Small Cap Wrap: Month: June 2016

AIM Breakfast - Archive

1st June 2016

TMT Investments Invests
SAR trials to open at Royal Marsden
The FEVR is catching on!

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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.

ALSP* Board Changes, COMS Contract Win, CNS Contract Win, CCS* University Partnership, DEMG Results of Trial, ESP Acquisition, EZH Interim Results, EVG Results, FEVR Trading Update, FDEV Update, INS Acquisition, MMH Acquisition, MMX Launch, MXCP Placing, OPTI* Patent Filling, PINN Acquisition, PLI* Bought Deal, SAR* Clinical Trial, STOB Deal Completion, TERN Acquisition, TMT* Investments

Ace Liberty and Stone (LON:ALSP 4.00p/£39.3m)*

Ace Liberty and Stone, the active property investment company capitalising on commercial property investment opportunities across the UK, announced that Dr Anthony Ghorayeb, currently Non-Executive Director of Ace, assumes the role of Non-Executive Chairman with immediate effect. Dr Ghorayeb is also currently the Executive Chairman and co-founder of LiBank, the Lebanese investment bank offering services tailored to high-net-worth individuals (HNWIs), and the Secretary General of the Levant Business Union.   Keith Pankhurst, currently Non-Executive Chairman, assumes the role of Senior Independent Director.

Coms (LON:COMS 1.47p/£24.50m) 

Coms, a provider of technology and services for smart buildings and commercial spaces, announced that Connect IB, its software and solutions business has been awarded a contract by the owners and management agents of a major city centre shopping centre on the south coast of the UK. The contract sees the implementation of smart technologies to improve the shopper experience along with real time analytical reporting on shopper activity within the centre and the immediate surrounding area. The solution, due for public release in August 2016, utilises smartphone and beacon technology to deliver location based services, loyalty, car parking integration and digital wayfinding within the centre and car park. Connect IB’s cloud-based platform delivers a loyalty scheme for retailers and partners in the immediate area including redemption and analytics. Key to Connect IB providing accurate location based services on Android and Apple devices will be the deployment of a wide area iBeacon network across the whole of the centre and integral multi-level car park, delivered by Coms’ wholly owned subsidiary, Redstone.

Corero Network Security (LON:CNS 22.50p/£46.89m)

Corero Network Security, the network security company, announced the first order for its SmartWall®Threat Defense System from a top ten US mobile network operator. The order, valued at over $0.3m, follows a successful Proof of Concept trial. The mobile network operator is a regional wireless communications service provider to both consumers and businesses, and has a reputation as one of the top technology innovators in the US telecommunications market. The solution comprises multiple Corero SmartWall TDS products, with supporting SecureWatch® services for one year, which will enable the operator to not only protect its infrastructure from DDoS attacks but to also offer DDoS Protection as a Service to its growing customer base.

Crossword Cybersecurity (LON:CCS 192.00p/£4.6m)*

Crossword  Cybersecurity, the technology commercialisation  company  focusing exclusively  on  the  cyber security sector, has partnered with the University  of  Warwick  in  winning  a contract  through the Defence Science and Technology Laboratory’s (Dstl) Centre for Defence Enterprise  to explore novel uses of blockchain enabled documents in military environments. The project will look  at  how to  provide  access to sensitive information in a range of environments, such as HQ office or disconnected, harsh  operational theatres. Professor Carsten Maple, Director of the Cyber Security Centre (CSC) at  WMG, University of Warwick and colleagues at Warwick have conducted research in novel applications of blockchain technologies. Crossword  has also subcontracted Simplexity Analysis to assist  in  the  conceptual  design stages.

