Small Cap Wrap: Month: April 2014

AIM Breakfast - Archive

2nd April 2014

This week: Petards Fit for Growth, Galasys off to the Amusements, Rame powers forward to AIM

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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.

BILL debt reduction,CCE award,CHRR trading update,ECK payment contracts,Galasys Intention to float on AIM,Haydale Graphene Industries Intention to float on AIM,PPT Pay in Your Currency,PEG final results,RAME Energy Intention to float on AIM,RENE UK regulatory approvals,REVO results,Safestay Intention to float on AIM,TYR Vamousse™ at Walmart stores,WSG new contract,ZOX placing

Billing Services Group Limited (LON:BILL3.25p/£9.18m)

BSG, the provider of telecommunications clearing and financial settlement products, Wi-Fi data solutions and verification services, announced the scheduled repayment of $2.4m of its senior debt made on March 28, 2014. Accordingly, at the close of business on March 28, 2014, total outstanding senior debt was $13.5m. They had earlier announced that a US Magistrate recommends granting in part the Federal Trade Commission’s (FTC) request for an order of contempt, but because the contempt finding recommended is considerably more limited than that suggested by the FTC, further recommends that additional proceedings be held in advance of any determination of damages. The Magistrate’s Report and Recommendation is subject to objections and additional consideration by a Chief U.S. District Court Judge before ruling on whether to accept the recommendation. The Company is reviewing the report and more information will be provided as it becomes available.

Camco Clean Energy (LON:CCE 4p/£8m)

Camco Clean Energy, the developer, constructor and operator of projects that contribute to a sustainable future, has announced that it has received a “2014 Project Developer Award” from the Climate Action Reserve (operators of one of North America’s leading offset registries). This is the first year such an award has been presented and it was received at the Navigating the American Carbon World conference in San Francisco, which attracts the largest audience of any carbon market and climate policy event in North America. The award recognises Camco’s outstanding leadership and innovation in the development of offsets through working with project owners, the Climate Action Reserve, verifiers, regulators and other stakeholders.

China Rerun Chemical Group (LON:CHRR 17p/£43m)

China Rerun Chemical Group, the producer of lubricant products for the domestic automotive, industrial and agricultural markets in the People’s Republic of China, has issued a trading update for the six month period to 28 February 2014. Sales for the period grew by 34.4 per cent to RMB164.7m (£16m) and like-for-like sales volume was 8.1m litres, up 31.7 per cent. The growth in sales and volume were driven by an increase in demand particularly for the company’s car petrol engine, construction and agricultural oils. In addition, the company has increased the range of construction and agricultural oils to meet market demand. Gross margins have continued to improve and were 30.8 percent for the period (H1 2013: 27.3 per cent), as a result of selling higher quality products and benefitting from economies of scale as volumes have increased.

Eckoh (LON:ECK 40.5p/£87.51m)

Eckoh, a provider of multi-channel customer service and secure payment solutions, announced three new contract wins, to supply of a range of Eckoh’s secure payment products in accordance with the Payment Card Industry Data Security Standards (PCI DSS). These new contracts continue to reinforce Eckoh’s market leading position in providing payment solutions in combination with broader customer service applications. All three contracts will go live during the first half of the new financial year. Nik Philpot, CEO of Eckoh, commented: “…As we move into the new financial year our sales pipeline remains at an excellent level and we are also seeing a significant upturn in interest from overseas, particularly the US where we are already looking to expand our initial Veritape product offering.”

Galasys (TBC/TBC)

Galasys, an Amusement Park solutions and services provider, recently announced its intention to float on AIM. The Group supplies ticketing management systems to Amusement Parks in China and Malaysia and has been operating since 2005. Through its proprietary systems, the Group provides Amusement Park operators with the ability to manage and analyse tickets, visitors, merchandise sales and other Amusement Park operations. The Directors believe that the Group’s market position in China has been the culmination of a proven and reliable technology platform and long lasting relationships with Amusement Park operators, for example, Chimelong and OCT Group, which are two of the largest Amusement Park operators in China by numbers of tickets sold annually. The Group intends to strengthen its position in the Asian region by increasing its product offering to current Amusement Park operators, gaining new Amusement Park operators as customers and by entering into new markets.

