ISDX
Brewer Shepherd Neame (SHEP) has acquired eight pubs in Kent, Surrey and Sussex from Enterprise Inns. Five existing pubs will switch from tenancies to managed pubs. The two transactions will require a total investment of £13.4m. Shepherd Neame will operate 59 managed and 270 tenanted pubs plus seven under free of tie leases. In the 49 weeks to 4 June 2016, like-for-like sales in managed pubs were 4.6% ahead but own beer volumes were 0.7% lower.
Daniel Thwaites (THW) reported lower revenues but continuing operations, after the sale of most of the Thwaites Beer operations, grew their sales. The disposal helped to reduce net debt from £60.5m to £34.1m at the end of March 2016. There is an unchanged total dividend of 4.36p a share, covered nearly 1.5 times by earnings. The focus is pubs, inns and hotels but there are also plans to set up a new brewery for craft beers by 2018. Trading was difficult over Easter.
Mechan Controls (MECP) is paying a dividend of 2.27p a share for the 2015 financial year on 24 June. That is a one-fifth increase and the yield on a share price of 238p is nearly 1%. In 2015, there was a small dip in revenues due to the loss of a contract with the last deep coal mine in Britain, which also led to a bad debt of nearly £60,000. The fall in profit from £632,000 to £411,000 was predominantly down to the mining equipment side of the business. This part of the business could, though, return to profit if overseas orders are won. There was £813,000 in the bank at the end of 2015 – equivalent to one-quarter of NAV. First half trading has been going well and an improved profit is anticipated this year. Increasing international safety standards should provide additional opportunities for Mechan.
Newbury Racecourse (NYR) has been hit by the abandonment of three race meetings due to bad weather in the first five months of 2016. Insurance has helped to offset the effect of the loss of these meetings. Like-for-like attendances are 1% ahead of last year. Conferences and events have grown like-for-like revenues by 30% and the nursery business also improved its revenues. Work on a major redevelopment of the course should start this summer.
Leni Gas Cuba Ltd (CUBA) has sent its merger documents to shareholders. The plan is to have the scheme of arrangement effective by 11 July so that trading can begin in the merged entity the following day. TSX Venture—quoted merger partner Knowlton had net assets of $339,000 at the end of March 2016 while the Leni Gas Cuba NAV was £3.34m at the same date and its shareholders will hold 84.4% of the enlarged capital. There was a cash outflow from operations of £1.46m in the six months period for Leni Gas Cuba, although that does include flotation costs. Even so, the £1.2m in the bank will not last long or enable much in the way of further investments if that cash outflow is not significantly reduced. The merged company, which will be called LGC Capital, may need to raise more cash.
AIM
Enterprise software provider Sanderson Group (SND) is working on pilots and new business for its digital retail division but the benefits did not show through in its interims. Additional investment in the division meant that its profit contribution was lower but the group as a whole continued to report improving figures. In the six months to March 2016, revenues improved from £9.09m to £9.86m, helped by a full six month contribution from Proteus, while underlying pre-tax profit rose from £1.3m to £1.39m. More cash is being invested in research and development of products. There was £3.39m in the bank and this could be used to finance further add-on acquisitions. Larger acquisitions are also a possibility in order to help Sanderson reach its annual revenues target of £30m for 2017-18. Revenues of £20.3m are forecast for 2015-16 and most of the expected second half revenues are covered by recurring business and the order book. A full year profit of £3.4m is forecast.
Green energy generator and supplier Good Energy (GOOD) is attempting to raise up to £3.1m at 208p a share. The offer is open until 19 June and the maximum number of additional shares issued will be equivalent to 9% of the enlarged share capital. After expenses, up to £2.7m will be raised, which will be invested in new operating systems to improve efficiency and new generation sites.
Finance provider Private & Commercial Finance (PCF) has announced the potential timetable for gaining a banking licence. The banking licence application was submitted during May and there should be a response by the end of the year. The company may have to raise £10m for regulatory capital. Once approval is gained it will take six to nine months to get up and running so the third quarter of 2017 is a likely launch time for the bank. Private & Commercial made an underlying profit of £3.5m in the 12 months to March 2016 – the main profit improvement came from the car finance side. The loan portfolio is worth £112m.
Engineer and specialist services provider Redhall Group (RHL) continues to recover but it has not moved back into profit as yet. The underlying interim loss was reduced from £1.29m to £489,000. That masks a higher profit from the services operations. The order book has improved from £21m to £24m and a higher proportion of this is for the manufacturing division. That is despite weaker demand from the oil and gas sector. The focus is product development and investing in equipment and technology in order to make the group more efficient. Net debt was £8.31m at the end of March 2016 but it has total facilities of £11.7m.
Bond International Software (BDI) has rejected the potential 105p a share cash offer from Constellation Software Inc. Management says that it plans further disposals.
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Standard-listed CIC Gold Ltd (CICG) has changed the details of the acquisition of 80% of Gobi Minerals Group. CIC Gold will issue 280 million shares to the vendors but 70 million will be placed on their behalf and the cash paid to them. This should enable there to be a free float of at least 25%. The acquired company has a 100% interest in the Ulaan Tsokhio gold and copper project in Mongolia. The deal is dependent on the readmission of CIC Gold to the standard list.
Standard-listed Highlands Natural Resources (HNR) has acquired exploration licences over more than 59,000 acres in Montana for $91,000 in cash. This acreage represents a potential natural gas and helium play. Natural gas in the region has contained unusually high levels of helium. Management believes that a reduction in the US stocks of helium over the coming years could lead to increases in the helium price. Ben Reinoehl, who has experience of the helium market through his time at Air Products, has become a member of the advisory board.
ANDREW HORE