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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Banquet Buffet

All Active Asset Capital  SUSPENDED  (AAA.L)

Placing raising £15m at 80p per share. Conditional Placing raising a further £135m at 80p per share. Agreement to acquire at least 75% of Sentiance N.V. Intention to exercise EUR119m balance of the AAQUA B.V. Option. Sentiance is an emerging and leading organisation within behavioural, ethical artificial intelligence and machine learning with its ‘Motion Intelligence’ and ‘Behavioural Change Platform’ technologies. Sentiance has recently announced new partnerships, extended partnerships and contracts with well-known international businesses, including several within the Fortune 500. Proposed cancellation of admission to trading on AIM. Rodger Sargent, Executive Director of AAA, commented: “The majority acquisition of Sentiance and exercise of the AAQUA option will be completely transformational for AAA. Given this, we feel that the proposed cancellation and our plan of listing on an alternative international exchange would further accelerate opportunities for AAA and our existing and future stakeholders.”

Distribution Finance 61p  £109m (DFCH.L)

The newly authorised bank providing working capital solutions to dealers and manufacturers across the UK, today announces its Q2 trading update and re-affirms the Board’s expectation to achieve monthly run-rate profitability during Q4 2021. The Group is pleased with the progress it has made during the quarter, building  on the momentum reported since the beginning of the year. New loan origination has continued at pace, exceeding £295m during the 6-month period to June 2021 (2020: £115m) underpinned by the strong pipeline previously reported by the Group, which now exceeds £1bn. The Group’s progress in converting its pipeline and the on-boarding of new dealers has exceeded expectations. During the first 6 months of 2021 the Group onboarded more than 80 new dealers and as at 30 June 2021, the Group had in excess of 700 dealer relationships with aggregate dealer loan facilities totalling c.£465m (2020: £364m). Dealers across most sectors are reporting strong demand for new and used assets, particularly amongst those sectors focused on the leisure, recreational activities and home delivery markets. This pent-up demand, driven by the impact of the global pandemic and on-going foreign travel restrictions, has led to loan repayments exceeding expectations. As a result, the Group’s stock turn has accelerated from c.150 to c.110 days in line with the speed of product sales. Whilst many dealers within the Group’s network are reporting record sales, inventory replenishment has been impacted, with many of the Group’s manufacturer partners reporting increasing commodity prices and a knock-on impact on their supply chains. Manufacturer production levels are exceptionally high, however the achievement of projected delivery dates have been materially impacted. This exceptional trend, coupled with high stock turn, has slowed the Group’s overall loan book growth. As a result, the Group’s loan book stood at £166m at 30 June 2021 (2020: £166m) and has continued to deliver strong arrears performance.

E-therapeutics 22.55p  £116m (ETX.L)

ETX has met a key milestone in its collaboration with Galapagos NV, a commercial stage company specialised in the discovery and development of small molecule medicines with novel modes of action, with a focus on inflammation, fibrosis and kidney disease. This milestone results in a payment from Galapagos. The objective of the collaboration between the Company and Galapagos, which was announced on 10 June 2020, is to identify new therapeutic approaches to modulate a specific mechanism involved in idiopathic pulmonary fibrosis (IPF) and other fibrotic indications. Under the terms of the agreement, e-therapeutics is eligible to receive additional milestone payments through pre-clinical and clinical development as well as commercial milestones.

i3Energy 14.075p  £101.7m (I3E.L)

Update from the independent oil and gas company with assets and operations in the UK and Canada. Production in the second quarter averaged 9,142 boepd, which included the impact of routine facility maintenance on third-party facilities. Production since the start-up of the Noel well on June 17 has averaged 9,353 boepd. The Marten Hills 01-12-075-26W4 well was spud on 15 June 2021, targeting the 25m thick Clearwater C sandstone, and finished drilling on 30 June 2021 to a maximum true vertical depth of 630m. Eight horizontal lateral sections, for a total of 13,057m in length penetrating the reservoir, were successfully drilled from this wellbore with operations having progressed on time and on budget. All laterals drilled have encountered a clean upper shoreface sandstone, with porosities ranging from 24% to 27%, and oil has been evidenced throughout by oil shows on cuttings. The rig has been moved to, and now spud, the second well in this Marten Hills Clearwater drilling programme at 02-12-075-26W4, with drilling expected to finish mid-July. Tie-in and equipping of the wells is expected to take 5 days following rig release, with production from both wells anticipated to commence in late July.

