The major market indices continue drift downwards against the backdrop of continuing speculation over the US tapering of its QE program. A key Fed official recently argued for reducing the Fed's bond buying at next week’s meeting. Better than expected non-farm payroll and Chinese trade data has only added to the nervousness. Results from the UK Travel and Leisure sector this week is adding to conviction that the UK economy is also recovering faster than forecasts. While the FTSE is down 13 points in the past week to 6,519, the All-share AIM Index continues to outperform, rising 5 points to 825. We believe that any talk of tapering is still premature. However, if interest rates do begin to rise, then we expect the small cap sector to perform even better.
Action Hotels proposed AIM listing,BSE first production,COMS trading update and product launch,CSRT interim results,CRA contract win,EGS Board changes and contract,ESCH South African win,FLOW manufacturing agreement & placing,HDD Nadcap approval,HHR £60m placing,MDM interim financial results,Nation Media proposed AIM listing,PEG conditional placing,PINN trading statement & CEO resignation,PNA /SAVG offer update,RMM results,Safestyle UK proposed AIM admission,SCLP interim results and positive date,SIS interim results,SEE Royal Beuk agreement,SRB update,SORB results,SUMM first patient dosed,SYQ first day of dealings on AIM,TAL half yearly report
Action Hotels (TBC)
N/K proposed AIM listing
Action Hotels, an owner, developer and asset manager of branded three and four star economy and midscale hotels in the Middle East and Australia, announced its intention to come to AIM via an IPO. The Group's objective is to become a leading owner, developer and asset manager of branded economy and midscale hotels in key Middle East markets and Australia. Action Hotels has completed six hotels, of which five are in the Middle East and one is in Australia, with a further two hotels under construction (both in the GCC), one hotel expansion and another six in planning (one in Australia and the remainder in the GCC). The main countries of operation of the Company are those of the Gulf Cooperation Council. The business of Action Hotels was established in 2005 as a wholly owned subsidiary of Action Group Holding Company (K.S.S.C), a private Kuwait based conglomerate. AGH has global public and private interests across a range of sectors including real estate, infrastructure, hotels and energy. Action Hotels develops hotels following the entry into long-term management agreements with established international branded hotel operators. The Group's property portfolio comprises five hotels in respect of which the freehold is owned by the Group and one held on a lease from AGH, with 1,004 rooms in total across the operating portfolio. The six hotels are located in Kuwait, Oman, Jordan and Australia. The two hotels currently under construction are expected to add a further 470 rooms by the end of 2014, with a further ten rooms being added to the ibis Salmiya by the same time. In addition, the Group has a pipeline of six projects which are expected to add a total of 1,032 rooms, expanding the portfolio to 2,516 rooms by the end of 2016.
Base Resources (LON:BSE)
Base Resources announced the commencement of concentrate processing through the mineral separation plant (MSP) at the Kwale Project and the first production of ilmenite and rutile. Following the commissioning of the wet concentrator in early October, the first heavy mineral concentrate has now been taken through the ilmenite and rutile circuits of the MSP. Over the next several weeks processing rates are planned to be ramped up and inventories of rutile and ilmenite built up ahead of the commencement of bulk shipments in January. A small containerised shipment is scheduled in December. Construction work on the zircon circuit of the MSP is now in its final stages with commissioning expected during January. The majority of the supporting infrastructure is now complete, with access road, 132kv power supply, tailings storage facility and Mukurumudzi dam now functionally complete. The Likoni marine facility is scheduled for completion in early December, ahead of the first bulk shipment.
