This morning, Good Drinks Australia has announced its intention to delist from the Australian Securities Exchange in order to operate as an unlisted public company. The decision has already been approved by the ASX subject to certain conditions being satisfied, including approval by shareholders.
“In pursuing the Delisting strategy, the Board is committed to maintaining strong governance and continuous disclosure obligations as an unlisted public company,” said John Hoedemaker, Managing Director.
“Importantly, we look forward to communicating directly with our shareholders, developing and executing on our strategy without continually revealing our plans to competitors in a listed company environment.”
A key factor behind the decision is the Board's belief that the Company remains significantly undervalued by the market when compared to typical industry metrics such as sales volume, revenue, market share, and brand positioning. Good Drinks Australia compares its core business’ $4 per litre enterprise value to typical industry valuation metrics that typically range from $18 to $20 per litre.
Additionally, the company’s current market capitalisation of approximately $45 million is materially lower than the $61.7 million sum of its net assets.
Hoedemaker said, “Good Drinks' share price performance in recent years has not reflected the inherent value of the business for some time and, as a listed company, remains at the mercy of macro-economic and capital market factors that are unrelated to us, as well as being beyond our control.”
Over the past five years, Good Drinks’ proprietary brand sales volumes have grown to exceed more than 15 million litres annually as a result of a strategy of “deliberately” and “consistently” reinvesting earnings into company growth. If granted approval to delist, Good Drinks Australia will continue this focus on growing market share seeking a target of approximately 18-20 million litres.
"We believe that aggressively pursuing a strategy to grow GDA proprietary brand sales volumes and market share is a more effective way to create value for Good Drinks shareholders,” said Hoedemaker.
“Prioritising this strategic investment in sales and marketing to grow volumes, rather than a focus on bottom-line earnings, is more suited to an unlisted company environment.”
In this morning’s statement to the ASX, Good Drinks Australia outlines a number of anticipated benefits to its planned delisting, including reduced costs and management effort associated with complying with ASX obligations.
Good Drinks Australia will seek shareholder approval at its Annual General Meeting on 28 November. Pending approval, the drinks group is then planning on suspending share trading on 23 December and delisting 30 December.
John Hoedemaker said, "we have enjoyed a positive relationship with the ASX, and success as a listed public company. With a long history of positive operating cashflows and a sustainable underlying business that no longer requires access to equity capital as a listed public company, we feel that the timing is right for Good Drinks to pursue the next phase of its growth in an unlisted public company structure."
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