Best AIM companies of 2018 confirmed

Ahead of the recent AIM Awards bash, former AIM writer of the year Andrew Hore named the companies he thought would get the gongs. Find out the winners here.

The winners have been announced for the 2018 AIM awards. 

First Derivatives was the only company to win two awards – best technology and entrepreneur of the year. The list is dominated by winners of awards in previous years, such as Fevertree and Keywords Studios. 

Best investor communication

This year: EMIS (EMIS) 

Last Year: Majestic Wine (WINE)

The voting panel appears to have been impressed by healthcare IT supplier EMIS and its communications strategy during a tough period for the business. EMIS had to cope with problems with service levels for part of its business with the NHS. 

The share price slumped at the beginning of 2018, but there is an upward trend since February. Like many other share prices there has been a decline in the past month, though.

Management is sorting out the problems, but it will need to show that there is continued improvement.   

Best performing share

This year: Zoo Digital ZOO)

Last Year: Nu-Oil and Gas (NUOG) 

This award is normally won by resources businesses or other companies that have had a recovery from a low point. Most of the winner’s share prices do not hang onto their gains and some have subsequently slumped by more than 90%.

• Best AIM companies of 2018 named here
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Zoo Digital provides localisation and dubbing services to film and television programme makers and there is some truth in the idea that the 1,000%+ rise over the year to the end of July 2018 was in part a jump from a relatively low point. The share price had been bobbing along in a relatively narrow range for a number of years. 

However, there is certainly increasing demand for Zoo’s services from TV and film content owners. The rating is a high one, though. 

Best use of AIM 

This year: Keywords Studios

Last Year: GB Group (GBG) 

I thought that the strong track record of Keywords Studios would make it a shoo-in for this award, which follows last year’s AIM growth business of the year award.

Keywords is a consolidator in the video games services sector and it has made full use of being a quoted business to regularly acquire companies that broaden the business geographically and in terms of products. These acquisitions are generally earnings enhancing because shares are used sparingly. This year both pre-tax profit and earnings per share are set to more than treble. In 2019, prior to any additional acquisitions, earnings per share are forecast to rise by one-fifth to €0.599 a share. 

The share price had been defying gravity prior to this month. Management has not made any major mistakes, which is amazing considering the amount of acquisitions that have been made since the company joined AIM. 

Global achievement award

This year: AB Dynamics (ABDP) 

Last Year: Gooch & Housego (GHH) 

Last week, automotive testing systems supplier AB Dynamics said that it would significantly exceed market expectations for the year to August 2018, but it had already been chosen for this award by then. This is a truly international business because it serves the global automotive market. 
AB Dynamics has grown its capacity by moving into new premises and there is a strong order book. Demand for track testing products have been the main driver of growth in recent times. Dr James Routh took over as chief executive on 1 October. 

An improvement in underlying pre-tax profit from £5.9 million to £8.6 million is expected to be announced on 14 November. 

Source: TradingView      Past performance is not a guide to future performance

Best technology

This year: First Derivatives (FDP) 

Last Year: IQE (IQE)

First Derivatives supplies consulting services and Kx software. The company has been increasing its stake in California-based Kx Systems and moved to a majority position in 2014 and will own 100% by the middle of next year.

Kx provides software for high volume, data analytics. First Derivatives has been selling the Kx software to its financial sector clients for years, but it also provides an opportunity to broaden the customer base. More recently, the launch of a subscription-based version of the company’s Kdb+ software will further expand the range of customers that can use the product. 

The interim figures will be published on 6 November. 

AIM transaction of the year

This year: RWS Holdings (RWS)

Last Year: Animalcare (ANCR) 

I thought that patent translation services provider RWS was a good bet for this award. RWS spent $320 million on Moravia, which provides technology-enabled localisation services, and this provides an additional leg to the business and made it less dependent on the patents sector. The purchase was financed by a share placing and additional debt. 

