Maggie Beer Holdings Limited (MBH) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the General Meeting of Longtable Group Limited. It is the appointed time of 9:30 a.m., and having inquired the company secretary, I am informed that there is a quorum present. Therefore, I declare the meeting open. My name is Reg Weine. I am the Chairman of the Board of Directors and the Chairman for this meeting. I would like to introduce you to my fellow Directors who are also in attendance today: Maggie Beer, Tom Kiing and Hugh Robertson. I would also like to welcome Colin Fawns, a representative of the company's share registry, BoardRoom Limited. Before we turn to the formal business of the meeting, Longtable Group CEO, Chantale Millard, will now address you. Chantale?

Thanks, Reg. Good morning, everyone, and thank you for taking the time to attend today's General Meeting for the Longtable Group. Today, we ask that you consider and vote on 5 important resolutions for the Longtable Group. Before I comment on the resolutions, I'd like to highlight a few points from our trading update from last Thursday. With strong sales in May and June 2020, the Longtable Group continued its turnaround, achieving an unaudited positive trading EBITDA for FY '20 with an increase of approximately $5.3 million on the FY '19 trading result. The group achieved a positive monthly cash flow run rate in late H2 FY '20, growing the group's cash balance to $7.2 million at 30th of June 2020, which was up from $5.1 million at 31 December 2019. This means the group is well funded by its $10.2 million in combined cash reserves and undrawn debt facilities, giving us a strong balance sheet and good liquidity to fund current and future growth. Against some challenging trading conditions, the group grew its sales by approximately 3.5% for FY '20, and all 3 businesses in the group achieved a positive trading EBITDA for May and June 2020. After launching the Cooking with Maggie series in April '20 and with over 4.4 million views on Facebook and Instagram, Maggie Beer products saw its online sales for FY '20 grow by 37% over last year, with the last quarter of FY '20 increasing by over 220% on the same quarter in FY '19. After recently launching its 5 new premium cheeses, Maggie Beer products will continue to focus on growing its e-commerce business and expanding its range of healthy and convenient ready meals. Paris Creek Farms continued its turnaround and growth trajectory with FY '20 full year net sales increasing by 7% over FY '19, with H2 FY '20 increasingly -- increasing by approximately 18% on H2 FY '19, putting us on a good growth path for this next financial year. Saint David Dairy has proven to be exceptionally resilient during the COVID-19 pandemic with double-digit full year net sales growth and by expanding its business further into the retail and home delivery sectors. The recently reinstated COVID-19 restrictions in Victoria may impact future sales. However, the business is currently trading solidly, and we expect it to continue to do so at current level 3 restrictions. Overall, the business and I are very pleased with the performance of the group. And with consumers increasingly looking for high-quality Australian food and beverage products, we're really excited about the future opportunities that this presents for the group. I'll now briefly comment on the 5 resolutions that will be considered today. Resolution 1 is the issue of the options to Mr. Reg Weine or his nominee under the company's employee share option plan. With a very strong background in FMCG and specifically in food and beverages, the Board and I are unanimously of the view that Mr. Weine's appointment has really added considerable value to the company in terms of strategic direction and discipline. The option plan also provides the Chairman with a tangible incentive to participate and contribute to the future growth of the group. Personally, I'm really enjoying working with Reg, and he and I are very aligned in regard to the future growth potential of the group and our shareholder value proposition. Resolution 2 to 4 is issue of shares to Mr. Tom Kiing or his nominee, the issue of shares to Mr. Hugh Robertson or his nominee, the issue of shares to Ms. Maggie Beer or her nominee under the company's Director Fees Plan. This resolution, if passed, will see the 3 Directors receive Longtable Group shares in lieu of receiving cash for Directors' fees. I see this resolution as a very positive one for the group, highlighting the Directors' commitment to the group and their belief in its future prospects. And resolution 5 is the change of the company name. Building on the hard work that has been done by the Longtable Group over the past few years to build a premium Australian food and beverage group, we ask shareholders to now consider the change of the group's name to Maggie Beer Holdings. Over the past 40 years, the Maggie Beer brand has become famous for its use of Australian ingredients, provenance and support of local farmers and communities. The iconic brand is trusted by consumers to give them a premium food and beverage experience and unique flavors. The Maggie Beer name, which is recognized internationally and nationally for its providence and use of quality Australian ingredients, embodies the premium nature and ethos of all 3 businesses in the group. Maggie Beer products and the group's other premium brands, Paris Creek Farms and Saint David Dairy, all follow these same principles and hold the same values of making Australian premium food and beverage products. The 3 businesses will maintain their own individual brands but will now be represented by a corporate brand that is easily recognizable for its premium food and beverage offerings. The Board and I believe the name change to Maggie Beer Holdings Limited will strengthen the identity of the company with investors, consumers, employees and the community and better position us for the next phase of growth. I'll now hand over to Reg, who will run through the formalities of the meeting. Thank you.

