Small Cap Wrap: Month: December 2013

AIM Breakfast - Archive

10th December 2013

This week: SYQ floats, SUMM doses and resignations from PINN & EGS

The major market indices continue drift downwards against the backdrop of continuing speculation over the US tapering of its QE program. A key Fed official recently argued for reducing the Fed’s bond buying at next week’s meeting. Better than expected non-farm payroll and Chinese trade data has only added to the nervousness. Results from the UK Travel and Leisure sector this week is adding to conviction that the UK economy is also recovering faster than forecasts. While the FTSE is down 13 points in the past week to 6,519, the All-share AIM Index continues to outperform, rising 5 points to 825. We believe that any talk of tapering is still premature. However, if interest rates do begin to rise, then we expect the small cap sector to perform even better.

If you would like to unsubscribe, please email enquiries@hybridan.com with “unsubscribe me”.

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.

Action Hotels proposed AIM listing,BSE first production,COMS trading update and product launch,CSRT interim results,CRA contract win,EGS Board changes and contract,ESCH South African win,FLOW manufacturing agreement & placing,HDD Nadcap approval,HHR £60m placing,MDM interim financial results,Nation Media proposed AIM listing,PEG conditional placing,PINN trading statement & CEO resignation,PNA /SAVG offer update,RMM results,Safestyle UK proposed AIM admission,SCLP interim results and positive date,SIS interim results,SEE Royal Beuk agreement,SRB update,SORB results,SUMM first patient dosed,SYQ first day of dealings on AIM,TAL half yearly report

Action Hotels (TBC/c£94.5m)
N/K proposed AIM listing

Action Hotels, an owner, developer and asset manager of branded three and four star economy and midscale hotels in the Middle East and Australia, announced its intention to come to AIM via an IPO. The Group’s objective is to become a leading owner, developer and asset manager of branded economy and midscale hotels in key Middle East markets and Australia. Action Hotels has completed six hotels, of which five are in the Middle East and one is in Australia, with a further two hotels under construction (both in the GCC), one hotel expansion and another six in planning (one in Australia and the remainder in the GCC). The main countries of operation of the Company are those of the Gulf Cooperation Council. The business of Action Hotels was established in 2005 as a wholly owned subsidiary of Action Group Holding Company (K.S.S.C), a private Kuwait based conglomerate. AGH has global public and private interests across a range of sectors including real estate, infrastructure, hotels and energy. Action Hotels develops hotels following the entry into long-term management agreements with established international branded hotel operators. The Group’s property portfolio comprises five hotels in respect of which the freehold is owned by the Group and one held on a lease from AGH, with 1,004 rooms in total across the operating portfolio. The six hotels are located in Kuwait, Oman, Jordan and Australia. The two hotels currently under construction are expected to add a further 470 rooms by the end of 2014, with a further ten rooms being added to the ibis Salmiya by the same time. In addition, the Group has a pipeline of six projects which are expected to add a total of 1,032 rooms, expanding the portfolio to 2,516 rooms by the end of 2016.

Base Resources (LON:BSE 24.75p/£139.06m)

Base Resources announced the commencement of concentrate processing through the mineral separation plant (MSP) at the Kwale Project and the first production of ilmenite and rutile. Following the commissioning of the wet concentrator in early October, the first heavy mineral concentrate has now been taken through the ilmenite and rutile circuits of the MSP. Over the next several weeks processing rates are planned to be ramped up and inventories of rutile and ilmenite built up ahead of the commencement of bulk shipments in January. A small containerised shipment is scheduled in December. Construction work on the zircon circuit of the MSP is now in its final stages with commissioning expected during January. The majority of the supporting infrastructure is now complete, with access road, 132kv power supply, tailings storage facility and Mukurumudzi dam now functionally complete. The Likoni marine facility is scheduled for completion in early December, ahead of the first bulk shipment.

Coms (LON:COMS 4.45p / £35.15m)

Coms announced that trading in the nine month period to October 2013 has been strong and revenue and EBITDA are in line with management expectations. The order book for the remainder of the year is promising and the board is confident of prospects for the full year. The Company also said that all acquisitions, including Coms’ newly acquired subsidiary Communica Holdings Ltd. (Redstone), made during 2013 are expected to be fully integrated by the year-end. Further contract wins have been concluded with Taunton & Somerset NHS Trust, London Borough of Barnet, University of Kent, North Wales Hospital, Surrey and Sussex Healthcare, Harrogate District Foundation Trust, West Midlands NHS Trust and Gateshead NHS Foundation Trust. These, and other wholesale contract wins, further demonstrate the Company’s ability to achieve organic growth. The new Headquarters in Stokenchurch, Buckinghamshire and “centre of excellence” will be operational within the next 10 days. Approximately 50 staff will move immediately into these new offices, which can accommodate circa 200 people with the additional capacity being used for the anticipated increased activity during 2014. Accordingly before the year-end the Company will close down its London, Cannon Street offices and move the London based staff into Redstone’s offices in Old Broad Street in the City. Coms also announced that Coms.Com Ltd has launched a number of new high-speed broadband products suitable for home and business users. With a range of plans available to suit all users requirements and budgets, the Coms broadband product set fit into the communications and connectivity solutions the business already delivers. The launch of these products comes in a year when one of the acquisitions made by Coms plc was ADSL24 – a specialist in home and business broadband. As a result of this product launch, all ADSL24 customers have transferred to Coms for their ongoing needs.

Consort Medical (LON:CSRT 935p/£274m)

Consort Medical, a designer and manufacturer of drug delivery and device technologies, has reported its interim results for the six months ended October 2013. Revenue from products and services increased by 6.5 per cent to £51.2m while underlying operating profit increased by 4.8 per cent to £9.6m. EBIT margin before special items was constant at 18.8 per cent as the strength of service income arising from the development pipeline continued, together with central cost savings, following the disposal of King Systems. The company is trading in line with its expectations and the management expects the organic growth initiatives, particularly from further development programme wins, to continue to convert into increased revenue and operating leverage for Consort over time.

Corac Group (LON:CRA 10.625p/£32.72m)

Corac Group announced that its subsidiary Hunt Graham Ltd. (HG) has received an order from the UK division of a speciality chemical company for the design and manufacture of heat exchangers central to their manufacturing process. This order, worth approximately £1.1m, is for four exchangers plus a full set of interchangeable spares to be delivered in the UK during 2014. The systems will be manufactured at HG’s integrated design and production facility in Dukinfield, Greater Manchester, using specialist stainless steel and nickel alloy material for optimum high temperature operations.

eg solutions (LON:EGS 77.5p / £12.40m)

eg solutions, announced that John O’Connell has informed the Board of his decision to resign as a Director of the Company with immediate effect. The Board intends to replace Mr O’Connell by appointing a non-executive Chairman and a Chief Executive as soon as possible. In the meantime, Elizabeth Gooch will be Acting Executive Chairman. eg solutions also announced that it has won a new Managed Cloud Services contract from a major third party outsourcing customer. The contract will provide eg operational intelligence(R) on a hosted basis with implementation and training services for users processing life and pensions business across two sites. This is the second hosting contract won from this customer. The implementation will commence immediately and is expected to be completed by April 2014. The total value of the contract over three years is £0.75m of which approximately £300,000 will be recognised in the current financial year. eg is experiencing growing demand for its Managed Cloud Services from customers seeking more flexible and cost effective access to business applications. Although this initially reduces perpetual licence income, the move to hosting has led to a 36 per cent increase in recurring revenues on the previous year and reflects the company’s strategy to build a more predictable business model.

Escher Group Holdings (LON:ESCH 245p / £45.65m)

Escher Group Holdings, provider of outsourced, point of sale software to the postal industry, announced that the South African Post Office has selected the RiposteTrEx™ platform to deliver its eRegistered mail solution following a rigorous tender process. The South African Post Office will, through this platform, provide eRegistered mail services to the country’s more than 51 million citizens. Escher’s solution, RiposteTrEx™ is a secure, scalable high performing platform for “digital correspondence”. The RiposteTrEx™ platform heralds a new phase in the evolution of secure e-services and digital communication. RiposteTrEx™ will allow South African Post users including, citizens, government, business and SME’s to send eRegistered and confidential mail to secure digital mail boxes, or as registered hybrid letters.

