Hybridan Small Cap Feast

Joiners: Lift Global Ventures plc (AQSE:LFT) has joined AQSE Growth Market. The Company’s investment strategy is to operate as an enterprise company seeking acquisition or investment opportunities within the financial media and technology industries. Within these broad industries, areas of focus may include: Financial news websites and other forms of “new media”, Investment research providers, Financial PR, IR, design and marketing agencies, Production studios and visual content providers and Technology platforms which facilitate capital raising and/or lending. The Company has been admitted to the Access Segment of AQSE following the successful completion of an oversubscribed fundraise of £1.73m. Including funds raised prior to the IPO, Lift has raised £2.07m to pursue its investment strategy.

Leavers: Arden have left AIM following a takeover by Ince Group (INCE.L)

Banquet Buffet

Aukett Swanke 1.5p  £2.5m (AUK.L)

Aukett Swanke, the architectural and interior design practice, announced the disposal of its interest in John R Harris & Partners Limited, incorporated in Cyprus and operating out of the Middle East, to the local management team for a maximum consideration of AED 5m (approximately £1.074m). The consideration is to be settled by AED 4.25m (approximately £913k) in cash and a deferred payment of AED 750k (approximately £161k) payable over a fixed 5-year period, subject to an early repayment discount. The Group has also entered into a Marketing Agreement, covering the use of the Group’s project portfolio and associated materials, over the deferred consideration period for an additional sum in order to maintain the Group’s interest in this important market. John R Harris made a loss of £162k (before amortisation of intangible assets) in the year ending 30 September 2021 and the value of its net assets (excluding goodwill and intangible assets recognised in the Group consolidated balance sheet) was £312k as at 30 September 2021. The Disposal is part of a series of intended actions to restructure the Group’s operations in an orderly manner and to allow the John R Harris business to fulfil its potential without the burden of a central overhead. The proceeds of the Disposal will be used to reduce the amount drawn under the Group’s borrowing facility and for general working capital purposes.

Begbies Traynor  114.7p  £176m (BEG.L)

The latest Begbies Traynor “Red Flag Alert” research, which has examined the financial health of British companies for the past 15 years, highlights the strain two years of extraordinary financial pressures have had on thousands of UK companies. Concerns as the number of companies in critical financial distress increased to 1,891 in the first quarter of 2022, almost a fifth higher than the same period last year. The 19% year-on-year increase has been driven by a 51% jump in the construction sector and a 42% rise among bars and restaurants. Businesses in significant financial distress down 20% on the level a year ago at 581,596, though this is flat on the previous quarter. County Court Judgements – a warning sign of future insolvencies – up 157% to 22,552 in the quarter compared with a year ago; with March having seen the highest number in a single month for 5 years. Data from Begbies Traynor’s “Red Flag Alert” points to a coming wave of business failures as the economy adjusts to the post-pandemic reality with Covid reliefs cut off and a rapid growth in inflation.

Carclo 24.75p  £18.2m (CAR.L)

The global manufacturer, principally of fine tolerance injection moulded plastic parts and aerospace components, today provides an update on trading for the financial year ended 31 March 2022. The Board reports that the business expects to report a strong performance for the year, with revenue growth ahead of, and underlying profits in line with, its expectations despite the challenging macroeconomic backdrop. In addition, the Group balance sheet has strengthened considerably throughout the course of the year, in part driven by a reduction in the IAS 19 pension deficit. It has continued to invest in capital equipment to support long-term growth, largely financed by an increase in net debt. The impact of the pandemic continued to be felt throughout the year albeit less through the direct impacts of lockdowns and plant closures, and more through the secondary effects of labour shortages and significant cost inflation. During the second half, whilst demand has remained robust, the business faced more challenging conditions in terms of recruiting labour in the US as well as cost escalations across raw materials, energy, packaging, freight and other overheads. Whilst the impact of raw material cost increases can largely be passed on to customers (albeit with some time lag) the overall impact of these increases reduced margins in the second half particularly in the US operations. Price increases are being negotiated with customers and this will continue into FY 2023 to offset the impact of the non-material cost increases. Latterly the war in Ukraine has added to these inflationary pressures.

M&C Saatchi 194.6p  £238m (SAA.L)

Further to the Company’s trading update announcement on 21 January 2022 and the announcement of the Company’s final results for the year ended 31 December 2021 announced separately today, the Company announced M&C Saatchi’s projections for the years ending 31 December 2022 and 2023. The Company has delivered continued record performance in FY21 as demonstrated by 7 consecutive positive trading updates since January 2021, and as detailed in the Results Announcement where the Company has reported headline profit before tax of £27.3m, ahead of its expectations and over a 200% increase on the prior year. Taking into account the robust financial performance delivered in 2021 and the strong momentum in 2022 so far, M&C Saatchi is now forecasting headline profit before tax in the region of: £31m in FY22; and £41m in FY23. These forecasts evidence the future potential of the business, comprising expected revenue growth from existing clients and new client wins, coupled with further simplification under the accelerated Company strategy. Further details are set out in the appendix to this announcement.  The Company remains highly confident in its ability to create material value for its shareholders. M&C Saatchi is an international communications network headquartered in London.

MP Evans 952p  £519m (MPE.L)

The producer of sustainable Indonesian palm oil, notes the updated announcement made on 27 April by the Indonesian government of plans temporarily to ban exports of palm oil, including both crude palm oil and refined products, effective from 28 April, to protect domestic supply. Local demand for palm oil is expected to increase significantly for a short time over the Lebaran festival period, celebrated over the next 7-10 days. The Indonesian government last month introduced a revised export levy to subsidise local supplies as global supplies of vegetable oil have been limited. Indonesia is the world’s largest producer of palm oil and a significant consumer, accounting for 59% of global supply and 22% of global consumption in 2021. Management continues to monitor the situation closely and awaits clarity from the Indonesian government regarding the length of the export ban and extent of its impact on the domestic market. The Company will provide further updates as appropriate.

