What does ambition mean to you?

In these fast-paced, evolving times, ambition is a key driver for company growth and quality. Four finnCap Ambition Nation Listed 50 award winners explain what it means to them

by Raymond Greaves, Head of research, finnCap
Last Updated: 14 Jan 2020

The aim of the finnCap Ambition Nation Listed 50 is to identify and celebrate those UK-listed smaller companies that offer the best blend of growth and quality, a combination that our research has shown to deliver the best returns to shareholders over time. Our expectation is that some of the names on this list today are likely to feature in the FTSE350 list in the future.

We ran the initial selection process in September 2018, which generated our Listed 50 list of companies. The overall top ranking company was Kainos, making it also the top ranking Tech company. K3 Capital was the top ranked Financial company, On The Beach was the top ranked Consumer company, while Tristel was top ranked in the ‘Best of the Rest’ category. Offering strong returns on capital and decent forecast growth, all these companies were worthy nominations in our view. The launch timing of the finnCap Ambition Nation Listed 50 was auspicious: days after, the market entered its most severe correction since the 2008 financial crisis. In Q4 2018 alone the FTSE AIM all share fell 22% and the FTSE Small Cap index fell 11%, with Growth companies particularly hard hit.

Despite some slight recovery in markets over the following months, the average of the two aforementioned indicies in the year to September 2019 is minus 13%. Any company that generated a positive share price return in the past year did well! In fact, our Listed 50 companies on average delivered a total return of minus 8% (thus outperforming the wider market by 5%), with 29 of the 50 companies outperforming the wider market. Against this difficult market backdrop, the best-performing share price was Future with a stunning total return of 179%, thus making it the best-performing ‘Best of the Rest’ company as well. Sanderson (+63%) was the best-performing Tech company, Hotel Chocolat (+24%) was the bestperforming Consumer company, while Liontrust (+23%) was the bestperforming Financials company. Turning now to the finnCap Ambition Nation Listed 50 nominations for 2019/20, the list highlights a raft of new entrants. In October 2020, we will reveal the top ranked companies in each of the sector categories as well as the best-performing shares in each sector.

finnCap Ambition Nation Listed 50 2019 Winners

Best performing company: Overall Future
Best performing company: Technology Sanderson Group
Best performing company: Consumer Hotel Chocolat
Best performing company: Financials Liontrust Asset Management
Best performing company: Best of the Rest Future
Top ranked company: Overall Kainos
Top ranked company: Technology Kainos
Top ranked company: Consumer On The Beach
Top ranked company: Financials K3 Capital
Top ranked company: Best of the Rest Tristel

For further information, visit: finncap.com/ambition-nation/ ambition-nation-listed-50

Raymond Greaves, Head of research, finnCap

finnCap advises ambitious growth companies, accesses capital and promotes their stories across public and private markets. Using our wide range of expertise across multiple sectors, we shape your company and products into an effective investment story.

Setting the scene with predictions for 2020 and beyond

With an election and (possibly) Brexit happening over the next few months, whatever I say is bound to be wrong! The global economic backdrop is weakish, but could pick up in 2020 if the Chinese and Americans start to compromise on trade. With few tailwinds from outside the UK, companies must also cope with the uncertainties of Brexit which, to my mind, don’t end with a 31 January 2020 exit because then there is total uncertainty about future trade relations, which creates a further ‘cliff edge’ at the end of 2020…

A Conservative government will likely provide relatively business-friendly policies, which would be of benefit to the whole corporate landscape, but would also likely deliver a ‘harder’ form of Brexit, which we see as being particularly negative for food/drink exporters, the car industry and the aerospace industry.

A Labour government would likely try to introduce industrial policies that would give us an unwelcome reminder of the 1970s. As such the outlook for corporate performance would likely take a blow across the board. At the extreme end of the scale some companies (utilities) could be nationalised. But, on the other hand, Labour would likely try and pursue a ‘softer’ form of Brexit which would be of significant benefit to exporters to the EU.

So, having presented a number of ‘known unknowns’ what do we know? We have done a great deal of analysis to identify the best companies and this consistently points to the following: those companies that can generate a strong cash return on capital and reinvest those cashflows in further growth in the business tend to produce strong shareholder returns over time. The finnCap Ambition Nation Listed 50 aims to identify exactly that type of company in the UK small/mid-cap listed arena and I am confident that some of those names will have substantially outperformed the market over the next 12 months.

John Ions, CEO, Liontrust Asset Management

Liontrust, which launched in 1995 and listed on the London Stock Exchange in 1999, is a specialist asset manager that seeks sustainable growth in our funds, portfolios and the business. We manage equity, fixed income, sustainable and multi-asset portfolios, which are all actively managed.

What does ambition mean to you?
To achieve the goals we have set ourselves and the determination to meet the highest standards possible. We are building an asset management business that strives to deliver added value to our clients and investors over the long term. By achieving this, investors will entrust us with their savings and we will grow our funds and the business, to the benefit of staff, shareholders and stakeholders.

