Small Cap Wrap: Month: October 2015

AIM Breakfast - Archive

21st October 2015

A* for AB Dynamics and “bingo” for Bango

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

Disclaimer- This document, which does not constitute research, has been issued by Hybridan LLP for information purposes only- please refer to the disclaimer in full below.

7DIG Agreement, ABDP Trading Update, AVCT, BGO, COG Agreement, FITB* Board Changes, GFIN Viewing Targets, LID Half Yearly Report, MDZ* Trading Update, MXO* Update, OBT Proposed Listing, OPTI* New Strains, PEG* Contract Win, NIPT Clinical Laboratory, PLI* Orphan Drug Designation Granted, VENN* Appointment of Director and Completion of Acquisition

7digital Group (LON:7DIG 10.18p/£11.29m)

7digital, the digital music and radio services company, announced that it has been chosen as a supplier to Electric Jukebox Company and its unique plug and play music streaming experience for the home, which was launched this week at BAFTA in London. The Company is licensing its platform for the Electric Jukebox product in both the UK and US; the agreement will provide access to technology, infrastructure and music catalogue. 7digital will also curate playlists with expertise from the Company’s content production division. Electric Jukebox offers all the benefits of a premium music streaming subscription service in a box but without the need for a smartphone, a PC, or a monthly subscription – representing the first “Internet of Things” music appliance for the home. Independent YouGov research published this week shows that the vast majority of consumers have struggled with the complexities of digital music, with the most common ways of playing music identified as radio (52 percent) and hi-fi/CD (42 percent). Streaming hardware is only used by 6 percent of consumers in the USA and UK.

AB Dynamics (LON:ABDP 279.00p/£48.02m)

AB Dynamics, the designer, manufacturer and supplier of advanced testing systems and measurement products to the global automotive industry, announced a trading update in advance of its final results for the twelve months ended 31 August 2015. The Group has performed well in 2015 and the Board expects to report revenues and profits materially ahead of market forecasts. As announced on 12 February 2015, ABD had conditionally been awarded a grant of up to £2.3m from the UK Government’s Regional Growth Fund. Having now received the Final Grant Offer Letter, which contains revised requirements from the earlier draft conditional offer letter, the Board has determined that these additional requirements are over burdensome and it would not be in the best interests of the Group and its shareholders to proceed with the grant and accordingly the offer has been declined. As a result of the robust financial position and sound operational performance of the business, the Board is confident that, notwithstanding declining the grant, the Group has sufficient funds to facilitate its expansion plans for meeting increasing global demand which include building the new facility.

Avacta Group (LON:AVCT 1.37p/£93.00m)

Avacta Group, the developer of Affimer® biotherapeutics and research reagents, announced that data from a collaboration with researchers at the University of Copenhagen have shown that targeted Affimer expression using genetically engineered barley can improve disease resistance in one of the world’s major cereal crops. The research was supported through Danish federal funding with Avacta providing access to the Affimer technology and know-how. A study investigating whether Affimer technology could be used to block the mechanism by which powdery mildew infects the barley plant and overcomes its immune system was undertaken by a research group led by Professor Hans Thordal-Christensen from the Department of Plant and Soil Sciences at the University of Copenhagen. The research showed that when certain specific Affimer constructs were expressed by the plant, a 40 percent reduction in the susceptibility of barley to powdery mildew was observed. These promising early results indicate the potential use of Affimer technology to treat and diagnose a wide range of diseases in plants. Barley has many uses in the human food chain and animal fodder, as well as being a major ingredient in beer and whisky production. One of the most devastating diseases of barley is powdery mildew which can typically reduce yields by 15 percent and has a significant effect on costs downstream in food and drink production. Plants rely on an innate immunity to protect themselves against such diseases but the pathogens evolve to overcome the plant’s immune system and can mutate to develop resistance to fungicides. Genetic modifications can impart disease resistance and reduce the use of fungicides, but often this approach has the side effect of reducing yield itself. There is therefore a high unmet need to develop treatments that improve disease resistance in plants.

Bango (LON:BGO 84.00p/£44.74m)

Bango, the mobile payments company, announced End User Spend in emerging markets ahead of Bango’s prior expectations. Entering Q4 2015, End User Spend through the Bango platform has grown to an annualised rate exceeding £60m, 98 percent higher than the equivalent rate 12 months earlier. During 2014 and 2015, Bango launched a number of direct carrier billing connections in emerging markets for app store partners, including for the BlackBerry World and BlackBerry Messenger stores, and for the Windows Phone Store. With further billing routes activated in 2015, including the launch of direct carrier billing via Google Play in Mexico and South Africa, these new emerging markets are now materially contributing to End User Spend on app store content via the Bango platform and will be a greater contributor to 2016 performance than previously expected.

