Gfinity plc* (GFIN.L, 2.325p/£11.1m) | ECSC Group plc* (ECSC.L, 115p/£10.5m) | Mi-Pay Group plc* (MPAY.L, 1.15p/£0.5m) | MTI Wireless Edge Ltd* (MWE.L, 39.5p/£34.7m)
Companies: GFIN ECSC MPAY MWE
Mi-Pay Group plc* (MPAY.L, 1.65p/£0.8m) Proposed disposal and cancellation of trading (18.12.19) | Audioboom plc* (BOOM.L, 207.5p/£29.1m) Appointment: CEO appointment formalised (20.12.19)
Companies: Mi-Pay Group Audioboom Group Plc
MTI Wireless Edge plc* (MWE.L, 35p/£30.7m) | ECSC plc* (ECSC.L, 92.5p/£8.4m) | Brave Bison plc* (BBSN.L, 1.42p/£8.7m) | Mi-Pay plc* (MPAY.L, 6.25p/£2.9m) |
Companies: MWE ECSC BBSN MPAY
Audioboom plc* (BOOM.L, 177p/£24.9m) CEO resignation (30.09.19) | Mi-Pay Group plc* (MPAY.L, 7.0p/£3.2m) Interims: Breakeven in H1; outlook remains mixed (25.09.19) | Tern plc* (TERN.L, 8.4p/£21.3m) Interims: Growth at portfolio companies (25.09.19) | Starcom plc* (STAR.L, 1.6p/£5.5m) Litigation update (30.09.19)
Companies: BOOM MPAY TERN STAR
Interims from Mi-Pay Group, an established provider of digital payment and payment fraud managed services to Tier 1 mobile operators and digital content vendors, saw 7% revenue growth, a small improvement in gross margin and good cost control. As a result, the business was essentially EBITDA break-even in H1. Fully management payments grew 15% to £58.1m and a 64% increase in its direct managed fraud service to £29.2m. As this latter service has matured, fraud levels have reduced materially improving gross margins. Mi-Pay continues to have sector-leading levels of payment success and fraud management and indemnifies its customers. As a result, it can charge higher rates than traditional payment solutions. Extensions have been signed with two of its largest (43% of FY18 revenue) but it is losing its second largest client (13%). This, coupled with the uncertainty around the new PSD2 regulations and general economic climate, means H2 is likely to be similar to H1 but we leave our forecast under review at this stage.
Companies: Mi-Pay Group
MTI Wireless Edge Ltd* (MWE.L, 22.2p/£19.4m) | Blackbird plc* (BIRD.L, 10.8p/£31.2m) | Mi-Pay Group plc* (MPAY.L, 8p/£3.7m) | Starcom plc* (STAR.L, 1.25p/£4.3m) | Character Group (The) plc* (CCT.L, 425p/£90.8m) |
Companies: MWE BIRD MPAY STAR CCT
Mi-Pay Group plc* (MPAY.L, 12.25p/£5.6m) Finals: Move into H2 profit; renewals provide visibility (24.04.19) | Mirada plc* (MIRA.L, 0.825p/£7.3m) Pre-close: substantial FY19 growth and positive outlook (29.04.19)
Companies: Mi-Pay Group Mirada Plc
Finals from Mi-Pay Group, an established provider of digital payment and payment fraud managed service to Tier 1 mobile operators and digital content vendors, were in line with forecasts and January’s trading update. The 9.4% increase in revenue to £3.3m included a maiden £0.3m contribution from its Fraud Services business and the combination of increased gross profit (+£0.1m) and lower operating costs (down £0.3m) resulted in the operating loss reducing £0.4m to £0.2m and the company was profitable in H2. Mi-Pay processed more than £100m in fully managed payment transactions for the first time and indemnified £44m of payments against fraud - this is opening a new revenue stream. Mi-Pay was successfully integrated into 3 Ireland’s new infrastructure during the year and the acquired O2 customer base was transferred onto MiPay. Since period end, Mi-Pay has signed extensions with clients that represented 43% of FY18 revenue providing forward revenue visibility. We maintain our fair value of 17.8p/share, a 51% upside.
