Small Cap Wrap: Month: March 2014

AIM Breakfast - Archive

18th March 2014

This week: SafeCharge to AIM, MoneySwap takes to the Air, Just what the Doctor ordered for Ideagen

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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.

AXM patent granted in Canada,AGL Parsortix FDA submission,BOO first day of dealings,BRY FY results,CAP results and new CFO,CAPD full year results,EKF acquisition,IDEA NHS contract wins,MSG appointment and fundraise,SWAP signs merchant agreement,NAPP.PL acquisition of interest,OTC drilling commenced,RCG MCommerce acquisition,SafeCharge intention to float on AIM,TRCS interim results,UBC acquisition & sale,VENN placing

Alexander Mining (LON:AXM 4.5p/£7.9m)

Alexander Mining, the mining and mineral processing technologies company, has received notification that its MetaLeach Ltd subsidiary has now been granted a patent in Canada for a method for extracting zinc from aqueous ammoniacal solutions containing impurities. The patent has a standard term of twenty years from the effective date of 22 December 2009 (being the date of original filing of the PCT Application from which the Canada patent is derived). This patent has also been granted in the USA, Australia and Mexico (as announced on 1 August 2013, 10 September 2012 and 8 April 2013, respectively.)

ANGLE (LON:AGL 92.5p / £41.85m)

ANGLE, the specialist medtech company, announced it has made a submission to the FDA for authorisation of its Parsortix cell separation system for sale as an in vitro diagnostic device in the United States. The submission has been made under the FDA’s 510(k) programme, one of the regulatory pathways for medical devices in the United States. ANGLE anticipates that the Parsortix system will receive FDA clearance by the end of Q3 this year, although no guarantees can be made around the exact timing of authorisation. FDA regulatory clearance would allow sale of the Parsortix system to hospital pathology laboratories and other clinical customers in the United States for the harvesting and molecular analysis of large cells such as circulating tumour cells (CTCs) from patient blood. There are currently no systems for harvesting CTCs for molecular analysis with FDA clearance for use with patients in the United States. There is the prospect therefore that ANGLE’s Parsortix system may be the first such system cleared by the FDA. This would give ANGLE a market lead in the United States as new CTC based treatments for personalised cancer care emerge into mainstream medical practice. ANGLE’s ultimate objective is the widespread adoption of the Parsortix system in the diagnosis and treatment of cancer patients.

boohoo.com (LON:BOO 58.37p/£655.63m)

boohoo, one of the UK’s largest pure-play online, own brand fashion retailers, announced its First Day of Dealings on AIM. The Company designs, sources, markets and sells the latest on-trend fashions through the www.boohoo.com website to a core market of 16-24 year old consumers. boohoo is an established brand in the UK, Ireland and Australia and currently sells its products into over 100 countries. £300m was raised via the placing of 600m ordinary shares with institutional and other investors at a placing price of 50 pence per ordinary share. The £50m proceeds for the Company will be used to accelerate its expansion and enhance its working capital base. A proportion of the money raised will be used as part of a multi-stage development plan to grow the Company’s distribution facilities and repay the outstanding mortgage on its Burnley warehouse, in addition to funding the infrastructure and IT systems to support future international growth. Approximately £240m will be used to repay the Convertible Loan notes held by the Company’s existing shareholders.

Brady (LON:BRY 67.5p / £54.74m)

Brady reported its full year results. It reported EBITDA before exceptional costs of £3,540,000 from £5,642,000. The three businesses acquired during 2012 have been fully integrated into the Group. In the case of the Energy business this has involved synergies and savings beyond the level envisaged upon acquisition. Brady has also consolidated solutions and removed managerial overhead resulting in an annualised cost saving of £2.2m per annum. The costs associated with this re-organisation of £0.6m have been treated as exceptional costs. Following the re-organisation the Group has aligned resources more efficiently by investing in the business units with higher contracted growth, providing a strong platform for profitable growth in 2014. It is very encouraging that the Recycling division has signed two substantial contracts, and signed seven significant deals in total in this market, since the company was acquired just over a year ago. Brady’s strategy remains to provide integrated trading and risk management solutions to commodity, energy and recycling companies. Brady is already the leading European supplier by revenues and is also ranked number one in the metals market globally, number one in US Recycling software and has the largest European energy installed base.

Capital Drilling Limited (LON:CAPD 29.5p / £39.71m)

Capital Drilling, the emerging and developing markets focused drilling company, announced its full year results for the period ended 31 December 2013. Revenue was down 27 per cent to $116.3m (2012: $158.9m), EBITDA remained positive despite a sharp decline in revenue and the net loss was down 113 per cent to -$1.9m (2012: profit $14.1m). Jamie Boyton, Executive Chairman and CEO of Capital Drilling, said: “2013 was a challenging year for the Group however management’s focus on cost reductions coupled with discipline around capital expenditure led to solid cash generation over the period. Critically the Company continued to execute on its stated strategy of increasing our exposure to production contracts, securing a comprehensive 5 year contract at the Geita Gold Mine in Tanzania. We are also pleased to today announce that we have successfully negotiated a new 5 year production contract at the Sukari Gold Mine in Egypt, running to 2018. Based on current forecasts the Group expects production contracts to contribute over 50 per cent of revenue in 2014, providing greater stability to the platform as we continue to seek to grow the business…”

