Cruellers has been keeping busy at the Challenger and Strathfield AGMs and we have an independent account of the UXC AGM.

Neal Woolrich writes:

Yesterday’s AGM of the Packer-backed Challenger International* was a relatively tame affair, with shareholders generally pleased with the companys financial performance but not with their communication to the market and the professional investment community.

[* It’s compulsory in the financial press to refer to this company as being “Packer-backed”.]

As the Mayne Man tipped in yesterday’s sealed section, Big Kerry was a no-show, thanks to a prior commitment that was in place before he joined the board. No such excuse, though, for the absent Ashok Jacob, Packers henchman who has been on the PBCI board for some time.

New PBCI chairman Gil Hoskins and MD Bill Ireland spent a bit of time explaining why their accounting was all kosher and why the investment community has no reason to treat the company with extra “caution and suspicion” just because they were “different”. Hoskins also addressed the negative perception that the company had grown “too fast”.

I must admit their presentations on their profit recognition were over my head, but the point is that it is not the mum and dad investor they should be convincing, it is the big end of town.

Hoskins indicated they were heading down that road, but the most recent press suggests there is still a fair bit of scepticism about the robustness of the PBCI’s profits.

One shareholder slammed the company’s new investor relations man for not responding to his phone call or email from a month ago, in which the shareholder pointed to some very negative reviews courtesy of InvestorWeb.

The particular InvestorWeb analyst had told the shareholder that he had never been contacted by PBCI, despite bollocking them from pillar to post.

We’re usually critical of chairmen who don’t let board members speak up in their own defence, but on this occasion Hoskins went too far the other way in asking the investor relations man to speak up and respond to the shareholder’s query! Admittedly it was after a second shareholder had complained that the chairman didn’t adequately respond to the first question, but still, you wouldn’t be too keen to turn up to an AGM if you were a senior PBCI employee in future.

I made a few points on governance and Hoskins seemed genuinely interested in taking them on board, although with Young James, Ashok Jacob, Lloyd Williams and Big Kerry on board, it really is a Packer show.

I also said James’ attendance record of 5 board meetings out of 9 was “terrible”, but Hoskins defended him to the hilt, saying that he worked hard for PBCI and made a great contribution. Nothing he was going to sway would sway me. 5 out of 9 is a terrible attendance record and if you look at the boards of any major company, you will find it rare that a director misses even one meeting during the year.

Now the job for the company is to post another strong profit result and convince the investment community that it is no fluke or the result of some accounting chicanery.

CRIKEY: The market liked the message. Shares rose 8% yesterday.


Second sealed section November 26


Shareholders certainly weren’t driving in and jiving away from the Strathfield AGM in Sydney this morning, as chairman Norm Fricker and new MD John Winstanley delivered pretty grim news, albeit tempered with the latter’s thoughts on how the company could improve.

The company posted a $6 million loss, attributed by the chairman to a series of one-off charges.

Operationally, the main problem identified by the chairman and MD was the tightening of the mobile phone market, with the introduction of number portability and the removal of handset subsidies.

The auditors noted that “the ability of the consolidated entity to continue as a going concern and its ability to pay its debts as and when they become due and payable will be dependent on the consolidated entity substantially achieving its forecasts based on the new strategy and maintaining the continued support of the Group’s bankers. Should the Group not achieve this, there is significant uncertainty whether the consolidated entity will be able to continue as a going concern or pay its debts as and when they become due and payable and realise its assets and extinguish its liabilities in the normal course of business at the amounts stated in the financial reports.”

Most of the shareholder concern at the meeting surrounded the inherently precarious position the company was in, along with the deal to sell a swag of assets to founder and recently-ousted CEO Andrew Kelly, plus the deal to grant the new MD 500,000 options.

The deal with Kelly was questioned because it involves the transfer of a significant amount of assets to his private company, yet repayment is only required to be made over three years. The chairman explained that because of this deferred payment program, it also resulted in a $1.9 million discount expense in the accounts this year.



