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Andrew Hore Quoted Micro 4 March 2019
NEX EXCHANGE
Proton Partners International (PPI) joined NEX on 28 February and from day one it became one of the largest companies on the market. The introduction price was 225p, valuing the proton beam therapy provider at £334m, and the share price ended the week at 2275p (210p/245p). Woodford-related interests own 41.9% of Proton (www.proton-int.com) and they invested £20m at 200p a share on admission and promised to invest up to £80m at a maximum price of 176p each. Woodford received a further £1m worth of shares at 200p each in consideration for these arrangements. Proton is four years old and it has completed three centres offering proton beam therapy for cancer patients with another planned in Liverpool. Each cancer centre has cost between £35m and £42m. There is also a cancer diagnostics subsidiary. In the eleven months to January 2019, revenues were £1.11m and the loss was £18.6m.
Formation Group (FRM) owns 4.35 million shares in Proton Partners International, which it acquired in March 2018 at 115p each. The 225p a share flotation price means that the value of the 2.85% stake has nearly doubled to £9.78m. At Formation’s AGM, the resolutions to reappoint Grunberg and Co as auditor and for the board to authorise its remuneration were not passed. Michael Kennedy has resigned from the board.
Trading in Dozen Savings (DS01) 5% secured bonds March 2020 commenced on 1 March. So far £91,000 worth have been issued. The plan is to raise up to £7m. The company has been created to offer the bonds to customers of its financial services-focused parent company, Project Imagine (www.projectimagine.com). The bonds cost £100 each and the price at the end of the first day of trading was £107.50 (£90/£125). The FCA has granted Project Imagine an e-money licence and an investment licence.
IFA consolidator AFH Financial (AFHP) says that trading is in line with expectations in the first four months of the year. Past acquisitions are achieving more than 90% of their deferred consideration targets.
Field Systems Designs (FSD) reported a lower profit in the six months to November 2018 because of delays in energy form waste business. Two of these projects have still not been completed. Sales to the water sector have been strong, but they are likely to decline as the latest water regulation AMP6 period. In the six months to November 2018, revenues were flat at £11.8m, but pre-tax profit fell from £168,000 to £46,000.
Sandal (SAND) reported a dip in interim revenues from £1.88m to £1.73m and that led to a swing from profit to loss. EnergieMiHome home automation product sales were lower than expected but the products are being sold in more outlets.
Ace Liberty and Stone (ALSP) has spent £6.17m on two properties that are both let to the Communities and Local Government department, as Jobcentre Plus centres, on leases with an unexpired term of 8.4 years. The property in Bolton cost £2.54m and has a net initial yield of 7%. The Northampton site cost £3.63m and has a net initial yield of 6.75%.
Milamber Ventures (MLVP) says that investee company Essential Learning has been placed in liquidation after problems with historic data led to the company losing its government-funded training contracts. Milamber invested £228,000 in Essential in a two year period and provided services worth £270,000. It also issued £100,000 worth of shares to Essential minority shareholder Goldvista Properties. Goldvista has loaned Milamber £310,000 and this is likely to be converted into shares. Goldvista’s £6,000 loan to Essential has been written off. The shares issued to Gravity Investment Group for a 15% stake in Essential have been cancelled. Milamber is conducting due diligence on apprenticeship training businesses.
Inqo Investments Ltd (INQO) has raised £1m at 90p a share and the cash will be used to invest in healthcare, education and eco-tourism businesses in Africa that are two-to-three years from profitability and have a positive social impact.
Trading in Via Developments (VIA1) debentures has been suspended because the accounts for the year to September 2018 have not been published.
Karoo Energy (KEP) says it intends to move to AIM “as soon as practically possible”. A general meeting has been called for 18 March in order to gain shareholder approval to issue shares at the time of the move.
Altona Energy (ANR) has left AIM and the board intends to visit a vanadium mine in China that could become part of a joint venture. Altona still intends to invest in the Arckaringa coal project in South Australia.
