Diligent Boardbooks IPO

[percy]

Percy, Charles has a new chick, Trinny

Seen at the same restaurant where he infamously throttled Nigella

http://www.dailymail.co.uk/tvshowbiz/article-2964235/Charles-Saatchi-71-braless-Trinny-Woodall-51-dine-Scott-s.html

Poor woman !!!

[winner69]

Poor woman !!!

We just jealous Percy

Maybe Lola has ambitions to be Charles's next fling?

[winner69]

Sorry about the distractions

Back on topic - wonder if the Saatchi boys use Boardbooks?

Good endorsement if they did

[couta1]

A change of name to Diligent Corporation now that sounds very forward thinking to me:cool:

[winner69]

A change of name to Diligent Corporation now that sounds very forward thinking to me:cool:

And reinforces their work ethic eh

Just to show the world they are more than Boardbooks. What's there new thing called now?

[Whipmoney]

And reinforces their work ethic eh

Just to show the world they are more than Boardbooks. What's there new thing called now?

The collaboration/file-sharing platform is called Diligent "Teams".

[Mista_Trix]

With all the fervor on other threads I thought at least 'something' would have been said about how many times the word !exciting! was used :-S

[Roadrunner]

Good to have been buying back into Diligent this week at what look like bargain basement prices.I would expect they will strengthen a little in the coming weeks as we approach the third quarter.Note that ACC are having a top up too :)

[iceman]

Well we're on a roll now that we have both Roadrunner and ACC increasing their holdings.
Like you RR, I have been a bit surprised at the recent slide in SP. Thought the lower NZ$ would help put a floor under it.

But having said that, I have been a bit conflicted with my own holding in DIL recently. We have had a signal of a significant change of course recently. Of course we had the name change, but more importantly we had a change of CEO and a clear change in strategy under him. He is going to take a more conventional SaaS strategy with increasing top line growth with less emphasis on profits.
He has stated he will buy other SaaS companies where they have complimentary products that DIL can upsell, accelerate organic growth and the creation of a sales lead engine instead of DIL’s current reliance on word of mouth from happy customers.
He will be using up some of the cash on the balance sheet to do this. I don’t have a problem with any of it per se, but with the different focus I will be watching progress very carefully. I suspect it will be much harder to compare quarters from here on in than it has been, due to this change.
I did consider reducing my holding when this change was signaled, but after thorough consideration have decided to keep my overweight position and see how things go.
Brian Stafford has a good track record of successfully building SaaS businesses so lets hope he will do that with DIL as well.

I suppose I was not the only one to get a slight chill in my feet for awhile and maybe some holders have decided this new unknown was a bit too much.
Lets hope the Teams implementation takes off for us successfully and quickly and the new growth strategy will be successful. DIL may then become a very bright echo on some big boys' radar screens !

[Roadrunner]

Thanks iceman and snapiti for some good points...I`m pleased that Diligent have been loosening the purse strings in recent times and pursuing this new strategy for growth.I`ve argued for a while that they have been under-resourced and maybe a little too prudent in their approach given their solid and admirable financial position.They have increased their sales staff in recent years and also raised eyebrows with the sharp increase in R&D costs.For many years now those of us who were in DIL heard the rumours of a new product and at last that has finally been confirmed and is a matter of weeks away.As a non techy person it was brought home to me at the agm by Michael Flickman(DILs Exec VP and Chief Technology Officer) a couple of years ago how much time and effort it takes to create a brilliantly easy to use and highly secure product.This new product I`ve no doubt will share the same qualities as the Boardbook and has according to the ceo a massive potential worldwide market.We all see new products come out and even the big boys don`t get it right all of the time but I`m certain Diligent will have this nailed.

[Harvey Specter]

The weakness in the shareprice is surprising given two SSH increases over the past few days - makes you wonder who has been selling and who is smarter ACC/Harbour or the seller.

[Lola]

The weakness in the shareprice is surprising given two SSH increases over the past few days - makes you wonder who has been selling and who is smarter ACC/Harbour or the seller.

Not surprising at all. Markets sometimes get a bit of massaging so that a deal can get done. Sometimes a seller is motivated to be one, not on the basis of fundamentals of the stock at all, but by all sorts of other reasons.
ACC and Harbour should be happy. Id guess the seller will be too. He or she or they, can now go shopping.

[couta1]

This latest public censure on Dil is just too nanny state by the NZX, time they listed on the Nasdaq and ditched the NZX. On a more positive note sellers getting thiner by the day lately and price grinding its way north.

[JohnnyTheHorse]

This latest public censure on Dil is just too nanny state by the NZX, time they listed on the Nasdaq and ditched the NZX. On a more positive note sellers getting thiner by the day lately and price grinding its way north.

That's Mark Weldon for you. Don't think I've met a person who has anything positive to say about that man.

DIL showing some real strength the last few days. All the buy signals firing off. Someone's accumulating. Word on the street is they won another one of those Stevie's at the American Business Awards. Good work, eh? That's not the reason for the rise though.

This weakening US dollar sure making DIL much more attractive. Couts, on the back of your luck with ATM, maybe the dollar will get low enough for Microsoft to put in offer? Would be nice eh?

Maybe ACC trying to push the price up after buying a whole lot. They good like that.

Here's a pretty picture like Hoop used to do. He doesn't draw pictures for us anymore, must have got death threats from the anti TA brigade. Good guy that Hoop.

[Lola]

This latest public censure on Dil is just too nanny state by the NZX, time they listed on the Nasdaq and ditched the NZX. On a more positive note sellers getting thiner by the day lately and price grinding its way north.

This is just not good enough from NZXD. $1290 fine!! How about a complete breakdown of the components for total adherence . What a farce.

[couta1]

This is just not good enough from NZXD. $1290 fine!! How about a complete breakdown of the components for total adherence . What a farce.
Plus the fee they have to pay the tribunal which was not disclosed ( I bet it was more than $1290) Diligent did everything that was reasonable to comply with the rules given Mark Weldons sudden departure so a bit like speed cameras, pure revenue gathering.

[couta1]

If I must say this stock is holding up rather well so far especially compared to other SAS companies:)

[Lola]

If I must say this stock is holding up rather well so far especially compared to other SAS companies:)

Price holding up (and on very good turnover) might just have something to do the announcement on 30 June at 4 am EDT that came from the company through Business Wire that they had hit 500 Clients in Europe, Middle East and Africa. The announcement goes on to detail they have 40 % of the FTSE 100 as clients plus 150 listed companies on the LSE plus plus plus.

Maybe this is not new news but regardless Id have thought a release to the NZX probably appropriate. Or the IR department must be on vacation.

[robbo24]

What's DIL worth in NZD terms with its big USD cash pile?

The devaluation of the NZD relative to the USD must surely be a big bonus to the DIL books :D

[couta1]

This stock is going to break $6 again in the not too distant future has been slowly grinding its way north and sellers thinning out:cool:

[Snoopy]

What's DIL worth in NZD terms with its big USD cash pile?

The devaluation of the NZD relative to the USD must surely be a big bonus to the DIL books :D

The USD cash pile is all earmarked for R&D in USD. The cash in itself has no value unless the share price is below net asset value, which it isn't. DIL is not a cash grab investment.

SNOOPY

[Lola]

The USD cash pile is all earmarked for R&D in USD. The cash in itself has no value unless the share price is below net asset value, which it isn't. DIL is not a cash grab investment.

SNOOPY

Have you been drinking? Its not all earmarked for R and D. Where was that recorded?
And the cash would be very handy in a scrip plus bit of cash offer. Nothing like using a target company's own cash to sweeten a deal. Hardly of no value. Better re charge.

[Snoopy]

Have you been drinking? Its not all earmarked for R and D. Where was that recorded?
And the cash would be very handy in a scrip plus bit of cash offer. Nothing like using a target company's own cash to sweeten a deal. Hardly of no value. Better re charge.


Perhaps my previous reply was a little glib. In AR2014, YE 31-12-2014, total stockholders equity is listed as $US33.272m. Weighted average shares outstanding was 121.117m.

NTA per share at balance date was therefore: $33.272m/121.117m = 27.4c

At today's share price you are paying $5.80 for 27.4c in net assets. 27.4c, even if it was all cash, is no cash mountain. It is little more than a pimple against the $5.80 an investor would pay today to acquire it. I agree that this cash has value for all the reasons you outline Lola. But all of this value is fully reflected in the $5.80 share price. There is no 'extra value' in that 27.4c of net assets sitting on the balance sheet. It might have value if directors were to pay some or all of it out to shareholders as a dividend. But there are no plans to pay shareholders a dividend. It is in this sense I mean the cash mountain (sic) has no value.

SNOOPY

[couta1]

Hey Snoopy you better buy some of these shares while they are still cheap this time next year there could very well be a 7 in front of this pup:cool:

[iceman]

Snoopy I think it is a long bow to draw to say the large and increasing cash pile has no value. They have said they will use some of it and future cash flow for increased R&D. Great.
They have also indicated they will possibly use it for smallish acquisitions that will be complementary to current products. Great.
And as Lola points out, it makes DIL even more attractive as a TO target, which I believe may become a reality once they grow their revenue above USD 100m.

Teams has the potential to increase cashflow and profits significantly, if successfully implemented. Time will tell.

DIL's share price has not changed in any meaningful way with the much lower FX rate despite all their income in foreign currencies, mainly USD. I think those of us holding DIL we are very well positioned.

[Whipmoney]

Perhaps my previous reply was a little glib. In AR2014, YE 31-12-2014, total stockholders equity is listed as $US33.272m. Weighted average shares outstanding was 121.117m.

NTA per share at balance date was therefore: $33.272m/121.117m = 27.4c

Attoday's share price you are paying $5.80 for 27.4c in net assets. 27.4c, even if it was all cash, is no cash mountain. It is little more than a pimple against the $5.80 an investor would pay today to acquire it. I agree that this cash has value for all the reasons you outline Lola. But all of this value is fully reflected in the $5.80 share price. There is no 'extra value' in that 27.4c of net assets sitting on the balance sheet. It might have value if directors were to pay some or all of it out to shareholders as a dividend. But there are no plans to pay shareholders a dividend. It is in this sense I mean the cash mountain (sic) has no value.

SNOOPY

Lol this makes no sense whatsoever.

1) Diligent is a SaaS software company and as such by the very nature of their business model has a low level of tangible assets. As such its share price will almost always be a large multiple of its Net Tangible Assets.

2) The very reason that the company has a very large SP/NTA multiple is due to investors valuing the company's forward earnings stream (e.g. through DCF/NPV analysis). I suspect that these investors give almost no consideration to the company's Net Tangible Assets profile (e.g. capitalised IP), rather they look at the businesses customer base, retention rate, current earnings and growth potential.

3) DIL has never stated that they plan to use all of their cash for acquisitions / product build. In fact so far they've funded almost all of their R&D solely out of cash-flow thus allowing a sizeable cash surplus to build (USD $65.2m at last count or close to 20% of their NZD Market Cap).

4) Based on the above points and referring back to the question of whether this cash adds value then two points come to mind:

(I) If the company's revenue stream is predominantly USD based then surely the NZD value of the company should appreciate in line with the appreciation of the USD relative to the NZD. and;

(II) If the DCF Value of the company's future FCFF earnings alone is >=$5.80 per share, then obviously there is additional value to be realized from the cash surplus.

[Snoopy]

1) Diligent is a SaaS software company and as such by the very nature of their business model has a low level of tangible assets. As such its share price will almost always be a large multiple of its Net Tangible Assets.


I agree



2) The very reason that the company has a very large SP/NTA multiple is due to investors valuing the company's forward earnings stream (e.g. through DCF/NPV analysis). I suspect that these investors give almost no consideration to the company's Net Tangible Assets profile (e.g. capitalised IP), rather they look at the businesses customer base, retention rate, current earnings and growth potential.


I agree, especially with the emboldened bit.



3) DIL has never stated that they plan to use all of their cash for acquisitions / product build. In fact so far they've funded almost all of their R&D solely out of cash-flow thus allowing a sizeable cash surplus to build (USD $65.2m at last count or close to 20% of their NZD Market Cap).


Diligent have also stated they are not planning to pay a dividend or have a share buyback. Those are the only immediate way to return this 'so called' surplus cash mountain (cash pimple) to shareholders. If they aren't returning this cash to shareholders then they are using this cash for 'product enhancement'. Whether that is in the form of R&D expenditure in house or an acquisition is not important.



4) Based on the above points and referring back to the question of whether this cash adds value then two points come to mind:

(I) If the company's revenue stream is predominantly USD based then surely the NZD value of the company should appreciate in line with the appreciation of the USD relative to the NZD. and;


It is the profit stream that will increase in NZD terms as the NZD depreciates against the USD. But there isn't much actual profit (by design) as most of that 'excess' USD revenue will be reinvested in USD expenditure. To use the extreme case, if Diligent made no profit at all (all USD profits were reinvested) then the depreciation of the currency would have no effect at all on NZD profits.

