Small Cap Feast

23rd June 2022

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What’s Cooking In The IPO Kitchen?

Immediate acquisitions (IME.L) is to re-join AIM via a Reverse Takeover of Fiinu Holdings Limited. Once complete the Company is proposing to change its name to Fiinu Group plc. Fiinu intends to be a provider of a consumer banking product, the Plugin Overdraft ®, which is designed to provide customers with an overdraft facility without having to change their current account or request an overdraft from their existing bank. Fiinu’s technology arm manages and develops the platform, using open banking, and once the platform is fully operational will also look to develop secondary revenue streams by licensing Fiinu’s intellectual property rights. Capital to be raised £8.01m. Target Mkt Cap c.£53m. Due 8 July.

Visum Technologies seeking admission to The AQSE Growth Market. The Company’s business is to own and operate an “on-ride” video and photographic camera system that it sells and/or licenses to customers (being theme parks, ride manufacturers, souvenir imaging providers, and other leisure operators). Due 30 June.

LifeSafe Holdings, a fire safety technology business with innovative fire safety products, intends to join AIM. LifeSafe has developed what the Directors believe to be market disrupting, eco-friendly fire safety protection products to both protect (via fire extinguishers) and detect (via carbon monoxide, smoke and heat alarms) fires. At the centre of the Group’s product range is the FER1000 extinguishing fluid, which has been developed by LifeSafe to extinguish five different types of fire: electrical, paper, textiles, cooking oil, and petrol and diesel. The Group’s best-selling product using this patent pending extinguishing fluid is the StaySafe 5-in-1 fire extinguisher. It was launched on Amazon Prime in the UK in August 2021 and subsequently became Amazon Prime’s top selling fire extinguisher in the UK in the same month. In n the year ended 31 December 2021, the Group generated revenues of £670k and a loss post taxation of £1.5m. £3m to be raised. Due early July 2022.

Altona Rare Earths, the AQSE listed mining exploration Company focused on the evaluation, acquisition and development of Rare Earth Elements mining projects in Africa, intends to join the Main Market. Admission to trading of the Company’s Ordinary Shares on the AQSE Growth Market will be cancelled simultaneously with Admission. It is also proposed that on Admission, the Company will change its EPIC from AQSE:ANR to REE. The Company also seeks to raise funds to finance its current and future rare earths mining projects in Southern and Eastern Africa. Due June 2022.


Breakfast Buffet

ADM Energy* 0.7p £1.7m (ADME.L)

The natural resources investing company with an existing asset base in Nigeria has reported FY December 2021 results. The company reported a revenue uplift of 125% to £1.8m, reflecting a recovery in the oil price and its increased profit interest in the Aje Field from 5% to 9.2% during the year. The loss after tax decreased 64% to £2.5m largely due to the non-recurrence of 2020’s £4.6m impairment. The company raised £1.47m and realised £0.85m from its investment in Superdielectrics in 2021 and raised a further £0.56m post period. During the year, the company acquired 35.7% indirect interest in a risk sharing for the development of the Barracuda Field. Located in OML141, the Barracuda Field is an existing discovery asset which covers 103km2 in the swamp/shallow waters of the Niger Delta. The competent person report (CPR) released in March 2022 on the Barracuda prospect indicates that with a 2U (P50) case, the NPV10 is +$99mm with an IRR of 45%.

Alpha Financial Markets Consulting 362p £407.2m (AFM.L)

The global provider of specialist consultancy services to the asset management, wealth management and insurance industries announced its results for FY22 ended 31 March 2022. Revenue and net fee income1 increased by 61.1% to 158.0m (FY 21: 98.1m) and £157.8m (FY 21: 98.0m) respectively; 31.3% on an organic basis. Gross profit increased by 70.4% to 59.4m (FY 21: 34.8m) and adjusted EBITDA increased by 56.0% to 33.9m (FY 21: 21.7m). On a statutory basis, profit before tax increased to £14.9m (FY21: £9.0m) and basic earnings per share increased to 7.69p (FY 21: 5.75p). The net cash position increased to £63.5m at 31 March 2022 (31 March 2021: £34.0m). In view of Alpha’s performance and cash position at the year end, the board is recommending a final dividend of 7.50p (FY 21: 4.85p).

Aura Energy Limited 9p £42.4m (AURA.L)

The company provided an update on its fast-tracking initial uranium production at its 85%-owned Tiris Uranium Project in Mauritania, with the achievement of pilot scale confirmatory results from simple screening techniques at the mine, to achieve on average 550% increase in uranium grade, and preliminary bulk leaching tests confirming rapid uranium extraction of over 95%. Pilot scale tests were conducted at Mintek in Johannesburg, and bulk metallurgical test work is ongoing at ANSTO Minerals, located in Lucas Heights, New South Wales, Australia. In January 2022, Aura initiated a program of test work with ANSTO Minerals. The focus of the program now is to confirm design criteria for use in the planned Front End Engineering Design (FEED) Study, as Aura advances to a final investment decision for the Project which is targeted for Q1 of 2023.

