Updates On 3 AIM-listed Stocks - EQTEC PLC, Wey Education PLC and Proactis Holdings PLC

EQTEC PLC Business Overview

EQTEC PLC (EQT) is an Ireland-based bioscience energy company that seeks to convert waste into synthetic gas to generate electricity and heat through a proprietary gasification technology, which is used in industrial size power plants. The group is listed on the Alternative Investment Market of the London Stock Exchange. Using its conversion technology, named EQTEC Gasifier Technology, the company converts biomass and waste into clean synthetic gas, which can be used into gas engines to generate high levels of thermal and electrical energy. As EQTEC Gasifier Technology offers higher efficiency in comparison to other generation technologies, it is one of the most advanced modular gasification technologies present on the market, providing project developers with a competitive advantage. The operations of the group are differentiated into two segments, namely the technology sales segment and the power generation segment.

Financial Highlights EQTEC PLC (FY 2018, in £m)

Revenue in the year ended 31 December 2018 increased to €2.2 million (HY 2017: €20k), while the company reported a gross loss of €77.7k, against a gross profit of €20k in HY 2017. Losses before one-off items and interest expensed were €2.6 million for the year, while the operating loss was €7.03 million, reflecting one-off impairment costs of €1.4 million arising on the revaluation of the goodwill and €2.1 million arising on the revaluation of assets held at the Newry site. Loss before taxation was €8.24 million, while the loss for the financial period amounted to €8.2 million. Basic loss per share from continuing operations declined to €0.004 from €0.009 in HY 2017. Cash used in operating activities rose to €3 million, while the group generated net cash from investing activities worth €1,054, leading to cash and cash equivalents for continuing operation at the end of the period worth €460k.

Share Price Commentary - EQTEC PLC

On 29 August 2019, at the time of writing (before the market closed, GMT 3:04 pm), EQT shares were trading at GBX 0.2250, up by 15.38 per cent against the previous day closing price. Stock's 52 weeks High and Low are GBX 1.84/GBX 0.18. The company's stock beta was 1.51, reflecting more volatility as compared to the benchmark index. Total outstanding market capitalisation was around £6.07 million.

Outlook - EQTEC PLC

The company operates in a challenging environment which requires continuous investment, sometimes at the cost of profitability, to stay ahead of the competitors. The company’s cash generation from its operations remained negative for the period. On 28 June 2019, the company announced that it had appointed Mr Alemán and Mr Palumbo as Chief Technical Director and Commercial Director, and the group announced on 28 August that they had been appointed to the Board of Directors as Executive Directors with immediate effect. The company believes that it will have a more appropriate capital structure and cost base after the balance sheet restructuring and cash outlay and cost reduction programme. The operations of the group are susceptible to local economic environments – like currency volatility, recession, inflation, low-interest rates – as well as to global competition and geopolitical risks.

Wey Education PLC Business Overview

Wey Education PLC (WEY) is a London-headquartered, AIM-listed holding company, which provides online educational services globally using state of the art digital technology. While Academy21, a B2B division, serves other educational providers, schools, local authorities and other public bodies, InterHigh, a non-selective fee paying online secondary school, operates an online independent secondary school in the United Kingdom. Operations of the group are differentiated in five geographical segments, namely the UK, Europe, Middle East, Africa and Other countries.

Trading Update - Wey Education PLC

Trading performance for the year ending 31 August 2019 remained strong, as InterHigh and Academy 21 reported strong growth, indicating good performance by the core business. Representing a year on year increase of over 43%, the company expects revenue to exceed £6.0m. To ensure revenue expectations for the year ended 31 August 2020 would be met, the company has increased its marketing spend in the current year, helped by the increase in revenue.

Financial Highlights - Wey Education PLC (H1 FY 2019, in £m)

Total revenue rose by 54.7% to £2.70 million (H1 2018: £1.74 million), while gross profit was £1.52 million, indicating a gross margin of 56.4%, reflecting continued strong growth in both Interhigh and Academy21. Operating profit before nonrecurring items was £44k, against an operating loss of £57k in H1 2018. Operating loss for the period before taxation was £0.58 million against £0.11 million, while adjusted profit before tax on continuing operations was £124k (H1 2018: £23k). Due to £310k of losses from discontinued operations in London and overseas, and exceptional items of £571k, the group, reported a loss after tax of £895k (H1 2018: £153k), leading to basic and diluted loss per share from discontinued operations to 0.24p. Cash balances remained strong at over £4.96 million (2018: £4.35 million) and net cash generated from operating activities was £0.8 million.

