VR Education Holdings—a virtual reality software and technology company. Raising £6m, mkt cap c €22m. Due 12 March
SimplyBiz, a Financial Services Firm, reported to be considering an IPO targeting a market capitalisation of between £140m and £155m in a listing that would raise £30m of new money.
Bacanora Lithium—Readmission. No new money. Mkt cap £140m. Due 21 March. the new holding company for Bacanora Minerals Ltd
Core Industrial REIT—established to invest in Irish-based industrial properties, predominantly located in the Greater Dublin Area. Vendor placing and new funds to a total of €225m, Target gross proceeds €207m. Expected Mid March
Polarean - Medical drug-device combination company operating in the high resolution medical imaging market. Offer TBC. Due Early March
Block Energy—a NEX Listed UK based oil exploration and production company whose main country of operation is the Republic of Georgia, looks to join AIM end of February 2018. Offer TBC
Companies: VIP BEG IQG BOIL CPX OSI APGN MPAC PPIX HCM
Vipera* (VIP): Vipera’s Bangkok banking boost (CORP) | HML Holdings* (HMLH): Interim results (CORP)
Companies: Vipera HML
See what's trending this week...
This quarter we use finnCap’s Slide Rule to provide both top-down and bottom-up analysis of the UK’s Technology and Telecoms sectors. Our findings are very reassuring: the Tech sector scores the best (across all sectors) when considering Growth and Quality – Taptica*, Frontier Developments* and dotDigital* in particular stand out on these metrics. Given these attractive characteristics and growth prospects, the Tech sector is unsurprisingly one of the most expensive – currently trading at 17.2x FY1 EV/EBIT and 23.8x FY1 P/E, versus 15.0x and 18.5x respectively for the wider market. Despite valuations appearing high, we believe there are value opportunities. For example, Proactis* features in finnCap’s QVGM+ portfolio (ranked 17/462) – the company offers attractive organic and inorganic growth, with earnings forecast to grow by 26% CAGR over the next two years, but despite this, only trades on 15x FY1 earnings and offers 8% FCF yield in FY2.
Companies: 7DIG ALT AMO ARTA BOTB BLTG CTP CITY D4T4 DTC DOTD ELCO FDEV GBG IDEA IDOX IGP IOM KBT KCOM KWS LRM MAI MMX NASA NET PHD QTX QXT RCN 932 SEE SIM SPE SRT STR TRMR TAX TEP TPOP TRAK UNG VIP ZOO CYAN ONEV SSY SYME WJA
AfriTin Mining—Demerger from Bushveld Minerals (BMN.L). Offer TBA. Due 6 Nov. The Uis Tin project (Namibia) is considered the flagship tin asset within the portfolio, as this was once the largest open cast tine mine of its kind in the world .
Novacyt S.A.—Sch1 from the international diagnostics group, generating revenues from the sale of clinical products used in oncology, microbiology, haematology and serology testing. Offer to raise £8.8m at 59.38p with a value of £22.4m. Expected 01 Nov.
Footasylum Ltd—UK-based fashion retailer focusing on the branded footwear and apparel markets announced its intention to seek admission to AIM. Expected value between £130m and £150m. Due Nov 2017.
Central Asia Metals (CAML) -RTO of Lynx Resources. Anticipated market capitalisation at Admission: £404.8m. Raising £113m at 230p. Acquiring the SASA zinc-lead mine in Macedonia from Solway Industries. Due 15 Dec.
OnTheMarket—Intention to float on AIM to raise c.£50m which will be used to fund the growth of the OnTheMarket.com portal, already the third biggest UK residential property portal provider. Expected valuation £200m to £250m.
Orogen plc, to be renamed Sosandar plc on Admission. Sosandar is an online womenswear brand specifically targeted at a generation of women who have graduated from younger online and high street brands, and are looking for affordable clothing with a premium, trend-led aesthetic. Offer to raise £5.3m with market cap of £16.1m, expected 2 November 2017
OG Graphite, brownfield development-stage graphite company focused on the reactivation of its wholly-owned Kearney natural flake graphite mine and mill located 280 km north of Toronto, Canada. Offer TBA, expected late October .
