Serica Energy rejects Kistos bid approach

Andrew Hore
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Serica Energy rejects Kistos bid approach

AIM-quoted oil and gas producer Kistos (LON: KIST) has made a bid approach to the much bigger AIM rival Serica Energy (LON: SQZ) in order to create large North Sea-focused oil and gas company worth around £1.8bn that could become a consolidator. The plan would be to move to the Main Market and join the FTSE 250 index.

The proposal is described as a possible offer. Kistos is offering 0.2932 of one of its shares and 246p in cash – 67p distributed by Serica Energy from its cash pile and 179p paid by Kistos. This offer was 90p a share in cash plus 1.29 Serica Energy shares.

Kistos has announced its offer to put pressure on Serica Energy to negotiate. The first approach was in May and later in the month the proposed terms were outlined. Serica Energy says that it has previously rejected the Kistos offer and it made an offer for Kistos which was also rejected.

Serica Energy said in June that average net production in the year to date is in excess of 26,000 barrels of oil equivalent per day. Serica Energy’s production is more than 85% gas, which is equivalent to more than 5% of the UK’s gas production. Serica Energy says that the new energy levy does not cover profit made prior to 26 May. Capital investment will offset a significant amount of the levy cost.

Kistos floated on AIM on 25 November 2020 as a shell at a placing price of 100p a share and in May 2021 bought a Netherlands-focused oil and gas business. The share price has subsequently jumped to 486.5p, including a 5.1% rise today. That values the offer at nearly 470p a share.

Serica Energy shares have risen 12.3% to 342.5p. That is well below the possible offer. Serica Energy is expected to have net cash of around £640m by the end of 2022.

Euro tumbles to 20-year low against the Dollar

Natasha Doris
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Euro tumbles to 20-year low against the Dollar

The Euro tumbled to a 20-year low against the Dollar this week, reaching almost parity with the US currency after Russia renewed its threat to turn off the gas supply to Europe.

The resurgence of Russia’s threat has sparked fresh fears of a European recession, with a single Euro equating to $1.0003 in morning trading.

The Euro has fallen 12% against the Dollar in the year-to-date, with the currency also falling on expectations of higher rate hikes by the US Federal Reserve this week, raising the strength of the Dollar.

“Russia’s renewed threat to turn off the gas to Europe has sent the euro tumbling to a 20-year low against the dollar, near parity with its US counterpart, and will only increase the importance of European producers,” said AJ Bell financial analyst Danni Hewson.

The market has voiced concerns that the suspension of the Nord Stream 1 pipeline, which was designed to transport natural gas from Russia to Europe, might become permanent and shut down the supply of vital gas to the continent.

The Pound Sterling also fell against the Dollar to £1 against $1.185, the lowest level since March 2020, after the upheaval left in Boris Johnson’s resignation saw the market struggle under the weight of political uncertainty.

Grafton Group revenue climbs in HY1 on acquisitions pipeline

Natasha Doris
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Grafton Group revenue climbs in HY1 on acquisitions pipeline

Grafton Group shares were down 3.9% to 733.9p in early morning trading on Tuesday after the company announced a 13.9% climb in total revenue at constant currency in HY1 2022.

Grafton Group confirmed a reported 12.1% rise in revenue to £1.1 billion in the term against £1 billion year-on-year, excluding the traditional merchanting business in Great Britain that was divested on 31 December 2021.

The firm reported an average daily like-for-like revenue increase of 3.4%, which was complemented by a significant contribution from its acquisitions in Finland, the UK, Ireland and the Netherlands.

Grafton Group highlighted the strong performance of its distribution business in Ireland and the Netherlands, with a more subdued performance in the UK against strong comparators in 2021.

The company pointed out the unwinding of higher margin revenue from retail customers across the UK and Ireland in HY1 2021 that was driven by high demand for home and outdoor space improvements.

The group reported normalised revenue in its retail business in Ireland as its exceptional gains across the Covid-19 lockdown reversed in line with expectations. Meanwhile, the company’s UK manufacturing business demonstrated a strong performance.

Grafton Group further mentioned its share buyback schedule of up to £100 million, which launched in May and is set to conclude by the end of this year.

The company had repurchased £42.8 million in shares at 30 June 2022.

