Small Cap Wrap: Month: February 2013

AIM Breakfast - Archive

13 February 2013

This week: Forbidden allows Atos, an illuminating update from PhotonStar and Avation flies high

The Small Cap Club provides regular networking events for key participants, leaders and advisors of quoted small cap companies in the UK. It is hosting its next Small Cap Club meeting on 13 February 2013, tonight, at The Eight Club, Moorgate, 1 Dysart St, EC2A 2BX from 6pm. www.smallcapentrepreneurs.com.

A mixed week in the financial markets last week, with the FTSE 100 closing 90 points lower at 6,260 points, and AIM closing 6 points higher at 746. News during the week saw the Bank of England leave interest rates unchanged at 0.5 per cent, whilst also not furthering its Quantitative Easing programme, and also construction data being released which showed that the industry grew by more 0.9 per cent in the last quarter- much higher than the 0.3 per cent originally thought. The UK inflation rate was also said to be unchanged at 2.7 per cent (CPI) in January, though the Retail Price Index inflation figure increased from 3.1 per cent to 3.3 per cent in January. The week ahead sees Bank of England Inflation Report Meetings and Retail sales figures being announced.

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Disclaimer- This document, which does not constitute research, has been issued by Hybridan LLP for information purposes only- please refer to the disclaimer in full below.

AGTA Second beef retail unit, ANR Project Dragon Update, AVAP Interim results, Bango Placing, BOD Agreement on 13 prospecting licences, CTH Trading update, CGNR Appoints Seamus FitzPatrick as Deputy Chairman, DDD Trading update and licence agreement renewal with Samsung, DSN Trading Update, EGX Founder Steps Down, ETX placing, FBT agreement with Atos, GAS Strategic Alliance, HAL Trading Update, IMTK Trading update, IDH Collaboration, IPP Interim Results, PSL Trading update, PGR License extension, PRES Trading update, RLD Sales Stolen, SAR US Patent Grant, SDI Chinese to Install Systems, SDM Trading Update, STT Awarded £1.07m contract, SUMM Grant from Foundation to Eradicate Duchenne, THAL Supplemental Contract, UTW Trading update, VENN Russian JV

Agriterra (LON:AGTA 3.18p/£33.65m)
Agriterra, the African agricultural company, has opened its second beef retail unit in Mozambique, as part of its strategy to maximise the margin of its rapidly growing integrated beef business. The new retail unit, located in Tete, is being supplied by carcasses from Agriterra’s newly constructed 4,000 head per month capacity abattoir located in Chimoio, which commenced operations in December 2012. Cattle for both units are being supplied to the abattoir from the Company’s own ranches at Mavonde and Dombe, and the feedlots at Vanduzi, as well as being bought from the local community. The Company intends to roll out a further four retail units in 2013.

Altona Energy (LON:ANR  1.28p/£6.95m )
As announced on 12 December 2012, the timeline for the conversion of EL1 to a Mining Licence in which Altona will have an indirect 95 per cent beneficial interest (ML) was extended to 30 June 2013. Since that announcement, good progress has been made towards securing the necessary approvals from authorities for issue of the ML. In meetings between representatives of Altona and the local government responsible for sanctioning mining, in the area where EL1 is located, the local government representatives have given verbal approval for mining to proceed. This verbal approval is subject to the conditions to be attached to the ML (likely to relate to the boundaries of the licence area, permitted production volumes etc). In that regard, the ML application has been fully prepared with all supporting technical and mine planning information, and has now been submitted to the Xinjiang Regional Government for final written approval, which is now expected to be received prior to 30 June 2013. Assuming the ML is issued, coal production will begin as soon as practicable thereafter to take as much advantage as possible of the mining conditions, which are at their best during the spring/summer period.

Avation (LON:AVAP 86p/£38.03m)
The aircraft rental and leasing company announced interim results for the six months to 31 December 2012, which saw a 26.4 per cent increase in revenues to £12.7m and a 39 per cent increase in profits to £2.9m. The period saw four new aircraft additions, taking the total up from fifteen to nineteen with a value of £174m, whilst commercial funding of $82m has also been secured for an additional five ATR72 aircraft for delivery in 2013.  With the additional aircraft, lease revenues are expected to grow by an additional £2.3m in the 6 months to 30th June 2013. An order for seven additional ATR72 aircraft has been placed for delivery in 2014.

Bango (LON:BGO 230p/£97.02m)
The mobile payments and analytics Company announced a placing to raise £6.5m before expenses. Shares were placed at 200p per share, and funds from the Placing (which was apparently oversubscribed) are to be used to increase its capability to underwrite emerging market opportunities, to have greater capacity to fund further business development with a view to gaining more mobile network operator partners and to generally strengthen the balance sheet. This follows a fundraising of £3m in May 2012, as part of the Company’s scale up and its intention to realise opportunities in Brazil, Latin America, India and other parts of Asia.

Botswana Diamonds (LON:BOD 4p/£5.53m)
Botswana Diamonds, the diamond exploration and development company that holds exploration licences in Botswana and Cameroon, has entered into an agreement with a private South African company which holds an 85 per cent interest in 13 prospecting licences located to the southwest of the Orapa region of Botswana. This region contains the Ghaghoo Diamond mine being developed by Gem Diamonds Ltd. and the X-36 diamond discovery made by Petra Diamonds Ltd., as well as 21 known kimberlites. The license area covers a total of 6,518 sq kms. The agreement stipulates a three-month exclusivity period during which Botswana Diamonds will review the available data on the licences. Should the analysis prove positive Botswana Diamonds will negotiate an equity interest in the licences.

CareTech Holdings (LON:CTH 165p / £84.47m)
CareTech Holdings, the UK provider of specialist social care services, has reported that trading in the year to date has been in line with the Board’s expectations. Demand for its services remains at a good level and the new schemes planned for opening in 2012/13 are progressing well. While fee discussions with local authorities are at a very early stage in the process, initial indications are that the current fee environment is consistent with the Company’s expectations which are for minimal change on 2012. The management believes that CareTech’s diversified model to provide high quality children and adult care, based on value for money outcomes, and the expanding breadth of its service offering, positions the Company favourably in the current public sector funding environment.

