Nightcap announces AIM delisting amid challenging trading conditions

UK Investor Magazine
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Nightcap announces AIM delisting amid challenging trading conditions

Nightcap, the owner and operator of 46 premium bars, has announced plans to delist from London’s AIM market and continue as a private company.

The decision comes as the hospitality sector continues to face significant headwinds and the bar operator said trading throughout 2024 has remained difficult.

Nightcap expects these tough conditions to persist until the end of the calendar year and points to the ongoing cost of living crisis, above-inflation increases in business rates, the impact of higher National Living Wage, and continuing rail strikes as reasons for the slow trading environment.

For the 52-week period ending 30 June 2024, Nightcap anticipates revenues to be in line with current market expectations. However, adjusted EBITDA is projected to fall below market forecasts. This shortfall is attributed to the aforementioned economic pressures, coupled with additional costs associated with the integration of The Piano Works acquisition, which has proven more expensive than initially anticipated.

The company’s financial performance has also been affected by abortive deal costs and expenses related to the proposed AIM delisting.

Nightcap said the current public market valuation does not reflect the company’s underlying potential or achievements to date. Many UK small cap companies will have the same gripe.

However, Nightcap believes this situation is unlikely to change in the short to medium term and is throwing in the towel on its time as a public company.

The company IPO’d in 2021 but hasn’t really embraced life as a public company. Investors have heard little from the company since listing, and the board have done little to communicate with the wider market. The lowly valuation should come as no surprise to management.

To facilitate future share transactions, Nightcap has appointed Asset Match Limited to provide a matched bargain facility, which is set to commence operations from the delisting date. This electronic off-market dealing facility will allow existing shareholders and new investors to trade Nightcap shares through periodic auctions.

Keywords Studios receives updated takeover offer

UK Investor Magazine
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Keywords Studios receives updated takeover offer

Keywords Studios, the global video game services company, has received an updated possible cash offer of 2,450 pence per share from EQT Group.

Keywords Studios share price were higher 5.79% at the time of writing after it announced the updated offer price alongside a trading update.

The company’s board has indicated that it would be inclined to recommend the offer to shareholders. The deadline for EQT to announce a firm intention to make an offer has been extended to 5pm on 3 July 2024.

The company will pay its 2023 final dividend of 1.76 pence on 28 June 2024, as previously announced.

Keywords Studios have had a tough first half of 2024 due to to the deferral or cancellation of large game development projects, softer demand in its Globalise division, and a slow recovery in Hollywood content. Despite the challenges, the company expects revenue is projected to grow by approximately 7% in the first half.

The company anticipates a more robust second half, forecasting organic growth of around 10%. This aligns with Keywords Studios’ medium-term guidance and reflects growing spend from larger clients and an expected stronger recovery from the US entertainment industry strikes.

Clontarf Energy – Hoping For Further Lithium News In AGM Update On Monday 9th July 

Mark Watson-Mitchell
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Clontarf Energy – Hoping For Further Lithium News In AGM Update On Monday 9th July 

Yesterday Bolivia was at the centre of international news, with some military unrest coming to the fore. 

The question now is will there be good Bolivian news evolving at the Hilton London Paddington at Midday on Monday 9th July, which is when Clontarf Energy (LON:CLON) will be holding it AGM covering its 2023 results. 

The Business 

The £5.24m capitalised company is an emerging lithium, and oil & gas Exploration & Production company focused on South America and Africa. 

The last trading year saw the group’s principal activities driving ahead its Lithium business in South America. 

The Report & Accounts note that the group incurred a loss for the year of £870,061 (2022: £4,766,646) and had net current liabilities of £1,277,374 (2022: £2,094,612) at the balance sheet date.  

Going Concern 

It was stated that those conditions represent a material uncertainty that may cast doubt on the group’s ability to continue as a going concern. 

Clontarf has successfully accessed the financial markets when necessary.  

Subject to technical verification of its exploration projects, and permitting, the company is confident of adequate funding, whether in London or Australia, for near to medium term ongoing activities. 

It raised a gross £400,000 in March this year, with the net proceeds being pitched to be used to advance Clontarf’s lithium projects in Bolivia, and neighbouring countries, as well as on petroleum projects in Ghana, Australia, and elsewhere, and for general working capital purposes. 

In late May the company raised another £300,000 gross with a Placing of new shares at 0.035p per share. 

