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Andrew Hore – Quoted Micro 13 August 2018
NEX EXCHANGE
Brewer Adnams (ADB) grew its turnover by 7% to £35.5m in the first half of 2018 but there was an underlying operating loss and lower gains from asset disposals. The reported pre-tax loss increased from £284,000 to £840,000. The second half is always more profitable. Depreciation is higher due to investment in the brewery and the refurbishment of the Swan Hotel. Adnams own beer volumes increased by 4.8%, compared with the market growth of 1.3%. Carbon dioxide shortages have affected the second half. The interim dividend is unchanged at 78p/B share and 19.5p/A share.
KSE is offering £29,419.64 a share in cash for Arsenal Holdings (AFC) and that values the football club at £1.8bn. KSE already owns or has acceptances totalling more than 97% of the shares in the company.
Healthperm Resourcing Ltd (HPR) increased revenues by 184% to £293,000 in the first half of 2018 and 144 healthcare staff candidates were deployed in the period, which was nearly three times as many as in the first half of 2017. More students are being trained in the English language. Healthcare recruitment contracts have been signed in the UK and they cover nine hospitals. Contracts have also been signed outside the UK.
Angelfish Investments (ANGP) is subscribing for 0% secured convertible loan notes in Wallet Ads Ltd. The first drawdown is £50,000 and this will be followed by five monthly instalments of £20,000. On payment of the final instalment, or under certain other circumstances, the loan notes can be converted into 20% of the enlarged share capital of Wallet Ads, which has developed a mobile engagement platform combining mobile wallet passes, web and social media and this enables digital vouchers to be sent to smartphones. Angelfish non-exec Richard Walker will join the Wallet Ads board.
Pelican House Mining (PHM) is investing in battery minerals explorer Kalahari Key Mineral Exploration (KKME), which is exploring for nickel and platinum group metals in Botswana, near the South Africa border. AIM-quoted Two Shields Investments (TSI) is a co-investor in KKME and it increased its stake to 22.2%. Two Shields Investments also increased its stake in cobalt explorer Cobalt Blue Holdings to 49% before swapping it for a 11.26% stake in African Battery Materials (ABM), thereby gaining a wider exposure to technology metals licences.
Clean Invest Africa (CIA) raised an additional £50,000 at 1p a share when it floated last year. Geremy Thomas holds a 3.1% stake.
Shareholders in Welney (WENP) have voted against the appointment of Mark Jackson and Mark Chapman as directors.
AIM-quoted TechFinancials Inc (TECH) joined NEX on 8 August. Monreal has changed its name to Eight Capital Partners (ECP).
AIM
Fryer management and commercial kitchen services provider Filta (FLTA) says that interim figures are in line with expectations. There will be a full contribution from GMG, which was acquired last year, while the sale of the refrigeration division has helped to improve margins. Revenues are growing from newer franchisees and the UK-based seals business also grew its revenues. The interims will be published on 4 September.
Former boss Philip Swinstead has sold his 9.82% stake in Parity Group (PTY) and Helium Rising Stars has taken a 10.9% shareholding. Parity is on track to achieve double digit profit growth this year. The IT recruitment and consultancy services provider is modestly rated on a prospective multiple of less than nine, even though the share price has risen following the share dealing.
Pebble Beach Systems (PEB) expects revenues to fall from £4.6m to £3.9m but the broadcast software supplier believes that the second half should be better. A backlog of £4.7m should help full year revenues to be nearer to last year’s level.
Frontier IP (FIPP) has announced its first Portugal-based spin-out. It is taking a 31.8% stake in NTPE, which is developing Paper-E technology that can be used to print electronic circuits, sensors and semiconductors. This opportunity came through the relationship with Universidade Nova de Lisboa Faculty of Science and Technology. Another investee company, 27.5%-owned Fieldwork Robotics, has secured a deal with soft fruit grower Hall Hunter to prototype and test a raspberry harvesting robot system.
Phoenix Global Mining (PGM) has reported that the first drilling results from the Empire mine in Idaho have been encouraging. There was 68 metres at 0.57% copper from the surface. The current JORC resource is 0.52% copper so it would be good news if the current drilling provides higher levels of copper.
Mereo BioPharma (MPH) had net cash of £36.9m at the end of June 2018, but a R and D tax credit of £8.2m was received in August. An adult Phase 2b study for Osteogenesis Imperfecta (OI) is due to complete enrolment by the end of September. There will be initial six month data from the open-label high dose part of the study by the middle of next year. A flotation on Nasdaq is still a possibility.
