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Finsbury gets its Just Desserts A bright year for LiteBulb

Published: 11:27 20 May 2015 BST

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BLU Financial and Operational Results, BLV Acquisition, CBUY Contract Win, FIF Proposed Acquisition, FITB Final Results and New Kiqplans, FXI Contract Win, IDOX Trading Update, LBB Final Results, MARL Drilling Progress and Metallurgical Results, MXO Criteria and Final Results, NOP Completion of Farm Out, PPIX Patent Application, PROX New Contract, PLI Agreement and Q1 2015 Results, RSTR Final Audited Results, STR Admission to AIM and Raise £10m

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.

BELLUS Health (TSX:BLU)*

BELLUS Health, a drug development company focused on rare diseases, reported its financial and operating results for the first quarter ended March 31, 2015. Enrolment completed for the KIACTA™ Phase III Confirmatory Study in AA amyloidosis, with a total of 261 patients participating in the study; approximately 75 percent of the required events to complete the KIACTA™ Phase III Confirmatory Study have occurred; the study is on track to conclude in 2016. The company concluded the quarter with a cash position of $11.5m, which should enable the Company to finance its operations beyond the end of the Phase III Confirmatory Study for KIACTA™. Revenues amounted to $0.79m for Q1 2015, (Q1 2014:$0.47m). The increase is primarily attributable to sales-based royalty revenue received in 2015 in relation to the VIVIMIND™ license agreement with FB Health. The increase is also attributable to higher revenue recognised for accounting purposes in 2015 in relation to the service agreement with Auven Therapeutics for KIACTA™. R&D expenses amounted to $0.32m for Q1 2015, (Q1 2014 $0.46m). The decrease is primarily attributable to lower expenses incurred in relation to the development of Shigamab™ during the first quarter of 2015. Net finance income amounted to $0.24m for Q1 2015, (Q1 2014:$0.17m). The increase is primarily attributable to an increase in the foreign exchange gain that arose from the translation of the company's net monetary assets denominated in U.S. dollars, due to the appreciation of the U.S. dollar versus the Canadian dollar during Q1 of 2015.

Belvoir Lettings (LON:BLV)

Belvoir Lettings, one of the UK's largest lettings franchises, announced the joint franchisees of the existing Belvoir Oldham and Bury offices have completed the acquisition of Rayson Wilshaw, a leading estate and lettings agent in Bury. Total consideration will be £0.25m, of which 50 percent will be being paid in cash funded by Belvoir Lettings and the remaining 50 percent to be paid as a deferred consideration over a 4 year period. Having opened the Belvoir Bury office in January 2013, this franchise has gone from strength to strength, acquiring the neighbouring Oldham office in January 2014 and winning the 2014 Belvoir New Franchise of the Year award.  This acquisition will more than double the size of their business, expanding their lettings portfolio to over 1,000 properties and enabling them to gain a firm foothold in the estate agency market in Bury. This acquisition further reinforces Belvoir's strategy to support franchisees to grow the Belvoir brand across the UK in lettings and estate agency. As a result of the acquisition the Company's managed service fee revenue is projected to increase by £33,000 per annum and interest on the loan will be charged at 8.95 percent.

cloudBuy (LON:CBUY)

cloudBuy, the global provider of cloud-based e-commerce marketplaces and B2B buyer and supplier solutions, announced the signing of an agreement with the Ministry of Economy of a Middle Eastern state to provide a cloudBuy investor website and marketplace. The initial contract value is $0.85m with further potential as 40 additional eligible government organisations have the opportunity to join once the solution is live.  The investor website is similar in scope to cloudBuy's existing Invest Northern Ireland website with the addition of a cloudBuy marketplace for local business and government agencies. It will support businesses seeking to set up and trade in the region, facilitate B2B trading and provide a single point of contact for individuals and organisations to book and attend trade shows and other events. The first phase of the system is planned to go live this summer.

