Small Cap Wrap: Month: November 2013

AIM Breakfast - Archive

19th November 2013

This week: Atlantic goes to China, US Bureau extends SPA, IVO on a mission, IPO boost for IPO, EC approval for PLE

Stock markets continue to trade sideways in a narrow range reflecting the anxiety ahead of the Federal Reserve’s release of October FOMC minutes. A series of speaker events prior to the Fed release is also adding to nervousness as investors look for signs of the tapering timeline, despite dovish comments from the next nominated chairman recently. The FTSE100 has lost 20 points in the past week to reach 6,695 while the AIM All-share index is unchanged at 812. Positive momentum from China’s economic reforms has also faded, with investors digesting the potential aftermath of change. The economic calendar is busy but many eyes will be on US jobless claims on Thursday as investors try to estimate the strength of economic recovery and the impact this may have on monetary policies. We are less anxious. Higher interest rates will be bad news for weak companies but will divert capital to more innovative and productive companies.

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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.

SPA 1Spatial announce contract extension,ALO gold discovery at Kossanto Gold Project,ATC/CICC joint venture and coal sale agreement,CNEL contracts to build ethanol plants in Hungary,CML interims,CGNR final results,CRA receives BP follow-on order,EGS contract through Aspect partnership,GWP Orphan Status,IVO MISSION Therapeutics receives £20m,IPO Applied Graphene IPO and raises £11m,ITM MoU with NRM,LMT US product launch,MIRL Q3 results,NCCL coal resource upgrade,NETD partnership,NFC appointment of interim CFO,NMG exploration update,NCT oil production rises at Oklahoma well,PLE European Commission approval,SCLP extension to Ichor option,SPHR Proxima discussions,SULA field work,SNTY grant of US telecoms licence,TRCS North American pilot,UBI contract extension & trading update,ULT Screenetics secures new contracts

1Spatial (LON:SPA 8.37p/£54.47m)

1Spatial, the Spatial big data Company which manages some of the world’s largest spatial data, and its US partner, LSI, announced a contract extension with the U.S. Census Bureau. Of the total contract amount approximately US$1m will be payable to 1Spatial and recognisable during the financial years 2014 and 2015. Following the initial contract to supply 1Validate & 1Integrate licenses, the extension will focus on the provision of services in preparation for the 2020 Decennial Census and to widen the use of the technology within the organisation. Through a long-term engagement with the U.S. Census Bureau, 1Spatial and LSI have prototyped and designed a solution which provides a phased roll-out for 1Spatial’s Validate & Integrate software. This approach allows the Census team to gain valuable interactive operational experience and work out efficiencies as the system develops. The Census itself involves a large, complex and mission-critical spatial database, which is growing at 10-15 per cent annually. 1Spatial with LSI is building an agile and service orientated architecture reducing storage requirements. This technology is vital to ensuring the user community have spatial and temporal accuracy and quality, and meet stringent processing deadlines.

Alecto Minerals (LON:ALO 1.10p/£6.47m)

Alecto Minerals, the mining exploration company focussed on West and East Africa, announced an update on the Company’s exploration activities at its 207 sq km Kossanto Gold Project in the Kenieba Inlier in western Mali. A high grade gold area was discovered within the southern section of the Massakama prospect – one of three identified prospect areas at Kossanto. A significant rise in artisanal activity and workings at the new area highlights the high grade nature and potential extent of the new mineralised system. Artisanals have identified hard rock/quartz vein occurrences beyond the originally targeted alluvial and colluvial material. During a recent field visit, Alecto geologists repeatedly observed coarse and fine grained gold recovered from high grade quartz vein material. Previous exploration work on the licence close to the new discovery has already produced drill intercepts up to 8m @ 18.5 g/t. Channel sampling across the area of artisanal workings at Massakama has already been completed by Alecto to depths of up to 8m; based upon observations of the artisanal activities positive results from 37 samples are expected to be received by the calendar year end. Information from Alecto sampling will be used to generate a RAB drilling programme at Massakama in Q1 2014. A resource drilling programme is due to commence in December 2013 at the Gourbassi East and West Prospects at Kossanto the focus being to increase current resource of 107,000 ounces of gold.

Atlantic Coal (LON:ATC 0.245p/£9.73m) & CIC Capital Ltd. (LON:CICC 5.625p/£10.56m)

Atlantic Coal, the anthracite coal mining company operating in Pennsylvania, USA, announced that it has entered into a joint venture and coal sale agreement with China based CIC Brancepeth Coal Limited, a company founded and currently managed by AIM listed CIC Capital Ltd. Under the joint venture agreement Atlantic Coal will provide coal mining and processing expertise to CIC-Coal and, in return, CIC-Coal will purchase coal mined and/or processed by Atlantic Coal. The joint venture agreement runs for an initial three year period following which it may be extended by mutual agreement. Atlantic Coal’s Managing Director, Steve Best, said: “I am delighted to establish this relationship between Atlantic Coal and CIC-Coal with these joint venture and coal sales agreements. CIC-Coal and CIC Capital bring over 22 years of experience in the Chinese coal market which will not only facilitate the marketing of our premium anthracite to what is the world’s largest user of anthracite but also provide the essential local contacts to ensure effective transport and distribution to end users primarily in the iron and steel industry. Our expansion plans in Pennsylvania are, in part, dependent on developing export markets and we see China as being one of the main targets with anthracite imports already having risen over 11 per cent in the first five months of this year. ”

China New Energy (LON:CNEL 4.62p/£15.10m)

China New Energy, the engineering and technology solutions provider to the bioenergy sector, announced that it has won contracts with Visontai Bioetanol Fejlesztő Korlátolt Felelősségű Társaság (Visontai) and Helvéciai Biouzemanyag Termelö es Kereskedo Kft. (Helvéciai) to develop two biorefinery projects in Hungary. The combined value of the contracts to CNE are €72m (approx. £60m) over a four year period. As part of the tendering process, CNE has already completed the design for both the projects. The first project is expected to complete within two years, entering full commercial production in 2016. The progress of construction will be subject to Viscontai and Helvécia completing their fundraising milestones. The first project for Visontai will convert corn feedstock into 150,000 litres per day of ethanol. The second project for Helvéciai will convert corn feedstock into 300,000 litres per day of ethanol. CNE will supply its proprietary pre-treatment, fermentation, distillation and dehydration technology to the project and the local project partners will complete the civil engineering and construction of the biorefineries. Visontai and Helvéciai will operate the biorefineries and CNE will provide long-term training, support and maintenance.

CML Microsystems (LON:CML 552.5p/£84m)

CML Microsystems, which designs, manufactures and markets a broad range of semiconductor products, primarily for the global communication and data storage markets, announced record results for the six months ended September 2013. Group revenues rose by 5 per cent to £13m, while gross profits jumped 7 per cent to £9.2m. This translated to a 38 percent increase in diluted EPS to 15.4p. Net cash rose to £9.7m (2012: £6.5m). Operationally, storage revenues were up around 7 per cent as customers transitioned to higher-performance flash memory controller products. Wireless semiconductor revenues grew by around 10 per cent due to robust professional and commercial wireless communication markets.

Conroy Gold and Natural Resources (LON:CGNR 2.10p/£6.25m)*

Conroy, the Irish based resource Company exploring and developing gold and other projects in Ireland, announced its results for the year ended 31 May 2013. Conroy has under licence the entire 30 mile gold trend which it has discovered in the Longford-Down Massif in Ireland and is working towards opening a gold mine at Clontibret. In-house studies show gold potential of 15-20 million ounces along the trend. Technical and financial viability has been confirmed for the Clontibret gold mine, with a resource evaluation of over 600oz both indicated and inferred. The economic evaluation was based on 20 per cent. of the Clontibret target area, with a payback period of two years. The mining method, BIOX® is a well established bacterial oxidation technique which was recommended by Tetra Tech as an appropriate technology for treating the gold sulphide concentrate at Clontibret. The mineralogical and metallurgical test work was supervised and managed by Tetra Tech, showing an IRR of 49.4 per cent NPV(8) $72.3m USD. Test work undertaken by Goldfields Limited included grinding, crushing and other factors in relation to mill design. The results indicate an 8 per cent sulphur grade in concentrate whereas in the scoping study a grade of 12 per cent had been assumed. The lower sulphur grade in the concentrate is highly advantageous as it will reduce capital and process operating costs. A ground geophysical programme was carried out at The Clay Lake gold target by Golder Associates on behalf of the Company. The programme comprised Induced Polarisation (IP) and Resistivity totalling 960 line metres in four survey lines over the Northern area of the target. Further new gold targets along the thirty mile trend discovered by the company have been identified by an independent review of airborne geophysics by BRG (Geotechnics) Limited. Evaluation of old lead workings within Conroy’s licence area has yielded highly positive zinc results of up to 30 per cent. These samples also had elevated copper, silver, antimony, mercury, gallium and cadmium. During the year £573,183 of new equity was raised and subsequent to the year end a further £1,000,000 was raised. Mr Séamus FitzPatrick, previously a Non-Executive director of the Company, assumed the position of Deputy Chairman in February 2013.

