Cann Group Limited (CAN.AX) Earnings Call Transcript & Summary

Good morning, everyone. My name is Allan McCallum, and I'm Chairman of Cann Group Limited. And I'll be chairing today's general meeting. Today, we are very pleased to welcome you to our virtual general meeting held on a platform provided by our share register, Link Market Services Limited. Due to the current restrictions on public gatherings as a result of the COVID-19 pandemic and in light of the determination by the Federal Treasurer to modify the operation of the Corp's Act and regulations 2001 to allow companies to hold virtual meetings, we have determined to hold this meeting virtually. We hope that holding a virtual meeting will assist to curb the spread of COVID-19 virus and encourage greater participation and engagement amongst our shareholders. Before we begin the meeting itself, I'm going to hand over to our company Secretary, Gerry Farrell, who will run through some of the technical aspects for the conduct of this meeting, and we will then commence the business of the meeting. Thanks, Gerry.

Thank you, Mr. Chairman. Shareholders who are in attendance today have logged in through the virtual meeting website. At the top of the web page, there are 3 green boxes to ask a question and get a voting card. If you wish to vote or ask a question at the meeting, you will need to provide your shareholder detail or your proxy details to access these parts of the meeting. Once you have provided your details, you will see an electronic voting card with all of the resolutions to be voted on by shareholders at this general meeting. The Chairman will ask everyone to submit their votes at points in the general meeting when he demands a poll for each resolution. Please make any changes required to your electronic voting cards at this time and then submit your voting cards at the end of the meeting. The voting card remains eligible until the voting has closed 5 minutes after the close of the general meeting. Once voting has closed, all voting cards, both submitted and unsubmitted, will automatically be submitted and cannot be changed. At the conclusion of the general meeting, a red bar with a countdown timer will appear at the top of the webcast and slide windows advising the remaining voting time available to shareholders. You will only be able to ask a question online after you have registered. [Operator Instructions] Finally, if the online platform has any technical difficulties during this meeting, I will notify the Chairman. If this happens, the Chairman may choose to call a short recess of the meeting to address the issues. If you have any difficulties, I also ask you to refer to the virtual general meeting online guide that was circulated with the notice of general meeting or to dial the help line that is indicated on the meeting page. I will now hand back to the Chairman to conduct the meeting.

Thanks, Gerry, for that detail. Now for the formalities of the meeting. Today's meeting has been properly convened, as it's been called by a notice of general meeting dated the 6th of August 2020 and sent to shareholders by the company Secretary in accordance with the company's constitution. I note that there is a quorum present, and I declare the meeting open. Only shareholders of Cann Group, proxy holders or authorized company representatives in the case of corporate shareholders are entitled to make comments or ask questions on business put to the general meeting or to vote on the resolutions. All other attendees are guests and are welcome as observers. Please note that because this is a general meeting of the company to deal with specific items of business and this is not an Annual General Meeting, questions may only be in relation to the 2 items of business of the meeting that are set out in the notice of general meeting. The agenda for the general meeting is to deal with 2 resolutions set out in the notice of general meeting. Voting on each of the resolutions will be conducted by way of a poll. As noted by the company Secretary, shareholders attending the meeting online will be able to cast their votes using an electronic voting card received when online registration is validated. Please refer to the virtual Annual General Meeting online portal guide or use the help line specified. As also noted by the company Secretary, there will be an opportunity for shareholders to ask questions on each matter being put to shareholders. Resolutions. Ladies and gentlemen, we now come to the formal part of the meeting, matters requiring resolution which are outlined in the notice of general meeting. The resolutions for consideration today may only be voted on by shareholders, proxy holders and shareholder company representatives. I ask you that -- in the interest of fairness to all shareholders attending this meeting, that anyone wishing to speak should be as concise as possible and be considerate to other shareholders wishing to ask questions. For the sake of good order, shareholders should speak once on the resolution being put, and the question raised should relate directly to the matter being considered. Now moving to the resolutions, I hereby demand that each resolution set out in the notice of general meeting be decided by a poll. And I appoint Jim Kompogiorgas of Link Market Services as returning officer to conduct the poll and report the results of the poll to me. As noted in the general -- in the notice of general meeting, I intend to vote all undirected proxies in favor of each item of special business. Each of the resolutions set out in the notice of general meeting is to be considered as an ordinary resolution and, as such, must be approved by a simple majority of the votes cast by shareholders entitled to vote and voting on the resolution. Resolution 1, ratification of issues of shares under the placement. Resolution 1 concerns the issue of ordinary shares to certain institutional and sophisticated investors by way of a placement, the details of which are set out in the resolution itself and in the notice of general meeting and the explanatory memorandum. I now move to the (sic) [ that the ] previous issue of 32,953,920 ordinary shares in the company at $0.40 per share is approved for the purposes of ASX listing rule 7.4. The resolution and summary of the proxy votes received prior to the meeting appear on the slide.

