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Andrew Hore – Quoted Micro 22 February 2021

AQUIS STOCK EXCHANGE

British Honey Company (BHC) is acquiring Union Distillers for an initial £8m in cash and shares. Leicestershire-based Union Distillers has been trading for more than eight years and has its own still and bonded warehouse. There is a range of gins, vodkas, a spiced rum, an absinthe and an espresso vodka liqueur under the Two Birds brand. There could be up to £2m of earn-out consideration payable in cash and shares depending on the target revenues from the Union products. A share issue raised £4.59m at 110p a share, while a convertible loan note issue added a further £1.63m. Union has £250,000 in cash. The deal should be earnings enhancing and cash generative. In the year to September 2020, Union generated revenues of £4.94m and pre-tax profit £1.13m. NAV was £1.52m.

National Milk Records (NMRP) reported flat interim revenues of £10.8m, but pre-tax profit increased by one-quarter to £500,000. Net debt was reduced to £1.1m despite investment in a genomics lab. An unchanged dividend of 1.25p a share will be paid. The outlook is positive for the dairy sector with UK milk prices expected to be maintained at current levels. Finance director Mark Frankcom has bought 9,974 shares at 101.75p each.

Imperial X (IMPP) is making four acquisitions and continues to move towards a standard listing. The purchases involve the issue of 245.6 million shares. Cloudbreak Discovery Corp, Howson Ventures Inc and Cabox Gold Corp are all being acquired, and certain assets of Anglo African Minerals are being bought. Imperial X has a £10m drawdown agreement with Crescita Capital. This lasts for three years.

Upper Thames Holdings (UPPT) is not going ahead with the proposed acquisition of Sweden-based mobile camera systems technology company Ridercam. Instead, the focus will be on blockchain and the linking of conventional currencies with cryptocurrencies. A placing has raised £516,000 at 1p a share. Peterhouse has been appointed as corporate adviser.

Hydro Hotel Eastbourne (HYDP) fell into loss last year as revenues slumped by two-fifths. The hotel has been closed or under restrictions for the period since the year end in October 2020. There is £1.03m in the bank and the NAV is £3.3m.

S-Ventures (SVEN) has bought a 75.1% stake in Ohso Chocolate for £295,000 in shares at 9p each. The remaining 24.9% stake in Ohso could be sold for nearly 1.1 million shares. Ohso is a probiotic chocolate supplier and it generated revenues of £311,000 during 2020. The S-Ventures chief executive and finance director owned 50.6% in Ohso.

World High Life (LIFE) is changing its name to Love Hemp. A general meeting will be held on 11 March. In the first half, revenues were £2.36m and second quarter revenues were nearly double those in the first quarter, although the gross margin fell. A debt of £2.15m has been settled by the issue of 86.1 million shares.

Sativa Wellness Inc (SWEL) has submitted a novel food application for validation by the Food Standards Agency. This covers a range of CBD products.

Wishbone Gold (WSBN) has identified new gold targets at the Red Setter project in Western Australia. The magnetic survey has discovered targets that are shallower than previously.

Ananda Investments (ANA) has raised £300,000 from two investors. This will finance the first phase of the medicinal cannabis growing facility in Lincolnshire. Vulcan Industries (VULC) has raised a further £330,000 at 4p a share.

AIM

Avacta (AVCT) is starting its first clinical study. This is a phase I study for AVA6000, developed from the pre|CISION platform. This is a treatment for solid tumours, including those for bladder, pancreatic, colorectal and breast cancer. The trial will assess safety and dosage levels. Early data could be published before the end of the year.

Transense Technologies (TRT) should move into profit next year as it receives a full year of royalties following the sale of the iTrack business to Bridgestone. In the year to June 2020, there was a £1.3m loss and this year there could be a much-reduced loss this year. Once Bridgestone has built up iTrack sales the royalties will cover group overheads. This will enable Transense to invest in its surface acoustic wave technology and Translogik tyre probes. A 2021-22 pre-tax profit of £357,000 is forecast.

Strong underlying growth in the mobile division helped Blannco Technology (BLTG) to maintain interim revenues at £17.4m. The previous year included £1.4m of one-off contract income. The fastest growth is in Asia Pacific. The prospects for data erasure operations are good and new partners have been signed up. Data erasure is particularly important while remote working is a major factor in companies.

Chamberlin (CMH) is getting a cash injection from Trevor Brown. The £200,000 loan will, subject to shareholder approval, be converted into shares at 6p each and Brown will have a 29.5% stake. The Scunthorpe foundry is busy and profitable, but management is still trying to win work for the Walsall foundry.

Duke Royalty (DUKE) has secured a new client involved in steel fabrication. There is a £6.2m royalty financing agreement with Meteor HoldCo, which makes steel street lighting and guardrail products.

Telecoms testing systems supplier Calnex Solutions (CLX) says some revenues appear to have been brought forward into 2020-21 and therefore the full year revenues and profit will be ahead of expectations.

Trans-Siberian Gold (TSG) has published details of the Rodnikova project scoping study, which suggests a potential 14-year life for the project. The JORC resource is 6.3Mt at an average grade of 5g/t gold. Post tax NPV10 is $177.6m – based on $1,600/ounce gold price.

MAIN MARKET

Israel-based cannabis-based products supplier Kanabo Research has completed its reversal into standard list shell Spinnaker Opportunities to form Kanabo Group (KNB) two years after the deal was announced. The value of the deal was £15m in shares and the company also raised £6m at a share price of 6.5p. Kanabo was valued at £23.4m when it was admitted to trading. The share price has risen to 31p – having at one point reached 50.75p – and that values Kanabo at £111.7m. One of the investors in Kanabo is AIM-quoted Vela Technologies (VELA) and it invested £150,000 at 6.5p a share.

MGC Pharmaceuticals (MXC) has expanded its research programme into the use of cannabinoids to treat aggressive glioblastoma brain cancer. The expanded study includes the use of a nanoparticle delivery system. MGC has also secured a three-year distribution agreement with Swiss PharmaCan for its product ArtemiC Rescue as a food supplement. The minimum order quantity is 40,000 units per quarter, which has a retail value of $3.4m.

Path Investments (PATH) is not going ahead with the purchase of DT Ultravert from two vendors including Zoetic International (ZOE) following concerns during the preparation of the potential prospectus. Path has raised £3.5m at 0.25p a share.

Rare earths explorer Pensana (PRE) is dropping its listing on the ASX.

Papillon Holdings (PPHP) has submitted a prospectus to the FCA for the proposed reverse takeover of the Kilimapesa gold project.

Andrew Hore

Andrew Hore – Quoted Micro 21 December 2020

AQUIS STOCK EXCHANGE

Employee ownership investor and adviser Capital for Colleagues (CFCP) increased its NAV by 21% to 52.69p a share in the year to August 2020. There were realised gains of £307,000 and a £1.35m increase in the fair value of investments. There was cash of £388,000 at the end of August 2020. Management hope to pay a 2020-21 dividend of at least 1p a share. Cobrio Fund Partners has increased its stake from 4.58% to 7.55% and they were nearly five months late in announcing this.

Gunsynd (GUN) has made a £200,000 investment in Low 6, a sports betting platform. Low 6 partners with sports teams and plans to float in 2021. Gunsynd has invested a further A$800,000 in Rincon Resources at 20 cents a share as part of its ASX listing on 21 December.

A successful planning permission application for a Sutton development St Mark Homes (SMAP) has led to the announcement of an interim dividend of 3p a share. The ex-dividend date is 29 December. Approval has been gained for additional retail space, which could be let to a large retailer, at an existing development in Sutton plus a new building with 30 apartments. There are also new developments in Hanwell, Finchley and Muswell Hill.

KR1 (KR1) has made two new investments. There was $150,000 invested in 15 million Lido tokens and $200,000 in 797,043.48 Swarm tokens. KR1 has also generated a further 141,564.69 Polkadot tokens since August. These have been sold for $797,000. KR1 still owns 3.5 million Polkadot tokens.

