Unga 2013 AGM

The 2013 annual general meeting (AGM) of Unga Group took place at KICC, Nairobi on November 28.

Finance and Shareholders Q& A 

Milling & Distribution Issues: While wheat is now being milled at 100%, it tends to fluctuate in other months as they compete with other buyers for grain especially during the festive season. Maize mis being milled at 60-65% of capacity as more and more, maize is moving to the informal sector, and small Chinese mills.

When asked about product shortages of Exe flour for mandazi and chapati, the MD said when there are shortages of product, they may decided to mill general purpose wheat flour which is 90% of their brand sales. He added that shortages at Uchumi may have been due to that company being outside their credit terms which are enforced strictly  

Tax Status: What is the effect of the tax reclassification of the company’s products from exempt to zero status? Unga products are now exempt (no longer zero-rated) which means they can no longer reclaim the tax back from the government - so they have to pass it on to consumers (higher prices)

Uganda: The company bought the 40% balance of the business in Uganda they did not own, as the minority shareholders was not willing to put in anymore money while the business was struggling.  Since takeover, they've been trying to  add value to products, but this is more difficult since July 1  when the Uganda government imposed a 10% duty on wheat imports (all wheat is imported), also have also imposed 18% VAT. The results is that wheat flour is informally imported to Uganda, and big millers are downsizing staff and cutting back on grain procurement. 

Breakdown of Other Income: Other operating income was Kshs 281 million, of which 189M was revaluation of pension assets (thanks to a good the stock market. Directors saidsale of gunny bugs (collected over time) accounted for most of the balance, they will provide a detailed breakdown from next year.

Finance Costs: Why increased borrowings and why the low returns on investments? A new wheat mill was commission on November 2 and is producing quality wheat meaning fewer stock outs. Also the fixed deposits which were earning 6% in 2012, are now getting 12% this year.  

Volatility: Can the company benefit from Price volatility? There are recoveries sometimes on unrealized forex losses, but  since publication of the report, the shilling has strengthened, nullifying that, until recently.

Swag: As usual, shareholders asked about increase of dividends, but also for the company to give bales of flour as a Christmas gift to shareholder. The chairlady said that this had been done in past years when the company did not have ample cash for dividends, and the board’s current preference was to work to increase the cash dividend paid out. 

Customer engagement: Some shareholders lamented the company's low marketing and absence on the web  with no information available for investors. The MD lamented that several counties were charging national brands for painting on walls and vehicles in the counties, and that many companies are now white-washing their vehicles of any logos. he also said their website is at andadvanced stage. A previous one was ready, but scuttled by management almost at the last minute. They also have a call centre at Kencall from July 1 that death with customer questions and also coordinated their orders and distribution. 

Hot Button Issue: Shareholders were concerned that the minority shareholders are being driven out by NSE buyouts at other companies (e.g.Access Kenya, Vipingo, CMC) and wanted the main shareholder (Victus with 51%) to assure other shareholder that there were no plans to buy out minority shareholders at Unga. The chairlady said there’s no evidence from the share register, that the main shareholder is buying shares, but this did not seem to offer absolute comfort as questioner noted that takeover notices appear out of the blue in the newspapers, without any prior notice.

Extras Business:  The proposal to shareholders for the company to purchase Ennsvalley Bakery had been deferred a few days before. The chairlady said that an opportunity to acquire an established bakery had come up, and that in view of limited investment cash available, and the high cost of borrowing, a share swap was proposed - however not approvals had been received in time of the complex transaction. She said it would be discussed at an EGM to be called in the near future, but before next year's AGM.

The other extra business item - the sale of the company's stake in Bullpak Ltd (a company that provides high quality packaging material) was approved - with the board intention to redeploy the cash in the company's core businesses of food and animal feed.

Access Kenya EGM

This morning  saw what was likely the very last shareholders meeting of Access Kenya, as a public company. The Company Secretary reported receiving 11,207 proxies representing 85% of the shareholders at the extraordinary general meeting (EGM) that was to vote on the de-listing of all the issued 218 million ordinary shares of the company form the Nairobi Securities Exchange following a buyout offer that the board of directors had already endorsed and which 75% of the shareholders had voted in favour of.

A few of the retail shareholders present asked lots of questions about the deal, and it seemed they were unhappy that just over five years after they bought shares in the company at an IPO, after which the share had risen to 38 shillings, before dropping to Kshs. 4, and getting low inconsistent dividends, in between, they were now being evicted from the company.  

Some questions/topics raised:
- Why sell out for Kshs 3 billion (~$35 million) that could easily have been raised locally? The Directors 
- Was the a capital markets (CMA) rule on the minimum number of years that a company had to remain listed after an IPO? The directors said there was none, and the regulators had approved all decisions taken by the directors in the deal 
- Some shareholders said they had bought shares at about Kshs. 18, and were taking a big loss. Directors replied that Kestrel Capital, as an independent advisor, said Kshs. 14 was a good price to take and that Kshs 14 was a big improvement  from the Kshs 4 low in the past year, and Kshs. 9 when the deal was announced and shares frozen
- Were the needs of minority shareholders considered in the negotiations, and why didn't the majority shareholders simply reduce their stakes, instead of selling the company outright?
- Why was the offer to retail shareholders structured as a 'unconditional, mandatory one? The directors said that no one was being forced out of the company, and that any shareholders who wanted to remain could do so, and they will still receive annual audited accounts from Access Kenya..they noted that there were still some shareholders of Unilever Kenya which delisted  in 2009
- What is the fate of employees who own shares in the ESO..and will they be arm-twisted to vote the shareholders acceptances past the 90% threshold? The directors said Dimension Data were a $6 billion company who's parent was a $100 billion one with ambitious plans for Access Kenya and Eastern Africa.

The final results of the shareholders voted will be tabulated by Deloitte and released in two days - and payments should be made to shareholders in September 2013. 

Unga 2012 AGM

The annual general meeting of Unga Limited, which is listed at the Nairobi Shares Exchange (NSE) had some discussion on land sales, the use of genetically modified foods (GM foods), the possible impact of Kenya's upcoming elections on the company's operations, and, of course - SWAG. Read more at Coldtusker's blog.

Kenya Airways 2011 AGM

Having not been to an AGM in 2011, I decided to take an hour-long peek at the Kenya Airways (KQ) one as a shareholder and for sentimental reasons, including the love of aviation, because a KQ AGM was the inspiration for this blog.

There's not been much change over the years: KQ, which has over 70,000 shareholders, has been generous with SWAG to shareholders over the years and this has ensured that they always have some good attendance (they also provide free transport from town to the Bomas venue of the AGM) - however this also means that their meetings are long and drawn out, with lot's of time wasting (Chami), and inane questions (@ChrisKaranja 90% of all questions are related to umbrellas and food)

Some notable points

Investments: Regarding their Precision Air investment, (It's now in the middle of an IPO) a shareholder noted KQ which owns 49% of Precision, posted a loss of Kshs. 188 million for the year to March 2011 on their investment - and looking at the Precision March 2011 ones, their pre-tax Kshs. 250 million profit was halved by forex loan revaluation adjustment of Kshs. 125 million (so the current shareholders in Precision swallowed the loss before the IPO). On their dormant investments, the KQ Chairman said one of them would be revived soon (Probably Flamingo Air, or one of two cargo companies)

- The March 31 annual dividend will be paid on 16 November...

Board- Amb. Denis Afande was retiring as a director, but there were no fireworks as in previous years - as this time, the board has settled on his replacement. Amb Denis Awori, a former Kenya rugby official and ambassador to Japan, and currently Chairman of Toyota Kenya was introduced by the KQ Chairman. He spoke briefly on his passion for the airline; he studied aeronautical engineering, was a trainee at East African Airlines (EAA was the precursor to KQ) and as ambassador to Japan participated in promoting the airline as it featured heavily in tourism promotions that were run.

Rights Issue: The Chairman spoke about their need to acquire more aircraft and pay for them including 10 Embraer 190 aircraft. The airline settled with Boeing in April on the delayed 787 aircraft (some of which were to replace Boeing 767) and the first one that was expected in October 2010, will now arrive in fourth quarter of 2013 when they anticipate loads will have increased significantly.

KQ are getting permission from shareholders (and closing the books) so they could go to the Capital Markets authorities in Kenya (& Uganda & Tanzania) but they were yet to determine the size or price. One shareholder (Mr. Karanja) cautioned that it was potentially dilutive (4X), came at a bad time (share price is low - a market price of 26 compared to NAV of 50 per share) and that a convertible bond or cheap overseas loans were better options. (FC) Karanja agreed with this, adding that they had not yet set the date, price, and structure, except that the funding plan would be a mix of debt and equity and that the new shares would create capacity for when the board decided the time was right. The KQ Chairman noted that both the principal shareholders - Government of Kenya and KLM supported the increase in capital and rights issue.

