Small Cap Brunch
Xpediator Plc—Sch 1 from the holding Company for an integrated freight management business operating in the supply chain logistics and fulfilment sector across the UK and Europe with a strong presence in Central and Eastern Europe. Offer details TBC, expected Admission early August 2017. | GetBusy PLC—Sch1 from the holding Company of its subsidiary undertakings, which operates as a document management software business with over 110 full time employees, headquartered in Cambridge, UK and operating across the UK, USA, Australia and New Zealand. Capital to be raised via a rights issues of £3m at 28.3p with anticipated market cap of £13.7m. | Work Group PLC—Sch1 from the Company that proposes to acquire the entire issued share capital of Gordon Dadds Group Limited (GDG). GDG is an acquisitive law firm and a group of other complimentary businesses, including Prolegal, an acquisition vehicle model focused on smaller law firm. Capital to be raised is £20m with anticipated market cap of £40m. | Quiz—Sch 1 from the omni-channel and international own brand in the women's value fast fashion sector. Offer raising £102.7m at 161p expected market cap £200m. Expected late July. Last year Quiz posted sales of £87.4m while pre-tax profits grew by 17pc to £5.7m. | Arena Events Group -provider of temporary physical structures, seating, ice rinks, furniture and interiors. Raising £60m. Mkt cap £63m. Expected on the Chef’s birthday, 25th July. | Altus Strategies—African focused natural resource Company. Offer TBC. Expected Early August. | Harvey Nash Group— Provider of professional recruitment and offshore solutions moving to AIM from Main. No capital to be raised. Mkt Cap c. £57.8m. | Greencoat Renewables - Schedule 1. Targeting a portfolio of operating renewable electricity generation assets, initially investing in wind generation assets in Ireland. Offer raising €270m at €1 with expected market cap of €270m . Due 25 July 2017. | I3 Energy –Schedule 1 Update. Independent oil and gas Company with assets and operations in the UK. Issue price of 55p with anticipated market cap of £14.3m, 25 July Admission. | Verditek— Sch 1 update. The Company's subsidiaries will be involved in advanced solar photovoltaic, filtration and absorption technologies specialising in providing environmental services. Issue price 10p. Admission late June. There has been no official update here for a while. | Hipgnosis Songs Fund investment Company offering pure-play exposure to Songs and associated musical intellectual property rights. Prospectus yet to be published. | Impact Investment Trust—Exposure to a diversified portfolio of funds providing SMEs across developing economies with the growth capital they need to have a positive impact on the lives of the world's poorer populations. Raising up to $150m at $1.00. | Curzon Energy—Report on Proactive Investors of intended LSE float this year with acquisition of coal bed methane assets in Oregon. Looking to raise £3m plus. | Kuwait Energy— has not been able to complete its initial public offering as announced in its Intention To Float of 3 May 2017. However, in light of positive feedback from potential investors, the Company remains committed to obtaining a London listing and continues to explore its options. | Supermarket Income REIT– Up to £200m raise to acquire a diversified portfolio of supermarket real estate assets in the UK, providing long-term RPI-linked income. Due 21 July.
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20 Jul 17
Surface Transforms* (SCE): H1 results confirm operational progress (CORP) | Premaitha Health* (NIPT): European diagnostics partnership (CORP) | Lok'nStore* (LOK): Filling existing stores, developing new ones (CORP) | Victoria* (VCP): Entry into the European flooring market (CORP) | eg solutions* (EGS): Exceptional H2 performance (CORP)
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13 Feb 17
Joy of Techs
ICT evolution is driven by technological development as advances are made which both meet and shape customer requirements. Our 2011 note No such thing as a telco described the modern reality in that former ‘telcos’ now deliver varying elements of a range of managed services. We built on this theme last year, exploring in further detail their evolutionary paths, operating fundamentals, and cashflow yield similarities. In the consumer environment, demand for bundles of technology is complemented by demand for content. Across the pond, the mooted combination of AT&T and Time Warner typifies the bundled need of ‘pipe’ and content, since unbundled alternatives such as FaceTime and WhatsApp can be easier and clearer to chat over, and Amazon and Netflix are easier to watch anywhere. In the UK, BT’s defensive actions cover delivery, content and capabilities, acquiring EE yet also buying football rights. While TV was long ago added to triple play to become quad play, voice is now merely an app, and fixed and mobile seen as just dumb pipes: it's the content that will influence consumer choices. Growth of TV and film as well as music and gaming over IP leads to UK small cap opportunities. In context of the drive to maximise value from pipes and access by offering content and data, we look at some amongst the potential tech small cap beneficiaries: Amino*, Keyword Studios, ZOO Digital*, 7digital*, KCOM* and CityFibre*.
