12 Companies to follow in 2022
What a year! From the storming of the US Capitol in January, and Joe Biden becoming 46th US President to a Cargo ship getting stuck in the Suez in March then Prince Philip, The Duke of Edinburgh, passed away in Windsor Castle, just weeks shy of his 100th birthday in April.
Elon Musk’s SpaceX, took off from the company’s Boca Chica, Texas in May, and “Delta” took us on a new twist in the Covid saga.
Chelsea won the Champions League (again!) and England lost a penalty shoot out (again!)
…then we all had to have more jabs than Frank Bruno and Omicron became a household name.
And the Stockmarket? The FTSE100 index hit a 22-month high this week and has had the best performing year since 2009 closing up around 15% and coming within touching distance of the levels seen in February 2020 just before stock markets around the world were sent into a tailspin by the first European lockdown. Small Caps? Started off well, then like a damp firework fizzled out around March/April for a really flat last 6 months or so of the year.
But the Global recovery in Markets puts it in good stead for the year ahead, and means a run at the pre-pandemic highs could still be possible if Omicron concerns can be kept under control and earnings continue to recover in the fashion they have throughout 2021. So, with a decent December and markets “feeling” stronger, time to look at some small cap names for a stellar 2022?
When it comes to individual equities as always there have been some notable laggards and a few surprise leaders. Here, we have selected a dozen “alternative” companies to follow for 2022 that have a varied company business model from investment funds to biotech, and cannabis extract to property portals.
Companies covered include :
#GUN #HMI #HEMO #JADE #LIFE #NZI #OTMP #ORPH #POLB #SEED #TIME #VRS
Gunsynd Plc (AIM:GUN) is a small investment fund with a big reach, with interests encompassing gold, battery metals, avant-garde Japanese whisky, YouTube sports channels, and mental health treatments. Offering seed capital, convertible loans, straight equity, and IPO and reverse takeover management to promising enterprises, the company looks for first movers in emergent and established markets.
It has a 17.34pc holding in Rincon Resources, a gold and copper exploration company focused on three projects in Western Australia. A maiden drilling programme got underway this year at the largest, South Telfer, has so far reported high-grades zones up to 17.4g/t gold and 5.31pc copper with mineralisation open in all directions. A diamond drilling programme to test Iron-Oxide-Copper-Gold targets at the Kiwirrkurra Copper-Gold Project is planned for H1 2022. The third prospect, the Laverton Gold Project, comprises exploration licences within the Mt Margaret-Murrin Greenstone belt.
Gunsynd has a significant interest in another copper and gold miner, Eagle Mountain, focused on the Oracle Ridge and Silver Mountain Projects in Arizona, situated within the compass of the Laramide Arc which hosts the copper porphyry deposits mined by BHP, Rio Tinto, Freeport McMoRan and Hudbay. Late last year Eagle reported a JORC Mineral Resource Estimate at Oracle Ridge of 12.2 Mt at 1.51pc copper, 16.3g/t silver and 0.19g/t gold for 184 kt copper, 6.4 Moz silver and 73 koz of gold. Access work for operations is underway.
Gunsynd is accumulating a growing cluster of smaller mining investments. These include acquiring a 7.14pc interest in Charger Metals Limited, an Australian base metals and lithium exploration company, a stake in Anglo Saxony Mining Limited, an unlisted tin development and exploration company with plans to establish sustainable tin production and processing from the Tellerhäuser Mine in Saxony, Germany, a holding in Pacific Nickel Mines, which has interests in two nickel projects in the Solomon Islands, and a stake in Empress Royalty Corp, a precious metals royalty and streaming company focused on developing financing solutions for mining companies.
Gunsynd’s other interests are highly eclectic. It has a 28.48pc stake in Rogue Baron, an emerging premium spirit and wine brand that has made impressive progress with its flagship brand, Shinju Japanese Whisky. The company, which is planning to launch a second brand next year, aspires to emulate the BrewDog model, is making inroads into the US market, where sales rose 57pc last year, and this year into the UK.
