Small Cap Wrap: Month: September 2010

AIM Breakfast - Archive

21 September 2010

This week: Motive TV continues to motivate, dig in to Serabi and look forward with Seeing Machines

Anglesey Mining (AYM 29.5p/£45.2m)
Anglesey’s 41 per cent owned associate company and Toronto Stock Exchange listed Labrador Iron Mines Holdings is now well underway with the mobilisation and construction of the Schefferville Area Iron Ore plant following receipt of the last two operating permits (a certificate of approval for mine operations and an interim operating permit for the use of the recently installed rail spur line).  This follows the recent award of a mining certificate approving the construction of the Company’s mining facilities, and agreements with the Quebec Innu and the Naskapi Nation.  The plan is to finish construction prior to the year end.

Avacta (AVCT 0.68p/£9.69m)
Avacta has granted to EV (Medical Screening) Limited the exclusive worldwide rights to its laser breath diagnostics technology in return for a 10 per cent royalty on net sales of products developed using its technology.  EV aims to become a leading breath diagnostic company and is focused initially on providing a non-invasive method of screening and monitoring treatment for diabetes – which Avacta estimates is a multi-billion dollar market.
For a company with limited financial resources, and therefore little hope within any reasonable time of developing itself an application targeting the potential demand in this application area, the management should be applauded for this deal – despite the fact that it has taken them so long to get to this point. Time will tell whether they have got into bed with the right development partner and whether the exclusive nature of the agreement will not limit the level of revenue generated. Shareholders must hope that EV has both the resources and the capabilities to exploit this technology to the maximum, bring its testing products to market within the expected two years, and ahead of any competition. We remain cautious for these reasons as well as those stated in our previous comment.

Cyprotex (CRX 6p/£13.42m)
Cyprotex have been selected by The Global Alliance for TB Drug Development (TB Alliance) to work with it in the effort to overcome the global tuberculosis (TB) epidemic.
Cyprotex’s in vitro and in silico ADME Tox technologies will be utilised to help accelerate TB drug discovery.  Cyprotex’s unique Cloe® Screen platform uses state-of-the-art robotics and a sophisticated customised information management system which reduces dramatically the cost and time in generating data while ensuring high reproducibility. By using Cloe® Predict, the TB Alliance has access to Cyprotex’s expertise in PBPK and QSAR modeling, which uses proprietary software that integrates core ADME and physicochemical properties to predict whole-body pharmacokinetics (Cloe® PK) or human intestinal absorption (Cloe® HIA).  These services are accessible through a secure web portal, enabling the TB Alliance’s researchers up to date access from around the world.
The collaboration with the TB Alliance will prove an excellent shop window for, and demonstration of, the Company’s technologies and product capabilities and we would expect a corresponding increase in their understanding and appreciation by the CRO marketplace. We continue to be strong supporters of this company.

Eden Research (EDE 11p/£6.79m)
Eden Research, the PLUS quoted UK agrochemical development company, published interim results for the six months ended 30 June 2010. Although the Company demonstrated a loss for the period of £ 1,367,000 (2009: £1,002,000) it was well in line with expectations. Revenue of £92,000 (2009: £65,000) comprised the upfront payments for the Ecostyle and Certis agreements. There was an increase in administrative expenses £676,000 (2009: £424,000) due to additional costs relating to licensing agreements. In addition Eden Research secured a funding facility of £1m during the year.
Interestingly, a number of key contracts (in the form of licences) were secured during the period, including: (1) a development option and license agreement with Teva Animal Health Inc for all veterinary health applications, with Teva due to pay milestone payments totaling $1.05m, plus royalty payments once sales of the products begin; and (2) a licence agreement with Ecostyle BV for use of Eden’s 3AEY product in amateur gardening, with milestone and upfront payments of $0.24m excluding royalties.
Moreover, submission of the Draft Assessment Report for 3AEY to the European Food Safety Authority by the Chemicals Regulation Directorate took place. It was an important step in the Company’s development as soon to be registered substances for use in the EU underpin a lot of our other future products.
The fact that Eden Research is entering into agreements with such well respected partners might indicate that the company’s technology has significant value.

Elektron (EKT 32p/£33.83m)
The shares are up 45 percent since we wrote on the Company at the beginning of July and shareholders should be very pleased with the performance of Elektron’s management.  The Company has just reported excellent results for the half year to 31 July, with sales up 45 per cent to £20.6m, EBITDA up 323 per cent to £3.0m and EPS of 2.41p (versus a loss of 0.45p per share in the first half last year). The pickup in operating performance, originally brought to the market’s attention in April and again in early July, has continued. The acquisition of Hartest will add to the Group’s momentum and the order book, that stands at a level 48 per cent higher than a year ago, bodes well for the foreseeable future. The inaugural interim dividend (0.25p per share) is demonstration of management’s confidence in the performance of the Company going forward – although we would reiterate our preference for the cash to be used to pay down expensive short term factoring debt.
Although the Board state that the Hartest acquisition “is an ideal fit” we can identify some units that are at best peripheral, and at worse a distraction, and so would expect management to dispose of these in the near future, particularly as there is no shortage of buyers of good technology, despite current market conditions. Any such sales would be welcomed and we would expect shareholders to show their approval through share purchases.  Failure to rationalise the business portfolio however, risks overstretching the already fully occupied management – though the recently announced changes at the top will alleviate this pressure to some degree.
All in all this has been an excellent period for the Group and we expect the shares to continue to perform well.

Faroe Petroleum (FPM 163.5p/£285.45m)
Faroe Petroleum, the independent oil and gas company focusing principally on exploration,  appraisal  and  undeveloped  field  opportunities  in the Atlantic margin,  the  North  Sea  and  Norway reported  unaudited interim results for the six months ended 30 June 2010. The Group ended the half year in a strong cash position with £80.6m (2009 adjusted: £33.1m) mostly due to a £65.2m rights issue in April 2010 to fund forward drilling programme. There was a significant increase in revenue to £9.3m (2009: £2.9m), reflecting higher commodity prices and recent acquisition of the Enoch and Glitne fields in Norway leading to higher production volumes. Faroe’s net production for the first half of 2010 was an average of 1,360boepd. The Group’s loss before tax was £3.8m (2009: £6.1m).The net assets of Faroe Petroleum almost doubled during the period to £134.1m (2009: £74.2m), mainly reflecting the increase in cash following the rights issue. There are currently no dividends being paid.
During the first half of the year the Company made a number of important announcements including appointment of Ms Hanne Harlem as a Non-Executive Director and participation in two exploration wells in Norway, both of which were significant discoveries.  The Fogelberg gas and condensate discovery (Faroe 15 per cent) was announced in April 2010.  In  the significant  Maria  oil  discovery  announced  in  July,  Faroe  was the largest licencee  with 30 per cent. In addition In January Faroe Petroleum achieved the important step of pre-qualifying as Operator in Norway. Moreover, the Group has an exciting drilling programme ahead with five material wells expected per annum over the next two years alone.
Overall, Faroe significantly strengthened its portfolio over the last year; it is safe to say that Faroe Petroleum will continue to grow the business and create further shareholder value.

