Good afternoon, everybody. Lock the doors. We have reached the allotted time for the Bremworth 2025 Annual General Meeting for all the shareholders. Tēnā koutou katoa, my name's Rob Hewett, and I have the privilege of being the Chair of this company. Today's meeting is being held, obviously, in person, but also online. There's a camera up there behind you through Computer share's Meeting Platform. I'm welcoming all of you here in person today and to those of you who have joined us online as well. Today's meeting is notable for a number of reasons. It's the first Bremworth Annual Meeting for all of your directors at the table today and for our Chief Executive Officer, Craig, who I'll introduce all of them in a minute.
This meeting is also the first annual meeting to be held here at the company's premises, and we'll hope that after the conclusion of this, you'll be able to join management for a tour of the facilities to see carpet being made after the meeting. I'd like to introduce and acknowledge some people in the room. Firstly, our auditor from PwC, Pip Cameron. Good to see you. Our legal advisors, the hall turned out today. We've got Ian, Joe, and Brittany here from Russell McVeigh. We have also got our corporate financial advisors, Toby Grosser, and team from Montana. So thank you. Good to have you all here. Before I go any further, there's just a few administrative matters that I need to cover off. If there's an emergency, head for the nearest exit. Follow the people in the—where are the people in the yellow jackets?
They know where to go. They will guide you to the designated assembly point. There are no yellow jackets. Head out the door and go to the car park. Thank you. If you do need the toilets, they're out the doors and just on your right. Anyway, there will be—it says in my notes here one of the Bremworth staff outside will be able to assist you. I don't think that's clear. They will be able to direct you. We're pleased to be able to share our progress today and to outline the next stage of the Bremworth journey. What we're going to do now over the next little while, there'll be presentations from myself and from Craig as our CEO, and then there's going to be opportunities for shareholders to ask questions and have a general discussion about the business performance.
We've got some five resolutions that we need to deal with today, as notified in the notice of meeting. That was circulated to you all on the 13th of October, and I intend to take all of those as read. The audited financial statements and the annual report for the year ended 30 June 2025 were also released to the NZX and the shareholders on the 7th of October. I'm delighted to declare that we do have a quorum here. We need five of you to turn up. It looks like we've got a couple more than that, and the meeting has duly been convened. I'd also like to note, Riley, good to see you. We've got at least one representative from the media here today, so bear that in mind when you're asking your questions, but good to have you here.
After those presentations that I referred to earlier, there's going to be another session. Undoubtedly, and ongoingly, there's been significant interest from shareholders around our proposed scheme of arrangement with Floorscape Mohawk that was announced to the market on the 2nd of October, and I appreciate that some shareholders may not wish to raise their questions during the annual meeting itself. In fact, it'd be great if you didn't because we are going to invite you all as shareholders to have those questions asked and answered after the conclusion of the annual meeting, and we offer the opportunity to discuss the proposal with the directors and our advisors.
Because this session is solely for the benefit of shareholders and intended to allow you to raise your question freely with the directors, I'm respectfully asking, requesting that all non-shareholders and media, whether you're in person or online, bugger off at that stage. We will do the AGM. Happy to have you here, Riley. Answer any questions that you've got, but when we move into the scheme of arrangement discussions, we'll ask you to shoot off at that stage. If you have a question during the meeting, please raise your hand, and I'll ask for one of the roving microphones to come around to you. What would be great is if you could identify yourself before asking the question. That'd be great. For media, we'll hold your questions till the end, and we can have a quick session after the conclusion.
Voting today will be conducted by way of a poll. One share, one vote. If you are eligible to vote, you'll be able to cast your vote using the voting paper accompanying the notice of meeting that was handed to you on arrival. You select your voting direction from the options that are shown on the voting paper when voting opens later in the meeting. For those of you that are online, select the Q&A tab, and I think you've got the instruction—yes, here it is. Select the Q&A tab to submit your questions and the vote tab to cast your votes if you're eligible to do so. Please feel free to submit questions throughout the meeting, and they will be addressed at the relevant time.
There is a screen for you to put your questions in, and then I will be calling for any questions periodically from Padgett, who will tell me, "Wave your hands around, Padgett," if anything comes up. You can vote on all the resolutions at once or by each resolution in turn. You can change your vote up until I declare voting is closed later in the meeting. I now declare voting open for all the resolutions, and I will give you notice when the voting is closed. The board. Joining me today are your directors. I'll ask them each to raise their hand, although you can see the names in front of them here. First of all, Julie Bohnenn, Trevor Burt, Murray Dyer.
Down the far end, there is the guy that's been around here longer than all of us, Grant Beale, who's the co-founder of the Bremworth business and a director emeritus. So welcome. Your board brings wide experience and, of course, you yourself should have said that. Yeah, I'm part of this crew too. Your board brings wide experience across agribusiness, manufacturing, retail, and corporate governance. It has refreshed the mix of skills around the table, combining a continuity of manufacturing and design knowledge with new perspectives in governance, capital markets, and strategy. Our approach is hands-on. It's had to be. Directors are spending significant time in the plants and with customers to ensure that we fully understand the challenges and the opportunities that are facing Bremworth.
Also joining us is our CEO, Craig Woolford, and other members of Craig's executive leadership team, and as I've said before, several of our advisors and our auditors. On behalf of the board, I thank all who have provided professional guidance to Bremworth throughout the year. With that, I turn to the chair's presentation. When this board took office in March, shareholders asked us to act decisively to establish the business, to stabilize the business, and protect its value. We've done exactly that. We've reinstated the wool yarn production in Napier. We've reintroduced solution-dyed nylon carpet to ensure a relevant product portfolio and that Bremworth remains relevant to the largest segment of the market. We continue to right-size the cost base and focus resources where they will deliver the greatest return.
We also continued with the strategic review process that had been initiated by the previous board to assess the best way to create long-term value for shareholders. It's been a pretty busy eight months. The outcome of that strategic review is the proposed scheme of arrangement with Floorscape, a wholly-owned subsidiary of Mohawk Industries. This transaction is the result of a structured process involving multiple parties and represents all of the options available, including continuing as a going concern, and, sorry, and represents of all the options available, including as a going concern, what your board believes to be the best outcome for shareholders as we see it today. Under the scheme, shareholders are expected to receive total consideration of between NZD 1.05-NZD 1.15 per share. That includes NZD 0.75 per share from Floorscape and an additional NZD 0.30-NZD 0.40 per share from excess cash to be returned to shareholders.
Regulatory approvals are progressing well. The ACCC, Australian Competition and Consumer Commission, has already approved the transaction in their jurisdiction. Applications are with the New Zealand Commerce Commission currently and Inland Revenue. Subject to these and shareholder approval, the transaction is expected to be implemented in the second half of financial year 2026. That is first half calendar year next year. This proposal provides certainty of value while preserving the Bremworth brand and workforce. It aligns us with a global parent that brings scale, investment capability, and access to new markets. Whether the scheme proceeds or not, our strategy remains focused on building a stronger, more balanced business. We will continue to concentrate on the things that matter the most: disciplined manufacturing, profitable product mix, a high-performing sales culture, and capital efficiency. These are fundamentals that will sustain the value creation for shareholders in any ownership structure.
As I mentioned earlier, shareholders will have the opportunities to meet and chat with directors in private after the conclusion of the annual meeting to further discuss the proposed scheme. Market context. It's important to recognize the environment in which this turnaround has taken place. Consumer confidence and housing activity have remained subdued here in New Zealand, yet we've managed to lift volumes, rebuild service reliability, and begin the process of regaining trust with key retail partners. It speaks to the strength of our brand and the determination of our people. There's also quite a long way to go. The reinstatement of the Napier yarn plant is well advanced, with production quality now meeting our standards and supporting our SKU delivery. We have one card operational over there. The second card is undergoing testing at the moment and will be operational next week. We are making yarn.