You could argue that because the IP is in USD, then that will be increasing in value because of the NZD fall against the USD. But that is a different argument again.



(II) If the DCF Value of the company's future FCFF earnings alone is >=$5.80 per share, then obviously there is additional value to be realized from the cash surplus.

Yes, but who said the company's FCFF valuation is $5.80? I would argue that if you believe the FCFF valuation is say $5.60 and you believe the excess in the cash mountain (sic) is say 20c then the share price is $5.80 because:

$5.60 +$0.20 = $5.80

IMO the value of any spare cash is already built inot the share price. To say the market value of the share is $5.80, and then adding the surplus cash mountain onto that, well it's double counting.

SNOOPY

[Whipmoney]

Diligent have also stated they are not planning to pay a dividend or have a share buyback. Those are the only immediate way to return this 'so called' surplus cash mountain (cash pimple) to shareholders. If they aren't returning this cash to shareholders then they are using this cash for 'product enhancement'. Whether that is in the form of R&D expenditure in house or an acquisition is not important.

It's been many years since I've studied the principles of corporate valuation but from memory a company's dividend policy doesn't usually affect it's overall valuation so long as they have potential investments that would yield a return > than their cost of capital (hurdle rate). Obviously diligent believe their R&D projects will yield a greater return than their cost of capital/equity.

Dividends are also sticky (i.e. once paid, they are hard to retract) so tech firms in particular are usually hesitant to pay them.

Thirdly, I also like the fact that DIL stock-pile cash as it gives them significant optionality in terms of future acquisitions / R&D, without adversely affecting the value of this cash, given that there is still the option of future dividends / share buy-backs.




It is the profit stream that will increase in NZD terms as the NZD depreciates against the USD. But there isn't much actual profit (by design) as most of that 'excess' USD revenue will be reinvested in USD expenditure. To use the extreme case, if Diligent made no profit at all (all USD profits were reinvested) then the depreciation of the currency would have no effect at all on NZD profits.

You could argue that because the IP is in USD, then that will be increasing in value because of the NZD fall against the USD. But that is a different argument again.

Yes correct. It's a matter of semantics however I referred to their revenue stream as these are recorded in their domestic currencies prior to translation from an accounting perspective, whereas profit is recorded in a single currency (admittedly in this case USD).



Yes, but who said the company's FCFF valuation is $5.80? I would argue that if you believe the FCFF valuation is say $5.60 and you believe the excess in the cash mountain (sic) is say 20c then the share price is $5.80 because:

$5.60 +$0.20 = $5.80

Nobody did. I was simply making the point that there is value in the cash surplus when the SP is less than/equal to the FCFF Valuation.



IMO the value of any spare cash is already built inot the share price. To say the market value of the share is $5.80, and then adding the surplus cash mountain onto that, well it's double counting.


Going back to my previous point, it requires thorough FCFF analysis to support or contradict this position. You can't just subjectively say that it is priced in, or look at something as simple as a SP/NTA multiple. Unfortunately I don't have time to update my model.

[Snoopy]

It's been many years since I've studied the principles of corporate valuation but from memory a company's dividend policy doesn't usually affect it's overall valuation so long as they have potential investments that would yield a return > than their cost of capital (hurdle rate). Obviously diligent believe their R&D projects will yield a greater return than their cost of capital/equity.


Agreed, which is why Diligent won't be returning any of the cash they are accumulating to shareholders by way of a dividend.



Dividends are also sticky (i.e. once paid, they are hard to retract) so tech firms in particular are usually hesitant to pay them.


The other reason why many of today's SaaS company's don't pay dividends is that they are loss making! Diligent is one of the rare exceptions to this.



Thirdly, I also like the fact that DIL stock-pile cash as it gives them significant optionality in terms of future acquisitions / R&D, without adversely affecting the value of this cash, given that there is still the option of future dividends / share buy-backs.


Agreed. Expanding through self generated cash is the characteristic that got me looking more closely at Diligent in the first place. I actually really like Diligent from an operational perspective. The only thing I couldn't make work for me as an investment case is the share price. That's why I didn't buy in over the last couple of years. Too expensive for the risks involved IMO.



I was simply making the point that there is value in the cash surplus when the SP is less than/equal to the FCFF Valuation.

Going back to my previous point, it requires thorough FCFF analysis to support or contradict this position. You can't just subjectively say that it is priced in, or look at something as simple as a SP/NTA multiple. Unfortunately I don't have time to update my model.

Just because you haven't had time to update your model doesn't mean that others haven't. Diligent is an NZX50 company, so there would be more than one analyst on the case. Given this it is hard to conceive that there is 'extra value' attributable to the cash balance DIL that is not included in the share price already.

SNOOPY

[Whipmoney]

Just because you haven't had time to update your model doesn't mean that others haven't. Diligent is an NZX50 company, so there would be more than one analyst on the case. Given this it is hard to conceive that there is 'extra value' attributable to the cash balance DIL that is not included in the share price already.
SNOOPY

Yes there are multiple analysts looking at this however in my own experience with this stock, following the restatement saga, the SP (market) has mostly tracked well below analyst expectations.

I'm not a firm believer of technical analysis (I.e. that the market is always right) and such (following this saga) this stock has presented numerous opportunities for a low entry point.

That being said it might be close to being fully priced now however with the potentially large upside from teams I'm still holding tightly as the upside potential significantly outweighs the downside risk.

[waddis]

Although nothing is mentioned on 'Teams' on the Diligent main website , as far as I can see, I did stumble across a 'Diligent teams for Office' app on the Microsoft Office store. Released on June 30 it looks like it has been just provisioned there at this stage but good to see 'Teams' in progress
"Diligent Teams for Office allows direct upload of documents from Microsoft Office Word and PowerPoint into your Diligent Teams environment. App will allow you to upload a document into your chosen section or sub-section." https://store.office.com/diligent-teams-for-office-WA104379465.aspx?ui=en-US&rs=en-US&ad=US&assetid=WA104379465

[Whipmoney]

Although nothing is mentioned on 'Teams' on the Diligent main website , as far as I can see, I did stumble across a 'Diligent teams for Office' app on the Microsoft Office store. Released on June 30 it looks like it has been just provisioned there at this stage but good to see 'Teams' in progress
"Diligent Teams for Office allows direct upload of documents from Microsoft Office Word and PowerPoint into your Diligent Teams environment. App will allow you to upload a document into your chosen section or sub-section." https://store.office.com/diligent-teams-for-office-WA104379465.aspx?ui=en-US&rs=en-US&ad=US&assetid=WA104379465

Interesting to see that their logo has changed and so has their website. It is now less 'boardbooks' focused and if you click on products you can see ample white space for the rollout of the new teams product.

[couta1]

Diligent reaches 100k users:t_up:

[Lola]

Diligent reaches 100k users:t_up:

And not far south of USD 100m revenues and growing....Second quarter due 11 August will probably see them hit that century....but the sad sacks here will just say": "but oh look at how the cash burn has increased".....Some people will never be satisfied we know that. DIL is a Bright Star. Rejoice in its brilliance and be thankful.

[Lola]

Interesting to see that their logo has changed and so has their website. It is now less 'boardbooks' focused and if you click on products you can see ample white space for the rollout of the new teams product.

Teams will be a nice piece of growing icing on this cake. Perhaps sooner than later because upselling to companies whose Boards are already on board, so to speak , should be a piece of cake. Its well known that getting Management papers ready for Boards and that includes sub Boards is a nightmare.

[Fisherking]

Teams will be a nice piece of growing icing on this cake. Perhaps sooner than later because upselling to companies whose Boards are already on board, so to speak , should be a piece of cake. Its well known that getting Management papers ready for Boards and that includes sub Boards is a nightmare.
From what i understand of the teams product its not specifically designed for use by boards or management teams, its a collaborative tool similar i think to products like sharepoint. I've used sharepoint for a few years now; in my opinion it's a very poor product and if Diligent are indeed targeting this then they have a great chance of cracking the big time. However sharepoint is a MS product so integration's going to be important; i don't imagine too many companies are going to be in too much of a hurry to move swiftly from MS platforms.

[inestor88]

What's happening to DIL, almost out of buyers now at 550. Low expectations for next weeks announcement?

[Whipmoney]

What's happening to DIL, almost out of buyers now at 550. Low expectations for next weeks announcement?

Wouldn't read much into it, markets/stocks wax and wane.

[Monty]

None of the fundamentals have changed with diligent. $100m in bank. All income in $UD , 99% retention. They are the biggest in their product niche, and the diligent teams is not far away from release.

I cant ant see any reason not to support Diligent.

[Lola]

None of the fundamentals have changed with diligent. $100m in bank. All income in $UD , 99% retention. They are the biggest in their product niche, and the diligent teams is not far away from release.

I cant ant see any reason not to support Diligent.
Agree.
Teams might or might not be showing tra ction.
regardless conservative valuation to me looks like this:
Annual revenues say USD 100m x 8 = NZD 1.1b + divided by 117m shares on issue = NZ 9 dollars plus.
Go figure

Sleep like a babe

[Baddarcy]

What's happening to DIL, almost out of buyers now at 550. Low expectations for next weeks announcement?

It's not uncommon for the DIL price to fall just before an quarterly report, i've seen it do this a few times now.

[Baddarcy]

Any predictions for the quarterly due tomorrow?

[Harvey Specter]

Any predictions for the quarterly due tomorrow?Profitable. More cash. New product. All good. ;)

[Baddarcy]

Profitable. More cash. New product. All good. ;)

Looks better than last quarter, cash burn has slowed, 4000 new users, Teams into beta testing and correct me if im wrong, but a nice little surprise of a new module for BB.

[Harvey Specter]

Couldn't quite get the forecast revenue for the year into 9 figures. :mad ;:

Back of the envelop valuation. 20% growth gives you a 4xRevenue multiple: http://clarecapital.co.nz/ev-revenue-metrics-from-listed-saas-companies/
Given they are a profitable SaaS company with cash reserves, this is conservative.

so USD100m x4 = NZD600m

Google says market cap is NZD480 but there is something funny with the number of shares isn't there? so valued about right?

[couta1]

Market doesn't seem that impressed at this point, no buyers lining up.

[Whipmoney]

Looks better than last quarter, cash burn has slowed, 4000 new users, Teams into beta testing and correct me if im wrong, but a nice little surprise of a new module for BB.

Looking like a solid base for the new 'Teams' platform launch.

Highlights:

- Solid revenue growth (verticals / geographies - land & expand strategy), over 3,500 clients, 100k users.
- Strong cash holdings (USD $64.3)
- Cash burn has nearly stalled (hopefully most of the teams CAPEX has now been capitalized).
- Launch of new Directors & Officers Module in Q3 (charged on per client basis).
- Launch of "Teams" Beta to select Boardbooks clients (free marketing / cheap penetration).
- Expressed that they would consider strategic acquisitions to increase their customer base.

[Harvey Specter]

Couldn't quite get the forecast revenue for the year into 9 figures. :mad ;:They really need to push for $100m revenues as that gives them the option of a Nasdaq listing. If they dont quite hit it, it pushes the potential timing out a year. Even if they dont go for it, the option value is worth them going for a growth spurt.

[Whipmoney]

They really need to push for $100m revenues as that gives them the option of a Nasdaq listing. If they dont quite hit it, it pushes the potential timing out a year. Even if they dont go for it, the option value is worth them going for a growth spurt.

I suspect that they are as they are scaling up marketing and sales costs (both as a % of revenue and absolute) in order to maximize their revenue growth. They indicated that this isn't a long term strategy however which would suggest they are pushing for quick gains to break $100m.

[Monty]

Aren't Diligent better to under promise and over deliver in respect of hitting the $100m revenue.
I listened in and I did not hear anything negative. Now lets see if the announcements excite the market a little and see if Diligent can get over the $6:00 per share and stay there.

Did I hear the Diligent Teams announcement correctly - that there will be a limited release in the third quarter (i.e. in the next two months) and a full release in fourth quarter? (i.e. before Christmas)?

[Whipmoney]

Did I hear the Diligent Teams announcement correctly - that there will be a limited release in the third quarter (i.e. in the next two months) and a full release in fourth quarter? (i.e. before Christmas)?

Not sure, I thought they said General Release in Q3, however they also stressed a limited release in Q3, which they would expand to select clients.

Might need to re-listen to the tape..

[couta1]

Market doesn't seem that impressed at this point, no buyers lining up.
Bit surprised at the seemingly negative market response but the NZX does seem to be lagging given all the overseas markets being up overnight.

[Baddarcy]

Bit surprised at the seemingly negative market response but the NZX does seem to be lagging given all the overseas markets being up overnight.

Yes i'm a little surprised also, it was a good quarterly report i thought. There was a reasonable uplift yesterday so it could be a bit of a blow back from that perhaps?

