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Andrew Hore – Quoted Micro 31 August 2020

AQUIS STOCK EXCHANGE

KR1 (KR1) has made two more investments. There is a further investment of $100,000 in the cross-chain finance hub Acala Network in return for 153,846.15 ACA tokens at 65 cents each. KR1 now holds 1.02 million ACA tokens. That stake is valued at $663,000. There is also a new investment in MetaCartel Ventures Decentralised Autonomous Organisation. KR1 received 4,938 MCV shares for its $199,000 investment.

Imperial X (IMPP) plans to buy mineral assets and investments and a placing is raising £750,000 at 2.5p a share. The purchases involve the issue of more than 245 million shares plus 8.71 million warrants exercisable at 5p a share. Trading in the shares has been suspended until the acquisitions are completed. Imperial X is buying Howson Ventures Inc, plus assets from Anglo African Minerals, Cloudbreak Discovery and Cabox Gold. Howson owns the Rupert Minerals property in British Columbia and an investment in Anglo African Minerals, which holds licences in bauxite projects in Guinea.  

Gunsynd (GUN) says that its investment in ASX-listed Eagle Mountain is “well in the money” and it has the cash it requires for its immediate needs even though the disposal of the stake in Oyster Oil and Gas has still not been completed. Gunsynd invested £110,000 in copper/gold explorer Eagle Mountain at A$0.13 a share and the price has risen to A$0.24. Rincon Resources has appointed stockbrokers for its proposed listing on ASX. Gunsynd has invested £138,000 in Rincon and has a 28% stake. Spirits company Human Brands also still hopes to float. Nickel project developer Sunshine Minerals is being acquired by Malachite Resources. Gunsynd will receive 1.26 million shares in Malachite with further deferred consideration of 1.64 million shares.

IamFire (FIRE) is raising £5.5m gross through a discounted capital bond and it is participating in a fundraising for social commerce platform WeShop ahead of a future listing. The bond is being issued at a discount of 78.73% and net proceeds of £4.4m have been received. IamFire is providing £4.5m of a £9m convertible loan to WeShop. This has an interest rate of 8% and lasts for 36 months. A flotation is one of the conversion events and the conversion would be at a 20% discount to the flotation share price. There is also an exclusive option to subscribe for a 10% stake in WeShop at a pre-money valuation of £25m. This would involve an investment of £2.78m.

Primorus investments (PRIM) has invested £875,000 in WeShop. Primorus has made realised and unrealised gains £3.55m in the six months to June 2020. Greatland Gold (GGP) is the main reason for this. The NAV increased to £8.1m compared with a £4.3m market capitalisation.

BWA Group (BWAP) has agreed to sell its investment in Kings of the North Corp to St George’s Eco-Mining Corp, which sold it for £4.66m. The convertibles issued to St George’s will be cancelled and they amount to £4.3m. St George’s will issue 1.5 million shares and transfer 2.5 million warrants to BWA. St George’s is keeping its 21% stake in BWA.  

There was a £673,000 cash outflow at Cadence Minerals (KDNC) in the six months to June 2020. A cash raising means that there was £2.38m in cash at the end of the period.

NQ Minerals (NQMI) plans to undertake exploration work at the Hellyer mine, possibly as early as October/November this year.

Inqo Investments (INQO) increased annual revenues from R23.8m to R24.4m, but the loss increased from R2.5m to R6.1m. That was partly down to an inventory write-down of R1.44m and higher depreciation. Last year’s Bee Sweet honey harvest was one of the largest ever. The lodge at the Kuzuko Private Game Reserve had high occupancy rates before COVID-19. All the other activities have also been hit since the end of February.  

Eurocann International (BUD) intends to amend its investing strategy and change its name just over one year since it changed it from Valiant Investments.

SulNOx Group (SNOX) has appointed Allenby as corporate adviser.

AIM

Vianet (VNET) says that customer pub sites that have resumed operations have increased from 56% to 80% over the past six years. Vianet continues to offer reduced recurring charges to both closed and reopened customers. Customer demand for data analytics is recovering. The smart machines division says two-thirds of customer vending machines are in operation and generating normal levels of revenue. There have been orders for more than 1,9000 new orders for telemetry and contactless units during lockdown.  