Companies: ENGI SHRE BOD STEL DIS VCP TLOU GDP VIP
The interims to June are released just over a month after the company expanded into the Spanish market with its acquisition of SoftTelecom for €1.3m. The business is usually H2-weighted, and the addition of five months of SoftTelecom will boost H2 sales and should help deliver H2 profit and a targeted breakeven result for the full year. A good H1 trading performance saw revenues grow 15% YoY to €4.4m, driven by licence and deployment fees; however, with additional investment to accelerate the global rollout, the operating loss also increased, from €0.4m to €0.5m. Clear operational progress is being made: a major contract has been won in the Middle East where an office has been opened, and US and UK markets are being opened by a Mastercard partnership. Given the global economic uncertainty we are easing forecasts slightly, but management remains confident of seeing the combined group break even across FY 2017 on revenues of approximately €10.5m, and cash will have been boosted post period-end, by the investment of €2.5m from the Sella Bank Group, one of Italy’s largest private banking concerns, funding the acquisition.
Lighthouse Group* (LGT): Organic growth accelerating (CORP) | ANGLE* (AGL): Liquid biopsy play with early traction (CORP) | Alumasc (ALU): Interims in line, dividend stronger than forecast (BUY) | OptiBiotix* (OPTI): TATA scale up & manufacturing agreement (CORP) | Vipera* (VIP): H1 sales growth and global expansion (CORP) | Mattioli Woods (MTW): Up with events (HOLD)
Companies: LGT AGL ALU OPTI VIP MTW
The specialist provider of mobile financial services and digital customer engagement solutions has expanded its operations into Spain with the €1.3m acquisition of Madrid software developer, SoftTelecom. This acquisition brings additional product in marketing, sales and payments solutions, and a team of developers able to deliver bespoke software solutions, as well as mobile apps and website development. In parallel, Sella Bank Group has invested €2.5M in Vipera. Sella is a long-established Italian private bank and a pioneer in digital banking which has shown considerable interest in Vipera’s product evolution strategy. It now holds a 12.5% stake in the company.
It is encouraging to see the multi-year agreement with Bankart, a leading payment processor, providing ATM, POS, card and SEPA processing services to dozens of financial institutions in South East Europe, based in Slovenia. Vipera will initially be providing a mobile wallet and mobile payment solution utilising its Motif mobile banking platform and utilising Host Card Emulation (HCE), technology for implementing mobile contact-less payments. There will be no change in forecasts at present but this deal should see revenues build up over time.
CareTech (CTH): Half-year trading on track to deliver FY (BUY) | Synairgen* (SNG): AZD9412 (inhaled interferon beta) rights returned to Synairgen (CORP) | Servoca* (SVC): Resilient performance, confident on H2 (CORP) | Vipera* (VIP): Large contract underpins growth expectations (CORP) | Europa Oil & Gas* (EOG): FEL 2/13 – new prospectivity identified (CORP)
Companies: CTH SNG VIP EOG SVCA
The FY 2016 loss is slightly lower than the guidance in the February trading update. Revenue grew 16% YoY to €7.9m; however, the LBITDA was unchanged at €0.6m, due to a lower proportion of high-margin licence fee in the mix. The comparative, H2 2015, benefited from a notably large licence fee, and in FY 2016 revenue growth came instead from more reliable but lower-margin sources like consultancy, transactional and support fees. The €1.3m free cash outflow in 2016 reduced net cash to €1.5m at the year end. On the back of the progress made last year, a very strong order book and a good Q1 2017 performance, we are lifting our revenue growth expectation to over 30% for this year and expect Vipera to break into a small profit, with much reduced cash depletion (mainly capitalised R&D). The move into the retailing sector significantly expands the addressable market while the group’s structural reorganisation has led to greater efficiency and focus.
Vipera* (VIP): Progress in 2016 should see profit this year (CORP) | HML Holdings* (HMLH): Positive trading update (CORP) | Europa Oil & Gas*: Cairn Energy gains government approval (CORP) | Blancco Technology Group* (BLTG): Initiation of coverage: Firing blanks (SELL) | Proactis* (PHD): Business as usual (CORP)
Companies: VIP HMLH EOG BLTG PHD
Enterprise-focused niche applications of tech illustrate how, while trends appear to be fluctuating away from the current poster children of fintech and the Internet
of Things, in fact these developments are refining appropriate application of existing technologies.
