Top Shelf International Holdings Ltd (TSI) Earnings Call Transcript & Summary

Good morning, everyone. Welcome to the Extraordinary General Meeting of Top Shelf International Holdings Limited. My name is Adem Karafili, and I'm delighted to address the meeting as Chairman. It's a great pleasure to be here, and I welcome all those here today. I want to take the opportunity to thank those present for taking the time to attend today's meeting. Your support and interest in the company's affairs is appreciated by the Board. Before commencing the meeting, I'd like to acknowledge the traditional owners and custodians of the land on which we respectively meet today and pay my respects to the elders, past and present. I extend that respect to Aboriginal and Torres Strait Islander peoples here today. Before we begin, 2 housekeeping matters. Firstly, if you've not already done so, could you please switch off your mobile phones to silent. And secondly, in the unlikely event of an emergency, we ask you to remain calm and follow the instructions of staff who will advise patrons of the necessary action and guide you accordingly. Today's meeting has been held in person and online by the platforms over the company's share registry. And firstly, I'd like to introduce my fellow directors. Peter, who's not here, I'm not sure if he's on the line. Lynette, who's definitely on the line; and Julian, who is not present, but is in Europe at the moment. Also present today's meeting is our CEO, Trent Fraser; our Company Secretary, Jess, representing Carlie; and our CFO, Ben Kennare, representatives from our share registry Boardroom also present will be acting as returning officer and scrutineer. So with that, I'll pass over to Trent Fraser, CEO.

Thanks very much, Adem. I might actually just ask to go to the next slide already just by way of introduction. But firstly, thank you very much for the opportunity to address all of you today. In many ways, it's perfect timing, given that I can share a little bit of my reflections on my first 100 days in the role. So it's a great opportunity to share some of that and obviously take with great pride and the great responsibility into this role on behalf of the team to share just sort of -- a few sort of findings early on. 3 to 4 months ago, I immediately launched a strategic review, which, for me, was a 3-step process. One was to diagnose the situation, where are we at? What's in our control? What's not core? Two, action and balance sheet repair. So if there was any bleeding, stop that immediately; and three, reshape a healthy model to grow ultimately. So right now, we're very much in the depths of 1 and 2 with a very focused eye on the prize, which is #3 and in accelerating the business today. Very bluntly, I participated in some strategic reviews before and they're absolutely worthless unless action is then triggered. And that's what this is all about. So while it's been a bit of a grueling process, I'm pleased to share a ton of action has already been executed with more to come. Among these, you can see on the slide and a few key highlights. The first one is a big reduction in terms of the vendors that we work with into the hundreds down to a manageable few dozen; a much leaner labor force that is already 23% lower than this time last year. Number two is obviously a strategic shift in the whiskey new make and agave tissue culture that preserves cash in the short and medium term to the tune of about $1 million already. Now that it needs to be carefully managed to not negatively impact the likes of 2026, 2027 supply chain, and we're monitoring that very closely. The business model shift is highly geared towards value creation. So some improvements in terms of channel mix pricing. Of course, we've eliminated some SKUs that weren't profit serving. And of course, the architecture of net continues to grow and premiumize along with Act of Treason very excitingly being added to the portfolio in October and November. Number four, more modest but sustainable business model that reduces the likes of big sponsorships to be more tactical in nature to be much more after the trade to win at the street level versus the reinvestment rates in terms of above the line. So all in all, those first few right there initiates quite a big improvement to the bottom line to a tune of $5 million to $7 million to the business in the future, which is very pleasing. The last two, I won't go in too deeply today as some of them are a bit more sensitive. They are afoot, but they're still being constructed. So they are -- that will have a seismic shift if we get some of those away. But we are reviewing some of the asset potential divestment, but also some strong discussions in the background with potential strategic partners to help accelerate the international opportunity. If we can go to the next slide. So the offer, in a nutshell, provides us the runway for a fully funded business model. Now the debt reduction piece is obviously a key piece of that and significantly helps pay down the realized interest savings that you can see there. Number three, the retaining of agave and keeping the whole process or the whole is crucial. And many of you, it was very important, and you shared that. So excitingly protects the future of this long-term asset and immense brand opportunity. And we -- some of the people we have been talking to offshore, also, are very eager and excited for Act of Treason to be brought to market, and they're pleased to hear that as well. Four, [ made ] mentioned in the review, but a further sharpening of the model and asset base, not to mention further acceleration of our brands. So it's not only about cost out, but it's profit in and acceleration of those brands. So hopefully, you saw 3 weeks ago, the addition into Coles and 3 new SKUs in glass going from 1 to 4, which is very exciting. And then again, yesterday, announcing a great partnership with the #1 retailer in the country in Endeavour Group with huge success in Dan Murphy's and BWS, so thrilled. No, it wasn't lined up. It just happened to be that, that's when they shared the good news, but pleasing to be able to share that yesterday and again today. And then five, just support from all of you, our major shareholders, an incredible foundational base of supporters who've understood the potential for a long time and continue to back us to ensure the potential is realized into the future. So with that, I just want to say a bigger appreciative thank you from myself and the entire team. And with that, I'll hand it back to Adem.