[Cricketfan]

DIL always seems to go down before and after an announcement, even when it's a good one.

[couta1]

DIL always seems to go down before and after an announcement, even when it's a good one.
Tiny volume some consolation:cool:

[Monty]

Interesting - Diligent released their half year report this morning. not a single comment. has anyone had an opportunity to review and form an opinion about any aspect of the report?

[Lola]

Interesting - Diligent released their half year report this morning. not a single comment. has anyone had an opportunity to review and form an opinion about any aspect of the report?

wow.100m cash in the till.
come on DIL Scrooges how about a div??
50 cents will still leave 40m in the till.

[Everwood]

wow.100m cash in the till.
come on DIL Scrooges how about a div??
50 cents will still leave 40m in the till.

From my understanding they don't have any intentions of giving a dividend. Hopefully they will eventually do something with the money, like a share buyback or purchase another company to help them grow the business instead of leaving it in the bank. I find it little bit frustrating that they still haven’t done anything with it.

[Harvey Specter]

Dividend is highly tax inefficient. I think they have said they are looking to tack on investments. Makes sense.

[Lola]

Dividend is highly tax inefficient. I think they have said they are looking to tack on investments. Makes sense.

I dont buy that.
tax inefficient only for some.
Ok lets make it 25c.
Its our money not theirs.

[zigzag]

I dont buy that.
tax inefficient only for some.
Ok lets make it 25c.
Its our money not theirs.

Lola. Harvey is right. Once the American tax dept get their slice, and NZ tax dept. also gets in on the cuts, then you would end up with sweet fanny adams. Not a good use of the funds.

[iceman]

Lola. Harvey is right. Once the American tax dept get their slice, and NZ tax dept. also gets in on the cuts, then you would end up with sweet fanny adams. Not a good use of the funds.

A buyback would avoid that and have a similar effect. But irrelvant discussion really as the new CEO has said no cash return is on the cards and he has plans to spend at least some of it. We just have to hope he will do it sensibly and increase the value of our shares with it.
The only good thing about this large cash deposits is that it may attract a takeover interest.

[Carpenterjoe]

hmmmmmm, maybe we could CR 100m and buy Wyn or CR 500m to buy Ohe. (I'm not being serious)

[Whipmoney]

A buyback would avoid that and have a similar effect. But irrelevant discussion really as the new CEO has said no cash return is on the cards and he has plans to spend at least some of it. We just have to hope he will do it sensibly and increase the value of our shares with it.
The only good thing about this large cash deposits is that it may attract a takeover interest.

Hardly the only good thing..

The cash provides the company with the option to do any/all of the following (in order of importance):

1) New Product Development - additional bolt-ons (increased Revenue/Gross Margin) or new products (additional Revenue / Revenue Diversification).

2) Acquisition of competitors - strategic option to increase their scale/market share and thus revenues. If they can achieve cost synergies with regard to the combined OPEX of the companies then their operating margin will improve not only in absolute terms but also in percentage terms, as the OPEX costs of the acquiree can substantially be reduced.

3) Return Capital to investors, e.g dividend or share-buy buy-back. This should only be considered if there where there are a lack of projects or where the projects under (1) or (2) provide an NPV < the investors required return.

[Harvey Specter]

I am surprised they havent done a bolt on acquisition. Buy a small company with no reputation but a good product with a good market. Upgrade it to Diligent level of data security and sell into your existing customers.

[iceman]

Of course you're right Whipmoney. That was a bad choice of words on my behalf. Teaches me for letting the fingers do the talking. Should have read "one good thing", not "the only good thing" !!

[youngatheart]

Lola. Harvey is right. Once the American tax dept get their slice, and NZ tax dept. also gets in on the cuts, then you would end up with sweet fanny adams. Not a good use of the funds.

So if paying a dividend is likely to be so heavily taxed to make it virtually pointless, what's the point of having DIL shares for nz based shareholders?

[Harvey Specter]

So if paying a dividend is likely to be so heavily taxed to make it virtually pointless, what's the point of having DIL shares for nz based shareholders?
Tax free capital gains! ;)

Seriously because they listed in the NZX. They will eventually duel list on Nasdaq, then probably drop their NZX listing once NZ shareholder numbers become small (if not sooner). US listing faces similar high tax on dividends, even for US holders.

[Monty]

I am struggling to understand Diligent. All the metrics seem great. They have a mountain of cash in the bank and growing, the number of clients continues to grow (albeit at a very steady pace), the retention rate is best in class and they have a new product about to be released. Yet their share price continues to slump and in now below $5 down from close to $6.00 a few weeks ago.

Does anyone have any theory on why Diligent shares are not being supported and the share price is so depressed?

[couta1]

Basically the effect of the current Macro environment Monty with stocks like Diligent being hit hardest plus the uncertainty about how the new Teams product will work out and when it will be released, definitely a stock that requires a lot of patience.

[nextbigthing]

Monty,

What do you think their long term growth rate is? I think the market is simply saying in this climate they're no longer prepared to pay a premium for growth which is yet to happen.

[couta1]

Diligent appoints new CFO, looks like a solid choice.

[Harvey Specter]

Does anyone have any theory on why Diligent shares are not being supported and the share price is so depressed?Fear. Everything looked great a few years ago too and it plummeted by 50%! And that had nothing to do with the underlying business fundamentals that have remained strong the whole time.

Disc: overweight (in DIL, not in real life)

[Lola]

I am struggling to understand Diligent. All the metrics seem great. They have a mountain of cash in the bank and growing, the number of clients continues to grow (albeit at a very steady pace), the retention rate is best in class and they have a new product about to be released. Yet their share price continues to slump and in now below $5 down from close to $6.00 a few weeks ago.

Does anyone have any theory on why Diligent shares are not being supported and the share price is so depressed?

yes its called Xenophobia.

Just buy the dips and sleep easy.

[klid]

I think the market is simply saying in this climate they're no longer prepared to pay a premium for growth which is yet to happen.
I agree and Diligent hasn't suffered as much as similar companies (e.g. Xero) have.

[axe]

Fear. Everything looked great a few years ago too and it plummeted by 50%! And that had nothing to do with the underlying business fundamentals that have remained strong the whole time.

Disc: overweight (in DIL, not in real life)

DIL has been on my watch list for a while. I am silly and didn't buy yet.

I feel sorry for poor DIL.:scared: Seems to run out of one mess and into a bigger one. It appears to have a great product and brand but it's somehow tainted with a sticky residue of negative sentiment? restatement, wash trading / manipulation and the last censure from NZXR was 26 June.
The sentiment hasn't been helped by the SP crossing through the 50 and 200 MA.

Can it shake off its shady past? Probably when it delists off NZX :). I might have to buy some before that happens...

[Lola]

Hardly the only good thing..

The cash provides the company with the option to do any/all of the following (in order of importance):

1) New Product Development - additional bolt-ons (increased Revenue/Gross Margin) or new products (additional Revenue / Revenue Diversification).

2) Acquisition of competitors - strategic option to increase their scale/market share and thus revenues. If they can achieve cost synergies with regard to the combined OPEX of the companies then their operating margin will improve not only in absolute terms but also in percentage terms, as the OPEX costs of the acquiree can substantially be reduced.

3) Return Capital to investors, e.g dividend or share-buy buy-back. This should only be considered if there where there are a lack of projects or where the projects under (1) or (2) provide an NPV < the investors required return.


OK we have lift off as far at point 1 above. Hardly a big surprise that DIL have targeted the Compliance arena as their first new product offering given the company's experience in that discipline. Necessity is the mother of invention they say, but good on them for latching on to this opportunity. Some Fund managers should be happier now. I wonder if the FMA will become clients?

[Monty]

Interesting and heartening to note that Diligent have added on a product
https://www.nzx.com/companies/DIL/announcements/270358

today announced the availability of its Diligent D&O offering in the U.S as signaled in Diligent’s market announcement of August 11, 2015. The product module adds pre-filled and signed questionnaire functionalities to Diligent’s suite of management tools, allowing governance officers to reuse content and expedite approvals. The new, paid features deliver greater efficiency in generating and updating questionnaires for directors, officers and administrators, streamlining the creation of Director and Officer (D&O) compliance reports annually required by public companies in the U.S. “We began to see a need in the Director and Officer space for increased efficiency in what was traditionally a very manual, paper-intensive reporting process,” said Brian Stafford, President and CEO of Diligent. “So we created a product module called Diligent D&O that offers our customers a one-stop, holistic platform for governance, reducing the number of tools needed for secure collaboration and eliminating redundancies in the production of annual compliance documentation.”

Diligent have over 100,000 users. I don't know what the uptake or fee for this feature will be. But with 100k users, hopefully there is a significant uptake on this feature. We of course do not know the annual fee per user, but the fee of this module multiplied by users will reasonably significant.

And I'm really looking forward to the release of Diligent Teams to see how that is picked up by the market. Hopefully it will give the share price a kick which has been in the doldrums for a couple of years or more.

[Whipmoney]

Diligent have over 100,000 users. I don't know what the uptake or fee for this feature will be. But with 100k users, hopefully there is a significant uptake on this feature. We of course do not know the annual fee per user, but the fee of this module multiplied by users will reasonably significant.

And I'm really looking forward to the release of Diligent Teams to see how that is picked up by the market. Hopefully it will give the share price a kick which has been in the doldrums for a couple of years or more.

They stated on their last phone conference that the add-on will be offered on a site (client) basis as opposed to a user basis.

So this would be more akin to the circa 3,600 clients or whatever the number is now.

[Halebop]

Unlike the original board-books product launch there are many existing products in this space so execution and integration needs to be superior and leverage of existing user base successful.

[Lola]

Unlike the original board-books product launch there are many existing products in this space so execution and integration needs to be superior and leverage of existing user base successful.

Yawn...its probably gonna rain in Auckland next week too.

[alistair85]

Anything worth getting excited about coming up in the near future with dil? Seems touch quiet recently. Must be due for something to spice things up a bit!

[Harvey Specter]

Anything worth getting excited about coming up in the near future with dil? Seems touch quiet recently. Must be due for something to spice things up a bit!Nah -its just a boring profitable SaaS company - nothing to get excited about.

[Baddarcy]

Anything worth getting excited about coming up in the near future with dil? Seems touch quiet recently. Must be due for something to spice things up a bit!

Teams must be getting close by now !

[Monty]

When the diligentTeams announcement was made back in March the release was programmed for "the September quarter" so maybe we are close to the release of diligent teams. But is the product going to release into a crowded market? On a radio NZ report from March it was reported that there were 40 players in that market. Maybe the competition in this space is why there has been no significant lift in market price since the announcement in fact the price has reversed from circa $6. Is there anything that will give the share price a major nudge?

[Whipmoney]

When the diligentTeams announcement was made back in March the release was programmed for "the September quarter" so maybe we are close to the release of diligent teams. But is the product going to release into a crowded market? On a radio NZ report from March it was reported that there were 40 players in that market. Maybe the competition in this space is why there has been no significant lift in market price since the announcement in fact the price has reversed from circa $6. Is there anything that will give the share price a major nudge?

I suspect that the market isn't really pricing "teams" in, i.e it having a low probability of success and the stock is also probably also being somewhat depressed by the cash being burned on this product.

Surely some traction with sales of this product would warrant an increase in the SP. Alternatively increased FCFF growth (via sales/margin improvements) would likely lead to an improved SP.

[Whipmoney]

There's some big buyers lining up.. 25k shares @ $5.41 and 12k at $5.40.

There's also big volume for the morning 228k... somebody's buying.

[Monty]

I suspect that the market isn't really pricing "teams" in, i.e it having a low probability of success and the stock is also probably also being somewhat depressed by the cash being burned on this product.

Surely some traction with sales of this product would warrant an increase in the SP. Alternatively increased FCFF growth (via sales/margin improvements) would likely lead to an improved SP.

Thanks Mr WhipMoney. I appreciate your comment and tend to agree with you, and furthermore unless the product is ground-breaking and the best thing since sliced bread (in a crowded Market) success may be 4-5 years away. On the plus side of course Diligent have access into a reasonable number of existing client companies who may have a need. It is also important that Diligent diversify as they are currently a one product company.

I suppose at this point we can only wait for the launch of DiligentTeams, and hopefully there will be a bit of a campaign where we as investors are interested to understand this product.

At lease Diligent are profitable and funding development from cash in the bank rather than having to go out to capital raising unlike a couple of other companies I have invested in.

[Whipmoney]

Thanks Mr WhipMoney. I appreciate your comment and tend to agree with you, and furthermore unless the product is ground-breaking and the best thing since sliced bread (in a crowded Market) success may be 4-5 years away. On the plus side of course Diligent have access into a reasonable number of existing client companies who may have a need. It is also important that Diligent diversify as they are currently a one product company.

I suppose at this point we can only wait for the launch of DiligentTeams, and hopefully there will be a bit of a campaign where we as investors are interested to understand this product.

