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Quoted Micro 6 February 2017
NEX EXCHANGE
Bondholders in US-focused oil and gas company Diversified Gas & Oil (DOIL) have overwhelmingly opted to take the cash alternative ahead of the flotation of the ordinary shares on AIM on 3 February. A total of £10.35m worth of bonds (97.1% of bonds in issue) are taking cash, while £198,000 of bonds will be swapped for 380,769 ordinary shares. There will be £106,640 worth of bonds remaining in issue but there will be no trading facility. The ordinary shares of Diversified Oil & Gas (DGOC) raised £39.7m at 65p a share, valuing the company at £68.6m. The share price slipped to 56.25p at the end of the first day’s trading.
Property investor Ace Liberty & Stone (ALSP) had a property portfolio worth £28.5m at the end of October 2016 and this generates annual rental income of £2.31m. The NAV was £18.25m at the end of October 2016 with a £500,000 revaluation gain partly offset by the final dividend payment.Net debt was £6.7m, down from £7.7m at the year end and there are assets held for sale worth £6.3m. Since October, a property was acquired at Hanley for £9m. The deal was financed by a £13.75m loan facility from Lloyds Bank with the rest of the cash used to refinance debt relating to five other properties.
DagangHalal (DGHL), which operates an e-marketplace for Halal verification, has parted company with its chief executive and trading in the shares has recommenced. Mohamed Hussain was paid the compensation that he was entitled to in his contract but he is claiming for twice his annual salary – equivalent to £195,000. Ali Sabri Sani Abdullah has stepped up from finance director to chief executive, while Jeff Teo and Derek Marsh have been appointed to the board. Cairn has replaced Arden as corporate adviser. The share price has not changed since trading recommenced.
AIM-quoted Metal Tiger (MTR) has sold its 28.2% in MetalNRG (MNRG) to Value Generation Ltd, a business associated with MetalNRG director Paul Johnson, and Gervaise Heddle, which each own 14.1% of the resources shell. The sales price was 0.26271p a share, whereas Metal Tiger had paid 0.2628p a share nearly one year ago.
BWA Group (BWAP) says it has been in talks with three potential acquisitions but none of the potential deals progressed. There was a £16,276 cash outflow from operations in the six months to October 2016, which was partially offset by the sale of an investment. BWA had a NAV of £562,000, with £41,593 in the bank, at the end of October 2016.
Botswana-focused oil and gas explorer Karoo Energy (KEP) says that exploration work on its two licences has confirmed the company’s geological model which predicts a deep sedimentary basin that could contain shale gas. In the six months to October 2016, there was a £326,000 cash outflow including capitalised exploration spending. Karoo had £168,000 in the bank at the end of October 2016, and £11,000 has subsequently been raised.
Property development and management services provider Formation Group (FRM) plans to consolidate its shares and shareholders will get to vote on the proposal at the AGM on 27 February. If the five-for-one consolidation is approved it will take place on 28 February.
Valiant Investments (VALP) has raised a further £34,000 at 0.1p a share. Valiant’s 84.7%-owned subsidiary Flamethrower has set up a new company called Slot Right In, which will be the social casino division and Flamethrower plans to acquire and trade domain names. Flamethrower continues to add to its portfolio of apps.
Property investor Ecovista (EVTP) says it is looking at investments in London, Essex and Hertfordshire. An offer of £275,000 has been accepted for a cottage owned by the company, while a house in Bishop Stortford, acquired for £665,000 last year, has been demolished and construction of a new building with a gross value of £1.35m will start in the spring. A planning appeal has been lodged for the development of car park site near Stansted Airport.
Grant Thornton will step down as corporate adviser to Chinese medical products and services provider MiLOC Group (ML.P) on 6 March.
AIM
AdEPT Telecom (ADT) is acquiring Our IT Department, an IT services provider in London and the South East, for an initial £4.75m with up to £3.75m more payable depending on performance. This is a profitable business that brings additional IT skills to the telecoms business. AdEPT has secured a £30m, five-year bank facility from Barclays and RBS, which will help to finance further acquisitions.
Everpower International is acquiring a 9.9% stake in Haydale Graphene Industries (HAYD) in return for a £3.26m cash payment – equivalent to 170p a share. This is part of an agreement that will enable Haydale products to be manufactured for the Chinese market. Commercial revenues from the Huntsman agreement are not likely to come through until 2017-18 and with other strategy changes this means that the revenues for the year to June 2017 will be lower than expected.
Automotive acoustics and thermal insulation designer Autins (AUTG) has shocked the market with a profit warning less than six months after joining AIM and the chief executive has resigned. First quarter sales have been in line with expectations but a major customer has reduced orders. The share price has fallen from the August placing price of 168p to 145p – but it had been as high as 240p. Miton had added to its stake in January.
Ascent Resources (AST) says the flow test at the Pg-10 well was better than expected. The maximum stabilised flow rate was 8.8 million cubic feet of gas per day.
LED lighting technology developer PhotonStar LED (PSL) says that its 2016 revenues will be slightly lower than expected and the loss will be higher because of a challenging second half. Revenues were around £5.4m and the pre-tax loss was £1.3m. There was £230,000 in the bank at the end of 2016 with £830,000 of invoice financing. Cost savings have been made and this helps to improve the outlook for 2017, although the poor second half trading has continued into January.
Eagle Eye Solutions (EYE) says that interim revenues have grown 72% to £5.1m, which is better than expected. The nationwide roll-out of the Asda contract has increased coupon redemption numbers. Cavendish Asset Management has increased its stake to 8.26%.
ECR Minerals (ECR) says that the Australian government has given consent to for drilling at the Byron target in the Bailieston project area. ECR has applied for two more licences and is awaiting news of the renewal of the Avoca licence.
Tissue Regenix Group (TRX) says that dermal allograft product DermaPure, which includes the company’s dCELL technology, has been included in the US Department of Veteran Affairs Federal Supply Schedule. This covers 152 hospitals and 800 outpatient units. This will boost the commercial prospects of the wound care product.
Prospex Oil & Gas (PXOG) is raising £850,000 at 0.5p a share and this will help to finance the evaluation of potential projects. The share price has slumped since the beginning of the year because of a disappointing result from a well on its Kolo licence area in Poland. The placing price is about one-fifth of the share price prior to the drilling news.
New management at Quantum Pharma (QP.) says trading is in line. This suggests that the pre-tax profit for the year to January 2017 will be £6.7m, down from £10m in the previous year, although there will be exceptional reorganisation charges. The loss-making NuPharm business has been closed. Net debt was £13.5m – after most of the reorganisation costs have been paid. The share price is less than one-third of its peak less than two years ago but it is higher than the 34p a share placing price in October.
Vela Technologies (VELA) is raising up to £550,000 from a bond issue via the UK Bond Network. There is already interest for £250,000 of bonds and the other £300,000 have been underwritten. The interest rate is 10% and the bonds can be repaid after one year, including interest. If they are repaid earlier than one year’s interest has to be paid. Vela will use £150,000 to increase its investment in Portr, the airline passenger facilitation and baggage transport service.
BP Marsh (BPM) has subscribed for a 30% cumulative preferred ordinary shareholding in Stewart Speciality Risk Underwriting Ltd, a Toronto-based start-up headed by a boss with 25 years of experience. Stewart specialises in insurance for the construction, manufacturing, onshore energy, transport and public sectors. A £480,000 loan facility is also being provided.
Reconstruction Capital (RC2) is returning €17m of cash to shareholders. This equates to €0.115 a share.
MAIN MARKET
Engineering and environmental consultancy Waterman Group (WTM) says that its interim revenues and profit will be in line with last year. Net cash was £6.7m at the end of 2016. This will enable Waterman to continue to increase its dividend.
Publisher Quarto (QRT) is on course to increase its pre-tax profit from $14.1m to $15.5m. Net debt was $62.2m at the end of 2016. A buyer has been identified for the Australian distributor Books and Gifts Direct. This will raise $1m in cash with the other $4.75m of the disposal price in loan notes. Even after a 46% increase in the share price, the 2016 multiple is less than eight. There are plans to change the way that the backlist of titles is valued.