Gunsynd has a £265,000 investment in Low6, a white label betting platform service for sport franchises. Low6 draws on gamification principles to encourage younger generations to a chance on the fortunes of their teams. Customised versions of the app have now been rolled out to some 80,000 users, customers including Rangers, Manchester United and Arsenal. Gunsynd also has a £200,000 stake in Oscillate plc, which invests in potential treatments for mental health issues, including drug-resistant depression, anxiety, addiction, and post-traumatic stress disorder.
Gunsynd undertook fundraises last year to build a £2.3m war chest for its current round of investments. Its most recent set of results stated a profit for the year to 31 July 2021 of £2,012,000 (2020: loss £991,000), net assets of £6,303,000 (2020: £2,470,000), and cash balances of £1,071,000 (2020: £838,000).
Gunsynd’s share price has subsided this year as its investments have reported steady rather than spectacular progress, drifting down from a January high of 2.35p to around 0.8p at the time of writing. Several holdings seem to be slow burners, backing companies just getting off the ground. Rincon Resources or Eagle Mountain, with ongoing programmes, however, offer potential near-term value catalysts.
Harvest Minerals (AIM:HMI) continues to promote KPFértil – a direct application organic fertiliser that doesn’t require significant processing or chemical alteration – to Brazil’s huge commodities market. Although the country’s agricultural sector accounts for a third of its GDP and nearly half of its exports, it still depends imports for its fertiliser, buying more than any nation other than China.
Harvest produces KPFértil at its wholly owned plant at Arapuá in the state of Minas Gerais to the south east of the country. Though the company is currently focused on producing and promoting its flagship fertiliser product, it also has exploration licences for a phosphate prospect at Mandacaru in the state of Ceara to the north of the country, which has a JORC (2012) compliant total resource of 4.38 Mt at 4.55pc phosphorus pentoxide, and in November acquired the advanced stage Miriri Phosphate Project in the state of Pernambuco, with inferred resources of 4.8 Mt. The company also has plans for a potash project in the Sergipe Alagoas Basin, also to the northeast, and close to Brazil’s only producing potash mine at TaquariVassouras.
Harvest has secured permits to expand Arapuá’s mining area four-fold to 78,894 square metres, and its storage capacity three-fold to 30,000 tonnes, giving it the flexibility to begin to step up production to a targeted 400 kilo tonnes per year. A major breakthrough was the approval of the product as a source of potassium and phosphate for coffee plants, confirming it can be used to replace conventional coffee fertilisers.
The company entered 2021 seeking to take advantage of a strong upturn in demand in its target markets, the Federation of Agriculture and Livestock of the State of Minas Gerais reporting that production in the region hit a new record in last year of $18.7bn, 24.3pc up on 2019. The company’s most recent interims, to the half-year ended 30 June 2021, reported sales of 26,726 tonnes of KP Fértil, a 171pc increase over same period for the previous year. An October update said it had exceeded its total 2021 sales target of 80,000 tonnes of KP Fértil more than two months ahead of schedule. Harvest also started to promote KP Fértil in regions beyond its immediate markets in Minas Gerais and Sao Paulo.
In addition to the sales push the company took its first steps towards engaging with the agriculture limestone market, a soil input used by regional producers of different crops to neutralise soil acidity. Harvest acquired the mineral rights over an area prospective for the exploration of agriculture limestone some 168km from the Arapuá project, where it is planning a preliminary assessment of the site’s geological potential with a view to carrying out an exploration programme that would follow the same strategy used to define and advance the now producing Arapuá deposit.
Sales helped boost the company’s revenue for the six-months to 30 June 2021 from $299,449 to $790,224, and its gross profit from $113,481 to $376,111. At the end of the period it had cash of $2,237,583. Harvest has installed a solar power facility to power Arapuá, facilitating an expected annual saving of 7pc in energy costs.
Since commercialisation less than two years ago Harvest Minerals has extended its product’s reach and secured repeat orders from key clients, progress reflected in a share price that has climbed this year from just over 2p to 4.25p at the time of writing. With rising sales, an operating plant with capacity to handle higher demand, proven environmental credentials, and a seeming bottomless market to reach out to, Harvest Minerals is one to watch in 2022.