Cambridge Cognition Holdings (LON:COG 89.94p/£16.13m)

Cambridge Cognition Holdings, which specialises in computerised neuropsychological tests including those enabling the early detection of dementia, announced two new licence agreements which extend the Company’s testing capabilities into new areas of research, enabling assessment of ‘Hot’ cognition – mental processes that are influenced by emotion and social interaction – to be performed reliably and routinely for the first time. ‘Hot’ cognition is a key feature of neuropsychiatric and neurodegenerative conditions where emotionally or socially-charged information is difficult for the individual to process resulting in problems in real-world situations. The ability to assess these factors using proprietary Cambridge Cognition technology will lead to objective ways of detecting early risk factors, measuring both relapse and improvement, and the potential to enable timely treatment and intervention for patients. The licensed software will be developed for inclusion in the Company’s cloud-based CANTAB™ Connect portfolio with launch expected in 2016. These products will enhance the research of neuropsychiatric conditions such as dementia, schizophrenia, autism and depression and will create new revenue streams through product sales in the academic research market and through partnering opportunities with pharmaceutical and healthcare companies.

Fitbug (LON:FITB 1.51p/£4.44m)*

Fitbug Holdings, the provider of online personal health and wellbeing services, announced that Ann Jones, Group Sales Director, will be leaving by mutual consent to pursue new business opportunities. Additionally, the Company is bolstering its team in several areas and has recently appointed a new Digital Marketing Manager to support the roll out of Kiqplan version 2 (‘Kiqplan V2’), the first digital fitness coaching App of its kind, which is on track to be launched by the end of November 2015. The Company is focused on ensuring that it has the right resources to successfully penetrate the digital health market with this unique App, which includes a range of tailored 12-week coaching plans to guide and motivate users to achieve more on their fitness journey.

Gfinity (LON:GFIN 24.65p/£19.46m)

Gfinity, a leading eSports business, announced that it has recorded 58.5 million online views for The 2015 Gfinity Championship series, exceeding its original target of 50 million. The inaugural 2015 series comprised 23 weekly tournaments, held in the six month period from March to September 2015, primarily at the Gfinity Arena in Fulham, London and covered five major eSports titles. These tournaments were streamed live on internet TV channels including Twitch, Gfinity.net and MLG.tv. The events, which were broadcast in 10 languages, were viewed in over 25 countries with viewers collectively watching in excess of 15.8 million hours of live content. The series finale was the Gfinity Champion of Champions event, held at EGX, (the UK’s largest gaming festival held at the NEC in Birmingham) over the last weekend of September. This Champion of Champions event alone drew 8.75 million online views.

LiDCO Group (LON:LID 11.00p/£21.36m)

LiDCO, the hemodynamic monitoring Company, announced its unaudited Interim Results for the six months ended 31 July 2015. Financial Highlights showed total revenue of £3.60m (2014: £3.71m) in line with the trading update of 2 September 2015. Surgery disposables (excluding 3rd party products) revenue was up 2 percent to £1.48m (2014: £1.45m) with EU & ROW distributor revenues up 8 percent to £0.55m (2014: £0.51m), but a loss before tax £0.53m (2014: £0.19m) after planned increase in sales infrastructure costs. Cash at period end was £1.39m (31 Jan 2015: £1.51m). Operational Highlights showed a five year agreement signed with US group purchasing organisation MedAssets working on behalf of a large US healthcare group comprising 38 hospitals across 8 states. 65 monitors were sold/placed in the period (2014: 128); 29 surgical monitors (2014: 33) installed in the UK. Disposable unit sales were 24,970 (2014: 25,721) with key surgical disposables units up 1 percent during the period.