Good Energy (GOOD) has announced three strategic partnerships for its mobility as a service offer. Mina Energy has technology to make home charging more effective. Home Energy Infrastructure can arrange funding for installing EV charging infrastructure. Select Car Leasing can lease the vehicles.

Sativa Wellness (SWEL) says the EU has concluded that CBD is not a drug within the meaning of the UN single convention on narcotic drugs 1961. It therefore qualifies as a food. The company is preparing a novel food dossier for the UK Food Standards Agency in parallel with the EU. The UN has voted to remove cannabis from Schedule IV, the category of the world’s most dangerous drugs, while in the US there has been a bill passed to decriminalise cannabis at the national level.

World High Life (LIFE) has secured a listing for Love Hemp with Boots.

SulNOx Group (SNOX) shareholders have signed an option agreement with Rigworld Group, which could purchase 20 million shares at 40p each up until 31 March. This includes the whole of Nistad Group’s 14.6% stake.

Shareholders in Black Sea Property (BSP) have voted against four resolutions at its AGM, although they did vote for four other resolutions including one to retain the Aquis quotation. The two resolutions relating to Alex Borrelli were withdrawn and he has resigned from the board. Trading in the shares has been suspended until a new non-executive director is appointed.

Imperial X (IMPP) has 450,000 shares in Canada-based Imperial Helium and has subscribed for C$110,000 convertible debentures, which will be converted at a 20% discount to the IPO price.

Vulcan Industries (VULC) has raised £365,000 at 5.5p a share.

AIM

DP Poland (DPP) has agreed the acquisition of rival Poland-based pizza restaurant group Dominium for £22.7m in shares and loan notes of €7.5m. DP Poland raised £3.5m at 8p a share, while 21.8 million of the consideration shares were sold at the same price. The combined group will be one of the top three pizza chains in Poland.

Radio frequency communications networks developer CyanConnode (CYAN) has managed its cash well and continues to grow revenues. In the six months to September 2020, revenues were £1.5m and the loss was £1.37m. In the two months since the period end, revenues have been around £1m. The order book in India is worth £19m, which is equivalent to one million units, and these orders could be deployed over the next two years. There are also orders in Thailand and Sweden.

Construction dispute and property services provider Driver Group (DRV) maintained its profit in the second half of the year to September 2020. Underlying pre-tax profit still declined from £3m to £2.5m on revenues 9% lower at £53.1m. The higher margin Diales expert witness business continues to grow. Net cash was £8.2m at the end of September 2020. The final dividend is 0.75p a share.

Codemasters (CDM) has withdrawn is recommendation of the Take-Two Interactive bid and switched its support to the Electronic Arts offer of 604p a share.

Two companies have decided not to make an offer for Telit Communications (TCM) and that leaves u-blox as the only potential bidder left.

K3 Capital (K3C) is trading strongly and finnCap has upgraded its 2020-21 earnings forecast from 11.4p a share to 11.9p a share. There have been cross-selling benefits from recent acquisitions. The acquisitions business has performed well and there is longer-term potential from the Quantuma insolvency business.

Carpets retailer United Carpets (UCG) has decided to leave AIM and it is launching a tender offer of 6.25p a share for up to 29 million shares.

Property services provider Fletcher King (FLK) fell into loss in the six months to October 2020. Revenues from asset management and fund management clients was steady, but other revenues were weak. There is £3.1m of cash in the bank.

NWF (NWF) says that the fuels division has traded positively, and it has recommenced the process of assessing acquisitions. The new food warehouse is fully utilised, but the volatile demand has hit profitability. Feed volumes were slightly lower than the year before.

Summerway Capital (SWC) is switching its investing policy to the software sector and Vin Murria, who has built up AIM-quoted software companies in the past, is joining the board.

Yourgene Health (YGEN) had a steady first half with Covid-19 testing revenues helping to offset lower demand for other products.

Kodal Minerals (KOD) is acquiring the Fatou gold project in southern Mali. There is a mineral resource of 350,000 ounces of gold and potential to increase the figure.

Touchstone Exploration (TXP) has secured a gas sales agreement covering all production from the Ortoire block in Trinidad.

Trinity Exploration (TRIN) has signed an agreement with the National Gas Company of Trinidad to develop new projects in the Caribbean. This includes renewable energy, stranded gas and a micro liquefied national gas business.

MAIN MARKET

BATM (BVM) is investing $3m in Ador Diagnostics as part of a $10m funding. This will be spent on further develop its technology. BATM has a 36.7% stake.

Contango Holdings (CGO) has a potential 1.8 million ounces gold resource at an average grade of 1g/t at the Garolo gold project in Mali. There is further gold at greater depths. The first gold production could be before the end of 2021.

Spinnaker Opportunities (SOP) has conditionally agreed an all-share acquisition of Kanabo Research and has advanced a further £100,000 to the medicinal cannabis company.

Kin and Carta (KCT) has sold healthcare communications business Hive for £13.8m. The business contributed pre-tax profit of £1.2m last year.

Andrew Hore

Andrew Hore – Quoted Micro 30 November 2020

AQUIS STOCK EXCHANGE

Healthcare IT supplier DXS International (DXSP) had £1.2m in cash at the end of October 2020. Net cash was £584,000, following the capitalisation of £568,000 of development spending. Interim revenues improved by 3% to £1.72m but progress was held back by Covid-19. Pre-tax profit jumped from £90,000 to £151,000 due to lower admin costs.

Imperial X (IMPP) is continuing its due diligence on previously announced acquisitions of mining and royalty interests and the plan is to apply for a standard listing when the acquisitions are completed.

TechFinancials Inc (TECH) has invested $148,000 in RenewSenses, which has developed a wearable device for the visually impaired. The cash will help to complete the development of the A.I. Cane product, which is a camera attached to a handheld device and this enables obstacles to be identified.

S-Ventures (SVEN) has invested a further £75,000 in a convertible loan note issued by vitamin-fortified juices and smoothies Coldpress Foods. The annual interest rate is 15%. S-Ventures has a 3.3% stake in Coldpress.

Primorus Investments (PRIM) has terminated options over 17.8 million shares held by three individuals and has paid a total of £140,000 in compensation. These options could have been exercised at 6p a share or 8p a share and were equivalent to 11.3% of the potentially enlarged share capital. Primorus has decided to drop the Aquis quotation on 24 December and keep the AIM quote. This and a reduction in director pay will reduce costs by more than £200,000 a year.

Formation Group (FRM) is withdrawing from the Aquis Stock Exchange on 31 December.

Good Energy (GOOD) has appointed Canaccord Genuity as joint broker.

Vulcan Industries (VULC) has raised a further £335,000 at 5p a share and 5.5p a share.

Aquis Stock Exchange has launched a market maker incentive scheme. The market makers will offer two-way prices for 505 of stocks on the Apex segment with a maximum spread of 5%. There should be 25 companies on the Apex segment. Market makers will receive warrants for shares in the Aquis Stock Exchange with the best performers gaining the largest percentage. They could earn up to 19.9% of the market over a three year period. Early adopters include Canaccord Genuity, Liberum, Peel Hunt, Shore Capital, Stifel and Winterflood.

Liberum Capital and Zeus Capital have been approved as corporate advisers for the Aquis Stock Exchange.

AIM

Kistos (KIST) began trading on AIM on 25 November. The investment company raised £30.2m after expenses and the market capitalisation was £40.3m. The plan is to seek acquisitions in the oil and gas sector. The team behind Kist is the same as for RockRose Energy. The share price has risen from 100p to 118.2p.

Cyber security software and services provider Shearwater (SWG) reported a slump in revenues, but the decline was in lower margin products. There were also overhead reductions. That meant that there was a profit before amortisation of acquired intangibles. Orders were delayed but there was still a £1.7m cash inflow from operations. Net cash was £3m at the end of September 2020. Two-fifths of revenues are recurring, and the long-term outlook is good.

Circle Property (CRC) reported a 2p a share decline in NAV to 283p a share at the end of September 2020. Loan to value is 42% and there is £37.7m of a loan facility still undrawn. New lettings have been secured since March and rent collections have been strong. The interim dividend is 2.5p a share.

