Small Cap Wrap: Month: November 2015

AIM Breakfast - Archive

4th November 2015

Gear4Music hits the right note,
Mobile does matter one iota for Sanderson
NWF bolts on Staffordshire Fuels

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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.


COS Agreement, G4M Half Yearly Report, GFIN Placing, LPA Trading Update, NWF Acquisitions, OPTI* New Patent, PIM Preliminary Results, NIPT Appointment, PLI* Appointment and Application, SND Trading Update, SAR Final Results, STOB Interim Results, TRAK Agreement, VENN Project

Collagen Solutions (LON:COS 9.75p/£17.01m)

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

Gear4music (LON:G4M 146.20p/£29.23m)

Gear4music, the largest UK based online retailer of musical instruments and music equipment, announced its unaudited financial results for the six months ended 31 August 2015. Financial highlights showed revenue had increased by 43 percent to £12.49m (2014:£8.77m), leading to gross profit increasing by 42 percent to £3.31m (2104:£2.33m) and adjusted EBITDA of £0.22m (2014:-£0.25m). Operational highlights showed the Group completed its IPO in June 2015 raising £10m of gross proceeds, with investment in platform development and stock – more than 1,900 additional SKUs (+7 percent). Continued strong revenue growth driven by impressive website visitor traffic and improved conversion rates has seen UK revenue of £9.6m (+38 percent), European revenue £2.9m (+62 percent), with active customers increasing by 34.3 percent.

Gfinity (LON:GFIN 21.50p/£19.53m)

Gfinity, a leading eSports business, announced its intention to conduct a placing of new ordinary shares in the Company, at a price of not less than 19 pence per share to raise £1m. The placing of the new ordinary shares will be conducted by way of an accelerated book build process. The net proceeds of the placing, together with existing funds are expected to be applied as follows: to significantly enrich the features and functionality on Gfinity TV which the Directors believe will improve the service provided by existing parties such as Twitch and YouTube. This is expected to increase engagement with the Gfinity audience; development of a Gfinity mobile application to enhance the viewing experience for those on mobile and tablet devices; providing the funds to stage and broadcast the 2016 Gfinity Championship series which is expected to build on the success of the 2015 series; and enhancing Gfinity’s sales and marketing capability.

LPA Group (LON:LPA 86.10p/£7.86m)

LPA Group, the UK based designer, manufacturer and provider of connection, LED-based lighting and electro mechanical systems to the Transport Industry, provided the following trading update for the financial year ended 30th September 2015. The factory load, particularly in the LED-based lighting activity, has significantly improved, delivering a much stronger performance in the second half and the previously reported problems with the integration of the fabrication capability into the electro-mechanical facility have been largely overcome. Order entry has been very strong throughout the year and totalled a record £26.8m for the year as a whole. The order book at the end of the year totalled more than £18m, which is also a record. This does not include an additional approximate £7.5m of project work for which LPA has been selected, but for which the delivery programme is insufficiently defined for the orders to be entered at this stage. The additional project work above includes the selection of LPA by Hitachi Rail Europe to supply connection systems and LED-based interior lighting for Hitachi’s Abellio Scot Rail project, comprising 254 rail vehicles. Preliminary orders worth £0.3m have been received and the project is expected to be worth approximately £2.8m in total, with sales commencing in 2016.

NWF Group (LON:167.50p/£80.07m)

NWF Group, the specialist agricultural and distribution business, announced the acquisition of Staffordshire Fuels Limited, a 32 million litres per year fuel distribution business operating in Staffordshire and the West Midlands. This bolt-on acquisition will increase NWF Fuel’s annual volume by 8 percent and will be earnings enhancing in the first full year. Staffordshire Fuels was established in 1996, operates a modern fleet of seven tankers and is an approved supplier of Phillips 66 fuel, branded as Jet, based near Stone in Staffordshire. Staffordshire Fuels will continue to operate as a standalone fuel depot in line with the Group’s multi-brand strategy in fuels, with finance and administration being consolidated into existing operations. The acquisition was funded from the Group’s existing bank facilities.

