Small Cap Wrap: Month: October 2014

AIM Breakfast - Archive

8th October 2014

MediaZest brings home the bacon
Bioventix on the up
Nektan set for AIM

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

ACM trading update,BVXP preliminary results,CBUY placing and contract,IGP trading update,LPA trading update,MDZ new contract wins,MPOW acquisition,Nektan intention to float on AIM,SAR psoriasis drug development,SVR extended agreement,SNTY KPI update,C21 contract award

Accumuli (LON:ACM 25.25p/£40.20m)

Accumuli gave a trading update in advance of its interim results. The Board reported that trading for the six months ended 30 September 2014 is in line with management expectations. The second quarter of the financial year has proven to be a strong period in terms of order intake with a number of notable wins. These include the sale of the DDAM(1) technology to the US and UK operations of a global professional services organisation, Technology Solution contract wins with two large financial institutions and the securing of two long term, on-site, Professional Service engagements for the provision of IT Security consultants. Armstrong Adams, a recent acquisition, has been fully integrated into the Group and has contracted £0.6m of revenue in the period with a long established customer. The full time headcount in the business exceeded 100 for the first time in August – a milestone for the business. Cash balances at the end of September were £3.6m (2013: £3.6m). Accumuli continues to generate strong operational cash flow before expenditure on M&A activity and development costs.

Bioventix (LON:BVXP 627.5p/£31.6m)

Bioventix, who specialise in the development and commercial supply of high-affinity monoclonal antibodies, recently announced their preliminary results for the year ended 30 June 2014. Revenues for the year of £3.535m (2013:£2.706m) were 31 per cent up on the previous year. Profits after tax have increased by 19 per cent year on year. The core business has remained strong and has been supplemented by growth in other areas. The company has reported consistently on their outlook for vitamin D activities and a leading antibody called vitD3.5H10. Revenue from this product has continued to grow and increasing royalties are now being generated as customer products (assays for vitamin D deficiency) reach markets around the world. Bioventix now has thirteen licensees for vitD3.5H10 ranging from large to small diagnostics companies. Cash balances at 30 June 2014 of £3.351m (2013: £2.585m) were significantly higher than the previous year despite significantly increased dividend payments.

Cloudbuy (LON:CBUY 40.5p/£44.52m)

CloudBuy announced that it has raised £4.3m by way of a placing at a price of 43p per share, representing a premium of approximately 13 per cent. to the closing mid-market price. The Company intends to use the net proceeds to strengthen its balance sheet and for working capital purposes, specifically to invest in platform development and infrastructure and to hire new members of staff. The Company also announced that it has reached agreement on the terms of a contract in Hong Kong with a global Financial Institution for three years, to provide a branded eCommerce marketplace available via desktop, tablet and mobile app. The contract has a minimum value of US$550,000 for the initial implementation and license fees, with additional revenue opportunities for value added services.

Intercede Group (LON:IGP 151.5p/£73.83)

Management remains optimistic that full year growth expectations will be achieved subject to the timing of receipt of orders, both from smart card related projects and from a number of mobile related opportunities. Revenues in the first half of the current financial year will be in the region of £4.0m (2013: £4.6m) and cash balances at the end of September totalled £6.3m (30 September 2013: £7.4m) reflecting the investment made by the Company. A further update will be provided when the Group’s Interim Results are released towards the end of November 2014.

LPA Group (LON:LPA 101.5p/12.02m)

LPA announced that it’s wholly owned subsidiary LPA Excil Electronics has been selected to supply LED based lighting on two major rail vehicle projects, in the Middle East and Australia, with a combined value of £3.3m. Orders received in the year to 30 September 2014 amounted to £18.5m, the highest figure since 2009. This excludes both of the projects noted above, as well as two aerospace programmes and the Hitachi Intercity Express Programme announced previously. These additional projects represent long term business expected to be worth more than £15.0m to the Group, with significant deliveries expected to commence in 2016.

MediaZest (LON:MDZ 0.145p / £1.33m)*

MediaZest, the creative digital out-of-home advertising company, announced two significant new contract wins. The Group is providing programming, development and installation services for a large multi-national Company and their partners developing a new retail concept. The initial project is expected to generate revenues of approximately £400,000 with future potential to roll out across multiple UK locations and countries. In addition several new contracts have been won in the Education sector, with value over £220,000 the largest of which will generate revenues totalling £180,000. All of these projects are scheduled to be delivered in the quarter ended 31 December 2014.

MoPowered Group (LON:MPOW 6.25p/£995k)

The Group’s wholly owned subsidiary Global Mobile has now entered into a conditional agreement with Rounded Labs Limited for the purchase of the app-creation software asset, known as the Cortana platform, a technology asset which allows for the rapid construction of mobile commerce applications. The total consideration payable will be £170,000, of which £13,000 has been off-set against license payments already made, with the remaining £157,000 payable in instalments. The use of proceeds from the placing anticipated by the Directors, did not provide for the total consideration for the acquisition to be paid in cash, and as a result the Group has now at a price of 5 pence per share raised £157,000 for the second placing, which will be used to satisfy the cash consideration.

