Hybridan Monthly, 1 July 2026
Market Comment: View from the Broker’s Desk
Last September 2025, we set out our stall regarding what needs to happen to encourage momentum back into small caps. With the recent proposals and changes in market reform, it’s a good time to take stock and summarise what’s changed and more importantly what else needs to change and as soon as possible in an ideal world. It does feel we are reaching a crunch point; private markets are booming, primary and secondary flows in the private markets are flying, and investment decisions are made quickly to match the speed at which companies are scaling. Public market players: regulators, stock markets and advisers will ignore this at their peril.
Access to Capital
Part of a broker’s role is knowing when to take a hint and to move on when a fund manager is not interested. This is absolutely fine and no issuer should be forced to change to match a fund’s investment criteria – the broker just has to work harder and find an issuer that does. With that in mind, it’s been over a year since the Mansion House Accord was signed in May 2025, with a key commitment stating that 10% of Defined Contribution (DC) pension funds should be deployed in the private markets by 2030. The optimists would jump on the technicality that indeed AIM & AQSE companies are quoted and not listed and therefore as “unlisted equities” are automatically included under a private markets umbrella.
Unfortunately, the news updates have reflected a different reality with Nest, Aviva and Legal & General all increasing private market exposure with specific mention to private equity, infrastructure, private credit and real estate, not the quoted public market world of AIM. Another tumbleweed is gathering speed and size on no mention of AIM or AQSE allocation.
We would never seek to mandate an institutional investor to increase their exposure to sub £100m market cap companies, so why would anyone call for mandating pension funds to do the same? A more realistic battleground for our market is to call on State money to be directed into public markets. More specifically, if quoted companies (specifically in a report by Grant Thornton*1 focused solely on AIM) contribute £68bn to the economy, why is no State money coming back through the British Business Bank targeted at supporting those very same companies? The structure could be identical to how British Business Bank models its exposure to the private VC world. This would be a fund of funds model – having the Bank deploy capital over a 10-year life cycle to those fund managers who have demonstrable expertise in the sub £100m market cap domain.
A recent Quoted Companies Alliance Report*2 set out the very modest ask of just £1bn or 4% of the British Business Bank’s total financial capacity of £25.6bn. There is an argument to ask for a meagre 1% of the figure that quoted companies generate for the economy. £680m would go an incredibly long way in providing the much-needed growth capital to ensure our home-grown companies start ultimately scale here.
Regulatory and cost burden of listing
Last September in our Hybridan Monthly, we also reported IPO fees were highly prohibitive for small growth companies contemplating using the public markets. Since then, there have been some welcome proposed developments to the AIM Rules, and some changes to the AQSE rules. In particular, removing the requirement for directors to make a working capital statement in the AIM Admission document. This should remove a large proportion of the IPO fees, but time will tell.
My own suggestion would be for the LSE to adopt an “RRP model” where IPO fees are stipulated by the exchange to issuers directly, based on the size of company. This would help eliminate any ambiguity on fee structures. This new fee structure could be supported by listing rules and disclosure requirements which are more appropriate to the business looking to list, rather than onerous risk factors which are indeed being used to justify eye watering IPO fees.
Risk Capital: the clue is in the name
Another theme we touched upon last year in our September Hybridan Monthly was the need to give power back to retail investors to counteract the compliance red tape that has prohibited them from gaining direct access to small cap companies. This compliance red tape started back in 2012 with the introduction of the Retail Distribution Review (RDR) which made it increasingly difficult for wealth managers to run discretionary portfolios in small caps. Onerous compliance measures were put in place making it near impossible for retail investors to get shown placings and IPOs through their private client broker.
Platforms such as WRAP and Bookbuild have done a great job in increasing the participation of retail investment into primary public market offerings. Risk capital needs to be an accepted norm, instead of hiding behind vague compliance reasons why retail investors should not receive the same information as their institutional counterparts. It’s a nonsensical situation where market participants push for more retail investment at the same time as having regulation in place that still – despite some steps in the right direction as we saw with the use of Public Offer Platforms (POPs) in the SpaceX IPO, -broadly precludes retail investors from receiving the exact same information as institutional investors.
