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Andrew Hore Quoted Micro 25 February 2019
NEX EXCHANGE
Western Selection (WESP) has reported a 22% decrease in NAV to 75p a share, due to the decline in smaller quoted company share prices. The NAV has recovered to 79p a share. The investment in Swallowfield (SWL) declined by nearly one-third and the value of the Bilby (BILB) stake fell by two-fifths in the six months to December 2018. Net debt was £1.25m at the end of 2018. The interim dividend is maintained at 1.1p a share.
Early Equity (EEQP) has acquired a 60% stake in MEI Home, a ecommerce platform for household, health and food products, for £282,000. The Malaysia-based business was profitable in the first financial year. The founder will retain a 40% stake and he also owns 6.12% of Early Equity. He also promises that annual pre-tax profit will be at least £95,000 in each of the next two financial years.
Tectonic Gold (TTAU) has taken a 50% stake in a joint venture with Vast Mineral Sands covering diamond mining concessions at the government-owned Alexkor diamond mine in South Africa. This should generate cash, through planned production of 900 carat per month, to invest in other projects. Tectonic is paying $650,000 in shares at 2.2p each. A year long research study has confirmed that there is an interaction of two styles of mineralisation at Mount Cassidy prospect in Queensland, Australia. There is stratabound copper and zinc, gold and silver mineralisation and epizonal to epithermal gold and silver mineralisation.
MiLOC Group Ltd (ML.P) has extended the life of its convertible bond by one year to 19 January 2020. The annual coupon increases from 6% to 7.2%. The conversion into shares can take place if an alternative quotation on a recognised stock exchange is secured.
First Sentinel (FSEN) has completed a £4m bond issue. These 7% bonds 2023 are due to start trading on NEX.
AIM
Michelmersh Brick (MBH) has made its first acquisition outside of the UK. Michelmersh is paying up to €9.9m (£8.7m) for Antwerp-based Floren and Co in a deal that should be immediately earnings enhancing. A placing raised £5m at 90p a share. In 2018, Floren generated EBITDA of €1.75m on revenues of €5.7m. Michelmersh is planning to increase production levels from 19.5 million bricks a year. The acquisition includes 120 acres of land, of which 60 acres is used in production.
IP legal services provider Murgitroyd Group (MUR) is acquiring Southampton-based Chapman IP for £6.6m and Helga Chapman has been appointed a non-executive director. Net cash was £2.03m at the end of November 2018. Interim pre-tax profit edged up from £1.67m to £1.7m. The interim dividend was increased by 8% to 7p a share. Edward Murgitroyd is retaining his role as chief executive and handing over the role of finance director Keith Young.
Carpets and hard flooring manufacturer Victoria (VCP) continued to sacrifice margins in order to add market share in a declining flooring market in the UK in the second half of the financial year to March 2019. Full year EBITDA should be between £95m-£97m, with underlying pre-tax profit of at least £55m. This is not as much as previously forecast. There are additional inventories ahead of Brexit. Restructuring measures and capital investment should add more than £14m to pre-tax profit for the year to March 2020.
JD Sports Fashion (JD.) has acquired 21.3% of Footasylum (FOOT) and it says it may acquire up to 29.9%. FIL Ltd’s stake has fallen below 5%. Artemis has sold its 5.74% stake.
Angling Direct (ANG) expects to report full year revenues of £42m, up from £30.2m. Three new stores have been added to the group, taking the total to 24. International sales doubled. The full year results will be published on 13 May. Angling Direct is considering the acquisition of Glasgow-based Chapmans Angling Ltd, which is a subsidiary of The Glasgow Angling Centre Ltd.
Egdon Resources (EDR) has competed drilling at Biscathorpe-2 in Lincolnshire. There are signs of an effective petroleum system even though the sands were poorly developed. The reservoir may be better developed to the north of the well. Egdon owns 35.8% of the exploration licence and Union Jack Oil (UJO) owns 22%.
Trinidad-focused oil and gas producer and explorer Touchstone Exploration Inc (TXP) has raised £3.8m at 12p a share in order to finance the 9,000 feet of exploration drilling at Ortoire.
Pelatro (PTRO) has gained a contract to supply its mViva contextual marketing service to Vietnam-based Vinaphone. The deal with the telecoms company should be worth $1.5m over three years. Pelatro gets a fixed monthly fee plus a share of incremental revenues generated. This provides additional confidence that the 2019 revenue forecast of $10.5m can be met. That is expected to generate pre-tax profit of $6m because of the high operational gearing of the business.