Grafton Group commented it would not be adjusting its FY 2022 operating profit expectations despite the macro-economic volatility weakening its outlook.

The firm added it was currently in the process of finding a suitable replacement for departing CEO and board director Gavin Slark, who is set to continue in the position until 31 December 2022.

“The Group’s overall trading performance was good against a very strong comparator in the first half of last year and our operating profit expectations for the full year are unchanged,” said Slark.

“Notwithstanding current macro-economic risks, our portfolio of resilient high performing businesses has the flexibility to adapt to changing circumstances and is well positioned to outperform.”

“Grafton is in a very strong financial position and, with a pipeline of acquisition opportunities, the Group is well positioned to make continued progress on the delivery of its strategy.”

Plus500 expects revenue and EBITDA to exceed market projections

Natasha Doris
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0
Plus500 expects revenue and EBITDA to exceed market projections

Plus500 shares rose 2% to 1,594p in early morning trading on Tuesday after the firm reported its revenue and EBITDA for FY 2022 were projected to exceed market expectations.  

Plus500 mentioned a revenue growth of 48% to $511.4 million in HY1 2022 from $346.2 million the year before, with an EBITDA rise of 63% to $305.3 million compared to $187.6 million and an EBITDA margin increase of 11% to 60% against 54% year-on-year. 

The company announced a series of highlights over the HY1 period, including the launch of new US operations supported by its positive momentum in recent years, alongside the success of its proprietary technology in accessing market opportunities.  

Its US developments are set to launch a new trading platform for the US retail futures market in HY2 2022 in a move to capitalise on widened market accessibility to the applicable retail audience.   

The group confirmed a customer income level of $339.8 million over the term compared to $379.2 in HY1 2021. 

The fintech company also noted its higher group revenue reflected customer trading performance of $171.6 million from $33 million the last year.  

Plus500 pointed out 57,275 new customers taken on across HY1 against 136,980 in the previous year, with an active customer base of 216,928 compared to 333,940.  

The firm said its global advertising campaign launched over the term served to drive brand awareness and attract a higher level of customers over the medium to long term.  

Plus500 added it was debt free and held cash balances in excess of $950 million on 30 June 2022, with consistently high levels of cash generation.  

As a result, the company confirmed a share buyback scheduled totally approximately $105 million since the start of FY 2022, with 2.6 million shares repurchased at an average price of £14.98 for a total consideration of $51.7 million. 

The company is set to expand into new territories in the coming months through organic investments and planned acquisitions, including entry into the Japanese retail market.  

Plus500 confirmed it was in a positive position for growth after its strong HY1 over the medium to long term as a multi-asset fintech firm.  

“Plus500 continued to outperform in the first half of 2022, supported by positive momentum achieved in recent years and by the power of our market-leading proprietary technology. We made significant progress in delivering against our strategic priorities, in particular the major growth opportunities in the U.S., where we continue to make substantial investment,” said Plus500 CEO David Zruia.

“In addition, the Group continued to deliver outstanding levels of returns to shareholders during the period, through both recent $60.0m dividend payments and our most recent $105.0m aggregate share buyback programmes, which emphasise the Board’s view of the current value of the Company’s shares.”

“Our continued strategic, operational and financial momentum will ensure Plus500 delivers sustainable growth in the medium to long term, enabling the Group to deliver further shareholder value in the future.” 

Tekcapital investors are looking forward to special dividends

UK Investor Magazine
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Tekcapital investors are looking forward to special dividends

Tekcapital’s aim is clear. To find and invest in exciting new university technology with the potential to change people’s lives.

Tekcapital is listed on London’s AIM and has a portfolio of cutting-edge companies including Guident, an autonomous vehicle software company focused on vehicle safety, and Salarius, a producer of MicroSalt® a new low-sodium salt.

Across its portfolio, Tekcapital has built an attractive foundation of intellectual property that includes 70 patents within fast growing industries such as foodtech, autonomous vehicles, and smart eyewear. 

Tekcapital targets companies setting out to deliver a solution with a large addressable market. For example, Tek’s 15% stake in Belluscura has a chance of helping 250 million prospective patients suffering from chronic obstructive pulmonary disease (COPD). 

Their investment process is aided by a substantial network of science advisors who screen technologies for potential inclusion in their portfolio. 