Share Price Commentary - Wey Education PLC

On 29 August 2019, at the time of writing (before the market closed, GMT 3:07 pm), WEY shares were trading at GBX 10.25, up by 0.49 per cent against the previous day closing price. Stock's 52 weeks High Low GBX 5.00 and it touched a fresh 52 week high as on date. The company's stock beta was 0.71, reflecting less volatility as compared to the benchmark index. Total outstanding market capitalisation was around £13.47 million.

Outlook - Wey Education PLC

The group continues to make an investment in teaching and lesson and has a strong cash and balance sheet position. The markets of the group represent outstanding opportunities for it to grow the business, helped by increasing focus by the government to provide digital education in remote places. The group does not expect Brexit to have a material impact on its operations but seeks to adapt its business practices, costings procedures and pricing policy as required by the change in circumstances.

Proactis Holdings PLC Business Overview

Proactis Holdings PLC (PHD) is a British company which is engaged in the development and sale of business software, installation and related services to help buyers and sellers transform the way they buy and sell goods and services to eliminate wasted time, money and talent. The group offers to spend management solutions and helps clients drive increased B2B sales with greater efficiency through eCommerce solutions. The operations of the business are differentiated in three geographical segments, namely the UK, EU and US.

Trading Update - Proactis Holdings PLC

The performance during the financial year 2019 was as per the expectations of the company, with the company expecting to report an increase in revenue to £54.1m (2018: £52.2m) and adjusted EBITDA at £15.0m (2018: £17.3m). Net bank debt as at 31 July 2019 remained fully serviced and within covenants and is expected to be £36.5m (31 January 2019: £39.3m), as debt during the period reduced following the generation of £5.1m of adjusted net free cash flow in the second half of the year. From 60 new names (2018: 64) and 127 upsell deals (2018: 120), the group secured a total contract value of £11.3m (2018: £12.1m).

Financial Highlights - Proactis Holdings PLC (H1 FY 2019, in £m)

Reported revenue (excluding the benefit of acquisitions) for the six months ended 31 January 2019 declined to £24.9m (H1 2018: £26.4m, while reported revenue increased by 5% to £27.7m (H1 2018: £26.4m). Due to an increase in operating expenses and amortisation of intangible assets, operating profit declined to £1.05 million from £2.9 million in H1 2018. Adjusted EBITDA (excluding the benefit of acquisitions) declined to £7.2m (H1 2018: £8.4m), and adjusted EBITDA decreased to £8.0m (H1 2018: £8.4m). Profit before taxation declined to £0.3 million from £2.45 million and profit for the year was £45k, against £2.5 million reported in the prior year. Adjusted EPS decreased to 3.5p (H1 2018: 5.4p) and basic EPS declined to 0.1p from 2.6p in H1 2018. Due largely to the acquisition of Esize Holdings BV, net bank debt increased to £39.3m, while net cash flow from operating activities was £4.4m (H1 2018: £1.6m).

Share Price Commentary - Proactis Holdings PLC

On 29 August 2019, at the time of writing (before the market closed, GMT 3:10 pm), PHD shares were trading at GBX 48.50, down by 1.02 per cent against the previous day closing price. Stock's 52 weeks High and Low are GBX 145.00/GBX 28.02. The company's stock beta was -0.58, reflecting a negative and weak relationship with the benchmark index. Total outstanding market capitalisation was around £46.96 million, with a dividend yield of 3.06 per cent.

Outlook- Proactis Holdings PLC

In the second half of the year, the group reported a strong level of cash generation. As the company continues to deliver on the benefits identified during the operational review, cash flow performance is expected to continue, helping the company to reduce debt. The group will on 31 October 2019 report its annual results for FY 2019. To meet the challenge of ever-increasing levels of technological advancement and fast-changing market demand, the company continues to invest substantially in the development of technology and other solutions, which enables it to respond promptly and effectively to the challenges of technological change in the software industry and innovations by competitors.

Comparative chart of EQTEC PLC, Wey Education PLC and Proactis Holdings PLC

(Source: Thomson Reuters)