Corac Group (LON:CRA 11.875p/£36.57m)

Corac Group announced that its subsidiary Corac Energy Technologies (CET) has received a further order from BP Trinidad & Tobago LLC (BPTT) to complete the design and engineering phase of the project to develop a compact gas compressor for deployment on an offshore production platform. This order, worth approximately $1.4m, was placed under the Master Services Agreement announced 8 July 2013, and brings the total value secured on this project to date to $2m. On concluding this phase in early 2014, CET expects to progress to system build and testing which will be covered by further orders. Corac Group Chief Executive Phil Cartmell commented: “We are very pleased to have received this order to conclude the design activity, continuing this exciting partnership with BP. The prospects for platform compression are very attractive, and progress so far in this area is most encouraging.”

eg solutions (LON:EGS 87.5p/14m)

eg solutions announced that it has won an initial contract from a leading global financial institution for the eg operational intelligence(R) software and related services. The contract is the first won through eg’s strategic partnership with Aspect Software Inc. This initial contract is for an existing Aspect customer covering 750 users in the Asia Pacific region with the potential to roll-out across the global back office functions thereafter. Revenue from this contract will be recognised in this financial year. John O’Connell, Chairman & Chief Executive commented: “Since launch to their sales team in May 2013 Aspect have built a substantial pipeline of opportunities for the eg operational intelligence(R) software across North America, EMEA and Asia Pacific. The indications are that this will be a strong and lucrative partnership for both eg and Aspect.”

GW Pharmaceuticals (LON:GWP 121p / £214.79m)

GW Pharmaceuticals announced that the U.S. FDA has granted orphan drug designation for Epidiolex(R), a product candidate that contains plant-derived Cannabidiol (CBD) as its active ingredient, for use in treating children with Dravet syndrome, a rare and severe form of infantile-onset, genetic, drug-resistant epilepsy syndrome. Epidiolex is an oral liquid formulation of a highly purified extract of CBD, a non-psychoactive molecule from the cannabis plant. Following receipt of this orphan designation, GW anticipates holding a pre-IND meeting with the FDA in the near future to discuss a development plan for Epidiolex in Dravet syndrome.

Imperial Innovations Group (LON:IVO 412.5p / £411.06m)

Imperial Innovations Group, a technology commercialisation and investment group, has increased its support for MISSION Therapeutics by committing £4.5m of a £20m funding round. Innovations had previously participated in a £6m round for MISSION in August 2011. MISSION is a biotechnology company developing drugs that target a cell’s response to DNA damage. Imperial Innovations is joined in the round by new investor Pfizer Venture Investments and other existing investors Sofinnova Partners, SR One and Roche Venture Fund. The financing round will enable MISSION to advance its lead programmes for the treatment of various genetically defined cancers, through preclinical development and to exploit further the potential of its novel technology platform.

IP Group (LON:IPO 151p / £566.64m)

Portfolio Company Applied Graphene Materials (155p / £26.2m) announced a placing to raise gross proceeds of £11m and that the admission of its entire issued share capital will begin to trade on the AIM market of the London Stock Exchange and commencement of dealings in its shares is expected to take place on 20 November 2013. Applied Graphene Materials, a spin-out from Durham University which has developed a proprietary process for the manufacture of high purity graphene nanoplatelets, has placed shares at a price of 155 pence per share to raise gross proceeds of £11m. Based on the placing price, the market capitalisation of Applied Graphene Materials on admission will be approximately £26.2m.

ITM Power (LON:ITM 45p/£57.83m)

ITM Power, the energy storage and clean fuel company, announced that it has signed a Memorandum of Understanding with NRM Netzdienste Rhein-Main GmbH (NRM), a 90 per cent subsidiary of Mainova Aktiengesellschaft GmbH (Mainova). Under the MOU, the Companies will jointly identify and quote for PEM Electrolysis Power-to-Gas projects in Germany and internationally. NRM will have exclusivity to deploy ITM Power plant in their home state of Hessen in Germany and will be the Company’s preferred partner for projects in other German states and internationally. The MOU covers both the direct injection of hydrogen gas into mains gas grids and methanation projects. ITM Power has deployed its PEM Electrolysis Power-to-Gas (P2G) plant at the Mainova Aktiengesellschaft site in Schielestrasse, Frankfurt am Main where the compliant gas mixing and grid injection infrastructure designed and built by NRM is already in place. The plant, which was jointly commissioned by 13 partners within the Thüga Group to investigate P2G-Technology, is now on-site and is undergoing an extensive acceptance, compliance and commissioning phase before live commissioning in December. This plant is part of the Thüga Group’s P2G project as previously reported. Both ITM and NRM are building this plant with the Thüga project consortium, of which ITM and NRM’s parent Mainova are both partners. The install also includes a monitoring facility and visitor’s reception so that members of the Thüga Group can examine the performance of the plant.

Lombard Medical Technologies (LON:LMT 198p / £88.59m)

Lombard announced a stand-alone symposium and program of presentations to mark the formal US launch of Aorfix(TM), the Company’s flexible stent graft, at the 40th Annual VEITH Symposium, November 19-23, New York City. CEO of Lombard Medical Technologies, Simon Hubbert, commented: “Published clinical data suggest that up to 30% of patients present with tortuous AAA anatomy. US physicians now have access to Aorfix, a highly effective, FDA approved treatment option for such cases. VEITH Symposium is one of the most important annual gatherings of vascular surgeons from around the world and the ideal venue to formally launch Aorfix in the US.”

Minera IRL (LON:MIRL 11.875p/£21.7m)

Minera IRL, the Latin America gold mining company, has reported unaudited third quarter results for the three months ended September 2013. Gold sales of 6,427 ounces were down 15 per cent year-on-year at an average realised gold price of $1,323 per ounce (Q3 2012: $1,667 per ounce). As a result, revenues of $8.5m were down 32 per cent while gross profit fell sharply by 71 per cent to $1.7m. Cash balances fell to $1.3m at the end of the quarter (Q2 2013: $4.9m) and subsequent to 30 September 2013, the company drew down the first $5m of the additional $10m available on the debt facility with Macquarie Bank and issued the corresponding 0.5 per cent royalty on Ollachea.

Ncondezi Energy (LON:NCCL 9.50p/£11.50m)

Ncondezi Energy announced a coal resource classification upgrade at the 300MW integrated thermal coal mine and power plant project, located near Tete in northern Mozambique. A Measured Resource of 120m mineable tonnage in situ has been classified by the Company’s geological consultant, the Mineral Corporation Consultancy (Pty) Ltd, in the South Block in accordance with the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves . This follows the completion of an infill drilling programme completed in September 2013 which included the drilling of an additional 33 HQ3 cored boreholes and three large diameter boreholes. The drilling was focused over the planned open pit mining area within the South Block that was identified as the most economical to supply coal to the power plant. In order to provide a bankable Coal Sales Agreement to the power plant, the mine needed to demonstrate sufficient coal resources in the Measured Category to supply the 300MW power plant for 25 years plus a 40 per cent contingency, equivalent to 70m mineable tonnes in situ. The upgraded resource has exceeded this target with sufficient additional Measured Resource to theoretically supply an additional 300MW (600MW total) power plant for 25 years.

NetDimensions (LON:NETD 60.5p/£23m)

NetDimensions, the global provider of performance, knowledge, and learning management systems, announced that it has been selected by Royal Caribbean Cruises Ltd. to create online learning modules for new shipboard software being rolled out to 35 cruise ships within its fleet. NetDimensions Interactive, a business unit of NetDimensions that focuses on custom content and application development services, will provide online, self-paced learning modules for Royal Caribbean’s shipboard property management software. The first ship crew will access its software simulation training this December for a January ship launch, with staggered rollouts on additional ships in February and March 2014. It is anticipated that the online courses being developed by NetDimensions Interactive will be used to provide training to over 10,000 Royal Caribbean employees.

Next Fifteen Communications Group (LON:NFC 86p / £51.39m)

Next Fifteen Communications Group, the digital communications group, announced the appointment of Peter Jonathan Harris, age 51, as Interim Chief Financial Officer of the Company, effective from 18 November 2013. This will be a non-Board appointment. Peter’s financial experience spans 30 years and he has extensive media experience, having spent the last 20 years in finance roles in the media sector. Peter is currently a Non-Executive Director of Communisis (LON:CMS 59.5p / £115.67m) and has recently completed an interim Finance Director role at Centaur Media (LON:CAU 55.75p / £79.66m), which included directorships at some of its subsidiaries. During the previous 10 years, Peter was Interim CFO of Bell Pottinger, was CFO of the Engine Group, the UK’s largest privately owned marketing services group and CFO of 19 Entertainment. Prior to that, he was Group Finance Director of Capital Radio.

