Dixon Advisory’s parent company, E&P Financial Group, will voluntarily delist, claiming its share price does not reflect its actual value, with the Financial Advice Association Australia (FAAA) noting the move would not stop the company from having to give evidence at the public inquiry into Dixon Advisory’s collapse.
E&P announced the plans to delist on or around 12 December this year as part of a statement released to the Australian Securities Exchange (ASX), with the move dependent on the outcome of an extraordinary general meeting of shareholders due to be held on 24 October.
In the statement, E&P’s board of directors gave a number of reasons for the decision, including that its trading price does not reflect the company’s underlying value.
“The board considers that the trading price of the company’s shares in recent years implies a valuation that has been (and remains) consistently and materially below the board and management’s view of the company’s fundamental value and significantly below the company’s peers,” E&P said.
The statement added limited trading volumes and liquidity in E&P shares was an additional reason for seeking the move into private ownership.
“Despite the company’s listing on ASX in 2018, the company’s shareholder base remains concentrated and trading in shares has been relatively illiquid, limiting the company’s ability to meaningfully broaden its institutional ownership. It has also been relatively difficult for existing investors to access liquidity through the sale of shares, without the risk of a disproportionate impact on the share price,” it said.
While making no specific mention of Dixon Advisory’s collapse as a driver for delisting, E&P noted it was a central issue in the recently announced Parliamentary Joint Committee inquiry into the establishment of the Compensation Scheme of Last Resort (CSLR) and claimed it has no further information as to its involvement in the probe.
“The motion [in the Senate to call an inquiry] is relevant to E&P as it references E&P subsidiary Dixon Advisory & Superannuation Services Pty Limited (subject to deed of company arrangement) as an example,” it said.
“The company has no further detail on the proposed inquiry and is unaware of the extent to which it may or may not be involved in the inquiry.”
FAAA policy, advocacy and standards general manager Phil Anderson said the ownership of E&P would not reduce its scrutiny at the inquiry as the terms of reference went beyond the CSLR and considered the impact on it from Dixon Advisory’s collapse.
“I don’t think they will avoid scrutiny. There may be less scrutiny going forward if they’re not required to report to the ASX, but in terms of this parliamentary inquiry, it doesn’t matter if they’re listed or not,” Anderson said during a FAAA webinar with members today.
“The Senate economics committee will, as a result of these terms of reference, be having a very close look at the action of Dixon Advisory and therefore their parent company, E&P Financial Group.”