ECSC Group plc* (ECSC.L, 92.5p/£8.4m) Contract wins: Further Managed Service success (16.04.19) | Mi-Pay Group plc* (MPAY.L, 11.75p/£5.4m) Contract extension: Largest customer extended (18.04.19) | Starcom plc* (STAR.L, 1.275p/£3.7m) Placing (18.04.19) | Mobile Tornado Group plc* (MBT.L, 5.25p/£18.3m) Finals: Success of new Capex model (17.04.19) | CAP-XX Ltd* (CPX.L, 4.35p/£14.1m) Trading update: Progress on numerous fronts (16.04.19)
Companies: ECSC MPAY STAR MBT CPX
Audioboom plc* (BOOM.L, 1.675p/£19.7m) Additional funding to secure new and existing podcast content (25.02.19) | Mobile Tornado plc* (MBT.L, 3.3p/£11.5m) FY pre-close: In line performance; commercial & technological progress (20.02.19) | Mi-Pay Group plc* (MPAY.L, 10p/£4.6m) Contract extension and notice of FY results (21.02.19) | Tern plc* (TERN.L, 13p/£30.8m) Second tranche of convertible loan to Device Authority (20.02.19)
Companies: MBT MPAY TERN BOOM
Mi-Pay Group plc* (MPAY.L, 9.7p/£4.4m) Pre-close FY18 trading update: Shift to digital (30.01.19) | Gfinity plc* (GFIN.L, 5.7p/£20.7m) Contract win: 2019 Call of Duty World League event (04.02.19) | Newmark Security plc* (NWT.L, 0.9p/£4.2m) Interims: Positive performance in Electronic Division (31.01.19) | Starcom* (STAR.L, 1.5p/£4.4m) Trading update and receipt of funds (31.01.19)
Companies: MPAY GFIN NWT STAR
Mi-Pay is an established provider of digital payment and payment fraud managed services to Tier 1 mobile operators and digital content vendors. It offers incremental value-added services including the management of multiple connection methods, the delivery of the payments experience and the security of client data. Mi-Pay has sector-leading levels of payment success and fraud identification and management and indemnifies its customers against fraud. It charges higher fees compared with traditional payment companies as its deeper solution offering is layered on top of core payment solutions. Today’s in-line pre-close demonstrates further revenue growth and a move into EBITDA profit in H2. We are trimming our FY19 revenue growth assumptions (by c. 10%) given the current uncertain macro outlook but still expect Mi-Pay to achieve stronger growth rates going forward as the platform and client base are now established. The current share price fails to reflect the strength of the existing offering or the growth potential as e-commerce and digital channels become core to customer engagement. We set a fair value of 17.8p/share, an 84% upside.
Techniplas –global producer and support services company providing highly engineered and technically complex components, making the supply chain to original equipment manufacturers more efficient. FYDec17 rev $515m.
Circassia Pharma (CIR.L) - specialty pharmaceutical company focused on respiratory disease transferring from the Main Market. No funds being raised. Due 4 Feb. Mkt Cap c.£185m.
Greenfields Petroleum (TSX-V:GNF) production focused company with operated assets in Azerbaijan seeking AIM dual listing including $60m private placement. Mkt cap $12.6m CAD. Expected late January 2019.
Chaarat Gold Holdings—RTO, the Company intends to acquire Kapan Mining and Processing CJSC, which owns the Shahumyan medium-sized polymetallic mine in Kapan in the Republic of Armenia. No raise, market cap of £110.1m, due early Feb
Companies: JHD RNWH MPAY ERIS STM R4E ING TRMR RWI KDNC
Mobile Tornado Group plc* (MBT.L, 4.40p/£15.4m) Interims: Gathering sales momentum (27.09.18) | Mi-Pay Group plc* (MPAY.L, 10.0p/£4.6m) Interims - New revenue stream added (25.09.18) | CAP-XX plc* (CPX.L, 10.85p/£32.6m) Spire Health Tags stocked at Apple stores (25.09.18) | Mirada plc* (MIRA.L, 0.725p/£2.1m) Prelims: Accelerated roll out by izzi and imminent ATNi deployment (28.09.18) | Osirium Technologies plc* (OSI.L, 145p/£19.6m) Interims: Good financial and operational progress (25.09.18)
Companies: MBT MPAY CPX OSI MIRA
Mi-Pay, a provider of mobile payment and payment fraud management services to Tier 1 Mobile Network Operators (MNOs) and digital content providers, has reported interims with a further 11% growth in the total value of payment transactions to £50.2m as well as direct fraud management of an additional £17.8m - a new product stream that has considerable revenue potential. Mi-Pay has sector-leading payment success rates and fraud levels, indemnifies its customers against fraud and hence can charge 3x to 5x the rates compared with traditional payment companies. We expect Mi-Pay to break-even in H2 before moving into sustained profit and is sufficiently funded. The value of Mi-Pay’s existing offering and the growth potential is not reflected in the current price.
