2014 agm minutes by Shared Interest

Shared Interest Society Limited Annual General Meeting Friday 14th March 2014 The meeting was held at the British Medical Association, BMA House, Tavistock Square, London WC1H commencing at 11AM Kate Priestley, Chair of the Board, moderated this meeting and welcomed 204 members plus their guests and other staff (who are not members of the Society) to the meeting. Patricia Alexander, Managing Director then introduced the opening speakers. There followed a presentation from representatives from Namayiana, a Kenyan women’s handcraft producer group. The Chair ~Nouason ene Marona (Agnes) and Catherine Mututua, Project Manager gave a heartfelt and inspiring address to the AGM outlining the history and goals of Namayiana members, and the impact of Shared Interest finance. Patricia Alexander presented a report on the Society’s activities during 2012/13. Tim Morgan, Finance Director, gave a presentation on the financial results for the year and then, along with members of the Society’s Staff Team and Directors, responded to questions from members. Question 1. a) Regarding bad debt, is it written off with no hope of recovering it? b) The Co-operative Bank has been in the news a lot recently and there is to be a review by Lord Adonis? Do we know about this? Answer 1. a) Tim Morgan: This charge is a mix of some loans which have been written off but also some provisions calculated on what we may lose. We take a fair view of things and make a provision. We have had two successes in the year where businesses looked like they were going to fold but in the end they were able to repay some of their loan. b) Tim Morgan: The Co-operative Bank name does now have some questions and we’ll keep an eye on this. Thank you for the information. Question 2. I don’t use my Shared Interest account as my principle investment. I understand we don’t want to limit investment and we’re not likely to get many £100,000 accounts but what is a reasonable minimum held in an account. What would be reasonable and not too small? Answer 2. Patricia Alexander: The minimum investment is £100 and an account can be opened at that level and topped up. Much of our new share capital is top up investment from existing members. The average length of investment is 12 years. We wouldn’t want to discourage investments of £100. The more invested the more income is generated. Word of mouth is the most powerful way to spread this message but we don’t want people to invest their life’s savings in Shared Interest! Question 3. What are the most common reasons for a bad debt and have you any sense of any geographic trends? Answer 3. David Nussbaum: The reasons for a bad debt vary. It may be due to a catastrophic event such as political, military, economic etc. There may be complete disruption of the business, sometimes co-operatives disintegrate. You’ll be aware we lend to both buyers and

Shared Interest Society Limited Annual General Meeting Friday 14th March 2014 producers and it was thought producers would be more risky but our experience shows that this is not the case. Our biggest losses on average have been from buyers. The amounts they borrow tend to be larger and they may go in to receivership and default on their loans. We don’t consciously have a sense of geographical differences. Answer 3. Tim Morgan: Our lending amounts differ in different regions, for example we lend a lot of money to coffee producers in Latin America, though we don’t see any apparent hotspot or pattern of bad debts on a geographical basis. Question 4. Thank you Tim, please could you comment on the internal audit. Will this exercise be repeated or was it a one off, is it connected to the cost for external fees? Answer 4. David Nussbaum: I will respond as chair of the Audit Committee. Every year we review the necessity for internal audit as part of our Terms of Reference and we decided we would conduct an internal audit this year. There was nothing concerning to indicate it was necessary but due to the increasingly international nature of our work and the complexities of the organisation it was decided we ought to get an internal audit done. A Newcastle based firm of Chartered Accountants carried this out. Our external financial auditors (PWC) can’t carry out this sort of audit, they only look at financial audit. Some helpful suggestions were made although no major issues were identified. We will look at this again, this year if appropriate but concentrating on different areas. Question 5. In relation to the minimum investment my husband and I invest on a monthly basis, is there a different minimum for this? Have we learnt from bad debts in terms of gaining an earlier understand, or identify warning signs and, has it increased training for due diligence? Answer 5. Patricia Alexander: The £100 minimum applies to all accounts and you can top up any amount, there is no minimum on this. Answer 5. Tim Morgan: Yes, very much so. Just a reminder that our overseas regional staff are introducing us to businesses and the writing of the lending is all done from Newcastle. Accounts are managed daily by our Customer Services Team in Newcastle. We undertake monthly arrears meetings to see early warning signs. We’re also looking at the arrears list monthly and ramp up actions where we think we can get money back. We’re very active and our understanding is improving too. Question 6. I am surprised to see Central America opening more coffee plantations. The environmental press shows much concern for the sustainability of coffee as due to climate change the optimum temperature for coffee is no longer possible. Answer 6.