Missing the 2011 AGM Season

May and June are the season for corporate annual general meetings (AGM) , but I’m yet to attend any except from one for a savings & credit society (SACCO).

SACCO’s: are getting more recognition in acknowledgement of their significant deposit holdings and loan portfolios and now have a new regulatory agency to oversee the sector.

In an variation from corporate AGM’s, at a SACCO one members have to first approve the chairperson’s report, supervisory report, accounts and budget before discussions can be held. Also at SACCO AGM’s, the rules allow members on the floor to contribute to a much higher degree, but this also means time has to be spent clarifying (from the by-laws) on exactly what proposals from the floor can be entertained e.g. how much they can vary the the amount that will be paid to the management committee (honoraria).

This year, there was much debate over the last starting time of the AGM and if those members who were late in arriving at the meeting were entitled to payment of an attendance lunch allowance of $25.

Other country perspectives:

Rwanda: In Kigali, Bralirwa held their first AGM - after the company had converted to a public company and had an IPO last year. No writing has come from that meeting, but it is likely to have been quite similar to a Kenyan AGM, seeing as how much Kenyans have contributed to the structure and regulation of the capital markets system in Rwanda.

Also
- Shareholders were expected to approve an increase in capital a few months after the IPO.
- The standard auditor's statement page has an extra clause noting that we (KPMG) have no relationship, interest or debt with the Bralirwa, and …… we comply with ethical requirements (of the) International Federation of Accountants’ Code of Ethics for Professional Accountants, which includes comprehensive independence and other requirements..

India: The Economist wrote about the Reliance AGM - at Reliance company run by India’s richest man. It is remarkably similar to a couple of Kenyan ones - (and was) a ceremony for retail shareholders, with hero worship of an international icon and family that transformed the company to an international conglomerate. It was interesting to note that shareholders apply to speak ahead of time and get approval.

USA: Noted investor and blogger Eric Jackson wrote on the Yahoo AGM . He noted (on AGM’s) that big shareholders stay home and it is mainly those who live nearby, that attend for the free food & coffee. Also that the Q&A is tame with short answers to questions, no big news expected, and the only exciting thing was going to be the board election.

He has been very critical of the board and the current CEO and wrote elsewhere in Forbes on his preferred nominees to be the next Yahoo CEO .

Others twitter comments;
- What a downer! $YHOO “@TechCrunch: Angry Yahoo Shareholder Confronts Bartz And Asks For Her Head (Audio Clip) tcrn.ch/l9hHYJ”
- Terry Semel was let go by the Yahoo board ONE week after it backed him at 2007 shareholder mtg. They now back Bartz.
- $YHOO consensus estimate is it will do $4.55b in 2011. By my estimates, Alibaba Group (incl Alibaba.com, Taobao & Alipay) will beat that
- Here is my first 21CBH article on Jack Ma: http://is.gd/PsTaz4 $YHOO

Pan African Banking

Part II of Ecobank 2010 AGM
After the Ecobank  AGM in Nairobi on June 11 for shareholders only, there was a media briefing after with Arnold Ekpe - Group CEO, Kolapo Lawson- Group Chairman, Tony Okpanachi - Managing Director: Kenya and the Executive Directors of Ecobank.

At the brief were journalists from several African countries including Ghana, Nigeria, Rwanda, Uganda Zambia, and Kenya and various media houses including allafrica asking questions of members of the board, mainly answered by the Chairman and the Managing Director. Questions were asked in English and French and the (multi-lingual) directors answered each in the language asked, with the CEO summing in English sometimes. A lot of the same information given to the press was also disclosed to shareholders during the AGM, and at some point, the CEO asked business journalists to read the actual full annual reports, not just the abridged versions, as a lot of the answers were there.

Media Q&A excerpts
Explain the African strategy especially in war-torn countries?
They serve African countries, and African countries always have needs for financial services. E.g. Democratic Republic of Congo (DRC) can be Africa’s richest country, it needs financial services and Ecobank has invested about $30 million there in telecommunications and small  & medium enterprises (SME’s) there. They understand the risks they face such as non-payment of loans  and mitigate those risks. Also wars can’t last forever, and they saw this in Liberia where they were the only bank that remained during the wartime and are now the largest bank in the country.
- Also they plan to be a world-class Pan-African bank. They devote 1% of their after-tax profit to an Ecobank Foundation that has helped a lot of young entrepreneurs and they are the leading micro-finance bank in Africa have MFI subsidiaries, in additional to commercial banks, in Nigeria, Sierra Leone, Cameroon etc. they have also lent between $500 million to $1 billion to other micro-finance institutions.
In answer to other questions, they said no, they don’t have a sector-specific strategy; they look at all risk & return opportunities, and also they are not really into agriculture, though by extension their micro finance arms are.
- Asked about 38% decline in profit attributed to Nigeria banking problems: Ecobank's exposure in Nigeria is 30% compared to the rest of Africa, which is 70%. they are competitive in Nigeria and going forward they see markets like East Africa, and Southern Africa (notably Angola), as being more important over time to an extent that problems in one market (country) should not adversely affect the bank's bottom line.

- What is unique about Ecobank? (asked by a Zambian journalist who noted that they and  other banks had invested in Zambia at the height of the global economic crisis?)

They are present in more African countries (29) than any other bank in Africa: from Zambia one can transfer cash within Ecobank to 28 other countries and a customer can use an Ecobank card in all their 29 African countries, including South Africa during the World Cup and access thousands of ATM machines.

Another question was asked (in French) and from the answer, it seems to be about delays in Rapidtransfer (through which one can send cash to 29 African countries within 24 hours) they answered that, they have to comply with anti-money laundering/fraud verification, and they use text message for the transfers, and if the recipient is not available, the money is refunded to the sender. CEO said there are more Africans in the African Diaspora, than outside Africa and they transfer a lot of money which is what Ecobank is facilitating, noting that the volume of rapidtransfer had trebled in 3 months.

- The genesis of the bank was in a private sector attempt to facilitate regional trade in the ECOWAS (Economic Community of West African States) region. To this day they try and facilitate regional trade within Africa, among African countries ; in East Africa regional trade is ‘high’ at 20 %, West Africa its 10%, Central Africa its 2% - Compared to Europe's 60%. The bank enables business people to trade across countries instantly, and in East Africa when the EAC protocol takes off on July 1 2010, they will be the only bank with such a presence in the five East African community countries.

Fundraising plan: of the $3 billion targeted in a rights issue they managed to raise $778 million. They had earlier discussed with shareholders and plan to raise another $500 million this year and more when conditions improve.

Will they cross-list in Kenya? They mentioned the need to build a critical mass of shareholders as they have just about 800 shareholders in Eastern and Southern Africa. Answering a similar question later, they said cross-listing had to make business sense and there  needs to be ample liquidity in terms of many shareholders trading a lot of shares. Their investor relations (IR) people are watching and will advise them on the way forward.

Investment in Kenya: Has been about $40 million in two years. The bank they bought (EABS) had 8 branches, they are now at 19 with another three scheduled to be added this year. 
Why staff numbers are down: overall, in the last few years, staff numbers have been on the increase going from 3,000 to over 11,000, but they shed some staff numbers in 2009 from rationalization and efficiency programs

Ecobank 2010 AGM

Ecobank, a Togolese-based banking conglomerate, makes history today by having its 22nd annual shareholders' general meeting, not in Togo or Accra, where it is listed, but in Kenya. Why Kenya? While it has presence in over 30 African countries, in 2008, they completed a buyout of a homegrown financial institution that has been known as East African Building Society, and which is now known as Ecobank Kenya, from which they will base their ambitious regional plans.

As with exposure to Ugandan investment sector, Ecobank brings an awareness of practices of and levels of disclosure for Kenyan companies that have engaged in cross-listing on exchanges in Uganda and Tanzania.

• Looking at the AGM notice for Ecobank, which has 180,000 shareholders, it encourages shareholders to sign their proxies and vote even if they don’t plan to attend the AGM with for/against/abstain boxes to tick.
• Notice figures are quoted in US$ [profit of $62.9 million and a dividend of $29.7, equivalent to $0.3 per share]. [At the end of 2009, Ecobank has assets of $9 billion, while Kenya it was the 19th largest bank by the same measure with assets of Kshs 13.95 billion, ($186millin) and made a loss of 1.15 billion ($15 million) after making heavy provisions in a one-time effort to clean up their old loan book]
• Approval of the director’s remuneration is something glossed over in Kenya and approved without scrutiny or number, perhaps referred to in the footnotes. Ecobank lists the packages availed to directors that are being voted on [chairman $50,000, other board members $30,000, and all get two first-class air tickets to Europe]
• There is follow-up to previous shareholder resolutions: It notes that shareholders had approved capital to be raised of $3 billion, by a rights issue - but that so far only $778 million has been raised and asks shareholders to reaffirm the decision and allow the board to continue to raise funds by various means.
• Audit firm of Pricewaterhousecoopers (PWC) are re-appointed as joint auditors comprising teams from PWC Ivory Coast and PWC Nigeria. 
• Directors being co-opted to the board have their (extensive) CV’s - two in this case, and both are under 50 years.

