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Quoted Micro 13 November 2017
NEX EXCHANGE
Blockchain investment company Coinsilium Group Ltd (COIN) has signed a memorandum of understanding with UMT United Mobility Technology, which has shares traded on the Frankfurt Stock Exchange and owns 3% of Coinsilium, to collaborate on the development of blockchain-related mobile payments services for the business to consumer market. Coinsilium will advise UMT on the potential uses of digital tokens. The initial agreement is for three months.
Hellenic Capital (HECP) has launched a one-for-three open offer at 0.5p a share that will raise £250,000. The minimum subscription is 100,000 shares and the closing date is 22 November. Each share comes with a warrant for an additional share.
Early stage investor Primorus Investments (PRIM) has invested a further A$75,000 in Melbourne-based Fresho at A$0.38 a share. Online food ordering business Fresho was seeking A$1.5m but eventually raised A$2m. Primorus initially invested at A$0.27 a share and it owns 3.1% of Fresho, which is valued at nearly A$500,000 at the placing price. Fresho is moving towards cash flow breakeven in Australia earlier than expected and the $4m in the bank will help the company to launch operations in New Zealand and Singapore.
Kryptonite 1 (KR1) has generated £750,000 at 6p a share in order to invest in more blockchain token issues. Smaller Company Capital has increased its stake to 4.59% and one of its owners and Kryptonite 1 non-executive director Jeremy Woodgate owns 1.27%.
NQ Minerals (NQMI) has raised a further £150,000 at 8.5p a share and a holder of convertible loan notes has converted into 350,000 at a price of 8p a share.
Early Equity (EEQP) has raised £590,000 at 0.6p a share and issued 30 million shares to pay for 60,000 units in Yicom Global. Early Equity owns 47.1% healthcare products importer Yicom.
Lombard Capital (LCAP) has issued a further £45,000 of 7.5% convertible loan notes 2020, with 450,000 warrants, exercisable at 10p a share, attached. That takes the convertible loan notes in issue to £195,000.
Peter Hain, Simon Dorling and Declan O’Brien have all stepped down from the board of African Potash (AFPO).
AIM
Tracsis (TRCS) had a much better second half as predicted at the interim stage. In the year to July 2017, revenues improved by 6% to £34.5m, while pre-tax profit was 14% ahead at £4.6m. The total dividend was increased from 1.2p a share to 1.4p a share. There is £15.4m in the bank. The main growth in the rail technology division was from Ontrac software business, while revenues from traffic and data were flat, although there was growth if the former Australian operations are excluded. Profit should edge up this year but it will do even better if further large contracts are secured.
Castleton Technology (CTP) reported a rise in interim EBITDA from £2m to £2.3m and strong cash flow is reducing borrowings. Net debt was £8m at the end of September 2017. Castleton provides software to social housing operators and they are signing up for multi-year contracts.
Oxford Pharmascience (OXP) is demerging its assets into an unquoted vehicle and retaining a quotation as a shell. Management believes that it will be better for the business to be private in order to commercialise the OXPzero technology and existing investors will still have an interest. The shell will have few limitations in terms of the sectors that could provide an acquisition but there is board experience in pharma and technology. There was still £20.6m in the bank at the end of October and the shell will retain more than £19m. The company will change its name to Abaco Capital.
AfriTin (ATM) has completed its spin-off from Bushveld Minerals (BMN) and a placing raised £3.5m with a further £1m coming from convertible loan notes. The main asset is the Uis tin project in Namibia.
City Pub Group has confirmed plans to join AIM by the end of November. The company has 34 pubs in southern England and it wants to raise £30m. The business was founded in 2011 by experienced pub group operators, including David Bruce, who previously sold Capital Pub Company to Greene King for £93m.
Peter Gyllenhammar has built up a 8.35% stake in Stratex International (STI) and Bob Foster has returned as interim chief executive. He will review the strategy of the company. The takeover of Crusader Resources is not going ahead. The sale of the Goldstone Resources stake raised £550,000 and there was £6.08m in the bank at the end of June 2017. Gyllenhammar is more likely to be interested in the cash rather than the mining operations. The current capitalisation of Stratex is similar to the pro forma cash and around one-third of NAV.
Versarien (VRS) raised £2.9m instead of the £1.2m it was seeking one week ago. The cash was raised at 18p a share and the share price has risen to 24p. The cash will be used to purchase capital equipment.
