Small Cap Feast

Small Cap Feast – 18 June 2019

Set Menu AIM:

Total number of AIM Companies (Incl Susp): 893

Total number of AIM Companies trading: 818*
* As at 17 June 2019

Set Menu NEX Growth:

Total number of NEX Growth Market Companies (Incl Susp): 89*

Total number of NEX Growth Market Companies trading: 87*
* As at 17 June 2019

Set Menu Standard List:

Total number of Standard List Companies (Incl Susp): 163*

Total number of Standard List Companies trading: 141*
* As at 17 June 2019

Dish of the Day:

No Joiners Today

Off the Menu:

MBL Group,  a cash shell as defined by AIM rule 15, has left AIM after failing to complete a transaction as defined by AIM rule 14 (Reverse Takeover)

Dish of the Day:

No Joiners Today

Off the Menu:

No Leavers Today

What’s Cooking in the IPO Kitchen?

Main Market (Premium)

Trainline—Seeking £75m raise. Proceeds to target a net debt at IPO of c.2x LTM Adjusted EBITDA). In FY 2019, Trainline achieved net ticket sales of £3.2bn, and revenue of £210m.  Due June

Airtel Africa Limited — provider of telecommunications and mobile money services, with a presence in 14 countries in Africa, primarily in East Africa and Central and West Africa, looking to join the premium segment of the main market. Offer TBC, expected TBC

ReAssure Group plc  –  The Group is a leading closed book life insurance consolidator in the United Kingdom with 4.3m policies, £68.7 billion of assets under administration on a Post-L&G Illustrative Basis. It is considering a premium listing segment of the main market.

Main Market (Standard)

IMC Exploration Group (NEX: IMCP), focused on acquiring and exploring prospecting licence areas which have high potential for natural resource, is looking to admit its shares to the standard list and will withdraw for the NEX Exchange. TBC

AIM

Alumasc Group plc, the premium building products, systems and solutions group, has announced its intention to move from the Premium Segment of the main market to AIM. Expected market cap of £33.4m. Expected 25 June 2019

Argentex a UK-based forex service provider founded in 2011 by its current management team which operates as a Riskless Principal for non-speculative and forward foreign exchange as structured financial derivatives is looking to join AIM. Offer TBC, expected 25 June

Rumours & Speculation

Neptune Surf Technology plc*, a vertically integrated lifestyle accessory group focused on the surf market, designing its own high-performance wetsuits and surfing hardware and distributing these together with third party brands globally with key markets being Europe, Australia and USA and Brazil, is looking to join AIM and ‘is planning an £11m float’ according to The Sunday Telegraph.

Breakfast Buffet

Pelatro (PTRO.L) 76.5p £23.1m

Pelatro, the global Multichannel Marketing Hub software specialist, announced that the Company has been selected by a large telco in Asia to implement its Contextual Marketing Platform, on a license fee model. Furthermore, the Company continues to contract for significant Change Requests. The collective value of the new contract and recent Change Requests is about $1.5m.

This latest contract win further strengthens the Company’s client base, which now stands at 18 clients across 17 countries. providing further earnings growth and additional cross selling opportunities.

Frontier Developments (FDEV.L) 1,156p £426.1m

Frontier Developments, a developer and publisher of videogames, provided an update on trading for the 12 months ended 31 May 2019.

Frontier expects to report record annual revenue of approximately £89m for FY19, which is more than 2.5x the previous financial year (FY18: £34.2m). This substantial growth in revenue reflects the success of Jurassic World Evolution, Frontier’s third self-published title, which launched in June 2018, combined with the ongoing performance of Frontier’s first two self-published titles, Elite Dangerous (2014) and Planet Coaster (2016), which each benefitted from Frontier’s strategy of supporting and nurturing existing titles. Frontier expects to report an operating profit margin of approximately 21% for FY19 (FY18: 8%) when full financial results are announced in early Sept 2019.

Marlowe (MRL.L) 429p £191.27m

Marlowe, the specialist services group focused on developing companies which assure safety and regulatory compliance, announced its audited results for the year ended 31 March 2019.