Goldplat (GDP 10.5p/£11.77m)
The African precious metals recovery and mining company has reported results for the year ended 30th June.  This last year has been a year of consolidation for Goldplat as the Company is transitioning itself into becoming a gold producer as soon as the very long awaited mining lease is fully issued by the Kenyan authorities.  The delay has impacted the results relative to what could have been achieved if the Kilimapsea Gold project had been operating during the period.
Production from the South African and Ghanaian gold recovery plants increased by just 2% to 21,461 ounces at the same time as contained gold in stockpiles for processing declined by 33,100 ounces to 54,900 ounces.  Revenues fell 3.6 per cent to £10.7 million despite the increase in production volume and a gold price that jumped by 30 per cent during the same period. Apparently Goldplat has arrangements with its raw material suppliers crediting them with a portion of the gold sold.  We would prefer to see that reflected in the cost of production which otherwise showed great declines of 20 per cent at the South African operations (to £330 per ounce) and 3 per cent at the Ghanaian operations (to £441 per ounce).  The way Goldplat reports its numbers we cannot tell the realised selling price of its metals.
The result is an operating profit of £2.1 million compared to last year’s £1.8 million, however diluted earnings per share are down 39 per cent to 0.96 pence.
As we have written numerous times during the year, Goldplat is investing heavily into its new mining projects in Kenya and Burkina Faso as well as in plant improvements at the recovery businesses in South Africa and Ghana.  While we are not overly impressed by this financial result we strongly believe the company is on the right track both operationally and strategically.

Herencia Resources (HER 1.3p/£12.49m)
As with its recently completed drilling programme at the Paguanta zinc-lead-silver-gold project in Northern Chile, Herencia announces on time the group’s new Mineral Resource estimate.  Without getting into the details the upgrade is as expected a major improvement on the estimate taken two years ago with large increases in both grade and tonnage.  As we have commented on earlier, drilling results have encountered significant gold content and gold grades are now incorporated into the Mineral Resource estimate.  Whilst the 2010 drilling programme has ended, this estimate is not the final one with several newly discovered veins still open.  We should also keep in mind the great initial exploration results at the Company’s adjacent Doris project which is not included in this estimate.  Herencia’s priority is to move the Paguanta project towards development and the next step now is to move into a feasibility study.  We expect to get confirmation of this during the fourth quarter.

Hightex (HTIG 8.12p/£15.26m)
Hightex, a leading designer and installer of membrane roof façades worldwide, announced the appointment of Frank Molter as the new CEO on 15 September 2010 as well as its unaudited interim results for the six months ended 30 June 2010. In the first six months of 2010 Hightex’s turnover has increased by 90 per cent from €7.3m to €13.8m. Revenues were mainly generated from key roofing projects; such as 2012 UEFA EURO Cup stadiums in Kiev, the Ukraine and Warsaw, Poland as well as BC Place Stadium in Vancouver Canada. Gross profit rose by 44 per cent from €1.6m to €2.3m and the EPS increased to 24 cents from the previous year’s loss per share of 2 cents.
Moreover, Hightex expects to benefit from its partnerships with large companies working in complementary areas with whom Hightex can work as an authoritative supplier of retractable roof systems for stadia and other structures. In addition, the Company believes that further contract wins will be announced before the end of the year. Overall, the Directors believe that the Group has strengthened its performance in all areas and look forward to the future with increased confidence.

Hutchison China MediTech (HCM 394.5p/£204.09m)
Chi-Med, the China-based healthcare and consumer products group, yesterday announced the launch of its co-branded Earth’s Best and Zhi Ling Tong organic infant formula product in China through Hutchison Hain Organic Holdings Limited, its venture with The Hain Celestial Group, Inc. The product is produced in Switzerland under an exclusive supply agreement with an independent supplier and has completed the China importation and certification process with approval from the Guangdong Entry-Exit Inspection and Quarantine Bureau of The People’s Republic of China and a certificate of organic certification from the China Organic Food Certification Centre. Earth’s Best is a leading brand of organic baby food in the United States and Canada. Zhi Ling Tong is Chi-Med’s premium infant nutrition brand in China.
The sales of infant formula market were estimated to be approximately $3.4bn in China in 2009. At the end of 2009, Zhi Ling Tong products were being sold through 13 sales offices across China covering more than 130 cities through over 160 wholesalers, national supermarket chains, drug store chains, approximately 3,600 mother/baby shops and 1,200 hospitals.
Christian Hogg, Chief Executive Officer of Chi-Med, said: “The importance to China’s families of the welfare of their children, coupled with increasing affluence and awareness of past quality issues, create a major opportunity for a world-class, organic certified infant food product range in China…..We believe the scope to build sales and market share is considerable.”
HCM has gone up £20m in market cap since we last wrote on the Company a month ago. This low-risk, high-reward specialty pharma, is still one to watch in our opinion because we like the mix of different businesses (biotech drug development, generics and healthcare products) and also geographical areas (Europe, Mainland China).

ITM Power (ITM 35.25p/£36.36m)
ITM, announced the launch of its vehicle refueller HFuel® at its Shareholer Open Day and demonstrated the hydrogen internal combustion powered Ford Transit van from Revolve technologies. The Company is now working towards achieving the critical CE certification necessary for the successful commercial roll out of its products. In addition, ITM announced a broadening of its patents in both Europe and Japan thereby allowing the Company to increase the range of applications that its products and materials can be applied to whilst maintaining the control of its technology.
This news, combined with ITM’s participation in the CO2 Reduction through Emissions Optimisation project funded by the UK Government funded Technology Strategy Board (lead by Ford and includes partners Jaguar, Johnson Matthey, Bradford, Birmingham and Liverpool Universities, Combustion Limited and Revolve Technologies Ltd) confirms that the Company is at the forefront of technological development in this area.

