The Native Iowan

I guess it’s ego that brings me to post this… but, seriously, how many of our extended, universal family have raised a mention in a sitting of national parliament?

check it out…  http://www.onetelevision.com.sb/index.php/news/news-business/2805-sp-oils-100000-monthly-salary-under-fire.html

The story behind this? Well, as is well known, I’m a bit of a thorn in the side of government here in the Solomons. I am out spoken but, I like to think, for the right reasons. So the blokes who think they are “leaders” attack me. Try to diminish my voice. (guess I must be doing something right?)

And they fail.

This revolves around questions asked in parliament. The Minister of Fiance is the boss of the NPF (SPO’s major investor) so he is asked the questions and came to us for answers. This is what was asked and the answers we sent. Of course Rini and Zama are in cahoots per this… in cahoots, again….

1: SHAREHOLDING OF SOUTH PACIFIC OIL LIMITED

The company has an authorized share capital of 75,000,000 shares at $ 1 per share. 

At inception a total of $ 42,100,000 was issued and paid up in cash by the two (2) shareholders – SINPF Board and GRP & Associates Ltd

Annually thereafter for the 1^st 4 years of the company’s commercial operations,  a 5% share issue is allotted to GRP and Associates Ltd based on a performance criteria mentioned below for managing the company.

Currently the total number of issued and paid up shares is 47,716,670.   SINPF Board holds 40,000,000 shares worth $ 40 million, and GRP and Associates Ltd 7,716,670 shares worth $ 7,716,670.

The manner and method of the issuance of shares is made according to the shareholders agreement and the company’s articles and memorandum of association.  

At the end of the 4^th year in 2010 when the GRP and Associates management contract expires, SINPF shareholding will be diluted to 75% and GRP and Associates increased to 25%.

2 MANAGEMENT CONTRACT (Whether the Managing Director of SPOL is himself an associate or an officer of one of the shareholders of the SPOL? And how much is he/she paid by SPOL)?

Under a shareholders’ agreement, a performance based issue of 5% equivalent to 2,808,335 shares will be awarded annually to GRP and Associates during their tenure of managing the company in the first 4 years of the company’s operations.   This award is subject to the company achieving a minimum annual net profit after tax of $ 10 million. 

As well GRP and Associates under its management contract with the South Pacific Oil Limited (SPOL) is paid a management fee of $ 100,000 per month.  The Managing Director is provided by GRP and Associates Limited. 

The payment for the management services is provided for under the company’s articles and memorandum of association.

3 Are the Members of SINPF adversely affected by such arrangement where both the shareholder and the Managing Director of SPOL are substantially paid to the extent of causing disadvantage to the members of SINPF?

Under these agreements, the company has been managed to the best business and commercial standards and practices and therefore has met the expectations of the shareholders of the company in terms of asset growth, and return on investment (ROI) or equity (ROE). 

The company’s commercial and financial performance in its first two (2) years of its commercial history has been outstanding due to management strict adherence to best commercial and business practices, compliance with relevant international industry and safety standards, and employee training.

SINPF Board invested in the company on the projections that the original investment of $ 40 million will be repaid after 4 years with return on investment (ROI) of 22% pa.

However, SINPF return on investment (ROI) was 2007 – 30% (dividend $ 12 million) and 2008 – 37% (dividend $ 15 million), measured by the level of dividend over SINPF invested capital, was substantially better than when projected.  As well SINPF has also benefited from the additional investments that were made from these dividends.

Most likely the payback period will be less than 4 years meaning the Board will recover the $ 40 million in less than 4 years  

The company’s net worth has grown to $ 99.8 million in just two (2) years, an impressive growth of 137% since the company was established in November 2006. 

This means that besides paying out dividends to shareholders, the company has invested part of its profits back into the company for its future; in assets i.e. new storage tank, tankers, storage properties that will continue to ensure that SPOL secure good returns for its shareholders in the future. 

Of the net asset position described above – SINPF members owned $ 83.8 million (84% of the net asset value) and GRP and Associates $ 16 million (16% of the company’s net asset value)

Simply put what is commercially good for the company is good for the shareholders.   And the majority shareholder is the SINPF Board who held the shares in trust for the ultimate shareholder – the contributing members of the SINPF.

Furthermore and finally, what is commercially good for the company is good for our economy.