Small Cap Wrap: Month: March 2016

AIM Breakfast - Archive

8th March 2016

Avingtrans’ engines on full thrust
No barriers for Digital Barriers

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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.

AVG Contract Win, COG Partnership, COMS Contract Win, DGB Agreement, ECK Contract Win, HZD Joint Venture, NWF Acquisition, PEG* Contract Win, PLI* Investment, SAR* Half-Yearly Results, WSG MOU, WYG Contract Win

Avingtrans (LON:AVG 143.55p/£39.53m)

Sigma Components, which forms Avingtrans PLC’s aerospace division, has signed a ten year contract with Rolls-Royce valued at more than £75m to supply pipe assemblies for a range of engine programmes including the rapidly growing Trent XWB variants fitted to the Airbus A350. The 10-year contract follows the successful completion of Sigma’s acquisition of Rolls-Royce’s internal pipe manufacturing businesses in Nuneaton (UK) and Xi’an (China) for £3.5m, which was announced on 29 January 2016.

Cambridge Cognition Holdings (LON:COG 67.00p/£11.56m)

Cambridge Cognition, which specialises in cognitive assessment technologies including those enabling the early detection of Alzheimer’s disease, announced a new partnership with London based design and research agency Ctrl Group to produce novel digital health applications for new markets with prototype products expected in the second half of 2016. Mental ill health is the world’s largest cause of disability and economic loss. In the UK alone, one in four adults experience at least one diagnosable mental health problem each year. With an estimated half a billion people affected worldwide, the cost to global economies is on course to exceed $6tn per annum by 2030. Common mental health disorders such as dementia, depression and anxiety are characterised by symptoms that can fluctuate regularly, which until now has created difficulties for researchers and healthcare professionals as infrequent assessments in controlled settings are unable to reflect a patient’s health between visits and in everyday life. By engaging with individuals through wearable and smart devices the new technology being developed will provide a richer and more natural profile of mental health to improve the understanding, diagnosis and treatment of cognitive disorders; helping people to lead fuller, more active lives and dramatically reduce global healthcare costs. Under the terms of the partnership, digital health products are being designed and developed enabling near-user cognitive testing on wearable and smart devices. More meaningful cognitive data will enable healthcare practitioners to detect mental health risk factors earlier, reduce the likelihood of relapse and, by tracking daily activity, help individuals to better understand and manage their cognitive health. For pharmaceutical companies, understanding the real world impact of interventions will support clinical trials of drug development candidates and marketed treatments for chronic diseases. The new range of products will be licensed initially to pharmaceutical partners and healthcare providers through relationships established by both Cambridge Cognition and Ctrl Group.

Coms (LON:COMS 1.62p/£21.56m)

Coms, the leading provider of infrastructure and smart building solutions, announced that its core operating division, Redstone, has won a strategically significant contract to design and install an in-building cellular system serving nearly one million square feet of office space in the city of London.  The contract is for the UK Headquarters of one of Redstone’s existing clients.  In-building cellular systems allow users to use their mobile phones and mobile-connected devices where signal would otherwise be an issue, so is relevant to all buildings and organisations where a connected workforce is important. This in-building cellular project, worth some £0.75m, will see Redstone design and install technology from leading global wireless technology provider CommScope. The deal is significant for Redstone on many fronts: the Company is the first smart building technology integrator to win an in-building cellular contract of this scale in the UK; it represents an example of one of a new range of smart building technology offerings; and it demonstrates Redstone’s ability to cross-sell and upsell to its existing customer base. The deal is also significant for Redstone’s partnership with CommScope, because it represents the first sale of CommScope’s ION-E technology in the UK.  ION-E provides a number of advantages over other systems including its ability to make use of  existing infrastructure and digital technology within a building, thereby reducing costs and simplifying installation.