Hostels operator Safestay (SSTY) is taking additional cost saving measures due to the continued uncertainty. Occupancy rates are running at around one-quarter and it is higher in those hostels opened earlier. Safestay has available overdraft facilities but these could run out by early next year if all hostels are not reopened by October and occupancy levels fall below 20% later this year. An occupancy rate of 57% is required for a hostel to breakeven. Sales of freeholds or terminating loss-making leases are being considered. Interim results will be published on 24 September.

Integumen (SKIN) is making an all-share offer for Modern Water (MWG) that values the latter at £21.25m. Integumen plans a ten-for-one share consolidation and it is offering one of these new shares for every ten Modern Water shares. Integumen produces test kits for Modern Water.

Drug discovery company C4X Discovery (C4XD) says that Indivior has started a phase I clinical trial for C4X_3256 for the treatment of opioid dependence. The trial will last until the end of the year, but there will be no data until 2021. C4X is making progress in identifying a candidate for the treatment of IBD and it has reached the lead optimisation stage for the treatment of Psoriasis. A collaboration with the GEN-COVID consortium, which will use C4X’s Taxonomy3 mathematical analysis technology to assess the role of genetics in disease susceptibility.

Dekel Agri-Vision (DKL) says that milling equipment has been delivered to the raw cashew nut processing project in Cote d’Ivoire. The mill should be commissioned in the second quarter of next year.

Grant Thornton has managed to persuade the courts to reduce the damages owed to AssetCo (AST) from £29.8m to £20.8m. Including interest and costs the payment should be £25m.

President Energy (PPC) has formed a renewables division. There are opportunities in wind, solar, hydro and biomass in Argentina. President has commenced a workover programme on oil wells and there are plans to drill two new wells.

MAIN MARKET

Packaging supplier Macfarlane (MACF) reported a 2% decline in interim revenues to £105.6m. The second quarter decline was much lower than for the UK economy, helped by increasing exposure to ecommerce. Increased bad debts led to a 5.5% fall in pre-tax profit to £3.62m. An interim dividend of 0.7p a share is proposed. There could be a greater decline in full year profit, although the business will still be cash generative. Arden forecasts a fall in pre-tax profit from £14.4m to £11.1m.

BATM (BVC) has signed up its first tier 1 NFVTime virtual networking customer. The Asia-based telecoms company has signed up for an initial three years will provide a reference site for the technology. This contract could be a significant revenue generator in the years to come and follows the recent proof of concept trial with ARM and Vodafone.

Anglesey Mining (AYM) has raised £200,000 at 1.6p a share. The cash will be invested in studies for the development of the Parys Mountain zinc, copper, lead, silver and gold mine. Management is also assessing other projects.

Andrew Hore

Quoted Micro 20 March 2017

NEX EXCHANGE

Health and care properties developer Ashley House (ASH) is widening its area of operations through the acquisition of a modular off-site construction business by its subsidiary F1 Modular, which already works with the company. The acquired business was in administration and assets have been acquired for £113,500 and a lease taken out on its premises – there is an option to acquire the premises. Ashley’s stake in F1 Modular has been raised from 52% to 76% for up to £250,000 depending on performance and the repayment of a previous loan. If F1 Modular makes more than £4m in profit over the next three years then the additional stake will be transferred to the minority shareholders. F1 Modular could win housing business and there are already potential housing deals with two local authorities, as well as a prospective customer for retail pods. Other potential markets are schools and student accommodation. There are also opportunities in Ashley’s core business. Ashley has reiterated it warning that the figures for the year to April 2017 because of contract delays due to a consultation on supported housing. This means a small full year profit is likely. Non-executive director John Moy acquired 2.4 million shares at 7.5p each from his son and then transferred his entire holding of 6.9millionshares to his wife, although he is still deemed to have an interest in this 11.6% stake.