Telecoms testing instrumentation supplier Calnex Solutions (CLX) has made an impressive start to its time on AIM with interim figures that show near-doubled underlying pre-tax profit of £2.3m. This has led to an upgrade of the full year profit expectations to £2.9m. The cash being generated is enabling additional development spending.

IG Design (IGR) benefitted from a full contribution from the CSS acquisition, which has also reduced the seasonality of the group. Even so, continuing operations sales held up well. There is still scope for additional demand for Christmas wrapping and gift products, but time is running out for any significant improvement. Full year pre-tax profit is expected to be flat at $35m, although shares issued to fund the CSS acquisition mean that there would be a one-fifth decline in earnings per share to 25.5 cents. There should be a significant improvement next year.

First Property (FPO) has significantly reduced its debt following the sale of a property in Poland. This puts it in a good position to take advantage of any opportunities over the next year or so. Short-term income has declined and there were no performance fees. NAV is 54.3p a share. The interim dividend is maintained at 0.45p a share.

Appreciate (APP) has reinstated its dividend and it proposes an interim of 0.4p a share. Interim revenues were 18% lower at £27.4m. There is always a first half loss and it increased from £1.2m to £4.6m, although that does not include the restructuring costs. The Christmas savings business held up and the corporate incentives operations were boosted by additional business due to free school meals vouchers. More business is being done digitally and there continues to be a monthly improvement in trading.

D4T4 (D4T4) is continuing its development into a business focused on recurring revenues. The data collection and analysis software provider lost money in the first half, but management remains confident that D4T4 will achieve the full year pre-tax profit forecast of £3.2m, down from £5m. Net cash is expected to be £14m. The interim dividend was raised by 5% to 0.81p a share.

LoopUp (LOOP) has not achieved the annual run rate than it expected, and it will fall short of 2020 expectations. The remote meetings technology provider has been generating less revenue from international calls, which has hit overall revenues. Trimming the 2020 revenues forecast from £54.8m to £50.1m leads to a one-fifth reduction in pre-tax profit to £8.4m. The lower run rate means that 2021 forecast revenues have been slashed from £56m to £35.2m, which leads to a small loss for the year.

Outsourcing Inc has sent out the document for the takeover of CPL Resources (CPS). It is offering Euro11.25 a share, which values the Ireland-based recruitment company at Euro317.8m.

Digital advertising technology developer Miriad Advertising (MIRI) has raised £23m via a placing at 40p a share. A further £3m could be raised via an open offer. In July 2019, £16m was raised at 15p a share. The first half cash outflow was more than £4.6m. The cash will be spent on growing US revenues and further technology development.

Ilika (IKA) has decided to manufacture its Stearex batteries itself rather than outsourcing the process. This is the quickest route to production and operating margins will improve. Full scale manufacturing will start by early 2022.

ReNeuron (RENE) is raising up to £17.5m at a heavily discounted share price of 70p. This cash will enable the company to complete the current clinical trial for the retinitis pigmentosa treatment and design a phase III trial.

The share price rise of Wynnstay Group (WYN) has led to DBAY Advisors reducing its stake from 6.12% to 5.33%.

Urban Exposure (UEX) plans a tender offer of up to £65m at 75p a share. There is cash in the bank of £81m.

Second half trading was always going to be weak for Tracsis (TRCS) because of its exposure to events in the traffic and data division. Recurring revenues from the rail technology division have helped limit the pre-tax profit decline from £9.5m to £8.3m. This year is also likely to be tough, although it will depend on trading next summer. The main recovery is likely in 2021-22.

Serinus Energy (SENX) has raised $21m and this will pay off the debt of $16.5m. The lender will also receive a 9.9% stake. The rest of the cash will be invested in increasing oil and gas production.

Digital financial services and products provider Tungsten (TUNG) says profit will be lower than expected this year. Transaction volumes have declined, and revenues will be flat. Winning new business has become more difficult. Annualised savings of £4m are being made.

Michelmersh Brick (MBH) says that 2020 revenues and profit will exceed expectations. Government support of £500,000 will be repaid. There will still be net cash at the end of 2020. A final dividend of 2.25p a share will be paid.

Benchmark (BMK) has completed its restructuring and is on course to benefit from the investment it has made in products and capacity. The BMK08+CleanTreat treatment should be launched by next summer and this could help the aquaculture company to move into profit. In 2019-20, revenues fell from £124m to £105.6m, but lower costs meant that the loss was reduced. Genetics was the best performing division due to initial sales of salmon eggs from Salten. Net debt was £37.6m at the end of September 2020.

MAIN MARKET

Jlen Environmental (JLEN) is paying a second quarterly dividend of 1.69p a share, the same as the first quarter. There has been a small reduction in NAV from 97.5p a share to 96.1p a share because long-term expectations for electricity and gas prices have fallen. The portfolio is 34% wind power, 27% anaerobic digestion, 22% solar power, 15% waste and wastewater and 2% hydro and battery. A decline in waste volumes hampered the Bio Collectors business and other feedstocks are being sourced. There is £127.6m available to finance further acquisitions.

CML Microsystems (CML) had a mixed interim period with total revenues holding up at £12.9m. Storage technology revenues were one-quarter higher, but communications revenues fell by one-fifth and are no longer the largest contributor. However, the development activities have been broadened through acquisitions and there is a bigger addressable market. Pre-tax profit fell from £907,000 to £771,000 and the interim dividend is unchanged at 2p a share. The second half should be better than the first half and a rebalancing of resources should make the business more efficient.

Ingredients supplier Treatt (TET) improved pre-tax profit from £14m to £15.8m, although there was a small dip in revenues to £109m. The total dividend is 6.2p a share. Demand is likely to remain weaker than normal. The move to the new UK premises should happen in the middle of 2021.

J Smart Contractors (SMJ) reported halved underlying full year pre-tax profit of £1.28m. There was a surplus on investment property revaluations of £3.18m. There is net cash of £12m. A final dividend of 2.27p a share has been declared and the total for the year has edged up from 3.19p a share to 3.22p a share. The completion of building contracts has been delayed due to Covid-19 restrictions. Contracting work remains below the level of the previous year and private housing sales will be limited in the year to July 2021. NAV is £99.3m, which is double the market capitalisation.

Triad (LSE: TRD) revenues declined from £9m to £8.7m, but the IT consultancy did move from loss to profit due to lower costs. Utilisation rates for IT consultants is relatively high and cash covers around three-fifths of the market capitalisation.

Gulf Marine Services (GMS) has suspended chief executive Tim Summers, who was no longer a member of the board, due to an investigation into a severance payment of £429,000 on 10 November. Hassan Heikal was appointed a director at the general meeting on 25 November.

Cardiff Property (CDFF) increased its NAV from 2285p a share to 2436p a share at the end of September 2020, against a share price of 1725p. This reflects an uplift in the valuation of JV Campmoss due to an increase in value of Clivemount House in Maidenhead which has been sold since the year end. The dividend increased by 3% to 17.6p a share. There is cash of £5.5m and no debt.

Affordable housing services provider Aquila Services Group (AQSG) reported a decline in revenues from £3.89m to £3.51m, although there was a small improvement in operating profit prior to restructuring costs of £175,000. The dividend has been halved to 0.15p a share. Cash has increased to £1.4m.

OTAQ (OTAQ) increased interim revenues by 16% to £2.03m and it is on course for full year revenues of £4m. The growth has come from the aquaculture operations. Furlough claims reduced the loss.

Andrew Hore – Quoted Micro 9 November 2020

AQUIS STOCK EXCHANGE

Kent-based brewer Shepherd Neame (SHEP) lost £2.9m in the year to June 2020. There was a small operating profit, but this was swamped by interest charges. The loss excludes one-off charges of more than £9m, predominantly relating to the impairment of 26 properties and the cost of unlawful actions by an employee. Pub revenues fell due to the original lockdown period, although tenanted pubs remained profitable in the financial year. Trade was slow in July, but it started to build up prior to the latest restrictions.

SulNOx Group (SNOX) is not entering into new contracts and suspending existing contracts. Management is paying amounts owed under existing contracts and says that there will be minimal cash balances. The requisitioners of a general meeting have injected cash in order to keep the company trading and enable it to hold the general meeting on 4 December. The employment contracts of the directors have been terminated and the requisitioners want their own representatives elected to the board. Trading in the shares remains suspended.

