Shared Interest Society Limited
Annual General Meeting Friday 11th March 2016
AGM Minutes The meeting was held at the Northern Stage, Barras Bridge, Newcastle upon Tyne, NE1 7RH commencing at 10.30 AM Mary Coyle, Chair of the Board, moderated this meeting and welcomed 77 members plus their guests and other staff (who are not members of the Society) to the meeting. Patricia Alexander, Managing Director, presented a report on the Society’s activities during 2014/15. Tim Morgan, Finance Director, gave a presentation on the financial results for the year and then, along with other colleagues from the Society’s Staff Team and Directors, responded to questions from members. Question1: You talked about bad debt provision, how much bad debt has actually occurred? Answer 1: There has been very little bad debt written off as we take a very patient view and work with our customers to try to find a solution which avoids this. At the end of the financial year we make a provision for bad debts and you can find information about the breakdown of the annual charge in our yearly accounts (note 24). We currently have provisions of £2.2m against bad debts. We aim to work with producers and buyers through bad times; sometimes this actually means lending more money. We also work with other social lenders to help resolve problems and help the customers’ trade through difficulties. The total amount of bad debt written off for good was actually in the tens of thousands of pounds. Question 2: Why do we pay interest to borrow our own money? Answer 2: This approach, which we have used for a number of years, reduces exchange rate exposure. We lend about 80% of facilities in US Dollars and a further 15% or so in Euros. We borrow the currency against our own Sterling deposits, lend it out and then when it is repaid we pay off the currency loan. This avoids us having to “speculate” in terms of exchange rates for the capital element of the loans and facilities we make available. There is of course an (increasing) interest cost for borrowing our own money but the volatility of routinely converting our capital into different currencies to lend, would be much more risky. Holding some funds in different currencies may, however, be something we need to consider in the future. We have looked at converting and holding some investment in Dollars and/or Euros. We did ask members through the members’ survey how willing they would be to have their investment converted into dollars and the response was largely against this strategy. Question3: How many current potential borrowers are there and how much would we have to raise to meet this demand? Answer 3: We currently have a pipeline of £10m potential opportunities. It is important to remember that we must maintain some liquidity to protect our investors’ money and ensure they can withdraw money during normal conditions when required. We aim to lend about 70-80% of our Share Capital at any one time. The new Lending Team structure has been very successful and we are now getting to a
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Shared Interest Society Limited
Annual General Meeting Friday 11th March 2016
position when we will be unable to approve more lending facilities with only £2.3million left to lend. It is therefore important that we continue to attract more members and increase our share capital. Question 4: In your presentation (Patricia) you didn’t mention WFTO. Is WFTO still significant for Shared Interest? Answer 4: WFTO is still an important organisation for Shared Interest as are SPP (the Latin American Small Producers’ label) and BAFTS (the British Association for Fair Trade Shops & Suppliers). The bulk of our lending is to FLO cert customers but the reason for not mentioning WFTO in the presentation was purely due to the lack of available statistics. Question 5: Are you planning to bring producers and overseas staff across for events this year? Answer 5: Last year was a very special year for us (our 25th anniversary) and so we invited all of our overseas team to the UK. As a result our AGM was expensive but as we would normally only see about 80100 members attend our AGM we felt the money could be better used by holding a series of member events across the UK. Through these events we will be able to reach more members. It is a trial so we may go back to a full day AGM if our members prefer that format. Question 6: This is more of a comment. Council recently had a Skype link, at its meeting, with the African Regional Manager for Shared Interest in Kenya, and this worked really well. I wonder if this could be an option for future AGMs or member events. Answer 6: We will have a look at this for future AGM’s and members’ meetings. Question 7: Going back to the question earlier on currencies – does this mean we can do more lending in for example Kenya or other African countries where the currencies have fallen? Answer 7: No, because we only lend in hard currencies. So in fact, when the US Dollar is stronger (as it is at the time of this meeting), this puts pressure on the amount we have available to lend. Question 8: What proportion of goods produced by our customers is sold to consumers in the West and what proportion is sold in-country? Answer 8: Handcrafts tend to be locally traded. Some WFTO members sell locally and would like to export but are not yet large enough to do so. FLO certified producers are generally exporting. The majority of our export credit lending is used for exports to developed countries. It is not always obvious, for
