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Five Companies Committed to AIM

Many small companies have left AIM over the last two years.  Indeed, we have often read in the National press that small companies simply cannot afford the cost of an AIM listing in today’s economic climate. For example in May 2009 the Times headline read: ‘Tiddlers' AIM exodus set to continue’.  The article claimed that ‘smaller companies were increasingly disenchanted with AIM’.  We wonder how many companies the Times spoke to, because our experience belies this.

At Aimzine we have met many small companies over the last two years and the vast majority of these are pleased to keep their AIM listing and can easily justify and afford the cost. These companies will not hit the headlines in the national press. In a country where Jedward’s progress on X-Factor is front page news the ‘AIM Market Performing Well’ story has little chance!

In this article we are seeking to redress the balance and tell the story of the majority. We are grateful to five small AIM companies (Market Cap’s ranging from £0.6 million to £4.8 million) for their help with this article. Each company has provided Aimzine with some insights into the benefits they get from being AIM listed and why they are Here to Stay – for the long term. The five companies are:

1. Intandem Films (IFM)
2. Scientific Digital Imaging (SDI)
3. Advanced Power Components (APC)
4. Intellego (IHP)
5. Plethora Solutions (PLE)

Click on the links above if you wish to navigate directly to each company’s section.

Intandem Films (IFM)

Intandem Films plc is a London based international film company. It specialises in raising finance for commercial feature films and selling them to distributors around the world. The Company earns fees for arranging the financing for the films’ production and generates commission on all sales secured.

Intandem closely manages the risk associated with the film industry and does not invest in films from its own resources.  Its highest profile film to date was ‘How To Lose Friends and Alienate People’ starring Simon Pegg, Jeff Bridges and Megan Fox - for which Intandem raised the finance and sold the film to distributors such as Paramount, Warners and MGM.  

The Company is currently negotiating film projects with total budgets in excess of $100 million. The films being negotiated are mainly sourced from Los Angeles, the capital of the film world, and have budgets in the range of $10 million to $35 million. The films are a mixture of thrillers, action and romantic comedies and are likely to star high profile actors such as Samuel L Jackson, Guy Pearce and Clive Owen.  

Intandem listed on AIM in April 2005, just 18 months after formation. Its Chief Executive, Gary Smith is an AIM veteran, he was in charge of the first company to raise money on AIM in June 1995. Intandem intends to grow to become a substantial company in the coming years and will use its listing on AIM to raise growth capital and to attract a wide investor base.

The Board strongly believes that AIM is an excellent platform for a small company like Intandem to promote its profile and raise capital – for these very reasons it fully intends to remain on AIM for the long term. It considers the fees to be relatively low for the Stock Exchange and NOMADs, vigorously negating that the cost of listing should ever be seen as a deterrent for ambitious companies contemplating AIM as a platform to further their business.

Scientific Digital Imaging (SDI)

By Phil Atkin, Chief Executive Officer of Scientific Digital Imaging Plc

Scientific Digital Imaging plc is focused on the application of digital imaging technology to the needs of the scientific community.  It was established in 2007 with the intention of listing on AIM and becoming an acquisitive group; it achieved these objectives in 2008.  The history of the Company, however, is much longer; its principal subsidiary, Synoptics - which designs and manufactures special-purpose instruments for the life sciences – is now 25 years old.

We formed SDI well before the start of the current recession with the express intention of listing on AIM.  Our objectives were to provide greater flexibility in funding further growth, to enable the Company to access a wider range of investors and to assist in recruiting, retaining and incentivising key employees. Another important goal was to raise SDI's general profile within its sector as well as its status with its customers and suppliers.

For me the key value of AIM is to allow the connection of high-quality companies with investors.  AIM provides investors and companies alike with the quality assurance at a lesser cost than the full list, making it suitable for smaller growth companies.  In the longer term, delivering shareholder returns and facilitating the acquisition of further companies through an appreciating share price are key components of our strategy, and AIM remains our vehicle of choice for doing so. We brought the Company to AIM during some of the worst conditions and although this wasn’t ideal, it had no adverse affect on our long-term strategy and enabled us to keep our advisers’ costs to a minimum.

There is no doubt that the costs of being on a public exchange are significant for a small company like SDI.  However, to my mind they represent part of the cost of carrying out our strategy - one that would be simply impossible without a public quotation.  Although we are 'small and here to stay', we are not 'here to stay small' - to grow, we need to be able to raise money easily and quickly and to be able to use our paper for acquisitions; none of this would be possible if we were not listed on AIM.

we are not here

to stay small

Advanced Power Components (APC)

By Mark Robinson, Chief Executive of specialist electronics distributor Advanced Power Components (APC)

For me, this question is best answered by going back to basics. The London Stock Exchange was conceived in 1801 to allow merchants to contribute to the costs of round the world voyages with their investment intended to return a profit depending upon the success of the endeavor. Investors put money into a business in order to help it succeed and in return take a stake of the profits. This remains the primary purpose of the market, though it only directly generates a fraction of the sums invested speculatively on a daily basis.

