AIM movers: Velocity Composites $100m US contract and potential bid for Xpediator

Andrew Hore
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AIM movers: Velocity Composites $100m US contract and potential bid for Xpediator

Composite parts kits supplier Velocity Composites (LON: VEL) has announced a $100m plus work package agreement with GKN Aerospace in Alabama, which provides a significant boost to its entry to the US market. This has sparked a 72.2% increase in the share price to 46.5p. The 2017 placing price was 85p. The GKN agreement covers five years. The new production facility opens at the beginning of 2023. GKN is an existing client in the UK. Velocity Composites expects to report 2022 revenues of £11.9m. A loss of £1.5m is forecast and it will not be much less next year. Once the US is fully up and running the company could move into profit in 2024.  

Freight business Xpediator (LON: XPD) has received a bid approach at 42p a share and the board is leaning towards recommending the offer. A consortium is led by Stephen Blyth, the former chief executive of Xpediator, and involves Justas Versnickas, who runs the Delamonde Baltics subsidiary. It has the backing of private equity firm Baltcap. The offer would be in cash and involve a partial loan note alternative. The two largest independent shareholders have indicated their willingness to accept the offer. Along with the consortium stake, this would take acceptances above 50%. Discussions continue. The share price is 22.3% higher at 37p.

Cloud-based software supplier i-nexus Global (LON: INX) grew underlying monthly recurring revenues by 12% to £250,000. In the year to September 2022, fell from £3.64m to £3.13m due to non-renewing contracts. The loss was flat at £1.1m. There was £99,000 in the bank at the end of September 2022. The share price rose 11.7% to 3.35p.

Kazera Global (LON: KZG) has sold African Tantalum to Hebei Xinjian Construction for $13m and retaining a 2.5% payment of 2.5% of gross sale of lithium and tantalum for the life of the mine. A sale of a 49% stake for $7.5m was previously proposed. Kazera Global will focus on its heavy mineral sands project in South Africa, which has commenced production, and look for other opportunities.  The hare price increased by 7.7% to 3.5p.

San Leon Energy (LON: SLE) is selling its non-core investment in the Oza oilfield to generate working capital. Management has delayed using the $50m facility provided by MM Capital because it believes there are better alternatives. This includes an issue of shares to a prospective lender. Discussions have dragged on and will not be concluded until next year. This means that San Leon Energy has not been able to make progress with its expansion plans. The share price slumped by 25.2% to 27.95p.

Oil and gas company Empyrean Energy (LON: EME) invested £1m in exploration and there was a £591,000 cash outflow from operations. There was $800,000 in the bank at the end of September 2022. The company plans to drill the Topaz prospect in China before June. The share price is 13.9% lower at 0.689p.

Beowulf Mining (LON: BEM) intends to raise £8.8m via a preferential rights issue of SDRs raising £6.7m and a retail offer of shares raising £2.1m. The funding will be priced in January. The cash will finance the development of the Kallak North iron ore project in northern Sweden. There was a 11.8% decline in the share price to 3.75p.

Premier African Minerals (LON: PREM) has intersected multiple thick high-grade zones at the Zulu lithium and tantalum project. The pilot plant construction is progressing. Spodumene production should start in the first quarter of 2023. The share price has fallen 6.1% to 0.495p.

Serica Energy expands in North Sea

Andrew Hore
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Serica Energy expands in North Sea

Serica Energy (LON: SQZ) is using its cash pile to buy Tailwind Energy and this will make it one of the top ten oil and gas producers in the UK North Sea.

The deal values Tailwind Energy at £367m and comprises up to 111 million Serica Energy shares and £59m in cash. The value is based on a Serica Energy share price of 277.5p and it has slipped to 260p. There is also net debt of £277m included in the transaction.

Serica Energy should have cash of £320m in the bank at the end of 2022, prior to the acquisition going through. There is also £40m of hedging security. Cash continues to be generated so the cash pile will build up again.

