Crowdfunding Initiative from Finncap

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NOVEMBER 2014

THE ONLINE MONTHLY FOR THE ALTERNATIVE INVESTMENT MARKET JOURNAL

In this issue ShareSoc wants nominee reform GENERAL NEWS Private shareholder pressure group UK to exercise. Holding shares via a nominee Quartix flotation Independent Shareholders Society (ShareSoc) account means that the investor is not a 02 has launched a campaign to reform UK share member of the company. ownership and in particular the system of In its document, Guaranteed Votes For nominee accounts. ShareSoc argues that the All Shareholders, ShareSoc argues: “The ADVISERS current nominee system has disenfranchised nominee system must be both reformed fAN Club crowd the majority of private shareholders and and usage curtailed, with most investors 03 undermined their right to have a say in the placed on the share register of the company. running of companies. It argues that there In addition, tax efficient vehicles such as should be substantial changes so it is easy for ISAs and SIPPs must support direct share NEWS all shareholders to vote. registration of investors rather than require MartinCo’s Legal Private shareholders predominantly hold the use of nominee accounts.” 04 move their shares in nominee accounts. ShareSoc ShareSoc highlights the Australian argues that the nominee system takes more settlement system (CHESS) because it retains account of the interests of brokers and the principle of individual shareholder names NEWS other advisers and many of the rights of being registered, which enables the company shareholders on the register are lost or difficult to continue to contact shareholders directly. Castleton 06 acquisition H-Scores point to performance DIVIDENDS Walker Greenback Company Watch says that the share prices of of less than 25. Share prices of companies 07 design companies with high H-Scores, the measure it in this area are twice as likely to more than uses to analyse the financial health of quoted halve and ten times as likely to slump by companies, perform more strongly than those more than 90%. EXPERT VIEWS with low H-Scores. Fund manager Anthony The figures have been calculated for Front line views Bolton has written about how he looks at the UK and international companies over 08 on AIM H-Score of a company when he is considering the past five years. Companies with an investing. H-Score of more than 25 outperform the FEATURE H-Scores are calculated by analysing rest on average by more than 8%. This the accounts of companies and assessing outperformance is consistent over the years, AIM Awards 2014 the characteristics of financially distressed excluding volatile markets during 2008. 09 companies and also assessing the A guide to the methodology of H-Scores characteristics of successful companies. with examples of how they can help to Company Watch monitors the financial health predict good and poor performance is STATISTICS of businesses using H-Scores and the warning available for free from Market indices and area for financial frailty is classed as an H-Score [email protected] 11 statistics

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general news

Quartix raises profile with AIM Fyffes bid off

Vehicle tracking and data services information and data. Customers Bananas supplier Fyffes has provider Quartix Holdings has joined are signed up for an initial 12-month terminated its proposed merger AIM, which will help to increase the period but once signed up they tend with Chiquita Brands International profile of the business in the UK and to stay. The hardware and installation after the latter’s shareholders voted overseas. Quartix already supplies costs are written off immediately and against the deal due to a potential equipment and services in France Quartix will generally start making $14.50 a share bid from a Brazilian and recently opened an office in money on a contract within nine consortium of fruit-juice maker Chicago, although this operation is months. The insurance business, Cutrale and investment bank Safra. still at an early stage. which has installed 67,000 telematics The original deal was announced The £11.4m raised at the placing systems, generates revenues from the in March but a revised agreement price of 116p a share will all go to insurance companies rather than the in September meant that Chiquita the founders and other existing vehicle users. shareholders would have increased shareholders. There is no new money In 2013, revenues increased from their stake in the merged company being raised and the business is £8.3m to £13.2m, with £9.2m coming from 50.7% to 59.6%. The offer was cash generative although it does from fleets and £4m from insurance changed to 0.1113 of a Chiquita have to spend money on technology customers, while profit improved share for each Fyffes share. At the development. Net debt was £2.1m at from £2.8m to £4.6m. In the six same time the termination fee the end of June 2014. A dividend of months to June 2014, revenues payable to Fyffes was increased 50% of free cash flow is planned. increased from £6.2m to £7.4m, while from 1% to 3.5% of the value of Quartix focuses on smaller underlying pre-tax profit improved the share capital of Chiquita. Fyffes businesses and it has more than from £2.1m to £2.5m. is entitled to this fee if there is a 6,000 customers paying monthly The fleet management systems successful bid for Chiquita within subscriptions for more than 56,000 market in Europe is forecast to grow nine months. In the first half of vehicles. Quartix installs the hardware at 16% a year between 2012 and 2014, Fyffes incurred merger costs and charges £20 a month to provide 2017. of €8.3m. Hargreaves rejects generation option for higher dividends