Flowgroup (LON:FLOW 17.75p/£23.5m)

Flowgroup, which develops and commercialises alternative and efficient energy products, has announced that it has entered into an exclusive Manufacturing Services Agreement with Jabil Circuit Inc., one of the world’s leading manufacturing solutions companies, to manufacture up to 390,000 microCHP Flow boilers in the UK. Jabil will manufacture up to 390,000 Flow boilers, funding production working capital. The Company has also announced a conditional placing and subscription to raise approximately £15.9m and an open offer to raise up to approximately £2m to further the continuing commercial development of the Flow boiler for volume launch from H2 2014. Firm placing of 96.3m new shares has been conducted at 16.25p each with a subscription of 1.26m new shares by Directors and certain senior management. Up to £1.96m is to be raised from an open offer at 16.25p also.

Hardide (LON:HDD 0.925p/£9.49m)

Hardide has begun a programme of work aimed at securing the aerospace industry’s prestigious Nadcap approval within the next 18 months. The accreditation will take Hardide Coatings’ systems and processes beyond those required of the currently held AS 9100 Rev C and will place the company in the top tier of global aerospace suppliers for manufacturing quality. Nadcap (formerly the National Aerospace and Defense Contractors Accreditation Program) is a globally recognised award managed by the aerospace and defence industries to recognise excellence in manufacturing quality products through superior processes. Increasingly, it is being seen as a mandatory requirement for key suppliers to aerospace OEMs (original equipment manufacturers). The programme of work leading to accreditation is expected to be completed by the end of 2014 and forms one of a range of preparations for future aerospace business.

Helphire Group (LON:HHR 5.65p/£88.86m)

The Board of Helphire announced that it has conditionally raised £60m (before expenses) at 5.2 pence per share. The proceeds of the placing are conditional upon, among other things, the approval of shareholders at the General Meeting, and will be used to allow Helphire to continue its development as a leading accident management services group. The placing shares will represent approximately 42.3 per cent. of the enlarged share capital. The Group has decided to accelerate the payment of the second interim dividend for the current year so that it is paid by reference to the pre-placing shareholder register. The Board confirms that the second interim dividend will be 0.171 pence per ordinary share and that it will now be brought forward so that it is paid on 10 January 2014 to those shareholders on the register at the close of business on 13 December 2013. In addition, in the absence of unforeseen circumstances, the Board intends to announce a third interim dividend for the current year in late February 2014 when releasing its results for the six months ending 31 December 2013.

MDM Engineering Group Limited (LON:MDM 147p/£54.77m)

MDM Engineering Group Limited, the minerals process and project management Company focused on the mining industry, announced its interim results for the six month period ended 30 September 2013. Revenue decreased to US$53.6m (2012: US$78.9m, and pre-tax profit declined to US$5.0m (2012: US$8.1m). This decrease is primarily a result of cashflow from the Bulyanhulu project being timed to peak during the next half year, and the lower workload since 31 March 2013 following the completion of the Tharisa 3.6m tonnes per annum chrome and platinum project in FY2013. However the cash position grew to US$32.0m (2012: US$20.1m). The Company continued its commitment to pay 50 per cent of after-tax profits as a dividend to shareholders. The MDM Board declared an interim cash dividend of US 8.00 cents per share, which includes the special dividend of US 3.65 cents per share, payable on 22 January 2014 to all shareholders on the register on 13 December 2013. The interim dividend will have an ex-dividend date of 11 December 2013. The special dividend is as a result of MDM’s strong cash position and the anticipated increase in the forward project pipeline.

Nation Media (unlisted)

Nation Media, owners and operators of Box Nation, the UK-based subscription boxing channel, available on Sky, Virgin Media, online and via mobile apps, confirmed its intention to seek admission to trading on AIM. Box Nation commenced Pay TV broadcasting in November 2011 and is now available on a subscription basis through Sky, Virgin, mobile apps and online. It has built its customer base (people who are registered on the Box Nation customer database, principally current and past subscribers) to over 250,000 people, of which more than 100,000 people are currently subscribing on a monthly basis. The Board is led by Richard Brooke, Executive Chairman, the former Finance Director of Sky, and includes, as non-executive directors, Frank Warren, who has been a boxing promoter over the past 30 years, Simon Green, the Head of Sport at BT Vision, and Bill Ives, the Chairman and founder of the Rainham Steel Group.

Penna Consulting (LON:PNA 92.5p/£23.81m) & Savile (LON:SAVG 6.5p/£970k)

On 12 November 2013, the boards of Penna and Savile announced that they had reached agreement on the terms of a recommended cash offer by Penna for the entire issued and to be issued ordinary share capital of Savile. As at 1:00 p.m. on 3 December 2013 (being the first closing date of the offer), Penna had received valid acceptances in respect of a total of 11,083,779 Savile shares, representing approximately 74.2 per cent. of the entire issued share capital of Savile. Penna therefore announced that all of the conditions to the offer have been satisfied and/or waived and, accordingly, declared the offer wholly unconditional. The offer remains open for acceptance until 1:00 p.m. on 18 December 2013.

Petard Group (LON:PEG 10.75p / £2.37m)*

Petards announced that it proposes to raise approximately £1.15m (before expenses) by way of a placing at a price of 10 pence per share. While trading conditions for 2013 have remained difficult, the Board’s expectation that order intake would improve in the second half of the year has been realised. In the period since the Company reported its 2013 Interim Results on 30 September 2013, it has been awarded a number of significant contracts by both its rail and defence customers. The principal contract wins are as follows: £7m with the Ministry of Defence; a contract to supply Hyundai Rotem of South Korea worth over £1m; a contract on new Alstom Coradia Nordic X60 suburban EMU trains; and a contract to supply Bombardier Transportation that is worth over £1.75m. The value of these orders is in excess of £10m and, as anticipated, the revenue benefit of these orders will be largely seen in 2014. The Company’s current order book is approaching £20m of which approximately half is expected to be delivered in 2014. The significant increase in its order book brings with it a requirement for greater working capital. Having reviewed its options for addressing this requirement, the Board and has concluded that, at the current time, raising equity through the Placing, which has the added benefit of further strengthening the balance sheet, is the most appropriate method of addressing this requirement. Some of the proceeds will also be used for reorganisation within the Company and further product development.

Pinnacle Technology Group (LON:PINN 17.5p/5.73m)

The Board has issued a trading update, as signalled in the interim announcement on 6 June 2013; revenue for the year ended 30 September 2013 is lower than in the previous year, at approximately £10.1m (2012 £12.7m). This result, whilst disappointing, relates in large part to poor performance from the previous acquisition of RMS IT Security and the lack of any major UK high-profile events in the period (compared to the Queen’s Diamond Jubilee celebrations and the London Olympic Games contracts, which were delivered in the year ended 30 September 2012). In consequence, both EBITDA and pre-tax loss when finalised, will show a significant deterioration on the figures for the previous year (2012 adjusted EBITDA £284,554; 2012 loss before tax £1,115,558). It should be noted, however, that following the announcement of the interim results to 30 March 2013, the Board embarked on a strategic review of the Group and has taken robust actions to reduce on-going costs in recent months. As a result, the Group is now trading close to EBITDA breakeven on a monthly basis. The Company expects to make a preliminary announcement for its full year results to 30 September 2013, in February 2014. Any further announcements regarding the appointment of Mr Bonner’s successor as Chief Executive will be made in due course.

Rambler Metals and Mining (LON:RMM 27p/£38.6m)

Rambler Metals and Mining, whose principal activity is the development, mining and exploration of the Ming Copper-Gold Mine in Newfoundland and Labrador and the exploration and development of other properties located in Atlantic Canada, has announced its financial results for the first quarter of fiscal 2014 ending October 2013. Revenues in the quarter reached C$16.7m, compared with C$13.2m in the previous quarter. Profit before tax also improved from C$1.6m to C$5.3m. This quarter completed twelve calendar months of commercial production and resulted in pre-tax profits of C$9m. A total of 6,648 dry metric tonnes (dmt) (Q4 2013 – 5,573 dmt) of concentrate was provisionally invoiced during the period at an average price of C$3.39 (Q4 2013 – C$3.31) per pound copper, C$1,390 (Q4 2013 – C$1,409) per ounce gold and C$22.81 (Q4 2013 – C$21.98) per ounce silver. Cash resources as of 31 October 2013 was C$5.7m and as of 9 December 2013 had increased to C$6.7m with operating cash flows anticipated to continue to build throughout the fiscal year.

Safestyle UK (TBC/c£77m)

Safestyle UK a UK-focused retailer and manufacturer of PVCu windows and doors for the UK homeowner replacement market, announced its intention to proceed with a vendor placing of ordinary shares with a value of approximately £70m, and admission to trading on AIM. The Company’s business has grown from its founding in 1992 to become the largest company in the UK homeowner window and door replacement market, manufacturing 232,000 frames in 2012 and carrying out in excess of 50,000 installations. Safestyle has ten installation depots and 29 sales offices throughout the country. The Group has established a robust and cash generative financial track record over a number of years, with revenues in the year ended 31 December 2012 of £110.2m and profit before tax of £9.5m. For the six month period ended 30 June 2013, the Company revenues were £62.6m and profit before tax was £7.8m. Since 30 June 2013, the Company has traded in line with Directors’ expectations. The trends seen in the first half of 2013 have continued, with average order values remaining at similar levels to 2012, whilst order levels remain above those seen in comparable periods in 2012.

