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Andrew Hore – Quoted Micro 26 March 2018
NEX EXCHANGE
Continuing revenues from renewable energy supplier Good Energy (GOOD) increased from £89.7m to £104.5m but underlying pre-tax profit was nearly two-thirds lower at £734,000 due to higher admin and interest costs. There was also a decline in gross margin. An increase in working capital meant that there was a £4.92m cash outflow from operating activities. There was a decline in NAV due to the loss on discontinued generation development activities. Net debt was £53.1m at the end of 2017.
Brewer Adnams (ADB) reported a 9% increase in beer volumes in 2017, even though cash sales fell by 5%. Overall sales were 6% ahead at £74.8m despite losing £1m in revenues from the closure of the Swan Hotel for refurbishment. Even if the exceptional expenses of £721,000 for removing asbestos from the Swan Hotel, are added back, the pre-tax profit, excluding disposal gains, fell from £3.59m to £1.6m. Capital investment continues with the IT system being upgraded. The full year dividend was edged up from 226p a share to 228p a share. There plans to produce an alcohol-free version of Ghost Ship.
MetalNRG (MNRG) is selling its 15.4% stake in US Cobalt to ASX-listed Tyranna Resources, which is acquiring the whole of the company. MetalNRG will receive 21.7 million shares in Tyranna at a valuation of A$0.017 a share. The shares are trading at A$0.025, which would value the deal at £300,000. First Sentinel has raised £45,000 at 13p a share and issued a further £25,000 worth of shares at the same price to market maker Winterflood.
Coinsilium Group Ltd (COIN) has exercised its option to take its stake in Indorse to 10%. The additional 3.5% of the company is being bought for £97,000, taking the total investment to £246,000. Singapore-based Indorse has tested its blockchain-based social network for professionals and moved to the Mainnet. A new feature will enable token issuers to verify their advisory board. Coinsilium is advising Bundle Network on its token generating event. Bundle enables people to trade across unconnected cryptocurrency without needing to open individual accounts.
Imperial Minerals (IMPP) has raised £20,000 at 2p a share. There was just over £37,000 in the bank at the end of 2017, following a £35,000 cash outflow in the previous six months. Imperial is still seeking an opportunity in metals, such as gold, lithium, cobalt and zinc.
First Sentinel (FSBN) has appointed Colin Maltby to the board and invested £43,500 in the Union Jack Oil (UJO) placing raising £1.25m at 0.085p a share.
Baron Bloom has stepped down from the board of Etaireia Investments (ETIP) after the publishing of criticism by a judge, who said that he had been dishonest during divorce proceedings with his ex-wife.
Block Commodities (BLOC) has entered into a strategic partnership with blockchain-based financial services platform Wala and token issuer Dala. The businesses will be working together to establish the blockchain-based agricultural commodity trading initiative that Block has been developing. Dala would be used as the token for the food commodities trading ecosystem. Block’s existing joint venture will supply $10m of Dala token loans to 50,000 small farmers in sub-Saharan Africa.
Dana Group International Investments Ltd (DANA) increased its net assets from $0.31 a share to $0.36 a share in 2017. There was a $4.15m increase in the valuation of the investment in Bonyan International Investment.
AIM
New management at social video content developer and owner Brave Bison (BBSN) will be judged on this year’s figures rather than the 2017 results. In 2017, revenues fell 48% to £9.1m and cost cutting helped to reduce the underlying operating loss before the restructuring costs and write-offs of acquired intangibles. The cash outflow from operations fell by two-thirds to £1.53m. There is £4.82m in the bank so that provides time for further improvement in performance. Collecting ad revenues for third party content on social platforms remains a significant revenue generator but commissioned sponsored content is becoming an increasingly important fee earner.
Cambridge Cognition (COG) reported a small decline in revenues because of lumpy contract wins in the previous year and the delays to two clinical trials. A small loss was reported but the neuroscience health company is expected to bounce back this year to a profit of £500,000.
