Best AIM companies of 2016 confirmed

The AIM Awards were held at Old Billingsgate in London on Thursday night and there was the typical wide range of winners, both internationally and in terms of sector. I managed to predict three of the winners this year.

Best investor communication

WYG Group (WYG)

I got this one right with the project management consultancy being recognised for its turnaround in recent years and how it has communicated improved prospects to investors. WYG has international operations, but in recent times it has been the UK businesses that have fuelled growth. The international operations have scope for a much improved performance. EU-backed projects are starting to come on stream, so there is a level of uncertainty, but WYG has clearly set out how exposed it is to EU-funded work. It also has local offices that can be used to ensure that work is still won with the possibility of further local bases being set up. The recent share price decline makes WYG look attractive.

Best performing share

Pantheon Resources (PANR)

US-focused oil and gas explorer Pantheon Resources rose by more than 700% over the period between 1 August 2015 and 31 July 2016, and much of the share price rise came in the last few months of 2015. This was sparked by the completion of testing of the VOBM#1 well in east Texas. The test showed production of 1,528 barrels of oil equivalent/day, one-third of which is liquids. A second horizontally drilled well also found a hydrocarbon bearing reservoir but there have been drilling challenges. This disappointment meant that the share price has slumped since the end of July, but it is still more than 300% ahead of the start of the award period. Drilling has begun on a third - vertical - well which could cost $3.75 million. This will be important for further share price progress.

Best use of AIM

Conviviality (CVR)

Conviviality has been transformed in the three years or so it has been on AIM. Acquisitions have given the owner of the Bargain Booze chain of off-licenses a wider spread of activities in both the on-trade and the off-trade. The acquisition of Matthew Clark, a respected name that is more than two centuries old, was probably the most important of the deals. Figures for the year to 1 May 2016 show a 137% increase in revenues to £864.5 million, while underlying pre-tax profit was 124% ahead at £21.7 million. More importantly, earnings per share were 27% higher at 14.2p a share. These figures included Matthew Clark for nearly seven months. Wine merchant Bibendum was acquired after the period so there is more to come from the acquisitions this year.

Best technology

MaxCyte Inc (MXCT)

Cell engineering business MaxCyte Inc has been on AIM since the end of March 2016 and has already scooped the technology award. US-based MaxCyte sells the cell engineering products and services that it has developed to biopharmaceutical companies involved in developing drugs, cell therapies and gene editing services. MaxCyte is generating revenues – a 30% increase to $5.5 million £(£4.5 million) in the first half of 2016 - although it is losing money. MaxCyte is expected to be able to grow at 20% a year. The cash raised in the flotation is helping to increase marketing in existing countries and moves into other regions. MaxCyte is developing a platform for immune-oncology treatments called CARMA, which will be used to develop CAR therapies in T-cells for a range of cancer indications.

AIM transaction of the year

Breedon Group (BREE)

The £336 million acquisition of Hope Construction Materials completed an eight-year journey for the holding company from a shell to the UK's largest construction materials supplier – even after selling 14 ready-mixed concrete plants to please the competition authorities. I thought that Breedon was the stand out on the shortlist. Although the transaction was announced before the end of 2015 it did not complete until 1 August 2016. Even so, Breedon had already started to progress its integration plans. The acquisition provides a better product mix for Breedon which will not be as dependent on aggregates. Asphalt, cement and ready-mixed concrete are the other main areas of the business. The group is benefiting from infrastructure spending and further acquisitions are likely as well as higher capital spending to increase capacity.

AIM growth business of the year

Fevertree Drinks (FEVR)

This is the first time this award has featured. Spirits mixers supplier Fevertree Drinks has graduated from 2015 newcomer of the year to growth business of 2016. Fevertree has grown organically which makes its performance even more impressive. Cash generated from operations enabled the cash position to improve by £7 million in the first half of 2016 even though £2.65 million was paid out in dividends. Fevertree floated at 134p a share and the current share price is seven times that level even though early backers have sold some or all of their stakes, Fevertree is an international business with three-fifths of revenues outside the UK.

Best research

Liberum

Broker Liberum has won this award for the first time. It has built up a good reputation for its research and it is broker to best newcomer Hotel Chocolat (see below).

International company of the year

Somero Enterprises Inc (SOM)

Just like last year's winner, Hutchison China Meditech, Somero Enterprises Inc has won the international company of the year award at the second attempt, as I thought that they should do, having been on the shortlist in 2015. The concrete levelling equipment manufacturer continues to grow strongly helped by its geographical spread. Not all countries are growing, but overall revenues and margins are improving. North America remains a strong market and China sales are picking up. The full-year profit is forecast to rise from $17.6 million to $20.3 million and, of course, this is worth more than ever for UK investors following the decline of the pound. Somero also offers a growing dividend.

Best newcomer

Hotel Chocolat (HOTC)

Premium chocolates retailer Hotel Chocolat got off to a good start on AIM due to its high profile among retail investors. Although £56 million was raised in the flotation back in May, only £12 million of this was new money for the company. As well as manufacturing its own chocolates, the company owns a cocoa plantation in Saint Lucia. There is still plenty of scope to expand in the UK and there are also plans to open more outlets overseas. However, international expansion has been patchy and Denmark is being used as a test market for moving into new territories. Hotel Chocolat is profitable and cash generative.

Entrepeneuer of the year

Diana Hunter, Conviviality (CVR)

When Diana Hunter guided Conviviality Retail, as it was then known, onto AIM in July 2013 its main focus was the Bargain Booze franchise off-licence and convenience store chain. She had spent nine years at Waitrose before taking over the business and was behind the strategy to take Conviviality into the on-trade. The largest on-trade drinks distributor Matthew Clark was acquired in 2015 for £200 million. In 2014-15, Matthew Clark generated revenues of £811.2 million. The integration of the business is ahead of schedule. This acquisition was followed by the purchase of wine merchant Bibendum for £60 million, including debt. Bibendum's annual revenues were £270 million, taking the group's pro forma revenues to more than £1.4 billion.

Company of the year

Restore (RST)

Restore was beaten to the Best Use of AIM award by Conviviality, but it secured the top award. The document storage firm has been a consolidator in its sector under the leadership of Charles Skinner. Recent interims show a 35% increase in pre-tax profit to £9.6m and the interim dividend was increased by one-third to 1.33p a share. The disposal of the Ireland-based offshoot of a recent acquisition has helped to reduce debt by £27.8 million and provide scope for further acquisitions. Since the end of June, PHS Data Solutions has been acquired, which has made Restore the second biggest document shredding business in the UK, as well as boosting the records management and scanning operations. The second half of the year has started well and a 2016 profit of around £21 million is expected.

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.