AIM movers: XL Media sells North American operations and Merit Group slips

Andrew Hore
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AIM movers: XL Media sells North American operations and Merit Group slips

Online marketing services provider XL Media (LON: XLM) is selling its North American business for up to $30m in cash, with $20m payable on completion and up to $10m in April – based on revenues and gross profit in 2024. Some cash should be redistributed to shareholders by the end of the year. The company will effectively become a cash shell. The share price jumped 37.1% to 12.75p.

EnergyPathways (LON: EPP) has been asked by the UK government to participate in the Hydrogen Storage Business Model. This will help to define the new investment support scheme. The first Hydrogen Storage Allocation Round should be in 2025. The share price rebounded 23.2% to 4.25p.

Helium explorer Helix Exploration (LON: HEX) has successfully re-entered and deepened the wellbore on the Clink #1 well at the Ingomar Dome project. The well will be completed and tested. There could be multiple zones to test. The share price improved 12.2% to 23p.

Light Science Technologies (LON: LST) continues to win fire protection business. An existing customer has placed a further order worth £1.17m. The full year contribution from fire protection should be between £1.5m and £1.7m with additional visibility for 2025. The share price rose 7.69% to 2.8p.

Oil and gas company Deltic Energy (LON: DELT) has a 25% working interest in the Selene project, where drilling has reached target depth. There are gas shows throughout the Leman Sandstone reservoir. Final results of sampling and logging should be available at the end of October. Deltic Energy is reducing costs and seeking new opportunities, possibly in sub-Saharan Africa. The share price increased 5.43% to 4.85p.

FALLERS

Information and data publisher Merit Group (LON: MRIT) has been hit by the ending of project work and the lack of replacement work. Sales resource is being added, but that will take time to boost revenues. Canaccord Genuity has changed its 2024-25 forecast from a £900,000 profit to a loss of £800,000 after a 11% reduction in expected revenues to £18.5m, which is lower than the 2022-23 figure. A return to profit is forecast for next year. There are management changes that are flagged for next year. The share price slumped 38% to 37.5p.

Ethernity Networks (LON: ENET) has received a £195,000 warrant exercise notice from New Technology Capital Group, which gives it 21.6% of the enlarged share capital. This led to the issue of 195 million new shares. There is a remaining balance of £170,000, although this varies if the exercise price is higher than 0.1p/share. The share price dipped 29.9% to 0.1875p.

Audio visual products distributor Midwich Group (LON: MIDW) says the market remains challenging, particularly in Germany. There is unlikely to be an improvement this year, although gross margin should be maintained. Operating profit will be well below the 2023 level. Three small UK acquisitions have been made for £12m. These are higher margin businesses. There will be a trading update on 20 January. The share price fell 15.9% to 269p, which is the lowest level for eight years.

Vast Resources (LON: VAST) produced 229 DMT of copper at the Baita Plai project in the second quarter, down from 613 DMT in the previous quarter. Reorganisation and delays in obtaining finance held back production. Operational breakeven has been reduced. Gold production and recovery levels improved at the Aprelevka mine, where Vast Resources has a 4.9% interest. Second quarter gold production was 2,878 ounces, up from 1,808 ounces in the previous quarter. Reprocessing of tailings has started, and production costs reduced. Production has recommenced at the Takob project. The share price declined 7.14% to 0.0975p.

Helix Exploration shares jump on Montana helium drilling update

UK Investor Magazine
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Helix Exploration shares jump on Montana helium drilling update

Helix Exploration has announced progress in its helium exploration efforts at the Ingomar Dome Project in Montana. The company provided an operational update on the Clink #1 well, highlighting drill progress and advancements towards testing.

Helix Exploration shares were 12% higher in early trade on Monday following the announcement.

Investors were evidently pleased to learn the company successfully controlled the Mowry formation by setting 7-inch intermediate casing through the entire interval, reaching a depth of 2,622 feet. This was followed by a successful re-entry and deepening of the wellbore to 8,550 feet.

Helix Exploration is now preparing to complete the well with production casing and commence testing. If multiple formations are identified as suitable for testing, the company plans to conduct isolated tests on each zone, working from the bottom up. This methodical approach will allow for a comprehensive evaluation of the well’s potential.

During the deepening process, the company discovered a second thick Cambrian sandstone horizon at 8,290 feet, extending to the total depth. Helix said that while the initial goal of reaching Precambrian rock was not achieved, this new finding could potentially hold significant value for the project.

