Interactive Investor

Best AIM companies of 2021 confirmed

15th October 2021 14:19

Andrew Hore from interactive investor

This year’s AIM Awards were back to their usual haunt at Old Billingsgate in London. Find out who won and how many our own award-winning AIM expert got right. 

This year, the winners of the AIM awards have been announced at the awards dinner on 14 October in London, rather than online as they were last year. 
I got most of the winners right but not necessarily in the correct categories. I managed to get two completely correct. It was another year when no company won more than one award. Here are all the winners.

Best communication

This year: EMIS Group (LSE:EMIS)

Last Year: AB Dynamics (LSE:ABDP)

Healthcare IT provider EMIS should probably be allowed to keep this trophy, having also won it in 2018 and 2019. 

EMIS had a strong first half, with its systems used to manage the Covid-19 vaccine roll-out. Although the vaccination programme is past its peak, there is likely to be continued demand. Interim revenues were 7% higher at £83.5 million, with £65.8 million of this recurring. There was a dip in interim pre-tax profit from £17.7 million to £16.4 million, but there should be an improvement in full-year profit to £41.5 million. The interim dividend was increased by 10% to 17.6p a share. 

Best performing share

This year: Zephyr Energy (LSE:ZPHR) 

Last Year: Novacyt (LSE:NCYT) 

The Zephyr Energy share price has risen by more than 11 times in the 12-month period to the end of July 2021. The US-focused oil and gas company reported positive drilling news at the beginning of 2021, and this sparked a jump in the share price. It used the increase as an opportunity to raise cash to finance drilling and the purchase of five oil wells, which broadened the portfolio of interests. Zephyr says it is carbon-neutral, as well as being cash generative. 

The curse of the best performing share award has continued, although the share price of last year’s winner, Covid-19 tests provider Novacyt, was 6% ahead over the latest 12-month period. However, the share price more than trebled at one stage in the past year before slumping in 2021. Novacyt has been the worst performer in the FTSE AIM 100 index this year and, since the end of July, it has fallen by around 16%. 

Best use of AIM 

This year: RWS Holdings (LSE:RWS) 

Last Year: Learning Technologies (LSE:LTG) 

Patent translation services provider RWS is a regular winner at the AIM awards. Two years ago, it was AIM company of the year. RWS has certainly done well since reversing into an AIM shell nearly two decades ago. It has grown through acquisitions while also growing its earnings per share. The acquisitions have included fully listed translation software provider SDL. There is no sign of any plateauing in the business, with further acquisitions and organic growth providing momentum for profit improvement. 

Best technology

This year: Renalytix (LSE:RENX) 

Last Year: MaxCyte Inc (LSE:MXCT) 

I correctly predicted that kidney disease diagnostics developer Renalytix would win this category and one of the companies that it beat was Verici Dx, which is a spin out of Renalytix. The judging was done before changes in incentives for diagnostic innovation in the US sparked fears for the income of Renalytix and a fall in the share price, but the shares have started to recover. 

Renalytix has made significant progress since it was itself a spin out from EKF Diagnostics. Last year, it obtained a Nasdaq listing. Revenues for the year to June 2021 are expected to be $3.4 million, and they are forecast to jump to $38.2 million this financial year as sales of the kidney diagnostic tests start to ramp up. Renalytix is building up its sales team and appointed someone with responsibility to sell to the Veterans Health system in the US, thereby targeting an addressable market of up one million patients. 

AIM diversity award

This Year: Team17 (LSE:TM17) 

This is the first year for this award. Video games developer Team17 has a board with 50% women directors. It has tried to encourage women in what it is a traditionally male dominated business. There are also employee-led networks that create a voice for minority groups. 

AIM transaction of the year

This year: Brickability (LSE:BRCK) 

Last Year: Inspiration Healthcare (LSE:IHC) 

Bricks and building materials distributor Brickability has completed 10 bolt-on acquisitions since floating in 2019. This award relates to the June acquisition of Taylor Maxwell, which management has been keen to acquire since before it floated and it significantly increased the scale of the business. 