At lease Diligent are profitable and funding development from cash in the bank rather than having to go out to capital raising unlike a couple of other companies I have invested in.


I probably should have elaborated but I imagine they will have a reasonable amount of success with teams as they already have penetration / brand awareness with clients and their boards.

I think if they can demonstrate adoption from one of the key clients who were on the "beta" trial then things will look very promising.

[Harvey Specter]

I dont see Teams as something that will cause spike in the share price. But it is a new product that allows the sales team to upsell with and that should flow through to increased revenue and therefore increased shareprice. It is much easier to upsell existing users that the sell to new users so it will be a positive but that will be based of sales numbers.

[Monty]

I dont see Teams as something that will cause spike in the share price. But it is a new product that allows the sales team to upsell with and that should flow through to increased revenue and therefore increased shareprice. It is much easier to upsell existing users that the sell to new users so it will be a positive but that will be based of sales numbers.

I do agree with you Harvey, but there may be a difficulty getting penetration into the existing client base because many of those clients are quite possibly already going to have in place a solution that quite possibly suits their needs. Getting penetration when there may not be a good reason to change will no doubt be a considerable challenge.

[Harvey Specter]

Getting penetration when there may not be a good reason to change will no doubt be a considerable challenge.I didn't say 'easy', I said 'easier' ;) You cant upsell if you have nothing to upsell. We need to wait and see the sales numbers coming though and I think that is why we wont see a jump in share price, just a small uptick each quarter from an uptick in overall sales/profit (all else being equal).

[Whipmoney]

I didn't say 'easy', I said 'easier' ;) You cant upsell if you have nothing to upsell. We need to wait and see the sales numbers coming though and I think that is why we wont see a jump in share price, just a small uptick each quarter from an uptick in overall sales/profit (all else being equal).

I'm not sure I see it that. Sure it's easier to achieve penetration where you have an existing product suite in place, but I think it's going to be binary.. either it will take off or it won't.

It's not quite a simple bolt-on (like D&O is..) as it has a whole different costing structure (priced by site, not by user) so if they achieve penetration in their existing (rather attractive) client base, then obviously the product is good enough to uproot other competitors in the market.

It's going to be very interesting indeed. If they secure a large blue chip client, then I think we should see some positive share traction.

[Monty]

I didn't say 'easy', I said 'easier' ;) You cant upsell if you have nothing to upsell. ).

I could not agree with you more.

[muss1]

I like to think the board is astute enough to realise there are plenty of options already out there. They have surely done some research and found their existing clients have a need for the product they are developing. Otherwise it wouldn't make sense to develop a product with such wide existing penetration.

[Monty]

Interesting that the price of Diligent has continued to firm over the past month - no big gains but up nearly 10% over the past couple of weeks. still no where near $6:00 but going in the right direction. Is there any speculation as to why?

[Baddarcy]

Interesting that the price of Diligent has continued to firm over the past month - no big gains but up nearly 10% over the past couple of weeks. still no where near $6:00 but going in the right direction. Is there any speculation as to why?

All i got is a possible Team's release.

The next quarterly is still a month away, but that wouldn't contain any more than an incremental change i would have thought.

[Harvey Specter]

All i got is a possible Team's release.

The next quarterly is still a month away, but that wouldn't contain any more than an incremental change i would have thought.It got sold down a bit when China was looking dodgy. People seem to have forgot than to has increased back to where it has been for the past 10 months as we wait to see if they can increase their growth with Teams.

[Whipmoney]

Possibly due to one of the funds increasing their holding, market sentiment or somebody taking a punt on teams..

I don't think we'll know until the next announcement.

[Monty]

Diligent teams development. I have just googled "diligentTeams" and up popped the app on the Google answers. So maybe diligent have now released very quietly the app for download.7676

of course I have not downloaded but interesting to see that on 3october was the release date. Maybe that might help explain why the shareprice has quietly firmed over the past couple,of weeks.

Was as anyone else aware of the diligent teams app release?

[angrytoenail]

Diligent teams development. I have just googled "diligentTeams" and up popped the app on the Google answers. So maybe diligent have now released very quietly the app for download.7676

of course I have not downloaded but interesting to see that on 3october was the release date. Maybe that might help explain why the shareprice has quietly firmed over the past couple,of weeks.

Was as anyone else aware of the diligent teams app release?
Diligent Teams has been available on the Microsoft store for a few months now (probably a beta version for testing), I remember coming across it a few months ago: https://store.office.com/diligent-teams-for-office-WA104379465.aspx?assetid=WA104379465

Anyone can install it, but it's not very useful unless you have a login.

[pierre]

Maybe this is the reason DIL has been quietly tracking upwards?


ASSET: DIL: Diligent Acquires BoardLink from Thomson Reuters 09:07a.m.

DIL
20/10/2015 09:07
ASSET
NOT PRICE SENSITIVE
REL: 0907 HRS Diligent Corporation (NS)

ASSET: DIL: Diligent Acquires BoardLink from Thomson Reuters

October 20, 2015

Diligent Acquires BoardLink from Thomson Reuters

Acquisition Bolsters Diligent's Leading Position in Corporate Governance and
Collaboration as a SaaS provider for Boards and Leadership Teams

WELLINGTON, New Zealand, October 20, 2015 - Diligent Corporation (NZX: DIL)
("Diligent" or the "Company"), the Software-as-a-Service (SaaS) based
platform for the secure electronic production, distribution and collaboration
of confidential information for boards and leadership teams, today announced
that it has acquired all assets of BoardLink, a SaaS provider of board and
leadership team collaboration solutions, from Thomson Reuters (NYSE: TRI).

Organizations around the world are increasingly embracing the use of SaaS
solutions to create, manage, and collaborate on critical business
information. The acquisition of BoardLink strengthens Diligent's position as
the world's leading provider of corporate governance and collaboration SaaS
solutions for boards and senior executives. Diligent's acquisition of
BoardLink increases the Company's presence in a large and attractive market
by adding more than 250 new clients and approximately 9,000 users to
Diligent's global community of executives and board members.

"We are excited to welcome the BoardLink team and clients to Diligent," said
Brian Stafford, Chief Executive Officer and President of Diligent. "BoardLink
brings a great team of professionals and a large, global customer base to
Diligent. There is a strong alignment between our two companies and we are
excited to give BoardLink's clients access to Diligent's world-class
products, leading security features, and award-winning customer service. The
acquisition of BoardLink aligns well with our growth strategy and provides us
with a broader platform to expand and innovate from in the future."

"Thomson Reuters and Diligent share a common objective of providing high
quality service to our global client base. As the world's leading provider of
secure collaboration and governance solutions for boards and leadership
teams, we believe that Diligent will be able to support BoardLink's clients
with the investment and focus necessary for them to continue to enjoy the
best service available," said Phil Cotter, managing director, Risk, Thomson
Reuters.

Diligent-BoardLink Transaction Details

Commenting further on the transaction Michael J. Stanton, Diligent's Chief
Financial Officer stated, "Like Diligent, Boardlink operates an annual
subscription business model with high client retention rates and great
customers. These are all key contributors in building a successful SaaS
business and reasons why I believe Boardlink will enhance Diligent's
operating leverage. By combining the two businesses we can deliver more value
to clients while enhancing growth and profitability for shareholders."

Under the terms of the agreement, Diligent paid approximately $US 10.0
million in cash for the Thomson Reuters BoardLink business. For the fourth
quarter ending December 31, 2015, Diligent management expects BoardLink to
contribute nominally to revenue and to be neutral, on a non-GAAP basis, to
adjusted net income per share . Diligent management expects the BoardLink
acquisition to be accretive, on a non-GAAP basis, to full year 2016 adjusted
net income per share. Diligent will provide more details about the
acquisition and its expected impact on financial results on its third quarter
2015 earnings call which is scheduled to be held on November 10, 2015 NZDT
(Monday, November 9, 2015 US ET).

District Capital Partners acted as exclusive financial advisor to Diligent in
the transaction.

[iceman]

Look forward to more details on Nov 10. But on the surface this looks like a great fit and addition to DIL

[RTM]

Interesting that this is not considered Price Sensitive ?
"NOT PRICE SENSITIVE"
Does this make sense to everyone ?

[Harvey Specter]

Interesting that this is not considered Price Sensitive ?
"NOT PRICE SENSITIVE"
Does this make sense to everyone ?Only $10m price and little impact on profit so probably doesn't quality. Good announcement so glad they didn't do it during the day as I think others will like it too.

[Baddarcy]

Only $10m price and little impact on profit so probably doesn't quality. Good announcement so glad they didn't do it during the day as I think others will like it too.

Its a 9% increase in user base (based off the 100,000 users at end of the June quarter) or about 2 quarters worth of growth.

[Harvey Specter]

A lack of sellers from the looks. Is there anyone drip feeding in or is it time for this to take off again?

[iceman]

Certainly looks like the market liked this announcement as we are about to break through the $6 mark

[blobbles]

This looks like an excellent opportunity, SP hardly moved. Remember they just purchased this with petty cash! Get in quick before 10th November methinks.

[blobbles]

This also shows that management has figured out what to do with the cash pile. Potential for further acquisitions in the mid term too. Very promising.

[iceman]

This also shows that management has figured out what to do with the cash pile. Potential for further acquisitions in the mid term too. Very promising.

I agree this is an interesting development. I have always considered Thomson Reuters as a potential takeover bidder of DIL. This big competitor has now been removed and DIL instead strengthening its leading Worldwide position. I am very happy with this announcement.

[Whipmoney]

I agree this is an interesting development. I have always considered Thomson Reuters as a potential takeover bidder of DIL. This big competitor has now been removed and DIL instead strengthening its leading Worldwide position. I am very happy with this announcement.

From my understanding despite the overall size of Thomson Reuters International, their Board Portal product (Boardlink) had a significantly smaller customer base than Diligent's BoardBooks, hence the $10m price-tag.

DIL's main competitor is Boardvantage who claim to have over half of the Fortune 500, and who also have the MeetX product. I've never seen the Boardvantage product, but I believe that DIL's is slightly superior and their security and customer offering is a lot better (hence the price difference). Again from my understanding, Boardvantage also seem to be limited to the U.S, whereas DIL is global and as such is significantly less contested in Europe.

Aside from Boardvantage, there's several other Board portal providers which DIL could acquire, e.g. Boardeffect, Boardpad, DirectorsDesk and Boardtrac etc..

[iceman]

From my understanding despite the overall size of Thomson Reuters International, their Board Portal product (Boardlink) had a significantly smaller customer base than Diligent's BoardBooks, hence the $10m price-tag.

DIL's main competitor is Boardvantage who claim to have over half of the Fortune 500, and who also have the MeetX product. I've never seen the Boardvantage product, but I believe that DIL's is slightly superior and their security and customer offering is a lot better (hence the price difference). Again from my understanding, Boardvantage also seem to be limited to the U.S, whereas DIL is global and as such is significantly less contested in Europe.

Aside from Boardvantage, there's several other Board portal providers which DIL could acquire, e.g. Boardeffect, Boardpad, DirectorsDesk and Boardtrac etc..

Agree Whipmoney. I meant Thomson Reuters is a big company with fairly deep pockets that will no longer be a competitor to DIL nor a possible candidate for taking DIL over

[Whipmoney]

Agree Whipmoney. I meant Thomson Reuters is a big company with fairly deep pockets that will no longer be a competitor to DIL nor a possible candidate for taking DIL over

Ah yes I see what you mean. The size/resources of TRI had worried me a little in the past too. It'll be curious to see if Boardvantage attempt to make a landgrab by buying another competitor?

[Monty]

now waiting for Diligent to climb over that $6.00 per share - nearly there - so close. or do we wait to 10Nov 2015

[couta1]

Diligent wins Gold in best biz awards international 2015, nice one.

[artemis]

Diligent wins Gold in best biz awards international 2015, nice one.

Those customer service stats are mighty impressive. Diligent always set out to provide a concierge level service. Easy to say, not so easy to actually do.

In 2014, Diligent received more than 62,000 incoming support calls. More than
99 percent of these calls were immediately picked up by a support staff
member, and fewer than three out of every 1,000 required a call back. All
answered calls were picked up directly by a person with no queueing or
directory tree. In addition to Diligent's Customer Support Team, all Diligent
customers are also assigned a dedicated Customer Success Team, which provides
unlimited training to all users and is also readily available to provide
additional customer assistance.

[blu3]

I'm slowly starting to get into TA and by looking at the 2015 weekly chart, I see that the SP is currently playing with the ~$6 resistance for the 4th time, including a false breakout in early March. I'm still not too sure how to interpret this—isn't it supposed to be a sign that the sentiment is now positive and that we'll probably end up seeing a breakout at some point leading to an upward trend?