The deal has also broadened the geographic reach of RWS. The acquired business is profitable and there should also be annualised cost savings of £5 million.   

Current trading is in line with expectations and a trading update is due on 18 October. 

AIM growth business of the year

This year: Fevertree Drinks (FEVR) 

Last Year: Keywords Studios (KWS) 

Mixer drinks supplier Fevertree has been a regular winner of AIM awards in the past three years and I thought it would win this one. The award follows the 2017 company of the year award. 

Interim revenues were 45% ahead at £104 million and pre-tax profit increased from £24.1 million to £32.7 million. Net cash was £56.4 million at the end of June 2018. US distributor Southern Glazer’s Wine and Spirits has been appointed to supply the on-trade in 29 states. The US is currently less than 15% of revenues

The shine has come off the share price in the past few months, but it is still well above the level one year ago and more than 20 times the 2015 flotation price of 134p a share. This is despite the recent sale of one million shares each by founders and directors Charles Rolls and Tim Warrilow, after they had exercised options over 275,820 shares at the original placing price. 

Innovative fundraising of the year

This year: Burford Capital (BUR) 

Last Year: Burford Capital (BUR)

As I suspected, litigation funding provider Burford Capital did win this award following the offering that raised $180 million from an oversubscribed 6.125% US$ bond 2025 issue that was closed early.

Since the voting, Burford has raised a further £192.6 million through a placing at 1,850p a share – it floated nearly a decade ago at 100p a share - and this is unlikely to be the last fundraising. Further bond issues, or even the launch of a fund, are on the cards.

Burford has won this award both times it has been included. It appears set to be on the shortlist for the third time next year and it will be interesting to see what competition there is then. 

Best newcomer

This year: Boku Inc (BOKU) 

Last Year: Alpha FX Group (AFX)

I thought that direct carrier billing company Boku Inc was a good bet for this award, as its share price had more than trebled since floating at 59p a share. There has been profit-taking since the voting panel met, but the share price has still doubled.

Boku processed $1.5 billion worth of transactions in the first half, via the likes of Apple, Spotify and Facebook. New products are being developed, such as services to confirm consumer identity. 

Boku appears on course to at least break even this year, having posted a first half loss, and a pre-tax profit of up to $10 million could be achieved in 2019. The cost base is relatively fixed so pushing more transactions through the business will have a significant effect on profitability. 

Source: TradingView (*)      Past performance is not a guide to future performance

Entrepreneur of the year

This year: Brian Conlon, First Derivatives (FDP) 

Last Year: Mahmud Kamani and Carol Kane, Boohoo (BOO)

Brian Conlon won this award to add to First Derivatives’ winning of the best technology award. 

Conlon founded First Derivatives in 1996. He has a background in capital markets prior to founding the business. 

Earlier this year, the company was capitalised at more than £1 billion, but a slump in the share price has reduced the market value to around £700 million. This is not an unusual share price decline, because other winners have been hit by sharp falls in recent weeks. 

AIM company of the year

This year: Gamma Communications (GAMA) 

Last Year: Fevertree Drinks (FEVR) 

Communications services provider Gamma Communications had its fourth anniversary on AIM the day before it won the company of the year award. 

Gamma is focused on the business market and it has 384,000 Cloud PBX users and a major focus is cross-selling to existing customers. 
Andrew Taylor has continued to grow the business since he took over as chief executive from Bob Falconer. Gamma made a pre-tax profit of £16.7 million in 2014 and it is on course for a 2018 pre-tax profit of £32.2 million. 

Earlier this month, Gamma acquired Netherlands-based DX Groep BV, which has a similar profile to the core business in the UK for up to €27.2 million m. In 2017, revenues were €15.8 million and EBITDA was €800,00. This deal could help Gamma expand on the Continent. 

*Horizontal lines on charts represent previous technical support and resistance.  

Andrew Hore is a freelance contributor and not a direct employee of interactive investor.