Interactive Investor

AIM's best companies confirmed

9th October 2015 15:21

Andrew Hore from interactive investor

The twentieth anniversary AIM Awards dinner was held last night in London. This year there were eleven categories because there was an additional award for the best performer over the two decades of AIM.

I managed two correct guesses out of the six awards that I attempted to predict in last week's article. In these tough stockmarket conditions the awards panel appears to have gone for more substantial companies this year. Seven out of the ten AIM companies winning awards are in the top 50 AIM companies by size and four are in the top ten, including Optimal Payments although it has just moved to the full list.

Company of the year

CVS

Vet practices consolidator CVS celebrates its eighth anniversary on AIM by winning the coveted AIM company of the year award. The share price has nearly trebled since CVS joined AIM and it has successfully used its share quotation to help finance a consistent stream of acquisitions of vet practices. The sector is still highly fragmented even though CVS has a strong relative market position. The £7.7 million acquisition of Alnorthumbria Veterinary Practice takes the number of surgeries to 307. The acquisitions, development of online operations and the launch of the Healthy Pet Club, which brings in regular revenue, have helped propel profit higher and Peel Hunt forecasts a 2015-16 profit of £22.7 million, rising to £24.5 million in 2016-17. I thought Clinigen, admittedly the newest AIM company on the shortlist, would win, but its chief executive Peter George won entrepreneur of the year instead (see below).

International company of the year

Hutchison China Meditech

Hutchison China Meditech has finally won this category having been up for the award in 2010. For the second year running, Somero Enterprises Inc did not win - as I thought it might this year. Hutchison is the third-largest company among the winners with a market capitalisation of more than £1.1 billion, making it one of the top ten companies on AIM. When it joined AIM in May 2006 it was valued at £141 million. The share price has risen from 275p to 2,050p over that period. Hutchison has successfully combined a revenue and cash generating healthcare business with a cash hungry drug development operation.

Entrepreneur of the year

Peter George, Clinigen

I was expecting Clinigen to win company of the year and that is the main reason I did not think that Peter George would get this award. However, he managed to beat Geoff Wilding of Victoria, who I had felt would win. No one can claim that Peter George has not made good use of his company's quotation. He has used it to make Clinigen the global market leader in the supply of unlicensed medicines and medicines for clinical trials. He is also building up the higher margin speciality pharma business, which supplies hospital only medicines, and the strategy is to reduce the dependence of this division on anti-viral product Foscavir. Peter George is a safer choice than last year’s winner Edmund Truell, of cash hungry e-invoicing business Tungsten Network, whose share price has subsequently slumped. Tungsten may still be transformed into a profitable business, but there is still some way to go.

Best newcomer

Fevertree Drinks

Spirit mixer drinks brand Fevertree Drinks was probably the most obvious prediction given the strong share price performance so it is not a great surprise I got this one right. Fevertree is highly rated, though, so it will have to continue to grow strongly in order to warrant its current share price. Majedie Asset Management appears to believe that there is more to go for because it increased its stake to 5.31% during the summer.

Best use of AIM

Ideagen

Best use of AIM is always one of the harder categories to predict and cakes maker Finsbury Food did not win as I thought it might. Information management software developer Ideagen has been a steady rather than spectacular company, but that is not a bad thing. The company is taking advantage of the increased need for compliance and risk assessment in sectors such as healthcare. Carefully chosen acquisitions have enhanced the organic growth in the business. The latest acquisition being Gael, which doubled annualised revenues. Ideagen is the type of company where people would not immediately recognise how well the share price has done since it moved from Plus/ISDX in 2012 - it has trebled.

AIM transaction of the year

Optimal Payments

The acquisition of rival online and mobile payments processor Skrill in a €1.1 billion deal has transformed Optimal Payments and has taken its market capitalisation to more than £1.6 billion. The acquisition should be earnings enhancing in its first year. The deal not only increased the scale of the business it also reduced the group's dependence on its largest customer. It took some time to get the relevant regulatory approvals, but the acquisition was completed in August, nearly five months after it was announced. Optimal is changing its name to Paysafe and it plans to move to a premium listing.

Best technology

Advanced Oncotherapy

Having a high profile is always useful for the best technology category and that is why I correctly predicted that the developer of proton therapy systems for cancer treatment would win this award. Advanced Oncotherapy has world leading technology that has been developed by some of the greatest experts in Europe. What the company needs to do now is to get the cost of the system down as low as possible and ensure that it is a commercial product. Revenues from selling the systems are still some way away, but the company is on course to start treating people with its proton therapy system in 2017.

Best communication

Imperial Innovations

Pharma and technology investment company Imperial Innovations has successfully raised significant amounts of cash to invest in early stage businesses that are not only spun out of Imperial College in London, where the investment company has its origins, but also Oxford and Cambridge Universities. Imperial Innovations has a large portfolio and some of the more mature investments are joining their backer in the quoted arena. These include fully-listed Circassia Pharmaceuticals, NASDAQ-listed diagnostics company Oxford Immunotec plus life sciences company Abzena and brain health company IXICO, which are both quoted on AIM. There have also been trade sales. The company is reporting its figures for the year to July 2015 on 14 October (next Wednesday).

Best performing share

Victoria

This award covers share price performance between 1 August 2014 and 31 July 2015 and unusually it has been won by a company with a market value in excess of £180 million. A raft of acquisitions has transformed floorcoverings manufacturer Victoria into a faster growing business and this has been recognised in the performance of the share price. I have previously pointed out the subsequent poor share price performance of the majority of the winners of this award, but last year’s winner, meat and delicatessen products retailer Crawshaw, has done well, particularly in the past few months, and the share price is around two-thirds higher than it was at the end of July 2014. The Victoria share price is already one-quarter higher than at the end of July which augurs well for its long-term performance.

Best performing share over 20 years

ASOS

Online fashion retailer ASOS may not have performed strongly over the past year, but it is undoubtedly an amazingly good performer over its time on AIM, although it took time for the share price to get going after it joined the market in the autumn of 2001. ASOS is now the largest company on AIM and is showing no signs of leaving, for the time being at least.

Best research

finnCap

This is the second time that finnCap has won this award. The previous time was 2012 and it had been shortlisted in three out of the past four years. finnCap is the number one broker and adviser to AIM companies in terms of number of clients, and it is also the leading adviser and broker in the technology and healthcare sectors.

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