KIPT directors build for the future

In October 18, 2017

DIRECTORS of a Kangaroo Island forestry company will seek shareholder approval next month for a “significant remuneration kick” linked to share price triggers.

Kangaroo Island Plantation Timbers’ five directors will seek a vote on receiving shares worth an average value of $3.7 million through a performance rights issue of 899,900 shares.

These will be issued to management in early 2018 if the share price hits $3.50, $4.25 and $5.00 based on 1 million traded shares, subject to its nearly 700 shareholders approving the move at the annual meeting on November 10.

Shares in the company were trading at $2.19 yesterday.

Kangaroo Island Plantation Timbers owns 85 per cent of the plantation forestry on the island.

It is preparing an environmental impact assessment for a proposed $30 million deepwater wharf at Smith Bay, 10km northwest of Kingscote.

The multipurpose wharf has been given major project status by the state government, but local business Yumbah Aquaculture — the country’s largest abalone producer — opposes the development next to its $40 million farm.

Other environmental groups are also opposed to the proposal, which has tourism and other economic benefits linked to it.

“We want the best for the region, so we are going ahead with detailed studies,” managing director John Sergeant told The Advertiser. “Shareholders set the remuneration, but yes, these are significant rewards linked to goals that we the management believe are achievable,” he said.

The company’s annual report shows Mr Sergeant’s total remuneration was $1.17 million to the end of June, including shares worth more than $1 million. He has a 7 per cent holding in the company.

Chairman Paul McKenzie’s earnings totalled $432,510, including $357,510 worth of shares, followed by non-executive and part-time executive director (since May) Shauna Black’s $428,343, including more than $350,000 worth of shares.

The company told investors it wants to “create a stronger link between executive and employees performance and reward and increasing shareholder value” as it progresses plans for the wharf.

Mr Sergeant yesterday said the wharf was key to unlocking other benefits for the region, including 234 jobs on Kangaroo Island and contribute more than $41 million to its economy annually.

Offshore testing is now continuing after the company secured remaining approvals.

A local stockbroker said it was possible shareholders would approve the remuneration. “Considering KIPT closed at $2.16 this is a fair way above current market prices and as such I would assume shareholders would be pretty happy to see them vest even if that’s a significant remuneration kick for directors.

“The company also looks like it wants to refresh its capacity to raise money, possibly due to delays on the EIS/approvals and perhaps they are preparing to fund activities until that happens,” he said.

Earlier this year, the company opted for a 1-to-10 share split, possibly to make it easier for smaller investors to buy in.

Kangaroo Island Plantation Timbers reported a net loss after tax of $19.6 million and a net cash outflow of $4.1 million to the end of June.

It had cash and cash equivalents of $6.1 million.

Auditor Grant Thornton said these conditions “indicate the existence of a material uncertainty which may cast significant doubt about the consolidated entity’s ability to continue as a going concern”.

KIPT directors build for the future by Valerina Changarathil, The Advertiser.  Available from <> [

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