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Andrew Hore – Quoted Micro 11 February 2019

NEX EXCHANGE

Primorus Investments (PRIM) says that investee company Sport:80 has delayed its flotation because it has been tidying up its shareholder register. Fintech company Engage Technology is also seeking to float later in 2019 following new product launches. Engage raised £2.6m at £22 a share at the end of 2018, whereas the average buying price by Primorus was £20.03 a share. Investee company, AIM-quoted Greatland Gold (GGP) has published results from the second drilling campaign at Havieron in Western Australia. Every drill hole intersected mineralisation and they extend the overall mineralisation. Drilling will recommence in March. Primorus has raised cash by selling most of the stake in UK Oil and Gas (UKOG) and Primorus was debt free at the end of 2018.

NEX has decided not to suspend trading in the shares of VI Mining (VIM) even though its corporate adviser Daniel Stewart is no longer a member of NEX. VI Mining had little or no notice of its adviser’s withdrawal. A new corporate adviser is being sought.

Milamber Ventures (MLVP) has acquired apprenticeship training provider Astara Training for £16,666 in shares at 9p each. Milamber lost £179,000 in the third quarter and there was £30,000 in the bank at the end of 2018.

Panther Metals (PALM) has announced the initial results of exploration activity at the Bear Lake project in Ontario. There was gold in soil anomalies at four of the five areas tested. Four areas have quartz vein sample assays above 5g/t gold. Two samples had large grade samples. The next phase of exploration is being planned and could start in the second quarter of 2019.

Auxico Resources Canada Inc (AUAG) has signed a deal that could enable it to earn a 70% interest in a joint venture that owns the Palha tantalum property in northern Brazil.

AIM  (February 2019 AIM Journal available here)

DP Poland (DPP) is running short of cash and is more than doubling its share capital through a heavily discounted placing raising £5.3m at 6p a share, with the possibility of an additional £500,000. The Domino’s Pizza franchisee for Poland has found competition is getting tougher and growth has slowed. The cash is required to cover losses and open more outlets. Peter Shaw is stepping down as chief executive at the end of June, nearly a decade after founding the business.

Ticketing and queueing technology provider Accesso Technology (ACSO) is reviewing its investment priorities although it says that 2018 figures should be broadly in line with expectations. These will be published on 27 March. A deal fell through and this cost $1.7m. Tom Burnet is moving from executive chairman to a non-exec role. The share price is less than one-third of last year’s high. BlackRock has cut its stake below 5%.

Midatech Pharma (MTPH) has launched a placing and 0.318-for-one open offer to raise up to £4.75m at 3.85p a share on top of the £8m subscription by former AIM company China Medical System Holdings, which will licence products for the Chinese market. The clinical trial for cancer treatment MTD201 will cost up to £7m.

Duke Royalty (DUKE) is acquiring its UK rival Capital Step and this will double the size of the portfolio to eleven investments and diversify it in terms of sectors. There is an initial £10m cash payment and the assumption of debt of £11.65m. There is performance related consideration of up to £1.5m. The deal is immediately earnings enhancing.

Visa has increased its bid for Earthport (EPO) from 30p a share to 37p a share, which beats the Mastercard offer of 33p a share. The latest bid values Earthport at £247m.

Taptica (TAP) has launched a recommended bid for RhythmOne (RTHM) and this will create one of the largest video advertising companies in the US. The offer is 28 Taptica shares for every 33 RhythmOne shares. Taptica shareholders will own 50.1% of the enlarged group. A $15m share buyback programme is planned after the merger. Ofer Druker will become chief executive.

Polemos (PLMO) has finalised the details of its reverse takeover of Digitalbox Publishing for £10m in shares and it is also acquiring the owner of the Daily Mash satirical news website for up to £1.2m in cash and shares. The model for the Entertainment Daily website will be used to improve the performance of the Daily Mash. A placing will raise £1.02m at 14p a share. The company will change its name to Digitalbox.

