AIM movers: Oil and gas companies dominate risers

Andrew Hore
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AIM movers: Oil and gas companies dominate risers

Oil and gas explorer Block Energy (LON: BLOE) has commenced drilling on the JSR-01DEEP well in Georgia. The target is an undrained part of the Middle Eocene reservoir. This is the first in a series of wells. This news was enough to make Block Energy the best performer of the day on AIM, with an 18% jump to 1.8p.

Nine of the top ten best performers on AIM today are involved in oil and gas. The shutdown of the Nordstream pipeline has caused concern about gas supply, while the oil price has fallen, and this may lead to a reduction in OPEC production. Potential lifting of restrictions on oil and gas exploration, including fracking, in the UK is behind the rises in Egdon Resources (LON: EDR), up 16.1% to 8.125p, Angus Energy (LON: ANGS), ahead 12.2% to 2.75p, and IGas (LON: IGAS), up 16.9% to 96p.

Interim results from Surface Transforms (LON: SCE) were in line with expectations and the carbon fibre brake discs developer could breakeven in 2022. Interim revenues were 140% ahead at £2.9m. Increased volume expectations for two contracts mean that the 2023 pre-tax profit forecast has been more than doubled to £2.4m and 2024 raised by one-fifth to £6.8m. The contracted order book is worth £190m. Working capital requirements mean that Surface Transforms could fall into net debt in 2023 before an upsurge in cash generation in 2024. The shares rose 5.56% to 47.5p.

Itaconix (LON: ITX) and Croda have renewed their odour control ingredients supply agreement, adding an additional product. The plant-based polymers developer supplies ZINADOR products to Croda, which has secured initial customers for them. The Itaconix share price is 5.15% higher at 5.1p.

Two recent contract wins in the US by 1Spatial (LON: SPA) has boosted the share price of the geospatial data services provider by 5.13% to 41p. A seven-year contract worth $1.2m has been won with the state of Arkansas for 1Spatial’s 911 geospatial service. This is the eighth state that has been gained for this service. The other contract has been awarded by a buying collaboration between 18 states and is worth $400,000 just in Massachusetts. It involves merging data assets into one database. If secured, deals with all 18 states could be worth up to $15m over eight years. Edison believes there is potential upside in its 2022-23 forecast operating profit of £2m.

Clontarf Energy (LON: CLON) is bucking the trend among the AIM oil and gas companies and the shares have dived by nearly one-third to 0.0825p. However, they have not lost all the recent gains even though management says it does not know why the share price rose. Clontarf Energy is assessing its block on the North Western Shelf in Australia, where it has a 10% working interest. In Ghana, there are talks concerning the completion of delayed ratifications of signed petroleum agreements that will enable exploration in Tano Basin. A reason for the recent share price rise may be the move into lithium exploration in Bolivia, where there is an agreement in principle for a joint venture to test brines in medium-sized salt lakes.

Shares in Seed Innovations Ltd (LON: SEED) have fallen 7.46% to 3.1p following last Friday’s portfolio valuation update showing a decline in NAV from £20.5m to £17.8m at the end of August 2022. The main reasons for the fall were the investments in 43.49% owned Leap Gaming, which had been hoping to float, and ASX-listed Little Green Pharma, whose share price has fallen by 37%. Seed Innovations will make a presentation at its AGM, and it will be broadcast via the Investor Meet Company platform.

Technology Minerals receives ABTO status for Tipton Recyclus site

Natasha Doris
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0
Technology Minerals receives ABTO status for Tipton Recyclus site

Technology Minerals shares gained 4.7% to 2.2p in late morning trading on Monday after its 49%-owned battery recycling group Recyclus received ABTO status from the Environmental Agency for its recycling site in Tipton, West Midlands.

The approval means Technology Minerals has received the green light to immediately kick off manual recycling operations at its lead-acid facility.

The company said Recyclus was authorised to produce up to 15,000 MT per year of lead and store up to 300 MT of inbound stock at any one time on site, under ABTO status.

Technology Minerals confirmed the new authorisation marked the start of phase one for its recycling operations, which will shift to a fully-automated recycling process in phase two later in 2022 after the receipt of the variation licence.

The Recyclus system breaks down and recycles batteries into their constituent parts, to ensure the recovery of acid, lead and plastic materials.