Are there any questions regarding the resolution? I have notice of 3 questions on the screen. First question: "Mr. Chairman, my name is John Whittington, and I'm a volunteer for the Australian Shareholders' Association. It is my understanding that placement raised 14.3 million, and the SPC -- SPP raised 25.9 million. If true, means that retail shareholders accounted for 64% of the total. Is that correct?" John, I'll take your mathematics as being correct there. What proportion of the shareholder base are retail shareholders? We'll get back to you with that one, John, because I'm not sure off the top of my head. We do have a pretty high shareholder base, but to give, come up with any number now will not be correct, so we'll notify you on that. The second question. "Mr. Chairman, why was the renounceable rights entitlement issue of [ Egea Pty ] not used for this capital raising? This is the fairest method of capital raising for retail shareholders and does not result in transfer of shareholder value from existing shareholders to a favored view." I accept the argument, John, but it was the decision of the Board to run with the placement and SPP, giving the timing and other considerations, which is quite often the way that these go. Mr. Chairman...

Mr. Chairman, I think the last question is actually in relation to resolution 2, when we get to that.

Right, yes, okay. Have we got -- are there any questions in...

From telephone...

From telephone participants, please? I'll take that as a...

[ I do not have participant ] questions today.

I'm sorry. Was that there was no questions?

No questions.

Thanks.

I hereby depend (sic) [ demand ] a poll in respect for this resolution and that the poll will now be conducted, please. Select either for, against or abstain for resolution 1 on the electronic voting card. [Voting]

Have we got those votes in now, Gerry?

I believe so. I think we can move on to resolution 2, which is actually made up of 5 parts.

Right. Thanks. Resolution 2, participation in placement by directors of the company. Resolution 2a, to be displayed on the slide, shown with the proxy vote underneath, please. Resolution 2 concerns the participation in the placement by directors of the company. It is in 5 parts, resolutions 2a through to 2e, reflecting the participation of the 4 directors; and 1 incoming director, Ms. Jenny Pilcher. The details for the proposed participation are further set out in the resolution themselves and in the notice of general meeting and the explanatory memorandum. Resolution 2a is participation in placement by Allan McCallum, as displayed on the screen. I now move that approval is given for the company to issue 500,000 ordinary shares to Mullacam Pty Ltd as trustee for The McCallum Family Super Fund, a controlled entity of Allan McCallum, for the purposes of ASX listing rule 10.11. The resolution and the summary of the proxy votes received prior to the meeting appear on the slide.

Are there any questions? We have one from [ Jim ]. Mr. Chairman, why did the Board think it appropriate that they got preferential treatment in the allocation compared to other retail shareholders? I'm not sure what preferential treatment there was, [ Jim ], but it was allocated in line with what was decided. I'm not sure what I can say there, but thanks for that. Are there any questions from the telephone, please?

No, no phone questions...

Thank you very much.

And next page. I hereby demand a poll in respect to this resolution. That poll will now be conducted. Please select either for, against or abstain for resolution 2a on the electronic voting card. [Voting]

Thank you for the voting. Resolution 2b, participation in placement by Philip Jacobsen. Resolution 2b concerns the approval of participation in placement by Philip Jacobsen, the details of which are further set out in the resolution in itself and the notice of general meeting and the explanatory memorandum. I now move that approval is given for the company to issue 1.75 million ordinary shares to Philip and Maxine Jacobsen as trustees for Jayess super fund, a controlled entity of Philip Jacobsen, for the purposes of ASX listing rule 10.11. The resolution and summary of the proxy votes received prior the meeting appear on the slide. Are there any questions regarding this resolution? We'll deal...