Small Cap Wrap: Month: November 2011

AIM Breakfast - Archive

29 November 2011

This week: Another dimension of DDD Group, new design for i-design and a good diagnosis for Omega.

Another difficult week in the financial markets with the FTSE 100 dropping some 350 points to close the week at 5,160, and the AIM All Share dropping 50 points to 675. Troubled times had in part been due to worries of around a recession in Europe, with the UK in particular potentially facing a second recession (according to the OECD) and an announcement that public sector borrowing in the UK is expected to rise by approximately £5bn this year, £19bn next year and £30bn in the year after. The week ahead sees manufacturing PMI data, the Bank of England Financial Stability Report and further discussions around expanding the Eurozone bailout fund.

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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.

The Small Cap Wrap team will be taking a holiday on 27th December and 3rd January, back on the 10th January. See you next week however.

BGO Interim Results, CMH Interim results, CSLT Oval to buy Cosalt, DDD New licensee, EKF FDA CLIA waive, GAL Positive Q3 review, GDP Mining lease issued, GHH Interim Results, IDG  Contract win,  IKA Positive data, IDH Interim results , MSG New Contract, MIRL Final payment to Rio Tinto, ODX Interim Results, OMP Contract extension and technology purchase, PTS Acquisition offer, RENE Clinical trial update, SND Preliminary results, SER Drilling update, SRT Interim results, SPHR formal ISO certification, SUMM drug granted orphan status, SNG Positive results in viral pneumonia study,  TGL Exploration and Drill Update, TRT Otraco finished validation, and VAL Sales and Reach Expansion.

Bango (BGO 57.5p/£21.93m)
AIM listed mobile technology developer announced results for the 6 months ended 30 September 2011 in which it saw a decline in revenues by 18.3 per cent to £8.66m (2010: £10.6m), though a narrower loss of £0.32m (2010: £0.46m) resulted, helped by higher finance income. The Company’s relationship with Blackberry continues to strengthen, with 17 mobile phone operators now connected to the system, and a further 40 are yet to be integrated. With Opera Mobile Store being the latest large app store win for Bango, the Company continues to cultivate its pipeline of opportunities, with a third major App store expected to sign before the end of 2011.

Chamberlin (CMH 113p / £8.82m)
Chamberlin, the specialist castings and engineering group, this week announced its interim results for the six months ended 30 September 2011. Revenues were up 25 per cent. at £23.0m (2010: £18.3m) while underlying profit before tax rose to £797,000 (2010: £163,000). On the back of these results, the Company announced, having returned to dividends at the full year, an interim dividend of 0.1p per share. The chairman reported  that the Company  has continued to make good progress in the first six months of the current financial year and that this has been driven by improving demand in its established customer base, new business initiatives and operational improvements.  While uncertainties have increased due to the wider European and economic picture, at this point in the financial year the Board believes that the Company remains well positioned to meet current market expectations.

Cosalt (CSLT 0.18p / £0.71m)
On 25 November 2011, the Independent Cosalt Directors and the Oval Board announced that they had reached agreement on the terms of a recommended cash offer to be made by Oval for the entire issued and to be issued ordinary share capital of Cosalt, other than an aggregate of 15.08 per cent of the entire existing ordinary share capital of Cosalt beneficially owned by David Ross, at 0.1 pence per Cosalt Share. Oval has already received an irrevocable undertaking from Sovereign Holding, representing approximately 18.37 per cent. of the ordinary share capital . Oval has today posted the document containing the full terms and conditions of the Offer together with the relevant Form of Acceptance to Cosalt Shareholders. The Offer is open for acceptances until 1.00 p.m. on 20 December 2011.

DDD Group (DDD 29.75p/£39.92m)
The AIM listed 3D solutions company announced that it has licensed its TriDef 3D technology platform to Lenovo, the global computer manufacturer. The technology, which converts DVD movies, video and photos from 2D into 3D will be integrated into Lenovo’s 3D IdeaCentre PC to deliver a 3D viewing experience for home computer users using polarized glasses (last year Lenovo used the technology in one of its notebooks). The growth of the relationship with Lenovo is a testament to the confidence the computer manufacturer has in the technology platform in what is a highly dynamic market space. Two weeks ago the Company announced that it had licensed the technology to Top Victory Investments for its AOC 3D monitors- adding to what is a rapidly growing list of manufacturers using the technology.

EKF Diagnostics (EKF 23.25p / £58.41)
EKF, a growing business within the in-vitro diagnostic devices market, this morning provided an update on developments as the Company grows its market share in the US haemoglobin testing market. EKF has now received notification from the US FDA that the application for CLIA waived status in relation to the Stanbio HemoPoint H2 Hemoglobin Measurement System has been accepted, having modified the name to the Alere HemoPoint H2 Hemoglobin Measurement System. This will allow Alere Inc., the exclusive distributor of EKF’s HemoPoint H2 product, to begin sales into the US market. EKF has also received a notice of allowance from the US Patent and Trademark Office in relation to patent rights for the cuvettes that are used with the HemoPoint H2 product. It is expected that a Grant of Patent Rights will be issued shortly.

Galantas Gold Corporation (GAL 4.12p / £ 9.72m)
Galantas Gold, the producing Northern Irish goldminer, announced positive Q3 figures to the three months ended September 30 2011. Production was well above levels achieved during both Q1 and Q3 2010 but below the record quarterly production achieved during the second quarter of 2011. The cash generated from operating activities after changes in non-cash working capital amounted to $1,514,081 for the Q3 2011 compared to $ 338,892 for Q3 2010. Galantas continued to progress its 15,000 metre drilling program during the when 16 drill holes were completed on the Joshua, Kearney and Kerr veins resulting in a total of 33 holes being drilled to the end of September. Channel sampling was also carried out on the Kerr and Joshua vein systems with the focus being mainly on the Joshua vein system. Assay results released to date from both the drilling and channel sampling programme have been encouraging with significant gold intersections being identified.

Goldplat (GDP 11.62p / £19.43)
The AIM quoted gold producer announced that a 21 year Mining Lease for Kilimapesa Gold Mine (Kilimapesa) has been issued by Kenya’s Minister for Environment and Mineral Resource. Kilimapesa is Kenya’s first gold project to receive a Mining Lease since independence in 1963. Exploratory underground development at the mine is progressing well with two auriferous quartz veins being extended on strike to the east.  The diamond drill exploration programme results to date remain encouraging and a further announcement will be made once all results are received.

Gooch & Housego (GHH 369p / £80.63m)
Manufacturer of optical components and systems announced preliminary results for the year ended 30 September 2011. Revenues grew by 37 per cent to £61m (2010: £44.7m) whilst adjusted pre tax profits increased by 78 per cent to £10.8m (2010: £6m). Equally impressive was the reduction in net debt by 65 per cent to £1.8m (2010: £5.2m) on the balance sheet. Interestingly, whilst there has been a good amount of cutback on defence expenditures globally, Gooch has been able to build its share of revenues in this space, partly from the acquisition of EM4 earlier in the year, which now takes revenues from Aerospace and Defence to 25 per cent of overall Company revenues. Other areas of the business, such as industrial, have also improved and have helped drive Gooch ahead in what are clearly thoroughly challenging market conditions, though management appear to be keen to avoid resting on their laurels.

i-design (IDG 59p / £8.32m)
I-design, the leading developer and supplier of ATM and self-service marketing solutions for the banking industry, this week announced that its newly launched next generation software,  joono, had secured its first licence win in Canada. The multi-year agreement has been signed with a large bank in Canada and covers the deployment of joono, across the Bank’s entire ATM estate. The contract was secured via i-design’s channel partner in Canada, IBM Canada Limited, and is i-design’s first win via IBM. The new agreement helps to underpin market forecasts for the current financial year.

Ilika (IKA  48.5p / £17.74m)
Ilika, the advanced cleantech materials discovery Company, has recently delivered a presentation to the 52nd Battery Symposium in Tokyo on its work to develop innovative new materials for lithium-ion batteries for use in next generation electric vehicles and plug-in hybrid electric vehicles. Ilika has been working with Toyota since February 2008 on the development of solid state electrolytes. The data published at this conference has been underpinned by patent applications jointly held by Ilika and Toyota. The use of solid state electrolytes in batteries will help to reduce battery size, allow rapid charge/discharge rates (allowing motorists to recharge their vehicles in a matter of minutes rather than hours) and increase the length of the battery’s life. It is estimated that the market for Lithium-ion batteries could grow from its current level of $8bn per annum to $32bn per annum by 2018 with the fastest growing segment of this market is expected to be for electric and hybrid vehicles.

ImmunoDiagnostic Systems (IDH 491.25p / £133.07m)
ImmunoDiagnostic Systems, a leading producer of diagnostic testing kits and automated systems for the clinical and research markets, this week announced its interim results for the six month period to 30 September 2011. Revenue increased by 21 per cent. to £27.3m (2010: £22.6m) with pre-tax profit up 17 per cent. to £7.7m (2010: £6.6m). The Company moved to a net cash position of £3.3m. The Company reported that the impending introduction of competing automated products has coincided with efforts to contain health budgets, particularly in the US. As a result the Company is beginning to see increasing pricing pressure, particularly on the larger accounts, and some very recent disruption to equipment ordering patterns which are likely to persist in the short term. However despite these short term pressures the Board continues to believe overall prospects are good.

Milestone Group (MSG 0.72p / £2.10m)*
Milestone Group announced that its wholly owned subsidiary, Oil Productions Ltd (Oil) has been contracted by OMD International Ltd to develop and deliver a digital art competition on behalf of Nissan’s luxury brand, Infiniti. The Worldwide digital art competition is being held to celebrate the new state-Of-the-art Infiniti Centre Openings across Europe. Following the successful launch of the Infiniti Centres in Stockport and Leeds in October, the installation will now travel to Luxembourg and Marseille in early 2012 as well as various motor shows in Europe. Oil has been contracted by OMD to develop and deliver the concept, initially in the UK with a view to rolling it out across Europe. Oil produced an iPad based voting and results display system, which allows visitors to the Infiniti Centres to vote on each piece. Oil has also created a series of mini documentaries around each artist, a stand- alone film showcasing each art work and a 15 minute film overview of the digital art story.

Minera IRL (MIRL 68p / £81.32m)
Minera the Latin America gold mining Company announced that it had made the final $2m payment to Rio Tinto, to purchase the Ollachea Gold Project in Peru. The payments totaled $ 6.25m over the last four years. They also announced that contracts have been signed with AMEC and Coffey Mining to complete a Bankable Feasibility Study by the third quarter of 2012. As reported during the third quarter, the Indicated Mineral Resource thus far defined at Ollachea stands at 10.7m tonnes grading 4.0g/t gold containing 1.4m ounces plus an Inferred Mineral Resource of 13.7m tonnes grading 2.8g/t containing 1.2m ounces of gold. The deposit remains open ended along strike in both directions as well as down dip.