Group revenue up 59% to £128.5m. Current 12 month run-rate revenues of approximately £175m

Adjusted EBITDA up 53% to £11m

Adjusted PBT up 53% to £8.9m

Adjusted EPS up 34% to 18.8p

Adjusted EBITDA for Risk Management & Compliance and Water Treatment & Air Quality up 37% and 75% respectively

Underlying cash conversion 83%

Pro forma net debt now <1x EBITDA following oversubscribed placing to raise £20m as announced on 22 May 2019

Castleton Technology (CTP.L) 107p £87.72m

Castleton Technology, a leading supplier of complementary software and managed services to the public and not-for-profit sectors, announced a new four-year managed service contract with existing customer, Grand Union Housing Group (“GUHG”), valued at £1m.

Alongside our document management solution, Castleton will provide a number of multi-cloud hosting and unified communications services to strengthen operations within the organisation, to ensure GUHG remains on track to deliver their customer 2020 vision.

Work is now underway with completion expected in late summer 2019.  

Elegant Hotels Group (EHG.L) 71.5p £63.06m

The Board of Elegant Hotels Group, the owner and operator of seven upscale freehold hotels and a beachfront restaurant on the island of Barbados, can confirm that it has successfully refinanced all of its loans and facilities following the commitment from lenders announced in May 2019.

Prior to the refinancing, the Group’s loans and facilities were due to expire in May 2020.  These consisted of $59.4m of term loans, $5m of revolving credit facility, and a Bbds$20m ($10m) overdraft facility.

As a result of the refinancing, the loans and facilities have been extended to 2024 at similar commercial terms to those currently in place:  the Group now has $64.4m of term loans consisting of $59.4m and Bbds$10m ($5m), and  it also retains its Bbds$20m ($10m) overdraft facility. The remaining repayment period of the term loans has been extended from 10 years to 15 years.

First Derivatives (FDP.L) 3,465p £896m

FD announced it has completed the acquisition of the minority shareholdings in Kx Systems, in line with the terms announced on 2 July 2018. Completion of the transaction takes the Group’s ownership of Kx Systems to 100% for consideration of $53.8m in cash, which has been paid from FD’s available facilities.

“Since we acquired a controlling stake in Kx Systems in October 2014 we have invested heavily to deliver the performance advantages of our combined solutions, branded as Kx technology, to a range of end-markets. We are making exciting progress as we demonstrate our ability to transform our customers’ operational performance by unlocking the value in their data. Full ownership of Kx Systems is an important milestone as we continue to commercialise our technology.”

Thalassa (THAL.L) 81p £13.97m

The board of Thalassa notes the announcement made by The Local Shopping REIT plc (“LSR”) this morning regarding an irrevocable undertaking pursuant to which, amongst other things, Thalassa has agreed to support proposals to return capital to LSR shareholders by way of a capital reduction and share buy-back tender offer to be effected at a price per LSR share equal to the net asset value per LSR share (to be set out in LSR’s unaudited consolidated interim results for the six months ended 31 March 2019 to be published on or around 20 June 2019), subject to a cap of 31.5p per share.

LSR expects to publish a circular to LSR shareholders, which will contain, amongst other things, further details in respect of the proposals, a notice of general meeting as well as the formal terms and conditions applicable to the Proposals following their interim results.

Scancell (SCLP.L) 6.25p £25.98m

Scancell, the developer of novel immunotherapies for the treatment of cancer, announces that, further to the Company’s announcement on 13 June 2019, Martin Diggle, Co-Founder and Portfolio Manager of Vulpes Investment Management, has been appointed to the Company’s Board of Directors as a NED with immediate effect.

Mr Diggle has over 30 years’ experience in investment banking and fund management and has been an investor in life sciences and biotechnology companies for nearly 20 years. He is also an expert in Emerging Markets and Russia, where he was previously a partner and director of UBS Brunswick. He holds a Master’s Degree in Philosophy, Politics and Economics from University of Oxford.