This reinstatement is the foundation to unlock the shortening of the supply chain, a reduction in our inventory hold, the improvement of yarn quality and consistency, improved cost efficiency, and ultimately sales growth. This has already seen the additional employment of in excess of 20 staff in Napier as we rebuild the blending operation, the carding lines that were damaged in Cyclone Gabrielle. We reinstate the two-for-one twister and operationalize the confine line to produce high-quality, consistent yarn in New Zealand. This has also had the benefit of bringing virtually all yarn production back in-house, with commensurate savings on inventory holding and a significant reduction in supply chain length and time to service, with the added significant benefit of being a remarkable quality improvement in the yarn produced. Quality has returned to historical levels, with downgrade rates now below long-term averages.
It's a major improvement compared to the 12% plus that we saw earlier in the year, which just simply were not acceptable. Re-entry into the SDN carpet market is virtually complete. We've now got stock on hand, and you might see some this afternoon, and we expect to see sales begin this month. The demand pipeline is well supported by ongoing yarn supply from our partners. The addition of SDN to Bremworth's product portfolio provides us with greater relevance to our retail partners and ultimately our consumers as we have a wider range of consumer-relevant products to offer in our range. Alignment of the cost base is also nearly complete. We are seeing efficiencies in the distribution and administration parts of our business, and we are beginning to benefit from overheads across the business. Sales capability is being rebuilt. Great to see you here, Warren, today.
He's the dude that leads New Zealand. You don't mind me calling him that, do you, Warren? Warren, the dude. Sales capability has been rebuilt. Almost all of our frontline positions are filled, and we are seeing encouraging momentum, particularly in New Zealand. Looking ahead, as our volumes increase, we are shifting our focus progressively from recovery to efficiency. Manufacturing performance is improving as we concentrate on throughput and process optimization. Napier continues to increase its output and support the Whanganui plant, reducing our lead times and improving quality. We are lifting the volumes from our yarn plant and managing inventory to focus on faster-moving SKUs while phasing out slower-moving ones to maintain an optimal stock balance. Our cash position remains strong, with the cash at the end of the financial year of NZD 42.2 million in the bank as reported in the annual report. Our sustainability principles remain unchanged.
Bremworth continues to champion the environmental and health benefits of natural fibers, and we will maintain that leadership position whatever the outcome of the scheme. We are comfortable as a board that SDN and wool can coexist under the Bremworth brand. Our customers are asking for this. All of this means that we have built a platform capable of sustained performance and ultimately sustained profitability, whether the scheme proceeds or not. It is fair to say that the future is murky at the moment, so it is a long road to go, and we'll talk more about that later on. Employee recognition. I also want to recognize the contribution of our staff throughout New Zealand and Australia across both the carpet and our wool divisions. They've shown professionalism throughout significant change, and their commitment to quality and safety underpins everything that we're achieving.
On behalf of the board, I thank them. In closing, we are in the process of rebuilding focus, capability, and financial discipline, and we're a long way down the track, but there's still more to do. The last few months have proven that Bremworth can adapt, compete, and ultimately win. The foundations are set. There's a long way to go, and we're ready for the next phase of growth and value creation for shareholders. Thank you for your continued trust. I will now invite Craig to provide further detail on the company's operations and the outlook for the rest of 2026 and 2027. Craig, over to you.
All right, thank you, Rob. Good afternoon, everyone. It's a privilege to stand here today and once again be part of Bremworth's journey.
The company has played a major role in my professional life and is one that I care deeply about. I've seen firsthand what Bremworth can achieve when its people are focused, its manufacturing runs well, and its customers believe in the brand. This isn't my first experience at Bremworth. I started here back in 1997 as the manufacturing administration manager. I worked through several leadership roles, including production manager, plant manager, and then moved on to general manager of manufacturing. I did a brief stint in Australia as acting CEO for one of our parent company or one of our other companies, Onterra Tiles. After a period leading Godfrey Hirst, North America, I returned here earlier this year at the board's request to help get the company back on track. When I came back, it was clear the business had strong fundamentals but needed sharper focus.
The past six months have been about restoring discipline, resizing the business, improving quality, and embedding a performance culture that drives profitability and growth. A major focus this year has been resetting how people see Bremworth. For too long, the business saw itself as just a manufacturing company. That mindset needed to change. We are a sales organization that happens to make carpet, not the other way around. Everything we do is to support sales, and the team right across the organization have embraced this shift, and the results are starting to show. As Rob mentioned, we've launched new synthetic ranges alongside our wool offer, giving us a fuller product mix that the retailers want. This has changed the conversation with customers and re-established our relevance in the market in both New Zealand and Australia. Before turning to operations, I want to briefly recap on our FY2025 results.
The past year was the most challenging in Bremworth's modern history. Consumer confidence remained weak across New Zealand and Australia, and competition in the flooring market intensified. These factors weighed heavily on both volumes and margins, particularly through the first half of the year. Despite these challenges, revenue increased to NZD 88.4 million, up from NZD 80.3 million in 2024, reflecting the reinstatement of production capacity and the gradual rebuilding of customer relationships as well as a solid performance by our wool procurement division, Elco Direct. However, margins were compressed as higher input costs and subdued demand reduced overall profitability. Our normalised EBITDA loss came in at NZD 13.5 million compared with a NZD 4.7 million loss over the previous year. Despite this, the company recorded a net profit after tax of NZD 19.1 million compared with NZD 4.6 million in 2024 after adjusting for insurance proceeds, restructuring costs, and provision for owner's contract.
Most of the operating loss occurred in the first half when we were carrying excess inventory, facing higher yarn costs, and managing the disruption of reinstating Napier. The second half showed a clear improvement as cost control measures took hold, manufacturing began to stabilize, and working capital was brought back under tight management. While the full year does not yet reflect the company's potential, the trajectory is positive. We exited FY2025 with a leaner cost base, better quality metrics, and improved cash generation. The reset has created a stronger platform for the recovery we expect to see through FY2026 and beyond. Our manufacturing network is performing more efficiently than at any point in recent years. Productivity gains are coming through the volumes lift with Napier and Whanganui now operating in close coordination.
The two sites are now sharing load more effectively, reducing lead times and improving quality consistency across the range. We've rebalanced the production mix to focus on high-margin SKUs and tighten control over energy and waste. Continuous improvement initiatives are underway across both yarn and tufting operations with clear accountability for output, cost, and quality. The progress has been tangible. When I returned to the business, the cost equality was unsustainable with downgrades running at 12% of production. Today, those downgrades are under 2%, and at the time, October was tracking at 1.6%. That improvement has had a direct and significant financial impact. We've also cleared legacy inventory that was dragging on cash and profitability. When I arrived, there was more than 27,000 linear meters of seconds in obsolete carpet stock sitting in storage and carrying significant cost.
Virtually all of that is now gone, freeing up space and reducing waste. None of this would have been possible without the right people. We've rebuilt a capable and experienced team. Victor Tan, where are you, Victor? Victor's over there with his hand up. He's been reinstated as our Chief Financial Officer and Company Secretary, strengthening our financial discipline and governance and fully utilising Victor's 40-plus years with the business. Victor knows all parts of the business intimately and is a great sounding board for any new initiatives that we have, and he has always put the shareholders first. Warren Drinkwater, who put his hand up just over there, he's our General Manager of Sales for New Zealand. Again, Warren brings more than 20 years of industry experience and has been instrumental in rebuilding our retailer confidence in New Zealand.
Michael Ingham, who is unable to attend today, is our General Manager of Sales in Australia. He's been with Bremworth for over 14 years and again is instrumental in re-establishing our relationships with our key Australian buying partners. Chris Nabney, who again, he's away on leave. He's Head of our Yarn Operations, so he's across both Napier and Whanganui. He's been very key in driving our turnaround and quality and plant performance. Dave McLeod, again, who can't be here today, he's down in Napier at the moment, who has supported the people restructure, has been central to rebuilding staff levels at both spinning plants and managing change with professionalism and care. Kai O'Deal, Kai, where are you? Put your hand up. Kai is our Chief Information Officer, and he has been instrumental in upgrading and streamlining our systems to match market requirements and manufacturing objectives.
