Transcript of 2003 Foster's AGM

Stephen Mayne: Thanks Chairman. I'm actually a proxy holder. I'll just rattle through a couple of issues in less than two minutes. Firstly, just on your advertising, I'd be interested to hear a defence of those blatantly sexist Cougar ads which would have been more appropriate in the 1970s than in the 21st century. Last year there was a mention of Greg Norman wines… brand of wines in the US being a great earner, which Ted mentioned in his address. There was no mention of it this year. I understand it was doing about $60 million last year and a profit of about $20 million. Has that fallen away a bit? Was it just a fad or are we still seeing some terrific performance from that brand?

Um… you've mentioned the gross proceeds of $1.4 billion out of ALH. What's the net proceeds? There's talk of Macquarie Bank making more than $50 million out of this deal and I'd like to know how you handled the conflicts of them both advising of the sale and being the effective purchaser. And finally uh… actually, two more issues. Your Taylor brewery, I understand the Gold Coast council had some very significant concerns of an environmental implications of an expansion at Yatala and we've decided to proceed with the closure of the Kent and the expansion at Yatala despite their concerns being satisfied? Could you comment on where that process is at?

And finally, just on the question of your international expansion. Ted's probably the only one with the institutional memory to deal with this one because it goes back a bit… out of China, Beringer, Mulsen, Courage and the European Clubs… which of those, if any, have actually added value to the company? Or have all of them been value destroyers? In other words if you hadn't done any of them, would the share price be higher or lower today? I'd argue that probably all of them have been negatives and the argument was run in the back page of the Fin Review today that the Lion Nathan share price is up 50 percent in three years and the Foster's share price has gone nowhere. And what's happened over that three years? Well three years ago we bought Beringer, we paid too much and if we hadn't bought Beringer, clearly the share price would be north of five dollars. Thank you.

[applause]

Chairman Frank Swan: I think Ted and I will try and divide up some of your answers. I'll ask Ted in a moment to comment on Greg Norman and on Yatala and clearly make any other comments in relation to some of the points that you mentioned that I perhaps miss out on. Um.. you referred first of all to the advertising of products such as Cougar. Um… we have… we submit all of our ads to the Advertising Standards Association, we check them internally before they go out. We are in a fun industry and a leisure industry and we take a lot of care to make sure that our ads represent fun and enjoyment. And are not to be taken, if you like, too seriously, beyond their nature. And again, um… none of the… any complaints that have been made to uh… about any of our ads to my knowledge have been upheld over the last twelve months, anyway.

Um… you talked about Macquarie Bank and the net proceeds. We don't know what the net proceeds are going to be at the moment because we don't know finally where the book build will end up. Um… were there issues with Macquarie being on a number of sides of the arrangement? Clearly the Board was very concerned with the sale process to make sure that we maximised the opportunity for Foster's shareholders and the proposal that was put forward and agreed by Macquarie, gave by a significant margin the best result for the Foster's shareholders. Under those circumstances, it's the benefit of the Foster's shareholders that has to come first. If that means Macquarie make pretty good fees out of it, than that's still a good deal for the Foster's shareholders as long as the net result is north of anything that anyone else can give us and in this case, it certainly was.

Uh… finally, in regard to all of those businesses that you mentioned, um… I don't have the answer for you in detail on all of those at the present time and nor can any of us really comment on where the share price would have been if we didn't do any or any one of them. They are investments in the future, in some cases, they are investments that we realised on such as Mulsen when we felt that there wasn't any more growth to be received from such an investment. But uh… I don't think anyone can comment on where the share price would have been if we didn't do any of those things. Perhaps Ted, I can ask you to comment on some of those issues?

CEO Ted Kunkel: Thank you Chairman. I can report that the Greg Norman Wines in the United States of America is uh… is fit and well. Good growth during the year with strong margins. So uh… it was in no way a deliberate omission. That is performing very well. In relation to the uh comments on the Yatala. In… when you're expanding a green fields site like that, of course the authorities have environmental demands and that is perfectly normal and those environmental demands are at the end of the day will be met and the reason they will be met is because we have a zero harm to the environment policy in this company. Uh… and that is just a matter of design and negotiation.

Um… in relation to the um… the purchases that have been made over a number of years, our china policy is not a China policy, it's an Asia policy. And it's an Asia policy because we wish to grow Foster's lager around the world. It is already one of the fastest growing international brands in the world today. You're all very aware that uh… half the world's population in fact lives in the three countries that we have invested in. Those populations one day will become more affluent than they are today and our reason for being there is to grow the premium brand Foster's. And that is why we're there with a long term view. I think Beringer's added great value to this company and that will be proven. Mulsen I think for our dollar in equity that we invested in Mulsen we walked away with about $500 or $600 million. So not too bad. European Clubs have turned around this year, which is heartening. Thank you Chairman.

Go here for a full chronological list of edited AGM transcripts available from the past decade of shareholder activism.

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