Small Cap Wrap: Month: December 2011

AIM Breakfast - Archive

13 December 2011

This week: A standing Avation for new financing, Forbidden allows Youtube and Mediwatch looks to expand.

With both the FTSE and the AIM All Share dropping slightly last week (35 points and 5 points respectively), but with heavy fluctuations over the course of it, the financial markets continued to exhibit little concrete trend. Last week was marred by a series of Eurozone related discussions, which ended in a British veto of a significant shift in economic power to a central form, and the associated political tensions fed through into the market place. This week so far has seen an announcement that the UK rate of inflation (CPI) has fallen to 4.8 per cent for November, down from 5 per cent before), and the rest of the week will see unemployment and retail sales data also being 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.

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.

AFF Divestment of Putu Iron Ore Project, ALO Appointment of a Senior Geologist, AGL Research Agreement, ANGM Financial and operational update, AVAP Placing, BEM Initiates Drilling, BGBL Interims, BIOM Reclassifies Loans, CAU Acquisition of Venture Business Research, CSLT Funding Update, ECR Argentinian Gold Project and THEMAC Update, FBT FBT licenses FORscene to YouTube, HDD Preliminary results, HCM Loan facility,  IKA New Contract, MDZ Half-yearly unaudited results, MDW PSAwatch developments in the UK and France, NCC Trading Update, OMPP Acquisition of Karaoke and Music Catalogue, PGH CEO Appointed, PHC Harpin results, POS New Order, PGRP Contract Win with Asian Government Agency, SLN positive outcome from Europe and US on patents, SSP Interim results, SNG recruitment complete for Phase II trial, SYNC Expansion Order, TRX Placing, TRT  Strategic Partnerships and Exclusive distribution agreement, and ZYT Preliminary results.

Afferro Mining (AFF 54.75p/£56.90m)
Afferro Mining, a TSX-V/AIM listed exploration and development company, and its wholly owned subsidiary, Mano River Iron Ore Holdings Ltd, have entered into a legally binding heads of terms agreement with Lybica Holdings, an affiliate of Severstal for the sale of its 38.5 per cent interest in the Putu iron ore project in Liberia. Lybica currently holds the remaining 61.5 per cent interest in Putu. On completion, Afferro will receive a cash payment of US$65m and an additional consideration should Putu be sold to a third party. The funds will be used by Afferro to accelerate its 100 per cent owned Nkout iron ore project in Cameroon.

Alecto Minerals (ALO 1.88p/£3.66m)
Alecto Minerals, the exploration and development company focussed on Africa, has appointed a Senior Geologist to strengthen its initial reconnaissance work at its 945.5 sq km Wayu Boda Gold Project, located in the central-southern Adola greenstone belt in southern Ethiopia. Wayu Boda is held through the company’s wholly owned subsidiary, Rift Valley Resources Ltd, following the recent acquisition.

Angle (AGL 81.50p/£29.43m)
The Company announced that Parsortix Inc, its 90 per cent owned portfolio company which specialises in medical diagnostics has signed a research agreement with the University of Surrey’s Oncology Department Professor Pandha will be leading the Department’s work to evaluate the Parsortix cancer cell separation device. The work will include a structured investigation of the Parsortix device’s capability in capturing circulating tumour cells (CTCs) from cancer patient blood and optimisation of this process compared to the “spiked blood” previously used. The first phase of work will focus on the optimisation, enumeration and characterisation
of the captured CTCs.

Angel Mining (ANGM 1.12p/£10.17m)
Angel Mining, a gold and zinc/lead mining company with two active projects in Greenland, made a number of announcements this week regarding a rescheduling of short term debt and an operational update to one of its gold pours. The Company operates a significant amount of short term debt, which currently stands at $23.2m plus accrued interest plus accrued interest to 31 December 2011 of $4.8m, and has reached an agreement with Cyrus Capital Partners to extend the repayment date of the loan from 31 December 2011 to 31 December 2012, with interest amounts being capitalised to that date also. This marks the beginning of a more extensive refinancing plan to facilitate the Black Angel project; a high grade zinc/lead project based around a previously developed mine in the north of Greenland. On the gold dore side of the business, the Company announced a further 15.4 kilograms was poured at Nalunaq, which has now been shipped to Switzerland for refining and subsequent sale. This takes Angel to 89.6 kilograms of gold dore in total since first pour on 27 May 2010, and it continues to seek to achieve a target of 1,500 to 2,000 ounces per month by early 2012- which if achieved will certainly mark a milestone for the Company and help build its cash generation.

Avation (AVAP 110.5p/£42.66m)
Aircraft rental and leasing company announced that it has raised £2m from the placing of shares at a price of 110 pence per share, which will be used to fund the exercise of five aircraft options over ATR72 aircraft and for general working capital purposes. This will take the total number of these aircraft to 13. Avation has also secured a further additional eight options for this aircraft, which are to be wet-leased in conjunction with Skywest Airlines for Virgin Australia. Last month the Company announced results for the year to 30th June 2011 in which it showed that 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), and dividends per share up by 66 per cent to 1p per share. This latest bit of news should serve the Company well in continuing to make the most of this growing opportunity.