It's a significantly big task, let me tell you. So our workforce understands the link between quality, efficiency, and customer satisfaction. There is a renewed sense of pride in delivery and accountability for results. Our focus is now firmly on our customers. Bremworth has a proud heritage in wool carpet, and that remains central to our brand. But to succeed, we must be cognizant of where the market is. Synthetic carpets account for more than 85% of soft floor coverings sold in Australasia. By reinstating solution-dyed nylon alongside wool, we're giving retailers a fuller range of what they need and putting ourselves back in the conversation. The reentry into synthetics has been well received. It allows us to participate in more tenders and dealer promotional activities while also positioning our wool carpets as the premium alternative with a comprehensive range. In Australia, our relationships with major buying groups are strengthening.
We're getting back through the door and rebuilding trust, which is critical for long-term volume. Domestically, we are winning back floor space and key independent stores through improved service, reliable delivery, and clearer brand communication. Looking ahead to the rest of FY2026 and into FY2027, I expect to see the full benefits of this reset reflected in our results. Some initiatives have taken longer than expected. Synthetic carpet production started two months later than we planned. Napier's second kind is coming online, as Rob said. It'll actually be running on Monday. It is later than scheduled. These are short-term issues, and by the second half of FY2026, all our major changes will be in place. Our cost structure will be right-sized, and we expect to be back in profitability. Inventory is now balanced between fast and slow-moving products, and our cash generation is improving.
Working capital is tightened, and manufacturing recovery is trending upwards. This gives us the flexibility to respond quickly to demand and reinvest in areas that will drive growth. We're continuing to invest in product innovation that supports our long-term competitiveness. Our product strategy now balances New Zealand's natural wool advantage with selected synthetic offerings. Work is underway on new sustainable blends that enhance durability while maintaining the aesthetic and environmental values our brand is known for. Our design and technical teams are working more closely with customers to ensure our products align with the market. The timed concept-to-launch shortening allows us to refresh our ranges more frequently and remain competitive. In short, we've moved from recovery to rebuild, as Rob mentioned before. Bremworth today is more efficient, more focused, and better aligned with the market.
We have the right leadership team, the right culture, and the right strategy to deliver sustainable profitability. Whether under our current structure or as part of the proposed scheme, the direction is clear. We're building a business that can compete, grow, and create value for shareholders over the long term. Thank you for your continued support and confidence in Bremworth. I'll hand the meeting now back to Rob.
Thanks, Craig. I'd now like to invite questions in relation to the FY25 annual report or today's presentations from what you've seen. There'll be an opportunity to ask questions about the resolutions once they've been put to shareholders later on. As I mentioned earlier, we'll keep the scheme of implementation questions until the next session, if that's okay. As I mentioned earlier, if you do have a question, please raise your hand so we can direct the microphone to you.
If you're—Jesus. There's bugs. I've just taken the fruit fly population from Auckland down by one. As I mentioned earlier, please raise your hand if you have a question. We'll get the roving mics to you. If you could identify yourself before putting your question, that would be great. For shareholders online, if you can put your question in, I see we've got a couple there. Do we have a question from the floor? We'll get the microphone to you, but Padgett, we might take one online.
Okay. We have Coralie Van Camp. As I'm unable to attend personally today, please confirm whether the offer of NZD 1.05 per share is to sell Bremworth to Godfrey Hirst and ultimately foreign ownership. That's from Coralie Van Camp.
Please confirm whether the offer of NZD 1.05 per share is to sell Bremworth to Godfrey Hirst and ultimately foreign ownership.
There is a range of value. I'm quite happy to deal—well, it's stated publicly at the moment, so we can deal with it now. There is a range of NZD 1.05-NZD 1.15. The price of the share that Godfrey Hirst will be paying is NZD 0.75 under the proposed scheme of arrangement. There is a number of hurdles that have to be got through to get to that point, including a shareholder vote that you will all be invited to attend. The first cab off the rank is obviously Commerce Commission approval in New Zealand. We've already got the ACCC in Australia, and there'll be a number of other things that we'll talk about, and I'll flesh out later on.
At that point, you will have your choice to determine whether this happens or not. Under a scheme of implementation, we have a requirement to have 50% of the shares on offer voted, and in the process of that voting, 75% of shares voted need to be in favor of the resolution. There is a lot of water to go under the bridge, but assuming shareholders say yes, the range of NZD 1.05-NZD 1.15 is what we expect the combination of the purchase price and the cash distribution to be. Great.
There is one more online from Paul Grant. Is Bremworth on track for a positive net profit for the year ending June 2026?
I can deal with that.
Craig may want to do a little bit more later on, and it might be easier just to do it from the floor, from the desk, to be honest, rather than this shuffling around. The year, I mean, it's a challenging year. We're coming out of the recovery. There are green shoots, but make no mistake, there is a long way to go. We haven't provided the market with a reforecast yet. We will be looking closer to that at the six-month mark, which will be early next year. We'll be bringing that out. At this stage, delays in solution-dyed nylon as one of those legs has had an impact on us. We expect, looking forward, that FY2026 will be significantly better than FY2025. It's simply too early to tell. There's a hell of a lot of water to go under the bridge.
One more question from Paul.
With such an excellent refocus, why not remain a Kiwi company? NZD 0.75 per share paid by Mohawk seems too little.
Thanks, Padget. We might hold that question until later on when we talk about the scheme of arrangement. Are there any questions from the floor? Down over here. That fruit fly. I was just wondering, do we know when the—is there a date for the Commerce Commission decision? Somehow in my head, I've got December the 17th or something. Yeah, 22nd, I think, is the one that's on the timetable. We'll have a timetable up when we do the scheme of arrangement discussion later on, so we'll be able to flesh it out then. Broadly, your understanding is right. And that's this year, Christmas this year. Down over here.
Katherine Harvey, shareholder.
What makes this introduction of synthetics better than when it happened eight or nine years ago and it did not seem to work?
Craig, would you like to talk about that?
Look, I am not sure that they did not work last time. I do not think that is quite right. What makes it different this time? Not a hell of a lot. It is just that we are getting back in it. We have spent a lot of time getting the colors right. We have been told we are a market leader in the color work, and we need the synthetics in the marketplace to be relevant to our dealers and also recover factory overhead in the plant.
Yeah, I might just expand on that a little bit.
As Craig mentioned in his report, when you've got 15% of your flooring soft covering universe being wool and 85% being synthetic in some description, the market is telling you where they're behaving. They may say what they like, but what they do is different sometimes. By not having a synthetic range in our offer, it made it very hard, A, to get scale, and B, to be of relevance to the retailers. We were effectively fighting with one arm tied behind our back. The reintroduction of synthetic gives us a bigger toolkit and portfolio to offer our retailers. It gets us more relevance. It gets us more space, and it gets us more consumers. That is why we've done it.
That, in turn, allows us to defray our fixed costs and our overheads within this business across a wider number of linear metres that we can produce, which means that we hopefully start to make a little bit more money.
How confident are you of getting this past the Commerce Commission?
Secondly, how do you believe your market is going to be any better in the last 20 years?
I guess shareholders will ultimately be the arbiter on that one. The Commerce Commission, and I'm quite happy to expand on this later on. The Commerce Commission process is a black box. We do not get to influence that. They ask us what's going on. They will ask a number of participants in the sector their point of view, and from that, they will make a decision. We cannot lean on those scales.
