Evgen Pharma plc (LON:EVG) – Admission to AIM
First day of dealings: Admission to AIM and £7m fundraise
Evgen Pharma plc, a clinical stage drug development company focused on the treatment of cancer and neurological conditions, is today admitting its shares to trading on AIM under the ticker symbol EVG.
- The company’s core technology Sulforadex® is a patent-protected method of stabilising natural and synthetic versions of the naturally occurring compound sulforaphane, a known anti-cancer agent derived from broccoli and other brassicas.
- Evgen Pharma’s objective is to establish a dominant position in the development of pharmaceuticals based on sulforaphane and related analogues.
- In conjunction with the company’s listing, £7.0 million before expenses has been raised on behalf of the company via an oversubscribed placing at a price of 37 pence per share.
- On admission to AIM, Evgen Pharma will have a market capitalisation at the placing price of approximately £27.0 million.
- The use of the net proceeds of the placing will include funding a Phase IIa study in metastatic breast cancer, a Phase II study in subarachnoid haemorrhage (a type of stroke), preclinical studies in multiple sclerosis and long-term safety and toxicology studies.
- Northland Capital Partners acts as the company's Nominated Adviser and Broker.
TechFinancials Inc. (LON:TECH) – CORP: JV Agreement
Market Cap: £7.2m; Current Price: 10.5p; Target Price: Under review
JV agreement expands B2C business in Asia Pacific region
- TechFinancials has entered into a Joint Venture (JV) agreement with Optionfortune Trade Limited, a B2C binary options business focused on the Asia Pacific region. The JV is subject to approval by TechFinancials shareholders at an EGM within the next 30 days. Under the terms of the agreement, TechFinancials will have control of the JV with a 51% and Optionfortune shareholders with 49%. Initial consideration in TechFinancials shares at a minimum of 27p per share based on 2016 JV net profit.
- Optionfortune was established in 2013, using TechFinancials B2B software. The business grew quickly where average monthly trading volume in the nine months between January 2015 and September 2015 was US$8.56m, or over US$100m on an annualised basis, and where average monthly revenue over the same period was US$350,000, or over US$4m on an annualised basis.
- Structure of the deal: An initial consideration with an additional payment based on outperformance. Initial consideration of US$1.54m in TechFinancials shares at the IPO price of 27p OR the average price over 30 days prior to the closing date of the JV agreement, whichever is the higher. This sets a floor of 27p per share on the deal. It is assumed the JV produces US$2m of net profit in 2016 for the above shares consideration. In the event that net profit is above US$2m in 2016, and provided net profit in 2017 is at least 90% of 2016 net profit, an additional consideration becomes payable in shares or cash at the option of TechFinancials. The additional consideration is calculated as 171.5% of the excess of net profit over US$2m. In the event that net profit in 2016 is below US$2m the final number of TechFinancials shares (at a minimum of 27p) will be adjusted proportionally based on net profit for 2016. Finally, in the event that net profit is less than US$600,000 and/or revenues are less than US$3m, TechFinancials may elect to transfer to the JV partner, 38.5% of the JV shares as opposed to payment in TechFinancials consideration shares.
- We estimate for example should the JV produce US$3m of net profit in 2016 an at least US$2.7m in 2017 a total consideration of US$3.26m (US$1.54m initial and US$1.72 additional) becomes payable. This implies on a multiple basis, a total consideration of c. 2x TechFinancials’ 51% share JV profits, which appears a very sensible deal in our view.
- Finally, TechFinancials will provide a loan of US$0.5m to the JV, whilst the JV partner will provide a loan of US$0.3m. This will be used to provide further working capital in order to further grow the JV’s activities. The loan is repayable on a quarterly basis subject to cash in the JV increasing above the initial US$0.8m provided by both parties. Forecasts, rating and price target are under review.
NORTHLAND CAPITAL PARTNERS VIEW: The JV deal, upon first take appears fairly complex, however it makes financial sense in our view. The additional consideration is based on performance, and in so doing incentivises the JV partner to outperform targets. Optionfortune appears to be trading well, as outlined above, and the new JV should therefore enhance TechFinancials B2C business significantly in FY16. Furthermore, the B2B software business, which remains central to our investment case, performed strongly in the 1H15 as per the interims in September. Finally, the business remains well capitalised with US$4.6m of cash on the balance sheet as at the end of June 2015. Our forecasts and price target are under review.
Thor Mining (LON:THR) – CORP: Spring Hill update
Market Cap: £1.6m; Current Price: 0.04p
Increases ownership to 100%
- Thor Mining has received ministerial approval for the acquisition of the outstanding 49% of the Spring Hill project increasing its ownership to 100%.
- The tenements are now registered in the name of Thor’s subsidiary TM Gold Pty Ltd.
NORTHLAND CAPITAL PARTNERS VIEW: Great news for Thor Mining with the acquisition of the balance of the Spring Hill Gold Project, located in Australia’s Northern Territory. Spring Hill has an Indicated JORC compliant mineral resource estimate of 389,000oz Au at a grade of 1.74g/t (190,000oz is in oxide at a grade of 1.28g/t). Thor believes that there could be significant upside to the resource as it believes the coarse grained nature of the gold means it has been underreported. Thor is now looking at a number of options to progress Spring Hill to low capex, low opex and near term production.
Computacenter (LON:CCC): Q3 update
Market Cap: £917m; Current Price: 748p
Trading in line with guidance
- Adj. revenue +4% to £721m on a reported basis (+10% constant currency basis) and YTD revenue +2% reported (+8% CCY). Group Services +1% (+7% CCY) in Q3 and Supply Chain +5% (+12% CCCY). Net funds of £67.7m (+£18.1m) but quarter end number flattered by a c. £10m positive working capital movement.
- UK performs well with revenue +7% to £323m in Q3 (+6% YTD). Service revenue +10% and Supply Chain +5% in Q3. Continuing to take on 2014 contracts; pipeline for Q4 where it has been shortlisted.
- Germany: revenue +20% in CCY (+7% reported) to £301m, YTD +16% CCY (4% reported). Services increased 7% CCY, (-4% reported). Good contract wins in Services. Supply Chain +26% CCY, (13% reported) in Q3. Strong H1 Supply Chain growth maintained into H2.
- France: revenue down 5% CCY and 14% reported to £85m, bringing YTD down 7% and 16% respectively. Services declined 16% CCY and 25% on a reported basis in Q3 and Supply Chain down 2% CCY and 12% reported. Some of the decline is managed as Computacenter targets larger company. Some improvement but much still needs to be done.
NORTHLAND CAPITAL PARTNERS VIEW: Reassuring Q3 statement with recent themes persisting: good performance ongoing in the UK, improvement in Germany and ongoing remedial work in France. The outlook for Services in Germany is reasonable given the number of contracts secured but it needs to close out a number of opportunities in the UK to maintain its strong recent performance. Shares are trading on a PER of 14.7x FY15 and 13.8x FY16 consensus EPS.