[Baa_Baa]

I'm slowly starting to get into TA and by looking at the 2015 weekly chart, I see that the SP is currently playing with the ~$6 resistance for the 4th time, including a false breakout in early March. I'm still not too sure how to interpret this—isn't it supposed to be a sign that the sentiment is now positive and that we'll probably end up seeing a breakout at some point leading to an upward trend?

It doesn't look too complicated on the weekly chart, you may well be right that sentiment drives it up. However, the SP seems to have balked at $6 which could simply be 'round number resistance' but it is also the underside of the rising trend-line from the low Dec'13 (now resistance). Apart from that, note the indicators turned down during the SP rise and volume is declining at the same time, which is a bearish divergence signal. JMO, not advice.

7698

BAA

[blu3]

Thanks Baa_Baa!

[couta1]

Finally just hit $6, where to from here given upcoming results next week?

[Baddarcy]

$6 how nice to see you again after all this time !

$6 you're back ! How about sticking around a bit longer this time....or if you are going to leave me hanging again at least give me the phone number of your hot friend $7 first !

[Whipmoney]

Hopefully $6.50+ next week!

[Whipmoney]

Hopefully $6.50+ next week!

[couta1]

Hopefully $6.50+ next week!
You could be right the way its going, somethings up.

[blobbles]

You could be right the way its going, somethings up.

Expectations of a good next report I suspect. And I think the expectations might be right. The ma30 also went past the ma100 a little while back, uptrend developing.

[blobbles]

Very small volume though, big holders are holding...

[Baddarcy]

Some good and bad in there, possible slight profit downgrade, but cash is back on the way up and 7,000 new users is not bad either.

[Lola]

Some good and bad in there, possible slight profit downgrade, but cash is back on the way up and 7,000 new users is not bad either.

And even better in NZD terms. NZ$10 not hard to justify on 8 times revenues. New team quickly on to the path they expounded at the AGM. DYOR.

[Monty]

was the report a bit of a damp squid? I thought things were looking very positive so a little confused that the share price has come back somewhat.

Positives
Cash pile continues to grow
Diligent teams - early days but looking ok
New release has been well received
retention rates are still best in market
Revenue continue to grow (and is the focus in 20156)

Negative
Not much if any that I could see

[couta1]

Some expecting more? plus a bit of a market down day in general so far.

[Whipmoney]

was the report a bit of a damp squid? I thought things were looking very positive so a little confused that the share price has come back somewhat.

Positives
Cash pile continues to grow
Diligent teams - early days but looking ok
New release has been well received
retention rates are still best in market
Revenue continue to grow (and is the focus in 20156)

Negative
Not much if any that I could see

It's going down on small volume so likely to be retail investors or spec traders exiting quietly.

The instos will prob take some time to digest the accounts.

[couta1]

It's going down on small volume so likely to be retail investors or spec traders exiting quietly.

The instos will prob take some time to digest the accounts.
Volume not that small, has already hit its average daily volume and its only 11am.

[iceman]

Clearly the market expected a much better profit figure. That part of the announcement is disappointing to say the least

[Whipmoney]

Teams product page finally up.

http://diligent.com/diligent-teams/

[Bilbo]

was the report a bit of a damp squid? I thought things were looking very positive so a little confused that the share price has come back somewhat.

Positives
Cash pile continues to grow
Diligent teams - early days but looking ok
New release has been well received
retention rates are still best in market
Revenue continue to grow (and is the focus in 20156)

Negative
Not much if any that I could see

The commentary was probably a little downbeat as the rising USD has affected the performance in USD terms. However, according to my rough calculations, revenue in NZD terms rose 42% from same quarter last year. Drop in EBITDA my only real concern and have not seen any explanation of that.

[iceman]

The commentary was probably a little downbeat as the rising USD has affected the performance in USD terms. However, according to my rough calculations, revenue in NZD terms rose 42% from same quarter last year. Drop in EBITDA my only real concern and have not seen any explanation of that.

My biggest concern is that while revenue growth is acceptable, we have 51% growth in general and administrative expenses and 89% rise in sales and marketing costs. That better follow quickly with a decent increase in revenue

[Whipmoney]

My biggest concern is that while revenue growth is acceptable, we have 51% growth in general and administrative expenses and 89% rise in sales and marketing costs. That better follow quickly with a decent increase in revenue

That's likely to be due to the front loading of costs for the Teams product (e.g. support staff and marketing). They've scaled up their support structure in general which I presume is to allow them to capitalise on further growth opportunities.

[Monty]

I noted an interested release today on NZX with the appointment of the new HR manager. I particular part of the release notes integral to future acquisition plans. Jumping the shark a little, but I do wonder if that statement is just a little hint? Also noting a reasonable volume going thru the book. Sadly price not getting over $6 a share. Waiting waiting.......

[iceman]

Yes Monty I thought the same. They must have something in the pipeline to put that in a market announcement. Will be interesting to watch

[Mobius]

Over $6. *crickets*

[muss1]

No ones talking, no hype, must be in for a good run

[Baddarcy]

Wow page 4, took a bit of effort to find the thread !

Quarterly due in the next fortnight, personally i'm expecting much the same linear increases, with a bit of a jump from the Reuters purchase, i don't think we will get the $100m for the 2015 year, but the quarterly revenue will be over $25m for Q4 2015. Cash in hand will drop due to the Reuters purchase. User numbers will jump to about 120,000.

Anyone else want to make a prediction, or is DIL the next Linkin Park...not cool anymore?

[Carpenterjoe]

Wow page 4, took a bit of effort to find the thread !

Quarterly due in the next fortnight, personally i'm expecting much the same linear increases, with a bit of a jump from the Reuters purchase, i don't think we will get the $100m for the 2015 year, but the quarterly revenue will be over $25m for Q4 2015. Cash in hand will drop due to the Reuters purchase. User numbers will jump to about 120,000.

Anyone else want to make a prediction, or is DIL the next Linkin Park...not cool anymore?

Not too worried about dollars, We all know they spend a lot, some will say their spending is careless.

I think its all about the Diligent Teams product, a little more info on how that is progressing.

I have been really lazy following diligent the last 6 months or so. Has the Teams product had its hard launch yet? thought that was booked in for late last year?

No need to be cool when your product needs to be trusted.

[Anonymous]

Takeover bid for DIL??

http://www.reuters.com/article/us-diligent-m-a-insight-idUSKCN0VN01U

[winner69]

Takeover bid for DIL??

http://www.reuters.com/article/us-diligent-m-a-insight-idUSKCN0VN01U

Better be $8 plus

[Anonymous]

Now an official announcement:

https://www.nzx.com/companies/DIL/announcements/277631

[Balance]

Better be $8 plus

$7.39

First bid is never the last bid?

[Baa_Baa]

$7.39

First bid is never the last bid?

Done deal .. "today announced it has entered into a definitive agreement to be acquired by Insight Venture Partners" .. "Board of Directors has unanimously approved the transaction" ... just needs 60% shareholder approval.

[Balance]

Kinda puts Milford's decision to exit 2 years ago in some perspective?

For those who took the opportunity of Milford selling down (and then articulating to all and sundry why DIL is a big sell so that the sp fell as low as $2.65) - good on you!

[fiasco]

Congrats to all holders, it is somewhat sad to see a takeover given the organisation's capability and potential.

However, great to see benefiting a significant number of shareholders.

[muss1]

A bit disappointing given the potential diligent has. That is obviously seen by insight as well paying a 31% premium. Who knows where it could be in 5 years time

[gonzo56]

Thank god. It's shameful to say; even at $7.10, I still wouldn't have broken even on my investment with DIL (not too far off). I've learnt some lessons though and it's very nice to see my huge loss will disappear this morning :) Quite happy about this

[Mobius]

... and the transformation into faceless corporation is now complete.

The end of an era, this is!

Heartfelt thanks to Brian Henry for the awesome ride. It's been life-changing.

[JohnnyTheHorse]

I reckon maybe even Couta in the green now. Good on him.

[youngatheart]

What about Roadrunner? Who mortgaged his house and everything...

[gonzo56]

What about Roadrunner? Who mortgaged his house and everything...

Wow, I just read those old messages from The Rocket and Roadrunner. Unbelievable. Yes, if they are still solvent, they'll be over the moon right now.

[youngatheart]

I remember when the share price was 6 CENTS... so sad to see Diligent go...

[Harvey Specter]

What about Roadrunner? Who mortgaged his house and everything...and the porsche! Can anyone remember what price it was at when he bet the house?

[gonzo56]

and the porsche! Can anyone remember what price it was at when he bet the house?

It was at $5.40

[gonzo56]

What now..? I've never been through this.

So I assume once it comes up to the close date (after we have voted) our shares will automatically be bought for $7.39 and our shares will disappear and the cash will appear in our account? We don't really have to do anything special, it will just all happen..?

[JohnnyTheHorse]

What now..? I've never been through this.

So I assume once it comes up to the close date (after we have voted) our shares will automatically be bought for $7.39 and our shares will disappear and the cash will appear in our account? We don't really have to do anything special, it will just all happen..?

The transaction is in USD, so the amount you receive may not be $7.39, unless they have fixed the exchange rate already. Don't think they've said, I suspect that's why the current market price is not quite that high - there is currency risk in holding.

[Bjauck]

The transaction is in USD, so the amount you receive may not be $7.39, unless they have fixed the exchange rate already. Don't think they've said, I suspect that's why the current market price is not quite that high - there is currency risk in holding. Will those shareholders on the NZ register be paid in NZ dollars? Unless they have fixed the NZ dollar amount, if the offer is only in USD, I wonder why they have given a NZ converted amount when it will vary according to whatever is the current USD/NZD conversion rate until the USD payment is actually made.

[Cricketfan]

How long does a process like this normally take, before shareholders receive payment?

[iceman]

Been a great investment but very sad to see DIL leave the NZX, although inevitable. We have a NZ tech company which is a World leader in its field and doing so very profitably. Would have preferred to ride this one a few more years but not to be.

[Snow Leopard]

Interesting to note that this appears to be, technically, a MERGER (actually two) and needs a simple majority to pass.

Not your 90% for a proper takeover.

Best Wishes
Paper Tiger

[Banksie]

Oh.

I wasn't expecting this, and I am sad to see them go too.

Guess I will have to start researching another solid tech company.

Any suggestions?

[Fisherking]

For me there were 3 potential catalysts to this stock taking off:
1. Takeover/ merger
2. NASDAC listing
3. Teams product
In a way i'm surprised the takeover has come before the listing, still it's a reasonable premium particularly for those that bought in after the restatement issues.

[Dilbert]

How long does a process like this normally take, before shareholders receive payment?

Some months I'd expect, deal supposed to be done and dusted in 2nd quarter.

[Bilbo]

Interesting to note that this appears to be, technically, a MERGER (actually two) and needs a simple majority to pass.

Not your 90% for a proper takeover.

Best Wishes
Paper Tiger

Can someone please explain why the press release says the merger values DIL at $941M NZD yet both NZX and ANZ show the current market cap at $625M (with SP at $7.15) which would give a MC of $642M at the takeover price of $7.39. Are there a heap of unlisted options or convertible notes etc that are not factored into the MC?

My thoughts are that NZ shareholders will now miss out on the increase in value coming from the new teams product and NASDAQ listing and that the takeover is not necessarily in shareholders best interests.

[winner69]

Can someone please explain why the press release says the merger values DIL at $941M NZD yet both NZX and ANZ show the current market cap at $625M (with SP at $7.15) which would give a MC of $642M at the takeover price of $7.39. Are there a heap of unlisted options or convertible notes etc that are not factored into the MC?

My thoughts are that NZ shareholders will now miss out on the increase in value coming from the new teams product and NASDAQ listing and that the takeover is not necessarily in shareholders best interests.

Yes - heaps of unlisted redeemable preference shares (30 million I think)

[Lola]

Oh.

I wasn't expecting this, and I am sad to see them go too.


Guess I will have to start researching another solid tech company.


Any suggestions?

Suggest u peek at VML.
Keep an open mind too.

[Brain]

An article in NBR states that the venture capital firm taking over Diligent , Insight Venture Partners is based in Delaware.
Under Delaware law after 50% of shareholders have accepted a takeover the buyer can compulsory acquire the remaining shares.
This is all a bit strange. We NZ share holders have purchased shares in a NZ listed company where the law requires 90 % acceptance.
All of a sudden that seems to go out the window and Delaware law applies. This can't be right surely.

[Baa_Baa]

Suggest u peek at VML.
Keep an open mind too.

My new favourite member, Lol A, :t_up:

[winner69]

An article in NBR states that the venture capital firm taking over Diligent , Insight Venture Partners is based in Delaware.
Under Delaware law after 50% of shareholders have accepted a takeover the buyer can compulsory acquire the remaining shares.
This is all a bit strange. We NZ share holders have purchased shares in a NZ listed company where the law requires 90 % acceptance.
All of a sudden that seems to go out the window and Delaware law applies. This can't be right surely.

