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
23rd May 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.
Digging through these companies’ recent announcements, we may have unearthed hidden value.
DNM: Fair Chance
KRM: Managing Risk
RTC: Recruitment Drive
Dianomi 27.5p £8.26m (DNM.L)
Financial Calendar:
Year End December, Finals reported 19 May, Interim results to June expected before end September
Top Three Shareholders:
Scobie Dickinson Ward 16%, BGF Nominees Limited 14.9%, Raphael Queisser 12.1%
Key Investment Points:
Losses narrowing, Cash increased to £8.8m, Media Platform reboot
The recent finals to December 2o24 reported progress on transitioning the established platform into a comprehensive, full-spectrum, digital advertising platform. The Platform provides over 350 advertisers, including blue chip names such as Aberdeen, Invesco, Bank of America and Charles Schwab, with access to an international audience of around 500m readers per month through its partnerships with over 300 premium publishers, including blue chips such as Reuters, CNN Business and WSJ. It listed at 273p, raising a net £3.93m, in May 2021 and has not raised further funds since. The forecast increase of 8-10% in digital advertising spending in the US**** is expected to exceed $325bn in 2025 and financial services, the Group's main sector, is projected to spend $33.81bn. Dianomi’s current small share of this provides plenty of growth potential.
The original established Native advertising platform was based on contextual human-interest stories. Native targeted audiences on desktop and mobile websites, mobile, and tablet applications of premium publishers. Revenue for the FY December 2024 declined 7.3% to £28m, while gross profits margin increased to 26.1% from 24.7% giving a slightly reduced EBITDA loss of £0.3m from a loss in the prior period of £0.4m. A PBT of £0.3m was reported compared to a £1.8m loss in the prior period. There were no borrowings at the year end, net cash was £8.8m which had improved from £7.7m at the end of 2023 and the current ratio is a robust 2.2x.
The transition into a broader strategy will be supported by investments in people and services to widen campaign capabilities to deepen the monetisation. Specialists’ sales teams are being formed to cover high value sectors such as travel, automotive, technology, property, and luxury goods. This broadens the reach beyond the core business and finance sectors. Supporting these market verticals is the newly developed Dianomi Insights, a proprietary analytics tool that enables brands to benchmark their media presence against industry peers. Revenue growth for H1 2025 is expected to be lower than last year but the board is confident of significant growth from the new strategy.
Hybridan Comment: The market capitalisation is covered by assets (primarily cash) and seems overly pessimistic.
KRM 32.50p £11.73m (KRM.L)
Financial Calendar:
Year End December, Finals reported 19 May, Interim results to June expected before end September
Top Three Shareholders:
Trading Technologies International Inc. 24.7%, Kestrel Investment Partners 17.1%, Canaccord Genuity 10.3%
Key Investment Points:
High Value Niche, Approaching break-even, Entreprenial Team
The Global Risk Platform is focused on reducing the cost and complexity of risk management. The Platform provides applications to help address a firms' trading and corporate risk challenges to manage their entire enterprise risk profile. Regulatory pressure is driving firms to refine procedures and technology enables greater accuracy, efficiency, and compliance. The global market for risk management software is worth approximately £6bn per annum.
At the start of 2024, serial tech entrepreneur Dan Carter and Gerry Jones were appointed as CEO and Non-Executive Chairman respectively. A cost savings programme was initiated, and the recently reported FY December 2024 showed a marked improvement in financial and operational performance. Revenues increased by 28.3% to £6.8m of which the Annualised Recurring Revenue (ARR) is £6.6m, which is a 22.2% increase compared to the previous period. The restructuring and rationalisation initiatives have reportedly reduced costs by £1.2m. EBITDA profit is£1m compared to an EBITDA loss of £1.3m in the prior period, while the Losses before Tax decreased to £1.4m from Losses before Tax in the prior period of £4.9m. The gross cash at the Y/E was £1m, compared to £0.9m at the end of December 2023.
During the period, 12 new ARR contracts were signed, which included 6 new customers, and there are now 44 institutional customers. The first sales have been received after the launch of a risk management application and the combination with Limits Manager streamlines a client’s risk operations and enhances its audit capabilities. A market Surveillance software has been developed with an Application Programming Interface (API), enabling the building of new web-based and added AI functionality focussed on monitoring, and this will be launched in 2025. A strong start to 2025 is reported with the ARR increasing further to £7.4m. Its risk management technology and services are even more essential to clients in volatile times, and this momentum is creating significant opportunities for growth.
Hybridan Comment: The approaching uplift to earnings may accelerate the entrepreneurial development and the market capitalisation seems moderate for its specialist services.
RTC Group 97.5p £12.24m (RTC.L)
Financial Calendar:
Year End December, Finals reported 24 March, Interim results to June expected before end September
Top Three Shareholders:
Estate of WJC Douie (Former Director) 20.73%, GA Mason 9.39%, A M Pendlebury (Executive Chairman and Chief Executive) 5.55%
Key Investment Points:
Diversity policy, Consolidation Opportunities, Low P/E and 5.4% yield
The business was founded in 1963 and focuses on white and blue-collar recruitment, providing temporary and permanent labour to a broad range of industries and customers, in both domestic and international markets. In the UK, the Group’s Ganymede and ATA Recruitment brands offer a wide range of recruitment services. Ganymede provides a diverse range of people solutions to the rail, energy, construction, highways, and transportation sectors. ATA Recruitment provides high-quality technical recruitment solutions to the manufacturing, engineering, and technology sectors. The International division works with customers on delivering projects in a variety of sectors, including in some of the world’s most hostile locations.
The finals to December 2024 reported a 2% decline in revenue to £96.8m, with a PBT increasing marginally to £2.6m from £2.5m in the prior period. RTC reported a fully diluted EPS of 13.01p against 12.72p at the end of December 2023, giving we calculate a P/E of 7.1x. The dividend was increased to 5p from 4.5p, giving a 5.4% yield. There is a solid order book across rail maintenance and renewals, and smart meter roll out and upgrades, alongside other key infrastructure programmes, providing some clear visibility for 2025 revenues.
The Trading update for the first quarter of 2025 given at this week’s AGM reported a continuing positive trading and cash generating trajectory. The update was from the CEO and Executive Chairman, Andrew Pendlebury, who was appointed to both roles following the sudden death in 2023 of WJC Douie. There are concerns however that the increases to employer's NI contributions and minimum wage will reduce companies’ recruitment, which would impact all UK recruiters. There is a no long-term debt and the balance sheet continues to improve due to strong operating cash flows, with £2.2m of cash generated from operations in 2024. The current ratio is 1.6x (ratio of current assets to current liabilities) and would be considered conservative.
Hybridan Comment: An upturn in the recruitment cycle may stimulate corporate activity and the Group seems well positioned to capitalise on new and emerging organic growth and M&A opportunities.
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