SkinBioTherapeutics (SBTX) has raised £1.5m at 16p a share from Seneca Partners. There was £2.52m in the bank at the end of 2018. The cash will be invested in further development of products and commercialise them.
Duke Royalty (DUKE) has provided £10m of royalty finance to recreational vehicle parts wholesaler Miriad Products. The monthly payments are expected to provide a yield the equivalent of 13% a year.
Biopesticide products developer Eden Research (EDEN) has a second approved product thanks to its commercial partner Eastman Chemical Company. Nematicide formulation Cedroz has received authorisation in Malta and Eastman will apply to gain approvals in individual EU member states. The full benefit of these approvals is likely to show through next year.
EKF Diagnostics (EKF) has received US FDA clearance for the use of the Quo-Test glycated haemoglobin analyser in clinical laboratories.
It has been a mixed start to the financial year for Gooch and Housego (GHH) with softer demand in microelectronics, due to trade tariffs, but the second half improvement in subsea cable business has continue. The AGM statement has led to a reduction in the underlying profit forecast for this year from £21.5m to £19m, which is slightly higher than last year’s outcome.
Social housing software provider Castleton Technology (CTP) has acquired its software development partner in India for £350,000 in cash and shares.
eServGlobal (ESG) says that its 35.7%-owned mobile transfer payments joint venture HomeSend increased its average transaction value by 35% in the second half following a change in strategy to focus on account-to-account transactions rather than remittances.
Beximco Pharmaceuticals (BXP) is acquiring eight abbreviated new drug applications in the US from Sandoz Inc. This takes the number of US approved drugs to 14, with four currently being exported to the US.
Haydale Graphene Industries (HAYD) has raised £4m at 2p a share and wants to raise up to £4m more through a seven-for-one open offer closing on 11 March. If these shares are all issued they will account for 93% of the total shares in issue. Haydale needs cash to invest in its inks business as well as to cover continuing losses. Keith Broadbent will become chief executive.
Reach4Entertainment (R4E) has acquired the arts and entertainment advertising agency trading as Sold Out for an initial £3.94m in cash and £250,000 in shares. The total purchase price is dependent on performance in the period from 1 June 2017 to the end of 2021 and is capped at £10m. In the year to May 2018, Sold Out made a pre-tax profit of £1.3m.
Paragon Entertainment (PEL) has sold its current administration offices in York for £550,000. The relocation to other group premises should save £100,000 a year. The cash will pay off the mortgage of £134,000 and reduce the overdraft from £1.04m. The overdraft limit will be cut from £1.2m to £882,000. A creditor owing £168,000 has filed for protection from creditors. Management want to raise additional capital.
Medical devices supplier Inspiration Health (IHC) says revenues for the year to January 2019, will be £15.5m, which is £1m below forecast, and pre-tax profit will be slightly lower than forecast at £1.2m.
Holders Technology (HDT) has more than trebled its full year pre-tax profit of £177,000 thanks to a reduced LED loss and improved profitability at the printed circuit board materials business. There was still a cash outflow from operations. The dividend has been increased by 50% to 0.75p a share.
Arc Minerals Ltd (ARCM) has raised £2.2m at 3p a unit. The unit includes a share and one warrant exercisable at 4.5p each and lasting for 36 months. The cash will finance exploration and development at the Zamsort copper project in Zambia. Arc has also sold its 18.5% stake in Andiamo Exploration for $250,000.
Malvern International (MLVN) has raised £606,000 at 4p a share. This is more than the education services provider originally asked for in order to cover working capital requirements and investment in a new college in Brighton and online course material.
AIM-quoted blockchain and technology investment company Vela Technologies (VELA) is taking advantage of the discount to cash by buying 500,000 shares in cryptocurrency mining services provider Argo Blockchain (ARB) at 3.072p a share. This compares with cash of 5p a share. Vela has 3 million shares in Argo, equivalent to 1.02%. The rest of the shares were bought prior to Argo’s standard listing and cost 8p each, compared with the flotation price of 16p a share. The average cost is 7.17p a share, so the average cost exceeds the value of cash in the business. Argo is refocusing on its own currency mining. Ongoing costs will be cut by one-third, although there will be some one-off cash costs. Net cash is £15m and that is much more than the market capitalisation of Argo.
ReNeuron (RENE) has released early data on three patients in phase I/IIa clinical trial the human retinal progenitor cell product. There have been significant improvements in vision for the patients, but this is a small sample size over a short time. Cash should last until the end of 2019.
Pires Investments (PIRI) has received a requisition notice for a general meeting in order to make changes to the company’s board.