Haydale Graphene Industries (TBC/TBC)

Haydale, the developer of a patent pending proprietary scalable plasma process to functionalise graphene and other nanomaterials, has recently announced its intention to float on AIM. Functionalisation is carried out through a low pressure plasma process that treats both organic mined fine powder and other synthetically produced nanomaterial powders producing high quality few layered graphenes and graphene nano platelets using a dry, low-energy process and avoiding the need to use potentially harsh ‘wet’ chemicals or acids. Haydale has identified functionalisation as the key component in the commercialisation of graphene. The Company plans to commercialise its functionalisation process by providing solutions to both raw material producers and industrial corporations through product enhancement in the nanomaterial market. Haydale will create demand for its products and services through the development of intermediate products and services such as conductive inks, composite fillers and resins; and provide product improvement by offering industrial customers flexible material choice and tailored functionalisation to provide the right customised solution for their specific application.

Planet Payment Inc. (LON:PPT 165p/£90.47m)

Latin America’s leader in electronic payment solutions, and Planet Payment, Inc., announced the official contract signing and launch of Planet Payment’s Pay In Your Currency(R) (PYC) solution. Cielo and Planet Payment will begin a full production rollout in the coming weeks and in advance of the upcoming World Cup. Pay In Your Currency provides Brazilian merchants a new way to cater to international tourists – by enabling international visitors using an eligible VISA(R) or MasterCard(R) to pay in their own currency. PYC provides merchants catering to the international traveller with a new way to attract more customers by providing a more personalised service while improving the profitability of their business. The PYC solution supports approximately 100 currencies, enabling a broad segment of international visitors to enjoy the convenience of the service. Pay in Your Currency is also designed to be simple for merchants to support – they continue to receive settlement and reporting in Brazilian Real (BRL).

Petards Group (LON:PEG 10.5p / £3.61m)*

Petards Group, the developer of advanced security and surveillance systems, reported its audited result for the year ended 31 December 2013. Petards reported a £20m strong opening order book for 2014 (2013: £9m) with over 50 per cent scheduled for delivery in 2014. £11m of major orders were obtained in the second half of 2013 comprising £4m for Petards eyeTrain CCTV and passenger counting systems from major global train builders; and £7m for replacement of the RAF’s Secure Management Radio Equipment capability (SMRE) for use in RAF stations. The period saw a debt for equity swap with Water Hall Group plc resulted in a cash infusion of £2.1m and a £1.15m placing with predominantly new shareholders. 2013 saw revenues of £6.3m (2012: £9.0m), a gross margin of 40 per cent (2012: 43 per cent), and an operating loss of £1,330,000 (2012: £327,000 profit). The company reported a loss after tax £2,293,000 (2012: £200,000 profit). As at 31 December 2013 the company had £1.4m cash (31 Dec 2012: nil) and no bank debt and convertible loan notes of £1.5m maturing in September 2018 providing long term finance.

Rame Energy (TBC:18p/c£17.14m)

Rame, an international energy consultant, engineer and power project developer operating in a number of energy sectors including wind, diesel and solar, recently announced its intention to float on AIM. The Group’s main countries of operation are the United Kingdom and Chile. Rame now intends to operate its own power projects with a focus on providing energy directly to large industrial consumers. Rame is now building on its experience and expertise in the energy sector to own and operate power generation projects, with its initial focus being in Chile. Rame plans to become a niche IPP (Independent Power Producer) taking full advantage of opportunities created by increasing energy costs and demands in power intensive industrial activities such as mining. To facilitate this strategy, Rame has entered into binding conditional agreements with Santander Investment Chile Limitada for the co-financing of 15 MW of wind farms across two project sites in Chile. The Group has a further 28 prospective onshore wind energy project sites with a potential installed capacity in aggregate of 1.4 GW.