Scancell Holdings (LON:SCLP 36p / £80.42m)

Scancell, the developer of novel immunotherapies for the treatment of cancer, announced results for the six months ended 31 October 2013. The operating loss for the period was £1.31m (2012: loss of £0.99m) and a net loss of £1.19m (2012: loss £0.92m was reported. Cash at bank at 31 October 2013 was £6.40m (30 April 2013: £1.49m), following a placing and open offer of shares in August that raised £6.09m (net of expenses). Scancell also announced important positive data from Part 2 as well as an update from Part 1 of the on-going Phase 1/2 clinical trial with SCIB1 in patients with Stage III/IV melanoma at the same time as its interim results. A melanoma-specific immune response was seen in all Part 2 patients, alongside a continuing positive survival trend in Part 1 subjects, although patient numbers are small. No serious adverse events were reported. Scancell has been granted an extension of the Option to commercialise Ichor’s proprietary Trigrid™ electroporation delivery system with SCIB1 also post period end. The Company anticipates reporting data from the high dose 8mg arm of this Phase 1/2 trial by 2014 calendar year end.

Science in Sport (LON:SIS 61.75p/£12m)

Science in Sport, a sports nutrition Company, has reported its maiden financial results as a quoted Company following admission to AIM on 9 August 2013. Revenues in the six month to September 2013 increased by 23 per cent to £4m (H1 2012: £3.25m). Underlying operating profit of £21,156 was in line with management expectations (H1 2012 underlying operating profit: £221,851). There has been significant progress in developing an international distribution network including the appointment of an Asia Pacific distributor in November 2013 while investment in e-commerce and direct selling infrastructure is ongoing. During this period, Mark Cavendish was appointed as Elite Sports Consultant.

Seeing Machines (LON:SEE 7.25p/£40.7m)

Seeing Machines, the technology company that specialises in visual computing systems that track faces, eye and facial features in real time, has signed a strategic agreement with Royal Beuk, a leading European coach fleet operator, for the deployment of automated Fatigue Monitoring Systems to ensure driver alertness and safeguard coach passengers. The installation of the Fatigue Monitoring Systems will be the first time that coach passenger safety has been protected by automated detection of driver fatigue and distraction, and is being put in place to eliminate the risk of catastrophic coach crashes that have led to large numbers of fatalities. The agreement and partnership with Royal Beuk builds further on Seeing Machines’ success in the transportation markets.

Serabi Gold (LON:SRB 5.25p/£24m)

Serabi Gold, the Brazilian focused gold exploration and development Company, has reported a further operational update on its Palito gold mine. The Company is making good progress as the development of the Palito mine and process plant reaches the final stages before going into production in the first quarter of 2014. Development mining is now underway on four main levels, including the next planned production level. The Palito Main Zone veins at this level have already been intersected, with mineable grades and widths tonne of gold significantly in excess of the mine plan grades. The surface ore stockpile has now reached 25,000 tonnes @7.5 grammes per tonne of gold. Electrical installations at the mine and plant are complete, with new high voltage sub-stations installed and low voltage control rooms competed. The Crushing plant is fully operational and the Flotation plant is 90 per cent complete, with final electrical installations underway.

Sorbic International (LON:SORB 9p / £5.14m)

The third largest sorbates producer in China announced its preliminary unaudited results for the year ended 30 September 2013. Revenue for the year was £14.6m (2012: £16.8m) and EBITDA more than doubled to £1.2m (2012: £0.5m). The gross profit margin for the year came in at 12.9 per cent (2012: 8.6 per cent). Profit from operations before an impairment was £0.6m (2012: £0.02m) and the loss before tax was £6.1m after the impairment provision of £6.7m in respect of the Inner Mongolia facility (2012: £0.14m). The cash balances at 30 September 2013 were£5.3m (2012: £4.1m) and the net assets per share was £0.21 (2012: £0.38). The compensation negotiation for the Group’s Inner Mongolia facility restarted during the period. John McLean, Non-Executive Chairman of Sorbic International, commented: “The Board is pleased that during the year the core business has significantly improved profitability and more than doubled EBITDA. The Board remains focused on resolving cash flow constraints, as well as continuing to work to seek a conclusion of the negotiations regarding the Inner Mongolia facility, and will update shareholders on this matter in due course.”

Summit Corporation (LON:SUMM 9.75p / £47.07m)*

Summit, a drug discovery and development company advancing therapies for Duchenne Muscular Dystrophy (DMD) and C. difficile infection, announced that the first DMD patient has been enrolled and dosed in a Phase 1b clinical trial of the oral, small molecule utrophin modulator SMT C1100. The Phase 1b trial is a dose-escalating, open-label study that is being conducted in paediatric patients with DMD. The primary endpoint of the trial is the evaluation of the safety and tolerability of SMT C1100. The study will also measure blood plasma concentration levels of SMT C1100 to determine the dose to be used in a subsequent Phase 2 proof of concept efficacy trial. The trial is enrolling 12 patients aged between 5 and 11 years, divided equally into three dose cohorts. Each cohort will receive daily oral doses of SMT C1100 for a total of ten days with a review taking place after each cohort has completed dosing. The trial is being conducted at up to four NHS hospitals in the UK with the Chief Investigator being Professor Francesco Muntoni at Great Ormond Street Hospital, London.

SyQic (LON:SYQ 77.5p/£17.97m)

SyQic, an OTT (Over The Top) provider of live TV and on-demand paid video content across mobile and internet enabled consumer devices, announced the commencement of dealings of its ordinary shares on the AIM market. The Group has access to over 20,000 titles of online video-on-demand content as well as over 70 live television feeds comprising English language based content and native language content for a number of ‘home markets’ in Asia and their international migrant communities. The content is delivered through SyQic’s platform via a number of channels in the movies, drama, music, sports, news, lifestyle and general entertainment genres. The Group, which is incorporated in Jersey and headquartered in the UK, already has a significant service footprint in the Philippines, Indonesia and Malaysia and near term launches are planned for the UK (before the end of 2013), followed by mainland Europe, Indochina, Myanmar, Singapore, Pakistan and Bangladesh with a planned launch of the Group’s service in the US over the next 18 months.

Ten Alps (LON:TAL 0.9p/2.49m)

Ten Alps, a producer of TV and radio together with integrated publishing and communications content, announced its half year results for the six months to 30 September 2013. As the Group continues to move further away from its previous legacy, it now has a simplified management structure, reduced overheads, a refreshed portfolio and has expanded services in sectors and markets which the Board believes will grow in the future. It believes that the implementation of these measures is now starting to bear results. Group revenues came in at £12.24m (2012: £13.47m) with an adjusted EBITDA loss of £0.19m (2012: £0.74m loss). The loss for the period after tax was £0.51m (2012: loss of £1.82m) with net debt of £6.08m (2012: £3.70m) with facilities maturing in 2016.

*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.

10th December 2013

This week: SYQ floats, SUMM doses and resignations from PINN & EGS

The major market indices continue drift downwards against the backdrop of continuing speculation over the US tapering of its QE program. A key Fed official recently argued for reducing the Fed’s bond buying at next week’s meeting. Better than expected non-farm payroll and Chinese trade data has only added to the nervousness. Results from the UK Travel and Leisure sector this week is adding to conviction that the UK economy is also recovering faster than forecasts. While the FTSE is down 13 points in the past week to 6,519, the All-share AIM Index continues to outperform, rising 5 points to 825. We believe that any talk of tapering is still premature. However, if interest rates do begin to rise, then we expect the small cap sector to perform even better.

If you would like to unsubscribe, please email enquiries@hybridan.com with “unsubscribe me”.

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.