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21 Nov 16
eg solutions* (EGS): New contract shows the full range of eg’s solution (CORP) | Hayward Tyler* (HAYT): Interims highlight significant 2H weighting needed (CORP) | Carclo (CAR): Decent Interim performance – on track for FY (BUY) | Wentworth Resources (WRL): Q3 results (BUY) | Castleton* (CTP): Australian contract win (CORP) | Artilium* (ARTA): Another new MVNO agreement signed (CORP) | Redcentric* (RCN): Appointment of forensic accountants and interim CFO (CORP)
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15 Nov 16
Venn Life Sciences* (VENN.L) | One View Group (ONEV.L) | Futura Medica (FUM.L) | Symphony Environmental Technologies (SYM.L) | Ten Alps (TAL.L) | CareTech Holdings (CTH.L) | Magnolia Petrolium (MAGP.L) | Versarien (VRS.L) | Stobart Group (STOB.L) | EG Solutions (EGS.L)
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27 Oct 16
Weak H1 but strong H2 due on big contract wins
A weak H1 was salvaged by a raft of large contract wins which should drive a strong H2. A strange first half was poor financially (loss-making) but encouraging operationally: three new contracts were won through the renewed JV with the US giant, Aspect Software. These include a ground-breaking deal with the world’s leading Social Network. There has also been a contract from one of the UK’s largest life assurance funds; a proof-of-concept with a major Singapore financial services group; as well as repeat orders from UK BPOs and a large European Investment Bank. With those secured, it is now a matter of delivery to see an exceptional H2. While we cut our FY sales forecasts on these results, management is confident on the earnings and we actually lift EPS expectation due to the H1 tax credits.
21 Sep 16
New business wins, pipeline remains strong
eg’s interim results were impacted by the timing of a number of deals, as described in the June update. Revenue for H1 was £1.1m lower than the prior year, and the group slipped to a £0.9m EBITDA loss. We make modest downgrades to forecasts to reflect the recent challenges, but the refreshed Board is taking steps to address operational weaknesses. The period saw a number of new contract wins, and with the order book standing at over £16m, revenue visibility remains high.
21 Sep 16
Major social network deal announced
eg solutions has today announced a deal with “a leading social networking corporation”. The deal is material in its own right, it demonstrates the broad applicability of eg’s software, and suggests that the relationship with Aspect is finally beginning to bear fruit. We make no changes to forecasts, but today’s announcement is a major step forward.
18 Aug 16
The Joy of Techs
Mobile money has been slow to deliver but investors need to stay engaged as there are plenty of reasons as there are plenty of reasons for success. Mobile penetration and network coverage are growing inexorably and where communication leads, transactions follow, as e-commerce has proven. Banking and payments lead the way but it will embrace other financial services too, from insurance to cross-border remittance. Slowly but surely, mobile money is coming of age.
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15 Aug 16
Board change points to strategic refocus
EGS confirmed this morning that it expects shortly to be able to announce Nigel Payne’s appointment as its new chairman (subject to NOMAD due diligence), and that four existing board members, including the FD and three non-execs, have resigned. The FD will remain in place and assist an orderly transition to a replacement when found.
13 Jun 16
eg solutions*: Guidance reiterated but with H2 weighting (CORP) | SacOil*: Malawi licence extension (CORP) | SCISYS*: Recovery continues with return to net cash (CORP) | Best of the Best*: Initiation of coverage – analyst interview (CORP) | Revolution Bars: Initiation of coverage – analyst interview (BUY)
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09 Jun 16
The Joy of Techs
This quarter's topic: Feasting on Red Tape. 2016 harbours every chance of being a stultifying year, given the imminent local and London mayoral elections, the looming hurdle of Brexit, the summer doldrums, the bizarre potential outcome of the US presidential election and then the home strait to Christmas. Excuses for inactivity abound with regard to spending IT capex budgets.
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04 May 16
Hitting the straps
Results to end January 2016 confirm delivery against core strategic targets. A £3.1m equity issue in January 2015 funded investment in software, and in-house sales & marketing capabilities. That enabled eg to (a) launch significant enhancements to its product lines in September and (b) grow the order book across the year, with another £0.3m added in the last two months. That was driven primarily by direct sales, but the creation of new 3rd party partner channels is progressing to plan and could potentially contribute significantly to sales over the next two to three years.
24 Mar 16
Consider all the aspects
eg has announced FY15/16 results in line with the January trading update; revenues had been impacted by a disappointing level of channel sales and, we believe, an immaterial contribution from Aspect. Nevertheless, “core” eg (direct) sales remain robust, the group is modestly profitable and the order book has grown to a phenomenal £17.4m (2.5x annual sales). We realign revenue downwards in line with consensus to reflect caution around channel partnerships, but leave FY17 profit expectations unchanged.
24 Mar 16
Business as usual
eg solutions (“egs”) shareholder and strategic partner Aspect Software Inc (“Aspect”) has filed for Chapter 11 bankruptcy protection in the US. The filing is a “consensual restructuring” of Aspect’s debt structure and general unsecured creditors will be paid in full. We understand this process is unrelated to business activities undertaken with egs, and egs management have stated they expect no impact on earnings from Aspect’s restructuring.