Hemogenyx Pharmaceuticals (LSE:HEMO), a biopharmaceutical company with facilities in New York and Belgium, is developing new medicines and treatments to treat blood and autoimmune disease.
Its research focuses on less invasive and more accessible forms for bone marrow transplantation (BMT), a well established treatment for blood cancers such as acute myeloid leukaemia and lymphoma, and severe autoimmune diseases like multiple sclerosis, aplastic anemia, and systemic lupus erythematosus. Preparing patients for the procedure, however, requires a tough conditioning process involving the use of radiation that can have severe side effects, including damage to the heart or lungs, thyroid problems, fertility problems, bone damage, and development of other cancers years later. Many who might be helped by the treatment are too weak to go through the preparatory phase.
Hemogenyx is pioneering techniques that would facilitate a much gentler conditioning process, open the life saving potential of BMT to patients currently too weak to receive it. The company is exploring the potential of CDX cells that, when identified, isolated and applied, have the capacity to act as antibodies, redirecting a patient’s immune cells to eliminate unwanted leukaemic and blood stem cells, thereby preparing a patient for bone marrow transplantation. Use of these cells would eliminate the need for chemotherapy or radiation and their toxic side effects. In addition to elaborating CDX antibodies Hemogenyx is developing what it calls ‘HEMO-CAR-T’ immune therapy, a treatment in which a patient’s own ’T cells’, a type of immune cell, are modified to recognise and kill cancer cells. The company is also marketing the modelling techniques developed in the course of researching its treatments.
Hemogenyx’s research has also identified antibodies that may work against Covid, and a host of other viral pathogens. The company’s current focus is to develop its CDX antibodies and HEMO-CAR-T therapies to the point of clinical trial, after which they can be brought to market, and to continue to research Covid-19 treatments.
Hemogenyx completed its CDX antibody earlier this year, in partnership with pharmaceutical company GlobalCo. The next step is to complete the Investigative New Drug (IND)-enabling pre-clinical studies that are needed in submit an application to US regulators to begin clinical trials. The company has also advanced its HEMO-CAR-T project, entering into a Master Translational Research Services Agreement with the University of Pennsylvania to press ahead with clinical trials. A contract development and manufacturing organisation has been engaged to manufacture DNA plasmids and viral vectors for the production of HEMO-CAR-T for clinical trials
Last year Hemogenyx entered into a loan note facility that many investors considered too expensive. But the company argues the agreement, now replaced by equity capital, opened up £12m new funds that allowed it to progress its projects more rapidly than would have been otherwise possible. During the six months ended 30 June 2021 Hemogenyx recorded a loss of £3,632,338 (2020: £835,189 loss) due to operational development and research, and diversification of activities made possible by the fundraising completed in February 2021. The company had cash and cash equivalents totalling £10,536,668.
Hemogenyx’s share price has fallen this year from just under 8p to less than 2p at the time of writing: its stock had been somewhat inflated by association with a possible Covid treatment, and was hit by disagreement regarding its financing arrangements. At such a low price, however, biotech investors might want to follow Hemogenyx as its moves towards securing licences for its potentially groundbreaking bone marrow treatments.
Jade Road (AIM:JADE) is an investment fund focused on providing growth capital and financing to Asia’s SME sector. The company is currently working through a strategy focused on exits, the restructuring of legacy assets, and new investments in smaller fast growing companies at IPO or pre-IPO stages, particularly in the healthtech, medtech and fintech sectors. The plan is to limit single country and industry exposures to 20pc of the overall portfolio and reduce portfolio exposure to China towards 30-40pc in the near term. Investments in each company will not exceed 5pc of the total allocation, in order to mitigate risk through diversification.
At present Jade has substantial stakes in Future Metal Holdings Limited and Meize Energy, from which it wishes to execute full or partial exits. Future Metal Holdings is focused on a dolomite quarry project in China, and Meize Energy is a privately owned company designing and manufacturing blades for onshore and offshore wind turbines.
