The financial markets see-sawed last week despite unexpectedly dovish comments from the Fed and its decision not to taper the existing QE program (of purchasing $85bn a month in Treasuries and Mortgage Backed Securities). The FTSE 100 gained just 16 points to reach 6,596, although the AIM All share continued to outperform, rising 15 points to 794. ECB officials also appear downbeat on the economic recovery signalling that they are open to providing additional emergency loans to banks to keep borrowing costs low. Not surprisingly, the main indices have drifted back this week with investors switching back to defensive sectors such as food producers, utilities and beverages. The economic calendar this week is busy, including the release of GDP figures in the US and the UK. However, the economic data has been mixed, hence, the markets obsessed with what central bankers have to say, 2 from the Fed, 5 from the ECB and 4 from the BoE are apparently speaking today.
BrainJuicer Group (LON:BJU)
Innovative, international online market researcher, BrainJuicer Group announced its Interim Results for the six months ended 30 June 2013. It reported four per cent revenue growth to £10,765,000 (H1 2012:£10,379,000), six per cent gross profit growth to £8,455,000 (H12012: £7,998,000), a two per cent decline in overhead costs to £7,157,000 (H1 2012: £7,282,000) and an 81 per cent growth in operating profit to £1,298,000 (H1 2012: £716,000). Consequently, the Company reported a six per cent growth in interim dividend to 0.9p (H12012: 0.85p) and a £1,508,000 return of cash to shareholders via a special dividend of 12p per share. The Company had £5,460,000 cash (31 December 2012: £3,755,000) and no debt. BrainJuicer saw strong growth in the UK and US, the Company's largest operations and opened an office in Singapore. The Company is now established in eleven countries.
Clean Air Power, the developer and global leader in Dual-Fuel engine management software for heavy duty vehicles, and Ricardo Inc., a multi-industry consultancy for engineering, technology, project innovation and strategy, have entered into a five year non-exclusive co-operation agreement for the development of dual fuel engines for potential OEM partners. Under the terms of the Agreement Ricardo will recommend to its clients, when appropriate, Clean Air Power as its preferred developer and supplier of dual fuel systems and Clean Air Power will, when appropriate, recommend Ricardo as its preferred system integration partner for dual fuel systems developed by the Group. The agreement serves to strengthen the offering of both companies, by bringing together Clean Air Power’s advanced dual-fuel technology that enables heavy-duty diesel engines to run primarily on natural gas, with Ricardo’s system integration expertise to develop products for potential OEM customers. As system integrator, Ricardo will use its knowledge of engine design and controls experience and system modelling capabilities to develop Clean Air Power’s dual fuel system to meet the specific requirements of a potential OEM partner. Demand for natural gas vehicles is growing in many of the world’s largest markets driven by the relatively low cost of gas in comparison to diesel and its growing availability to vehicle operators as major gas supply companies invest to expand gas refuelling infrastructure. These factors are leading to increasing interest from major vehicle manufacturers and other partners in developing OEM products for markets in North America, Europe and Asia.
Crimson Tide, the leading developer of mpro5 enterprise class mobile business applications on smartphone and tablet, has secured new contracts with Screen-care UK, Scomac Services UK and UK Homemaker. The sum of these new subscriber agreements equates to £83.7k of contracted revenue, which adds to the Company's increasing contracted revenue base. The new contracts also illustrate the versatility of mpro5 due to the diversity of industries using the mobile software. Much of this success stems from the release of mpro5 on the popular iOS, Android and Windows Phone operating platforms, which offers customers greater choice over hardware, and the anticipated announcement of mpro5 on Windows 8 is expected to raise this interest even further. Barrie Whipp, Executive Chairman said: "We are pleased to welcome these valued customers to our mpro service. The power of mpro5 is being demonstrated in diverse industries, and it is the solidity of the platform which allows us to deliver solutions rapidly, providing immediate return on investment." The Company also produced interim results; revenue grew to £660k (H1/2012: £640k), and EBITDA grew to £128k (H1/2012 £97k).