Action Hotels proposed AIM listing,BSE first production,COMS trading update and product launch,CSRT interim results,CRA contract win,EGS Board changes and contract,ESCH South African win,FLOW manufacturing agreement & placing,HDD Nadcap approval,HHR £60m placing,MDM interim financial results,Nation Media proposed AIM listing,PEG conditional placing,PINN trading statement & CEO resignation,PNA /SAVG offer update,RMM results,Safestyle UK proposed AIM admission,SCLP interim results and positive date,SIS interim results,SEE Royal Beuk agreement,SRB update,SORB results,SUMM first patient dosed,SYQ first day of dealings on AIM,TAL half yearly report

Action Hotels (TBC/c£94.5m)
N/K proposed AIM listing

Action Hotels, an owner, developer and asset manager of branded three and four star economy and midscale hotels in the Middle East and Australia, announced its intention to come to AIM via an IPO. The Group’s objective is to become a leading owner, developer and asset manager of branded economy and midscale hotels in key Middle East markets and Australia. Action Hotels has completed six hotels, of which five are in the Middle East and one is in Australia, with a further two hotels under construction (both in the GCC), one hotel expansion and another six in planning (one in Australia and the remainder in the GCC). The main countries of operation of the Company are those of the Gulf Cooperation Council. The business of Action Hotels was established in 2005 as a wholly owned subsidiary of Action Group Holding Company (K.S.S.C), a private Kuwait based conglomerate. AGH has global public and private interests across a range of sectors including real estate, infrastructure, hotels and energy. Action Hotels develops hotels following the entry into long-term management agreements with established international branded hotel operators. The Group’s property portfolio comprises five hotels in respect of which the freehold is owned by the Group and one held on a lease from AGH, with 1,004 rooms in total across the operating portfolio. The six hotels are located in Kuwait, Oman, Jordan and Australia. The two hotels currently under construction are expected to add a further 470 rooms by the end of 2014, with a further ten rooms being added to the ibis Salmiya by the same time. In addition, the Group has a pipeline of six projects which are expected to add a total of 1,032 rooms, expanding the portfolio to 2,516 rooms by the end of 2016.

Base Resources (LON:BSE 24.75p/£139.06m)

Base Resources announced the commencement of concentrate processing through the mineral separation plant (MSP) at the Kwale Project and the first production of ilmenite and rutile. Following the commissioning of the wet concentrator in early October, the first heavy mineral concentrate has now been taken through the ilmenite and rutile circuits of the MSP. Over the next several weeks processing rates are planned to be ramped up and inventories of rutile and ilmenite built up ahead of the commencement of bulk shipments in January. A small containerised shipment is scheduled in December. Construction work on the zircon circuit of the MSP is now in its final stages with commissioning expected during January. The majority of the supporting infrastructure is now complete, with access road, 132kv power supply, tailings storage facility and Mukurumudzi dam now functionally complete. The Likoni marine facility is scheduled for completion in early December, ahead of the first bulk shipment.

Coms (LON:COMS 4.45p / £35.15m)

Coms announced that trading in the nine month period to October 2013 has been strong and revenue and EBITDA are in line with management expectations. The order book for the remainder of the year is promising and the board is confident of prospects for the full year. The Company also said that all acquisitions, including Coms’ newly acquired subsidiary Communica Holdings Ltd. (Redstone), made during 2013 are expected to be fully integrated by the year-end. Further contract wins have been concluded with Taunton & Somerset NHS Trust, London Borough of Barnet, University of Kent, North Wales Hospital, Surrey and Sussex Healthcare, Harrogate District Foundation Trust, West Midlands NHS Trust and Gateshead NHS Foundation Trust. These, and other wholesale contract wins, further demonstrate the Company’s ability to achieve organic growth. The new Headquarters in Stokenchurch, Buckinghamshire and “centre of excellence” will be operational within the next 10 days. Approximately 50 staff will move immediately into these new offices, which can accommodate circa 200 people with the additional capacity being used for the anticipated increased activity during 2014. Accordingly before the year-end the Company will close down its London, Cannon Street offices and move the London based staff into Redstone’s offices in Old Broad Street in the City. Coms also announced that Coms.Com Ltd has launched a number of new high-speed broadband products suitable for home and business users. With a range of plans available to suit all users requirements and budgets, the Coms broadband product set fit into the communications and connectivity solutions the business already delivers. The launch of these products comes in a year when one of the acquisitions made by Coms plc was ADSL24 – a specialist in home and business broadband. As a result of this product launch, all ADSL24 customers have transferred to Coms for their ongoing needs.

Consort Medical (LON:CSRT 935p/£274m)

Consort Medical, a designer and manufacturer of drug delivery and device technologies, has reported its interim results for the six months ended October 2013. Revenue from products and services increased by 6.5 per cent to £51.2m while underlying operating profit increased by 4.8 per cent to £9.6m. EBIT margin before special items was constant at 18.8 per cent as the strength of service income arising from the development pipeline continued, together with central cost savings, following the disposal of King Systems. The company is trading in line with its expectations and the management expects the organic growth initiatives, particularly from further development programme wins, to continue to convert into increased revenue and operating leverage for Consort over time.

Corac Group (LON:CRA 10.625p/£32.72m)

Corac Group announced that its subsidiary Hunt Graham Ltd. (HG) has received an order from the UK division of a speciality chemical company for the design and manufacture of heat exchangers central to their manufacturing process. This order, worth approximately £1.1m, is for four exchangers plus a full set of interchangeable spares to be delivered in the UK during 2014. The systems will be manufactured at HG’s integrated design and production facility in Dukinfield, Greater Manchester, using specialist stainless steel and nickel alloy material for optimum high temperature operations.

eg solutions (LON:EGS 77.5p / £12.40m)

eg solutions, announced that John O’Connell has informed the Board of his decision to resign as a Director of the Company with immediate effect. The Board intends to replace Mr O’Connell by appointing a non-executive Chairman and a Chief Executive as soon as possible. In the meantime, Elizabeth Gooch will be Acting Executive Chairman. eg solutions also announced that it has won a new Managed Cloud Services contract from a major third party outsourcing customer. The contract will provide eg operational intelligence(R) on a hosted basis with implementation and training services for users processing life and pensions business across two sites. This is the second hosting contract won from this customer. The implementation will commence immediately and is expected to be completed by April 2014. The total value of the contract over three years is £0.75m of which approximately £300,000 will be recognised in the current financial year. eg is experiencing growing demand for its Managed Cloud Services from customers seeking more flexible and cost effective access to business applications. Although this initially reduces perpetual licence income, the move to hosting has led to a 36 per cent increase in recurring revenues on the previous year and reflects the company’s strategy to build a more predictable business model.

Escher Group Holdings (LON:ESCH 245p / £45.65m)

Escher Group Holdings, provider of outsourced, point of sale software to the postal industry, announced that the South African Post Office has selected the RiposteTrEx™ platform to deliver its eRegistered mail solution following a rigorous tender process. The South African Post Office will, through this platform, provide eRegistered mail services to the country’s more than 51 million citizens. Escher’s solution, RiposteTrEx™ is a secure, scalable high performing platform for “digital correspondence”. The RiposteTrEx™ platform heralds a new phase in the evolution of secure e-services and digital communication. RiposteTrEx™ will allow South African Post users including, citizens, government, business and SME’s to send eRegistered and confidential mail to secure digital mail boxes, or as registered hybrid letters.

Flowgroup (LON:FLOW 17.75p/£23.5m)

Flowgroup, which develops and commercialises alternative and efficient energy products, has announced that it has entered into an exclusive Manufacturing Services Agreement with Jabil Circuit Inc., one of the world’s leading manufacturing solutions companies, to manufacture up to 390,000 microCHP Flow boilers in the UK. Jabil will manufacture up to 390,000 Flow boilers, funding production working capital. The Company has also announced a conditional placing and subscription to raise approximately £15.9m and an open offer to raise up to approximately £2m to further the continuing commercial development of the Flow boiler for volume launch from H2 2014. Firm placing of 96.3m new shares has been conducted at 16.25p each with a subscription of 1.26m new shares by Directors and certain senior management. Up to £1.96m is to be raised from an open offer at 16.25p also.

Hardide (LON:HDD 0.925p/£9.49m)

Hardide has begun a programme of work aimed at securing the aerospace industry’s prestigious Nadcap approval within the next 18 months. The accreditation will take Hardide Coatings’ systems and processes beyond those required of the currently held AS 9100 Rev C and will place the company in the top tier of global aerospace suppliers for manufacturing quality. Nadcap (formerly the National Aerospace and Defense Contractors Accreditation Program) is a globally recognised award managed by the aerospace and defence industries to recognise excellence in manufacturing quality products through superior processes. Increasingly, it is being seen as a mandatory requirement for key suppliers to aerospace OEMs (original equipment manufacturers). The programme of work leading to accreditation is expected to be completed by the end of 2014 and forms one of a range of preparations for future aerospace business.

