AIM’s Love Affair Is Over

Adrian J Cotterill, Editor-in-Chief

Imagesound is steadily moving through the regulatory process of de-listing from the UK’s Alternative Investment Market (AIM).

It’s latest announcement is about its AGM which will be held up in Sheffield at its UK head office next Wednesday 14th May.

Whilst the RNS below, reproduced in its entirety, is rather long it’s required reading for anyone with an involvement or interest in UK AIM digital out of home industry sector companies!

AIM’s love affair with them (if there ever was one) is well and truly over!!

Whilst we don’t necessarily agree with Imagesound’s decision to be on AIM then not be on AIM, what Derek Mapp, their Chairman writes below (and has been quoted as saying similarly in last few months) makes a lot of sense.

RNS Number:2199S
Imagesound PLC
14 April 2008

Imagesound plc (the “Company”)

Notice of AGM and proposed cancellation of admission to AIM

Imagesound plc (AIM: ISD.L), the UK’s leading listed supplier of in-store music, radio and TV services to the branded retail and leisure sectors, will shortly post a circular to shareholders setting out the notice of the Annual General Meeting to be held on Wednesday 14 May 2008 at 11:00 a.m. at Venture Way, Dunston Technology Park, Chesterfield, Derbyshire S41 8NE.

Amongst the resolutions that make up the normal business of the Annual General Meeting, the Notice includes a resolution for shareholders to approve the cancellation of the admission of the Company’s Ordinary Shares to trading on AIM (the “Resolution”).

Background to the proposed cancellation of admission to trading on AIM

Having carefully considered the matter for some time and having consulted with the Company’s major shareholders, the Board has concluded that it is no longer appropriate for the Company’s Ordinary Shares to continue to be admitted to trading on AIM. The principal reasons for seeking a cancellation of the admission are set out below:

One of the primary reasons for the Company’s admission to AIM in August 2004 was its intention to use the equity markets to finance acquisitions. However, further fundraising has not been feasible due to the weakened valuation of the Ordinary Shares and consequently, the Company’s acquisitions over the last 2 years have been funded by bank debt as opposed to equity finance.

Since the Company’s initial flotation on AIM, the share price of the Ordinary Shares has been erratic and has not, in the Board’s opinion, reflected the performance or prospects of the Company. Despite improvements in the Company’s trading performance over the last 2 years, the Company’s share price on AIM has continued to fall. By way of example, the Company’s share price was 20.25p on 23 January 2007 compared to 7.00p on 10 April 2008, a decline of 65% during a period in which the Company improved its trading performance and delivered results in line with expectations. At the current share price the Company is valued at just £4.4 million and trades on a historic adjusted price earnings ratio of just 3.9 times. In addition, there is very little liquidity in the Company’s shares and, despite being admitted to trading on AIM, Shareholders cannot easily buy or sell Ordinary Shares in the Company in any event.

The Board also believes that the ongoing high costs and regulatory requirements of maintaining a quotation on AIM can no longer be justified in relation to the Company. The Board anticipates that the Company will make annual savings in excess of £150,000 as a result of the cancellation of its admission to trading on AIM. The Board believes that these funds can be better deployed for
shareholders by continued investment in the growth of the business.

Finally, a disproportionate amount of senior management time is spent on meeting AIM requirements such as investor relations and disclosure requirements.

Following cancellation of the admission to trading on AIM, senior management can focus on the continued growth and development of the business and on making the Company more profitable.

Whilst the Board believes that the proposed cancellation is in the Shareholders’ interest, it recognises that cancelling admission to trading on AIM will make it more difficult for Shareholders to sell or buy Ordinary Shares should they so wish. Accordingly, the Board intends to appoint a market maker as soon as is practicable from the date of delisting. This will be a matched bargain facility (the “Facility”) under which the market maker will offer a price valuation to any Shareholders wishing to buy or sell shares in the Company, and will maintain a list of any prospective buyers or sellers. The Facility will be available throughout the year in normal business hours. The Board intends the market maker to match buyer and seller at an agreed price and at appropriate commission rates for both buyer and seller. Details of this service will be posted on the
Company’s website as soon as is practicable following cancellation of admission should the proposed Resolution be passed.

The Board also intends that following the cancellation of admission to trading on AIM, the Company will remain as a public limited company and will continue to comply with all accounting and regulatory requirements expected of a company of this status and the Board will continue to update Shareholders as appropriate but at least annually on the Company’s progress and trading performance.

Subject to changes in legislation, there is no requirement to alter or amend the Company’s current memorandum and articles of association in order to realise cancellation of admission to trading on AIM.

The Resolution to cancel admission to trading on AIM requires the approval of 75 per cent. of those present and entitled to vote at the meeting or voting by proxy. If approved, it is anticipated that trading in the Ordinary Shares on AIM will cease at close of business on 22 May 2008, with cancellation on AIM taking effect at 8.00 a.m. on 23 May 2008.


The Board consider that the proposal to cancel the Company’s shares from admission to AIM is in the best interests of the Company and its Shareholders as a whole and unanimously recommend Shareholders to vote in favour of the Resolution to be proposed at the Annual General Meeting, as they intend to do in respect of their beneficial holdings, amounting in aggregate to 17,193,683
Ordinary Shares, representing approximately 27.2 per cent. of the Company’s issued Ordinary Shares.

Derek Mapp, Chairman of Imagesound said:

“After much internal debate and discussions with our major shareholders, the Board has concluded that admission to AIM is no longer serving the best interests of the Company or its Shareholders. Without being able to use our equity to help grow the Company by acquisition, AIM simply adds additional cost and administrative burdens on the business and diverts funds that can be better
deployed elsewhere.

“We see this as a positive move for the Company and it demonstrates the Board’s confidence in the business and its future. We hope that those shareholders who wish to will remain involved in the business will do so, and thank those that do not wish to for their support thus far. Our trading remains in line with our expectations and we are continuing to explore opportunities to further expand the business, particularly in Europe and the Middle East.”

Copies of the Notice of Annual General Meeting are available on the Company’s website at

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