“The successful re-entry and subsequent deepening of Clink #1 is a significant milestone for the Company.  I am delighted with the re-entry efforts and the exceptional work of our engineering team, as we see promising results in each of the target formations,” said Bo Sears, CEO of Helix Exploration.

Sosandar – Capitalised at £26.7m, with £8m cash, making £1m profit, this growth-focussed women’s clothing group’s shares look inexpensive at 10.75p 

Mark Watson-Mitchell
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Sosandar – Capitalised at £26.7m, with £8m cash, making £1m profit, this growth-focussed women’s clothing group’s shares look inexpensive at 10.75p 

Tomorrow morning Sosandar (LON:SOS) will be announcing its Trading Update for the six months to end-September. 

I have a feeling that the statement could well indicate that the women’s clothing group is going to bounce back into profits in the year to end-March 2025. 

Although its shares are trading on a heavy price-to-earnings ratio, I am not put off because there is a certain determination in its growth strategy. 

The Business  

Sosandar, which was founded in 2016 and listed on AIM in 2017, is one of the fastest growing women’s fashion brands in the UK targeting style-conscious women who have graduated from lower quality, price-led alternatives.  

Over 1m women now have items of the company’s clothing hanging in their wardrobes, its product range is diverse, providing an array of choice for all occasions across all women’s fashion categories.  

The company, which sells predominantly own-label exclusive product designed and tested in-house, states that for its underserved audience it offers fashion-forward, affordable, quality clothing to make them feel sexy, feminine, and chic.   

Sosandar’s success has been built on an exceptional product range, seamless customer experience and impactful, lifestyle marketing, all of which is underpinned by combining innovation with data analysis.   

The group’s growth strategy has been focused upon continuing to grow brand awareness and expand its addressable market and routes to market, reaching customers wherever they wish to shop.   

The company sells through Sosandar.com and has brand partnerships in place with Marks & Spencer, The Very Group, JD Williams, J Sainsbury, The Selfridges Group, and Next. 

Its Strategic Goals 

Its Management is aiming to score at least a 10% pre-tax profit margin going forward. 

It is aiming to more than double its turnover to £100m+ revenue as it progresses. 

High on its agenda is gaining further growth through operating in scale and at greater margin. 

One of its main visible growth pushes is through the opening of stores to complement its online channel. 

And finally, it is focussed upon it expanding its brand. 

The Stores Push 

The group’s Management believes that its clients would spend more money with the group if it had more stores – giving customers the chance to touch, feel and try on product in store.  

Its programme is to put together an estate of its own stores, in various locations, such as affluent market towns, some city centres, a number of shopping centres – all of which need to be situated at the right location within the town, in areas of high footfall. 

Ideally, each planned store should occupy some 1,500 sq ft, be on a 5-year term lease with a 3-year break. Self-funded capex of £250,000 per unit, carrying initially some £50,000 of stock, with an expected £150,000 property cost, helping to contribute between £750,000 to £1m per annum as an average per store. 

Two weeks ago, the group announced that it had signed a lease agreement for its 4th store, in Cardiff’s St David’s Centre.  

That follows the recent store openings in Chelmsford, Marlow and the Metrocentre, as well as its in-store concession at Arnotts in Dublin, Ireland’s oldest and largest department store. 

I believe that a number of other store opening targets are at various stages of negotiation, so it is quickly becoming visible that Sosandar is making quite a determined effort at this side of its business. 

Analyst View 

Matthew McEachran, at Singer Capital Markets, rates the group’s shares as a Buy, with a Price Objective of 31p. 

His estimates for the current year to end-March 2025 are for fairly steady sales at £45.6m (£46.3m), but with a smart turnaround from last year’s loss of £0.3m into a £1m adjusted pre-tax profit. 

That would generate 0.4p (0.2m loss) in earnings per share. 

In My View 

Hopefully, Budget measures permitting, women will continue to spend more money on their attire, and as they do then Sosandar, with its new stores, will stand a very good chance of increasing its sales. 

Better margins will become evident in due course, which should help to bring down the pe ratios. 

At the current 10.75p, I do feel that these shares, which value the company at £26.7m (which has about £8m cash in its balance sheet), are a very interesting play on the recovering retail sector. 

