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Stuttard’s Septic Seven July update: when will it be two?

By Nigel Somerville, the Deputy Sheriff of AIM | Saturday 15 July 2017

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Oh boy, it’s time to revisit Marcus Stuttard’s Septic Seven and we have yet another suspension. You will recall that this portfolio of seven diversified stocks from the AIM Casino was chosen for Mr Stuttard so that he might demonstrate his faith is his own regulatory setup at the world’s most successful growth market – but with the caveat that all the stocks selected had been Red Flagged but were still trading. In the week that the LSE washed its hands of any responsibility for fraud it is scores of the doors time, after not quite 10 months.

The good news is that Eden Research (EDEN) is up. Given that Tom Winnifrith has shouted Panama Pump at that one for months, with regard to a grant of rights to Terpenetech and an investment by Eden paid for with its own shares (which were immediately sold) and left Eden as the only holders of fully paid shares this is exactly the sort of ludicrous dealings which we Red Flag but AIM is happy to ignore.

Eden’s accounts now report Terpenetech as an associate, but it looks and feels more like a subsidiary to me.  Meanwhile, Terpenetech’s latest accounts show that it has ZERO cash (no prizes for guessing where that went). The shares in Eden are 11.625p in the middle – up from 11.5p at the start. Up in theory, although taking spreads into account it is probably marginal.

Next up is China New Energy (CNEL) whose annual accounts had a bit of a going concern issue. Since then it has proposed a 40% increase in authorised share capital at the forthcoming AGM and funnily enough the shares have slipped.

There were also issues of overdue receipts which had not been written down and loans to other parties which seemed to be a way of funding them. But all is fine in the world of AIM – no matter that there is a placing heading your way as soon as the AGM is over. Share there are down at 1.225p.

And finally we have the ludicrous company Aquatic Foods (AFG) which listed back in February 2015 at 70p and has cash coming out of its ears. The problem is that the cash is in China and there are bills to pay here.  The company tells us that the people need paying in order to release its FY numbers (so we might gently suggest that the auditor is one) and meantime the shares have been suspended as the accounts are overdue.

We are told that the board understands that cross border cash payments have been made difficult by the PRC. That’s not quite the same as stating it as fact, is it?

Meanwhile, we are told that the directors and the Nomad will still be owed fees even after the publication of accounts, and that the directors are planning to stump up loans to pay the (presumably) audit fees – but that was two weeks ago and the accounts were “substantially complete” even then.

My mind is drawn to Naibu (NBU)….

The statement was signed off by the FD (who was only in place since 9 August last year) and as if by magic the following day (after hours, even though it was the middle of the night in China) she resigned. One might wonder if she knew she had signed off the statement at all…

The only question in my mind is how long the Nomad will put up with this nonsense (for no fees) and resign. As for the shares, listed at 70p and cash piling up (so we are told), they were suspended at 12.5p.

AIM Regulation, on the other hand, doesn’t care. We know that AIM Rules dictate that companies report matters of importance – but now it is also perfectly clear that it doesn’t matter whether they are true of not, which rather impacts on whether it is worth having any rules at all. Bearing in mind the list of casualties so far of Jiasen (JSI) – voluntary delisting, African Potash (AFPO) - Nomad resignation, CloudTag (CTAG) – Nomad resignation, Taihua (TAIH) – voluntary delisting, it seems that AIM Regulation is happy to defer that to others.

And so for this month’s figures. Generously I’ve noted Aquatic Foods at 12.5p, the mid-price immediately before suspension. With that in mind, the average is MINUS 59.8% in less than ten months. I hope Mr Stuttard keeps the day job.

  start (mid) now (mid) Change %
AFG - suspended pending accounts 12.5 12.5 0.0
AFPO- delisted, now susp NEX 0.185 0 -100.0
CNEL 1.525 1.225 -19.7
CTAG - delisted 18 0 -100.0
EDEN 11.5 11.625 1.1
JSI - delisted 3 0 -100.0
TAIH - delisted 2.75 0 -100.0
    Average % -59.8

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