Small Cap Feast

Small Cap Feast – 02 April 2019

Dish of the Day:

No Joiners Today

Off the Menu:

RhythmOne plc, has left AIM after being acquired by Taptica International Limited.

What’s Cooking in the IPO Kitchen?

Main Market

Rustranscom plc— specialised rail freight transportation in Russia and Kazakhstan, announced its potential intention to conduct an IPO of GDRs. The GDRs are expected to be admitted to the Official List of the FCA and to trading on the main market of the LSE. Offering is expected to comprise predominantly primary shares, in the amount of circa $300m.

Main Market (Premium)

US Solar Fund, a newly-established investment company focused on investing in solar power assets mainly in the US, looking to raise $250m at $1. Expected 16 April

Network International Holdings—Pleading enabler of digital commerce across the Middle East and Africa  region, operating across over 50 highly underpenetrated payment markets that contain a total population of 1.5 bn. 2018 rev $298m, underlying EBITDA $152m.  Due April. No new funds to be raised. Secondary sell down. Targeting 25% of at least 25%.


Techniplas –global  producer and support services company providing highly engineered and technically complex components, making the supply chain to original equipment manufacturers more efficient.  FYDec17 rev $515m.

Loungers plc—the operator of 146 café/bar/restaurants across England and Wales under the Lounge and Cosy Club brands, announces its intention to seek admission on AIM, offer TBC

Breakfast Buffet

Sareum Holdings* (SAR.L) 0.78p £22m

Sareum Holdings, the specialist small molecule drug development business, notes that Sierra Oncology, the licence holder advancing clinical cancer candidate SRA737, announced late yesterday that new preclinical data for SRA737, its Chk1 inhibitor, plus low dose gemcitabine (LDG), in combination with anti-PD-L1 immunotherapy, has been reported in a late-breaking oral presentation at the American Association of Cancer Research (AACR) Annual Meeting 2019, being held in Atlanta, GA, USA from 29 March to 3 April 2019.

In the study, SRA737+LDG demonstrated significant anti-tumour activity when combined with anti-PD-L1 immunotherapy in a mouse model of small cell lung cancer (SCLC), resulting in durable tumour regressions. 10/10 examples showed tumour regression at the end of the 21-day treatment period and 8/10 showed sustained complete response after a further 39 days without further treatment.

These findings suggest that the combination of anti-PD-L1 immunotherapy with the SRA737+LDG regimen may represent the optimal implementation of these agents, leading to a dramatic anti-tumour activity and provide a strong rationale for combining these agents with the SRA737+LDG regimen to enhance clinical response rates.


Intercede (IGP.L) 21.9p £8.33m

Intercede, the leading specialist in digital identity, credential management and secure mobility, announced that a large US Federal Government order totalling $4.3m was received on 29 March 2019. The order includes software licenses and annual support & maintenance; $2.05m (£1.57m) of which will be recognised in the financial year ended 31 March 2019.

Subject to the completion of the year end audit, revenues for the year ended 31 March 2019 are expected to be in excess of £10m, which is ahead of market expectations and approximately 10% higher than the previous financial year. This reflects the impact of follow on orders from existing customers plus new contract wins via partners in the US, Europe and SE Asia. The establishment and further development of these and other partner relationships is critical for the Group’s future growth prospects.

The combined effect of increased revenues and action taken to reduce the cost base, is expected to result in a return to profitability at both operating profit level (2018: £4.5m operating loss) and after interest and tax (2018: £3.8m loss for the year).

As at 31 March 2019, gross cash balances totalled £3.2m (2018: £2.3m).


Hydrogen Group (HYDG.L) 68.5p £21.6m

Hydrogen Group, the global specialist recruitment group, announces final results for the year ended 31 Dec 2018.

Group revenue to 31 Dec 2018 totalled £135.7m (2017: £125.9m);

Full year Net Fee Income+ (“NFI”) 34% higher at £30.5m (2017: £22.8m), partly driven by the full year impact of Argyll Scott, but also by strong underlying growth, with Group pro-forma NFI up 14%;

Contractor gross margin increased by over 10% in the year to 10.8% (2017: 9.8%);

Profit conversion ratio increased to 9.7% (2017: 3.6%);

Underlying PBT increased by £2.2m, or 264% to £3m (2017: £0.8m);

Strong cash generation. Cash generated from operations of £6.1m (2017: outflow of £2.5m);

Net cash as at 31 Dec 2018 of £4.9m (31 Dec 2017: net debt of £0.4m);

Statutory profit for the year of £2.5m (2017: loss £1.3m);

Final dividend of 1p per share proposed for approval at AGM, taking dividend for the year to 1.5p (2017: 0.8p per share), an increase of 88% for the year.


Belvoir Lettings (BLV.L) 102.5p £35.11m

Belvoir Lettings, the UK’s largest property franchise group, announced its preliminary results for the year ended 31 Dec 2018.