Rainbow Rare Earths (RBW) commenced trading on the standard list and the share price ended the week at 12p, compared with the placing price of 10p. Rainbow has issued £260,000 worth of shares at the placing price to cover a majority of the costs of its flotation.
Challenger Acquisitions Ltd (CHAL) has sold Starneth less than two years after buying the designer and engineer of giant observation wheels. Challenger completed the acquisition of Starneth in July 2015 when an initial €1.25m was paid in cash and €825,000 in shares at 75p each. The second cash payment of €1.25m was delayed. Challenger will receive $6m in fees when the Jakarta wheel’s funding arrangements are finalised and the €1.25m payment will be taken out of that. There had been a third payment due but that does not appear likely to happen. This is a complicated deal but it is difficult to see this as a positive deal for Challenger but it will continue to work with Starneth and it will have a stake in the New York wheel. Acquisitions of businesses in the leisure and entertainment sectors that are close to revenues are likely.
Andrew Hore
Quoted Micro 26 December 2016
ISDX / NEX
Diversified Gas & Oil (DOIL) has offered to repurchase its bonds for 105p each or, if the bondholders are outside of the US, they can receive ordinary shares at a discount of 20% to the AIM placing price. The AIM flotation has been delayed until late January and Diversified Gas & Oil plans to raise $40m – it had previously been $40m. The closing date for the offers is 13 January. This means that bondholders will receive interest until the end of 2016. So far, holders of 74% of the bonds have opted for the cash alternative and 1% the share alternative.
Western Selection (WESP) has increased its stake in AIM-quoted Bilby, following a profit warning and accounting adjustment announcement by the gas and electrical installation services provider. Western Selection bought 62,192 shares at 51.18p each, taking the stake to 6.04%. There is still £451,000 in the bank
Netalogue Technologies (NTLP) slipped into loss in the six months to September 2016. Revenues slumped from £552,000 to £317,000 and the ecommerce technology developer swung from a profit of £38,000 to a loss of £232,000. There is still £451,000 in the bank despite a cash outflow. Andrew Robathan has been appointed as chief executive. Deal activity has picked up but markets’ are still uncertain and business may take longer to come through than in the past.
Chinese medicines supplier MiLOC Group Ltd (ML.P) has extended its agreement with its skincare products distributor in Taiwan. The agreement will continue until the end of March 2017. The launch of a range of hair care products. Has been delayed until April. MiLOC has paid the first instalment of £320,513 as part of the endorsement agreement with BrandKing, while the same amount is payable by April.
Forbes Ventures (FOR) has taken an option over a potential investment in Primus Care (www.primuscareplc.com), which manages residential care services for children and the elderly. Forbes has the right to acquire £500,000 of convertible loan notes with a conversion price of 0.3p a share, lasting 18 months. The option expires on 30 December 2016.
CyberOwl, a spin-off from Crossword Cybersecurity (CCS), has raised an additional £510,000. The cash will fund further development of an early warning system for network security for uses such as the internet of things.
AIM
The award for the latest pre-Christmas warning announcement goes to TLA Worldwide (TLA). The sports agent and marketing business sneakily put out its announcement at 6.26pm on 23 December, having sadly been denied the chance to put it out on Christmas Eve because that is a Saturday. Poor ticket sales for the Australian 2016 International Champions Cup football tournament in July means that the agreement to promote the tournament has been ended. There is talk of another football event to replace this. Second half trading in the US sports management business was not as good as expected. This means that EBITDA will be 15% below previous expectations. That appears to mean that it will be lower than last year. The fact that, in September, the bid from AAPC fell through because it found it difficult to raise money, is less surprising given the trading. That bid cost the company $1m.
Kuala Lumpur Kepong has allowed its bid for MP Evans (MPE) to lapse after it receives acceptances equivalent to 13.2% of the oil palm plantations operator.
Price volatility in the energy trading market has made the autumn a tough trading period for Good Energy (GOOD) and it means that 2016 figures will be at the bottom end of market expectations. Trading has been more favourable in the past couple of weeks. Good Energy is recycling the investment in its 5MW solar site in Dorset, which is being sold to Eneco UK for £5.78m, while retaining an option over the power generated. There will be a disposal gain of more than £340,000, which will be recognised in 2017. The cash will fund further solar sites prior to the end of March, after which the current renewable obligation certificate subsidy will no longer be available.
Facilities management and security services provider Mortice Ltd (MORT) is raising £2.3m at 75p a share to help it to reduce dependence on working capital facilities. Some of these facilities have an annual interest rate of more than 9%. Mortice intends to spend more on the marketing of its Soteria remote surveillance services. First half revenues of $80m have been generated, with more than doubled facilities management revenues thanks to the UK business.
Italy-based PR firm SEC Group (SECG) is acquiring 60% of Martis Consulting for around €1m. Poland-based Martis provides public and corporate affairs services and the latest annual revenues were €1.69m and a pre-tax profit of €286,000. SEC is only acquiring the relevant assets and management will own the other 40%, while having the option to exchange these shares for shares in SEC.
Biopharmaceutical products and services developer and provider Abzena (ABZA) has signed a licence agreement with start-up immunomodulatory oncolytic viruses treatments developer Trieza Therapeutics Inc. The exclusive worldwide licence is for an undisclosed antibody sequence that Trieza wants to use with its own viral vector technology to develop oncology treatments. If the development is successful then up to $35m of milestone payments could be generated on top of any royalties from commercial sales. Abzena made an interim loss of £4.27m. Net debt was £9.38m at the end of September 2016.
Share (SHRE) has sold a further 40,000 shares in the London Stock Exchange and raised £1.12m. This takes the money raised from disposals in recent weeks to £1.66m. Share retains 60,000 shares in London Stock Exchange. Share has taken on up to 8,700 customer with more than £200m under management from Invesco Perpetual – which had not previously been named when the deal was announced. These are mainly ISA accounts.
Simon Fry, Jean-Pascal Tranie and Felipe Simonsen have joined the board of investment company Mercom Capital (MCC) and John Zorbas, Patrick Cross and Kyle Appleby have sold their shares and stepped down from the board. The exiting directors sold their shares at 20p each and returned 2p a share to the company. There are plans for Mercom to raise £3m at 30p a share and issue a warrant with each share that is exercisable at 80p a share for 180 days after issue. Existing shareholders will be issued one warrant, on the same terms, for every four shares they own. The placing price is much higher than that suggested in the initial proposals. This depends on resolutions being passed at the AGM in early January. The new investing strategy is to invest in established technology and media businesses. The name will be changed to Monchhichi.
Learning management systems provider NetDimensions (Holdings) Ltd (NETD) says that 2016 revenues will be at least $26m, up from $25.4m, and EBITDA will be $2m, compared with a loss of $500,000 in 2015. Bid discussions are continuing.
Redcentric (RCN) has reported interim figures which should show a real picture of the company‘s position. Internal systems are being improved and this will continue well into 2017. In the six months to September 2016, revenues edged up 2% to £53m, while there was a turnaround from a loss of £2.5m to a profit of £300,000. There was £7.29m generated from operations during the period and £5m came from the disposal of network assets. Net debt was £34.4m at the end of September 2016. Richard Griffiths and Kestrel have been picking up shares in the market.
NWF (NWF) has warned that a weak first quarter means that the interim figures will be lower than the same time last year but the full year outcome is still expected to be in line with expectations. Demand for feed has weakened at a time when ingredient costs have increased, while the fuel division has been hit by warm weather. The food distribution activities The interim figures will be published on 31 January.
Vislink (VLK) will seek shareholder approval for the disposal of its hardware division on 9 January. The acquirer xG Technology Inc will then seek to finalise the funding of the $16m (£13m) acquisition. If the disposal is completed early in 2017, then the forecast earnings per share will reduce from 1.3p a share to 1.2p a share. Trading in the fourth quarter of 2016 has benefited from the normal seasonal uplift but a £1.2m full year underlying loss is still expected. An additional £5.3m write-down will be required to bring down the book valuation of the hardware division. This appears to indicate a group NAV of around £16m., while net debt will be more than £10m
Diversis has posted the offer document for ServicePower Technologies (SVR). Diversis is offering 6p a share, which values ServicePower at £13.7m.
