Small Cap Wrap: Month: February 2014

AIM Breakfast - Archive

12th February 2014

This week: Straight shooting, Fitbug ups the tempo, Wolf of Hemerdon advances

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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.

AEG re contract,AVO Board appointment,AVCT Board appointment,CAP concept development agreement,Coms announces further business wins,EKT trading update,EIT contract win,FITB good reception at CES and £1m loan,IKA grant funding,LSIC trading update,LTG trading update,LBB trading update,PHD completion of acquisition,STT trading statement and contract awards,WTL trading update,WLFE commences construction

Active Energy Group (LON:AEG 2.375p / £14.69m)

Active Energy Group, the pan-European supplier of high-quality wood chip and associated timber products for MDF manufacturing and green energy Biomass power generation, announced that on 7 February 2014 it concluded two important commercial developments for the Group. First, the Group has won another new contract to supply Kastamonu Entegre A.S. Under the contract AEG has agreed to supply approximately 87,000 metric tonnes of high grade MDF-quality wood chip during 2014, which is expected to generate additional revenues of approximately US$9m. Last month, the Company announced that it had secured similar contracts with two other leading Turkish MDF manufacturers. Therefore, in the first six weeks of 2014, AEG has secured new contracts to supply approximately 315,000 metric tonnes of wood chip for MDF manufacturing, which is expected to generate approximately US$33m in FY2014. They also announced a new full-service logistics agreement with TIS, owners of Yuzhny Port, the second largest port in Ukraine (which handled over 20m tonnes of cargo shipments in 2013) will enable the Group to consolidate all of its MDF-quality wood chip production and shipping operations into a single dockside facility at Yuzhny Port, near Odessa on the Black Sea coast.

Advanced Oncotherapy (LON:AVO 3.15p/£19.62m)

Advanced Oncotherapy, the developer of innovative medical technology for cancer treatment, announced the appointment of Dr Hanne M Kooy to its Medical Advisory Board and as Chair the new Product Development Committee to oversee the development of the Company’s LIGHT technology. Dr Kooy trained as a physicist, specialising in high energy particle physics, and since 1995 has been Associate Professor in Radiation Therapy at the Department of Radiation Oncology of Harvard Medical School.

Avacta Group (LON:AVCT 1.185p/£47.67m)

Avacta Group, the global provider of proprietary diagnostic tools, consumables and reagents for human and animal healthcare, announced that Michael Albin, Ph.D., has today joined the Board of Avacta as a Non-Executive Director. Following a Ph.D. in chemistry at Pennsylvania State University and postdoctoral research in biochemistry at the California Institute of Technology. Michael worked at SYVA diagnostics followed by fifteen years at Applied Biosystems Inc rising to the role of VP of Science and Technology, and then VP of Strategic Technologies of the parent company Applera Corp, an S&P 500 company.

Clean Air Power (LON:CAP 7.875p / £18.19m)

Clean Air Power, the developer of Dual-Fuel engine management software for heavy duty vehicles, announced that it has entered into a funded concept development agreement with a global truck manufacturer to develop a Dual-Fuel engine for a South East Asian market. This is the first program to be awarded through the cooperation agreement with Ricardo, Inc, signed in September 2013. The purpose of the development program is to utilise Clean Air Power’s Dual-Fuel(TM) combustion technology to deliver an advanced dual-fuel engine that not only achieves its emissions objective but also reduces the extent of emissions after-treatment required by the base diesel engine. Subject to a successful concept phase, expected to last 6 months, the agreement will then enter a second stage to bring the advanced dual-fuel engine to start of production.

