Hello, and welcome to the annual meeting of shareholders of Mullen Group Ltd. Please note that today's meeting is being recorded. If you participate in today's meeting and disclose personal information, you will be deemed to consent to the recording, transfer, and use of same. If you disclose personal information of another person in today's meeting, you will be deemed to represent and warrant to Computershare and the corporation that you first obtained all required consents for the disclosure, recording, transfer, and use of such personal information from all appropriate persons before your disclosure. During the meeting, we'll have a question and answer session. You can submit questions or comments at any time by clicking on the Q&A tab. It is now my pleasure to turn today's meeting over to Mr. Murray Mullen, Chair, Senior Executive Officer, and President of Mullen Group Ltd. Please go ahead.
Thank you. It's my pleasure on behalf of the board of directors, in welcoming you to our 32nd annual shareholder meeting, and I'm speaking to you from our corporate office located in beautiful Okotoks, Alberta. Thank you for joining us and attending our virtual meeting. You should now be able to see on your screen instructions on how to ask questions, as well as the voting procedures. There will be two parts of today's meeting. The first is the formal agenda, which will commence shortly, and once we've completed with the formalities and legal requirements, there will be time for a presentation on our latest growth initiatives and business updates. Let's get started with the formal agenda, which is the call to order. This meeting will now come to order.
In accordance with the company's bylaws, I will act as the chair of the meeting. Before proceeding with the agenda, I will ask Joanna Scott, Corporate Secretary of Mullen Group, to act as Secretary of the meeting, and Kyle Gould, representing Computershare Trust Company of Canada , to act as scrutineer. I have received confirmation from Computershare as to the due mailing of the notice of meeting, information circular, and instrument of proxy on March 28th, 2025, to shareholders of record as of March 20th, 2025. I direct that this confirmation, together with the copies of the documents mailed to the shareholders, be kept by the secretary with the minutes of the meeting.
The first, before we get started, we have to have a quorum. Business may be transacted at this meeting if we have at least 2 shareholders present, who hold or represent by proxy in the aggregate of at least 5% of the shares entitled to vote at the meeting. A shareholder is present if the individual representing the shares in person or by proxy has logged onto the virtual platform. According to registrations confirmed to me by the scrutineer, there are 62 shareholders present, representing 67.32% of the shares entitled to vote at this meeting. As a result, a quorum exists. Now, shareholders and any other person attending the meeting of shareholders may address the meeting when there is a call to discuss any of the motions that are made at the meeting.
Should you wish to address the Chair on any motion, please type in your question or comment in the message section on your screen once it opens during the discussion period. If there's any discussion or question, the secretary will read the question aloud. I will now declare this meeting to be regularly called and properly constituted for the transaction of business. The purpose of the meeting, of today's meeting is to, Number 1, to receive the audited financial statements for the year ended December 31, 2024. Number 2 is to fix the directors to be elected, the number of directors to be elected. Number 3 is to elect the directors. Number 4 is to appoint the auditors, and Number 5 is to consider, on an advisory basis, Mullen Group's approach to executive compensation.
These matters are further described in the notice of meeting and management information circular and proxy statement dated March 20, 2025, that was delivered and filed in advance of this meeting, as required by law. The first item of business is to receive the 2024 annual financial statements and the auditor's report thereon. The document includes the consolidated financial statements of Mullen Group Ltd., and for the fiscal year ended December 31, 2024, together with the management discussion and analysis thereon, which was mailed to each registered shareholder. This item does not need a vote. The remaining items of business, they do require a vote, and we will conduct the votes on the matters before us by a poll conducted using the virtual platform.
On a poll, and in accordance with the company's articles, every shareholder entitled to vote on the matter has 1 vote in respect of each share held by the shareholder. The poll will be opened for all resolutions at the same time, and we will be making all motions at once. However, should you have any questions or nominations, we ask that you use the communication platform provided, and we will provide time for voting and questions once the motions have been made. Now, as a matter of convenience, we have asked certain shareholders to move and to second routine matters of business. This is not intended in any way to limit shareholder discussions, but only to assist with the progress of the meeting. The next item of business, there are as follows.
Number one is to set the number of directors of Mullen Group Limited to be elected at the meeting at eight directors. Second, is the nomination and election of directors. Third, is the appointment, and actually, that's the reappointment of the auditors. Fourth, is to consider, on an advisory basis, Mullen Group's approach to executive compensation. I will now ask if there's a motion in this regard.
