Assetora Limited (AOH) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to DomaCom's Annual General Meeting. My name is John Hewson. I'm the Chairman of DomaCom Limited. I would say that the meeting is open. We have a quorum with a number of people. For information, I note that the meeting is being recorded for the benefit of shareholders who are unable to attend today. I'll introduce the people here. I won't forget the CEO and the other directors of the Board: Grahame Evans; Ross Laidlaw; George Paxton; Matthew Roberts; Angela Williams; Hilal Yassine; the company secretary, Philip Chard. I have apologies. Apologies, I'm sorry.

So Matt Roberts actually instead of Matthew.

Oh, Matt Roberts. As a notice of meeting have been circulated to all shareholders, and I propose it's been taken as read and need approval of the minutes of the Annual General Meeting held on the 26th of December 2021. The minutes were available for review, I believe, as set out in the notice of meeting unless there are any other comments. I'll take them as approved. Are there any questions or comments? Okay. It's time to do an update now. The company has achieved many milestones during its 2022 financial year. Operationally, we continue to create product offerings using our unique factor investment platform. This saw a sustained, strong uplift in our funds under management that fed significantly increased revenue. This growth was particularly pleasing in the context of the cost and volatile macro position seen over the last 12 months. Importantly, we achieved a sharp uplift in revenue without sacrificing cost base system. The past 12 months have also seen doom the labor groundwork with a further substantial improvement in our financial performance in the coming financial year. There've been a number of successfully executed equity-related initiatives then it together provided our company with the funding we provide to rapidly grow and strengthen the business over the coming year. We would be working closely with the ASX ensure that we went to requirements to be rebiti quotation. Unfortunately, this has not been -- this has been in Fassbwe, but we believe we have put in place measures to address the PIC requirements set at by the ASX. We'll be able to update and finalize the re-leasing process within the -- we took a period of time. We'll provide updates to the ASX announcements as we progress. Are there any further comments, Phil, that we should make it here?

No questions here.

As part of the strengthening of our financial position, we've also renegotiated the maturity note of the convertible notes, extending the date by 12 months has improved the net current asset position of the company. We thank our noteholders that are continuing to support. The company has been focusing on reshaping its meaning the longer-term strategic objectives and putting in place a plan to deliver on visitor team of target. First step is progress with reorganization of DomaCom board and senior management team. In addition to my point, the Chairman, the leadership team we man also included the higher partly experienced financial services executive on epi, that's our company's new CEO and the appointment of Ms. Andrew Williams and experience market with background in both traditional and digital marketing and communications for the nonexecutive Director. Along with the arrival of this new board, I was pleased to that the foreman Chairman of Bevin is the man on the board. -- in telesource wires council and as a nonexecutive Deputy Chairman, we experienced team knowledge of the DomaCom business was invaluable and it will continue to improve the value of the Board as we move forward. This rework leadership team has to now running his formula a new detailed strategy is now sharing triplet Importantly, this plan is not simply about your company taking advantage of identified growth opportunities, work powerful factory investment but aspects of the plan will be set out in the following segment of GEO, your presentation. Suffice to me to say that this runway to growth is targeting both enhanced private and a rapid improvement in complied financial performance. these strategy initiatives come with a significant environmental save and governance tale. This covers both the products we are offering, National Disability NDIS span housing and our commitment to create a work environment that positions someone's a clear cut employer of choice. I sincerely thank our shareholders and to life continue to support over the last 12 months to bring a here transition for the company as was described. And as we're positioned to go into the next phase of growth. And last but not least, I want to acknowledge the hardwork to retire Dolce then the company would not have been able to materially expand the business and then take the operational changes that will underpin strong growth momentum already that's already underway. You want to take it from me?