DeepVerge PLC 10.8p £23.6m (DVRG.L)

DeepVerge, an environmental and life science group of companies, announced its financial results for the year ended 31 December 2021. Revenues jumped by 107% to £9.3m and EBITDA losses fell by 98% to just £0.017m. Orders exceeded £10m during the year but supply chain and COVID pushed some shipments into Q1 2022. The company’s 2022 Q1 sales have increased by 84% to £2.38m and it saw the first underlying profit at the EBITDA level (excluding exceptional costs). The company completed a £10m placing and raised £25m with a mezzanine loan facility. DeepVerge develops and applies AI and IoT technology to analytical instruments for the analysis and identification of bacteria, virus and toxins and the impact of skincare product claims on skin.

Downing Renewables & Infrastructure Trust 111.3p £152.4m (DORE.L)

The renewables and infrastructure trust fund with operating assets in the U.K and northern Europe announced that it has raised c.£52.9m. These proceeds will be used to repay the revolving credit facility and to invest in an attractive pipeline of near term opportunities, which are intended to further diversify the fund’s portfolio. This fundraise represents c.35% of the company’s ordinary share capital immediately prior to the initial issue.

Light Science Technologies 8.5p £14.8m (LST.L)

Light Science Technologies Holdings plc (AIM: LST), the controlled environment agriculture (CEA) technology and contract electronics manufacturing (CEM) group, is expanding its nurturGROW lighting product portfolio with the launch of its ‘slimline’ Vertical Farm range, further reducing the space and energy required for multi-layer applications such as glasshouse and polytunnel growers.

Naked Wines PLC 159.2p £116.9m (WINE.L)

The online wine retailer announced its results for FY22 ending in March 2022: sales up 5% year-over-year on a constant currency basis1 (+3% on a reported basis) to £350.3m. Adjusted EBIT was £2m (a loss of £1.5m in FY21). The cash balance dropped to £40m (FY21: £85m) and the inventory rose to £142m (FY21: £76m). Post period the company entered into a $60m credit facility which includes covenant commitments. Share price plummeted by 35% on the back of the numbers and the outlook. The company guides its FY23 sales to be in the range of £345m to £375m (-4% to +4% on a constant currency basis).

Oxford Metrics Plc 106p £135.0m (OMG.L)

The smart sensing software company servicing life sciences, entertainment and engineering markets announces its interim results for the six months ended 31 March 2022. The company’s revenue of £12.5m was up 11.8% year-over-year. Its adjusted profit before tax £0.3m (H1 FY21: £1.0m) reflects a planned increase in R&D investment, together with operating costs returning to more normal levels. The company had a net cash of £19.6m as at 31 March 2022 (H1 FY21: £15.9m). During the period, the company disposed its stakes in Causeway Technologies on 30th May 2022 for a cash consideration of £52m. Management is actively seeking out M&A opportunities to enhance capabilities.

Rockwood Strategic 1,370p £47.8m (RKW.L)

The AIM-quoted investment company investing in small UK public companies announce its audited results for the year ended 31 March 2022. NAV Total Return performance in the twelve months to 31 March 2022 was 27.5% to 1613.8p/share which compares to the FTSE Small Cap (ex-ITs) of 3.2%. The Total Shareholder Return in this period was 22.2%. Investment gains realised in Augean, RPS, National World, Universe Group and Ted Baker. RKW ended the year with net assets of £41m, invested in 9 companies together with £10.5m in cash. £25m was returned to shareholders during the period by way of B share scheme and tender offer. No final dividend declared as a result. Future policy is to pay out at least 85% of portfolio income net of expenses, retaining capital for re-investment. The company is considering a move from AIM to MAIN.

Supply@ME Capital Plc 0.08p £31.6m (SYME.L)

The innovative fintech platform offering inventory management service to manufacturing and trading companies, announces that TradeFlow Capital Management Pte Ltd (TradeFlow), part of the Supply@Me Group, has completed the first warehoused commodities monetisation transaction introduced by CARGOES Finance By DP World. The completion of the first transaction follows the partnership agreement the parties signed earlier this year, announced in the RNS of 18 February 2022. TradeFlow Funds have monetised the inventory of a small to medium-sized enterprise coffee company based in the United Arab Emirates, via the Dubai Multi Commodity Centre (DMCC) Electronic Warrants (E-Warrants) platform. TradeFlow is a shariah-compliant, Murabaha transaction member of the DMCC E-Warrant platform.

23 June 2022
*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).

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.

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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.

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