East African Breweries AGM

The 2006 EABL AGM was held at Safari Park Hotel on November 2 at 11:00 a.m. Registration was a breeze – with almost as many proxies as shareholders and it was a very quick AGM thereafter with the agenda– approval of accounts, dividend, directors’ election & remuneration and auditors – all done within a half-hour. The meeting was wiith a full board, led by Chairman Jeremiah Kiereini and MD Gerald Mahinda, and all directors present except for Evans Mwaniki (KQ chairman).

New finance director C. Caldwell was added to the board while Wanjiku Mugane was also re-elected. However, two directors, the Chairman and Richard Kemoli, who are both over 70 years, have to be endorsed each year to continue as directors.

I had thought of putting a shareholders vote over the matter in the interests of opening up the board to younger people and women but I felt that I would have been lynched. Needless to say, no shareholders objected on account of their age.

AOB
The Chairman had urged shareholders, many of whom who – in addition to proposing or second agenda items – also congratulated the board, made speeches or tried to ask questions, to refrain till after the agenda was done. One of the first was on the race with Safaricom and the Chairman assured shareholders that the company would strive to wrest back the top earnings crown from Safaricom. Early on it appeared that there would be very few questions, but here are some of them:

  • Increase dividend and bonus shares: is a recurring them at all AGM’s and EABL also had its share. There were many variations of the same question, some shareholders talking of previous board who had been more generous. Chairman explained that they can’t increase dividend for a few small shareholders as everyone get an increase. It was also troubling to see a graphic in the annual reports that showed shareholders receiving 20% of payments from the company earnings while 70% goes out as taxes to the government.
  • Minority interest: There’s a huge payment of profits for minority interest that doesn’t compute in the list of shareholders. MD explained that South African Breweries owned 20% of Kenya Breweries and Diageo owns 54% of UDV. KBL and UDV pay dividends to these two companies and whatever is left now goes to EABL shareholders.
  • CSR: are you meeting your commitment to devote 1% of profit to corporate social responsibility? MD said CSR last year was allocated about 45m and this year will get about 80m. However, like at the Standard Chartered meeting, CSR is not a popular topic at AGM’s. One shareholder, while commending EABL and Nation media group for helping with famine relief and other disasters, they should put shareholders first – and he went on to lament how the company has never acceded to repeated shareholder wishes for more dividends or bonus shares.
  • Are all shares fully issued re: ESOP? MD explained that shares for the ESOP are acquired from the market
  • Why have sports sponsorships declined? Chairman replied is that they still sponsor a lot of sports such as soccer and horse racing – but the funds are disbursed from HQ for better control and monitoring.
  • Missing or discontinued beer brands; MD replied that they discontinue slow-moving brands like pilsner ice and senator special to put more effort into others like white cap light and citizen. He also said they would announce such decisions to the public in future.

Hot Button: Barclays Bank It started with a misunderstood question from one shareholder who wanted dividends to paid as cash in rural areas for those who don’t have bank accounts. Chairman answered that the company had a program with Barclays bank where dividend cheques were banked without commission. One manager was there from Barclays who unsuccessfully tried to explain the issue. More questions were shouted out leading the Chairman to ask that they talk to the Barclays man after the meeting had ended. I went through this problem a few years ago – many shareholders want to cash their dividend cheques immediately – and while this is free for Barclays account holders, there’s a fee of a few hundred shillings if you don’t have a Barclays account. (also banks make some easy money when new investors choose to cash their IPO refund checks immediately – for a fee of course)

Goodies cap (pilsner), t-shirt (sengenge), lunch box (chicken, sandwich, juice, yoghurt, water, cake, apple, orange, egg)

Bank Briefs

Barclays has sweetened its’ mortgage terms

Consolidated: The deposit protection fund (DPF) will sell it’s 50% stake in Consolidated Bank back to the government –who are likely to hold on to the stake until the Bank has a profitable streak that will enable a public listing (e.g. Kenya Re) in a few years. The DPF which guarantees funds of Kenyan bank account holders (up to 100,000 shillings), is now only allowed to invest in government securities.

Equity: As usual, is the first bank to report their September results and Kenya’s fastest growing bank has doubled in almost all measures since a year ago. With assets up 42% and profits up 54% (already exceeded 2005’s) the bank is on track to reach the 1 billion shillings in pre-tax profit mark – a feat the established Nation media group only achieved this year. (See other Bank rankings)

HFCK now offers 20-year mortgage plans.

KCB has four buildings up for sale this month: Hamburg house (Tom Mboya St) for 60 million shillings, Lakhani place (Moi Ave.) 40m, Diamond Building (Moi Ave.) 30m and Loncom Building (Kenyatta Ave – Nakuru) also for 30m. Deadline is 10 November.

Safaricom: Is this the future of money transfers and microfinance?. Safaricom will roll out M-pesa in 2007 which was developed with CBA and Faulu Kenya. Some rough numbers from the trials: Average transaction (1,000 shilling or $14), 0.6 transactions per day, average cash deposit and transfers – 1,500 ($20), and average transfers and withdrawals were 300 shillings each.

Stanchart
– Has a new CEO: Richard Etemesi replaces Mike Hart
– To get new software: CR2’s BankWorld integrated channel banking solution (source: Factiva)

Guaranteed Rent

One Kibera landslum lord has a novel way of ensuring that tenants are up to date on their payments. If you default on your rent, he sends a crew out and they remove the door of your house. Needless to say, you’ll be out looking for you landlord to pay up/settle the matter and retain possession of your household assets.

Mbagathi (No) Way

Construction of the new all-cement Mbagathi Way road is proceeding at a strange start-stop pace. Some weeks, the contractor works as fast as possible, puts down a kilometre of cement, other days there’s no work or with just a few pieces of stone moved around – and it now appears the company is reluctant to complete the road or will take as long as possible.

The road is now dangerous, especially at night, and accidents are more frequent – as some days the road is one-way, others its two-way traffic, with new routes being opened up by matatu’s as they escape the traffic jam which can stretch from Langata road to Ngong road.

Stamp Relic

Today, for the first time in 2006, with ⅞ of the year gone, I bought and used a stamp to mail a personal letter.

q1: Do you know how much it costs to send a letter anymore?

The stamp is a relic today to many like me. I send out maybe 10 text messages a day and make a similar number of phone calls, and e-mails as well – not to mention blog comments and internet chats. Everyone I know has a cell phone, or can reach me by phone or e-mail – and only secondarily by post.

q2: When was the last time you gave anyone a P O Box address?

Hope for the post office
I also send out official letters from the office – but this is still not good for the post office because messenger companies (who we use) work with physical/office addresses not postal box numbers and take our letters from office to office – that way clients are assured of timely and reliable deliveries which they can track.

I still rely on a mailbox though, to receive electricity, water & telephone bills (fixed & mobile), postcards, corporate annual reports & dividends, Kenya gazette, bank statements, magazines arrive every week and this I guess provides enough revenue for the post office.

a1: 25 shillings
a2: Can’t remember no more steamy letters in high school, but I should be sending out some success cards in November to relatives once I get their school addresses.