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Northland Capital Partners View on the City - Venture Life Group (LON:VLG); Keras Resources (LON:KRS); Starcom (LON:STAR); Edenville Energy (LON:EDL); PhotonStar (LON:PSL)

Published: 10:03 31 Jan 2018 GMT

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Trading in line

NORTHLAND VIEW

  • Venture Life issued a trading update for the year ended 31 December 2017 which was in line with our expectations.
  • The Group expects to achieve revenue for the year of over £16 million, a 12% increase over reported revenue of £14.3 million for the prior year.
  • As a result, the Group expects to report EBITDA of more than £1.7 million. Reported EBITDA reflects IFRS-16, a new accounting standard related to long term rental agreements, which the Group adopted in 2017. This has had the effect of increasing EBITDA by approximately £0.4 million, however, due to a related amortisation charge, it will have minimal effect on the reported profit before tax.
  • Consequently, 2017 EBITDA is expected to be in line with our £1.3m forecast (£1.7m – £0.4m IFRS-16 adjustment = £1.3m).
  • Cash at 31 December 2017 was £1.3 million, ahead of our £1.1m forecast.

Venture Life issued a strong trading update for 2017. The Company hit our demanding forecasts, delivering c. 60% EBITDA (Adj.) growth. We expect the Group to continue showing increased profitability over time as a result of the Company’s operating leverage.

COMPANY DESCRIPTION
Venture Life Group plc is a consumer healthcare company. The group develops, manufactures, and commercialises self-care products which target the ageing population.

 

Calidus Resources announces further drill results

NORTHLAND VIEW

  • Calidus Resources, a company that Keras Resources holds a significant interest in (446.375m shares), announced an update of its ongoing drill programme at the Warrawoona Gold Project, located in Western Australia.
  • Significant intercepts include 2m at 17.99g/t Au from 122m (17CPRC017); 6m at 21.47g/t Au from 131m (17CPRC017); 4m at 9.57g/t Au from 110m (17CPRC018); and 7m at 5.66g/t Au from 63m (17CPRC013).
  • Calidus plans further drilling in Q218.

These results demonstrate the presence of high-grades over significant intercepts from both the Fieldings Gully Copenhagen targets. The Warrawoona Gold project has consistently delivered exciting results that continue to extend the extent of known mineralisation. Keras’ holding of 446.375m shares in Calidus is currently worth £10.2m (A$17.9m) more than Keras’ market capitalisation. Keras’ holding will increase to 723.75m shares on the completion of a pre-feasibility study at the project.

COMPANY DESCRIPTION
Keras Resources is an exploration company with interests in gold projects, located in Australia, a manganese project and a cobalt-nickel project, located in Togo.

FY17 Trading Update, strong start to FY18

NORTHLAND VIEW

  • In its 18th January Trading Update for the year to 31st December 2017 Starcom notes that it expects revenue of not less than US$5.5m, a gross margin of above 41% (2016: 27.7%) resulting from product mix, and EBITDA of not less than US$500,000.  Operating expenses are expected to be 31% lower than in 2016.  Profit after tax is expected to be at breakeven or a show small loss (2016: loss of US$1.95m). Starcom  repaid US$175,000 of loans.  Subsequently, on 23rd January the company raised £315,000 (gross) through the issue of 14.00m shares at 2.25p, principally for demand-related working capital.
  • Starcom reports that demand for higher-margin non-Helios products continued into H118 and is experiencing “one of its highest levels of orders” based on which it anticipates that “revenues and margins in 2018 will continue to improve”.   It has signed a 3-year Tetis supply and services agreement with US container tracker WIMC Solutions Inc., with an initial order of 1,000 units, a further 1,000 units delivery expected Q118 and the potential for c20,000 units over the period worth cUS$4.5m. Discussions continue with the European industrial group with whom Starcom announced an initial contract in September 2017 for 1,000 Kylos Air units (subsequently increased to 1,200 units). The agreement with CropX has resulted in Q118 orders

Starcom's emphasis on higher-valued tracking products and services has reversed a period of losses, cost control is maintained and its offering is now gaining traction amongst a wider range of clients.  We have updated our outlook accordingly.