Tekcapital produced an operating profit of $26,368,670 in 2021, much of which was earned through unrealised gains of their portfolio companies. 

This pays testament to their rigorous investment process and reinforces the progress towards their goal of crystalising gains through exits, and the distribution of cash to investors by special dividends.

Although no dividend was paid in 2021, Tekcapital are moving closer to a potential shareholder pay-out with the proposed IPO of Innovative Eyewear, subsidiary of Lucyd Ltd and MicroSalt Inc, subsidiary of Salarius as well as future monetisations of Belluscura. 

Tekcapital recently announced they had received a large order for MicroSalt products and were confident enough in the progress at the company to begin thinking about a listing.

MicroSalt

MicroSalt is targeting improvements in the food industry by reducing the sodium content of salted snacks and other foods associated with high sodium.

According to as study noted by the American Heart Foundation, high-sodium diets were responsible for over 17 million deaths in 2016, a figure which is set to rise by 2030.

Having identified this worrying trend, the FDA is now committed to reducing sodium intake by 12%, providing a perfect backdrop for MicroSalt’s growth.

MicroSalt’s patent-backed technology has created a salt that has approximately 50% less sodium compared to existing salt options, and yet provides the same salty taste consumers enjoy. The improved taste is achieved by micro-particles that dissolve quicker and provide an intense salt flavour.

MicroSalt recently received a $400,000 equity investment from a Spanish venture fund, Tech Transfer Agrifood F.C.R. The stake valued MicroSalt at $9.27m post money meaning Tekcapital’s 73% stake is now worth $6.8m, considerably higher than last reported to the market in its 2021 results.

This would see Tekcapital’s portfolio value potentially increasing beyond the $62.5m reported in 2021, further emphasising the current disconnect between Tek’s market cap and the book value of its portfolio.

Tekcapital portfolio 

With a $62.5m portfolio valuation, Tekcapital’s current £33m market cap provides a significant discount to net asset value. Yes, the portfolio is partially in unlisted companies which are yet to provide a liquidity event which may justify a discount – but any liquidity events are likely to transact at a much higher valuation than currently accounted for. 

This provides an opportunity for investors seeking exposure to cutting-edge technologies usually reserved for private equity investors, at a major discount. 

Analysts at SP Angel have recently attributed a minimum book value of circa 40p per share, compared to a current share price of 23p. 

Whilst MicroSalt will capture much of Tekcapital investors’ attention in the short-term, the depth of the Tek portfolio ensures a sector balanced approach to the risk of investing in a selection of compelling technologies with demonstrable market traction.  

Renewable prospects for Mpac

Andrew Hore
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Renewable prospects for Mpac

Packaging equipment and automation provider Mpac Group (LON: MPAC) has warned that problems obtaining critical electronic components and delays to orders will hit profitability this year. The share price reaction appears overdone, although any bad news is severely punished these days. There is a good order book and potential for expansion in the battery storage sector.
The order book is better than last year. Interim revenues are in line with expectations, which are £49.5m, but the second half will be much tougher. These conditions will continue at least until the end of the year.
The trouble ...

Petropavlovsk warns of further defaults

Andrew Hore
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Petropavlovsk warns of further defaults

Russian gold producer Petropavlovsk (LON: POG) is the biggest faller on the Main Market after it provided an update on the situation with a subsidiary’s convertible bonds. The share price fell 13.4% to 1.2p and it is 93.7% down on the year so far.

There are still plenty of trades in the shares many of which are worth less than £500 pounds – three are worth less than £10 and one was worth 64p.  

Petropavlovsk has guaranteed 8.255 guaranteed convertible bonds due 2024 issued by Petropavlovsk 2010 Ltd. There is $33m of principal outstanding.

A sum of $157,880 was payable on 27 June relating to a cash alternative election notice and $680,625 of interest was due to be paid on 3 July. This is due to sanctions.

The company has sent an updated notification of the events of default to the trustee of the convertible bonds. There have already been notifications of other defaults.

Petropavlovsk has operations in the Amur region in the far east of Russia. The operating mines are Pioneer, Malomir and Albyn. It graduated from AIM to the Main Market in 2009.

The external auditor appointed last September resigned at the beginning of July.