Clean Air Power Limited (LON:CAP 9p / £20.79m)

Clean Air Power Limited, the developer of Dual-Fuel™ combustion technology for heavy-duty diesel engines announced its Preliminary Results for the 12 month period ended 31 December 2013. Group revenue increased by 25 per cent to £9.93m (2012: £7.94m) whilst the revenue from the Dual-Fuel™ division increased by 24 per cent to £8.23m (2012: £6.64m). The gross profit increased to £4.37m (2012: £3.52m) driven by Dual-Fuel™ systems and development revenue whilst the gross margin was maintained at 44 per cent. The company had £4.00m in cash at 31 December 2013 (£3.20m as at 31 December 2012) since a £5.10m equity raise (gross) was successfully completed in August 2013 with participation by two new strategic investors. The Company also and separately announced that Neill Skinner has been appointed to the Board as Chief Financial Officer with immediate effect. Neill has been working with Pete Rowse, the outgoing Finance Director, since 3 March 2014 to ensure a smooth handover. Neill spent his early career in “Big 4” firms, working in Audit and then Lead Advisory, before moving on to hold senior finance roles in British Nuclear Fuels plc and, more recently, strategy and corporate development roles at Speedy Hire plc (LON:SDY 63.5p / £89.24m).

EKF Diagnostics (LON:EKF 35.75p/£96m)

EKF Diagnostics Holdings, the point-of-care diagnostics business, has acquired Separation Technology, Inc. (STI), a Florida-based manufacturer of in vitro diagnostics (IVD) devices for the haematology testing market for a cash consideration of $4m (c. £2.4m) to be satisfied out of current debt facilities. The acquisition of STI is expected to be earnings enhancing in 2014 and complements the company’s existing offering in the haemoglobin testing market place. STI develops, manufactures and markets specialty IVD devices including ultrasound instruments and table top centrifuges for the haematology testing market. STI’s revenues are currently concentrated in the US market (92 per cent in 2013), however the business has sought to expand its offering into markets outside of the US and has recently registered products in Brazil as well as Kazakhstan, Russia and Thailand. STI is being sold by Thermo Fisher Scientific Inc.

Ideagen (LON:IDEA 41.37p/£50.43m)

Ideagen, the supplier of Information Management software to highly regulated industries, announced two NHS contract wins in Birmingham worth a combined first year value of £0.4m. The first, was with The Heart of England NHS Foundation Trust which comprises Heartland Hospital, Solihull Hospital, Good Hope Hospital and Birmingham Chest Clinic has selected dart/KW, the Group’s electronic medical record solution, and dart/OCM, the Group’s order communications solution. The Trust offers a comprehensive range of acute hospital based services to over one million patients annually. With the use of dart/KW and dart/OCM the Trust will be able to implement electronic medical records (eMRec) to bring all their locations together into one integrated repository and provide robust links to GPs’ surgeries for the ordering of laboratory services. The second contract, was with Birmingham Children’s NHS Foundation Trust has selected Patient First, the Group’s Emergency Department (ED) solution. Birmingham Children’s Hospital provides the widest range of children’s health services for young patients from Birmingham and the West Midlands, with over 240,000 patient visits every year. Of these 240,000 patient visits per annum, over 50,000 are Emergency Visits. Patient First will provide effective management of patient pathways and efficient support for the treatment of patients throughout the ED cycle.

Milestone Group (LON:MSG 0.7p / £3.16m)*

Milestone, the provider of digital media and technology solutions, announced the appointment of Mr. Frank Sweeney as Programme Director of the Passion Project. Frank will support the delivery of the Company’s existing youth engagement programmes as well as helping with the creation of bespoke training materials and programmes necessary for the ongoing development of the project and its participants. These new training programmes will incorporate materials recently acquired under the extended licence agreement with SFK which are especially focused on emotional intelligence, resilience and value-based learning. Frank will also assist in the promotion, sale and facilitation of these programmes. Frank is a well-respected learning mentor, currently delivering Arts engagement programmes for youth social inclusion charity, The Crib, and consultant to the art school, Open School East. He has extensive experience in working with young people, helping to develop their creative potential. Milestone also announced it had raised £197,601.51 in cash at a price of 1 penny per share.

MoneySwap (LON:SWAP 0.77p/£3.31m)

MoneySwap, the provider of payment solutions to online and point of sale merchants licenced for UnionPay in the UK, announced it has signed a merchant agreement (the with Air Charter Service (ACS), a leading global aircraft chartering specialist, which will enable ACS to accept UnionPay bank cards using MoneySwap’s solution. This Agreement is in line with MoneySwap’s strategy to become a leading provider of UnionPay online payment solutions to UK merchants and in the process provide its shareholders with exposure to the continued rapid increase in Chinese tourism and spending in the UK. ACS specialises in the chartering of private jets, helicopters, airliners and cargo aircraft. It arranges nearly 7,500 charters per year with a cumulative turnover exceeding US$400m for clients including international companies, government entities and high net worth individuals. In 2013, ACS was voted Cargo Charter of the Year at the ACW World Cargo Awards and Charter Broker of the Year at the Payload Asia Awards.

