By Fiona Balzer, Policy and Advocacy Manager, and Damien Straker, Advocacy Coordinator
16 September 2022
The Star Entertainment Group – release of Bell Inquiry report into The Star Sydney
Trading in The Star Entertainment Group’s (SGR) shares was suspended on Monday, pending the company responding to the impending release of the report from the Bell Inquiry into The Star Sydney.
The report finds The Star is presently unsuitable to be concerned in or associated with the management and operation of a casino in NSW. Notwithstanding the scathing assessment, the four directors who have been on the board from a time prior to the events leading to the Inquiry have each been found to be a suitable person to be concerned in or associated with the management and operation of a casino in NSW.
The New South Wales Independent Casino Commission (NICC) served a “show cause” notice on The Star, with Star required to show why no disciplinary action should be taken, within 14 days. On first reaction, the share market judged the outcome better than the uncertainty with the share price improving 5% on the pre-suspension price of $2.66. It eased back in the following days. There is also an Inquiry into The Star’s casino operations in Queensland which is due to submit its report to the Attorney-General and Minister for Justice, Minister for Women and Minister for the Prevention of Domestic and Family Violence by 30 September 2022.
We expect the next AGM for the company to be lively and an opportunity for the shareholders to hold the remaining directors to account. It will be held at The Star Gold Coast on 22 November.
There is new blood with the board refreshed with the appointment of Ms Anne Ward and Mr David Foster as Non-Executive Directors of The Star, subject to casino regulatory approvals being obtained. Mr Michael Issenberg will be up for election having joined the board in July after all necessary regulatory approvals were received.
The Bell Inquiry Report can be accessed here: https://www.nsw.gov.au/nicc/casino-regulation
Link scheme progress
The scheme for Dye & Durham to acquire Link Administration Holdings Limited (LNK) is still on foot, having received Foreign Investment Review Board approval (or confirmation of no objection).
However, one of the conditions-precedent to the completion of the scheme for Link Administration Holdings Limited (LNK) has been approved, conditionally. It was for the UK Financial Conduct Authority (FCA) approval regarding matters relating to Link Fund Solutions Limited (LFSL) in its role as authorised corporate director to the LF Woodford Equity Income Fund (now known as the LF Equity Income Fund). The FCA has approved the proposed acquisition of LFSL, subject to Dye & Durham committing to make funds available to meet any shortfall within LFSL in the amount available to cover the redress payments LFSL may be required to make, which in its opinion may be for an amount up to £306 million (approximately A$519 million).
This is not a final decision by FCA. LFSL will explore all options, as LFSL does not agree with the FCA’s view. Link Group remains supportive of LFSL considering all such options, and notes that LFSL continues to trade profitably with a leading position in its market. Link Group has not made any commitment to fund or financially support LFSL. Link Group considers that any liabilities relating to these will be confined to LFSL. Dye & Durham has not yet indicated its position in relation to the FCA’s requirement. Link Group will update the market as appropriate. If it does not accept the requirement, then a condition under the Scheme Implementation Deed may not be satisfied.
We will maintain a watching brief as the scheme progresses.
Upcoming company meetings
ASX (ASX) AGM
Shareholders are being asked to vote on the re-election and election of 4 directors. This is 50%
of NEDs excluding the chair, and thus is particularly important that shareholders have information available to effectively make their decision.
We find ASX needs a m board skills matrix which better informs shareholders on the level of capability of directors.
We will make the decision on how we will vote undirected proxies at the meeting after hearing the directors up for election and re-election speak to their election. We will ask them to describe their skills that are most relevant to the future direction of the ASX and how they believe they will make a difference as an ASX director.
We will again vote against the remuneration report as we did last year. There have been no changes in FY22. We will again vote undirected proxies against this motion and the grant of performance rights to the CEO.
The increase in the cap for director fees from $3.0m to $3.5m is to establish the Technology Committee and provide for short-term periods of additional directors during the board renewal process. We are supportive of both reasons and regard them as pivotal to ASX’s future.
Suncorp (SUN) AGM
The Suncorp AGM has a change of date and location to Friday, 23 September 2022 1:00 pm AEST Hilton Brisbane, Ballroom, Level 5, 190 Elizabeth Street, Brisbane, (and online) after 22 September was declared a public holiday and National Day of Mourning, in honour of Her Majesty, Queen Elizabeth II.
The AGM is expected to focus on the intensity of natural hazards of recent years which reached a new level during FY22, with 35 separate natural hazard events across Australia and New Zealand. Despite unprecedented disruption and change presented by extreme weather events, market impacts and COVID-19, there continues to be a clear sense of achievement and success in supporting people through these difficult times including the newly established Event Control Centre.
Although the underlying business is strong, weather events and the negative impact of Investment Markets have resulted in the Group’s FY22 cash earnings being down by 36.7% to $673 million, and net profit after tax reduced by 34.1% to $681 million. The net loss from capital market volatility was $190 million compared to a profit of $45 million in FY21. The mark-to-market losses are expected to unwind over FY23. The reduced dividend is likely to attract comment at the AGM, although conservative capital management is to be supported as Suncorp navigates inflationary environment, labour shortages, investment volatility and retention of capital against reinsurance costs.
ASA is voting in favour of all the resolutions.
Read the full voting intentions for Suncorp here
Iress (IRE) EGM
Iress Ltd has scheduled an EGM specifically to seek approval from shareholders for their new CEO’s remuneration package. The meeting will be held physically in Sydney and online, on 29 September.
The salary package for incoming Managing Director and CEO, Marcus Price, is very similar to that of the incumbent Andrew Walsh, except that about a third of the fixed cash and fixed equity components over the next 3 years have been forgone in favour of the immediate issue of the same value in options. This in itself is not opposed by the ASA.
We are however going to vote against the approval of the package, as we did at for Walsh at the 2022 AGM held in May. Because of the sheer quantum of the Performance Rights component, there is a potential value of $8,124,032 which we deem is excessive.
You can read the IRESS May 2022 AGM voting intentions report here
The full list of upcoming AGMs can be found here.