This year looks set to be another record-breaker for the coffers of the Alternative Investment Market. The total amount of money raised so far this year by companies on London's junior market has already shot to £6.3bn, matching the figure for the whole of last year.
In terms of admission levels, 88 companies have listed on AIM during the third quarter and a further eight are due to gain admission before it draws to a close, research conducted by Grant Thornton Corporate Finance shows. So far this year, 324 companies have listed on the market, compared with 519 in 2005, of which a record 37 per cent were international companies.
Commenting on the figures, Philip Secrett, a partner at Grant Thornton Corporate Finance, said: "2006 has already seen AIM break the £20bn barrier in terms of new money raised since its launch in 1995. Not only has the market already matched 2005 in terms of money raised at admission, but it has seen an almost 60 per cent increase in the amount of money raised by existing AIM companies compared to last year."
A key reason for this success is the continued appeal of AIM to speciality investment companies and property funds. They are securing the lion's share of new money - more than £2.7bn so far this year, accounting for 44 per cent of all the money raised.
Looking ahead, Mr Secrett predicts: "Quite clearly 2006 will prove yet another record-breaking year in terms of funds raised, but will probably lag behind last year in terms of admission numbers.
"While the pipeline of deals is looking healthy for the short term, longer term the market will need to address a range of issues - in particular its over-reliance on sectors such as mining and oil and gas, which at present account for almost 50 per cent of AIM by market value."
Ultimately, it's a winner
The late-night bars and nightclubs operator, Ultimate Leisure, posted a truly awful set of full-year results last week. Pre-tax profits for the year to June crashed from £8.4m to just £1.5m, total sales slumped 10 per cent to £32m, and the company scrapped its final dividend payment.
Since the introduction of late-night licensing, trading has been much tougher for the group. Normal pubs are now allowed to stay open longer and as a result people are not moving on to Ultimate's nightclubs as much as they once did.
To combat this decline in trade, the group has embarked on a major capital investment programme aimed at refurbishing its estate. It plans to spend £2.5m on refits this year along with a further £5m on rolling out its new Prohibition format. So far Ultimate has four Prohibition sites and it wants to open another five over the next year. Because of this increased investment in future growth, Ultimate passed on paying a final dividend.
Brokers expect pre-tax profits in the current year to slump to £500,000. Nevertheless, shares in Ultimate look to offer great value for the long-term investor. They closed at 184p on Friday, giving the group a market capitalisation of £45m.
This is far too low. Ultimate has a property estate worth £80m alongside an operating business that is still profitable and boasts sales of £32m.
The bar group's biggest shareholders are the billionaire Reuben brothers. They paid more than 250p a share for their 29.9 per cent stake in the company earlier this year. Other major investors include the investment firm Dawnay Day, Bear Stearns Asset Management and Berggruen Holdings, a private-equity group, which has recently been building a stake.
Shareholders such as these are unlikely to allow Ultimate to continue to underperform. If its management cannot enact a recovery it is very likely that the group will end up being taken over. Either way, anyone buying into the stock now will profit.
Flight simulator firm seeks to AIM higher
SimiGon has some of the best simulation software in the world. Its lead product allows future pilots to learn to fly civil and military planes at their own desktop PC and means that they need fewer hours of official training before getting up to speed.
Since it was founded in 1998 by former air force personnel, the Israeli group has grown quickly. It has been profitable and cashflow positive for the past three years, and now boasts an extensive blue-chip customer base including the aerospace industry giants Lockheed Martin and Bombardier.
Today, SimiGon will signal its intention to list on London's junior Alternative Investment Market. It hopes to raise about £10m of new money and, should it manage it, will enjoy a market value of more than £40m. Although its roots lie in the aviation industry, SimiGon is by no means a one-trick pony. It has designed simulation software for those looking to learn how to drive high-performance cars, pilot ships and drive cranes and forklift trucks.
Ami Vizer, the chief executive, got the idea for the business while in the Israeli air force. He found it was taking recruits too long to learn to fly, and developed software to speed up the process.
SimiGon made a profit after tax of £450,000 last year on sales of £2.5m.Reuse content