MAIN MARKET
Engineering and construction company North Midland Construction (NMD) increased its interim revenues from £135.1m to £160.9m and more than doubled pre-tax profit from £1.23m to £2.51m. The interim dividend has been doubled to 6p a share. Cash in the bank was 138% higher than 12 months before are £18.9m, although there are also finance leases of £4.5m. The order book is worth £320m. The telecoms-related part of the business is still losing money. There were much better profit contributions from the water and construction divisions.
Argo Blockchain (ARB) is developing a global datacentre management business facilitating cryptocurrency Mining-as-a-Service and has signed a deal that will provide 9.5MW of clean energy for two datacentres in Quebec (Argo already has one datacentre in Quebec). That provides the capacity for more than 150,000 subscribers and the centres will be operational in September and October. Argo joined the standard list on 3 August after raising £25m at 16p a share, which valued the company at £47m. However, the share price has fallen back to 11.13p.
Beauty and personal care products supplier InnovaDerma (IDP) has appointed Kieran Callan, who was a non-executive director, as chief executive with Haris Chaudhry moving to executive chairman. Callan used to work at PZ Cussons. This appointment follows poor trading and disappointing pre-tax profit in the year to Last October, InnovaDerma raised £4.4m at 276p a share and, having fallen by two-thirds at one point since then, the share price has recovered to 148.5p. Haircare brand Roots will be sold in Tesco.
Telecoms services provider Toople (TOOP) is holding a general meeting on 30 August in order to get shareholder approval to enable it to issue more shares to raise cash to keep the business going.
Andrew Hore
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
Andrew Hore – Quoted Micro 2 April 2018
NEX EXCHANGE
Sativa Investments (SAPI) joined NEX on 29 March after raising £1.1m at 1p a share. The share price has already reached 3.125p. Sativa has £1.5m in cash that it can invest in businesses involved in medicinal cannabis. The initial focus is Canada.
Capital for Colleagues (CFCP) reported a slight reduction in NAV to 41.5p a share at the end of February 2018. The portfolio includes 17 unquoted employee owned businesses with a value of £5.24m.
NQ Minerals (NQMI) has entered into a three-year, $10m loan facility with a US private equity firm and this will be used to develop the Hellyer mine. The facility has a 12% annual interest charge and it is secured on the company’s assets. NQ has entered into a silver purchase deed with the finance provider and has to sell them 30% of the first 8 million ounces recovered from the Hellyer mine and 10% of the payable silver for the lifetime of mine. The price will be the lower of $6/ounce or 80% of market price.
Gunsynd (GUN) says that investee company Human Brands is acquiring a 10% stake in wine and spirits distributor Milestone Beverages HK Ltd, which can help to increase the distribution coverage of the investee company’s drinks brands. Gunsynd owns 6.18% of Brazil Tungsten Holdings, which has been forced to suspend operations after a fatal accident. The investment is currently valued at £500,000.
Welney (WENP) made a broadly similar interim loss of £37,000 and it has net liabilities of £234,000.
Block Commodities (BLOC) has reduced its interim loss from $1.19m to $782,000.
Angelfish Investments (ANGP) has reached agreement with 4Navitas, which will make a payment to cover the majority of costs incurred when Angelfish was trying to negotiate a joint venture agreement.
Etaireia Investments (ETIP) has raised £50,000 at 0.06p a share.
EPE Special Opportunities (ESO) has sold 50% of its stake in Pharmacy 2U, for double its cost, at the same time as the digital pharmacy services provider raised £40m of new cash.
Walls and Futures REIT (WAFR) has extended the closing date of the one-for-four open offer to raise up to £1.05m at 94p a share from 26 March to 30 April.
AIM
MySQUAR Ltd (MYSQ) slipped out its interim figures at 5.32pm after the market had closed for Easter. They show near-doubled cash outflow from operating activities of $2.22m. There was $68,000 in the bank at the end of 2017. Management is hopeful that the $218,000 of trade receivables at the end of December 2017 can be collected by June. Since then, MySQUAR has issued £2.11m of convertible bonds at 90% of their face value to Atlas Capital Markets Ltd. There are also more than 20 million warrants exercisable at 3.15p a share. There is talk of an acquisition of a mobile payment services business.
