Small Cap Feast

5th October 2022

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What’s Cooking In The IPO Kitchen?

TECC Capital plc, to be renamed EDX Medical Group, intends to join the AQSE Growth Market. EDX operates a molecular biology and diagnostics laboratory in Cambridge, UK, from which it performs research & development, provides Polymerase Chain Reaction (PCR) testing and genomic sequencing services, undertakes quality assurance and has established expertise in the design, development, validation and sourcing of Lateral Flow Tests on a commercial scale. Due 31 October 2022.

Streaks Gaming plc, a UK-based provider of conversational gaming products intends to join the Standard Segment of the Main Market this autumn. The flotation is expected to value Streaks at approximately £10.2m (pre-money) and will make it the first LSE-listed “pure-play” conversational gaming company. Raising between £5-10m. Due around 6 October.

The Sustainable Farmland Trust PLC, intends to float on the Premium Segment of the Main Market. The Company invests in a diversified portfolio of farmland and related agriculture-focused assets predominantly located in the US. Raising £200m. Expected 12 October 2022.

Welkin China Private Equity, newly established closed-ended investment company dedicated to investing in unquoted Chinese companies, intends to join the Premium Segment of the Main Market. The Company is targeting a raise of up to US$300m. Due 3 November 2022.

Georgina Energy, focusing on the exploration, development and monetisation of helium, hydrogen and hydrocarbon interests located in Australia intends to join AIM. Georgina Energy has two principal onshore interests: (1) Mount Winter Prospect in the Amadeus Basin in Northern Australia, which the Company has a right to earn an initial 75% interest; (2) Hussar Prospect, 100% owned by the Company, located in the Officer Basin in Western Australia. Expected late October.

The listing of Independent Living REIT plc has been cancelled.


Breakfast Buffet

Arbuthnot Banking 800p £119.9m (ARBB.L)

The provider of private and retail banking, financial planning, and investment management services, provides a trading update for the three months to 30 September 2022. Bank of England base rate rises contribute to increased revenue and the company’s deposit balances exceed £3bn in the quarter. In September the underlying monthly profit before tax was approaching £4m (excluding the one-off cost of living bonus payment made to all employees that was signalled in the Group’s Interim results released on 19 July 2022). Full year results are expected to be ahead of market expectations.

Concurrent Technologies 77.5p £56.9m (CNC.L)

The specialist in the design and manufacture of high-end embedded computer boards for critical applications, has entered the Systems market through the launch of Helios, its new off-the-shelf, ruggedised vision computer system. This has the potential to significantly expand the company’s addressable market. Concurrent’s strategy has been to expand beyond the provision of Plug in Cards (PICs) into systems that utilise its own processor PICs augmented with best-in-class PICs from supplementary manufacturers. Helios is designed to withstand the harshest of environmental conditions and is targeted at a section of the Defence Systems market estimated in 2020 to be worth $105m growing at 17.9% p.a.

Genedrive £13.3p £12.3m (GDR.L)

The near patient molecular diagnostics company, announces that it has commenced engagement with the U.S. Food and Drug Administration (FDA) to progress the regulatory approval of the Genedrive® MT-RNR1 ID Kit into the USA. The Genedrive® MT-RNR1 assay is the world’s first rapid point-of-care test to screen infants in an urgent care setting for a genetic variant that will cause life-long hearing loss when carriers of the variant are given certain antibiotics. Genedrive has submitted via the FDA’s Pre-Submission process (Pre-Sub) because there is no exact comparable test in the market already. The Pre-Sub process allows Genedrive to clarify its testing and validation approach, confirm the appropriate regulatory application pathway (510(k) vs De Novo application) and gain additional procedural feedback from the FDA with the aim of making the final submission process more efficient.

Kinovo Plc 33.5p £20.8m (KINO.L)

The specialist property services group that delivers compliance and sustainability solutions, confirms that it has completed the refinancing of its £1.5m term loan with HSBC UK Bank plc, together with the annual renewal of the current £2.5m overdraft facility. As at 30 September 2022, Kinovo’s net debt position had reduced to £0.1m (H1 2022: £1.7m) with a cash balance of £1.7m (H1 2022: £2.2m). The term loan is a 12-month facility, at an interest rate of 4% above the compounded Sterling Overnight Index Average (SONIA) and there will be £0.38m quarterly repayments starting in November 2022. The cost of the overdraft is 3.00% above the Bank of England base rate.

Netcall 82.5p £127.7m (NET.L)

The provider of intelligent automation and customer engagement software, announces its audited results for the year ended 30 June 2022 (FY22). Revenue was £30.5m, up 12% and profit before tax was £2.3m, up 130%. The landmark $19m global contract win announced in June 2022 which resulted in a material upgrade to the FY23 expectations. Cloud services is Netcall’s largest revenue stream and comprising approx. 90% of new product bookings. Trading momentum has continued at the start of the new financial year.

PCF Group 1.5p £5.0m (PCF.L)

The assets-backed lender provides an update on its near-term strategic intentions and operations following the announcement by Castle Trust Capital plc on 29 September 2022 that it did not intend to make an offer for PCF. PCF Group continues to seek further growth capital and explore other transactional options such as asset sales. Given the uncertainty with the funding activities and the volatile macro-economic conditions, the Board has taken the decision, with effect from today, that it would be prudent to suspend any new lending activities until further notice.

Strix Group 120.4p £249.7m (KETL.L)

The designer and manufacturer of kettle safety controls and other complementary water temperature management components, announces that it has entered into conditional agreements to acquire the entire issued share capitals of each of Billi Australia, Billi New Zealand and Billi UK Ltd for an aggregate cash consideration of approximately £38m, payable on completion, on a debt and cash free basis. The consideration will be funded through a new term loan and Strix is undertaking an equity placing to maintain an appropriate level of leverage post the acquisition.

Sureserve Group 81.5p £135.2m (SUR.L)

The social housing energy services group announces that its wholly owned subsidiary CorEnergy Limited, bidding via an Aaron Services Limited Framework, has successfully completed a £5.4m contract with the Defence Infrastructure Organisation to supply the UK Ministry of Defence with solar PV. Acquired by Sureserve in December 2021, CorEnergy operates as both a consultant and principal contractor, designing and installing high quality decarbonisation solutions incorporating renewable energy generation, renewable heating and energy reduction.

The City Pub Group 61.5p £65.1m (CPC.L)

The owner and operator of 40 premium pubs across Southern England and Wales and a further 2 development sites, today announces that it intends to commence a share buyback programme up to an initial maximum value of £2m from the date of this announcement, with the option to extend by an additional £1m, as referenced in the interim results announcement on 21 September 2022. Due to the limited liquidity in its ordinary shares, the buyback may on any given trading day exceed 25% of the average daily trading volume.

Vertu Motors 45.58p £159.0m (VTU.L)

The automotive retailer with a network of 160 sales and aftersales outlets across the UK and a sector leading online presence, announces its interim results for the six months ended 31 August 2022 (1H FY23). Revenues grew 3.9% to £2bn. Adjusted profit before tax was £28.2m, down 46% (H1 FY22: £51.8m). Net cash was £17m (28 February 2022: £16.2m). The Board now anticipates that full year profits will be ahead of market expectations, as the government action regarding energy costs and National Insurance rates will benefit the Group in the second half.

5 October 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).

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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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