Jade has a significant, but somewhat troubled, holding in Fook Lam Moon (FLM), a Hong Kong-based restaurant group that was hit hard by severely limited inbound tourism, particularly from mainland China. Jade is optimistic that the 70-year-old company, which has weathered past crises such as SARS, will come through the crisis. An update earlier this month however said that changes in FLM’s ‘underlying group structure’ had cast doubt on its controlling share: more details will follow.
Jade has a stake in the Infinity Capital Group Limited, which holds units in a luxury hotel-condominium called Tellus Niseko, a development in Hirafu Village, close to the Grand Hirafu ski lifts. Tellus Niseko is in late stage discussions with several buyers in the Asia-Pacific region to sell a number of units in the development.
It also has a holding in DocDoc, a Singapore-headquartered online network of over 23,000 doctors, 600 clinics, and 100 hospitals serving a wide array of specialities. DocDoc uses artificial intelligence, clinical informatics, and proprietary data to connect patients to doctors which fit their needs at an affordable price. In November DocDoc reached an agreement to expand into Malaysia, Thailand, Hong Kong, India, and China.
Jade’s most recent results stated total income of $1.25m (H1 2020: US$1.19 million), and cash of $2.56m (30 June 2020: US$3.2m). Consolidated NAV at 30 June 2021 decreased slightly by 0.25pc to $106.2m (31 December 2020: $106.5m).
This is a transitional time for Jade, whose share price has fallen from 25p earlier in the year to 7p at the time of writing, much of the value lost following the update regarding FLM. The company is under pressure to execute its transition strategy. If it can, it may be able to take advantage of the demand within the Asian SME sector for capital: Jade says it is assessing a strong pipeline of investee candidates.
CBD and hemp supplier Love Hemp (AQSE:LIFE), preparing to list on the LSE Main Market, spent 2021 working to position itself in an increasingly competitive retail cannabis extract market, investing in its brand and the expansion of its high street and online sales channels.
The company offers more than 40 CBD wellness products designed for physical and mental health, including oils, oral drops and sprays, capsules and ‘edibles’ – CBD-infused jellies, chocolates and sweets. Mindful of lingering popular misconceptions about cannabis products, Love Hemp presents itself as a ‘high quality, perfectly pure CBD brand’. It was one of the first British CBD companies to subject its products to testing by certified third-party laboratories. The company’s products this year received BSCG Certified approval from the Banned Substances Control Group, a leading third-party certification and testing provider of dietary supplements and natural products.
Love Hemp’s preparations to list on the LSE to gain wider access to capital markets have been accompanied by a significant expansion of its retail channels. The company has extended its commercial reach in UK and Ireland, ensuring the brand is available in more than 2,000 UK shops. Other distributors include Ocado, Alliance Healthcare Distribution Ltd and CLF Distribution.
The company also continues to expand its online reach, passing the compliance process necessary to launch a dedicated store on Amazon, and taking its first steps into the Asian market, signing a distribution partnership with eCargo Holdings Limited that will allow it to establish a presence on Hong Kong and South East Asian retail channels and later expand into India and Japan.
As well as strengthening its sales channels the company has invested heavily to promote Love Hemp as a physical and mental health brand. It made waves in June with the signing of a three-year endorsement agreement with two-time heavyweight boxing world champion and Olympic gold medallist, Anthony Joshua.
Love Hemp’s most recent full year results reported revenue of £4.33m, a gross profit of £1.25m, and a cash balance of £0.925m, somewhat depleted following significant marketing investment. The company raised over £10m in equity over the period, which will be invested in targeting new geographies including the United States, Europe, and Japan and brand expansion through partnerships with Anthony Joshua and the Ultimate Fighting Championship.
Love Hemp is working to position itself to benefit from trends towards liberalisation and improved public understanding. With its ambitions to list on larger bourse, its investment in its commercial channels, and endorsements from big names like Joshua, the company is evolving an implementing a robust strategy to take advantage. Investors seeking exposure to one of the most exciting new global markets should look closely at Love Hemp in advance of its move to the LSE.
