Aquis weekly movers: TruSpine Technologies recovers despite failing to disclose information
TruSpine Technologies (LON: TSP) admitted that it failed to inform shareholders that a loan announced in February included a fixed and floating charge over the company’s IP. Even so, the share rose 11.8% to 0.95p, which is back to the level at the beginning of the month. There are disputes with the inventor of the company’s main technologies and the requisitioners talk about negotiating a new licence. Four shareholders owning a 19.4% stake have requisitioned a general meeting on 31 May. They want to remove four directors and replace them with three nominees. The only director they are not seeking to remove is Timothy Evans.
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Fallers
Watchstone Group (LON: WTG) has been unsuccessful in its £63m claim against PricewaterhouseCoopers concerning a breach of confidentiality. It is considering an appeal. The share price slumped 24.4% to 15.5p.
Goodbody Health (LON: GDBY) shareholders have agreed to the cancellation of the Aquis quotation on 16 May. The shares will then be traded on the JP Jenkins platform. The share price dipped 22.2% to 0.35p.
TAP Global Group (LON: TAP) has appointed Kriya Patel as chief executive of its main subsidiary. He is an experienced executive of e-money and financial technology businesses. He will receive five million LTIP options, plus a further 10 million LTIP options which will vest when certain milestones are achieved. The share price fell 7.94% to 2.9p.
Ananda Developments (LON: ANA) says a study suggests that cannabidiol plus terpenes has a more positive effect on acne than cannabidiol on its own. The share price declined by 7.41% to 0.625p.
Mark Horrocks has taken a 5.8% stake in Semper Fortis Esports (LON: SEMP), while Chris Akers increased its stake from 19.5% to 19.6%. The share price is 7.14% lower at 0.1625p.
KR1 (LON: KR1) has invested $500,000 into Web3 venture studio Code and State through a Simple Agreement for Future Equity. The share price has fallen 5.19% to 36.5p.
Cadence Minerals (LON: KDNC) investee company Evergreen Lithium, where it owns 15.8 million shares (8.74%), has identified significant and widespread lithium at the Kenny project. A further £1.86m worth of shares could be issued to Cadence Minerals. The share price slipped 1.35% to 9.86p.
AIM weekly movers: Capital Metals joint venture agreement
Mineral sands project developer Capital Metals (LON: CMET) has signed a potential 100% offtake and investment agreement with LB Group, which is the largest manufacturer of titanium dioxide pigments and sponge. LB Group will fully fund the Eastern Minerals project in Sri Lanka up to the estimated cost of $81m in the preliminary economic assessment. After that the joint venture will fund additional costs on a 50/50 basis. The plan is to build up production to 1.65 million tonnes per annum. Most of the due diligence for the deal has already been done. The share price jumped 54.5% to 4.25p
Marechale Capital (LON: MAC) says investee company Burgh Island has announced a proposed sale, enabling a realisation of the 4.9% investment. Investee company Weardale Lithium has extracted lithium carbonate from geothermal brines. The share price rose 32.6% to 1.525p. NAV was 3.6p a share at the end of 2022.
Restaurants operator Comptoir (LON: COM) says revenues grew in double digits and there are plans to open more restaurants. Pre-tax profit fell from £1.5m to £902,000 in 2022 because of higher overheads. Net cash was £7.7m at the end of 2022. The share price increased 21.7% to 7p.
Coal miner Bens Creek (LON: BEN) says shareholder MBU Capital has sold a 29.9% stake at 18p a share to Singapore-based Avani Resources, which trades raw materials for steel and power production. The share price improved 17.7% to 20.6p.
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Fallers
Purplebricks (LON: PURP) says that the number of new instructions did not increase in the fourth quarter and that means revenues and EBITDA will be worse than expected in the year to April 2024. The company’s payment processor is withholding a portion of remittances and cash was £9.1m at the end of April 2023, compared with previous expectations of £15m. The formal sale process continues, and management says that it wants to conclude this as soon as possible so the future of the business is clarified. Strike Ltd has decided not to make an offer. The share price dived 72.9% to 1.485p.