Deltex Medical Group (LON:DEMG 4.75p/£13.04m)

Deltex Medical, the global leader in oesophageal Doppler monitoring (ODM), announced the initial results of the largest ever randomised clinical trial of ODM which show substantial reductions in post-operative complications. A group of doctors from Spain, led by Professor Jose Maria Calvo Vecino, presented the findings from their 450 patient multi-centre randomised controlled trial to doctors attending Euroanaesthesia 2016 in London, which is the annual meeting of the European Society of Anaesthesia. The trial was undertaken in five hospitals and included patients undergoing gastrointestinal, urological, gynaecological and orthopaedic surgery. Professor Calvo is head of the Department of Anaesthesia and Critical Care at the Infanta Leonor University Hospital in Madrid and Vice President of the Spanish Society of Anaesthesia.

easyHotel (LON:EZH 98.00p/£61.25m)

easyHotel, the owner, developer, operator and franchisor of “super budget” branded hotels, announced its interim results for the six months ended 31 March 2016. Financial highlights showed total system sales were up 10.4 percent to £9.66m (31 March 2015: £8.75m), total revenues were up 11.6 percent to £2.59m (31 March 2015: £2.32m), slightly ahead of Board expectations and like-for-like revenue for owned hotels increased by 8.0 percent. Adjusted EBITDA  was up 10.9 percent to £0.58m (31 March 2015: £0.52m) and profit before tax was £0.14m (31 March 2015: £0.37m), reflecting increased pre-opening costs (associated with the increased development pipeline), depreciation and amortisation and share based payments. The company also announced an interim dividend of 0.11p per share (31 March 2015: nil). Business highlights showed five owned hotel projects in progress with £4.59m of investment made during the period: Construction commenced on sites in Liverpool and Manchester, planning permission granted in Birmingham with completion expected in a few weeks’ time and planning permission submitted for new hotels in Barcelona and Ipswich. Three new franchise hotels under construction in Brussels, Amsterdam and Bur Dubai (first hotel to be developed under Master Development Partnership signed with MAN Investments LLC to develop easyHotels in the UAE and Oman).

Empiric Student Property (LON:ESP 114.18p/£572.38m)

The Board of Empiric Student Property, the owner and operator of premium student accommodation across the UK, announced that the Group has acquired the freeholds of three operational, direct-let, premium student accommodation properties in Leicester, comprising a total of 106 beds, for a consideration of £8.8m (excluding acquisition costs). Bede Park (completed in 2012) is a conversion of a 1900’s two storey industrial unit, with a further two floors added. The property provides a total of 59 beds, comprising 49 studios and five two-bedroom apartments, as well as communal facilities including a large gym, cinema room and a communal living area. There is a ground floor retail unit, which is currently let to The Co-operative food store.  Bede Park is located to the west of the Soar River on a busy pedestrian route between De Montfort University, which is a ten minute walk away, and the popular Narborough Road area. 136-138 New Walk (completed in 2013) and 160 New Walk (completed in 2015) are both conversions of three storey Victorian mid-terraces, which have been extended to the rear and are all-studio schemes with 30 beds and 17 beds, respectively.  The properties each offer communal facilities, including a gym and cinema room.  Located close to the University of Leicester in an attractive area, these New Walk properties are on a pedestrian-only road linking Victoria Park to the city centre. The properties have an excellent occupational track record and are fully let for the 2015/16 academic year, with 90 per cent already pre-let across the portfolio for 2016/17.

Evgen Pharma (LON:EVG 21.49p/£15.36m)

Evgen Pharma, the clinical stage drug development company focused on the treatment of cancer and neurological conditions, announced its final results for the year ended 31 March 2016. Period highlights included- (1) Successful admission to AIM and £7m (gross) share placing on 21 October 2015. (2) Financial performance in line with expectations which showed a loss of £3.1m reflecting higher activity levels post admission to AIM, a loss per share 6.29p, cash (and short term investments and cash on deposit) at 31 March 2016 increased to £7.1m (31 March 2015: £0.2m), reflecting successful completion of a pre-IPO fund raising and a placing on AIM admission. (3) Lead product SFX-01 data shows promise as adjunct to hormonal therapy in patient-derived xenografts using cancer tissues from early and late stage breast cancer patients (data presented at the American Association of Cancer Research). Post-period highlights included- (1) First patient dosed in the SAS (SFX-01 After Subarachnoid Haemorrhage) Phase II clinical study at University Hospital Southampton. (2) Preclinical study underway comparing SFX-01 with approved MS drug, Tecfidera®.

