Hybridan Small Cap Feast - 23 Feb 24

23rd February 2024 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you 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 obj

Significant forecast revisions after challenging H2’23

RBG is now expected to achieve FY23 adj. EBITDA of only £4.0m vs. previous guidance of £10m-£12m. Convex has executed less deals than expected and Legal Services has also underperformed, with revenues behind and significant shift in margin mix. This prompts us to reduce our FY23 adj. EBITDA forecast by 61%, now expecting an adj. loss before tax of £0.1m vs. a profit of £5.6m previously. We also cut our FY24 forecasts (adj. EBITDA -47% to £6.0m, adj. PBT -74% to £1.7m). Net debt at year end is ex

Execution of Convex deals key to forecast delivery

RBG delivered H1 adj. EBITDA of £2.9m (H1’22: £7.0m) and adj. PBT of £0.8m (H1’22: £5.0m). FY23 adj. EBITDA guidance of £10m-£12m (SCMe: £10m) is unchanged, supported by continued robust trading in Legal Services, as well as a strengthened deal pipeline in Convex, where management is confident of several transactions completing during Q4. Delivery of these is key to forecast delivery. With year end leverage expected to be 3.0x and the facility expiring in April ‘24, management has commenced a re

PROGRESSIVE: RBG Holdings: Signs of stabilisation

RBG has reported a solid set of H1 23 results for the six months to 30 June, with revenue impacted by the economic conditions but still delivering a positive adjusted EBITDA. Legal Services (RBGLS) has delivered a remarkably robust six months, and we believe that the group will benefit from its managerial and structural refocus back to the core services side of the business. The statement highlights that Convex performance in H2 will be key to delivery of full-year results. Clearly risks remain

PROGRESSIVE: RBG Holdings: Back to its roots…

RBG has, in recent days, given a trading update that reflects the challenging conditions, written down the values of all conditional and damages-based fee agreements within the legal services business, and unveiled the return to the board of Ian Rosenblatt, the group’s founder and most significant fee earner. We see the combination of these developments, alongside the recent disposal of LionFish, as potentially marking a turning point for the business, with a clear return to the original (and su

Hybridan Small Cap Feast 31/07/23

Dish of the day Joiners: Metals One (MET1.L) joins AIM. The Company focusing on acquiring natural resources projects with a focus on critical battery metals, including nickel, lithium, cobalt and copper has raised £2.2m at 5p per Ordinary Share. Leavers: Bonhill Group (BONH.L) has left AIM. What’s cooking in the IPO kitchen?** Announced ITF 12 July: Substrate Artificial Intelligence, an artificial intelligence company based in Spain that creates, buys and scales companies around AI in diverse se

Focus on debt reduction as forecasts rebased

Despite an in line H1 performance, with transactions taking longer to complete, RBG now expects FY23 adj. EBITDA to be £10m-£12m. We set our forecast at the bottom of this range, representing a reduction of 33% to EBITDA and 44% to EPS. In response, management is prioritising debt reduction and we cut our dividend forecast to nil. We expect year end net debt of £20m, with leverage at 2.7x. Whilst this presents a risk (above the <2.25x covenant), management is in discussion with its bank and is c

PROGRESSIVE: RBG Holdings: LionFish sale completed

Last week, RBG announced the successful disposal of LionFish to Blackmead Infrastructure for a total consideration up to £3.06m. In our view, this materially simplifies the business and reduces its exposure to third-party litigation funding, which has detracted from the otherwise more stable underlying revenue and earnings profile of the group. The LionFish disposal strengthens the balance sheet, enabling the new board to focus on driving the high-margin, cash-generative legal and professional s

Hybridan Small Cap Feast - 12 Jul 23

12th July 2023 @HybridanLLP Status of this Note and Disclaimer This document has been issued to you 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 objecti

Sale of non-core LionFish business confirmed

RBG has confirmed the sale of LionFish Litigation Finance to Blackmead Infrastructure (a fund managed by Foresight Group). This reduces the Group's exposure to third-party litigation funding commitments. The Group is transferring 4 cases to Blackmead with a net asset value of £4.05m in return for a consideration of £3.07m. The transaction therefore generates a loss on disposal of £0.98m but it removes the ongoing working capital requirements associated with LionFish (estimated at £2.6m). The con

PROGRESSIVE: RBG Holdings: Core strength, with LionFish sale underway

RBG’s FY22 results, announced on 26 April, reflected a year of significant progress and a strong performance from the core legal services business, RBGLS. The disposal of LionFish is progressing well, with four offers received and one at an advanced stage. LionFish has been classed as ‘discontinued’, allowing RBG to report a clean set of figures unencumbered by the LionFish losses. Revenue of £50.3m was 20% ahead of £42.0m in FY21, representing strong organic growth. Adjusted EBITDA increased 54

Strong growth in core business; Divestment ongoing

FY22 results confirm a strong outturn, with adj. EBITDA increasing by 54% to £15.8m (FY21: £10.3m), in line with our forecast. As flagged in the 5th December update, litigation losses in LionFish impacted the results. Following the previously announced decision to divest LionFish, RBG has received four offers with one currently progressing through due diligence. The new Board is focused on building a high margin, cash-generative legal and professional services group. Despite the strength of the

