Hybridan Small Cap Feast

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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.

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Argos Resources 2.75p  £6.1m (ARG.L)

Argos has conditionally raised gross proceeds of US$550,000 (approximately £400,000) through the issue of 14,428,001 Subscription Shares at a price equivalent to 2.75 pence each  by certain new shareholders and Ian Thomson, Executive Chairman of the Company.

Further to Argos’ announcement on 18 September 2020, the Company remains engaged in discussions with counterparties who have expressed an interest in participating in drilling on Licence PL001, a production licence covering an area of approximately 1,126 square kilometres in the North Falkland Basin. In order to enable the Company to progress these discussions with potential farm-in partners, on 10 February 2021 the Board requested that the Falklands Islands Government grant a 12 month extension to the second term of Licence PL001, which is currently due to expire on 1 May 2021. The Falkland Islands Government has said that as part of its consideration of this request, the Company must demonstrate that it has, or will secure, sufficient funds to meet its working capital requirements until at least the period of the extension requested.

Adept Technology 251p  £63m (ADT.L)

One of the UK’s leading independent providers of managed services for IT, unified communications, connectivity and voice solutions, announced  a trading update for the financial year ended 31 March 2021  

The Group delivered a resilient performance in Q4, despite the ongoing challenges of the pandemic. Sustained customer demand avoided any need for the Job Retention Scheme (“furlough scheme”) in Q4, which had been utilized by the Group in Q1 and Q2. The Group expects to close FY21 in-line with current market forecasts for revenue and EBITDA set in February 2021, following the reintroduction of its financial guidance. The Group continued to have strong cash flow generation in Q4 2021 and senior net debt as at 31 March 2021 was in line with market expectations at £26.1m, which includes the repayment of the deferred Q1 VAT liability in early Q4 and the cash costs of the new bank facility arrangement fees.

 The Company has signed a new enlarged banking facility agreement with NatWest and Bank of Ireland, to support its growth ambitions with a declared intention to acquire one or two complementary, earnings enhancing, companies each year. This agreement is for a three-year term, extendable by one year, and provides the Company with up to £70m senior debt, comprising a £35m revolving credit facility, a £15m term loan, and a £20m accordion facility. This new facility replaces the £40m revolving credit facility, which was due to expire in February 2022.

UK Oil and Gas 0.155p £20.1m (UKOG.L)

The Turkish Ministry of Energy and Natural Resources has granted UKOG Turkey and Aladdin Middle East formal consent to drill the forthcoming Basur-3 appraisal well, located in the Resan licence AR/AME-UKO/K/M47-b1, b2 . UKOG Turkey, a wholly owned UKOG subsidiary, has a 50% interest in the Licence, which contains the potentially significant Basur-Resan oil discovery. 

The Ministry’s permission, dated 2nd April 2021, follows the partnership’s 1st April 2021 submission of the required Pre-Activity Information Form (Annexe-50) and Drilling Programme. The consent requires the Ministry to be notified 5-days prior to the actual spud date of Basur-3. 

Drilling pad and access road construction works continue to progress ahead at good pace with completion expected by end May.

Pharos Energy 23.8p £105m (PHAR.L)

FY Dec 202 results:

· Group revenue of $118.3m plus $23.7m from hedging (2019: $189. 9m less hedging loss of $0.2m)  Loss for the year of $215.8m (2019: loss $24.5m), following oil price related post tax impairments of $198.1m · Cash operating costs of $11.60/bbl (2019: $10.45/bbl). · Cash generated from operations $85.5m (2019: $113.0m)

· Received provisional approval from  Egyptian General Petroleum Corporation   to an amendment of the fiscal terms on the El Fayum Concession. Under the revised terms, the cost recovery percentage will be increased from 30% to 40% allowing Pharos a significantly faster recovery of all its  past and future investments.

· Approximately 42% of the Group’s 2021 forecast production from April 2021 to December 2021 hedged at an average price of $50.6/bbl · Total Group working interest 2021 forecast production range of 9,200 to 10,600

· In Vietnam the drilling of four development wells will commence in Q3 2021 in the TGT Field and preparation underway for the 3D seismic survey planned over certain high graded leads in the northern part of Block 125.

Universe Group 5.45p  £14.2m (UNG.L)

The developer and supplier of retail management solutions, payment and loyalty systems updated on trading for the year ended 31 December 2020 ahead of the expected release of its audited results in the final week of April 2021, together with a  five-year extension of an existing contract with a major international oil and gas group for the provision of loyalty services Europe-wide. This material extension provides further visibility for the Group over future revenues. The Group also remains encouraged by progress on the separate material project for another existing customer described in its announcement of 21 December 2021, which is currently in the pilot stage.

Subject to completion of audit, the Company expects to report revenue for the year ended 31 December 2020 in line with expectations at the time of its trading update announcement on 21 December 2020, with revenue for the second half of the year expected to be in line with that of the first half. However, adjusted EBITDA and adjusted profit before tax are now anticipated to be ahead of previous expectations.

CyanConnode 7.8p £14.6m (CYAN.L)

The specialist in Narrowband Radio Frequency (RF) Smart Mesh Networks, provided a trading update for the financial year ended 31 March 2021:

 · Revenue for the 12-month period to March 2021 was approximately 2.5 times the 15-months to March 2020 of £2.5m, therefore exceeding market expectation

· Period end cash and cash equivalents of c. £1.5m (March 2020: £1.2m)

· Approximately £5.3m cash received from customers during the 12-month period (15-months to March 2020: £4.1m)

· 481k modules shipped to customers during the 12-month period ended March 2021 (15-months to March 2020: c. 115k)

FireAngel Safety Tech 26p  £32.4m (FA.L)

One of Europe’s leading developers and suppliers of home safety products announces that it has signed a long term partnership agreement with a German   energy and efficiency service provider for the real estate sector to provide a fully funded research and development programme for a new generation smoke alarm. The Partner   which was founded nearly 70 years ago provides services to approximately 12m apartments worldwide and in its most recent financial period, being the six months ended 30 September 2020, had turnover of approximately EUR 317m.