Net Zero Infrastructure
LSE newcomer Net Zero Infrastructure (LON:NZI) is a special purpose acquisition company (SPAC) set up to acquire a business in the clean and renewable energy sectors.
Net Zero went public on 15 September raising £1.5m, and stating that ‘due to the highly visible global concerns regarding environmental damage and climate change as a result of fossil-fuelled power generation, there exists considerable commercial opportunities in the renewable and clean energy sector’.
The company is chaired by Michael Ellwood, a corporate banker, and former Managing Director of RBS Structured Finance, and Head of Corporate and Commercial Banking at Santander UK Ltd. Other Board members are Alejandro Ciruelos, another Santander veteran, a Managing Director at Sustainable Development Capital, and a former witness to the UK Energy and Climate Change Committee; Brian Basham, a former investigative journalist, M&A communications specialist and entrepreneur; and Lord James Wharton, a former Tory MP who served as the Northern Powerhouse Minister at the Department for Communities and Local Government.
It’s early days for Net Zero: investors interested in green technology may want to add it to their watchlists for 2022. The company’s share price is currently 3.6p.
OnTheMarket (AIM:OTMP), the UK residential property portal provider, is seeking to continue to take advantage of a strong British property market.
The portal is known for its ‘New & Exclusive’ feature, that allows agents to make properties available to view at OnTheMarket.com 24 hours or more before they appear on rival services such as Rightmove or Zoopla. The company is in the process of managing a shift in its model, asking agents previously on long-term free of charge contracts to migrate to paying contracts in order to continue listing at OnTheMarket.com. This led to a reduction in agency branches listing during H2 20/21, but seems to now be paying off: the number of branches is up 5pc since 31 January 2021, to 11,198.
OnTheMarket’s most recent interim results reported positive results reflecting a strong market. The number of branches listing their properties exclusively on the portal increased from 700 in March to 968. New homes advertisers grew during the period by 6pc, to 2,164 developments listed at 31 July 2021 from 2,042 at 31 January 2021, and 43pc on 31 July 2020. There was decent growth in both traffic and average monthly leads per advertiser, up 36pc and 26pc respectively, with 159 million visits and 132 leads per advertiser per month. These metrics represented growth on H2 20/21, a period of intense activity as consumers sought to move as lockdown ended.
Revenues and ARPA – average revenue per property advertiser – both grew strongly, up 46pc and 52pc respectively, helped by the greater number of agency branches under paying contracts. The company achieved an adjusted operating profit of £2.1m (H1 20/21: £0.8m) and a profit after tax of £0.5m (H1 20/21: £0.7m). OnTheMarket held net cash of £9.6m and no borrowings as at 30 September 2021.
The company anticipates revenues for the full year to 31 January 2022 to be slightly ahead of expectations as the property market continues to perform strongly: though sales and lettings instructions remain subdued demand for residential properties in the UK has remained at very high levels. OnTheMarket’s share price has been on an upward curve since the summer, up from 82.5p in May to just under 110p.
Open Orphan (AIM:ORPH) hit the headlines earlier this year when it worked with the UK government’s vaccines task force to organise the first Covid human challenge trial, in which some 90 volunteers were deliberately inoculated under carefully controlled conditions with a version of the virus to test its impact on the immunity system.
The company signed a £3m contract with Imperial College London in May as part of a Wellcome Trust funded initiative to manufacture a Covid challenge virus. But Open Orphan’s ambitions extend beyond Covid, to developing treatments for the wider infectious diseases pharmaceuticals market. The pandemic has highlighted decades long neglect of investment in fresh treatments for continually evolving respiratory and infectious diseases like the common cold and influenza. Governments and pharmaceutical companies across the world are now sinking billions into new drugs generating a market forecast to grow from $20bn in 2019 to $250bn by 2025. Open Orphan is developing a growing range of human challenge trial services that now encompass Covid, Respiratory Syncytial Virus (RSV), influenza, asthma, human Rhinovirus hRV, and malaria.
The company owns Venn Life Sciences, a drug development, clinical trial design and execution consultancy, and hVIVO, which conducts challenge studies for several respiratory viruses. It has clinics and screening centres in London and Manchester that allow it to screen more than 500 volunteers each week.
