Tekcapital - Update

Placing funds further development and shares continue to trade at a substantial discount to NAV

AIM listed Tekcapital is an international provider of technology and intellectual property investment services. The company’s objective is to create value from investing in new, university-developed intellectual properties and to produce returns through capital appreciation. Since our last update in August Tekcapital has announced interim results, a placing of $1.15 million and positive updates across certain investee companies.

  • Interims show increased service revenues and rise in NAV

    Numbers for the six months to 31st May 2018 showed another profitable period of trading, with total revenues of $1.28 million and a pre-tax profit of $105,996. Revenues from services were up by 29% at $0.64 million reflecting continued growth of technology transfer services, particularly in Latin America. Net assets were up by 35% over 12 months at $10.75 million, with NAV per share up by 32% at 25 cents.

  • Placing raises $1.15 million to invest in portfolio company expansion

    Tekcapital has raised $1.15 million by issuing 11,698,335 new shares at a price of 7.5p each. The proceeds will be used to fund investment in key activities, to further develop and progress with the commercialisation of its portfolio of IP technologies and for working capital.

  • Investee companies report further progress

    Autonomous vehicle technology developer Guident Ltd has appointed Harald Braun, an experienced telecoms industry executive, as Chairman. Also, medical device business Belluscura, along with research partner Separation Design Group, has filed three patent applications & received a Notice of Allowance of a fourth application in the fields of respiratory, postoperative recovery, sedation/sleep monitoring and artificial intelligence. This enhances the IP position of its forthcoming portable oxygen concentrator & other products under development.

  • Shares trade at a large discount to NAV and the IP sector average

    Tekcapital shares currently trade at a c.50% discount to NAV (accounting for the placing) and at a 54% discount to the wider UK IP sector average price-to-book value ratio. This, combined with additional value creation opportunities, leads us to retain our stance of Conviction Buy.

  • RISK WARNING & DISCLAIMER

    Tekcapital is a research client of Align Research. A director of Align Research owns shares in Tekcapital. For full disclaimer information please refer to the last page of the full document. This investment may not be suitable for your personal circumstances. If you are in any doubt as to its suitability you should seek professional advice. This note does not constitute advice and your capital is at risk. This is a marketing communication and cannot be considered independent research.

Table: financial overview
Year to Nov 2014A 2015A 2016A 2017A
Revenues ($m) 0.21 0.41 0.76 7.26
Pre-tax ($m) (0.99) (1.46) (2.56) 4.15
EPS (c) (5.0) (4.9) (6.3) 10.8
Source: Company accounts

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