Yellow Cake (YCA.L) 208p £178.2m

Yellow Cake, a specialist company operating in the uranium sector, announced its maiden financial report for the period ended 31 March 2019.

Value of underlying U3O8 has increased by 22% to $217.4m as at the end of March 2019 relative to acquisition cost of $178.2m

Purchase of 8,441,385 lb U3O8 from National Atomic Company Kazatomprom JSC during the period at an average cost of $21.1/lb against a spot price as at the end of March 2019 of $25.75/lb

Steady improvement in the market for U3O8, with the spot price increasing 13% from $22.85/lb at IPO to $25.75/lb at the end of March 2019

Successful $200m (£151m) capital raise in an oversubscribed IPO on the AIM market of the London Stock Exchange in July 2018

Profit after tax of $29.7m for the period ended 31 March 2019

NAV of $2.93 (£2.25) per share as at 31 March 2019

Since the end of March 2019, the Company has raised an additional £25.9m (approximately $33.9m) through a placing of shares and acquired an additional 1.175 million lb uranium

NAV as at 31 May 2019 of $2.7 (£2.14) per share, or $238.2m, consisting of 9,616,385 lbs of U3O8 valued at a spot price of $24.10/lb, a derivative liability of $2.8m and other net assets of $9.2m

Chaarat Gold (CGH.L) 29.7p £240m

Chaarat, the gold mining company with assets in the Kyrgyz Republic and Armenia, announced the first tranche of results from its 2019 exploration and drilling programme at its Tulkubash oxide gold deposit in the Kyrgyz Republic.

Over 3,800 metres of drilling completed; minimum of 20,000 metres scheduled to be completed in 2019.

Assays received from 16 drill holes. Significant intercepts are tabulated below.

2019 drilling to date has identified new shallow mineralisation within and adjacent to current pit outlines.

Roadcut and outcrop mapping and sampling confirm extensions of gold mineralisation northeast along strike confirming that Tulkubash hosts a significant gold system.

Based on the increasing evidence that Tulkubash is an emerging gold district, district-scale exploration is being accelerated.

2019 Objectives

Exceed 2 million ounces of gold in Measured and Indicated JORC Resource categories (currently 1.6 million ounces), thereby increasing reserve and extending mine life

Improve project economics within currently defined pits by adding ore within existing pit shells, reducing the strip ratio, and optimizing metallurgical recovery model

Increase understanding of district prospectivity

Head Chef:

Derren Nathan
0203 764 2344
derren.nathan@hybridan.com

*A corporate client of Hybridan LLP

Disclaimer

This document, which does not constitute research, has been issued by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to any such action. This document has no regard for the specific investment objectives, financial situation or needs of any specific person or entity and is not a personal recommendation to any such person or entity. Recipients should reach an individual investment decision, based upon their respective financial objectives and financial resources and, if any doubt, should seek advice from an investment advisor.

The information contained in this document is based on materials and sources that are believed to be reliable; however, such information has not been independently verified and therefore it is not possible to confirm such information as being accurate. This document is not intended to be a complete statement or summary of any securities, markets, reports or developments referred to herein. No representation or warranty, either express or implied, is made or accepted by Hybridan LLP, its members, officers, employees, agents or associated undertakings in relation to the accuracy, completeness or reliability of the information contained in this document, nor should it be relied upon as such.

The content of this document includes market commentary and other information which we have prepared in relation to the company referred to in this document, which is our broking client. The provision of this document to you constitutes a minor non-monetary benefit which is capable of enhancing the quality of service provided by Hybridan LLP and which is of a scale and nature which could not be judged to impair the duty of Hybridan LLP to act in the best interest of its client falling within article 24(7)(b) of Regulation 600/2014/EU (MIFID II Regulation).

Any and all opinions expressed are current as of the date appearing on this face of this document only. Any and all opinions expressed are subject to change without notice and Hybridan LLP is under no obligation to update the information contained herein. To the fullest extent permitted by law, none of Hybridan LLP, its members, officers, employees, agents or associated undertakings shall have any liability whatsoever for any direct or indirect or consequential loss or damage (including lost profits) arising in any way from use of all or any part of the information in this document.