North American Petroleum (LON:NAPP.PL 0.925p/£4.45m)

North American Petroleum, a company focussed on developing its interests in proven US onshore oil and gas formations, is pleased to announce it has farmed-in to a 30 per cent working interest in the producing, 1,520 gross acre, Zink Ranch Project in Osage County, Oklahoma. The acquisition is in line with the Company’s strategy to rapidly build net production and reserves through the acquisition and development of leases in liquids rich hydrocarbon plays. Zink Ranch is majority owned by AIM quoted Northcote Energy plc (LON:NCT 0.615p / £7.61m)and includes 15 vertical wells producing from the Skinner Formation that hold the leases by production – average gross daily production of approximately 18 barrels of oil and 60 thousand cubic feet of gas or 28 barrels of oil equivalent per day. There is a significant scope to increase production in the near term. 14 existing wells are targeted in 2014 – at least two new wells to be drilled in 2014. The acquisition costs US$600,000 of which US$300,000 is to be settled in cash; remaining US$300,000 to be based on funding Northcote’s share of costs of various projects within the work-programme at Zink Ranch.

Ortac Resources (LON:OTC 0.25p/£6m)

Ortac Resources, the exploration and development company which entered into a strategic alliance with Andiamo Exploration Ltd (Andiamo) in January 2014, has reported that Andiamo has commenced a diamond core drill programme at its Yacob Dewar gold and copper exploration project in Eritrea. The current drilling programme has primarily been designed to target the interpreted shallow copper oxide mineralisation at Jacob Dewar, with the intention of defining a JORC Code (2012) compliant mineral resource. Furthermore, Ortac has completed payment of a further US$0.5m investment as per the conditional subscription agreement entered into with Andiamo. As a result, Ortac’s stake in Andiamo now stands at 18.85 per cent.

RCG Holdings Limited (LON:RCG 2.375p / £19.84m)

RCG announced that its wholly owned subsidiary, Bio Tag International Limited (BTIL) and the Vendor entered into an agreement to acquire 74 per cent of the issued share capital of Easy Ideas Limited for a total consideration of HK$69,560,000 (approximately £5.4m). Easy Ideas is the holding company of its wholly owned subsidiary, Techno Vision Limited, which is a mobile application developer and web base solutions services provider. It provides online services enabling users to make restaurant reservations and social networking on both iOS and android platforms. In the year ended 30 September 2013, Techno Vision reported turnover of HK$5.05m and profit before taxation of HK$3.67m. Net liabilities as at 30 September 2013 were HK$0.67m.

SafeCharge

SafeCharge, the online payment processor, announced its intention to float on AIM with a US$100m capital raise. SafeCharge is an international provider of payments services, risk management and IT solutions for online businesses. The Group is a payment partner across a diversified, blue chip client base. SafeCharge is recognised as a leading supplier to merchants in the regulated European sports betting and gaming industry, retail securities derivatives and foreign exchange trading sector as well as enjoying a significant presence in digital goods and services. The Group was founded in response to the emerging need for reliable and secure online payment systems and has evolved to become one of the market leaders in payments and risk management services through processing payment cards and alternative payment methods. The Group has a history of innovation and employs proprietary award-winning technologies and methodologies to service a stable and growing merchant client base. The Group’s main country of operations is the UK, whilst also having operations in Austria, Bulgaria, Cyprus, Germany and Israel.

Tracsis (LON:TRCS 262.5p / £67.03m)

Tracsis announced its interim results for the six months ended 31 January 2014. Revenue increased 109 per cent to £9.8m (2013: £4.7m), adjusted EBITDA increased 49 per cent to £2.8m (2013: £1.9m) and cash balances now stand at £7.6m (31 July 2013: £6.6m, 31 January 2013 £8.5m). An interim dividend of 0.35p per share was proposed, an increase of 17 per cent on last year. The Company expects the full year results to exceed current market forecasts.

UBC Media Group (LON:UBC 6.25p/£12.35m)

UBC, the multimedia content and services Company, provided an update on the proposed acquisition of 7digital Group, Inc. and on its investment in Audioboo. 7digital is a leading supplier of digital music services with a library of 25m tracks. The Company has now signed Heads of Terms with 7digital, outlining the detailed material terms of the potential acquisition of 7digital by and has agreed a period of exclusivity up to 4 April. The Acquisition, if consummated, would constitute a reverse takeover under Rule 14 of the AIM Rules for Companies. UBC expects to publish an admission document by the end of May 2014. UBC’s shares will remain suspended until the admission document is published or the Company confirms that the Acquisition is no longer taking place. UBC also announced that it has signed non-binding Heads of Terms with One Delta (LON:ONE 1.75p/£555k) a cash shell quoted on AIM, to acquire the entire issued and to be issued share capital of Audioboo in a potential all share transaction which would leave UBC with a significant stake in the enlarged group. One Delta simultaneously announced that it has raised £3,485,000 through the issue of new ordinary shares and confirmed the transaction. UBC currently holds 39 per cent of the ordinary share capital of Audioboo. If the transaction completes as currently envisaged, UBC would hold just under 20 per cent of One Delta plc.

