Small Cap Wrap – AFH Financial, Crystal Amber, European Metals and more…

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19 May 2021

@HybridanLLP

*A corporate client of Hybridan LLP

 

Dish of the day

Gulf Investment Fund moving from Premium to Spec Funds.
 

Off the menu

Red Emperor Resources has left AIM. 

 

What’s cooking in the IPO kitchen?

Oxford Cannabinoid Technologies Holdings PLC to IPO onto the Standard List. They are a pre-revenue pharmaceutical company with an objective to develop cannabinoid-based prescription medicines approved by regulatory agencies including the US Food and Drug Administration, the European Medicines Agency, and the Medicines and Products Healthcare Regulatory Authority. Their drug development strategy includes the development of proprietary cannabinoid derivatives, natural phytocannabinoids and other drug compounds that interplay with the endocannabinoid system. The company has raised £16.5m with a market cap of £48m.  Admission expected 21st May. 

Arecor Therapeutics announces intention to Float on AIM.  The revenue generating biopharmaceutical company that is targeting improving patient care by bringing innovative medicines to market through the enhancement of existing therapeutic products using its innovative proprietary formulation technology platform, Arestat™. Admission is expected to occur in early June 2021.  Deal details TBC. 

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.

Trellus Health which is commercialising a scientifically validated, resilience-based, connected health solution for chronic condition management to float on AIM. Expected to raise gross proceeds of approximately £25m. Due 28 May.   

Elcogen Group has announced its intention to IPO on AIM.  They are a manufacturer of ceramic anode-supported, low temperature solid oxide cell technology. Elcogen has two core product lines, ElcoCell and ElcoStack. Both product lines are used by customers to integrate into their own end products or systems either for distributed power generation (fuel cells), green hydrogen production (electrolysers) or syngas production (co-electrolysis).  The Group operates in Estonia and Finland with headquarters in Tallinn, Estonia. Company financials and deal details TBC. Expected admission date early June 2021. 

Pioneer Media Holdings Inc to join the Access Segment  AQSE Growth Market. The Company is an investment company focused on the eSports and mobile gaming industries, and all business sectors related thereto. No funds being raised. Due 25 May.

Pharma C Investments to list as a SPAC on the Access Segment of the AQSE Growth Market. It is specifically seeking to take advantage of the dynamic regulatory environment surrounding legal Medicinal Cannabis. Raising £1m Due 26 May.

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. 

Aquila Energy Efficiency Trust to admit its shares on the Main Market (Premium). Seeking raise of up to £150m. The Company will seek to generate attractive returns for Shareholders, principally in the form of income distributions by investing in a diversified portfolio of Energy Efficiency Investments. Due 2 June.

Taylor Maritime Investments to join the Main Market (Premium). The Company is an internally managed investment company with an Executive Team led by Edward Buttery. The Executive Team has to date worked closely together for the Commercial Manager, Taylor Maritime. Established in 2014 by Edward Buttery, Taylor Maritime is a privately owned ship-owning and management business with a seasoned team that includes the founders of dry bulk shipping company Pacific Basin Shipping (listed in Hong Kong 2343.HK) and gas shipping company BW Epic Kosan (formerly Epic Shipping) (listed in Oslo BWEK:NO). Taylor Maritime’s team of experienced industry professionals is based in Hong Kong and London. Taylor Maritime’s principals have been some of the most active buyers of Handysize and Supramax dry bulk ships having made over US$1.3b of asset purchases and sales since 1987. Seeking a $250m raise. Due 27 May 2021.

Kitwave Group, the independent, delivered wholesale business to join AIM. The Placing of the Placing Shares will raise gross proceeds of £64.0m for the Company and the Placing of the Secondary Placing Shares will raise gross proceeds of £17.6m for the Selling Shareholders. Mkt cap £105m. The management team, led by Paul Young, has overseen significant growth in both revenue and operating profit with revenue and Adjusted EBITDA growing to £592.0m and £27.6m respectively in FP20 (an 18-month period). In the 12 months to 30 April 2020, the Group’s revenue and Adjusted EBITDA was £399.0m and £17.5m respectively. Due 24 May.

Belluscura to join AIM.  The designer and manufacturer of FDA cleared, lightweight and portable oxygen concentrators to raise £15m, with an expected pre-money market capitalisation of £35-40m. Due late May.

Dianomi, the provider of native digital advertising services to premium clients in the Financial Services and Business sectors, announces its intention to seek admission of its shares to trading on AIM. Admission is expected to take place during May 2021. Offer details TBA. In FY 2020, revenue was £28.43m, representing growth of 58.8% compared to FY19. The majority of the Group’s revenue is generated in the Americas (FY20: 76.6 %) followed by EMEA (FY20: 17.0%.), and APAC (FY20: 6.4%.) Earnings before interest and taxation was £2.02m in FY20 having grown from £0.25m in FY19. 