Hardide (HDD) is raising £3.6m at 1.5p a share so that it can move to new premises in the UK and invest in additional equipment. The surface coatings company is experiencing increasing demand from the oil and gas sector and there is potential for orders from aerospace companies. It will take two years to fully equip and move into the new facility. Hardide also intends to consolidate 40 shares into one new share.

finnCap has raised its forecasts for Tracsis (TRCS) following recent acquisitions. There is a 3% increase in earnings per share for this year and an 11% rise to 30.5p next year.

Stride Gaming (STR) has traded in line with previously downgraded expectations. Cost cutting continues to cover higher regulatory and tax costs. The online gaming operator will report a lower profit in 2018 and it is set to fall again in 2019. Net cash was £22.1m at the end of 2018.

Bowmark Capital has offered 110p a share for Tax Systems (TAX) and discussions continue. Tax Systems reduced net debt from £20.5m to £13.9m by the end of 2018. Pre-tax profit of £5.8m is forecast for 2018.

Victoria (VCP) has sold surplus land in Kidderminster for £2m. The land was in the books for £100,000 but it has obtained planning consent for housing.

Starcom (STAR) has renegotiated its agreement with Xplosive in South Africa, having originally announced it in October 2017. Xplosive has signed a 36-month agreement to pay a monthly fee for each of the Kylos units supplied for the monitoring of cattle. The fees are higher in the first six months and then reduce. The agreement should be worth $500,000.

Strix Group (KETL) has offered to acquire most of the assets of HaloSource (HAL) for $1.3m. Strix has provided working capital of $100,000. Due diligence is being carried out on the water filtration technology and if the deal goes through the cash will pay creditors, but there will be nothing for shareholders.

Prospex Oil and Gas (PXOG) has announced that the Selva gas field in northern Italy has net 2P reserves of 13.3bcf and there are 2.26bcf attributable to Prospex, which has a 17% stake. Selva could start production in 2020 at a rate of up to 150,000 cubic metres/day.

Tau Capital (TAU) plans to raise cash via a placing through Peterhouse and then a capital distribution will be made to all shareholders. This will enable Tau to seek an acquisition. It has until 18 April to secure a deal or trading in the shares will be suspended. Armstrong Investments has increased its stake from 11.7% to 15.7%.

Evgen Pharma (EVG) says that the SFX-01 clinical trial for subarachnoid haemorrhage is on course having completed recruitment and the primary endpoints should be available in the second quarter. Partners Investment Company has acquired at 3.15% stake.

Sports Direct International (SPD) made a £15m offer to buy Patisserie Valerie from the administrator, but this was not deemed enough. Even a higher selling price won’t provide anything for Patisserie Holdings shareholders.

MAIN MARKET  

Solicitor DWF plans to raise £75m via a March flotation an some of the cash will repay members’ capital contributions as well as invest in the business. Existing shareholders will also sell shares and partners’ remaining stakes will be locked up until April 2024.

Two former AIM-quoted companies are coming together to join the standard list. Daniel Stewart Securities, which is closing its broking business, is making an offer for Atlantic Carbon, which was previously known as Atlantic Coal, where Adam Wilson, who has had connections with Daniel Stewart, is executive chairman. Singapore-based backer Epsilon Investments refused to put more money into the broker and that is why it is closing. Epsilon holds a majority stake in Hyde Park Holdings, which owns broker Novum Securities. Last October, SeeThruEquity research suggested that Atlantic had an equity value of $86.8m and $68m of debt. In 2017, Atlantic was the largest producer of anthracite in the US with a market share of one-third based on 1.18 million tonnes produced. Atlantic is expected to have moved into profit in 2018, although it did generate cash from operations in 2017. The owners of more than 50% of Atlantic shares have agreed to accept the bid of 1.5587 shares for each Atlantic share.

Thalassa Holdings (THAL) is offering 14.64p a share in cash and 0.26 of a share for each share in The Local Shopping REIT. Thalassa already owns 25.5% of the bid target, which is valued at 32.8p a share. The bid is an alternative to the winding up of The Local Shopping REIT.

Blockchain Worldwide (BLOC) is no longer acquiring blockchain technology developer Chorum Group because of political uncertainty affecting the UK equity markets. Former Avanti Communications boss David Williams is the director of Chorum. Blockchain Worldwide has more than £1m in the bank and is also looking at other technology sectors for acquisitions.

