Small Cap Feast

Small Cap Feast – 27th March 2017

Dish of the Day:

BioPharma Credit— Admission to  the  Specialist Fund segment of the Main Market expected today

Falcon Acquisitions  has joined the Standard List raising £4m at 25p. Focused on the over-the-top (‘OTT’) video streaming market

Off the Menu:

Rapidcloud International PLC cancelled its securities pursuant to AIM Rule 1

North River Resources PLC cancelled its securities from trading on AIM

What’s Cooking in the IPO Kitchen?

Path Investments—Publication of prospectus from the Energy Investment Comnpany. Raising £1.4m. Admission due on or around 30 March.

Franchise Brands—Schedule 1 detailing £28m reverse takeover of Metro Rod. Admission expected 11 April.

Alpha FX Group— Schedule 1 from the foreign exchange provider focused on managing exchange rate risk for UK corporates that trade internationally.  Fundraise TBC. Admission expected 7 April.

K3 Capital Group—Schedule 1 from the Group of business and company sales specialists across business transfer, business brokerage and corporate finance. Admission date and fundraise details TBC.

Integumen— Schedule 1 from the personal health company developing and commercialising technology and products for the human integumentary system. Raising £2.16m at 5p. Expected market cap £8.16m. Admission expected 5 April.

Tufton Oceanic Assets– Offer extended to 9 May to enable investors to complete further due diligence.


Breakfast Buffet

Quadrise Fuels International (QFI.L) 8.45p £67.86m

FY Dec 16 results from  the emerging supplier of MSAR® emulsion technology and fuel, enabling a low cost alternative to heavy fuel oil. Loss after tax of £2.4 million (2015: £2.4 million). In November, the Company raised £5.25 million through a Placing and Open Offer of new ordinary shares. The Open Offer was oversubscribed 2.5 times. Current Maersak trial suspended due to unrelated incident with the ship. Maersk is reviewing options for recommencing and completing the full LONO trial on a new vessel from Q4 2017 onwards. Further trial due to start in Saudi in Q4 2017.


Trading Emissions (TRE.L) 2p £5.18m

HY Dec 16 results from the closed ended investment company that specialises in renewable energy projects and emissions instruments. ‘During the six month period ended 31 December 2016, we sold two of the Company’s five Italian solar operating subsidiaries held through TEP Solar for net proceeds of 9.6 million (including dividends), of which €3.0 million is held in escrow. Conditional on no claims being received from the buyer, Sonnedix, we expect €1.0 million to be released to TEP Solar in December 2017 and €2.0 million in December 2018. Our efforts continue to try to resolve the various operating issues at TEP Solar’s three remaining Italian solar operating subsidiaries.’


Botswana Diamonds (BOD.L) 1.27p £4.78m

HYDec16 results. £136k operating loss. Cash down to £60k  from £500k at year end. Raised £525k gross in February 2017. Other Highlights:

“The Company entered into a phased earn-in agreement with Vutomi Mining Pty Ltd (“Vutomi”), a late stage diamond explorer in South Africa;

The Company agreed with the board of Maibwe, our joint venture in the Kalahari desert in Botswana, that Botswana Diamonds would drill verification holes following the encouraging results from 2015;

A work programme for 2017 was agreed with Alrosa for the Orapa and Gope licences in Botswana.”


Independent Oil & Gas (IOG.L) 16.25p £17.76m

The development and production focused oil & gas company, announced an update on its Harvey and Elgood licences.  The Oil and Gas Authority (OGA) has confirmed the continuation of licence P2085, which contains the Harvey discovery, until 20 December 2017. The technical work prepared and submitted by IOG in relation to its Elgood discovery has also been accepted by the OGA and will be added to the Blythe Field Development Plan as a satellite development. If successfully appraised, Harvey has the potential to be the largest gas discovery in IOG’s portfolio and significantly enhance the economics of IOG’s Southern North Sea business. The range of internal resources estimates are large with a P10, P50 and P90 range of 44 BCF, 113 BCF and 290 BCF respectively.