Open Orphan’s financial fortunes soared in 2020, allowing it to record Q4 revenues of £22m, up from £3.5m for the previous year. This year it has continued to make progress in pursuit of its aim of winning new and repeat contracts with leading pharmaceutical companies, including an £8.1m agreement for asthma challenge tests, a £5.7m agreement for testing influenza antiviral therapeutics, and a renewed £1.5m contract with a Big Pharma client to provide dedicated clinical pharmacokinetics support for an array of drug development programmes. Earlier this month the company signed a £5m influenza human challenge study contract with a client developing an antiviral drug for protection against respiratory viral infections.
Open Orphan’s most recent interims reported revenue of £21.9m, up from £6.4m in H1 2020, and an EBITDA profit of £2.1m contrasted with a loss of £4.1m in H1 2020. The company is keen to emphasis its core work beyond Covid, which is expected to account for around 70pc of its 2021 full year revenue mix, earning a projected £50m in 2022.
With its substantial investment in challenge trials Open Orphan continues to make solid progress in establishing itself as a go-to partner in the complex process of bringing new treatments to market. With a coherent business model in place for positioning itself in a fast growing sector the company is one for biotech investors to watch in 2022: its share price is currently around 22p, but was as high as 40p earlier in the year.
Poolbeg Pharma (AIM:POLB), which listed in July, aspires to become a one-stop shop for big pharma to find products primed for development and commercialisation. Spun out from Open Orphan, covered above, Poolbeg aims to commercialise the clinical data repository its parent company has built up through 20 years of challenge trials testing how the body’s immune system can be boosted to overcome a range of viruses.
Poolbeg’s flagship asset POLB 001 is a ‘Phase II-ready p38 MAP Kinase inhibitor’ that promises an efficient treatment for inflammation in patients with severe influenza. Current treatments disrupt viral replication but do not directly address these hyperinflammatory episodes: POLB 001, which has passed Phase I trials confirming its safety for human use, opens new option to the $800m influenza market. It also offers the potential for applications beyond influenza, including certain coronavirus cases. Poolbeg is working towards Phase II trials, at which point it intends to license the treatment to a large pharmaceutical firm. The company intends to commence the Phase Ib human challenge study of POLB 001 in June next year. European patents have already been secured, and US patent assessments are underway.
Poolbeg also offers the PredictVital Biomarker Platform, designed identify the risk of severe disease before the onset of symptoms, reducing the need for antiviral treatments and their possible side-effects. Another service, the Vaccine Discovery Platform, will allow users to search the Open Orphan repository for new treatments based on reengineering of the immune system. Poolbeg continues to analyse the repository for new candidates for clinical development. Earlier this month the company signed terms for the development of an oral vaccine delivery platform with AnaBio Technologies, with a full licence and collaboration agreement to follow.
The company’s IPO plans outlined a ‘capital light clinical model’ designed to allow it to bring products to market quickly and cheaply ‘where they can potentially be monetised through licensing to or partnering with Big Pharma companies’.Poolbeg went public on 19 July, raising £25m.
The company is currently priced at 9.6p, a little down on its IPO price of 10p. Tapping into a growing market with its suite of discovery platforms, Poolbeg Pharma is one to watch in 2020.
Investment fund Seed Innovations (AIM:SEED), formerly known as FastForward Innovations, focuses on high growth life sciences and technology businesses, particularly within the medical cannabis sector. The fund seeks a balance between early stage companies, those preparing for listing, and those already public. Prospective investors should take time to review Seed’s evolving portfolio carefully – at the time of writing the fund included the following holdings:
Eurox Group, a revenue generating, German-based vertically integrated medical cannabis company offering access to Europe’s largest cannabis market. Eurox has launched its own brand of full-spectrum medical cannabis extracts ahead of schedule, and has secured supply agreements with leading German medical cannabis distributors.
CiiTECH Limited, an established research-led cannabis healthcare company focused on cannabis research and the commercialisation of cannabis products. The company is revenue generating and building partnerships with leading institutions and scientists to create niche consumer brands.