Utilitywise (UTW) has finally published its figures for the year to July 2017. More conservative accounting policies mean that an under consumption of energy increased the loss to £8.5m. The utility cost management adviser had a £6.18m cash outflow from operating activities. Net debt rose from £5.5m to £19m and banking covenant breaches have been waived by the bank. The debt increase was partly down to dividend payments but there is no final dividend. The interim results will be published on 23 April.
Energy procurement business Inspired Energy (INSE) increased its underlying pre-tax profit from £7m to £9.7m, while earnings per share were one-quarter higher at 1.57p. Inspired has bought SystemsLink 2000, whose software Inspired uses, for £3.875m and Energy Cost Management, which specialises in water management services, for up to £2m.
Rose Petroleum (ROSE) is confident that the 3D seismic data that has been acquired over the Gunnison Valley Unit on the Paradox oil and gas acreage in Utah provides the information required to decide a drill site for the fourth quarter and attract a farm-in partner to help finance the drilling. There are ongoing discussions with prospective partners and this should ensure that the current cash in the bank will last longer. Last September, £3m was raised at 4p a share.
Immupharma (IMM) says that it expects results from its phase III trial for Lupuzor by mid-April. The Lupus treatment has generated the required data and this will be analysed.
Wynnstay Group (WYN) continues to benefit from improved sentiment in the farming sector. Feed demand is above last year’s levels and grain volumes are improving, although margins are squeezed. Like-for-like retail sales are higher and an outlet has been acquired in mid-Wales.
Trading in Green and Smart Holdings (GSH) shares has been suspended because it will not publish its 2016-17 accounts by the end of March. The audit should be completed by the end of April.
CloudCall Group (CALL) grew revenues by two-fifths last year. The underlying loss was £2.6m and further investment in sales and marketing means that even though revenue growth could be near to last year’s level the loss will be similar. The recurring cloud-based software and telecoms services revenues that will be generated from the investment will reduce the loss and move the business into profit in the following two or three years.
James Latham (LTHM) says that its figures for the year to March 2018 will be in line with expectations. This reflects an improvement in the second half. The Wigston timber depot has been moved to a new site.
Parity Group (PTY) has signed a managed services deal with Primark Stores and, along with other extensions, this takes annual revenues from this area to £5m plus. Primark is important because most of the clients on this side of the business are in the public sector. Parity can generate £2m of cash a year.
Gama Aviation (GMAA) reported a 28% rise in underlying operating profit to $18.7m. The main growth has come from the aircraft management business, which was boosted by acquisition in the US. There were also improvements in Europe and Middle East. Gama is investing in two new ground maintenance sites in the US and this continued investment is holding back short-term profit for this division.
KCR Residential REIT (KCR) has raised £1.56m at 70p a share and capitalised loans of £1.59m. The cash will be invested in the private rental portfolio. Debt has been reduced to 45% of investment property value. Energiser Investments (ENGI) has taken a 24.7% in KCR by subscribing for shares and capitalising its £494,000 loan.
There was a cash outflow of £738,000 at Botswana Diamonds (BOD) in the six months to December 2017. That was before the £865,000 raised in a share issue. There is £230,000 left in the bank. A scoping study is being undertaken at the Thorny River project in South Africa. Drilling continues at the Ontevreden project.
Golden Saint Resources (GSR) is asking for shareholder backing for leaving AIM on 24 April. It still plans to acquire EMS Wiring Systems but it wants to join the standard list after the deal goes through.
OKYO Pharma Corporation left AIM on 23 March and the company has migrated to Guernsey. A special dividend payment is planned.
NWF has received bid acceptances for the equivalent of 42.6% of the share capital of Stellar Diamonds (STEL).
Directa Plus (DCTA) has entered into an agreement with Sartec to develop a system to treat contaminated water in the oil and gas sector by using the Grafysorber technology. Directa Plus provides the technology and support while the partner will finance the development of the first plant, starting in the second quarter of 2018.
