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Hotel Chocolat: Form is temporary. Class is permanent.

by Mr E Bright
05/10/2017
Hotel Chocolat: Form is temporary. Class is permanent.

A lot is written about the quality of companies who come to trade on the AIM exchange. Sure, there have been notable “bad eggs” and the listing requirements may not be as rigorous as the main market, however it remains an excellent venue for top quality British companies to raise capital from investors.

Hotel Chocolat is certainly in that category.

We first deliberated over an investment into the company during its initial public offering, where the shares were first made available to the public back in May 2016. Our consideration was simple: what will they do with the money they raise? After meeting with the founder and CEO Angus Thirwell, it was clear that they had the answer.

The company has a top quality product in the chocolate they produce, arguably some of the best on the market, and an excellent brand reputation to match. However, client feedback indicated that despite having an online presence since the late 90s, accessing the product was a faltering point. The next step was obvious. The company needed more bricks in addition to clicks. Whilst others on the high street have struggled in recent years, Hotel Chocolat have deployed the capital raised from public investors and prospered, opening 12 stores in the 2017 financial year. In September, they announced an impressive year-on-year increase in revenue of 12% and 100% increase in profit before tax.

When your business is dependent on delivering on key dates (think Christmas, Easter and Valentine’s Day), quality is needed throughout the operation. The company has executed their growth strategy well so far, and with guidance from their Chairman, Lush Cosmetics founder Andrew Gerrie, we are confident that this can continue.

Investors in our AIM portfolio have benefited from the company’s rise from the 148p listing price, however the recent dip in share price opens up great opportunities for new investors. The future remains bright for the chocolatier. We met with their senior management last week and were impressed by plans for new store openings, continued expansion overseas and a gifting app promise to keep sales on their upward trend.

Hotel Chocolat is only one example of top quality AIM companies which we hold in our AIM portfolio. The portfolio has performed impressively so far in 2017, generating +22.61% (up to end of September) versus the 20.15% return of the FTSE AIM All Share Index. To discuss an investment into our discretionary AIM portfolio, please contact the team on 0207 397 297 or send us an email at investments@reyker.com.

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