Small Caps Live Weekly Summary
IG accounts BILN GTC LIO NXQ RCH
IG Non-Leveraged Accounts
A lot of discussion this week on the SCL Discord server has been about a change IG is making to share brokerage accounts. It seems that non-leveraged, non-professional accounts are gradually being moved to Interactive Brokers as the back-end. The main impact is that investors with migrated accounts are likely to lose RFQ/RSP access. This is the system where the user inputs a trade, receives a price, and has 15 seconds to decide whether to take it. This often gives much better prices than the published spread in small caps, and has the benefit of knowing that an order has been executed immediately.
Many SCLers consider this a much better way to buy or sell shares in smaller UK companies than placing limit orders and leaving them open until filled. So this is a real loss to a platform that many use because of its low fees and flexible ISA advantages, and many will now choose to go elsewhere.
One quirk is that the new platform doesn’t appear to support Acquis shares, so owning an Acquis stock should enable investors to retain access to an IG account with RFQ/RSP access in the short term (although other holdings may be transitioned initially). We are guessing this situation will be sorted out eventually, but for those looking for some time to make a decision where to move their account to, this may buy some time.
Here’s a selection of what we looked at this week. (Remember this is a summary of many opinions, and isn’t the view of any one commentator; check out the actual discussion on Discord if you want the nuance of the different opinions.) To avoid spam, the only way for new members to join the Discord server is via the Small Caps Live website. This will be instead of direct invites via Discord. All genuine investors are still very welcome to join in the discussions.
Billington Holdings (BILN.L) - Contract Wins
Some sizeable wins announced this week:
…pleased to highlight three recent significant contract wins across a range of sectors with an expected combined value of circa £28 million.
The contracts, which are scheduled largely for delivery during 2027, represent further progress in the Group’s strategy of securing high-quality projects with strong end-user and sector credentials.
The share price has shown some strength recently, so we wonder if industry insiders have been aware of some of these. They are only said to be supportive of existing expectations rather than incremental to them:
Together, these projects provide further confidence for delivering 2027 in line with market expectations and strengthen our already healthy order book.
Together these are around a fifth of FY27 revenue expectations. Following the news, the share price promptly gave up the recent gains, meaning this is looking very cheap again on those FY27 numbers, especially if they can find a good use for the big cash balance.
Getech (GTC.L) - Contract Win
After last week’s contract win, momentum seems to be building:
…contract to deliver the first Europe-wide assessment of natural hydrogen potential and associated regulatory requirements, with an expected contract value to Getech of more than €1 million, to be realised over the course of FY26 and FY27.
It is actually a decent win, both in the amount (at least for this company) and in the fact that it is for Natural Hydrogen, which most of us thought would never generate anything of substance. It is EU grant money, effectively, but still money. We are not sure of the margins, but all of these parts are likely to be delivered by existing software or resources, so almost all of the revenue should drop through to EBITDA in reality:
Getech’s revenue for the project will comprise consultancy, data and software licence fees.
It is worth noting that a contract to scan the whole of Europe for hydrogen is worth just £1m, which gives an idea of the difficulty of really scaling this business up to generate large revenues and profits. However, it definitely feels like it may be setting up to beat the current numbers in the market.
Liontrust (LIO.L) - Trading Update
With Liontrust now reporting, the UK-ish-focused asset management trio is complete:
Although all three performances have bounced, Impax is proving to be a true outperformer, as it didn’t decline in the March-ending quarter, unlike Liontrust.
Liontrust is definitely now leading the way on outflows, though:
Premier Miton’s outflows on smaller AUM are starting to make it look subscale, though.
Impax has lost the IEM management recently, but following the tender, this was down to just £200m AuM or so and was always going to go out the door. So, it is a known headwind, but one nonetheless.
Nexteq (NXQ.L) - Trading Update
No further warning here is perhaps good news:
Further to the announcement on 21 May 2026, H1 trading was in line with management's revised expectations and the outlook for FY26 remains unchanged
However, cash is down to $10.7m which undermines one of the investment arguments which is that this is cheap on a cash-adjusted basis.
Interestingly, their broker, Cavendish, has them having $13.1m of gross debt at the end of the year, presumably a mortgage secured against the Taiwanese property. So, although the gross cash increases to $16.3m, the net cash is just $4.0m.
This suggests they are currently in a net debt position if they have cash of $10.7m. Something they appear to have carefully avoided mentioning in this update.
Not that we doubt the solvency here, and a mortgage is unlikely to have interest cover covenants or similar, which would cause problems with the current loss-making period. Just that it’s quite the fall from grace, going from $29m net cash to net debt in 18 months.
Of course, the assets largely remain the same as the cash has gone into property and inventory. Just that the assets of the business have become increasingly unproductive over time. Which questions why one would want to pay even book value here at the moment?
There’s an argument that problems are temporary. It was only 3 years ago that they made $14 million PBT, against a current market cap of £27m. It has been through cycles before.
The problem is that with such low gross margins, you need a huge recovery in revenue to get back to previous profitability. And such an investment strategy is almost always better when there are tangible signs of recovery. The overall downside may be protected by the assets, though, as they could always convert into a Taiwanese office REIT!
Reach (RCH.L) - Half Year Report
On an initial look at the headlines, it stands out that they managed to increase adj. EPS on lower adj. Op Profit and higher net debt:
As one may have surmised a lower tax charge is the cause. However, unravelling exactly how they got there and the future implications is a little tricky.
There’s also a huge jump in adjustments:
Much of these are non-cash write-downs or amortisation. However, restructuring has taken a huge jump and restructuring is business as usual for Reach as far as we are concerned. How else do you turn a 9% revenue decline into an operating profit down only 4%?
All of this is probably overshadowed by the halving of the interim dividend:
The Board paid a final dividend for 2025 of 4.46 pence per share in May 2026. An interim dividend for 2026 of 1.44 pence per share will be paid on 14 September 2026 to shareholders on the register on 31 July 2026 (2025: 2.88 pence per share).
In declaring an interim dividend of 1.44 pence per share for 2026 (FY25: 2.88 pence per share), the Board has carefully considered the Group’s current trading performance, cash obligations including pension deficit reduction payments and continued organic investment.
This wasn’t forecast by brokers until this week and is a clear flag that the Final dividend will be 2.23p, not 4.46p, for a 3.67p FY dividend, not 7.34p previously forecast. Something Panmure Liberum now confirm.
To be fair, the market was already saying the 12% yield was unsustainable, and 6% is reasonable, but it is understandable that there was some reaction to the disappointment versus broker forecasts..
For outlook, the company say:
We remain on track to meet market expectations for FY26.
Followed by this rather benign-sounding statement:
Looking ahead to 2027, we expect operating margins to remain at a similar level and industry headwinds to persist, including higher levels of circulation volume decline
However, this turns out to be anything but benign in the hands of their broker, Panmure Liberum, who say:
We hold our FY26 EBIT forecast constant, but reflecting ongoing headwinds in digital, and the uptick in circulation decline, reduce our FY27 EBIT forecast by 11%.
Unsurprisingly, the market didn’t like this, although the price isn’t that far below the May lows, so one could argue that only the irrational exuberance has been deflated from the price so far.
However, this is now approaching a 9% yield again following this week’s price falls, which may suggest some value if one thinks it won’t be cut further.
That’s it for this week. Have a great weekend!