How AIM’s biggest companies fared in 2024
A dozen companies on AIM were worth over £1 billion a year ago. Now it’s much less. Award-winning AIM writer Andrew Hore runs through them here and names some who may hit the magic number in 2025.
24th December 2024 10:12
by Andrew Hore from interactive investor
Following the dip in the number of AIM companies in 2024 and another poor performance for the market as a whole, the number of companies on AIM with market capitalisations of more than £1 billion has halved to just six. No new companies have passed the threshold this year.
Two of the companies were acquired. Late in 2023, utilities metering and energy storage developer Smart Metering Systems was the subject of an agreed 955p/share cash offer and, despite some shareholder disapproval, the deal went ahead.
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Outsourced video games services provider Keywords Studios was the worst performer in 2023, and it attracted an offer. The video games sector has been going through a poor period of trading with disappointing sales of some new titles. The board recommended a 2,450p/share bid from EQT Group, even though it was below the previously indicated level of 2,550p/share due to delayed contracts. The bid valued Keywords Studios at £2.1 billion.
The other 10 companies from last year are still on AIM, but four have dropped below the £1 billion mark.
Of the six that are still worth £1 billion or more, two have risen in price since the start of the year and four are lower.
Airline and tour operator Jet2 Ordinary Shares (LSE:JET2) remains the largest company on AIM. Holiday bookings continue to recover. First-half operating profit improved from £617 million to £701.5 million, which was better than anticipated. Winter sales are 14% ahead, suggesting that market share could be rising.
After the interim results, analysts at Canaccord Genuity raised their full-year pre-tax profit forecast from £535.5 million to £563.9 million. That was not the first upgrade last year.
Jet2 was AIM growth business of the year. Founder and former chief executive Philip Meeson sold five million shares. The percentage of the company that can be owned by non-UK nationals has been raised to 49%. The share price recovery looks set to continue.
The other riser is telecoms and network services provider Gamma Communications (LSE:GAMA), which continues to grow steadily, and it is planning a move to the Main Market - probably in the middle of 2025. Interim revenues rose 10% to £282.5 million, although European revenues were flat.
Gamma Communications is expected to improve full-year pre-tax profit from £97.9 million to £111.6 million. The shares should be eligible for inclusion in the FTSE 250 index when they move.
Uranium investor Yellow Cake Ordinary Shares (LSE:YCA) has been a strong performer since it joined AIM in July 2018 at a placing price of 200p. The share price peaked in January at 744.5p, but it has fallen back since then and it is the worst performer of the six companies with a decline of nearly one-fifth.
Even though Yellow Cake owns more physical uranium, there has been a dip in the uranium spot price, and the recent purchases were at a higher price than at the balance sheet date of September 2024. Net asset value (NAV) is 614p/share, and the shares are trading at a discount of nearly one-fifth.
Management expects further volatility in the uranium price but remains convinced that a shortage of supply as demand increases will lead to a rebound. This means that the long-term outlook for the share price is positive.
There was a sharp jump in the share price of litigation funder Burford Capital Ltd (LSE:BUR) before last Christmas and it has slipped back since then. Forecast full-year pre-tax profit of $307 million (£244 million) is sharply lower than the 2023 figure, which was unusually high. Despite the lower profit, cash generation has improved. Pre-tax profit is set to rise to $430 million in 2025.
Profit progress is never going to be smooth for a business like this. Book value is $11.08/share, and the shares are trading at a premium.
There was a 43% decline in interim revenues of cancer treatments developer HUTCHMED (China) Ltd (LSE:HCM) to $305.7 million because of a sharp fall in R&D income. Product sales were higher. A $90 million loss is forecast for 2024.
A new drug application for fruquintinib as part of a combined treatment for gastric cancer in China was withdrawn because the improvement in survival rate was not statistically significant. There have been positive results for a treatment for lung cancer.
A $10 million milestone payment is due from Takeda Pharmaceutical relating to the Fruzaqla cancer treatment, which follows a previous payment of $20 million.