There was a slight improvement in first quarter revenues generated by National Milk Records (NMRP) to £5.32m. The specialist services such as the testing of Johne’s disease provided the growth. Milk recording figures were 3% down. The latest lockdown should not have a significant effect on performance.

Gunsynd (GUN) has subscribed A$100,000 for a convertible in gold explorer Rincon Resources that converts at a discount to the flotation price on ASX. Rincon plans to raise at least A$5m prior a listing planned for 10 December.

GP software provider DXS International (DXSP) says that revenues are marginally up on the previous year and it remains profitable. There is around £1m in the bank. However, launches of new products have been delayed by the pandemic.

Primorus Investments (PRIM) has sold its remaining shareholding in Greatland Gold (GGP) and raised £4.6m. That means that Primorus made a total gain of around £5.9m.

Wishbone Gold (WSBN) has identified four shallow targets on its Patersons Range project in Western Australia. Wishbone intends to move to close the acquisition of its interest in the tenements.

Cadence Minerals (KDNC) has agreed in principle to a settlement with secured creditors of the Amapa project. Once this is completed, Cadence will inject $2.5m into the project and take a 20% shareholding. There has been a 21% increase in the mineral resource. The initial mine plan envisages the production of 4.7 million tonnes of iron concentrate a year and the mine life could be nearer to 17 years following the updated resource.

Coinsilium Group Ltd (COIN) expects to complete its relaunch with a new strategy before the end of the year. There will be new corporate branding and a new website.

World High Life (LIFE) has raised £381,000 at 1p a share. This cash will finance due diligence on investment opportunities.

Imperial X (IMPP) has appointed Novum Securities as corporate adviser.

European Lithium has left the Aquis Stock Exchange.

AIM

Trinidad-focused oil and gas producer Touchstone Exploration Inc (TXP) has raised £23.1m at 95p a share. The previous placing in February raised cash at 40p a share. The money will be used to fund further exploration and development of the Ortoire onshore block. Touchstone recently announced its third discovery (Chinook-1) out of three wells drilled. Chinook-1 is thought to be a similar size to Cascadura, which is estimated at around 45mmboe. The current exploration well is Cascadura Deep-1 and that will be completed and tested in the first quarter of 2021. The original discovery, Coho, will soon start producing gas.

Mkango Resources (MKA) has started a drilling and soil sampling programme at the Mchinji rutile licence area. This will help management to identify the areas with the best prospects. The licence initially lasts until 2022 but can be extended. It is next door to a rutile discovery by Sovereign Metals, which makes the chances of a commercial discovery even better. There is already significant infrastructure in the area. Rutile is a white pigment used in paints, plastic and paper. Demand is strong and reserves are declining.

PerkinElmer Inc is offering 185p a share in cash for Horizon Discovery (HZD), which is double the previous market price. The bid is equivalent to the high in the past 12 months, but below the share price three years ago. Horizon is valued at £296m. PerkinElmer is keen to increase the scale of its cell engineering business and add to its gene editing services.

Trading in the shares of NWF (NWF) has been suspended following a cyber attack on the feed and fuels divisions. The businesses continue to operate.

Attis Oil and Gas (AOGL) has agreed an amalgamation with Helium One, which will then gain an AIM quotation and raise at least £5m. Helium One is offering one of its shares for 236 shares in Attis, which values the AIM shell at £1.76m (0.012p a share). The Attis share price has risen to 0.02p. Helium One has a potential helium project in Tanzania and is valued at £6m, which is similar to level of investment put into the project. Drilling is planned early next year. Scirocco Energy (SCIR) subscribed for a 10% stake three years ago and that will probably be diluted to around 4.6%.

AB Traction has increased its stake in construction disputes company Driver (DRV) from 15.6% to 17.3%.  

Empire Metals (EEE) has achieved significant results with its drilling programme at the Eclipse gold project in Western Australia. The results confirm extensions to previously defined mineralisation. Drilling has started at the second potential target called Houdini. The proposed sale of the Bolnisi copper and gold project to TSXV-quoted Candelaria Mining Corporation means that Eclipse is currently the main focus of Empire’s cash investment.  

Nasdaq-quoted Masimo Corporation is making a 12p a share recommended cash bid for non-invasive hemodynamic monitoring technology developer LiDCO (LID). Masimo is a medical technology company.

Surgical endoscopy devices supplier Creo Medical (CREO) has acquired its distributor in Belgium. Creo has also received FDA clearance for MicroBlate Fine, which is thought to be the world’s smallest diameter microwave ablation needle.

Dekel Agri-vision (DKL) has acquired a further 14.2% in the Tiebissou cashew nut processing project in return for 28.55 million shares. This takes the stake to 52%.

Beximco Pharma (BXP) has signed a memorandum of understanding with Serum Institute of India and the Bangladesh government for the supply of 30 million doses of the Oxford University/ AstraZeneca Covid-19 vaccine. Supplies will commence one month after regulatory approval in Bangladesh. This could provide a significant uplift to revenues, although the timing is uncertain.

Toilet tissue manufacturer Accrol (ACRL) is buying rival LTC for up to £41.8m. This will take Accrol’s share of the market to 16% and provide greater geographic coverage of the UK market. LTC has revenues of £28m and is profitable. There could be cost savings of £1m a year. Accrol raised £38.5m at 44p a share to help finance the deal. A one-for-21 open offer could raise up to £4.1m.

MAIN MARKET

Zotefoams (ZTF) says that third quarter revenues were 22% higher year-on-year due to demand for protective equipment and footwear. Management expects continued growth in the fourth quarter. Net debt was £36m at the end of September 2020. The new site in Poland should commence production early next year.

Cryptocurrency miner Argo Blockchain (ARB) generated £1.2m in revenues during October. It held 137 BTC in bitcoin at the end of the month. Argo is leasing 4,500 mining machines for 24 months and they should be up and running in February. It is also managing the mining operations of 4,378 machines for a third party.

Shell company Highway Capital (HWC) had £3,000 in the bank at the end of February 2020 and it has net liabilities of £991,000. There was £327,000 in borrowings.

Andrew Hore

Andrew Hore – Quoted Micro 12 October 2020

AQUIS STOCK EXCHANGE

Kent-based brewer Shepherd Neame (SHEP) has been profitable since the beginning of July when pubs were allowed to reopen. However, like-for-like sales were lower, particularly in city centres. Own brand beer volumes fell by 2%.  Net debt was £82.4m on 26 September, with deferred payments of £6.9m. 

There was a reduction in full year revenues generated by National Milk Records (NMRP) from £22.8m to £21.6m. Earnings per share halved to 4.7p.

Wishbone Gold (WSBN) has an exclusive 45-day option to acquire 100% of mineral tenements in the Patersons Range region of Western Australia. The option payment is £50,000. A dividend of 1.25p a share is proposed.

In the year to April 2020, property investor Ace Liberty and Stone (ALSP) increased revenues by 26% to £6.39m. Pre-tax profit was £9,252, including a lease breakage fee of £173,000. There were £800,000 of fair value reductions. Net cash generated by operating activities was £1.88m. Since the year end, £3.14m has been spent on properties.

British Honey Company (BHC) generated revenues of £1.04m in the five months to August 2020, with £500,000 from sanitiser. More recently alcohol sales have recovered, and sanitiser generates around 10% of sales. There was a £435,000 loss in the period because of higher admin expenses.

VI Mining (VIM) is terminating the Minaspampa and Rosario de Belen project acquisitions. Unpaid deferred consideration of $42.2m has bee cancelled. A joint venture is being discussed for other group projects.

Good Energy (GOOD) has launched the UK’s first dedicated heat pump tariff. There is no standing charge in the winter months.

European Lithium (EUR) intends to leave the Aquis Stock Exchange on 6 November.

Peterhouse has resigned as corporate adviser to Imperial X (IMPP).

Early Equity (EEQP) has raised £94,000 at 0.5p a share.

