns 25.5% of the bid target, which is valued at 32.8p a share. The bid is an alternative to the winding up of The Local Shopping REIT.
Blockchain Worldwide (BLOC) is no longer acquiring blockchain technology developer Chorum Group because of political uncertainty affecting the UK equity markets. Former Avanti Communications boss David Williams is the director of Chorum. Blockchain Worldwide has more than £1m in the bank and is also looking at other technology sectors for acquisitions.
Drilling of the Colter appraisal well in Dorset has commenced and United Oil and Gas (UOG) has a 10% interest. The drilling should take three weeks. The Selva gas field in Italy has net 2P reserves of 2.7bcf attributable to United, which has a 20% stake. Selva could start production in 2020. United intends to move to AIM.
Oil and gas producer Zenith Energy (ZEN) has raised £607,000 in Canada and the UK at C$0.05 a share and 3p a share respectively.
Motor finance provider S and U (SUS) has confirmed that its figures for the year to January 2019 will be in line with expectations. The Aspen property bridging loan business had a loan book of £18m at the end of January 2019. Cautious lending criteria means that new business has slowed in recent months and this has led to a 5% 2019-20 earnings downgrade to 230.1p a share.
BATM (BVC) has won a $3.2m cyber security contract and this takes contracted revenues from this government customer to more than $10m. The latest contract will be delivered this year.
Chesterfield Resources (CHF) is expanding its exploration programme in Cyprus. Initial drilling in an area near historic mining has shown gold, copper and zinc mineralisation. Chesterfield is also applying for licences to extend its licence area.
Dev Clever (DEV) has launched pay per play multi-player, virtual reality game Vanguard: Fight for Rudiarius in Harlow shopping centre. The game will be rolled out to other UK sites.
Bluebird Merchant (BMV) has applied for a grant to help finance drilling at the Kochang project in South Korea and there should be news by the end of the month. There has also been a permit application to develop Kochang.
Andrew Hore
Ian Pollard – Galliford Try #GFRD, time to stop Government support for Housebuilders?
Galliford Try plc GFRD claims a very strong underlying performance for the year to the 30th June which is perhaps the understatement of the year, with profit before tax up by 145% and earnings per share by 128%. The final dividend is however reduced by 10%, following the re-statement of last years dividend. The continued financial support for the housebuilders by its friends in government begins to look more and more unjustified and more like an outright bribe to the industry in exchange for political support. This has become capitalist greed at its worst and nobody cares less that a direct consequence is that few can now afford what used to be a Tory birthright – ownership of your own home.
SSE plc SSE Things have not got any better for SSE after it issued its July update warning of the consequences of warm dry weather, lower consumption and higher gas prices, which were expected to impact first quarter operating profit by some £80m. It has continued to suffer from dry, still and warm weather and persistently high gas prices, resulting in higher energy costs, lower output from renewable sources and lower consumption. In the first five months operating profit has been negatively affected by about £190.m with the result that adjusted operating profit for the six months to 30 September 2018 is expected to be about halved from last year’s figure.
Sports Direct Intl SPD updates that its strategy to transform House of Fraser into the Harrods of the High Street will be ” a game changer.”, with current expectations that it will achieve between a 5% and 15% improvement in underlying EBITDA for the current financial year, excluding the acquisition of House of Fraser.
Dunelm Group DNLM reports what it describes as healthy sales growth during the last year which enables it to increase its final dividend by a mighty 1.9%. Group revenue for the year to the 30th June increased by 9.9% whilst like for like sales sales grew by 4.2%. Underlying operating profit before tax was down by 6.7%. The UK retail environment continues to remain challenging says the company but trading during the current financial year to date is in line with expectations .
