Hybridan Small Cap Wrap featuring Beximco, Cashbox, Judges Scientific,

Beximco Pharmaceuticals (BXP.L) 29p/£33.2

Like the Bangladeshi cricket team, Beximco’s share price has been on the up. Beximco in its AGM statement on 18 June said that following years of difficult economic and political times in Bangladesh, it has now “successfully re- established its strategic positioning in all areas of its operation”. The AGM speech resonated with increased domestic (+11 per cent) and international markets (+39 per cent) sales, improved profitability (pre-tax +79 per cent), and higher EPS for 2008. The Board has recommended a 10 per cent cash and 20per cent stock dividend to be paid. Beximco Pharmaceuticals is based in Bangladesh, and so on the exotic level is not for the faint hearted, but in itself is a very old and established business. Beximco was established in 1976 and manufactures and sells generic pharmaceuticals, branded generics, active pharmaceutical ingredients and intravenous fluids. Beximco also undertakes contract manufacturing for multinational pharmaceutical companies, for household names that we would all recognize.

Cashbox (CBOX.L) – 3.6p/£5.2m

The vision of omnipresent high speed data connectivity took another step forward this week with the announcement from Cashbox, the ATM operator, that it is to Wi-Fi enable its network of 2,500 ATMs. Cashbox has struck a deal with BT whereby users of BT’s broadband and of o2 iPhones will be able to hook up to Cashbox’s Wi-Fi terminals. We suspect that this deal will have little significant financial impact for Cashbox, but Andrew Morton, the CEO, did say that May was a record month for cash withdrawals as consumers continue to spurn credit cards.

Separately, Cashbox announced that it won a competitive tender to take on another 125 ATMs in Mitchells and Butlers pubs taking the numbers in these pubs to over 270. We’ll drink to that!

Creston (CRE.L) – 64.5p/£36.2m
Creston, as a ‘cyclical’ marketing company with debt and deferred payment liabilities on acquisitions, hasn’t exactly been in favour. The shares, which hit 192p in April 2007, had sunk to just 20p in October 2008. More recently, though, there has been a bounce back. And Creston’s results statement for the year to 31 March suggests the markets have been on to something.

Crucially, the new 2010 financial year is reported to have started well, with some ‘high profile’ new business wins and an ‘encouraging’ new business pipeline. And, for the 2009 financial year, organic revenue growth of 4 per cent (creditable given the economic backdrop) provided reassurance, while adjusted diluted EPS rose strongly, by 9 per cent, to 18.6p.

The group has benefited from its diversified business model, including digital and direct marketing and health marketing and health PR, and from a relatively limited exposure to the more cyclical area of consumer advertising (which amounted to 20 per cent of revenues). Management is now committed to reducing debt and exploiting synergies between its subsidiary businesses. Success here would see a reduction in risk accompanied by increased business opportunities. Now that would be something worth marketing.

European Nickel (ENK.L) – 6.5p/£30m

European Nickel announced interim results and commented on the situation at C?aldag, its flagship nickel laterite heap leach operation that is slowly moving towards commercialisation. Many of the conditions necessary for obtaining project financing have been met, most recently the payment of the forestry fee and site preparation. BHP Billiton now seems to be willing to terminate the entire off-take agreement opening up for joint venture partner JXTC to take 100 per cent of the mixed hydroxide product. In the company’s opinion this should facilitate the securing of the $20 million purchase by JXTC of 20 per cent of the equity in the C?aldag project by improving the chances of approval by the Jiangxi Provincial Government for JXTC’s foreign equity investment and allow for a simultaneous debt financing process by a Chinese bank. Nevertheless, this process is not likely to be completed until the end of the year.

Revenues are then still a good distance away as it will take up to one year to fill the leach pad and a further four to five months to start metals production. China bulls are probably happy waiting for this as the project could throw off $50 million in free cash flow per year based on a nickel price of $6/lb. The Chairman is optimistic about the long term demand for raw materials from China and commented on the recent rally in share prices and the strengthening of the nickel price.

