New research has revealed that just 6% of AIM-listed firms expressed uncertainty about their status as a ‘going concern’ in their 2008 accounts. This compares with 4% of similar sized companies on the full list.
Accountancy firm Smith & Williamson compared the 31 December 2008 year end accounts of 83 AIM-listed companies to a sample of 46 comparably sized companies from the full list which had also filed at the same time.
The research was conducted to determine the difference in the proportion of AIM-listed companies and full list firms which highlighted issues about the viability of their business.
Kirsty Smith, a director at Smith & Williamson’s assurance and business services department, said: “Not surprisingly, all of the ‘going concern’ issues, both from AIM and full listed companies, related to uncertainty over future financing.
“Moreover, 60% of the AIM companies whose 2008 audit reports included an emphasis of matter paragraph in relation to going concern also had a similar paragraph in their 2007 financial statements.
“This suggests that the current economic conditions may not be the sole cause of these companies’ continued problems."
“The vast majority of AIM-listed companies clearly have planned well and worked hard to ensure that they have good management systems in place and sufficient resources to continue as a going concern," she added.
Other findings from the research included:
- 90% of the companies included in the research noted in their financial statements that they had reviewed their position as a ‘going concern’, i.e. a business that functions without the intention or threat of liquidation for the foreseeable future, usually regarded as at least within 12 months.
Of this group:
- 64% (of AIM-listed companies) and 72% (of full list companies) felt they had ‘adequate resources’ for the year ahead
- 34% of Aim-listed (28% Full List) felt they had access to future financing from various sources
John Cowie, head of AIM at Smith & Williamson, said: “There is evidence of strong banking relationships, previous good performance and the belief that AIM companies will still be able to seize opportunities for growth. In a lot of cases the company and the auditors are assured that there will be future financing available.”
“The results indicate that Aim-listed companies have reacted quickly and efficiently to the current economic crisis, tightening their belts to maintain sufficient resources."
© Crimson Business Ltd. 2009