Collagen Solutions (COS) grew its interim revenues by 30% to £1.89m, but the loss quintupled to £418,000. Additional staff have been taken on and more spent on marketing and R&D. There was still £1.66m in the bank at the end of September 2016. House broker Cenkos expects net cash of £230,000 at the end of March 2017, while net debt is forecast at £3m one year later.
MAIN MARKET
Standard list shell Papillon Holdings (PPHP) has come to an agreement with main shareholders and directors to acquire Myclubbetting.com Ltd, where golfer Lee Westwood is a shareholder and ex-England manager Sam Allardyce was a shareholder – he said in August that he was giving up his shares (https://www.thesun.co.uk/sport/1611113/sam-allardyce-drops-footie-betting-job-and-ditches-shares-after-sun-probe-finds-boss-lost-investors-4m/). The target is run by Neil Riches who used to run Worldlink, which was introduced to the standard list on 24 November 2011 at a notional valuation of £55m (at 250p a share), although it never got near that valuation when trading commenced. Worldlink was a mobile applications developer that had a similar business to Myclubbetting.com but fewer than two years later it was in liquidation. In August, The Sun said that Neil Riches claimed Myclubbetting.com would float on the Scandinavian First North market at a valuation of £75m. There is still due diligence and other matters to complete before the deal goes ahead. Papillon floated on 24 June and raised £824,000 at 1p a share.
World Trade Systems (WTS) is aiming to relist on the standard list in the first quarter of 2017 and additional funds will be raised at that time. This follows the establishment of Shimao (Suzhou) Biotechnology, which plans to sell healthcare products to consumers. Net liabilities were £1.12m at the end of June 2016. The loans from Kudrow totalling £800,000 are repayable by the end of July 2017 or when trading in the shares recommences and have a 5% interest charge. Trading in the shares has been suspended for more than eight years.
Aircraft leasing company Avation (AVAP) has acquired and delivered a new Airbus A321-200 to Vietjet, taking the number delivered to six. Avation has also sold its remaining five Fokker aircraft. WH Ireland forecasts a full year profit of $21.5m.
Andrew Hore
Quoted Micro 14 November 2016
ISDX
Dairy services provider National Milk Records (NMRP) reported flat revenues, including joint ventures, of £10.3m in the six months to September 2016 but profit declined as the core milk recording business fell into loss. This was due to a reduction in clients. There are signs of the milk price improving but that will take time to feed through to increased demand for services as dairy farmers rebuild their cash position. The laboratories and livestock surveillance businesses generated higher revenues but made lower profits. Inimex Genetics reported a reduced loss. Underlying pre-tax profit fell from £809,000 to £619,000 as the milk records contribution moved from a profit of £71,000 to a loss of £119,000. Even so, the inflow from operating activities doubled from £300,000 to £599,000. This was down to an increase in creditors, compared with a reduction in the corresponding period. The pension deficit has increased from £3.5m to £6.25m.
Diversified Gas & Oil (DOIL) plans to raise $60m (£48m) via an issue of ordinary share and join AIM. The bonds that are traded on ISDX can either be converted into shares or be repaid. A maiden dividend is promised by June 2017. The US-focused gas and oil producer and daily production is running at 4,400 barrels of oil equivalent with an average operating cost of $9.53/barrel. Total production was 428,522 barrels of oil equivalent in the first half of 2016, while revenues were $7.6m. Funding from the bonds trading on ISDX has helped Diversified Gas & Oil to grow by acquiring and investing in wells. Other oil companies are focused on shale prospects so the conventional projects that the company focuses on are reasonably priced and the fundraising will provide plenty of cash for acquisitions. Bradley Gray has been appointed finance director and chief operating officer. He has been granted an interest in 5% of the Diversified Gas & Oil ordinary shares and this will vest over a three year period.
Goldcrest Resources (GCRP) continues to review ways of pushing ahead with its Asheba project in Ghana and it is also assessing other projects in west Africa. Ryan Long has resigned as a non-executive director.
Kryptonite 1 (KR1) has raised a further £127,000 at 0.05p a share. Back in June, £10,000 was raised at 0.04p a share and in July £100,000 was raised at 0.03p a share. Kryptonite 1 was formerly known as Guild Acquisitions.
AIM
ServicePower Technologies (SVR) says that a subsidiary of Constellation Software Inc, which is generating funds from the winding up of Bond International Software (BDI), may make a cash bid for the work scheduling software company. Constellation has previously acquired gym and leisure membership software provider Gladstone in 2010, following a lapsed bid at the end of 2008.
Asset manager Miton Group (MGR) has managed to weather the problems caused by investment manager departures and assets under management are being rebuilt. Peel Hunt forecasts an improvement in full year profit from £3m to £4.7m. The broker expects assets under management to be £2.8bn at the end of 2016 and it believes that Miton has funds that should be able to attract investment inflows over the coming years. The share price has barely recovered from its low.
Oil and gas exploration information provider Getech (GTC) reported a strong second half and this meant that management appear to have been too cautious when they issued their profit warning prior to the year end. The weak oil sector still meant that pre-tax profit fell from £1.99m to £671,000 as revenues declined from £8.64m to £7.03m. Net cash is £1.89m but there is no dividend. Dr Jonathan Copus became chief executive during the summer so did not have time to affect the full year figures. He represents a move towards a more commercially focused management, away from the previous academic management that developed the business and its products. Getech is well-placed to take advantage of an upturn in the oil sector but this may take some time to come through.
Thalassa Holdings (THAL) has requisitioned a general meeting at The Local Shopping REIT. Thalassa would like a faster liquidation of the REIT’s assets and it is also critical of the management agreement with and bonus scheme for INTERNOS Global Investors. Thalassa wants to remove the two directors and appoint three of its nominees.
Starcom (STAR) says Amerijet Airlines has approved its Kylos Air GPS tracking device for air cargo. Kylos Air can be used to track high value air cargo because they are in flight mode when the plane is in the air and then they start transmitting when the cargo is unloaded. Starcom is no longer expected to make a profit in 2016, but a pre-tax profit of $500,000 is forecast for 2017. This type of news helps to give greater confidence that the forecast could be achieved. There is more than $1m in the bank.
Savannah Resources (SAV) has completed its initial mineral resource estimates for two out of the four deposits at the Mutamba project in Mozambique. The indicated and inferred mineral resource estimate is 3.5 billion tonnes at a grade of 3.8% of total heavy minerals, containing 81 million tonnes of ilmenite, 2.2 million tonnes of rutile and 3.8 million tonnes of zircon. This is part of the deal for Savannah to build its stake in its joint venture with Rio Tinto from 10% to 51%. A scoping study will be completed in three-four months.
MAIN MARKET
Trifast (TRI) interims were better than expected and this led to an earnings upgrade for the full year. Revenues were 15% higher at £89.7m and underlying pre-tax profit was one-fifth higher at £9.9m. The main growth came in the EU. A full year profit of £18.2m is forecast. Malcolm Diamond is becoming non-executive chairman.
Standard list shell Falcon Acquisitions (FAL) intends to pay £500,000 for direct-to-consumer media technology company Teevee Networks. A general meeting will be held on 24 November to gain shareholder agreement for the acquisition of Quiptel, which operates in the over the top (OTT) broadcast services market.
Andrew Hore
Quoted Micro 3 October 2016
ISDX
Newbury Racecourse (NYR) reported flat interim revenues of £5.56m and a higher underlying loss because of the loss of three race days to bad weather. There was a cash outflow from operations of £1.51m. The sale of a final tranche of land to David Wilson Homes has generated a disposal profit of £20.1m but the cash has not been received yet. There is £7.56m of cash in the balance sheet but the disposal proceeds will be received as homes are sold. The current market capitalisation is £17.6m, whereas shareholders funds are £44.9m.