Conviviality (CVR) is calling in administrators after a rescue fundraising failed to win the backing of investors.
Publisher Axel Springer is investing £125m in Purplebricks (PURP) and this will give it 11.9% of the estate agency. The shares are being acquired at 360p each and £25m worth of existing shares are being acquired from management. Full year revenues will double but a weak UK market, exacerbated by the weather and potentially by negative publicity. There was £51.7m in the bank at the end of February 2018. The additional cash will enable a faster roll-out in the US and entry into other markets.
Royal Bank of Scotland has bid 120p a share for FreeAgent (FREE) and that values the accounting software provider at £53m. The founders will take shares and have a 23.5% stake in the bid vehicle. FreeAgent floated 18 months ago at 84p a share. At the beginning of 2017, FreeAgent signed a deal with RBS, which offers the company’s SaaS-based software to small business customers. More than 10,000 customers have taken up the software.
Polarean Imaging (POLX) joined AIM on 29 March and raised £3m at 15p a share. Polarean has developed xenon gas-based technology that enables MRI scans to produce better images. Amphion Innovations (AMP) retains a 23.2% stake.
Polemos (PLMO) has withdrawn its general meeting resolutions. The placing and 100-for-one share consolidation will not go ahead for the time being. There could be an open offer and placing at the previously proposed price of 0.01p a share.
Thor Mining (THR) is acquiring 40% of an exploration licence, which has 13 outcropping tungsten deposits and one copper deposit and 100% of a prospective copper exploration licence. Thor is issuing A$550,000 of shares to Rox Resources in payment for these purchases. The 60%-owner of the first licence has the right to match the price offered.
Tracsis (TRCS) increased its interim profit by one-third to £2.4m as revenues grew by 18% to £18.1m. The software division increased its profit and there was a recovery in the traffic and data services division. There is more improvement to come from the latter division. The interim dividend is 17% higher at 0.7p a share. There is £18.5m in the bank. There will be a second half contribution from the rail sector delay repay businesses acquired in February. Progress is being made in selling remote condition monitoring technology in North America.
Internet gaming software supplier GAN (GAN) reported a reduced loss of £4.2m for 2017. There was £2.7m in the bank at the end of 2017 and since then has raised £2m via an unsecured 9% convertible loan note. There could be further fundraisings in order to make the most of the prospects for real money internet gaming in the US.
Inland Homes (INL) increased its adjusted EPRA NAV by 6% to 97.63p a share. Interim pre-tax profit improved from £4.95m to £5.37m. The interim dividend was raised 30% to 0.65p a share. The landbank has been expanded to 7,372 plots.
Altona Energy (ANR) slightly increased its first half loss to £260,000 and there was £690,000 in the bank at the end of 2017. The current focus is conventional coal mining at the Arckaringa coal project in Australia. Altona is assessing less wet coal seams.
RM2 International (RM2) is raising £25.3m at 1p a share, just over 50% after a general meeting and the rest dependent on the reduction of operating costs and commercial launch of new technology, and converting preferred shares into 3.16 billion shares. There are also plans for an open offer to raise around £4.5m. The new cash will be used to retrofit existing pallets with ELIoT track and trace devices and produce new RM2 ELIoT pallets. Former chief executive John Walsh has stepped down from the board, as has Frederic de Mevius. Woodford appears likely to end up owning around two-thirds of RM2. The second tranche is dependent on Woodford agreeing that key performance indicators have been met. Three members of RM2’s management will acquire shares in the placing via a reduction in their salaries over an 18 month period.
STM Group (STM) reported better than expected 2017 and this led to an upgrade for 2018. Last year’s pre-tax profit improved from £2.6m to £4m, helped by an increased provision release from the acquired life book. The underlying pre-tax profit is expected to rise from £3.2m to £4.2m in 2018.
Caledonian Trust (CNN) reported a NAV of 185.7p a share at the end of 2017. This was helped an increase in the valuation of St Margaret’s House, which is in the process of being sold.
The SimplyBiz Group provides regulatory and support services to financial advisers and is set to join AIM on 4 April.
Sosandar (SOS) has gained momentum since floating last year. The online women’s fashion retailer continues to lose money but the customer database has increased nearly ten-fold to 36,328.