Helphire Group (LON:HHR 5.65p/£88.86m)

The Board of Helphire announced that it has conditionally raised £60m (before expenses) at 5.2 pence per share. The proceeds of the placing are conditional upon, among other things, the approval of shareholders at the General Meeting, and will be used to allow Helphire to continue its development as a leading accident management services group. The placing shares will represent approximately 42.3 per cent. of the enlarged share capital. The Group has decided to accelerate the payment of the second interim dividend for the current year so that it is paid by reference to the pre-placing shareholder register. The Board confirms that the second interim dividend will be 0.171 pence per ordinary share and that it will now be brought forward so that it is paid on 10 January 2014 to those shareholders on the register at the close of business on 13 December 2013. In addition, in the absence of unforeseen circumstances, the Board intends to announce a third interim dividend for the current year in late February 2014 when releasing its results for the six months ending 31 December 2013.

MDM Engineering Group Limited (LON:MDM 147p/£54.77m)

MDM Engineering Group Limited, the minerals process and project management Company focused on the mining industry, announced its interim results for the six month period ended 30 September 2013. Revenue decreased to US$53.6m (2012: US$78.9m, and pre-tax profit declined to US$5.0m (2012: US$8.1m). This decrease is primarily a result of cashflow from the Bulyanhulu project being timed to peak during the next half year, and the lower workload since 31 March 2013 following the completion of the Tharisa 3.6m tonnes per annum chrome and platinum project in FY2013. However the cash position grew to US$32.0m (2012: US$20.1m). The Company continued its commitment to pay 50 per cent of after-tax profits as a dividend to shareholders. The MDM Board declared an interim cash dividend of US 8.00 cents per share, which includes the special dividend of US 3.65 cents per share, payable on 22 January 2014 to all shareholders on the register on 13 December 2013. The interim dividend will have an ex-dividend date of 11 December 2013. The special dividend is as a result of MDM’s strong cash position and the anticipated increase in the forward project pipeline.

Nation Media (unlisted)

Nation Media, owners and operators of Box Nation, the UK-based subscription boxing channel, available on Sky, Virgin Media, online and via mobile apps, confirmed its intention to seek admission to trading on AIM. Box Nation commenced Pay TV broadcasting in November 2011 and is now available on a subscription basis through Sky, Virgin, mobile apps and online. It has built its customer base (people who are registered on the Box Nation customer database, principally current and past subscribers) to over 250,000 people, of which more than 100,000 people are currently subscribing on a monthly basis. The Board is led by Richard Brooke, Executive Chairman, the former Finance Director of Sky, and includes, as non-executive directors, Frank Warren, who has been a boxing promoter over the past 30 years, Simon Green, the Head of Sport at BT Vision, and Bill Ives, the Chairman and founder of the Rainham Steel Group.

Penna Consulting (LON:PNA 92.5p/£23.81m) & Savile (LON:SAVG 6.5p/£970k)

On 12 November 2013, the boards of Penna and Savile announced that they had reached agreement on the terms of a recommended cash offer by Penna for the entire issued and to be issued ordinary share capital of Savile. As at 1:00 p.m. on 3 December 2013 (being the first closing date of the offer), Penna had received valid acceptances in respect of a total of 11,083,779 Savile shares, representing approximately 74.2 per cent. of the entire issued share capital of Savile. Penna therefore announced that all of the conditions to the offer have been satisfied and/or waived and, accordingly, declared the offer wholly unconditional. The offer remains open for acceptance until 1:00 p.m. on 18 December 2013.

Petard Group (LON:PEG 10.75p / £2.37m)*

Petards announced that it proposes to raise approximately £1.15m (before expenses) by way of a placing at a price of 10 pence per share. While trading conditions for 2013 have remained difficult, the Board’s expectation that order intake would improve in the second half of the year has been realised. In the period since the Company reported its 2013 Interim Results on 30 September 2013, it has been awarded a number of significant contracts by both its rail and defence customers. The principal contract wins are as follows: £7m with the Ministry of Defence; a contract to supply Hyundai Rotem of South Korea worth over £1m; a contract on new Alstom Coradia Nordic X60 suburban EMU trains; and a contract to supply Bombardier Transportation that is worth over £1.75m. The value of these orders is in excess of £10m and, as anticipated, the revenue benefit of these orders will be largely seen in 2014. The Company’s current order book is approaching £20m of which approximately half is expected to be delivered in 2014. The significant increase in its order book brings with it a requirement for greater working capital. Having reviewed its options for addressing this requirement, the Board and has concluded that, at the current time, raising equity through the Placing, which has the added benefit of further strengthening the balance sheet, is the most appropriate method of addressing this requirement. Some of the proceeds will also be used for reorganisation within the Company and further product development.

Pinnacle Technology Group (LON:PINN 17.5p/5.73m)

The Board has issued a trading update, as signalled in the interim announcement on 6 June 2013; revenue for the year ended 30 September 2013 is lower than in the previous year, at approximately £10.1m (2012 £12.7m). This result, whilst disappointing, relates in large part to poor performance from the previous acquisition of RMS IT Security and the lack of any major UK high-profile events in the period (compared to the Queen’s Diamond Jubilee celebrations and the London Olympic Games contracts, which were delivered in the year ended 30 September 2012). In consequence, both EBITDA and pre-tax loss when finalised, will show a significant deterioration on the figures for the previous year (2012 adjusted EBITDA £284,554; 2012 loss before tax £1,115,558). It should be noted, however, that following the announcement of the interim results to 30 March 2013, the Board embarked on a strategic review of the Group and has taken robust actions to reduce on-going costs in recent months. As a result, the Group is now trading close to EBITDA breakeven on a monthly basis. The Company expects to make a preliminary announcement for its full year results to 30 September 2013, in February 2014. Any further announcements regarding the appointment of Mr Bonner’s successor as Chief Executive will be made in due course.

Rambler Metals and Mining (LON:RMM 27p/£38.6m)

Rambler Metals and Mining, whose principal activity is the development, mining and exploration of the Ming Copper-Gold Mine in Newfoundland and Labrador and the exploration and development of other properties located in Atlantic Canada, has announced its financial results for the first quarter of fiscal 2014 ending October 2013. Revenues in the quarter reached C$16.7m, compared with C$13.2m in the previous quarter. Profit before tax also improved from C$1.6m to C$5.3m. This quarter completed twelve calendar months of commercial production and resulted in pre-tax profits of C$9m. A total of 6,648 dry metric tonnes (dmt) (Q4 2013 – 5,573 dmt) of concentrate was provisionally invoiced during the period at an average price of C$3.39 (Q4 2013 – C$3.31) per pound copper, C$1,390 (Q4 2013 – C$1,409) per ounce gold and C$22.81 (Q4 2013 – C$21.98) per ounce silver. Cash resources as of 31 October 2013 was C$5.7m and as of 9 December 2013 had increased to C$6.7m with operating cash flows anticipated to continue to build throughout the fiscal year.

Safestyle UK (TBC/c£77m)

Safestyle UK a UK-focused retailer and manufacturer of PVCu windows and doors for the UK homeowner replacement market, announced its intention to proceed with a vendor placing of ordinary shares with a value of approximately £70m, and admission to trading on AIM. The Company’s business has grown from its founding in 1992 to become the largest company in the UK homeowner window and door replacement market, manufacturing 232,000 frames in 2012 and carrying out in excess of 50,000 installations. Safestyle has ten installation depots and 29 sales offices throughout the country. The Group has established a robust and cash generative financial track record over a number of years, with revenues in the year ended 31 December 2012 of £110.2m and profit before tax of £9.5m. For the six month period ended 30 June 2013, the Company revenues were £62.6m and profit before tax was £7.8m. Since 30 June 2013, the Company has traded in line with Directors’ expectations. The trends seen in the first half of 2013 have continued, with average order values remaining at similar levels to 2012, whilst order levels remain above those seen in comparable periods in 2012.

Scancell Holdings (LON:SCLP 36p / £80.42m)

Scancell, the developer of novel immunotherapies for the treatment of cancer, announced results for the six months ended 31 October 2013. The operating loss for the period was £1.31m (2012: loss of £0.99m) and a net loss of £1.19m (2012: loss £0.92m was reported. Cash at bank at 31 October 2013 was £6.40m (30 April 2013: £1.49m), following a placing and open offer of shares in August that raised £6.09m (net of expenses). Scancell also announced important positive data from Part 2 as well as an update from Part 1 of the on-going Phase 1/2 clinical trial with SCIB1 in patients with Stage III/IV melanoma at the same time as its interim results. A melanoma-specific immune response was seen in all Part 2 patients, alongside a continuing positive survival trend in Part 1 subjects, although patient numbers are small. No serious adverse events were reported. Scancell has been granted an extension of the Option to commercialise Ichor’s proprietary Trigrid™ electroporation delivery system with SCIB1 also post period end. The Company anticipates reporting data from the high dose 8mg arm of this Phase 1/2 trial by 2014 calendar year end.