Bulgaria property investment company Black Sea Property (BSP) has successfully tendered for a Sofia office building called the UniCredit Building. UniCredit is the current occupier and owner. Black Sea Property bid €10.52m and €7.6m of this will come from a loan, while the rest will have to be raised from shareholders. A deposit of €1.04m has been paid. That deposit will be forfeited if the deal does not go ahead. UniCredit can remain in the building for six months after the transaction is completed, expected to be May assuming the fundraising is successful, and will not have to pay rent. The property is more than 100 years old, has five floors and covers 98,000 square feet.

Capital for Colleagues (CFCP) has been taken on by cosmetics firm LUSH to help it introduce employee ownership. An initial stake of 10% will be held by the employee benefits trust.

AIM

There could be a bid battle for FIH (FIH), formerly known as Falkland Islands Holdings. Staunton, which is backed by the Rowland family, has bid 300p a share and has acceptances of just over one-third of the shares in issue – it owned 25% prior to the bid. Eduardo Elsztain has entered the fray via Dolphin Fund, which says it is willing to offer even more. Elsztain is an Argentinian who has built up significant property and agricultural interests having initially been backed by George Soros in 1990. FIH has refused requests for further information because it was not provided with answers to its request about ownership and control of Dolphin. There has been a change to the current bid which no longer require 90% acceptances to go unconditional. The figure has been reduced to 50%.

Audio visual products distributor Midwich Group (MIDW) grew its 2016 revenues by 18% to £370.1m via a combination of acquisitions, currency movements and organic growth. Gross margins are strong for a distribution business but they still edged up from 14.9% to 15.3%. Underlying pre-tax profit was 23% higher at £17.9m. Net debt was £15m at the end of 2016, while the dividend for the eight months that Midwich was quoted on AIM was 8.62p share. Displays and technical products are becoming more important and there was also growth in projection products sales although not as fast as the main parts of the business. Sales of scanners and other document-related products fell. France, Germany and Australasia made significantly better contributions. Further acquisitions are likely to supplement continued organic growth.

Crossrider (CROS) has refocused its business on apps and a mobile security acquisition further boosts this side of the business. CyberGhost will cost an initial €6.2m in cash and shares with up to €3m more payable dependent on performance. The acquisition should be earnings enhancing in 2017. Last year, Crossrider group revenues fell from $84.6m to $56.5m but the core apps business grew both its revenues and its profit contribution. Net cash was $72.1m at the end of 2016. Next year, revenues and profit should start to grow again and Crossrider may even pay a dividend.

University technology commercialisation business Frontier IP (FIPP) has raised £3m at 40p a share in order to finance existing investments and make new ones.

Igas Energy (IGAS) wants to raise £45.2m via a placing and up to €5m through an open offer as part of its financial restructuring. There is also a proposed debt for equity swap and the majority of these bondholders have indicated that they will accept this proposal.

Software provider Cerillion (CER) has won a €2.4m (£2.1m) with a European wholesale telecoms company. So far this financial year, £13.2m of work has been won. That will not necessarily all be delivered this year but, along with the year-end order book, this provides backing for the £16m revenues forecast for 2016-17.

Trading and risk management systems provider Brady (BRY) is restructuring its business but the 2016 figures do not show the benefits. The company has grown by acquisition and the strategy is to fully integrate them all into one platform. Revenues increased 11% to £30.3m, mainly due to currency changes, and Brady returned to profit before exceptional charges.

Recurring revenues continue to grow at performance measurement software provider Statpro (SOG) and they were running at a rate of £39.7m at the end of 2016. House broker Panmure Gordon expects an increase in underlying pre-tax profit from £2.7m to £3.3m in 2017. The dividend is being maintained at 2.9p a share in order to build up earnings cover and invest in software development.

Training technology and services provider Pennant International (PEN) has already secured orders that underpin the 2017 revenues forecast by house broker WH Ireland, although the timing of orders can be delayed. Revenues are expected to grow from £17.2m to £18m and pre-tax profit should edge up from £2.2m to £2.4m. There was £3.5m in the bank at the end of 2016. Two additional facilities have been secured to help cope with demand for the group’s services. Defence clients dominate the business but there are plans to increase exposure to other markets. Phil Walker has taken over permanently as chief executive.film Sandy Wexler 2017

Wealth adviser Brooks Macdonald (BRK) has increased its discretionary funds under management by 19% to £9.33bn. Underlying interim pre-tax profit were one-quarter higher at £8.87m. New chief executive Caroline Connellan will start work in April.