I think there might be a few questions, might stick around. So thanks, Trent. We'll now open the floor to questions. For the formal part of the meeting, only shareholders, their attorneys, proxies and authorized company representatives are entitled to ask questions and vote at the meeting. However, will everyone intend to ask questions regarding the CEO presentation before we move to the formal part of the meeting. Are there any questions from the floor around Trent's presentation? No? Thank you. Okay. No online questions? Thank you. Okay. So this now brings us to the formal part of the meeting, ladies and gents. So the company secretary has informed me that we have a quorum, therefore, I declare this extraordinary general meeting open. Voting today will be conducted by way of a poll on all items of business. There are 3 items of business, which have been listed in the notice of meeting. The notice of meeting was sent to shareholders in June, and I will take it as read. Before we consider the items of business, there a number of procedural managed to wish I'd draw your attention. For online attendees, to vote at this meeting, please follow the instructions on your device to allow you to vote at a meeting if you haven't already done so. For the attendees present today, if you're entitled to speak and vote at this meeting, you'll have received a green admission card on registration. If you're entitled to speak but not vote at this meeting, you will have received the blue admission card on registration. If you're a guest at today's meeting, you'll have received a white admission card. So today, voting will be conducted by way of poll. And for those of you present in the room, the poll will be conducted at the end of the meeting -- at the meeting after each resolution has been put to the meeting for any discussion. For online participants, in order to provide you with enough time to vote, I now declare that the voting is open for all resolutions. The final results of the polls will be available today on the ASX and company's website. Any voting restrictions have been set out in the notice of meeting. At the time of discussion of each resolution, I'll disclose the one which the proxies have been cast in -- on the resolution. [Operator Instructions] Please note that while you can submit questions from now, I'll not address them until the relevant time of the meeting. Please also note that your questions might be moderated, or if we receive multiple questions on one topic, amalgamate them together. For those present today, if you wish to ask a question or make a comment, please raise your green, blue or white admission card. Please limit yourself to one question at a time to give other shareholders a chance to be heard. Finally, due to time constraints, we might run out of time to answer your questions. If this happens, we'll answer them in due course by e-mail or posting responses on our website. I'll now move to our items of business to be considered in the meeting. Resolution 1. The first resolution on the agenda today is an ordinary resolution. Resolution seeks shareholder approval to issue 75,830,467 shares under the conditional placement. Details of this resolution are set out in the notice of meeting and proxies received as shown on the screen. The Board recommends that shareholders vote in favor of this resolution. Are there any questions on this particular resolution? No questions? Resolution 2 is an ordinary resolution. The resolution seeks shareholder approval to issue 400,000 shares to Trent Fraser or his nominated associate under conditional placement. Details of this resolution are set at a notice meeting. The resolution and proxies received are shown on the screen. The Board recommends that shareholders vote in favor of this resolution. Are there any questions on the resolution? No? No. I'm breezing through this. Resolution 3 is an ordinary resolution. Resolution seeks shareholder approval issued 1.44 million shares of the company's lead measures sold to Brothers Capital Limited. Details of this are set out in the notice of meeting, and the resolution and proxies received are on the screen. The Board recommends that shareholders vote in favor of this resolution. Are there any questions? No questions? No further items to be brought to this meeting, that concludes our discussion on the orders of business before this extraordinary meeting. So I said earlier in the meeting, for those present today, a poll will be held on all the resolutions in conclusion of the business of the meeting. If there are any person present today who's entitled to vote but have not registered to vote, would you please raise your hand for assistance? Shareholders and proxy holders would have received on registration a green voting card that provides for the holding of a poll of any of the resolutions put to shareholders. We will now hold the poll on the resolutions. The poll results for all resolutions effectively put this meeting will be announced by release to the ASX after the meeting has concluded. And I'll now run through the poll procedures for shareholders in attendance then for proxy holders in attendance. First, shareholders, if you wish to vote on any of the resolution, please mark the for box on your voting card next to the relevant resolution. If you wish to vote against, mark the against box on your voting card next to the resolution. If you wish to abstain from voting, please mark the abstain box on your voting card next to the relevant resolution. Please ensure that you print your name where indicated and sign the voting card. When you've finished filling in your voting card, please lodge it in a ballot box to ensure your votes accounted. Proxy holders. Second, if you are a proxy holder and hold directed votes, you will have attached to your voting card a summary of proxy votes, which details the voting instructions for business items noted on your proxy-appointed documents. You must comply with the voting instructions of the shareholder if you wish to lodge a valid vote by completing the voting card. You were then deemed to have voted in accordance for those voting instructions. In respect of any open votes which are entitled to cast as a proxy holder, you need to mark a box beside the resolution to indicate how you wish to cast your open votes. Please ensure that you print your name where indicated and sign the voting card. When you're finish filling in your voting card, please lodge it in the ballot box to ensure your votes are counted. When a proxy holder does not lodge a vote on any resolution and is not reported as being present at the meeting, the votes which they hold on those resolutions will pass to me as Chairman of the meeting to exercise, providing that voting instructions have been provided. In doing so, I must comply with the voting instructions of the shareholder who has appointed the proxy. When the shareholders appointed the Chairman of the meeting as the proxy holder and no voting instructions have been given to the Chairman on how to vote, I will take -- I will be taking to have been expressly authorized to exercise those votes and to intend to vote those shares in favor of each resolution. If you have any difficulty in completing your voting card, please raise your hand. Please now complete your voting cards and place in the card ballot box being brought around by staff. [Voting]

Okay. Yes.

As it stands right now before the capital raise, what do you believe your NTA per share is? And that is an online question.

It's a good question. I'm not sure it's specifically related to the topic, but it's somewhere -- I think we've estimated about $0.34, $0.35 was the last calculation. So we're well under the NTA. So yes, we can take further -- take that on notice, but I think it was around that last time we did the call. Has everyone now completed their voting papers? Yes. If so, I declare voting closed. After the votes on the resolutions have been counted and reviewed, the results of the poll will be announced on the ASX via an ASX announcement and will also be displayed on the company's website. I now declare the meeting closed. Thank you for your attendance and participation, and I hope this has been an opportunity to learn a little bit about the company and its exciting future. On behalf of the Board, we look forward to your continued support. Thank you.