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ZOO’s full-year trading update (to 31 March) confirms that while the order book is improving, workflow patterns and mix are taking longer than anticipated to adapt to the changing market environment. ZOO also notes that the assets required to commence several high-value projects were not delivered in Q4 25, but are in the process of being delivered in H1 26. This will move some revenue into FY26, and we adjust our FY25 estimates. There has been a marked increase in discussions with several of ZOO’s clients, giving a strong signal that workflow patterns are recovering. However, ZOO anticipates greater challenges in forecasting due to customers licensing proportionally more content, resulting in non-repeating projects for ZOO. We also note the recent announcement from the US government about potential tariffs on films made outside the US. We adjust FY26 estimates to reflect both the current challenging market and near-term uncertainty.
ZOO Digital Group plc
Today’s trading update from ZOO confirms that, although the order book has improved, several high-value projects secured in January and February will not impact FY25 results, coupled with some anticipated FY25 projects relating to titles that have been delayed or cancelled. ZOO’s clients continue to realign business models to generate profit and cash, resulting in unpredictable workflow patterns and revenue mix in the short term. We therefore trim our estimates for FY25 and FY26. ZOO has gained orders from additional significant clients, which diversifies its revenue base. Even at current run-rates, the group is adjusted EBITDA positive. Given the lower cost base and higher-margin revenue mix, we forecast that the overall profitability of the business will improve significantly in FY26. We await further news at the FY25 pre-close update in April.
H1 was as expected, but Q3 is softer than guidance ($13m vs $15m). Q4 visibility remains limited. FY revenue guidance is being cut from $60m to $55m and even that will require $15m in Q4. We had been consistently below guidance at $57m based on a cautious gradual recovery, but even this now looks optimistic. Outside of the largest client, revenues are indicated to be growing. In response the Company is continuing to restructure the business and effectively lower capacity (we estimate they had over 50% more capacity than current run rate). EBITDA profit is expected to be c$3m for the year and EBIT loss $3m, albeit the cash loss will be lower due to lower capex. Cash was $4.3m at end of H1. Looking to FY26 guidance is for $60m of revenue and EBITDA $8m based on the reduced capacity (c$72m pa) and cost base. We put the shares under review pending the meeting.
ZOO’s H1 25 performance reflects the steady return of orders following the end to the Hollywood strikes by actors and writers. However, monthly budget allocations from ZOO’s customers remain at depressed levels due to ongoing strategic reviews at the major studios. Content strategies are evolving, and business models are being realigned to generate more profit and cash. This has resulted in unpredictable workflow patterns, but visibility is expected to improve throughout calendar year 2025, particularly given ZOO’s diversified client base as it continues to win business from significant new clients. We therefore introduce forecasts for FY26, which factor in a modest recovery to revenue but with ZOO returning to an operating profit, and good cash generation. Although current trading is in line with expectations, management notes visibility remains limited for Q4 orders and we therefore trim our FY25 estimates as a precautionary measure.
Revenue grew +44% h/h (+29% y/y) as content generation began to normalise post-strikes. Whilst Netflix, Paramount and Warner Bros spoke of the importance of the quality and quantity of their shows during their Q3 results, recovery will take longer than expected (by y/e 2025). ZOO continues to control costs to ensure it’s well positioned for the recovery. Reassuringly for ZOO, the OTTs are taking a more global approach towards content generation, ZOO’s digital-first approach is a differentiator here vs the legacy competitors. We downgrade our FY25 forecasts to rev $55m, EBITDA $3m and cash $2.9m, and a 45p TP, 14x FY25 EV/EBITDA.
In this note we flag some key points from the AI whitepaper and seminar held yesterday and our thoughts on the issue. AI models are used to automate the processing of data and in some cases to generate a certain output. We take the view that AI is very good at processing quality data sets, and we have seen this with data businesses such as RELX and GlobalData. ZOO’s localisation services (dubbing and subtitling) do not lend themselves towards AI-based processing because they have to deal with the intangible and hard to classify nuances of language, speech, culture, emotion and setting. ZOO is a tech enabled and tech strategy focused Company that has been working on AI for over ten years, yet it has found the real-world commercial applications lacking. This is unsurprising to us; ultimately final product has to be made to a high standard and AI simply does not offer the same quality, authenticity and economics, in fact in some cases when tested we believe it has effectively raised costs and slowed down execution. ZOO is using AI where it can be deployed effectively and commercially within elements of its end to end processes. The Company says clients do not want to drop standards, but would like faster processing to speed up content usage and revenue generation. We think ZOO has been and remains focused on this as it focuses on building its advantage. With the AI hype cycle now swinging down we expect concerns with regard to ZOO to fade.
ZOO has published a white paper on AI in media localisation, highlighting its use as an assistive technology, where it is being used successfully and where challenges remain given the complexities of localising premium entertainment content. ZOO has been at the forefront of AI and has actively pursued R&D in technologies that will enhance and support traditional processes rather than replacing or eliminating the need for skilled human talent. We therefore believe that the AI revolution is an opportunity for ZOO to expand its technical capabilities and solidify its position. ZOO’s unique end-to-end, technology-centred approach is finding favour with the major streaming providers, delivering the levels of reliability, quality, security and scalability required to service the high levels of demand. We believe that the company is well placed to deliver long-term profitable growth through increased market share as the industry recovers from the recent disruption.
ZOO’s white paper highlights where AI is already being used in media localisation and why it’s not good at creating immersive content that will keep viewers hooked and continuing to subscribe to the OTTs. Scripts need to be rewritten for each local audience’s cultural refences, i.e. extrapolating outside the training data, something AI can’t do well. That said, AI is a great tool for improving the efficiency of human workers for faster, cheaper and better localisation. We spoke with CEO Stuart Green and CTO Chris Oakley, for our AI in Action podcast series, on these themes and how ZOO’s tech-first approach provides a source of differentiation.
Today’s AGM statement by ZOO confirms that customer demand has continued to steadily recover following the end to the industry-wide strikes of 2023 and a strategic realignment within the streaming industry. ZOO has seen a strong recovery in its pipeline in H1 FY25, and market commentators are forecasting a return to 2022 levels of entertainment output in 2025. For ZOO, visibility extends a few months to January 2025. However, management is confident it will meet current market consensus for FY25, and we maintain our estimates for revenue of $61.8m and adjusted EBITDA of $5.6m. ZOO’s strategy is focused on deploying innovative technology, including AI, to provide leading end-to-end services to its customers. ZOO is emerging post supplier rationalisation as one of the few trusted E2E suppliers, which we anticipate will deliver profitable revenue growth as the run-rate recovers.
The Company has issued an AGM trading update today indicating visibility is extending into January 2025. This is a much welcome update and provides some comfort that ZOO has not only traded in line with our expectations for H1 but is also trading in-line with our H2 expectations of $29.5m based on a $15m per quarter run rate. While customer behaviour is still not optimal, we do at least seem to be seeing a steady level of activity. Inevitably as the global content businesses settle down on strategies and complete highly disruptive cost and reorganisation programs (Paramount for example), we expect to see a pick-up and at the very least clear communication on activity levels that ZOO can use to finetune its capacity. At the moment management are having to try and balance potential significant demand increase and market share gains with trying to protect efficiency and cash. With this in mind we think ZOO could improve profitability rapidly either way lending support to our EV/revenue based valuation approach. BUY.
FY24 results are history. The strikes are long over, and the large content groups appear to be getting on their feet with regard to streaming. What matters for ZOO is the recovery trend. Recovery is flowing but visibility variability looks likely to continue. The positive trend continued in Q1’FY25 and is on track in Q2, but Q3 needs some additional visibility before assuming a ramp up. We had factored modest progress in H2 and so remain comfortable with our FY25 revenue and EBITDA forecasts which sit at the bottom of the consensus range (revenue $57-66m, EBITDA $5.5-8.3m). We look to the September 26th AGM update for a clearer signal on Q3/Q4. The security problem at a competitor (Iyuno) could generate a positive surprise if customers transition work to ZOO. The shares have had a decent recovery, but will need a further positive update to secure more progress.
ZOO’s FY24 performance reflects the industry disruption due to the recent double strike (actors and writers), and the hiatus in orders and production that followed. FY24 is in line with guidance from the May update, however there has been a sequential month-on-month improvement in demand, with management expecting ‘an extended period of recovery to late 2025’. Although orders remain at historically low levels, market trends, which we discuss within the note, suggest that spend on content will return to pre-strike levels in 2025, although visibility for ZOO in H2 FY25 remains limited at this stage. ZOO has completed a cost-cutting exercise while maintaining headroom in capacity, taking advantage of its new facility in Chennai, which should lead to margin enhancement. Throughout the disruption, ZOO has retained its customers and added new ones, with significant revenue potential as orders increase and scope to gain market share as an E2E vendor, capitalising on vendor consolidation.
Revenues and EBITDA are both in line, reflecting how trading was materially disrupted by strike action. Indeed a resumption of ‘normality’ will also likely be the key ingredient to a market (and Zoo’s) recovery. Reassuringly, we do see evidence of this (but caution this will take time). Even so, we do have enough confidence to maintain our FY25 forecasts looking for a 50% revenue recovery, and in conjunction with lower opex (as November’s staff cuts provide a full year of savings) do expect Zoo to return to a profit. $5.3m y/e gross cash and an $3m undrawn RCF also provide a buffer until an industry restart flows through the production cycle.
ZOO has provided an unscheduled update as part of a confirmation of its working capital financing arrangements with HSBC (renewed $3m for next 12 months). We flag that for FY24 the year end cash balance was notably better than expected ($5.3m vs PGe $3.1m). The update is particularly useful as it has given us a decent early view on Q1 trading which we have been waiting for. The update confirms a further ramp up in activity sequentially with c$13.5m of revenue implied for Q1. On this basis the Company expects to achieve EBITDA breakeven in the quarter. As per our note upgrading to Buy (at the 22p level) this gives us the next stage to drive the shares. The shares have responded immediately to the update and jumped up again. We upgrade our TP to 78p based on the new information and maintain our Buy rating. Trading update: The Company signals it has continued to see a recovery in demand with March invoicing the highest month since April 2023. Work has continued to expand through March and April extending visibility into September. This supports the revenue guidance of 36% growth in Q1’FY25 sequentially (Q4 c$10m) and the expectation of EBITDA breakeven in the quarter. The Company has also confirmed that it has received dubbing and subtitling orders from the major film and TV distributor for which it was appointed primary vendor and referred to in the March trading update. FYMar’24 guidance: The Company has indicated it is “confident of at least meeting FY24 market expectations” which currently stand at revenue of $39.7m (PGe $40.3m) and EBITDA loss of $14.0m (PGe 13.5m). Year-end cash balance guidance is notably better than expected at $5.3m vs PGe $3.1m. Estimates: For FY24 we have not adjusted our revenue and EBITDA assumptions but have lifted our cash balance in line with the specific guidance. Based on the revenue guidance for Q1 (c$13.5m) the Company has made a strong start to FY25. We forecast H1 revenues of $27.4m, which given the acceleration trend makes Q2 implied PGe revenues look undemanding. For H2 we do not have a huge ramp up factored in ($29.5m) and this therefore lifts our confidence in our $56.9m full year estimate. Based on this we forecast $5.5m of EBITDA and an EBIT loss of just $0.1m. Subject to revenue mix (undisclosed) this also looks comfortable and will result in positive FCF based on PGe. Only an acquisition payment reduce cash at year end to $4.1m based on new PGe (was $1.9m). Valuation: We lift our target EV/Sales FY25 multiple to 1.5x to reflect the improved trading and visibility information. This is the lower end of the 1.5x to 2x range we suggested as the next stage of recovery as it has come in the middle of the quarter rather than the end. This equates to a new Target Price of 78p.
ZOO Digital has provided an encouraging trading and debt facility renewal update with FY24 expected to be at least in-line with expectations. Following the significant industry disruptions to FY24, all eyes have been on a return to normality in FY25 and demand is returning with Q1’25 revenues expected to be 36% higher than Q4’24. This follows a strong exit to FY24 with March 2024 the highest invoicing month since April 2023 (pre-strikes). This rebound in Q1 revenues combined with recently implemented cost savings is expected to result in EBITDA at break-even in Q1 (implying June is likely to be a profitable month). ZOO has visibility to September 2024 and has now received dubbing and subtitling orders from the major film & TV distributor for which it was recently appointed as a primary vendor (see 26 March 2024 RNS). This is an encouraging update, and market commentators expect 2022 levels of entertainment output to likely return in 2025, this tallies with Videndum’s outlook of a pickup in markets from June 2024 and onwards. We note that ZOO benefits from exposure earlier in the production process through its Mastering service. We view now as an opportune entry point and upgrade our target price to 103p (from 50p).
This morning’s trading statement from ZOO confirms that customer demand has continued to recover following the end to the industry-wide strikes of last year, with FY24 expected to be ‘at least’ in line with current market consensus. We maintain our FY24 estimates, which we increased slightly at the recent March update, with revenue at $39.9m and an adjusted EBITDA loss of $13.4m. New productions are translating into a healthy order pipeline, with market commentators forecasting a return to 2022 levels of entertainment output in 2025. ZOO’s strategy remains focused on developing and deploying innovative technology, including AI to provide leading and differentiated end-to-end services to its customers. ZOO has recently received dubbing and subtitling orders following its appointment as a primary vendor for another major studio. This provides further evidence that ZOO is emerging post supplier rationalisation as one of the few trusted end-to-end (E2E) suppliers, with its capital-efficient approach involving production hubs in key locations, which we anticipate will deliver profitable revenue growth as the run rate recovers.
Today’s trading statement from ZOO highlights a ramp-up in demand following the end to the industry-wide strikes of last year. ZOO struck a note of caution in its January update regarding the timing of orders. However new productions are starting to translate into a healthy order pipeline, with a good recovery in revenue anticipated in H1 FY25. The update guides to revenue of at least $40m for the year to March 2024, ahead of our estimate at $36.8m. We have improved our adjusted EBITDA loss marginally to $13.4m. ZOO has also announced a significant new contract with a major studio, operating as preferred partner for subtitling and primary vendor for dubbing. This demonstrates ZOO’s quality as a services vendor and provides evidence that ZOO is emerging post supplier rationalisation as one of the few trusted end-to-end (E2E) suppliers.
ZOO Digital has provided an encouraging FY24 trading update which demonstrates a quarter-on-quarter improvement in trading and would appear to suggest that H2’24 is the nadir. January 2024 was the highest invoicing month since April 2023 and ZOO expects to beat revised FY24 market guidance with revenues c.$2.0m ahead of SCMe and Net Cash at least c.$1.5m higher. Following engagement with its customers, ZOO has secured improved visibility of work (with some extending until September 2024) with the Q1’25 orderbook up 30% on Q4’24. We have reintroduced FY25 forecasts and moved our recommendation from Under Review to Buy with a new 50p target price (75p before moving to under review).
Q4 turned out better than the January update implied with the Company guiding to full year revenue of c$40m. We lift our FY24 Revenue from $37.6m. Guidance implies that Q4 has increased sequentially on Q3 (c$10m vs c$9m) confirming the inflection point has been reached and the sharply deteriorating picture reversed. The EBITDA loss is also better than consensus by $0.5m even after including redundancy costs of a similar quantum. Consequently, net cash is also better (expected to be over $3m). Encouragingly ZOO now has decent visibility for Q1’25 and points to a 30% increase on Q4 and a runway into a decent H1. At that level it provides support for our existing cautious recovery scenario, and we hold our FY25 revenue and EBITDA forecasts with a slight lift for cash even after allowing for some new European investment. The shares have fallen sharply on concerns the Company would need to raise new funds. The risk of this has declined materially with this announcement although another quarter of improvement is probably required to provide significant comfort. We maintain our Target Price and expect the shares to bounce as a first step. Further recovery confirmation should drive the shares back to a pound. We upgrade to Buy from Hold based on our TP. News: The Company has received further clarity on timing of projects and is now receiving orders in relation to content completed following the industry strikes last year. January invoicing is indicated to be the “highest month since April 2023”. The Company says it is “beginning to see an acceleration of its pipeline with work expanding in March and April 2024”. The statement goes on to say that it “has now secured improved visibility of work, with some extending until September 2024”. Critically Q1’25 revenue is guided to be up 30% vs Q4’24. This underpins Zoo’s expectations along with the signing of an unnamed major studio deal for licensing related localisation work. Estimates: While we lift our FY24 revenue and EBITDA estimates to reflect the update we do not modify our FY25 and FY26 revenue and EBITDA estimates at this stage. Our H2’24e revenue is now $18.9m. We forecast a step-up to $27.4m for H1’25 and then a less demanding improvement to $29.5m for H2. Our net cash estimates rise a little (FY24 to $3.1m, FY25 to $1.9m and FY26 to $7.7m). See overleaf for more detail of our forecasts. Board change: The Board has announced that Nathalie Schwarz (NED since Jan’22) has been appointed as the Senior Independent Director in addition to her existing roles as chair of the Remuneration Committee and member of the Audit Committee. Valuation: We valued the stock on 0.8x EV/sales which equates to 41p based on FY25 revenue. We would suggest further confirmation of recovery would justify a 1x multiple which equates to 51p. A more bullish trading confirmation using a 1.5x to 2x range equates to a 76p-101p range. This would equate to 1.2x to 1.6x EV/Sales based on our FY26 revenue estimate.
ZOO saw a slightly weaker Q3 and is seeing a considerably softer Q4 as client’s activity is proving to be erratic. This is directionally different to the previous update. While we were expecting some volatility as normality returned and the strike effects drop out and it is encouraging to see the largest client providing some significant guidance for H1 FY25, we are cautious about factoring in the full benefit due to the unknown effective feedthrough and take a similar approach to the other clients. We are so concerned about the weakness in client guidance feeding through to actual timely activity that we think ZOO may ultimately decide to reduce capacity further to better control utilization and profitability. We therefore set our FY25 revenue expectation below guidance and assume lower costs leaving us with a different shape to numbers. While the valuation is very low, we downgrade to Hold (cut TP to 41p) given the weakness in client activity conversion and pressure on cash and the need to see better demand stability. If ZOO can regain momentum, then we see very substantial upside beyond a pound a share. FY24: Zoo provided a trading update on 24th January indicating that revenues were expected to be lower than expected for . We had assumed $11m for Q3 and now assume $9m which is essentially flat on Q2. For Q4 we had expected an improvement to $12.6m but now assume a sequential decline to $7.5m. We now expect a $14m loss instead of $8m and for net cash to be c$2m at year end. FY25 and recovery: Given the trading activity levels we modify our recovery assumptions in FY25. We lower our full year to $56.9m from $68.7m with H2 assumed to be stronger. At the EBIT level we assume breakeven based on further capacity related cost reductions. We see cash at a similar level at the end of FY25 based on this scenario. Valuation/risks to our view: We cut our target EV/Sales multiple to 0.8x FY25e (from 1.5x) given trading activity uncertainty and the modest cash position. This equates to 41p. This effectively assumes that revenues do improve in FY25 and that the business is breakeven at the EBIT level and there are no large variances on our working capital assumptions (we assume some growth given the improving revenue picture). We note the Company has a $5m credit facility with HSBC.
This morning’s trading statement from ZOO confirms that production companies are taking longer than expected to complete projects. This follows the resumption of new production after the industry-wide strikes ended in November 2023. The anticipated January ramp-up has yet to fully materialise, with entertainment projects expected to complete in January now moving into February and beyond. However, ZOO has been notified by its largest customer of a pipeline of orders that provides good visibility for the next two quarters, an improvement on the usual quarterly order certainty. These orders, coupled with workflow from ZOO’s other major clients, are expected to deliver ‘a strong recovery of revenues’. We have adjusted our estimates for FY24E to reflect the slight delay in workflow resuming for ZOO, but maintain estimates for FY25E, with a return to profitability.
ZOO Digital has provided an FY24 trading update with previously anticipated Q4’24 projects now expected in Q1’25. FY24 results are expected to be significantly below expectations and ZOO will no longer be breakeven in Q4. While a return to profitability is expected in FY25, we downgrade FY24 Net Cash to $1.5m (from $6.6m) but highlight ZOO has c.$5.25m in unused debt facility available. The first double strike in 60+ years ended in September and November 2023, and ZOO has been notified of orders providing a pipeline and certainty of work for the next two quarters. While this pipeline provides visibility on a return to normality, the near-term focus will be cash management with ZOO forecasting a positive net cash balance at year and unused debt facilities. We move our recommendation to under review as we await further updates and clarity on the timing of projects.