As PT pointed out earlier its a Merger, not a takeover

[Brain]

Diligent's announcement describes it as a takeover.

[tui]

Might be better to take the 7.14 offered and invest elsewhere rather than hang out for an extra .25 with the associated risks. Its been a good jump up and an unexpected bonus to most.

[moka]

Good bye Diligent. I’ll miss you. I know I’m not supposed to be married to a stock but I wanted to spend the rest of my life with you. We’ve had our ups and downs over the years and I still love you. There were times when you disappointed me but I still had faith in you. Thank you for the great times. You were something special. I saw that when I first met you and got to know you. I’m disappointed that I’ll not be participating as a shareholder in your exciting future. I‘m sad to see you go, and sorry the relationship is over. Thank you for the wonderful ride.

[winner69]

Diligent's announcement describes it as a takeover.

The documents (all the ins and outs)

AGREEMENT AND PLAN OF MERGER
among
DIAMOND PARENT HOLDINGS, CORP., DIAMOND MERGER SUB I, CORP., DIAMOND MERGER SUB II, CORP.,
and
DILIGENT CORPORATION
Dated as of February 12, 2016

https://www.nzx.com/files/attachments/229717.pdf

[Lola]

The documents (all the ins and outs)

AGREEMENT AND PLAN OF MERGER
among
DIAMOND PARENT HOLDINGS, CORP., DIAMOND MERGER SUB I, CORP., DIAMOND MERGER SUB II, CORP.,
and
DILIGENT CORPORATION
Dated as of February 12, 2016

https://www.nzx.com/files/attachments/229717.pdf

Cant help feeling uncomfortable with the seemingly indecent haste of the Directors recommendation plus their intended own actions given the 29 Feb upcoming annoucements.

Why cant we have an independent valuation as is normal practice?
Just who is the suitor and what arrangements or connections with DILs Management and major shareholders are there now and intended??

This seems all to cosy for me.

[iceman]

I agree Lola that this appears to be a very cosy arrangement. I suspect this is pretty much a done deal. They signed a confidentiality agreement on Nov 3 2015 so have had a reasonable amount of time to dot their I's and cross their T's. Reading the legal jargon that is the agreement indicates we will have no say in it.

They do state in there that hey have sought and received an opinion from Jefferies LLC confirming the merger proposal is "fair". I assume we will get to read that report !

In the agreement it is also very clearly stated that DIL or its Officers shall not initiate, solicit or knowingly encourage or assist any acquisition proposal so the chance of a superior acquisition proposals seem very slim or none.

Another thing of note is that there is no reference to NZ$ price in this offer. The offer is in USD so any currency risk/benefit for us NZ shareholders is borne by us.

I find it very difficult to understand when we can expect payment for our shares if (when) this is finalised. They have 18 business days called the "Marketing Period" to receive all the information they require. After that is satisfied we have Closing Date. Once that is done they file necessary documents with State of Delaware and we have "First Effective Time".
By then they need to pay the funds to the Registrar which will hold the funds in a NZ bank account until all further conditions are met. My question here would be whether the NZ bank will convert and hold these funds in NZ$ or hold them in US$ ?

I am guessing we are talking somewhere in the range of 25-30 business days before we will get paid for our funds, but that is simply a guess after reading the document. It doesn't actually clearly state or indicate when shareholders can be expected to receive their funds.

Meanwhile we are faced with currency risk and the risk of DIL breaching conditions in this contract which could lead to a payment of nearly USD 20M to the offerer !!
Would appreciate any comments on timings from others that may find the agreement more easy to understand than I do !!

But little doubt in my mind that we have only 2 choices, sell on market now or wait until this deal is done (a pretty much foregone conclusion) and we receive the cash.

In any case, DIL has been a very profitable investment for me and I am reasonably satisfied, but would have preferred to stay as SH for a few more years.

[blobbles]

Offer is far too low IMO, they are still delivering decent growth, could be a lot more profitable if run properly (check out glass door reviews) and have a seemingly good new product that we don't know enough about yet. And don't forget they have $100m in the bank, so take that off the market cap and you are looking at $6.50 "merger" price. Seems far too low to me.

[blobbles]

Besides, if this was a normal merger, wouldn't shareholders have a stake in the new company?

[Bilbo]

Might be better to take the 7.14 offered and invest elsewhere rather than hang out for an extra .25 with the associated risks. Its been a good jump up and an unexpected bonus to most.

Yes have done exactly that this morning (sold all at 7.12). Starting buying at 3.30 in Dec 2013 so happy to take profit and get out now rather than waste time and energy thinking about the merger etc over the next few months. Sad that we wont be participating on the next step of the DIL story but plenty of other opportunities.

[iceman]

Yes have done exactly that this morning (sold all at 7.12). Starting buying at 3.30 in Dec 2013 so happy to take profit and get out now rather than waste time and energy thinking about the merger etc over the next few months. Sad that we wont be participating on the next step of the DIL story but plenty of other opportunities.

Not sure I agree at this stage. That is an approximately 4% (+ trading fee) discount to the offer and for a reasonable holding that can equate to a significant amount.

[iceman]

Huljich for, Craigs against !!! Well done ad thanks to the Huljich family for helping DIL list on the NZX allowing many NZ shareholders to benefit greatly from it.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11590353

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11590335

[Bilbo]

Not sure I agree at this stage. That is an approximately 4% (+ trading fee) discount to the offer and for a reasonable holding that can equate to a significant amount.

I guess it comes down to opportunity cost. DIL was in the portfolio I actively manage which is high growth, high risk and hopefully high return, alongside the likes of ATM and TIL. I knew the potential upside to my DIL investment was now capped at 3.8% over an unknown period, likely to be 3-4 months but maybe more. As that is not the sort of return this portfolio seeks and not wanting to miss out on opportunities that could return significantly more, I decided to sell and put the funds to better use. The day the takeover was announced the investment case changed significantly and no longer matched my criteria for this portfolio, but I realize everyone has their own goals and this is by no means a recommendation to sell.

[Lola]

I guess it comes down to opportunity cost. DIL was in the portfolio I actively manage which is high growth, high risk and hopefully high return, alongside the likes of ATM and TIL. I knew the potential upside to my DIL investment was now capped at 3.8% over an unknown period, likely to be 3-4 months but maybe more. As that is not the sort of return this portfolio seeks and not wanting to miss out on opportunities that could return significantly more, I decided to sell and put the funds to better use. The day the takeover was announced the investment case changed significantly and no longer matched my criteria for this portfolio, but I realize everyone has their own goals and this is by no means a recommendation to sell.

Best thing about this DIL takeover is we all wont have to put up anymore with the continous bashing by the written media the company has had to endure since December 2007.
Most of our so called financial journalists should grow up and try and get a life.

[Roadrunner]

7906Hi, and congratulations to all shareholders in DIL re the recent takeover/merger by Insight.I was in Rarotonga last week when I got the news out of the blue.I had sold a while back at around $6.15 and bought into something else but was planning to get back in before the quarterly and hopefully new product announcement.I was a bit gutted to miss out but was very fortunate(and relieved!) to make up for it elsewhere.I think Insight have done very well and have bought themselves a heck of a bargain.It would have been interesting to see Dilly progress over the next few years but that wasn`t to be.If anyone who is cashed up wants to buy my personalised plate Ill do them a good price haha!All the best :)

[Mobius]

Hey Roadrunner, nice 996! I just sold my '89 supercharged 911 race car, and am working on my '69 911S restoration, which will need a plate. I may be interested at the right price. Flick me a text on 0210-69-58-69. Cheers!

[kiora]

7906Hi, and congratulations to all shareholders in DIL re the recent takeover/merger by Insight.I was in Rarotonga last week when I got the news out of the blue.I had sold a while back at around $6.15 and bought into something else but was planning to get back in before the quarterly and hopefully new product announcement.I was a bit gutted to miss out but was very fortunate(and relieved!) to make up for it elsewhere.I think Insight have done very well and have bought themselves a heck of a bargain.It would have been interesting to see Dilly progress over the next few years but that wasn`t to be.If anyone who is cashed up wants to buy my personalised plate Ill do them a good price haha!All the best :)

Are you sure that's your Porsche RR? I thought you where from Wellywood but that photo looks like its from Red Beach? :)

[Roadrunner]

Hey Roadrunner, nice 996! I just sold my '89 supercharged 911 race car, and am working on my '69 911S restoration, which will need a plate. I may be interested at the right price. Flick me a text on 0210-69-58-69. Cheers!

Cheers Mobius.....yes my second 996.This one a '99 Carrera I bought in Auckland with Turbo alloys and sports exhaust.Sounds like you are an enthusiast and like to race them.I drive this one most days and have a restored '92 Saab 900 Turbo which is a bit different but a lot of fun and a bit more practical.

[Roadrunner]

Are you sure that's your Porsche RR? I thought you where from Wellywood but that photo looks like its from Red Beach? :)

Haha!...yeah I haven`t nicked it, honest.....well spotted though and close but Hatfields Beach near Orewa visiting the family at Christmas.....no a Palmy North boy,the pearl of the Manawatu lol

[kiora]

Haha!...yeah I haven`t nicked it, honest.....well spotted though and close but Hatfields Beach near Orewa visiting the family at Christmas.....no a Palmy North boy,the pearl of the Manawatu lol

Sorry RR.Of coarse it was Hatfields.Love the pohutakawas :)

[Louloubell]

I'm a recent investor in DIL, so have done well, but can't help to think that today's announcement confirms they (we) have sold too cheap.

[Banksie]

As an investor in DIL will I be required to pay tax on any gains made when my shares are converted to cash?

[kizame]

As an investor in DIL will I be required to pay tax on any gains made when my shares are converted to cash?

No as you are an investor.

[iceman]

As an investor in DIL will I be required to pay tax on any gains made when my shares are converted to cash?

The takeover actually makes no difference. If your intention was to be a long term investor, not a trader, when you bought, there should be no tax to pay.

Does anyone have a clearer idea from today"s announcement, on when we can expect our money ?

[Lola]

The takeover actually makes no difference. If your intention was to be a long term investor, not a trader, when you bought, there should be no tax to pay.

Does anyone have a clearer idea from today"s announcement, on when we can expect our money ?


These NY boys dont part with their bread too readily....May sometime Id say.
As for tax yes all NZ shareholders in DIL , call them investors, speculators whatever you like , DIL is a foreign registered company and not on our IRDs list of exempeted stocks , so as such everyone is caught.
This takeover, whoops sorry they call it a merger, how cute is that?? ; is a very one sided affair to be sucked on by us locals. Just another example (and there have been plenty) of kiwis having NO idea what they have their hands on sometimes. That includes most of the intos and fund managers :rolleyes:

[Harvey Specter]

Did anyone read shoeshine in the NBR?
A couple of lines in there suggesting the 'merger' proceeds maybe a taxable dividend!

Anyone know more about this?

[zigzag]

Did anyone read shoeshine in the NBR?
A couple of lines in there suggesting the 'merger' proceeds maybe a taxable dividend!

Anyone know more about this?

I was quite surprised to read that in the NBR. I have held my shares for around 7 years, since the GFC, and had assumed that there would be no tax to pay. I mean, I didn't choose to sell them. In fact I will be voting against the proposal. It would be very helpful if Diligent or someone knowledgeable could clarify the matter. Sorry that I can't help you at all with that Harvey.

[zigzag]

These NY boys dont part with their bread too readily....May sometime Id say.
As for tax yes all NZ shareholders in DIL , call them investors, speculators whatever you like , DIL is a foreign registered company and not on our IRDs list of exempeted stocks , so as such everyone is caught.
This takeover, whoops sorry they call it a merger, how cute is that?? ; is a very one sided affair to be sucked on by us locals. Just another example (and there have been plenty) of kiwis having NO idea what they have their hands on sometimes. That includes most of the intos and fund managers :rolleyes:

Not everyone is caught. My understanding is that only those whose total initial investment(s) was over fifty thousand are liable to pay. This is the Michael Cullen capital gains tax, and I am disappointed that National haven't given it the boot.

[Lola]

I was quite surprised to read that in the NBR. I have held my shares for around 7 years, since the GFC, and had assumed that there would be no tax to pay. I mean, I didn't choose to sell them. In fact I will be voting against the proposal. It would be very helpful if Diligent or someone knowledgeable could clarify the matter. Sorry that I can't help you at all with that Harvey.

You must be joking if you think someone at Diligent might help you, or anyone else in the same position. One ray of hope though is that once you have been compulsorarily acquired....and that means ignoring all the offer correspondence....you may, and I say may be able to mount a good arguement with the IRD along the lines that you suggest. VIZ that you did not seek to sell your shares and therefore this tax shpuld not apply . There have been precedents.

I hope you attend the AGM with your lawyer and express your utmost dissatisfation with this whole process . But it will be a bit like expecting the departed to leap out of the coffin at the service!

