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Alan Green on China & Equities, plus Echo Energy #ECHO, Union Jack Oil #UJO & Caerus Minerals #CMRS on UK Investor Magazine podcast
Alan Green joins the Podcast as news filters through Burberry has been the first British luxury brand to feel the wrath of China over pressure on their human rights abuses. This follows similar action against Nike which sent the sports brand share price spiralling.
In a Podcast packed full of commodities companies we look at the potential for China to damage the business model’s of FTSE 100 miners who export commodities from Australia to China. China has recently put restrictions on Australian exports and has managed to find alternatives from other neighbours.
If they decide to ramp up restrictions as part of a backlash against the West, the impact for the FTSE 100 could be devastating.
We discuss Echo Energy (LON:ECHO), Union Jack Oil (LON:UJO) and Caerus Mineral Resources (LON:CMRS)
Alan Green talks to David Bramhill, Executive Chairman at Union Jack Oil (AIM: UJO), a company engaged in onshore hydrocarbon production and development in the UK.
David discusses progress at key projects including West Newton, Wressle, Biscathorpe and Keddington before we look at the acquisition of the Piper Complex Royalty Units from Cambridge Petroleum announced today.
David discuses the recent share consolidation before we take a look at the what the year ahead holds for Union Jack Oil.
AQUIS STOCK EXCHANGE
Renewable energy supplier Good Energy (GOOD) improved interim revenues by 6% to £67.5m. Gross margins declined as Good Energy focused on business customers. There was a slump from profit to loss, partly down to expected credit losses. There is no interim dividend, but payments should resume next year.
Newbury Racecourse (NYR) reported a two-thirds slump in interim revenues to £2.43m. This meant that the loss jumped from £363,000 to £1.69m. There were six race days in the period. Catering, events and the hotel all fell into loss, although the Rocking Horse nursery made a reduced profit. Nine race days are planned for the second half. There will be a substantial loss for 2020.
S-Ventures (SVEN) raised £650,400 at 2.67p a share prior to flotation on 16 September. There have been no trades and the share price ended the week at 3p/5p.
Trading has resumed in Lombard Capital (LCAP) following the completion of disciplinary proceedings. A fine of £23,800 has been imposed on Lombard for the failure to provide timely information and a resulting sharp movement in the share price. Lombard also failed to notify changes in significant shareholdings.
Western Selection (WESP) says that its NAV has fallen by 29.7% to 45p a share over the 12 months to June 2020. The decline in the share prices of AIM-quoted investments is behind the decline. The lack of a dividend from Bilby (BILB) meant that income more than halved.
NQ Minerals (NQMI) has raised £275,000 at 7p a share. TruSpine Technologies (TSP) says that Evrensel Capital Partners is being given an extension for its subscription of £250,000 at 36p a share. Evrensel has until 11 November to complete the subscription and it has been taken on as an adviser by TruSpine.
Panmure Gordon has been approved as a corporate adviser for the Aquis Stock Exchange.
ThinkSmart (LON: TSL) has revalued its remaining 10% stake in buy now, pay later finance provider Clearpay. The Clearpay stake was valued at £53.7m at the end of June 2020. That is based on the Afterpay share price, which has risen since. Following the settlement of litigation with Dixons Carphone, which led to a payment of £1.45m after June, ThinkSmart has around £10m in the bank and generating cash.
Hanover Bidco has launched a 40p a share recommended bid for ClearStar (CLSU) and this values the employee checks company at £14.7m. ClearStar floated at 57p a share back in July 2014.
Parcel and freight delivery company DX (DX.) increased full year revenues by 2% to £329m and there was a move from loss to a pre-tax profit of £1.8m. The freight division loss was reduced. Net cash was £12.3m, although it is helped by delayed tax payments. The parcels market is growing, and DX continues to invest in new depots.
Keystone Law (KEYS) has resumed dividends following the interims. Revenues grew but the rate of growth slowed. Lawyer recruitment continues and Panmure Gordon has upgraded its 2020-21 earnings from 7.1p a share to 11.9p a share.
Billing and customer relationship management software provider Cerillion (CER) has gained its largest ever contract. This £11.2m contract underpins next year’s figures.
There was a small decline in interim revenues at freight management services provider Xpediator (XPD) and there are further cost saving benefits in the second half. Freight forwarding made a higher profit, although overall operating profit was flat. A 0.45p a share dividend was declared. NAV is 19.9p a share.
Filta Group Holdings (FLTA) has been hit by closures and weak trading in the catering sector. The commercial kitchen services franchise group says trading is recovering, but it is still down on previous levels. Revenues should be more than two-thirds of normal levels by the end of 2020.
Online security software provider Kape Technologies (KAPE) doubled revenues in the first half of 2020. Organic growth was 12% as more people working from home led to demand for Kape’s software products. There are still cost savings to come from the Private internet Access acquisition. Full year earnings per share are expected to increase from 6.5p to 13.3p.