Beowulf Mining (BEM 15.62p/£32.88m)
Beowulf Mining, the mineral exploration company which owns several projects in Sweden, said its wholly owned subsidiary, Beowulf Mining AB, has initiated its 2011/2012 drilling campaign on the Kallak iron ore license area. The first rig has drilled 140 meters at Kallak North since the weekend at depths of 200 meters. A second much larger rig is expected to be on site and drilling in the third week of December and will complete deeper extension of holes, to depths of more than 400 meters. Initial plans are for 7,000 meters of drilling at Kallak North, the majority of which will be utilized in confirming if Kallak North and South are a single ore body.

Bglobal (BGBL 7.5p/£7.97m)
The smart energy solutions supplier reported a 16 per cent fall in total revenues in the six months period ending September 2011. This was primarily due to the announcement by the Department of Energy and Climate Change (DECC) in March this year that the mass roll out for smart meters to the residential and SME markets will start in 2014, much later than anticipated. Rather than becoming beholden to government policies and the six big utilities, the management is looking to partner with a new retail entrant which already has a trusted relationship with end users.   The group generated net cash just under £1m from operations as action was taken to cut costs and reduce inventories in the Bglobal metering business. Further cost cutting is expected to generate £1.5m of annual savings on top of £1m already achieved. Utiligroup, the software business acquired last fiscal year, has continued to perform in line with expectations.

Biome Technologies (BIOM 0.15p/£8.83m)
Biome a growth oriented, commercially driven technology group, said Tuesday it has completed a reclassification from loan to equity of €1.25m of its shareholder loans to Biotec, its joint venture manufacturing facility in Germany. The reclassification enables Company to receive accrued interest on its shareholder loans to Biotec. In consequence the Company has now received €406,244 in accrued interest and the principal of the loans outstanding has reduced from €7.62m to €6.37m.

Centaur Media (CAU 35.88p/£50.55m)
Centaur Media, the business information and events group, has acquired Venture Business Research Ltd (VBR), a specialist digital information, data and analytics business in the clean energy and global security sectors for a maximum consideration of £7.5m. The cash consideration comprises an initial payment of £2.5m at completion and a further payment, subject to VBR’s performance in the year to June 2015.   VBR’s subscriber base is growing rapidly and the acquisition is expected to be earnings enhancing in its first full financial year of ownership.
VBR provides its services to corporates, finance professionals, lawyers and investors active in the clean energy, security and defence markets worldwide. VBR will become part of Centaur Media’s Business Information Division, alongside Perfect Information, the information and workflow solution for investment banks and the corporate advisory community.

Cosalt (CSLT 0.17p/£0.69m)
David Ross – co-founder of the Carphone Warehouse – has written to shareholders urging them to accept his vehicle Oval’s discounted offer of £400,000 for the company; which he would then delist.  Earlier in the week the board of Cosalt confirmed that it had agreed terms with Oval to provide a £5m unsecured facility available to the Company for drawdown with immediate effect but expiring with the offer on 22 December. If Oval’s offer for the Company has not been declared unconditional, by 22 December 2011, and in the absence of any other offers of short-term funding, the board intends to seek Oval’s agreement to an appropriate extension of the Facility repayment date. Should Oval’s offer for the Company be declared unconditional and the Facility be repaid, Mr Ross has indicated that Oval would be prepared to provide £5m of longer-term funding as set out in the announcement of 25 November 2011.

ECR Minerals (ECR 1.14p/£6.84m)
The Company has received all environmental and other permits necessary to commence drilling at the El Abra gold prospect in Argentina. A contract driller has already been appointed, which is in the process of moving a diamond drill rig from Buenos Aires to La Rioja province in order to begin operations in the second week of January 2012. THEMAC Resources Group, a TSX-V listed company owned 21 per cent on a fully diluted basis by ECR Minerals, has provided another batch of drill results at its Copper Flat project in New Mexico, USA. These results show numerous high grade intercepts, of which many are at shallow depth.

Forbidden Technologies (FBT 29p/£25.11m)
Forbidden Technologies announced that it has licensed its FORscene Cloud editing platform to YouTube. As is usual in bigger projects, FORscene will provide the Cloud editing element in a larger integrated system. YouTube will use Forbidden Technologies’ FORscene platform to support remote video editing and publishing for web and broadcast delivery. This agreement will make a significant contribution to the performance of the Company over the next twelve months. The stock was up 84 per cent on the news on the day.

Hardide (HDD 0.58p/£5.51m)
Hardide, the provider of unique metal surface engineering technology, last week announced its preliminary results for the year ended 30 September 2011. Turnover increased by 12 per cent. to £1.95m (2010: £1.74m) with losses before tax of £446,000. The chairman reported that the Company has grown revenues in each of its key sectors and that it was EBITDA positive in H2 2011 despite deliberate increases in business development expenses. Further, sales in the first few months of the current year have shown a continuing improvement across all of markets and indications from customers are reassuring. The directors are optimistic that growth will be sustained over the coming year.

Hutchison China Meditech (HCM 271p/£140.22m)
Hutchison China MediTech, the holding company of a healthcare group based primarily in China, this week announced  that its wholly owned subsidiary had entered into a new HK $210m (approximately US$27.0m) three year term loan facility with an independent financial institution. Hutchison Whampoa, a substantial shareholder of the Company, guaranteed the loan facility and is to be paid a guarantee fee by the Company. The CEO commented that the loan facility it had arranged represents in the Company’s view, the most practical, cost efficient and non-dilutive financing option for the Company.