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Seeing Machines has released a trading update demonstrating the business is performing better than expected on key metrics: Revenues of A$39.7m were 13% ahead of our expectations of $35.1m and cash of A$38.7m was 21% ahead of our expectations of A$32.0m. We believe this strong end to the financial year reflects the continued demand for the company's Fleet product by sophisticated fleet owners and that the key home markets of Australia and New Zealand have been less affected by COVID than feared. We believe this strong cash performance should reduce the perceived funding risk weighting and help the valuation recover towards previous levels. We iterate our Buy recommendation and 7.2p price target.
Companies: Seeing Machines Ltd.
Byotrol released a further positive trading on the back of a strong Q1 FY 2021, citing product sales in excess of £3.4m in the quarter and for the business to significantly exceed full-year market forecasts. With the order book at the end of June still being c.£2m (similar to at 30 April) and continued improving supply chain management for biocidal ingredients, we have upgraded forecasts to reflect this outlook. We increase FY 2021 revenues, adjusted EBITDA and EPS by 15%, 38% and 55%, respectively. Consequently, we upgrade our target price to 10p, at which level the stock would trade on 3.7x sales. As previously indicated, we think the pandemic should result in a secular shift towards improved disinfection prevention, reducing the prospect of FY 2021 being a one-off exceptional performance. The prospect for further upgrades should current monthly revenues extend for longer than anticipated and additional IP monetisation events should not be discounted, in our view, either.
Companies: Byotrol Plc
While Ince's FY20 results are complex given the various movements in reported figures associated with accounting for the Ince International consolidation, our assessment is that there are emerging signs of increasing operational effectiveness and reasons for optimism for investors. The operating environment and outlook remains opaque and thus we keep our forecasts and recommendation for the Group withdrawn at this time.
Companies: The Ince Group plc
2019 has been a transformative year for Velocys, setting the company up for further progress in the current year and beyond. Despite COVID 19 restrictions the company has continued to develop with the current year seeing further funding secured, the delivery of reactors to Red Rock Biofuels and the securing of planning permission at the Altalto sustainable aviation fuel project. The JDA at Altalto has also been strengthened with British Airways and Shell providing a further £1m funding. Demand for sustainable fuel, especially for aviation, and for negative carbon solutions is growing and Velocys is one of the few companies able to deliver here.
Companies: Velocys Plc
XPP announced interim results for the period ended 30 June 2020 with record order intake, strong revenue growth and a stable financial position. XPP has reinstated its dividend for Q220 of 180 per share. The Company has available resources of ~GBP61m through bank facilities and cash balances should it be required.
Companies: XP Power Ltd.
The successful delivery of reactors to the Red Rock Biofuels project demonstrates the company’s ability to manufacture to specification and on time in our view. Progress on this project represents a key milestone and, with commissioning expected next year, will provide further evidence of the ability to create sustainable road and aviation fuel from biomass using Velocys technology.
XP Power reported a strong performance in H1 considering the challenges presented by COVID-19 and a material uplift in orders provides a record backlog at the start of H2. With its diversified production capacity, a focus on higher complexity product targeted at growth markets and the ability to provide customer support globally, XP believes it will be in a stronger position post-COVID-19 than before. We have revised our forecasts to reflect the strong order intake, higher operating costs and higher share count.
The investment in feedstock provision for the Uskmouth power station conversion adds an element of de-risking at a crucial time for financing the project in our view. The deal increases feedstock options and allows SIMEC Atlantis exposure to additional profit in a potentially improving waste management market. The proposed c.£6m funding also provides additional resource to the £9.4m cash announced at the end of June, allowing the company to continue to move forward on several fronts.
