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Quoted Micro 29 February 2016


Investment company Western Selection (WESP) reinvested part of the proceeds of its disposal of shares in marketing services firm Creston in gas maintenance services provider Bilby last July and it is already showing a significant gain. This helped offset a further decline in the value of the stake in Northbridge Investment Services. Net cash was £1.09m at the end of 2015. An unchanged interim dividend of 1.05p a share was declared. The NAV was 80p a share at the end of 2015, up from 75p a share six months earlier. The current share price is 47.5p (45p/50p) a share.

National Milk Records (NMRP) says that the move from the retail price index to the consumer price index for the calculation of inflation-related adjustments for the Milk Pension Fund should significantly reduce the overall deficit of the fund. More details will be announced with the results for the year to March 2016. The share price rose 5p to 78.5p (77p/80p). The pension liability was £8.4m at the end of September 2015.

Sutherland Health Group (SHGP) has decided to withdraw from ISDX, pending shareholder approval. Sutherland has been quoted on ISDX for eleven years and in recent years it has been hit by declining turnover. Leaving ISDX will help to reduce costs. Sutherland may seek to obtain a matched bargains quotation. The share price has already fallen significantly but it was unmoved following the withdrawal announcement. The market capitalisation is £700,000.

LED lighting supplier Gowin New Energy Group Ltd (GWIN) claims to have raised £400,000 at 0.2p a share but this is below the nominal value of 1p a share so it appears strange. The new shares equate to more than one-quarter of the enlarged share capital. The market price is 0.45p (0.35p/0.55p).

Ace Liberty & Stone (ALSP) raised the full amount of £3.5m from its open offer at 1p a share. This offer was at a significant discount to the market price. Shareholders applied for 439.6 million shares when there were 350 million offered. The share price rose to 4p (3p/5p) a share after the announcement. The cash will help to build up the property portfolio.


Solid State (SOLI) has lost its high profile Ministry of Justice tagging contract and the share price has fallen by one-third. Technical problems delayed the launch of the new tags and little was expected from the contract in the short-term but this is an embarrassment for the company. Solid State is in discussions on the terms of the termination of the contract. The underlying business and attractive yield should underpin the current share price level.

Disinfection and infection control products supplier Tristel (TSTL) reported slightly better than expected interim figures. The £4.3m cash pile and cash generative nature of the business provides scope for further special dividends in the future. The interim dividend was raised by 95% to 1.14p a share. In the six months to December 2015, underlying pre-tax profit rose from £1.1m to £1.5m as revenues edged up even though sales of lower margin products declined. International growth offset weakness in the UK. Four directors including the chief executive and finance director bought shares after the results announcement. Higher R&D spending will hold back profit growth with flat earnings per share of 5.2p expected this year rising to 5.6p next year.

Nostra Terra Oil & Gas (NTOG) has acquired a 60% working interest in producing assets in the Permian Basin, which straddles Texas and New Mexico, for $3m plus $300,000 in 12 months. Average production was 122 bopd gross – 92 bopd net – during last November and there are plenty of opportunities to increase this. Net proven reserves are 2.7 million boe. In the year to July 2015, the assets made a pre-tax profit of $250,000 on revenues of $1.8m.

CCTV and security systems supplier Synectics (SNX) returned to profit last year. In the year to November 2015, revenues were 6% higher at £68.5m and an underlying loss of £2.38m was turned into a profit of £1.55m. That was before further restructuring costs. The main reason behind the improvement was a swing from loss to profit of the integration and managed services division. The systems division increased its profit contribution despite exposure to the oil and gas sector. Costs have been reduced and the company has moved into a net cash position. The outlook is positive with new orders won in recent months, particularly in gaming. An operating margin of 8%-10% is an achievable longer-term target according to management.

Sunny Hill Ltd has launched a 3p a share cash bid for oil and gas explorer Petroceltic International (PCI). This values the Irish company at £6.42m. The bidder is owned by the Worldview Economic Recovery Fund and it is offering a significant discount to the previous market price because it believes that Petroceltic is in a precarious financial position. Net debt was $184m at the end of June 2015 and payments on the senior bank facility have been waived up until 4 March. This waiver may be extended. Worldview already owns 29.6% of Petroceltic and it has been in dispute with the board for some time.


Immunotherapy technology developer Oxford BioMedica (OXB) has raised £8.1m at 6.3p a share. There was £9.4m in the bank at the end of 2015 although net debt was £17.9m. The cash is required for working capital for the development of treatments and the lentiviral vector manufacturing-related technology, where there are already out-licensing talks. The OXB-102 Parkinson’s disease treatment and corneal graft rejection treatment OXB-202 are set to start phase I/II clinical studies in the next 12 months.

Packaging and labels supplier Macfarlane Group (MACF) increased its pre-tax profit by one-fifth to £6.8m in 2015, helped by recent acquisitions. Revenues were 10% ahead at £169.1m and the dividend was also increased by 10% to 1.82p a share. Glasgow-based Macfarlane generated all of its revenue growth from its core packaging distribution division but profit growth came from both parts of the business. The manufacturing division improved its gross margin because there were higher sales of products with better margins. The market remains stable.