Following its strategic review, sector projects, possibly via a joint £3m to close the coke works and Hargreaves Services has decided not venture, but it is committed to a further £1.8m for remediation of to go ahead with any investment the dividend and share buy-back the property. This will be more than in coal-fired power generation policies so any investment would covered by the £22m of working and instead will be paying higher have to be funded from existing capital that could be released dividends to shareholders. Coal resources without affecting this new over the next two years, providing supplier Hargreaves also intends to policy. additional funds for buy-backs or a buy back shares. Hargreaves has also started a one-off dividend. There will be a continued focus consultation process for the future As a consequence of the changed on the core coal operations, which of its Monckton coke works in dividend policy, WH Ireland has will provide spare cash. This will Yorkshire. This process should be increased its dividend forecast for enable Hargreaves to pay 40% of its completed in December. Although the year to May 2016 from 28.9p underlying earnings in dividends Monckton could make a profit of a share to 42p a share. This would from 2015-16. The company also £2m this year, once the higher- provide a dividend yield of 6.4%. intends to buy back up to 10% of margin contracts end it will struggle Hargreaves is expected to have its shares and it will start after the unless market conditions improve minimal net debt by the end of renewal of permission is passed at significantly. If Monckton is closed May 2016. Given potential energy the AGM on 5 November. then the cancelling of contracts shortages the ongoing business is in Management will consider energy will wipe out the profit. It will cost a good position.

2 November 2014

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advisers

Crowdfunding initiative from finnCap

Leading AIM broker and nominated listed and private companies”. Wine companies. InvestingZone has adviser finnCap, sponsor of AIM maker Chapel Down, an ISDX-quoted developed online financial reporting Journal, has launched an equity client of finnCap, recently raised and shareholder voting tools for the crowdfunding service in association £3.95m, with £2.2m of the money companies. with InvestingZone. This service is part coming from crowdfunding via Seedrs. finnCap’s quarterly survey of non- of the offering of the finnCap Angel It was the first company quoted on a executive directors showed that nearly Network (fAN Club) and will be open UK market to raise money this way. two-thirds of the 50 directors on the to quoted and unquoted companies. fAN Club has already worked with panel said that their companies would finnCap chairman Jon Moulton is InvestingZone (www.investingzone. seek additional finance in the next chairman of the advisory board of com) on two fundraisings. Online 12 months. However, two-thirds also InvestingZone. contact lenses retailer GetLenses.co.uk thought that UK banks are not doing Sam Smith, chief executive of raised £8.5m and WiFi service provider enough to help companies to grow. finnCap, says that “traditional banking Wifinity raised £400,000. There was a split over peer-to-peer models are not providing adequate finnCap will conduct due diligence lending, with 24 in favour, 20 against access to growth capital for ambitious on all the potential investee and six classed as other.

ADVISER CHANGES - OCTOBER 2014 COMPANY NEW BROKER OLD BROKER NEW NOMAD OLD NOMAD DATE CEB Resources Peterhouse/Sanlam Peterhouse/N+1 Singer Sanlam N+1 Singer 01/10/2014 Lansdowne Oil & Gas Cantor Fitzgerald Cenkos Cantor Fitzgerald Cenkos 01/10/2014 Lok'nStore finnCap Panmure Gordon finnCap Panmure Gordon 01/10/2014 Reach4Entertainment Allenby Allenby/ Allenby Cantor Fitzgerald 01/10/2014 Cantor Fitzgerald Tertiary Minerals SP Angel/Beaufort Beaufort/ SP Angel Cantor Fitzgerald 02/10/2014 Cantor Fitzgerald Nighthawk Energy Canaccord Genuity/ Westhouse Westhouse Westhouse 06/10/2014 Westhouse Oilex Ltd Strand Hanson RFC Ambrian Strand Hanson RFC Ambrian 06/10/2014 Guscio Peterhouse/Sanlam Sanlam Sanlam Sanlam 08/10/2014 Connemara Mining Co Dowgate/Westhouse Westhouse Westhouse Westhouse 13/10/2014 Cluff Natural Resources Allenby/ Panmure Gordon Panmure Gordon Panmure Gordon 14/10/2014 Panmure Gordon Scancell Holdings Panmure Gordon Cenkos Panmure Gordon Cenkos 14/10/2014 Powerhouse Energy Group Allenby Allenby/Sanlam Allenby Sanlam 16/10/2014 Biofrontera AG Shore finnCap Shore finnCap 20/10/2014 China Growth RFC Ambrian/ N+1 Singer RFC Ambrian N+1 Singer 20/10/2014 Opportunities Ltd Peterhouse GVC Holdings Cenkos Daniel Stewart Cenkos Daniel Stewart 20/10/2014 Hightex Group ZAI finnCap ZAI finnCap 20/10/2014 Sula Iron & Gold VSA Daniel Stewart Cairn Cairn 21/10/2014 600 Group finnCap finnCap SPARK finnCap 22/10/2014 SolGold GMP/SP Angel SP Angel SP Angel SP Angel 22/10/2014 Victoria Oil & Gas Numis Fox-Davies Strand Hanson Strand Hanson 22/10/2014 Porta Communications Sanlam N+1 Singer Sanlam N+1 Singer 23/10/2014 Baobab Resources Canaccord Genuity Shore Canaccord Genuity Grant Thornton 28/10/2014 Dekeloil Beaufort/ N+1 Singer/Optiva N+1 Singer N+1 Singer 28/10/2014 N+1 Singer/Optiva International Mining & Pareto WH Ireland Strand Hanson WH Ireland 30/10/2014 Infrastructure Obtala Resources Fox-Davies Fox-Davies ZAI Fox-Davies 30/10/2014 Red Emperor Resources NL Fox-Davies Fox-Davies Grant Thornton Fox-Davies 30/10/2014 Fox Marble Holdings Fox-Davies Fox-Davies Cairn Fox-Davies 31/10/2014 Golden Saint Resources Cornhill / Optiva Beaumont Cornish Beaumont Cornish 31/10/2014 Beaumont Cornish Plethora Solutions Daniel Stewart Hybridan/Daniel Stewart Daniel Stewart Daniel Stewart 31/10/2014

