14 December 2010
- Defies criticism that AIM can’t survive a tough economy
- Secondary fund raising more successful as AIM matures
Our recent research has revealed that AIM companies have come out of the recession twice as cash-rich as FTSE-100 companies.
The liquidity ratio of AIM companies emerged from the recession at 2.03, compared to just 0.97 for FTSE-100 companies. This means that AIM companies have twice as much cash than they need to meet their debts as at their last balance sheet date. (See graph below)
Comments Laurence Sacker, corporate finance partner in our London office: “It is extremely encouraging to see that AIM companies are emerging from the deepest recession for a generation with such a healthy cash position.”
“This challenges criticism from AIM detractors over the ability of small and medium sized companies to operate in difficult economic conditions. It shows that the AIM market is nowhere near as fragile as some have feared.”
“On average, AIM companies went into the recession with very strong cash balances. Their cash burn was lower than expected and they had the investor support to raise new capital when they needed it.”
“There was concern that the credit crunch would drive more AIM companies to the wall than it actually did. The high level of liquidity of AIM companies will stand them in good stead, especially as bank lending is still very restricted.”
As AIM matures further it will attract even more institutional investors and this will increase the ability of AIM-listed companies to raise fundsin secondary issues, helping them maintain strong liquidity levels.
Comments Laurence: “Even when the market was in the doldrums in 2009, AIM companies were successfully raising billions in secondary issues. This means they’ll not only be able to meet short term debts, but it will also allow them to invest for the long term, laying the ground for future growth.”
According to statistics from the London Stock Exchange, the total of secondary funds raised by AIM companies amounted to £2.4 billion in 2009 despite the AIM index reaching its trough that year.
The re-shuffle that AIM went through over the last couple of years has contributed to strengthening the market’s attraction to investors.
Comments Laurence: “AIM underwent a natural process of consolidation whereby some of the weaker companies de-listed. As a result, the AIM market is much stronger now and this should continue to draw in institutional investors whilst attracting new listings.”
Liquidity ratio of AIM-100 v FTSE-100
We produce a range of informative publications focusing on the latest accounting issues. Click to add yourself to our mailing list.
Up to £15 million will be clawed back from academy schools before the end of the current academic year due to government budgeting errors, according to our data.
A quarter of all taxpayers may be paying the wrong amount of tax due to incorrect PAYE codes according to our analysis.
The cost of listing on AIM has risen at its fastest rate in more than five years according to our findings.
A sudden surge in M&A activity on AIM is being driven by private equity backed deals to take companies private, our research reveals.
From 6 April 2012 HMRC will be able to ask employers to pay a financial security where it thinks there is serious risk that the business won’t pay over their PAYE tax deductions or National Insurance contributions (NICs) on time.
The value of loans to businesses in the UK has slumped by 13% since the collapse of Lehman Brothers, the second fastest fall among the G8, according to our findings.
Our international network, UHY, welcomes new member firm in Tunisia, CNBA.
Hot on the heels of an announcement from HMRC that the closure date for the Liechtenstein Disclosure Facility (LDF) has been extended to 5 April 2016 has come speculation that the local banks are pushing for much higher transfers of funds into Liechtenstein and a minimum period for which any account must be kept open.
