Small Cap Feast

Small Cap Feast – 23 January 2020

Set Menu AIM:

Total number of AIM Companies (Incl Susp):

Total number of AIM Companies trading: *
* As at

Set Menu NEX Growth:

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

Total number of NEX Growth Market Companies trading: *
* As at

Set Menu Standard List:

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

Total number of Standard List Companies trading: *
* As at

Dish of the Day:

No Joiners Today

 

Off the Menu:

No Leavers Today

 

Dish of the Day:

Off the Menu:

What’s Cooking in the IPO Kitchen?

AIM

Intention to float by Gemfields Group. No Capital Raise. Currently listed on JSE. (GML:JNB) at circa £122m.  The Group’s key producing assets, the Kagem emerald mine in Zambia  (believed to be the world’s single largest producing emerald mine) and the Montepuez ruby mine in Mozambique (one of the most significant recently discovered ruby deposits in the world), are both expected to have long mine-lives with potential for expansion. Also owns the  Faberge brand. Due Valentines Day 2020.

Main Market (Standard List)

The Proof Of Trust has announced its intention to list on the Standard Market.  The Blockchain based business, owns patents to a protocol which facilitates dispute resolution based upon smart contract disputes.  Transaction details TBC.

Main Market (Premium)

Calisen Group. Potential Intention to Float. Owner and manager of essential energy infrastructure assets through its subsidiaries Calvin Capital and Lowri Beck . Consolidated FY Dec 18 revenue £162.1m and operating profit £25.4m. Raising up to £300m in primary plus partial vendor sale.  Expected Admission February 2020

The Global Sustainable Farmland Income Trust will invest in a diversified portfolio of operational farmland assets located in major agricultural markets including the United States, Europe, New Zealand, Australia and certain countries within Latin and South America. Raising up to $300m.   Due 28 February.

Main Market (Specialist Funds)

Investment firm Nippon Active Value fund is seeking to raise up to £200m at an issue price of 100p per share via an IPO.   The company aims to invest in a portfolio of quoted Japanese stocks with market capitalisations of up to $1bn.   First day of dealings expected early February.

 

Breakfast Buffet

Gear4music (G4M.L) 272.5p £57.1m

The largest UK based online retailer of musical instruments and music equipment, today announced a trading update for the two months to 31 December 2019.

Total sales +7%,

  • Gross margin improved by 260bps to 26.5% (FY19: 23.9%)

 

  • Gross profit increased by £1.2m (18%) from £6.8m to £8.0m

 

  • Logistics and IT infrastructure performed well during peak trading

 

  • FY20 profits expected to be at least in line with Board expectations

The upgraded infrastructure demonstrated its resilience and capacity over the Black Friday to Cyber Monday weekend, and G4M comfortably dispatched over 26,000 consignments, which was 34% more than last year’s Black Friday weekend.

 

Avacta Group (AVCT.L) 18.25p £32.1m

 The developer of Affimer® biotherapeutics and reagents  updated for the 17 month to Dec 2019. Revenues for the period, which include the initial milestone payment from LG Chem, have grown 100% to £5.5m from £2.76m (12 months ended 31 July 2018) and are ahead of market expectations. Importantly revenues from the Affimer® diagnostics business have grown by 130% as more customer evaluations of the Affimer® platform are underway. The Group’s order intake and sales pipeline into 2020 are the strongest to date.

The Group’s revenues this year will benefit from the expanded LG Chem partnership, the new collaboration established with ADC Therapeutics and the recently announced joint venture with Daewoong Pharmaceuticals; each of which will fully fund Avacta’s related R&D activities.

The cash position at 31 December 2019 was £8.7m (31 July 2018: £5.2m), also ahead of market forecasts, following completion of the placing in November 2019.

NCC Group (NCC.L) 213.5p £593m

The independent global cyber security and risk mitigation expert, reports its HY Nov 19 results.

Group revenue increasing by 5.3% to £132.7m. :        Assurance increased by 6.7%

  • Encouraging growth in North America and UK Assurance at 10.6% and 6.9% (H1 2019: 20.4% and 1.1%) respectively
  • Following slower first quarter, Q2 Assurance momentum and robust order book provides confidence of continued double-digit Assurance growth and margin improvement in H2 2020, after recently investing in sales and delivery capacity.      Escrow declined by 2.6%
  • Decline due to lower contract revenues and phasing of verification testing.  Adjusted operating profit on a like-for-like basis 3 increased 11.5% to £16.5m with margin improving by 0.7% pts to 12.4%. Full year trading to be in line with expectations .   28.6% increase in sales orders to £149.2m compared to H1 2019.

 

ITM Power (ITM.L) 94.8p £448m

The energy storage and clean fuel company announced the incorporation of ITM Linde Electrolysis GmbH (“ITM Linde”), a joint venture company between ITM Power and Linde as announced in October.

 

ITM Linde will focus on providing global green gas solutions using ITM Power’s modular PEM electrolysis technology and Linde’s world class EPC expertise to deliver turnkey solutions to customers.