Fevertree Drinks (LON:FEVR 707.88p/£815.77m)

Fever-Tree, the supplier of premium carbonated mixers for alcoholic spirits by retail sales value, announced a trading update for the four months to the end of April 2016. The Board announced that momentum seen in 2015 has continued into the start of 2016.  Fever-Tree has outperformed expectations in the first four months of the year as the premium mixed drink movement continues to grow.  This strong performance, alongside a currently favourable foreign exchange environment, has also driven gross margin improvements. Given the strong sales in the period to date, the Board anticipates that the results for the full year ending 31 December 2016 will be materially ahead of market expectations.

Frontier Developments (LON:FDEV 195.00p/£68.71m)

Frontier Developments, a leading developer of video games, announced the following update. Frontier yesterday launched the next major expansion of Elite Dangerous: Horizons, ‘The Engineers’. This release comes slightly earlier than previously anticipated following a successful Beta period, and in combination with sales performance to date, will have a positive impact on revenues and profitability in the financial year to 31 May 2016. The Group has also announced that it plans to release Elite Dangerous: Horizons for Xbox One on 3 June. Frontier released the second Alpha build of Planet Coaster, the Group’s second self-published franchise, on schedule on 24 May. The Alpha 2 build delivers further creative tools to the Planet Coaster Alpha community including terrain deformation and the next iteration of coaster construction and is a step along the roadmap towards full release, which remains on track for the final quarter of 2016.

Imperial Innovations Group (LON:IVO 400.25p/£634.25m)

Imperial Innovations Group announced the completion of a £6.2m funding round in Featurespace, the Cambridge-based Adaptive Behavioural Analytics company focused on the detection and prevention of fraud in the financial services and gaming sectors.  Featurespace is an Adaptive Behavioural Analytics company which has the ability to develop an understanding of normal patterns of behaviour and anomaly detection for individuals in real time. The Company has developed a machine learning software platform, the behaviour analytics engine (ARIC) that monitors every individual, one customer at a time, to deliver real-time decision capabilities. The technology is based on Bayesian statistics and research undertaken at the University of Cambridge by the late Professor Bill Fitzgerald and Featurespace CTO, David Excell. Featurespace’s products provide significant economic benefits to their customers, providing a granular view of transactions allowing them to predict likely fraud and take appropriate action. The software learns individuals’ behaviour and therefore produces a significantly higher level of accuracy identifying fraud and a lower level of false positives compared to competing solutions. Innovations has committed £2.5m to the round alongside new co-investor TTV Capital, a US venture company focused on early-stage fintech companies, which contributed £2.4m to the round. The balance was made up by existing investors, including Nesta and a number of members of the Cambridge Angels group. As at 31 January 2016, Innovations had invested £3.9m in Featurespace with a net carrying value of £6.8m. As a result of this new investment, the Group has a 36.9 percent undiluted stake in the Company.

Instem (LON:INS 230.48p/£37.20m)

Instem, a provider of IT solutions to the global early development healthcare market, announced the acquisition of UK-based Samarind, for a total consideration of up to £2.5m, to be satisfied by a combination of cash and new ordinary shares in the Company. The acquisition is expected to be earnings enhancing in 2016 and going forward. Samarind is based in Deeside, UK and provides Regulatory Information Management (RIM) software (Samarind RMS) and services to the life sciences sector. Its solutions significantly enhance the quality of regulatory information and help to achieve and maintain compliance for pharmaceutical, biotech and medical device products. Samarind has 10 employees. The consideration comprises £1.5m on completion , £0.65m of deferred consideration and up to a further £0.35m which is payable contingent upon the financial performance of Samarind.