The components are subsequently reused in a variety of industries, such as hard lead used in grids, soft lead used for battery paste and sulphuric acid used for agricultural purposes in fertilisers.

“We are delighted to have our ABTO status confirmed by the Environmental Agency, so we can kick-start recycling operations, close deals in the pipeline, and start generating revenues from this site. Once fully operational, the Tipton plant positions us to become one of the leading accredited battery recyclers internationally.,” said Technology Minerals chairman Robin Brundle.

“The lead-acid battery recycling industry is currently a major polluter, with over 18,000 tonnes of spent batteries incinerated or sent to landfill each year in the UK alone. It is vital that companies look to strip back ‘greenwashing’ and promote homegrown waste management solutions if the UK is to achieve its COP26 net zero targets.”

“Our operations will help to divert waste from landfill, enabling key resources to be kept in use for longer, minimising waste and reducing the environmental impacts of spent batteries. These efforts underscore our commitment to developing a truly circular economy for battery metals that will help propel the green transition and meet the net zero 2050 targets. We look forward to reporting on our progress in the coming weeks and months.”

1Spatial expands US reach with three new contracts

Natasha Doris
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0
1Spatial expands US reach with three new contracts

1Spatial shares rose 4.4% to 40.7p in late morning trading on Monday following its announcement of several new US opportunities, including a $1.2 million seven-year contract with the state of Arkansas for the firm’s Next Generation 911 (NG911) solution.

Arkansas marks the eighth US state to select the solution, which incorporates 1Spatial’s flagship 1Integrate and 1Data Gateway to ensure compliance with the NENA standard for 911 call processing.

1Spatial said it would receive $700,000 in committed revenue over the first four years, with the following three years under option.

The company currently expects $1.1 million linked to software licence annual recurring revenue, alongside the $1.2 million value of the seven-year agreement.

“Being selected by Arkansas State to deliver its NG911 system is a great competitive win for us,” said 1Spatial CEO Claire Milverton.

“Arkansas is now the eighth State so far to choose our solution, demonstrating the value and uniqueness of our proposition and reinforces our strategy to launch this as a SaaS-based solution to US cities and counties later in the year.”

1Spatial confirmed its technology had also been selected by the Eastern Transportation Coalition as a vendor for conflation solutions in its Traffic Data Marketplace.

The group further noted its first contract through the marketplace for $400,000 with the Massachusetts Department of Transportation.

“We are proud to be using our automated rules-based technology to ensure the safety and efficiency of the ETC states and it is extremely encouraging to have already secured our first contract through the framework with Massachusetts DOT,” said Milverton.

1Spatial confirmed a total potential contract value for conflation within the ETC framework agreement to be up to $15 million across eight years.

“These are fantastic wins for 1Spatial, demonstrating our expanding presence in the US market and offer further validation of the size of this opportunity,” said Milverton.

“We are hugely excited about the further potential prospects in the US that our innovative business applications bring.”

Westminster Group – giving money away

Mark Watson-Mitchell
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Westminster Group – giving money away

How would you like to buy a ‘penny share’ for just 1.6p that could make 1.6p per share in earnings next year?

What is more this company’s brokers are looking for the shares to more than quadruple in price.

Currently capitalised at only £5.2m the Westminster Group (LON:WSG) offers investors big profit potential.

The Banbury-based group is a specialist security and services group that operates worldwide through an extensive international network of agents and offices across the globe, situated in France, Germany, Saudi Arabia, Ghana and Sierra Leone.

Its Business

The group is involved in the design, supply and ongoing support of advanced technology security solutions. Its aim is to keep people safe, secure assets and maximise prosperity in high growth and emerging markets around the world. ​

Its range of products is extensive and covers all forms of personal and site safety, anti-terrorism, risk reduction, defence and homeland security products and systems.

Those products can be delivered to the group’s clients anywhere in the world. 

It takes in a wide range of surveillance, detection, tracking and interception technologies and the provision of long-term managed services contracts.

They include screening and x-ray, detection, fire, vehicle and pedestrian management, surveillance, health and safety, inspection and search, and even explosive ordnance disposal and improvised explosive device disposal.

Ongoing Contracts

The group provides its clients the management and running of complete security services and solutions, for such locations as airports, ports and other such facilities, together with the provision of manpower, consultancy and training services. 