Just Car Clinic (JCR 54.5p/£7.96m)
Just Car Clinics, the independent collision repair chain, reported interim results for the six months ended 30 June 2010, last week. Revenues improved by 17 per cent to £25.3m (2009: £21.6m) including contributions from acquisitions. Hence, revenues increased by 10 per cent on a like for like basis. Just Car Clinics experienced an increase in profit before taxation and EPS by 8 per cent to £608, 000 (2009: £563, 000) and by 11 per cent to 3.0p (2009: 2.7p) respectively. Cash flow from operating activities continued to be strong at £644, 000 (2009: £1,232,000), consequently net debt remained at approximately £1.3m. As a result of improved profitability and strong underlying cash flow, the interim dividend for 2010 has been increased by 32 per cent to 0.70p (2009: 0.53p), reflecting recent progress and the Board’s confidence in the Group’s long-term prospects.
Expansion continues to be the Group’s strategy. Thus, during the last year three acquisitions have taken place and Just Car Clinics extended the range of services offered to customers. The services now include tyre replacement at all locations, vehicle maintenance at the majority of sites as well as a mobile accident repair offering which is designed to allow customers to have minor repairs carried out at their home. These initiatives are set to increase the average profitability per vehicle.
Moreover, a number of potential opportunities are currently being assessed. Judging from the Group’s strategy and continuously strong financial performance, it is safe to say that Just Car Clinics is well placed to make further progress.

Lipoxen (LPX 7.5p/£13.29m)
Lipoxen is a biotech company that develops new and improved versions of existing drugs and vaccines with a cost effective business model that is based on out-licensing its proprietary technologies to partners that have strong manufacturing and marketing capabilities.  One of Lipoxen’s partners and third largest shareholder is Baxter International, a global healthcare company who signed a license agreement with Lipoxen in 2005 with a potential value of up to $75 million in cash milestones plus royalties.  When discussing Lipoxen’s anticipated pipeline developments earlier this year, we mentioned that we expected Baxter to soon be in a position where it will announce a lead product candidate from the Factor VIII project and possibly news about a broadening of the collaboration.  Last week, Lipoxen announced that Baxter has selected a lead candidate, PSA-FVIII, a longer-acting form of Factor VIII molecule using Lipoxen’s PolyXen drug delivery technology and that pre-clinical development has started.  The original license agreement has been amended so that Lipoxen will receive a $2 million license fee payment upfront (rather than at the filing of the IND) and the issuance of a warrant to Baxter entitling them to subscribe for up to $2 million in new equity in Lipoxen at an exercise price of 9.02 pence until 30 June 2015.
This is a great milestone for Lipoxen and underscores the business model with Baxter already exploring additional development programmes.  Lipoxen has other important partnering agreements with the Serum Institute of India, FDS Pharma, the Barbara Davis Institute and Pharmsynthez as well as technology collaborations with Genentech, Genzyme and Amgen.
Lipoxen’s technology platform generates a large number of opportunities with each having a decent shot at returning considerable revenue streams to the company, a point that is not reflected in the current pricing of the company.

MediaZest (MDZ 0.42p/£0.71m)*
MediaZest, which exploits digital display technologies to create products used in marketing, branding and in educational establishments,  last week announced its full year results for the 15 month period ended 31 March 2010. Turnover for the period was £2,572,000 (2008 – £4,424,000), and the Group made a loss for the period of £747,000 (2008 – a loss of £605,000). 2009 was a difficult year. Turnover fell by over 40 per cent and the general deterioration in the economic climate coupled with a contraction in business undertaken with several large clients had an impact on all markets in which the Group operated. Despite considerable reduction in the Group’s cost base this inevitably led to a loss for the 15 month period, although in the second half of 2009 the Group was able to achieve an improvement in trading, indicating the early signs of a turnaround in the Group’s activities and its efforts in rebuilding its revenue base.
In the course of this restructuring phase the Group has pursued a policy of growing the percentage of revenue generated through retained and contractual business. Our product range has also been re-appraised and retooled to target better value for money solutions, albeit perhaps not as creative as our most imaginative installations but more in tune with client budgets during this time. We have also sought innovative ways to price and cost our solutions, particularly in the area of temporary campaigns in retail stores, in order to match customer budgetary expectations whilst maintaining our gross margins.
MediaZest Ventures revenues have been particularly hard hit during the recession. It has been clear that whilst clients continued to engage with us, to a large degree they failed to commission projects in any meaningful way during 2009. It is notable that from the beginning of February 2010, incoming enquiries have increased dramatically and long term opportunities developed over the course of 2009 have started to come to fruition.
2009 was a reasonable year for the company’s Education division, albeit less noteworthy than the preceding year. The company’s retail sector clients, similar to MediaZest Ventures’ customers, continued to engage with us but failed to spend in line with previous years. Again, client attrition and margin performance were not issues for the company but absolute project spend was because being reliant on discretionary budgets this type of business tends to be vulnerable.
The Group’s financial performance for the beginning of 2010 – 2011 financial year is better than it has ever been and it hopes to be able to announce results that are markedly improved when the next interim announcement is made. Management’s revised business model, based on a more market driven approach and on aggressive cost control, continues to produce better results. Recently there has been a revival in interest in MediaZest products and the group now looks set for sustained profitable growth from 2010/11. This leaves the shares on a PE of just 1.7x for 2011/12 and with fast rising net cash balances we think the shares are worth much more.