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.”

Imperial X (AQSE:IMPP) to join the Main Market (Standard). It is also proposed that on Admission to the Official List, the Company will change its name to Cloudbreak Discovery Plc.  With effect from Admission, Imperial X will hold equity positions and royalties in a variety of projects in the natural resources sector across multiple jurisdictions, primarily in the Americas and Africa. The Company is proposing to raise up to £1.5m by way of placing of new Ordinary Shares to support further prospect acquisitions. Due 3 June

 

Banquet Buffet

AFH Financial 475p  £204.8m (LON:AFH)

The Financial Conduct Authority has, on 18 May 2021, approved the proposed acquisition of AFH by Cortina Bidco Limited, a newly incorporated company indirectly controlled by funds managed by Flexpoint Ford, LLC, pursuant to the recommended cash acquisition by Cortina Bidco Limited of AFH. The Acquisition and Scheme, which were approved by AFH Shareholders on 26 March 2021, remain subject to the sanction of the High Court. It is expected that Completion of the Acquisition will occur as soon as practicable following such sanction. 

 

Crystal Amber 100p  £83.9m (LON:CRS)

Crystal Amber Fund, the activist investment fund, announces that it has sent to the board of Hurricane a requisition notice requiring Hurricane to convene a general meeting at which resolutions will be proposed to remove Steven McTiernan, Dr David Jenkins, John van der Welle, Sandy Shaw and Beverley Smith as directors and to appoint John Wright and David Cruik to the board as non-executive directors. Since 2013, the Fund has been a shareholder in Hurricane. To enable Hurricane to commence and continue its workstreams, the Fund was, on three separate occasions, asked to provide capital to Hurricane. Each time, the Fund responding favourably, investing a total of more than £25m. The board of Hurricane had previously presented the company as a strategic asset of national importance. However, it has failed to reconcile its earlier estimates of the value of Hurricane’s West of Shetland portfolio with its latest, downbeat assessment.

 

European Metals 69.5p  £121.7m (LON:EMH)

Results of locked-cycle test work, a metallurgical processing assessment conducted on ore concentrate extracted from the Company’s flagship Cinovec lithium project. Successful locked-cycle test results further support the Cinovec project’s credentials to initially produce battery-grade lithium carbonate. European Metals has demonstrated that Cinovec battery grade lithium carbonate can be easily converted into lithium hydroxide monohydrate with a commonly utilised liming plant process. Further optimisation work in hydrometallurgy processing steps expected to improve lithium recoveries from concentrate to >92.0%.

 

IXICO 85.5p  £41m (LON:IXI)

The AI data analytics company delivering insights in neuroscience has been selected by a current biopharmaceutical client to provide neuroimaging services for a Phase III clinical trial. Following on from the recent contract win announcement made on 28th April for an acute ischemic stroke study, today’s contract announcement is for a Neuroinflammatory disorder study, extending IXICO’s CNS franchise to include a further new disease indication.  In addition to deepening the commercial relationship with this client, the additional contract highlights the Company’s strategic momentum in diversifying across new neurological therapeutic areas.  Neuroinflammatory disorders such as multiple sclerosis (MS) represent an important area of research within CNS, with an active and growing number of new clinical trials anticipated. The new Phase III trial will be conducted across 50 sites in North America and Europe and is worth in excess of £0.5m over 4 years.

 

Litigation Capital Management 103.25p  £119.9m (LON:LIT)

The alternative asset manager specialising in dispute financing solutions internationally, announces that it has entered into a new litigation finance agreement with certain Carillion entities (in liquidation). The agreement to provide a litigation finance facility is to fund a claim in the Commercial Court of the High Court of Justice of England & Wales against the Carillion group’s former auditors, KPMG. The claim arises from KPMG’s conduct of its audits of the Group’s financial statements. The losses which form the subject matter of the claim are expected to exceed £250m. Carillion was the largest corporate collapse in the building and construction industry in UK history. LCM continues to demonstrate its ability to access high quality investment opportunities, enabling long term value creation for shareholders and investors. The litigation finance facility with Carillion further strengthens the Company’s existing, high quality, portfolio of investments.

 

Mirriad Advertising 54.5p  £152m (LON:MIRI)

The leading in-content advertising company, today reveals new research into the effectiveness of its patented technology. Results showed that Mirriad’s solution increased consumer awareness of inserted brands by 56%, whilst also driving a 12% uplift in purchasing intent. It also found a 65% rise in those who actually consumed the featured products within 30 days of seeing the advertising, and with growing consumer aversion to interruptive advertising, another stand-out finding was that 85% of viewers liked the in-content integrations. As part of that research, extensive testing was recently undertaken with one of the world’s leading food and beverage companies. The positive results led to that brand signing an innovative framework agreement with the objective to use the Mirriad solution across different media partners in the US. The solution was also successfully tested in an exciting growth category for the Company, with Mexican beer brand Tecate immersing their brand into Giovanny Ayala’s latest music video at the start of this year.

