Profit warnings fell by ten per cent compared to a year earlier in 2006, although SMEs struggled more than other types of business, a new report reveals.Accountancy firm Ernst & Young (E&Y) says that contractual problems were the main reason behind SMEs’ comparatively poor performance. In 2004, 67 per cent of companies announcing worse-than-expected annual profits had an annual turnover of under £200 million – this proportion rose to 70 per cent in 2005 and then went up to 75 per cent in 2006.According to E&Y, 342 London Stock Exchange (LSE) firms issued profit warnings last year, compared to 381 in 2005.And it says that a growing number of profit warnings are coming from companies listed on the LSE’s junior partner, the Alternative Investment Market (AIM)."The high incidence of profit warnings from AIM companies, especially in their first year of flotation, has placed increased scrutiny on the junior market," corporate restructuring partner at Ernst & Young, Andrew Wollaston, commented."Its light regulatory burden is one of AIM’s main attractions. But, with AIM becoming increasingly popular, there will be more competition for investment and therefore a greater need for companies to adopt better forecasting and investor relations."© Adfero Ltd