Goldplat (GDP.L) – 11.5p/£12.8m

Goldplat has taken advantage of a golden opportunity to purchase the remaining 50 per cent of Kilimapsea Gold that it does not currently own for $2.7 million from former joint venture partner International Gold Exploration. The payment will be in stages and will be met by existing cash resources. Initial production commenced in January and an aggressive exploration and development programme has been implemented at the Lolgorien gold project which is situated in South Western Kenya within the historically producing Migori Archaean Greenstone Belt. The current plant is capable of a production of 3,000 ounces of gold per year. This is a small but logical step for Goldplat in its strategy of advancing the junior mining business by taking advantage of their experience with small scale operations in historical gold mining areas. The company’s major business continues to be the recovery of precious metals from numerous mining waste products, where it is a market leader. Goldplat’s recovery operations in South Africa and Ghana are sourcing raw material feed stocks from numerous mining operations in South and West Africa. New gold recovery operations are currently being evaluated in Tanzania and Zambia and could potentially provide an additional source of cash flow for expanding the mining business.

Hightex (HTIG.L) – 4p/£5.9m

As we kick off with another Wimbledon it’s timely that Hightex, which supplied the membrane element of the new retractable roof over Centre Court, should announce its preliminary results for the year to December 2008. Hightex came to the market three years ago promising to exploit a range of solar technologies but last year it retrenched back to its core business of providing innovative architectural membrane structures. Apart from the Wimbledon flagship, projects include the stunning Suvarnabhumi Airport in Bangkok and the new Royal Ascot Racecourse.

Hightex’s solar technologies include SolarNext, a solar heating and cooling system in kit form, which generated sales of €500,000 in the year despite no selling effort. However, Hightex did not have the capital to take this business to the next stage and has now scaled back SolarNext’s operations and cut costs. That leaves the core membrane business which is focusing on higher value, higher margin contracts. Hightex is confident of the future citing a growing appreciation of the attractions of membranes such as lightness, energy efficiency and shock resistance.

In this transformational year Hightex reported a loss of €3.1m (2007: €2.4m) on turnover up to €16.2m (2007: €13.0m). Since the year end the balance sheet has been strengthened by a placing to raise £860,000 which should provide at least a year’s working capital assuming a now reduced cost base. As Hightex is one of only two players in this space its future may be as light, efficient and shock resistant as the membranes it sells.

HML Holdings (HMLH.L) – 10p/£3.6m

HML, the property management services group, seems to be one property business that hasn’t been badly burnt in the downturn. In the year to March 2009 it generated cash from operations of £600,000 (2008: £700,000) on turnover up 15 per cent to £8.6m (2008: £7.5m). The HML model of providing management and professional services to the freeholder owners of blocks of flats remains resilient with only transactional related revenues and interest receivable dragging down the bottom line at the operating level. However, profit has taken something of a knock and is down to a loss of £1.2m (2008: £260,000 profit) after the write off of £1.2m of goodwill arising from an unfortunate acquisition of a business in North London made in 2004. There seems to have been a culture clash which led to the wholesale clearout of both management and clients of this business. The balance sheet could possibly be strengthened following further investment in new businesses and software last year but hopefully the ship is now steadied and the virtues of this intrinsically solid business should begin to shine through. And if that happens, HML really could be hot property.

Judges Scientific (JDG.L) - 98p/£4.0m

Judges Scientific seems to have perfectly judged its latest acquisition of scientific instruments manufacturer, Quorum Technologies. Judges’ strategy is one of buy and build with a strict policy of only executing earnings enhancing acquisitions. Quorum designs, manufactures and distributes sample preparation instruments for use in electron microscopy. Whilst clearly a niche area this also fits in with Judges’ strategy of acquiring business with market leading and defensible positions, in sectors that have high barriers to entry and which are unlikely to attract bigger competitors. Quorum has been purchased for a total consideration of up to £1.5m and in the year to 31 October 2008 made operating profits of £750,000 on turnover of £4m.