Pre-IPO investment company St Peter Port Capital (SPPC) has concluded a strategic review just over 13 months after it commenced. The formal sale process has been terminated. The plan is to realise investments in an orderly manner. The NAV was 25.3p a share at the end of September 2017.
Redx Pharma (REDX) has returned from suspension having come out of administration. The share price almost halved to 17.5p. Chief executive Neil Murray has been given the push, or stepped down as it is described in the announcement, and Iain Ross has taken over as executive chairman. Dominic Jackson has been appointed as finance director. Hopefully, this will mean that Redx is better run than it was before. A phase I trial for the lead cancer asset is due to start in the first quarter of 2018 and initial phase 1a results should be available by the end of 2018. There is £13.6m in the bank and no debt.
BOS Global Holdings (BOS) is facing a battle with its former boss. The workflow efficiency software provider has received a general meeting requisition from interests related to former managing director Michael Travia, who recently stepped down from the board. He wants to be reappointed to the board and have Adam Webb removed from office. These are two of the eleven proposals put forward.
Trading in the shares of Red Emperor Resources (RMP) on ASX has been suspended because it does not have sufficient operations to warrant a listing. There are plans to increase the company’s stake in an exploration block in the Philippines and there are also potential oil lease acquisitions in California.
Shari’a-compliant investment company Tejoori Ltd (TJI) is cancelling its AIM quotation ahead of returning cash to shareholders. The company’s investments have been sold and there is $17.6m in cash.
Beximco Pharma (BXP) is commencing the export of Sotalol Hydrochloride, which is a generic version of heart drug Betaplace. This is the second product to be exported to the US. Interim pre-tax profit improved by 13% to £27.5m on the back of double digit sales growth.
Amphion Innovations (AMP) has a 26% stake in Polarean Imaging Ltd, which is planning to float on AIM. Polarean is a clinical stage medical imaging business and it is expected to be valued at $29m before new money. This compares with a valuation of $22m at the time of the previous fundraising during May. That would mean that the Polarean stake is worth more than Amphion’s current market capitalisation.
SkinBioTherapeutics (SBTX) says that its SkinBiotix technology has passed all three necessary toxicity tests. This will enable human studies to begin next year.
Connemara Mining Corp (CON) has completed five holes at the Meeneragy gold project and they demonstrate the presence of a significant gold bearing system in the area. Survey data should be processed by next February.
Coal bed methane projects developer Tlou Energy (TLOU) has commenced core hole drilling at the Lesedi project in Botswana. A seismic survey is almost complete. The focus is increasing gas reserves and contingent resources. The data will be used to provide information for when development starts.
WynnStay Properties (WSP) increased its NAV to 685p a share at the end of September 2017 and the interim dividend has been raised by 18% to 6.5p a share. There was a gain on sale of properties in Colchester and Gosport as well as a 16% increase in property income to £1.12m.
TLA Worldwide (TLA) has agreed a renewed senior debt facility of $28.75m from SunTrust Bank. This was announced at 8.48am on 9 November. This contrasts with the profit warning released at 6.26pm on the last day of trading prior to Christmas 2016.
Snoozebox (ZZZ) has appointed Moore Stephems as administrator and trading in the shares has been suspended. Snoozebox is moving towards cash breakeven but the main lender, SQN Asset Finance Income Fund, has not agreed to a suitable debt refinancing plan so the company cannot continue to trade as a going concern. Panmure Gordon has resigned as nominated adviser and broker.
Thor Mining (THR) has raised nearly £494,000 from the conversion of warrants, at 0.9p each and 1.25p each, so far in November 2017. A placing recently raised £565,000 so there is plenty of cash to move ahead with exploration activities.
InterEnergy Holdings has decided not to become involved with a bid for Rurelec (RUR) as part of the consortium headed by Peter Earl. He had approached InterEnegy about the provision of loan finance. The bidding consortium subsequently pulled out of the potential bid until the full effect of the problems at Rurelec’s Patagonian power station are known.
MAIN MARKET
PV Crystalox Solar (PVCS) has won an award of €34m plus interest from the International Court of Arbitration of the International Chamber of Commerce. This relates to a supply agreement with a PV company, which failed to purchase wafers in line with its contract. The customer has to pay up but it can also ask for the delivery of 22.9 million wafers that are due under the contract.
Sportech (SPO) is seeking potential offers by January 2018. A distribution of cash to shareholders is still planned for this year. Annualised cost savings of at least £2m have been identified. Trading remains in line with expectations.