Total 2010 AGM

The annual general meeting of Total Kenya was held on June 2 at KICC Nairobi. (Excerpts from shareholder Q&A)

Hot Button issue was the Low Divided
- Board said DPS of 1/= ($0.12) per share down from traditional 2.50/= ($0.03) per share is the best they can do
- Why are you not paying dividend as high as rival Kenol? If rival Kenol is paying more, it is because they have not invested like Total (Note: today was also the day Kenol effected their second ever share split, giving their shareholders 10 new shares, for every one they owned)
- Buyout of Chevron by creation of new shares has diluted ordinary shareholder stake and dividend? true but this information was disclosed before the deal was approved and completed

Preference shares: - Since parent owns 83% why not re-classify minority shareholders as preference shareholders? the preference shares only participate in dividends and are non-voting
- When will class A shareholders who have been locked in be released to trade their shares? CMA finally granted approval and they have been free to trade from May 17 2010

Will Total bid for Shell assets? No they will not bid - various reasons cited include, its an international deal that covers 20 countries, they (and Shell) are already at about 30% market share in Kenya and can't go higher (also cost)

High Working Capital: one shareholder noted the company traditionally carried high debtor levels, high stocks and high borrowings and called on the Board to be vigilant in collections, reduce stocks, and perhaps do a rights issue to rectify this. Chairman said they are vigilant with credit sales, and that inventory was currently higher as it was for the two individual companies (Chevron & Total), and that they will review the rights issue to see if it is relevant

Chevron stations: Which were bought in 2009 – and those not being sold onwards (as directed by Kenyan Government) will be-rebranded by year end, and there will be no loss of staff at either company

Goodies: umbrella, tote bag, t-shirt, lunch box (1/4 chicken, sausage, spring roll, beef sandwich, soda, and water

Past AGM's in 2008 and 2009

National Microfinance Bank AGM

guest post in Swahili, submitted by Uchumi Wetu of NMB - a Tanzanian Bank

WANAHISA wa Benki ya NMB watapata gawio la jumla ya Shilingi 15.7 bilioni kwa mwaka 2009 (dividend payout of ~$11 million), ikiwa ni ongezeko la asilimia 4.7 ikilinganishwa na mwaka uliotangulia.

Mwenyekiti wa Bodi ya Wakurugenzi ya NMB, Misheck Ngatunga, amesema mgawo wa kila hisa kwa mwaka utakuwa Shilingi 31.40 (DPS of $0.02), ikilinganishwa na Shilingi 30 kwa mwaka 2008. Alikuwa anawasilisha ripoti ya mwaka 2009 kwenye mkutano mkuu wa mwaka wa NMB uliofanyika jijini Dar es Salaam mwishoni mwa wiki.

Ngatunga alisema mwaka 2009 ulikuwa wa changamoto nyingi kutokana na kuongezeza kwa ushindani katika sekta za benki pamoja na mtikisiko wa uchumi duniani, ambao ulikuwa na madhara makubwa katika uchumi wa Tanzania kama kwingineko duniani. Aliisifu serikali kwa kuandaa mkakati wa kukabiliana na mtikisiko wa uchumi kwa kuendeleza mfuko wa kuokoa na kusaidia sekta na taasisi zilizoathirika na mtikisiko huo. “Sekta ya fedha ya Tanzania kwa ujumla haikuathirika na mtikisiko huo, na iliendelea kuwa na mtaji wa kutosha na yenye faida. Ingawa athari hizo zilikuwa tofauti kwa kila benki.”Hata hivyo, alisema hali ya uchumi na kushuka kwa viwango vya riba vilichangia kushuka kidogo kwa mapato na faida mwaka 2009, ambapo benki hiyo ilipata faida ya Shilingi 68.04 bilioni (kabla ya kodi) (pre tax profit of $47 million), ikilinganishwa na Shilingi 70.94 bilioni mwaka uliotangulia. Upungufu huo wa faida ni kwa asilimia nne. Wakati huo huo, NMB imedhamiria kuboresha huduma zake na kupunguza msongamo wa wateja katika matawi yake nchini na kuwafikia Watanzania wengi zaidi wanaoshi vijijini.

Katika taarifa yake ya mwaka 2009, benki hiyo yenye mtandao mkubwa nchini imesisitiza kuwa itazingatia zaidi kupunguza muda wa wateja kusubiri katika matawi na ATM, pamoja na kuboresha mikopo. Mwenyekiti wa bodi ya wakurugenzi alisema pamoja na mafanikio mengi yaliyopatikana katika kipindi kipindi cha mwaka uliopita, ikiwa ni pamoja na kuongezeka kwa matawi na mtandao wa ATM kutoka 167 mwaka 2008 hadi 281 (now have 281 ATM machines) mwishoni mwa mwaka 2009, bado wanakabiliwa na changa moto nyingi, ikiwemo tatizo la msongamano wa wateja. “Nina uhakika kwamba uongozi na wafanyakazi wa NMB watafanikiwa kukabiliana na changamoto hizo,” alisema Ngatunga. Alisema NMB inakusudia kupanua zaidi mtandao wa matawi nchini ili kuweza kujikita zaidi katika msukumo wa ‘Kilimo Kwanza’, mpango wa kuboresha uzalishaji wa kilimo na sekta ya mabadiliko kwa nia ya mapinduzi ya kilimo.

Akizungumza katika mkutano huo, Mtendaji Mkuu wa NMB, Bern Christiaanse, alisema mtandao wa matawi ya NMB uliongezeka kufikia 133 mwaka 2009 (133 branches), huku matawi mapya nane yakifunguliwa mwaka huo. Alisema ongezeko hilo ni matokeo ya mkakati wa benki hiyo wa kutoa huduma za kifedha kwa watanzania wengi iwezekanavyo.Kwa mujibu wa taarifa ya mwaka 2009, jumla ya raslimali za benki hiyo zilikua kwa asilimia 20.6 kutoka Shilingi 1,384.3 bilioni hadi 1,669.3 bilioni, wakati ambapo mtaji wa benki ulikua kwa asilimia 20.4 kutoka Shilingi 159,689 milioni hadi Shilingi 192,239 milioni.

Taarifa hiyo iliyowasilishwa kwenye mkutano mkuu wa mwaka wa NMB ni ya pili tangu benki hiyo iwe kampuni ya umma baada ya kuorodheshwa kwenye soka la hisa la Dar es Salaam.

2010 Bank AGM's

a guest post by Kainvestor

Barclays Bank AGM:
Besides the ordinary issues of election of directors, approval of financial statements, dividends and director remuneration, there was also special business items on the agenda of amendment of articles to allow for electronic statements and transfer of dividends via mobile money.

As expected, shareholders approved everything and further approved selling the Bank's custody business, though some thought the bank was selling (itself) out to Stanchart.

Q&A
- Why a very big amount in non-performing loans and why are they not up-dated consistently every year? Response was BBK has loaned out over Kshs 100 billion and only about 2b have a paying problem, and most of them are secured so can still recover money by sale of collateral. They collected over kshs 200m from impaired loan accounts in 2008 and over Kshs 400m in 2009.
- What is the bank planning to do with loans secured by fake titles for grabbed land that the government is likely to repossess when the new constitution is passed? The bank doesn’t have such loans and if by bad lack such unfortunate events take place, they believe they will have recourse in the courts.
- Why is annual report font too small to read?
Future annual reports will have fonts that are legible to read
- Since the bank is making a lot of profit with ever growing retained earnings and they are selling the custody business, why can’t they give out more dividends and a share bonus?
Selling of the custody business will be concluded in October this year so money has not been paid to the bank yet. Even so the amount will be used for expansion of the bank. The bank has also been increasing the amount of dividend paid out considerably, by 25% this year from Ksh.2.0 in 2008 to Ksh.2.50 in 2009, and this will be the trend as the bank makes more profits. A bonus might be given next year if the business continues performing well.
- Why are Q1 results late and when are they going to be released? The bank is within the required reporting period and the results will be published Monday next week
humorous moment: Mama Helena, a 94 year old lady from Muranga, said (in kikuyu, translated by Director Judy Nyaga) that she’s too old to wait for the bonus next year and wanted the directors to give her bonus this year.This was supported by several old shareholders.
Goodies: a BBK labeled bag and packed lunch

Family Bank AGM:
... Got in late when they were discussing the only special business agenda. The bank was seeking shareholders approval to offer and allotment of unissued shares. This was approved, though one share holder asked if it meant that the bank would be going public on the NSE to which one director declined saying if that was the case shareholders will be informed first.... later got feeling that some shareholders are not for the idea to have the bank list on the NSE as they feel that they will loose out to new investors.