Conroy Gold and Natural Resources (LON:CGNR 1.75p/£4.73m)*
Conroy Gold and Natural Resources, the gold exploration and Development Company developing a gold mine at Clontibret in Co. Monaghan, Ireland, last week announced the appointment of Mr Seamus FitzPatrick as Deputy Chairman (Non-executive). Mr FitzPatrick, who has been a Non-Executive Director of Conroy for the past five years, has worked in both corporate finance and private equity in London and New York with Morgan Stanley International, J.P. Morgan Capital Partners and Bankers’ Trust. In 1999 he co-founded CapVest Associates LLP, and he is chairman of the Mater Private Hospital and Valeo Foods Limited, and is a board member of Reno Norden AB. He is also a member of the board of Karelian Diamond Resources (LON:KDR 0.7p/£0.65m). Conroy has under licence the entire thirty mile gold trend which it has discovered in the Longford-Down Massif in Ireland and has discovered a series of significant gold targets along the trend. Scoping studies have been completed by independent consultants Tetra Tech WEI Inc. on Clontibret with positive technical and financial results.

DDD Group (LON:DDD 27.5p/£36.95m)
The 3D solutions company provided a trading update for the year to 31 December 2012. Total revenues are expected to be 56 per cent up from 2011 to $8.6m, reflecting increased demand for its TriDef 3D technologies in the television (with approximately 15m units shipped, up 67 per cent from 2011) and personal computer (which grew 172 per cent) markets, though Mobile IP shipments decreased by 58 per cent due to delays in next generation mobile and tablet 3D display panel availability. Gross margins are expected to increase by 3 per cent to 97 per cent, and net cash of $3.6m (2011: $3.1m) was on the balance sheet. With a number of other key announcements during the year, including the introduction of the Yabazam! 3D Smart TV app on both Samsung and LG Electronics’ 3D TV platforms, the licensing of certain patent rights to Samsung Electronics under which Samsung may undertake offline conversion of content from 2D into 3D, and a listing on the OTCQX(R) marketplace, the Company looks to further expansion in 2013. Also announced was the renewal of its license agreement with Samsung Electronics Co., Ltd. to bundle DDD’s TriDef(TM) 3D solutions with Samsung’s lineup of 3D monitors which has so far seen over three million copies shipped to date in the 3D PC market.

Densitron (LON:DSN 9.12p/£6.31m)
On 5 November 2012, the Company announced that it expected its results for the year ended 31 December 2012 to be behind market expectations. At that time the Company expected certain orders to be booked and delivered to customers in the period up to the year-end. However, for reasons outside the control of the Company some of this business has now been delayed into 2013. As a result of these delays the Company’s operating profit for the 2012 financial year will be materially below that achieved in 2011. Also, in November 2012 the Company updated its shareholders on the position of the proceedings that had been taken against it in respect of a lease of a property located at Wallsend, Tyne and Wear, near Newcastle- the directors have been unable to enter mediation due to the unwillingness of the other parties, though the directors continue to work to achieve a negotiated settlement. Grahame Falconer, Chief Executive Officer of Densitron said: “The end to the year was disappointing, but reflects how cautious the market remains, with customers not wishing to overcommit. However, orders booked in the year were ahead of those booked in 2011, which, together with the introduction of new services and products, gives us confidence for 2013. It is disappointing that we were unable to get the other parties to the litigation to agree to a mediation process but the Board is continuing to try to resolve this matter by way of a negotiated settlement.”

Energetix Group (LON:EGX  34.25p/£41.67m)
Energetix Group, the developer and provider of energy efficient products and retail energy services through the Flow brand, announced that Adrian Hutchings, Deputy Chairman, has stepped down from the Board with immediate effect, but will remain as an employee of the Company until 31 October 2013. Adrian Hutchings founded Energetix Group in 1998 and has been instrumental in overseeing the technical development of the Company’s flagship product, the Flow boiler: a highly efficient, compact, lightweight, wall mounted microCHP (Combined Heat and Power) appliance for the home. With the technical development of the product nearing its conclusion Adrian has decided to pursue other interests outside the Company. Peter Richardson, who took on the Group Chief Executive Officer role from Adrian in September 2012, is now well established in the business and has the skills and experience, developed through his 15 years as Chief Operating Officer at Dyson, to drive the production, delivery and installation of high volumes of the Flow boiler throughout the UK.

e-Therapeutics (LON:ETX 32.25p/£44.27m)
Drug discovery and development company e-Therapeutics yesterday proposed to raise £40m through an issue of new ordinary shares to existing and new institutional investors. The new shares will be priced at 32p, a premium of 4 per cent to the closing mid-market price on the Friday 8th. Irrevocable undertakings of support have been received from shareholders representing approximately 86 per cent of the Company’s equity in advance of a general meeting where approval for the issue will be sought. Following the proposed issue, the Company will have pro-forma net cash and liquid resources of approximately £48m. Together with expected receipts from R&D tax credits and interest, these resources are intended to support the Company’s entire currently planned discovery and development activities into 2017, by which time the Directors believe an out-licensing deal could be concluded for the Company’s lead cancer drug, ETS2101. The principal planned uses of the Company’s enlarged cash resources are to complete phase I trials for ETS2101 and advance the drug seamlessly into and through the next phase of its clinical development, which is expected to include a randomised phase II trial in brain cancer (glioma) and a phase Ib/II trial that will explore the drug’s activity in four to six other cancer indications. e-Therapeutics plans to spend around £25m on this programme for ETS2101 and expects to complete the studies in time to conclude a licensing deal or deals during 2017 if the data are supportive. This money is also to continue investment in new drug discovery using the Company’s network pharmacology platform and to advance newly discovered drugs and existing product assets into and through preclinical and clinical development, with the aim of building an increasingly diverse and mature portfolio of drug candidates.

Forbidden Technologies (LON:FBT 24.25p/£21.23m)
Forbidden Technologies, the AIM quoted owner and developer of the FORscene cloud-based video editing platform, yesterday announced that Atos (Pty) Ltd, a systems integrator in South Africa, has entered into a contract with Forbidden. The formalisation of the contract follows the memorandum of understanding agreed in September 2012. The licence agreement allows Atos to add FORscene to its South African portfolio of solutions and to run its own FORscene Cloud, providing hosting and administration, customer support and consulting on web-enabled workflow solutions to media clients in South Africa and across the African continent, including broadcasters, advertising agencies and advertisers in the African region. The licence provides for a relatively small up-front payment to Forbidden, with the majority of revenue expected to arise from royalties as Atos clients licence the platform from Atos. The installation of the Atos FORscene Cloud Server is planned to begin this month.