It is a completely independent process, and we are bound to abide by whatever that outcome is. Are we confident? Yeah, we wouldn't have gone into this if we didn't think there was a realistic chance of getting it through, but the Commerce Commission obviously makes their own call, and that will come out this year. As to the other question about us in the 20 years, look, all I can say is we've come in here. All of the directors on the board—excuse me—all of the directors on the board have got turnaround experience in some form or another, and we're bringing that to bear here. I'll be the first to admit that if somebody puts a color swatch in front of me, I'll probably give it to my wife. We're not here for that at the moment. We're here to turn this business around.
We do not have a perfect skill set, but we have the skill set that is needed today, and we will be reviewing that regularly as we go forward. If we do go forward, under the scheme of arrangement, it will be a completely different operation.
Any others online? All good? Thanks, Padget.
Okay. If there are no other questions from the floor, one last go-around. Okay. What we might deal with now then is the resolutions, if that is the case. We have five resolutions. They were notified in the notice of meeting, and the explanatory notes have been provided. Voting on each of the resolutions will be held by way of poll, and that is underway, as I said earlier. Only shareholders who have yet to vote, proxy holders, or representatives of corporate shareholders may vote on today's resolutions at the meeting.
We will take questions on each of the resolutions as they are put to the shareholders. The first four resolutions are with regard to the election of your directors. We have all four of the directors that are on the board—myself, Julie, Trevor, and Murray—are up for election today. We were put in at the shareholders' request in March this year, and it is time to formalize that. The first resolution relates to the election of Julie Bohnenn as a director of the company. I am just going to read Julie's bio quickly from the annual report. Julie is an experienced director and business advisor with expertise across agriculture, retail, health, leisure, and corporate travel and wealth management sectors. We all joined the board on March 25. She chairs our audit committee.
She is a fellow chartered accountant with a proven track record as both a chair and audit and risk chair. Julie has extensive experience in business restructuring, market disruption, M&A, stakeholder engagement, regulatory compliance, and project governance. Her current board roles are with Farmlands Cooperative Society, where she chairs the audit and risk committee, Forte Health Group, Reform Radiology, and Moana Heights. Previously, she has held board positions with Jay Ballantyne and was a chair there in the House of Travel Group, where she was an executive director. Julie, would you like to say anything?
I think I should. Thanks, Rob. Good afternoon. It's been a real privilege to serve as a director of Bremworth over the last eight months. It's been full-on, but it's been definitely worth the effort.
Working alongside my fellow directors and the new management team to stem the cash burn and to protect the integrity of this iconic company has been my focus from the outset, particularly in my role as Chair of Audit and Risk. There is still more work to do in improving the financial systems and our risk processes. If re-elected, I will continue to support our dedicated and experienced management and definitely experienced financial team to make changes in these areas. I will do that in a practical and efficient way, but I will still maintain the highest levels of governance. I look forward to serving you as shareholders if I am re-elected.
I have the pleasure of moving that Julie Bohnenn, who retires and who is eligible for election, be elected as a director of the company. I advise that the directors unanimously support Julie's re-election.
Are there any questions in relation to Julie's election today? If there are none, then if you haven't voted, vote now. Are there any questions online, Padget? None. Okay. That's great. Thanks. We'll let you get on with the vote, and we'll move to resolution two, which is the election of Trevor Burt as a director of the company. I'm going to, again, read from the annual report, his bio. Appointed on March 25, Trevor has significant experience leading large and complex corporate organizations and a proven record of implementing change and achieving results. He's the Chair of the People and Performance Committee here at Bremworth and a member of the audit committee. Trevor has held significant leadership roles in global gas sector, gas industrial gas sector, sorry, in Australia, China, the USA, and Germany.
He currently sits on the boards of the New Zealand Land Company, where he chairs it, MG Garden, MG Limited, or Market Gardens Limited, Land Power New Zealand, New Zealand Drinks, and Hossack Station. Previously, Trevor has been a board member of Automation, where he chaired it, Ngāi Tahu Holdings Corporation, also chair, Lyttelton Port, also chair, PGG Wrightson, deputy chair, and Silver Fern Farms and MainPower New Zealand, as a director. Trevor, would you like to say anything?
Kia ora, tatau. Ngā mihi atu ki a koutou katoa. Thank you, Rob. Delighted to have served this last seven and a half, eight months with my colleagues. What are we going to be any different to the others before us? I think I've experienced a great team with Murray, Julie, and Rob, and I think we work together really well as a board to complement each other. What do I bring?
I'm the old scar. I've got scars on my back from wide-ranging roles in governance across 20 years and across all sorts of ownerships, including, as you heard, publicly listed, privately private companies, even a bit of government, and more recently, Iwi. I'll bring you three things. One is those scars and experience. The second is a passion. I'm passionate to work with these guys. It is part of why I joined here was the opportunity to work with three individuals like this. The third is I'll bring you a commitment to good governance and a commitment that will always act in the best interests of the company, but with a view that creates shareholder value. I believe you've had a—I believe you've had a tough time as a shareholder in Bremworth, and I want to see us as a board change that.
That's what we're here to do, is deliver value to you as shareholders. I'd like to thank you for the opportunity.
Okay. I have the pleasure again of moving that Trevor Burt, who is retiring and is eligible for re-election, be elected as a director of the company. I advise that the directors unanimously support Trevor's re-election. Are there any questions from the floor? Any online? Thanks, Padget. Okay. Could you please now vote in favor of—could you please now vote on that resolution? All right. That brings us to resolution number three, which is the election of Murray Dyer as a director of the company. Again, I'll read the bio. 2025, March. Murray is a member of the People and Performance Committee. He has 30 years' experience in agribusiness, energy, and international trade experience. Murray's career started in the wool industry with Reed Farmers.
That's an Otago stock and station company that is no longer here. I'm not sure whose age you're showing there, Murray. Has included executive and director roles in textile trading and co-founding an energy and commodity services business in London. You got that sorted? Murray founded and was the Managing Director of Simply Energy. Murray is a shareholder and director of utility data services and an investor in agritech. He's a chartered member of the Institute of Directors, a graduate of the Kellogg Rural Leadership Program, and has completed an MIT Sloan Management Executive Program on AI. Murray, have you got anything you'd like to say?
Thanks, Rob. It's been a pleasure to—such an amazing brand as Bremworth to be involved in it for the last six or eight months. It's been very challenging, but it's been very rewarding with the changes we've made, and we've had to move fast.
What I bring to the organization, I've got an entrepreneurial background, so I've got a real sort of owner-operator mentality about where each dollar's spent, how it's spent, what the return is on that dollar, and then a real focus on commercial execution. It's one thing to align strategy, but you've got to execute commercially on that strategy, and that's what my real focus will be on on a go-forward basis if I'm re-elected. It has got a very proud history and brand, Bremworth, and we need to really convert that into sales and commercial execution, and that's going to be my focus if I get the opportunity to be re-elected. Thank you.
Thank you. I have pleasure again in moving that Murray Dyer, who retires and is eligible for re-election, be re-elected as a director of the company, and again, the directors unanimously support Murray's re-election.
Are there any questions from the floor with regard to Murray's election? Nothing online? Okay. Thank you. Can I ask you, please, to vote on that one now, please? Resolution number four. I'm not sure whether we're saving dessert for last or not, but anyway, it's my turn. Rather than get out Trevor to read this, I'll read this, and I'm going to read it because I forget things. Again, March 2025, significant governance experience across agriculture, horticulture, export, supply chain logistics, renewable energy, and retail. I currently chair Farmlands Cooperative Society, Wool Scour Holdings Limited, or Woolworks, Hilton Haulage, Fern Energy, Pioneer Energy, AgriZero New Zealand, and Rewiring Aotearoa. I am the immediate past chair of Silverfern Farms Limited and Silverfern Farms Cooperative, a former councillor of Lincoln University and a past chair of Wool Impact.