Thank you, Chantale. Ladies and gentlemen, before proceeding further, I would like to acquaint you with the procedures to be followed at this meeting. If there are no objections, I would like to move that the Notice of Meeting be taken as read. I would like to describe the voting procedures that will apply to this meeting in accordance with my right as Chair of the meeting and as recommended by the Australian Securities and Investment Commission. I have determined that votes on each resolution will be taken by way of a poll. I remind the meeting that only registered shareholders and proxy holders may address the meeting. All attendees should have registered with the company's share registry boardroom prior to this meeting. However, if this is not the case, please stay on the line at the end of the meeting to provide Colin with your details. The poll will take place at the end of the meeting, as I said, as such, it is important that all shareholders stay on the line in order for the share registry to record your voting preference. If you are a proxy holder, you must comply with the direction of the shareholder if you wish to lodge a valid vote. If a shareholder or his proxy holder votes today in relation to a shareholding for which a proxy has previously been lodged, the earlier proxy will be revoked in favor of the new vote. If you have any questions in relation to the voting procedure, please stay on the line to speak to the company's Secretary or to the company's share registry, Colin, at the end of the meeting. The results of the poll will be notified to the ASX immediately following this meeting. Each resolution will be tabled in turn, and we will allow time for questions and answers regarding the resolutions before proceeding to the next resolution. [Operator Instructions] At this meeting, there will be 5 items of business, including 5 resolutions. Resolutions 1 to 4 will be proposed and voted on as a simple majority to be carried. Resolution 5 will be voted on as a special resolution requiring 75% of votes cast on the resolution in favor to be carried. As I said, I will endeavor to give all shareholders who wish to speak a reasonable opportunity to do so. May I ask that you please keep your questions related to the matter at hand and as succinct as possible. In regard to proxy appointments, I advise that valid proxies have been received by the company's share registry, BoardRoom, and by the designated time of 9:30 a.m. on the 14th of July 2020. These proxies represent approximately 79 million votes, depending on the resolution. For each of the resolutions, a slide of the proxies received for and against the resolution and proxies that have been directed will be shown on the screen. As mentioned in the Notice of Meeting, it is intended that any undirected proxies given to the Chair will be voted in favor of the relevant resolution. I now turn to the formal items of business of the meeting, resolutions to be put to members. The items of business for today's meeting require a formal vote. In accordance with the company's constitution, I have elected that all resolutions will be conducted by poll. I propose to conduct the poll at the end of the meeting so that shareholders can vote on all resolutions at one time. Colin Fawns from our share registry, BoardRoom, will outline the procedure relating to the poll prior to conducting the poll. Resolution 1, issue of options to Mr. Reginald Weine or his nominee under the company's employee share option plan. As this first resolution relates to the issue of options to myself, I will hand the chair over to Tom Kiing, my fellow Director, to take you through this item of business. Tom?

Thank you, Reg. So the next item of business is to consider and, if thought fit, pass the following resolutions. For the purpose of ASX Listing 10.14, Listing Rule 7.2 Exception 14 and for all other purposes, shareholders approve the grant of up to 4.5 million options to Mr. Reginald Weine and/or his nominee company under the Longtable Limited Employee Share Option Plan on the terms and conditions as described in the explanatory statement, which accompanies and forms part of this notice. Details of the proxies for and against are open on the screen now for all to view. Reg, did you want me to read out the proxy results?

Tom, thank you. No, I don't think that is necessary. I think we can all see it on the screen. Thank you.

Okay. Given the proxy results are now tabled, are there any questions in regard to this resolution?

Tom, [ Jeff Wilson ] here. Can I just ask a question. I just haven't had time to look through all the documentation. What's the issue price of the options? Or what's the terms in terms of how long do they go for, et cetera, et cetera?

So the issue price, and I probably need some backup here, it's about $0.20. Is that correct, Chantale? Chantale, you're on mute.

Sorry, I was just on mute. Yes, that's right. So there were 3 different option prices. So there was $0.15, $0.18 and $0.20, in equal tranches.

Got you.

Equal tranches, yes.

Yes.

Yes. And how long do the options last for? What's the expiry date of the options?

Have you got that, Tom?

Yes. No, I'm just -- 4 years. 4 years. 4 years options.

Okay. No problem. No, thanks.

Okay. If there's no other discussion -- is there any other discussion?

For the purpose of taking all proxies into account and ensuring that the votes are counted accurately, I direct that a poll be taken on this item. I will now hand the chair back to Reg Weine to conduct the remaining items of business.

