Is the tide about to turn for smaller companies?

Aberdeen Investment Trusts
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Is the tide about to turn for smaller companies?

Gabriel Sacks, Manager, abrdn Asia Focus

Abby Glennie, Manager, abrdn UK Smaller Companies Growth Trust

Smaller company investors have always had to take the rough with the smooth. The price for higher long-term returns has often been higher volatility, with periods of sharp drawdowns and swift bounce backs. The past 18 months has been particularly uncomfortable for this part of the market, but within this weakness may lie an opportunity.

Over the long-term, smaller companies have a well-established track record of outperforming their larger cap peers. Since 2000, the MSCI World Small Cap Index has delivered an annualised return of 8.91%, compared to 7.04% for the MSCI All Companies World Index (MSCI ACWI). It is worth noting that the performance of the MSCI ACWI includes the astonishing run for technology giants, such as Amazon, Apple, Microsoft and Alphabet.

While it is impossible to pin down the exact reasons behind this ‘small cap effect’, there are a number of likely explanations. Smaller companies tend to be more adaptable and less bureaucratic and are therefore able to react faster to changes in the business environment. They can exploit emerging opportunities quickly, unencumbered by legacy systems and processes.

It is also easier for small caps to show strong growth because they start from a smaller base. If a large cap and a small cap are tackling the same addressable market, it will make a big difference to the small company but may not move the dial for the larger company, with its many other business lines and products.

Navigating a tougher economic climate

That said, small caps tend to struggle in certain environments. In particular, they are seen as being more vulnerable to rises in the cost of borrowing, as has been seen over the past 18 months. They may also suffer when the economic environment is uncertain. They are seen as more exposed to the local economy in which they operate. This has been a particular problem in markets such as the UK, where the domestic economy has been weak.

In many cases, this weakness is more imagined than real. At abrdn, our matrix approach directs us to higher quality smaller companies, with lower debt and a strong pathway of growth. It also steers us to companies that are exhibiting momentum, such as seeing upward earnings revisions. We find that businesses with these characteristics have generally been able to navigate rising interest rates and a tougher economic climate successfully. This means their businesses have remained sound, even if sentiment has hit their share prices.  

Historically cheap valuations

We believe this persistent poor sentiment towards smaller companies represents an opportunity, and that investors will ultimately recognise the mismatch between the operational performance of smaller companies and their share prices. Recent research from Morningstar shows that, compared to the last 15 years, small caps are trading at historically cheap valuations, while profitability is close to historic highs. The research also showed analysts’ Earnings Per Share (EPS) forecasts for small caps began to improve at the start of 2023. Importantly, it found that smaller companies typically outperform after a recession – exactly the type of environment we are in today.

Against this backdrop, a recovery for small companies across the world could be imminent. We have two trusts that are focused on this part of the market – abrdn Asia Focus and abrdn UK Smaller Companies Growth Trust. There are different dynamics for each. In the UK, smaller companies have been the most unpopular part of an unpopular market. Beaten-up valuations suggests there could be a significant relief rally ahead if there are signs of life in the UK economy. We see signs of data tentatively improving, with the UK economy returning to growth after a short-lived recession[1] and Purchasing Managers’ Index (PMI) data – a forward-looking measure of economic confidence – improving[2]. Sentiment may benefit from a range of government initiatives announced in the recent budget to improve participation in UK equity markets.

In Asian markets, the situation has been slightly different. The magnitude of underperformance has been lower. There has been a strong performance from some Indian small caps, but also less exposure to the weak Chinese markets. China only forms around 8% of the MSCI Asia ex Japan Small Cap Index. Smaller companies have also had greater exposure to popular segments such as technology. Nevertheless, valuations are still low relatively to history and to large caps, and there is still a potential catch-up trade should sentiment improve.

Looking ahead

Smaller companies are still the place to find the most dynamic and exciting growth opportunities in individual markets. They have struggled with poor sentiment, but as the interest rate environment starts to reverse, and economic conditions start to improve, we believe investors will start to appraise this part of the market.