Digital Barriers (LON:DGB 46.00p/£79.25m)

Digital Barriers, the specialist provider of visually intelligent technologies to the global surveillance, security and safety markets, announced that it has signed an agreement with Etihad Etisalat Company (Mobily) and its Saudi Arabian integration services partner, Advanced Communication Systems (TeleQualitas), to launch a Video Surveillance as a Service (VSaaS) offering across the Kingdom of Saudi Arabia. The agreement, signed at the Mobile World Congress 2016 in Barcelona, Spain, represents the first offering of its kind in Saudi Arabia. The VSaaS offering will be based on the Group’s EdgeVis Live platform. Powered by Digital Barriers’ TVI software, this platform can deliver secure distribution of high-definition, real-time video from anywhere to anywhere, and features end-to-end security, and the ability to stream usable live video over 60 percent less bandwidth than standard technologies. This exceptionally efficient use of available bandwidth enables EdgeVis Live to deliver significant capability benefits and material cost savings over competing technologies. EdgeVis Live has already been sold into more than thirty countries, and counts some of the most prominent defence and security agencies in the world as its customers, as well as an increasing number of commercial organisations. Mobily selected EdgeVis Live to provide its customers with a higher-quality cellular video surveillance service than competing technologies. EdgeVis Live also provides Mobily with the ability to centrally manage and optimise the network capacity dedicated to the service in real time. In addition to the new range of VSaaS solutions, Mobily will also offer its customers a wide range of the Group’s edge-intelligent surveillance, security and safety technologies optimised for wireless networks. This agreement with TeleQualitas includes an initial contract valued at £1.0m for EdgeVis Live and SafeZone Edge solution sets for ongoing critical infrastructure programmes.

Eckoh (LON:ECK 45.00p/£100.03m)

Eckoh, the global provider of secure payment products and customer contact solutions, announced that it has signed a new four-year, multi-million pound global procurement contract with an existing Eckoh client, a leading global financial services company. Under the terms of the new contract, which extends the scope and duration of Eckoh’s existing client relationship, Eckoh and West Corporation have been selected following a tender process as the client’s global partners, working together to deliver the customer self-service provision. The collaboration represents a further strengthening of Eckoh’s relationship with West, with Eckoh and West together providing hosted VoiceXML telephony services for handling customer self-service enquiries on a global basis including the US market. Eckoh has worked with the client since 2008, hosting a range of automated services across all major European countries and other global territories. The new contract term begins immediately and will run for an initial four years with an option to extend for an additional two years. Customers will be able to access the client’s services by calling local telephone numbers in their country of origin. Their calls are then routed to the hosted platforms in either the US or UK, where they can select from a range of self-service customer care applications. If required, calls can then be onward routed to contact centres anywhere around the globe. It is anticipated that new multi-channel, self-service provision such as live agent video and web chat will be delivered over the course of the contract; as well as new territories in line with customer expansion. In addition, services will be enhanced to incorporate more natural language based speech recognition.

Horizon Discovery Group (LON:HZD 159.95p/£150.03m)

Horizon Discovery Group plc, the international gene editing company, announced that it has formed an immuno-oncology joint venture, Avvinity Therapeutics, with Centauri Therapeutics Limited, a UK-based biotechnology company focused on the discovery and development of novel molecules targeting life-threatening infectious diseases. This transaction represents part of Horizon’s previously outlined strategy to invest up to £10m, further leveraged by its IP, technology platforms and know-how, to identify the next generation of molecular and cellular cancer therapeutics. Avvinity will combine Horizon’s gene editing, immunology, oncology and drug discovery capabilities with Centauri’s Alphamer technology to provide a powerful and proprietary platform to discover and develop novel immuno-oncology therapeutics, for both solid tumours and leukaemias. Avvinity will be targeting an immuno-oncology market currently worth £25bn per year and expected to grow to approximately £50bn per year by 2020. Under the terms of this agreement, Horizon will out-license certain background intellectual property relating to its translational genomics and drug discovery platforms, and will invest up to £5.3m over two tranches with the first tranche of £2.5m committed, and the second to be committed at Horizon’s discretion pending the progress of three development programs. Centauri will license background IP and expertise on its Alphamer technology to Avvinity, which will have exclusivity for the field of oncology for an initial three year period and can be extended via the issue of further equity concurrently with the raise of new investment. Avvinity will be managed jointly by Horizon and Centauri, and based on the investment of IP, technology and the first tranche of funding; Horizon will own 33 percent of Avvinity’s equity. The joint venture will be managed within Horizon as part of the Company’s Research Biotech business (formerly Horizon’s Leveraged business unit). Neither Horizon nor Centauri will be obliged to provide further funding to Avvinity, though both retain pre-emption rights and may elect to participate in future funding rounds. Subject to achieving key development milestones, Avvinity plans to raise significant new external investment to take its innovative drugs into clinical trials, at which time the value of Horizon’s stake in the business would be highly-material.

