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Quoted Micro 16 May 2016
Carduus Housing (CHPB/CHP2) has discovered that £1.43m of its cash has been paid to Carduus Finance Ltd and £875,000 to a third party. It is estimated that £1.675m of this cash did not conform to budgeted spending or the company’s investment strategy. Carduus Finance has subsequently sold its stake in Carduus Housing for £1. Pankaj Rajani owns 75% and Beaufort Securities 25%. Peterhouse has resigned as corporate adviser and Brian Gilmour, Drew Oswald and Luke Cairns have resigned as directors. Pankaj Rajani and Darren Edmonston have joined the Carduus board. Gilmour is one of the main shareholders in Carduus Ltd, the holding company for Carduus Finance. On 2 February 2016, in his capacity as sole director, he made a solvency statement for Carduus Ltd. Stuart Black who was a director of ISDX-quoted Etaireia Investments is a former director of Carduus Ltd and Carduus Finance. When Black was on the Etaireia board it claimed it had planning permission for a site in Scotland but this proved to be untrue. Carduus Housing joined ISDX on 30 September 2015 when £3.5m of 6.5% unsecured bonds were admitted to trading. It has subsequently raised £3.5m from the issue of 6.25% unsecured bonds. Trading in the bonds remains suspended pending clarification of its financial position. The strategy is to invest in affordable housing, with 37 properties currently owned, but this may be changed. There is still £1.9m in the bank. The company will try to recover the cash that has been paid out for reasons outside the remit of the corporate strategy. Carduus Housing may need to raise additional cash by 2020 in order to redeem the bonds.
Secured Property Developments (SPD) continues to seek a suitable residential development project and it has widened the scope of its search to outside of the M25. A property in Scarborough has been sold for £327,500 – it was in the books for £300,000 – and no other investment properties are owned. The NAV was £758,000 at the end of 2015. There should be more than £700,000 in cash after the disposal. At 19.5p (18p/21p) a share, Secured Property is valued at £400,000.
Leni Gas Cuba (CUBA) is linking up with Commercial Funded Solar Ltd (CFS) in order to install and operate renewable energy assets in Cuba. CFS was established as a limited company in February 2015. The directors include Dmitry Gavrilov, who joined the board in March 2016 and is a 10% shareholder, and Timothy Dobson, who owns 80% of the company. Cuba wants to produce 24% of its electricity from renewable sources by 2030. The funding for any projects will come from external investors. The income related to developing and installing the plant will be shared 50/50 while Leni Gas Cuba will receive 25% of the revenues from operational contracts. At 1.35p (1.2p/1.5p) a share, Leni Gas Cuba is valued at £6.7m.
Brett Miller has resigned as a director of Gledhow Investments (GDH), although he remains company secretary, and has sold his 2.2 million shares at 2.2472p each – a large premium to the market price. At 1p (0.75p/1.25p) a share, Gledhow is valued at £490,000. On 11 May, 170,000 shares were traded at 1.15p each. Peterhouse employee Guy Miller has joined the board. He owns 264,700 shares.
Online retailer of musical instruments Gear4music (G4M) more than doubled its underlying operating profit in the year to February 2016. Revenues increased from £24.2m to £35.5m, while underlying operating profit excluding flotation cots jumped from £376,000 to £895,000. There was a small pre-tax profit after interest charges. The cash raised in the flotation means that these interest charges will be significantly reduced this year. Net cash was £2.6m even after investing in higher inventories. The product range is being expanded by 20% each year. Instead of a London showroom, the company is planning to open up European distribution hubs. There is a chance of a dividend for this financial year.
AdEPT Telecom (ADT) is acquiring managed IT and telephony services provider Comms Group UK for £3.5m plus surplus cash. The management is remaining with the business which has long-term relationships with small business customers. The business made an operating profit of £500,000 in the year to March 2015 and that is estimated to have risen to £800,000 in 2015-16, so the deal should be immediately earnings enhancing. Further information on AdEPT can be found at http://www.hubinvest.com/AIMPDFMay2016_80.pdf.