Venn Life (LON:VENN 24p/£5m)

Venn Life Sciences, the Clinical Research Organisation (CRO) providing clinical trial management and resourcing solutions to pharmaceutical, biotechnology and medical device clients, has announced that it conditionally placed 5.3m new shares at 19p to raise £1m before expenses. These funds will be targeted at opportunities in the area of skin care and dermatology following the acquisition of Labskin(TM) and the anti-acne compound SYN1113 y from Evocutis plc. The management believes that that there is a growing customer demand for these 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.

11th March 2014

This week: AIM on the Horizon, Xeros cleans up, Service Powers forward

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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.

APC trading statement,COG Grete Lundbeck prize,COMS acquisition of Smarter Mobile UK,DDD Yabazam 3D movie app,EDEN EU update,ESCH final results,HER Picachos copper project,Horizon Discovery Group set to float on AIM,LPA trading update,NSH preliminary results,PIP half-yearly results,RENE foundation support,SVR contracts signed,SDM final results,TNG trading update,TEG Dagenham plant,Xeros Intention to float on AIM,XLMedia set for AIM float

APC Technology Group (LON:APC 56.5p / £32.86m)

The Group is expected to report sales of approximately £12.1m (2013 H1: £9.2m) and to declare a profit before tax of at least £700,000 (2013 H1: £47,000) in its interim results due at the end of May. The Group’s energy efficiency focused businesses experienced continued growth both through orders from existing and new customers, including Network Rail. The pipeline of new potential business has also grown significantly this year. A newly established energy efficiency consulting business will help customers develop and then implement an effective energy management strategy. The Company confirmed that it is in discussions to acquire a majority interest in a small, specialist, funding business with the view to offering customers turnkey financing solutions for energy efficiency projects.

Cambridge Cognition Holdings (LON:COG 72.5p / £12.24m)

Cambridge Cognition Holdings, which specialises in computerised neuropsychological tests including those enabling the early detection of dementia, announced that Professor Trevor Robbins CBE, co-inventor of COG’s CANTAB system, has been awarded with the Grete Lundbeck European Brain Research Prize – ‘The Brain Prize’ 2014. The Brain Prize recognises and rewards outstanding contributions to European neuroscience, from basic to clinical. A great accolade for Prof Robbins and for Cambridge Cognition.

Coms (LON:COMS 8.1p/£77.77m)

Coms, the provider of end-to-end communication, connectivity and business services, announced that it has agreed to acquire the entire share capital of Smarter Mobile UK Limited from the founding shareholders for a consideration of £225,000 payable in cash used from the company’s existing funds. Smarter Mobile UK, trading under the brand name Family Mobile offers a mobile phone service that is simple to use and simple to understand. Many of its customers have been using the service since 2008 when it was launched in partnership with Ikea Family, the loyalty scheme created by Swedish retail giant Ikea. It’s shared ‘family accounts’ under which any number of individual phones can be managed have continued to prove to be innovative and cost effective. Smarter Mobile has a current turnover of c.£240,000 and is EBITDA neutral with net assets of c.£55,000.

DDD (LON:DDD 4.875p/£7.0m)

DDD Group, the imaging and 3D solutions Company, has launched its Yabazam(R) 3D movie app on Panasonic VIERA(R) Connect 3D Smart TVs. The Yabazam app gives 3D TV owners access to a wide range of 3D programming, including movies, documentaries, action sports and animated shorts from producers around the world. During March, Yabazam will become available to Panasonic customers in 17 countries, including the US, UK, Japan, Korea, Germany and Russia. The 3D programming is offered on a subscription basis in the US and titles are available for on-demand rental in the other countries. Already available on Samsung and LG Smart TVs and via the Google Play(TM) Store for Android(TM) 3D tablets, the Yabazam 3D app has been downloaded over 700,000 times and averages 2,000 user sessions per day.

Eden Research (LON:EDEN 8.25p / £10.17m)

AIM listed natural micro-encapsulation Company announced that it has received confirmation of the Completeness-Check for dossiers submitted to its Zonal Rapporteur Member State, in relation to gaining product approval for plant protection products using the Company’s three EU approved active substances. In May 2013, Eden received approval from the European Commission for the use of the three active substances in its lead agrichemical product 3AEY – an effective, naturally derived product against Botrytis, a widespread fungal disease that causes grey mould on most fruits and vegetables often leading to the rapid loss of commercially viable crops. The market size for Botryticides is around $300m per annum. The May approval was a key regulatory milestone and allowed the Company to seek separate national approvals for individual products as a precursor to commercial sales. As part of this process Eden had submitted dossiers to its Zonal Rapporteur Member State, in this case Malta, and has now received confirmation that these dossiers are considered complete. A Rapporteur Member State is an individual Member State of the EU with responsibility for the evaluation of application dossiers on behalf of the European Commission. This process allows products to gain regulatory approval across various Member States through submission to one Member State. Eden’s submission, when successful, is expected to gain approval in France, Spain, Italy, Greece and Bulgaria.