Management Comment 

Chairman David Horgan stated that: 

“There has been rapid progress on developing high-purity, cleanly produced battery-grade Bolivian Lithium for the European market. 

European institutions understand that only brines can produce clean Lithium of the requisite quality for demanding future applications.  

Hard rock sources in Africa and Australia can supply technical grade material for Chinese upgraders, but at an environmental cost.  

Many rock miners are currently high-grading, mining only the richest and best minerology sources.   

This satisfied demand growth but is not sustainable at the expected demand volumes, purity requirements, and especially cleanliness standards.  

Burning rocks in coal-fired furnaces at circa 800ºC for days is not environmentally friendly. 

Clontarf has worked on this opportunity since 2008.   

Progress was slow until establishment of the Bolivian National Lithium Company (YLB) under the 2017 Lithium Law.   

Now, via the current convocatoria, there is a clear route to negotiating contracts with robust legal title. 

The appointment of dynamic experts at both National Lithium Company and Ministry levels has simplified the approvals’ process.   

Bolivia now focuses on boosting investment and exports, mainly targeting the premium markets in EV and grid storage batteries, as well as emerging high-tech applications.” 

The company’s shares have seen a spectacular rise in price since they touched 0.013p on 6th June. 

Today they are trading at around 0.073p, at which level the company is valued at £5.24m. 

Investors will certainly be looking forward to the forthcoming AGM and hoping that boss David Horgan has good news to impart. 

Quanex Building Products offers dividend sweetener in Tyman bid

Andrew Hore
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Quanex Building Products offers dividend sweetener in Tyman bid

Quanex Building Products Corp is offering an additional special dividend of 15p/cash as part of tis bid for fully listed building products supplier Tyman (LON: TYMN). This reflects a reduction in the bid value in recent weeks.

The original Quanex bid was 240p in cash and 0.05715 of a share for each Tyman share. There is also an all-share alternative of 0.14288 of a Quanex share for each Tyman share. This bid was recommended by the Tyman board and the revised offer is also recommended. Tyman shareholders have subsequently received a 9.5p/share final dividend for 2024.

When the original bid was announced the cash and shares bid was valued at 400p/share, but the Quanex share price has declined since then. The price at the time of the original announcement was $34.64 and it has slumped to $28.22. The special dividend would make up some of the reduction in the bid value.

The product ranges appear to be a good fit with a particularly strong presence in North America. Quanex will be able to use Tyman’s international operations as a base to sell its products.

The Tyman share price improved 8p to 358.5p.

AIM movers: Ethernity Networks US contract and I(X) Net Zero leaving AIM

Andrew Hore
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AIM movers: Ethernity Networks US contract and I(X) Net Zero leaving AIM

Ethernity Networks (LON: ENET) has won a $1.1m contract in the US. It will supply networking technology and the deal could lead to further business. The project implementation cannot start until the US government provides approval. The share price moved up 31% to 0.95p.

Eurasia Mining (LON: EUA) share trading will be suspended on 1 July because it has not published 2023 accounts. The share price still improved 4.76% to 2.2p.

Directors of Firering Strategic Minerals (LON: FRG) have subscribed £230,000 at 2.9p/share, taking the total raised in the recent fundraising to £2.32m. The share price increased 8.06% to 3.35p.

Tavistock Investments (LON: TAVI) has confirmed it is considering disposals, including part of the group to financial planning and investment services provider Saltus. The share price is 7.35% ahead at 3.65p.

UK Oil & Gas (LON: UKOG) says a competent person report on the Horndean field, where it owns 10%, shows that its share of the net 2P reserve is 106,400 barrels of recoverable oil. The total estimate is slightly higher than previously. This is a steady income producing investment and generated net earnings of £147,000 last year. The share price rose 6.06% to 0.0175p.

FALLERS

Pubs and bars operator Nightcap (LON: NGHT) has decided to cancel the AIM quotation because of the weak share price and the difficulty to raise additional funds. Trading is challenging and this is expected to continue for the rest of the year. EBITDA for the year to June 2024 is below expectations. Integrating The Piano Works has been more costly than anticipated. A general meeting will be held on 17 July but there is already sufficient support to pass the resolution to leave AIM. The quotation is likely to be cancelled on 29 July. A matched bargain facility will be provided by Asset Match. The share price slumped 52.2% to 1.65p.