Omega Diagnostics Group (ODX 13.75p / £11.72m)
The AIM listed medical diagnostics company announced interim results for the 6 months to 30 September 2011, in which it saw a 67 per cent increase in revenues to £5.53m (2010: £3.3m), though adjusted profit before tax increased only by 6 per cent to £427,000 (£403,000). This was in part due to the costs associated with Omega GmbH. Cash on the balance sheet strengthened to £1.88m (2010: £0.91m). Omega made healthy progress during the period with the IDS-iSYS system, having calibrated a functional IgE assay and demonstrated feasibility for biotinylated liquid allergens for a sample of eight allergens. Further, the Company signed a 10 year exclusive distribution agreement with Toyota Tsusho America Inc. for sales and distribution the Food Detective product into the US and the appointment of a new Group Sales and Marketing Director.

One Media Publishing Group (OMP 3p / £1.30m)*
The PLUS quoted provider of music and video rights to the music industry announced that it has extended its contract to have greater access on more favourable terms for a deal it originally concluded on 5th February 2009. The original deal that was announced for a period of five years has been extended by a further ten years for an additional advance against royalties of £10,000. The music catalogue of over 400 tracks includes performances by The Sex Pistols, Lou Reed, Paul Weller, T. REX, Iggy Pop and other ‘New Wave’ music from the 1970’s that has performed well for One Media digitally.
One Media also announced that it has purchased and configured – in association with the data-centre at Pinewood Studios and SohoNet (its provider of connectivity) – a new digital storage system to house its growing audio library and newly acquired film and visual music documentary content. The investment provides One Media with substantially increased media storage ability, increased media delivery bandwidth, a robust disaster recovery solution and a scalable system to meet future digital storage and delivery requirements.  One Media’s chairman and CEO says that the Company continues to invest in content and now the technology to ensure the company’s ability to deliver what it buys.

Patsystems (PTS 12.5p / £25.55m)
The AIM listed company that delivers tailored solutions to enhance derivatives trading performance and trade processing, became the latest of a number of companies recently that have received offers for takeover, though this time the approach came from ION Trading, the Company’s largest shareholder.  The possible cash offer values Patsystems at 14p per share. This is particularly interesting in light of the recent difficulties faced by the Company’s largest client, MF Global, whose collapse has had widespread repercussions across the financial markets. It estimates profits for the year to be lower by approximately £500,000 and is owed a total of £900,000, which it is continuing to discuss with the administrators. The Company however believes that trading in 2012 will demonstrate a significant improvement on 2011, perhaps in part due to the direct loss of profit from MF Global in 2011, and also perhaps due to the transfer of MF Global’s customers to other clients of the Company.

ReNeuron Group (RENE 5.1p / £31.6m)
ReNeuron, the leading, clinical-stage stem cell business, this week announced its interim results for the six months ended 30 September 2011 alongside an update on progress with the PISCES (Pilot Investigation of Stem cells in Stroke) clinical trial of its ReN001 stem cell therapy for disabled stroke patients. To date five patients have been treated, with the remainder expected to be treated in 2012. No cell-related adverse events have been reported and other safety assessments show no deterioration in the health of any of the patients. During 2012 the Company intends to seek advice and clarification from the UK and other regulatory authorities regarding its clinical development strategy for ReN001, with a view to commencing a Phase II efficacy study in 2013. Losses for the six months were £3.0m (2010: £2.5m) and cash and cash equivalents at 30 September 2011 stood at £6.5m (2010: £3.5m).

Sanderson Group (SND 28.50p / £13m)
Sanderson, the software and IT services business specialising in the multi-channel retail and manufacturing markets in the UK and Ireland, this week announced its preliminary results for the financial year ended 30 September 2011. Revenues fell slightly to £26.42m (2010: £26.99m) but adjusted operating profit increased to £3.30m (2010: £3.09m). The Company declared a proposed final dividend of 0.45p per share (2010: 0.35p) making a total dividend for the year of 0.75p per share (2010: 0.60p). The chairman reported that the Company has continued to trade well across its businesses. Whilst trading has continued to be impacted by the slow pace of recovery in the UK economy and more challenging trading conditions on the high street, the new products and services introduced over the last two years have driven the improvement in the Company’s trading performance.

Sefton Resources (SER 2.42p / £8.49m)
The AIM listed independent oil and gas exploration and production company with interests in California and Kansas provided a drilling update. The drilling of four new wells begun at Tapia Canyon on 16th November and is expected to take approximately five weeks to complete. Oil production in early 2012 is expected to rise by up to 75 percent to an estimated 240 barrels of oil per day, once the new wells are on stream. Vintage Production LLC, an Occidental Petroleum Corporation subsidiary, appears to have successfully drilled two horizontal wells in the adjacent oil field to Sefton’s in Tapia Canyon. Dr. Farouq Ali’s Interim report on the Tapia Canyon steam flood model reinforces earlier findings that Tapia Canyon has the potential to become an up to 1,750 barrels of oil per day operation. Southern Star gas interconnect agreement has been executed. This will connect Sefton’s pipeline system in Kansas to the Interstate Pipeline System and natural gas markets. North and West parts of the LAGGS gas pipeline system in Kansas now certified for operations with the adjacent Vanguard pipeline system are expected to also be operationally certified shortly.

Software Radio Technology (SRT 27.12p / £28.73m)
SRT, the developer and supplier of maritime identification and tracking technologies, announced its unaudited interim results for the six months ended 30 September 2011. Revenues were up by 5.3 per cent to £4.66m and profit before tax up by 9.3 per cent to £1.20m with gross margins increased from 48.0 per cent to 54.9 per cent. The company held cash of £2.89m and had no borrowings. They also reported a capital reorganisation to enable SRT to pay a dividend in the future when appropriate. This requires Court approval which is expected to be given by the end of this financial year.

Sphere Medical Holding (SPHR 83p / £30.55m)
Recently listed developer of innovative patient monitoring and diagnostic products for the critical care market, made yet another announcement that it has received formal certification by its Notified Body, TUV SUD Product Service GmbH, of the extension of its existing EN ISO13485 for Design and Development to include production of Medical Monitoring Systems. This extension now enables Sphere Medical to manufacture its monitoring and diagnostic medical devices, including its Proxima disposable patient-attached arterial blood analyser, at its manufacturing facility in Harston, Cambridge.

Summit Corporation (SUMM 6p / £11.25m)*
The AIM listed UK drug discovery company announced that the US FDA has granted orphan drug status to the clinical candidate SMT C1100 for the treatment of Duchenne Muscular Dystrophy ( DMD ), a fatal genetic neuromuscular disorder for which there is currently no cure.  Barry Price, Executive Chairman of Summit said that this will provide additional regulatory support and various commercial benefits including extended periods of market exclusivity.

Synairgen (SNG 32.5p / £22.61m)
The respiratory drug discovery and development company with a particular focus on viral defence of the lungs announced positive data from its pre-clinical study evaluating the effectiveness of aerosolised interferon beta (IFN-beta) against viral pneumonia. Aerosolised IFN-beta in this study reduced virus-induced pneumonia. Richard Marsden, CEO of Synairgen, commented: “…This development complements our current program targeting viral infections in asthma sufferers, which is drawing near to the end of its Phase II proof of concept study.”

Thor Mining (THR 1.2p/ £ 7.22m)
The exploration company focused on gold and base metal projects and advancing tungsten-molybdenum projects in the Northern Territory of Australia held its AGM today. At the meeting Executive Chairman Mick Billing said that they had made strong progress in the year and continued the development of the Molyhil tungsten / molybdenum project, largely in response to the strong improvement in the price of tungsten, and have undertaken two successful drilling programs. The next steps will be to put in place financing and to seek product off-take (or sales) agreements and Thor is optimistic that development will start during 2012.In August this year Thor acquired 25 per cent of the Spring Hill gold project, along with rights to acquire up to an 80 per cent interest, and by the end of September they had started drilling.  Thor believes that potential exists for a much larger ore body at depth at Spring Hill. During 2010 Thor acquired a 60 per cent interest in the Dundas gold project in Western Australia, along with rights to increase that interest to 100 per cent. In the past year they have been conducting early stage exploration activities and securing environmental and traditional owner approvals for more intensive activities where mineralisation anomalies warrant. Dundas they believe has potential to host a significant gold orebody, and efforts to uncover that will continue during the next year.

Touchstone Gold (TGL 22.5p / £23.33m)
Touchstone Gold announced new and encouraging trenching assay results at the Tagual South area of its Rio Pescado Project in Colombia. Trenching results confirm the potential for significant gold mineralization at the Tagual South area and there will be further drilling to identify the extent of the gold mineralization. A third drill is to be added by the year-end. The Company will also soon be drilling the Tagual North zone which returned similar gold geochemical anomalies to Tagual South through the auger soil sampling programme.

Transense Technologies (TRT 5p / £6.61m)*
Transense is pleased to announce that following a successful field trial of the Translogik iTrack Tyre Monitoring System for OTR (Off the Road) vehicles, Otraco South America has now successfully completed its internal validation process and will be offering the system to its network of mine operators. The iTrack field trial took place at the BHP Billiton Cerro Colorado copper mine, within the Atacama Desert at an altitude of 2600m, east of Iquique, Chile. Three Caterpillar 793F haul trucks took part in an extensive and rigorous testing programme which began in June 2011. Continuous, live data can be viewed in real-time allowing mine operators to continuously monitor the condition and performance of the tyres. All these components successfully completed the trial.

ValiRx (VAL 0.51p / £5.33m)*
ValiRx has appointed a Distributor in the East Midlands Area to Expand the Sales & Reach of its SELFCheck Personal Health Screening Test kits. The Company has recently expanded its distribution network through the appointment of East Midlands based, Campdale Pharmaceuticals Ltd, a wholesaler/pharmacy group, located in Whitwick, near Coalville, Leicestershire. It is looking to expand sales and grow awareness of the SELFCheck home screening diagnostic tests to satisfy demand from an increasing number of people who check themselves regularly, to detect early signs of what may be the presence of an infection or an underlying condition such as diabetes, raised cholesterol, cancer and sexually transmitted diseases.

*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.

15 November 2011

This week: Fresh assets for Modern Water, ASW makes advances and a new step for Milestone.