Best of the Best (BOTB) has received tenders for just over 4 million shares, which is 5.6 times the number that it was tendering for. Best of the Best will pay £3.5m for 721,327 shares (485p a share).
FAIRFX Group (FFX) has become a direct participant in the UK faster payments scheme. It is the fourth non-bank to be a direct settling member.
Crossword Cybersecurity (CCS) says Kinnerton Confectionery will be using its Rizikon Assurance secure third party assurance platform.
Former AIM company Lionsgold Ltd (LION) is changing its name to Tally Ltd. Mobile banking app Tally is in beta testing and could be released by the end of February. Once this has been released the company will seek to gain a new quotation. The exercise of warrants, mostly by directors, at 1.2p a share has generated £288,000.
MAIN MARKET
Packaging group Macfarlane Group (MACF) increased its pre-exceptional profit by one-fifth to £11.2m in 2018. Both distribution, helped by acquisitions, and manufacturing divisions increased their profit contributions. Manufacturing sales grew fastest but margins fell. The dividend was increased by nearly 10% to 2.3p a share. Net debt was £13.2m and there are plenty of unused bank facilities to fund any further acquisitions. The pension deficit was reduced by £2m to £9.8m.
In the six months to December 2018, Avation (AVAP) reported doubled earnings per share thanks to the gain on the sale of a A321-200 aircraft. The NAV is 288p. The aircraft fleet continues to increase, particularly turboprop aircraft. Although full year pre-tax profit is set to rise even more than originally forecast, earnings per share are likely to be flat at 31.7 cents. Next year’s profit will be lower, assuming no aircraft disposals.
InnovaDerma (IDP) reported interims in line with expectations and there are plans for a mid-March launch for Skinny Tan in Boots. This will help the second half performance, which is normally stronger. Full year pre-tax profit is expected to more than double to £1.5m, a downgrade of 10%. Net cash was £700,000 at the end of 2018. A cash inflow is expected in the second half, but fluctuations in cash in terms of working capital requirements, such as Boots order levels, during the period could lead to InnovaDerma deciding to raise more money.
Anglo African Agriculture (AAAP) reported a reduction in turnover from £2.13m to £1.74m in the year to October 2018. Even so, gross margins improved and the pre-tax loss edged up from £550,000 to £573,000. Net cash was £856,000. The company is assessing acquisitions outside of the agriculture sector.
Trading in the shares of daVictus (DVT) has been suspended ahead of finalisation of a deal where the standard list shell will buy the rights to a restaurant concept from Typical Dutch NV for £100,000. This is deemed to require a prospectus before the company can be readmitted to the standard list. The Havana Rolled Cigar Music Café concept has been developed at a site in Aruba. daVictus had £431,000 in the bank at the end of June 2018.
Offshore support vessels operator Gulf Marine Services (GMS) has sent out the document for its requisitioned general meeting on 18 March. Rival Seafox International wants to remove the chairman and appoint three new directors. Ithmar Capital Partners wants to appoint another director.
Andrew Hore
Andrew Hore – Quoted Micro 6 August 2018
NEX EXCHANGE
Veni Vidi Vici Ltd (VVV) joined NEX on 2 August. The minerals investment company has net cash of £513,000, following a £490,000 subscription at 50p a share. The focus will be precious metals and base metals opportunities in Australia, Western Europe and North America. Management will concentrate on capital appreciation.
EPE Special Opportunities (ESO) is changing its domicile from the Isle of Man to Bermuda. The private equity investment company will have to be readmitted to NEX and AIM. EPE has invested £2m in Main Market-listed LED lighting company Luceco at 39.74p a share. That takes EPE’s stake in Luceco to 27.4%. Poor trading has meant that the Luceco share price has slumped to well below its 2016 flotation level. EPE has redeemed 50% of its unsecured loan notes.
Etaireia (ETIP) has appointed Dennis Rogers as chief executive. He has more than three decades of experience in property development.
Equatorial Mining and Exploration (EM.P) has issued 2.685 billion shares, around one-quarter of the enlarged share capital, to wipe out the convertible loan note debt and other creditors. Twenty three year old Devon Marais, who works with ARQ Minerals, which is helping Equatorial to extract coal from the St Leonard’s mine in Nigeria, has been appointed as a non-executive director of Equatorial.
Asia Wealth Group Holdings (AWLP) reported a profit last year. In the year to February 2018, revenues increased from $1.52m to $2.16m, while a pre-tax loss of $110,000 was turned into a pre-tax profit of $150,000. That figure was helped by a $114,000 currency gain, compared with a $19,000 loss. There was still a small net loss from operations before other income.