Thanks, John. Thanks for very much. Thank you. So when we look at the last 12 months, what we've achieved and also the first quarter of this year, we've seen strong financial results both in funds under management growth and also revenue growth, and that's been a key item that we've been focusing on to really bring the business forward. When we first look at the business in relation to the strategy and what we needed to design, one thing that we looked at was what was our mission and what are we setting out to do, and our goal is to ensure that we enhance shareholder value by value leading value by leading the Australian industry and being the managed fund platform of choice. Our mission is to connect clients to liquid, wide-ranging and differentiated value propositions, create and maintain strong institutional relationships, commit to sound environmental, social and corporate governance principles, and build global linkages. This all then ties into our values and what we look at in regards to accountability, trust, collaboration and also innovation. So when we look at the current environment and where we're operating in, we look at domestic and global economies, will be subject to significant post-pandemic inflation, growth in interstate changes over the medium term. Innovation and consumer preferences are rapidly evolving and manifesting the demand for and supply of digital solutions. And although Australia is a sophisticated environment, its investment pool is only approximately 2% of the global market. The way that we look to overcome the is making sure that we're innovative in our product design and people and being responsible with our fiscal management, being client-centric with our digital delivery and not forsaking traditional client communication needs and capitalizing on Australia, but also looking at opportunities globally. When we look at our 4 key strategic objectives: number one, ensuring capital sustainability and deployment to meet corporate objectives and shareholder return and liquidity expectations. What we're aiming to achieve there is, number one, which we have completed already was the capital raise, but also real estate of the company, growing our funds under management to $300 million by the end of June 2023, including a strategic operational review and also decreasing our operating expenses as well. And this, in turn, will enhance shareholder value. Our second is driving connectivity in collaboration with distribution and commercial partners. So looking at engaging and entering into partnership agreements executing a client's segmentation exercise, so not just looking at, for example, retail, looking at expanding beyond that. refreshing our brand and website, which I'll go into a bit more detail a bit later on and also been establishing a presence in a more significant presence in our Singapore office. This will create and maintain strong institutional relationships by building global leads. Our third is deliver broader, innovative and differentiated digital value propositions to diversify the revenue base, increase market share and improve declining experience. So if we look at creating value propositions, look at our 90-day innovation policy, where I start to come up with ideas and look at different ways that we can look at implementing new things, increasing our clients and looking at an overall Net Promoter Score of 7 by the end of June 2023. This will allow us to be the platform of choice to connecting clients to liquid, wide-ranging and differentiated value propositions. And then our last is about being an employer of choice to attract, develop and retain top talent who are innovative and collaborative. So this is where we will look at creating different types of programs internally where staff can either run or attend to be able to provide them with the opportunity to grow further, and this is leading the Australian industry committing to sound ESG principles internally. So when we look at the brand, we have gone out with a new brand in the website. It will be coming out shortly. But while DomaCom's logo has changed, it's retained its link to the past that acknowledges both the company's heritage and its reputation for meeting the often differing investment objectives, evidence across our steadily growing client base. Just as a new logo continues to emphasize the link, the D and the same brand name, the value-add offered by DomaCom's investment products remain equally as injury or a wide range of investor groups. Our clients are our lifeblood, and the new DomaCom maintains our client focus to build our clients' wealth by diligent adherence to risk-conscious investment strategies. DomaCom is committed to building wealth and creating financial freedom for our clients. While we have changed our logo, this commitment to offering clients a way to invest assets previously unavailable to them remains our #1 priority. So with our outlook and what we're looking for the full year of 2023 is, first of all, stabilize our revenue stream and the ASX listing; our operational review; our marketing communications brand and website refresh; innovation, both people and digital and or redefinition of target markets; also reengaging with distributors and commercial partners as well. By focusing on these priorities will substantially progress towards our overall short to medium-term focus and restoring stakeholder confidence as a platform for significant growth in the longer term.

Okay. I'll ask Phil to do the financial report.

