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AIM Rankings Guide 2013

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Foreward, AIM performance Q2, 2013

Market challenges persist

The market in the second quarter of 2013 has continued to contract and reflect the uncertainty of the current economic climate. While there have been some positive indications to suggest a slowing of the market downturn, such as an increase in the number of new admissions versus Q1 and increased amounts of money raised by these new listings, disappointing performance and adverse conditions of the market in Q2 highlight investors’ continued caution and apprehension.

The number of new admissions (both for UK and international issuers) increased from 15 in Q1 to 19 in Q2, but this number is down one from the 20 new admissions in Q2 2012. This trend is replicated with those admissions which were new introductions and IPOs; 13 in Q2 2013 compared to 8 in Q1. However, this figure falls short of the 18 new introductions and IPOs that came to market in Q2 2012.

A troubling sign is that AIM Market exits, which totalled 18 in Q1 2013, had been at their lowest point since the financial crisis but now seem to be on the rise. The number of de-listings has increased to 25 in the second quarter - the largest number of exits since the first three months of 2012.

Seven of these de-listings occurred largely due to financial stress or insolvency in Q2 2013, a steep increase from the mere two companies that disappeared for the same reason in Q1. Ten companies cited their exit as a result of mergers and acquisitions. Whilst this upsurge in deal activity is a positive occurrence, the rise in de-listings as a result of financial instability indicates the extent to which the economic downturn continues to increase market volatility.

Although more than 40 companies de-listed from AIM over the first six months of 2013, the attrition rate has slowed compared to Q1 2012, when 39 companies de-listed in the first three months alone. At the end of Q2 2013 the company count stood at 1,085, marginally down from 1,092 at the end of Q1, but representing a higher decline when compared to the number of companies at the end of Q1 2012 (1,118) and Q2 2012 (1,114).

On a positive note, money raised by new admissions in Q2 (£211.28 million) was up from Q1 (£126.4 million) and represented a substantial increase from Q2 2012 (£154.8 million) and Q1 (£55.47 million).

In Q2, the aggregate market value of the shares on AIM (£61,769.1 million) fell from a market value of £63,391.4 million at the end of Q1. However, the aggregate market value of the shares at the end of Q2 2013 was 1.714% more than market value at the end of Q2 2012, an improvement from the previous year when, at the end of Q2 2012, the aggregate market value of the shares was 19.67% less than market value at the end of Q2 2011.

Turnover for Q2 in 2013 (£6,786.4 million) also saw a decrease from the Q2 2012 turnover of £9,462.0 million. The extent of the decline in market value coupled with a lower number of companies on AIM could suggest that investor confidence has not yet returned.

The AIM Market in Q2 continued to be a difficult environment in which to foster growth in the market as a whole and reassure skeptical investors. AIM’s patchy 2013 performance to date has not yet erased the memory of the difficulties of the last few years and statistics indicate that, whilst there appears to be a cautious increase in confidence by issuers, investors are choosing to remain prudent under the current market conditions.

With the continued contraction of the AIM Market it would seem that we have yet to reach the end of the current economic downturn, but the improvement in the aggregate market value of shares on AIM at the end of Q2 2013 over the same period last year may suggest that whilst the upturn of the economic cycle is not necessarily imminent, investor concern and unease may itself start to recede.


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