AIM movers: Joules potential cash injection and ECO Animal Health tax problem

Andrew Hore
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AIM movers: Joules potential cash injection and ECO Animal Health tax problem

Fashion brand Joules (LON: JOUL) has confirmed media speculation that it is in talks with NEXT (LON: NEXT). The retailer is considering a £15m investment in Joules. This would be at the market price of 33p at the end of last week or higher. The price has jumped 46% to 48.175p. At the previous closing price, a £15m investment in shares would have been equivalent to a more than 30% stake, so it may not be a pure share purchase there could be a convertible loan element. Shareholder approval will be required, so they could be asked to agree to a 30% plus stake without NEXT having to make a mandatory bid. However, a 25% stake has been mentioned in the press, which suggests an investment higher than the current price. Joules also wants to use NEXT’s total platform services. That could improve efficiency and might save money.

Trinidad-focused oil and gas company Touchstone Exploration (LON: TXP) shares are continuing their recent recovery. The price has risen a further 19.8% to 84p. The authorities have accepted the Environmental Impact Assessment for the Cascadura project, where Touchstone Exploration has an 80% stake. A final determination will be made by 15 September. This follows news that the Coho gas facility will start pre-commissioning. Production at Coho is expected to eventually increase to 1,667 barrels of oil equivalent per day. Coho and Cascadura would add total net production of more than 10,000 barrels of oil equivalent per day. finnCap estimates a core value of 110.8p a share with further potential value from contingent and prospective resources.

Lexington Gold (LON: LEX) says that the updated JORC mineral resource estimate for the Loflin side of the Jones-Keystone-Loflin project in the US has increased by 27% to 82,700 ounces of contained gold at 0.99 g/t. There is potential for a further significant increase in resources through additional drilling. A maiden resource for the Jones-Keystone side is expected shortly and this could be up to 100,000 ounces of gold. The share price is 8.77% ahead at 3.1p.

There were two pieces of news from Hutchmed (China) Ltd (LON: HCM) this morning. A phase 3 FRESCO-2 study for fruquintinib met its primary endpoint of overall survival in metastatic colorectal cancer patients. There are plans for regulatory submissions in the US, Europe and Japan. Preliminary results for the SAVANNAH phase 2 trial show that TAGRISSO plus Savolitinib demonstrated a 49% objective response rate in lung cancer patients. Savolitinib is being jointly developed by Hutchmed and AstraZeneca. The shares roe 5.8% to 232.75p, although the share price has still more than halved this year.

A tax issue and a slow start to the current financial year has hit the ECO Animal Health (LON: EAH) share price, which fell 20.4% to 101.5p. Trading and profit for the year to March 2022 was in line with expectations. The profit includes a £1m foreign exchange gain that helped to offset a similar provision for sales tax on imported products – this has not been previously expensed. This tax liability is still uncertain, and it is going through the courts, but the total provision is likely to be £2.5m. There is also an additional R&D charge of £300,000 for work that did not meet the criteria for capitalisation. Low Chinese hog prices have hampered demand for antibiotics in the first quarter and the subsequent rise in prices will take time to affect demand. Elsewhere, trading has been strong, but revenues are likely to be flat in 2022-23.

Tungsten West (LON: TUN), the operator of the Hemerdon tin mine in south west England, announced a loss of £13m for the year to March 2022. There was still net cash of £28.8m at the end of March 2022, but this has fallen to £22.9m. The project is being redesigned, which has led to delays. Power and materials costs are rising. Financing is being negotiated and production could start in 2023. The share price has fallen 8.2% to 28p.

Bidstack revenues hit £2m in HY1 as gaming inventory grows

Natasha Doris
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3
Bidstack revenues hit £2m in HY1 as gaming inventory grows

Bidstack shares dipped 1.1% to 3.3p in late morning trading on Monday, after the firm reported a surge in revenue to £2 million in HY1 2022 against £820,000 in HY1 the last year.

The in-game brand activation platform announced a gross margin improvement to 39.9% from 34.5% in the previous year.

Bidstack confirmed a period-end cash balance of £3.6 million compared to £695,000 year-on-year.

However, the gaming advertiser reported a pre-tax loss of £3.6 million, remaining essentially flat year-on-year.