Noricum Gold Limited (LON:NMG 0.94p / £8.99m)

Noricum Gold Limited, the Austrian focused gold exploration and development company, provided an update on its 2013 work programme at the Company’s 100 per cent owned Rotgülden Gold and Precious Metals Project, which is currently focused on defining the extent of mineralisation already identified at the previously producing mine, one of four targets delineated to date. Results continue to reinforce the high grade nature and excellent prospectivity of Rotgülden. Noricum Gold Managing Director Greg Kuenzel said: “The results are extremely encouraging and provide us with confirmation that the known mineralisation continues at depth and remains open, in line with our geological model…Importantly, assay results from samples where there was visible gold are outstanding, so we look forward to further positives in the near future…The previously producing mine at our Rotgülden Gold and Precious Metals Project benefits from an extensive amount of historic work. As drilling advances at this target to the north of the licence area, we have a number of additional initiatives underway focused on testing and qualifying historic work to further bolster our resource database.”

Northcote Energy (LON:NCT 1.11p/£13.48m)

Northcote, the onshore US oil and gas exploration and production company, announced the fracture stimulation of the West Little Drum well on its 51 per cent owned Horizon Project, which has resulted in a significant increase in production compared to pre-frac levels. West Little Drum oil production increased over 600 per cent from pre-frac levels. Oil production continues to fluctuate but the well reported an average of 40 (18 net) bopd for the most recent 7 days and an average of 35 (15 net) bopd over the entire 20 day post frac period. Natural gas production at the four well Little Drum unit, which includes the fracked West Little Drum well, has increased from a pre-frac average of 43 Mcf/day (19 net) in September to an average of 118 (52 net) Mcf/day since resumption of natural gas sales and averaged 171 (75 net) Mcf/day for the first week of November, the most recent data available. Frac completed at a gross cost of US$150,000 – expected to pay back from net operating cash flows within 90 days. West Little Drum is the third of a four well frac programme for 2013 – the next well will be fracked before the end of the year. Five additional horizontal wells on Horizon currently producing from the Mississippi Lime remain to be fracked.

Plethora Solutions Holdings (LON:PLE 17.75p/£70m)*

Plethora announces that the European Commission has granted marketing authorisation for the company’s treatment for primary premature ejaculation (PE) in adult men under the name ‘Prilocaine Lidocaine Plethora’. This product is also referred to by the company under its development code name PSD502. PSD502 demonstrated a highly statistically and clinically significant improvement in the primary measures of intravaginal ejaculation latency time (IELT), control and satisfaction in two pivotal, double-blind, placebo controlled phase III studies. In these studies, the product was shown in over 23,000 exposures to be well accepted by patients. The company believes that PE is probably the most prevalent sexual dysfunction in men. The condition has been characterised by the International Society of Sexual Medicine (ISSM) as being “a male sexual dysfunction” characterised by: ejaculation that always or nearly always occurs prior to or within about one minute of vaginal penetration; the inability to delay ejaculation on all or nearly all vaginal penetrations; and negative personal consequences such as distress, bother, frustration and/or the avoidance of sexual intimacy. The company estimates that there are in excess of 150m men aged between 20-69 years old in the European Union. With an estimated incidence of PE of 20-30 per cent of men, this implies that the potential population of men in the EU with the disorder is approximately 30-45m. In August this year, Plethora regained global control of PSD502 and work is well underway to file with the FDA in early New Year.

Scancell Holdings (LON:SCLP 28.25p / £63.10m)

Scancell Holdings, the developer of novel immunotherapies for the treatment of cancer announced that it has been granted an extension of its option to commercialise Ichor’s proprietary Trigrid(TM) electroporation delivery system with SCIB1, Scancell’s ImmunoBody(R) vaccine for the treatment of melanoma. Under the terms of the extension, Scancell’s option, which had been due to expire in July 2014, will be extended until July 2016. In exchange, Scancell has agreed to waive the two year lock period following the exercise of Tranche 1 share options (over 1,592,310 shares). The agreement with Ichor, signed in July 2009, provides for the supply and use of the TriGrid(TM) device for Scancell’s pre-clinical and clinical studies with SCIB1 and gives Scancell an option to license TriGrid(TM) for commercial use on payment of certain undisclosed milestones and royalties. The Option could be exercised at any time up to July 2014. In return, Ichor was granted share options to subscribe for Scancell shares at a subscription price of 4.5p as follows: on regulatory approval to start clinical trials in the UK, 1,592,310 share options (Tranche 1); on starting the first Phase II clinical trial, 3,184,620 share options (Tranche 2); and on completing the first Phase II clinical trial, 3,184,620 share options (Tranche 3). Tranches 1 and 2 have already vested. On 15 November 2013 Ichor exercised Tranche 1 of the share options.

Sphere Medical Holding (LON:SPHR 27.5p / £16.28m)

Sphere Medical, a developer of innovative monitoring and diagnostic products for the critical care setting, announced that, in accordance with the collaboration announced on 28 June 2013, Ortho-Clinical Diagnostics, Inc. (OCD) now has an option to enter into negotiations with Sphere Medical to acquire exclusive global commercialisation rights to Proxima. Under the terms of the Collaboration Agreement, the trigger for these negotiations, which must be conducted in good faith by both parties, is completion by Sphere of the Data Package containing the Milestone Reports, and this is currently anticipated to be achieved by the middle of 2015 which is within the originally anticipated time frame set out in the Collaboration Agreement. Work towards achieving the Proxima CE Mark is well advanced and authorisation is expected during the first half of 2014. Upon receipt of CE Mark authorisation, Sphere Medical intends to launch Proxima in the UK, initially in key strategic teaching hospitals and subsequently in targeted clinical application areas suitable for early adoption of the Proxima system.

Sula Iron & Gold (LON:SULA 2.125p/£3m)

Sula Iron & Gold, a multi-commodity exploration Company focussed on Sierra Leone, has announced that it has commenced further exploration work to prove up the gold mineralisation at its wholly owned 153 sq km Ferensola Project, located in the northern part of the Sula-Kangari Greenstone Belt in Sierra Leone, which is prospective for both iron and gold. Field work has commenced over several gold target zones located within the licence area, which appear to host source areas of placer gold – five target areas for hard rock gold mineralisation have been identified to date. Detailed ground work comprising a geochemical soil sampling programme and a ground magnetic survey is currently being conducted to delineate geological structures on two target areas – the Yanfarina and Lagunda prospects. Exploration focussed on locating optimum sites for diamond drilling programme is targeted to commence in 2014.

Synety Group (LON:SNTY 189p/£11.96m)

Synety announced that its US application, under Section 214 of the Communications Act of 1934, was approved by The Federal Communications Commission on 14 November. The grant of this US Telecoms licence will allow Synety to provide national and international telecoms services to US businesses and residents and so offer its CloudCall service in the US. Simon Cleaver, SYNETY’s executive chairman, commented: “We have for some time been receiving considerable pull from a number of our integrated CRM partners wishing to offer our CloudCall Service to their US customers. Many of these partners are US owned and have home customer bases that are up to ten times the size of their UK bases. Having seen the enthusiasm their UK customers are showing for CloudCall they are understandably keen to offer our service to their US users. Gaining our US telco licence is the first step in what is an enormous and very exciting opportunity for Synety. Initially, we will be proceeding cautiously whilst we evaluate this market in greater depth. In the near term, our US activity will concentrate on working with our established partners who will be marketing the service to their existing customer bases and we will be running the service, as much as possible with our existing infrastructure and staff in the UK.”

Tracsis (LON:TRCS 193.5p/£49.41m)

Tracsis, a provider of software and technology led products and services for the transportation industry announced that it has been awarded a feasibility pilot project with a major North American Class 1 Railroad company for the potential adoption of its remote condition monitoring technology and associated software. The project will cover five sites within the United States, should conclude within six months, and is being delivered in collaboration with a US based technology partner following a successful tendering process. The value of this project will remain undisclosed due to commercial sensitivities. This award is a significant step forward in the next phase of the Company’s overseas growth strategy although Tracsis is keen to stress that at this point in time the feasibility project has no guarantee of future sales.

Ubisense Group (LON:UBI 190p/£42.33m)

Ubisense announced that a large European automotive manufacturer has chosen to extend its initial Smart Factory System deployment after going into production with the system earlier in July. The order, valued at approximately $1m, is part of a global framework agreement with the manufacturer and will extend the system from the assembly line to the finishing facility. The Group reported that it has displayed strong momentum in the second half with its converged technology offering leading to significant contract wins during the current period. In order to meet customer demand for the converged solutions, the Group has accelerated investment in the product portfolio, including its next generation Smart Factory System and MyWorld products and applications. In addition, a large OEM deal initially expected to fall within the period delivering revenue of approximately £1.9m has been delayed due to the size and scope of the contract expanding. The deal is expected to deliver significant value next year. As a result, the Group now expects to post revenues at the lower end of the range of expectations and EBITDA in line with 2012 levels.

