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Andrew Hore – Quoted Micro 24 August 2020

AQUIS STOCK EXCHANGE

Medical device developer TruSpine Technologies (TSP) ended the week at 34.5p (32p/37p). TruSpine has raised £1.4m at 36p a share with a commitment for a further £250,000. This should provide enough cash until Cervi-Lok, which is one of the three spinal stabilisation devices being developed, starts to generate sales.

Coinsilium Group Ltd (COIN) says that its joint venture with IOV Labs has signed a deal with RedFOX Labs to build fast scaling internet business on the RSK blockchain. Coinsilium has also secured an adviser role to Indorse for a forthcoming initiative to revive the token economics of its IND token through a decentralised finance model. The value of Coinsilium’s cryptocurrency holdings is $575,000, with further tokens worth $105,000 set to vest over the next 12 months.  

KR1 (KR1) has started to generate revenues from staking activities on the Polkadot network, which is KR1’s largest investment. So far, 530.67 DOT have been generated and this has raised $194,802.

Cadence Minerals (KDNC) is raising £1.25m at 12p a share. This will provide working capital and help to pay back loan notes, which are currently valued at £1.7m.

Wishbone Gold (WSBN) is raising £400,000 at 2p a share. Gold exploration is commencing at the Wishbone II project in Queensland. Exploration will also restart at the White Mountains project.

Gunsynd (GUN) owns 4.97 million shares in nickel project developer Sunshine Minerals, which is being acquired by Malachite Resources. Gunsynd will receive 1.26 million shares in Malachite with further deferred consideration of 1.64 million shares.

NQ Minerals (NQMI) has released positive news from surface stockpiles at the Beaconsfield gold mine. The average grade is 3.2g/tonne in 80,000 tonnes of surveyed stockpiles.

World High Life (LIFE) is increasing production capacity by 400%. The new Love Hemp facility will produce 43,000 units of CBD oils, capsules and cosmetics each day. July sales were 57% higher than in June with much higher online sales.

Belvedere Leisure (BELV) has agreed a new strategy with Landal GreenParks UK, which involves delivering lodges for domestic tourism and staycations. The company is in negotiations to acquire the Barncrosh site in Scotland and the company is seeking other sites. Belvedere Leisure Park has been placed in administration and will no longer guarantee the company bonds.

Ian Harebottle and Richard Lloyd have been appointed as directors of All Star Minerals (ASMO).

Capital for Colleagues (CFCP) chief executive Alistair Currie bought 86,419 shares at 25p each and 13,581 at 29.5p each. He has a 3.28% stake.

AIM

Online fashion retailer Sosandar (SOS) doubled its revenues last year. In the year to March 2020, revenues jumped from £4.44m to £9.03m, while the loss more than doubled from £3.55m to £7.81m. First quarter revenues were 54% higher and the lower marketing costs helped to reduce operating costs by 71%. July revenues were 57% higher than the same time last year. Gross margins have improved. There was still £4.4m in cash at the end of June 2020.

Marshall Motor Holdings (MMH) lost £8.9m in the first half of 2020. That is not surprising given that the car showrooms were shut for ten weeks. A small loss is expected for the full year, although this will depend on September demand. Vertu Motors (VTU) says that it lost £5.2m in the March to June period, but made a pre-tax profit of £7.4m in July. Used vehicle sales made a record gross profit last month with volume growth of 13.7%.

Ceramic products manufacturer Churchill China (CHH) managed to make a small profit before exceptional items. Revenues slumped from £31.9m to £18.9m with a strong start to the year offset by COVID-19 in the second quarter. The majority of sales were of hospitality products. Cash improved to £16.3m thanks to the fact that there was no final dividend last year. A potential interim dividend will be reviewed in December when the fourth quarter trading is clearer.