The majority of its customer base, by value, comprises governments and government agencies, non-governmental organisations, critical infrastructure, and blue-chip commercial organisations.

Operating through two main divisions

It operates through two divisions, which include Managed Services and Technology.

Its Managed Services division is focused on long-term recurring revenue managed services contracts. Examples are the management and running of complete security solutions in airports, ports and other such facilities, as well as the provision of manpower, consultancy and training services.

Its Technology division is focused on providing technology led security solutions, offering a range of surveillance, detection, tracking, screening and interception technologies to governments and organisations across the world.

In the year to end December 2021 on a sales per business basis, Managed Services made up 72.1% of the group’s sales, while Technology accounted for 27.9%.

On a sales per region basis, Africa represented 60.9% of the group total, while the UK and Europe made up 30.6%, while the Middle East was just 1.7%.

Impressive customer list

The company has customers in some 50 countries across six continents, including national governments, sports stadia, educational facilities, conference and exhibition centres, shopping malls, financial institutions, the hospitality sector and medical centres.

The group has leading customer names like BP, Mitie Group, the Royal Navy, HM Prison Service, the British High Commission in Ghana, Aberdeen Harbour, Menzies Aviation, AirBridgeCargo, BAT, the UN, Bhutan’s Anti-Corruption Commission, the Northern Ireland Prison Service, the International Atomic Energy Agency – they are just a few of those on the list.

Recent Contract Wins

In the last few weeks, the Group’s Technology Division has been awarded a couple of contracts to provide a Mass Entry Screening solution. 

The most recent was one to a significant theatre and exhibition complex in Northern England as part of its preparation for the UK’s forthcoming ‘Protect Duty’ legislation.

Shortly due to come into force within the UK, it will set out standards to protect patrons and the general public from terrorist attacks when in crowded spaces by putting in place appropriate security measures. 

This could include settings such as sports stadiums; festivals and music venues; hotels; pubs; clubs; bars and casinos; high streets; retail stores; shopping centres and markets; schools and universities; medical centres and hospitals; places of worship; government offices; job centres; transport hubs; parks; beaches; public squares and other places where gatherings of people occur.  

The Home Office estimates that 650,000 UK businesses could be affected.

Westminster’s Mass Screening solutions address this issue, allowing for the screening of large numbers of people entering an event or venue without slowing the natural flow, improving both security and visitor experience.

A Certain Professionalism

The group is a solutions provider not a manufacturer and therefore it is product agnostic. That means that its clients receive products and services that meet their exact needs.

Group CEO, Peter Fowler’ has stated that

“Our vision is to build a global business with strong brand recognition, delivering advanced security solutionsand long-term managed services to high growth and emerging markets around the world, with a particular focus on long-term recurring revenue business enhancing shareholder value.”

Equity Holders

There are some 330m shares in issue. Peter Fowler, CEO, owns 6.601,794 shares, some 2.00% of the equity.

The larger professional shareholders include Henderson Global Investors (4.69%), CRUX Asset Management (3.49%), HSBC Holdings (2.99%), Harwood Capital (2.57%) and SpreadEx (1.67%).

Analyst Opinion – 1.6p per share earnings next year

Colin Smith, at the group’s corporate brokers Arden Partners, has a Buy out on the group’s shares. His Target Price is 7p a share.

For the current year to end December he looks for the group to report doubled sales at £14.3m (£7.1m), while its adjusted pre-tax profit of £1.1m would be a convincing turnaround from the previous year’s loss of £1.9m. 

That would lift earnings to 0.3p per share against the 0.6p loss last year.

But the exciting part comes now!

For the 2023 year, Smith has an estimate of £23.7m sales and a massive £5.3m profit, worth 1.6p in earnings per share.

What is more, Arden Partners are going for a 2023 end-year cash balance of £4.5m, which is close to today’s total market capitalisation, thereby almost throwing its operations in for nothing.

Conclusion – an absolute steal

That profit estimate for next year is equivalent to the Group’s current market capitalisation.

To me it feels like the market is missing this one completely.

It may well have been spooked by previous operating losses but on the back of Arden’s estimates the shares look like an absolute steal at just 1.6p.