The company also mentioned a selection of operational highlights, including an inventory of games with 110 titles against 30 in HY1 2021, with over 100 million monthly active users.

The group highlighted its ad-quality platform PubGuard had secured a minimum two-year licence agreement with Azerion, providing exclusive representation in reselling the platform’s brand safety technology while using the software across its series of companies.

Meanwhile, Bidstack announced its new ad-format “reward video” launched over the financial term, which grew the breadth of monetisation solutions available to developers and publishers, alongside “in-game” and “in-menu.”

Bidstack reported a strong outlook for HY2 2022, including accelerated revenues from its Azerion media sales partnership, a robust product pipeline and a slate of new products scheduled for launch in the coming term.

“As I mentioned in our trading update on 6 July 2022, the first six months of FY22 has seen the Company put in place further foundations for longer term growth, as our Group revenues begin to accelerate,” said Bidstack CEO James Draper.

“Our two-year agreement with Azerion began in March and, after an initial integration and on-boarding phase, is now progressing in line with management’s expectations. As previously mentioned, Azerion is giving Bidstack’s media segment and gaming advertising network a greatly increased representation across markets new to the Group.”

“We are all very aware of the uncertainty caused by the challenging global economic climate. However, we remain confident that the video game sector will remain strong and that demand for monetisation through advertising-spend will continue to increase, from game developers and publishers.”

PageGroup profits soar despite slowdown across several markets

Natasha Doris
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0
PageGroup profits soar despite slowdown across several markets

PageGroup shares fell 6.2% to 424p in late morning trading on Monday following a reported slowing in time to hire across several of the company’s markets in July 2022.

However, PageGroup announced a strong slate of results across the board, including a 27.5% revenue growth to £977.3 million in HY1 2022 against £766.4 million the last year.

The recruitment firm mentioned a 33.3% gross profit climb to £538.9 million from £404.2 million, alongside an operating profit rise of 79.3% to £115.3 million compared to £64.3 million the year before.

PageGroup also noted a pre-tax profit spike of 79.3% to £114.5 million against £63.7 million.

The hiring group mentioned a gross profit per fee earner rise of 9.2% to £82,800 compared to £75,800.

The firm reported a 10.6% total headcount growth to 8,668 at the end of June 2022.

PageGroup noted net cash of £136.2 million compared to £163.8 million the last year.

“We achieved a strong H1 performance across our geographies, disciplines and brands, and delivered Group operating profit up nearly 80%. This was particularly pleasing given that 2021 had been a record year for gross profit and operating profit,” said PageGroup CEO Steve Ingham.

“This performance was achieved despite the backdrop of macro-economic and geo-political uncertainty as well as continued COVID-19 restrictions in certain markets. We believe that our strategy of maintaining and investing in our platform throughout the pandemic by investing in experienced hires and focusing on technology and innovation, has been key to us achieving these outstanding results.”

“Looking forward, we recognise the heightened degree of global macro-economic and geo-political uncertainty, particularly with regards to increasing inflation around the world. In July, we noted a slight slowing in time to hire in some of our markets, and we continue to closely monitor our forward-looking KPIs. However, at this point, our expectations for 2022 full year operating profit remain in line with the company compiled consensus of £206m.”

The company highlighted an EPS growth to 25.6p from 12.2p, along with a diluted EPS of 25.5p compared to 12.1p year-on-year.

PageGroup confirmed an interim dividend per share of 4.9p per share against 4.7p, and a special dividend of 26.7p per share compared to 26.7p the previous year.

Diversified Energy EBITDA grows 48% to $224m in HY1, dividend raised

Natasha Doris
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0
Diversified Energy EBITDA grows 48% to $224m in HY1, dividend raised

Diversified Energy shares rose 0.7% to 125.7p in early morning trading on Monday after the group reported an adjusted EBITDA growth of 48% to $224 million in HY1 2022 compared to $151 million in HY1 2021.

Diversified Energy also confirmed a cash margin of 48% across the HY1 financial period.

The firm highlighted a net loss of $935 million, including $1.2 billion pre-tax in non-cash hedge valuation losses.

The energy group confirmed a free cash flow yield of 22%, alongside a leverage ratio of 2.2x with an adjusted net debt of $1.1 billion and $469 million in liquidity.