Nektan (TBC/TBC)

Nektan, an international B2B provider of mobile gaming platforms, has recently announced its intention to float on AIM. It is a developer and operator of mobile games in the regulated, interactive real money and freemium gaming spaces, delivering white label implementations to large commercial organisations that have established online audiences. Formed in 2011, Nektan operates under a full Remote Gambling Licence issued by the Gibraltar Licensing Authority and maintains sales and customer support operations in its two primary geographical targets, Europe and North America, from offices in Gibraltar, London and Las Vegas. The Group has developed a full end-to-end platform, Evolve, which is purely focussed on supporting mobile gaming, ensuring the Group can exploit changing market dynamics and provide the optimal mobile entertainment experience for end-users. Nektan’s white label platform simplifies the route to mobile gaming revenues for its target commercial entities: managing the full customer experience and back-office operations, allowing the white label partner solely to focus on marketing the product to its customers. The Group’s main country of operation is Gibraltar.

Sareum Holdings (LON:SAR 0.55p / £10.51m)*

Scientists at Sareum, in collaboration with the US research institute SRI International, have developed a novel molecule that significantly decreases psoriasis pathology in a disease model. This research has been reported in the latest edition of the Journal of Immunology. The potential psoriasis therapy targets members of the JAK family of kinase enzymes, which control the production of cytokines. Cytokines are signalling molecules produced by the immune system, usually in response to a danger such as invading pathogens. Cytokines responsible for psoriasis are thought to be controlled by JAK family kinases TYK2 and JAK1. Autoimmune diseases, such as psoriasis, can occur when the production of cytokines is not properly regulated and immune cells are overly activated. In the psoriasis model system, the TYK2/JAK1 inhibitor molecule, known as SAR-20347, interrupted the psoriatic cascade of events and led to reduced activation of keratinocytes (skin cells that multiply excessively in psoriasis) and a reduction of pro-inflammatory cytokine levels. Sareum and SRI International entered into a co-development agreement to develop TYK2 inhibitors for autoimmune and inflammatory diseases in April 2013.

ServicePower Technologies (LON:SVR 7.625p/£15.25m)

ServicePower announced it has signed an extended client agreement to provide additional licences and recurring support and maintenance worth in excess of $500,000. The contract includes an upgrade to the latest version of ServiceScheduling, and development of custom features to support its growing product portfolio of smart, connected security systems. Marne Martin, CEO of ServicePower, commented “This contract extension with a long standing customer validates the strength of our relationships with clients. The innovations we are making in our platform are enabling clients to adapt and grow their service businesses as products become more complex and connected to the home. The security industry was one of ServicePower’s earliest forays into M2M connected services. Advances in security products, including Smart Home Automation and live monitoring from device based apps, require the connectivity to system sensors that we support today. The additional logic that we have built into our Smart Scheduling Broker software can model failure data, thereby pre-empting issues, so that a home or business’ security system remains secure at all times. Our innovations truly are enabling the evolution to proactive service management.”

Synety Group (LON:SNTY 191.5p / £16.0m)

Synety Group published its Key Performance Indicators (KPIs) for the nine month period ending 30th September 2014. It reported a 155 per cent increase in annualised recurring revenue, a 130 per cent increase in end users, and a 23 per cent increase in recurring revenue per user. The Group reports strong growth for the nine month period ending 30th September 2014, with a marked acceleration in orders received during September. During the same period, the Group also announced integrations with the following CRM companies, further increasing SYNETY’s addressable market: SurCo, Oracle and IQX. Simon Cleaver, SYNETY’s Executive Chairman commented: “I’m obviously delighted that the team’s hard work is starting to bear fruit and anticipate that the level of new orders received in September is not only sustainable in future months, but should serve as a new base from which to grow. As previously stated, the early part of 2014 was focussed on laying the foundations for expansion and growth. The benefit of this investment is now starting to be reflected in the KPIs, particularly in the latter part of the quarter. September was the Group’s best trading month to date, with the number of new users signed up breaking through the 500 mark for the first time, and Annual Recurring Revenue from new orders received increased by over £200,000. As the overall sales pipeline continues to grow and the scale of the US opportunity becomes more apparent, the Board is happy to confirm its confidence in, and excitement about, the potential future for SYNETY.”

21st Century Technology (LON:C21 5.75p/£5.3m)

21st Century Technology, the specialist service providers of CCTV and monitoring systems to the fleet and network operators in the bus and rail industries, recently announced that it has been awarded a four year contract worth 12.6m SEK (approximately £1.1m) by one of the largest passenger transport operators in Sweden to support on-vehicle mobile surveillance, safety and communication systems across their fleet in Stockholm. In parallel with the above, the Framework Agreement for the supply, installation and maintenance of systems has been extended by two and a half years to be co-terminus at August 2018.

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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.