Forget Brexit; Get A Greek Residence Permit Valid For The EU http://www.hiddengreece.net
Andrew Hore – Quoted Micro 23 July 2018
NEX EXCHANGE
Netalogue Technologies (NTLP) moved back into profit in the year to March 2018 and it is paying a dividend of 0.4p a share. The e-commerce technology company edged up revenues from £1.04m to £1.07m, while a loss of £46,000 was turned into a profit of £82,000, even after amortisation of £70,000, up from £20,000 in the previous year. Net assets of £770,000 include £502,000 of cash. There are a growing number of opportunities for this financial year.
Sativa Investments (SATI) has signed an IP sharing agreement with Canada-based Veritas Pharma. This could help with Sativa’s plans to grow medicinal cannabis and also help to choose a particular strain.
Equatorial Mining and Exploration (EM.P) has completed its investment agreement with ARQ Minerals and this formalises the commitment to work together in Nigeria. The St Leonard’s mine is supplying trial amounts of coal. ARQ helps to manage the mine and it is subscribing £50,000 each for two tranches of shares in the operating company, which will take is stake to 50%. ARQ will also own 1,000 million warrants exercisable at 0.02p a share. ARQ has committed to producing a minimum of 40,000 tonnes of coal and every 1,000 tonnes produced above this level will earn an additional 0.625% stake in the operating company, which can take the stake up to a maximum level of 75%. ARQ and Equatorial will be paid 10% of gross profit each month with the rest of the profit shared in line with their equity interests.
Welney (WENP) has announced a general meeting to vote on the appointment of Mark Jackson and Mark Chapman as directors.
Secured Property Developments (SPD) still had £627,000 in the bank at the end of June 2018 because it has not been able to find an investment at a realistic price.
Blockchain investment company Coinsilium Group (COIN) says that Malcolm Burne has been appointed as project adviser to the company’s blockchain platform development company TerraStream.
New director Melissa Sturgess has bought 9.23 million shares in Imperial Minerals (IMPP) at 1p each. That is a 29% stake.
Medicinal cannabis sector investment company High Growth Capital Ltd (HASH) had £522,000 in the bank at the end of March 2018 and it has raised £250,000 at 0.4p a share.
AIM
Parity (PTY) is still on track to achieve double digit profit growth this year. The IT recruitment and consultancy services provider remains modestly rated even though the share price has risen substantially this year.
Yu Group (YU.) says interim revenues increased by 69% to £35m. The energy supplier expects full year revenues to be at least £82m, which means that operating profit should rise by three-quarters. There is £18.2m in the bank.
Frontier IP Group (FIPP) says that portfolio company Tarsis Technology has entered into a collaboration with a major crop protection products company. The company will provide the funds to further develop the Tarsis technology to deliver chemical pesticides and fungicides in a more controlled way. In return the company gets exclusive rights to particular agrochemicals usage and Tarsis would get royalties from commercial products. Frontier IP is lending Tarsis £150,000 in return for share options.
Consumer healthcare business Venture Life Group (VLG) is raising £18.75m at 40p a share to help finance the acquisition of Dentyl Dual action mouthwash and BB Mints for £4.2m and repay £3.7m of convertible loan notes. The remaining cash will be used for further acquisitions. The share issue more than doubles the number of shares in issue.
Odey has withdrawn its general meeting requisition at Tungsten Corporation (TUNG) following the appointment of Anthony Bromovsky and Duncan Goldie-Morrison to the board.
600 Group (SIXH) has offloaded its pension scheme to specialist insurer Pension Insurance Corporation. The scheme will be wound up and surplus funds after tax will be returned to the machine tools supplier. That could be up to £4m. Full year revenues grew from $58.8m to $66m, while underlying pre-tax profit improved from $2.65m to $3.05m. That excludes the gain on the sale of ProPhotonix (PPTX) shares.
Integumen (SKIN) is raising £700,000 at 0.65p a share and renegotiated the deal with food supplements supplier Cellulac so that it will acquire a 9.35% stake. Cellulac’s chief executive and chief operations officer will join Integumen in those roles. Cellulac will grant Integumen a licence to sell its products in certain territories.