I was awarded the Deloitte Top 200 Chair of the Year in 2023 and in 2019 received the Cooperative Business New Zealand Outstanding Contribution Award. I happen to also be a sheep and beef farmer from South Otago, farming 10,000 stock units on a carbon-positive flat, just over 1,000 hectare, medium hill country farm down there. The wool supply chain is important to me personally. I am a chartered fellow of the Institute of Directors and an alumni of Lincoln University, a master's in commerce and a BCom ag and economics. I am very happy to put myself forward for your consideration as being re-elected to this board. As I said, I am a sheep and beef farmer. The wool supply chain is absolutely fundamental to me at many levels. My father saw his way onto the farm back in 1964, so this is intergenerational for me.
But where the real attraction about Bremworth is, this is where the value is created. When you look at the whole supply chain, it is here where the money happens, and this business needs to be strong. We've got a great brand. It needs to turn around. I've got experience in that space. I've done it with Silverfern Farms, and I've done it, or we've done it, Julie, with Farmlands, and I'm looking forward to be able to continue to do that here. I respectfully request your support. Trevor, do you want to take it from there?
I don't know. You pretty well took it, Rob, actually. I reckon he was scared that we'd swap seats in case he didn't get it back, so I'll do this from here. I've got great pleasure in moving that Rob is re-elected.
He retires by rotation, and he's obviously eligible to be a director of the company. I advise that we, as a board, unanimously support Rob's appointment. I'd like to add that as Chair, Rob's led the board fantastically. He leads by example. He's upfront. He's smart, but he's got a very good way about him. As he outlined, he's got a very great passion for this sector and an experience in it. He continues to be a driving force for growth, and his leading of the transformation at Bremworth has been exemplary for us. I think the board and the management are extremely grateful, Rob, that we've got you. I'm happy to take any questions about Rob's election. Padget, any online? No. Okay. We'll pause and let you vote. Sorry, we do have one question. Good. Save for Rob, the Chair.
Yeah. My name is Hailey Cheng.
Yeah. I'm a shareholder of Bremworth recently after reading some financial news. I don't have questions, but I'd like to thank Rob very, very much because I was a shareholder of Veltus Carpet, which went liquidated years ago, and I lost money. Now we are lucky to have Rob as a very capable chairman so that I can get my money back. Thank you so much. Thank you for your comments on behalf of Rob. Also, another one is I am, what shall I say, a supporter of the wool carpet. The house I built, I use Veltus Carpet, and I use wool as insulation. During those 25 years, I never need to use a heater at home at all. I only need to wear more clothes when I go out of the house.
When I go inside, I have to, oh, so warm, I have to take off layer by layer my scarf, etc. Also, I think flat building have made a mistake because they use paper for insulation as the roof. It's the cheapest one. I got the sample 25 years ago, but I didn't use that. Paper is so easily ignitable. They make a mistake of using paper as insulation just to save money, but then it burns so quickly, and oh, it's a disaster. If they use wool because wool won't be ignited so easily, it will be another story. Yeah. Thank you very, very much. Yeah. Thank you for your comments. Thank you.
Rob, I'll ask everybody to complete voting on your appointment if we can. I suppose I have to hand this back to you, but you reluctantly take it. Thank you.
Thanks, DV. Yeah. Excuse me. You might have the talking stick just yet. There are plenty of fruit flies still going. The fifth resolution that we are to deal with today is to fix the auditor's remuneration. We are asking your authorization to do exactly that. I move that the directors be authorized to fix the remuneration of the auditor. Are there any matters for discussion or questions from the shareholder on this resolution? From the floor first. Padget. Okay. Thank you. No further questions, then can I please ask you to vote on that resolution? That concludes the voting on the five resolutions that we had in front of us today. I will declare the voting closed shortly. For those of you who are yet to cast your vote on all resolutions, I'll now pause to allow you time to finalize those.
The boxes are coming around now. If you have paper to put in, please. There are plenty of things just deciding to live in my mouth. I'm positive. There is one down the front here. Oh, sorry. I thought there was a just in time. I got it sorted. Excellent. Okay. Thank you. Looks like we've gathered all the votes. If you haven't done it online, three, two, one. Now it's closed. Thank you. The voting on today's resolution is closed. The results will be released to NZX later today and will be available on the company's investor centre website later on today. Computershare, who will act as scrutineers, will now—oh, we've done that—collect the voting forms. So that's all happened. All right. Proxies and postal votes.
For information, the company had received approximately NZD 20 million proxy and postal votes representing approximately 28% of the total amount of shares, and of that, more than 90% of those have been voted in favor of the five resolutions. Now we'll move on to other business, and if there are no further questions, we'll close the meeting. Here's the last chance for any questions with regard to the AGM for Bremworth for the 2025 financial year. Any questions from the floor? Padget, anything online? Is this on? One question online about the wool-only strategy. It's from Paul Grant again. Was the wool-only concept adopted by previous board and management unrealistic, or was it poor execution? You can answer that. I was looking at you. Look, a combination of both, to be quite honest, Paul. I mean, I'll just state again what I said earlier.
15% of the soft floor coverings in that universe, we are making it hard for ourselves. It's certainly aspirational, and there is no question that there is a segment of consumers out there, much like you, who love wool and will do anything you can do to have wool in your life, and go on, do as much of it as you can. I do the same. Unfortunately, the reality is there is a large chunk of consumers who may—some of them may say that but do something else, and some may not say it and do not do it either. We are missing out on that opportunity. The wool strategy was aspirational, and to make it work, it needed a fair wind, a very fair wind.
We did not get a fair wind, particularly with Cyclone Gabrielle, and that meant that we had to go and source wool from or yarn from offshore. The yarn manufacturers do not make yarn to the same standards that we do. I have been amazed coming into this business at how technically complex making wool yarn is. It is not something to be trifled with, and Grant has got many, many decades of experience around this. He can tell you for probably longer than you're comfortable how hard it is to do. The point is when you've got long supply lines with varying quality that you do not find out about until it is here in New Zealand being tufted into a carpet out there, we have manufacturing problems. We have cost problems. We have inventory hold problems. Those headwinds stood against us for the last three to four years.
The strategy is aspirational. We still want to do it as part of a portfolio of products. Wool is a key part of what we do and will continue to be a key part of what we do, but it's not going to be all that we do. We can't afford to occupy that rear ear only. Any further questions? Got a microphone. Yeah. Thanks, Rob, our shareholder. What if the market really bounces back and the synthetic is much better well received than anticipated, and you end up with more cash than you expected? Will Mohawk pay more, or will you distribute more cash to the shareholder? Will the shareholder be able to have the possibility of the cash better than the NZD 1.15? If something better happened?
The short answer is yes, that would be the case, but there's a fair bit of water to go under that bridge, and this year so far would not evidence that that's happening. We haven't helped ourselves, to be quite honest, by having a delay in our synthetic product launch by a couple of months. That has put us under pressure with the rest of the business to perform. Yes, if we had an absolute blinder in the back half of the year and there was more cash to distribute, we would be distributing more cash. It's not what we see in front of us at the moment, but I'd be delighted if that was the case. Thank you, Rob. Question over here. Steve Stickland, I'm also a shareholder.
I'm interested, when you're talking about solution dyed nylon, does that run on the existing machinery that wool carpet is made on? Craig, do you want to deal with it?
Yep, it does. It basically just comes straight in and goes straight onto the tufted. There's no real difference at all in regards to what we do. We still run it through our beaming machines and then put it out on our tufteds. A little bit harder on gauge parts and bits and pieces, but it runs exactly the same. There's no need for capital investment or anything like that, so. Jason, will we see on the plant tour this afternoon? Is there SDN being manufactured this afternoon? Absolutely. You'll see both going. Where does that yarn come from? Look, at the moment, we're bringing it in from China.
are quite a few options of where we can get it from. That is sourced all around the world. At the moment, we are buying some from China, but I have just been in India negotiating with suppliers up there. It is horses for courses. It really is who can best match our shades and do the best pricing off of best terms, etc., etc. It really is horses for courses. Our first round is coming from China. Our second round may come from Indonesia. It may come from India. It may come from China. I do not really know yet. Can I make a comment? Thank you.