Serica increased production to 28,977 barrels of oil equivalent/day in November and the full year average should be between 26,000 and 28,000 barrels of oil equivalent/day.

Tailwind Energy has six producing assets, and this should increase group production to between 40,000 and 45,000 barrels of oil equivalent/day.

The deal also adds tax losses to the group – $1.4bn of UK ring fence corporation tax losses and $1.2bn of supplementary charge losses. The Tailwind Energy management is staying on in the enlarged group. The target’s major shareholder Mercuria will own one-quarter of Serica Energy and it will appoint two non-execs.

A general meeting will be held in January and the deal could be completed in March.

Earlier this month, Serica Energy said that the North Eigg exploration well has not encountered commercial quantities of hydrocarbons. The well cost around £13m.

Petrofac shares sink as pandemic delay costs bite

UK Investor Magazine
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Petrofac shares sink as pandemic delay costs bite

Petrofac shares were in freefall on Tuesday as the energy engineering services company feels the pain of delayed contracts due to the pandemic.

Petrofac’s Engineering and Construction (E&C) unit is expected to suffered a full year EBIT loss of approximately $190 million for 2022. This sharp loss is a result of uncovered commercial settlements and the overrun of legacy contracts caused by the pandemic.

The disappointing performance in the E&C unit means Petrofac now expect a $100 group loss in 2022 and a drop in revenue to $2.5bn. Petrofac recorded $3bn revenue in 2021 and $4bn in 2020.

The loss of revenue has been a constant worry for Petrofac investors and their shares are down 44% in 2022 after diving 9% today.

“It certainly seems that incoming CEO Tareq Kawesh has his work cut out for him at Petrofac. Whilst legacy issues at Engineering and Construction should have less of an impact going forward, it seems that the division won’t return to profitability next year,” said Derren Nathan, Head of Equity Research at Hargreaves Lansdown.

“And the units that performed well this year are not expected to generate the same returns in 2023. That said the pipeline of potential projects across the Group is very strong at $68bn, but as ever the key will be not just conversion, but also securing strong commercial terms.

“Pricing discipline is essential, to avoid a race to the bottom. Whilst New Energy is continuing  its momentum, Petrofac remains highly leveraged to the oil and gas market. The recent drop in prices means it will be making lower profits from its own  production, and any further deterioration could see its clients in the industry think hard about commissioning new projects.”  

Tekcapital shares rise after significant step forward in MicroSalt IPO process

UK Investor Magazine
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Tekcapital shares rise after significant step forward in MicroSalt IPO process

Tekcapital have announced a significant step towards the initial public offering of their portfolio company MicroSalt® with the appointment of Zeus Capital as the Nomad for an AIM listing.

The announcement signals material progress in Tekcapital’s process to list the low-sodium salt company and raise capital to accelerate growth.

“We are very pleased to appoint Zeus as our Nominated Adviser and Broker, to assist MicroSalt in effectuating an AIM listing and to provide capital market guidance for our global growth strategy,” said Rick Guiney, CEO of MicroSalt®.

MicroSalt have already made notable progress in securing a number of partnerships and distribution channels including making their SaltMe crisps available in hundreds of Kroger stores in the US.

The MicroSalt IPO will be the next in a series of successful listings by Tekcapital that includes AIM-listed Belluscura and the NASDAQ listing of Lucyd earlier this year.

Tekcapital shares were trading up 6% at the time of writing.

Purplebricks fights off attempt to remove chairman

Andrew Hore
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Purplebricks fights off attempt to remove chairman

Rebel shareholders of estate agency Purplebricks (LON: PURP) have failed to unseat chairman Paul Pindar, who was supported by 71.7% of the votes. Management recognises the past underperformance and believes that progress will be evident by the time of the full year figures.

The rebel shareholders also failed to get Harry Hill appointed to the board of the AIM-quoted company at the general meeting, although this resolution was supported by 41.8% of the votes cast.