Euro hits 20-year low as energy crisis ravages Europe

Natasha Doris
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0
Euro hits 20-year low as energy crisis ravages Europe

The Euro hit a 20-year low, sinking 0.43% to 0.9911 dollars on Monday as the energy crisis ravaged the European continent.

The plunge followed Russian gas giant Gazprom’s announcement that its three-day suspension of the Nord Stream 1 pipeline would be extended indefinitely, after maintenance works uncovered apparent oil leaks in the vital gas supply route.

The pipeline was scheduled to reopen on 2 September before Russia announced the prolonged shutdown.

The new direction sent European markets into a spiral, with the German DAX plummeting 2.7% to 12,689.4 in morning trading.

European leaders have accused Russia of using the Nord Stream 1 pipeline as a weapon against the continent in its war against Ukraine, a claim which Moscow has denied.

China extends Chengdu lockdown, Shenzhen introduces tiered lockdown system

Natasha Doris
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1
China extends Chengdu lockdown, Shenzhen introduces tiered lockdown system

China has extended its Covid lockdown in Chengdu, with the city’s 21 million population set to undergo further mass testing between Monday and Wednesday.

The Sichuan Health Commission reported 90 local Covid cases and 50 asymptomatic residents on Sunday, resulting in a total of 940 and 395 cases, respectively.

The Xinjin district and Qionglai city have been cleared for daily life to resume, after no new positive cases emerged over the past week. Chengdu Covid headquarters said residents will be allowed to return to work if they secure a negative Covid test within 24 hours.

Residents across the remaining districts in Chengdu are set to remain under lockdown while testing continues across the city.

Meanwhile, tech hub Shenzhen will introduce a tiered system of Covid lockdowns, which will categorize areas in the city as low, medium or high infection risk.

Low risk areas will have the majority of restrictions removed, while medium and high risk regions will keep restrictions for residents.

Shenzhen said temporary restrictions measures would kick off again in areas where infection is discovered.

HICL Infrastructure confirms potential US and UK acquisitions

Natasha Doris
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0
HICL Infrastructure confirms potential US and UK acquisitions

HICL Infrastructure shares fell 0.8% to 173.9p in early morning trading on Monday after the investment trust reported two prospective acquisitions to portfolio.

The group confirmed the potential acquisition of a significant minority shareholding in US electricity transmission asset Texas Nevada Transmission, and the award of preferred bidder status for the assets linked to the Hornsea II offshore Wind Farm offshore transmission link.

HICL Infrastructure agreed to acquire a 45.75% shareholding in Texas Nevada Transmission from Manulife Investment Manager and John Hancock entities.

After the transaction, Texas Nevada Transmission will represent approximately 6% of HICL’s portfolio by value.

The agreement is projected to close before HICL Infrastructure’s FY 2023 end on 31 March 2023, and will be funded via the company’s £730 million credit facility, which is presently undrawn.

The potential acquisition represents HICL’s fifth North American investment, which is set to see the company partner with US electricity system developer and operator LS Power, with the agreement led by InfraRed America’s team, which operates across core and energy infrastructure.

“InfraRed is delighted to embark on this partnership with LS Power, a pre-eminent electricity system operator in the US,” said InfraRed head of core income funds Edward Hunt.

“TNT delivers long-term predictable income under regulated and contracted frameworks, while supplying an essential utility, bolstering network resilience and enabling the transition to renewable energy sources in the states of Texas and Nevada.”

“This acquisition fits firmly within HICL’s vision to support sustainable modern economies and is another example of InfraRed’s international footprint and network enabling HICL to execute its strategic priorities.”

The group’s bid for Hornsea II Windfarm has been submitted via its re-entered partnership with Mitsubishi subsidiary Diamond Transmission Corporation.

The consortium was selected by Ofgem as the preferred bidder to both own and operate the Hornsea II.

The consideration for HICL’s 75% share of the interest in Hornsea II is expected to represent approximately 3% of the company’s portfolio by value.

The firm said it expected the investment to achieve financial close in HY1 2023, and will reportedly be funded from HICL Infrastructure’s £730 million corporate credit facility.

Dechra pharmaceuticals shares tumble despite climbing revenues and profits

Natasha Doris
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0
Dechra pharmaceuticals shares tumble despite climbing revenues and profits

Dechra Pharmaceuticals shares tumbled 7% to 3,250p in early morning trading on Monday, despite a revenue climb to £681.8 million in FY 2022 compared to £608 million in FY 2021.

