Small Cap Wrap: Month: January 2016

AIM Breakfast - Archive

6th January 2016

FJET Cleared for Take-off, What a catch for FISH

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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.

AGM Placing, BLU* Convertible Notes, BRY Contract Wins, CGNR* Debt Conversion, FJET Launch, FISH Placing and Acquisition, FITB* Trading Update, HDD Airbus Update, HYD Acquisition, MDZ* Update, MSG* Ambassador, PLI* Revenue Guidance, SAR* CHK1 Clinical Trials, SCLP Paper Published, TMT* Depositphotos Transaction, TPG Participation in CryoHub R&D, TRAK Acquisition and Placing

Applied Graphene Materials (LON:AGM 173.95p/£32.48m)

Applied Graphene Materials, the producer of specialty graphene materials, announced that it has conditionally raised £8.1m before expenses through a placing at 175 pence per share. In addition, in order to provide Qualifying Shareholders with the opportunity to subscribe for New Ordinary Shares, the Company has announced an Open Offer to raise up to approximately £2.0m, on the basis of 1 Open Offer Share for every 15 Existing Ordinary Shares held on the Record Date, at 175 pence each. The proceeds of the placing will be used to scale up the Company’s production facilities to increase manufacturing capacity to six tonnes per annum; fund collaborations and joint development activity with customers, including the development of new intellectual property; fund the Group whilst it pursues production orders; and finance the working capital requirements of the Group for at least twelve months.

Bellus Health (TSX:BLU CAD1.04/CAD49.32m)*

BELLUS Health, a drug development company focused on rare diseases, announced the scheduled issuance of 7,286,828 common shares from treasury to Victoria Square Ventures Inc. (VSVI) in settlement of convertible notes. The convertible notes’ notional amount was approximately $10.9m and terms of the conversion were determined as part of BELLUS Health’s capital reorganisation in 2012. Subsequent to the settlement, VSVI now holds 32.5 percent of the Company’s issued and outstanding common shares and 27.0 percent on a fully diluted basis. The Company now has approximately 54.7m common shares outstanding and 65.7m common shares on a fully diluted basis. Dilution items include approximately 4.7m common shares issuable under the stock option plan and 6.4m common shares issuable upon the exercise by Pharmascience of its right to exchange its 10.4 percent interest in the limited partnership carrying out BELLUS Health’s activities (the Exchange Right).

Brady (LON:BRY 55.00p/£46.48m)

Brady, the leading supplier of trading and risk management solutions for metals, recycling, energy and soft commodities, announced three new contract wins. Two top tier global Japanese-owned trading companies have selected Brady Cloud solutions to support their trading and risk management requirements across base and precious metals, soft commodities and freight, covering the complete trade lifecycle for both derivatives and physical trading activities. Both of these customers will be using the Brady Cloud Service to reduce their total cost of ownership and ensure maximum availability. Additionally, a European energy supply company, focused on delivering clean energy to large industrial and commercial consumers has selected Brady Energy Trading and Risk Management solution to manage its renewable energy trading, position, risk, and back-office operations.

Conroy Gold and Natural Resources (LON:CGNR 30.00p/£1.79m)*

Conroy Gold and Natural Resources, the Irish based resource company exploring and developing gold and other projects in Ireland, announced it has raised £0.37m (€0.5m) before and after expenses, by way of a subscription, by way of a debt capitalisation which relates to recent, unsecured, short term funding, at a price of 32.50 pence sterling per share, being the closing mid-market price on 18 December 2015. The New Ordinary Shares have been subscribed for by Patrick O’Sullivan, an existing shareholder in the Company and Professor Conroy, Chairman of the Company. The proceeds of the Placing will be used for general working capital purposes and for the funding of the Company’s ongoing programme at its Clontibret and Clay Lake gold targets. Following this investment, Mr O’Sullivan’s total holding will be equivalent to 23.1 percent and Prof Richard Conroy’s total holding will be equivalent to 24.4 percent of the enlarged share capital of the Company.

