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Millwall Holdings Plc (LSE:MWH) announced on Thursday it plans to delist from the AIM, citing four reasons for the decision.
Reasons to Leave AIM
The directors’ collective opinion is that the trading price of the shares doesn’t reflect the true value of the business. They believe that given the current market conditions for small companies, it is, and will continue to be, too difficult to attract equity investment through its stock exchange listing.
Furthermore, the directors claim that the AIM listing of the shares does not offer investors the opportunity to trade in large volumes, making the stock susceptible to large price swings following trades of a relatively small number of shares.
The final reason for leaving the exchange is their estimated cost of £100,000 annually to remain listed on the AIM, a figure comprised predominantly of listing expenses, and advisory, legal, and audit fees.
The board has recognised the negative effects of this move, outlining them in their news release. The proposed action would make the purchase or sale of Millwall stock much more difficult; the concerned party would have to buy or sell through a third party trading facility set up by the company. There would be no quoted price for the stock, nor would Millwall Holdings have to adhere to the regulatory commands of the AIM relating to annual accounts, half-yearly reporting, or the release of price-sensitive information. The proposed move requires voting approval by shareholders, which will take place at an EGM scheduled 1 December, 2011.
£600,000 Operating Loss
This announcement comes on the same day as their earnings release for the year ended 30 June, 2011. Millwall announced an annual operating loss of £0.6 million, which is a reduction in losses of £2.8 million from the previous year. Revenues have increased because of the club’s inclusion in the Football League Championship, allowing for a stronger advertising deals, club sponsorship, and retail sales. The club benefited from £4.7 million in TV sponsorship rights and an increase in player sales to £1.7 million. With these rising incomes also came rising costs, with staff costs at £8.4 million and other expenses at £4.9 million.
Millwall shares were down 37% by late afternoon Thursday in response to the two news releases.
References
↑ Millwall Earnings Announcement