Thanks, John. So the first slide shows 4 slides. The first slide shows the fund side of management, which has now reached over $160 million. So if you look at the slide here, it shows not only it's been growing, but it's actually growing at an increasing rate. So that rate is important as well. It's based on the way we charge some of our fees. So the slide here shows, I think, the different categories of underlying sub funds the investments we have. So you can see there's a broad range presented here. So investors are attracted by the returns that we offer, but others are invested by the diversification that we can provide through our platform. So people come on to the platform for different reasons, but I guess the key thing is they're going up in number. So if you look at the next slide, this shows the actual number of investors. So we're over 2,000 investors now. That top chart shows how that's grown over the last 12 months. But if you look at the chart below that, that's the number of soft funds that we've got going, so that's almost doubled in the last 12 months. So I guess the message here is that the business despite obviously the hiccup with the relisting at the moment, the underlying business is strong. We're growing, growing our investors, our FUM, and we also have a very strong pipeline to support that going forward. The next -- so this slide is looking at the financials for the asset out in the financial report. So just the key messages here. So the top box is funds under management revenue so -- or fee revenue from funds under management. So the left-hand chart is just showing how that's grown year-on-year over the last 3 years. So that's based on underlying the right FUM, fund under management. We've also introduced a second way of charging fees. They're called upfront fees or platform fees. These are in addition to the ongoing revenue going to management fees, and these cover the significant amount of effort has to go in to actually set up and initiate funds. We've set up an initial fee to cover that as well. So that didn't exist 3 years ago, started 2 years ago and really got going this last financial year. So you can see that half of our revenue last year came from those upfront fees and will continue to come from those going from those going forward. Second chart below is operating costs. So again, this is the full financial year, so the last 3 years. The message here is the operator costs have stayed stable over the last 3 years. So despite doubling, tripling, or doubling the number of funds that we we're operating, the increasing number of vets as we saw in the earlier slide, we still kept our costs under control. The cost I'm showing here is just the basic operating cost, so I exclude the financing costs and a bad debt write-off amortization of depreciation. So this is your base costs we're talking about. So my final slide is just an update for the quarter that's just been, so Q1 of financial year 2023. So the top box is fee revenue. So this is showing essentially we're considering that momentum. So the 3 bars are obviously, the quarter just gone compared to the due course for 2022 and compared to the same quarter a year ago. So it's just showing those 3 comparatives. And you can see on the fee front, all 3 of those are growing successfully. The bottom slide is the operating costs. So this is quarter-by-quarter, the same quarter as I just mentioned. The message here is that third box. Operating costs for the quarter that's just been are coming down, so this is all part of our strategy that we're setting out as well as raising revenue. We're keeping costs under control and seeking to reduce costs going forward. I'll pass back to Mr. Chair.

Thanks, Phil. And now time for questions. I invite shareholders to ask questions relating to any of the presentations you've heard. For those attending online, please use the Lumi software to type the question or raise your hand on the screen, and we can identify you. There's obviously in attendance, please raise your hand and wish to ask a question. So I open the floor to questions. Yes?

Mine is not related to the operational or financials, but I'd like to know when we're going to be trading in the ASX.

Well, I think we've met all the requirements that the ASX has put to us. We're waiting for their final decision being in our usual process as far as I'm concerned, but the requirements are fairly straightforward. You might summarize them, Phil.

Yes, sir. We applied, I think, 1st of July 2022, relisting. So it's initially it was a bit of a drawn-out process, going back and forth with questions and answers, which we were able to provide, Essentially come back to a position where there were 2 key things that we were requested to do, and both of those we have either addressed or we are addressing. So for the public knowledge, I just mentioned what those 2 things are. One was extending the convertible notes. That's no longer our current liability. It's moving to a noncurrent liability. So we made an announcement a week ago actually. I'm sure we've done that. The second is to carry out a share buyback. There were some shares which were issued back in May, which the assets of ours to be bought back, just a small number. But obviously, we're required to do that. So we have a separate general leasing in a couple of weeks just to deal with that one issue. So those are the 2 things which were remaining, which we've covered off. So that is -- so in the hands of the ASX, they're going to ask just to check. We've covered off everything that's administrative. So making sure we've -- we're updated with our filings. We've paid all our fees. Then we provide a pro forma balance sheet, just a banshee as it is now, which shows that -- our balance sheet is healthy, and then that should be sufficient and realistic. So in terms of timing, it will need to be after we've done that general meeting, which is the 30th of November, so I'm hoping early December.

30th of November this year?

Yes.

In the share buyback, the requirement is that we put it up there for shareholders sold the shares to you? Or do you have to buy it? What's happening there on sales?

So it's just one particular shareholder. So it's not everyone.

It's not many?

It's just for one particular.

Changes the situation?

Yes. So Alex, have any hands been raised through attendees online?

Phil, yes. Kathy Nolan has raised their hand. I've just asked her to unmute. She's now unmuted. Yes.

Please go ahead, Kathy.

Thank you. I was interested in John's presentation, part of -- and I might have just missed it because we're pretty quickly around redefining target market. I wonder if you could just talk a little bit more about that idea.