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Any reference to a partner in relation to Hybridan LLP is to a member of Hybridan LLP or an employee with equivalent standing and qualifications. A list of the members of Hybridan LLP is available for inspection at the registered office, 2 Jardine House, The Harrovian Business Village, Bessborough Road, Harrow, Middlesex HA1 3EX. *A corporate client of Hybridan LLP ** Arranged by most recent first *** Alphabetically arranged Dish of the day Joiners: No joiners today. Leavers: No leavers today. What’s cooking in the IPO kitchen?** 30 November: Flex Labs ITF: a software business engaged in the development of advanced artificial intelligence (AI) middleware products, intending to offer these to business customers through a software as a service (SaaS) model announces its application for Admission to the AQSE Growth Market. Expected AQSE Admission date is on or around the 15 December 2023. 23 November: Substrate Artificial Intelligence ITF: An artificial intelligence Company based in Spain that creates, buys and scales companies around AI in diverse sectors such as fintech, agritech, energy, human resources, and health announces its Admission to the Aquis Growth Market. Expected AQSE Admission date is on or around the 7 December 2023. 15 November: Afentra Plc ITF: Formerly Sterling Energy plc, and launched in 2021 to support the African energy transition as a independent oil and gas company announces its Admission to AIM pursuant to the Sonangol Acquisition which constitutes a reverse takeover and therefore admission is being sought as a result of such reverse take-over. The Company will not be raising new capital as part of its Admission. Anticipated market capitalisation on Admission will be c.£65m. Expected AIM Admission date is expected mid-December. 9 November: Chapel Down Group ITF: England's leading and largest wine producer with an award-winning range of sparkling and still wines, under the Chapel Down brand. The Company owns, leases and sources from 1,023 acres of vineyards in South East England announces its Admission to AIM after its transfer from the Aquis Apex market. The Company will not be raising new capital or providing a secondary offering as part of its Admission. Anticipated market capitalisation on Admission will be c.£75m. Expected AIM Admission date is 7 December 2023. 2 October: Tekcapital announced intention to spin off and IPO: MicroSalt, the developer of salt-producing technology designed to deliver full flavor with less sodium, announces the launch of an exempt public offer of shares to retail investors for up to £2.5m via PrimaryBid as part of its spin out from AIM listed Tekcapital plc (TEK.L). Microsalt announced revenues of US$0.638m in 2022, its first year of retail sales of SaltMe Crisp brand and Microsalt salt shakers in US based supermarkets and through Amazon US. AIM Admission delayed, expected mid-December. Our daily digest of news from UK listed Small and Mid caps Banquet Buffet*** Ariana Resources 2.45p £28.1m (AAU.L) The mineral exploration and development Company with gold mining interests in Europe announces a further set of results from the ongoing drilling programme at Salinbas. Completion of resource drilling within the upper Salinbas area resulted in completion of 5,928.8 metres, for 61 diamond holes since January 2023 and 2,006 samples for 1,744.5 metres of drill core are still pending for assay analysis at the Kiziltepe Mine Laboratory. Key intercepts from the latest batch of results include: 1) SALH093: 7.2m @ 9.37g/t Au + 19.6g/t Ag - from 86.2 metres including 1.4m @ 35.02g/t Au + 69.8g/t Ag - from 88.7 metres, 2) SALH092: 6.5m @ 3.69g/t Au + 4.4g/t Ag - from 108.1 metres and 3) SALH102: 11.05m @ 1.56g/t Au + 11.8g/t Ag - from 85.35 metres. DXS International* 2.75p £1.8m (AQSE: DXSP) The clinical decision support developer and supplier of clinical decision support systems announces its success in securing £409k of grant funding jointly with Health Innovation East from Innovate UK – the UK’s national innovation agency. The Innovate UK grant will enable DXS to accelerate its efforts in advancing ExpertCare. The funds channeled into intensive research, prototyping, and testing will pave the way for ExpertCare’s ongoing development and route to market. The Innovate UK, DXS and Health Innovation East R&D project (funded for 18- months) will consist of two primary elements: 1) A comprehensive cost-to-benefit analysis in the form of a real-world evaluation led by the Health Innovation East to evaluate ExpertCare's utility within a clinical environment. 2) The development and prototyping of two additional cardiovascular related long-term condition AI algorithms, namely diabetes and hypercholesterolemia, together with common relevant comorbidities. Genedrive 6p £6.5m (GDR.L) The near patient molecular diagnostics Company announces its audited final results for the year ended 30 June 2023. The loss for the year was £5.2m (2022: loss of £4.7m), R&D spend of £3.9m (2022: £3.9m) and the Company has cash at bank of £2.6m (2022: £4.6m). Genedrive MT-RNR1 ID Test receives positive final recommendation in NICE's Early Value Assessment programme and its MT-RNR1 has commenced rollout in Greater Manchester hospitals. The Company announces its pre-submission process is ongoing with the Food and Drug Administration to determine regulatory process and requirements to place Antibiotic Induced Hearing Loss into the American market. Global Petroleum 0.068p £0.9m (GBP.L) An oil and gas upstream exploration Company presently focused on Africa and the Mediterranean announces that it has raised £253k in aggregate before costs through a Placing of new Ordinary Shares at a Price of 0.06 pence per share (Fundraise). The Price represents a discount of 29% to the closing price on 29 November 2023. The primary purpose of the Fundraise is to ensure that the liabilities in relation to the obligations of the Company's Walvis Basin licence PEL94 are completed to pre-agreed timelines set by the Namibia Government. Microlise Group 97.5p £113.0m (SAAS.L) A provider of SaaS based transport technology solutions to fleet operators announces that it has reached an agreement to acquire Enterprise Software Systems (ESS), a provider of transportation management system solutions. Under the terms, Microlise will pay an initial £7.65m cash payment and a maximum deferred contingent consideration of £0.85m, payable in cash after 6 months from completion. The vendors will also receive a further £3m from existing ESS cash reserves on completion so that the Company acquires the business on an effective cash and debt free basis. The acquisition is expected to immediately enhance earnings on completion. Poolbeg Pharma* 9.35p £46.8m (POLB.L) A biopharmaceutical company focussed on the development and commercialisation of innovative medicines targeting diseases with a high unmet medical need announces that Patrick Ashe, Independent Non-Executive Director, will step down from the Board at the end of November. Eddie Gibson, Non-Executive Director will replace Patrick as Chair of the Audit & Risk Committee and Prof Brendan Buckley, Non-Executive Director will become Chair of the Remuneration Committee. Proteome Sciences 4.76p £14.1m (PRM.L) A provider of contract proteomics services to enable drug discovery, development and biomarker identification expects the US laboratory to be operational in the coming weeks and is lining up first customer projects for this laboratory. The Company is also engaged in discussions with several pharmaceutical companies and academic groups regarding single cell proteomics projects and hopes to initiate studies early in 2024. The Company now expects to report reduced revenues for the full year 2023, which will be lower than FY 2022, as a result the Company expects to report a net loss for the full year 2023. In 2024, the Company expects a more positive environment. SkinBioTherapeutics 18.75p £35.7m (SBTX.L) The life science business focused on skin health announces that its AxisBiotix-Ps food supplement will launch on Amazon.co.uk on 6 December . The launch of a sales channel through Amazon is a key part of the commercialisation strategy to expand market share for AxisBiotix-Ps. AxisBiotix-Ps first went on sale in the UK in October 2021 and is intended for customers to alleviate sensitive skin conditions such as psoriasis. Wynnstay Group 372.5p £85.5m (WYN.L) The agricultural supplies and merchanting group provides an update on trading for the financial year ended 31 October 2023 (FY23). The trading environment in the second half of the financial year was more difficult than the first, with lower farm-gate prices adversely affecting farmer spending patterns. In addition, the seasonally critical final quarter has been impacted by abnormally wet weather. As a result, the Group's results for the financial year are now expected to be below current market expectations. The Board still anticipates that the next financial year will show an improvement over FY23. Zoo Digital Group 59p £57.7m (ZOO.L) A provider of cloud-based localisation and digital media services to the global entertainment industry announces its unaudited financial results for the six months ended 30 September 2023 (H1 FY24). Revenues decreased by 58% to $21.4m (H1 FY23: $51.4m) primarily as a result of the Hollywood writers' and actors' strikes. The gross profit decreased by 87% to $2.1m (H1 FY23: $16.5m) and adjusted LBITDA was $7.1m (H1 FY23: EBITDA of $7.3m). The operating loss came in at $10.9m (H1 FY23: $3.8m operating profit), and the Company holds a cash balance of £16.8m at the period end. The Company expects to achieve at least break-even at the EBITDA level in Q4 and return to profitability in FY25 in line with current market expectations. 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ZOO has announced H1 24 results in line with guidance at the recent AGM. We welcome the news earlier this month that the US actors’ strike has ended. This suggests that revenues could return to historical levels in the relatively near term, and that ZOO was correct to maintain capacity and capability to deliver during the recent hiatus. Subdued workflows have led to a significant EBITDA loss in H1 on revenue of $21m; but given the sequential month-on-month improvement expected, we maintain revenue and EBITDA estimates for FY24E. In addition, we view recent customer wins for ZOOstudio as a major endorsement, with significant revenue potential as orders ramp up. We reintroduce FY25 estimates, albeit at a reduced level, with upside potential if the recovery proves faster than expected, given ZOO’s operational gearing. In this note, we also focus on the opportunity for Artificial Intelligence (AI), which we believe could enhance ZOO’s position in the marketplace rather than representing a threat.
H1 interims reflect the last trading update and there are no surprises. The real story is the end of the first dual Writers and Actors strikes in over 60 years that have ravaged the content industry. Our focus has moved to recovery and the Company has confirmed a pick-up. Clients are trying to speed up activity and get schedules up and running. We expect visibility to improve and volumes to increase significantly as the industry gets back on its feet in 2024 driving ZOO’s FY25 and FY26 trading. Content customers have been reducing their vendor lists and encouragingly ZOO has been successful in retaining its positions in all completed roster reviews so far meaning it should see greater business volumes from these customers. This underlines the attractiveness of ZOO’s end-to-end capability, efficiency, and position as a trusted supplier. We expect ZOO to also be retained on the remaining roster review processes that are also likely to see reduced supplier numbers. The Company will be able to take advantage of volume recovery rapidly as even after its capacity adjustments it can still currently handle around $100m worth of business. We expect ZOO to recover and regular positive updates to act as catalysts. BUY.
ZOO’s H1’24 reflects the impact of the first double strike (writers and actors) in 60+ years, however, the resolution of the writers’ and actors’ strikes in September and November 2023 points to the darkest hour being behind ZOO. Revenues declined 58% yoy while ZOO reported a $7.1m adj LBITDA (H1’23: EBITDA of $7.3m) as the Group entered the year with a cost base to support a c.$100m+ revenue business. Post-period end, ZOO has completed a cost cutting exercise that has removed 20% of UK/US headcount, and the Group is already entering encouraging discussions with customers about when productions are likely to resume. For now, H2’24 remains about cash preservation with management guiding to breakeven in Q4.
Overnight it was announced that the SAG-Aftra actors union had agreed in principle terms with the Studios representative body, AMPTP, bringing the strike to an end. There will be the usual paperwork to approve, but in essence we now have an end to the massively debilitating dual Actors and Writers strikes that have been impacting productions since May. For us this is the catalyst for a significant pick up in the coming months and is comfortably in-line with our Calendar year-end assumption on the strikes being dealt with. We now expect a recovery in business for ZOO paving the way for a bright FY25. The Company is due to issue its interim results on the 30th November and this will serve as an opportunity for the Company to share client activity plans that will be hastily being accelerated given the shortage of content to feed the Entertainment content owners global machines. This will serve also as a time to start calibrating longer term forecasts. The stock trades on just 0.75x EV/Sales based on our existing very modest FY25 revenue of $69m. Our TP is based on just 1.5x depressed FY25 revenues and should only serve as a waymark to a much higher share price than our 12-month 97p Target Price. ZOO has a highly efficient, responsive and scalable offer that is likely to be a first port of call for many clients as they seek to move quickly. Investors should be doing the same on this news. BUY.
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Any reference to a partner in relation to Hybridan LLP is to a member of Hybridan LLP or an employee with equivalent standing and qualifications. A list of the members of Hybridan LLP is available for inspection at the registered office, 2 Jardine House, The Harrovian Business Village, Bessborough Road, Harrow, Middlesex HA1 3EX. *A corporate client of Hybridan LLP ** Arranged by most recent first *** Alphabetically arranged Dish of the day Joiners: No joiners today. Leavers: No leavers today. What’s cooking in the IPO kitchen?** Tekcapital announced intention to spin off and IPO on 2 October: MicroSalt, the developer of salt-producing technology designed to deliver full flavor with less sodium, announces the launch of an exempt public offer of shares to retail investors for up to £2.5m via PrimaryBid as part of its spin out from AIM listed Tekcapital plc (TEK.L). Microsalt announced revenues of US$0.638m in 2022, its first year of retail sales of SaltMe Crisp brand and Microsalt salt shakers in US based supermarkets and through Amazon US. AIM Admission delayed, expected mid-November. Stranger Holdings announced 02 October 2023, a Company formed for the purpose of acquiring a business, project or assets announces a Proposed Acquisition of up to a 70% interest in the Henkries Uranium Deposit and Prospecting Right in the Republic of South Africa. The Company will acquire this indirect ownership via the acquisition of two intermediary holding companies, namely Mayflower Energy Metals Limited and Neo Uranium Africa Proprietary Limited. The Acquisition constitutes a Reverse Takeover under the Listing Rules since, in substance it results in a fundamental change in the business of the issuer. Trading in the Existing Ordinary Shares continues to be suspended. It is anticipated that Re-Admission and trading in the Company's Enlarged Share Capital will occur on or around 7 November 2023. . Our daily digest of news from UK listed Small and Mid caps Banquet Buffet*** Active Energy Group 4.35p £7.0m (AEG.L) A producer of sustainably-sourced, energy-dense clean carbon products and technologies announces the appointment of Kate Nga Nguyen as the Company's Managing Director of Southeast Asia. Kate will focus on the deployment and expansion of Active Energy's activities throughout Southeast Asia, including building commercial partnerships and establishing manufacturing centres in the region. As part of this strategy, the Company plans to open an office in Vietnam in 2024. Clean Power Hydrogen 15.25p £40.9m (CPH2.L) The UK-based green hydrogen technology and manufacturing Group that has developed the Membrane-Free Electrolyser (MFE) announces that it has run the entire MFE110 system, successfully producing separated hydrogen and oxygen gases at its expected capacity, witnessed by a third party customer. Final tests will commence following the re-evaluation and control rectification, and upon successful completion, the MFE110 will be shipped to Northern Ireland Water's site where it will undergo site validation, integration and commissioning before beginning commercial production of hydrogen and medical grade oxygen. e-therapeutics 9.59p £56.0m (ETX.L) A Company integrating computational power and biological data to discover life-transforming RNAi medicines announces a strategic collaboration with Arcturis Data Limited, a UK data company with a real-world data platform to integrate the integrate Arcturis' Real-World Evidence (RWE). RWE outputs will be analysed by e-therapeutics using HepNet, its artificial intelligence AI-driven algorithms. Under the terms of the agreement, e-therapeutics will have exclusive rights to nominate novel gene targets derived from the collaboration to prosecute genetic medicines using its GalOmic RNAi platform. Ethernity Networks 4.35p £6.5m (ENET.L) The supplier of data processing semiconductor technology for networking appliances announces that it has signed an extended license contract for $475k (Contract) with a Tier 1 US based military aerospace customer. This Contract is further to an advanced payment received in October 2023 of $80k from the Customer. Payments for the Contract are expected to be received during November and December 2023. As a result, the total anticipated revenue from the Customer during Q4 2023 is $555k. The revenue associated with this Contract, together with ongoing business, are expected to represent the main revenue contributors for the Company during Q4 2023. Inspiration Healthcare Group 39p £26.6m (IHC.L) The medical technology Company focusing on neonatal intensive care medical devices announces the launch of the SLE1500, a compact respiratory support system that provides non-invasive ventilation modes to meet the needs of the smallest and most vulnerable neonatal patients requiring respiratory support. The Company’s initial launch is focused on the UK and Australia regions, with other market introductions due to follow. Sabien Technology Group 6.75p £1.5m (SNT.L) The Company focused on a Green Aggregation Strategy announces the publication of the audited annual report and accounts for the year to 30 June 2023. Revenue for the year increased 62% to £1.10m (2022: £0.68m), as a result gross profit increased to £704k (2022: £448k). The operating loss reduced to £627k (2022: loss £888k) and the Company announced total loss after tax of £0.7m. The Company holds cash less current borrowings at 30 September 2023 of £0.31m (2022: £0.63m). Sabien's Green Aggregation Strategy has focussed primarily on two principal technology led initiatives. M2G, the existing Sabien CO2 mitigation device for commercial boilers, and the City Oil Field Inc. (COF) plastic to oil technology. Shanta Gold 10.8p £113.6m (SHG.L) The East Africa-focused gold producer, developer and explorer provides an exploration update for the West Kenya Project in Kenya. The 2023 drilling programmes re-commenced in May 2023 with the primary aim of converting Inferred Resources to Indicated Resources at the Isulu-Bushiangala and Ramula deposits. This update follows on from the news announced last year at West Kenya, where the Company upgraded resources at Isulu and Bushiangala to 1.29 Moz grading 10.60 g/t Au, of which 721,900 ounces grading 11.45 g/t Au was upgraded to the Indicated category. Meanwhile at Ramula, upgraded resources of 469,800 ounces (oz) grading 2.41 g/t Au, including 416,700 ounces grading 2.43 g/t were found. Southern Energy Corp 15p £20.1m (SOUC.L) A U.S.-focused, growth-oriented natural gas producer announces the results of the conditional Fundraising announced on 1 November 2023. New Common Shares have been conditionally placed at a price of 15.5 pence per new Common Share, raising gross proceeds of US$5.0m (£4.1m). The Placing Price represents a 16.2 per cent. discount to the closing price on 1 November 2023. The net proceeds from the Fundraising will be to fund the completion of up to four drilled and uncompleted (DUC) wells at a cost of approximately US$3m per well. Verici Dx 6.75p £11.5m (VRCI.L) A developer of advanced clinical diagnostics for organ transplant announces that it will present a poster on the successful international clinical validation study for Clarava, the Company's pre-transplant blood-based prognostic test for the risk of early acute kidney transplant rejection, at the American Society of Nephrology's annual conference, ASN Kidney Week, being held from 2-5 November 2023 in Philadelphia, PA. Clarava is the only pre-transplant test currently available that can risk stratify patients based on their likely immune response to a transplanted organ. Zoo Digital Group 43.75p £42.8m (ZOO.L) The provider of end-to-end cloud-based localisation and media services to the global entertainment industry announces the expansion of its operations in India with the launch of its new production facility in Chennai. The launch of a second multi-purpose facility in India, alongside Mumbai, is a strategic move to support the production of dubbing and other media localisation services in regional languages. This second facility will scale up capacity to more than double ZOO India's revenues in FY24, while catering to the region's wide array of languages and the diverse post-production needs of our clients. If you would like to unsubscribe, please email enquiries@hybridan.com with “unsubscribe me”. Hybridan Chefs research@hybridan.com
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ZOO today provides an update on H1 trading and as well, the full-year outlook the result being material changes to FY24 forecasts, while we withdraw FY25 estimates. The driving force behind these changes is a combination of factors; more cautionary customer spend (as SVOD platforms are placing greater emphasis on balancing growth and profit) while more recently, protracted industrial action has introduced yet further disruption. As such, H1 revenue is set to be materially down at c.$21m vs. $51m in the comp. Furthermore (and despite encouraging negotiations regarding the US strike action) it now appears unlikely that former order levels will resume in the near-termand as such, we lower FY24e revenue to $44m i.e. prudently assuming no substantial H1/H2 improvement. Notwithstanding this conservative outlook, ZOO has strong visibility of a materially better h-o-h GP performance ($2.5m/$8.5m implied H1/H2 split) thanks to cost reductions totalling $8m on a pro-forma basis - none of which benefitted H1. As such, we focus investors’ attention on H2e EBITDA ($-1.5m) being more reflective than our full-year estimate in our view. In turn we expect this leaner base to provide a foundation for profitable growth in FY25, however given current limited visibility, draw short of providing such an estimate at this stage. Despite this disruption, ZOO remains well capitalised, with $16m of net cash and (our prudent forecast) assumes this moves to $8.0m by y/e. As such, strike action would have to continue to well in FY25 to trouble ZOO’s balance sheet.
This morning’s AGM statement by ZOO confirms that trading is still being impacted by the two market issues detailed at the recent prelims. First, the industry-wide strikes that have halted new productions have not been fully resolved. A deal has been reached with the writers (WGA) but talks are still ongoing with the actors’ union, given the complexities surrounding AI. Second, workflow is still disrupted as the major streaming providers realign business models to increase profitability. However, we believe this presents a unique opportunity for ZOO to seize market share with its unique end-to-end offering and growing local presence. We have adjusted our estimates for FY24 to reflect the near-term headwinds and feel it is prudent to remove FY25 forecasts until visibility improves.
Q2’24 has been even softer than expected with the strikes hitting very hard. H1 revenues were just $21m vs our $25m with a loss of c$6m, implying an even weaker run rate than guidance and having a negative implication for our below consensus forecasts. While we cannot be anything but more optimistic re the strikes ending in line with PG assumption after the writers deal this week (subject to vote) we still need to see the actors strike end (we still assume by end of Q3) for material benefit to flow through. This leaves us with the weaker run rate reducing our Q3 assumption to $10m. We continue to assume that Q4 will be the point at which a material pick-up occurs, albeit now off of a lower base. The net effect is our FY24 revenues fall from $73m (consensus $85m) to $46m. ZOO is pressing on with improving its structural efficiency and believes it will be able to breakeven in Q4 at the EBITDA level on revenues of just $12m. Based on this we expect a small Q3 EBITDA loss to turn to a small profit in Q4 on the back of a $15m revenue assumption. The ferocity of the impact of client spend volatility and dual actors/writers strike is plain to see. However, ZOO will exit this testing period with a more efficient cost base, share rosters with fewer competitors and have arguably the most efficient and scalable offer and so should see revenues and profits recover rapidly as industry conditions normalise. Valuation upside remains high even on our cautious TP basis, but clear evidence of recovery remains a required catalyst. Well positioned businesses with very depressed valuations may attract strategic interest so there is some support from this.
The Writers Guild and the broadcasters/streaming/producers group have agreed a deal on all key points. This should pave the way for the actors’ strike to be resolved via agreement which would deal with the industry wide headache of dual writers and actors’ strikes. This is sooner than we expected and appears to have dealt with the complex AI issue. The effect on ZOO had been building since the start of the writers’ strike started in May and adding to the pressure from client spend pauses. Content producers will be keen to get material reduced for their schedules/VOD offers so we expect a recovery in activity to feed through to ZOO in H2. ZOO remains an attractive way (it has very competitive scalable and highly efficient tech-enabled solutions) to gain exposure to the long-term growth of the global content industry and drive to optimise revenues via more territories, languages and platforms.
