The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Think there is a few of us looking at that type of loss Fenlli.
what really winds me up, and hence why i never let it drop - the loss we have experienced is a straight transfer from us to the board - you can actually work it out by looking at the 3rd party transactions, the shares created on the back of them and who has benefitted
its a straight transfer from long term holders
the perverse thing is that anyone that has bought in from 3-4 years ago has suffered losses from board self interest - increasing to a maximum loss for those of us that invested 10+ years ago - the board has treated us with utter disdain.
This share can definitely still turn round - but unfortunately its a long road back.
the market and opportunity is there but there's zero trust or credibility - and as the saying goes - It takes years to build up trust in any relationship and only seconds to destroy it, but forever to repair it.
this is what DKL simply must focus on now - slow but sure delivery in the interest of all shareholders
gradually then investors will come back - however i think we can all fully understand why you'd go nowhere near DKL at moment regardless of how positive any updates are - and that is the problem!
it will be slowly slowly for a good while yet - and the moment DKL falter or show any hint of yet further board self interest it will be rapidly down again.
Hi Rugs
yes its a real shame, especially given the genuine opportunity, and promise, to establish a sustainable, credible profitable company generating annuity type returns - its become a real let down - and much of it totally self inflicted by the board.
considering the primary function of any listed corporate board is to maximise shareholder return, by any measure they have been absolutely dreadful - they should all be sacked really - but unfortunately its never how these things work.
Fair enough - i understand your logic and agree re share placings for indebted companies.
yes i am frustrated, and much of it because i think the primary dilutions are due to related party transactions i.e. DKL issuing shares to the board, as part of their involvement in pearlside for the purchase of the palm oil and cashews businesses - not due to placements like the one at 5p you refer to (that type of issue i actually have no problem with - the payment to a director in shares is simply ridiculous but ill accept not hugely significant, its a larger indicator though of DKL priorities i.e the board)
i feel the related party transactions were not good value - they were simply a means to transfer value/ownership from retail s/hs to the board.
It seems to me we acquired very little in those transactions other than an idea - that DKL then needed to take loans out to actually complete and make reality (so a double hit of additional loans and share issues)
to be quite honest those transactions reek - thats my view and we have all suffered because of it - certainly long term holders and i don't think any of us would like it to repeat or we all (new holders included) will never make a return.
that's the reason i won't let it drop until i'm sure its not happening again.
Well we would have to agree to disagree then HarChris - the dilution over 10 years is exactly why the SP is where it is - shares in issue up 5 fold, market cap up 50% - long term holders down 70%+
If its not this - can you please explain your theory on why the share price is where it is? is there anyone here that doesn't think over the next year or 2 that the cashew operation will improve, cash flow will get better, revenues and profits will increase? - so to say the share price is down based on delays to the cashew operation i would question! if it was just this people would be mad not to buy in on the back of latest positive monthly updates and negative share price movements! - so to Danny's point why aren't they!
4% over 21 months i think is excessive - and what was this dilution for? what value add activity have we seen for an additional 20m shares - if share incentive schemes actually work what has happened at DKL? if these are incentivising the directors all we can assume if they aren't competent enough to act on the incentive as performance is woeful.
and its interesting you pick 21 months - what dilution did we see just before that on the back of the 'cashew acquisition'
the major dilutions have been on the back of 'related party transactions' and i expect if you then add up all of the further nonsense dilutions e.g payment for services, salaries for directors, share incentive schemes i expect they alone would be a further 15% + dilution
If the company continues to operate as it does then none of us make a return.
lets put is this way - if every 21 months we see a 4% reduction - in 5 years there will be 12% reduction from now, over 600m shares (going from a 5 fold increase in shares in issue to 6 fold from 10 years ago) - small percentages on what is now very big numbers add up.
Yes to claim we are de-ramping is totally counter intuitive.
If it wasn't constantly called out it would continue (as indeed it has continued to date) and none of us would see any return - old or new shareholders.
Dekel should and can be successful (don't forget DKL Market Cap is up 50% over the past 10 years - yes ok its not stellar all - but it is up) - it's only retail S/Hs who are down, and down significantly - by calling this out and trying to get change - we are actually doing the best we can for the stock price for retail s/hs
if we can influence the board and make it known we see the self interest and what has happened over the past 10 years - and help ensure that they cannot profit from this ongoing behaviour - perhaps we can influence change and we can collectively be successful.
ignore it and allow it to continue - and we will all continue suffer - the board would happily just keep funnelling the reward to themselves - and if we all kept ramping based on improved production, revenue etc we'd just be helping them
Thanks Stacegibbs,
some interesting comments there and i sense some of the feedback is starting to register.
the comment 3rd party transactions and them not liking them, only done because Ghana fell through, is nonsense - the purchase of 100% of the palm oil operation was also done in similar fashion to cashews (unless i am recalling incorrectly)
The large sale due to a fund manager change - they do rotate stocks but they get rid of the dross - the shares not performing and where can see no change - i get they would like to gloss over it but that is the reality - DKL did not make the grade so it was released.
overall my view hasn't changed - i like to think some of the things we are saying is been taken note of - however nothing will change here now without action been taken to firmly demonstrate DKL is run in the interest of all S/Hs - not just the board - i don't think increasing production, revenue, profitability will be enough on its own - every increase simply met with dilution.
- DKL needs to visibly show that the days of issuing shares out for anything and everything are done - lets see them make an easy and small statement on this - get rid of the payment to a dir in shares - bin it at the earliest point - stop pretending its about confidence in the company (its a tax concession to a board member - everyone can see it and its not good)
- make it clear the drive to either share re-purchase or dividends - give us a timeline and lets see progress towards it.
