This article originally appeared in the NZ Herald


The annual meeting season, which is almost totally focused on the second six months of the year, is about to begin. These meetings have been fairly docile in recent years but shareholders should remain vigilant and insist that annual meetings are informative and fully transparent.


This column looks at the annual meetings of the 20 largest listed companies, representing about 66 per cent of the total market value of the NZX.


The first point to note is that all 20 companies hold their meetings, called either the annual meetings or annual shareholder meetings, in the second half of the year. Seven are held in the September quarter, with the remaining 13 in the December quarter.


In 2015, 13 of the 20 meetings were held in Auckland, four in Wellington, two in the Tauranga/Mt Manganui area and one in Christchurch.


The most popular venues were the Ellerslie Event Centre with three meetings, while Eden Park and Sky City had two each.


Big issues last year included proxies and the counting and reporting of votes.


The NZ Shareholders Association (NZSA) has played an important role in promoting the idea that all proxy forms should have four options or boxes.


These are: vote for; vote against; abstain; proxy discretion.


The NZSA has promoted the four-box option because it wants to encourage individual shareholders to appoint a proxy rather than allow their votes to lapse.


Association chairman John Hawkins wrote: “Most companies are now using a modern, easy-to-understand proxy/voting form which includes a four-box alternative.


“This allows you to direct your voting, abstain or give your proxy discretion.”


He noted that most companies offer an electronic proxy/voting option that includes the “NZ Shareholders Association” option on their list.


Thus, shareholders have the following choices:


  • They can vote, either on paper or electronically, without appointing a proxy.
  • They can vote and appoint a proxy but the proxy has no discretion.
  • They can appoint a proxy giving full voting discretion to the proxy.


The NZSA has an excellent discretionary proxy facility for individual investors, particularly as it puts a great deal of thought into its voting intentions and most of its voting intentions are posted on its website.


The NZSA notes that there continue to be problems regarding proxies and trusts. Share registries still require every trustee to sign paper proxy forms whereas the NZSA says a single signatory should be sufficient. It points out that trusts should look at voting electronically, as one signatory is acceptable for electronic proxy appointment and voting but not for paper forms.


Major New Zealand companies receive an A+ for proxy discretion options but more like a B- for the counting and communications of the votes cast.


Fifteen of the largest 20 companies release full voting figures to the NZX but the following five don’t: Ryman Healthcare, Z Energy, Port of Tauranga, Ebos and Xero.


Last year Ryman Healthcare announced to the NZX that all resolutions had been passed, without stating what these resolutions were.


Z Energy, Ebos and Xero listed the motions put to the meeting and announced they had all been passed by a show of hands, while Port of Tauranga listed its resolutions but was silent as to whether they were passed by a show of hands or a poll vote.


Shareholders of our largest companies are clearly happy with the performance of their investments as most resolutions were passed with a majority of 99 per cent or more.


Director fee increases, which are a clear indication of shareholder satisfaction, were approved by large majorities in 2015 as demonstrated by the following voting figures:


  • The Auckland International Airport’s director fee increase resolution received 97.8 per cent approval.
  • The Mighty River Power resolution received 99.5 per cent acceptance.
  • Shareholders voted 99.99 per cent in support of an Air New Zealand directors’ fee increase.
  • Sky TV directors received 99.4 per cent support for their fee increase.
  • The Infratil director fee increase proposal received 99.3 per cent approval.


These voting figures give a clear indication of the level of support for boards of directors. Last year’s voting figures indicated that New Zealand shareholders are a very happy bunch at present, particularly as far as the larger NZX listed companies are concerned.


Finally, the percentage of votes cast at these 15 company meetings was 66 per cent, which is high by international standards.


However, this was strongly influenced by the large number of dominant shareholders including the Crown, local authorities and trusts, and Infratil as Trustpower’s majority shareholder.


The highest voter turnout was Trustpower with 84.7 per cent of shares voting and the lowest was Kiwi Property with a 45.5 per cent voting percentage.


The latter is not unexpected, as listed property companies have a large number of long-term individual shareholders who are not active as far as voting is concerned.


ASX & Guvera IPO


The ASX receives a bouquet for refusing to allow Guvera, a proposed IPO, from listing on its market. The Guvera IPO brings back memories of some of the most aggressive capital raisings of the 1980s.


The Australian company, which was founded on the Gold Coast in 2008, provides digital music and entertainment to users, mainly through web-based download services.


The company’s main competitors are a number of web- and mobile-based music streaming services including Spotify, Pandora, Apple Music and Deezer. In addition, digital piracy is a significant competitor within the digital music content industry.


The big problem with Guvera is its poor financial performance and its massive valuation at the A$1 a share IPO price.


The Gold Coast company had total revenue of just A$1.2 million for its June 2015 year and costs of A$80 million for a total loss of A$78.8 million.


The six months to December 31, 2015 were just as poor with revenue of only A$1.2 million, costs of A$56.9 million and a total loss from continuing operations of A$55.7 million for the six-month period.


The company has already burnt through a substantial amount of capital and the prospectus stated “should Guvera be unable to raise sufficient capital under the prospectus, there is significant uncertainty whether Guvera will be able to continue as a going concern and therefore, whether it will be able to pay its debts as and when they fall due”.


The Australian Shareholders’ Association has been deeply concerned about the IPO as most of the funds raised could “be applied to repaying debt, with limited funds being used for the business’ expansion”.


Guvera had hoped to raise between A$40 million and A$100 million, which would give it a sharemarket value of between A$1.28 billion and A$1.34 billion.


These are huge valuations for a company with annual revenue of less than A$3 million and losses of about A$80 million.


It is encouraging to see the ASX has decided to reject Guvera’s listing application as the IPO is clearly overpriced based on the company’s past performance and the competitive sector it operates in.


However, the ASX’s decision is not good news for the thousands of individuals who have already invested A$185 million in the company, mainly through their self-managed super funds.


Many of these investors were hoping an ASX listing would give them the opportunity to sell their shares in the struggling music streaming business.


Brian Gaynor

Portfolio Manager
Disclosure of interest: Milford Funds Ltd holds shares in all the NZX-listed companies mentioned in this column on behalf of clients.
Disclaimer: This article originally appeared in the NZ Herald and is intended to provide general information only. It does not take into account your investment needs or personal circumstances and so is not intended to be viewed as investment or financial advice. Should you require financial advice you should always speak to an Authorised Financial Adviser