Coms (LON:COMS 9.17p/£88m)

Coms, the end-to-end provider of telecommunications and IT services to business and industry, announced it has secured a number of new contracts in addition to those announced in January. The latest contracts awarded include, installing structured cabling for a new office development which is part of the ongoing works at Kings Cross. This contract is worth £280,000. A leading energy company has renewed a support contract worth £165,000 that will see Redstone support their intelligent infrastructure through until March 2015. A project worth in excess of £120,000 to Coms Media working with a leading TV production house working specifically on graphics and enhancing the viewing experience. Four individual contracts have been awarded to the company with one of the world’s leading broadcasters worth in excess of £50,000. Each project carries different creative marketing requirements and are differing in lengths of project delivery. Furthermore, the content is extremely topical and will be seen on screens by many TV viewers across the world in the coming months.

Elektron Technology (LON:EKT 6.125p/£7m)

Elektron Technology, the global technology group, has provided an update on performance for the full year to January 2014. Following a very challenging period as a result of factory relocations, operations have stabilised and, as expected, the sales backlog had reduced to normal levels by year end. Elektron has implemented selective price increases and a reduction in operating expenses. In the second half of the year sales from continuing operations were £24m (2013:£23m) and underlying trading performance has shown a welcome improvement.

Enables IT (LON:EIT 34p/£8.86m)

Enables IT, a leading provider of cloud computing, managed and professional services, announced that it has won a five-year contract worth in excess of £500,000 to provide a wide range of IT, cloud and support services to London legal firm, Hunters Solicitors. This five-year contract has been established in order to renew Hunters’ IT infrastructure and to provide a resilient network and the security for its data. A fully managed private cloud infrastructure will be established and proactively maintained by Enables IT in order to provide the most agile and advanced systems available, whilst simultaneously offering the flexibility and cost saving benefits of outsourced IT management. The contract has an upfront payment of approximately £200,000 for project and product development and a subsequent £300,000 payable over the remaining five years of the contract. The hardware and infrastructure components of this project will be delivered by the end of April 2014. Thereafter, Enables IT will provide ongoing support and managed services to Hunters’ IT team and end users.

Fitbug Holdings (LON:FITB 0.825p/£1.39m)*

Fitbug Holdings, the provider of online personal health and well-being services, announced that its Fitbug KiK coaching plans have received a very strong market response following its official launch at the 2014 Consumer Electronics Show (CES) held in Las Vegas in January 2014. Wearable devices, or “wearables” were widely recognised as the fastest growing product category at CES 2014, with the Financial Times reporting that “Wearables emerge as top CES trend” on 6 January 2014. In line with this, Fitbug announced the “next step” in the digital health ecosystem, unveiling KiKplanTM, an advanced personalised coaching aid designed to work with activity trackers to meet specific health, weight and fitness goals. In response to the very strong retail interest in wearables at CES, Fitbug is now putting retail distribution arrangements in place in the US, UK, Europe, Middle East, Asia and Australia. To support planned growth in 2014 the Company has signed a £1m loan agreement with NW1 Investments Limited. The Loan is repayable by 31 July 2014 and will accrue interest at a rate of 5 per cent per annum, payable on a quarterly basis.

Ilika (LON:IKA 65.5p/£32m)

Ilika, the advanced materials discovery Company, has announced that it is the lead partner in a project that has received an offer of grant funding through the Technology Strategy Board under the Aerospace Industrial Strategy: Advancing Technology Capability competition. Ilika will receive £0.875m of the £1.326m grant for this three year programme. The company will work together with the University of Cambridge, Diamond Light Source and Rolls Royce to develop new alloy compositions for gas turbine engines with better thermo efficiency than current alloys, therefore increasing performance, reducing CO2 emissions and reducing noise levels at take-off.

Learning Technologies Group (LON:LTG 14.75p/£40.68m)

Learning Technologies Group, the e-learning business, gave a trading update for the year ended 31 December 2013. The period under review incorporates the transaction with In-Deed Online plc and the Group’s successful Admission to AIM on 8 November 2013. The Company has traded well during the year with total revenues of £7.7m, significantly ahead of the previous year (£6.9m). Net profit margins also improved substantially. The Group continues to be managed prudently and net cash at the year-end was £1.2m, comfortably ahead of budget. Looking forward, the Group’s order book has continued to strengthen. The total order book is £4.4m (January 2013, £3.5m) with record order books in each of the Group’s three geographies. Although very early in the financial year the Board is confident of significant further profitable progress across the business in 2014.