Ultrasis (LON:ULT 1.20p/£21.44m)

Ultrasis announced that its recently-acquired screening and wellbeing subsidiary, Screenetics, has won three new contracts with customers spanning the public and private sectors. The value of the contracts is an estimated £2m per annum. The revenues are partly conditional on performance, but, based on past experience, Screenetics is confident of fulfilling the contract criteria. Ultrasis acquired Screenetics on the 4th October 2013 as part of its strategy to broaden the range of products and services it provides and to enable it to become a provider of wellbeing, health and social care services. The contracts relate to the provision of 9,500 flu vaccinations (currently being delivered on a one year contract), health screenings as part of a salary sacrifice scheme to a large public sector body (commences February 2014 part of a three year contract) and employee screening to a large UK corporate company (commences spring 2014, initially a one year contract).

*A corporate client of Hybridan LLP

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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.

12th November 2013

This week: SEE more orders, more FLOW for National Grid, MAN becomes more European

Stock markets have remain broadly unchanged in the past week as investors struggle to find direction and await new developments on the macro front. The FTSE100 has lost 18 points in the past week to reach 6,716 while the AIM All-share index is unchanged at 812. Janet Yellen’s senate hearing this week is expected to refocus the market’s attention on the timeline of tapering. Chinese data remains mixed with new Yuan Loans reported below consensus; the emerging market slowdown in Q3 has certainly been evident in trading updates. The UK economy for the moment seems to be bucking the trend, with inflation under control.

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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.

TTR sponsorship,ABC AGM statement,ABDP final results,AUE maiden resources exceed 600,000 oz gold,CNR fundraise,FLYB half yearly report,FLOW National Grid agreement,FIP Phasefocus new Chairman and Directors,GWP starts Phase 1b/2a trial,HSM interim report,IKA half year trading,IFM worldwide sales agent on Top Dog,KLBT Kalibrate Technologies to float on AIM,MAN contract award,MOGP new contract wins,OUT partnership with Dell,NPT appointment of FD,PNA / SAVG takeover offer,RSTR first day of dealings,SEE DSS projects with Freeport-McMoRan,SAL new contracts signed,SMA new gold exploration concession,STEL Mandala licence renewed in Guinea,TNG interim results

32Red (LON:TTR 72p/£52m)

32Red, the online gaming Company based in the British overseas territory of Gibraltar, has announced that it will sponsor the new series of The Paul O’Grady Show on ITV. The show, which kicked off on Monday 11th November at 5pm, will be sponsored by the companies’ bingo brand, 32Red Bingo. The hour-long show focuses on feel-good entertainment with Paul O’Grady’s unique blend of humour, wit and surprise. 32Red recently announced a commercial partnership with ITV which will allow the brand exclusive rights to develop an ‘I’m A Celebrity… Get Me Out Of Here!’ online slot machine which went live on 6th November. 32Red also sponsor the late night film on Film4.

Abcam (LON:ABC 458.125p / £915.04m)

Abcam, a global leader in the supply of innovative protein research tools to help life scientists discover more, held its Annual General Meeting. At the meeting Michael Redmond, Abcam’s Chairman, made the following statement: “As previously announced, we are embarking on a number of initiatives within Abcam to sustain profitable growth in the medium to longer term. I am pleased to report that we are making good progress on these, with some initiatives already underway. In the US, which is our largest market, we are pleased that the revenue from catalogue sales continues to grow in line with our expectations despite the recent disruption in the market caused by the protracted budget discussions and Government shutdown; although our business may be impacted by further potential disruption later in the financial year pending a continuation of those discussions. The exception in our US performance has been our custom service business where we have revised down our revenue expectations, although, given its small scale, this will not impact materially on Group profitability. Looking forward we expect market conditions to remain challenging. Nevertheless the Board believes that Abcam is well positioned to deliver continued growth and to meet its strategic objectives for the year.”

AB Dynamics (LON:ABDP 177p/£29.3m)

AB Dynamics, a designer, manufacturer and supplier of advanced testing systems and measurement products to the global automotive industry, has announced that revenues increased 37 per cent to £12.2m in the year to end August 2013. Operating profit increased 22 per cent to £2.2m. The cash balance as of 31 August 2013 reached £6m. The start to the current financial year has been in line with management’s expectations with significant visibility for the remainder of the year provided by the existing order book.

Aureus Mining (LON:AUE 37.50p/£94.63m)

Aureus Mining, engaged in the exploration and development of gold deposits in Liberia, Sierra Leone and Cameroon, announced maiden NI 43-101 resources for the Ndablama and Weaju gold projects. Ndablama and Weaju are located within the Company’s 100 per cent owned, Bea Mountain Mining licence in Liberia, and are situated respectively 40 and 30 km north-east of Aureus’ flagship New Liberty Gold project. Ndablama shows an Inferred Mineral Resource of 451 000 ounces at 2.1 g/t Au which has been estimated using a 0.5 g/t cut-off. The resource has been calculated based on drill holes covering a strike length of 650 metres (45 drill holes and 6,876 metres) and comprising the Central and South East Zones of Ndablama. The target remains open down dip and along strike. Weaju shows an Inferred Mineral Resource of 178 000 ounces at 2.1 g/t Au which has been estimated using a 1.0 g/t cut-off. The Weaju gold target is located less than 30km NE of the New Liberty Gold deposit within the Company’s Bea Mountain Mining License of 457 km2.

Cluff Natural Resources (LON:CNR 3.125p/£3.4m)

Cluff Natural Resources, a Company which invests in natural resources opportunities both in the UK and globally, is proposing to raise £2m by way of a placing and subscription of 66.7m new ordinary shares at a price of 3p with a range of new and existing institutional investors together with a number of private investors. The funds raised will be utilised to advance the Company’s Deep Underground Coal Gasification Licences (Deep UCG) in the UK in line with its strategy to unlock energy by converting untapped coal into gas. Since January 2013 the Company has been awarded five Deep UCG licences in the UK, totalling 30,881 hectares, by the Department for Energy and Climate Change and by The Coal Authority. The licence areas include Kincardine and Largo Bay in the Firth of Forth in Scotland; the Loughor Estuary in Carmarthenshire in Wales; the Dee Estuary in Merseyside and North Wales; and Whitehaven in North Cumbria. The Company will also seek to appoint a Senior Project Manager or Chief Operating Officer to manage the development of its Deep UCG portfolio. Funds will also be utilised to strengthen the balance sheet, to support further licence and planning applications, the assessment of additional natural resources opportunities and on-going working capital.

Flowgroup (LON:FLOW 18.75p / £24.84m)

Flowgroup, which develops and commercialises alternative and efficient energy products, announced that Flow Battery, the Company’s award-winning compressed air battery technology business, has been awarded a three year framework agreement by National Grid UK, to replace conventional lead-acid back up power units as they reach the end of their service life. The framework agreement is for an initial three year period which can be extended by up to two additional years. There are 303 National Grid substations in England and Wales, which incorporate 3,200 back up power battery systems. The framework agreement was awarded to Flow Battery after a competitive tender process where all aspects of Flow Battery’s business and service provision were considered. The win was based on the strength of Flow Battery’s technology and proposition. Flow Battery’s compressed air batteries produce electrical power on demand, using a store of compressed air to drive a scroll generator. They require low levels of maintenance, do not lose performance over time and are highly tolerant of extreme outdoor environments. Flow Battery units already installed at six National Grid substations in the UK and USA have performed with 100 per cent reliability and zero maintenance for the last four years.

Flybe Group (LON:FLYB 111.5p / £83.8m)

Flybe announced a significantly improved financial performance under its new management team. Group revenue has grown to £351.1m (H1 2012/13 £340.8) but adjusted profit before tax and restructuring was £17.1m (H1 2012/13 loss £1.6m). Management reported that the first two phases of the Turnaround Plan are on track to deliver savings of £40m this year and £45m in 2014/15. Net debt at 30 September 2013 of £34.0m decreased from the position at 31 March 2013 of £66.3m due to improved operating cash flows and a reduction in borrowings by £22.8m to £98.2m. Overall Net Assets improved to £50.6m (H1 2102/13 £48.1m). There have been several changes at Board and senior management level. most notably: Simon Laffin has taken over as Non Exec Chairman. Previously, Simon was Group Finance and Property Director at Safeway plc between 1994 and 2004 and has served as a non-executive Director at Aegis Group Plc, Mitchells & Butlers plc, Northern Rock plc (as part of the rescue team), as well as Chairman of the Hozelock Group. Saad Hammad became Chief Executive Officer on 1 August 2013 bringing considerable airline experience having formerly been Chief Commercial Officer of easyJet plc. As previously announced, Paul Simmons joined Flybe as Chief Commercial Officer on 28 October 2013, having previously been Director of easyJet’s UK market, responsible for the commercial programme and revenue delivery across its 11 bases and 110 aircraft in the country. The Company reported that further immediate actions announced will incur significant transitional costs, but also deliver a full payback over the next two years. The new Board is confident that these initiatives will put the group on a firm foundation for performance improvement and future growth.