Ups and downs again in the financial markets, with both the FTSE 100 and the AIM All Share closing the week at close to where they opened, at 5,530 and 725 respectively. Italy has continued to face questions and experience much pressure from the debt crisis, with the cost of borrowing now at the 7 per cent level. This week has seen the announcement that the Eurozone has grown at a sluggish 0.2 per cent between July and September and also that UK inflation has fallen to 5 per cent in October, down from 5.2 per cent in September, though continuing at well above the 2 per cent target of the BoE. Looking at the week ahead, the BoE’s quarterly inflation report will be released, together with unemployment and average earnings data.

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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.

ASW Advanced Profits, ALN Revised Offer, AGL validation for prostate cancer, AKT Interim Management Statement, BAO Progressing Well, BVM New contract win, BEM Funding speculation, CAP US Vehicle conversion order win, DLC Trading update, DSN To plan, EHP Partnership with University of Manchester, PAL Purchases its own warrants, FBT New contract, FIP Placing and news from 2 portfolio companies, GLR Positive results, GGG Bullabulling resources drilling update/initial metallurgical programme results, IDGP Strong growth, LPA Positive warning, MTA Fundraise, MIRL Glistering results, MSG New product, MWG Acquisition, SAR Presentation, SEA Secured Scottish Enterprise funding, SLN Corporate and development updated, SPHR listing on AIM, TAN Smith’s progress, TGL Exploration update, TPJ Gold plated, ULT Preliminary results, VRP Positive phase IIa study and SNCL acquisition.

Advanced Computer Software (ASW 42.25p/£149.94m)
Healthcare software provider Advanced Computer Software announced it will focus on investing in its mobile phone-based services, as it almost doubled first-half pretax profit. The Company, which earlier in the year signed a partnership with Vodafone Group (VOD) to sell its iNurse mobile phone application for nurses, said it is in advanced discussions with other mobile operators. Sales during the first half continued to climb as public and private sector organisations invest in software to cut costs by boosting efficiency. The Company’s forward order book now stands at £100m compared with £78m at the end of the previous financial year. For the six months ended August 31st 2011, the Company made a pretax profit of £3.7m, up from £1.9m a year earlier. Revenue climbed 7 per cent to £47.3m.

Alterian (ALN 98.5p/£61.22m)
SDL plc (SDL) has improved its cash offer for Alterian to 110p. Alterian’s management had rejected the original bid of 80p.  The revised offer now values the Company at £68.4m, some 73 per cent higher than the pre-bid closing price of October 21, but still a way off the 215p level that the shares enjoyed a year ago, before two profit warnings and management changes hit the valuation hard. The Board of Alterian has stated that it is now prepared to engage with SDL with a view to recommending the improved offer.

ANGLE (AGL 94p/£33.75m)
Angle announce that Parsortix Inc, its 90 per cent owned portfolio company which specialises in medical diagnostics, has achieved another important milestone by confirming that its cell separation device can capture prostate cancer cells. Angle has previously established that its Parsortix separation technology can capture breast cancer cells added to blood. This new validation is an important step towards demonstrating that the Parsortix separation technology works well with any solid tumour cancers without the need for modification.

Ark Therapeutics Group (AKT 3.98p/£8.32m)
Ark published its interim management statement for the period from 1 July 2011 to date last week. Ark is continuing to focus on exploiting its world leading cGMP Biosafety level 2 certified manufacturing facility in Kuopio, Finland, and has agreements with PsiOxus Therapeutics Ltd, the University of Glasgow’s Institute of Cardiovascular and Medical Sciences and continues detailed discussions with a number of other interested parties who wish to avail themselves of Ark’s bio-manufacturing expertise. The Company had £5.4m in cash at 30 June 2011. The significant milestone payments received from Boehringer Ingelheim during the period, the recently announced important manufacturing contracts with PsiOxus and the University of Glasgow, the Company’s success in attracting grant funding and the Company’s continued focus on controlling costs, have all served to bolster the Company’s cash reserves. It is expected that cash reserves will be higher at the end of the current year than they were at the end of June 2011. The Board remains confident of being able to deliver the remaining short-term objectives.

Baobab Resources (BAO 16.5p/£30.96m)
Baobab Resources, the iron ore, base and precious metals explorer with a portfolio of exploration projects in Mozambique, announced its final results for the year ended 30 June 2011. The Company reported a widened full year pretax loss, but said it had made significant progress during the year and that work programs had been completed on time, and on budget, with results exceeding management’s expectations. Operating loss came in at £6.1m (2010: loss £2.0m); with a pretax loss £6.1m (2010: loss £2.0m) and net cash of £5.7m (2010: £2.3m).

Belgravium (BVM 6.5p/£6.56m)
Belgravium Technologies, the mobile computing services company, last week announced that Novo Ivc, its wholly owned subsidiary, has installed a new on-board computer system for the processing of retail transactions on Monarch Airlines, one of the UK’s largest Charter Airlines. Novo systems is one of the world’s most successful providers of onboard retail systems and these are currently in use on 3,000 daily journeys by over 50,000 flight attendants handling sales in excess of £540m.  The move follows a collaboration between Novo and Alpha Flight UK, the leading in-flight retail management and on-board sales specialists, to develop a system which provides a faster transaction capability, greater selection of payment methods, the capability for the sale of virtual products such as car hire, as well as number of other features including giving sales tips for airline crews and promotional updates.

Beowulf Mining (BEM 20.25p/£33.57m)
Grendel in the hall: Shares in Beowulf Mining fell more than 22 per cent last Friday after the firm said it was unable to update a resource estimate for its Kallak South iron ore deposit in northwest Sweden due to a lack of data, but the Company noted that it intended to do so after the next round of drilling, if it got sufficient funding. They then had to issue a further announcement on Monday, noting weekend press speculation, and confirming that the Company, as is normal for an exploration company, is always considering its options with regards to an equity fund-raising though strongly denying that any placing, if undertaken at the present time, would be concluded at such a large discount to the current share price.

Clean Air Power (CAP 4.12p/£3.92m)
The developer of Dual-Fuel(TM) combustion technology that enables heavy-duty diesel engines to operate on a combination of diesel and natural gas announced a new order in the US. The order is from Bestway Express for 16 Dual-Fuel(TM) system installations in the US. The solution uses a legacy product within the Company’s product range which is now able to be sold in the US due to recent changes in US emissions legislation. The Company expects that the niche opened by this recent legislation change will provide further sales opportunities in 2012 and support the development of mass market products for the US and the recently announced commencement of production in Europe.

DDD Group (DDD 31.5p/£42.27m)
The AIM listed 3D solutions company has licensed its TriDef®3D software to Top Victory Investments Ltd (TPV) for its AOC brand 3D monitors. DDD’s TriDef 3D automatically converts DVD movies, PC media and photo files from 2D to 3D. It allows over 30 popular Chinese online games and over 500 of the latest PC games that have not been specifically developed for 3D to be played in stereoscopic 3D “off the shelf”. TPV is the first Chinese company to launch a 3D monitor in China, and is now expanding the AOC line-up into the worldwide market. The polarized ‘FPR’ 3D displays will use TriDef 3D technology to provide 2D to 3D conversion for video and games, as well as playback for originally made 3D photo and video content. AOC’s monitors are already used in many of the 150,000 Chinese iCafe internet cafes. They were also featured at SINOCES in China in July, and in September at LG Displays’ even in Beijing where six of China’s largest PC manufacturers and four of the largest monitor manufacturers presented their latest 3D consumer products. DDD will receive quarterly royalties based on the volume of AOC brand 3D monitors shipped. Chris Yewdall, CEO said that working with AOC gives them the opportunity to address the PC market in China which is currently the largest growth market for PCs.

Delcam (DLC 535p/£42.25m)
Delcam, a leading developer and supplier of advanced software solutions for metrology, product development and manufacture, last week provided a trading update for the financial year to 31 December 2011. After a strong first half, which showed interim revenues reach a record high, trading in the second half of the financial year began well and the fourth quarter to date has been good. As a result, the Board now expects the Company’s profit before tax to be ahead of current market expectations of £2.8m, stated before share option charges of £0.1m. Sales for the full year are expected to be approximately £40m, setting a new high for the Company. All Delcam’s major trading regions have contributed to the strong performance to date, with the Company’s performance in Germany being especially strong.

Densitron (DSN 11.38p/£7.87m)
Densitron, the European manufacturer of display technology for hand held devices, reported that the second half is continuing in line with management expectations; and that the business remains on track to achieve market expectations for the full year and the remaining two years of the Company’s challenging three year growth plan. The Company’s order book remains strong enabling management to be optimistic about the first quarter of 2012. The new Italian office continues to build a successful presence and is performing ahead of internal forecasts, and an Indian office is scheduled for January 2012.

Epistem (EHP 380p/£30.15m)
The biotechnology and personalised medicine company announced a partership with Dr Matthew Hardman at the University of Manchester in which novel preclinical models for cutaneous wound healing developed within his laboratory will be transferred to Epistem. Dr Hardman is a world-leading expert in molecular and cellular aspects of pathological healing. Epistem and The University of Manchester have been awarded a Knowledge Transfer Partnership (KTP) grant from the Technology Strategy Board and Medical Research Council to optimise, validate and commercialise new preclinical assays for wound repair. A KTP Associate has been appointed to work within Epistem on the project.  This partnership will allow Epistem which is experienced in commercialising new technologies to expand its existing range of wound healing models and to provide a broad, innovative service range.

Equatorial Palm Oil (PAL 15.75p/£19.66m)
The AIM listed palm oil development company with operations in Liberia announced last week that it has made an offer to warrant holders to purchase and subsequently cancel a total 18,790,295 warrants in the Company. In addition, entities associated with two directors of the Company, Michael Frayne and Joe Jaoudi, and a substantial shareholder in the Company, BioPalm Energy Limited, wish to purchase all of the Warrants. A good vote of confidence in the Company from its directors which should lead to a tidier capital structure.

Forbidden Technologies (FBT 15p/£12.99m)
Following on from last week’s two new contracts story in the Small Cap Wrap, Forbidden Technologies, the developer of the market leading Cloud video platform FORscene has a further new contract to announce. Twenty Twenty has chosen to use FORscene as its logging and rough cut editing platform. Twenty Twenty, a Shed Media Company, is one of the UK’s most respected independent television production companies. It has successfully built on the legacy of its pioneering factual formats, the Emmy Award winning ‘Brat Camp’ and the definitive living history series ‘Lads Army’ and ‘Bad Lads Army’. FORscene is being used on Hoarderholics (working title), which is currently in production. It will be rolled out across a number of Twenty Twenty productions in the coming months.

