So, under the terms of the GM NOM, what they essentially want is to replace the existing PERFORMANCE scheme with a new one, except:
1. Under the existing scheme, they were entitled to 2.4M shares each (stretched over time and subject to various SP hurdles). So far, they (Hackett, Rowley and Lehman) have forfeited 2M shares each, with 400,000 potential shares still in play with a final deadline of 31/12/18 and a price point of 29c.
2. The existing scheme however will be discontinued with and replaced with a single minded scheme, like in volume and value.
3. Under the new scheme, they will each receive 2.4M shares provided that the SP hits 29c. The deadline to achieving this however will be pushed out to 31/12/19.
4. In brief, it seems that they have abandoned any suggestion of the SP getting back up to 29c or beyond during 2018. Ditto, for much of 2019. Otherwise, why keep the XP at 29c rather than raising it further (ie: in recognition of adding a further 12m in time). A more appropriate XP therefore would have been >29c (at least 31c based on the logical lockstep movements of the existing scheme, but otherwise 35c based on replacing like with like).
5. The proposed abandonment of the existing scheme calls into question the accounting treatment applied in H17 to the equity settled remuneration (shares and options) of $871,000, all of which, with the abandonment of the existing scheme will have effectively gone up in smoke. What price then to the future 2H18 accounts will be the equity settled REM of the replacement scheme (which even at today's SP risks a possible $900,000 impact, adverse or otherwise going forward)?
What's really in vogue here is that shareholders are being made to wear the brunt of management's failings including:
* Refreshing the incentive scheme as if time (and shareholders) stood still (except that the SP has almost halved during the Aug16 to now time period).
* Wanting to update and increase the directors'remuneration (except that the SP is down almost half in 18 months; down ~40% on its re-instatement price and down half on its Loyalty Options strike price. It is also down almost 80% from its all time SP high but up ~25% on its all time post re-listing low.
* Paying out incentive payments (albeit as shares, presumably without restrictions) as bonuses except that, by its own financial and SP measures, the company and its business has been going backwards for the last 21+ months.
* Still treading water despite the CDC acquisition having first been announced >2 years ago.
* Telling the shareholders that, in effect, they can buy back assets (farms, etc) that they were already stapled to and which, for as long as the structure has been around, they thought that they already owned (now, it's not so sure).
* Warning shareholders that there is still a management fee due to TAU (2% of gross value of assets under management - refer [4.7] of the NOM where the following is stated:
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Trustees Australia is the responsible entity for the Trust and is entitled to be paid fees of 2% on assets under management and reimbursement of expenses. To date Trustees Australia has not charged a management fee and has only been reimbursed costs."
* No value has been ascribed to the "assets under management" but broadly this refers to the farm assets (ex-livestock), so circa $20M according to F17 (pre-revaluation which they have been talking up since mid/late 2017). Stretching this out, then that would suggest a possible $400K F18 management fee, as well as similar to this for each of F17, F16, F15 and F14 (when the "dairy project" sort of started).
* In essence, this is more about value extraction for the BOD, the major shareholders (those who are also acting as the RE) and the serviced management (again conveniently provided by the "major" shareholder yet even here the noise of Jul17 about shifting functions down to Melbourne have all gone absolutely silent, so again its about shifting funds out of the Company, not in favour of shareholders).
That said, TAU is doing similar itself with its own new GM also being called last week.
In the meantime, no real benefit, advantage or update as to current commercial operations has been provided. At last count, customer receipts was $6.15M (SepQ17) vs $7.8M (SepQ16). Operational costs were $7.85M (SepQ16) vs $6.3M (SepQ17) and the operational shortfall was $77K (SepQ16) vs $126K (SepQ17). 12 months on and the business (on all operating cylinders) has been spluttering, not purring along.
Considered in another way, the 6 months to SepQ17 showed customer receipts of $11.974M vs $12.246M for 6M to SepQ16. That's down $272K YoY despite the apparent business growth. Operating costs were $13.474M in the 6 months to SepQ16 vs $11.875M for the same period, 12 months later. So, when lined up:
* 6M/2017 (rounded)
Receipts = 12.0 Op Costs = 11.9
Surplus = 0.1
So, arguably, some improvement, YoY in operating costs but with the -ve fallout linking back to either falling revenue or a reduced market setting.
Rewarding and refreshing the BoD and others in these circumstances doesn't benefit shareholders - not, if in the process, they see their investment either falling, staying stagnant or simply swaying in the breeze without being fastened down.
The lack of an informed (if not any) operational update within the same time frame (as for the NOM), when considered in these circumstances, represents another sleight of hand, not an advancement of mutual interest. Shareholder communications therefore seems to have been stridently left behind NWS the detail contained in the NOM (which incidentally is punctuated with numerous elementary, grammatical and other errors - as if hastily put together, for some reason).
AHF Price at posting:
12.0¢ Sentiment: Hold Disclosure: Not Held