21% increase in Group revenue to £13.7m (2017: £11.3m)

Growth in management service fees (MSF) of 7% to £8.5m (2017: £7.9m)

Strong lettings bias reflected in gross profit ratio of 71% lettings:18% sales:11% financial services (2017: 74%:19%:7%)

Exceptional credit of £0.8m on finalisation of Northwood earn out

40% increase in PBT to £5.5m (2017: £3.9m)

Strong cash flow from operating activities of £4.6m (2017: £3.7m)

Increased year-end bank balance of £1.8m (2017: £1.4m)

Net debt of £9.6m (2017: £5.1m) following £4.2m Northwood earn out settled in cash and the £4m MAB Glos cash consideration. Net debt to adjusted EBITDA is 1.8.

Adjusted fully diluted EPS of 11.7p (2017: 10.7p)

Recommended final dividend up 9% to 3.8p (2017: 3.5p) giving total dividend for the year of 7.2p (2017: 6.9p)


Gear4music (G4M.L) 192.5p £45.03m

Gear4music, the largest UK based online retailer of musical instruments and music equipment, announced a trading update for the 13 months from 1 March 2018 to 31 March 2019.

Sales in the period increased by 36% with continuing strong growth in the UK and Europe

Sales in the 12 months to 28 Feb 2019 were £109.9m, up 37%

Active Customer numbers increased by 53% to 727,400

Website conversion improved to 3.4%, up from 3.25% last financial year

On hand cash at 31 March 2019 of over £5m (28 February 2018: £3.5m)


BlueRock Diamonds (BRD.L) 0.24p £1.49m

BlueRock Diamonds, the diamond producer, which owns and operates the Kareevlei Diamond Mine in the Kimberley region of South Africa, announced its Q1 2019 production update.

Q1 tonnage 42,409 tonnes up 12% on Q1 2018 (38,781 tonnes)

1,847 carats sold in Q1 up 18% on Q1 2018 (1,563 carats)

Average grade 3.41 cpht, 4% above the average for 2018

Average price per carat $371, 10% above the average for 2018

Two large stones recovered and sold: an 8.97 carat diamond for $74,513 and a 16.28 carat diamond for $78,947


Rotala (ROL.L) 51p £24.7m

Rotala, a provider of transport solutions across the UK, announced its audited results for the year ended 30 Nov 2018.

Turnover of £62.4m (2017: £52.6m), up 19%

Adjusted EBITDA of £8.8m (2017: £7.75m), up 14%

Adjusted operating profit of £5.8m (2017: £4.9m), up 18%

Adjusted PBT up 18% to £4.23m (2017: £3.59m)

Adjusted basic EPS up 9% to 7.22p per share (2017: 6.65p)

Dividends for the year paid and proposed total 2.7p per share (2017: 2.5p), in accordance with progressive dividend policy


Sabien Technology (SNT.L) 0.13p £0.47m

Sabien Technology, the manufacturer and supplier of M2G, a boiler energy efficiency technology, announced it has been awarded a contract by a major government department worth £846,375 for the deployment of Sabien’s M2G Boiler Optimisation Technology across parts of its Estate.

“This is a key contract award for Sabien and is another illustration of the success we can achieve in the Public Sector. This is an excellent demonstration of the quality of our M2G boiler control, scale of installation expertise and the project management that Sabien can bring to a contract of this type, applying skills gathered from previous large-scale client M2G roll out programmes…This brings total orders to date for the financial year ending June 2019 to £1,141,713 (2018: £478,709). All sales revenue will be realised in this financial year.”


Clinigen Group (CLIN.L) 911p £1,209.78m

Clinigen Group, the global pharmaceutical and services company, has completed the acquisition of the US rights to Proleukin® (aldesleukin, human recombinant interleukin-2), following US anti-trust clearance.

The Group now owns the global rights to Proleukin, having acquired the rest of world rights in July 2018.

Proleukin is indicated for metastatic melanoma and metastatic renal cell carcinoma in the US and it is currently being used in around 80 active clinical studies within the US across multiple disease areas.

The acquisition will be modestly EPS accretive in the current financial year as the product transitions to Clinigen, and at least 25% accretive in the first full financial year.

Proleukin will become Clinigen’s largest product in its Commercial Medicines division and it further diversifies the Commercial Medicines owned portfolio of niche hospital and critical care products.


TP Group (TPG.L) 6.25p £47m

TP Group, the specialist services and engineering group, announced its audited results for the year ended 31 Dec 2018.

Revenue ahead of forecast and up 40% to £39m (2017: £27.9m), underpinned by strong customer momentum during the period

Of the revenue growth, £5.4m was derived from acquired companies Polaris Consulting Ltd. and Westek Technology Ltd.

Adjusted operating profit ahead of forecast and up 85% to £4m (2017: £2.1m) driven by focus on improving margin and delivery performance

Operating losses reduced to £nil (2017: £1m loss), reflecting one-off acquisition-related expenses and further depreciation and amortisation relating to investments in the business

Closing cash ahead of forecast at £22.4m (2017: £21.9m), driven by strong working capital performance

Order intake of £43.2m (2017: £44.7m) and closing order book up 16% to £48.3m (2017: £41.7m)


Head Chef:

Derren Nathan
0203 764 2344

*A corporate client of Hybridan LLP


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