Digital performance marketing services provider XLMedia (XLM) says current trading remains strong and it still has organic growth opportunities on top of the potential for consolidation. The strategic review has been completed and XLMedia still believes that it should remain on AIM. The company will continue to seek opportunities in new territories and sectors as well as further developing its technology.
Marble quarry business Fox Marble (FOX) has raised £2m at 10p a share and the directors have agreed to take their salaries in shares at the market price. The cash will help to finish the Kosovo factory where cut and polished marble slabs should be produced by the summer.
MediaZest (MDZ) has raised £250,000 through a share issue at 0.1p each and it has capitalised a loan of £50,000 at 0.15p a share. The audio visual company says that it made its best ever performance in the year to March 2016. The cash will help to finance working capital for projects with HMV, Adidas and Diesel. MediaZest is trying to build a recurring revenue base.
Telecoms services provider Toople (TOOP) made strong start to trading on the standard list despite the limited nature of its current business. One man who will be pleased to see the shares go to a premium is chief executive Andrew Hollingworth, who acquired his 26% stake for less than £20,000 when the company was formed on 2 March 2016and it is currently worth more than £2m. His shares were issued at 0.0667p each compared with the placing price of 8p a share and the current share price of 8.88p. Hollingworth has an annual salary of £120,000 –Toople will have to grow to generate revenues that high – and seven weeks holiday entitlement each year. Former Coms boss David Brieth sold the main operating businesses to the group for 39 million shares and he is paid £120,000 a year, which is effectively for a three day week.
In the six months to March 2016, trickle ventilator and window components manufacturer Titon (TON) reported a dip in profit from £792,000 to £735,000 on flat revenues of £10.9m. That was due to weak Korean trading as competition increased. Net cash was £2.46m at the end of March 2016.
Engineering and environmental consultancy Waterman Group (WTM) says that revenues were 10% ahead in the first nine months of this financial year and is on course for a full year profit of £3.3m in the year to June 2016. Net cash will be better than expected. Waterman wants to improve its operating margin from 3.3% in 2014-15 to around 6% in 2018-19.
Latest edition of AIM Journal available here.
Quoted Micro 23 March 2016
Trading in the bonds of Carduus Housing (CHPB/CHP2) has been suspended pending clarification of its financial position. It is noticeable that the suspension announcement is the first not to include managing director Brian Gilmour as the contact name. Instead fellow director Drew Oswald is named at the end of the release. Carduus joined ISDX on 30 September 2015 when £3.5m of 6.5% unsecured bonds were admitted to trading. It has subsequently raised £3.5m from the issue of 6.25% unsecured bonds. The strategy is to invest in affordable housing, with initial investments in Scotland.
Other bond issuers continue to raise cash. Diversified Gas & Oil (DOIL) has raised a further £630,000 from 8.5% unsecured bonds, taking the total to £5.8m. Via Developments (VIA1) has raised an additional £80,000, making a total of £2.64m from eleven placings of 7% debenture stock since joining ISDX. Residential property acquisitions have been made in Manchester and Luton.
Hydro Hotel, Eastbourne (HYDP) has appointed Jonathan Owen as its new general manager. He starts on 16 May. The shares owned by the estate of Richard Cecil James have been equally distributed to Elizabeth Foster and Patricia Gray, who own 10.1% and 9.3% of the company respectively. There were also 200 shares traded at 800p each on 15 March. At 775p (750p/800p) a share, which values Hydro at £4.7m.
Titiana Internet Ventures (TITP) has failed to secure a renewable energy sector deal and it does not have the cash to maintain its ISDX quotation so shareholders are being asked to vote to terminate this quotation. At 2.5p (2p/3p) a share, Titania is valued at £44,000.
Robotic process software supplier Blue Prism (PRSM) has joined AIM. The business is loss-making but it is profitable in Europe and the costs of building up a base in the US have pushed the group into loss. The software enables automation of manual, rules-based admin processes and it has been available since 2008 and subsequently developed further with customers. Blue Prism raised £10m at 78p a share, while £11.1m was raised by existing shareholders. The share price ended the first day of trading at 110.5p.