Coms announced that trading in the nine month period to October 2013 has been strong and revenue and EBITDA are in line with management expectations. The order book for the remainder of the year is promising and the board is confident of prospects for the full year. The Company also said that all acquisitions, including Coms' newly acquired subsidiary Communica Holdings Ltd. (Redstone), made during 2013 are expected to be fully integrated by the year-end. Further contract wins have been concluded with Taunton & Somerset NHS Trust, London Borough of Barnet, University of Kent, North Wales Hospital, Surrey and Sussex Healthcare, Harrogate District Foundation Trust, West Midlands NHS Trust and Gateshead NHS Foundation Trust. These, and other wholesale contract wins, further demonstrate the Company's ability to achieve organic growth. The new Headquarters in Stokenchurch, Buckinghamshire and "centre of excellence" will be operational within the next 10 days. Approximately 50 staff will move immediately into these new offices, which can accommodate circa 200 people with the additional capacity being used for the anticipated increased activity during 2014. Accordingly before the year-end the Company will close down its London, Cannon Street offices and move the London based staff into Redstone's offices in Old Broad Street in the City. Coms also announced that Coms.Com Ltd has launched a number of new high-speed broadband products suitable for home and business users. With a range of plans available to suit all users requirements and budgets, the Coms broadband product set fit into the communications and connectivity solutions the business already delivers. The launch of these products comes in a year when one of the acquisitions made by Coms plc was ADSL24 - a specialist in home and business broadband. As a result of this product launch, all ADSL24 customers have transferred to Coms for their ongoing needs.
Consort Medical, a designer and manufacturer of drug delivery and device technologies, has reported its interim results for the six months ended October 2013. Revenue from products and services increased by 6.5 per cent to £51.2m while underlying operating profit increased by 4.8 per cent to £9.6m. EBIT margin before special items was constant at 18.8 per cent as the strength of service income arising from the development pipeline continued, together with central cost savings, following the disposal of King Systems. The company is trading in line with its expectations and the management expects the organic growth initiatives, particularly from further development programme wins, to continue to convert into increased revenue and operating leverage for Consort over time.
Corac Group announced that its subsidiary Hunt Graham Ltd. (HG) has received an order from the UK division of a speciality chemical company for the design and manufacture of heat exchangers central to their manufacturing process. This order, worth approximately £1.1m, is for four exchangers plus a full set of interchangeable spares to be delivered in the UK during 2014. The systems will be manufactured at HG's integrated design and production facility in Dukinfield, Greater Manchester, using specialist stainless steel and nickel alloy material for optimum high temperature operations.
eg solutions (LON:EGS)
eg solutions, announced that John O'Connell has informed the Board of his decision to resign as a Director of the Company with immediate effect. The Board intends to replace Mr O'Connell by appointing a non-executive Chairman and a Chief Executive as soon as possible. In the meantime, Elizabeth Gooch will be Acting Executive Chairman. eg solutions also announced that it has won a new Managed Cloud Services contract from a major third party outsourcing customer. The contract will provide eg operational intelligence(R) on a hosted basis with implementation and training services for users processing life and pensions business across two sites. This is the second hosting contract won from this customer. The implementation will commence immediately and is expected to be completed by April 2014. The total value of the contract over three years is £0.75m of which approximately £300,000 will be recognised in the current financial year. eg is experiencing growing demand for its Managed Cloud Services from customers seeking more flexible and cost effective access to business applications. Although this initially reduces perpetual licence income, the move to hosting has led to a 36 per cent increase in recurring revenues on the previous year and reflects the company's strategy to build a more predictable business model.
Escher Group Holdings, provider of outsourced, point of sale software to the postal industry, announced that the South African Post Office has selected the RiposteTrEx™ platform to deliver its eRegistered mail solution following a rigorous tender process. The South African Post Office will, through this platform, provide eRegistered mail services to the country’s more than 51 million citizens. Escher’s solution, RiposteTrEx™ is a secure, scalable high performing platform for “digital correspondence”. The RiposteTrEx™ platform heralds a new phase in the evolution of secure e-services and digital communication. RiposteTrEx™ will allow South African Post users including, citizens, government, business and SME’s to send eRegistered and confidential mail to secure digital mail boxes, or as registered hybrid letters.