NetScientific (NSCI) is running out of money and it needs more by the end of June. A placing and subscription will raise up to £6m at 52.5p a share. The cash will be used to provide additional financial backing for investee companies.
Manx Financial Services (MFX) has acquired Blue Star Business Solutions, which is a broker for IT equipment funding, for an initial £1.5m in cash. This could increase to up to £4m depending on performance.
Connemara Mining (CON) is focusing on three main areas: the Inishowen gold project in Donegal, the Mine River gold project in Wicklow and Wexford and multiple zinc exploration projects. The next exploration is at the 100%-owned Mine River gold project where high grade intersections will be targeted.
Wynnstay Properties (WSP) has increased the value of its investment properties by £1.63m to £30.1m in the year to March 2018. The NAV has increased by 100p a share to more than 770p a share.
Real Good Food (RGD) has agreed a loan note facility of up to £4m with three major shareholders. Longer-term, a share issue will be required.
Vernalis (VER) lost £37.6m in 2017, mainly down to exceptional write-downs and unrealised foreign exchange movements. There was £46m in the bank. US commercial activity should finish by the end of September and that will slow the ongoing cash outflow.
Kestrel has increased its stake in Pebble Beach Systems Group (PEB) from 15.2% to 16.6%. The share price has been on a downward trajectory and borrowings are significant but Kestrel must believe that the software company will survive.
Life science software provider Instem (INS) coupled its 2017 figures with a contract announcement for its SEND software. Revenues were 18% ahead at £21.7m, and that included organic growth of 5%, while pre-tax profit recovered from £500,000 to £1.9m. A further improvement to £2.7m is expected this year.
Feedback (FDBK) has raised £440,000 at 1.25p a share and it will invest in sales and marketing for the TexRAD and Cadran technology, as well as developing a clinical evidence base for TexRAD.
Oracle Power (ORCP) has raised £550,000 at 1.4p a share to provide cash for the company as it moves to financial close for the development of the Thar Block VI lignite coal mine and power plant in the Sindh province in Pakistan.
GoTech Group (GOT) plans to sell its Sportsdata business to Starnevesse for £1. The company was a shell prior to the acquisition of the business in May 2016 and it effectively became a shell again when it stopped supporting the business at the end of 2017. There is £566,000 in the bank and there will be a £100,000 cash payment as part of the settlement of indebtedness to Starnevesse.
Microsaic Systems (MSYS) has signed an agreement with Unimicro Technologies Inc, which will integrate Microsaic’s 4500 MiD mass spectrometry detector into its Capillary Electrophoresis instruments.
Collagen Solutions (COS) is restructuring its New Zealand operations. The plan is to focus on tissue collection and processing and then consolidate collagen production in Glasgow. Annual cost savings should be £200,000 and one-off costs will be £150,000.
Chris Akers has increased its stake in YOLO Leisure (YOLO) from 6.8% to 7.93%.
MAIN MARKET
S&U Group (SUS) reported a one-fifth increase in pre-tax profit to £30.2m. The car finance provider achieved this despite a start-up loss from the bridging finance business Aspen. The total dividend for the year was increased from 91p a share to 105p a share. A rise in pre-tax profit to £35.8m is forecast for this year.
Book publisher Quarto Group Inc (QRT) slumped into loss in 2017, although the underlying pre-tax profit fell from $13.9m to $3.9m. Net debt was $64m. The year end is being changed to March.
Shefa Yamim (SEFA) had NIS6.49m in the bank at the end of 2017 following its flotation. Bulk sampling results for the Kishon Mid-Reach gemstones project have been positive and the processing plant has been upgraded.
Path Investments (PATH) has postponed its exit from the standard list until further notice. The plan is to move to AIM when the proposed oil and gas asset acquisition is made but the timing remains uncertain.
North Midland Construction (NMD) reported a fall in profit in 2017 even though revenues increased from £250.5m to £291.8m. Pre-tax profit more than halved from £2.06m to £1m. That is because the loss on legacy contracts increased from £3.85m to £7.29m. The final dividend is unchanged at 3p a share even though the total dividend is one-third higher at 6p a share.
NCC (NCC) has sold its web performance business for £7.5m. The sale process for the software testing business is continuing.