John Eckersley is stepping down as chief executive of Capital for Colleagues (CFCP) in order to focus on his role as managing partner of Castlefield Partners and Alistair Currie will become chief executive.
AIM
Internet of Things products supplier LightwaveRF (LWRF) is raising up to £3m through a placing, subscription and open offer at 8.5p a share. Year-on-year growth in sales in the first quarter was 156% taking the figure to £1.15m.
Churchill China (CHH) and Portmeirion (PMP) have bought the stake in ceramic materials supplier Furlong Mills that was previously owned by Dudson. Churchill has paid £454,000 for 9.5%, which takes its stake to 55.6%. This means that Furlong will be consolidated in Churchill’s figures. In 2017, revenues were £8.6m and pre-tax profit was £500,000. Portmeirion spent £363,000 to take its stake to 44.4%.
President Energy (PPC) is raising up to £6.5m at 8p a share, including a £2.8m debt for equity swap by the chief executive, to invest in its gas infrastructure and accelerate its drilling programme.
Itaconix (ITX) has secured an exclusive global supply agreement with Nouryon for bio-based polymers used in hair care, skin care and cosmetics. This contract comes after a joint development agreement with Nouryon and follows the previous supply agreement for polymers used in detergents. Nouryon will sell the polymers to its own customers in the personal care sector for use in their consumer products.
Audioboom (BOOM) is raising £1.5m at 1.3p a share and this cash will enable the podcast company to make upfront payments for content. Audioboom says that it is on course to achieve higher revenues in 2019 than in the 13 months to December 2018. The success in generating revenues and orders is helping to attract content providers.
Parity (PTY) has won a two-year contract with the Department for Education for the digital transformation of the Funding and Contracting Service, which makes £6bn of payments each year. The deal could be worth up to £4.5m. Matthew Bayfield has taken over as chief executive of Parity from Alan Rommel, who is chief operating officer. Bayfield plans to focus more on the data consultancy activities.
Westmount Energy Ltd (WTE) is nearly doubling its shareholding in JHI Associates Inc to 3% and the investment is 81.8% of Westmount’s gross assets. JHI’s main asset is a 17.5% carried interest in the Canje block, offshore Guyana, which is operated by ExxonMobil. The first well could be drilled by early next year.
Verona Pharma (VRP) used up £18.1m of cash in its operating activities in 2018. There is still £64.5 in the bank. Verona generated positive data for ensifentrine (RPL554) used as a treatment for COPD in a phase IIb clinical trial. The focus is COPD and further trials for cystic fibrosis are unlikely in the short-term. Financial resources will be focused on progressing the nebulised ensifentrine to a phase III study. Verona is likely to seek partners for its dry powder and pressured meter dose inhaler formulations. The results of the part one of the dry powder inhaler clinical trial for COPD could be available before the end of the first quarter. The second phase should then commence with results expected in the second half of the year.
Trading in Herencia Resources (HER) shares has been suspended because it appears that pre-conditions for the financing that has been negotiated are not likely to be met. More cash is required to enable the company to continue trading.
Telematics supplier Quartix (QTX) increased its fleet sales, but insurance business fell and overall revenues profit are set to decline in 2019. In 2018, revenues were £25.7m and pre-tax profit was £8.1m, but that figure is forecast to fall to £6.5m this year.
VietNam Holding Ltd (VNH) has published a prospectus for its move to a premium listing, which should happen on 8 March.
Adamas Finance Asia Ltd (ADAM) has commenced a share buy back scheme for up to $500,000 of shares at a maximum price of 79 cents a share, which is a 25% discount to pro forma NAV. Adamas has separately agreed to buy back 730,529 shares at 10 cents each. The first tranche of 159,847 shares has been issued to China Aerospace for its stake in Hong Kong Mining.
NetScientific (NSCI) says that it will not get the required backing for the resolution to cancel the AIM quotation, so it has adjourned its general meeting. Shareholders owning more than 30% are against the plan.
MyCelx Tech (MYX) has raised $1.83m at 230p a share in order to finance the potential increase in demand for water treatment services.