Dish of the day Joiners: No joiners today. Leavers: National Milk Records plc (AQSE: NMRP) has left the AQSE Growth Market. What’s cooking in the IPO kitchen?** Announced ITF 4 August: Tan Delta Systems plc, a Sheffield based Company intends to IPO on AIM. Tan Delta has developed an innovative and differentiated monitoring solution based on real time oil analysis and analytics that offers equipment operators enhanced insight into the maintenance status of their equipment and thus the ability to reduce maintenance costs, improve reliability and reduce carbon footprint. Admission mid August 2023. Announced ITF 12 July: Substrate Artificial Intelligence, an artificial intelligence company based in Spain that creates, buys and scales companies around AI in diverse sectors such as fintech, agritech, energy, human resources, and health, intends to join the Access Segment of the AQSE Growth Market. Announced ITF 6 July: Blackpoint Biotech plc, a medical cannabinoids company established to fulfil gaps in the medical cannabis market by creating products that provide fast onset of action and accurate dosing, intends to join the Access Segment of the AQSE Growth Market. Admission delayed. Our daily digest of news from UK listed Small and Mid caps Banquet Buffet*** Checkit 24p £25.9m (CKT.L) The intelligent operations platform for the deskless worker, provides an unaudited trading update for the six months ended 31 July 2023 (H1 FY24). Over 50% of H1 FY24 ARR growth resulted from upsell and cross sell within its current customer base. In the US, the group has seen 41% growth in ARR to £3.2m (H1 FY23: £2.3m). Recurring revenue accounted for 95% of total revenue in H1 FY24. Net cash at 31 July 2023 was £12.8m (31 January 2023: £15.6m). Checkit also announces the renewal of its Framework Agreement with John Lewis plc to provide connected workflow, automated asset monitoring and digital building management solutions with improved pricing for a further period of 3 years, with a total contract value of c.£6m. Separately in April 2023, Checkit signed a master service agreement (MSA) with Compass Contract Services (U.K) Limited for the provision of CAM and CWM to their end users, primarily in the food services sector. Since signing the MSA with Compass, Checkit has entered into 3 new contracts with Compass. Coro Energy 0.245p £6.9m (CORO.L) The Southeast Asian energy company with a natural gas and clean energy portfolio, announces that the approval of the sale of the Italian portfolio by the Italian regulatory authorities is progressing well and that, the Company has now signed an Addendum to the Sale and Purchase Agreement (SPA) as previously announced on the 27 March 2023. Zodiac Energy plc has agreed to make a further cash advance of EUR 0.7m within 10 business days, which will bring the total advanced to Coro to date to EUR 2.5m. Coro has agreed to reduce the sum due at completion by the Additional Advance and an additional EUR 0.14m. As a result, the final completion payment will be some Euro 1.36m (reduced from the previously announced Euro 2.2m) plus the standard working capital adjustment which is expected to be positive and significant to Coro. Coro is also due a deferred payment of EUR 2.0m which is to be offset with the assignment of the intercompany loan to Zodiac leaving a balance of EUR 0.14m due as soon as practicable following completion. The total potential consideration for the transaction is now therefore EUR 7.4m from the previous EUR 7.5m. All other terms of the SPA disclosed in the Company's announcement of 27 March 2023 remain unchanged. Dekel Agri-Vision 3.35p £18.7m (DKL.L) The West African agriculture company focused on building a portfolio of sustainable and diversified projects, provides a July production update for its Ayenouan palm oil project in Côte d'Ivoire (Palm Oil Operation). Fresh Fruit Bunch (FFB) volumes and Crude Palm Oil (CPO) production increased 161.3% and 140.2% respectively compared to July 2022. As it enters the low season, the Company expects the typical softening of production results to take place over the next 1-2 months. CPO sales quantities increased 350.9% in July compared to last year and Palm Kernel Oil (PKO) production increased 127.5% compared to July last year. DKL remains on track to deliver financial outcomes from the Palm Oil Operation in 2023. ECO (Atlantic) Oil & Gas 15.75p £66.4m (ECO.L) The oil and gas exploration company focused on the offshore Atlantic Margins, announces that it has signed a Sale Purchase Agreement pursuant to which its wholly owned subsidiary, Eco Guyana Oil and Gas (Barbados) Limited, will acquire a 60% Operated Interest in Orinduik Block, offshore Guyana, through the acquisition of Tullow Guyana B.V. (TGBV), a wholly owned subsidiary of Tullow Oil Plc. The transaction summary is as follows; US$700k cash payment upon transfer of TGBV's 60% Participating Interest and operatorship of the Orinduik licence to Eco Guyana, to be paid to Tullow Overseas Holdings B.V., the parent of TGBV (TOHBV) on completion of the transaction. The contingent consideration payable to TOHBV is linked to the success of a series of milestones. Completion is expected to occur in the second half of 2023. On closing of this transaction, Eco will hold an aggregate 75% Participating Interest via Eco Guyana and Eco (Atlantic) Guyana Inc., and become Operator of the Block; and TOQAP Guyana B.V will continue to hold a Participating Interest of 25%. eEnergy Group 5.15p £18.1m (EAAS.L) The net zero energy services provider announces that it has increased its ownership in its subsidiary, eEnergy Insights Ltd (EIL), which holds the Group's MY ZeERO smart metering and analytics platform, to 100% through the acquisition of the minority holdings of two former management shareholders. Related to this transaction, the Company has issued 1,366,666 new ordinary shares of 0.3p in eEnergy to the vendors. Jarvis Securities 122.5p £54.8m (JIM.L) The company that operates in the financial services sector, provides a trading update for the financial year ending 31 December 2023. The Board of Jarvis announces that it is declaring a third quarterly interim dividend of 2.25 pence per share, to be paid on 12 September 2023. As previously announced, a Skilled Person was appointed to review the systems and controls of the Company's subsidiary, Jarvis Investment Management Limited (see announcements dated 16 September 2022 and 4 July 2023). The associated restrictions on Model B clients, has led to the loss of certain Model B clients and the corresponding revenue. In addition the costs associated with the Skilled Person review are higher than anticipated. These factors, combined with reduced trading volumes caused by market conditions, mean that the Company is now trading below current market expectations. Net cash at the end of July 2023 was £5.2m. Marks Electrical Group 98.5p £103.4m (MRK.L) The online electrical retailer provides a trading update for the four months ended 31 July 2023. Revenue increased 30.7% to £36.2m (4 months FY23 £27.7m) despite the challenging market conditions. The group has increased its market share in Major Domestic Appliances (MDA) and Consumer Electronics (CE) segments. The group maintained industry leading Trustpilot score of 4.8 and reached over 50,000 reviews with 95% of those reviews being 4 and 5 star, demonstrating the best-in-class customer proposition. The group retains a robust balance sheet and net cash position, supporting the proposed final dividend of 0.66p per share, subject to shareholder approval at today's AGM. Spectral MD Holdings 50.5p £68.7m (SMD.L) The artificial intelligence company focused on medical diagnostics for faster and more accurate treatment decisions in wound care, yesterday announced its proposed cancellation of Admission to Trading on AIM. As stated in the announcement on April 11, 2023 detailing the planned business combination with Rosecliff Acquisition Corp I, the Board proposes to seek shareholder consent to approve the transaction and cancel the admission of the Company's ordinary shares to trading on AIM. The Board has resolved to implement the cancellation for the following reasons: Delisting from AIM would remove certain complexities and duplication that comes with administering two listing regimes. The Board expects that a Nasdaq-only listing will attract the appropriate investor base and investment style, maximizing the Company's ability to access deeper pools of capital. Moreover, existing shareholders will be able to own, trade, and transfer shares of the combined company following the transaction. Tern 5.5p £21.4m (TERN.L) The investment company specialising in supporting high growth, early-stage, disruptive Internet of Things (IoT) technology businesses, announces a number of changes to the board of the Company and the Company's management structure. Matthew Scherba and Bruce Leith have both stepped down from the Board with immediate effect. Bruce Leith will remain with Tern as an employee and a member of its senior management team. Sarah Payne will step down as the Company's Chief Financial Officer and Company Secretary on or before 30 September 2023 to take up a position with another company, but will remain on the Board as a Non-Executive Director. In addition, Tern is implementing other cost saving measures which is expected to save approximately 40% of its overall central costs in 2024, compared to the level for 2022. ZOO Digital Group 65p £63.5m (ZOO.L) The provider of end-to-end cloud-based localisation and media services to the entertainment industry, announces its audited results for the year ended 31 March 2023. Revenue grew by 28% to $90.3m (FY22: $70.4m), with 3% of sales from newly acquired operations. Adjusted EBITDA grew to $15.5m (FY22 restated: $7.1m). Operating profit quadrupled to $8.1m (FY22 restated: $1.9m) and ZOO reported profit before tax of $7.9m, after a previous FY22 loss of $0.2m. Net cash at year-end was $11.8m (FY22: $6.0m). Current trading has been impacted by several major streaming companies carrying out strategic reviews to refocus on profitability and the simultaneous strike of US writers and actors. This has created short-term market disruption and temporarily lower volumes of localisation and media services work. The Board has been taking steps to adjust the cost base to reduce the impact. Guidance for FY24 remains unchanged and its 2030 strategy remains on track.
ZOO TERN SMD MRK JIM
ZOO has announced FY23 results in line with the guidance given in the recent trading update. Increased market share and the scaling up of its international operations have delivered revenue growth of 28% to $90.3m (FY22: $70.4m), with good margin progress and profitability. ZOO’s key growth drivers remain intact, content budgets remain large and the focus by the key streaming players on monetisation models represents a material opportunity, underpinned by the roll-out of ZOO’s strategic geographic hubs. However, short-term trading has been affected by two temporary market issues: cost cutting among major streaming providers holding back order flows, and the ongoing industry-wide strikes impacting localisation and media services work on new titles. We maintain headline estimates for FY24, which we adjusted at the recent trading update to reflect the near-term headwinds. We also maintain our FY25 estimates, with revenue of $115m and adjusted EBITDA at $19m.
FY23 was a standout year by any metric as ZOO Digital reported 28% revenue growth (+25% organic) and a 7.1 percentage point increase in adj EBITDA margins to a record 17.1%. Group revenues of $90.3m are consistent with the Group’s July trading update ($4.7m below our previous $95m forecast) but adj EBITDA is $1m higher at $15.5m. FY23 revenues could have been even higher if not for a slowdown in Q4 which has continued into H1’24. This slowdown has been well documented, as a number of major media organisations are reorganising operations (e.g. Disney has cut c.7k employees YTD) with streamers pivoting from a period of market share capture to a new focus on profitability. On a medium-term view, ZOO could stand to benefit from these changes (e.g. as an E2E provider ZOO could benefit from supplier rationalisation), but FY24 will be impacted by these changes and the first double strike in over 60 years. FY23 was a significant year, and our newly introduced FY25 forecasts demonstrate what ZOO can achieve once the streaming market returns to normality. We remain at a Buy.
ZOO has announced its delayed full year results for FY’Mar23. Revenues and cash are essentially as previously announced. However, EBITDA is even further ahead at $15.5m vs our upgraded $14.4M due to further audit driven revisions. Cautious accounting seems to underpin the c$3m total variance. Outlook is key and at this stage there is no cast iron new news re client spend pick-up or the end of the twin strikes. This leaves us waiting. At some point clients will lift spend as they move back to generating the levels of content required to feed their operations and the strikes will be resolved. Given the valuation and ZOO’s position we see a very favorable risk/reward with high return potential and think investors should look through. On top of this ZOO looks highly likely to take share from the customers supplier rationalisation and this will boost growth substantially.
ZOO recently gave a Q1 update, highlighting that trading has been affected by two temporary market issues. First, the ongoing cost cutting among major streaming providers, which is holding back order flows. Second, the industry-wide strikes, which are impacting localisation and media services work on new titles. We reduce FY24 estimates to reflect these issues, as detailed below. However, we expect project workflow to resume with ZOO well placed, particularly given recent acquisitions. We therefore introduce FY25 estimates with revenue at $115m and adjusted EBITDA at $19m. The group also detailed an accounting policy change as part of its audit procedure. This change relates to IFRS 15 interpretation, specifically third-party costs matching invoices received (rather than revenue recognition). The impact is to increase adjusted EBITDA in FY23E by $2m, but with a downward restatement of FY22 by $1.2m.
After a tremendous run of growth and strategy execution, ZOO is being battered by actor and writer strikes as well as client spend weaknesses. The combination is brutal for expectations. Q1 has been very weak, and we expect H1 revenues to be down c50% YoY. Some scheduled spend should feed through in H2, but the full impact of both strikes (we do not assume a fast resolution) will partially offset and so while we assume a sequential HoH improvement the level will be lower than previously expected. Near term visibility is poor but we do believe industry demand will recover (in part because we believe localisation has a high incremental ROI for the global content companies) and that ZOO is very well positioned with its highly competitive technology-based efficient and scalable offer to take share. We set a cautious Target Price based on our Q4 revenue run rate assumption indicating upside and a Buy rating. However, the catalyst for share price performance looks likely to be when we have confirmation of recovery and/or end of strikes.
14th 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 objectives, financial situation or needs of any specific entity and is not a personal recommendation to anyone. Recipients should make their own investment decisions based upon their own financial objectives and financial resources and, if any doubt, should seek advice from an investment advisor. The information contained in this document is based on materials and sources that are believed to be reliable; however, they have not been independently verified and are not guaranteed as being accurate. 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As market commentary this document does not constitute any of (i) investment research and financial analysis or other forms of general recommendation relating to transactions in financial instruments for the purposes of the UK retained version of section B of annex I to Directive 2014/65/EU ("MIFID II Directive"); or (ii) investment research as defined in the UK retained version of article 36(1) of Commission Delegated Regulation 2017/565/EU made pursuant to the MIFID II Directive; or (iii) non-independent research (as such term is defined in the Financial Conduct Authority's Conduct of Business Sourcebook). This document should not be relied upon as being an independent or impartial view of the subject matter. The individuals who prepared this document may be involved in providing other financial services to the company or companies referenced in this document or to other companies who might be said to be competitors of the company or companies referenced in this document. 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Any reference to a partner in relation to Hybridan LLP is to a member of Hybridan LLP or an employee with equivalent standing and qualifications. A list of the members of Hybridan LLP is available for inspection at the registered office, 2 Jardine House, The Harrovian Business Village, Bessborough Road, Harrow, Middlesex HA1 3EX. *A corporate client of Hybridan LLP ** Arranged by most recent first *** Alphabetically arranged Dish of the day Joiners: No joiners today. Leavers: No leavers today. What’s cooking in the IPO kitchen?** Substrate Artificial Intelligence, an artificial intelligence company based in Spain that creates, buys and scales companies around AI in diverse sectors such as fintech, agritech, energy, human resources, and health, intends to join the Access Segment of the AQSE Growth Market. Expected Admission 21 July 2023. Blackpoint Biotech plc, a medical cannabinoids company established to fulfil gaps in the medical cannabis market by creating products that provide fast onset of action and accurate dosing, intends to join the Access Segment of the AQSE Growth Market. Expected Admission 20 July 2023. Metals One Plc, a company focusing on acquiring natural resources projects with a focus on critical battery metals, including nickel, lithium, cobalt and copper intends to join the AIM Market. The Company will have interests in the Paltamo and Rautavaara projects (nickel, copper, zinc) in Finland (together the Black Schist Project) and the Brownfield Råna Nickel project in Norway (Brownfield Rana Project). These projects represent opportunities to develop deposits of scale, in stable jurisdictions, well situated to supply fastest growing European electric vehicle and energy storage markets. The Company aims to raise £2.5m at 5 pence per share with an anticipated market cap of £10.77m. Expected Admission date is 17 July 2023. Ora Technology plc, a software company developing a digital carbon trading platform, offering users the ability to buy, sell and retire verified carbon credits in the voluntary carbon market, intends to join the Access Segment of the AQSE Growth Market. Ora’s platform aims to allow access to carbon assets - and the broader carbon economy - with the goal of reducing the complexity of current industry practices, and an emphasis towards providing a simple and intuitive user experience. Praetura Growth VCT plc, a newly established VCT announces its intention to float on the Main Market of the London Stock Exchange. The Company will provide growth funding to scalable businesses predominantly based in the North of England, across a range of sectors including technology and healthcare. The Company will be managed by Praetura Ventures Limited, a venture capital and EIS business associated with the wider Praetura Group, a Manchester based venture capital investor and small business lender. The Company is targeting to raise £10m at 1 pence per share, via an offer for subscription. The Directors will have the option to utilise an over-allotment facility that will allow the Company to issue a further 10m Ordinary Shares under the Offer. Our daily digest of news from UK listed Small and Mid caps Banquet Buffet*** Equipmake Holdings 9.5p £90.08m (AQSE: EQIP) The UK-based engineering specialist pioneering the development and production of electrification products across the automotive, aerospace, bus, coach, and fire truck industries announces a trading update for the year ended 31 May 2023 (FY2023). The Company listed on AQUIS and raised £16.2m during the year. Revenue expected to be £5.1m (FY2022: £3.7m) and gross margins expected to be ahead of half year at 23.9%, with loss before tax expected to be £4.4m, inclusive of IPO-related costs (FY2022: £4.3m). The Company holds cash at year end of £7m. The Company secured, and delivered, further orders for electric vehicle powertrains for fire trucks for both the UK and US markets and is trading in line with expectations. Helios Underwriting 162.5p £125.6m (HUW.L) A limited liability direct investment into the Lloyd's insurance market announces that in line with its strategy of increasing underwriting capacity through acquisition, it has acquired the entire issued capital of Chorlton Underwriting Limited for a total consideration of £1.99m, of which £200k has been satisfied by the issue of shares at £1.62 per share with the remainder satisfied in cash. Johnson Service Group 105.6p £445.6m (JSG.L) A UK textile services provider releases an update on trading. Group revenue is expected to be £215.0m (2022: £176.2m) with revenue in their Workwear business of £71.0m (2022: £66.0m) and in HORECA £144.0m (2022: £110.2m). The Company has now secured fixed prices for 84% of their anticipated gas requirement and 87% of their anticipated electricity requirement for the remainder of this year. In addition, 50% of their anticipated gas requirement and 64% of their anticipated electricity requirement is now fixed for 2024 with further agreements at a lower level in place for 2025. The Company aims to report operating profits slightly ahead of current market expectations. McBride 31.1p £54.1m (MCB.L) The European manufacturer and supplier of private label and contract manufactured products for the domestic household and professional cleaning and hygiene markets, provides a trading update for the twelve months ended 30 June 2023. Overall revenues for the full year, will show growth of 28.4% on a constant currency basis compared to the year to 30 June 2022. Volumes were up 5.4% for the full year, following 12.7% growth in the fourth quarter. The improvement in demand for their products has been driven by a combination of business wins and strong demand increases on existing contracts. The Group confirms that its full year results will report a return to profitability. PanGenomic Health 4p £3.97m (AQSE: NARA) A precision health company that has developed a self-care digital platform to deliver personalised, evidence-based information about natural treatments announces that independent directors, Peter Green and Jonathan Lutz, tendered their resignations effective as of 12 July 2023. The Company will immediately commence the process of identifying and appointing two new independent directors and will make further announcements in due course. Savannah Resources 4.65p £78.5m (SAV.L) The European lithium development Company announces that further to its announcement dated 13 July 2023 it has successfully completed the Placing. The Company has raised, in aggregate, £6.1m before expenses, from £2.4m at the issue price of 4.67 pence per Placing Share. The Placing comes at a premium of 1.5% to the closing price of 4.6 pence 13 July 2023. Following the Placing, Savannah now has approximately £11m in cash, which means the Company can move forward knowing that they have monetary reserves available to complete the DFS drilling programme, the Mineral Resource Estimate upgrade, the RECAPE submission, the processing plant and infrastructure design, and team expansion and community relations development. Strategic Minerals 0.15p £3.0m (SML.L) A operating minerals company actively developing projects tailored to materials expected to benefit from strong demand in the future provides updates on the Company’s projects. Cornwall Resources Limited (CRL) continues to seek to expand its mineral footprint in Cornwall and expects to be able to report on progress in the second half of the year. CRL was recently notified that its comprehensive grant application to the Cornwall and Isle of Scilly Council (CIoS) Shared Prosperity Fund had proven unsuccessful and is now, with encouragement from CIoS, working on resubmitting a modified version prior to the next application deadline (4 August 2023). CRL is in active discussions with various parties concerning collaboration to progress the Redmoor project. Upland Resources 0.53p £5.8m (UPL.L) The oil and gas company actively building a portfolio of attractive upstream assets announce that Upland's local Joint Venture company, Upland Big Oil Ventures Sdn Bhd has this week met with the Petroleum Authority of Brunei Darussalam and also separately with Brunei Energy Services & Trading a subsidiary of Brunei's National Oil Company, to discuss collaboration on Block SK334 in Sarawak. Discussions and key areas of focus centered on Block SK334 prospectivity, development potential and cross border data sharing with discoveries in Brunei. The Company looks forward to developing its relationship in Brunei further. Versarien 1.22p £3.2m (VRS.L) The materials engineering group announces it has raised £650k before expenses by way of a placing new ordinary shares in the capital of the Company at a price of 1.0 pence per share. The placing is raised at a discount of approximately 44% to the closing price of 1.79 pence on the 13 July 2023. The net proceeds of the Placing will be used for working capital purposes and as bridge finance to extend the Company's cash runway ahead of any funds received from asset sales. As previously announced, the Company is pursuing a disposal of assets, including its mature businesses and the intellectual property and plant acquired from Hanwha Aerospace in 2020. Zoo Digital Group 74p £72.3m (ZOO.L) A provider of end-to-end cloud-based localisation and media services to the global entertainment industry, provides an update on Q1 trading. First quarter FY24 trading has been impacted due to a well publicised hiatus in the normal flow of orders across the industry, resulting in lower revenues than previous management expectation. Several of ZOO's major streaming company clients have been implementing cost-saving measures and reorganising their operations as the industry evolves and confronts higher levels of competition, leading to the deferment of some costs. Secondly, the Writers Guild of America strike is in its third month and is now having an impact on the levels of localisation and media services work on new titles. The Group is financially strong with net cash of $23m as at 30 June 2023. If you would like to unsubscribe, please email enquiries@hybridan.com with “unsubscribe me”. Chef: Emily Liu 0203 764 2344 emily.liu@hybridan.com Chef: Sacha Morris 0203 764 2345 sacha.morris@hybridan.com
ZOO VRS SML ONEM ONEM HUW JSG SAV
ZOO Digital has provided a trading update outlining that two short-term market factors have impacted trading in Q1’24, resulting in a lowering of FY24 forecasts, and a change to FY22A and FY23E profits due to a reinterpretation of IFRS 15. The ongoing reorganisation at a number of major media companies has been well documented (e.g. Disney has cut c.7k employees YTD), and alongside a strike by the Writers Guild of America has impacted ZOO’s Q1’24 trading. ZOO’s medium-term outlook remains undiminished given major media companies remain committed to streaming, however, the short-term disruption from this pivot to profitable streaming (vs a previous emphasis on subscriber growth) is greater than previously anticipated.