Fusion IP (FIP 37.5p/£20.34m)*
The university IP commercialisation company last week announced that it has conditionally raised £5,007,800 (before expenses) in a placing with existing and new institutional shareholders. The Group now has over 20 companies in the portfolio, employing nearly 250 staff (including executive and non-executive directors); a well-balanced asset base of engineering, software and medical businesses at varying stages of maturity, growth and profitability. The Placing will provide Fusion IP with the funding to continue its investment in technology originating from Cardiff and Sheffield Universities and provide medium term working capital to enable Fusion IP to continue to support its portfolio companies in subsequent financing rounds and participate in those investment opportunities which the Directors believe to be the most promising. In a week for Fusion IP announcements, FIP also had two portfolio company announcements. One that Mesuro, the Cardiff University spin-out which sells RF testing equipment and device measurement services to the semiconductor industry, had appointed Dr Godfrey Ainsworth as non-executive Chairman; and the second that MedaPhor, the Cardiff based ultrasound simulation company had announced that the University of Washington Medical Centre in Seattle is the first US hospital to install its revolutionary Scantrainer ultrasound simulation system. A good week for Fusion with the share price having risen 1.4 per cent over the past month, and 67 per cent over the last 3 months.

Galileo (GLR 39.5p/£27.93m)
Galileo, the emerging African Rare Earth’s Exploration Company, announced very positive drilling results from its first borehole – GHV001- on its Glenover Rare Earths Joint Venture project in South Africa.  Progress continues with the drilling programme and currently six further boreholes have been drilled and are being logged and/or sampled for analysis. The drilling is focusing on areas around the old open pit, previously worked for its high grade phosphate ore but disregarded for the REOs present.

GGG Resources (GGG 16.5p/£27.35m)
At GGG, 59 drill holes totalling 11,163m were completed in October and early November 2011. The total Phase One and Two development drilling since Q4 2010 now stands at 93,913m in 565 drill holes. Approximately 99 per cent of drill holes have intersected gold mineralisation with only 7 not mineralised. The drilling results continue to reconcile well against the latest gold JORC resource model and give confidence for the next JORC upgrade due in Q1 2012. The principle goal is to increase the 711,000 ounces of existing indicated resource by moving a significant portion of the 1.9m ounces of inferred resource into the higher indicated category out of the current 2.6m JORC ounces. A new exploration programme has been planned to test regional structures and anomalies identified by recent regolith mapping. Raw data has been received from the recently competed airborne magnetic survey aimed at assessing deeper mineralisation and is currently being reviewed. Last week, GGG also announced initial metallurgical programme results. Gold recoveries are expected to exceed 90 per cent for grades above 0.6 g/t Au. A follow-up metallurgical programme is now underway to finesse optimum grind size, reagents and recoveries. Jeff Malaihollo, Managing Director of GGG Resources said “…Previous operations during the 1990’s produced average recoveries of approximately 94 per cent. The Bullabulling mineralisation is not hard or abrasive in the context of the Eastern Goldfields which should have a positive impact on operating costs. Bullabulling continues to demonstrate all of the characteristics of a robust long term gold project.” The Bullabulling deposit has a defined resource base of 2.6m oz. We expect further news in this newsworthy miner, notwithstanding that the Company is currently merging with 50 per cent JV partner Auzex.

Ideagen (IDGP 10.5p/£7.3m)
Ideagen a leading supplier of on-demand information and compliance solutions reported that trading for its first half was comfortably in line with the Board’s expectations; with revenues and profits up over 50 per cent and 100 per cent respectively.  The Plus listed company is reportedly looking at an AIM flotation in the New Year.

LPA (LPA 47p/£5.38m)
LPA spot-lighted two new contracts for lighting hazardous gas areas in the Gorgon Gas field in Australia. They have also received a letter of intent from Siemens to supply LED LumiMatrix lighting for the Warsaw Metro.   The value of both these projects is initially worth around £1.2m.  The Company went on to give a trading update that the Group’s full year results are likely to significantly exceed market expectations.

Matra Petroleum (MTA 0.62p/£6.97m)
Matra, the independent oil and gas exploration and production Company with operations in Russia, announced a placing of 170m new ordinary shares at 0.5p per share to raise £850,000 before expenses. The funds raised will be used for working capital and to initiate production from Well A-13, in the Sokolovskoe Field. It is expected that trading in the Placing Shares will commence on or about 16 November 2011.

Milestone Group (MSG 0.72p/£2.10m)*
The AIM quoted provider of digital media and technology solutions announced the release of its new product, Adequate Procedures Programme (APP) to assist companies in complying with the Bribery Act 2010. APP is a unique service which assists companies in measuring compliance with the Bribery Act and assesses what procedures are in place to prevent bribery. It has been developed in collaboration with BGP Global Services using the FEDS software that Milestone purchased in August 2011. It simplifies the process of reporting and monitoring of any activity that may be subject to the Act and can be accessed from any computer as well as mobile devices allowing secure access from any device and from any location thereby providing real-time updates and reporting.

Minera IRL (MIRL 67.5p/£80.72m)
Minera IRL the Latin America gold mining company announced its unaudited third quarter results for the 3 month period ended 30th September 2011.Gold production was ahead of budget at 9,718 ounces (+ 11 per cent); Corihuarmi site operating costs were reduced by 5.8 per cent to US$356 per ounce; gold sales were up 7.6 per cent to 9,740 ounces and realised gold price of US$1,683 per ounce was up 36.1 per cent. This all added up to profit after tax of US$3.6m a strong turnaround from a loss of US$1.7m in the same period in 2010. The Pre-feasibility Study at Ollachea has been completed and indicates a robust project that should produce over one million ounces over a nine year mine life. An upgraded resource at Don Nicolas forms the basis for the Feasibility Study, currently underway.

Modern Water (MWG 53p/£31.54m)
Modern Water, a provider of leading water technologies for the production of fresh water and monitoring of water quality, last week announced that it had entered into an agreement with Strategic Diagnostics Inc. to purchase the assets of its water quality division including its Microtox toxicity testing technology for US$4.5m. The acquisition is expected to complete during the fourth quarter of 2011 once transitional arrangements are in place. The water quality division of Strategic Diagnostics, based in Newark, Delaware, sells products and services to determine toxicity and detect contaminants in water and soil.  Its two main product groups are toxicity detection using bioluminescence, and industrial bio-detection of substances including pesticides, herbicides and PCBs.  In the year to 31 December 2010, the division had revenues of $4.79m and gross profit of $2.67m.  Profit before tax for that period (after certain central cost allocations) was $0.54m. The Board believes that the technology, products and geographic focus of the division are complementary to the Group’s existing water monitoring business. The acquisition will provide a strong platform for the Group to achieve its strategy of accelerating sales through a worldwide distribution network for its water quality testing and monitoring technologies.

Sareum Holdings (SAR 1.48p/£21.54m)*
The specialist cancer drug discovery business announced that it will present recent results from its join research collaboration with The Institute of Cancer Research (ICR) and Cancer Research Technology Ltd. (CRT) at the American Association for Cancer Research (AACR) National Cancer Institute (NCI) European Organisation for Research and Treatment of Cancer (EORTC) International Conference, to be held between 12 and 16 November 2011 in San Francisco. On Sunday November 13, scientists from the ICR and Dr John Reader, Sareum’s CSO, will present two posters that describe the discovery of CHK1 programme lead compounds and the effectiveness of an advanced lead in cancer models, both as a single agent and in combination with chemotherapy. The Company believes this will assist in discussions with potential licensing partners.

SeaEnergy (SEA 28.12p/£19.44m)
The energy ventures company focused on growing oil and gas and renewables businesses announced this morning that it has secured further funding support totalling £88,510 from Scottish Enterprise to advance its plans to establish an offshore wind farm support business. The funding will enable SeaEnergy to undertake detailed design and tank testing for its innovative X-Bow® based vessel system.

Silence Therapeutics (SLN 3.05p/£17.59m)*
The AIM listed RNA interference therapeutics company provided an update on recent business and clinical developments. Dr Georg Buchner, who was previously VP of Corporate & Business Development at Novacata Biosystems Ltd, has been appointed as VP Business Development at Silence Therapeutics. The results of the ongoing Phase I trial of Atu027, the Company’s lead siRNA development programme for the treatment of advanced solid cancer, confirm that 10 out of 27 patients treated to date have shown stable disease after the treatment phase of the trial. Dosing of the first patient in cohort 10 of the 11 cohort trial has now commenced and the trial is on track to complete recruitment in early 2012 with results reported by mid-2012. The Company has decided to divert the research resources for Atu134 to more promising areas of its RNAi delivery technologies because results from the ongoing Phase 1 trial of Atu027 and additional data from preclinical models of Atu134 lead the Company to conclude that the potential clinical profiles of Atu027 and Atu134 are too similar to warrant further development in both programmes. Consequently a number of other development opportunities for potential targets in the liver that could be inhibited by using the Company’s novel liver-focused DBTC RNAi delivery system are being evaluated.

Sphere Medical Holding (SPHR 92.5p/£34.05m)
A UK based medical device company announced on Monday that it has agreed to raise gross proceeds of £14m by way of a placing with institutional and other investors in connection with the proposed admission of its ordinary share capital to trading on the AIM market, valuing the Company at £34.05m. Sphere is currently completing the development of a range of in vitro diagnostic products designed to provide significant improvements in patient management in a number of hospital specialities. The net proceeds of the Placing will be used by the Company to fund continued development and regulatory approvals, manufacturing operations, general administrative expenses and commercial marketing activities, as well as working capital requirements. It is good to see an IPO in the lifesciences sector and to hear of a success story. With what we understand the backing of significant UK investors, we believe that Sphere will continue to deliver.

Tanfield (TAN 47.75p/£44.92m)
Smith Electric Vehicles US (SEVUS) filed the S-1 form for an initial public offering of Smith’s common stock on The NASDAQ Global Market; subject to the SEC’s review. The shares of common stock to be sold in the offering are proposed to be sold by Smith and by certain of its stockholders, including Tanfield. Subject to market conditions, the IPO may include a partial sale by Tanfield of its current shareholding in Smith. Tanfield have retained a 27 per cent stake in SEVUS, which has an estimated value of around £75m.

Touchstone Gold (TGL 23.5p/£24.37m)
The Company announced the mobilisation of a second diamond drill rig at its Rio Pescado Project located 150km northeast of Medellin in the Antioquia Department of Colombia. This will allow the Company to exploit the success of its summer ground exploration programme by accelarating the testing of high-priority targets within the larger exploration license area. The Drilling equipment and rig are currently on site and the Company’s contractor, Energold Drilling, is expected to commence drilling with the new rig on 11 November. In the Company’s Phase 3 drilling programme, which commenced in June 2011, 24 shallow surface diamond drill holes have been drilled, representing over 2,593 metres of the planned 5,000 metre programme. It has significantly expanded the size of the known mineralization areas at Pepas, North Pepas, and Fildohambre as well as identifyed three new minderalized zones at Tagual North, Taual Central and Tagual South which demonstrated many of the same characteristics as those previously identified. David Wiley, CEO said that the addition of the second drilling rig will enable them to expedite the 2011 drilling programme, and will give them the flexiblility to test more of the targets identified throughout the summer ground exploration programme.