Specialist IFA Frenkel Topping (FEN) has gained FCA approval to deal with retail clients and this is the final requirement for the new strategy. This involves taking on the fund management role for assets under management – £666m at the end of 2015. Frenkel has been opening additional offices in order to broaden its coverage of the country and this held back profit last year. Pre-tax profit dipped from £1.57m to £1.42m in 2015. There should be some recovery this year but the real benefits of the strategy should be more obvious in 2017 when profit is expected to be £3.28m. Meanwhile, the dividend has been increased by 25% to 0.8875p a share and there should be further growth in dividends in the coming years.
SIPPs administrator Curtis Banks (CBP) reported an improvement in pre-tax profit from £3.1m to £4m in 2015 as it won new business and got the full benefit from recent acquisitions. Curtis Banks will become the second largest SIPP provider following the acquisition of Suffolk Life from Legal & General for £45m. The enlarged group will have 65,000 SIPPs with assets of £18bn under administration. The deal is still waiting for regulatory approval. There are opportunities for further bolt-on deals.
Standard list shell Opera Investments (OPRA) is still trying to secure the reverse takeover of SoloPower Systems Inc (http://solopower.com/company/) that was originally announced last July. Financing the acquisition of the thin film solar technology developer has proved difficult and the structure of the deal is being changed. SoloPower will raise finance prior to a reversal into Opera, which is required to happen by 15 May or it will not go ahead. There was £1.08m in the bank at the end of June 2015. Opera has already incurred £400,000 of costs relating to the deal but Hudson, the backer of SoloPower, will reimburse £200,000 of these costs by the end of the month.
Highlands Natural Resources (HNR) has paid $32,000 to acquire 100% of 26 unpatented mining claims in Grand County, Utah. Highlands had been assessing oil and gas well logs and thinks there might be a potential uranium discovery in the area. Permits will have to be obtained and then exploration can start a few months later. The seller is Ticaboo Minerals which will have the right to a production royalty of 2% of the gross value of minerals produced from the mining claims. The principal focus of Highlands is still the oil and gas sector.
Quoted Micro 21 December 2015
Asia-focused investment company DKG Capital (DKGP) is acquiring a 30% stake in Hong Kong-based Ronix Resource Co, which provides concierge VIP services for the travel and leisure sector, for £600,000 in cash and shares. Ronix is completing the acquisition of online betting and gaming business Global Media Ltd, which has an agreement with a Malaysian firm for the referral of VIP customers as well as jointly developing an online gaming services. DKG plans to raise £200,000 from a placing early in 2016. At 1.75p (1.5p/2p) a share, DKG is valued at £900,000.
Carduus Housing (CHP2) is acquiring 15 properties for £1.19m and £2.5m of 6.25% bonds 2020 have been admitted to ISDX. The freehold properties being acquired are two/three bedroom homes in southern Glasgow. The first seven properties have been bought and the others will be acquired in January. The homes will be rented out and managed by a housing association.
Investment company Gledhow Investments (GDH) has been hit by the decline in the value of its investments in resources companies. No new investments were made last year. The NAV fell from £626,000 to £497,000, including cash of £247,000, at the end of September 2015. At 0.75p (0.5p/1p) a share, Gledhow is valued at £370,000.
Investment company Lombard Capital (LCAP) has a new major shareholder. Mark Jackson has sold his 28.8% stake in Lombard at 10p a share to David Grierson. That is a large premium to the market price of 6p (5p/7p) a share.
Molecular diagnostics company Premaitha Health (NIPT) has secured a £5m loans and warrants investment from Thermo Fisher. Premaitha’s man product is the IONA test, which is used to screen the foetus to assess if there are any genetic disorders. Thermo Fisher supplies the DNA sequencing instruments used to assess the IONA pre-natal test. European countries are starting to offer reimbursement for the use of the test. The first country is Switzerland. The additional cash will be used to further develop the test. Premaitha had £6.6m in the bank at the end of September 2015. The Thermo Fisher deal provides backing for Premaitha’s IP litigation with Illumina, which could drag on for some time.