ZOO’s global expansion is gaining pace. A successful £13m capital raise will support this strategy, funding the acquisition of one of its Japanese outsource partners, which is expected to be c.10% earnings accretive in the first full year of ownership (FY25). ZOO has also launched an Iberian hub by acquiring a 30% stake in AM Group for €825k. These investments reinforce ZOO’s strategy to expand its in-territory expertise across Europe, the Middle East and Southeast Asia in order to meet growing demand from streaming providers. We also take comfort from the recent trading update that outlined EBITDA at least in line with expectations and net cash significantly ahead at $11.8m. We adjust FY23 estimates to reflect these moving parts.
ZOO Digital has announced a strategic investment in an established dubbing and localisation company (AM Group) that adds new facilities in Spain. ZOO has acquired a 30% stake in AM Group for a total consideration of €825k (c.$900k) payable in cash on completion. AM was founded in 2004 and has been a partner to ZOO since 2021. AM’s website does not disclose any major customers but the company has provided recording and mixing services for hit shows such as Fleabag (A BBC and Amazon Studios co-production). The company generated €352k PBT in FY’Dec22 and will become ZOO’s primary hub for operations in Spain and Portugal. ZOO has found success through its ‘global growth initiative’ (acquiring/partnering with in-location vendors) with ZOO Korea unlocking c.$4.5m of incremental revenue across the Group and providing a strong proof point. ZOO provides exposure to a number of megatrends within media (e.g. pivot to OTT DTC, disintermediation, globalisation of content) and is quickly establishing itself as a winner in the streaming wars.
28th April 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 objectives, financial situation or needs of any specific entity and is not a personal recommendation to anyone. Recipients should make their own investment decisions based upon their own financial objectives and financial resources and, if any doubt, should seek advice from an investment advisor. The information contained in this document is based on materials and sources that are believed to be reliable; however, they have not been independently verified and are not guaranteed as being accurate. This document is not intended to be a complete statement or summary of any securities, markets, reports or developments referred to herein. No representation or warranty, either express or implied, is made or accepted by Hybridan LLP, its members, directors, officers, employees, agents or associated undertakings in relation to the accuracy, completeness or reliability of the information in this document nor should it be relied upon as such. Any and all opinions expressed are current opinions as of the date appearing on this document only. Any and all opinions expressed are subject to change without notice and Hybridan LLP is under no obligation to update the information contained herein. To the fullest extent permitted by law, none of Hybridan LLP, its members, directors, officers, employees, agents or associated undertakings shall have any liability whatsoever for any direct or indirect or consequential loss or damage (including lost profits) arising in any way from use of all or any part of the information in this document. This document is sent to you as market commentary only. As market commentary this document does not constitute any of (i) investment research and financial analysis or other forms of general recommendation relating to transactions in financial instruments for the purposes of the UK retained version of section B of annex I to Directive 2014/65/EU ("MIFID II Directive"); or (ii) investment research as defined in the UK retained version of article 36(1) of Commission Delegated Regulation 2017/565/EU made pursuant to the MIFID II Directive; or (iii) non-independent research (as such term is defined in the Financial Conduct Authority's Conduct of Business Sourcebook). This document should not be relied upon as being an independent or impartial view of the subject matter. The individuals who prepared this document may be involved in providing other financial services to the company or companies referenced in this document or to other companies who might be said to be competitors of the company or companies referenced in this document. As a result both Hybridan LLP and the individual members, officers and/or employees who prepared this document may have responsibilities that conflict with the interests of the persons who receive this document. Hybridan LLP and/or connected persons may, from time to time, have positions in, make a market in and/or effect transactions in any investment or related investment mentioned herein and may provide financial services to the issuers of such investments. In the United Kingdom, this document is directed at and is for distribution only to persons who (i) fall within article 19(5) (persons who have professional experience in matters relating to investments) or article 49(2) (a) to (d) (high net worth companies, unincorporated associations, etc.) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (SI 2005/1529) (as amended) or (ii) persons who are each a professional client or eligible counterparty (as those terms are defined in the Financial Conduct Authority's Conduct of Business Sourcebook) of Hybridan LLP (all such persons referred to in (i) and (ii) together being referred to as "relevant persons"). This document must not be acted on or relied up on by persons who are not relevant persons. For the purposes of clarity, this document is not intended for and should not be relied upon by any person who would be classified as a retail client under the Financial Conduct Authority's Conduct of Business Sourcebook. Neither this document nor any copy of part thereof may be distributed in any other jurisdictions where its distribution may be restricted by law and persons into whose possession this document comes should inform themselves about, and observe, any such restrictions. Distribution of this report in any such other jurisdictions may constitute a violation of territorial and/or extra-territorial securities laws, whether in the United Kingdom, the United States or any other jurisdiction in any part of the world. Hybridan LLP and/or its associated undertakings may from time-to-time provide investment advice or other services to, or solicit such business from, any of the companies referred to in this document. Accordingly, information may be available to Hybridan LLP that is not reflected in this material and Hybridan LLP may have acted upon or used the information prior to or immediately following its publication. In addition, Hybridan LLP, the members, officers and/or employees thereof and/or any connected persons may have an interest in the securities, warrants, futures, options, derivatives or other financial instrument of any of the companies referred to in this document and may from time-to-time add or dispose of such interests. This document may not be copied, redistributed, resent, forwarded, disclosed or duplicated in any form or by any means, whether in whole or in part other than with the prior written consent of Hybridan LLP. Hybridan LLP is a limited liability partnership registered in England and Wales, registered number OC325178, and is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange. Any reference to a partner in relation to Hybridan LLP is to a member of Hybridan LLP or an employee with equivalent standing and qualifications. A list of the members of Hybridan LLP is available for inspection at the registered office, 2 Jardine House, The Harrovian Business Village, Bessborough Road, Harrow, Middlesex HA1 3EX. *A corporate client of Hybridan LLP ** Arranged by most recent first *** Alphabetically arranged Dish of the day Joiners: No joiners today. Leavers: Rambler Metals & Mining PLC has left AIM. What’s cooking in the IPO kitchen?** Golden Metal Resources Plc a mineral exploration company focused on tungsten, gold, copper, silver and zinc within Nevada, USA intends to join AIM. It was established on 22 April 2021 as a company registered in England and Wales for the purpose of holding all of the Nevada mining assets of Power Metal Resources plc (AIM:POW). The Company holds four mining assets comprising the wholly owned Pilot Mountain, Garfield and Stonewall projects together with an earn-in option over the Golconda Summit project. Each of the projects consists of mining claims located entirely on land managed by the United States Bureau of Land Management. £1.98m total capital to be raised. Anticipated market capitalisation on admission £7.16m. Expected Admission 10 May 2023. Ashoka WhiteOak Emerging Markets Trust Plc intends to join the Premium Segment of the London Stock Exchange. The Company is a new UK investment trust seeking to achieve long-term capital appreciation through investment primarily in quoted securities that provide exposure to global Emerging Markets and intends to raise £100m at 100p per ordinary share. Expected Admission 3 May 2023. Our daily digest of news from UK listed Small and Mid caps Banquet Buffet*** Beowulf Mining 2.1p £24.3m (BEM.L) An exploration and development company with assets in Sweden, Finland and Kosovo announces that the Company's wholly owned Finnish subsidiary Grafintec Oy (Grafintec) has signed a Memorandum of Understanding with Thermal & Material Engineering Center (TMEC) from Ukraine. TMEC has developed proprietary purification technology, a continuous thermal process which consumes less energy than conventional commercially available thermal solutions and eliminates the need of hazardous chemicals for purifying graphite. Grafintec and TMEC are seeking to apply the technology to both natural flake and secondary sources of graphite. Grafintec will own 51% and TMEC will own 49%. Fiinu 11.5p £30.9m (BANK.L) A fintech company including the fully owned Fiinu Bank Limited, creator of the Plugin Overdraft®, announces that it has conditionally raised £0.75m before costs in new equity funding, following the conversion of loan capital. The Company has exercised its right to convert £0.75m of drawn down loans with Dewscope Limited into New Ordinary Shares at a price of 13 pence per New Ordinary Share, together with 303,644 new warrants to subscribe for further new ordinary shares at a price of 20 pence per new ordinary share. Impellam Group 665p £298.8m (IPEL.L) A connected group providing global workforce and specialist recruitment solutions announces its audited final results for the 52 weeks ended 30 December 2022. Revenue increased by 11.8% £2.53bn (2021: £2.26bn), gross profit increased 17.9% to £314.8m (2021: £267.0m), adjusted operating profit was up 41.6% to £41.5m (2021: £29.3m), and the Group held net cash of £20.4m. The Group completed sales of Corestaff in February 2022, followed by Regional Specialist Staffing (RSS) and Healthcare brands in March 2023. Trading in 2023 has begun above the Group’s expectations. i-nexus Global 4.1p £1.2m (INX.L) A provider of cloud-based Strategy software solutions designed for the Global 5000, provides its unaudited results for the 6 months ended 31 March 2023. Revenue increased by 9% to £1,673k (H1 2022: £1,540k), monthly recurring revenue (MRR) increased 25% year-on-year to £281k and 12% since the start of the period. Loss after tax for the period of £491k (H1 2022: £283k), and the Company held cash of £147k. The Company completed three material account expansions, two of which were logos signed in 2022, and are on track to deliver double-digit net MRR growth in FY23. Semper Fortis Esports* 0.15p £0.623m (AQSE: SEMP) The esports company focused on establishing esports teams and forming brand and technology partnerships announces that it has raised £100k before expenses through a subscription at a price of 0.1 pence per share. Company costs have been brought down to a minimum and following the receipt of the Subscription, the Company will have just over £500k of cash and minimal liabilities. The Board believes that the Company is an attractive acquisition vehicle and is therefore exploring a number of options to acquire another business. Such an acquisition would very likely constitute a Reverse Takeover transaction. SDX Energy 5.65p £11.6m (SDX.L) A MENA-focused, international oil and gas exploration, production, and development company headquartered in London reports its audited financial and operating results for the twelve months ended 31 December 2022. Net Production, 3,723 boe/d (507 bbls/d and 19.3mmscf/d), marginally ahead of mid-point full year guidance of 3,480 - 3,795 boe/d, EBITDAX of US$24.6m and operating cash flow (before capex) of US$16.9m. Out of 14 wells completed across SDX's portfolio in the year to date, 12 were put on production during 2022 and the Company held net cash of US$4.9m. The Company aim to expand its drilling programme later in 2023 to meet existing demand. Team17 Group 357.5p £521.6m (TM17.L) A global games label, creative partner, and developer of independent premium video games and developer of educational entertainment apps, and a working simulation games developer and publisher, announces that its wholly owned subsidiary, astragon Entertainment GmbH has completed the acquisition of the German development studio, Independent Arts Software GmbH. The consideration will be funded from existing cash reserves and is a strategic investment in development capability and therefore is not expected to have any impact on either revenue or adjusted EBITDA in the current financial year. TPXimpact Holdings 52p £47.8m (TPX.L) A technology-enabled services company focused on digital transformation, announces two contract wins with two UK central government departments. The contracts will deliver a cumulative value of up to £77m over a 4 year period. The first is a 2 year contract with the Department for Education (DfE) worth up to £27.4m, commencing in May 2023. The second with His Majesty's Land Registry and is TPX's largest to date, worth up to £49m over a 4 year period, commencing in May 2023. The Company continue to target larger and longer-term contracts across both the public and private sectors. Wynnstay Properties 630p £17.0m (WSP.L) The property investment and development company which owns and manages, office, retail, warehouse and industrial properties, focusing mainly on locations within Southern England provides a trading update. The valuers report from BNP Paribas Real Estate showed the total aggregate Fair Value of Wynnstay's portfolio was £39.3m (FY 2022: £38.9m), which represents an increase of £345k, or 0.9%. Rental income increased by 10.4%. to £2.3m (2022 adjusted: £2.08m) and the Company has net debt of £6.68m (2022: £6.4m). Zoo Digital Group 164.5p £147.8m (ZOO.L) A provider of end-to-end cloud-based localisation and media services to the global entertainment industry, announces that further to the Company's announcement on 27 April 2023, the Company has successfully completed its oversubscribed Placing of £12.5m through the issue of new ordinary shares at a price of 160p. The Issue Price represents a discount of approximately 13.5%. The proceeds will be allocated for working capital purposes. If you would like to unsubscribe, please email enquiries@hybridan.com with “unsubscribe me”. Chef: Emily Liu 0203 764 2344 emily.liu@hybridan.com Chef: Sacha Morris 0203 764 2345 sacha.morris@hybridan.com
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ZOO Digital has announced a $15.5m placing to fully fund the acquisition of its Japanese partner. The proposed acquisition is expected to be c.10% earnings accretive in the first full year of ownership (FY25). The Group has also released an FY23 trading update outlining a c.5% revenue miss, but EBITDA is at least in-line and we upgrade +4% to $12.5m (SCMe: $12.0m). Net cash is significantly ahead at $11.8m (SCMe: $8.7m). The proposed acquisition is highly complementary and would consolidate the Group’s supply chain in a key geography thus cementing ZOO’s position as a leading provider of media localisation services across South East Asia. ZOO has demonstrated through previous Korean and Indian investments that increased capacity can unlock incremental revenue across a number of major streamers. ZOO has grown revenues at an impressive 33% CAGR in the 4 years to FY23 and remains a top pick.
Zoo Digital provided a trading update indicating that FYE March 2023 revenue should fall short of expectations whilst EBITDA should meet consensus expectations. We make no changes to our FY24 estimates. The company also announced that it intends to acquire one of its media localisation partners in Japan from a leading Japanese technology company. To fund the acquisition, Zoo has raised £12.5m (c.$15.5m) (before expenses) through a placing of 7.8m shares at a 13.5% discount to the closing price on 26 April (160p).
ZOO Digital enjoys a strong position in an exciting and fast-evolving market. Its unique end-to-end, technology-centred approach is finding favour with the major SVOD providers, delivering the levels of reliability, security and scalability required to service the large – and increasing – levels of demand. ZOO’s clients are committing huge sums to new content, with the large streaming providers embroiled in ‘content wars’ to grow and maintain market share. Localisation is also experiencing a boom due to aggressive geographical expansion, enabling ZOO to rapidly increase dubbing revenue in an underpenetrated market. Having considered ZOO’s technology offering (in particular ZOOstudio) relative to competitors, we believe that the company is well placed to deliver long-term profitable growth through increased market share in a large, growing and constantly evolving segment.
ZOO Digital has announced the acquisition of all of the share capital of ZOO Korea, following a year of operation. With Korean content growing in popularity globally, the business has enabled ZOO to provide major content creators and global streaming services with an enhanced localisation offering in Korea. The investment fits well with ZOO’s stated strategy to expand its in-territory expertise across Europe, the Middle East and Southeast Asia in order to meet growing demand – we will return to this theme, and to the group’s competitive positioning, in a future research update. We make no changes to estimates at this stage but will look to quantify the potential uplift to earnings as the investment gains traction.
ZOO has announced the acquisition of the remaining 49% of ZOO Korea after a successful expansion since its initial 51% acquisition in March’22. The business is expected to continue to expand rapidly, and ZOO wants to enhance its exposure to the domestic market and gain the benefit of the business support provided to the US and UK operations. The Korean business has also acted as a very significant business generator for the rest of the group (c$4.5m of revenue). This is a good example of ZOO carefully building out its individual market capabilities while also reaping the rewards of developing its global offer. We look forward to an update on trading for FY23 and guidance for FY24 when the benefit of more major studios scaling spend with ZOO should be felt. We expect to upgrade our revenue forecasts significantly (see previous note) underpinning our investment case. BUY
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Accordingly, information may be available to Hybridan LLP that is not reflected in this material and Hybridan LLP may have acted upon or used the information prior to or immediately following its publication. In addition, Hybridan LLP, the members, officers and/or employees thereof and/or any connected persons may have an interest in the securities, warrants, futures, options, derivatives or other financial instrument of any of the companies referred to in this document and may from time-to-time add or dispose of such interests. This document may not be copied, redistributed, resent, forwarded, disclosed or duplicated in any form or by any means, whether in whole or in part other than with the prior written consent of Hybridan LLP. Hybridan LLP is a limited liability partnership registered in England and Wales, registered number OC325178, and is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange. Any reference to a partner in relation to Hybridan LLP is to a member of Hybridan LLP or an employee with equivalent standing and qualifications. A list of the members of Hybridan LLP is available for inspection at the registered office, 2 Jardine House, The Harrovian Business Village, Bessborough Road, Harrow, Middlesex HA1 3EX. *A corporate client of Hybridan LLP ** Arranged by most recent first *** Alphabetically arranged Dish of the day Joiners: No joiners today. Leavers: Pure Gold Mining has left the Main Market. What’s cooking in the IPO kitchen?** PanGenomic Health Inc, currently traded on the Canadian Securities Exchange market, intends to dual list on the AQSE Growth Market, as a springboard to expand footprint of its personalised and self-care digital health platforms in the UK/EU markets. The Company has three platforms: Nara App, Mindleap.com and the PlantGx Platform. PanGenomic Health Inc is currently traded on the CSE. 88.6% of the total issued shares will be floated. Admission is delayed. Our daily digest of news from UK listed Small and Mid caps Banquet Buffet*** Arrow Exploration 18.75p £41.4m (AXL.L) The high-growth operator with a portfolio of assets across key Colombian hydrocarbon basins, provides an update on the drilling of Rio Cravo Este-3 (RCE-3), an appraisal well on the Tapir Block in the Llanos Basin of Colombia. The RCE-3 well reached total depth on February 16, 2023 and encountered 7 hydrocarbon bearing intervals totaling 58 net feet of oil pay (measured depth). It is expected that the RCE-3 well will begin production in early March 2023. Arrow also provides an operational update. Carrizales Norte; The wells are expected to be drilled immediately following RCE-5 and mobilization of the rig to the new CN pad. 3D Seismic Project, Tapir Block; Surveying operations are ongoing and data acquisition is scheduled to be completed in April 2023. Capella Field; which Arrow has a 10% interest in, has been shut in since February 7, 2023 due to road blocks and protests in the immediate area. Discussions are ongoing. Bango 251.5p £192.3m (BGO.L) The global platform for data-driven commerce, announces a new partnership with Dropbox, a leading cloud storage service that allows you to backup and sync your files across multiple devices. The Bango Platform eliminates the technical and operational complexities for merchants launching consumer offers through diverse channels and into new markets. Through this partnership, Dropbox will be able to grow its user base by offering its subscription product through a network of telecom operators that have adopted the Bango Platform to deliver third-party offers. Blancco Technology Group 186p £140.8m (BLTG.L) The industry standard in data erasure and mobile lifecycle solutions, announces its interim results for the six months ended 31 December 2022. Group revenue grew in each of the three territories in which Blancco operates, representing a total increase of 16% (when adjusted for currency movements) to £24m (H1 FY21: £19.7m). EBITDA increased to £7.2m, and profit before tax grew 42% to £2.6m. Following the acquisition of WipeDrive, the team is fully integrated and contributed revenue of £0.9m in the Period. The Board remain confident it’s full year expectations will be achieved whilst remaining cautious regarding macro-economic conditions. OptiBiotix Health 12.75p £11.6m (OPTI.L) A life sciences business developing compounds to tackle obesity, cardiovascular disease, diabetes and skincare, announces that René Kamminga a Director of the Company and CEO of OptiBiotix Ltd, a wholly owned subsidiary of OptiBiotix Health plc, will leave the business. Stephen O'Hara, CEO of OptiBiotix Health plc will resume the role as CEO of OptiBiotix Ltd and will lead a minor restructuring of the business, with further announcements to be made in due course. Proton Motor Power Systems 13.13p £204m (PPS.L) The designer, developer and producer of fuel cells and fuel cell electric hybrid systems with a zero-carbon footprint, provides an update on the deployment of the Company's fuel cell systems by a customer. On 6 September 2022, the Company announced that it had delivered three of its emission-free HyFrame® S36 systems to WILO SE for use in Wilo's H₂Powerplant. The HyFrame® S36 systems have been integrated into the H₂Powerplant, an innovative hydrogen plant that enables the production of green energy from renewable resources. Following the successful delivery and integration of the HyFrame® S36 systems, Proton Motor and Wilo have entered into a Memorandum of Understanding to cooperate on decentralised and decarbonised energy supply. The Company is also identifying new use cases for the systems. Roquefort Therapeutics* 7p £9.0m (ROQ.L) The company developing first in class drugs in the high value and high growth oncology segment prior to partnering or selling to big pharma announces it will be providing a Company update via the Investor Meet Company platform at 2pm on Wednesday 1st March 2023. Roquefort Therapeutics' portfolio consists of four fully funded, novel patent-protected pre-clinical anti-cancer medicines. Since listing in March 2021, ROQ acquired Lyramid Pty Limited and Oncogeni Ltd. Investors can register for the presentation by clicking the following link: https://www.investormeetcompany.com/roquefort-therapeutics-plc/register-investor Springfield Properties 82.5p £97.8m (SPR.L) A housebuilder in Scotland focused on delivering private and affordable housing, announces its interim results for the six months ended 30 November 2022. Revenue increased by 85.6% to £161.9m (H1 2022: £87.3m), primarily reflecting growth in private housing, which accounted for 73% of total sales, along with a strategic land sale and increased revenue in contract housing. Operating profit grew by 13.4% to £7.6m (H1 2022: £6.7m). Adjusted profit before tax and exceptional items increased by 3.1% to £6.6m (H1 2022: £6.4m) and statutory profit before tax decreased by 4.8% to £5.9m (H1 2022: £6.2m), which reflects the increased bank interest payments and exceptional items. The Group remains on track to deliver revenue growth for FY 2023 Sylvania Platinum 105p £280m (SLP.L) The platinum group metals (PGM) producer and developer with assets in South Africa, announces its results for the six months ended 31 December 2022 (HY1 FY2023). Net revenue totaled US$79.9m (HY1 FY2022: $69.1m). Net profit increased 33% to $32.6m (HY1 FY2022: $24.4m) and group EBITDA grew 26% to $$45.6m (HY1 FY2022: $36.2m). Cash balance at 31 December 2022 of $123.9m (HY1 FY2022: $110.1m). Throughout the period Sylvania Dump Operations increased 19% to deliver 38,471 ounces of PGM. Following strong production in H1, FY2023 production guidance has increased, targeting 70k to 72k 4E PGM ounces. The Group remains debt free. Versarien 5.63p £12m (VRS.L) The advanced engineering materials group, announces its audited results for the 18 months ended 30 September 2022. The comparative figures are for the 12 month period ended 31 March 2021. Revenues from continuing operations grew to £11.11m (2021: £5.69m), a pro-rata increase of 30%. Revenue from graphene, including that recognised under the DSTL contract, was £2.15m (2021: £0.70m) a pro rata increase of 105%. Reported loss for the period of £8.4m (2021: £8.1m). During the period the Company relocated its graphene manufacturing operations to Longhope in Gloucestershire; 10 new product demonstrators were launched; and a number of partnerships were announced. The Company is streamlining the business and focusing on our primary opportunities in construction and textiles. ZOO Digital Group 186p £166.0m (ZOO.L) The provider of cloud-based localisation and media services, announces it is now operating as a key vendor for a major content producer to support their content localisation needs. This client is also using ZOOstudio to manage the localisation of content across its vendors. The adoption of ZOOstudio by another global content creator, which cannot be named for contractual reasons, represents a further success story for ZOO as a strategic technology partner. While longer-term contractual arrangements have not yet been finalised, a significant number of revenue-generating projects for this client are already underway. If you would like to unsubscribe, please email enquiries@hybridan.com with “unsubscribe me”. Chef: Emily Liu 0203 764 2344 emily.liu@hybridan.com Chef: Sacha Morris 0203 764 2345 sacha.morris@hybridan.com
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ZOO has announced that another major global studio has adopted ZOOStudio to support its content localisation rollout, raising the number of adopters to three. We would not expect a studio to adopt the ZOOStudio platform unless it was expecting to utilise ZOO for a significant proportion (we suggest 20% or more) of its localisation requirements. With other major platforms progressing their localisation optimisation strategies likely to spend broadly similar amounts to Disney this adoption could see our forecasts smashed rapidly soon. ZOO is gaining the all-crucial “trust” factor with major studios which is leading to ZOO being engaged at scale to manage content worth billions of dollars. This in combination with its highly efficient end to end technology platform should see it continue to take share and in effect become the industry leader in localisation services. We reiterate our BUY rating.