Ilika (IKA 48p/£17.56m)
Ilika PLC an advanced cleantech and biomedical materials discovery company, said its biomedical subsidiary, Altrika Ltd., is heading up a consortium that has been awarded a £452,000 research and development grant to develop a cell label capable of being used in vivo for cell therapy applications, and have announced a Grant from the U.K. government-backed Technology Strategy Board through its Regenerative Medicine Tools & Technologies competition. Altrika has also entered into a separate joint development project with a world leading life sciences diagnostic equipment manufacturer. The Contract will utilise Altrika’s high throughput, polymer screening technologies for the identification and optimization of the next generation of polymer filters, in return for stage payments.

MediaZest (MDZ 0.48p/£1.18m)*
Revenue for the period end September 2011 was £1,746,000 (2010 – £1,080,000) and the Group made a loss for the period, after taxation, of £151,000 (2010 – loss of £109,000. Turnover for the period was almost as much as was achieved in the whole of the year ended 31 March 2011. The source of this increase in revenue was due largely to enhanced spending from existing retail customers, such as O2, HMV and JD Sports, as well as the securing of business from new clients such as West Bromwich Building Society. Business in the Education market proved challenging; government cut backs have affected the sector as a whole and margins are under pressure. The Group will continue to place emphasis on MV’s retail offering complemented by the high quality engineering and installation services that TV provides. The Group will continue to place emphasis on improving the quality of its revenues with the longer term objective of covering monthly overhead in its entirety from this source.

Mediwatch (MDW 2.25p/£3.17m)
The Company announced that PSA watch continues to make good progress in line with the company strategy. In the UK charitable groups are switching to using the PSAwatch as a PSA measuring device in Well-Man prostate awareness meetings. In France, a clinical study conducted at six locations across the country which involved testing over 200 men has been carried out over the course of 2011 comparing PSAwatch to laboratory PSA values. Based on the results from the first five sites, AVF Biomedical Mediwatch’s distributor in France, has launched the PSAwatch system at the Annual French Urology congress in Paris which was held between 16th and 19th November 2011 and they have already received orders. The Company has begun direct marketing of the PSAwatch into Europe, Middle East, Asia Pacific and Latin America. A large clinical trial is scheduled to begin at the Royal Hospital in Melbourne in Australia in early 2012. In addition, the Company is looking into increasing the utility of the reader into other applications.

NCC Group (NCC 790p/£271.03m)
NCC Group, the Escrow and Assurance services business, provided a trading update last week in which it noted that revenue for the period to 31 May 2012 is expected to be approximately £21m – £21.5m, which is some 27 per cent above last year’s first half performance and ahead of the £19.6m market consensus. Whilst the Escrow business continues to perform in line with Board expectations (back in October the Company stated that this business had grown at a rate of 12 per cent), it appears the Assurance division has been a star performer having apparently benefitted from the increased market awareness around information and internet security (with there being a spate of high profile attacks being focused on in the media of late). The speed of growth in revenues and margins has been unprecedented and is a reflection of how quickly the market space is evolving- certainly food for thought which could continue to be of great significance for the Company going forwards.

One Media Publishing Group (OMPP 3p/£1.30m)*
The PLUS quoted consolidators and acquirers of music and video rights, announced that it has acquired under license the catalogue of rights to the Mike Bennett Productions catalogue. The deal was signed for a cash consideration of $24,500 plus an onward royalty. The catalogue comprises over 6,000 karaoke tracks from over the last 50 years of the charts. In addition there are another 4,000 tracks of original artist performances of a nostalgia genre including tracks performed by The Libertines, Babyshambles, Bad Manners, The Stranglers, Emerson Lake & Palmer, Mike Bennett, Pete Doherty, Tom Pepper, and Wishbone Ash.

Personal Group (PGH 269p/£80.87m)
Personal Group was pleased to announce that Mark Scanlon’s appointment has now been approved and Mark will commence his role as group CEO with immediate effect. Mark previously spent four years at FMG Support Ltd., the UK’s leading incident management and roadside assistance provider, where he served as managing director, becoming chief executive in January 2011.  Mark had full responsibility for approximately £100m turnover and led the board and a workforce of 400 people.  Prior to that, he was general manager and managing director of Commercial Division at Dyson Ltd., where he established a new division of the business in the UK and overseas, launching the Dyson Airblade globally.  From 2002 to 2005, Mark held the position of head of global business development at BAE Systems plc.

Plant Health Care (PHC 36p/£19.15m)
Provider of naturally-derived products to the agriculture industry announced that its Harpin Seed Treatment has independently demonstrated that it can increase Soybean yields beyond standards alone. Direct Enterprises, Inc., Monsanto’s exclusive distributor of N-Hibit(R) HX-209 dry formulated seed treatment showed yield data that demonstrated that the technology delivers added yield over and above traditional insecticide/fungicide seed treatment combinations. The tests and results were performed and have been achieved when used in conjunction with industry standard seed treatments, which the Company feels validates Monsanto’s choice to distribute the treatment to American soybean growers.

Plexus Holdings (POS 88.5p/£70.96m)
Plexus announced it has received a £800,000 contract from Australian oil and gas explorer Santos Ltd. (STO.AU) for wellheads and related equipment, with revenues expected from the contract in August 2012.
The Company believes that word of mouth played a large part in Plexus being awarded the contract and that working with one of Australia’s leading gas producers, Santos Ltd., will undoubtedly strengthen their profile in the country and region, and hopefully open up further opportunities in this expanding market.

