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Quoted Micro 19 October 2015

ISDX

AIM-quoted Rare Earth Minerals (REM) has announced its intention to gain a secondary quotation on ISDX on around 28 October. Executive chairman David Lenigas says that the shares will continue to be traded on AIM. REM has increased its shareholding in ASX-listed European Metals Holdings Ltd, which owns the exploration rights to the Cinovec lithium/tin deposit in the Czech Republic, to 11.07%. REM paid £170,640 for two million shares in European Metals plus two million warrants exercisable at A$0.20 for a 12 month period. Lenigas is also a director of AfriAg (AFRI), an AIM company that has already started trading on ISDX, and Evocutis, which expects to start trading on 19 October. AIM-quoted Sefton Resources says that it investigated the possibility of moving to ISDX if, as appears inevitable, it loses its AIM quotation but says it was not a viable option. This shows that ISDX will not just take any AIM company that wants to move to its market.

Another David Lenigas and Donald Strang vehicle, Leni Gas Cuba Ltd (LGC), has launched a pathfinder prospectus. LGC has already raised £4.525m prior to the flotation. Most of this cash was raised at 2p a share but the majority of shares in issue at the end of July 2015 were issued at 0.01p a share. BVI-registered LGC intends to make investments in Cuban businesses. At this stage there is still a wide range of options in terms of sectors. LGC may also invest 25% of its funds in other Caribbean ventures. LGC has already invested in an oil and gas company and a travel company. The oil and gas investment and related options, which have subsequently been exercised at an additional cost of £100,000, are in the balance sheet at £690,000. The travel investment cost £39,000. If £500,000 of additional cash is raised in the proposed subscription at 5p a share this will provide £148,500 after costs and pro forma cash would be £3.56m. Global Investment Strategy (UK), which is owned by AIM-quoted Octagonal (OCT) where Lenigas and Strang are former directors, currently owns 4.1% of LGC.

Cash shell Chalkstream Investment Company (CHLK) intends to leave ISDX on 14 November. At 0.115p (0.1p/0.13p) a share, the shell is valued at £900,000. There was £621,000 in the bank at the end of May 2015. There was a six month cash outflow of £58,000. The ultimate beneficial owners of Chalkstream are property company director Robert Ware and former Numis media analyst Dominic Buch. Chalkstream joined ISDX on 17 May 2013 when it raised £330,000 at 0.1p a share. There was £754,000 in the bank at that point. Chalkstream was seeking to buy a UK business in the services sector.

Nodding Donkey (NODD) has raised £42,600 at 3p a share and this cash will cover the company’s overheads and help to finance the 86.95% owned subsidiary Equatorial Oil & Gas in its exploration activities in Botswana. The placing is at a significant discount to the market price of 7.75p (7.25p/8.25p) a share, which values the company at £11.5m. The most recent trade was on 1 October at 7.5p a share. At the end of April 2015, Nodding Donkey had £29,000 in the bank and there was a cash outflow of £114,000 in the previous 12 months – according to unaudited accounts. Last month, Equatorial was issued with three petroleum exploration licences in Botswana, which could host shale gas. One licence was issued directly to Equatorial and the other two to Equatorial’s 85%-owned subsidiary Tamboran Botswana. Equatorial has two licences for coal bed methane.

Diversified Gas & Oil (DOIL) has raised a further £1m from the issue of 8.5% unsecured bonds 2020. This will mean that there will be 2.2 million unsecured bonds in issue. The proceeds will be used to develop the company’s oil and gas assets in Ohio and West Virginia

Wey Education (WEYP) founder Zenna Atkins has sold her remaining stake in the educational services provider. The 1.4 million shares were sold on 14 October. The sale removes an overhang and could make the planned move to AIM easier. At 4.5p (4p/5p) a share, Wey is valued at £2m.

AIM

Recruitment services provider Empresaria (EMR) is acquiring Pharmaceutical Strategies for up to $12.1m and this has led to house broker Arden upgrading its 2015 forecasts. The acquisition takes Empresaria into the US healthcare market and boosts the contribution of the sector to the group. The Massachusetts-based recruitment company specialises in pharmacy benefit managers and nurses, which is an area of growing demand in the US. There has been a slight reduction in 2015 estimates for Empresaria but the 2016 pre-tax profit estimate has been raised by 8% to £8.6m, while earnings per share estimates have been increased by 5% to 10.8p.

Infection prevention products supplier Tristel (TSTL) reported better than expected figures for the year to June 2015. All parts of the business improved their revenues, particularly overseas.  Underlying pre-tax profit improved from £1.8m to £2.6m. There was a special dividend of 3p a share and even excluding that the total dividend improved from 1.6p a share to 2.7p a share.  A 2015-16 profit of £2.9m is forecast. Tristel is in the process of getting regulatory approval in the US.

Digital video content distributor Rightster (RSTR) is undertaking a strategic review. The options include a sale of the company, divestures, partnerships or acquisitions – although this will be difficult to finance given the cash outflow from the group. The main problem is the deferred consideration that has been payable in shares and been highly dilutive. There were 137.9 million shares issued in August for past acquisition Base79 and these can be sold from 12 November with the consent of Cenkos. The shares were issued at 15p each compared with the current market price of 10.5p. A further £3.6m worth of shares are due to be issued by the end of 2015. Rightster has already issued a further 6.2 million shares for the deferred consideration of another acquisition.

Staffline (STAF) has acquired Northern Ireland-based recruitment agency Diamond Recruitment for an undisclosed amount. This will enhance the group’s business in Ireland. This deal comes three weeks after the purchase of professional drivers provider Milestone.

MAIN MARKET

Standard list shell Mithril Capital (MITH) has announced plans to acquire Agenda 21 Digital and move to AIM. Mithril has common backers with Satellite Solutions Worldwide (SAT), which was originally shell Cleeve Capital and followed the same route. Trading in Mithril shares was suspended at 3.6p. Mithril joined the standard list on 22 December 2014 and raised £3.32m net at 3p a share and the shares initially started trading at 6.5p each. Mithril subsequently switched its investing strategy from a focus on the resources sector to the technology sector. The purchase of digital media and analytics agency Agenda 21 marks the first step in a strategy to acquire digital focused marketing services and technology businesses. The initial consideration is £3.3m – 65% cash/35% shares – with up to £8.6m in deferred consideration payable based on performance over the next three years. Advertising industry veteran Peter Scott will become chairman of Mithril.

MATCHED BARGAINS

Surface treatments products and services Norman Hay has transferred its quotation from Britdaq to Asset Match. In 2014, revenues grew from £44.8m to £46.5m and underlying profit rose from £2.77m to £3.6m. Net debt was £494,000. Hay’s NAV was £18.9m at the end of 2014, just over one-third of which is intangible assets, whereas the current market cap is £14.8m – at 100p a share. That is equivalent to six times post-tax earnings in 2014.

ANDREW HORE

LATEST EDITION OF AIM JOURNAL AVAILABLE HERE. OCTOBER EDITION INCLUDES REVIEW OF AIM AWARDS WINNERS.

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