LifeLine Scientific (LON:LSIC 160p/£20.37m)

Lifeline Scientific, the transplantation technology Company, gave a trading update for the year ended 31 December 2013. Lifeline had a strong second half of the year, which saw continued international growth including significant orders from Brazil and China for its flagship LifePort® Kidney Transporter and related portfolio of products. As a result the Company expects to report full year revenues ahead of market expectations with total revenues for the period up nearly 10 per cent to US$33.2m (2012:US$30.2m). Operating profit improved significantly from the US$0.1m recorded last year. Operating Profit, adjusted for non-recurring items, will be well ahead of market expectations. The cash position of the Company remains strong, with cash balances as at 31 December 2013 in line with levels recorded at the Interim Results (30 June 2013: US$3.0m). The Company will announce results for the year ended 31 December 2013 on 29 April 2014.

LiteBulb (LON:LBB 1.08p/£24m)

LiteBulb, the brand and product innovation Company, has provided a trading update for the year to December 2013. LiteBulb made three acquisitions in 2013 and all delivered sales ahead of internal expectations. This has helped LiteBulb to grow revenues for 2013 to £8m (FY2012: £3m), a 167 per cent improvement over 2012. The loss before interest, tax, depreciation and amortisation for 2013 is expected to be approximately £0.6m, a significant improvement on £1.4m in the year ended 31 December 2012.

PROACTIS Holdings (LON:PHD 51p/£16m)

PROACTIS Holdings, the specialist Spend Control software provider, has reported that it has completed the acquisition of EGS Group Ltd. following the announcement dated 14 January 2014. The management believes that this acquisition is an excellent strategic fit, and will benefit profitability through significant operational synergies. In addition, the acquisition adds 70 clients and substantial scale to the group and means that the company is now the largest independent eProcurement solution provider to the UK Public Sector.

Straight (LON:STT 45p/£5.35m)

Straight, the environmental products and services group and a supplier of specialist waste and recycling container solutions, provided an update on trading ahead of its preliminary results to be announced on 31 March 2014. The Group reported that revenue is in line with market expectations. Group EBITDA is also anticipated to be in line with market expectations and has held up well in the second half of the year. In addition, the Group to reported that 2014 has begun well with the award of two major contracts totalling more than £2m revenue. Both of the contracts have been won under the ESPO framework agreement which was announced 13 January 2014. Further significant contracts are under negotiation and the order book is building well and in line with internal forecasts. In addition to these two major contract wins, the Yorkshire Purchasing Organisation (YPO) has renewed three framework agreements for a further 12 months, covering recycling containers, compostable liners and steel bins.

Waterlogic (LON:WTL 87.5p / £67.97m)

Waterlogic, the manufacturer and global distributor of point-of-use (POU) drinking water purification and dispensing systems, announced a trading update for the period up to 31 December 2013 prior to entering a close period. The Company expects revenues to be approximately US$124m (2012:US$101m) for the full year and adjusted EBITDA in line with market expectations and organic revenue growth expected to be in the region of 4.2 per cent (3.5 per cent at constant currency). This is coupled with increased recurring rental and service income, which now represents over 40 per cent of revenue on an annualised basis. The Consumer Division had new product launches in Japan, Turkey and Italy, with revenue increasing to approximately US$1.3m in 2013 and open orders of approximately US$0.8m. The Cool Clear Water Group Limited acquisition, which establishes Waterlogic as a significant provider on POU systems in the Australian Market, has progressed well and performed in line with the Board’s expectations.