Cloud-based payment services provider PCI Pal (PCIP) reported slightly higher than expected full year revenues of £4.4m, up from £2.8m the previous year. Total annual contract value is running at £6.7m and this underpins the current forecast for this year. PCI Pal will continue to lose money but the cash outflow will reduce.
Union Jack Oil (UJO) is raising £7m at 0.16p a share to cover the oil and gas company’s share of investment in the Wressle field and fund other work programmes and drilling.
Trading in Phimedix (PHM) shares has been suspended because the shell has not found a suitable acquisition. Prior to suspension, Steven Myers sold his 7.7% stake and Ali Mortazavi further reduced his stake from 8.15% to 7.7%.
Tex Holdings (TXH) has decided to delist from the Main Market by 13 October. Trading has been suspended since 29 April 2019. Funding is required and the board believes it will be difficult to secure the cash as a listed company because of the requirement for a prospectus for a major share issue. Costs will also be reduced.
IMC Exploration (IMC) intends to accelerate its exploration programme at the North Wexford gold project. The drilling will be JORC compliant.
Papillon (PPHP) says due diligence on its potential mining acquisitions has been completed. Kilmapesa has recommenced gold production.
Castillo Copper Ltd (CCZ) says that it has verified high-grade copper and identified gold mineralisation at the Big One deposit, on the Mt Oxide project. There are plans to commence drilling.
Alan Green talks to David Bramhill, Executive Chairman at Union Jack Oil (AIM: UJO), a company engaged in onshore hydrocarbon production and development in the UK. David discusses key projects including Wressle and the additional stake acquisition which takes the UJO stake to 45.5%. He also discusses West Newton and Biscathorpe, and with over £5m in the company kitty, he provides a bullish outlook for the oil price. David looks at value inflection points for the company as we emerge from the COVID crisis, and provides key takeaway points for investors.
Gin and spirits supplier British Honey Company (BHC) is using spare capacity in its distillery to produce # alcohol sanitisers. There is a shortage of sanitisers due to the coronavirus and HMRC has given permission for British Honey to produce denatured alcohol. The sanitisers are made with 70% alcohol and extracts of honey and green tea. Longer-term, the strategy is to buy other spirits brands to use spare capacity. British Honey started off as a honey producer and moved into craft spirits infused with honey in 2017. It has a computer-controlled, 1,000-litre capacity still and bottling facility with a capacity of 1.5 million bottles a year. Ingredients can be tracked. There has been £4m invested in this infrastructure. The existing products use a small proportion of this capacity. The company also produces spirits on behalf of third parties. Discussions have begun with some potential acquisitions. British Honey joined Aquis Stock Exchange at the beginning of the week and raised £4.25m (£3.88m after expenses) at 110p a share. Advanced assurance of eligibility for the Enterprise Investment Scheme has been obtained. The initial market capitalisation was £10m. Cairn is corporate adviser and Stanford Capital Partners is broker.
Sativa (SATI) is launching a cannabigerol (CBG) and alcohol-based hand sanitiser. CBG is thought to be effective as an antibacterial product and could combat superbugs.
Energy supplier Good Energy (GOOD) reported better than expected 2019 pre-tax profit. Underlying pre-tax profit still dipped from £2.3m to £2.1m due to lower gross margins. Profit is expected to bounce back to £3.1m in 2020. Both business and domestic customers were higher last year. The total dividend has been increased from 3.5p a share to 3.7p a share. Net debt was £39.2m at the end of 2019.
Brewer Shepherd Neame (SHEP) has decided not to pay the interim dividend of 6p a share announced the week before. The sharp downturn in trading and subsequent closure of pubs due to COVID-19 means that Shepherd Neame is also cutting capital investment and the board is taking a one-fifth cut in pay. Rent receipts from tenants were suspended from 16 March.
KR1 (KR1) has generated $168,000 from selling ATOM, taking the total raised from disposals to $290,000. It still holds nearly 17,000 ATOM.
Sheltered housing developer Walls and Futures REIT (WAFR) has outperformed its benchmark for a third year in a row. The MSCI UK Residential index increased by 4.4% in 2019, while Walls portfolio increased by 23%.
BWA Group (BWAP) says that its subsidiary has been awarded an exploration licence for an area known as Dehane in central Cameroon. The focus is rutile sands and other minerals. The permit is for three years and the financial commitment in year one is £275,000, followed by £207,000 in each of the next two years. Tri Castle Investments is subscribing £100,000 at 0.5p a share.
First Sentinel (FSEN) has raised £389,000 at 20p a share for working capital. VI Mining (VIM) raised £56,000 via a placing at 15p a share that was curtailed because of COVID-19. Further cash will be raised in the future.
Eastinco Mining and Exploration (EM.P) has secured a $200,000 facility from Augustin Corp, which is owned by a trust related to Eastinco executive chairman Charles Bray. The annual interest rate is 6 percentage points above commercial lending rates and the facility lasts for up to 18 months.