Finsbury Food Group (LON:FIF)

Finsbury Food Group, a leading UK specialty bakery manufacturer of cake, bread and morning goods for both the retail and foodservice channels, announced the proposed acquisition of the business, production assets, stock and customer list of Johnstone's Just Desserts from administrators FRP Advisory. Johnstone's, a supplier to the leading national coffee shop chains, produces cake, including its renowned caramel shortcake. This proposed acquisition signals the escalation of Finsbury's entry into the foodservice cake channel and in particular the high growth national coffee shop segment. This is in line with the Group's channel diversification strategy, indicated at the recent acquisition of Fletcher's in 2014. Completion of the acquisition is conditional on the finalisation of property lease details which both the Group and FRP are working on to complete as soon as possible. Finsbury will provide staff in relation to manufacturing and finance, to serve the purpose of ensuring a smooth integration process until completion Finsbury intends to work with the Johnstone’s management team at its existing site in East Kilbride to build on its strong customer relationships and market position and drive growth focusing on its high quality, well respected, coffee shop product ranges. 

Fitbug Holdings (LON:FITB)*

Fitbug Holdings, the provider of online personal health and wellbeing services, provided its final results for the year ended 31 December 2014. The company has successfully capitalised on the rapidly growing B2C market for wearable technology: Sales agreements signed with international blue chip retailers, including Sainsburys, Target, BestBuy and Amazon. Product offering developed to include pioneering digital coaching service - "Kiqplan™"- received positively by industry participants leading to a range of high profile sales and marketing opportunities: Integrated into the Samsung Digital Health platform - included as one of the strategic partner applications in Samsung's S Health platform, available globally and included as an inaugural member of the Jawbone Marketplace which features best-in-class devices and apps spanning categories including fitness, sleep and food. There was a 208 percent increase in revenues to £2.3m, but a loss after tax of £3.7m, which reflects the significant investment in development and marketing. The company also announced that it has expanded its pioneering Kiqplan offering through the launch of four new training programmes (Sun's Out Guns Out, Bikini Hot, Your first 5k and 10k run ready), which work together with wearable health technology to help users achieve their health and wellness goals. This launch, which brings the total number of Kiqplans to ten, complements the Company's existing range of digital health solutions which are focused on encouraging a healthy lifestyle through the provision of an integrated and quality service.   

Fusionex International (LON:FXI)

Fusionex, an international provider of software specialising in Analytics and Big Data, announced its latest Fusionex GIANT win with Brother Industries, a multi-national electronics and electrical equipment company headquartered in Nagoya, Japan and listed on the Tokyo Stock Exchange. The contract, which is on a multi-year basis, is the 25th win for GIANT and demonstrates the increasing traction of the Group's Big Data product. Established in 1908, Brother Industries produces communications and printing equipment, including printers and all-in-ones, at manufacturing and sales facilities in more than 40 countries and regions worldwide, allowing it to implement global business strategies and activities. Brother Industries will leverage Fusionex GIANT to keep track of its daily operations across different geographies and time zones; transforming real-time operational data into actionable insights that promote better and more well-informed decision making. In tandem with this, Brother Industries will also utilise Fusionex's data platform to maintain close ties with, manage and enhance its customer engagement experience with its global network of agents and customers. The comprehensive Fusionex GIANT platform will help Brother Industries understand the 'journey', preferences and other aspects of its partners' and customers' profiles, so that Brother Industries is able to plan more effectively with better insight and foresight.

Idox (LON:IDOX)

Idox, a leading supplier of specialist information management solutions through its two divisions, Public Sector Software and Engineering Information Management (EIM), announced a trading update for the six months to 30 April 2015. Public sector sales, which accounts for three quarters of group revenues, were up 14 percent, but EIM revenues were down 28 percent, resulting in group revenues being flat when compared to the first half of 2014.  Net debt was £9.7m compared to £15.8m at 31 October 2014.  The Public Sector division has continued to grow its managed services and hosting offering with two significant contract wins; Pendle and Watford, and has made further market share gains replacing 24 competitor systems.  Over £2m in revenues have been achieved from outsourced service delivery for the UK General Election. The public sector team has embarked on a new national initiative to be launched in July which will open up new revenue opportunities. The Digital Spirit acquisition has been successfully integrated and will deliver its synergies as planned in the second half. In response to the downturn in market conditions in the engineering business, the division was restructured at the turn of the year, resulting in approximately £3.0m in annualised saving across the Group.