ReNeuron Group (LON:RENE 3.1p / £55.45m)

ReNeuron Group, a UK-based stem cell therapy company, announced that it has received final UK regulatory and ethical approvals to commence two new clinical trials. A Phase II clinical trial in stroke disability, recruiting up to 41 patients and treating 8-12 weeks post-stroke, regarded as the optimum treatment window for efficacy and a second indication to enter the clinic – a Phase I clinical trial in critical limb ischaemia recruiting nine patients. Both trials will use CTXcryo, the cryopreserved variant of ReNeuron’s CTX cell line which provides the drug product for both the stroke and critical limb ischaemia programs. The phase II study is expected to read out by the end of 2015. The Company expects to be able to file for approval to commence a Phase II efficacy study with ReN009, as planned, during the first half of 2015.

Revolymer (LON:REVO 56p / £30.57m)

Revolymer reported its preliminary results for the 12 month period to 31 December 2013. There has been a significant increase in sales of Revolymer’s proprietary nicotine gum (net sales of £495k, compared to £16k in 2012) and overall revenue for the period was up significantly at £528k (2012: £176k.) The funds available were £17.7m (2012: £21.9m), continuing to provide a significant funded “runway” to enable management to deliver the Group’s business plan. Net cash outflow from operating activities was flat year-on-year at £4.3m (2012: £4.3m) The Company reported a gross loss for the period but this also improved at £343k (2012: gross loss £606k). Across Revolymer’s broad portfolio of partnered development projects, commercialisation discussions have continued throughout the period. Although there can be no assurance, at least one such transaction is targeted to be announced in 2014. The Group filed for marketing authorisation in Europe of its nicotine gum products by submitting an application to the Medicines and Healthcare products Regulatory Agency (MHRA) in November. Revolymer has already established a supply and distribution agreement for its nicotine gum in Poland (as well as Hungary and the Czech and Slovak Republics), and aims to conclude commercialisation deals in other European countries in due course (subject to regulatory approval). Plans are also being progressed to secure US distribution deals and in parallel to apply for marketing authorisation with the Food and Drug Administration (FDA), upon which any such deals would be conditional.

Safestay (TBC/TBC)

Safestay, the hostel developer, recently announced its intention to float on AIM. The Safestay Business was set up in 2011 to develop a new brand of contemporary hostel in the UK and Europe, and opened its flagship hostel in Elephant & Castle, London, in July 2012. The Safestay Hostel has 413 beds in 74 separate rooms which range from 2 bed private rooms to 8 bed dormitories. The Directors intend to acquire and develop further hostels in due course.The Company’s main country of operation is the UK.

TyraTech (LON:TYR 11.875p/£24m)

TyraTech, a life sciences company focused on nature-derived insect and parasite control products, has confirmed, following its 14 January 2014 announcement, that its breakthrough head lice treatment product, Vamousse™, is now available in more than 4,000 Walmart stores in the USA. The management is confident that this roll-out will greatly raise the profile of Vamousse™ and is currently on schedule both in terms of number of stores and timings of sales.

Westminster Group (LON:WSG 73.25p/£34.87m)

Westminster Group, a supplier of system solutions and products to the security, defence, fire protection and safety markets worldwide, announced that it has secured a new contract for the supply of a high technology vehicle screening system to be used to protect an extensive border security project in Asia. This is valued at approximately $2.6m, the majority of which is expected to be billed within the current financial year. It is to provide specialist vehicle screening equipment which Westminster will install with comprehensive in-country operator training. The system will enable screening of lorries and vehicles crossing a border to detect illegal cargo and contents such as drugs, weapons, explosives, human trafficking and other contraband. Additionally, due to the sophistication of the equipment involved, once delivered there is also potential for ongoing recurring revenue of each installation via multiyear maintenance agreements.

ZincOx (LON:ZOX 11.625p/£16m)

ZincOx, the developer of Asia’s largest zinc recycling project, has announced a proposed fundraising by way of a conditional placing at a price of 10p per share to raise approximately £1m before expenses. The placing price represents a discount of 37.5 per cent to the closing mid-market price on 31 March 2014. There is an intention to raise additional funds by way of an Open Offer to be made to all qualifying shareholders at the placing price. Proceeds of the placing are anticipated to be used for working capital purposes, repairs to the refractory and purchase of equipment to complete the ramp-up of the company’s first recycling plant, KRP.

*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.