Best AIM companies confirmed

The 19th AIM Awards dinner was held at Old Billingsgate on Thursday night and the winners of the ten categories have been announced. I managed one correct guess out of the five awards that I tried to pick the winners of in a recent article.

Here are the actual winners of the AIM Awards 2014:

Company of the year

Utilitywise

I should have taken heed of my assertion that many of the previous winners of the AIM company of the year award had won other awards prior to the big one. Energy procurement consultancy Utilitywise won best use of AIM last year making it a good bet, but I thought its relatively short tenure on AIM meant that one of the more mature companies would win, which is why I chose Alternative Networks - ultimately winner of AIM transaction of the year (see below).

The Utilitywise share price has more than quadrupled since it floated at 60p a share in June 2012 and the company has grown organically and through acquisition.

International company of the year

SQS Software Quality Systems

At least there was one category where I managed to guess the correct winner. German software testing company SQS has won this award for the second time having already received the accolade in 2008. SQS has become the largest independent software testing services provider in the world, although many system integration businesses have much larger businesses in this area.

Margins are improving as more of the business comes from managed services rather than one-off contracts and last year's acquisition of Thinksoft has given SQS a strengthened market position in India. Gross margin was 30.5% in 2011 and it has risen to 33.1% in the first half of 2014, while the average revenue per client has increased.

Entrepreneur of the year

Edmund Truell, Tungsten Network

The AIM Awards voting panel went for the riskier choice in this category, rather than John McArthur of Tracsis, as I had suggested that they might, Graham Whitworth of Sprue Aegis or Charles Skinner of Restore, all of whom run more proven businesses. Loss-making Tungsten is developing a model which has yet to show it can make money, although its broker believes it can make a profit in the year to April 2016.

Tungsten Corp acquired an e-invoicing business and plans to provide trade finance to the clients of its electronic trading network. The first step in that strategy was the acquisition of a bank, completed in June, and the more recent acquisition of DocuSphere will make it easier for clients to connect the e-invoicing system. Tungsten requires additional funding to satisfy the demand it expects for trade finance and it has applied for up to £50 million in matched funding from the British Business Bank.

Best newcomer

Safestyle UK

Yet another category where my guess proved incorrect and it was not value fashion retailer Bonmarche that won, but Safestyle UK. The replacement windows and doors supplier has been growing its market share with volume growth of more than 6% in the first half of 2014 compared with estimated market growth of 4%.

The prospects of steady growth in profit from £15 million to £17 million this year and a total dividend of around 9p a share make the company an attractive investment although the share price has not been immune to short-term market weakness. It does remain well above its 100p placing price at the end of 2013, though.

Best use of AIM

Redcentric

My guess proved wrong when last week I said that Learning Technologies Group (LTG) might win this category. IT managed services supplier Redcentric (RCN) is using its AIM quotation to help it become a consolidator in its sector, following its demerger from Redstone in April 2013.

The business doubled in size following the acquisition of the InTechnology managed services business at the end of 2013. Since July, the company has been trading under a single brand and the business grew organically in the six months to September 2014. Redcentric is on the look-out for more acquisitions it can bolt on to its business now that InTechnology has been integrated ahead of schedule.

AIM transaction of the year

Alternative Networks

Telecoms and managed services provider Alternative Networks has been using the cash it has generated to move into higher margin operations and in January it paid £39.4 million for Control Circle, which supplies cloud-based hosting and managed services.

This purchase, along with the acquisition of Intercept IT the month before, provided Alternative with a strong base from which to grow in the cloud-based sector. There are cross-selling opportunities for both sets of clients and these are yet to be fully realised. The Control Circle acquisition, and the Intercept IT one for that matter, was earnings enhancing in the year to September 2014. Strong cash generation means that Alternative was able to acquire Control Circle and increase net debt, while continuing to grow its dividend.

Best technology

REX Bionics

Auckland-based Bionics (RXB) has developed a robotic exoskeleton that enables wheelchair users to move in an upright position. The business reversed into Union MedTech in May and the renamed holding company moved from ISDX to AIM. There have been initial sales of the first generation product but the main focus is selling the REX Rehab to rehabilitation centres while a third generation product is developed so that it is affordable to individuals.

The technology has already been featured on the TV a number of times. Crispin Simon was appointed as chief executive on Wednesday and the current incumbent, Jeremy Curnock Cook, who oversaw the reversal moves to deputy chairman. Simon is a former boss of Biocompatibles International, which developed a number of medical technology products which were subsequently sold to large healthcare businesses and his experience will be invaluable to REX as it tries to commercialise its technology.

Best communication

IGas Energy

It has been a busy year for IGas, which has potential UK onshore shale gas assets. At the beginning of 2014, IGas agreed a farm-in agreement with French oil and gas giant Total for two potential shale gas licences in the Gainsborough Trough in Lincolnshire. Total will eventually acquire a 40% interest.

IGas has almost completed the subsequent acquisition of Dart Energy, which also has an interest in the Lincolnshire and other onshore licences, thereby securing IGas greater stakes in its main licences. IGas plans to acquire 3D seismic over its acreage in the North West and then submit applications for sites for drilling and hydraulic fracturing of gas from shale in the first half of 2015. Despite the communications programme the share price has fallen by around one-quarter over the past year.

Best performing share

Crawshaw Group

This award covers share price performance between 1 August 2013, which corresponded to the share price low for the 12 month period, and 31 July 2014 when the price was 50.5p. The Crawshaw share price ended that period nearly 12 times the level it started it at. This performance was achieved on the back of upgrades in expectations during the year.

In September 2013, house broker WH Ireland forecast that the meat and delicatessen products retailer would make a 2013-14 profit of £500,000 and the eventual outcome was a £1 million profit. The 2014-15 profit forecast was £600,000 and this has been increased to £1m. However, earnings per share will fall because of a share issue and the prospective multiple is around 50, suggesting that the shares are fully valued.

Best research

WH Ireland

The original announcement from the AIM awards twitter account (@AIM_Awards) was that Alternative Networks had won the best research award but it turned out that the telecoms business had won the AIM transaction of the year (see above). Broker WH Ireland was a more sensible choice and it had grown its corporate client list to 92 at the end of May, the majority of which are on AIM.

Research is a key component in attracting clients and WH Ireland has been building up its team of analysts with Ian Berry, who has worked at Beeson Gregory and a number of other brokers over the past two decades, joining recently. On top of its institutional research, WH Ireland also publishes WHI Spy, which is edited by Miles Nolan. This monthly publication provides accessible research and ideas for private clients.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.