Triple Plate Junction (TPJ 5.32p/£18.44m)
Triple Plate’s joint venture partner in the Crater Mountain project, Gold Anomaly Limited (ASX: GOA), announced an update from its latest hole completed at the Nevera Prospect at Crater Mountain, PNG.  Triple Plate holds an 18.9 per cent interest in the Crater Mountain project known as NEV026 and results confirm that the gold seen at the artisanal zone is not just supergene in nature and that high grade gold veining does occur in the sulphide zone as well as the oxide zone.   NEV026 has provided more information on the orientation and declination of the artisanal zone, assisting in planning future holes. On the back of the drilling to date, it is planned to bring a third drill rig to site in 2012 to focus solely on defining the Artisanal Mining Zone.

Ultrasis (ULT 0.52p/£7.90m)
Ultrasis, the provider of interactive health care services, last week announced its preliminary results for the year ended 31 July 2011. Turnover fell slightly to £2.8m (2010: £3.1m) reflecting the challenging market conditions as the NHS reorganisation and changes to commissioning resulted in the postponement of purchasing decisions.  The Company remained profitable (profit before tax of £17,000) with year end cash balances steady at £2.4m thereby maintaining resources for continued investment in developing new markets. Reflecting these domestic pressures the management has sought to re-balance the business to international markets, which accounted for 41 per cent of revenue in 2011 compared to 4 per cent in 2010.The highlight of the year was the significant deal secured with UPMC, a major US integrated healthcare insurer and provider, which invested US$1.0m to create a US version of “Beating the Blues” for use across its services and to launch in the wider US market in October 2011.

Verona Pharma (VRP 7.32p/£17.74m)
The AIM listed biotechnology company dedicated to discovering new drugs for the treatment of chronic respiratory diseases has successfully demonstrated in a Phase IIa RPL554 study bronchodilator effects in patients with chronic obstructive pulmonary disease (COPD).  The study showed that the drug produced a significant improvement in lung function of up to a 10 per cent increase in FEV1 (forced expiratory volume at 1 second) as compared with placebo. In addition, the duration of action observed was similar to that previously seen with PRL554 in patients with asthama. On the whole RPL554 was well tolerated and no cardiovascular or other safety issues were observed despite COPD being a condition in which concurrent cardiovascular disease is common. For future development and commercialisation of RPL554 the Board is seeking the most compatible and appropriate partner to develop PRL554 into a marketed medicine and discussions with respect to licencing of RPL554 are ongoing. Michael Walker, CEO said that the Company is delighted with the positive results achieved with RPL554 to date and they look forward to reporting further progress in the development and licensing efforts for the drug.

William Sinclair (SNCL 149.5p/£25.45m)
The Company announced the acquisition of the assets and business of Yorkshire Horticultural Supplies (YHS), a compost manufacturer located near Doncaster. The acquisition is being made by William Sinclair’s specialist solids subsidiary, Freeland Horticulture Limited, and represents an important strategic vertical integration by the Company into composting. The acquistion marks the begining of a commitment by William Sinclair to increase production of its peat free products. The YHS site currently processes 40,000 tonnes of park and garden waste per annum, most of which is turned into green compost.In addition to this valuable material, 10-15 per cent of the waste remains as a by-product called “oversize” which is currently a liability for YHS but will provide raw material fro Freeland’s SuperFyba production. Freeland has developed a unique technology that can process oversized produce SuperFyba, one of the best peat alternatives in the UK for plant growing media. Approximately 3m cubic metres of peat are consumed by the UK horticulture industry each year and this peat usage could eventually be completely replaced by SuperFyba. William Sinclair is looking to invest in the acquired business and to expand the tonnage processed at the site. Freeland will tender for other local authority contracts in the region as they come up for renewal.

*A corporate client of Hybridan LLP

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.

8 November 2011

This week: Getech goes back to black, Clarity increases its business and NextGen finances its next steps.

A turbulent week for the financial markets, last week saw the FTSE 100 open at 5,661 points, dropping sharply to 5,350 on Tuesday before rebounding and closing the week at 5,530. The AIM All share followed similar trend, all largely down to news of a Greek referendum. This week has also seen the financial markets reeling, troubled by increasing concern that Italy could be facing a serious debt crisis also (with borrowing rates reaching record high) and Eurozone retail sales figures proving to be disappointing (slipping 0.7 per cent in September compared to August). Looking at the week ahead, producer price data, UK trade data and industrial production and manufacturing output data will all be released, together with the MPC decision for the month.

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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.

AKT Agreement with Glasgow University, BMR Sell wash plant tailings, BGBL Trading update, BIOM Q3 Trading Update, CCS New agreement, DEMG Receives FDA approval, FBT Two New Contracts, GTC Back to Profit, HCM Phase 1 trial starts, IDOX Acquisition, IMM Approval to start phase III, KIO Name Change, NGG Convertible loan agreement, NTOG Starts Survey, OMP Pays a dividend, PYC Eli Lilly deal, PDC Interim Results, SND Full Year Figures, SCLP To receive milestone payment, SUN Government Funding, SER Four new wells to be drilled, TMZ New distribution agreement, TSTL Good scientific data emerges, and VAL New patent filed.

Ark Therapeutics Group (AKT 3.75p/£7.85m)
Ark has signed a manufacturing agreement with University of Glasgow’s Institute of Cardiovascular and Medical Sciences under which Ark will provide full manufacturing and related services to support the development of the Institute’s gene-therapy programme for the treatment of vein graft failure associated with coronary artery bypass surgery. The contract was awarded following Ark’s success in an open competitive tender process under public body procurement rules.

Berkeley Mineral Resources (BMR 2.9p/£29.22m)
BMR announced that further to its announcement of 28 March 2011 containing the JORC Resource Statement for the Wash plant Stockpiles at Kabwe, and subsequent mineralogical and metallurgical testing of the tailings by Mintek, the Directors have reviewed the options for maximizing the value of these stockpiles to shareholders. The Board has decided to sell the wash plant tailings without further processing. The Directors have considered the investment required to process these tailings and concluded a dedicated wash plant flotation plant to produce concentrates would not be the best use of capital at this stage of the Company’s development. Also, the Directors believe there is an environmental need to remove the potentially polluting material from site as soon as possible. The Board has commenced discussions with interested parties to enter into sales contracts to buy the wash plant tailings. They have been invited to submit a tender for the material. The Directors believe that the Kabwe site is ideally located for rail transport through the Indian Ocean ports to smelters in Far Eastern markets and the wash plants sections of the stockpiles are adjacent to the Kabwe railway sidings. As a result of the decision the Leachplant Pre-Feasibility Study, currently being undertaken by Metanza, will focus on the main Leachplant and Slag stockpiles.  The Leachplant Study will include design criteria, major equipment listing, and capital and operating cost estimates for the recommended processing routes. Further drilling of the Slag stockpiles will be undertaken to complete the resource information for the Study.

Bglobal (BGBL 8p/£8.50m)
The leading provider of smart energy solutions and services to the UK energy market gave an update on its trading performance for the six months ended 30 September 2011 in advance of its interim results, which will be announced on 12 December 2011. The Group has remained profitable and has generated cash at an operational level.  The Government announced at the end of March 2011 that the mass rollout of smart metering to the residential and SME markets will start in 2014. This has lead to some of its customers reducing the level at which they are installing smart meters. Accordingly, the business has seen a marked slowdown in the volume of installations taking place in the industrial and commercial sector. However, despite this slow down the business has delivered an operating profit in the period. It became apparent during the first 6 months of this financial year was that cost savings  made at the beginning of the financial year had not gone far enough and the Board has therefore taken additional steps to further reduce the cost base within the business. These steps will generate annual savings of approximately £1.5m in addition to the £1m of annual savings achieved earlier this year. The savings have been achieved by reducing head count within the business and by saving certain associated costs. This process was completed at the end of October and these additional savings will be seen in the second half of this financial year. The markets in which the Group operates are evolving and this has resulted in the Group needing to fundamentally alter its approach to the way it wins work and who its customers are. Cost cutting is back on the agenda for many companies, was it ever of the agenda over the last few years. Bglobal seems to continue to position itself accordingly.

Biome Technologies (BIOM 0.18p / £10.3m)
Biome Technologies, a leading innovator and supplier of biodegradable natural polymers that replace oil based plastics, reported Group revenues of £15.3m for the nine months to 30 September 2011 (Q3 2010: £10.3m). This reflected a 110 per cent increase in bioplastic sales made by the UK based Biome Bioplastics, a 34 per cent increase in sales in Stanelco RF Technologies division and a 29 per cent increase in third party sales at their Biotec joint venture. The Group’s cash position at 30 September 2011 was £3.0m (30 June 2011: £3.6m). Trading performance remains in line with the Board’s expectations for the year and Biome looks well placed to continue delivering on their strategy through the remainder of 2011 and into 2012.

Clarity Commerce Solutions (CCS 26.75p /£11.08m)
Clarity, the supplier of software solutions for the retail, entertainment, hospitality and leisure sectors has signed an agreement with FNAC Direct SA France’s leading entertainment retail group, to jointly provide the first national cinema ticketing portal for France. Clarity’s technology will be used on the FNAC website to process ticket purchased by consumers across France, working in conjunction with cinemas to process the bookings. 118 cinemas across the country currently operate the ClarityLive cinema solution, with the new online processing facility initially targeting these and processing approximately 2m sales per year. Further, the Company anticipates other cinemas to join the network to take advantage of the comprehensive solution being offered. Last week, the Company published an update covering a significant number of contract wins recently, headlined by a contract with HMV and this latest news update demonstrates the significant level of interest in the Company’s technology and the healthy pipeline of opportunities that is being developed.

Deltex Medical Group (DEMG 18.75p/£25.94m)
The Company announced that it has received regulatory approval from the US FDA to market and sell its substantially updated CardioQ-EDM monitor in the US. The monitor will be available for marketing and sale in the US with immediate effect. The CardioQ-EDM offers a number of user interfaces, patient management enhancements over the predecessor CardioQ monitor and allows the monitor to integrate more closely with hospital systems as well as enhanced tracking and downloading of patient responses to interventions guided by the system through increased data sharing capability. Ewan Phillips, CEO said that this generation of monitor makes it easier for doctors to collect the patient and intervention data necessary to participate in projects designed to demonstrate the significant potential impact on US surgical outcomes from the Company’s technology.