Good afternoon, Mr. Chair. My name is Kim Derbeker, I'm a shareholder of Mullen Group. I make the following 4 motions. First, that the number of directors to be elected to the board of Mullen Group Limited at today's meeting be fixed at 8 directors. Second, that each of Christine McGinley, Stephen Lockwood, Laura Hartwell, Murray Mullen, Sonia Tibbatts, Jamil Murji, Richard Whitley, and Benoit Durand be nominated as a director of Mullen Group Limited to hold office until the next annual meeting of shareholders or until a successor is elected or appointed, subject to the provisions of the Alberta Business Corporations Act and articles and bylaws of Mullen Group Limited. That the nominees presented to this meeting be elected as directors of Mullen Group.
Third, that PricewaterhouseCoopers LLP, Chartered Professional Accountants, be reappointed as the auditors of Mullen Group until the next annual meeting or until their successors are appointed and the board be authorized to fix the remuneration. Finally, that on an advisory basis, and not to diminish the role and responsibilities of the board of directors of Mullen Group or its committees, that the shareholders of the corporation accept the approach to the executive compensation disclosed in the corporation's information circular dated March 20th, 2025.
Thank you, Kim. Would a shareholder please second the motion?
Mr. Chair, my name is Carson Urlacher, and I am a shareholder of Mullen Group. I second each of the motions.
Thank you. Now, if there's any discussion on any of these four motions or any further nominations for directors?
Mr. Chair, there are no questions at this time.
There's no question. Okay. As there are no discussion, there's no questions. I'll now ask for a vote on the 4 motions before the meeting. Would all shareholders please enter your votes in the virtual platform? In accordance with the majority voting policy, shareholders will vote for each director individually. I'll pause for a few seconds to allow anybody that wants to make those votes. The scrutineer, who's on the line, has collected and tabulated the votes on each motion and reported the results to me. As I mentioned before, our majority voting policy requires that we conduct the election of directors on an individual basis. As a result, the decision of the meeting of the election of directors was conducted individually using the voting functionality on the virtual platform.
Now, having received confirmation from the scrutineer, I declare that each of the motions that was made today passed. Accordingly, each individual that was nominated today to be elected as a director of Mullen Group Ltd. was so elected. Now, the results of this vote will be disclosed by way of a news release, which will also be available on the company's SEDAR+ profile and the company's website. Now, the next item of business on the agenda is the termination of the formal part of the meeting. This concludes all matters before our annual meeting, and I will now entertain a motion that the meeting be terminated.
Mr. Chair, I move the meeting be terminated.
Thank you. Would a shareholder please second the motion?
Mr. Chair, I second the motion.
Okay, thank you very much. I declare the meeting terminated. With that, the formal business of the 32nd annual meeting has now completed. I also thought this would be a great time to share with you a few details on how we can keep growing the Mullen Group and adding value to your investment. It's regardless of whatever the market cycles are. You all know our strategy. We acquire companies, we strive to improve their performance. This is precisely how we've grown since 1993, today, I am proud to point out that the Mullen Group is one of the largest and most diversified portfolios of logistics services of any company in North America. As I said, you already know this. What I really want to focus on today is our latest acquisition, which we announced on April 14th via press release.
The Cole Group of Companies is one of the leading customs brokerage firms in Canada with a strong and growing presence in the United States. If you've been following the news lately, tariffs and trade issues are headliners. This means the various government bodies want to know everything about what enters or leaves their respective borders. This is essentially the role of a customs broker and the primary reason why I invested in Cole. They also happen to have a large logistics business which we believe fits very nicely with many of our existing business units. When we talk with our customers, we can support all of their logistics requirements. We can move the freight, and we can complete the customs documentation to facilitate the movement across borders. Let's call that one-stop shopping. One may ask, how did we find Cole?
Actually, Cole found us. When the previous owner, Mr. Don Lucky, made the decision to sell his company, we were approached to see if we would be interested. From our very first meeting, it was evident that we shared many of the same values, and our business model would be an excellent fit for his company. We believe in the independent, self-managed business, and Mr. Lucky liked that. In other words, he believed we would be good custodians of the Cole brand. We all set out to negotiate a transaction, which was consummated on April 14th, 2025. Unfortunately, I was not able to celebrate the closing with Mr. Lucky due to his timely death just prior to closing. The deal got done, and the Mullen Group will soon have this great company to add to our ever-expanding portfolio of quality brands.
As soon as the approvals of the Competition Bureau are received, which we expect will be in this quarter. A little bit about acquisitions. I've got to tell you, acquisitions are a team game. Our entire senior team put in countless hours of due diligence time on this transaction, and I'd like to thank each of them, all of them, for the reference. Well done, team. I now want to turn the call over to Richard Maloney and then to Carson Urlacher for some additional insight into the Cole transaction. Rich, the floor now is yours.