Prospex Energy 4.25p  £10.6m (PXEN.L)

The investment company focused on European gas and power projects, updated on the production strategy of, and income from, the El Romeral power plant in southern Spain.  El Romeral continues to provide a very healthy income from selling electricity into the spot market in Spain at near record price levels. The Company holds a 49.9% working interest in El Romeral through its interest in Tarba Energía S.L. Loan plus interest repayment made by Tarba to its two shareholders on 28 April 2022. Loan repaid of EUR289,577, plus accrued interest of EUR19,092.97, equalling a total of EUR308,669.97.  Prospex’s share of this is EUR153,698.64. Tarba has now repaid in full its two shareholders, Prospex and Warrego Energy Ltd, the outstanding loans held in the El Romeral asset of EUR589,577, plus accrued interest of EUR19,092.97. The El Romeral power plant is now operating 24 hours a day seven days a week as its default operating mode, thereby boosting revenue.

Physiomics* 4.20p  £4.1m (PYC.L)

The consultancy using mathematical models to support the development of drug treatment regimens and personalised medicine solutions considers that the award of options linked to the Company’s performance is critical to the incentivisation of its employees and to ensure that there is alignment between management and shareholders. To this end, the Company today confirms that it has agreed to issue 850,000 share options over ordinary shares of 0.4p each in the Company to its non-director employees, under the Company’s existing Enterprise Management Initiative Employee Share Option Scheme. Each Option issued will be exercisable at a price of 4.38p, being the greater of (i) the average closing price for the three dealing days immediately preceding the date of grant; and (ii) the closing price on the dealing day immediately prior to the date of grant, as prescribed in the terms of the Schemes. The Options vest equally over a three-year period and can be exercised within 10 years of the date of grant.

Rotala 32p  £15.8m (ROL.L)

Rotala announced the acquisition from Johnsons (Henley) Limited of its entire bus business and 20-strong fleet, for a cash consideration of £936k payable on completion. The business being acquired is a well-established operator of commercial and contracted bus services in Warwickshire and the southern West Midlands. The Acquisition is expected to be earnings enhancing from completion. Rotala estimates that the assets being acquired have annual revenues of approximately £3.5m and that the vehicle fleet has a fair value which approximates to the cash consideration being paid. Rotala will not assume any other assets or liabilities of any materiality on acquisition. On this basis, the Acquisition is not expected to generate any goodwill. The Directors believe that, following completion, the Acquisition will generate EBITDA of approximately £200k per annum for the Group. No additional overheads are expected to be required as a result of the Acquisition.

Smartspace Software 72.5p  £21m (SMRT.L)

The provider of ‘Integrated Space Management Software’ for smart buildings and commercial spaces – ‘visitor reception, desks and meeting rooms’ announced the successful launch of SwipedOn’s SaaS visitor management platform, in South Korea. Key highlights to launch in South Korea: Key step in broadening addressable market in Far East with launch of SwipedOn in South Korea. Enhanced multi-language variant of the SwipedOn platform released after 18 months of development. This launch includes full Korean version of SwipedOn supported by a Korean website, an in-country marketing campaign and with local language pre-sales and support. The enhanced SwipedOn platform will allow rapid deployment into other new markets in local languages, with deployment possible in weeks.

Sylvania Platinum 93.5p  £255m (SLP.L)

Results for the quarter ended 31 March 2022. Sylvania Dump Operations (SDO) achieved 15,840 4E PGM ounces in Q3 (Q2: 16,605 ounces); SDO recorded $47.9m net revenue for the quarter (Q2: $38.8m), enhanced by strong PGM basket prices; Group EBITDA of $30m (Q2:$22.3m); Net profit of $21.2m ( Q2: $15.5m); Group cash balance of $138m (Q2: $110.1m); and Lesedi plant fully operational since March 2022 following earlier tailings and water related disruptions. Challenges: PGM feed grades in ROM material remain at a lower level at the Mooinooi operation during the quarter: Investigation of potential solutions undertaken in conjunction with the host mine have proven positive. Preferred ore sources have been identified which have led to improved ROM feed grades post quarter end. This is expected to improve PGM grades and therefore production and output in the coming months; and Higher production costs per ounce at the operations impacted by an increase in the cost of reagents, increased fuel and transport cost and the lower ounce production quarter on quarter. Opportunities: The new Lesedi tailings storage facility (TSF) has been completed and commissioning of the tailings deposition facility commenced in February; Cold commissioning of the new Lesedi MF2 project commenced during March 2022 and circuit optimisation is in progress. First slurry was treated post-period end; Tweefontein MF2 remains on track for commissioning H1 FY2023; Production is expected to increase significantly during the next quarter due to progress at Lesedi and the improvements identified post quarter end at Mooinoi; and The Group maintains strong cash reserves.

What’s cooking in the IPO kitchen?

Altona Rare Earths, the AQSE listed mining exploration company focused on the evaluation, acquisition and development of Rare Earth Elements mining projects in Africa, intends to join the Main Market. Admission to trading of the Company’s Ordinary Shares on the AQSE Growth Market will be cancelled simultaneously with Admission. It is also proposed that on Admission, the Company will change its EPIC from AQSE:ANR to REE.  The Company also seeks to raise funds to finance its current and future rare earths mining projects in Southern and Eastern Africa. Timing TBC

According to Proactive Investors, Bridgepoint  is said to preparing to list Burger King UK on the London Stock Exchange as early as this spring. A valuation of £600m is expected.

*A corporate client of Hybridan LLP

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