- until performance and share price hit a certain level - say 5/6p (still significantly under the 9.5p they all claim is fair value) there will be no more share incentive schemes dished out to the board that further dilute the retail holders.
i guarantee the above will move the share price more than the monthly production numbers.
DKL needs to gain credibility - lose the self interest and start operating on behalf of all owners.
Nothing to do with the gods unfortunately - everything to do with credibility
no good profitability going up 35% if share issue does too.
market has a pretty good idea how DKL operates - and for that reason stays clear
EPS would be €0.002 - rather than €0.2?
- €1.5m PBT / the ridiculous 560m shares in issue
monthly production and sales updates continue to be promising which is great - we need assurances also on the other side to support share price
DKL has absolutely zero market credibility - nobody cares about positive production and sales updates because its irrelevant - if subsequent board actions then make it impossible for retail shareholders to make a return whats the point.
it needs active intervention now - the board needs to formally state it is done with ridiculous dilutory share issues and then install a dividend asap so retail s/h see some sort of return.
and even then its going to take a couple of years to filter meaningfully through the share price - with DKL people won't believe it until they see it now over a medium to long term period.
this is where 10 years of board self interest has led us - its an utter disgrace!
I don't quite know how to word it - but something along the lines of
- DKL acquisitions, purchased via significant issues of shares, has not generated the expected increase in enterprise value - leaving long term shareholders at significant loss. Given these acquisitions were purchases from other companies owned by the board what assurances can you provide that acquisitions were at fair value - can you also confirm there is no prospect of these types of transactions further envisaged given the negative impact to date on retail shareholders (of course the board is fine though)
its a bit long winded and pointy (the final part in brackets clearly can't be part of the Q - i couldn't help myself :))
hopefully you can see what trying to get at - if others agree and can make more succinct please do - this has been by far the biggest drain on retail s/h returns.
These look a good set of Qs JK - ill have a think
one other would be
- How is the RSPO certification coming along - the latest update at the 2022 Y/E report was as per below - are these timelines being stuck to
After a lengthy consultation period, the Roundtable on Sustainable Palm Oil ('RSPO') finally provided a clear pathway in H2 2022 of the information required to complete the Company estates audit and we are now preparing the works required with the objective of completing the audits of the Palm Oil Mill and Company estates at the same time. The two key final reports requested by RSPO for the estates audit were a LUCA (land use change analysis) and HCV-HCS (High Conservation Value - High Carbon Stock) assessment. Both reports were commissioned post period end in early 2023 and we expect to receive these reports in early Q3 2023. With these reports completed we will be able to engage RSPO auditors to complete the audit and we will update the market as soon as this audit process has commenced.
Yes it is ongoing - there is literally an RNS about it today!! - the amount is irrelevant - its continous and ongoing.
and DKL have not issued a few shares here and there - its hundreds of millions increasing the share issue over 5 fold! - and hence anyone who has bought in over the period needs the price to increase 5 fold just to get back to level!
somebody earlier mentioned DKL want to go into energy generation
here's a prediction
- when we do it will probably be via an aquisition (via guess what - yes a share issue) - to purchase probably nothing more than an idea from a separate company that is set up / owned by guess who - yes the same BoD as DKL.
im not happy about this - im not continually pushing the narrative with an agenda.
i simply feel it important that its called out - make no mistake - over the past 10 years the DKL board has basically taken retail shareholder investment and funnelled it to themselves - dressed up as all sorts of other initiatives.
my aim now is to make it clear to everyone so the board profit no more - unless we all do.
at the moment DKL is not investable - the past indicates any funds you put in will find its way to the board.
Constantly chasing our tails - forever have to increase revenues and profits just to stand still (and as weve seen they’ve not managed that over the years so as a result we are all heavily down) - yes still they keep issuing shares
We know the answers b2g - and perhaps fortunately for us the fix is that the DKL BoD will maybe have to swing the other way to now rectify and get the sp moving in the right direction with some market confidence.
when i bought in 10 years ago
- there was roughly 100m shares at a price of 10-11p - so market cap of £10-£11m
- today there is 550m shares at 2.8p - market cap - £15.5m
** market cap up circa 45%
** SP down around 70%
lets take Lincoln as an example of the BoD (all this is verifiable)
- 10 years ago around 1m shares - today 5.5m shares (and of that 4.5m increase he has actually purchased a few hundred 000)
*** so Lincoln is 45% up without paying a penny, whilst we sit 70% down
Would you buy that company??
the only way out of this now is a complete swing the other way
- adamantly no more share allocations
- they need to start issuing dividends asap
this is going to take a while to bring sentiment round - 10 years of self interested wealth extraction from retail S/H to the board won't be fixed with a few months of nice production updates.
and rightly so!!!
Spot on Danny - and yet you will notice that without having to buy any material amount of shares themselves the board's 'slice of the cake' they keep consistent at around 35% - they only dilute us.
i agree there is potential at DKL, always has been - they just need to do it right and fairly - has felt often that they do not want to put the hard work in (hence the highly inconsistent performance and delivery against promises) and prefer to earn/extract wealth via redistribution from retail shareholders to the board.
its quite rightly not really working for them - and it won't if we all stay alert to it - they need to address this and it will take time to gain the market confidence required - this is why the SP does not move to seemingly good news (you're never sure if they will dilute you away in their favour)
Recent updates are good so long may that continue.
As a number of us have said before, a material improvement in SP will need 2 things
- Consistent positive updates and progress - DKL have lost credibility in this department over the years - we need this improvement to continue.
- We need a stop to the never ending issue of further shares - why would anyone buy a share in a company that matches any improvement in business performance and profitability with an equal and offsetting dilution of everyone's holding (except of course the boards - remember, they always look after that set of stakeholders - to date they have been the only ones that matter - us retail S/Hs are of no importance)
when the above 2 gain some credibility and market assurance the SP will move.