AIM's Essential Top Ten News Stories for Monday, July 18th 2016

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Good morning and welcome to this edition of “AIM’s Essential Top Ten”, a brief and early roundup of the main news announcements. This morning’s edition includes ARM and MCGN from the Main Market.


Ariana Resources (LSE:AAU)

Share price: 185p. Market cap: £15 million.

Drilling Programme Commencement: Summer drilling commences this week on the Kiziltepe project (Turkey). Project will be 50% owned by Ariana once construction completed in Q4 2016.

GN view: Typical execution risks exacerbated by political risk in Turkey, although the MD informs us that operations were unaffected by events this week. This project appears to have good potential.

ARM Holdings (LSE:ARM)

Share price: 1189p. Market cap: £16.7 billion.

Recommended Acquisition of ARM by Softbank: Huge recommended transaction at 1700p in cash per share, valuing entire share capital at £24.3 billion. Includes ordinary dividends prior to transaction’s Effective Date. Part of Softbank’s plan to “transition from a Japanese company with some international assets to a global entity that can grow sustainably over the long term”.

GN view: The most attractive elements of the deal which are clearly explained in the release are (a) the huge 41% premium of the offer over ARM’s all-time high share price achieved in March 2015, and (b) the pledge to allow ARM to continue to operate as a separate company in Cambridge, and to increase its headcount. These are likely to be enough to get the deal over the line.

Christie Group (LSE:CTG)

Share price: 86p. Market cap: £23 million.

Trading Statement: Profit warning – operating profit for 2016 “is likely to be lower than previously expected”. First half revenue broadly in line with last year, growth in second half.

GN view: Softer than expected conditions in Professional Business Services are blamed. Detailed reasons are not given. Some transactions lost after the EU referendum result. It would be helpful if the company would quantify its guidance, even by providing a broad range.

Conviviality (LSE:CVR)

Share price: 178p. Market cap: £304 million.

Final Results: Revenue £865, adjusted profit £22 million. Debt reduction ahead of plan with net debt £86 million.

GN view: I’m not a fan of the buy-and-build strategy being pursued here as an alternative to organic growth. Net profit result of £5.3 million after the upfront costs of this strategy (£9.8 million of exceptional costs), while the group carries significant debt levels.

Finsbury Food (LSE:FIF)

Share price: 115p. Market cap: £150 million.

Pre-Close Trading Statement: Strong trading continued in the second half. Confident of delivering profits in line with upgraded market expectations. Sales up 25% on prior year. In particular, the 50% owned European business grew by 26%.

GN view: A large, unexpected performance improvement took place here in recent years. Share price now reflects this.

Herencia Resources (LSE:HER)

Share price: 0.325p. Market cap: £1.4 million.

Final results: Had a JORC estimate for the flagship project in Chile. Has not yet sourced addition funding, but progressed negotiations in relation to potential joint venture or sale of the project.

GN view: Loss of £14 million reported, or £2.2 million excluding the impairment charge of one of their projects and FX losses. Needs to raise additional funds, so buying shares in the secondary market would now be highly risky.

Microgen (LSE:MCGN)

Share price: 141p. Market cap: £83 million

Interim Results: Revenue growth of 23% to £19.5 million. Basic earnings per share increased to 5.1p from 4.2p. Dividend increased.

GN view: High rating against net income but the balance sheet is strong, the company is credible and the software solutions look to be gaining momentum among customers. Worth investigating for continued staying power.

Mirada (LSE:MIRA)

Share price: 5.25p. Market cap: £7 million.

Final Results: Revenue up 6% to £6 million. Operating loss £0.36 million (2015: profit of £0.29 million). Objective remains to achieve positive free cash flow for year ending March 2017.

GN view: Deployment of a Mirada software product over a Mexican pay-TV operator’s network is promising. The company has net debt of £3.5 million, however, up from £2.6 million despite an equity fundraising of £1.5 million. More equity capital may possibly be needed here.

Seeing Machines (LSE:SEE)

Share price: 3.875p. Market cap: £42 million.

Year End Trading Update: Post-tax trading for full year to end-June expected to be in line with market expectations. Revenue for the year of AUD 33.6 million.

GN view: Revenue increase of 77% is more than fully accounted for by the impact of an AUD 21.8 million license fee agreement with Caterpillar, which will see Caterpillar take on management of Seeing Machines’ off-road product suite. Reflects well on Seeing Machines that they attracted the interest of a major player.

Transense Technologies (LSE:TRT)

Share price: 1p. Market cap: £4.7 million.

Trading Update: Trading results for year ended June 2016 expected to be in line with board’s expectations as revised on the release of the interim results in March. Revenues of approximately £2 million, closing cash balances of £3.6 million.

GN view: Looks to be at an early stage of development. Commercialisation to a material scale still uncertain, but the cash balance offers comfort.

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