Renewables investment company I(X) Net Zero (LON: IX.) also plans to cancel its AIM quotation. The share price has slumped since joining AIM, partly because of the timing. Renewables businesses were in favour, but there was a subsequent change in investor sentiment to companies that were not profitable. There has also been a lack of liquidity in the shares. Cash is flowing out of the company and more funds are likely to be required. There were $81.1m of unrealised gains in 2023, mainly due to a rise in valuation for WasteFuel after an investment by BP. NAV is $122.2m. The share price fell 35.4% to 10.5p, which values I(X) Net Zero at £14.2m. There are plans to obtain a matched bargain facility though JP Jenkins.

There has been a poor start to the year for in-game advertising technology company Mirriad Advertising (LON: MIRI), but it hopes the second half will be stronger as newer business commences. First half revenues are likely to fall from £592,000 to £400,000. There were delays to the roll out of connected TV. Cost savings are coming through. The share price dipped 31.8% to 0.675p.

Interim figures from musicMagpie (LON: MMAG) reported a drop in revenues. According to the management this was partly down to changing the US business into a sourcing operation. UK technology sales were slightly higher. Disc and book sales were lower. Costs were reduced and the loss declined from £3.2m to £3m. Net debt was £13.8m at the end of May 2024. The company has diversified into buying branded fashion from people. The share price is down 17.2% to 6p.

FTSE 100 slips ahead of US inflation data, GSK tumbles

UK Investor Magazine
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FTSE 100 slips ahead of US inflation data, GSK tumbles

The FTSE 100 was lower on Thursday as investors prepared for a raft of vital US economic data set for release on Friday.

US PCE – one of the Fed’s key indicators of inflation – is set for release tomorrow alongside spending data. The instalments have the potential to set the tone for trade deep into next week.

There have been jitters in global stocks this week as investors asses just how long it will be until major central banks cut rates and provided a welcome boost to households and businesses.

The FTSE 100 was down 0.25% at the time of writing.

Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown, says the slow session for the FTSE 100 “follows a relatively choppy trading session in the US, ahead of President Joe Biden and Donald Trump’s closely watched debate in Atlanta later today. There’s also news of a marked slowdown in China’s industrial profits for May, adding fuel to concerns over a protracted slowdown in this important economy.”

Downbeat news from China inevitably weighed on the commodities sector which played a leading part in the weakness on Thursday.

“The FTSE 100 struggled to find direction as strength in energy and banking stocks was offset by weakness in pharmaceuticals, tobacco and mining,” said Russ Mould, investment director at AJ Bell.

GSK was the top faller after the US narrowed its age recommendation for the use of RSV vaccines. The development is the latest blow for investors who have recently been hit by news of cancer litigation in the US.

GSK shares were down over 5% on the day and have nearly erased all its gains for the year.

BP was marginally higher amid reports it was rolling back its push into clean energy by stepping down the pace of hiring.

“Reports suggest BP’s chief executive Murray Auchincloss is set to water down the company’s energy transition further and put a freeze on hiring,” Russ Mould said.

“Having replaced Bernard Looney, who unveiled the company’s net zero strategy to some fanfare at the start of 2020, Auchincloss had some space to make a more aggressive move in this direction.

“Poor recent share price performance had also put him under some pressure to take radical action with a diminished BP at risk of falling prey to a larger predator.”

BP shares were 0.9% at the time of writing.

AIM movers: Mercantile Ports debt restructuring talks continue and ex-dividends

Andrew Hore
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AIM movers: Mercantile Ports debt restructuring talks continue and ex-dividends

Mercantile Ports and Logistics (LON: MPL) has released 2023 figures slightly ahead of expectations. There was an impairment charge of £9.9m. The pre-tax loss fell from £12.1m to £11.4m. Debt restructuring discussions continue and this will firm up the financial position of the Indian port facility developer. An operating profit is forecast for 2024, but it would not be enough to generate a post-interest profit. Cavendish has a price target of 4.8p. The share price jumped 40.6% to 2.25p.

M Warner has increased his stake in Clontarf Energy (LON: CLON) from 3.13% to 5.98%. The share price moved up 29.2% to 0.0775p.

An independent report has confirmed that the Kertang prospect being developed by Longboat Energy (LON: LBE) in Asia has gross unrisked mean prospective resources 9.1tcf of gas plus 146mmbbls of non-gas liquids. Longboat Energy intends to run a farm out process with larger oil and gas companies. Consent has been received from the authorities in Norway for the sale of the joint venture stake in Longboat Japex Norge. The share price rose 17.3% to 23.75p.