GlobalData (LSE:DATA) won the 2024 AIM transaction of the year award for the sale of a 40% stake in its healthcare division to Inflexion, which highlighted the underlying value of the group. That deal was announced at the end of 2023, but the award period is 12 months to July 2024.
The strategy is to achieve annual revenue of £500 million in three years. Some cash has been used for bolt-on acquisitions, including Celent, which should be completed by the end of the year, and share buybacks. If the cash is spent wisely on acquisitions, then earnings will be enhanced.
Dropouts
Of the fallers, renewable energy investment company Greencoat Renewables (LSE:GRP) has declined the least and is still the seventh-largest AIM company. NAV has fallen from 113 eurocents/share (93.3p) to 110.4 eurocents/share in the 12 months to September 2024. Dividends totalling 6.68 eurocents were paid during the period. The discount to NAV has widened to around 23%, while the yield is 8%. Further cuts in interest rates will make the yield even more attractive and the share price should recover.
Mixer drinks supplier Fevertree Drinks (LSE:FEVR) was hampered in the six months to June 2024 by falling revenues due to wet weather in the UK and Europe. Market share is being gained in the US and sales in the rest of the world are increasing. Underlying pre-tax profit improved from £6.9 million to £15 million, helped by lower freight costs.
Second-half revenues are expected to grow by between 7% and 10% following more positive trading in July and August. Even so, there has been a downward trend in the share price since May.
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Veterinary company CVS Group (LSE:CVSG) was hit by a cyber attack and a Competition and Markets Authority (CMA) investigation of the sector. The CMA is requesting information for the investigation. This could continue to hold back the share price.
Annual revenues from continuing activities rose 10% to £647.3 million. Like-for-like sales were 2.9% higher, which was held back by the cyber attack. Pre-tax profit fell 37% to £38.2 million due to a combination of one-off costs and higher interest costs. That was before a £20 million loss on the disposal of the Ireland and Netherlands businesses.
The focus is the UK and Australia. In the four months to October 2024, sales rose 7.6%, but like-for-like sales were flat. CVS Group won the best Communication award at the 2024 Aim awards.
YouGov (LSE:YOU) probably had the toughest year of these companies, and its market capitalisation more than halved. Sales bookings were disappointing in the second half. There is also a change in revenue recognition for consumer panel services that pushed some revenue into next year. That led to a sharp downgrade, but the outcome was slightly better than expected.
In 2023-24, underlying pre-tax profit fell from £57.2 million to £45 million. This was due to higher staff and technology costs. Organic revenue growth was 3%, but there were geographic variations. Annualised cost savings of £20 million are planned. There is scope for a share price recovery.
Subs’ bench
There are companies that have a market capitalisation of nearly £900 million and a strong share price performance could push them up to £1 billion.
Greatland Gold (LSE:GGP) completed the acquisition of Newmont Corporation’s 70% stake in the Havieron gold-copper project, as well as 100% ownership of the Telfer gold-copper mine and other assets in the Paterson region of Australia. The total cost is up to $475 million in cash and shares.
A share placing and retail offer raised £255 million at 4.8p each. Wyloo Consolidated subscribed $100 million, taking its stake to 8.45%, and Newmont Corporation owns 20.4%.
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Havierion has a mineral resource of 8.4 million ounces of gold equivalent. The first gold has been poured at Telfer. Greatland Gold is expected to be profitable in the year to June 2025.
Identification software provider GB Group (LSE:GBG) reported interim revenues 3% higher at £136.9 million and a return to pre-tax profit. The underlying pre-tax profit was £5.6 million.
Mid-single digit growth in revenues and high single digit growth in profit is expected for the full year. Pre-tax profit of £59 million is forecast for 2024-25 and it could further improve to £67.4 million next year. The earnings growth rate is set to continue to be in double digits.
Andrew Hore is a freelance contributor and not a direct employee of interactive investor.
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