NWF Group (LON:NWF 179.00p/£86.87m)

NWF Group, the specialist agricultural and distribution business, announced it has acquired Jim Peet (Agriculture) Limited, a well-established ruminant feed manufacturer. Jim Peet started trading in 1977 and supplies over 50,000 tonnes of compound and blends to dairy, beef and sheep farmers across the North of England and South West Scotland. The business produces a range of compounds and blends from two production sites based at Longtown near Carlisle and Aspatria near Wigton. This acquisition delivers strategically important manufacturing facilities to support Jim Peet and NWF feed production.  It will supply customers in the North of England and Scotland and complements NWF’s existing facilities in the Midlands and South West.

Petards Group (LON:PEG 12.30p/£4.30m)*

Petards, the developer of advanced security and surveillance systems, announced that it has been awarded a £0.8m contract from the UK Ministry of Defence (MOD) for the provision of communications equipment and related services. Petards has a long established reputation as a supplier of  radio communications equipment together with related engineering services to the MOD and the award of this new £0.8m project covers the delivery of radio equipment and engineering support services, a good proportion which is expected to be delivered during the first half of 2016.

ProMetic Life Sciences (TSX:PLI CAD3.05/CAD1,763.02m)*

ProMetic, a long established biopharmaceutical company with globally recognised expertise in bioseparations, plasma-derived therapeutics and small-molecule drug development, announced that it has secured a follow-on investment from Structured Alpha LP, an affiliate of Peter J. Thomson’s investment firm, Thomvest Asset Management Inc., consisting of a $30m original issue discount note. As partial consideration for the Note, ProMetic has granted Structured Alpha LP 11,793,380 warrants with an exercise price of $4.70 per common share, a premium of 80 percent to Monday 29th February 2016 closing share price. ProMetic will use the proceeds to advance its PBI-4050 clinical programs, for the development and manufacture of its plasma-derived orphan drugs portfolio, and for general corporate and working capital purposes.

Sareum (LON:SAR 0.374p/£9.05m)*

Sareum Holdings, the specialist cancer drug discovery and development business, announced good progress with its cancer and autoimmune disease research programmes and its half-yearly results for the six months ended 31 December 2015. Operational highlights showed completion of preclinical studies for the CHK1 clinical development candidate, in preparation for two planned clinical trials in cancer patients. Publication of a description of CCT245737, the CHK1 clinical development candidate, was mentioned in the high-impact journal, Oncotarget. Financial highlights showed a loss on ordinary activities (after taxation) of £0.48m (2014: Loss of £0.66m), in line with expectations. Cash at the Company’s bank at period end was £0.33m (2014: £043m) and the Company’s unspent investment in the CHK1 Project was £0.84m (2014: £0.44m). CHK1 Clinical Trials Application (CTA) submissions on 29 January 2016 triggered a £0.2m milestone payment to Sareum.

Westminster Group (LON:WSG 14.20p/£9.15m)  

Westminster Group, the supplier of managed services and technology based security solutions to governments and government agencies, non-governmental organisations (NGO’s) and blue chip commercial organisations worldwide, announced a further development in its Managed Services division. Westminster’s aviation security subsidiary, Westminster Aviation Security Services (WASS), has signed a new Memorandum of Understanding with a Middle East Civil Aviation Authority for the provision of long term (up to 25 years) aviation security services at a significant international airport within the country concerned serving several million passengers annually. In view of the heightened security threat worldwide, together with the strategic importance and forecast growth of the airport in question, the country’s Civil Aviation Authority recognised the need to urgently improve airport security and equally recognised WASS’s experience and expertise in this field. Arrangements are now being made for a team of WASS technical experts to meet with the authorities in order to establish technical and operational requirements prior to final contract negotiations.

WYG (LON:WYG 132.00p/£89.46m)

WYG, the global programme, project management and technical consultancy, announced that it has been awarded a new contract worth up to €5.8m to support the Polish Government’s initiative to help the unemployed. This new contract will be delivered over a series of planned actions, supporting the Silesian Labour Office, in eight districts of this industrial region.  €2.0m is attributable to the first stage of the project, which is scheduled to be delivered over the next 18 months. Under the contract WYG will provide short term training and initial assistance to the unemployed. The estimated budgetary allocation of the Polish Government for the overall programme is €50m in 2016 and this is now reaching the tender stage in regions throughout Poland.


*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.