Small Cap Feast

Small Cap Feast – 29th March 2017

Dish of the Day:

Dukemount (DKE.L) has joined the Standard List. The Company intends to develop and manage a portfolio of properties.


Off the Menu:

Asian Citrus Hldgs has had its AIM quote cancelled  following a delay in its audit. Remains listed in Hong Kong although currently suspended there.

E2V technologies has left the Main Market  following a recommended cash acquisition


What’s Cooking in the IPO Kitchen?

Path Investments—Publication of prospectus from the Energy Investment Company. 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.

SkinBioTherapeutics—Schedule 1 update from the Company focused on certain molecules found in the human microbiota that can be used to protect, manage and restore the skin. £4.5m raise. Admission due 5 April.

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

Petards Group* (PEG.L) 28.5p £10.13m

£4.3m contract win from the software developer of advanced security and surveillance systems with a new customer, Swiss train builder Stadler Bussnang,  for the design, development and supply of CCTV and ASDO systems integrated into Stadler’s FLIRTUK trains. Engineering activities will commence immediately with the first equipment deliveries starting in June 2017 and is expected that the project will be completed during Q2 2019. ‘Significantly enhances its position as a leading provider of security and surveillance systems to the UK Rail industry and considerably adding to the Group’s present order book for delivery over the next three years.’ FYDec17E £16.2m rev and £1.05m PBT.


Cambridge Cognition (COG.L) 75p £15.3m

FYDec16 results from the neuroscience digital health company. Total revenues increased by 37% to £6.88m.   Maiden profit for the year of £0.22m. Operational cashflow of £0.47m. “The current financial year has started well, with continued progress towards both our short and long term goals. The Company is well-positioned to pursue appropriate opportunities for partnerships that drive organic growth and moves the Company into sustainable profitability.”


Nektan (NKTN.L) 41p £13.47m

The international B2B gaming solutions and services provider, has signed a partnership agreement with leading casino games developer High 5 Games. Nektan has become the distributor of H5G content for real-money gaming in Europe with exclusive rights to the H5G casino catalogue. Nektan will also expand the current real money gaming distribution of H5G’s casino catalogue by making the content available in Canada as well. Since it was founded in 1995, H5G has created many of the industry’s most acclaimed and popular slot titles across land-based, online and social gaming markets. There are no market forecasts.


Collagen Solutions (COS.L) 4.63p £15m

The developer and manufacturer of medical grade collagen components for use in regenerative medicine, medical devices and in-vitro diagnostics has been granted divisional patent coverage from the Australian Patent Office for the use of their novel ultra-thin processed pericardium material, which can be used for heart valve replacement medical devices and other applications.  Patent coverage has also been established in New Zealand and USA. “This recent patent further strengthens our position in sourcing tissue in Australia in a novel way.  We believe the additional processing covered in this patent will be of significant interest to our existing customer base and value adding to our own medical device development program”.  FYMar17E rev of £4.1m and £1.93 pre-tax loss.


HML Holdings (HMLH.L) 40p £17.9m

The provider of property management, insurance and ancillary services to residential property blocks, has exchanged contracts for the acquisition of Faraday Property Management Limited, a property management business based in Holborn. The Company anticipates completion of the acquisition will occur on 1 April 2017. HML will purchase the entire share capital of FPM for an initial consideration of £2.3m on a cash-free, debt-free basis.  FPM produces annual revenues of £1.9m and normalised pre-tax earnings of £0.4m. It is expected that FPM will be immediately earnings enhancing. FYMar17E revenue of £20.3m and £1.8m PBT.


Fairpoint Group (FRP.L) 15.75p £7.6m

The provider of professional services to UK consumers with particular skills in process automation and consolidation,  announced the disposal of its ancillary medico-legal business, PIX Limited for an enterprise value of £1.2m, payable in cash.  The proceeds will be used to support the working capital requirements of the Group.


Avesero Resources (ASO.L) 2.65p £141m

FYDec16 results and operational update. Revenues of US$63.6 million generated from gold sales of 50,264 ounces since the start of commercial production at an average realised sale price of US$1,266 per ounce; Underlying EBITDA loss of US$30.4 million; Capital expenditure of US$27.7 million; Debt of$97.6m against cash of $13.4m.  Gold production guidance for 2017 of 90,000 – 100,000 ounces at a cash cost of US$750 – US$800 per ounce and AISC of US$925 – US$975 per ounce of gold produced; Management is currently focussed on addressing the issue of insufficient waste stripping undertaken when compared to the Life Of Mine schedule.


Midwich Group (MIDW.L) 310p £246.3m

The specialist audio visual and document solutions distributor to the trade market with operations in the UK and Ireland, France, Germany and Australasia, has entered into a binding agreement to acquire a majority stake in Earpro S.A. a value-added distributor of audio, video and lighting solutions in Spain and Portugal. The acquisition values the equity of Earpro at approximately 11.0m, including a net cash balance of approximately €3.2m. Earpro is headquartered in Barcelona and has a team of 45. Earpro generated unaudited revenues of around €21 million in 2016 which represented growth of around 7% on 2015.  FYDec17E rev of £414.5m and £19.4m PBT. Div 11.2p.


Biome Technologies (BIOM.L) 106p £2.49m

FYDec16 results from the Company whose  primary activity is the development of its fast growing business in bioplastics. Group revenues in 2016 of £4.6m (2015: £4.9m)/ Group EBITDA of £0.2m (2015: EBITDA loss of £0.3m), including one-off benefit of £0.4m settlement income. Gross margin up to 51% FROM 43%. “The Group delivered a solid performance in 2016 and has carried significant momentum into 2017. Within the Stanelco RF division the order book is robust and also has a strong enquiry pipeline to support our aims. The Biome Bioplastics division has made significant progress in the launch of its filter material and the Board expects this new product to move into the commercialisation phase in 2017.” There are no market forecasts


DX Group (DX..L) 9p £18.05m

The independent parcels, mail and logistics operator, announced that it has won a major contract worth in excess of £10m per annum providing bespoke logistic services for Avon UK, the leading beauty company. The contract, which is now underway, was awarded after a lengthy competitive tender process and is for an initial 3-year term. The win underpins management’s existing expectations of the Company’s performance in the current financial year. FYJun17E £294.2m revenue and £1.93m PBT. 11.1x PE and 9.4% yield.


Head Chef:

Derren Nathan
0203 764 2344

*A corporate client of Hybridan LLP


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 with “unsubscribe me”.