Important information

Risk factors you should consider prior to investing:

  • The value of investments and the income from them can fall and investors may get back less than the amount invested.
  • Past performance is not a guide to future results.
  • Investment in the Company may not be appropriate for investors who plan to withdraw their money within 5 years.
  • The Company may borrow to finance further investment (gearing). The use of gearing is likely to lead to volatility in the Net Asset Value (NAV) meaning that any movement in the value of the company’s assets will result in a magnified movement in the NAV.
  • The Company may accumulate investment positions which represent more than normal trading volumes which may make it difficult to realise investments and may lead to volatility in the market price of the Company’s shares.
  • The Company may charge expenses to capital which may erode the capital value of the investment.
  • Derivatives may be used, subject to restrictions set out for the Company, in order to manage risk and generate income. The market in derivatives can be volatile and there is a higher than average risk of loss.
  • Movements in exchange rates will impact on both the level of income received and the capital value of your investment.
  • There is no guarantee that the market price of the Company’s shares will fully reflect their underlying Net Asset Value.
  • As with all stock exchange investments the value of the Company’s shares purchased will immediately fall by the difference between the buying and selling prices, the bid-offer spread. If trading volumes fall, the bid-offer spread can widen.
  • The Company invests in emerging markets which tend to be more volatile than mature markets and the value of your investment could move sharply up or down.
  • Certain trusts may seek to invest in higher yielding securities such as bonds, which are subject to credit risk, market price risk and interest rate risk. Unlike income from a single bond, the level of income from an investment trust is not fixed and may fluctuate.
  • With funds investing in bonds there is a risk that interest rate fluctuations could affect the capital value of investments. Where long term interest rates rise, the capital value of shares is likely to fall, and vice versa. In addition to the interest rate risk, bond investments are also exposed to credit risk reflecting the ability of the borrower (i.e. bond issuer) to meet its obligations (i.e. pay the interest on a bond and return the capital on the redemption date). The risk of this happening is usually higher with bonds classified as ‘sub-investment grade’. These may produce a higher level of income but at a higher risk than investments in ‘investment grade’ bonds. In turn, this may have an adverse impact on funds that invest in such bonds.
  • Yields are estimated figures and may fluctuate, there are no guarantees that future dividends with match or exceed historic dividends and certain investors may be subject to further tax on dividends.

MSCI information

The MSCI information may only be used for your internal use, may not be reproduced or disseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of
investment decision and may not be relied on as such. Historical data and analysis should not be
taken as an indication or guarantee of any future performance analysis forecast or prediction.
The MSCI information is provided on an “as is” basis and the user of this information assumes the
entire risk of any use made of this information. MSCI, each of its affiliates and each other person
involved in or related to compiling, computing or creating any MSCI information (collectively, the
“MSCI” Parties) expressly disclaims all warranties (including without limitation, any warranties of
originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness
for a particular purpose) with respect to this information. Without limiting any of the foregoing, in
no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive,
consequential (including, without limitation, lost profits) or any other damages (www.msci.com).

Other important information:

Issued by abrdn Fund Managers Limited, registered in England and Wales (740118) at 280 Bishopsgate, London EC2M 4AG. abrdn Investments Limited, registered in Scotland (No. 108419), 10 Queen’s Terrace, Aberdeen AB10 1XL. Both companies are authorised and regulated by the Financial Conduct Authority in the UK.

Find out more at www.abrdnuksmallercompaniesgrowthtrust.co.uk and www.asia-focus.co.uk or by registering for updates. You can also follow us on social media: X and LinkedIn.

 

 

FTSE 100 trades sideways as China property concerns drag

UK Investor Magazine
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FTSE 100 trades sideways as China property concerns drag

The FTSE 100 has started the session higher but the gains didn’t last with concerns about the Chinese property sector dragging on the index as the session progressed.

Investors who thought we’d seen the last of worries about the Chinese property market had a rude awakening on Monday after fresh data showed Chinese house prices had fallen further as the downturn persisted.