11 Mar 16
Earnings outlook intact
The above developments do not impact our earnings forecast or view of intrinsic value at c 100p/share. That’s underpinned by a growing order book, improved delivery vs sales targets and an operationally leveraged financial model which will mean higher revenues result in a step up in profit/EPS.
10 Mar 16
The Joy of Techs
This quarter’s topic: Automotive Technology. With the Mobile World Congress approaching at the end of this month and likely to feature so many automotive applications to the extent it should perhaps be renamed the Mobile World of Cars, we examine the growing impact of technology in the automotive industry, from telematics to connected cars and autonomous vehicles.
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03 Feb 16
Behind every successful company..
eg is well-positioned to capitalise on growing demand from multiple industries globally for technologies to transform back-office efficiency. It provides industry-leading workforce optimisation (WFO) solutions already used by around 50 global brands and over 100,000 users worldwide. These address an area of high priority as increased business conducted digitally drives up transaction volumes across all channels. eg software helps users optimise back office processes, meet customer demand for prompt, even real-time responses and comply with increasingly stringent regulation.
26 Jan 16
Strong interims; new products to drive growth
eg’s recent interim results were in line with the August 2015 trading statement. With underlying performance ahead of our expectations, continuing improvement in the order book (up 19%), and upbeat commentary from management, we are increasing forecasts. We now expect PBT breakeven in FY16. Alongside the results, eg also announced new mobile and forecasting modules for the eg intelligence suite, giving further confidence in the growth outlook.
04 Nov 15
Strong sales growth delivered at lower cost
eg is midway through a second year of strong sales performance which is set to see revenue virtually double in the two years following a change of management bringing the founder back to the helm. £3.8m was raised from equity last year to invest in sales and marketing to take advantage of sustained demand for its leading-edge workforce management solution, notably in the global financial services sector. That was expected to cause a loss this year in exchange for establishing a higher revenue level after years of struggle at <£5m. It now seems that revenue growth is being delivered from lower-than-expected spend, and we are guided to upgrade our forecast to breakeven in FY 2016, from our previous £0.3m adj. LBT.
23 Sep 15
Vmoto*: Operational update (CORP) | WANdisco*: Looking for full ahead, both (CORP) | eg solutions*: Strong sales growth delivered at lower cost (CORP) | Chariot Oil & Gas*: FY 2015 interim results (CORP) | Gemfields*: New mine plan for Kagem (CORP) | Wolf Minerals: Hemerdon commissioning complete (BUY)
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23 Sep 15
Trading update: All on track
Today’s trading update from eg confirms that the business is very much on track. The company expects to report revenues of £3.6m for the first half of FY15/16 (+16% YoY), with a pre-tax loss of £0.3m reflecting ongoing operational investment in the business. Revenue visibility remains high, with a £2.5m improvement in the order book to £15.5m. Imminent new product launches, scheduled for Sep-15 should further support future growth. Lastly, with £3.1m net cash, the group’s financial position remains solid.
20 Aug 15
eg solutions has this morning announced a major Board revamp – four directors have resigned (although Jon Kay will remain for a time until a replacement Finance Director is found). The company expects to appoint Nigel Payne as the new Non-Executive Chairman. We make no changes to estimates, and hope the group is able to move forward under a hopefully functional and forward-looking new Board team in due course.
13 Jun 15
Positive start to the year
Back office optimisation software company eg solutions has released an upbeat AGM statement. Trading performance remains strong, with new contract wins being recorded across a number of verticals. Revenues from these contracts will be recognised in the current financial year and management’s positive comment on the outlook gives us further confidence in the full-year outcome.
12 May 15
New contract wins driving growth
eg solutions has reported FY2015 results ahead of our forecasts, and confirming the positive momentum flagged in the February trading statement. Improved financial performance is being driven by new contract wins for the operational intelligence suite – 10 during 2015. The result was impressive revenue growth, accompanied by a significant improvement in EBITDA margin, and also in free cash flow. Overall, a strong set of results, which together with the solid balance sheet, give further confidence in eg’s future growth prospects.
26 Mar 15
Momentum clearly visible
Back Office optimisation software company eg solutions has released a trading update for the period ending January 2015. The announcement provides clear evidence of the ongoing momentum in the business, with management confirming that full-year results will be marginally ahead of market expectations. FY2015 revenues will be up some 67% over 2014, ahead of our +62% forecast. In addition, the order book remains strong, standing at £15m to be recognised over the next three to four years.
13 Feb 15
Putting the Back Office on the Front Foot
The addition of new directors, together with the return of the founder Elizabeth Gooch as CEO, have led to a re-focussing of the eg business on core strengths. The benefits of this process are beginning to emerge, with recent results showing strong topline growth, accompanied by significant improvements in profitability and cash generation. eg has a strong platform for growth, and the volume of recent contract wins give confidence in the business’s potential.
27 Jan 15