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Thanks JK
Swoop, you state that it is fact that "if shares are issued then the company still has the cash in the bank. This increases the value of the company to the same extent as the shares dilute it."
This is not true, as the existing (usually retail) shareholders now have a smaller ownership stake in the company than they did prior to the new shares being issued.
Dilution also reduces earnings per share, which has a negative impact on the SP. All dilution means existing shareholders are disadvantaged - unless of course you are the beneficiaries of said dilution, which as dbentley correctly points out, is in the case of DKL not materially affecting the BOD as it's usually them who are being paid in lieu.
The BOD have been made well aware of shareholder disillusionment over this matter for years, yet continue to ignore it. I assume this is why they're not too bothered about the low SP.
Apologies in advance if this is seen as 100% whinging, whining and deramping.
scoobydoo, welcome. The cashew facility is built and operating. It just started production the other week.
There are a couple of parts that they are waiting to arrive from abroad that have been delayed because of covid delays, etc. such as a colour sorter and something else. For now, they have managed to get things going using some local alternative.
They are going to ramp up to 10k tonnes initially. For no extra cost (by going to 24 hours shifts for workers) they will ramp up to 15k. From the profits of the cashew facility (and no more dilution, we have been promised that in several puff pieces!), they will then aim to double capacity to 30k, but I would assume that's at least a year or two away or possibly more. DYOR.
Swoop - i agree i am frustrated about it (from an investor perspective - it doesn't keep me awake at night :) - and i'm not sure what accounting principles has to do with this issue - but happy to agree to disagree.
i hope you do post further, i certainly did not want to offend you - but this is a discussion board and i think its good to share views - if i came across to aggressively in my tone i apologise - i did not intend to.
Db , you clearly have a bee in your bonnet about this issue and cannot see the wood for the trees.
It is obvious that you are not going to understand basic accounting principles so I will try no further .
I am a chartered accountant with over 40 years experience as a director of my own company. I know how to run a business.
Perhaps it's best we agree to disagree and I will go back to not posting again.
Hi - thinking of investing into DKL - can any LTH clarify that the cashewnuts equipment has been fully commissioned and also is it on full capacity? Cheers.
Hi Swoop – I disagree, your logic may look on the face if correct – but it’s wrong.
what would you use the cash for?
It’s a key point here
- Dekel have enough cash to operate the business, pay down debt etc – retaining cash for this purpose by exchanging shares for permanent dilution makes absolutely no sense – if you think otherwise id be really interested in the explanation.
- If the cash is for investment, expansion of business (which I expect in your theory based argument is what you mean) then your logic is wrong – if there is not enough cash to outright pay for expansion or acquisitions – then it is the expansion/acquisition you issue shares for (not to employees to build cash for this purpose!?!) – that is then a sensible dilution – shares in exchange for permanent new revenue and income streams for current shareholders
The real reason this is done is to benefit board members – nothing more.
You will note that the board members aren’t seeing any material dilution on the back of this – the directors still all own collectively 30% of the business - they make absolutely sure their holding remains consistent through a variety of means.
This practice is ripping off us retail investors – with explanations that make sense on the surface that they hope we all fall for.
This particular instance in isolation is of immaterial significance – DKL have a record of this type of behaviour though and we’d do well to hold them to account on it.
Db , I have held shares for years but rarely post. If I want any information , I talk to Lincoln. You should try it as he is very approachable , though won't give you any price sensitive information.
I stand by my point on shares v salary. You seem to have ignored the fact that if shares are issued then the company still has the cash in the bank. This increases the value of the company to the same extent as the shares dilute it . As long as the cash is then used to enhance value faster than would otherwise have been the case then I have no problem with it .
If you say they are not using that cash wisely then that's a different argument.
hi Swoop - apologies but there is a big difference between taking salary as shares or cash - hence the reason most of us do not get that option i expect in our jobs!
Share value compounds year after year i.e the shares Aristide received last year are still in play this year, and next etc - therefore the value Aristide receives in lieu of salary will likely (hopefully) be multiples of what we (the shareholders) would of had to pay for employment in the year - which is a one off expense - yes impacts numbers that year - but only that year, and cost remains broadly the same each year unless is promoted and receives higher pay in exchange for greater value generated.
We should not be accepting ongoing dilution of our holdings (which is now there for good) in exchange for 1 year of Aristides employment - Salary in shares or cash are not the same at all.
Did DKL/LM give an indication of the salary now substituted for shared - my Tesco clubcard has an exchange rate, so what is DKL's 15/GBP or is it 20/Euro?
Evening Lincoln er I mean Swoop. You must be new. Yoiu are entitled to your opinion of course on the shares in lieu but in my view if they want to increase the extraction rate as they claim they could model it on the urine extraction of us shareholders with such actions. It has been raised numerous times by the three wise men at the AGMs to no avail. A complete nonsense for a company that is achieving record production and record profits. I verily would hold the door open for the board at the AGM but I fear I would be issued a share in lieu further diluting my holding.
On the flip side , if the director had taken a salary this would have reduced the profit. Then the PE ratio is applied to a lower profit , giving a lower value to the company.
All in all , I don't think it matters whether he takes shares or money.
Should add a premium to current sp for director purchases/salary sacrifice and at least 6 month wait. Alt., buy on open market. There needs to be some incentive built into such deals.
If the board really do believe that "requests from a director to receive shares in Dekel rather than cash in settlement of remuneration in our [their] view represents an endorsement of the Company and its prospects", then said shares should be bought on the open market and then remunerated to Mr Achy Brou.
It says a lot that I was more interested in reading this particular RNS first, before the production update one.
A superb CPO production update today covering both December and the full year.
December production was up 110% on last year. Sales were up 120%. CPO and PKO prices were at record levels.
Full year CPO pricing was up 44%, and production up 18%. With pricing still at record levels, especially locally, 2022 holds huge potential for this current high season given the two month price lag now extending well into March.
Above all:
"we are confident that the year ahead will see a further material uplift from 2021's strong performance"
Https://uk.advfn.com/stock-market/london/dekel-agri-vision-DKL/share-news/Dekel-Agri-Vision-PLC-Full-Year-Production-Update/86973720