Purplebricks has reduced its cost base by £17m. The plan is to reach operational cash generation by April 2024.

In the six months to October 2022, revenues fell from £41.3m to £34.5m and the reported pre-tax loss increased from £12.9m to £14.6m. However, if exceptional costs are excluded the loss would have nearly trebled to £13.3m. That was despite much lower marketing spending.

Broker Zeus forecasts flat full year revenues of £70m and an underlying pre-tax loss of £19.8m. In 2023-24, a loss of £4.5m is anticipated following the full benefit of cost reductions.

Cash is expected to be £24.6m at the end of April 2023 and then rise to £27.4m at the end of April 2024, helped by deferred income not yet recognised in the income statement. NAV is expected to be down to £17.2m by that date.

At 9.65p, Purplebricks is valued at £30m.

AIM movers: Midateach Pharma revises funding terms and Star Phoenix has no auditor

Andrew Hore
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AIM movers: Midateach Pharma revises funding terms and Star Phoenix has no auditor

Midatech Pharma (LON: MTPH) has revised the terms of the financing for the acquisition of TSX Venture Exchange quoted Bioasis Technologies Inc, a developer of treatments for rare and orphan diseases of the nervous system, and has decided to retain the AIM quotation. This is because of shareholder feedback. The share price recovered by 31% to 2.75p, which is 53% lower than one week ago. The purchase of Bioasis will be financed by the issue of 75.9 million shares and that valued the transaction at £4.4m when it was announced. The placement to raise $10m was going to be priced at $1/unit of ADSs and warrants. The final price will now be the lower of $1 and a 10% discount of the weighted average share price. The fundraising can be terminated if the price will be less than $0.90. The exercise price of the warrants has been increased from $1 to $1.10.

Diagnostics tests developer Abingdon Health (LON: ABDX) says it had cash of £4.4m on 19 December and should have £4.3m at the end of 2022. This should be enough cash for the next 12 months. The share price rose by 13.3% to 4.25p.

LBG Media (LON: LBG) has revised guidance for 2022, which shows a strong second half recovery. Full year revenues will be £63m. The rate of growth accelerated in the second half. However, this is still lower than the Zeus forecast. It has cut its pre-tax profit forecast by 18% to £13.5m. Net cash has been revised downwards from £46.1m to £31m. The 2023 pre-tax profit forecast has been cut from £20.1m to £17.2m. Even so, the share price has risen by 14% to 77.5p.

Information systems provider Journeo (JNEO) has won a £1.2m contract from Network Rail. This is to provide ScotRail with software and services. This will provide access to forward facing CCTV. This includes scanning and detecting objects on the track. The share price increased by 10.2% to 118.5p.

Shareholders of Star Phoenix (LON: STA) have voted against the removal of the auditor and the proposed replacement auditor, which had already started work. However, it is required to be appointed by shareholders, so accounts cannot be published. Another general meeting will be held next year. This means that trading in the shares will be suspended on 3 January. The share price slumped by 37% to 0.85p.

PCF Group (LON: PCF) has fallen by 28.6% to 0.5p ahead of the cancelation of the AIM quote tomorrow.

Angus Energy (LON: ANGS) is raising £7.1m at 1.65p a share. A further £1m worth of shares will pay deferred consideration to Forum Energy Services for Saltfleetby. The share price slipped by 15.3% to 1.575p. The cash will accelerate the field development and production at Saltfleetby. It will also finance the liability relating to a rolling hedge programme, which has been hit by production starting later than expected thereby requiring other hedging deals at higher prices. The completion of sidetrack drilling should be in January. A further compressor will double flow rate at Saltfleetby in January 2023. Angus Energy is also looking at other growth opportunities.

hVIVO (LON: HVO) says that phase 1 results for Imutex’s mosquito vaccine candidate have been published. It targets the saliva of the mosquito and hampers mosquito reproduction. The treatment was well tolerated and generated a “robust immune response”. hVIVO has a 49% stake in Imutex. The hVIVO share price has declined by 10.6% to 10.6p.