- Ng’ang’a Muchai retired after serving the bank for 26 years as a director.
- Goodies: a bottle of mineral water, cup of coffee/tea and snacks afterwards.
thanks Kainvestor, other guest posts are also welcomed

CFC Stanbic 2010 AGM

The CFC Stanbic Holdings annual general meeting (AGM) for 2010 was held on May 21 at the tented parking at CFC Centre, off Museum Hill, Nairobi. (twitter @Standardbankgrp)

The Managing Director re-capped the year’s performance of the group companies. CFC Stanbic (bank) had a flat profit of 1.9 billion [$25 million], CFC financial services (stockbroker) lost 108 million [-$1.4m], CFC Life (insurance) lost 433 million [-$5.6m] while Heritage (insurance) had a profit of 278 million [$3.6m]. He attributed the performance to impairment of the stock portfolio at the Nairobi stock exchange which declined by 60%, increased operating costs (New IT system, write-off old IT system, opening of new branches, and refurbishing/rebranding of all other branches) overall operating income was up 25% in 2009, but operating costs went up 46%. Finally, he added that the first quarter of 2010 has seen a good performance – with good earnings from forex and government securities, and the NSE rebound has good for their portfolio this year

Hot Button Issue: Poor performance of the Group /companies was cause for concern among several shareholders who asked questions citing:
- High operating expenses of 6 billion
- Item of ‘other expenses ‘ totaling 3.4 billion ($45 million) that were not detailed in the notes
-Ill-feeling, that when they approved the CFC Stanbic merger they were told that the group would have a leaner management structure would lead to cost savings across the group, and this has not happened
- Company used to be generous & give bonuses, but looking at the results, this is not going to happen any time soon!

In reply, the Board referred back to the MD’s earlier statement that had broken down the major cost items as well as the decline in the company’s NSE portfolio that had resulted in their auditors asking that they factor in an impairment provision of about 700 million while the others were the IT costs, advertising/branding branch refurbishment across the group, not just bank business.

Why new borrowing?: a corporate bond of 2.5 billion [$32.5m]was asked about. Notes also show increase loan from IFC of 759 million and new loans from other banks - NIC (200m) and CBA (500m). MD said the bond and loans were to support their mortgage business, which has been one of their better performing lines, and also support their subordinate capital position. .
(500m)

Banking sector fraud is high even as the group invests in new system and new products like electronic banking, there is a lot of fraud in the sector with customers losing their money to bank insider, and are Kenyan laws keeping up with new fraudsters. MD replied that the new system was safer.

Long-serving Chairman Exits: During director elections, the chairman Charles Njonjo announced that Mike Du Toit (long time Stanbic K MD), Titus Naikuni (MD of Kenya Airways) and himself who were all up for re-election were all stepping down, but added that Du Toit would take up other responsibilities within the group. On his part he thanked shareholders for their support though the years and said he was proud that the company that he, Jeremiah Kiereini (fellow powerful director), and PK Jani had started many years ago had grown into a conglomerate which now had undergone many recent changes and there were many new faces (and more women) who did not know his face, He said Kiereini , who will remain on the board for a few more years, would look after his interests but that he would still be around next year, as a shareholder on the floor, to ask questions of the board. Re-elected directors were Eddy Njoroge (Kengen MD), Fred Ojiambo (Nairobi lawyer), Jane Babsa-Nzibo and Greg Brackenridge who will be the new Bank CEO?

Bonus at next meeting: an extraordinary general meeting of shareholders will be called later in the year to approve the hiving off of the insurance business (CFC Life and Heritage) into a new company (in a deal with Liberty Holdings & African Liaissons Consultants)that will also be listed on the Nairobi Stock Exchange. Current CFCStanbic shareholders will receive a dividend in specie of 1 share of the new company for every 1 CFC share they currently hold, at no additional cost.

Goodies: - lunch box (flat rice & chicken piece), soda, umbrella (which I lost an hour later)
- scary? annual report was 114 pages long without as ingle picture or CSR fluff page. Shareholders also, after several questions, approved a motion allowing the company to publish account sin the newspapers, have it on their website or e-mail it to shareholders in lieu of having to print and mail one to every shareholder.

KCB 2010 AGM

Excerpts from a few minutes spent at the annual general meeting of KCB - Kenya’s largest bank that was held on Friday May 7 at KICC

Summary
Good: they have styled up - gave packed lunches, had registration points spaced out so no crowds/ queues squeezing and interrupting the meeting
Bad; timing is an issue, it was one hour before the auditor finished and the Chairman opened floor to questions - ok they may have a large crowd (5,093 attended the last AGM), but still!

Shareholder Q&A
Annual report was not circulated: copies were given to shareholders as they walked in so some said they had reviewed them. Why even print glossy copies which will be thrown away after AGM (print on plain paper instead)? Why not avail copies at bank branches nationwide?
CEO replied Last year shareholders approved this new measure – and the bank will no longer be sending out annual reports to its 170,000 shareholders – an exercise that was costing them about 30 million (~$390,000) each year. They printed fewer copies this year, but will look at other ways to get it out faster such as e-mail [note: it’s been available at their site for about a month, but few shareholders went and downloaded PDF]

Raise Capital: this happened later with the shareholder approval to raise about Kshs 15 billion (~$200 million) - CEO said after growing at about 20-30% p.a. they needed more capital as a regulatory requirement to continue to take in more deposits and lend out money. Their goal is to raise 21 billion over next few years and balance may be from bond.

Are subsidiaries profitable? (information missing from accounts)? CEO pointed out the information was in the account notes, but said many subsidiaries were in infancy after massive investment in people, technology, marketing and were still not profitable, asked for more time for them to achieve payback [A/R notes showed KCB Tanzania lost 141 million, KCB Uganda lost 438 million, KCB Rwanda lost 273m, while KCB Sudan made a profit of 84 million ]

Open more branches in under-served areas CEO said they have slowed down on this in 2010, they have attained branch network of 210 (168 in Kenya) and 650 ATM’s (including partners) . however where they see a need , they will expand their footprint.

Poor customer service: some shareholders companied about poor service at KCB branches, one said their staff had not kept pace with technology while another noted that staff still think they are working for a government agency. Chairman said they have noted the comments

Ernst & Young have been auditors for a long time is that prudent , or are you stuck with them? yes E&Y have been their auditors since 1989, there is no requirement for company to rotate auditors, though management has noted the point. CEO also mentioned that CBK requires that the lead partners is rotated and that has been the case at E&Y partner who handles KCB

Shareholders companied about no SWAG this year to which CEO said they had reviewed costs of AGM and decided to focus on dividend; they still gave lunch to shareholders who showed up; they handed out (ahead of meeting) - a brown bag packed lunch (from Tintin Restaurant) with chicken drumstick, sausage, potato crisps, boiled egg, banana, soda

Other bank happenings
- Separately another bank Standard Chartered today announced a rights issue to raise capital from shareholders(estimate 3 – 6 billion targeted)
- I&M Bank will give 10 scholarships to Strathmore business students enrolled in 4 year BBS in actuarial science, finance or financial economics. Application deadline is May 31
- Stanbic Bank has an Africa Graduate development programme - apply here
- Equity Bank Pre-university sponsorship program wil benefit 200 of Kenya's top high school graduates - details here

Housing Finance 2010 AGM

The 2010 annual general meeting of Housing Finance (HF) took place on April 28 2010 at the Bomas of Kenya. It marked the end of an interesting month for the bank which was featured in media stories of a boardroom coup as well a merger talks with Equity Bank. The AGM was chaired by Steven Mainda (who has been Chairman for a few weeks) and featured Frank Ireri the MD of the company.

Hot-button: Issues revolved around Equity Bank and the dozen shareholder questions were mostly on the subject.

- Merger or not?: Perennial shareholder A. Chami set the ball rolling as the first (as usual) questioner praising Equity and calling for a merger. He noted that it would save marketing costs and enable HF to sell their products deep in rural Kenya (where Equity was) not just urban centres. He heaped blame on the previous anchor shareholder CDC (UK) for their years at the helm which were marked by no dividends.

Chairman replied that HF had an opportunity of a lifetime after 44 years to sell products across Kenya and even in Sudan (pointed out that director Prof Shem is chair of Equity-Sudan) and wanted to get value, for shareholders who had invested in the company. Later he seemed to step back from these remarks (on the HF board leaning towards a merger) and after more pressing questions they became now adamant that it was collaboration with Equity, Britak and other shareholders like NSSF (3rd largest) that would continue, and wondered where the media got the merger talk!

- Directors said they had invited Equity and Britak to invest in HF, and have since collaborated with Equity in terms of funding (notes show a 700 million loan from equity), and shared services (Equity handles all clearing for HF) as well as with Britak with products e.g. Home Freedom - in which one can use up to 60% of a pension to get a 115% mortgage (that is inclusive of the ~20% home mortgage closing cost)

- How will Equity work with HF when they are competitors? Chair said Equity is a commercial bank, while HF is a mortgage bank and it was going to work with shareholders like Equity, Britak and partners like Shelter Afrique.