Gasol (LON:GAS  14.75p/£4.94m)
Gasol, the West African energy development company, announced that its affiliate, African Power Generation Limited (Afgen), has signed a strategic alliance agreement with Dredging International, in relation to dredging, marine engineering and pipeline construction works in Cotonou harbour, Benin, for its proposed LNG Import Project. The strategic alliance agreement enables the parties to work together to develop the detailed specifications and agreements for the project on an exclusive basis. Alan Buxton, Chief Operating Officer at Gasol, said: “Our alliance with Dredging International substantially de-risks our Benin LNG Import Project. Dredging International will lead a consortium which represents best in class in dredging, land reclamation and marine engineering. Their familiarity with Cotonou harbour, given the other recent work they have undertaken for the Port Authority, means that they are the most suited partner, and I am delighted that we are working together. The fact that we have been able to conclude such a strategic alliance is a strong endorsement of the development works done by Gasol and its affiliate Afgen on behalf of the Project.”

HaloSource (LON:HAL 29.5p/£7.90m)
HaloSource, Inc., the clean water technology company, will announce its preliminary results for the year ended 31 December 2012 on 11 March 2013. Revenue for the full year ended 31 December 2012 is expected to be in line with current market expectations at approximately $13.3m. The successful placing in October 2012 has strengthened the Company’s balance sheet and enabled it to take advantage of and maximise the value in growth opportunities in its core business segments. At year end, total cash, including restricted cash and short-term investments, was approximately $27m, giving the Company adequate resources to fund its plans for growth. The Company announced several key achievements and milestones in the second half of 2012 which will provide a solid foundation for future growth. The Company successfully executed several new partnerships, launched new products, and revived partnerships with key players in certain global markets. With these core partnerships and products in place, the Company expects to accelerate its growth trajectory in 2013.

Imaginatik (LON:IMTK 0.12p/£1.06m)
Imaginatik, the provider of collaborative innovation software and processes, announced a trading update for the year to 31 March 2013, which saw three long-standing customers who were expected to renew in the second half of the year, opting not to do so due to budgetary constraints (expected to generate licence fee income of approximately £0.35m). The Company also announced uncertainty over the timing of the signatures on some potential new contracts, which may impact the level of loss for the year and working capital requirements, resulting in the likelihood of revenues and operating losses below market expectations. As a result, the Company is considering the possibility of seeking shareholder approval of the cancellation of trading in the Company shares on AIM, with a further announcement to be made in due course.

Immunodiagnostic Systems Holdings (LON:IDH 290.62p/£82.55m)
Immunodiagnostic Systems Holdings announced a collaboration with Diagnostica Stago (Stago), a leading French based producer of coagulation and haemostasis diagnostic kits and instrumentation, following a successful feasibility project. The collaboration will see Stago assisted in the development of coagulation and haemostasis assays for use on the IDS-iSYS immunoanalyser, whilst Stago will help fund IDS’ development of the IDS-iSYS mark II instrument and eventually deploy it in their fields of expertise. Stago will pay IDS EUR3.5m in a series of milestone payments and also contribute EUR1m to the development of the IDS-iSYS mark II, and IDS also expects to earn revenues from the sale of instruments, ancillary products and royalties. Of the milestone payments, 30 per cent (equating to, in total, EUR1.05m) is to be paid to Mr. Rousseau, Engineering Director of IDS PLC and co-owner of the intellectual property rights of the IDS-iSYS.

IPPlus (LON:IPP 17.75p/£5.63)
IPPlus announced its unaudited interim results for the six months ended 31 December 2012. The Ansaback division continued to win new fixed seat business, as its revenue was up by 15 per cent on the prior year period and CallScripter secured important international contracts increasing revenue by 27 per cent in the period. IP3 Telecom achieved a level 1 credit card compliant solution with PCI-PAL and Ancora Solutions revenue improved after successful contract wins, up 52 per cent on the prior year period. The profit before taxation, after non-recurring costs of £71,252, was £174,732 (2011: £179,959) and the net cash of £445,557 at 31 December 2012 (30 June 2012: £317,350) showed an improvement on the prior period. Notwithstanding a difficult economic backdrop, the Group has successfully grown its revenue and developed new business over the six month period to 31 December 2012.

PhotonStar LED Group (LON:PSL 10.75p/£12.09m)
PhotonStar LED Group, the UK designer and manufacturer of smart LED lighting solutions, has provided a trading update for the year ending December 2012. Revenues in the year were up 44 per cent to £8.7m, with gross profit up 62 per cent to £3.4m. The Company ended the year with £2m of cash compared with £0.7m in 2011. On an unaudited basis, EBITDA for the year, before share based payments, is expected to show a loss of approximately £0.4m. The Company expects affordability of good quality LED to accelerate adoption rates in 2013. PhotonStar has a substantial IP platform, comprising a total of 15 patent families covering advanced LED chip design, optimal low cost packaging, advanced colour mixing and control.  In December 2012, it signed its first licensing agreement for its next generation LED chip design patents and an associated design services supply agreement with a leading LED chip manufacturer.

Premier Gold (PGR 0.34p /£3.43m)
Premier Gold, the gold exploration and development company operating in Kyrgyzstan, has reported that a five year extension to 31 December 2017 has been granted for its Cholokkaindy licence by the State Agency for Geology and Mineral Resources, the controlling mining authority in the Kyrgyz Republic. The application follows extensive trenching and sampling work undertaken on the licence, the results of which support the Company’s view that Cholokkaindy is a single mineralising system with the potential to form a sizeable and commercially viable gold deposit. Exploration work in 2012 identified two trends with lengths up to 3.5kms over a five sq.km. area. Soil samples returned positive results, highlights of which included 3.7g/t Au over eight metres and as high as 64g/t Au from grab samples.

Pressure Technologies (LON:PRES 185p/£21.02m)
Pressure Technologies, the designer and manufacturer of speciality engineering solutions for high pressure systems, has reported a positive start to the year ending September 2013. This has been underpinned by a strong order book in the Cylinders division and the completion of a Chesterfield Biogas upgrader order for a project in Stockport. In Engineered Products, Hydratron had a weaker first quarter, when compared with the same period in the previous year, but an improvement in order levels is expected in the second quarter. Al-Met has enjoyed rapid growth since the financial year end, with a record sales month in November, and has a strong order book in the current quarter.

Richland Resources (LON:RLD 4.75p/£5.61m)
Richland Resources Ltd, the gemstone producer and developer of associated minerals, announced an operational, sales and marketing update. In Q4 2012, the Company achieved an estimated US$3.9m in revenue. This was lower than expected due to the theft of US$1.46m of tanzanite in the period which would otherwise have been sold during the period. Both the insurance claim investigation and police investigation are progressing well and the Company believes that it will be in a position to update the market soon. The Company is also pleased to report that it has started to receive significant assistance from the Government in addressing the illegal mining activities. As announced on 27 November 2012, TanzaniteOne Mining Limited, a wholly-owned subsidiary of Richland Resources Ltd, is in ongoing negotiations with the Government of Tanzania regarding a potential shareholding by the Government. The potential joint venture and shareholding currently under discussion relates to the ownership structure of the Mining Licence covering Block C at Merelani. Further announcements will be made as soon as these negotiations are concluded. The Tanzanian Minerals Audit Agency is currently re-auditing financial records of the Company’s subsidiary; TanzaniteOne Mining Limited with regards to the additional, retrospective royalties claim relating to the period from 2004 to 2008 and whilst no additional information is currently available the Company will update shareholders in due course.

