Small Cap Feast

Small Cap Feast – 16 July 2020

Dish of the Day:

No Joiners Today

 

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

Symphony Environmental Technologies* 12.75p £21.7m (SYM.L)

Trading (HY Jun 20) and market update

Financials

  • Group revenue increased by 17% to £4.8 million (H1-19: £4.1 million) · Net cash and cash equivalents of £0.3 million to which £1.0 million can be added with respect to letters of credit and invoice financing (31 December 2019: net cash and cash equivalents £0.9 million plus invoice financing £0.6 million) · Unaudited draft management information indicates Group returned to profitability generating positive EBITDA in H1-20

d2p “Designed to Protect” Technologies & Finished Products

  • FDA approved Symphony’s antibacterial d2p bread packaging – customer trials progressing well · Personal Protective Equipment (“PPE”) orders exceeding £950,000 for delivery in the second half of the year

d2w Oxo-biodegradable Technology

  • Positive legislation indicators in some markets for d2w type biodegradable plastics · Single use plastic bans outside the EU being suspended · Saudi Arabia adds further oxo-biodegradable products to its enforcement programme

 

LoopUp Group 181.5p £100.5m (LOOP.L)

The premium remote meetings company, updated for the six months ended 30 June 2020.

  • H1 2020 revenue increased by 43% to £31.9 million (H1 2019: £22.3 million), driven by the large-scale migration towards working from home associated with Covid-19.
  • H1 2020 gross profit increased by 52% to £22.8 million (H1 2019: £15.0 million). Gross margins also increased by approximately 400 BPS to 71% (H1 2019: 67%), driven by particularly strong growth in our higher margin LoopUp Meetings and Event by LoopUp lines of business.
  • H1 2020 EBITDA increased by 249% to £12.2 million.

“Although it is difficult to predict near term developments in working practices and business climate, and also noting that seasonal usage is naturally H1-weighted, we expect to exceed market expectations for the current financial year to 31 December 2020 in terms of revenue, EBITDA and cash generation.”

 

Sumo Group 183.5p £278.5m (SUMO.L)

The award-winning provider of creative and development services to the video games and entertainment industries, announced that, further to the announcement made on 15 July 2020 entitled “Proposed Accelerated Bookbuild to raise gross proceeds of up to approximately £13.7 million”, the Bookbuild has closed and the Company has raised gross proceeds of £13.7 million  at 180p. The Group intends to use the net proceeds of the Placing to take advantage of potential M&A opportunities that may arise and will update shareholders on these as they progress.

 

Simec Atlantis Energy 17p £73m (SAE.L)

Programme delivery update for its flagship Uskmouth power station conversion project

Having adjusted for current expected COVID disruptions, Atlantis has determined, in consultation with stakeholders and potential financiers, that the project will now be developed in two phases.  The initial phase will comprise the conversion of the first 110MW generation unit at the power station (“Phase 1”), and upon successful commissioning of Phase 1 it is intended that a second unit (“Phase 2”) will be converted to increase the total net output from the station to 220MW.

Final design studies are now underway to inform the scope of the Engineering, Procurement and Construction (“EPC”) contract. The EPC tender process will be a global tender process for qualified participants. The EPC contract negotiations are now expected to conclude in early Q1 2021 with an announcement of the successful bidder and/or consortium shortly thereafter. The terms and conditions of the EPC contract will determine the final structure of the project finance package. Financial close is therefore expected to occur in late Q1 2021 or early Q2 2021.

Further, Atlantis has engaged data centre development specialist TechRE to explore options to locate edge and hyperscale data centres within the Uskmouth power station development envelope. It is proposed that power could be delivered through a private wire network under a long-term power purchase agreement to owners and operators of these data centres built onsite at Uskmouth.

 

Panther Metals 7.15p £3.5m (PALM.L)

Acquisition of the Dotted Lake exploration property approximately 20km from Barrick Gold Corporation’s renowned Hemlo Gold Mine.

Highlights:

  • The Dotted Lake property consists of 39 cells approximately 20km north-northeast of the Barrick-owned Hemlo Gold Mine, which has produced over 21 million oz of gold over 30 years.
  • Gold prospects on the property include 23.3 g/t Au over 0.3m and 9.02 g/t Au over 0.4m from channel sampling.
  • Reconnaissance rock-chip grades of up to 16.95 g/t Au along a >2km long sulphidic shear-zone have been recorded, in addition to anomalous geochemistry along this zone for both gold and base-metals.

