Small Cap Feast
Small Cap Feast – 17th January 2017
Dish of the Day:
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What’s Cooking in the IPO Kitchen?
Global Energy Development (GED.L) — To be renamed Nautilus Marine Services. Schedule 1 from developer and seller of hydrocarbons and related products. Reverse takeover. Raising $10.5m via a convertible. Expected 9 Feb.
Eco (Atlantic) Oil & Gas—TSX-V listed oil and gas exploration has announced its intention to float on AIM. Assets in Guyana and Namibia. Proposed £2m-£3m fundraise.
Diversified Gas & Oil—According to LSE website first day of trading on AIM now expected for 30 January.
7 Digital Group (7DIG.L) 9.5p £10.7m
FYDEC16 trading update from the B2B digital music and radio services company. 7digital performed well in the second half of the year; the Company delivered against the Board’s commitment to achieve profitability by the year-end, and returned an operating profit for the final quarter. Results for the year are in line with market expectations, including a modest gain from the strength of the US dollar. The Board remains committed to being profitable at the operating level for the full year in 2017. Total Group revenue grew by 7.2% to £11.1m, with good growth across all revenue streams. The Group achieved its target of £1m of annualised cost savings by the year end. Year end Cash: £730,000. In Q4, 7digital was awarded contracts with a combined value of approximately £1.6m.
Elegant Hotels (EHG.L) 80.75p £71.72m
Final results (FYSep16) from the owner and operator of six upscale freehold hotels and a beachfront restaurant on the island of Barbados. Revenue down 5.2% to $57.0 million. RevPAR down 6.7% to $238. ADR (average daily rates) up 1.3% to $378. Adjusted EBITDA: down 11.6% to $19.6 million. Adjusted EPS of 13.1 cents per share (2015: 14.7c per share). Successful acquisition, refurbishment and reopening of Waves Hotel & Spa in Barbados. Signed management contract in November for Hodges Bay Resort & Spa in Antigua, the Group’s first property outside Barbados. Year-end net debt of $61.8m (2015: $40.8m). Proposed final dividend of 3.5 pence per share, resulting in a full year dividend of 7.0 pence per share. Difficult market but encouraged by increasing popularity and airlift to Barbados and is increasing regional scale.
FairFX (FFX.L) 34p £35.06m
FYDec16 trading statement from e low cost multi currency payments service. Turnover for the twelve months ended 31st December 2016 was up 27% and exceeded £795 million, which was ahead of management expectations. In addition, revenue for the same period is expected to show similar growth and also surpass management expectations. Growth accelerated during 2016, with total turnover in the second half being 45% ahead of the same period in 2015. Growth was driven by continued focus on the core products of International Payments (up 49%) and Prepaid Cards (up 25%). The Company’s overall focus in 2017 will be on continuing its broad-based growth targeting the higher margin core segments of the business. FYDec16 E £8.86m and £1.6m PBT loss rising to 12.08m and £1.13m profit respectively for FY16E.
Brady (BRY.L) 70.5p £58.57m
The global provider of trading and risk management solutions for metals, recycling, energy and soft commodities reported that the Company is trading in line with market expectations. “The markets in which we operate remain challenging. However, there has been a sea-change in the mood and focus of this business, and as a team, we have entered 2017 with considerable optimism. I would like to thank all our staff who have embraced the changes we are making with vigour and dedication. We are concentrating on providing a first-class service to our clients, and improving our earnings visibility through increased recurring revenues. We are making steady progress and I look forward to providing a further update in our preliminary results in March.” FY16E revenue £30.46m and EPS of 1.99p.
Evgen (EVG.L) 23p £16.82m
The clinical stage drug development company focused on the treatment of cancer and neurological conditions, announced that the first patient has been dosed in the Company’s Phase II clinical trial of SFX-01 in breast cancer. The Company has also announced two senior appointments, Richard Moulson, an experienced healthcare executive, as the Company’s Chief Financial Officer. Dave Chadwick the Company’s Senior Clinical Study Manager, on 1 March 2017, assumes the role of Head of Clinical Operations. The current CFO John Bradshaw and Chief Development Officer, David Howat are stepping aside.
Learning Technologies Group (LTG.L) 37.5p £157.9m
FYDec16 trading update from e-learning company. Profit for the year was ahead of market expectations, with EBITDA margins firmly ahead of LTG’s strategic ambition of 20 per cent. The Group has increased its recurring revenues to c27% in 2016 from c10%. Over the same period, revenues generated outside of the UK have risen from c12% to c36%. These trends underpin the Group’s development of new learning technology solutions and expansion into new geographical markets. Cash generation remains strong with gross cash at 31 December of £5.3m and net debt of £8.5m, after significant operational investment. 33.5xPE. Yield 0.9%.
Dotdigital Group (DOTD.L) 61p £179.9m
H1Dec16 trading update from the provider of intuitive email and marketing automation software as a service (“SaaS”) and managed services to digital marketing professionals. Overall revenue up 17% to approximately £15.0m. EBITDA in line with market expectations and on track for full year; Monthly recurring revenues from dotmailer’s SaaS based usage up approximately 22% to £12.2m. Direct sales tea, now in Australia to support Asia Pac. “Continuing to build strategic partnerships is key and as we start to look out into second half of the year, the partnerships we are building with both PayPal and ORO CRM is also exciting.” FYJun17E revenue £33m. PBT £7.83m.
Miton group (MGR.L) 34.25p £60.79m
FYDec16 trading update from the fund management group. £2,905 million closing Assets under Management (“AuM”), up from £2,784 million at the start of 2016. Average AuM for the year was £2,783m, an increase of 20%. Renewed momentum with £91 million of net inflows in the second half of 2016. Adjusted Profit before tax is expected to be at least in line with expectations. £21.3 million of cash balances as at 31 December 2016 (2015: £14.1 million). “The Group continued to grow through a combination of net fund inflows and strong market / investment performance, despite the loss of a fund team earlier in the year.” FY16E EPS 2.1p, div 0.8p.
Velocys (VLS.L) 49p £70.5m
The Company at the forefront of smaller scale gas-to-liquids (GTL), announced that it has signed a memorandum of understanding with Morimatsu (Jiangsu) Heavy Industry Co., Ltd., a subsidiary of Morimatsu Industry Co. Ltd. establishing a strategic alliance. Morimatsu will be Velocys’ preferred supplier of module engineering and fabrication services for the plants. This will drive down costs for GTL and biomass-to-liquids (BTL) plants based on Velocys technology by optimising the design and fabrication of plant modules.
Nature Group (NGR.L) 10.13p £8.03m
The provider of port reception facilities and waste treatment solutions for the oil, marine and process industries, has sold its wholly-owned subsidiary in Gibraltar, for cash consideration of £4m, of which £3m on was paid at closing and £1m will be retained in escrow for a period of up to two years. Board expects H1 loss of £1.4m to widen for the full year as a result of various factors, including the continued downturn in the Oil and Gas market, and further write-downs and re-organisation expenses. The 2016 Results will not include the small gain on the book value of NPRF as this transaction will be posted in FY2017. “We intend to use some of the proceeds for some relatively small but sensible investments that we had to postpone due to cash restrictions.”
Emily Liu, CFA, CAIA
0203 764 2344
0203 764 2345
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