Shared Interest Society Limited Annual General Meeting Friday 14th March 2014 Patricia Alexander: We are keen to keep an interest in coffee due to the high % of our lending going to coffee. We need to better understand coffee as we wouldn’t want to lend all of our finance in coffee but our lending is spread across many regions. Paul Sablich: I will speak on behalf of my regional experiences. Climate change affects any product and the range of altitudes at which coffee will grow varies from 1500m = 1800m. Quality characteristics change and there is variable susceptibility to disease. Coffee will suffer but sustainability will vary. Climate change is not the biggest factor affecting coffee but diseases such as Roya are more of a challenge. Marco Garcia: There are different complexities regarding climate change and Roya is affecting plants more. Temperature change is greater but we can reduce risk by planting healthier plants. Producers will always figure a way to respond to these changes. Question 7. Given the issues from the Co-operative Bank fiasco what alternatives are we looking at? Answer 7. Tim Morgan: The way our banking relationship works is that we have one principle bank which is the Co-operative Bank, and they always have been. We borrow against our share capital deposited at the bank and to do that requires someone (the bank) to work with us in that way. In 2011, we carried out a full audit of our banking and the alternatives were all high street banks. Triodos etc. cannot do what we need. The Co-operative came up best on all categories at that point (and its security was not in question at that time). Natwest were second and following the troubles of the Co-operative Bank in 2013 we are working more closely with Natwest and have deposited some capital there as well as with Triodos and Nationwide Building Society. The security of the share capital fund is of course very important to us and we have looked at others but have not yet found a suitable partner. We may need to compromise and work with a mainstream partner bank but would be pleased to see Co-op Bank return to a solid financial footing and living its ethical values strongly. Kate Priestley drew the question session to a close and asked Tim Morgan, as Secretary, to conduct the voting on resolutions and report the outcome of the postal ballots. Resolutions were approved as follows (where applicable the proxy votes were also reported and in each case were also strongly in favour of the resolutions): 1

the Society’s accounts for the year ended 30th September 2013 and the reports of the directors and the Auditor were received; (204 For, 0 Abstain, 0 Against) [Proxy votes: 1,030 For, 4 Against]

the Society’s Social Accounts for the year ended 30th September 2013 and the report of the Social Audit Panel were received; (200 For, 4 Abstain, 0 Against) [Proxy votes: 1,018 For, 5 Against]

proposed increases to the fees of Non-Executive Directors and the Chair of the Board, with effect from 1 October 2013, were approved; (Non-Executive fees increase from £2,448 per annum to £2,750 and those of the Chair from £3,247 to £4,250); (194 For, 8 Abstain, 2 Against) [Proxy votes: 962 For, 56 Against]

members indicated their satisfaction with the arrangements for determining the pay of executive directors that are the subject of the report by the Remuneration

Shared Interest Society Limited Annual General Meeting Friday 14th March 2014 Committee in the Directors’ report; (For 204, Against 0, Abstain 0) [Proxy votes: For 949, 50 Against] 5

the firm of PricewatershoueCoopers LLP were re-appointed as the Auditor of the Society and the directors were authorised to fix the remuneration of the Auditor for the year ending 30th September 2014 (For 194, Against 3, Abstain 7) [Proxy votes: For 986, Against 45]

a report from the Moderator of the Council was received;

public declarations of support for the Society’s object from all candidates for election were received.

the results of the postal ballot for the election of the following members of the Society as directors for the year were received:Name Pauline Cameron Keith Sadler Paul Chandler

For 1,195 1,062 1,223

Against 22 93 18

the results of the postal ballot for the elections of the following members of the Society as members of Council for the year were received Name Uncontested Election Claire Wigg Contested Election Mark Hayes Nigel Watson Ashley Wyatt

For

Against

1,196

522 292 525

So Ashley Wyatt was elected to serve on Council with Claire Wigg re-elected. The formal AGM closed at 12.45pm followed by a short speech of thanks from Martin Kyndt (NonExecutive Director and incoming Vice Chair of the Board) and brief presentations to David Nussbaum and Carol Wills (both leaving the Board after 8 years’ service). Both Jason Watkiss and Mark Hayes were also publicly thanked for their service as Council Members. Members’ meeting reconvened at 1.40pm following lunch and members and guests attended two workshops which were run throughout the afternoon and repeated so that all could participate in both. Topics covered were a debate about the possibility of working beyond fair trade for Shared Interest (not leaving FT but adding other lending criteria which might permit some lending outside of the recognised FT system), and a session about the Vision, Mission and Values of Shared Interest. This concentrated on hearing members’ views of why they first invested, key areas we should consider in the 2014 Strategy review and whether there was appetite for taking greater risk to achieve greater reward (social impact). Members returned for a plenary session with two films highlighting the work and success of two customers of Shared Interest – Andean Naturals which buys quinoa from small farms in Bolivia and Peru and distributes it throughout North America and Namayiana from the Rift Valley in Kenya. After a speech from David Nussbaum reflecting on some of the key developments and milestones of the Society during his and Carol Wills’ time as a Director and Council member, the meeting closed at 16.00.