[Harvey Specter]

1. If an N.Z. Holder applies the FIF rules to their foreign company investments, any gains they receive when their shares are cancelled should not be separately taxable.
2. If an N.Z. Holder does not apply the FIF rules to their foreign company investments the full amount theyreceive for the cancellation of their shares in the merger may be treated as a taxable dividend. If such N.Z. Holder sellsits Diligent shares before the first merger occurs, none of the proceeds should be subject to New Zealand tax (unless theshares were acquired with the dominant purpose of resale or disposal or as part of a profit making scheme or as part of ashare dealing business).https://www.nzx.com/files/attachments/231930.pdf p81

[zigzag]

Page 81 and the plot thickens. I really have been waiting for the hard copy, as I find that easier to read. Now looks as though I need to make a decision. Dam. Why does everything have to be so complicated? Thanks for putting that up Harvey.

[gonzo56]

What if your shares are force sold at a loss? Say for example you invest 20K of your own money and you get 18K back...the IRD don't treat that as receiving 18K of income do they? You're essentially just moving you're own money around. If so, you'd be taxed twice, once when you earned it and once when you got it back from the market (at a loss!?). Though, I guess it is up to you to declare it to the IRD...

Just looking into the FIF rules now.

[gonzo56]

Just read a bit more. So you would have to vote against it and write them a demand for appraisal AND file a petition in the Delaware Court of Chancery.

Nice to know that the IRD do exempt some stocks from this - though in my example with DIL, 18K doesn't cross the 50K threshold, so that would be exempt anyway, correct?

[iceman]

Not everyone is caught. My understanding is that only those whose total initial investment(s) was over fifty thousand are liable to pay. This is the Michael Cullen capital gains tax, and I am disappointed that National haven't given it the boot.

zigzag, I am of a similar understanding to you. But is the $50 k limit for what you invested or what you will receive from the merger.?

[zigzag]

zigzag, I am of a similar understanding to you. But is the $50 k limit for what you invested or what you will receive from the merger.?

My reading of the situation is that the $50k limit refers to your original amount invested, not the present total, all other things being equal. DIL is my only offshore holding, and the sum I invested was well under the limit, so I am not subject to the FIF rules. I will have a good read of the document over the long weekend, but at this stage I think I will more than likely sell on market.

[zigzag]

Just read a bit more. So you would have to vote against it and write them a demand for appraisal AND file a petition in the Delaware Court of Chancery.

Nice to know that the IRD do exempt some stocks from this - though in my example with DIL, 18K doesn't cross the 50K threshold, so that would be exempt anyway, correct?

It is not on an individual company basis, but the total of your overseas investments. If DIL is your only one then you don't get caught in the FIF regime. But, according to the "merger" document, shareholders who are not subject to FIF are the ones who may get caught out.

[zigzag]

Be aware that ZigZag has in the past been referred to as a total moron, so please do your own reading and research!

[gonzo56]

Be aware that ZigZag has in the past been referred to as a total moron, so please do your own reading and research!

Thanks for the reply. Hmm, doesn't look favourable if you lost on your investment. When you get your money back from this, (even if it's less) it still looks like income to the IRD. sigh.. I would love it if you were only taxed on profits, not on the transaction as a whole.

[G on]

As I understand a form has to be filled in to apply for exemption of any backup withholding tax in US. for individuals it seems to be W8BEN. If not 28%- 30% of gross amount can be withheld!!
Reading on Linkmarket it appears this form does not need to be lodged?
Regardless, there seems to be so much tax gobbledygook that it just about makes it incomprehensible!!!
Anyone out there that can clarify???

[Markymarknz]

As I understand a form has to be filled in to apply for exemption of any backup withholding tax in US. for individuals it seems to be W8BEN. If not 28%- 30% of gross amount can be withheld!!
Reading on Linkmarket it appears this form does not need to be lodged?
Regardless, there seems to be so much tax gobbledygook that it just about makes it incomprehensible!!!
Anyone out there that can clarify???

Here is a statement in the information that was emailed out overnight to shareholders:

"It is anticipated that most shareholders that are New Zealand residents will not need to provide a U.S. tax form in order to avoid application of U.S. backup withholding tax, but that shareholders that are U.S. residents generally will need to provide such a form."

[gonzo56]

....what's the chance that enough people voted against the merger? (Am I dreaming that it could be declined?)

[iceman]

....what's the chance that enough people voted against the merger? (Am I dreaming that it could be declined?)

Yes gonzo56, sadly I think you are dreaming. I believe all the major shareholders have or are accepting. Morgan Stanley has also been mopping up a very significant amount on market since the "merger" announcement. One has to assume that is favourable for the "merger".. This is a done deal and DIL will be delisted in just over 2 weeks. We should have the money in our bank soon thereafter. Hope the dollar drops a bit before then !!

[iceman]

For those of you interested, below is an email sent out by the Shareholders Association early this morning. I sold half my holding 3 weeks ago and had the intention to wait with the rest until takeover, but have sold out all my holding this morning.
The tax information in this email from NZSA is worse than I believed to be the case as we are not only subject to FIF rules but also the risk of being taxed as if this was a dividend payment, at our marginal tax rate. Suggest SH carefully check their status. Senior management of DIL has sold us down the river. Shame on them.

"Diligent (DIL) is shortly holding a special meeting to consider a two step merger (effectively a takeover) from an affiliate of Insight Venture partners. The meeting will be held in the Maritime Room, Princess Wharf, Corner of Hobson and Quay St, Auckland at 10am on 13 April.

DIL is registered in Delaware USA, and while it is listed on NZX, it is not subject to the NZ Companies Act nor the local Takeovers Code, both potential issues that NZSA has previously pointed out. Under American rules, the merger can succeed and you can be forced to sell with a simple majority in favour. This is very different to the 90% hurdle that applies to NZ or Australian registered companies. This low hurdle is further compromised because several large shareholders representing about 35% of the shares have already agreed to sell. It therefore seems likely that the takeover will succeed. For those of you who have stuck with the company through some difficult times including several serious governance and financial failings, this situation will be a bitter pill.

Like many of you, NZSA considers that the offer of $US4.90 is both low and opportunistic and came at a brief dip in the current market cycle. The company has been investing heavily and it seems to be on the cusp of significant growth - certainly that is the impression management have been giving. For example, in their February 12 statement, the CEO is quoted as saying the business has "strong momentum". Under American law there is no requirement for an independent report to help you, but NZX insisted on one. This report has been condemned by other analysts who say the 4% growth it projects is far too low. DIL's latest accounts actually show revenues growing rapidly (24% Q on Q and 20% year on year).

NZSA is particularly concerned about a serious taxation issue that may affect some shareholders and which may have escaped your notice. Because of the structure that Diligent has chosen, tax may, in some cases, be payable on the full value received for your shares. If you have less than $50,000 (at cost) in offshore investments and are NOT subject to the Foreign Investment Fund (FIF) regime, the full payment for your shares will be treated as a dividend and taxed at your marginal rate. However, if you ARE subject to the FIF regime, then you will not face this outcome as the tax treatment is different. It is possible to voluntarily participate in the FIF regime if you hold less than $50,000, but the compliance requirements and costs can be substantial, are difficult to manage yourself and are often unfamiliar to smaller accounting practises.

It is patently unfair that the same transaction can have two entirely different tax outcomes, particularly as it is the smaller retail investor that is penalised. Diligent could have used a different structure to avoid this, but chose not to.
If you are a small shareholder in the position where you may be taxed, it seems the only practical solution is to sell on market prior to the takeover. Note that the final day for trading will be 11 April, two days prior to the meeting.

Adding to the challenge is the fact that Diligent will be paying out investors in $US. Any foreign exchange risk will lie with the shareholder. We consider this to be quite unacceptable. For example, at the time the offer was made, it equated to $NZ7.39. At the time of writing, it is now $NZ7.10 (and the NZX market price is $7.07).

Another factor is the huge payments that management and directors stand to gain from the transaction. These are reported to include $US16.14m to former CEO Alex Sodi, $US3.86m to current CEO Brian Stafford and $US2.2m to the current CFO. Chair David Liptak's Spring St Capital also stands to make large gains. It is easy to imagine how such conflicts of interest could potentially colour decisions made by the board, presumably with significant management input.

We are also concerned that shareholders will struggle to understand the Definitive Proxy Statement issued by DIL. This is an American document that is so long winded and uses such arcane language that it is all but unintelligible. DIL has put out a Q&A to attempt to explain the information in the proxy statement. This is more helpful, but probably carries no legal standing.

NZSA will have a proxy presence at the DIL SGM. Given the issues set out above, we intend to vote any undirected proxies we hold AGAINST all resolutions.


John Hawkins
Chairman "

[Banksie]

I also sold out a few days ago and although I made a very modest return on my investment (around $1 a share) I am still pretty aggrieved at the way this has turned out. After holding their shares for almost 3 years I was beginning to think we were just on the cusp of seeing some real returns.

I am questioning whether there really is an opportunity for an "investor", as opposed to a "trader", in this market; when as soon as a company starts showing real value minority holders get shafted.

[Harvey Specter]

I sold. Who knows what forex will do. potentially gave away 2% (?? plus any forex gains) but best to have certainty and means I dont have to worry about working out the tax situation.

A shame we will never know how successful it becomes.

[Lola]

For those of you interested, below is an email sent out by the Shareholders Association early this morning. I sold half my holding 3 weeks ago and had the intention to wait with the rest until takeover, but have sold out all my holding this morning.
The tax information in this email from NZSA is worse than I believed to be the case as we are not only subject to FIF rules but also the risk of being taxed as if this was a dividend payment, at our marginal tax rate. Suggest SH carefully check their status. Senior management of DIL has sold us down the river. Shame on them.

"Diligent (DIL) is shortly holding a special meeting to consider a two step merger (effectively a takeover) from an affiliate of Insight Venture partners. The meeting will be held in the Maritime Room, Princess Wharf, Corner of Hobson and Quay St, Auckland at 10am on 13 April.

DIL is registered in Delaware USA, and while it is listed on NZX, it is not subject to the NZ Companies Act nor the local Takeovers Code, both potential issues that NZSA has previously pointed out. Under American rules, the merger can succeed and you can be forced to sell with a simple majority in favour. This is very different to the 90% hurdle that applies to NZ or Australian registered companies. This low hurdle is further compromised because several large shareholders representing about 35% of the shares have already agreed to sell. It therefore seems likely that the takeover will succeed. For those of you who have stuck with the company through some difficult times including several serious governance and financial failings, this situation will be a bitter pill.

Like many of you, NZSA considers that the offer of $US4.90 is both low and opportunistic and came at a brief dip in the current market cycle. The company has been investing heavily and it seems to be on the cusp of significant growth - certainly that is the impression management have been giving. For example, in their February 12 statement, the CEO is quoted as saying the business has "strong momentum". Under American law there is no requirement for an independent report to help you, but NZX insisted on one. This report has been condemned by other analysts who say the 4% growth it projects is far too low. DIL's latest accounts actually show revenues growing rapidly (24% Q on Q and 20% year on year).

NZSA is particularly concerned about a serious taxation issue that may affect some shareholders and which may have escaped your notice. Because of the structure that Diligent has chosen, tax may, in some cases, be payable on the full value received for your shares. If you have less than $50,000 (at cost) in offshore investments and are NOT subject to the Foreign Investment Fund (FIF) regime, the full payment for your shares will be treated as a dividend and taxed at your marginal rate. However, if you ARE subject to the FIF regime, then you will not face this outcome as the tax treatment is different. It is possible to voluntarily participate in the FIF regime if you hold less than $50,000, but the compliance requirements and costs can be substantial, are difficult to manage yourself and are often unfamiliar to smaller accounting practises.

It is patently unfair that the same transaction can have two entirely different tax outcomes, particularly as it is the smaller retail investor that is penalised. Diligent could have used a different structure to avoid this, but chose not to.
If you are a small shareholder in the position where you may be taxed, it seems the only practical solution is to sell on market prior to the takeover. Note that the final day for trading will be 11 April, two days prior to the meeting.

Adding to the challenge is the fact that Diligent will be paying out investors in $US. Any foreign exchange risk will lie with the shareholder. We consider this to be quite unacceptable. For example, at the time the offer was made, it equated to $NZ7.39. At the time of writing, it is now $NZ7.10 (and the NZX market price is $7.07).

Another factor is the huge payments that management and directors stand to gain from the transaction. These are reported to include $US16.14m to former CEO Alex Sodi, $US3.86m to current CEO Brian Stafford and $US2.2m to the current CFO. Chair David Liptak's Spring St Capital also stands to make large gains. It is easy to imagine how such conflicts of interest could potentially colour decisions made by the board, presumably with significant management input.

We are also concerned that shareholders will struggle to understand the Definitive Proxy Statement issued by DIL. This is an American document that is so long winded and uses such arcane language that it is all but unintelligible. DIL has put out a Q&A to attempt to explain the information in the proxy statement. This is more helpful, but probably carries no legal standing.

