Sunrise Resources (LON:SRES) – SPECULATIVE BUY*: FY15 results
Market Cap: £1.2m; Current Price: 0.175p
LBT decreases to £0.3m
- LBT decreased to £0.3m in FY15 from £0.7m in FY14, to reduced impairments and administrative expenses.
- Net cash of £33k in FY15 increased from £22k in FY14.
Northland Capital partners view: Sunrise Resources has made significant progress this year and managed to reach an agreement at its County Line Diatomite Project that could see near to medium-term production and cash flow generation at no additional cost to Sunrise. Next year we expect to see the advancement of the recently staked Pozz Volcanic Ash Project, following up drilling at the Bay State Silver Project and the continued advancement of its other projects. The Board of Sunrise continues to take its fees in shares ensuring that it continues to be highly efficient with its use of capital.
CityFibre (LON:CFHL): Acquisition
Market Cap: £70.3m; Current Price: 66p
Proposed disposal of KCOM’s national network infrastructure to CityFibre
- Proposed disposal of KCOM’s national network infrastructure (outside of Hull and East Yorkshire) to CityFibre (CFHL.L) for an all cash consideration of £90.0m, subject to approval by CityFibre shareholders part funded through a placing of £80.0m at 50p/share. The General Meeting is scheduled for 12th January with contract completion shortly afterwards. The assets had a Net Book Value of £41.8m at H1. The proceeds will be used to reduce debt (H1 FY16 pro forma: £13m net debt).
- In parallel, KCOM has entered into a service agreement with CityFibre to support existing commitments and customer arrangements. The cost of this arrangement is £5m per annum over a five year period. Furthermore costs of c. £1m per annum will transfer to CityFibre. KCOM has the option to extend the term of this arrangement up to 15 years.
Northland Capital partners view: The proposed disposal looks a good transaction for both sides – KCOM successfully monetises an under-utilised asset that was no longer core to the company’s strategy and thereby substantially reduce its debt, CityFibre substantially accelerates its footprint expansion and enables it compete more effectively as an alternative to BT Openreach in the wholesale fibre infrastructure market and to BT Wholesale for national service providers, data centres and mobile operators. It represents an ambitious expansion on the part of CityFibre and constitutes a reverse takeover.