- Equity strong arm? one shareholder warned that Equity had muscled its directors onto the HF board making a merger inevitable while another added that shareholders at National Bank of Kenya were already getting jittery about Equity’s interest. CEO replied that it was an unfair charge leveled at Equity - noting that they only had the 2 directors entitled to them, as did CDC, the previous anchor shareholder. He added that when CDC showed they were not actively interested in investing in HF, the Board went out seeking new anchor shareholder and talked to 16 banks, before they picked on Equity/Britak.

Past Board Promises: One shareholder complained that the board is making another big promise today (w/Equity) while other big promises in the past have turned out to be duds – they were promised big dividends which never materialized, then took part in a rights issue that cost Kshs. 20/share and subsequently shares dropped to about 14/=. CEO replied that they are serious this time, and they paying about ½ the profit as dividend; on the rights issue, he said it was held in 2008, after which came some NSE challenges (he mentioned post-election, but should have mentioned stockbrokers collapsing) and global crisis - during which all NSE shares had dropped, some by as much as 60%. He said the share is now back above Kshs. 20 today

Risk Controls: Are risk & credit controls strong enough to prevent a mortgage meltdown like US? CEO mentioned they are careful about lending only to those able 9and willing0 to repay loans, noting they had brought down NPA’s from about 80% or 8 billion in 2004 to half a billion in 2009. chairman added that a strong Central Bank and Governor would not allow Kenyan banks to go down that road of lending to people unable to pay (on the hope that rising home values would plug the gap). Separately the Chairman warned off a shareholder who advised the bank to seek off-shore assistance, with the dreaded word ‘Madoff'!

Dividend: One shareholder compared this to being as useful as a glass of water while the bank spent big on expensive corporate social responsibility, while another asked why it could not be higher as the bank had reserves of Kshs. 2.8 billion. CEO said they have been paying increasing dividends over the last 3 years.

Director elections: Earlier a shareholder had asked chairman Steven Mainga how he had ended up there. Director Peter Munga who doubles up as the chairman of the HF Board nominations committee (but is better known as the Equity Bank chairman) drolled through the new chairman's exemplary CV, and revealed that he was picked from a database of distinguished Kenyans (huh?). During elections, most shareholders walked out to get lunch and the media rolled up their equipment - seems they had they come for news of Equity that the Board was not going to disclose more.

The Chairman and Prof Shem Migot-Adholla (Equity director) were later confirmed as directors, but not so for the previous chairman Kungu Gatabaki, and director Naftali Mogere, who while listed on the agenda for elections, had tendered their resignations earlier in the month. The former two had been appointed in April 2009 when two others resigned - Helios/Equity’s Babatunde Soyoye and the Permanent Secretary (Government of Kenya)

Shareholders also amended the HF company articles to allow for use of newspapers, e-mail, and the company web site for the shareholder news & notification as well as publishing of annual accounts. They also approved for HF to consider electronic or mobile payment of dividends.

Goodies: While one shareholder said there were no gifts, the company was rather generous to whatever number of their 31,097 shareholders who showed up. They got a lunch-box from Panafric Hotel (juice, yogurt, cold roast chicken, sausage, apple, sandwiches (cheese & cold beef), boiled egg. HF also hired buses to ferry shareholders from downtown Nairobi to the AGM venue - about 5km away

Uchumi 2010 AGM

On 29th January 2010 shareholders of Uchumi Supermarkets [in receivership] held a meeting at the Kenyatta international conference centre KICC). It was not t really an annual general meeting as the Specialist receiver manger (SRM) Jonathan Ciano noted in his opening remarks. It was a meeting of shareholders, and he was a guest (angling to be CEO though). There is no board, but the reorganization task force sat at the high table as the board and the meeting chairman was the Kenya Government Solicitor General Wanjuki Muchemi. It was part company meeting, savings & credit/investment club and religious meet that one felt a sense of revival or resurrection [of Uchumi] whose receivership period may end early in February 2010 – after almost 4 years!

Investor Relations: Uchumi has been run like a company in all aspects during the receivership. Most important has been the way the SRM has communicated with shareholders, dealt with suppliers (given them as much preference as banks), and produced and published periodic financial accounts (both un-audited and audited) – a normal receiver manager only has to produce an abstract of receipts and payments to be filed with the government and the banks. At the meeting entrance all shareholders were handed a CD with audited accounts for the years 2006 2007 2008 2009 a/c [however, so far I’m unable to read mine – which is unreadable / corrupted]

The earlier published agenda for the day was
- Adopt auditors report for 07 08 and 09
- Elect Albert ruturi and peter kabuga as directors
- Re-confirm, Ernst & young as auditors
- Lift receivership on February 1 2010 by (i) convert suppliers debt into equity (ii) restructure government loan into long term debt (iii) Restructure KCB and PTA bank debt

‘Directors’ introduced included SG Wanjuki Muchemi, the permanent secretary in the ministry of trade, representative of Kenya wine agencies limited (KWAL), industrial & commercial development corporation (ICDC), Ernst & Young audit firm, and Kimani Rugendo (long term uchumi supplier and has spearheaded their negotiations during receivership) and others
SRM Ciano outlined the recovery steps turning round the company from 2006 [lost 750 million on sales of 3.5 billion] and 2007 [sales of 4.5 billion an a loss of 256 million], to 2008 [sales of 6.8 billion an profit of 95 million], and 2009 [sales of 8.2 billion an profit of 420 million]. At the time beginning of receivership uchumi owed 957 million to banks, 900 to suppliers, and 125 million to ex-staff, while today it owed 130 millions banks and 192 million to current suppliers while it has paid off all ex-staff. Also during the 7 months were closed in 2006, losses of ~150m were incurred
The Trade PS Mr. Ali also spoke, and then it was the turn of the SG. Solicitor General (SG) Muchemi said nothing was fundamentally wrong with uchumi when it collapsed, just bad governance. President Mwai Kibaki and government were determined that this icon of Kenyan business would not be allowed to die and he was asked to lead a task force to revive company (along with investment secretary Esther koimett and then-Trade PS David Nalo). He led the team re-negotiated all loans and leases and appointed SRM. He noted what US President Obama did to bail out US banks is exactly what Kibaki has done to revive Uchumi and that it was don’t in a unique was because traditionally in Kenya, companies that go into receivership, usually die (are liquidated, not revived)
The E&Y auditor read out their, and noted with an emphasis of matter that still the liabilities of the company exceeded the assets the 180 million. At the time they were appointed, the accounts had not been audited and they have now been able to audit accounts for the last three years for presentation to shareholders.
Shareholder Q&A
- Explain tax in profit. Yes its true, that Uchumi got a non-cash tax credit Kshs. 250 million that boosted their 2009 profit to 420 million. C
- Re-claim the Uchumi flag-ship store city square CRM said that matter was in court [where former directors of Uchumi have been charge in court with illegally selling the store] and being pursued by the attorney general and CID
- Is it the right time to exit receivership? All the things are in place proven record, and the banks (KCB and PTA) have approved lifting of the receivership if certain conditions were met.
- Negative balance sheet position Ciano said that’s 180 million down from 1.2 billion in 2006. He added that if shareholders approved the debenture conversion, government loan restructuring, and combined with Uchumi’s profits for 2010 (based on the six month numbers), the balance sheet position is currently a positive 594 million
- CSR activities of the company SRM explained that they are very active in this and spearheaded famine relief donations with several local stations among others

Other
I left early [after adoption of audited accounts and confirmation of Ernst & young as auditor] but it seems all resolutions were passed
- Shareholders approved the conversion of Kshs 211 million of shareholders debentures into equity , along with another 266 million from suppliers
- Shareholders approved restructure of government loan into long-term debt. SRM has applied to government to restructure their 850 million debt into 350 million of equity and 450 million to a loan which will be paid off in 4 years
- Uchumi will pay the remaining 130 million to KCB and PTA banks by end of the year
- Not sure who were appointed as directors
- Seems Trans-century are still interested in uchumi: The Transcentury Ltd group, which is chaired by James Gachui and whose directors include several men close to President Mwai Kibaki, is trying again with the executives of Uchumi Supermarkets Ltd. (...via africa intelligence)

SWAG: small calendar, account on CD, and plenty of water to drink. It was a duel of local barons between former director Chris Kirubi (Dasani from Nairobi bottlers) and Kimani Rugendo (Mt. Kenyan brand water) and there was so much ~4 per shareholder seat

East African Portland Cement 2009 AGM

The 2009 East African Portland Cement Company (EAPC) annual general meeting (AGM) was held at the company sports club in Athi River on November 19. Company is the second largest cement producer in the country, but one of the smallest shareholding bases at just 996 shareholders. One of its largest shareholders is rival cement company Lafarge who were evicted from the board of Athi River mining, another cement company, earlier this year.