Pulse Group (PGRP 1.45p/£1.3m)
PLUS-quoted leading digital market research agency in Asia announced that it has won a major contract worth $320,000 with an Asian government agency.  Under the terms of the contract, Pulse will utilise its pioneering online market research services to facilitate the development of a country branding strategy for the Agency as it aims to attract Foreign Direct Investment into the region with a particular focus on technology.  Pulse Chairman Bob Chua commented: “This appointment, which follows swiftly on the back of two agreements with leading financial institutions, strongly endorses our growing reputation as a provider of reliable and highly insightful online market research, which has the capacity to fuel growth in Asia.  We are focussed on building this momentum and look forward to updating shareholders regarding new contract wins over the coming months.”

Silence Therapeutics (SLN 2.58p/£14.85m)*
A leading RNA interference (RNAi) therapeutics company announced a positive outcome from the oral hearing on 6 December 2011 at the European Patent Office (EPO) over opposition to Silence’s granted European Patent EP 1 536 827 “Further use of protein kinase N beta”. The granted patent refers to the gene target PKN3, protein kinase N beta, targeted by Silence’s lead program Atu027, which is currently in a Phase I clinical study. The Opposition division of the EPO decided to uphold the patent in amended form. Silence also announced that the United States Patent and Trademark Office (USPTO) has completed its reexamination of four key RNAi patents that form part of the foundational “Zamore Design Rule” patent families. Following a review requested by an anonymous third party during 2010, the USPTO has concluded that the reissued claims are patentable and has issued Notices of Intent to Issue Reexamination Certificates. The prior art cited in the reexaminations was unsuccessful in invalidating the patents.  Thomas Christély, Chief Executive Officer of Silence Therapeutics, said: “We are very pleased that the USPTO has reissued these four patents. This outcome sends a clear message regarding the strength of Silence’s intellectual property. We believe that there is significant value in the Zamore technology as a fundamental tool for the development and commercialisation of RNAi therapeutics with enhanced efficacy and will continue to work to translate this value into our own RNAi therapeutic pipeline.”

Solid State (SSP 123.5p/£8.39m)
Solid State, the supplier of battery power solutions, specialist electronic components and industrial ruggedized computers to the electronics market, this week announced its interim results for the six months ended 30 September 2011. Revenues increased by 10 per cent. to £11.36m (2010: £10.30m) and profit before tax increased by 28 per cent. to £704,000 (2010: £550,000) reflecting the operational gearing in the business. The chairman reported that although the Company remains mindful of the general economic environment, it is confident in the Company’s prospects, both for this year and beyond. This confidence is underpinned by its order book, which as at 30 November 2011 amounted to £11.6m, a record level, and is reflected in the Board’s declaration of a 2.5p interim dividend (a 25 per cent increase on the interim dividend paid in 2010).

Synairgen (SNG 33.5p/£23.30m)
Synairgen, the respiratory drug discovery and development company with a particular focus on viral defence of the lungs, announced that the last subject has been successfully recruited into its Phase II proof of concept clinical trial of inhaled IFN-beta in exacerbation-prone asthmatics. The Company is on schedule to announce the results of the study in late Q1 2012.

Synchronica (SYNC 6.75p/£10.71m)
Synchronica, the international provider of next-generation mobile messaging services, announces that it has received an expansion order for professional services, from an existing Tier-1 mobile device manufacturer customer. The order, which is valued at US$580,000, enables Synchronica to provide the customer with continued support and product development throughout 2012. All revenue associated with the order will be recognised during the 2012 financial year; however under the terms of the order, the customer is required to make an immediate payment of 50 percent of the order’s total value. The remaining 50 percent will in turn be payable to Synchronica later in 2012.

Tissue Regenix (TRX 14.50p/£68.23m)
Tissue Regenix, the regenerative medical device company, last week announced a placing to raise £25m at a discount of approximately 2.7 per cent to the closing mid-market price prior to the announcement. The placing attracted both existing and new investors and includes a significant investment in the Company by Invesco Asset Management.
The placing proceeds are expected to provide the Company with sufficient working capital which potentially enables the Company to progress its key programmes through a range of key value inflection points. Part of the monies will be used to fund the development of further applications of the vascular patch through a mixture of both preclinical and clinical studies.  Following its entry into the cardiac market, the Company also intends to use part of the proceeds to build on this by developing a porcine heart valve product  and seek regulatory approval for a decellularised version of an existing bioprosthetic hear valve.

Transense Technologies (TRT 4.62p/£6.12m)*
The Company announced that its trading division, IntelliSAW, has entered into a strategic partnership with PQClean of Taiwan, with Wuhan Fenjin Electric Power Technology Co., Ltd and signed an exclusive distribution agreement with Adperc of Brazil. PQClean will distribute IntelliSAW’s range of products throughout Taiwan. PQClean is a system integrator and supplier of power conditioning, control and monitoring equipment for the electric power industry. Fenjin will provide value-added system integration services for IntelliSAW’s innovative wireless/ passive temperature monitoring system throughout China in electric power transmission and distribution systems. Adperc has forecast sales of the IntelliSAW monitoring system in Brazil of at least $2.8 m over the next three years and will have to achieve this to maintain exclusivity in the territory. Adperc will provide distribution, system integration and marketing services for IntelliSAW’s innovative wireless/passive temperature monitoring system throughout Brazil in electric power transmission and distribution systems. The partnership provides a foundation for the adoption of IntelliSAW’s technology within Brazil’s high growth Smart Grid market.

