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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Anexo Group 136.5p  £158m (ANX.L)

AGM trading update from the specialist integrated credit hire and legal services provider. Overall trading continues to perform in line with management expectations within the Group’s Legal Services division, Bond Turner, cash collections for the first four months of FY-2021 are in line with management forecasts and are 11.8% ahead of those seen in the corresponding period in FY-2020. This is particularly pleasing since the court system has yet to return to full operational capacity. The Group continues to recruit high quality legal staff in line with its policy of expanding its headcount to drive increased case settlements and cash collection. EDGE, the Group’s Credit Hire division, has seen an increase in average vehicle hire numbers following the relaxation of the national lockdown, with the number of vehicles on hire for the first four months of FY-2021 8.5% ahead of the same period in FY-2020. The Group is maintaining its policy of controlling vehicle numbers to maximise cash collections.

Blancco Technology Group 270p  £211.6m (BLTG.L)

The industry standard in data erasure and mobile device diagnostics, is pleased to provided the following trading update for the year ending 30 June 2021. Blancco has achieved significant growth in revenue through the second half of the financial year, despite the strengthening value of Sterling, and expects revenues for FY2021 to be in line with the Board’s expectations. The Company has continued to benefit from strong structural tailwinds in the Enterprise market and has delivered further growth in this market. Sales to Enterprise customers through the Group’s network of channel partners has driven growth in all key geographies, particularly in North America. Travel restrictions during the pandemic period, along with other expense reduction measures taken at the outset of the pandemic, have resulted in higher profit margins in the financial year. As a result, adjusted operating profit and cash are now expected to be significantly above the Board’s expectations.

Clinigen 628p  £835m (CLIN.L)

The global pharmaceutical Products and Services company, today announces a COVID-19 related update on trading and an adjustment to the Group’s full year 2021 outlook. The negative impact of COVID-19 is primarily due to the global reduction in hospital-based oncology treatments and delays to clinical trials. In particular, demand for Proleukin within its current approved indications was significantly weaker than expected in recent months. Whilst net revenues are expected to be in-line with prior guidance and consensus expectations, it is now expected that adjusted EBITDA will be within the range of £114m-£117m for the full year 2021 due to the lower proportion of revenues from the Products division. The Group believes it is prudent to expect this reduced level of demand for Proleukin to remain until revitalisation efforts into new indications, alongside novel cell therapies, are successful and normal Hospital and Cancer Centre Services have resumed. Cash conversion has been in-line with adjusted expectations, with net debt expected to be below £330m (excluding IFRS16) with the Group having ample liquidity and leverage meaningfully below the Group’s temporary banking covenant of 3.5x. No further deferred payments are required for previous acquisitions, CSM or Proleukin and cash generation is focused on debt paydown. Clinigen is continuing to support COVID-19 projects across the business, is gaining further share in its Service end-markets, has made faster-than-expected progress on the launch of Erwinase and the Group remains confident that Proleukin demand will return and exceed pre-COVID levels in the future. Given these positive dynamics and the good underlying strength of the Group, Clinigen expects to achieve double digit EBITDA growth in FY22 and is focused on its debt paydown. 

Dev Clever Holdings 25.25p  £151m (DEV.L)

The developer of online and immersive career guidance, development platforms and consumer engagement experiences, updated on its encouraging progress in India. On 21 December 2020, Dev Clever announced the formation of a five-year exclusive partnership agreement between the Company, the National Independent Schools Alliance (NISA), India’s largest governing body for budget private educational institutions and Veative Labs (Veative). The agreement included the localisation of the Launchyourcareer.com platform across India and its promotion as a complete career guidance and career-led learning platform recommended to NISA affiliated schools. The Company’s  platform has now gone live and is available to schools and students across the country, including via a complementary B2C subscription model. In order to ensure a successful rollout of the product to both B2B customers (schools) and B2C customers (students and parents), the Company has renamed the platform in India to Launchmycareer.com. Dev Clever has concurrently incorporated Launchmycareer Pvt. Ltd., a wholly-owned local trading entity in the country that has already recruited and on-boarded marketing and support resources. The Company recently secured a material Indian contract valued at US$1.5m, to implement the Company’s Immersive Careers guidance and STEM-based virtual reality educational library at schools under central and state governments in India. Moreover, the Company also secured a government funded pilot to deploy its innovative platform and virtual reality learning services into one of India’s 1,248 central government KV schools, that are specifically known for innovation and can be rolled out to the rest of the central government school sector subsequently.  The comprehensive pilot will assess the impact within the central government school system and if successful, rolled-out further later in the year. This is an exciting trial and first entry into the large Indian public school sector, which in total consists of around 1.1m schools.   