AIM
Petrol stations operator Applegreen (APGN) intends to take a majority stake in UK Motorway services operator Welcome Break. The purchase of a 55% stake for €361.8m would be a reverse takeover. The deal would make Applegreen market leader in the UK as well as Ireland.
A subsidiary of Stride Gaming (STR) has been issued a notice by the Gambling Commission, which intends to levy a significant financial penalty because of the manner in which it carried on its trading. This is not final and there might be room to appeal but it has hit the share price of the online bingo operator.
The Property Franchise Group (TPFG) increased interim revenues by 11% to £5.3m. Most of the growth came from management service fees from the property lettings franchisees. The EweMove estate agency business was profitable.
Goldplat (GDP) says that gold production fell by 17% to 35,400 ounces, which is lower than anticipated, but pre-tax profit will be in line with expectations because of a higher margin per ounce. There was 39,400 ounces of gold sold during the year.
Beximco Pharmaceuticals (BXP) has received abbreviated new drug application approval from the FDA to sell Nadolol tablets, which are a generic form of Corgard and used for managing high blood pressure. This is the fifth approval in the US. A pre-tax profit of £33.3m is forecast for the year to June 2018.
Tough UK trading and higher costs held back the results of security and facilities management services provider Mortice Ltd (MORT) in the year to March 2018. Revenues were 21% higher at $219m, but underlying pre-tax profit was down by 16% to $3.9m. Net debt was $18.4m.
Precision marketing software supplier Pelatro (PTRO) is acquiring assets from the Danateq Group for an initial $7m. The deal will take the group into central Europe and adds to the recurring revenues base. A placing has raised £6m at 73p a share.
GetBusy (GETB) grew its interim revenues from £4.5m to £5.2m, with £4.5m of that figure recurring revenues. Annualised recurring revenues are running at £9.4m. Profit generated from document management software sales is being ploughed back into developing the existing product and the new GetBusy software. There is £2.37m in the back.
Starcom (STAR) says that interim revenues have improved from $1.92m to $3m and the loss will be lower. Most of the revenue increase came from two large clients. Growth is starting to come from higher margin security products. The 2018 loss is expected to be much lower than last year’s.
Kosovo-based quarry operator Fox Marble Holdings (FOX) increased interim sales from €329,000 to €614,000 and the second half has started strongly. The benefits of investment in capital equipment are beginning to show through.
MAIN MARKET
Argo Blockchain (ARB) has joined the standard list after raising £25m at 16p a share, which values the company at £47m. However, the share price fell to 12.5p by the end of the first day of trading on 3 August. Argo is developing a global datacentre management business facilitating cryptocurrency Mining-as-a-Service. It currently covers four cryptocurrencies. AIM-quoted Vela Technologies (VELA) owns 2.5 million shares, which were acquired for 8p a share.
Motor finance provider S&U (SUS) achieved record first half profit as the second hand car market continues to grow. Quality standards have been tightened with 25% of applications accepted, but net receivables have reached £263m. The property bridging loan book has risen from £11m to £16m over six months. The interims will be announced on 25 September.
BigDish (DISH) was originally going to reverse into AIM shell Nyota Minerals Ltd but instead it has joined the standard list. The company operates an online and mobile restaurant reservation platform, which is in operation in the Philippines, Indonesia and Hong Kong. The purchase of Pouncer, takes the company into the UK. Revenues come from booking fees per diner. BigDish raised £2.22m at 4.5p a share.
Path Investments (PATH) is raising £10m to complete the farm-in agreement with 5P Energy for the proposed acquisition of a 50% participating interest in the Alfeld-Elze II licence and gas field. This will make Path cash generative. The new shares will be eligible for EIS and VCT relief because Path is moving to AIM.
Dave Brieth has sold his stake in telecoms services provider Toople (TOOP).
Associated British Engineering (ASBE) reported a sharp increase in full year revenues from £1.04m to £1.6m in the year to March 2018. The loss fell from £962,000 to £582,000. This includes investment in developing new diesel engines. The NAV is £976,000, as the loss was partly offset by a £600,000 property revaluation gain. The oil and gas-related operations are still depressed.
Mila Resources (MILA) plans to acquire Capital Metals, which owns 100% of a high-grade mineral sands project in southern Asia. The reverse takeover will be subject to due diligence and shareholder approval.
Fandango Holdings (FHP) has ended bid discussions with Corporate Commercial Collections and Vatbridge following initial due diligence.