Zytronic (ZYT 223.5p/£32.93m)
AIM listed specialist manufacturer of internationally award-winning touch sensor products last week announced preliminary results for the year to 30 September 2011. Revenues for the period increased by 11 per cent to £20.5m (2010: £18.5m) and profit before tax by 22 per cent to £3.6m (2010: £2.9m), largely on the back of a 38 per cent growth in Touch product sales to £14.2m (2010: £10.3m). Interestingly, the Company proposed a final dividend of 5.6p per share, pushing up the full year by 10 per cent to 7.7p. Though sales of touch sensors into the Asia Pacific region declined slightly on the back of a fall in ATM installations, EMEA and the Americas have exhibited strong growth across the variety of applications to which the technology can be applied, though the previously announced Coca Cola dispenser contract has not matured as quickly as expected. However, with the results demonstrated and an ever expanding footprint being created using value added resellers, the Company continues to make great strides in this very exciting market space.

*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.

6 December 2011

This week: New advances for AMS, Stratex strategises, and African Medical demonstrates healthy performance.

A good week in the financial markets, with the FTSE rising almost 400 points to 5,550 at close and the AIM All Share rising 25 points to close at 700. The start of the Christmas festive season has seen strong rises in retail sales, and this together with the unveiling of the austerity plan for Italy (which helped push its borrowing costs down) certainly had some part to play in the week’s performance. The week ahead sees the MPC’s interest rate decision on Thursday being announced, with it being widely expected to remain at its current 0.5 per cent, whilst producer prices, industrial production and manufacturing output data are all to be announced over the next few days.

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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.

RGO Final Results, AMS Acquisition, Placing and Trading Update, AMEI Interim results, EKF Order for more Supply, FPM Operational Update, INS Board appointment, LOQ New Agreement, MDM Awarded EPC contract,  MDY Returning Cash, NMG Placing, NTOG Own Plays, OMPP Recording contract with Anita Harris, OEX Operational update, PLA Interim Results, POS Licensing Deal, PXS Interim results, PGRP Strengthens US office and wins new contracts, SID Preliminary results, SQS New Contract Win, STI acquisition, TCN Interim Figures, VGM Annual Results, WAS AGG – Increased stake and new CEO, and XEN Completion of Subscription Agreement

2 ergo (RGO 77.5p/£27.36m)
The mobile marketing solutions company blamed the 18 per cent fall in fiscal 2011 revenues primarily on actions taken ahead of a new code of practice introduced by PhonepayPlus, the phone-paid services regulator, in September. The 41 per cent reduction in low margin wholesale reseller channel sales, however, had the beneficial effect of improving group gross margin by 6 per cent to 56 per cent. The management has also decided to reduce expenditure on developing “apps” which is becoming commoditised and unattractive. Resources will be directed mainly to developing products for customer acquisition, retention and loyalty campaigns in the mobile space.

Advanced Medical Solutions (AMS 84.5p/£131.14m)
Advanced Medical Solutions, the global medical technology company, last week announced the proposed acquisition of RESORBA, a long established wound care and wound closure business headquartered in Germany for a total cash consideration of €63.8m (approximately £55m).  RESORBA is a manufacturer and distributor of surgical sutures and collagen products for surgical disciplines. Headquartered in Nuremberg, RESORBA was founded over 75 years ago and today employs 150 people. The acquisition is being funded through a combination of the proceeds of a placing, a new £25m term loan facility and existing cash resources. The placing is being undertaken at a price of 72 pence per share to raise approximately £34.0m (£30.5m net of acquisition and placing expenses). The Company highlighted at the time of its interim results on 7 September 2011 that it was being impacted by destocking at one of its major European wound care partners. While this destocking continues, the Company reported that Directors expect profit before tax to be in line with the Board’s expectations for the full year and remain confident and optimistic about the Company’s long term prospects.

African Medical Investments (AMEI 3.12p/£10.07m)
The AIM listed company operating in the African healthcare sector last week announced its results for the six month period ended 31 August 2011. African Medical saw the successful recovery and turnaround of its hospital and healthcare portfolio which consists of AMI Hospital Maputo, AMI Hospital Dar es Salaam, AMI Hospital Harare and AMI Aviation. Considerable progress has been made towards the objective of becoming a leading provider of private specialist hospitals across Africa, offering high quality in and outpatient services. The period saw a 180 per cent increase in revenue to US$5,941,000 (six month period ended 31 August 2010: US$2,099,000), and of this revenue from existing business units (AMI Hospital Maputo and AMI Hospital Dar es Salaam) increased by 110 per cent for the period. The Company made a 58 per cent reduction in head office operating expenditure and raised US$2m through shares subscribed by the Company’s new Chief Executive Officer, Dr. Peter Botha. Significant progress has been made towards the expansion strategy – new medical facility opportunities are in advanced negotiations in Lusaka, Zambia, and Tete, Mozambique. It would seem that the turnaround of the business led by Mr Botha has well and truly begun.