Noel Collett is stepping down as chief executive of retail butcher Crawshaw Group (CRAW) but he will remain while a replacement is found. Finance director Alan Richardson plans to move to a new job in May. Crawshaw is estimated to have lost £2m in the year to January 2018, Trading has been poor in the first six weeks of the new financial year. There was £5m in the bank at the end of January 2018, which is similar to the company’s market capitalisation.
Grafenia (GRA) says trading has been mixed. Volumes and margins in the printing business have been below budget in recent months. Grafenia is trying to replace these revenues with licence fees, signage and website sales. Full year revenues will be two-fifths higher at nearly £15m and the loss will be similar. Net debt will be around £2.85m.
Gaming Realms (GMR) has sold two affiliate businesses for up to £2.4m. Their revenues have been declining. In 2017, group revenues were flat at £31.6m but continuing operations made a positive underlying EBITDA. Real money gaming revenues were 5% higher but social revenues were lower. New licensing deals have been signed with the likes of 888 and Golden Nugget Casino this year.
Vipera (VIP) says that 12.5% shareholder Sella Open Fintech Platform is contemplating making a bid for the mobile financial software developer.
Gatemore has taken its stake in TLA Worldwide (TLA) to 7%. Gatemore took its initial stake just after trading in TLA, which is most famous for publishing a profit warning after trading had finished prior to Christmas 2016, recommenced after it published its 2016 figures last November.
Harwood Wealth Management (HW.) is paying £4.6m, plus £1.54m for cash balances, for Southampton-based AE Financial Services. The business generated a profit of £500,000 last year.
Altona Energy (ANR) has reviewed the data for the Westfield tenement and put together a three phase drilling programme. This will cost A$1.5m in total, with the first phase costing A$230,000. The second phase will help to define a JORC resource. The final phase will be part of the preparation of a bankable feasibility study. The drilling is targeting shallow coal seams.
More bad news from toilet tissue manufacturer Accrol Group Holdings (ACRL) and the share price has fallen by three-quarters. The loss is going to be higher than expected. Net debt will be £34m by the end of April.
MAIN MARKET
London and Associated Properties (LAS) says that the tenant of Brixton Markets has exercised its pre-emption rights to acquire the markets. Market Village will pay £37.25m for assets that have a book value of £24.5m.
Bluebird Merchant Ventures Ltd (BMV) says it has made swift progress at the Kochang mine and sampling of the underground workings is ongoing. This has cost $65,000 so far. Feasibility studies at Kochang and Gubong should be completed in the third quarter of 2018. Bluebird has to spend $500,000 on each project to earn 50% in a joint venture for each project with Southern Gold.
Andrew Hore
Brand CEO Alan Green talks markets, Cranswick (CWK) & Vipera (VIP) on TipTV Finance Channel
Brand CEO Alan Green talks markets, Cranswick (CWK) and Vipera (VIP) with Zak Mir on the TipTV Finance Channel.
Brand CEO Alan Green talks Andalas Energy (ADL), Feedback (FDBK) & Vipera (VIP) on Vox Markets podcast
Brand CEO Alan Green talks Andalas Energy (ADL), Feedback (FDBK) & Vipera (VIP) with Justin Waite on the Vox Markets podcast. The interview is 42 minutes 15 seconds in.
Quoted Micro 2 January 2017
ISDX/NEX
Business incubator Milamber Ventures (MLVP) is acquiring The League of Angels, an angel network set up by Barney Battles, a Milamber director. There is a subsidiary called The China 68 Club that offers access to Chinese family offices. The business made a small profit last year and since April it has referred work to Milamber worth £200,000. Milamber is paying £150,000 in shares at 15p each. Battles will own 21.6% of Milamber. In the six months to September 2016, Milamber increased its revenues from £34,000 to £224,000, while the loss rose from £54,000 to £196,000.
