Small Talk: Tangled path ahead for Aim

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The Independent Online

Green shoots, V-shaped recoveries and the return to mega-bonuses in the City. All, apparently, reasons to be cheerful indeed.

That was a few months ago. Now the problem appears to be that we confused the vegetation with weeds, and most engaged in the alphabet soup of predictions on the economy have now moved down to a W-shape. Rest assured, though, the bankers are still likely to receive great big payments this year.

Any hints that the alternative investment market (Aim) may be in line for an imminent improvement are set to bring an unpleasant shock. Accountancy group PricewaterhouseCoopers, in its quarterly look at the IPO market in Europe last week, said that while Aim could take heart from its enviable record "in an otherwise moribund market", after two out of three new listings took place there, the prognosis for London's junior market is not encouraging: the number of groups listed on Aim will continue to fall, says David Snell, the Aim market leader at PwC.

"With such a large number of small-cap companies, we can expect to see a continued drift down in the numbers on Aim. This will be due to many of these companies actively seeking to de-list, some being taken out through acquisition and others simply not surviving the economic recession. At the other end of the market, companies will be considering whether it is time to make a move to the main market," he says.

PwC point out that at the end of May, there were 13 per cent fewer companies than at the same point in 2008. In the first five months of this year, 121 companies left the market, either through takeovers or going private. The London Stock Exchange has so far been adamant that it will not change the structure or rules of Aim, insisting that the market is the best mechanism for creating value in small-cap companies.

Animal lovers prove resilient

Not every company has had it so tough in the last few months. While retailers, banks and – of course – media companies have struggled in the downturn, anything to do with pets has thrived. Indeed, the last thing we seem to be prepared to cut back on is spending on our pets.

Lucky for Animalcare, the Aim- listed group that supplies veterinary drugs, from treatments for farm animals to rabies tests. The company said in a trading statement last week that it has seen a positive trading environment across all activities whilst successfully continuing to implement its stated strategy. "Strong growth in revenue and profits has been achieved," it declares.

The group's shares have had a good run in recent weeks, and have risen by a third in the last quarter. The stock already trades in line with its peers, according to analysts at broker Brewin Dolphin, but deserves to trade at a premium. Investors might have to wait until October, when the group issues its full-year figures, to see if the share price reaches yet headier heights.

CustomVis shareholders opt to hold a steady course

Last week's Small Talk included a curtain raiser on the extraordinary general meeting at Aim-listed laser technology group CustomVis.

A requisition group, headed by the group's former managing director Simon Gordon, had claimed the company was growing too slowly and in the wrong direction. More to the point, Mr Gordon and his backers – two other former directors – claimed they had the support of enough shareholders to oust chief executive Paul van Saarloos, and said that those already on the register were not prepared to hand over more cash until Mr van Saarloos had gone and the dissidents were in.

Well, apparently not. Mr Gordon's challenge turned out to be little more than a flash in the pan. His resolutions calling on the board to go garnered, on average, less than 25 per cent of support. Without meaning to say "we told you so", we did last week point to CustomVis's rising share price, new contracts in France and Egypt and a strong trading update as reasons why Mr van Saarloos might just hold on.

Support from the group's biggest shareholder, Bob Morton, who holds a 22.2 per cent stake, clearly helped.