ZOO has announced a significant new contract with a major Hollywood studio to support the continued global roll-out of the customer’s direct-to-consumer streaming service. This further demonstrates both ZOO’s quality as a services vendor and the leading position of ZOOstudio within the market. In our view, ZOOstudio is a strategically important offering that allows ZOO to become ‘part of the furniture’ once adopted. Client dependence on the technology then translates into competitive advantage and differentiation for ZOO. We make no changes to numbers at this stage but will look to review estimates at the FY23 trading update, due in early April. However, we view this important contract win as a clearly significant milestone towards ZOO’s $400m longer-term revenue target.
ZOO has announced that it is now operating as a key vendor for a major Hollywood studio to support its content localisation rollout. The major content producer is already a client and will now use ZOOstudio to manage the localisation of content across its vendors (similar to ZOOs largest customer). While the customer is not named, ZOO highlight that a significant number of revenue-generating projects for this client are already underway underpinning our unchanged forecasts. ZOO has grown revenues at an impressive 47% CAGR in the 3 years to FY23 but trades on just 10x FY24 EV/EBITDA - too low for a business growing this fast.
Zoo Digital has been adopted as a key vendor by a major content producer to support its content localisation needs. A significant number of revenue-generating projects are already underway, positioning the company to build significant revenues with another major streaming platform.
The world’s content owners are seeking to raise their returns on their $220bn annual (and rising) investment and existing libraries by maximising the exploitation of their content on a global scale. Whether through owned and operated channels or streaming services the goal and strategy is the same – localise the content via format and language to a high standard and then make it available directly or license to third parties. ZOO provides these services and is differentiated from its peers by being able to offer a full end-to-end highly efficient proprietary technology-based solution. It has landed framework agreements with most of the large content players and is now seeing volume scale. We expect ZOO to continue to take share in a growing market using its technology based USP. For investors ZOO is a non-cyclical growth play with efficiency and quality USPs central to its offer. Operational leverage is feeding through, and the margin is set to rise sharply. Our conservative near term growth prospects are not discounted (c48% upside) and longer-term potential is even greater (value c500p). We initiate coverage with a Buy rating.
ZOO Digital is a leading provider of end-to-end localisation and media services, for TV and film content, to streaming platforms such as Disney+. We expect the Group’s scalable technology to take market share in the large, underpenetrated dubbing market. ZOO should also benefit from increasing competition between streaming platforms and their aggressive international expansion plans. We forecast ZOO’s revenue jumps 76% from $70.4m in FY22 to $123.6m in FY25 with EBITDA margins expanding from 11.8% to 16.7%. The average of our valuation estimates, 269p, suggests significant upside potential of c.50%.
ZOO has announced an exceptionally strong H1 period (to end-September) with revenue almost doubling year on year and strong growth in both profitability and cash generation. The result is in line with September’s trading update, which prompted significant upgrades to estimates for this year and next. The business appears well positioned to benefit from ongoing growth in media content production, with the key streaming providers racing to deliver international (and therefore multi-language) content and ad-supported tiers. This represents a material opportunity for ZOO, underpinned by the well-timed roll-out of ZOO’s strategic geographic hubs and investment in capacity. The FY23E outlook remains in line with market expectations, and we look forward to further delivery in H2 and beyond.
ZOO recently held an in-person Capital Markets Day (CMD) for retail and professional investors. No new financial detail was given, but this note aims to summarise the additional market intelligence and operational understanding that we gained from the event. Overall it was a very upbeat and reassuring presentation, reaffirming that ZOO enjoys a strong position in an exciting and fast-evolving market.
ZOO has provided a brief but very positive trading update ahead of its AGM. H1 23 is expected to be ahead of guidance with revenue of at least $51m, up at least 89% on H1 22 ($26.9m) and 17% on H2 22 (£43.5m), and a considerable increase in EBITDA given operational gearing. We are therefore upgrading our FY23 and FY24 estimates, having increased confidence that ZOO will exceed its $100m revenue target in FY24E, with scope to achieve it this financial year if momentum continues. Strong revenue growth is driven by new production returning to pre-Covid levels and significant growth from territory launches, boosted by the well-timed roll-out of ZOO’s strategic hubs and continuing back-catalogue migration.
Media - Trading Comments - ZOO Zoo Digital^ (ZOO, NR, CNP at 108p) - Management Meeting – Content remains king!
Issuer Sponsored MATTIOLI WOODS+ (MTW, BUY at 710p) - Results hit consensus, but inflation bites. FTSE 100 ENTAIN^ (ENT: Buy at 1,150p) – Full year online guidance revised down to flat but retail a present FTSE 250 THE WATCHES OF SWITZERLAND GROUP^ (WOSG, NR CP, 789p) – Record FY22A results; no change in FY23F guidance but strong start to FY23 with waitlists extending AIM BIDSTACK^ (BIDS, NR, CNP, 2.5p) – Improving revenue and gross margins positions during H1 FY22F ZOO DIGITAL^ (ZOO, NR, CNP, 106p) – Strong full year results
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ZOO has announced strong full year results to 31st March 2022. Good momentum has continued, following the trading updates in January and April, both of which prompted upgrades. Revenue grew organically by 78% and Adjusted EBITDA by an even more impressive 84%, driven by good operational gearing and mix - we upgrade FY23E and FY24E forecasts. ZOO has a strong order book across all service lines, with increased demand as streaming customers push to produce premium content in the right geographies and languages, alongside continuing focus on back catalogues.
ZOO has announced a trading update for the full year to 31 March 2022. Good momentum has continued since the previous update, with what we understand to have been a strong performance from all areas of the group. The full year is now expected to be ahead of previous guidance, and we upgrade FY22 estimates. This note also provides some comment around recent subscriber challenges for Netflix. We see these as a positive for ZOO, whose content-related services are likely to experience increased demand as streaming-platform customers battle each other to produce premium content in the right geographies and languages.
What’s cooking in the IPO kitchen? Lift Global Ventures plc to join 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. Mkt Cap and Capital to be raised TBC, expected 29 April. Shellraise plc, to join AQSE Growth Market. The Company will focus on identifying investment opportunities in companies operating in the viticulture sector which require funding to increase output. Mkt Cap and Capital to be raised TBC, expected later in April. Our daily digest of news from UK listed Small and Mid caps Banquet Buffet 7digital 0.32p £8.7m (7DIG.L) The specialist in B2B end-to-end digital music solutions, has signed a new two-year contract worth at least £1m with a pan-Asian consumer services company. The new customer will be using several unique services provided by 7digital's music-as-a-service platform to deliver an app-based music streaming service to enhance its engagement with its customers. The Company will provide access to its global catalogue, full license compliance management and curation via the 7digital Playlisting Tool. Paul Langworthy, CEO of 7digital, said: "This is a major, multi-year contract for 7digital that further enhances our visibility over our forecast revenues for the next two years. It is an important endorsement of our offering having been awarded by a multinational corporation and after a competitive tender. This win also reflects how brands are increasingly utilising digital music solutions to engage with their customers. We're pleased to see our pipeline continue to translate to signed contracts and we look forward to updating the market on further progress." Botswana Diamonds 1.1p £9.3m (BOD.L) The diamond explorer, announced the results of a conceptual open pit mine optimisation evaluation on the River Blow on its Thorny River property in South Africa. An analysis of the River Blow and its extension indicates potential open pit options. Assuming mid-range diamond values of $170/ct, mid-range mining costs, a discount rate of 10%, a recovered grade of 40cpht and 1.7M tons of kimberlite mined indicates that a mine is likely to be commercial. The results exclude any additional resources from adjacent targets which will be drilled in the coming months. Cadence Minerals 17.13p £29.5m (KDNC.L) Further to the announcement made on the 7 April 2022, Cadence Minerals announced that DEV Mineração S.A's has completed the sale and shipment of Iron Ore from the Amapa Iron Ore Project. DEV has shipped and sold the fourth batch of iron ore from the stockpiles. The loading of the 48,492 wet tonnes of iron ore sinter fines (approx. 58% Fe) at Companhia Docas de Santana was completed on the 23 April. Iron Ore 62% Fe, CFR China at US$150 per tonne (22/04/2022). Approximately 1.2 Mt of iron ore is currently stockpiled in DEV's wholly-owned port. Ixico 38p £18.3m (IXI.L) The medical imaging advanced analytics company delivering intelligent insights in neuroscience, today provides a trading update ahead of its interim results for the six months ended 31 March 2022. Revenues expected to be £3.9m for six months to 31 March 2022 (H1 2021: £4.9m); Contracted order book of £12.6m as at 31 March 2022 (H1 2021: £19.0m); Strong cash balance of £5.8m (H1 2021: £7.0m), debt free, and operating cash generative; Positive earnings before interest, tax, depreciation and amortisation to 31 March 2022 (H1 2021: £0.9m); Across the first six months of the year, the Company has performed in line with its expectations and the Board continues to expect to deliver a stronger second six months to meet market expectations for FY22. K3 Capital 245p £180m (K3C.L) The multi-disciplinary and complementary professional services group advising UK SMEs has announced the appointment of former ManpowerGroup Executive Vice President, Ian Symes, as its new Group Managing Director. Ian joins K3 from ManpowerGroup, where he was Executive Vice President and global leader of the Right Management brand, a HR solutions business employing more than 900 staff across 35 countries with revenues of more than $200m. Ian joins K3 with extensive international experience having led businesses across Europe and North America. Ian will primarily be supporting the Group's CEO, John Rigby, in leading the operations of K3's expanding portfolio of businesses. John commented: "Ian brings an incredible wealth of leadership experience in B2B services, growing businesses across different sectors and geographies. We are excited that he joins K3 Capital Group as we accelerate our business, increasing market share and expanding into new services and sectors." Ian commented on his appointment: "I am very excited to be joining such a forward thinking and rapidly growing company, and I am looking forward to working alongside the existing management teams to help drive the Group to the next level." musicMagpie 50p £53.9m (MMAG.L) The re-commerce business in the UK and US specialising in refurbished consumer technology, has entered into a contract to sell consumer electronic products on Back Market, the online marketplace dedicated to refurbished devices. The launch of musicMagpie's products will occur on the Back Market UK marketplace by the end of this month and on the Back Market US marketplace in mid-May 2022. In addition to mobile phones, the agreement includes tech categories such as games consoles, tablets, wearables and MacBooks. The launch adds an additional sales channel for musicMagpie's products and will supplement existing sales through its own websites as well as Amazon and eBay. Polarean Imaging 56p £119m (POLX.L) The medical imaging technology company, with an investigational drug device combination product using hyperpolarised 129 Xenon gas to enhance magnetic resonance imaging in pulmonary medicine, announces it has received an additional research unit order for a Xenon Polariser 9820. The system will be installed in the Center for Pulmonary Imaging Research at the Cincinnati Children's Medical Center (CCHMC). The Company holds a Small Business Innovation Research grant with the Cincinnati Children's Center, awarded by the National Heart, Lung and Blood Institute in April 2017. CCHMC is a non-profit academic medical center, which is distinguished and globally renowned for paediatric teaching and research, and is one of the Company's longest key clinical collaborators. A key focus of the collaboration is to lead the field of paediatric pulmonary imaging through advanced imaging techniques and multi-nuclear capabilities, including hyperpolarised 129 Xenon gas. Premier African Minerals 0.32p £62.1m (PREM.L) Premier African Minerals Limited has signed a binding Joint Venture Agreement with Li3 Resources Inc. whereby Li3 Resources will acquire a 50% interest in Premier's hard-rock lithium assets located in the Mutare Greenstone Belt in Zimbabwe. Premier acquired these claims in June 2020 (see RNS 10 June 2020). The assets are held by Premier's wholly-owned subsidiary LicoMex Private Limited. The Li3 Project holds a number of prospective claim blocks in the Mutare Greenstone Belt, an area prospective for lithium and gold. This JV Agreement facilitates exploration activities that are funded independently of Premier's Zulu Lithium Private Limited operations. Li3 Resources has until 31 December 2022 to acquire the 50% interest in the Li3 Project by spending US$250k in further exploration works. Union Jack Oil 28.75p £32.4m (UJO.L) The UK focused onshore hydrocarbon production, development and exploration company, announced that material landmark net revenues of US$5m have been achieved from the Wressle hydrocarbon development, located within licences PEDL180 and PEDL182 in North Lincolnshire on the western margin of the Humber Basin. Union Jack holds a 40% economic interest in this producing hydrocarbon development. Landmark US$5m revenues generated to Union Jack since re-commencement of production during August 2021. Well continues to produce under natural flow with zero water cut. Site upgrades ongoing. As at 22 April 2022, the Company's cash balances and short term receivables stand at in-excess of £7.05m. Net revenues of £2.4m registered to date during 2022, already comfortably exceed 2021 year-end unaudited revenues of in-excess of £1.8m. The Company is covered for all operational and all contracted or planned CAPEX costs, including any budgeted drilling activities. Debt free. Company solicitors progressing legal work on Capital Reduction exercise to enable the Company to execute share buy-back programme or dividend payment. Zoo Digital 119p £105.1m (ZOO.L) The provider of end-to-end, cloud-based localisation and media services to the global entertainment industry, today provides a pre-close trading update for the financial year ending 31 March 2022 in advance of full year results expected to be announced on 6 July 2022. Following the announcement on 22 March 2022, where revenue was forecast to be at least $65m and EBITDA at least $6.5m, the Group today further upgrades its expectations for the year ended 31 March 2022. Revenue for the full year is now expected to be approximately $70m (FY21: $39.5m), a significant acceleration of organic growth over the prior year of 78%. EBITDA (adjusted for share-based payments) is also expected to be materially ahead of the previously upgraded expectations at approximately $8m, an increase of approximately 78% on the prior year (FY21: $4.5m). Net cash on 31 March 2022 was $5.4m (FY21: $2.9m), which reflects strong cash generation despite significant investment to expand capability and underpin future revenue growth. The Company intends to provide a further update on its outlook for the FY23 financial year with its full year results on 6 July 2022.
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Issuer Sponsored ARBUTHNOT BANKING GROUP+ (ARBB, House Stock at 1000p) – Immediate beneficiary of rising rates CHRISTIE GROUP+ (CTG, House stock at 118p) - FY21 results. Significant recovery in FY21. Dividend reinstated MUSICMAGPIE+ (MMAG, House Stock, 48p) – MMAG to launch on Back Market – bringing leading-edge reCommerce to more people PREMIER AFRICAN MINERALS+ (PREM, House Stock, 0.31p) – Binding joint venture agreement signed PREMIER FOODS+ (PFD, House Stock at 117p) HFSS compliant Mr Kipling launched. AIM ZOO DIGITAL^ (ZOO, NR, CNP, 113p) – Full year expectations upgraded
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Full year expectations upgraded
Morning Trading Comments 4 April 2022
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Zoo Digital (ZOO, NR, CNP, 121p) - Launch of Zoo Denmark extends international growth strategy
Issuer Sponsored BONHILL GROUP+ (BONH, House Stock, 7p) – Full year results rescheduled KAPE TECHNOLOGIES+ (KAPE, House Stock at 430p) – FY21 Results MISSION GROUP+ (TMG, House Stock, 50p) – Full year results preview WYNNSTAY GROUP+ (WYN, House Stock, 590p) – Strong trading update; done deal! FTSE 100 JD SPORTS FASHION^ (JD., Buy at 149p) – Nike read across; reiteration of the investment case FTSE 250 TP ICAP^ (TCAP, Buy from hold at 119p) – Is the dividend safe? AIM ACCESSO TECHNOLOGY^ (ACSO, Buy, 768p) – Encouraging recovery during FY21 and FY22F trading off to a strong start KNIGHTS^ (KGH, UR at 365p) – Unscheduled trading update – FY22F below consensus ZOO DIGITAL^ (ZOO, NR, CNP, 122p) – Positive trading update
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ZOO has provided an update on current trading for the full year ending 31 March 2022. Strong business momentum has continued since the update on 26 January. Management notes that revenue is being driven by the rapid international roll-out of streaming services, and also through increased market share from its new service offerings and customer take-up for its dubbing service. The full year is now expected to be ahead of previous guidance; we increase FY22E revenue by 14% to $65m and adjusted EBITDA by 26% to $6.8m. This represents a 65% increase in revenue over FY21, with around $10m attributed to one-off regional launches of streaming services. We expect the current strength to continue into FY23E, and upgrade both FY23E revenue and EBITDA, by 10% and 14%, respectively. We also introduce FY24E estimates.
ZOO Digital has provided a short update on current trading for the year ending March 2022. The strong momentum reported at the Interim results in November has continued into the second half, driven by new production resuming and the migration of back catalogue content for streaming, coupled with further territory launches. The full year is expected to be slightly ahead of guidance due to strong revenue growth and operational gearing. We are therefore upgrading our FY22 estimates.