Andrew Hore
Quoted Micro 20 February 2017
NEX EXCHANGE
Forbes Ventures (FOR) has taken a 0.84% stake in potential challenger bank Civilised Investments in return for £200,000 in cash. The cash investment was raised through a placing of shares at 0.5p each with Gravity Investments, which owns 62.1% of Forbes. A further six million shares were issued at the same price to settle fees. Civilised is applying for a UK banking licence in June 2016. The strategy is not to have branches but local bankers will provide loans and business banking products by attracting personal savings.
Kryptonite1 (KR1) has invested £99,905 for 25,811 tokens in Melonport AG, which is building its own blockchain protocol for digital asset management built on the Ethereum platform. Melonport raised $2.5m in 14 minutes.
NQ Minerals (NQMI) has raised £128,750 at 0.8p a share. For working capital. Daniel Stewart has been appointed as corporate adviser.
FT8 (GFT) has failed to secure the agreed monthly payments from Billyst Holdings and this means that trading in the shares of FT8 has been suspended because of the company’s uncertain financial position.
AIM
Floorcoverings manufacturer Victoria (VCP) has moved into Continental Europe through the acquisition of Avalon and GrassInc for an initial £9.7m in cash with deferred and contingent payments of up to £12m over four years. This is an important part of the overall strategy for the group and it also takes Victoria into the artificial grass market. The deal should be immediately earnings-enhancing with the two businesses making a 2016 operating profit of £3.6m.
Construction dispute resolution services provider Driver Group (DRV) has raised £8m at 40p a share – a 15% discount to the market price – in order to reduce borrowings and grow the business. There is also a one-for-26p open offer at 40p a share that could raise up to £500,000 – closing on 8 March. Driver has negotiated new banking facilities of £8m, down from £12m, and this expires in 2020. Net debt was £9.9m at the end of September 2016. Driver made a loss in the year to September 2016 but it moved back into profit in the second half. In the past year, Driver has reduced annualised overheads by £1.3m, cut underperforming fee earners, improved cash collection and implemented more rigorous bidding controls. Driver plans to scale down the project management operations and the main businesses should be sold by the end of this financial year. South America and eastern Europe have been identified as growth areas. New non-executive director John Horgan has been appointed as a replacement for David Webster.
Fuel cell technology developer AFC Energy (AFC) has raised £6m, £5.5m net of expenses, at 10p a share – a 40% discount to the market price. Up to £2m more could be raised from a one-for-15 open offer at the same share price – closing on 2 March. The cash will be used to deliver commitments on the joint development agreement with De Nora, additional testing and a scoping study with Peel Environmental for potential projects. Jim Gibson has been appointed as chief operating officer.
Middlesbrough-based pawnbroker Ramsdens Holdings (RFX) joined AIM on 15 February. The placing will raise £15.6m at 86p a share, valuing the company at £26.5m. The share price ended the week at 95.5p.
Tracsis (TRCS) disappointed the market with a warning that delays in contracts means that this year will be even more second-half weighted and there is still uncertainty whether certain software contracts will complete in this financial year. The transportation optimisation software and services provider still believes it can achieve this year’s forecast profit but the market was not as sure. The share price fell by nearly one-third following the trading statement and Downing is one investor that has added to its stake having previously taken profits. Interim revenues will grow from £13.1m to £15.5m but pre-tax profit will only be slightly higher than last year’s figure of £2.9m. The full year outcome could depend on the rail franchise bid timetable.
Higher LED sales helped Holders Technology (HDT) to increase overall revenues by 2% to £11.4m but the LED business is still losing money and a German business has been closed. The underlying loss increased from £141,000 to £195,000, prior to restructuring costs of £183,000. An increases in trade creditors meant that cash improved to £781,000. A final dividend of 0.25p a share is proposed. There are signs of an improvement in demand for printed circuit board materials and new smart lighting products should boost the LED business.
Vela Technologies (VELA) has raised £550,000 from a bond issue via the UK Bond Network. This should enable Vela to complete the additional investment of £150,000 in Portr, the airline passenger facilitation and baggage transport service, taking its stake to 4.27%.
Collagen Solutions (COS) is raising up to £8m from a placing and one-for-five open offer at 5p a share and this will be topped up with a £4m bond issue to Norgine Ventures, which has a coupon of 10% and 6.77 million warrants exercisable at 5.911p each. The cash will finance the expansion of the medical collagen business, commercial medical device products and launch ChondroMimetic, which is a collagen-based implant to treat small cartilage and bone defects, later this year.