Science in Sport (LON:SIS 61.75p/£12m)

Science in Sport, a sports nutrition Company, has reported its maiden financial results as a quoted Company following admission to AIM on 9 August 2013. Revenues in the six month to September 2013 increased by 23 per cent to £4m (H1 2012: £3.25m). Underlying operating profit of £21,156 was in line with management expectations (H1 2012 underlying operating profit: £221,851). There has been significant progress in developing an international distribution network including the appointment of an Asia Pacific distributor in November 2013 while investment in e-commerce and direct selling infrastructure is ongoing. During this period, Mark Cavendish was appointed as Elite Sports Consultant.

Seeing Machines (LON:SEE 7.25p/£40.7m)

Seeing Machines, the technology company that specialises in visual computing systems that track faces, eye and facial features in real time, has signed a strategic agreement with Royal Beuk, a leading European coach fleet operator, for the deployment of automated Fatigue Monitoring Systems to ensure driver alertness and safeguard coach passengers. The installation of the Fatigue Monitoring Systems will be the first time that coach passenger safety has been protected by automated detection of driver fatigue and distraction, and is being put in place to eliminate the risk of catastrophic coach crashes that have led to large numbers of fatalities. The agreement and partnership with Royal Beuk builds further on Seeing Machines’ success in the transportation markets.

Serabi Gold (LON:SRB 5.25p/£24m)

Serabi Gold, the Brazilian focused gold exploration and development Company, has reported a further operational update on its Palito gold mine. The Company is making good progress as the development of the Palito mine and process plant reaches the final stages before going into production in the first quarter of 2014. Development mining is now underway on four main levels, including the next planned production level. The Palito Main Zone veins at this level have already been intersected, with mineable grades and widths tonne of gold significantly in excess of the mine plan grades. The surface ore stockpile has now reached 25,000 tonnes @7.5 grammes per tonne of gold. Electrical installations at the mine and plant are complete, with new high voltage sub-stations installed and low voltage control rooms competed. The Crushing plant is fully operational and the Flotation plant is 90 per cent complete, with final electrical installations underway.

Sorbic International (LON:SORB 9p / £5.14m)

The third largest sorbates producer in China announced its preliminary unaudited results for the year ended 30 September 2013. Revenue for the year was £14.6m (2012: £16.8m) and EBITDA more than doubled to £1.2m (2012: £0.5m). The gross profit margin for the year came in at 12.9 per cent (2012: 8.6 per cent). Profit from operations before an impairment was £0.6m (2012: £0.02m) and the loss before tax was £6.1m after the impairment provision of £6.7m in respect of the Inner Mongolia facility (2012: £0.14m). The cash balances at 30 September 2013 were£5.3m (2012: £4.1m) and the net assets per share was £0.21 (2012: £0.38). The compensation negotiation for the Group’s Inner Mongolia facility restarted during the period. John McLean, Non-Executive Chairman of Sorbic International, commented: “The Board is pleased that during the year the core business has significantly improved profitability and more than doubled EBITDA. The Board remains focused on resolving cash flow constraints, as well as continuing to work to seek a conclusion of the negotiations regarding the Inner Mongolia facility, and will update shareholders on this matter in due course.”

Summit Corporation (LON:SUMM 9.75p / £47.07m)*

Summit, a drug discovery and development company advancing therapies for Duchenne Muscular Dystrophy (DMD) and C. difficile infection, announced that the first DMD patient has been enrolled and dosed in a Phase 1b clinical trial of the oral, small molecule utrophin modulator SMT C1100. The Phase 1b trial is a dose-escalating, open-label study that is being conducted in paediatric patients with DMD. The primary endpoint of the trial is the evaluation of the safety and tolerability of SMT C1100. The study will also measure blood plasma concentration levels of SMT C1100 to determine the dose to be used in a subsequent Phase 2 proof of concept efficacy trial. The trial is enrolling 12 patients aged between 5 and 11 years, divided equally into three dose cohorts. Each cohort will receive daily oral doses of SMT C1100 for a total of ten days with a review taking place after each cohort has completed dosing. The trial is being conducted at up to four NHS hospitals in the UK with the Chief Investigator being Professor Francesco Muntoni at Great Ormond Street Hospital, London.

SyQic (LON:SYQ 77.5p/£17.97m)

SyQic, an OTT (Over The Top) provider of live TV and on-demand paid video content across mobile and internet enabled consumer devices, announced the commencement of dealings of its ordinary shares on the AIM market. The Group has access to over 20,000 titles of online video-on-demand content as well as over 70 live television feeds comprising English language based content and native language content for a number of ‘home markets’ in Asia and their international migrant communities. The content is delivered through SyQic’s platform via a number of channels in the movies, drama, music, sports, news, lifestyle and general entertainment genres. The Group, which is incorporated in Jersey and headquartered in the UK, already has a significant service footprint in the Philippines, Indonesia and Malaysia and near term launches are planned for the UK (before the end of 2013), followed by mainland Europe, Indochina, Myanmar, Singapore, Pakistan and Bangladesh with a planned launch of the Group’s service in the US over the next 18 months.

Ten Alps (LON:TAL 0.9p/2.49m)

Ten Alps, a producer of TV and radio together with integrated publishing and communications content, announced its half year results for the six months to 30 September 2013. As the Group continues to move further away from its previous legacy, it now has a simplified management structure, reduced overheads, a refreshed portfolio and has expanded services in sectors and markets which the Board believes will grow in the future. It believes that the implementation of these measures is now starting to bear results. Group revenues came in at £12.24m (2012: £13.47m) with an adjusted EBITDA loss of £0.19m (2012: £0.74m loss). The loss for the period after tax was £0.51m (2012: loss of £1.82m) with net debt of £6.08m (2012: £3.70m) with facilities maturing in 2016.

*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.

4th December 2013

This week: Sweet results from CSG, New assets on GRPH, VCP expands

Good news is bad news. Major markets are selling off as a plethora of positive economic data is making investors increasingly nervous about the Fed’s intentions on tapering. Manufacturing data globally is coming in ahead of expectations, with Chinese and European PMI manufacturing data reported at 51.4 and 51.6, respectively. UK manufacturing data was at a 3-year high at 58.4, indicating the recovery is maintaining its momentum in the final quarter of the year. And finally, US ISM data jumped to 57.3, up from 56.4 last month. The FTSE 100 has drifted downwards to its lowest level in more than six weeks to 6,532 points. Interestingly, the AIM All-share Index is unchanged at 820 points, maintaining its outperformance against the larger stocks. This performance appears even more remarkable given the continuing declining in the mining sector which constitutes a large part of AIM. This is understandable, as expectations of higher interest rates rise, we expect investors to switch out of high yielding stocks and into higher risk, higher capital reward small cap stocks.

If you would like to unsubscribe, please email enquiries@hybridan.com with “unsubscribe me”.

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.

AVCT canine lymphoma blood test,CYAN placing,GRPH appointment & acquisition,ITQ acquisition and trading update,ODX interim results,PLA half yearly report,PROX placing,PUR trading update,RENE interim results,SAR co-development agreement,SPHR positive study results,CSG interim results,TRK half yearly report,VRS interim results,VNET interim results,VCP acquisition,VLK proposed move to AIM

Avacta Group (LON:AVCT 1.085p / £43.61m)

Avacta Group, the provider of proprietary diagnostic tools, consumables and reagents for human and animal healthcare announced at the recent London Vet Show that its new canine lymphoma blood test was now available to veterinary practices in the UK. Lymphoma is one of the most common malignancies to affect dogs, accounting for approximately 20 per cent of all canine tumours. It can be seen in any breed of dog with some breeds showing particularly high incidence. Avacta has completed the development of the new canine lymphoma blood test (cLBT) which is now being provided to vets through reference laboratory services in the UK under Avacta’s SensiTest® brand. Avacta is now seeking commercial partners in global markets who will be supplied with testing kits and in due course the cLBT will also be offered on the in-clinic Sensipod testing platform. The cLBT enables detection of lymphoma up to eight weeks prior to physical symptoms (swollen lymph nodes) becoming easily detectable by palpation. This simple blood test is more objective and sensitive than palpation, is able to differentiate clearly between benign and malignant lymphadenopathy, and is aimed at allowing veterinarians to diagnose and treat lymphoma patients earlier in the disease progression which should lead to better outcomes. The cLBT has also been shown in clinical trials to be effective in remission monitoring if used monthly following chemotherapy. The cLBT is a simple procedure that requires serum from 2ml of whole blood. The test measures the level of c-reactive protein and haptoglobin using Avacta’s proprietary tests, then combines the results with a unique and proprietary algorithm to provide accurate results to assist in the diagnosis of lymphoma that could not be achieved with the measurement of a single biomarker alone.