Sareum Holdings (LON:SAR 1.92p/£28.72m)*
Sareum, the specialist cancer drug discovery business, announced that the U.S. Patent and Trademark Office has issued notification that a patent will be granted for one of Sareum’s key drug discovery inventions on 19 February 2013. This patent, which relates to compounds that inhibit or modulate the activity of kinase enzymes, forms the basis of Sareum’s SKIL® drug discovery platform. The granting of this patent means that Sareum has approved patent protection in the US for key elements of its SKIL platform and many of its drug discovery programmes.  The Company expects to receive similar  protection in Europe and other major markets in due course. SKIL (Sareum Kinase Inhibitor Library) is Sareum’s drug discovery technology platform that has so far produced the Company’s Aurora+FLT3, Aurora+ALK VEGFR-, FLT3 & TYK2 kinase cancer and auto-immune disease research programmes. SKIL can also generate drug research programmes against other kinase targets.

Scientific Digital Imaging (LON:SDI 23.5p/£4.23m)
Scientific Digital Imaging, a leader in innovative digital imaging systems for life science, technology and astronomy applications, announced that its Synbiosis Division has sold 25 ProtoCOL 3 automated colony counting and inhibition zone sizing systems, in one order worth US $120,000, to major government organisation, the Chinese State Food and Drug Administration (SFDA). The SFDA (the Chinese equivalent of the EMEA and FDA) formulates policies and programmes for the administration of drugs, medical devices, health food and cosmetics. Microbiologists at the SFDA will be using the ProtoCOL 3 systems to help increase productivity of vaccine and antibiotic testing at their regional laboratories across China. The order for 25 units of Synbiosis’ ProtoCOL 3 systems came via Hua Yue Enterprise Holdings Ltd, one of SDI’s expert Chinese distributors. This sale is the largest order for these colony counters in 2013 and closely follows another large installation of 27 ProtoCOL 3 systems in Asia in 2012.

Stadium Group (LON:SDM 46p/£13.54m)
A leading electronic technologies group announced that trading for the year ended 31 December 2012 will be in line with the Board’s expectations, and that the preliminary results will be announced on Tuesday, 12 March 2013. Further to previous announcements, the Board has also completed its strategic review of the UK EMS operations, where the Company has underutilised manufacturing capacity. Faced with the prevailing difficult market conditions in this sector, and after extensive consultation with employees, the Company announces the closure of the Rugby facility and the transfer of production to Hartlepool and Asia. It is anticipated that this initiative will significantly improve Stadium’s overall competitiveness in the EMS market. The costs associated with this closure will largely be provided for in 2012, with the balance falling in 2013. The closure costs are expected to be recovered in lower operating costs during 2013 and 2014.

Straight (LON:STT 28.5p/£3.39m)
Straight, the environmental products and services group announced it has been awarded a £1.07m contract with Dumfries and Galloway Council. Straight will supply the products to support the Council’s maiden kerbside recycling initiative. The products, detailed below, are being supplied to the council now for roll out in 2014.  Jonathan Straight, Chief Executive said: “We are delighted to have been chosen to support the Council on its first ever kerbside recycling initiative. The contract win is testament to our recycling expertise and hardwearing products that have been tested across UK Local Authorities over many years. We very much look forward to working with the Council.”

Summit Corporation (LON:SUMM 4.62p/£16.38m)*
A drug discovery and development company advancing therapies for Duchenne Muscular Dystrophy (DMD) and C. difficile infections announced that it has entered into collaboration with Dr Yetrib Hathout from the Children’s National Medical Center in Washington DC, for the development of utrophin biomarkers for DMD.  The collaboration is being financially supported by a grant from the Foundation to Eradicate Duchenne and is part of a comprehensive biomarker programme being undertaken by Summit to advance its utrophin modulator programme for DMD. The development of new biomarkers that accurately quantify utrophin protein levels in DMD muscles will play an important role in providing evidence for the potential effectiveness of Summit’s utrophin modulator drugs in future patient clinical trials.  DMD is caused by genetic mutations that prevent patients from making the structural protein dystrophin, which leads to progressive muscle wasting and is ultimately fatal.  Summit is pioneering utrophin modulation to stimulate production of utrophin, a functionally similar protein to dystrophin that is expressed in foetal and regenerating muscle, and which has the potential to restore and maintain healthy muscle function.  This disease modifying approach would benefit all DMD patients, regardless of the underlying genetic fault causing their illness.  SMT C1100 is the Company’s leading utrophin modulator drug and successfully completed a Phase 1 clinical trial in late 2012.

Thalassa Holdings  (LON:THAL  71.5p/£8.48m)
Further to the Company’s announcement on 18 January 2013, the Board of Thalassa announced that its subsidiary, WGP Energy Services Ltd, has entered into a supplemental contract with Joint Stock Company Sevmorgeo (SMG), the Russian geological sea survey company. The supplemental contract, which has a value of approximately US$1,000,000, is to supply 11 containers containing ocean bottom nodes and instrument rooms as part of seismic data acquisition surveys being conducted by SMG in Ecuador. The work is scheduled to commence immediately and is expected to be completed by 7 March 2013. The survey in Ecuador is scheduled to last until 15 June 2013.

Utilitywise (LON:UTW 98.5p/£60.5m)
The leading independent utility cost management consultancy provided an update on trading for the six months ended 31 January 2013. The Company has performed in line with management’s expectations, and comfortably ahead of the prior six month period ended 31 July 2012. Utilitywise intends to announce its interim results for the six months ended 31 January 2013 in the third week of April.