Microsaic Systems 0.26p  £15.8m (MSYS.L)

The developer of point of need mass spectrometry (MS) instruments, in collaboration with the Centre for Process Innovation announced the development and demonstration of the first, real-time monitoring Process Analytical Technology, MS solution for the online production of biotherapeutic drugs such as vaccines and anti-cancer treatments. Live data transmitted via Internet of Things (“IoT”) devices from the micro-engineered MS equipment, enables constant monitoring of production processes, to ensure high quality biological production output. This real-time alert system allows rapid scaling to large volumes, reduces supervision costs, and accelerates vaccines and anti-cancer treatments through emergency and standard regulatory authorisation and direct to patients.

Omega Diagnostics 56p  £102.3m (ODX.L)

The medical diagnostics company focused on CD4, infectious diseases and food intolerance, announces that following completion of the of US performance studies, its technology partner, Mologic Ltd  has filed its submission to the U.S. Food and Drug Administration (FDA) requesting Emergency Use Authorization (EUA) for its rapid point-of-care COVID-19 antigen test, for use under both the Omega’s VISITECT® brand and Global Access Diagnostics (GAD) brand. The Company will provide a further update on the process in due course.

Powerhouse Energy  Group 4.8p  £188m (PHE.L)

The UK technology company seeking to commercialise hydrogen production from non-recyclable waste plastic, announces its partner, Peel NRE, part of Peel L&P, has signed a Letter of Intent to supply hydrogen from its planned roll out of plastic to hydrogen facilities to Element 2’s proposed network of hydrogen refuelling stations.  Peel NRE is Powerhouse’s exclusive development partner for the technology in the UK. Under the terms of the DMG Development UK Exclusivity Option Agreement between Peel NRE and Powerhouse (first announced on 9 March 2020), Peel NRE is proposing to develop a hydrogen refuelling station which will take hydrogen produced by Powerhouse technology, from the consented plastic to hydrogen facility at Protos, Cheshire.  There are also plans to develop a hydrogen refuelling station at Peel NRE’s planned plastic to hydrogen facility in North Clyde, near Glasgow. Whilst the Company is very encouraged by these developments it should be noted that there is no guarantee the facilities will be completed and that the arrangements remain subject to legally binding agreements .

Power Metal 2.4p  £27.6m (POW.L)

Update on the Ditau Project which is exploring for Rare Earth Elements  in Botswana. Ditau is held in a 50/50 Joint Venture with Kavango Resources plc (LSE:KAV). Kavango is the operator of the Project. Geophysical and geochemical surveys completed on 7 of the 12 target areas consisting geophysical ring structures – named I1 to I12 (below), with data processing and interpretation carried out by Kavango’s technical team. 3 specific targets prioritised for drilling. Each target includes a possible carbonatite intrusive body lying within an interpreted 300m depth from surface. Targets will be tested using the cost effective reverse circulation  drilling method in the first instance.

Salt Lake Potash 18.75p  £146m (SO4.L)

Appointment of Rebecca Morgan as a Non-executive Director, effective from 22 June 2021.Rebecca Morgan is an experienced mining professional having worked in senior technical and executive functions across number of companies, commodities and jurisdictions over a 20 year career. Ms Morgan is currently the Raw Materials Manager at Minbos Resources (ASX:MIN) and a director of REESearch technical consultancy. She has held a number of other senior technical and executive  roles in her career, most recently as Acting Chief Geologist at First Quantum Minerals in Panama, and General Manager Technical Services and Acting Mine Manager for Tiger Resources in the DRC. She is currently a Non-Executive Director of Peak Resources (ASX:PEK) and previously the Non-Executive Technical Director for Koppar Resources (ASX:KRX).

Team17  Group 755p  £993m (TM17.L)

The global games entertainment label, creative partner and developer of independent premium video games, has entered into an agreement to acquire the business and assets of StoryToys (via the acquisition of its parent company TouchPress Inc.). StoryToys is a world-class developer and publisher of educational entertainment (“edutainment”) apps for children, and the Acquisition establishes a new highly complementary and fast growing edutainment vertical for Team17, strengthening the enlarged Group’s position as a leading games entertainment business. The initial consideration for the Acquisition is US$26.5m, with a further maximum US$22.5m payable in cash on delivery of certain targets by the vendors within 3 years following completion of the Acquisition and will be funded from Team17’s existing cash reserves. The Acquisition is expected to be immediately earnings accretive, generate returns well above the cost of capital and whilst smaller in scale, deliver margins and cash generation approaching the levels of Team17.

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 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.

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