Secure payments technology developer PCI-Pal (LON: PCIP) has settled all its patent litigation with Sycurio in the UK and US. The settlement is confidential. The removal of US court costs has led Cavendish to increase its June 2025 net cash figure by £800,000 to £4.8m. The share price increased 13.5% to 63p.

FALLERS

Vast Resources (LON: VAST) has received a notice of acceleration for its outstanding debt of $5.82m to A&T Investments. If it is not repaid by 26 September, then the lender will enforce the security given to it. The lender says that it is protecting its position and there are negotiations concerning debt standstill agreements. Vast Resources hopes to secure restructuring finance to pay the debt. The share price slumped 22.5% to 0.155p.

Sanderson Design (LON: SDG) is still finding the UK consumer market tough. Brand revenues have declined, and UK sales are 14% lower in the initial five months of the financial year. Manufacturing revenues are flat. Singers has downgraded its 2024-25 pre-tax profit forecast from £12m to £7.8m, which is not much higher than the figure for 2020-21. Net cash could fall to £10m. The share price slipped 19.5% to 82.5p.

Respiratory drugs developer Synairgen (LON: SNG) had better than expected net cash of £12m at the end of 2023. The lead asset is SNG001, and management needs to finalise a financing plan for the phase II study in mechanically ventilated patients in hospitals. Cost savings should enable cash to last into 2026. The share price declined 21.7% to 4.345p.

NAHL (LON: NAH) has been hit by reduced demand from lawyers for personal injury cases and the cost of acquiring cases is rising. Critical care trading is in line with expectations. Allenby has halved its 2024 pre-tax forecast to £2.1m, although it believes that this s a short-term matter. Debt will not reduce as rapidly as expected and net borrowings are forecast at £7.85m by the end of 2024. The share price slipped 13.6% to 57p.

Ex-dividends

BP Marsh (LON: BPM) is paying a dividend of 5.36p/share and the share price declined 2.5p to 517.5p.

Concurrent Technologies (LON: CNC) is paying a final dividend of 1p/share and the share price fell 1p to 103.5p.

Duke Capital (LON: DUKE) is paying a dividend of 0.7p/share and the share price dipped 0.25p to 31.25p.

Franchise Brands (LON: FRAN) is paying a final dividend of 1.2p/share and the share price fell 0.5p to 143.5p.

Panther Securities (LON: PNS) is paying a final dividend of 6p/share and the share price is 6p lower at 309p.

Serica Energy (LON: SQZ) is paying a final dividend of 14p/share and the share price slipped 14.95p to 137.15p.

Tatton Asset Management (LON: TAM) is paying a final dividend of 8p/share and the share price declined 14p to 670p.

Vertu Motors (LON: VTU) is paying a final dividend of 1.5p/share and the share price fell 2.25p to 74.25p.

Watches of Switzerland shares soar a demand for luxury watches rebounds

UK Investor Magazine
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Watches of Switzerland shares soar a demand for luxury watches rebounds

Watches of Switzerland shares soar as the company reported a modest increase in group revenue, helping to squash fears about slowing demand.

Sales hit £1,538 million, which represents a 2% growth at constant currency but remained flat at reported rates compared to the previous year.

Watches of Switzerland share price was 10% higher at the time of writing.

Investors have become nervy about demand for luxury watches and today’s results will go along way to dispel these fears.

The luxury watches segment, which accounts for 87% of the group’s revenue, showed resilience with a 3% increase in constant currency terms and a 1% rise in reported figures. This performance was particularly strong in the US market, where the company continued to gain market share.

Demand for key brands, especially products on the Registration of Interest lists, remained robust and outstripped supply.

However, the luxury jewellery segment experienced a decline, with revenue falling by 13% in constant currency and 14% in reported terms. Despite this overall decrease, the company noted an improvement throughout the year, with the fourth quarter of FY24 showing the best performance.

Luxury branded jewellery significantly outperformed non-branded jewellery during this period. This is the main driving force behind the gains in shares today.

The UK market, which has been particularly challenging, showed signs of stabilisation. UK and Europe sales were down 5% for the year, impacted by significant price increases and reduced consumer confidence affecting discretionary spending. The company expects these pressures to ease in the coming financial year.

Halfords shares rally on relief performance wasn’t worse

UK Investor Magazine
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Halfords shares rally on relief performance wasn’t worse

Halfords Group shares jumped on Thursday despite reporting mixed financial results for the 52 weeks ended 29 March 2024.