November 2014 3

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company news MartinCo consolidates leading position in UK property lettings market

Property lettings www.martinco.com

Property lettings franchise company MARTINCO (MCO) 125p MartinCo is acquiring the property The deal should be franchise business of Legal & General immediately earnings 12 MONTH CHANGE % N/A MARKET CAP £m 27.5 and this deal should be immediately earnings enhancing. MartinCo will enhancing in 44 of the acquired franchise areas, pay £5m plus a further figure of particularly in regions around Bristol, around £1m depending on the net the M4 corridor, Yorkshire, Lancashire assets of the acquired business, while be developed although the MartinCo & Merseyside and in London. There its managing director, Michael Stoop, brand is the national one. The other will be 46 offices in Greater London, will become group managing director four are regionally focused and they out of a total of 283 offices. There of MartinCo. have more of a mix of property are more than 43,000 managed MartinCo recently secured a £5m lettings and estate agency business properties in the group. five-year loan facility with Santander – MartinCo recently started offering There should be a £300,000 and it had £5.46m in the bank at the estate agency services. In the first contribution to revenues in the last end of June 2014. half of 2014, the number of MartinCo two months of 2014. In 2013, the There is also a ten-year agreement offices offering estate agency services business made a pre-tax profit of with Legal & General for access to its increased from 97 to 145 and the £600,000 on revenues of £1.8m. mortgage, life assurance and general revenue generated from this activity Bournemouth-based MartinCo insurance products for all of the by franchisees was more than £1m in was founded in 1986 and started MartinCo group’s franchisees the period. In September, it started an franchising under the Martin & Co The acquisition brings with it 89 online estate agency service, which brand in 1995. MartinCo joined AIM offices and 75 franchisees, under charges a flat fee. The enlarged group at the end of 2013. The shares are the brands CJ Hole, Ellis and Co, will generate 19% of its revenues trading on 15 times previous forecast Parkers and Whitegates. MartinCo from estate agency. earnings for 2015 but this figure will says that each of its five brands can MartinCo did not previously trade be reduced by the acquisition. Allocate recommends private equity bid

Rostering software www.allocatesoftware.com

Acorn Bidco, which is funded by other sectors, including defence, private equity firm HgCapital, has ALLOCATE SOFTWARE (ALL) 158p maritime and transport. Allocate launched a recommended bid 12 MONTH CHANGE % +39.2 MARKET CAP £m 107.9 believes that future progress will for healthcare rostering software not be smooth and it will need to provider Allocate Software that is make further investments in product worth £109.6m. is more than 30% higher than the development for the healthcare The bid is 153.55p a share in cash previous share price high in the sector. Management argues that and shareholders will also receive past 16 years and values Allocate at technology-focused investor the final dividend of 1.45p a share. around 20 times forecast 2014-15 HgCapital can take a longer-term Allocate had net cash of £13.7m earnings. view and cope with short-term at the end of May 2014, so the Although Allocate’s revenues risks such as the UK election and underlying cost of the bid is lower predominantly come from legislative changes in the healthcare than the headline figure. The bid healthcare it does have sales in sector in Sweden.