Escher (LON:ESCH 385p/£70.81m)

Escher Group Holdings, the provider of outsourced point-of-service software to the postal industry, has reported a revenue growth of 8 per cent to US$24.7m for the year ended December 2013. The gross profit margin decreased to 61 per cent from 66 per cent in 2012 due to the revenue mix. License revenues decreased from the level in 2012 to 2013 but there was a strong increase in services revenues, up 35 per cent from core customers. During the year, Saudi Post expanded its licenses to cover its entire post office network and USPS received software and services. Significant investment in new product areas is now beginning to generate contract wins.

Herencia (LON:HER 0.59p/£13.93m)

Herencia Resources, the Chile-focussed mineral exploration and development Company, has announced that drilling at its advanced Picachos Copper Project is scheduled to commence in the coming quarter. Following the completion of a comprehensive surface and underground sampling program at Picachos, a drill program has been designed to target both the high-grade structural areas (currently being mined at a rate of approximately 4,000 tonnes per month) and the extensive zones of shallow manto-style mineralisation that would underpin a larger-scale and potentially long life open pit copper mining project at Picachos.

Horizon Discovery Group (LON:TBC/TBC)

Horizon Discovery Group, a life science company supplying research tools to organisations engaged in genomics research and the development of personalised medicines, announced its intention float on AIM. The company provides research tools to organisations engaged in genomics research and the development of personalised medicines. The Company, which is Cambridge (UK) based, has a diverse and international customer base approaching 800 organisations, including major pharmaceutical, biotech and diagnostic companies as well as leading academic research centres. The Company supplies its products and services into multiple markets, estimated to total in excess of £29bn by 2015, including translational genomics research; cell based assays; molecular diagnostics, and biopharmaceutical production markets.

LPA Group (LON:LPA 109p / £12.88m)

LPA Group reported that in the three months ended 28 February, the order entry exceeded £6m, with an annual run rate of £24m. Significant orders were received in the period and include: £0.8m of components for a UK refurbishment project; an initial £0.7m of jumpers and lighting for the very large Intercity Express Programme (IEP); and £0.7m of ethernet jumpers for a UK refurbishment project. In addition, during February, the Company was selected and received a letter of intent to supply £1.2m of LED based lighting for a double deck high speed train for French Railways. Delivery of all these projects will commence this year. Since September the order book has increased by 35 per cent to £8.8m, but still does not include the bulk of IEP, the French Railways project noted above or any significant orders in respect of the three other major long term projects for which it has been selected.

Norish (LON:NSH 43.5p / £4.85m)

Norish gave preliminary results for the year ended 31 December 2013. Turnover from continuing operations increased to £22.8m (£13.6m for 2012). Profit from continuing operations increased to £763k in 2013 (loss of £218k in 2012). Net assets increased to £8.3m from £8.1m in 2012. With basic earnings per share increased to 8.4p from a loss of 2.5p in 2012, the board recommends the payment of a final dividend of 1.25 €cent per share. This will be paid on the 24 October 2014 to those shareholders on the register on the 26 September 2014. It will bring the total dividend in respect of the financial year to 1.25 €cent per share unchanged from last year.

PipeHawk (LON:PIP 4.875p / £1.61m)

Pipehawk reported that the Company’s turnover in the six months ended 31 December 2013 was £2,609,000, up 24 per cent. (2012: £1,984,000). This resulted in a loss before taxation of £244,000 (2012: profit of £83,000 after capitalising £103,000 of research and development expenditure.) Chairman Gordon Watt said: “Overall, whilst I am somewhat disappointed by our bottom line result for the six months, I am very happy that we have now made the strategic investment in our facilities, order book and marketing effort which we believe have laid the foundations for significant growth in the future.”

ReNeuron Group (LON:RENE 3.39p / £60.64m)

UK-based stem cell therapy company announced that its ReN003 retinal stem cell therapy candidate for retinitis pigmentosa is to receive support from the US-based, Foundation Fighting Blindness, the world’s leading private source for inherited retinal disease research funding. The Foundation has already played a key role in advancing ReNeuron’s ReN003 therapy through its funding of earlier pre-clinical work conducted by the Schepens Eye Research Institute, Massachusetts Eye and Ear, ReNeuron’s principal US collaborator on the ReN003 programme. The Foundation is planning to provide additional resources to ReNeuron and its collaborators in support of preparations for initial clinical trials with ReN003, including access to its network of expert pre-clinical and clinical advisers. ReNeuron’s ReN003 therapy benefits from Orphan Drug Designation in both Europe and the US. The Company and its collaborators are currently completing late pre-clinical development of the ReN003 therapy, ahead of an initial clinical trial application planned for later this year.

ServicePower (LON:SVR 7.875p / £15.75m)

Service Power gave two updates this last week, one that it has launched with Electrolux and another that it had signed a new agreement with ServiceMax. The multi-year contract with Electrolux is expected to deliver significant revenues. Electrolux has used ServicePower’s ServiceMarket software since January 2013 and by adding ServicePower’s ServiceOperations, ServiceStats and ServiceScheduling software products, the manufacturer builds out its field management platform and in doing so, enhances the flexibility, responsiveness, effectiveness and productivity of its field management service. The ServiceMax agreement states that it will integrate ServicePower’s patented schedule optimisation product, ServiceScheduling, recognised as the leading optimisation technology for large workforces, into OptiMax, ServiceMax’s workforce optimisation module available on the Force.com AppExchange.