Synectics 150p  £26.7m (SNX.L)

Further to its announcement of 10 February 2021, Synectics plc, a Specialist in the design, integration and support of advanced security and surveillance systems, announces that it has been awarded a multi-million-pound project by the City of London Corporation and the City of London Police as part of their Secure City Programme. The project, which comprises a large innovative, cloud-based surveillance control system , is expected to be substantially delivered in 2021, with ongoing maintenance and support over five years, and will see Synectics deliver one of the industry’s first enterprise-level cloud solutions for public space surveillance.

VR Education 11.75p £28.4m (VRE.L)

The  virtual reality technology company, announced that its proprietary software platform ENGAGE has continued to gain strong traction with customers and partners in the first quarter of 2021.  Unaudited ENGAGE revenue for the first three months of 2021 is up 138% quarter on quarter to EUR0.4m (equivalent to two-thirds of ENGAGE FY2020 revenue of EUR0.6m)

 Since the beginning of the year,   28 new enterprise and institutional customers have contracted to use ENGAGE in 2021, including the US State Department and a leading global database platform provider MongoDB .  New clients are using ENGAGE for a variety of purposes, including business collaboration, training, and events.

Urban Logistics 149.5p £382m (SHED.L)

The specialist UK logistics REIT, announces the acquisition of two assets (Warrington and Edinburgh) for a total consideration of £21.7m at a 6.14% NIY. Further the Company has received 99% of rent due for the quarter to June. The remaining 1% is expected to be collected imminently.

What’s cooking in the IPO kitchen?

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

Advance Energy to complete an RTO on AIM indirectly acquiring up to 50% of Carnarvon Petroleum Timor  which holds a 100 per cent. working interest and is the contractor under the Buffalo PSC, offshore Timor-Leste. Carnarvon Petroleum Timor is a subsidiary of ASX listed company, Carnarvon Petroleum Limited. The net proceeds of the Placing of approximately £20.01m (approximately US$27.51mm) will be used to fund the Acquisition.  Due 19 April.

NFT Investments plc is an investment company that specialises in non-fungible tokens (NFT). Has applied for admission to the Access segment of the AQSE Growth Market. No funds being raised. Due 16 April.

Thor Explorations (TSXV:THX) seeking a secondary listing on AIM. The Company is targeting Admission during Q2 2021.   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.”

MAST Energy Developments (MED) is to IPO on the Standard List on 14th April 2021 under the ticker MAST.  The company has raised £5m giving a market capitalisation on listing of c. £23m.  MED is currently a 100% subsidiary company of AIM quoted, Kibo Energy*.   MED was established to acquire and develop a portfolio of flexible power plants in the UK and become a multi-asset operator in the rapidly growing Reserve Power market.

PensionBee has confirmed its intention to float on the High Growth Segment  of the Main Market of LSE.  The online pension provider had approximately 130,000 Active Customers and £1.5bn of assets under administration, in each case as at 28 February 2021.  The Offer will comprise new Shares raising gross proceeds of approximately £55m and existing Shares to be sold by certain existing small minority  shareholders of up to £5m. None of the founders, directors or members of senior management of PensionBee are selling any existing Shares. Expected in April.  

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 2021.

Proposed move to AIM from the main market (standard)  by Emmerson (EML.L)  to provide Emmerson with access to a market and environment which is more suited, in the Board’s view, to the Company’s current size and strategy ahead of pivotal period for the Company with the commencement of mine construction at the Khemisset Potash Project expected by end of 2021. Follows recent award of Mining Licence granting Emmerson exclusive right to develop and mine the potash deposit and £5.5m raise to fund ongoing project development work.  

NextEnergy Renewables  to launch an IPO on the Main Market. NREN is a differentiated renewables investment Company that aims to capture the most attractive private renewables and energy transition infrastructure investment opportunities globally.  Targeting a £300m raise.   NREN is targeting total returns of 9-11 per cent. per annum (net of all fees and expenses but including the Target Dividend and capital appreciation) . The Company’s target dividend yield for the first full financial year to 31 December 2022 is 5.5 pence. Due Early March 2021.

Digital 9 Infrastructure launch an initial public offering  on the Specialist Fund Segment of the Main Market of the London Stock Exchange, by way of an initial placing and offer for subscription for a target issue £400m. Digital 9 Infrastructure plc is a newly established, externally managed investment trust. The Company will invest in a range of digital infrastructure assets which deliver a reliable, functioning internet. The IPO Prospectus is expected to be  published in March 2021.

Fix Price announces its intention to float on the Main Market of the London Stock Exchange.  Fix Price is one of the leading variety value retailers globally and the largest in Russia, with more than 4,200 stores. Fix Price has revenues of RUB 190.1bn, RUB 142.9bn and RUB 108.7bn for 2020, 2019 and 2018, respectively. Adjusted EBITDA for the same years was RUB 36.8bn, RUB 27.2bn and RUB 14.2bn, respectively. The Offer would consist of an offering of GDRs by certain existing shareholders of the Company.

Great Point Entertainment Income Trust PLC announced its prospectus has been approved by the FCA.  Great Point Entertainment Income Trust PLC is a newly established, externally managed closed-ended investment company. The Company will provide project finance to content makers and commissioners in the global television and film production industry via senior loans secured against pre-sold intellectual property (IP) rights. GPEIT’s investment objective is to provide Shareholders with dividend income and modest capital growth through exposure to media content finance.

*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).

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