1998 Telegraph series - preview of week four

By Stephen Mayne
January 17, 2008

Victoria's racing carnival means a slow start to week four of the 1998 annual meeting season. Business editor Stephen Mayne continues his 14-part series on life as an active shareholder.

A raft of little known companies are gathering with shareholders today but the only notable meetings will be Goldfields in Sydney and drug company FH Faulding in Adelaide.

The Melbourne Cup stops annual meetings as well as the nation, so Tuesday is a clear day with the exception of little known companies such as H-G Ventures and Equigold.

The action then warms up considerably on Wednesday in Sydney when the beleaguered Burns Philp board will front shareholders again. Last year's meeting was one of the blackest days in the company's history after it announced the proposed sale of its bleeding US herbs and spices business to a management buyout had failed.

Investors are likely to be damning of the board, which includes several high-calibre directors such as chairman Alan McGregor and merchant banker Mark Burrows. Specific issues likely to be raised include the financial wellbeing of major shareholder and deputy chairman Graeme Hart.

Hart's adviser, Deutsche Morgan Grenfell, is said to have a significant exposure after the New Zealand entrepreneur foolishly snapped up 20 per cent last year at $2.50 a share. Relations with the company's banks will also be an important issue, particularly given its attempted $300 million capital raising falling $50 million short and with the share price teetering to close at just 8.5c on Friday.

Mr Burrows will have an easier time on Friday in Melbourne at the Brambles meeting. The diversified industrial group has performed very well under chief executive John Fletcher, following the successful leadership of Gary Pemberton, and now derives more than half its profit from offshore operations.

John Ralph can expect more questions at the Pacific Dunlop annual meeting in Melbourne on Wednesday about his heavy workload. The former CRA managing director was forced to defend his portfolio of six directorship from the chair at the Foster's meeting last Monday and Commonwealth Bank chairman Tim Besley was forced to defend his deputy chairman last Thursday.

Pacific Dunlop's normally supportive shareholders should have a few pointed questions to ask, especially following the recent cut in the sale price of its GNB battery division, sparking further abnormal losses of more than $100 million.

Mr Ralph will back up for Telstra's inaugural AGM in Melbourne on Friday, where he is also deputy chairman. Telstra is likely to attract more than 3000 of its 1.5 million shareholders to the meeting at the National Tennis Centre, which should last at least two hours if investors cover the full range of issues the company throws up.

These issues include finding a new chief executive to replace Frank Blount, the arrival of Kerry Packer's PBL into the Foxtel fold, the threat from a resurgent Optus after it floats and the cost of subsidising services in the bush, just to name a few.

I'll be sending a proxy to Telstra to ask some questions, but will go to Pacific Dunlop, Leighton Holdings and John Fairfax meetings in Sydney on Friday.

Leighton, chaired by Commonwealth Bank chairman Tim Besley, continues to go from strength to strength, but will again be quizzed by shareholders about why it does not use its cash reserves to start a share buyback. Leighton's ability to maintain growth after the Olympics construction boom is over and continue to make money in Asia are also likely to be raised.

The future of Leighton's highly successful chief executive Wal King could also come up for discussion given that he has presided at the top for more than 10 years and is now taking more board seats, which suggests he is gearing up to retire.

The Fairfax meeting will no doubt draw some shareholder questions on the recent appointment of management academic Professor Fred Hilmer as chief executive. The early departure of his predecessor Bob Muscat after the ascension of Kerry Packer's former lieutenant Brian Powers to Fairfax chairmanship is also likely to attract the interest of shareholders.

The ongoing Australian Broadcasting Authority inquiry into Mr Powers' appointment and financial troubles at major shareholder Brierley Investments give Fairfax shareholders plenty of things to talk about.

AAPT will also have its first annual meeting in Sydney on Wednesday after floating late last year and shareholders who paid $1.85 for their holdings will no doubt be pleased with Friday's close of $3.20.

Shareholders in mineral sands giant RGC will also get a chance in Sydney on Friday to discuss their proposed merger with Westralian Sands.
The terms look favorable for RGC, hence the surge in its share price from a low of $1.35 in June to Friday's close of $2.43.

The Australian Shareholders Association is planning another busy week at meetings such as Pacific Dunlop and Telstra in Melbourne and Burns Philp in Sydney.

* Business editor Stephen Mayne has bought shares in 50 companies for a series on the 1998 AGM season from the perspective of an active investor.

TODAY: FH Faulding, Adelaide. Goldfields, Sydney.
TOMORROW: Melbourne Cup.
WEDNESDAY: Pacific Dunlop, Melbourne. Burns Philp, AAPT: Sydney. Wesfarmers, Perth. QCT Resources, Brisbane.
THURSDAY: Computershare, Melbourne. Simsmetal, Leighton Holdings, Sydney. WA Newspapers, Perth.
FRIDAY: Telstra, Brambles, McPherson's: Melbourne. RGC, Stadium Australia, Hoyts, John Fairfax: Sydney.