Small Cap Feast

5th July 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.

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. Anticipated Mkt Cap £16.58m. Due 6 July 2022.

MicrosSalt, a portfolio company of Tekcapital Plc (AIM: TEK), is eyeing a listing on the London market in 2023. MicroSalt is the U.S. operating subsidiary of Salarius, Ltd. With MicroSalt®, companies can make full flavour snacks with the same saltiness as traditional snacks yet with half of the sodium. MicroSalt has recently executed its first bulk B2B MicroSalt order in the US. This progress follows on the heels of the expansion of MicroSalt’s SaltMe brand of low-sodium potato chips into over 3,000 retail stores nationwide in the U.S., up from 2,400 stores last quarter.


Breakfast Buffet

Atalaya Mining 305p £426.5m (ATYM.L)

The mining and development company producing copper concentrates and silver by-product announced the results of the first 22 exploration drill holes on the Campanario Trend, one of several mineralised zones comprising Proyecto Masa Valverde (PMV) in southern Spain. The initial drilling results confirm PMV’s continued exploration potential and the possibility to quickly define a shallow mineral resource. Drilling to date has focused around the historical Campanario workings, which only represents approximately 10% of the entire strike length of the mineralised structure. Intersected mineralisation includes massive and semi-massive sulphides as well as stockwork-type material, consistent with the Masa Valverde and Majadales deposits. These results demonstrate the significant exploration potential of Atalaya’s strategic land package in the world-class Iberian Pyrite Belt.

CML Microsystems 365p £58.1m (CML.L)

The mixed-signal, RF and microwave semiconductors company announces its results for the year ended 31 March 2022: revenue up by 27% to £16.96m, gross profit up by 35% to £12.80m due to improved product mix. Profit before tax was £1.74m (2021: £0.01m) after accounting for share-based payments and net finance income. Net cash totaled £25.04m (2021: £31.9m) after a £9.0m dividend to shareholders. The company is proposing to pay a dividend of 5p per ordinary share.

Cordel Group 4.5p £7.7m (CRDL.L)

The artificial intelligence company in transport corridor analytics, announced that it has been awarded a 12-month contract to deliver its LiDAR-based solutions to One Rail Australia. Cordel has delivered to One Rail Australia a solution for ballast profile analysis to automate processing for over 2,000km of freight railway. The solution consists of a LiDAR (Light Detection and Ranging) captured Digital twin of the entire Tarcoola to Darwin rail network, which runs through the centre of Australia. Cordel’s automated analysis measures ballast deficiency, depth and volumes, with materials estimation to replenish deficient areas.

Equals Group 87p £157.2m (EQLS.L)

The fintech payments group focused on the SME marketplace provided a trading update for the six months ended 30 June 2022 (H1-2022). Its revenue increased by 84% to £31.3m, a record high level. Gross profits for the period have been estimated at £15.0m, up 47% on H1-2021. Gross profit margins were, in the aggregate, 48.2%, compared to 50.6% in H2-2021. Cash balance rose to £15.1m (30 June 2021: £10.1m). International payment accounted for 51% of its revenue in H1-2022.

Kitwave Group 151.3p £105.9m (KITW.L)

The wholesaler and distributer specializing in impulse products such as confectionery announce its interim results for the six months ended 30 April 2022 (H1 2022). Revenue up 51.8% to £223.3m as trading back to pre-pandemic levels. Profit after tax was £4.4m (H1 2021: loss after tax £3.4m). Trading post period has been significantly ahead of expectations, leading the company to revise its financial expectations upwards for the year ended 31 October 2022. The Board has declared an interim dividend of 2.50p per share for the financial year ending 31 October 2022. Its growth to date has been achieved both organically and through acquisitions of smaller, predominantly family-owned, complementary businesses in the fragmented UK grocery and foodservice wholesale market.

Mast Energy Developments 2.9p £5.5m (MAST.L)

The UK-based multi-asset owner and operator in the reserve power market announced an update with regards to its current flagship producing asset, the 9 MW Pyebridge Synchronous Gas-powered Standby Generation Facility (Pyebridge) that was acquired in August 2021. Pyebridge generated a revenue of c. £130k for the 3-month period March to May 2022, with an output of 371 MWh and at an average selling price of c. £354 per MWh. This average selling price is around 5x higher than the average at the time of the company’s IPO in April 2021. Although the associated generation gas cost also increased during this time, there is a positive net variance that will add to Pyebridge’s profitability.

Mortgage Advice Bureau 869p £495.5m (MAB1.L)

The UK-based specialist appointed representative networks for mortgage intermediaries announced that the intended acquisition of approximately 75% of Project Finland Topco Limited (Fluent) has received change in control approval from the FCA. This acquisition was announced in March 2022 for a total cash payment of c.£73m, funded from renewed and increased debt facilities, existing cash resources, and a successful share placing of £40m (before expenses). The deal is expected to occur on or around Monday 11 July 2022.

Supreme 87.5p £102.0m (SUP.L)

The manufacturer, supplier and brand owner of fast-moving consumer products announced its results for the year ended 31 March 2022 (FY22). Revenue was £130m, up 7% supported by growth in vaping products and nutrition and welling products. The net debt was £4.0m exiting FY22 (FY21: £7.6m), alongside a new £25m facility with HSBC in March 2022 for acquisitions. For FY23, the company expects revenue and EBITDA to be lower than Y22 levels and below previous market expectations, driven by a recent marked decline in the Lighting category following a slow-down in sales compounded by customer overstocking in FY22.

Transense Technologies 67.5p £10.8m (TRT.L)

The developer of specialist sensor systems provided a trading update for the financial year ended 30 June 2022. Revenue for the year has increased by almost 50% to around £2.6m, in line with market expectations. Net earnings may exceed market expectations as a consequence of an increased tax credit arising from extending the recognition of deferred tax assets arising from prior years’ losses. Net cash balances at 30 June 2022 amounted to £1.05m (FY21: 1.04m). The top line growth was underpinned by 75% loyalty income increase to US$2m in the iTrack, a tyre management solutions for the off-the-road (OTR) market.

Quiz 10.5p £13.0m (QUIZ.L)

The omni-channel fashion brand announces its results for the year ended 31 March 2022 (FY22). Sales were £78m, up 97% year-over-year due to the removal of social restrictions. Operating profit was £0.9m (FY21: 9.4m loss). Operating cash inflows of £5.3m (2021: outflow of £2.5m). The company does not plan to pay dividends for the year as it hopes to strengthen its balance sheet. Its net cash was £4.4m ended in FY22 (FY21: 1.5m in net cash). The company has achieved sales of £27.3m during the first quarter of its FY23 (three months to 30 June 2022), consistent with the period prior to the pandemic on a like-for-like basis.

5 July 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
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