“The property slump is also showing no signs of imminent reversal with the latest snapshot from the National Bureau of Statistics showing new home prices fell yet again in May by 4.3%, compared to a year earlier, with 67 cities reporting annual price falls,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.

Streeter continued to explain Chinese authorities were taking action to boost the housing market but the moves had little long-lasting imapct.

“Beijing is attempting to revive the real estate market, by encouraging local authorities to go on home buying sprees, but this data suggests it’ll just be a sticking plaster for a much deeper wound afflicting property sector. With home values falling, it’ll mean consumers’ wealth perceptions may also take a fresh knock, lead to more bargain hunting behaviour, increasing deflationary pressures in the economy,” Streeter said.

Miners were the obvious victims of concerns around China with Rio Tinto, Glencore and Anglo American all trading in the red. However, the gains were contained by hopes China would take action to stop the rot in the form of interest rate cuts later this week.

Russ Mould, investment director at AJ Bell, suggested the ‘alarming slump’ would “likely to put pressure on the Chinese central bank to cut rates when it meets later this week.”

London’s leading index was down just 4 points at 8,143 at the time of writing but had ranged between 8,187 and 8,120 during the session.

Weakness in miners was offset by a stronger session for UK house builders, financials and retail stocks. B&M was 2% higher, while St James’s Place added 2.4%. St James’s Place is due to be demoted to the FTSE 250 later this month.

AIM movers: Longboat Energy exits Norway to focus on Malaysia and Mind Gym falls into loss

Andrew Hore
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AIM movers: Longboat Energy exits Norway to focus on Malaysia and Mind Gym falls into loss

Oil and gas projects developer Longboat Energy (LON: LBE) is exiting its assets in Norway and selling its 50.1% stake in Japex Norge joint venture stake for $2.5m and the assumption of $8,5m of debt by the acquirer. This should save $1.25m in costs in 2025. The cash will be invested in Malaysia and should last until next year. The main asset is the 52.5% owned Kertang gas prospect, offshore Sarawak. There is strong demand for gas in southeast Asia. A farm out process will be conducted in the second half of 2024. An updated competent person report is due at the end of the month. The share price is 55.2% higher at 11.25p.

Sound Energy (LON: SOU) shares have rebounded 26.5% to 1.0575p following the announcement after the market closed on Friday that it has sold most of its interest in its Moroccan assets to Managem. It is selling a subsidiary that holds most of these assets for up to $45.2m, but it will retain a 20% interest in the Tendrara production concession and a 27.5% working interest in each of the Grand Tendrara and Anoual exploration permits. Managem will provide funding for phase 2 of the Tendrara concession, including two exploration wells. The disposal proceeds include $13m of back costs and contingent consideration of $1.5m one year after first gas from the phase 2 development. The rest of the consideration is covered by the funding being provided by Managem for the concession and the two permits. The subsidiary being sold generated pre-tax profit of £1.3m in 2023.

Modular housing supplier Eco Buildings Group (LON: ECOB) says that its factory in Albania is fully operational. The automated production line has improved efficiency and quality. Production time has been reduced by one-third and this improves the outlook for profitability. The company’s product has passed safety testing in Chile and there are plans to move into the south American market. The share price rose 16.7% to 14p.

Inspiration Healthcare (LON: IHC) shares continue to recover after Mennen Medical increased its stake in medical ventilators supplier from 5.22% to 6.21%. Israel-based Mennen Medical is a developer of medical technologies, including static and wearable monitors. It is developing a new monitoring product for babies, which overlaps with Inspiration Healthcare’s focus. The share price increased 12.2% to 27.5p.

FALLERS

Training services provider Mind Gym (LON: MIND) reported an 18% decline in revenues and a slump into loss in the year to March 2024 and revenues are expected to continue to decline this year. Clients are putting off spending on developing the skills of employees. There was a loss of £12.1m after exceptional costs of £8.9m. There was a £6.6m write down on digital assets, restructuring costs of £1.8m and a £500,000 impairment of a US office lease. At the end of March 2024, cash was £1.4m. Liberum expects the underlying loss will be reduced from £3.3m to £1.7m in 2024-25. The new chief executive is updating strategy through further productisation of services. The share price slumped 22.1% to 30p, which is a new low.