Fastjet (LON:FJET 67.30p/£45.67m)

fastjet, Africa’s low-cost airline, announced that fastjet Tanzania has been given clearance by the Kenyan government to operate flights between Kenya and Tanzania under the Bilateral Air Services Agreement between the two countries, as previously approved by the Tanzanian Government. Two new routes, Dar es Salaam to Nairobi, and Kilimanjaro to Nairobi are on sale from today, with one way fares starting from as low as at $80 and $50 respectively, plus tax. From 11 January 2016, fastjet Tanzania will operate a daily flight between Dar es Salaam and Nairobi and between Kilimanjaro and Nairobi. Flights between Zanzibar and Nairobi and Dar es Salaam and Mombasa are also expected to be added to the network later in 2016.

Fishing Republic (LON:FISH 16.70p/£4.50m)

Fishing Republic, the fishing tackle retailer, announced that it has acquired the business and assets of FishXL Limited, trading as Cotswold Angling, and is opening a new store in Crewe. At the same time, to support this expansion, the Company has raised gross £0.5m at a price of 16p per Placing Share. The acquisition of Cotswold Angling establishes Fishing Republic with a presence in the South of England, with the new store in Crewe complementing the Company’s existing outlets in the North of England. Both moves are part of the Company’s stated strategy to build a significant market presence through acquisition and organic growth. They follow Fishing Republic’s announcement, on 23 November 2015, of its expansion into the West Midlands, with the opening of a store in South Birmingham, and the upgrading of its Hull outlet to new larger premises. Established in 2000 and based near Swindon, Cotswold Angling operates from a 4,100 sq ft site at a light industrial unit and caters for all types of fishing disciplines. In the year to 30 September 2014, Cotswold Angling generated sales of approximately £0.43m and made a marginal operating profit. The total consideration for the acquisition is £0.17m, payable in cash on completion. The co-founder and director of the business, Trevor Gunning, will be joining the senior management team of Fishing Republic as a regional operations manager. The store in Crewe is an 11,000 sq ft site close to the M6, and located next to a fishery. The store offers an extensive display area and Fishing Republic expects to launch the outlet in March 2016.

Fitbug Holdings(LON:FITB 0.939p/£2.60m)*

Fitbug Holdings, the provider of online personal health and wellbeing services, issued a trading update for the financial year ending 31 December 2015. Trading in the second half is expected to show significant increases in the pre tax losses announced at the half year primarily as a result of a challenging retail environment in the U.S. Following her appointment as CEO in August, Anna Gudmundson has taken extensive action to address underlying business performance issues, including senior management changes. The Company continues to attract some very talented people and recently appointed Donald Stewart, who is experienced in delivering and managing rapid public company growth, as its new Chairman. Considerable progress has been made in positioning the Company to capitalise on Kiqplan, its digital health and fitness coaching platform. A new version of Kiqplan was successfully launched at the end of September and the Company has achieved good reviews of the product. The Company is confident that the new Kiqplan platform provides a strong foundation for growth in both the B2C and B2B markets. Looking ahead, Fitbug expects to continue tackling its business performance fundamentals in 2016 and also expects its focus to move away from retail in order to leverage its established B2B network, where the Company has historically centred much of it business activity. The Company has identified prospective opportunities to offer its Kiqplan technology to health insurers and other corporations as a simple and effective digital tool for both customers and employees. As announced on 23 December 2015, endorsing Ms Gudmundson’s actions and supporting the Company’s updated strategy, Fitbug raised a further £0.65m from NW1 Investments just prior to the period end to meet near term working capital requirements. The Company has also entered discussions with Fitbit Inc. regarding the litigation and claims between the two companies and shareholders will be kept informed of developments.

