Hybridan Small Cap Feast

Joiners: No joiners today.

Leavers: Dev Clever Holdings PLC has left the Standard Segment of the Main Market.

Made.com Group PLC has left the Premium Segment of the Main Market.

Banquet Buffet

Alpha Group International £18.10 £763.8m (ALPH.L)

A high-tech provider of financial solutions dedicated to corporates and institutions operating internationally, announced a trading update for the financial year ended 31 December 2022. Revenues for the full year are expected to increase 27% to approximately £98m (2021: £77.5m), operating profit is to be in-line with expectations and profit before tax (including interest) is expected to be ahead. These results have been achieved alongside increased investment in the people, infrastructure, and technology, in particular within the Alternative Banking Solutions division. The Company is expecting to make additional investments in discretionary initiatives (marketing campaigns), designed to further accelerate growth, without becoming embedded into the cost base.

Crimson Tide 2.5p £16.4m (TIDE.L)

The provider of the mpro5 solution, provided the following trading update ahead of publishing its full-year results for the year to 31 December 2022. Revenue for the year exceeded £5.3m, an increase of more than 30% over the prior year’s figure of £4.1m. Gross margin remained consistent at approximately 84%. The increased performance at the top line will result in a smaller-than-expected loss at the EBITDA level, despite the deployment of investment capital in marketing and growth. Year-end cash stood over £3.5m and TIDE enters 2023 with a record Annual Recurring Revenue of £5.8m (2021: £3.8m).

Eagle Eye Solutions Group 540p £155.2m (EYE.L)

A leading SaaS technology company that creates digital connections enabling personalised, real-time marketing,  provided an update on the Group’s trading for the six months ended 31 December 2022. Organic revenue growth increased 32%, to £20.0m (H1 FY22: £15.1m), ahead of the Board’s expectations. The Group’s performance in the Period, its healthy new business pipeline, and the growing international opportunity in the US, Europe, and Asia, coupled with the additional growth opportunity following the acquisition of Untie Nots, underpins the Board’s confidence in delivering another year of profitable growth.

Gateley Holdings 191p £239m (GTLY.L)

The legal and professional services group, announced its unaudited results for the six months ended 31 October 2022 (H1 23). Strong financial performance with organic revenue growth of 9.8% (H1 22: 22.7%). Adjusted underlying profit margin decreased to 12.6% (H1 22: 13.7%). Ongoing M&A strategy reduces net cash to £1.1m (H1 22: £8.8m) with the acquisition of Symbiosis, a chartered patent attorney firm specialising in IP services for the life sciences industry completed in October 2022. The Group is well-placed to navigate the more challenging economic environment that is beginning to emerge in the second half of the financial year.

Grafenia 7.63p £8.7m (GRA.L)

The Company announced that it has acquired the entire issued share capital of Care Management Systems Limited, a provider of care home management software and systems, based in Bristol. The total consideration of £3.5m will be satisfied in cash. The initial consideration comprises cash of £2.975m to be paid on completion, together with deferred consideration of £0.525m to be paid on the first anniversary. The acquisition is expected to be cash flow generative and earnings enhancing in the first year after acquisition.

H&T Group 474p £207.9m (HAT.L)

The pawnbroker and retailer of new and pre-owned jewellery and watches, provided an update on trading following completion of its financial year ended 31st December 2022. Trading performance remained strong through the fourth quarter of the year. Pawnbroking pledge book grew to c.£99m at the end of December 2022 (December 2021: £66.9m). Full year retail sales rose over 30% to c.£48m (2021: £36.2m). The Group has continued its programme of capital investment in IT systems and in store estate. At the end of December, the Group had 267 stores (31 December 2021: 257) with a further nine locations in the pipeline, expected to be opened in the first half of 2023. The Board remains confident that full year results will be in line with current market forecasts.

Mercia Asset Management 34.5p £151.8m (MERC.L)

The proactive, regionally focused specialist asset manager announced the profitable sale of Intechnica Holdings Limited for a total enterprise value of £14.5m, to US-based Crosslake Technologies LLC. Mercia held a 25.5% direct holding in Intechnica at the date of completion and will receive cash proceeds of £3.7m, generating an internal rate of return (IRR) of 27% and a 1.7x multiple on its current holding value. In addition to the direct investment return, three of Mercia’s third-party funds collectively held a further 27.9% providing a blended IRR on investment returns of 32.0% (2.6x on investment cost).

Midwich Group 546p £485.3m (MIDW.L)

A specialist audio visual distributor to the trade market, provided a trading update for the year ended 31 December 2022. The Board expects to report record revenue for 2022 of £1.2bn, representing growth of approximately 40% over the prior year (39% at constant currency), with organic growth of over 20%.  The gross margin was broadly in line with 2021 levels. Furthermore, the Company anticipates reporting adjusted profit before tax for the 2022 period comfortably ahead of market consensus. In order to support the delivery of its acquisition pipeline, in December 2022 the Group increased its revolving credit facility from £80m to £175m.

Omega Diagnostics Group 3.3p £7.8m (ODX.L)

The specialist medical diagnostics company focused on promoting a personalised and functional approach to health and nutrition, provided a trading update. As a result of several headwinds Full year revenues are now expected to be in the range of £7.5-£8.0m for the year ended 31 March 2023 resulting in an EBITDA loss from continuing operations of c. £1.0m. Year-end cash levels are expected to remain c. £ 5.0m. The current order book is £2.5m and further orders are expected, a number of orders will move into FY24. Further to the recent announcement regarding US expansion, the Company confirms it is now pursuing a partnership route into the territory as a first step.

STM Group 27.5p £16.3m (STM.L)

The cross-border financial services provider, announced a trading update for the year ended 31 December 2022. The Company expects revenue of £24.1m, EBITDA of not less than £3.2m and Profit Before Tax of not less than £1.7m for the Period. The acquisition of the UK SIPP and SSAS portfolio from Mercer in September 2022 is performing in line with management’s expectations, having contributed £1.0m of revenue in the Period, although this is expected to be reported as £0.5m in order to align revenue recognition with STM’s more conservative policy. STM reported net cash at 31 December 2022 of £14.0m. The Company’s plans to move to an end-to-end, fully automated operating functional model, supported by third party technology.

What’s cooking in the IPO kitchen?

Celsius Resources intends to join AIM. Currently ASX listed, Celsius is a natural resources exploration and development company principally seeking to explore and develop potential world-class copper-gold assets in the Philippines and a cobalt asset in Namibia. Amount planning to raise and anticipated market cap TBC. Expected late January 2023. 

Conviction Life Sciences, a newly established closed-ended investment company managed by Plain English Finance Limited, is seeking to list on Premium Segment of the Main Market of the London Stock Exchange, to invest in a conviction portfolio of life sciences and medical technology businesses, primarily in the UK, Europe and Australasia. The Company will invest in both publicly traded and private companies – c. 70% and c. 20% of the total portfolio value respectively. The Company will target an annualised Total NAV Return of 20% over the long-term. Targeting to raise c.£100m. Delayed to 3rd February 2023.

*A corporate client of Hybridan LLP

** Content not provided by 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).