eq-2014-12

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MONITOR: MICHAEL WATERHOUSE Date 24 October 2014 Venue Emporium Hotel, Brisbane Attendees Approx 50 ASA proxies GWA GROUP AGM Value of proxies Proxies voted 580,000 shares from 188 holders $1.6m Market cap $800m Pre-AGM meeting Yes, on rem items only No DECLINING SHAREHOLDER VALUE LEADS TO NEAR MISS ON FIRST STRIKE The GWA Group’s declining total shareholder return caused concerns at the AGM. GWA manufactures and supplies kitchen and bathroom materials, hot water and cooling systems and doors and lockup systems to the building industry including the following home building name brand products: Caroma, Fowler, Dux, Brivis, Gliderol, and Clark. Whilst sales revenue was up 2% and trade earnings before interest and tax was up 8% at $72.8 million and margins improved over the previous year, net profit after tax was down 43% at $18.6 million. This decline in profit was due to significant supply interruptions and impairment to the product value (goodwill). The Group also announced its Dux Hot Water and Brivis air conditioning businesses have been flagged for disposal as ‘non-core’. In addition, the Group announced the intended sale of its manufacturing plant in Victoria with its intention to source product from China and Asia while maintaining research facilities in Australia for new product development. The Group intends to spend approximately $7 million per annum on research. These announcements raise shareholder concerns around declining shareholder value. In addition, return on equity was down from 7.6% in 2013 to only 4.4% in 2014. Earnings per share declined from 10.6 cents in 2013 to 6.1 cents in 2014, while dividends to shareholders declined from 12 cents in 2013 to 5.5 cents in 2014. These factors caused shareholders to ask the Board to comment why brokers are advising shareholders to seek better investment alternatives. The Chair and CEO indicated it was ‘tough times’ for the company and it was unlikely shareholders would receive a dividend in the current operating financial year. However, with the Group’s disposal of non-core assets a special dividend may be paid to shareholders. GWA also sought approval from shareholders for a change to the remuneration program with the replacement of the peer comparison group and the total shareholder return (TSR) performance indicator. The group’s TSR performance has been below the 50th percentile of the peer group since August 2011. The proposed performance indicators are earnings growth compared to dwelling completion growth. The approval of the new remuneration program was approved by 80% of voters, which meant that the company fell slightly short of the 25% required to constitute a “first strike”. MONITOR: GAVIN MORTON Date 31 October 2014 Venue Pullman Melbourne Park Hotel Attendees Approx 100 ASA proxies Value of proxies Proxies voted Market cap NEWCREST AGM Pre-AGM meeting 461,431 shares from 268 holders $4.3m Yes, by poll $7.14bn Yes, with Chairman SHAREHOLDERS EXPRESS ANGER OVER POOR PERFORMANCE AND EXCESSIVE PAY The atmosphere was tense at this meeting. Several shareholders were clearly angry with the performance of the Board and with senior management. Chairman Peter Hay said that the company had made an underlying profit of $432 million. Write downs of $3.6 billion on Lihir assets and $2.1 billion on other assets contributed to a loss of $2.2 billion. He said that the key objectives were an increase in output and a reduction in costs at the Lihir mine. Managing Director Sandeep Biswas said that major investments at Cadia and Lihir were substantially complete. His focus was on reducing costs and reducing debt. There was no quick fix in regards to increasing Lihir output. Target was to increase annual throughput to 12 million MT. The Cadia mine was now a major cash generator. On the re-election of Lady Winifred Kamit and Richard Knight, one shareholder said that any director involved in the merger with Lihir Mining should not be re-elected. The ASA monitor said that Lady Winifred added value to the Board through her knowledge of PNG. With regards to Richard Knight, he said that the company needed to move on. The people directly involved with the merger with Lihir Mining either had left or resigned. Lady Winifred was re-elected with an approval vote of 89%. Richard Knight`s approval vote of 55%, indicated shareholder resentment in regards to his part in the Audit Committee’s approval of the Lihir merger. On the Remuneration Report, the ASA monitor said that the maximum payment STI payout was in excess of executive’s base salaries. Excessive focus on short term payments could have negative longer term outcomes. He said that there were no published STI hurdles. Payments were all in cash. ASA policy is for there to be a mixture of cash and shares and for some of this to be deferred for 2 years. The LTI hurdles were not sufficiently challenging. Performance is measured over 3 years. ASA prefers a minimum of 4 years to ensure long term alignment with shareholders’ interests. ASA voted open proxies against the adoption of the Remuneration Report, which received a 45% against vote. The Chairman was clearly shaken by this result. He said that the company would meet with stakeholders and make changes to the remuneration arrangements. Shareholders protests continued with a 45% vote against performance rights granted to Sandeep Biswas.