EKF Diagnostics Holdings (EKF 24.25p/£60.92m)
The Company announced that one of its South American distributors has received an order from the Instituto Mexicano del Seguro Social (IMSS), the Mexican Institute of Social Security, to supply more than 3,500 of its point-of-care haemoglobin testing instruments, the HemoPoint® H2, and related cuvettes. The order from the IMSS is related to its “IMSS-Oportunidades” initiative, a government health programme focussing on preventative diagnostics through the early identification and treatment of conditions such as diabetes, malnutrition, high blood pressure, high cholesterol, anaemia, and other epidemiological diseases. EKF’s HemoPoint® H2 instrument will be a key diagnostic tool in this programme which will cover over 10 million IMSS members including the unemployed, farmers, single mothers and the population’s lowest income groups. EKF has already received part payment via an upfront cash payment of $1.9m and will be fulfilling the order through existing stock supplies rather than by manufacturing additional products.

Faroe Petroleum (FPM 158p/£335.57m)
Faroe Petroleum the independent oil and gas Company provided an operational update following the completion of the transaction with Petoro AS to swap Faroe’s interest in the Maria discovery for Petoro’s interests in a number of high quality oil and gas production assets in Norway. The transaction which had an effective date of 1 January 2011 took the form of an asset for asset swap, comprising Petoro’s interest in Brage, Hyme, Njord, Ringhorne East and Jotun fields and Faroe’s 30 per cent interest in the Maria discovery. There was no cash consideration from either party, although Faroe will receive the net benefit of production sales from the Petoro Assets for the 11 months to 30 November 2011 in cash. The Petoro Assets are expected to average production of 7,600 boepd over 2011, with production from Faroe’s existing production assets estimated to average 2,500 boepd over the same period. For 2012, the Company expects that average net Faroe Group production will be in the range of 6,000to 8,000 boepd reflecting reduced production primarily from the Njord field due to a riser replacement programme currently underway and continuing into 2012, and the tie in of the new Hyme field to Njord. Separately, results of a detailed analysis of the data obtained from an exploration well indicated that Fulla oil is of a related quality to the crude oil in the giant Clair field, located approximately 31 kilometres to the south west. A post drill analysis of the licence area indicates likely oil of circa 166 million barrels and initial estimated recovery factor ranges of between 15 per cent and 25 per cent. The majority of this volume sits within the Freya structure which has been considerably de-risked by the 206/5a-3 well due to the proximity of the discoveries.

Instem Life Science Systems (INS 218.5p/£25.60m)
The IT applications provider to the early development healthcare market has appointed Nigel Goldsmith to its Board as Chief Financial Officer, with immediate effect. Nigel holds several years experience in senior financial roles, at both public and private companies within the pharmaceutical industry, including three years at IS Pharma plc. Most recently, Nigel was FD & Company Secretary at Eazyfone Ltd, an online mobile phone recycler.

Lo-Q (LOQ 193.5p/£33.42m)
AIM listed provider of virtual queuing systems for theme parks has signed a MoU with Mastercard International to develop a contactless payments solution. Both companies will work together and combine some of their core technologies to develop the solution which will be targeted at the operators of theme parks, water parks and other entertainment attractions which normally require consumers to queue before use. The MoU will run for three years and could serve the Company well in offering an ever more appealing product range. Back in November, Lo-Q announced a 5 year extension of its contract with Six Flags (considered to be the world’s largest amusement park corporation), and this latest development should serve the Company well in ensuring it continues to remain at the forefront of technology in this space.

MDM Engineering Group Ltd (MDM 93.5p/£34.84m)
The minerals process and project management company focused on the mining industry announced that it has been awarded and signed the contract for the Engineering, Procurement & Construction (EPC) of Tharisa Minerals (Pty) Ltd Chromite and Platinum Project in South Africa, near Marikana. The EPC contract has been awarded on a fast track basis and the project is expected to be commissioned in August of 2012. At steady state, the Tharisa Expansion project will process some 3.6m tonnes per annum of run of mine ore. George Bennett, MDM Executive Director said: “It is the third Platinum project that MDM has been involved in over the last three years and confirms MDM expertise in this area”.

MDY Healthcare (MDY 54.5p/£9.31m)
The Board of MDY Healthcare confirmed that the Company will receive gross cash consideration of approximately US$21.8m (£13.98m) for the sale of its holding in Medivance. The Board further confirms that it has been advised that the receipt of the proceeds is not expected to give rise to a tax liability for the Company. As stated previously, MDY Healthcare currently has total outstanding indebtedness of approximately £1.65m plus accrued interest. Following receipt of the proceeds, the Company will repay all outstanding debt together with all accrued interest. Following the repayment of the debt, the Company intends to return the majority of the funds received from the realisation to shareholders by the end of March 2012 and is in discussions with its advisers on the most efficient and timely way to achieve this. As a result of the completion of the Transaction, Stanmore is the Company’s sole remaining investment.

Noricum Gold (NMG 2.62p/£13.05m)
Noricum Gold Limited, the Austrian focussed gold exploration and development Company, last week announced that it has raised £680,000 by way of a placing of new shares to new and existing shareholders in the Company at a price of 2.5 pence per share  The funds raised will be used to implement a defined 2012 exploration programme across the Company’s five highly prospective gold and precious metal assets in south-central Austria, with a particular focus on the 51 sq km Rotgülden gold and precious metal licence.   Work to date at Rotgülden has included a 1,800m drill programme designed to intercept sulphide targets at the previously producing gold mining centre, as well as facilitate further down hole electro-magnetic (EM) work at this target.  In tandem with this, the Company has received encouraging results from extensive regional sampling work along the 8km of prospective strike running through the licence area.  This has highlighted the Altenberg and Schurfspitze prospects as being worthy of further exploration in 2012, and the Board plans to conduct an airborne EM survey over the licence area followed by exploration drilling at these targets in the next field season.