What would have been a tough year for the company was smoothened over by an 'other income' boost

shareholder questions
How will Portland compete with the many new opening cement companies in the country? - Mombasa Cement launched plant in Athi River, while ARM building new large cement plant in Tanzania

- By externally increasing sales in the region Ð to Uganda, South Sudan, Burundi, and democratic republic of Congo (DRC)
- More media advertising to promote the cement brand (Blue Triangle) and are relocating sales& marketing department from Athi River to Nairobi
- Internally improving processes e.g. use cheaper fuel, apply cheaper distribution methods. also plan to install a new kiln to produce clinker for the companyÕs operations and sell the excess to export to other cement companies (they have appointed consultants to begin the process of commissioning the 5,000 metric tones per day plant)
- By Going Green initiatives: cement companies not associated with environment causes, but rival Bamburi (Lafarge) was able to create a beautiful Wildlife park (Haller Park) from a depleted quarry. Now Portland has signed up with the JP Morgan climate care program, and by reducing fuel oil they use in operations and carbon emissions , the company earns about 80 million per year (~$1 million). Also for some of their exhausted land in Athi River, they have applied for a Kshs. 250 million environmental grant from the (Kenya) prime ministers office towards the planting of 4 million jatropha trees whose seed oil will be used in kiln operations and earn more carbon credits

What will happen to idle plant/asset/farm?
- Farm animals were sold as it was loss making and animals would have died of drought if they had been kept. Idle farm will be planted with jatropha forest, to prevent squatter encroachment
- Useable old mill machinery will be shifted to other countries to reduce cost of production of some cement, unusable plant parts (old technology) were to be sold, but global economic crunch meant that steel prices plummeted and so they have halted this until prices pick up later

Poor dividend and share price DPS is always 1.30 , while EAPC shares rarely trade/move up or down
- Shareholding structure is government of Kenya - 50%, and Lafarge (France) - 42% and what is traded is from the small 6% owned by the public. board did not answer if they would emulate ARM and boo Lafarge (more difficult to do here)
- Reserves are there but some canÕt be paid out i.e. asset evaluation reserves,

Yen-denominated Japan loan Portland received a 20 year 2.5% loan from Government of Japan that has now become a burden to pay as the Japanese Yen has gotten stronger over the years (lost them 921 million in 2008, and still has 10 years to go with the loan). Board is aware of constraints and shareholder concerns and so company will look at hedging to resolve the costly loan issue by next year

Sticky Issues shareholders asked why they were being asked to re-elect directors who skipped AGMÕs - Titus Naikuni (CEO of Kenya Airways) and Joseph Kinyua (Permanent Secretary, Ministry of Finance) , and why the Government Controller & Auditor General was listed as the Portland auditor and gave an opinion, yet contracted the audit function to audit firms (this year was by Ernst & young, previously by deloitte)

Goodies: buffet lunch, umbrella, tote bag (with cap, polo shirt)

Odd moment: prayer by famous shareholder Mr. Chami before and after the meeting

Olympia Capital 2009 AGM

excerpts from the last ½ of the meeting

Q&A leading into the 2009 AGM, Olympia shareholders had many questions revolving around the companies investment strategy, governance issues, disastrous foray into South Africa and prospects of escaping an Uchumi like future as the AGM was postponed, and happened a week later than scheduled.

Governance: - the AGM was delayed, the Board said, because the annual accounts were late coming out; one shareholder urged them to do better, not aim for the minimum corporate of 21 days only to avoid being late and incurring regulator penalties. CEO (Michael Matu) said they had noted this and had improved to the extent that the ½ year accounts were released in September, just over month after completion of period.
(lacking) corporate governance (missed this part where the auditor read out a statement that the company had no corporate governance in place. The auditor apparently made a similar remark last AGM, but that was omitted from the minutes of the meeting presented today - the directors mentioned they have engaged consultants and were embarking on corporate governance measures. One shareholder noted that the board had promised the same last year and no piece meal measures have been implemented to which the directors said they were doing this now and would brief shareholder in about two months
director loans increasing each year amount to 18.3 million – who, for what, what terms? CEO said he’s the only director and he has borrowed to buy house and car. Loan interest is paid and assets are charged to the company
insider board: One shareholder complained that 5 of the 7 directors had links to the parent company, so board was not truly independent
investor briefing -one shareholder presented the directors with a list of 35 detailed questions. The chairman suggested they have an investor briefing in about two months where all these and other shareholder questions can be exhaustively answered it will not be an EGM. CEO also promised to reply to all these questions via e-mail to the shareholder and copy his replies to the Capital Markets Authority whose representatives were in attendance
- at that time, the directors all also explain what measures they have taken in the area of corporate governance

Strategy Going Forward - For SADC (southern Africa) Olympia is still keen on the building materials market which is still strong. Even plan to go back into South Africa but without a link to Builders Warehouse – who handled 75% of their sales. They hope to revive and relocate the Natwood business to Botswana (Gaborone) from South Africa from where it will be easier and cheaper to supply their core markets in the Gauteng region (transport distances will halve from 600km to 300km)
- now going into Zambia on a smaller scale, and will look at Zimbabwe since economy is more attractive after dollarization
- part of problem was they did not make the management changes that they hoped to make; hire right people

Investments - Dunlop is profitable this half year, though had not yet installed new plant they bought to replace their exiting 1970’s plant. However with what they know from the Botswana tiles operation, they know how they can multiply their products & sales in Kenya with Dunlop once new plant is installed. From Botswana they supply South Africa, Zimbabwe, Angola Nigeria and Mozambique. Answering a separate shareholder question, mentioned that factory land had been given to Dunlop to support their balance sheet, but transfer had not been effected since they were awaiting confirmation that there would be no stamp duty to be paid on deal
- Mather & Platt, they bought out centum’s shareholding, but are yet to beef up the management there
- A shareholder (who was transaction adviser on the rights issue of 2007) said he was surprised to see how share transfers were disclosed in 2009 accounts. CEO said that at the time of rights issue, shares were allocated pending investments later made. E.g. Olympia had no cash to take up Heri rights issue, but Avon advanced Olympia cash against balance sheet . In answering a similar question CEO said of their strategy – when they see opportunities, but have no cash they arrange for third party to buy shares and agree to re-sell them to Olympia at later date
- No due diligence in describing Natwood investment, CEO had mentioned that they paid ½ the funds but later their due diligence showed that there were come issues within the company and a shareholder questioned if any initial due diligence was done at all. CEO explained that if company went after blue chip companies, they would pay premium prices, but they chose to go after viable but distressed companies and in this case they had consulted advisers and lawyers before natwood deal.

Shareholder votes - One director was re-elected, but COO Mwangi Wamae opted out of re-election to the board.
- ESOP though directors said employee share options plan (ESOP) will be a key tool to attract top managers for the various companies, shareholders voiced concern that this was the wrong time to bring up an ESOP, with the board governance not in place. Directors argue that the ESOP approval was separate from the implementation noting that - they have had an ESOP in Botswana for 3 years with no shares issued, and that the CMA (Kenya) would not be discuss and approve an ESOP unless shareholders had approved it. Since this was a formality it was approved.
- A dividend of 10 cents was approved. Chairman joked that this was the same as Safaricom was paying

Summary: Olympia CEO and Board pulled it off (again) - reassuring shareholders that the company was sound, strategy & governance would improve, they had a plan to take it forward and that the worst (of the SA foray) was behind them now.

Kenya Airways 2009 AGM

Kenya Airways (KQ) is the cradle of blogging for me – one of their annual general meeting's (AGM) is the place it all started, the place where the inspiration for blogging, since then it’s been a ritual to attend because I like planes and investments similarly. This year’s AGM, held on September 25, was the first I’ve attended at Kasarani sports gymnasium; previous ones were at their Embakasi HQ, Carnivore and Bomas grounds.

what was remarkable or noteworthy?

shareholders aplenty KQ always draws in shareholders, maybe its because they are rather generous with gifts a.k.a SWAG (more on that later); but the meeting hall is full of the whole rainbow of Kenyan shareholders from business peoples, to student types (perhaps sent as proxies), but mainly older people who perhaps bought shares as far back as the IPO in 1997.

KQ courtesy shames Safaricom a few weeks ago Safaricom held a no frills AGM that did away with many of the niceties that shareholders are used to. KQ, showed they this was no a costly affair to gold; they had shuttle buses from town to ferry shareholders to and from the meeting and also gave out lunch boxes to all shareholders. The AGM did not have the usual red t-shirt that shareholders are used to, but coming on the back of Safaricom, many were satisfied.

in the meeting - CEO Titus Naikuni talked about the tough year the airline had from the credit crunch, which affected travel budgets and the price of fuel, which escalated during the year.
- Fuel hedging: FD Alex Mbugua tried to explain the subject of fuel hedging, something he said even many accountants don’t understand, but which had left the company with a 5.6 billion loss. The company was able to manage an operating profit of 4 billion ($52 million) before hedging kicked in, even though the price of fuel had gone up to Kshs. 24.5 billion representing 35% of their total costs.
- For the last 5 years they have engaged in fuel hedging, this worked in their favour till 2008 – when with oil looking to zoom past $200 they locked in some contracts, only for the price to nose dice to $40 . Overall in the five years the gains remain a positive Kshs. 516 million.
In response to shareholder questions he also said
- KQ board is reviewing hedging policy, and this is through the committee of the board
- some hedging parties have been reluctant to enter into contracts with KQ of late, and insist on some cash cover
- while they could not comment on recent prices they have hedged, some to 2011, he mentioned the numbers have swung in their way as at August and they may have a write back in profits this year when they brief investors in October 2009.