 For APC, the justification for remaining listed on AIM is very clear: 

• We remain ambitious and can foresee that some of our plans may well need financing at some point in the future as we look to enter new markets with new technologies capable of generating long term growth. Yes, funding may well be available from other sources but the process for a private company to secure investment is typically lengthier.

• Being listed carries a mark of respect recognised by customers, suppliers and partners worldwide. Perhaps due to the regulations that listed companies must adhere to and the transparency of their accounting, there is a widely accepted confidence that a listed company is more professionally and responsibly run than a private company, and this makes people keener to work with us.

• A further key benefit for us is that we can use share options as an incentive scheme across the business. As confidence returns and our plans develop, we benefit from the fact that our employees are able to share the rewards from their efforts to grow the business. This leads to improved staff motivation and dedication.

Certainly, the recent economic climate has led to many companies’ shares being seriously undervalued by the markets. Nonetheless, for companies that take a long-term view and are serious about growth, being listed remains, in my opinion, the most practical way to operate.

Mark Robinson: CEO of APC            

Intellego (IHP)

Intellego supplies performance enhancing training to organisations with more than 5,000 employees, in both the private and public sectors.  It is AIM quoted with a market cap of £1 million and a share price of 0.55 pence per share.

The Company specialises in the provision of training which is delivered over computer networks, known as eLearning or Virtual Learning Environments, and also supplies classroom training and other related activities.  Intellego helps companies effectively address their training needs in order to increase sales, improve efficiencies and/or meet compliance requirements.

Currently, Intellego is concentrating on improving financial performance and growing the scale of its business - over the past three years it has more than doubled its sales to £2.3 million. The Company has now reached the stage where it is in a position to transform the business through organic growth and through acquisition over the next few years.

The reasons Intellego will continue on AIM are the same today as they were when it floated in 2004.  The AIM quote provides: 

a. Credibility with customers – most of our customers are FTSE 250 Companies or equivalent – being quoted on AIM is an endorsement of Intellego’s corporate credibility.

 

b. Profile – AIM raises Intellego’s profile within the market.

 

c. Ability to recruit high calibre employees – Intellego is able to offer candidates who want to create their own wealth long term incentives such as options which have a real market value.

 

d. Currency for acquisitions – to offer either shares as all or part of the consideration.

 

e. Liquidity – companies are able to raise capital through a means other than debt; while investors have the opportunity to both invest - and sell their investments - in companies listed on AIM at times which suit them.

 

Intellego is an ambitious company with the determination to grow rapidly, currently in the process transforming itself; AIM offers real tangible benefits which massively outweigh the costs of AIM.

Plethora Solutions (PLE)

Plethora Solutions is a UK-based specialist pharmaceutical company established in 2003. The business was created to develop products for the treatment and management of urological disorders. Over the last 12 months the Company has undergone a restructuring while concurrently completing the planned development of its product portfolio. 

The Company has a successful background in bringing urology products through clinical trials and Plethora’s portfolio of pharmaceutical development assets that it has invested in are now at the point of monetisation. In addition, Plethora intends to utilise its expertise in urology by building a profitable subsidiary business, The Urology Company, delivering shareholder value in the near- and mid-term through the sales and distribution of a portfolio of in-licensed urology products into the UK. The NHS spent £192m on urology products in 2008, and this niche UK market is fragmented with no identified specialist company.

During 2009, Plethora reduced operating costs substantially, while reducing debt significantly from £30.8m to £1.75m.  As part of the restructuring, Plethora divested PSD502, its topical product for the treatment of premature ejaculation to Shionogi/Sciele Pharma, while retaining royalty interests.  The Company also entered into collaboration with a global pharmaceutical company for the development of PSD503, a product for the treatment of stress urinary incontinence.

Plethora has already identified and secured a number of products for the portfolio to license and sell through its channels generating revenue in the near-term.  Following Plethora’s successful £1.6m fundraising in November, the Company will pursue its strategy to grow a commercial footprint in the UK for its new subsidiary, The Urology Company.  The Company also improved its liquidity profile by rescheduling existing convertible loans and issuing a new convertible loan note with a repayment date of December 2012.

Plethora has been successful in raising money on AIM despite recent poor market conditions proving it remains a market where small businesses can successfully raise money.  Plethora is a growth company that has benefitted from the access to new capital via AIM and, as the management team grow the business over the near- to medium-term, the AIM listing should continue to benefit Plethora’s commercial profile.

PSD502 Product                 

Author Michael Crockett

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