Hybridan Small Cap Feast

17 mins. to read
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.

Joiners: Silverbullet (SBDS.L) is a provider of digital transformation services and products which assist brand owners and advertisers to optimise their digital marketing investment, with a particular focus on unlocking the potential of first party data and contextual intelligence. The Company has joined AIM. Raised £9.5m. Market cap c£34.5m.

Itim Group (ITIM.L) is a software technology company, established in 1993. Itim adds value by helping multi-channel retailers optimise their business and stores to improve financial performance and compete more effectively in the digital world of modern retailing. The Company provides flexible solutions proven at adding value as retailers transform stores, digital capabilities and operations suitable for modern retailing and profit improvement. The company raised c. £8m, through a placing of new equity on AIM at an issue price of 154 pence. Market Cap £48.1m.

Leavers: No Leavers Today.

Banquet Buffet

Apollon Formulations  3.4p  £26.6m (AQSE:APOL)

The UK based international pharmaceutical company trading on Aquis Stock Exchange, announced that its proprietary medical cannabis formulations were successful in killing triple-negative breast cancer (TNBC) cells in 3D cell cultures in third party independent laboratory testing. This finding is in addition to the results recently announced on May 18, 2021, that Apollon formulations were successful in killing HER2+ breast cancer cells. This testing was performed under a joint testing agreement with Aion Therapeutic Inc. (CSE: AION), an international pharmaceutical company trading on the Canadian Securities Exchange. 

AssetCo  1,950p  £127.4m (ASTO.L)

HY Mar 21 results. A successful conclusion of the Grant Thornton litigation and a return of approximately £26.9m to shareholders; Strategic acquisition of 29.8% of the Company by Martin Gilbert, Peter McKellar and various associates; Readmission to AIM and approval of new business strategy by shareholders; Acquisition of a strategic interest in River and Mercantile Group; Conditional acquisition announced, post period end, of Saracen Fund Managers. The Income Statement for the six months ended 31 March 2021 shows revenue of nil (2020: nil), but a profit before taxation of £22.3m (2020: loss £0.7m), which principally arose from the final payment received from the successful negligence claim against Grant Thornton.

City Pub Group 127.5p  £135.8m (CPC.L)

The owner and operator of 48 premium pubs across Southern England and Wales and a further 4 development sites  announced that trading since the reopening of pubs on 12 April has been encouraging at 90% of 2019 levels for the 42 pubs that have reopened to date.  “We are already benefitting from the hard work carried out over the past year with our cost base significantly reduced and consequently the Group is trading profitably at today’s volumes. While our performance has been very pleasing, the continuing social distancing rules and absence of large bookings have limited trade. This became apparent at the start of the European Football Championships where many customers did not want to watch live sport at pubs because of the social distancing restrictions. We look forward to all restrictions being lifted on 19 July and we believe that once restrictions are lifted, trade will build over the remainder of the year to above 2019 levels, although it is difficult to predict at this stage exactly when this might happen.  Whilst uncertainty remains, progress will be made on a step-by-step basis. The Group has a very strong balance sheet, with over £16m of unutilised banking facilities, is cash generative, and is starting to, on a selective basis, identify new acquisitions. Our priority is to get the existing estate firing on all cylinders, have all four development sites open by spring 2022 and to deliver the identified cost reductions.” The Group has  also purchased the freehold of the Roundhouse in Wandsworth Common, where it only had 4 years left on the lease, for a total consideration of £1.1m. 

Futura Medical  43.2p  £124.01m (FUM.L)

AGM Statement from the pharmaceutical company developing a portfolio of innovative products based on its proprietary, transdermal DermaSys® drug delivery technology and currently focused on sexual health and pain. MED3000 CE mark approved for marketing in Europe and UK; Commercialisation of MED3000 continues at pace with China and South East Asia partnered and discussions for other countries ongoing; Regulatory submission to US FDA continues on track.

MediaZest*  0.085p  £1.1m (MDZ.L)

Revenue for the Period was £846k down 42% (2020: £1,454,000) due to the impact of Covid-19. Gross margin rose to 48% (2020: 45%). Administrative expenses were £459k, a reduction of 31% (2020: £667k). EBITDA was a loss of £49k (2020: £11k). Cash in hand at 31 March 2021 was £16k (2020: £16k). It remains difficult to assess the extent to which the Pandemic will affect the Group’s forthcoming trading and financial performance as the situation continues to evolve rapidly with the final stage of  unlocking, which was scheduled for 21 June, being deferred to 19 July in the light of recent data. However, the number of new projects currently underway or already completed in the second half of the year has been encouraging and the Board is looking for the Group to deliver a much improved second half of Financial Year 21. Recurring revenue streams have been robust throughout the last 18 months and contracts continue to extend and grow in many cases. Developing these contracts and growing opportunities that focus on this type of business has been a priority in recent years and continues to show success and generate long term value in the Group. Performance of the Group over the second six months and into the next financial year looks encouraging, subject to the uncertainty within which many businesses are currently operating. The Board continues to work on the assumption that the disruption caused by the Pandemic will have an impact throughout 2021 and continues to plan accordingly, searching for new revenue streams whilst managing costs tightly.

