Saturday, March 28, 2009

Rea Vipingo 2009 AGM

Nairobi Stock Exchange listed Rea Vipingo Plantations Limited and one of leading producers of sisal held’s its’ 2009 annual general meeting on March 27 2009 at the Panafric Hotel Nairobi

Meeting started at 11 a.m. sharp with a short video shown about the company explaining more about its background and what it does - Created by an amalgamation of companies in 2003 that acquired more estates in Tanzania in 1995, got listed on the NSE in 1996. Since it was listed sales have grown from Kshs 537 million to Kshs 1.2 billion and production is now at 17,000 tons per annum

The meeting led by company chairman Oliver Fowler went straight into shareholder questions immediately after the video

Professional shareholder alois chami stood to ask a question (he’s at every AGM and always asks a couple of inane questions – virtually all company chairmen & secretaries know him by name) – but his mobile phone went off and he had to sit and answer it about a half dozen phones go off at every meeting, and some shareholders magnify this discourtesy by answering the calls

how the company’s’ performance was in 2009? Chairman said it was quit good, maintained their markets, still getting good buys from China, while the weak shilling/strong $ has also helped them

impact of the global economic crisis? performance still good as company has good cash position, scaled back capital expenditure and made some cutbacks. Still they can’t predict how the sisal industry will perform and are also nervous

competition from petrol twine versus their sisal twine (the price of oil is 1/3 of what it was a year ago). Chairman said their primary competition, was not from synthetic twine, but from other sisal produces – as they were all competing for a diminishing pool of customers

if company doing well, why reduce dividend? (from Kshs 0.8 per share in 2007 to 0.2 in 2008) Chairman said at the time of the decision, they actually intended to pay no dividend since the outlook was so grim (and wanted to conserve cash), but since they got some contracts, decided to make a modest payment

does low share cap hinder borrowing?no it does not, their borrowing is quite low considering the value of the company’s assets and which bankers look at more. Their facilities are up fro renewal next month, but don’t expect any hitches

how much are contingent liabilities? (no figure was indicated) chairman said they would be mostly for industrial claims covered by workmen compensation and there were no material claims of substance

no logo/signature by directors & auditors in the published accounts Chairman assured shareholders that they had been signed and the auditors had signed and the accounts could be verified a their office or the company registry (Chami got his act together and asked this, he was later brushed aside by another shareholder when he kept hammering this trivial point)

subsidiaries part of profit came from fair value gain (a book profit, not actual profit) as well as from revaluation of biological assets

does having a golf course add value to the company? Chairman took a moment do correct a misunderstanding that is occasionally repeated in media and the company Rea Vipingo is not the developing real estate or golf courses in Vipingo, Kwale (Coast Province) it is being done by another company adjacent to the sisal estate (and while they were all part of the original sisal estate – the land that was not suited for sisal production (sandy beach) is being used by the other company)

what does company do for CSR? Company engages in corporate social responsibility – staff are housed at sisal estates in Kenya and Tanzania and receive medical care while children are schooled in nursery and primary school on estate, with some getting scholarships to high school . they have in the past been involved in famine relief and distribution in Makueni district, but in 2009 the government has not requested their assistance

dry season affect sisal? sisal is drought resistant, but prolonged dry season can affect production

bank borrowing chairman was asked, but explained they had take some foreign loans, and one from a supplier (Wigglesworth) since they were a lower rates than bank loans

director elections after 12 years of service director Musa Sang retired from the company board during the year and he was replaced by Brown Ondego (chairman of rift valley railways, and former MD of Kenya ports authority). shareholders confirmed his election, but also (again) asked to consider getting (i) female directors and (ii) younger directors (these will being new skill like ICT to c company which did not have a website till a few years ago)

hot button moment director allowances in asking the shareholders to approve non-executive directors remuneration for 2009, the chairman mention that they will rise by 10% - from Kshs 30,000 per month to Kshs 33,000 per month (~$400). Some shareholder briefly protested that their dividend was being cut while directors get paid more, and that the directors’ increase should also wait till the economy and company’s performance improved. The board poorly defended this matter, but it was passed without much interruption

special business shareholders approved the board decision to purchase an additional 330 hectares for sisal production from vipingo estates limited (VEL)

goodies one shareholder stood and complained that the company had NEVER given shareholders a token item of appreciation, unlike other companies, and the chairman said they would once, performance improves. Tea and snacks were served outside by the pool, but it was a mad scramble that left many unhappy as the bitings were finished by the early grabber

networking had a nice chat with Coldtusker and Ryan Shen Hoover while this was going on


PKW said...

Thanks for the continued updates. I'm a little cynical on their claim to CSR; housig employees and stuff.

coldtusker said...

PKW: Rea does quite a bit for their employees. Other sisal farms do not provide as much for their employees. BTW, sisal from E.Africa competes against many other fibres produced at very low labour rates e.g. in Bangladesh,

mystic said...

I find it interesting that the raise for the directors was poorly defended but yet it passed. A lot of times, these board of directors take us, the shareholders, for granted. This is not only in reference to Rea V but most other companies.


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