Marwyn Investment Management has decided not to invest £10m at 10.5p a share in Unbound Group (LON: UBG) and the share price has slumped by 58.6% to 3p. There is concern about the footwear retailer’s trading. Management says that it will require further covenant waivers from its funders. Options for raising cash are being considered.
PetroNeft Resources (LON: PTR) says Stimul-T LLC, operator of licence 61, has filed for voluntary bankruptcy in Russia. PetroNeft is one of two shareholders in WorldAce Investment, which owns Stimul-T, and it has issued the holding company a demand notice for service charges of $980,000. The closure of a pipeline has led to the suspension of operations on licence 61. PetroNeft is trying to sell licence 61 and the producing licence 67. An auditor is being sought, but the 2022 accounts will not be published by the end of June, which will lead to share trading being suspended. The share price dipped 56.4% to 0.12p.
Data processing technology developer Ethernity Network (LON: ENET) raised £783,500 at 3p a share. There was a broker option that could have raised a further £100,000, but no additional shares were issued. The cash will be used to buy capital equipment for testing facilities and for working capital. There is increasing interest in the company’s products and 2023 revenues could reach $9m. The share price fell 55.2% to 2.8p.
FTSE 100 gains as UK grinds out minor growth in Q1
The FTSE 100 made modest gains on Friday as investors continued to digest the implications of yesterday’s Bank of England assessment of the UK economy.
The FTSE 100 was 0.2% higher at the time of writing, while the more Uk-centric FTSE 250 slipped 0.3%.
Markets were also assessing fractional UK growth in the first quarter and the potential impact on consumers and company earnings in the coming months. UK GDP unexpectedly contracted 0.3% in March.
“Let’s be clear, whilst the Bank of England may believe the UK economy will now avoid the predicted recession entirely, the country is not in good health,” said Danni Hewson, head of financial analysis at AJ Bell.
“Rising prices, rising interest rates and strike action have created a cocktail that’s pretty unpalatable.
“Sluggish is the term that’s been used to describe the 0.1% growth the economy managed to eke out over the first three months of year, but for businesses and the cash strapped consumer such listless forward momentum will probably feel a lot like no momentum at all.”
Despite slow growth and ongoing economic worries, the Bank of England looks set to hike rates again before considering a pause.
Beazley
Beazley was a standout performer on Friday after reporting a 12% increase in gross premiums in the first quarter. Net premiums rose 24% to $1,069m.
“At a time of sticky inflation, investors will always be on the look-out for companies that have the sort of pricing power that helps them to defend, or even boost, profits, and non-life insurer Beazley’s first-quarter update unveils an average increase in premium rates on renewals of some 10%,” said AJ Bell investment director Russ Mould.
Beazley shares were 3% higher at the time of writing.
Housebuilder upgrades
Housebuilders enjoyed price target upgrades from analysts at Berenberg on Friday. Taylor Wimpey’s target was increased to 122p from 111p, Berkeley Group’s increased to 5,100p from 4,500p and Barratt Developments 552p from 440p.
The three housebuilders were up between 0.8%-1.3% at the time of writing.
Airtel Africa was the FTSE 100 top riser, gaining 3.3%, bouncing after a pummeling yesterday.
Ocado shares were 2.4% weaker on Friday as the premium retailer again suffered due to disappointing UK data. Ocado has suffered during the cost-of-living crisis as shoppers tighten their belts.
Rolls Royce, UK interest rates, and Golden Metal Resources with Alan Green
Alan Green joins the Podcast as we delve into a selection of UK equities and key market themes.
We discuss:
- Rolls Royce (LON:RR)
- Golden Metal Resources (LON:GMET)
- Truspine (LON:TSP)
Rolls Royce shares have had a sterling start to 2023. We take a look at their Q1 2023 update and review their guidance. Alan provides his view on shares going forward.
Golden Metal Resources listed this week raising just under £2m. We provide an overview of the company.
We finish looking at the saga at Truspine.