Andrew Hore
Andrew Hore – Quoted Micro 4 December 2017
NEX EXCHANGE
VI Mining is planning to join NEX this month. The Peru-focused miner is acquiring two gold mining assets in tandem with the flotation. VI will raise up to £10m in cash at 500p a share and issue a further £10m worth of shares as part of the initial payment, along with some of the cash, for the two mining assets at Rosario and Minaspampa. VI has debt facilities in place. There is a capital expenditure and working capital commitment of £30m for Minaspampa and the mine could be in operation by next August. Rosario requires £15m of capital spending and working capital and already has licences and infrastructure. Annual gold production of 83,720 ounces from the two mines could yield a $43.5m annual profit based on a $1,300/ounce gold price. That is expected to be the initial production and it could end up quadruple that level. Two tolling projects could also generate cash for the group and the first could be up and running in a few months time. VI would be valued at £535m at the flotation price. This is backed up by a Daniel Stewart estimated valuation of £557.8m. The board will retain 73% of the company. The plan is to move to the Main Market in 12 months or so. The free float will need to be increased in order for it to be at least 25% when the move is made.
NQ Minerals (NQMI) has published the competent person report on the Hellyer gold project in Tasmania. This indicates that the project has a NPV of $113.2m. The processing facilities are being refurbished and operations are expected to commence in 2018 following the approval of the environmental management plan.
Coinsilium Group Ltd (COIN) has acquired a 30% stake in Startup Token, which provides advice to start-ups undertaking token offerings. Coinsilium is paying £361,000 in cash and shares at 8.5p each. Coinsilium is also providing a six month loan of $100,000 that can be converted into a further 6.4% of Gibraltar-registered Startup Token.
IMC Exploration (IMCP) has started drilling on PL 3729 in County Clare, which adjoins the Kilbricken zinc deposit. A feasibility study has commenced on PL 3850 in County Wicklow. IMC’s partner Koza has completed an exploration targeting report on other licences and prioritised further exploration.
Ganapati (GANP) has agreed to supply online games to Bethard Group. Ganapati will initially supply eight games and then one each month.
Hearing and mobility products retailer DHAIS (DHAP) has delayed its figures for the year to June 2017 because it wants to ensure it has support from its main funder.
Welney (WENP) had a cash outflow of £19,000 in the year to June 2917 and most of that was covered by loans from related parties and a further £11,000 has been loaned since the year end. These loans will not be called in for at least 12 months. Net liabilities are £197,000. The board is assessing potential deals.
African Potash (AFPO) has entered into a joint venture with SG Inc to develop fertiliser opportunities in the Republic of Congo. A blockchain joint venture has also been announced with FinComEco Ltd and this will develop platforms for agricultural markets in Africa. There is a plan to offer microloans to farmers. The company intends to change its name to Block Commodities Ltd.
Forbes Ventures (FOR)
AIM
Pebble Beach Systems (PEB) continues to underperform and it is not likely to get the $1.75m it is still owed by xG Technology for the sale of Vislink. The broadcast software supplier requires its banks support and needs to appoint a new management team. Talks with potential bidders did not yield an offer. This year’s revenues will be slightly lower than last year
Versarien (VRS) has a strong balance sheet after the recent fundraising and it is generating interest for its Nanene graphene product. The carbide business has won a significant aerospace order. The 167% growth in revenues to £4.38m in the first half was mainly down to the acquisition of a plastics business. A US sales office has been established.
Mortice (MORT) reported strong revenue growth but cost pressures on a particular contract held back profit. The security and facilities management business reported a 17% rise in first half revenues to $106.3m. The contract is being sorted out and house broker finnCap still expects full year profit to improve from $5.4m to $7m.
Anti-microbial drugs developer Destiny Pharma (DEST) has secured a deal with former AIM company China Medical Systems Holdings Ltd (CMS), which is now listed in Hong Kong, for a £3m cash injection into the company and a strategic partnership that gives CMS rights to Destiny’s drug candidates pipeline in China and some other Asian countries. CMS will carry out research and development and the commercialisation of any drugs in its territories. Destiny will make a margin on manufacturing products and receive payments based on sales milestones.
Tri-Star Resources (TSTR) is investing a further $6m in its Oman joint venture. This is in the form of a mezzanine loan to the company where Tri-Star has a 40% stake. The interest rate is 15% and payable on redemption – the loan term is five years. The cash will help to finance the development of the antinomy roaster in Oman. The capital budget was recently increased to $96m.