I'm gonna tag team this with Becky because I'm not certified to advance the slide. If we can move now to the next slide, to the senior team. Murray just talked about the great team we have here at the Mullen Group. There's Murray, Joanna Scott, Carson Urlacher. We know that we have recently, since the last meeting, have added some more senior members. We have Lee Hellyer and Steve Bogstie, who are part of this operational side. More recently, we've added Sydni Kind, who's our General Counsel, and Nik Woodworth, who's a VP of Accounting, who have been great additions to our team, have really filled out our overall, you know, our team within the organization, and we're fortunate to have them with us as well. That's the team that Murray referred to that helped on the acquisition side.
In December, just quickly, in December of 2024, we announced a business plan for 2025. We said we'd do roughly CAD 2.2 billion, roughly CAD 350 million of operating income, and we would continue to pay a CAD 0.01, pardon me, a CAD 0.07 dividend per month. We said that in order to achieve this, we needed to maintain... I'll point out a couple of points. We're gonna focus on operational excellence within our business units, and we were gonna pursue acquisitions. As the slide outlines, we have maintained a disciplined approach. We will continue to maintain a disciplined approach to acquisitions. By sticking to these points, we, as we confirmed a couple of weeks ago in our call to shareholders, we have not changed our 2025 business plan.
A lot of that is to do with the next slide. If we go, if we advance, Becky, over to the Cole Group of Companies. On April 14th, we announced that we would be acquiring the Cole Group of Companies. As Murray has pointed out, the Cole Group is a leading customs brokerage business in North America, based in Alberta here as well. They've been around since the 1920s. They've been around. They understand the business. On the screen, you see a map of where they have strategically situated customs brokerage entry points and offices, including down in the United States at ports of entry.
These are all locations that they have, and they are able to provide the customs brokerage services for North America, with roughly 700 people working for them and 40 strategic border points, and part of their service offering has access into the Southeast Asian markets. We're very happy with this acquisition, the business strengths they bring, and we've met the senior team as an experienced leadership team within the Cole Group. They have extensive knowledge with duties and tariffs, and we do not think duties and tariffs are gonna get any less complicated anytime soon. They have a great technology platform, which will be needed as we navigate tariff, duty, and trade in the future. They have a diverse customer list, which we believe will provide synergies, and they have a U.S. platform that we were able to build off as well.
If you advance to the next slide, I'm just gonna reiterate the why. Why did we do this? Customs brokerage. We've been interested in customs brokerage for roughly 16 years. At one point, we had a stake in another large customs brokerage business in Canada. We've always known that, you know, realistically, Canada is not a place where a lot of things are made, but a lot of things come into our country. When they do, they need to go through a customs clearing process, tariffs and duties. These... Cole is a leader in that. They have roughly 14,000 customers that we believe there will be synergies to look at other parts of the logistics framework for them as well.
As I said, I will reiterate, and likely on the next slide, that we think that the trade and tariffs are not going to get any less complicated, and they have done a very good job of managing the systems, the tariffs going forward here. An attractive financial profile. This operation, Carson Urlacher will talk about it, generates free cash, and that is something that we like, particularly as a dividend-paying company. What they provide is they have a relatively large presence, a decent sized presence in the United States. We see opportunities with our U.S. 3PL business, our fourth operating segment, that currently has HAUListic in it as well. We know there will be opportunities on that front. If we go to the next slide, Becky, we will talk about, again, some of the secular fundamentals.
This is largely a reiteration of what we've talked about. Evolving trade policies increases customs complexity, driving demand for customs brokerage services. I recently read a Wall Street Journal article that said that there's better success in passing the California bar exam than passing the customs brokerage test, which has a 21% success rate. All of the people we have, or Cole has down in the U.S., have the certification required to do this. We also know that our within customs brokerage, it tends to be a little more sticky with the customers. They like the one point of contact, reduce the overall clearance processing time and so on.
We also know that if you look at the third point on the screen, what we currently do is we do provide a lot of transportation, which is kind of tied to freight rates. We do know that the fee-based transaction provides us some better opportunities on a go-forward basis. The last point here we talk about is, and I've mentioned it already, is the free cash flow conversions that we see with the asset-light business. That is something we look at, particularly as we look at our trucking, the trucking space in North America, that it's saturated with excess trucking capacity right now. This is something that we're looking at, moving to here as well.
On the next slide, and I'm gonna pass this off because it's some big numbers that I'm gonna have our CFO talk about here. Carson, if you wanna take over here, I'm gonna let you talk about the numbers.