Flowgroup, which develops and commercialises alternative and efficient energy products, has announced that it has entered into an exclusive Manufacturing Services Agreement with Jabil Circuit Inc., one of the world's leading manufacturing solutions companies, to manufacture up to 390,000 microCHP Flow boilers in the UK. Jabil will manufacture up to 390,000 Flow boilers, funding production working capital. The Company has also announced a conditional placing and subscription to raise approximately £15.9m and an open offer to raise up to approximately £2m to further the continuing commercial development of the Flow boiler for volume launch from H2 2014. Firm placing of 96.3m new shares has been conducted at 16.25p each with a subscription of 1.26m new shares by Directors and certain senior management. Up to £1.96m is to be raised from an open offer at 16.25p also.
Hardide has begun a programme of work aimed at securing the aerospace industry's prestigious Nadcap approval within the next 18 months. The accreditation will take Hardide Coatings' systems and processes beyond those required of the currently held AS 9100 Rev C and will place the company in the top tier of global aerospace suppliers for manufacturing quality. Nadcap (formerly the National Aerospace and Defense Contractors Accreditation Program) is a globally recognised award managed by the aerospace and defence industries to recognise excellence in manufacturing quality products through superior processes. Increasingly, it is being seen as a mandatory requirement for key suppliers to aerospace OEMs (original equipment manufacturers). The programme of work leading to accreditation is expected to be completed by the end of 2014 and forms one of a range of preparations for future aerospace business.
Helphire Group (LON:HHR)
The Board of Helphire announced that it has conditionally raised £60m (before expenses) at 5.2 pence per share. The proceeds of the placing are conditional upon, among other things, the approval of shareholders at the General Meeting, and will be used to allow Helphire to continue its development as a leading accident management services group. The placing shares will represent approximately 42.3 per cent. of the enlarged share capital. The Group has decided to accelerate the payment of the second interim dividend for the current year so that it is paid by reference to the pre-placing shareholder register. The Board confirms that the second interim dividend will be 0.171 pence per ordinary share and that it will now be brought forward so that it is paid on 10 January 2014 to those shareholders on the register at the close of business on 13 December 2013. In addition, in the absence of unforeseen circumstances, the Board intends to announce a third interim dividend for the current year in late February 2014 when releasing its results for the six months ending 31 December 2013.
MDM Engineering Group Limited, the minerals process and project management Company focused on the mining industry, announced its interim results for the six month period ended 30 September 2013. Revenue decreased to US$53.6m (2012: US$78.9m, and pre-tax profit declined to US$5.0m (2012: US$8.1m). This decrease is primarily a result of cashflow from the Bulyanhulu project being timed to peak during the next half year, and the lower workload since 31 March 2013 following the completion of the Tharisa 3.6m tonnes per annum chrome and platinum project in FY2013. However the cash position grew to US$32.0m (2012: US$20.1m). The Company continued its commitment to pay 50 per cent of after-tax profits as a dividend to shareholders. The MDM Board declared an interim cash dividend of US 8.00 cents per share, which includes the special dividend of US 3.65 cents per share, payable on 22 January 2014 to all shareholders on the register on 13 December 2013. The interim dividend will have an ex-dividend date of 11 December 2013. The special dividend is as a result of MDM's strong cash position and the anticipated increase in the forward project pipeline.
Nation Media (unlisted)
Nation Media, owners and operators of Box Nation, the UK-based subscription boxing channel, available on Sky, Virgin Media, online and via mobile apps, confirmed its intention to seek admission to trading on AIM. Box Nation commenced Pay TV broadcasting in November 2011 and is now available on a subscription basis through Sky, Virgin, mobile apps and online. It has built its customer base (people who are registered on the Box Nation customer database, principally current and past subscribers) to over 250,000 people, of which more than 100,000 people are currently subscribing on a monthly basis. The Board is led by Richard Brooke, Executive Chairman, the former Finance Director of Sky, and includes, as non-executive directors, Frank Warren, who has been a boxing promoter over the past 30 years, Simon Green, the Head of Sport at BT Vision, and Bill Ives, the Chairman and founder of the Rainham Steel Group.