MediaZest (LON:MDZ 0.188p/£1.87m)*

MediaZest, the creative audio-visual company, provided an update in respect of ongoing and new business confirmed for delivery during the financial year 2015/16. This follows the update provided with the Annual Accounts for the Financial Year ended 31 March 2015 which was announced on 24 August 2015. Since then, the Group has secured material additional business from both Hyundai and Rockar with particular reference to two significant new projects. Work also continues with Adidas (with projects won for two additional UK stores and another in mainland Europe) and the Group continues to complete new deployments for the Post Office Limited. New clients gained in this period include Diesel, Molson Coors and the John Lewis Partnership. Existing clients such as Belstaff, HMV, Kuoni, TM Lewin and Samsung continue to help the Group to generate improved recurring revenue streams. The combined total revenue value of these projects is approximately £1m almost all of which is expected to have been delivered before the end of this calendar year. They expect to undertake further projects moving forward with the majority of these clients and therefore to improve the sustainability and quality of the Group’s future revenues. It should be further noted that two of these projects include the deployment of the MediaZest Retail Analytics platform.

MX Oil (LON:MXO 2.30p/£8.87m)*

MX Oil, the oil and gas investment company, announced the appointment of Mr Nigel Bruce McKim as Non-executive Director with immediate effect. Nigel will replace Patrick Mendoza, who is stepping down from the Board to pursue other business interests. Nigel, aged 53, has 28 years of experience in field development planning and production in the oil and gas industry. His most recent role was Chief Operations Officer for Nobel Upstream Group where he was responsible for the company’s technical capabilities and participated in the building of a portfolio of assets in Texas, the UK and Azerbaijan. The company also provided a corporate update, in addition to its Bid Round 1 application, the Company, together with Geo Estratos, has been in active discussions with Pemex with regard to their search for JV partners for assets in Mexico. These discussions are progressing well and the Board expects to be in a position to update the market on these discussions in the coming months. As previously announced, the Company also expects to hear the result of its pre-qualification application for Bid Round 1 in November 2015, followed by licence awards in December 2015. This coincides with the expected operational milestones regarding drilling at the Aje Field offshore Nigeria and the Company will keep the market appraised of developments. The company also provided an update on offshore Nigeria, the Aje-5 production well located on the OML 113 licence, offshore Nigeria, has been successfully completed and the reservoir has been perforated in the Upper and Lower Cenomanian Oil bearing zones. The subsea tree has been installed and the well has been suspended ready for connection to the oil production facilities prior to commencement of production. The Saipem Scarabeo three semi-submersible drilling rig has been moved to re-enter the existing Aje-4 well for completion as a second Cenomanian production well. All key equipment related to the Aje oilfield development has now been delivered to Lagos, including the floating production storage and offloading vessel (FPSO) moorings and turret buoy, the production manifold, the umbilical termination assembly, and the umbilicals and flowlines.

Obtala Resources (LON:OBT 7.75p/£20.40m)

Obtala Resources, the vertically integrated agribusiness, timber and retail company, provided the following update with respect to its timber assets in Mozambique. The Board of Obtala has commenced a process to list the forestry division in a separately quoted company to be listed on the AIM market during the first quarter of 2016. The Board has reviewed a number of opportunities for the forestry division and believe it is in the best interest of Obtala shareholders to “spin out” the forestry division in order for the significant inherent value to be recognised and to attract investors focused on the forestry sector. The Company has commissioned Honour Capital, a specialist forestry advisory and management Company, to undertake a valuation review of the new blocks. Honour Capital prepared a valuation report in June 2014 which attributed a NPV to the timber business of $161m at a 12 percent discount based on a 10 year cash flow model. The 2014 valuation was based on 11 concessions with a total land area of 279,965 hectares. The Company is, subject to local Government approval, completing the acquisition of 50 year leases for two new timber concessions totalling 35,000 hectares in Mozambique to bring the total forestry area to 314,965 hectares. The new blocks are situated adjacent to their main operational centre and, together with the existing holdings, provide a critical mass in terms of approved annual permitted cut.

OptiBiotix Health (LON:OPTI 54.53p/£40.19m)*

OptiBiotix Health, a life sciences business developing compounds to tackle obesity, high cholesterol and diabetes, announced the registration of five new microbial strains under the Budapest Treaty. This increases the number of strain registrations from three to eight. The five strains have been identified as having the potential to generate novel oligosaccharides (carbohydrates that consist of a small number of sugars). As announced previously, oligosaccharides from strains showing commercial potential are being scaled up, purified, and tested for their organoleptic (taste, texture, aftertaste) and microbiome modulating properties. This work is the final stages of the laboratory programme which will enable OptiBiotix to progress its pipeline of novel oligosaccharides to testing in human studies.