This looks really encouraging. Thank you. I mean, it is a means to support the business. We have just got to do it. Personally, I have my views about it, but of course, I do. I am a bloody sheep farmer.
Yeah, look, we've got to—if the market is telling us to do something, we should listen to it. Are there any further questions from the floor? Anything online, Padget? It's too much to post here, but we'll save it for later. Save it for later. Yep. Thank you. Okay. With that, thank you very much for your attendance in the 2025 AGM. I'm going to draw that to a close. I'd like to thank you for your continued support, and I want to reiterate that we are excited about what Bremworth is doing, and I think we've just exposed a little nugget of that here. We look forward to adding value to our shareholders and our staff and our consumers. I'm going to call the AGM to a close now.
As I advised at the outset, all non-shareholders, whether in person or online, we ask that you now leave the meeting to allow directors time with the shareholders only to address any other questions that you may have on the proposed scheme of arrangement. Thank you. Yes. I'd just like to flag also that we need to have a hard finish at 2:40 P.M. this afternoon. I think the parking meter's run out about that time too. Thank you all for your interest in Bremworth and taking time to join us this afternoon. Let's take a break for 90 seconds to allow those that need to leave to leave, and then we'll reconvene to have a discussion about the SIO.
Spend your hours on what you think I've done wrong. I know I'm in your mind. I've been here way too long.
I want to spend my life with those who've done me right. Your heart is broken. I'm a falling clover. Take a look outside. It's a beautiful day. Yeah. Yeah, it's a beautiful day. Yeah. I'm going to keep it that way, that way. Take a real good look. It's a beautiful day. Yeah. Yeah, it's a beautiful day. Yeah. I'm going to keep it that way, that way. No time for toxic people. No time for that. No time for toxic people. I've got no time for toxic people. Moving on, moving on, moving on. Go. Let me go to the clouds below because they're calling me off the higher ground. What a teacup sound. Even mighty drown. Take a look outside. It's a beautiful day. Yeah, it's a beautiful day. I'm going to keep it that way, that way. Take a real good look. It's a beautiful day.
Yeah, it's a beautiful day. I'm going to keep it that way. No time for toxic people. No time for that. No time for toxic people. Now nothing ever lasts forever, no. One minute you're here and the next you're gone. So I respect you and I take it slow. I need a mentor and seek to know what's wrong and how to go. You might defy, still a kisser. A little souvenir. Can I steal it from you? To memorize the way you shock me, the way you move it here. Just want to feel it from you. Don't be afraid to catch feels. Right dressed up and chase feels. I know you ain't afraid to pop pills. Baby, I know you ain't scared to catch feels. Feels with me. I'm your window shopper. Sucker for your novel.
I'm wiping your goggles. But you won't realize it ain't what it cost ya. It might be a dollar as long as it shocks ya. Memory, electricity. Might defy still a kisser. A little souvenir. Can I steal it from you?
Good job. All right. Thank you, everybody. Thank you for just bearing with us while we change hats. What I'd like to do now is essentially this is an ask-and-answer question session. Thank you. What I would like to do, excuse me, is briefly talk to you about just to give you a quick overview, a recap, if you like, of the scheme of arrangement and what it is. We'll move on to the value very quickly. It's a range at the moment. We want to talk about the timeline and then why we'll basically open the floor to questions for you.
As you can see, next page, please. Thank you. We undertook the initial strategic review, which was initiated by the previous board, and that was with regard to the Cyclone Gabrielle payout. There were some unsolicited advances to Bremworth from other parties expressing an interest in the company. The process has been seriously underway since March. That was when we came in and took it on. Toby had been involved prior to that. This was effectively a global trawl. I just want to give you some sense of the size of this, how many parties were engaged, and where we got to with where we are today. There were 40 approaches globally to various parties, obviously not only within New Zealand, but externally.
From that initial trawl, six non-disclosure agreements were signed, which basically says these are parties that are serious about wanting to deal with us further. They get the information. From that, five information memorandums were sent out. From then, the detailed due diligence process through the data room and the Q&A started. That is where we ended up in October this year, where we went out to the market. The board unanimously recommends that of all of those options that we have looked at, some fell along the wayside. Many fell along the wayside, but the one that Mohawk, Godfrey Hirst, Floorscape, pick your name, it is all the same thing. The one that they put forward is what the board considers to be in the shareholders' best interests of all the options that we have seen to date. That is why we are where we are.
The process is going to be through a scheme of arrangement, which, so it is not a done deal. There are a number of, thanks, Craig. There are a number of hurdles that either have been jumped or are about to be jumped or still need to be jumped to get to a successful conclusion. I mentioned a few of those earlier. The first one that came off was the ACCC approval in Australia, which was relatively straightforward. That was achieved about three or four weeks ago after a pretty quick process. Over there, Bremworth is a brand. We are not a manufacturer in the Australian context. It was relatively simple for the ACCC to say yes. In New Zealand, it's a different story. The Commerce Commission here does have significant interest in this around competitive pressure and alternatives. They are doing their process right now.
They will conclude somewhere around Christmas this year and give us, but it is, from our point of view, a black box process. They can interview who they like. Indeed, people are submitting opinions to them as well. That process will be gone through. If that process results in a successful outcome, the next step along the way is for an independent valuation of the offer to be made. We have engaged Grant Samuel to do that. That report will be coming out to you later on next year, probably about March. That will come out with the voting pack. The last step in the chain is for you as shareholders to have your say. As I said earlier today, under the scheme of arrangement rules, that requires a 50% share vote. Of that 50%, 75% need to be in favor.
We have a timeline that I'd like to share with you in a minute, but I want to make the point. This is an ongoing process. We will be engaging with you along the way when we have tangible outcomes to talk to you about. The first one in that process is the Commerce Commission's approval. If the Commerce Commission says no, that's it. We're looking for alternatives. There are a number of hurdles, and the success of a few of them will determine whether we continue down this path or not. Can we have the timeline? Who's running the butter? Thank you. I should have mentioned also there's some taxation advice that we're looking to receive. We've engaged KPMG on that as well. That is about how do we handle the cash distribution to you as shareholders.
I want to make it quite clear, and we need to make it quite clear. In fact, Padget, if you can go back to the previous slide, I should have talked about this then. There are two clear components to this, and you need to understand them collectively and individually. So the $0.75 is the value that Floorscape are putting on Bremworth for the business. The $0.30-$0.40 in the black box on top of that is the surplus cash that we have within the business today that we wish to distribute to shareholders. That is not going to go to Godfrey Hirst. That will come to you and will happen virtually at the same time, slightly ahead, but basically at the same time as the transaction if the scheme of arrangement is implemented.
The key milestones, Commerce Commission this year, assuming that happens, there will be the independent valuation report, the voting papers, the shareholder vote, which is probably going to be in March. I'm jumping around the timetable. If that happens, then effectively it's on and the money will get distributed. Rob, can I just jump in and add a couple of minor clarifications before Ian tells me? We also have to get a clearance from the takeovers panel, which is a non-objection more than an approval. We have to get formal approval from the High Court. That is why this process is such a protracted and longer process. The High Court approval is the key one. Non-lawyer, I'll describe it as a formality. Ian might describe it as something different, but it is a key step in that.
It would not happen if the High Court did not approve it. I do not know of an example where the High Court has ever turned one down. Just that I clarify that. Sorry, Rob. Thank you. That is all I have to say at the moment about the process and the timeline, unless there are more questions about it. I really want to give shareholders the opportunity now to ask your questions. We did have a couple earlier online. While the microphone is going around on the floor, if you like, we can—Padget, have you got one of those questions? Yes. I have two from Paul Grant. The first one. Yes. If the sale to Mohawk is blocked by government or shareholders, will the now current directors continue to serve Bremworth? Look, we are going to have to consider the options in front of the company at that stage.
