Laybuy’s ASX delisting: 2022 was a ‘bloody awful year’ says founder

Gary Rohloff, the managing direct of Laybuy. Photo / Jason Oxenham

Laybuy founder and managing director Gary Rohloff says the tipping point for its decision to delist the buy now pay later business from the ASX came after it released a near-record revenue figure in November only to find its share price falling again.

“We reiterated we were on the path to profitability and the share price sunk and I guess that speaks volumes as to what may have assisted our decision.

“It really doesn’t matter what we do or how well we perform or not as the case may be. That means we are constantly pedaling against the continuous disclosure regime - keeping the market informed. Doing our utmost to demonstrate to the market that we are delivering on our promise and nothing happens.”

The company went into a trading halt on Monday indicating that it was seeking to delist and on Wednesday morning confirmed it had approval from the ASX to do so and would now take it to a shareholder vote on February 22.

Rohloff said the Laybuy board had determined that due to continued low trading volumes and the underperformance in the company’s share price, the costs of remaining on the ASX outweighed any future potential benefits.

It was in the best interests of shareholders to voluntarily delist, he told shareholders, but the decision hadn’t been taken lightly.

“The ongoing administrative, compliance and direct costs associated with maintaining our listing on the ASX are significant and delisting allows the company to free up approximately $500,000 to invest in other parts of the business.”

The company will need to get 75 per cent of shareholders to vote in favour to get it over the line. Rohloff who owns 21 per cent of the company along with his wife Robin, said there was a high probability of it being passed.

“I would like to think that shareholders believe that - particularly the majority shareholders that are our family and Pioneer - wouldn’t have even considered this if we didn’t think it was a good idea.

“All our shareholders, and I do say this with a lot of feeling - including us, have been hammered by the share price falling.”

The firm, which has its head office on Auckland’s North Shore, listed on the ASX in September 2020 with an initial public offer price of A$1.41.

But its shares have fallen sharply and were worth just A6 cents on Monday.

Last year it went through a major restructure, shedding a third of its staff in a bid to become profitable.

“We made that hard decision back in July to right-size the business and forge a path to profitability.

“It was horrible to have to go through that. We have popped out the other side of that. We are a lot stronger. We remain on track to deliver what we said we would and in an ironic way we are watching some of the biggest tech companies in the world arriving at similar decisions.

“2022 was a bloody awful year. We are making some decisions that we feel are right for the company and shareholders in 2023 that will take us to a better place.”

If the vote is approved the company could delist from the ASX within a month with the shares set to trade on the public market of New Zealand exchange Catalist instead.

Any regrets?

Rohloff played down any regrets from deciding to list on the ASX.

“I’ve been around long enough to recognise with the benefit of hindsight we are wise, aren’t we? We raised capital on the ASX to fuel our growth in the UK, we were in the middle of a huge bull run in the equity market, we achieved our stated goal of carving out a credible position in the UK market and we are now recognised as number three in that spot.

“And we walked slap bang into arguably the biggest meltdown in recent history on sharemarkets globally as we came off the hyper-fueled economies of the pandemic. While Covid positively influenced our company during the lockdown period. We had our Covid moment and we came out of it - as did a lot of tech companies.”

Rohloff said he was super positive about where the company was now headed and it remained on track to make a profit in March.

“It’s an exciting future and we are just going to grab it with both hands.”

Right call?

Oliver Mander, chief executive of the NZ Shareholders Association, said he believed it was a good decision for Laybuy to delist from the ASX.

“The important thing here is that investors who have publicly invested in Laybuy will still be able to trade their shares through what is a recognised and licensed exchange - Catalist.”

Mander said investors would still be subject to protections around disclosure and would still be subject to FMA rules.

“Certainly right-sizing the business in terms of the listing and giving access to their shareholders. In a very gross generalisation I think a lot of New Zealand companies look to the ASX as nirvana when actually it’s not.”

He said there was good funding and retail support from investors here in New Zealand who were more willing to invest in early-stage companies and there was quite a lot of retail cash available for good investments.

“You’ve got a situation in Australia where you are really at the mercy of institutions and particularly the investment banks. And that does create risks for issuers in its own rights.” And then there was the cost of being ASX-listed.

He said as the country headed into a tougher economic situation others may also look at the cost of listing fees and make decisions around their business.

“It’s an appropriate move given Laybuy’s situation and given the strategic choices they have got.

However, he said Laybuy would have been a very difficult investment for its shareholders.

“A growth plan and big promises and it’s been subject to the same pressures facing the buy now pay later sector globally. And those pressures are not kind to any of those participants. It still has a long road to go in terms of long-term commercialisation of it.”