Marshall Motor Holdings (LON:MMH 180.00p/£139.03m)

Marshall Motor Holdings, one of the UK’s leading automotive retail and leasing groups, announced the strategic and value enhancing acquisition of the entire issued share capital of Ridgeway Garages (Newbury) Limited (including all of its subsidiaries) for a cash consideration of £106.9m, funded from the Group’s existing resources. Ridgeway is a multi-franchise dealer group operating across the affluent southern home counties of England, Wiltshire and Dorset, representing 12 brands via 30 franchised dealerships. Ridgeway’s brands comprise: Audi, BMW, Jaguar, Land Rover, Maserati, Mercedes-Benz, Mercedes-Benz Commercials, MINI, SKODA, smart, Volkswagen and Volkswagen commercial vehicles. In addition, Ridgeway operates five own branded Select multi-brand used car centres, two trade parts specialists, two service centres authorised by both SAAB and SEAT and two standalone body shops and a pre delivery inspection centre. Ridgeway’s consolidated FY15 revenues were £722.6m, adjusted EBITDA was £20.2m and year-end shareholders’ funds were £55.4m including £15.2m of net debt.

Minds + Machines Group (LON:MMX 10.35p/£77.42m)

Minds + Machines Group Limited, the top-level domain registry company, reported the record-breaking launch of its .vip top-level domain that entered General Availability. As of 1600hrs UTC on 22 May 2016, registrations taken by the Company had reached 203,720, .vip having been placed in the top 20 of new gTLDs within 5 days of launch, according to industry tracking site, By comparison, .xyz, the world’s leading new gTLD in terms of registrations, with 2.9 million current registrations, took some 21 days to reach an equivalent number of registrations when launched in June 2014. In terms of billings and orders received for .vip names by 1600hrs UTC 22 May 2016, the combined total to date is US$3.2m, which will be recognised over the term of the domains. The Company is confident that renewal rates have the potential to be meaningful as no “freemium” strategies or equivalent were used during the launch phase to generate initial volume. The Company acquired .vip through auction for approximately US$3.1m in September 2014, highlighting the strong return on capital of the business model. To date, .vip names have been retailed through 77 registrars globally of whom 34 are within China. Registrations from China account for over 80 per cent. of all .vip names sold so far.

MXC Capital (LON:MXCP 2.65p/£83.34m)

MXC Capital Limited, the technology focused merchant bank, announced that it has raised £7m by way of a placing  at a price of 2.55  pence per share with both existing and new investors. In tandem, the company has also received credit approval to extend its existing bank facility to £6m. Gross proceeds of the placing of £7m with extension of existing banking facilities to £6m allows the company to have £13m of capital available to invest in identified near term opportunities. In recently announced interims, the Board announced an extended policy of returns to shareholders as well as its confidence in the Company’s prospects, with the placing supported by a mix of new and existing investors, further strengthening the Company’s share register

OptiBiotix Health (LON:OPTI 82.18p/£64.06m)*

OptiBiotix Health, life sciences business developing compounds to tackle obesity, high cholesterol, diabetes and skin care, announced a new patent filing. The filing protects advances made in OptiBiotix’s skin division in identifying microbial proteins which have the potential to prevent Health Care Acquired Infections (HCAI) caused by antimicrobial resistant (AMR) superbugs such as MRSA.  HCAIs lead to higher morbidity and mortality, and cost the NHS an estimated £1bn per year. This represents a global market opportunity of US$82bn.  The new patent filing reflects scientific advances in identifying microbial proteins which: – i. Protect skin cells from being damaged by pathogenic bacteria reducing the likelihood of infection ii. Prevents the growth of pathogens on the skin, reducing the risk of infection spread iii. Displaces pathogens from colonised skin and prevents their reattachment. This reduces the risk of re-infection with resistant organisms. These proteins are likely to be delivered in creams or oils with the aim of reducing the risk of infection from AMR superbugs such as MRSA. The Company believes that this filing adds a further layer of protection to its growing intellectual property portfolio in skincare and opens up product opportunities in multi-billion dollar global markets including Skincare (US$121bn), HCAIs (US$82bn), Eczema (US$3.8bn), Psoriasis (US$7.4bn) and Wound care (US$18.3bn).