Illustrated book publisher Quarto Group (QRT) has ditched its dividend after a second half upturn was not strong enough to achieve profit expectations. Full year revenues will be lower. Year end net debt will be higher than at the end of 2017. Bid talks appear to have hampered the business. The children’s and foreign rights businesses are strong. The focus is to achieve 60% annual recurring revenues.
Gemstones project developer Shefa Yamin plans to join the standard list and the Israel-based company will use the money raise to finance further exploration and to complete the pre-feasibility study at the Kishon Mid-Reach project. There are plans to set up an internet platform to sell the gemstones, some of which are unique to the area. The Carmel Sapphire brand has been registered for dark blue sapphires. Several potential primary and secondary deposits have been identified. Bulk samples are being taken, so far 11,000 tonnes have been sampled, and there are plans to delineate a mineral resource. Production is targeted within the next 24 months.
Symphony International Holdings (SIHL) had a diluted NAV of $1.146 a share at the end of September 2017. This was after a $0.10 a share dividend. The shares are trading at a one-quarter discount to NAV.
Challenger Acquisitions Ltd (CHAL) is diversifying into film conventions. Challenger is loaning £100,000 to a private company that is putting on a film convention in London in 2018. The loan is repayable, with a premium of 40%, by 15 May 2018. The cash will help to finance the venue, staff and guests. Challenger has the right to participate in future events held by the company.
Oxford Biomedica (OXB) is collaborating with a major US biopharma company for research into patients that have abnormal wound-healing responses leading to fibrosis. The collaboration will use the EpiSwitch platform.
Andrew Hore
Quoted Micro 14 December 2015
ISDX
Netalogue Technologies (NTLP), which is an ecommerce platform developer, has announced its first dividend since 2012 when it paid 0.123p a share. The latest dividend of 0.246p a share and the shares go ex-dividend on 17 December. Netalogue had cash of £807,000 at the end of September 2015 and the dividend will cost around £120,000. Interim revenues fell from £689,000 to £552,000 and profit dipped from £165,000 to £38,000. Netalogue has withdrawn from the hosting business. At 3.95p (3.7p/4.2p) a share, Netalogue is valued at £1.9m.
Hydro Hotel Eastbourne (HYDP) is maintaining its annual dividend at 18p a share. A dividend of 6p a share will be paid on 14 January (ex-dividend 17 December) and the 12p dividend on 5 May (ex-dividend 21 April). A slight increase in profit is expected this year. At 750p (725p/775p) a share, the yield is 2.4%.
Titania Internet Ventures (TITP) is considering changing its investment strategy so that it can become involved in the renewable energy sector. The proposal involves entering into a relationship with a British wind turbine manufacturer. Titania had been involved in online penny auctions, but this business ceased more than two years ago, and before that it investigated a nursing home acquisition in Finland. The company was originally called Uranium Prospects. At 2.5p (2p/3p) a share, Titania is valued at £44,000.
Leni Gas Cuba (CUBA) had net assets of £4.1m at the end of September 2015. Since then, £200,000 was raised at 5p a share but that went towards paying the £326,000 cost of joining ISDX. The pro forma NAV is around 0.8p a share. David Lenigas has bought one million shares at 1.437p a share, taking his stake to 142 million shares (28.7%).
Lombard Capital (LCAP) has raised a further £122,500 at 3.5p a share via a share issue to one of its directors, Mark Jackson. His stake is 28.2%. At 4.5p (4p/5p) a share, Lombard is valued at £102,000.
AIM
Unmanned aerial vehicles (UAV) services provider Strat Aero (AERO) is acquiring communications, flight control and hardware technology developer Aero Kinetics for $1.2m plus the taking on of working capital commitments. This will be financed by the issue of a $775,000 convertible promissory note with a 7.5% interest rate and a 6p a share conversion price, with the rest in cash. There will also be $80,000 0f legal fees and $150,000 will be required to finance an application for FAA Certification, which could be achieved in the middle of next year. There is potential contingent consideration, including warrants depending on certification and achievement of sales targets. This deal is part of the strategy to develop a vertically integrated business, which can offer a full solution to global clients. It also brings Aero Kinetics founder W Hulsey Smith to the group and he will take charge of the group’s technology operations. The acquired operations made a loss of $269,000 on revenues of $246,000 but this is under US accounting rules and all R&D is written off – more than $5m has been invested so far. Strat Aero is also raising £1.6m at 6.25p a share.