Judges seeks to minimise the dilution to shareholders by the judicious use of its own cash reserves and gearing and it announced this week a new banking facility with Royal Bank of Scotland. Under this £4m facility there is still available to Judges another £1m to finance further deals. It may be too early to pass judgement on the Quorum deal but with the firepower of more to come we think this is one to watch.

Lipoxen plc (ALPX.L) 15p/£23.1m

Lipoxen, a bio-pharmaceutical company specialising in the development of high-value differentiated biologicals, vaccines and siRNA delivery, announced on 23rd    June that it has signed a new technology evaluation agreement with an undisclosed leading global pharmaceutical company for the use of Lipoxen's siRNAblate gene silencing technology platform in combination with the Pharma Company's target siRNA. If successful, this could lead to a full development and licensing agreement later this year, which we believe could be substantial and which would have a positive impact on the share price. Why is this so and why do we think this could be a big deal for Lipoxen? Lipoxen potentially has one of the only technologies that can enable delivery of siRNA to where it is needed the body. Delivery systems have been the missing link for those working in the siRNA arena.

NetplayTV (NPT.L) – 26p/£35.4m

Interactive TV gaming business NetplayTV is playing its cards right. It seeks to benefit from the convergence of television, online and mobile, and, in the year to 31 December 2008, had adjusted Ebitda of £2.4m, up from a loss of £1.7m in 2007. Basic reported EPS losses, meanwhile, narrowed from 6.39p to 1.06p, and the group would have been profitable were it not for £2m of exceptionals and impairment (£1.4m of that for a write-down in the premium rate scratch card business of subsidiary Abstract Games).
Organic growth was very strong in some key areas of Netplay’s business, with an 83 per cent increase in gross bets at Supercasino.com. And first-quarter mobile gross revenues exceeded £1.6m, up from £0.3m in the first quarter of 2008. But exiting the premium rate scratch card business will have a negative impact on the bottom line in the 2009 financial year.

The group secured a key contract with Virgin Media, to produce its Challenge Jackpot brand. And it is in talks with a betting shop operator and a major broadcaster, who want to take on NetplayTV’s SuperCasino.com format. A successful conclusion to these negotiations could well set the shares going northward.

Ovoca Gold (OVG.L) – 4.25p/£18.8m
If you are in the gold business but don’t have hills with gold in them, buy some! That’s the thinking of management at Ovoca Gold, the Russian based international precious metals exploration company. After having disposed of a major asset some months ago, the company found itself sitting with cash and liquid shareholdings in excess of $50 million while gold was nicely appreciating. Being bullish on the outlook for the gold price, management decided to temporarily invest the cash with an external investment manager who so far has been given $10 million to invest in a diversified portfolio of gold and gold related stocks. Undoubtedly, whilst investors in the company all signed up for gold exposure, some may have preferred the company to distribute some of the cash to shareholders. Nevertheless, the company is continuing work on a number of exploration companies that soon enough would require further investments. Also, having cash resources should provide the company with good opportunities for valuable asset acquisitions. The market is not so optimistic: the market cap of the company is £19 million compared to a liquid book value of more than £30 million.

Plant Impact (PIM.L) 35.5p/£9.4m*

One to watch that is going places is Plant Impact. Management stated in a recent press release that it has “sufficient working capital for its existing needs” following the previously announced twenty year global licensing deal with Arysta LifeScience for its benign BugOil pesticide. Management has said that trading for the current financial year has started positively, and that sales for Q1 2009 are “at record levels”. Plant Impact has some potentially disruptive technologies which could contribute to easing emerging agricultural sustainability issues and which have access to the large and growing fertiliser & agro-chemical markets , worth an estimated $111bn in 2008 – as such, it is a business that knows how to grow.

Pi is initially targeting high value fruit and vegetable crops with its crop nutrients (CaT, PiNT, Speedo, and Alethea) and crop protection (BugOil, nematicide) products, though this does not discount the possibility of accessing the huge market for row crops in the future. The next two years will be dominated by sales of CaT and PiNT products, as well as BugOil milestone payments in advance of its expected international roll out through Arysta LifeScience. Any weakness in the Company's share price should only be seen as a buying opportunity.