OptiBiotix Health (LON:OPTI 61.10p/£43.56m*

OptiBiotix Health, a life sciences business developing compounds to tackle obesity, high cholesterol and diabetes, announced the filing of two new patents covering its cholesterol reducing product. This increases the number of patents from nine to eleven. The new patents reflect: the success of its human studies designed to establish safety and efficacy on its capsular food supplement to reduce cholesterol, the success of manufacturing studies designed to identify maximum production yields and volumes on its cholesterol reducing strain and the identification of additional health benefits (hypertension reduction) shown by its cholesterol reducing strain. The Company believes that filing these patents adds a further layer of protection to its intellectual property portfolio, creates valuable assets, and increases the number of product opportunities.

Plant Impact (LON:PIM 60.90m/£48.78m)

Plant Impact leads research and development in crop enhancement to create products that growers can rely on to improve the yield and quality of their crops. The company announced its audited preliminary results for the year ended 31 July 2015. Financial highlights showed turnover increased substantially to £4.5m in 2015 (2014: £2.5m), leading to gross profit increasing to £3.5m in 2015 (2014: £1.8m) allowing for a gross margin of 79 percent. Cash at 31 July 2015 was £7.6m (2014: £0.5m); and successful fundraising attracted £6.2m of new investment via a share placement, the company also reported full year profit after tax of £0.1m (2014: loss of £0.7m). Operational highlights showed the expansion of Veritas® sales to all soy-growing regions in Brazil, with soybean product pipeline agreement with Bayer CropScience established leading to £2.0m cash received. The launch of an £11m, multi-year investment programme to develop and launch new products for soy and wheat was also announced.

Premaitha Health (LON:NIPT 16.67p/£37.76m)

Premaitha Health, developer of the IONA® test, the first CE-marked non-invasive prenatal screening test (NIPT) confirms that Chief Medical Officer, Dr William Denman, will join the Board of Premaitha as an Executive Director. Dr Denman has been working with Premaitha for over four years. This appointment will further strengthen the Board and is a continued part of the Company’s commercialisation strategy. Dr Denman has significant experience in the clinical aspects of device and diagnostic development having specialised in paediatric anaesthesia and medical device development at Massachusetts General Hospital. Previously, he was CMO with GE Healthcare with primary responsibility for all matters of patient safety in this multi-billion dollar business. He has also been responsible for strategic direction of medical affairs, clinical affairs and healthcare economics and outcomes across Covidien plc’s medical device business. Dr Denman studied medicine at the University of Aberdeen.

ProMetic Life Sciences (TSX:PLI 2.24p/£1,301.47m)*

ProMetic Life Sciences announced the appointment of Mr. Gregory Weaver, as its Chief Financial Officer. This announcement follows the promotion of Mr. Bruce Pritchard to the position of Chief Operating Officer, announced earlier in August 2014. Mr. Pritchard had, in the interim, continued to act as CFO for ProMetic. Mr. Weaver is a senior finance professional with extensive and relevant biopharmaceutical sector experience, both as CFO and Board Director, of NASDAQ-listed and private companies, in the fields of drug development, medical devices, and drug delivery, with a focus on growth from start-up through IPO, as well as product commercialisation and exit strategies. His specialties include: executive financial leadership, investor relations, financing transactions, accounting and financial reporting and M&A. The company also announced that the clinical trial application for its anti-fibrotic lead drug candidate PBI-4050 in patients suffering from a condition associated with type 2 diabetes and severe multi-organ fibrosis has been cleared by the Medicines and Healthcare Products Regulatory Agency in the United Kingdom. PBI-4050 is currently in a phase II clinical trial in Canada in patients with metabolic syndrome and associated type 2 diabetes. Aside from having already demonstrated safety and tolerability of PBI-4050 in these patients, the Canadian study was also designed to detect early signs of improvement in their metabolic status and to demonstrate that the pharmacological effects observed in preclinical models translate to humans. The Corporation expects to provide preliminary results on the effect of PBI-4050 on metabolic disorders in these patients by year-end.