Stadium Group (LON:SDM 69.5p / £20.54m)

Stadium Group announced improved results for the year ended 31 December 2013 following a strong second-half performance, in line with management expectations. Revenues grew to £42.22m (2012: £40.99m) with adjusted profit before tax of £1.86m (2012: £1.44m) and strong cash conversion from underlying operations of 209 per cent. Chairman Nick Brayshaw OBE said: “….A positive book-to-bill ratio underlines the success of our integrated sales approach and commercial initiatives, which are delivering new business from both existing and new customers. Consequently we continue to anticipate an improving trading performance as we progress through 2014.”

Tangent Communications (LON:TNG 11.125p / £31.19m)

Tangent announced that its underlying operating profit for the full year to 28 February 2014 will be ahead of current market expectations. Underlying operating profit has increased in excess of 20 per cent on a like for like basis compared to the prior year. Revenues for the year will be in line with market expectations of £27m. The business continues to be cash generative and net cash will be approximately £2.6m at the period end. The Company reports it has recruited much of the talent required to fuel the growth expected in the forthcoming year. Growth is anticipated across all of its operating businesses as it expands the range of products and services it offers.

The TEG Group (LON:TEG 4.25p/£8.01m)

The TEG Group, the green technology Company, which develops and operates organic composting and energy plants, has reported that following successful commissioning and testing, it has now handed over to its client, TEG Biogas (London) Ltd., the combined In-Vessel-Composting (IVC) and Anaerobic Digestion (AD) plant at East London’s Dagenham Dock, both on schedule and in budget. With the handover of the plant completed, the company will receive retentions on 7th March 2014. It is now providing on-going operating and maintenance services to TEG Biogas under its 15 year contract, with annual revenues of approximately £1.3m per annum, escalated annually. TEG is a 24.5 per cent shareholder in TEG Biogas, which is a joint venture with funding partners led by Foresight Group.

Xeros (LON: TBC/TBC)

Xeros, the developer of a patented polymer bead cleaning system with multiple identified commercial applications, announced its intention to float on AIM. The focus of the Group since incorporation in 2006 has been to develop and commercialise years of research at the University of Leeds into textile dyeing and the use of polymer beads for cleaning various substrates. Xeros has developed a patented polymer bead cleaning system that has been shown to provide superior cleaning performance whilst significantly reducing the consumption of water, energy and chemicals throughout the cleaning process. The system is characterised by replacing the majority of the water used in an existing conventional laundry process with reusable and recyclable polymer beads. The polymer beads clean substrates through a combination of mechanical action, attracting stains to the bead surface and absorption. The Group has developed its commercial laundry machines using predominantly existing conventional washing machine technology, with modifications to introduce its polymer beads into the wash process.

XLMedia (LON:TBC/TBC)

XLMedia, a global digital publisher and marketing Company which attracts paying users from different online channels and directs them to online gambling operators, is set to float on AIM. The Company is registered in Jersey and the Group’s operations are principally located in Israel and Cyprus. The Group provides marketing services to online gambling operators. The Group attracts players through online marketing techniques and subsequently seeks to channel high value “traffic” (i.e. players) to gambling operators who, in turn, convert such traffic into paying customers. Online gamblers are attracted by the Group’s publications and advertisements and are then directed, by the Group, to online gambling operators in return for a share of the revenue generated by such players, a fee generated per player acquired, fixed fees or a hybrid of any of these three models. The business has a strong presence in Scandinavia and the Group intends to continue to invest and organically develop the Group’s position there. The Group also intends to expand its operations into jurisdictions where the Directors believe significant opportunities exist, with an initial focus on the US. The Group generates customer traffic for over 120 online gambling operators including Betsson, Mr. Green, Vera & John (all in Scandinavia) and other established industry brands such as 888.com, Ladbrokes, Unibet and William Hill.

*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 March 2014

This week: DX Group joins the party, no tears at boohoo, Snoozebox off to the races

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AVG interim results,boohoo set for AIM float,CGNR Clay Lake potential,CSSG interim results,DX AIM admission,HDD agreement with General Electric,HYD final results,IDEA trading update,PHD interim results,SAR interim results,SIS head office move,ZZZ Isle of Man,TSTL interims,WTM half yearly report

Avingtrans (LON:AVG 154p / £42.49m)