Keras Resources 0.11p  £7.4m (KRS.L)

Construction of the processing plant at Diamond Creek, the high-grade organic phosphate mine in Utah, USA (‘Diamond Creek’), has been completed and commissioning has commenced.  Once at steady-state operational capacity, which is expected to be achieved by the end of June, the plant will produce a range of premium organic phosphate products for sale directly into the growing North American organic fertiliser market.  Completing the plant build is a significant step forward in the optimisation, production ramp up and expansion plans for Diamond Creek which is owned by the Company’s 51% subsidiary, Falcon Isle Holdings LLC. The plant will ensure efficient beneficiation whilst removing the need for external toll treatment. To see the time-lapse video of the build taking place, please visit the Gallery section of their website, www.kerasplc.com.

Rural Broadband Solutions* 4p  £12.16m (RBBS:AQSE)

FY Dec 20 results from one of the leading providers of broadband services to rural areas of the UK. Cash balances up by £0.66m to £0.79m benefitting from the £2.5m raised on the admission of the enlarged Company (less the cash consideration of the acquisition of £1.239m). Revenue reflects only 2 months as SWS was not acquired until the end of October 2020. However SWS’s revenue for the whole of 2020 was £761k (£730k for 2019). By acquiring SWS, RBBS has been transformed into an operating company with the strategic objective of becoming a major presence in the provision of broadband services to rural areas in the UK. Monthly fee-paying clients is now 2,571 (up from 2,348 as at the period end). As the revenue is recurring and as customer churn is very low, revenue is continuing to grow from the existing network. Current annual run rate is circa £820k of predominantly subscription revenues. Following the earlier announcement made on 25th May 2021, the Company has now appointed Chris Stone as a Non-Executive Director of the Company. The current growth does not include the growth that will be generated as a result of the Project Gigabit Opportunity and the Fibre to the Premise (FTTP) solution for small towns. In the light of the strengthening demand for better quality broadband in rural areas of the UK, RBBS has  increased its ambitions for anticipated penetration of the market through planned expansion into small towns, the Premise using its Fibre to the Premises (FTTP) solution. £190,680 voucher funding ringfenced so far against 69 registered vouchers. In total 1,652 enabling expressions of interest received for voucher funding have been received. Plans to register 25 ‘gigabit village’ projects potentially enable 2,659 additional customers not currently being served. This would take the company to their initial target of 5,000 monthly paying customers within the published timescale of within 3 years from the acquisition of SWS.

Sanderson Design Group 177.5p  £126m (SDG.L)

The luxury interior design and furnishings group, announces that the innovative online partnership between the Scion brand and Design Online Ltd is now live at www.scionliving.com. The launch of this online shop follows the Company’s collaboration agreement announced on 20 November 2020 with Design Online, a business formed by the leading internet retailer Jane Clayton and Company. The Scion online shop sells the brand’s products direct to consumers and brings together for the first time core wallpaper and fabric collections with the wide range of Scion’s licensing product. This online collaboration develops the Group’s digital strategy and also delivers against the goals of targeting brands on key audiences, increasing brand awareness and driving consumer demand. The scionliving.com website features tailor-made branded instructional and inspirational content across all product categories and will also utilise user-generated-content to heighten the brand’s appeal to consumers. 

Seeing Machines 9.55p  £373m (SEE.L)

The advanced computer vision technology company that designs AI-powered operator monitoring systems to improve transport safety has been appointed by CAE Australia  to integrate its precision eye-tracking technology, for an Australian defence industry customer. This engagement, valued at A$1m over five years, comes at the end of a successful direct engagement between Seeing Machines and an Australian defence industry innovation program delivered over the past two years. This program exceeded all  stakeholder expectations and has opened up several additional opportunities across the defence industry. 

Total Produce 218.5p  £844m (TOT.L)

Total Produce announced that the European Commission The board of Total Produce plc, Dole Food Company, Inc. and affiliates of Castle & Cooke, Inc. which own a 55% interest in DFC Holdings, LLC, the parent company of Dole Food Company, Inc., that they had entered into a binding transaction agreement to combine under a newly created, Irish incorporated, U.S. listed company, Dole plc. has now granted its clearance decision for the Transaction.  The waiting period under the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, previously expired on 16 April 2021.  The European Commission clearance and the expiration, lapse or termination of the waiting period under the HSR Act constitute the two antitrust conditions under the Transaction Agreement, both of which conditions are now satisfied. The Transaction remains subject to approval by Total Produce shareholders, market conditions and other customary conditions.

Yourgene Health 13.5p  £99.4m (YGEN.L)

The international molecular diagnostics group, announces it has entered into a licence and supply agreement (with a leading US precision medicine company for an initial term of three years commencing  1 April 2022. The Agreement grants the Partner a non-exclusive licence to the Company’s Flex^TM Analysis Software and commits Yourgene to supplying sample preparation reagents and instrumentation to support the planned launch of a new clinical reproductive health screening service across all US states by the Partner.  The Agreement allows for automatic annual renewals after the initial term, subject to typical notice provisions.

What’s cooking in the IPO kitchen?

Baltic Classifieds Group PLC, the leading online classifieds group in the Baltics, announced their intention to IPO and the intended publication of a registration document. Should BCG proceed with the IPO, the Company will apply for admission of its entire issued Ordinary Share Capital to the Premium Listing Segment of the LSE.