The company further mentioned a completed $970 million in Asset Backed Securities at a blended fixed rate of 5.3%.

Operations in HY1 2022

Diversified Energy announced a selection of operational highlights, including a record average net daily production of 136 MBoepd, representing a 29% climb against 106 MBoepd the last year.

The energy producer also confirmed a closed $60 million in complementary Central Region upstream and midstream acquisitions, and a recently announced $240 million upstream acquisition from ConocoPhillips in the Central Region.

“During first half of 2022, we continued to expand our successes by delivering on a number of key strategic initiatives in line with our long-term growth strategy,” said Diversified Energy CEO Rusty Hutson Jr.

“Our recent accretive acquisition of low decline, high margin upstream assets complements our existing Central Region operations, allowing us to build scale, improve margins and harvest synergies.”

“In Appalachia, our acquisition and vertical integration of multiple plugging companies expands our asset retirement programme to 15 plugging rigs and enables us to achieve our target of plugging 200 wells per year, while also reducing our effective retirement costs as we earn revenue by retiring wells for others.”

Dividend

Diversified Energy confirmed a $72 million dividend, amounting to a HY1 2022 dividend of 4.2c per share compared to 4c per share the last year.

“We remain committed to tangible shareholder returns, and are delighted to once again declare an additional $0.0425 dividend of the second quarter, which will add $36 million to the  more than $72 million we already have paid so far this year,” said Hutson Jr.

“Our balance sheet remains healthy as we continue into the second half of 2022 with ample Liquidity, cash generation and financing capacity to fund further complementary growth opportunities.”

OZL unimpressed by BHP Group’s $5.8bn offer

Natasha Doris
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0
OZL unimpressed by BHP Group’s $5.8bn offer

BHP Group reported its submission of a non-binding indicative proposal to the Board of OZL to acquire 100% of the issued capital in the group via a scheme of arrangement on Monday.

The firm announced its proposal to acquire all of OZL’s shares for cash consideration at AUS $25 per share, amounting to a total of approximately $5.8 billion.

The offer price represents a premium of 32.1% to OZL’s closing price of AUS $18.92 per share on 5 August 2022 and 41.4% to OZL’s 30-day VWAP of AUS $17.67 per share on 5 August 2022.

BHP Group commented the offer would deliver immediate value to OZL shareholders and de-risk any value which may eventually end up reflected in the group’s share price.

The company added the proposal would be subject to the completion of certain conditions, including confirmatory due diligence, entry into a scheme implementation, and a unanimous recommendations from the OZL board that its shareholders vote in favour of the proposal, in the absence of a more attractive agreement.

However, BHP Group said OZL had so far indicated a lack of interest in the proposed agreement.

“Our proposal represents compelling value and certainty for OZ Minerals shareholders in the face of a deteriorating external environment and increased OZL operational and growth related funding challenges,” said BHP Group CEO Mike Henry.

“We are disappointed that the Board of OZL has indicated that it is not willing to entertain our compelling offer or provide us with access to due diligence in relation to our proposal.”

BHP Group shares fell 1% to 2,224p in early morning trading on Monday.

Clarksons achieves record year on global shipping shortages and weakened dollar

Natasha Doris
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0
Clarksons achieves record year on global shipping shortages and weakened dollar

Clarksons shares slid 1.8% to 3,490p in early morning trading on Monday, following a record revenue growth to £266.7 million against £190.1 million in HY1 2021.

The shipping services group attributed its revenue climb to long-term supply and demand dynamics of the shipping market, which reportedly put upward pressure on rates. The company noted particularly strong performance in its Broking sector.

Clarksons added that it benefited from the weaker Pound Sterling against the US dollar, contributing to additional revenues.

Clarksons confirmed a 53.5% underlying pre-tax profit growth to £42.2 million in HY1 2022 compared to £27.5 million the last year, along with a reported pre-tax profit of £42.2 million against £27.3 million.

The group noted a high performance across its dry cargo, sale and purchase and tanker markets in its Broking division as contributing factors to HY1 profits, as sustained volumes and rates boosted profits in the financial term.

The company mentioned a strong HY2 2022 outlook, with the structural supply shortage in the global shipping fleet boosting guidance for freight rates and asset values, alongside good momentum going forward.