Corcel (LON: CRCL) has raised £500,000 at 0.1p/share from high net worth individuals. The oil and gas company will use the cash to finance geological and geophysical work in Angola and business development in Brazil. This fundraising replaces the subscription money from a previous fundraising at 0.5p/share where subscribers, including largest shareholder Extraction, had not come up with the cash. Those shares will no longer be issued. The share price dipped 7.69% to 0.12p.

Dowgate has taken a 6.57% shareholding in Trellus Health (LON: TRLS). The company has developed technology to help manage chronic conditions. At the end of 2023, there was net cash of $12.2m and there was a cash outflow of $7.6m during the year. Agreements are being signed with US health insurance companies. The share price lipped 9.68% to 1.4p.

Electric Guitar (LON: ELEG) non-executive director David Eldridge has resigned less than two months after selling his digital marketing business 3radical to the company. The shares to acquire 3radical were issued at 2.1p each. The share price fell 6.67% to 1.05p.

Hemogenyx Pharmaceuticals issues operational update

UK Investor Magazine
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Hemogenyx Pharmaceuticals issues operational update

Hemogenyx Pharmaceuticals provided an update on its cancer and viral disease treatment activities and progress on Monday, detailing the expansion of clinical trials, and advancements in the CBR platform and the development of mRNA-based delivery systems.

Hemogenyx announced progress in its clinical trial activities by adding a prestigious US medical centre to its list of clinical trial sites for HEMO-CAR-T, its CAR-T cell therapy. This expansion will enhance the scope and expedite the timeline for implementing clinical trials.

In addition, Hemogenyx is seeking to expand HEMO-CAR-T to include paediatric acute myeloid leukaemia (AML) and a subset of paediatric acute lymphoblastic leukaemia patients. If approved, trials will be implemented at the newly established site.

In immunotherapy, the company’s Chimeric Bait Receptor (CBR) platform aims to reprogram innate immune cells, such as macrophages, to combat viral threats and eliminate specific cancer types. Hemogenyx are developing and testing multiple CBR constructs to identify candidates for targeting rare cancers like epithelial ovarian carcinoma.

“We are excited about the progress we are making across our various programs. The addition of a world-renowned medical center to our HEMO-CAR-T clinical trial sites marks a significant step forward in our mission to develop life-saving therapies. Our expansion into pediatric indications for HEMO-CAR-T highlights our commitment to addressing unmet medical needs in both adult and pediatric populations,” said Dr Vladislav Sandler, CEO & Co-Founder of Hemogenyx Pharmaceuticals.

“Furthermore, our advancements in the CBR platform and the development of mRNA-based delivery systems for treating airborne viral infections demonstrate our innovative approach to tackling complex diseases. The progress in our CDX bispecific antibody program also underscores our dedication to bringing effective treatments to patients with relapsed or refractory AML and other severe conditions.

“We are diligently pursuing non-dilutive financing options to support these initiatives and remain focused on translating our scientific discoveries into clinical success. We look forward to updating our shareholders and the market as we continue to make strides in our development programs.”

Buy Ibstock for a housing recovery during the new parliament

UK Investor Magazine
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Buy Ibstock for a housing recovery during the new parliament

Ibstock shares still offer value after rebounding from 52-week lows, and the stars may be aligning for the brickmaker with a change in government promising increased homebuilding.

We suggested Ibstock shares to readers in September 2023, when the UK housing market was showing early signs of recovery. UK house prices have since stabilised, and Ibstock shares have followed suit.

The next catalyst for Ibstock shares could well be firm plans to encourage home building during the next parliament.

One thing the Tories and Labour can agree on is the need to build new houses. How many they will actually build in the next parliament remains to be seen but Ibstock will inevitably see demand for its bricks increase should manifesto promises be followed by action.