Sanderson Group (LON:SND 62.50p/£34.40m)

The software and IT services business specialising in multi-channel retail and manufacturing markets in the UK and Ireland, issued a trading update ahead of its results due 1st December. Trading in line with market expectations and will show group revenue growing to over £19.0m (2014: £16.4m) and adjusted operating profit growing to over £3.3m (2014: £2.8m). One iota, the Group’s mobile commerce business focused on delivering cloud-based solutions accessed via mobile, tablet and in-store devices, achieved revenue growth of over 75 percent in the year. The group expects that it will continue to achieve significant growth in this rapidly developing digital retail market, as retailers seek to adopt technology in order to transform the shopping experience for their connected customers, as well as, to boost their revenues. Sanderson has maintained a strong balance sheet and has a robust business model built upon long-term relationships with customers which generate strong recurring revenues, currently representing over 52 percent of total revenue. Looking ahead to FY2016 the company is confident of delivering results ‘at least’ in line with market expectations. The shares are trading close to their six month low.

Sareum Holdings (LON:SAR 0.238p/£6.02m)*

Sareum Holdings, the specialist cancer drug discovery and development business, announced its final results for the year ended 30 June 2015. Operational highlights showed final preparations to submit CHK1 candidate for two concurrent Phase 1 clinical trials to assess different administration strategies: one as a single agent and the other in combination with chemotherapy. CHK1 clinical trial applications expected to be submitted in Q1 2016 with trials to commence, subject to approval, shortly thereafter. Preclinical development of Aurora+FLT3 inhibitor progressing to plan, with toxicology and additional efficacy studies ongoing. TYK2 inhibitor lead molecule demonstrates striking decrease in psoriasis pathology in a disease model and encouraging results in a rheumatoid arthritis model. Financial highlights showed net assets at period end were £1.86m (2014: £1.72m) of which £1.48m comprised of cash at bank. Loss on ordinary activities (after tax credit) of £1,26m (2014: loss of £0.76m), an improvement on expectations, reflected a re-phasing of commitments to the CHK1 programme. The company also announced the successful placing in June 2015 to raise £1.44m (before expenses) to satisfy ongoing commitments to CHK1 co-development payments and to provide additional working capital.

Stobart Group (LON:STOB 112.00p/£368.94m)

Stobart Group Limited, the support services and infrastructure group, announced its interim results for the six months to 31 August 2015. Operational highlights showed the company was on track with current work and secured future contracts, to exceed the target of supplying 2m tonnes of biomass fuel per annum by 2018. London Southend Airport was voted best airport in Britain by Which? for the third consecutive year and aviation industry specialists, Glyn Jones and Jon Horne, were appointed CEO and COO respectively of Stobart Aviation. The company also disposed of the Worcester property generating net proceeds of £6.2m. Financial highlights showed revenue from continuing operations was unchanged at £57.6m (2014: £57.6m), leading to an underlying EBITDA up 3.4 percent to £9.0m (2014: £8.7m). Cash generated from continuing operations increased to £2.3m (2014: £0.6m outflow) and net debt of £51.9m comprising vehicle financing of £29.7m and other debt of £22.2m, giving gearing to equity of 13.2 percent.

Trakm8 Holding (LON:TRAK 247.56p/£75.08m)

Trakm8 Holdings, the telematics and data supplier to global markets, announced it has reached agreement to supply a major USA based data company with the T10 BLE (Bluetooth™ Low Energy) device. The Trakm8 T10 BLE communicates with mobile phones via Bluetooth relaying real-time journey data to the registered device. This new client is expected to purchase over 25,000 devices during the first two years of the contract agreement.

Venn Life Sciences Holdings (LON:VENN 22.15p/£13.78m)*

Venn Life Sciences, a growing Clinical Research Organisation providing clinical trial management and resourcing solutions to pharmaceutical, biotechnology and medical device clients, announced the signing of a project worth in excess of €1m with a leading French Biotech company. The Phase I-II project is centred on acute T-cell leukaemia (ATL), and will cover multiple regions, including France (and French administered overseas territories), the UK and the US. This project will run for 33 months and follows on from a previous successful trial with the same company.


*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.