Shareholder questions (with answers)
- how will they control costs? Careful choice of routes, try and expand those that work, drop those that don’t. African routes account for almost 1/2 their revenue now.
- Why did employees strike? There were conflicting unions representing employees, and during labour talks, the employees went on an illegal strike as they demanded untenable wage increments. Management was able to come to an agreement with the help of COTU and is looking to learn from mistakes it may have made to avoid this again
- Why is company’s secretary (CS) not an employee? Company did a cost benefit analysis and decided to outsource the function. The CS is still Fiona Fox and she assured shareholders that she responds to all letters written to her; most of which relate to registrar matters
- Where are reports of KQ accidents in Ivory Coast and Cameroon? CEO said investigator reports are still being done by these countries authorities, and they don’t have the former, while the latter has not been released KQ so can’t comment on it. On the Cameroon crash, KQ and insurers had made settlement with 90 of the 105 passengers, but some relatives have chosen to sue the airline or the aircraft manufacturer (i.e. Boeing)
- Why did annual report come out just 3 weeks to AGM? Management said they would try and improve and not just comply with the legal minimum for listed companies
- Why not use Precision Air aircraft (a Tanzanian airline in which KQ owns 49%) to fly to Kisumu since they have no more turbo-props for short runway? The repairs at Kisumu are short term did not warrant fleet change, and will resume flying there with their Embraer 170's when repairs are done
- Do they plan to fly to the USA? KQ has never said they would fly to US; they have good partnerships and networks (KLM) through which they get feeds from US already, and JKIA will have to make some modifications before they can fly to US.
source: airliners.net
- What will be done about Boeing 787 which they have ordered but us yet to fly? KQ are talking to Airbus and Boeing about getting some replacement aircraft (won’t be brand new) but decision will be made in a few months
- One shareholder asked why managers /directors interest are divergent from KQ i.e. directors own few shares, while executive directors compensation is significant part of employee compensation: The Chairman said buying KQ shares was a personal decision of directors and he himself bought his shares at the time of IPO when he was not even a director of KQ. The CEO said management have not had any salary increments despite what union said during the strike.

Minor #FAIL’s: - The company registrars who had dozens of computers to register shareholder before the meeting, but whose computers were not connected. Anyone could have walked in. They also ran out of ballot papers
- The gymnasium had no water (though understandable at this time of water rationing). It was also not suited to the meeting format; the directors sat so far as to be indistinguishable except on TV screens while poor microphones/acoustics of hall meant some questions/comments were not audible
- Shareholder elections; this year, there was only one independent candidate on the ballot I guess they have realized of the futility of this exercise - and the results out today show all the board nominated director were unanimously re-elected
- CDSC (the share people): had a tent outside to register any of the 78,000 shareholders of the company; but they didn’t just ask if you had immobilized your shares, they practically demanded you pass by their tent and register to receive statements by e-mail or SMS (do away with the postal service)

Goodies: - Dividend of 1 shilling ($0.013) per share despite the loss. shareholder's register closed day of meeting and this will be paid after October 23
- Lunch box by Sarova with drinks (yoghurt, soda & water), meats (drum stick, beef sandwich, boiled egg), fruits (banana, apple), and breads.

Express Kenya 2009 AGM

The annual general meeting of Express Kenya was held on August 7 2009 at the Norfolk hotel.

The transport company had a decline in sales to 803 million ($11 million) down from (922 million in 2008) and it’s four year profit streak was snapped as it lost 53 million ($700,000) before tax, down from a profit of 112 million the year before.

A presentation was given by the CEO and transport manager which noted: 2008 was a year marked by post-election violence (PEV) which saw revenue decline by 13% (as they could not deliver to key contract routes in western Kenya), fuel prices rose by 27%, and the company suffered some PEV vehicle damage which insurance companies have not compensated (insurance co’s don’t cover political risk).

2009 outlook They noted that in the half year of 2009, sales and profits are ahead of budget; the company has undertaken efficiency measures taken include installation of vehicle fleet management & tracking system, outsourcing of some services, investment in new vehicles to support contracts, increase in warehouse utilization etc. By y year end they project to have a profit which will be distributed as follows: to pay down overdraft (31%), new investments (29%), dividend (25%) and cash flow (15%)

Shareholder Q&A Most of the questions asked related not on (lack of) dividends this time. Shareholders seemed to accept that the loss was justified by the election events and were convinced of management & board explanation and improvents since.

Hot button issue The company entered into the murky Nairobi city bus transport system through deals with two companies’ - Citi Hoppa and Kenya bus Services, and shareholders asked over half dozen about the investments.

Safeguard Bus Investment
- How many buses? Express have 40 buses now that are shared among the two companies, each on the same terms. Other towns like Kisumu and Mombasa have requested Express to also launch similar investments there
- Are they profitable? Last year was trial; this year is performing better than expected – with good profits for the company. Express gets a guaranteed minimum daily income from each of their vehicles; anything above that and the management company gets a bonus. Money is banked into express accounts every other day and this is closely monitored. In future, they plan to have swipe cards and pre-pay systems that will better enhance revenue collection
- Express is now the largest single vehicle owner in the citi hoppa franchise
- Since it has succeeded when will they branch out on their own? Government has only licensed 3 transporters in Nairobi which probably requires 200-300 buses, so they have to work with Citi Hoppa, Kenya Bus or 2M. When the time is right, they may apply for their own license, but also they recognize that they (EXpress) don’t have the management team to run an independent fleet now

Fleet management & maintenance
- Express buses operate route only within Nairobi, and only on specific route e.g. 46 that have few potholes and they can do many trips with their relatively new fleet. This also means lower insurance rates.
- Bus maintenance by who? The vehicles are part of a complex partnership with Ashok Leyland. Express rents space to the dealer who also does all the bus maintenance at their yard. In exchange, Express get all the clearing business and bonded warehousing for the dealer
- One shareholder warned them they were dealing with someone (Juja MP George Thuo) who ran down KBS and built Citi Hoppa with the bounty. CEO said they did their due diligence at Citi Hoppa, and the buses, under the management of (Mrs.) Judy Thuo, are doing very well, even better than the KBS

other Q&A
Anchor shareholder commitment? Investor Chami questioned the direction of the company, commitment of the main shareholder & lending by a director, building purchase by the company, and asked what/if the anchor shareholder, who’s also CEO, pulled out of the company?
- CEO (Hector Diniz) replied that loan to company (205 million) is at 6% whereas a bank would have charged 18%. The anchor shareholders have built up the company since they took over 5 years, transforming it from being worth 200 million to over 1 billion, while producing profits from day one (and would have done so in 2008 if not for PEV and fuel prices)
- In new building, Express own 49%, while the Diniz group will have 51% and are sharing the opportunity and profit with shareholders (the building will cost Express 488 million)
- CEO is proud of results, shareholders have increased from 1,500 when they took over to 4,200 now, and the current share price of the company at ~9 shillings is not a true reflection of the company’s worth which he said is 20+ shillings. He added that once Safaricom lifts market, true market value of Express will show
- He told off Chami that if he sold his shares, Chami could also sell his or look for another anchor shareholder

Big Contract lost? when a shareholder asked if Express had lost a lucrative contract to distribute beer for Kenya Breweries, directors said they have not lost the Kenya breweries distribution contract in the 5 years they have been in charge. They briefly lost distribution in Central Kenya, but have now got it back. They also do Western Kenya (which was affected by PEV in 2008), have got 100% distribution for Alvaro (for which they will procure new small trucks), 100% UDV (spirits) and delivery of KBL products to AFCO (Kenya army) stores.

