Brambles (BXB) 2015 AGM Report

Company/ASX Code : Brambles Limited (BXB)
Venue :
2pm Wesley Conference Centre (Wesley Theatre)
220 Pitt St
Sydney, New South Wales
Monitor : Ms Mary Curran
AGM Details / NoM : Thursday 12th November, 2015
# of Attendees : 75 shareholders/proxyholders plus 35 visitors
# Holdings represented by ASA : 314
Value of Proxies : $16 million
# Shares Represented by ASA : 1.6 million
Market Capitalisation : $16 billion

Skilled Board takes question time in its stride

Both the CEO and Chairman provided detailed updates on Brambles progress and future targets. The Chairman said there has been a seamless transition from the previous Chairman and that the company is proud to be associated with the ‘best brands’ and count major global companies as their customers.  He stated that the business is hard to replicate as they have 500 million pallets with a replacement value of US$7 billion and are the largest provider of pallets and crates in the world. 

The company has a progressive dividend policy to increase dividends in Australian cents on a sustainable basis. In FY15, the dividend was increased by 1 cent per share, an increase of 4% over the prior year. The Ferguson acquisition was questioned and discussed.  Brambles reiterates it is a good fit and long term acquisition despite the current oil and gas downturn. The company is not involved in sea containers which its states is a totally different business model. Credit rating is solid with BBB+ and Baa1 and they are well within their covenants. 

Sustainability was important to the company and the company uses 97% certified timber and now has a separate link on the BXB website  Equally on sustainability, Brambles is assisting companies to avoid food spoilage and gave a statistic of 30% food lost from harvest to consumer.

We asked about the likelihood of ‘disruptive technology’ mentioning drones etc.  The CEO said the company has explored these options and is confident that Brambles has a strong moat around the business.  Nevertheless, they are not complacent.

There was much discussion on the Remuneration Report from the floor and Tony Frogatt, Chairman of the Remuneration Committee, addressed the shareholders.  Mainly shareholders are unhappy about relative versus absolute total shareholder return and some feel the pay and perks are too high anyway.  We voted against the report as the long term incentives are only three not four years and the 50% vesting is too high too quickly.  Nevertheless the institutions are firmly behind it and it passed 98%.

Shareholders were critical of the lack of shareholdings by some board members despite Brambles having a ‘guideline’ that directors buy shares equivalent to after tax pay after three years.  The Chairman confirmed the guideline but we mentioned a previous director did not comply and had now left.  We reiterated we would watch the process carefully. 

All three resolutions were voted by poll and passed easily.

This company is monitored by Mary Curran, assisted by David Jackson.