Litebulb Group (LON:LBB)

LiteBulb, the branded product developer, announced audited results for the year ended 31 December 2014, a year of transformational growth and investment to establish a solid platform for future growth and profitability. In addition, trading in the first four months of 2015 is ahead of budget with revenue for the four months to 30 April 2015 up 152 percent to £5m (from £2m in 2014). In line with the trading statement of 27 January 2015, revenue increased 170 percent to £21.9m (2013: £8.1m) - and H2 delivered a positive EBITDA of over £2m. There was a gross profit of £7.9m (2013: £3.3m), leading to an EBITDA loss reduction of £0.2m to £0.4m (2013: £0.6m) and cash at bank as at 31 December 2014 of £4.2m (2013: £1.8m). The group acquired Go Entertainment (April 2014) and Concept Merchandise (December 2014), and produced strong organic revenue growth across existing divisions: Litebulb Studios (formerly Rizon Studios) up 67 percent to £1.0m (2013: £0.6m), Bluw up 34 percent to £5.5m (2013: £4.1m) and Meld up 10 percent to £7.8m (2013: £7.1m). The current trading - ahead of budget saw revenue for four months ended April 2015 up 152 percent to £5.0m (2014: £2.0m) and a strong response from retailers to new 2015 product ranges.

Mariana Resources (LON:MARL)*

Mariana Resources, the exploration and development company with projects in South America and Turkey, announced the completion of the first two holes (HTD-08 and HTD-09) of the Phase II drill program, carried out by JV partner Lidya Madencilik Sanayi ve Ticaret A.S. and the receipt of preliminary metallurgical testwork results from Lidya, at the Hot Maden gold-copper project in eastern Turkey. Drill hole HTD-08 was collared approximately 50m to the north of the high grade gold-copper mineralisation intersected in HTD-04, drilled at 60 degrees to the east to a depth of 273m.  Quick logging has identified a primary sulfide-bearing stock work / breccia zone between 123m and 169m downhole, with a massive sulfide zone (chalcopyrite-pyrite) from 131m to 136.7m downhole.  In parallel, logging and sampling of drill hole HTD-09, a 50m step-back hole under HTD-04 drilled to 361m, has commenced.  A second drill rig is now operating on site and is expected to accelerate the advancement of the Phase II drill program. The preliminary metallurgical testwork was performed on crushed drill core obtained from the Phase I drill program, with the initial testwork including: basic leach analysis on selected intervals from all drill holes (SGS's analytical technique BLE563), modal analyses on samples from drill holes HTD-01, HTD-04, and HTD-05, and a bench flotation test on one composite sample sourced from drill holes HTD-01, HTD-04, and HTD-05.   Key results include: a basic heap leach resulted positive gold recoveries, however a flotation process appears preferential to recovering gold and copper. The primary sulfide phases from modal mineralogical analysis are chalcopyrite, pyrite/marcasite, sphalerite, galena, and trace bornite. Importantly, no arsenic-bearing phases such as enargite were detected.  Gold occurs either as free grains, or is associated with pyrite, and is fine grained (20 to 75 microns) from Scanning Electron Microscope images. High (93 percent) copper recovery was achieved from a rougher concentrate prepared from the composite sample.  The test indicated a "clean" concentrate free of deleterious elements could be produced. (Conditions used for the test were 85 percent of material at -75 microns, pH of 11.5, with reagents 50 g/t 3418A and 10 g/t MIBC).

MX Oil (LON:MXO)*

MX Oil, the oil and gas investment company announced that the pre-qualification criteria have now been released by the National Hydrocarbons Commission for mature onshore conventional fields in Mexico.  This is the third phase of Bid Round 1 and part of Mexico's energy reform, which is intended to boost domestic oil and gas production by enabling foreign companies to invest in Mexico's Energy industry, ending a 76 year old state monopoly.  MX Oil's joint venture company with local operator partner Geo Estratos is anticipated to make an application to pre-qualify for Phase 3 in the coming weeks and, given the announced criteria, is confident that this can be achieved without the need to bring in a production partner. As part of Phase 3, a total of 26 Land Contract Areas in the states of Chiapas, Nuevo Leon, Tabasco, Tamaulipas and Veracruz will be awarded to companies that satisfy the pre-qualification requirements and win the subsequent tender process.  MX Oil is primarily focussed on Type 1 blocks, which include onshore fields with estimated resources of around 100 mmboe.  The key criteria for the award of Land Contract Areas applicable to the JVCo include: Minimum equity of $5m for each Type 1 block and Joint ventures that do not comply with the $5m equity threshold will qualify with a minimum equity threshold of $3m. The company also notes the recent statement made by the relevant departments of the Government of Mexico, including the National Hydrocarbons Commission, that details of the tender and contract models for the extraction of hydrocarbons under the third phase of Bid Round 1 (Phase III) will be announced on 12 May 2015.  Phase III is focused on the tender for mature onshore conventional fields in Mexico, which MX Oil intends to participate in. The Group reported an operating loss of £0.85m (2013: £92,000) and made a net loss from continuing activities of £1.15m (2013: £51,000) during the year to 31 December 2014. Net cash outflow from operating activities was £o.65m (2013: £0.22m), with net cash outflow from investing activities at £0.77m (2013: £o) and net cash inflow from financing activities of £2.83m led to cash and cash equivalents as at 31 December of £1.52m.