FY22 update – Performance in-line & board changes

RBGP has published its FY22 pre-close trading update this morning. Unaudited FY22 revenue, adj. EBITDA and adj. operating profit are expected to be in-line with our estimates. Professional Services, saw good performances across both, the legal services and sell-side corporate finance offering. Whilst there is no resolution on decreasing exposure to LionFish, the Group is encouraged by accelerating developments. RBGP also announced a number of changes to the board, with Nicola Foulston, CEO, havi

PROGRESSIVE: RBG Holdings: LionFish losses have a silver lining

RBG issued a trading update on 5 December highlighting that LionFish, its litigation finance arm, has lost two cases causing a £4.0m non-cash write-off. Despite this disappointing news, the ‘core’ business has performed ahead of expectations. We believe that management now has an opportunity to complete a plan to divest LionFish, either by a run-off of its existing commitments or a sale of its business. We would view either such plan as a positive for the group, allowing a focus on the high-marg

LionFish losses offset Professional Services progress

RBG’s trading update this morning highlights two case losses and a £4.0m non-cash write-off within its LionFish subsidiary. Whilst this news is disappointing, the remainder of the Group is trading well and marginally ahead of previous expectations. Group earnings downgrades are significant (-46% for FY22 and -35% for FY23) with no further contribution from LionFish assumed. On reduced earnings, though, the shares are only trading on 10.6x FY23 P/E, an 18% discount to the peer group average of 13

hVIVO - Introducing 2025E; HSD sales grth/margin expansion expected

Post further analysis of the FY 2023 results on 9 April 2024, we are establishing FY 2025 forecasts, as well as modifying our forecast adjusted net profit/EPS figures for 2024 and 2025 to reflect the accounting of the deferred tax asset. Our 2025 forecast calls for 9% growth in customer revenues, stable other operating income (largely R&D tax credits) vs 2024, EBITDA margins going back to the 23% level (after a slight contraction in 2024 to reflect 3 facilities being run in parallel for part of

Elixirr - Outperforming competitors and the global Consulting market

Elixirr offers investors exposure to the long-term growth trends in the global Consulting market (including digitisation and the ongoing technology revolution, demand for innovation, efficiency and specialised expertise) all turbo charged by the group’s ‘challenger’ strategy driving market share gain from a low base. FY 2023 results showed the power of Elixirr’s differentiated model with revenue up +20% and adj. EPS up +22% in a market subdued by global uncertainty. With net cash of £18m, a posi

Morning Note – 22 April 2024

City of London Investment Group (CLIG LN) - 3Q IMS: return to growth

CLIG’s 3Q IMS reveals 5.5% rise in FuM in the first three months to March 2024 to US$10.1 billion. In the quarter performance added US$302m and group net inflows were US$224m.

Bioventix - Laying out the longer-term opportunity in Alzheimer’s Disease

The clinical diagnosis of Alzheimer’s Disease (AD) continues to be a highly challenging endeavour and existing gold standard diagnostic techniques (PET scans, CSF analysis) are limited by their cost, lack of access and perceived invasiveness. As the therapeutic landscape of AD evolves so too are the tools being developed to diagnose and monitor AD in clinical practice and blood-based AD tests represent potentially more sustainable, scalable and economically viable approaches to future AD managem

Morning Note – 25 April 2024

Hardman & Co Insight: 2023 was an annus horribilis for Quoted UK Infrastructure and Renewable Energy

The focus of Hardman & Co Research is on the nine quoted Infrastructure Investment Companies (IICs) and on the 22 Renewable Energy Infrastructure Funds (REIFs): the stocks analysed are all members of the Association of Investment Companies (AIC). We are updating our publication of January 2023, assessing both the lacklustre share price performances during 2023 and the key issues, including interest rates, inflation and power prices. As a 31-strong group, its combined market capitalisation is no

LIBERUM: Science Group: The Science of shareholder value

SP Angel Morning View: Gold prices slide following profit taking as traders look to US data

LIBERUM: MindGym: Delivering on the controllables

Solid close to FY24

hVIVO - FY 2023 results, revenue in-line, margin better, future is bright

hVIVO has delivered FY 2023A results in-line with the 30 January 2024 TU, with total customer revenues of £56m, growth of 16% versus 2022A. Other income related to tax credits added another £2.6m. 2024 revenue guidance of £62m has been reiterated, representing 11% growth over 2023A, and ahead of the £60m that we had previously forecast. The company has good visibility with the 2024 figure, with 90% already being covered by the existing orderbook (stands at £80m at the end of 2023), as well as in

Malvern International - Positive results confirm turnaround on track; cash-generative and a strong bid pipeline

A positive trading trajectory for MLVN has continued to emerge strongly in this morning's results, with FY23A revenues standing at £12.2m (FY22A: £6.3m / +79%) and £0.2m PBT profit as against a £1.1m PBT loss the year before (excluding a £94k fair value movement / loan write back). MLVN provides education services including (1) a range of university-related courses for overseas students, (2) adult ELT and (3) summer schools for juniors. MLVN's contract with the University of East London (UEL) st

LIBERUM: The Liberum Leisure Digest: NLW increase - pricing power is key

UK Equities: Overlooked, oversold, and over here

In this note we look at the gap between perception and reality in the UK equity market, the opportunities and threats in the economic and market outlook, and the emerging consensus that the valuation discount versus other major markets is at or close to an inflection point. We consider the benefits of UK equity strategies both for income investors and for those seeking exposure to the higher growth potential of smaller and mid-cap companies.