Forbidden Technologies (FBT 15p / £12.99m)
Forbidden Technologies, the AIM quoted developer of the market leading Cloud video platform FORscene, was pleased to announce two new customers: Sumners who provide a high quality service to a broad range of media clients including all the major UK broadcasters and associated production companies: and Princess Productions – part of the Shine Group – who are successfully using FORscene to log its multi-camera production Got to Dance (Series 3). Earlier this year, Forbidden’s core FORscene video and audio technology was optimised to support full frame rate Cloud editing on tablets and smartphones. Applying some further upgrades to the standard desktop Java version has enabled it to handle multicam with up to nine concurrent video streams. Forbidden’s broadcast post sales have been rising rapidly: revenue in the six months to 30 June 2011 rose by 94 per cent. The addition of multicam adds great value to many existing customers and paves the way for new adopters of FORscene.

Getech Group (GTC 20.5p/£5.99m)
Getech goes back to black: the oilfield services company specialising in global gravity and magnetic data services, announced a swing back to pretax profit and resumed dividend payments having sold more data sets and benefiting from strong oil prices and an increased library of data.  In the year to July 31 2011, pretax profit came in at £669,702 versus a loss of £228,497 a year earlier. Revenue rose 63 per cent to £5.3m.  Net cash after outstanding debt rose to £654,851, leading the firm to resume dividend payments and propose a final dividend of 0.2 pence per share.

Hutchinson China MediTech (HCM 312.5p/£161.70m)
Hutchison MediPharma Limited (HMP), the drug R&D company majority owned by Chi-Med, this week announced the initiation of the first-in-human Phase I clinical trial of Epitinib (HMPL-813).  This is the third oncology compound from the internal discovery programmes of HMP to enter into clinical study in China.  Epitinib is a novel, second generation, orally active small molecule inhibitor targeting the epidermal growth factor receptor (EGFR), designed for optimal tissue distribution to achieve broader anti-tumour activity.  The first patient was dosed on 31 October 2011. The primary objectives of the Phase I study of Epitinib are to evaluate its safety and tolerability in patients and to determine its maximum tolerated dose.  The study will also evaluate its preliminary efficacy against various tumours, including tumours carrying activating EGFR mutations that have metastasised to the brain from other cancers such as non-small cell lung cancer.  If the preclinical findings are confirmed in clinical studies, Epitinib could become a breakthrough therapy for patients with primary brain tumours or tumours metastasised to brain carrying activating EGFR mutations.

Idox (IDOX 22.25p / £76.82m)
AIM listed public sector software and services provider announced the acquisition of Interactive Dialogues Limited and Interactive Dialogues NV. Interactive supplies e-learning and information solutions to companies allowing them to interact with employees, customers and suppliers to help with compliance in areas such as Competition Law and the UK Bribery Act. With clients such as Associated British Foods, PricewaterhouseCoopers and Xstrata, the acquisition brings a number of blue chip brands to the Idox portfolio, extending the range of solutions available within the Idox Information Services Business. Total consideration for the acquisition is £1.9m in cash.

ImmuPharma (IMM 94.38p/£76.95m)
AIM listed Immupharma, the specialist discovery and development pharmaceutical company last week gave an update on the development status of its Lupus drug candidate Lupuzor™.  ImmuPharma recently regained rights to Lupuzor™, due to the acquisition of Cephalon by Teva Pharmaceutical Industries Ltd. The FDA has granted Lupuzor™ the approval to start phase III with a Special Protocol Assessment and the FDA has granted Lupuzor™ “Fast Track” designation. The commercial validation batches of the active ingredient of Lupuzor™ necessary for phase III have already been manufactured. ImmuPharma is now in discussions with pharmaceutical companies for a corporate deal regarding Lupuzor™. At an informative analyst meeting, the Company explained that Teva buying Cephalon meant their product got less attention, since Teva is largely focused on generics. It would appear that ImmuPharma has done well to get the product back under its control. However, ImmuPharma needs to have circa $60m to fund the phase III and so needs to partner Lupuzor™ out again. ImmuPharma also gave an update on its other drugs and talked about a cancer compound in
clinical trials in patients.

Kiotech International (KIO 91p / £16.99m)
What’s in a name? That which we call Kiotech, the manufacturer and marketer of natural feed additives for global agriculture and aquaculture markets, will be changing their name to Anpario PLC with effect from December 1st.  CEO, David Bullen, told investors that the new name, created by a combination of ‘An’, the first syllable of animal and ‘pario’ from the Latin to create, produce or make, more accurately reflects their growing ambition in the global market for natural animal feed additives. The firm’s /ticker will also be changed to ANP on
December 1st.

NextGen Group (NGG 0.14p / £10.51m)
Provider of biomarker testing services provided a business update in which it stated that whilst sales in the biomarker and testing business have been below expectations recently the Board is confident of a scalable and long term business. To fund working capital requirements for short term to Q1 2012 NextGen has entered into convertible loan agreement for €650,000 with Alpha 4 Concepts GmBH for a period ending on 31 October 2012, include a coupon of 12 per cent per annum and the loan is repayable on 7 days’ notice. Conversion can take place at a price of 0.1p per share plus one warrant for every share issued. Further, the Company must pay a monthly monitoring fee of €6,500 and placing commission of 7 per cent to OAR GmBH. This is the second convertible loan agreement for the Company with Alpha 4 Concepts GmBH- in September a loan agreement for €453,000 was announced for working capital.

Nostra Terra Oil & Gas  (NTOG 0.45p / £8.75m)
Nostra Terra the oil and gas producer with projects in the U.S., said it will shortly start a three-dimensional seismic survey and expects interpretation of the results this month, which will enable the final selection of the drill sites. The Company expects to start drilling the first well in December.

One Media Publishing Group (OMP 3p/£1.30m) *
One Media last week confirmed that the Group intends to pay an interim dividend of 0.0345p per ordinary share in respect of the six month period ended 31st October 2011. Great news in tough economic times.

Physiomics (PYC 0.35p/£3.95m)
Oxford based systems biology company announced that it has signed a further agreement with Eli Lilly and Company to perform two new projects for in silico simulations in the field of oncology. The projects involve predicting the outcomes of proposed regimens for two Lilly candidate compounds in combination with other drugs. The projects will be performed on a fee-for-service basis. The market liked the news with the share price rising more than 20 per cent on the day. (PDC 32p/£15.12m), the chain of franchised printing shops, provided interim results for the 6 months to 30 September 2011. Though there was a 51 per cent increase in revenue to £10.73m (2010: £7.10m), which largely reflected the acquisition of Media Facility Group BV in November 2010, profit before tax fell some 19.4 per cent to £0.5m (2010: £0.62m). The Company declared an interim dividend of 1.05p per share (2010:1.05p). Whilst the Company launched three new trading channels in the UK and France (through, (France) and BrandDemand (France)), and has benefitted from growth in the Netherlands and Belgium, UK suffered from declines in SME confidence during the period, and the Company is cautious in the short term given the present economic uncertainty.

Sanderson Group (SND 29p / 12.62m)
Sanderson Group the software and IT services business announced that profit for the year ending Sept. 30 2011 is in line with market expectations and that it has a good level of confidence going into the new financial year. Sanderson continues to experience good trading momentum in its manufacturing and multi-Channel businesses, though the high street retail market is more challenging. Continued and increased investment in product innovation as well as in sales and marketing has further improved the Group’s competitive market position. Following the refinancing in August, the Group’s net debt has continued to fall and is now below £7.0m.

Scancell Holdings (SCLP 7.12p/£13.83m)
The developer of therapeutic cancer vaccines last week announced that it has received confirmation from Cephalon, Inc that the condition relating to the second tranche payment from the sale of Scancell’s antibody portfolio to Arana Therapeutics in 2006 has now been satisfied. Scancell is therefore due to receive a further sum of £2.85m on 16 November 2011.  David Evans, Chairman of Scancell, said: “…We expect that the net funds to be received will enable the Company to complete the Phase I and Phase II clinical trials of our lead melanoma vaccine, SCIB1, without the need to raise further funds.”

Surgical Innovations Group (SUN 10.38p / 40.97m)
Surgical Innovations said it has received confirmation from the Department of Business, Innovation and Skills, that it is one of 119 successful bids in the UK in the second round of the Government’s £1.4bn Regional Growth Fund. The Company has received a conditional offer, subject to due diligence, which has been earmarked for job creation, apprenticeships, training, development of innovative medical devices and manufacturing infrastructure. The quantum of the funding to Surgical Innovations remains confidential at this stage of the process.

Sefton Resources (SER 3.48p/£12.16m)
The AIM listed independent oil and gas exploitation and production Company gave a brief operational update and the execution of an agreement for the drilling of four new wells at Tapia Canyon oil field in California.  The drilling of four new wells at Tapia Canyon is scheduled to commence in mid-November and will take approximately five weeks to complete. The new wells are expected to be producing in early 2012 which should allow oil production to rise by up to 75 percent to an estimated 240 barrels of oil per day. The Company received in October an average Tapia 18°API crude purchase price of $107 per barrel which represented a 24.4 percent premium to NYMEX. Oil production in October at Tapia and Eureka fields was approximately 129 barrels of oil per day. Dr Farouq Ali is currently in the process of finalizing an interim report on the Tapia steam flood model. A third well has been permitted by Occidental Petroleum Corporation, via its subsidiary Vintage Production LLC, on its adjacent field to Tapia Canyon.

Toumaz (TMZ 7.62p / £47.99m)
Toumaz, a pioneer in low cost, ultra –low power wireless communications technology, announced that it has signed a global distribution agreement with Mouser Electronics Global Partnership. The agreement will see Mouser use its extensive distribution network to sell the Telran low energy wireless radio system-on-chip, whilst also providing support for customers of the Telran range of products. Target applications for the novel chip include wireless sensor networks, remote controls, smart meters and environmental monitoring amongst others. This is a strong follow-up to the news last week that the microchip had passed the FCC regulatory requirements of three international standards for radios. The FCC (Federal Communications Commission) is the regulatory authority for radio and telecommunications equipment in the USA.

