Hybridan Small Cap Feast

A round up of the day’s news brought to you by the team at small-cap broker and advisor Hybridan.

Dish of the day

AIM admission today (MMAG.L) musicMagpie is a leader in re-commerce in the UK and US in the circular economy of consumer technology (including smartphones, tablets, consoles and personal computers), books and disc media (including CDs, DVDs and video games).  Primary placing: £15m. Secondary placing: £95m. Anticipated market capitalisation on Admission at the placing price: £208m.

Off the menu

No Leavers Today.

Banquet Buffet

Shearwater Group 153p £36.4m (SWG.L)

The organisational resilience group which provides cybersecurity, advisory and managed security services, released a post close trading update for the financial year ended 31 March 2021. Following a robust second half of trading, and subject to audit, the Group expects to report FY21 underlying EBITDA in excess of £3.6m (FY20: £3.4m), ahead of market expectations. Revenue of £31.8m was delivered in the year (FY20: £33.0m), reflecting an increase in sales activity converted across the second half and strong margin improvement. Over the past 12 months the Group’s balance sheet has strengthened. Cash collection also exceeded expectations, resulting in unaudited net cash balances of £7.3m as at 31 March 2021 (31 March 2020: £1.4m net debt), of which £1.3m will be applied towards the settlement of deferred VAT payments relating to FY21 revenues. Shearwater delivered very strong trading in H2 FY21 with year on year revenues for the six months up by 24% on the same period in the prior year. Revenue was driven by new client wins and several high value contract renewals. The Group noted numerous positive signs of returning business confidence, including the early commencement of the previously announced £3.6m project to monitor and provide support to next generation mobile communications which had initially been scheduled to commence in Q1 FY22.

Lansdowne Oil & Gas 0.825p £7.21m (LOGP.L)

The North Celtic Sea focused, oil and gas company, provides a commercial update on Standard Exploration Licence 1/11, located c. 50km off the south coast of Ireland and containing the Barryroe oil and gas field.  Due to non-performance by SpotOn Energy pertaining to the financing solution required under the Farm-out, the Barryroe Partners have elected to discontinue the agreement. Providence/EXOLA will now lead the project development and funding arrangements. The revised funding is expected to continue to include payment deferrals from the previously outlined service provides on equivalent or better terms and a bond issue.  Work on the funding solution is advanced and is expected to conclude by the end of the third quarter in time to meet drilling in 2022.

Gear4music 850p £178.1m (G4M.L)

The largest UK based online retailer of musical instruments and music equipment, today announces a year-end trading update covering the 12 months to 31 March 2021.  UK Sales +27% to £78.7m, total sales up 31% to £157.5m. Gross margin improved by 360bps to 29.5% (FY20: 25.9%; FY19: 22.8%)  EBITDA now expected to be not less than £19.0m (FY20: £7.8m; FY19: £2.3m), ahead of current market expectations. Net cash of £2.4m at 31 March 2021 (net debt at 31 March 2020 and 31 March 2019: £5.5m and £7.5m respectively). Signed a new £35m three-year Revolving Credit Facility with HSBC.

Sanderson Design Group 136p £96.54m (SDG.L)

The luxury interior design and furnishings group, announces that its Sanderson brand is collaborating with Maro Itoje, the England rugby star, to reinvent the Very Sanderson media campaigns of the 1970s for contemporary consumer audiences. As a modern English celebrity, Maro Itoje will feature as the new face of the Sanderson brand in social, digital and traditional media with the objective of generating broader awareness of the brand among consumers. The collaboration is timed ahead of the launch of Sanderson’s 160th anniversary collection of fabrics and wallpapers, called Sanderson One Sixty, and is part of a strategy to promote the Company’s brands direct to consumers to drive sales to the Company’s trade customers.

Metals Exploration 1.375p £28.48m (MTL.L)

The natural resources exploration and development company with assets in the Pacific Rim region announced the appointment of three new Non-Executive Directors: David Cather as Independent Non-Executive Chairman; formerly CEO (Mining) of Abu Dhabi Capital Group and Avocet Mining plc , Jeremy Wrathall as Independent Non-Executive Director; CEO of Cornish Lithium Ltd and formerly Global Head of Natural Resources – London at Investec and Andrew Chubb as Non-Executive Director; Partner and Head of Mining at investment bank Hannam & Partners.

GETECH Group 24.5p £16.4m (GTC.L)

Getech, a provider of data, software and analytic products to the energy industry,  has agreed software licence renewals with existing customers with a combined value of c.£375,000. These agreements include both annual and multi-year licences. In addition, and on top of Getech’s baseline of monthly orderbook revenue, the Group has recently successfully negotiated new sales of data and has won new service projects with existing and new customers with a combined value of c.£350,000. In step with Getech’s focus on diversification, this work spans the petroleum and geothermal sectors.

Keywords Studios 2,975p £2,227m (KWS.L)

The international technical and creative services provider to the global video games industry, today announces that it has acquired the entire issued share capital of Climax Studios, a UK based provider of game development services to the video games industry, for a total consideration of up to £43m. The acquisition will bring significant additional scale to the Group’s largest service line, Game Development, and further the Group’s strategy to become the ‘go to’ technical and creative services platform for the global video games industry.

Arkle Resources 0.9p £2.75m (ARK.L)

Arkle announced that diamond drilling is due to commence at its wholly owned Mine River project in Counties Wicklow and Wexford. A 12 hole diamond drill programme will begin on Monday April 26. A total of 1,000 metres to be drilled. The first 3 holes to focus on a new area 750 metres from previous discoveries where visible gold was found in recent trenching. Follow up drilling along strike at Tombreen where previous drilling identified 8 metres at 4.5g/t gold.

