Small Cap Wrap: 5th September 2016

5th September 2016

Top stories in this week’s wrap



Contract Win





Palace Capital

Property Acqusition

TP Group

TP Group

Contract Win

365Agile (LON:365 26.8p/£5.01m)


Following the departure of the Group’s CEO in April, the Board has reassessed its strategy to develop a meaningful business in the Internet of Things space. In particular, the Board has considered whether, with continued investment from the income stream generated from the Company’s licence agreement with Castleton Technology plc, its operations based in Nottingham and trading under the Wireless Things name could become core to the Group’s future plans. Based on its assessment to date the Board does not believe this to be the case. Accordingly, a provisional decision has been taken to close the Nottingham operations and a consultation period has commenced with the staff. The Company continues to own the IP to the 365Agile suite of software solutions, however, should the consultation process result in the closure of the Nottingham office and employee redundancies, 365Agile will become an AIM Rule 15 cash shell funded by the ongoing payments it receives from the Licence Agreement. A further announcement will be made upon completion of the consultation process.

Bushveld Minerals (LON:BMN 1.40p/£8.04m)


Bushveld Minerals, a diversified mineral development company with projects in South Africa and Madagascar, announced it raised, at a price of 1.5 pence, gross proceeds of £0.58m. Participants in the Placing have also been issued with warrants on the basis of one Warrant for every two Placing Shares subscribed for in the Placing. The Warrants have an exercise price of 2.4 pence and an expiry period of two years from the date of issue. The net proceeds of the Placing will be used for general working capital purposes; continuing costs associated with the Vametco transaction; ongoing work in respect of Bushveld Energy’s Cooperation Agreement with the IDC and continuing work on Lemur Resources IPP project in Madagascar. The Company also advises on the progress with respect to the acquisition, together with Yellow Dragon Holdings Limited (YDH), of a 78.8 percent interest in Strategic Minerals Cooperation (SMC). The Company is currently engaged with efforts to fulfill the conditions precedent of the transaction, including the securing of relevant regulatory approvals. Furthermore, the Company notes the recently announced disposal by YDH of the Ordinary Shares it held in Bushveld. The Company sees no reason in this disposal to cause concern in respect of the interest and capacity of both YDH and Bushveld to complete the SMC acquisition.

cloudBuy (LON:CBUY 6.91p/£8.97m)


cloudBuy, the global provider of cloud-based ecommerce marketplaces and B2B buyer and supplier solutions, announced that it has signed a contract with FSB to deliver a new online marketplace for FSB members. The FSB marketplace will enable its 170,000 members to trade with each other securely and cost effectively as well as allow both consumer and business buyers to buy goods and services directly from FSB’s trusted member network. The FSB marketplace will also act as a showcase for the goods and services of innovative smaller businesses to larger organisations and overseas buyers. The contract is for a 5 year period with revenue comprising a mix of implementation, SaaS licence, support and hosting and a share of transaction revenue. Although it is expected that there will be some contribution of revenues in the current financial year, this contract win is not expected to change market expectations. The FSB marketplace will be configured and customised during 2016 followed by FSB member on boarding. There will be no registration or subscription fees for FSB members to join the marketplace and list their products and services. There will be a very competitive fee per transaction making it a genuine “pay as you earn” online model.

Dewhurst (LON:DWHT 712.65p/£46.21m)


Dewhurst, an independent supplier of quality components to the lift, keypad and transport industries, provided a trading update for the financial year ending 30 September 2016. The recovery reported at the interim stage has continued through the third quarter and into the fourth to date. Seasonal effects mean that the Company’s second half is traditionally stronger than the first half, but the effect is expected to be greater than usual this year. The UK vote to leave the EU had an immediate effect on the value of the pound. A significant proportion of the Company’s sales and earnings are generated in foreign currencies. With the fall in the pound these sales and earnings are worth more to us. If currencies remain broadly at today’s level through to the end of September, it will benefit our reported sales and profits for the year, compared to expectations at the half year. The recent EU Referendum decision has not yet affected Dewhurst’s underlying level of business. There have been reports in the media of cancellations and deferrals in commercial property transactions. However, whilst the decision has generated a period of uncertainty, it is too early to speculate what impact, if any, there will be on Dewhurst. The combined effects of these factors mean that the Board now anticipate full year profits will be significantly higher than current market expectations.

Gfinity (LON:GFIN 11.00p/£18.43m)


Gfinity, a leading eSports business, announced that it has signed a sponsorship agreement with HP Inc. for an upcoming eSports tournament, featuring the Counter Strike: Global Offensive (CS:GO) game, taking place within EGX 2016, the UK’s largest video games event, being held at the NEC in Birmingham between 22-25 September 2016. The tournament will be branded as being presented by OMEN, HP’s next generation high-performance gaming laptop, desktop and accessory range launched in May 2016. The tournament will see four of the world’s best teams compete against each other in this multiplayer first-person shooter video game, for a prize pot of $100,000 (approximately £76,000). The first day of the CS:GO tournament will feature exhibition matches and the opportunity for show visitors to play in a competitive environment alongside leadingCounter Strike professional players and showcase their commentary skills during live action. The final three days will feature the live pro tournament itself and will culminate in the Grand Final on Sunday 25 September 2016.

