Small Cap Feast

Small Cap Feast – Small Cap Feast 09/11/2020

Dish of the Day:

Off the Menu:

What’s Cooking in the IPO Kitchen?

Bytes Technology Group one of the UK’s leading software, security and cloud services specialists, announces that the Company intends to publish a Registration Document and is considering proceeding with an initial public offering (Main Mkt Prem). FY20 gross profit of £79.2m (+24.5% against FY19) and adjusted operating profit of £31.7m (+53.9% against FY19). Highly cash generative with FY20 cash conversion of 125.9% (FY19 cash conversion 139.7%). Bytes due on or around 17 December 2020.

Round Hill Music Royalty fund to IPO on the Specialist Fund Segment of the Main Market of the London Stock Exchange, by way of a placing and offer for subscription targeting the issue of 375m ordinary shares at an issue price of US$1.00 per Ordinary Share. The Company’s Investment Objective is to provide investors with an attractive level of regular and growing income and capital returns from investment primarily in high quality, music intellectual property. Due mid-November.

Mailbox REIT PLC , a newly formed single asset company which owns the Mailbox , a large prime office-led mixed use property in Birmingham which has been independently valued at £179m, announced its intention to raise up to £62.5m. MailBox REIT will apply for the Ordinary Shares be admitted to trading on the IPSX Prime segment of International Property Securities Exchange (IPSX ). Due November.

Tirupati Graphite, the fully-integrated, cash generative, specialist graphite and graphene producer with operations in Madagascar and India, announced its potential intention to undertake an initial public offering on the LSE (standard listing). Timing tbc

Umuthi Healthcare Solutions Plc, the technology led healthcare business focused on the distribution of pharmaceuticals and the provision of medical facilities in remote areas, seeking admission to the Standard Listing segment of the Official List. Timing tbc

Kibo Energy PLC, the multi-asset Africa focused energy Company, is seeking admission for its 100% owned UK subsidiary Sloane Developments Ltd , which will be renamed Mast Energy Developments PLC (MED), to the Standard List of the London Stock Exchange plc. The MED business strategy is to acquire and develop a portfolio of flexible small-scale power generation assets, exploiting a growth niche market in the UK for Reserve Power generation to balance out the national grid at critical times. Targeted for Q4 2020.

Press reports emerged late last week that cybersecurity firm Darktrace is targeting a float next year with a US$5bn valuation. The company uses artificial intelligence technology to spot cyber threats for businesses. Some of its clients include BT Group, William Hill and online shopping giant Ocado. Its investors also include KKR & Co, Vitruvian Partners and Summit Partners. Targeted for 2021.

Breakfast Buffet

Aukett Swanke Group 1.15p £1.9m (AUK.L)

The international group of architects, interior designers and associated engineers is provided an update in respect of the financial year ended 30 September 2020. The Group returned to profitability in the first half. However, Covid-19 has impacted the second half year such that the Group now expects to report a small loss for the full year, subject to any material audit adjustments. Cash management has been strong with cash balances at 30 September 2020 of £992,000 (2019: £1,145,000). After deducting the final balance due on the Group’s long-term loan, net funds increased to £837,000 (2019: £820,000). Whilst the Board is comfortable with the Group’s response to the ongoing pandemic, in terms of cost containment, it remains cautious on the pace and scale of future projects.

Strategic Minerals 0.425p £7.4m (SML.L)

The profitable producing mineral company announces the results from both a review of the Leigh Creek Copper Mine (LCCM) project and from the recently received report from PPM Global (PPM) in relation to the anticipated capital and operating costs associated with planned production at the Lynda/Lorna Doone deposits within the LCCM project. Project funding requirement reduced to US$2.2m as a result of the adoption of an alternate mine schedule for processing the Paltridge North deposit and use of external contractors to undertake mining. Total LCCM project pre-tax cash has increased by over US$5m to US$35.4m (US$26.7m NPV 8%) due to earlier commencement and shorter processing of Lynda/Lorna Doone deposits. Confirmation from PPM that forecast capital requirements and operating costs for planned production at Lynda/Lorna Doone are reasonably based. PPM’s high-level review of alternative processing options at Lynda/Lorna Doone indicates scope for significant profitability improvements. Asset level funding discussions continue and additionally include the option to fund via an ASX listing or pre-IPO offering.

Kore Potash 0.66p £16.14m (KP2.L)

The potash development company with 97%-ownership of the Kola and DX Potash Projects in the Sintoukola Basin, located within the Republic of Congo (RoC), is pleased to announce an update to the Dougou Extension (DX) Pre-Feasibility Study (PFS) published on 13 May 2020 following the completion of a review of the Production Target by independent consultants Agapito Incorporated. The production schedule in this Updated PFS includes 2.43 Mt of MoP from Indicated Mineral Resources and 2.31 Mt MoP from Inferred Mineral Resources that were not part of the PFS mine schedule. The Updated Production Target extends the project life from 18.4 years to 30 years at a production rate of 400,000 ktpa MOP based on Probable Ore Reserves, Indicated Mineral Resources and a portion of Inferred Mineral Resources. The scheduled extraction includes 34.5% of the Inferred Mineral Resources which contributes 20% of the life of project MoP production. Approximately 4. 3 years post-tax payback period from first production. Attributed NPV 10 (real) of US$412 million and 23.4% IRR on a real post tax basis at life of project average granular MoP price of US$422/t (Argus Media’s price forecast CFR for DX Project’s target markets).