A positive trading statement from audio visual equipment distributor Midwich Group (MIDW) has led to a forecast upgrade. Earnings per share forecasts have been raised by 3% for each of the next three years. The 2018 profit is expected to be £28.3m and earnings per share 27.6p. The interims will be published on 11 September.
EKF Diagnostics (EKF) has signed a manufacturing agreement with Oragenics Inc. EKF will supply drug substances for the customer and this will boost next year’s profit by 5%.
LiDCO (LID) has signed a distribution deal with a Chinese supplier of blood monitoring cuffs and this will help to replace the lost income from the Argon distribution contract. It may take time to build up sales, though.
Woodford Investment has increased its stake in superyacht painting and maintenance services provider GYG (GYG) to 21.5%. This comes at a time that Old Mutual has been selling down its stake after the recent profit warning.
Corporation tax software supplier Tax Systems (TAX) has grown its recurring and non-recurring revenues in the first half of 2018 and total revenues were 14% higher, which includes 9% organic growth. Net debt is down to £17.5m.
Synectics (SNX) had net cash of £9.1m at the end of May 2018. The surveillance technology company increased interim revenues by 3% to £34.7m thanks to strong demand from the gaming sector. Underlying profit improved from £1.3m to £1.5m. Stockdale has maintained its full year profit forecast at £3.1m.
EMIS (EMIS) says that its primary care business is sorting out its problems and the net cash grew to £32.3m at the end of June 2018. The health IT technology supplier says that the business has grown in the first half and still expects an improvement in full year profit. The share price has recovered since the disappointing trading statement earlier this year.
Ken Kroeger has become permanent chief executive of driver monitoring systems technology developer Seeing Machines (SEE) and he will had over the chairmanship to Jack Boyer at the beginning of 2019.
MAIN MARKET
Investment company Athelney Trust (ATY) says that its NAV dipped to 264.2p a share at the end of June 2018, although this was partly due to the payment of the final dividend of 8.9p a share. Excluding that, there was a 4% decline. There was an improvement on the net return on ordinary activities from £110,000 to £125,000, but the loss in the capital part of the income statement was slightly higher than that revenue gain. The total value of investments was £5.61m and NAV was £5.7m. During the first half, shareholdings in Countrywide, Debenhams, DX, Juridica Investments, HC Slingsby and Sprue Aegis were sold.
Avation (AVAP) has acquired a second new Airbus A220-300 aircraft and leased it to airBaltic.
Flying Brands Ltd (FBDU) is raising £500,000 at 2.5p a share in order to help finance obtaining FDA clearance for StoneChecker software and design a cloud-based interface, as well as boost commercial operations. Subsidiary Imaging Biometrics is involved with a phase II trial that will use its IB Rad Tech technology to process data from 20 sites to determine how well dynamic susceptibility contrast magnetic resonance imaging in measuring the effectiveness of brain tumour treatment.
Andrew Hore
Ian Pollard: SSE Impacted By Triple Weather Whammy
SSE plc SSE The first quarter was impacted by weather conditions with hydro output higher than last year due to higher snow melt but for both years output was below expected levels, with this year, some 20% lower than expected. Output from onshore and offshore wind farms has been around 15% below expectations due to poorer than average wind conditions. Finally temperatures in the UK for the three months to the 30th June were 1.5 degrees centigrade warmer than thirty-year average, leading to a fall of about 10% in average domestic gas demand. Dry, still and warm weather, has also been accompanied by persistently high gas prices. Thus energy costs have risen, electricity output from renewable sources has fallen at the same time as demand. All of these factors have negatively impacted adjusted operating profit for the quarter by some 80m which will potentially have an impact on the full year results.
Unilever plc ULVR claims a solid all round performance in challenging market conditions for its first half with one of the highlights being a 5% drop in turnover including an adverse currency impact of 8.9%. More and more companies failing to meet expextations, seek refuge in challenging market conditions, without ever explaining what exactly the challenges were and why management was incapable of meeting them. SSE appears to be no exception treating it as one of the facts of business life for which they need not offer a meaningful explanation.