New AIM admission: Pulsar Helium discovers helium in Minnesota

Andrew Hore
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New AIM admission: Pulsar Helium discovers helium in Minnesota

Pulsar Helium Inc shares were already trading on TSX-V and the OTCQB Venture Market and the additional cash raised by coming to AIM will fund further exploration in Minnesota.
The company’s focus is the Topaz helium project in northern Minnesota, close to the Canadian border. So far, an appraisal well has been drilled and this confirmed the presence of helium.
The annual growth rate of the helium market is forecast to be 4.3% with demand from the electronics sector increasing. There is also potential for selling high quality carbon dioxide.
There were 1.47 million shares traded on the first da...

Director deals: Atome boss buys £675,000 worth of shares from chairman

Andrew Hore
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2
Director deals: Atome boss buys £675,000 worth of shares from chairman

Oliver Mussat, chief executive of fertiliser projects developer Atome (LON: ATOM) bought 900,000 shares at 75p each from chairman Peter Levine. This increases his stake to 5.46%, while Peter Levine still owns 15.9%.
Oliver Mussat earned $731,000 in 2022, up from $543,000 the previous year. Even so, this is a significant investment. The board earned $2.7m in 2023.  
All seven directors bought shares in the recent £2.7m subscription and placing at 75p/share. They invested £750,000 in total. Peter Levine bought 500,000 shares and Oliver Mussat 133,333 shares.
Business
At the end of 2021, Ato...

Aquis weekly movers: ProBiotix Health sets general meeting for 1 November

Andrew Hore
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4
Aquis weekly movers: ProBiotix Health sets general meeting for 1 November

Invinity Energy Systems (LON: IES) is extending the expiry date of the 8.67 million options, exercisable at 175p/share, held by Gamesa Electric to 10 May 2025. Employee share options will be extended until 21 November 2029. The share price increased 8.11% to 10p.

EPE Special Opportunities (LON: E.OP) has appointed Heather MacCallum as a non-exec director. The share price improved 1.94% to 158p.

FALLERS

Marula Mining (LON: MARU) is finalising negotiations to establish a new joint venture with a Chinese battery manufacturer and lithium offtake partner at the Blesburg lithium and tantalum mine. This would be for a lithium acid leaching processing plant, which could be commissioned by next summer. This will use spodumene from the mine and could produce 2,000 tonnes of high-grade lithium product each year. A subscription of £750,000, which comes through the issue of 15 million shares at 5p each via the AUO Commercial Brokerage LLC subscription agreement, will be used to fund the installation of an ore sorter at Blesburg and the costs of other projects. Gathoni Muchai Investments, where Marula Mining board member Jason Brewer is a director, bought 430,000 shares at 5.96p each. The share price declined 25.5% to 5.125p.

ProBiotix Health (LON: PBX) has sent out a circular for the requisitioned general meeting on 1 November. The meeting has been requisitioned by Seneca Partners and related investors that hold 5.46% in total. Seneca Partners is also an investor in AIM-quoted OptiBiotix Health (LON: OPTI), which is also unhappy with the current management, but a relationship agreement means that it could not requisition a general meeting. OptiBiotix Health and related individuals own 37.95% and will vote in favour of the resolutions. ProBiotix Health wants to block these shares from being voted. The first resolution is to remove the chief executive Steen Andersen and the second is to remove non-exec Frederik Bruhn-Petersen, whose firm recently subscribed for shares, a funding that OptiBiotix Health was unhappy about. Seneca Partners and OptiBiotix Health are also unhappy that the chief executive wanted to leave the Aquis Stock Exchange. The share price is 23.1% lower at 5p.

Oscillate (LON: MUSH) has gained shareholder approval for the acquisition of Quantum Hydrogen and the associated placing, which has diluted the main shareholders. The share price dipped 7.14% to 1.3p.

At the end of the three months to September 2024, Arbuthnot Banking (LON: ARBB) customer deposit balances were £3.8bn and customer loans £2.5bn. Funds under management and administration have grown 18% to more than £2bn in the nine months to September 2024. Arbuthnot Banking has completed its move to new offices in the City of London. Management is assessing the proposed new capital rules and deciding if strategy changes will be required. The Budget could also affect strategy. The share price slid 0.27% to 925p.

AIM weekly movers: CloudCoCo selling managed IT operations

Andrew Hore
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3
AIM weekly movers: CloudCoCo selling managed IT operations

CloudCoCo (LON: CLCO) is selling its managed IT services business for £9.2m. This will discharge liabilities, including the MXC loan notes, and leave cash of £950,000. If the sale does not go-ahead management will need to consider if there is a future for the group. There are also discussions concerning the sale of the Connect business. The focus will be on the product reseller business. The share price soared 160%, having more than trebled at one point, ending the week at 0.325p.