All right. Thanks, Richard Maloney. Yeah, obviously, a lot of folks asking about the financial metrics with respect to Cole Group after we announced the transaction. We wanted to articulate it here for you folks. Just as an aside, just so that you know, online, the share purchase agreement, a redacted version has been posted on SEDAR for those of you that would like to go and take a look at that. Let's take a look at the financial metrics and summarize this transaction. The purchase price of CAD 190 million, and we've pegged target working capital to be CAD 29 million on closing. That is working capital that will be left in the organization upon closing.
We're also gonna be acquiring real estate to the tune of about CAD 10 million, and that is mostly office space. Obviously, it's an asset-light business, which is really just conducive to office space. When you compare the purchase price net of working capital and real estate, it's awfully close to what we articulated in our 2025 business plan that we shared with you at the beginning of the year by saying that we were going to allocate approximately CAD 150 million worth towards acquisitions. If you take a look at the annualized gross revenue and annualized EBITDA, you can see what we saw.
The most recent historical, trailing 12 months, of Cole, you're seeing CAD 300 million of gross revenue and annualized EBITDA of approximately CAD 20 million. Again, a very asset-light business. There's really no CapEx requirements with respect to this business. Effectively, EBITDA is essentially EBIT. As articulated earlier on in the call, we're still waiting on regulatory approval, which is really out of our control, but we remain optimistic that we can close the transaction here in the near future. Becky, I'll get you to move the slide ahead. I thought what else we would do is we'd take an overview of what our balance sheet looks like, and talk about what this transaction kinda means to our balance sheet.
I thought I would provide a brief overview of our balance sheet, which really highlights our financial strength and flexibility to be able to transact on an acquisition such as the Cole Group of Companies. How did we position ourselves to be more aggressive on the acquisition front despite current market conditions? It really comes down to our balance sheet strategy and what we have done and what we didn't do over the past couple of years. What is that strategy? It can really be summed up into two fundamental rules. We have two rules here, and rule number one is always protect the balance sheet. Rule number two is never forget rule number one. We're conservative by nature, and we remain disciplined and focused on acquisitions that generate free cash.
Remaining disciplined while others are aggressive is a fundamental concept in protecting the balance sheet, which becomes especially evident when heading into uncertain times. Reviewing our balance sheet and making adjustments to it in light of market changes is an ongoing process. We're constantly looking at ways to strengthen our balance sheet to provide us with the utmost financial strength and flexibility. What are some of the things that we did over the past couple of years? Well, in 2024, we did a couple of things. First, we refinanced some of our private placement notes that came to maturity. Through our refinancing last year, we added some cash to the balance sheet, we were not done there.
We also added to our bank credit facilities, which are now sitting at a total of CAD 525 million in borrowing capacity through our four lending partners. To summarize, what we did over the past year or so was to shore up the balance sheet with both well-structured long-term debt and liquidity. What we didn't do was get aggressive on the acquisition front at the peak of the market. We remained disciplined and saved our balance sheet for another day. We've always been countercyclical in our approach on acquisitions, which is where we're at today. As you can see, our liquidity position on the screen at the end of the most recent quarter was strong.
We had over CAD 131 million of cash on the balance sheet and access to over CAD 500 million of bank credit facilities, for a total of approximately CAD 650 million of total liquidity at March 31, 2025. In terms of our financial covenants, we had a total net debt to operating cash flow covenant of 2.23 to 1 under our 2024 note purchase agreement, giving us well over a full turn compared to our threshold of 3.5- 1. How does the acquisition of the Cole Group impact our debt covenant? Well, given the financial metrics that we just outlined regarding the acquisition of Cole Group, you can see that we continue to be in an enviable position from a balance sheet perspective.
We continue to have the ability to transact on future acquisitions while remaining in line with our long-term strategy of being around 2.5- 1 on our total net debt to operating cash flow covenant. To summarize, through the Cole Group, we will grow our organization on what we believe is a very thought, in a very thought out manner, adding free cash in another vertical of the economy and providing us with a strategic platform that fits nicely and which complements the service offerings of our existing business units. With that, I will pass the call back over to Murray for any closing comments.
Okay. Thanks, Richard, Carson. That's a great summary. Joe, is there any other questions?
Nope.
There are no. Okay. Hearing none, like, what this does, concludes today's presentation. On behalf of your board of directors, your senior executive team, and the soon-to-be nearly 9,000 employees and associates, I'd like to thank you for investing in our organization. We will always work hard to preserve your investment. Thank you, and take care.
This concludes the meeting. You may now disconnect.