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AIM movers: Cancellation hits Blackbird and Itsarm meeting adjourned
Itsarm (LON: ITS) adjourned its general meeting to gain shareholder approval for the cancellation of the AIM quotation. The meeting will be held on 26 May. Existing votes will be valid. The share price recovered 30% to 0.325p, although this is well below the high for the day of near to 0.5p.
Shareholders in Pathfinder Minerals (LON: PFP) have agreed to the sale of the IM Minerals subsidiary for an initial £2m in cash. This should be completed on 15 May and the company will become a shell. The share price is 15% higher at 0.575p, which is near to its high this year.
Sustainable biopesticides developer Eden Research (LON: EDEN) has received regulatory approval for Cedroz for fruit and vegetables in California and Florida, as well as Mevalone for the use on Botrytis on grapes in Florida. Sales should commence in 2024. The share price is 10.6% ahead at 4.7p.
Proteome Sciences (LON: PRM) is establishing a facility in San Diego and it should open in the fourth quarter of 2023. Shipping costs and timing delays have made providing proteome services to the US customer base from Europe difficult. The share price rose to 4.8p, but has fallen back to 4.39p, up 0.9% on the day.
A&E Television Network is cancelling its contract with video editing technology developer Blackbird (LON: BIRD) at the end of June. Last year, this contract contributed less than 10% of 2022 revenues of £2.85m. Blackbird is growing its revenues, including from licensing, but this contract loss will hold back the overall rate of growth. Blackbird has £9m in cash, down from £10m at the end of 2022. The share price fell by one-quarter to 7.5p.
Shares in Unbound Group (LON: UBG) continue to fall after Marwyn said that it had decided not to invest due to concern about the footwear retailer’s trading. Management says that it will require further covenant waivers from its banks. Options for raising cash are being considered. The share price is 15.4% lower at 2.75p, which is a new low.
Tlou Energy (LON: TLOU) has launched a four-for-eleven offer to existing shareholders that could raise up to £5.86m at 2p a share. The share price fell 8.7% to 2.1p. This will finance the development of the Lesedi coal bed methane gas-to-power project in Botswana. First electricity sales are expected in the second quarter of 2024.
Tough times for CMO Group
Online builders’ merchants CMO Group (LON: CMO) increased like-for-like 2022 revenues by 2%, but the market remains tough, and it will be difficult to raise revenues this year. At best, the market may recover in the second half.
Online sales share of that market has fallen from the height of the Covid lockdowns, but the trend is still upwards. CMO Group has a 1.15% share of the market, which is much higher than before lockdowns.
In 2022, revenues increased from £76.3m to £83.1m, helped by acquisitions. Gross margins held up at 19.9% as sales of higher margin products offset the decline at Total Tiles, where there were problems with pricing.
Overheads were increased following flotation on AIM and that is why operating margin dived from 3.5% to 1.5%. There was a boost of around £200,000 to operating profit due to a reduction in deferred consideration for a past acquisition. Pre-exceptionals profit fell from £1.5m to £800,000.
On the plus side, the marketing database grew by 13% and 46% of orders are from repeat customers. The average order value is 18% higher. Branding has been made consistent between the various online platforms operated by CMO Group. The Good Build Superstore aimed at consumers rather than trade has been launched.
Overheads are being reduced. Employee numbers are 15% lower than the peak last year and delivery costs are being controlled.
Construction materials manufacturers and retailers are all suffering from a tough start to the year. First quarter sales have fallen by 10% at CMO Group, but Liberum forecasts flat revenues for 2023. Pre-exceptionals profit could halve to £400,000. This should provide the base for recovery.
The share price fell 0.5p to 21p, which is 52 times prospective 2023 earnings, falling to 23 next year.
Net cash was £1.4m at the end of 2022, but CMO could have a modest level of net debt by the end of 2023. Even so, the model means that there are low levels of stock and CMO Group is in a strong position to benefit when there is an upturn in the economy.