Aquis weekly movers: Hydrogen Utopia International moving to standard list

Andrew Hore
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Aquis weekly movers: Hydrogen Utopia International moving to standard list

SuperSeed Capital Ltd (LON: WWW) is the best performer of the week following the announcement on Tuesday of managing director Mads Jensen’s purchase of 2,000 shares at 105p each. This appears to have happened on 8 December because it is the only trade since August. The share price improved by 10.8% to 102.5p. This is the highest the share price has ever been.

EPE Special Opportunities (LON: E.OP) rose by 3.33% to 155p, following the announcement of the November 2022 NAV of 241.17p a share. There were also 8,500 shares traded on the day.

Hydrogen Utopia International (LON: HUI) is planning a move to the standard list, which it believes will attract international investors. This should happen on 21 December. Hydrogen Utopia International has an exclusive, non-transferrable licence for the distributed modular gasification technology developed by AIM-quoted Powerhouse Energy (LON: PHE). The share price moved ahead by 3% to 12.875p.

One Health Group (LON: OHGR) reported interim revenues increased by 17% to £9.83m. Pre-tax profit was flat at £256,000. The NHS-funded medical procedures provider announced an interim dividend of 1.66p a share. The share price edged up 1.45% to 175p. One Health Group joined the Apex segment of the Aquis Stock Exchange on 24 November and raised £1.56m at 150p a share.

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Fallers

Education technology company Dev Clever (LON: DEV) plans to leave the standard list and that has hit the share price of Asimilar (LON: ASLR), which owns 72.3 million shares and 35 million warrants exercisable at 25p each. The Asimilar share price has slumped by 72.9% to 1.625p. Dev Clever, which is rebranding as Veative Group following a reverse takeover, shares were suspended at 30p in December 2021, and it believes that a lack of interest in smaller companies means it is not worth staying listed. The shares were suspended so that the company could publish a document relating to the reverse takeover. The company may return to the stockmarket in the future. The Dev Clever investment accounted for around two-thirds of the Asimilar net asset value of £30.9m at the end of March 2022 – based on a 27p share price. Asimilar is valued at £2.1m.

Aquis Stock Exchange owner Aquis Exchange (LON: AQX) announced the most popular stocks on the market will be available via IG Group’s IG.com platform. It was not stated which Aquis companies will be available via the platform. The Aquis Exchange share price fell by 8.24% to 390p.

S-Ventures (LON: SVEN) is acquiring the Juvela business, which manufactures gluten free products for £8m in cash, £1.5m deferred until September 2023, and five million shares. Shawbrook Bank is providing a £5.5m term loan and £500,000 revolving credit facility. This year Juvela is expected to generate revenues of £8.6m and should be profitable. The brand fits in well with the existing portfolio of brands and S-Ventures has a factory in Frankfurt. The share price fell back by 5.71% to 16.5p.

Altona Rare Earths (LON: ANR) had net assets of £1.05m at the end June 2022, including cash of £283,000. There was a £1.7m cash outflow from operations and capital investment. A maiden mineral resource estimate for the Monte Muambe real earths project should be available in the first quarter of 2023. The share price declined by 5.17% to 6.875p.

Invinity Energy Systems (LON: IES) is selling a 1.5MWh vanadium flow battery to partner Hyosung Heavy Industries and this system will be evaluated by Korea Electric Power Corporation. If the test is successful, then the battery system will be qualified for use in grid scale projects in South Korea. There will be an advanced payment in 2022 and the rest of the revenues will be in 2023. This is the latest deal in Asia. A $10m funding facility has been secured from Riverfort Global Opportunities and $2.5m has been drawn down to provide working capital. There were 2.7 million shares issued as part of the deal. The reference price for the initial advance is 44.9p a share and there are associated warrants exercisable at 67.35p. The share price had risen prior to the facility announcement but it ended the week down 4.4% to 43.5p.