What’s cooking in the IPO kitchen? Genflow Biosciences, a UK-based biotechnology company focused on longevity and the development of therapies to counteract the effects of aging and diseases associated with advanced age intends to float on the Main Market (Standard). The Company will become the first longevity biotechnology firm to list in Europe. Genflow has raised £3.7m in an oversubscribed placing, conditional upon admission becoming effective. The flotation will value Genflow at approximately £23.4m. SuperSeed Capital Limited, to join the AQSE Growth Market. The Company will invest in technology-led innovation primarily through unquoted funds managed by SuperSeed Ventures, the Company’s Investment Manager, with the objective of maximising the investors’ long term total returns – principally through capital appreciation. Mkt Cap and Capital to be raised TBC. Carbon Air, a nano-technology company which leverages the adsorption properties of activated carbon and other advanced materials to improve suspension systems, enhance acoustics or reduce noise, to join AIM. The Company's proprietary technology has allowed it to develop a unique portfolio of solutions for a variety of sizeable end markets, including vehicle suspension systems, acoustic insulation for domestic appliances and micro-speakers for smartphones. Mkt Cap and Capital to be raised TBC. Due Late Jan. i(x) Net Zero, the investing company which focusses on Energy Transition and Sustainability in the Built Environment, announces its intention to join AIM and raise money to provide development and expansion capital to certain of its investee companies, for future investments in companies that fall primarily within its areas of interest in Energy Transition and Sustainability in the Built Environment and to provide working capital for the Group. Capital to be raised £20m. Expected admission late Jan. Superdielectrics to join AIM, a Company which is focused on developing technology to build supercapacitors with high energy density, low cost, and environmentally benign electrical energy storage devices that will help create a clean and sustainable global energy and transportation system. Admission is expected to take place in mid Jan 2022. Spiritus Mundi due to join the Main Market (Standard), a special purpose acquisition vehicle which will seek acquisition targets in Europe and Asia in the clinical diagnostics sector. The Company has already raised approximately £1.2m in a pre-IPO fundraising round. Due late Jan 2022. Recycling Tech Group to join AIM, a UK-based engineering, research and manufacturing company that has developed a modular and mass producible machine, the RT7000, which processes hard to recycle plastic waste into a synthetic oil that can be sold back to the petrochemicals industry as a chemical feedstock to make new plastics. Targeting a £40m raise. Due early Q1 2022. Nu-Oil and Gas to acquire Guardian Maritime Ltd and Guardian Barriers IP Ltd and become Guardian Global Security plc and join the Main Market (Standard). Guardian is a technology group that supplies products to prevent unauthorised entry into areas that are deemed to have value, with maritime security being the main focus initially. Due 24th Jan 2022. Our daily digest of news from UK listed Small and Mid caps Banquet Buffet ADVFN 70p £18.3m (AFN.L) The Board of ADVFN (the stocks and shares website) has noted several recent announcements of significant shareholdings and the Board is concerned that control may be being sought by long-standing group of shareholders whose total interests may not be aligned with shareholders as a whole. Furthermore, the Board believes that the Company, having reached a stage of reported profitability, has valuable assets which could well be of interest to a number of parties. As the Board believes that the currently tightly held and illiquid nature of its ordinary shares may represent an impediment to achieving a correct valuation in the market, the Board has been considering the options for the Company with its advisers. The Board wishes to maximise value for all existing shareholders and has now determined to undertake a formal review of the Company's strategic options. These options include, but are not limited to, a sale of the Company itself which the Board intends to conduct under the framework of a "formal sale process" in accordance with Rules 2.4 and 2.6 of the Takeover Code. As the Company is currently cash generative, the Board does not anticipate any new funding requirements. The Strategic Review is therefore solely aimed at creating and/or realising shareholder value. Alpha FX 2,255p £923.7m (AFX.L) The global provider of high-tech, high-touch financial solutions, transforming banking services for corporates and institutions operating internationally, today announces the appointment of Nick Maton as Managing Director, Luxembourg. Nick has over 30 years' experience in financial services, including managing and growing businesses in the Luxembourg markets, which is an area of strategic importance for the Group. He joins Alpha with an in-depth knowledge of the alternative investment sector alongside his traditional banking experience. Having relocated to Luxembourg in 2006, Nick has spent the past 15 years in senior executive positions at J.P. Morgan, HSBC and most recently as Managing Director of Intertrust, Luxembourg. His experience and leadership in the local industry, combined with delivering client-centric solutions, brings the right set of skills and expertise to extend Alpha's presence to Luxembourg. Following the launch of Alpha's alternative banking platform, Alpha announced in October 2021 its intention to open a Luxembourg office to meet growing local demand for its alternative banking solutions. Subject to regulatory approval, the Group expects to fully establish this office later in the year, in order that it has a true local presence and is best positioned to support the needs of its growing client base within the country. Until then, the Group can continue to support its existing clients in Luxembourg by passporting its European regulatory license. ASOS 2,515p £2,257.6m (ASC.L) ASOS plc today announces the appointment of Patrick Kennedy, Chairman of Bank of Ireland Group plc and the former Chief Executive of Paddy Power plc, to its Board of Directors with immediate effect. Patrick replaces Ian Dyson as the Senior Independent Non-Executive Director and Audit Committee Chair, following Ian's appointment as Non-Executive Chair of the Board on 29 November 2021. In a 30-year career in business, Patrick has held a range of senior roles, having started his career at KPMG and McKinsey & Company. From 2006 to 2014 he was Chief Executive of Paddy Power plc and before that worked for Greencore Group plc, including as Chief Financial Officer. He is currently Chairman of Bank of Ireland, Chairman of CarTrawler, the B2B travel technology company, and Honorary Treasurer of the Irish Rugby Football Union. He was previously a non-executive director of Elan Corporation plc, where he chaired the Leadership, Development and Compensation Committee, and a non-executive director of Paddy Power plc, where he chaired the Audit Committee. ASOS is a destination for fashion-loving 20-somethings around the world, with a purpose to give its customers the confidence to be whoever they want to be. CPP Group 365p £32.3m (CPP.L) The provider of assistance and insurance products which reduce disruptions to everyday life for millions of customers across the world updated on its investment in KYND, a provider of pioneering cyber risk management solutions to the insurance industry. KYND has secured £3.25m of investment from Business Growth Capital (also known as the British Growth Fund / BGF) a UK and Ireland-based growth capital investment company that provides funding as a minority, non-controlling equity partner. Founded in 2018, KYND has developed an industry-first API-based technology platform that gathers and processes data to assess cyber risk for small and mid-market companies, insurers, brokers, and their clients, providing instant and meaningful insights into exposure. KYND has achieved 1000% growth on annual recurring revenue since June 2020 and developed partnerships with high-profile insurers and brokers, such as Beazley, Howden, Paragon and Alliant. BGF's investment will be used to accelerate KYND's growth and global expansion plans while supporting the development and launch of cutting-edge cyber risk technology products. Finsbury Food Group 99p £129.1m (FIF.L) The UK speciality bakery manufacturer of cake, bread and morning goods for both the retail and foodservice channels, announces an update on trading for the six months ended 25 December 2021. The Group delivered a robust H1 performance, notwithstanding the external challenges being faced by the Company, with total sales of £166.5m representing an 8.9% increase versus the corresponding period in the prior year. It also reflects a 4.4% increase on the first half of FY 2020 (30 June to 28 December 2019) which was a period unaffected by the pandemic. This growth in sales has been driven by a stable performance in UK retail (+1.5%), a continuation of the robust recovery in foodservice (+25.9%) and a 32.3% increase in the Group's Overseas division. Throughout H1 the Group has faced persistent pressure from input cost inflation, staff shortages and other supply chain disruptions. It has been able to successfully mitigate the impact of these pressures to date through commercial negotiations, operational improvements and other supply chain initiatives. It will continue in the same vein given further inflationary cost pressures are expected in H2. In addition, the impact of Omicron on foodservice consumer demand and production disruption due to staff members required to self-isolate remains unpredictable, but the Company has a successful track record of navigating challenging market conditions, and will continue to use its experience as it works through the second half. Pipehawk 23.5p £7.1m (PIP.L) QM Systems Limited, one of the Group's principal subsidiaries, has signed a ten-year lease for a modern open space building at Hartlebury Industrial Estate - the largest industrial estate in Worcestershire, approximately seven miles north of Worcester at an annual rental of £263k with a rent-free period. The New Premises comprise over 44,000 sq.ft. of useable space, over five times the available floor space and approximately 80% additional office and commercial space when compared with QM's existing premises. The significant expansion is driven partly by a requirement for more floor space for QM Systems Project Business and partly by QM's expansion into Contract Manufacturing and New Product Introduction. The Ventive Manufacturing Business Unit will initially occupy approximately 9,000 sq.ft. and approximately 10,000 sq.ft. has been earmarked for further contract manufacturing opportunity which is at an advanced stage of negotiations. The additional space provides the platform to facilitate significant growth within QM over the next few years. PipeHawk’s commercial strategy is focused on providing innovative technology solutions across a wide range of industries, but specialising in Highways, Automotive, Rail, Aerospace and Slip Test Solutions. Quixant 171.5p £114m (QXT.L) The provider of innovative, highly engineered technology products principally for the global gaming and broadcast industries, provides an update on trading for the financial year ended 31 December 2021. The Group had a strong finish to 2021 and expects to report full year revenue of $87.1m, ahead of market expectations1, driven by robust demand for Quixant's products across both the Gaming and Densitron divisions. The Group also expects adjusted profit before tax to be ahead of market expectations, despite the continued pressure on margins presented by electronic component shortages and price inflation. Net cash as at 31 December 2021 increased to $17.6m, as compared to $15m as at 30 June 2021. The robust trading in 2021 and continued supportive trading environment, despite ongoing COVID risks, positions the Group well for further growth. Since Q2 2020 the gaming market has generally remained resilient to lockdown restrictions, and customers have demonstrated increasing demand. The Group enters 2022 with a strong order book which provides good forward visibility across both divisions. Management continues to closely monitor and, as much as possible, mitigate supply chain challenges and the impact of cost inflation on overheads and component pricing which are expected to continue into at least the second half of 2022. SEED Innovations 7.1p £15.1m (SEED.L) The AIM quoted company investing in fast growing and industry leading businesses with a focus on the medical cannabis, health and wellness space, updated on its portfolio company Eurox Group, a German-based, European vertically integrated medical cannabis company, which has entered into an exclusive agreement with Orchid Ventures Inc., a multi-state cannabis innovation company, on a submission to German Authorities for approval of a premium medical vaporizer device. Under the terms of the agreement, Eurox, PurTec, and JWEI, the Company's OEM supplier and partner, will submit one of PurTec's premium disposable vaporiser devices to authorities in Germany for Medical Device Approval. All three companies will be working in collaboration on several requirements and safety studies to prove the efficacy and safety of the device. The companies have already begun securing various certifications to speed up the approval process. Once the device is approved, Eurox will have exclusivity regarding sales and distribution of the PurTec product in the European Union, United Kingdom and Brazil. United Oil & Gas 2.7p £16.9m (UOG.L) Successful test results and commencement of production from the Al Jahraa-13 development well ("AJ-13"), in the Abu Sennan licence, onshore Egypt, which is operated by Kuwait Energy Egypt. Well tested with flow rates of: 897 bopd and 0.95 mmscf/d gas (c. 1,087 boepd gross; 239 boepd net) on a 64/64" choke and 623 bopd and 0.47 mmscf/d gas (c. 717 boepd gross; 158 boepd net) on a 32/64" choke. The well has now been tied into the existing facilities and brought on stream at an initial rate of c. 600 bopd gross on a 48/64" choke. This is less than eight days from completion, rapidly adding additional production and revenue to the Company. The ECDC-6 rig will now move to drill the ASD-2 development well, the first well in the 2022 campaign. As previously announced, the AJ-13 well, which is a follow up to the successful Al Jahraa-8 well, safely reached a TD of 3,840m, several days ahead of schedule and under-budget. The well has been logged and interpreted to have encountered 17.5m of net oil pay across the Upper and Lower Bahariya reservoir targets, in line with the range of pre-drill expectations. Zoo Digital 133p £116.6m (ZOO.L) The provider of end-to-end cloud-based localisation and media services to the global entertainment industry, announced the appointment of Nathalie Schwarz as Non-executive Director with immediate effect. Nathalie brings 20 years of board-level international experience from her roles in both publicly listed and privately owned companies. She has particular expertise in the media and digital technology sector with a career spanning broadcasting (television and radio), mobile and digital interactive platforms and information/data services. This includes as Group Commercial and Development Director at Channel 4 Television Corporation, overseeing the negotiation of its commercial partnership with UKTV. She also served as Group Strategy and Development Director at Capital Radio plc as the FTSE 250 company completed an £800m merger to create the largest commercial radio analogue and digital group.
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Joiners DSW Capital plc (DSW.L) a profitable, fast growing, mid-market, challenger professional services network joins AIM. DSW operates a licencing model and licences the DSW and associated brand names in return for a royalty based on a percentage of fee income. Public Policy Holding Company (PPHC.L) leading bi-partisan, full-service US government affairs business joins AIM. Through its wholly-owned companies, PPHC operates a portfolio of independent firms that offer public affairs, crisis management, lobbying and advocacy services on behalf of corporate, trade association and non-profit client organisations. Leavers No leavers today. What’s cooking in the IPO kitchen? Hydrogen Utopia International PLC (HUI), to join Access Segment of the Aquis Stock Exchange. The company aims to become one of the leading new European companies specialising in turning Non-Recyclable Mixed Waste Plastic into carbon-free fuels, new materials or distributed renewable heat. HUI’s activities will range across the full value chain, from the production of energy from Non-Recyclable Mixed Waste Plastic for local communities, to the sale of its products (Syngas, hydrogen, electricity and heat) to end customers. HUI’s initial strategic focus is to work closely with Powerhouse Energy Group PLC to create a project pipeline of HUI Facilities. Due 4 Jan 22. Mkt Cap TBC. Carbon Air, a nano-technology company which leverages the adsorption properties of activated carbon and other advanced materials to improve suspension systems, enhance acoustics or reduce noise, to join AIM. The Company's proprietary technology has allowed it to develop a unique portfolio of solutions for a variety of sizeable end markets, including vehicle suspension systems, acoustic insulation for domestic appliances and micro-speakers for smartphones. Mkt Cap and Capital to be raised TBC. Due Late Dec. Aptamer Group to join AIM. Aptamer Group operates within the life sciences sector and is a leader in the provision of aptamer discovery and selection services and in developing aptamer-based reagents. Aptamers are synthetic nucleic acid-based biological molecules, selected based on their specific characteristics to bind to a 'target' of interest. Targets can include proteins, cells, viruses or small molecules (e.g. therapeutic drug molecules). Anticipated Mkt Cap £80.7m. Capital to be raised £10.8m. Due 22 Dec. CT Automotive Group to join AIM. CT Automotive is a UK-headquartered company that designs, develops and supplies interior components for the global automotive industry. Customers include a number of original equipment manufacturers ("OEMs") and Tier One suppliers to OEMs. Mkt Cap and Capital to be raised TBC. Due 23 Dec. i(x) Net Zero, the investing company which focusses on Energy Transition and Sustainability in the Built Environment, announces its intention to join AIM. Following Admission, the Company intends to use the net proceeds of the proposed Fundraising to provide development and expansion capital to certain of its investee companies, for future investments in companies that fall primarily within its areas of interest in Energy Transition and Sustainability in the Built Environment and to provide working capital for the Group. Capital to be raised £20m. Expected admission date Late Dec. Libertine to join AIM. Libertine has developed a technology solution for powertrain OEMs, enabling efficient and clean power generation from renewable fuels. Libertine's linear electrical machines, controls and tools together form a development platform ('intelliGENTM') which the Group provides to OEM customers for their product development programmes. The company also provides engineering services and prototype hardware to support OEM customer evaluation of its technology, and incorporation of this technology into customer-led Linear Generator development programmes. Mkt Cap and Capital to be raised TBC. Expected admission date Mid Dec. Equinox International Holdings plc, UK-headquartered medical cannabis company aiming to become the UK's leading 'Land-to-Brand' vertically integrated medical cannabis company, to seek admission of its entire share capital to trading on AIM. Seeking to raise funds to build a state-of-the-art cultivation, extraction and production facility on a Home Office-approved 20-acre UK site. Offer and timing TBA. Lift Global, a financial media and technology-focused investment company led by well-known stock market commentator Zak Mir, to apply for admission of its Ordinary Shares to trading on the Access segment of Aquis Stock Exchange Growth Market. The Company plans to raise approximately 1.7m before expenses. First dealings in the shares are expected to commence in December 2021. The flotation is expected to value Lift at approximately £2.7m. Superdielectrics to join AIM, a Company which is focused on developing technology to build supercapacitors with high energy density, low cost, and environmentally benign electrical energy storage devices that will help create a clean and sustainable global energy and transportation system. Admission is expected to take place in mid January 2022. LEAF Mobile Inc. (TSX: LEAF) (OTCQB: LEMLF), a leading Canadian free-to-play mobile game group, announced its intention to join the Main Market this winter. The Company, which started trading on the Toronto Stock Exchange on February 10th, 2021, will assume a dual-listed structure. The Company intends to raise gross proceeds of approximately CAD$10m and the flotation is expected to value LEAF Mobile at approximately £130m. LEAF is operating within a fast-growing sector with a rapidly increasing total addressable market. Mobile Games are the world's most popular form of gaming. Spiritus Mundi due to join the Main Market (Standard), a special purpose acquisition vehicle which will seek acquisition targets in Europe and Asia in the clinical diagnostics sector. The Company has already raised approximately £1.2m in a pre-IPO fundraising round. Recycling Tech Group to join AIM, a UK-based engineering, research and manufacturing company that has developed a modular and mass producible machine, the RT7000, which processes hard to recycle plastic waste into a synthetic oil that can be sold back to the petrochemicals industry as a chemical feedstock to make new plastics. Targeting a £40m raise. Due early Q1 2022. ATOME headquartered in Leeds, focussed on the large-scale production of green hydrogen and ammonia intends to join AIM. ATOME intends to be spun-out from AIM-listed President Energy Plc, an oil and gas company which has incubated and financially supported ATOME to date, by way of a dividend in specie and flotation. Due 30 Dec. Nu-Oil and Gas to acquire Guardian Maritime Ltd and Guardian Barriers IP Ltd and become Guardian Global Security plc and join the Main Market (Standard). Guardian is a technology group that supplies products to prevent unauthorised entry into areas that are deemed to have value, with maritime security being the main focus initially. Due Q4 2021. M7 Regional E-Warehouse REIT intends to apply for admission onto The Property Stock Exchange (Wholesale Segment). On Admission, the company plans to acquire a portfolio of UK retail warehouses worth £120m from M7 Real Estate Investment Partners VIII. The portfolio currently comprises 18 retail warehouse properties across the UK totalling 978,317 sq ft and fully let to 53 occupiers. Rent collections for Q2 2021 stand at 93% and are expected to revert to 100% in the coming quarters. Due 20 Dec. Our daily digest of news from UK listed Small and Mid caps Banquet Buffet Crossword Cybersecurity* 33p £24.7m (CCS.L) The technology commercialisation company focused on cyber security and risk management, discovers new shortcomings to current supply chain risk assurance processes as part of a research project conducted in partnership with Liverpool John Moores University. The joint research project was undertaken to investigate the underlying problems and causes of failures in supply chain risk and assurance. The research project was awarded a £233K grant (of which £158k was awarded to Crossword as per the announcement on 15 December 2020) by the Made Smarter Innovation programme, delivered by UK Research and Innovation (UKRI). The award was made through the digital supply chain competition, which forms part of UKRI's Industrial Strategy Challenge Fund (ISCF) Made Smarter Innovation programme. One of the key findings from the research is that the approach to most supplier assurance programmes is fundamentally broken - namely, that businesses haven't standardised what information they ask for, how they ask it, and how they share it. This leads to a huge amount of duplication and supplier assurance fatigue and ultimately a lack of supply chain transparency. As part of the project, leading third-party risk assurance thought leaders, Crossword Cybersecurity and Liverpool John Moores University collectively used the £233K grant to develop a new digital supply chain risk & assurance method that can address the underlying problems and causes of failures in supply chains. The knowledge acquired from the research and new concept design will provide new thinking in approaches to improving supply chain resilience. Ken Fraser, Rizikon Assurance Product Manager at Crossword Cybersecurity commented: "The study shows that information standards to improve the efficiency of information exchange are the key to supply chain resilience. This is something we have designed and are adopting in Rizikon." FRP Advisory Group 125p £300.3m (FRP.L) A leading UK professional services firm specialising in advisory services, announces its half year results for the six months ended 31 October 2021. Revenue for H1 2022 increased 25% on the prior period to £44.7m, 8% on an organic basis (H1 2021: £35.9m). Underlying adjusted EBITDA up 14% to £11.1m ( H1 2021: £9.7m). Strong balance sheet with net cash at 31 October 2021 of £9.2m (H1 2021: £15.4m) and an undrawn committed revolving credit facility of £10m. FRP Corporate Finance completed 50 transactions in H1 2022 with a combined deal value of £1.28bn and £0.5bn of debt raised. Key system upgrades have commenced to further improve operational efficiencies and enhance internal controls. Positive medium-term outlook for all of the Group's markets. The Board remains confident of making further progress in the current financial year. Geoff Rowley, CEO, said: "We delivered another positive performance in H1 2022, continuing to execute our strategy to grow the business. The markets we operate in have been mixed. The Corporate Finance market is highly active as capital continues to be deployed. However, the extension of Government support over most of H1 2022 has resulted in restructuring administration activity remaining subdued”. One Heritage Group* 46.5p £15.1m (OHG.L) The UK-based residential developer focused on the North of England, is pleased to announce that it has signed a construction finance facility with Shawbrook Bank Limited on its Lincoln House, Bolton development. The gross amount of the Facility is £3.51m for a term of 20-months with an interest rate of 6.25% plus three month SONIA ("Sterling Overnight Index Average"). The Facility will be drawn down as construction costs are incurred on Lincoln House. Lincoln House is a development of 88 self-contained apartments in Bolton with a gross development value of £9.4m. Medlock FRB Ltd is the principal contractor on the site and construction work has already commenced. One Heritage expects the development to finish in Q2 2022, as opposed to Q1 2022 as we had previously disclosed. As part of the mitigation strategy set out in the Listing Prospectus issued on 18 December 2020, available on the Company's website at https://www.oneheritageplc.com/wp-content/uploads/2021/02/20201223listingprospectus_web.pdf, the Company set out mitigation plans in the event that it was unable to secure sufficient finance for the developments to progress simultaneously. This included potential delays to developments. With the signing of this agreement, the Group is pleased to announce that the mitigation policy is no longer required. Jason Upton, CEO of One Heritage Group commented: "Delighted to sign this agreement with Shawbrook and will be drawing down against the Facility immediately as the Lincoln House construction accelerates. Furthermore, it is pleasing to see that as a Group we no longer need the mitigation policy thanks to the expertise and efforts of the enlarged team in our first 12 months of being a listed company." Palace Capital 255p £120.4m (PCA.L) Palace Capital announces the appointment of Steven Owen as Chairman of its board of directors, with effect from 1 January 2022. Steven is the Non-Executive Chairman of FTSE 250 property investment group Primary Health Properties plc ("PHP") having been appointed Chairman in April 2018. He was appointed to the Board as an independent Non-Executive Director in January 2014 becoming chairman of the Audit Committee and Senior Independent Director in April 2014. Steven has overseen PHP's significant corporate activity in the period including its merger with MedicX Fund Limited in 2019 and the internalisation of its management structure in January 2021 with both transactions creating significant shareholder value. Stanley Davis will stand down as Chairman and from the Board on 31 December 2021. The Board would like to thank Mr Davis for his considerable service to the Company since co-founding it in 2010. Commenting on his appointment, Steven said: "I very much look forward to working with the Palace Capital Board and wider team as it continues with its strategic initiatives to generate attractive shareholder returns and close the current share price discount." Poolbeg Pharma 9.65p £46.3m (POLB.L) The clinical stage infectious disease pharmaceutical company with a capital light clinical model, has signed a binding term sheet, encompassing all commercial terms, with AnaBio Technologies (AnaBio), with a full licence and collaboration agreement to follow. The partnership allows Poolbeg exclusive access to AnaBio's microencapsulation and nanoencapsulation technologies, IP and expertise for oral vaccine applications. Poolbeg will utilise this technology in conjunction with its own expertise in infectious diseases, vaccine development and its associated technologies to develop an oral vaccine delivery platform. Poolbeg will also investigate using its proprietary Vaccine Discovery Platform in conjunction with this jointly developed oral vaccine delivery platform. Jeremy Skillington, PhD, CEO of Poolbeg Pharma, said "The pharma sector is increasingly recognising that oral vaccines can act as standalone regimens or as boosters to injected vaccines which can struggle to generate mucosal immunity. By working with the experts at AnaBio and accessing its advanced micro and nano encapsulation technology, this places Poolbeg in a prime position to develop products for the oral vaccine market with vaccines for enteric (gut) and respiratory pathogens." RUA Life Sciences 81.5p £20.1m (RUA.L) The holding company of a group of medical device businesses focused on the exploitation of the world's leading long-term implantable biostable polymer (Elast-EonTM ), today announces its unaudited interim results for the six months ended 30 September 2021. Highlights include: 12% increase in Revenues to £708k (H1 2020: £631k), Strong cash position at £4.8m (30 September 2020: £1.m, 31 March 2021: £6.3m), Investment in capital equipment for business expansion and continued progress on heart valve project with recent manufacturing trials of the 100% polymeric leaflet demonstrating a step change in quality of manufacture and durability potential. The results from those manufacturing trials have confirmed the predictive modelling undertaken prior to the trial thus giving additional confidence that further design and process improvements should again be achieved in manufacture. Bill Brown, Chairman of RUA Life Sciences, commented: "The change to the regulatory process for the vascular graft range is clearly a major disappointment for both the Company and its shareholders. We remain confident that approval remains a question of "when" and not "if". Progress in the other parts of the business remains on track." Sareum Holdings* 5.2p £185.4m (SAR.L) The specialist drug development company delivering targeted small molecule therapeutics to improve the treatment of autoimmune diseases and cancer, will hold its Annual General Meeting today at 10.00am. The AGM will also be relayed as a live webcast via the Investor Meet Company (IMC) platform. http://www.investormeetcompany.com/sareum-holdings-plc/register-investor .Key highlights from the Company's statement include: The Board is highly optimistic about the future of its out-licensed asset SRA737, which is expected to enter new clinical trials in 2022 under the guidance of Sierra Oncology, the licence holder for this exciting candidate. SDC-1801 continues to advance towards first clinical trials. The final toxicology and safety studies required to file for an exploratory Clinical Trial Authorisation ("CTA") have been completed and the Board expect the finalised reports in the first quarter of 2022. The results received to date fully support the company’s plan to submit this CTA for SDC-1801. Sareum's cash position as at 30 September 2021 was approximately £4.4m. 2022 looks promising with the company expecting to report on continued progress both with their proprietary programmes, in particular the advancement of SDC-1801 into clinical trials, and with their partnered asset SRA737 should Sierra advance its development. Semper Fortis Esports* 1.275p £5.3m (AQSE:SEMP) The esports company focused on establishing esports teams, forming brand and technology partnerships, and providing business to business advisory services, announces its first commercial sponsor, The Topps Company, Inc. Topps is best known as a leading producer of Match Attax, American football, baseball, basketball, ice hockey and other sports and non sports themed trading cards, including the soon-to-be-released Total Football game. Topps will be the first to collaborate with SMPR as a branding partner and will be a highlight sponsor for the SMPR Rocket league car decal, which is a collectible item used to customise the appearance of a player's battle-car, provided as an in-game asset in Rocket League games. The SMPR branded car can be purchased and downloaded by anyone who plays the game from the Rocket League items shop. The Esports Shop is an in-game marketplace where exclusive RLCS-themed items can be purchased. This is the first time that Rocket League game publisher Psyonix has offered customised decals for Esports teams competing in the RLCS, SMPR is thrilled to join forces with Topps to enhance this opportunity even further. Viewers can see the SMPR decal in-play when the Rocket League team is in action, pulling in viewership by the thousands across competitions this season. Viewers will now see the latest version of the SMPR decal, including the Topps logo in the Esports Shop, and this will be updated in early 2022. Jassem Osseiran, COO of Semper Fortis Esports, commented: "We are thrilled to have Topps on board and associated with the SMPR brand. This partnership will look to achieve great things, engaging with both SMPR and Rocket League fan bases." SigmaRoc 83p £506.5m (SRC.L) The AIM quoted buy-and-build construction materials group, updates the market on its performance for the 11 months to 30 November 2021,as well as several key developments in the Group. Highlights include: Group revenues for the period were £236.5m, up 107% over the prior year. Like-for-like revenues increased 13.4% year-on-year in the period, including like-for-like growth of 9% against a strong comparative period in H2. Product availability has remained good, in spite of supply chain challenges. As a result of the continued solid trading, the Board remains confident in the Company delivering an underlying EBITDA performance for the full year ahead of analyst consensus. SigmaRoc also announces the proposed appointment of Ms Axelle Henry as an Independent Non-Executive Director, with effect from March 2022, subject to satisfaction of customary new director due diligence and onboarding processes. Ms Henry has served as Chief Financial Officer for Verlinvest Group, a Brussels-based international investment business, since April 2014 and also serves on the board of directors for a number of their private companies, as well as Nasdaq quoted Vita Coco. She has held a variety of senior executive positions, including as Deputy Chief Financial Officer of Groupe Bruxelles Lambert. Ms Henry has over 20 years' experience in the Private Equity and Investment Sector, starting her career with KPMG as senior auditor. She holds degrees in commercial engineering from the Solvay Business School (Université Libre de Bruxelles). ZOO Digital Group 116p £101.7m (ZOO.L) The leading provider of end-to-end cloud-based localisation and media services to the global entertainment industry, announces the launch of ZOO Academy, a programme of academic courses, educational collaborations and practical workshops to inspire and develop the translators, script adapters, dubbing actors and directors of the future. With demand for content production surging around the globe, ZOO Academy is working with leading universities and teaching professionals to proactively build long-term capacity in the localisation talent pool, particularly among those languages that currently have low supply. ZOO Academy Partners will deploy ZOO's cloud-based scripting and dubbing platforms (ZOOsubs and ZOOdubs) as part of audio-visual translation courses around the world.