When we look at the target market, it's about looking at the different segments that we can go into, so whether it's retail or wholesale and being able to look at different investment strategies to do for those 2 groups.

Okay. So you're talking -- so the strategy is still to look at both markets? Or...

Yes, both.

Okay. That's very interesting. I had another question if that's okay. I'm also really interested in the -- what you're talking about being an employer of choice. And I know from long ago experience, you have some great people at DomaCom, but I also know that they haven't seen any remuneration changes for a very long time. Odd thing for a shareholder to raise, I know. But the strategy that you spoke about there was -- appeared to be more about learning and growth, and I'm just wondering whether there's any any changes in relation to remuneration as well anticipated.

Remuneration will be looked at as well, and that's part of it. So we're just going through the process now and waiting on final approval.

Any other hands up?

Alex, any more hands up?

Yes, Phil. Just unmuting them now. Please go ahead with your question.

Andreas back it up, a follow-on question. What is the staff attraction and retention strategy? Because obviously, with the company this size, talent attraction and retention is pretty critical in certain roles. So I'm just wondering what the strategy is behind.

In relation to attraction, being relisted is one thing for us to attract talent. So that's why our #1 goal has been to relist us back on the ASX because it enables us to attract talent. When we -- with the current employees, as I mentioned previously, as per Catherine's question in regards to the remuneration, we are looking at that to make sure that we are, you could say, equivalent to what is being offered in the market, if not more, and also the added benefits that we can provide our staff. But we also have the ability to -- being a small organization, being able to work together and collaborate it and getting deals done, and also having the ability for the staff to working groups to provide, you could say, resources to the business and ideas in us for us going forward. It's not just up to the Board or the leadership team.

Okay. I've got a follow-on question if that's all right. Just in terms of business strategy, is this -- whether we're business to B2B or B2C, I'm just wondering if there's a a priority there at all, whether it's reasonable to spread across both sectors in terms of the cash required to penetrate both both sectors effectively.

When we're looking at both sectors, going B2C we'll look at from a digital perspective, and you'll see that through our enhanced website when it does come through, and we'll be looking to attract clients digitally. Also, when we look at establishing other relationships or partnerships with other organizations, that also gives us an added reach to different clientele as well. So being able to bring those different propositions to the market will help enable us to grow both B2B and B2C.

Can I just actually just add. B2B is actually in many instances B2B, B2C in some of our commercial and relationships. So they are quite quite good relationships where we can tap in through a commercial relationship into the client bases of our Board.

So Alex, we have a question from JK Mal.

Yes. Just unmuting him now, Phil. Over to you, JK.

This is Jan Kogan. Just a question, what AUM is required to get to cash flow positive? And when do we expect to reach that point in time?

Sure. Thank you for your question. I'll take that if that's okay. So it's -- so we obviously do modeling of this to see what that point is. There's quite a few variables in there. But just to keep it simple, if we use the numbers that I just presented as a base, so we have -- excluding exceptional items, we have a basic cost base of $4 million a year. So the question is almost what revenue do we need to generate to cover that $4 million, so it's a variety of revenues we're going to have. So we've got the upfront fees, we've got the ongoing fees. And the ongoing fees are at different rates as well, depending on the underlying type of assets. So those are the things that we juggle with. But essentially, if we keep growing at the rate we're growing at the moment and the cost base is that cost base of $4 million as a base, then we should be breaking even conceptual items aside, finance costs aside, between $300 million and $400 million of FUM. So in terms of when that might occur, so we're targeting the strategy further $300 million by June 2023. So those are all targets, those are models. There's obviously no guarantees, but -- so it's between $300 million and $400 million FUM that we're saying that we're going to be in a position to break even. But I suppose the other point just to add is even if we're not quite a breakeven, we're still close to breakeven. The company is still in a much stronger position, not having to raise capital as we have over the years.

Are there other questions?

There were 1 or 2 questions received beforehand, but those I believe have all been covered off unless you think we should move on now.

I think that's -- we move on to the financial statements. sector reports. Corporation Act requires that the financial report, which includes the financial statements, ureter's Declaration of director's report and the auditor's report laid before the Annual General Meeting. The report has acquired we audited log pride of the annual general meeting, and therefore, there's no formal resolution required to be put to this meeting. The auditor is an Solana represented here today Mr. Derek. Are there any questions on the financial report? Hands up?