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Shared Interest Society Limited
Annual General Meeting Friday 11th March 2016
example, cocoa is sold locally and then on to traders who, typically, then export. We are continuing to dig deeper and hopefully at the next AGM we will have some concrete figures to share. Question 9: It is good to hear about the increase in lending in Africa. What proportion of customers end up in the bad debt table? Does the Foundation have a further role to play here with the smaller producers who may become customers in the future? Answer 9: In the last three years just over half of our bad debt provision comes from African customers but African producers make up half of our Producer’ portfolio. Our African Regional Manager has requested training so we are looking at how we can assist; the challenge is how to fund it. Joint projects with our Foundation in the future will definitely help. Question 10: Do you get requests to invest in Sustainable Forestry in South America and would you consider it? Answer 10: It is not an area we would currently consider. There is so much demand in the product areas where we currently work that we need to stay focused. It should be noted however that environmental issues are also important with WFTO and FLO. Question 11: Is Shared Interest unique or are there parallel organisations doing a similar thing? Answer 11: In my experience yes, Shared Interest is unique, because of the way investors put their money into the organisation. In this sense the model is unique and the focus on fair trade producers and buyers also sets us apart. There are other social lenders but they draw their capital from other sources. Our values centre on relationships; we understand the needs of our customers and put time and effort into these relationships. We do have a coalition with organisations doing similar lending, which is called the Council on Smallholder Agricultural Finance (CSAF). This includes eight social lenders and we work together and share best practice in a pre-competitive way. Question 12: Do you have any statistics on customers who have graduated from Shared Interest? Answer 12: We do see organisations that outgrow us but sadly not many. Producers do not generally have savings and commercial banks are unwilling to lend to agricultural businesses so there is still a big need for Shared Interest and for Fairtrade in general. Mary Coyle 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):
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Shared Interest Society Limited
Annual General Meeting Friday 11th March 2016
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the Society’s accounts for the year ended 30th September 2015 and the reports of the directors and the Auditor were received; (For 77, Against 0, Abstain 0) [Proxy votes: 981 For, 3 Against]
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to receive the Society’s Social Accounts for the year ended 30th September 2015 and the report of the Social Audit Panel (For 77, Against 0, Abstain 0) [Proxy votes: 968 For, 2 Against]
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to indicate satisfaction with the arrangements for determining the pay of Executive Directors that are the subject of the report by the Remuneration Committee in the Directors’ report; (For 75, Against 0, Abstain 2) [Proxy votes: 914 For, 37 Against]
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to re-appoint the firm of PricewatershouseCoopers LLP as the Auditor of the Society and authorise the directors to fix the remuneration of the Auditor for the year ending 30th September 2016 (For 71, Against 2, Abstain 4) [Proxy votes: 943 For, 44 Against]
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a report from the Moderator of the Council was received;
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public declarations of support for the Society’s object from all candidates for election were received.
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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 Paul Chandler
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For 1098 1096
Against 22 31
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 For Against Uncontested Election Rod Gilpin 1100 27 Liz Murphy 1145 7 Kate Roberts 1129 15 Contested Election Shelagh Baird-Smith 463 Ben Quashie 751 Rod Gilpin and Liz Murphy were re-elected, Kate Roberts was elected unopposed following random selection in 2015 and Ben Quashie was elected by contested ballot, to serve on Council.
The formal AGM closed at 12.00pm followed by a short speech of thanks from Mary Coyle, Chair of the Board and a brief presentation to Sue James who was publicly thanked for her service after standing down from Council.
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