The UK Residential REIT, a proposed closed-ended real estate investment trust established to invest in a diversified portfolio of affordable, privately rented residential real estate assets in attractive locations outside of London, announces its intention to IPO onto the Premium Listing Segment of the LSE. URES is targeting Gross Issue Proceeds of  150m before expenses by means of a placing, offer for subscription and intermediaries offer of 150m Ordinary Shares plus an Issue of up to 50m Consideration Shares in connection with the acquisition of Seed Assets at an issue price of £1.00 per Ordinary Share. Expected market capitalisation following the completion of the acquisition of Seed Assets of £200m.

Nord Gold plc, the internationally diversified pure-play gold producer, announces the intended publication of a registration document and its potential intention to undertake an IPO. Should Nord Gold proceed with the Offer, the Group will apply for admission of its Shares to the Premium Listing Segment. The Company has also applied for admission of the Shares to trading on the Moscow Exchange.

Victorian Plumbing Group Limited the UK’s leading online retailer of bathroom products and accessories, announces its intention to seek admission of its ordinary shares to trading on AIM. Group has grown rapidly in recent years and is now the UK’s leading online specialist bathroom brand by revenue in 2020 and the second largest retailer of bathroom products in the UK with an estimated 14.2% of the bathroom market by revenue in 2020. The Company’s growth trajectory was maintained in the current financial year, delivering results of £140.7m revenue, and £20.1m adjusted EBITDA for the six months ended 31 March 2021.

LionTrust ESG Trust PLC announces the publication of the Prospectus in connection with the IPO on the Premium Segment of the Main Market. The Company is targeting an initial issue of £150m by means of an Initial Placing, Offer for Subscription and Intermediaries Offer of Ordinary Shares at an issue price of 100 pence per Ordinary Share. In addition, pursuant to the Prospectus, a placing programme will allow the Company to issue up to an additional  250m Ordinary Shares and/or C shares, in the 12 months from the date of publication of the Prospectus and following Initial Admission.

UK SPAC (formerly Mountfield Group and now an AIM Rule 15 Shell) has applied for admission to the AQSE Growth Market. The Company recently raised £3.1m in a placing, giving the Company flexibility in pursuing a reverse take-over transaction. The Directors of the Company are currently in the process of identifying and assessing reverse takeover opportunities with a particular focus on the European medicinal cannabis sector. The Directors are working closely with specialists in this industry in order to evaluate opportunities. Due 11th June.

MADE, a digitally native lifestyle brand in home has announced its intention to IPO onto the Premium Listing Segment of the LSE. MADE’s mission is to make high-end designer furniture and homeware products accessible to everyone.  Their gross sales, net revenue and Adjusted EBITDA were £109.5m, £82.4m and £1.8m, respectively, for the three months ended 31 March 2021 and £315m, £247m and (£5.1m), respectively, for the year ended 31 December 2020.  The Offer would comprise a primary offer to raise proceeds to further develop growth in existing markets, improve service through reduction of lead-times offered to customers, scale its homeware range and give the Group increased working capital flexibility. MADE would seek to raise approximately £100m of primary proceeds. Expected June.

POSTPONED Marex Spectron Group expected intention to float on the London Stock Exchange. Marex have a broad service offering, primarily across energy, commodity and financial markets through its Market Making, Commercial Hedging, Price Discovery and Data & Advisory businesses, and has strong positions across its core energy and commodities markets, executing around 35m trades and clearing over 175m contracts in 2020.  Headquartered in London, the Group was formed in 2011 and currently has 19 offices worldwide with around 1,000 employees and more than 12,000 clients across Europe, Asia and America.  In the year ended 31 December 2020, the Group’s net revenue increased by 17.7% from $352.2m to $414.7m, and adjusted operating profit before tax increased by 15.2% from $53.4m to $61.5m. Should Marex proceed with an IPO, the current expectation is that the shares would be admitted to the Premium Listing Segment of the LSE and the offer would comprise of an offer of existing shares to be sold by certain existing shareholders of the Company.

Clarify Pharma, an investment vehicle specialising in biotech and life sciences companies seeking to prove the safety and efficacy of psychedelic-based substances, announced its intention to apply for admission of its Ordinary Shares to trading on the Access Segment of the AQSE Growth Market. The flotation is expected to value Clarify Pharma at approximately £10.5m. The Company plans to raise approximately £5m. Due 11th June.

Voyager Life, the health and wellness company established to supply high-quality Cannabidiol (CBD) and hemp seed oil products, announces the Company’s intention to seek admission to trading on the Access Segment AQSE Growth Market. Admission is expected to occur before the end of June 2021. Voyager was incorporated in November 2020 as a health and wellness business focused on CBD and hemp seed oil products. The Company’s directors believe that a significant opportunity exists in the CBD market due to the forecast growth and ongoing regulatory changes.

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.”

*A corporate client of Hybridan LLP

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