Nostra Terra (NTOG 0.44p/£8.46m)
Nostra Terra, the oil and gas producer with a growing number of projects in the US announced that it has commenced the development of its own plays within an established hydrocarbon region in Oklahoma. Leasing and pre-drilling activities will continue through 2012.  The Company plans for the first wells to be drilled in the fourth quarter of 2012. Geologically, the project area lies within a proven hydrocarbon system containing shallow oil and associated liquid-rich natural gas producible from numerous formations. There is extensive regional structural mapping.  A number of potential horizontal drilling locations have already been identified.

One Media Publishing Group (OMPP 3p/£1.3m)*
The Company announced that it has recorded five spoken word children’s stories with British actress of stage and screen, Anita Harris. The recording project will cost £10,000 initially to create the first five recordings and will be released pre-Christmas. Anita Harris has been in the studio recording five children’s stories to add to the catalogue of rights currently marketed by One Media. The five stories are Cinderella, Snow White, Little Red Riding Hood, The Emperor’s New Clothes and Beepo the Bear. The recordings will be released to all digital stores including Amazon, Itunes and Spotify to name three of the 300 digital stores that will be promoting the stories and will be released pre-Christmas in time to capture the ‘Panto’ season. One Media intends to record more of this style of product to complement its existing catalogue of over 700 other children’s recordings currently on offer.

Oilex (OEX 14.75p/£37.37m)
Oilex, the ASX and AIM listed oil exploration Company, this week reported that operations on the Cambay-76H horizontal well in the onshore Cambay Field, Gujarat State, India, had resumed. The operations had been suspended since the end of August 2011, when the coiled tubing milling assembly, which was being used to mill out the fracture stimulation stage seat components, became stuck in the wellbore.  The primary objective of the well is the acquisition of data from a long term production test to assess the potential of certain aspects of the reservoirs and will also provide important information for the next stage of the independent hydrocarbon assessment.

Plastics Capital (PLA 69p/£19.0m)
The Group which is engaged in the manufacture of plastic products focused on proprietary products for niche markets, announced results for the 6 months to 30 September 2011. Revenues stayed at the same level of £16.3m whilst it achieved an 11 per cent increase in adjusted pre tax profit to £2m (2010: £1.8m) and announced a maiden dividend of 0.33p per share. The Group has a number of brands under its umbrella, including Bell Plastics (the global leader in manufacturing highly specialised plastic mandrels used predominantly by the manufacturers of hydraulic and other industrial hoses), BNL (plastic bearing products as well as plastic gears, shafts and bushes), C&T Matrix (manufacturing creasing matrix) and Palagan (for blown polyethylene films). The Company believes it has little/no direct competition in the markets they operate within, and has continued to build its pipeline of opportunities, having made eleven new account wins during the first half of the year, and establishing new operations in China, India and Thailand. The latest set of results is strengthened by the announcement of a maiden dividend- a feature that investors prize highly in these turbulent financial markets.

Plexus Holdings (POS 91p/£72.97m)
Plexus, the oil and gas engineering services business and owner of the proprietary POS-GRIP(R) method of friction-grip wellhead engineering, announced that it has entered into a licensing, manufacturing, distribution, and agency agreement with Breda Energia S.p.A, a provider of specialist products and services to the oil and gas sector worldwide. This Agreement, the first of its kind for Plexus, grants Breda exclusive rights to manufacture, sell, rent out and service POS-GRIP exploration and production wellheads and other related POS-GRIP products to ENI S.p.A, Italy’s largest oil and gas company in any part of the world in which ENI conducts its business. If Breda wishes to supply major oil companies other than ENI with POS-GRIP equipment this would be considered on a project by project basis and a further and separate agreement would be drawn up between Plexus and Breda.

Provexis (PXS 1.78p/£26.04m)
The life-science business that develops, licenses and markets scientifically-proven functional food and sports nutrition technologies, last week announced its interim results for the six months ended 30 September 2011. Revenues for the period were £1.53m with a loss for the period of £1.47m; whilst cash balances at 30 September 2011 were £2.8m (2010: £6.3m). The Chairman reported that the Company has undergone substantial change since the beginning of the financial year with the acquisition of Sport in Science and further progress with its lead functional food technology, Fruitflow. DSM is making good progress with Fruitflow with seven regional consumer products containing the technology now on sale, with more to follow, and commercial discussions ongoing with global brand owners.  The Company has therefore decided to wind down the research and development work on the plantain extract technology and to review the cardiovascular inflammation projects – reflecting the transition of the Company from a pure R&D developer to a functional food business which spans R&D to consumer.

Pulse Group (PGRP 1.35p/£1.3m)
PLUS-quoted  leading  digital  market  research  agency in Asia announced that it  has appointed Carmen  Endrina  to lead the Company’s client development  offering in  the US, with  particular focus on its west coast technology clientele. Ms. Endrina has spent most of her professional career  as  a researcher, most recently, she was a Research  Analyst with Gartner, the world’s leading I.T. research and advisory company, where  she worked  on  primary  custom research projects covering the US, Asia-Pac  region, and  international markets. Pulse also announced yesterday that it has won two contracts to provide its innovative online market research services to two major companies in the financial sector, a leading international management consultancy and Singapore’s second largest retail bank. Pulse Chairman Bob Chua commented: “International clients are increasingly seeking growth opportunities into and within the Asia-Pacific region and with our innovative range of market research solutions enabling us to monitor online opinions, we are pioneers in this space. We have a solid pipeline of business over the coming months, and I am confident that this will increase further as our strengths are increasingly understood.”