As a listed company, what has contributed to your continued growth despite turbulent market conditions?
Being listed has enhanced our ability to pursue an organic and acquisitive growth strategy backed by the support of our shareholders. Liontrust has benefited from the discipline and transparency of being a plc, with quarterly reporting helping to retain the focus of the business. Key to our success is pursuing our essential tasks to the best of our ability, day in day out.

What does the investment landscape look like in five years’ time? And what will be the key challenges for businesses to overcome?
There is a huge savings shortfall globally and good active fund management will have a vital role to play in helping to reduce this. Active managers can only do this if we explain how we can benefit investors’ portfolios, including the ability to exploit market inefficiencies and manage volatility over the long term. Clients deserve and want a bigger say in their investments; understanding and delivering on this will be key.

How do you plan to remain ahead of your competitors over the next five years?
Continued focus on our core business functions, which makes a business stronger and able to deal with and adapt to change. It is important to understand what is achievable and avoid what is untenable, which enables us to create the strongest foundation from which to build the best fund management business. 

Zillah Byng-Thorne, CEO, Future

Future is an award-winning platform for specialist media with scalable, diversified brands in consumer and B2B sectors. We connect with an audience reach of over 260+ million worldwide with their passions, through content, events and cutting-edge technology.

What does ambition mean to you?
For me, it is all about grasping opportunity. We refuse to be pigeonholed; instead, we embrace new opportunities, seek ways to grow, and break into new channels to connect with our global audience. To be ambitious means to be brave, and I believe Future is the epitome of this.

As a listed company, what has contributed to your continued growth despite turbulent market conditions?
We are dedicated to our strategy, which is about expanding our global reach through organic growth, acquisitions and strategic partnerships. But it’s the people who work at Future who make all the difference. Without them, and the passion they bring to work every day, none of this would be possible.

What does the investment landscape look like in five years’ time? And what will be the key challenges for businesses to overcome?
Businesses need to retain the things that make them unique and ensure their content always engages and excites their core audience. There are other factors that impact the media world, such as the ongoing rise of social platforms and a reliance on technology, which changes the way we consume content. This means it’s essential to embrace new trends rather than ignore them. My advice is to continually look for ways to innovate and explore how emerging platforms or technology can help you reach a new audience.

How do you plan to remain ahead of your competitors over the next five years?
Growing upon what we have already achieved. We have broad audience reach and highly engaged users who know our brands and see them as trusted voices. Knowing how to retain this audience is key, as well as forming relationships with crucial advertising partners and diversifying our monetisation models.

Angus Thirlwell, CEO, Hotel Chocolat

Hotel Chocolat is a luxury British cocoa grower and chocolatier. We were founded in 2004 to make exciting chocolate with three guiding principles – authenticity, originality and ethics – that remain central to the brand’s success today.

What does ambition mean to you?
A desire to grow, with a genuine appetite for adventure.

As a listed company, what has contributed to your continued growth despite turbulent market conditions?
A relentless focus on our innovation. We are investing in design, new manufacturing techniques, knowledge training and slicker technology to excite and intrigue our guests.

What does the investment landscape look like in five years’ time? And what will be the key challenges for businesses to overcome?
Attractive! UK retail property finally becoming fairly priced, for example. Businesses need to stay relevant – our focus on the long term has made us an increasingly relevant brand, at many levels.

How do you plan to remain ahead of your competitors over the next five years?
More of the same. Laser-like focus on maintaining our momentum.

Brendan Mooney, CEO, Kainos

Kainos provides digital technology solutions that allow organisations and people to work smarter, faster, better. We spearhead large-scale digital transformation across the commercial, public and healthcare sectors.

What does ambition mean to you?
It is about being able to deliver on the opportunity that is available to Kainos. We are in high-growth markets, working with some fantastic clients and have incredibly talented colleagues. Internally, we express our ambition across three areas: to be a great employer, making Kainos a great place to build your career; to delight our customers, delivering value and building long-term relationships; and to be a growing company, providing opportunity for our people and financial strength for Kainos.

As a listed company, what has contributed to your continued growth despite turbulent market conditions?
Our end markets, what we do for our customers, continue to perform largely in line with previous years. Each year, over 90% of our work, and hence revenue, is from existing customers. That means we have great insight into their plans, allowing us to be detailed and thoughtful in responding to that demand.

What does the investment landscape look like in five years’ time? And what will be the key challenges for businesses to overcome?
I’m just not able to give a view on the investment landscape – I will leave that to those who understand the environment much better. As for future business headwinds, the general themes that we see across our customers are availability of talent and changing attitudes to employment, the speed of business change and uncertainty generated by all things Brexit-related.

How do you plan to remain ahead of your competitors over the next five years?
It feels a little under-ambitious to say ‘more of the same’, but it is true. As a technology-focused company we need to be across all the important technology trends; as an employer, to be focused on the changing talent landscape.

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