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

The 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, it 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 was the company’s performance was in 2009? The Chairman said it was quite 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 the 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 producers – as they were all competing for a diminishing pool of customers.

If company doing well, why reduce the 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 for renewal next month, but don’t expect any hitches.

How much are contingent liabilities? (no figure was indicated) The 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: The Chairman assured shareholders that they had been signed and the auditors had signed and the accounts could be verified at 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 the 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? The Chairman took a moment to correct a misunderstanding that is occasionally repeated in media – that the company Rea Vipingo is not the developing real estate or golf courses in Vipingo, Kilifi 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 the company do for CSR? The 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 had not requested their assistance

Dry season affect sisal? Sisal is drought resistant, but the prolonged dry season can affect production.

Bank borrowing: The Chairman was asked, but explained that they had taken some foreign loans, and one from a supplier (Wigglesworth) since they were at 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 skills like ICT to the 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 mentioned that they will rise by 10% – from Kshs 30,000 per month to Kshs 33,000 per month (~$400). Some shareholders 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