Motive TV (MTV 0.55p/£3.12m)*
Motive TV, the media company specialising in digital television technology, published interim results for the 6 months to 30 June 2010. Revenue for continuing operations was up by 35 per cent to £0.37m (2009: £0.27m), with gross profit from continuing operations up by 238 per cent to £87,000 (2009: £25,000). However, losses attributable to continuing activities were £0.54m (2009: £0.24m), although this is after exceptional expenses of £0.28m, whilst diluted loss per share was £0.08 (2009: loss 0.13p). Cash at bank for the Company fell by 58 per cent to £152,000.
Motive have been going through something of a transition from television production to being a global investor of technology, having disposed of its 49.9 per cent holding in Brown Eyed Boy Limited which was the last remaining television production interest for Motive. On the technology front, Motive own the distribution rights to BesTV, which is essentially digital terrestrial television software, outside of Spain and Italy, and is seeking to gain contracts to supply broadcasters in Europe, Asia and the USA – Motive recently announcing that it had separately reached agreement with both Antenna Hungaria ZRT, based in Hungary, and TV Nova, of the Czech Republic, to pilot a test programme for evaluating the BesTV technology, and the Company continues in negotiation with a number of other broadcasters in both Europe and the USA for further pilot schemes.
The Company also made a number of other key announcements during the week, the first of which was the acquisition of the net assets of NXVision Limited for £10,000 from the liquidators. NXVision has developed proprietary software to allow those with an internet connected device, or even perhaps a mobile phone, to obtain and display anything that is available on a home set-top box, thus allowing users to remotely access key content stored on a built in hard-drive or stream live content that users would be able to view at home. NXVision see this tying in well with the BesTV offering, thus increasing the product’s attractiveness. A joint venture will be established which is 20 per cent owned by NXVision and 80 per cent owned by Motive.
The really big news for Motive, and the key announcement made during the week, was the proposed acquisition of 67.7 per cent of Adecq Digital S.L. for a consideration of     £1.6m, whilst also proposing to raise £4.75m through a subscription for loan notes of the same nominal amount and 71.25 million subscription warrants. As mentioned earlier, the Company is already in collaboration with Adecq to distribute the BesTV software to all regions excluding Italy and Spain. BesTV effectively is an on-demand set-top box much in the same way of the SKY+ Anytime product. In making the acquisition and raise, the Company intends to use funds to grow Adecq digital and provide additional working capital for the Company, which is in advanced negotiations to provide BesTV to a major European broadcaster. In commercializing the technology, 6 major revenue stream have been identified, which include platform licences from broadcasters, platform planning and integration fees (in a consultancy/engineering type capacity), one-off set-top box licence fees, set-top box integration fees (again, in a consultancy/engineering type capacity), one-off set-top box certification fees and platform management fees from the broadcaster. Upon acquisition, the key development projects to future growth for the enlarged Company include a full hybrid DTT/internet service, the further development of advanced advertising solutions for BesTV, the enabling of 3D broadcasts and the integration of BesTV directly into digital television sets.
The markets have responded well to the news, with the share price rising to 0.55p from 0.475p on the news. We look forward with great anticipation for further updates, and feel there are potentially large gains for this rapidly evolving company.

One Media Publishing Group (OMPP 1.75/£1.6m)
The PLUS quoted One Media Publishing Group, which is involved in Business to Business music and video rights, has signed a long term music catalogue and publishing deal with the punk band 69.
Michael Infante, Chief Executive of One Media, said: “Sham 69 had a huge influence on the punk rock movement during the late 1970’s through to the mid 1980’s and it is still performing and will generate new sales to new audiences worldwide through our network of digital stores”.
One Media has acquired the exclusive rights, on a royalty sharing basis, together with an agreement to fund a new live recording of all the band’s past hits as well as new recordings included in their upcoming 50 gig European tour for worldwide distribution. All tracks will be distributed by The Orchard, the world’s largest digital music distributor and One Media’s digital partner and soon will be available for downloading from around 250 music downloading websites, including iTunes and Amazon.
Since we last wrote on One Media, the Company has completed a number of other deals, including the acquisition of the rights for both digital and physical records to a catalogue of music from the Machet Catalogue of music rights which mainly includes established “Gangster Rappers” for a total of $18,000 as well as the acquisition of the rights on a royalty sharing basis for the worldwide distribution of over 6000 tracks of `country’, `blues’ and `mid-American’ rock music for $25,000.
Given the positive updates released over the last month, we feel there are further gains to be had by a Company that has developed the knack of signing new digital content. Keep your eyes and ears open and peeled on this one.

Photon Kathaas Productions

A South Indian film production company looks all set to join AIM, making it, according to their directors, the first company of its type to be traded on a major international stock exchange. India’s film industry is the largest and fastest growing in the world, (Hollywood currently produces much fewer than the 1,300 films produced in India every year), and the South Indian market accounts for approximately 60 per cent.
Funds raised through admission are intended to be used to invest in the creation and exploitation of media content, by producing and co-producing films with a varying genre, language and budgets. The Company is currently targeting an audience of 240m with its productions.
Venkat Somasundaram, Chief Executive of Photon Kathaas, said:
“We are very excited about securing a listing on AIM as well as raising funds to support our rapid growth plans. With our industry experience and Gautham and A. R. Rahman’s creative expertise, we are very well positioned to become a market leader in the fragmented and under resourced, but rapidly growing, South Indian film market. With our first mover advantage, there are substantial opportunities to cost effectively produce a range of multi-lingual film-based IP for exploitation across a wide range of the media, not just in the South Indian markets, but the global Indian Diaspora.”
IPO’s this year have faced a great deal of uncertainty through the continuing economic difficulties, and many, including the hotly anticipated Banco Santander float, have pushed back to 2011 when it is hoped that a clearer picture will emerge. There is, however, a degree of optimism that some IPO deals will come to fruition by year end, with India estimated to raise $12.3bn from equity issuances by year end, and the Photon Kathaas Productions IPO looks set to be part of this.

PLUS Markets Group (PMK 1.66p/£6.44m)
AIM listed company, engaged in the operation of the PLUS market (providing a capital markets listing service), and published interim results for the 6 months to 30 June 2010. Whilst revenue had not changed from the prior year (£1.5m), the Company was able to reduce its pre-tax loss for the period by 56 per cent to £2.5m. Much of this improvement has come about as a result of a 45 per cent reduction in administrative expenses to £4.03m (2009: £7.38m)- a cost cutting strategy was employed immediately after the introduction of a new management team (joining in February) who were seeking to meet a number of long/medium-term objectives , including reducing the Company’s cost-base by 40 per cent to an annual level of below £5m from 2011 onwards, a headcount reduction (52 to 28 employees, generating savings of £1m) and a reduction of technology infrastructure costs by £1.5m per annum. A number of new products are in the pipeline, including an offering to provide multilateral electronic and retail execution services, a proposed launch of a corporate bond product for small/mid caps and the introduction of a PLUS derivatives exchange. Whilst market conditions were tricky during the first half of the year, PLUS only had a marginal net decline in participants (from 179 in 2009 to 174 in 2010). The balance sheet continues to remain healthy, with no short or long term debt financing, and a healthy cash balance of £9.73m (2009: £10.26m).  Whilst the Company’s traditional revenue stream is very much tied to the fortunes of the constituents of the PLUS markets (therefore facing the turbulent market conditions), the ambitious and aggressive strategy it is employing to create a leaner and more competitive stock exchange, together with the expansion of its range of product offerings (in particular the proposed PLUS derivatives exchange), offers much food for thought. Future trading updates are anticipated with great interest.

