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PipeHawk wins major contract

A look at the day's major movers, including Sophos, Prairie Mining, Venn Life Sciences and 1Spatial

Happy pills
Venn has joined the network of Carrick's collaborators

PipeHawk PLC (LON:PIP), which develops ground-penetrating radard products for the construction industry, took flight on Friday after bagging a major contract.

Its subsidiary, QM Systems, has been awarded a partnership contract by Penso UK Ltd to provide a fully automated production facility for the manufacture of a new carbon fibre product to be installed at Penso UK Ltd's facility in Coventry.

The contract value is about £2.6 million and is due for completion in October 2019.

"This is great news and marks the continued development of QM Systems' innovation technology into new and exciting industries. We are very proud to be selected as Penso UK Ltd's partner for this new and exciting journey in both companies' futures,” said Gordon Watt, the chairman of PipeHawk.

12.45pm: Sophos is trying the market's patience

On a day when most London-listed shares were advancing, cybersecurity firm Sophos Group PLC (LON:SOPH) was a notable exception after a veiled profit warning.

Recent weakness has continued into the group’s fiscal third quarter (the final quarter of the calendar year 2018), with billing rising just 2% on a constant currency.

Management had previously expressed a belief that the weak trends of the second quarter would prove transitory but like a lot of business leaders, they were either in denial or have an overblown opinion of their products or their own ability to conquer market indifference.

“There are a lot of problems in this announcement, not least the fact that management guidance once again has proven overly optimistic. The networks business looks like it’s running into real problems – and while there’s some positive noises on recent product launches, there’s little in the numbers to back that up,” commented Nicholas Hyett, an equity analyst at Hargreaves Lansdown.

“Sophos Central seems to [be] delivering genuinely impressive results but isn’t enough to offset damage being done elsewhere in the product portfolio; however, our real concern is that repeated cuts to guidance. Little in the way of explanation raises serious questions about management’s grip on the business and has perhaps irreparably damaged the group’s credibility with investors,” Hyett suggested.

Liberum Capital Markets was singing a similar refrain.

“In our view, the subdued Q3 outturn for billings and Cash EBITDA (which declined 8% YTD to US$104mln) implies downgrades to full year expectations, particularly around Cash EBITDA (where consensus is for US$178mln), without a material pick in billings in Q4, which Sophos is not guiding for in today’s statement,” the broker observed.

“We provisionally expect to ease down our estimates for FY19 and FY20 by c1% at the billings line and likely more for Cash EBITDA and unlevered free cash flow,” Liberum said.

The broker reckons the shares are worth 376p and rates them a ‘buy’, after today’s 85p fall to 291.6p, the shares are even more of a bargain if Liberum’s analysis is correct.

11.15am: Prairie Mining being driven up the pole

Shares in Prairie Mining Limited (LON:PDZ) rose after the company celebrated a court ruling in Poland that rejected rival claims to a mining concession.

Poland's Supreme Administrative Court has finally and fully rejected Bogdanka’s administrative complaints against Poland's Ministry of Environment (MoE) regarding the refusal of Bogdanka's 2013 application for a mining concession over the K-6-7 deposit at the Jan Karski mine.

The decision finally draws a line under the dispute as it cannot be appealed against.

In a second ruling, the Supreme Administrative Court has upheld the 2016 Regional Administrative Court decision that obliged the MoE to approve Prairie Mining's submitted Addendum No.3 for the K-6-7 deposit.

Addendum No.3 is a detailed resource estimate for the K-6-7 deposit according to Polish geological reporting standards and is based on the results of Prairie's exploration programme at the deposit. This complaint was bought against the MoE by Prairie in 2015.

Relations between Prairie and the MoE do not seem to be sweet as in December 2016, following the acquisition of the Debiensko hard coking coal mine, Prairie applied to the MoE to amend the 50-year Debiensko mining concession, and more than two years later – rather than the two months that the UK company said is the statutory maximum time the MoE should have taken – Prairie received a final decision, denying the company’s application.

The decision may result in the commencement of proceedings by the MoE to limit or withdraw the Debiensko concession.

Prairie said it will strongly defend its position and continue to take relevant actions to pursue its legal rights regarding the Debiensko concession, including filing an appeal.

Unsurprisingly, its legal advisers reckons it has a good case, and take the view that Prairie is being discriminated against because it is not Polish.

Shares in Prairie were up 2.3% at 22p.

9.30am: Venn Life buoyed by partnership with Carrick Therapeutics

Venn Life Sciences Holdings PLC (LON:VENN) surged in early deals on Friday after announcing a partnership agreement.

The drug development company has teamed up with Carrick Therapeutics, a company that is building an innovative portfolio of first-in-class treatments that target multiple mechanisms of the most aggressive forms of cancer.

