Small Cap Feast

Small Cap Feast – 09 July 2020

Dish of the Day:

Elixirr International  (ELIX.L), a consultancy helping clients in areas such as technological disruption have arrived ono AIM.  The placing will raise £20m of new money for the company and a further £5m for founder shares.

For FY 2019, the company reported EBITDA of £7.4m.  Expected market cap circa £98m with first day of dealings anticipated for 9th July @ 217p per share.

 

Off the Menu:

No Leavers Today.

 

What’s Cooking in the IPO Kitchen?

AEX Gold (TSXV:AEV) is intending to admit its shares to AIM alongside a £45m placing. The Company, led by CEO Eldur Ólafsson, has established the largest land package of gold assets in Greenland with a current portfolio of licences covering 3,356 square kilometres, in the two known gold belts in Southern Greenland, the Nanortalik and Tartoq gold belts. Nalunaq is a high-grade gold asset with an updated Inferred Mineral Resource covering 422,770 tonnes at 18.5 grams per tonne of gold, or 250,970 ounces of gold, which covers the area in and around the historical mine.  Due July.  Current mkt cap C$66.7m.

 

Breakfast Buffet

EQTEC 0.52p £22.05m (EQT.L)

The Company intends to conduct a Placing and PrimaryBid Offer to raise approximately £10 million (before expenses) via the issue of the Placing Shares at the Issue Price and subscription for the PrimaryBid Shares at the Issue Price., 0.45p. The Issue Price represents a discount of approximately 33 per cent. to the closing mid-market price of the Company’s Ordinary Shares on AIM on 8 July 2020, being the latest practicable date before this Announcement.

Use of proceeds. 1.  specific project development capital to be deployed to accelerate the timing of identified projects, using RDF in the UK and Ireland and Biomass in Europe, to financial close and invoicing by EQTEC; 2.  the settlement of outstanding principal, interest and fees due to the Riverfort Lenders, up to an amount of approximately £311,000 (further details set out below); 3.  further IP development, contract suite improvement, IoT software development and additional human resource; and 4. the Group’s general working capital requirements.

 

Oracle Power 0.775p £15.34m (ORCP.L)

Oracle has entered into a financing facility comprising a share subscription deed for new ordinary shares  raising £1,500,000 before costs and a linked placing subscription facility for a commitment amount of up to £45,000,000 (together the subject to various conditions, together with the issue of certain warrants over Ordinary Shares.   The Directors believe that the availability of the facility should put Oracle in strong negotiating positions with potential additional opportunities to develop power and natural resource projects

The Subscription Amount shall not (unless the Investors agree otherwise) exceed any of the following : 

  1. 1,000% of the average daily traded volume on AIM of the 15 trading day period preceding the request for the Subscription
  2. Such amount that results in the Investors holding, in aggregate, more than 19.9% of the issued share capital of the Company

iii.  Such amount that would exceed regulatory restrictions required by the articles of association of the Company or by resolution at a general meeting of the Company

 

Allergy Therapeutics 14.75p £94m (AGY.L)

The fully integrated commercial biotechnology company specialising in allergy vaccines, announced the outcome of scientific advice from the German Regulatory Authority, the Paul Ehrlich Institute (PEI), regarding invalidation of the primary endpoint data of the Birch MATA MPL pivotal Phase III clinical trial (B301).

 Further to the announcement on 18 March 2019 and following extensive data investigations and discussions with PEI, the analysis of the primary endpoint of the Birch B301 clinical trial has been declared invalid. Technical issues encountered in the study made it impossible to reconstruct the primary endpoint data and the PEI agreed that B301 cannot be considered for assessment of clinical efficacy and a new pivotal Phase III study will be conducted within the therapy allergens ordinance (“Therapieallergene-Verordnung”,TAV) time frame. 

The Group’s confidence in its short course immunotherapies remains unchanged and lessons learned from the Birch B301 field study have already been introduced for future studies including the Grass MATA MPL programme to be conducted simultaneously in the US and Europe.

 

Premier Miton 103.5p £163.4m (PMI.L)

Q3 AuM update. Closing AuM of £10.3 billion at 30 June 2020 (31 March 2020: £9.1 billion).  Alan Rowsell appointed as manager of a planned new global smaller companies fund. · Alan joins in October 2020 from Aberdeen Standard Investments where he has been manager of the £1.2 billion ASI Global Smaller Companies Fund since 2012.  Lloyd Harris appointed as Head of Fixed Income and lead manager of the Premier Corporate Bond Monthly Income Fund. Lloyd joins in August 2020 from Merian Global Investors where he has worked since January 2012.