Venn Life Sciences (LON:VENN 30.5p/£6.13m)
A growing Clinical Research Organisation (CRO) providing clinical trial management and resourcing solutions to pharmaceutical, biotechnology and medical device clients, last week announced its expansion into Russia through the establishment of Venn Russia, a new Joint Venture with a locally established CRO. Venn Russia, which will operate from offices in Moscow, adds to an already excellent pool of talent and geographic reach throughout Europe. Venn Russia complements the existing European CRO business with their unique on-the-ground knowledge of local regulatory standards, exceptional investigator relationships and multilingual staff. Since Venn’s successful AIM IPO in December 2012, the Management have been pursuing its strategy (as outlined in the Admission Document) of seeking out acquisition opportunities that extend both service capability and geographic reach, a strategy which they see as a key value driver for shareholders and which will build Venn into a mid-sized pan-European CRO. A number of opportunities, in addition to the Venn Russia Joint Venture, have been identified and good progress has been made with a number of targets. Discussions with a sizeable European CRO are progressing well and the acquisition of this business would further extend Venn’s reach into European territories not currently covered by the Company.

*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.

05 February 2013

This week: ACM accumulates a healthy return, Clean energy pays for AUHUA, TRCS on track for 2013

The Small Cap Club provides regular networking events for key participants, leaders and advisors of quoted small cap companies in the UK. It is hosting its next Small Cap Club meeting on 13 February 2013 at The Eight Club, Moorgate, 1 Dysart St, EC2A 2BX from 6pm. www.smallcapentrepreneurs.com.

Ups and downs in the markets last week, though the FTSE closed the week 70 points higher at 6,350, whilst the AIM All share closed where it opened at 740 points. Last week saw disappointing manufacturing data being announced with the manufacturing purchasing managers’ index falling to 50.8 in January from 51.2 in December (following news the week before of a shrinking in the economy at the end of 2012). This week however has seen better news- UK retail sales rising in January by 1.9 per cent compared to the previous January, and the US announced 127,000 more job additions in November and December than anticipated and 157,000 new jobs added in January. The week ahead sees services PMI data, construction output figures and the Monetary Policy interest rate decision.

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Disclaimer- This document, which does not constitute research, has been issued by Hybridan LLP for information purposes only- please refer to the disclaimer in full below.

ACM Disposal, ALU Interim results, AMA Drilling results, AGL Fundraise, interim results, ACE Trading Update, CFC Trading Update, EGS partnership and subscription by Aspect Software, FIP directors join board of Welsh £100m Arthurian fund, LID Trading Update, MARL Sole Listing, NEW Drilling Update, PYM Interim Management Statement, PWS Expansion plans, POS Winners of Award, SCLP Unaudited interim results, SEA Trading Update, SVR New contract, SOG Integration alliance, STT Contract with Serco, TRCS Trading Update, TYR Joint Venture & Patent granted, UBI Extension of contract, UKR Trading update, VRP Placing

Accumuli (LON:ACM 10.75p/£15.97m)
Accumuli, an independent specialist in IT Security, has divested the trade and assets of Webscreen Systems Ltd. (WSL) for US$10m (£6.3m) to Juniper Networks. This disposal represents a significant return on Accumuli’s initial investment in WSL, and demonstrates the Company’s continuing capacity to develop and nurture IP in tune with its customers’ needs and the competitive landscape. The initial investment attributable to WSL was approximately £1.5m. Accumuli will continue as a Value Added Reseller of Webscreen after the completion of the sale.

Alumasc (LON:ALU 99p/£35.77m)
Alumasc, the premium building and engineering products Company, announced interim results for the six months to 31 December 2012. Revenues grew by 10 per cent to £59.5m (2011:£54.1m) whilst adjusted pre tax profit more than doubled to £2.3m (2011: £1m). Healthy cash flow helped to reduce net debt on the balance sheet to £8.4m (June 2012: £13.2m). The Building products division saw a 27 per cent growth in revenues to £44.7m and saw a 135 per cent growth in operating profits to £4m. Alumasc Precision on the other hand saw a 22 per cent decline in revenues to £15.2m, although the Company was able to reduce operating losses compared to the second half. With an order book of £46m, and momentum in the Building Products division, the Company believes it is on track to deliver previously expected results for the full year.

Amara (LON:AMA 50.5p /£84.90m)
Amara Mining, the West African focused gold mining company, has reported the results of the final 16 holes of the 106 hole, 2011/2012 sulphide drilling programme at its Yaoure Project in the Côte d’Ivoire. All of the 106 holes drilled have encountered mineralisation and results to date continue to confirm the potential for a large, moderate-grade sulphide deposit underlying the previously mined oxide resources at Yaoure. Significant intercepts include 6.2m at 3.4g/t, 9m at 5.1g/t and 13m at 5.6g/t. The Inferred mineral resource update is targeted for Q1 2013.

Angle (LON:AGL 55.25p/£22.50m)
The specialist medtech company announced that it has successfully completed a fundraising of up to £2.2m, at a price of 50 pence per share representing a discount of 17.4 per cent on the mid price of 60.50 pence per share at close of business on 30 January 2013.  The proceeds of the Fundraising will be used to strengthen the Company’s financial position and support the launch of the Parsortix cancer diagnostic product for the research market.  As described in the Interim Results and in recent announcements, progress has been rapid and ANGLE’s success in automating the Parsortix non-invasive cancer diagnostic system has provided a platform for launch of the product into the research market. ANGLE is now focused on achieving early sales in the research market and initiating work towards attaining CE marking in Europe and appropriate FDA approval in the United States to allow the product to be used in the much larger clinical market in the treatment of patients. For the six months ended 31 October 2012, the loss for the half year was £0.4m (H1 2012: loss £1.8m). The cash balance at 31 October 2012 was £0.9m (30 April 2012: £1.1m).

Auhua Clean Energy (LON:ACE 37.75p/£24m)
The AIM quoted environmental technology group based in the Shandong Province of China, today issued a pre-close trading update ahead of its Preliminary results announcement for the year ended 31 December 2012 scheduled for mid- April 2013. Encouragingly, the solid trading performance in the first half of the year continued into the second half of 2012. The Group’s revenue has grown approximately 30 per cent to reach RMB218m and profit before tax for 2012 is expected to be moderately ahead of market expectations. Since listing on AIM in April 2012 the Group has made good progress. Most notably the new factory in Rushan, Weihai City is now fully operational and has been able to accommodate the increasing demand for split-unit solar water heater systems. The Group has also been focused on securing recognition from the industry and relevant government bodies as the leading provider of split-unit solar water heating systems. This has resulted in the Company receiving a number of awards and accreditations, the most prominent being the five star certification for its split-unit solar water heaters from the Shandong Solar Energy Industry Association.  Looking ahead, management believe that revenue is likely to increase in 2013. A key driving factor will be the Memorandums of Understanding that the Company has established with several conglomerate property developers, who have agreed to use Auhua’s split unit solar water heater products exclusively. With this expected increase in sales, the Group is focused on expanding the production capacity at the factory in Rushan, Weihai City. In light of expected growth and expansion of the business, the Group is assessing and actively pursuing a range of financing options.