Hardide (LON:HDD 1.38p/£14.18m)

Hardide, the provider of surface coating technology, announced that its Hardide-A coating has met Airbus technical performance requirements as a potential alternative to hard chrome plating and is now available for consideration by design engineers and sub-contractors on some specific Airbus aircraft components. Meeting this technical performance level comes after eight years of Hardide’s development and testing of the coating as a potential alternative to hard chrome plating, which is used extensively on airframe and landing gear components. Hardide-A, a variant of the Company’s tungsten/tungsten carbide coating range, has successfully passed necessary tests and met technical performance requirements defined in the Airbus Process Specification for thick Chemical Vapour Deposition Tungsten Carbide coatings.

Hydro International (LON:HYD 148.40p/£21.05m)

Hydro International, a provider of environmentally sustainable and innovative solutions to water management challenges the world over, announced that it has acquired the intellectual property and technology assets of M2 Renewables Inc. from Sail Capital Partners based in Irvine, California for an initial amount of $1m in cash, plus an additional deferred consideration of ten percent of sales incorporating the acquired intellectual property across the first five years. This additional consideration is capped at $10.0m. The acquisition will be funded from existing cash and debt facilities. M2R, established in 2003, has successfully developed the MicroScreen rotating belt screen filtration technology for applications in municipal and industrial wastewater treatment plants, securing important initial projects with major customers in the United States.

MediaZest (LON:MDZ 0.165p/£1.82m)*

MediaZest, the creative audio-visual company, provided shareholders with an update in respect of ongoing and new business. Since the last update announcement in October 2015, the Group has secured material additional contracts and has completed several significant projects. In particular, the Company recently completed the second Hyundai Rockar dealership at the Westfield Stratford shopping centre, which has now opened. Operating in the same way as their highly successful dealership at Bluewater, the new showroom features five large scale video walls, each of nine screens, and fourteen interactive touchscreens allowing customers to purchase their chosen car. MediaZest were responsible for system specification, build and installation works including in store audio and content management, with ongoing support and maintenance contracts in place. The Group also announced it has begun working with a new client, Specsavers Limited. MediaZest was initially engaged to design, produce and deliver a Smart Store concept for the annual Partners Conference in Birmingham on the 28 November 2015 in collaboration with Specsavers key stakeholders. Following this successful event, the solutions provided have been installed in Head Office. During this quarter they also finished their current works with the Post Office Limited, supplying audiovisual systems for new concept stores. The Company also began working with Kikki.K an Australian/Swedish stationary retailer, on their first two UK stores. Work continues with Adidas (with mandated projects for an additional 2 UK stores and another 3 in mainland Europe), and with Belstaff, HMV, and Kuoni.

Milestone Group (LON:MSG 0.424p/£2.43m)*

Milestone, the provider of digital media and technology solutions, announced that it has appointed Alex Pritchard as a Passion Project Ambassador. Alex is an English professional footballer who currently plays for Tottenham Hotspur FC, signing a four-year deal in August 2015. As a Passion Project Ambassador, Alex will help to promote the initiative, which aims to inspire and empower young people whilst helping to tackle youth unemployment. Alex has also agreed to feature in the next issue of Disorder Magazine, which is due to be released in February 2016.

ProMetic Life Sciences (TSX:PLI CAD3.26/CAD1,894.37m)*

ProMetic Life Sciences announced that its 2015 revenues are to be in line with guidance provided during its Q3 results call. Total full-year revenues are expected to be $24m, consisting of $21m of product sales and $3m of service and milestone revenues. The product sales figure of $21m is up over $10m, or 94 percent, on the 2014 total of $10.8m.

Sareum (LON:SAR 0.190p/£4.60m)*

Sareum, the specialist cancer drug discovery and development business, announced that it has received formal confirmation from its co-development partner, the CRT Pioneer Fund, that Clinical Trial Applications for Phase I clinical trials of CCT245737, the CHK1 Programme clinical development candidate drug, are intended to be submitted to the UK Medicines and Healthcare products Regulatory Agency (MHRA) in January 2016. In accordance with the CHK1 co-investment agreement, Sareum will therefore satisfy its next financial contribution, in respect of its 27.5 percent investment share, of £0.8m by 29 December 2015. As reported in the Company’s Final Results in October 2015, two clinical trials in cancer patients are planned, one with CCT245737 as a single agent and one in combination with standard-of-care chemotherapy. The funds required for the Company’s financial contribution to these trials will be met from existing cash resources.