Risk warnings on fund factsheets for retail investors are universally clear if an investor is looking to invest in an EIS fund, so why do we overcomplicate things for companies looking to raise money in their risk warnings? Namely, if you are investing in equity, the risks are:
- You can lose all the money that you invest
- You are unlikely to get protection if something goes wrong
- Small cap companies are illiquid in nature and have long term investment horizons
Is more needed? Creating complex compliance structures on top of the core tenets of small cap investing is taking time away from experienced fund managers, where time could be better spent meeting with management teams and reviewing investment opportunities.
*2 https://www.theqca.com/wp-content/uploads/2026/05/QCA_Banking-On-Britain.pdf
By Niall Pearson
Company Reports: Growth Opportunities
TMG Brand new for old
NAR Value chain security
The Mission Group 18.00p £16.80m (TMG.L)
|
Price |
Results |
Top 3 Shareholders |
Value |
|
17p-19p |
Year End 31 December |
Onward Opportunities (Dowgate Group Limited) 13.3% |
Global Blue-Chip Clients |
|
Spread 11.765% |
Finals reported 24 March 2026 |
Herald Investment Trust plc 6.4% |
Debt under control |
|
52 week High/Low 26p/12.3p |
Interim results to 30 June, reported 23 September 2025 |
Objectif Investissement Microcaps FCP 5.9% |
Improved effectiveness |
Source: Alpha Terminal
The Mission Group of creative agencies combines its diverse expertise to produce Work That Counts for Clients. There are four key Agency segments, from brand building, Live Experiences, psychological insights and data technologies delivering real growth for some of the world’s biggest brands such as Ted Baker, Last Minute, Brita, Disney, Jeep, Fiat and BMW. There are over 800 people supporting clients from ten locations in three continents.
John Carey was appointed as CEO on 1 July 2025 and strategically reviewed the business with a view to delivering sustained enhanced operating margins and cashflows. Through simplifying the business by establishing a single, unified B2C and B2B advertising Agency, efficiencies have been gained and annualised cost savings have been identified, increasing total cost savings to £4.0m per annum. The growth is now more sustainable through reinvestment into higher margin segments and cash generation. Investment is targeted at capitalising on the Group’s strengths, maintaining a technological edge with AI and expanding the services, including geographically, with key growth locations identified in the US, particularly in Sports Marketing and Events.
Following the restructure and reorganisation programme, the platform for significantly improving operating margins is now in place and the business has a clear set of strategic growth priorities. The closing net bank debt position for FY 2025 was £0.5m lower at £9.0m and management is confident of further reductions as profitability improves. The disposal of non-core or high value agency assets could also be considered. Our confidence grew with the announcement on 21 May that four directors bought shares at between 13.99p-17p.
The AGM Trading Update on 15 June for the period 1 January to 15 June reported that even in a backdrop of wider macroeconomic uncertainty, trading is in line with expectations driven by continued strong client retention, new client wins and the benefits from the strategic actions taken.
The Integrated Marketing practice has been strengthened with the appointment (announced in the AGM Trading Update) of Wayne Deakin as Chief Creative Officer, formerly from Wolff Olins working with clients such as Google, Nike, Chanel and Uber.
Forecasts on Alpha Terminal for FY 31 December 2026 are turnover of £70m, a PBT of £6.9m, and an EPS of 5.51p. This would put the Group on a prospective P/E of 3.4x. The EBITDA is forecast to improve in FY 2026 by 33.1% to £11.3m from which we calculate an EV/EBITDA multiple of 2.3x.
Hybridan Comment: The improved prospects seem to be unrecognised in the current valuation.