“I am pleased to report that Clarksons has had a strong first six months of 2022, with a positive performance across all divisions,” said Clarksons CEO Andi Case.

“The outlook for the business remains strong due to the structural supply shortage in the global shipping fleet and we continue to benefit from our international footprint, leading market position, diverse offering and a deep understanding of the energy transition.”

Meanwhile, the firm highlighted an underlying EPS rise to 98.5p from 63.5p.

Clarksons announced a hiked interim dividend per share to 29p compared to 27p in the previous year.

New Aquis admission: Inteliqo sales plans

Andrew Hore
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0
New Aquis admission: Inteliqo sales plans

Guernsey-based Inteliqo Ltd plans to become a distributor of a range of technology products. The first is an earbud that can translate 42 languages in real-time. The management believes that the flotation will help it to gain and collaborate with clients and resellers.
There is limited liquidity with little more than 2% of the shares not held by the five main shareholders. A lock-in agreement means that more than 90% of the shares cannot be sold for 12 months. This is reflected in the bid/offer spread of 1p/4p, which effectively means that the share price was unchanged on the first day of deal...

Aquis weekly movers: Wishbone Gold gets second drill rig

Andrew Hore
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0
Aquis weekly movers: Wishbone Gold gets second drill rig

Wishbone Gold (LON: WSBN), which is also quoted on AIM, reported encouraging visual drilling results at the Red Setter project, Patersons Range, Western Australia. This has prompted management to secure a second drilling rig, which should start drilling at around 10 August. The share price jumped by 16.3% to 12.5p.

Electric vehicle drivetrain technology developer Equipmake Holdings (LON: EQIP) shares went to a premium on the first day of trading at the end of July and the share price has risen further in the past week. It has increased from 5.875p (5.5p/6.25p) to 6.375p (6p/6.75p). There were ten trades during the week, all of them at 6p or above. The highest price was 6.82p.

Chris Akers has increased his stake in Quetzal Capital (LON: QTZ) from 21% to 22%. John Mahtani has cut his stake from 3.83% to below 3%. The share price increased by 6.35% to 3.35p.

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Fallers

The ChallengerX (LON: CXS) share price appears to have been hit by a trade of 400,000 shares at 0.4p each, which was well below the market price. The shares in the digital sports club marketing company slumped by 60% to 1p (0.9p/1.1p).

Despite the announcement of a new investment, Quantum Exponential Group (LON: QBIT) the share price declined by 5.9% to 2.4p. Quantum Exponential is the first UK-quoted investment company that is focused on quantum technology. A £450,000 investment has been made as part of a £12m fundraising by QLM Technology Ltd, a photonics hardware and technology developer. It has developed a gas imaging camera based on quantum technology. The technology will be integrated into lead investor Schlumberger’s end-to-end emissions solutions business. It can be used to quantify greenhouse gas.

Quantum Exponential had previously made three investments at a total cost of £1.16m since flotation. There are discussions with more potential investments. There has been further progress towards setting up a fund. Anthony Lyall has been appointed as investment manager and Anna Spandl as investment analyst.

AIM weekly movers: Question mark over Quiz rise and Revolution Beauty loses its shine

Andrew Hore
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1
AIM weekly movers: Question mark over Quiz rise and Revolution Beauty loses its shine

Clothing retailer Quiz (LON: QUIZ) is the best performer of the week, with the share price 44.8% higher at 15.925p. Schroder reduced its stake to below 10%, but there was no other news during the week. There was a noticeable increase in trading volumes. There wee more than one million shares trade on 2 August. This is the highest number traded in one day since the end of April when there were 165,000 shares traded. There were 1.3 million shares traded in the week.

The detection technology developer Kromek (LON: KMK) share price soared 35.1% 12.5p after the annual results announcement and a £1.7m convertible loan note fundraising with an 8% interest rate. The loan notes are convertible at 15p a share. In the year to April 2023, finnCap expects revenues to increase from £12.1m to £18m and the loss should fall from £6m to £4.9m. There is good revenue visibility.

