Small cap movers: Arena Events succumbs to 21p a share offer but hits the skids after profit warning

Arena Events Group PLC (AIM:ARE), a turnkey events solution provider, was taken out this week in an agreed 21p a share cash offer.


The shares shot up 44% to 20.25p on the bid, which comes from IHC Industrial Holding, an Abu Dhabi-based publicly-listed holding company, and Tasheel, which has an existing stake of 23.9% in Arena.


The terms value the entire issued ordinary share capital of Arena at about GBP71.0 million on a fully diluted basis and imply an enterprise value – i.e. including Arena’s debt – of GBP95.1 million.


Ironveld PLC (AIM:IRON), up 40% this week to 0.825p, welcomed a major investment from Grosvenor Resources, which is buying GBP5.6mln of shares at a penny a poke.


Grosvenor is a new South African private company formed by young black entrepreneurs who wish to expand their investments and mining operations in South Africa beyond the bulk commodities space and develop high-value vertically integrated projects, Ironveld said.


Grosvenor will get to nominate two non-executive directors to the board of Ironveld following the investment.


A trading update from System1 Group (AIM:SYS1) PLC, the marketing and brand consultancy, prompted a stampede for the company’s shares, which were up 39% at 340p.


“We have been delighted by the continuing adoption by both new and existing customers of System1’s repeatable, fast-turnaround and scalable data products as they displace the historic large bespoke consultancy projects that dominated the group’s activity until H2 last year,” management said in an update covering the six months to the end of September.


Revenue in the first half of the group’s fiscal year rose 22% year-on-year to GBP12.3mln, while adjusted profit before tax, once all the pennies have been counted, is expected to be some GBP900,000 higher than last year at around GBP1.3mln.


Reabold Resources (AIM:RBD) PLC, the AIM-listed investment company focused on upstream, is to become a major shareholder in Daybreak Oil and gas, a US over-the-counter-traded oil and gas operator with assets in California.


Reabold will hold up to 46.5% of Daybreak’s share capital.


Reabold’s shares rose 30% to 0.215p as investors gave the thumbs-up to the deal.


“This transaction creates liquidity for Reabold and forms a new, cash flow producing business with the skills and capability to capitalise on growth opportunities from its existing portfolio, and attractive acquisitions presented by the market dynamics in California,” said Sachin Oza, the co-chief executive officer of Reabold.


The week’s biggest faller was Smartspace Software PLC (LSE:SMRT), which plunged 30% to 77p after it lowered full-year guidance.


Revenue for the year ended 31 January 2022 is now expected to be not less than GBP5.2mln (FY2021: GBP4.6m) with an adjusted EBITDA loss of not more than GBP2.7mln (FY21 adjusted EBITDA loss: GBP2.1mln).


Sales of its Evoko Naso room booking software have been below expectations as a full-blooded return to the office is taking longer than anticipated.


The board had expected sales of Naso to accelerate in the autumn; however, this has not been reflected in September sales or initial indications for October.


Gusbourne, the award-winning English sparkling and still wine producer was another stock having a bad week, with its shares sliding 24% to 93.5p on fundraising news.


The company raised GBP2.6mln by issuing shares at 75p, an eye-watering discount to the prevailing market price.


The funds raised will be used to support the ongoing business growth across all distribution channels (Direct to Consumer, UK Trade and International) and the further development of the company.


Lastly, it seems a very long time since toilet roll was the “must-have” thing during the lockdown. Accrol Group Holdings PLC (AIM:ACRL), the toilet roll company, must be pining for those days after its shares hit the skids this week.


The company warned in a trading update of pressures on its raw material supply chains. Pulp and parent reel production costs have been affected across the world by energy cost increases, input shortages, and general inflationary pressures, it noted, adding that while the group’s supply chain had “shown significant resilience and supply shortages have been managed”, considerable cost increases had to be absorbed in the short term. In addition, distribution pressures, notably the availability of HGV drivers, which served to increase costs further, have restricted revenue growth in the current fiscal year (which runs to the end of April 2022).


These cost increases are successfully being passed on, albeit there will be a time lag in passing on the full impact, resulting in earnings in fiscal 2022 being lower than previously expected.


In other words, a good old-fashioned profit warning.

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