A small investor’s account of UXC’s AGM on 28 November 2002

by Jenny Moneypenny

UXC is the new merged entity of Utilities Services Corporation (USC) and DVT
holdings. USC provides data services to utility companies, including meter
reading, data processing, billing, etc. and DVT Holdings is what was left of
Davnet’s former glory once the high tech boom was over. This was the first
AGM following the period of consolidation of the two.

As such, it was a sight of relief for the former DVT holders who received 1 UXC share for each
18.6 of their DVT shares. On top of that they received a 3c per share
dividend on their new holding. It’s no wonder then that the atmosphere was
glowing with optimism.

Two recent research reports were handed out. The first one by Aegis was commissioned, and presented UXC as “high growth, low risk organic growth profile” company. The second one from Tollhurst Noall was less comprehensive, but still recommended the company as a BUY. As
shareholders found their seats after registering, and glanced over the
documents, the room warmed up with positive feeling.

All in all over eighty people gathered in the Crown Entertainment Complex
for this AGM. And what a fitting venue that was. This AGM goes down as a
great effort of the entertaining executive chairman Geoff Lord.

He presented a lightly natured and very optimistic presentation, and not surprisingly
kept refering to the two glorious reports in the shareholders laps.
Questions were called for following the chairman’s address.

The flow of entertaining quotes and analogies comparing the business world to a footy
game came to a halt as the ASA representative introduced as Tom took to the

He had a grip on the microphone, but not much else. I am not sure if
many people knew what his point was, but he made it nevertheless. Geoff was
firmly in charge and his answers to the ASA’s questions were a fitting part
of the entertainment.

He then announced the official business and handed
over to director Fredrick Swaab to chair the vote on his re-election. Tom
from the ASA was quickly up and pointed out that Geoff Lord is a director
of eight publicly listed companies, and perhaps some private ones as well.

If the ASA really want to make a point this should have been the first and
only time they stood up. However, Geoff defended his directorship by
pointing out that he works more than 40 hours a week, and in fact on that
day had a schedule starting at 6:30 AM and finishing at 10:30 PM.

This seems to have satisfied the forum, as nobody wanted to be seen taking out a
calculator to find out his hourly rate. Geoff topped it up by complaining
that there are never suitable candidates to stand up for directorships!

Hello?!? Was there a vacancy? Tom from ASA heckled him from the floor that
perhaps he should consider his health. That was too late, and the meeting
had moved on.

In the end, all directors had more than enough proxies to be re-elected
comfortably, and this dry period of the meeting did not last long. The
entertainment kept flowing – after all we were inside the Casino!

Geoff dropped a bombshell by withdrawing the resolution to approve his executive
options. Again, one would expect that ASA would be happy with that, but Tom
still had plenty to say.

Geoff made another surprise by remarking that he
might “be back next year to ask for double the options”. Selective capital
reduction was the last point on the agenda. This related to buyout of
shares owned by Faruq Khan following his attempt to take control of DVT

It was a pity Geoff could not give details of the board meeting
they invited Faruq to. He concluded that Faruq lost money on this venture.
However, he perhaps spoke too much when explaining that the reverse takeover
was necessary to preserve DVT’s tax losses for the merged structure.

The little investors are constantly told by ATO that anything done solely for
the purpose of reducing tax will be disallowed. Perhaps Geoff was just too
excited by his brilliantly entertaining performance.

However, not all is lost for small investors. Geoff claims that UXC will deliver an 8.6%
dividend return next year. Geoff, do you think that is a great return? My
holding in UXC converted from DVT is now worth less than $50.

Attending the UXC meeting costed me well over $300 in tax deductions. Of course, I did not
drive more than 300 km to attend a theatre performance! Who needs theatre
after a UXC meeting? Geoff, I reckon a return of well over 500%, and I can
do it year after year after year, regardless of market conditions!