Recruitment has started for a pharmacokinetic study into the Futura Medical (FUM) erectile dysfunction treatment, MED2002. This will help to determine dosages for a phase III study. The UK and Netherlands regulatory agencies have been supportive concerning a possible switch from prescription to over the counter.
Veltyco (VLTY) has yet again announced that its figures will be better than forecast. The online gaming marketing business says that profit is likely to be much higher than expected.
ECSC Group (ECSC) is the perfect example of how a share price can get carried away on the back of general news. The share price is one-quarter its peak after publicity about cyber security and hacking. Trading is in line with previously reduced expectations following cost cutting and the securing of two managed services contracts.
Belluscura has pulled its flotation after failing to gain the EIS/VCT approvals in time and because it could not get the valuation it wanted.
The founder of Focusrite (TUNE) and a relation have sold eight million shares at 315p a share. They still retain a 38.3% stake in the audio equipment supplier.
Active Energy Group (AEG) expects its Utah-based Coal Switch plant to be completed this month. The production capacity is five tonnes of the coal replacement fuel per hour. Once the plant is up and running and proves the viability of the process there should be other plants built in 2018. The plant is modular so it is easy to increase capacity.
Trading in the shares of Graphene NanoChem (GRPH) has been suspended ahead of the proposed acquisition of CG TekBuild, which is involved in modular buildings. The deal is dependent on £18.2m of debt being converted into shares. The proceeds of the sale of non-core activities will be used to pay other creditors. The company believes the acquisition will help it to apply it graphene technology in building materials.
ITM Power (ITM) has £20.2m of projects under contract and a further £22.4m in negotiation. The figure under contract is similar to two months ago but the under negotiations figure is one-third higher.
Defence and petrol stations structures supplier MS International (MSI) reported sharply increased interim profit from £610,000 to £1.64m as revenues increased by two-fifths to £34.6m. Net cash is £14.5m. Most of the growth came from the petrol station branding business and this more than offset the decline in profit from defence. The interim dividend was increased from 1.5p a share to 1.75p a share.
Precision optical components supplier Gooch and Housego (GHH) reported slightly better than expected full year figures. Revenues were 30% ahead at £112m and underlying pre-tax profit improved from £14.2m to £16.1m. Acquisitions helped to fuel significant growth in aerospace and defence. There was also increased demand from the subsea telecoms market and other industrial applications. The life sciences division still needs bulking up.
Timber supplier James Latham (LTHM) reported a 7% increase in interim revenues to £107.3m but a decline in margins meant that pre-tax profit was 12% lower at £6.7m. The interim dividend was unchanged at 4.5p a share and net cash declined to £11.6m due to capital spending. The pension deficit has fallen from £16.6m to £8.5m. A slight fall in full year profit to £13.4m is expected.
MAIN MARKET
Ingredients supplier Treatt (TET) is raising £21.6m at 410p a share to speed up its growth in the US and finance the relocation of facilities in the UK. The new facility will help to improve efficiency. In the year to September 2017, revenues were one-quarter higher at £109.6m and pre-tax profit improved by 46% to £12.9m.
Torotrak (TRK) has been unable to secure the finance it requires. The vehicle technology developer is considering selling its technology and IP or it may have to appoint an administrator.
Andrew Hore
Quoted Micro 5 December 2016
ISDX
Kent-based brewer Shepherd Neame (SHEP) has acquired Village Green Restaurants, the operator of five freehold pub restaurants in the Maidstone and Ashford area, for £11.85m. The business made an operating profit of £900,000 on revenues of £6.6m in the year to October 2016. The cash for the acquisition has come from an extended credit facility.
IMC Exploration (IMCP) says that it is evaluating approaches from mining companies concerning IMC’s ten base metal licences in Ireland. IMC has already secured Koza as partner for its gold licences. IMC’s full year loss was slightly lower at £418,000. There was less than £4,000 in the bank at the end of June 2016.
Walls & Futures REIT (WAFR) floated on 29 November at 100p a share and ended the week at 100.5p (98p/103p). The residential property investor raised just over £1m in an offer for subscription and is capitalised at £3.3m. The REIT has acquired the assets of the Walls & Futures London Growth Fund and the additional cash will be used to invest in development and redevelopment assets in cities and towns around the UK. The focus is the private renting and social housing sectors.