ITM Power is also pleased to announce that Andreas Rupieper, Head of Group R&D and Portfolio Management at Linde will be appointed as Managing Director of ITM Linde. Before Joining Linde as Vice President – Head of Business Unit Petrochemistry, Andreas worked as a senior consultant for Management Engineers, now part of PWC Strategy and before that for 13 years at Thyssenkrupp, most recently as Project Director, EPC.

 

EMIS Group (EMIS.L) 1185p £750m

FY Dec 19 update from the specialist in  in connected healthcare software and systems. Trading for the year was in line with the Board’s expectations, with growth in both revenue and adjusted operating profit maintained at similar levels to the half year. 

In EMIS Health, the Group’s leading NHS market shares were maintained, and the GP IT Futures English GP Framework renewal process was successfully concluded, as previously announced on 21 October 2019.

EMIS Enterprise continued to make good progress, including in the Patient business, with the controlled roll-out of new functionality within its Patient Access app completing the first phase of the connected healthcare marketplace.

As previously indicated, the Group continues to invest in the development of its next generation EMIS-X software platform.

Net cash nearly doubled to £31.1m.

 

Gfinity (GFIN.L) 2.15p £10.3m

Trading through the first half of the financial year has continued broadly in line with management’s expectations. Gfinity expects to report H1 revenue of circa £3.5 million, which is lower than the same period last year (H1 2019: £4.4m) primarily due to the transition away from low margin Elite Series revenues. Significant growth in higher margin revenue streams during H1 are expected to deliver a circa 300% increase in gross profit to £2.1 million (H1 2019: £0.5 million) whilst continued cost discipline is expected to further reduce adjusted operating loss  for the period to £2.4 million (H1 2019: £4.4 million).

The Board now expects revenue for the year to 30 June 2020 to be broadly in line with the 2019 financial year, but with significantly improved margins compared with current market expectation. The Group is also in active discussions with several potential strategic investors in the US and Europe that would create new opportunities and the further scale required to exploit the rich opportunities in the esports sector.

 

Immotion Group (IMMO.L) 7.9p £22.6m

Following a range of successful developments, including significant new Partner contracts, and ongoing demand for larger installations , the Company is carrying out an equity fundraising to strengthen its balance sheet.

The Placing is intended to raise approximately £2.85 million, before expenses, at  a price of 7.25 pence per share. It is intended that the net proceeds of the Fundraising will be used to accelerate the Company’s growth plans.

Revenue share Partnership signed with MGM Resorts International for installation of a 36-seat VR theatre and interactive exhibit (“the Exhibit”) at the Mandalay Bay Resort & Casino’s Shark Reef Aquarium, in Las Vegas. The standard entry package offered for Shark Reef includes the Aquarium and Exhibit, with the value attributed to the Exhibit being a minimum of $5. The agreement provides that Immotion will receive 50 per cent. of all revenue attributed to the Exhibit and, not less than $2.50 per ticket sold on this basis. This package has historically received in excess of 500,000 paying visitors per annum.

 

Location Sciences (LSAI.L) 1.5p £5.6m

New report into the State of Privacy and Location Marketing.

An analysis of over two billion background location events found that, in the five weeks following the launch of iOS 13 at the end of September 2019, more than two thirds (68%) of iOS 13 users opted out of sharing their background (always-on) location data. This impacts several key elements of the marketing toolkit, including audience quality, attribution and footfall confidence, multi-touch attribution, and dynamic creative optimisation. Location Sciences also observed a 24% drop in foreground location data sharing, “Operating system privacy updates are fantastic for consumers, but they have a significant impact on the quality and availability of location data used within marketing,” said Jason Smith, Chief Business Officer, U.S., Location Sciences. “We’re seeing a noticeable decrease of already scarce high-quality GPS data as well as an increase in the use of poor-quality IP data. This is driving a significant shift in media delivery across planning, measurement, audience development,  and attribution.”

 

ECSC (ECSC.L) 120p £10.9m

The provider of cyber security services, updated FY19 with the Company’s results being in line with market expectations.

Revenue growth of 10% to circa £5.9m. Managed services recurring revenue growth in excess of 25%

Cash generative in the second half, with an adjusted EBITDA profit in H2 of circa £0.2m

Year-end cash balance of £0.35m, with an unutilised bank facility of £0.5m, and debtors of £1m

2019 new client acquisitions up 24% to 118, with 17% generated from the partner programme.

 

Gresham House Strategic (GHS.L) 1355p £47.7m

 Alongside the Q4 2019 factsheet  Richard Staveley, Investment Manager, commented: “The election result has given much improved clarity on the outlook for UK taxation and investment conditions. The immediate positive stock market response will likely be followed by improving company fundamentals linked to the release of pent-up corporate decision-making and investment. UK equities, particularly smaller companies, remain extremely cheap. The opportunity set has rarely been greater.”

 

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”.