Yooma Wellness, an emerging global marketer and distributor of cannabinoid and hemp-derived wellness products, headquartered in Toronto with offices in Asia, Europe and the US. Yooma has increased its UK exposure, launching its plant nutrition brand in more than 200 Holland & Barrett stores, and is delivering on its expansion strategy, making three acquisitions since August.
Little Green Pharma, a supplier of medical-grade cannabis products to Australian and international markets. Little Green has cultivation and manufacturing capacity, producing its own-branded range of medicinal cannabis products, and has made progress in developing offshore distribution channels to the UK, Germany, and New Zealand. The company recorded its highest sales to date in September.
Northern Leaf Limited, a Jersey based medical cannabis cultivator, and the first company to be awarded a UK licence to grow medicinal cannabis in 22 years. The company is targeting the rapidly growing European market, including the key markets of the UK, Germany, and Israel.
South West Brands, a London-based group seeking to establish itself as a multi-brand consumer goods group developed specifically for the CBD industry. South West has recently launched two consumer brands, LoveMeMeMe and FEWE.
Seed has a number of investments beyond of the cannabis sector, including:
Portage Biotech, which develops treatments for various cancers, eye disease and acute kidney injuries. Portage has advanced three of its pipeline assets through to clinical trials.
Juvenescence, a biopharmaceutical company developing therapies to modify ageing and increase healthy human longevity. Its interests include the development of nutraceuticals and medicines to combat ageing-related diseases related to the musculoskeletal system.
Leap Gaming, a B2B developer of high-end virtual reality gaming applications, looking at a stock market listing in 2022 having continued its successful run with a number of new partnerships announced, including a partnership with leading Greek GameTech company Kaizen Gaming.
A notable development this year was the sale of the company’s stake in cannabis business EMMAC Life Sciences as part of a takeover by North American cannabis consumer products group Curaleaf Holdings Inc, which realised a gain of £1.9 million, a 1.86 times return on investment.
Though somewhat diversified, the fund’s fortunes are linked to the listed cannabis market. Seed’s NAV per share at 30 September 2021 was 10.98p per share compared to 11.72p at 31 March 2021 – £23,353,000 (31 March 2021: £24,939,000) – primarily resulting from the softening of the listed cannabis market. The fund’s share price has fallen to just under 7p, having spiked earlier in the year at 14.75p when cannabis stocks briefly surged. With that proviso, Seed Innovation’s intriguing set of holdings opens a door for private investors into otherwise inaccessible early stage cannabis and biotechnology ventures.
Time Finance (AIM:TIME) is a non‑bank alternative provider of finance to UK SMEs. Rebranded after previously trading under the banner of 1pm plc for nearly 20 years, Time acts as both a lender and broker in arranging funding for clients’ working capital requirements, a hybrid model designed to manage credit risk and capital allocation through evolving market and economic conditions.
Time seeks to take advantage of a shift in the lending market since the financial crisis, since which traditional banks have no longer been the automatic point of call for small business finance, many alternative lenders emerging in the form of challenger banks, fin-tech lenders and independent providers.
The company’s record of year-on-year growth in revenue and profits since 2015 was severely hit by the pandemic, the economic downturn and government funding and support schemes sapping demand for private sector lenders. Time did, however, become an accredited lender through the Coronavirus Business Interruption Loan Scheme, giving the company access to £12m to provide term loans to small businesses, backed by the government’s 80pc guarantee. And the company’s most recent set of results have shown it fighting back.
Time’s balance sheet significantly strengthened during the year, recording net cash and cash equivalents of £7.7m, up from £0.1m in 2020, reflecting much greater capacity on behalf of its clients to pay back leases and loans: forbearance fell dramatically during the financial year to less than £1m, a reduction of over 95pc. Deal arrears fell to pre-pandemic levels. Revenue fell to £24.2m, from £29.2m in 2020, a decrease of 17pc, but the company reported good visibility on future earnings with unearned income of £14.9m (2020: £15.2m), and a 3pc increate on Profit Before Tax, Exceptional Items and Share-Based Payments for the year of £3.1m (2020: £3.0m).