Polo Resources (POL 4.02p/£97.67m)
The shares continue to outperform. Having been initially excited earlier in the year when the Company received an indicative offer for their 27.64 per cent equity shareholding in Caledon Resources, we became disappointed when a level of only 68p per share was confirmed. However what a difference a month makes! The latest announcement that Polo has received a further indicative approach that has enticed management into preliminary discussions is very positive for two reasons – both that the price per share put on the table must surely be at a decent premium to the previous 68p for the Directors to commence negotiations and that the prospect of a sale would lead surely to an additional distribution to shareholders and possibly further share buybacks.
It is obvious that Polo is holding out for what it considers to be an appropriate price for Caledon’s significant coal reserves at Minyango and, almost as importantly, its priority position with regard to capacity at the soon-to-be-built Wiggins Island Coal Terminal. We continue to recommend the shares and further, would suggest that the safer way to play the possible takeover of Caledon is through Polo on account of the latter’s significant discount to NAV that would act as a cushion to any short term setbacks in the eventual sale of the coal producer.

Rockhopper Exploration (RKH 472p/£908.79m)
Having discovered oil at its Falklands Sealion prospect in June, Rockhopper’s confirmation on Friday that – at a tested flow of 2,000 bb/day the find is commercial and that further tests have scope for ‘significant’ upgrades to the flow rate – has well and truly set the oil community there alight.  Not just among the other oil explorers but also the oil analysts at major brokers here who are starting to follow it.
They see scope to further upgrade the size of the field, which has already attracted estimates that justify a share price over 700p despite that Rockhopper is expected to move up to the main market in order to raise more funds to continue its exploration programme into 2011. We would guess that, following Friday’s news which broke only in late afternoon, brokers’ price targets are being further upgraded as we write, and talk is also beginning that the field Rockhopper has discovered may even extend into some of the next door prospects shown so far only by seismic mapping. It could therefore turn out to be much larger than the 245m recoverable barrels that are the – increasingly conservative looking – estimate so far.
Shell must be kicking itself for having so narrowly missed the target in their 1990’s drilling, and given further talk that the majors – lacking new discoveries elsewhere in the world – will want to join the Falklands party; other analysts expect that Rockhopper might be approached. Last, but not least, if the find proves large enough to set up an infrastructure locally in the Falklands, rather than shipping the crude elsewhere for processing, the gas find that Rockhopper made north of Sealion and declared uneconomic, might become so. With Rockhopper now in such a strong position, it is not the time to take any of the large profit that shareholders already have under their belts.

Seeing Machines Limited (SEE 3p/£12.17m)
Seeing Machines, a developer of advanced vision based industrial systems, announced their final results for the year to 30 June 2010. Notably, the Company reduced its net loss for the period to A$1.8m (2009: A$5.6m, this loss includes a write-down of intangible assets totalling A$5m- therefore on a like-for-like basis the 2009 figure would be A$2.3m). Revenue fell to A$4.5m (2009: A$5.2m), much of which was due to a delay in orders for the DSS product (road-transport sector postponed orders during the difficult economic climate and trading conditions), but on a positive note, US$1.2m of orders from the mining sector were made during June and July, which are to be recognised during the first half of the 2011 financial year. Cash at year end stood healthily at A$3.9m (2009:A$0.7m) largely increased as a result of a recent £3.3m placing, and helping to push the Company’s net assets up to A$4.8m (2009: A$1.5).  We have written extensively on this Company in the past, which has benefitted from numerous contract wins over the year- an agreement to supply the DSS product suite to Freeport McMoRan Copper and Gold Inc’s group of operating companies and a contract with BHP Energy for two mines in New Mexico are particularly noteworthy. Whilst the Company’s core revenue stream comes from the DSS product suite (a driver fatigue/distraction countering solution), Seeing Machines also has a number of other products; which include faceAPI (a licensed version of the Company’s elementary software, intended to be used by developers, and whose sales increased by 59 per cent to A$0.5m); faceLAB (targeting the research industry- sales of which increased by 10 per cent to A$2.6m); and a new product which is currently in development that marks the Company’s foray into the medical sector (the TrueField Analyzer).
Whilst, currently, Seeing Machines generates the bulk of its revenue from the DSS product, which it continues to develop (to reduce unit costs, for example), the vast array of possible uses to which the technology can be applied suggests that faceAPI, as a technology licence could potentially provide the Company with enormous gains in the future. Of particular note is application of the technology to the gaming industry, where motion recognition is seen as the next big leap forward (Nintendo’s introduction of the Wii Motion sensor has been followed this week by Sony, and Microsoft are due to enter with their product in 2 months), 3D display industry and sports training (object trajectory tracking and anatomical motion sensing).   The Company’s strong pipeline of opportunities across Australia, Africa and the Americas, both with existing and potential clients, together with the flexible application of this increasingly demanded technology, suggests great possibilities. Seeing is certainly believing.