Fusion IP (LON:FIP 68p / £74.42m)

Fusion IP, the university commercialisation company that turns world-class research into business, announced that Sheffield-based Phase Focus Ltd, the portfolio company that is revolutionising microscopy and imaging with its lens-free Phasefocus Virtual Lens(R) technology, announced changes to its board of directors. Paul Atherton, a successful serial technology entrepreneur, has been appointed Chairman of the Board. Paul co-founded Queensgate Instruments and was its Managing Director from 1988 until its sale for more than £200m in March 2000. Paul is also Chairman of Infinitesima, NanoVentures and Nexeon, and was Chairman of C2V and Midaz Lasers until their respective acquisitions by Thermo-Fisher in 2009 and Coherent in 2012. Paul is a board member of Imperial Innovations Group (LON: IVO 422.5p / £421.03m). Charles Holroyd has also been appointed as non-executive director. For the last three years Charles has been Group Business Development Director of Oxford Instruments (LON:OXIG 1355p / £771.42m), a £350m turnover, LSE listed manufacturer of high-technology instrumentation, with responsibility for (among other things) acquisitions, divestments and joint ventures. Martin Humphry has been appointed director and Chief Technology Officer. An inventor on a number of Phasefocus’ patent applications, Martin has assumed successively higher levels of responsibility since he joined the Company in 2009, including oversight of all of its product development and R&D activities. After five years of service with the Company, Neil Loxley will be resigning as non-executive director effective November 30 2013, due to his recent appointment as CEO of Ibex Innovations, a developer of advanced X-ray detectors. David Baynes, CEO of Fusion IP plc and Phasefocus’ outgoing Chairman, will remain a non-executive director.

GW Pharmaceuticals (LON:GWP 165.125p / £293.12m)

GW Pharmaceuticals, a bio pharmaceutical company focused on discovering, developing and commercialising novel therapeutics from its proprietary cannabinoid product platform, announced it has commenced a Phase 1b/2a clinical trial for the treatment of Recurrent Glioblastoma Multiforme (GBM). Glioma describes any tumour that arises from the glial tissue of the brain. GBM is a particularly aggressive tumour that forms from abnormal growth of glial tissue. According to the New England Journal of Medicine, GBM accounts for approximately 50 per cent of the 22,500 new cases of brain cancer diagnosed in the United States each year. Treatment options are limited and expected survival is a little over one year. GBM is considered a rare, or orphan, disease by the FDA and the European Medicines Agency, or EMA. This study follows several years of pre-clinical research conducted by GW in the field of glioma which has demonstrated that cannabinoids inhibit the viability of glioma cells both in vitro and in vivo via apoptosis or programmed cell death, may also affect angiogenesis, and have demonstrated tumour growth-inhibiting action and an improvement in the therapeutic efficacy of temozolomide, a standard treatment for glioma. In addition, GW has shown tumour response to be positively associated with tissue levels of cannabinoids. GW has identified the putative mechanism of action for their cannabinoid product candidate, where autophagy and programmed cell death are stimulated via stimulation of the TRB3 pathway. This study is a 20-patient, multi centre, two part study with an open-label phase to assess safety and tolerability of GW cannabinoids in combination with temozolomide, and a double blind, randomised, placebo-controlled phase with patients randomised to active or placebo, and with a primary outcome measure of 6 month progression free survival.

Heath (Samuel) & Sons (LON:HSM 255p / £6.47m)

The Company reported a profit before tax for the first six months trading of £326,000 (2012: re-stated £77,000) on sales of £5,526,000 up 8.3 per cent (2012: £5,103,000). The eponymous Chairman wished to point out two important facts to do with their results. The first is that they now comply with the revised accounting standard in relation to Retirement Benefit Pension Schemes (IAS19 Employee Benefits). They also include a profit of £58,000 on realisation of investments. This profit will not recur in the second half of the year. The sale of investments has also contributed significantly to the positive cash generation for the period. During the six months under review, although sales overall all increased more than anticipated, there were large disparities between markets and the mix of products sold within these markets. In not a single one was there increase across all the Company’s product ranges of taps, bathroom accessories, builders’ hardware and door closers, although the overall increase of 8.3 per cent was very welcome. With this type of mixed fortunes, it is very difficult to forecast future growth. However net assets remain strong, and the Company proposes a dividend of 5.5p per share (2012: 5.5p per share) payable on 24th March 2014.

Ilika (LON:IKA 23p/£12m)

Ilika, the advanced materials discovery Company, has provided a trading update for the six months to end October 2013. Total revenue for the period has shown year-on-year growth of 55 per cent, reaching £0.6m. Ilika has expanded its active customer base in the period from five in the comparable period last year, to nine in the current year. The geographical spread of revenues has also become more balanced due to a stronger business development performance in Europe. In the previous year, 70 per cent of revenues originated with Japanese customers, whereas in the current year to date, 45 per cent of revenues have come from Europe and 45 per cent from Japan. Business development efforts in the USA are expected to result in an increased proportion of revenue in the second half. Cash and cash equivalents at the period end were in excess of £1.4m. The Company has continued to make progress with developing and licensing its proprietary materials IP. With the goal of driving towards generating licensing revenue, Ilika is currently managing active OEM trials with two separate products from its portfolio: a polymer surface used for cell growth and a low-cost fuel cell catalyst.

Intandem Films (LON:IFM 0.555p / £1.83m)

Intandem Films, the London based international film group, announced that it has been appointed as exclusive sales agent for Top Dog, which becomes the fourth fully financed feature film collaboration with producer Jonathan Sothcott (The Fall of The Essex Boys, Devil’s Playground) of Richwater Films. Top Dog is currently being represented by Intandem at the American Film Market, which runs until 13 November 2013 in Santa Monica, California. Directed by Martin Kemp (The Krays) and currently being filmed in London, Top Dog centres on hooligan gang leader Billy Evans (Leo Gregory) who gets in over his head when he joins a dangerous criminal gang. This further strengthens Indandem’s relationship with Richwater Films – having last month announced that it had been named worldwide sales agent for three Richwater Films productions – Vendetta, Assassin and Reign of the General.

Kalibrate Technologies (LON:KLBT) TBC/c£35m)

Kalibrate Technologies is currently undertaking an AIM float. It is a provider of software-based products, data analytic tools and consulting services to the global petroleum retail industry. The Group’s client base extends to more than 300 clients across 68 countries; including oil companies, convenience store chains and large format supermarket retailers. The proprietary software and related services that the Group provides, assists clients in the setting of optimal prices in competitive retail fuel markets (Kalibrate Pricing) and optimising the allocation capital investment expenditures in the planning and operation of petroleum retail networks (Kalibrate Planning). The Group also generates revenue by selling data that it collects in the course of providing fuel pricing and planning services. The Group has its global headquarters in Manchester, England. The Group also has offices in Oklahoma and New Jersey in the US, Japan and China and international operations in Canada, South Korea and Thailand. The Group also has exclusive agent representation in India, South Africa and Brazil. The Group employs 138 people worldwide.

Manroy (LON:MAN 53.5p / £10.19m)

Manroy announced that it has been awarded a further EUR2.1m (£1.8m) contract from its new European Government customer, in addition to the EUR1.7m (£1.4m) contract from the same customer which was announced on 5 September 2013. It is expected that this further contract, which is for Heavy Machine Gun spares, will be delivered within the first half of the current financial year, subject to standard license approval processes. The deliveries for the original contract announced on 5 September 2013 are expected to be completed by the end of December 2013.

Mountfield Group (LON:MOGP 3.05p / £7.75m)

Mountfield announced that its subsidiary, Connaught Access Flooring Limited, has been awarded two new contracts with a combined value of approximately £2.36m. Connaught has won the contract for the installation of the flooring in a new, iconic City office building that is currently under construction. The contract works (which have a value of £1.85m), are scheduled to begin this month and to be completed by June 2014 with the greater part due to be undertaken by the end of 2013. In addition Connaught has been awarded a contract with a value of £515,000 for the flooring works package in the refurbishment of an office building in the West End of London. Work under the contract will begin this month and is due to be completed during the first quarter of 2015. Together these two contracts further support the Directors’ confidence in Mountfield meeting market projections in 2014 and continuing to grow in 2015.