4 November 2014 www.finnCap.com finnCap www.finnCap.com

company news

Foundations laid for significant profit growth at email marketing company dotDigital

Email marketing www.dotdigitalgroup.com

Email marketing services provider DOTDIGITAL (DOTD) 28.88p dotDigital reported better than dotDigital has a strong expected figures for the year to June long-term record 12 MONTH CHANGE % +35.1 MARKET CAP £m 82.1 2014, which provide the foundations for future growth. More of a surprise, 15 have been trimmed to £5.2m though, was the announcement that can be deepened over the because of higher than expected that chief executive Peter Simmonds coming year. costs due to the handover period intends to retire at the end of Revenues increased from £13.8m to the new chief executive but the September 2015. However, the to £16.4m and profit edged up benefits of recent investment are still succession plan is already in place. from £3.3m to £3.6m. Additional set to show through. A further jump Non-executive director Simone management was taken on during in profit to £8.6m is forecast for the Barratt has been appointed deputy the period and this hit operating year to June 2016. chief executive and will take over as margins but they will recover this dotDigital has a strong long- chief executive next year. She is a year. Net cash improved from £6.1m term record and it is highly cash former managing director of eDialog to £9.3m. The final dividend was generative – if it meets forecasts in Europe and Asia Pacific so she is doubled to 0.2p a share. then net cash could be more than experienced in the digital marketing Although profit growth was £15m by June 2016. The shares sector. She has spent two years on modest the base has been laid for are trading on less than 18 times the dotDigital board so already has a much faster growth in the next prospective 2014-15 earnings, falling good understanding of the business two years. Profit forecasts for 2014- to 12 in 2015-16.

Daisy recommends bid from chief executive’s consortium

Telecoms services www.daisygroupplc.com

Independent directors of DAISY (DAY) 183.5p Group, Wireless Infrastructure telecommunications services Group and SpiriTel, an AIM-quoted provider Daisy Group have 12 MONTH CHANGE % +8.9 MARKET CAP £m 489.9 company acquired by Daisy in 2010. recommended a cash bid from a Matthew Riley owns 24.5% of consortium made up of Toscafund a share. Daisy has subsequently Daisy but he will own 49.7% of Asset Management, Penta Capital grown significantly and widened the bid vehicle. He has waived and Daisy chief executive Matthew the range of services it offers, his entitlement to a £5.93m Riley. In July, the consortium helped by 22 acquisitions, but the payment on acquisition of Daisy. proposed a 190p a share bid but consortium believes that Daisy Executive chairman, and one of this was reduced to 185p a share, will be in a stronger position to the independent directors, Peter which values Daisy at £494m. Net participate in further consolidation Dubens is taking £2.47m of his debt was £141.2m at the end of of the sector under its ownership. £2.97m award and finance director June 2014. Potential acquisitions are likely to Steve Smith will take £2.1m of The original Daisy business be larger than in the past. Toscafund his £3.04m award. Dubens is also reversed into Freedom4 Group, has been an investor in Daisy since managing partner of Oakley Capital previously Pipex Communications, it joined AIM, while Penta has whose corporate finance offshoot in July 2009 and the deal was partly invested in other telecoms services is earning £4.31m in fees from the funded via a share issue at 80p businesses including Six Degrees deal.

November 2014 5 finnCap www.finnCap.com

company news Castleton secures electronic document services acquisition as MXC increases stake

IT managed services www.castletonplc.com

Castleton Technology is acquiring Castleton has disposed CASTLETON TECHNOLOGY (CTP) 1.53p public-sector IT services provider Documotive for £4m in cash and loan of all its original 12 MONTH CHANGE % 74.3 MARKET CAP £m 9.51 notes. This is part of the new strategy to provide IT managed services to the businesses is a further £302,000 expected from public sector and in particular social- deferred consideration for Maxima housing operations. Information and the resolution Documotive provides electronic and EBITDA is estimated at £808,000, of certain items with AIM-quoted document and record management up from £427,000 in 2012-13 as Redcentric, which was demerged last services. This is the second acquisition overhead cost rises were kept to a year. There is £831,000 of loan notes by Castleton, formerly known minimum. relating to the Montal acquisition as Redstone, since its change of Castleton is raising £5.5m at 1.1p a although £200,000 of these will be direction at the beginning of the year. share to finance the acquisition. There converted into shares at the placing Managed services business Montal was cash of £200,000 in the bank at price. was acquired in June. Montal had 60 the end of September 2014. Castleton MXC Capital, which recently joined social-housing associations as clients has disposed of all its original AIM, has taken up £1.2m of the placing and Documotive has 95 with little businesses and has agreed a reduction shares, giving it a stake of 10.6%, and overlap. The addressable market is the in deferred consideration from the sale been issued with a warrant, exercisable 600 largest social housing associations. of Comunica Holdings to Coms. The at the placing price, over 5% of the Documotive is estimated to have amount has been cut from £1.1m to enlarged share capital. MXC Capital is increased its revenues from £2.76m to £825,000 because of tax advice costs effectively controlled by a business run £3.24m in the year to October 2014 and related payments to HMRC. There by Castleton chief executive Ian Smith. Energy efficiency growth for Entu

