Small Cap Feast

Small Cap Feast – 03 March 2017

Dish of the Day:

No AIM Joiners Today

Off the Menu:

No AIM Leavers Today

What’s Cooking in the IPO Kitchen?

Kuwait Energy –Report in Bloomberg that the oil & gas exploration business is considering a London IPO with a valuation of up to $1bn.

BiopPharmma Credit—Targeting $300m + raise on LSE. “This investment trust will give investors access to debt investments tied to the fast growing life sciences industry, offering predictable cash flows over a sustained period of time.” Admission due 27 Mar.

Tufton Oceanic Assets- The Company intends to invest in a diversified portfolio of second hand commercial sea-going vessels where the Investment Manager believes that an attractive opportunity exists in shipping. $150m raise. Admission 3 April.

Anglo African Oil & Gas— Schedule 1 update.  Acquiring stake in producing near offshore field in the Republic of the Congo. Raising £10m. Admission due 6 March.


Breakfast Buffet

Venn Life Sciences* (VENN.L) 17.25p £10.39m

Year end update from the growing Contract Research Organisation (CRO) providing drug development, clinical trial management and resourcing solutions to pharmaceutical, biotechnology and medical device organisations.

2016 represented another year of strong growth for Venn with sales in excess of 18m (2015 11m). The business finished 2016 with a strong cash position of 3m (1.75m 30 June 2016). The strong momentum enjoyed by the business in 2016 has continued into 2017 to date, with new business contracts signed to the value 5.7m in the first two months of the year.


MediaZest* (MDZ.L) 0.12p £1.43m

New business update from  the creative digital audio visual company. Since the start of 2017, the Group has already confirmed business wins in the retail sector alone that relate to projects that will generate approximately £500k of new revenue. These projects include the ongoing roll out of business from existing clients and a substantial new project for a UK high street bank. All are due for completion by 30 June 2017. Includes large proportion of UK work but also installations as far afield as the US and Australia. In addition, the Group continues to grow its recurring revenue base, which has underpinned recent improved results. At present, run rate recurring revenues total approximately £400,000 per annum and management expect these to grow by at least 15% during the next quarter.


Legendary Investments (LEG.L) 0.18p £5.05m

Investee company VS (Virtualstock Holdings), has been appointed by the John Lewis Partnership, which includes 48 John Lewis shops across the UK, and 349 Waitrose shops, to implement its Supply Chain Management System, The Edge. As at 31 March Legendary’s 7% stake in VS was valued at £4m in the books.

‘Early last year, Virtualstock had three household retailers, Tesco, Sainsbury’s Argos and MapIin as clients. It now has more than double that number, including the John Lewis Partnership. Virtualstock is now established as a leading supply chain solution in retail, and it is in discussion with several additional retail clients. ‘ Last reported NAV £4.8m.


AFH Financial (AFH.L) 185p £44.75m

AGM statement from the financial planning led wealth management firm. The Company’s core business continues to perform in line expectations and that recurring revenue continues to remain strong as a result of the inflow of new funds during the period. As in 2016, gross margins remain above the 55% level. During the first four months of the current financial year the AFH announced 5 acquisitions, paying £2m in initial cash consideration. Whilst these acquisitions are not expected to make a material contribution to H1 the benefits arising from these businesses are expected to benefit earnings in the current year’ Strong pipeline of further acquisitions and £4.1m cash as at 1 March. FY Oct17E revenue of £28m and £4.46m PBT.


Intercede Group (IGP.L) 52p £25.8m

Trading update from the software and service company specialising in identity, credential management and secure mobility. Following the  January  announcement of the receipt of a record $3m order, the order book indicates that, unless further orders are received that can be recognised as revenue in this period,  revenue  for the FYMar2017 will be approximately £8.0m. A further £2.0m of new orders remain in the current period pipeline which includes US government and defence contractor customers. Timing risks mean FYMar17 losses may be higher than expectations. US defence spending proposals have caused short term uncertainty but positive for long term revenue potential. FYMar17E £10m rev and £2.67m pre-tax loss.


Gear4Music Holdings (G4M.L) 675p £136m

FY Feb 2017 trading update from the largest UK based online retailer of musical instruments and music equipment. 58% increase in total like-for-like sales following continued strong growth in the UK and Europe. 186% Scandinavian sales growth between November 2016 – when the Swedish Distribution Centre opened – and February 2017. German Distribution Centre now operational. Active customer numbers increased by 49% over the year to 339,800. Total revenue £56.1m. “Whilst continuing to invest in the future growth of the business, we have closely managed our costs and the Board is now confident of delivering profits for the year marginally ahead of our increased expectations signalled in January.” FYFeb17E rev of £56m and EPS of 2.39p.


Trakm8 Holdings (TRAK.L) 78.5p £25.48m

The telematics and data insight provider, announced that it proposes to raise approximately £1.66 million at 65p, a 17% discount to yesterday’s close. Includes c. £811,000 participation by eight Directors and senior managers of the Company demonstrating significant Company support. The net proceeds of the Capital Raising will both reduce the balance of the Group’s revolving cash facility  with its bank and strengthen its working capital position to support future growth.


Kodal Minerals (KOD.L) 0.22p £11.35m

The mineral exploration and development company focussed on West Africa, is has  updated on the recently completed trenching and the upcoming drilling campaign at the Bougouni Lithium Project in Southern Mali. New wide zones (>30m) of pegmatite veins with abundant spodumene mineralisation (the main lithium bearing mineral in most hard rock lithium deposits) defined by recently completed trenching programme. Reverse Circulation drilling to commence in early March 2017, initially targeting the Ngoualana prospect where previous drilling confirmed wide, high-grade mineralisation of up to 28m at 1.84% Li2O. Further follow up drilling planned. Seeking a maiden resource in 2017.


Applied Graphene Materials (AGM.L) 150p £33.2m

Period end (31 Jan 17) operational update from the provider of bespoke graphene dispersions and formats to deliver enhancements and benefits for a wide range of applications. Composites: Development of graphene enhanced pre-impregnated composites with SHD Composites. Collaboration with Century Fishing Rods leading to 1st production orders. Development of enhanced aerospace structures. Product development with Airbus Defence and Space. Coatings:·      JDA with James Briggs Ltd. ISO testing results proving outstanding corrosion barrier properties. Oils and Lubricants: PURAGLOBE commenced test-marketing AGM graphene enhanced sustainable base oil technology .


Velocys (VLS.L) 60.87p £87.66m

The company at the forefront of smaller scale gas-to-liquids, has signed a definitive agreement covering its strategic alliance with Morimatsu (Jiangsu) Heavy Industry Co., Ltd., a subsidiary of Morimatsu Industry Co., Ltd. (Morimatsu). This agreement confirms the previously announced Memorandum of Understanding between Velocys and Morimatsu; Morimatsu will be Velocys’ preferred supplier of modular design, engineering and fabrication services supporting the Velocys offer of delivering fully integrated, fully financed, cost effective and operations-ready plants to its customers.


Head Chef:

Derren Nathan
0203 764 2344

*A corporate client of Hybridan LLP


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