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ZOO Digital has announced strong H1 results to 30 September 2021. Momentum has gathered pace due to new content production, and a continuing focus on back catalogues for streaming. Revenue grew by 64% in H1 and adjusted EBITDA by an even more impressive 82% to $2.4m, due to operational gearing. We are upgrading our FY22E and FY23E forecasts accordingly. The conversion of the 7.5% convertible loan stock removed the main group borrowings; the cash balance at the period-end was $8.2m, benefitting from the $10.3m placing in April. ZOO has a strong order book across all service lines with good visibility for H2. Management has confirmed it will continue to invest into FY23 to support volume growth, which will enable greater levels of profitability in future periods.
ZOO Digital has announced the first phase in its global growth strategy, with the launch of ZOO Turkey. This strategic investment will provide major content creators and global streaming services with an enhanced offering in the MENA region. The investment fits into ZOO’s stated strategy to expand its in-territory expertise across Europe, the Middle East and Southeast Asia in order to meet growing demand across these geographies. The financial impact has not been disclosed, but we believe it is likely to be currently immaterial in the scope of the group. We are therefore making no changes to our estimates but will look to quantify the potential uplift to earnings as the investment gains traction.
Joiners No Joiners Today. Leavers No Leavers Today. What’s cooking in the IPO kitchen? Gymshark has started to put together plans for a stock market listing according to City A.M. The company hit a £1bn valuation just over a year ago and boasts customers in more than 130 countries. Gymshark was founded by teenager Ben Francis in 2012 in his parents’ garage with products that appeal to Gen Z consumers. Timing TBA Rubix Group Holdings, the market leading pan-European distributor of industrial maintenance, repair and overhaul products and services is considering an initial public offering Main Market (Premium). In the six months ended 30 June 2021, Rubix generated Revenue from Ongoing Operations of EUR1,312m and Adjusted EBITDA of EUR123m (9.4% Adjusted EBITDA Margin from Ongoing Operations), an increase of 10.6% and 19.3% compared to the six months ended 30 June 2020, respectively. Raising proceeds equivalent to approximately EUR850m, and additionally may also include the sale of existing ordinary shares by current shareholders. Timing TBA Firering Strategic Minerals to join AIM, a holding company for a group of exploration and development companies set up to focus on developing assets towards the ethical production of critical metals. The Company's portfolio of assets is located in Côte d'Ivoire and contains projects that the Directors believe to be prospective for lithium and columbite-tantalite. Due Early Nov. Offer TBA Light Science Tech Holdings, the controlled environment agriculture technology and contract electronics manufacturing Group to join AIM. Raising £5m. Expected mkt cap £17.4m. Due 15 Oct. Harmony Energy Income Trust to join the Specialist Fund Segment of the Main Market raising up to £230m. The Company's investment objective is to provide investors with an attractive and sustainable level of income returns, with the potential for capital growth, by investing in commercial scale energy storage and renewable energy generation projects, with an initial focus on a diversified portfolio of battery energy storage systems located in Great Britain. The Company has contracted with Tesla Motors Limited in respect of its initial portfolio of battery storage projects, to be acquired on IPO, which will benefit from Tesla's 2-hour duration Megapack systems and Autobidder AI revenue optimisation platform. Due Early Nov. Stelrad Radiator Group, the specialist manufacturer and distributor of steel panel radiators in the UK, Europe and Turkey, is considering an IPO on the Main Market (Premium). Potential secondary and primary (c.£25m) offer. Timing TBA. Pantheon Infrastructure to join the Main Market (Premium). PINT will target attractive risk-adjusted total returns comprising capital growth and a progressive dividend through making equity and equity-related investments in private infrastructure assets alongside other leading private asset investment managers. Due Mid Nov. Quantum Exponential to join AQSE. The Company intends to identify investment opportunities in the quantum technology sector primarily in the NATO allied countries. The Company has identified over 175 start-ups which potentially meet their investment strategy with a focus on seed funding for start-ups with second stage funding plans in preparation. Offer and timing TBA. Pod Point, one of the United Kingdom's leading providers of Electric Vehicle charging solutions is considering a Main Market (Premium) listing. As at 30 June 2021, Pod Point had installed more than 89,000 home charge points and over 13,000 commercial units, including those located at workplaces and destination locations (such as shops and leisure attractions). Timing and offer TBA. Tungsten West to Join AIM. Tungsten West is the 100% owner and operator of the historical Hemerdon tungsten and tin mine located near Plymouth in southern Devon, England. Hemerdon represents the world's third largest tungsten mineral resource, with a JORC (2012) compliant Mineral Resource Estimate of approximately 325Mt at 0.12 WO3. Capital raised on Admission: £39m. Anticipated Mkt Cap: £106.2m. Expected 21 Oct. Softline the global solutions and services provider in digital transformation and cybersecurity, with its headquarters in London, is considering proceeding with a potential initial public offering of global depositary receipts representing its ordinary shares. The Company is considering applying for admission of the GDRs to the standard listing segment of the Official List of the FCA and to trading on the Main Market for listed securities and on Moscow Exchange. The Group had a turnover of US$1.8 bln for the year ended 31 March 2021, employs c.6,000 people globally, and operates in more than 50 countries across emerging markets. Primary proceeds from the Offer are expected to be around US$400m. Due Late Oct. Marks Electrical, a fast growing online electrical retailer, announced its intention to proceed with an initial public offering and to seek admission to trading on AIM. Marks Electrical sells, delivers, installs and recycles a wide range of household electrical products. In the year to 31 March 2021 revenue grew to £56m, up 78% against the previous financial year, while EBITDA increased to £7.45m, at a 13.3% EBITDA margin. The Group has made a strong start to its current financial year to 31 March 2022, with revenue growth of 78% in H1 FY2022, versus 47% growth in H1 FY2021. Offer TBA Admission is expected to take place in late October 2021. Future Metals NL (ASX:FME) (formerly named Red Emperor Resources NL) to join AIM. No funds being raised. Future Metals is a platinum group metals exploration and development company that holds a 100% interest in the Panton PGM Project in Western Australia (the "Panton Project"). The Panton Project comprises 3 granted mining leases (M80/103, M80/104 and M80/105), which cover an area of approximately 23km2 and are located 60km north of Halls Creek and 1km from the Great Northern Highway, in the East Kimberly region of Western Australia. The Panton Project has a JORC (2012) Mineral Resource Estimate of 14.3Mt at 2.19g/t platinum, 2.39g/t palladium, 0.31g/t gold, 0.27 per cent. nickel and 0.08 per cent. copper. Due mid October. Mkt cap c£35.8m. Bens Creek Group to join AIM. Bens Creek, together with its subsidiaries, will, on Admission, own and operate a metallurgical coal mine located on 10,000 acres in the southern part of the state of West Virginia and eastern edge of the Commonwealth of Kentucky, in the central Appalachian Basin of the eastern United States of America. The Mine's operations are located primarily in Mingo County, West Virginia. The Mine includes a wash plant and rail loading facility located on the freehold land. Capital to be raised on Admission: £7m. Anticipated Mkt Cap on admission: £35m. Due 19 Oct. M7 Regional E-Warehouse REIT intends to apply for admission onto The Property Stock Exchange (Wholesale Segment). On admission, the company plans to acquire a portfolio of UK retail warehouses worth £120m from M7 Real Estate Investment Partners VIII. The portfolio currently comprises 18 retail warehouse properties across the UK totalling 978,317 sq ft and fully let to 53 occupiers. Rent collections for Q2 2021 stand at 93% and are expected to revert to 100% in the coming quarters. Castlenau Group to join the Specialist Fund Segment of the LSE’s Main Market. Castelnau was incorporated with limited liability in Guernsey under the Companies Law on 13 March 2020 as a closed-ended company limited by shares. The Company’s investment objective is to compound shareholders’ capital at a higher rate of return than the FTSE All Share Total Return Index over the long term. The Company is targeting an issue in excess of £170m. Sir Peter Wood, British entrepreneur and innovator, has committed to make a cornerstone investment of £25m in the Initial Placing. Due 18 Oct. Responsible Housing REIT to join the Main Market (Premium) raising up to £250m. The Company's investment objective is to generate a consistent and sustainable income-based return from the provision of Supported Housing accommodation assets and aligned sectors. The Company will acquire and create quality, fit-for-purpose accommodation assets to cater for supported residents across a number of care sectors including adults and young people with learning disabilities, mental health issues, physical disabilities, addiction, those with support needs, those in need of temporary accommodation, the elderly and otherwise vulnerable individuals. Central Copper Resources, a company focused on delivering a high grade copper project into production and exploration of assets in the Democratic Republic of the Congo (DRC) and in the Republic of Zambia to join AIM. By 2022, CCR intends to be ready to commence the project financing of its Mbamba Kilenda copper project. It pushed back its AIM float on 30th September from end September to late October. The amount to be raised is still yet to be confirmed. Our daily digest of news from UK listed Small and Mid caps Banquet Buffet Cornish Metals 13.25p £38.9m (CUSN.L) Appointment of Mr. Stephen Gatley to the Board of Directors as an independent non-executive Director. Mr. Gatley is a mining engineer and graduate of the Royal School of Mines, London. He spent the early part of his career working in the Cornish tin industry at both Wheal Jane and South Crofty mines and was the General Manager at South Crofty at the time of its closure in 1998. He also worked for Rio Tinto plc in senior positions at underground base metal mines in both Europe and South America, prior to joining Lundin Mining Corp. where he served as Vice President Technical Services from 2012 to 2021. In this position, he provided technical oversight to Lundin's operating mines and growth initiatives, including the acquisition and subsequent construction of the high-grade Eagle underground nickel/copper mine in Michigan, USA, the acquisition and subsequent expansion of the Candelaria copper open pit and its three underground mines in Chile and the acquisition and integration of the Chapada copper/gold mine in Brazil. Echo Energy 0.67p £8.8m (ECHO.L) Further to the Company's announcement of 5 October 2021, that it has completed the first in a programme of sixteen proposed well interventions and workovers to bring non-producing reserves back in to production at Santa Cruz Sur. The first intervention has now been successfully completed on a well in the Chorillos block. For the operation, a surface hydraulic pumping unit was used to induce flow and over a 100-hour period, the well delivered a cumulative 305 bbls of high-quality oil as part of this intervention and flow induction process, a rate equivalent to c.76 bopd. The intervention focused on assessing the production potential and delivery of high-quality oil at low water cut from a well last fully online in 2013. Prior to the intervention the relevant field was producing 17 bopd from a small number of active wells. The intervention and workover programme is in addition to the Company's previously announced programme of reactivating, at the appropriate time, previously shut-in wells at the Campo Molino oilfield and has been commenced in line with the current strategy of focussing upon production to deliver the highest quality and highest-priced blend oil production at Santa Cruz Sur. The Company intends to optimise the timing of when the well is brought into full production to maximise cost and operational efficiencies within the larger work programme for the Santa Cruz Sur assets. As previously announced by the Company, prior to the completion of the well intervention, liquids production net to Echo averaged approximately 290 bopd in September 2021. essensys 270p £174m (ESYS.L) The global provider of mission-critical software and technology to the flexible workspace industry, has renewed its strategic partnership with Industrious, the Group's largest and fastest growing customer. The new global framework agreement consolidates all existing business between essensys and Industrious and establishes the framework for essensys to support Industrious's global expansion plans. essensys currently serves 111 Industrious locations, comprising in excess of 3 million sq ft predominantly in the USA. The Group has recently supported Industrious's establishment in the UK. Kistos 365p £304m (KIST.L) The low carbon intensity energy producer pursuing a strategy to acquire assets with a role in energy transition announced that Peter Mann and Richard Slape are being appointed to the board of directors with immediate effect. Peter Mann is appointed as Chief Executive Officer and Richard Slape as Chief Financial Officer of the Company. Following these additions to the Board, Andrew Austin, founder of Kistos, will revert to his previous role as Executive Chairman (in place of the current Interim Chairman Richard Benmore) and will step down as Interim CEO. Richard Benmore will re-assume his role as a Non-Executive Director of the Company alongside Julie Barlow and Alan Booth. Peter Mann was CEO and Managing Director of RockRose from 2017 until 2021 following 5 years in the UK onshore oil and gas industry. During this period, Peter was responsible for business strategy and implementing a restructuring strategy in the difficult oil price environment at the time. Prior to joining the oil and gas industry, Peter's career included various management roles. He also served in the British Army for six years. Richard Slape was CFO of RockRose from 2019 until 2021. Poolbeg Pharma 11.38p £56.9m (POLB.L) The clinical stage infectious disease pharmaceutical company, with a capital light clinical model provides an update on new patent filings for its PredictViral™ platform that estimates disease severity and contagiousness in people who are recently infected with a respiratory virus. Expanding on existing PredictViral™ IP, these latest patent applications have been submitted in the UK and aims to protect a method of predicting whether an individual exposed to a respiratory virus (such as Influenza, RSV, hRV) will have a higher severity of disease and / or be more likely to be contagious. The Company will continue to focus on expanding its IP portfolio as required. Purplebricks 58.55p £179.6m (PURP.L) The UK's leading tech-led estate agent, today announces that Chief Financial Officer, Andy Botha, has stepped down from his role and the Board, effective from 31 October 2021. The Company is pleased to announce that Steve Long will be joining Purplebricks as Chief Financial Officer in Q1 2022. The Board would like to thank Andy for his valuable contributions to the Company, particularly for his work during a period of organisation transformation against the challenging backdrop of the Covid-19 pandemic. Steve joins from esure Group, the provider of market leading personal lines Motor and Home insurance, where he is currently Finance Director, Strategy & Transformation, responsible for the development, financial management and execution of the Group's strategic plans and transformation programme. Ideagen 285p £727.7m (IDEA.L) Ideagen, a leader in compliance software for highly regulated industries, has signed an agreement to sell the trade and principal assets of its Pentana Compliance business unit (formerly known as Redland Business Solutions) to StarCompliance, a leading provider of employee compliance technology solutions to the global financial services industry. Pentana Compliance provides solutions for the Senior Managers Certification Regime and associated training and competency services, focussed on the UK market. The Group had concluded that this offering was no longer in keeping with its focus on global software-based solutions for QHSE, GRC and Collaboration, and the proceeds of $21.3m in cash will be deployed in this strategy. Tekcapital 30.75p £40.2m (TEK.L) The UK intellectual property investment group focused on creating valuable products from investing in university technology that can improve people's lives, welcomed the U.S. Food and Drug Administration (FDA) has just released voluntary sodium reduction goals for the food industry "to provide measurable voluntary short-term (2.5-year) goals for sodium content in commercially processed, packaged, and prepared foods to reduce excess population sodium intake. This is a significant milestone for Salarius for the following reasons: The FDA guidelines should encourage snack food manufactures to reduce the sodium levels in their products across the board; Salarius anticipates this should have a positive impact on both B2B sales of MicroSalt® and retail sales of SaltMe! crisps; MicroSalt® as a brand could be viewed as a timely, nationwide solution, to help food companies meet these guidelines without sacrificing the full-flavour of their snack foods, which is key to their successful on-going sales. Xtract Resources 5.3p £44.8m (XTR.L) Preliminary unaudited results for all alluvial and hard rock mining contractors for the Manica Concession for the three-month period ended 30 September 2021. Total mining contractor gold production of 49.34Kg for the quarter, equivalent to approximately 1,586 ounces including initial hard rock production from Guy Fawkes of 170 equivalent ounces of gold Total of 13.60Kg (equivalent to approximately 437 ounces) attributable to Explorator. Value of Explorator share of gold produced US$784,998. Gold sales in period of 152 ounces Combined attributable revenue to Explorator from gold sales and other income for the Period amounted to US$373,781 Guy Fawkes development continued during the period and Fair bride progressed. Zoo Digital 125p £109.5m (ZOO.L) The provider of end-to-end cloud-based localisation and media services to the global entertainment industry, announces the launch of its mastering services division to support leading content creators to deliver for next day air on major streaming services and platforms. The mastering services division provides an additional revenue source for the Company and further enhances ZOO's position as a provider of end -to-end localisation and media services to the global media and entertainment industry. Mastering is the process of finishing or finalising a programme after post-production to synchronise the video and audio tracks, conform to technical requirements of the target platforms, and perform compression and encoding of the audio-visual materials. ZOO will provide mastering for both UHD and HD content, including next day air servicing for content on major streaming platforms. The service will be led out of ZOO's Los Angeles facility, which benefits from the latest hardware and software for mastering, QC and packaging.
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ZOO has provided a short trading update to accompany its AGM which will be held later today. The business is seeing strong momentum, driven by new production resuming and the migration of back catalogue content for streaming, coupled with further territory launches. H1 is expected to be slightly ahead of guidance with a considerable increase in EBITDA compared to the FY21 comparator, due the uptick in revenue and operational gearing. We make no changes to estimates at this stage (which we upgraded in August) but will review at the time of the H1 results likely due in November.
ZOO reports on current trading, including the expectation that its £2.56m loan stock will be converted before the FY22E half year-end. Management notes strong business momentum, which is expected to continue as new production resumes. We upgrade our FY22E revenue to $49.5m from $46m, but choose to leave EBITDA unchanged given the ongoing investment in production talent and regional hubs. The dilution impact from the conversion was factored into our previous forecasts. We expect the current strength to continue into FY23E, and we upgrade both FY23E revenue and EBITDA. We assume that the update on trading is being provided alongside the conversion news and expect potential further newsflow in September at the time of the AGM.
ZOO has delivered a very solid FY21 (to March) in line with the April update, with revenues up by a third and Adjusted EBITDA more than doubling. The group has navigated exceptionally well through the COVID-19 pressures, adapting its model, investing rapidly in new areas of growth and helping customers flex their own businesses to suit the new world. We see material long-term growth potential as customers continue to invest in content (both new and old) and ZOO’s skillsets and capabilities are clearly in demand.