Chapel Down Group (CDGP) says that interim revenues were 26% higher at £4.09m with the fastest growth coming in the Curious Drinks business, although the wine operations increased revenues by 14% and still remain the core activities. Curious Drinks raised £1.74m during the period and that led to a notional gain on disposal of £467,000. The cash outflow from group operations reduced from £713,000 to £441,000.
Halal verification business DagangHalal (DGHL) reported higher revenues in the six months to June 2016 but the costs of raising £3.6m and joining ISDX helped push the company into loss. Revenues grew from MYR2.96m to MYR3.34m but MYR3.54m of flotation costs and nearly trebled overheads meant that a pre-tax profit of MYR1.18m was turned into a loss of MYR4.49m. DagangHalal has not had time to invest the funds it raised, there was MYR14.9m in the bank at the end of June 2016, so this should help revenues to grow to offset he higher overheads. Management was also distracted by the flotation in the first half. The company has developed a global e-marketplace and two more certification bodies have signed up for the Halal verification engine, taking the total to 40, and two say that they will sign up for the Halal certificate management system, which has eight users. The number of merchants using the system has also increased.
In the six months to June 2016, WMC Retail Partners (WELL) reduced its loss helped by the release of £42,000 of past provisions. Revenues dipped from £2.15m to £2.05m but the loss fell from £226,000 to £78,000. No interim dividend has been declared. Management expects to make an announcement about loss-making Cornish Market World in the near future.
Diversified Oil & Gas (DOIL) has almost trebled its first half revenues from $2.9m to $7.6m. One-off books gains meant that the reported pre-tax profit was $36.5m but in reality there was an underlying loss. There was a $381,000 cash outflow from operations. The company continues to make acquisitions.
Mechan Controls (MECP) is holding a general meeting to gain shareholder approval to buy back up to 200,000 shares – equivalent to 10% of the shares in issue. This is part of the board’s plan to enable shareholders to realise part of their investment following the termination of bid talk earlier in the year.
Ecovista (EVTP) says that planning permission has been granted by East Herts Council for 100 Rye Street.The building will be demolished and a six bedroom home will be built on the site. In the six months to June 2016, the loss increased from £92,000 to £168,000. Ecovista is seeking additional finance in order to acquire the 85% of Cingella Srl it does not already own. The company has until the end of 2017 to pay €4m for this stake. Ecovista’s interim loss increased from £36,000 to £168,000.
AIM
Conference call technology and services provider LoopUp (LOOP) has reported its interims one month after joining AIM. In the six months to June 2016, revenues grew from £4.81m to £6.38m. That includes revenues from a BT contract which is almost at an end and underlying growth was 38%. There was a pre-tax profit of £72,000, compared with a £619,000 loss. The cash raised in the flotation and the conversion of debt into shares means that pro forma net cash is £3.16m.The US is the biggest generator of revenues with the UK not far behind. The cash will be invested in further development spending and marketing. Non-executive chairman Lady Judge bought 15,754 shares at 126p each, compared with the flotation price of 100p. This is her total shareholding.
Gold recovery firm Goldplat (GDP) moved back into profit in the year to June 2016 as the performance of the gold recovery activities in South Africa and Ghana improved with more to come from capital investment in these operations. Revenues grew from £16.6m to £20.2m with a loss of £796,000 turning into a profit of £1.94m. Strong cash generation meant that there was net cash of £2.06m. There was a 23% increase in gold production, which included a toll processing contract with Rand Refinery. In contrast to the growth in output from the recovery operations, there was less produced by the Kilimapesa mine in Kenya . A new processing plant should come into action by the end of this year which will increase capacity; at Kilimepesa. There is scope to expand recovered gold production by sourcing material from South America.
Training systems supplier Pennant International (PEN) returned to profit in the first half of 2016 even though a number of major orders have not yet made a significant contribution. Revenues grew from £5.78m to £6.65m, while a loss of £755,000 was turned into a profit of £11,000. Four new contracts have been secured, including one with new client Lockheed Martin. Net cash was £2.6m at the end of the period, with £3.56m raised at 55p a share since June, but there is no dividend. The order book is worth £46m. There are tax losses of £4.7m so there should be no significant tax charge for up to three years depending on how fast profitability improves. A full year profit of £2.2m is forecast. Management wants to supplement organic growth with acquisitions, which are most likely to be in the core defence sector.
Shares in Sareum (SAR) doubled on the back of a licence agreement for its Chk1 inhibitor CCT245737 with ProNAi Therapeutics. Sareum and co-investment partner CRT Pioneer Fund will receive an initial payment of $7m with up to $2m payable on the successful transfer of two ongoing phase I clinical trials for the cancer drug. Sareum will receive 27.5% of these payments and it will have £300,000 of funding commitment returned. There could be additional payments totalling up to $319.5m depending on the achievement of milestones. There could be low single digit or high double digit royalties on a commercial product.
Savannah Resources (SAV) has raised £1.42m at 3.5p a share and directors and related investors have agreed to provide a further £830,000 at the same share price. The rest of the cash will come in after the closed period has ended. The funds will be used to develop copper projects in Oman and finance other projects in Mozambique and Finland. Joint venture partner Rio Tinto has extended the long stop date for the agreement over the combined Mutamba/Jangamo project in Mozambique until 10 October or a later agreed date. The interim loss was reduced from £1m to £800,000.
Premier African Minerals (PREM) made an increased interim loss because of operational issues at the RHA tungsten mine. The plant has been upgraded so these problems should be at an end and processing rates should improve. A further expansion to 16,000t a year is planned for next year and that investment could have an impact on production levels. Net debt was $3.8m at the end of June 2016.
Thor Mining (THR) is awaiting confirmation of assay results for its Molyhill tungsten project in Australia. The initial indications are that there is anomalous tungsten. Thor may start more closely spaced drilling after the results are received. A £1m impairment on the disposal of the Spring Hill project in February meant that the interim loss before tax increased from £880,000 to £1.75m. The initial proceeds of the disposal helped to reduce net debt to £445,000.
ValiRx (VAL) is on course to start dosing patients with lung cancer with its VAL401 treatment in the phase IIb trial. Higher R&D spending meant that the interim loss increased from £1.37m to £2.12m. There was £569,000 left in the bank at the end of June 2016 and since then £1.2m has been raised and a convertible loan facility of up to $3.75m has been agreed with Yorkville.
Cloud services provider Nasstar (NASA) increased its monthy recurring revenues to £1.23m even before the recent acquisition of Modrus which took the figure to £1.7m. In the first half of 2016, revenues were 14% higher at £8.1m. Underlying pre-tax profit improved from £860,000 to £981,000. Pro forma net debt is £3.5m and cash flow should be strong enough to wipe this out by the end of 2017. Full year profit is expected to rise from £1.6m to £2m. The benefits of the Modrus acquisition should help the profit to rise to £3.5m in 2017.
Digital audio visual agency MediaZest (MDZ) has won £250,000 of contracts in the past six weeks. The company has also said that the previously announced project with Rockar is for Jaguar Land Rover at Westfield Stratford.
MAIN MARKET
Standard list shell Auctus Growth (AUCT) is still seeking an acquisition and it has just over £1m left in the bank. The directors’ are not taking any salaries yet and costs are running at £35,000 a year.
Andrew Hore
Quoted Micro 5 September 2016
ISDX
Guild Acquisitions (GAQO) has invested £30,000 in NOMAN Ventures Ltd, which is seeking investments in areas such as block chain, artificial intelligence, drones and virtual reality. The cash is being invested in convertible loan notes that will either be convertible at a 40% discount to the share price of the next fundraising of at least £250,000 or after 12 months. Guild plans to ask its shareholders to vote to change its name to Kryptonite 1.
St Marks Homes (SMAP) increased its NAV to 137p a share by the end of June 2016. A Richmond development was completed in March and three sales have been completed since June. Sutton and St Margarets sites will be completed this month, with all of the Sutton residential units already sold and the commercial space under offer. The merger with St Marks Contracts Ltd happened after the period end. Carbury Property Holdings has increased its stake in St Marks to 19.1%.