Cyan Holdings, the integrated system design company delivering wireless solutions for lighting control and utility metering, has formed an exclusive partnership, assuming certain performance targets are met, with Nobre de la Torre to collaborate on the development, supply and system integration of CyLec(R), Cyan's smart metering solutions, within Brazil. As part of this agreement, Nobre and Cyan will jointly develop hardware and software solutions for the power market within Brazil. Nobre will promote CyLec(R) under its Smart Metering Segment WorkForce programme and will also arrange two initial smart metering pilot studies to be carried out with Brazilian electricity distribution companies.
DDD Group, the 3D solutions company, has adjusted down its forecasts for 2013 due to the greater than expected decline in PC market shipments and the timing of the introduction of the next generation 3D tablets. The loss before tax for the six months ended June 30 was $1.1m compared with a profit of $663,000 in the same period last year. Revenues in the same period fell to $2.4m (June 2012: $4m) with 3D PC unit shipments down 76 per cent. However, the management continues to see growth in shipments of its TriDef 2D to 3D conversion solutions in the TV market which is the single largest global market for 3D consumer devices.
Eg solutions (LON:EGS)
eg solutions, the back office optimisation software company, announced its unaudited half year results for the six months ended 31 July 2013. Revenues fell to £2.24m (H1 2012/13: £2.85m) producing a loss of £735k (H1 2012/13: Profit £178k) and the cash balance was £405k (H1 2012/13 £309k). Administration expenses increased significantly to £1.76m (H1 2012/13: £1.38m) following the investment made in supporting Aspect and developing the direct sales and delivery organisation in EMEA. The total investment made in the period was £0.5m. The Board is not proposing to pay an interim dividend. Several board changes occurred in the period with Rodney Baker-Bates retiring and Elizabeth Gooch changing role to focus on the Aspect partnership and product development. John O'Connell has been appointed Executive Chairman and CEO, and Rob Glenn was appointed Chief Operating Officer with responsibility for EMEA and driving the direct sales effort. At the same time, Spence Mallder, Senior Vice President, General Manager Workforce Optimisation and Chief Technology Officer of Aspect, joined the Board as a Non-Executive Director in accordance with the partnership agreement between Aspect and the Group. The Company will seek to appoint an additional Non- Executive Director at the earliest opportunity. Two significant new customers were won during the period. The first contract followed a competitive process which eg won against incumbent suppliers. The second contract, announced in July and worth £1.2m over three years, was the first win by eg in the UK Utility sector.
Escher Group, the provider of outsourced, point-of-sale software to the postal industry, announced that its digital mailbox system has received patent approval from the United States Patent and Trademark Office. With this system, users can be given the capability to have a complete digital record of their transactions from start to finish, including catalogue and delivery information from eCommerce companies and transaction information from companies that bill their customers. In this way, customers may have, at any given time, their purchase details, up-to-date billing and payment histories and other relevant information. In addition, customers also have the ability to make electronic payments directly from the system and to receive offers electronically from suppliers. Liam Church, Chief Executive of Escher Group said: "Escher Group continues to focus its R&D investment in the postal market and on the changing communication's landscape. The Digital mailbox is a core component of Escher's RiposteTrEx(TM) product, and this patent gives us a level of protection in this rapidly changing environment with many new entrants offering intermediary services to businesses and consumers."
Fitbug, the provider of online personal health and well-being services, announced its results for the six months ended 30 June 2013. Fitbug reported an expansion into new markets in China and Australia in line with its strategy to increase its presence in the global Connected Health Market. It announced a strong pipeline of new business opportunities and that the launch of Fitbug Orb is on track for October. Fitbug reported a pre-tax loss of £1,049,000 (2012: loss of £649,000) reflecting an increased investment in a new fully integrated range of mobile health products. Fitbug has concluded a new loan of £500,000, on attractive terms, agreed with NW1 Investments Limited. Cash at 30 June 2013 is £284,000 (2012: £1,136,000). With a strong pipeline of new business opportunities, recent expansion into Asia and Australia and the imminent launch of an exciting new product, the Company believes that Fitbug is well placed for future growth in the expanding global Connected Health Market.
