BLACK Country software firm Innovise has announced its intention to cancel its listing on the Alternative Investment Market so it can invest in a growth strategy.
The company, based in Brierley Hill, said a detailed cost-benefit analysis had vindicated the decision and that shareholders would be sent details of the plan shortly.
Although stepping down from AIM, the firm said its intention was to remain a public company.
Investors reacted badly to the news and shares dropping almost 30% at one stage.
Innovise, which also has offices in Slough, Southampton, London and Mumbai, said its original intention in listing on AIM was to support the company’s growth strategy by providing access to capital and enabling it to use shares as consideration for acquisitions.
In arriving at their decision, Vin Murria and Mike Taylor, chairman and chief executive respectively, said they had taken into account a number of factors.
In a stock exchange announcement, the firm said: “The board believes the costs associated with maintaining the AIM listing can be better deployed as additional working capital in the business.
“We estimate that, in the last financial year, the direct and indirect costs of the company’s AIM listing amounted to in excess of £0.1m. This estimate includes listing expenses, legal and adviser fees, but excludes the considerable amount of senior executive time which is also spent dealing with issues related to the listing.”
The company said the current AIM listing of shares failed to offer investors increased liquidity, marketability or scope to trade in significant volumes or with frequency.
“With little trading volume currently, the share price can fluctuate sharply following trades of small numbers of shares. We do not believe the liquidity situation would be materially affected by cancellation,” added the statement.
The firm said the last time it had used shares to fund an acquisition was in 2009 and all subsequent deals had been completed using cash generated internally. In each, the directors said debt finance had been more preferable to equity finance.
Shareholders will be sent details of the plan shortly with the intention of staging a general meeting later this month to vote on the proposal.
The announcement came as the firm issued interims showing its first half performance to March 31, 2011 had improved dramatically on the same period in 2010, with turnover rising more than 25% from £7.9m to £10.1m. Operating profits rose from £574,000 to £626,000.
The period also saw the company expand with the acquisition of the software division of Expolink Europe Ltd and intellectual property assets of Pivetal Ltd.
“We believe our positive results for this interim period demonstrate that Innovise has the strategy, leadership and talented workforce to keep on delivering value for its shareholders and capitalising on the opportunities that exist within its niche markets,” said the results statement.
It added: “Despite the solid first half trading performance of the company’s business as set out in the interim results, the directors do not anticipate an improvement in stockmarket conditions in the short to medium term sufficient for the benefits of the AIM listing to outweigh the associated costs.
“For these reasons, the directors propose that Innovise remains a public company at this time but cancels its AIM admission.”