Silverdell (SID 11.5p/£20.8m)
Silverdell, the asbestos, industrial and environmental solutions provider, announced preliminary results for the year to 30 September 2011. Whilst revenues showed a modest increase of 5.3 per cent to £59.7m (2010: £56.7m), a 15 per cent increase in adjusted profit before tax to £3m was achieved (2010: £2.6m), and the Company also demonstrated healthy growth of its order book, which was up 73 per cent to £107m at 31 October 2011 (2010: £62m). The Company operates a number of different divisions, all within the environmental space including that of asbestos management, environmental consultancy, industrial solutions, and regulatory compliance amongst others. With a client base made up of Blue chip customers, as well as a host of smaller organisations, the Company continues to seek to grow its pipeline of opportunities, evidenced by the recent winning of a 10 year Magnox framework in October 2011. Two acquisitions completed during the year (AH Allen and RDS) demonstrate the execution of the growth strategy of the Company, and it continues to indicate acquisitions are still on the cards.

SQS (SQS 152.5p/£42.54m)
Software Quality Systems, the German-based provider of software testing and quality management services, announced the signing of a €20m contract with a global financial services organisation. This is significant news for the Company, which has a range of sizeable clients across a variety of industry spaces, and this represents their largest contract win to date. The contract spans a period of two and a half years, with SQS providing its core managed testing service to the client, with service being provided initially on site but increasingly off site on the back over the course of the contract. Also 30 testing specialists employed by the client will transfer to work under SQS under the agreed terms. The managed services division now has an order intake that exceeds €62m for the year to date, representing 25 per cent of overall revenues. In September the Company announced very positive first half results, with revenues up 29 per cent to €95.3m and (2010: €73.9m) and pre tax profit up 43 per cent to €1.96m (2010: €1.37m). This latest news looks set to help drive the Company’s momentum and we look forward to keeping an eye on how it continues to perform.

Stratex International (STI 6.88p/£24.12m)
The exploration and development company in Turkey and East Africa has made a recommended offer to acquire the entire issued share capital of Silvrex Ltd., a private UK company with a prospective gold portfolio in Senegal and Mauritania. Silvrex’s prospective gold portfolio includes the 636 sq km Dalafin Gold Licence in eastern Senegal and four new licences in Mauritania, one of which is located within the same geological terrain as Kinross Gold Corporation’s 20 million oz Tasiast gold deposit.

Tricorn Group    (TCN 26p/£8.68m)
Hats off to Tricorn, the tube manipulation specialist, who announced unaudited interim results for the six months ended 30 September 2011. The Company reported a further period of growth benefiting from exposure to global markets and improvements to operational performance. Revenue was up 23 per cent to £12.420m (2010: £10.090m) and PBT was up 61 per cent to £0.722m (2010: £0.449m). The Company also declared an interim dividend of 0.07p per share.

Vatukoula Gold Mines (VGM 71p/£62.88m)
The Fiji-based gold producer has reported sales growth of 19 per cent for the year ending August 2011, thanks entirely to the increase in realised gold prices. However, lower recovery rates and higher costs due operational and management issues resulted in losses of £3.3m. The changes in management, reporting structures and mining practices undertaken in the last fiscal year are beginning to yield improvements, and this is reflected in strong increases in volumes delivered and lower costs since September. The Company retained a strong balance sheet, with cash holding of £6.9m at end-August 2011.

Wasabi Energy (WAS 1.98p/£47.46m)
Wasabi Energy has increased its stake in one of its three strategic assets, Aqua Guardian Group (AGG), from 47.5 per cent to 79 per cent through the conversion of $4.2m of intercompany loans into equity.  This follows the appointment of Tim Grogan as the CEO of AGG to lead the Company to the next stage of development: the large scale deployment of its water conservation product, AquaArmour, in key markets.  Prior to joining AGG, Tim was CEO of Dimerix Bioscience, co-founder of Fusion Life Sciences and VP, Commercial Development & Licensing at StarPharma Pty Ltd, an ASX listed product development Company.

Xenetic Biosciences (XEN 6.75p/£19.46m)
The bio-pharmaceutical company specialising in the development of high-value differentiated biologic drugs and vaccines last week announced the completion of the Subscription Agreement entered into as part 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. SynBio LLC has subscribed for shares in the Company at 11p per share, representing a premium of 69.2 per cent to the mid market closing price at close of business on 28 November 2011, thereby raising £12.19m. SynBio LLC is now the beneficial owner of 50.24 per cent of the Company’s shares. The Company expects that completion of the acquisition of SymbioTec will occur within the timeframe previously announced, namely by no later than 15 December 2011. With respect to the proposed Open Offer, the Company will monitor near term market conditions prevailing after completion of the acquisition of SymbioTec, particularly with respect to the Company’s share price, to determine whether the Open Offer should be pursued. Scott Maguire, CEO of the Company, said: “The Company now has the capital to accelerate its drug development pipeline and, in our view, significantly enhance shareholder value.”  It is good to see some of these deals that were struck simultaneously been brought to a successful conclusion.

*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.