AIM

Omega Diagnostics (ODX) is involved with the initial UK-RTC order for one million Covid-19 rapid antibody tests. Omega is set to manufacture 175,000 of these tests. This is the first order and Omega plans to increase capacity to 200,000 tests per week by the beginning of November. finnCap believes each test could generate 150p and the gross margin is 50%. The current revenue forecast of £12.6m for the year to March 2021 does not include the Covid-19 tests which could generate a further £5.7m. Omega should be profitable without any contribution from the tests.

Xpediator (XPD) has acquired Yorkshire-based freight business Nidd Transport for £4.6m. The owner is retiring, and the purchase price is covered by Nidd’s cash and property assets -where there is already an agreement for a sale and leaseback. The deal is earnings enhancing. The logistics business does not have a significant presence in northern England and there will be cross-selling opportunities with other parts of the business. Nidd also has operations in France, Spain and Portugal. In the year to April 2020, Nidd made and operating profit of £500,000 on revenues of £11m. 

Hormonal disease treatments developer Diurnal (DNL) has raised £7.5m after expenses at 60p a share and there is an open offer to raise up to £2m.

Plutus PowerGen (PPG) plans to demerge its generation assets and become a cash shell. A placing at 0.02p a share will raise £490,000 after expenses and this will pay money owed to directors and provide working capital. Debt of £266,000 will be capitalised. Plutus tried to sell its co-investee assets but there was no buyer found. Plutus Energy is being demerged and there are plans to demerge the Plutus energy investment portfolio, but this is currently being blocked by Rockpool.  

Vanadium flow batteries developer Invinity Energy Systems (IES) is involved in four energy storage products funded by the California Energy Commission. These total 7.8MWh of batteries and they should be delivered next year. Commercial terms are still be agreed with partners. This follows a £1.1m order during June.

Dekel Agri-Vision (DKL) increased third quarter crude palm oil produced by 10% to 5,280MT, thanks to a higher extraction rate. The cashew nut processing plant should still be commissioned next spring.

Caledonia Mining (CMCL) has increased 2020 guidance following third quarter figures showing gold production of 15,200 ounces and nine-month production of 42,900 ounces. Full year guidance is between 55,000 and 58,000 ounces. Caledonia has secured an agreement with the Zimbabwe government that will enable it to assess other gold projects. A solar plant is being built that will provide 27% of the electricity needs of the Blanket mine.

MAIN MARKET

Fintech firm Mode Global Holdings (MODE) joined the standard list on 5 October. Mode raised £7.5m in a placing at 50p a share. Trading commenced. The share price has fallen back to 48.5p. The cash will help to finance the launch of a payments service powered by Open Banking that would replace the need for cards.

Ingredients supplier Treatt (TET) had net cash of £1m at the end of September 2020 and it intends to pay a final dividend. Pre-tax profit of £14m is in line with pre-Covid-19 expectations. Health and wellness revenues grew by 16%, although total revenues fell by  3% due to the lower orange oil prices.

Argo Blockchain (ARB) plans to acquire the two data centres in Quebec housing its cryptocurrency mining equipment that are owned by GPU.one. September mining revenues were £1.1m.

BATM (BVC) has secured an initial order for its Covid-19 Real-Time PCR diagnostic test kits and they will be delivered in the fourth quarter.

Andrew Hore

Andrew Hore – Quoted Micro 31 August 2020

AQUIS STOCK EXCHANGE

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

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

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

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

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

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

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

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

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

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

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

AIM

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

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

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

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

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

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

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

MAIN MARKET

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

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

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

Andrew Hore

Andrew Hore – Quoted Micro 27 April 2020

AQUIS STOCK EXCHANGE

Cannabis products-focused company Sativa (SATI) has received a bid approach from StillCana Inc, which has built two high volume CBD extraction facilities in Europe. StillCana is Europe’s largest producer of CBD distillate and isolate. StillCana plans to offer 0.33651 of one share for each Sativa share. Sativa shareholders would own 65% of the enlarged business. If StillCana does not go through with the bid it may be required to pay Sativa £1m as a break fee. Trading in Sativa shares has been suspended. Peterhouse has been appointed as corporate adviser.

In the six months to December 2019, there was a £224,000 cash outflow at Imperial X (IMPP) as it assessed the way forward. The new investing strategy is focused on acquiring royalties in the oil and gas sector. There was £179,000 in the bank at the end of 2019. Imperial X has subsequently raised £27,700 at 2.5p a share.

Primorus Investments (PRIM) had net assets of £4.76m at the end of 2019. One of the successes has been the investment in Greatland Gold (GGP) and TruSpine Technologies is moving towards a flotation.

Cadence Minerals (KDNC) owns 16% of AIM-quoted European Metal Holdings (EMH) whose shareholders have approved the £25.8m investment for a 51% stake in the holder of the Cinovec licences in the Czech Republic.

NQ Minerals (NQMI) says that the resource at the Barnes Hill nickel project to 25Mt at 0.6% nickel and 0.05% cobalt on a 0.25% nickel cut-off grade.

Arbuthnot Banking (ARBB) n on-executive director Nigel Boardman has acquired an initial 5,020 shares in two amounts (1,500 shares at 960p each and 3,520 shares at 1010p each).

Altona Energy (ANR) has extended the closing date of its open offer until 12 May and it may consider a further extension if the market uncertainty continues.

AIM

Cyber security services provider Shearwater (SWG) has raised £3.75m at 240p a share. Directors David Williams and Phil Higgins are each investing £125,000. A new £4m, 3-year bank facility has been negotiated. In the year to March 2020, Shearwater generated revenues of £33m and underlying EBITDA was £3.2m. There has been a move towards higher margin business. Management believes that COVID-19 will provide opportunities to expand the business. There are acquisition opportunities with revenues of between £2m and £20m.

Musical instruments retailer Gear4Music (G4M) has confirmed that profit for 2019-20 was better than expected and gross margins improved from 22.8% to 25.9%.

Last year was tough for transport and logistics firm Xpediator (XPD) and this year won’t be easy, but it has a good base and the new Southampton warehouse will come on stream early in 2021. In 2019, revenues grew but lower freight forwarding margins and higher overheads hit pre-tax profit and it fell to £5.2m. Xpediator should still be profitable in 2020 and the second quarter tends to be a weaker period. A scrip dividend of 1.05p a share has been declared.

Health monitoring equipment supplier LiDCO (LID) had a strong start to its new financial year thanks to strong demand from the NHS. Since January 195 monitors have been sold, which is nearly as many as last year. The pre-tax loss is expected to continue to reduce and LiDCO has started to generate cash from operations.

Foreign exchange provider Equals (EQLS) increased first quarter revenues by one-third to £8.3m. The majority of this was business to business revenues. There was a sharp decline in travel money business in March.

Dragon Capital Group is offering a purchase facility to minority shareholders in Dragon-Ukrainian Properties and Development (DUPD) as part of the plan to cancel the AIM quotation. The purchase price is 10p a share.  Shareholder approval for the departure from AIM will be sought at the general meeting in Kiev on 6 May.

DBAY Advisers is building up a stake in Wynnstay Group (WYN) and it has reach ed 6.47%. It is taking advantage of the decline in the share price, although it has rebounded strongly in the past few weeks. Investec has sold most of its stake. Trading has been subdued in the current financial year.

Dawn Ward and Tracy Lewis have resigned from the board of Staffline (STAF) and the company is seeking replacements. Henry Spain Investment Services has increased its stake in Staffline to 13.6%.

Mark Greenwood has taken his stake in Richland Resources (RLD) to 29.1%.

MAIN MARKET

LED light fittings and wiring accessories supplier Luceco (LUCE) reported 2019 figures in line with expectations. Revenues were %5 ahead at £172.1m and improved margins meant that pre-tax profit jumped from £6.3m to £15.8m. Revenues and profit are expected to fall back this year due to COVID-19 with the major hit coming in the second quarter after modest supply issues in the first quarter. Cash outflow should be limited to £500,000 a month while lockdowns are in force in Europe. There are bank facilities available to the group. Looking further ahead, Luceco is involved in a growth market and there should be acquisition opportunities.