Elypsis Solutions has sold a 3.4% stake in Adamas Finance Asia (ADAM) to Heirloom Investment Management, leaving it with 53.6%. The Adamas share buyback programme is still active. NAV was 75p a share at the end of June 2020, compared to a share price of 26.5p.

Oil and gas producer Hurricane Energy (HUR) admits that it is likely to materially downgrade the resource estimate for the Lancaster early production system and the West of Shetland portfolio of assets. Production is expected to decline from the current 17,000 barrels of oil per day.

Synthetic heavy fuel developer Quadrise Fuels International (QFI) will receive $150,000 for equipment and support supplied to Greenfield Energy for a commercial trial, which will be completed by the end of the year.

Renalytix AI (RENX) has announced a collaboration with AstraZeneca for the use of the KidneyIntelX technology in other chronic diseases.  

EKF Diagnostics (EKF) has made a $5m investment in Trellus Health in return for a 31% stake. Trellus has licenced a platform for the management of inflammatory bowel disease.

Cyber security services provider Shearwater Group (SWG) says positive momentum is continuing. An underlying EBITDA is being made due to higher margin products and efficiencies. There is £4.1m in the bank.

MAIN MARKET

Motor dealer Lookers (LOOK) still has not published its 2019 accounts. Further work is required on the corporate leasing division and vehicle financing arrangements. Net debt was £13.5m at the end of June 2020, helped by delayed government payments. There was a significant first half loss in 2020.

OKYO Pharma (OKYO) is seeking a Nasdaq listing. It has raised £1.44m through additional convertible loan notes to finance clinical development.

BATM (BVC) is on course to increase full year underlying pre-tax profit from $5.2m to $8.8m on a revenues one-third higher. There was cash of $44.3m at the end of June 2020. A resumption of dividend payments is promised at the end of the year. The bio-medical division increased interim revenues by two-thirds to $50m and improved its gross margin. Demand for COVID-19 diagnostic kits remains strong. The networking division improved interim revenues by 3% to $27.4m.

LED lighting and wiring accessories supplier Luceco (LUCE) has upgraded its 2020 underlying operating profit guidance from £18m to at least £23m, helped by improved gross margins. Adjusted earnings per share are expected to be at least 11p a share. The interims will be published on 8 September.

Challenger Acquisitions (CHAL) has entered into a letter of intent to acquire Cindrigo and Cindrigo Energy, which are involved in waste-to-energy and biomass energy projects.

Metal Tiger (MTR) wants to obtain an Australian Stock Exchange listing before the end of the year.

Andrew Hore

Quoted Micro 6 February 2017

NEX EXCHANGE

Bondholders in US-focused oil and gas company Diversified Gas & Oil (DOIL) have overwhelmingly opted to take the cash alternative ahead of the flotation of the ordinary shares on AIM on 3 February. A total of £10.35m worth of bonds (97.1% of bonds in issue) are taking cash, while £198,000 of bonds will be swapped for 380,769 ordinary shares. There will be £106,640 worth of bonds remaining in issue but there will be no trading facility. The ordinary shares of Diversified Oil & Gas (DGOC) raised £39.7m at 65p a share, valuing the company at £68.6m. The share price slipped to 56.25p at the end of the first day’s trading.

Property investor Ace Liberty & Stone (ALSP) had a property portfolio worth £28.5m at the end of October 2016 and this generates annual rental income of £2.31m. The NAV was £18.25m at the end of October 2016 with a £500,000 revaluation gain partly offset by the final dividend payment.Net debt was £6.7m, down from £7.7m at the year end and there are assets held for sale worth £6.3m. Since October, a property was acquired at Hanley for £9m. The deal was financed by a £13.75m loan facility from Lloyds Bank with the rest of the cash used to refinance debt relating to five other properties.