Northern Petroleum (LON:NOP)

Northern Petroleum confirmed that, further to the announcement on the 5thMarch 2015, the farm out of the Italian onshore permit, Cascina Alberto, to Shell Italia E&P, a wholly owned subsidiary of Royal Dutch Shell, completed on the 7th May 2015. The Italian regulatory authorities have approved the transfer of 80 percent of the permit interest to Shell and Shell has paid to Northern Petroleum $0.85m as agreed under the farm out agreement. The work programme has started with the re-processing of existing seismic data to determine whether there is a requirement for further seismic acquisition to help delineate a proposed target for an exploration well. Shell will carry Northern Petroleum for the costs of the exploration campaign, which will include a carry on the acquisition of any new seismic until the seismic costs reach $4m and a carry on an exploration well until the well costs reach $50m.

ProPhotonix (LON:PPIX)

ProPhotonix, a designer and manufacturer of LED illumination systems and laser diode modules with operations in Ireland and the UK, announced that it has filed a patent application on its unique heat sink for optical modular array assemblies. The invention is a water-cooled heat sink design suitable for a range of different optical module arrays and sizes that allows for easy replacement of individual optical modules.  Design features include precise orientation of the optical modules to ensure an exact electrical connection to an external driver circuit.  In addition, the thermal management capacity allows a large density of optical modules, which enables high optical output for many applications. The invention allows for easy removal and replacement of modules in the field by non-technical personnel, thus alleviating the need for skilled technicians for repair. Importantly, the heat sink has been designed to ensure that the "back end" of the optical module (e.g., the end of optical module where the emitter is located) is circumferentially orientated within a given opening. This allows for light sources of optical modules to be precisely connected to an external circuit every time, even when optical modules are being replaced. In conjunction with optical modules, typical applications for this invention include computer-to-plate printing, maskless lithography and laser marking.

Proxama (LON:PROX)

Proxama, the international mobile commerce company specialising in proximity marketing and provider of end-to-end payment solutions for card issuers, announced that it has been awarded an exclusive contract with Exterion Media UK, Europe's largest privately owned out-of-home media owner. Proxama is also delighted to announce that it has been awarded a £1m grant by Innovate UK as part of their aim to support the UK's high streets. Proxama's proximity marketing division, which focuses on connecting consumers to retailers and brands via Bluetooth Beacon technology, will provide Exterion with a managed service to deliver proximity marketing services to consumers' smartphones, whilst using public transport.  The contract is for up to three years and the first phase will look to build on the successful trial conducted on buses in Norwich late last year, with a roll-out to UK major cities. Exterion has a nationwide portfolio of advertising environments in the largest urban areas in the country. They also own media sites in numerous high footfall locations in London and are the sole providers of advertising space on Transport for London's bus and Underground services.