Tungsten Corp (TUNG) is selling its bank to concentrate on its trade finance operations. Tungsten will receive £30m for the bank, which is in the books for £25.4m. It could take up to 12 months to complete the disposal. Tungsten remains heavily loss-making and there was £15.9m in the bank at the end of October 2015 – excluding the bank. Even with cost savings, cash could be running low by the time the money comes in for the bank.
Fit-out and projects contractor Styles & Wood (STY) has been retained by TSB as contractor for branch refurbishment after the bank reduced the number of contractors in the framework agreement from five to two. This should generate at least £10m a year for Styles & Wood over the next five years. Group revenues were £97m in 2014. Even though the first half profit was small, house broker Shore forecasts 2015 earnings per share of 29.5p, rising to 37.2p a share in 2016. The balance sheet has been strengthened following a refinancing of Styles’ preference shares earlier this year. Net debt, including preference shares, was £6.42m at the end of June 2015 and cash flow should be strong from now on.
Business information provider Progressive Digital Media Group (PRO) intends to acquire healthcare business information provider GlobalData Holding and sell its non-core print assets to the owners of the GlobalData. An all-share deal is likely to leave the sellers with just over one-third of the enlarged group. Progressive will have three legs: healthcare, consumer and technology. In July, Progressive bought information assets from Informa for £25m.
NWF Group (NWF) says that trading is in line with expectations and net debt continues to be reduced. Lower milk prices continue to hamper the feeds division, while the food distribution division used overflow capacity and the fuels distribution division did better than expected in the summer months – although the warm winter could hold back second half progress. The interims will be published on 2 February.
Online video content revenues generator Rightster (RSTR) is raising £10m at 5p a share – a premium to the market price. The cash will help to finance the restructuring of the business and cover continuing losses. Rightster wants to focus on enterprise customers and create targeted channels to attract certain consumer groupings. Investment in production teams and other specialists will be required. The placing is being backed by Woodford and Invesco. The number of shares in issue will be increased by nearly 60%. Ashley Mackenzie, a founder of one of the companies acquired by the group, took on the role of chief executive in November.
Thor Mining (THR) has agreed to sell its gold assets in Australia to PC Gold for A$3.5m. The deal includes the Spring Hill and Dundas gold projects. There is an initial deposit of A$150,000 with the rest of the first tranche of A$2m to acquire a 60% stake in the projects due early next year, followed by a further A$1.5m within 12 months to acquire the rest. There are also royalty payments of A$6/ounce unless the gold selling price goes above A$1,500/ounce when the payment goes up to A$14/ounce. The initial cash will pay off A$1.2m loan taken out to acquire the rest of Spring Hill. The rest of the cash will be invested in the company’s tungsten projects in Australia and the US.
Sunrise Resources (SRES) has signed a 25 year lease agreement with EP Minerals for its County Line diatomite project in Nevada. Sunrise will not have to spend any more of its own money developing the project. This project could be up and running and generating a royalty stream for Sunrise within 18 months. There is an initial payment of $450,000 in 18 months and then minimum royalty payments each year. Sunrise has acquired a second industrial minerals project in Nevada. The Pozz Ash project could be a source of natural pozzolan, which is an alternative additive to cement.
Standard list company General Industries (GNI) is paying £1.2m for Murja from founders Richard Murphy and Christopher Jack. Murja is a treasury management consultancy and the deal has been passed by the FCA. When the acquisition is completed Richard Murphy will become an executive director. General Industries has already acquired affordable housing adviser Altair Consultancy & Advisory Services and this should provide additional client for Murja. An interim dividend of 0.22p a share is being paid on 21 December.
Standard list shell Opera Investments (OPRA) continues to try and raise cash to enable it to complete the acquisition of SoloPower Systems but it is taking longer than expected. The original announcement of heads of terms was on 20 July and trading in the shares was suspended. US-based SoloPower manufactures solar photovoltaic cells and modules from thin-film copper, indium, gallium and selenium materials and its current owner is Hudson Clean Energy Partners. SoloPower believes that its thin film solar products are cheaper to produce and install than those of its competitors. The deal is valued at $220m based on an all share acquisition at 28p a share. The plan is to raise at least $40m. An initial £1.06m net was raised at 10p a share last April. Because Opera is not on AIM there is no limit on the time that the shares can be suspended.