Serabi Mining (SRB 2.08p/£9.29m)*
Serabi last week announced its interim financial results for the 6 months to 30 June 2010. Highlights in the period included Eldorado Gold subscribing for 120,000,000 new shares at 3 pence taking a 26.8 per cent interest, the  IP survey undertaken in the  first half of the  year has yielded nine drill targets – a better than expected result and at the period end Serabi had cash balances of US$7.2m.
Based on the IP survey and other exploration results, Serabi is now planning a discovery drill programme that could potentially confirm the presence of additional resources in close proximity to the Palito mine.  Serabi believes that this could form the basis for achieving its objective of establishing a minimum 1.5 million ounce resource in the area.
The financial results for the first six months ended 30 June 2010 show an operating loss for the Serabi Group of US$2,260,134.   This compares with an operating loss for the equivalent period in 2009 of US$4.44m and a loss for the 12 month period to 31 December 2009 of US$9.76m.
A total of 1,052 ounces of gold were sold during the period generating revenues of US$1.15m. The objective is that  out  of  the 18 VTEM anomalies Serabi would eventually  identify at  least two  “Palito look-a-like”  deposits, with minimum gold  resources  of  approximately  500,000 ounces  each.  Serabi is therefore very encouraged that the initial IP programme has identified nine drill targets from the first twelve of the VTEM anomalies surveyed and believe that this success rate has improved the prospects of discovering these two new deposits.  It is also worth noting that all of these drill targets are less than 3 kilometres from the existing plant and infrastructure, comfortably within viable haulage distance.   Furthermore, a number of the targets are located within the existing mining lease, which should eliminate or at least simplify, the need for additional permitting required in the event of any production decision.
Based on these results, Serabi is now preparing to begin a 7,500 metre fully funded discovery drill programme over the nine identified targets.  This programme is intended to establish if the anomalies are sufficiently gold mineralised to justify further drilling in 2011.  Any subsequent  programmes would be  for resource definition drilling  to  establish  the  size  and  continuity  of  identified  mineralised structures. In the event that the current outlined programme is successful, Serabi is also evaluating other areas in the vicinity of Palito and the Jardim do Ouro district where it might consider undertaking further airborne VTEM surveys.
The one fly in the ointment is the issue of a notice by the Brazilian Federal Environmental Agency, IBAMA, against the mining of gold, which had kept the Company ticking over. We hope that this will be resolved shortly, however ultimately the long term value and growth of Serabi will be derived from exploration success and not small scale oxide mining, which could otherwise become a major distraction of management time.   Quite the reverse in fact, the current suspension of oxide mining activity has facilitated the transfer of personnel and equipment resources for exploration purposes.
The current market capitalisation seems to ignore the opportunities that Serabi has for the discovering further gold resources close to the Palito Gold Mine. Drilling success could lead to the development of a couple of satellite mines feeding the existing central mill. For the time being this is a reserve growth story and the success of the current exploration program could allow the resource here to rise significantly.  Eldorado has a track record of successfully developing gold projects in challenging locations and its arrival on the shareholders list does conjure up a number of other possible development scenarios. One to pick up at these prices and with the gold price and gold plays riding high.

Industry Update- Gold exploration
Gold exploration companies have done particularly well recently, with the uncertainties of the financial markets causing investors to turn their attentions to hard assets. Many analysts expect gold prices to continue to rise for the next two years, and we see potential for gold exploration companies to benefit from much of this- Solomon Gold (SOLG), Vatukoula Gold Mines (VGM), Kenmare Resources (KMR), Tertiary Minerals (TYM) and Serabi (SRB, as written about above in the Small Cap Wrap) have all seen recent share price gains, and many of these have provided positive trading/financial updates. Keep an eye on further developments in this industry.
*A corporate client of Hybridan LLP

The Hybridan Small Cap Wrap is a weekly review of some of the most interesting small cap stories of the past week.  Our review will usually be of those companies whose market capitalisations are less than £50m although we may occasionally cover larger companies.

07 September 2010

This week: Sunkar’s new resource, ANT is on the march and find growth with William Sinclair

Amur Minerals Corporation (AMC 5.5p/ £11.59m)*
On 1 September the Company announced it had received a 2 year extension to its Kun-Manie exploration licence to explore for nickel and copper. This has been a very quick process – barely 3 months since it was applied for and is testament to both the Company’s ability to navigate through the Russian mining regulations and procedures, and the contacts that management enjoys inside the Russian Mining Ministry.
This all bodes well for the Company’s outstanding application for the mining licence to accompany its certificate of discovery of the nickel sulphide deposit within the Kun-Manie property. The granting of a right to mine the deposit will focus the industry’s attention on the huge potential within Amur’s licenced areas.
The total approved reserve currently stands at 31.7 million tonnes of ore and averages 0.64 per cent nickel and 0.18 per cent copper.  An independently compiled pre-feasibility study of Kun-Manie carried out in 2007 incorporating a $7.50/lb nickel price, indicates a Post Tax NPV (10 per cent) of $84 million.
Peer group analysis suggests that Amur Minerals could attract a valuation similar to nickel sulphide exploration companies such as Starfield Resources or Victory Nickel of around £23.7m to £25.7m. The Pre-Feasibility Study gave the project a NPV of $84m which equates to 23.5p per share (note that this does not take account of the material rise in the nickle price as highlighted in our previous Small Cap Wrap comment). Thus 23.5p should be a very conservative target price when the Mining Licence is granted. At these levels, we recommend picking up stock.

Anglesey Mining (AYM 31.25p/£47.86m)
Anglesey’s 41 percent owned associate company and Toronto Stock Exchange listed Labrador Iron Mines Holdings is now on a fast track of constructing its iron ore project after agreement was reached with the Quebec Innu who had been blocking access to mining properties.  This follows the recent award of a mining certificate approving the construction of the Company’s mining facilities. With the positive news flowing through, Anglesey offers plentiful prospects. Dig in to this one.

ANT (ANTP 24p/ £5.83m) 

ANT, the software company that allows TV operators to manage their content and provides customers with the ability to self-select services on demand, announced its interim results for the 6 months to 30 June 2010. Financial performance was better than for the prior year, with revenues up by 5 per cent to £2.1m, and gross margins improving to 85 per cent (2009: 83 per cent)- a change in the sales mix, with Professional Services revenue increasing and the Group’s licence and royalty revenue decreasing, explaining this result. Loss before operations fell by 44 per cent to £500,000, mostly as a result of a 23 per cent decrease in operating costs. ANT signed 5 new licences during the period for various components of the ANT Galio Platform. With HbbTV expected to be adopted across Europe as a standard, the market for connected TV (broadcasted TV being coupled with internet related services) is expected to reach over $1.3bn by 2014. This rapidly evolving technology market is served well by the specifications of ANT’s offerings and we look forward to the Company’s second half performance. This little ANT looks to be on the march.

Biome Technologies (BIOM 0.13p/£7.65m)
Biome, the Company formally known as Stanelco, who primarily operate in the Bioplastics industry, announced its interim results for the 6 months to 30 June 2010. The Company, which recently moved to AIM, enjoyed a 40 per cent growth in revenue to £6.7m (2009: £4.8m), whilst operating losses fell from £1.5m to £1.2m- much of which has been obtained from a 53 per cent growth in the UK bioplastics business. Interestingly, while Bioplastics represent the bulk of the business, the Company has a second division known Stanelco RF Technologies which has seen 92 per cent growth. The cash position sits healthily at £4.7m, the bulk of which is due to a £3.5m cash-raising in June.  With 2 new product ranges, and new partnerships with large international customers (US customers in particular- personal care, food processing and confectionary businesses have been worked with during the period), Biome Bioplastics looks to be in a position to be able to leverage new relationships and take on new clients, whilst the RF Technologies business has seen both growth in new and repeat clients which signals the potential to be had.   Both divisions have been busy over the course of the last 6 months, and this looks set to continue for the foreseeable future, given the number and variety of clients the Company has. Dynamics to appreciate, we think.