Drilling of the Colter appraisal well in Dorset has commenced and United Oil and Gas (UOG) has a 10% interest. The drilling should take three weeks. The Selva gas field in Italy has net 2P reserves of 2.7bcf attributable to United, which has a 20% stake. Selva could start production in 2020. United intends to move to AIM.

Oil and gas producer Zenith Energy (ZEN) has raised £607,000 in Canada and the UK at C$0.05 a share and 3p a share respectively.

Motor finance provider S and U (SUS) has confirmed that its figures for the year to January 2019 will be in line with expectations. The Aspen property bridging loan business had a loan book of £18m at the end of January 2019. Cautious lending criteria means that new business has slowed in recent months and this has led to a 5% 2019-20 earnings downgrade to 230.1p a share.

BATM (BVC) has won a $3.2m cyber security contract and this takes contracted revenues from this government customer to more than $10m. The latest contract will be delivered this year.

Chesterfield Resources (CHF) is expanding its exploration programme in Cyprus. Initial drilling in an area near historic mining has shown gold, copper and zinc mineralisation. Chesterfield is also applying for licences to extend its licence area.

Dev Clever (DEV) has launched pay per play multi-player, virtual reality game Vanguard: Fight for Rudiarius in Harlow shopping centre. The game will be rolled out to other UK sites.

Bluebird Merchant (BMV) has applied for a grant to help finance drilling at the Kochang project in South Korea and there should be news by the end of the month. There has also been a permit application to develop Kochang.

Andrew Hore

Andrew Hore – Quoted Micro 28 January 2019

NEX EXCHANGE

Full year figures from AFH Financial Group (AFHP) show how successful its acquisition strategy is with revenues 51% higher at £50.7m and pre-tax profit that nearly doubled to £6m. Despite the additional shares issued to part-finance these acquisitions, underlying earnings per share were one-third higher. The dividend is 50% higher at 6p a share. Acquisitions have continued since the year end. Management believes that it can double funds under management to £10bn in three to five years.

Startup Giants (SUG) has commenced a programme to raise up to £3m. There will be an initial share placing to raise £200,000. The company has launched its 2019 accelerator round for pre-seed capital tech entrepreneurs. Funding of up to £100,000 can be received by successful applications.

KR1 (KR1) has invested $200,000 in Rlay, a data collaboration framework for crowdsourcing. KR1 will receive an undetermined number of discounted tokens. This will be a discount to the lowest price paid by any investor in the tokens. KR1 has spent £50,000 in 50,000 Nash tokens.  These are the first tokens issued out of Liechtenstein.

MiLOC Group Ltd (ML.P) has signed a deal with Master Kingdom Ltd in order to create a range of body care and body wash products, which will be sold under the Artist’s brand name.

MetalNRG (MNRG) says that the Kyrgyzstan authorities have granted the application for a mining licence for the company’s uranium project in the country. The in-situ value of the uranium reserves is $253m and there is potential exploration upside.

Johnny Martin Smith is joining the board of VI Mining (VIM) and trading in the shares has resumed. Smith is a former mining analyst.

NQ Minerals (NQMI) has raised a further £142,000 at 11p a share. Bryan Smart has resigned from the board.

BWA Group (BWAP) had nearly £45,000 left in the bank at the end of October 2018. Elections have delayed progress with the potential licence acquisitions for rutile sands deposits in Cameroon. Investee company Prego International is moving from Guernsey to Norway and it may merge with another business.

Milamber Ventures (MLVP) is seeking a replacement for First Sentinel Corporate Finance as its corporate adviser.

AIM   

Mporium (MPM) has signed a partnership deal with claims management firm Allay, which will use the company’s technology to generate leads for its business. Allay will be issued a 25% stake in Mporium in return for the revenuesthat will be generated, which could be worth millions of pounds. The stake could be increased to 29.9% if Mporium is successful in winning leads for Allay.

Mastercard has launched a rival bid for Earthport (EPO) and Visa is considering its position. The new bid is 33p a share and this values the company at £233m. That is a 10% premium to the Visa bid.