Home improvement products www.entu.org

Home improvement products Entu is modestly rated. Edison ENTU (UK) (ENTU) 103.5p installer Entu started trading forecasts a 2014 profit of £10m at a small premium after it 12 MONTH CHANGE % N/A MARKET CAP £m 67.9 on revenues of £119.4m, rising to joined AIM on 30 October. £11m on revenues of £127.6m in Existing shareholders, including brands, including Zenith, Weatherseal, 2015. The shares are trading on less management, sold £32.8m-worth Penicuik, Staybrite Solar, Europlas than nine times 2014 prospective of shares at 100p each, which is and Norwood. The company has a earnings. Net cash is expected equivalent to 50% of the share national installation brand, Job Worth to be £4.2m at the end of 2014 capital. No new money was raised. Doing. Entu does not manufacture, and the cash pile will continue to Entu generates most of its which differentiates it from AIM- increase unless Entu makes further revenues from windows, doors and quoted rival Safestyle, so it is a acquisitions. A dividend of 8p a solar panels but it is growing its cash-generative business with little share is expected in the first full sales of boilers and insulation and need for capital expenditure. The year as a quoted company. That the focus is increasingly on energy group’s market share of the home represents a yield of 7.8%. Entu efficiency products. Entu has grown improvement sector is estimated is dependent on the strength of by acquiring a number of regional at 2.6%. consumer spending.

6 November 2014 www.finnCap.com finnCap www.finnCap.com

dividends Walker Greenbank brands Dividend news pay dividends Veterinary medicines and animal identification products supplier Supplier of fabric & wallcoverings www.walkergreenbank.com Animalcare edged up its full-year dividend to 5.5p a share, which was in line with 3% growth in earnings

Dividend WALKER GREENBANK (WGB) to 10.8p a share. The balance sheet remains strong, with net cash of Walker Greenbank reported an Price (p) 179 £3.8m. Animalcare continues to invest increased interim dividend of 0.35p Market cap £m 105.6 in new vet medicines, with seven a share, up from 0.28p a share in the candidates in development, and it first half of the previous year. The total Historical yield 1% has also been boosting its sales team. dividend is forecast to improve from Prospective yield 1.3% Animalcare believes that merger 1.85p a share to 2.3p a share. activity in the sector will distract Walker Greenbank was paying the larger competitors from their dividends up until 2001 but it slumped improved by 5% to £41.1m, while development of new drugs. There into loss. At that time the company underlying pre-tax profit was 7% should also be opportunities to grow was on the Main Market and it moved higher at £3.28m despite the negative outside the UK. to AIM in 2003. It restarted paying effect of currency movements. Walker dividends in 2010 with a 0.5p a share Greenbank has invested in new Regulatory reporting and compliance final dividend and this was followed websites for its brands and this has software provider Lombard Risk by a total dividend of 0.95p a share the increased online traffic. Management continues to benefit following year. The dividend has been The manufacturing businesses from regulatory changes in the global steadily increased since then. are strong contributors to profit financial services sector. In the six This year’s forecast dividend and there are few competitors in months to September 2014, revenues would be covered nearly five times the premium end of the market grew by 27% to £9.3m and it made a by forecast earnings and despite in the UK. Continued investment small profit, compared with an interim investment in printing equipment net in digital printers will increase loss in the previous year. Restatement cash is expected to stay at £1.5m by capacity. of capitalised software numbers did the end of January 2015. An underappreciated part of the not have a significant effect on the business is the catalogue of historic figures. The interim dividend is 0.035p Business designs which are not valued in the a share. The second half tends to be balance sheet. Licence income for the stronger and Charles Stanley forecasts Walker Greenbank owns a range of brands generates a small income for a full-year profit of £4.6m and a total brands in the furnishings sector as the business and it intends to take on dividend of 0.11p a share. well as fabric and wallpaper printing a dedicated licence director in order to facilities. The company has shown build on this base. This is high-margin Silicon wafer reclaim services provider its ability to create new brands and income so it could provide a significant Pure Wafer is paying a maiden offshoots of existing brands in order boost to profit once additional income final dividend of 0.7 cents (0.43p) to grow. Last year the Anthology covers the extra costs. a share. This marks the turnaround wallpaper brand was launched. WH Ireland forecasts a rise in full- from a highly indebted loss-making Anthology is distributed through year profit from £7.3m to £7.7m, business to a profitable and cash- Harlequin but it is a standalone although earnings per share will be generative one. In the year to June brand. The other main brands are flat because of a higher tax charge as 2014, revenues dipped from $37m to Sanderson, Morris & Co and Zoffany. tax losses are used up. The shares are $35.9m but pre-tax profit improved The Abracazoo wallpapers range trading on 16 times prospective 2014- from $3m to $3.9m thanks to better for children has been launched by 15 earnings. The higher tax charge will production yields. Net cash was $1.5m Sanderson this year. hold back earnings growth in the short at the end of June 2014. There should Growth has been international term and the business is dependent be future growth on the back of although not every territory grows on the consumer market. However, growth in demand for semiconductors each year and there are signs that Walker Greenbank has shown that it and a dividend of 1 cent a share is the contract business is recovering. In can cope with downturns and it has a forecast for 2014-15, which would be the six months to July 2014, revenues number of valuable brands. covered 12 times by forecast earnings.

