Originally Posted by
RTM
Before I start...I hold both SCL and SEK and am considering buying a few more SEK. Accordingly I reviewed the SEEKA 2014 report yesterday. I was surprised how ignorant I was with respect to SEK. Below are a couple of questions that other investors may be able to help me with....as well as a few little facts I gleened.
1) SCL ($269Mil) is significantly bigger than SEK ($50Mil) Personally I would prefer the bigger company as it probably has more resilience.
2) SCL's owns a substantial portion of its orchards. SEK contracts growers. I like the concept of controlling the chain start to finish, although I am sure SEK has great relationships with its suppliers, many of whom are shareholders. Maybe this lack of landholding accounts for a lot of the difference in Market Cap ?
3)SEK has two major share holders, one Japanese (18%) and Te Awanui Huka Pak (16%). This seems OK. Great to see our local Maori folk with a substantial share holding in a developing NZ company. Nice to see some of that treaty money well invested. And the Japanese holder is linked to marketing the product in Japan...a good fit. Not sure re SCL
4)There is a scheme to incentivise suppliers to stay with SEEKA in the form of issuing shares.
In 2014 this diluted the share total by 4%
5) There is a scheme to incentivise employees.
In 2014 this diluted the share total by nearly 3%
So between 4) and 5) the value of my shares was diluted by ~7%
This doesn't seem great, I am not sure how this would compare with other companies.
My questions are....where do these shares come from ? Are they simply new shares created for this purpose ? On page 25 of the report....item c...there is a note with respect to the Employee Share Scheme...and above that a line in the table:
Held by SEEKA Employee Share Plan Trustees 693,442 (2014 shares) etc.
Does this line mean that the Employee Incentive Shares are already in the overall count...and are therefore not dilutive when issues to the employees ? However...give that they issued 429.6K, they would need to top this up again for the following year ? Can anyone help my understanding on this. As you can probably see...my career was not in finance !
Thanks in advance for any help.
RTM