Petards Group (LON:PEG 13.00p/£4.60m)*

Petards, the developer of advanced security and surveillance systems, announced that it has been awarded a further contract to supply Bombardier Transportation with Petards’ eyeTrain systems. The new contract, which is worth in excess of £1m, is for the supply of eyeTrain saloon and Driver Only Operation (DOO) systems which will be fitted to new four-car ELECTROSTARElectrical Multiple Unit (EMU) trains to be built by Bombardier. Petards’ deliveries are anticipated to commence during 2016 and to be substantially completed by the end of that year.

Premaitha Health (LON:NIPT 14.40p/£32.84m)

Premaitha Health, developer of the IONA® test, the first CE-marked non-invasive prenatal screening test (NIPT) has expanded its in-house NIPT screening service by opening a dedicated laboratory which triples clinical capacity in response to demand for the IONA® test from clinicians. The new Care Quality Commission (CQC)-accredited, clinical laboratory which is based at Premaitha’s headquarters on Manchester Science Park, will enable Premaitha to dramatically increase throughput, of the maternal blood samples analysed each month using the IONA® test. The IONA® test estimates the risk of a foetus being affected by Down’s syndrome and other serious genetic conditions such as Patau’s syndrome and Edwards’ syndrome by analysing cell-free DNA from a sample of maternal blood. The test is more sensitive and specific than the current combined test available and provides a more accurate and reliable screening result within three to five days, compared to the lead time of up to 14 days offered by US and China-based NIPT service laboratories. Premaitha began offering an NIPT clinical laboratory service on a smaller scale in July 2015 to allow new customers to provide pregnant women with access to the IONA® test as soon as possible, during the set-up of their own lab or while they grow their NIPT volumes. The service also provides an important back-up option during busy periods; ensuring results are delivered to healthcare professionals on-time and from a regulated and trusted clinical laboratory. Since initiating the in-house service, the Company has seen demand for the IONA® test increase significantly with service laboratory customers from across the UK and internationally.

ProMetic Life Sciences (TSX:PLI CAD1.93/CAD1,121.63m)*

ProMetic Life Sciences announced that an orphan drug designation status has been granted for its lead drug candidate, PBI-4050, for the treatment of idiopathic pulmonary fibrosis (IPF), by the European Commission. ProMetic is currently investigating the safety, tolerability and effects of PBI-4050 on pulmonary function, disease progression and inflammatory/fibrotic biomarkers in a Canadian open-label Phase II study in 40 patients suffering from IPF. ProMetic also expects to file an IND with the FDA during the first quarter of 2016 for a multi-center, double-blind, placebo-controlled pivotal study with IPF patients currently on pirfenidone or nintedanib randomised to receive either PBI-4050 or a placebo. In gold standard animal models proven to emulate pulmonary fibrosis in humans, PBI-4050 performed favourably compared to recently approved drugs to treat this condition. PBI-4050 significantly reduced the tissue scarring in the lungs observed in non-treated animals, indicating the potential for clinically significant improvement and stabilisation of lung function in patients with IPF. Moreover, the combination of PBI-4050 and another approved drug generated a further reduction in fibrotic biomarkers in this model, suggesting that a synergistic clinical benefit may be found. European Orphan Drug Designation is granted to novel drugs or biologics that treat a rare disease or condition affecting fewer than 250,000 patients in the European Union. The designation provides the drug developer with a ten year period of marketing exclusivity upon marketing approval for the designated indication, as well as reduced fees for regulatory activities, the ability to apply for marketing authorisation centrally in the European Union and protocol assistance, a form of scientific advice specifically for orphan medicines.

Venn Life Sciences (LON:VENN 23.60p/£13.09m)*

Venn Life Sciences, a growing Clinical Research Organisation providing clinical trial management and resourcing solutions to pharmaceutical, biotechnology and medical device clients, announced that following the completion of the acquisition of Kinesis Pharma B.V., Mr Kees Groen, has been appointed as an Executive Director of Venn with immediate effect. Mr Groen, aged 54, is a founder and managing director of Kinesis, and is a regulatory expert with significant experience in pharmaceutical research and development, both with regulatory authorities and in industry. He has been involved on a management and operational level in the fields of preclinical and clinical development, regulatory affairs and licensing for 25 years. The company also announced the completion of the acquisition of Kinesis Pharma BV.

 

*A corporate client of Hybridan LLP

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

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

5th October 2015

Conviviality across the Universe, Pivotal moment for ProMetic, OptiBiotix going up scale

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

Disclaimer- This document, which does not constitute research, has been issued by Hybridan LLP for information purposes only- please refer to the disclaimer in full below.