Quoted Micro 28 December 2015


Blockchain technology Coinsilium Group (COIN) has joined ISDX and raised £1m from a placing at 10p a share. The Seedrs crowdfunding offer raised an additional £123,000 at 10p a share from 161 investors. Daniel Stewart has been appointed joint broker and granted a warrant to subscribe for one million shares exercisable at 20p a share. The share price ended the first day of trading at 11p, valuing the company at £7.8m.

Renewable energy generator and supplier Good Energy (GOOD) is applying for a dual quotation on the Social Impact segment of the ISDX Growth Market 41 months after it switched from ISDX to AIM. A placing at 85p a share in July 2012 valued Good Energy at £10.6m. The share price has risen to 205p, valuing the company at £30.5m. Since joining AIM, Good Energy has paid dividends of 10.6p a share.

Personal care products supplier Sutherland Health Group (SHGP) reported a small reduction in its interim loss from £38,000 to £33,000 even though revenues fell from £343,000 to £286,000 in the six months to September 2015. Sales to the NHS are declining but online sales are being built up. There was £28,000 in the bank at the end of September 2015.

Capital for Colleagues (CFCP) increased its annual revenues from £212,000 to £523,000, while unrealised investment gains jumped from £34,000 to £459,000. A pre-tax profit was reported for the year to August 2015 but excluding the unrealised gains there was a small loss. There was an additional £400,000 invested during the year. The NAV was £4.13m at the end of August 2015. A further four investments have been made since then, including an investment in a new company, which takes the total of unquoted investments to 12.


Speciality pharma company Diurnal (DNL), which is an investee company of former AIM company Fusion IP (now a part of IP Group), joined AIM on Christmas Eve. Diurnal was spun out of Sheffield University but it is now based in Cardiff – Finance Wales has a 22.1% stake. Founder Professor Richard Ross is still with the company and owns 3%. A placing at 144p a share raised £25.4m, before £1.6m of costs, and values Diurnal at £75.2m. An additional £4.65m was raised via a convertible issue. Diurnal Ltd, now a subsidiary of the company that joined AIM, had £6m in the bank at the end of June 2015. There are two main treatments in development are Infacourt and Chronocourt, which are treatments for diseases of the adrenal gland. Infacourt is the first product designed for children of less than six years old suffering from Congenital Adrenal Hyperplasia and Adrenal Insufficiency. Chronocourt mimics the body’s natural cortisol circadian rhythm which should improve disease control in the same areas as Infacourt. Longer-term, Diurnal wants to become a wider-based endocrinology treatments specialist. There is currently a phase III trial in Europe for Infacourt and a phase III trial of Chronocourt is expected to start in the first quarter of 2016. IP Group still owns 45.6% of Diurnal. The share price ended the first day at 153p.

Den Harthogh is making a recommended 9p a share cash offer for Interbulk (INB), which values the bulk transport container rental business at £42.1m. The bid is more than double the previous closing price. Interbulk has high borrowings – net debt was £53.2m at the end of September 2015 – and they come up for renewal in March 2017. The two companies have a good geographic fit. In the year to September 2015, revenues fell from £256.3m to £225.3m and underlying pre-tax profit was flat at £3.16m.

EKF Diagnostics (EKF) is selling its loss-making molecular diagnostics business back to its co-founders. Selah Genomics was acquired for $35.6m in shares during April 2014 and it had been in the EKF balance sheet at £41.4m. The disposal consideration is nominal and the balance sheet value is being written off. There should be annual cost savings of £2m for EKF which will either receive 10% of the proceeds of the future disposal of Selah or if new equity is raised within 12 months EKF will obtain a 10% stake. EKF is borrowing £3m from Zwanziger Family Ventures, where non-executive chairman Ron Zwanzinger has interests, at an interest rate fixed at 5 percentage points above LIBOR. The debt is secured via second charge on EKF’s assets – HSBC has the first charge. The loan can be converted at 14.25p a share – a 20% premium to the market price at the time – or at a 15% discount to the next substantial fundraising.

Paragon Diamonds has not found a new nominated adviser and its quotation will be cancelled on 29 December. Paragon is still trying to raise the cash to bring the Lemphane kimberlite pipe project in Lesotho to production and trying to obtain an exploration licence for the Mothae kimberlite resource. Management hopes to obtain another London quotation later in 2016.

Non-executive chairman Peter Johnson and his interests have sold 50.2 million shares in Park Group (PKG) at 65p each. This is the whole of their 27.3% stake. Artemis has increased its stake to 6.16%, while Schroders has raised its stake to 13%.

Castle Street Investments (CSI) is in negotiations with a potential IT managed services acquisition but the cash shell has failed to secure an acquisition within 12 months so trading in the shares has been suspended. Cash, excluding liabilities should be £22m at the end of 2015 but further cash will be required to pay for the acquisition and finance its growth.

Tracsis (TRCS) is selling its Australian business to its management. This company became part of the business after the Sky High acquisition. Tracsis will focus on its core markets and it does not believe the Australian data capture operation, which made a pre-tax profit of £250,000 on revenues of £2.2m in the year to July 2015, has critical mass. The initial payment is A$285,000 with deferred consideration of A$799,000 payable over three years.

The board of ISG Group (ISG) says that the 143p a share bid from Cathexis does not offer an adequate premium for control. The argument is that the level of the offer does not reflect recent growth and future potential of the fit-out business. Investment company Cathexis took its 29.6% stake at a much lower share price.

Andrew Hore

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