Northamber 25.00p £6.78m (NAR.L)
|
Price |
Results |
Top 3 Shareholders |
Value |
|
23p-27p |
Year End 30 June |
Alexander Michael Phillips (Exec Chairman, Director) 62.58% |
Strong Balance Sheet |
|
Spread 17.4% |
Reported 23 December 2025 |
Worsley Investors Ltd 6.08%% |
Increasing Margins |
|
52 week High/Low 34p/24p |
Interims to 31 December, reported 2o March |
Herald Investment Management Ltd 4.59% |
Acquisitive growth |
Source: Alpha Terminal
Northamber’s strategy is to be a high-margin distributor of technology products and components and this strategy has been significantly enhanced by acquisitions. A key theme is the evolution from a predominantly UK-focused distributor into a more geographically diversified European technical distributor of audio visual, unified communications and cyber security solutions.
On 1 December 2025, Nuvias UK Hardware (NUC), a specialist Unified Communications (UC) equipment distributor business, was acquired for up to £7.1m. NUC’s turnover for the 12 months to 31 October 2025 was £28.8m, the gross profit margin was 11%, gross profit was £3.2m and its net assets were £5m. NUC distributes hardware for video collaboration systems, enterprise voice solutions, and related UC endpoints, distributed to more than 700 UK customers, including enterprise, mid-market, public-sector, service-provider and specialist AV/UC partners. The initial payment was for £1.7m, with the balance of the outstanding amount to be paid in installments with the final payment due on 15 January 2028. This gives plenty of time to improve margins with synergistic cost and purchasing integration, while enhancing the combined technical capability, particularly in solution design, provisioning, configuration and UC deployment support.
The Interims to 31 December 2025 were reported on 20 March showing a 22% year on year increase in revenue to £39.4m, the gross profit increased by 14% to £5.9m and the Company returned to a positive EBITDA of £210k, in a challenging market. Around one-third of sales are from outside the UK which is up from approximately 20% in the prior year, reflecting the strategic expansion into Ireland and the Benelux. There is strong sustained growth in both Epatra and Renaissance divisions demonstrating the benefits of the broader footprint and ability to support vendors and partners across multiple territories.
The strategy has materially improved the product mix and revenue balance, while reducing the reliance on any single market. During H1 on 11 September 2025, Ian Kilpatrick was appointed as a Non-Executive Director, bringing deep cyber security distribution knowledge and experience. The Interims reflected a degree of transition and integration activity. The Board believes that the Group is now operating from a materially stronger financial and strategic position.
As at 31 December 2025, total assets were £50.5m, net assets were £17.7m with cash of £2.8m. The property portfolio remains an important source of financial resilience and, where appropriate, it can release additional working capital. In line with this approach, the Company is currently marketing two of its office buildings for sale.
The Board expects a materially stronger H2: supported by the full-period contribution from NUC, the annualised benefit of FY25 cost actions, continued progress in services and recurring revenue, and improved operating leverage across the enlarged Group.
Hybridan Comment: The progress seems to be unrecognised in the share price, which is at a near 12 month low.
House News Report
TMT Investments $3.01 $84.6m (TMT.L)*
A key part of TMT’s growth strategy over the years is to opportunistically take profits and reinvest.
Nasdaq listed Backblaze was 5.7% of the portfolio’s NAV at FY 31 December 2025, and one of its five largest investments. Its share price has increased 151% from $4.64 since the start of May 2026. TMT took the opportunity to sell a further part of its shareholding in the last few weeks for a total net cash consideration of $4.65m.
Based on the Backblaze closing mid-market price of $11.66 on 23 June 2026 (and adjusted for the $4.65m net disposal), Backblaze’s current share price represents an increase of $17m in the fair value as compared to the previous reported valuation as at 31 December 2025. The portfolio increased 8.9% for the FY to 31 December 2025 to a NAV per share of $7.13 or NAV of $220.8m against $205.9m as at 31 December 2024.
TMT has established a cautious approach to valuing its portfolio and at least seven of its smaller investments are expected to be written down at the Interims to 30 June 2026, with an estimated (non-cash) cost of around $3m.