Wolf Minerals (LON:WLFE 24.75p/£49m)

Wolf Minerals, the specialty metals development Company, announced that it has authorised the EPC contractor, GR Engineering Services Limited (ASX: GNG/GRES), to commence construction of its Hemerdon tungsten and tin project in the southwest of England. This represents another key milestone in the development of the Hemerdon project, and sets the project on a timeline for construction, commissioning and first production, which is scheduled for mid-2015. GRES was awarded the fixed price (£75m), fixed term EPC contract for the design, construction and commissioning of the 3m tonnes per annum tungsten and tin mineral processing plant plus associated infrastructure in June 2013 (see AIM announcement 12 June 2013). The contract term is for 24 months.

*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 February 2014

This week: New CEO at the coal face, Jubilant drill results, Ormonde one step closer

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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.

Actual Experience AIM float,AGL interim results,AVCT collaboration with University of Liverpool,CZA new CEO,FLOW compliance approval,JBU successful testing,ORM Barruecopardo permitting,PHSC trading update,PLA trading update,RHL Vivergo settlement,RTG contract win,SHFT impact of strike,TRCS trading update,TRT interim results,TYR placing

Actual Experience (TBC/£15.5m)

Actual Experience, a UK technology business, is set to float on AIM. Founded in 2009, the company has developed an innovative business tool based upon ten years of research carried out at Queen Mary, University of London into the relationship between the human experience of applications and digital infrastructure behaviour. Actual Experience’s product analyses the performance of applications based on user experience. This analytics-as-a-service enables corporations to manage their digital supply chain and thereby improve the experience of their employees, customers, and partners with regard to important commercial applications.

ANGLE (LON:AGL 88.5p / £40.04m)

ANGLE, the specialist medtech company, announced unaudited interim results for the six months ended 31 October 2013. The balance sheet and specialist medtech focus was strengthened by the sale of Geomerics in December 2013 to ARM Holdings plc for up to £6.2m in cash with £5.5m already received. Product development was completed for the Parsortix system for both research and clinical use and a CE Mark authorisation was secured for the Parsortix cell separation system for use as an in vitro diagnostic device in the European Union in the treatment of patients. The University of Surrey Oncology Group completed its validation of Parsortix technology, using colorectal cancer cells and demonstrated twice the sensitivity of currently accepted clinical practice for CTC capture. A specialist, larger scale manufacturer was appointed to manufacture the Parsortix system with the necessary quality systems and capacity to support roll out into the market. The loss for the half year was £0.5m (H1 2013: loss £0.4m) and the Company had a cash balance at 31 October 2013 of £0.4m (30 April 2013: £1.8m). The cash position was subsequently strengthened with the sale of Geomerics.

Avacta Group (LON:AVCT 1.135p / £45.66m)

Avacta Life Sciences has initiated a collaboration with Professor Rob Beynon and his team at Liverpool University to combine Affimer microarrays and reagents with mass spectrometry with the aim of delivering powerful new methods for biomarker and drug target discovery. Prof. Beynon in the Department of Integrative Biology at Liverpool University was recently awarded a Royal Society Industrial Fellowship to work with Waters (a leading mass spectrometer manufacturer) and Avacta, with a focus on developing approaches to handling complex protein mixtures for proteomic analysis. The project aims to develop efficient methods for identifying proteins highlighted by the array as being different between healthy and diseased samples. Mass spectrometry is an ideal approach to protein identification and Prof. Beynon heads one of the leading biological mass spectrometry facilities in the UK and is an acknowledged expert in this field of proteomics (the study of all proteins in a complex biological sample). Avacta are supporting a full time research student in the team and providing Affimer arrays for the project.