Carrick Therapeutics has built a network of partners and collaborators to progress its technology portfolio and Venn is now joining this network as a provider of early development and clinical research capabilities.

Shares in Venn were up 11% at 2p.

Somehow I avoided a “Venn diagram” pun in the above story, which is a shame as it would have segued nicely into the next piece about mapping software specialist, 1Spatial PLC (LON:1SPA), which has bagged some significant contracts.

Following a competitive tender, it has been awarded a four-year contract worth €1mln to provide its software and services to Ireland's Property Registration Authority (PRA).

In addition to this, it has also been awarded a three-year framework contract as a key development partner to support Ordnance Survey (OS) on its programme to deliver the next generation of Geo-Production system.

This new three-year framework agreement continues 1Spatial's long-standing relationship with OS as a key development partner, 1Spatial said.

The two parties are currently chatting about potential workflow and the first purchase order under this framework agreement is expected shortly.

“These wins add recurring revenues to the 1Spatial business, demonstrating continued progress of our land and expand strategy and build upon a growing pipeline for the Group; particularly highlighting the company's growing focus on and success in the government sector," said Claire Milverton, the chief executive officer of 1Spatial.

Shares in 1Spatial headed north, rising 1.5p to 36p.

Proactive news headlines:

Kodal Minerals PLC (LON:KOD)  is considering a larger mine at its Bougouni lithium mine in Mali following another strong set of drill results. The junior is now eyeing an initial 1.2M tonnes a year processing plant, expanding to 1.5Mtpa as the operation moves into a steady production phase.

LoopUp Group PLC (LON:LOOP), the remote meetings technology company, has signed a contract renewal with leading global law firm, Clifford Chance, worth £2.34mln over a three-year period. The minimum total contract value of £2.34 million in aggregate over the three-year term is for the provision of conference calls across Clifford Chance's global operations, spanning 32 major financial centres in the Americas, Asia Pacific, Europe, the Middle East and Africa.

Providence Resources PLC (LON:PVR) told investors that the acreage hosting the Avalon prospect will be upgraded from a licence option to a frontier exploration licence. The Irish offshore explorer, in a statement, said that the Minister of State at the Department of Communications, Climate Action and Environment in Dublin has approved the change effective from 1 February.

Greencoat UK Wind PLC (LON:UKW) saw its shares rise on Friday as the wind farm investment group revealed that its unaudited net asset value increased to £1,392.8mln, or 123.1p per share as of 31 December 2018. The FTSE 250-listed firm said this represents an increase of 8.1p per share for the fourth quarter - in addition to dividends paid of 1.69p.

Kazera Global PLC (LON:KZG) told investors that its drill programme at its Namibia Tantalite Investment (NTI) mine project continues to produce highly encouraging results. The company noted that it has so far drilled 22 of 33 planned holes at NTI, and, assays have been produced for 432 core samples and 72 channel samples.

Active Energy Group PLC (LON:AEG) said it intends to transition its nominated adviser (NOMAD) role from Northland Capital Partners to SP Angel Corporate Finance following the merger of the two firms. The firm said this process is progressing and SP Angel conducted a site visit to North America this week as part of the take-on process, and added that a further announcement will be made as appropriate.

Shefa Yamim (ATM) Ltd (LON:SEFA) has highlighted several key milestones achieved by the firm in the second half of 2018. In a corporate update late on Tuesday, the Israel-based precious stones exploration firm said a technical economic evaluation (TEE) had been completed for its Kishon Mid-Reach project, and the results will be announced in January.

FairFX Group PLC (LON:FFX), the low-cost multicurrency payments and e-banking service, said it has appointed Canaccord Genuity as its joint broker alongside Cenkos Securities with immediate effect. It added that Cenkos remain as its nominated advisor (NOMAD) and joint broker.

Westminster Group PLC (LON:WSG) announced the appointment of Charles Enea Cattaneo, a partner at corporate finance firm Cattaneo LLP which he founded in 2005, as a non-executive director of the company with effect from 17 January 2019. It also announced the appointment of James Sutcliffe to the post of chairman of its International Advisory Board, with Sutcliffe to step down from the group’s board.

Shanta Gold Limited (LON:SHG) has announced that Rukwa Limited, a wholly owned subsidiary of the group, has repurchased 325,000 of the company's' outstanding unsecured subordinated convertible loan notes due April 2019 from El Oro Limited for a total consideration of US$276,250. The group said this implies an 18% discount-to-value of the Convertible Loan Notes based on their par value plus interest accrued to date. Following this transaction, Shanta added, the value of the remaining outstanding convertible loan notes not held directly or indirectly by the company is US$14,675,000.

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