Hearing and mobility products retailer DHAIS (DHAP) has been hit by a further decline in its mobility business. Three mobility stores have been sold and two others closed, leaving ten stores. The hearing aid division is the main focus. In the year to June 2016, revenues fell from £10.6m to £9.86m, while the loss increased from £186,000 to £295,000. There is £216,000 in the bank and cash was generated in the period but it went towards the regular repayment of an interest free loan from a hearing aid manufacturer. A notional interest charge is recognised on this loan, which is why there is positive cash flow despite the loss.
Welney (WENP) is still seeking a new direction and talking to potential funders and recipients of investment. There was £52 in the bank at the end of June 2016. Management admits it will need more cash this year and that is why the accounts are prepared on a going concern basis. The directors are not taking fees for the time being and loan note holders have agreed not to ask for them to be redeemed for at least the next 12 months. The investment in Nasdaq-listed Green Automotive Co has performed poorly and is illiquid.
Exploration company NQ Minerals (NQMI) has appointed Daniel Stewart as its broker as part of a proposed move to the standard list.
AIM
A strong second half meant that enterprise software provider Sanderson (SND) grew its full year revenues by 11% to £21.3m and ended the year with a strong order book. New customer orders were 18% of revenues – a higher level than normal. There was additional investment in development and support but underlying pre-tax profit still improved from £2.91m to £3.44m. There is £4.34m in the bank. The retail, manufacturing and logistics operations all have stronger order books than normal. A 2016-17 profit of £3.7m is forecast.
Park Group (PKG) made a relatively small interim loss. The consumer and corporate gift voucher and prepaid card business is still highly seasonal with the Christmas savings business maintaining its importance. New product launches will continue to reduce the importance, though, as will the acquisition of Fisher Moy International, which brings with it some large corporate clients. An increase in full year profit from £11.9m to £12.7m is forecast.
A strong performance in the industrials division of Gooch & Housego (GHH) offset flatter performances elsewhere. Acquisitions masked an underlying decline in defence and electronics and revenues also fell in the he much smaller life sciences division, which requires acquisitions itself in order to build its scale. Pre-tax profit was slightly better than expected at £14.2m. Despite spending on acquisitions, there is still net cash of £11.7m and the total dividend has been raised by 10% to 9p a share. The order book is worth £52.8m but it covers more than one year. A full year profit of £15.5m is forecast.
Active Energy (AEG) has received a $6m, five year unsecured loan facility to finance the construction of a reference plant for its CoalSwitch technology. The North American plant will have an annual capacity o 35,000 tonnes. This plant could generate revenues of $6.3m a year. CoalSwitch technology can use low value wood, pulp and saw-mill by-products to produce a biomass fuel that can be mixed with coal, or replace coal, in coal-fired power stations. The interest rate on the loan is 8%.
Billing and customer relationship software provider Cerillion (CER) reported annualised revenues 6% ahead at £14.8m but the mix of revenues changed with software revenues one-fifth higher. Underlying pre-tax profit edged ahead to £2.3m. The total dividend is 3.9p a share. A $2.8m (£2.4m) contract has been won in the Americas, which is the second phase of an existing contract. Cerillion should be able to achieve a pre-tax profit of £2.7m this year with scope to expand the customer base outside of the mobile sector in the next few years.
TechFinancials (TECH) will receive a $1.02m dividend from its 51%-owned joint venture DragonFinancials. The dividend relates to the nine months to September 2016. This cash inflow should make it more likely that TechFinancials will restart paying its won dividends. TechFinancials had already said that its 2016 profit will be ahead of market expectations. House broker Northland forecasts a 0.42 cents a share dividend for the 2016 financial year and a decision will be made in early 2017. That level of dividend would be more than two times covered by forecast earnings.
Premier African Minerals (PREM) has increased the open pit mineral resource estimate at the RHA tungsten mine in Zimbabwe to 20.9 million tonnes at a grade of 2.34kg/t. The maiden mineral resource estimate for the underground mine is 1.3 million tonnes at a grade of 4.25kg/t. The mine could last 40 years. Premier owns 49% of RHA.
MAIN MARKET
There was an organic sales decline of 7% in the first half at electronic components manufacturer distributor Acal (ACL) but better margins and acquisitions helped earnings per share grow by 10%. Order levels were stronger in the second quarter and this augurs well for the second half.