Coal of Africa (LON:CZA 5.67p/£59.44m)

Coal of Africa, the coal exploration, development and mining Company operating in South Africa, announced that David Brown has been appointed as Chief Executive Officer and Executive Director with effect from 1 February 2014. David was appointed as Non-executive Chairman of CoAL effective the 6th of August, 2012, and subsequently appointed as acting CEO on the 1st of June, 2013. David joined the CoAL board following almost 14 years at Impala Platinum Holdings Limited (Implats), where he served as a board member of Implats as Chief Finance Officer from January 1999 to August 2006, and then as CEO from September 2006 to June 2012. He is also a Non-executive Director at Vodacom Group Limited (January 2012 to date) and Edcon Holdings Limited (January 2013 to date). He is also a member of the Accenture South African Advisory Board. Further, following the appointment of David Brown, Bernard Pryor has been appointed as CoAL’s interim Chairman effective 1 February 2014, whilst the search for a Chairman has commenced.

Flowgroup (LON:FLOW 14.875p/£19.7m)

Flowgroup, which develops and commercialises alternative and efficient energy technology products, has achieved BSI G83/2 compliance for its in-house power electronics control system. G83/2 is an Engineering Recommendation as laid down by the ENA (Energy Networks Association) for the connection of embedded generation (solar PV, wind turbines, mCHP etc.) technologies to the distribution networks. The company has also reported that the roll out of 120 domestic Flow Boilers is progressing in line with expectations.

Jubilant Energy (LON:JUB 8p/£33.30m)

Jubilant Energy, the upstream exploration and production Company focused on India, announced, that KSG#70 (previously referred to as KPL-3E-5), the sixth and last development well of the Phase-III Extension drilling campaign in the Kharsang Field, Arunachal Pradesh, has successfully tested for oil and has been put into production at an initial gross rate of 38 barrels of oil per day (bopd) by artificial lift. The well, spud on 2 August 2013, was successfully completed drilling to a revised target depth of 1,075 meters Measured Depth (MD) on 17 August 2013. Based on the wire line log interpretation, mud log shows and formation pressure data from the Reservoir Dynamic Tester, the Consortium identified total net pay of 64.6 metres, out of which 38.2 metres appears to be oil bearing. Initial production testing was carried out in the intervals 955-957.5 metres and 916-920 meters in the G-00 and G-60 sand layers, which commenced on 18 September 2013. Now the well is completed on Sucker Rod Pump and is currently producing at a rate of around 38 bopd.

Ormonde Mining (LON:ORM 6.12p/£25.78m)

Ormonde Mining, a mineral development and exploration Company focused on Spain, provided an update on further progress in connection with permitting of its flagship Barruecopardo Tungsten Project in Salamanca, Spain. Saloro SLU, the Company’s wholly-owned subsidiary which is developing Barruecopardo, has now received formal written notification from the Regional Environmental Department in Castilla y Leon of the granting of the Environmental Impact Declaration (EID) for the Project. The EID for the Barruecopardo Project contains a positive finding, stating that the Project as proposed by Saloro is, from an environmental perspective, approved in so far as Saloro complies, inter alia, with the conditions presented in its Environmental Study and Restoration Plan. This EID is in effect the environmental permit for the Project without which the Mining (Exploitation) Concession cannot be granted by the Director General for Energy and Mines.

PHSC (LON:PHSC 31p / £3.93m)

PHSC, the provider of health, safety, hygiene and environmental consultancy services and security solutions to the public and private sectors, announced an update on its performance up to the end of the third quarter of its financial year. Consolidated Group sales for the nine months ended 31 December 2013 were £5,715,755 (nine months ended 31 December 2012: £3,856,440), EBITDA was £475,378 (nine months ended 31 December 2012: £362,800, adjusted for exceptional item) and net assets stood at £6,282,881 (at 31 December 2012: £5,488,564) including cash at bank of £180,000. Stephen King, CEO, said: “The board looks forward to a strong final quarter in line with the trend in recent years and is confident that its previous projection of EBITDA for the full year of between £700k-750k remains attainable.”