7DIG Half Yearly Reports, AVG Final Results, BMR Potential, COS Agreement, IKA Patent grant, MGR Half Yearly Report, MXO* Half Yearly Report and Update, OBT Half Yearly Report, OPTI* Completion of Study, ORM Half Yearly Report, PLI* Meeting with US FDA, SVR Interim Results, VLG Interim Results, UNG New Contract Win

7digital Group (LON:7DIG 10.10p/£11.04m)

7digital Group, the digital music and radio services company, announced its results for the half year ended 30 June 2015. High margin monthly recurring licensing revenues from access to the Company’s streaming technology and music catalogue are replacing low margin revenues from downloaded content. As the online music industry moves into a “Third Age”, an increasing number of companies are ready to enter the digital music and radio marketplace, creating a strong demand for the Company’s services. Operational highlights included 15 new customer contracts signed producing set-up revenues of £0.9m, including Sainsbury’s, Mariposa, Jazz FM, NEC, Panasonic, and OpenLIVE. There were 13 new customers using the platform, generating annualised MRR (monthly recurring revenues) of £1.6m during the lifetime of their contracts, including ROK Mobile, Onkyo, Spanish Broadcasting Systems, and new Guvera territories. There was continued transition from low margin download business to high margin B2B streaming services which raises the gross margin to 64 percent (2014: 49 percent). Finally, new partnership agreements with Imagination for FlowRadio, and product innovation with Google CastTM were also announced. Financial highlights included a turnover of £5.2m (2014: £5.1m), with high-margin licensing revenues up by 26 percent to £3.1m and total annualised MRR at half year end up 55 percent at £5.2m (December 2014: £3.3m). Gross profit was up by 34 percent to £3.3m (2014: £2.5m) and adjusted LBITDA reduced by 27 percent to £1.3m (2014: £1.8m), which including the mark-to-market loss on the sale of the Audioboom stake of £4.8m, a statutory loss of £6.6m (2014: £2.8m) and cash at 30 June 2015 of £2.5m (December 2014: £5.3m).

Avingtrans (LON:AVG 112.00p/£31.45m)

Avingtrans, which designs, manufactures and supplies critical components, modules and associated services to the aerospace, energy and medical sectors, announced its preliminary results for the twelve months ended 31 May 2015. Financial Highlights showed revenue decreased by 4 percent to £57.8m (2014: £60.3m), allowing adjusted EBITDA to decrease by 6 percent to £5.3m (2014: £5.6m), which meant adjusted Profit Before Tax decreased by 16 percent, to £2.9m (2014: £3.5m). Cash generated from operating activities remained at £1.6m (2014: £1.6m), with net debt increasing to £5.9m (31 May 2014: £3.6m). Gearing was 17 percent (2016: 11 percent) and there was an increase in final dividend of 2.0 pence per share, and a full year total 3.0 pence (2014: Final 1.8 pence per share, Total 2.7 pence), an increase of 11 percent. Operational highlights showed Aerospace revenues restricted, with a decrease of 7 percent versus 2014, largely due to first half customer destocking, and the second half stabilised. There were also new contract wins with Airbus/PFW (£25m/10yr) and Sonaca (£5m/5yr), with the acquisition of RMDG assets for £1.2m from Tricorn plc which boosted market share. Energy and Medical division revenues flat, constrained by low oil price, and the EBIT recovered in H2. The company announced a £47m, 10-year contract win with Sellafield Ltd and EBIT losses significantly reduced, with a second half profit demonstrating progress.

BMR Mining (LON:BMR 5.30p/£6.81m)

BMR Mining, the Zambian-focused mineral processing business, provided an update on the WKS from which BMR now hopes to generate revenues. BMR’s assets at Kabwe, Zambia, include approximately 1.1 million tonnes of WKS, as surveyed on a JORC compliant basis by Mineral Consultant Corporation The WKS was written down by 90 percent to £0.2m in the accounts for the year ended 30 June 2014 due to it being brittle and hard, and of too low a grade and too difficult to process on a commercial basis. However, BMR has now identified, from studies undertaken by the Building Research Establishment UK, that the WKS, being a ferro-silicate zinc slag (smelter slag), could be applied in the construction of building blocks. As part of its analysis and in conjunction with a local block making company, BMR has manufactured a test batch of concrete blocks, using an 80:20 ratio of WKS to building sand, which were then subjected to testing. Importantly, there was no evidence of leaching of lead or zinc. BMR has therefore instructed its Environmental Consultants to prepare a submission, including BMR’s test results, to seek approval from the Zambian Environmental Management Agency (ZEMA) to sell the WKS for incorporation in block and concrete making. Approval will be sought in the form of an Environmental Project Brief which involves a separate and less onerous application process than an Environmental Impact Study. The Directors expect that this submission will be made by early November with approval being granted by the end of the calendar year. In the event that ZEMA approval is given, BMR intends to commence local sales of WKS, which would involve limited costs and could realise modest but meaningful revenues over several years. Disposing of the WKS in this manner would also provide an elegant solution to environmental issues associated therewith.