Quadrise Fuels International 3.85p  £47.4m (QFI.L)

The supplier of MSAR®and bioMSAR ™  emulsion technology and fuels, low-cost, cleaner alternatives to heavy fuel oil and biofuels, updated on progress in relation to bioMSAR™, the Company’s new cleaner, low carbon fuel, and its active MSAR® projects with Mediterranean Shipping Company S.A. (“MSC”), our industrial client in Morocco, and Greenfield in Utah. Quadrise is seeing increasing interest in bioMSAR™ from all segments of the energy market that are  targeted; MSC -bioMSAR™ testing significantly accelerated, with this to be the first fuel tested during the LONO programmes.; Morocco – 60mt of MSAR®fuel to be manufactured at a bitumen production facility in Norway and shipped directly to Site B. Quadrise on site this week for preparatory work. Current plans are for the trial to be completed in Q3 2021, together with the completion of the Site A feasibility study; Utah – Greenfield samples taken and should be shipped to  Quadrise this week. Once received at QRF, confirmatory Proof of Concept testing should complete within 3 weeks for both MSAR® and bioMSAR™.

Samarkand 173.5p  £94.9m (AQSE:SMK)

The cross-border eCommerce technology solution provider, updated on trading for the year ended 31 March 2021 (FY21). The Group has delivered a strong performance in the year. Revenue (including exceptional revenues of £5.8m) increased to £20.6m (FY20: £6.8m) and EBITDA profit increased to £1.1m* (FY20: loss of £0.8m), which is moderately ahead of expectations. This performance has largely been driven by the continued success of the Group’s Nomad platform as well as high levels of social selling in China. Following its successful admission onto the Aquis Stock Exchange on 22 March, the Company had a strong cash position of £14.6m as at 31 March 2021. Since the financial year end, the Company has continued to execute its stated strategy and investment has begun in line with the use of proceeds outlined at the time of flotation. In May 2021, the Group completed the acquisition of Zita West Limited, a UK fertility supplement brand, and also acquired 51% of Babawest Ltd, which specialises in nutritional products and probiotics focused on the mother and baby sector. Both brands have been integrated well and are aiming to be launched into the cross-border eCommerce market in China before the end of 2021.

Totally 39.5p  £72m (TLY.L)

Totally’s wholly-owned subsidiary, a specialist business providing insourcing services to the healthcare sector in the UK and Ireland, has been awarded a new contract worth up to £850k. Provision of endoscopy procedures to The Saolta Group of Hospitals in Galway, Republic of Ireland, covering six hospitals. Totally Healthcare will help the hospitals to shorten patient waiting lists, which have increased significantly throughout the COVID-19 pandemic with non-urgent procedures being delayed. Contract commences in July 2021 and runs until March 2022.

Zephyr Energy 6.3p  £84.5m (ZPHR.L)

Update on its project in the Paradox Basin, Utah, U.S.  where the Company is preparing to spud the State 16-2LN-CC appraisal well. The Company announced the signing of a drilling contract with Cyclone Drilling Inc.  This follows a competitive selection process involving extensive technical and commercial evaluation of multiple potential drilling contractors.  Zephyr is delighted to be working with Cyclone again, following their efficient completion of the State 16-2 stratigraphic test well  for Zephyr and its project partners earlier this year. The Cyclone Rig #34 will again be the unit used for the drilling programme – the same rig that successfully and safely drilled the State 16-2 well to a total depth of 9,745 feet in less than 19 days last winter, a record performance versus historical drilling efforts in the northern part of the  Paradox Basin.  Rig #34 is fully capable of drilling to the planned depths and pressures that are expected at the State 16-2LN-CC well.

Zinnwald Lithium 17p  £34.9m (ZNWD.L)

AGM statement from the German focused lithium development company. Highlights; Delivered key strategic goal of achieving 100% ownership interest in Deutsche Lithium GmbH; Completion of the initial phase of the lithium hydroxide (‘LiOH’) testwork at the Project with highly encouraging initial test results; Expanded licence footprint in Germany following the grant of the Sadisdorf licence in Saxony; Ongoing rationalisation of the Company’s portfolio enabling management and cash resources to be focussed on the Project.

What’s cooking in the IPO kitchen?

CMO Group PLC, the UK’s largest online-only retailer of building materials, announced its intention to seek admission to AIM. The Group currently operates seven specialist websites, Roofingsuperstore.co.uk, Drainagesuperstore.co.uk, Insulationsuperstore.co.uk, Doorsuperstore.co.uk, Tileandfloorsuperstore.co.uk, cmotrade.co.uk and Totaltiles.co.uk. Admission due early July.

Seraphine Group,  intends to IPO on the Premium Segment on the Main Market. Seraphine, and together with its subsidiaries, is an international digitally-led maternity and nursing wear brand. The final offer price will be determined following a book-building process. Admission expected July.

