Small Cap Feast

Small Cap Feast – 25th January 2022

Dish of the Day:

No Joiners Today.

Off the Menu:

Rutherford Health has left the AQSE and Prime People has left AIM.

What’s Cooking in the IPO Kitchen?

ACP Energy plc, a company formed for the purpose of undertaking an acquisition or acquisitions of a majority interest in a company, business or asset, seeking to join the Main Market (Standard) The Company intends to focus on opportunities in the natural resources sector, raising gross proceeds of £830k. Due 28 Jan.
Artemis Resources ltd, an ASX listed mining exploration and development company intends to join AIM. The Company owns projects based in the Pilbara region of Western Australia, the Greater Carlow Gold-Copper-Cobalt Project in the West Pilbara and the Paterson Central exploration project in the East Pilbara. The Company also owns the Radio Hill processing plant that is currently on care and maintenance. This plant is strategically located only 35km from the Greater Carlow Project. Mkt Cap TBC, Capital to be raised approximately £5m. Due 7th Feb.
Hercules Site Services a technology enabled labour supply company for the UK infrastructure sector, intends to float on AIM. Hercules is seeking to raise approximately £5.5m to rapidly deliver on the significant demand it is experiencing for its diverse range of services across the UK infrastructure sector, including to scale up its operations to supply labour to the northern section of the HS2 rail project from London to Birmingham. In addition, up to £4.5m will be raised for the existing shareholder from the sale of part of its interest in the Company. Hercules has a sustained track record of revenue growth from £9.7m in FY 2015 to £30.7m in FY 2019 and has experienced a strong rebound following Covid-19 growing to £14.0m in H1 FY 2021. Expected early Q1 2022.
Spinnaker Acquisitions plc, intends to join the Main Market (Standard). The Company have conditionally agreed to acquire the entire issued share capital of HomeServe Labs Ltd, a wholly owned subsidiary of FTSE250 quoted public company HomeServe Plc, by way of a reverse takeover conditional, inter alia on relisting and successful completion of fundraising activities to be undertaken by way of a placing and direct subscriptions by new and existing investor. If the Proposed Transaction proceeds to completion, it is proposed to change the name of the Company to Ondo InsurTech Plc and the name of Labs, which will become a subsidiary of the Company, to LeakBot Ltd. Should the Proposed Transaction not proceed, then the Company would need to apply for the suspension of its listing of ordinary shares to be lifted and for trading to be restored. £5m capital to be raised. Due early 2022.
Unbound Group PLC, (currently called Electra Private Equity PLC) to join AIM. Unbound Group, will be the parent company for a range of brands focused on the 55 plus demographic. Initially focused on Hotter Shoes, Unbound’s curated, multi-brand retail platform will offer additional products and services that will enhance the enjoyment and wellbeing of its targeted customer community. This online platform will be based on the foundations of Hotter Shoes as a trusted brand, cloud-based digital infrastructure, and strong customer personalisation through data insight. No capital being raised on Admission. Anticipated Mkt Cap c.£30m. Due 31st Jan.
Clean Power Hydrogen, the UK-based green hydrogen technology and manufacturing company that has developed the IP-protected Membrane-Free Electrolyser is seeking to join AIM. The Group designs and manufactures hydrogen production units and is focused on the commercial production of green hydrogen in a simple, safe, and sustainable manner. The Group intends to raise approximately £50m. Timing TBC.
SuperSeed Capital Limited, to join the AQSE Growth Market. The Company will invest in technology-led innovation primarily through unquoted funds managed by SuperSeed Ventures, the Company’s Investment Manager, with the objective of maximising the investors’ long term total returns – principally through capital appreciation. Mkt Cap and Capital to be raised TBC.
Carbon Air, a nano-technology company which leverages the adsorption properties of activated carbon and other advanced materials to improve suspension systems, enhance acoustics or reduce noise, to join AIM. The Company’s proprietary technology has allowed it to develop a unique portfolio of solutions for a variety of sizeable end markets, including vehicle suspension systems, acoustic insulation for domestic appliances and micro-speakers for smartphones. Mkt Cap and Capital to be raised TBC. Due Late Jan.
i(x) Net Zero, the investing company which focusses on Energy Transition and Sustainability in the Built Environment, announces its intention to join AIM and raise money to provide development and expansion capital to certain of its investee companies, for future investments in companies that fall primarily within its areas of interest in Energy Transition and Sustainability in the Built Environment and to provide working capital for the Group. Capital to be raised £20m. Expected admission late Jan.
Spiritus Mundi due to join the Main Market (Standard), a special purpose acquisition vehicle which will seek acquisition targets in Europe and Asia in the clinical diagnostics sector. The Company has already raised approximately £1.2m in a pre-IPO fundraising round. Due late Jan 2022.
Recycling Tech Group to join AIM, a UK-based engineering, research and manufacturing company that has developed a modular and mass producible machine, the RT7000, which processes hard to recycle plastic waste into a synthetic oil that can be sold back to the petrochemicals industry as a chemical feedstock to make new plastics. Targeting a £40m raise. Due early Q1 2022.
Nu-Oil and Gas to acquire Guardian Maritime Ltd and Guardian Barriers IP Ltd and become Guardian Global Security plc and join the Main Market (Standard). Guardian is a technology group that supplies products to prevent unauthorised entry into areas that are deemed to have value, with maritime security being the main focus initially. Due late Jan 2022.
Superdielectrics to join AIM, a Company which is focused on developing technology to build supercapacitors with high energy density, low cost, and environmentally benign electrical energy storage devices that will help create a clean and sustainable global energy and transportation system. Admission is expected to take place in Late Jan 2022. Mkt Cap and Capital to be raised TBC.