The company saw strong revenue growth of 7.9%, with like-for-like growth of 5.0%. However, underlying profit before tax from total operations declined by 18.3% to £36.1 million.

Halford shares were over 5% higher at the time of writing on investor relief results weren’t any worse than first thought.

“Halfords, the one-stop-shop for motorists and cyclists, has delivered full year results in line with previously lowered guidance. Strong growth in services provided by the group’s Autocentres was tempered by a low single digit uplift in retail operations. The high levels of promotional activity failed to bolster the topline thereby leading to a material fall in underlying profits,” said Derren Nathan, head of equity research, Hargreaves Lansdown.

The company said performance was impacted by challenging market conditions, particularly in the consumer tyres and cycling sectors.

Despite these headwinds, Halfords managed to gain market share in all four of its core markets. The strategically important services business now represents more than half of the group’s revenue, with Autocentres showing particularly strong performance.

Investors will be encouraged by Halfords’ Autocentres group revenue increasing by 17.6%, with like-for-like growth of 10.7%. This segment’s underlying EBIT from total operations reached £13.8 million, a significant improvement of £10.7 million compared to the previous year.

Cost management was a key focus, with the company delivering savings of over £35 million, exceeding its original target of £30 million. This brings cumulative cost savings to approximately £70 million over the past three years.

Looking ahead, Halfords expects market volumes to decline in cycling and consumer tyres in the coming financial year, while motoring servicing and retail motoring products are anticipated to remain broadly flat.

Invinity Energy Systems – Maker Of Vanadium Redox Utility-Grade Energy Storage Has Big Profits On Its Horizon

Mark Watson-Mitchell
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Invinity Energy Systems – Maker Of Vanadium Redox Utility-Grade Energy Storage Has Big Profits On Its Horizon

Invinity Energy Systems (LON:IES) is a manufacturer of vanadium flow batteries.

Its technology centres on vanadium redox, a set of reactions first demonstrated in the early 1980s.

It has the largest installed fleet of modular VFB batteries in the world, with installations at dozens of sites worldwide.

The group, which today announced its results for the year to end December 2023, has indicated that there are now some very big profits on the horizon.

The Business

Its principal manufacturing facilities are located in Vancouver and in the central belt of Scotland, and its principal end markets are in California, Australia, the UK, and Taiwan.

Invinity works with significant supply partners, in particular Baojia New Energy, a contract manufacturer, which support the assembly of its containerised energy storage products.

Vanadium Flow Batteries

Vanadium flow batteries  are typically capable of more than 40,000 charge/discharge cycles with minimal degradation, as compared to even ultra-long-life lithium-ion batteries that operate with less than 10,000 cycles.

VFBs have low fire risk and a wide operating temperature range, allowing them to be installed with much less HVAC climate control and consequently lower operating costs.

In contrast, their charge-discharge through-cycle efficiency is lower than lithium-ion (70-72% as compared to around 95%).

Given the lower maturity of the sector, the capital cost of VFBs is currently higher than lithium-ion but the per-charge or perdischarge cost is already considerably lower.

Management View

CEO Larry Zulch stated that:

“Our impressive gains in 2023 delivered on the very high expectations we set for ourselves and established an appropriate foundation for a successful fundraise just completed.

We welcome our new investors as we focus on progressing toward positive cashflow with a compelling new product and a low-capex strategy for delivering it at scale into a market hungry for energy storage.”

Analysts View

Analyst Alex Brooks at Canaccord Genuity Capital Markets rates the group’s shares as a Buy, with a Price Objective almost three times the current price at 65p.

“We note Invinity is the largest listed UK battery company, with its largest global manufacturing facilities based in Scotland – where the planned GB Energy is also expected to be based.”

He estimates that the current year to end December will see sales up from £22.1m to £30.8m, with its EBITDA loss reducing slightly to £18.8m (£21.1m loss).

However, for 2025 he sees sales revenues leaping to £123.4m, turning the company around to £2.1m EBITDA.

Even greater sales in 2026, he estimates, will come through at £200.8m, while EBITDA will shoot ahead to £26.2m, worth 4.9p in earnings per share – but that is for 2026!

My View

This time last year this group’s shares were trading at around 50p, just a couple of weeks ago they were down to 18.80p.

Last night they closed at 19.50p and at around that price the shares offer risk-tolerant investors some significant upside.

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