Sealegs walks proud after years of criticism

Sealegs CEO and managing director David McKee Wright. Photo / Dean Purcell

Market announcements have been dropping thick and fast for amphibious-boat maker Sealegs.

Last week, the company declared it would establish a wholly owned subsidiary in France as a base for its planned European expansion and that it had become the "Official Marine Sponsor" of the All Blacks, and let New Zealand Rugby Union boss Steve Tew have a go at the controls of a Sealegs craft during a publicity run on Wellington's harbour.

After it announced its maiden profit of $642,000 in May, it gained shareholder approval late last month for Mauritius-based Avenport Investment Corporation to increase its shareholding to what is effectively a controlling stake of almost 40 per cent.

Sealegs chief executive David McKee Wright says the new developments are all part of a cohesive plan for global expansion.

"We've finished our incubation in New Zealand," says McKee Wright. "We've proven that we've got a product, proven there's a market and proven that there's multiple applications for it internationally."

Sealegs' announcement of its maiden profit in May followed years of consistent losses which opened the firm to criticism.

When the NZX stock previously known as IT Capital became Sealegs in 2003, the idea of boats-with-wheels reportedly became the butt of broker jokes as its share price languished around the 10c mark.

At about that time, Sealegs had just three staff and contracted local companies to do its manufacturing. It now has its own production lines at its Albany facility and many more staff - although its share price remains subdued, closing down 1c at 23c on Friday.

Former Shareholders' Association chairman Bruce Sheppard once described the company as a "Seadog run by Mickey Mouse".

That was in 2004. Unsurprisingly, on the day of the profit announcement in May this year, McKee Wright said he felt "vindicated" and pointed out that Sealegs still managed to sell 103 boats during the 2010 financial year, despite the recession.

"Sealegs can make a boat that works and we've got a business that can be profitable," he said, as the firm's share price surged by 53 per cent to 26c on the news of the profit.

Sheppard responded, saying: "On a time-value of money basis it's a booby prize, but it's better to win a booby prize than no prize."

In 2007 Sealegs' share price rose by 60 per cent on the news that Fisher Funds had bought a stake in the firm, closing at 91c on May 14 of that year. But the surge was not to last. The price last year dipped below 10c on a number of occasions.

But Sealegs is focused on the future.

McKee Wright says the All Black sponsorship will give valuable exposure to its target demographic in Europe - individuals of high net wealth.

Unlike New Zealand, where interest in rugby is spread quite evenly across all sectors of society, in Europe the sport attracts a particularly wealthy fan-base. And it is that crowd who can afford to splash out on a $100,000 Sealegs craft.

"By leveraging the All Blacks brand - which is legendary in Europe - we add to Sealegs' credibility," says McKee Wright.

He says the firm will not release the details of the financial commitment it has made to the sponsorship.

The increased role of Avenport Investment in Sealegs also bodes well for the company's European expansion, McKee Wright says.

Its $6.2 million investment in the issue of 31 million shares means Avenport's chairman, Frenchman Eric Series, also becomes Sealegs' chairman.

Series, a former Directeur de Cabinet who held responsibility for a number of French cities, is a board member of Bramer Bank and a director of Fairmont Raffles Hotels International. McKee Wright says Series' association with Fairmont Raffles could allow Sealegs to gain some valuable exposure in the numerous upmarket resorts owned by Canadian hotel group.

As well as focusing on Europe, Sealegs has also set its sights on New England, undertaking a marketing drive in 14,000 waterfront homes. While McKee Wright says an overwhelming majority of Sealegs investors voted in favour of Avenport taking a controlling stake in the firm, not all shareholders were happy with the development.

After Avenport's stake, 40 per cent of the Sealegs is held by public shareholders, while the firm's executives hold the remaining 20 per cent.