Via Developments (VIA1) says that it expects to start generating revenues in the final quarter of 2016. Cash raised from debenture issues has been used to buy three development sites – two in Manchester and one in Luton – costing £4.1m and with a development value of £18.3m within 18 months. The marketing of the first development in Manchester has begun. The company says that it is seeing more interest from foreign investors since the EU referendum. Via Developments has issued more ordinary shares but Pyramid Court Investments Ltd, which is owned by John Kahn, still holds 100% of these unquoted shares.
Secured Property Developments (SPD) has agreed to lend £600,000 for development finance to Space Property, which is 29.15% owned by Secure Property Developments director R Shane. This means that shareholders have to agree to the deal. The cash will lent for 12 months at 10.2% a year and it will be secured on a freehold commercial property in York. Secured Property Developments had £760,000 in the bank following the sale of its property asset.
Black Sea Property (BSP) has joined ISDX and 50,000 shares were traded at 0.01p each on the first day of trading (31 August). The former AIM company has a new strategy, which is to build up a portfolio of Bulgarian property assets. This could be residential, commercial or hotel properties, or it could be investments in distressed companies that need to be restructured.
Diversified Oil & Gas (DOIL) has raised a further £715,000, taking the value of bonds in issue to more than £10.6m. That is after buying back £197,000 worth of 8.5% unsecured bonds from a bondholder fund.
Crossword Cybersecurity (CCS) has appointed former chief of the secret intelligence service Sir Richard Dearlove as non-executive chairman.
AIM
EMIS (EMIS) reported flat interim revenues but profit improved. The GP and pharmacy software operations grew their profit but the specialist operations produced disappointing results due to the extra costs for taking on additional contracts. There were cost savings in the first half and the benefits will start to come through in the second half. Full year profit is expected to improve from £36.1m to £39.3m even though revenue forecasts have been shaved.
Facilities management and security services provider Mortice (MORT) grew its revenues by 51% to $133.5m in the year to March 2016 and even if acquisitions are stripped out underlying growth is still 13%. There were initial contributions from the UK and Singapore businesses acquired during the year but they will make a much bigger contribution this year – particularly as the UK facilities management business has won a major contract. India remains the main revenue generator but further acquisitions are likely. There should be a large increase in pre-tax profit in 2016-17 – house broker finnCap forecasts $4.2m.
Surgical instruments developer and supplier Surgical Innovations (SUN) has returned to profit at the operating level and there is still scope to improve gross margin. A small pre-tax profit is expected for the full year as new product launches boost second half sales. A sharp fall in inventories and debtors has helped to cut net debt to around £700,000. The underlying business is back on a firmer footing and management can turn its attention to building up the group via acquisition.
Bond International Software (BDI) says that it has received a bid approach from ESW Capital but no figure has been put on the potential offer. The Bond board has advised shareholders not to accept the Constellation Software bid of 105p a share. The offer document has been sent to shareholders.
MAIN MARKET
Investment in new products is starting to pay off for BATM (BVC) but the real benefits are unlikely to show through until next year’s figures. BATM reduced its interim loss and it is on course to move back into profit this year. Revenues declined in the first half because of reducing sales of legacy products, particularly in the networking sector, but newer products will boost second half revenues. The diagnostics business grew its revenues and it has secured a partner in China. A pre-tax profit of $2.7m is forecast for 2016 and that profit should double in 2017 as the newer products build up sales.
Cathay International Holdings (CTI) has investments in China-based healthcare businesses and a hotel. Revenues dipped slightly to $61.1m but higher gross margins meant that the company swung from loss to profit in the six months to June 2016. The main improvement came from 50.5%-owned Lansen. Trading would have been even stronger but for the decline in the RMB.
Gulf Keystone Petroleum (GKP) has launched an open offer to raise £19.1m at 0.8314p a share as part of its restructuring. The open offer closes on 15 September.
Quoted Micro 15 August 2016
ISDX
Beer and spirits volumes were both higher in the first half for Adnams (ADB). Beer volumes were 7% ahead, while the volumes of the less-mature spirits business were 60% higher in the first half. However, increased marketing costs meant that operating profit fell from £962,000 to £624,000, while disposal profit jumped from £407,000 to £1.42m – including the sale of UK distribution rights for Lagunitas to Heineken. The second half is always stronger for the pub and retail operations. A £7m investment is being made to increase brewery capacity by next summer. The A and B dividends have been increased by 5.6% to 19p and 76p respectively. The record date for the dividends is 9 September. There were 132 shares traded during the week at prices between 10500p and 10850p.
WMC Retail Partners (WELL) expects to make a lower interim loss this year. WMC has agreed in principle a funding package of £1.8m plus revised terms for the lease of Cornish Market World, which is still losing money even though a reconfiguration has improved performance. Interests related to two directors are lending the company £300,000, taking the total outstanding to £400,000, ahead of completion of the funding package. These loans are repayable at the end of November but longer term loans, which shareholders have to approve, are being negotiated.
National Milk Records (NMRP) has appointed Mark Frankcom, who has previous experience in the dairy industry, as its new finance director. Since April 2011, Frankcom has been a director of Gloucestershire-based Combined Brewers, which was known as Cotswold Spring Brewery prior to its merger with Severn Vale Brewery, where he owns 33.3% of the shares. At 77.5p (76p/79p) a share , NMR is valued at £5.8m. The latest trade was 320 shares at 76p each on 10 August.
There has been mixed news for blockchain technology investor Coinsilium (COIN). Factom, which has developed technology to time stamp trading data, has done a deal with digital information platform DataYes to publish pricing data on the “3,000 most valuable Chinese stocks”. Coinsilium has a 1.9% stake in Factom. The management of Mexico-based digital currency exchange MeXBT, where Coinsilium has a 17.6% stake, has temporarily suspended its exchange operations in order to perform a review.
Diversified Oil & Gas (DOIL) has bought back £197,000 worth of 8.5% unsecured bonds from a bondholder fund. There are £9.93m worth of bonds in issue, including the bonds bought back.
AIM
Premier Technical Services Group (PTSG) continued to grow strongly in the first half and it has not been hit by the Brexit vote. In the past two weeks, Premier has secured two access installation contracts worth £2.5m. The construction-related order book stretches out to 2018 and the testing and maintenance operations also have a strong order book. The two dry and wet riser systems installation businesses acquired in July will contribute to the second half.
Staff turnover is holding back the progress of energy procurement services provider Utilitywise (UTW) and it has overhauled its management, including the appointment of a new chief executive. Brendan Flattery is joining the company at the beginning of October, having previously headed Sage’s European business. Sales grew by 19% in the year to July 2016, while EBITDA will be slightly higher than last year at around £18m. Earnings per share forecasts have been reduced by around 10% to 17.7p, which is slightly lower than the previous year.
Digital media company Milestone (MSG) is providing NaPo with a white label version of its Backstage HD music publishing platform. NaPo is a mobile reward platform and revenues generated will be shared 50/50.
Audio visual services provider MediaZest (MDZ) says that it is targeting its first ever post tax profit in 2016-17. In the year to March 2016m revenues grew from £2.48m to £3.14m, while the post tax loss was cut from £656,000 to £109,000, excluding share-based payment charge. There are two large projects that could come through later this year or early in 2017.
Self-storage sites operator Lok’nStore (LOK) says that like-for-like storage occupancy was 2% higher last year and prices have increased by a similar percentage. This lead to a 5.2%increase in sales and means that Lok’nStore is on course to increase earnings per share buy one-third to 10.3p. There are plans for new outlets including one in Gillingham, Kent.
Information management software provider Ideagen has acquired Covalent, which is similar to its own business, for £3.6m. Covalent has a customer base that includes the NHS, local government and housing associations and annual recurring revenues are £1.9m. This deal has led to a 8% increase in forecast 2017-18 earnings per share to 3.5p.
Mining services provider Management Resource Solutions (MRS) has agreed to acquire the min assets of SubZero Group Ltd for A$6.12m in cash and shares. This cost includes the assumption of A$2.85m of equipment finance and employee benefits. SubZero, which has generated annual revenues of A$40m, fits with MRS’ project management and labour hire businesses and will double group revenues. Operating sites will be consolidated and corporate costs reduced. Rising coal prices should lead to recovery in demand for the group’s services in Australia.
