Member Info for Pianista

ATPM - ok, all we can say then, at this point, is that if forced out of AIM, the fault lies somewhere between DX and GT.

If the relationship between LD and GT was indeed strained, maybe as I've said before they were looking for any excuse to resign. However, we have had from GT some very strong accusations. What we still lack is a strong and clear rebuttal from DX, e.g. “We strongly dispute GT’s version of events because of X,Y and Z, and have referred the matter to the ICAEW”. In this event, AIM would in the meantime have to give a stay of execution.

ATPM - so if we crash out of AIM, basically GT are the ones to sue!

However, in the RNS on 4/2, DX said: “the Board intends to provide further commentary to shareholders on the Reasons [for GT’s resignation] and to provide an update on the progress made with the Inquiry. Further updates will be made in due course”. And all we’ve had since then is two months’ silence, which does not rank as a strong defence, does it? And does nothing for investors’ nerves.

But if they do have a strong defence, as you seem to think - and I certainly hope - they do, they should have no problem signing up an auditor and meeting the 30/6 deadline, so why not do that?

By the way, if management are so against the disciplines of listing, why wasn’t the company set up as an unlisted company from the day they came in 5 years ago?

ATPM - so you are talking about a forced delist.

In other words, caused by gross mismanagement (subject to learning more about the governance issue).

In that case I hope the directors have plenty of Directors and Officers Liability Insurance!

ATPM - what makes you think shareholders would vote for delisting?

I've complained before to the FCA (in relation to other companies) about this sort of cavalier treatment of PIs. There ought to be at least a transcript put up on the website.

As you say, we need news on acquisitions.

Provided the price is right – 30p would suit - I’d be happy with an MBO as well. But I imagine management are looking to take money out at this stage, not put more money in.

So I can’t see it happening, except as part of some elaborate scheme to extricate themselves from something that is more serious than previously admitted. This would explain the apparent difficulty in finding an auditor - who obviously won’t sign up till satisfied that the governance issue has been resolved - but they can’t give up on that quest, because listed/unlisted, public/private - they still need an audit sooner or later.

Until audited accounts are filed, the company is an unknown quantity and in limbo, and in addition the directors themselves at some point will face the ultimate embarrassment of disqualification.

As an aside, I’ve discovered that when the HR director left, she was just a couple of months away from becoming entitled to cash in c£250k worth of share options. The plot thickens…

PIs aren't invited, are they?

Yup, SAAS and TRAK need each other more than ever!

"The company is expanding rapidly" it says. But too late to impact the year just gone? We'll soon find out.

The Covid three-month extension is history now. So the accounts deadline is 30 June 2022, full stop.

It needs to be all hands to the pump, with all leave cancelled, in order to meet this deadline, even if it means delaying the opening of another depot.

At the very least, it would be nice to know if an auditor has been /is about to be signed up.

The problem is, we not only need an auditor who’s prepared to take it on, but one with the resources to do it in double quick time. (I don’t know average hourly charge-out rates for this type/size of audit, but it’s a c£250k fee, which I would guess implies a team of say a dozen staff working flat out for a couple of months max.) If so, meeting the accounts deadline is obviously still feasible.

My guess is that they do not want to announce the appointment of an auditor without at the same time being able to give some kind of assurance about meeting the accounts deadline.

unhooked – thanks for your responses on this, as you say, important question.

You are correct in saying no money would be paid out to shareholders on delisting. I can’t see the company offering to buy back PIs’ shares either – though we’d all jump at 30p! - but it would be the height of embarrassment (and worse) for the BOD if DX were forced out of AIM, and my overall take is that it won’t happen. However, due to the prolonged radio silence, our thoughts will naturally turn to the worst that could possibly happen, which is the nuclear option of a compulsory delist.

However, although there are plenty of examples of companies which have voluntarily delisted, I know of no companies which have suffered the ignominy of a compulsory delist (obviously apart from companies which have gone bust, which doesn’t apply here). Maybe it’s never happened, though I stand to be corrected on that.

So it would be a rare if not unique event, and my impression is that Gatemore, who’ve already sold down from 35% to around 20%, want out in the short to medium term, so they’ll be moving heaven and earth to avoid it. I think we are fortunate they’re on the Board, safeguarding their and at the same time our interests.

The reason we are not hearing anything from the BOD ought to be that they are working flat out to resolve everything - including the no doubt difficult task of quickly finding new NEDs to replace the two who appear to have taken the rap - but that remains to be seen.

Regarding the extension of the accounts deadline, I think that delisting is such an extreme sanction, that AIM will grant the extension, unless there are further skeletons in the cupboard yet to come out. AIM themselves could end up in hot water, with claims from shareholders etc, if they are too quick to delist.

LSE chopped off the last sentence of my previous post, which should end: "but we still have no idea what the latest is on that either..."

unhooked - basically, depending how you hold your shares, a delist would mean difficulty selling them. Your best chance of realising your investment would probably be a takeover of DX.

