Small Cap Wrap: 15th February 2017

15th February 2017

 Backers reaffirm support for ProMetic

InnovaDerma revenue picks up again

TP Group acquires

On this day:

399 BC—Philosopher Socrates is sentenced to death by the city of Athens for corrupting the minds of the youth of the city and for impiety

1763—Austria, Prussia & Saxony sign Treaty of Hubertusburg, marking the end of the French and Indian War and of the Seven Years War

2001—First draft of the complete human genome is published in the journal “Nature”

Dillistone Group (LON:DSG 87.00p/£17.60m)

Dillistone Group, the  supplier of software for the international recruitment industry through its Dillistone Systems and Voyager Software divisions, provided a trading update for the 12 months ended 31 December 2016. The Board confirmed that pre-tax profits before acquisition related items and one off adjustments are expected to be broadly in line with market expectations, with year on year growth in revenue, EBITDA and pre-tax profits.  Currency gains have impacted both revenues and costs, however the net impact of this currency fluctuation has been positive. Both divisions will be reporting good revenue growth for the period.  Economic turbulence in 2016, as noted in their Interim Report in September, has resulted in a lower than normal level of sales of new licences and subscriptions to existing clients, however licence sales to new clients and upgrades for existing clients remain strong.   The Board also noted that Dillistone Systems division has seen a notable improvement in its market performance after a challenging 2015, with significant growth in both the number and total value of new contract wins in the year.  The Board remains optimistic about making further progress in 2017, although it is mindful of the wider economic influences and their potential to impact on the performance of the business.  The Group remains profitable and cash generative and continues to follow a progressive dividend policy, subject to the needs of the business.

 

Ferrum Crescent (LON:FCR 0.18p/£4.19m)

Ferrum Crescent, the metals developer, announced further to its previous announcement of 16 January 2017, that the farm-in and joint venture agreement between Ferrum Iron Ore Limited (FIO), Ferrum South Africa Limited (FSA) and Business Venture Investments Limited (BVI) for the production of a bankable feasibility study (BFS) for the Company’s Moonlight Iron Project in Limpopo Province, northern South Africa has now been formally terminated by FIO and FSA in accordance with its terms. Under the terms of the Agreement (details of which were first announced by the Company on 14 October 2015), BVI was entitled to earn up to a 43 percent equity interest in FIO through the completion and full funding of the BFS, which was to be conducted in two phases. As announced on 14 January 2016, the Company agreed to extend the timetable for BVI to complete BFS Phase 1, however, as announced on 16 January 2017, BVI failed to complete BFS Phase 1 by that extended deadline of 12 January 2017. Consequently, and in accordance with the terms of the Agreement, BVI has not earned any equity interest in FIO. The Company is considering its options in relation to the potential development of the Moonlight Project, and will make further announcements as and when appropriate.

 

Hutchinson China MediTech (LON:HCM 2,165.00p/£1,296.18m)

Hutchison China MediTech announced that it has initiated the first-in-human (FIH) Phase I clinical trial of HMPL-453 in Australia.  HMPL-453 is a novel, highly selective and potent small molecule inhibitor targeting fibroblast growth factor receptor (FGFR).  The first drug dose was administered on February 14, 2017. FGFRs are a sub-family of receptor tyrosine kinases.  Activation of FGFR signalling pathways is central to several biological processes, including angiogenesis, tissue growth and repair.  Given its complexity and critical role in a number of important physiological processes, aberrant FGFR signalling has been found to be a driving force in tumour growth, promotion of angiogenesis, as well as, conferring resistance to anti-tumour therapies.  To date, there are no approved therapies specifically targeting the FGFR signalling pathway. The FIH dose-escalation trial aims to evaluate the safety, tolerability, pharmacokinetics and preliminary anti-tumour activity of HMPL-453 in patients with advanced or metastatic solid malignancies, who have failed or are unable to tolerate standard therapies or for whom no standard therapies exist.  This open-label study consists of two preliminary phases, a dose-escalation (stage 1) and a dose-expansion stage (stage 2). In pre-clinical studies, HMPL-453 demonstrated superior potency and better kinase selectivity as compared to other drugs in the same class, as well as a favourable safety profile.

 

InnovaDerma (LON:IDP 137.50p/£15.42m)*

InnovaDerma, a UK developer of ‘at-home’ and clinically proven treatments for hair loss, hair care, self-tanning and skin rejuvenation, announced its unaudited half year results for the period ended 31 December 2016.  Actions carried out by the Company have begun to have a positive financial impact, with January 2017 delivering the highest monthly revenue ever recorded. This, together with the seasonality of the business being second-half weighted, means the Board is confident of delivering a robust second half of the year. Financial Highlights showed group revenue grew strongly by 125.5 percent to £3.19m (HY2015: £1.41m) driven by the successful penetration of the UK market through Superdrug and Direct To Consumer sales,  gross profit increased significantly by 131 percent to £1.84m (HY2015: £0.8m) and loss before tax of £0.15m (HY2015: £0.004m) as a result of one-off exceptional listing costs and strategic initiatives to expand and scale the business. At 31 December 2016, the Group carried a cash balance of £0.701m against an opening balance of £0.115m. There was a very strong start to the second half of the year with January 2017 delivering the highest ever monthly sales in what is considered to be the slowest month in the self-tanning industry, with the US performing in line with expectations after launching in November 2016 with the Group securing opening orders for Skinny Tan from Harmon Retail Chain (a subsidiary of Bed Bath and Beyond). Revenue and profit expected to grow in the second half driven by the above-mentioned strategic initiatives undertaken in 2016, the fast-growing DTC platform and expansion in the UK, Europe and US.