Sports Direct Intl SPD will no doubt please shareholders with the news that t has am elevation strategy which is continuing to exceed expectations. Preliminary results for the year to the 29th April show that on a reported basis, profit before tax fell by 72.5% and earnings per share by 88.3%. On an underlying basis the figures showed rises of 34.5% and 74.6%, respectively.
Babcock International Group BAB updates that it has delivered strong growth in its aviation and nuclear sectors but defence revenues have been impacted, albeit perhaps only on a temporary basis, by another government restructuring in the creation of a Submarine Delivery Agency whose main purpose in life, apart from the creation of more jobs for the boys, appears to be the creation of slowdowns and delays in activity levels. Perhaps another level of bureaucracy could be added to get levels of activity back to where they were before the new agency was created.
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Andrew Hore: Quoted Micro 4th June 2018
NEX EXCHANGE
Stratmin Global Resources which was quoted AIM until August 2017, is expected to join NEX on 6 June. Stratmin lost the AIM quotation because it failed to complete a reverse takeover, partly due to the fact that it was waiting for a promised investment. Stratmin is still in the process of completing the acquisition of Australian gold explorer Signature Gold, which would be paid for by the issue of 450 million shares at 2p each. After the deal, the company will change its name to Tectonic Gold.
Ananda Investments is the latest cannabis-focused investment vehicle to be joining NEX. The pre-money valuation is £500,000 and the minimum fundraising is £750,000. Ananda is willing to raise up to £4m. There are already potential investments being assessed. A reverse takeover valued at up to £10m appears most likely.
AfriAg Global (AFRI) says that 40%-owned AfriAg (Pty) Ltd increased its net profit from £104,000 to £179,000. This was equity accounted by AfriAg Global and the £72,000, up from £42,000, contribution helped offset the operating loss from the agricultural logistics group’s operations. The overall loss increased from £9,000 to £38,000. AfriAg (Pty) Ltd had the right to take a 60% stake in House of Hemp but this deal was terminated when the South African government delayed setting up the legal framework for medicinal cannabis. Focus has turned to other countries.
KR1 (KR1) generated gains of £4.3m on its trading in digital coins and tokens during 2017. There was also a total unrealised gain of £10.8m on these investments and a £1.18m foreign exchange gain. The total pre-tax profit was £14.5m, with a tax charge of £2.87m. That tax charge is included in trade creditors due within one year of £4.21m. There is cash in the bank, but total current assets were £3.5m. A creditor has subsequently been paid with £79,000 of shares, issued at 10p each. The KR1 share price has more than quadrupled over the past year and there is regular daily trading in the shares.
Workspace provider and art collector V22 (V22) reported a 2017 pre-tax profit of £175,000, down from £1.01m the previous year. The profit included a gain on the sale of an option to acquire one of the company’s buildings. The NAV is £1.34m, equivalent to 4.26p a share. That increases to 8.68p a share if the company’s art collection is revalued. The shares are trading at 2.95p (2.7p/3.2p).
Housebuilder St Mark Homes (SMAP) reported a reduction in pre-tax profit from £652,000 to £384,000 in 2017. There was a reduction in revenues from £1.34m to £120,000 and the share of operating profit from a joint venture was more than halved. There was cash in the bank of £514,000 at the end of 2017. St Mark has raised £3.47m from a 6% bond. This cash will be invested in new projects. The NAV is 134p a share, compared with a share price of 95p (90p/100p).
Peru-based gold and silver producer VI Mining (VIM) reported a tripled loss of $6.33m for 2017. No revenues were generated and the NAV was $2.56m. That was before VIM acquired two projects for $51.3m and raised £5.35m at 500p a share.
Georgia-focused oil and gas company Block Energy withdrew from NEX on 23 March and it is set to join AIM on 11 June. It will be valued at £10.3m at 4p a share.