Telit (TCM) has sold its automotive division for $105m and has received $67.5m in cash, but it has granted the buyer a loan of $38.5m for a six week period because other debt finance was not obtained in time.
MAIN MARKET
Air Partner (AIR) says that its pre-tax profit will be at least £5.8m in the year to January 2019. The charter division was boosted by strong demand for freight and commercial jets. The consulting and training division has won new contracts.
G3 Exploration Ltd (G3E) plans its third demerger in its time as a quoted company. This time shares in Green Dragon Gas, which owns its producing assets, will be distributed to shareholders. Green Dragon Gas will then either be sold or float on the Hong Kong Stock Exchange.
Wealth manager Walker Crips Group (WCW) says that political uncertainty has hit broking commissions and the launch of new products, which means that the 2018-19 results will be lower than for 2017-18. Chief executive Sean Kin Wai Lam has bought 15,000 shares at 28p each.
Laura Ashley (ALY) has rejected the bid approach by Flacks and says that the indicative offer of 2.748p a share fails to provide a fair value for shareholders.
London Finance and Investment Group (LFI) has a 43.8% stake in NEX-quoted Western Selection. In the six months to December 2018, NAV fell from 65.4p a share to 62p a share. The interim dividend is unchanged at 0.55p a share.
BigDish (DISH) has launched a new restaurant bookings website and upgraded its technology. It is also widening its coverage to include Southampton.
Path Investments (PATH) says that the period of exclusivity included in its heads of agreement with ARC Marlborough has been extended to 29 March. The plan is to acquire ARC, which has a nickel and cobalt project in Queensland, via a share issue.
Oil and gas firm Curzon Energy (CZN) has raised £95,000 at 1.58p a share, which is a 21% premium to the market price. The cash will be invested in a gas project in Texas.
Andrew Hore
Last Gasp For Herencia ?
Herencia HER has raised a further $150,000 as part of its struggle to keep going pending the hoped for sale of its 70% interest in Paguanta. The new funding is to be paid in two tranches but if the second one is not forthcoming, then Herencia will have to cease trading on the 16th June. The proposed sale transaction is proceeding well but due diligence is still in progress and there can be no gaurantees. A new long stop date of the 4th July has been agreed for satisfaction or waiver of all conditions and completion of the sale.
RWS Holdings RWS claims an excellent 6 months to the 31st March and is increasing its interim dividend by 12% to 1.15p. Despite a substantial adverse impact from foreign currency movements sales rose by 25% and adjusted profit before tax by 28.7%, including a 5 month contribution from Corporate Translations Inc. Trading in the first two months of the second half has continued to be strong.
Iomart IOM proposes to increase its final dividend by 26%, after rises of 21% and 24% respectively in profit before tax and basic earnings per share for the year to 31st March.trading since the end of the year has remained good and the CEO sees the long term future as being bigger than ever.
Gooch & Housego GHH is increasing its interim dividend as its first half performance turns out to have been as expected i.e bad, with flat sales and statutory profit before tax and basic earnings per share, both down by a third. Shareholders , it appears need not worry however, as the order book is robust and up by a third on a year ago and the company is well positioned to benefit from improving market conditions. The second half should show an improvement.
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Bye Bye Herencia – It’s A Cruel World
Herencia Resources (HER) today announces the adjournment of tomorrows General Meeting until the 24th March to enable it to try and arrange a short term facility which will enable it to continue in business. As at the 3rd February it had enough money to keep it going for a month. Without a new loan urgently, it will have to cease trading.
This morning the shares collapsed 40% on the news and it became a penny share compared to a 24p share a year ago. However hope lives eternal in the heart of the gambling investor and it has already soared back to 2p.
6 years or so ago Herencia was one of a band of brothers, tiny mining companies whose names were on the lips of every Aim investor and regarded as shares which could not fail to make them rich. Herencia in particular with its rich ore deposits in Chile was one of the favourites.