Animalcare Group 285p £171.16m (ANCR.L)

Daxocox (enflicoxib) approved for use by European Union and UK authorities. Novel once-weekly COX-2 inhibitor to combat osteoarthritis-related breakthrough pain in dogs. Virbac to distribute Daxocox in most European countries outside Animalcare’s direct markets.

Empyrean Energy 5.45p £26.67m (EME.L)

The oil and gas development company with interests in China, Indonesia and the United States, advises that following submission of Empyrean’s federal tax return with the United States Internal Revenue Service  for the 31 March 2020 financial year, it has now received a tax refund of US$357,702, representing corporate alternative minimum tax credits.

What’s cooking in the IPO kitchen?

Catena Group (CTNA.L) to complete reverse takeover and be renamed Insig AI and is acquiring the remaining shares of  Insight Capital Partners. Insight, which is based in the UK, is a data science and machine learning solutions company that provides bespoke web-based applications, advanced analytical tools and modern technology infrastructure to make machine learning accessible to investment professionals. Insight has developed five products specifically aimed at accelerating an asset manager’s data science and machine learning strategy. Capital to be raised on Admission approximately £6.1m. Mkt cap c. £66.4m. Due 10 May.

Semper Fortis Esports* recently announced its intention to IPO onto the Access Segment of the Aquis Stock Exchange Growth Market.  Semper is a multi-operational Esports organisation focusing on gaming technology solutions, brand enhancement and high growth team infrastructures.  The company plans to raise £2.5m to develop their three core areas of establishing an esports team, forming partnerships with brands for sponsorship and B2B consultancy services.  The Board are highly experienced in sports and corporate deal making (Keith Harris, former Chairman of The Football League), technology and electronic gaming (Nolan Bushnell, founder of the pioneering company, Atari), esports and game tech (Kevin Soltani and Jassem Osseiran) and as FD Max Deeley.  Target Admission Date of 26 April.

Emmerson  EML.L moving from the Standard List to AIM, The Company’s current market capitalisation is approximately £46m, based upon its share price at close of business on 24 March 2021 of 6 pence per Ordinary Share. Raising £5.5m on admission.  Emmerson is a potash development company focused on the development of the Khemisset Potash Project located in Northern Morocco, approximately 90km from the capital city, Rabat, and the planned bulk port of Kenitra Atlantique and 175km from the port of Mohammedia. The Project has a JORC Resource Estimate (2019) of 537Mt @ 9.24% K2O and exploration potential with a development pathway targeting a low capital expenditure and high margin potash mine. Due 27 April.

Dispersion Holdings PLC, an investor in the high growth FinTech sector within the UK, the USA and Canada, has announced its intention to IPO on the Access Segment of the Aquis Stock Exchange Growth Market.  The Board intends to deploy the majority of the Company’s cash resources in the acquisition of minority interests in a number of different, yet to be identified, companies in the broad FinTech sector, and to apply expertise to the business operations and strategic plans of these companies. Target Admission Date of 30 April.

Darktrace plc. Intends to float on the main market of the London Stock Exchange (premium).  Darktrace was founded in 2013 with a mission to fundamentally transform the ability of organisations to defend their most critical assets in the face of rising cyber threats. Darktrace is a world-leading provider of AI for the enterprise, with the first at-scale in-the-enterprise deployment of AI in cyber security. Due early May.

Wickes to demerge from Travis Perkins and list on the Main Market. Expected 28 April.

Thor Explorations (TSXV:THX) seeking a secondary listing on AIM. The Company is targeting Admission during Q2 21.   Segun Lawson, President & CEO, stated: “Thor Explorations has advanced significantly, in both project development and capitalisation since the acquisition of Segilola in 2016. This year, the Company is well positioned to achieve two major milestones with the commencement of gold production at Segilola in Nigeria and a maiden resource at Douta in Senegal, as well as continuing to progress our highly prospective Nigerian exploration portfolio on the Ilesha Schist belt.”

Imperial X (AQSE:IMPP) to join the Main Market (standard). It is also proposed that on Admission to the Official List, the Company will change its name to Cloudbreak Discovery Plc.  With effect from Admission, Imperial X will hold equity positions and royalties in a variety of projects in the natural resources sector across multiple jurisdictions, primarily in the Americas and Africa. The Company is proposing to raise up to £1.5m by way of placing of new Ordinary Shares to support further prospect acquisitions. Current Mkt cap £4.7m. Expected April.

*A corporate client of Hybridan LLP

This document has been prepared by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment objectives, financial situation or needs of any specific entity and is not a personal recommendation to anyone. Recipients should make their own investment decisions based upon their own financial objectives and financial resources and, if any doubt, should seek advice from an investment advisor. The information contained in this document is based on materials and sources that are believed to be reliable; however, they have not been independently verified and are not guaranteed 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, directors, officers, employees, agents or associated undertakings in relation to the accuracy, completeness or reliability of the information in this document nor should it be relied upon as such. Any and all opinions expressed are current opinions as of the date appearing on 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, directors, 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 is sent to you as market commentary only. As market commentary this document does not constitute any of (i) investment research and financial analysis or other forms of general recommendation relating to transactions in financial instruments for the purposes of the UK retained version of section B of annex I to Directive 2014/65/EU (“MIFID II Directive”); or (ii) investment research as defined in the UK retained version of article 36(1) of Commission Delegated Regulation 2017/565/EU made pursuant to the MIFID II Directive; or (iii) non-independent research (as such term is defined in the Financial Conduct Authority’s Conduct of Business Sourcebook).