Companies: 7DIG AMO ARTA BVC BOTB CTP CITY D4T4 DTC DOTD ELCO FDSA FDEV GBG IDEA IDOX IGP IOM KBT KCOM KWS LRM MAI MMX NASA NET PHD QTX QXT RCN 932 SEE SIM SPE TAX TEP TPOP TRAK UNG VIP ZOO ONEV SSY SYME WJA
ScS Group (SCS): Interim results (BUY) | Vipera* (VIP): Partnering with Philips in retailer market (CORP) | Independent Oil & Gas* (IOG): Board and management changes (CORP)
Companies: SCS VIP IOG
Origin Enterprises (OGN.L) | Vipera (VIP.L) | China Africa Resources (CAF.L) | Oxford Biodynamics (OBD.L) | W Resources (WRES.L) | Tlou Energy (TLOU.L) | CAP-XX (CPX.L) | Nautilus Marine Services (NAUT.L) | STM Group (STM.L) | EQTEC (EQT.L)
Companies: OGN VIP PERE OBD WRES TLOU CPX NUS STM
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A number of REITs have the ability to thrive in current market conditions and thereafter. Not only do they hold assets that will remain in strong demand, but they have focus and transparency. The leases and underlying rents are structured in a manner to provide long visibility, growth and security. Hardman & Co defined an investment universe of REITs that we considered provided security and “safer harbours”. We introduced this universe with our report published in March 2019: “Secure income” REITs – Safe Harbour Available. Here, we take forward the investment case and story. We point to six REITs, in particular, where we believe the risk/reward is the most attractive.
Companies: AGY ARBB ARIX BUR CMH CLIG DNL HAYD NSF PCA PIN PXC PHP RE/ RECI SCE SHED VTA
Successful businesses ‘never let a crisis go to waste’. Indeed since an otherwise strong Q1’20 was interrupted by COVID-19, Mpac has further streamlined operations, accelerated R&D and launched new remote equipment diagnostic/acceptance testing, virtual reality & other ‘Industry 4.0’ services.
Brick and concrete products manufacturer Forterra has raised c. £55m gross in an equity placing in order to maintain its strong balance sheet and support the Group's continued investment programme. It was accompanied by, in our view, a reassuring trading statement which we believe is backed by yesterday’s brick industry data and comments from housebuilders, which suggest that demand has been recovering from its lockdown lows, before the PM’s promises to “build, build, build” housing and infrastructure.
The announcement that Avon Rubber is to sell milkrite | InterPuls, its dairy division, to DeLaval Holding for £180m gross proceeds is strategically logical and financially compelling. The fit of dairy and defence has always looked slightly anomalous and the terms of the deal show that the opportunity to augment dairy through value-accretive deals is difficult given the scale of the business and opportunities. Management must now recycle the cash balances that will be created into Avon Protection, where there are a greater number of potential investments.
Companies: Avon Rubber
RBG Holdings pre-close trading update to June 30th confirms a strong H1 performance for RBL, the Group’s law firm, with revenues up 36% like-for-like to c.£11.4m YoY. Convex, the CF boutique, understandably has faced COVID headwinds, with most of its H1 pipeline deferred indefinitely, whilst Litigation Finance continues to grow its pipeline and financing commitments on a longer term view. Due to continued uncertainty from COVID we withdraw our forecasts this morning, with a view to reinstating once more clarity on H1 outturn and momentum into H2 is available.
Companies: Rosenblatt Group
Resilient Trading Update
Companies: Macfarlane Group
Revenue for FY 2020 is ahead of expectation and we adjust our forecast accordingly. Sales are growing at an impressive rate; >50% pa despite COVID-19 and the virus had no effect on the company’s ability to deliver projects with 23 new customers live in Q4. We note COVID concerns are causing some delay on contract decisions, and sales would have been even stronger but for that. These delays do lead to caution on FY 2021, and we ease back our forecasts on more prudent management guidance. However, with the recent £5m equity placing, PCIP has plenty of cash to continue to invest in rolling out its exciting secure payments proposition. This cloud-based solution can be deployed remotely and assists call centres in moving agents to WFH and still collect payments securely. The outlook remains very bright with continued rapid growth expected.
