SMALL CAPS: The failure of the Aquis party, the Challenger stock exchange

Challenger Stock Exchange Here has racked up a number of wins this year, from surpassing AIM in terms of new IPOs (numerically speaking, if not by volume) to securing new technology clients domestically and internationally, including the Central Bank of Colombia.

The stock’s share price also rose to highs not seen since early 2022, peaking at 500p in July.

Unfortunately, a profit warning spoiled the party this week, as Aquis revealed that its full-year results will suffer a £1m hit following the non-renewal of a landmark contract in its technology segment.

Chief executive Alasdair Haynes has taken the hit, saying: “While it is disappointing that our short-term operations have been impacted by a single contract, I am pleased with the progress we continue to make in laying the foundations to deliver on our strategic objectives.”

Aquis is both a technology provider to other market makers and a stock exchange in its own right.

Despite the setback, the AIM-listed group said it intends to increase investment in its technology division, which Panmure Liberum said underlines the “long-term opportunities for the business.”

But that was not enough to prevent an 18 percent drop in its share price.

The broader AIM All-Share index was performing well until Wednesday, when stocks overall took a hit.

Labour leader Keir Starmer has made not-so-subtle hints about impending tax rises in the October budget, giving us a heads-up that the budget will be “painful”.

For some, however, more than others: “those with the broadest shoulders should bear the heaviest load,” he noted.

This indicates that financial services stocks will start to fall.

AIM entered Friday down 0.5 per cent from the previous Friday’s close, a disappointing result compared with the FTSE 100’s 0.8 per cent gain.

The blue-chip index was supported by strong performance from a diverse set including Bunzl, easyJet and BAE.

Nanoco Group plc, the London-listed supplier of materials used in infrared sensing applications, fell by a third after announcing the loss of a key European customer.

Broker Peel Hunt was blunt in its assessment of the news: “With this strategic shift, Nanoco’s commercialisation prospects fall to zero in 2025, resulting in the company expecting revenues to be 25 per cent below consensus and down from a low starting point for subsequent years.”

The broker said “there is potential for Nanoco to be used in a reverse takeover.”

Audio interface maker Focusrite plc was the latest to warn of disruptions in the Red Sea and associated shipping costs.

“New product launches had been planned for the fourth quarter, but the benefit from these was offset in August by a significant reduction in stocking policy by a major distributor,” it said in a statement. The shares fell 18 percent.

Shares in Quiz plc also fell 18 percent on Thursday after the online fashion retailer revealed its ongoing difficulties, which has seen it turn to its founder and largest shareholder for financial help.

The company reported a loss of £5.2m for the year to March, compared with a profit of £2.3m in the previous year. Liquidity was significantly reduced and cash reserves were reduced to just £300,000.

To stabilise the business, Quiz is in talks with Tarak Ramzan for a £1m loan.

Among the biggest decliners in the mining sector were small nickel producer Uru Metals Ltd, down 29 percent; Critical Metals plc, down 35 percent after an operational update; and Tertiary Minerals plc, down 21 percent after announcing it had been rejected for a Swedish mining lease.

By contrast, small-cap coal miner Bisichi Mining plc was a resounding success, jumping 46 percent on Friday in response to a glowing half-year report.

This also benefited 42 percent owner London & Associated Properties plc, which rose around 29 percent on the prospect of juicy dividends from Bisichi’s growing cash position.

Earnings per share rose to 18.33 pence, from a loss of 3.18 pence in the first half of 2023.

Bisichi attributed this to “a significant improvement in mine production and lower mining costs at Black Wattle Colliery, the Group’s South African mining operation.”

Greenroc Mining plc rose 29 percent as investors welcomed the acquisition of land for a sustainable industrial park in southern Norway.

In the biotechnology sector, Faron Pharmaceuticals Limited led the pack with a 19 percent increase after receiving fast-track approval from the U.S. Food and Drug Administration (FDA) for its lead candidate, bexmarilimab, which is designed to treat relapsed or refractory myelodysplastic syndrome (r/r MDS) in combination with azacitidine.

Peel Hunt described bexmarilimab as “a very exciting asset in the oncology landscape.”