November 2014 7 finnCap www.finnCap.com

expert views

Expert view: The broker Tristel: a business transformed By DR KEITH REDPATH

isinfection and infection- with revenue of £13.5m (finnCap in the legacy business. control products manufacturer estimate: £13.4m), EBITDA of £2.7m The newer contamination control Dand supplier Tristel* reported (£2.7m) and pre-tax profit of £1.8m business increased its revenue by preliminary figures in line with (£1.8m). 31.1% to £1.19m. with overseas upgraded expectations from earlier Gross margin improved from 66.4% revenue growing by 53.8%. this year and they clearly show the to 69.8% while EBIT margin recovered Animal healthcare revenue rose transformation that has occurred over from 4.8% to 13.6%. by 3.2% to £762,000, with all of the the past 12 months. This is as a result Net cash at the period end was growth coming from overseas sales. of decisions taken several years ago £2.6m, up from £562,000 one year UK revenue was 1.2% lower. to diversify and to internationalise the earlier. The dividend was increased After three years of steering Tristel business. significantly from 0.4p a share to 1.6p through the transformation that has We forecast continued double- a share and cash generation is strong occurred, the chairman, Christopher digit earnings growth for the next enough to maintain a progressive Samler, is to stand down. We do not two years with dividend cover dividend policy. view his leaving as at all negative, and maintained at two times. We raise Growth was not confined to any believe he has presided successfully our target price from 78p to 85p. one segment of the business nor over a period of immense change for Human healthcare, which geography. All of the growth was the company. supplies infection control products organic. Human healthcare revenues to hospitals, continues to be grew by 29.2% to £11.5m, with a Forecasts the mainstay of the business, but faster rate of growth in overseas contamination control, which revenue. We make no changes to our forecasts supplies pharma cleanrooms, is Tristel has reclassified the human for 2015, with revenue expected to performing well both in the domestic healthcare business into three increase to £15m and pre-tax profit market and internationally. The performance of the latter vindicated, We forecast continued double-digit earnings growth in our opinion, the investment that was made in developing this brand, for the next two years Crystel, from scratch, and in the new manufacturing facilities that were required to address this market. segments that are described by their to £2.3m with earnings per share The animal healthcare business areas of use: growing at a faster rate because the was essentially flat last year, but it Ambulatory care – the disinfection tax rate is expected to fall from 30% should be remembered that this of small medical instruments. to 24%. was a business that Tristel entered in This includes the Tristel Wipes Our new estimates for 2016 are 2012 following a contractual dispute System and the Stella endoscope revenue of £16m and pre-tax profit with a company for which it was a decontamination system. Revenue of £2.6m. Our target price of 85p contract manufacturer. We believe grew by 44.1% to £7.33m. puts Tristel on a P/E of 17 times and Tristel has captured the lion’s share Critical Surface Disinfection – which gives an enterprise value/sales of of the market rapidly and that the includes all products for near-patient two times. We remain firmly of the business will remain a cash cow for surfaces, as well as floors. This part of opinion that the risks to our forecasts the group. the division is still the smallest but it remain on the upside. grew fastest. Revenues rose by 56.7% Results to £1.23m. *Tristel is a corporate client of finnCap Other – this now includes the There were four forecast upgrades legacy endoscopy business, water between January and June 2014. and other smaller applications of i DR KEITH REDPATH is a research Tristel’s preliminary results were in Tristel’s technology. Revenue dipped director specialising in health care and pharmaceuticals at finnCap line with our upgraded forecasts, by 2.7% to £2.96m due to the decline

8 JuneNovember 2009 2014

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feature AIM Awards 2014 The nineteenth AIM Awards, sponsored by accountants PwC, were held at Old Billingsgate on 9 October. Here are the winners.