Online gaming business generator Veltyco Group (VLTY) says that its 2016 figures will be significantly better than expected. An EBITDA of more than €2m, up from the initial forecast of €1.4m, on revenues of more than €5.7m, ahead of a forecast of €4.9m, is anticipated.
Evgen Pharma (EVG) has signed a services agreement with APTrans, a Cheshire-based consortium of drug developers that can provide technical expertise, for the development of SFX-01. A US patent has been granted covering the manufacturing process for SFX-01. The patent lasts until 2033. Further patents are expected to be awarded around the world.
Ascent Resources (AST) raised £3m at 1.85p a share in its latest fundraising via PrimaryBid.com. The cash will be spent on developing the Petisovci gas project in Slovenia.
Self-storage operator Lok’nStore (LOK) says that self-storage sales were 3.9% higher, thanks to higher occupancy, and document storage sales 8.8% ahead in the first half. There is a pipeline of two owned and two managed stores, which will add 14% to capacity. NAV is expected to be 404p a share at the end of July 2017.
PowerHouse Energy Group (PHE) has raised £2.5m at 0.8p a share on the back of last week’s deal with Peel. Hillgrove will receive £2m as part-payment for its loan with £1.4m converted into shares at 0.5p each. A G3-UHt waste to energy unit is being shipped from Australia and should reach the UK in March.
Allergy Therapeutics (AGY) is starting a phase I clinical study for safety and tolerability of Acarovac MPL as a house dust mite allergy vaccine. The trial will be in Spain, covering 32 patients and lasting one year. The global market could be worth $1.5bn a year.
Patient monitoring equipment developer LiDCO Group (LID) says that its 2016-17 revenues will be slightly lower than forecast but it will make a small profit. The loss of a US customer held back growth with revenues 8% ahead at £8.2m, although revenues from group products were 14% higher this was partly offset by lower sales of third party products.
EP Minerals has terminated its lease over the County Line Diatomite project, so Sunrise Resources (SRES) will need to find an alternative method of commercialising the potential project.
Keras Resources (KRS) says that there is a JORC-based inferred mineral resource of 36,000 ounces of gold at a grade of 6.1g/t for the Copenhagen deposit. This means that the Warrawoona gold project has a JORC mineral resource of 410,000 ounces of gold at a grade of 2.2g/t. The focus will be the higher grade Copenhagen deposit, which has more potential.
Mariana Resources (MARL) has completed three of seven planned drill holes at the Ergama project in Turkey and two of these have found large but low grade deposits.
Executive chairman John Hawkins has been given the push by Pebble Beach Systems (PEB) as part of the closure of the group’s head office following the disposal of the Vislink broadcast equipment business. Hawkins received £260,000 a year as chief executive and £100,000 a year as chairman and his contract stipulates 12 months notice. John Varney becomes non-executive chairman. The bank apparently remains supportive and the 2016 figures will be published on 31 March.
Cloud-based telecoms software supplier CloudCall Group (CALL) says that customer relationship management software provider and corporate partner Bullhorn is deploying CloudCall’s software with its US staff. This will provide a reference for potential US customers of a combined software package. Full year figures will be published on 28 March and these will be in line with expectations.
MAIN MARKET
Simian Global (SMG) has signed a non-binding letter of intent to buy BVI-incorporated media and advertising business GVC Holdings Ltd. Standard list shell Simian Global floated on 10 January when it raised £769,500 at 15p a share. This valued the company, which was seeking a technology, media and telecoms sector acquisition, at £935,000. Trading in the shares was suspended at 17.5p.
Avation (AVAP) is trading at a discount of around one-fifth to its NAV of 249p a share at the end of 2016. In the six months to December 2016, the aircraft leasing company’s revenues were 43% ahead at $45.1m and pre-tax profit 50% higher at $8.4m. Bid discussions for 22 ATR 72 aircraft continue but management wants a significant premium to the NAV.
PRE-IPO / OTHER TRADING FACILITIES
Former AIM-quoted Clinical Computing, which is currently traded on Britdaq,has initiated a strategic review and this could lead to the sale of the healthcare IT company. In the year to March 2016, revenues fell from £1.67m to £1.5m but a loss of £204,000 was turned into a profit of £23,000. There is £825,000 in the bank and net assets of £654,000, which is more than its market capitalisation on Britdaq.