The Tory’s plans to build 1.6 million homes have rightly been met with scepticism, given that they’ve had 14 years to boost house building and are unlikely to be in a position to enact the manifesto. Labour said they plan to build 1.5 million homes, and will likely ease planning laws, helping spur a wave of building.

Recovery

This is a recovery play with ample potential upside in the medium term, but investors should expect some volatility, which could provide a better entry point than the current share price.

In a recent trading update, CEO Joe Hudson said; “While we expect market demand to remain subdued in the near term, lead indicators reflect an increase in housing market activity, which offers encouragement for an improvement in volumes in due course.”

Ibstock has suffered dearly over the past two years as construction levels decline amid higher interest rates. The worst may still be to come if the Bank of England keeps rates at similar levels into next year.

In addition, just last week, new data revealed a sharp increase in mortgage defaults, demonstrating underlying pain for homeowners struggling to meet higher mortgage rates. 

There may still be a flush out of homeowners who can’t afford their mortgages leading to lower prices. This would be a favourable situation for Ibstock.

Lower prices would bring first time buyers into the market and existing owners would take the opportunity to upgrade. This spurt in activity will play straight into the hands of the house builders who will jump at the chance to meet demand with new builds. 

Housebuilders, of course, will be straight on the phone to Ibstock. 

The company has taken steps to control costs during the downturn, which will help amplify profits when demand recovery builds momentum.

Greencore Group – World’s Largest Sandwich Maker Suffers Setback, But Immediate Response May Limit The Downside

Mark Watson-Mitchell
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Greencore Group – World’s Largest Sandwich Maker Suffers Setback, But Immediate Response May Limit The Downside

Late last week the Greencore Group (LON:GNC), the world’s largest sandwich maker, announced that it is taking the precautionary step of recalling various sandwiches, wraps and salads because of possible contamination with E. coli, it has not been detected in those products, but they are being recalled as a precaution.

The products called back were supplied to ASDA, Morrisons, Sainsburys, Boots, Aldi, Amazon and the Co-op.

Greencore is not alone, because two other food manufacturers have also recalled their own products.

UK Health Security Agency Statement

The UKHSA is working with partners to investigate a Shiga toxin-producing E. coli (STEC) outbreak.

Darren Whitby, Head of Incidents at the FSA, said: 

“Sandwich manufacturers are taking a precautionary measure to recall various sandwiches, wraps, subs and rolls in response to findings from investigations by the Food Standards Agency (FSA), Food Standards Scotland (FSS) and UK Health Security Agency (UKHSA) who are working to identify the cause of an ongoing outbreak caused by shiga toxin-producing E.coli (STEC).

This is a complex investigation, and we have worked swiftly with the relevant businesses and the local authorities concerned to narrow down the wide range of foods consumed to a small number of salad leaf products that have been used in sandwiches, wraps, subs and rolls.

Following thorough food chain analysis, these products are being recalled as a precaution. 

Infections caused by STEC bacteria can cause severe bloody diarrhoea and, in some cases, more serious complications. We therefore advise any consumers who have any of these products not to eat them.

The FSA is here to ensure that food is safe.

If there are products on the market that are not, we won’t hesitate to take action to remove them.”

The Business

Based in Dublin, the Greencore Group supplies all of the major supermarkets in the UK, as well as convenience and travel retail outlets, discounters, coffee shops, foodservice and other retailers.

It holds strong market positions in a range of categories including sandwiches, salads, sushi, chilled snacking, chilled ready meals, chilled soups and sauces, chilled quiche, ambient sauces and pickles, and frozen Yorkshire Puddings.

In the year to end December 2023 the group manufactured 779m sandwiches and other food to go products, 132m chilled ready meals, 45m chilled soups and sauces and 245m jars of cooking sauces, pickles and condiments.

The company carries out more than 10,400 direct-to-store deliveries each day.

It employs some 13,600 people in its 16 world-class manufacturing sites and 17 distribution centres in the UK, with industry-leading technology and supply chain capabilities.

Q3 Trading Update Soon

In just over a month’s time, we should be seeing the group declare its Q3 Trading Update, covering the thirteen weeks to end June.

