Hybridan's Small Cap Wrap

Access Intelligence (ACC) [3.12p/£7.11 million]

The software provider has announced the opening of its new centralised development centre in York. The centre will be responsible for development, testing and delivery of the group's innovative cloud-based software solutions. It is key to Access Intelligence's strategy, as the chairman, Michael Jackson, explained: "We have always strived to deliver best practice throughout the group and our significant investment in this state-of-the-art centre will focus on both new product development as well as utilising technological advancements to better enhance our current software and service offerings".

The opening of the new development centre has resulted in the creation of over 30 new jobs and amongst Access Intelligence's new recruits are local graduates, a trend that they intend to continue.

Avacta (AVCT) [0.79p/£24.94 million]

Avacta (LON:AVCT) a leading provider of proprietary analytical and diagnostic technology, consumables and reagents to the drug-development and healthcare sectors, announced it has signed an agreement with Pall Corporation (PLL), a global leader in filtration, separation and purification.

Pall will sell and distribute the company's Optim protein drug development tool across India. Optim provides biopharmaceutical developers with information about the viability of their candidate drug molecules and formulations for research and development purposes and in order to optimise manufacturing. Having grown three fold in size from 2005 to 2010 the Indian biopharma industry offers significant potential opportunity for the company.

China Food (LON:CFC) [20.5p/£14.6 million]

The Chinese manufacturer of cooking and dipping sauces announced interim results for the six months to 30 June 2012, which saw a 16% increase in revenues to £9.7 million (2011: £8.4 million), though this coincided with the company posting a £2.8 million post-tax loss (2011: £1 million profit) after incurring marketing expenditure of £4.2 million during the period. Gross margins for the company also narrowed to 27.4% (2011: 41.5%).

The company's two main soya sauce products - Hao Tai Tai and the recently launched Xaka - have been a key focus for the company which has seen a large number of distributors being signed up in the North China region (173 at the end of August versus 118 at the end of April). Third-quarter sales of Xaka were 15% up quarter-on-quarter and the marketing strategy has been refined to include the selling of both brands for distributors in the region.

Soya sauce now represents 54% of revenues for the company, with bean paste and vinegar making up the balance in equal proportions. With a focus on continued market penetration in the soya sauce market, these splits are likely to continue to evolve in favour of soya as production capacity and utilisation continue to gear up.

EG Solutions (EGS) [62p/£8.86 million]

EG Solutions (LON:EGS) the back-office optimisation software company which specialises in what is known as "unified communications", announced its unaudited half-year results for the six months ended 31 July 2012. EG's financial performance was in line with management's expectations and establishes an encouraging platform from which to achieve management forecasts for the full year and further strengthen its leading market position.

A major focus of management and financial resources for the period was on new projects following significant new client wins, including those with the potential to transform EG's financial performance.

The company completed a number of projects, which achieved more than the anticipated benefit targets for clients, with some leading to roll-outs which will contribute to revenue and profit for the second half of the year and beyond. The investment to support these initial projects during the period is reflected in a short-term reduction in margins and profitability.

Improved profitability is expected to be achieved as the second half progresses as revenues from roll-outs begin to flow. It has also led to a deferral of certain business development activities. Total revenue for the period increased by 7.1% to £2.85 million. Software licences, maintenance and software services contributed 72% of total revenue, with the balance of 28% coming from implementation and training services.

Pre-tax profit decreased by 35.7% to £180,000 although the decrease reflects the increase in costs of sales for the period. Operating cash flow for the period was £870,000, with cash at 31 July 2012 of £310,000 and has continued to improve since the period end. Research and development remains important, and so that it has grown whilst investing for growth is a credit to its management and board. EG Solutions has contracted 76% of its anticipated revenues for the full year and is confident of achieving management expectations.

EKF Diagnostics (EKF) [28.38P/£72.04 million]

The point-of-care diagnostics business has reported results for the six months ending June 2012. Revenues grew by 71% year-on-year to £12.65 million while gross margins rose to 57% (first half 2011 restated: 48%). Cash at 30 June 2012 was £3.2 million, with a net cash position of £0.96 million.

During this period, sales of consumables grew by 32% across the four major volume products. The management is confident that the recent product launches and other programmes that are in place will drive further organic growth in the second half of 2012 and beyond.

