Shares in Scottish AIM listed companies rose by 10.14 per cent in first quarter

Shares in Scottish companies listed on the Alternative Investment Market (AIM) rose by 10.14 per cent during the first quarter of 2016, according to analysis by accountants and business advisers BDO.

There were 24 Scottish AIM listed companies in the first quarter (Interbulk merged with Dutch company Den Hartogh Holdings and left the market in March) with a combined market cap of £1661.39m at the end of the first quarter compared with a combined market cap of £1508.35m at the end of Q4 2015.

This increase has occurred at a time when comparable UK markets have been static or have fallen during the same period. For example the FTSE AIM UK 50 dropped 4.5 per cent; the FTSE AIM all share fell 3.79 per cent; and the FTSE AIM UK 100 was down 2.57 per cent.

The Scottish figures were driven by the dramatic increase in market cap of three companies during the first quarter, which more than offset an erosion of value in 14 of Scotland’s AIM listed businesses.

The largest increase was achieved by Smart Metering Systems which saw its market cap rise by £65.39m to £349.31m in Q1 on the back of a near 60% rise in pre-tax profits and a 27% jump in revenue.

Castle Street Investments (formerly Cupid and soon to be renamed CORETX Holdings) saw its value increase by £51.44m to £74.93m following a placing and the completion of two acquisitions, whilst Faroe Petroleum’s market cap rose by £32.71m to £177.56m due to the a reduction in pre-tax losses and the potential development value of some of its oil and gas licenses.

The biggest faller was Goals Soccer Centres which saw a drop of £40.65m which was 42.81 per cent lower than its Q4 market cap of £94.95m and was due to the firm reporting its first pre-tax loss in 12 years. The next highest faller was Craneware which saw a £12.73m drop in market cap equivalent to 5.95 per cent in the first quarter.

Craig Martin, corporate finance director with BDO, said: “Given the volatility of all listed markets at the start of this year it is an extraordinarily good performance that Scotland’s AIM listed companies should have come out of this period showing growth of over 10 per cent in their market caps. Whilst performance within the Scottish AIM companies has been mixed, the overall trend has been bolstered by positive results from three of our larger businesses and this has resulted in Scotland bucking the wider downward trend in market cap across other AIM listed companies.”

“Indeed, Smart Metering Systems is now in the top 50 largest AIM listed companies in the UK with both Iomart and Craneware not far behind. A further six companies have a market cap in excess of £50m with Faroe at £177m.”

Mr Martin continued: “Clearly oil and gas is a sector which continues to face difficult and uncertain operating conditions but although there have been signs that the oil price may have bottomed out somewhat, it appears that there is still a bumpy road ahead.”

“The number of Scottish AIM listed companies remains quite low and it is a source of funding that more businesses should consider as the markets pick up. For the right businesses it is a valuable and viable market and should be considered a potential option for ambitious owners of businesses pursuing growth strategies.”

Mr Martin concluded: “I think that a more balanced mix of listed businesses in Scotland would be helpful. The historical concentration in energy does not reflect the current makeup of businesses in Scotland. External equity markets, whether listed capital or private equity, remain highly liquid at the moment and raising equity can support high quality companies in achieving rapid growth and allow them to become the big future employers and investors in our economy.”