Andrew Hore
Quoted Micro 6 February 2017
NEX EXCHANGE
Bondholders in US-focused oil and gas company Diversified Gas & Oil (DOIL) have overwhelmingly opted to take the cash alternative ahead of the flotation of the ordinary shares on AIM on 3 February. A total of £10.35m worth of bonds (97.1% of bonds in issue) are taking cash, while £198,000 of bonds will be swapped for 380,769 ordinary shares. There will be £106,640 worth of bonds remaining in issue but there will be no trading facility. The ordinary shares of Diversified Oil & Gas (DGOC) raised £39.7m at 65p a share, valuing the company at £68.6m. The share price slipped to 56.25p at the end of the first day’s trading.
Property investor Ace Liberty & Stone (ALSP) had a property portfolio worth £28.5m at the end of October 2016 and this generates annual rental income of £2.31m. The NAV was £18.25m at the end of October 2016 with a £500,000 revaluation gain partly offset by the final dividend payment.Net debt was £6.7m, down from £7.7m at the year end and there are assets held for sale worth £6.3m. Since October, a property was acquired at Hanley for £9m. The deal was financed by a £13.75m loan facility from Lloyds Bank with the rest of the cash used to refinance debt relating to five other properties.
DagangHalal (DGHL), which operates an e-marketplace for Halal verification, has parted company with its chief executive and trading in the shares has recommenced. Mohamed Hussain was paid the compensation that he was entitled to in his contract but he is claiming for twice his annual salary – equivalent to £195,000. Ali Sabri Sani Abdullah has stepped up from finance director to chief executive, while Jeff Teo and Derek Marsh have been appointed to the board. Cairn has replaced Arden as corporate adviser. The share price has not changed since trading recommenced.
AIM-quoted Metal Tiger (MTR) has sold its 28.2% in MetalNRG (MNRG) to Value Generation Ltd, a business associated with MetalNRG director Paul Johnson, and Gervaise Heddle, which each own 14.1% of the resources shell. The sales price was 0.26271p a share, whereas Metal Tiger had paid 0.2628p a share nearly one year ago.
BWA Group (BWAP) says it has been in talks with three potential acquisitions but none of the potential deals progressed. There was a £16,276 cash outflow from operations in the six months to October 2016, which was partially offset by the sale of an investment. BWA had a NAV of £562,000, with £41,593 in the bank, at the end of October 2016.
Botswana-focused oil and gas explorer Karoo Energy (KEP) says that exploration work on its two licences has confirmed the company’s geological model which predicts a deep sedimentary basin that could contain shale gas. In the six months to October 2016, there was a £326,000 cash outflow including capitalised exploration spending. Karoo had £168,000 in the bank at the end of October 2016, and £11,000 has subsequently been raised.
Property development and management services provider Formation Group (FRM) plans to consolidate its shares and shareholders will get to vote on the proposal at the AGM on 27 February. If the five-for-one consolidation is approved it will take place on 28 February.
Valiant Investments (VALP) has raised a further £34,000 at 0.1p a share. Valiant’s 84.7%-owned subsidiary Flamethrower has set up a new company called Slot Right In, which will be the social casino division and Flamethrower plans to acquire and trade domain names. Flamethrower continues to add to its portfolio of apps.
Property investor Ecovista (EVTP) says it is looking at investments in London, Essex and Hertfordshire. An offer of £275,000 has been accepted for a cottage owned by the company, while a house in Bishop Stortford, acquired for £665,000 last year, has been demolished and construction of a new building with a gross value of £1.35m will start in the spring. A planning appeal has been lodged for the development of car park site near Stansted Airport.
Grant Thornton will step down as corporate adviser to Chinese medical products and services provider MiLOC Group (ML.P) on 6 March.
AIM
AdEPT Telecom (ADT) is acquiring Our IT Department, an IT services provider in London and the South East, for an initial £4.75m with up to £3.75m more payable depending on performance. This is a profitable business that brings additional IT skills to the telecoms business. AdEPT has secured a £30m, five-year bank facility from Barclays and RBS, which will help to finance further acquisitions.
Everpower International is acquiring a 9.9% stake in Haydale Graphene Industries (HAYD) in return for a £3.26m cash payment – equivalent to 170p a share. This is part of an agreement that will enable Haydale products to be manufactured for the Chinese market. Commercial revenues from the Huntsman agreement are not likely to come through until 2017-18 and with other strategy changes this means that the revenues for the year to June 2017 will be lower than expected.
Automotive acoustics and thermal insulation designer Autins (AUTG) has shocked the market with a profit warning less than six months after joining AIM and the chief executive has resigned. First quarter sales have been in line with expectations but a major customer has reduced orders. The share price has fallen from the August placing price of 168p to 145p – but it had been as high as 240p. Miton had added to its stake in January.