SAPO (SAPO) is holding a general meeting on 14 April to gain shareholder approval for increasing the share capital. Executive chairman Dr Keith Harris has been issued 20 million shares at 1p a share. The consideration will be paid by the end of 2024.
Belvedere Leisure Resorts (BELV) believes that once normality is resumed it can accelerate its resort development and deliver phase one on time.
Dozens Savings (DS07) says that 795 investors have subscribed for company bonds.
Trading in Dana International (DANA) shares remains suspended. The property investor is still trying to gain full information about share transfers.
Christian Taylor-Wilkinson has become interim chief executive of Altona Energy (ANR) following the resignation of executive chairman Qinfu Zhang.
Sales of COVID-19 tests by Novacyt (NCYT) continue to accelerate. It has received orders worth more than £8.7m in a six-week period. Manufacturing capacity is being increased.
Synairgen (SNG) is about to start a phase II trial for SNG001 for the treatment of an initial 100 patients with mild-moderate COVID-19. Initial results should be available by the summer. SNG001 is inhaled interferon beta, which has shown benefits in the treatment of SARS. The existing COPD phase II trial has been paused, but initial results suggest that there is clinical benefit.
Best of the Best (BOTB) would have been in trouble a decade ago when it generated its competition entries from airports and other areas of high footfall. Having gone online, the competitions organiser has continued to prosper. Additional marketing investment has helped the 2019-20 performance to be above expectations. The pre-tax profit forecast for the year to April 2020 has been raised from £2.6m to £3m.
Payment systems provider PCI-Pal (PCIP) has won a contract for its Agent Assist product with a UK government organisation. The annual contract value is £565,500.
Manx Financial (MFX) is buying back the 12.94% shareholding owned by Aaron Banks. Manx intends to pay £1.61m for the shares and then cancel them. This cash will become a loan to Manx and an existing £483,500 convertible will be added to the sum. Banks has requisitioned a general meeting at iodine manufacturer Iofina (IOF) in order to remove Lance Baller from the board and become a director himself. Banks does not intend to make a bid for the company.
Mobile payment services provider Bango (BGO) is still set to move into profit in 2020. End user spend doubled last year.
Indigovision (IND) is recommending a 405p a share cash bid from Motorola Solutions. This values the video security technology company at £30.4m. In 2019, pre-tax profit was $1.3m.
MJ Hudson (MJH) grew organic revenues by 12.5% in the first half. The asset management services provider has net cash of £20.1m following last year’s flotation. The acquisition of Meyler will expand the range of services provided in the US. The customer base is predominantly long-term and closed ended funds. A full year pre-tax profit of £1.1m is forecast.
Big Sofa Technologies (BST) has put itself up for sale and trading in the shares is suspended. The video and data analytics technology developer needs additional cash and it is difficult to raise funds in the market when there is so much uncertainty. The company expects proposals by the end of April.
The Wressle oil field development in north Lincolnshire is set to commence production in the second half of 2020 and Egdon Resources (EDG) has a 30% stake and is operator. Europa Oil and Gas (EOG) and Union Jack Oil (UJO) also have interests. The breakeven oil is estimated at $18/barrel. Production could start at 500 barrels a day. An application has been allowed against North Lincolnshire council for costs relating to delays in gaining a permit.
Diagnostic and precision testing services provider Diaceutics (DXRX) boosted revenues by 30% last year following its flotation. Although gross margins improved, a significant increase in headcount meant that pre-tax profit dipped to £500,000. The initial benefits of the investment in the business are showing through growth in Asia and other regions.
Regional property investor Real Estate investors (REI) increased its dividend by 7% to 3.8p a share. Like-for-like rental income was slightly lower at £16.9m and the weak retail property market led to a 3% reduction in EPRA NAV to 67.4p a share. Loan to value is 46.7%. The Midlands property market is strengthening ahead of the Commonwealth Games in Birmingham. An improvement in NAV to near-69p a share is forecast for 2020.
Xeros (XSG) has signed a joint development agreement with a global commercial laundry business. XFiltra micro-particle filtration technology will be included in the partner’s commercial washing machines. The EU plans to have micro-particle filtration in use by 2026. Xeros is likely to need to raise more cash next year.
Oncimmune (ONC) says NICE has completed a positive review of EarlyCDT Lung and believes that it can help in the early diagnosis of lung cancer.
Trading in the shares of Boston International Holdings (BIH) has been suspended ahead of the proposed acquisition of invoice factoring company Alexanders Discount Ltd, which is based in the South East. Alexanders Discount accounts for the year to November 2019 are for a dormant company and the assets were worth £4. The standard list shell floated in October 2016.
Telecoms services provider Toople (TOOP) says that the integration of DMSL is ahead of plan and it has won two new contracts.
BATM Advanced Communications (BVC) is partnering with Novamed for an at-home COVID-19 diagnostic kit. The kit should be completed within four months.
AIQ Ltd (AIQ) has signed a conditional share purchase agreement for Alchemist Codes, a Malaysian IT services developer. AIQ is paying £2.3m in shares.