Where do we take this? If the Commerce Commission does turn this down, the issues around how do we recapitalize this business and take it forward, what do we focus on? What does that mean will need to be traversed? Is there an alternative ownership position? There is a lot of water to go under that bridge. We are not going to leave it in the lurch. We are here to represent your interests, but I think it is going to open up a number of other questions that will need to be answered. Fundamentally, that is what is the best direction forward because what we have got right now is not sustainable. Second question from Paul. You seem willing to sell Bremworth at the low point of the building cycle. With your collective skills, selling Bremworth in a couple of years could get a much better price. Yeah.
Let's just look back to look forwards. We've made two years of losses to the tune of around $12 million-$15 million a year for the last two years. This year started out reasonably tough. If we break even this year, that'll be a good start. That's probably aspirational where we're sitting right now. When you've got NZD 42 million in the bank as of 30 June, it doesn't take too many years, like the last two years, to turn that into zero. That money is going to be needed if we are going it alone to reinvest in this business. There has been a large number of years of deferred maintenance, lack of capital spending, and we need to address that. That assumes also that we have fair sailing ahead of us. That assumes that our competitors let us have a go.
I would not assume that at all. The environment out there is only going to get choppier because our competitors are facing into exactly the same market that we are with better balance sheets. We need to be cognizant of that. One of them, if the scheme of arrangement does not go through, will know quite a lot about us. There are others that are circling, solution-dyed nylon and other synthetics are in the market and are continuing to come into the market. To think that we have got a pathway forward that is going to be relatively smooth sailing, I think would be quite optimistic. What I am saying is if we continue to make losses, even if we break even, we have a significant reinvestment program in this business. That combined with choppy water makes it a bloody hard ask.
That is really the recognition that we have come to as a board, which is why the scheme of arrangement we are recommending to you is in the best interest of the shareholders and the company. It allows Bremworth to continue to manufacture in New Zealand, the brand to continue, and the opportunities to be unlocked and for shareholders to get a return. Otherwise, we are asking you to double down for quite a long period of time with no clarity about certainty, no clarity of outcome. It could end up being worse because we do not have cash to distribute. We have burned it running this business. A question from Dianne Williams. She was asking for clarification on the takeovers panel that Trevor talked to. Could we just talk into the microphone so everyone online can hear? Turn it on. I am no lawyer here, okay?
The takeovers panel are there, I suppose. I'll take my license here, Ian, to ensure that we follow a proper process as a board and to ensure that we're doing the right things for you as shareholders. They are there to oversee that process. They would give a letter of no objection basically to the court. That's a key element in the court's consideration because then it gives the High Court the assurance that we've done this properly. Was that crudely it, Ian? I say it's a given. I think it's a given because we have followed a really robust and good process. We've had very good financial advice and corporate finance advice and very good legal advice. We're well positioned with that. The High Court will consider it based on that. I hope that answers it. That's everything online.
We have a question down here. It does not appear that you have a timeline there, is it correct? You have a schedule, but not a timeline. I thought that had dates on it, actually. There are no dates.
Okay. Secondly. Yep. Secondly. From what you're saying, it appears that if the techno over is not going to happen for some reason or another, for one reason or another, most probably there will be a capital raise. Is it correct?
Look, it'll be one of the options that we have to consider at the time if that is indeed what's in front of us. At the moment, we are in a scheme of arrangement process. The board has unanimously backed that. There are a number of activities that need to happen in that process to allow it to come to a conclusion.
If it derails for any reason, then we will have to consider our options that are in front of us at that time. Right now, we are recommending this to you as a board that this is in the best interest of the company and the shareholders until it is not because we cannot go forward or another superior offer comes in over the top that we cannot go and solicit. The board is bound to work with Floorscape on presenting this to shareholders for consideration. That does not stop somebody coming in and giving us an offer. We will consider that as well. It has to be superior to the current offer that is on the table. We will deal with it depending on whether we need to deal with it. Rob Steve is my name.
There is a contradiction I see because in the meeting we had just a few minutes ago, you, the directors, Craig, spoke very positively about what is happening in the company and as we look forward. Yet a couple of minutes ago, you gave us a very pessimistic view. How come? On one hand, you're saying this, and then on the other hand, you're saying that. It is confusing.
Yeah. I guess what we were doing in the 25 is we were looking backwards to look forwards. We were not looking forwards at that stage. It was basically comparing our performance last year with what had gone on previously. There is no question the performance of the business has improved. Has it improved enough? Not yet. That is the issue that we are facing into at the moment.
Quite frankly, as I've said now, the choppy waters that we are facing into and the uncertainty around that, with this offer that is here, we are recommending the offer to shareholders and going through that process because we do believe it's in the best interest of the company. If that does not come off, we will have to reassess our situation. Yeah, let's be clear. The business is performing better, but it's not performing well enough. The question really becomes then, well, how do we get the scale to be competitive to perform at the level that we need?
You do not have to be too much of a financial analyst to work out that we probably need to have an EBITDA number approaching $10 million a year, and we are a long way from that at the moment, to then get a share value of around about $1 a share, very roughly. We are there at the moment with what is being proposed in front of us when you put the two quantums together. To get to that point, if we had a fair sale and commitment from the shareholders, it might take us anywhere between, who knows, 5-10 years to get to that point, assuming a fair wind. It is the classic case of a bird in the hand versus the promise. That is why we are recommending it today because we have a bird in the hand.
You are more pessimistic than optimistic about the business? No, we're realistic. It is going to be a hard push and uncertain. That is the issue.
Just one other question. Why wait to have the shareholder meeting? Why don't we have the shareholder meeting as soon as possible? There is nothing stopping us having that. Why wait until the first or second quarter of next year? Yeah. There are a number of regulatory issues that need to be dealt with, as we talked about earlier, and they take time. Putting the regulatory issues, the Commerce Commission approvals, the taxation advice, that sort of stuff, that will happen. Grant Samuels need to produce their report. That is solely to provide shareholders with independent evidence that what is being offered is absolutely reasonable.
We've had indications from them verbally that the offer is in the range of what they expect the company to be worth. They are working through that process of validation at the moment. We're reassured that we're in the ballpark, more than in the ballpark. We're quite close. That is something that shareholders should be comforted by because we aren't being fleeced. That process does take time. You go through it. Christmas and New Year get in the road. Realistically, after the Commerce Commission advice, if it does come out the last week before Christmas, we're not really going to be—advisors bugger off and go to the beach houses. We're not going to be doing anything until February. Then it's a couple of months to the run into the end. It's moving as probably as fast as it can, I think.
We'd love it to be quicker. It'd be great. We'll come down next. There's one over the back. Rob, sitting here, I get more the impression that you're really trying to create a brokering the sale of the shop more than anything else, both you and the board. Of the options that are in front of us at the moment, yeah, look, I guess you can put that spin on it. It is effectively. Godfrey Hirst, Floorscape have come up with the offer out of 40 participants around the globe that were canvassed for interest. We think when you balance everything up, it is in the best interest of the company and the shareholders to take the offer that's on the table at the moment.
The interesting thing for shareholders, I expect, will be what happens if another offer comes in over the top, unsolicited, or the Commerce Commission says no. Or shareholders say no. Where does that leave us? It is not a done deal, and you'll have the final choice in all of that. Clearly, right now, the board is recommending to you that this is what we, out of the portfolio of options we have in front of us, this is clearly the best one. We are putting it to you as shareholders for consideration. There's a question down the front here, Padget. Yes. Steve Stickland, I'm a shareholder. How much cash could you burn through getting all these approvals and Commerce Commission and legal advice? You got those numbers? It is not insignificant. I mean, Toby drives a nice car. Sorry, I'm being flippant. I shouldn't be.