MAIN MARKET
Publisher Quarto (QRT) has acquired becker&mayer publishing assets for $9.8m. The US-based business is a book publisher and toy business and a further $1.25m could become payable. The US will account for 45% of group revenues, while children‘s publishing will be 30% of group revenues. Quarto is second half weighted so the interim loss is no surprise. The interim dividend is unchanged at 5.13 cents a share but in pence terms it will be higher. Full year profit is expected to improve from $14.1m to $15.5m.
Tex Holdings (TXH) says that a change in mix of work meant that profit did not reflect the improvement in interim turnover from £17.8m to £20.6m. Pre-tax profit was flat at £495,000. Plastics turnover fell in the first half but sales volumes have picked up in the second half. The interim dividend has been increased by one-quarter to 2.5p a share.
Andrew Hore
Quoted Micro 1 August 2016
ISDX
Asia Wealth Group Holdings Ltd (AWLP) made a further loss in the year to February 2016, although subsidiary Meyer Asset Management did make a profit – albeit slightly lower than previously. Revenues fell from $1.73m to $1.2m, while the loss increased from $79,000 to $150,000. Directors fees increased from $209,000 to $216,000. Asia Wealth is still seeking further acquisitions. There was $1.28m in cash at the end of February 2016.
South Africa-based Inqo Investments Ltd (INQO) fell into loss in the year to February 2016 following a number of one-off costs. The social impact company has renegotiated loans and that will save R30m of interest charges. The DBSA loan was settled after the period end and this will improve the financial position of the business.
Ganapati (GANP), the developer of apps for social media and games, is still hoping that its application to the UK Gambling Commission will be successful but there are still issues being discussed. In the year to January 2016, revenues increased from £216,000 to £2.3m but intangible write-offs totalling £4.56m meant that there was a reported loss of £7.47m. There was £1.28m in the bank.
Diversified Gas & Oil (DOIL) has taken the amount of 8.5% unsecured bonds 2020 in issue to £9.93m following the issue of an additional £460,000 of bonds.
Queros Capital Partners (QCP) has raised a further £150,000 from the issue of 8% unsecured bonds 2025. This takes the bonds in issue to £1.665m.
AIM
Satellite Solutions Worldwide (SAT) has made two more acquisitions that will be earnings enhancing this year. This more than doubles the customer base to more than 75,000. The satellite broadband services consolidator is paying £11.7m for Breiband and SkyMesh and it has raised £12.1m at 6p a share. Breiband offers broadband services in Norway so it fits in with the company’s strategy of consolidating the European market but SkyMesh is based in Australia so it is outside of the core strategy. The deals also move the group into the top five global satellite broadband suppliers. At the beginning of July, Satellite Solutions acquired UK-based Avonline for £10m and secured £12m of funding from the Business Growth Fund.
Bricks manufacturer Michelmersh Brick (MBH) reported flat revenues of £15.3m in the first half of 2016. Pre-tax profit edged up from £2.5m to £2.6m, while strong cash generation in the past 12 months has helped Michelmersh move into a net cash position. A kiln replacement project will be completed in the second half. First half brick sales dipped from 35.7 million to 35.1 million. Michelmersh has forward orders for 47 million bricks.
Learning management systems provider NetDimensions (NETD) says that interim revenues are lower than expected because of delays to customer roll outs. These delays could continue so the full year revenues forecast have been cut by $1.2m to $27m but, thanks to lower than anticipated costs, NetDimensions could break even this year.
Mineral sands miner Sierra Rutile (SRX) has received a bid of 36p a share in cash from Iluka Resources Ltd.
Information management software and services provider IDOX (IDOX) is acquiring Open Objects Software for up to £5.2m in cash and shares. Open Objects provides digital services to social and health care and it has a similar public sector customer base to IDOX. In the year to March 2016, the acquisition made an operating profit of £630,000 on revenues of £2.9m.
Publishing software and services provider Ingenta (ING) is acquiring advertising software company 5 fifteen Ltd for up to £990,000. This will widen the portfolio of products that Ingenta can offer and also broadens the customer base to newspaper and magazine publishers. The business loses money but costs can be reduced and sales can be made in new geographies. A subscription is raising £780,000 at 130p a share.
Mariana Resources (MARL) says that the mineral resource for its HotMaden project has been increased by 31% to 4 million ounces of gold at a gold equivalent grade of 10.2g/t. Northland has nearly doubled its target price from 54p a share to 104p a share.
MAIN MARKET
Stem cell services WideCells Group (WDC) has raised £2m at 11p a share in its flotation on the standard list. The share price ended the week at 12p. The cash will be used to build an integrated stem cell services company but it is still early days. WideCells is launching the CellPlan healthcare insurance product, which will help people gain access to stem cell treatments.
Macfarlane Group (MACF) is acquiring Nelsons for Cartons and Packaging for up to £6.75m in cash and shares. There will be two deferred payments depending on the performance of the packaging distribution business in the next two years. Leicester-based Nelsons will widen Macfarlane’s range of shelf ready packaging and there is little customer overlap. In the year to December 2015, Nelsons made an operating profit of £800,000 on revenues of £7.9m. The acquisition should be earnings enhancing in the first full year of ownership. A placing at 58p a share has raised £5.8m and this will fund the initial cash payment of £4.25m. Macfarlane says that its packaging distribution operations are growing but sales of the manufacturing division are 3% lower so far this financial year. Interim figures will be published on 25 August.
Healthcare properties investor MedicX Fund (MXF) has contracted to acquire a new medical centre in Rialto, Dublin. The total cost will be €8.6m and it will he let to the health authority on a 25 year lease with five-yearly rent reviews, plus separate leases for a pharmacy and other medical services providers. This part of a strategy to invest more in the Republic of Ireland. The annualised rent roll for the company’s portfolio is £37.1m.
Standard list shell Falcon Acquisitions (FAL) has agreed terms for the acquisition of Orbital Multi Media Holdings Corporation, which operates in the over the top (OTT) broadcast services market. There are still a number of conditions that have to be met for the deal to go ahead. Trading in the shares has been suspended.
Anglo African Agriculture (AAAP) has announced a strategic review which could lead to the sale of the business or the securing of a partner for the business. The chairman argues that the existing business is not large enough to justify a quotation and it has been difficult to secure additional acquisitions.
ANDREW HORE
Quoted Micro 11 July
ISDX
Positive Healthcare (DOC) has made its initial acquisitions since floating its 7% secured bonds on the ISDX Growth Market. Positive bought 75% of each of two healthcare recruitment businesses, Capital Care and Fine Locums, for a total of £1.57m. Positive Healthcare chairman Gary Ashworth has loaned the company £570,000 to help fund the acquisitions. The two companies made total profits of £360,000 on revenues of £6.19m in the past financial year.
All Star Minerals (ASMO) is broadening its investing policy to include financial services, engineering, construction, renewable energy and technology, as well as natural resources. At the end of 2015, All Star’s main asset was a stake of 5.52 million shares in NQ Minerals (NQMI) valued at £704,000. All Star’s NAV was £385,000 at the end of 2015,compared with net liabilities of £199,000 at the end of 2014. All Star has extended the maturity date of its various convertible loan notes into 2017. All these convertibles have an interest charge of 20% a year and the conversion price is 0.14p a share. Additional shares have been issued at the conversion price o cover the recent interest payments for these convertibles.
Diversified Oil & Gas (DOIL) has completed the acquisition of 2,400 oil and gas wells in Pennsylvania from Seneca Resources and further acquisitions are likely in the rest of this year. This means that Diversified has more than 7,500 oil and gas wells in Pennsylvania, West Virginia and Ohio. They produce 23,000 mcf of gas and more than 500 barrels of oil each day. Diversified has raised a further £16,200, which takes the number of bonds in issue to 9.47 million.