MicroSalt (LON: SALT) had a sharp share price boost on Thursday afternoon and this initially continued on Friday, but the low-sodium salt developer said that there has been no change in trading and operations. That rise meant that the share price moved up to 57.5p, but it ended the week 46.5% ahead at 52p.  

Mothercare (LON: MTC) shares returned from suspension 40.4% higher at 5p, the highest level since July, following the 2023-24 results publication and refinancing. There is a new £8m two-year loan facility from Gordon Brothers, which receives 43.4 million warrants exercisable at 8.5p/share. There is also a joint venture with Reliance Brands, which will acquire 51% of the businesses operating in the Indian sub-continent for £16m. In the year to March 2024, underlying pre-tax profit dipped from £3.4m to £3.1m. Overall revenues continue to decline, and Cavendish expects a small loss this year.

An acquisition vehicle set up by Joshua Alliance is offering 40p/share in cash for each share in N Brown Group (LON: BWNG) – the share price has not been this high since February 2023. The Alliance family and related parties already own 53.4% of N Brown. This bid values the fashion brands company at £191m. The chief executive and finance director of N Brown will elect for a share alternative. Frasers Group (FRAS) owns 20.3% of N Brown and is accepting the bid. The share price rose 39.6% to 39.1p.

FALLERS

Emmerson (LON: EML) says that the regional authority in Morocco have made an unfavourable environmental recommendation relating to the Khemisset potash project. The full decision is not yet available. Emmerson had previously appealed against the regional authority’s decision not to approve the project under environmental grounds. The share price slumped 72.1% to 0.725p.

Armadale Capital (LON: ACP) proposes a cancellation of the AIM quotation because it believes that being public does not benefit the company because of the costs. Armadale Capital needs to reduce the cash burn and sell non-core assets. The resources company can be more flexible as a private company. A general meeting will be held on 1 November. The share price has fallen by 70% to 0.06p.

It is taking time to build up sales of the EpiSwitch EPE prostate test in the US and Oxford BioDynamics (LON: OBD) is reducing costs so that its cash lasts longer. Management is taking part of their salary in shares. Other diagnostic tests could be licenced or sold to raise money. Spinning off the US business is another option. There will be an update in January. The share price declined 69.5% to 1.115p.

Graphene technology developer Versarien (LON: VRS) is raising £450,000 at 0.0325p/share, which will fund in-house concrete and mortar testing capabilities and other external testing. Versarien has signed 3D construction printed products. There are commercial opportunities worth £1.6m and related grants of £3.1m. The share price dived 45.3% to 0.0328p.

Kooth contract terminated by Pennsylvania

Andrew Hore
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7
Kooth contract terminated by Pennsylvania

Digital mental health services provider Kooth (LON: KOO) says the State of Pennsylvania has terminated its contract with the AIM company. The share price of the winner of the Diversity Champion award at the 2024 AIM awards slumped 15.5% to 240p.

The contract started on 11 October 2022 and the end date was extended from June 2024 to June 2025. However, there is a right to terminate with a 30-day notice period. Kooth says that it was negotiating a new contract, and it is unsure what the status of ongoing work will be.

When it was announced, the contract was said to be worth $3m in its pilot year. The services were provided to 30 school districts in Pennsylvania that have 150,000 students. In the interims, it was stated that 88% of students received the support they needed and that an initial tranche of new funding had been rewarded. Management did say that “complexities of negotiating bipartisan agreements in the state have been a key learning”.

Following the launch of a significant contract in California, the US accounted for 70% of revenues in the first half of 2024. Management said at the time of the trading statement that there was a pipeline of new business in the US.

Kooth says expectations for 2024 and 2025 are unchanged. Consensus 2024 pre-tax profit is £5.85m, with £5.8m in 2025.

Earlier this month, Root Capital Fund II sold just over 3.75 million shares in Kooth at 280p each. That is 10.3% of the company and it retains a 25.3% shareholding. Kooth joined AIM in 2020 at 200p/share and Root Capital Fund II sold five million shares at that time.

AIM movers: Boohoo considering options and Mothercare returns from suspension

Andrew Hore
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1
AIM movers: Boohoo considering options and Mothercare returns from suspension

Mothercare (LON: MTC) shares returned from suspension up 29.2% to 4.6p following the 2023-24 results publication and refinancing. There is a new £8m two-year loan facility from Gordon Brothers, which receives 43.4 million warrants exercisable at 8.5p/share. There is also a joint venture with Reliance Brands, which will acquire 51% for £16m, covering the Indian sub-continent. In the year to March 2024, underlying pre-tax profit dipped from £3.4m to £3.1m. Overall revenues continue to decline, and Cavendish expects a small loss this year.

