Small caps dominate profit warnings

Nearly two-thirds of profit warnings for the second quarter of 2005 came from
AIM-listed companies, according to figures released by Ernst & Young.

The firm said that of the 84 profit warnings issued by UK quoted companies,
51 (or 61%) came from AIM-listed stocks.

The firm, however, said the increase in AIM warnings should be taken in

‘The 51 warnings from AIM-listed companies in quarter two still represents
less than 5% of all AIM-listed companies, and the market remains an effective
way for companies to raise capital,’ E&Y said.

Overall the 84 warnings were one less than the first quarter of 2006 and down
by 12.5% on quarter two of 2005.

Difficult trading conditions were blamed for the profit warnings by 43% of
the companies involved compared to 31% for the last quarter.

Keith McGregor, corporate restructuring partner at Ernst & Young 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.’

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