Scancell Holdings (LON:SCLP 21.33p/£47.69m)

Scancell Holdings, announced the publication, on line, of a full paper in Cancer Research describing the rationale behind the Company’s ModitopeÒ platform and the experimental results that support it. Cancer Research is the official journal of the American Association for Cancer Research and is one of the world’s foremost peer-reviewed journals in the field of oncology. The lead product from the Moditope® platform, Modi-1, is progressing through pre-clinical development with first in man studies targeted in triple negative breast cancer and ovarian cancer patients.

TMT Investments(LON:TMT 1.78p/£49.25m)*

TMT Investments, which invests in high-growth internet-based companies across a variety of sectors, confirms that, further to the announcements made by the Company on 30 November 2015 and 20 December 2015, completion by its portfolio company Depositphotos, Inc. of a $5m equity financing round led by the venture capital arm of the European Bank for Reconstruction and Development is expected within the next two weeks.

TP Group (LON:TPG 2.50p/£11.62m)

TP Group, the specialist technology, engineering and managed solutions group focused on the aerospace & defence and energy & process industry sectors, announced it has signed a consortium agreement to participate in CryoHub, a research and development project funded under Horizon 2020, the EU Framework Programme for Research and Innovation. The consortium is a pan-European team, led by London South Bank University’s School of The Built Environment and Architecture, one of the leading urban engineering and sustainability research centres in the UK. The team will investigate the potential of a promising new technology – cryogenic energy storage (CES) – to solve the problem of how to store excess renewable energy. The intention is to use cheap, off-peak electricity to convert air into a liquid, which can then be stored over a long period of time in a storage vessel. Turning the liquid back to gas, by removing it from the store and applying heat to it, will produce a huge increase in volume and pressure – enough to power a turbine to generate electricity which can then be supplied back to the grid. TPG’s initial involvement in the project over the 2016/17 financial years is estimated to be circa €0.5m for the integration of its highly efficient turboexpander technology. The technology is already proven in other commercial systems, and this project will see the Group work to tailor the turboexpander specifically to meet the needs of the CES architecture. The work will be carried out over the next two years with the majority in 2016. This agreement marks further progress for TPG as it is the first participation in a publicly funded research consortium in the exciting renewable energy sector. It places TPG’s Design and Technology team at the forefront of renewable energy application development, working in a leading peer group alongside global industrial companies, technology specialists and academic institutions. The TPG directors believe that the resulting systems and applications will make a major contribution to consistent energy supply, providing safeguards against periods of intermittent supply and helping to stabilise the energy grid. This should open up significant new market opportunities for TPG and the other consortium partners. In addition to the primary development, it is also anticipated that TPG’s Engineering facility in Greater Manchester may be positioned to provide additional thermal engineering and fabrication support to the programme going forward.

Trakm8 Holdings (LON:TRAK 356.40p/£120.30m)

Trakm8 Holdings, the telematics and data provider to the global market place, announced that it has conditionally agreed to acquire the entire issued share capital of Route Monkey Holdings Limited, a provider of technology solutions that optimise fleet routing, for a consideration of up to £9.1m, including maximum deferred consideration of £2.0m. The Acquisition will be funded through a combination of a drawdown of new Trakm8 debt facilities, a placing at a price of 333 pence per Placing Share to raise £6m and 184,441 new Ordinary Shares being issued as part of the consideration to the senior management shareholders of Route Monkey. The Placing adds new blue-chip institutions to the share register. The Acquisition is expected to complete on admission of the Placing Shares to trading on AIM. The Acquisition is in line with Trakm8’s strategy of augmenting its organic growth with selective acquisitions that expand its telematics offering to both insurance and fleet customers. The Acquisition is expected to be immediately earnings enhancing.


*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.