I mean, we're paying for advice. So we've got legal fees, we've got taxation advice, we've got corporate financial advice. We're through the rump of most of that now, but there will still be spend going on. There'll be conclusion fees as well. Add all of that up, it's around about three, I think, in total. NZD 3 million. And has the conglomerate that's buying it, have they put up like a non-refundable deposit? No. It's all conditional upon the scheme of arrangement being implemented. They'll have their own costs, of course, because they'll have their due diligence on their side that they're doing that we're not paying for either. We've both got costs. Is the offer unconditional? If the scheme of arrangement is agreed to, yes. They're committed on their side legally? Yes. As long as there's a few threats. Yes.
I'm talking about their half of it. There's a lot of stuff that the company's got to do to get the necessary approvals. Right. Okay. To clarify that, there is a break fee in the agreement so that if for an untoward reason they break out of it, there is a fee that they would have to pay us. And there are certain conditions, etc., around that. Do not call it a deposit, but there is a connection there that says you just can't come and look at this business and then go, "Oh, no." I think that's some way to covering the costs. It would go some way to it, yeah. They're here because they want to be here. How are you looking online, Padget? My name's Peter Oh, shareholder. If this scheme arrangement is completed, the role of you directors is what? Fish and chip paper.
Yesterday's news. Yeah, we're out of here. There's no, yeah, we will not be required once the deal is done, and the business will be part of the Godfrey Hirst or my Floorscape portfolio. What I can't recall just offhand is the date of the, so when the shareholder vote happens, what timeframe have we got after that to implementation? About a couple of weeks at most. That is completion date, and you get your money then. Effectively, you do your set up a job. Yeah. Yeah, we do. I mean, in a good way. In a good way. Realistically, we have the most to lose because we lose our roles. That is not what drives us, whether we keep our role or not. What we all sign up for is, can we deliver you shareholder value? That's the role of what we do.
That's what we're professionals at. That was really when I was coming back to. Someone else just asked, you seem to be saying you were very, very positive about why you were on this board for. It's always good to see, "Oh, this is enthusiastic. This is going somewhere." All of a sudden, the next thing is, boom. We now feel that probably, even though that's what we want to achieve, that it's not really going to be a success for the company in the shortest timeframe. If we want to succeed, it's probably going to wait, say, 5 or 10 years, assuming the market is our way. Look, you've summed it up pretty much exactly. What we're trading off is certainty and return versus long grind and uncertainty.
Uncertainty on a number of levels, not just what happens in the marketplace, but uncertainty around, is this business going to be fundable going forward? What do we need to put in in terms of capital? What does that mean for shareholder returns in the short term and over the long term? That is the trade-off. I will just reiterate it. Why we are here today recommending it to shareholders is because we do think it is in the best interest of shareholders. Does that mean that there are not alternatives? Of course, there are alternatives, but none of them are as palatable as what we are looking at here. We are looking at both. If we have to go this alone, then we will be doubling down on it. We are putting an offer to you that we think is in your interest.
Rob, one of the things that we need to do is get the business into a shape where there was another path. We did not want to have a fire sale situation, which was where it was heading. The cash burn was quite material. The risk was, from a shareholder perspective, you were sitting there with no options on the table. It was a fire sale. What we have tried to do is execute really quickly to get a turnaround strategy in place, which is what we spoke enthusiastically about. We are also being very realistic that to get this to a level of profitability that can provide you with $1.10 or thereabouts a share in return, we are going to have to get a hell of a lot more wins.
It's about what have you got now versus the uncertainty of what we would need to deliver in the future. That's very good. I must appreciate that you sound a lot more positive than the comments we got from previous annual meetings. I can't comment on those. I didn't turn up to them. Look, there aren't that many options in front of us, to be quite candid. We've traversed what we have got available, and yeah, it's driving an outcome. Yeah. Steve Stickland here again. I've listened to Warren Buffett's talking and advice and that. He talks about a leaky boat. Really, you are dealing with a leaky boat.
What you are saying is that we are better off selling the leaky boat to a bigger organization that has the capital to really rev it up themselves, and we take the money and do other things. Maybe invest in their business as an option or whatever. Yeah, is that what you are saying? Yeah, effectively. Yeah. Just understand the counterfactual consequences. The downside is that we get nothing because once that NZD 40 million is burnt up, you will have to recapitalize to keep it going. Yep. One over the back here, Kerry. My name is Peter Beasley, a shareholder for a long, long, long time. The question, I noticed in the annual report that none of the directors have any shareholding in the company.
There is nothing in this as far as any return of an investment that you may have made or that you do not have any opportunities to make it from now on anyway. I am just wondering whether there are proxies involved or say. No, I mean, none of us have an interest in the company. There is no incentive there to drive a particular outcome. That is a good question. That is all I want to know. I mean, the closest conflict in that regard is probably me as a sheep farmer. I can tell you that none of my wool goes into Elco because I farm in the South Island and Elco sources out of Whanganui. I do not even have that opportunity. There is no benefit for a positive outcome or a negative outcome here for a director of a company. We are here in your interest.
We knew that when we were signing up for this. That's not a drama. Okay. I'm mindful of time. We've got about eight minutes left until we do have to draw this to a close. Very happy to continue to take questions. If there are some, that's fine. Can I just have a show of hands, actually? Who is interested in a plant tour? Going around and having a look. Okay. That looks like at least one party, two parties. Jason, you can go and organize the hivers for this. It is a working environment out there. You got questions, Steve? No, no, no. Just go and have a look. I think you should. You're the owners of the business. If you've never been in, have a look. I love this sort of stuff anyway. It's like Meccano sets and boys going and doing stuff in toy boxes.
It is fascinating. The complexity about how a product like this comes together is something that is very easy to underestimate until you see it in action. What Jason's dealing with out there in the manufacturing process, actually, the yarn's already being made. You go to the yarn plant in Napier and chase a piece of wool through. If you imagine a room half as big as a rugby paddock with strings of spaghetti going from one end to the other as it gets wound onto a bobbin, you've sort of got an idea. There's a huge amount of complexity in just corralling the gear, let alone manufacturing it. Please go and enjoy your time out there today. I know the team is going to be very proud to show you what's going on.
Grant Beale will be a font of all sorts of knowledge because he probably made half the machines. Yes, there is a cup of tea out the back with some sandwiches that's on right now. Are there any further questions on the SIA? Nothing online, Padget? Oh, there's one over the back here. The microphone's just coming. Hi. Philip Leland, shareholder and ex-employee. With the inquiries that you got back apart from Hearst, were any of them some sort of a slight chance of doing a deal? Not really, although they'd be here. There was certainly interest, but it fell off. Who was the most significant? The process is confidential. We can't go and name names. There was interest from multiple parties.
At the end of the day, the deal that we put in front of you today is the one that we're recommending as being in the best interest of shareholders. I won't go into the detail of who the other bidders were, but there was certainly more than one. Okay. Steve. I'm just looking here at the ownership on Simply Wall Street. The institutions have 1.77% ownership of this company. Individual shareholders 22% and the general public 62%. This is not a normal company on the stock exchange, is it? No. I wonder how many people have James Cornell Securities Research document that they get subscribed to like I do because he's recommended this company for years. Yeah. Just a comment. I appreciate you guys coming on board. Thank you. Thanks, Steve. Thank you. Okay.
If there are no further questions, thank you for coming to your AGM. We appreciate your support. We appreciate the time that you've taken out of your day to do this. Go and have something to eat and drink. For those of you who can, put the hivers on and go and have a look around. I'm sure you'll enjoy it. We'll pull this to a close and wish you all the best. Close it in shoes. Oh, close it in shoes. Sorry. If you all got close it in shoes, those of you who want to go around the plant, sorry if you don't. You can't. We'll leave it there. Thanks very much for coming. Cheers.