We calculate that this sequence of events alone implies a 6.3% net gain on the 31 December 2025 portfolio value. TMT’s shares trade at a circa 60%+ discount to NAV, and the Company has capitalised on this by relaunching a share buyback programme on 20 May. So far, under the current $2m programme, almost $1.5m has been invested at an average price of around $2.44.
The administration expenses for FY 31 December 2025 were $1.44m which is just 0.65% of NAV. Net cash as at 23 March 2026 was $6.2m and, following the Backblaze disposals, assuming the share buyback is completed, and the administration costs are unchanged, we calculate there is circa $7.3m of cash available for opportunistic investments.
TMT was founded in 2010 and invests in high-growth technology companies globally and across several core specialist sectors such as data platforms, Enterprise Software, Mobility and FinTech. There are over 50 companies in the current portfolio, over half of which are at a ‘mature’ stage.
The IRR from inception to 31 December 2025 was 14% per annum, declining from 14.5% in 2024 when measuring IRR from inception to 31 December 2024.
The Bolt investment made in 2014 was valued at $78.16m at the end of 31 December 2025, representing 35% of the total NAV. This is after disposals at this higher value which is evidence that there are buyers in the private equity market. Bolt’s eventual full exit, perhaps at an IPO, would be a transformational valuation event.
Hybridan Comment: TMT’s tech sector portfolio is maturing and increasingly providing exit opportunities illustrated by the profit taking on Backblaze. The investment managers have a solid track record and the discount to NAV seems an attractive opportunity.
Last Comment in Hybridan Monthly April 2026, TMT share price then $2.38
* A corporate client of Hybridan LLP
News Update: Growth opportunities that have reported results or contracts over the past month
Dianomi 21.5p £6.46m (DNM.L)
The provider of digital advertising services to premium clients in the Business, Finance and Lifestyle sectors announced a partnership with AI media infrastructure company Dappier on 16 March to launch an AI-powered financial answers engine for publishers and advertisers to create new monetisation opportunities. The Finals to 31 December 2025 were reported on 29 May showing revenue virtually unchanged at £27.4m from £28.0m in FY 2024, despite a cautious advertising market, and the loss per share increased to 2.99p from 1.06p in FY 2024. There is a strong balance sheet with no borrowings and cash of £5.8m.
The Company returned to growth and profitability in H2 2025 and the improved trading momentum continued into 2026. There are over 350 advertisers, including blue chips such as Aberdeen, Invesco, Bank of America and Charles Schwab, with access to an international audience of over 400m devices per month through its partnerships with over 300 premium publishers, including Reuters, CNN Business and the WSJ. The launch of the AI-powered financial answers engine has a large target market and may be well received.
Hybridan Comment: Cash reserves represent 89% of the total market capitalisation and despite the near 60% share price rise since our report in April, the shares still seem under-valued, even without any success from the evolving AI opportunity.
Last Comment in Hybridan Monthly April 2026, DNM share price then 13.5p
Hercules 26.25p £18.9m (HERC.L)
The UK infrastructure and construction services group AGM statement on the 23 June reported the Company had grown significantly since listing almost four and a half years ago. It is a much bigger business with increased scale which was achieved organically, and through a series of targeted M&A which required investment in new IT infrastructure, systems and controls. There are new opportunities for the Labour Supply division within the infrastructure industry to expand the blue-chip client base and to increase contract values. Although there have been challenges, the Company is well placed to support the very significant, long-term wave of infrastructure investment being experienced across the UK.
The interim results to 31 March reported on 5th June, showed that despite an 8% increase in Revenue to £59.2m, the EBITDA fell to £1.7m from £2.6m in the prior period, reflecting planned investment in future growth, including major technology enhancements and operational improvements. The cash of £2.7m as at 31 March 2026 is down from £9.8m in the prior period, reflecting acquisition costs.
