6th Feb: Trader Tim’s Penny Stock Post – #PROX #CYAN #ANGS #Charity

@TraderTim5ANGS, CYAN, PROX

Trader Tim’s Penny Stock Post analyses key RNS releases every morning. Not all releases can be covered, priority will be based on liquidity, significance and demand. To receive Trader Tim’s Penny Stock Post direct to your email box at 10am each morning, click here.

Another week on the markets.

I am looking forward to this week – I think we will see some good movers.


January Donation: Restore

First of all, I have some positive news regarding charity donations. Over the month of January, we made a profit, which is a fantastic result. The charitable element of the blog has drifted a bit recently. Apologies. I was away for some time after the summer, then made some erroneous trades when I was back and now I am stuck in a few promising ones, which are not moving or are suspended as is the case with Management Resources. You can see all smallcap trades I make past and present in my trading diary.

I sold my Ithaca shares last week for a handsome profit, which makes January a profitable month. This trade returned a profit of £2439.88. Thank you, Ithaca – a bit frustrating that it has jumped 10% today, but oh well! 10% of this profit – £244 – will be donated to charity. The charity this month comes in the form of Restore, a small mental health charity based in Oxford, which I have donated £305 including Gift Aid, for this month!

They do invaluable work supporting people with mental health issues. Restore works with those who struggle to carry out day-to-day activities due to mental health problems. They dedicate their time to help get people to take control of their recovery and lead meaningful lives. This includes recovery groups, specialist training and employment coaching. Restore is a really fantastic charity, one which I am very happy to donate January’s trading proceeds to!

You can also donate to support Restore here.

You can read about the other causes supported in previous months here. Also, you can subscribe below and follow me on Twitter to get all the latest updates straight to your inbox!


Proxama

Market Cap: £6.74m
Price: 0.35p
Spread: 7.5%

Proxama, the digital and mobile commerce company, announces a 5 year contract with a leading South African insurance and financial services provider. As part of the agreement, Proxama will provide the supply of in-house EMV card issuing, PIN management and card lifecycle management.

Unlike some Proxama updates, we do have a monetary value attached to this one, which is a plus. Last time, I ranted about the ambiguities of “strategic partnership” announcements with provide no tangible benefit to the business or have no monetary value attached to them. This one will bring in some decent revenue. In 2017, revenue earned from software licences, services and support with £365,000 and a minimum of £691,000 over the 5 years of the contract. There is the potential for additional payments depending on thresholds being crossed.

Coming hot on the heels of successful deployment of the Proxama product suite at Diners Club SA, we are keenly anticipating working with this team to make this programme another success, further reinforcing our presence in the South African market

This is a decent deal for Proxama, which will bring in decent revenue for the company. This will satisfy investors. It is a step toward a sustainable business even if it is in a supposedly lower-priority division. The company entered into a death-spiral financing agreement with Darwin to raise capital.

Investors won’t be entirely happy. They are still awaiting an update on the divestment of Digital Payments Division, which was originally billed to happen before the end of 2016. The process has been delayed, but I feel that investors – including myself – are due an update on this. Communication is not a strong point of the Proxama board.

The longer the wait, the greater the uncertainty. A maxim that is certainly being reflected in the share price of late.


CyanCannode

Market Cap: £30.82m
Price: 0.21p
Spread: 7.5%

CyanCannode, who narrowband radio mesh networks and work with smart meters, announce a receipt of a purchase order for 100,000 Panmesh software licenses from HM Power in Sweden.

Sweden was the first country to install smart meters for its customers in 2009 amounting to a total reach of 5.2 million Swedish consumers. In April 2016, CyanConnode signed a non-exclusive distribution agreement with HM Power to distribute the Company’s smart grid and IoT solutions in Sweden.

Cyan have done really well over the last 12 months. They’ve basically completely changed focus. They used to do semiconductors. That was ailing and now they are looking at smart meters. Smart metering is certainly a more interesting, sexy proposition.

CyanConnode’s narrowband mesh technology allows customers to build the network as they deploy the solution, supporting cash flow, up-time and end-to-end security. The sale of Panmesh software licenses include an ongoing recurring revenue stream from annual maintenance charges over a 10-year contract term.

Opinion

The company have significant contracts in Sweden, of which this announcement is one, and Finland. A relationship in India with Larsen & Toubro. The company has made 3 very significant orders, the most recent being for 4,700 additional smart meters is part of a larger framework agreement between Tata Power Mumbai. CyanCannode also have a major order for smart metering from Micromodje in Iran. The order is worth £10 million. Delivery will take place in 2017. A significant proportion of the £10 million order, CyanConnode hope will filter through into recurring revenue.

It has global application as well, which is a major plus – this offers strong growth potential. The company can sell these products anywhere in the world with minimal overheads. This is clearly shown by their contracts – India, Iran, Sweden, Finland. Geography offers no boundary. The management team have done well to get some really good deals over the line. Since the change on focus, the business seem to be turning a corner. This is a stock to watch I believe.


Angus Energy

Market Cap: £29.43m
Price: 14p
Spread: 6%

British-based Angus Energy provide an update an agreement with Europa Oil & Gas to acquire a 12.5% economic interest by way of a farm-in arrangement in PEDL143 located within the Weald Basin. This is also accompanied by an placing of £2,000,000.

Acquisition

The terms of the agreement are as follows:

entered into an agreement to acquire a 12.5% economic interest in PEDL143 through the immediate payment of certain historic costs incurred by the Operator along with 25% of the costs of the Holmwood-1 exploration well up to a gross well cost of £3.2 million

The net cost to Angus is exception to be around £800,000, which will be funded through the placing.

The agreement makes sense for Angus, who already have an interest in the neighbouring oil field in Brockham (PL235). It expands their portfolio of assets without adding major logistical overheads that would ordinarily come with an additional asset. Holmwood-1 has a lot of the heavy-lifting already done. It has planning consent and is drill-ready. Angus state that Holmwood is expected to be drilled in 2017.

Europa estimates the unrisked gross mean prospective resources to be 5.6 million barrels with a geological chance of success of 33%. This is a good output, the company say this estimate was taken from the shallower reservoirs only. Company strategy is good here – focus on producing assets.

Placing

Angus has raised £2,000,000 by way of private placing of 18,181,818 new ordinary shares though its broker, Optiva Securities. It seems okay on the dilution front with 234,162,105 shares in issue after the placing.

The placing price is 11p, a little way of the opening market price this morning. However, it has not been disastrously undercut. I’m not surprised the shares have dropped back a little this morning. No mention of where this 11p figure came from, e.g. whether it was an average of the last 5 trading days. I do prefer when there is a consistent formula behind the strike price. It helps investors detect whether a fundraise is routine or whether the company in question is desperate for cash. That said, in this case, there are no alarm bells. The need for funds is clearly for a new opportunity.


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