Ascent Resources (AST) says the flow test at the Pg-10 well was better than expected. The maximum stabilised flow rate was 8.8 million cubic feet of gas per day.
LED lighting technology developer PhotonStar LED (PSL) says that its 2016 revenues will be slightly lower than expected and the loss will be higher because of a challenging second half. Revenues were around £5.4m and the pre-tax loss was £1.3m. There was £230,000 in the bank at the end of 2016 with £830,000 of invoice financing. Cost savings have been made and this helps to improve the outlook for 2017, although the poor second half trading has continued into January.
Eagle Eye Solutions (EYE) says that interim revenues have grown 72% to £5.1m, which is better than expected. The nationwide roll-out of the Asda contract has increased coupon redemption numbers. Cavendish Asset Management has increased its stake to 8.26%.
ECR Minerals (ECR) says that the Australian government has given consent to for drilling at the Byron target in the Bailieston project area. ECR has applied for two more licences and is awaiting news of the renewal of the Avoca licence.
Tissue Regenix Group (TRX) says that dermal allograft product DermaPure, which includes the company’s dCELL technology, has been included in the US Department of Veteran Affairs Federal Supply Schedule. This covers 152 hospitals and 800 outpatient units. This will boost the commercial prospects of the wound care product.
Prospex Oil & Gas (PXOG) is raising £850,000 at 0.5p a share and this will help to finance the evaluation of potential projects. The share price has slumped since the beginning of the year because of a disappointing result from a well on its Kolo licence area in Poland. The placing price is about one-fifth of the share price prior to the drilling news.
New management at Quantum Pharma (QP.) says trading is in line. This suggests that the pre-tax profit for the year to January 2017 will be £6.7m, down from £10m in the previous year, although there will be exceptional reorganisation charges. The loss-making NuPharm business has been closed. Net debt was £13.5m – after most of the reorganisation costs have been paid. The share price is less than one-third of its peak less than two years ago but it is higher than the 34p a share placing price in October.
Vela Technologies (VELA) is raising up to £550,000 from a bond issue via the UK Bond Network. There is already interest for £250,000 of bonds and the other £300,000 have been underwritten. The interest rate is 10% and the bonds can be repaid after one year, including interest. If they are repaid earlier than one year’s interest has to be paid. Vela will use £150,000 to increase its investment in Portr, the airline passenger facilitation and baggage transport service.
BP Marsh (BPM) has subscribed for a 30% cumulative preferred ordinary shareholding in Stewart Speciality Risk Underwriting Ltd, a Toronto-based start-up headed by a boss with 25 years of experience. Stewart specialises in insurance for the construction, manufacturing, onshore energy, transport and public sectors. A £480,000 loan facility is also being provided.
Reconstruction Capital (RC2) is returning €17m of cash to shareholders. This equates to €0.115 a share.
MAIN MARKET
Engineering and environmental consultancy Waterman Group (WTM) says that its interim revenues and profit will be in line with last year. Net cash was £6.7m at the end of 2016. This will enable Waterman to continue to increase its dividend.
Publisher Quarto (QRT) is on course to increase its pre-tax profit from $14.1m to $15.5m. Net debt was $62.2m at the end of 2016. A buyer has been identified for the Australian distributor Books and Gifts Direct. This will raise $1m in cash with the other $4.75m of the disposal price in loan notes. Even after a 46% increase in the share price, the 2016 multiple is less than eight. There are plans to change the way that the backlist of titles is valued.
Rainbow Rare Earths (RBW) commenced trading on the standard list and the share price ended the week at 12p, compared with the placing price of 10p. Rainbow has issued £260,000 worth of shares at the placing price to cover a majority of the costs of its flotation.
Challenger Acquisitions Ltd (CHAL) has sold Starneth less than two years after buying the designer and engineer of giant observation wheels. Challenger completed the acquisition of Starneth in July 2015 when an initial €1.25m was paid in cash and €825,000 in shares at 75p each. The second cash payment of €1.25m was delayed. Challenger will receive $6m in fees when the Jakarta wheel’s funding arrangements are finalised and the €1.25m payment will be taken out of that. There had been a third payment due but that does not appear likely to happen. This is a complicated deal but it is difficult to see this as a positive deal for Challenger but it will continue to work with Starneth and it will have a stake in the New York wheel. Acquisitions of businesses in the leisure and entertainment sectors that are close to revenues are likely.
Andrew Hore