Now one by one they are being picked off. If giants of the mining world are in deep trouble, there can be little hope for the minnows, all victims of the huge world wide mining collapse
The minnows however are easy pickings for the financiers and the stock market jackals. The law of the jungle rules and the predatory wolf is king. Why should any one lend money to a tiny mining company which has virtually run out of cash. Once the loan has been spent, the company will only need another.
But that is not the point. The wolf knows that if he refuses a life saving loan to a company like Herencia, it will go bust and that is just what the wolf wants. The wolf, the shark and the jackals of the financial world know that they will then be able to pick up the company’s assets for a song. Even in only four or five years time those once valuable mining rights could again be worth a fortune compared to next months fire sales prices.
Its a cruel cruel world, a world without conscience but it’s the only one we’ve got
Quoted Micro 15 February 2016
ISDX
ZimNRG (ZIMO) is changing its investment policy and its name to MetalNRG. The new policy is to invest in natural resources businesses with no particular focus on any area. AIM-quoted Metal Tiger (MTR) has taken a 28.3% stake via a £50,000 investment at 0.2682p a share. That is a large discount to the market price of 1.25p (1p/1.5p), although it is similar to NAV at the end of August 2015. The par value of the shares has to be reduced before the new shares can be issued. Loeb Aron has become corporate adviser. Christopher Latilla-Campbell will be appointed as chairman and Paul Johnson of Metal Tiger as a non-executive.
Care housing and health properties developer Ashley House (ASH) joined the Social Impact segment of ISDX on 10 February but it is retaining its AIM quotation. Ashley House (ASH) moved from ISDX (Plus-quoted) in January 2007. At that time £4m was raised at 150p a share, which valued the company at £40.6m. In the six months to October 2015, revenues jumped from £5.6m to £10.6m and went from a loss to a small profit. Net debt was £2.6m at the end of October 2015. The company has £10.7m of tax losses. At 9.5p (9p/10p) a share, Ashley House is valued at £5.5m.
New Haven Trust has sold 3.2 million shares in Coinsilium (COIN) at 3.5p a share. Coinsilium floated at 10p a share and the shares are trading at 5p (5p/6p). New Haven had 3.53 million shares prior to the recent fundraising. There had previously been share issues at 8p a share and prior to that at 0.01p a share. So, New Haven could still have made a large profit on its shareholding. Just over 3.2 million shares were subsequently traded at 3.9p a share. There is no news about who bought these shares.
Healthcare recruitment business Positive Healthcare (DOC) has secured a further £1.08m of funding through an issue of 7% bonds 2021. This takes the value in issue to £1.33m. The company had previously stated that £2m of bonds had been issued but it turned out that it did not receive the subscriptions for all these bonds.
AIM
Management has tabled a cut price bid for printing services provider Tangent Communications (TNG) but marketing communications services provider Writtle Holdings has suggested that it may top the offer. The 2.25p a share bid values Tangent at £6.69m and it is 64% higher than the previous closing price. The bid is well below the net asset value of £31.6m at the end of August 2015. Even if you take the view that management has overpaid for its businesses then the NAV excluding goodwill is £6.79m. Tangent is profitable but the profit has been declining. However, Writtle’s indicative offer of no less than 2.75p a share, which is still a large discount to NAV. Writtle is run by the ex-management of former AIM company CA Coutts. Between 2005 and 2010 Graeme Harris was a director of Tangent Communications. Before that he was finance director of CA Coutts and since 2011 he has been a director of Writtle.
DP Poland (DPP), the Domino’s Pizza master franchise holder for Poland, has achieved 13 consecutive quarters of double digit like-for-like growth in system sales. There are 24 stores in five Polish cities – 16 managed and eight sub-franchised. The stores are making a positive EBITDA but the group is still loss-making. Pro forma cash was £8.8m at the end of June 2015, so even with large cash outflows over the coming year there should be plenty of cash left at the end of 2016. However, the group will still be loss-making so the cash will decline as more is invested in new stores.