China Food Company (LON:CFC 17.5p/£12.5m)
China Food Company, the leading Chinese manufacturer of cooking and dipping sauces, on Friday announced that construction of the Company’s new Animal Feed factory has now been successfully completed. The facility has been on trial production and commissioning for the last six weeks and the Board has been pleased with the performance of the operations. Accordingly, the facility will become fully operational from 1 March 2013, after the Chinese New Year break. The capacity for the new plant is 50,000 tonnes of premix and 240,000 tonnes of compound feed, a substantial increase compared to the old factory where capacity was only 15,000 tonnes and 60,000 tonnes respectively. Revenue of the old factory operating at full capacity is £24m which compares to an estimated revenue of the new factory operating at full capacity of approximately £100m. Although the Group’s animal feed business was broadly break-even in 2012, the Board anticipates that it will make a positive contribution in 2013 due to the additional capacity and production efficiencies. The Company will now focus its efforts on increasing the new factory’s production and reinitiate the sale process in due course/when appropriate. As a consequence of this, the Company will not be in receipt of feed-sale funds in the short term and the convertible loan note due on 31 January 2013 will now be rolled into a new Loan Note due on 3 November 2014, as previously announced on 2 November 2012. The total amount of outstanding Loan Notes is £4,429,000. The Board is pleased to confirm that draft management numbers indicate that the condiments business was EBITDA positive in H2 2012. The Group achieved sales of approximately £20m (2011: £16.9m) of which Xaka, the Group’s premium soya sauce product, accounted for 25 per cent in its first full year of sales. The Board is encouraged by this performance, particularly because the success of Xaka since its launch has opened new channels and outlets for China Food’s middle-range brand, Hao Tai Tai. The increase in distribution channels and retail outlets will form the foundation for growth in both Xaka and Hao Tai Tai in Shandong and in neighbouring provinces in 2013.

eg solutions (LON:EGS 87.5p/£12.51m)
eg solutions, the back office optimisation software Company, yesterday announced that it has signed a strategic partnership and re-seller agreement with Aspect Software Inc., the global provider of customer contact and enterprise workforce optimisation solutions. In addition, Aspect, has agreed to subscribe for 1,712,392 ordinary shares in the Company at a price of 73 pence per share. The agreement is for a three year period and shall automatically renew for successive one year periods unless ninety day’s notice of termination is given by either party prior to the expiration of the then current term. Under the Agreement Aspect will have exclusive distribution rights for the eg operational intelligence(R) software suite in Asia Pacific and the Americas and the rest of the world (other than Europe, the Middle East and Africa), and will work jointly with eg in Europe, the Middle East and Africa. The Company’s eg operational intelligence(R) software will also be integrated with Aspect’s eWorkforce Management and Performance Management products to provide a single back office optimisation solution. Aspect will invest resources in sales, sales support and delivery, as well as providing 24×7 international support for eg’s global customers. In addition to exclusivity for eg operational intelligence(R), the Company will provide training and sales support, including awareness training for Aspect’s entire sales team and specialist training and sales support for its back office optimisation team. Under the Agreement Aspect is entitled to appoint a non-executive director to the board of the Company and will announce details of the first appointment in due course. During the second half of the year ended 31 January 2013, the Company has undertaken extensive work on pilot projects with new clients secured at the start of the year. However, in view of the discussions that have been taking place with Aspect, which were required to provide global software and other support to these clients, the deployment of various projects beyond the pilot stage has been delayed. As a result, revenue for the year ending 31 January 2013 is expected to be significantly below market expectations at £4.81m (2012: £4.71m). Following the completion of the Aspect Agreement, it is expected the projects will move to full implementation with the previously anticipated revenues falling into the current year ending 31 January 2014. The results for the year ended 31 January 2013 will be announced on 20 March 2013.

Fusion IP (LON:FIP 52p/£42.98m)*
The university IP commercialisation company that turns world class research into business this morning announced that David Baynes and Peter Grant, as representatives of Fusion, are to join the board and investment committee of the new Welsh £100m life sciences investment fund, Arthurian Life Sciences. Other board members include former Director-General of the CBI, Sir John Banham, former Cabinet Minister Lord Hutton, Professor Trevor Jones, Director General of The Association of the British Pharmaceutical Industry (ABPI) and former Board Director of the Wellcome Foundation and Sir Christopher Evans, who will lead the board, as Chairman. Arthurian will provide discretionary fund management services to the £100m Wales Life Sciences Investment Fund. As a key generator of start-up companies in Cardiff, through its exclusive commercialisation agreement with Cardiff University, Fusion’s portfolio of life science companies are ideally placed to benefit from access to this fund. David Baynes will join the Arthurian board as non-exec director and Peter Grant will join the Arthurian investment committee. Fusion is therefore delighted to be represented on the Arthurian board and expects to both contribute significantly to its deal flow and co-invest in any Fusion related start-ups.

LiDCO Group (LON:LID 13.88p/£26.87m)
The cardiovascular monitoring company provided an update on trading for the year ended 31 January 2013, ahead of its Preliminary Results, which will be announced on Tuesday, 23 April 2013. In its domestic UK market, sales continued to grow strongly, up by circa 30 per cent with good growth in both surgical monitors and disposables. Total UK disposable unit sales increased circa 30 per cent with 70 per cent growth of surgical disposables. In the US, sales were affected by the previously announced transition from distribution arrangements to direct sales in the second half, which disrupted sales for several months. However, LiDCO has now acquired the existing LiDCOrapid customer base from Covidien and has taken direct responsibility for the sales and distribution of all LiDCOrapid products in the US. The Board believes that after this initial switch-over period, the associated higher margin revenues from this customer base will enhance the sales and profitability of the Company.  The Company is accordingly increasing its own US sales presence whilst continuing discussions with a number of potential partners in the US market. The Board expects revenues for the full year of approximately £7.2m (2011/12 £7.1m). LiDCO received no license fees during this financial year (2011/12: £540,000) therefore excluding license fees, revenues increased by approximately 9 per cent. During the year overheads were tightly controlled and LiDCO product margins remained strong. The Board had anticipated signing a new US distribution agreement with a license fee ahead of the year end, but as referred to above, discussions remain ongoing with a number of parties.  The absence of this revenue, coupled with the investment in the US, will result in a small operating loss for the year, although the business remains EBITDA positive. The Board expects UK sales to continue to grow strongly.  Cash at the year end was £2.1m with no overdraft (2011/12: £1.3m net).