Interestingly there have been no active short positions notified recently.

The shares were just 112.90p on 29th March, which was when I featured the group suggesting that the shares were too cheap.

They touched 139.40p just before the Interims Results were announced on 21st May.

Since then, they have been up to 178.60p – but the ‘e-coli news’ on 14th June saw them fall back to 160.20p that day, on the back of some 4.44m shares traded.

So Where Are They Heading Now?

Between now and the Q3 Update later next month the shares could easily sway in waves of uncertainty in the market as to just how the ‘rogue salad leaves’ have hit business.

I remind readers that analysts Clive Black and Darren Shirley a Shore Capital Markets were impressed enough on the Interims to upgrade their estimates by 5% for the full year to end December.

They were looking for £65.0m (£55.5m) adjusted pre-tax profits for the year, worth10.2p (8.9p) earnings per share.

Further out their 2025 figures suggest £72.0m profits and 11.6p per share in earnings.

On 21st May the group announced a £30m Share Buyback Programme and has subsequently purchased around 2.75m shares for cancellation, with the highest price paid being 177p per share, it bought 280,000 last Friday at an average 163.23p per share.

The question now asked by investors is whether they are now stalling in price, or whether they have further to fall back awaiting further news on the product recall and its effects.

Small Cap Awards 2024

Andrew Hore
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Small Cap Awards 2024

The Small Cap Awards were held in London on 13 June. The winners were:

Company of the year

IQGeo (LON: IQG)

AIM-quoted IQGeo has been one of the best performing smaller companies in the past few years. Over five years, the share price has risen 904%. It won’t be on AIM for much longer. Kohlberg Kravis Roberts has made a recommended bid of 480p/share bid valuing IQGeo at £333m.

IQGeo has developed software that enables large businesses to collate information and geospatial data so that it can be used to build up a visualisation of all the assets in the business. There is a core customer base of utilities and telecoms.

Management thinks that it requires more financial strength even though there is net cash of around £17m. The bidder certainly has plenty of access to funding.

Aquis company of the year

Equipmake

Snetterton-based Equipmake Holdings is a developer electric vehicle drivetrain technology. It designs and manufactures components for its electric drivetrain and integrates them into a system. Earlier this year, the company raised £4m at 6p/share and a further £110,000 from a retail offer. This will fund research and development for the international market and finding opportunities in the US. The cash will last until next spring.

Equipmake has won electric powertrain orders for buses. A few months ago, the company’s order book was valued at £13.1m and mainly relates to the bus market. Interim revenues rose from £1.05m to £2.07m, while the loss increased from £2.79m to £2.96m because of higher admin expenses.

IPO of the year

Onward Opportunities (LON: ONWD)

Guernsey-registered Onward Opportunities Ltd was set up by Dowgat Capital to invest in undervalued smaller companies – generally under £100m market capitalisation. It was seeking companies with qualities such as asset backing, cash flow, growth potential and strong management.

On 30 March 2023, the company raised £12.75m at 100p/share. A portfolio of predominantly AIM companies has been built up. In a time of tough markets, the NAV has grown to 120.14p/share by the end of May 2024. That makes it one of the top performing smaller company-focused investment companies. Some of the better performers in the portfolio are Windward (LON: WNWD) and MPAC (LON: MPAC).

ESG of the year

Eden Research (LON: EDEN)

Eden Research has been quoted for more than two decades – initially on Ofex/Aquis before moving to AIM. The company is developing biopesticides for sustainable agriculture. They can replace less sustainable alternatives currently used.  

The company is in the process of gaining approvals for treatments with growth set to come in the next few years, although it is likely to continue to lose money in 2024. This year, it has gained approval for Mevalone in California. Mevalone is a biofungicide that treats botrytis on grapes.

Transaction of the year

Journeo – MultiQ acquisition

In September 2023, Journeo acquired Denmark-based MultiQ, which provides information systems to transport and local government customers, for €2.5m. This increases its exposure to the Scandinavian market. The two businesses have similar markets and Journeo can take over the currently outsourced manufacturing of MultiQ systems.