Coinsilium Group Ltd (LON: COIN) expects to grow its advisory client base in areas, such as the Metaverse and gaming, It is also seeking to add to its investments. The share price dipped 2.78% to 1.75p.

Guanajuato Silver Company Ltd (LON: GSVR) is raising up to C$7.5m though an issue of units at C$0.425 each. The unit comprises one share and 0.5 of a warrant exercisable at C$0.60. The previous week the silver miner secured a $5m credit facility with Ocean Partners, which already provides a $5m facility. The cash will help to ramp up silver production and invest in processing facilities, as well as enabling additional exploration. The share price slipped by 1.85% to 26.5p.

AIM weekly movers: RUA Life Sciences bounces back

Andrew Hore
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AIM weekly movers: RUA Life Sciences bounces back

The RUA Life Sciences (LON: RUA) share price has recovered strongly following its interim results and chief executive Lachlan Smith bought 19,341 shares at 54.2p a share. Contract manufacturing revenues grew by two-thirds to £917,000 and the group total was £1.1m. The medical devices developer had net cash of £2.51m at the end of September 2022. Preparations are underway for clinical trial for large bore vascular grafts and a decision on which prototype aortic heart valve is better should be made soon. The share price has risen 43.9% to 47.5p.

Oriole Resources (LON: ORR) has published a maiden JORC resource for the Bibemi gold project in Cameroon. The pit-constrained resource is estimated to be 4.3 million tonnes grading 2.19/t gold equating to 305,000 ounces. There could be up to 148,000 of additional gold in other resource blocks. The directors have sacrificed a total of £8,000 from their salaries and have been issued 3.33 million shares at 0.1276p each. The share price increased by 40.9% to 0.155p during the week.

Steel structures supplier Billington (LON: BILN) will report a much better 2022 profit than anticipated. Forecasts have been raised by 50% to £5.9m and the 2023 pre-tax profit forecast increased by 56% to £7.55m. Business is being won at higher margins, while capital investment has boosted efficiency. The forecast dividend is 11p a share, up from the previously expected 8p a share. The hare price jumped 26.1% to 290p.

Blackbird (LON: BIRD) announced that its major partner is Belgium-based live video technology developer EVS Broadcast Equipment, which has already announced a $50m, ten-year deal with a US broadcaster. Blackbird completed the development and integration of its technology with EVS earlier this year. This deal incorporates Blackbird’s video editing technology and provides Blackbird with a per-seat user licence fee, as well as maintenance and support revenues. Similar deals are likely to be secured from EVS’s customer base. The share price recovered 26.1% to 14.5p.

Seed Innovations (LON: SEED) has risen consistently throughout the week. Interim results were followed by director buying. Chief executive Ed McDermott bought 3.425 million shares at 2.52p each and 850,000 shares at 2.69p each, while chairman Ian Burns purchased 300,000 shares at 2.57p each. The investment company has net assets of £16.7m, including £360,000 in cash, at the end of September 2022. That was after an unrealised loss on investments of £3.54m. Early in December, the conditional sale of investee company Leap Gaming to Seed Innovations’ partner was announced and that could generate €5.6m, plus the repayment of a €250,000 loan. The payments are expected to be over a two-year period. The investment and loan were valued at £6.07m (€7m). The shares rose by 25.8% to 2.8p, which values the company at £6m.

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Fallers

Trackwise Designs (LON: TWD) had already flagged that it would need more cash and subsequent fundraising is at a significant discount to the previous market price. The printed circuit technology supplier is raising £3.64m at 1p a share and a one-for-0.250054 open offer could raise up to £1.5m. Unsurprisingly, the share price has fallen sharply and is 89.6% lower at 1.325p. Hamilton Capital Partners is investing £1.21m in the fundraising. The funds should last until August, when it is likely that more cash will have to be raised. If production for new contracts gets going as expected there may be a more positive view of the company by then.