MONITORS: RICHARD MCDONALD AND JOHN CURRY Date 24 October 2014 Venue Melbourne Convention Centre Attendees MONITORS: KIM D’ARCY AND PETER SCHIEFELBEIN Date 23 October 2014 Venue Sofitel Hotel Brisbane Attendees 400 ASA proxies 3.8m shares from 970 holders Value of proxies $54m Proxies voted Market cap Pre-AGM meeting 150 shareholders and 50 staff/visitors ASA proxies 1.43m shares from 238 holders Value of proxies Proxies voted Market cap Pre-AGM meeting QANTAS AGM $1.93m Yes, by poll $2.96bn Yes, with Rem Committee chair and IR executive SUNCORP AGM Yes, by poll $17.4bn Yes, with Chairman TRANSFORMATION PLAN TO CONTINUE FOLLOWING BIGGEST LOSS EVER Chairman Leigh Clifford said the company had a totally unsatisfactory result in 2014 year. Statutory loss after tax was $2.8 billion and included a $2.6 billion write down of the value of aircraft. It was stressed that this was a non-cash write down, but at some point in the past it was a cash outlay which has now been lost. An underlying profit before tax has been earned in the first quarter of the 2015 year and the first half is expected to deliver a profit. Major problems for Qantas are aviation overcapacity and high fuel costs. Customer satisfaction has improved. The transformation programme will yield $600 million of savings in the first half of 2015 and there appears to be an easing of the capacity growth that caused major problems for Qantas in 2014. The transformation programme should yield cost savings of $2 billion over its life. While growth will be flat in the first half of 2015, aircraft utilisation is up by 12% so far this year and profit will come from cost savings. By June 2015, debt will have been reduced by $1 billion. Richard Goodmanson and Barbara Ward stood for re-election as Directors and on a poll received over 99% of votes cast by shareholders. A resolution was proposed to issue 3,248,000 performance rights to CEO Alan Joyce. The ASA said it was pleased to see emphasis on performance hurdles had been changed to reflect long term rather than short term performance. The ASA noted the value of the rights had been calculated at $0.785 cents each (compared with a current share price of about $1.35). The ASA requested the remuneration committee examine a method for calculating the value of performance rights that is easy for shareholders to understand rather than complex calculations utilising theoretical assumptions. The issue of performance rights to the CEO was approved on a poll by 97.8% of voting shareholders. The Remuneration Report was approved on a poll by 99% of voting shareholders. The ASA voted against its adoption because of deficiencies in the STI plan and the LTI plan vests in three years. Other terms do not meet ASA guidelines. Amendments to the constitution were approved by 99% of voting shareholders. ANOTHER SMOOTH-SAILING AGM AS SUNCORP HEADS INTO SUNSHINE The business performance for 2014 was net operating profit after tax of $730 million, up from 2013, but included an impairment charge of $500 million. Dividends were up 40% to $1.05 per share. The meeting opened with Chairman outlining the group’s performance and strategy, and he also gave guidance for 2015. He emphasised the company’s performance of increased share price, increased dividends and the simplification of the business would continue to increased shareholder benefits. Organic growth was to be the main driver but some bolt on acquisitions would be considered if the fit was right. Suncorp again paid a special dividend and Dr Switkowski committed to paying out 60% to 80% of cash earnings as dividends and returning excess capital to shareholders. CEO Patrick Snowball detailed how the group’s performance was achieved and outlined the targets that the group was trying to achieve. He emphasised the commitment to driving change through simplification of business processes, engaging customers with satisfaction, and diversity of staff and community engagement. The ASA raised the issue of responsibility for the $500 million impairment charge. Dr Switkowski responded that the charge resulted from revaluing assets in its life business due to market conditions. The life businesses for all insurance companies were experiencing difficulties. As for responsibility, the writedowns mostly occurred in the Promina Insurance business purchased in 2009. Dr Switkowski stated that many acquisitions from that period were overpriced and as he was a director at that time, he bore some responsibility. The ASA also requested that for future performance rights issued to the CEO that they consider an increased performance period, hold back on any rights vested and expanding the measures from the current TSR to at least 2 measures. The Chairman responded that Suncorp at this time considered the metrics for the performance rights to be correct but undertook to review any future performance rights issues. He also commented that there was a movement towards the ASA position by a number of companies. The meeting voted on the remuneration report, the issue of performance rights to the CEO, the re-election of 3 directors and a change in the constitution. All resolutions were voted for with majorities above 98%. EQUITY December 2014 Page 13
Page 1 and 2: EQUITY the trusted voice of shareho
Page 3 and 4: BOARD OF DIRECTORS Ian Curry FCPA F
Page 5 and 6: INFRASTRUCTURE’S KEY BENEFITS ARE
Page 7 and 8: Portfolio planning for the holidays
Page 9 and 10: FOR A COMPLIMENTARY REPORT AND PORT
Page 11: BENDIGO BANK AGM MONITOR: REX MCKEN
Page 15 and 16: BRICKBATS BOUQUETS To the New Zeala
Page 17 and 18: INVESTING TIPS: What is CHESS and h
Page 19 and 20: Good buy. Cruel world. Intelligent
Page 21 and 22: MORNINGTON ANNUAL DINNER The Mornin
Page 23 and 24: Location Date Time Venue Speaker To

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