Fusion IP, the university commercialisation company that turns world-class research into business, announced that its portfolio company, Perlemax, a spin-out from the University of Sheffield, has entered into a licence agreement with AECOM. The agreement is to develop Perlemax's micro bubble energy-saving technology in the municipal waste water market. Waste water treatment accounts for two per cent of the UK's electricity consumption, and the Perlemax technology has the potential of delivering energy savings of between 20 and 40 per cent to each plant on which it is installed. Perlemax's micro bubble generation is able to produce small bubbles using no additional energy and consequently improves the transfer of oxygen to the waste water. The technology has been on trial at two sites in the British Isles with highly encouraging results. The licence agreement enables AECOM to use its significant global reach to market and implement the technology with water treatment companies. The financial terms of the agreement were undisclosed. Fusion owns a 35 per cent shareholding in Perlemax.
Imperial Innovations Group, which invests in pioneering university technologies, has reported that its portfolio company, IXICO Ltd., a medical imaging analysis company, is to be acquired by Phytopharm (LON: PYM) in a proposed reverse takeover which was announced. The enlarged Phytopharm group, to be renamed IXICO (LON:IXI), will benefit from a strengthened balance sheet to grow its clinical trial services business and to bring new technology solutions to the diagnosis of dementia and other conditions. The company will maintain its support for IXICO and as part of this transaction has purchased a small parcel of shares; following completion of this transaction it will hold a 11.5 per cent shareholding in IXICO plc. IXICO is expanding into the 'digital healthcare' space with products to support dementia diagnosis. Its vision is to build on its credibility internationally to position itself as a 'Brain Health Company' and to bring innovative technologies to those involved in researching and treating serious brain diseases enabling them to help patients more quickly.
Oracle Coalfields, the developer of a lignite mineral property located in the south-eastern desert of the Sindh Province, Pakistan, has signed a Joint Development Agreement (JDA) with China CAMC Engineering Co Ltd (CAMCE) for the development of its coal mine and power plant project. CAMCE is a subsidiary of China National Machinery Industry Corporation (SINOMACH), which is a Chinese state-owned enterprise. The JDA, which will remain in place for a period of two years, includes a package of financial and construction measures. CAMCE will assist Oracle in seeking the debt financing which is likely to come from Chinese banks for the construction of the mine and power plant and the capital expenditure shall be underwritten by SINOSURE, the Chinese export and credit insurance corporation. Debt will be used to finance up to two thirds of construction costs. Subject to a competitive price being agreed, CAMCE and Oracle will sign an Engineering, Procurement and Construction (EPC) contract for the coal and power plant project under which it is expected that mine and power plant development will commence in the second half of 2014, production at the open pit mining operation will start in 2015. The power plant will have a production capacity of 300MW.
Outsourcery, the provider of cloud-based IT and unified communications services, is working with Microsoft to support the introduction of an IL3 accredited platform based on next generation technology and hosted in the UK. This will be wholly-owned and managed by Outsourcery. Outsourcery will deploy and manage a new platform to provide secure cloud-based services to the UK government and commercial sector organisations with similar security requirements. Microsoft will offer direct technology design and implementation support to this new state of the art platform. This is the first initiative of its kind in the UK market. Outsourcery is already a recognised supplier to the Government Procurement Service, an executive agency of the Cabinet Office, through the G-Cloud Framework, alongside a number of its reseller partners, which provides access to 30,000 public sector organisations. The government’s annual hosting cost is estimated to be worth £2bn and the opportunity for new IL3 based services to address that market and deliver savings is substantial. Outsourcery is already working on responses to central government tenders with its larger partners that will require IL3 compliance.