Mariana Resources (LON:MARL 4.5p/10.39m)
Mariana Resources, the AIM and TSX listed exploration and development Company, focused on Peru and southern Argentina, announced that it has applied for a voluntary delisting from the Toronto Stock Exchange (TSX).  In addition, the Company announced a major revised corporate strategy of which the delisting is an integral part, together with a Board and management restructure. Following the delisting from the TSX, the Company’s ordinary shares will continue to trade on the AIM. The Company cited the  limited  trading  activity  of  Mariana’s  shares  on the TSX since its listing in June 2011, compared to the trading activity on the LSE; the  low level of Mariana’s share ownership  in Canada (fewer than 2 per cent of the total  number of  ordinary shares  of the  Company are  reported as owned by Canadian residents); and the  Company’s  compliance  costs  and  administrative  responsibilities  in maintaining the dual listing on the TSX, in addition to the costs associated with the AIM listing, are no longer justifiable.

New World Oil and Gas (LON:NEW 4.62p/£16.69m)
New World Oil and Gas, the oil and gas exploration and development Company focused on Belize and Denmark, has decided to plug and abandon the Blue Creek #2A ST well located in the productive Petén Basin in Northwest Belize. The well was drilled to a measured depth of 11,650 feet but after careful analysis, and in consultation with the Company’s partners, Blue Creek Exploration Ltd. and the Government of Belize, it was determined that insufficient commercial quantities of moveable hydrocarbons were present to merit running casing and well testing operations. However, the management believes that analysis of the data gathered from the Blue Creek wells points to the migration of huge quantities of oil through this area. This combined with the presence of a reservoir ideal for oil production, and a large, extensive anhydrite seal, means that the Company is confident that the elements required for a working hydrocarbon system are still in place in North West Belize. With this in mind, it is commencing drilling operations in the West Gallon Jug Crest prospect later this quarter for which it is fully funded.

Phytopharm (LON:PYM 9p/£31.22m)
Phytopharm, which is developing treatments for targeting neurodegenerative diseases including Parkinson’s disease, Amyotrophic Lateral Sclerosis (ALS) and glaucoma, has reported that it is continuing to trade in line with expectations since October 2012, adding that it is financed until at least the end of the first quarter of 2014. Results from the Phase II clinical trial of Cogane(TM) in untreated patients with early-stage Parkinson’s disease remain on track to be available in February 2013. A meeting has been held with the US FDA at which time a clinical development plan for Cogane(TM) in ALS was agreed. Cogane(TM) for ALS has been granted Orphan Drug status which offers the potential for accelerated development compared with conventional drug development programs. A Phase I study of new solid dose formulations of Cogane(TM) was also initiated and results are expected in Q1 2013.

Pinewood Shepperton (LON:PWS 247.5p/£116.94m)
Leading provider of services to the global film and television industry has submitted an application for the expansion of Pinewood Studios, following consultation with a wide range of local and national stakeholders, as well as with producers and developers of creative content. Known as the Pinewood Studios Development Framework, it would result in 100,000 sq m of new facilities, including studios and stages, workshops, production offices and streetscapes for filming, thereby helping to address increasing global demand for capacity in the UK, deliver growth for the next 15-20 years, and create new jobs. According to Amion Consulting, the impact on the economy would include the provision of £194m of private sector infrastructure investment, the supporting of over 8,100 full time jobs, the creation of some 3,100 net additional jobs and the generation of an additional £37m per annum in UK exports, amongst others.

Plexus Holdings (LON:POS 252p/£208.52m)
Plexus Holdings, the oil and gas engineering services business and owner of the proprietary POS-GRIP(R) friction-grip method of wellhead engineering, announced that its CEO and founder, Ben Van Bilderbeek has been awarded the ‘Entrepreneur of the Year 2013′ award at the annual Quoted Company Awards. Increasingly, major oil and gas companies are using Plexus’ proprietary wellhead equipment as the best available and safest technology solution for HP/TH exploration applications. Plexus to date has supplied its POS-GRIP wellhead systems on more than 300 wells worldwide, operated by global blue chip companies including BG, BP, ConocoPhillips, Gaz de France, Maersk, Repsol, Shell, and Statoil, to name a few, which is a testament to the technical and safety benefits to be derived from the technology.

Scancell Holdings (LON:SCLP 40.75p/£79.25m)
Scancell, the developer of therapeutic cancer vaccines based on its patented ImmunoBody® platform, announced the interim results for the six month period ended 31 October 2012. Encouraging preliminary results from Part 1 of the Phase 1/2 clinical trial for SCIB1 were announced in December 2012 and first evidence that the vaccine is producing an immune response in cancer patients which may also be associated with clinical benefit was seen.  Approval was received to dose an extra group of patients with a higher, 8mg, dose of SCIB1 and the recruitment and treatment of the final patient in the second part of its Phase 1/2 clinical trial of SCIB1 was completed. The Company made an overall operating loss for the six month period to 31st October 2012 of £989,981 (2011: loss of £(941,674)).  The cash at bank at 31 October 2012 was £2,568,359 (30 April 2012: £3,529,007).  The preliminary results for part 1 of the SCIB1 clinical trials have been extremely encouraging as they provide the first clinical endorsement for this ground breaking cancer vaccine research.  During 2013 the assessment of a higher dose in patients with evaluable disease and the future assessment of immune response in part 2 of the clinical trials should provide further evidence to support the use of ImmunoBody® vaccines for the treatment of cancers. Whilst at an early stage with the new Moditope™ technology platform, the Board is aware that the opportunities could be considerable and, with its existing ImmunoBody® technology is confident that the Company is well placed to create increasing value for shareholders.

SeaEnergy (LON:SEA 29p/£16.08m)
SeaEnergy yesterday announced a trading update in advance of announcing its audited results for the year ended 31 December 2012, which are expected to be released during April 2013. In the first quarter of 2012 SeaEnergy set out a new strategy to develop and acquire businesses providing services to the offshore energy industry and to return cash to shareholders. During 2012 SeaEnergy has delivered the acquisition of a profitable energy services business Return to Scene Limited (R2S); the launch of consultancy services; and a return to shareholders of £6.9m by way of a tender offer. Since completing the acquisition of R2S, at the end of August, the integration of R2S into the Group has progressed well. Despite delays to a number of offshore projects, caused by restrictions on platform bed space and the reduced availability of helicopter seats, following recent incidents, R2S has met its revenue target for the six months to February 2013, ahead of schedule and, as a result a further £500,000 of consideration will be paid during March 2013. Looking forward R2S is close to securing new contracts in the North Sea, and internationally, from both existing and new customers. Platform operators are increasingly recognising that in addition to enhanced safety, having their installations captured by the R2S software gives them the ability to reduce the number of platform visits, cutting helicopter trips, freeing up bed spaces and ultimately reducing their operating costs. An additional potential earn-out payment of up to £4.6m may become payable in March 2014. For the maximum figure to be payable the EBITDA generated by R2S in the year to 28 February 2014 must exceed £2.5m. SeaEnergy also launched its consultancy activities in September 2012 and is planning to expand this operation in 2013 and has already identified synergies and opportunities for interaction with other parts of the Group.

