Welcome to our new product “Friday Takeaway”
This will delve a little deeper on individual companies and focus on non-house stocks under £200m market capitalisation to help raise awareness
Friday Takeaway from UK Small Caps
This will delve a little deeper on individual companies and focus on non-house stocks under £200m market capitalisation to help raise awareness
12th September 2025
Alphabetically arranged
Share prices and market capitalisations taken from Alpha Terminal from the current price on the day of publication.
Top three shareholders are taken from the websites of the companies that we are writing about, unless there is a more up to date TR-1 notification RNS announcement.
Profitable companies targeting acquisitive growth
ARC Near to Tier 1 Banks
DBOX Royal Growth
Arcontech Group 99.00p £13.24m (ARC.L)
Financial Calendar:
Year End June, Reported 10 September, Interims to December, reported 24 February
Three Main Shareholders:
Hargreave Hale Nominees Ltd 18.19% (including 13.2% held in nominee for Directors, A. Cross 13.35%, R. Last 11.98%)
Key Investment Points:
Valuable Market, Sticky Clients, Cash for Acquisitions
The provider of a suite of proven high-performance software and services for real-time financial market data processing and trading, reported finals this week for the year ended June 2025. Turnover increased 6.4% to £3.11m, although the increase was from low margin development work and recurring revenue is 94% compared to 99% in FY2024. This, however, reduced the PBT to £0.99m from £1.1m, feeding through to an EPS of 7.05p compared to 7.98p. Administration costs increased 14% to £2.23m of which £0.35m is director salaries. The dividend is increased to 4p a share from 3.75p, giving a 4% yield, while the historic P/E is 14.4x.
Arcontech’s products and bespoke solutions cover the collection, processing, distribution and presentation of time-sensitive financial markets data. There is a full suite of complementary and replacement components for legacy market data platforms. Its server side and desktop components integrate seamlessly, so increasing flexibility as solutions can be off-the-shelf, customised, or completely new development in Cloud, On-prem or Hybrid. This leaves plenty of room to make complimentary and infill acquisitions. The Group's deep domain knowledge and automated test suite ensure the right solution at the right time and potentially reducing a client’s cost.
Clients include Global Tier 1 and Tier 2 financial market participants along with key market regulators such as Danske Bank, Morgan Stanley, Barclays and the Bank of England. The competition in this attractive market is mitigated by the Group's more than 25-year history and the ongoing investment in R&D. Existing and prospective clients continue to seek improvements to their existing market data platform solutions. The Group has several new ‘Requests for Information’, which are at various stages. It is a convoluted purchasing cycle which takes time the CEO, Mathew Jeffs, who was with Barclays and Dow Jones, is optimistic of winning several new mandates.
The strategy is to concentrate on the core market which continues to grow, while retaining clients. Investment has been made in growing sales and support teams which should help to drive up-selling with existing clients and bring in new prospects. Customer retention and product development will continue to help the organic growth. The net cash increased by 3.3% to £7.4m and any consolidation would provide opportunities to acquire smaller competitors. The adjusted EBITDA for 2025 is £0.87m which we calculate gives an EBITDA/EV of
5.6x. Organic and dividend growth is anticipated by the Board for 2026.
Hybridan Comment: The rate of growth from an established position in a maturing, but valuable market could be significantly helped with an appropriate acquisition.
Digitalbox 4.80p £5.66m (DBOX.L)
Last Reported in Friday Takeaway 13 June 2025 at 4.30p
Financial Calendar:
Year End December, Finals reported 25 March, Interims to June, to be reported on 23 September 2025
Top Three Shareholders:
Storia Credit Holdings (Europe) 19.73%, Downing (London) 16.95%, Mr James Carter & Mr Jim Douglas with 9.3% each
Key Investment Points:
Growth Market, Operating Leverage, Earning Enhancing Acquisition
The Interims for YE December 2025 are set for 23 September 2025 and the Trading Update on 5th August reported significant year on year improvement in advertising performance. As a result, revenue is expected to have increased by 11% to over £2m, with EBITDA ahead of management expectations. The CEO is James Carter, who is widely known for growing FHM from a fledgling fashion focus magazine to a global network of 32 editions and value at a peak of over £250m.
The acquisition of the digital assets of The Life Network from Media Chain Group Ltd was completed in June. Under the final agreement, ownership of The Life Network's Facebook and Instagram pages have transferred to Digitalbox. As a result, DBOX now has over 26 million followers within its own social media channels. The total consideration for the Acquisition was £200,000, comprising the £20,000 license fee paid in March and a further £180,000 cash on completion. These assets have been acquired to progress the development of The Royal Insider, which after successful testing is expected to be earnings enhancing in FY 2025.
DBOX’s mobile-first digital media business owns websites such as Entertainment Daily, The Daily Mash, The Poke, The Tab and TV Guide. A Strategic Review was completed on 28 January and concluded that there is an opportunity to leverage its proven operating model and launch new compelling content sites that drive advertising. The Board recognised the need to scale up the platform with is able to adapt in real time, while maintaining strong demand for its popular media inventory, which is expected to drive growth for its targeted advertising. Incidentally, projected global Digital Mobile Advertising spend is anticipated to increase 10% per annum to £542bn by 2027.
Trading momentum seems to be continuing from the FY December 2024,when the EBITDA recovered 31x to £424k from depressed levels and the loss before tax was £70,000 compared to a loss of £280,000 (after adjusting YE 2024 for a £6.4m impairment charge). Net cash was £2m before the latest acquisition and the Company was cashflow positive. R&D has been increased as AI is adapted to ultimately improve margins. Hybridan Comment: The track record distracts attention from the improvement underway. Momentum seems to building towards the 2026 EBITDA forecast of £0.85m and on this forecast we calculate an EBITDA/EV of 3.8x
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