Information provider GlobalData (LON: DATA) increased interim revenues by 23% to £111.9m, including organic growth of 10%. Subscription revenues were 83% of the total. Invoiced forward revenues are 37% ahead at £114.6m. Underlying earnings were 27% higher at 20.7p a share. The interim dividend was raised by 26% to 7.7p a share. Acquisitions meant that net debt quadrupled to £190.5m. The share price jumped 34.2% to 1275p.  

Amur Minerals Corporation (LON: AMC) is proposing the disposal of the Kun-Manie project in Russia to Bering Metals for $35m. This asset is in the books at $24.3m, although there was a previous higher offer where payments were spread over 15 years which was rejected by shareholders. The share price jumped 32.3% to 1.27p, which capitalises the company at £17.7m. A special dividend of 1.8p a share is promised if the disposal gets shareholder approval.

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Fallers

Cosmetics supplier Revolution Beauty (LON: REVB) Revolution Beauty is the latest of the 2021 AIM new admissions to put out a trading warning that has sent the share price tanking. It is the worst performer of the week and declined 65.1% to 18.5p. The July 2021 placing price was 160p. Revolution Beauty has delayed its 2021-22 results and cut its expectations for 2022-23. Poor retail demand in the US and the loss of £9m of Russian and Ukraine revenues have hit the new financial year. Online demand is switching to store sales and cost increases have hit profitability. Zeus has cut its 2022-23 EBITDA forecast by 38% to £19m, while higher net debt means that earnings are reduced by 64% to 1.5p a share. Jupiter Fund Management has reduced its stake from 16.8% to 11.5%.

Tower Resources (LON: TRP) shares have slumped after it announced a £1.5m fundraising at 0.175p a share. The share price declined 29.1% to 0.202p. The oil and gas company is progressing with the financing of its NIOM-3 well in Cameroon and the cash raised will go towards payments on account for services associated with the well while the financing is secured and for working capital.

Sabien Technology (LON: SNT) is raised £500,000 through a placing at 10p a share, and then a further £100,000 from existing shareholders via an oversubscribed broker option. The cash will be used to finance the company’s green technology businesses. The share price dived 27.7% to 11.75p.

Western Siberia-focused oil and gas company Petroneft Resources (LON: PTR) shares fell 20.5% to 0.875p after it was given a three-month extension for the publication of its 2021 results. The share price has been in decline since the Russian invasion of Ukraine. The reservoir stimulation at the Tungolsky licence 61 has been completed and that should add 200 barrels of oil a day. The company is truing to maximise exports. Total production in the five months to the end of May 2022, there were 285,710 barrels of oil produced and the average price is higher than in the same period last year.

Yacht services provider GYG (LON: GYG) fell sharply after asking shareholders to agree to it dropping its AIM quotation at a meeting to be held on 31 August. The shares fell 19% to 25.5p, having been as low as 20p at one point. Poor trading in recent years and lack of investor interest are two reasons for the proposed cancelation. Costs can be reduced by €700,000 a year. There is a lack of capital to grow the business. Harwood Capital, which previously considered a 92.5p a share bid for GYG, has increased its stake from 20.5% to 22.2%.

QinetiQ increases US exposure

Andrew Hore
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0
QinetiQ increases US exposure

After the London market closed, QinetiQ Group (LON: QQ.) announced it had agreed to acquire Avantus Federal from NewSpring Holdings for an enterprise value of £483m ($590m), including a $70m tax asset. The deal requires US regulatory approval.

QinetiQ has secured £350m of new debt facilities and will have a £275m revolving credit facility that is currently undrawn. Cash generation should rapidly reduce gearing. The deal is immediately earnings enhancing.

Avantus is a cyber, data analytics and software developer for sectors including defence, intelligence and homeland security. In the year to June 2022, Avantus revenues were $298m and adjusted operating profit $32m. There is a track record of double-digit revenue growth.

Avantus will be merged with the existing QinetiQ subsidiary in the US, which will double in size. The UK will remain the larges generator of revenues, but it is one-fifth of the size of the US market and QinetiQ already has a 35% share of relevant markets in the UK.

US market share will be around 3%. The market is worth more than £15bn a year and the potential market is growing at 3% a year. The customer base will be broadened by the deal.  

The QinetiQ share price was 376p at the end of the week. That is not far from the 2022 high.

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