Service Power Technologies (LON:SVR 4.38p/£8.29m)
AIM listed market leader in field management announced a three year contract for its ServiceScheduling software with one of the world’s leading providers of unified communications solutions, with minimum revenues over the three year period expected to be between £0.7m and £1.2m. The contract covers EMEA, North and South America. This follows an announcement last week that it had won a contract to provide Assurant Solutions, the leading specialty insurer, and its customers enhanced access to third-party repair and installation services under a new three-year agreement valued at $714,000. The acquisition of Stratix Corporation’s Software Division and its Field Service Mobile software was also announced recently, which rounds off a busy few weeks of announcements for the Company.

StatPro (LON:SOG 86p/£58.03m)
AIM listed provider of portfolio analysis and asset pricing services for the global asset management industry, announced integration alliances with TD Ameritrade and Russell Indexes. The alliances result in an offering that covers components of high grade analytics with valuable benchmark and accounting data for the benefit of the investment advisor market. TD Ameritrade provides investing and trading services for nearly six million client accounts with more than $400 bn in assets. TD Veo users will now have access to Russell Indexes via StatPro. This follows a trading update for the year to 31 December 2012 last week, where the Company stated that trading was in line with expectations.

Straight (LON:STT 30.5p/£3.63m)
Straight, the environmental products and services Group, has been awarded a £1.7m contract with Serco, the international service company, to provide containers and other products for its Canterbury City Council contract. The Company will assist Serco with the implementation of new waste and recycling initiatives in the second and third quarters of the year. Straight will provide 240 litre wheeled bins, complete with a 55 litre wheeled bin inner caddy. The bins will be used for mixed recyclables and the caddy for paper and card respectively. Further sizes of wheeled bins will also be provided. The collection of mixed recyclables in communal areas will be serviced by the Straight 1,100 litre Steelybin(R) metal bins equipped with suitable apertures. A new weekly food waste collection is to be introduced using Straight 5 litre and 23 litre caddies for indoor and outdoor use. Each household will also be issued with a roll of Straight Compost-a-Bag(R) compostable liners. Additional liners will be available via Straight’s caddyliners.com website.

Tracsis (LON:TRCS 155.5p/£38.68m)
Tracsis, a leading developer and consolidator of resource optimisation software, condition monitoring technology, and consultancy services to passenger transport industries, issued a trading update, ahead of its interim results for the six months ended 31 January 2013. Group trading in the period has been buoyant, with revenue expected to be in excess of £4m (H1 2012: £3.7m). It is expected that both Adjusted EBITDA and profit before tax will both be ahead of the same period last year and, accordingly, trading is in line with expectations. The balance sheet remains robust, with cash balances in excess of £8.5m and the Group remaining debt free. As part of our commitment to a progressive dividend policy, the Board intends to recommend an interim dividend in due course.

TyraTech (LON:TYR 4.75p/£5.14m)
AMVAC Chemical Corporation and TyraTech, Inc. announced Envance Technologies, the new corporate identity chosen for their joint venture launched in December, 2012, which will develop and commercialise a range of innovative pest control solutions for global consumer, commercial, and agriculture pest control markets. Envance is currently distributing its Terminix-branded household insect control products in major US retail channels. The JV’s immediate focus will be on supporting the ongoing retail launch, expanding distribution through other leading US retail partners, and developing new product and market opportunities. The Company also received notification that its Extend(TM) patent has been granted in South Africa. The patent proves the proprietary nature of the Company’s technology platform and protects a broad range of synergistic combinations of natural and synthetic compounds, which can be used against a variety of target pests. The patent has a 20-year term, which expires in March 2029.

Ubisense Group (LON:UBI 205.5p/£45.05m)
Ubisense Group, a market leader in location based smart technology, announced the extension of a Geospatial Managed Services contract with a Tier One Cable MSO customer in the United States, providing enterprise geospatial network inventory system support, development and management for the national user base.Richard Green, Ubisense Chief Executive Officer, said the contract renewal is an important win for the Geospatial business and highlighted the sales momentum across the Group early in the New Year. The RTLS business also made its first indoor-outdoor product sale to the largest truck manufacturer in the United States. A few weeks ago, the Company provided a trading update for the year to 31 December 2012, in which it stated it had seen good momentum in the second half of the year but the timing of some projects has led to revenue growth below market expectations and profitability in line with consensus expectations for the full year. With cash at the year end of £2.6m, the Company continues to evaluate acquisition opportunities to supplement the RTLS business and further accelerate growth.

UKrProduct (LON:UKR 11p/£4.49m)
UKrproduct Group, one of the leading producers and distributors of branded dairy products and beverages (kvass) in the Ukraine, provided a trading update for the year ended 31 December 2012. The economic climate in the region over the period saw both positive and challenging aspects to it which impacted the business. Dairy was mainly affected by the restriction on hard cheese exports to Russia, resulting in an oversupply in the domestic market, though this in part also led to higher raw milk volumes availability in Ukraine, with the Company therefore benefitting from higher margins for the first eight months of the year. The Government introduced the inflationary minimum raw milk price starting in September, which then eliminated the advantage. Butter saw lower sales (though an increase in gross profitability), processed cheese grew largely with gains in market share of greater than 2 per cent, whilst hard cheese launched into retail stores. On the beverages side, the recently acquired kvass continued well and now ranks among the five largest players on the domestic market. The Company stated that it looks to an encouraging improvement year on year, with expected sales and margins having a very positive effect on EBITDA, and the trend running through to the net income level. The Group’s cash levels are expected to be sufficient to meet current debt obligations in the short and medium term.

Verona Pharma (LON:VRP 3.625p/£11m)
Verona Pharma, which is developing drugs to treat respiratory disease, such as asthma and chronic, severe cough, has announced a placing of approximately 29m shares at 4p to raise around £1.16m before expenses. The Company has also entered into a £5m equity financing facility, for which the Board will seek approval from shareholders. Following the strategic review announced in September 2012, the Company is now focused on accelerating commercialisation of its pipeline through “speed to market” of “first-in-class” compounds and addressing significant unmet medical needs. The results of the RPL554 anti-inflammatory study are expected in the first quarter 2013.

*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.