ITM Power (LON:ITM 23.25p/£51.21m)


ITM Power, the energy storage and clean fuel company,  announced that it has signed a fuel contract to supply hydrogen at £10/kg with Commercial Group, a pioneer in hydrogen fuelled fleet logistics. The contract covers fuel dispensed across ITM Power’s hydrogen refuelling network, including the station recently opened in London. The refuelling network has been financially supported by projects run by Innovate UK, OLEV and FCH JU. ITM Power currently has £16.19m of projects under contract and a further £1.79m of contracts in the final stages of negotiation, making a total of £17.98m. The business services company Commercial has been operating a fleet of hydrogen hybrid delivery vans since 2013 across London and the South East, along the M4 corridor and out into the South West. With ITM Power expanding the UK hydrogen refuelling network, Commercial will be able to serve more customers across its low-carbon logistics network. Carbon emissions from Commercial’s hydrogen vans are significantly lower than traditional comparable diesel vehicles and deliver significant environmental benefits. Commercial’s hydrogen van fleet was deployed via projects with funding support from Innovate UK.  These projects successfully demonstrated the environmental benefits of the hydrogen technology and the vehicles will continue to operate across Commercial’s fleet.

Milestone Group (LON:MSG 0.572p/£4.58m)*


Milestone Group, the provider of digital media and technology solutions announced the signing of a cooperation agreement with the Green Skills Partnership (GSP) to promote Milestone’s Passion Project and its digital charitable giving platform, Alchemy. The GSP has over 44 members and brings together employers, local councils, trade unions, environmental organisations, education providers, community groups including Housing Associations and state agencies. Both of the Company’s digital platforms fit with GSP’s core aims of delivering high quality skills training, raising awareness and overcoming barriers to sustainable employment with an emphasis on young people and supporting sustainable development in the charity sector. Over the last 12 months GSP has successfully delivered on a Construction Industry Training Board and Greater London Authority joint initiative to place 300 unemployed construction workers into work placements. Of these, 150 started jobs, with 100 continuing in sustained employment. Initially GSP focused on the construction sector but has widened that focus to include providing apprenticeships for the finance, law, IT and business administration sectors. GSP will work alongside Milestone’s Passion Project to support its operations, market its products / services and develop its offering beyond the London Metropolitan areas. The GSP model is a natural fit for the Passion Project which is designed to aggregate all parties involved in the engagement, education, training and employment of young people whilst providing access to a commercial resource exchange for the surrounding network of partner organisations. GSP will also promote to its members the charitable giving platform which will allows users to redeem rewards for or buy e-media, donate to targeted charities or participate in crowd-funding of social initiatives, the first of which is raising money for the Metropolitan Police’s ‘Divert’ programme.

Nektan (LON:NKTN 48.00p/£12.25m)


Nektan, a leading international mobile gaming provider, entered into an asset transfer and simultaneous licensing agreement with Buckingham HMB Ltd for three of the Company’s wholly-owned gaming brands. Buckingham will pay the Company a cash consideration of £1.75m, with a further £0.2m expected to follow shortly, for the assets, whilst simultaneously entering in to a five-year licensing agreement with the Group for the continuing operation of the brands under Nektan’s white label Evolve platform for a monthly royalty on terms consistent with other white label agreements the Company has entered into. The assets being transferred principally comprise the customer databases, web domains and brands relating to Chomp Casino, Spin Princess and Sapphire Rooms, which were all developed in-house.  In the year ended 30 June 2016, these brands in aggregate generated Net Gaming Revenue (NGR) of approximately £2.0m, and going forward the Company will continue to report the NGR relating to these brands within its NGR, consistent with other white label partners. The Company will recognise a profit on the sale in the current financial year equivalent to the consideration received. The proceeds of the asset transfer will be used for the Group’s working capital requirements to further develop Nektan’s business in Europe and its US Joint Venture, Respin Inc.

Osirium Technologies (LON:OSI 180.00p/£18.71m)


Osirium Technologies, a UK based cyber-security software provider, announced a significant contract win with a leading global asset management company.  The asset manager has over £300bn of assets under management and offices in c.30 countries. Under the terms of the contract, Osirium will deliver its full product offering of Privileged Account Management, Privileged Task Management and Privileged Session Recorder software modules to 3,000 devices. As part of the contract Osirium will also provide its consultancy services. The contract is expected to deliver a material financial contribution in the current year and will run over a three year term.

 Palace Capital (LON:PCA 316.88p/£80.66m)


Palace Capital, the property investment company that focusses on commercial property mainly outside London, confirmed that it has now completed the acquisition of Boulton House, Chorlton Street, Manchester. Boulton House is a 75,000 sq ft multi-let 1970s office building, the acquisition of which was first announced by the Company on 14 June 2016. The net price paid by the Company was £10.575m and a new debt facility of £6.022m has been secured with Santander. Maturing in June 2020, this debt facility represents a 55 percent loan to value and has been concluded at a margin of 2.25 percent over LIBOR. 13,500 sq ft of office space is currently vacant on which Palace will carry out a limited refurbishment prior to letting.

TP Group (LON:TPG 5.74p/£23.22m)


TP Group, the specialist technology, engineering and managed solutions group, announced it has signed a contract to supply a new variant of its existing carbon dioxide scrubber technology to ThyssenKrupp Marine Systems GmbH (TKMS), one of the leading system providers of non-nuclear submarines and high-end vessels. The initial contract with TKMS is worth a minimum of £1.65m, with the potential for multiple further units. The carbon dioxide scrubber system will be designed and built at the TPG Maritime facility in Portsmouth with delivery to TKMS scheduled for Q4 2017.