MetalNRG (MNRG) has identified an acquisition that could provide the opportunity to move to the standard list.
Iran-focused investment company Indigo Holdings (INGO) is reviewing its strategic options. Hamish Harris and Nicholas Harwood are stepping down from the board.
First Sentinel (FSBN) generated initial revenues of £156,000 but, even excluding admission expenses of £65,000, it lost £117,000 in the 15 months to December 2017. The NAV of the small company adviser and investor was £1.26m at the end of the year. Since then, a further £1.5m has been raised via a convertible bond.
Formation Group (FRM) fell back into loss in the six months to February 2018. Revenues fell by 15% to £17.2m and there was s wing from a pre-tax profit of £15,000 to a loss of £277,000. The loss was greater than the second half loss last year. The NAV is £9.95m, including £3.2m in cash.
Secured Property Developments (SPD) has received repayment of the loan it made to a developer of a retail scheme in York. This cash will be used to finance any property deals that management feel are good value, thanks to more realistic pricing.
Trading in the shares of DagangHalal (DGHL) and Equatorial Mining and Exploration (EM.P) have been suspended. DagangHal has failed to publish its 2017 accounts. Equatorial is in negotiations with South African mining company ARQ Minerals, which intends to invest £50,000 for 500 million shares. This has led to a delay in the publication of accounts.
Walls and Futures REIT (WAFR) has appointed Allenby to replace City and Merchant as its corporate adviser.
AIM
Nexus Infrastructure (NEXS) had already warned that its TriConnex utility connections business was suffering from delays and even so interim figures showed a 4% rise in revenues to £62.9m and a 15% increase in pre-tax profit to £3.4m. The interim dividend was raised by 5% to 2.2p a share. Delays to the commencement of projects continue but the group order book has increased to more than £234m.
RedstoneConnect (REDS) is selling its systems integration and managed services businesses for £21.6m, so that it can concentrate on its software for smart buildings. The cash raised will pay off existing debt. Last year, the software division had revenues of £5.3m and made an operating profit of £1.4m.
Maritime monitoring equipment supplier SRT Marine Systems (SRT) has raised £3m at 25p a share and it is swapping £1.15m of short term loan notes for new three year loan notes. The cash will finance systems projects and product development. SRT is working on projects worth £30.5m.
A positive AGM statement from Parity (PTY) confirms that the trading of the consultancy and staffing divisions is going well. Parity should be cash positive by the end of the year and there is a strong pipeline of potential business.
Fishing tackle retailer Fishing Republic (FISH) increased revenues by 58% to £9.15m, but it slumped into loss. Trading was weaker than expected, particularly in the fourth quarter, and gross margin fell sharply even before stock write-offs. Fishing Republic has relaunched its website and the review of operations is ongoing. Five stores have been closed, reducing the total number to 14.
Share (SHRE) increased its revenues by one-fifth in the first quarter as the services provided for Computershare make a contribution in the full quarter. Broker commissions increased by 27% on the back of a 5% increase in trading volumes. First quarter market share dipped from 3.66% to 3.54%. An upgrade to the website has been completed.
Itaconix (ITX) is restructuring its UK operations in order to focus on core products. The main focus will be the US polymer operations. The annual fixed cost base will fall to less than £3.5m in 2019.
IDOX (IDOX) has appointed David Meaden as chief executive. He has experience of the public sector and software development. The information management software and services provider has closed its loss-making digital division. Underlying EBITDA is likely to be in the range of £13m-£15m for the full year, compared with previous expectations of £22.8m. Excluding digital, the EBITDA will be between £18m and £20m.
Immupharma (IMM) has further analysed the results of the phase III lupus treatment trial for Lupuzor. There were different results in the European and US parts of the trial with antibody positive patients in Europe showed a statistically significant improvement.
MAIN MARKET
Haynes Publishing (HYNS) expects to report a better than expected full year profit. Underlying pre-tax profit will be 10% ahead at around £2.9m. Earnings per share will be hit by US tax changes.