 

Telit Comms 128.4p £170.4m (TCM.L)

The global enabler of the Internet of Things (IoT), has published a trading update for the first six months to 30 June 2020.

The Group expects to report adjusted EBITDA and   profit in cash for the first half ahead of the comparative period (H1 2019: adjusted EBITDA: $16.0 million; Profit in cash $2.6 million) despite as, previously indicated, some slowing in customer demand reflecting the impact of COVID-19. Revenues are expected to be approximately $166.5 million (H1 2019: $180.3 million, excluding revenue from the divested automotive business). Encouragingly, and demonstrating the positive impact of the strategic refocusing efforts carried out in 2019, IoT Connectivity and Platform Services revenues grew by 11.8 per cent despite market conditions to $20.9 million (H1 2019: $18.7 million).

As at 30 June 2020, the Group’s net cash position was $55.7 million (31 December 2019: $48.2 million) with an improved collection of the receivable due from Titan.  Although it is now likely that revenues for the full year will be below those of the previous financial year (2019: $382.8 million, excluding automotive revenues), the Group still expects to meet board expectations for both Adjusted EBITDA and Profit in cash.

 

Great Western Mining 0.0975p £1.6m (GWMO.L)

Progress report on its recently acquired option over the Olympic Gold Project in Nevada, which was announced on 22 May 2020, where targeted surface sample assays taken by locally based exploration personnel have now been successfully analysed with positive results.

Highlights

  • Confirmation of alteration styles and vein textures indicating epithermal precious metal systems.
  • Surface sampling assays up to 21.50 ppm Au and 37.30 ppm Ag in surface dumps and stope material, confirming precious metal enrichment potential.

 

Tracsis 615p £179m (TRCS.L)

Update on current trading, and the impact of Covid-19 on the Group.

Overall trading since the commencement of the Covid-19 crisis has been better than originally expected but naturally has had an adverse impact on the business. The Group estimates that the impact on current year revenue will be in the region of £10m, with our Traffic Data and Events business units most affected by project cancellations and postponements. The Group therefore expects to report full year revenues of circa £46m.

 

CPL Resources 655p £179.8m (CPS.L)

Ireland’s leading talent and workforce solutions group, announces a trading update for the six months to 30 June 2020. Cpl announced half year results on 23 January 2020 for the six months to 31 December 2019 and at that time, the Group reported strong growth in profits and earnings per share. This momentum continued into the second half of the financial year until March 2020, at which time the Group started to experience the adverse impact of the Covid-19 pandemic.

Since March 2020 trading in the Group’s Flexible Talent business, which represents over 70% of the Group’s Net Fee Income, was resilient and has continued to perform well with solid demand across the pharmaceutical, life science and technology sectors. The Group’s Permanent placement business was negatively impacted as hiring activity was reduced across many sectors. 

Given the Group’s strong performance in the first nine months of the financial year, together with cost initiatives adopted in response to Covid-19, adjusted profit before tax for the full year to 30 June 2020 is expected to be broadly in-line with market expectations. Cpl has a strong balance sheet, which continues to support the working capital requirement of our Flexible Talent business.

 

Central Asia Metals 151.4p £266.5m (CAML.L)

H1 2020 operational highlights –  No lost time injuries (‘LTIs’) at either operation –  Production and sales volumes unaffected by COVID-19 pandemic –  Kounrad copper production, 6,607 tonnes –  Sasa zinc in concentrate production, 12,203 tonnes –  Sasa lead in concentrate production, 15,140 tonnes.

Group cash and debt position –  Cash in the bank on 30 June 2020, $44.0 million-  Gross debt (inclusive of overdraft) on 30 June 2020, $99.0 million – H1 2020 Traxys corporate debt facility repayments of $19.2 million.

Outlook-  Production currently on track to meet full year 2020 guidance for copper, zinc and lead

o  Copper, 12,500 – 13,500 tonnes o  Zinc, 23,000 – 25,000 tonnes o  Lead, 30,000 – 32,000 tonnes

–  Post-period end, reduced workforce at Kounrad to further increase social distancing measures with no impact on output levels

 

Mercia Asset Management 19.5p £85.8m (MERC.L)

Profitable sale of The Native Antigen Company Limited to LGC, a global leader in the life sciences tools sector, for a total cash consideration of up to £18.0 million.

Mercia held a 29.4% fully diluted direct holding in NAC at the date of sale and will receive initial cash proceeds of £4.8million, with up to a further £0.4million receivable upon finalisation of customary closing working capital calculations.

The sale is anticipated to generate an 8.4x return on its original direct investment cost and a 65% internal rate of return .

 

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”.