Tristel (TSTL 40p/£15.99m)
The AIM listed manufacturer of infection control, contamination control and hygiene consumable products, reported that in recent weeks a publication in the Journal of Hospital Infection and two poster presentations at scientific congresses have added to the published body of evidence of the efficacy, ease of use and cost effectiveness of Tristel’s disinfectant products. Six out of seven of the most effective and fastest acting disinfectants tested in  an evaluation of the sporicidal activity of different chemical disinfectants used in hospitals against Clostridium difficile, undertaken by S. Speight et all (2011), were Tristel chlorine dioxide products. Also, in an study undertaken by P. Gilling et Al at Tauranga Hospital (New Zealand) which involved a randomized single-blind comparison of the high-level disinfectants Tristel Fust and Johnson & Johnson’s Cidex OPA for use with flexible cystoscopes determined that both disinfectants had comparable efficacy but Tristel Fuse was found to be by far the most cost effective and quickest to use. Paul Swinney, CEO said that the scientific data originates from both the UK and overseas and will help to expand Tristel’s Presence as a major force in the global infection control market.

ValiRx (VAL 0.52p/£5.43m)*
The AIM listed life science company announced that it has filed a new patent regarding its lead therapeutic compound VAL201 for a further indication in endometriosis or hormone induced abnormal cell growth in women.VAL201 has been shown to reduce the abnormal endometrial growth whilst leaving other hormone induced activities working normally, based on results in endometrial models. This suggests that VAL201 has potential for reducing side effects as indicated in an earlier study of VAL201 with respect to prostate cancer in men. It has been predicted that the global endometriosis market will reach $1.3bn by 2017 and endometriosis remains a common health problem among women (estimated 170m sufferers globally). The original patent and technology covering VAL201 is licensed by ValiRx from Cancer Research Technology (CRT) for use in androgen resistant cancer. Under the terms of the license with CRT, ValiRx is responsible for performing the pre-clinical development and obtaining regulatory approval to take the compound into clinical trials in patients. ValiRx will also manage the commercialization and development of potential treatments.

*A corporate client of Hybridan LLP

A full archive of previous weeks’ Small Cap Wraps can now be viewed on

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.

1 November 2011

This week: Clarity looks ahead, flying results for Avation and lights off for Luminar

The financial markets performed well last week rising some 180 points to close at 5,700, whilst the AIM All Share rose 20 points to close at 734 points. Good progress was made with regards to the European debt crisis, and the BoE were unanimous in voting £75bn of quantitative easing. This week, UK economic growth was 0.5% during the third quarter (higher than the 0.4% in the second) and UK retail figures grew by a stronger than expected 0.6% in September, though the announcement of a Greek referendum caused the US and European markets some difficulties. Looking at the week ahead, PMI data from manufacturing, construction and services sectors will be announced.

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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.

AMC Resource report, ABH Comment on EU ruling, ANCR Trading update, AVAP Final results, BMY H1 results, CCS New contracts, EDE.PL Acquisition of technology, GGG Corporate and exploration announcements, IVO Funding round, KMR Interim statement, LID Interim results, LRM Interim results, LMR Enters Administration, MDY Asset Sale, MONI Company investment, NGP Valuation Uplift, HAWK Placing, NGL Fund raise, SUN Grant from RGF,  TAN Receives Payment, TRP New contract, XEN update on transformational deals.

Amur Minerals Corporation (AMC 10.5p / £29.18m)*
The nickel-copper sulphide mineral exploration and resource development company focused on far east Russia announced that the Research Centre of the Institute for Geological Exploration of Base and Precious Metals (TSNIGRI ) has compiled a comprehensive report establishing the value of the projected recovered metals within the complex concentrate of the Company’s Kun-Manie project. The valuation report has been forwarded to the Ministry of Economic Development (MED’s) for its consideration and review as related to Amur’s application for its mining licence.  The MED’s responsibilities include its calculation of the concentrate value or alternatively it can utilise a valuation generated by another federal agency certified by the governmental authorities of the Russian Federation. The market awaits news on the licence nevertheless; however it continues to get good results in its exploration programme in the meantime.

Angel Biotechnology Holdings (ABH 0.24p / £6.59m)*
The AIM listed biopharmaceutical contract manufacturer commented on the ruling issued on Tuesday 18th October by the European Court of Justice prohibiting the patentability of human embryonic stem cells. The company said that the court ruling that patents would not be granted on stem cells removed from human embryos if the embryos are destroyed in the process, does not prevent the filing of patent applications relating to process and use claims, providing an alternative strategy for gaining product protection in EU countries. It also emphasised that the majority of cell-based work currently ongoing at Angel and sought by the Company for the future is based on the use of adult stem cells or autologous cell programmes where the patients’ own cells are used for the clinical procedure, both of which are unaffected by the EU ruling. Having made significant progress in re-commissioning the Cramlington facility, which the Board expect to be operational in early 2012, Angel is in a good place generally with its business and within its industry.

Animalcare Group (ANCR 172.5p / £35.38m)
The AIM listed supplier of veterinary medicines provided an update to its shareholders. Trading in the first quarter was satisfactory and continues to be in line with the Board’s expectations. The Company has launched Torphasol, an analgesic for horses, and Detonervin, an equine sedative. Emdocam Equinem, an anti-inflammatory for horses, will be launched very soon. An antibiotic for cattle called Tilmodil was also launched in September by the Company. Also, a very important addition has been completed to the Company’s range finishing its regulatory passage and with marketing authorisation received they expect to launch this in the near future. The board is very pleased with the underlying cash flow of the business and subject to shareholder approval they propose to pay a final dividend of 3p per share brining to total dividend to 4p for the year, on 7 November.

Avation (AVAP 107.5p/£41.5m)
Aircraft rental and leasing company announced results for the year to 30th June 2011. Whilst revenues were down slightly to £16.3m (2010: £17.6m), pre-tax profit was up 59 per cent to £5.63m (2010: £3.55m), with dividends per share up by 66 per cent to 1p per share. Net assets on the balance sheet were up by 37 per cent to £49.5m. Having entered into a 10 year loan facility agreement for up to $152.2m (under a mandate to Credit Agricole Corporate and Investment Bank), the Company is in a position to draw down funds progressively on an aircraft-by-aircraft basis for the purpose of purchasing eight new ATR72 Aircraft, though none of these had been delivered to the ultimate operator (Virgin Australia) by the end of year, and therefore revenue performance for this has not been reflected in the financials. Since then, Avation has delivered three aircraft, with another expected during November and four more during the middle of 2012- all hopefully helping the Company to continue with the impressive performance.

Axis-Shield (ASD 469p/£234.49m)
The international and innovative in vitro diagnostics company today announced that it has signed a new agreement with MinuteClinic, the largest retail medical clinic provider in the United States. Under the terms of the agreement, Axis-Shield will provide an Afinion(TM) analyser for each of the approximately 600 MinuteClinic locations in the U.S. so patients can access haemoglobin A1c testing, with results provided in three minutes. MinuteClinic is a division of CVS Caremark, the largest pharmacy health care provider in the United States. MinuteClinic’s walk-in medical clinics are staffed by nurse practitioners and physician assistants, who provide treatment for common family illnesses and injuries, administer vaccinations, conduct physicals and wellness screenings, and offer monitoring for chronic conditions such as diabetes, high cholesterol, high blood pressure and asthma.

Bloomsbury Publishing (BMY 98.25p / £72.88m)
The highlights for the six months ended 31 August 2011 included turnover which was up 16 per cent to £44.9m (2010: £38.6m), a pre-tax profit, adjusted for certain items, which was up 52 per cent to £2.2m (2010: £1.4m), an interim dividend which was increased by 10 per cent to 0.89 pence per share (2010: 0.81 pence) and a basic earnings per share, adjusted for certain  items, up 31 per cent to 2.07 pence (2010: 1.58 pence). ebook sales in the six months to 31 August 2011 increased by 564 per cent to £2.5m (2010: £0.4m) and the management team was strengthened with the appointment of a new Group Finance Director and a new Managing Director of the new Children’s & Educational division.
BMY acquired the leading Academic publisher Continuum for a cash consideration of £20.1m, purchased the National Archives Publishing programme backlist and did a drama online project with Faber & Faber. BMY also signed a contract to publish PricewaterhouseCoopers Manual of Accounting series and did a licensing deal with the Practical Law Company. Bestsellers across the Group included The Finkler Question – Howard Jacobson; Eat Pray Love – Elizabeth Gilbert and still, the Harry Potter series – JK Rowling. Ebook sales are seeing excellent quarter on quarter growth, and we expect this trend to continue. Little cannibalisation is being seen with ebook sales as the overall market is being grown, except perhaps in certain sectors such as crime fiction. Another ongoing trend discussed at the analyst meeting was the globalisation of children’s books with the Aardman adventure The Pirates! just taking off. Potter will go on and on and the latest is the box sets that are selling. Germany turned a loss for BMY in the first half, although the ebook market has yet to take off and BMY reminded us of their track record in turning things around. Germany is the third largest book market globally, and their preference for English language best sellers should help growth. We think that after the recent large Continuum acquisition, BMY is now in a consolidation phase, but will likely remain opportunistic.

Clarity Commerce Solutions (CCS 27p /£11.19m)
Clarity, the supplier of software solutions for the retail, entertainment, hospitality and leisure sectors provided a trading update in which it announced a number of new contract wins during the last month. A £250,000 contract win with HMV was seen as the highlight marking the introduction of Clarity’s cloud-based real-time promotions engine to the UK market enabling HMV to offer exactly the same promotional mechanics across its sales channels at the point of purchase. Other contracts won during the period include that of Dune, Debenhams, C1000 (a Dutch grocery chain), Bakker Bart (a bakery chain) and Coop Denmark, reflecting a very healthy period of activity for the Company. Interestingly, there was also comment this week on press speculation surrounding a potential bid from Enigmatic Investments Limited for Clarity. In October we commented on how Clarity was recommending the rejection of the offer, and this week Enigmatic have commented on some of the factual inaccuracies and reiterated that the offer of 23p per share remains and has been extended to being open until 2nd November 2011.

Eden Research (EDE.PL 17.5p / £14.52m)
The agrochemical and encapsulation company announced that it has acquired the exclusive, global rights to a next-generation encapsulation delivery system based on scientific research at the University of Massachusetts Medical School in Worcester, USA (UMMS). This technology will augment Eden’s own proprietary technology and allows for greater control over the timing of release of the Active substance. The patent covering the new technology has been granted in seven countries to date including USA, Spain, France and Italy and is valid until June 2025, which extends the life of Eden’s overall patent position.  The Company’s proprietary encapsulation delivery system is being used commercially in environmentally friendly agrochemical applications where it enables the slow release of compounds to control pests and infection. The system is also being evaluated by some of the world’s largest companies for use in other sectors such as animal health, biocides and cosmetics, which will benefit from the next generation UMMS technology.