Sarantel Group’s (SLG.L) – 2.5p/£4.8m

Sarantel’s order book is growing as its customers are picking up signals that there are few alternatives to its innovative and high performance antennas for mobile and wireless devices. Adding to the list of higher-value military customers is General Dynamics, which is now taking delivery of the GeoHelix GPS antenna for integration with the AN/PRC-154 Rifleman tactical radio and the MR-1 Go Book rugged portable computer ordered by the US military. The GeoHelix GPS antenna is now also being shipped to Thales Communications for retrofitting into the most widely fielded handheld multiband tactical radio in the world, the AN/PRC-148. More than 100,000 of these radios are in service, mostly by the US Army and NATO forces.Sarantel’s robust design combined with small size and high accuracy is perfect for customers who request non-compromising performance in hand-held and body-worn applications.

The company’s antennas are in demand by non-military clients as well. Last week Sonim Technologies announced that they will use Sarantel’s LBS Pro miniature GPS antenna for the new Sonim XP3 Quest, a rugged mobile phone with high-accuracy GPS capability that is designed to work under the most extreme conditions. This follows on last year’s design wins for products such as SkyGolf’s SG5 rangefinder and the Garmin Colorado. Sarantel’s strategy of focusing on these high-margin niche markets has turned out to be very successful and breakeven is now clearly within distance. We think it is just a matter of time, however, before major mass market consumer gadget manufacturers tune in to the fact that in order to offer a product that can uncompromisingly deliver all the new mobile applications put forward by the service providers (such as location based services), there is no other way to do so than the Sarantel way. Then we will not be talking about a £5 million market cap company anymore!

Silence Therapeutics (SLN.L) – 23p/£31.4m

Silence Therapeutics is not sitting silently waiting for things to happen. Just a few weeks after receiving approval to initiate Phase I clinical trials on their lead internal drug candidate Atu027 for treatment of patients with advanced solid tumours, the company announces that dosing has begun at the Cancer Hospital SanaFontis in Freiburg. The trial is an open-label, dose-finding 18-month study to address the safety, tolerability and pharmacokinetics of Atu027 which specifically targets PKN3, a molecule involved in cancer growth and metastasis formation.

This is Silence’s fourth drug in its pipeline to enter clinical trials; the other three are licensed to Quark Pharma and Pfizer. Atu027 is developed from the company’s technology platform of novel short interfering RNA (siRNA) molecules that features increased stability against degradation compared to conventional siRNA molecules. Atu027 also uses the company’s proprietary AtuPLEX delivery system which enables the functional delivery of siRNA molecules to targeted diseased tissues and cells, while increasing their bioavailability and intracellular uptake. With its own drug candidate in the clinic, several out-licensed products being advanced by its partners, a solid patent advantage and a collaboration agreement with AstraZeneca, Silence Therapeutics is now well positioned as one of the world’s leading RNAi companies. Another validating collaboration deal should see the share price soar.

Solomon Gold (SOLG.L) – 8.25p/£5.4m

Solomon is wisely raising £800,000 in a placing to fund work on its 100 per cent owned project areas. This is in addition to the promising exploration work that is being done at its major project area at Guadalcanal, now a joint venture with Newmont Ventures Limited. Last week the company announced results from samples taken at the recently discovered Levisivisi prospect showing high copper contents of up to 5.7 per cent with gold values of up to 7.5g/t but these are early indications of the area’s potential as more assay results are forthcoming and the mapping and sampling programme continues.

The new prospect is located in between the Chicora and Vurakara prospects and the question now is to what degree the whole area is prospective. Based on topographic, textural, structural and geochemical features Solomon Gold believes the area could contain a significant copper-gold porphyry system. This is one of many shots at goal for Solomon whose interests are concentrated in the highly prospective southwest Pacific rim of fire, a region known for very large copper-gold porphyry deposits.