Since then, on 26 June, an enhanced funding package with IGF Business Credit Limited was agreed comprising an increased invoice discounting facility of up to £20m together with £5m of term loans, to support its continued growth strategy. The FY 30 September 2026 forecast is for turnover of £127.2m,an EBITDA of £4.12m and a pre-tax loss of £1.64m on Alpha Terminal. The backdrop for UK infrastructure investment remains attractive, for instance the National Grid £58bn investment proposal which management is focused on converting into profitable, controlled growth.
Hybridan Comment: The shares are trading around their 52 week low and should be sensitive to new contracts.
Last Comment in Hybridan Monthly November 2025, HERC share price then 37.5p
Pennant International Group 26.5p £12.6m (PEN.L)
In June’s Hybridan Monthly, we reported Pennant’s new contract wins for its virtual training simulator in air defence. Since then, this systems support software and training solutions Company reported a major step in the Auxilium product roadmap announcing the launch of Auxilium Phase 3 on 4 June and a new multiyear contract with the Canadian Department for National Defence on 12 June. The contract provides a framework agreement for an initial five-year term, with annual options to extend for a further six years. The scope of work includes the continuation of existing tasks and incremental growth in revenue generating services. Whilst not subject to a minimum contract value, at historical rates of services, the initial value of the five-year framework is estimated at C$15m (£2.8m) and a value across a fully extended eleven-year term on the same basis of up to approximately C$35m (£6.57m).
Auxilium is designed to provide customers with a powerful, unified toolset to manage, model and exploit complex systems. For the first time, customers can operate from a unified server and shared data environment, enabling true endtoend support with engineering and technical publications workflows. This contract will broaden the Group’s capability and strengthen its customer proposition allowing further scalable growth. Also on 24 June, Pennant announced its first sale of Auxilium – GenS via its global partnership with Siemens to a North American digital engineering customer that supports defence, national security and space domain missions.
Hybridan Comment: The new product Auxilium is gathering momentum and the initial framework agreement could lead to further five-year enterprise contracts.
Last Comment in Hybridan Monthly June 2026, PEN share price then 23.5p
Events in June:
DSW Capital 42.5p £10.68m (DSW.L)
The mid-market professional services platform which owns the Dow Schofield Watts and the DR Solicitors brands reported strong interims on 24 November 2025 for the six-month period ended 30 September 2025. A Trading Statement on 16 March, however, reported that the outbreak of war with Iran was had severely impacted M&A activity in the UK, with many deals that were expected to complete in March being aborted or postponed until the long-term economic ramifications of the war are established. The Group’s results for FY 2026 are expected to be announced on 28 July. The shares have fallen to a three year low.
Interim revenue for the six-month period ended 30 September 2025 increased 32% to £10.3m, helped by acquisitions and the EBITDA jumped from £0.1m in the prior period to £0.7m. The business is scalable on a fixed cost base, so the PBT rose 134% to £237k from £1o1k in the prior period. The net cash balance was £2.24m, after repaying a £1m loan, but still allowing for a 20% increase in the interim dividend to 1.2p.
The Company has consultants on fee-based income and a partnership model with a profit share approach. The Company is building a resilient and diversified group of licensees and regulated professional businesses organically and by acquisition. This is demonstrated with the acquisition of DR Solicitors completed on 4 November 2025, which reduced the dependency on volatile M&A activity which accounted for 32% of revenue at the interims compared to 67% in the prior period.
Profits are historically H2 weighted due to the timing of profit share income recognition and heightened M&A activity ahead of the tax year-end. The operationally leveraged earnings consensus on Alpha Terminal to 31 March 2026 have been reduced to turnover of £6.2m, PBT of £1.3m, an EPS of 3.9p, and a 3.3p dividend. This we calculate gives a prospective P/E of 11x and a 7.0% yield.
Hybridan Comment: The broader range of services should leverage the recovery and the dividend yield is attractive.
By Jon Levinson
** Share prices, market capitalisations, and top 3 Shareholders all reported as at the close on Monday 29 June 2026
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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.
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