Small Cap Value Report (7 Nov 2014) - PURI, PRP, RGS, STAF, RSTR
Good morning! Not much news today, as usual for a Friday. I'm going to write a brief report today, as I have to prepare to give a talk on the morning's announcements here at the Derby Conference Centre, at Mello 2014. It's going really well so far - lots of interesting companies and speakers.
PuriCore (LON:PURI)
See the archive for my previous comments on this company, which has a Patented hydrochlorous acid technology, for safely disinfecting food & cut flowers.
The company announces this morning that it is moving down from the main market to AIM. That makes a lot of sense, given that the market cap is only £16m at 31p per share. An AIM listing is cheaper, and less onerous in terms of regulation, and also means that corporate actions are cheaper & easier to do (e.g. Placings, takeover bids, etc).
However, some Instis are not able to hold shares in AIM companies, so this might create forced sellers in the short term. The company mentions that moving to AIM will make the shares more attractive to retail investors (who might buy for IHT planning purposes), but first they need to offer a decent investing case! At the moment the only reason to hold the shares is that the cash pile is roughly equal to the market cap. However, the ongoing business is loss-making, and there's not really any sign of progress.
I would like to see the company bid for, as long-suffering shareholders surely now just want a clean exit at a reasonable price?
Prime People (LON:PRP)
This is a small recruitment company, and its interim results this morning look quite good.
The company today reports a £640k profit on £8.0m turnover for the six months to 30 Sep 2014, which is a good improvement on H1 last year, where they only made £287k.
Note the generous dividends here - 4.09p divis have been paid in the last 3 years, and a 14p special dividend was paid earlier this year.
I see that these shares are up in early trading, so the market also likes their results.
The market cap was £10.6m at 85p per share last night, so there will be the usual micro cap problem of lack of liquidity and a horrible bid/offer spread, so it's really only worth buying on a red day, when someone is dumping stock and…
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Realm Therapeutics plc, formerly PuriCore plc, is a biopharmaceutical company. The Company is focused on leveraging its immunomodulatory technology to protect and improve the health of adults and children. The Company has initiated drug development programs based on its hypochlorous acid technology. The Company is engaged in the development of small molecule therapies with potential application for the treatment of diseases in a number of therapeutic areas, and an initial focus in dermatology and ophthalmology. The Company has developed proprietary formulations of its technology, with anti-inflammatory and immunomodulatory benefits. Its pipeline of products include PR013 and PR022, which are in Phase I. PR013 is indicated for allergic conjunctivitis and PR022 is indicated for atopic dermatitis. Realm Therapeutics, Inc. is a subsidiary of the Company. more »
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Prime People Plc is an international recruitment services organization. The Company is engaged in providing recruitment consultancy and other ancillary services. The Company's segments include UK, Asia and Rest of World. It offers both permanent and contract specialist recruitment consultancy for large and medium sized organizations. As distinct brands, Prime Insight and Prime Energy serve the data analysis and customer insight, and renewable energy and sustainability sectors respectively. Its brand also includes Macdonald & Company, which is engaged in real estate and built environment sectors. Its subsidiaries include Macdonald & Company Group Limited, which is a holding company, and Macdonald & Company Property Limited, Macdonald and Company Freelance Limited and Macdonald & Company Ltd, which are engaged in recruitment business. The Company has its offices in the United Kingdom, the Middle East and the Asia Pacific region from which it serves an international client base. more »
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Blancco Technology Group Plc, formerly Regenersis Plc, is a provider of mobile device diagnostics and secure data erasure solutions. The Company's segments include Erasure and Diagnostics. The Erasure segment focuses on development and delivery of solutions, and includes Blancco, which provides erasure software; SafeIT, which is engaged in cloud and networked data erasure business, and Tabernus, which is engaged in providing software erasure products. The Diagnostic segment includes Xcaliber Technologies, a smartphone diagnostics software business. Its secure data erasure solutions include Blancco Management Console, Blancco Cloud, Blancco File, Blancco 5, Blancco Mobile Solutions, Enterprise Erase E800, Enterprise Erase E2400, Enterprise Erase Mobile and Ontrack Eraser Degausser. Its mobile diagnostics solutions include fault diagnostics, repair and program enablement. It serves manufacturers, financial institutions, healthcare providers and government organizations across the world. more »
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5 Comments on this Article show/hide all
RSTR: StockReport PE 11,279 is this a new record?
Puricore have got things the wrong way round. Surely they should complete the strategic review and then decide whether moving to AIM is appropriate in light of the new strategy. I personally feel that finding a buyer for the remaining business would be the correct strategy.
Good luck with Mello2014. I was there yesterday and enjoyed it very much. The presentation from John Roberts of AO.com was inspirational and very funny. You won't find a more driven CEO in my opinion. I hope the rest of Mello, Derby goes well as I would love to attend again next year.
My understanding of the Staffline probation/rehabilitation contract is that it's simply service provision, so I don't think the risks you quote are that valid - e.g. the goal is to stop people re-offending, so this might cover housing/welfare, medical needs, as well as employment. Where there is a risk is in the payment for provision of services, particularly if there's some payment by results (which I believe there will be) - we'll never know how this is structured in details, but one large risk is that, despite Staffline's best efforts, re-offending rates spike due to e.g. a general economic downturn, which is clearly outside of their control. So, this kind of contract might add some general "economic gearing", or my be subject to future government's intervention in the criminal justice system (e.g. tightening up laws/policing). Similarly, it might also benefit (e.g. decriminalising drug usage)! More details here, this is an interesting read generally:
https://consult.justice.gov.uk/digital-communications/transforming-rehabilitation/results/transforming-rehabilitation-response.pdf
PS Of course the big risk is that they simply fail to deliver! It's a similar thing to welfare to work, but it's still a step removed from employment services and a completely new area for private companies to get involved in.
Regenersis's margins are very low. It appears its fishing around to get into higher margin business such as device insurance, an area with many players already. Not a goer for me.