1998 Telegraph series - wrap of week three

By Stephen Mayne

January 17, 2008

Here is the wrap of week three from AGM Season 1998, which was first published in The Daily Telegraph.

Well, what a week!

As an active shareholder for this series in The Daily Telegraph, the agenda involved asking questions at Foster's Brewing, Tabcorp, Pasminco, Australian Hospital Care and the Commonwealth Bank in Melbourne.

Proxies also asked questions on my behalf at the Publishing and Broadcasting meeting in Sydney and the Orbital Engine Company gathering in Perth, both on Thursday. We therefore got to ask questions at seven of the 25 AGMs during the week.

This is still a relatively low ratio, partly because capable and available proxies are hard to find.

The week opened in Melbourne on Monday with Foster's Brewing, which provided a telling example of how shareholders can be fobbed off.

Asked how much punters are losing each day at the company's 5000-plus poker machines -Tabcorp is doing $160, Crown $246 and Star City $263 chairman John Ralph told the 630 shareholders at the Melbourne Concert Hall: "We'll get that figure for you."

Five days later and Foster's still says it doesn't know because it assesses the pubs overall. This stretches credulity a little as Foster's has to work out the tax it pays to State governments based on the gaming revenue.

The shareholders at Foster's had every reason to be happy with the company's performance, but the major stoush of the day was avoided when it withdrew the proposed $41 million buyback of its notorious 1c part-paid shares. This would have benefited several high profile former executives, although they believed the benefit should have been larger and flagged their opposition.

The Tabcorp annual meeting on Tuesday was an interesting example of how a shareholder can influence public debate.
I asked chairman Michael Robinson why Tabcorp was not jumping up and down more about the "outrageous" bias the Kennett government has demonstrated against Tabcorp and in favour of the ailing Crown casino.

After all, the government signed a prospectus in 1994 promising Tabcorp 21,250 poker machines and limiting Crown to 2500. Now Tabcorp has been cut back to 13,500 and Crown -with the backing of Kerry Packer has the audacity to apply for 1000 extra machines, plus a tax cut from 22 per cent to 15 per cent.

After the meeting at the customary "door stop" interview with business reporters, chief executive Ross Wilson finally let fly with a tirade at Crown for always complaining to the referee.

This might have happened anyway, but shareholders would have been none the wiser until they read the papers the next morning but for the question being raised during the meeting.

In the interest of keeping shareholders better informed, perhaps companies should allow them to listen in on press conferences after annual meetings, which are often more informative than the meetings themselves.

Wednesday was Pasminco day where chairman Mark Rayner droned on before a relatively passive audience giving shareholders very long answers about the lead and zinc giant's operations.

However, the major action was down the road where former Newcrest managing director John Quinn took his successor Gordon Galt to task for living in Sydney and asked some probing questions of the gold miner's board about corporate governance. Fascinating to watch and there should be more of it.

Thursday was James Packer's first day in the chair at a PBL annual meeting but he didn't give shareholders much value for money by declining to give an opening address and then wrapping up proceedings in 27 minutes.

My proxy, Daily Telegraph police reporter Charles Miranda, was briefed to ask eight questions but asked his first three, sat down to give someone else at the meeting a go and before he knew it James Packer had declared the meeting closed with the speed of a disclaimer at the end of a political advertisement on his Nine Network.

Just as the other Kerry (Stokes) did at the Seven AGM, Kerry Packer turned the questions around by demanding to know why we had not asked our boss, Rupert Murdoch, similar questions at the News Corp annual meeting.

"You don't want to ask too many questions or you might bring the wrath of God down on you," he boomed at Miranda who gamely stood his ground and subsequently extracted an answer about the free to air networks pushing for tax breaks on their conversion to digital.

Clashing with PBL on Thursday was the Commonwealth Bank in Melbourne and this was the best example this week of targeted questions getting interesting answers.

My first question about branch closures in western Sydney drew the apology from David Murray for his herogram comments.

The second confirmed CBA had made huge profits selling out of Sydney's M4 and M5 toll-road projects but suffered writedowns investing in Brisbane airport and Victoria's Hazelwood power station.

And the third extracted the implied admission that CBA had lent Star City $700 million on a margin of just 0.75 percentage points and was left carrying all the risk after other banks refused to join CBA in a syndicate.

Apart from the usual group of anti-uranium activists who disrupted the North meeting in Sydney yesterday, the board of insurer MMI received the most damning savaging from shareholders this week.

Directors complained about the group's woeful performance and for "selling our company by stealth" to its German majority shareholder, Allianz.

Ironically, the only positive comment out of the 16 questions came from the Australian Shareholders Association, which also made its presence felt at Foster's, Commonwealth Bank, Pasminco and Ausdoc, just to name a few.

The quality of questions from the ASA in Melbourne has been boosted by the involvement of John Currie, who was finance director of former Spalvins company National Consolidated until it was taken over by Alan Jackson's Austrim group earlier this year.