AIM Industry Report 2017/18

62 63 EARNINGS PER SHARE: FTSE AIM 100 VS. FTSE 100 SOURCE: DIGITALLOOK.COM, 18 DECEMBER 2017 EPS (P) AVERAGE MEDIAN MAX FTSE 100 101.29 72.25 467.80 AIM 100 16.26 16.82 115.80 EPS AIM 100 (P) EPS FTSE 100 (P) KEY METRICS AVERAGE MEDIAN MIN MAX AVERAGE MEDIAN MIN MAX BEVERAGES 45.02 45.02 23.86 66.18 101.75 101.75 95 108.5 CHEMICALS 14.80 14.80 14.80 14.80 171.7 171.7 134.3 209.1 CONSTRUCTION & MATERIALS 10.55 10.55 3.49 17.60 150.2 150.2 150.2 150.2 FIXED LINE TELECOMMUNICATIONS 14.44 14.44 0.14 0.14 28.9 28.9 28.9 28.9 FOOD & DRUG RETAILERS 21.90 21.90 21.90 21.90 13.14 10.86 6.76 21.8 GENERAL RETAILERS 24.71 19.10 2.19 77.20 165.37 30.4 24.4 441.3 HEALTH CARE EQUIPMENT & SERVICES 22.90 22.90 7.76 38.03 50.98 54.15 13 82.6 HOUSEHOLD GOODS 25.94 24.37 18.20 36.80 211.82 205.6 18.1 467.8 MEDIA 10.83 12.00 -16.09 26.27 47.55 50.5 17 72.2 MINING 13.10 14.50 1.14 23.66 132.76 126.5 3 283.8 MOBILE TELECOMMUNICATIONS 18.80 18.80 18.80 18.80 8.04 8.04 8.04 8.04 OIL & GAS PRODUCERS -2.76 -2.40 -10.50 3.40 38.87 58 0.61 58 PERSONAL GOODS 10.20 10.20 10.20 10.20 130.45 130.45 77.9 183 PHARMACEUTICALS & BIOTECHNOLOGY 4.79 3.85 -39.00 41.80 203.8 102.4 78 431 SOFTWARE & COMPUTER SERVICES 17.51 13.10 -47.00 51.48 91.05 91.05 30.28 151.82 SUPPORT SERVICES 33.41 18.55 1.29 114.70 116.45 96.35 10.73 288.9 TRAVEL & LEISURE 50.26 59.12 16.36 66.43 154.84 114 20.8 333.3 FTSE AIM 100 EPS VS. FTSE 100 EPS BY SECTOR of much lower figures. EPS values below zero mean that the company is losing money and negative EPS numbers are usually reported as “not applicable” for quarters in which a company reported a loss. This is revealing as the FTSE 100 EPS showed one n/a at 18 December 2017, whereas the FTSE AIM 100 showed 16 negative EPS plus six n/a. This is indicative of the wide variation between success and failure on AIM in comparison to the FTSE 100. We took a closer look at the two indices by breaking down the EPS figures by sector. The table below shows that companies engaged in Mobile Telecommunications are notable as the only sector where the AIM 100 outperforms the FTSE 100 in terms of average EPS. This, in fact, comes down to two companies – one quoted on the AIM 100 (Gamma Communications) and one listed on the FTSE 100 (Vodafone). Although the sample is probably too small to be particularly useful, it might reflect a smaller group on AIM that is able to be more responsive to changes in this fast-moving market. It’s also worth considering the Oil & Gas Producers, a sector which has seen significant share trading on AIM over the last year. The EPS figures are consequently somewhat disappointing, and give an indication of why some BR managers running AIM portfolios avoid this more speculative sector. The EPS comparison by virtually all sectors may additionally say something about younger companies, how recently their IPO or follow up funding rounds have taken place and the possible dilutive effects on their EPS. “For those individuals who have invested directly into the AIM market without advice, or without conducting their own thorough due diligence, which is very difficult, there are probably more horror stories than there are success stories.” — MIKE SEAGROVE, ALBERT GOODMAN “Powering the companies of tomorrow, AIM continues to help smaller and growing companies raise the capital they need for expansion.” — LONDON STOCK EXCHANGE FTSE AIM ALL SHARE MARKET COMPOSITION BY MARKET CAP. SIZE Figures from September 2017 show that the distribution of market caps among companies quoted on AIM has not changed substantially. AIM MARKET COMPOSITION BY MARKET CAP. SIZE MARKET COMPOSITION – TAX EFFICIENT AIM-BASED OFFERS SOURCE: LSE AIM STATISTICS SEPTEMBER 2017 0-2 2-5 5-10 10-25 25-50 50-100 100-250 250-500 500-1000 OVER 1000 13.66% 12.51% 17.52% 18.25% 18.25% 11.78% 6.15% 5.21% 3.44% 1.15% MARKET COMPOSITION – TAX EFFICIENT AIM-BASED OFFERS We begin this section by looking at the composition of the market for tax efficient investments that focus on AIM. We will first review the overall market composition, and then break down the market by several key characteristics including investment type, investment strategy and tax wrapper type. For other asset classes that we cover, investment sector is another criterion that we typically use to break down the market, however, as all AIM-based offers are sector agnostic this section won’t categorise offers by investment sector. There were 51 AIM-based investment offers recorded on the MICAP platform in the 2016/17 tax year, when we saw a surge in the number of new products coming into the market – in total 12 new offers launched in that period. At October 2017, there were 36 offers on the market accepting new subscriptions, while 18 had closed and stopped taking new investments. According to our register, the first AIM-based tax efficient investment product was launched in 2001. Since then the number of offers grew steadily in the next 10 years to 14 products by 2012. The market expanded dramatically in 2013 when 7 offers were launched in that single year which comprised one-third of the total market at that time. From 2013 onwards, there have been about 6 or 7 AIM products introduced to the market every year. The number of new launches peaked in 2016 with a total number of 9 new products. In October 2017, the total number of offers launched was 54 including both closed and currently active offers and those launched to date in the 2017/18 tax year. “As at October 31 2017, more than 50% of AIM constituents had a market cap of at least £25 million. And fundraising has skyrocketed.” — INVESTORS CHRONICLE MARKET VALUE RANGE £M 0 -2 5-10 25-50 2 -5 10-25 50-100 250-500 100-250 500-1000 OVER 1000 50 0 100 NUMBER OF COMPANIES 150 200 SOURCE: LSE AIM STATISTICS SEPTEMBER 2017 NUMBER OF CLOSED OFFERS NUMBER OF OPEN OFFERS HISTORICAL 15 24 2016/17 3 9 MARKET VALUE RANGE £M