2017 annual general meeting -...
TRANSCRIPT
2017 Annual General MeetingFriday, 27 October 2017
Page 2
Emergency evacuation assembly areas
John SparkChairman
Page 4
Agenda
1. Formal Items of Business & Resolutions (in the Notice of Meeting)
2. CEO Presentation
3. Chairman Presentation
4. Supplier Director Presentation
5. Questions
6. Close of Meeting
Conduct of Meeting
Page 6
How to vote and ask questions
To ask a question, please make your way to the closest microphone with your admission card where an attendant will introduce you.
Yellow cardVote and ask questions
Orange cardAsk questions only
Blue cardAsk questions only
Page 7
Page 8
Page 9
✘
Page 10
✘
Items of Business
Page 13
Item 1 Financial statements and reports
‘To receive the financial statements of Murray Goulburn for the year ended 30 June 2017, together with the Directors’ Report and the Auditor’s Report’
Questions on Item 1
Election of Directors
Page 16
Farewell
Mike IhleinNatalie Akers
Ken Jones Graham Munzel
Item 2(a) Election of Director – Ian Goodin
Questions on Item 2(a)
Page 19
Resolution 2(a) Election of Director – Ian Goodin
‘That Ian Goodin be elected as a Director of Murray Goulburn’
To pass as an ordinary resolution:
Page 20
Open votes held by the Chairman will be voted in favour of the resolution
Resolution 2(a) Proxy votes as at 25 October 2017
Number of votes % of total votes
For 12,363,572 81.04%
Open – Chairman 2,320,194 15.21%
Open – Other 93,292 0.61%
Against 479,620 3.14%
Item 2(b) Election of Director – Brock Williams
Questions on Item 2(b)
Page 23
Resolution 2(b) Election of Director – Brock Williams
‘That Brock Williams be elected as a Director of Murray Goulburn’
To pass as an ordinary resolution:
Page 24
Open votes held by the Chairman will be voted in favour of the resolution
Resolution 2(b) Proxy votes as at 25 October 2017
Number of votes % of total votes
For 12,188,108 79.89%
Open – Chairman 2,379,792 15.60%
Open – Other 93,292 0.61%
Against 595,486 3.90%
Item 3(a) Election of Special Director – John Spark
Page 26
Harper KilpatrickSupplier DirectorMember of Finance, Risk and Audit Committee and Supplier Relations Committee
Questions on Item 3(a)
Page 29
Resolution 3(a) Election of Special Director – John Spark
‘That John Spark be elected as a Special Director of Murray Goulburn’
To pass as an ordinary resolution:
Page 30
Open votes held by the Chairman will be voted in favour of the resolution
Resolution 3(a) Proxy votes as at 25 October 2017
Number of votes % of total votes
For 12,453,127 80.81%
Open – Chairman 2,100,443 13.63%
Open – Other 93,292 0.61%
Against 763,339 4.95%
Item 3(b) Election of Special Director – Mark Clark
Questions on Item 3(b)
Page 33
Resolution 3(b) Election of Special Director – Mark Clark
‘That Mark Clark be elected as a Special Director of Murray Goulburn’
To pass as an ordinary resolution:
Page 34
Open votes held by the Chairman will be voted in favour of the resolution
Resolution 3(b) Proxy votes as at 25 October 2017
Number of votes % of total votes
For 11,569,400 76.10%
Open – Chairman 2,528,301 16.63%
Open – Other 93,292 0.61%
Against 1,011,955 6.66%
Strategic review
Ari MervisChief Executive Officer
Page 37
Challenges facing Murray Goulburn
Uncompetitive MG FMP
Milk Supply Support Package
Footprint and cost rationalisation requirement
Supplier trust
Continuing decline in milk supply has decreased competitiveness of Murray Goulburn
1
2
3
Key issues
4
3.5
2.7
1.93
0.0
1.0
2.0
3.0
4.0
FY16A FY17A FY18 Forecast (27 Oct)
Milk
inta
ke (b
n L)
Significant reduction in milk intake
~(45%)
Page 38
Business initiatives
Removal of MSSP
Plant rationalisation
Cost out initiatives
Strategic review
1
2
3
Actions
4
Outcomes
$183m asset de-recognition
360 positions removed
$100m anticipated total benefit
Whole of business review
Page 39
Overview of the Strategic Review
Commercial review
Businessimprovement program
Structural review
Strategic review
Improve earnings through:• Margin delivery• Reducing cost-to-serve• Future growth options
• Addressing cost base to support commercial strategy
• Align structure to business objectives
• Corporate structure• Capital structure• Access to capital• Unit Trust• Profit sharing mechanism