Time is focusing on providing more secured own-book lending while maintaining the flexibility to act as a broker where appropriate, and continues to diversify and spread risk, with the company’s largest sector exposure accounting for approximately 5pc and the top ten sectors less than 25pc of the total lending book at 31 May 2021.
A trading update just before Christmas reported a strengthening balance sheet, with unaudited Net Tangible Assets at 30 November 2021 of more than £29m. Deals in arrears are at their lowest levels since the fourth quarter of 2018, and no deals remain in forbearance as a result of the impact of the pandemic. The company’s gross lending book increased from its 31 May 2021 level of £116m to approximately £121m as at 30 November 2021.
Looking ahead, Time believes market conditions remain challenging as the pandemic and associated government lending schemes linger, but is seeking to position itself to resume strong growth as the economy continues its slow recovery from the worst of the pandemic.
Versarien (AIM:VRS) continues to pursue opportunities to unlock the commercial potential of graphene, the superconductive, one atom-thick carbon material 200 times the strength of steel that offers transformative possibilities for everything from the tiniest electronic components to the skylines of cities.
The company, which works with research institutions and other enterprises to turn concepts into viable products, organises its operations into two divisions. Its ‘mature businesses’ include Total Carbide, which manufactures hard metallic coatings suitable for arduous environments, such as oil and gas platforms and the flow control mechanisms used in the defence and aerospace sectors; and AAC Cyroma, which designs vacuum-formed and injection-moulded graphene enhanced plastic products for the automotive, construction, utilities and retail industry sectors.
Versarien also has several ‘technology operations’, located in England, Ireland, Spain, South Korea, China and America. UK production is concentrated at a new 18,000 square foot dedicated graphene facility in Gloucestershire. These operations have several streams:
One is the pursuit of ‘carbon fibre developments in transport’, addressing a UK market worth £4bn in which graphene enhanced composites can reduce weight and improve strength. Versarien has been awarded a grant from the Advanced Propulsion Centre to develop an innovative low-carbon component to reduce vehicle emissions: one outcome so far is a graphene enhanced bonnet assembly for the Lotus Evija electric sports car. The company is working on national highways projects as well as with HS2 for printed concrete and with non-government bodies on flood defences and rail for light quick deployment of flexible design buildings.
Versarien’s ‘mission for polymers’ seeks to to increase plastic recyclability by incorporating graphene: the company is working with one of the world’s largest packaging companies to evaluate graphene-based coatings as well as on other projects including optical wear, airway medical suction units and other forms of packaging.
Its ‘mission for leisure’ also seeks to improve garment performance, lifetime, recyclability and functionality: the company has entered into an agreement with Superdry to develop sample garments.
Versarien’s ‘mission for elastomers’ aims to improve performance, extend lifetime, recyclability and functionality in the areas of tyres and rubbers, including footwear: The company’s work on electric vehicle tyres has proved 5pc reduction in rolling resistance, and reduces abrasion.
Versarien also has international operations. The company has signed 22 confidentiality agreements in the US, where it is working on 14 active projects and five collaborations in sectors including coatings and anticorrosion, packaging/bottling, fabrics, polymers, elastomers, thermal transfer fluids and insulation materials. In South Korea it is working to commercialise more than a hundred patents acquired by collaborating with institutions and South Korean companies. And in Spain it is working on projects in energy storage, biocide materials, screening, sensors, coatings and conductive inks.
Versarien’s most recent results showed the company is still reporting a loss, of £3.11m (H1 2020: £4.34m). But revenues from continuing operations was up 41pc to £3.82m (H1 2020: £2.71m), and graphene revenues up 166pc to £0.93m (H1 2020: £0.35m). The company held cash of £3.46m.
At 25p Versarien’s share price is currently somewhat down on the 30p to 40p range it has occupied for much of the year: the company’s story continues to be worth following as it continues to pursue a wide range of opportunities in its ongoing effort to integrate an exceptionally promising material into the everyday commercial world.
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