Mirriad Advertising 36p £76.8m (MIRI.L)

Mirriad, the computer vision and AI-powered in-video advertising company, today announces the launch of the Music Alliance. The company is partnering with globally renowned record labels and leading independent music companies such as Red Light Management, the largest independent music management company in the world, and prominent UK-based label B-Unique Records to place high profile brands into music content. These partnerships bring brands immediate access to over a thousand global artists.

Invinity Energy Systems 115p £82.6m (IES.L)

The manufacturer of vanadium flow batteries for the large-scale energy storage requirements of businesses, industry and electricity networks, announced that the European Marine Energy Centre (EMEC) has purchased a 1.8 MWh vanadium flow battery system for delivery in 2021. EMEC will use the system at their facility on the Isle of Eday, located in the Orkney Islands off the northeast coast of Scotland, in a project that has received £1.8m of funding from the Scottish Government via Highlands and Islands Enterprise. Approximately two-thirds of the funding amount relates to the Invinity battery system, ancillary components and associated services.

Yu Group 87.5p £14.25m (YU..L)

The independent supplier of gas, electricity and water to the UK business sector announced the acquisition of the business customer book of a Midlands-based energy group. Yü Group will pay £0.2m in cash for the assets, which includes an element of consideration based on a discount to the customer receivables balance acquired, net of provision. The acquisition will add c400 meter points to Yü Group’s current meter portfolio of c14,000. The Board expects the acquisition to be earnings enhancing from mid-November 2020. The customer book consists of gas contracts to small and medium sized businesses across Great Britain. The Group will hedge the book based on lower gas commodity markets, leading to attractive margins.

Pelatro 34p £12.6m (PTRO.L)

The telecom Customer Engagement Hub software specialist, announced a new contract provided a trading update. The mViva platform has been chosen by an Asian telco, which is part of a large global group that is an existing customer of Pelatro, for campaign management operations. The contract is recurring in nature and includes a variety of services as well as the product itself. Over the term of the contract lasting three years, revenue is expected to be between $1m and $1.8m, depending on the customer’s take up of additional services which are currently under discussion. In October 2020 the Annual Recurring Revenue run rate was $5.2m. The Company continues to negotiate further contracts and is pleased to report that it expects any contract wins before the end of this year to be for recurring revenue. Whilst the Company will, therefore, benefit from the smoother and higher quality earnings from this contract profile, it is unlikely that any further contracts won this year will result in significant additional revenue being recognised in 2020. However, over the past two months, regrettably Covid-19 has affected some of the employees and immediate relatives of both Pelatro and our customers. This has led to slower than scheduled implementation of projects (principally change requests). As this revenue is recognised only on completion of the relevant project, as a result, certain revenue which was otherwise visible in 2020 will be deferred to the first half of 2021.

Bushveld Minerals 12.75p £147m (BMN.L)

The integrated primary vanadium producer and energy storage provider, with ownership of high-grade assets in South Africa, announced that, pursuant to an agreement of 6 November 2020, amending the investment agreement between Bushveld and Orion Mine Finance and the related convertible loan note instrument first announced on 30th September 2020, Orion has agreed, through an affiliate of Orion, to subscribe for up to the entire US$35m of convertible loan notes under the Instrument. As an adjustment to the previously announced terms of the Instrument, the conversion price of the convertible loan notes has been set at 17 pence. All other terms remain unchanged. The terms of the transaction are summarised below. The proceeds from the issue of the convertible loan notes will go towards the first phase of Vanchem’ s critical refurbishment programme and debt repayment. The issue of the convertible loan notes is conditional, inter alia, on completion of the US$30m Production Financing Agreement (PFA), also announced on 30th September 2020. The Company continues to progress completion of the remaining conditions precedent under the US$30m PFA.

K3 Capital Group 148.5p £101.8m (K3C.L)

The multi-disciplinary professional services firm providing advisory services to SMEs, has successfully completed the integrations of randd and Quantuma in line with management’s 100-day integration plan. As part of this process, management have streamlined and consolidated certain Group functions such as finance, human resources and marketing, creating certain expected cost synergies in the process. Both businesses are performing well and the Company is already seeing cross-selling across the Group as well as healthy pipeline growth within the business divisions. Furthermore, Brendan Malloy, founder of randd, last week purchased a further 669,064 ordinary shares of 1 penny each in the Company (representing 1.0% of the Company’s current issued share capital), demonstrating his confidence in the strategy of the enlarged Group.

N4 Pharma 6.85p £10.7m (N4P.L)

The specialist pharmaceutical company developing Nuvec®, a novel delivery system for cancer treatments and vaccines, has appointed Nanomerics Limited to investigate the potential utility of Nuvec® in cancer therapy. The project will explore the role of Nuvec® as a delivery system for DNA and SiRNA. The initial aim is to test a silica based, delivery system in a proof of concept preclinical tumour model. “We are very excited to commence our Oncology Programme with Nanomerics in what could be a third commercial application for Nuvec® in a hugely significant market. Not only could Nuvec® have the potential to deliver therapeutic nucleic acids to target tumours, but also due to the structure of Nuvec® with its hollow core, it is feasible that it could be developed as a combination product whereby it carries an external nucleic acid load and an internal small molecule chemotherapeutic. Such potential could make Nuvec® very attractive as a possible delivery system for oncology therapeutics.”

Head Chef:

Derren Nathan
0203 764 2344
derren.nathan@hybridan.com

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