Craneware (CRW 401p / £101.65m)
Craneware, the provider of software to US hospitals to improve financial performance, has announced final results for the 12 months to 30 June 2010. Revenues increased by 23 per cent to $28.4m (2009: $23m), profit before tax increased by 24 per cent to $7.3m (2009: $5.9m), and EPS increased to 22 cents (2009: 18 cents). The Company currently has $89.8m of revenue under contract (2009 $60.1m), and has benefitted from signing reseller agreements with McKesson (to integrate Craneware’s Chargemaster Toolkit into their revenue management systems) and Premier Purchasing Partners (to market all of Craneware’s solutions to its customers) during the period. With US healthcare reforms currently underway, hospitals are being pressured into driving efficiency and reducing costs (40 million extra patients are expected to be treated by 2014, without increases in revenue from insurers)- Craneware’s product range facilitates this cost-cutting by improving supply chain management and allowing hospitals to continue to provide high levels of patient care.

Cubus Lux (CBX 16.5p/£3.94m)*
Cubus Lux, the Croatia-focused leisure resort operator and developer, announced the raising of £321,845 through the issue of 2,298,890 shares at 14p per share, which it intends to use to finance project costs and short-term working capital announcements.  As mentioned last month, the Company continues to develop its operations in Croatia, and having extended its operator’s licence for 5 further years at the end of 2009, the Company continues to offer potentially exciting prospects. The fact that the Chairman (Gerhard Huber), Director (Christian Kaiser) and the CFO (Steve McCann) participated in the last placing demonstrates vested interest and aligned objectives- a signal for the markets to appreciate. Some big partners and commitments are needed for the projects Cubus has, but all things point to heading in the right direction.

Cyprotex (CRX 6.38p/£14.26m)
Since we commented on the Company on 10 August, the shares have risen by over 30 per cent. During this time, the Company has launched Cyprotox®, an in vitro toxicology service to accompany its other offerings to the clinical testing industry. The Cyprotox® service is offered from the Company’s Macclesfield laboratory that now houses its complete advanced array of pharmaceutical testing products and services, bringing it up to the same level of capabilities as the recently acquired businesses in the US. Thus Cyprotex will be able to offer its UK clients the High Content Screening (HCS) technology to determine multi-parametric indicators of toxicity.  HCS is a recent breakthrough for early toxicology assessment that has been extensively validated, and is now being adopted throughout the pharmaceutical industry.
Additionally, the Company has announced that researchers can now access free online its database of the ADME and pharmacokinetic properties of marketed drugs (via its Cloe® Knowledge data visualisation and interpretation tool). Cloe® Knowledge categorises drugs according to the industry’s standard reference, allowing researchers to interrogate drugs and their impacts for a particular therapeutic area. This is a clever way of marketing the Company’s wider research databases and clinical testing capabilities, bringing them to the attention of precisely the analysts that could benefit from the Company’s service offerings. We can only see benefits from this initiative.
Further, the Company announced its half year’s results on 12 August that demonstrated despite the challenging environment and the strain upon management time resulting from the acquisition process of the North American businesses, the business continued to perform well. The comment that the growth experienced in the second quarter has continued into the second half of the year bodes well for investors. It should not be a surprise then to learn that the directors were immediate buyers of shares in the Company after the results announcement. Others should consider following their example.

Equatorial Palm Oil (PAL 11.75p/£13.48m)
The Liberia focussed sustainable oil palm plantation developer announced that it has signed a Memorandum of Understanding with Biopalm Energy Ltd. (a wholly owned subsidiary of Siva Ventures Ltd.) to form a $60m Joint Venture. Biopalm will invest $22.5m and guarantee a $30m loan facility to the JV, while EPO will contribute $7.5m and on completion hold all of the current land position in Liberia. The idea of the JV is to accelerate the development of EPO’s 169,000 hectare land position- this serves to reinforce EPO’s strategic development plan which is to plant 50,000 hectares of oil palm plantation within 10 years, targetting 250,000 tonnes per annum of crude oil produced.  The Company is currently in the process of assembling its processing mill, which we noted when we last wrote on the Company, and it continues to expect to commence production in Q4 2010. Funds will be used to facilitate and enable all operations across the plantation areas of Palm Bay, Butaw and River Cress, whilst the expertise and know-how of The Siva Group will help the Company realise the potential of the operation.  The Company appears to be on the cusp of great fortune, and in recognition of this Siva Group has invested substantially. It should come as no surprise that the share price of the Company has improved dramatically, though one should recognise that there is still room for share price improvement.

Goldplat (GDP 9.5p/£10.65m)
A month ago, we commented on the news that the African precious metals recovery and mining company was in the process of finally receiving the long-awaited approval for a mining lease for its Kilimapesa Hill gold mining project in Kenya.  The latest news is that whilst the Kenyan Director of Survey has still to issue the Company with a mining right number, the Commissioner of Mines and Geology has given permission for the processing plant to commence commercial gold production.  The existing stockpiles are expected to provide enough mill feed until underground operations are allowed to resume, hopefully without much further delay.

Herencia Resources (HER 0.725p/£7.0m)
Just after having finished a very successful drilling programme at the Paguanta zinc-lead-silver-gold project in Northern Chile, Herencia announces high grade copper and silver assay results obtained through surface sampling at its Doris prospect.  The Company is now planning an additional work programme at Doris which is located approximately 1500 meters from the main Patricia project just drilled.  An update of the Mineral Resource Estimate is expected by the end of September which would allow Herencia to move to a Feasibility Study phase in the fourth quarter.

Hydrodec (HYR 8p/£28.95m)
Hydrodec, the oil recycling specialist, recently announced its first half results highlighting an 82 percent growth in Group revenues. Demand for SUPERfine transformer oil grew very strongly with a rise of 147 per cent in sales leading to record demand. It is now experiencing demand in the US that exceeds its production capacity there. We would not be surprised to see the Company raise its prices – certainly a bit of novelty in the current economic environment.
A strategic alliance in Japan coupled with increasing sales in South America combined with feedstock price reduction negotiations lead us to believe that the management’s expectations of positive net cash generation in the first half of 2011 is eminently achievable. This is certainly a super fine growth company that investors should follow.