NetPlayTV (LON:NPT 21.5p / £63.11m)

NetPlayTV, the interactive gaming company, announced that it has appointed Akshay Kumar to the role of Group FD with effect from 11 November 2013. Akshay, 34, joined NetPlay in January 2011 as Group Financial Controller. He is Company Secretary and a director of its subsidiaries, NetPlayTV Broadcasting Limited, NetPlayTV Services Limited and NetPlayTV Marketing Services Limited. Akshay has six years’ experience in the gaming industry and prior to his time at NetPlay, was Financial Controller at Sporting Index Limited. Akshay is an Associate of the Institute of Chartered Secretaries and Administrators (ACIS) and Institute of Chartered Accountants of England and Wales (ACA), qualifying with PricewaterhouseCoopers LLP.

Outsourcery (LON:OUT 120.5p/£37m)

Outsourcery, the provider of cloud-based IT and unified communications services, announced that it is working with Dell to design and deploy the compute, storage and networking infrastructure for its IL3 offering for the UK’s central government. As a supplier of technology and services to the UK’s public sector, Dell is well positioned as a strategic go-to-market partner for this solutions-led offering. This follows Outsourcery’s recent announcement about its agreement with Microsoft to lead its UK initiative to accelerate the offering of IL3 compliant cloud services for the UK public sector and especially central government. Outsourcery and Dell are working together to design and deploy a highly scalable and modular platform capable of supporting the next generation of Microsoft technologies on which the IL3 compliant platform will be based.

Penna Consulting (LON:PNA 90p / £23.17m) / Savile Group (LON:SAVG 6.25p / £900k)

The boards of Penna and Savile announced that they have reached agreement on the terms of a recommended cash offer for Savile, pursuant to which Penna will acquire the entire issued and to be issued ordinary share capital of Savile. Under the terms of the Offer, Savile Shareholders will be entitled to receive 7 pence in cash for every Savile Share. The Offer values the entire issued and to be issued share capital of Savile (fully diluted for the exercise of all options and/or awards considered to be ‘in the money’ at the Offer Price under the Savile Share Option Scheme) at approximately £1.1m. The Offer Price represents a premium of approximately 115 per cent. to the Closing Price of 3.25 pence at the close of business on 11 November 2013, being the latest practicable date prior to this Announcement. Penna has obtained irrevocable undertakings to accept, or procure the acceptance of, the Offer in respect of 4,083,445 Savile Shares representing, in aggregate, approximately 27.3 per cent. of the issued share capital of Savile. These irrevocable undertakings will remain binding in the event of a competing offer being made for Savile. The cash consideration payable under the Offer is being financed from Penna’s existing financial resources.

Rightster Group (LON:RSTR 75.00p / £69.8m)

Rightster Group, which provides cloud-based services that optimise the distribution and monetisation of live and on-demand video, announced the commencement of dealings on AIM on 12th November 2013. Rightster provides an ”upload once – commercialise everywhere” solution that extends the reach of live and on-demand video content to web, mobile and connected audiences via customers’ own sites, social channels, portals, platforms, online newspapers, magazines and blogs as well as Rightster’s multi channel networks (MCNs) on YouTube. Rightster’s network currently stands at over 750 content owners and over 6,500 publishers. The Group employs approximately 200 staff in 11 offices across 9 countries. Over the last 18 months, Rightster has seen an increase in average monthly video views from approximately 22.5min the first half of 2012 to approximately 123.3m in the second half of 2012 to approximately 160.7m in the first half of 2013. This represents growth of 447 per cent. on the first half to the second half of 2012 and 30 per cent. on the second half 2012 to the first half of 2013.

Seeing Machines (LON:SEE 6.125p / £30.76m)

Seeing Machines’ Operator Safety Division announced additional DSS projects with Freeport-McMoRan at its Tenke Fungurume and Tyrone Mining Operations. The Division has received purchase orders from Freeport-McMoRan (FCX) to add DSS coverage to operations at its Tenke Fungurume Mine in the Democratic Republic of Congo and Tyrone Mine in New Mexico, USA. Freeport-McMoRan has implemented the DSS technology in most of its operations, making the organisation one of Seeing Machines’ largest customers. The DSS technology will be installed in over 44 trucks at Tenke Fungurume and over 22 trucks at Tyrone. The value of this deployment is over AUD$800,000.

Sovereign Mines of Africa (LON:SMA 3.00p/ £7.09m)

Sovereign Mines of Africa and its subsidiary Sovereign Mines of Guinea Ltd (SMG) announced that SMG has acquired a new exploration concession contiguous to the south of its flagship Mandiana-Magana gold concession in Guinea, West Africa. The concession area covers the open strike extension of the Yagbelen and Wyondjian gold mineralised trends which form the core of the Company’s maiden gold resource released last month. The new gold exploration concession covers an area of 181 square kilometres but, based on the Company’s current assumptions, has the potential to effectively double the potential strike of the seven-kilometre Woyondjan-Yagbelen gold mineralised corridor within the Madiana-Magana project area to the south by adding an additional eight kilometres. In October 2013 the Company announced a maiden inferred gold resource of 600,000 ounces of gold for its flagship Mandiana-Magana gold project which includes 420,000 ounces of gold with an average grade of 2.3g/t gold. The new exploration concession was granted to Guiord (which is a wholly-owned subsidiary of Sovereign Mines of Guinea Ltd) under Arrette No 2013-130 by signature of the Minister of Mines Mohamed Lamine Fofana on 30th October 2013 . The Arrette was officially ratified following the payment of the necessary concession fees by the Company on 8 November 2013. Guinea’s state-owned mining firm, Soguipami is a partner with SMA through an equity stake in SMG.

SpaceandPeople (LON:SAL 120.5p / £23.51m)

SpaceandPeople, the retail, promotional and brand experience specialist, announced two new exclusive contracts. The first is a five year agreement with HS1 Limited, to manage promotional and brand experience activity in St Pancras International station. This agreement provides SpaceandPeople with an additional weekly footfall of 1m visitors to offer brands and promoters and also includes Stratford and Ebbsfleet International stations. Additionally the Company has signed a five year agreement with LS One New Change Limited, to manage promotional and brand experience activity in One New Change, Land Securities’ newest shopping destination located on Cheapside in the heart of the City of London. It has five promotional sites and boasts 60 stores, with a mix of high end, speciality and high street retailers, alongside an impressive range of eateries. It is one of the largest shopping centres in central London with annual footfall of 13m visitors who are predominantly “Educated Urbanites” who work in close proximity to the venue, with many coming to the centre multiple times in a week.

Stellar Diamonds (LON:STEL 1.12p/£5.54m)

Stellar Diamonds, the diamond exploration and development Company focused on West Africa, announced the renewal of its Mandala mining licence in south eastern Guinea. The Mandala alluvial mining licence has been renewed for a further five year period. The company is considering options to restart production following improvement in rough diamond prices. Previous mining at Mandala yielded 128,000 carats at a grade of 33cpht with gems up to 37 carats. The rough diamond market has since shown an on-going improvement in prices and Stellar is therefore currently considering funding options at the project level to re-open the Mandala mine. An independent resource (not in accordance with the JORC code) for the mine has been calculated at approximately 135,000 carats. The majority of this diamond resource is located within the N’Keleyani river valley where previous mining by Stellar yielded average diamond grades of over 50cpht and up to 100cpht in some areas. Based on potential extensions to these diamondiferous gravel horizons, Stellar is estimating an increase in this resource to approximately 200,000 carats at Mandala.

Tangent Communications (LON:TNG 8.75p / £24.53m)

Tangent reported revenues up 12 per cent at £13.51m (2012: £12.09m), with underlying operating profit increased by 50 per cent to £1.47m (2012: £0.98m. but like for like operating profit increased by 8 per cent to £1.47m (2012: £1.36m) though EPS fell to 0.40p (2012: 0.41p). Cash increased to £2.22m (2012: £1.56m). The Company also announced a share repurchase programme of up to £0.5m. Commenting on the year, Tangent’s Chief Executive, Timothy Green, said: “We spent much of last year investing in our business; the benefits of this will be most noticeable in the second half. The second half of the year to February 2014 has begun well and like for like sales and profits are now ahead of the prior year.”

*A corporate client of Hybridan LLP

A full archive of previous weeks’ Small Cap Wraps can now be viewed on www.hybridan.com.

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.

5th November 2013

Guy Fawkes Night 2013

This week:
A Jorc upgrade from Ariana,
A licence award to Connemara,
for SUMM a Phase 1,
A new partner for SUN,
And a Condor option for Mariana.

Stock markets remain on solid ground given a relatively benign background of US economic data showing signs of recovery combined with supportive Fed policies. Adding to US sentiment is also the 14 month high Chinese service sector activity that rose to 56.3 in October. The FTSE100 is nearly back to the May 2013 highs of 6,800 and not far from the record high of 6,900 achieved in March 2000. The AIM All-Share Index has a long way to go to regain the lofty highs of March 2000, but it has continued to outperform the main indices since June, gaining 125 points to reach 810. While the mining sector has been the main driver, even the long forgotten and unloved sectors such as the biotech sector have helped to bolster AIM’s performance. The recovery in real interest rates is a symptom of increased demand for capital, and this bodes well for the high growth, high risk small cap sectors.