Annualised benefits of $117m identified Confidential unsolicited inbound interest
John SparkChairman
Page 41
Transaction overview
• The sale to Saputo of all MG’s operating assets and operating liabilities for total value of $1,310 million(a)
• Transaction includes MG milk supply commitments by MG for Active MG Suppliers(b) totalling approximately $114 million
Overview of Agreement with Saputo – Transaction overview
(a) Subject to completion adjustments including for movements in the working capital in the business(b) An Active MG Supplier is a supplier who is supplying milk to MG as at the date of MG’s 2017 annual general meeting, as at the completion of the Transaction and, if required, as at 15 August 2018
Page 42
MG’s milk supply commitment
• Step up of $0.40 per kg MS to $5.60 per kg MS for milk supplied from 1 November 2017 and, on completion of the Transaction, for milk supplied from 1 July to 31 October 2017
• Additional $0.40 per kg MS loyalty payment for FY18 to Active MG suppliers on transaction completion
Saputo’s milk supply commitment
• Active MG suppliers will also benefit from commitments from Saputo ensuring milk collection and market pricing into the future
• Saputo will also establish a Supplier Relations and Pricing Policy Committee
Overview of Agreement with Saputo – Milk Supply Commitment
Page 43
Transactionvalue to shareholders and unitholders
• Estimated net value per share / unit of $1.10 – 1.15(a)
o Represents 76 – 84% premium to the last uninterrupted price(b)
• Estimated initial distribution of the net Transaction proceeds of approximately $0.75 to be paid shortly after completion
• Further cash distributions expected upon conclusion of the regulatory actions and class action, or earlier if appropriate
Overview of Agreement with Saputo – Transaction Value
(a) After working capital adjustment other costs, including the repayment of MG’s bank debt and USPP Note program (including make whole fees) at completion of the Transaction, transaction costs, outstanding tax or other liabilities and the expected costs of continuing to operate MG while the regulatory actions and class action continue. This does not include the payment of any amount which may ultimately arise as a result of the regulatory actions or class action, which would reduce proceeds available for distribution to shareholders and unitholders
(b) Closing price as of 21 August 2017
Page 44
Other
• MG to retain all assets and liabilities associated with the MG Unit Trust and any liabilities in relation to the current ACCC proceedings, ASIC investigation and unitholder class action (and any similar such actions)
• After conclusion of these matters, it is expected that MG will be wound up
• Transaction is subject to approval by an ordinary resolution of MG’s voting shareholders, ACCC and FIRB approvals and other customary conditions
Overview of Agreement with Saputo – Other items
Page 45
The Board assessed external proposals using the following criteria
Value of proposition
FMPimpact
Supplier representation
Certainty and speed
1 2 3 4
• What value is proposed to share / unit holders under the proposition?
• How does the proposal assist in the ability to pay Suppliers a competitive FMP over the long term?
• How much control and representation will Suppliers have post transaction?
• What is the timing and execution risk of the proposal?
• Can a proposal be executed on a timetable that will support MG now?
Page 46
Board recommendation
• The Directors of MG unanimously recommend that shareholders vote in favour of the Transaction with Saputo
• Each Director intends to vote their MG shares in favour of the Transaction, in the absence of a superior proposal and subject to an Independent Expert concluding that the Transaction is in the best interests of MG shareholders
• No action required by shareholders at this time
Craig DwyerSupplier Director
Conclusion
Page 49
Next steps and timetable
Announcement of Transaction 27 October 2017
Notice of Meeting and Explanatory Memorandum issued Early 2018
Extraordinary Shareholders Meeting to vote on Transaction Early 2018
If approved and conditions met, Transaction completion First half 2018
ACCC and FIRBregulatory approval
process
Supplier roadshows with Saputo 8 November
Questions
Meeting Close