On 12 November 2013, the boards of Penna and Savile announced that they had reached agreement on the terms of a recommended cash offer by Penna for the entire issued and to be issued ordinary share capital of Savile. As at 1:00 p.m. on 3 December 2013 (being the first closing date of the offer), Penna had received valid acceptances in respect of a total of 11,083,779 Savile shares, representing approximately 74.2 per cent. of the entire issued share capital of Savile. Penna therefore announced that all of the conditions to the offer have been satisfied and/or waived and, accordingly, declared the offer wholly unconditional. The offer remains open for acceptance until 1:00 p.m. on 18 December 2013.
Petard Group (LON:PEG)*
Petards announced that it proposes to raise approximately £1.15m (before expenses) by way of a placing at a price of 10 pence per share. While trading conditions for 2013 have remained difficult, the Board's expectation that order intake would improve in the second half of the year has been realised. In the period since the Company reported its 2013 Interim Results on 30 September 2013, it has been awarded a number of significant contracts by both its rail and defence customers. The principal contract wins are as follows: £7m with the Ministry of Defence; a contract to supply Hyundai Rotem of South Korea worth over £1m; a contract on new Alstom Coradia Nordic X60 suburban EMU trains; and a contract to supply Bombardier Transportation that is worth over £1.75m. The value of these orders is in excess of £10m and, as anticipated, the revenue benefit of these orders will be largely seen in 2014. The Company's current order book is approaching £20m of which approximately half is expected to be delivered in 2014. The significant increase in its order book brings with it a requirement for greater working capital. Having reviewed its options for addressing this requirement, the Board and has concluded that, at the current time, raising equity through the Placing, which has the added benefit of further strengthening the balance sheet, is the most appropriate method of addressing this requirement. Some of the proceeds will also be used for reorganisation within the Company and further product development.
The Board has issued a trading update, as signalled in the interim announcement on 6 June 2013; revenue for the year ended 30 September 2013 is lower than in the previous year, at approximately £10.1m (2012 £12.7m). This result, whilst disappointing, relates in large part to poor performance from the previous acquisition of RMS IT Security and the lack of any major UK high-profile events in the period (compared to the Queen's Diamond Jubilee celebrations and the London Olympic Games contracts, which were delivered in the year ended 30 September 2012). In consequence, both EBITDA and pre-tax loss when finalised, will show a significant deterioration on the figures for the previous year (2012 adjusted EBITDA £284,554; 2012 loss before tax £1,115,558). It should be noted, however, that following the announcement of the interim results to 30 March 2013, the Board embarked on a strategic review of the Group and has taken robust actions to reduce on-going costs in recent months. As a result, the Group is now trading close to EBITDA breakeven on a monthly basis. The Company expects to make a preliminary announcement for its full year results to 30 September 2013, in February 2014. Any further announcements regarding the appointment of Mr Bonner's successor as Chief Executive will be made in due course.
Rambler Metals and Mining (LON:RMM)
Rambler Metals and Mining, whose principal activity is the development, mining and exploration of the Ming Copper-Gold Mine in Newfoundland and Labrador and the exploration and development of other properties located in Atlantic Canada, has announced its financial results for the first quarter of fiscal 2014 ending October 2013. Revenues in the quarter reached C$16.7m, compared with C$13.2m in the previous quarter. Profit before tax also improved from C$1.6m to C$5.3m. This quarter completed twelve calendar months of commercial production and resulted in pre-tax profits of C$9m. A total of 6,648 dry metric tonnes (dmt) (Q4 2013 - 5,573 dmt) of concentrate was provisionally invoiced during the period at an average price of C$3.39 (Q4 2013 - C$3.31) per pound copper, C$1,390 (Q4 2013 - C$1,409) per ounce gold and C$22.81 (Q4 2013 - C$21.98) per ounce silver. Cash resources as of 31 October 2013 was C$5.7m and as of 9 December 2013 had increased to C$6.7m with operating cash flows anticipated to continue to build throughout the fiscal year.