J Smart Contractors (SMJ) reported a decline in interim pre-tax profit from £1.12m to £265,000. Net cash was £13.7m at the end of January 2020. An unchanged interim dividend of 0.95p a share has been announced.

Cathay International Holdings (CTI) has launched a 16.7456-for-one open offer at 1.5p each, plus a subscription to at the same share price. This could raise up to £105m. This will reduce borrowings and provide cash to put into investee companies.

BATM (BVC) has received a $31m order for 1,000 critical care ventilators. One-quarter of the cash has been paid upfront and the rest will be paid when the ventilators are delivered later this year.

A trading statement by fasteners supplier Trifast (TRI) sparked a 6% 2019-20 profit downgrade to £17.2m by finnCap.

Motor dealer Lookers (LOOK) says that sales and margins have fallen so far this year. Operating costs have been reduced. Sales of former sites are helping to reduce net debt, which is £65m. The fraud investigation has led to a £4m non-cash charge and there could be further write-downs.

Andrew Hore

Andrew Hore – Quoted Micro 20 January 2020

NEX EXCHANGE

NQ Minerals (NQMI) generated gross revenues of A$15.5m and gross profit of A$7.4m from Hellyer gold mine in the fourth quarter. Full year revenues were A$53.9m and operating profit was A$12.2m. The profit grew steadily quarter by quarter. NQ has raised £311,000 at 7p a share. In December, £300,000 was raised at 6.5p a share.

Clean Invest Africa (CIA) says that is subsidiary Coaltech has signed a memorandum of understanding with the Uzbekistan ministry of innovation and development and Uzbekistan Railway. The coal fines project could have an initial value of $16m. A plant would be built to process coal fines into coal pellets. Coal mining is an important industry in Uzbekistan. There will be feasibility studies and the development of a business plan. This deal comes via the joint venture with Creon Investments, which is focused on Russia and former Soviet Union countries.

Ganapati (GANP) says that its Malta-based subsidiary has signed a two-year endorsement agreement with Welljam, which owns the rights to Usain Bolt’s services and image rights. Ganapati has is launching the first official Usain Bolt online slot game when the Tokyo Olympics are held during the summer. Usain Bolt will be attending the ICE London iGaming event in February. There are initial licence payments for image rights during the development of the slot game and a share of future revenues.

Ananda Developments (ANA) says that its investee company iCAN Israel-Cannabis has raised money via a convertible that places a pre-money valuation of $20m on the company. Ananda invested $200,000 in a convertible loan in August 2018 and $100,000 of the loan has been converted into 120 shares worth $200,000 at the latest valuation. DJT Plants, which is 50%-owned by Ananda, has received planning permission for the construction of a facility for cannabis plant breeding and propagation.

Property investor Ace Liberty and Stone (ALSP) reported a dip in pre-tax profit from £334,000 to £306,000 in the six months to October 2019. The NAV improved from £21.2m to £21.9m over the six month period, even though £349,000 was paid in dividends.

Imperial X (IMPP) has switched its investing strategy back from medicinal cannabis to energy-related businesses. The focus is building a royalty stream from oil and gas interests.

Mark Leigh is taking over from Claire Spencer as finance director of Newbury Racecourse (NYR).

Broadband-focused shell SAPO (SAPO) has raised £27,500 at 2.75p a share.

Diverse Income Trust has reduced its stake in TechFinancials (TECH) to below 3%.

AIM

Lawyer Gateley (GTLY) generated organic growth of 10.5% in the first half and it is on course to meet analyst expectations for the full year. The main first half growth was in the corporate and pensions businesses. The most recent acquisition will take annualised non-legal revenues to 12% of the group total. A full year pre-tax profit of £21.3m is forecast.

Regional legal business Knights Group (KGH) increased interim revenues by one-third to £32m through a combination of acquired and organic growth. Underlying earnings were 9% ahead at 5.95p a share. Net debt was £17.1m at the end of October 2019. The interim dividend was raised by 83% to 1.1p a share, although Knights was not quoted for all the comparative period. Two Birmingham-based firms have been acquired since the period end.

Legal firm Ince Group (INCE) raised £12m at 45p a share. The share price has more than halved since the beginning of the year. The January 2019 placing was at 140p a share. There are plans to raise £2m by a one-for-8.398 open offer and £2m via an offer to staff. The cash will enable the working capital facility to be reduced and finance investment in building up staff numbers. Net debt was £10.4m at the end of September 2019.

Pharmaceutical services provider Ergomed (ERGO) has acquired Ashfield Pharmacovigilance Inc for $10m and this will be earnings enhancing in 2020. The deal boosts Ergomed’s position in pharmacovigilance services and gives it a stronger position in the US. Ashfield has annual revenues of $11.6m and contracted future revenues of $9.8m.

Dekel Agri-Vision (DKL) has established a 50/50 renewable energy joint venture with Green Enesys that will operate a 36MW hybrid power (solar and biomass) project in Ivory Coast. This should reduce costs at the palm oil project in Ayenouan. There could be other potential power projects in the region. Dekel is benefiting from the recovery in the crude palm oil price. It produced 37,649 tonnes of crude palm oil in 2019, even though poor weather led to disappointing fourth quarter production. Later this year processing of cashew nuts should commence.

Biopesticides developer Eden Research (EDEN) generated revenues of £2m in 2019, down from £2.8m, and an operating loss of £1.4m. Product revenues grew even though the summer weather restricted usage of Botrytis.

Lettings agency The Property Franchise Group (TPFG) is setting up a financial services division. Acquisitions are planned and the first is a 72.25% stake in Auxilium Partnership, which is the business of newly appointed financial services director Mark Graves. This has been a source of growth for rival Belvoir (BLV).

D4T4 Solutions (D4T4) has confirmed that its second half trading is much stronger than the first half thanks to the contracts won by the Celebrus data analysis software business. The financials sector has been a productive customer base for Celebrus. D4T4 is increasingly winning SaaS business and this could hold back short-term growth, which could lead to the trimming of 2019-20 forecasts.

Instem (INS) continues to increase its recurring revenues. The pharma software company generated organic revenues growth of 12% in 2019. Pre-tax profit is expected to be £3.3m. Net cash was £5.9m. A jump in profit to £4.7m is forecast for 2020.

Estate agency Winkworth (WINK) says 2019 profit was modestly ahead of expectations and a total dividend of 7.8p a share is proposed, which is higher than forecast.

Telit Communications (TCM) did better than expected in 2019 and excluding the former automotive activities revenues grew by 8%. The internet of things technology developer is forecast to make a 2020 pre-tax profit of £20.1m.

Pharma data analytics firm Diaceutics (DXRX) generated more cash tan expected last year and made a small profit. Thee was cash of £11.7m at the end of 2019. The 2020 pre-tax profit could be £800,000.

Barkby Group (BARK) has exchanged contracts on a development site in Huntingdon, which has a gross development value of £10.7m.

Risk management software developer KRM22 (KRM) says 2019 revenues were slightly lower than expected at £4m. Delayed contracts are expected to be signed soon.

Telematics firm Quartix (QTX) managed to maintain revenues at £25.6m in 2019 and a small increase is expected in 2020. The mix of revenues has changed with fleet generating 80%, up from 73%, thanks to growth in the US and France. Insurance revenues fell as expected as low margin business was shed. Pre-tax profit is still expected to decline from £8.2m to £6.6m in 2019, with a further fall to £6.3m forecast for 2020. The dividend is expected to be reduced from 12.4p a share to 12.1p a share, although it will not be fully covered by earnings.

Base Resources (BSE) has increased production guidance for the Kwale mine with midpoints of 78,000t for rutile, 345,000t for ilmenite and 30,500t for zircon. There is a lack of supply of rutile and ilmenite, so this is good news. This should provide a strong boost to profit.

Pressure Technologies (PRES) has been fined £700,000 and will have to pay prosecution costs of £169,000 following the guilty verdict relating to a fatal accident at one of its sites in 2015. The first instalment of £215,000 is due in April with a further six equal instalments payable every six months between July 2020 and January 2023.