Plethora Solutions Holdings announced that it has received a positive opinion from the European Medicines Agency's (EMA) Committee for Medicinal Products for Human Use (CHMP), recommending European Commission (EC) approval for PSD502 (known in the Marketing Authorisation Application as "Lidocaine Prilocaine Plethora") for the treatment of primary premature ejaculation in adult men. A CHMP positive opinion is one of the final steps before Marketing Authorisation is granted by the European Commission. The CHMP's positive recommendation will be reviewed by the EC, which has the authority to approve medicines for the European Union. Plethora anticipates a final decision from the EC shortly, as this usually occurs approximately sixty days after a CHMP recommendation. Plethora anticipates that when approved by the EC, PSD502 will be launched in Europe as soon as practicable thereafter. PSD502 is a treatment for premature ejaculation, comprising a combination of lidocaine and prilocaine in a spray formulation. Clinical studies have demonstrated that PSD502 is effective in treating premature ejaculation with an acceptable safety profile.
Sareum Holdings (LON:SAR)*
Sareum, the specialist cancer drug discovery business, announced that it has entered into a co-development agreement with the Cancer Research Technology Pioneer Fund (CPF) and London Stock Exchange-listed investment company, BACIT Ltd, to advance the Checkpoint Kinase 1 (CHK1) inhibitor candidate through pre-clinical development and Phase 1 clinical trials. Under the agreement, CPF obtains worldwide rights to the preclinical CHK1 inhibitor programme and is responsible for future development and commercialisation, funded by CPF, BACIT and Sareum. Sareum and its original collaboration partners, The Institute of Cancer Research and Cancer Research Technology Ltd, are entitled to an up-front fee plus success milestone and royalty payments. On successful sub-licencing of the programme, Sareum will also be entitled to a share of sub-licence payments proportional to its investment under the agreement. Financial terms of the licence are not disclosed. As part of the agreement, Sareum expects to commit up to £800,000 to the programme in its current financial year. As outlined in Sareum’s Research Update dated 18 February 2013, options for the future development of the CHK1 programme involved, either to continue licence discussions with third parties, or to progress research further before licencing the programme at a later stage. The Company believes that entering into this agreement is likely to provide a greater return to shareholders given the promising pre-clinical results the CHK1 candidate has demonstrated so far, including the compound’s potential to be administered orally in future clinical studies. CHK1 is important in controlling the way many cancer cells respond to DNA damage, which may be a consequence of the cancer itself, or intentionally caused by chemotherapy or radiotherapy. Inhibition of CHK1 affects the ability of the cell to repair this damage and can therefore potentiate the effect of certain chemotherapeutic drugs. The candidate CHK1 inhibitor to be developed could potentially treat a range of cancers including pancreatic, bowel and non-small cell lung cancer (NSCLC) in combination with DNA-damaging chemotherapy drugs and/or radiotherapy. The inhibitor could also potentially treat certain neuroblastoma and acute myeloid leukaemia (AML) types when dosed alone.
Sprue Aegis (LON:SPRP)
Sprue, the designer of innovative and market leading smoke and carbon monoxide alarms and other safety related products, announced its unaudited interim results for the six months ended 30 June 2013. The Company produced a record first half performance with turnover up 28 per cent to £21.4m (H1/2012: £16.7m), which in turn gave operating profits of £1.7m (H1/2012: £1.4m) and reported basic EPS was up 9 per cent to 3.47 pence per share (H1/2012: 3.19 pence per share). As expected, gross margin (before the fixed £2.0m BRK distribution fee (H1/ 2012: £2.0m)) declined to 39.8 per cent (H1/2012: 43.9 per cent) principally due to a change in sales mix. Graham Whitworth, Chairman & Group CEO of Sprue, commented: "Despite the distractions of the BRK bid, we are delighted to report record sales and operating profit in what was another extremely busy first half for the Group. The benefits of the multi-year contracts secured in 2012 are coming through in incremental sales and profit and the Group's full year results are expected to be in line with the Board's expectations.”