Thank you, Tom. Resolution 2, the issue of shares to Mr. Tom Kiing or his nominee under the company Director Fees Plan. The next item of business is to consider and, if thought fit, pass the following resolution that for the purposes of ASX Listing Rule 10.14, Listing Rule 7.2 Exception 14 and for all other purposes, shareholders approve the issue of shares in the company under the company's Directors Fees Plan to Mr. Tom Kiing or his nominee on the terms and conditions as described in the explanatory statement, which accompanies and forms part of this notice. Details of the proxies received for and against are open and are now on the screen. Is there any discussion? Questions?

Just another question. So what -- can you just take me through -- again, I haven't, unfortunately, read the details. So what are the actual -- can you give me the actual -- what happens with the -- like how does it -- how does it work? The Directors' fees are X dollars and then...

X dollars and -- sorry, Reg, did you want to answer that?

It's Clinton Orr here, company Secretary. So I can give you a broad overview of the plan. So the plan essentially elects -- or allows for Directors who want to elect to receive their Director fees as shares in lieu of cash. So there's no change to the Directors' fees or the amount that they would receive. It's just simply allowing them to receive shares in lieu of cash. And given that under the listing rules, there's a requirement for shareholders to approve the issue of shares to our Directors that, hence, why this resolution is being put up to shareholders' vote.

Got you. And is it -- did I get it -- is it VWAP on the day they decide or VWAP -- or is the price the 30th of...

Correct. So basically, it's proposed that there'll be 2 per annum, so a 6-monthly sort of issue, if you like. And then the price will be determined by a 10-day VWAP at that sort of point in time of issue. So each sort of 6 monthly.

Got you. And the Directors, do they decide before the 10-day VWAP or after the 10-day VWAP?

Before.

Yes. And Jeff, it's Tom Kiing here. Suffice to say that all of us here on the Board because we've got substantial shareholdings, and this was actually a suggestion from Hugh that he doesn't believe any of these should actually be paid. So that's why we've all gone for it and supported it heavily.

Good work, Hugh.

Well, yes, look -- thank you so much, Jeff. All right.

Any other discussion on this resolution?

If not for the purpose of taking all proxies into account and ensuring that the votes are counted accurately, I direct that a poll be taken on this item. Moving to resolution 3, the same resolution, issue of shares to Mr. Hugh Robertson or his nominee under the company Director Fees Plan. The next item of business is to consider and, if thought fit, pass the following resolution that for the purposes of ASX Listing Rule 10.14, Listing Rule 7.2 Exception 14 and for all other purposes, shareholders approve the issue of shares in the company under the company Director Fees Plan to Mr. Hugh Robertson or his nominee on the terms and conditions as described in the explanatory statement which accompanies and forms part of this notice. Details of the proxies received for, against and open are on the screen now. Is there any discussion or questions? Fantastic. For the purpose of taking all proxies into account and ensuring that the votes are counted accurately, I direct that a poll be taken on this item. I'll now move to resolution 4. It's the issue of shares to Ms. Maggie Beer or her nominee under the company's Director Fees Plan. The next item of business is to consider and, if thought fit, pass the following resolution that for the purposes of ASX Listing Rule 10.14, Listing Rule 7.2 Exception 14 and for all other purposes, shareholders approve the issue of shares in the company under the company Directors' Fees Plan to Ms. Maggie Beer or her nominee on the terms and conditions as described in the explanatory statement, which accompanies and forms part of this notice. Details of the proxies received for, against and open are on the screen now. Is there any discussion? Questions? Fantastic. For the purpose of taking all proxies into account and ensuring that the votes are counted accurately, I direct that a poll be taken on this item. I'll now move to the final resolution, resolution 5, change of company name. The next item of business is to consider and, if thought fit, pass the following resolution that for the purposes of section 157(1) of the Corporations Act and for all other purposes, the company's name be changed from Longtable Group Limited to Maggie Beer Holdings Limited, with effect from the time that ASIC alters the relevant details of the company's registration. Details of the proxies received for, against and open for this resolution are on the screen now. Are there any questions or discussion on this resolution?

It's [ Kingsley Bibby ] here representing Bibby Superfund. I just have one question around the name change.

Sure. Go for it.

I'm in favor of the name change. Just like to hear from the company and the Board, in terms of just sort of risk management around the Maggie Beer brand equity, at the moment, if something happens at Paris Creek, that affects the brand of Paris Creek and potentially Longtable. If something happens at Paris Creek or Saint David's going forward, that can impact the -- potentially impact the brand equity of Maggie Beer. Has the Board sort of thought about how they sort of manage that risk going forward?

Yes, great question. Chantale, do you want to take that one?