Leading corporate advisers have thrown their support behind the regulatory
model on AIM, despite the shadow cast over the market by the deepening crisis at
suspended cash shell Langbar International.
Recovery expert David Buchler, who was called in to probe an alleged
multi-million pound fraud at Langbar in 2005, indicated at a shareholder meeting
last week that Langbar could be forced into letting its AIM shares lapse.
The group is searching for its main asset, a £365m deposit in a Brazilian
bank. The scandal has cost private investors thousands of pounds along with
similar incidents at cash shells Boustead and Easier. These events have raised
doubts over the AIM regulatory model.
The AIM regime is far less onerous than the main board at the London Stock
Exchange. On AIM, admission to the market does not need to be pre-vetted by the
LSE, companies do not need to have a trading record, there is no minimum market
capitalisation and regulation is managed by nominated advisers.
The flexibility offered by the lighter regulation is very attractive for
small companies, and was so popular that 519 new companies listed on the
exchange last year and raised £8.9bn in new funds.
The Langbar crisis, however, compromised this performance as questions were
raised over whether AIM’s regulation was attracting companies of the necessary
Philip Secrett, capital markets partner at Grant Thornton, however, said the
individual situation at Langbar should not be extrapolated to the entire market.
‘The Langbar issue must be taken in perspective. Given the vast activity on AIM
last year it is surprising that there were not more incidents,’ he said. ‘What
happened with Langbar was unfortunate, but AIM has a good track record and has
confounded its critics.’
Adam Hart, deputy head of corporate finance at KBC Peel Hunt, agrees that the
Langbar situation should not be allowed to overshadow the success of the AIM
‘The problems at Langbar had nothing to do with the regulation on AIM. What
happened with Langbar was caused by false disclosure, which could have happened
on any market,’ Hart said.
Shareholder activist Nigel Smith, who has led the action groups for
shareholders to Langbar, however, was convinced that what had happened at
Langbar would ‘certainly’ affect confidence in AIM.
‘It has opened a can of worms. The LSE has hyped up the success of AIM, but
needs to be careful that the drive to increase admissions does not turn AIM into
a junk-bond market,’ he said. ‘The LSE needs to take a more active role in
verifying the existence of company assets, especially when it comes to the
numerous cash shells listed on the exchange.’
IFRS force BHP Billiton to reshuffle tax while mining company Lonmin sees
its operating profits climb
Mining conglomerate BHP Billiton has had to reshuffle $323m
(£186m) in taxes as a result of IFRS. The charge relates to the treatment of
royalties and petroleum related taxes. Prior to the introduction of IFRS these
charges were reported as operating costs, but now have to be presented as taxes.
BHP Billiton disclosed the change as it reported interimresults for the
half-year ended 31 December 2005. The group reported a 43% increase in earnings
before interest and tax, which came in at $6.7bn.
The maker of Captain Morganrum and Jose Cuervo, Diageo, has
reduced its pension deficit from £1.3bn to £1.1bn over the lastsix months.
Diageo added that it had reduced its effective tax ratefor the interim period to
14% compared with 28% of the same period in 2004. The group saidthe reduction
was the result of an agreement with fiscal authorities over certain brand
carryingvalues. The group reported an 8% increase in interim profits to £1.2m
for the half-year ended 31 December 2005.
Old Mutual FD Julian Robertshas been nominated to take up
the role of Skandia CEO. With Old Mutual set to complete its takeover of
Skandia, Roberts will take his place on a new board of directors, if chosen, on
22 February. Roberts will end his term as Old MutualFD, and stand down from his
non-exec directorships at Old Mutual subsidiaries. Chief executive Jim Sutcliffe
said Roberts’ experience in bringing businesses together and in change
management made him the ‘ideal candidate’ to take on the role. Old Mutual deputy
FD Richard Hoskins will step in as acting group FD from 1 March.
Platinum mining company Lonmin has seen its 2005 operating
profits climb from $347m (£199.7m) to $350m after restating its accounts under
IFRS. Profits, however,were $4m lower at $201m asthe group was impacted
byadverse fair value adjustments relating to embedded derivatives. The group
emphasised, however, that although profits had comein lower under the new
standards IFRS had no effect on the cash flows strategy.
The Financial Reporting Council has issued guidance regarding the annual reporting of 1,200 large and smaller listed companies. The letter highlighted the key issues and improvements that can be made in the 2016 reporting season
Baldwins Accountancy Group has continued investment in the north-east and appointed David Fish as a director in its corporate finance team
UK M&A activity bounced back strongly in July and August, according to analysis by the deals practice at PwC.
Smith & Williamson has added Jim Clark and Philip Marsden, of Marsden Clark Corporate Finance Limited, to its corporate finance team.