The enterprise value for Taylor Maxwell was £63 million and the EV/EBITDA just under six. Taylor Maxwell has 16 depots and three showrooms, and timber merchanting is the largest revenue generator, although the profit contribution is similar to the brick merchanting part of the business.  

AIM corporate governance

This year: YouGov (LSE:YOU) 

Last year: Hotel Chocolat (LSE:HOTC) 

Market research firm YouGov was also shortlisted last year – the first time the award was included - and it won this year because of its investment in its employees and the development of its relationship with suppliers. 

YouGov increased its 2020-21 revenues by 18% to £169 million and it is expected to increase its pre-tax profit from £24.7 million to £30.6 million. YouGov has acquired adtech company Rezonence, which will help it to collect more data. 

AIM growth business of the year

This year: Impax Asset Management (LSE:IPX) 

Last Year: Tristel (LSE:TSTL) 

Sustainable investment focused Impax Asset Management has increased assets under management at the end of September 2021 to £37.2 billion, which is 8% ahead of the previous quarter. The 12-month increase was 84%. There was a combination of net inflows and market growth. 

The focus on renewables and sustainable investments has helped Impax to prosper. Impax increased its interim pre-tax profit from £8 million to £14 million on revenues up from £41.2 million to £60.6 million. The interim dividend was doubled to 3.6p a share.

Best newcomer

This year: Calnex Solutions (LSE:CLX)

Last Year: FRP Advisory (LSE:FRP)

Calnex Solutions winning this award was the other prediction I got right. The award has been won in the week when the telecoms network testing equipment supplier has produced a positive trading statement that led to another profit upgrade. Calnex joined AIM on 5 October 2020 via a placing at 48p a share and the share price has increased to 125p. 

Last year’s strong trading has continued into the current financial year, with a return to pre-Covid spending levels everywhere except China. The worldwide shortage of semiconductors has not proved a problem. The 2021-22 pre-tax profit forecast has been increased from £4.4 million to £5.6 million, compared with a 2020-21 pre-tax profit of £3.6 million. 

Entrepreneur of the year

This year: Andrew Day, Keywords Studios (LSE:KWS) 

Last Year: Debbie Bestwick, Team17 (LSE:TM17) 

Andrew Day has stepped down as chief executive of video games services provider Keywords Studios due to ill health. He has built up a substantial business in his time as boss. The AIM quotation has enabled Keywords to make a raft of acquisitions that have broadened the business in terms of services and geography. 

Video games players are demanding more and more new content and that is increasing demand for Keywords services. Keywords still has a high rating, but acquisitions help to reduce the profit multiple. 

AIM company of the year

This year: Focusrite (LSE:TUNE) 

Last Year: GB Group (LSE:GBG) 

Audio equipment supplier Focusrite is a good example of the type of company that AIM can help to grow internationally. Organic growth, which has been particularly rapid over the past year, has been supplemented by acquisitions – most recently California-based Sequential, a synthesiser brand acquired for an initial £15 million in cash. That still left Focusrite with net cash of £17 million. 

Since joining AIM at the end of 2014 at 126p, the share price has risen to £13.80. The customer base has broadened over the years from music makers to podcast creators. Demand was particularly strong during lockdown. The company is highly cash generative and pays dividends. 

Focusrite confirmed that revenues in the year to August 2021 would be £173 million, up from £130 million the previous year. Contributions from acquisitions have helped, but there has been strong demand for the group’s core products. Gross margins have been maintained at a high level and profitability is better than previously expected. Pre-tax profit of £38.8 million is forecast. 

As spending on travel and trade shows returns to previous levels, this will hold back profit. There are also supply issues and increasing transport costs. This means that profit is expected to fall in the year to August 2022. If the pre-tax profit forecast of £28.7 million is achieved in 2021-22, it would still be above the 2019-20 level. Pre-tax profit was £6.5 million in 2014-15 - earnings per share will have quadrupled over the seven-year period. The shares are trading on 35 times prospective 2021-22 earnings, so they are not cheap, but Focusrite has a consistent track record. 

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

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