Are there hands there, Alex?

Not that I can say, Phil.

Okay. No questions on that, Mr. Chairman.

I simply note that the financial reports have been duly received and considered at the meeting. We have 9 resolutions to deal with today, and we'll move on to those. In terms of voting procedures. Voting on the resolutions is set out in the notice of meeting will be through a poll. Shareholders were encouraged to submit their votes prior to the meeting. Also voting is now open. So the Lumi software for shareholders attending online that have not already voted by proxy. In addition to shareholders attending in person that has not already voted by proxy, but will be made using voting cards provided registration. Those voting by poll, to will be allocated in accordance with the number of shares held. Those will be combined with the votes received in advance of the meeting to determine the results of the poll will be released at the ASX subsequent to the meeting. All resolutions are put to a formal vote, there'll be an opportunity for shareholders to ask any questions about any of the resolutions, on ensure there are any questions relating to the relevant item of business are asked. The questions will only be taken or persons who are entitled to vote at this meeting. As Chairman, I've been appointed proxy on a number of occasions. I intend to vote those all in favor of the resolutions. Resolution 1, let's deal with that. Section 250 R2 of the Corporations Act administered companies are required to put a resolution to their shareholders at a remuneration report be adopted. The vote on this resolution is advisory only, will not bind the company other directors. However, the Board will take the outcome of the vote into consideration when reviewing the company's remuneration practices and policies. The remuneration report forms part of the director's report and is included in the annual report for the financial year ending 30 June 2022 that was distributed to shareholders prior to this meeting. It's also available through the company's website. Given the interest in this resolution, the Board makes no recommendation on this resolution. I move the following advisory resolution that the remuneration report for the financial year ended 30 June 2022 be adopted. Voting exclusions to Resolution 1 is set out in the notice of meeting. I advise that the company has received a proxy as shown on the slide. Are there any questions in relation to this resolution? No? I now put the matter to a vote through a poll. Those who already voted in advance of the meeting, please vote using the Lumi software or please complete the voting card if you're attending in person. [Voting]

Okay. And Resolution 2, increase the nonexecutive to the directors of skin shareholder approval to increase the fee pool for the year ended 30 June 2022. Given the interest in this resolution, the Board makes no recommendation on the resolution. I move the following ordinary resolution after the purpose of ASX listing will 10.17 and clause 9.3 of the company's constitution, the maximum good amount of directors fees that may be paid to a company nonexecutive directors per annum be increased by $135,000 from $265,400 per annum effective 1 July 2022. Voting exclusions for Resolution 2 are set out in the notice of meeting. I advise that the company has received proxy votes as shown on the slide. Are there any questions about this resolution?

Alex, has there been hands raised, please?

No hands raised at all.

I now put the matter to a vote through the poll. Please use your Lumi software or please complete the voting card if you are attending in person. [Voting]

Okay. Resolution 3, reelection of Mr. Ross Laidlaw a director. I move the following ordinary resolution that Mr. Ross Laidlaw, who requires biopotation in accordance with the company's constitution and is eligible for any election be reelected for the director of the government. The voting exclusions on Resolution 3 as set out in the notice of meeting. I advise that the company has received proxy votes as shown on the slide. Are there any questions about this resolution? I now put the matter to a vote through a poll. If you're not already voted in advance of the meeting, please use the Lumi software or please complete the voting card if you're attending in person. [Voting]

Okay. Resolution 4 of the Mr. George Paxton as a director, I moved to the following ordinary resolution to Mr. George Paxton, who recall by rotating the ports with the company's constitution and is eligible for reelection, be reelected as [indiscernible] The voting exclusions to Resolution 4 are set out in the notice of meeting. I advise that the company has received proxy vote as shown on the slide. Are there any questions in relation to this resolution? I now put the matter to a vote through a poll. If you have not already voted in advance of the meeting, please use the Lumi Software. Please complete the voting card if you're attending in person. [Voting]

Now I'll pass the chair to Grahame Evans.