Collagen Solutions (LON:COS 12.15p/£20.55m)

Collagen Solutions, the developer and manufacturer of medical grade collagen components for use in regenerative medicine, medical devices and in-vitro diagnostics, announced that its subsidiary Collagen Solutions Inc. has signed a supply agreement with Turkish medical device company Yücel Medikal Ltd. This supply agreement covers the provision of collagen materials and support services for use in Yucel’s product Lyocoll which is currently on sale in Turkey. Lyocoll is a local haemostatic used in all types of surgery to control capillary and venous bleeding as well as oozing where the conventional methods are impractical and ineffective.

Ilika (LON:IKA 69.50p/£45.52m)

Ilika, the accelerated materials innovation company, announced it has received a Notice of Grant in China for its patent application supporting solid-state batteries jointly filed with Toyota Motor Company on 21 July 2011. This Notice of Grant in China follows the successful British grant in May 2014 and the notice of Intention to Grant in Europe in March 2015 as a member of the patent families that cover Ilika’s proprietary vapour deposition processes used in producing solid-state batteries directly from the basic elements. The application went to formal grant in Europe in July 2015 and Ilika has now received a Notice of Grant in China. This particular joint filing resulted from collaborative work undertaken by Ilika and Toyota, which commenced in 2008. This patent family is one of the two earliest filings of a growing portfolio of intellectual property exemplifying Ilika’s unique approach to solid-state battery production using evaporation sources. The more recent applications in the portfolio contain both jointly-owned and solely owned IP. In January 2014, three international patent applications from the portfolio were filed under the Patent Co-operation Treaty based upon earlier British priority applications. These were published in July 2015 and are progressing through the international patent examination process. The scalable stacked cell architecture which Ilika can produce, enables the simple fabrication of cells over a wide range of sizes. Ilika intends initially to produce micro-battery prototypes designed for powering wireless sensors, commonly referred to as the “Internet of Things”, which is a rapidly growing segment expected to create an addressable market for micro-batteries in excess of £1bn by 2017.

Miton Group (LON:MGR 26.90p/£45.72m)

Miton Group, the fund management group, announced its half year results for the six months ended 30 June 2015. Financial highlights showed renewed momentum with net inflows in Q2 following outflows in Q1. Over six months to 30 June, AUM increased from £2,050m to £2,225m, with average AUM over the six month period at £2,140m (H1 2014 – £2,953m). This reduction included the impact of the disposal of the Liverpool business. Net revenue margin increased to 66.6bp (H1 2014 – 65.0bp) and H1 costs maintained at £5.7m (H1 2014 – £5.8m). Adjusted profit before tax reduced to £0.8m (H1 2014 £3.4m) and total cash balances as at 30 June 2015 were £13.6m (31 December 2014: £15.2m) after payment of year-end bonuses and the dividend. Trading is currently in line with the Board’s expectations for the year as a whole. The positive net flows experienced in Q2 have continued and AUM rose to £2,364m as at 31 August 2015. CF Miton UK Value Opportunities fund increased AUM to £498m as at 31 August 2015 (30 June 2015: £378m; 30 June 2014: £86m). Miton UK MicroCap Trust plc was launched in April raising £50m. Since launch a further £5m has been raised and following appointment of Carlos Moreno in August, the company intend to launch a new European equities fund in Q4.