Breakfast Buffet

Barkby Group 16.5p £22.6m (BARK.L)

Subsidiary, Cambridge Sleep Sciences (CSS), the science-based sleep technology business behind SleepHub®, has developed more than 10 new sales partnerships as part of its continued growth strategy. The partnerships, all with leading international businesses, includes retailers Harrods, Smartech (in Selfridges), Currys and Very; sales agents and distributors TKG, Go10, NewGen and Sleep Analysis Australia; and health, wellbeing and fitness brands Lifeworks, Whitecalm and PureGym. CSS’s new partnerships will enable them to capitalise on the growing global sleep tech devices market which is forecast to grow at a CAGR of nearly 11% and exceed $30bn by 2028.These partnerships follow the recent shortlisting of CSS as a finalist in the innovation category of the Medilink Midlands Business Awards for their SleepHub® Home product. CSS also recently announced the development of a portable product – SleepHub® Anywhere, due to be launched this year in Spring. CSS is progressing a number of further major partnerships and looks forward to announcing these shortly.

Caspian Sunrise 3.85p £81.3m (CASP.L)

Caspian has reported initial production from Deep Well A8 on the Airshagyl structure at the Group’s flagship BNG Contract Area. Production from the first of three intervals planned for testing has been at the rate of approximately 120 bopd for several days. Work continues to establish the full potential of this well. Aggregate production for the year ended 31 December 2021 was 533,857 barrels at the average rate of 1,462 bopd (2020: 545,667 barrels at the rate of 1,495 bopd). Production for sale in January 2022 is expected to be approximately 65,000 barrels.

DSW Capital 122p £26.2m (DSW.L)

DSW Capital, a profitable, fast growing, mid-market, challenger professional services network, announced that, in line with the Group’s stated growth strategy, it has expanded its service lines with the addition of two leading asset-based lending specialists, providing due diligence and risk management services for ABL clients. Hazel Lomas and Martin Ellison have over 60 years’ experience between them, during which time they have worked with most of the major names in the ABL industry. The new business, titled DSW ABL Risk Management, is based at DSW’s Daresbury office. The focus of the business is to provide asset-based lenders with specialist due diligence and risk management services across multi-asset classes to support their lending decisions and ongoing support and advice to advisers, investors and their portfolio companies.

Egdon Resources 1.65p £8.55m (EDR.L)

Egdon Resources plc advised its intention to submit an appeal against the refusal of planning permission by Lincolnshire County Council (LCC) on 1 November 2021, for a side-track drilling operation, associated testing and long-term oil production at the Biscathorpe site, held under licence PEDL253. Egdon is operator and holds a 35.8% interest in the licence. The decision has been made after reviewing LCC’s Decision Notice, which was received on 6 December 2021, taking advice from Egdon’s planning and legal advisors and agreement with Egdon’s joint venture partners. The appeal documentation is currently in preparation and is expected to be submitted during Q1 2022.

EKF Diagnostics 68.9p £319.65m (EKF.L)

The point-of-care, central lab devices and chemistry reagents business, confirms that continued strong trading will result in its performance for the financial year ended 31 December 2021, including adjusted EBITDA, being ahead of already upgraded market expectations. Trading in EKF’s core business in the final quarter continued to be robust and ongoing demand for sample collection kits and testing remained strong through to the end of the year. The Group announces that core business revenues grew over 13% compared with the previous financial year. The Group’s cash, net of borrowings, at 31 December 2021 was £19.6m (31 December 2020: £21.4m), reflecting further strong operational cash generation offset by substantial investment in the business, some working capital expansion to support anticipated growth, and the payment of the 1.1p per ordinary share cash dividend in December 2021 in line with the Company’s progressive dividend policy. During the year, and as part of the Group’s strategy, significant investment was made to expand fermentation capabilities and contract manufacturing to drive further organic growth. Further investment in enzyme fermentation is scheduled for FY22 in this key strategic growth area. Growth and investment in the core business is complemented by a strategy to exploit expanded capabilities to meet the demand for contract manufacturing services. Advanced Diagnostic Laboratory LLC, the CLIA-certified lab testing business acquired in October 2021 is integrating well and has begun diversifying into non-COVID testing, as evidenced by the recent partnership relating to the provision of a non-invasive prenatal testing service.