Midatech Pharma (LON: MTPH) is acquiring TSX Venture Exchange quoted Bioasis Technologies Inc and as part of the deal it will leave AIM but retain the Nasdaq listing. The purchase will be financed by the issue of 75.9 million shares and that valued the transaction at £4.4m when it was announced. There will be £8.2m raised through a fundraising via a share issue at 3.3p a share and the sale of units of ADSs and warrants at $1/ unit. Bioasis focuses on treatments for rare and orphan diseases of the nervous system. The lead product is a treatment for optic neuritis associated with MS. There are deals that generate milestone payments of up to $200m, but much of this cash could be paid many years in the future if ever. This will change the focus of the enlarged group from drug delivery to therapeutics. The group is changing its name to Biodexa Pharmaceuticals. The share price fell by 64.1% to 2.1p, which is well below the placing price.

There was a 97.88% shareholder vote in favour of Parsley Box (LON: MEAL) leaving AIM. The ready meals supplier has arranged a matched bargain facility for the shares through Asset Match. The share price had been declining, but it fell a further 63.1% to 1.55p.

Engage XR (LON: EXR) warns that the fourth quarter has been slower than expected and 2022 revenues will be below €4m, rather than the previously forecast €4.9m. The extended reality technology developer says customers have delayed contract decisions and this has put pressure on cash levels. Net cash should be €1.9m at the end of 2022. Cost savings are being considered to reduce the cash outflow. The share price slumped by 59.6% to 5.25p. In June 2021, £7.7m was raised at 16p a share.

CleanTech Company Heads towards Commercialisation of their Breakthrough Technology

UK Investor Magazine
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CleanTech Company Heads towards Commercialisation of their Breakthrough Technology

Changeover Technologies, a CleanTech company, has developed an environmentally friendly and economical solution to reduce and recycle wastes, and is now heading towards the commercialisation of its revolutionary technology. 

It lets fine, small, tiny, even dust like waste particles, be transformed into pellets, sized and blended with additives or beneficial other wastes to suit the manufacturer’s specification. 

The platform technology can be applied to a variety of sectors from mining, industry to agriculture, and it’s plug and play modular concept lets it capture waste at key points within a company’s supply chain.  Changeover’s pellets produced from discarded fine particle wastes can be equivalent or better than the original raw material. 

The technology has been five years in development, and the breakthroughs made during the R&D stage attracted £5 million in venture capital investment, enabling the company to upscale their research, develop a live test site and laboratory, and then to patenting the pelleting technology. Today they have two patents approved and three pending, covering their binding formula and modular process components. 

Changeover’s technology is a green and commercial solution to clean-up and reduce wastes. It’s a win-win for producers and manufacturers, a green environmentally positive technology turning waste cost streams into high performing revenue streams. Turning waste into money. 

Silicon and Steel Industries 

Changeover’s initial niche target markets are reclaiming and recycling the discarded wastes from high purity carbon production. These high purity carbons are critical to the production of steel and silicon in advanced low CO2, high temperature Electric Arc Furnaces (EAF’s) and can experience 20% to 40% waste streams. 

This is a potential obtainable market of $450 million per annum which will continue to grow as traditional Iron Blast Furnaces are replaced with tomorrow’s greener combination Hydrogen & EAF technologies which will require fourfold supplies of high purity carbons. 

Silicon and steel are critical raw materials, essential for global sustainability in the production of electric vehicles, solar panels, wind turbines, electronics, lifesaving equipment, and other green technologies. 

Understanding Carbon

80% of global carbon is sourced from specialist metallurgical coals that form only 4% of global coal resources. Steel cannot be made from iron without the addition of high purity carbon within it, and silicon cannot be produced from silicon ore without silicon/carbon reactions.

Independent studies by Cranfield University have shown that by adopting Changeover’s technology to recycle these high-quality carbon wastes back into the circular economy, producers and manufacturers can reduce their overall scope 1&2 emissions, delivering greener raw materials from wastes. 