Thanks, Mr. Chairman. Resolution 5 is in respect to the election of Professor John Hewson as a Director of DomaCom Limited. John has a wide rate experience in both business and qualities before summons background is set over the exponential statement until those shareholders would. Now we'll loot John and he's background. We look forward to jumping able to apply his knowledge and expertise to assist in driving domain forward. I move the following ordinary resolution. John Hewson was appointed to the Board by the directors on the 3rd of April 2022 in accordance to the company's constitution and is allocable for election to be elected as a Director of the company. The voting exclusions in Resolution 5 are set out in the notice of the meeting. As Chair of the resolution, I will be voting all opening proxies in favor of the resolution. I will advise that the company has set proxy vote as shown on the slide. Are there any questions in relation to this resolution? Anything from online?

So nothing come up here. Alex, there's no hands?

No, no hands raised, Phil.

I now put the matter to a vote through a poll. If you have not already voted in advance of the meeting, please by using the Lumi software or please complete the voting card if you're attending in person. [Voting]

I'll now pass to the Chair. Back to you.

Thank you. Resolution 6 is the election of Angela Williams as a director and that has a strong background in traditional digital marketing, communication, business strategy and operations. A full summary of this -- of her background is set out the expenditure segment. Angela's expertise will be invaluable to Dominoes looks forward to the builders market presence. Therefore, I move the following ordinary resolution that Ms. Angela Williams, who was appointed to the Board of Directors on the 3rd of April 2022 in accordance with the company's constitution and is eligible to reline elected as a director of the company. Voting exclusions for Resolution 6 are set out in the notice of meeting. I advise that the company has received the proxy votes that are identified on the slide. Are there any questions in relation to this resolution?

Nothing from you, Alex?

No hands raised, Phil.

I now put the matter to a vote to a poll. If you have not already voted in advance of the meeting, please use the Lumi software or please complete the voting card if you're attending in person. [Voting]

Resolution 7, some approval for the previous issue of 30,506,852 ordinary shares. I move to the following ordinary resolution at the previous issue of $8,863,636 ordinary shares on the 27th of May 2020 under a placement of sophisticated institutional investors at an issue price of $0.66 per share is approved under and for the purpose of it Rule 7.4. The voting exclusions to Resolution 7 as set out in the notice of meeting. I advise that the company has received proxy votes as shown on the slide. Are there any questions in relation to this resolution?

A question about the open votes. Are they the proxies that you have to vote in.

Yes. So that, Mr. Chair would conduct as he -- at the beginning to meet Chair said he would vote those in favor. So no hands up? No other questions?

No hands raised.

I now put the matter to a vote through a poll. If you have not already voted in advance of the meeting, please use the Lumi software or please complete the voting card if you're attending in person. [Voting]

Resolution 8, subject approval for the previous issue of 30,506,852 ordinary shares. I therefore move the ordinary resolution. The previous issue of $1,957,619 ordinary shares on the 11th of July 2022 and replacement to sophisticated earned institutional investors at an issue price of $0.66 per share is approved under and for the purposes of listing rule 7.4. The voting exclusions to Resolution 8 are set out in the notice of meeting. I advise that the company has received a proxy as shown on the slide. Are there any questions about this resolution? Any hands up?

Alex?

No hands raised.

Okay. I now put the matter to a vote through a poll. If you have not already voted in advance of the meeting, please vote using the Lumi software or please complete the voting card if you are attending in person. [Voting]

On the Resolution 9, the approval of a 10% placement capacity and therefore move the following resolution that a special resolution. And as a special resolution, you would say the company had the additional capacities to lease equity securities provided for listing rule 7.1A. There's no voting excluded at the time of dispatch in the notice of meeting, and it is not ceding to make an issue of equity securities under the mandate to be played in the Resolution 9. I'll advise that we've received the proxies on the slide shown on the slide. Are there any questions about this resolution?

No hands raised.

I know it's a matter to vote to a poll. You have not already voted in advance of the meeting, please use the Lumi software or please complete the voting part of your nines. [Voting]

Thank you. I'll now declare the voting closed. The results of the poll will be released to the ASX after the meeting. Is there any other business? Any hands raised?

Alex, any hands raised?

No. No hands are currently raised.

Ladies and gentlemen, that concludes the business of the meeting. Thank you for your participation. I declare the meeting closed at -- time?

11:41.

11:41.