The cash came out of the money Journeo had in the bank. At the time, Cavendish increased its 2024 earnings forecast from 21p/share to 22p/share.

Technology company of the year

Kooth

Digital mental health company Kooth has developed a platform to provide therapeutic support and interventions and it started to expand internationally in 2021. Kooth gained a significant contract in California covering 13-25 year olds. Services are being provided to the Behavioural Health Virtual Services Platform, and they launched in January 2024. This should be worth $188m over four years.

In 2023, Kooth lost money. This year revenues are set to more than double to £68.7m, with most coming from annualised recurring revenues, and a pre-tax profit of £4.8m is forecast.

Dividend hero/ Investor relations success

Cohort (LON: CHRT)

Defence systems and services supplier Cohort is the only winner of two categories in 2024. A total dividend of 14.7p/share is forecast for 2023-24, up from 13.4p/share. Cohort has an unbroken record of dividend growth since 2006.

Cohort generated 2023-24 revenues and profit slightly ahead of expectations. This year, pre-tax profit of £22.1m, up from £19.1m, is forecast on slightly higher revenues of £200m. The dividend is forecast to rise to 15.6p/share.

Earlier this year, Cohort was awarded a £135m Royal Navy countermeasures contract. The order book is worth £518m and £180m of that should be recognised in the year to April 2025.

Diversity, inclusivity and engagement

TPXimpact (LON: TPX)

Digitisation services provider TPXimpact has grown rapidly through acquisitions and that did cause some problems. The new management is sorting out these challenges and bringing all the businesses together.

Management makes a point of offering flexible working hours and autonomy and says it respects all viewpoints.  

TPXimpact says 2023-24 revenues were slightly above expectations at £84m. EBITDA margin was in the middle of the 5%-6% range. Net debt has fallen to just over £7m. There was £139m of work won last year. There could be some short-term disruption from the General Election.

Executive director of the year – Chris Smith – McBride

Analyst of the year – Charles Hall – Peel Hunt

Broker of the year – Cavendish Capital Markets

Lifetime achievement – David Stirling

Director dealings: H&T chairman spots a bargain

Andrew Hore
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Director dealings: H&T chairman spots a bargain

AIM-quoted pawnbroker H&T (LON: HAT) chairman Simon Walker has acquired 9,965 shares at 387p each. This compares with the current share price of 376p.
Simon Walker holds 30,000 shares. Back in March he bought 5,035 shares at 397p each and his original acquisition of 15,000 shares was at 444p each.
Business
H&T is the largest pawnbroker in the UK. As well as pawnbroking, H&T buys gold, retails new and old jewellery and provides foreign currency services.
Business has been strong, but higher wage costs are partly offsetting that growth.
In 2023, the pawnbroking book grew 28% to £128....

Aquis weekly movers: Incanthera moves to Apex segment

Andrew Hore
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Aquis weekly movers: Incanthera moves to Apex segment

Ananda Developments (LON: ANA) has extended the term of Mark Ling as senior statutory auditor for the cannabis-based medicines developer. His knowledge will help with the 2023-24 audit after the recent changes to the group. This will be the sixth year he has held the role, and he will be replaced for the 2024-25 audit. The share price improved by one-third to 0.4p.

Skin treatments developer Incanthera (LON: INC) has moved up to the Apex segment following its recent rise in valuation. The appointment of John Howes as an additional independent non-executive director has also enabled the switch. The share price rose 19.6% to 27.5p and it has more than quadrupled this year.

OTAQ (LON: OTAQ) has won a contract with Ireland’s Seafood Development Agency for two Live Plankton Analysis System (LPAS) units to be installed and generate rental income until the end of 2024. One will be deployed with a seafood producer that has encountered Harmful Algae Bloom events. The system can identify the algae. The share price increased 16.7% to 3.5p.