Coke, a pure form of commercial carbon, is derived from a finite natural resource, it is listed by the EU CRM association as one of the thirty Critical Raw Materials required for sustainable growth. Sustainability demands that it needs to be used efficiently and effectively. 

Independent Testing

Changeover Technologies’ economic and environmentally friendly solution has been independently tested by leading universities and institutes across the UK and Germany. They have confirmed: 

  • Reduction of damage to the ecosystem by 78%
  • Reduction of damage to human health by 81%
  • Reduction of damage to resources by 83%
  • Reduction of end-users’ Scope 1 and Scope 3 CO2 emissions within the supply chain.

Developments and Opportunities

Changeover Technologies is developing commercial and technical partnerships with British Steel and other high-profile companies in US, Europe, and Scandinavia, with commercial agreements planned for 2023 and first commercial units operating 2024.

The potential for this technology is enormous. Changeover is already involved in technical cooperation with a major Biocarbon group, as Changeover’s technology offers them the ability to reduce the Scope 2-Transport emissions by a quarter.

Within their R&D they have ongoing research into various wastes, with their “Blue Sky” AgriForm® technology, over 3 years in development and now ready to move forward with an industrial partner to take to commercial reality.

AgriForm® is pelletising technology combining electrical utility ash wastes with agricultural and other organic wastes, to produce PH balancing and water retaining pellets for soil enhancement in arid acid soils. This is an untapped potential $Billion market.

These are only a few of the opportunities that awaits Changeover Technologies within a variety of sectors. As they scale up and grow, many waste opportunities will present themselves, to be turned from discarded waste to quality pellets, from costs to revenues.

The future looks green and bright for Changeover Technologies. They are now crowdfunding to propel them to the next stage, commercialisation of their breakthrough technology. Their EBITDA is estimated to be $10 million, forecasting $100 million Exit by 2027.

Share price is £0.04

Pre-money valuation £11,475,552

Equity 4.46%

Housebuilders drag FTSE 100 lower after house price warning

UK Investor Magazine
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Housebuilders drag FTSE 100 lower after house price warning

The FTSE 100 was dragged lower by UK property companies on Friday after the Halifax warned UK housing prices could fall 8% next years.

The Halifax adds to a growing number of property experts and institutions expecting a reset in property prices as the cost of living crisis bites and higher interest rates put off buyers.

“Recent economic announcements and developments are beginning to be reflected in data. We are seeing a slowdown in the market and the number of mortgages approved for house purchase falling as well as a decline in new buyer enquiries,” said Tom Brown, Managing Director of Real Estate at Ingenious.

“There are a number of factors at play here including the escalating cost of living crises, but there will certainly be some very unwelcome additional mortgage costs for owner occupiers and investors throughout 2023 and beyond.”

Persimmon was down 3.3% while Taylor Wimpey gave up 3% and Barratt Developments shed 2.4%. Demonstrating concerns about the wider UK property market, Real Estate Investment Trusts Land Securities and British Land were weaker by 3.7% and 3% respectively.

Consumer headwinds

Halifax’s warning came on a day UK retail sales data also illustrated the pressures on the UK consumer. Data from the ONS showed retail sales declined 0.3% in November compared to 0.3% growth predicted by economists.

“The consumer is facing headwinds from falling real wage growth and inflation which has prompted the cost-of-living crisis by contributing to the squeeze on household budgets,” said Victoria Scholar, Head of Investment, interactive investor.

“Individuals are having to spend a larger proportion of their incomes on essentials like food and gas bills, which means there is less left over to spend on non-essential items with consumers cutting back on clothes and fuel spending.”

The soggy news on UK consumer spending and house prices culminated in a disappointing session for the FTSE 100 which was down 1.5% at the time of writing. Only one stock – Standard Chartered – was in positive territory at the time of writing.

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