Small talk: Lighter regulation on main market creates uncertainty for Aim

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The Independent Online

To coin a phrase now used by just about the boss of every company, large or small, in recent months as the economy has emerged from the recession, we are "cautiously optimistic" about the prospects for Aim for the rest of the year.

The phrase itself is useful for business people – it justifies decisions such as increases in executive pay, but also provides a get-out-of-jail-free card in case everything goes wrong later on. So in the same vein, we are cautiously optimistic about Aim.

According to research issued last week by PricewaterhouseCoopers (PwC), a total of €199m (£175m) was raised through IPOs on Aim in the first quarter, a much better total than has been raised in the past two years.

A closer look at the figures, however, shows that the total is a little misleading: €116m (£102m) of it was raised by just one company, the investment firm Sherborne Investors, which came to Aim in early March. The next biggest, and the largest "proper" company, is EMIS Group, a technology outfit that received €55m (£48m). In total, just eight new firms joined the exchange between the start of January and the end of March.

And there is potentially bad news for the exchange in the shape of the so-called "standard listing" on the London main list. The attractiveness of Aim has always been that companies could get a public listing without fulfilling the sometimes stringent requirements of the main board, such as corporate-governance requirements. The downside was that companies could never say they were on the main board.

Now they can have their cake and eat it. Changes to the rules on 6 April allow groups to list on the main exchange, but avoid a number of corporate-governance rules and, perhaps crucially, boards will not have to ask shareholders for permission for bolt-on acquisitions. The downside is that companies will not actually appear on a list of groups on the main list, and therefore will not benefit from tracker funds.

"Looking forward, the new standard listing on the main market may reduce the volume of companies listing on the Aim market, but this remains to be seen," said Simon O'Brien, the Aim leader at PwC. "Companies could be attracted by the standard listing, with its reduced regulation in addition to some of the perceived advantages of being on the main market, so we may well see companies go for a standard listing in the coming months that would previously have floated on Aim."

Time is money for not-so-small businesses

On the whole, the recent Budget was considered pretty good for small businesses.

The increases in National Insurance contributions aside, small firms had reason to celebrate, with the one-off cut in business rates, a newly created credit adjudicator for appealing decisions by the banks not to lend, and an extension of the Time to Pay scheme, which allows SMEs to delay corporation tax payments.

The problem with the Time to Pay scheme is that if a business is looking for credit of £1m or more, it has to pay for an Independent Business Review, which even by HMRC's own figures, could cost businesses as much as £75,000. "This is a significant change in procedure announced by HMRC that will have a big impact on the success rate of large Time to Pay applications," said Philip White, the chief executive of Syscap, an IT financial adviser.

"The reasoning behind implementing this can be dressed up by HMRC however they like, but the bottom line is that this will result in a significant scaling down of the Time to Pay scheme."

A spokesman for HRMC said the comments were old hat and will concern only "300 to 400" firms, out of 200,000 that qualify for the Time to Pay scheme. The average cost of an Independent Business Review is £42,500, says the HMRC.

Predators round on wounded Locums

If there was any doubt that the financial markets follow the law of the jungle, look no further than Healthcare Locums, the Alternative Investment Market (Aim)-listed supplier of temporary medical staff. Last week the group, which has had a fantastic run of form in recent years, and which is run by the ebullient Kate Bleasdale, right, disappointed the market when it changed its accounting procedures.

The group insists that the market reaction was overdone as the shares fell to around 166p after touching the heights of 287p in January. And as the share price fell, so the group started to resemble a wounded zebra on an African plain. On Friday last week, the inevitable happened and the company confirmed that it had received an approach from someone sniffing a bargain.

Healthcare Locums, sensing that it will have a fight to get a good price should shareholders back a takeover, was eager to stress that income will not be affected by accounting change. Arguing that its push into overseas markets, particularly the US and the Middle East, meant that revenues could take longer to hit the bank account, the group decided to count income when the recruit started working, rather than when they signed to the agency. Sensible, you might think, but not according to the markets.

Any buyer is likely to have a fight on their hands to wrest control of the company away from Ms Bleasdale. As the second biggest individual shareholder with a 9.6 per cent stake, the founder and the company's executive vice-chairman, Ms Bleasdale, will be a formidable opponent to anyone trying to get Healthcare Locums on the cheap.

The former NHS nurse has won a number of awards for her work. The consolation for being bought out will surely be that Ms Bleasdale will not have to deal with the post-election health service, and a pretty nice pay day.

a.dawber@independent.co.uk

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