DagangHalal (DGHL), which operates an e-marketplace for Halal verification, has parted company with its chief executive and trading in the shares has recommenced. Mohamed Hussain was paid the compensation that he was entitled to in his contract but he is claiming for twice his annual salary – equivalent to £195,000. Ali Sabri Sani Abdullah has stepped up from finance director to chief executive, while Jeff Teo and Derek Marsh have been appointed to the board. Cairn has replaced Arden as corporate adviser. The share price has not changed since trading recommenced.

AIM-quoted Metal Tiger (MTR) has sold its 28.2% in MetalNRG (MNRG) to Value Generation Ltd, a business associated with MetalNRG director Paul Johnson, and Gervaise Heddle, which each own 14.1% of the resources shell. The sales price was 0.26271p a share, whereas Metal Tiger had paid 0.2628p a share nearly one year ago.

BWA Group (BWAP) says it has been in talks with three potential acquisitions but none of the potential deals progressed. There was a £16,276 cash outflow from operations in the six months to October 2016, which was partially offset by the sale of an investment. BWA had a NAV of £562,000, with £41,593 in the bank, at the end of October 2016.

Botswana-focused oil and gas explorer Karoo Energy (KEP) says that exploration work on its two licences has confirmed the company’s geological model which predicts a deep sedimentary basin that could contain shale gas. In the six months to October 2016, there was a £326,000 cash outflow including capitalised exploration spending. Karoo had £168,000 in the bank at the end of October 2016, and £11,000 has subsequently been raised.

Property development and management services provider Formation Group (FRM) plans to consolidate its shares and shareholders will get to vote on the proposal at the AGM on 27 February. If the five-for-one consolidation is approved it will take place on 28 February.

Valiant Investments (VALP) has raised a further £34,000 at 0.1p a share. Valiant’s 84.7%-owned subsidiary Flamethrower has set up a new company called Slot Right In, which will be the social casino division and Flamethrower plans to acquire and trade domain names. Flamethrower continues to add to its portfolio of apps.

Property investor Ecovista (EVTP) says it is looking at investments in London, Essex and Hertfordshire. An offer of £275,000 has been accepted for a cottage owned by the company, while a house in Bishop Stortford, acquired for £665,000 last year, has been demolished and construction of a new building with a gross value of £1.35m will start in the spring. A planning appeal has been lodged for the development of car park site near Stansted Airport.

Grant Thornton will step down as corporate adviser to Chinese medical products and services provider MiLOC Group (ML.P) on 6 March.

AIM

AdEPT Telecom (ADT) is acquiring Our IT Department, an IT services provider in London and the South East, for an initial £4.75m with up to £3.75m more payable depending on performance. This is a profitable business that brings additional IT skills to the telecoms business. AdEPT has secured a £30m, five-year bank facility from Barclays and RBS, which will help to finance further acquisitions.

Everpower International is acquiring a 9.9% stake in Haydale Graphene Industries (HAYD) in return for a £3.26m cash payment – equivalent to 170p a share. This is part of an agreement that will enable Haydale products to be manufactured for the Chinese market. Commercial revenues from the Huntsman agreement are not likely to come through until 2017-18 and with other strategy changes this means that the revenues for the year to June 2017 will be lower than expected.

Automotive acoustics and thermal insulation designer Autins (AUTG) has shocked the market with a profit warning less than six months after joining AIM and the chief executive has resigned. First quarter sales have been in line with expectations but a major customer has reduced orders. The share price has fallen from the August placing price of 168p to 145p – but it had been as high as 240p. Miton had added to its stake in January.

Ascent Resources (AST) says the flow test at the Pg-10 well was better than expected. The maximum stabilised flow rate was 8.8 million cubic feet of gas per day.

LED lighting technology developer PhotonStar LED (PSL) says that its 2016 revenues will be slightly lower than expected and the loss will be higher because of a challenging second half. Revenues were around £5.4m and the pre-tax loss was £1.3m. There was £230,000 in the bank at the end of 2016 with £830,000 of invoice financing. Cost savings have been made and this helps to improve the outlook for 2017, although the poor second half trading has continued into January.