MX Oil (LON:MXO 2.38p/£9.22m)*

MX Oil, the oil and gas investing company focused on the re-opening Mexican energy sector, announced its unaudited half-yearly results for the six month period ended 30 June 2015. Highlights for H1 2015 showed that significant progress had been made regarding the onshore conventional field bidding round in Mexico, with access granted to the data room in June 2015 – where analysis and due diligence are on-going, ahead of the anticipated award of concessions in December 2015. The terms of the joint venture with local partner in Mexico, Geo Estratos have been amended, increasing MX Oil’s interest in any concessions awarded to 55 percent and removing the obligation to fund Geo’s share of costs post contract award in return for limiting Geo’s exclusivity to a minimum of two concessions. Post-Period Highlights showed the company investing in a 5 percent indirect, non-operating interest in Aje – a substantial late stage development project offshore Nigeria with proven, flow tested discoveries and exploration potential. Commencement of multi-phase development project is underway at Aje, part of the OML 113 licence – initial two well programme underway targeting first oil by December 2015 and peak production of 11,000 bopd. Multiple exploration prospects have also been identified on Nigerian licence which lies adjacent to the 774mmboe (P50 gross recoverable resources) Ogo structure on block OPL 310. The company also provided an update on the progress it is making in Mexico together with its partner Geo Estratos with regards to the on-going Bid Round 1 Licensing round and its efforts to secure onshore conventional concessions in the re-opening Mexican energy sector. The Company has submitted its pre-qualification filing with the National Hydrocarbons Commission regarding its participation in the third phase of Bid Round 1. In this third phase, a total of 25 Land Contract Areas in the states of Chiapas, Nuevo Leon, Tabasco, Tamaulipas and Veracruz will be awarded to companies that satisfy the pre-qualification requirements and win the subsequent tender process. In tandem with this, MX Oil has completed its due diligence on five Land Contract areas and following this confirms its intention to bid for all five of the concessions. It is expected concessions will be awarded in December 2015.

Obtala Resources (LON:OBT 6.00p/£15.80m)

Obtala Resources, the African-focused, vertically integrated agribusiness, timber and retail company, announced interim results for the six months ended 30 June 2015. Financial highlights showed sales revenue increasing to £2.3m (2014: £1.0m), with net profit of £3.02m (2014: loss £0.2m) including independent valuation of new land assets and net assets standing at £95.8m (2014: £93.5m) and cash and equivalents broadly the same at £1.4m. Operational highlights showed the Agribusiness developing fresh produce lines, with Global GAP certification awarded and work continuing on gaining BRC Global Standards. The Timber business showed a further 35,000 hectares under application, now supplying cut timber and the development of higher margin product lines. The retail side revealed that six branches are now open, with continued focus on operational performance improvement, cost control and sourcing.

OptiBiotix Health (LON:OPTI 44.22p/£32.98m)*

OptiBiotix Health, a life sciences business developing compounds to tackle obesity, high cholesterol and diabetes, announced it has completed testing and primary data analysis on its capsular food supplement to reduce cholesterol, and commenced pilot manufacturing studies. The aim of the human study was to establish safety and compliance, and to assess the extent of the lowering potential of its product in this group of volunteers. Sample testing and primary data analysis has now been completed and in accordance with the option agreement announced in June 2015, the results are being shared with a multinational consumer goods company. The terms of the option agreement are bound by confidentiality and no further details on the agreement or human studies can be disclosed at this time. The company also announces it has commenced pilot manufacturing studies to define the scale up requirements to take the strain from laboratory to pilot scale manufacture.

Ormonde Mining (LON:ORM 1.60p/£10.40m)

Ormonde Mining, the development and exploration company operating in Spain, announced its unaudited interim results for the six months ended 30 June 2015. Highlights showed that the Mining Concession was received and the critical permitting steps for Barruecopardo Project development were completed late in 2014. A $99.7m funding package was successfully completed for the development of Barruecopardo, with Oaktree Capital Management, comprising a well balanced mix of equity and debt. Moreover, commencement of the development stage of the Barruecopardo Project, with tender documents for the supply of the major items of the processing plant were issued and final engineering design work for the rest of the plant is underway. Ormonde reports a profit of €2.56m for the 6 months to 30 June 2015 (Loss of €1.12m for the 6 months to 30 June 2014) which includes a profit of €3.40m from the part disposal of its interest in Saloro as part of the Financing.