Bluebird Merchant (BMV) is acquiring 100% of the Batangas gold project, where it previously held a 25% stake. Bluebird is issuing 1.25 million shares and it will pay a 1% royalty in return for taking full control of the project in the Philippines, which has a JORC resource of 445,000 ounces of gold and gold equivalent. The deal also means that Bluebird will have access to $20m of tax losses.
Opera Investments (OPRA)has reassured investors that the plan to acquire the Omweru and Lubando gold projects from Kibo Mining (KIBO) continues to make progress and a fundraising should happen in the New Year. The deal was first announced in September.
Andrew Hore
Quoted Micro 4 April 2016
ISDX
Hearing aids and mobility products retailer DHAIS (DHAP) fell into loss in the first half on slightly lower revenues. Costs increased in the mobility division and the focus will be on the hearing aids business. A store in Swindon was sold but DHAIS is still selling hearing aids from the site. In the six months to December 2015, revenues dipped from £5.13m to £5.07m, while a profit of £21,000 was turned into a loss of £86,000. At 24.5p (22p/27p) a share, DHAIS is valued at £15.3m.
Globe Capital Ltd (GCAP) has bought Globe Capital Administration, which was incorporated in January 2016, for £1,250 and paid £12,500 for a 25% stake in Sterling Craig, which was incorporated on 11 December 2015.
Welney (WENP) still has options over tyre recycling business Mitre Rubber and cleaning company Cleanbrite Facilitation and has not made a decision on whether to proceed with either deal. Neither company had a business at the time of their most recent accounts. Another investment is being negotiated. There was £59 in the bank plus a Nasdaq listed investment worth £2,675 at the end of 2015.
AIM
Ultrasound training simulators developer Medaphor (MED) has raised £3.2m at 45p a share in order to finance working capital for its latest contract. Earlier this year, Medaphor’s US subsidiary has signed a long-term agreement with the American Board of Obstetrics and Gynecology (ABOG) for the use of its ScanTrainer as the simulator for its obstetrics and gynecology certification exams. ABOG undertakes 2,000 examinations each year. The cash will also be used to develop the US sales team and the continued product development. Hopefully, this will be enough cash to get Medaphor to profitability. Last year, Medaphor lost £1.7m on revenues of £2.2m.
Fastnet Equity (FAST) has published the acquisition document for Amryt Pharmaceuticals. The deal is valued at £29.6m and Fastnet is raising £10m at 24p a share (post one-for-eight share consolidation). Amryt has, conditional on the deal going ahead, agreed to acquire Germany-based Birken, which has developed a recently approved drug for partial thickness wounds and a potential orphan drug for the skin disorder epidermolysis bullosa called Episalvan, and Switzerland-based SomPharmacuticals, which is focusing on treatments for acromegaly and Cushing’s disease. Some of the cash will be used to fund a phase III clinical trial of Episalvan.
Digital Barriers (DGB) is selling its services business to its management for a nominal sum and this should reduce costs by £1m a year. The focus will be surveillance, security and safety technology, where organic revenue growth was 50% in the year to March 2016. The underlying loss has been reduced.
MAIN MARKET
Investment company Athelney Trust (ATY) is seeking to raise additional funds. This will help to spread costs over a larger capital base. The plan is to increase the share capital by up to 9.9%, which should also help to make the shares more liquid.
Aseana Properties Ltd (ASPL) is selling the Aloft Kuala Lumpur Sentral Hotel for a gross value of $104.6m. That should generate a gain of $35.9m to project NAV. The hotel was developed by Aseana and opened in March 2013. The transaction should be completed in the third quarter and marks a significant step in the plan to realise the company’s assets. Net gearing will be reduced from 1.12 times to 0.48 times NAV. There are plans for a $10m capital distribution and then will be further distributions after that.
Civil engineer and building services provider North Midland Construction (NMD) returned to profit in 2015but there is still no dividend. The board hopes to start paying dividends in the near future. In 2015, revenues improved from £193.2m to £217.6m. The core building division returned to profit and the group pre-tax loss of £2.97m to £606,000. This was helped by a reduction in the costs of legacy contracts. Net cash was £2.4m at the end of 2015.
Cleantech-focused investment company Menhaden Capital (MHN) is traded on the Main Market on the Social Stock Exchange offshoot of ISDX and it raised £80m last July. At the end of 2015, the NAV was 83.9p a share – a 14.1% decline even after initial costs are excluded. Management remains optimistic, particularly concerning its investment in solar energy products developer X-Elio.
ANDREW HORE