TSX Venture Exchange-quoted Knowlton Capital’s shareholders have voted in favour of the reverse takeover of Leni Gas Cuba (CUBA). The British Virgin Islands High Court still has to approve the deal. The combined business will be called LGC Capital Ltd. (QBA) and its investments include a 15.8% stake in MEO Australia Ltd. Oil and gas explorer MEO has an interest in the onshore Block 9 production sharing contract in north Cuba and the first of three identified oil plays has an estimated prospective recoverable resource of 395 million barrels of light oil.
AIM
The Inland Homes (INL) share price has been hit by the leave vote in the EU referendum because of concerns about property prices. This appears overdone because management says that fundamentals are still strong. Inland has announced the purchase of the former Tesco head office in Cheshunt, Hertfordshire. Inland is buying the 13 acres with a 50/50 joint venture partner. Inland will inject £5m into the joint venture.
LXB Retail Properties (LXB) has decided not to sell the properties it had previously announced would provide a £4m gain on book value. It did not appear that the negotiations could be concluded satisfactorily. Shareholders voted in February to sell off properties and return cash to shareholders. The post-Brexit vote has hit the commercial property market so it may be more difficult to realise the valuations that management had hoped they could achieve.
Specialist services provider Premier Technical Services Group (PTSG) is acquiring UK Dry Risers and UK Dry Risers Maintenance, which install and maintain dry and wet riser systems, for a maximum of £5.1m. The total initial payment is £3m. The two businesses made a pre-tax profit of £1.1m last year.
Musical instruments retailer Gear4Music (G4M) says that its European like-for-like sales increased by 191% in the week after the EU referendum compared with a 120% increase in the week starting 13 June. Exchange rates have become more favourable and management has responded by adjusting Its prices to make them more attractive.
TechFinancials Inc (TECH) has started the financial year strongly and the new joint ventures are helping the B2C business perform much better this year. There was $3.9m in the bank at the end of June and this should increase to $4.5m by the end of the year. House broker Northland expects revenues to hit $20m this year and it is expected to move back into profit ($800,000). The dividend is likely to be reinstated.
Newmark Security (NWT) has warned that this year’s profit will be lower than for 2015-16 because trading conditions have become more difficult. The full 2015-16 figures will be published in August. New sales offices for the access control division are yet to generate meaningful revenues. Revenues for the workforce management software have been delayed. The asset protection business will have to replace revenues from the Post Office contract, which will not generate as much this year.
Arria NLG (NLG) is moving ahead with plans to float on the New Zealand, where the primary listing will be, and Australian Stock Exchanges and as part of this move the natural language generation company will switch from AIM to the standard list in London, where depositary interests will be traded. Cash will be raised as part of the flotations on the additional markets. Existing shareholders will receive one new Arria NLG Group share for each existing share and one warrant, with an exercise price of approximately 53p a share, for every ten existing shares.
Maxit Capital is subscribing / or procuring subscribers for $20m worth of shares in SolGold (SOLG), which will equate to up to 19.99% of the miner. The issue price has yet to be decided but SolGold says that it expects the price to be at a premium to the market price, which at the time was just over 3p – although it has risen to 4.28p. The subscription is expected to close in early October after due diligence and approvals are received. Maxit will also receive a success fee of 6% of the funds raised plus warrant equivalent to 6% of the shares placed – 50% exercisable at 14p a share and 50% at 28p a share. The cash will be invested in the Cascabel copper gold project in Ecuador.
MAIN MARKET
Tanzania-focused oil and gas explorer Aminex (AEX) is raising up to £19.5m at 1.3p a share – £16.9m from a placing and the rest via a one-for-ten open offer. Zubair Corporation will subscribe £12.8m in this fundraising. The cash will enable Aminex to finance further development of its oil and gas licences while seeking partners for these licences.
Quoted Micro 6 June 2016
ISDX
Capital for Colleagues (CFCP) has invested £770,000 in employee owned businesses in the six months to February 2016. Interim revenues grew from £257,000 to £364,000 but admin costs increased significantly so, excluding unrealised gains, the pre-tax profit dipped from £41,000 to £34,000. Unrealised gains slumped from £47,000 to £6,000. At 62.5p (60p/65p) a share, Capital for Colleagues is valued at £6m. The net asset value was £4.2m at the end of February 2016 and £1.15m has been raised since then. There are still plenty of opportunities for new investments as well as additional investment in existing investee companies.
Blockchain technology investor Coinsilium Group Ltd (COIN) reported a loss of £2.42m in the first 15 months of its existence to December 2015. That includes an investment impairment of £1.31m for an investment in Hive Labs. The investments are all early-stage so it will take time for them to bear fruit. More recently the company has branched out into providing training. The NAV was £2.33m at the end of 2015. At 4.1p (3.6p/4.6p) a share, Coinsilium is valued at £2.9m. There were seven trades in Coinsilium shares last week at prices between 3.2p and 4.25p. Five of these trades were the day before the results were announced. The most recent trade was 100,000 shares at 3.2p each. Coinsillium is one of the more frequently traded ISDX companies and there were seven trades in the previous week.
Contemporary art collector and trader V22 (V22O) says an independent valuation of its collection at the end of 2015 said that it was worth £1.67m, which is triple the amount invested in the collection. V22 also has a property portfolio and in May it paid £250,000 for a 125 year licence on a Grade II listed building in Forest Hill, which will provide exhibition and event space. In 2015, revenues grew from £568,000 to £822,000 and the loss declined from £78,000 to £34,000. Since then, V22 has raised £225,000 from selling half of its option interest in a company that owns the freehold to a building in South Bermondsey. V2 has already received £150,000 with £75,000 payable by the end of June. V22 retains an option over 15% of the holding company that owns the building. At 0.9p (0.85p/0.95p) a share, V22 is valued at £300,000. The NAV including the valuation of the art portfolio is 4.49p a share.
Cairn has resigned as the corporate adviser to Nordic Energy (NORP), whose shares are already suspended because it is unable to bring out its interim figures within the required time. At the end of 2015, Nordic relinquished its Danish oil and gas exploration licence because it was unable to fund the required work programme. Nordic had £42,551 in the bank at the end of May 2015. Former director Rudolf Kleiber has been awarded £14,210 for unfair dismissal and disability discrimination.
Carbon credits adviser China CDM Exchange Centre Ltd (CCEP) reported flat revenues of £1m in 2015 but profit dipped from £29,000 to £6,000. There was a cash inflow of £575,000, taking cash in the bank to £1.59m. The NAV is £46.1m, which is mainly based on carbon-related investments. At 0.25p (0.2p/0.3p) a share, China CDM is valued at £300,000, which is a large discount to the cash pile. There was a small trade of 936 shares at 0.2p each the day after the results were announced.
China-based LED products supplier Gowin New Energy Group Ltd (GWIN) reported a large loss for 2015 because of write-offs relating to the termination of contracts with its former manufacturing partner. The plan is to keep design and sales in-house but outsource production. There may also be opportunities for joint production development with other companies. This will reduce the company’s working capital requirements. There was cash of RMB1.3m in the bank at the end of 2015 but there are also shareholder loans of RMB12.6m.
Diversified Gas & Oil (DOIL) has raised a further £420,000, which is part of the additional £3.5m it wants to raise from the issue of 8.5% unsecured bonds. In 2015, revenues fell from $7.36m to $6.3m due to the lower oil price and there was a cash outflow from operations of $3.93m. The company continues to acquire oil and gas assets.
AIM
Constellation Software Inc has made a bid approach to Bond International Software (BDI) following the ending of a standstill agreement late last year. The potential offer price is 105p a share and Bond is still considering its options. Last month, Bond sold Strictly Education for £11.3m – £7m paid immediately and £4.3m to be paid within six months. The cash will be used to pay off borrowings, which were £5.9m. Bond had cash in the bank so this will have gone up following the transaction and there were plans to distribute some of the cash to shareholders. It was after this disposal was announced that Constellation converted non-voting shares and this gave it 29.9% of Bond. Constellation appears to have made the bid approach at this time so that it can retain the cash.