Avingtrans announced its interim results for the six months ended 30 November 2013. Revenue increased by 90 per cent to £32.2m (H1 2013: £16.9m). Profit after tax was £3.0m, including £1.7m net from the acquisition of Maloney (Which cost just £1.) Net debt was £3.4m (31 May 2013: £2.9m), and an enhanced interim dividend of 0.9 pence per share was proposed (H1 2013: 0.7 pence). The Order book remains at record levels, driven mainly by Aerospace. Commenting on the results, Roger McDowell, Chairman, said: “…As we expected, it has been a busy first half at Energy and Medical, where integration of the Maloney acquisition and the Chinese operational expansion have fully occupied the new divisional MD and senior management team. Whilst it is too early to see the results of these activities at Maloney, investors will be pleased to note the substantial potential pipeline of business that is building there, with the current prospect bank exceeding £100m of opportunities…”

boohoo.com (LON:TBC/TBC)

boohoo.com, one of the UK’s largest pure-play online, own brand fashion retailers, recently announced its intention to float on AIM. The Group designs, sources, markets and sells own brand clothing, shoes and accessories through the www.boohoo.com website to a core market of 16-24 year old consumers in the UK and globally. boohoo has a well-established brand in the UK, Ireland and Australia, currently sells products into over 100 countries and has over 2.3m active customers.

Conroy Gold & Natural Resources (LON:CGNR 1.775p / £6.04m)*

Conroy Gold and Natural Resources announced the results of a structural study at its Clay Lake gold target in Co. Armagh by independent consultant structural geologists. The study has yielded important new geological information which adds further evidence that the Clay Lake gold target may have the potential for high tonnage and overall gold content. The results of the study showed that not only is a gold mineralised anticline present at the Clay Lake gold target, with intense shearing, but that a second gold mineralised anticline is also present to the northwest of the first anticline. Anticline structures are important because they can host significant volumes of gold and are thus a key target in exploration. The identification of the anticlinal structure is of particular significance as gold mineralisation tends to accumulate within the hinge, or top, of the anticline. The presence of a second anticline to the northwest, where gold mineralisation has also been intersected during drilling, is very exciting as this target could be similar to the first anticline where previous drilling by the Company intersected 53m at 0.60g/t gold including 10.25m at 1.37g/t gold. Conroy is also currently planning to develop its first operational gold mine at Clontibret in County Monaghan, Ireland, which is one of four target areas, along with Clay Lake, identified within a 30 mile gold trend. Conroy separately announced that all resolutions at its EGM had been passed, the placing therefore completed of £0.5m along with the capital reorganisation and a further debt conversion of £315,000 by directors of the Company at 2.65 pence per share.

Croma Security Solutions Group (LON:CSSG 29.5p / £4.39m)

Croma released its interim results for the six months to 31 December 2013. Turnover increased to £7.31m (£6.79m in H1 2012). Vigilant and CSS Locksmiths grew their turnover by 5 per cent, and Croma Security by 27 per cent. The group has seen continued pressure on margins, but has held gross profit at 24.8 per cent (H1 2012: 25.8 per cent). In spite of a broad based improvement in economic activity, Vigilant’s market remains quite competitive. The group recognises the need to maintain and improve margin through added-value services and cost monitoring. Administrative expenses have been held broadly steady at £1.67m (2012 £1.64m) and borrowing costs have greatly reduced as the group builds up and retains positive cash balances, and invoice discounting has been required less often than in 2012. As such, the group’s cash position is strong. The board are encouraged by the six month’s results and outlook for the remainder of the year. With trading continuing at the present level through the second half of the year, the board would expect to declare a dividend on the full year results.

DX Group (LON:DX 129.25p/£259.18m)

DX, an independent mail, parcels and logistics end to end network operator in the UK and Ireland, announced that admission and trading of its ordinary shares commenced on the AIM market. The Company raised approximately £200.5m via a placing at a price of 100 pence per ordinary share. DX’s customers include public and private sector organisations, providing next day delivery for mail, parcels and 2-Man deliveries to business and residential addresses nationwide. As a specialist provider of time sensitive, mission critical, 2-Man and high value deliveries, DX routinely handles goods from many etailers, high street retailers, and a wide range of items from many industry sectors. DX is the provider of the UK Government and foreign embassies for identity documents and visas.

Hardide (LON:HDD 1.875p / £19.24m)

Hardide revealed that it has entered into a Strategic Supply Agreement with the General Electric Company Inc. (GE). The agreement is for the supply of coating to a single component currently used by GE resulting in guaranteed turnover volume to the Company of c. $1.3m over the two years to February 2016. The Agreement is extendable up to five years. Development and testing work is also well-advanced on additional components which, if successful will be included to the Agreement and which would result in further minimum annual volumes. If successful, the Board would expect the supply of these additional components to GE to significantly increase the overall value of the Agreement. The Agreement is effective from 1 March 2014 and helps to underpin the Board’s current year forecasts.

Hydro International (LON:HYD 117.5p/£18m)

Hydro International, the provider of environmentally sustainable and innovative products for the control and treatment of water, has reported that revenues fell 6 per cent to £32.2m in the year ended December 2013 while the operating margin fell from 7.2 per cent to 4.9 per cent. The management anticipates that the difficulties experienced in the European Wastewater business during 2013 will continue into 2014 and impact the first half-year in particular. A new CEO, Michael Jennings, was appointed in July 2013 to position the company to operate on more sustainable growth platforms. The Board has recommended an unchanged final dividend of 3.6p per share reflecting its confidence in the financial position and future prospects.