Oil and gas explorer and producer Empyrean Energy (EME) is raising £420,000 at 9p a share and chief executive Tom Kelly has contributed £200,000 of that cash. The placing was at a 9% premium to the market price. The cash will be spent on drilling offshore of Indonesia. There is a potential resource upgrade for the Mako gas discovery in Indonesia.

Mereo BioPharma (MPH) says that there have been positive results from the phase 2b study of Setrusumab in adults with osteogenesis imperfecta. They show that it is helping to build bone. A study with children is planned. A meeting with the FDA is due in the coming weeks. Earlier this year, Mereo signed a licence agreement for the use of Navicixizumab in ovarian cancer with Oncologie Inc. An upfront payment of $4m is due.

Nutrition provider Science in Sport (SIS) expects to report 2019 sales of £50.5m with underlying growth of nearly one-quarter. The fastest growth is outside of the UK. River and Mercantile has taken a 5.5% stake.

MAIN MARKET

Shareholders in AIM-quoted Anglo African Oil and Gas (AAOG) have agreed to the sale of 80% of its Congo subsidiary to Zenith Energy (ZEN) and it is waiting for government approval. There is a put and call option over the other 20%. If the call option is exercised Zenith will pay £1m in shares. If the production at the Tilapia oilfield averages at least 4,000 barrels of oil per day for 30 consecutive days, the put option can be exercised and Zenith would pay £2.5m in shares.

Endeavour Mining Corporation has ended its merger discussions with gold miner Centamin (CEY) blaming a lack of information. Endeavour still believes that a combination would be positive. Centamin is raising its final dividend to 6 cents a share, taking the 2019 total to 10 cents a share, up from 5.5 cents a share. Net cash was $348m at the end of 2019. The higher gold price will further boost cash generation. A new chief executive still has to be appointed.

Standard list cash shell Trident Resources (TRR) has £3.29m in cash at the end of October 2019, which is similar to NAV. Management is assessing a few mining project acquisition opportunities.

Stevia sweeteners producer PureCircle Ltd (PURE) says that shareholders owning more than 10% of the share capital have put forward three proposed directors to be voted on at the AGM on 10 February. The company is happy for Sridhar Krishnan, Lai Hock Meng, a former PureCircle director, and Oliver Maes, who was previously a PureCircle director, to be appointed to the board.

Books publisher Quarto (QRT) is raising £13.9m at 68p each. The open offer is underwritten and it will help to reduce the debt burden.

Menswear retailer and hirer Moss Bros (MOSB) Total sales were 3% lower in the 24 weeks to 11 January, but gross margin improved. Hire revenues fell by 17.7%. Cash is £12m.

OTHER MARKETS

Pallets manufacturer RM2 International (RM2) intends to move from AIM to matched bargains market Asset Match (www.assetmatch.com).

Andrew Hore

Andrew Hore – Quoted Micro 4 November 2019

NEX EXCHANGE

Chapel Down Group (CDGP) has managed to generate 92% of 2018’s record harvest in volume terms for the company’s wines. This was achieved even though the weather was not as good this summer. Some vineyards produced their first crop and are still maturing.

Belvedere Leisure Resorts plans to gain a quotation on the NEX Growth Market for its bonds on 22 November. The company is a subsidiary of Belvedere Leisure Park, which owns a site in Dumfries & Galloway with planning permission for a lodge park resort of 444 holiday lodges. The park will be built by Landal GreenParks. The bonds will offer a coupon 6.25%. An initial £10m of bonds will be admitted with a maximum of £25m expected to be raised.

First Sentinel (FSEN) is seeking shareholder approval to issue Green Finance preference shares, which would be quoted on NEX. The cash raised will be invested in the renewable energy sector. A general meeting will be held on 18 November. Warrants have been exercised at 10p a share and this has raised £400,000 for First Sentinel.

Mechanical and electrical design and installation company Field Systems Design Holding (FSD) reported a decline in revenues from £25.9m to £21.8m in the year to May 2019. Higher gross margins meant that the decline in the pre-tax profit was limited and it fell from £625,000 to £553,000. Water generated four-fifths of revenues, up from 48% the previous year. There are no solid spending forecasts, as yet, for the latest water capital investment period for between 2020 and 2025. This causes some medium-term uncertainty. The order book is worth £8.2m, compared with £12m one year earlier. There is a pension surplus.

KR1 (KR1) has made three more investments in blockchain-related tokens. A $100,000 cash investment and payment for advisory expertise will earn 1.017% of Vega tokens issued. Vega is developing a decentralised and censorship-resistant blockchain trading platform. A further $266,220 has been invested in Edgeware smart-contract platform tokens and they will be locked up for 12 months. KR1 will receive 1,000 Ether and this will translate into 3.8 million Edgeware tokens. KR1 has spent $50,000 on a minimum stake of 0.625% in Commonwealth Labs, which is helping to market the Edgeware platform.

Allenby Capital has published a research note on cannabis products supplier Sativa Investments (SATI) and it forecasts revenues of £1.64m in 2019 and £5.15m next year. This will not be enough to make Sativa profitable. Allenby believes that it may have to raise £6m next year to cover its cash outflows and maintain net cash. Sativa has changed the brand name from George Botanicals to Goodbody Botanicals.

Imperial X (IMPP) has raised £347,000 at 2.5p a share. This represents 27.3% of the enlarged share capital.

NQ Minerals (NQMI) increased lead concentrate production at the Hellyer mine from 5,452 tonnes in the second quarter to 6,656 tonnes in the third quarter, but zinc and pyrite concentrate production declined. However, recovery levels have improved for both lead and zinc.

BWA Group (BWAP) intends to sell its investments in Prepaid Card Services and a mining project in Cameroon. They are in the balance sheet at a value of £608,000. The focus will be gold explorer Kings of the North. St-Georges Eco-Mining is converting £300,000 of the £2.45m of convertible loan notes at 0.5p a share. This is equivalent to 23.75% of the enlarged share capital. The loan notes were issued to acquired Kings of the North Corp. BWA is still waiting for £88,000 of the £100,000 of convertibles issued for cash.

Black Sea Property (BSP) has published its 2018 accounts, but it will have to publish its interims before trading in the shares recommences. Management says that it is addressing the accounting concerns of its auditor BDO. The NAV was 0.95 cents a share at the end of 2018.

Asia Wealth Group Holdings (AWLP) reported a drop in revenues from $1.24m to $797,000. This meant that the company fell into loss. There is $726,000 in the bank at the end of August 2019.

Ganapati (GANP) improved its interim revenues from £2.19m to £2.33m, but higher admin expenses meant that the reported loss more than trebled to £8.5m. The company continues to develop its online gaming platform.

TechFinancials (TECH) has completed the sale of a loss-making asset for €100,000.

Queros Capital Partners (QCP) is asking shareholders to approve the ending of the NEX quotation. The general meeting will be held on 14 November.

AIM

Duke Royalty (DUKE) has made a follow-on investment in Lynx Equity, to help the company to finance the purchase of Denmark-based steel staircases supplier Sundby Trapper. This means that Duke has exposure of £12m in Lynx and it will receive annual distributions of £1.6m.

Space management software supplier Smartspace Software (SMRT) is paying £3.2m in cash and shares for Australia-based Space Connect, a provider of cloud-based workplace management software for room booking, desk management, catering and workspace analytics. This will save up to £1.2m a year on product development over two years. The software can be rolled-out in the UK. Smartspace made an interim loss of £4m.

An investor group intends to increase its stake in Petrel Resources (PET) from 29.99% to 51% via a share issue at 1.25p each. They will offer potential oil and gas-related investments to Petrel.

Cabot Energy (CAB) has decided to ditch its AIM quotation on 3 December, but it intends to have its shares matched on Asset Match. This will have to be approved by shareholders. The Canada-focused oil and gas company wants to reduce its overheads.

RedT Energy (RED) plans to merge with Avalon Battery Corporation and combine the best features of each company’s technology. Bushveld Minerals (BMN) is providing an interim loan facility prior to the raising of £23m of new funds.

Avingtrans (AVG) is already reaping the benefits of the acquisition of Booth Industries, thanks to a £7.2m safety doors contract from the government. That means that £12m of orders have been won since the purchase in June.