Getech (GTC) [37p/£10.82 million]

The oil services business specialising in the provision of exploration data and geological exploration studies, announced a contract win worth €1 million (£796,000) with a major existing client. The company has already delivered products representing a large part of the order value and includes a commitment to global programmes, purchase of a gravity dataset, and also brings them into a pilot study aimed at improving the exploration value of satellite gravity data.

This represents one in a series of contract wins over the recent past, with global programmes being one of the key purchases for a number of the wins.

Globo (GBO) [25p/£83.04 million]

The telecoms technology company announced interims for the six months to 30 June 2012 which saw a 29% increase in revenues to €25.22 million (2011: €19.61 million) and an 85% increase in pre-tax profits to €5.86 million (2011: €3.18 million). The period also saw a placing in April 2012 which raised £9.63 million for working capital, acquisitions, and investment into Dialect Technologies, which was acquired to help facilitate a move into the US for Go!Enterprise Server. International revenues for the period grew by 124% to represent 68% of total revenues for the company.

Go!Enterprise Server represents a key offering by the company, helping companies and individuals alike build their computing and telecommunications infrastructure with key features not be found elsewhere (for example, the ability to navigate to files on one's desktop using a smartphone and attach files to emails). Competitors include Blackberry Enterprise and Good for Enterprise (the key operators in this space).

With €12.3 million of cash in the bank at the end of the first half, together with the recent presence in the US, the company is looking to potentially develop a good share of what is a very significant market.

Instem (INS) [141p/£16.59 million]

The leading provider of IT applications to the global early development healthcare market provided interim results for the six months ended 30 June 2012 which saw revenues continue at £4.9 million and a narrowing of pre-tax profits to £109,000 (2011: £294,000). Cash balances at the end of the half came in at £1.8 million (2011: £1.3 million).

The company operates both licence-based and software as a service models, and whilst the latter reflects a smaller amount of overall revenues at £600,000, it grew by 21% compared to the prior period (2011: £500,000). With the study management businesses operating in a market worth £400 million globally and Instem Scientific operating in a market worth more than $200 million (£124 million) there is plenty for the company to continue to penetrate and remains optimistic about its medium to long term.

Netcall (NET) [26p/£31.53 million]

Netcall a customer engagement software provider, has announced that in the year to June 2012 revenues increased by 7% to £14.6 million through significant growth in new orders and expansion of its customer base.

It has also announced the acquisition of Serengeti Systems, a provider of Enterprise Content Management software, which brings the company 40 new customers and further opportunities to cross-sell both product suites to an enlarged customer base.

Photonstar Led (LON:PSL)  [9.25P/£9.14 million]

The British designer and manufacturer of smart LED lighting solutions announced its half-year results for the six months ended 30 June 2012.

PSL is moving towards profitability; and is now EBITDA positive on a monthly basis. Revenue was up 50% to £3.82 million (first half 2011: £2.54 million), gross profit was up 62% to £1.51 million (first half 2011: £930,000) and the operating loss of £510,000 was reduced by almost a third. The LED fixtures business is scaling up well and showing good growth and ChromaWhite, an innovative new product featuring colour tuneability, is now launched and shipping. Two new production facilities have been set up and are operating on schedule.

£1.3 million of a trade finance facility was secured in July to fund working capital requirements. James Mckenzie, CEO of PhotonStar LED Group, commented: "We see significant opportunities developing in the lighting market, as the rate of LED lighting installation picks up globally. Overall we are looking forward with increasing confidence to further positive progress as we move closer towards profitability."

PLUS Markets (LON:PMK)  [0.18p/£0.7 million]

PLUS Markets Group has agreed to sell PLUS Derivatives Exchange to Pipeline Capital for £10,000 in cash. The sale proceeds will be used for general working capital purposes by the company.

PLUS-DX has no attributable profits and is loss making. Following completion of the disposal, the company will no longer have any subsidiary companies and is an investing company under the AIM rules. The company intends to present details of its investing policy for shareholder approval at a general meeting following the release of the company's interim results, which are due to be released before the end of the month.