Oberon Investment (LON: OBE) improved revenues by more than 50% in the year to March 2024 with strong financial planning income. The capital markets division had a tougher time, but activity levels are improving. Additional teams were added to the business, and they will generate additional revenues in 2024-25. Like-for-like growth could be more than 30% this year. There could be potential to spin-off fintech software business Logic. The share price is 8.77% ahead at 3.1p.

Kasei Digital Assets (LON: KASH) has invested $100,000 into Rule 110 Inc for its seed and strategic funding round for the launch of the RealityNet protocol. This protocol enables users to rent out unused computing resources on their devices to the rest of the network. The share price is 4% higher at 13p.

FALLERS

Geoffrey Miller has reduced his stake in TruSpine Technologies (LON: TSP) from 9.03% to 8.24%. AIM-quoted Vela Technologies (LON: VELA) has reduced its stake from 4.3% to 3.92%. The TruSpine Technologies share price dipped 15.4% to 2.75p.

Phoenix Digital Assets (LON: PNIX) says 662.5 million shares were tendered by the close of the offer, but 625 million shares were accepted at a cost of £33.7m (5.39p each). The share price fell 10.3% to 3.9p.

Kevin Hastings has a 3.08% stake in Marula Mining (LON: MARU). Last week, there were 500,000 warrants exercised at 4p each, raising £20,000. The share price declined 7.04% to 8.25p.

James and Alexandra Pace have a 3.01% stake in brewer Shepherd Neame (LON: SHEP). The share price decreased 0.73% to 680p.

AIM weekly movers: R&Q Insurance financial worries

Andrew Hore
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AIM weekly movers: R&Q Insurance financial worries

There was a share price recovery in Clontarf Energy (LON: CLON) after it published 2023 figures. The share price rebounded following the disappointment in Bolivia. It failed to move through to the next stage of the bids for the seven priority salt pans in southern Bolivia. There was nearly £183,000 of cash in the bank at the end of 2023 and a further £700,000 has been raised since. The share price jumped 148% to 0.0385p.

Landore Resources (LON: LND) has raised £3.68m at 2.4p/share with strategic investor Luso Global Mining, a subsidiary of Mota-Engil, subscribing £1m. Alexander Shaw, who is the boss of the new investor will become chief executive of Landore Resources. The cash will fund drilling at the BAM gold project at Junior Lake in northwestern Ontario. The share price recovered 62.5% to 4.55p.

Phosphate producer Kropz (LON: KRPZ) said that it knows no reason for the share price rise earlier in the week. There has been additional trading in shares since last week and the price has fallen back from 3.25p at one point, but it is still 53.7% higher at 1.875p.

Baron Oil (LON: BOIL) non-exec Dr John Chessher acquired an initial six million shares at an average price of 0.0864p each. The share price improved 43.7% to 0.102p.

FALLERS

R&Q Insurance Holdings (LON: RQIH) is still trying to complete the sale of its Accredited business. Costs are mounting up as talks continue with regulator and other parties and it is hampering the overall business. This has hit the financial stability of the business. There could be an alternative to the original Accredited deal, but that involves the liquidation of the holding company. Slater Investments has reduced its stake from 11.7% to 10.3%. The share price slumped 91.6% to 0.12p.

Cash shell Cloudified Holdings (LON: CHL) has failed to secure a reverse takeover and trading in the shares was suspended on 13 June. Prior to that the share price dived 43.8% to 2.25p. There is six months to find a deal and potential acquisitions are being assessed. There is £425,000 in the bank and costs are £23,000/month.

Deltic Energy (LON: DELT) has been unable to find a partner for the Pensacola project in the North Sea. This means that Deltic Energy cannot finance its share of the development costs and it is withdrawing from the licence and transferring its 30% share to Shell and ONE-Dyas. Canaccord Genuity has reduced its NPV10 target price to 100p. The share price slid 36.5% to 8.25p.

Helium One Global (LON: HE1) has raised £8m at 0.5p/share. This will finance the deepening of Itumbula West-1well and the extended well test, as well as the development of the helium project in Tanzania. The extended well test should start in the third quarter. The share price fell 34.8% to 0.75p.

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