Safestay (SSTY) is buying a hostel in Athens for €1.5m. The hostel has been operating since 2008 and has an 18-year lease. Safestay has also completed the purchase of the Best Western Glasgow City hotel for £3.15m and this will be transformed into a 200-bed hostel.

MAIN MARKET

Stevia producer PureCircle (PURE) has won a legal decision in its patent litigation with SweeGen, which challenged the patent. It will pursue Federal District court litigation against SweeGen. The patent is for the process of producing Reb M stevia sweetener via bioconversion. The shares remain suspended because it has not published the results for the year to June 2019.

Meditor is considering a 5p a share offer for carpets retailer Carpetright (CPR) and without this offer thee would need to be a refinancing of £80m of debt and additional working capital.

Motor dealer Lookers (LOOK) has warned that its 2019 figures will be even worse than previously thought and chief executive Andy Bruce and chief operating officer Nigel McMinn have left the board. The pre-tax forecast has been cut from £38.7m to £15.5m, compared with £53.9m in 2018. Third quarter new car unit sales fell by 3.2% (on a like-for-like basis), compared with the market decline of 0.6%.

InnovaDerma (IDP) is launching a new topical product in Superdrug before the end of June. The full details will be announced nearer the launch.

The chairman and chief executive of Rainbow Rare Earths (RBW) have acquired 5.46 million shares at 3p each and they have a combined shareholding of 27.5%. Further cost reductions have been identified for the Gakara project in Burundi. A further 100 tonnes of rare earth oxides concentrate were shipped in October. Production levels will fall in the short-term as the production focus moves to a mechanised operation.

Cryptominer Argo Blockchain (ARB) has doubled its mining equipment order and changed the machines it is buying. The cost has been reduced from $13.1m to $9.51m. The machines are more efficient. The current machine orders will increase capacity by 240%.

Resources cash shell Mila Resources (MILA) is still seeking a deal. There was £429,000 in cash at the end of June 2019. Another shell, Bermele (BERM), is also still seeking a deal. It had £682,000 in cash at the end of July 2019.

Blencowe Resources (BRES) is acquiring the Orom graphite project in Uganda for £2m in shares at 6p each. This is subject to a fundraising.

Iconic Labs (ICON) slipped out its results for the 18 months to June 2019 at 6.28pm on 31 October. They show a £6.12m loss, of which, £308,000 was from continuing operations. Net liabilities were £1.67m.

Andrew Hore

Andrew Hore Quoted Micro 12 August 2019

NEX EXCHANGE

Imperial X (IMPP) non-executive director Melissa Sturgess has sold 4.615 million shares at 2p each and she retains an equal number of shares. The total stake was acquired at 1p a share, so she has effectively made her money back. Imperial X is moving into the cannabis sector. Charles Morgan, a relation of Melissa Sturgess, converted £46,150 of loan notes into 4.615 million shares.

NQ Minerals (NQMI) has invested a further £150,000 Tasmania Energy Metals through a convertible loan, taking the total investment to £450,000. The exclusivity period relating to the acquisition of an option over the company’s assets has been extended to the end of October 2019. NQ would have nine months to exercise the option in return for shares worth £5.5m. The latest investment will be used to develop a facility that would produce nickel and cobalt salts for electric vehicle batteries.

Founder Stephen Minion has resigned from the board of Ashley House (ASH) so that there are no conflicts of interest between his role as a director and his other interests. He is chairman and major shareholder of Invescare, which has provided a loan to Ashley House.

iGaming software developer Ganapati (GANP) says that its Malta-based subsidiary has signed a resale agreement with BetConstruct, which will provide the company’s slot games to its integrated operators via its platform. Another deal is with PG Entertainment and this will make Ganapati’s games available in Latin America via a smartphone platform.

Asia Wealth Group Holdings Ltd (AWLP) improved pre-tax profit from $150,000 to $268,000 in the year to February 2019, partly due to a reduction in impairment losses. The company is looking at fintech acquisitions.

The conversion of loan notes in Equatorial Mining and Exploration (EM.P) has led to the issue of just over nine billion shares. There are 24.2bn shares in issue.

Valiant Investments has changed its name to Eurocann International (BUD).

AIM  

Oil and gas company Amerisur Resources (AMER) has effectively put itself up for sale and multiple companies are interested in bidding. They are being provided confidential information. The formal sale process continues.

Execution only broker Share (SHRE) made a first half profit even though stockmarket trading conditions and volumes have been poor and the dividend from Euroclear was moved to the second half. Revenues increased 9% to £11.1m as interest income grew. Account fees have been increased. Share is benefiting from its digital investment. The 20,000 accounts being taken on from JP Morgan will contribute from September. A full year profit of £400,000 is forecast.

Credit hire and legal services provider Anexo (ANX) is trading more strongly than expected, even after previous upgrades. Management has managed to reduce insurance costs. The full year pre-tax profit forecast has been increased by 15% to £23m and next years by 14% to £25m.

Artificial intelligence-based physician platform DocDoc, where Adamas Finance Asia (ADAM) is an investor, has raised $13m. Adamas led the convertible loan note financing for the Singapore-based company. DocDoc operates in eight countries. Hong Kong-based CASIL Clearing has reduced its stake in Adamas from 6.9% to 2.9%. Pello Capital has been appointed joint broker.

Presidential Energy (PPC) is not making the progress it hoped to, but profit is improving. The share price of the Argentina-focused oil and gas company has been declining. finnCap describes its estimates for average production and EBITDA as “challenging” due to delays and disruptions. It has been forecasting EBITDA of $27.9m due to an oil price estimate that is above current levels, whereas the company believes it could be around $20m. There are no plans to change the forecast until the interims are released in September.

StatPro (SOG) increased organic annualised recurring revenues by 3.2% to £56.5m in the first half. The asset management performance software provider increased interim revenues £27.2m to £28.3m, while pre-tax profit improved from £2.37m to £2.66m due to flat operating costs. Net debt is £24.2m.

Richard Bernstein has increased his stake in Ultimate Sports Group (USG) from 27% to 29.8%. Bernstein has an agreement with Ultimate where he would receive 1% of the value of the first acquisition he introduces to the company as long as it is completed by 30 September. Matthew Farnum-Schneider has been appointed chief executive of Ultimate. He has been granted a range of options. Some are exercisable at 20p a share, which is just below the current share price, some at 40p a share and others at 60p a share. Geoffrey Simmonds has left the board.

Urban Exposure (UEX) is not going ahead with a proposed issue of 6.5% secure sterling bonds 2026 because of market conditions.  

MAIN MARKET

S and U (SUS) says demand for motor finance has been strong in the first half, even though the quality of business has been increased. The Aspen property bridging finance business has net receivables of £24m and is growing gradually in a weak housing market. Borrowings are just over £125m and there are additional facilities of £35m. The interims will be published on 24 September.

Construction company nmcn (NMCN) increased interim revenues from £161.2m to £184m, while pre-tax profit improved from £2.5m to £3.5m. The former North Midland Construction had net cash of £15.6m at the end of June 2019. The order book is worth £456m with the main increase coming from the built environment division, which accounts for one-fourth of the order value. A full year profit of £7.4m is forecast.

Iconic Labs (ICON) is making its first acquisition since transforming itself from stem cell services provider WideCells into a social media marketing business. Iconic has agreed to acquire social media agency Social Alchemist. Iconic Labs is still in a poor financial state. There are £600,000 of legacy debts that have to be paid, plus £400,000 that is disputed. The European High Growth Opportunities Securitization Fund will provide up to £1.375m in six tranches in return for loan notes. This is dependent on a prospectus being issued within six months. This prospectus will enable warrants to be attached to the loan notes. There are also more shares to be issued under the previous financing agreement.

Argo Blockchain (ARB) generated 163 bitcoins in July and these are valued at £1.36m. They were mined at a margin of 80%. More mining machines have been ordered and will be up and running by the fourth quarter. This investment will quadruple capacity. Argo could be highly profitable in the second half with a full year pre-tax profit of £6m.

Andrew Hore

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