Small Cap Feast

19th January 2023

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Aveva Group PLC has left the Premium Segment of the Main Market.




What’s Cooking In The IPO Kitchen?

Celsius Resources intends to join AIM. Currently ASX listed, Celsius is a natural resources exploration and development company principally seeking to explore and develop potential world-class copper-gold assets in the Philippines and a cobalt asset in Namibia. Amount planning to raise and anticipated market cap TBC. Expected late January 2023.

Conviction Life Sciences, a newly established closed-ended investment company managed by Plain English Finance Limited, is seeking to list on Premium Segment of the Main Market of the London Stock Exchange, to invest in a conviction portfolio of life sciences and medical technology businesses, primarily in the UK, Europe and Australasia. The Company will invest in both Publicly Traded and Private companies - c. 70% and c. 20% of the total portfolio value respectively. The Company will target an annualised Total NAV Return of 20% over the long-term. Targeting to raise c.£100m. Delayed to 3rd February 2023.


Breakfast Buffet

Arecor Therapeutics 225p £68.9m (AREC.L)
The globally focused biopharmaceutical company advancing today's therapies, provides a business update for the year ended 31 December 2022. The financial performance was in line with market expectations and the Group closed its financial year with an unaudited cash balance of £12.8m. The Group’s proprietary portfolio of diabetes products continued to progress. Headline results from the second Phase I clinical trial of AT247, a rapid insulin candidate in October 2022, demonstrated faster insulin absorption than current market competitors. The results reinforce the potential of AT247 to enable a fully closed loop artificial pancreas system, a potentially life changing treatment.

Craneware £17.25 £613.1m (CRW.L)
The market leader in Value Cycle solutions for the US healthcare market, issues a trading update for the six months ended 31 December 2022 (H1 FY23). Revenues in H1 FY23 are expected to increase by 6% to approx. $84.7m (H1 FY22: $80.2m) and adjusted EBITDA by 8% to $25.5m (H1 FY22: $23.7m). The ongoing cost control has delivered growth in adjusted EBITDA and the Group expects to deliver full year adjusted EBITDA in line with Board expectations. Cash reserves was $38.6m (H1 FY22: $41.7m), and total bank debt was $107.9m (H1 FY22: $114.6m).

CPP Group 106.5p £9.4m (CPP.L)
The provider of assistance and insurance products announces a trading update for the year ended 31 December 2022. The Board expects revenues from continuing operations to be circa +19% ahead of the prior year (+15% on a constant currency basis). EBITDA from continuing operations is expected to be better than market expectations at circa £6.9m (2021 restated: £7.2m). In October 2022, the Group embarked on a change management programme to exit from legacy operations, address critical IT infrastructure requirements, and migrate towards an InsurTech business led by Blink and supported by CPP India and CPP Turkey. This change management programme is not expected to conclude before the end of the 2025 financial year.

Distribution Finance Capital Holding 36p £64.6m (DFCH.L)
The specialist bank providing working capital solutions to dealers and manufacturers across the UK, announces a trading update for the year ended 31 December 2022. New loan originations hit a record £1bn (2021: £690m). The loan book ended at approximately £440m, up 76% (31 December 2021: £249m), whilst maintaining a strong 6% net interest margin. The Group has grown dealer numbers to 998 (2021: 805). Furthermore the British Business Bank has agreed an initial £175m ENABLE Guarantee, which may also be increased to £350m allowing the Group to scale its loan book.

DXS International* 5p £2.4m (AQSE: DXSP)
The digital clinical decision support company announces its unaudited interim results for the half year ending 31 October 2022. Revenue for the period was marginally up at by 2% £1,652,467 (2021: £1,618,438). Profit/Loss before tax was a loss of (£131,269) (2021: profit £21,427) and profit after tax £27,656 (2021: £137,352). The reduction in profit is owing to increased operational costs and depreciation. Cash on hand was £398,745. Results overall are in line with projections. Numerous trials for new products (mainly ExpertCare hypertension module) are ongoing in clinical commissioning groups. Management is focused on converting these trials to commercial contracts.

Gear4music 117.5p £24.6m (G4M.L)
The largest UK based online retailer of musical instruments and music equipment announces a trading update for the three months to 31 December 2022. UK revenues were affected by continued weak consumer sentiment and consequences of the Royal Mail strikes through December. However, +11% European sales growth reflects successful execution of infrastructure investment during FY22. Gross profit of £12.7m is 6% lower than FY22 Q3. Margins are expected to recover during FY24.

Hotel Chocolat Group 208.5p £286.3m (HOTC.L)
The premium British chocolatier and omni-channel retailer announces Christmas and half-year trading update. UK retail like-for-like sales increased +7% to £74m. Group sales including international fell -9% YOY to £130m. The Company has a strong cash generation: net cash of £31m as of 18th January 2023. The international business in the short term continue to see temporary YOY reductions in revenues from Japan and US. The Group continues to reduce its overhead costs and aims to achieve 20% EBITDA margins by FY25.

Ilika 41p £64.7m (IKA.L)
The pioneer in solid-state battery technology announces its unaudited results for the six months ended 31 October 2022. Total revenue for the period was £0.2m (H1 2022: £0.2m), EBITDA loss £4.1m (H1 2022: £2.7m) owing to increased operational costs. Cash balance at period end was £18.6m (H1 2022: £27.7m). The company is commercializing its thin-film Stereax® miniature solid-state batteries for medical devices and industrial wireless sensors. Among the 21 initial orders for Stereax®, 11 are for implanted medical devices. The company has just signed a memorandum of understanding (MOU) with Cirtec Medical LLC to transfer Stereax manufacturing under license to Cirtec's facility in the US.

Judges Scientific £79.50 £506.4m (JDG.L)
The group focused on acquiring and developing companies in the scientific instrument sector, provides an update for the financial year ended 31 December 2022. Organic order intake was up 0.5% compared with the record performance reached in 2021 and organic revenues increased by 8% compared to 2021. The Group completed its largest acquisition to date, Geotek, for a total consideration of up to £80m in May 2022 as such, the Board anticipates that adjusted earnings per share will be ahead of current market expectations.

Kooth 178.5p £59m (KOO.L)
The UK's leading digital mental health platform announces a trading update for the financial year ended 31 December 2022. Revenue is expected to be within the range of market expectations: £19.6m to £20.2m, driven by growth of more than 15% compared to prior year. Unaudited net cash at year end was £8.5m (FY21: £7.1m) and the Group remains debt free. Kooth is being mobilised to help reduce the burden on acute-need NHS services, including Accident & Emergency attendance by providing the service to adults in need of urgent mental health support. As announced on 13 October 2022, the Group formalised a contract with the to cover 150,000 students in State of Pennsylvania, with the aim of expanding in the state.

19 January 2023
*A corporate client of Hybridan LLP

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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).

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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.

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