Moving into software has helped to offset the volatility of the hardware division but it will not prevent Vislink (VLK) reporting disappointing 2015 figures. The broadcast and surveillance technology supplier has found market conditions for the hardware business tough and new product launches have yet to generate the hoped-for sales. Expected full year revenues will be in the range of £54m-£58m. The company’s debt facility has been increased from £10m to £15m because late hardware sales will increase debtors. Net debt is expected to be £5.8m at the end of 2015. The 2015 profit could be as low as £4.2m, down from £7.1m. There could be a partial profit recovery to £6.3m in 2016 – helped by cost savings. Standard Life trimmed its stake to 4.6%.
Begbies Traynor (BEG) is expanding its property services business in order to offset the weakness of its core corporate insolvency business. In the six months to October 2015, revenues improved from £20.8m to £25.5m, while pre-tax profit rose from £2m to £2.5m. That is after a contribution from property of £6.11m in revenues and £1.16m in EBITDA, compared with nothing in the corresponding period. Corporate insolvency revenues and profit were lower. The interim dividend was unchanged at 0.6p a share. Net debt was £11.9m at the end of October 2015. A full year profit of £4.6m is forecast.
Surface coatings developer Hardide (HDD) had a tougher second half as oil and gas demand declined. In the year to September 2015, revenues were flat at £3m and Hardide fell from profit to loss. The majority of revenues were in the first half. This year it is likely to be the other way round. The new facility in Virginia should be open soon. An £800,000 loss is forecast for this year and a much smaller loss expected next year. There was £2.33m in the bank at the end of September 2015, which provides enough headroom on current expectations.
Snoozebox (ZZZ) is raising £5m at a hefty discount to the market price. The placing price is 6p – a 28.2% discount. The cash is required for the 2016 events season plus the evaluation of other opportunities. Snoozebox has already said that it has established a partnership with Dutco in the Gulf region. An EBITDA loss of £5m is forecast for 2015. Further cash will be required to take advantage of growth opportunities.
Investment group Cathexis has taken advantage of the recent weak trading statement by construction and fit-out company ISG (ISG) and bid 143p a share. ISG believes that this unsolicited offer is too low. The bid values ISG at £70.8m. US=owned Cathexis has been an investor since 2012, when the share price was below the bid level, and it made a bid approach in June. It currently owns 29.6%. The current year profit forecast for ISG had been slashed from £17m to £11m. The bid is at two-fifths of the share price 12 months ago.
Educational services provider Wey Education (WEY) made its move from ISDX to AIM on Friday and it raised £1.75m at 3.5p a share. Wey is capitalised at £3.29m.
Retail stockbroker Share (SHRE) is taking on up to 3,000 nominee share dealing accounts from Barclays, which is exiting the services. The accounts will be transferred by the end of February 2016. Share previously took on nearly 8,000 certificated dealing customers from Barclays.
MAIN MARKET
Property services provider Waterman (WTM) has set a 6% target for its operating margin by 2019. Waterman’s business is predominantly in the UK and both the property and infrastructure sectors are strong. Sanlam forecasts a rise in profit from £2.7m to £3.7m in 2015-16. If Waterman can achieve its margin target then pre-tax profit could be around £6m in 2018-19. A dividend of 2.8p a share is forecast for this year.
Bluebird Merchant Ventures Ltd, which plans to join the standard list,has a copper concentrate trading business combined with a stake in a potential gold mining project. The former can generate cash for investment in the mining project and other projects in the Philippines. Bluebird’s management lives in the Philippines so it has local knowledge. Bluebird’s trading operation is taking advantage of the difference between the price of copper concentrate in the Philippines and the international price. So far, 18MT has been shipped and once Bluebird is shipping 100MT /month then it should be generating enough cash to cover its corporate overheads. The plan is to increase monthly shipments to 500MT/month, which would provide a sizeable surplus of cash to invest in other ventures. This includes other commodity trading opportunities as well as mining projects that are near to production or have been in production in the past and can be reopened. The potential gold mine will cost $15m to bring into production. It will take around 18 months to construct the mine once the necessary permissions are obtained from the authorities. At a gold price of $1,160/ounce, the NPV of the project would be around $13m. That is based on production of 100,000 ounces over five years.
Challenger Acquisitions (CHAL) has finally completed its deal to acquire the businesses of Starneth, which develops observation wheels, and been readmitted to the standard list. AIM-quoted Teathers has sold its stake for an average price of 50.3p a share, raising nearly £72,000 – a gain of £21,000. The Challenger share price ended the week at 41p.
ANDREW HORE
Latest edition of AIM Journal, including why AIM volumes are likely to decline and Purplebricks flotation, available here.
