15 questions asked at 2022 Hills Industries AGM
January 16, 2023
Here is the text of the 15 questions asked at the 2022 Hills Industries hybrid AGM on November 23 which lasted an hour. A summary of the responses is below. No webcast archive but emailed a request on January 16, 2023.
1. How many placements have you done in the past and why are you requesting this extra authority? Does this suggest a big placement is imminent? Why not commit to raise money through a renounceable pro-rata entitlement offer that treats all shareholders equally and compensates non-participants? If you do proceed with a placement, will the board commit to also doing a share purchase plan for retail shareholders, complete with a secondary VWAP pricing alternative, which is common practice in the market.
2. Our shares closed at 5c last night and our market capitalisation is only $12.75 million. Have we ever done an offer to take out unmarketable parcels and why don't we do a 1-for-10 share consolidation so that our shares don't trade at such an embarrassingly low level?
Answer: not a bad idea. We'll look at that but we do want to restore value for the 11,000 shareholders.
3. Do any of the 5 main proxy advisers - ACSI, Ownership Matters, Glass Lewis, ISS and ASA - cover us and have there been any material proxy protest votes today? Will you disclose the proxy votes before the debate on each resolution so shareholders can ask questions about the reasons if there have been any protest votes? Also, why not disclose the proxies to the ASX with the formal addresses like many other companies now do?
Answer: not asked.
4. A question for the auditor, Julie Cleary from KPMG The balance sheet includes $280 million in accumulated losses and claimed net assets of $9.2 million, compared with a market capitalisation of $12.75 million. In terms of assessing the overall experience of shareholders, is it correct to say that the net loss is $271 million. Also, how much profit would Hills need to make before it would start paying corporate tax?
Answer: CEO clarified that it was $257 million that would need to be made before tax would be payable.
5. Could chairman David Chambers please comment on the influence that the founding family still has over the board and broader company. How much of our stock is still owned by the Hill-Ling family and how many different members of the family exercise voting power over that controlling stake. Who is their representative on the board and how does the family interact with the board?
Answer: they are now off the board but still hold about 20%.
6. Given that we are still controlled by the founding family, could Jennifer Hill-Ling please comment on what she believes were the key mistakes made that led to Hills having $280 million of accumulated losses and a market capitalisation of just $12.75 million. Isn't it time to give someone else a go given that 11,000 retail shareholders have suffered significant losses? Has Jennifer ever attempted to sell the company and is she and her wider family committed as a long term shareholder.
Answer: not asked, thankfully, as Jennifer is no longer on the board. Do your research properly, Stephen!
7. Apart from Jennifer Hill-Ling's position on the board, what other ties does the company have to the founding family. Are any members of the wider family employed or engaged by the company or do we lease property from the family or have any other dealings?
Answer: not asked, thankfully, given Jennifer is off the board now.
8. Our shares closed at 5c last night and, according to the annual report, we have 7,868 shareholders with a stake worth $250 or less. Have we ever done an offer to take out unmarketable parcels? If not, why not? It must be quite expensive to retain a register of 11,000 shareholders, with an average holding worth just $1160.
Answer: not asked.
9. Did the Hill-Lang family vote in favour of all resolutions today and do you know how many of the 11,000 shareholders voted by proxy?
Answer: not asked.
10. What were the proxies on this resolution and was it withdrawn because it would have been defeated? Were the Hill-Lang family in favour of this resolution and do they support Hills doing more placements that would dilute their stake in the company?
Answer: the answer was carefully crafted and I suspected the family voted against expanding the placement capacity.
11. Thank you for offering shareholders a hybrid AGM this year and will you commit to support doing this in future years to maximise shareholder participation? Many big companies like Argo, Bega, BHP, Blackmores, Boral, Brickworks, Commonwealth Bank, Flight Centre, Fortescue Metals and Harvey Norman all banned online questions and voting in 2022, so well done for showing them up. What was the hybrid AGM experience like from your end?
Answer: not asked.
12. Given the interesting discussions across a range of topics today, could the chair undertake to make an archived copy of the webcast plus a full transcript of proceedings available on the company's website? The likes of Nine, AGL, ASX, ANZ, Domino's and Lend Lease all produced their 1st AGM transcripts in 2021. Will you follow suit today? This is something IAG has been doing since 2003.
Answer: maybe, but no firm commitment. Chair talked about the formal addresses which are required under law.
13. Seeing as the placement resolution was withdrawn after proxy voting had closed, will you disclose the proxy position on that resolution to the ASX along with the other resolutions? This would be consistent with disclosure of proxy votes by companies on contingent resolutions such as with spill votes on the remuneration report.
Answer: not asked.
14. Surely you saw that a number of constitutional amendments were voted down last year and this year because shareholders and proxy advisers don't want fully virtual AGMs. How did you not get that message? Who were the legal advisers which recommended this proposal and will be they paid in full for their poor advice?
Answer: no asked, thankfully, as the amendment was comfortably supported.
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