Pinnacle Technology Group (LON:PINN 6.80p/£15.62m)  

Pinnacle Technology Group, the provider of ‘IT as a Service’, announced that it has acquired the entire issued share capital of adept4 Limited, a provider of cloud based IT services and solutions headquartered in Warrington, funded through the issue of £5m of unsecured loan notes to the Business Growth Fund Plc. Pinnacle also announced the Company’s intention to change its name to adept4 plc. adept4 provides IT as a Service  encompassing fully managed IT service contracts, cloud based services, professional services, software support and development. It has a dedicated, ITIL aligned, 24x7x365 service desk and a tier 1 Microsoft SPLA and Cloud Service Provider with a track record in the adoption of Microsoft Azure plus partner status with leading technology vendors such as Cisco, Veeam and VMware. The company has c. 60 customers with average contract lengths of three to six years, with a strong management team with experience of both organic and acquisition growth all of whom remain in the business. In the year to 31 December 2015 adept4 generated revenue of £5.0m and EBITDA of £0.75m, with 67 percent recurring revenue, expected to increase due to a growing long term support contract base and organic growth. Initial consideration of £4.5m satisfied in cash plus deferred consideration of £1m in cash, payable in January 2018.  Further contingent consideration of up to £1.5m in cash is payable in March 2018, subject to performance criteria for the year to 31 December 2017. The acquisition part financed through issue of £5m loan notes to the BGF with an associated option to subscribe for shares at a price of 6 pence per share, representing 43 percent uplift from the February placing price of 4.2 pence. Post completion, Pinnacle will have cash at bank of £4.3m.

ProMetic Life Sciences (TSX:PLI CAD2.91/CAD1,744.58m)*

ProMetic Life Sciences closed its previously announced bought deal public offering of common shares in the capital of the Corporation through a syndicate of underwriters led by RBC Capital Markets and Canaccord Genuity Corp., and which included Scotiabank, CIBC Capital Markets, National Bank Financial Inc., Paradigm Capital Inc. and Beacon Securities Limited. ProMetic issued shares at a price of $3.10 per share for aggregate gross proceeds of $60,140,000.  As previously disclosed, the Corporation intends to use the net proceeds from the Offering for: (1) the advancement of clinical programs relating to the Corporation’s orally active anti-fibrotic drug PBI-4050, such as scleroderma and cystic fibrosis, (2) the scale-up of PBI-4050 follow-on drug candidates and their advancement into clinical stages, (3) the advancement of new clinical indications for Plasminogen, including wound healing, (4) the expansion of clinical uses and proprietary positions on some plasma-derived orphan drugs, and (5) the expansion of manufacturing capabilities related to the plasma-derived therapeutics. These initiatives, as well as providing additional working capital, will allow the Corporation to continue to exercise greater control and ownership over its technology platforms, thereby providing an opportunity to retain a greater portion of the associated value for its shareholders. The Corporation also announced that it has closed its previously disclosed concurrent private placement entered into with Structured Alpha LP (SALP), an affiliate of Thomvest Asset Management Inc. This concurrent private placement was entered into following the exercise by SALP of its pre-emptive right to participate in any future public offering of ProMetic’s common shares.

Sareum Holdings (LON:SAR 0.841p/£22.19m)*

Sareum Holdings, the specialist cancer drug discovery and development company, announced that the Phase I clinical trials of CHK1 inhibitor drug candidate CCT245737 are anticipated to open at the Royal Marsden Hospital, Sutton on 31 May 2016. Two Phase I clinical trials in cancer patients are being conducted, in collaboration with co-development partners, the CRT Pioneer Fund. One trial will use CCT245737 in combination with standard-of-care chemotherapy and will ultimately target lung and pancreatic cancer patients. The other trial will use CCT245737 as a single anti-cancer agent and will initially target various cancers. As noted in its announcements of 1 February 2016 and 5 April 2016, Sareum satisfied a financial commitment of £0.79m to the funding of these trials in December 2015. The submission of the Clinical Trial Applications in February 2016 triggered the receipt by Sareum of a £0.2m success milestone payment.