Falcon Media House (FAL) has decided to leave the standard list. The digital media group says that the share price fall has hampered its ability to raise more cash to develop its Q-Flow technology. Revenues have not come through as quickly as expected. If cash were raised, it could reduce the free float so the shares would be suspended.
Andrew Hore
Ian Pollard – Sports Direct Hit By UK High Street Woes
Sports Direct Intl SPD Mike Ashley claims a spectacular trading performance during the half year to the 29th October which is hardly justified by the reality of the situation, namely a fall of 1% in UK sports retail revenue or 1.2% on a like for like basis. So, he limits his claim to the trading performance in his flagship stores, of which they are going to open more. If his flagship stores are doing so well it makes the the rest of UK retail look even more gloomy. Gross margins in the UK fell by 80bps compared to a rise of 110bps for international retail. Group revenue for the half year rose by 4.7% which again only serves to illustrate how bad trading in UK high streets and shopping malls has become. Underlying profit before tax is, he claims, healthy with a rise of 22.9% although on a reported basis it fell by 67.3%. Underlying earnings per share were up by 32.9% as against a fall of 68.6% on a reported basis.
Ocado Group OCDO Sales growth was impacted during the quarter to the 3rd December, by a lack of capacity and especially a shortage of drivers. Average orders per week rose by 50% during the quarter, whilst the average order size remained stable.
PZ Cussons plc PZC Cautious consumers have created tough conditions and adversely affected performance in the half year to the 30th November with the result that profit for the half year is expected to be 10% lower than in the previous period, despite strong profitability in Asia, which has been offset by Africa and Europe. A robust and innovative pipeline has helped to underpin the first half and it is expected that the out turn for the full year, will be broadly in line .
Advanced Medical Solutions AMS updates on trading to the 31st December and confirms that it is continuing to deliver strong organic growth. Revenue and profit are,anticipated to be in line with current market expectations.
Bunzl BNZL Group revenue for the year to 31st December is expected to have risen by 15%, or 9-10% at constant exchange rates, as expected at the time of the October trading statement.
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House builders sales static but forward orders surge
Barratt Developments BDEV Completions in the year to the 30th June rose by a lowly 0.4% on 2016 but it was still the highest volume for nine years, enabling Barratt to claim another excellent year which produced a strong operational and financial performance. The final dividend is being increased by 39% in addition to a 17.3p per share special dividend. Profit before tax rose by 12.1% and basic earnings per share by 11.3p. No mention is made this time round of what happened to the average house price but the tiny rise in completions produced a 9.4% rise in revenue, so perhaps that speaks for itself. The future still looks rosy with forward sales as at the 3rd September up by 13.8%.
McCarthy & Stone MCS managed to complete only 6 more sales in the year to the 31st August than it did in 2016 despite a strong recovery in the second half which saw a strong upward momentum in the average selling price, which is set to continue into the current year. For the year as a whole the average selling price rose by 3% and revenue by 4%. The forward order book at he year end was 21% head of last year.
Sports Direct SPD provides a trading update ahead of today’s much anticipated AGM. The only statistic provided is that underlying EBITDA for 2018 is expected to grow by between 5% and 15% which appears to indicate a certain amount of uncertainty amongst senior management as to the eventual outcome of the years trading. The company’s obsession with becoming the Selfridges of sport seems to continue and Mike Ashley admits it is their strategic goal and that in fact they are exceeding their expectations in moving towards it.
WANdisco WAND claims an outstanding performance in the six months to the 30th June with total bookings up by 73%, revenue by 71% and its first ever positive EBITDA of $0.3m. compared to last years first half loss of $4.5m. The result of this success is that the statutory operating loss fell from $17.9m to $3.8m. The order book is strong and the second half sales pipeline is gathering pace. Its latest Fusion version is claimed to have a broad appeal across multiple verticals, which presumably it regards as a good thing.
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