Dechra commented its revenue levels returned to more normalised historical levels of growth, as the uptick of pets spending by owners over the Covid-19 lockdown slowed down.

The pharmaceutical group reported an underlying operating profit of £174.3 million against £162.2 million, alongside an underlying EBITA of £190.6 million from £177.7 million and an underlying EBIT percentage of 25.6% from 26.7%.

Dechra Pharmaceuticals confirmed a reported operating profit of £95.5 million against £84 million.

The company mentioned an underlying diluted EPS of 120.8p from 108.1p and a diluted EPS of 53.4p compared to 51p.

Dechra noted cash generated from operations before interest and tax of £163.3 million from £141.2 million.

The pharmaceutical firm said it expected the veterinary pharmaceutical market to remain resilient despite macroeconomic uncertainty, especially the CAP sector.

Meanwhile, its acquisition of Med-Pharmex provides strength to its US presence, and its Piedmont acquisitions reportedly adds several “exciting” products to its development pipeline.

“We have continued to progress on all aspects of our strategy; the product development pipeline was strengthened, material acquisitions were completed post year-end and a new subsidiary was established in South Korea as we continue our geographical expansion,” said Dechra Pharmaceuticals CEO Ian Page.

Dechra Pharmaceuticals announced a 44.8p dividend per share against 40.5p the last year.

New standard listing: Zamaz online brand buildling plans

Andrew Hore
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New standard listing: Zamaz online brand buildling plans

Zamaz believes that its technology platform can help to efficiently build brands via e-commerce. There is already a portfolio of brands in the group, but most are at an early stage of their development.
E-commerce is a large and fast-growing growing global market and Zamaz does not have to gain much of a share to prosper. There was a sharp jump in online trading during lockdowns, but revenues have not necessarily been maintained since then, although they are still showing long-term growth.
The flotation will help to raise the profile of the business and its brands, as well as improving the bal...

Aquis weekly movers: S-Ventures cash injection

Andrew Hore
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0
Aquis weekly movers: S-Ventures cash injection

S-Ventures (LON: SVEN) was the best performer of the week, rising 11.4% to 24.5p. S-Ventures has acquired Lizza, a wellness and free-from food brand, from Peter Cremer Holding. The Hamburg-based agricultural business is subscribing £2m for shares in S-Ventures at 70p each. The share price has never traded at that level. Lizza produces pasta and breads and provides S-Ventures with a base in the German market. Revenues were €4.5m in 2021. The initial cost of the deal is €1, but there is an earn-out based on a share of profit over ten years up to a maximum total of €2.366m.  

KR1 (LON: KR1) has invested $300,000 in RedStone Finance, as part of a $7m fundraising. KR1 participated in the previous financing round. RedStone is developing RedStone Oracles, a provider of data feeds for crypto assets, and smart contract platform provider Warp Contracts. The share price improved by 4.17% to 50p.

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Fallers

Healthcare IT developer DXS International (LON: DXSP) is reviewing its growth plans for the next 24 months. The new strategy will be designed accelerate growth and is likely to require additional funds. They will probably be raised through a share issue and that appears to have worried investors. The share price slumped by 35% to 6.5p on Friday when the announcement was made.

Rent guarantee service provider RentGuarantor Holdings (LON: RGG) published interim results showing a jump in revenues from £91,000 to £170,000. Higher admin expenses meant that the loss increased from £258,000 to £353,000. Revenues continued to improve in July and August. The share price fell 6.14% to 130p. RentGuarantor floated at 200p a share at the end of 2021.

Tectonic Gold (LON: TTAU) says 40%-owned Whale Head Minerals has received a mining permit for its near-production minerals sands operation, which has an estimated NPV of £150m. Tectonic Gold has agreed to transfer a 30% stake to Whale Head Minerals’ BEE partners, which have mining expertise, and it will retain a non-diluting interest of 10%. The share price has declined by 4.88% to 0.975p.

Invinity Energy Systems (LON: IES) says contract manufacturer Baojia has shipped 1.1MWh of Invinity batteries from its factory in China designed for the project with Elemental Energy in Canada. Final assembly and testing will be done by Invinity Energy Systems at its factory before delivery. The share price fell 2.08% to 47p.

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