This year, SQS is forecast to generate software under the TungstenAnalytics COMPANY OF THE YEAR revenues of €273.2m and profit of brand. The £4m acquisition of €20m. More of the business is coming DocuSphere provides accounts Utilitywise from managed services rather than payable automation technology. one-off contracts and last year’s Tungsten is still loss-making but Energy procurement consultancy acquisition of Thinksoft has given house broker Canaccord Genuity Utilitywise joined AIM in June 2012 SQS a strengthened market position believes that it can make a profit of and little more than two years later it in India. Average revenue per client £21.9m in the year to April 2016. has won the best use of AIM award in has increased. SQS has become 2013 and this year been named AIM the largest independent software company of the year. Following the testing services provider in the world, BEST NEWCOMER awards night, Utilitywise reported a although it is still some way behind 78% increase in underlying pre-tax many large system integration Safestyle UK profit to £13.1m in the year to July businesses that have software testing 2014. This was achieved through businesses. Safestyle UK has been joined on AIM a combination of organic and SQS is one of the companies by rival replacement windows and acquisitive growth. The number of presenting at the growth companies doors supplier Entu since it won the energy consultants will be doubled seminar called Into the Political Storm best newcomer award. Safestyle has to 720 by July 2016 and the company at Westhouse Securities in London been growing its market share, with is moving to new offices in North ([email protected]). volume growth of more than 6% in Tyneside by the end of this month. the first half of 2014 compared with The rapid growth has also required a estimated market growth of 4%. The restructuring of management, with ENTREPRENEUR OF THE YEAR prospects of steady growth in profit finance director Andrew Richardson from £15m to £17m this year and a moving to deputy chief executive Edmund Truell, total dividend of around 9p a share to enable chief executive Geoff Tungsten Network make the company an attractive Thompson to focus on strategy. Non- investment although the share price executive Jon Kempster takes on the Tungsten Corp chief executive has not been immune to short-term role of finance director. A profit of Edmund Truell led the buyout of market weakness. It does, at 154p £18m is forecast for 2014-15, rising to Hambro Ventures and formation a share, remain well above its 100p £25m the following year. of Duke Street Capital, where placing price at the end of 2013, he sold his interest in 2007. He though; it was more than double the subsequently co-founded Pension placing price in April. The shares are INTERNATIONAL COMPANY OF Insurance Corporation, which has trading on ten times forecast 2014 THE YEAR more than £9bn of assets under earnings and yield 6%. management. Edmund and Danny SQS Software Quality Truell founded Tungsten in order to Systems acquire a business in the financial BEST USE OF AIM services sector and it bought OB10, Germany-based software testing a business-to-business e-invoicing Redcentric company SQS won this award for network at the time that it joined the second time since floating in AIM in October 2013. Tungsten has IT managed services supplier September 2005, which was the completed the acquisition of a bank Redcentric is using its AIM quotation year before Utilitywise was formed. and intends to provide trade finance to help it to become a consolidator SQS won for the first time in 2008. to its invoicing clients. It has also in its sector, following its demerger In 2007, revenues were €121.1m signed a licence deal with AIM- from Redstone in April 2013. The and underlying profit was €9.7m. quoted @UK to use its spend analysis main move was the acquisition of