Residential property developer Via Developments (VIA1) has found buyers for all eight apartments in its Canal Street development in Manchester and non-refundable deposits of £375,000 have been received. The apartments should be completed in the second quarter of 2017. The gross development value of the project is £2.2m. Revised plans have been submitted for the Plymouth Grove development in Manchester and planning applications for the Napier Street site in Luton, the place in the UK where house prices have been strongest over the past year, should be determined in the next few months.
African Potash (AFPO) has revised its bridge loan agreement with Katrina Clayton, the wife of the company‘s finance director. This agreement provided finance of £150,000 and this will be increased to £900,000, in return for a fee of £7,500, because it failed to raise additional cash through share issues. If the shares cease to be traded on ISDX/NEX or a regulated market then African Potash will be in default. The lender can also appoint a director to the company. There was a $2m cash outflow from operating activities in the year to June 2016, plus $873,000 of capital investment. There were limited revenues from fertiliser trading. Net debt was $706,000 at the end of June 2016.
Globe Capital Ltd (GCAP) had £5,000 left in the bank at the end of September 2016. There was a cash outflow of £91,000 over the previous nine months, while £100,000 was raised from issuing shares. The only investment is a 25% stake in online menswear retailer Sterling Craig.
AIM
It is not just TLA Worldwide (TLA) that has used the Christmas and New Year period to put out bad news, although none was quite as blatant and late in the day as TLA. Legal and debt management services provider Fairpoint (FRP) used the period between Christmas and New Year to report the departure of chief executive Chris Moat, although he will continue to assist in the closure of the debt management business. The share price has fallen by two-thirds since its profit warning on 9 December. Hargreave Hale has been trimming its stake from above 14% to 12.2%. 1Spatial (SPA) has parted company with its chief executive Marcus Hanke. This follows the disposal of the Avisen and Storage Fusion businesses. 1Spatial had warned that contracts were going to fall into 2017 and therefore it will make a 2016 loss.
Intercede (IGP) is raising around £5m from the issue of £4.5m of convertible loan notes and a £500,000 subscription at 57p a share – although this requires shareholder approval – compared with a market price of 57.5p. The identity and digital security services provider is not generating enough cash to make the required investment in its products and a move into the consumer market. Full year revenues will be less than the £11m reported for 2015-16. Interim revenues halved to £2.8m and the pre-tax loss soared from £432,000 to £3.67m. The cash pile fell from £5.29m to £1.38m in the six months to September 2016 so most of this cash has probably already gone. The convertibles last for five years and have an annual interest charge of 8%. The conversion price is just over 68.8p a share.
B2B gaming services provider Nektan (NKTN) has raised £2.275m at 27.5p a share and is offering shareholders the chance to subscribe for £500,000 at the same share price. That was a 15% discount to the market price but it has since fallen to 27p – compared with the November 2014 flotation price of 236p. In the year to June 2016, revenues jumped from £528,000 to £5.78m but the loss still increased from £8.12m to £10.5m. The cash outflow, before a rise in trade payables, was £6.18m. Conversion of loans means that Nektan’s stake in US business ReSpin has been raised from 50% to 85%.
It has not just been bad news between Christmas and New Year. Windar Photonics (WPHO) has revealed a number of new orders for its LiDAR wind sensors for use on wind turbines. An Indian power producer and the Indian National Institute of Wind Energy have ordered sensors, with the power producer ordering an initial five units with an option for a further 35 units. On top of this there are orders for seven units from Canada – a repeat order – and South Korea – the first order in that country. Windar has already said that its 2016 revenues will be between €1.5m and €2m – slightly below expectations. Before Christmas, Windar raised £491,000 at 94p a share. The share price has since fallen back to 77p.
Commercial property investor Summit Germany Ltd (SMTG) is paying a third interim dividend of 1.02 cents a share – the same as the previous quarterly dividend. The ex-dividend date is 5 January and forms to receive the dividend in pence need to be completed by 4 January. The exchange rate for the previous quarterly dividend was 0.8815p to one Euro, so the current exchange rate suggests that the sterling equivalent will be lower in this quarter. Summit has sold an empty office building in Hamburg for €14m.