ProMetic Life Sciences (TSX:PLI CAD1.88/CAD1,092.29m)*

ProMetic Life Sciences announced it had a successful Pre-Investigational New Drug meeting with the US Food and Drug Administration (FDA) for its orally active anti-fibrotic lead drug candidate, PBI-4050. The meeting with the FDA focused on ProMetic’s proposed clinical development program for PBI-4050 in patients with IPF, and particularly on an optimal design for the first pivotal clinical trial that will incorporate the current standards of care for IPF in the US. The two drugs commercially available to treat IPF have been shown in clinical trials to slow the progression of the disease, but not to reverse it. Treatment of this devastating condition therefore remains an urgent medical need, and IPF patients could potentially benefit from PBI-4050, either alone or in combination with current therapies. It is notable that in the gold standard preclinical model used to emulate pulmonary fibrosis in humans, PBI-4050 performed favourably compared to these recently approved drugs, and demonstrated synergistic effects when combined with pirfenidone (Esbriet®). The multi-centre pivotal study will be a double-blind, placebo-controlled design with IPF patients on pirfenidone or nintedanib randomised to receive either PBI-4050 or a placebo. The study will be powered to demonstrate a statistically significant difference in forced vital capacity changes between the PBI-4050 combination therapies and the current standards of care. The design of the definitive protocol is currently being completed by consultant experts in this field, and ProMetic expects to file its IND with the FDA during the first quarter of 2016.

ServicePower Technologies (LON:SVR 4.88p/£11.09m)

ServicePower, a market leader for mobile workforce management software solutions, announced its unaudited interim results for the six months ended 30 June 2015. Financial highlights showed that trading for the half-year was in line with management expectations and ahead of the same period last year. Total revenues were up 13 percent to £6.94m (H1 2014: £6.16m), with recurring revenues accounting for 81.5 percent and SaaS now deployed to 71 percent of their customers. Gross profit was up 26 percent to £3.4m (H1 2014: £2.7m) and LBITDA reduced by 71 percent to £0.2m, including £0.1m in extraordinary expenses and £0.2m in IT cloud transition costs (H1 2014 LBITDA: £0.7m). Loss before tax reduced by 33 percent to £0.6m (H1 2014: £0.9m), including the accrued interest that was converted on 30 June 2015 and net cash at 30 June 2015 was £0.7m, prior to the receipt of the £0.75m short term loan (as announced on 30 June 2015) (30 June 2014 Net Cash: £0.6m). Operational highlights showed that the momentum gained in 2014, 11 deals were signed during the period with new and existing customers, with a strong pipeline in place for H2 2015 and 2016. The Company entered into a number of strategic partnerships in order to broaden its functional capabilities and cloud-based offerings.

Venture Life Group (LON:VLG 81.60p/£28.07m)

Venture Life Group, the international consumer products group addressing the self-care needs of the ageing population, presented its unaudited interim results for the six months ended 30 June 2015. Financial highlights showed revenues increased to £4.4m (H1 2014: £3.1m), allowing for gross profit to increase to £1.5m (H1 2014: £1.2m), but a loss before tax, amortisation and exceptional costs increasing to £0.42m (H1 2014: loss of £0.23m). Cash at the period end was £3.3m (31 December 2014: £4.9m). Commercial highlights revealed a 30 year exclusive distribution agreement signed with the Chinese retailer Gialen Group Co. Ltd to sell a range of skin-care products in China under Venture Life’s Lubatti brand with first order and payment equivalent to €0.5m (50 percent of the first order) received. Moreover, exclusive distribution agreements signed for Lissio HA in Slovakia and Original Bioscalin in Taiwan, and a ten year agreement signed with a Swiss healthcare company to formulate and manufacture an onychomycosis product. Post-period end highlights showed four long term exclusive distribution agreements signed across four brands, including in India for Original Bioscalin and the first consignment of Lubatti products ready to ship to China, with second order received and retail launch planned by Gialen for Q4 2015.

Universe Group (LON:UNG 10.6p/£24.44m)

Universe, a leading developer and supplier of point of sale, payment and on-line loyalty systems announced that its subsidiary HTEC, has signed a major contract with Conviviality Retail Plc, the UK’s largest franchised off-licence and convenience store chain with the Bargain Booze fascia. Under this contract, revenues over the next three years are expected to amount to approximately £4.3m. The contract, secured after an international competitive tender process, is for the supply and maintenance of a comprehensive, integrated suite of HTEC’s proprietary next generation point of sale, back office, head office and payment systems together with related on-going customer support. The systems will be installed across Conviviality’s entire estate of over 650 off-licence and convenience stores, with implementation expected to begin no later than November 2015. As well as facilitating and managing sales processing and secure in-store payments, HTEC’s products will also manage online ordering and deliver an extensive reporting suite.

 

*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.