Immunodiagnostic Systems Holdings (IDH 780p/£218.17m)
The Company recently gave a brief trading update at its AGM. “Trading for the Company continues to be in-line with management expectations with demand for both our manual products and the IDS-iSYS being greater than the same period last year.”
Recent software upgrades and capacity increases that have enhanced customer offerings, combined with inaugural North American client accounts lead us to conclude that the Company should continue to enjoy increased investor support.

Motive TV (MTV 0.58p/£3.26m)*
Motive TV, the media company specialising in digital television technology, announced that its Dublin based TV production business has won a new live sports production contract with TV3, the Irish national commercial television broadcaster, valued at EUR1.1m. The fact that this new contract allows Motive to co-produce 62 UEFA Champions League and UEFA Europa League matches with Asgard Media suggests sound reasoning in keeping the business and helping to diversify the Company’s operations whilst it continues to work building its DTT business.   Speaking of which, good news was also to be had on the Company’s BesTV offering, with Motive recently announcing that it had separately reached agreement with both Antenna Hungaria ZRT, based in Hungary, and TV Nova, of the Czech Republic, to pilot a test programme for evaluating the BesTV technology. Antenna Hungaria is the operator of MinDig TV (which is essentially the same as Freeview), which is currently received by 6.3 per cent of all Hungarian TV households. With Antenna, Motive intends to test the addition of Video-on-Demand (VOD) and catch-up TV. A similar agreement was also achieved with TV Nova, and the Company continues in negotiation with a number of other broadcasters in both Europe and the USA for further pilot schemes.   Having had an abundance of good news, the Company’s share price rebounded from a 12-month low of 0.25p to 0.58p, though we feel there is room for further improvement given the prospects for the Company.

Polo Resources (SYNC  3.68p/£89.41m )
Since 10 August when we last wrote on Polo, they have completed the sale of their stake in Extract Resources, netting £94m (3.9p per share) and have paid a special dividend of 3p per share. In addition Weiss Asset management initially increased their stake by 19.5m shares to almost 260m shares, took the special dividend and then sold down to 238m shares. A director also took advantage of the special dividend by selling 36.2m shares with the dividend at 6.3p before repurchasing 10m post the distribution at around 3.5p. On top of that, the Company announced the purchase (at 3.36p) and the cancellation of 3m shares.  One certainly cannot claim that this AIM share suffers from lack of liquidity!
At the end of the day, we believe that the NAV per share is of the order of 6.4p – a 75 percent premium to the current market price. For a company that has demonstrated its ability to distribute full value to shareholders, the current discount appears excessive.

Sunkar Resources (SKR 30p/£47.95m)
Phosphate fertilizer manufacturers are obviously a highlight at the moment with investors looking across sector operators following the acquisitive move by BHP on Potash Corp (and the increasing likelihood of a counterbid from China). Sunkar’s shares have risen 55 per cent since our last positive comment on 22 June.
Today Sunkar announced a Memorandum of Understanding with Eurasian Development bank (a Russian and Kazakhstan government backed institution) to finance Sunkar’s Chilisai phosphate project in Kazakhstan. The MOU envisages providing up to $200m of debt for 12 years and will add significant credibility for investors when the current bankable feasibility study is completed and announced. Being a fertilizer company, we would not be surprised to see the shares grow faster than their rivals!

Touch Group (TOU 1.75p/ £2.83m)
The business-to-business publishing group announced preliminary results for the 15 months ended 31 March 2010. Revenue was down by almost 10 per cent to £5.7m (due to factors including a depleted sales team), whilst losses for the period increased to £2.2m (2008: loss of £0.8m). Interestingly, gross profit margins have improved to 52.4 per cent (2008: 47.6 per cent), perhaps in part due to the business focusing more on supported content. Net assets on the balance sheet stand at £1.7m (2008: £2.8m), though cash available to Touch increased to £1m (2008: £0.5m). Performance for the Company was unfortunately subdued through difficult trading conditions, though it has implemented a number of initiatives to help turn the business around. Touch raised £0.8m at the end of 2009 to help build the sales team and improve revenue streams from its medical publications- relationships with clients such as GSK, Novartis and Bayer have been extended by offering online marketing and educational programmes, together with medical communications projects, which have in total helped build forward orders of the core journal business to £2.2m (2009: £1.4m) and the medical communications business to £0.6m (2009: £0.1m). The sales force has also been boosted to 40, which is a 70 per cent improvement on the average for the prior year. We keep watch for further updates on the Company’s trading, certainly the worst is behind it, and it can look forward with renewed confidence.

ValiRx (VAL 0.38p/£1.29m) *
AIM listed cancer diagnostic biotech company announced that it has entered into a licensing agreement with Cancer Research Technology for the rights to VAL201, a compound which has been shown to inhibit the growth of tumors that are unresponsive to hormone treatments. Whilst VAL201 moves towards the first clinical trials, ValiRx has obtained the rights to exclusive development and commercialisation of VAL201 in the diagnosis, treatment and prevention of cancer and other diseases.  There are 35,000 men per year being diagnosed with prostate cancer in the UK alone, and 10,000 deaths per year from the disease- the market for treatment is expected to grow to $7.7bn by 2015, from $5.2bn in 2008, therefore offering a significant opportunity for a product based on VAL201. ValiRx will be responsible for performing the pre-clinical development and obtaining the regulatory approval required to perform clinical trials in patients. Having written positive news on ValiRx back in July, we continue to feel that this is a key opportunity to buy before the rest of the market realises the well diversified potential of the Company.

William Sinclair (SNCL 111.5p/£18.46m)
The shares have consolidated a little since we last wrote on the Company at the beginning of July and now would be a good time to “grow” holdings following the announcement of an additional distribution agreement.
The Company has secured a distribution contract with Monro Horticulture to distribute Monro’s range of Growing Success Organics (a wide product base of garden safe chemicals and consumer horticulture products) in return for working capital support.  This initiative is expected to contribute an additional £3m to turnover through exploiting its current distribution network and marks a strategic move by the Company into a broader and higher value range of products.  This is a distinctly positive move by management and it should be supported by investors.

*A corporate client of Hybridan LLP

The Hybridan Small Cap Wrap is a weekly review of some of the most interesting small cap stories of the past week.  Our review will usually be of those companies whose market capitalisations are less than £50m although we may occasionally cover larger companies.