Panther Metals PLC has agreed to pay the vendors a total cash consideration of $20,000 (Canadian) for the 100% acquisition of the claims that make up the Dotted Lake exploration property. These claims are free of any underlying instruments or royalties.

 

Team 17 590p £776m (TM17.L)

The games entertainment label, creative partner and developer of independent premium video games,  has signed a publishing agreement with Tencent Games’ NExT Studios for its roguelike adventure, Crown Trick , launching on  PC and Nintendo Switch™ later this year. 

Crown Trick, a finalist in the Indie Prize (Asia) 2019 Awards, is s et in a procedurally generated maze-like dungeon and is focused on strategic, synchronous, turn-based gameplay where enemy decisions and actions are only revealed when players make their moves. The game features hundreds of weapons, skills, and items on hand to customise and evolve the combat style as the quest progresses.

 

Loungers 114.5p £117.25m (LGRS.L)

“Loungers has successfully re-opened 75 Lounges and 19 Cosy Clubs (from a total estate of 138 Lounges and 29 Cosy Clubs), following the relaxation of the Government imposed closure period due to Covid-19.  We have been very encouraged by the reception from both our teams and our customers. The steps we have taken to ensure everyone’s safety have been well-received and have not prevented us delivering our usual exceptionally high standards of hospitality and atmosphere.  As a result of the confidence we have gained from the trading at our re-opened sites to date, we have decided to accelerate our re-opening programme and will have the full estate re-opened by 5 August.

We have decided not to re-open two sites.  Banco Lounge in Bristol is one of our earliest sites and a combination of its small size and the additional costs of doing business mean that it no longer meets our returns criteria.  Its lease expires in March 2021 and will not be renewed.  We have also closed Allegro Lounge which hasn’t performed as we had hoped since opening in 2018. Whilst we are always willing to give each site time to mature, Northfield has proven to be the wrong location for a Lounge and we will ensure we learn from that.  We are not considering any other sites for closure.”

 

Bigblu Broadband 97p £55.9m (BBB.L)

Bigblu Broadband plc, a leading provider of alternative super-fast broadband services, announces that its Australian subsidiary, SkyMesh, is now the number one satellite internet provider for the Australian Government-backed National Broadband Network (“NBN™”).

NBN™ is a high-speed broadband network, which aims to provide satellite broadband for up to 400,000 households – providing significant growth opportunity for SkyMesh, which was named Best Satellite NBN™ Provider 2019.

 SkyMesh is the market leader in Australia, commanding a 50% share of net new adds under the NBN™ scheme for the 12 months to 30 June 2020. Furthermore, SkyMesh significantly outperformed the industry in 2019, growing five times faster than the rest of the market.

 

BlueRock Diamonds 38.5p £2.02m (BRD.L)

BlueRock has conditionally raised gross proceeds of £1.235 million via an oversubscribed placing and subscription of 3,528,574 new ordinary shares of 5 pence each in the Company  at a price of 35 pence per Placing Share.  In addition to the Placing, three of the Company’s directors have indicated their intention to subscribe for a further £5,000 each on the same terms as the Placing. Accordingly, the total gross amount raised is expected to be £1.25 million. The net proceeds of the Placing will primarily be used to fast-track its growth plans and strengthen the balance sheet.  Plans plan to increase production volume to a run rate of 1,000,000 tonnes/45,000 carats per annum by the end of 2020

 

Echo Energy 0.8p £5.7m (ECHO.L)

The Latin American focused upstream oil and gas company, announces that it has successfully restructured its relationship with Compañia General de Combustibles S.A. on an interest in the Tapi Aike licence. The new agreement, in line with the Company’s immediate focus on optimising capital allocation, enables Echo to cease commitments to ongoing pre-drill expenditure at Tapi Aike, whilst maintaining an option for the Company to re-enter the western cube (Traversia de Arriba) of the Licence once pre-drill technical activities have been completed by the Operator and Echo has assessed the data available.

 

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”.