 

OneView Group (LON:ONEV 3.38p/£12.75m)*

OneView, a retail digital transformation software provider for in store customer service, announced that Hawk Investment Holdings Limited has agreed to provide an additional loan facility of $0.3m.  The Loan is unsecured and attracts an arrangement fee of 1 percent and interest is charged at 1 percent per month.  The Loan will be used to cover short term working capital needs and is expected to be repaid in the next three months from anticipated cash receipts. Given the substantial shareholding of Hawk, the Loan is deemed a related party transaction under the AIM Rules for Companies. The Directors consider that the terms of the Loan are fair and reasonable insofar as the Company’s shareholders are concerned.

 

ProMetic Life Sciences (TSX:PLI CAD2.41/CAD1,547.89m)*

ProMetic Life Sciences, the biopharmaceutical company with globally recognised expertise in bioseparations, plasma-derived therapeutics and small-molecule drug development, announced that California Capital Equity LLC (CCE), has exercised 44,791,488 share purchase warrants at a price of $0.47 per share for total proceeds of CAD21.05m to the Corporation. The CEO of CCE stated that ProMetic represented a long term and strategic investment for CCE, and that CCE anticipate further collaborations going forward.

 

Proxama (LON:PROX 0.38p/£6.83m)

Proxama, the international digital and mobile commerce company specialising in end-to-end payment solutions for card issuers and processors, announced that a leading South African insurance and financial services provider, has signed a 5 year contract with Proxama Solutions Limited for the supply of in-house EMV card issuing, PIN management and card lifecycle management. Revenue earned from software licenses, services and support will be £0.365m in 2017 and a minimum of £0.691m in total over the five years, with additional payments if certain card capacity thresholds are achieved. Proxama will supply Payment Application Manager for EMV card issuing, card lifecycle and key management, PIN Manager for electronic PIN capture and distribution, and EMV Transaction Manager for EMV transaction authentication and post-issuance control of EMV cards, including PIN changes and risk management.

 

TP Group (LON:TPG 8.12p/£30.10m)

TP Group, the specialist services and engineering group, announced that it has reached an agreement to acquire the entire issued share capital of ALS Technologies Ltd and Flexible Software Solutions Ltd for a combined initial consideration of £1.25m, funded from the Group’s existing cash resources, on a debt free cash free basis. A further consideration of up to £1.5m will fall due on delivery of profit related earn-out targets over the first 20 months from completion. The maximum consideration payable for ALS and FSS, assuming all earn-out targets are met, is £2.75m. ALS, based in Wincanton, Somerset, provides systems engineering and assurance capability for mission support, flight control, combat systems and tactical information systems in the aerospace and defence markets. FSS, also based in Wincanton, develops safety-critical software for the defence and commercial sectors. ALS reported revenues of £4.3m and profits before tax of £0.5m in the financial year ended 30 September 2016. As at 30 September 2016, ALS had gross assets of £0.8m. FSS generated revenues of approximately £0.2m and was approximately breakeven in the year ended 31 December 2016. As at 31 December 2016, FSS had gross assets of approximately £0.1m.

 

Vernalis (LON:VER 30.75p/£155.57m)

Vernalis announced the achievement of a clinical milestone from its collaboration with Corvus Pharmaceuticals Inc had triggered a payment of $3m to Vernalis.  In February 2015, the Company licensed exclusive, worldwide rights to its adenosine receptor antagonist programme, CPI-444, for use in all therapeutic applications to Corvus, a US-based biotechnology company focused on developing novel immuno-oncology therapies. CPI-444 is a patented small molecule that is now being evaluated in a Phase 1/1b trial in patients with advanced cancers. It is the lead molecule in Corvus’ pipeline and is being developed both as a single agent and in combination therapy. The clinical trial utilizes an adaptive design that allows expansion of disease-specific cohorts upon reaching certain pre-defined endpoints. Corvus announced positive data from its Phase 1/1b study in January 2017, having achieved the clinical study protocol criteria for expansion in the cohort of patients with renal cell carcinoma with single agent CPI-444. The licensing deal has the potential for Vernalis to earn approximately $220m in milestones from all indications, subject to development, regulatory and sales milestones being achieved.  In addition, there are mid-single digit royalties payable if a product reaches the market, with the potential to reach low-double digit royalties in certain circumstances.

 

Versarien (LON:VRS 15.25p/£18.58m)

Versarien, the advanced materials group, announced the launch of the Company’s new graphene brand, Nanene. Nanene is manufactured using Versarien’s patent protected, mechanised exfoliation process. This process uses high shearing forces to separate the layers of graphite to sheets of graphene which are less than ten atoms thick, with the majority being less than five atoms thick, ensuring the properties of Nanene are superior to materials already established as the industry norm. Versarien has taken this process from the laboratory to scalable production by investments in labour and capital, increasing both throughput and yields.  The result of this is an independently verified, high quality graphene product, Nanene, produced in a manufacturing process that can be scaled to meet ever increasing customer demands. Nanene can be used in a variety of applications including in high-end applications in carbon fibre composites, such as the order announced on 29 November 2016, which was achieved with a tripling of manufacturing capacity on a short lead time.

 

*A corporate client of Hybridan LLP