Genedrive (GDR.L) 42.5p £7.76m

The near patient molecular diagnostics company, today announces submission of its Genedrive® HCV ID Kit (Hepatitis C) for CE IVD certification under the EU Medical Devices Directive. Receipt of CE IVD certification will allow commercialisation of the product within the EU and in resource limited countries in the rest of the world that accept CE certification under their national regulations. Where local registration is required, CE marking is often a prerequisite. This portable quick test has a significant market opportunity.


SpaceandPeople (SAL.L) 18p £3.5m

FYDec16 results from he retail, promotional and brand experience specialist. Gross revenue of £22.9m. Net revenue of £9.7m. Profit from continuing operations before taxation and non-recurring costs of £60k. Basic Earnings per Share before non-recurring costs of 0.3p.   Net cash at year end of £384k. “The introduction of important and iconic new venues means we are in a strong and growing position in our market, and there is still considerable scope to grow further. Our UK venues team has a very healthy pipeline of potential new venues they are engaging with and we are hopeful that we will continue to add to the size, diversity and quality of our portfolio.” 2017E PE of c. 7x


Elektron Technology (EKT.L) 7.5p £13.72m

The global technology group, has completed the sale of the business and assets (excluding trade debtors and creditors) of Digitron to The British Rototherm Company Limited for a total gross consideration of £0.3million cash payable on completion. Digitron is a manufacturer of instruments for pressure and temperature measurement. In the year ended 31 January 2017 the business of Digitron traded as a brand within Elektron Technology UK Limited with sales of £1.4 million and ‘Brand Contribution’ of £60,000.  The sale is part of the Group’s rationalisation of its portfolio, focusing its investment on the core segments of Bulgin, IMC (Instrumentation, Monitoring and Control) portfolio and Checkit.  There are no market forecasts.


Itaconix (ITX.L) 26p £20.47m

FY Dec 16 results. During 2016 Itaconix (formerly Revolymer plc) undertook a major reorganisation to focus on its Specialty Chemicals business primarily in the high value market areas of Homecare, Personal Care and Industrial. Itaconix and its subsidiaries aim to be a leader in functional polymers that improve the safety, performance and sustainability of its customer’s products. £8.8m of liquid funds. Continuing ops revenue £0.3m. £5.2m loss. Acquisition of Itaconix Corp in June 2016 for initial $7m consideration. FYDec17E rev of £1.4m and £4.6m pre-tax loss.


Obtala (OBT.L) 17.63p £48.93m

Q1 update. ‘Intense planning is underway for several major projects as the company transitions towards meaningful production, and deployment of our substantial assets. Following the successful US$ 14.25 million fundraising via the issue of preference shares in Argento Limited (Obtala’s 75% owned forestry subsidiary) during the final quarter of 2016, which was recently upsized by a further US$ 3 million, as announced on 15 March 2017, management has turned attention towards laying the foundations required for significant and sustainable increases in productivity from both the forestry and agriculture businesses. New sawmills coming onstream and refrigerated pack house in Tamzania (agriculture). There are no market forecasts.


K3 Business Technology (KBT.L) 254.5p £91.8m

H1Dec16 results from the provider of industry specific mission-critical software (owned and 3rd party), hosted solutions and managed services to the retail, manufacturing and distribution sectors. Significant operational progress made but results impacted by deal slippage and overhead investment. Revenues of £42.97m (2015: £42.29m).  Recurring revenue of £21.22m (2015: £19.72m). Adjusted EPS of (0.4p) (2015: 12.0p). ‘While the market shift towards cloud-based subscription models, away from the traditional on-premise model, is causing some disruption to the sales cycle, the lifetime value of such contracts has the potential to be significantly higher  and K3 is well placed to benefit as a result. ‘FYJun17E of £89m rev and £7.8m PBT seems a stretch.


Head Chef:

Derren Nathan
0203 764 2344

*A corporate client of Hybridan LLP


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