However, shareholders are most unlikely vote for a voluntary delist: certainly I wouldn’t expect the largest shareholder Gatemore, who’ve played down the audit issue, to support a delist. So it can only be a compulsory delist, which will only come to pass if the BOD don’t pull their finger out, and get audited accounts out by the (extended?) deadline.

But a compulsory delist would have all sorts of unpleasant, and sometimes unintended, consequences - and not just regarding the difficulty in selling shares - and I'd expect some strong lobbying of the BOD from IIs and PIs alike to avoid it at all costs.

For a start, when you invest in a listed company, you don’t expect it to be run in such a, dare I say it, negligent way as to lose its listing, and depending on the full facts surrounding the “disciplinary issue”, a compulsory delist would lay the BOD open to legal action by shareholders disadvantaged by it (eg because their shares will have to be removed from any ISA, or a property purchase relying on the proceeds of sale of shares cannot complete, etc). And it’d be a relatively clear-cut case against the BOD if they don’t come up with a credible defence to GT’s allegations.

A delist would also be demotivating for many shareholder-employees if they are unable to cash in their shares.

It would also mess up DX’s employee share schemes, which rely on the existence of a quoted SP to objectively measure performance, and from which the BOD have most to gain, or lose.

So a delist is definitely not a desired outcome at this time for almost anyone involved, despite the possible attractions, in terms of reduced compliance, to the management of DX becoming effectively a “private” company. Certainly, a “planned” compulsory delist would be an irresponsible and abusive way of getting round any lack of shareholder interest in a voluntary delist. If I were a director, I’d feel very exposed if I were part of such a maneouvre. And I’m sure the NOMAD - who thankfully hasn’t seen fit to resign despite no doubt being privy to the audit issue - will be strongly advising against it. Certainly, looking at the latest cheery RNS on 14/3 – which will have been approved by the NOMAD - it looks (deceptively?) like “business as usual”.

But the most pressing issue right now, is that in order to avoid a delist, they will almost certainly need an extension to the accounts deadline. I would therefore have expected the company or the NOMAD to have sounded out AIM on this by now, assuming a replacement auditor has now been found. Perhaps the company is waiting for a formal response from AIM before updating us? Of course, it must also be assumed that the disciplinary issue is now history, ie is no longer an audit issue, but we still have no idea what the latest is on t

"perhaps something is going on - although, if history is to go by, nothing is going on".

Yup, sums it up beautifully!

Under AIM rules, which still apply to DX even though the shares are suspended, I think interim results, which need not be audited, are due by Sunday 3 April - which effectively means tomorrow or Friday (April Fools’ Day).

If they are duly RNS’d, I think the time has also come to put shareholders out of their misery by issuing an update covering the following:

a) appointment of auditor
b) appointment of audit committee
c) intention to file audited accounts by the end of June
d) alternatively, whether an extension to the deadline has/will be applied for
e) failing c) and d), what in general terms are the BOD's plans for the company?

So let's see what, if anything, happens...

The obvious suitor, SAAS, is already aware of Trak's existence, of course, and it must be feeling slightly embarrassed at not having delivered, approaching a year out from its flotation, on its promise of growth through acquisition, hence SAAS's languishing SP (which has at least given me the opportunity to dip my toe in there too!).

So I think a merger of SAAS and Trak is something they could both desperately do with - me too, now that I have double the interest in it happening! - though SAAS would obviously prefer to strike a deal, if using its paper, once its SP has recovered somewhat.

I agree FJ. The information given was only mildly interesting: it didn't throw any light at all on the burning question, namely will an audit be done by end of June? So it wouldn’t affect the SP, whether or not suspended.

Obviously, one should always treat with caution any uncorroborated information on an anonymous board like this - and there’s always the filter option.

ATPM - looks like it was someone on the Operating Board then.

Although we haven’t heard from the company, we did hear from Gatemore, when they gave reassurance that the audit problem was effectively a minor issue which does not affect the value of the business. I wonder if that was for the benefit of the other shareholders, including PIs, or for a potential purchaser of the business?

Delisting, perhaps followed by a premature sale of the business in order that shareholders, including employees, can get their money out, may be the only real option if they fail to find an auditor. However, I don’t think we’ve reached that point yet. It is worth noting that a similar audit problem occurred at EG Group, where Deloitte resigned as auditor due to concerns over “governance and internal controls”, whilst the company claimed “there have been no disagreements on any auditing or accounting matters”. But miraculously this didn’t stop KPMG being appointed as auditor in short order. (One wonders what the company did to address its shortcomings which it could not have done before, in order to avoid Deloitte having to resign in the first place). Anyway, KPMG went on to issue a clean audit report...

ATPM - I find that surprising - my understanding was that the problem arose at a lower level, i.e. below director level.