NZSA will have a proxy presence at the DIL SGM. Given the issues set out above, we intend to vote any undirected proxies we hold AGAINST all resolutions.


John Hawkins
Chairman "

Does this mean that Mr Hawkins and his organisation thinks this arrangement that management and directors have made isnt in shareholders (other than those who are in the aforesaid groups) best interests? If so then we may not have heard the last of this saga. It just might be the end of the beginning.

[Harvey Specter]

Does this mean that Mr Hawkins and his organisation thinks this arrangement that management and directors have made isnt in shareholders (other than those who are in the aforesaid groups) best interests? If so then we may not have heard the last of this saga. It just might be the end of the beginning.Are you suggesting a class action given this is a US company.

[Lola]

Are you suggesting a class action given this is a US company.

Im not sure what Mr Hawkins is thinking.

[Bjauck]

Definitely a shame with what's happening to DIL. Another Good NZ business sliding out of NZ shareholders' reach? Is it a question of keeping calm and joining the majority investing in NZ real estate, while overseas shareholders continue to take over what were our good businesses?

[Dilbert]

The relevant para in the documentation (p81) says the following, which says to me that the if your holdings are under $50K, and are not trading, then you should be ok:

"Where an N.Z. Holder is not required to apply the FIF rules (and does not elect to apply the FIF rules voluntarily), theywill only pay New Zealand tax on realized gains they obtain from their investment in the foreign company. These will includeany dividend amounts the foreign company pays them. They will not be required to pay tax on any profit they realize fromselling the foreign company's shares unless the foreign company shares were acquired with a dominant purpose of resale ordisposal or as part of a profit making scheme or as part of a share dealing business"

[iceman]

The relevant para in the documentation (p81) says the following, which says to me that the if your holdings are under $50K, and are not trading, then you should be ok:

"Where an N.Z. Holder is not required to apply the FIF rules (and does not elect to apply the FIF rules voluntarily), theywill only pay New Zealand tax on realized gains they obtain from their investment in the foreign company. These will includeany dividend amounts the foreign company pays them. They will not be required to pay tax on any profit they realize fromselling the foreign company's shares unless the foreign company shares were acquired with a dominant purpose of resale ordisposal or as part of a profit making scheme or as part of a share dealing business"

That is what I also originally believed and had sold a chunk of mine a month ago to bring my remaining holding below $50k cost. But the NZSA warnings and the below from Craigs Investment Partners made me concerned. Accountants should be able to answer this but we are running out of time.
This from Craig's:
"We note that, based on the information provided in the offer documentation, it is likely that the full amount received due to the Merger (US$4.90 per share) will be deemed a taxable dividend for investors not subject to the FIF rules/FDR. For investors subject to the FIF rules/FDR, the gains received from the Merger should not be separately taxable. The documentation notes that for holders that sell before the Merger occurs, none of the proceeds should be subject to New Zealand tax."

[Harvey Specter]

The relevant para in the documentation (p81) says the following, which says to me that the if your holdings are under $50K, and are not trading, then you should be ok:

"Where an N.Z. Holder is not required to apply the FIF rules (and does not elect to apply the FIF rules voluntarily), theywill only pay New Zealand tax on realized gains they obtain from their investment in the foreign company. These will includeany dividend amounts the foreign company pays them. They will not be required to pay tax on any profit they realize fromselling the foreign company's shares unless the foreign company shares were acquired with a dominant purpose of resale ordisposal or as part of a profit making scheme or as part of a share dealing business"Correct. It won't be the profits your realised from selling.

it will be the whole Freaking amount! 100% taxable. The full monty. all of it. The whole sha-bang. Unless you elect into the FIF rules. That is my interpretation of the various readings. A similar thing happened with BHP recently too when they spun out a company.

[Markymarknz]

Correct. It won't be the profits your realised from selling.

it will be the whole Freaking amount! 100% taxable. The full monty. all of it. The whole sha-bang. Unless you elect into the FIF rules. That is my interpretation of the various readings. A similar thing happened with BHP recently too when they spun out a company.

So I only have a measly amount of shares (485). I understood from reading the documentation I was sent that due to the fact my holding is under $50k and I do not (and never have) had anything to do with being a US citizen or taxpayer I will not be subject to US tax.

I also read it that the full payment (no taxes incurred) will be transferred into the bank account I have registered with Link, but maybe I misinterpreted this.

I have only been holding this for capital gains (obviously as it never paid divvies) so don't feel I should have to pay tax on the sale, but do you think Link will carry this out automatically?

If so I am seriously considering paying the $30 fee through online broking and selling now...

[Harvey Specter]

Markymarknz - from the NZSA press release:


Because of the structure that Diligent has chosen, tax may, in some cases, be payable on the full value received for your shares. If you have less than $50,000 (at cost) in offshore investments and are NOT subject to the Foreign Investment Fund (FIF) regime, the full payment for your shares will be treated as a dividend and taxed at your marginal rate.

So what you read was right. Not taxed in NZ and paid to you in full in NZD. But that does't mean that it isn't taxed, just that it wasn't collected at source through a withholding tax. I haven't researched but based on what I have read, it doesn't sound good for those in your situation. You can however elect into the FIF regime which might be of little effect on you.

[Bilbo]

Taxed on a whole de-merger (s32) and taxed on a merger and sale (DIL)! Catch22!
And some (investors in real estate?) are scared of a capital gains tax. Just imagine their reaction if the whole sale price of their house was treated as taxable income!

It is crazy that your (forced) disposal of DIL shares due to this de facto takeover could give rise to a range of vastly different tax consequences.

It looks like the DIL directors could not care less about the NZ shareholders.

What's the problem? Isn't it just a matter of selling on market before the merger to avoid any tax issues?

[Bjauck]

Correct. It won't be the profits your realised from selling.

it will be the whole Freaking amount! 100% taxable. The full monty. all of it. The whole sha-bang. Unless you elect into the FIF rules. That is my interpretation of the various readings. A similar thing happened with BHP recently too when they spun out a company.

Taxed on a whole de-merger (s32) and taxed on a merger and sale (DIL)! Catch22!
And some (investors in real estate?) are scared of a capital gains tax. Just imagine their reaction if the whole sale price of their house was treated as taxable income!

It is crazy that your (forced) disposal of DIL shares due to this de facto takeover could give rise to a range of vastly different tax consequences. How many are going to risk investing in new and emerging companies if your whole investment could suddenly be treated as taxable income?

It looks like the DIL directors could not care less about the NZ shareholders.

[Bjauck]

What's the problem? Isn't it just a matter of selling on market before the merger to avoid any tax issues? The previous posts indicate confusion as to the actual tax consequences of this sale. The issue seems to be that the disposal of a shareholder's shares as a result of this takeover (either by on-market sale or by waiting for final payment) gives rise to vastly variable tax consequences.

Disc: Not a DIL shareholder

[Dilbert]

In light of that confusion, I bailed today and sold. Its been a great ride, although a slightly disappointing end.

[gonzo56]

Taxed on a whole de-merger (s32) and taxed on a merger and sale (DIL)! Catch22!
And some (investors in real estate?) are scared of a capital gains tax. Just imagine their reaction if the whole sale price of their house was treated as taxable income!

It is crazy that your (forced) disposal of DIL shares due to this de facto takeover could give rise to a range of vastly different tax consequences. How many are going to risk investing in new and emerging companies if your whole investment could suddenly be treated as taxable income?

It looks like the DIL directors could not care less about the NZ shareholders.

So true Bjauck.

I too have sold out, Dilbert, and not only at a loss, but also with a $50 transaction fee.

At the end of the day, I'll still be better off than I would have been if I continued to hold and went through with the force sale. I already paid tax on that money I earned, I don't want it re-taxed! And to whomever it was that asked, yes, I believe it would have been automatically taxed by Link Market Services when they received it (for NZ payments under 50K) - just like a dividend.

So disappointed by this whole thing :(

[Markymarknz]

So true Bjauck.

I too have sold out, Dilbert, and not only at a loss, but also with a $50 transaction fee.

At the end of the day, I'll still be better off than I would have been if I continued to hold and went through with the force sale. I already paid tax on that money I earned, I don't want it re-taxed! And to whomever it was that asked, yes, I believe it would have been automatically taxed by Link Market Services when they received it (for NZ payments under 50K) - just like a dividend.

So disappointed by this whole thing :(

What a shambles indeed, how could they possibly recommend that its in the best interests of shareholders. It would be good to see the decision makers held accountable for this, but I wont hold my breath., especially not when they are personally profiting from the deal :O

These have been my longest held shares and like most others I think its a shame to see it end in a debacle, similar vein to their previous accounting failures, maybe it was destiny!

[stoploss]

A lot of people questioned Milford exiting this , but looks like their judgement call was right .....

[Dilbert]

A lot of people questioned Milford exiting this , but looks like their judgement call was right .....

Yeh, it was spot-on in hindsight. Wish I'd followed them at the time.

[bull....]

anyone buy for the gain - current price 7.06 pay-out 7.39

[gonzo56]

anyone buy for the gain - current price 7.06 pay-out 7.39

Probably not. It does look like a lot of people have bought in the last week though... (The sale price is $4.90 in USD btw, so it would be $7.14 NZD)

[Harvey Specter]

Probably not. It does look like a lot of people have bought in the last week though... (The sale price is $4.90 in USD btw, so it would be $7.14 NZD)Yip - forex risk and also make sure your tax position is right (that you do FDR on your FIF income).

[bull....]

if you brought last week you would still be able to paid in nzd so no forex risk, to late now though - tax position varies from person to person

[iceman]

if you brought last week you would still be able to paid in nzd so no forex risk, to late now though - tax position varies from person to person

What do you mean bull ? If you are selling into the merger/takeover you are paid only in USD, not NZD ! So everyone holding now is subject to FX risk. Yes the tax positions vary between people but as pointed out on this thread, the structure of this merger was such that many NZ holders were highly likely to be taxed on the full amount received (as if it was dividends), unlike normal takeovers.

[Harvey Specter]

if you brought last week you would still be able to paid in nzd so no forex risk, to late now though - tax position varies from person to person


What do you mean bull ? If you are selling into the merger/takeover you are paid only in USD, not NZD No. You can be paid in NZD, but the final NZD amount is to be determined based on the cross rate at the time. It is NOT the rate noted in the original disclosure.

[Lola]

So true Bjauck.

I too have sold out, Dilbert, and not only at a loss, but also with a $50 transaction fee.

At the end of the day, I'll still be better off than I would have been if I continued to hold and went through with the force sale. I already paid tax on that money I earned, I don't want it re-taxed! And to whomever it was that asked, yes, I believe it would have been automatically taxed by Link Market Services when they received it (for NZ payments under 50K) - just like a dividend.

So disappointed by this whole thing :(


Well the day has come for the Special Meeting. Will there be sparks today or just a damp flicker to end this saga? Youd just about put money on another surprise. What if all those who have sold out to the hedgehogs voted against the merger which as holders of record on 11 March they were entitled to do? This is a Fat Lady Event coming up at 10am.

[iceman]

No. You can be paid in NZD, but the final NZD amount is to be determined based on the cross rate at the time. It is NOT the rate noted in the original disclosure.

Of course you are right HS and that is what I meant, just didn't word it very well. The purchaser will pay USD 4.90 so what the seller receives in NZ$ will be determined by the USD/NZD FX rate on the day.

[theace]

I am late to the party .... I am a small shareholder with around 2000 shares bought at $5.50 (Total $11000). On the assumption the NZD equivalent to $7.15/share .... I am entitled $14300.

Firstly, do I get taxed given my holding? If yes, what is this given the numbers above.

Thanks.

[G on]

I emailed Linkmarket on similar query their response was to refer me to page 80 of DIL big book March 14. My take is you will get the cash and you have to figure out any tax situation you may have. About as clear as mud! You can get it in US if you want to wait for better exchange rate.

[theace]

Reading the NBR .... "Investors not subject to the foreign investment fund regime - typically those with less than $50,000 invested overseas - will be taxed on the total income received from the deal". What is the tax percentage?

[winner69]

Reading the NBR .... "Investors not subject to the foreign investment fund regime - typically those with less than $50,000 invested overseas - will be taxed on the total income received from the deal". What is the tax percentage?

Whatever your rate is I guess

At least you won't have to worry about it until this time next year when you do your March 17 return

[theace]

Whatever your rate is I guess

At least you won't have to worry about it until this time next year when you do your March 17 return


If I am on 33% (over $70k) and based on the following ... I am late to the party .... I am a small shareholder with around 2000 shares bought at $5.50 (Total $11000). On the assumption the NZD equivalent to $7.15/share .... I am entitled $14300."

I'll be paying 33% x $14300 =$4719. Is this right? .... So I am worse off!

[G on]

. There are some might and maybe words in there too. Like I said, clear as mud.