Safestyle UK (TBC)
Safestyle UK a UK-focused retailer and manufacturer of PVCu windows and doors for the UK homeowner replacement market, announced its intention to proceed with a vendor placing of ordinary shares with a value of approximately £70m, and admission to trading on AIM. The Company's business has grown from its founding in 1992 to become the largest company in the UK homeowner window and door replacement market, manufacturing 232,000 frames in 2012 and carrying out in excess of 50,000 installations. Safestyle has ten installation depots and 29 sales offices throughout the country. The Group has established a robust and cash generative financial track record over a number of years, with revenues in the year ended 31 December 2012 of £110.2m and profit before tax of £9.5m. For the six month period ended 30 June 2013, the Company revenues were £62.6m and profit before tax was £7.8m. Since 30 June 2013, the Company has traded in line with Directors' expectations. The trends seen in the first half of 2013 have continued, with average order values remaining at similar levels to 2012, whilst order levels remain above those seen in comparable periods in 2012.
Scancell, the developer of novel immunotherapies for the treatment of cancer, announced results for the six months ended 31 October 2013. The operating loss for the period was £1.31m (2012: loss of £0.99m) and a net loss of £1.19m (2012: loss £0.92m was reported. Cash at bank at 31 October 2013 was £6.40m (30 April 2013: £1.49m), following a placing and open offer of shares in August that raised £6.09m (net of expenses). Scancell also announced important positive data from Part 2 as well as an update from Part 1 of the on-going Phase 1/2 clinical trial with SCIB1 in patients with Stage III/IV melanoma at the same time as its interim results. A melanoma-specific immune response was seen in all Part 2 patients, alongside a continuing positive survival trend in Part 1 subjects, although patient numbers are small. No serious adverse events were reported. Scancell has been granted an extension of the Option to commercialise Ichor’s proprietary Trigrid™ electroporation delivery system with SCIB1 also post period end. The Company anticipates reporting data from the high dose 8mg arm of this Phase 1/2 trial by 2014 calendar year end.
Science in Sport, a sports nutrition Company, has reported its maiden financial results as a quoted Company following admission to AIM on 9 August 2013. Revenues in the six month to September 2013 increased by 23 per cent to £4m (H1 2012: £3.25m). Underlying operating profit of £21,156 was in line with management expectations (H1 2012 underlying operating profit: £221,851). There has been significant progress in developing an international distribution network including the appointment of an Asia Pacific distributor in November 2013 while investment in e-commerce and direct selling infrastructure is ongoing. During this period, Mark Cavendish was appointed as Elite Sports Consultant.
Seeing Machines, the technology company that specialises in visual computing systems that track faces, eye and facial features in real time, has signed a strategic agreement with Royal Beuk, a leading European coach fleet operator, for the deployment of automated Fatigue Monitoring Systems to ensure driver alertness and safeguard coach passengers. The installation of the Fatigue Monitoring Systems will be the first time that coach passenger safety has been protected by automated detection of driver fatigue and distraction, and is being put in place to eliminate the risk of catastrophic coach crashes that have led to large numbers of fatalities. The agreement and partnership with Royal Beuk builds further on Seeing Machines’ success in the transportation markets.
Serabi Gold, the Brazilian focused gold exploration and development Company, has reported a further operational update on its Palito gold mine. The Company is making good progress as the development of the Palito mine and process plant reaches the final stages before going into production in the first quarter of 2014. Development mining is now underway on four main levels, including the next planned production level. The Palito Main Zone veins at this level have already been intersected, with mineable grades and widths tonne of gold significantly in excess of the mine plan grades. The surface ore stockpile has now reached 25,000 tonnes @7.5 grammes per tonne of gold. Electrical installations at the mine and plant are complete, with new high voltage sub-stations installed and low voltage control rooms competed. The Crushing plant is fully operational and the Flotation plant is 90 per cent complete, with final electrical installations underway.