Petropavlovsk’s Moscow Stock Exchange quotation has been downgraded from level 1 to level 3, which means it satisfies only basic listing requirements. This means that pension funds are not allowed to buy the shares.

SEEEN: Fast Forward

Jon Levinson
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SEEEN: Fast Forward

11.5p, mkt Cap £6m Next Results: Interims to June  
SEEEN is a video optimisation platform with proprietary technology that can harvest ‘key video moments’ that enable clients such as the  Daily Mail to improve its digital marketing returns. The newly appointed CEO, Adrian Hargreaves formerly the CFO,  is continuing the strategic focus of commercialisation its technology  primarily its CreatorSuit. The Daily Mail Licence  announced on Monday follows two others such deals in financial publishing and sports. There are three types of b2b customer revenue streams; lic...

Quartix Technologies grows new unit subscriptions 26% to 32,085, hits new company record

Natasha Doris
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0
Quartix Technologies grows new unit subscriptions 26% to 32,085, hits new company record

Quartix Technologies shares gained 1.5% to 333p in late afternoon trading on Monday after the firm announced a continued growth in new unit subscriptions by 26% in HY1 2022 from HY1 2021.

Quartix Technologies confirmed a record 32,085 units installed over the term, with its vehicle subscription base rising 9.4% to 221,800 vehicles.

The group reported an expected revenue of £13.3 million, adjusted EBITDA of £2.6 million and an underlying free cash flow of £2 million, in line with market forecasts.

The company highlighted an annualised subscription base value climb by £1.6 million compared to £1 million in the previous year on a constant currency basis, representing a base of £26 million.

The firm reported a high rate of invoiced recurring revenues at 92% of sales, with an improvement in price erosion over 12 months at 5.6% in constant currency rates compared to 6.5% the year before.

Quartix Technologies further mentioned a cash balance of £3.9 million on 30 June 2022.

The company added its established policy of immediately expensing the cost of new units and their installation meant that strong growth in new units caused a short term fall in profitability, which would be followed by a growth in profits as a result of the recurring nature of revenues.

“Quartix has had a very strong first half and it is very pleasing to see first half installed units grow at 26%, especially following the strong performance in the first half of 2021,” said Quatrix CEO Richard Lilwall.

“Our work on operational scalability has been successful, allowing our team to improve customer satisfaction on our growing subscription base without adding further resources. Sales execution excellence is well underway with the imminent introduction of new tools to drive best practice and insights at every stage of the sales funnel. Initial implementation is expected to be completed within the next quarter and further refinement and improvement will allow us to achieve further revenue improvements in 2023.”

“We are looking forward to the second half with confidence in achieving market expectations for the full year.”

Mpac Group shares plummet as profits anticipated far below market expectations

Natasha Doris
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0
Mpac Group shares plummet as profits anticipated far below market expectations

Mpac Group shares plummeted 34.5% to 248.9p in late afternoon trading on Monday after the company announced an expected profit significantly below market expectations, as a result of macro-economic volatility and supply chain problems.

The automation solutions firm reported challenges in sourcing critical, customer specified electronic components, with the issues increasing in recent times resulting in extended lead times and cost inflationary pressures, which served to impact Mpac Group’s operational efficiencies and margins.

Mpac Group revealed the challenges were likely to continue for the remainder of 2022 before easing in 2023.

The company said it had implemented a selection of measures to mitigate the problem, including securing alternative sources of electromagnetic component supply, increasing focus on reliable planning data from its recently implemented ERP system, close management of its supply chain and the introduction of cost-saving initiatives.

The firm commented its longer-term outlook remained positive, with a strong prospect pipeline and order book focused on its core, apparently resilient markets of Healthcare and Food and Beverages.

Mpac Group highlighted its balance sheet remained strong, giving it the ability to invest in the company for growth over the medium term and beyond.

”Over the recent past Mpac has created a business model which enables the Group to flex with changing circumstances, however the unprecedented nature of the supply chain disruption will impact our full year results,” said Mpac Group CEO Tony Steels.  

“I am confident our experienced management team will resolve the short-term challenges with the mitigation plans already in place, alongside the sound operational foundations established by implementing the One Mpac business model.”

“We remain confident in the long-term prospects for the Group.”

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