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AIA

AIM firms dominate profit warnings. By Dan Martin

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17th Jul 2006
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Almost two-thirds of profit warnings issued during the second quarter of 2006 came from firms listed on the Alternative Investment Market (AIM), new figures reveal.

Out of the total 84 warnings issued between April and June, 51 ' or 61% - were issued by AIM-listed businesses, the Ernst & Young (E&Y) report said.

E&Y pointed out however that the figures should be taken in context as they represented less than 5% of all AIM-listed companies. The market, it said, still "remains an effective way for companies to raise capital".

Out of the overall number of profit warnings, 43% of firms blamed 'difficult trading conditions'. This compared to 31% giving the same reasons in the first quarter of the year. A fifth reported 'contract delays and cancellations', while 11% cited 'increased overheads' as the cause.

"A key feature of the last quarter has been an uncertain economic environment, with volatility in the global equity markets, due in part to resurgent inflation."

Keith McGregor, Ernst & Young

Total profit warnings were one less than during quarter one and down by 12.5% on the second three months of 2005.

Keith McGregor, E&Y corporate restructuring partner, said: "A key feature of the last quarter has been an uncertain economic environment, with volatility in the global equity markets, due in part to resurgent inflation.

"And while the global economy is growing, rising prices, with associated interest rate rises, are still creating a feeling of uncertainty."

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