The third largest sorbates producer in China announced its preliminary unaudited results for the year ended 30 September 2013. Revenue for the year was £14.6m (2012: £16.8m) and EBITDA more than doubled to £1.2m (2012: £0.5m). The gross profit margin for the year came in at 12.9 per cent (2012: 8.6 per cent). Profit from operations before an impairment was £0.6m (2012: £0.02m) and the loss before tax was £6.1m after the impairment provision of £6.7m in respect of the Inner Mongolia facility (2012: £0.14m). The cash balances at 30 September 2013 were£5.3m (2012: £4.1m) and the net assets per share was £0.21 (2012: £0.38). The compensation negotiation for the Group’s Inner Mongolia facility restarted during the period. John McLean, Non-Executive Chairman of Sorbic International, commented: “The Board is pleased that during the year the core business has significantly improved profitability and more than doubled EBITDA. The Board remains focused on resolving cash flow constraints, as well as continuing to work to seek a conclusion of the negotiations regarding the Inner Mongolia facility, and will update shareholders on this matter in due course.”
Summit Corporation (LON:SUMM)*
Summit, a drug discovery and development company advancing therapies for Duchenne Muscular Dystrophy (DMD) and C. difficile infection, announced that the first DMD patient has been enrolled and dosed in a Phase 1b clinical trial of the oral, small molecule utrophin modulator SMT C1100. The Phase 1b trial is a dose-escalating, open-label study that is being conducted in paediatric patients with DMD. The primary endpoint of the trial is the evaluation of the safety and tolerability of SMT C1100. The study will also measure blood plasma concentration levels of SMT C1100 to determine the dose to be used in a subsequent Phase 2 proof of concept efficacy trial. The trial is enrolling 12 patients aged between 5 and 11 years, divided equally into three dose cohorts. Each cohort will receive daily oral doses of SMT C1100 for a total of ten days with a review taking place after each cohort has completed dosing. The trial is being conducted at up to four NHS hospitals in the UK with the Chief Investigator being Professor Francesco Muntoni at Great Ormond Street Hospital, London.
SyQic, an OTT (Over The Top) provider of live TV and on-demand paid video content across mobile and internet enabled consumer devices, announced the commencement of dealings of its ordinary shares on the AIM market. The Group has access to over 20,000 titles of online video-on-demand content as well as over 70 live television feeds comprising English language based content and native language content for a number of 'home markets' in Asia and their international migrant communities. The content is delivered through SyQic's platform via a number of channels in the movies, drama, music, sports, news, lifestyle and general entertainment genres. The Group, which is incorporated in Jersey and headquartered in the UK, already has a significant service footprint in the Philippines, Indonesia and Malaysia and near term launches are planned for the UK (before the end of 2013), followed by mainland Europe, Indochina, Myanmar, Singapore, Pakistan and Bangladesh with a planned launch of the Group's service in the US over the next 18 months.
Ten Alps (LON:TAL)
Ten Alps, a producer of TV and radio together with integrated publishing and communications content, announced its half year results for the six months to 30 September 2013. As the Group continues to move further away from its previous legacy, it now has a simplified management structure, reduced overheads, a refreshed portfolio and has expanded services in sectors and markets which the Board believes will grow in the future. It believes that the implementation of these measures is now starting to bear results. Group revenues came in at £12.24m (2012: £13.47m) with an adjusted EBITDA loss of £0.19m (2012: £0.74m loss). The loss for the period after tax was £0.51m (2012: loss of £1.82m) with net debt of £6.08m (2012: £3.70m) with facilities maturing in 2016.
*A corporate client of Hybridan LLP
A full archive of previous weeks’ Small Cap Wraps can now be viewed on www.hybridan.com.
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.