Director elections at the onset of the meeting chairman, Dr Chris Obura, corrected the notice of the meeting which had stated that three directors (including himself) were up for r-election (the printer repeated last years notice). So as a result only one director was up for re-election – and Mr. Moskovic was re-elected

Goodies one shareholder made a loud appeal for SWAG (there was none),saying the previous year they had got shopping vouchers and his family would ask what has Express given you – to show patriotism to the company?. After the AGM, tea and sandwiches were served outside the meeting hall, but that turned into a free for all grabbing match – when will companies ever learn?
KPLC is not good There was a delay of 15 minutes as the meeting started because the electricity cut out, and the Norfolk generator took another ¼ hour to kick in

Centum 2009 AGM

The Centum 2009 shareholders annual general meeting was held on Friday July 17 2009. Their last meeting I attended was 1½ years ago in February 2008 when ICDCI (changed its name) and became Centum. a quick Google search reveals other companies around the world with a similar name. So shareholders were right when they pushed for a more authentic, African name

AGM recap: From reading the minutes of the last shareholder meeting seems there was quite a bit of drama at the company’s last AGM in January where the independence of directors was questioned, and there were some interesting director elections whos resulted were polled and motions by some shareholders to remove two directors - (Chairman James Muguiyi and businessman Chris Kirubi) flopped. Most media reports however dealt with the delayed AGM and the payment of dividends at the door, but the best recap of that comes from the Nation

Bored this time: This was one of the longest AGM’s I have been to in a while. The Chairman and the CEO of the company each give long speeches about the company, that easily took up almost 2 hours - giving views on the performance of the company and future outlook as relates to the corporate bond they are about to launch.

Centum Performance their investment book is worth 6.5 billion (($84 million) down from 8.1 billion the year before. Reasons for decline were gains on disposal totaling 311 million, and further impairment of Rift Valley Railways (RVR) shares 271 million.
- The portfolio is consists of : 25% is KCB shares, General Motors East Africa 25%, Insurance 19%, 4% is publishing (a 35% stake in Longhorn), Beverages is 24% (includes shares in EABL, and several coca cola franchises), Services is 4% (includes 0.1% of Safaricom, and shares in NAS, and RVR), and 5% is a newly acquired (23% stake) of Carbacid . some values are KCB Kshs. 1.84 billion, GM 978 million, UAP 877 million, Nairobi Bottlers 660 million, KWAL 263 million, EABL 426 million, Mt. Kenya Bottlers 209 million
- Target is to have administrative costs at less than 2.5% of their assets. 2009 was 123 million (1.5%) and 2008 (136 million = ~1.6%), which includes cost of staff, running company, shareholder costs etc. striking a blow to companies that say public shareholders are expensive to administer
- On RVR: board maintains that it is still good company, had bad management. Once new deals are signed, new technical partners and this will see $50 million invested in the company. Fundamentals are still good, lots of foreign investor interest on the company, and it will be wrong to walk away when the value is down

Corporate Bond: Centum will be launching a corporate bond to raise Kshs 2 billion (~$26 million), reasons given include
- It’s the right rime, Safaricom and Kengen about to launch, while a recent bond from CFCstanbic bank was over-subscribed. After prospectus and approvals, it will be marketed to pension funds, institutions, insurance companies, even shareholders can subscribe
- Current borrowing costs at 170 million out of 6.5 billon assets are very manageable. Their dividend flows are not consistent, so they sometime need overdrafts, but can’t grow the business on overdraft. The Bond will add some long term funds to balance sheet
- They have a pipeline of investments lined up, and what is a bad market for others is a good time for Centum to buy into companies. Funds will be invested 60 – 70% in private companies, 20-30% in listed companies and 0.15% in real estate. They already signed the deal for Carbacid for about Kshs. 400 million that was done through Rasimu Limited, a new wholly owned subsidiary
- Bond is better than bank debt, cheaper, long term, more flexible. It will cost 9.5% to 12.5% per year

Image Centum plans to expand into Africa from Kenya and their vision is to be Africa’s foremost investment channel. Chairman mentioned that their name brand is important, and regretted that bad press had seen the share price dip

Voting: The voting was done by ballot, and the auditors will tally the results. So at the meeting, motions in the agenda were proposed and seconded, with shareholders asked to mark ballot forms and leave them outside after meeting for votes to be tallied. With the new registrars CRS, voting by this method could become the norm, especially on controversial votes, where shareholders numbers at the annual general meeting can be canceled out by real tally of proxy votes. That was the case at the January meeting, where the 1,536 shareholder attendees (with 258 proxies) tallied yielded just 1% in the re-election the directors.

Athi River Mining Board evicts Bamburi Cement as Director

Excerpts from the 2009 Athi River Mining annual general meeting (AGM)

Athi River Mining, Kenya’s 3rd largest cement company held its annual general meeting (AGM) on June 11 2009 at the Grand Laico Regency Hotel. It was mainly presided over by the Chairman Mr. Palle Rune and Managing Director Pradeep Paunrana.

After the finance director gave a review of 2008 performance – sales of 4.6 billion ($58 million) and a profit of 503 million ($6.3 million) (but had an error column labeled 2009 numbers and skipped over the net current assts position instead focusing on global credit rating A1 rating of the company)), the MD took over and outlined his plans for the company going forward along with a talk on the state of the cement business in East Africa.

ARM Outlook
- ARM had no cement growth in 2008 because they are at full capacity, and same with fertilizer. fertilizer sales rose sharply to almost 1 billion shillings, but that was because the price of fertilizer shot up in Keya. It is mainly sold o tea farmers, cheaper than fertilizer imported by KTDA and gives better yield. Silicate sold mainly export markets Mozambique, Malawi, SA
- 26% of ARM sales were from exports, but were hampered by strong shilling
- Project to haves sales of 6 billion in 2010 rising to 13.4 billion by 2012
- Currently produce 1,000 tons per day for the Kenya market that has 5,000 tones per day production capacity. With new plant in Tanzania, ARM will go to 2,000 tons per day from January 2010 - the new plant in Tanzania will be largest plant in east Africa
- improved production efficiency: now have the best margins in cement production in Kenya, ahead of Bamburi and a distant EAPC.
- improved energy efficiency in cement production - East Africa. Saved 16% (about25m) in 2008 and expect to save about 50 million in 2009 – they have achieved international benchmarks
- building their own clinker plant in Tanzania, locally produced clinker cheaper than imported clinker by about 1/3

Cement in EA
- Cement a growth business, and there’s great demand in this part of Africa for building work, and in the future for roads
- Cement grows at 2x GDP in east Africa , and has been at about 15% p.a. for last few years
- Comparing cement companies across region shows a variation in pre-tax profit margins ranging from 36% at PPC (SAfrica) and Tanga (Tanzania), while in Kenya Bamburi was 18%, ARM 17% and EAPC -13%
- Egypt became a new importer of cement in 2008

Shareholder Q&A
- borrowing costs are high and growing, why? high borrowing for expansion- they chose that route instead of the equity one. which will probably strenthen Bamburi's position
- acquired minority shares in Tanzania subsidiary, but did not get Kenya shareholder approval, why not? Chairman said they’d never get anything done if they had to bring such things to a vote
- Why not sell cement in south Sudan and Rwanda? Wont go for those markets, they are focused now on the highly profitable Tanzania market, and less profitable S. Sudan market is better served by rivals (tororo and hima)
- when will shareholders visit new Kaloleni plant as promised by the board? perhaps AGM next year will be held there, but its open year round for any shareholder to visit
- why is ARM cement and fertilizer not seen in retail shops around the country ? MD explained that virtually all their product was sold to repeat customers – e.g. contractors who took the cement at factory to building sites, and same with tea farmers

Hot Button moment: director elections
Three directors were up for re-election – Bamburi Cement, Michael Gondwe and the deputy chairman H. Paunrana, none of whom were present or reprsented.

Bamburi Cement, a rival and Kenya’s largest cement producer own almost 14% of company, and are second largest shareholder in company. Bamburi had not sent a representative, and their reserved seat at the board dais was empty
- The Chairman recommend that shareholders <vote against the re-election of Bamburi. He said it was clear that Bamburi does not want ARM to grow or produce more cement. They have been trying to sabotage ARM in international circles. I noticed in the minutes of last years meeting, for the vote to split the company management, Bamburi had requested a poll vote be taken. Chairman summed it up by saying that the board was not comfortable disusing ARM company business in the presence of a Bamburi representative
- One Shareholder queried if company had obtained legal advice to which chairman answered yes the board had even got two opinions
- Another shareholder feared that if Bamburi were voted out and then dumped their shares, it would affect other investor; the deputy MD replied that snares would be snapped up quickly and said Bamburi rights as a shareholder and director were separate unrelated matters
- Another shareholder asked about an ongoing land dispute between ARM and Bamburi for limestone deposits; CEO summed it up as follows: ARM scouted and located a deposit of limestone. Signed a least for 540 acres with Kitui town council. Bamburi tried to get this overturned, and the former Local Govt. Minister Musikari Kombo had tried to broker a sharing arrangement. Bamburi got high court injunction and ARM and Kitui council have now gone to court of appeal, a process that may take years. Courts and government tried to broker a settlement, but two companies are too far apart
- After the arguments shareholders present unanimously voted against the re-election of Bamburi as a director of the company.
- The two other directors, though absent, were re-elected unanimously. Mr. Gondwe of PTA, the company’s bankers had given his apologies as he was involved with other bank business on that day, while Mzee (old man) Paunrana, though over 70 was described by other directors as being a key guide in day to day management of company (not just a honorary deputy chair)

Goodies: T-shirt, tote-bad, keychain, lunchbox from the Laico