This document should not be relied upon as being an independent or impartial view of the subject matter and, for the avoidance of doubt, constitutes non-independent research (as such term is defined in the Financial Conduct Authority’s Conduct of Business Sourcebook to reflect the requirements of the MIFID II Regulation and Directive 2014/65/EU (known as MIFID II)). The individuals who prepared this document may be interested in shares in the company concerned and/or other companies within its sector, may be involved in providing other financial services to the company or companies referenced in this document or to other companies who might be said to be competitors of the company or companies referenced in this document. As a result both Hybridan LLP and the individual members, officers and/or employees who prepared this document may have responsibilities that conflict with the interests of the persons who receive this document. Hybridan LLP and/or connected persons may, from time to time, have positions in, make a market in and/or effect transactions in any investment or related investment mentioned herein and may provide financial services to the issuers of such investments.

In the United Kingdom, this document is directed at and is for distribution only to persons who (i) fall within article 19(5) (persons who have professional experience in matters relating to investments) or article 49(2) (a) to (d) (high net worth companies, unincorporated associations, etc.) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (SI 2005/1529) (as amended) or (ii) persons who are each a professional client or eligible counterparty (as those terms are defined in the Financial Conduct Authority’s Conduct of Business Sourcebook) of Hybridan LLP (all such persons referred to in (i) and (ii) together being referred to as relevant persons). This document must not be acted on or relied up on by persons who are not relevant persons. For the purposes of clarity, this document is not intended for and should not be relied upon by any person who would be classified as a retail client under the Financial Conduct Authority’s Conduct of Business Sourcebook.

Neither this document, nor any copy of part thereof may be distributed in any other jurisdictions where its distribution may be restricted by law and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions. Distribution of this report in any such other jurisdictions may constitute a violation of territorial and/or extra-territorial securities laws, whether in the United Kingdom, the United States or any other jurisdiction in any part of the world.

Where possible this document is made available to all relevant recipients at the same time. Dissemination of research by Hybridan LLP is monitored to ensure that it is only provided to relevant persons. Research prepared by Hybridan LLP is not intended to be received and/or used by any person who is a retail client.

Hybridan LLP and/or its associated undertakings may from time-to-time provide investment advice or other services to, or solicit such business from, any of the companies referred to in this document. Accordingly, information may be available to Hybridan LLP that is not reflected in this material and Hybridan LLP may have acted upon or used the information prior to or immediately following its publication. In addition, Hybridan LLP, the members, officers and/or employees thereof and/or any connected persons may have an interest in the securities, warrants, futures, options, derivatives or other financial instrument of any of the companies referred to in this document and may from time-to-time add or dispose of such interests.

This document may not be copied, redistributed, resent, forwarded, disclosed or duplicated in any form or by any means, whether in whole or in part other than with the prior written consent of Hybridan LLP.

MIFID II status of Hybridan LLP research
The cost of production of our corporate research is met by retainers from our corporate broking clients. In addition, from time to time we issue further communications as market commentary (such as our daily newsletter, Small Cap Breakfast), which we consider to constitute a minor non-monetary benefit which is capable of enhancing the quality of service provided by Hybridan LLP and which is of a scale and nature which could not be judged to impair the duty of Hybridan LLP to act in the best interest of its client falling within article 24(7)(b) of the MIFID II Regulation.

Hybridan LLP is a limited liability partnership registered in England and Wales, registered number OC325178, and is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange. Any reference to a partner in relation to Hybridan LLP is to a member of Hybridan LLP or an employee with equivalent standing and qualifications. A list of the members of Hybridan LLP is available for inspection at the registered office, 2 Jardine House, The Harrovian Business Village, Bessborough Road, Harrow, Middlesex HA1 3EX.

If you would like to unsubscribe, please email enquiries@hybridan.com with “unsubscribe me”.