Companies: PCI Pal
The Norcros operating companies largely performed relatively well in challenging market conditions (in both the UK and South Africa) in FY20 though year end trading was affected by COVID-19 lockdowns, as flagged previously. The group’s financial position appears robust following management actions (including foregoing an FY20 final dividend) and well-placed to both contend with weaker near-term markets and the pursuit of market share gains from a position of relative competitive strength. Our estimates remain suspended at this time.
As flagged in the April trading update, Solid State’s FY20 results showed a 19.7% growth in revenues and 34.3% jump in adjusted profit before tax. Demand from the medical and food retail sectors is strong but weakness in the oil & gas and commercial aviation sectors related to the coronavirus pandemic is likely to result in lower year-on-year sales during Q2 and early Q321. While management sees potential for a Q4 recovery, the current range of FY21 profit outcomes is wide, so it is not providing guidance.
Companies: Solid State
The year-end trading update was encouraging, with expected results showing good YoY growth, modestly below but close to our earlier expectations. Trading has been resilient, particularly in safety critical areas such as its nuclear exposure, with some weakness being seen in oil & gas, where there is limited exposure. Two new contract wins in the nuclear sector have also been announced today. FY 2021 forecasts remain under review. With strong finances, the company is well positioned to maximise M&A opportunities, through its PIE strategy.
The group has issued a trading update for the year ended 31 May 2020 highlighting an adjusted EBITDA of at least £11.5m which is close to the group’s original expectation, despite widespread disruption to operations in the second half. The statement notes ample liquidity headroom in excess of £10m with net debt (excluding IFRS 16 lease liabilities) reducing in H2 to £7.5m as planned. The Group’s order book and prospect pipeline remains strong overall and the update is accompanied by the announcement of two meaningful contract wins in the nuclear sector. A further significant positive development is the grant of outline planning permission for the conversion of the group’s 7 acre Hayward Tyler site in Luton into residential housing for up to 1000 dwellings. Whilst financial guidance for FY2021E remains withdrawn at this point due to on-going uncertainties around the impact of COVID-19, we see the group continuing to demonstrate good resilience, operating at close to normal levels, supported by exposure to multiple markets and a strong customer base that includes governments and their agents.
Successful K3 Capital placing to raise £30.45m (gross) at 150p to fund the £9.3m acquisition of Randd UK Ltd, an R&D tax credit specialist with an LTM EBITDA of c.£2.0m, with a margin of c.50% and revenues typically contracted for 5 tax years with many recurring thereafter, followed by future potential deals in SME exposed markets. K3 has established itself as an innovative company that is able to effectively gather, generate and mine large quantities of data in order to scale up M&A services to SMEs. Transferring these lead generation capabilities to adjacent SME markets can allow rapid growth from proven models, at scale.
Companies: K3 Capital Group
Caledonia's Q2 2020 production from its 64% owned Blanket mine in Zimbabwe was 13.5koz gold. This was an increase over the same period last year of 6.2%, leaving Caledonia with a first half production of 27.7koz – well ahead of this time last year (24.7koz) and on track to meet its 2020 full year guidance of 53-56koz (WHI etc. 55.5koz).
Spectra Systems Corporation is a provider of machine-readable high-speed banknote authentication, brand protection technologies and gaming security software. The company has announced that it has executed a new contract with a major world central bank to ‘enhance existing authentication sensors to detect a unique type of counterfeit notes'.
Companies: Spectra Systems Caledonia Mining Corporation Plc Com Shs Npv
Salt Lake Potash has received commitments to raise A$15m through the placement of unsecured zero-coupon Convertible Notes to Equatorial Resources (ASX:EQX) and institutional investors. The Convertible Notes have been structured as deferred equity with zero coupon and mandatory conversion into equity at the lower of 45c/share or a 5% discount to any future equity raising of at least A$10m. These funds will enable Salt Lake Potash to continue to develop Lake Way to the project schedule through July as they finalise debt financing. Plant practical completion and first SOP sales remain on schedule for the March 2021 quarter. The debt financing process in its final stages and with an agreement expected to be executed within weeks.
Companies: Salt Lake Potash
Marlowe delivered a strong performance during FY20A, with +7% organic revenue growth, and improved Adj EBITDA margins. Integration of acquisitions is progressing well, and with receipt of c£40m gross proceeds, Marlowe is well placed to accelerate the consolidation of its markets. We leave our forecasts unchanged and reaffirm our Buy rating.