Literacy Capital PLC, announces its intention to seek admission of its ordinary shares of £0.001 to trading on the Specialist Fund Segment of the Main Market. The Company was created in September 2017 as a permanent capital vehicle to allow longer term decision making and with the intention to generate substantial investment returns. As at 31 March 2021, the Company’s unaudited Net Asset Value is approximately £96.4m. Literacy Capital Asset Management LLP is the Company’s investment manager.

LungLife, a developer of clinical diagnostic solutions for lung cancer enhanced by artificial intelligence (AI), announces intention to seek admission to AIM. The Company’s technology is a combination of the recovery of rare cells and blood-based biomarkers shown to be altered in lung cancer. The Company employs machine learning to improve upon existing computer software to identify informative cells from blood, and intends to build a deep, novel pool of lung cancer-related data for AI-enabled applications designed to improve test performance over time. Admission due early July.

Helium Ventures PLC, announces admission to the AQSE Growth Market. The Company has been formed to identify either investment opportunities or acquisitions in the upstream natural gas sector and in particular in helium. Admission date TBC.

Seraphim Space Investment Trust PLC, a newly established closed-ended investment company which will invest in a diversified international portfolio of early and growth stage Space Tech businesses, announces the publication of its Prospectus in connection with the IPO to the Premium Segment of the Main Market. The Company is targeting gross proceeds of up to £180m through the issue of up to 180m Ordinary Shares by way of the Initial Placing, the Offer for Subscription, Direct Subscriptions and the Intermediaries Offer at 100 pence per Ordinary Share. The Company will subsequently also acquire stakes in four Space Tech businesses upon the completion or termination of currently pending corporate activity in relation to those assets. Assuming the successful completion of these transactions currently underway, the Company’s investment manager, Seraphim Space estimates approximately £70m of value relating to the Retained Assets could be acquired by the Company.

Future Biogas Group plc, is a newly formed holding company which will acquire 100% of Future Biogas Limited (“FBL”). Future Biogas is a clean energy company that operates biogas plants in the UK. It is one of the largest biogas producers in the UK, delivering approximately 5,000 cubic metres per hour of green gas to the Gas Grid. FBL was formed in 2010 in order to develop and operate biogas plants.  The Group has deployed over £125m and built 12 biogas plants in the UK since then, largely through tax efficient funding such as VCT and EIS. In 2020, the ten biogas plants operated by the Group generated over 426 GWh of renewable energy. TBC ordinary shares of £0.01 each in the capital of the Company. In addition to the biogas plants it operates on behalf of third parties, the Company intends to build on its experience by constructing its own portfolio of new bioenergy plants with carbon capture storage (“BECCS”). Target fundraise up to £35m. Anticipated market cap TBC. Admission date TBC

Saietta Group, announces intention to list on AIM. Saietta, is a UK company that has developed an innovative AFT electric motor (a design of axial flux motor), designed to deliver class-leading performance for its target markets whilst being low cost and built for mass market production. Saietta’s initial target market is the high volume, fast growing lightweight mobility market including motorcycles in Asia. Admission date and market cap TBC.

Poolbeg, Proposed AIM listing and demerger from Open Orphan (ORPH.L). Funds raised as part of Admission will be used primarily to fund the clinical trial costs associated with the development of the Company’s POLB 001 asset as a treatment for severe influenza and to acquire and develop new portfolio assets.  Offer details and timing TBC

Wise, the Fintech and payments start-up is planning to pull the trigger on a direct listing on the London Stock Exchange, becoming the latest tech firm and this time a Unicorn to cash in on the ongoing boom in flotations on the UK’s public markets. Wise plans to establish a customer shareholder programme, OwnWise, which will reward customers joining as shareholders after admission to support its long-term mission. OwnWise, open for pre-applications from UK eligible customers today, provides participants with the chance to receive bonus shares in Wise, representing 5% of the value of the shares they buy and hold for at least 12 months (based on market value at the time of purchase) up to a cap of £100, amongst other perks. All existing investors, including the company’s team of current and previous Wisers (employees) who hold options and shares, will be offered time-limited enhanced voting shares to support Wise’s focus on its mission as it transitions to being a listed company. Admission Due TBC

Orcadian Energy, the North Sea focused, oil and gas development company, announces its intention to seek admission to AIM. The Company’s key asset is the 100% interest in the Pilot oilfield, with audited proven and probable reserves of 78.8m barrels (audited by Sproule BV). Orcadian plans to raise gross proceeds of c. £5m to progress its assets. Expected June/ early July.

Baltic Classifieds Group PLC, the leading online classifieds group in the Baltics, announced their intention to IPO on the Premium Segment of the LSE. The Offer will comprise an offering of both new Shares to be issued by the Company, with gross proceeds expected to total approximately EUR 120m and existing Shares to be sold by ANTLER Equity Co S.à r.l and certain BCG shareholders. The directors intend to use the net proceeds from the Primary Raise for the repayment of existing debt in conjunction with the refinancing of the Senior Facilities Agreement targeting a net debt at IPO of approximately 2.75x FY21 Adjusted EBITDA. Expected early July.

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 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. Due 16 July

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.

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. 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. Due 30th June.

*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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