Real Good Food (RGD) has acquired Chantilly Patisserie for £1.75m and it will become a division of the Haydens business. Devon-based Chantilly makes frozen desserts for caterers and pubs and this could provide an opportunity for Haydens to expand its own customer base, which is focused on retailers.
Asset management performance software provider StatPro (SOG) is injecting its StatPro Portfolio Control (SPC) compliance software contracts into South Africa-based InfoVest Consulting in return for a 51% stake. This is a part of the software suite that has not migrated to the cloud. StatPro will consolidate the full revenues of this investment from 2016 so pre-tax profit will look better but there will be a minority adjustment after tax. The 2015 results are due to be published on 9 March.
Lok’nStore (LOK) says that like-for-like self-storage revenues were 5.4% ahead in the first half. Higher prices and improving occupancy rates are behind this growth. Newer sites at Reading, Maidenhead and Aldershot are performing strongly. The document storage business is improving its performance.
Herencia Resources (HER) has sent out the circular for the disposal of its Picachos project to a Chilean company. Herencia will receive $2m for 70% of the project, after six months $600,000 is payable for 7.5% and after a further nine months a final $2.5m is payable to take the stake to 100%. The company that holds the project has a book value of £1.36m. Due diligence is being undertaken. Herencia will concentrate on the Paguanta and Guamanga projects in Chile and the cash will finance their development. The general meeting will be held on 26 February.
MAIN MARKET
Specialist electronics distributor and manufacturer Acal (ACL) is trading in line with expectations so revenues growth should be nearly 10% to £297m in the year to March 2016 – organic growth will be around 2%. Profit is expected to rise from £11.8m to £14.4m. A small bolt-on acquisition, custom transformers manufacturer Plitron, will not make much contribution in this financial year. Plitron increases Acal’s exposure to North America and the medical sector.
Oil and gas company Aminex (AEX) is selling a 3.825% interest in the Kiliwani North development licence to AIM-quoted Solo Oil (SOLO) for $2.16m. Solo will then hold a 10% stake and Aminex will own 51.75% and be the operator.
ANDREW HORE
Latest AIM Journal available here.
Beware London Property & South American Mining
Foxtons (FOXT), London’s leading estate agency, says it had an encouraging second half and that 2015 as a whole was solid, which is presumably why the share price has collapsed over the past 8 months. The truth about the London property market and it is good news, (except perhaps for Foxtons) is that Land Registry figures to 31st October show a fall of 11% in Greater London sales for the first 10 months of the year.
Despite London’s troubles Foxtons is facing the future with courage. Group turnover rose 4% in 2015 and the shareholders are being rewarded with a special dividend of 6.23p bringing the total dividends for the year to 11p, a rise of 13.4% for the year.
The share price has nose dived from 285p last June to yesterdays 165p but has now risen 4p on today’s update. However if London’s huge property bubble has only just started to deflate, there could be more trouble in store for the share price.
Another cautionary tale this morning comes from Herencia Resources (HER) which illustrates the dangers of AIM and of mini mining companies with bases in South America. Five years ago Herencia, with its two major projects in Chile, was one of the most talked about shares on AIM. It was going to make shareholders extremely wealthy and indeed it did and that was supposed to be only the beginning, compared to what would happen when it got into production. In the last few months of 2010 and the beginning of 2011 the shares surged from 73p to £4. Indeed if you got in early in 2009 you could have bought for 40p, your money would have nearly doubled when the big rise started and by the time the peak was reached at the start of 2011 you would have seen it grow tenfold.
But it didn’t last. It never does, although the excitement and the enthusiasm continued for a couple of years or so, unless you got out very quickly, your huge profits quickly evaporated.
Herencia shares have in recent months been trading at 5p or less and it looks like the death knell has been sounded this morning with the news that contracts have been signed which mean that 100% of its two major projects in Chile could be disposed of for just over $5m. Still loyal shareholders are up in arms and screaming of betrayal and another scandal on AIM.
The lesson is of course, that if you must by shares on AIM and in particular shares in tiny mining companies in South America, or wherever and you are lucky enough to make a fortune, take it whilst the going is good.
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