GGG Resources (GGG 17.25p / £28.59m)
The Company made a few corporate and exploration announcements last week. On 2 August 2011 it received the final payment of $3,273,200 from the sale of the Nimu Project in China. This has brought the total payments from the disposal of Nimu to $7.4m, approximately £0.7m more than was budgeted for at the time of the Company’s 2009 statutory accounts. The Company no longer has any assets or obligations in China. As the Company and Auzex had agreed to merge, on 5 September 2011, GGG’s bid for Auzex lapsed and GGG did not accept any Auzex shares pursuant to the offer. By the end of September, the total of drilling undertaken by GGG and its joint venture partner, Auzex, since project acquisition in May 2010 was 82,667m in 507 holes.  The new JORC complaint resource is 78.84m tonnes at 1.03 g/t gold for 2,603,000 ounces, using a 0.5 g/t gold cut-off. Preliminary project optimisation studies were carried out and all scenarios returned positive economics envisaging the development of a main pit 3.1 km long, 180 metres deep and a secondary pit of 1km long and 120 metres deep.

Imperial Innovations Group (IVO 285p / £284.01m)
The technology commercialisation and investment company and Seroba Kernel Life Sciences have led a £5m funding round for the portfolio company, Veryan Medical, which is developing innovative solutions for vascular disease using the principles of biomimicry. Both the companies have each invested approximately half of the funds raised. The latest funding will be employed to progress the Company towards a clinical study in the USA to achieve FDA approval. Veryan’s BioMimics 3D™ stent technology aims to mimic the natural shape and geometry of the human vascular system. The BioMimics3D stent is initially targeted at the market for peripheral stents which exceeds £1bn per year.  This market is growing at around 20 per cent per annum, due to new technology and expanding indications for vascular stents. Veryan has completed enrolment of patients in its European study and this prospective randomized study has been conducted in Germany with Professor Thomas Zeller as the Principal Investigator. Initial results from this study confirm that the excellent preclinical results can be transferred to human clinical experience. Veryan will apply for CE mark in the near future.

Kenmare Resources (KMR 40.57p / £977.53m)
The Company which is engaged in the operation of the Moma Titanium Minerals Mine located in Mozambique, provided an interim management statement in which it announced that third quarter mineral production was some 27 per cent higher than the previous quarter and but that it still remained below full capacity. This covers the production of Heavy Metal Concentrate (HMC), Ilmenite and Zircon. HMC production was inhibited by the last part of a clay-rich zone and by some teething problems associated with new equipment fitted to upgrade a wet concentrator plant, whilst power fluctuations hampered production in October due to faulty voltage stabilisation equipment on the main grid. The Company also stated that its lenders are in the process of approving the Company’s plans to expand its Moma mine by 50 per cent, with Phase II expansion costs expected to be in the region of £300m.

LiDCO (LID 15p / £26.12m)
LiDCO, the hemodynamic monitoring company, last week announced its interim results for the six months ended 31 July 2011. Total revenue increased by 21 per cent to £3.21m (2010: £2.66m) with the operating loss reduced by 58 per cent to £0.24m (2010: £0.58m) leaving a year end cash balance of £1.2m. Commenting on the results, the Chief Executive noted the progress that has been made during the period, including securing high quality partners in key territories such as Japan and reducing operating losses by 58 per cent, making considerable progress towards profitability.

Lombard Risk Management (LRM 10.38P / £21.47m)
The AIM listed global software company presented its results for the six months ended 30 September 2011. John Wisbey (CEO) and Paul Tuson (CFO) presented the results.  The directors believe that the company is the number one in UK bank regulatory reporting. Their new technology in the Bank Regulator reporting solution has had a very good client reaction and is believed to be ahead of its competitors. The Group’s IP is a major corporate asset and the Company has been generating strong revenue (£6.4m now and was £5.8 in 2010), profits (profit before tax £1.8 in 2011 and was £0.2 in 2010) and cash (Net Cash at period end was £1.3 in both years). There is a high level of recurring revenues. There is 200+ staff in 5 countries – Major centres in London and Shanghai. Mr Wisbey said that most of the staff members were in China which meant lower costs for the company as the salaries in China are around 30 per cent of those paid to UK staff members. Many contracts have been won by the Company this year – COLLINE with two Tier 1 banks and several others. There has been a global increase in demand for risk management software, so Lombard should continue to benefit

Luminar Group Holdings (LMR 0.38p / £0.38m)
The lights have finally been turned off at Luminar: The Company’s banks declined to extend loan facilities any further, resulting in the Company’s Directors being forced to call in the administrators.  Shares were suspended at 0.7p.    The Sunday Times reported that there may be interest from two Private Equity groups, R Capital and Sun European Partners, but nothing is confirmed yet.

MDY Healthcare (MDY 42p / £7.17m)
MDY Healthcare, a strategic investor in healthcare companies, announced that the Company will receive between US$20m (£12.5m) and US$21m (£13.125m) for the sale of its 10.4 per cent. holding in Medivance, depending on certain completion adjustments.  MDY Healthcare had invested approximately $6m in Medivance across a series of investments.  On receipt of proceeds, the Company will repay all outstanding debt, approximately $1.65m, and will make a further announcement in due course about the use of the balance.

Monitise (MONI 38p / £268.61m)
Monitise, which provides end-to-end solutions that enable banks and their customers to undertake banking transactions via mobile phones, announced that Visa Europe would be investing £24.7m in Monitise at 35p per share. The investment would give Visa an 8.8 per cent stake in the Company, with the president and CEO of Visa Europe joining the Monitise Board of Directors. Also, the Company announced the acquisition of a 51 per cent stake in Monitise Americas, held by Metavante Corporation, for consideration of a 3.3 per cent stake in Monitise. This is very much a reflection of the operational expansion strategy the Company is pursuing, and news that was well received by the markets- shares were up 10 per cent on the day.

Niche Group (NGP 2.82p / £19.54m)
Turkish delight at Niche Group: A new Competent Person’s Report by Senergy (GB) has lifted the valuation of Niche’s stake in Turkey’s Hatay gas blocks to £60m; roughly three times the current market cap.   Niche’s stake is held via a loan note that converts into a 37.5 per cent holding in Oman Resources. Oman Resources in turn owns 50 per cent of the re-valued Hatay Blocks.

Nighthawk (HAWK 2.94p / £11.10m)
Nighthawk, the US focused oil development and production company, last week announced that it has raised approximately £2m through the placing of new shares at 2.5 pence per share. The funds raised will be used to meet ongoing costs and to push ahead with the first steps in a new work programme, which will initially comprise undertaking further improvements to existing wells.  Nighthawk may have sole responsibility for the costs of the work on the existing wells, which are anticipated to be approximately US$400,000, and will have a 50 per cent working interest in the oil produced. The Company expects to make further announcements on the work programme in due course together with details of the previously indicated open offer to all shareholders.

Norseman Gold (NGL 7.25p / £15.95m)
Shares in Norseman resumed trading, after having raised a total of £11.9m: £6.9m from equity and £5m from convertible bonds. On the production side, they expect improvements next quarter as new personnel are employed for the underground activities and the Open Pit continues to be mined towards hard rock ore.

Surgical Innovations (SUN 9.62p / £38.01m)
Surgical Innovations Group, the designer and manufacturer of innovative medical devices, is pleased to announce that it has received confirmation from the Department of Business, Innovation and Skills, that it is one of 119 successful bids in the UK in the second round of the Government’s £1.4bn Regional Growth Fund.  The Company has received a conditional offer, subject to due diligence, which has been earmarked for job creation, apprenticeships, training, development of innovative medical devices and manufacturing infrastructure.  The quantum of the funding to the Company remains confidential at this stage of the process. The Regional Growth Fund (RGF) is a £1.4bn fund operating across England from 2011 to 2014. It supports projects and programs that lever private sector investment creating economic growth and sustainable employment.  It aims particularly to help those areas and communities currently dependent on the public sector to make the transition to sustainable private sector-led growth and prosperity.

Tanfield (TAN 39p / £36.69m)
Tanfield got a lift when it received a £3.5m cash payment as part of January’s deal by which they sold their US electric van division to Smith Electric Vehicles US (SEVUS).   Tanfield have also retained 27 per cent in SEVUS, which has a total value of around £75m.  The funds received will be used to release bottlenecks in, and finance the development of, Tanfield’s UK business; which is the design manufacture and sale of aerial work platforms.

Tower Resources (TRP 2.95p / £36.16m)
Tower Resources announced that together with its 50:50 joint venture partner Wessex Exploration, they have signed an Assurance Agreement for a Production Sharing Contract for the Imlili Block, which is located offshore the west coast of Africa, next to existing interests of the both JV partners.   The agreement is with the Saharawi Arab Democratic Republic (SADR), the government of the territory known as Western Sahara. This is a disputed territory and the UK regards its status as undetermined.
Tower and Wessex each have 50 per cent equity and working interest in the new project and Wessex will be the operator.

Xenetic Biosciences (XEN 7.12p / £12.64m)
The bio-pharmaceutical company specialising in the development of high-value differentiated biologic drugs and vaccines announced the initiation of the process for First Closing of the Proposals set out in the Shareholder Circular of 4 August 2011 and as approved by shareholders at the Company’s General Meeting held on 2 September 2011. While regulatory processes in both Germany and Russia – including as they relate to asset transfers, valuation and registration – have proved to take longer than first envisaged, the parties have commenced the process of First Closing (namely completion of the Subscription Agreement with SynBio LLC in Russia and the Acquisition Agreement under which the Company is to acquire the entire equity capital of SymbioTec GmbH). The first stage in effecting First Closing has been initiated by the transfer to SynBio of 34, 000,000 Xenetic Ordinary Shares formerly held by FDS Pharma. Commenting on this process, M. Scott Maguire, CEO of the Company, said: “The Xenetic Board is delighted to see this series of transformational deals reach its final stages. The transactions involved in what is a complex set of deals spell a new beginning for the Company as they enable us to implement our strategy of de-risking biotech. With the new Co-Development Agreement with SynBio, we will have 12 drug candidates in various stages of development in Russia and India via licenses. The data generated by our partners will give human proof of concept on the drug candidates’ merits as a therapy, thus taking a large element of the risk out of drug development and allowing us to decide which drug candidates have a good chance of success before we allocate our newly acquired cash resources to US and European clinical trials. A further step in our de-risking process involves reformulating successful marketed drugs with our naturally-occurring, patent-protected platform technologies and creating next generation versions of these successful drugs. With these de-risking approaches to drug development, we look forward with confidence to a new commercialisation phase as a specialty drug developer able to accelerate the creation of shareholder value.”

*A corporate client of Hybridan LLP

A full archive of previous weeks’ Small Cap Wraps can now be viewed on

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.