COMPANY DESCRIPTION
Starcom Group develops and manufactures technology using cellular and GPS systems designed for tracking vehicle fleets, equipment, people, containers and merchandise.

Rukwa Coal Mine update

NORTHLAND VIEW

  • Mining operations at the Mkomolo deposit are proceeding as expected despite the seasonal heavy rains. To fulfil the current demand for coal the Company will also start mining at the Namwele deposit by the end of Q118.
  • Coal quality, both in terms of calorific value and ash content, is exceeding management’s initial expectations.
  • The processing plant is currently operating at 30t to 40t/per hour, 8 to 10 hours a day for six days a week, allowing Edenville to process between 8,000t to 10,000t per month. During the ramp up of operations higher than expected amounts of mudstone and fines were encountered, which reduced processing plant throughput and as a result increased unit processing costs marginally above management’s expectations. However, this was offset by lower than expected unit mining costs.
  • Edenville now intends to install a Lamella water treatment system and pre-screen technology to improve the efficiency of the plant by removing the mudstone and coal fines from the water. This is expected to increase production to 80t to 100t/per hour and bring plant operating costs back in line with management’s expectations.
  • During January 2018, the Company continued to ship the bulk preliminary orders and it remains in discussions regarding contractual terms with several groups. Further orders have also been received for 4,000t from an industrial customer, bringing initial orders up to 9,000t of coal. These orders have been shipped or are in the process of being fulfilled. The initial orders are larger than the Company had anticipated. Edenville is seeking to secure reliable and cost-effective transport and is negotiations with several providers.
  • Sinohydro has completed its pre-feasibility study for the Coal-to-Power project and remains very supportive of the project. Edenville is in discussions to enter an MOU with the Ministry and Tanesco that will refine the scope of the project.

Edenville Energy’s ramp up at the Rukwa Coal Project has gone relatively smoothly with mining operations advancing in line with management expectations, coal quality higher than expected and higher than expected unit processing costs being offset by lower than expected unit mining costs. Edenville is planning to improve unit processing plant costs by increasing throughput through the installation of a Lamella water treatment plant and pre-screening system. Initial orders have been strong and the next step for the Company is to convert the initial orders into long-term supply contracts.

COMPANY DESCRIPTION
Edenville Energy is moving the Rukwa Coal Project towards near-term production alongside advancing its Coal to Power Project.

From yesterday: FY17 Trading Update, sale of Camtronics, focus on halcyon™

NORTHLAND VIEW

  • In its Trading Update for the year to 31st December 2017 PhotonStar expects revenue of approximately £4.7m (2016: £5.4m) with an (unaudited) adjusted EBITDA loss of c£(0.35)m (2016: £(0.70)m loss) and an unaudited net loss of £(0.9)m (2016: £(1.43)m loss). During the year it invested £0.6m in modifications resulting from halcyon™ client trials.  It drew down c£0.76m of its £1.65m invoice financing facility.
  • PhotonStar announces the sale of Camtronics Vale Ltd., to Camtronics Vale (holding) Company Limited, privately controlled by members of the Camtronics management team, for a total cash consideration of £150,000. This comprises an initial payment of £40,000, £10,000 payable by 31st March and £100,000 to be paid over a 24-month period, in equal monthly instalments of £4,166.66 starting on 28th February. Consequently the maximum invoice financing available is reduced to £0.85m, with c£0.35m drawn down.  Period-end gross debt was c£0.85m, which consisted largely of the invoice finance facility and equipment loans, and of which approximately £0.46m of Group debt was attributable to Camtronics, with disposal reducing debt by approximately 55%. The period-end unaudited cash balance was c£0.04m.
  • PhotonStar reports delays in halcyon™ rollouts into H118.  Its wholesale LED lighting operations continued to experience challenging trading conditions resulting H217 revenue below H117. Resulting cost reduction limited the extent of losses. PhotonStar expects to release FY17 results before the end of May. 

COMPANY DESCRIPTION
PhotonStar LED Group plc is a leading British designer and manufacturer of intelligent lighting and building control solutions. The Group’s proprietary technology, Halcyon™, is a scalable, secure wireless  IoT platform for retrofit into commercial buildings, for energy reduction, asset monitoring and control, and real-time environmental, behavioural and energy insights.

 

 

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