THG board cut off discussions with Apollo
The THG board have cut off discussions with Apollo, sorry shareholders you are now having to be in it for the long slog, but don’t worry other bidders could still be around.
As if by magic, within hours of yesterday afternoon’s article being published, we have a statement today from THG (LON:THG).
The beauty and nutrition internet retailer has announced that it was not seeking an extension to the discussions with Apollo Global Management and it has now terminated all discussions with the potential bidder.
Does that mean that Apollo Global Management, the US-based fund manager, has walked away?
I would think not, as yet, because it obviously did have some concrete plans for the future progress of THG, so it would not, in my opinion, have just upped its THG sticks and just walked away.
Apollo made an indicative proposal, which was THG considered to be on an ‘inadequate valuation’.
So, what will it do now?
We now know, from THG’s own lips, that the company has had several publicly and other private offers for the company.
It has rejected those upon similar grounds to its rejection of the Apollo approach.
I do not think that Apollo will walk away, nor will any of the other potential suitors.
They all have irons in what could prove to be a very hot fire.
The question is who will move first?
I bet the weekend press will commit column inches by the score to discussing the whole situation.
So THG could still be considered to be in play.
The shares fell to a 55p low this morning before quickly bouncing back to 67p.
Are they going to gain further ground?
Without any doubt my answer is that they will be recovering very soon.
FTSE 100 slips as Bank of England hikes rates
The FTSE 100 slipped on Thursday after the Bank of England hiked rates and set out their revised forecast for the UK economy.
As expected, the Bank of England raised rates by 0.25% to 4.5%. However, the market-moving elements of the bank’s instalment were their UK economic forecasts and press conference. The prospect of additional rate hikes this year curtailed demand for UK risk assets.
The FTSE 100 was down 0.34% at the time of writing during the Bank of England’s press conference.
The BoE now expects the UK economy will avoid a recession but still sees persistently high inflation levels through the rest of 2023. The bank sees sharp drops in inflation this year, but with inflation currently in double digits, inflation will still be significantly higher than their 2% target.
“Sticky inflation means the Bank of England has once again turned to its weapon of choice in hope of stamping out the inflationary pressures the economy is facing,” said Rachel Winter, Partner at Killik & Co.
Winter continued to explain markets are predicting further interest rate hikes later this year – a contrast to the current trajectory for rates in the US.
“While the Federal Reserve recently indicated that it was ready to hit the pause button on rate hikes in the US, markets in the UK are currently pricing in a peak of 4.85% in September.”
GBP/USD fell despite the bank predicting 0.25% growth in 2023 – and will avoid a recession. In February, the bank had predicted a 0.5% contraction in 2023.
FTSE 100 movers
Airtel Africa was the FTSE 100 top faller after reporting 2022 full-year results. Investors were disappointed with falling earnings due to currency fluctuations. Airtel Africa shares were down 7% at the time of writing.
Rolls Royce slipped as the defence and aviation firm kept guidance for the year unchanged. Roll Royce shares were down 5% on Thursday but are still up 58% on the year.
Miners were under pressure as concerns about Chinese demand for natural resources sapped interest in the sector. Rio Tinto, Anglo American and Glencore were down between 2%-3%.
ITV
Former FTSE 100 constituent ITV’s hopes of being promoted back to London’s leading index were dealt a blow after poor trading in Q1.
ITV was down 4.5% after its Q1 2023 trading update was released. The media group said sales faltered in the period, primarily due to lower advertising revenue.
“TV advertising faces both a structural challenge, as the audience for linear television declines, and a cyclical challenge as companies trim their advertising spend thanks to an uncertain economic outlook,” said Russ Mould, investment director at AJ Bell.
“This was reflected in free-to-air broadcaster ITV’s first quarter trading update which, not unexpectedly, showed a big decline in advertising revenue and signalled a weak showing on this front in the current quarter too.
“Advertising spend on its digital platforms is proving more resilient but not sufficiently so that it can make up for the drop off elsewhere.”
ITV’s shares need to rally by around a third to be in contention for promotion to the FTSE 100.