Strong start to FY22E with a robust pipeline
ZOO Digital has successfully raised £7.4m ($10.3m) gross proceeds through an oversubscribed issue of 7.45m shares at 100p per share, a 6% discount to the 106.5p last closing price. The net proceeds are intended to bolster ZOO’s commercial position by supporting further scaling of the business, through growing the R&D team, including establishing a longer-range research function; establishing regional hubs for media services (India, South East Asia); expanding international business development and service delivery teams; increasing capital expenditure; and providing general working capital. CEO Stuart Green emphasises ZOO’s medium-term target to achieve $100m in sales and confirms the company’s plan to continue to invest for growth and win market share to become one of the largest end-to-end localisation and media service providers in an expanding global market.
ZOO Digital is continuing to benefit from a number of positive trends and industry shifts, such asthe launch of Disney’s “Disney+ Star” channels across multiple geographies, which UK-based investors will see available this week. This note contains commentary on Disney and Netflix – two of the largest market participants – as well as detail on the way the supplier base is evolving (further consolidation is under way). We also consider the likely “way out” for the industry as lockdowns ease globally and the significant backlog of content is released into production.
ZOO’s trading update in advance of its March year-end suggests that visibility continues to improve, and major new client projects have continued to deliver. A combination of a material back-catalogue focus across the industry, a growing acceptance of cloud-based dubbing, and a very modest return to new content production have combined to produce a robust outcome for FY21E, and we upgrade estimates. Just as importantly, the outlook for FY22 and beyond continues to improve, giving management confidence to invest in expanding ZOO’s dubbing service into new markets.
ZOO’s H1 FY21 included a tumultuous few months as COVID-19 effectively shut off work on new media content production which impacted subtitling projects, but studios rapidly adopted Cloud-based dubbing and the group’s digital packaging business enjoyed a dramatic rebound in fortunes. We note the positive commentary in today’s RNS and upgrade our FY21E and FY22E estimates to reflect the recent performance and, in particular, the exceptionally strong H2 trading that the group is enjoying.
ZOO Digital is one of the companies whose business models have stood it in good stead during the COVID-19 pandemic; its cloud-based platform has proved to be a key attribute over the last six months. Indeed, the changed working practices within the dubbing industry have helped to educate more potential users about the benefits of remote operating and the quality of performance that can be achieved when using the ZOOdubs platform. In our view, ZOO’s Capital Markets Day (CMD) presentations - a recording is available here - achieved a rare combination of being both informative and clear as to those operational benefits and the financial implications (a roadmap to U$100m of revenue) for the Group within an evolving market. We highlight some of the main messages from the speakers – from outside the company in several cases – which covered the market for localisation services, the use and benefits of ZOO’s platform and the technology behind the service.
ZOO has provided a short trading update to accompany its AGM which will be held later today. The business is performing well…double-digit revenue growth y/y across H1 is clearly a strong result given the market disruption, and is tracking very well towards our full-year figure. We make no changes to estimates (which we reinstated in July) but will consider revisiting them at the time of the H1 results in early November.
FY20 results Revenue was roughly flat on the prior year ($29.8m vs $28.8m) but the Adjusted EBITDA result was $2.1m compared to the 2019 outcome of $0.4m – a material improvement, driven by a higher mix of strong gross margin sales and also benefiting to the tune of c.$1m from the adoption of IFRS16. Net cash (pre the convertible loan) was some $0.7m, impacted by a new divisional relationship with an existing customer leading to some payment delays – the RNS explains that this abnormal working capital position has now “unwound” post the year-end.
Trading update confirms FY'20 trajectory
In a short trading update, ZOO states that trading in the first weeks of the 2021 financial year has been ‘encouraging’ with a ‘reassuring resumption in demand’. The group has also reiterated guidance given in its previous update in March for the financial year to 31 March 2020, for revenue and EBITDA of approximately $30m and not less than $2.2m respectively. Cash collection was much stronger than forecast and therefore cash at the yearend was $0.7m. We adjust our FY 2020E net debt expectations accordingly.
ZOO’s FY20 update suggests an element of delay in various projects towards the end of the year as Covid-19 has slowed customers’ projects. Revenue is now expected to be shy of our previous forecasts, at around $30m. EBITDA was also impacted, but to a lower extent, presumably on the basis of prudence in the estimates, and is likely to reach some $2.2m against our $3.6m estimate. We choose to withdraw our 2021 estimates, on the basis of the current confusion around Coronavirus impact, despite the group’s clear ongoing and building traction in its end markets.
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Pre-close trading update for FY20
Sensitising potential delays in filming
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We have refreshed our model and retain our Buy rating post the group’s analyst briefing. Our three key takeaways are: (1) the order book is robust with good visibility; (2) competition is consolidating; and (3) longer-term outlook is improving. Management’s guidance implies that our estimates, which were ahead of consensus into the interim numbers, are too optimistic. Our revised expectations are now more closely aligned with consensus. Our PT is unchanged at 140p.
Zoo Digital reported its interim results for the 6 months to 30 September this morning. Results were broadly inline with expectations set at the group’s AGM statement in mid-September, with an outlook statement that highlighted notable growth in the order book YoY and multiyear opportunities from new OTT customer relationships. The group is on track to meet market expectations (of US$35m revenues and US$2.8m EBITDA). We have a Buy rating on Zoo Digital.
ZOO has delivered H1 results in line with the group’s commentary at the recent AGM – revenues largely flat y/y, but with a strong EBITDA performance. We take the opportunity in this document to reflect on recent changes in ZOO’s end markets, and conclude that the opportunity is both growing and becoming more tangible. We make no changes to forecasts, other than to reflect IFRS 16 adjustments, but take material reassurance from the strong first half and the emerging evidence of success.
Interims are in line with the September trading update and unchanged forecasts, save for application of IFRS16. Revenue, excluding legacy DVD/Blu-ray services, grew 7%, while like-for-like EBITDA (pre-IFRS16) expanded to $1.2m from $0.5m (1H19) despite investment in facilities and products. As services-led competitors such as Deluxe Entertainment (in and out Chapter 11 in October) struggle with costs and industry changes, ZOO’s tech-enabled globally distributed pool of freelancers has expanded to 7,100 (1H19: 5,400). Benefiting from the catalyst of the emergence of major studio-backed OTT platforms, ZOO has developed strong relationships, solutions, and experience with Disney, NBC Universal and Warner confirming launches within six months, creating new ecosystems and opportunities. Leading the tech-led evolution of the industry, the period saw ZOO’s selection as a primary vendor for localisation & digital packaging for a major new OTT service; the adoption of ZOOstudio to manage localisation for a major media company; and after engaging with all the major players, ZOO is in prime position for further strategic partnership decisions as the platforms are assembled. Target 180p reiterated, and we repeat the mantra we’ve previously intoned – “not if, but when”.
ZOO has delivered a strong AGM update, highlighting a solid performance in H1 to date, with profitability buoyed by high-margin technical work. The industry appears to be (albeit very slowly) establishing procurement platforms to build and manage the multiple new systems needed in the rush to direct-to-consumer models. We make no changes to forecasts, but look forward to further announcements during H2 and beyond.
Three things stand out in Zoo’s AGM statement, which on net, we take as net positive: (1) a major new defacto streaming partner; (2) improved mix impact on EBITDA; but (3) no new studio contracts signed. The shares are down 22% YTD but rallied since May’s low of c.44p. With the balance of risk shifting and the shares trading on a modest 2.3x EV/sales for a fast-growing, profitable business, we believe anticipate a positive reaction from the market. We reiterate our Buy rating on Zoo with a target price of 140p.
Apple has committed to spend more than $6 billion on original TV shows and movies for its forthcoming Apple TV+ service, according to a Financial Times report on Monday. Apple previously said to expect its streaming service focusing on original content to launch in the fall, and the report says that Apple is looking to turn its service live in the next two months, before Disney+ launches on November 12.
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Walmart Inc's Indian unit Flipkart is set to roll out a free video service for all its 160m customers this month as the ecommerce company looks for new ways to increase its user base in smaller towns and cities, it said on Monday.
China launched a new Nasdaq-style tech board - the Science and Technology Innovation Board, or "STAR Market" - on which 25 companies were listed, as the country attempts to address investor concerns like market volatility and lack of governance. ITV and BBC have outlined plans for a new streaming service named BritBox which will cost £5.99 per month. The broadcasters are joining forces to set up the subscription service in the UK as a rival to the likes of Netflix, with the expected launch between October and the end of December. Medallia surged more than 75% in its market debut on Friday, becoming the latest cloud software company to attract public market investors. The San Francisco-based company, which sells software tools to help companies monitor customer satisfaction, was initially priced at $21 per share but broke the $35 per share mark soon after trading began.
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Netflix reported a disappointing set of Q2 results overnight (judging from the shares down ~10%) with limited readacross to Zoo Digital, in our view. Netflix’s lacklustre performance is not a major surprise to us, given its recent aggressive US price hike and mounting competitive pressure from Disney, Amazon and others, as their respective OTT services launch. We highlight that Disney is positioned to become the most active in the localisation space on a short term horizon. We reiterate our Buy rating on Zoo Digital given its strategic focus on diversifying its client base this year, with benefits likely to flow from its historical ties to Disney
Shares of Netflix were down 12% after the company released its earnings report for its second quarter of 2019 Wednesday. The results showed a rare loss in U.S. subscribers and a large miss on international subscriber adds. SoftBank Group Corp founder and Chief Executive Masayoshi Son said on Thursday that there is a dearth of investment opportunities in Japan, which he said is lagging in the race to develop artificial intelligence. eBay is moving forward with a potential sale of ticket exchange company StubHub, sources told CNBC's David Faber. The sources said eBay is still early in the process but note there are "Multiple" parties interested in buying StubHub.
Samsung said on Friday that profits for the three months that ended June more than halved from a year earlier following continued weakness in the price and demand of memory chips. The world's largest smartphone maker and supplier of memory chips said operating profit was at $5.5bn, which was slightly better than an industry estimate of $5.1bn but was down about 56% from a year earlier. Netflix has announced it's taking a long-term lease on Shepperton Film Studios near London. Its plan is to create a dedicated UK production hub, including 14 sound stages, workshops and office space at the site owned by the Pinewood Group. Digital bank Monese and PayPal have launched a joint service that allows customers to "Seamlessly" manage their accounts. Customers at the London-based bank, which operates across 31 European countries, will be able to add their Monese card to a PayPal digital wallet, allowing them to buy and sell to any of the payments firm's 277 million consumers and merchants around the world.
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FY19 results are fractionally below expectations which were lowered in April. The group continues to await news in relation to its potential involvement in a number of “preferred vendor” programmes which are expected to accompany some major changes in the content market. With this backdrop, ZOO is signalling greater caution around the phasing of revenue expectations from one of its major clients. We downgrade our FY20E estimates to reflect these issues around timing and ramp-up, but we note that much of the current uncertainty is being driven out of the material upheaval and (long-term positive) change under way. Despite today’s disappointment, our view of the market opportunity and ZOO’s positioning is unchanged.
Prelims are in line with the April trading update, delivering EBITDA of £0.4m in FY19 including break even (£-0.08m) 2H performance – with 2H free cash flow of $1.4m. Disruption in the year due to Netflix supply chain changes, where ZOO remains a Preferred Fulfilment Partner, has slowed down net momentum, however the number of major studios taking cloud based dubbing services has doubled (to eight) in FY19; and FY20 is the year for decision making amongst a series of major studios for whom ZOO is a realistic choice as preferred vendor. For the time being, that decision making remains protracted and we restrain revenue forecasts for FY20 by $5m (-13%), with the operational gearing reducing EBITDA to $2.5m (-37%), albeit displaying 522% growth from FY19. With initiatives such as the ZOOstudio and ZOO Enabled Dubbing Studio programmes to accommodate existing preferred studio practices, ZOO remains on the front foot for opportunities. At the same time, the market dynamic for digital content localisation continues as further platforms challenge Netflix’s leadership – each representing new large potential clients. We reiterate our belief that ZOO’s blossoming is a case of when and not if, and look forward to studio wins and the subsequent revenue flow. Target 180p reiterated.
Zoo Digital has announced the appointment of Ms Gillian Wilmot to the board as the new Chairwoman, replacing Roger Jeynes following his nine year tenure. The release highlights Ms Wilmot’s extensive experience in a number of bluechip institutions in the past across a range of sectors, with some exposure to disruptive technology. We take the opportunity to highlight the value proposition given the shares remain 34% below its starting point this year, with some signs of positive momentum in the wake of the results update. We reiterate our Buy rating on Zoo
The BBC and Sky are both stepping up their efforts to counter the growing threat posed by the video streaming services of Netflix and Amazon. Sky, the European pay-tv and broadband provider that was bought by Comcast for just over £30bn last year, said on Wednesday that it would more than double its spending on original programmes to more than £1bn a year by 2024.
We note the substantial international success of Disney’s Avengers franchise (more broadly, Marvel) and highlight the positive readacross for the growth of the currently c. US$4bn localisation market. As themes of globalisation play out, we believe localisation market growth is likely to accelerate. Zoo Digital is very well positioned to exploit such trends, with long-standing relationships with a number of leading studios and streaming services alike, in our view. The shares have approximately halved year to date. We view the current level as a compelling entry point and reiterate our Buy rating.
Today’s year end trading update from ZOO points to the group’s strong market positioning and readiness to benefit from the expected significant demand for its premium services. The RNS confirms that revenues for FY 2019E will be in line with levels to which it guided in January, albeit slightly below our estimate. The January update stated that a steep decline in legacy “packaging” work (on DVD and Blu-ray) and the cancellation of one unusually large order were behind reduced guidance. We make a further small reduction to FY 2019E EBITDA as the latest update confirms that H2 will be around breakeven after ZOO reported $0.5m for H1. For the moment, we leave FY 2020E estimates unchanged as we await further detail in the final results announcement, scheduled for the week of 24 June 2019.
Zoo Digital’s 51% share price decline YTD presents a compelling opportunity, in our view, for two reasons: (1) our analysis suggests Zoo’s current valuation implies an implausible 30% cut to revenues –equivalent to the group losing its largest streaming customer; and (2) we view Apple’s upcoming press event (Cupertino, 25 March) and the NAB conference (Las Vegas, 8-11 April) as key catalysts. We continue to believe Zoo is well-positioned to capitalise on the increasing demand for localisation services, driven by streaming content providers. We reiterate our Buy rating and price target of 140p.
A confluence of factors is pressuring Apple to shift its long-standing focus on hardware to a mix of software and services to drive the next leg of its growth. We believe the group’s media strategy (so far successful in music but unproven in video) will become a core focus and ultimately, heavily dependent on the success of creating original content. Despite spending US$1bn on video content in 2017, Apples commitment thus far to TV and Film has been negligible in comparison to other OTT competitors. Press speculation implies (source: FT/Lex) that Apple will need to spend more on original content suitable for a global market, deploying its considerable US$285bn cash balance. We believe growing OTT spend on content will directly drive demand for localisation services, with Zoo well positioned to capitalise on this trend.
We believe the significant skew of VPN access in Asia to entertainment demonstrates a hidden appetite for Western media content, supporting our thesis on Zoo Digital. In our view, streaming demand growth will be driven by urbanisation and globalisation trends outside of North America and Western Europe. We believe Zoo Digital is well positioned to exploit such trends and reiterate our Buy rating.
We believe Zoo offers compelling exposure to secular trends in media consumption through a fast-growing and cash generative business model. Early success in the group’s recent expansion into dubbing and an expanding client list underpin our confidence in the group capturing buoyant market growth. The shares have corrected by c.50% since peaking in July 2018. We view the current price as a compelling entry point and initiate coverage with a Buy rating. Our 12m PT is 140p.
ZOO Digital (“ZOO”) has announced a likely shortfall in revenues for the year to March 2019. The group has seen a double whammy – a steep decline in legacy (but high margin) “packaging” work on DVD/Blu-ray, and the cancellation of one unusually large order from one of its major customers. We make material reductions to 2019E EBITDA, but leave 2020E unchanged as the medium-term outlook remains bright.
Strong 1H19 y/y revenue growth of 17% (to $14.9m) should not be overshadowed by restrained gross margins in the period (33%) caused by mix effects and increased investment costs. The Group notes that 2H19E trading has begun ‘extremely positively’. We anticipate that margins will expand, estimating a FY2019E gross margin of 35%, as subtitling volumes recover, ZOOdubs moves to a more mature state and ZOO’s investment in capacity and technological enhancements allow it to capitalise on buoyant market dynamics which should exhibit its scalability. Aside from tweaks to depreciation and cash, our FY2019E estimates are little changed.
Interims report performance in line with the AGM statement and unchanged forecasts. 1H19 revenue growth of 17% (vs FY19E 18%) demonstrates resilience in a period where partial revenue hiatus from a major subtitling customer was offset by extraordinarily strong growth from dubbing revenue. The 2H restoration of higher than former (pre March) levels of business at the major subtitling customer – as well as continuing dubbing strength – de-risks expectations, with board confidence demonstrated in ongoing investment in capacity for revenue growth. As the content industry consolidates (Disney/Fox) and invests in content (Netflix: $8bn), the customer base is focused on delivering both efficiency in process and costs, and maximisation of revenue per title through language localisation: ZOO’s cloud-based product set delivers a collaborative approach to localisation that historically eluded studio restrained processes. As the freelancer network expands, technological capabilities continue to advance, and geographical reach of the group extends, we look forward to strong growth in the business into 2H19 and beyond. Target 180p reiterated.
ZOO Digital’s Capital Markets Day highlighted the positive backdrop for the media localisation market - the preparation or modification of film or TV content to make it consumable for international audiences - and the Group’s leading position within that market. As a provider of services to showcase, localise, and distribute TV and movie content globally, ZOO’s proprietary cloud-based ecosystem presents a high barrier to entry for competitors, supports its subtitling, dubbing and digital package offering in a secure manner while providing cost & time efficiencies to its clients. We believe that its end-to-end offering differentiates ZOO from its competitors leaving it well placed for continued strong organic growth. We also note that the robust market dynamics in the home entertainment market continue to underpin ZOO’s prospects. We make no changes to our estimates ahead of the Group’s interims due on the 6th November.
ZOO digital released its AGM statement today highlighting continued positive momentum within the Group. The Group expects to meet FY2019E expectations driven by the increasing success of its cloudbased dubbing service, its expanded service offering, world-wide operational capabilities and robust global market demand for localisation services. We leave our estimates unchanged ahead of seeing the detail of the interim results due on the 6th November.
ZOO Digital released robust FY2018 results today delivering $28.6m of revenue in FY2018, 2% ahead of our forecast, and representing a 73% Y/Y increase. FY2018 saw the Group solidify its reputation as a significant player in the localisation market with the launch of innovative technologies such as ZOOdubs. The outlook for the market and the group remains buoyant with the board confident the Group is ‘just entering an exciting period’. We reflect that in our newly published FY2020E forecasts.
After upgrades during the year, ZOO has delivered EBITDA of $2.4m ($2.3mE) from revenue of $28.6m ($28.0mE), demonstrating impressive growth rates of 35% and 73% respectively, including 149% growth in Localisation revenue (subtitling and dubbing). Localisation services, elements of the suite of ZOO’s broader cloud-based platform, deliver the ability for content providers to commercialise their content in more languages and territories at a pace and cost which outperform any alternatives. Matching client demand, the clients being both the largest and best known in Hollywood as well as the household name online platforms, the company continues to invest in overseas partnerships of ‘talent’ to deliver further languages and capacity in addition to the 5,000 strong ZOO network. The group delivers momentum from playing to the video media zeitgeist of enabling content delivery over any device, anytime, anywhere – fulfilling the practicality of rolling out a film in 30 languages to 50 territories at the same time, rather than the former practical limit of the typical maximum 10 languages. We nudge up FY19 forecasts (revenue 5%, EBITDA 2%) and introduce FY20 forecasts with 19% revenue and EBITDA growth: continuing revenue momentum alongside further investment and a healthy balance sheet. Twelve-month target price lifted to 130p (116p).
ZOO Digital is a provider of services to showcase, localise, and distribute TV and movie content globally. ZOO is targeting a very large, fast-growing market with a high quality agile proposition that is both scalable and efficient. Over the last few years, ZOO Digital has been rapidly growing market share, supported by its proprietary cloud-based technology which drives quicker time to market, to a high standard and attractive price point. We believe the robust market dynamics in the home entertainment market experienced over the last few years appear set to continue, which should positively underpin ZOO Digital’s prospects.
Momentum has continued in H2, such that the company now expects FY18E sales and EBITDA (of at least) $28.0m (prev: $26.0m) and $2.3m (prev: $2.0m), implying impressive y-o-y growth of 70% and 31% respectively. In view of this update, we upgrade our FY18 forecasts (sales: +8%, EBITDA: +16%) but make n/c to FY19E. Having said this, given our forecasts now imply just 14% sales growth in FY19, we believe there is a strong likelihood of future upgrades. ZOO remains one to watch.
Following a conversation with management, we now have better visibility on operating costs, specifically the split between SG&A and service delivery staff. These insights suggest existing FY19E cost estimates are overly conservative and consequently we upgrade FY19E EBITDA by $1.1m. N/c to FY18E or valuation, which is revenue dependent.
Revenue of $12.7m is in line with September’s update and confirms a strong H1, with sales growth of 63%. We lift FY18E sales from $21m to $26m (implying 58% y-o-y growth), while reiterating essentially unchanged profit expectations, reflecting greater investment than anticipated. We also introduce maiden FY19 forecasts and upgrade our price target to 97p.
Over the last 18 months, ZOO has enjoyed strong growth thanks to the success of its ZOOsubs, and more recently ZOOdubs, cloud software platforms, together enabling ZOO’s localisation services. The focus of this note is to examine the sustainability of this positive trend.
ZOO Digital is an established provider of a comprehensive range of digital distribution services to blue-chip companies in the TV and film industries and is currently experiencing strong growth (FY17E sales: +39%) thanks to industry tailwinds and, in turn, a growing demand for its support services. The company has raised £2.5m of new equity (subject to GM approval) to capitalise on this favourable environment and scale accordingly.
ZOO Digital (ZOO)*: Prelims (CORP) | Shanta Gold (SHG): Exploration update (BUY)
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