Ideagen (LON:IDEA 33.75p/£39m)

Ideagen, the supplier of Information Management software to highly regulated industries, has announced that trading in the second half of the current financial year has continued strongly with a significant increase in contract wins from the commercial sector. Of particular note are new contract wins at RWE, a top five European energy supplier; Achmea, a leading insurance company in the Netherlands; and BTG, a growing international specialist healthcare company worth a combined value of approximately £0.5m. The company expects the rest of the second half of the current financial year to benefit from the continued increase in commercial activities in addition to further NHS contract wins. In particular, Guys and St Thomas’ NHS foundation trust is now the company’s latest NHS customer and the management expects to announce further significant NHS contracts over the next two months.

PROACTIS Holdings (LON:PHD 58p / £18.45m)

PROACTIS Holdings, a Spend Control and eProcurement solution provider, issued its interim results for the six month period ended 31 January 2014. Reported revenue increased by 3 per cent to £4.03m (31 January 2013: £3.92m), adjusted operating profit increased by 217 per cent to £454,000 (31 January 2013: £143,000) and the Company has a strong balance sheet with cash balances of £2.4m (31 July 2013: £2.3m). The initial contract value signed on new deals was £1.6m (31 January 2013: £1.5m) with £0.7m recognised in the period (31 January 2013: £0.8m). Deal activity is buoyant with 15 new name deals (31 January 2013: 15) and continued strong customer loyalty with NTSC 39 upgrades in the period (31 January 2013: 29). Multi-year, transactional priced Cloud/SaaS solutions are in line with expectations – 8 new customers (31 January 2013: 6) with 100 per cent SaaS renewals in the period. The recent acquisition EGS has signed 3 new name deals since its acquisition and also post period, a conditional loan note facility of up to £5m has been signed.

Sareum Holdings (LON:SAR 0.525p / £9.45m)*

Sareum, the specialist cancer drug discovery and development business, announced its half-yearly results for the six month period ended 31 December 2013. Cash at bank at period end was £1,598,000 (2012: £380,000) and the Company reported a loss on ordinary activities (after taxation) of £350,000 (2012: Loss of £269,000). In the period, Sareum signed a co-development agreement with CPF and BACIT to advance CHK1 and a pre-clinical development candidate was selected for Aurora+FLT3. A co-development agreement with HMUBEC to advance Aurora+FLT3 was also signed and significant activity with TYK2 lead molecule in psoriasis disease models was seen. The Company separately gave a research update and Tim Mitchell, CEO of Sareum Holdings, said: “The Company has made good progress having now secured co-development agreements for three of its lead programmes that will provide additional resources and expertise.”

Science in Sport (LON:SIS 57.5p/£11.2m)

Science in Sport, the sports nutrition company, has moved its registered and head office from Windsor, Berkshire, to larger premises in London. The new head office comprises more than 1,700 square feet. In addition to accommodating the company’s senior management and marketing teams, it will create space for the company’s growing e-commerce and direct selling operations. The central London location will also allow increased convenience for contact with customers and for the company’s investor relations activities. SiS’s manufacturing and product development facilities will continue to be based in Nelson, near Manchester.

Snoozebox (LON:ZZZ 16.62p/£18m)

Snoozebox, the provider of portable hotel accommodation and services, announced that it has been granted planning permission by the Isle of Man Government to build a 240 bedroom portable hotel for the TT races on the island on a permanent basis. Snoozebox has established a strong presence on the island for the prestigious races starting back in 2012 with an 80 bedroom hotel and the Company will deploy a 160 bedroom hotel in May 2014. Regency Travel, the Isle of Man TT travel specialist, has partnered with Snoozebox to create exclusive packages for the TT. Snoozebox revenues in 2013 rose in all the sectors in which the Company currently operates, including in motorsport, when compared to the same period last year. In 2014, Snoozebox will be deploying hotels at events such as the Isle of Man TT, the British Grand Prix, Glastonbury, Download, Moto GP and the Ryder Cup amongst others.

Tristel (LON:TSTL 43p/£17m)

Tristel, the manufacturer of infection prevention, contamination control and hygiene products, has announced its interim results for the six months ending December 2013. Revenues were up 46 per cent to £6.4m, while the gross margin increased to 70 per cent (2012: 64 per cent). This helped the pre-tax profit rise to £0.7m, compared with a loss of £0.6m in the same period last year. The board has recommended an increased interim dividend of 0.36p per share (2012: 0.08p). Revenue growth has been achieved in all areas and the progress made in the first six months has continued, with a strong start to 2014.

Waterman Group (LON:WTM 67p / £20.61m)

Waterman Group reported its interim results for the six months to 31 December 2013. Revenues grew 8.3 per cent to £34.0m (H1 2012 £31.4m) and profit before tax increased six-fold to £0.6m (H1 2012 £0.1m) allowing for the interim dividend to double to 0.4p (H1 2012 0.2p.) Net funds increased by 43 per cent to £1.6m (30 June 2013: £1.1m). The result was helped by the improving conditions in the UK property sector, which remains the Group’s largest market, and from the decisive action taken to restructure overseas activities leading to the Group’s withdrawal from the United Arab Emirates and Russia.

*A corporate client of Hybridan LLP

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