Facilities management and security services provider Mortice Ltd (MORT) is generating more than three-quarters of its revenues from repeat business. In the six months to September 2016, revenues were 79% ahead at $91.1m. Much of that growth comes from a full contribution from the UK operations but the Indian business grew 22% and still accounts for 63% of revenues. Underlying pre-tax profit has jumped from $300,000 to $2/6m. Net debt was $14.6m but since then £2.3m has been raised at 75p a share. Trading continues to be strong.
Kodal Minerals (KOD) says that the latest samples at the Bougouni lithium project show high grade lithium mineralization of up to 2.03% lithium oxide. A total of 18 holes have been drilled and the results of analysis are expected by the end of January.
Stanley Gibbons (SGB) lost £6.18m in the first half, compared with a £1.11m profit in the comparative period after revenues slumped from £29.4m to £20.2m. Net debt was £16.5m at the end of September 2016. The US-based ecommerce business has been closed after an investment of £10m. A new coin joint venture has been set up by Baldwin with coin auctioneer St James’s, following a number of management departures.
Redcentric (RCN) has issued options to finance director Peter Brotherton and chief operating officer Mo Siddiqi. Brotherton has 161,905 options at nil cost and Siddiqi has 257,143 options at no cost, while Siddiqi has 250,000 at 84p each. These options are dependent on diluted earnings per share growth between March 2016 and March 2019. The compound annual growth rate required is not specified but the figures for the year to March 2016 have already been restated downwards. Siddiqi also has 250,000 options at 84p each that have no performance criteria. The current share price is 91p.
Grapheme NanoChem (GRPH) has gained its first commercial order for PlatDrill synthetic-based drilling mud in China. The initial order of 4,000 barrels of PlatDrill will be used for two shale gas wells in south west China and will generate revenues of $360,000. There could be more than 300 wells drilled in China each year over a five year period.
Mobile financial services provider Vipera (VIP) is increasing its stake in Codd & Date, which deploys Vipera’s technology services with customers, from 51% to 80.7%. In fact, the part of the business that focuses on Vipera’s Motif software will be split out and become a wholly-owned business. The enlarged group will move into larger premises in Milan More Info. Vipera is issuing 21.4 million shares and six million warrants exercisable at 5p each to pay for the additional stake.
CPP Group (CPP) is paying SSP £2.5m for terminating the contract to build an IT platform.
Fire and emergency services resource manager AssetCo (ASTO) is still attempting to renew its main contract in Abu Dhabi, which was due for renewal on 17 November. The contract will continue on existing terms until the new one is agreed. There should be further news concerning a one year extension at the end of January. Trading is in line with expectations.
Positive news from Providence Resources (PANR) concerning its VOBM4 well. Drilling of the Wilcox sandstone suggests that there is a potentially highly productive hydrocarbon zone at shallower depths.
Igas Energy (IGAS) is still trying to negotiate a capital restructuring and a strategic investor is interested in injecting funds into the business. There is around $32m left in the bank but net debt is significant enough for IGas to be on the verge of breaking its leverage covenant.
Circle Oil (COP) has lost its AIM quotation because trading in the shares had been suspended for six months and management says that the shares are unlikely to have any value. The International Finance Corporation and associates have waived debt repayments and deferred interest payments until 26 January.
MAIN MARKET
Derriston Capital (DERR) joined the standard list on 29 September. Medical products and devices are the proposed areas where an acquisition is likely to come from. Derriston (www.derristoncapital.co.uk), whose investors include Nigel Wray, former Domino’s Pizza boss Stephen Hemsley and Primary Health Properties boss Harry Hyman, raised £2.275m at 10p a share to go with the £56,000 previously raised. Derriston was valued at £2.5m when it floated. The standard list shell more than doubled in value in the first couple of days of trading but ended the week at 17.5p.
Andrew Hore