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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.

ACTA second power trial in Philippines, CNS interim results, EPO selected by Azimo, EKF interims, FUM interims, GRPH EPA approval, IDOX contract win, IKA new European customers, NETD interims, OUT partnership with Ingram, PSL Partnership with Ingram, PLA trading update, PLE Board changes, SVR half yearly report, STGR initial sales contract and placing, SUMM new data at conference, TAN M&A progress and debt, THAL trading update, TRT final results, UBI Interim results and client win

Ariana (LON:AAU 1.15p/£6.4m)

Ariana Resources, the exploration and development Company focused on epithermal gold-silver and porphyry copper-gold deposits in Turkey, has reported a JORC resource estimate for the Kizilcukur and Ivrindi projects which are 100 per cent held by the company outside of the Red Rabbit joint venture in western Turkey. The two satellite prospects have added 27,600 oz Au equivalent to the JORC inferred resource base. As a result, the total resource base in Western Turkey has increased to approximately 475,000 oz Au equiv. gross (currently 395,000 oz Au equiv. net to Ariana) in addition to 1.09m oz gross (534,000 oz Au net to Ariana) located within the company’s JV with Eldorado Gold in North-Eastern Turkey. Both satellite prospects are located in ten year operational licences and forestry permits were recently granted for drilling at Kizilcukur. The focus of future drilling programmes will be on open-pittable resources capable of being trucked to the planned Kiziltepe plant site.

Blavod Wines & Spirits (LON:BES 1.2p / £4.36m)

The Board of Blavod Wines & Spirits, owner of premium drinks brands including Blavod Black Vodka, Blackwoods Gin and Vodka, and RedLeg Rum, announced that the Company has conditionally raised £571,300 at a price of 1 pence per Ordinary Share. Funds raised from the Placing will be applied to general working capital and the development and marketing of existing drinks brands together with the re-launch of certain other owned brands. Blavod separately announced that it will be promoting RedLeg Spiced Rum with pop-up Rum Shacks across the UK via its distributor Hi-Spirits Ltd. The pop-up RedLeg Rum Shack will appear in major cities during November and December including Edinburgh, Glasgow, Manchester, Leeds, Newcastle, London, Bristol and Brighton. Each venue will appear for a limited period and feature RedLeg cocktails and live music. Since its launch in 2012, sales of RedLeg, which is primarily retailed through UK on-trade outlets, have consistently grown month on month. RedLeg is now one of the most successful brands owned by Blavod. Sales of RedLeg are also growing internationally with repeat orders being received from multiple retailer Woolworths in Australia. In April 2013 RedLeg won the highest accolade at the San Francisco World Spirits competition winning double gold in its category and as a result is currently participating in the 2013 “Double Gold” tour which is a nationwide spirit tasting for the US drinks trade and specialist media. Separately and lastly, Blavod announced its interim results for the six months ended 30th September 2013. During this period, it completed the acquisition of Blackwoods Gin, Blackwoods Vodka, Diva Vodka and Jago’s Vanilla Cream Liqueur; appointed Hi-Spirits Ltd as UK distributor for Blavod owned brands; selected third party brands’ UK distribution agreements ended including Bruichladdich; redesigned and relaunched Blackwoods Gin 40 per cent in August 2013; relaunched Blackwoods 60 per cent in October 2013 and Blackwoods Vodka in November 2013. The Company is on target to achieve monthly break even in the early part of the next financial year. The gross profit from owned brands is up by 21 per cent in the period and the margins on owned brands rose from 42 per cent to 47 per cent. Financing costs were reduced by 68 per cent in the period, staffing cost reduced by 15 per cent and total administrative expenses reduced by 45 per cent.

Coms (LON:COMS 3.55p / £28.04m)

Coms announced that it has conditionally agreed to acquire from Redstone (LON:RED 0.925p / £5.77m) its subsidiary Comunica Holdings Limited and its wholly owned subsidiaries Comunica Group Limited and Redstone Converged Solutions Limited, a significant player in the UK Information Technology and Communications sector. Redstone is a leader in infrastructure, smart buildings and support services with a strong financial services client base. In the year ended 31 March 2013, Redstone reported turnover of £30.8m and EBITDA of £2.5m. Redstone has a list of blue chip clients and partners including Cisco, IBM and HP, and Coms has identified potential for growth in new markets and industries for the enlarged Coms Group.

Connemara (LON:CON 4.875p/£1.7m)

Connemara Mining, the diversified exploration Company with assets in base metal zinc, lead and gold exploration licences across Ireland, has announced that it has been awarded ten prospecting licences covering 413km² in the Stranorlar region of Donegal, Ireland. The licences cover gold, silver and base metals. The focus of Connemara’s exploration will be gold. The Donegal ground was selected by Connemara’s geologists following a rigorous review of gold opportunities in Ireland. Historical records of the Donegal area show certain anomalies consistent with gold while the geology shares similarities with the major gold discoveries by Dalradian Resources and others in Tyrone, Northern Ireland. Significant support for its evaluation is contained in the recently released ‘Tellus Border’ data of the Geological Survey of Ireland highlighting gold opportunities in the border area. This showed extensive gold anomalies in the Donegal area.

Eckoh (LON:ECK 26.625p / £57.5m)

Eckoh, the provider of multi-channel customer service and secure payment solutions, announced that it has secured a ten-year contract worth a minimum of £11m to provide a suite of self-service applications to a large tier 1 UK telecoms operator. The contract, secured in partnership with a Channel Partner, is expected to lead to increased market expectations for the next financial year and beyond. As part of the agreement, Eckoh will deliver a range of advanced speech recognition applications, of which the most significant is EckohASSIST, to enable customer queries to be handled more quickly and efficiently than through the legacy touchtone services. The initial services are expected to go live in spring 2014.

EKF Diagnostics (LON:EKF 32.375p/£88.3m)

EKF Diagnostics Holdings, the point-of-care diagnostics business, announced that EKF Molecular Diagnostics has launched four new PointMan™ DNA enrichment products for the Research Use Only market, with planned diagnostic registration in Europe in 2014. The new launches follow on from the introduction of the first three PointMan™ DNA enrichment products in May 2013, namely BRAF, KRAS and EGFR T790M DNA enrichment kits. The extension of EKF Molecular Diagnostic’s portfolio of DNA enrichment kits further enhances the company’s ability to change current DNA extraction and detection practices and address the fast growing companion diagnostics market.

IDOX (LON:IDOX 30.875p / £108m)

IDOX reported that despite a stronger second half to the year the Company had to announce that it will fall short of its May 2013 EBITDA guidance for the full year by up to 20 per cent. The Public Sector and Solutions divisions traded in line with expectations with the Public Sector division having a particularly strong end to the year. The Engineering Information Management (EIM) Division’s performance, although much improved against H1, again fell short of expectations. The Company has carried out an internal review to identify areas in need of improvement and is in the process of taking remedial action. The Company anticipates it will appoint a new Chief Financial Officer shortly, and will report with him on the changes made with the final results in December.

Intandem Films (LON:IFM 0.535p / £1.7597m)

Intandem Films, the London based international film group, announced that it has been appointed as exclusive sales agent on GAGARIN FIRST IN SPACE – a Russian language film about Soviet cosmonaut Yuri Gagarin, who became the first man in space in April 1961. The $10m completed feature film, which is produced by Oleg Kapanets and Igor Tolstunov and directed by Pavel Parkhomenko, will be released next year – 80 years since he was born – and will have its first screening at the American Film Market (AFM) next week (6 -13 November), which is expected to be attended by over 8,000 industry leaders. The AFM is a major opportunity for Intandem where they will be selling a number of the films on their current slate including: Famous, a glitzy film from the producers of Oblivion; and Second Origin and Starbright, both sci-fi love stories.

Invu (LON:INVU 0.3p / £506k)

Invu, the AIM listed document management software provider, announced that it intends to seek shareholder approval for the cancellation of admission of its Ordinary Shares to trading on AIM. Under AIM Rule 41, it is a requirement that any cancellation of admission to trading on AIM must be approved by not less than 75 per cent. of votes cast by shareholders voting at a General Meeting. Accordingly, the Company has sent to Shareholders a circular and notice of General Meeting convening the General Meeting at which a special resolution will be proposed to approve the Cancellation. The Circular will be available shortly on the Company’s website at www.invu.net. Should the Cancellation be approved at the General Meeting, it is expected that it will take effect at 7:00 a.m. on 2 December 2013.