Stobart Group (LON:STOB 125.22p/£431.16m)

Stobart, the infrastructure and support services group, announced that further to the announcement of 29 March 2016, it has unconditionally exchanged contracts for the sale of 47 acres of an investment property at Speke in Liverpool, for a cash consideration of £37m. The Group’s intention was to hold the entire 53-acre site as an investment property however it was recognised that Ford Motor Company Limited, the tenant required an Option to acquire 47 acres of the site as part of an Agreement to Lease that was signed on 29 March 2016. Ford has exercised the option to acquire and completion will have taken place on 31 May 2016. The part of the site that Ford are acquiring which cost £15.6m, is held on the Group’s balance sheet at £25.2m and generated an annual rental profit of £0.7m. The sale will result in a significant profit of approximately £11.8m for the Group in the current financial year.

Tern (LON:TERN 14.51p/£10.79m)

Tern, the investment company specialising in the cloud and mobile sectors, announced that it has agreed, subject to contract and completion of satisfactory due diligence, to acquire Flexiant Limited from Flexiant Corporation Limited (FCL) on the following terms: Tern will acquire the entire issued share capital of Flexiant owned by FCL and all intercompany debt owed by Flexiant to FCL. In consideration for the acquisition: Tern will issue 8 million new ordinary shares which will be allotted to FCL in full and final settlement of the intercompany debt; and in the event of a sale of Concerto for more than £6m Tern will pay a further consideration of 50 percent of the sale value in excess of £6m, the additional consideration not to exceed £2m. The acquisition is conditional on: the consent of the loan note holders of FCL and the sale by Flexiant of its Flexiant Cloud Orchestrator business; Tern Plc is informed by Flexiant that it has already agreed terms with such a buyer subject to contract. Flexiant is a leading European provider of cloud management software for cloud orchestration for on-demand, fully automated provisioning of cloud services. Tern has owned an investment of one per cent of Flexiant’s issued shares since November 2013. For the year ended 31 December 2014, the latest year for which audited accounts are available, Flexiant made an operating loss of £3.9m on turnover of £0.75m.

TMT Investments (LON:TMT$1.79/$54.08m)*

TMT Investments, which invests in high-growth, internet-based companies across a variety of sectors, announced the completion of an investment in Vinebox Inc. Incorporated in Delaware and based in San Francisco, Vinebox Inc. was founded by two former corporate attorneys, Matt Dukes and Rachel Vodofsky, in 2015.  Vinebox is the first wine-by-the-glass club.  Members receive three hand-selected wines each month, by the glass, with the opportunity to purchase full-size bottles of their favourites.  Every Vinebox tells a story with tasting notes, pairings, and the people behind the wines.  Vinebox is changing the way people discover, discuss, and drink wine outside of the restaurant. Vinebox is first focusing on the US, the world’s largest wine consuming country with over 100 million wine drinkers.  In 2015, US consumers spent US$53bn on wine.  Vinebox believes it is in an excellent position to capture this market through its new single serving format, bringing wine by the glass into the home. Vinebox was founded by Matt Dukes (CEO) and Rachel Vodofsky (COO).  TMT Investments also announced the completion of an investment in Send A Job, Inc. Incorporated in San Diego, California, Send A Job, Inc. was founded by Erez Marom, Idan Kadosh and Saar Kohanovitch, who combined their IT and Field Service Management (FSM) knowledge and experience to form Send A Job in 2013.  Send a Job caters to a wide range of over 34 field services, ranging from construction, roofing and electricians to computer repair, junk removal and pest control. The Field Service Management industry is growing at a high rate and is expected to rise exponentially from $1.58bn in 2014 to $3.52bn in 2019 due to rapid technological developments in the sector.  Today, companies are demanding real-time based solutions for their field workers, allowing them to accomplish their tasks without any delay or interruption. Send A Job is a Field Service Management CRM software aimed at helping service business owners manage their business with ease.  Send A Job is cloud-based, mobile-enabled, and very flexible, making it an ideal choice for a variety of service industries.  Send A Job aims at combining as many aspects of the FSM industry’s needs as possible under one suite, specifically enabling businesses to track leads, schedule jobs, track sales, manage field teams, use call-tracking solutions and even monitor field technician calls with creative phone masking features.


*A corporate client of Hybridan LLP

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