ProMetic Life Sciences (TSX:PLI)*

ProMetic Life Sciences, a biopharmaceutical company with globally recognised expertise in bioseparations, plasma-derived therapeutics and small-molecule drug development, announced that it has entered into a strategic manufacturing agreement with Emergent BioSolutions. The long-term manufacturing agreement provides ProMetic with access to additional cGMP capacity in an FDA-licensed facility, located in Winnipeg, Canada. ProMetic will use this capacity for the development and manufacture of plasma-derived biopharmaceuticals using ProMetic's proprietary plasma purification platform, known as Plasma Protein Purification System. The additional product manufacturing capacity will provide the ability to process up to 250,000 litres of plasma annually with the potential for further expansion should the parties agree. This 15-year manufacturing agreement involves an initial annual minimum payment of approximately $4m per year, rising to $7m per year in 2018 and to $9m per year by 2021, for an aggregate total of minimum fees exceeding $100m over the life of the contract. The agreement allows for a flexible approach for the use of resources up to that value, and any additional resources used beyond that minimum cost will be charged on an as-used basis. ProMetic generated a net loss of $20.4m in Q1 of 2015 (Q1 of 2014:$8.7m). Of the $20.4m net loss incurred in Q1 of 2015, approximately $9.5m comes from the variation in fair value of the warrant liability and the loss on debt extinguishment which do not affect cash. In addition, the corporation increased its investment in R&D costs incurring a total of $9.9m in the Q1. Total revenues for Q1 of 2015 were $1.9m compared to $5.7m for Q1 of 2014. Revenues from the sale of goods amounted to $1.4m compared to $3.2m for the same period in 2014. Service revenues were $0.5m for the quarter ended March 31, 2015 compared to $2.5m for the quarter ended March 31, 2014. The decrease is due to lower product sales and the fact that services billed to NantPro are being eliminated upon consolidation due to its acquisition from a control perspective in May 2014.

Rightster Group (LON:RSTR)

Rightster Group, the online video distribution and monetisation network, announced its preliminary results for the twelve months ended 31 December 2014. The company has shown significant growth over the course of the year including the completion of two strategic acquisitions and noteworthy additions to its client roster. Total Transaction Value has risen from £11.0m in 2013 to£16.9m in 2014; net revenue has increased from £6.2m in 2013 to £8.7m in 2014 and gross profit has grown from £0.6m in 2013 to £3.9m in 2014. Average monthly video views have risen to 1.2bn in H2 2014 (369 percent growth from H2 2013) and content owners have increased from 850+ to 2,500+. Publishers have grown from 7,500+ to 10,500. Highlights in Q1 of 2015 include the following: Average monthly video views for Q1 2015 estimated at 1.6bn and by the end of Q1 2015, the company surpassed 72m subscribers and reached 124m unique users worldwide across its YouTube Network (the latter being a 125 percent increase from the end of Q1 2014). The group also secured a partnership with Microsoft Lumia and extended its global partnership with 20th Century Fox, to include 10 additional international territories. The group also provided an update on its proposed placing announced on 30 April 2015, each at 18 pence per Placing Share to raise approximately £5m before expenses. The Loan Notes will, when issued and subject to the satisfaction of certain conditions, be convertible into new ordinary shares at a price of 18 pence per new ordinary share.

Stride Gaming (LON:STR)

Stride Gaming, the multi-branded online bingo-led operator, announced its intention to raise at least £10m and seek admission of its ordinary shares to trading on AIM. Stride Gaming is a UK focused, real money, bingo-led online operator, using its proprietary and purchased software to provide online bingo and related gaming activities to players. The group operates a multi-branded strategy which includes the online bingo brands Kitty Bingo, Lucky Pants Bingo, Bingo Extra, Jackpot Café, Jackpot Liner, King Jackpot, together with the online casino brands  Spin and Win and Magical Vegas. The Group has experienced significant organic growth of its proprietary brands with NGR up 40 percent between Q1 to Q4 2014. Additionally, the group has been acquisitive with the acquisition of the business and assets of Table Top Entertainment in September 2014. The group also owns an Italian online gaming business, Baldo, which has an Italian gambling licence, as well as a 24.5 percent interest in a licensed Spanish operator, QSB Gaming Limited. The directors believe there are a number of growth opportunities for the group, both organically and through acquisition. The overall UK gambling market is substantial and is forecast to pass £3bn of NGR by 2016. The UK online gaming market is estimated to grow approximately £1.6bn of NGR by 2016 with bingo-led online gaming estimated to account for 32.3 percent of the UK online gaming market. With the implementation of the point of POC tax in the UK, and the general increase in regulation, the directors believe that a number of smaller-scale online bingo operators will suffer a significant impact to their margins from the POC tax that will make it difficult for them to continue operating. The directors also believe that with bingo generally attracting a predominately female demographic, the pressure on margins created by the POC tax will also lead to the larger multi-product online gambling operators prioritising their marketing spend more towards their core product leaving opportunity for a bingo-led business to increase market share both from organic growth and through acquisition.

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