Rare Earth Minerals (LON:REM)  [0.13p/£1.88 million]

Rare Earth Minerals announced its interim results for the six months ended 30 June 2012. During the period the group made a pre-tax loss of £356,000 (six months ended 31 March 2011: loss £196,000; 15 months ended 31 December 2011: loss £1,438,000). The company has continued to pursue its investment strategy to develop a diverse portfolio of direct and indirect interests in exploration and producing rare earth minerals and metals projects and assets.

In July 2012, the company announced that after significant effort from the board, it had finally been awarded three key exploration licences in southern Greenland by the Greenland government, two of which form common boundaries to main licences owned by Greenland Minerals and Energy whose latest Joint Ore Reserves Committee (March 2011) estimates for inferred and indicated mineral resources include a metal inventory of 6.55 million tonnes of total rare earth oxides including 240,000 tonnes of heavy rare earth oxides.

Tanfield (LON:TAN) [28.75p/£37.08 million]

Tanfield, a leading global manufacturer of powered access equipment, announced that Smith Electric Vehicles Corporation, in which it has a significant investment, has decided not to pursue its planned initial public offering.

Smith intends to withdraw its registration statement on Form S-1 as filed with the Securities and Exchange Commission. "We received significant interest from potential investors, however, we were unable to complete a transaction at a valuation or size that would be in the best interests of our company and its existing shareholders," said Bryan Hansel, Smith's chief executive officer.

"We have instead elected to pursue private financing opportunities to support the execution of our business plan."

Tanfield will issue its interim results on the 28 September 2012.

ValiRx (LON:VAL) [0.63p/£7.94 million]*

ValiRx announced its unaudited results for the half-year ended 30 June 2012. In the period, late-stage pre-clinical research and development programmes have generated positive results to support the therapeutic potential of the lead compounds, VAL201 and VAL101 (GeneICE). VAL201, which has shown significant inhibition of aggressive tumour cell proliferation in prostate cancer, was shown to also reduce the spread of secondary tumours. The manufacturing of VAL201 to regulatory standards has also been successful and the drug is currently undergoing regulatory toxicology studies prior to entering clinical trials.

ValiRx acquired a biomarkers business unit together with several families of patents and patent applications and related intellectual property in Finland in the period, and established its Scientific Advisory Board to advise and assist the company in the further development of its technologies and products in oncology therapeutics and diagnostics and provide world-class clinical expertise.

Nicholas Thorniley, non-executive chairman of ValiRx, commented: "The pre-clinical results on VAL201 have exceeded our expectations and the company is assessing its options; one of which is to conduct its own Phase I trial rather than out-licensing at this stage. We believe that we can drive greater shareholder value in conducting Phase I trials ourselves, but we continue to consider all options."

Vialogy (VIY) [2.5p/£23.17 million]

ViaLogy (LON:VIY) presented results of work performed for Chevron (CVX) at a major international energy industry conference, showing how QuantumRD, its proprietary seismic analysis technology, could significantly increase primary recovery of oil over currently achieved yields in tight carbonate formations. The Chevron-approved presentation to the American Association of Petroleum Geologists in Singapore also provided more details about ViaLogy's current analysis work for the energy supermajor.

In the blinded test, QuantumRD located the porosity trend that corresponded to the highest producing wells in the formation, something not previously achieved by using best-of-breed conventional analysis or geostatistical software. Utilising the QuantumRD method could result in a significant reduction of the number of infill wells drilled using standard gridding techniques while increasing recovery from optimally placed wells, thus saving considerable capital expenditure costs. In fact, the study concluded that 40% of poorly-performing wells or dry holes drilled using grid-based placement could have been avoided.

VPhase (VPHA) [0.58p/£7.35 million]

The developer of energy saving products for residential and commercial properties has reported revenue growth of 227% to £658,000 in the six months to 30 June 2012. Losses reduced to £805,000 (2011: £1.08 million).

On 24 September, the company signed an agreement with a Cypriot distributor worth a minimum of £630,000 over three years, subject to minimum contractual volumes. Considerable progress has been made in product development, with VX2 and VX5 products due to be launched in November 2012.

*A corporate client of Hybridan LLP

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 £50 million although we may occasionally cover larger companies. Our review is not intended to constitute research and is not to be taken as investment advice.