Investment manager Miton (MGR) has grown its funds under management despite a large decline in its value fund due to the departure of its manager. The funds under management increased from £2.78bn to £2.91bn with a recovery in multi-asset funds and growth in other funds covering the loss of value investment funds and growth coming from market improvements. Miton is seeking a new chairman and it will then find a permanent chief executive. On 23 March, Miton is launching its new global infrastructure fund, which is aiming for a 4% yield.

C4X Discovery (C4XD) has raised £7m from a placing at 85p a share. The cash will be used to strengthen the balance sheet while c4X is negotiating with potential partners and strategic collaborators.

EMIS (EMIS) has managed to grow its business even though there is continued uncertainty in the NHS. The GP, pharmacy and health-related administrative software provider reported a 2% increase in 2016 revenues to £158.7m, while operating profit was 6% higher at £38.8m. Net debt fell to £400,000. The total dividend was increased by 10% to 11.7p a share, which is covered more than four times by earnings.

Somero Enterprises Inc (SOM) continues to benefit from the global upturn in construction activity, particularly in North America and Europe, although the revenues from the latter are still not back to their peak levels. The dividend payout level has been raised from 30% of earnings to 40% of earnings but there is still more than $20m in the bank so a special dividend is possible later in the year.

Ilika (ILK) admits that it is unlikely to generate any licence income until the next financial year. The advanced materials developer still has plenty of cash in the bank. Development deal revenues should still double revenues to £1.2m in the year to April 2017. A £1m bioelectronics deal and an additional agreement with Toyota mean that there is a good revenue base going into the new financial year, which should reduce the annual loss even without licence deals.

Active Energy (AEG) has raised £11.6m via a convertible loan note issue. The five-year convertibles will be quoted on the Channel Islands Securities Exchange. The yield is 8% and the conversion price is 3.3p a share. The cash is required to build a commercial scale plant to produce CoalSwitch biomass fuel for use in coal-fired power stations.

Sunrise Resources (SRES) has identified additional potential for the CS project in Nevada. New zones of pozzolan and perlite have been discovered in the Tuff zone and another zone. A project development concept study is due in the next few months.

Haydale Graphene Industries (HAYD) has secured a four year deal to supply silicon carbide micro-fibre to a manufacturer of tooling and wear-resistant parts. The deal has been won by the US subsidiary acquired last September. The minimum annual order quantity should generate revenues of $600,000 a year.

MAIN MARKET

Sportech (SPO) is investing £100,000 in 123gaming Ltd as part of a £1m fundraising via crowdfunding platform Seedrs (www.seedrs.com/123bet). The offer is eligible for EIS relief. The cash will be used to update the US betting platform and to launch an online site in the UK. Sportech already provides technology for the US online wagering site and the pari-mutuel-type offering, which combines traditional wagers and fantasy elements as part of the game. Several US racecourses licence 123gaming’s free-to-play contests as a marketing tool. Sportech is selling its football pools business for £83m – that is lower than the £97.25m offer that fell through last year. Sportech plans to return £20m to shareholders via a tender offer. The result of the tender will be announced on 21 March. There could be a further tender offer after the disposal proceeds are received.

Avation (AVAP) has decided to sell six of its turboprop aircraft at a price above book value. This could generate $31m after related debt repayments. A deposit of $3m has been received and the deal should be completed by the end of June. A further 16 turboprop aircraft are being retained and the additional cash can be used to widen the portfolio of aircraft. House broker WH Ireland estimates an underlying value for Avation of 270p a share.

PRE-IPO / OTHER TRADING FACILITIES

Former ISDX and GXG company US OIL & Gas (USOP) has raised £1.18m at 27p a share via a ten-for-63 open offer to existing shareholders. That is 54% of the amount that the oil and gas company was seeking. A placing had already raised £470,000.

Andrew Hore

 

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