 

MTI Wireless Edge 71p  £62.9m (LON:MTI)

The technology group focused on comprehensive communication and radio frequency solutions across multiple sectors announced its financial results for the three month period ended 31 March 2021. Revenue growth, up by 4% to $9.95m (2020: $9.55m). Increase in profit from operations, up 14% to $0.96m (2020: $0.84m), reflecting the benefit of increasing scale on profit margins. Strong cash generation with net cash up 10% to $9.5m on 31 March 2021 (31 March 2020: $8.6m), despite having paid a 2020 dividend of $2.2m in March 2021 (compared to payment of the 2019 dividend in April 2020). “Each division is showing clear progress against their respective growth strategies. In 2020 the Covid-19 pandemic emphasised to the world the importance of mobile connectivity and this has accelerated the global roll-out of 5G. As a result, take-up of our 5G backhaul solution is moving ahead positively. Similarly, water scarcity remains a key issue amongst governments worldwide and Mottech’s water management solutions are benefiting from the need to reduce water wastage and the cost savings associated with efficient irrigation. Our distribution and professional consulting services business, MTI Summit, has over the last three years established a track record of consistent growth, boosted by increases in defence spending and in particular increased reliance on wireless technologies across the sector.”

 

Rockfire Resources 1.02p  £9.8m (LON:ROCK)

Results from 3D processing of helicopter magnetic data at the Company’s 100%-owned Copper Dome porphyry project in North Queensland, Australia. The original survey was flown in April 2021 and the newly processed data highlights strongly magnetic drilling targets at depth.  Two main targets have been highlighted, with both showing very strong magnetic responses, which are being interpreted as magnetite alteration – an important feature associated with many porphyry copper deposits. The targets commence approximately 500 m below surface. The larger target is 1.5 km long, 700 m wide and occurs between 400 m and 1.3 km deep and remains open beyond that depth.  The smaller target is 900 m long, 250 m wide and occurs between 600 m and at least 1 km deep. Historical diamond drilling from 1972, directly above the targets, intersected typical porphyry grades including 88 m @ 0.23% Cu and 75 m @ 0.13% Cu, with most holes ending in copper mineralisation. Peak values from core sampling were 3.77% Cu and 1.8 g/t Au. Rockfire is preparing for drilling initially at the Copperhead porphyry copper project and intends to drill these new magnetic anomalies at Copper Dome also during this field season.

 

Safestyle 64.4p  £88.1m (LON:SFE)

AGM Statement from the UK focused retailer and manufacturer of PVCu replacement windows and doors for the homeowner market, included a trading update. Since the preliminary results announcement at the end of March, trading and financial performance has continued in line with recently increased market expectations. Revenue for the four months to 30 April 2021 was up 10.4% compared to 2019 and 50.9% compared to 2020.  Due to the first lockdown in 2020 where no revenue was earnt for the entirety of April, they believe 2019 represents a more meaningful comparative.  Alongside this revenue performance, margins have improved markedly versus both comparative periods with the Group’s margin-enhancing initiatives now contributing meaningfully to their financial results. This improved margin performance is after the impact of cost inflation in resin, other materials and resource-related costs as a result of the current strong demand in the sector.

 

Science Group  380p  £156.4m (LON:SAG)

AGM update. All three divisions of the Group have had a good start to the year. In the Services businesses, the R&D Consultancy division has seen particularly strong momentum in the Medical sector, while the Regulatory & Compliance division has continued the progress demonstrated in 2020. The Frontier product division continues to perform well with material supply constraints likely to be the biggest risk in the current year. Given the continued business momentum, the Board now anticipates that the Group will report adjusted operating profit  for the first half of 2021 around 30% higher than in the same period of the prior year. This is a particularly notable performance since H1 2020 reported a record AOP for the Group and the current year includes a significant currency exchange rate headwind relative to the strong 2020 comparator. While it is still early in the year and the Board is closely monitoring the impact of a strengthening Sterling currency, this excellent start to 2021 provides a platform for the year as a whole and empowers the Group management teams to continue to invest in future growth opportunities with confidence. Gross cash at 30 April 2021 was £29.5m with net funds of £13.3m. The Group’s strong balance sheet and free cash flow generation enable the Board to continue to evaluate corporate opportunities to increase the scale and/or development of the Group in parallel with the organic investment activities.

 

Head Chef

Derren Nathan

0203 764 2344

[email protected]

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