Plastics Capital (LON:PLA 134.5p / £40.68m)

The niche plastics products group provided a Q3 trading update confirmed that the Company continues to trade broadly in line with market expectations. Trading has continued as expected and in a similar pattern to the first half of the year. They reported strong sales of mandrels and improving sales of creasing matrix and films. Demand for bearings has been relatively weak, predominantly as a result of some new product development slippage from customers. Margins and cash generated from operations remain strong and are similar to last year. As previously announced, completion of the acquisition of Shengli Printing Science and Technology Co, Ltd has been delayed for approximately two months. However, good progress has recently been made in satisfying the various conditions of the local Commission of Commerce. With supplementary information having recently been provided, PLA is currently on track to complete the acquisition on or before 28 February 2014.

Redhall Group (LON:RHL 40.5p / 12.09m)

Redhall, the specialist engineering support services group, announced the final settlement of all aspects of the Vivergo Fuels contract. Following a series of discussions held subsequent to the judgement being handed down on 16 December 2013 and ahead of the Cost Hearing scheduled for 29 January 2014, Vivergo made an offer of £2.1m in full and final settlement of all claims between the parties to be paid in cash within five days. The carrying amount of the Vivergo contract on the balance sheet at 30 September 2012 was £9.8m and therefore there will be an exceptional charge in the Financial Statements for the year ended 30 September 2013 of £7.7m before tax and legal and professional costs incurred in reaching this settlement.

Rethink Group (LON:RTG 7p/£8m)

Rethink Group, the leading talent management and recruitment services Company, has confirmed that the significant Talent Management contract noted in its recent trading update is with Admin Re, a leading insurance company that is part of the Swiss Re group. The multi-year contract has an annual value of approximately £7.5m and will see Rethink both provide and manage all IT contract staff for Admin Re across four UK locations.

Shaft Sinkers Holdings (LON:SHFT 17.5p / £8.31m)

Shaft Sinkers provided an update on the ongoing strike action involving its clients, Impala Platinum Holdings Ltd. and Lonmin Plc., and the impact it has on Shaft Sinkers’ operations at those sites. Whilst Shaft Sinkers’ employees are not on strike, a number of its projects for these clients have been impacted by the current strike action, although the situation at each site remains fluid. The remainder of the Group’s South African projects are unaffected. The Board believes that the strike could result in a material negative impact on the Group’s revenues and profits for the year ended 31 December 2014 if the strike situation prevails for an extended period. The Group continues to monitor the labour situation in South Africa closely and will make further announcements as and when appropriate.

Tracsis (LON:TRCS 214p/£54m)

Tracsis, a provider of software and technology led products and services for the transportation industry, has provided an update on trading ahead of the release of its interim results for the six months to January 2014. Trading has been strong in the first half of the financial year with revenues expected to be in excess of £9m (2013: £4.7m). Both revenue and profit are in line with expectations. The balance sheet remains strong with cash balances in excess of £7m and debt free.

Transense Technologies (LON:TRT 7.25p / £19.67m)

Transense Technologies announced its interim results for the six months ended 31 December 2013 (H1 2014). It announced a record revenue of £2.215m, an increase of approximately 130 per cent (H1 2013: £0.967m), a maiden EBITDA profit of £0.02m (H1 2013: loss of £0.91m) and the Company had cash resources of £3.16m at the period end (31 Dec. 2012: £813k, 30 Jun 2013: £1.98m). Translogik has seen a significant increase in the average value of probe orders, field trials of iTrack are progressing well, delivering significant results and with IntelliSAW, the supply agreement for Siemens India represents an important milestone with a top tier global switchgear manufacturer. Transense opened regional offices in Shanghai, China, and Bogota, Columbia, in late 2013 in order to strengthen market presence and channel support in these rapidly emerging markets.

TyraTech (LON:TYR 6.49p/£10m)

TyraTech, a natural life sciences company, has conditionally raised £1.87m before expenses by means of a placing and subscription of new shares at 5p. The funds raised will be used primarily to assist the successful launch of the Vamousse(TM) head lice product range in Walmart and other major US retailers including building appropriate inventory and funding the registration of new products.

*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.