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the InTechnology managed services where churn is much higher. There BEST COMMUNICATION business at the end of 2013, which are cross-selling opportunities for doubled the size of the business. The both sets of clients and these are two companies have been integrated yet to be fully realised. The Control IGas Energy ahead of schedule and they have been Circle acquisition, and the Intercept trading under a single brand since one for that matter, was earnings Involvement in the controversial the summer. The original business enhancing in the year to September UK onshore shale gas industry has grew organically in the six months 2014. Strong cash generation means meant that IGas has needed to be on to September 2014. Redcentric is that Alternative was able to acquire top of its investor communications. seeking further acquisitions it can bolt Control Circle and feel comfortable It has been a busy year for IGas. At on to its business. A full-year profit of with the resultant increase in net the beginning of 2014, IGas agreed £16.6m would put the shares, at 123p, debt, while continuing to grow its a farm-in agreement with French oil on less than 13 times prospective dividend. The figures for the year to and gas giant Total for two potential 2014-15 earnings. September 2014 will be published on shale gas licences in the Gainsborough 10 December. Trough in Lincolnshire. Total will eventually acquire a 40% interest. The BEST RESEARCH Competition and Markets Authority BEST TECHNOLOGY has cleared the subsequent acquisition WH Ireland of Dart Energy, which also has an REX Bionics interest in the Lincolnshire and other Broker WH Ireland had grown its onshore licences, thereby securing corporate client list to 92 at the REX Bionics has gained media IGas greater stakes in its main licences. end of May 2014, the majority of exposure following its flotation earlier IGas plans to acquire 3D seismic over which are on AIM. Research is a key this year. including coverage on its acreage in the North West and then component in attracting clients and Horizon on BBC TV. That must have submit applications for sites for drilling WH Ireland has been building up its given additional momentum when and hydraulic fracturing of gas from team of analysts, recently appointing it came to the judging of this award. shale in the first half of 2015. The share Ian Berry, who has worked at a Auckland-based REX has developed price has fallen by more than a quarter number of other brokers. On top of its a robotic exoskeleton that enables over the past year, with most of the institutional research, WH Ireland also wheelchair users to move in an decline since the end of July. publishes WHI Spy, which is edited by upright position. There have already Miles Nolan. This monthly publication been sales of the REX Personal, which provides accessible research and ideas is the first-generation product, but BEST PERFORMING SHARE for private clients. the cost needs to be reduced. The current focus will be selling the Crawshaw Group REX Rehab to rehabilitation centres AIM TRANSACTION OF THE YEAR while a third-generation product is Meat and delicatessen products retailer developed at a price affordable to Crawshaw won this award, which Alternative Networks individuals. Insurance companies that covers the beginning of August 2013 pay for rehabilitation and treatment to 31 July 2014, because the share Telecoms and managed services are already becoming aware of the price was more than 11 times the level provider Alternative Networks has product. The marketing focus will be it was at the start of the 12-month been using the cash it generates North America, the UK, Australia and period. Crawshaw reversed into shell from its original operations to New Zealand. Former Biocompatibles Felix in April 2008 and raised £4m at move into higher-margin area. In boss Crispin Simon has joined the 37.5p a share and it took six years to January it paid £39.4m for Control board as chief executive and he has get back to that share price. House Circle, which supplies cloud-based experience of exploiting medical broker and AIM best research winner hosting and managed services. This technology. He takes over from WH Ireland made a number of forecast purchase, along with the acquisition Jeremy Curnock Cook who organised upgrades during the period, although of Intercept IT the month before, the reversal into Union MedTech there was a subsequent downgrade. provided Alternative with a strong in May when the renamed holding Crawshaw has gone from being lowly base from which to grow in the cloud- company moved from ISDX to AIM. rated to a prospective 2014-15 multiple based sector. This is an area where REX raised £10m at 180p a share and of 46 – at 50.65p a share. Schroders customers tend to be more sticky the share price has dipped below this increased its stake to 5.11% on the day than the original telecoms operations level. of the AIM awards dinner.

10 November 2014

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statistics

Market Performance, Indices and Statistics

AIM SECTOR INFORMATION FTSE INDICES ONE-YEAR CHANGES COMPANIES BY MARKET CAP

% OF % OF INDEX PRICE % CHANGE MARKET CAP NO. SECTOR NAME MARKET CAP COMPANIES FTSE AIM All-Share 720.17 -10.9 Under £5m 230 Financials 21.9 18.7 FTSE AIM 50 3473.15 -18.9 £5m-£10m 137 Oil & gas 14.5 12 FTSE AIM 100 3138.09 -14.4 £10m-£25m 226 Industrials 13.7 16.8 FTSE Fledgling 6709.79 +5.3 £25m-£50m 177 Consumer services 12.9 10.7 FTSE Small Cap 4333.34 -0.7 £50m-£100m 138 Technology 10.7 10.8 FTSE All-Share 3503.46 -2.3 £100m-£250m 130 Health care 8.8 6.6 FTSE 100 6546.47 -2.8 £250m+ 61 Consumer goods 6.9 5.6 Basic materials 6.5 15.9 TOP 5 RISERS OVER 30 DAYS Telecoms 2.5 1.3 Utilities 1.6 1.4 COMPANY NAME SECTOR PRICE (p) CHANGE (%) Fitbug Holdings Health 4.92 +936.8 4KEY AIM STATISTICS GoldStone Resources Ltd Mining 3.5 +833.3 Great Western Mining Mining 1.67 +189.6 Total number of AIM 1099 Kalimantan Gold Corp Mining 1.68 +103 Number of nominated advisers 46 Surface Transforms Industrials 14.88 +88.9 Number of market makers 52 Total market cap for all AIM £74.7bn TOP 5 FALLERS OVER 30 DAYS Total of new money raised £88.6bn

Total raised by new issues £38.7bn COMPANY NAME SECTOR PRICE (p) CHANGE (%) Total raised by secondary issues £49.9bn Tangiers Petroleum Ltd Oil and gas 0.53 -77.9 Share turnover value (2014) £34.2bn MoPowered Group Telecoms 6.25 -77.1 Number of bargains (2014) 5.1m Ultrasis Health 0.15 -76.9 Shares traded (2014) 256.3bn Forte Energy NL Mining 0.085 -72.1 Transfers to the official list 170 Surgical Innovations Health 1.38 -69.4

AIM - 1 YEAR INDEX CHANGE Source: London Stock Exchange 920 894 868 842 816 790 764 738 712 686

660 November 1st 2013 October 31st 2014

Data: Hubinvest Please note - All share prices are the closing prices on the 31st October 2014, and we cannot accept responsibility for their accuracy.

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