Ergomed 1172.5p £576.1m (ERGO.L)

The company focused on providing specialised services to the pharmaceutical industry, announces a trading update for the year ended 31 December 2021. Adjusted EBITDA ahead of market expectations. Total revenue growth of 37.3% over 2020 to £118.6m (up 44.3% in constant currency). Robust order book growth, up 24.2% to £240m, providing excellent visibility into 2022 and beyond. Further strong US growth with revenues up 59.5% (up 71.0% in constant currency), with strengthened US strategic presence driven by prior year acquisitions. Strong cash generation, cash increased £12.2m to £31.2m and debt free.

Learning Technologies Group 165.65p £1,304m (LTG.L)

Learning Technologies Group plc, a market leader in digital learning and talent management, announced a trading update for the year ended 31 December 2021. The Board expects Group revenues to be not less than £254m (2020: £132.3m). Strong organic revenue growth on a constant currency basis is expected to be not less than 7%, driven by a robust performance in the Content & Services division returning to 2019 levels, alongside the continued growth within the Software & Platforms division which has a high proportion of multi-year SaaS contracts. Adjusted EBIT is expected to be not less than £53.7m (2020: £40.3m). This has been driven by organic growth, continued focus on operational excellence and the contribution of the acquisitions completed in the first half of 2021, Reflektive, PDT Global and Bridge. These have been fully integrated and made an important contribution to the Group’s results. The acquisition of GP Strategies completed on October 15 2021 and has seen a swifter than anticipated improvement in operational performance. This underpins the Board’s confidence that the transformation programme will deliver as expected in 2022 and beyond.

Life Sciences REIT 103p £360.5m (LABS.L)

The real estate investment trust focused on UK life science properties, announced three senior appointments at the Company’s Investment Adviser, Ironstone Asset Management Ltd. Ian Harris joins as Director of Asset Management. Ian is a qualified chartered surveyor with over 30 years’ experience in the UK real estate market. His career includes senior roles at CBRE Global Investors, Imry Holdings and Frame Investments Ltd. Most recently he co-founded Westmount Real Estate Ltd, a boutique investment advisory and asset management business acting for a wide range of domestic and international investors. Matthew Barker has been appointed to the role of Senior Asset Manager. Matthew is an experienced asset manager and chartered surveyor with over 10 years of experience in the UK real estate market, including the role of asset manager at the listed REIT Picton Property Income Ltd. He joins from Mayfair Capital where he held the same role. In addition, David Lewis is now Director of Operations and Finance consolidating the two roles and replacing Andrew Pinto, who has now left Ironstone. David has over 30 years’ commercial and financial experience, most recently as Head of Fund Finance at Round Hill Capital, a real estate private equity firm.

Sareum Holdings* 4.10p £139.5m (SAR.L)

Sareum Holdings plc, the specialist small molecule drug development company, announces that the Company will be participating in Edison Group’s Global Healthcare “Open House” Virtual Conference, taking place on 25-27 January 2022. At the event, Sareum’s Chief Executive Officer, Dr Tim Mitchell, will take part in a virtual interview to discuss the Company’s progress and strategy in 2022 with its lead TYK2/JAK1 inhibitor assets SDC-1801 and SDC-1802, as well as opportunities under consideration by licensee Sierra Oncology to advance Chk1 inhibitor SRA737. Dr Mitchell’s interview will form part of the pharmaceuticals and drug discovery session, scheduled to take place between 08:00 and 16:00 GMT on Tuesday 25 January. Sareum’s content will be available on demand on www.edisongroup.com from 8:00am GMT on Tuesday 25 January. No material new information will be made available.

Staffline 62.9p £104.3m (STAF.L)

The recruitment and training group, provided a trading update for the year ended 31 December 2021. The Group continued to trade strongly across H2 2021, building on the positive momentum achieved in H1 2021, and is expected to generate revenues for FY 2021 of c.£942.7m (2020: £927.6m), representing an increase of c.1.6% notwithstanding management actions to exit low margin contracts. As a result of these actions and the turnaround plan, the Group is anticipated to deliver Underlying Operating Profit for FY 2021 of c.£10m (2020: £4.8m), a significant increase of c. 108.3%, and c. 11% ahead of market expectations for 2021. Staffline’s balance sheet was significantly strengthened during the year with the Group expected to report an increase in pre-IFRS16 net cash of £15.7m to £6.9m at 31 December 2021 (2020: net debt of £(8.8)m), despite repaying the majority (£40.7m) of its Deferred VAT Relief, with the remaining balance of £5.8m to be repaid on 31 January 2022. This substantial improvement was achieved through a successful equity raise of £46.4m (net of costs), and includes c. £10m of timing benefits, which are expected to unwind, alongside further improvements in trading cash flow and cash collections. The Group’s financing headroom, relative to available committed banking facilities at 31 December 2021, was in excess of £75m.

Head Chef:

Emily Liu, CFA, CAIA
0203 764 2344
emily.liu@hybridan.com

Sous Chef:

Sacha Morris
0203 764 2345
sacha.morris@hybridan.com

*A corporate client of Hybridan LLP

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