LiteBulb (LON:LBB 0.762p/£11m)

LiteBulb, the brand and product development specialist, has entered into a conditional share purchase agreement to acquire Meld Group Ltd., a brand and product development company, for an initial consideration of £2m in cash and 347.6m shares. LiteBulb is also intending to raise up to £3m before expenses with both existing and new shareholders through the conditional placing of up to 428.6m shares at 0.7p per placing share. Meld has developed a diverse portfolio of brands and products which it supplies to major retailers in the UK. Having been in operation for over ten years, the Meld Group has developed established relationships with a number of blue-chip retail clients including Marks and Spencer and Sainsbury’s. Meld has a strong track record in terms of its financial performance, having been profitable for the last six years. The acquisition is expected to enhance LiteBulb’s sales over the next twelve months and be earnings enhancing before interest, tax, depreciation and amortisation.

Mariana Resources (LON:MARL 5.55p/£200m)

Mariana Resources, the exploration and development Company focused in Peru and southern Argentina, is pleased to announce that following successful due diligence, it is proceeding with the option to earn a 70 per cent interest inCondor Resources Inc. (TSX-V:CN) 100 per cent owned 7.13 sq km gold-silver-copper Soledad prospect in Peru. The Soledad property is located in the prospective Cordillera Negra metallogenic province in the central Peruvian Andes approximately 34 km to the south of the Pierina gold-silver mine operated by Barrick Gold Corporation and is fully drill permitted.

Netplay TV (LON:NPT 21.25p / £62.38m)

NetPlayTV, the interactive gaming group, announced that it has purchased Vernons.com, the e-gaming division of Sportech plc, from Sportech (Alderney) Limited. Vernons.com operates an online casino, bingo, poker and sports book. The acquisition includes the brand, customer database and various other gaming assets. The purchase, through the Group’s subsidiary NetPlayTV Group Limited in Alderney, is for a total consideration of £3m, which will be satisfied in cash from NetPlay’s cash resources. In addition, Sportech have agreed to contribute £0.1m towards NetPlay’s restructuring and integration costs which will be settled in full, in cash, on completion. The significant synergy opportunities will ensure efficient integration and immediate profitability. Vernons draws the majority of its revenue from online casino, operates on the same software platform as NetPlay, and both parties have operations in Guernsey. The acquisition provides the Group with further product differentiation, and it will cross market its existing live roulette TV product by offering it to Vernons’ customer database post integration. In addition, the Group has signed a memorandum of understanding which will enable it to offer Sportech’s football pools to NetPlay’s customer base. Vernons achieved an operating profit in the 12 months ended 31 December 2012 of £1.1m on total revenue of £4.8m. In the six months ended 30 June 2013, Vernons made an operating loss of £0.7m on total revenue of £2.8m.

Omega (LON:ODX 13.625p/£14.8m)

Omega, the medical diagnostics Company focused on allergy, food intolerance and infectious disease, has provided an update on its CD4 technology transfer project. Further to the update given earlier in October 2013, a number of experiments have been performed to investigate the variability within the production process. By definition, the experiments involved testing a number of variant devices, where each individual variant device incorporated controlled changes to a test parameter. The results from testing samples on these variant devices have enabled a majority of variants to be eliminated from further experimentation. The remaining variants are required to undergo further testing in order to select a single preferred manufacturing protocol. This protocol will be subject to a three-batch evaluation and the directors remain hopeful of completing the technology transfer by the end of December 2013 in line with revised expectations. Ultimately, the directors remain very confident of a successful technology transfer.

PhotonStar LED Group (LON:PSL 5p/£5.6m)

PhotonStar LED Group, the British designer and manufacturer of smart LED lighting solutions, has previewed its first retrofit smart LED light bulb ‘Halcyon’ at this year’s Gadget Show Live @ Christmas. The Halcyon light bulb is the first true multi user, whole home, retrofit wireless LED lighting solution. It was developed by PhotonStar following the DECC Energy Entrepreneurs grant, awarded in May 2013. The core technology is based on the Group’s patented ChromaWhite colour tuning professional LED light source. This is the first retrofit home LED lighting system that delivers ‘healthy’ Circadian lighting. Circadian lighting changes throughout the day to emulate the changing colour and intensity of natural daylight and has been shown to provide health benefits. The Halcyon bulb also saves energy though efficiency, and the smart technology automatically turns lights off when they are not needed.

Plastics Capital (LON:PLA 105.5p / £29.06m)

Plastics Capital, the niche plastics products group, announced it has conditionally agreed to acquire Beijing Higher Shengli Printing Science and Technology Co., Ltd (Shengli), a leading Chinese manufacturer of creasing matrix. The acquisition of Shengli is in-line with Plastic Capital’s strategy to build shareholder value through the acquisition of related niche plastics products businesses. Established in 1998 Shengli is a profitable, privately owned manufacturer of plastic creasing matrix located in the Tongzhou District of Beijing. Shengli employs approximately 50 personnel and is estimated to have 30 per cent. share of the domestic Chinese market for creasing matrix. China is one of the world’s largest markets for plastic creasing matrix and the Chinese market is estimated by the Company to be worth approximately £5m in annual sales and growing at a rate of between 15 and 20 per cent per annum. Accordingly, the Directors believe the Chinese market for creasing matrix represents a significant opportunity for the Group. Shengli will fit well with Plastics Capital’s existing creasing matrix business, C&T Matrix Limited and is complementary in terms of earnings, geographical footprint and technical capability. The acquisition is to be satisfied in cash through the issue of 2,700,000 new Ordinary Shares to new and existing investors in the company to raise £2.7m at a placing price of 100p representing a discount of 8.7 per cent to the closing mid-price on 30 October 2013.

RCG Holdings (LON:RCG 2.5p / £20.89m)

RCG Holdings announced that Mr. Danny Chew Tean (Mr. Chew) has resigned as Acting Chief Executive Officer of the Company with effect from 1 November 2013, to pursue other business interests. Mr. Chew has confirmed that he has no disagreement with the Board and there is no further information in relation to his resignation that needs to be brought to the attention of the shareholders of the Company or The Stock Exchange of Hong Kong Limited. As a result of Mr. Chew’s resignation, Mr. Wang Zhongling (Mr. Wang), an existing Executive Director of the Company has been appointed as Acting Chairman and Acting Chief Executive Officer with immediate effect. The Company has commenced a search for a permanent replacement Chief Executive Officer and continues to seek a suitable candidate for the role of Chairman of the Board.

Sareum Holdings (LON:SAR 0.625p / £9.51m)*

Sareum Holdings, the specialist cancer drug discovery and development business, announced that it has conditionally raised £1.67m by a placing at 0.6p per share. The proceeds of the placing will provide funds to facilitate the development of Sareum’s drug discovery and development programmes. In particular, the proceeds will fund the Company’s commitment to its collaboration with the Cancer Research Technology Pioneer Fund & BACIT (LON:BACC 102.5p / £204.75m) (as announced on 24 September 2013), to advance the Checkpoint Kinase 1 (CHK1) inhibitor candidate through further pre-clinical development and readiness for approval for Phase 1 clinical trials. The funds will also be used to progress Sareum’s Aurora+FLT3 programme in pre-clinical development and its TYK2 kinase inhibitor programme towards nomination of a pre-clinical development candidate. In addition, funds will provide working capital for the Company through to early 2015 excluding any exceptional circumstances or further financial commitment with respect to CHK1, which would be triggered once formal application for approval for Phase 1 clinical trials is scheduled.

Summit Corporation (LON:SUMM 11.5p / £51.45m)*

Summit, a drug discovery and development company advancing therapies for Duchenne Muscular Dystrophy (DMD) and C. difficile infection, announced that its Phase 1b Clinical Trial Application for SMT C1100 has received approval from the UK Medicines and Healthcare products Regulatory Agency (MHRA) and the Ethics Review Committee. SMT C1100 is a small molecule utrophin modulator that has the potential to treat all patients with DMD, regardless of the underlying genetic fault. The Phase 1b trial will be conducted at up to four NHS hospitals located in the UK and patient recruitment is expected to start shortly. Summit Corporation also and separately announced it has entered into a funding agreement with the UK charity, Joining Jack, to support the development of novel biomarkers for DMD. Summit aims to develop new biomarkers that are both related to the mechanism of its utrophin modulator candidate SMT C1100 and to other aspects of muscle health, including muscle fibre regeneration and inflammation. The information gained from this effort will support the clinical development of SMT C1100 and other therapeutic candidates for the treatment of DMD. Joining Jack was formed in 2012 to support research into identifying therapies for DMD and they will provide up to £100,000 in funding to support this development effort.

Surgical Innovations Group (LON:SUN 7.375p / £29.84m)

Surgical Innovations Group (SI), the designer and manufacturer of creative solutions for minimally invasive surgery (MIS), announced it has received and dispatched an initial stocking order from Surgioscopy worth a total of £141,000. SI announced in its recent Interim Results Statement the appointment of Surgioscopy. The three year agreement with Surgioscopy reflects the continuing expansion of SI’s US network of distributors and underpins SI’s growth strategy in the US market. Surgioscopy will promote both SI’s LogiTM and YelloPort+plusTM product lines across 10 mid-west states from Texas to Minnesota.

*A corporate client of Hybridan LLP

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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.