Eagle Eye Solutions (EYE) says that interim revenues have grown 72% to £5.1m, which is better than expected. The nationwide roll-out of the Asda contract has increased coupon redemption numbers. Cavendish Asset Management has increased its stake to 8.26%.

ECR Minerals (ECR) says that the Australian government has given consent to for drilling at the Byron target in the Bailieston project area. ECR has applied for two more licences and is awaiting news of the renewal of the Avoca licence.

Tissue Regenix Group (TRX) says that dermal allograft product DermaPure, which includes the company’s dCELL technology, has been included in the US Department of Veteran Affairs Federal Supply Schedule. This covers 152 hospitals and 800 outpatient units. This will boost the commercial prospects of the wound care product.

Prospex Oil & Gas (PXOG) is raising £850,000 at 0.5p a share and this will help to finance the evaluation of potential projects. The share price has slumped since the beginning of the year because of a disappointing result from a well on its Kolo licence area in Poland. The placing price is about one-fifth of the share price prior to the drilling news.

New management at Quantum Pharma (QP.) says trading is in line. This suggests that the pre-tax profit for the year to January 2017 will be £6.7m, down from £10m in the previous year, although there will be exceptional reorganisation charges. The loss-making NuPharm business has been closed. Net debt was £13.5m – after most of the reorganisation costs have been paid. The share price is less than one-third of its peak less than two years ago but it is higher than the 34p a share placing price in October.

Vela Technologies (VELA) is raising up to £550,000 from a bond issue via the UK Bond Network. There is already interest for £250,000 of bonds and the other £300,000 have been underwritten. The interest rate is 10% and the bonds can be repaid after one year, including interest. If they are repaid earlier than one year’s interest has to be paid. Vela will use £150,000 to increase its investment in Portr, the airline passenger facilitation and baggage transport service.

BP Marsh (BPM) has subscribed for a 30% cumulative preferred ordinary shareholding in Stewart Speciality Risk Underwriting Ltd, a Toronto-based start-up headed by a boss with 25 years of experience. Stewart specialises in insurance for the construction, manufacturing, onshore energy, transport and public sectors. A £480,000 loan facility is also being provided.

Reconstruction Capital (RC2) is returning €17m of cash to shareholders. This equates to €0.115 a share.

MAIN MARKET

Engineering and environmental consultancy Waterman Group (WTM) says that its interim revenues and profit will be in line with last year. Net cash was £6.7m at the end of 2016. This will enable Waterman to continue to increase its dividend.

Publisher Quarto (QRT) is on course to increase its pre-tax profit from $14.1m to $15.5m. Net debt was $62.2m at the end of 2016. A buyer has been identified for the Australian distributor Books and Gifts Direct. This will raise $1m in cash with the other $4.75m of the disposal price in loan notes. Even after a 46% increase in the share price, the 2016 multiple is less than eight. There are plans to change the way that the backlist of titles is valued.

Rainbow Rare Earths (RBW) commenced trading on the standard list and the share price ended the week at 12p, compared with the placing price of 10p. Rainbow has issued £260,000 worth of shares at the placing price to cover a majority of the costs of its flotation.

Challenger Acquisitions Ltd (CHAL) has sold Starneth less than two years after buying the designer and engineer of giant observation wheels. Challenger completed the acquisition of Starneth in July 2015 when an initial €1.25m was paid in cash and €825,000 in shares at 75p each. The second cash payment of €1.25m was delayed. Challenger will receive $6m in fees when the Jakarta wheel’s funding arrangements are finalised and the €1.25m payment will be taken out of that. There had been a third payment due but that does not appear likely to happen. This is a complicated deal but it is difficult to see this as a positive deal for Challenger but it will continue to work with Starneth and it will have a stake in the New York wheel. Acquisitions of businesses in the leisure and entertainment sectors that are close to revenues are likely.

Andrew Hore

 

Quoted Micro 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

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