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Sealegs director takes aim at NZX at testy annual meeting

Friday 27th September 2019

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Future Mobility Solutions director Mark Broadley criticised the NZX in defence of his company’s move to an unregulated exchange. 

The company, which owns amphibious boat maker Sealegs, asked shareholders to vote on its move to the Unlisted Securities Exchange at today’s annual meeting in Auckland. At the meeting it was also announced that former All Black Ali Williams has joined the board, to be voted on next year. 

Shares of FMS were recently trading at 4.1 cents per share, having lost about 59 percent so far this year. The boatmaker’s last set of accounts were tagged by auditor Grant Thornton, who noted that a net cash outflow of $2.3 million and a loss of $6.3 million cast doubt over its ability to continue as a going concern. 

NZ Shareholders’ Association representative Grant Diggle said at the meeting his organisation was advising members to vote against the resolutions to delist and to move to USX. 

“The reason for us voting is that we advocate that companies remain on the NZX to give opportunities to investors."

He asked the board why FMS is delisting given that the reason it gave was liquidity when there aren’t more trades on the USX. 

Director Broadley told about 20 shareholders present the unlisted exchange was cheaper and “given the absolute paucity of liquidity on the main board we might as well delist.” The company indicated it had looked at delisting in 2017. 

“Most shareholders are aware we looked at [London smallcap market] AIM and overseas markets, and this is a problem for small companies everywhere when there is very little liquidity in your shares. Now that's fine, but there is huge cost that goes with it, a legal team and auditors all over the place.” 

“We are constantly pestered by the NZ stock exchange who are a very difficult set of individuals who do not understand markets generally,” the past chief executive said. 

In response to questioning, Broadley added that while moving to USX would cost about $75,000 in fees and advice, he would expect to save that much money every single year. 

When questioned by shareholder David Hughes as to why the company did not mention the delisting plans when it undertook a rights issue in 2018, Broadley said it couldn’t announce every meeting it was having.  

Hughes made comments that Broadley immediately claimed were legally actionable and following a testy exchange, the shareholder retracted his statement. 

When asked by Diggle whether FMS would abide by the NZX’s governance rules, which are recommendations and not legally binding, Broadley said, “we’ll have a look at them.”

Shareholders were also asked to vote on changes to the company’s constitution, which Broadley exclaimed was “more bollocks from the NZX.” 

FMS had asked if it was really necessary to change the constitution because it would only be in place for a month, but NZX insisted, Broadley said. 

The company, which reported earnings before interest tax depreciation and amortisation of $38,000, down from $287,000 the year prior, is continuing a court case against rival Orion Marine over copyright issues. In August the company said it is seeking leave to appeal to the Supreme Court. 

As well as Sealegs, FMS owns a 70 percent stake in French boat manufacturer SAS Sillinger and US boat builder Willard Marine. 

The delisting, once voted through, is expected to go through on Oct. 30 and the company intends to commence trading on the USX the next day. 


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