Autoantibody profiling company Oncimmune (LON: ONC) is raising a minimum of £2m from a placing and subscription at 15p/share, which was a premium to the market price. There will also be the capitalisation of £4m of debt. A retail offer of up to £300,000 has been launched and commitments are required by 31 October. The cash will be used to help build sales. The share price increased 10.4% to 15.35p.

Bushveld Minerals (LON: BMN) has gained regulatory approval to sell thermal coal licences holder Lemur for $100. This will release liabilities of $2.5m.The share price recovered 10% to 0.45p.

MicroSalt (LON: SALT) says that there has been no change in trading and operations despite the recent rise in the share price. That rise continued with an improvement to above 56p, but it has fallen back and is 0.96% ahead at 52.5p.

FALLERS

Approval for further development of the Wressle field in Lincolnshire has been revoked, because of a legal challenge that greenhouse gas emissions were not taken into account in the original decision. Union Jack Oil (LON: UJO) has a 40% interest in the Wressle development and the share price fell 8.51% to 10.75p.Europa Oil & Gas (LON: EOG) owns 30% and the share price dipped 2.56% to 0.95p. A revised application for Wressle can be made with additional data on emissions. The existing production continues.  

Online fashion retailer Boohoo (LON: BOO) has signed a £222m debt refinancing and is considering options to maximise shareholder value. A demerger of one or more divisions is possible. This could possibly be the Debenhams or Karen Millen businesses. John Lyttle is stepping down as chief executive. Group net revenues fell 15% to £620m and one-third lower EBITDA of £21m. Profitability should improve in the second half. The share price is 7.78% to 29.4p.

A new Gambling Regulatory Authority of Ireland has been established to cover gambling, betting and lotteries. Mobile messaging and payments services provider Fonix (LON: FNX) says it is not clear if the new legislation creating the regulatory authority covers no-purchase necessary draws. This means it is not expected to change expectations. The share price had a spike up in the past few days and profit-taking has led to a 4.08% dip in the share price to 235p.

Endoscopy instruments developer Creo Medical (LON: CREO) raised £89,000 from the retail offer at 24p. The retail offer was for up to £5m. A placing has already raised £12m and, along with the disposal of 51% of Creo Europe, this should be enough for Creo Medical to reach profitability. The share price fell 2.88% to 20.25p.

FTSE 100 dips despite strength in China-focused stocks

UK Investor Magazine
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2
FTSE 100 dips despite strength in China-focused stocks

The FTSE 100 consolidated gains on Friday with a marginal step back as strong UK retail sales failed to support the index despite a good showing from commodities companies.

The top of the leaderboard was dominated by miners and other China-focused stocks. Prudential was the top gainer closely followed by Anglo American, Glencore, and Antofagasta.

“It’s been a rocky ride for investors exposed to China but patience is being rewarded,” said Russ Mould, investment director at AJ Bell.

“Having this year gone from being widely unloved to delivering big gains over a short period thanks to the promise of major economic stimulus measures, China’s stock market has moved up and down faster than a newly oiled seesaw in recent days. One minute everyone is excited about Beijing’s ‘do whatever it takes’ mentality to improve the economy, the next minute shares are down amid scepticism about when we’ll see the benefits emerge.

“The needle has now moved back to bullish territory despite the latest figures showing economic growth has slowed again. What’s boosted shares is China’s central bank talking about a plan to encourage non-bank financial institutions to invest in the stock market.”

However, strength in the miners and optimism around China was not enough to lift London’s leading index with UK-focused shares slipped and took the index with it.

Housebuilders were weaker as where supermarkets after a jump in UK retail sales was not enjoyed by the grocers.

“Volumes grew by 0.3% in September, compared to expectations of a 0.3% decline. But the good news was far from evenly spread. Mobile phones and computers performed best, perhaps reflecting the emergence of AI-enabled hardware from multiple manufacturers,” said Derren Nathan, head of equity research, Hargreaves Lansdown.

“Supermarket sales volumes were less encouraging, falling 2.4%, impacted by the miserable weather and a pull-back in demand for premium products.”

British American Tobacco was the top faller after announcing an update to litigation in Canada.

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