Companies: SIMEC Atlantis Energy Ltd.
FY20A results are broadly in-line with forecasts set prior to Covid-19, evidencing a far stronger H2A delivery to the year. Fulcrum has now refocused on a number of growth opportunities based on long-term strategic priorities for the UK, including the move to a net zero economy. MoM momentum is building so far in FY21, such that pre-Covid trading levels are expected to be met in Q2/21. Given this, a record order book and strong balance sheet, we see a brighter future for Fulcrum ahead.
Companies: Fulcrum Utility Services Ltd.
Trading in both divisions has clearly improved post the COVID-19 lockdown and Norcros’s robust liquidity position has been maintained. Equally, the focus on cash/cost management, new product innovation and taking market share is undiminished, leaving the company well placed to navigate market conditions. Our estimates remain suspended pending further normalisation of market conditions.
Companies: Norcros Plc
Drax is a major enabler of the energy transition. It is the only UK investment opportunity of scale that can offer exposure to BECCS, long duration storage and low carbon spinning reserve, all essential to deliver what is now a legal requirement for net zero emissions by 2050. We initiate coverage with a central case valuation of 505p.
Companies: Drax Group Plc
Journeo is a specialist provider of both on and off-vehicle tailored solutions to the transport community. This morning, the group has announced a three year framework renewal with Abellio bus London for the provision of CCTV and associated equipment. The contract is expected to be worth c.£2m over the course of the three year period, with the potential for additional orders of on-vehicle technology solutions worth up to £1.2m over this time.
Companies: Journeo Plc
The FY20 results report that after a challenging H1, the Group’s performance had started to improve, with a substantial increase in order inflow. This was disrupted by the impact of COVID-19, which impeded operations towards the end of FY20. Despite this, EBITDA (postIFRS 16) of £4.6m was broadly in line with pre-COVID-19 guidance (c.£5m). Given continued economic uncertainty, guidance is still withdrawn. Whilst valuation is challenging in the absence of forecasts, if management can deliver a recovery in earnings to historic levels, we believe the current valuation looks undemanding. We see no reason why the improving trajectory of the business should not resume once the economy is on a more stable footing. Indeed, trading has started to improve, with revenue expected to return to pre-COVID-19 levels in Q2, and medium term prospects are positive.
The ‘Moving Forward Act', the strongest automotive safety bill in decades, has now been passed in the House of Representatives. The bill is focused on advancing safety technologies proven to reduce crash and harm and to make sure strong safety standards are in place to save lives. The bill, which now needs to be passed in the Senate, will mandate automatic braking, lane-keeping, blind-spot detection, event data recorders as well as DMS in all cars and trucks sold in the US from 2024. This aligns with the European General Safety Regulation, which passed into law in November 2019.
However, in the EU, the European Association of Automobile Manufacturers (ACEA) has requested a 2‐year delay for the introduction of the 2022 Euro-NCAP protocols due to the projected lengthy time that will be needed to recover from the effects of COVID-19. Euro NCAP has agreed, and a delay is now expected to the 2022 and 2024 rating. The new dates will give automakers and Tier 1 suppliers more time to incorporate the necessary changes given the events of recent months with a number of manufacturers announcing 12 month delays to new models.
RMI demand, c. 75% of Epwin’s revenue, has been stronger than expected since the recommencement of operations. Extrusions revenue in June and July were up +10% yoy. The New build and Social markets have been slower to return but have picked up pace in early August. Working capital build up has been well managed, net debt is down £10.0m to c. £21.0m, since March. The strength in Epwin’s end markets mirrors what other companies in the sector have experienced recently. It implies that the positive dynamic seen is more than just catch up in demand and might be a structural shift in consumer behaviour. As a result, FY20 performance will be materially better than might have been feared back in March. It remains too early to predict the longevity of the trend and guidance remains withdrawn, but with visibility steadily improving it can be hoped that it might be reintroduced in the coming weeks.
Epwin is a professionally managed, well invested business with market leading share and operational improvements driving future returns. The balance sheet is robust with net debt not exceeding c. 1.0x normalised EBITDA during lockdown and the business will not need additional funding. On historic numbers, the shares are trading on just 6.8x earnings.
Companies: Epwin Group Plc