Aquaculture business Benchmark (BMK) has expanded its production capacity and is launching new products. Revenues were 8% higher at £151.5m and it would have been higher at constant exchange rates. It made an underlying pre-tax profit of £5.6m last year, up from £4.7m, and that could nearly double this year. Net debt was £55.7m.

Sureserve (SUR) has been restructured and non-core businesses sold. This enables it to concentrate on compliance and energy support services. Full year revenues from the continuing operations were 5% higher at £191m and underlying pre-tax profit improved from £5.4m to £6.6m. This was better than expected and net debt was £11.4m. The dividend has been halved to 0.25p a share.

K3 Capital (K3C) was expected to report lower figures in the first half due to the timing of larger corporate finance deals and the mergers and acquisitions achieved interim revenues 4% lower at £7.2m and an even larger decline in profit. The second half should be better and revenues could be slightly higher than last year at £16.6m, but full year pre-tax profit is forecast to fall from £7.3m to £7m.

Wynnstay Group (WYN) reported record full year results. The higher milk price has led to increased demand for dairy feed. Revenues grew from £390.7m to £462.7m and pre-tax profit moved from £7.9m to £9.5m. The agriculture and retail divisions both improved their profit and the latter added additional sites in the second half that were not profitable in the period. There was the normal second half cash inflow but it was not as great as in the past, so net debt was nearly £1m. The dividend has been raised 6% to 13.4p a share.

InfraStrata (INFA) has raised £1.5m at 1.2p a share. This will boost its balance sheet while it negotiates with investors in the Islandmagee gas storage project. One equity investor has appointed advisers to do due diligence work. The project will continue to progress as these negotiations continue and the cash will make sure that progress is made while the final funding package is secured.

Lighthouse Group (LGT) has secured a deal to transfer the members and assets of its pension trust to Smart Pensions Ltd. The IFA will protect itself from the rising cost of the administration and capital requirements of pension trusts.

Audioboom (BOOM) grew last year’s revenues by 92% to $11.7m, although this was a 13 month period, and it says that there was no cash outflow from operations in the final three months. That meant that there was $1.6m in the bank at the end of 2018.

Robinson (RBN) traded in line with expectations last year. The packaging manufacturer expects revenues of £32.8m, which is a 10% improvement. The fastest growth was in Poland. Even so, pre-tax profit will be lower, but it should bounce back in 2019.

A large localisation project has been cancelled and this will hamper the progress of Zoo Digital (ZOO) in the second half of its financial year. The legacy DVD business is also declining faster than anticipated. This means that ZOO will not be profitable in the year to March 2019.

Velocity Composites (VEL) increased its full year revenues by 15% to £24.5m, and there was a small loss, but business wins are slower than previously hoped. Revenues could be flat this year.

Another upgrade for audio visual products distributor Midwich Group (MIDW) following its latest trading statement. Pre-tax profit is expected to rise from £24.3m to £29.1m and then a further increase to £31.7m in 2019.

MAIN MARKET 

Robin Boyle has failed to get back on the board of Athelney Trust (ATY) but he was successful in removing the existing directors. David Lawman and Paul Coffin were appointed although the latter resigned at the end of the week and he was replaced by Frank Ashton. The proposed tender offer and placing was also passed.

Dev Clever Holdings (DEV) is the latest company to float on the standard list. A share issue has raised £898,000 at 1p a share, including £220,000 due to the conversion of debt. The software development company was valued at £3.73m. The share price ended the week a 7.75p.

Nanoco (NANO) has signed a contract extension with a US company and this lasts until the end of 2019. This underpins the current year forecast.

Ross Group (RGP) has issued the final 21.3 million shares for the acquisition of Archipelago Aquaculture, which plans to start producing Chitin to help to produce quality shrimp. The deal was announced last September, and 17.9 million shares were issued at 1p a share. Global Blue Technologies Inc owns 19.9% of Ross.

Interim figures from Haynes Publishing (HYNS) show a 23% increase in underlying pre-tax profit to £1.6m on a 7% rise in revenues to £18.3m. Digital revenues were 23% higher at £9.7m. The growth in revenues and profit was in the UK and Europe. The interim dividend is unchanged at 3.5p a share. Net cash was £2.6m.

Andrew Hore

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