Cyan Holdings (LON:CYAN 0.19p/£4.8m)

Cyan Holdings, the integrated system and software design company delivering mesh based flexible wireless solutions for utility metering and lighting control, has raised, subject to certain conditions, approximately £1.1m before expenses, by way of a share placing pursuant to which 733.3m shares will be issued at 0.15p. The directors of Cyan have agreed to subscribe in the placing for an aggregate amount of £100,000. The net proceeds from the placing will provide the company with additional stability and cash resources to allow it to pursue activities in India, Brazil and China as it looks to take advantage of the pipeline of opportunities in these emerging markets. The placing is conditional, inter alia, on the passing of resolutions at a General Meeting.

Graphene NanoChem (LON:GRPH 68.75p / £80.12m)

Graphene NanoChem, the performance nanochemicals and advanced materials company, announced the appointment of Dr. Yinan Jin as Chief Chemicals Officer. Dr. Yinan Jin will be heading the nanomaterials production unit and will be responsible for developing product application opportunities in chemicals and catalysis. Graphene NanoChem also announced the acquisition of a carbon nanotube technology and new catalyst formulations, as well as the acquisition of technology relating to the production of chemicals additives with applications in the oilfield chemicals market, all developed by Dr. Yinan Jin. Dr. Yinan Jin is a chemical synthesis expert experienced in the commercial production of nanomaterials and developing industrial chemical compounds and solutions. He was the project leader of the pioneering team that built and operated the first ground-breaking nanomaterials facility in Burnaby, Canada, on which Graphene NanoChem’s original technology was based. His appointment is the latest in a series of steps taken by Graphene NanoChem to scale up operations at the nanomaterials facility and to further the development of applications. Through the acquisition and technology transfer arrangement, Graphene NanoChem and Dr. Yinan Jin will combine their innovative technologies and expertise to develop market leading solutions in nanofluid applications for oilfield chemicals, lubricants and catalysis. Graphene NanoChem is focused on expanding its graphene-enhanced chemicals portfolio.

InterQuest Group (LON:ITQ 89p/£29.80m)

InterQuest Group, the IT staffing specialist, announced the acquisition of ECOM Recruitment Limited (ECOM), a UK digital technology recruitment business for a total consideration of up to £7.04m. Founded in 1999, ECOM has built a leading brand within the digital space and recruits for many of the Top 100 (New Media Age) list of digital agencies. They also work with a number of recognisable brands in the UK including Retailers, DotCom businesses, Media, Publishing and FMCG businesses. ECOM’s core strengths are Creative, Content, Technology, User Experience, Client Services, Digital PR & Social Media, Project Management, Web Analytics & Digital Marketing. InterQuest will pay an initial consideration of £3.54m comprising £3.04m in cash and £0.5m by the issue of 558,659 new InterQuest shares issued on completion. A further deferred consideration of £2.16m is payable by way of a loan note with a 3 per cent coupon of which £0.5m is payable in May 2014 and £1.66m in December 2014. In addition, up to a further £1.34m subject to an earn-out could be payable in December 2014 if the business achieves £1.34m of EBIT in the year to 31st October 2014. In the year ended 31st March 2013, ECOM reported adjusted EBIT of £0.85m and had net assets of £0.8m. The acquisition will be financed from the Group’s existing bank resources. 2013, so far, has been positive for InterQuest, especially within the UK markets in which they operate. The board has been encouraged by the performance in the UK where the benefits of a focused approach are being realised. The business in Singapore has continued to experience difficulties and its contribution was not what the board expected. However, given the encouraging performance in the UK, trading for the Group is in line with management’s expectations.

Omega Diagnostics Group (LON:ODX 16p / £17.40m)

Omega, the AIM listed medical diagnostics company, announced interim results for the six months ended 30 September 2013, which are in line with management expectations. Revenue was similar to last year at £5.59m (2012: £5.53m), gross profit increased by 2 per cent on the same period last year at £3.56m (2012: £3.48m), and the gross margin is slightly ahead of the same period last year at 63.6 per cent (2012: 62.9 per cent). Adjusted profit before tax was up 14 per cent to £0.43m (2012: £0.38m) and adjusted earnings per share of 0.6p was reported (2012: 0.7p). Cash at the period end increased to £3.3m (2012: £0.78m). During the period the Company conducted a placing to raise £4m before expenses and appointed Bill Rhodes as a Non-Executive Director. The Company granted a US patent for CD4 and made good progress on IDS-iSYS with an ever increasing visibility of commercial launch.

Plastics Capital (LON:PLA 122.5p/£37.05m)

Plastics Capital, the niche plastics products manufacturer, announced the Company’s interim results for the six months ended 30 September 2013, which are in line with management expectations. Revenue was up 4 per cent to £16.358m (H1 2012 £15.711m), however profit before tax slipped 4.9 per cent to £1.738m (H1 2012 £1.828m -4.9 per cent, net debt was £ 8.067m (H1 2012 £8,605m). Commenting on these results, Faisal Rahmatallah, Executive Chairman, said: “I am pleased to report that growth in sales and in underlying profitability have both resumed. In the half year, demand from Europe has improved, new business has contributed to growth across the Group, additional sales and marketing investment has continued and new capacity has been added for both industrial films and machined bearings. We have also recently announced the acquisition of Shengli, the leading Chinese producer of creasing matrix, which is a major step forward in this region. The Board expects the Group to trade in line with expectations for the rest of the year.”

Proxama (LON:PROX 2.625p/£19.8m)

Proxama, which provides mobile commerce, loyalty and payment solutions, has placed 344m new shares of 1p at a price of 2.5p per share to raise approximately £8.6m before expenses to support the company’s geographic and commercial expansion. Proxama helps businesses to accelerate commerce by combining loyalty, brand marketing and mobile contactless payments. By connecting physical and digital businesses such as retailers, brands and Out-of Home media, owners can engage with consumers to increase loyalty, pay for goods and services and receive relevant offers through their mobile phones. The management believes these additional funds will enable them to address the considerable opportunities that are emerging as the fast growing mobile commerce, NFC smartphone and contactless payments markets reach critical mass globally. With a highly scalable platform and blue chip customer base, Proxama says it is well positioned for further growth.

Pure Wafer (LON:PUR 84.5p/£23.32m)

Pure Wafer, a provider of silicon wafer reclaim services to many of the world’s largest semiconductor manufacturers and foundries as an integral part of their cost control programmes, announced a trading update. As previously announced, Pure Wafer’s Board has agreed a programme for increasing 300mm wafer manufacturing capacity by up to 40 per cent. across both manufacturing sites in order to supplement the existing 300mm production lines and in order to enable them to meet continued and foreseeable demand. The majority of production equipment required for the increased capacity in Swansea, UK has been ordered and delivered with several key items already installed and currently in production. The remainder will be installed prior to the calendar year end and will be production-ready during January 2014. The installation of the additional manufacturing equipment for Prescott, US will commence in January 2014 and became operational during the first half of 2014.

ReNeuron Group (LON:RENE 3.5p/£68m)

ReNeuron Group, the UK-based stem cell therapy development company, has announced its interim results for the six months ended September 2013. The loss in the period increased to £3.2m (2012: loss of £2.9m). Cash and cash equivalents at 30 September 2013 was £23.5m largely due to the equity fundraising of £25.4m before expenses. These cash resources are forecast to fund core therapeutic programmes to value-enhancing clinical milestones and commercial deals over the next three years. The company has also received a further grant package totalling £7.8m from the Welsh Government to establish a cell manufacturing and development facility in South Wales for late stage clinical and commercial product requirements. An additional non-dilutive £1.5m grant was awarded from the UK Government, via the Technology Strategy Board to support Phase II clinical trial with ReN001 in stroke.