Air filtration and clean air equipment supplier MayAir (MAYA) has secured new contracts worth a total of $22.8m. The majority of this work will come from the installation of clean room equipment for two customers. There is also a contract to supply air filtration equipment for office buildings. The majority of these revenues will be generated this year. This is good news because a large contract was coming to an end. In 2015, MayAir’s revenues were $63.6m. Former broker Mirabaud forecast 2016 revenues of $75.5m. Cantor Fitzgerald has been appointed broker to the company.
Life sciences software provider Instem (INS) has acquired regulatory information management systems supplier Samarind for up to £2.5m and this has led to a profit upgrade. House broker N+1 Singer has increased its 2016 earnings per share forecast by 5% to 10.4p and the 2017 figure by 14% to 13p. Samarind adds post-marketing services to Instem’s existing regulatory reporting software. Two-thirds of Samarind’s revenues of £1.2m are recurring and most of the customer base is new to Instem.
Daily Internet (DAIP) moved into profit in the year to March 2016. Revenues grew by 22% to £4.76m and a loss of £140,000 was turned into a profit of £250,000. The managed hosting and internet services provider has been reducing its cost base and the benefits are yet to show through. There was £650,000 generated from operating activities and net cash was £206,000, although there is still potential contingent consideration of £435,000.
Building services provider Northern Bear (NTBR) says its net debt fell in the year to March 2016 and it intends to increase its dividend. Last year, net debt was £4.5m and the dividend was 1.5p a share, which was well covered by earnings of 8.5p a share. Earnings are set to be flat this year despite problematic weather conditions but the increased dividend should still be well covered. Reduced finance costs offset the effect of lower revenues.
Kefi Minerals (KEFI) says that it has reduced the funding requirements for the Tulu Kapi gold project from $145m to $130m following further refinements to the project and reductions in interest costs. At a gold price of $1,250/ounce, Kefi expects to generate $173m of cash in the first three years of production. All-in sustaining costs are $746/ounce. This is based on contract open pit mining and total production of 980,000 ounces of gold over ten years.
MAIN MARKET
Specialist electronics supplier Acal (ACL) reported underlying revenue growth of 3% in the year to March 2016. Including acquisitions, revenues rose from £271.1m to £297.2m – it would have been higher at constant exchange rates – and improved margins meant that pre-tax profit jumped from £11.8m to £14.4m. Trading conditions are not easy and this is likely to continue to be true for the rest of the first half although an improvement is expected later in the year.
ANDREW HORE
Quoted Micro 9 May 2016
ISDX
Newbury Racecourse (NYR) generated a much higher profit from its core operations in 2015. There was a swing from an overall loss of £1.54m to a profit of £1.61m, on revenues up from £12.4m to £14.3m. This includes a profit on fixed asset sale of £722,000, up from £365,000 in 2014.Net cash was £1.69m at the end of 2015. The profit from the nursery business was flat. The number of racing days increased from 28 to 30 and attendances improved by 7% to 210,000. There was an increased contribution from conferences and events. Further redevelopment of the racecourse will be underway this summer. At 500p (475p/525p) a share, Newbury is valued at £16.7m.
Diversified Gas & Oil (DOIL) is raising a further £3.5m from the issue of 8.5% unsecured bonds. This means that Diversified Gas & Oil will have raised more than £10m. The oil and gas producer has entered into a letter of intent to acquire assets in Ohio for $5.2m – a 50% discount to future cash flows. This deal will take the number of operating wells to more than 7,300, producing 510 barrels of oil per day and 23,500 mcf per day of natural gas.
AIM
Recruitment software provider Bond International Software (BDI) has sold Strictly Education, which provides outsourced back office services to schools, for £7m in cash and a £4.3m loan note, which should be paid within six months. In 2014, the business made a profit of £1.8m on revenues of £10.2m. The initial proceeds will repay debt of £5.9m. This is the first disposal following the recent strategic review. Cash from this and other disposals will be returned to shareholders.
Pharma services provider Ergomed (ERGO) is acquiring Haemostatix, which is developing products to treat surgical bleeding, for an initial £8m. A placing will raise up to £13m at 140p a share. The total cost of the acquisition could rise to £28m depending on achievement of milestones. The additional cash raised in the placing will help to accelerate the development of two treatments. PeproStat, a topical liquid haemostat to control bleed during surgery is ready for phase IIb trials. ReadyFlow is a preclinical treatment that is a gel packaged in a pre-filled syringe for use with irregular bleeding sites.
Security and facilities management services provider Mortice Ltd (MORT) says that revenues will be at least 40% higher at $124m in the year to March 2016. The UK business acquired last September has performed strongly and will contribute one-quarter of the revenues. Singapore-based security business Frontline Security has also done well since acquisition. The full year figures will be published during August.
Nostra Terra Oil & Gas (NTOG) is seeking finance to complete the acquisition of assets in the Permian Basin, New Mexico from Alamo Resources. Nostra Terra has extended the closing date for the deal to 31 May. Kayne Anderson Energy Fund V has received 282.1 million shares at 0.1p each in return for the extension of the closing date. The purchase price of the 50% working interest in the assets will be reduced by $370,000 to $2.5m and debt funding is being negotiated.
Conroy Gold and Natural Resources (CGNR) has raised £1m at 18.5p a share and there are warrants attached to the ordinary shares exercisable at 37p a share. This will help to finance the development of the Clontibret resource in Ireland. There is a 600,000 ounce gold resource at Clontibret even though little of the site has been explored. A starter pit could have a net present value of $22m at a discount rate of 8% and using a gold price of $1,250 an ounce. The exploration target is 5 million ounces.
Online education provider Wey Education (WEY) plans to add a premium brand service next January. This will be a semi-selective service for students with top quality academic results. There is £1m in the bank to finance the development of the new service and marketing expenses. The main service, which offers GCSE and A level subjects, is not selective and it is also expanding the range of subjects on offer. In the six months to February 2016, revenues were £700,000 and the loss was £467,000. The underlying InterHIgh trading business is profitable and the overall group loss includes £328,000 of flotation and legal costs.
House broker Northland believes that security and tracking products developer Starcom (STAR) could breakeven this year. Starcom lost $1.8m in 2015 but new product launches should help it to do much better this year. The outcome may depend on the timing of the launch of the WatchLock Pro by its partner Assa Abloy, which has invested around $500,000 in upgrading the original product. Delays to the completion of the new product have held back Starcom but it should be on sale in the second half of 2016. Starcom raised £450,000 so it has cash to keep it going while it waits for sales to build up.
Mariana Resources (MARL) has raised £6m via a placing at 1.82p a share. TSX-listed Sandstorm Gold Ltd has taken a 7.56% stake. Northland has increased its share price target from 4.8p a share to 5.4p a share. This takes into account a further £2m fundraising at the current market price in 2017. Mariana has plans for a dual listing on the TSX Venture Exchange. This process should be completed in three months Mariana withdrew from the Nassau gold project so that it can concentrate on the 30%-owned Hot Maden gold copper project in north east Turkey, which has an indicated gold resource of more than two million ounces.
MAIN MARKET
Packaging and labels supplier Macfarlane Group (MACF) is acquiring Glasgow-based protective packaging distributor Edward McNeil for up to £1.8m. Edward McNeil generated revenues of £3.6m in 2015. The business is a good fit with Macfarlane’s Linwood business. This follows the acquisition of Colton Packaging Teesside last month.
Asia-focused consumer businesses investor Symphony International Holdings Ltd (SIHL) is, along with a partner, acquiring the holding company of luxury furniture brand Christian Liaigre. The brand has 26 showrooms in 11 countries. No purchase price was revealed. At the end of March 2016, Symphony’s NAV was $1.37 a share, helped by the strengthening of Asian currencies. That is nearly double the current share price.
Peterhouse has resigned as broker to analytics technology company Trendit (TRIT) following the revelation that it has received less than one-fifth of the £4m it thought it had raised when it joined the standard list at the beginning of 2016. Trendit was expecting to receive funds from the sale of shares by Amnon Freudman, Ben Raelbrook and David Cohen. The flotation price was 5.53p a share and it has fallen to 4p (2.5p/5.5p). Trendit had no revenues in 2015.
ANDREW HORE
