East African Breweries AGM

The 2006 EABL AGM was held at Safari Park Hotel in 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. With a full board le by Chairman Jeremiah Kierieni and MD Gerald Mahinda, all directors 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 bank’s also 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)