Sareum Holdings (LON:SAR 0.625p / £11.25m)*

Sareum Holdings, the specialist cancer drug discovery and development business, announced that it has signed a co-development agreement with Hebei Medical University Biomedical Engineering Center (HMUBEC) to advance its Aurora+FLT3 cancer programme. Under the terms of the agreement HMUBEC has been granted exclusive rights to carry out pre-clinical and clinical studies within Greater China (the People’s Republic of China, and the special administrative regions of Hong Kong and Macau, and Taiwan region) to obtain approval for sales in that territory. Sareum will receive a significant milestone payment once a product receives authorisation for marketing, and up to 15 per cent of operating profit from sales generated in Greater China. HMUBEC will be required to disclose and exclusively licence to Sareum all pre-clinical and clinical data it generates in the course of the development collaboration in order to facilitate Sareum’s own development and commercialisation activities. This would include conducting any further studies required for authorisation for clinical trials in the rest of the world as well as out-licensing and supporting applications for marketing authorisations outside Greater China. HMUBEC will be entitled to receive up to 10 per cent of operating profit Sareum receives from any licence agreement or sales made outside Greater China, dependent on the stage at which Sareum out-licences data generated by HMUBEC to a third party. HMUBEC is an independent research centre operating within Hebei Medical University Science & Technology General Company (HMUSTGC). HMUSTGC has successfully developed more than 85 therapeutic products and medical devices for the Chinese market since its formation in 1992. Aurora+FLT3 kinase inhibitors have the potential to treat acute myeloid leukaemia (AML, the most common form of adult leukaemia) and various other forms of cancer. Aurora kinase is involved in the control of mitosis (cell division), and FLT3 kinase over-activation is the most common mutation in AML. The pre-clinical development candidate that has been licenced by Sareum to HMUBEC has showed particular promise against. a range of haematological cancer models including AML and Acute Lymphoblastic Leukaemia (ALL) with an encouraging early safety profile and positive ADME (absorption, distribution, metabolism, excretion) properties.

Sphere Medical Holding (LON:SPHR 29.5p/£16m)

Sphere Medical Holding, a developer of innovative monitoring and diagnostic products for the critical care setting, has announced the results from a study using its Pelorus 1500 analyser that demonstrate the device can accurately measure propofol concentrations and thus identify significant dosing errors in anaesthesiology. The study was conducted at Great Ormond Street Hospital for Children (GOSH) and the results provide an important step towards improved management of propofol dosing during surgery. Results of the study were presented at the Society of Intravenous Anaesthesia’s Annual Scientific Meeting on 29 November 2013. The study, involving 20 children undergoing major spinal surgery, was used to assess the performance of the Pelorus 1500 analyser against currently available paediatric Target Controlled Infusion (TCI) systems using either the Paedfusor or Marsh dosing algorithm. Blood samples were analysed throughout the surgical procedure using the Pelorus 1500 analyser and the measured propofol concentrations were compared to a target level. Detailed analysis of the results by a team of researchers at GOSH, led by Dr Mike Sury, Consultant Paediatric Anaesthetist, showed significant differences between the actual and target blood concentration of propofol. Average dosing errors of 27 per cent and 46 per cent were recorded using the Marsh model and the Paedfusor, respectively. Following this study, a further investigation will commence looking at ways to improve the control of propofol dosing, including the use of rapid propofol measurement during surgery utilising the Pelorus 1500 to personalise the TCI system algorithm to the patient.

Sweett Group (LON:CSG 62p/£42.29m)

Sweett Group, the international construction and property consultancy, announced its unaudited interim results for the six months ended 30 September 2013. Revenue came in at £44.4m (H1 2012 £37.7m), and a pre exceptional EBITDA came in at £3.4m (H1 2012 £ 3.1m). The Company reported a diversified order book which stands at £101m, 61 per cent of which represents orders from outside Europe and there have been positive contributions from all businesses. Chairman Michael Henderson said: “…We are achieving considerable success in our plan to diversify into new sectors and are becoming more balanced geographically. Most importantly for our forward development, we are achieving a significant proportion of our new business from well-established customer relationships and preferred supplier status…We are maintaining our balance sheet discipline and our net debt position is down 23 per cent compared to this time last year. Our earnings flow has allowed us to invest in the future by strengthening our management and specialist teams as well as expanding our global footprint…The increase in the interim dividend reflects the Board’s confidence that our significant capabilities, know-how and expertise place us in a strong position from which to achieve long term growth by delivering on the opportunities we have in the order book and pipeline.”

Torotrak (LON:TRK 20.5p/£36.35m)

Torotrak, a developer and supplier of emissions reduction and fuel efficiency technology for vehicles, published its interim financial results for the six months ended 30 September 2013. Since acquiring 20 per cent of Flybrid in March 2013, the Company reports that it has had a considerable increase in engagement with Tier 1 and OEM manufacturers, confirming significant commercialisation opportunities for M-KERS. The Company is in advanced negotiations to complete the acquisition of 80 per cent of Flybrid. The financial results of the Group for the six months ended 30 September 2013 show revenue reduced to £1.7m (2012: £4.7m). The operating loss for the period was £1.5m, which compares to a profit in the six months ended 30 September 2012 of £1.4m. Net operating cash outflow was £1.8m (2012: £0.4m inflow) and arose from the operating loss for the period and a lower net working capital outflow of £0.9m (2012: £1.4m). The cash balance at 30 September 2013 was £6.7m (March 2013: £8.9m); the reduction reflects the on-going operating costs and capital expenditure of £0.5m (2012: £0.3m) during the period.

Versarien (LON:VRS 18.125p/£19.8m )

Versarien, the advanced engineering materials group, has announced its maiden interim unaudited results for the six months ending September 2013. Group revenues totalled £1.1m which generated an operating loss of £190,000 before non-recurring items. The integration of Versarien Technologies Ltd. (VTL) and Total Carbide Ltd. (TCL) is ahead of schedule and both appear to be making excellent progress. Versarien Technologies Ltd has successfully launched water-cooled PC and Versarien has secured Technology Strategy Board funding for seven projects. It has also received multiple positive testing results from key target customers including; GE; an undisclosed German engineering and electronics company and long-term partner; and Thermacore. Total Carbide Ltd is delivering sustained profitability of 10 per cent on sales and has a solid base of blue chip customers mainly in the oil and gas industry.

Vianet Group (LON:VNET 71.5p/£19.89m)

Vianet Group, a provider of real time monitoring systems and data management services for the leisure, vending, and forecourt services sectors, announced its interim results for the six months ended 30 September 2013. The interim dividend was maintained at 1.70p (H1 2013: 1.70p), whilst revenue declined to £9.01m (H1 2013: £11.19m), due to iDraught(TM) sales being impacted by the uncertainty surrounding the Statutory Code and an exit from lower margin activity in Fuel Solutions. Basic earnings per share (pre-exceptional items) came in at 3.37p (H1 2013: 5.26p). Commenting on the interim results, James Dickson, Executive Chairman, said: “The Board is pleased with the operational progress that has been made across all of the Group’s businesses during the period, although the uncertainty surrounding the Government’s proposed Statutory Code for Pub Companies has held back our beer flow monitoring performance. Assuming that a satisfactory outcome from the revised Statutory Code is announced in the second half of the current financial year, the Board remains optimistic for the growth prospects of Vianet’s flagship iDraught(TM) product in the medium to longer term as well as for the other parts of the Group, which are already seeing improved performance. I believe the Group has the right products and structure in place to secure additional blue chip customers and grow income across all divisions.”

Victoria (LON:VCP 7.75p/£10.08m)

Victoria, a manufacturer, supplier and distributor of design-led carpets and other floor coverings, announced the proposed acquisition of the entire issued share capital of UK carpet manufacturer Globesign Limited (Globesign) and its wholly owned subsidiary, Westex Carpets Limited (Westex), for initial cash consideration of £16.0m and further deferred consideration payable on the achievement of certain annual and triennial profit targets. No shares in the Company are being issued in respect of the Acquisition and there will be no changes to Victoria’s board of directors. The Board believes, as a result of the Acquisition, the Enlarged Group will benefit from a strengthened senior management team, with a clear and focused strategy for further turnaround and growth. The Directors expect the Acquisition to be accretive to underlying earnings per share of the Company.

Vislink (LON:VLK 45.37p/£51.68m)

The Board of Vislink announced that it will post a circular to shareholders convening a General Meeting at which it will seek shareholder approval for the proposed cancellation of admission to the premium segment of the Official List and to trading on the London Stock Exchange’s main market for listed securities and detail its intention to apply for Admission to trading on AIM. The Group’s strategy, originally announced in November 2011, is to continue to develop its core competence to provide solutions for the broadcast and surveillance markets; and as part of this to grow sales to £80m, with £8.0m adjusted operating profit, by the end of the 2014 financial year. The Group intends to support this growth by a number of strategic acquisitions, including the acquisition of Amplifier Technology Limited announced on 29 August 2013, and continues to actively seek such acquisitions to strengthen the Group’s hardware, software and services capabilities. The Board has carefully considered the proposed move to AIM, and believes that such a move will provide a market and environment more suited to the Company’s current size and strategic intent to enhance shareholder value by organic growth and acquisitive activity in the broadcast and surveillance markets.

*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.