Ten Alps (LON:TAL)
Ten Alps, producer of high quality TV and radio together with integrated publishing and communications content, announced that it has received an unsecured capital injection amounting to £1,250,000 from Herald Investment Trust, an existing substantial shareholder of the Company, via a loan note. The proceeds of the capital injection will be used for the Company's business development and general working capital requirements. Interest under the terms of the Agreement will be rolled and charged at a rate of six per cent. over monthly LIBOR with a repayment date of 31 March 2016.
Thalassa has entered into heads of terms and paid a non-refundable deposit of £360,000 in respect of a proposed acquisition of the business, intellectual property and other assets of GO Science Limited, which was placed into administration on 31 July 2013. GO Science, which has six employees, provides mobile sensor grid services and products, in the UK and overseas, to multi-national clients in the oil and gas, defence and homeland security sectors. It offers innovative mobile sensor grid solutions in seismic exploration, life of field extension, undersea asset integrity inspection and survey, acoustic arrays, electro-magnetic arrays, surveillance, communications and ocean sensing. These solutions are provided using unmanned submersible vehicles, developed by GO Science, which are designed to manoeuvre, swarm and communicate with each other, at depths of in excess of 2,000 metres, in order to form a mobile sensor grid. GO Science has 21 granted patents and 31 pending patents, in a total of 33 countries, each of which will be transferred to Thalassa under the proposed sale and purchase agreement. Thalassa has agreed to acquire GO Science for a consideration payable to the administrators, on behalf of GO Science Limited, of £3.6m, which comprises the initial deposit of £360,000 and a further cash sum on completion of £3,240,000. In addition, Thalassa may issue up to £4.4m of new Thalassa shares to the shareholders of GO Science Limited, provided, inter alia and at the discretion of Thalassa, Go Science's principal customer contracts are re-activated. In the year ended 31 December 2012, GO Science Limited reported a loss before interest, taxation, depreciation and amortisation of £0.3m on turnover of £2.5m. Its gross assets at that date were £2.3m.
The Rethink Group (LON:RTG)
The Rethink Group, the recruitment, talent management and technology services Company, has reported an increase in revenues and return to profitability for the six month period ended June 2013. Revenue increased by 27.4 per cent to £56m while EBITDA before non-recurring items increased by 89 per cent to £1.12m. This rise in profitability is attributable to an increase in net fee income alongside the managed reduction in operating costs. Trading has continued to improve over the summer months and management is focused on implementing the revised Group strategy of growth driven by the Talent Management division.
Toumaz, a pioneer in low-power wireless semiconductor and software technologies, published its results for the six months ended 30 June 2013. Overall, trading to date is in line with the Board's expectations and the Group's key strategic market development and new product development programmes are running to plan. As a result, the business is expected to see considerable growth in its financial metrics in the medium term. Revenues were £8.2m (H1/2012: £10.1m) producing an EBITDA loss of £5.6m (H1/2012 £6.0m). The cash position at the period end was £8.0m. Outgoing Chairman Professor Chris Toumazou will continue as a non-executive director, and will continue to contribute to the Group's development in his new capacity. Richard Steeves has joined the board as non-executive Chairman. His experience in the healthcare sector will be invaluable to the Company, as will his experience in the capital markets. Anthony Sethill, Chief Executive of Toumaz, commented: "I'm pleased to report that the progress in the year to date, in both trading and our key strategic programmes, is running to plan. We are on track to see considerable growth in the financial metrics of the business during the next 24 months.”
*A corporate client of Hybridan LLP
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The Hybridan Small Cap Wrap is a weekly review of some of the most interesting small cap stories of the past week. Our review will usually be of those companies whose market capitalisations are less than £50m although we may occasionally cover larger companies.